Phillips 66 sells pipeline stake for $865 million

HOUSTON - Energy company Phillips 66 (NYSE: NYSE:PSX) has reached a definitive agreement to sell its 25% non-operated equity interest in Gulf Coast Express Pipeline LLC to an affiliate of ArcLight Capital Partners (WA:CPAP), LLC. The deal, announced today, involves a pre-tax cash transaction of $865 million, with adjustments to the purchase price expected.

The Gulf Coast Express Pipeline, approximately 500 miles in length, transports around 2 billion cubic feet of natural gas per day from the Permian Basin to the Agua Dulce area in Texas. Upon completion of the sale, the pipeline will be jointly owned by subsidiaries of Kinder Morgan , Inc. (NYSE: NYSE:KMI) and affiliates of ArcLight Capital Partners, LLC.

Phillips 66's Chairman and CEO, Mark Lashier, stated that the transaction allows the company to surpass its $3 billion asset divestiture target, a goal set as part of its strategic priorities. Lashier emphasized that the company will continue to optimize its portfolio and rationalize non-core assets. He also highlighted the company's evolution as a leading integrated downstream energy provider, which he believes will enhance shareholder value and position Phillips 66 for the future.

The sale price suggests an Enterprise Value/EBITDA multiple of 10.6x based on the expected EBITDA for 2025. Phillips 66 plans to allocate the proceeds from this sale towards strategic priorities, including shareholder returns and debt reduction.

The transaction is anticipated to close in January 2025.

Phillips 66 is an integrated downstream energy provider with businesses in Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels. The company, headquartered in Houston, operates globally with a commitment to safety, reliability, and a lower-carbon future.

This news is based on a press release statement from Phillips 66.

In other recent news, Kinder Morgan has been the recipient of several target price upgrades from various analyst firms. Citi raised its target for Kinder Morgan to $25, citing potential major expansion projects and a forecasted growth rate of 5%. RBC Capital Markets increased its price target from $24 to $26, noting the company's strong cash flow and balance sheet. Goldman Sachs also increased its target to $26, pointing to Kinder Morgan's potential to capitalize on growing natural gas demand.

CFRA raised its target price from $24 to $28, citing the growing demand for natural gas logistics. The firm also increased its 2025 earnings per share projection for Kinder Morgan to $1.32. BofA Securities initiated coverage with a Buy rating and a $27 price target, noting expected improvements in the company's base business.

These recent developments follow Kinder Morgan's announcement of a 2% year-over-year increase in EBITDA and stable earnings per share. The company also announced a $3 billion South System Expansion 4 Project, anticipating significant growth in natural gas demand. The board declared a quarterly dividend of $0.2875 per share, marking a 2% increase from the previous year. These highlights reflect the recent positive outlook for Kinder Morgan's financial performance and growth prospects.

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