The pipeline of midstream transactions is still alive and kicking, as last month's roundup of the most recent deals illustrates. In April, the industry saw some $2 billion in equity, debt and initial public offerings (IPOs), to bring the year-to-date total to nearly $15.5 billion. Mergers and acquisitions totaled just less than $3 billion in April, and $8.8 billion year-to-date.
The biggest MLP IPO so far this year was Tesoro Logistics LP, a midstreamer focused on the red-hot Bakken shale oilfield in North Dakota and Montana. The company operates two businesses: an oil-gathering system in the Bakken shale in the Williston Basin, and a system of eight refined products terminals and a storage facility in the western U.S. All told, the MLP's gathering system is set up to deliver up to 70,000 barrels per day of crude oil to Tesoro Corp.'s refinery in Mandan, North Dakota, one of Tesoro Corp.'s smaller refineries that will be expanded, by 2012, to accommodate all of the MLP's gathering capacity.
Tesoro Logistics LP, a subsidiary of oil refiner Tesoro Corp., sold more units than planned at the top of the proposed price range and raised more than expected in its IPO. The partnership plans to make minimum quarterly distributions of 33.75 cents per unit. Tesoro Corp. retained a majority ownership stake in Tesoro Logistics after the IPO and will continue to control its general-partner interests, entitling it to receive incentive distribution rights from the LP. During the next two years, Tesoro Logistics will raise additional capital and announce a series of drop-downs from its parent.
Elsewhere, Energy Spectrum Partners VI (ESP VI) has invested in Costar Midstream LLC. Costar will acquire gas-gathering and processing assets, in the $50- to $250-million price range, in the Granite Wash play in Texas and Oklahoma. This is the first portfolio investment for ESP VI, which is a $998.7-million private-equity fund focused exclusively on midstream infrastructure opportunities and management teams.
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