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Phillips 66 Partners acquires coke processing units

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Hydrocarbon Engineering,

Phillips 66 Partners LP has reached agreement with Phillips 66 to acquire its 25% interest in each of Dakota Access, LLC and Energy Transfer Crude Oil Company, LLC (collectively, the Bakken Pipeline) and 100% interest in Merey Sweeny, L.P. (MSLP), the owner of fuel-grade coke processing units at the Phillips 66 Sweeny Refinery. The acquisition is expected to close in early October 2017.

The total transaction value of US$2.4 billion includes US$625 million in proportional non-consolidated, non-recourse Bakken Pipeline debt and US$100 million of MSLP debt. The value reflects an approximate 8.9 times multiple, based on the acquired assets’ forecasted full year 2018 adjusted EBITDA of approximately US$270 million. In connection with the MSLP acquisition, Phillips 66 Partners will enter into a new 15 year tolling agreement that includes a base throughput fee and minimum volume commitment from Phillips 66.

“This is the largest acquisition Phillips 66 Partners has made to date,” said Greg Garland, Phillips 66 Partners chairman and CEO. “The Bakken Pipeline complements our strategy to expand current systems that are integrated with Phillips 66 refineries and terminals, while MSLP provides another reliable source of cash flow generation to the portfolio. This acquisition supports our EBITDA growth objective by adding solid fee-based assets to the Partnership and keeps us on track to deliver our 30 percent distribution growth target. To meet our US$1.1 billion of annual run-rate adjusted EBITDA goal by the end of 2018, we do not anticipate accessing the equity market, other than through selective use of our at-the-market programme.”

The transaction includes interests in the following assets:

The Bakken Pipeline, which consists of 1926 combined pipeline miles and 520 000 bpd of crude oil capacity expandable to 570 000 bpd. There are receipt stations in North Dakota to access Bakken and Three Forks production, a delivery and receipt point in Patoka, Illinois, and delivery points in Nederland, Texas, including the Phillips 66 Beaumont Terminal.

MSLP, owner of facilities that process residue from heavy sour crude oil into liquid products and fuel-grade petroleum coke at the Phillips 66 Sweeny Refinery in Old Ocean, Texas. The facilities include a 125 000 bpd capacity vacuum distillation unit and a 70 000 bpd capacity delayed coker unit.

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