Phillips 66 Partners (PSXP) to Acquire Chevron-Owned NGL Logistics Assets in South Louisiana

August 26, 2016 5:51 AM EDT

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Phillips 66 Partners LP (NYSE: PSXP) announced that an agreement has been reached for it to acquire a natural gas liquids (NGL) logistics system in southeast Louisiana currently owned by Chevron. The system includes approximately 500 miles of pipelines and a storage cavern connecting multiple fractionation facilities, refineries and a petrochemical facility.

“We are committed to a growth strategy that includes dropdowns from our sponsor Phillips 66, organic projects and third-party acquisitions,” said Tim Taylor, Phillips 66 Partners president. “This acquisition will expand the Partnership’s NGL footprint into the Louisiana market. The assets are strategically located and connect offshore production, local refineries and petrochemical facilities in south Louisiana while providing significant opportunities for fee-based growth.”

The acquisition includes the following assets:

  • TENDS Pipeline System, an approximately 300-mile, bidirectional NGL pipeline system connected to third-party fractionators, refineries -- including the Phillips 66 Alliance Refinery -- and a petrochemical plant.
  • VP Pipeline / EP Pipeline, approximately 200 miles of regulated pipelines that carry raw NGLs from a third-party natural gas processing plant to pipeline and fractionation infrastructure.
  • Sorrento Cavern, a salt dome cavern with approximately 1.5 million barrels of NGL storage capacity located in Ascension Parish.

The Partnership expects earnings before interest, taxes, depreciation and amortization (EBITDA) from the acquired assets to be approximately $25 million in 2017. The acquisition will be financed with cash and borrowings under the Partnership’s revolving credit facility.

The transaction is expected to close in the fourth quarter of 2016 pending regulatory approvals.

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