PSXP - Earnings call transcript Q1 2019

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Operator

Welcome to the First Quarter 2019 Phillips 66 Partners Earnings Conference Call. My name is Julie, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. the to turn President, Dietert, now Relations. Investor will call Jeff over Vice I begin. may you Jeff,

Jeff Dietert

The with Chief Phillips the will Events Good to will of materials And the be Vice call. Vice could and afternoon. included supplemental welcome filings. and be Harbor President, differ session. using we Participants results that quarter Vice from turn Q&A President operating cause Partners a presentation I President Zuklic, actual can on here, Kevin. earnings the well Operations; information. first will and Slide today's SEC It Tim call that our on what and the call are CFO; we X and Actual during include Rosy contains Mitchell, Partners results found along the Kevin during With website, our Roberts, reminder Phillips XX financial statements in Operating Officer. that, we the the call as section will presentation statement. to today. Safe may to as present over XX be differ Factors forward-looking making is materially

Kevin Mitchell

a by and In Thank we that well quarter, afternoon results delivered period significant impacted during you, solid everyone. the was refinery operated turnarounds. financial Jeff good and first

We Oak also construction pipeline. including advanced Gray our major of the growth projects,

was Bayou pipeline its day During expansion the Bridge quarter, Sand and of Hills volumes of fourth quarter following the second pipeline barrels per record XXX,XXX achieved the phase completed.

first cash of per of from and $X.XX Board than XX% quarter of approved increase quarter an distribution. Our common the unit, quarter XXXX recently first the $X.XXX Directors a previous distribution higher

IPO the in increased distribution since have every July XXXX. the We quarter

and and a committed remain strong while delivering Looking maintaining ratios. forward, competitive growing leverage distribution, we to coverage

strength portfolio Our organic projects future growth. financial position us for and well of

due of our volumes from turnarounds by million impact financial The assets as Philip volumes the first Earnings by reflects Explorer from decrease of the to compared lower $XXX lower adjusted with pipeline $XXX Sand Partnership the higher discuss reported at on Slide pipelines, X offset our on volumes. the XX. quarter from declined affiliate result in to prior EBITDA equity Bakken to operated of Hills refineries a partially results. wholly-owned million Moving quarter.

borrowings First flow of decrease million quarter Slide our maintenance. primarily prior $XX revolving million, to quarter from lower highlights from $XXX million assets, credit of liquidity. was outstanding the by of $XXX cash lower distributable first flexibility cash our a and partially financial $X We ended quarter, under $XX million earnings facility. and our wholly-owned due offset X with the million

ratio Our on basis was debt to EBITDA X.X a revolver covenant times.

Our continues partnership is and will now projects, In leverage new program the as Philip XX over first us debt cash well Long-term, distribution provide an ratio capacity. Charles our to to update turn with enables over the Partnerships times distribution Rosie targeting Caverns it X.X of was capital financial operating flow in Clemens growth greater our I $XXX million, fund to position our quarter, we as the growth The Lake expansion. refinery and spend major X.X coverage including investments coverage the advance of are times. its times. X.X the projects. The pipeline projects. isomerization capital strong and unit on to of

Rosy Zuklic

the and will next that lists Kevin EBITDA years. have X drive Thanks everyone. ongoing hello we projects the Slide two for growth

There Oak moment projects. the take in We we projects. will comment I During is larger a of Gray to pipeline XX the couple Construction miles day pipeline. XXX,XXX Gulf just XXX barrels oil made crude pipeline the growth facilities. our of Texas the the and transport advanced per Ford quarter, destination. continues progress on from the Permian and or to Eagle the on the Coast

right the most rates and of pipes, XX% labor is The billion. from foundations of be been acquired costs, approximately way the have steel of enforced. now cost project right all have We way. pressures experiencing all the $X.X higher We're has expected to delivered. cost has of purchased XX and which total been of

all commitments. remains in on with up on pipeline million the expected We XXXX. of Texas time. Marine of customer multiple Army terminal storage on year. schedule to fourth two Christi, capacity. XXX,XXX barrels ownership. permit initial has Engineer to our Corpus and of have Oak up the PSXP complete a Gateway Corps supported listed This will in The deep per remaining will Gray have in barrels water docks the facility to by The start and X prepared terminals The is remarks. throughput connect quarter and up to start has this XX% South track Terminal, including is to concludes since sanctioned capacity about day mid are The project additional of expanded by all which

