A Brief Overview of Shell Midstream Partners

Shell Midstream Partners (SHLX) is a MLP (master limited partnership) formed by Shell Pipeline Company, or SPLC, an affiliate of the international integrated energy giant, Royal Dutch Shell (RDS.A), also referred to as Shell.

Shell Midstream Partners completed an IPO (initial public offering) on November 3, 2014. The company’s initial assets include ownership interests in onshore and offshore pipelines primarily located in Texas and Louisiana.

While domestic integrated energy companies such as ExxonMobil (XOM) and Chevron (CVX) haven’t used this strategy yet, refiners such as Marathon Petroleum (MPC) and Phillips 66 (PSX) have spun off their midstream assets to form MPLX LP (MPLX) and Phillips 66 Partners (PSXP), respectively. For more on these companies, read MPLX LP: Key Insights for Investors and Should you buy pipeline player Phillips 66 Partners?

RDS.A, XOM, CVX, MPC, and PSX are all components of the iShares Global Energy ETF (IXC), combining to make up ~30% of the ETF.

Shell, through its affiliate Shell Pipeline Company, or SPLC, owns Shell Midstream Partners GP LLC, which holds a 2% general partner interest in Shell Midstream Partners (SHLX), as well as the incentive distribution rights. SPLC also owns Shell Midstream LP Holdings LLC, which holds a 64.6% limited partner interest in SHLX. The remaining 33.4% limited partner interest is held by the public.

SHLX holds a 100% ownership interest in Shell Midstream Operating LLC, which in turn has ownership interests in four pipelines:

• Zydeco
• Mars
• Bengal
• Colonial

We’ll discuss these four midstream assets in detail in the following parts of this series.