Phillips 66 to Sell Bakken Pipeline Stake, Other Assets to Partnership For $1.7 Billion

   By Cara Lombardo

Phillips 66 Partners LP (PSXP) will buy crude-oil pipeline and coke-processing assets from its majority owner, Phillips 66 (PSX), in a $1.7 billion deal, the companies said Friday.

Phillips 66 Partners is acquiring a 25% stake in the 1,872-mile Bakken Pipeline and full ownership of Merey Sweeny LP, which owns coke-processing units at Phillips 66's Sweeny Refinery in Texas.

The partnership said the deal, valued at $2.4 billion when including the assumption of debt, is expected to close early next month. Phillips 66 Partners will fund the transaction through a combination of debt, the private placement of $750 million of equity units and issuance of $240 million of equity units to Phillips 66.

Phillips 66 Partners Chief Executive Greg Garland said the deal is the largest the history of the partnership, which was formed in 2013, and will reliably generate cash flow.

The Phillips 66 Partners deal is the latest in what has been an active year for merger and acquisitions, though some of the activity consists of companies spinning off assets or investing more money into master limited partnerships. Master limited partnerships, or partnerships that are publicly traded, offer tax advantages that have made them an increasingly common way for oil companies to structure pipeline operators and other capital-intensive companies.

Phillips 66 has beat earnings estimates in recent quarters while Phillips 66 Partners has missed. Shares in both companies were inactive premarket Friday.

Write to Cara Lombardo at cara.lombardo@wsj.com

(END) Dow Jones Newswires

September 22, 2017 09:34 ET (13:34 GMT)

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