Shell Midstream Partners seeks up to $787.5 million in US IPO

10/24/2014

By MOHAMMED HADI
Bloomberg

Shell Midstream Partners LP, the pipeline company backed by Europe’s largest oil company, is seeking as much as $787.5 million in a US initial public offering.

The Houston-based company, which owns a stake in the Houston-to-Houma, or Ho-Ho, crude oil pipeline among others, is offering 37.5 million shares at $19 to $21 apiece, according to a regulatory filing. The offering is scheduled to price on Oct. 28, data compiled by Bloomberg show.

Royal Dutch Shell CEO Ben van Beurden is selling assets to focus on projects with the highest returns for investors. Shell, which earlier this year had sought an investor in the Ho-Ho pipeline, will receive more than half the IPO proceeds in the form of a payment from Shell Midstream, filings show.

The company is structured as a master limited partnership, or MLP, which means it pays no taxes but must distribute most of its income to investors.

Shares of MLPs tracked by the Cushing 30 MLP index have returned about 13% this year, including dividend payments, compared with a total return of about 4% for the Standard & Poor’s 500 Index.

Shell, through one of its subsidiaries, will own about 72% of Shell Midstream’s common and subordinated units after the offering, the filing shows.

The Ho-Ho pipeline carries crude from Houston to Houma, Louisiana, to give refineries on the Gulf Coast better access to crude oil produced in the Eagle Ford and Bakken basins. Shell Midstream also owns stakes in an offshore pipeline to the Mars field in the Gulf of Mexico and the Bengal and Colonial pipelines, which deliver fuel through the eastern US.

Takeovers involving energy companies that help move and process oil and gas have increased sharply this year, as buyers seek scale to handle a pickup in US energy production.

Barclays and Citigroup are managing the IPO.

10/24/14