August 03, 2020 [Business Wire] – Reported earnings of $255 million and adjusted EBITDA of $269 million. Announced quarterly distribution of $0.875 per common unit. Started full operations on the Gray Oak Pipeline. Reached milestone at South Texas Gateway Terminal with first export cargo loaded in July. Recently completed Clemens Caverns expansion.

 
Phillips 66 Partners LP (NYSE: PSXP) announces second-quarter 2020 earnings of $255 million, or $1.05 per diluted common unit. Cash from operations was $215 million, and distributable cash flow was $218 million. Adjusted EBITDA was $269 million in the second quarter, compared with $321 million in the prior quarter.

“During the quarter, we continued to demonstrate our commitment to operating excellence,” said Greg Garland, Phillips 66 Partners’ chairman and CEO. “Our financial results reflect the ongoing economic downturn. We reached key milestones with the Gray Oak Pipeline achieving full service and supplying the first crude oil into the South Texas Gateway Terminal. We remain focused on safe and reliable operations, as well as maintaining our strong balance sheet and continuing our disciplined approach to capital allocation.”

On July 21, 2020, the general partner’s board of directors declared a second-quarter 2020 cash distribution of $0.875 per common unit, a 2% increase over second quarter 2019.
 

Financial Results

Phillips 66 Partners’ earnings were $255 million in the second quarter of 2020, compared with $226 million in the first quarter. The second-quarter results include an $84 million gain related to recognition of the Partnership’s prior-year sale of an interest in the Gray Oak Pipeline. Excluding this gain, the Partnership reported adjusted EBITDA of $269 million in the second quarter, compared with $321 million in the prior quarter. Second-quarter earnings and adjusted EBITDA reflect reduced volumes at the Partnership’s wholly owned and joint venture assets, driven by lower domestic oil production, refinery utilization and product demand.
 

Liquidity, Capital Expenditures and Investments

As of June 30, 2020, total debt outstanding was $3.7 billion. The Partnership had $7 million in cash and cash equivalents and $532 million available under its revolving credit facility.

The Partnership’s capital expenditures and investments for the quarter were $377 million. Excluding $38 million of capital spending funded by Gray Oak joint venture partners, adjusted capital spending was $339 million. Growth capital included investments in the Gray Oak Pipeline and the South Texas Gateway Terminal, as well as spend on the C2G Pipeline and the Sweeny to Pasadena Pipeline. In addition, following deferral of the Liberty Pipeline, the Partnership continued to fund its share of the project’s previous commitments.
 

Strategic Update

During the quarter, the Gray Oak Pipeline commenced full operations from West Texas and Eagle Ford to Texas Gulf Coast destinations, marking the completion of the project. Phillips 66 Partners has a 42.25% effective ownership interest in the 900,000 barrels per day (BPD) pipeline.

The Gray Oak Pipeline connects to multiple terminals in Corpus Christi, Texas, including the South Texas Gateway Terminal being constructed by Buckeye Partners, L.P. The first dock and 3.4 million barrels of storage capacity have been commissioned, and the terminal began crude oil export operations in July after receiving its first crude oil supply from the Gray Oak Pipeline. Marine operations are expected to ramp up through the end of this year as additional phases of construction are completed. Upon expected project completion in the first quarter of 2021, the marine export terminal will have two deepwater docks with up to 800,000 BPD of throughput capacity, along with storage capacity of 8.6 million barrels. Phillips 66 Partners owns a 25% interest in the terminal.

The Partnership recently completed its expansion of storage capacity at Clemens Caverns, from 9 million barrels to 16.5 million barrels, in connection with the Phillips 66 project to add natural gas liquid (NGL) fractionation capacity at the Sweeny Hub. The caverns expansion is backed by long-term commitments.

Phillips 66 Partners continues construction of the C2G Pipeline, a 16 inch ethane pipeline that will connect Clemens Caverns to petrochemical facilities in Gregory, Texas, near Corpus Christi. The project is backed by long-term commitments and is expected to be completed in mid-2021.

The Sweeny to Pasadena Pipeline expansion project will add 80,000 BPD of pipeline capacity, providing additional naphtha offtake from the Sweeny fractionators. In addition, product storage capacity will increase by 300,000 barrels at the Pasadena Terminal. The project is backed by long-term commitments and is expected to be completed in the third quarter of 2020.

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