PSX Phillips 66

   By Ezequiel Minaya 
 

Phillips 66 Partners LPP (PSXP), a master limited partnership formed to own some of Phillips 66′s (PSX) oil pipelines and other assets, said Tuesday it had acquired some 30 pipelines and terminal systems from its parent company in a so-called dropdown deal valued at $1.3 billion.

The Houston-based partnership said it would finance the deal with a combination of debt and $196 million in new units--which trade on exchanges like common shares--issued to Phillips 66. The deal is expected to close this month and be immediately accretive to unitholders, the partnership said.

"As our largest dropdown acquisition to date, this represents a milestone for the partnership and will provide additional fee-based income and diversity to our already strong midstream portfolio," said Phillips 66 Partners Chief Executive Greg Garland.

Many companies that own energy infrastructure--pipelines, storage tanks, rail terminals--have spun them off in master limited partnerships, which don't pay corporate income taxes and distribute available cash to their investors.

Master limited partnerships need fresh sources of cash to pay out to investors. They get the money by buying new businesses--often in deals with their parent companies known as dropdowns.

--Alison Sider contributed to this article

Write to Ezequiel Minaya at Ezequiel.Minaya@wsj.com

(END) Dow Jones Newswires

October 11, 2016 13:39 ET (17:39 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.