UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended			March 31, ~~2020~~ 2021



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from						to



Commission file number:			001-36011

Phillips 66 Partners LP

(Exact name of registrant as specified in its charter)



Delaware						38-3899432
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2331 CityWest ~~Blvd~~.Blvd., Houston,, Texas77042

(Address of principal executive offices) (Zip Code)

(~~855~~) (855) 283-9237

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Units, Representing Limited ~~Partnership~~Partner Interests

PSXP

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 228,340,146 common units outstanding as of March 31, ~~2020.~~2021.

Table of Contents

PHILLIPS 66 PARTNERS LP

TABLE OF CONTENTS

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS



Consolidated Statement of Income (Loss)			Phillips 66 Partners LP

Millions of Dollars
Three Months Ended
March 31
2020
2019
Revenues and Other Income
Operating revenues—related parties $ 258
296
Operating revenues—third parties 9
6
Equity in earnings of affiliates 136
119
Other income 1
2
Total revenues and other income 404
423

Costs and Expenses
Operating and maintenance expenses 88
139
Depreciation 30
29
General and administrative expenses 17
18
Taxes other than income taxes 11
11
Interest and debt expense 29
27
Other expenses 2
—
Total costs and expenses 177
224
Income before income taxes 227
199
Income tax expense 1
1
Net income 226
198
Less: Preferred unitholders’ interest in net income 10
10
Less: General partner’s interest in net income —
69
Limited partners’ interest in net income $ 216
119

Net Income Per Limited Partner Unit (dollars)

Common units—basic $ 0.95
0.96
Common units—diluted 0.93
0.92

Weighted-Average Limited Partner Units Outstanding (thousands)

Common units—basic 228,312
124,258
Common units—diluted 242,132
138,078
See Notes to Consolidated Financial Statements.


	Millions of Dollars
	Three Months Ended March 31
	2021		2020
Revenues and Other Income
Operating revenues—related parties	$	245	258
Operating revenues—third parties	7		9
Equity in earnings of affiliates	124		136
Other income	0		1
Total revenues and other income	376		404

Costs and Expenses
Operating and maintenance expenses	95		88
Depreciation	34		30
Impairments	198		0
General and administrative expenses	17		17
Taxes other than income taxes	10		11
Interest and debt expense	33		29
Other expenses	0		2
Total costs and expenses	387		177
Income (loss) before income taxes	(11)		227
Income tax expense	0		1
Net Income (Loss)	(11)		226
Less: Net income attributable to noncontrolling interest	7		0
Net Income (Loss) Attributable to the Partnership	(18)		226
Less: Preferred unitholders’ interest in net income (loss) attributable to the Partnership	12		10
Limited Partners’ Interest in Net Income (Loss) Attributable to the Partnership	$	(30)	216

Net Income (Loss) Attributable to the Partnership Per Limited Partner Unit (dollars)
Common units—basic	$	(0.13)	0.95
Common units—diluted	(0.13)		0.93

Weighted-Average Limited Partner Units Outstanding (thousands)
Common units—basic	228,340		228,312
Common units—diluted	228,340		242,132
See Notes to Consolidated Financial Statements.

Table of Contents



Consolidated Statement of Comprehensive Income (Loss)			Phillips 66 Partners LP

Millions of Dollars
Three Months Ended
March 31
2020
2019

Net Income $ 226
198
Defined benefit plans
Plan sponsored by equity affiliates, net of income taxes —
—
Other comprehensive income —
—
Comprehensive Income $ 226
198
See Notes to Consolidated Financial Statements.


	Millions of Dollars
	Three Months Ended March 31
	2021		2020

Net Income (Loss)	$	(11)	226
Defined benefit plans
Plan sponsored by equity affiliates, net of income taxes	(1)		0
Other comprehensive loss	(1)		0
Comprehensive Income (Loss)	(12)		226
Less: Comprehensive income attributable to noncontrolling interest	7		0
Comprehensive Income (Loss) Attributable to the Partnership	$	(19)	226
See Notes to Consolidated Financial Statements.

