PROSPECTUS SUMMARY

This summary provides a brief overview of selected information contained elsewhere in this prospectus. You should carefully read the entire prospectus, including “Risk Factors,” the historical audited and unaudited financial statements and accompanying notes and the unaudited pro forma financial statements and accompanying notes included elsewhere in this prospectus, before making an investment decision. Unless otherwise indicated, the information in this prospectus assumes (i) an initial public offering price of $         per common unit (the mid-point of the price range set forth on the cover of this prospectus) and (ii) that the underwriters do not exercise their option to purchase additional common units.

Unless the context otherwise requires, references in this prospectus to “Shell Midstream Partners, L.P.,” “Shell Midstream Partners,” “our partnership,” “we,” “our,” “us,” or similar terms, when used in a historical context, refer to the assets that Shell Pipeline Company LP is contributing to us in connection with this offering and their related operations. These assets include (i) a 43.0% ownership interest in Zydeco Pipeline Company LLC, (ii) a 28.6% ownership interest in Mars Oil Pipeline Company, (iii) a 49.0% ownership interest in Bengal Pipeline Company LLC and (iv) a 1.612% ownership interest in Colonial Pipeline Company. For accounting purposes or when used in the past tense, “we,” “our,” “us” and similar terms refer to our predecessor, the Houston-to-Houma pipeline system. When used in the present tense or future tense, these terms refer to Shell Midstream Partners, L.P. and its subsidiaries after giving effect to this offering and the related formation transactions. References to our “general partner” refer to Shell Midstream Partners GP LLC. References to “Shell” refer collectively to Royal Dutch Shell plc and its controlled affiliates, other than us, our subsidiaries and our general partner. References to “SPLC” refer to Shell Pipeline Company LP, a wholly owned subsidiary of Royal Dutch Shell plc, and its controlled affiliates, other than us, our subsidiaries and our general partner. References to “Zydeco,” “Mars,” “Bengal” and “Colonial” refer to Zydeco Pipeline Company LLC, Mars Oil Pipeline Company, Bengal Pipeline Company LLC and Colonial Pipeline Company, respectively, and the pipeline systems owned by those entities. References to the subsidiaries of Shell Midstream Partners, L.P. include Shell Midstream Operating LLC, Zydeco, Mars and Bengal. We have provided definitions for some of the terms we use to describe our business and industry and other terms used in this prospectus in the “Glossary of Terms” beginning on page B-1 of this prospectus.

Shell Midstream Partners, L.P.

Overview

We are a fee-based, growth-oriented master limited partnership recently formed by Shell to own, operate, develop and acquire pipelines and other midstream assets. Our initial assets consist of interests in entities that own crude oil and refined products pipelines serving as key infrastructure to transport growing onshore and offshore crude oil production to Gulf Coast refining markets and to deliver refined products from those markets to major demand centers. We generate substantially all of our revenue under long-term agreements by charging fees for the transportation of crude oil and refined products through our pipelines. We do not engage in the marketing and trading of any commodities.

We will initially own interests in two crude oil pipeline systems and two refined products systems. The crude oil pipeline systems, which are held by Zydeco and Mars, are strategically located along the Texas and Louisiana Gulf Coast and offshore Louisiana. These systems link major onshore and offshore production areas with key refining markets. The refined products pipeline systems, which are held by Bengal and Colonial, connect Gulf Coast and southeastern U.S. refineries to major demand centers from Alabama to New York.

Our Relationship with Shell

Shell is one of the world’s largest independent energy companies in terms of market capitalization and operating cash flow, and Shell and its joint ventures are a leading producer and transporter of onshore and offshore

 

hydrocarbons as well as a major refiner in the United States. As one of the largest producers in the Gulf of Mexico, Shell is currently developing several deepwater prospects and associated infrastructure. In addition to its offshore production, Shell has significant onshore exploration and production interests and produces crude oil and natural gas throughout North America. Shell’s downstream portfolio includes interests in refineries throughout the United States with a combined refining capacity over 1.8 million barrels per day.

