Oil by rail: USD Partners LP sets terms for $177 million IPO

USD Partners LP, an MLP spun out of US Development Group to own oil and gas rail terminals, announced terms for its IPO on Tuesday. The Houston, TX-based company plans to raise $177 million by offering 8.9 million shares at a price range of $19 to $21. At the midpoint of the proposed range, it would command a fully diluted market value of $427 million.

The company is owned by United States Development Group, which counts Goldman Sachs and, as of September, Energy Capital Partners, as primary shareholders.    

USD Partners LP is a fee-based growth-oriented MLP with an origination crude-by-rail terminal in Hardisty, Canada (170,000 barrels per day) and two destination ethanol rail terminals in San Antonio, Texas (20,000 bpd) and West Colton, California (13,000 bpd).

For the six months ended June 30, 2014, total revenue fell 18% to $11 million due to a decrease in railcar leases. Adjusted EBITDA swung negative to -$1.5 million from $1.1 in the prior six months. Pro forma for the offering, USD Partners LP had $100 million of debt at quarter-end.

USD Partners LP, which was founded in 2014 and booked $24 million in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol USDP. Citi, Barclays, Credit Suisse and BofA Merrill Lynch are the joint bookrunners on the deal. It is expected to price during the week of October 6, 2014.