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Phillips 66 (PSX) Divests Rockies Express Pipeline Stake

Phillips 66 PSX, a leading integrated energy company, has announced the sale of its 25% non-operated equity interest in Rockies Express Pipeline to a subsidiary of Tallgrass Energy, LP. Tallgrass is the operator of the Rockies Express Pipeline and owns its remaining 75% stake. The deal, valued at $1.28 billion, is part of PSX’s commitment to deliver a value of more than $3 billion from asset divestitures.

The Rockies Express Pipeline is one of the largest natural gas pipelines in the United States, spanning 1,714 miles. It transports approximately 5 billion cubic feet per day (Bcf/d) of natural gas bi-directionally between the Rockies, Appalachia and the northeastern United States.

Phillips 66 has stated that it is continuously working toward optimizing its portfolio and monetizing assets that are no longer deemed essential for its long-term objectives. Following the transaction, Tallgrass Energy will own 100% of the equity stake in Rockies Express Pipeline. The sale of PSX’s 25% stake in the Rockies Express Pipeline provides the company with pre-tax proceeds totaling $685 million. This figure includes adjustments related to the allocation of the associated debt and preferred equity balances. The company has mentioned that it will use proceeds from the sale to support its priorities like increasing shareholder returns.

Zacks Rank and Key Picks

Currently, PSX carries a Zacks Rank #3 (Hold).

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Some better-ranked stocks in the energy sector are Archrock Inc. AROC, SM Energy SM and Hess Midstream Partners LP HESM. Archrock and SM Energy presently sport a Zacks Rank #1 (Strong Buy) each, while Hess Midstream carries a Zacks Rank of #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

SM Energy is an upstream energy firm operating in the prolific Midland Basin region and the South Texas region. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.

Hess Midstream owns, operates, develops and acquires a wide range of midstream assets, providing services to Hess Corporation and other third-party customers. The partnership has a stable fee-based revenue model secured via long-term commercial contracts. Since Hess Midstream operates through 100% fee-based contracts, it is exposed to minimal commodity price risks.

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Phillips 66 (PSX) : Free Stock Analysis Report

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Hess Midstream Partners LP (HESM) : Free Stock Analysis Report

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