HOUSTON, April 16, 2012 /PRNewswire/ -- Oiltanking Partners, L.P. (NYSE: OILT), today announced a $104 million expansion project to construct approximately 3.2 million barrels of new crude oil storage capacity at its Houston terminaling facility. The project scope includes the purchase of 95 acres of nearby land for approximately $12 million, on which the new capacity will be located. The incremental land purchase can also accommodate the construction of an additional 3 million barrels of storage capacity to meet future needs.
Carlin G. Conner, President, CEO and Chairman of the Board, stated, "As expected, the dramatic increase in domestic crude oil production has created a growing need for storage capacity by oil producers and marketers attracted to premium Gulf Coast crude oil pricing and our local refinery customers. This new project is the second phase of our infrastructure and storage expansion to address the robust demand from both existing and new customers and is supported by new long-term storage contracts."
"With this project, we have now announced nearly $200 million of capital investments to expand our connectivity and storage capacity since our initial public offering in July of 2011. We believe Oiltanking Partners is well positioned for continued growth," concluded Conner.
All environmental and internal approvals required to commence construction are in place, and the additional storage capacity is expected to be placed into service in the fourth quarter of 2013. Once complete, the new storage capacity will bring total active storage capacity at the Partnership to approximately 22 million barrels.
The expansion project is expected to be accretive to distributable cash flow once the additional storage is operational and is expected to generate returns of approximately 6-8 times EBITDA, or earnings before interest, taxes and depreciation, generally targeted for organic expansion projects. The Partnership anticipates funding the project primarily with debt.
Oiltanking Partners is a master limited partnership engaged in independent storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas. We provide our services to a variety of customers, including major integrated oil companies, distributors, marketers and chemical and petrochemical companies. Our assets are located along the Gulf Coast of the United States. For more information, visit www.oiltankingpartners.com.
This press release contains forward-looking statements, including statements as to the Partnership's expectations for the expansion of its Houston terminal. These forward-looking statements reflect Oiltanking Partners' current views with respect to future events, based on what it believes are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties as described in Oiltanking Partners' filings with the Securities and Exchange Commission, available at the SEC's website at www.sec.gov. By issuing forward looking statements based on current expectations, opinions, views or beliefs, Oiltanking Partners has no obligation and, except as required by law, is not undertaking any obligation, to update or revise these statements or provide any other information relating to such statements.
Ken Owen, Chief Financial Officer
SOURCE Oiltanking Partners, L.P.