Valero Energy finishes $950 million merger of hubs and pipeline operations in Oklahoma and other states

In a move that will have direct impact on pipelines and oil terminals in Oklahoma, San Antonio-based Valero Energy Corp. has wrapped up a $950 million merger with a subsidiary.

With the merger, Valero is taking over operations of Valero Energy Partners LP at $42.25 per share.  The master limited partnership has storage terminals as well as pipelines in Oklahoma, Texas, Louisiana and Tennessee.

The closing of the merger comes after a strong third quarter for the parent company and its MLP, which reported $141 million in revenue. That was an increase of $31 million from third quarter 2017, according to a statement to investors.

Valero Energy Partners, whose stock stock was formerly traded under the symbol VLP, attributed the increase to contributions from the terminal in Port Arthur, Texas, and a company pipeline that runs between Louisiana and Mississippi.

Valero made a profit of more than $850 million in the third quarter, which CEO Joe Gorder said was due to discounts on domestic crude oil over foreign crude oil and strategic pipelines.

The company’s decision to buy Valero Energy Partners is in line with an industry trend brought on by changing capital market conditions. Dallas-based Energy Transfer LP (NYSE: ET) and San Antonio-based NuStar Energy LP (NYSE: NS) have made similar moves to merge with their MLPs.

“After considering a range of options, we concluded that a merger would provide the best outcome for VLP unit holders and VLO shareholders,” Gorder told investors in October. “The merger offers a premium to VLP’s average trading prices and immediate conversion of VLP’s equity to cash.”