Phillips 66 Partners (PSXP) is scheduled to release its earnings for 1Q15 on April 30. Its stock price was $71.57 as of April 24.
Phillips 66 Partners (PSXP) is a master limited partnership formed by Phillips 66 (PSX). PSXP owns and operates crude oil and refined petroleum product pipelines, terminals, and storage systems in the central and Gulf Coast regions of the United States.
Analyzing Phillips 66 Partners’ stock since December last year, we can see that it returned more than 20%. Also, as we can see in the graph above, between January and February this year, PSXP stock has returned over 30% since levels last December.
Phillips 66 (PSX), PSXP’s parent company, has returned about ~13% since last December. However, as the graph above notes, the stock had negative returns earlier in January this year. Both PSXP and PSX are currently trading at levels higher than in December.
Why has PSXP had superior performance?
The major reason for PSXP’s superior performance compared to the broader energy sector is that PSXP is spared from commodity price exposure because it generates revenues from transportation fees or tariffs, not from the prices of the commodities it transports.
As per the company’s annual 10-K, “(We) generate revenue primarily by charging tariffs and fees for transporting crude oil and refined petroleum products…We do not take ownership of the crude oil or refined petroleum products that we transport, terminal and store, and we do not engage in the trading of any commodities.”
PSXP has bettered the MLP ETF AMLP, because some MLPs, including the ones in AMLP, get paid in kind, which means direct commodity price exposure, which in turn means that falling commodity prices will cause the ETF to take a hit.
In comparison to PSXP’s performance, its peers MPLX LP (MPLX) and Tesoro Logistics (TLLP) gave ~13% and 10% returns, respectively, since last December. PSXP makes up 0.44% of the First Trust North American Energy Infrastructure Fund (EMLP).
In the next part of this series, we’ll analyze PSXP’s historical performance.