Our Master Limited Partnership (MLP) team, based in our Houston, Texas office, offers knowledge, experience and insight to help our clients navigate the complexities of the MLP industry. We combine skill and ingenuity with understanding and insights that come from deep knowledge of the industry.

MLPs, also known as publicly traded partnerships, are commonly used by energy companies and investment funds for the tax efficiencies, access to capital markets and strong yield-based returns they offer. They require a certain percentage of gross income to come from qualifying sources, including income derived from the exploration, production, development or transportation of any mineral or natural resource. While MLPs have seen sizable growth in recent years, their formation and management structure poses several organizational tax issues and complex governance, accounting and regulatory concerns. These challenges require a comprehensive grasp of relevant legal considerations from a corporate, energy and tax perspective. Our team has been heavily involved in this area since the late 1990s.

Our lawyers have experience with all of the key industries in which MLPs operate, especially the midstream space as well as propane, fertilizer and coal. We regularly address the complex tax, business, securities and debt structuring issues that arise in MLP development and operations, working closely with the corporate sponsors, underwriters, investment banks and various institutional investors, in addition to MLPs and their general partners. We also regularly represent a number of Special or Conflicts Committees of the Boards of MLPs in asset drop‑downs and other related party transactions.

Our corporate, tax and finance practices support the planning, formation and subsequent activities of MLPs. We provide an integrated approach that combines expertise in the areas of:

  • Mergers, acquisitions and joint ventures
  • Restructurings and recapitalizations
  • Capital markets, IPOs and finance
  • Tax structuring
  • Qualifying income determinations
  • Private letter rulings from the IRS

Through our working relationships with the government agencies that regulate the industry, including the IRS and SEC, we collaborate with key industry players to be at the forefront of regulatory developments affecting MLPs. We are also a member of, and an active participant in, the Master Limited Partnership Association (MLPA). One of our partners served as the primary drafter of comments submitted by the ABA Section of Taxation on proposed IRS regulations regarding qualifying income under section 7704 for MLPs, submitted January 4, 2016.

We work closely with members of our 145-lawyer global Energy & Infrastructure practice to provide our clients with a nuanced understanding of the energy industry in establishing and structuring MLPs. Our energy practice was recognized as a Law360 Project Finance Group of the Year in 2016—for the fourth time—and is Chambers-rated in 24 different Energy & Infrastructure categories globally, with completed projects in 95 countries and all 50 U.S. states.

Orrick’s global, cross-practice capabilities are essential elements of an integrated MLP service platform that assists clients in all stages of MLP business.

  • Archrock, L.P. (formerly Exterran Partners, L.P.) │ Acquisition of a natural gas compression services provider with operations in Mexico and Argentina.

    Buckeye Partners, L.P.

    • Sale of its interest in a gas storage facility.
    • Sale of intrastate pipelines.

    Conflicts Committee, Spectra Energy Partners, LP │ The US$1.5 billion sale (reverse drop down) of two natural gas liquids pipelines to Spectra Energy.

    ConocoPhillips

    • Structuring and separation of midstream and downstream assets leading to the formation of Phillips 66 Partners.
    • US$1.15 billion sale of interest in crude oil pipeline to Enbridge Energy Partners, L.P.

    Delek Logistics Partners │ Investment into two newly formed LLCs, including related pipeline construction and operation agreements.

    Delek Logistics Partners’ Conflicts Committee

    • Multiple acquisitions from affiliates (drop-down) of logistics assets, including rail offloading facilities and crude oil storage tanks, that required the separation of midstream assets from downstream assets.
    • Acquisition from Enterprise Products Partners of a 13.5 mile pipeline from the Big Sandy Terminal to the Tyler Refinery that included the amendment of certain agreements with its sponsor to effect the acquisition.
    • Acquisition from subsidiaries of its sponsor of a rail offloading facility and a crude oil storage tank.

    Enterprise Products Partners, L.P. │ Multiple acquisitions of gas gathering and processing assets.

