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.
