Phillips 66 sells stake in REX Pipeline to Tallgrass

Integrated downstream company Phillips 66 is selling its 25 percent non-operated common equity interest in Rockies Express Pipeline LLC (REX) to a subsidiary of Tallgrass Energy LP (TGE) for an enterprise value of approximately $1.275 billion.

TGE is the operator of REX and will own 100% of the common equity interest in REX following the transaction, Phillips 66 said in a news release.

This transaction will generate pre-tax cash proceeds of $685 million for Phillips 66, after adjustments for Phillips 66’s allocation of REX’s debt and preferred stock balances, the press release said. The expected proceeds will support Phillips 66’s strategic priorities, including shareholder returns.

“This sale is an important step in our commitment to achieve more than $3 billion in asset divestitures,” said Mark Lashier, chairman and CEO of Phillips 66. “We aim to manage our portfolio and monetize assets that are longer fit into our long-term strategy.”

REX, a 1,700-mile pipeline system, is one of the largest natural gas pipelines in the U.S., providing more than 5 billion cubic feet per day of bidirectional natural gas transportation between the Rockies, Appalachia and the Northeastern United States. the release.

The natural gas pipeline system extends from Rio Blanco County, Colorado, to Monroe County, Ohio. REX became fully operational in November 2009 with a capacity of 1.8 billion cubic feet per day. REX offers fixed and interruptible transportation services, as well as pooling, wheeling and a park and loan service, according to the TGE website. Tallgrass NatGas Operator, LLC operates Rockies Express.

Earlier this month, Phillips 66 subsidiary Phillips 66 Pipeline, LLC launched a binding open season to recruit shippers for service from Wichita, Kansas, to Jefferson City, Missouri, and East St. Louis, Illinois, on its Blue Line System.

The Blue Line system is a common transportation fluid pipeline that transports propane and butane between origin and destination points as outlined in the tariff on file with FERC and available on the Phillips 66 website, according to a previous statement.

The open season will provide interested shippers with the opportunity to secure long-term transportation of liquefied petroleum gas (LPG) products on the Blue Line system under binding transportation service agreements. The transmission services are expected to be available during the winter seasons (October through March) beginning in the fourth quarter, subject to FERC approval of a related settlement to be filed. The open season began on June 7 and will remain open until 5:00 PM CDT on July 6.

Phillips 66 announced in May an agreement to acquire Pinnacle Midland Parent LLC from Energy Spectrum Capital for $550 million in cash, aiming to expand its midstream business in the Permian Basin. The transaction, expected to close in mid-2024, would deliver the recently constructed Dos Picos natural gas gathering and processing system. The plant has a processing capacity of 220 million cubic feet per day, while the gathering pipeline extends 80 miles.

Houston-based Phillips 66 describes itself as a leading diversified and integrated downstream energy supplier that produces, transports and markets products that power the global economy. The company’s portfolio includes Midstream, Chemicals, Refining and Marketing and Specialties businesses.

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