MLP IPO Filing: PES Logistics Partners

PES is a fee-based, growth-oriented, traditional master limited partnership (MLP) recently formed by its parent, Philadelphia Energy Solutions, to own, operate, develop and acquire crude oil, refined product and other logistics assets. It will own the general partner interest and a 45% limited partner interest in the operating partnership. The company plans to generate revenue by charging fees for receiving, handling and transferring crude oil.

All of the revenue and cash flow will be initially derived from equity ownership in the operating partnership and its 10-year, fee-based commercial agreement with refining.

PES runs a rail unloading terminal that has the capacity to unload two crude oil unit trains, or 140,000 barrels per day (bpd), based on the industry-standard 104-car unit train configuration.

PES stated in its filing:

Refining has commenced an expansion project, expected to be completed in mid-October 2014, to increase the unloading capacity of our terminal to three unit trains, or 210,000 bpd. Our rail unloading terminal was designed to unload 120-car unit trains and, if the rail industry moves to these more efficient trains, then the expanded capacity of our rail unloading terminal will improve to 240,000 bpd.

Overall, PES looks to use its proceeds to first reimburse its parent company and then for general operating purposes. Like most MLPs, this was looks to maximize distributions and taxes in the infrastructure side of the oil and gas sector.

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