PSXP’s capital expenditures
Phillips 66 Partners’ (PSXP) capital expenditure in 1Q16 was $57 million compared to $32.9 million during the same period in 2015. This included its investment in the Bayou Bridge, Bakken, and Sand Hills joint ventures as well as its ongoing development of its Clemens Caverns.
Additionally, in March 2016, Phillips 66 Partners acquired 25% interest in Phillips 66 Sweeny Frac for a consideration of $236 million. This consisted of $24 million in newly issued PSXP units and $212 million in notes payable to Phillips 66 (PSX).
On May 4, PSXP announced its acquisition of Standish Pipeline and the remaining 75% interest in Phillips 66 Sweeny Frac from PSX for a total consideration of $775 million.
Distributable cash flows
The above graph shows Phillips 66 Partners’ distributable cash flows and total capital expenditures over the last two years. The right axis shows PSXP’s per-unit distribution.
Phillips 66 Partners’ distributable cash flow for 1Q16 was significantly higher than it was in 1Q15 due to contributions from interests in the Sand Hills, Southern Hills, and Explorer pipelines.
PSXP’s 1Q16 distributable cash flows were lower compared to 4Q15, due to both the absence of a non-recurring payment received in 4Q15 from a joint venture and lower long-haul pipeline volumes resulting from refinery maintenance in 1Q16.
PSXP increased its 1Q16 distributions by 5%. This was the tenth consecutive quarterly increase since the company’s initial public offering.
“We remain on track to achieve our five-year annual distribution growth-rate objective of 30 percent through 2018,” said Greg Garland, Phillips 66 Partners’ chair and CEO, in the partnership’s 1Q16 earnings release.
PSXP currently trades at a low distribution yield of nearly 3.4%. In comparison, Tesoro Logistics (TLLP) currently trades at a distribution yield of nearly 6.4%.