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Capital Projects Should Fuel Phillips 66 Partners’ EBITDA Growth

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Phillips 66 Partners’ 2Q15 EBITDA

Phillips 66 Partners’ (PSXP) 2Q15 EBITDA (earnings before interest, tax, depreciation, and amortization) remained almost flat year-over-year. The company’s EBITDA increased from $27 million in 2Q13 to $36 million in 2Q15. The MLP was listed on the New York Stock Exchange in July 2013. PSXP has generated 93% total returns since its listing.

Phillips 66 Partners was formed by Phillips 66 (PSX) to own and operate crude oil, refined products, and natural gas liquids pipelines, terminals, and other transportation and midstream assets.

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About Phillips 66 Partners

The above graph shows the growth in Phillips 66 Partners’ EBITDA since 2Q13. PSXP primarily generates fee-based revenues. Similar to Delek Logistics Partners (DKL) and PBF Logistics (PBFX), PSXP has multiple long-term, fee-based agreements with parent company PSX, with minimum volume commitments. PSXP plans to pursue strategic acquisitions of PSX assets that the latter may plan to sell.

Phillips 66 Partners doesn’t own the oil and products it stores or transports. So it has very limited commodity price exposure.

PSXP’s growth projects

Phillips 66 Partners is working on several growth projects that should contribute to its EBITDA growth over the coming years. These include a crude oil-gathering system to connect Eagle Ford production to third-party pipelines, a crude oil rail loading facility in Palermo, North Dakota, and Sacagawea crude oil pipeline. Phillips 66 Partners also expects to benefit from several of PSX’s planned growth projects.

Buckeye Partners (BPL), Magellan Midstream Partners (MMP), and Sunoco Logistics Partners (SXL) are some other MLPs with refined products pipeline assets. MMP forms 0.5% of the Multi-Asset Diversified Income ETF (MDIV).

In the next part of this series, we’ll take a look at EBITDA growth for Tesoro Logistics (TLLP).

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