Noble Midstream Partners LP secured a $200 million preferred equity commitment from Global Infrastructure Partners Capital Solutions Fund for contributions to Noble's new unit that holds its 30% equity interest in the EPIC crude pipeline.
Half the funds will be available to Dos Rios Crude Intermediate LLC during the first quarter of 2019, while the rest will be available for a one-year period, according to a March 25 news release. Proceeds will be used to repay part of Noble's outstanding revolver debt, which was used to fund its investment in the 30-inch EPIC line.
"This preferred equity provides an attractive funding source for the partnership, allowing us to maintain a prudent balance sheet without issuing common equity as the EPIC crude pipeline progresses," Noble Midstream CFO John Bookout said in the release. "We are excited to capitalize on the growing demand for crude oil takeaway and export capability from the Permian Basin and look forward to adding a high-quality source of cash flow to our portfolio."
Global Infrastructure Partners can ask to redeem the preferred equity, which is perpetual and carries a 6.5% annual dividend rate, six years after the closing or five years after the pipeline is completed, whichever occurs first. Noble Midstream can also redeem the equity, in whole or in part, at any time for a predetermined redemption price.
The EPIC crude pipeline would carry 590,000 barrels per day of crude from the Permian Basin and Eagle Ford to the Gulf Coast. The line is expandable to about 900,000 bbl/d with the addition of pumps and storage. Noble recently closed the deal to acquire its stake in the pipeline, which would expand the company's takeaway capacity in the production area.