PBF Logistics, a limited partnership formed by the owner of the Delaware City Refining Co., is doubling down on the fuel storage market in the region with a deal to acquire four refined product terminals located in the greater Philadelphia region.
The seller is an affiliate of Plains All American Pipeline, L.P. Sales price is listed at $100 million.
The assets to be acquired include 57 product tanks with a total shell capacity of about 4.2 million shell barrels, pipeline connections to the Colonial, Buckeye, Sunoco Logistics and other proprietary pipeline systems, 26 truck loading lanes and marine facilities capable of handling barges and ships.
This acquisition expands the PBF Logistics’ storage and terminal footprint and introduces third-party customers to the logistics revenue base. The logistics unit was spun off from PBF Energy and includes a rail delivery area and other facilities at the Delaware City site.
The acquisition is expected to be financed through a combination of cash on hand, borrowings and equity that could come from sales of partnership units to PBF Energy.
The acquisition is expected to close in the second quarter of 2016, subject to customary closing conditions.
PBFX CEO Thomas Nimbley said, “The acquisition of the East Coast Terminals is PBFX’s first third-party acquisition, adds meaningful third-party, fee-based revenue and represents an attractive acquisition multiple. The addition of the East Coast Terminals increases the Partnership’s total capacity by over 100 percent to approximately 8.1 million shell barrels and diversifies its customer and asset base. We expect the acquisition to be accretive to distributable cash flow upon closing.” Nimbley continued, “PBF Logistics has been able to execute its strategy and deliver growth to our unitholders. PBF Energy, as a sponsor, is committed to the continued growth and strategic development of PBF Logistics. We are excited about the transaction and look forward to welcoming the East Coast Terminals employees and customers to the PBF Logistics family.
The East Coast Terminals are ideally situated in the sixth largest metropolitan area in the United States with significant local demand for refined products. The terminals provide a critical link for the approximately 1.3 million barrels per day of refining capacity located within 100 miles of the terminals and associated downstream demand. With extensive pipeline, truck and deep-water marine connectivity, the East Coast terminals have the flexibility to accommodate a wide variety of potential customer requirements.
The East Coast Terminals are expected to allow PBF Logistics to leverage its expanded footprint and capitalize on commercial opportunities with new customers and leverage opportunities with PBF Energy due to the proximity of PBF Energy’s East Coast refining system.
To date, PBF has stayed away from getting into the retail side of the refining business, unlike Valero, the former owner of the Delaware City Refinery.
In this region, a major player on the retail side is Wawa, which is adding stores and gas pumps, with Royal Farms and Speedway also in the mix.
The partnership expects to invest approximately $5 million, from cash on hand, to improve infrastructure in order to increase capability at the terminals.
Based on a total transaction cost of $105 million, including the $5 million investment and synergy opportunities, the partnership expects the East Coast Terminals to generate approximately $15 million in earnings before taxes and depreciation, of which approximately two-thirds is expected to come from third-party customers.