We open will line questions. now the for

Operator

line [Operator is open. Instructions] Spiro your Dounis ahead please Suisse, Credit from go

Spiro Dounis

could, to of Oak, looking guess, impact or point? this at this increase. any the returns you starting the charging just the Gray project on into be any you're just on I tariffs at leading there going up through Maybe cost or is if flow some

Rosy Zuklic

the to going be projects being projects. for true eight -- slide to times there we is But It's what that’s what into would have eating I returns. six was project the the say all multiple on the

the at it pipeline of of towards Obviously, the project. it and commitments when day. going project still it great lower about still multiple the great excited once not at this barrels XXX,XXX very up barrels the is have end still we XXX,XXX I'm opportunities XXX,XXX the was multiple, of expect first increase per obviously, at returns. around And sanctioned, pipeline about to is running, now sectioned day it was other was originally obviously, per lending day, higher sure towards are think the per lending barrels We but a it. find we end and be to will the with As

Spiro Dounis

time, you to down is second expansion multiple at accretive that which my question, there's answered multiples presumably for on would again. that And room an work that over very

Rosy Zuklic

That’s right.

Kevin Mitchell

project to that. a on further returns The a Just basis. for add those are standalone we little show, the build on that multiples

about, this project talked on project enhance As the which also, we're we've basis. will further a going financing levered returns into on

is still attractive to very us. So

Spiro Dounis

some Second up assets Is specifically have fully But logical comments this a with which for I from maybe dropdowns. that’s at could makes PSX. contracting, to respect that just the you attractive from some way now, and that expansion asset midstream that a were more seems question there terminal. the Sweeny still guys the LPG midstream around right shifted long-term little Thinking spark MLP of call export of and $X.XX PSXP? think around frac there on away an being about to understand PSX some export I And and rates like standpoint? LPG pathway interest making maybe

Kevin Mitchell

So once the the that a themselves complete, assets those standpoint. the structure. looking at MLP fracs the to from fracs two three, and would export terminal model, PSX Clearly, so and LPG lend MLP

So is that we've out down I dropdown more anytime preclude while lot the still the soon, as away a potential to certainly point And know do organic MLP. no assets into to doesn’t at that transitioned you rightly plans get us focus, and dropdown there. entering those from out but transactions from

Operator

line now go ahead Elvira please your Capital open. Markets, Scotto is from RBC

Elvira Scotto

to just going cost overrun. back So Oak Gray the

Or is will be financed So do that that about financed just project or financing? we of it the that incremental, revolver, that part how going to off be that financing? think

Rosy Zuklic

way. me in talk we let this and about capital hit can total maybe Maybe it

So if I think approved PSXP about October, capital billion board the program. back in the $X.X

in Gray $XXX financing, because now is $X.X the the -- that about the post $X.X the $X.XX be to billion, more Oak around so to was of so somewhere billion. overage original higher, Gray was million. budget billion financing its trending And largely project The XX%

between Now, $XXX and million $XXX to be million. looking it's

gives impacting that's looking financing how the you and and Oak an both numbers. after overage the that So financing four idea of is project how Gray project of

Kevin Mitchell

the financing that So all debt then capital budget PSXP extent be becomes by just what funded other will -- the net to things for of is increasing, just described levels, Rosy PSXP equal. at being effect that that has essentially in the

Elvira Scotto

to in CapEx your spend? any change there is And maintenance outlook

Rosy Zuklic

No, still this million, $XX the million, number believe here. around at not $XX is point. No, I

Elvira Scotto

just the Grey contracted there. How come you online of up actual on the to then day-one, Can all expect just contracts you a and then understand, that. those And do us on are -- Grey the which got so you've help on mean follow I ramp commitments, pipeline. you to Oak? Oak as volumes

Rosy Zuklic

to So available. be the when from going thinking a about we're volumes pipeline perspective, the the is fourth is way is

them major going so little shippers when is available time available thought to any time. to effectively the production bit in, for, a and as to some of when take is bring pipelines, it's And the also are it's take for going

-- to pipeline the Bakken with for involvement And a to so to think of pipeline -- It that’s full. full I be couple fully that the having months with obviously come our pipeline. took fully

couple take will at months. it So a least of

So the quarter sometime will that full really first where is thinking capacity. the we're the have pipeline in

Elvira Scotto

in and actually into can Christi can much move then just also How then because Corpus Sweeny? -- terms know And to I the go of capacity pipeline Sweeny. into

