U.S. Markets closed

Phillips 66 to form master limited partnership

HOUSTON (AP) -- Phillips 66 on Thursday announced plans to use some of its transportation assets to form a master limited partnership that will go public the second half of next year.

The Houston-based refining and pipeline company said the assets used to form the partnership may include product and crude pipelines and terminals, rail cars and other rail infrastructure, along with natural gas liquids assets.

Phillips 66 said it expects to file for an initial public offering in the second quarter of 2013. The company plans to sell a minority interest in the partnership in the IPO in the second half of 2013, which is expected to raise $300 million to $400 million in gross proceeds.

A master limited partnership is a limited partnership that is publicly traded. It gets most of its cash flow from real estate, natural resources and commodities. There are certain tax benefits of such partnerships that some investors find attractive.

Phillips 66 said the partnership will help pay for expansion in the transportation and midstream sectors, while boosting value for the company's shareholders.

The company, which was spun off from ConocoPhillips in May, also said Thursday that it expects its 2013 capital spending to total $3.7 billion, representing a 6 percent increase from 2012's expected level.

Shares of Phillips 66 fell $1.28, or 2 percent, to $51.77 in morning trading.