Shell’s portfolio of midstream assets provides key infrastructure required to transport and store crude oil and refined products for Shell and third parties. Shell’s ownership interests in transportation and midstream assets include crude oil and refined products pipelines; crude oil and refined products terminals; chemicals pipelines; natural gas processing plants; and LNG infrastructure assets.

SPLC is Shell’s principal midstream subsidiary in the United States. Following this offering, SPLC will own our general partner, a significant limited partner interest in us and all of our incentive distribution rights. We believe Shell is motivated to promote and support the successful execution of our business strategies, including using our partnership as a growth vehicle for its midstream assets. Shell has an expansive portfolio of midstream infrastructure, including additional interests in our assets, which could contribute to our future growth if acquired by us. We may also pursue acquisitions jointly with Shell or its affiliates. Neither Shell nor any of its affiliates is under any obligation, however, to sell or offer to sell us additional assets or to pursue acquisitions jointly with us, and we are under no obligation to buy any additional assets from them or to pursue any joint acquisitions with them.

Our Assets and Operations

We believe that our assets are core components of the North American crude oil and refined products infrastructure. Our initial assets consist of the following:

 

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A 43.0% ownership interest in Zydeco Pipeline Company LLC, or Zydeco, which is currently wholly owned by SPLC. Zydeco will wholly own the Houston-to-Houma crude oil pipeline system, or Ho-Ho, which is regulated by the Federal Energy Regulatory Commission, or FERC. Ho-Ho is situated within the largest refining market in the United States. Following the flow reversal project completed in December 2013, Ho-Ho provides a critical outlet to alleviate current transportation bottlenecks for crude oil produced in multiple basins throughout North America, a large portion of which is transported to and stored in the Houston area, to access major refining centers along the Gulf Coast. Upon the completion of the Ho-Ho expansion projects described below, approximately 87% of the fully expanded capacity of Ho-Ho will be subject to ship-or-pay contracts with a weighted average remaining term of over eight years. SPLC’s employees operate Ho-Ho for Zydeco. SPLC will own the remaining 57.0% interest in Zydeco.

 

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A 28.6% ownership interest in Mars Oil Pipeline Company, or Mars. Mars is a major corridor crude oil pipeline in a high-growth area of the offshore Gulf of Mexico, originating approximately 130 miles offshore in the deepwater Mississippi Canyon and terminating in salt dome caverns in Clovelly, Louisiana. Mars transports offshore crude oil production received from the Mississippi Canyon area, including the Olympus platform and the Medusa and Ursa pipelines, and from the Green Canyon and Walker Ridge areas via the Amberjack pipeline connection. We believe that Mars is the primary outlet for connected producers. Mars reaches attractive trading hubs in Louisiana. Mars’ transportation volumes are subject to life-of-lease agreements, some of which have a guaranteed return, and posted tariffs, in each case with established producers with whom Mars has long-standing relationships. SPLC operates Mars’ pipeline system. SPLC will own a 42.9% interest in Mars and an affiliate of BP p.l.c., or BP, will own the remaining 28.5% interest in Mars.

 

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A 49.0% ownership interest in Bengal Pipeline Company LLC, or Bengal. Bengal’s refined products pipeline connects four refineries in the St. Charles, Norco, Garyville and Convent areas of Louisiana

 

with refined products storage tankage in Baton Rouge, Louisiana. Bengal also connects with the Plantation and Colonial pipelines, providing major market outlets to the East Coast from the Gulf Coast. Colonial is the system operator for regulatory reporting purposes and operates Bengal’s tankage. As of March 31, 2014, approximately 67% of Bengal’s capacity was subject to minimum volume commitments under ship-or-pay contracts with a weighted average remaining term of approximately three years. SPLC operates Bengal’s pipelines. SPLC will own a 1.0% interest in Bengal and Colonial will own the remaining 50.0% interest.

