Building a distribution hub in Arkansas

LITTLE ROCK AND ROLL

PRODUCTS • DELEK AND GREEN PLAINS HAVE TEAMED UP WITH ANOTHER JOINT VENTURE, THIS TIME FOCUSING ON THE GASOLINE AND ETHANOL SECTOR

DELEK LOGISTICS PARTNERS and Green Plains Partners have formed a 50/50 joint venture, DKGP Energy Terminals LLC, to invest in storage terminals for light refined products. DKGP’s first acquisition is likely to be two light products terminals owned by an affiliate of American Midstream Partners located in Texas and Arkansas. DKGP has agreed to pay $138.5m in cash for the assets; subject to the usual conditions and approvals, the deal is expected to close in the first half.

The two acquired terminals have a total capacity of 1.32m bbl (210,000 m3). The North Little Rock terminal, which features ethanol blending facilities and the capability to unload ethanol unit trains, is adjacent to Delek Logistics’ existing terminal.

Green Plains and Delek Renewables formed another joint venture, NLR Energy Logistics LLC, a year ago with the aim of developing another ethanol unit train terminal in the Little Rock area; this facility is expected to be in service before the end of this quarter. The partners stress that NLR Energy Logistics and DKGP will remain separate entities.

“We are excited to partner with Green Plains Partners for its potential ethanol volumes, logistics expertise and industry knowledge as the domestic markets expand blending, and look forward to the future of this joint venture,” says Uzi Temin, chairman/CEO of Delek Logistics’ general partner. “This is a great opportunity as it fits our strategy to grow through assets in markets that we are very familiar with, and by contributing our complementary existing logistics assets in east Texas and Little Rock, Arkansas, we expect to create additional synergies within the joint venture. In addition to serving third party customers, it should be well positioned to provide additional logistics support to Delek US’ Tyler, Texas and El Dorado, Arkansas refineries. Our financial flexibility should give us the ability to finance this investment under our revolving credit facility, while we continue to look for opportunities for future growth.”

“This transaction helps us start achieving our goal of diversifying Green Plains Partners revenue and income streams,” adds Todd Becker, president/CEO of Green Plains Partners. “We believe this joint venture with Delek Logistics creates significant value for both our partnership unitholders and Green Plains Inc shareholders.

For American Midstream, the divestment of the terminal assets is part of its capital optimisation strategy; that process is likely to also see the sale of additional terminal facilities, including its marine and speciality chemical storage facilities.

SELLING ASPHALT Delek US Holdings, meanwhile, has reached agreement to sell four asphalt terminals in California and Arizona, as well as its 50 per cent share in another terminal in Nevada to an affiliate of Andeavor for $75m in cash plus working capital. The deal is expected to close before the end of the first half.

“We explored different options for these assets, including a sale to our affiliate, Delek Logistics Partners, and determined this transaction was the most attractive relative to other options,” says Yemin. Net cash proceeds could be returned to shareholders.

Delek US is, though, looking at other logistics assets that may be dropped down to Delek Logistics Partners, including assets at the Big Spring refinery in Texas that may also be transferred during the first half. HCB www.deleklogistics.com www.greenplainspartners.com www.americanmidstream.com