Monday, December 30, 2013

Kinder Morgan Buying Tanker Companies

Kinder Morgan Energy Partners said Dec. 23 that it is buying American Petroleum Tankers (APT) and State Class Tankers (SCT) from affiliates of The Blackstone Group and Cerberus Capital Management for $962 million in cash.

“This is a strategic and complementary extension of our existing crude oil and refined products transportation business,” John Schlosser, president of KMP’s Terminals division said in a statement.
APT and SCT are involved in the marine transportation of crude oil, condensate and refined products in the United States domestic trade.

APT’s fleet consists of five medium range product tankers, each with 330,000 barrels of cargo capacity. With an average vessel age of about four years, the APT fleet is one of the youngest in the industry. Each vessel is operating pursuant to long-term time charters with major integrated oil companies, major refiners and the US Navy.

Crowley Maritime operates APT's vessels.

SCT has commissioned the construction of four medium range product tankers, each with 330,000 barrels of cargo capacity. The vessels are scheduled to be delivered in 2015 and 2016 and are being built by General Dynamics’ NASSCO shipyard. Kinder Morgan says it plans to invest about $214 million to complete construction of the SCT vessels.

“Product demand is growing and sources of supply continue to change, in part due to the increased shale activity,” Schlosser explained. “As a result, there is more demand for waterborne transportation to move these products. We are purchasing tankers that provide stable fee-based cash flow through multi-year contracts with major credit worthy oil producers.”

The transaction, which is subject to standard regulatory approvals, is expected to close during the first quarter of 2014.