DEFM14C

DEFM14C 1 d367576ddefm14c.htm DEFM14C DEFM14C

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14C

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the

Securities Exchange Act of 1934

Check the appropriate box:

☐	Preliminary Information Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))

☒	Definitive Information Statement

Shell Midstream Partners, L.P.

(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

☐	No fee required

☒	Fee paid previously with preliminary materials.

☐	Fee computed on table in exhibit required by Item 25(b) of Schedule 14A (17 CFR 240.14a-101) per Item 1 of this Schedule and Exchange Act Rules 14c-5(g) and 0-11.

LOGO

150 N. Dairy Ashford Rd.

Houston, Texas 77079

NOTICE OF ACTION BY WRITTEN CONSENT

AND INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY AND

YOU ARE REQUESTED NOT TO SEND US A PROXY

To the Common Unitholders of Shell Midstream Partners, L.P.:

This notice of action by written consent and the accompanying information statement are being furnished to the holders (the “Common Unitholders”) of common units representing limited partner interests (“Common Units”) in Shell Midstream Partners, L.P., a Delaware limited partnership (the “Partnership”), in connection with the Agreement and Plan of Merger, dated as of July 25, 2022 (as it may be amended from time to time, the “Merger Agreement”), entered into by and among Shell USA, Inc., a Delaware corporation (“Parent”), Shell Midstream LP Holdings LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of Parent (“Holdings”), Semisonic Enterprises LLC, a Delaware limited liability company and indirect wholly owned subsidiary of Parent (“Merger Sub”), the Partnership and Shell Midstream Partners GP LLC, a Delaware limited liability company and the general partner of the Partnership (the “General Partner”), pursuant to which, among other things, and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into the Partnership, with the Partnership surviving the merger and continuing to exist as a Delaware limited partnership (the “Merger”).

If the Merger is completed, you will be entitled to receive (i) $15.85 in cash, without interest, less any applicable withholding taxes, for each Common Unit you own and (ii) any distribution in respect of the Common Units with a record date occurring prior to the effective time of the Merger (the “Effective Time”) that may have been declared by the Partnership on the Common Units in accordance with the terms of the Merger Agreement and the Partnership Agreement (as defined below) and which remains unpaid at the Effective Time.

The conflicts committee (the “Conflicts Committee”) of the board of directors of the General Partner (the “GP Board”), consisting solely of individuals that satisfied the independence and other requirements for membership on the Conflicts Committee that are set forth in the Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of April 1, 2020 (the “Partnership Agreement”), at a meeting duly called and held on July 25, 2022, unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including holders of Common Units other than Parent, Holdings, the General Partner and their respective affiliates (the “Public Unitholders”), (b) approved the Merger Agreement and the transactions contemplated thereby, including the Merger (the foregoing constituting “Special Approval” for all purposes of the Partnership Agreement, including Section 7.10(a) thereof), (c) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, and (d) recommended that the GP Board (1) direct that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the limited partners of

the Partnership (the “Limited Partners”) for approval pursuant to Section 14.3 of the Partnership Agreement and (2) authorize the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

Upon receipt of the recommendation of the Conflicts Committee (and the approval of the General Partner’s sole member), and following discussion regarding, among other things, the Conflicts Committee’s receipt of a fairness opinion of Intrepid Partners, LLC, the terms of the transaction documents and their negotiation by the various parties, including in-house counsel for the Partnership, the terms of comparable recent master limited partnership buy-in transactions, and the process undertaken by the Conflicts Committee in connection with the Merger, at a meeting duly called and held on July 25, 2022, the GP Board unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are (1) fair and reasonable to the Public Unitholders and (2) in the best interests of the Partnership, including the Public Unitholders, (b) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, (c) approved the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby, including the Merger, and (d) directed that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement, recommended approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by the Limited Partners and authorized the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

On July 25, 2022, Parent caused Holdings, which beneficially owns 269,457,304 Common Units and 50,782,904 Series A perpetual convertible preferred units, collectively representing approximately 72% of the voting power of the Partnership’s outstanding limited partner interests, to deliver, concurrently with the execution of the Merger Agreement, a written consent (the “Written Consent”) approving the Merger Agreement and the transactions contemplated thereby, including the Merger. The delivery of the Written Consent is sufficient to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on behalf of the Limited Partners. As a result, the Partnership has not solicited and is not soliciting your approval of the Merger Agreement or the Merger. Further, the Partnership does not intend to call a meeting of Limited Partners for purposes of voting on the approval of the Merger Agreement or the Merger.

The accompanying information statement provides you with detailed information about the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the accompanying information statement. You are encouraged to read the entire information statement, including the Merger Agreement and the documents incorporated by reference in the information statement, carefully. Please read “Material U.S. Federal Income Tax Consequences of the Merger” for a more complete discussion of the U.S. federal income tax consequences of the Merger. You may also obtain additional information about the Partnership from documents the Partnership has filed with the Securities and Exchange Commission.

No action by you is requested or required at this time. If the Merger is consummated, you will receive any relevant instructions regarding the surrender of, and payment for, your Common Units.

The accompanying information statement is dated September 16, 2022, and is first being mailed to Common Unitholders on or about September 20, 2022.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER OR PASSED UPON THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

By Order of the Board of Directors of Shell Midstream Partners GP LLC,

as the General Partner of Shell Midstream Partners, L.P.,

Sincerely,

/s/ Steven C. Ledbetter

Steven C. Ledbetter
President, Chief Executive Officer and Director of Shell Midstream Partners GP LLC,
the general partner of Shell Midstream Partners, L.P.

TABLE OF CONTENTS


	Page
SUMMARY TERM SHEET		1
Parties to the Merger		1
Relationship of the Parties to the Merger		2
The Merger		3
The Merger Consideration		3
Effects of the Merger		4
Action by Written Consent		4
The Conflicts Committee and GP Board Recommendations and Reasons for the Merger		4
Position of the Shell Filing Parties as to the Fairness of the Merger		6
Opinion of Financial Advisor to the Conflicts Committee		6
Interests of the Directors and Executive Officers of the General Partner in the Merger		6
Regulatory Approvals Required for the Merger		6
Conditions to Completion of the Merger		7
Termination of the Merger Agreement		7
Effect of Termination; Termination Expenses		8
Financing of the Merger		9
Expenses Relating to the Merger		9
Material U.S. Federal Income Tax Consequences of the Merger		9
No Appraisal Rights		10
Accounting Treatment		10
Delisting and Deregistration of Common Units		10
QUESTIONS AND ANSWERS ABOUT THE MERGER		11
SPECIAL FACTORS		15
Effects of the Merger		15
Background of the Merger		16
Resolutions of Conflicts of Interest; Standards of Conduct and Modification of Duties		24
Reasons for Approval of the Merger Agreement and the Merger by the Conflicts Committee and the GP Board		25
Unaudited Financial Projections of the Partnership		33
Opinion of Financial Advisor to the Conflicts Committee		37
Position of the Shell Filing Parties as to the Fairness of the Merger		47
Purposes and Reasons of the Shell Filing Parties for the Merger		49
Primary Benefits and Detriments of the Merger		51
Interests of the Directors and Executive Officers of the General Partner in the Merger		52
Material U.S. Federal Income Tax Consequences of the Merger		52
Ownership of the Partnership After the Merger		53
Regulatory Approvals and Clearances Required for the Merger		53
Financing of the Merger		53
Fees and Expenses		53
Certain Legal Matters		54
Provisions for Public Unitholders		54
Delisting and Deregistration of Common Units		54
No Appraisal Rights		54
Accounting Treatment of the Merger		54
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		55
OTHER MATTERS		56
Householding of Materials		56


	Page
THE MERGER AGREEMENT		57
The Merger		57
Effective Time; Closing		58
Conditions to Completion of the Merger		58
The Merger Consideration		60
Representations and Warranties		60
Conduct of Business Prior to Closing		62
Agreement to Take Further Action and to Use Reasonable Best Efforts		63
Conflicts Committee		64
Access to Information		64
Indemnification and Insurance		64
Certain Tax Matters		64
Withholding		65
Adjustments to Prevent Dilution		65
Termination of Trading and Deregistration		65
Section 16 Matters		65
Other Covenants and Agreements		65
Termination of the Merger Agreement		66
Effect of Termination; Termination Expenses		67
Amendment and Supplement; Waiver		67
Assignment		67
Specific Performance		67
Action by the Partnership or the General Partner		68
Performance by the General Partner		68
Governing Law		68
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER		69
Tax Consequences of the Merger to Common Unitholders		70
INFORMATION CONCERNING THE PARTNERSHIP		72
About the Partnership		72
Business and Background of Natural Persons Related to the Partnership		72
COMMON UNIT MARKET PRICE AND DISTRIBUTION INFORMATION		78
Common Unit Market Price Information		78
Distribution Information		78
INFORMATION CONCERNING THE SHELL FILING PARTIES		80
UNIT OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF THE SHELL FILING PARTIES		82
Unit Ownership by the General Partner’s Directors and Executive Officers		82
Unit Ownership by Parent’s Directors and Executive Officers		83
Unit Ownership of Five Percent or More Common Unitholders		83
CERTAIN PURCHASES AND SALES OF COMMON UNITS		84
DELISTING AND DEREGISTRATION OF COMMON UNITS		84
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE		84
WHERE YOU CAN FIND MORE INFORMATION		84

ANNEX A: AGREEMENT AND PLAN OF MERGER

ANNEX B: OPINION OF INTREPID PARTNERS, LLC

SUMMARY TERM SHEET

The following summary highlights selected information in this information statement and may not contain all of the information that may be important to you. Accordingly, Shell Midstream Partners, L.P., a Delaware limited partnership (the “Partnership”), encourages you to read carefully this entire information statement, its annexes and the documents referred to in and incorporated by reference into this information statement. You may obtain the information incorporated by reference into this information statement without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 84 of this information statement.

Parties to the Merger (see page 72):

SHELL MIDSTREAM PARTNERS, L.P.

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Phone: (832) 337-2034

The Partnership is a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream and logistics assets. The Partnership’s assets include interests in entities that own (a) crude oil and refined products pipelines and terminals that serve as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and deliver refined products from those markets to major demand centers and (b) storage tanks and financing receivables that are secured by pipelines, storage tanks, docks, truck and rail racks and other infrastructure used to stage and transport intermediate and finished products. The Partnership’s assets also include interests in entities that own natural gas and refinery gas pipelines that transport offshore natural gas to market hubs and deliver refinery gas from refineries and plants to chemical sites along the Gulf Coast. The Partnership’s common units representing limited partner interests in the Partnership (“Common Units”) are listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “SHLX.” On September 14, 2022, the most recent practicable date before the printing of this information statement, 393,289,537 Common Units were issued and outstanding.

SHELL MIDSTREAM PARTNERS GP LLC

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Phone: (888) 467-4355

(option 8)

Shell Midstream Partners GP LLC, a Delaware limited liability company (the “General Partner”), is the general partner of the Partnership. Its board of directors (the “GP Board”) and executive officers manage the Partnership. The General Partner is a direct wholly owned subsidiary of Shell Pipeline Company LP (“SPLC”). The General Partner owns a non-economic general partner interest in the Partnership.

SHELL MIDSTREAM LP HOLDINGS LLC

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Phone: (888) 467-4355

(option 8)

Shell Midstream LP Holdings LLC, a Delaware limited liability company (“Holdings”), is an indirect wholly owned subsidiary of Shell USA, Inc., a Delaware corporation (“Parent”). Holdings holds 269,457,304

Common Units and 50,782,904 Series A perpetual convertible preferred units representing limited partner interests in the Partnership (“Preferred Units”), which collectively represents approximately 72% of the voting power of the Partnership’s outstanding limited partner interests as of September 14, 2022.

SHELL USA, INC.

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Phone: (888) 467-4355

(option 8)

Parent is wholly owned by Shell Petroleum Inc., a Delaware corporation, whose shares are indirectly owned 100% by Shell plc, a public limited company incorporated under the laws of England and Wales (“Shell”). Parent and its subsidiaries organize their activities into Upstream, Downstream, Integrated Gas, Renewables and Energy Solutions (R&ES) and Corporate businesses. The Upstream business explores for and extracts crude oil, natural gas and natural gas liquids in the United States. The Downstream business is primarily engaged in oil products and chemicals manufacturing and marketing and trading activities that turn crude oil and other feedstocks into a range of products that are moved and marketed around the world for domestic, industrial and transport use. The Integrated Gas business is primarily engaged in the marketing and trading of liquified natural gas. The Renewables and Energy Solutions business includes Parent’s production and marketing of hydrogen, nature-based and environmental solutions as well as its integrated power activities. The Corporate business covers the non-operating activities supporting Parent’s businesses.

SEMISONIC ENTERPRISES LLC

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Phone: (888) 467-4355

(option 8)

Semisonic Enterprises LLC, a Delaware limited liability company (“Merger Sub”), is an indirect wholly owned subsidiary of Parent formed solely for the purpose of facilitating the Merger (as defined below). Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement (as defined below), including the Merger (the “Proposed Transaction”). By operation of the Merger, Merger Sub will be merged with and into the Partnership, with the Partnership surviving the Merger as a wholly owned subsidiary of Parent.

Relationship of the Parties to the Merger

Shell is the sole ultimate parent of (i) Parent, Holdings and the General Partner, which collectively own the non-economic general partner interest in the Partnership, approximately 72% of the voting power of the Partnership’s outstanding limited partner interests as of September 14, 2022, and (ii) Merger Sub. SOPC Holdings West LLC, a Delaware limited liability company (“SOPC West”), is a wholly owned subsidiary of Parent and is the sole member of Merger Sub. SPLC is an indirect wholly owned subsidiary of Parent and is the sole member of Holdings and the General Partner, which is the sole general partner of the Partnership. As the sole member of the General Partner, SPLC has the right, subject to the limitations set forth in the Merger Agreement, to appoint and remove all of the members of the GP Board and indirectly owns the non-economic general partner interest in the Partnership, which is directly held by the General Partner. As the indirect sole owner of SPLC, Shell has a controlling interest in the General Partner, which manages the operations and activities of the Partnership.

The General Partner has no business or operations other than managing the business of the Partnership. In addition, outside of its investment in the Partnership, the General Partner owns no assets or property. The Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of April 1, 2020 (the “Partnership Agreement”), imposes no additional material liabilities upon the General Partner or obligations to contribute to the Partnership other than those liabilities and obligations imposed on general partners under the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”).