 

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A 1.612% ownership interest in Colonial Pipeline Company, or Colonial. Colonial is the largest refined products pipeline in the United States, transporting more than 40 different refined products, consisting primarily of gasoline, diesel fuel and jet fuel. Colonial transports more than 100 million gallons per day of refined products, or approximately 50% of refined petroleum products consumed in the East Coast of the United States, through its 5,500 mile system. Colonial operates its pipeline system. SPLC will own a 14.508% interest in Colonial and third parties will own the remaining interests.

For more information about our assets, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Generate Revenue” and “Business—Our Assets and Operations.”

The table below sets forth certain information regarding our initial assets as of March 31, 2014:

 

Entity		Our Ownership Interest				SPLC Retained Ownership Interest(1)				Pipeline Length (Miles)				Mainline Capacity (Kbpd)(2)				Estimated Contribution to Our Forecasted Cash Available for Distribution for the Twelve Months Ending June 30, 2015(3)
Zydeco (Ho-Ho)			43.0	%			57.0	%			350				375	(4)			64.3	%
Mars			28.6	%			42.9	%			163				400	(5)			18.6	%
Bengal			49.0	%			1.0	%			158				515	(6)			13.1	%
Colonial			1.612	%			14.508	%			5,500				2,500				4.0	%

 

(1)	We will have voting control over SPLC’s retained ownership interest in Zydeco, Mars and Bengal.

(2)	Pipeline capacities vary depending on the specific products being transported, among other factors.

(3)

Total cash available for distribution used in calculating percentages shown does not give effect to incremental general and administrative expense related to being a publicly traded partnership and other expenses to be incurred at the partnership level. Please read “Cash Distribution Policy and Restrictions on Distributions” for important information as to the assumptions we have made for our financial forecast and for a reconciliation of cash available for distribution to net income for each of Zydeco, Mars and Bengal. Our forecast is a forward-looking statement and should be read together with our historical financial statements and accompanying notes included elsewhere in this prospectus, our unaudited pro forma condensed combined financial statements and accompanying notes included elsewhere in this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(4)

The capacity of Ho-Ho ranges from 250 kbpd to 500 kbpd depending on the segment of pipeline and the type of crude oil transported. The mainline capacity, which represents the capacity of the 213-mile segment from Nederland to Houma, following completion of the flow reversal in December 2013, is 360 kbpd. We expect to complete several expansion projects on Ho-Ho, including the installation of new pump stations and the addition of a new connection at Nederland before the end of 2014, and the addition of a new third-party connection and new tankage at Port Neches before the end of 2015. Following completion of these expansion projects, the mainline capacity of Ho-Ho is expected to increase from 360 kbpd to 375 kbpd.

(5)

The capacity of the Mars pipeline system ranges from 100 kbpd to 600 kbpd depending on the segment of pipeline and the type of crude oil transported. The mainline capacity, which represents the capacity of the 54-mile segment from the connections to Ursa and Medusa at the West Delta 143 platform complex to the connection with the Amberjack pipeline at Fourchon, Louisiana, is 400 kbpd.

(6)	The Bengal pipeline system consists of two pipelines that have capacities of 210 kbpd and 305 kbpd.

 

Organic Growth Projects

We have a history of making capital investments in response to customer demand. We have recently completed two significant capital projects that are supported by long-term transportation agreements and will increase throughput on our pipelines. We believe that our recently completed growth projects and our current expansion projects provide near-term growth with attractive returns for us.

