DBRS Confirms Express Pipeline Limited Partnership & Express Pipeline LLC at A (low), Stable

DBRS Limited (DBRS) confirmed the Issuer Rating and the rating on the Senior Secured Notes due 2020 (the Senior Secured Notes) issued by Express Pipeline Limited Partnership & Express Pipeline LLC (collectively, Express) and guaranteed by Platte Pipe Line Company, LLC (Platte) at A (low) with Stable trends. The ratings are supported by the combined strength of Express and Platte (collectively, the Express-Platte System) and reflect Express’s strong business risk profile supported by firm long-term shipping contracts that cover a majority of the pipeline’s capacity and provide predictable cash flows with no direct exposure to commodity risk.

The Express-Platte System is a crude oil pipeline system that offers competitive tolling options for the Western Canadian Sedimentary Basin (WCSB), the Bakken and Rockies crude oil producers shipping to refineries in the U.S. Rockies (Petroleum Administration for Defense District (PADD) IV) and Midwest (PADD II) regions. Express’s committed long-term take-or-pay contracts and fee-for-service tolling structure with annual toll escalators provide for revenue and cash flow growth. However, the Express-Platte System faces volume risk on the Platte section of the pipeline from Wyoming to Illinois as the segment is fully uncommitted. However, the Platte pipeline section is the only crude oil pipeline connecting PADD IV to PADD II, which is the destination for much of the WCSB’s heavy oil shipments, with volumes supported by refinery demand in Illinois. DBRS expects Express’s business risk profile to remain stable over the medium term.

Express’s only remaining outstanding debt is the $110 million Senior Secured Notes that mature on January 15, 2020, which DBRS expects to be fully repaid at maturity. Credit metrics remain strong as Express benefits from high capacity utilization and a stream of contracted cash flows. The strong financial metrics have also improved over time from the significant repayment of outstanding debt from the inception of the rating. Capex in 2019 are expected to remain within historical levels and to be well supported by internally generated cash flow. In DBRS’s view, the strong competitive positions of the Express-Platte System, as well as the long-term refinery demand for crude oil in their service regions, will continue to support strong shipper interest in the Express-Platte System. DBRS rates Express on a stand-alone basis and does not assume any credit support from its ultimate parent, Enbridge Inc. (rated BBB (high) with a Stable trend by DBRS).

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodologies are Rating Companies in the Pipeline and Diversified Energy Industry and DBRS Criteria: Guarantees and Other Forms of Support, which can be found on dbrs.com under Methodologies & Criteria.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

DBRS will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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