Phillips 66 Explores Sale of Its Rockies Express Pipeline Stake

Reuters, March 26, 2024

U.S. oil refiner Phillips 66 (PSX.N) is exploring a sale of its 25% stake in the Rockies Express Pipeline that it hopes could be worth more than $1 billion, including debt, people familiar with the matter said on Tuesday.

The Rockies Express Pipeline (REX) is a 1,700-mile (2730-km)interstate natural gas pipeline, stretching from Wyoming and Colorado in the U.S. West to Eastern Ohio.

Phillips 66 is working with its advisers on talks with potential buyers, which include private equity firms and infrastructure funds, the sources said, requesting anonymity as the discussions are confidential.

The Houston-based company is hoping to command a premium to the stake's current book value of $451 million, the sources said, adding bidders would also need to assume debt obligations worth more than $500 million associated with the stake.

A spokesperson for Phillips 66 declined to comment.

Phillips 66, which has a market value of $67 billion, is aiming to raise about $3 billion from asset sales this year.

In an interview earlier on Tuesday, Chief Executive Mark Lashier said the company was in discussions with potential buyers for asset sales, but it was not in a rush to complete divestments. He declined to name the assets referenced in those discussions.

The company has come under pressure in recent months from Elliott Management, which disclosed a stake in November and pushed for Phillips 66 to improve its refining operations and revamp its board of directors.

The activist investor and Phillips 66 agreed last month to add a new board member approved by the investment firm, and to work together to identify a second director appointment.

The remainder of the REX pipeline is controlled by privately owned Tallgrass Energy.

Stakes in pipelines, such as REX, are attractive to financial investors as they like businesses with steady cash flow, the sources said, adding stakes in interstate pipelines are not marketed to buyers often.

(Reporting by David French; Additional Reporting by Arathy Somasekhar; Editing by Anirban Sen, Andrea Ricci and Jonathan Oatis)

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