Phillips 66 MLP acquires stake in Sweeny NGL fractionator in Texas
Phillips 66 Partners LP has reached agreement with Phillips 66 to acquire a 25% controlling interest in Phillips 66 Sweeny Frac LLC, which owns the newly-constructed Sweeny Fractionator One and Clemens Caverns storage facility, for total consideration of $236 million.
The transaction consideration consists of $24 million in newly-issued PSXP units and the assumption of $212 million in notes payable to Phillips 66.
The acquisition is expected to be immediately accretive to the partnership and its unitholders, and it is anticipated to close in early March 2016.
The acquisition consideration is based on forecasted annual earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $25 million attributable to the acquired interest, and $7 million of remaining growth capital expenditures expected to be incurred by the partnership for its proportional share of additional Clemens NGL caverns development.
“This acquisition expands and diversifies our fee-based portfolio into natural gas liquids fractionation and storage,” said Greg Garland, chairman and CEO of Phillips 66 Partners. “Our consistent strategy and fee-based business model have shown resiliency throughout this challenged market environment, and as a result, we remain on track to deliver on our stated five-year compound annual distribution growth target of 30% through the end of 2018.”
Phillips 66 Sweeny Frac LLC owns the following assets:
- Sweeny Fractionator One: A 100,000-bpd NGL fractionator located within the Phillips 66 Sweeny refinery complex in Old Ocean, Texas.
- Clemens Caverns storage facility: Located approximately 15 miles southeast of Phillips 66’s Sweeny refinery, the facility includes five newly developed caverns that will have storage capacity of approximately 7.5 million bbl of Y-grade NGL, propane and butane, with the capability for future capacity expansion.
In connection with the acquisition, Phillips 66 will enter into fractionation and storage agreements, each with a 10-year term, that include a minimum fractionation volume commitment for Sweeny Fractionator One and minimum storage commitments at the Clemens Caverns storage facility.
The terms of the transaction were approved by the board of directors of the general partner of Phillips 66 Partners, based on the approval and recommendation of its conflicts committee comprised solely of independent directors.
The conflicts committee engaged Evercore to act as its financial advisor and Vinson & Elkins, L.L.P. to act as its legal counsel.
About Phillips 66 Partners
Headquartered in Houston, Phillips 66 Partners is a growth-oriented master limited partnership formed by Phillips 66 to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum product and natural gas liquids pipelines and terminals and other transportation and midstream assets.
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