Editor's note: This breaking news article has been updated with analyst commentary. 

Phillips 66 plans to sell its 25% stake in the Gulf Coast Express (GCX) natural gas pipeline to an affiliate of ArcLight Capital Partners for $865 million, according to a Dec. 16 press release.

After the sale, which is expected to close in January 2025, the ownership of the line will be split between ArcLight’s affiliate and Kinder Morgan, which owns the operating interest in the pipeline.

The GCX is a 2 Bcf/d capacity, 500-mile pipeline system that connects the Permian Basin to the Agua Dulce hub in South Texas near Corpus Christi. Kinder Morgan announced in October that the company planned to expand the line’s capacity by 570 MMcf/d.

The sale falls in line with Phillips 66’s overall strategy of emphasizing its downstream assets, said Mark Lashier, Phillips 66 CEO and chairman, in the release.

“The evolution of our portfolio underscores our position as a leading integrated downstream energy provider, enhancing shareholder value and positioning the company for the future,” Lashier said.

According to Phillips, the company’s $865 million sales price represents an estimated EBITDA multiple of 10.6x based on expected 2025 EBITDA.

An analysis of the deal found the price met expectations.

“The valuation is nearly in line with our estimate ($885 million),” said Matthew Blair, an analyst for TPH Energy Research in a quick analysis following the Phillips’ announcement.

Phillips still has several options for divestiture, including retail assets in Germany and Austria, its stake in the Dakota Access Pipeline and the Energy Transfer Crude Oil Pipeline.

Proceeds from the sale will support the strategic priorities of Phillips 66, including returns to shareholders and debt reduction, the company said in its statement.

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