Table of Contents



Consolidated Balance Sheet			Phillips 66 Partners LP

Millions of Dollars
March 31
2020
December 31
2019
Assets
Cash and cash equivalents $ 92
286
Accounts receivable—related parties 91
101
Accounts receivable—third parties 4
4
Materials and supplies 13
13
Prepaid expenses and other current assets 14
10
Total current assets 214
414
Equity investments 3,136
2,961
Net properties, plants and equipment 3,410
3,349
Goodwill 185
185
Other assets 52
52
Total Assets $ 6,997
6,961

Liabilities
Accounts payable—related parties $ 24
19
Accounts payable—third parties 75
84
Accrued interest 46
42
Deferred revenues 19
16
Short-term debt 25
25
Accrued property and other taxes 12
10
Other current liabilities 3
3
Total current liabilities 204
199
Long-term debt 3,491
3,491
Obligation from equity interest transfer 356
343
Other liabilities 93
94
Total Liabilities 4,144
4,127

Equity
Preferred unitholders (2020 and 2019—13,819,791 units issued and outstanding) 747
746
Common unitholders—public (2020—58,580,009 units issued and outstanding;
2019—58,539,439 units issued and outstanding)
2,723
2,717
Common unitholder—Phillips 66 (2020 and 2019—169,760,137 units issued and outstanding) (616 ) (628 )
Accumulated other comprehensive loss (1 ) (1 )
Total Equity 2,853
2,834
Total Liabilities and Equity $ 6,997
6,961
See Notes to Consolidated Financial Statements.


	Millions of Dollars
	March 31 2021		December 31 2020
Assets
Cash and cash equivalents	$	3	7
Accounts receivable—related parties	104		103
Accounts receivable—third parties	3		3
Materials and supplies	16		16
Prepaid expenses and other current assets	17		11
Total current assets	143		140
Equity investments	3,029		3,244
Net properties, plants and equipment	3,646		3,639
Goodwill	185		185
Other assets	50		50
Total Assets	$	7,053	7,258

Liabilities
Accounts payable—related parties	$	20	19
Accounts payable—third parties	54		73
Accrued interest	39		35
Deferred revenues	38		27
Short-term debt	500		465
Accrued property and other taxes	12		11
Other current liabilities	3		3
Total current liabilities	666		633
Long-term debt	3,444		3,444
Other liabilities	90		90
Total Liabilities	4,200		4,167

Equity
Preferred unitholders (2021 and 2020—13,819,791 units issued and outstanding)	749		749
Common unitholders—public (2021 and 2020—58,580,009 units issued and outstanding)	2,647		2,706
Common unitholder—Phillips 66 (2021 and 2020—169,760,137 units issued and outstanding)	(828)		(656)
Accumulated other comprehensive loss	(2)		(1)
Total unitholders’ equity	2,566		2,798
Noncontrolling interest	287		293
Total Equity	2,853		3,091
Total Liabilities and Equity	$	7,053	7,258
See Notes to Consolidated Financial Statements.

Table of Contents



Consolidated Statement of Cash Flows			~~Phillips~~ Phillips��66 Partners LP


	Millions of Dollars
	Three Months Ended March 31
	2021		2020
Cash Flows From Operating Activities
Net income (loss)	$	(11)	226
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation	34		30
Impairments	198		0
Undistributed equity earnings	(5)		4
Other	0		2
Working capital adjustments
Accounts receivable	(1)		10

Prepaid expenses and other current assets	(6)		(4)
Accounts payable	2		(3)
Accrued interest	4		4
Deferred revenues	11		3
Other accruals	1		2
Net Cash Provided by Operating Activities	227		274

Cash Flows From Investing Activities
Cash capital expenditures and investments	(78)		(236)
Liberty acquisition	0		(75)
Return of investment from equity affiliates	39		38
Net Cash Used in Investing Activities	(39)		(273)

Cash Flows From Financing Activities
Issuance of debt	450		0
Repayment of debt	(415)		0
Issuance of common units	0		2

Quarterly distributions to preferred unitholders	(12)		(9)
Quarterly distributions to common unitholders—public	(51)		(51)
Quarterly distributions to common unitholder—Phillips 66	(149)		(149)
Net proceeds from equity interest transfer	0		12

Distributions to noncontrolling interest	(13)		0
Other distributions to Phillips 66	(2)		0
Net Cash Used in Financing Activities	(192)		(195)

Net Change in Cash and Cash Equivalents	(4)		(194)
Cash and cash equivalents at beginning of period	7		286
Cash and Cash Equivalents at End of Period	$	3	92
See Notes to Consolidated Financial Statements.