The Merger (see page 57)

Parent has agreed to acquire all of the Common Units held by persons other than Parent, Holdings, the General Partner and their respective affiliates (“Public Common Units” and the holders of such units, the “Public Unitholders”) of the Partnership under the terms of the Agreement and Plan of Merger, dated as of July 25, 2022 (the “Merger Agreement”), by and among Parent, Holdings, Merger Sub, the Partnership and the General Partner, as described in this information statement. Under the terms of the Merger Agreement, Merger Sub will merge with and into the Partnership, with the Partnership surviving as an indirect wholly owned subsidiary of Parent (the “Merger”). The non-economic general partner interest in the Partnership, and the Common Units and Preferred Units held by Parent and its affiliates, in each case that are issued and outstanding immediately prior to the Effective Time (as defined below), will be unaffected by the Merger and will remain outstanding, and no consideration will be delivered in respect thereof. Following the consummation of the Merger, Parent, as the parent of the General Partner and Holdings, will indirectly own all of the limited partner interests and the non-economic general partner interest in the Partnership. The Merger will become effective upon the filing of a properly executed certificate of merger with the Secretary of State of the State of Delaware or at such later date and time as may be agreed by Parent and the Partnership and set forth in the certificate of merger (the “Effective Time”).

The Merger Agreement is attached as Annex A to this information statement and is incorporated herein by reference. The Partnership encourages you to read the Merger Agreement carefully and in its entirety because it is the legal document that governs the Merger.

The Merger Consideration (see page 60)

Each Public Common Unit issued and outstanding as of the Effective Time will be converted into, and will thereafter represent only, the right to receive (i) $15.85 per Public Common Unit in cash, without interest (the “Merger Consideration”), and (ii) any distribution in respect of the Common Units with a record date occurring prior to the Effective Time that may have been declared by the Partnership on the Common Units in accordance with the terms of the Merger Agreement and the Partnership Agreement and which remains unpaid at the Effective Time. As of the Effective Time, (i) the Public Common Units will no longer be outstanding and will automatically be cancelled and cease to exist and (ii) each Public Unitholder will cease to have rights with respect to the Public Common Units, except with respect to the right to receive the Merger Consideration and any distributions described above. The Merger Consideration is subject to adjustment pursuant to the terms of the Merger Agreement to reflect the effect of any unit distribution, subdivision, reclassification, recapitalization, split, split-up, combination, exchange of units or similar transaction and to provide the Public Unitholders the same economic effect as contemplated by the Merger Agreement prior to any such event.

All of the limited liability company interests in Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into a number of Common Units in the Partnership as the surviving entity in the Merger equal to the number of Public Common Units converted into the right to receive Merger Consideration. The (i) non-economic general partner interest, (ii) the Common Units held by Parent and its affiliates and (iii) the Preferred Units, each as are issued and outstanding immediately prior to the Effective Time will not be cancelled, will not be converted into or entitle the holder thereof to receive Merger Consideration and will remain outstanding as equity interests in the Partnership as the surviving entity in the Merger.

Effects of the Merger (see page 15)

If the Merger is completed, (i) the Partnership will become an indirect wholly owned subsidiary of Parent, (ii) the Public Unitholders will no longer have an equity interest in the Partnership, (iii) the Common Units will no longer be listed on the NYSE, (iv) the registration of the Common Units with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be terminated and (v) Parent, as the parent of the General Partner, Holdings and Merger Sub, will own all of the limited partner interests and the non-economic general partner interest in the Partnership. For more information regarding the effects of the Merger, see “Special Factors—Effects of the Merger” and “The Merger Agreement—The Merger.”

Action by Written Consent (see page 23)

Under the applicable provisions of the Partnership Agreement, the approval of the Merger Agreement requires the approval of a “Unit Majority,” which means at least a majority of the outstanding Common Units and outstanding Preferred Units, with such Preferred Units to be treated as Common Units on an “as if” converted basis, voting together as a single class.

On July 25, 2022, Parent caused Holdings, its indirect, wholly owned subsidiary, which, as of the date thereof beneficially owned 269,457,304 Common Units and 50,782,904 Preferred Units in the Partnership, which collectively represented approximately 72% of the voting power of the Partnership’s outstanding limited partner interests, to deliver, concurrently with the execution of the Merger Agreement, a written consent (the “Written Consent”) as holder of a Unit Majority approving the Merger Agreement and the transactions contemplated thereby, including the Merger. The delivery of the Written Consent was sufficient to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on behalf of the limited partners of the Partnership (the “Limited Partners”). For this reason, this information statement is being provided to you for informational purposes only. You are not being asked for a proxy, and you are requested not to send a proxy.

The Conflicts Committee and GP Board Recommendations and Reasons for the Merger (see page 25)

The Conflicts Committee of the GP Board (the “Conflicts Committee”) consists of the three directors who meet the independence and other qualifications set forth in the Partnership Agreement for membership on the Conflicts Committee: James J. Bender (Chairman), Carlos A. Fierro and Rob L. Jones. The Partnership Agreement requires that members of the Conflicts Committee (i) not be officers or employees of the General Partner or directors, officers or employees of its affiliates, (ii) are not holders of any ownership interest in the General Partner or its affiliates other than (A) Common Units and (B) awards that are granted to such director in his capacity as a director under any long-term incentive plan, equity compensation plan or similar plan implemented by the General Partner or the Partnership and (iii) are determined by the GP Board to be independent under the independence standards for directors who serve on an audit committee of a board of directors established by the Exchange Act and the rules and regulations of the SEC thereunder and by the NYSE.

on behalf of the Partnership and the Public Unitholders directly with Parent and its affiliates and the counsel and advisor to each of them, as the Conflicts Committee deems necessary or appropriate, in its sole discretion, (v) review and make such investigation of potential alternatives to the Proposed Transaction, including maintaining the status quo, as the Conflicts Committee deems necessary or appropriate, in its sole discretion, (vi) consult with, advise and/or direct management of the Partnership in connection with discussions and/or negotiations concerning potential terms and conditions of the Proposed Transaction, (vii) determine whether the Proposed Transaction is in the best interest of the Partnership and the Public Unitholders, and (viii) determine whether to approve, and to recommend that the GP Board approve, the Proposed Transaction, with any such approval by the Conflicts Committee constituting “Special Approval” for all purposes under the Partnership Agreement, including but not limited to Section 7.10(a) thereof.

The Conflicts Committee conducted an extensive review and evaluation of the Proposed Transaction and negotiated with Parent and its representatives with respect to the Merger and the Merger Agreement. The Conflicts Committee retained Intrepid Partners, LLC (“Intrepid”) as its financial advisor and Gibson, Dunn & Crutcher LLP (“Gibson Dunn”) as its legal counsel. In the course of reaching its decision to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, the Conflicts Committee considered a number of factors affecting the Public Unitholders in its deliberations. For a more complete discussion of these items, see “Special Factors—Reasons for Approval of the Merger Agreement and the Merger by the Conflicts Committee and the GP Board—Reasons for the Conflicts Committee’s Approval.”

The Conflicts Committee unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including the Public Unitholders; (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, such approval constituting “Special Approval” of the Merger Agreement and the transactions contemplated thereby, including the Merger, for all purposes of the Partnership Agreement, including Section 7.10(a) thereof; (iii) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement; and (iv) recommended that the GP Board (A) direct that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement and (B) authorize the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

Following the receipt of the recommendation of the Conflicts Committee (and the approval of the General Partner’s sole member), as well as discussion regarding, among other things, the Conflicts Committee’s receipt of an opinion of Intrepid, dated July 25, 2022, to the effect that, as of such date and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the Merger Consideration in the Proposed Transaction to be received by the Public Unitholders pursuant to the Merger Agreement is fair, from a financial point of view, to the Public Unitholders, the terms of the transaction documents and their negotiation by the various parties, including in-house counsel for the Partnership, the terms of comparable recent master limited partnership (“MLP”) buy-in transactions, and the process undertaken by the Conflicts Committee in connection with the Merger, the GP Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are (A) fair and reasonable to the Public Unitholders and (B) in the best interests of the Partnership, including the Public Unitholders, (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) approved the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby, including the Merger, and (iv) directed that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement, recommended approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by the Limited Partners and authorized the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

Position of the Shell Filing Parties as to the Fairness of the Merger (see page 47)

Under the SEC’s rules governing “going private” transactions, each of Parent, Holdings, the General Partner and Merger Sub (collectively, the “Shell Filing Parties”) is an affiliate of the Partnership that is required to express its belief as to the fairness of the Merger to the Public Unitholders. The Shell Filing Parties believe that the Merger (which is the Rule 13e-3 transaction for which the Schedule 13E-3 (as defined below) was filed with the SEC) is substantively and procedurally fair to the Public Unitholders on the basis of the factors described in “Special Factors—Purposes and Reasons of the Shell Filing Parties for the Merger” and based on their consideration of the factors discussed in “Special Factors—Position of the Shell Filing Parties as to the Fairness of the Merger.”

The Shell Filing Parties did not participate in the deliberations of the Conflicts Committee regarding, or receive advice from either the Partnership’s or the Conflicts Committee’s legal or financial advisors as to, the fairness of the Merger to the Public Unitholders. None of the Shell Filing Parties has performed, or engaged a financial advisor to perform, any valuation or other analysis for the purpose of assessing the fairness of the Merger to the Public Unitholders. Based on the knowledge and analysis by the Shell Filing Parties of available information regarding the Partnership, as well as discussions with members of the General Partner’s senior management regarding the Partnership and its business and the factors considered by the GP Board discussed in this information statement in “Special Factors—Purposes and Reasons of the Shell Filing Parties for the Merger,” the Shell Filing Parties believe that the Merger is substantively and procedurally fair to the Public Unitholders. In particular, the belief of the Shell Filing Parties as to the procedural and substantive fairness of the Merger is based on their consideration of the factors discussed in “Special Factors—Position of the Shell Filing Parties as to the Fairness of the Merger.”

Opinion of Financial Advisor to the Conflicts Committee (see page 37)

The Conflicts Committee engaged Intrepid to act as its financial advisor in connection with evaluating the Proposed Transaction. As part of that engagement, the Conflicts Committee requested that Intrepid evaluate the fairness, from a financial point of view, of the Merger Consideration in the Proposed Transaction to be received by the Public Unitholders. On July 25, 2022, Intrepid delivered to the Conflicts Committee its oral opinion, confirmed by its delivery of a written opinion dated as of the same date, that, as of the date thereof, and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the Merger Consideration in the Proposed Transaction to be received by the Public Unitholders pursuant to the Merger Agreement is fair, from a financial point of view, to the Public Unitholders. For a more complete discussion, see “Special Factors—Opinion of Financial Advisor to the Conflicts Committee.”

Interests of the Directors and Executive Officers of the General Partner in the Merger (see page 52)

Some of the directors and executive officers of the General Partner have financial interests in the Merger that may be different from, or in addition to, those of the Limited Partners generally. The Conflicts Committee and the GP Board were aware of these interests and considered them, among other matters, in approving the Proposed Transaction and making their recommendations that the Limited Partners approve the Merger Agreement and the Merger.

The General Partner’s directors and executive officers are also entitled to continued indemnification and directors’ and officers’ liability insurance coverage under the Merger Agreement for a period of six years after the Effective Time. For a further discussion of the interests of directors and executive officers in the Merger, see “Special Factors—Interests of the Directors and Executive Officers of the General Partner in the Merger” beginning on page 52.

Regulatory Approvals Required for the Merger (see page 53)

None of Parent, Holdings, the General Partner or the Partnership is aware of any federal or state regulatory approval required in connection with the Merger, other than compliance with applicable federal securities laws and applicable Delaware law.

Conditions to Completion of the Merger (see page 58)

The obligation of the parties to the Merger Agreement to complete the Merger is subject to the satisfaction or waiver of certain conditions, including:

•

with respect to each party’s obligation to effect the Merger, (i) the Written Consent providing approval of the Limited Partners shall have not been amended, modified, withdrawn, terminated or revoked, (ii) the absence of any legal restraint or prohibition enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Merger Agreement, including the Merger, or making the consummation of the foregoing illegal and (iii) the mailing of a definitive information statement to the Limited Partners at least 20 days prior to the closing of the Merger (“Closing”);

•

with respect to Parent’s, Holdings’ and Merger Sub’s obligation to effect the Merger, (i) the representations and warranties of the Partnership and the General Partner being true and correct, both when made and as of the Closing as though made on the closing date of the Merger (the “Closing Date”), unless otherwise specified, subject to certain materiality qualifications and, with respect to certain representations and warranties, unless the failure of such representations and warranties to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a Partnership Material Adverse Effect (as defined in the Merger Agreement), (ii) the performance by the Partnership and the General Partner of their respective obligations under the Merger Agreement, subject to certain materiality qualifications and (iii) the receipt by Parent of an officer’s certificate signed on behalf of the Partnership and the General Partner by an executive officer of the General Partner certifying that the two preceding conditions have been satisfied; and

•

with respect to the Partnership’s obligation to effect the Merger, (i) the representations and warranties of Parent, Holdings and Merger Sub being true and correct, both when made and as of the Closing as though made on the Closing Date, unless otherwise specified, subject to certain materiality qualifications and, with respect to certain representations and warranties, unless the failure of such representations and warranties to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect (as defined in the Merger Agreement), (ii) the performance by Parent, Holdings and Merger Sub of their respective obligations under the Merger Agreement, subject to certain materiality qualifications and (iii) the receipt by the Partnership of an officer’s certificate signed on behalf of Parent by a duly authorized person of Parent certifying that the two preceding conditions have been satisfied.

The Partnership can give no assurance when or if all of the conditions to the Merger will be satisfied or, to the extent possible, waived, or that the Merger will be consummated.

