Will Phillips 66 Roll Up Its MLP? And The Bakken Pipeline System? -- Fitzsimmons -- May 20, 2018

Will Phillips 66 roll up its MLP? -- Fitzsimmons, over at SeekingAlpha.

How does Mike opine on this?

First some data points:

These include the following interstate pipelines:

• The Bakken Pipeline System (25%): 520,000 bpd of crude oil; North Dakota to Texas.
• The Explorer Pipeline (21.94%): 660,000 bpd of refined products; Indiana-to-Texas.
• The Bayou Bridge Pipeline (40%): 480,000 bpd of crude oil; Texas to Louisiana.
• The Southern Hills Pipeline (33.33%): 175,000 bpd of NGLs; Oklahoma to Texas.

More:

While it certainly is true most of PSXP's pipelines are not FERC regulated, I would argue that most of the largest pipelines that PSXP has interests in are FERC regulated (see list above) and a significant percentage of the company's total number of barrels transported are via those pipelines. As for being a "sole shipper", that is also not the case on the pipelines listed above. In addition, it is not clear - at least not to me - that the pipelines listed above are not "cost of service" oriented pipes. It appears to me they are. But of course, as usual, none of the analysts attending the conference call pressed PSXP management on these issues.

And then a most transparent summary:

PSXP has been a great vehicle for PSX to monetize its midstream assets. The MLP has been performing well (other than its unit price) and has met its goal of a 30% CAGR in distribution growth. If you own the units, I wouldn't sell them here. At the same time, I wouldn't buy PSXP here either (I'd buy PSX instead). That said, income oriented investors may find PSXP's 5.8% yield attractive - even with the 10-year slightly over 3%.

Me, I am underwater in PSXP and would love to see PSX roll-up the MLP so that I would own more PSX instead. However, given how successful the MLP has been from PSX's standpoint, I don't see that happening. Meantime, investors deserve more disclosure on the impact of the FERC decision on PSXP's interstate pipeline interests.