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Phillips 66 to Divest Assets

Zacks Equity Research

Phillips 66 (PSX) announced that it would divest its products pipeline system and two storage spheres for $700 million to Phillips 66 Partners LP (PSXP).

The partnership will acquire Phillip 66's Gold Line System – which consists of a 681-mile refined products pipeline that runs from its Borger, Texas refinery to Cahokia, Ill. –and two refinery-grade propylene storage spheres. The transaction is expected to be completed by Mar 1.

Headquartered in Houston, Texas, Phillips 66 Partners is a master limited partnership formed by Phillips 66 in 2013 to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum product and natural gas liquids pipelines and terminals and other transportation and midstream assets.

The strength of Phillips 66’s business model reflects its commitment to return value to shareholders along with its strong cash generation capabilities. Phillips 66 has a good capital deployment policy through share repurchase and payment of dividends. We believe that the Berkshire transaction will boost investor confidence in the stock, and drive shareholder value.

Phillips 66, an independent publicly traded company, was formed after the spin-off of the refining/sales business of ConocoPhillips (COP) in 2012. The move resulted in the creation of the largest refining company in the U.S. and the largest exploration and production player based on oil and gas reserves.

Phillips 66, is headquartered in Houston, Texas. In addition to the refining, marketing and transportation businesses, the company has emerged as an integrated downstream company with most of the Midstream and Chemicals segments as well as power generation and certain technology operations included in the Emerging Businesses segment.

Phillips 66 currently holds a Zacks Rank #2 (Buy). Meanwhile, one can also consider better-ranked Zacks Rank #1 (Strong Buy) stocks in the oil and gas sector like Clayton Williams Energy, Inc. (CWEI).

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