Phillips 66 Eyes $1-Billion Pipeline Stake Divestment

Phillips 66 is pondering the sale of its 25% stake in a gas pipeline that runs between Wyoming and Ohio, which would perchance presumably well salvage over $1 billion.

Citing unnamed sources in the know, Reuters talked about the refiner modified into as soon as at this time discussing the divestment with advisers and that doable suitors for the stake integrated non-public equity corporations and infrastructure funding funds.

The stake, per the Reuters sources, has a book price of $451 million nonetheless it carries some $500 million in debt that the purchaser would own to seize on.

Phillips 66 talked about earlier this year it planned to divest $3 billion price of resources as fragment of an effort to decrease charges and boost returns.

“We fabricate not own (a) sense of urgency… It’s truly going to be a feature of whether somebody puts a better price on these resources than we end,” chief executive Imprint Lashier talked about in January.

2023 modified into as soon as not the most simple year for the U.S. refiner, which noticed its earnings tumble by 46% in the second quarter of the year, with adjusted earnings of merely $1.8 billion—compared with $3.3 billion in Q2 2022. Its Q3 adjusted earnings were increased at $2.1 billion nonetheless quiet didn’t dwell up to analyst expectations.

It got worse because the year moved on, with activist investor Elliott Management disclosing it had amassed a $1-billion stake in the company and straight away occurring the offense to increase its monetary performance. The asset divestment thought modified into as soon as launched shortly after.

Per Elliott, Phillips 66’s performance has declined in contemporary years “as it has shifted its focal point some distance flung from its Refining segment.”

“This ability that, operational execution has suffered, and the Firm modified into as soon as poorly positioned to seize unprejudiced appropriate thing in regards to the refining dapper-cycle in 2022 and 2023,” Elliott talked about in a letter it sent to the refiner’s board of directors after it disclosed its stake.

By Charles Kennedy for Oilprice.com

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