Phillips 66 has divested its non-operated stake of 25% in Rockies Express Pipeline (REX) to a subsidiary of Tallgrass Energy (TGE) for an enterprise value of around $1.28bn.

Following the transaction, Tallgrass Energy, which has been the operator of the American natural gas pipeline system, gains full ownership.

The 2,758km long Rockies Express Pipeline is one of the largest natural gas pipelines in the US. It offers bi-directional transportation services for over five billion cubic feet of natural gas per day, connecting the Rockies, Appalachia, and the northeastern US.

Spanning from Rio Blanco County, Colorado, to Monroe County, Ohio, the pipeline became fully operational in November 2009, with an initial capacity of 1.8 billion cubic feet per day.

The deal provides pre-tax cash proceeds of $685m to Phillips 66 after adjustments for the company’s allocation of the debt and preferred equity balances of Rockies Express Pipeline.

According to Phillips 66, the expected proceeds will bolster its strategic priorities, including returns to shareholders.

Phillips 66 chairman and CEO Mark Lashier said: “This sale is an important step in our commitment to deliver over $3bn in asset divestitures.

“We are committed to managing our portfolio and monetising assets that no longer fit our long-term strategy.”

Last month, Phillips 66 signed a deal to acquire Pinnacle Midstream from Energy Spectrum Capital for $550m in cash in a move to extend its natural gas gathering and processing presence in the Midland Basin in the US.

The deal includes the Dos Picos natural gas gathering and processing system, a gas processing plant, gathering pipeline and 50,000 dedicated acres through high-quality producers in one of the focus basins of Phillips 66.