Reversal and Expansion of Ho-Ho. In response to strong shipper demand, we completed a reversal of Ho-Ho in December 2013. Ho-Ho now flows from the Houston, Texas area to market hubs in St. James and Clovelly, Louisiana and transports growing light crude oil volumes arriving in the Houston market from the Eagle Ford shale, the Permian Basin and the Bakken shale to Gulf Coast refining centers. We also expect that Ho-Ho will eventually carry crude oil volumes arriving in the Houston market from the Canadian oil sands. We expect to complete several expansion projects on Ho-Ho, including the installation of new pump stations and the addition of a new connection at Nederland before the end of 2014, and the addition of a new third-party connection and new tankage at Port Neches before the end of 2015. The open seasons related to the reversal and expansion projects resulted in ship-or-pay contracts for approximately 87% of the fully expanded capacity of Ho-Ho with a weighted average remaining term of over eight years.

Mars Expansion . Mars recently completed an expansion project that became operational in February 2014. The expansion added approximately 41 miles of 16- to 18-inch diameter pipeline that connects the new Olympus platform to Mars’ existing pipeline at the West Delta 143 platform. The Olympus platform, which is the largest tension-leg platform in the Gulf of Mexico, accesses the deepwater South Deimos, West Boreas and Mars fields. In connection with this expansion, Mars entered into life-of-lease agreements with certain producers that include a guaranteed return to Mars. The annual transportation rate under these agreements is adjusted over a fixed period of time to achieve a pre-determined rate of return. At the end of the fixed period, the last calculated rate will be locked in and thereafter subject to adjustments based on the FERC index. As a corridor pipeline, Mars is positioned to allow additional connections from new supply pipelines without significant capital expenditures by Mars. Due to Mars’ existing connections to the Medusa, Ursa and Amberjack pipelines, we expect that Mars will be an increasingly important conduit for crude oil produced in the deepwater Gulf of Mexico to access salt dome caverns in Clovelly, Louisiana which are major trading hubs.

Business Strategies

Our primary business objectives are to generate stable and predictable cash flows and increase our quarterly cash distribution per unit over time through safe and reliable operation of our assets.

 

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Maintain Safe and Reliable Operations. We are committed to maintaining and improving the safety, reliability and efficiency of our operations, which we believe to be key components in generating stable cash flows. We strive for operational excellence by using SPLC’s existing programs to integrate health, occupational safety, process safety and environmental principles throughout our business with a commitment to continuous improvement. In addition, many of our assets are relatively new or have recently undergone significant upgrades. SPLC’s employees operate Ho-Ho for Zydeco and also operate Mars. Colonial operates its pipeline system. Colonial is the system operator of Bengal for regulatory reporting purposes and operates Bengal’s tankage. SPLC operates Bengal’s pipelines. Both SPLC and Colonial are industry-leading pipeline operators that have been recognized for safety and reliability and continually invest in the maintenance and integrity of our assets. We will continue to employ SPLC’s rigorous training, integrity and audit programs to drive ongoing improvements in safety as we strive for zero incidents.

 

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Focus on Fee-Based Businesses. We are focused on generating stable and predictable cash flows by providing fee-based transportation services, most of which are underpinned by ship-or-pay contracts or

 

life-of-lease agreements, some of which provide us with a guaranteed return. We intend to continue to focus on assets that generate revenue from multiple long-term, fee-based agreements with inflation escalators.

 

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Grow Our Business Through Strategic Acquisitions. We plan to pursue strategic acquisitions of assets from Shell and third parties. We believe Shell will offer us opportunities to acquire additional interests in our assets, as well as additional midstream assets that it currently owns or may acquire or develop in the future. We also may have opportunities to pursue the acquisition or development of additional assets jointly with Shell or its affiliates. However, Shell and its affiliates are under no obligation to offer any assets or opportunities to us.

 

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Optimize Existing Assets and Pursue Organic Growth Opportunities . We will seek to enhance the profitability of our businesses by pursuing opportunities to increase throughput volumes, manage costs and improve operating efficiencies. We also will consider opportunities to increase revenue on our pipeline systems by evaluating and capitalizing on organic expansion projects, including, for example, connecting additional production or refineries, or increasing pipeline capacity by adding pumps. Our recent reversal of Ho-Ho and the expansion of Mars demonstrate our ability to respond to growing demand for transportation services in the areas in which we operate.

