BP Midstream Partners will primarily hold BP’s Gulf Coast and Midwest assets. It will trade on the New York Stock Exchange under the “BPMP” ticker.
BP Midstream Partners will primarily hold BP’s Gulf Coast and…
British oil company BP said Monday it plans to spin off its U.S. pipeline business through an initial public offering by year-end.
BP said it will launch BP Midstream Partners by selling up to $100 million in shares that will trade on the New York Stock Exchange under the “BPMP” ticker. The new company will have a Houston headquarters, with additional offices in Chicago.
The business will primarily hold BP’s Gulf Coast and Midwest assets, specifically, its Gulf of Mexico pipelines, processing and storage capacity that connect its deep-water Gulf platforms to Louisiana. The company will also own and operate BP pipelines affiliated with its Whiting refinery in Indiana.
BP said in July it was considering turning its U.S. pipeline business into a publicly traded master limited partnership, which is a uniquely American corporate structure aimed at avoiding taxes. A master limited partnership, which is popular with pipeline companies, requires companies to distribute most of their income to investors in payments similar to stock dividends.
Robert “Rip” Zinsmeister is taking over as the new BP Midstream CEO after serving nearly six years as BP’s chief operating officer for mergers and acquisitions. The chief operating officer is Gerald Maret, who was president of BP Pipelines. Craig Coburn, the former CFO for BP America, was named chief financial officer of BP Midstream.
Out of the so-called “Big Oil” companies, only Royal Dutch Shell has a subsidiary that uses the master limited partnership structure, following its spinoff of Shell Midstream Partners in 2014.
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As just a small part of Big Oil’s portfolio, pipelines typically are overlooked by investors more focused on oil and gas production. Spinning off pipelines into a separate, investor-friendly business provides a vehicle to attract more eyes and dollars. Shell’s spinoff of its pipeline business raised more than $900 million, which helped buy more pipelines.
Refiners, who are facing flattening U.S. fuel demand, also have created publicly traded companies to hold their pipelines and related assets as a way to bring in new investors and spur new growth. Phillips 66 of Houston and Marathon Petroleum Corp. of Findlay, Ohio, for example, have created new companies, using the master limited partnerships, from their pipeline holdings.
“BP realizes that carving out and growing a midstream MLP will allow it to highlight assets that currently receive little, if any, value from BP shareholders,” said Ethan Bellamy, an energy analyst at the investment firm Robert W. Baird & Co.
BP submitted its IPO registration paperwork on Friday to the U.S. Securities and Exchange Commission.