NGL Energy Partners LP is teaming up with companies backed by private equity firm Haddington Ventures LLC to form a joint venture that would expand liquids storage in Utah.
NGL Energy Partners said it will sell its Sawtooth NGL storage facility to the joint venture for $45 million, while other Haddington Ventures entities, namely Magnum Liquids LLC, contribute refined product rights and leasehold at the Sawtooth site in Salt Lake City.
Under the agreement, NGL would hold a 67.6% interest and Magnum would own the remaining 32.4% in the joint venture. Magnum may also opt to acquire an additional 21.6% interest, with another option to acquire NGL Energy Partners' remaining 46.0% interest within three years of the deal closing.
The Sawtooth facility has 6.1 million barrels of capacity in five salt caverns as well as rail and truck access to markets in the western U.S. The joint venture would allow Sawtooth to use existing capacity for refined products with minimal capital requirements and expand the facility's scope of services to include storage of refined products such as gasoline and diesel, according to NGL Energy Partners CEO Mike Krimbill.
The deal is scheduled to close by March 31. UBS Investment Bank served as NGL Energy Partners' financial adviser, and McGrath North Mullin & Kratz PC LLO acted as the partnership's legal counsel. King & Spalding served as Magnum and Haddington's legal counsel.
