Phillips 66 Partners to buy Phillips 66 logistics assets for $1.3 billion
Phillips 66 Partners LP has agreed to acquire 30 crude, refined products, and natural gas liquids logistics assets from Phillips 66 for $1.3 billion.
The partnership plans to fund the acquisition with a combination of debt and $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.
Expected to close this month, the deal includes:
• A crude oil pipeline and terminal system that provides crude supply for Phillips 66’s Ponca City refinery in Oklahoma, consisting of 503 miles of pipeline and 1.7 million bbl of storage.
• A refined products and NGL pipeline and terminal system that provides product takeaway transportation services the Ponca City refinery, consisting of 524 miles of pipeline and 1.7 million bbl of storage.
• A crude pipeline and terminal system that provides crude supply for Phillips 66’s Billings refinery in Montana, consisting of a 79% undivided interest in a 623-mile pipeline and 570,000 bbl of storage.
• A refined products pipeline and terminal system that provides product takeaway transportation services for the Billings refinery, consisting of 342 miles of pipeline and 386,000 bbl of storage.
• A refined products and NGL terminal system that provides storage services for Phillips 66’s Bayway refinery in New Jersey, consisting of 2 million bbl of storage.
• A crude pipeline and terminal system that provides crude supply for the Phillips 66-operated Borger refinery in Texas, consisting of 1,089 miles of pipeline and 400,000 bbl of storage.
• A refined products pipeline and terminal system that provides product takeaway transportation services for the 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 bbl of storage.
Upon closing, the partnership will be entitled to receive the cash earnings associated with the acquired assets as of Oct. 1. In connection with the deal, Phillips 66 will enter into 10-year terminaling and throughput agreements that will include minimum volume commitments covering 85% of forecasted volumes.
Houston-based Phillips 66 Partners is a master limited partnership formed by Phillips 66 to own, operate, develop, and acquire primarily fee-based crude oil, refined petroleum product, and NGL pipelines and terminals and other transportation and midstream assets.
Among a flurry of deals over the past 3 years, the partnership in August agreed to acquire an NGL logistics system in southeast Louisiana owned by Chevron Corp. (OGJ Online, Aug. 26, 2016).
The partnership’s most recent dropdowns with Phillips 66 include this year’s acquisition of 100% interest in Sweeny Frac LLC and nearby Clemens Caverns storage facility in two separate deals, the latter of which included the Standish pipeline extending from the Ponca City refinery to the partnership’s North Wichita terminal in Kansas, for a combined $1.01 billion (OGJ Online, Feb. 18, 2016; May 5, 2016).
Previous dropdowns include the Bayway rail-unloading facility within the Bayway refinery and Ferndale rail-unloading facility adjacent to the Phillips 66 Ferndale refinery in Washington for $330 million; interests in firms that own the Sand Hills and Southern Hills NGL pipeline systems and the Explorer refined products pipeline system for $1.01 billion (OGJ Online, Feb. 16, 2015); and the Gold product pipeline system and Medford spheres, two refinery-grade propylene storage spheres, for $700 million (OGJ Online, Feb. 13, 2014).