Phillips 66 Partners buys equity in three US refined products, NGL pipelines
2/17/2015 12:00:00 AM
Phillips 66 Partners announced an agreement with Phillips 66 to acquire its interests in three pipeline systems.
The acquisition includes one-third equity interests in the limited liability companies that respectively own the Sand Hills and Southern Hills natural gas liquids (NGL) pipeline systems, and a 19.46% equity interest in Explorer Pipeline Co., the owner of the Explorer refined products pipeline system.
In exchange, Phillips 66 will receive total consideration of $1.01 B consisting of $880 M in cash and 1.7 million newly issued PSXP units to be allocated between common units and general partner units in a proportion allowing the general partner to maintain its 2% general partner interest.
The transaction is expected to be immediately accretive and is anticipated to close in early March 2015.
“This acquisition will expand our fee-based portfolio into NGL transportation and provide us with an interest in one of the largest refined products pipeline systems in the US,” said Greg Garland, Phillips 66 Partners chairman and CEO.
The transaction includes Phillips 66’s equity interests in entities holding the following assets:
- The 720-mi Sand Hills NGL pipeline system provides takeaway service from DCP Midstream and third-party plants in the Permian and the Eagle Ford basins to fractionation facilities along the Texas Gulf Coast and the Mont Belvieu, Texas market hub. The system has a capacity of 200 Mbpd and is expandable up to 350 Mbpd with additional pumping stations.
- The 800-mi Southern Hills NGL pipeline system provides takeaway service from DCP Midstream and third-party plants in the Midcontinent to fractionation facilities along the Texas Gulf Coast and the Mont Belvieu, Texas market hub. The system has a capacity of 175 Mbpd.
- The 1,830-mi Explorer Refined Products pipeline system provides connectivity to refineries and market centers from the Gulf Coast to the Midwest. The system has a capacity of 660 Mbpd.
The terms of the transaction were approved by the board of directors of the general partner of Phillips 66 Partners, based on the approval and recommendation of its conflicts committee, which is comprised solely of independent directors.
The conflicts committee engaged Evercore Partners to act as its financial advisor and Vinson & Elkins, LLP to act as its legal counsel.
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