Competitive Strengths

We believe that we are well positioned to execute our business strategies based on the following competitive strengths:

 

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Our Relationship with Shell. We believe that our relationship with Shell provides us with a strategic advantage to operate and compete for additional midstream assets. SPLC will own our general partner, a significant limited partner interest in us and all of our incentive distribution rights. In addition, Shell owns a substantial amount of other midstream assets, including additional interests in our assets. We believe that our relationship with Shell and its affiliates will provide us with significant growth opportunities. We also expect that we will benefit from SPLC’s long history of operating safe and reliable pipelines.

 

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Strategically Located Assets. Our assets serve as key infrastructure to transport growing onshore and offshore production to Gulf Coast refining markets and to deliver refined products from those markets to major demand centers. Our crude oil pipeline systems are strategically located along the Texas and Louisiana Gulf Coast and offshore Louisiana and link major onshore and offshore areas of current and future production with key refining markets. Our refined products pipelines connect Gulf Coast and southeastern U.S. refining areas to major demand centers from Alabama to New York.

 

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Stable and Predictable Cash Flows. Our assets primarily consist of interests in common carrier pipeline systems that generate stable revenue under FERC-based tariffs and long-term transportation agreements. Our ship-or-pay contracts will substantially mitigate volatility in our cash flows by limiting our exposure to changing market dynamics that can reduce production and affect shipper demand. Our life-of-lease agreements, some of which have a guaranteed return, reduce our cash flow exposure to volume reductions. We also believe that our strong position as the outlet for major offshore production with consistent production activity will provide consistent revenue.

 

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Financial Flexibility. At the closing of this offering, we will enter into a revolving credit facility with an affiliate of Shell with $         million in available capacity. We believe that we will have the financial flexibility to execute our growth strategy through borrowing capacity under our revolving credit facility and access to capital markets.

 

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Experienced Management Team. Our management team has substantial experience in the management and operation of pipelines, storage facilities and other midstream assets. Our management team also has

 

expertise in executing growth strategies in the midstream sector. Our management team includes many of SPLC’s and Shell’s senior management, who average over 20 years of experience in the energy industry.

Implications of Being an Emerging Growth Company

As our predecessor had less than $1 billion in revenues during its last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may, for up to five years, take advantage of specified exemptions from reporting and other regulatory requirements that are otherwise applicable generally to public companies. These exemptions include:

 

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the initial presentation of two years of audited financial statements and two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in the registration statement of an initial public offering of common equity securities;

 

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exemption from the auditor attestation requirement on the effectiveness of our system of internal controls over financial reporting;

 

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delayed adoption of new or revised financial accounting standards; and

 

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reduced disclosure about our executive compensation arrangements.

We may take advantage of these provisions until we are no longer an emerging growth company, which will occur on the earliest of (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the fiscal year in which we have more than $1 billion in annual revenues, (iii) the last day of the fiscal year in which we have more than $700 million in market value of our common units held by non-affiliates as of the end of our fiscal second quarter or (iv) the date on which we have issued more than $1 billion of non-convertible debt over a three-year period.

We have elected to take advantage of all of the applicable JOBS Act provisions, except that we have elected to opt out of the exemption that allows emerging growth companies to extend the transition period for complying with new or revised financial accounting standards, which election is irrevocable. Accordingly, the information that we provide you may be different than what you may receive from other public companies in which you hold equity interests.

Risk Factors

An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of our common units. You should carefully consider the risks described in “Risk Factors” and the other information in this prospectus before investing in our common units.

Risks Related to Our Business

 

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We may not have sufficient cash available for distribution following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to our general partner and its affiliates, to enable us to pay minimum quarterly distributions to our unitholders.