Millions of Dollars

Three Months Ended
March 31

2020
2019
Cash Flows From Operating Activities

Net income $ 226
198
Adjustments to reconcile net income to net cash provided by operating activities

Depreciation 30
29
Undistributed equity earnings 4
2
Other 2
10
Working capital adjustments

Accounts receivable 10
4
Prepaid expenses and other current assets (4 ) 9
Accounts payable (3 ) (4 )
Accrued interest 4
(5 )
Deferred revenues 3
(40 )
Other accruals 2
2
Net Cash Provided by Operating Activities 274
205

Cash Flows From Investing Activities

Cash capital expenditures and investments (236 ) (634 )
Liberty acquisition (75 ) —
Return of investment from equity affiliates 38
20
Proceeds from sale of equity interest —
81
Net Cash Used in Investing Activities (273 ) (533 )

Cash Flows From Financing Activities

Net proceeds from equity interest transfer 12
341
Issuance of debt —
725
Repayment of debt —
(585 )
Issuance of common units 2
32
Quarterly distributions to preferred unitholders (9 ) (9 )
Quarterly distributions to common unitholders—public (51 ) (46 )
Quarterly distributions to common unitholder—Phillips 66 (149 ) (58 )
Quarterly distributions to General Partner—Phillips 66 —
(67 )
Other distributions to Phillips 66 —
(4 )
Net Cash Provided by (Used in) Financing Activities (195 ) 329

Net Change in Cash and Cash Equivalents (194 ) 1
Cash and cash equivalents at beginning of period 286
1
Cash and Cash Equivalents at End of Period $ 92
2
See Notes to Consolidated Financial Statements.

Table of Contents



Consolidated Statement of Changes in Equity			Phillips 66 Partners LP


	Millions of Dollars
	Three Months Ended March 31
	Partnership
	Preferred Unitholders Public		Common Unitholders Public	Common Unitholder Phillips 66	Accum. Other Comprehensive Loss	Noncontrolling Interest	Total

December 31, 2020	$	749	2,706	(656)	(1)	293	3,091
Net income (loss)	12		(8)	(22)	—	7	(11)
Other comprehensive loss	—		—	—	(1)	—	(1)
Quarterly cash distributions to unitholders ($0.875 per common unit)	(12)		(51)	(149)	—	—	(212)

Distributions to noncontrolling interest	—		—	—	—	(13)	(13)
Other distributions to Phillips 66	—		—	(1)	—	—	(1)
March 31, 2021	$	749	2,647	(828)	(2)	287	2,853

December 31, 2019	$	746	2,717	(628)	(1)	0	2,834
Issuance of common units	—		2	—	—	—	2
Net income	10		55	161	—	—	226
Quarterly cash distributions to unitholders ($0.875 per common unit)	(9)		(51)	(149)	—	—	(209)
March 31, 2020	$	747	2,723	(616)	(1)	0	2,853

Millions of Dollars
Three Months Ended
March 31
Preferred Unitholders Public
Common Unitholders
Public

Common Unitholder
Phillips 66

General Partner
Phillips 66

Accum. Other
Comprehensive Loss

Total

December 31, 2019 $ 746
2,717
(628 ) —
(1 ) 2,834
Issuance of common units —
2
—
—
—
2
Net income 10
55
161
—
—
226
Quarterly cash distributions to unitholders ($0.875 per common unit) (9 ) (51 ) (149 ) —
—
(209 )
March 31, 2020 $ 747
2,723
(616 ) —
(1 ) 2,853

December 31, 2018 $ 746
2,485
592
(1,313 ) (1 ) 2,509
Cumulative effect of accounting change —
(1 ) —
—
—
(1 )
Issuance of common units —
32
—
—
—
32
Net income 10
53
66
69
—
198
Quarterly cash distributions to unitholders and General Partner ($0.835 per common unit) (9 ) (46 ) (58 ) (67 ) —
(180 )
Other contributions to Phillips 66 —
—
—
(4 ) —
(4 )
March 31, 2019 $ 747
2,523
600
(1,315 ) (1 ) 2,554


	Units
	Three Months Ended March 31
	Preferred Units Public	Common Units Public	Common Units Phillips 66	Total Units

December 31, 2020	13,819,791	58,580,009	169,760,137	242,159,937
Units issued in public equity offerings	—	—	—	0
March 31, 2021	13,819,791	58,580,009	169,760,137	242,159,937

December 31, 2019	13,819,791	58,539,439	169,760,137	242,119,367
Units issued in public equity offerings	—	40,570	—	40,570
March 31, 2020	13,819,791	58,580,009	169,760,137	242,159,937
See Notes to Consolidated Financial Statements.

