8-KMaterial AgreementsRegulation FDExhibits & Filings

Phillips 66 8-K Report, Material Agreement (Jan 7, 2025)

Filed January 7, 2025For Securities:PSX

Summary

Phillips 66 (PSX) has announced a significant strategic acquisition through its wholly-owned subsidiary, P66, entering into an Equity Purchase Agreement to acquire all equity interests in EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP for a base purchase price of $2.2 billion in cash. The target companies own and operate a portfolio of natural gas liquids (NGL) pipelines, fractionation facilities, and distribution systems. This acquisition is expected to be funded through existing cash on hand, proceeds from recent asset dispositions, and potentially short-term debt, indicating a strong liquidity position and a commitment to expanding its midstream operations. This move represents a substantial investment in the NGL midstream sector, aiming to bolster Phillips 66's infrastructure and market position in this growing area. The transaction is subject to customary closing conditions, including regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Act. Investors should monitor the satisfaction of these conditions and any potential adjustments to the purchase price, which are subject to customary terms related to working capital, indebtedness, and capital expenditures.

Key Highlights

  • 1Phillips 66 (PSX) to acquire EPIC Y-Grade assets (NGL pipelines, fractionation, distribution) for $2.2 billion cash.
  • 2Acquisition is expected to enhance PSX's midstream natural gas liquids infrastructure.
  • 3Transaction funding will primarily come from cash on hand and proceeds from prior asset sales.
  • 4Deal is subject to customary closing conditions, including antitrust (HSR Act) approval.
  • 5Base purchase price is subject to customary adjustments for working capital, indebtedness, and capital expenditures.
  • 6The agreement includes standard representations, warranties, and termination rights for both parties.

Frequently Asked Questions

Phillips 66, through its subsidiary P66, is acquiring all equity interests in EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, which own natural gas liquids (NGL) pipelines, fractionation facilities, and distribution systems. The base purchase price for this transaction is $2.2 billion in cash.

Phillips 66 expects to fund the $2.2 billion acquisition primarily with cash on hand, supplemented by proceeds from recently announced asset dispositions. Short-term debt may be utilized if necessary.

The completion of the transaction is subject to customary closing conditions. A significant condition is the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). Other conditions include mutual satisfaction of representations and warranties, and the absence of any legal impediments to the transaction.

Yes, the base purchase price of $2.2 billion is subject to customary adjustments. These adjustments will be based on the target companies' cash, indebtedness, working capital, and transaction expenses at closing. There will also be an adjustment related to specific pipeline expansion capital expenditures funded by P66.