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Phillips 66 Partners to acquire crude, refined products and NGL logistics assets

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Hydrocarbon Engineering,


Phillips 66 Partners LP has reached agreement with Phillips 66 to acquire 30 crude, refined products and natural gas liquids (NGL) logistics assets for total consideration of US$1.3 billion. The partnership plans to fund the acquisition with a combination of debt and US$196 million in new PSXP units issued to Phillips 66, to be allocated proportionally between common units and general partner units allowing the general partner to maintain its 2% general partner interest. The transaction is anticipated to close this month, subject to satisfaction of customary closing conditions, and is expected to be immediately accretive to unitholders. Upon closing, the Partnership will be entitled to receive the cash earnings associated with the acquired assets as of 1 October 2016.

The acquisition consideration reflects an approximate 8.7 times multiple based on the forecasted full year 2017 earnings before interest, taxes, depreciation and amortisation (EBITDA) attributable to the assets of approximately US$150 million. In connection with the acquisition, Phillips 66 will enter into 10-year terminalling and throughput agreements that will include minimum volume commitments covering approximately 85% of forecasted volumes.

“As our largest dropdown acquisition to date, this represents a milestone for the Partnership and will provide additional fee-based income and diversity to our already strong midstream portfolio,” said Greg Garland, Phillips 66 Partners chairman and CEO. “We remain committed to maintaining a stable, fee-based, growing business model at Phillips 66 Partners, and are on track to deliver on our commitment to a five year distribution compound annual growth rate of 30% through 2018.”

The transaction includes the following assets:

  • A crude pipeline and terminal system that provides crude supply for Phillips 66’s Ponca City refinery, consisting of 503 miles of pipeline and 1.7 million barrels of storage.
  • A refined products and NGL pipeline and terminal system that provides product takeaway transportation services for Phillips 66’s Ponca City Refinery, consisting of 524 miles of pipeline and 1.7 million barrels of storage.
  • A crude pipeline and terminal system that provides crude supply for Phillips 66’s Billings refinery, consisting of a 79% undivided interest in a 623 mile pipeline and 570 000 barrels of storage.
  • A refined products pipeline and terminal system that provides product takeaway transportation services for Phillips 66’s Billings refinery, consisting of 342 miles of pipeline and 386 000 barrels of storage.
  • A refined products and NGL terminal system that provides storage services for Phillips 66’s Bayway refinery, consisting of 2.0 million barrels of storage.
  • A crude pipeline and terminal system that provides crude supply for the Phillips 66 operated Borger refinery, consisting of 1089 miles of pipeline and 400 000 barrels of storage.
  • A refined products pipeline and terminal system that provides product takeaway transportation services for the Phillips 66 operated Borger refinery, consisting of 93 miles of pipeline, a 33% undivided interest in a 102 mile segment and a 54% undivided interest in a 19 mile segment of a 121 mile pipeline, a 50% interest in a 293 mile pipeline and 700 000 barrels of storage.

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 comprised solely of independent directors. The conflicts committee engaged Evercore to act as its financial advisor and Vinson & Elkins, L.L.P. to act as its legal counsel.

Read the article online at: https://www.hydrocarbonengineering.com/refining/12102016/phillips-66-partners-to-acquire-crude-refined-products-and-ngl-logistics-assets/


 

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