September 22, 2017 / 12:04 PM / a month ago

Phillips 66 Partners to buy Bakken assets from Phillips 66

The Phillips 66 gas station in Superior, Colorado, U.S., July 27, 2017. REUTERS/Rick Wilking

(Reuters) - Phillips 66 Partners LP (PSXP.N) said on Friday it would buy pipeline and other assets from parent Phillips 66 (PSX.N) in a $2.4 billion deal that strengthens the master limited partnership’s presence in the prolific Bakken basin.

The acquisition, Phillips 66 Partners biggest to-date, sent the company’s shares up 4.8 percent in morning trading, on pace for their best intra-day percentage gain in over a year.

The company is acquiring a 25 percent interest in two of the refiner’s pipelines in the Bakken basin - Dakota Access LLC and Energy Transfer Crude Oil Company LLC - and a 100 percent interest in the Merey Sweeny LP coke processing unit.

The assets include 1,926 combined pipeline miles and 520,000 barrels per day of crude oil capacity, Phillips 66 Partners said on Friday.

The deal supports the partnership’s objective of 30 percent distribution growth and its $1.1 billion earnings before interest, tax, depreciation and amortization (EBITDA) goal by 2018 end, Morningstar analysts wrote in a note.

Phillips 66 Partners last year bought assets supporting Phillips 66’s refineries in New Jersey, Montana, Texas, and Oklahoma in a $1.3 billion deal.

MLPs are formed by oil companies to buy and operate midstream assets and distribute excess cash to its investors in the form of tax-deferred dividends.

The Partnership plans to fund the deal with debt and $240 million in new units issued to Phillips 66.

The deal, which includes debt, is expected to close in early October.

Reporting by John Benny; Editing by Sriraj Kalluvila

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