Rosy Zuklic

the to really haven’t Tim, given We split want comment out. on that? you do

Tim Roberts

you our commitment we disclosed on tell we shipper. is is a that that, not do the PSX, with this But what build pipeline. undertaking We're think I haven’t meet expect to some that optimize for another those for obviously line anchor But available. Sweeny asset barrels exception reason having on to new can that helps commitments PSX not is the we it the pipeline. any

Kevin Mitchell

the be we're It of than is what it a if going less -- size lower would going there. straight line

Operator

is go ahead Jenkins Justin your now please line Raymond James, open. from

Justin Jenkins

operations? development first on of for ramps and you does give I see and that then any could terms how maybe guess, bigger process of may And how the a leg start that second comments maybe I unfold? you here offer month gone want up the that pipeline ACE is to Bridge with if question Bayou in

Rosy Zuklic

Bridge. is going well everything Bayou with So

starting As started so we earnings just April expected, expect that. TSA X, after month to a cash see later month and a then distribution the

have hit I expected. you the way nice think is is the out. perspective, From it everything about ACE all playing on as an So mean, everything be would head. you've to it

You've Alliance down Alliance, the And and Bayou St. way to and to all PSX then then completed the the crude way got to pipeline ACE James. the Bakken Beaumont, going refinery. or take all the then

to Lake not tie refinery, be the Alliance And so the only a would but into parts Charles plan. so its of nice that

Justin Jenkins

big And offset looks maybe of there, increase the on on similar Kevin, costs the second the like on the any color But line. sequential anything terms I question revenue operating, how quarter-over-quarter, guess -- in a maybe pretty play there… choppiness

Rosy Zuklic

there, associated million with million $XX what allow the there. is There MSOP to turnaround. happened if the $XX what's seeing me, Actually, MSOP turnaround you're is you Justin, about

is revenue And line is reimbursement. expense expense in so the what the for you're the and the seeing the turnaround

asset reimbursement when that PSX PSXP So turnaround pre-arrangement expenses. for to for was we drop a in, there

the And in so XXXX, in number same quarter less, seeing much about was phenomenon just was you're there. the happened first But actually really more $XX that’s million. it that fact what has the it's of

Operator

ahead Chen Theresa Barclays, open. now from is go your please line

Theresa Chen

potential pipeline pumping capacity. the of what First, segments into is Bakken taking cup? potential additional remind the system you in but account [ed] the you expansion terms capacity JV capabilities, us this XXX XX-inch Can of the add current and hydraulic storage still of above if do the

Rosy Zuklic

So pipeline barrels XXX,XXX per today the is day. at

partners the further further XXX, talking with as XXX,XXX any seen, barrels. to we're looking pipeline not we're about necessarily but to ability up But have this just to that’s -- storage. do, what actually expansion. doing about go We're We're what talking into far to expanding in and I really getting the I the pumping the think above looping. has As from currently are not expansion what it

Theresa Chen

XXX XXX, per inch? include or that within the would still that would barrels And day, XX lubing be that

Rosy Zuklic

No, adding just I any I pumping, would believe believe just that looping. be that would be don’t

Theresa Chen

open wanted or so origins Bayou I these to to Red Oak interest various projects points, recent far? potential connectivity I’m development, PRB, expand What you it update And the the into from parent given Liberty in are be seeing are how you with the PSXP. Bakken, Bridge provide other at at then origins, season And shippers and touch including Can such. Cushing, implies Permian of progressing? Gray and your Oak lube guessing on on with projects terms an this these

Tim Roberts

and to as projects seasons the it's Liberty, other Beaumont, as weigh in the to to I'll From a it's on down far St. and got get be system get at James, Bayou into to the you've the the particular the of are southeast open there either and in are or Nederland Beaumont to refining that. because or From Bridge on pipelines Louisiana. area get barrels Oak got in Red view, lube, barrels PSX barrels and connectivity area with to located Bakken coming that where coming working from going potentially get barrels

some see going a down in we to Huston So the are logical of alternative we're and to coming destinations. these or be getting pipelines other

with in just working the no we're we're different region. down to joint-tariff opportunities a the We is an that. to people at what point see we'll see our is. partners and open far this It's So interest interest think than level basins side creating Louisiana through into as from what season getting barrels more binding as optionality the that more

Theresa Chen

it do that pour forever the And like on from the you of of and stops? like amount then maintenance related dropdowns. Is to certain revenue thing, reimbursement a a or type years

Rosy Zuklic

with contractual a have we MSPL years. for XX So agreement

-- contract at have of we just that we this the But so done. was to have once obviously the renegotiate time is this did the we'll something drop… And

Tim Roberts

to asset… Specific that

Rosy Zuklic

Correct…

Theresa Chen

the other assets? about What

Rosy Zuklic

No, we do not.

