US downstream energy company Phillips 66 has announced plans to acquire Pinnacle Midstream from Energy Spectrum Capital for $550m.  

The acquisition is part of Phillips 66’s strategy to boost its natural gas gathering and processing capabilities in the Midland Basin. 

Pinnacle’s assets include the Dos Picos natural gas system, which features a 220mcf/d processing plant and a 128.74km gathering pipeline, along with 50,000 dedicated acres from producers. 

Phillips 66 highlighted the potential for a second 220mcf/d plant, noting the Dos Picos system’s integration with its existing downstream infrastructure.  

Phillips 66 chairman and CEO Mark Lashier said: “We are growing our Midstream business in the Permian to further strengthen and expand our service offerings to customers while driving operational and commercial synergies. Pinnacle is a bolt-on asset that advances our wellhead-to-market strategy and complements our diversified and integrated asset portfolio.  

“Further, this transaction aligns with our long-term objectives to build out our natural gas liquids value chain, be disciplined with our capital allocation and create sustainable value for our shareholders.” 

The transaction is expected to be finalised by mid-2024, subject to regulatory approvals, including those under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. 

In March, the company was reported to be considering the sale of its 25% stake in the Rockies Express Pipeline (REX), a deal that could exceed $1bn.  

The REX pipeline, spanning 2,730km, connects natural gas supplies from Wyoming and Colorado to markets in eastern Ohio. 

In January 2023, Phillips 66 agreed to purchase all publicly held common units of DCP Midstream for $3.8bn in cash.