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Shell Said to Seek Buyers for $1 Billion Stake in Ho-Ho Pipeline

Screen Shot 2013-11-13 at 07.38.22Royal Dutch Shell Plc (RDSA) is seeking to sell a stake in its Houston-to-Houma crude oil pipeline, which Europe’s largest oil company recently reversed and renamed, people familiar with the matter said. Shell is working with Barclays Plc (BARC) to solicit offers for a stake of as much as $1 billion…  Shell on Jan. 17 warned fourth-quarter earnings fell to the lowest level since 2009 due to rising losses in the Americas and deteriorating refining markets.

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By Matthew Monks January 27, 2014

Royal Dutch Shell Plc (RDSA) is seeking to sell a stake in its Houston-to-Houma crude oil pipeline, which Europe’s largest oil company recently reversed and renamed, people familiar with the matter said.

Shell is working with Barclays Plc (BARC) to solicit offers for a stake of as much as $1 billion in the conduit, which is known as the Ho-Ho system and valued at about $3 billion in its entirety, said one of the people, asking not to identified because the matter is not public.

The Anglo-Dutch company wants to raise money to cover the cost of reversing the flow direction of the 350-mile (563-kilometer) pipeline, the people said. It also wants to monetize part of the pipeline so that it can use the proceeds to invest in drilling projects that generate higher returns, they said.

The pipeline now carries crude from Houston to Houma, Louisiana, to give refineries on the Gulf Coast better to access to crude oil produced in the oil-rich Eagle Ford and Bakken basins. Previously called the Houma-to-Houston pipeline, it was renamed last year once the reversal was completed, Shell said in December. The company plans to add pump stations to increase its capacity.

Spokesmen for Barclays and Shell declined to comment on the Ho-Ho stake sale.

Shell on Jan. 17 warned fourth-quarter earnings fell to the lowest level since 2009 due to rising losses in the Americas and deteriorating refining markets.

To contact the reporter on this story: Matthew Monks in New York at [email protected]

To contact the editors responsible for this story: Stephen Cunningham at [email protected]; Mohammed Hadi at [email protected]

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COMMENT RECEIVED FROM A REGULAR CONTRIBUTOR: “OUTSIDER”

John
 
The Bloomberg article you published this morning mentions, “Shell on Jan. 17 warned fourth-quarter earnings fell to the lowest level since 2009 due to rising losses in the Americas…”
 
“Rising losses” implies that the $2 billion impairment in the second quarter and anticipated $700 million impairment for the fourth quarter may be little more than a foretaste of additional, larger write-offs to come.

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