Units
Three Months Ended
March 31
Preferred Units Public
Common Units Public
Common Units Phillips 66
General Partner Units
Phillips 66

Total Units

December 31, 2019 13,819,791
58,539,439
169,760,137
—
242,119,367
Units issued in public equity offerings —
40,570
—
—
40,570
March 31, 2020 13,819,791
58,580,009
169,760,137
—
242,159,937

December 31, 2018 13,819,791
55,343,918
68,760,137
2,480,051
140,403,897
Units issued in public equity offerings —
622,032
—
—
622,032
March 31, 2019 13,819,791
55,965,950
68,760,137
2,480,051
141,025,929

~~See Notes to Consolidated Financial Statements.~~



Notes to Consolidated Financial Statements			Phillips 66 Partners LP

Note 1—Description of the Business

Unless otherwise stated or the context otherwise indicates, all references to “Phillips 66 Partners,” “the Partnership,” “us,” “our,” “we,” or similar expressions refer to Phillips 66 Partners LP, including its consolidated subsidiaries. References to Phillips 66 may refer to Phillips 66 and/or its subsidiaries, depending on the context. References to our “General Partner” or “GP” refer to Phillips 66 Partners GP LLC, and references to “Phillips 66 PDI” refer to Phillips 66 Project Development Inc., the Phillips 66 subsidiary that holds a limited partner interest in us and wholly owns our General Partner.

We are a growth-oriented master limited partnership formed to own, operate, develop and acquire primarily fee-based midstream assets. Our operations consist of crude oil, refined petroleum products and natural gas liquids (NGL) transportation, terminaling, processing and storage assets. We conduct our operations through both wholly owned and joint venture operations. The majority of our wholly owned assets are associated with, and are integral to the operation of, 9 of Phillips 66’s owned or joint venture refineries. Our operations consist of 1 reportable segment.

We primarily generate revenue by providing fee-based transportation, terminaling, processing, storage and fractionation services to Phillips 66 and other customers. Our equity affiliates primarily generate revenue from transporting and terminaling crude oil, refined petroleum products and NGL. Since we do not own any of the crude oil, refined petroleum products and NGL we handle and do not engage in the trading of ~~crude oil, refined petroleum products and NGL,~~those commodities, we have limited direct exposure to risks associated with fluctuating commodity prices, although these risks indirectly influence our activities and results of operations over the long term.

Note 2—Interim Financial Information

The unaudited interim financial information presented in the financial statements included in this report is prepared in accordance with generally accepted accounting principles in the United States (GAAP) and includes all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of our financial position, results of operations and cash flows for the periods presented. Unless otherwise specified, all such adjustments are of a normal and recurring nature. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our ~~2019~~2020 Annual Report on Form 10-K. The results of operations for the three months ended March 31, ~~2020~~,2021, are not necessarily indicative of the results to be expected for the full year.

The COVID-19 pandemic continues to disrupt economic activities globally. Reduced demand for petroleum products has resulted in decreased volumes through logistics infrastructure. The depth and duration of the economic consequences of the COVID-19 pandemic remain uncertain. We continuously monitor our asset and investment portfolio for impairments in this challenging business environment. We recorded an impairment totaling $198 million in the first quarter of 2021, and additional impairments may be required in the future. See Note 4—Equity Investments for additional information.

Note 3—Operating Revenues

Operating revenues are primarily generated from long-term pipeline transportation, terminaling, storage, processing and fractionation lease and service agreements, mainly with Phillips 66. These agreements typically include escalation clauses to adjust transportation tariffs and terminaling and storage fees to reflect changes in price indices. In addition, most of these agreements contain renewal options, which typically require the mutual consent of both our customers and us.

Total operating revenues disaggregated by asset type were as follows:


	Millions of Dollars
	Three Months Ended March 31
	2021		2020

Pipelines	$	104	111
Terminals	39		43
Storage, processing and other revenues	109		113
Total operating revenues	$	252	267

Millions of Dollars
Three Months Ended
March 31
2020
2019

Pipelines $ 111
109
Terminals 43
40
Storage, processing and other revenues 113
153
Total operating revenues $ 267
302

The majority of our agreements with Phillips 66 are considered operating leases under GAAP. The ~~lease’s~~ classification of a lease as either an operating or a financing lease requires judgment in assessing the contract’s lease and service components and in determining the asset’s fair value. We have elected to account for lease and service elements of contracts classified as leases on a combined basis, except for leases of processing-type assets, which contain non-ratable fees related to turnaround activity. For these types of leases, we continue to separate the lease and service elements based on relative standalone prices and ~~applied~~apply the ~~new~~ lease standard to the lease element and the revenue standard to the service element.

Total operating revenues disaggregated by lease and service revenues were as follows:


	Millions of Dollars
	Three Months Ended March 31
	2021		2020

Lease revenues	$	207	218
Service revenues	45		49
Total operating revenues	$	252	267

Millions of Dollars
Three Months Ended
March 31
2020
2019

Lease revenues $ 218
257
Service revenues 49
45
Total operating revenues $ 267
302

We bill our customers, mainly Phillips 66, under our lease and service contracts generally on a monthly basis.

