Shell Midstream Partners LP filed its initial S-1 registration form on June 18, setting the stage for the first MLP to be created by one of the major, integrated oil companies.
The prospective publicly traded partnership’s sponsor, Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS A, RDS B), has embarked on an effort to monetize non-strategic assets and expects to complete US$14 billion to US$15 billion worth of divestments by the end of 2015.
New CEO Ben van Beurden initiated this restructuring after the international oil company announced fourth-quarter 2013 earnings that fell about US$2 billion short of analysts’ consensus estimate.
Management attributed this shortfall to soaring capital expenditures for finding and developing new oil and gas resources; the company’s exploration and production bill hit US$42.6 billion this year–a huge jump from US$26.3 billion in 2011.
Royal Dutch Shell has already written down the value of its shale gas properties in the US because of the depressed price of this commodity. And the firm shelved plans to build a US$20 billion plant on the Louisiana’s Gulf Coast that would covert natural gas into liquid fuels.
Creating a vehicle to monetize its US midstream infrastructure will enable the energy behemoth to achieve a higher valuation for these assets, which previously had been lumped into its Americas Upstream and Americas Downstream operating segments.
Shell Midstream Partners’ initial asset base will comprise interests in four crude-oil and refined-product systems: