Phillips 66 Partners (PSXP) Dips Despite Q4 Earnings Beat
Phillips 66 Partners LP’s PSXP units have declined marginally despite reporting strong fourth-quarter 2021 earnings on Jan 28. This probably occurred because investors expect refining margins and utilization to remain under pressure as the pandemic continues to wreak havoc on the oil-producing province.
The partnership reported fourth-quarter adjusted 2021 earnings per unit of $1.19, beating the Zacks Consensus Estimate of $1.02. The bottom line increased from the year-ago profit of 71 cents per unit.
Total quarterly revenues of $503 million increased from $390 million in the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $433 million.
The strong quarterly results were primarily driven by higher terminal throughput and refined product volumes.
Phillips 66 Partners LP Price, Consensus and EPS Surprise
Phillips 66 Partners LP price-consensus-eps-surprise-chart | Phillips 66 Partners LP Quote
PSXP’s Operating Information
The partnership provides services through Pipelines, Terminals, and Storage Processing & Other activities.
Pipelines: For fourth-quarter 2021, the partnership generated revenues of $144 million, up from $111 million in the prior-year period. An increase in pipeline volumes of crude oil, and refined petroleum products and NGL aided the segment.
Pipeline volumes of 2,053 thousand barrels per day (Mbpd) rose from the year-ago figure of 1,720 Mbpd. Also, average pipeline revenues of 76 cents per barrel increased from 70 cents in the year-ago quarter.
Terminals: The partnership generated $53 million in revenues, up from $41 million in the year-ago quarter primarily due to higher throughput volumes of crude oil and refined petroleum products. Terminal throughput volumes were 1,280 Mbpd, up from the year-ago period’s 994 Mbpd.
Average terminaling revenues per barrel were 44 cents for the quarter, in line with the year-ago quarter’s level.
Storage, Processing & Other activities: Through the activities, the partnership generated revenues of $134 million, up from $113 million in the year-ago quarter.
Costs & Expenses
For the December-end quarter of 2021, it reported operating and maintenance expenses of $106 million, up from $85 million in the year-ago period. Yet, total costs and expenses decreased to $201 million in fourth-quarter 2021 from the year-ago level of $278 million.
Balance Sheet & Capex
As of Dec 31, 2021, the partnership recorded cash and cash equivalents of $62 million, down from the third quarter’s $71 million. Total debt at the end of the quarter under review was $3,897 million. It has $749 million available under the revolving credit facility.
Capital expenditure and investment for the fourth quarter totaled $74 million.
Outlook
For 2022, Phillips 66 Partners plans its capital budget at $338 million.
The capital budget involves expansion capital of $203 million, which will be allocated toward pipeline operations, completing optimization and near-term projects, and repayment of its 25% share of Dakota Access’ debt due in 2022. It also includes $135 million for maintenance projects to improve system reliability and pipeline integrity.
Zacks Rank & Stocks to Consider
Phillips 66 Partners currently carries a Zacks Rank #3 (Hold).
Meanwhile, investors interested in the energy space can consider some better-ranked companies like Centennial Resource Development, Inc. CDEV, Occidental Petroleum Corporation OXY and SM Energy Company SM. All the companies currently sport a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Centennial Resource reported fourth-quarter 2021 adjusted earnings of 39 cents per share, beating the Zacks Consensus Estimate of 30 cents. CDEV announced its proved reserves for 2021-end at 305 MMBoe, representing growth from 299 MMBoe at the end of the prior year.
Centennial Resource is expected to see earnings growth of 91.3% in 2022. CDEV announced the launch of its stock repurchase program of $350 million. The authorization of the plan is for two years.
Occidental Petroleum reported fourth-quarter 2021 earnings of $1.48 per share, beating the Zacks Consensus Estimate of $1.08 by 37%. OXY’s 2021-end proved reserves were 3.51 billion barrels of oil equivalent (Bboe), up 2.9 Bboe at 2020-end.
Occidental Petroleum is expected to see earnings growth of 74.1% in 2022. As of Dec 31, 2021, OXY’s had cash and cash equivalents of $2,764 million compared with $2,008 million in the corresponding period of 2020.
SM Energy reported fourth-quarter adjusted earnings of $1.14 per share, beating the Zacks Consensus Estimate of 82 cents. SM’s estimated its proved reserves at 2021-end at 492 MMBoe, increasing 22% year over year.
SM Energy is expected to see earnings growth of 257.8% in 2022. SM currently has a Zacks Style Score of A for Growth, and B for Value and Momentum. As of Dec 31, 2021, the company had cash and cash equivalents of $332.7 million.
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