Operator

your from please go Jeremy is Tonet JPMorgan, ahead open. line

Jeremy Tonet

of -- what in the Just little could clarify clarify, DAPL projects want Do objectives that talk you Liberty you guess, kind any these extensions? overlap expansion. to bit the hope Or in are sense? me, the with could I Pipeline about you two the for when

TimRoberts

with Wattenberg. and Bakken think purposes. different Liberty. west DJ I they're the PSX way. by the specifically This River, serving Tim trying some I'll the is Liberty on to of again, view really is access two really basins to From different the side coupled talk Powder Roberts

that fully currently. really serve part Bakken hitting doesn't Liberty's So a different really

So that's out again, We side River head continued the Powder difference room expansion we really on those still there's and for the on the then and of the between pipelines. side two think as towards, other eastern the Bakken obviously basins. western

Jeremy Tonet

Oak to want just quick. And go real to Gray

question, times closer clarifying the point. with multiple an at X still a thing economics to Just regards this than

received whole that promote is of in partners in. understanding PSXP a the the Our formation coming

level or the that state you of economics before promote when is that so And payment? after considering

Rosy Zuklic

after. It's

Operator

Dennis America Coleman Bank is your Lynch, open. Merrill from line of go please ahead

Dennis Coleman

Gray the I with stand guess Where what I Any from just has guess you level question spent? you been percentage to is I'm Oak. on get can last wise one guidance here? trying the really at much what spend how project? -- do is

Rosy Zuklic

maybe I'll try holistically. tackle So question to this

and weighted about than engineering at a the project XX% the maybe XX% about obviously, a is construction, So of XXXX. think to is I itself the in little inclusive is and done, half back projects as it going falling this and But be expense with done in being some stage bit perspective, engineering. all towards there more different from it's largely of

majority in in Obviously, have going XXXX, to little So to you're you're to in maybe XXXX. quarter vast spending first remaining that a the see going be because the bit of of going XXXX. is

Operator

line from Blaschke please your Barrett MUFG go Securities, ahead is open.

Barrett Blaschke

Gray cost or want you Most to said I costs, increases drivers my from did little way, for just but three right on give were us a coming mostly addressed quantify been breakdown? materials ask. it the Can what a Oak. labor Is of if bit? could before you it of have Rosy, you

Rosy Zuklic

can't. one things I facilities. that we I'd Greg want the it But PSX on the also calls to additionally to No, have and touch is in spoke also that of

been has One that the offers is of offer of Oak that Gray some built other optionality don't pipelines optionality facilities. our the and things that into

facilities not also the be going some -- things. so to give costs. you also added split able And to those adding between I'm are a have But

Operator

line Michael Wells ahead Fargo, Blum your go is from please open.

Michael Blum

would guess capital the clarify. was late then capacity is. part. pipeline, to what Bakken I the That that? the XXXX? intend listed the get the on part by on you just is, first project, involved second more Is couple this XXX,XXX be third an And to the Do with so Thanks. FID a then of to that not it's And because of know part slide? I Just

Rosy Zuklic

sure I I’m you late XXXX, mean I by… guess understand by

TimRoberts

ask that right person the really the the is of transfer operator energy think to I pipeline. as

Michael Blum

release to progressing further the the referencing I’m XXXX, just it press what capacity where that’s partner your are by says I’m plans referencing. in late increase

Rosy Zuklic

increasing are of pipeline. capacity talking obviously the partners about the No, the

And this to we're talking the so point, exactly at details of we're do. going though what

time. as XXXX have through far So give it we color we more the as going this all Hopefully, that give permitting but to And don’t and to before you. don’t that stuff. timing, much work do you we're really more have at to

Operator

Levine Ryan your please from Citi, ahead go open. line is

Ryan Levine

to wanted just I Bridge. on one point Bayou clarify

to Is existing that’s with in season be outstanding. the the connection contracts additive? potential altered for that would Given season, open any open or be everything there

