HOUSTON--(BUSINESS WIRE)--Phillips 66 Partners LP (NYSE: PSXP) (the “Partnership”) 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.
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.
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 forecasted EBITDA. This is a non-GAAP financial measure. Forecasted EBITDA is based on the Partnership’s projections for the acquired assets. 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.