Good afternoon and welcome to the First Quarter 2015 Phillips 66 Partners Earnings Conference Call. My name is Sally and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being record. I will now turn the call over to your host, Rosy Zuklic, Manager of Investor Relation. Rosy, you may begin.

Thank you, Sally. Good afternoon and welcome to the Phillips 66 Partners first quarter earnings conference call. With me today are Tim Taylor, President of Phillips 66 Partners; Greg Maxwell, Vice President and CFO; and Bob Herman, Senior Vice President, Operations; and Tom Liberti, Vice President and Chief Operating Officer. The presentation materials we’ll be using during the call can be found on the events section of the Phillips 66 Partners website, along with supplemental financial and operating information. We’ll have time for questions at the end of the presentation. Slide 2 contains our Safe Harbor statement. It is a reminder that we will be making forward-looking statements during the presentation and the question-and-answer session. Actual results may differ materially from what we present here today; factors that could cause actual results to differ are included here as well as in our filings with the SEC. References in this presentation to operational and financial results for the fourth quarter of 2014 exclude amounts from predecessors. These are non-GAAP financial measures and the reconciliation to their GAAP counterparts, which include predecessor results, are included in the supplemental information accompanying our earnings release and posted on our website. With that, I’ll turn the call over to Tim Taylor for some opening remarks. Tim?

Thanks Rosy and good afternoon everyone. During the quarter, we continued to deliver on our growth plans. We completed over $1 billion acquisition from Phillips 66. Over the last five quarters, we’ve executed over $2 billion in acquisitions, demonstrating our continuing commitment to top tier growth. Our recently announced first quarter distribution of $0.37 per unit is 9% higher than the fourth quarter distribution and keep this on track to achieve our goal of 30% compound annual distribution growth rate through 2018. Since the IPO, we have increased the distribution at a compound annual rate of 45%. Slide 4 is a summary of our March acquisition. PSXP acquired one-third equity interest in the Sand Hills and Southern Hills natural gas liquids pipelines as well as a 19.5% interest in the Explorer refined products pipeline. We financed the $1.1 billion transaction with the combination of public equity, senior notes, and units to Phillips 66. Our first debt offering was investment grade rated. This provides a solid foundation for efficient borrowing to fund our growth program. The acquisition provides increased connectivity with Phillips 66 as growing midstream business adds natural gas liquids transportation service to our portfolio and gives us interest in one of the largest refined products pipelines in the country. Let’s move on and talk about the operational highlights from the first quarter. We operated well during the quarter. Total pipeline throughput volumes were 745,000 barrels per day, up 2% over the fourth quarter, largely driven by the full quarter operation of the Cross-Channel Connector Pipeline. The increase was tempered by lower volumes on the long haul gold line product system due to the plan turnaround at the Borger Refinery. Volumes from our equity affiliates are not included in these results. Average pipeline revenue per barrel was $0.44, down $0.08 from the fourth quarter mainly due to lower volumes on the gold line system. Total terminaling throughput volumes were 989,000 barrels per day, an increase of 10% over the prior quarter. Crude oil terminaling throughput was up 16% over the fourth quarter as result of the Bayway and Ferndale rail racks operating for the full quarter after the December 2014 acquisition. Now, I’ll turn the call over to Bob Herman.

Thanks, Tim. On April 17th, our pipeline that transports refined products from the Hartford Terminal to a dock on the Mississippi River experienced a diesel fuel release. The release was discovered and halted on the same day. The current spill volume estimate is between 900 and 1,200 barrels. Our response teams began working with the appropriate authorities that day to ensure safe and effective remediation of the incident. Since this event occurred in April, first quarter 2015 results were not affected. We expect cost associated with the cleanup and remediation to be $3 million to $5 million most of which are expected to be recognized in the second quarter of 2015. Phillips 66 partners carries property and third party liability insurance, each in excess of $5 million self insured retentions. Turning to Slide 7, we’re making good progress on our organic growth projects. The Eagle Ford crude gathering system and Bakken joint ventures remain on track for scheduled completion in the third and fourth quarters of 2015 respectively. The Cross-Channel Connector expansion project is progressing and we expect third party connections to be complete in the third quarter of this year. For 2015, including additional growth capital for the recently acquired equity interests we expect to spend about $235 million. A majority of this additional capital is for a lateral expansions on the Sand Hills pipeline. Going forward as PSXP executes its plan for top-tier growth. We expect to see the partnership take on larger organic projects to supplement acquisitions from Phillips 66. Now I’ll turn the call over to Greg Maxwell to provide a more detailed update on the financial results for the quarter.

