Buckeye Partners will sell some US pipelines and terminals and its interest in the Vitol-backed marine terminal businesses VTTI as its Caribbean segregated storage operations struggled.
The company will sell its 50pc interest in VTTI to Vitol and global funds manager IFM Investors for $975mn, roughly two years after it acquired its share of the global storage operation. Buckeye will separately sell for $450mn jet fuel pipelines supplying Florida, Nevada, California and Tennessee airports and refined product terminals in northern California.
Deep losses in Buckeye's global marine terminals businesses overwhelmed stable results in the company's domestic pipelines and terminals operations during the third quarter. Segregated storage, particularly in the Caribbean, continued to struggle in the quarter, chief executive Clark Smith said. Buckeye had disclosed a review of its assets and operations in an August quarterly earnings call.
But the company saw its tank business turning around as more capacity shifted from crude to refined products and feedstocks. Its Caribbean assets participated in Mexican gasoline demand and saw nascent interest in residual oil and distillate storage ahead of marine fuel specifications in 2020, Buckeye president of global marine terminals Khalid Muslih said.
"I think as we look at the portfolio we do see growing demand for services, but again, where I think we see some weakness continues to be around crude oil," Muslih said.
Buckeye will sell its Florida jet fuel pipeline connecting Port Everglades to the Fort Lauderdale and Miami airports. The company will also sell pipelines and terminals supplying the Reno, Nevada; San Diego, California and Memphis, Tennessee airports, and refined products terminals in Sacramento and Stockton, California.
The company will continue to operate the facilities under a management contract with the new owner.
Buckeye disclosed its planned $1.15bn purchase of 50pc of VTTI in October 2016 and closed on the deal the following January. VTTI at the time operated 54mn bl of storage in Europe, the UAE, Singapore and the US.
Buckeye reported a $745.8mn loss for the quarter, including a $537mn impairment on its Caribbean assets and a $300mn non-cash loss on the sale to VTTI.