BP says it is considering IPO of U.S. pipeline assets

By Jessica Resnick-Ault

(Reuters) - BP Plc is considering spinning off certain U.S. pipeline assets in the U.S. Gulf and Midwest in an initial public offering, the company said in a statement on Tuesday.

The potential IPO would structure the assets as a master-limited partnership (MLP), a frequently used corporate structure for pipeline companies.

The plan, first considered about five years ago, was shelved when oil prices declined sharply in 2014, according to one person familiar with the earlier talks. Both BP and its underwriters have retained advisors to explore the sale, the person said.

Media reports in 2015 said BP America was trying to sell North American pipelines and gas storage assets. A deal did not materialize. Last year, BP approached Enbridge Inc in an effort to sell some of BP's offshore Gulf of Mexico pipeline network, known as the Mardi Gras Transportation System, without success, according to a person familiar with the matter.

 

Rival Royal Dutch Shell Plc held a public offering of its midstream assets in June, 2014, raising nearly $1 billion to pay down debt, just before oil prices collapsed. Shell was the first oil major to use this structure to generate cash from its assets.

Independent refiners like Valero Energy Corp , Tesoro Corp , and Marathon Petroleum Corp have previously formed master-limited partnerships for their pipeline assets and independent pipeline companies often use this corporate structure.

If successful, the deal would be one of the largest initial public offerings of the year, the person said, speaking on the condition of anonymity as the talks were private.

BP did not comment on the details or valuation of the potential transaction beyond the press release.

(Reporting By Jessica Resnick Ault; Editing by Cynthia Osterman and David Gregorio)