Phillips 66 Partners LP agreed to acquire a 50% stake in the Liberty Pipeline, a $1.6 billion project to transport Rockies and Bakken crude oil production to Oklahoma’s Cushing hub.

According to a Feb. 21 news release from the Houston-based company, Phillips 66 Partners will acquire the interest as part of a roughly $75 million dropdown agreement with Phillips 66 Co. The company said it plans to fund the transaction through a combination of cash on hand and its revolving credit facility.

Greg Garland, CEO of both Phillips 66 and its MLP, described Liberty Pipeline, which is underpinned with long-term volume commitments, as a great addition to the Phillips 66 Partners portfolio.

“It is a strong organic project and continues our strategy of growing [Phillips 66 Partners] with stable fee-based cash flows, supported by long-term volume commitments,” Garland said in a statement. “Phillips 66 Partners is well-positioned to execute this pipeline project on the heels of successfully starting up the Gray Oak Pipeline.”

Liberty Pipeline Map (Source: Phillips 66)
Liberty Pipeline Map (Source: Phillips 66)

Service on the 24-inch Liberty Pipeline is targeted to commence in first-half 2021. The cost of the pipeline is expected to be about $800 million net to Phillips 66 Partners. Bridger Pipeline LLC owns the remaining 50% interest in Liberty.

The purchase price for the dropdown reflects the reimbursement of project costs incurred by Phillips 66 prior to the March 1 effective date of the transaction, according to the release.

The transaction is expected to close March 2. The Phillips 66 Partners conflicts committee engaged Evercore to act as its financial adviser and Vinson & Elkins LLP as its legal counsel for the deal.