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Phillips 66 Divests Non-Core Natural Gas Assets in Texas Deal

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Phillips 66, (PSX - Free Report) , a leading energy company, has sold its natural gas gathering and processing assets in East Texas to Voyager Midstream Holdings, a portfolio company of Pearl Energy Investments, per a Reuters report. This move is part of Phillips 66’s ongoing strategy to monetize non-core assets and enhance returns.

Phillips 66’s Strategic Asset Monetization

The sale aligns with Phillips 66’s previously announced plan to divest $3 billion in non-core assets in January 2024. The proceeds from these sales are intended to support the company's strategic priorities, including cost reduction and portfolio optimization.

According to the report, a company spokesperson emphasized the significance of the transaction, stating, "This transaction with Voyager Midstream Holdings is part of our plan to monetize non-core assets that are expected to generate more than $3 billion in proceeds that will be deployed to further our strategic priorities."

Voyager Expands With PSX’s East Texas Assets

Voyager Midstream Holdings, based in Houston, is expanding its infrastructure footprint in East Texas and North Louisiana with this acquisition. The assets, located in Panola, Rusk, and Harrison counties in Texas and Caddo Parish in Louisiana, are situated in the prolific Haynesville shale formation, which is known for its substantial natural gas reserves.

Will Harvey, CEO of Voyager, emphasized the strategic value of the acquisition, underscoring the company’s commitment to expanding its infrastructure in East Texas and North Louisiana while enhancing producer connectivity and netbacks.

Inclusion of Carthage Hub in Phillips 66’s Asset Sale

The transaction also includes Carthage hub, a significant natural gas trading and delivery center capable of handling more than 1 billion cubic feet per day. The hub provides critical connectivity to various markets across the United States, including access to liquefied natural gas (LNG) markets in Texas and Louisiana.

While Voyager did not disclose the financial details of the deal, the acquisition highlights the company’s commitment to enhancing its midstream capabilities and expanding its reach in key natural gas markets.

Phillips 66's strategic asset monetization efforts, coupled with Voyager's expansion plans, are indicative of the ongoing shifts in the energy infrastructure landscape in East Texas and beyond.

PSX’s Zacks Rank & Key Picks

Currently, Phillips 66 carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like MPLX LP (MPLX - Free Report) , Core Laboratories Inc. (CLB - Free Report) and TechnipFMC plc (FTI - Free Report) . While MPLX currently sports a Zacks Rank #1 (Strong Buy), Core LaboratoriesandTechnipFMC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.

The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.29. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

Core Laboratories, an oilfield services company, has a deep portfolio of sophisticated, proprietary products and services that positions it to take advantage of the growing maturity in the global hydrocarbon reserve base. CLB’s expanding international upstream projects indicate a positive trajectory for revenues and profitability, especially as oil demand continues to rise globally.

The Zacks Consensus Estimate for CLB’s 2024 EPS is pegged at $0.95. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry, with a focus on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.

The Zacks Consensus Estimate for FTI’s 2024 EPS is pegged at $1.34. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.


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