Phillips 66 to acquire Pinnacle Midstream for $550m to expand Midland Basin operations

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Phillips 66 (NYSE: PSX) has reached a definitive agreement to acquire Pinnacle Midland Parent LLC from Energy Spectrum Capital for $550 million in cash. This acquisition is a strategic move to enhance Phillips 66’s footprint in natural gas gathering and processing in the Midland Basin, significantly strengthening its position in the energy sector.

Details of the Acquisition

Pinnacle Midstream II LLC, a subsidiary of Pinnacle Midland Parent LLC, is known for its high-quality natural gas services in the Midland Basin. The company, headquartered in Houston, Texas, has been a key player in providing essential midstream energy services to producers in the region. The acquisition includes the Dos Picos natural gas gathering and processing system, featuring a 220 MMcf/d gas processing plant, 80 miles of gathering pipeline, and 50,000 dedicated acres with high-quality producers.

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Strategic Importance and Integration

Mark Lashier, Chairman and CEO of Phillips 66, emphasized the strategic value of this acquisition, stating that it complements the company’s diversified asset portfolio and advances its wellhead-to-market strategy. The addition of Pinnacle’s assets, including the scalable Dos Picos processing complex, is expected to drive operational synergies and expand service offerings in one of Phillips 66’s focus basins.

Phillips 66 Announces Strategic Acquisition of Pinnacle Midstream to Boost Midland Basin Operations

Phillips 66 Announces Strategic Acquisition of Pinnacle Midstream to Boost Midland Basin Operations

Enhancements and Future Plans

The integration of Pinnacle’s assets into Phillips 66’s existing infrastructure is poised to improve efficiency and scalability. Plans are already in place to potentially expand the Dos Picos facility with a second 220 MMcf/d gas plant, which would further enhance Phillips 66’s processing capacity and ability to serve world-class customers in the region.

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Closing and Future Outlook

The transaction is anticipated to close around mid-year 2024, pending customary closing conditions and regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. This acquisition aligns with Phillips 66’s long-term objectives to strengthen its natural gas liquids value chain and create sustainable value for shareholders.

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Phillips 66’s acquisition of Pinnacle Midstream represents a strategic enhancement to its operational capabilities in the Midland Basin. By expanding its natural gas gathering and processing facilities, Phillips 66 not only secures a stronger foothold in the energy market but also sets the stage for future growth and efficiency improvements. This move is indicative of the company’s commitment to investing in robust and scalable infrastructure, aiming to meet the increasing energy demands efficiently and sustainably.

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