Opinion

Oil & Gas MLP 'Represents a Solid Opportunity for Investors'


A Raymond James report shared the highlight of the "strong" quarter for this entity.

pipelinesunset580

A July 27 research report from Raymond James indicated that Phillips 66 Partners LP (PSXP:NYSE)exceeded its $1.1 billion run rate EBITDA target a few quarters earlier than expected. "Despite considerable commodity and master limited partnership (MLP) market volatility over the past several years, the MLP has been able to execute on its robust growth strategy," wrote analyst Justin Jenkins.

Phillips 66 Partners' Q2/18 adjusted EBITDA was $276 million ($276M), well above Raymond James' forecast of $254M and consensus of $252M.

Discounted cash flow similarly came in higher than expected, at $204M. This compares to Raymond James' estimate of $186M and consensus of $185M. Jenkins noted, "Based on the discounted cash flow upside relative to our model, distribution coverage of 1.38x easily topped our estimate (1.26x), showing strong excess cash flow generation, even while growing the distribution by 5.3% sequentially in Q2/18."

The MLP's growth outlook "looks attractive," Jenkins said. At the forefront of anticipated growth is the Gray Oak Pipeline, which is slated to be Phillips 66 Partners' "largest ever organic project." It will give the MLP a strong footprint in the Permian Basin and, simultaneously, broaden its access to advantaged crude oil.

Management expects initial capacity of Gray Oak, which completed another open season, to be 800,000 barrels per day (800 Mbpd); already, 700 Mbpd in commitments are lined up. Capacity could be expanded to about 1 million barrels per day but would take additional capital to do so. "The total cost of the pipe is expected to be $2B (75% share at Phillips 66, for now) and exemplifies the MLP's ability to develop larger-scale projects at the partnership level," indicated Jenkins.

Generally, he concluded, Phillips 66 Partners L.P. offers an "attractive risk/reward proposition." It has a "supportive sponsor (Phillips 66) providing growth visibility through a large dropdown backlog, and both companies have impressive asset bases that provide connectivity and bolt-on options. Couple this with strong organic growth prospects and optionality from mergers and acquisitions, and we think Phillips 66 Partners represents a solid opportunity for investors."

Raymond James maintains its Outperform rating and $60 per share target price on the MLP, whose stock is currently trading at $53.32 per share.



New service from OilVoice
Trip Shepherd is for companies who need to track their staff in areas of risk.
It's free to use, so we invite you to try it.

Visit source site

https://streetwisereports.com/article/2018/08/04/o...

OilgasMLPNYSEPhillips 66pipeline

More items from oilvoice


Cyber Security Experts Unite to Protect Europe’s Critical Industries

CS4CA Summit Returns to London this October Staying abreast of fast-paced industry developments is crucial for cyber security professionals. And while one can learn a lot from publications and social media, it's hard to beat the value of insights gained first-hand from peers. This is why 150+ IT ...

OilVoice Press - OilVoice


Posted 6 months agoPress > cybereurope

Africa E&P Summit

The organisers of the Africa E&P Summit are bringing together Africa's leading exploration companies and governments, just one of the many reasons why you should be attending frontier's event that they are organising and hosting in London at the IET: Savoy Place, 22-23 May. Over 200 key senior exec ...

OilVoice Press - OilVoice


Posted 10 months agoPress > Africasummitoil summit +2

Equinor Deepens in Offshore Wind in Poland

Equinor has exercised an option to acquire a 50 % interest in the offshore wind development project Bałtyk I in Poland from Polenergia. This transaction is a follow-up of the agreement between the two companies which came into force in May 2018 , by which Equinor acquired a 50 % inter ...

OilVoice Press - OilVoice


Posted 1 year agoPress > EquinorEquinor EnergyPoland +2

Nigeria has highest capex on crude and natural gas projects in sub-Saharan Africa Over Next Seven Years, says GlobalData

Nigeria accounts for more than 34% of the proposed capital expenditure (capex) on planned and announced crude and natural gas projects in the sub-Saharan Africa over the period 2018–2025, according to GlobalData , a leading data and analytics company. The company's report: ‘H2 2018 Production ...

OilVoice Press - OilVoice


Posted 1 year agoOpinion > GlobalDataNigeriaCrude +5

CNOOC Signs Strategic Cooperation Agreements with 9 International Oil Companies

HONG KONG, Dec. 18, 2018 /PRNewswire/ -- CNOOC Limited (the "Company", SEHK: 00883, NYSE: CEO, TSX: CNU) announced today that its parent company, China National Offshore Oil Corporation (CNOOC), has signed Strategic Cooperation Agreements with 9 international oil companies including: Chevron, Conoco ...

OilVoice Press - OilVoice


Posted 1 year agoPress > CNOOCChina National Offshore Oil CorporationChevron +11
All posts from oilvoice