Thanks Bob, good afternoon everyone. Beginning on Slide 8, first quarter revenues were $70.1 million this is up $7.4 million from the fourth quarter, the increase primarily reflects the month of equity earnings from the ownership interest that we acquired in the Sand Hills and the Southern Hills NGO pipelines and also to explore pipeline. This acquisition closed at the beginning of March also included our full quarter revenues from the Bayway and Ferndale rail racks they’re required in December of 2014. Total costs and expenses were $34.5 million. This is up $8.2 million from the prior quarter mainly driven by cost associated with the first quarter acquisitions including additional interest expense on the new debt that we issued. We also have higher operating costs, general and administrative expenses and depreciation for the rail racks. The general partners board recently declared the first quarter distribution of $0.37 per limited partner unit which will be payable on May 12, is represents a 9% increase compared with the $0.34 per unit distribution for the previous quarter. The next slide shows our adjusted EBITDA and distributable cash flow growth over the last five quarters. During this time period we’ve executed on our aggressive growth plans and the impact on PSXP’s growth profile has been significant adjusted EBITDA is more than doubled and distributable cash flow is up 80% as shown we’re delivering on our objective to provide top-tier growth for our unit holders. Turn to Slide 10, EBITDA for the fourth quarter was $46.6 million and distributable cash flow was $41.9 million. During the quarter PSXP received minimum volume deficiency payments of $1.1 million from Phillips 66. These payments were primarily triggered at the Gold Line Product System due to turnaround activities at the Borger refinery we had maintenance capital expenditures of $1.7 million during the quarter and total cash distributions will be $36.7 million resulting in a coverage ratio of 1.14. Slide 11 shows that we ended the quarter with $138 million of cash and cash equivalents and no outstanding borrowings on our revolving credit facility. As previously noted during the quarter, we issued $1.1 billion of senior notes with tenures of 5, 10 and 30 years with a weighted average interest rate of 3.6%. The proceeds from the notes offering were used to partially fund our acquisition of the equity interest in the pipelines and to repay the $412 million in sponsor loans to Phillips 66. Our debt to EBITDA ratio on a debt covenant basis and also adjusted for JV depreciation was 4.2. We expect our leverage to decrease to at or below our target level of 3.5% as Sand Hills and Southern Hills continue to ramp up and as organic growth projects advance. This concludes our prepared remarks. We’ll now open the line for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Brian Zarahn with Barclays. Your line is open.

Good afternoon.

Hi, Brian.

Hi, Brian.

I know it’s a small project, but what caused the delay of the Cross-Channel Connector from the second to the third quarter?

So, this is Bob. On – mostly, it’s – we’re depending on third-parties to complete connection work there and they have been delayed on executing their parts of projects. The part that’s on partners’ assets is completed in up and running.

Okay. And then any color on additional organic projects that you’re looking at that haven’t been announced yet?

We don’t have – this is Tom, Brian. We don’t have anything to announce at this point in time, but you know I mean we haven’t put our 2016 capital budget together yet as same as the parent. So – but you know you would expect us to look at and be in the same kind of range and grow as we’ve said in the past. As the partnership’s gotten larger, we’re able to pick on more and larger capital projects organic growth and we would expect to do that.

And then on the drop-down inventory, is the new number, $2.2 billion of EBITDA, incorporating the March transaction?

Yes that $2.2 billion inventory looking out in that 2018 timeframe was existing assets with the base that we had in 2013 looking at the growth as well. So that was part of that number.

But the – a little variable, but in terms of the incremental inventory, what can be dropped to PSXP, is $2.2 billion the right estimate? Or is it – how would you think about that?

$2.2 billion is the total of which now run rate is about $300 million.

Okay. So the inventory is less than 2, about 1.9, you're saying, okay.

That’s right.

And then on guidance, the $1.1 billion EBITDA that you provided, is that an exit rate for 2018? Is that more of an average for 2018?

That’s a run rate for 2018.

So more of an exit rate, at some point?

Right.

Okay. And the last one – I know the answer to this question, but I have to ask anyway. Will PSXP have any role in the DCP restructuring?

DCP restructuring, our view is that that is really handled at DCP level. We don’t anticipate that PSXP would be involved in that.

Thank you.

Your next question comes from the line of Richard Roberts with Howard Weil. Your line is open.

Hi, good afternoon, folks. Couple from me. So now we've got a distribution growth target out there, and the 30% CAGR range. I'm just wondering what the thought around drop-downs is now? Is that going to be more of a balancing mechanism to sort of get you to those targets, outside of what you do organically or through third-party acquisitions? Or would you expect to still be more methodical in getting those PSX assets down into PSXP?

I think we continue to be very methodical about what we drop and when we drop it and I think when we look at our inventory the method looking at it would get us to that $1.1 billion run rate in 2018. So I don’t really anticipate changing the way we approached that. I think we caution people before not to draw straight line between today and 2018 because the projects are varying size and they won't come at a ratable drop down rate.

Okay, got it.

I would just add to that Richard, as we’ve said in the past we’ll look opportunistically of what happens. So if there is other things like acquisitions or more organic projects then that would affect the drop down rate also.