Termination of the Merger Agreement (see page 66)

The Merger Agreement may be terminated, and the Merger may be abandoned, at any time prior to the Effective Time:

•

by the mutual written consent of Parent and the Partnership duly authorized by Parent and the Conflicts Committee, respectively;

•

by either Parent or the Partnership, if:

•

the Closing does not occur on or before January 25, 2023, except that the right to terminate the Merger Agreement in this situation will not be available (i) to the Partnership if the failure of the Closing to occur by such date is due to the failure of either the Partnership or the General Partner to perform and comply in all material respects with the covenants and agreements in the Merger Agreement to be performed or complied with by it prior to the Closing, (ii) to Parent if the failure of the Closing to occur by such date is due to the failure of any of Parent, Holdings or Merger Sub

to perform and comply in all material respects with the covenants and agreements contained in the Merger Agreement to be performed or complied with by it prior to the Closing or (iii) to Parent or the Partnership if, in the case of Parent, the Partnership or the General Partner, or in the case of the Partnership, Parent, Holdings or Merger Sub, has filed (and is then pursuing) an action seeking specific performance as permitted under the terms of the Merger Agreement; or

•

any restraint is in effect and has become final and nonappealable that has the effect of enjoining, restraining, preventing or prohibiting the consummation of the transactions contemplated by the Merger Agreement, including the Merger, or making the consummation of the foregoing illegal, except that the right to terminate the Merger Agreement will not be available to the Partnership or Parent if the restraint was due to the failure of, in the case of the Partnership, the Partnership or the General Partner, and in the case of Parent, Parent, Holdings or Merger Sub, to perform any of its obligations under the Merger Agreement in any material respect;

•

by Parent, if the Partnership or the General Partner has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the Merger Agreement (or if any of the representations or warranties of the Partnership or the General Partner set forth in the Merger Agreement fail to be true), and such breach or failure (i) would (if it occurred or is continuing as of the Closing Date) (A) cause certain fundamental representations and warranties of the Partnership or the General Partner to fail to be true and correct in all respects or (B) constitute a failure by the Partnership or the General Partner to perform in all material respects their obligations under the Merger Agreement and (ii) is incapable of being cured, or is not cured, by the Partnership or the General Partner within 30 days following receipt of written notice from Parent of such breach or failure; provided, however, that Parent will not have the right to terminate the Merger Agreement under this condition if Parent, Holdings or Merger Sub is then in material breach of any of its representations, warranties, covenants or agreements contained in the Merger Agreement; or

•

by the Partnership (which termination may be effected for the Partnership by the Conflicts Committee without the consent, authorization or approval of the GP Board), if Parent has breached or failed to perform any of its representations, warranties, covenants or agreements contained in the Merger Agreement (or if any of Parent’s representations or warranties contained in the Merger Agreement fails to be true) and such breach or failure (i) would (if it occurred or is continuing as of the Closing Date) (A) cause certain fundamental representations and warranties of Parent, Holdings or Merger Sub to fail to be true and correct in all respects or (B) constitute a failure by Parent, Holdings or Merger Sub to perform in all material respects their obligations under the Merger Agreement and (ii) is incapable of being cured, or is not cured, by Parent within 30 days following receipt of written notice from the Partnership of such breach or failure; provided, however, that the Partnership will not have the right to terminate the Merger Agreement under this condition if the Partnership or the General Partner is then in material breach of any of its representations, warranties, covenants or agreements contained in the Merger Agreement.

Effect of Termination; Termination Expenses (see page 67)

In the event of termination of the Merger Agreement as summarized above under “—Termination of the Merger Agreement,” the Merger Agreement will terminate and become null and void and there will be no liability on the part of any of Parent, Holdings, Merger Sub, the Partnership or the General Partner, or their respective representatives, directors, officers, subsidiaries and affiliates, to the other parties to the Merger Agreement; provided, however, that no such termination will relieve any party from (i) its obligations to reimburse the other party for its expenses, as provided below, or (ii) any liability for international fraud or a willful breach of any covenant or other agreement contained in the Merger Agreement.

The Merger Agreement contains various amounts payable under the circumstances described below:

•

if the Merger Agreement is validly terminated by Parent due to a material uncured breach by the Partnership or the General Partner of any of their representations, warranties, covenants or agreements as described above, then the Partnership will promptly pay Parent’s designee all of the reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financing sources, hedging counterparties, experts and consultants) incurred by Parent and its affiliates in connection with the Merger Agreement and the transactions contemplated thereby up to a maximum of $5.0 million; and

•

if the Merger Agreement is validly terminated by the Partnership due to a material uncured breach by Parent of any of its representations, warranties, covenants or agreements as described above, then Parent will promptly pay the Partnership’s designee all of the reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financing sources, hedging counterparties, experts and consultants) incurred by the Partnership and its affiliates in connection with the Merger Agreement and the transactions contemplated thereby up to a maximum of $5.0 million, subject to certain limited restrictions.

Financing of the Merger (see page 53)

The total amount of funds necessary for Parent to consummate the Merger, excluding expenses related thereto, is anticipated to be approximately $1.96 billion. Parent expects to fund the Merger with cash on hand. The Merger is not subject to any financing condition, and Parent does not expect any difficulties in obtaining the cash required to fund the Merger.

See “Special Factors—Financing of the Merger.”

Expenses Relating to the Merger (see page 53)

Under the terms of the Merger Agreement, all expenses will generally be borne by the party incurring such expenses, whether or not the Merger is consummated, except that (i) Parent and the Partnership will each pay one half of the expenses, other than the expenses of financial advisors or outside legal counsel, incurred in connection with the printing, filing and mailing of this information statement and a Rule 13e-3 transaction statement on SEC Schedule 13E-3 relating to the Written Consent and the Merger (“Schedule 13E-3”) and any amendments or supplements hereto or thereto, (ii) Parent will pay all costs and fees of Citibank, N.A. (the “Paying Agent”) and all expenses associated with the exchange of the Public Common Units for the Merger Consideration and (iii) in the event of a material uncured breach, Parent or the Partnership, as the case may be, will be liable for up to $5.0 million in reimbursement of expenses as described above under “—Effect of Termination; Termination Expenses.”

For more information regarding the estimated fees and expenses associated with the Merger, see “Special Factors—Fees and Expenses.”

Material U.S. Federal Income Tax Consequences of the Merger (see page 69)

The receipt of cash in exchange for Common Units pursuant to the Merger will be a taxable transaction to U.S. Common Unitholders (as defined in the section titled “Material U.S. Federal Income Tax Consequences of the Merger”) for U.S. federal income tax purposes. In general, gain or loss recognized on the receipt of cash in exchange for Common Units will be taxable as capital gain or loss. As discussed in “Material U.S. Federal Income Tax Consequences of the Merger” below, a portion of this gain or loss, which portion could be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the U.S. Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “Code”),

to the extent attributable to assets giving rise to “unrealized receivables,” including depreciation recapture, or to “inventory items” owned by the Partnership and its subsidiaries. Passive losses that were not deductible by a U.S. Common Unitholder in prior taxable periods because they exceeded the Common Unitholder’s (as defined below) share of the Partnership’s income may become available to offset a portion of the gain recognized by such holder. However, the precise U.S. federal income tax consequences of the Merger will depend on the holder’s personal tax situation. Accordingly, each Common Unitholder should consult its tax advisor regarding the tax consequences of the exchange of Common Units for cash pursuant to the Merger in the light of its particular circumstances (including the application and effect of any state, local or foreign income and other tax laws).

No Appraisal Rights

Holders of Common Units (the “Common Unitholders”) are not entitled to dissenters’ rights of appraisal under the Partnership Agreement, the Merger Agreement or applicable Delaware law. See “Special Factors—No Appraisal Rights.”

Accounting Treatment

The Merger will be accounted for in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Because Parent has a controlling financial interest in the Partnership before the Merger (through its indirect ownership of the General Partner and Holdings) and will retain the controlling financial interest in the Partnership after the Merger, changes in Parent’s ownership interest in the Partnership will be accounted for as an equity transaction. Accordingly, no gain or loss on the Merger will be recognized in Parent’s consolidated statements of earnings. See “Special Factors—Accounting Treatment of the Merger.”

Delisting and Deregistration of Common Units

The Common Units are currently listed on the NYSE under the ticker symbol “SHLX.” If the Merger is completed, the Common Units will cease to be listed on the NYSE and will be deregistered under the Exchange Act.

QUESTIONS AND ANSWERS ABOUT THE MERGER

Set forth below are questions that you, as a Public Unitholder, may have regarding the Merger and the Merger Agreement, and brief answers to those questions. You are urged to read carefully this information statement and the other documents referred to in this information statement in their entirety, including the Merger Agreement, which is attached as Annex A to this information statement, and Intrepid’s opinion, which is attached as Annex B to this information statement, and the documents incorporated by reference into this information statement, because this section may not provide all of the information that is important to you with respect to the Merger and the Merger Agreement. You may obtain a list of the documents incorporated by reference into this information statement in the section titled “Where You Can Find More Information.”

Q:	*Why am I receiving these materials?*

The Partnership and the General Partner, together with Parent, Holdings and Merger Sub, have agreed to a merger, pursuant to which Merger Sub will merge with and into the Partnership, with the Partnership surviving as an indirect wholly owned subsidiary of Parent. After the Merger, the Common Units will cease to be publicly traded. This information statement describes the Merger, and the approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by Written Consent of Holdings. The GP Board is providing this information statement to you pursuant to Section 14(c) of the Exchange Act solely to inform you of, and provide you with information about, the Merger Agreement and the transactions contemplated thereby, including the Merger, before the Merger is consummated. This information statement is first being mailed to Common Unitholders on or about September 20, 2022.

Q:	*Why am I not being asked to vote on the Merger?*

Consummation of the Merger requires approval of a “Unit Majority” of the Limited Partners, which means at least a majority of the outstanding Common Units and outstanding Preferred Units, with such Preferred Units to be treated as Common Units on an “as if” converted basis, voting together as a single class. Holdings owns approximately 72% of the voting power of the Partnership’s outstanding limited partner interests, a sufficient number to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on behalf of the Limited Partners. Concurrently with the execution of the Merger Agreement, Holdings delivered the Written Consent approving the Merger Agreement and the transactions contemplated thereby, including the Merger. As a result, the Partnership has not solicited and is not soliciting your approval of the Merger Agreement or the Merger, and does not intend to call a meeting of the Limited Partners to approve the Merger Agreement or the transactions contemplated thereby, including the Merger. See “The Merger Agreement—Conditions to Completion of the Merger.”

Q:	*What will happen in the Merger?*

In the Merger, Merger Sub will merge with and into the Partnership. The Partnership will survive as an indirect wholly owned subsidiary of Parent. If the Merger is completed, the Common Units will cease to be listed on the NYSE, will be deregistered under the Exchange Act, and will cease to be publicly traded. See “Special Factors—Effects of the Merger.”

Q:	*What will I, as a Common Unitholder, receive if the Merger is completed?*

Upon completion of the Merger, you will be entitled to receive (i) $15.85 per Common Unit in cash, without interest, less any applicable withholding taxes, and (ii) any distribution in respect of the Common Units with a record date occurring prior to the Effective Time that may have been declared by the Partnership on the Common Units in accordance with the terms of the Merger Agreement and the Partnership Agreement and which remains unpaid at the Effective Time. See “The Merger Agreement—Conditions to Completion of the Merger.”

Q:	*Will the Partnership continue to pay quarterly distributions?*

During the period from July 25, 2022, the date of the Merger Agreement, until consummation of the Merger, if permitted by applicable law and in accordance with the terms and conditions in the Partnership Agreement, the General Partner will cause the Partnership to declare and pay regular quarterly cash distributions to the Common Unitholders consistent with past practice. In no event will any regular quarterly cash distribution declared or paid by Partnership to the Common Unitholders and the holders of the Preferred Units be less than $0.300 per Common Unit and $0.2363 per Preferred Unit, respectively. See “The Merger Agreement.”

Q:	*How does the $15.85 per Common Unit Merger Consideration compare to the market price of the Common Units prior to the execution of the Merger Agreement?*

The $15.85 per Common Unit Merger Consideration represents an approximate 25% premium to the trailing 30-day volume-weighted average price (“VWAP”) of the Common Units as of February 10, 2022 (the last trading day prior to the time that Parent offered to acquire all of the Public Common Units), an approximate 23% premium to the closing price of the Common Units on February 10, 2022, and an approximate 13% premium to the trailing 30-day VWAP of the Common Units as of July 22, 2022 (the last trading day prior to the Conflicts Committee’s approval of the Merger). See “Common Unit Market Price and Distribution Information—Common Unit Market Price Information.”

Q:	*Did the Conflicts Committee approve the Merger Agreement and the Merger?*

Yes. The Conflicts Committee, consisting of the three directors who meet the independence and other qualifications set forth in the Partnership Agreement for membership on the Conflicts Committee, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including the Public Unitholders; (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger (the foregoing constituting “Special Approval” for all purposes of the Partnership Agreement, including Section 7.10(a) thereof); (iii) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement; and (iv) recommended that the GP Board (A) direct that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement and (B) authorize the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement. See “Special Factors—Reasons for Approval of the Merger Agreement and the Merger by the Conflicts Committee and the GP Board—Reasons for the Conflicts Committee’s Approval” beginning on page 26 of this information statement.

Q:	*Did the GP Board recommend that the Limited Partners approve the Merger Agreement and the Merger?*

Yes, the GP Board unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are (1) fair and reasonable to the Public Unitholders and (2) in the best interests of the Partnership, including the Public Unitholders, (b) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, (c) approved the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby, including the Merger, and (d) directed that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement, recommended approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by the Limited Partners and authorized the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement. See “Special Factors—Reasons for Approval of the Merger Agreement and the Merger by the Conflicts Committee and the GP Board—Reasons for the GP Board’s Recommendation” beginning on page 30 of this information statement.

Q:	*When do you expect the Merger to be completed?*

Parent and the Partnership expect the Merger will close as soon as possible following the satisfaction of the closing conditions to the Merger described in this information statement, which the parties expect to occur in the fourth quarter of 2022. See “The Merger Agreement—Effective Time; Closing.”

Q:	*What if the Merger is not completed?*

If the Merger is not completed because the closing conditions are not satisfied or waived, you will not receive any form of consideration for your Common Units in connection with the Merger. Instead, the Partnership will remain a publicly traded master limited partnership, and the Common Units will continue to be listed and traded on the NYSE.

Q:	*What conditions must be satisfied to complete the Merger?*

Parent and the Partnership are not required to complete the Merger unless a number of customary conditions are satisfied or waived. For a more complete summary of the conditions that must be satisfied or waived prior to the completion of the Merger, see “The Merger Agreement—Conditions to Completion of the Merger.”

Q:	*What do I need to do now?*

A:	No action by you is requested or required at this time. If the Merger is consummated, you will receive any relevant instructions regarding the surrender of, and payment of the Merger Consideration for, your Common Units. See “The Merger Agreement—The Merger Consideration.”

Q:	*What happens if I sell my Common Units before the Effective Time?*

A:	If you transfer your Common Units before the Effective Time, you will transfer the right to receive the per unit Merger Consideration, if the Merger is consummated, to the person to whom you transfer your Common Units. See “The Merger Agreement—The Merger Consideration.”

Q:	*How will I receive the per unit Merger Consideration to which I am entitled?*

Promptly after the Effective Time, the Paying Agent will mail or provide to each Public Unitholder of record certain transmittal materials and instructions for use in effecting the surrender of Common Units to the Paying Agent. The Partnership does not have certificated Common Units as of the date of this information statement. As such, your Common Units are held in “street name” through a bank, brokerage firm or other nominee, and you should contact your bank, brokerage firm or other nominee for instructions as to how to effect the surrender of your “street name” Common Units in exchange for the per unit Merger Consideration. In the event that unit certificates are issued to you after the date of this information statement, please do not send such certificates to the Paying Agent until you receive the transmittal materials and instructions for use in effecting the surrender of Common Units to the Paying Agent. See “The Merger Agreement—The Merger Consideration.”

Q:	*Am I entitled to appraisal or dissenters’ rights?*

A:	No. Common Unitholders are not entitled to dissenters’ rights of appraisal under the Partnership Agreement, the Merger Agreement or applicable Delaware law. See “Special Factors—No Appraisal Rights.”

