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Transaction consideration of $775 million
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Expected to be immediately accretive to unitholders
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Assets include the Standish products pipeline and the remaining 75
percent interest in a newly constructed natural gas liquids (NGL)
fractionator and NGL storage cavern facility
HOUSTON--(BUSINESS WIRE)--
Phillips 66 Partners LP (NYSE: PSXP) (the “Partnership”) announced that
it has reached agreement with Phillips 66 (NYSE: PSX) to acquire the
Standish Pipeline and the remaining 75 percent interest in Phillips 66
Sweeny Frac LLC (“Sweeny Frac LLC”), which owns the newly constructed
Sweeny Fractionator One and Clemens Caverns storage facility, for total
consideration of $775 million. The Partnership previously acquired a 25
percent interest in Sweeny Frac LLC in March 2016. The Partnership
expects to fund this acquisition with a combination of newly issued PSXP
units to Phillips 66 and the assumption of notes payable to Phillips 66.
The acquisition is expected to be immediately accretive to the
Partnership and its unitholders and is anticipated to close later this
month.
The acquisition consideration is based on forecasted annual earnings
before interest, taxes, depreciation and amortization (EBITDA) of
approximately $90 million, attributable to the assets and interest
acquired in the transaction, and $13 million of remaining growth capital
expenditures expected to be incurred by the Partnership for additional
Clemens Caverns development.
“The acquisition provides the Partnership with full ownership in Sweeny
Fractionator One and the Clemens Caverns, further diversifying our
fee-based portfolio,” said Greg Garland, Phillips 66 Partners chairman
and CEO. “The addition of the Standish Pipeline is consistent with our
plan to build out our current systems that are strategically integrated
with Phillips 66 refineries. We remain on track to deliver our stated
five-year compound annual distribution growth target of 30 percent
through the end of 2018.”
The transaction includes the following assets:
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Sweeny Fractionator One: A 100,000 barrel-per-day NGL fractionator
located within the Phillips 66 Sweeny Refinery complex in Old Ocean,
Texas.
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Clemens Caverns storage facility: Located approximately 15 miles
southeast of the Sweeny Refinery, the facility includes five newly
developed caverns that will have storage capacity of approximately 7.5
million barrels of Y-grade NGL, propane and butane, with the
capability for future capacity expansion.
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Standish Pipeline: A refined petroleum products pipeline system
extending from Phillips 66’s Ponca City Refinery in Ponca City,
Oklahoma, to the Partnership’s North Wichita Terminal in Wichita,
Kansas.
Phillips 66 and the Partnership are parties to 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, L.L.P. to act as its legal
counsel.
About Phillips 66 Partners
Headquartered in Houston, Texas, Phillips 66 Partners is a
growth-oriented master limited partnership formed by Phillips 66 to own,
operate, develop and acquire primarily fee-based crude oil, refined
petroleum product and natural gas liquids pipelines and terminals and
other transportation and midstream assets.
CAUTIONARY STATEMENTS
This press release contains forward-looking statements as defined
under the federal securities laws, including projections, plans and
objectives. Although Phillips 66 Partners believes that expectations
reflected in such forward-looking statements are reasonable, no
assurance can be given that such expectations will prove to be correct.
In addition, these statements are subject to certain risks,
uncertainties and other assumptions that are difficult to predict and
may be beyond Phillips 66 Partners’ control. If one or more of these
risks or uncertainties materialize, or if underlying assumptions prove
incorrect, actual results may vary materially from what Phillips 66
Partners anticipated, estimated, projected or expected. The key risk
factors that may have a direct bearing on the forward-looking statements
are the accuracy of our assumptions used to estimate the benefits to be
realized from the acquisition, our ability to successfully complete the
acquisition and integrate the assets into our operations, and other
factors as described in the filings that Phillips 66 Partners makes with
the Securities and Exchange Commission. In light of these risks,
uncertainties and assumptions, the events described in the
forward-looking statements might not occur or might occur to a different
extent or at a different time than as described. All forward-looking
statements in this release are made as of the date hereof and Phillips
66 Partners undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Use of Non-GAAP Financial Information -- This news release
includes the term forecasted EBITDA. This is a non-GAAP financial
measure. Forecasted EBITDA is based on the Partnership’s projections for
the acquired assets, including fractionation and storage fees expected
to be paid by Phillips 66 under commercial agreements that were entered
into in connection with the previous acquisition of the 25 percent
interest in Sweeny Frac LLC. Forecasted EBITDA is included to help
facilitate comparisons of operating performance of the Partnership with
other companies in our industry, as well as help facilitate an
assessment of our assets' projected ability to generate sufficient cash
flow to make distributions to our partners. Forecasted EBITDA is not
presented as an alternative to the nearest GAAP financial measure, net
income, and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. We are unable
to present a reconciliation of forecasted EBITDA because certain
elements of net income, including interest, depreciation and taxes, are
not available. Together, these items generally result in EBITDA being
significantly greater than net income.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160504006752/en/
Source: Phillips 66 Partners LP