Sure. And then looking up at PSX, so there's still a fair amount of organic capital underway on the Midstream side up there. You sort of alluded to this in the comments earlier. But as you're getting bigger at the MLP, I'm just wondering how you think about what sort of maybe size projects you can take on, at the MLP level, versus up at the parent? And then similarly, on third-party acquisitions, should we expect anything of a certain size will be done at PSX versus PSXP. How do we think about those sort of things?

So I think if you kind of look what we done already we’ve gone essentially no capital – organic capital last year to this year will be in the $250 million range and one of those projects our Bakken project actually in and of itself being fairly sizable. We'll look at every organic project that our sponsor has and we’ll strike a balance between PSX and PSXP with trying to balance that unit distributable cash flow growth over the period we’ll like projects that not so much the absolute cost of those projects but more the duration of how long it takes those projects to get up and start generating EBITDA. So I can tell you we look at every project that’s coming through the portfolio and you will just see us take on bigger and bigger projects as times goes on.

Longer term we would expect more of that capital spend to end up be conducted directly by PSXP from our long-term plan.

Okay. Thanks and then may be just one more on the revenue for the quarter, little bit later than what we were looking for in our model and admittedly we didn’t much impact from a Gold Line being down for bit. So I’m wondering if you can help us out on a couple of things for one if you were add the sort of run rate EBITDA numbers you given on the rail terminals in the quarter. And then also on the pipeline acquisitions you did in the first quarter if you’re at sort of run rate pro rata there for the quarter and then if you can give us any order of magnitude on what the degradation from the Gold Line system being down partially what kind of impact we had there on revenue side and that’s it from me thanks.

Yes. This is – from the rail rack standpoints of those run exactly as we have had planned and budgeted for full quarter they also ran exactly the same way in the last month of last year when we dropped them. Going forward if we look at the lines that we dropped in the first quarter those were actually ramping up most of that ramp up is at Sand Hills we were at about 70% of capacity both Sand and Southern for the first quarter and so that was reflected in the one month of PSXP owned that and we expect that volume to ramp up over time Sand getting closer to its initial capacity of 200,000 barrels in the third quarter kind of timeframe. Trying and think of the…

Gold Line here…

The Gold Line impact was basically the bulk of the reduction in the income that we had in the first quarter.

Great. Thank you very much.

Your next question comes from the line of Jeremy Tonet with JP Morgan. Your line is open.

Good afternoon.

Hi, Jeremy.

Thanks for the call today. I just want to follow-up a bit more in Sand Hills and Southern Hills if possible. And wanted to know if you guys can provide a little more color on the growth you see in these assets and what type of growth CapEx in expansion opportunities you see there and has that slowed at all in the current environment with producers are curtailing their activity a bit? Any color on that would be great.

Jeremy, I think that the most of the growth where really come from the Sand Hills and if you think about the areas that the support the Sand Hills line, you can kind of understand that. We see that ramping up to its capacity, its current capacity of 200,000 barrels a day again as I said somewhere in the third quarter. As we look forward we are putting anywhere from $40 million to $45 million of capital to some other lines in connections and thing to ramp that capacity up to about 300,000 barrels a day, and we see that happening over the next couple of years kind of timeframe.

Okay, great. So you could increase the capacity with by 50% with, just a kind of a modest investment also it looks like that would be pretty accretive projects?

That’s capital this year. There will be more capital in next year timeframe during the 2016 timeframe. But a lot of it is pump capacity and connections, so we have to differ fields.

Okay, so how much would there be in total for pump CapEx, could you say that?

No, I don’t have that number available right now.

Okay. Fair enough. Thank you, thank you for the color.

Your next question comes from the line Tim Schneider with Evercore ISI. Your line is open.

Hey, good afternoon guys, quick macro question from me, I think it the theme coming out of some of these ENP earnings calls, is how bad some of NGL realizations have been. So I just wondering if you could give us a little bit more color on how you see volumes in the your NGL system and your NGL pipelines kind of shake outs over the next couple of years here?

Well, this is Tim, I think I look at NGL, and think about crude prices and if you look at that their falling, they fall in line with the crude price and maybe the forward look to the forward curves look a little bit different. So I think it really is related directly to the crude price and the activity. So to the extent that there is lower drilling activity, we would expect there to be lower growth in the future, yet some of these are pretty close to markets and so it very much depends on the field. So they could, still growth is still there, our view is just push that growth out a year or two in terms of what the ramp ups ultimately from an industry perspective that we would have expected.

Okay. Thank you.

We have no further questions at this time. Rosy, I’ll turn the call back over to you.

Okay, perfect. Well, thank you very much for joining us this afternoon and for your interest in Phillips 66 Partners. If you have any additional questions, please feel free to give me a call. Thank you once again, bye.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.