HOUSTON - EPIC Y-Grade, LP, a company specializing in natural gas liquids (NGL) infrastructure, has sold its NGL operations to Phillips 66 (NYSE: NYSE:PSX), a $47.5 billion market cap energy company, for a total cash consideration of $2.20 billion. The agreement, subject to standard adjustments, transfers ownership of EPIC Y-Grade's long-haul NGL pipelines and fractionation facilities, which support the Permian and Eagle Ford (NYSE:F) basins. According to InvestingPro, Phillips 66 maintains a FAIR financial health score, suggesting solid operational stability for this acquisition.
Brian Freed, the CEO of EPIC, highlighted the company's progress, stating that the sale confirms the value of their strategy and execution. He expressed confidence in Phillips 66 as the new steward of these assets, which include assets in Corpus Christi and Sweeny with downstream interconnectivity. With Phillips 66 currently trading below its Fair Value according to InvestingPro's analysis, and analysts setting a high target of $161, this strategic acquisition could further enhance shareholder value.
EPIC Y-Grade's assets consist of 885 miles of NGL pipelines, 350 miles of purity product pipelines, and a fractionation complex capable of processing 170,000 barrels per day, all strategically located in Robstown, Texas.
Financial advisory for the transaction was provided by Jeffries LLC, and legal counsel was offered by Kirkland & Ellis LLP.
This strategic move comes as EPIC Y-Grade has been building and operating key infrastructure since 2017, aimed at linking NGL reserves from the Permian and Eagle Ford regions to Gulf Coast refiners, petrochemical companies, and export markets. With Phillips 66's strong EBITDA of $5.57 billion and healthy current ratio of 1.21, InvestingPro subscribers can access detailed analysis of how this acquisition fits into the company's broader growth strategy through comprehensive Pro Research Reports, available for over 1,400 US stocks.
The transaction is based on a press release statement and reflects a significant change in ownership for one of the key players in the NGL market. It underscores the ongoing realignment within the energy sector, particularly in the realm of infrastructure that supports major oil and gas producing areas in the United States.
In other recent news, Phillips 66, a diversified energy manufacturing and logistics company, has set a $2.1 billion capital budget for 2025, with a focus on sustaining and growth capital. The company has also reported strong financial performance in its Q3 2024 earnings call, with adjusted earnings of $859 million and an operating cash flow of $1.1 billion. Despite challenges in the refining market, Phillips 66 is nearing its target of returning $13 billion to $15 billion to shareholders, having already returned $12.5 billion since July 2022.
In a recent development, the company plans to shut down its Los Angeles refinery by Q4 2025 due to local crude production declines and regulatory pressures. Phillips 66 is also on track to achieve $3 billion in asset sales and projects a mid-cycle earnings capacity of $14 billion by 2025. Analysts note that despite some bearish highlights, the company remains committed to returning 50% or more of operating cash flow to shareholders by 2025.
These recent developments underscore Phillips 66's strategy of disciplined capital investment and commitment to delivering shareholder value. The company's strategic focus on the natural gas liquids wellhead-to-market value chain and refining competitiveness enhancements has helped maintain its robust financial position, with last twelve months revenue of $147.7 billion and EBITDA of $5.57 billion.
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