struck a deal to acquire VitolGroup's Permian Basin crude oil system for about $760 million plusworking capital.
Expectedto close in the fourth quarter, the acquisition includes a 2 million barrelcrude oil terminal in Midland, Texas, a crude oil gathering and mainlinepipeline system in the Midland Basin, crude oil inventories related to Vitol'scrude oil purchasing and marketing business in West Texas and the remaining 50%interest in SunVit Pipeline LLC, according to a Sept. 26 news release. TheSunVit pipeline links the Midland terminal to the partnership's .
"Theaddition of the Vitol system is an excellent synergistic fit to our growingcrude platform in the Permian Basin," Sunoco President and CEO MichaelHennigan said in a statement. "The Vitol pipeline assets are located inwhat we believe are the three best counties in the Midland Basin."
Inconnection with the deal, EnergyTransfer Partners LP and EnergyTransfer Equity LP have agreed to reduce Sunoco's incentive distributionsto Sunoco's general partner, Sunoco Partners LLC, by a total of $60 millionover a two-year period. The reduction will begin with the quarterly cashdistribution for the third quarter of 2016 and will be spread evenly during thetwo-year time frame.
Tofund a portion of the purchase price, Sunoco launched an underwritten publicoffering of 21,000,000 common units, with a 30-day overallotment option for3,150,000 additional common units for its sole underwriter, Barclays CapitalInc. If the acquisition fails to go through, the net proceeds from the offeringmay be used for general partnership purposes.