BP Midstream Partners LP, which will trade on the New York Stock Exchange under the ticker "BPMP," is set to use a master limited partnership structure. The MLP setup provides a tax advantage that keeps the company from paying corporate income tax on distributions or earnings to partners. It's been frequently used by other pipeline or capital-intensive companies in IPOs.
The idea to list U.S. pipelines assets separately first came up at BP about five years ago, but declining crude prices forced the company to put the idea on the back burner, Reuters reported. BP announced plans about two months ago to spin off U.S. Midwest and Gulf Coast pipeline assets in an IPO.
BP joins the growing group of energy companies raising cash by spinning off pipeline assets, which includes Royal Dutch Shell (RDS.A - Get Report) , Valero Energy Corp. (VLO - Get Report) , Tesoro Corp (TSO) and Marathon Petroleum Corp. (MPC - Get Report) .
BP stock traded up 0.75% to $35.59 midday Monday.
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