Phillips 66 bolstered its capacity Monday to move Permian natural gas into South Texas with the announcement of its $2.2 billion acquisition, in effect, of several fractionalization facilities and NGL pipelines from Corpus Christi-based EPIC NGL.
The all-cash acquisition, which further connect Permian production points to Gulf Coast refiners, is expected to be immediately accretive to earnings per share.
“This transaction bolsters Phillips 66’s position as a leading integrated downstream energy provider,” said Mark Lashier, chair and CEO of Phillips 66. “This transaction optimizes our Permian NGL value chain, allows Phillips 66 to provide producers with comprehensive flow assurance, reaching fractionation facilities near Corpus Christi, Sweeny, and Mont Belvieu, Texas, and is expected to deliver attractive returns in excess of our hurdle rates.”
Vanessa Allen Sutherland is general counsel at Phillips 66.
Kirkland & Ellis advised EPIC Y-Grade with a team led by corporate partners Chad Smith in Houston and Will Eiland and Jonathan Benloulou in Dallas, with Houston associates Bilal Iftikhar, Curtis French and Shelby Velasquez; tax partners David Wheat and Joe Tobias in Dallas and debt finance partners Lucas Spivey and Marco Chan in Houston.
Wachtell, Lipton, Rosen & Katz with a team led from New York by partners Gregory Ostling and Meng Lu.
The EPIC NGL assets, owned by its subsidiaries EPIC Y-Grade LLC and EPIC Y-Grade LP, include two fractionators (capacity 170 MBD) near Corpus Christi, approximately 350 miles of purity distribution pipelines and an 885-mile NGL pipeline (capacity 175 MBD) linking production in the Delaware, Midland and Eagle Ford basins to the Phillips 66 Sweeny Hub.
EPIC NGL is in the process of increasing its pipeline capacity to 225 MBD and has sanctioned a further expansion to 350 MBD.