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BP Midstream IPO Looking to Generate $800M-Plus

BP plc has launched an initial public offering for its Houston-based pipeline spinoff BP Midstream Partners LP.

The unit, formed in May, expects to generate more than $800 million from the launch by selling 42.5 million units, each priced from $19-20, it said in a filing with the Securities and Exchange Commission.

Initially, the midstream business would house Gulf Coast and Midwest assets, including deepwater Gulf of Mexico (GOM pipelines and processing/storage capacity that connects platforms to the onshore. It also would include the Whiting refinery in Indiana.

Of the Big Oil operators working in the United States, only Royal Dutch Shell plchas a pipeline master limited partnership (MLP), which it launched three years ago, initially to hold GOM crude oil pipelines. The deal raised $920 millionin its debut, and today Shell Midstream Partners LP is estimated to be worth more than $4 billion.

Shell’s decisions to sanction several huge investments in the GOM deepwater, and BP plc’s recently sanctioned $9 billion upgrade to the Mad Dog 2 platform, mean “our assets will become an increasingly important link to onshore markets,” BP Midstream’s filing said.

“Due to the difficulty of obtaining construction permits, the capital intensive nature of offshore midstream assets and the remaining capacity in existing offshore pipelines, we believe offshore assets such as ours are well-positioned to capture new volumes from the Gulf of Mexico.”

BP has stakes in the BP2, River Rouge, Diamondback and Mars crude oil pipelines, as well as the Mardi Gras system in the deepwater GOM, which includes Cleopatra, a natural gas system, and the Caesar, Proteus and Endymion crude pipelines.

With 500 MMcf/d of capacity and running 115 miles long, Cleopatra provides gathering and transport services for multiple natural gas producers in the Southern Green Canyon area to the Manta Ray pipeline, which in turn connects to Nautilus for transport to shore.
BP Midstream CEO Robert “Rip” Zinsmeister previously was BP’s COO for mergers and acquisitions. COO Gerald Maret previously was president of BP Pipelines. CFO is Craig Coburn, formerly CFO for BP America.

The new business is to trade on the New York Stock Exchange under “BPMP.” BP would continue to own more than 53% of the MLP once the public offering is completed.

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