Phillips 66 Advances in the Permian Basin with Strategic Pinnacle Midstream Purchase


Written by Tazmyn Gounden, Head of Investor Research, Energy Council

Published 20 June 2024

Energy & Emissions

HOUSTON, TEXAS – June 2024– In a continuation of the oil and gas industry's trend toward mega-consolidation, Phillips 66 (NYSE: PSX) announced a significant enhancement to its Midstream operations with the acquisition of Pinnacle Midland Parent LLC (Pinnacle) from Energy Spectrum Capital for $550 million in cash. This move extends the consolidation trend into the Midstream and Downstream sectors, with Phillips 66 strategically positioning itself in the heart of the Permian Basin.

Key Assets and Strategic Expansion

Central to this acquisition are Pinnacle’s newly developed assets, including the Dos Picos natural gas gathering and processing system. This state-of-the-art facility features a 220 MMcf/d gas processing plant, 80 miles of gathering pipeline, and 50,000 dedicated acres serviced by high-quality producers. Located in one of Phillips 66’s focus basins, the Dos Picos complex is not only a recent build but is also primed for expansion with the potential for an additional 220 MMcf/d plant. Its integration into Phillips 66's existing downstream infrastructure promises enhanced operational synergy.

This acquisition is not merely a transaction; it is a calculated step to augment Phillips 66's natural gas gathering and processing capabilities. Incorporating Pinnacle into its operations allows Phillips 66 to bolster its entire production-to-market process, enhancing control and flexibility across its operations.

Energy Council

Operational and Commercial Synergies

“Pinnacle has established itself as one of the premier midstream providers in the Midland Basin, with a skilled team, first-class operations, and world-class customers,” noted a Phillips 66 spokesperson. “Recent consolidation among Permian Basin oil and gas operators has influenced drilling activity and, consequently, production volumes. This acquisition positions us to navigate these changes effectively.”

By leveraging Pinnacle’s strategic assets and expertise, Phillips 66 aims to enhance asset utilization, maximize throughput, and capture emerging market opportunities. This synergy-driven approach not only improves operational performance but also strengthens Phillips 66's competitive edge in a dynamic energy landscape.

This strategic acquisition of Pinnacle aligns seamlessly with Phillips 66's long-term growth objectives, significantly bolstering its capabilities within the Permian Basin. By enhancing operational efficiency and market responsiveness, Phillips 66 is better positioned to navigate the dynamic energy market. This move not only supports sustainable growth but also reinforces the company’s competitive stance, ensuring it remains well-equipped to handle the evolving demands of the energy sector.

North America Energy Capital Assembly

October 16 - 17, 2024 | Houston

The most senior & influential finance and investment meeting for the North American E&P sector.

Sign Up To Our Newsletter


You might also be interested in