Q:	*What are the expected U.S. federal income tax consequences to Common Unitholders as a result of the Merger?*

A:	If you are a U.S. Common Unitholder (as defined in the section titled “Material U.S. Federal Income Tax Consequences of the Merger”), the receipt of cash in exchange for Common Units pursuant to the Merger

will be a taxable transaction for U.S. federal income tax purposes and the resulting tax liability, if any, will depend on your particular situation. In general, gain or loss recognized on the receipt of cash in exchange for Common Units will be taxable as capital gain or loss, a portion of which will be separately computed and taxed as ordinary income or loss under the Code. Accordingly, you should consult your tax advisors regarding the particular tax consequences to you of the exchange of Common Units for cash pursuant to the Merger in the light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws). See “Material U.S. Federal Income Tax Consequences of the Merger” for a more complete discussion of certain U.S. federal income tax consequences of the Merger.

Q:	*What is “householding”?*

The Partnership has adopted a procedure approved by the SEC called “householding.” Under this procedure, Common Unitholders who have the same address and have consented to the Partnership’s mailing of proxy materials and other unitholder information only to one account in such household will receive only one paper copy of this information statement, unless one or more of these Common Unitholders notifies the Partnership that they wish to continue receiving individual copies. This procedure helps reduce the Partnership’s printing costs and postage fees.

A number of brokerage firms with account holders who are Common Unitholders may also use householding. Once you have received notice from your bank or broker that it will be householding materials to your address, householding generally will continue until you are notified otherwise or until you revoke your consent.

If, at any time, you no longer wish to participate in “householding” and you prefer to receive separate materials, please notify your broker or write to the following address:

SHELL MIDSTREAM PARTNERS, L.P.

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Attention: Investor Relations

Phone: (832) 337-2837

For further discussion of householding matters, see “Other Matters—Householding of Materials.”

Q:	*Who can help answer my questions?*

A:	If you have any questions about the Merger or need additional copies of this information statement, you should contact the Partnership at the above address and phone number.

SPECIAL FACTORS

This section of the information statement describes the material aspects of the proposed Merger. This section may not contain all of the information that is important to you. You should carefully read this entire information statement and the documents incorporated herein by reference, including the full text of the Merger Agreement and Intrepid’s opinion for a more complete understanding of the Merger. Copies of the Merger Agreement and Intrepid’s opinion are attached hereto as Annex A and Annex B, respectively. In addition, important business and financial information about the Partnership is included in or incorporated into this information statement by reference. See “Where You Can Find More Information.”

Effects of the Merger

Pursuant to the Merger Agreement, Merger Sub, an indirect wholly owned subsidiary of Parent, will merge with and into the Partnership, with the Partnership surviving the Merger and continuing to exist as a Delaware limited partnership, and each Public Common Unit will be converted into the right to receive the Merger Consideration. If the Merger is completed, (i) the Public Unitholders will no longer have an equity interest in the Partnership, (ii) the Common Units will no longer be listed on the NYSE, (iii) the Common Units will be deregistered under the Exchange Act as promptly as practicable following the Effective Time and (iv) Parent, as the parent of Holdings, the General Partner and Merger Sub, will indirectly own all of the limited partner interests and the non-economic general partner interest in the Partnership.

The limited liability company interests in Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into a number of Common Units in the Partnership as the surviving entity in the Merger equal to the number of Public Common Units converted into the right to receive Merger Consideration. At the Effective Time, the books and records of the Partnership will be revised to reflect (i) the conversion and cancellation of all Public Common Units and the right to receive the Merger Consideration, (ii) the conversion of the limited liability company interests in Merger Sub and that, immediately after the Effective Time, Holdings and SOPC West will be the only holders of Common Units and Limited Partners and (iii) the continuation of the existence of the Partnership without dissolution.

The (i) non-economic general partner interest, (ii) the Common Units held by Parent and its affiliates and (iii) the Preferred Units, each as are issued and outstanding immediately prior to the Effective Time will not be cancelled, will not be converted into, or entitle the holder thereof to receive, Merger Consideration and will remain outstanding as equity interests in the Partnership as the surviving entity in the Merger.

As a result and upon consummation of the Merger, the Partnership will cease to be a publicly traded partnership and the Common Units will no longer be traded on the NYSE. The Public Unitholders will no longer have any interest in the Partnership’s future earnings or growth. The Merger will have the federal tax consequences described under “Material U.S. Federal Income Tax Consequences of the Merger.”

The Partnership’s net book value (calculated as total assets minus total liabilities) as of June 30, 2022 was approximately $(441) million, and the Partnership’s net income attributable to the Partnership for the six months ended June 30, 2022 was approximately $306 million. Based on their ownership in the Partnership on an as-converted basis, the Shell Filing Parties’ aggregate beneficial interest in the Partnership’s net book value as of June 30, 2022 was approximately 72% (approximately $(318) million) and the Shell Filing Parties’ aggregate beneficial interest in the Partnership’s net income attributable to the Partnership for the six months ended June 30, 2022 was approximately 72% (approximately $221 million). If the Merger is consummated, the Shell Filing Parties’ aggregate beneficial interest in the Partnership’s net book value and net income attributable to the Partnership each will increase to 100%. Accordingly, if the Merger is consummated, the Shell Filing Parties’ aggregate beneficial interest in the Partnership’s net book value and net income attributable to the Partnership will increase to approximately $(441) million and approximately $306 million, respectively (based on the Partnership’s June 30, 2022 financial data). Parent and its affiliates will also be entitled to any future increase in the Partnership’s value and all income generated by the Partnership’s operations going forward.

Background of the Merger

Parent and its management regularly review operational and strategic opportunities to increase value for Shell’s investors. Likewise, since its formation and initial public offering, the Partnership has executed a strategy to increase value for its investors. In connection with these reviews, the parties have, from time to time, evaluated potential transactions that would further their respective strategic objectives.

Parent and its controlled affiliates formed the Partnership to serve as a growth vehicle for Shell’s midstream business by accessing public capital markets. Following the Partnership’s initial public offering in 2014, Parent and its affiliates engaged in a number of dropdown transactions through April 2020 to support the Partnership’s growth strategy. These transactions, along with the restructuring discussed below, were funded by a combination of cash raised by borrowings from credit facilities with Parent and its affiliates, public issuances of Common Units by the Partnership and the direct issuance by the Partnership of Common Units and the Preferred Units to Parent and its affiliates. Additionally, as part of its efforts to support the Partnership’s growth strategy and to lower its cost of capital, Parent and its affiliates agreed to waive payments totaling $130 million with respect to the Partnership’s incentive distribution rights and Common Units beginning in 2019 and, concurrently with the April 2020 dropdown transaction, completed a restructuring that eliminated the Partnership’s incentive distribution rights and the General Partner’s economic general partner interest. In May 2021, an affiliate of Parent also engaged in a transaction with the Partnership in which certain assets of the Partnership were exchanged for Parent’s remaining interests in Zydeco Pipeline Company LLC.

In recent years, Parent has from time to time considered the environment for MLPs generally, and for the Partnership specifically, including the reduced accessibility of equity capital markets for MLPs, which limited the ability of MLPs to fund acquisitions using additional equity issuances; the increasing cost of capital for MLPs, even for MLPs that had already eliminated their incentive distribution rights; the increased desire of investors for companies legally structured as traditional corporations for governance and liquidity reasons; the passage of the Tax Cuts and Jobs Act of 2017, which lowered the U.S. federal corporate income tax rate from 35% to 21% and thereby reduced the relative tax benefits of the MLP pass-through structure; and rising interest rates and inflationary pressures and the perceived effects of such market dynamics on the trading prices for the Common Units. These market trends have led to numerous transactions involving MLPs, including buy-ins of MLPs by their corporate sponsors, acquisitions of MLPs by third parties, conversions of MLPs to corporations for income tax purposes and simplifications of MLPs in which incentive distribution rights are modified or eliminated to improve an MLP’s cost of capital. The overall result of these transactions, combined with a lack of initial public offerings by MLPs in recent years, has been a significant reduction in the number of outstanding MLPs.

As a result of these considerations and in the light of the uncertainty surrounding the early phases of the COVID-19 pandemic, in March 2020 Parent began to explore the feasibility of acquiring the Partnership either through a negotiated merger or by utilizing the limited call right included in the Partnership Agreement, which would allow Parent to acquire the outstanding Public Common Units at a specified price once it owned 75% of the total outstanding Common Units. In exploring such a transaction, Parent considered various options to reach the 75% threshold required to exercise the limited call right. Parent ultimately decided against pursuing a transaction with respect to the Partnership at that time due to the continuing uncertain effects of the COVID-19 pandemic and overall market conditions on Shell and the Partnership. No such potential transaction was discussed with either management of the General Partner or the GP Board.

Management of Parent and its affiliates continued to monitor the Partnership’s performance and the market for MLPs generally throughout the remainder of 2020 and 2021. Performance of the Common Units continued to decline during this period, and the Partnership decreased its distribution for the quarter ended June 30, 2021. In January 2022, Parent again began actively considering potential options with respect to its investment in the Partnership and engaged Baker Botts L.L.P. (“Baker Botts”) and Richards, Layton & Finger, P.A. (“RLF”) to serve as its counsel in connection with a potential buy-in transaction. Parent also engaged Barclays Capital Inc. (“Barclays”) on February 8, 2022, to serve as its financial advisor. Following initial discussions with its advisors, on February 4, 2022, Parent management sought and received organizational approval to pursue a potential

acquisition of the Public Common Units using cash consideration from Parent. Shell determined not to issue its own equity as consideration in a potential transaction, which would have been inconsistent with its announced share repurchase goals. Following this approval, Parent management and its advisors prepared to submit an initial cash proposal to the Partnership. On February 9, 2022, Parent discussed with Evercore Group L.L.C. (“Evercore”) the possibility of serving as a financial advisor to Parent in connection with the potential transaction. Parent subsequently engaged Evercore on March 17, 2022, to serve as its financial advisor alongside Barclays.

On February 10, 2022, representatives of Parent alerted the Chief Executive Officer and the Chief Financial Officer of the General Partner that Parent would be submitting a proposal with respect to the Proposed Transaction the following morning. On February 11, 2022, Thomas P. Stokes, Parent’s Head of Finance Acquisitions & Divestments and New Business Development, Americas, submitted to the GP Board on behalf of an affiliate of Parent a proposal with respect to the Proposed Transaction reflecting consideration of $12.89 per Public Common Unit payable in cash (the “Initial Proposal”), which was the closing price of the Common Units on the prior trading day. The Initial Proposal indicated that the applicable affiliate of Parent was only interested in acquiring all of the Public Common Units and had no interest in pursuing other strategic alternatives involving the Partnership. That same day, Parent amended its Schedule 13D to publicly disclose the Initial Proposal, and each of the Partnership and Parent issued press releases announcing the proposal.

Later that day, the GP Board held a meeting at which the GP Board constituted the Conflicts Committee and authorized the Conflicts Committee to, among other things, review, evaluate and negotiate the Proposed Transaction for the purpose of determining whether to grant “Special Approval” under the Partnership Agreement. Following the meeting of the GP Board, the Conflicts Committee held an initial meeting to discuss the Initial Proposal.

Following the Initial Proposal, Mr. Stokes held several discussions on February 14, 2022 and February 15, 2022 with management of the General Partner and the members of the GP Board concerning next steps with regard to the Proposed Transaction and preparation of a management presentation to the Conflicts Committee and its advisors.

On February 14 and 15, 2022, the Conflicts Committee interviewed representatives of potential legal counsels to advise the Conflicts Committee in connection with the Proposed Transaction. The Conflicts Committee ultimately selected Gibson Dunn as its legal counsel with respect to the Proposed Transaction.

On February 22, 2022, the Conflicts Committee met with the other members of the GP Board and provided a general status update of the Proposed Transaction process.

On February 23 and 24, 2022, the Conflicts Committee interviewed representatives of four potential financial advisors to advise the Conflicts Committee in connection with the Proposed Transaction.

On February 25, 2022, the Conflicts Committee met with representatives of Gibson Dunn. At the meeting, the Conflicts Committee approved the engagement of Intrepid as its financial advisor with respect to the Proposed Transaction. The Conflicts Committee and representatives of Gibson Dunn also discussed the transaction process, certain issues and considerations in the evaluation and negotiation of the Proposed Transaction, and next steps.

On March 4, 2022, the GP Board, by resolutions, confirmed that each of James J. Bender, Carlos A. Fierro and Rob L. Jones continued to satisfy the requirements under the Partnership Agreement to serve on the Conflicts Committee and authorized, and ratified the prior authorization of, the Conflicts Committee to (i) consider, review, evaluate and analyze any potential conflicts that may exist among or between (A) the General Partner and its affiliates and (B) the Partnership and the Public Unitholders arising in connection with the Proposed Transaction; (ii) perform appropriate due diligence on and valuation analyses with respect to the Proposed Transaction; (iii) consider, review, evaluate and analyze the terms and conditions of the Proposed Transaction submitted to the GP Board by an affiliate of Parent, on behalf of the Partnership and the Public Unitholders;

(iv) negotiate the terms and conditions and any documentation of the Proposed Transaction on behalf of the Partnership and the Public Unitholders directly with Parent and its affiliates and the counsel and advisor to each of them, as the Conflicts Committee deems necessary or appropriate, in its sole discretion; (v) review and make such investigation of potential alternatives to the Proposed Transaction, including maintaining the status quo, as the Conflicts Committee deems necessary or appropriate, in its sole discretion; (vi) consult with, advise and/or direct management of the Partnership in connection with discussions and/or negotiations concerning potential terms and conditions of the Proposed Transaction; (vii) determine whether the Proposed Transaction is in the best interest of the Partnership and the Public Unitholders; and (viii) determine whether to approve, and to recommend that the GP Board approve, the Proposed Transaction, with any such approval by the Conflicts Committee constituting “Special Approval” for all purposes under the Partnership Agreement, including but not limited to Section 7.10(a) thereof. The GP Board also authorized and ratified the retention of legal and financial advisors by the Conflicts Committee in its sole discretion.

On March 8, 2022, the Conflicts Committee met with representatives of Gibson Dunn to discuss the materials prepared by Gibson Dunn regarding the role and duties of the Conflicts Committee, the framework for resolution of conflicts of interest involving the Partnership, the process and recommendations for resolution of conflicts of interest in connection with the Conflicts Committee’s exploration, consideration, review and evaluation of the Proposed Transaction and related topics. After such discussion, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid, at which meeting Intrepid reviewed the materials prepared by Intrepid with respect to the Proposed Transaction. The Conflicts Committee and representatives of Gibson Dunn and Intrepid also discussed the transaction process, certain issues and considerations in the evaluation and negotiation of the Proposed Transaction, and next steps.

