Houston-based Plains All American has reached a deal to sell its Pine Prairie and Southern Pines natural gas storage facilities to an affiliate of energy and commodities firm Hartree Partners for $850 million.
The storage facilities include nine storage caverns with about 70 billion cubic feet of natural gas capacity, according to the company's announcement.
The deal, expected to close in the third quarter, lets Plains generate more free cashflow, which will build momentum for debt reduction and shareholder returns, said CEO Willie Chiang.
"This is a win-win transaction for both parties. Plains is exiting at an attractive valuation within a timeframe consistent with our expectations, while Hartree is receiving high-quality critical infrastructure in a strategic market. We thank our PAA Natural Gas team members for their dedication to excellence over the past decade plus, and we know they will contribute as part of Hartree to continue to unlock further value."
Hartree Partners Co-founder Steve Semlitz said the natural gas storage facilities are two of the highest performing in the United States, with strategic locations in the Gulf Coast, as well as a diverse mix of pipeline, utility and liquefied natural gas customers. "I look forward to working with the existing management and operating teams to build upon their outstanding customer relationships and operating track record," he said.
Wells Fargo Securities LLC served as Plains’ exclusive financial adviser, and Vinson & Elkins LLP acted as legal counsel to Plains. Milbank LLP acted as legal counsel to Hartree.