January 25, 2021 – Seeking Alpha
Phillips 66: Your No. 1 Reopening Energy Stock Pick
By: Michael Fitzsimmons
...Meantime, PSXP has a 42.25% ownership interest (a net 380,250 bpd) in the world-class 900,000 bpd Gray Oak pipeline that went into service in Q2 of last year and may have ramped up to full-capacity by now. This is important because PSX owns 75% of PSXP's outstanding units - about 170 million units - each of which currently pays a $3.50 annual distribution. That equates to an estimated $595 million in annual midstream income from PSX's ownership stake in its MLP. Indeed, PSX's strong midstream operations were a big reason why the company was able to break-even in Q3 despite the awful performance of the refining segment.
Another reason PSX was able to break-even was its chemical business. RBN Energy recently reported that ethylene margins have recently "skyrocketed" with December ethylene prices up 4x as compared to April. As a result, I would expect PSX's chemicals segment, CP Chem - a 50/50 JV with Chevron (CVX) - to report net income significantly higher than Q3's $132 million ... perhaps in the range of $185-195 million...
Read the full article here: https://seekingalpha.com/article/4400782-phillips-66-your-no-1-reopening-energy-stock-pick
