Phillips 66 and Enbridge Inc. have agreed to merge and exchange interests in a natural gas liquid-heavy (NGL) midstream firm and crude oil pipeline through a  joint venture in a move management from both companies say will enhance value.

In the deal disclosed Wednesday evening, Phillips would increase its ownership in DCP Midstream LP, a pipeline and gathering service operator focused in the Permian and the Denver-Julesburg (DJ) basins. 

Enbridge would also increase its ownership in Gray Oak Pipeline LLC, which holds a key pipeline the Calgary-based firm plans to leverage for growing crude oil volumes from the Permian Basin to its Gulf Coast export site. Phillips would also pay Enbridge $400 million in the transaction.

Phillips CEO Mark Lashier said the transaction plays into a...