Valero Energy Partners LP Announces Acquisitions of the Port Arthur Terminal Assets and Parkway Pipeline LLC for $508 Million

SAN ANTONIO, Oct. 26, 2017 -- Valero Energy Partners LP (NYSE:VLP) (the “Partnership”) today announced that the board of directors of its general partner has approved the Partnership’s acquisitions of the Port Arthur terminal assets and Parkway Pipeline LLC (“Parkway Pipeline”) from Valero Energy Corporation (NYSE:VLO) (“Valero”) for total consideration of $508 million.  In the first twelve months of operation, the acquired operations are expected to contribute a total of approximately $24 million and $60 million of net income and EBITDA, respectively.  The transaction is expected to close effective November 1, 2017.

The Port Arthur terminal assets consist of 47 tanks with 8.5 million barrels of storage capacity for crude oil, intermediates, and refined petroleum products, which support Valero’s Port Arthur refinery.  Parkway Pipeline is a 141-mile, 16-inch refined petroleum products pipeline linking Valero’s St. Charles refinery with the Plantation and Colonial pipeline systems in Collins, Mississippi.  Parkway Pipeline currently has 110,000 barrels per day of capacity, with the ability to expand to more than 200,000 barrels per day.

The Partnership expects to finance the acquisitions primarily with borrowings under its revolving credit facility, cash on hand, and the issuance of additional common units and general partner units to Valero subsidiaries.  The newly issued units will be allocated in a proportion allowing the general partner to maintain its 2 percent general partner interest.

“We are pleased to continue growing VLP’s footprint in the Gulf Coast region,” said Joe Gorder, Chief Executive Officer of VLP’s general partner.  “This transaction, combined with our organic growth projects, and strong distribution coverage, positions the Partnership well to deliver its targeted distribution growth without the need for additional acquisitions.”

The Partnership continues to target annual distribution growth of 25 percent for 2017 and at least 20 percent for 2018.

Upon closing, the Partnership plans to enter into separate 10-year terminaling and transportation agreements with Valero.  The agreements are each expected to include minimum volume commitments covering approximately 85 percent of expected throughput.

The terms of the transaction were approved, subject to the execution of definitive documentation, by the board of directors of VLP’s general partner, following the approval and recommendation of the board’s conflicts committee.  The conflicts committee is composed of independent directors and was advised by Evercore Group L.L.C., its financial advisor, and Akin Gump Straus Hauer & Feld LLP, its legal counsel.
           
About Valero Energy Partners LP
Valero Energy Partners LP is a fee-based master limited partnership formed by Valero Energy Corporation to own, operate, develop and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. With headquarters in San Antonio, the Partnership’s assets include crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States that are integral to the operations of 10 of Valero’s refineries. Please visit www.valeroenergypartners.com for more information.

Contacts

Investors:

John Locke, Vice President – Investor Relations, 210-345-3077

Karen Ngo, Senior Manager – Investor Relations, 210-345-4574

Tom Mahrer, Manager – Investor Relations, 210-345-1953

Media:

Lillian Riojas, Director – Media and Communications, 210-345-5002

Safe-Harbor Statement
This release contains forward-looking statements within the meaning of federal securities laws. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other forward-looking information. You can identify forward-looking statements by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “project,” “could,” “may,” “should,” “would,” “will” or other similar expressions that convey the uncertainty of future events or outcomes. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Partnership’s control and are difficult to predict. These statements are often based upon various assumptions, many of which are based, in turn, upon further assumptions, including examination of historical operating trends made by the management of the Partnership. Although the Partnership believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies, which are difficult or impossible to predict and are beyond its control, the Partnership cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in the Partnership’s filings with the SEC, including the Partnership’s annual reports on Form 10-K, quarterly reports on Form 10-Q and other reports filed with the SEC and on the Partnership’s website at www.valeroenergypartners.com. These risks could cause the Partnership’s actual results to differ materially from those contained in any forward-looking statement.

Use of Non-GAAP Financial Information
This release includes the term “EBITDA.”  We define EBITDA as net income before income tax expense, interest expense, and depreciation expense.  EBITDA is a supplemental financial measure that is not defined under United States generally accepted accounting principles (GAAP).  We believe that the presentation of EBITDA provides useful information to investors in assessing our financial condition and results of operations.  The GAAP measure most directly comparable to EBITDA is net income.  EBITDA should not be considered as an alternative to net income in accordance with GAAP.  EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income.  EBITDA should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.  Additionally, because EBITDA may be defined differently by other companies in our industry, our definition of EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.