 

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The assumptions underlying the forecast of cash available for distribution that we include in “Cash Distribution Policy and Restrictions on Distributions” are inherently uncertain and subject to significant business, economic, financial, regulatory and competitive risks and uncertainties that could cause our actual cash available for distribution to differ materially from our forecast.

 

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We do not control certain of the entities that own our assets.

 

Risks Inherent in an Investment in Us

 

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Our general partner and its affiliates, including Shell, have conflicts of interest with us and limited duties to us and our unitholders, and they may favor their own interests to the detriment of us and our unitholders. Additionally, we have no control over the business decisions and operations of Shell, and it is under no obligation to adopt a business strategy that favors us.

 

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Our partnership agreement requires that we distribute all of our available cash, which could limit our ability to grow and make acquisitions.

 

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The fees and reimbursements due to our general partner and its affiliates, including SPLC, for services provided to us or on our behalf will reduce our cash available for distribution. In certain cases, the amount and timing of such reimbursements will be determined by our general partner and its affiliates, including SPLC.

 

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Our partnership agreement replaces fiduciary duties applicable to a corporation with contractual duties and restricts the remedies available to holders of our common units for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.

 

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If you are not an eligible holder (as defined in our partnership agreement), your common units may be subject to redemption.

 

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Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.

 

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Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors.

 

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Even if holders of our common units are dissatisfied, they cannot initially remove our general partner without its consent.

 

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There is no existing market for our common units, and a trading market that will provide you with adequate liquidity may not develop. Following this offering, the price of our common units may fluctuate significantly, and you could lose all or part of your investment.

Tax Risks to Common Unitholders

 

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Our tax treatment depends on our status as a partnership for federal income tax purposes. If the Internal Revenue Service, or IRS, were to treat us as a corporation for federal income tax purposes, which would subject us to entity-level taxation, or if we were otherwise subjected to a material amount of additional entity-level taxation, then our cash available for distribution would be substantially reduced.

 

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Our unitholders’ share of our income will be taxable to them for federal income tax purposes even if they do not receive any cash distributions from us.

 

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If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution.

Formation Transactions

At or prior to the closing of this offering, the following transactions, which we refer to as the formation transactions, will occur:

 

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SPLC will contribute a 43.0% ownership interest in Zydeco to us and will enter into a voting agreement with us giving us voting control over its retained 57.0% ownership interest in Zydeco;

 

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SPLC will contribute a 28.6% ownership interest in Mars to us and will enter into a voting agreement with us giving us voting control over its retained 42.9% ownership interest in Mars;

 

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SPLC will contribute a 49.0% ownership interest in Bengal to us and will enter into a voting agreement with us giving us voting control over its retained 1.0% ownership interest in Bengal;

 

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SPLC will contribute a 1.612% ownership interest in Colonial to us;

 

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we will issue              common units and              subordinated units, representing an aggregate     % limited partner interest in us, to SPLC;

 

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we will issue              general partner units, representing a 2% general partner interest in us, and all of our incentive distribution rights to our general partner;

 

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we will issue              common units to the public in this offering, representing a     % limited partner interest in us, and will apply the net proceeds as described in “Use of Proceeds”;

 

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we will enter into a revolving credit facility with an affiliate of Shell with $         million in available capacity, under which no amounts will be drawn at the closing of this offering; and

 

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we and our general partner will enter into an omnibus agreement with SPLC pursuant to which we will agree, among other things, to pay our general partner an annual fee for general and administrative services to be provided to us.

The number of common units to be issued to SPLC includes              common units that will be issued at the expiration of the underwriters’ option to purchase additional common units, assuming that the underwriters do not exercise the option. Any exercise of the underwriters’ option to purchase additional common units would reduce the common units shown as issued to SPLC by the number to be purchased by the underwriters in connection with such exercise. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters pursuant to any exercise will be sold to the public, and any remaining common units not purchased by the underwriters pursuant to any exercise of the option will be issued to SPLC at the expiration of the option period for no additional consideration. We will use any net proceeds from the exercise of the underwriters’ option to purchase additional common units from us to make an additional cash distribution to SPLC.

