U.S. oil refiner Phillips 66 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 March 26.
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 March 26, CEO 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.
Recommended Reading
US Drillers Cut Oil, Gas Rigs for Third Week in a Row, Baker Hughes Says
2024-08-30 - The rig count is 8% below this time last year, according to Baker Hughes.
Helix Awarded Vessel Service, Charter Contracts Off Brazil
2024-08-28 - Helix Energy Solutions Group was awarded new three-year charter and service contracts, valued at an estimated $786 million, from Petrobras for Siem Helix 1 and Siem Helix 2.
Shell, Akselos Enter Enterprise Deal for Structural Performance Management
2024-08-28 - Shell Information Technology International will leverage Akselos’ structural performance management software to monitor the health and lifecycle of Shell’s critical assets in Qatar, Canada, the Gulf of Mexico and elsewhere.
From Exxon to APA, E&Ps Feel Need to Scratch Exploration Itch
2024-08-27 - Exxon Mobil is looking for its “next Permian,” which an executive said could be in Algeria.
E&P Highlights: Aug. 26, 2024
2024-08-26 - Here’s a roundup of the latest E&P headlines, with Ovintiv considering selling its Uinta assets and drilling operations beginning at the Anchois project offshore Morocco.