Operator fluency on fresh ground

Phillips 66 (PSX) — this company's answers

The model's full reasoning — Q4 2016 call → NOWe need to determine if the transcript shows the dynamic described. The question asks about a recently emerged positive element of the business, probed by analysts, and management responds with unhesitating, granular operational command, answering follow-ups with specific present-tense working detail, while conveying that contribution is still early. We need to identify such an element. The transcript mentions several things: Freeport LPG Export Terminal, Beaumont Terminal expansion, Dakota Access, PSXP dropdowns, CPChem projects, etc. The most likely candidate is the Freeport LPG Export Terminal, which was completed in 2016, first commercial cargo mid-December, and is expected to load near capacity this month (January 2017). It's young, meaningful contribution began recently. Analysts ask about it. Let's examine the exchanges. First question from Paul Sankey: "Could you update us on the contribution that the Freeport LPG Export Terminal made in Q4? I assume it was nothing, if not negative. And what the anticipated contribution EBITDA-wise is for this coming year or this current year of 2017? And can you do the same for the crude storage that you added? And finally, could you just update us on the very latest on how the petrochemical, major Petrochemical Project is going on the Gulf Coast?" Management responds: Greg starts with "Okay. So I think look, on the LPG export facility, we premised eight cargoes a month. I think we did about $5.5 million." Kevin says "Correct." Greg continues: "So we essentially had a full quarter worth of cost, which is somewhere around $12 million-ish I guess. So we probably did not offset the cost with the cargoes during the fourth quarter. As you look into the first quarter, January we did eight cargoes. I think we have the same laid in for February and March. And so I think that as you think about that project, we've never really broken down what the export facility is going to be. We've said the total Sweeny Hub, which is the frac, LPG export, caverns, et cetera is $400 million to $500 million of EBITDA. And we've said there's about $200 million or so of arb in there. So that leaves you, kind of, $300 million-ish. The frac's up and running. And that's somewhere $65 million to $70 million of EBITDA. That leaves you the balance with what it will be in LPG export facility.

← Back to the full PSX analysis