Tallgrass Energy to gain full ownership of REX in deal with Phillips 66

June 14, 2024
Tallgrass Energy agreed to acquire Phillips 66's interest in Rockies Express Pipeline LLC.

A Tallgrass Energy LP (TGE) subsidiary is set to own 100% of Rockies Express Pipeline LLC (REX) through a deal to acquire the 25% non-operated common equity interest held by Phillips 66 Corp. for an enterprise value of $1.275 billion. The deal is expected to close today.

TGE is operator of REX, a 1,714-mile pipeline system—one of the largest natural gas pipelines in the US—that provides over 5bcfd of bi-directional natural gas transportation service between the Rockies, Appalachia, and the northeastern US.

This transaction generates pre-tax cash proceeds of $685 million to Phillips 66 after adjustments for Phillips 66’s allocation of REX’s debt and preferred equity balances.

For Phillips 66, the deal is part of ongoing plans to divest $3 billion in non-core assets. Including the REX deal, Phillips 66 has generated $1.1 billion in asset sale proceeds through divestmens of Belle Chase Terminal to Harvest Midstream in 2022 and South Texas Gateway Terminal LLC to Gibson Energy in 2023 (OGJ Online, Dec. 21, 2022).

Tallgrass Energy in 2016 closed a deal to aquire a 25% membership interest in REX from Sempra for about $440 million.

About the Author

Mikaila Adams | Managing Editor - News

Mikaila Adams has 20 years of experience as an editor, most of which has been centered on the oil and gas industry. She enjoyed 12 years focused on the business/finance side of the industry as an editor for Oil & Gas Journal's sister publication, Oil & Gas Financial Journal (OGFJ). After OGFJ ceased publication in 2017, she joined Oil & Gas Journal and was named Managing Editor - News in 2019. She holds a degree from Texas Tech University.