OREANDA-NEWS. November 18, 2014. Plains All American Pipeline, L.P. (NYSE: PAA) announced that it has entered into a definitive purchase and sale agreement with Occidental Petroleum Corporation for the purchase by PAA of Occidental's 50% interest in BridgeTex Pipeline Company LLC ("BridgeTex") for USD1.075 billion.

BridgeTex owns the BridgeTex pipeline, which is a new 300,000 barrel-per-day crude oil pipeline system that extends from Colorado City in West Texas to Texas City and is complementary to PAA's existing West Texas assets. At Colorado City, the BridgeTex pipeline is connected to PAA's Basin Pipeline System as well as PAA's Sunrise Pipeline. The Sunrise Pipeline originates in Midland and is currently under construction with an initial capacity of 250,000 barrels per day and is expected to be placed into service in December 2014.

An affiliate of Occidental is the anchor shipper on the BridgeTex pipeline. Approximately 80% of the pipeline's capacity is committed to long term contracts with a volume weighted average tenor of 9.5 years (13.5 years taking into account shipper extension options). The remaining 50% interest in BridgeTex is owned by Magellan Midstream Partners, L.P. ("MMP"); MMP is also the operator of the BridgeTex pipeline.

Contemporaneous with the purchase by PAA, BridgeTex has agreed to sell the southern leg of the pipeline system which runs from Houston to Texas City (the "Texas City Leg") to MMP, and MMP has agreed to enter into a long term capacity lease with BridgeTex pursuant to which BridgeTex shippers will have access to capacity on the Texas City Leg.

In addition to customary closing conditions and the contemporaneous consummation of the sale of the Texas City Leg by BridgeTex to MMP and execution of the capacity lease, PAA's acquisition of Occidental's interest in BridgeTex is subject to completion by Plains GP Holdings, L.P. (NYSE: PAGP) of an underwritten secondary offering pursuant to which Occidental would sell a portion of its equity interest in PAGP.

In order to facilitate such offering and the overall transaction, (i) the board of directors of PAGP's general partner has agreed to an early release of the 15-month lock-up arrangement that was originally imposed on certain PAGP equity owners, including Occidental, in connection with PAGP's initial public offering in October 2013, and (ii) certain affiliates of Kayne Anderson Investment Management, Inc., The Energy & Minerals Group and PAA Management, L.P. have agreed to waive their participation rights in such offering, and (iii) Occidental, certain affiliates of Kayne Anderson Investment Management, Inc., The Energy & Minerals Group and PAA Management, L.P. have agreed to refrain from selling any of their respective interests in PAGP for a period of up to 90 days following such offering. If an offering is not completed prior to December 31, 2014, both PAA and Occidental have the right to terminate the overall transaction.
"BridgeTex represents a very attractive and strategic addition to our existing West Texas pipelines," said Greg Armstrong, Chairman and CEO of Plains All American. "Given recent and projected increases in Permian Basin production, we believe that BridgeTex will play an important role in providing needed takeaway capacity out of the Permian Basin, will provide additional flexibility for our customers and will expand PAA's market access to the Gulf Coast."
"Upon achieving full operating capability, we anticipate PAA's share of annualized EBITDA from BridgeTex LLC will range between USD 100 and USD 105 million. At that level, we expect the transaction to be approximately 1.5% accretive to PAA's targeted 2015 distribution per unit and 5% accretive to PAGP's corresponding distribution per share for 2015."

This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Plains All American Pipeline, L.P. is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL"), natural gas and refined products. PAA owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles over 3.9 million barrels per day of crude oil and NGL on its pipelines. PAA is headquartered in Houston, Texas.

Plains GP Holdings is a publicly traded entity that owns an interest in the general partner and incentive distribution rights of Plains All American Pipeline, L.P., one of the largest energy infrastructure and logistics companies in North America. PAGP is headquartered in Houston, Texas.