Phillips 66 Partners acquires interest in Phillips 66 Sweeny Frac

Phillips 66 Partners LP (NYSE: PSXP) has reached agreement with Phillips 66 (NYSE: PSX) to acquire a 25% controlling interest in Phillips 66 Sweeny Frac LLC, which owns the newly constructed Sweeny Fractionator One and Clemens Caverns storage facility, for total consideration of $236 million.

The transaction consideration consists of $24 million in newly issued PSXP units and the assumption of $212 million in notes payable to Phillips 66. The acquisition is expected to be immediately accretive to the Partnership and its unitholders, and is anticipated to close in early March.

The acquisition consideration is based on forecasted annual earnings before interest, taxes, depreciation, and amortization (EBITDA) of $25 million attributable to the acquired interest, and $7 million of remaining growth capital expenditures expected to be incurred by the Partnership for its proportional share of additional Clemens NGL caverns development.

In connection with the acquisition, Phillips 66 will enter into fractionation and storage agreements, each with a 10-year term, that include a minimum fractionation volume commitment for Sweeny Fractionator One and minimum storage commitments at the Clemens Caverns storage facility.

The terms of the transaction were approved by the board of directors of the general partner of Phillips 66 Partners, based on the approval and recommendation of its conflicts committee comprised solely of independent directors.

The conflicts committee engaged Evercore to act as its financial advisor and Vinson & Elkins LLP to act as its legal counsel.

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