Phillips 66 is making big moves in the Permian Basin, a critical hub for U.S. energy production. During their Q4 2024 earnings call, the company outlined how strategic acquisitions, processing expansions, and pipeline investments will drive growth in their Midstream business and position them to capitalize on rising NGL and crude demand.

With a clear focus on expanding their wellhead-to-market strategy, Phillips 66 is optimizing its Permian assets to increase efficiency, reduce costs, and enhance shareholder value.

EPIC NGL Acquisition: Expanding Takeaway Capacity

One of the biggest highlights from the call was the acquisition of the EPIC NGL pipeline, which strengthens Phillips 66’s Midstream network and reduces reliance on third-party pipelines.

“EPIC provides us and brings us needed Permian pipeline capacity that is already in an expansion program that is very capital efficient, cost-effective,” said Don Baldridge, EVP of Midstream and Chemicals.

This move is a response to surging NGL production in the Permian. Phillips 66 currently moves 125% of its Sand Hills pipeline capacity, meaning they have been forced to ship volumes on third-party systems. The EPIC acquisition will allow them to shift these barrels onto their own network, capturing better margins and improving logistics efficiency.

“As our G&P volumes grow, we’ll be able to fill in the expansion capacity that comes online at the end of 2026 with EPIC,” Baldridge added. “It really gives us room to continue to grow our G&P footprint.”

This acquisition also provides export flexibility, allowing Phillips 66 to move NGLs from the Permian to the Gulf Coast for processing, fractionation, and eventual international shipment.

New Processing Plants: Increasing Permian Throughput

Beyond pipeline capacity, Phillips 66 is also investing in new gas processing and fractionation facilities to handle increasing Permian production.

A new Pinnacle processing plant will come online in July 2025, providing additional NGL supply.
A third-party processing plant is dedicated to Phillips 66, ensuring steady throughput.
The company hinted at another processing plant expansion announcement later in 2025.

This growth strategy ensures that Phillips 66 can process more NGLs at the source while optimizing logistics from wellhead to market.

Growing Midstream EBITDA Through Permian Expansion

The Permian is a major driver of Midstream earnings growth for Phillips 66, and they expect these investments to contribute to their $1 billion Midstream EBITDA growth goal by 2027.

“We put together a Midstream platform now, an NGL value chain that we believe we can grow organically at a mid-single digits growth rate on an annual basis,” Baldridge stated.

The company’s Midstream business has nearly doubled in EBITDA since 2021, thanks to organic projects and acquisitions like Pinnacle and EPIC. This momentum is expected to continue as Permian production increases and new processing capacity comes online.

Permian Market Outlook: Strong Crude & NGL Demand

Phillips 66 is well-positioned to take advantage of increasing Permian production and global energy demand.

Crude oil and NGL volumes are rising, driving more demand for transportation and processing.
Global demand for ethane, propane, and butane continues to grow, especially in Asian and European markets.
U.S. Gulf Coast export infrastructure is expanding, creating new opportunities for Phillips 66’s Midstream business.

Their strategy of integrating pipelines, processing plants, and export facilities ensures they remain a key player in Permian Midstream operations.

The Bottom Line: Phillips 66 is Betting Big on the Permian

With the EPIC acquisition, new processing plants, and a focus on efficiency, Phillips 66 is positioning itself for strong Midstream earnings growth through 2027. By expanding their wellhead-to-market strategy, the company aims to capture more Permian volumes, reduce costs, and optimize its logistics network.

“We recognize our capital constraints. We’re not going to grow Midstream just to grow Midstream,” said Mark Lashier, CEO of Phillips 66. “We’re going to grow Midstream to create more value for our shareholders.”

With strong Permian fundamentals and increasing demand for U.S. energy exports, Phillips 66’s Permian expansion strategy is set to deliver long-term value in the years ahead.