EPIC Y-Grade Agrees to Sell Business for $2.20 Billion to Phillips 66

Rhea-AI Summary

EPIC Y-Grade has announced the sale of its natural gas liquids (NGL) business to Phillips 66 (NYSE: PSX) for $2.20 billion in cash, subject to customary adjustments. The transaction includes EPIC's long haul natural gas liquids pipelines and fractionation facilities serving the Permian and Eagle Ford basins.

The company's assets include NGL facilities in Corpus Christi and Sweeny with downstream interconnectivity. CEO Brian Freed highlighted that this transaction validates their team, strategy, and execution. Jeffries and Kirkland & Ellis LLP served as financial and legal advisors, respectively, for the transaction.

Positive

• Sale of NGL business for $2.20 billion in cash strengthens company's financial position
• Strategic assets in key locations (Permian and Eagle Ford basins)
• Established downstream interconnectivity infrastructure

Negative

• Divestment of core NGL business operations may impact future revenue streams

Insights

Financial Analyst

This $2.20 billion acquisition strategically enhances Phillips 66's midstream portfolio and vertical integration capabilities. The purchase of EPIC Y-Grade's NGL assets strengthens PSX's position in key production basins while expanding its fractionation capacity. The deal represents approximately 4.5% of PSX's market cap, making it a significant but manageable investment. The timing is particularly advantageous given the growing NGL production in the Permian and Eagle Ford basins, which should drive sustained cash flows. The Corpus Christi and Sweeny interconnectivity adds valuable optionality for product placement and marketing. Integration synergies and operational efficiencies should enhance returns on invested capital. The all-cash transaction structure indicates PSX's strong balance sheet and liquidity position.

Energy Infrastructure Expert

The acquisition of EPIC's NGL infrastructure assets represents a strategic consolidation in the midstream sector. The long-haul pipelines and fractionation facilities are critical infrastructure connecting two major production basins to key Gulf Coast markets. The Permian and Eagle Ford connection is particularly valuable as these basins continue to see robust production growth. The Corpus Christi terminal provides export optionality while Sweeny integration enhances Phillips 66's existing operations. The $2.20 billion valuation appears reasonable given the strategic value and potential for operational synergies. This deal strengthens Phillips 66's competitive position against other major midstream players and provides additional fee-based revenue streams with minimal commodity price exposure.

HOUSTON--(BUSINESS WIRE)-- EPIC Y-Grade, LP (“EPIC Y-Grade” or “the Company”) announced that it has entered into definitive agreements with Phillips 66 (NYSE: PSX) to sell its natural gas liquids (“NGL”) business for total cash consideration of $2.20 billion, subject to customary purchase price adjustments. EPIC Y-Grade owns long haul natural gas liquids pipelines and fractionation facilities that serve both the Permian and Eagle Ford basins.

“EPIC has transformed its NGL business over the past few years and this transaction affirms our team, our strategy, and our execution,” said Brian Freed, Chief Executive Officer of EPIC. “We have developed natural gas liquids assets in Corpus Christi and Sweeny with downstream interconnectivity. We believe Phillips 66 will be a great owner to steward these assets into their next phase.”

For this transaction, Jeffries LLC served as financial advisor and Kirkland & Ellis LLP served as legal advisor to EPIC Y-Grade.

About EPIC Y-Grade, LP

EPIC Y-Grade was formed in 2017 to build and operate natural gas liquids pipelines and associated fractionation complex linking NGL reserves in the Permian and Eagle Ford to Gulf Coast refiners, petrochemical companies and export markets. EPIC Y-Grade’s operated fractionation complex is located at the terminus of its 24” pipeline in Robstown, Texas. EPIC Y-Grade owns and controls 885 miles of NGL pipelines, 350 miles of purity product pipelines and fractionation capacity totaling 170,000 barrels per day in Robstown, Texas. For more information on EPIC Y-Grade, visit www.epicmid.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250107698592/en/

EPIC Midstream Holdings, LP

Mike Garberding

Chief Financial Officer

(214) 766-4929

Mike.garberding@epicmid.com

Source: EPIC Y-Grade, LP

FAQ

How much is Phillips 66 (PSX) paying for EPIC Y-Grade's NGL business?

Phillips 66 is paying $2.20 billion in cash for EPIC Y-Grade's NGL business, subject to customary purchase price adjustments.

What assets are included in Phillips 66's (PSX) acquisition of EPIC Y-Grade?

The acquisition includes EPIC Y-Grade's long haul natural gas liquids pipelines and fractionation facilities serving the Permian and Eagle Ford basins, including facilities in Corpus Christi and Sweeny.

Which geographic regions will Phillips 66 (PSX) gain exposure to through this acquisition?

Through this acquisition, Phillips 66 will gain exposure to the Permian and Eagle Ford basins, with facilities in Corpus Christi and Sweeny.

Who are the advisors for the EPIC Y-Grade and Phillips 66 (PSX) transaction?

Jeffries served as financial advisor and Kirkland & Ellis LLP served as legal advisor to EPIC Y-Grade for this transaction.