 

Organizational Structure After the Formation Transactions

After giving effect to the formation transactions described above, assuming the underwriters’ option to purchase additional common units from us is not exercised, our units will be held as follows:

 

Public common units				%
Interests of Shell and affiliates:
Shell common units				%
Shell subordinated units			49.0	%
General partner units			2.0	%
Total			100.0	%

The following simplified diagram depicts our organizational structure after giving effect to the formation transactions described above.

 

 

Management

We are managed by the board of directors and executive officers of Shell Midstream Partners GP LLC, our general partner. SPLC is the sole owner of our general partner and has the right to appoint the entire board of directors of our general partner, including the independent directors appointed in accordance with the listing standards of the New York Stock Exchange, or NYSE. Unlike shareholders in a publicly traded corporation, our common unitholders are not entitled to elect our general partner or the board of directors of our general partner. Many of the executive officers and directors of our general partner also currently serve as officers of Shell. For more information about the directors and executive officers of our general partner, please read “Management—Directors and Executive Officers of Shell Midstream Partners GP LLC.” Our operations will be conducted through, and our operating assets will be owned by, various operating subsidiaries. However, neither we nor our subsidiaries will have any employees. Our general partner has the sole responsibility for providing the employees and other personnel necessary to conduct our operations, whether through directly hiring employees or by obtaining services of personnel employed by Shell, SPLC or third parties, but we sometimes refer to these individuals in this prospectus as our employees because they provide services directly to us.

Principal Executive Offices

Our principal executive offices are located at One Shell Plaza, 910 Louisiana Street, Houston, Texas 77002, and our telephone number is                 . Following the completion of this offering, our website will be located at www.             .com . We expect to make our periodic reports and other information filed with or furnished to the Securities and Exchange Commission, or SEC, available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.

Summary of Conflicts of Interest and Duties

Under our partnership agreement, our general partner has a duty to manage us in a manner it believes is not adverse to our best interests. However, because our general partner is a wholly owned subsidiary of SPLC, the officers and directors of our general partner also have a duty to manage the business of our general partner in a manner that is not adverse to the best interests of SPLC. As a result of this relationship, conflicts of interest may arise in the future between us and our unitholders, on the one hand, and our general partner and its affiliates, including SPLC, on the other hand. For example, our general partner will be entitled to make determinations that affect the amount of cash distributions we make to the holders of common units, which in turn has an effect on whether our general partner receives incentive cash distributions. For a more detailed description of the conflicts of interest and duties of our general partner, please read “Risk Factors—Risks Inherent in an Investment in Us” and “Conflicts of Interest and Duties.”

Delaware law provides that Delaware limited partnerships may, in their partnership agreements, expand, restrict or eliminate the fiduciary duties owed by the general partner to limited partners and the partnership. Our partnership agreement contains various provisions replacing the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing the duties of our general partner and contractual methods of resolving conflicts of interest. The effect of these provisions is to restrict the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of its fiduciary duties. Our partnership agreement also provides that affiliates of our general partner, including SPLC and its affiliates, are not restricted from competing with us, and neither our general partner nor its affiliates have any obligation to present business opportunities to us. By purchasing a common unit, the purchaser agrees to be bound by the terms of our partnership agreement, and pursuant to the terms of our partnership agreement, each holder of common units consents to various actions and potential conflicts of interest contemplated in our

 

partnership agreement that might otherwise be considered a breach of fiduciary or other duties under Delaware law. Please read “Conflicts of Interest and Duties—Duties of Our General Partner” for a description of the fiduciary duties imposed on our general partner by Delaware law, the replacement of those duties with contractual standards under our partnership agreement and certain legal rights and remedies available to holders of our common units and subordinated units. For a description of our other relationships with our affiliates, please read “Certain Relationships and Related Party Transactions.”