Phillips 66’s sale to Tallgrass will generate $685 million in proceeds following debt and equity adjustments.
Phillips 66 has agreed to sell its 25% non-operated common equity interest in Rockies Express Pipeline LLC (REX) to a subsidiary of Tallgrass Energy for an enterprise value of approximately $1.275 billion, according to a June 14 press release.
Tallgrass, the operator of REX, will own 100% of the common equity interest in REX following the transaction. The transaction will generate 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.
The transaction is expected to close June 14.
REX, a 1,714-mile pipeline system, is one of the largest natural gas pipelines in the U.S. and provides more than 5 Bcf/d of bi-directional natural gas transportation service between the Rockies, Appalachia and the Northeastern U.S.
“This sale is an important step in our commitment to deliver over $3 billion in asset divestitures,” said Mark Lashier, Chairman and CEO of Phillips 66. “We are committed to managing our portfolio and monetizing assets that no longer fit our long-term strategy.”
The expected proceeds will support Phillips 66’s strategic priorities, including shareholder returns.
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