U.S. oil refiner Phillips 66 is exploring a sale of its 25% stake in the Rockies Express Pipeline that it hopes could be worth more than $1 billion, including debt, people familiar with the matter said on March 26.
The Rockies Express Pipeline (REX) is a 1,700-mile (2730-km) interstate natural gas pipeline, stretching from Wyoming and Colorado in the U.S. West to Eastern Ohio.
Phillips 66 is working with its advisers on talks with potential buyers, which include private equity firms and infrastructure funds, the sources said, requesting anonymity as the discussions are confidential.
The Houston-based company is hoping to command a premium to the stake's current book value of $451 million, the sources said, adding bidders would also need to assume debt obligations worth more than $500 million associated with the stake.
A spokesperson for Phillips 66 declined to comment.
Phillips 66, which has a market value of $67 billion, is aiming to raise about $3 billion from asset sales this year.
In an interview earlier on March 26, CEO Mark Lashier said the company was in discussions with potential buyers for asset sales, but it was not in a rush to complete divestments. He declined to name the assets referenced in those discussions.
The company has come under pressure in recent months from Elliott Management, which disclosed a stake in November and pushed for Phillips 66 to improve its refining operations and revamp its board of directors.
The activist investor and Phillips 66 agreed last month to add a new board member approved by the investment firm, and to work together to identify a second director appointment.
The remainder of the REX pipeline is controlled by privately owned Tallgrass Energy.
Stakes in pipelines, such as REX, are attractive to financial investors as they like businesses with steady cash flow, the sources said, adding stakes in interstate pipelines are not marketed to buyers often.
Recommended Reading
Viper to Buy Diamondback Mineral, Royalty Interests in $4.45B Drop-Down
2025-01-30 - Working to reduce debt after a $26 billion acquisition of Endeavor Energy Resources, Diamondback will drop down $4.45 billion in mineral and royalty interests to its subsidiary Viper Energy.
Phillips 66’s NGL Focus, Midstream Acquisitions Pay Off in 2024
2025-02-04 - Phillips 66 reported record volumes for 2024 as it advances a wellhead-to-market strategy within its midstream business.
Alliance Resource Partners Adds More Mineral Interests in 4Q
2025-02-05 - Alliance Resource Partners closed on $9.6 million in acquisitions in the fourth quarter, adding to a portfolio of nearly 70,000 net royalty acres that are majority centered in the Midland and Delaware basins.
Plains All American Prices First M&A Bond of Year
2025-01-13 - U.S. integrated midstream infrastructure company Plains All American Pipeline on Jan. 13 priced a $1 billion investment-grade bond offering, the year's first to finance an acquisition.
Buying Time: Continuation Funds Easing Private Equity Exits
2025-01-31 - An emerging option to extend portfolio company deadlines is gaining momentum, eclipsing go-public strategies or M&A.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.