Leaders of Phillips 66 Partners LP described their fourth quarter 2018 as a “strong quarter” with reported earnings of $221 million and adjusted earnings of $309 million. The $221 million in earnings translated to $1.09 per diluted common share. The $309 million in adjusted earnings compared to $305 million in the third quarter of 2018.
The increased earnings resulted in a raised quarterly distribution by 5.4 percent to $0.835 per common unit. The company also stated it had record pipeline and terminal throughput volumes.
“We ended 2018 with another strong quarter, running safely and reliably while delivering record financial results,” said Greg Garland, Phillips 66 Partners’ chairman and CEO. “Our assets performed well, we achieved our 30 percent five-year distribution CAGR target, and we further advanced our organic growth projects.”
The company indicated its increased earnings reflected higher equity earnings, mainly due to increased Bakken Pipeline volumes.
As of Dec. 31, 2018, total debt outstanding was $3 billion. The Partnership had $1 million in cash and cash equivalents and $625 million available under its revolving credit facility.
The Partnership’s total capital spending for the quarter was $331 million, including $20 million of maintenance capital. Expansion capital of $311 million included investments in the Gray Oak, Sand Hills and Bayou Bridge pipelines, as well as spend on the new isomerization unit at the Phillips 66 Lake Charles Refinery and the Clemens Caverns expansion.
Phillips 66 Partners is expanding the Sweeny to Pasadena Pipeline by 80,000 barrels per day (BPD). In addition, products storage capacity will be increased by 300,000 barrels at the Pasadena Terminal and new connectivity will be added to third-party terminals. The project is expected to be completed in the second quarter of 2020.
The Partnership is constructing the 900,000-BPD Gray Oak Pipeline, which will provide crude oil transportation from the Permian and Eagle Ford to destinations in Corpus Christi and Freeport, including the Phillips 66 Sweeny Refinery. Phillips 66 Partners will have a 42.25 percent ownership in the pipeline, which is anticipated to be in service by the end of 2019.
The Gray Oak Pipeline will connect to multiple terminals in Corpus Christi, including the new South Texas Gateway Terminal under development by Buckeye Partners, L.P. The marine terminal will have two deepwater docks and planned storage capacity of 6.5 million to 7 million barrels. Phillips 66 Partners owns a 25 percent interest in the terminal, which is expected to start up by mid-2020.
The Sand Hills Pipeline expansion was completed in the fourth quarter of 2018, increasing the capacity to 485,000 BPD. The pipeline transports natural gas liquids (NGL) from the Permian and Eagle Ford to the Texas Gulf Coast and is owned one-third by the Partnership.
The Bayou Bridge Pipeline operates from Nederland, Texas, to Lake Charles, Louisiana. Commercial operations for the extension from Lake Charles to St. James, Louisiana, are expected to begin in March. Phillips 66 Partners owns a 40 percent interest in the joint venture.
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