Tulsa’s NGL Energy Partners LP announced it has entered a $45 million joint venture with Magnum Liquids LLC to focus on storage of natural gas liquids in the salt caverns located southwest of Salt Lake City, Utah.
It is the site of NGL’s Sawtooth Storage facility and there are 5 underground salt caverns. The venture will also include Magnum Liquids refined products rights and adjacent leasehold. In exchange for the $45 million from NGL, Magnum will contribute the right, title and interest in certain leasehold and assets located at the site.
NGL will own nearly 67.6% of the joint venture and Magnum will own the remaining 32.4% at closing. Magnum will also have an option to acquire another 21.6% from NGL and still another option to buy NGL’s remaining 46% interest within three years of closing.
Closing on the deal is anticipated by the end of the month.
“We are very excited to bring together NGL’s Sawtooth natural gas liquids storage asset with the refined products storage rights and commercial expertise of the Magnum team,” stated Mike Krimbill, NGL’s CEO. “This new joint venture will allow Sawtooth to utilize existing capacity to store refined products with very minimal capital requirements. It will also accelerate the earnings potential and broaden the scope of services offered at the facility. The proceeds received by NGL will be utilized to further reduce indebtedness and improve our leverage profile.”
“We are very excited to enter into this joint venture with NGL by combining Magnum’s refined products project, which is in late stage development, with Sawtooth,” stated James Lam, Managing Director at Haddington. “The earmarking of an existing cavern for gasoline or diesel storage expedites our ability to provide the service to our customers and accelerates further development of our unique site.”
UBS Investment Bank served as the financial advisor to NGL and McGrath North Mullin & Kratz, PC LLO served as NGL’s legal counsel in connection with this transaction.
Magnum Development LLC uses the only known gulf style salt dome in the West and is located in Millard County, north of Delta, Utah. It is a 10,000-acre site located at the crossroads of existing and developing renewable electric, natural gas and petroleum liquids infrastructure.
Magnum is considered a portfolio company of Haddington Ventures LLC, a Delaware limited liability company headquartered in Houston, Texas. Haddington specializes in control-oriented investments in the midstream energy and infrastructure space. It was founded in 1998.