    Ferrellgas Partners (NYSE: FGP) | Represented the client, and MLP propane provider, with regard to the following matters:

    • Multiple issuances of publicly and privately issued senior notes, including multiple related exchange offers.
    • Multiple underwritten public issuances of common stock units and multiple direct sales of registered common units.
    • Numerous acquisitions and dispositions of propane businesses and related assets, such as storage facilities, including the acquisition of Blue Rhino (US$340 million) and Thermogas (US$500 million) and the disposition of storage assets to Enterprise Products Operating (US$350 million).
    • Acquisition from its sponsor of storage tanks and a product terminal at a refinery in Tyler, Texas, for US$94.8 million.

    Hoover Energy Partners

    • US$300 million contribution of all of its assets to Regency Energy Partners LP in consideration of the issuance of common units.
    • Multiple midstream asset acquisitions in the Permian Basin.

    Kinder Morgan Energy Partners (NYSE: KMP)

    • Multiple public offerings and private placements of equity and debt securities, including shelf registrations, 144A offerings and exchange offerings.
    • Various acquisitions and dispositions of pipelines and terminals (including sale of assets to ONEOK (US$400 million) and the reverse merger of Kinder Morgan, Inc. into KN Energy, Inc. (US$750 million).
    • Contribution of certain terminal assets to Kinder Morgan Energy Partners for US$700 million.
    • US$1.5 billion acquisition of Santa Fe Pacific Pipeline Partners.

    Seadrill Partners LLC │ Represented Conflicts Committee of Seadrill Partners LLC in connection with amendments to three secured credit facilities that relate to rigs purchased by Seadrill Partners from Seadrill Limited to insulate Seadrill Partners from events of default related to Seadrill Limited’s likely use of chapter 11 proceedings to implement its restructuring plan and continued representation of the Conflicts Committee in Seadrill Limited’s bankruptcy proceedings.

    Special Committees of the Board of Directors of general partners of master limited partnerships │ Special Counsel in such partnerships' acquisition of midstream oil and gas assets from affiliates of the applicable general partner and such partnerships' mergers, such as Heritage Propane Partners, LP.

    Potential exposure to derivative suit liability in light of recent ruling in El Paso Pipeline Partners, L.P., which awarded US$171 million in damages to an El Paso MLP common unitholder for breach of fiduciary duty.

    TC Pipelines | Numerous offerings and acquisitions, including:

    • US$200 million equity offering, in which Wells Fargo, Merrill Lynch, J.P. Morgan, SunTrust and UBS each act as sales agent with respect to the sale of shares of TC Pipelines common stock. 
    • US$388 million equity offering to fund the drop-down of Gas Transmission Northwest (GTM) and Bison Pipeline.
    • US$605 million acquisition of an interest and US$1.05 billion acquisition of an interest in both GTM and Bison.

    Tesoro Logistics (NYSE: TLLP)

    • Formation of Tesoro Logistics and the acquisition of petroleum and refined products storage tanks, terminal assets, real estate and logistics assets in Martinez, Calif., from Tesoro Corporation, including a US$150 million working capital credit facility. 
    • Three contributions of logistics assets from Tesoro Corporation during 2012.
    • US$2.5 billion acquisition by Tesoro Corporation and subsequent drop down of a portion of the logistics and pipeline assets related to BP’s Carson refinery in Southern California.
    • US$650 million acquisition of the remaining Carson refinery logistics assets from Tesoro Corporation, which included a 100-mile-long crude oil pipeline system.

    Valero Energy │The formation of Valero L.P., now NuStar, and design and implementation of an innovative structure to reduce taxable gain on sale of assets to Valero.

    Western Gas Resources (Anadarko) │ US$130 million tax consequences of its acquisitions of Marcellus Midstream assets from Chesapeake as well as a number of additional Marcellus gathering assets worth US$300 from joint ventures in which Anadarko had an interest.

    Energy-focused private equity firm │The formation of a master limited partnership with two major natural gas utilities, which resulted in a combined company with assets of nearly US$11 billion.

    Group of entities │ Equity investment for first round of funding with respect to general partner of Energy Transfer Partners.

    National banking corporation │Proposed emergence from bankruptcy as an MLP owning interests in real estate.  

    National investment bank │Formation and funding of a private master limited partnership in the coal industry.

    PE portfolio companies │Tax advice on MLP structures.

    Publicly traded MLP │US$400 million bridge loan facility for the acquisition of natural gas pipeline assets.

    Various MLPs and sponsors │Reporting obligations under the Securities and Exchange Act of 1934, including drafting Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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