(Reuters) – U.S. oil refiner Phillips 66 said on Monday it will acquire various pipelines and distribution systems from Ares-backed pipeline operator EPIC NGL in an all-cash deal for $2.2 billion in its bet on natural gas liquids to substantiate.

NGLs include a group of hydrocarbons extracted from natural gas at a processing plant and used as feedstocks in petrochemical plants, for heating, cooking, and various other applications.

The deal will see Phillips 66 acquire EPIC Y-Grade GP and EPIC Y-Grade and their various subsidiaries, which is expected to be immediately accretive to earnings per share, the statement said.

Phillips 66 has bet heavily on NGLs, having previously said NGL production would grow faster than crude oil production through the end of the decade, supported by demand from petrochemical producers.

“This transaction optimizes our Permian NGL value chain, allows Phillips 66 to provide producers with comprehensive flow certainty and is expected to deliver attractive returns in excess of our minimum return rates,” said Mark Lashier, CEO of Phillips 66.

The company added that it does not expect to increase its 2025 capital program following the transaction in connection with EPIC NGL’s process to increase its pipeline capacity.

According to analysts at RBN Energy, the Permian Basin oil field accounts for about 85% of U.S. NGL production and much of it is exported.

Last year, oil refiner Pinnacle Midland acquired Energy Spectrum Capital from private equity firm Energy Spectrum Capital in a $550 million all-cash deal to expand its natural gas gathering and processing presence in the Midland Basin.

The U.S. shale oil industry has seen a record-breaking wave of deal deals recently as energy companies rushed to expand their oil and gas drilling reserves, particularly in the Permian Basin.

(Reporting by Devika Nair, Kanjyik Ghosh and Shariq Khan; Editing by Rashmi Aich)