Phillips 66 Partners LP (the partnership) has announced an agreement with Phillips 66 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 a total consideration of US$236 million. The transaction consideration consists of US$24 million in newly issued PSXP units and the assumption of US$212 million in notes payable to Phillips 66. The acquisition is expected to be immediately accretive to the partnership and its unit holders and is anticipated to close in March 2016.
The acquisition consideration is based on forecasted annual earnings before interest, taxes, depreciation and amortisation (EBITDA) of approximately US$25 million attributable to the acquired interest, and US$7 million of remaining growth capital expenditures expected to be incurred by the partnership for its proportional share of additional Clemens NGL caverns development.
“This acquisition expands and diversifies our fee-based portfolio into natural gas liquids fractionation and storage,” said Greg Garland, Phillips 66 Partners Chairman and CEO. “Our consistent strategy and fee-based business model have shown resiliency throughout this challenged market environment, and as a result, we remain on track to deliver on our stated five year compound annual distribution growth target of 30% through the end of 2018.”
Phillips 66 Sweeny Frac LLC owns the following assets:
- Sweeny fractionator one: A 100 000 bpd NGL fractionator located within the Phillips 66 Sweeny refinery complex in Old Ocean, Texas.
- Clemens caverns storage facility: Located approximately 15 miles southeast of Phillips 66’s sweeny refinery, the facility includes five newly developed caverns that will have storage capacity of approximately 7.5 million bbls of Y-grade NGL, propane and butane, with the capability for future capacity expansion.
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.
Adapted from press release by Francesca Brindle
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