On March 9, 2022, the Conflicts Committee and representatives of Gibson Dunn and Intrepid met with management of the General Partner, members of the Parent transaction team and representatives of Barclays, Evercore and Baker Botts, during which meeting management of the General Partner presented to the Conflicts Committee and its advisors a presentation regarding the Proposed Transaction. During the presentation, management of the General Partner provided a summary of management’s projections relating to the Partnership’s business at an asset level, discussed specific potential positive and negative impacts on the Partnership’s business during the forecast period and answered questions posed by Intrepid and members of the Conflicts Committee regarding the projections. After the meeting with management of the General Partner, the Conflicts Committee, Gibson Dunn and Intrepid had a preliminary discussion regarding the presentation and next steps for the Proposed Transaction.

Also on March 9, 2022, the Conflicts Committee and its advisors were given access to a virtual data room containing various due diligence information with respect to the Partnership and its business. Following the management presentation, representatives of the General Partner held a series of due diligence sessions with Intrepid, Gibson Dunn and members of the Conflicts Committee through April 11, 2022. Aside from participation in these due diligence sessions and management presentations, management of the General Partner and the members of the GP Board affiliated with Parent were not involved in the ongoing negotiations between Parent and the Conflicts Committee.

On March 28, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the materials prepared by Intrepid evaluating the Proposed Transaction based on the preliminary data provided by the Parent transaction team and management of the General Partner.

On April 8, 2022, the Parent transaction team and management of the General Partner provided updated financial projections of the Partnership (the “Interim Projections”) to the Conflicts Committee and its advisors.

On April 12, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the materials prepared by Intrepid evaluating the Proposed Transaction based on the Interim Projections.

On April 13, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss a potential counterproposal with respect to the Proposed Transaction. After the discussion, the Conflicts Committee members unanimously agreed to reject the Initial Proposal and to make a counterproposal whereby an affiliate of Parent would acquire all of the Public Common Units at a price of $17.50 per Public Common Unit payable in cash (the “First Committee Counterproposal”). The Conflicts Committee members also unanimously agreed that, on the Conflicts Committee’s behalf, Gibson Dunn should deliver to the applicable affiliate of Parent a letter setting forth the First Committee Counterproposal.

On April 14, 2022, Gibson Dunn delivered the letter setting forth the First Committee Counterproposal to the applicable affiliate of Parent on behalf of the Conflicts Committee.

After receiving the First Committee Counterproposal, on April 18, 2022, representatives of Parent held a meeting with Barclays and Evercore at which the details of the First Committee Counterproposal were discussed along with how the premium implicit in the counterproposal compared to recent precedent transactions. Following this meeting and internal discussions, on April 21, 2022, an affiliate of Parent delivered to the Conflicts Committee a response to the First Committee Counterproposal, which proposed consideration of $14.02 per Public Common Unit payable in cash (such response, the “Second Proposal,” and such proposed consideration, the “Second Proposed Consideration”).

On April 25, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the Second Proposal, at which meeting Intrepid reviewed the materials prepared by Intrepid evaluating the Proposed Transaction. After such discussion, the Conflicts Committee members unanimously agreed that Intrepid should contact Evercore and Barclays to obtain more information with respect to the Second Proposal, including the rationale for the Second Proposed Consideration, and report back to the Conflicts Committee.

On April 26, 2022, Intrepid had a call with Barclays regarding the Second Proposal, during which Barclays informed Intrepid that Barclays did not have Parent and its affiliates’ valuation framework supporting the Second Proposed Consideration.

On April 27, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid. Intrepid reported on the call with Barclays on the previous day. Discussion then ensued among the Conflicts Committee, Gibson Dunn and Intrepid regarding the Second Proposal and Intrepid’s call with Barclays. After such discussion, the Conflicts Committee members unanimously agreed to reject the Second Proposal, noting that the Second Proposed Consideration was well below the Conflicts Committee’s view of the intrinsic value of the Partnership and below the market trading price of the Common Units. The Conflicts Committee members directed Gibson Dunn to prepare a draft form of counterproposal letter for the Conflicts Committee’s review, with the amount of the proposed consideration to be further discussed by the Conflicts Committee.

On April 29, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss a potential counterproposal. After such discussion, the Conflicts Committee members unanimously agreed: (i) to make a counterproposal whereby an affiliate of Parent would acquire all of the Public Common Units at a price of $17.10 per Public Common Unit payable in cash (the “Second Committee Counterproposal”) and (ii) that, on the Conflicts Committee’s behalf, Intrepid should deliver the Second Committee Counterproposal verbally to Barclays and Gibson Dunn should deliver to the applicable affiliate of Parent a letter setting forth the Second Committee Counterproposal. Later that day, on the Conflicts Committee’s behalf, Intrepid verbally delivered the Second Committee Counterproposal to Barclays, and Gibson Dunn delivered a letter setting forth the Second Committee Counterproposal to the applicable affiliate of Parent.

Between May 2 and May 6, 2022, Parent held a series of discussions with its financial and legal advisors to discuss the Second Committee Counterproposal.

On May 6, 2022, Intrepid had a call with Barclays. During the call, Barclays verbally delivered a proposal with respect to the Proposed Transaction on behalf of an affiliate of Parent, which proposed consideration of $14.75 per Public Common Unit payable in cash (such proposal, the “Third Proposal,” and such proposed consideration, the “Third Proposed Consideration”). After the call between Intrepid and Barclays, an affiliate of Parent delivered a letter setting forth the Third Proposal to the Conflicts Committee.

Later that day, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the Third Proposal. Representatives of Intrepid reviewed materials prepared by Intrepid analyzing the Proposed Transaction. The Conflicts Committee and representatives of Gibson Dunn and Intrepid also discussed materials sent by a purported holder of Public Common Units to the Conflicts Committee regarding such purported holder’s valuation of the Public Common Units. After such discussion, the Conflicts Committee instructed Intrepid to call Barclays to obtain more information regarding the Third Proposal, including the rationale of the Third Proposed Consideration, which Intrepid did after the meeting.

Later that day, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid, during which meeting representatives of Intrepid reported on the call with Barclays earlier that afternoon. The Conflicts Committee and representatives of Gibson Dunn and Intrepid then discussed the Third Proposal. After such discussion, the Conflicts Committee members unanimously agreed: (i) to reject the Third Proposal; and (ii) that Intrepid should inform Barclays, on behalf of the Conflicts Committee, that the Conflicts Committee would not approve the Proposed Transaction for consideration less than $16.00 per Public Common Unit.

On May 9, 2022, Intrepid had a call with Barclays, during which Intrepid informed Barclays, on behalf of the Conflicts Committee, that the Conflicts Committee was currently contemplating a price per Public Common Unit that was in the $16s. In response, on behalf of an affiliate of Parent, Barclays asked that the Conflicts Committee deliver its counterproposal in writing. Also on May 9, 2022, the chairman of the Conflicts Committee, Mr. James Bender, and representatives of Gibson Dunn and Intrepid received an oral presentation from a purported holder of Public Common Units regarding such purported holder’s valuation of the Public Common Units.

Later that day, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid, during which meeting representatives of Intrepid reported on the call with Barclays earlier that day. Discussion then ensued among the Conflicts Committee members and representatives of Gibson Dunn and Intrepid regarding a potential counterproposal and negotiation strategy. After such discussion, the Conflicts Committee members unanimously agreed: (i) to make a counterproposal whereby an affiliate of Parent would acquire all of the Public Common Units at a price of $16.85 per Public Common Unit payable in cash (the “Third Committee Counterproposal”) and (ii) that, on the Conflicts Committee’s behalf, Intrepid should deliver the Third Committee Counterproposal verbally to Barclays, and Gibson Dunn should deliver to the applicable affiliate of Parent a letter setting forth the Third Committee Counterproposal.

On May 10, 2022, on the Conflicts Committee’s behalf, Intrepid verbally delivered the Third Committee Counterproposal to Barclays, and Gibson Dunn delivered to the applicable affiliate of Parent a letter setting forth the Third Committee Counterproposal. Following receipt of the Third Committee Counterproposal, Mr. Stokes called Mr. Bender to propose a meeting between the parties and their financial and legal advisors, which was set for May 24, 2022.

Prior to the May 24, 2022 meeting, Parent held a series of discussions with its financial and legal advisors to prepare for such meeting. Parent also held discussions with its advisors regarding potential alternative transaction structures should an agreement with the Conflicts Committee not be reached on acceptable terms. These alternative structures involved conversion of the Preferred Units and additional Common Unit purchases by Parent, either through a tender offer, individually negotiated purchases or open market purchases. No such alternative structure was discussed with the Conflicts Committee or its advisors.

On May 24, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss and prepare for the upcoming meeting later that afternoon of the Conflicts Committee and its advisors with Parent and its advisors regarding the Proposed Transaction.

Later that day, the Conflicts Committee and representatives of Intrepid and Gibson Dunn met with members of the Parent transaction team and representatives of Barclays, Evercore and Baker Botts. At that meeting, the parties’ financial advisors discussed the respective methodologies they were using to evaluate the Proposed Transaction and key differences between them. Mr. Stokes then noted for the Conflicts Committee and its advisors certain elements that Parent believed may be leading the Conflicts Committee to overvalue the Partnership. After this meeting, Mr. Stokes and Mr. Bender further discussed the matters raised at the meeting and potential paths forward with respect to the Proposed Transaction. Mr. Stokes advised that Parent would revert with a revised proposal.

Following the May 24, 2022 meeting, Parent held further discussions with its advisors regarding potential alternative transaction structures, but continued to view a negotiated transaction with the Conflicts Committee as the preferred path forward. Additionally, as part of its normal business planning process, management of the General Partner prepared updated projections for the Partnership’s business during this period.

On June 15, 2022, the Parent transaction team and management of the General Partner provided to the Conflicts Committee and its advisors further updated financial projections of the Partnership (the “Updated Financial Projections”).

On June 16, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the Updated Financial Projections, during which meeting representatives of Intrepid reviewed with the Conflicts Committee the materials prepared by Intrepid comparing the Updated Financial Projections against the Interim Projections. After such discussion, the Conflicts Committee members unanimously agreed that Intrepid should contact Parent and Parent’s financial advisors on behalf of the Conflicts Committee to arrange a meeting among the Conflicts Committee, Parent and management of the General Partner to discuss the Updated Financial Projections.

On June 20, 2022, Mr. Bender had a call with Mr. Stokes with respect to the Proposed Transaction. During the call, Mr. Stokes discussed the Updated Financial Projections and informed Mr. Bender that an affiliate of Parent would deliver to the Conflicts Committee later that day a proposal with respect to the Proposed Transaction proposing consideration of $15.10 per Public Common Unit payable in cash (such proposal, the “Fourth Proposal,” and such proposed consideration, the “Fourth Proposed Consideration”).

Following the call, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the call between Mr. Bender and Mr. Stokes. After such discussion, the Conflicts Committee members agreed that, after the receipt of the Fourth Proposal, the Conflicts Committee would convene another meeting to discuss the Proposed Transaction. Later that day, an affiliate of Parent delivered a letter setting forth the Fourth Proposal to the Conflicts Committee. After the delivery of the Fourth Proposal, Parent continued to explore with its advisors potential alternative transaction structures.

On June 22, 2022, the Conflicts Committee and representatives of Gibson Dunn and Intrepid met with members of the Parent transaction team, management of the General Partner and representatives of Barclays, Evercore and Baker Botts, during which meeting management of the General Partner responded to questions asked by Intrepid on behalf of the Conflicts Committee with respect to the Updated Financial Projections.

On June 23, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss next steps for the Proposed Transaction. After such discussion, the Conflicts Committee members unanimously agreed that Intrepid should update its financial analysis based on the Updated Financial Projections and current capital market conditions and present to the Conflicts Committee such updated analysis at a later meeting.

On June 28, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the updated financial analysis prepared by Intrepid with respect to the Proposed Transaction based on the Updated Financial Projections and current capital market conditions. The Conflicts Committee members and

representatives of Gibson Dunn and Intrepid also discussed communications from purported holders of Public Common Units and next steps with respect to the Proposed Transaction. After such discussion, the Conflicts Committee members unanimously directed Intrepid to contact Evercore and Barclays to discuss the Proposed Transaction, which Intrepid did after the meeting.

Later that day, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the call Intrepid had with Evercore and Barclays earlier that day. After such discussion, the Conflicts Committee members unanimously agreed that, on behalf of the Conflicts Committee, Mr. Bender should contact Mr. Stokes to discuss the Proposed Transaction.

On the same day, the Parent transaction team and management of the General Partner provided to the Conflicts Committee and its advisors further updated financial projections of the Partnership (the “Final Financial Projections”).

On June 29, 2022, Mr. Bender had a call with Mr. Stokes, during which Mr. Stokes, on behalf of an affiliate of Parent, verbally delivered a proposal to the Conflicts Committee with respect to the Proposed Transaction, which proposed consideration of $15.75 per Public Common Unit payable in cash (such proposal, the “Fifth Proposal,” and such proposed consideration, the “Fifth Proposed Consideration”).

On June 30, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the call between Mr. Bender and Mr. Stokes on the previous day, the Fifth Proposal and a potential counterproposal to be delivered by the Conflicts Committee to an affiliate of Parent. After such discussion, the Conflicts Committee members unanimously agreed: (i) to make a counterproposal whereby an affiliate of Parent would acquire all of the Public Common Units either (A) for $15.75 per Public Common Unit payable in cash, subject to approval by holders of a majority of the Public Common Units (“Majority of the Minority Approval”), or (B) for $16.00 per Public Common Unit payable in cash (the “Fourth Committee Counterproposal”); and (ii) that, on behalf of the Conflicts Committee, Mr. Bender should contact Mr. Stokes to verbally deliver the Fourth Committee Counterproposal, which Mr. Bender did on July 1, 2022.

Between July 1, 2022 and July 9, 2022, Mr. Bender had several calls with Mr. Stokes regarding the Fourth Committee Counterproposal and the Proposed Transaction. On a call between Mr. Bender and Mr. Stokes on July 9, 2022, Mr. Stokes, on behalf of an affiliate Parent, verbally delivered a proposal to the Conflicts Committee whereby: (i) an affiliate of Parent would acquire all the Public Common Units for $15.85 per Public Common Unit payable in cash (such proposed consideration, the “Sixth Proposed Consideration”) without the Majority of the Minority Approval; (ii) the Partnership would make quarterly distributions on the Common Units consistent with past practice; and (iii) if a record date for such distribution occurs before the closing of the Proposed Transaction, such distribution would be paid even if the payment date is post-closing (such proposal, the “Sixth Proposal”).

On July 11, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid to discuss the Sixth Proposal, during which meeting representatives of Intrepid reviewed with the Conflicts Committee an updated financial analysis prepared by Intrepid with respect to the Proposed Transaction based on the Final Financial Projections. After such discussion, the Conflicts Committee members unanimously agreed: (i) that the Sixth Proposal was acceptable, subject to negotiation and execution of definitive documentation, receipt of an acceptable fairness opinion from Intrepid and formal approval by the Conflicts Committee; and (ii) that, on behalf of the Conflicts Committee, Mr. Bender should convey that view to Mr. Stokes, which Mr. Bender did later that day.

