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Phillips 66 (PSX) Acquires All Public DCP Midstream Units
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Phillips 66 (PSX - Free Report) has completed the acquisition of all publicly held common units in DCP Midstream for $3.8 billion.
As of Jun 15, DCP Midstream’s common units are no longer listed on the New York Stock Exchange. The acquisition will double Phillips 66’s stake in DCP Midstream to 86.8%.
DCP Midstream’s assets gather, process and transport natural gas and natural gas liquids from the major U.S. shale plays, including the Permian Basin, Eagle Ford, the Ardmore and Anadarko Basins in Oklahoma and the Denver-Julesburg Basin in Colorado.
Phillips 66 focuses more on midstream, renewables and chemical operations, making its business model more stable. The acquisition provides Phillips 66 with natural gas processing in important regions, increased fractionation capacity and long-haul pipelines appearing from the Denver-Julesburg and Permian basins. Owning those assets offers Phillips 66 enhanced flexibility.
In August 2022, Phillips 66 announced restructuring ownership of DCP Midstream and taking over management of the joint venture. At that time, the restructuring boosted Phillips 66’s interest in DCP Midstream from 28.26% to 43.31%. The final agreement was announced in January, in which Phillips 66 made a non-binding bid to acquire all the publicly held common units of DCP Midstream.
The latest acquisition bolsters Phillips 66’s natural gas liquids business. It expects to generate an incremental $1 billion of adjusted EBITDA for the company. The refiner anticipates saving at least $300 million by integrating DCP Midstream into its existing midstream business.
Phillips 66 expects to take two years to integrate DCP Midstream’s business into the larger company.
Price Performance
Shares of Phillips 66 have outperformed the industry in the past three months. The stock has gained 2.5% compared with the industry’s 1.4% growth.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Phillips 66 currently carries a Zack Rank #3 (Hold).
Seadrill is a market-leading international driller with strong exposure in key strategic basins like the U.S. Gulf of Mexico, Brazil and Angola. SDRL reported first-quarter 2023 earnings of 83 cents per share, beating the Zacks Consensus Estimate of 55 cents per share.
Seadrill has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The Zacks Consensus Estimate for SDRL’s 2023 and 2024 earnings is pegged at $2.93 and $4.01 per share, respectively.
PHX Minerals is an oil and natural gas mineral company. PHX Minerals posted first-quarter 2023 earnings of 11 cents per share, beating the Zacks Consensus Estimate of 7 cents per share.
PHX Minerals has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The Zacks Consensus Estimate for PHX’s 2023 and 2024 earnings per share is pegged at 30 cents and 55 cents, respectively.
Enterprise Products reported first-quarter 2023 adjusted earnings per limited partner unit of 64 cents, which beat the Zacks Consensus Estimate of 62 cents. This was primarily due to higher contributions from the Natural Gas Pipelines & Services business.
In the first quarter, Enterprise Products generated an adjusted free cash flow of $1,347 million against the negative free cash flow of $1,618 million in the year-ago quarter. EPD recorded a distributable cash flow of $863 million in the same time frame.
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Phillips 66 (PSX) Acquires All Public DCP Midstream Units
Phillips 66 (PSX - Free Report) has completed the acquisition of all publicly held common units in DCP Midstream for $3.8 billion.
As of Jun 15, DCP Midstream’s common units are no longer listed on the New York Stock Exchange. The acquisition will double Phillips 66’s stake in DCP Midstream to 86.8%.
DCP Midstream’s assets gather, process and transport natural gas and natural gas liquids from the major U.S. shale plays, including the Permian Basin, Eagle Ford, the Ardmore and Anadarko Basins in Oklahoma and the Denver-Julesburg Basin in Colorado.
Phillips 66 focuses more on midstream, renewables and chemical operations, making its business model more stable. The acquisition provides Phillips 66 with natural gas processing in important regions, increased fractionation capacity and long-haul pipelines appearing from the Denver-Julesburg and Permian basins. Owning those assets offers Phillips 66 enhanced flexibility.
In August 2022, Phillips 66 announced restructuring ownership of DCP Midstream and taking over management of the joint venture. At that time, the restructuring boosted Phillips 66’s interest in DCP Midstream from 28.26% to 43.31%. The final agreement was announced in January, in which Phillips 66 made a non-binding bid to acquire all the publicly held common units of DCP Midstream.
The latest acquisition bolsters Phillips 66’s natural gas liquids business. It expects to generate an incremental $1 billion of adjusted EBITDA for the company. The refiner anticipates saving at least $300 million by integrating DCP Midstream into its existing midstream business.
Phillips 66 expects to take two years to integrate DCP Midstream’s business into the larger company.
Price Performance
Shares of Phillips 66 have outperformed the industry in the past three months. The stock has gained 2.5% compared with the industry’s 1.4% growth.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Phillips 66 currently carries a Zack Rank #3 (Hold).
Some better-ranked players in the energy space are Seadrill Limited (SDRL - Free Report) , PHX Minerals Inc. (PHX - Free Report) and Enterprise Products Partners LP (EPD - Free Report) . While SDRL currently sports a Zacks Rank #1 (Strong Buy), PHX and EPD carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seadrill is a market-leading international driller with strong exposure in key strategic basins like the U.S. Gulf of Mexico, Brazil and Angola. SDRL reported first-quarter 2023 earnings of 83 cents per share, beating the Zacks Consensus Estimate of 55 cents per share.
Seadrill has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The Zacks Consensus Estimate for SDRL’s 2023 and 2024 earnings is pegged at $2.93 and $4.01 per share, respectively.
PHX Minerals is an oil and natural gas mineral company. PHX Minerals posted first-quarter 2023 earnings of 11 cents per share, beating the Zacks Consensus Estimate of 7 cents per share.
PHX Minerals has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The Zacks Consensus Estimate for PHX’s 2023 and 2024 earnings per share is pegged at 30 cents and 55 cents, respectively.
Enterprise Products reported first-quarter 2023 adjusted earnings per limited partner unit of 64 cents, which beat the Zacks Consensus Estimate of 62 cents. This was primarily due to higher contributions from the Natural Gas Pipelines & Services business.
In the first quarter, Enterprise Products generated an adjusted free cash flow of $1,347 million against the negative free cash flow of $1,618 million in the year-ago quarter. EPD recorded a distributable cash flow of $863 million in the same time frame.