(Bloomberg) -- Phillips 66 and Enbridge Inc. swapped interests in two major US pipelines as part of a transaction merging joint ventures between the companies. 

Phillips 66 increased its ownership of DCP Midstream LP to 43.3% from 28.3% while slashing its stake in Gray Oak Pipeline LLC to 6.5% from 42.3%, the crude refiner said in a statement. The company will pay Enbridge $400 million in cash as part of the transaction. 

Enbridge’s share of Gray Oak will increase to 58.5% from 22.8% while its stake in DCP will fall to 13.2% from 28.3%, the Calgary-based company said. Enbridge has also agreed to operate the pipeline, currently managed by Phillips 66, starting in the second quarter of 2023. 

In a separate announcement, Phillips 66 said it has made a non-binding offer to buy all publicly held common units of DCP Midstream, a master limited partnership, for $34.75 each. That means Phillips 66 may spend about $3.1 billion on the acquisition. DCP units rose 9.8% to $38.16 as of 9:34 a.m., implying an expectation that the proposal will be improved. 

Phillips 66 shares fell 2.4% while Enbridge was up 0.9%. 

With the reshuffle, Phillips 66 aims to further expand into natural gas liquids, a key feedstock used by refineries and petrochemical plants. Meanwhile, the deal allows Enbridge to focus on moving crude oil from the Permian basin to the Gulf Coast. 

Currently, Phillips 66 and Enbridge share ownership in DCP and Gray Oak through two separate joint ventures, which will now be merged into a single entity. The transaction was entered into and closed on Wednesday.




(Updates with share price moves starting in fourth paragraph)

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