On July 12, 2022, Baker Botts had a call with Gibson Dunn regarding the draft merger agreement to be provided in connection with the Proposed Transaction. After the call, Baker Botts sent to Gibson Dunn the draft merger agreement and a support agreement to be executed by Holdings concurrently with the execution of the Merger Agreement (“Support Agreement”), pursuant to which Holdings would agree to deliver the consent of a Unit Majority.

On July 15, 2022, the Conflicts Committee met with representatives of Gibson Dunn to discuss the draft merger agreement provided by Baker Botts in connection with the Proposed Transaction, the issues list prepared by Gibson Dunn summarizing Gibson Dunn’s proposed revisions to the draft merger agreement and a revised draft of the merger agreement prepared by Gibson Dunn, which, among other things, (i) required Holdings to deliver a written consent approving the Merger concurrently with the execution of the Merger Agreement and therefore eliminated the need for Holdings to execute a Support Agreement; (ii) revised the scope of the approval contemplated by the Conflicts Committee; (iii) deleted various interim operating covenants with respect to the Partnership; (iv) increased the cap on expense reimbursement to the terminating party in case of termination for material breach by the other party from $3.5 million to $5.0 million; and (v) required the Conflicts Committee’s authorization for any amendment to the Merger Agreement on behalf of the Partnership or the General Partner, or any determination, decision, approval, consent, waiver or agreement of the Partnership or the General Partner pursuant to the Merger Agreement. The Conflicts Committee members confirmed agreement with Gibson Dunn’s proposed changes in the revised draft of the merger agreement and directed Gibson Dunn to send the merger agreement markup to Baker Botts and the applicable affiliate of Parent, on behalf of the Conflicts Committee, which Gibson Dunn did after the meeting.

On July 19, 2022, the board of directors of Parent held a meeting at which they approved the Proposed Transaction and delegated to the Parent transaction team the authority to finalize and execute the transaction documentation. Later that day, Baker Botts sent a further revised merger agreement to Gibson Dunn. Among other things, the further revised draft (i) revised the scope of the approval contemplated by the Conflicts Committee; (ii) reinserted certain interim operating covenants with respect to the Partnership; (iii) accepted the increase of the cap on expense reimbursement in case of termination for material breach to $5.0 million; and (iv) required the Conflicts Committee’s approval for any amendment to the Merger Agreement on behalf of the Partnership or the General Partner, or any determination, decision, approval, consent, waiver or agreement of the Partnership or the General Partner pursuant to the Merger Agreement.

Later that day, Gibson Dunn sent a further revised draft of the merger agreement to Baker Botts and the applicable affiliate of Parent, which, among other things, revised the scope of the approval contemplated by the Conflicts Committee and deleted various interim operating covenants with respect to the Partnership.

Between July 20 and 23, 2022, representatives of Parent, Baker Botts, RLF and Gibson Dunn held a series of calls to discuss the scope of the approval contemplated by the Conflicts Committee. On July 20, 2022, management of the General Partner was informed of the status of the Proposed Transaction and was subsequently engaged to prepare materials regarding the Proposed Transaction for review by the full GP Board. Also between July 20 and 23, 2022, Baker Botts and Gibson Dunn exchanged further revised drafts of the merger agreement, which incorporated comments from management of the General Partner and representatives of the Partnership, and drafts of the Partnership’s disclosure schedules to the merger agreement prepared by representatives of the Partnership.

On July 25, 2022, the Conflicts Committee met with representatives of Gibson Dunn and Intrepid. Gibson Dunn discussed the summary of the Merger Agreement prepared by Gibson Dunn. Following the presentation by Gibson Dunn, representatives of Intrepid discussed materials prepared by Intrepid regarding financial analyses with respect to the Proposed Transaction and delivered an oral opinion, confirmed by delivery of a written opinion dated July 25, 2022, to the Conflicts Committee to the effect that, as of such date and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the Merger Consideration in the Proposed Transaction to be received by the Public Unitholders pursuant to the Merger Agreement is fair, from a financial point of view, to the Public Unitholders. After all representatives of Intrepid left the meeting, Gibson Dunn provided the Conflicts Committee with Gibson Dunn’s legal assessment of the Conflicts Committee process. Thereafter, the Conflicts Committee, by unanimous vote, (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including the Public Unitholders; (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, such approval constituting “Special Approval” of the Merger Agreement and the transactions contemplated thereby, including the Merger, for all purposes of the

Partnership Agreement, including Section 7.10(a) thereof; (iii) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement; and (iv) recommended that the GP Board (A) direct that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement and (B) authorize the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

Following a report from Mr. Bender regarding the process undertaken by the Conflicts Committee and receipt of the recommendation of the Conflicts Committee (and the approval of the General Partner’s sole member), as well as discussion regarding, among other things, the Conflicts Committee’s receipt of Intrepid’s opinion, the terms of the transaction documents and their negotiation by the various parties, including in-house counsel for the Partnership, the terms of comparable recent MLP buy-in transactions, and the process undertaken by the Conflicts Committee in connection with the Merger, at a meeting duly called and held on July 25, 2022, the GP Board unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are (1) fair and reasonable to the Public Unitholders and (2) in the best interests of the Partnership, including the Public Unitholders, (b) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, (c) approved the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby, including the Merger, and (d) directed that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement, recommended approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by the Limited Partners and authorized the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement. Later that afternoon, the parties executed the Merger Agreement, Holdings delivered the Written Consent, and the parties issued a joint press release announcing the execution of the Merger Agreement. The Partnership also filed a Form 8-K announcing the execution of the Merger Agreement, and Parent amended its Schedule 13D to reflect the execution of the Merger Agreement.

Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties

Under Section 7.10(a) of the Partnership Agreement, whenever a potential conflict of interest exists between the General Partner or any of its affiliates, on the one hand, and the Partnership, any Group Member or any Partner (each as defined in the Partnership Agreement), on the other hand, any resolution or course of action by the General Partner or its affiliates in respect of such conflict of interest will be permitted and deemed approved by the General Partner and all of the Partnership’s limited partners and will not constitute a breach of the Partnership Agreement, of any Group Member Agreement (as defined in the Partnership Agreement), of any agreement contemplated in the Partnership Agreement or in any Group Member Agreement, or of any duty stated or implied by law or equity, if the resolution or course of action in respect of such conflict of interest is approved by “Special Approval.” “Special Approval” is defined in the Partnership Agreement as approval by a majority of the members of the Conflicts Committee.

Under Section 7.10(b) of the Partnership Agreement, whenever the General Partner, the GP Board or any committee thereof (including the Conflicts Committee) makes a determination or takes, or declines to take, any other action, or any of its affiliates causes it to do so, in its capacity as the general partner of the Partnership as opposed to in its individual capacity, whether under the Partnership Agreement, any Group Member Agreement or any other agreement, then, unless another express lesser standard is provided for in the Partnership Agreement, the General Partner, the GP Board or such committee, or such affiliates causing it to do so, shall make such determination or take or decline to take such other action in good faith and shall not be subject to any other or different duties or standards (including fiduciary duties or standards) imposed by the Partnership Agreement, any other agreement contemplated thereby or under the DRULPA or any other law, rule or regulation or at equity. Pursuant to Section 7.10(b) of the Partnership Agreement, a determination or other action is deemed to be in “good faith” for purposes of the Partnership Agreement if the person or persons making such determination or taking or declining to take such other action subjectively believe that the determination or other action or inaction is in, or not adverse to, the best interests of the Partnership.

The Conflicts Committee determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including the Public Unitholders, and approved the Merger Agreement and the transactions contemplated thereby, including the Merger, such approval constituting “Special Approval” as such term is defined in the Partnership Agreement.

Pursuant to Section 7.10(a) of the Partnership Agreement, if a transaction giving rise to a potential conflict of interest is approved by “Special Approval”, then it is presumed that, in making its decision to approve such transaction, the Conflicts Committee and/or the GP Board acted in good faith. In any proceeding brought by any limited partner challenging such approval by the Conflicts Committee or the GP Board, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.

Under Section 7.11(b) of the Partnership Agreement, the General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the advice or opinion of such persons as to matters that the General Partner reasonably believes to be within such person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such advice or opinion.

Reasons for Approval of the Merger Agreement and the Merger by the Conflicts Committee and the GP Board

The Conflicts Committee

The Conflicts Committee consists of the three directors who meet the independence and other qualifications under the Partnership Agreement for membership on the Conflicts Committee: James J. Bender (Chairman), Carlos A. Fierro and Rob L. Jones. The Partnership Agreement requires that members of the Conflicts Committee (i) not be officers or employees of the General Partner or directors, officers or employees of its affiliates, (ii) are not holders of any ownership interest in the General Partner or its affiliates other than (A) Common Units and (B) awards that are granted to such director in his capacity as a director under any long-term incentive plan, equity compensation plan or similar plan implemented by the General Partner or the Partnership and (iii) are determined by the GP Board to be independent under the independence standards for directors who serve on an audit committee of a board of directors established by the Exchange Act and the rules and regulations of the SEC thereunder and by the NYSE.

In connection with the Proposed Transaction, the GP Board on March 4, 2022, by resolutions, reaffirmed that each of the members of the Conflicts Committee continued to satisfy the requirements under the Partnership Agreement to serve on the Conflicts Committee and authorized, and ratified the prior authorization of, the Conflicts Committee to (i) consider, review, evaluate and analyze any potential conflicts that may exist among or between (A) the General Partner and its affiliates and (B) the Partnership and the Public Unitholders, arising in connection with the Proposed Transaction, (ii) perform appropriate due diligence on and valuation analyses with respect to the Proposed Transaction, (iii) consider, review, evaluate and analyze the terms and conditions of the Proposed Transaction submitted to the GP Board by an affiliate of Parent, on behalf of the Partnership and the Public Unitholders, (iv) negotiate the terms and conditions and any documentation of the Proposed Transaction on behalf of the Partnership and the Public Unitholders directly with Parent and its affiliates and the counsel and advisor to each of them, as the Conflicts Committee deems necessary or appropriate, in its sole discretion, (v) review and make such investigation of potential alternatives to the Proposed Transaction, including maintaining the status quo, as the Conflicts Committee deems necessary or appropriate, in its sole discretion, (vi) consult with, advise and/or direct management of the Partnership in connection with discussions and/or negotiations concerning potential terms and conditions of the Proposed Transaction, (vii) determine whether the Proposed Transaction is in the best interest of the Partnership and the Public Unitholders, and (viii) determine whether to approve, and to recommend that the GP Board approve, the Proposed Transaction, with any such approval by the Conflicts Committee constituting “Special Approval” for all purposes under the Partnership Agreement, including but not limited to Section 7.10(a) thereof. The GP Board also authorized and ratified the retention of legal and financial advisors by the Conflicts Committee in its sole discretion.

On July 25, 2022, the Conflicts Committee unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including the Public Unitholders; (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, such approval constituting “Special Approval” of the Merger Agreement and the transactions contemplated thereby, including the Merger, for all purposes of the Partnership Agreement, including Section 7.10(a) thereof; (iii) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement; and (iv) recommended that the GP Board (A) direct that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement and (B) authorize the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

Reasons for the Conflicts Committee’s Approval

At a meeting of the Conflicts Committee on July 25, 2022, the Conflicts Committee, by unanimous vote, (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including the Public Unitholders; (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, such approval constituting “Special Approval” of the Merger Agreement and the transactions contemplated thereby, including the Merger, for all purposes of the Partnership Agreement, including Section 7.10(a) thereof; (iii) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement; and (iv) recommended that the GP Board (A) direct that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement and (B) authorize the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

In evaluating the Proposed Transaction and reaching its determination and approval, the Conflicts Committee considered information supplied by management of the General Partner and Parent and its affiliates, consulted with its legal and financial advisors, and considered a number of factors. The Conflicts Committee also consulted with its legal counsel regarding its authority and duties.

The Conflicts Committee considered the following factors to be generally positive or favorable in making its determination and granting “Special Approval” of the Proposed Transaction:

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Through negotiation, the Conflicts Committee was able to increase the Merger Consideration by $2.96 per Public Common Unit, or approximately 23% as compared to the $12.89 per Public Common Unit offer initially proposed by an affiliate of Parent on February 11, 2022.

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The Conflicts Committee believed that $15.85 per Public Common Unit was likely the highest price per Public Common Unit that Parent would be willing to pay at the time of the Conflicts Committee’s determination and grant of “Special Approval.”

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The Merger Consideration represents an approximately 25% premium to the trailing 30-day VWAP of the Common Units as of February 10, 2022 (the last trading day prior to the time that Parent offered to acquire all of the Public Common Units), an approximate 23% premium to the closing price of the Common Units on February 10, 2022, and an approximate 13% premium to the trailing 30-day VWAP of the Common Units as of July 22, 2022 (the last trading day prior to the Conflicts Committee’s approval of the Merger).

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The financial analyses prepared by Intrepid, as financial advisor to the Conflicts Committee, and the oral opinion of Intrepid delivered to the Conflicts Committee on July 25, 2022 and subsequently confirmed in writing, which analyses and opinion the Conflicts Committee adopted as its own, that, as of such date and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and others matters set forth in Intrepid’s written opinion (as more fully described below under “Opinion of Financial Advisor to the Conflicts Committee”), the Merger Consideration in the Proposed Transaction to be received by the Public Unitholders pursuant to the Merger Agreement is fair, from a financial point of view, to the Public Unitholders.

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The Merger Consideration is an all-cash amount, which the Conflicts Committee believes provides greater value to the Public Unitholders than the long-term value of the Partnership as a publicly traded partnership, after taking into account the opportunities for, as well as the risks and challenges facing, the Partnership’s current business and financial prospects.

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The Conflicts Committee believed that there were no viable alternative transactions for the Partnership in lieu of a transaction with Parent that would provide comparable or superior value, in the light of Parent’s controlling position in the Partnership through Parent’s indirect ownership of the General Partner and approximately 72% of the voting power of the Partnership’s outstanding limited partner interests as of July 25, 2022, the Parent’s affiliate being the sole lender to the Partnership and its subsidiaries and the Conflicts Committee’s recognition of overall risks and uncertainties in midstream corporate and asset transactions.

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The Conflicts Committee’s belief that it was unlikely that any other transaction with a third party involving a sale of the Partnership or a significant interest in the Partnership or its assets could be consummated at the time of the Conflict Committee’s determination and approval in the light of Parent’s stated position when it delivered the Initial Proposal (and throughout its negotiations with the Conflicts Committee) that it was only interested in acquiring all of the outstanding Common Units owned by the Public Unitholders and had no interest in approving any combination of the Partnership with, or a sale of all or substantially all of the assets of the Partnership to, any other acquirer.

