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Shell offloads stake in Amberjack pipeline to MLP for $1.22 billion

Reuters Staff: May 10, 2018

(Reuters) – Royal Dutch Shell (RDSa.L) will sell its stake in Amberjack Pipeline Co to its master limited partnership Shell Midstream Partners LP (SHLX.N) for $1.22 billion, the U.S. pipeline operator said on Thursday.

Drop down deals – where a parent transfers assets to its master limited partnership (MLP) – are practiced widely by energy companies to boost the value of their midstream assets without losing ownership of critical infrastructure.

The Amberjack pipeline, jointly run by Chevron Corp (CVX.N) and Shell, is located in the Gulf of Mexico and transports roughly 300,000 barrels per day of oil. 

The pipeline is expected to transport about 400,000 barrels per day by the end of 2019 from continued in-field development, as well as new projects coming online.

Shell Midstream Partners was formed by Shell to operate, develop and acquire pipelines and other midstream assets.

Reporting by John Benny in Bengaluru; Editing by Sai Sachin Ravikumar and Saumyadeb Chakrabarty

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