On April 11th the firm met with the head of the charter member of a unique class – publicly-traded MLPs with a major oil company sponsor. SHLX CEO John Hollowell, a 36-year Royal Dutch veteran, described the special challenges and opportunities presented by this pioneering structure, both of which are magnified in the current difficult oil and gas capital markets environment. Mr. Hollowell, who has served across all facets of Shell’s business – upstream, midstream and downstream – spoke of SHLX’s current mission which, expressed in a tongue-in-cheek manner, is to be “extraordinarily boring”. In the context of SHLX specifically and the MLP market generally, the “extraordinarily boring” mantra is intended to convey the significant advantages of an asset portfolio that is virtually 100% supported by fee-based, long-term contracts with very little exposure to commodity price volatility. The decision to move forward with the MLP IPO in late 2014 was not simple and straightforward, either. Shell’s corporate profile is as about as diverse as it gets among the super majors from a global reach and management culture standpoint. Selling the idea of a tax-advantaged partnership structure to non-U.S Shell constituents was no small task. Among the near-term advantages John sees is the obvious role SHLX can play in helping its corporate sponsor achieve its $30 billion monetization target on the heels of the merger with BG. Longer-term, he believes the scale and variety of the drop-down opportunity set paves a value creation path that should be compelling to investors in terms of transparency, predictability and duration.
Bobby Tudor, John Hollowell
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