South Texas Gateway Terminal : Gibson Energy to expand North American terminal footprint with $1.1bn acquisition

Gibson Energy is set to acquire the South Texas Gateway Terminal (STGT) LLC, in a cash deal valued at $1.1 billion, expanding its North American terminal footprint.

The newly built South Texas Gateway Terminal, a high-quality crude oil export facility, has positioned itself as a globally competitive liquids terminal and export facility with direct pipeline connections to resource-rich areas and large crude carrier capabilities.

Having loaded its first vessel in 2020, South Texas Gateway Terminal operates an open access marine terminal in Ingleside, Texas, near Corpus Christi Bay, and is a joint venture between Buckeye Partners (50%), Phillips 66 Partners (25%), and Marathon Petroleum (25%).

Since finalizing its construction phase in March 2021, South Texas Gateway Terminal has a total terminaling capacity of 8.6 million barrels of crude oil across 20 tanks, and is connected to the Permian and Eagle Ford basins via multiple, newly-built pipelines.

With two deep-water docks, the terminal allows for the simultaneous loading of two very large crude carriers (VLCCs) and boasts a permitted throughput capacity of one million barrels per day, making it the second-largest US crude oil export terminal by capacity. In 2023, the terminal handled around 12% of the total US crude oil exports and achieved record volumes of over 670,000 barrels per day in March 2023.

The purchase sets Gibson Energy up for potential future expansions at the terminal as US crude oil exports continue to grow. The acquisition will establish a third liquid hub for Gibson Energy, backed by over 95% take-or-pay revenue, with the majority of the counterparties being investment-grade existing customers of Gibson Energy’s current North American businesses.

Steve Spaulding — Gibson Energy President and CEO said: “Since establishing Gibson as a leading liquids-focused infrastructure company, we have been looking for an opportunity that is a strategic fit, while enhancing our scale and diversity.

“After much patience and discipline, I am excited to add the world-class South Texas Gateway Terminal to our infrastructure portfolio. This transaction amplifies our high-quality infrastructure revenues and bolsters the continued growth of our distributable cash flow per share.

“To add 1 mmbbl/d of export capacity and nearly 9 million barrels of terminals storage in a highly strategic location furthers our momentum in growing Gibson’s infrastructure footprint and provides a platform for future growth with existing and new customers.”

J.P. Morgan Securities Canada is acting as exclusive financial advisor while Latham and Watkins LLP, and Bennett Jones LLP are providing legal counsel for the transaction.

The deal, expected to close in the third quarter of 2023, is subject to standard closing conditions, including the expiration or termination of the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act.