Rosy Zuklic

contracts, that to The would we years. in long-term have five place contracts additive. It XX be are

additive. for looking really we're so And

Operator

line Chris your Sighinolfi Jefferies, from please ahead open. go is

Chris Sighinolfi

Kevin, want to at a dropdown such we follow and be to if Any had of unit it distribution and then I’m to might but with eliminate context that noted growing asking rate relative would with you've I one really the time. IDRs. out a noted growth PSXP entail -- be how potential curious been hasn’t from could Greg's accretive accretion to help comments combination desire the of start on And I just helpful? called question, just the have dropdown IDR numerical about slightly competitive one transaction And if but the He to elimination also holder. Spiro's PSX, in provided. LP that to means where think a

Kevin Mitchell

we sure need point at Greg we in back -- time out several an that’s is certainly so that there, of our something transaction -- IDRs a So a seen around we give at And been considerations. certainly you a others. would that’s thinking the and But IDR done doing formally same terms say by would dropdown elimination and laid while out I this to either is than have way would we will this have to doing and acknowledgment specific partner. the structure in make to we is other want it's MLP anticipated, guidance sooner works on when originally or for and that this exactly we general don't any we going do to a give to for the and look than both to like. We what that have to happen get get going exactly

but steered dropdown have plans that say that would we such. and that as is from firm consider from guidance. with highlighted do standpoint, due growth giving something we to distribution you've not have could consider, that to don’t that any So a we away the along then And that’s specific

portfolio approximate those projects and that that projects the and generation when You complete, the of from timing see come of we the of will have organic estimates EBITDA that.

competitive. And have so that But you balance is us metrics, to growth, fund also model big But be need or manage objective to We now. what picture get be. specified allow self-funding up needs that leverage are mindful growth ability we're the into in a want a metrics, can portfolio we sheets, exactly distribution. that will to continue continue terms given not predominantly a it see mostly to going caught to much we grow around -- the get to pretty of of the to to that coverage the target in the this

all And so to balance just we those factors. try of

Chris Sighinolfi

to the And that differential DCF. wanted same there's there. Looks think pertains understood the that reminder seems two maintenance like to maintenance sure just recorded statement. is income what's helpful make had it appreciate as I follow-ups in that's I also it Okay, I between it I I footnote have for the a attributable color. to It Rosy. to like thing. on a correctly? helpful. probably was and capital that as reimbursement that pertains noticed very capital, modest the then you MSLP did I the the

Rosy Zuklic

yes. so, believe I

Chris Sighinolfi

the on year just It was versus XX last X, I to previously looked which well. had you know year that same agreement didn't as turnarounds, saw related like XX we if and

Rosy Zuklic

But because that is it, Yes, that I is I the will you. believe know the I I've case. don't that look case. that believe into for confirmed I

Chris Sighinolfi

capital there million on in an noted in what little being was debt financed. bit then release obviously, I merry in this, PSXP programs was equity predominantly just any Rosy, the alongside question expectation you terms see I raised? being it the component the I the And think final was raised, formal $XX did the period. for PSX curious had a for debt if to of

Kevin Mitchell

offering. the an from standpoint not Certainly, of actual doing equity

in utilize We have program but the place program. of which little funding capital of really the we context the provides overall and in bit that, ATM that's minor a

Chris Sighinolfi

be in what run we So to we shouldn't expect nature? first rate anything a that the saw of or quarter

Kevin Mitchell

is still was quarter $XX ATM. first which So million or so,

something million So to But I it's unreasonable that several be as going that dollar to they'll equity see not offering… a continue. you're mean will hundred not assume like

Operator

go Theresa Chen your is line from ahead Barclays, please open.

Theresa Chen

Gray Elvira's just follow-up of Oak quick I had a questions on ramp. to one the related

Or take the So within to XXXX. understand full the slower XXX QX going it's around ramp that to actual of same so they expected of Rosy, to we to frame completely commitments, a will commitments in the sometime when months to But will by pace couple capacity, at XXXX versus QX get also time ramp capacity? for get well? it Is as a volumes?

Rosy Zuklic

No, it'd capacity. be with consistent

Operator

We no this Jeff. turn back questions, will time. I further call the to now at over have

Jeff Dietert

XX Thank your in interest Partners. and you this Phillips XX afternoon for Phillips

Thank you Brent questions, please If any me. you. or have call

Operator

today's Thank you, This and ladies gentlemen. conference. concludes

You disconnect. may now

Phillips 66 Partners (PSXP) 30 Apr 192019 Q1 Earnings call transcript