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Further increases in market interest rates, which are expected, may adversely affect the attractiveness of the Common Units to investors compared to other financial instruments or alternate investment opportunities.

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The Conflicts Committee’s belief that investor sentiment increasingly disfavors MLP structures as compared to alternative structures and, as a result, the state of the MLP debt and equity capital markets will continue to present challenges for the Partnership to fund acquisitions and growth capital expenditures.

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The receipt of cash consideration eliminates downside risk associated with the continued ownership of the Common Units, including any possible decrease in the future revenues and cash available for distribution, growth or value of the Partnership following the Merger.

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Parent’s and its affiliates’ historical status as one of the Partnership’s largest customers and primary sources of debt capital and the dependence of the Partnership’s growth on the growth of Parent’s and its affiliates’ businesses.

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The Partnership’s base business being unable to sustain the prior distribution level, leading the Partnership to decrease its distribution by 35% in the second quarter of 2021 and to maintain its distribution at such lower level.

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Given the difficulty the Partnership would face in accessing the capital markets to fund a dropdown, growth prospects for the Partnership were expected to be limited.

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The Written Consent executed and delivered by Holdings is sufficient to approve the Proposed Transaction on behalf of the Limited Partners, which increases certainty of Closing.

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Certain terms of the Merger Agreement, principally:

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Each Public Unitholder will receive $15.85 in cash for each Public Common Unit owned;

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Parent’s obligation to reimburse certain of the Partnership’s expenses, up to $5.0 million, in connection with the termination of the Merger Agreement as a result of a material uncured breach by Parent;

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Provisions prohibiting Parent and its subsidiaries, including the General Partner, from revoking or diminishing the authority of the Conflicts Committee, increasing the size of the Conflicts Committee or removing any member of the Conflicts Committee, in each case, without the consent of the Conflicts Committee between signing of the Merger Agreement and the Closing;

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Provisions requiring the prior written approval of the Conflicts Committee to amend the Merger Agreement and to authorize other actions on behalf of the Partnership and the General Partner as specified in the Merger Agreement;

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Provisions requiring the Partnership to make distributions of no less than $0.30 per Common Unit through the Effective Time and to pay any distributions with a record date prior to the Effective Time that remain unpaid as of the Effective Time;

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The limited nature of the operational representations and warranties and covenants given by the Partnership and its subsidiaries;

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The Merger Agreement contains only limited conditions and exceptions to the closing conditions, and the consummation of the Proposed Transaction is not contingent upon financing; and

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A provision prohibiting Parent, Holdings and the General Partner from transferring any interests in the Partnership that Parent, Holdings and the General Partner or their respective subsidiaries own beneficially or of record until Closing or the earlier termination of the Merger Agreement.

As part of its deliberative process, the Conflicts Committee considered the following factors to be generally negative or unfavorable in making its determination and granting “Special Approval” of the Proposed Transaction:

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The Conflicts Committee was not authorized to and did not engage in the review, solicitation, consideration or evaluation of any alternative proposals by third parties unaffiliated with Parent.

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The Common Units have, in the past, traded at levels that exceed the per unit Merger Consideration.

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The Merger Agreement does not include a condition that requires the approval by a majority of the Public Common Units, and therefore approval of the Proposed Transaction does not require the affirmative vote of any Public Unitholder.

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The fact that the market price of the Common Units could be affected by many factors, including the following if the Merger Agreement is terminated: (i) the reason for such termination and whether such termination resulted from factors adversely affecting the Partnership, (ii) the possibility that, as a result of the termination of the Merger Agreement, possible acquirers (including Parent and its affiliates in any future consideration) may consider the Partnership to be an unattractive acquisition candidate and (iii) the possible sale of Common Units by short-term investors following an announcement that the Merger Agreement was terminated.

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The risks and contingencies relating to the announcement and pendency of the Merger, including the potential for diversion of management and employee attention and the potential effect on the Partnership’s business and the restrictions on the conduct of the Partnership’s business during the period between the execution of the Merger Agreement and the completion of the Merger.

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Certain terms of the Merger Agreement, principally:

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The Partnership’s obligations to reimburse certain of Parent’s expenses, up to $5.0 million, in connection with the termination of the Merger Agreement as a result of a material uncured breach by the Partnership or the General Partner; and

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The operating covenants of the Partnership providing protection to Parent prior to Closing by restricting the Partnership’s ability to take certain actions prior to Closing that could reduce the value of the Common Units in the event the Merger Agreement is terminated.

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The Public Unitholders are not entitled to dissenters’ or appraisal rights under the Merger Agreement, the Partnership Agreement or Delaware law.

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The Public Unitholders will not have any equity participation in the Partnership following the consummation of the Proposed Transaction, and the Public Unitholders will accordingly cease to participate in the Partnership’s future earnings or growth, if any, or benefit from any increases, if any, in the value of the Common Units.

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The Proposed Transaction may result in a cash tax liability for certain Public Unitholders.

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The Partnership has incurred and will continue to incur transaction costs and expenses in connection with the Proposed Transaction, whether or not the Proposed Transaction is completed.

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Litigation may be commenced in connection with the Proposed Transaction, and such litigation may increase costs and result in a diversion of management focus.

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The Proposed Transaction might not be completed in a timely manner, or at all, and a failure to complete the Proposed Transaction could negatively affect the trading price of the Common Units.

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Some of the directors and executive officers of Parent, its affiliates and the General Partner may have interests in the Proposed Transaction that are different from, or in addition to, the interests of the Public Unitholders.

The Conflicts Committee also considered the following factors relating to the procedural safeguards that the Conflicts Committee believed were and are present with respect to the fairness of the Proposed Transaction and to permit the Conflicts Committee to make its determination and grant “Special Approval”, which the Conflicts Committee believes support its decision and provide assurance as to the procedural fairness of the Proposed Transaction to the Public Unitholders:

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The Conflicts Committee consists solely of directors who are not securityholders (other than of Common Units), officers or employees of the General Partner or its affiliates, are not officers, employees or controlling shareholders of Shell, any of its affiliates or the Partnership, are not otherwise affiliated with Parent and its affiliates and are all independent of management of the General Partner.

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The terms and conditions of the Merger Agreement, including the Merger Consideration, were determined as a result of arm’s length negotiations between Parent and the Conflicts Committee and their respective representatives that included multiple proposals and counterproposals.

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The Conflicts Committee retained independent financial and legal advisors with reputations, knowledge and experience with respect to public merger and acquisition transactions, MLPs, and midstream and oil and gas companies, as well as substantial experience advising MLPs and other companies with respect to transactions similar to the Proposed Transaction and familiarity with the Partnership and its business.

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The members of the Conflicts Committee are members of the GP Board and are familiar with, and understand, the businesses, assets, liabilities, results of operations, financial condition and competitive positions and prospects of the Partnership.

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The compensation of the members of the Conflicts Committee is in no way contingent on their approving the Proposed Transaction.

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Although no specific issues came to the attention of the Conflicts Committee with respect to the information it was ultimately provided, the Conflicts Committee was aware that Parent, as the controlling party of the Partnership, controlled the delivery and presentation of information the Conflicts Committee received for purposes of evaluating the Proposed Transaction and the fairness of the Merger Consideration to be received by the Public Unitholders.

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The resolutions of the GP Board establishing the Conflicts Committee granted authority to the Conflicts Committee, including the authority to determine whether or not to proceed with the Proposed Transaction and to negotiate the terms and conditions of the Proposed Transaction, and the members of the Conflicts Committee were aware that they were under no obligation to approve, and could reject, the Proposed Transaction.

After taking into account all of the factors set forth above, as well as others, the Conflicts Committee concluded that the potential benefits of the Proposed Transaction outweighed any negative or unfavorable considerations and determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including Public Unitholders.

The foregoing discussion of the information and factors considered by the Conflicts Committee is not intended to be exhaustive, but includes material factors the Conflicts Committee considered. In view of the variety of factors considered in connection with its evaluation of the Proposed Transaction and the complexity of these matters, the Conflicts Committee did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors considered in making its determination and granting its approval. In addition, each of the members of the Conflicts Committee may have given differing weights to different factors. The Conflicts Committee granted its approval based on the totality of information presented to, and the investigation conducted by, the Conflicts Committee. It should be noted that certain statements and other information presented in this section are forward-looking in nature and, therefore, should be read in the light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

The GP Board

The GP Board consists of seven directors, three of whom (Messrs. Bender, Fierro and Jones) constitute the Conflicts Committee. As such, some of the directors on the GP Board may have different interests in the Merger than the Public Unitholders. For a discussion of these and other interests of the members of the GP Board in the Merger, see “—Interests of the Directors and Executive Officers of the General Partner in the Merger.”

Following the receipt of the recommendation of the Conflicts Committee discussed above (and the approval of the General Partner’s sole member) and after considering the factors discussed below, on July 25, 2022, the GP Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are (A) fair and reasonable to the Public Unitholders and (B) in the best interests of the Partnership, including the Public Unitholders, (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) approved the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby, including the Merger, and (iv) directed that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval, recommended approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by the Limited Partners and authorized the Limited Partners to act by written consent. In making the determination described above, the GP Board has expressly adopted the analysis of the Conflicts Committee, which expressly adopted the analyses and opinion of Intrepid, among other factors considered in the course of making its recommendation that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

Reasons for the GP Board’s Recommendation

In determining that the Merger Agreement and the Proposed Transaction are fair and reasonable to the Public Unitholders and in the best interests of the Partnership, including the Public Unitholders, recommending that the Limited Partners vote in favor of the Merger Agreement and the Proposed Transaction and authorizing the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement, the GP Board considered a number of factors, including the following material factors:

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The terms of comparable recent MLP buy-in transactions, including the premium paid in such transactions.

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The approval of the General Partner’s sole member.

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The factors considered by the Conflicts Committee to be generally positive or favorable in making its determination and granting “Special Approval” of the Proposed Transaction, including the material factors considered by the Conflicts Committee to be generally positive or favorable described under “—Reasons for the Conflicts Committee’s Approval.”

The GP Board considered the following factors to be generally negative or unfavorable in making its determination and approvals, and the related recommendation to the Limited Partners:

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The Conflicts Committee was not authorized to and did not engage in the review, solicitation, consideration or evaluation of any alternative proposals by third parties unaffiliated with Parent. Since Parent indirectly controls the Partnership, it was unrealistic to expect an unsolicited third-party acquisition proposal to acquire assets or control of the Partnership, and it was unlikely that the Conflicts Committee could conduct a meaningful process to solicit interest in the acquisition of assets or control of the Partnership.

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The factors considered by the Conflicts Committee to be generally negative or unfavorable in making its determination and granting “Special Approval” of the Proposed Transaction, including the material factors considered by the Conflicts Committee to be generally negative or unfavorable described under “—Reasons for the Conflicts Committee’s Approval.”

In making its determination, the GP Board also considered:

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The Conflicts Committee’s unanimous approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, such approval constituting “Special Approval” for all purposes of the Partnership Agreement, and the recommendation to the GP Board discussed above.

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The GP Board’s understanding of the process and procedures undertaken by the Conflicts Committee by which the Conflicts Committee arrived at its determination that the Merger Agreement and the transactions contemplated thereby, including the Merger, were in the best interests of the Partnership, including the Public Unitholders, which included:

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the Conflicts Committee consists solely of directors who are not securityholders (other than of Common Units), officers or employees of the General Partner or its affiliates, are not officers, employees or controlling shareholders of Shell, any of its affiliates or the Partnership, are not otherwise affiliated with Parent and its affiliates and are all independent of management of the General Partner;

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the Conflicts Committee retained independent financial and legal advisors with reputations, knowledge and experience with respect to public merger and acquisition transactions, MLPs, and midstream and oil and gas companies, as well as substantial experience advising MLPs and other companies with respect to transactions similar to the Proposed Transaction and familiarity with the Partnership and its business;

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the GP Board’s determination that the members of the Conflicts Committee were independent and otherwise met the test for membership on the Conflicts Committee as set forth in the Partnership Agreement;

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the GP Board’s resolution that the Conflicts Committee would not have any duty (fiduciary or otherwise) to consider the interests of the General Partner or its controlling affiliates, including Parent, in its consideration of the Proposed Transaction;

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the terms and conditions of the Merger Agreement, including the Merger Consideration, were determined as a result of arm’s length negotiations between Parent and the Conflicts Committee and their respective representatives, including in-house counsel for the Partnership, that included multiple proposals and counterproposals;

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that certain actions, including amendment of the Merger Agreement, may not be taken without prior written approval of the Conflicts Committee; and

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the Conflicts Committee’s receipt of Intrepid’s opinion, dated July 25, 2022, to the effect that, as of such date and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the Merger Consideration in the Proposed Transaction to be received by the Public Unitholders pursuant to the Merger Agreement is fair, from a financial point of view, to the Public Unitholders.

In addition, under the SEC rules governing “going private” transactions, the Partnership and the General Partner are engaged in a “going private” transaction and, therefore, are required to express their position as to the fairness of the Merger to the Partnership’s “unaffiliated security holders,” as defined in Rule 13e-3 under the Exchange Act. The GP Board, on behalf of the General Partner and the Partnership, is making the following statements for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The GP Board, on behalf of the General Partner and the Partnership, on the basis of the factors described above, believes that the Merger (which is the Rule 13e-3 transaction for which the Schedule 13E-3 was filed with the SEC) is both substantively and procedurally fair to the Public Unitholders. The GP Board did not retain an unaffiliated representative to act solely on behalf of the Public Unitholders for purposes of negotiating the terms of the Merger Agreement.

In addition, the GP Board did not consider the Partnership’s net book value, which is defined as total assets minus total liabilities, because the GP Board believed that net book value was not a material indicator of the value of the Partnership as a going concern. The GP Board also did not consider the liquidation value of the Partnership’s assets, and did not perform a liquidation analysis, because it considers the Partnership to be a viable going concern. Therefore, no appraisal of liquidation value was sought for purposes of valuing the Common Units, and the GP Board believes that the liquidation value of the Common Units is irrelevant to a determination of whether the Merger is fair to the Public Unitholders. The GP Board was not aware of, and thus did not consider, any firm offers or proposals made by any unaffiliated person during the past two years for: (i) a merger or consolidation of the Partnership with another company; (ii) the sale or transfer of all or substantially all of the Partnership’s assets; or (iii) the purchase of securities of the Partnership that would enable such person to exercise control of or significant influence over the Partnership. The GP Board is not aware of, and thus did not consider, any purchases by the Partnership of Common Units during the past two years.

