BP Files Papers for IPO of Gulf Coast and Midwest Pipeline

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BP the British energy company announced on Monday that it had filed an initial public offering for its United States Gulf Coast and Midwest pipeline assets.

The master limited partnership BP Midstream Partners formed by the U.S. pipeline unit of BP, is planning to list on the NYSE using the BPMP symbol, it announced in in one of its filings with the United States Securities and Exchange Commission.

This offering arrives close to two months after plans were outlined by BP to spin off pipeline asses it has in the U.S. through an IPO to help raise cash.

The new IPO revives plans that were first mentioned internally in 2013 prior to the drop of prices of crude oil that caused the company to put its idea on hold, said a source.

Royal Dutch Shell is a company that spun off its pipeline assets in 2014 and raised close to $1 billion in the largest to date MLP listing. Refiners such as Tesoro Corp, Marathon Petroleum and Valero Energy Corp have done the same as well.

The MLP represents a tax advantage structure used often by pipelines and other companies that are capital intensive to distribute their excess cash to their investors through dividends that are tax-deferred. The majority of MLPs use external debt as a way of funding their new projects.

Increased interest rates made it more costly to borrow for the MLPs which weighed on performance recently despite the stabilizing of oil prices.

The Alerian MLP ETF has dropped by almost 12% in 2017.

BP’s pipeline business in the U.S. includes a massive network of more than 3,500 miles of pipelines as well as terminal facilities that transport and store over 1.3 million barrels daily of oil, natural gas and refined products.

In addition to Midwest and Gulf Coast assets, the British oil giant has pipeline operations in the U.S. Pacific Northwest.

Goldman Sachs, Citigroup, Barclays, Morgan Stanley, JPMorgan and Credit Suisse are amongst the BP Midstream underwriters for the IPO.

BP Midstream announced that it is looking to raise as much as $100 million through this IPO.

The money that a company announces that it is planning to raise for its first filing of an IPO is used in order to calculate the registration fees. The IPO’s final size could be and often is different.

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