Phillips 66 explores sale of pipeline stake worth over US$1 billion: sources

US OIL refiner Phillips 66 is exploring a sale of its 25 per cent stake in the Rockies Express Pipeline that it hopes could be worth more than US$1 billion, including debt, people familiar with the matter said on Tuesday.

The Rockies Express Pipeline (REX) is a 2730 km interstate natural gas pipeline, stretching from Wyoming and Colorado in the US West to Eastern Ohio.

Phillips 66 is working with its advisers on talks with potential buyers, which include private equity firms and infrastructure funds, the sources said, requesting anonymity as the discussions are confidential.

The Houston-based company is hoping to command a premium to the stake’s current book value of US$451 million, the sources said, adding bidders would also need to assume debt obligations worth more than US$500 million associated with the stake.

A spokesperson for Phillips 66 declined to comment.

Phillips 66, which has a market value of US$67 billion, is aiming to raise about US$3 billion from asset sales this year.

In an interview earlier on Tuesday, chief executive Mark Lashier said the company was in discussions with potential buyers for asset sales, but it was not in a rush to complete divestments. He declined to name the assets referenced in those discussions.

The company has come under pressure in recent months from Elliott Management, which disclosed a stake in November and pushed for Phillips 66 to improve its refining operations and revamp its board of directors.

The activist investor and Phillips 66 agreed last month to add a new board member approved by the investment firm, and to work together to identify a second director appointment.

The remainder of the REX pipeline is controlled by privately owned Tallgrass Energy.

Stakes in pipelines, such as REX, are attractive to financial investors as they like businesses with steady cash flow, the sources said, adding stakes in interstate pipelines are not marketed to buyers often. REUTERS