Phillips 66 Enhances NGL Platform with Wellhead to Market Integration Through Increased Economic Interest in DCP Midstream
17 August 2022 - 11:00PM
Business Wire
- Aligns strategic interests through restructuring of joint
ventures
- Increases economic interest in DCP Midstream, LP
- Enhances existing NGL platform through value chain
integration
- Transaction entered into and closed August 17, 2022
Phillips 66 (NYSE: PSX) announced today a realignment of its
economic and governance interests in DCP Midstream, LP (DCP
Midstream) (NYSE: DCP) and Gray Oak Pipeline, LLC (Gray Oak
Pipeline) through the merger of existing joint ventures owned with
Enbridge Inc. (Enbridge).
Phillips 66 increased its economic interest in DCP Midstream
from 28.26% to 43.31% and will oversee and manage the joint
venture’s interest in DCP Midstream, including the General Partner.
Phillips 66’s economic interest in Gray Oak Pipeline decreased from
42.25% to 6.50%. Enbridge will oversee and manage the joint
venture’s interest in Gray Oak Pipeline. As part of the
transaction, Phillips 66 contributed approximately $400 million of
cash. The transaction is expected to be accretive to earnings.
“We are growing our integrated NGL business to further
strengthen our competitive position, while driving operational and
commercial synergies,” said Mark Lashier, President and CEO of
Phillips 66. “DCP is a valued business in our portfolio and
enhances our existing value chain from wellhead to market, creating
a platform for future NGL growth. Our focus remains on operating
excellence and disciplined capital allocation to create sustainable
value for our shareholders.”
DCP Midstream is a master limited partnership with a diversified
portfolio of assets, engaged in the business of gathering,
processing, transporting, storing and marketing natural gas, as
well as transporting, fractionating and marketing natural gas
liquids. Phillips 66 and Enbridge hold their DCP Midstream general
and limited partner interests through DCP Midstream, LLC.
Gray Oak Holdings, LLC, a joint venture between Phillips 66 and
Enbridge, has been merged with and into DCP Midstream, LLC. The
joint venture continues to own 65% of the Gray Oak Pipeline crude
oil system with capacity of 900,000 barrels per day of crude oil
from the Permian and Eagle Ford basins in West Texas to the U.S.
Gulf Coast.
The transaction was entered into and closed on August 17, 2022.
BofA Securities, Inc. acted as exclusive financial advisor to
Phillips 66. Bracewell LLP acted as legal counsel, and Gibson Dunn
& Crutcher LLP acted as special tax counsel to Phillips 66. For
further information on this transaction, refer to the Strategic
Joint Venture Update available on the Phillips 66 Investors site,
phillips66.com/investors.
CAUTIONARY STATEMENT FOR FORWARD-LOOKING
STATEMENTS
This release contains certain forward-looking statements. Words
and phrases such as “anticipated,” “estimated,” “expected,”
“planned,” “scheduled,” “targeted,” “believes,” “continues,”
“intends,” “will,” “would,” “objectives,” “goals,” “projects,”
“efforts,” “strategies” and similar expressions are used to
identify such forward-looking statements. However, the absence of
these words does not mean that a statement is not forward-looking.
Forward-looking statements included in this release are based on
management’s expectations, estimates and projections as of the date
they are made. These statements are not guarantees of future
performance and you should not unduly rely on them as they involve
certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecast in such
forward-looking statements. Forward-looking statements contained in
this release include, but are not limited to, statements regarding
the expected benefits of the potential transaction to Phillips 66
and its shareholders and DCP Midstream and its unitholders, and the
anticipated consummation of the proposed transaction and the timing
thereof. Factors that could cause actual results or events to
differ materially from those described in the forward-looking
statements include: uncertainties as to the timing to consummate
the potential transaction; the effects of disruption to Phillips
66’s or DCP Midstream’s respective businesses; the effect of this
communication on the price of Phillips 66’s shares or DCP
Midstream’s common units; transaction costs; Phillips 66’s ability
to achieve benefits from the proposed transaction; and the
diversion of management’s time on transaction-related issues. Other
factors that could cause actual results to differ from those in
forward-looking statements include: the effects of any widespread
public health crisis and its negative impact on commercial activity
and demand for refined petroleum products; the inability to timely
obtain or maintain permits necessary for capital projects; changes
to worldwide government policies relating to renewable fuels and
greenhouse gas emissions that adversely affect programs like the
renewable fuel standards program, low carbon fuel standards and tax
credits for biofuels; fluctuations in NGL, crude oil, and natural
gas prices, and petrochemical and refining margins; unexpected
changes in costs for constructing, modifying or operating our
facilities; unexpected difficulties in manufacturing, refining or
transporting our products; the level and success of drilling and
production volumes around our Midstream assets; risks and
uncertainties with respect to the actions of actual or potential
competitive suppliers and transporters of refined petroleum
products, renewable fuels or specialty products; lack of, or
disruptions in, adequate and reliable transportation for our NGL,
crude oil, natural gas, and refined products; potential liability
from litigation or for remedial actions, including removal and
reclamation obligations under environmental regulations; failure to
complete construction of capital projects on time and within
budget; the inability to comply with governmental regulations or
make capital expenditures to maintain compliance; limited access to
capital or significantly higher cost of capital related to
illiquidity or uncertainty in the domestic or international
financial markets; potential disruption of our operations due to
accidents, weather events, including as a result of climate change,
terrorism or cyberattacks; general domestic and international
economic and political developments including armed hostilities,
expropriation of assets, and other political, economic or
diplomatic developments, including those caused by public health
issues and international monetary conditions and exchange controls;
changes in governmental policies relating to NGL, crude oil,
natural gas, refined petroleum products, or renewable fuels
pricing, regulation or taxation, including exports; changes in
estimates or projections used to assess fair value of intangible
assets, goodwill and property and equipment and/or strategic
decisions with respect to our asset portfolio that cause impairment
charges; investments required, or reduced demand for products, as a
result of environmental rules and regulations; changes in tax,
environmental and other laws and regulations (including alternative
energy mandates); political and societal concerns about climate
change that could result in changes to our business or increase
expenditures, including litigation-related expenses; the operation,
financing and distribution decisions of equity affiliates we do not
control; and other economic, business, competitive and/or
regulatory factors affecting Phillips 66’s businesses generally as
set forth in our filings with the Securities and Exchange
Commission. Phillips 66 is under no obligation (and expressly
disclaims any such obligation) to update or alter its
forward-looking statements, whether as a result of new information,
future events or otherwise.
About Phillips 66
Phillips 66 (NYSE: PSX) manufactures, transports and markets
products that drive the global economy. The diversified energy
company’s portfolio includes Midstream, Chemicals, Refining, and
Marketing and Specialties businesses. Headquartered in Houston,
Phillips 66 has employees around the globe who are committed to
safely and reliably providing energy and improving lives while
pursuing a lower-carbon future. For more information, visit
phillips66.com or follow @Phillips66Co on LinkedIn or Twitter.
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version on businesswire.com: https://www.businesswire.com/news/home/20220817005656/en/
Jeff Dietert (investors) 832-765-2297 jeff.dietert@p66.com
Shannon Holy (investors) 832-765-2297 shannon.m.holy@p66.com
Thaddeus Herrick (media) 855-841-2368
thaddeus.f.herrick@p66.com
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