NorthAmOil: Phillips 66 signs $3.8bn deal to buy stake in DCP Midstream

Phillips 66 has agreed to acquire all of the publicly held common units representing limited partner interests in pipeline operator DCP Midstream LP, in an all-cash deal worth $3.8bn. This is a cash consideration of $41.75 per common unit.

The deal will double Phillips 66’s economic interest in the Denver-based natural-gas giant DCP Midstream to 86.8%. The transaction values DCP at some $8.7bn. The all-cash transaction is expected to close in the second quarter of 2023.

Phillips 66, a Houston-based oil refiner, has been expanding its business in natural gas liquids (NGLs).

“We are delivering on our commitment to grow our NGL business,” said president and CEO of Phillips 66, Mark Lashier. “Our wellhead-to-market platform captures the full NGL value chain. As we continue integrating DCP Midstream, we are unlocking significant synergies and growth opportunities.”

The transaction is expected to generate an incremental $1bn of adjusted EBITDA for Phillips 66. In addition, Phillips 66 expects to capture operational and commercial synergies of at least $300mn by integrating DCP Midstream into its existing midstream business.

Phillips 66 plans to fund the approximately $3.8bn cash consideration through a combination of cash and debt while maintaining its current investment grade credit ratings.