Phillips 66 to Sell Stake in Gulf Coast Express Pipeline

Phillips 66 has signed an agreement to divest DCP GCX Pipeline LLC, which owns a 25 percent non-operating stake in the Gulf Coast Express Pipeline, to ArcLight Capital Partners LLC for $865 million pre-tax.

Expected to close January 2025, the transaction will result in the Houston, Texas-based downstream oil and gas player exceeding a $3 billion divestment plan, according to chair and chief executive Mark Lashier.

“We intend to continue to optimize the portfolio and rationalize non-core assets going forward”, Lashier said in a statement. “The evolution of our portfolio underscores our position as a leading integrated downstream energy provider, enhancing shareholder value and positioning the company for the future”.

Stretching about 500 miles, the Gulf Coast Express Pipeline carries around two billion cubic feet a day of natural gas from the Permian Basin to Agua Dulce, Texas, according to the owners.

“Following the transaction, Gulf Coast Express Pipeline LLC will be jointly owned by subsidiaries of Kinder Morgan Inc. (NYSE:KMI) and affiliates of ArcLight Capital Partners LLC”, said the statement on Phillips 66’s website.

“The sales price represents an implied Enterprise Value/EBITDA multiple of 10.6x based on expected 2025 EBITDA”, the company added.

“Proceeds from the sale will support the strategic priorities of Phillips 66, including returns to shareholders and debt reduction”.

Separately Phillips 66 announced $2.1 billion in capital budget for 2025, comprising $1.1 billion for growth and $998 million for sustaining capital.

Midstream operations account for the bulk of the budget with a $975 million allotment. The midstream allocation “advances the integrated NGL [natural gas liquids] wellhead-to-market value chain by strengthening the company’s position in key basins, including increasing gas processing capacity”, Phillips 66 said in another press release.

The refining segment will get $822 million, with a focus on “high-return, low-capital projects”, Phillips 66 said.

It has earmarked $74 million for renewable fuels. This will be spent on the “optimization of feedstocks and logistics for renewable diesel and sustainable aviation fuel production” at the Rodeo Renewable Energy Complex, it said. The converted refinery in San Francisco, California, started production in the first quarter and has since ramped up to full production at 50,000 barrels a day, Phillips 66 said in a press release June 26.

“Corporate and Other capital will primarily fund information technology projects”, Phillips 66 added in its budget announcement.

Including Phillips 66’s share of capital for joint ventures Chevron Phillips Chemical Co. LLC (CPChem) and WRB Refining LP (WRB), the company’s total budget for 2025 is expected to total $3 billion.

“CPChem’s growth capital will continue to fund the construction of world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar, through joint ventures”, Phillips 66 said. “The facilities are expected to start up in 2026.

“WRB’s capital spending will primarily be directed to sustaining projects”.

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