The GP Board’s consideration of the factors described above reflects its assessment of the fairness of the Merger. The GP Board implicitly considered the value of the Partnership in a sale as a going concern by taking into account the Partnership’s current and anticipated business, financial conditions, results of operations, prospects and other forward-looking matters. The GP Board did not, however, explicitly calculate a stand-alone going concern value of the Partnership because the GP Board believes that going concern value is not an appropriate method of determining the value of the Common Units for purposes of the Merger. In the light of the fact that the Shell Filing Parties already have, and will continue to have, control of the Partnership, and that the Shell Filing Parties continue to desire to retain their Common Units, the GP Board does not believe that it would be appropriate for the Public Common Units to be valued on a basis that includes a control premium.

The foregoing discussion of the information and factors considered by the GP Board is not intended to be exhaustive, but includes material factors the GP Board considered. In view of the variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the GP Board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors considered in making its determination and recommendation. In addition, each of the members of the GP Board may have given differing weights to different factors. Overall, the GP Board believed that the positive factors supporting the Merger outweighed the negative factors it considered. It should be noted that certain statements and other information presented in this section are forward-looking in nature and, therefore, should be read in the light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

Unaudited Financial Projections of the Partnership

In connection with the Proposed Transaction, the General Partner’s management prepared projections relating to the Partnership (without giving effect to the Merger) that included future financial and operating performance (the “Initial Projections”) of the Partnership, which were provided to the Conflicts Committee on March 9, 2022. The General Partner’s management based the Initial Projections on projections previously prepared during a periodic budgeting process. On April 8, 2022, the Parent transaction team and management of the General Partner provided the Interim Projections to the Conflicts Committee and its advisors, which provided updates for (i) selected key changes since the Initial Projections, (ii) certain new customer contracts and (iii) a change to the assumption that the Preferred Units would be converted. Subsequent to preparation of the Initial Projections and the Interim Projections, during discussions regarding the Proposed Transaction and as part of its normal business planning process, the General Partner’s management prepared the Final Financial Projections on June 15, 2022 and June 28, 2022, which superseded the Interim Projections and took into account the most recent forecasts and information with respect to the Partnership’s anticipated joint venture interests, updated views of the General Partner with respect to the Partnership’s future financial and operating performance and revised assumptions underlying interest rates being charged to the Partnership under certain of its credit facilities (such Final Financial Projections, together with the Initial Projections, the “Projections”). It should be noted that the Projections and certain statements and other information presented in this section are forward-looking in nature and, therefore, should be read in the light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

The Projections were prepared only for internal purposes and not with a view toward public disclosure or toward compliance with GAAP, the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants for the preparation of prospective financial information but, in the view of the General Partner’s management, were prepared on a reasonable basis and reflect the best then-available estimates and judgments of the General Partner’s management, taking into account, among other things, projections provided by operators of relevant joint ventures. However, this information is not fact and should not be relied upon as necessarily predictive of actual future results, and readers of this information statement are cautioned not to place undue reliance on this and other prospective financial information.

The Projections were provided to the Conflicts Committee and Intrepid in connection with its evaluation of the Proposed Transaction and the Final Financial Projections were provided to Intrepid for its use and reliance in connection with its financial analyses and opinion described under “—Opinion of Financial Advisor to the Conflicts Committee.”

These Projections are included below to give Public Unitholders access to certain non-public unaudited prospective financial information that was made available to the Conflicts Committee, the GP Board, and Intrepid in connection with the Proposed Transaction. The inclusion of these Projections in this information statement should not be regarded as an indication that the Partnership, the General Partner or their respective representatives considered or consider the Projections to be necessarily predictive of actual future performance or events, and the Projections set forth below should not be relied upon as such.

Uncertainties are inherent in prospective financial information of any kind. None of the Partnership, the General Partner or any of their respective affiliates, officers, directors, managers, advisors or other representatives has made or makes any representation to any Limited Partner or can give any assurance to any Limited Partner or any other person regarding the ultimate performance of the Partnership compared to the information set forth below or that any such results will be achieved.

While the Partnership may provide public earnings guidance from time to time, the Partnership does not as a matter of course publicly disclose other financial forecasts as to future earnings or financial performance or results because of, among other reasons, the uncertainty underlying assumptions and estimates. The Projections summarized below were prepared by the General Partner’s management.

Neither Ernst & Young LLP, the Partnership’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

The Projections are, in general, prepared primarily for internal use. Such internal forecasts are inherently subjective in nature, susceptible to interpretation and, accordingly, such forecasts may not be achieved. The internal financial forecasts also reflect numerous assumptions made by management of the General Partner, including material assumptions with respect to the business of the Partnership for the periods covered by the Projections. Such assumptions may not be achieved and are subject to significant uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of Parent or the Partnership. Accordingly, there can be no assurance that the assumptions made in preparing the Projections will be realized. Some of the assumptions made by management of the General Partner in connection with the Projections included, but were not limited to, the following:

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weather conditions;

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commodity pricing;

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the amount and timing of distributions made to the Partnership by its equity method investments;

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the amount and timing of distributions to the unitholders by the Partnership;

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the amount and timing of the administrative fee paid by the Partnership under its Omnibus Agreement effective February 1, 2019, by and among the Partnership, the General Partner, SPLC and Shell Midstream Operating LLC;

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the amounts of revenue and expenses per budget;

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the demand for the Partnership’s transportation, storage and other services;

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the competitive landscape in any market that the Partnership serves;

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the ability of the Partnership to renew or extend agreements with its customers and the terms of such renewals or extensions;

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the ability of the Partnership to remain a public entity;

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the amounts and nature of future capital expenditures, including the allocation of capital to expansion capital expenditures or maintenance capital expenditures; and

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other general business, market, industry and interest rate assumptions.

There will be differences between actual and forecasted results, and the differences may be material. Important factors that may affect actual results and cause these Projections not to be achieved include, but are not limited to, risks and uncertainties relating to the Partnership’s business (including the Partnership’s ability to achieve strategic goals, objectives and targets over the applicable periods), industry performance, general business and economic conditions, the regulatory environment and other factors described in or referenced under “Cautionary Statement Regarding Forward-Looking Statements” and those risks and uncertainties detailed in the “Risk Factors” sections of the Partnership’s public filings with the SEC, including the Partnership’s Annual Report on Form 10-K filed with the SEC on February 24, 2022. The risk that these uncertainties and contingencies could cause the assumptions to fail to be reflective of actual results is further increased given the length of time in the future over which these assumptions apply. Any assumptions and projections in early periods could have a compounding effect on the projections shown for later periods. Thus, any failure of an assumption or projections to be reflective of actual results in an early period could have a greater effect on the projected results failing to be reflective of actual events in later periods.

Initial Projections


	Year Ended December 31,
	2022E			2023E			2024E			2025E			2026E
	(Financial metrics in millions)
Revenue Total, Net of Cost of Goods Sold	$	520		$	524		$	512		$	505		$	525
Operating expense	$	(242	)	$	(247	)	$	(258	)	$	(259	)	$	(252	)
Depreciation and amortization	$	(54	)	$	(55	)	$	(55	)	$	(57	)	$	(57	)
Property and other taxes	$	(22	)	$	(22	)	$	(22	)	$	(23	)	$	(23	)
Loss/gain from disposition of fixed assets	$	0		$	0		$	0		$	0		$	0
Total costs and expenses	$	(318	)	$	(324	)	$	(335	)	$	(338	)	$	(332	)
Operating income	$	202		$	199		$	177		$	166		$	193
Income from equity investment	$	397		$	464		$	466		$	474		$	490
Dividend income from investment	$	0		$	0		$	0		$	0		$	0
Other income / expense	$	37		$	48		$	48		$	47		$	47
Income from other investments	$	434		$	512		$	513		$	521		$	537
Interest income / expense	$	(57	)	$	(59	)	$	(63	)	$	(66	)	$	(68	)
Income before income taxes	$	579		$	652		$	627		$	621		$	661
Tax expense	$	0		$	0		$	0		$	0		$	0
Net Income	$	579		$	652		$	627		$	621		$	661
Net income attributable to non-controlling interests	$	(12	)	$	(15	)	$	(15	)	$	(15	)	$	(14	)
Net income attributable to Parent	$	0		$	0		$	0		$	0		$	0
Net income attributable to the Partnership	$	566		$	637		$	612		$	606		$	647


	Year Ended December 31,
	2022E			2023E			2024E			2025E			2026E
	(Financial metrics in millions, except per Common Unit figures)
Net Income	$	579		$	652		$	627		$	621		$	661
Depreciation	$	54		$	55		$	55		$	57		$	57
Contract asset amortization	$	15		$	15		$	15		$	15		$	15
Loss (gain) from disposition of fixed assets	$	0		$	0		$	0		$	0		$	0
Allowance oil reduction to net realizable value	$	0		$	0		$	0		$	0		$	0
Interest expense and income tax expense, net	$	58		$	60		$	64		$	66		$	69
Distributions from equity investments	$	(35	)	$	(38	)	$	(37	)	$	(36	)	$	(35	)
Equity method distributions included in other income	$	455		$	536		$	543		$	548		$	564
Income from equity investments	$	(397	)	$	(464	)	$	(466	)	$	(474	)	$	(490	)
Adjusted EBITDA⁽¹⁾	$	728		$	815		$	801		$	797		$	841
Adjusted EBITDA attributable to non-controlling interests	$	(12	)	$	(15	)	$	(15	)	$	(15	)	$	(14	)
Consolidated Partnership Adjusted EBITDA⁽¹⁾	$	716		$	800		$	786		$	783		$	827
Partnership finance receivable, interest and income taxes paid⁽²⁾	$	(52	)	$	(54	)	$	(57	)	$	(59	)	$	(58	)
Partnership share of volume deficiency payments	$	0		$	0		$	0		$	0		$	0
Partnership share of maintenance capital expenditures	$	(37	)	$	(10	)	$	(25	)	$	(21	)	$	(21	)
Series A Convertible Preferred Coupon Payments	$	0		$	0		$	0		$	0		$	0
Reimbursements from Parent included in partners’ capital	$	0		$	0		$	0		$	0		$	0
Cash Available for Distribution⁽³⁾	$	627		$	736		$	704		$	703		$	748
Distributions per Common Unit per Year	$	1.20		$	1.20		$	1.20		$	1.20		$	1.20
Yearly Coverage Ratio	1.18x			1.38x			1.32x			1.32x			1.40x
Growth Capital Expenditure	$	23		$	26		$	28		$	25		$	36

Updated Projections


	Year Ended December 31,
	2022E⁽⁴⁾			2023E			2024E			2025E			2026E
	(Financial metrics in millions)
Revenue Total, Net of Cost of Goods Sold	$	559		$	538		$	551		$	521		$	545
Operating expense	$	(270	)	$	(258	)	$	(270	)	$	(258	)	$	(280	)
Depreciation and amortization	$	(50	)	$	(52	)	$	(53	)	$	(54	)	$	(55	)
Property and other taxes	$	(19	)	$	(20	)	$	(20	)	$	(20	)	$	(20	)
Loss/gain from disposition of fixed assets	$	0		$	0		$	0		$	0		$	0
Total costs and expenses	$	(340	)	$	(330	)	$	(342	)	$	(332	)	$	(355	)
Operating income	$	220		$	208		$	208		$	189		$	190
Income from equity investment	$	370		$	458		$	463		$	469		$	491
Dividend income from investment	$	0		$	0		$	0		$	0		$	0
Other income / expense	$	36		$	49		$	47		$	46		$	44
Income from other investments	$	407		$	507		$	511		$	515		$	536
Interest income / expense	$	(64	)	$	(74	)	$	(73	)	$	(75	)	$	(79	)
Income before income taxes	$	563		$	642		$	646		$	628		$	646
Tax expense	$	0		$	0		$	0		$	0		$	0
Net Income	$	563		$	642		$	646		$	628		$	646
Net income attributable to non-controlling interests	$	(8	)	$	(11	)	$	(11	)	$	(10	)	$	(4	)
Net income attributable to Parent	$	0		$	0		$	0		$	0		$	0
Net income attributable to the Partnership	$	555		$	631		$	635		$	618		$	642


	Year Ended December 31,
	2022E⁽⁴⁾			2023E			2024E			2025E			2026E
	(Financial metrics in millions, except per Common Unit figures)
Net Income	$	563		$	642		$	646		$	628		$	646
Depreciation	$	50		$	52		$	53		$	54		$	55
Contract asset amortization	$	15		$	15		$	15		$	15		$	15
Loss (gain) from disposition of fixed assets	$	0		$	0		$	0		$	0		$	0
Allowance oil reduction to net realizable value	$	0		$	0		$	0		$	0		$	0
Interest expense and income tax expense, net	$	64		$	74		$	73		$	76		$	79
Distributions from equity investments	$	(33	)	$	(34	)	$	(33	)	$	(33	)	$	(32	)
Equity method distributions included in other income	$	505		$	516		$	531		$	537		$	561
Income from equity investments	$	(370	)	$	(458	)	$	(463	)	$	(469	)	$	(491	)
Adjusted EBITDA⁽¹⁾	$	794		$	806		$	821		$	808		$	833
Adjusted EBITDA attributable to non-controlling interests	$	(8	)	$	(11	)	$	(12	)	$	(11	)	$	(5	)
Consolidated Partnership Adjusted EBITDA⁽¹⁾	$	786		$	795		$	809		$	797		$	828
Partnership finance receivable, interest and income taxes paid⁽²⁾	$	(59	)	$	(68	)	$	(67	)	$	(69	)	$	(71	)
Partnership share of volume deficiency payments	$	6		$	0		$	0		$	0		$	0
Partnership share of maintenance capital expenditures	$	(30	)	$	(21	)	$	(19	)	$	(18	)	$	(21	)
Series A Convertible Preferred Coupon Payments	$	(48	)	$	(48	)	$	(48	)	$	(48	)	$	(48	)
Reimbursements from Parent included in partners’ capital	$	1		$	0		$	0		$	0		$	0
Cash Available for Distribution⁽³⁾	$	656		$	658		$	676		$	662		$	688
Distributions per Common Unit per Year	$	1.20		$	1.20		$	1.20		$	1.20		$	1.20
Yearly Coverage Ratio	1.39x			1.39x			1.43x			1.40x			1.46x
Growth Capital Expenditure	$	8		$	27		$	37		$	24		$	40

(1)

Adjusted EBITDA, a non-GAAP financial measure, is defined by the Partnership as net income before income taxes, interest expense, interest income, gain or loss from dispositions of fixed assets, allowance oil reduction to net realizable value, loss from revision of asset retirement obligation, and depreciation,

amortization and accretion, plus cash distributed to the Partnership from equity method investments for the applicable period, less equity method distributions included in other income and income from equity method investments. Consolidated Partnership Adjusted EBITDA is defined as Adjusted EBITDA attributable to the Partnership less Adjusted EBITDA attributable to noncontrolling interests.

(2)	Finance receivables represent the annual net payment of $140 million that the Partnership receives in relation to certain logistics assets at the Shell Norco Manufacturing Complex.

(3)

SEC Form DEFM14C filed by Shell Midstream Partners L.P.