Tesoro Logistics LP (TLLP) is to acquire a natural gas gathering and processing business owned by QEP Resources, Inc., Tesoro Corporation revealed late Sunday.
The addition of QEP Field Services LLC creates a full-service logistics company, expanding the operations of Tesoro Logistics to include natural gas in addition to oil. It also increases the amount of revenue coming from third-party companies; after the acquisition, approximately half of Tesoro Logistics' revenue will come from companies other than Tesoro.
QEP Field Services has natural gas gathering and processing assets in the Rocky Mountains, Uinta Mountains and North Dakota.
Tesoro Logistics will pay approximately $2.5 billion in the transaction, which also includes a 58 percent stake in QEP Midstream Partners LP, a pipeline and processing partnership. The company will acquire the rest of the business at a later date, according to Bloomberg.
Greg Goff, president and CEO of Tesoro, welcomed the acquisition. "This is another transformational acquisition for Tesoro and TLLP, which enables our logistics company to offer a full suite of services to third-party customers and enhances the growth of our midstream operations," he said.
Goff added that the transaction is in line with the company's strategy to build a customer-focused logistics business, broadening its capabilities across the value chain.
The deal is expected to be completed in the fourth quarter of 2014, subject to regulatory clearance.