After three months of shopping, Phillips 66 announced Friday a completed sale to Tallgrass Energy of its 25 percent passive equity interest in the Rockies Express Pipeline for an enterprise value of $1.275 billion.
With the acquisition by a subsidiary Tallgrass, the Kansas-based midstream company that operates REX, gains 100 percent equity ownership of the 1,714-mile bi-directional natural gas pipeline that connects major basins in the Rockies with Appalachia and the Northeast.
Phillips 66 said the transaction is part of its ongoing plan to divest $3 billion in non-core interests, and will generate pre-tax proceeds of $685 million after adjustments for allocation of REX’s debt and preferred equity balances.
Reuters reported in March that Phillips was hoping to command a premium above the $451 million book value for their interest in REX at the time — in addition to the assumption of more than $500 million in debt associated with the stake.
“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.”
Bracewell announced that it advised Phillips 66 on the transaction with a team led from Houston by partners Benjamin Martin and Alan Rafte with New York partner Elizabeth McGinley, chair of Bracewell tax department. The team also included associates Andrew P. Mintz and Gabriela Hindera in Houston, Benjamin Cantor in New York and Samuel Lombardo in Washington, D.C.
Vinson & Elkins counseled Tallgrass with a team led by partners Lande Spottswood and Alex Robertson, with assistance from associates Chase Browndorf, Autumn Simpson and Waleed Vohra. Other key team members include partner Ryan Carney, counsel Peter Rogers and associate Tyler Underwood; partner David Wicklund and associate David Albano; partner Hill Wellford and counsel Ryan Will; and partner Dario Mendoza.
Houston-based Senior Counsel Kristina McQuaid supported the transaction for Phillips 66.