Valero Files for Midstream MLP

SAN ANTONIO -- Valero Energy Corp. filed a Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) in an effort to spin off its midstream division in an initial public offering.

If approved by the SEC, the new company, Valero Energy Partners LP, will trade under the ticker symbol VLP on the New York Stock Exchange (NYSE).

Valero Energy Corp. has yet to state how many shares of VLP it plans to offer to the public and at what price. However, the parent company did say it expects to reap approximately $300 million -- minus underwriter proceeds -- once the transaction is completed.

VLP will be a master limited partnership (MLP) that will own, operate, develop and acquire crude oil and refined petroleum product pipelines, terminals and other transportation and logistics assets. Like its parent company, VLP will be headquartered in San Antonio, and expects to initially own and operate pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States.

J.P. Morgan and Barclays are acting as joint book-running managers for the proposed offering.

To qualify for MLP status, a partnership must generate at least 90 percent of its income from what the Internal Revenue Service deems “qualifying” sources. Those sources include activities related to the production, processing or transportation of oil, natural gas and coal.

Several convenience and petroleum retailing companies have created MLPs that currently trade on the NYSE, including Speedway LLC parent company Marathon Petroleum Corp.; MAPCO Express parent Delek US Holdings Inc.; Alon USA Energy Inc.; Stripes parent Susser Holdings Corp.; Phillips 66; and Tesoro Corp. Western Refining Inc. also filed a S-1 registration statement with the SEC to spin off its midstream business into an MLP.

Valero Energy Corp. already spun off its retail division as CST Brands Inc. on May 1.

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