(Reuters) – U.S. oil refiner Phillips 66 (NYSE: ) said on Monday it will buy various pipelines and distribution systems from Ares-backed pipeline operator EPIC NGL in a $2.2 billion deal as it seeks to shore up its liquidity bet.
NGLs include a group of hydrocarbons extracted from natural gas in processing plants, and are used as raw materials in petrochemical plants, for heating, cooking and various other applications.
The deal would see Phillips 66 acquire EPIC Y-Grade GP, EPIC Y-Grade and its various subsidiaries, which is expected to be immediately accretive to earnings per share, the statement said.
Phillips 66 has been betting big on NGLs, after previously saying it expected NGL production to grow faster than the rest of the decade, supported by demand from petrochemical producers.
“This transaction optimizes our Permian NGL value chain, enables Phillips 66 to provide producers with comprehensive flow assurance and is expected to deliver attractive returns that exceed our hurdle rates,” said Phillips 66 CEO Mark Lashier.
The company added that it does not expect to increase its 2025 capital program after the deal, related to the EPIC NGL pipeline capacity increase process.
About 85% of U.S. NGL production is concentrated in Permian Basin oil fields, and most is exported, according to RBN Energy analysts.
Last year, the oil refiner bought Pinnacle Midland from private equity firm Energy Spectrum CapitalEnergy Spectrum Capital in a $550 million cash deal to expand its natural gas gathering and processing area in the Midland Basin.
The US shale industry has witnessed a record wave of deals in the recent past, as energy companies have rushed to expand oil and gas well reserves, particularly in the Permian Basin.