Total accounts receivable by revenue type was as follows:

Millions of Dollars
March 31
2020
December 31
2019

Lease receivables $ 74
87
Service receivables 20
18
Other receivables 1
—
Total accounts receivable $ 95

105


	Millions of Dollars
	March 31 2021		December 31 2020

Lease receivables	$	89	87
Service receivables	18		19
Total accounts receivable	$	107	106

Our deferred revenues represent payments received from our customers, mainly Phillips 66, in advance of the period in which lease and service contract performance obligations have been fulfilled. The majority of our deferred revenues relate to a tolling agreement and a storage agreement that are classified as leases. The remainder of our deferred revenues relate to lease and service agreements that contain minimum volume commitments with recovery provisions. Our deferred revenues are recorded in the “Deferred revenues” and “Other liabilities” line items on our consolidated balance sheet.

Total deferred revenues under our lease and service agreements were as follows:


	Millions of Dollars
	March 31 2021		December 31 2020

Deferred lease revenues	$	54	45
Deferred service revenues	4		4
Total deferred revenues	$	58	49

Millions of Dollars
March 31
2020
December 31
2019

Deferred lease revenues $ 41
41
Deferred service revenues 2
1
Total deferred revenues $ 43

42

Future Minimum Lease Payments from Customers

At March 31, ~~2020,~~2021, future minimum payments to be received under our lease agreements with customers, mainly Phillips 66, were estimated to be:


	Millions of Dollars

Remainder of 2021	$	575
2022	752
2023	706
2024	588
2025	530
Remaining years	1,297
Total future minimum lease payments from customers	$	4,448

Millions
of Dollars

Remainder of 2020 $ 527
2021 698
2022 685
2023 642
2024 521
Remaining years 1,386
Total future minimum lease payments from customers $ 4,459

Remaining Performance Obligations

We typically have long-term service contracts with our customers, mainly Phillips 66, of which the original durations range from 5 to 15 years. The weighted-average remaining duration of these contracts is 119 years. These contracts include both fixed and variable transaction price components. At March 31, ~~2020,~~2021, future service revenues expected to be recognized for the fixed component of the transaction price of our remaining performance obligations from service contracts with our customers that have an original expected duration of greater than one year were:

Millions
of Dollars

Remainder of 2020 $ 109
2021 137
2022 136
2023 136
2024 116
Remaining years 671
Total future service revenues $ 1,305


	Millions of Dollars

Remainder of 2021	$	99
2022	124
2023	123
2024	99
2025	95
Remaining years	381
Total future service revenues	$	921

For the remaining service performance obligations, we applied the exemption for variable prices allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer distinct services as part of a performance obligation.

Note 4—Equity Investments ~~and Loans~~

~~Equity Investments~~

The following table summarizes the carrying value of our equity investments:

Millions of Dollars
Percentage Ownership
March 31
2020
December 31
2019

Dakota Access, LLC and Energy Transfer Crude Oil Company, LLC (Bakken Pipeline) 25.00 % $ 595
592
Bayou Bridge Pipeline, LLC (Bayou Bridge) 40.00
296
294
DCP Sand Hills Pipeline, LLC (Sand Hills) 33.34
598
595
DCP Southern Hills Pipeline, LLC (Southern Hills) 33.34
218
215
Explorer Pipeline Company (Explorer) 21.94
102
105
Gray Oak Pipeline, LLC 65.00
799
759
Liberty Pipeline LLC (Liberty) 50.00
103
—
Paradigm Pipeline LLC (Paradigm) 50.00
143
143
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal) 70.00
67
70
South Texas Gateway Terminal LLC (South Texas Gateway Terminal) 25.00
102
74
STACK Pipeline LLC (STACK) 50.00
113
114
Total equity investments $ 3,136
2,961


			Millions of Dollars
	Percentage Ownership		March 31 2021		December 31 2020

Dakota Access, LLC and Energy Transfer Crude Oil Company, LLC (Bakken Pipeline)	25.00	%	$	575	577
Bayou Bridge Pipeline, LLC (Bayou Bridge)	40.00		281		288
DCP Sand Hills Pipeline, LLC (Sand Hills)	33.34		585		582
DCP Southern Hills Pipeline, LLC (Southern Hills)	33.34		217		217
Explorer Pipeline Company (Explorer)	21.94		89		92
Gray Oak Pipeline, LLC	65.00		843		860
Liberty Pipeline LLC (Liberty)	50.00		46		241
Paradigm Pipeline LLC (Paradigm)	50.00		140		141
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal)	70.00		15		15
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)	25.00		175		167
STACK Pipeline LLC (STACK)	50.00		63		64
Total equity investments			$	3,029	3,244

Earnings from our equity investments were as follows:

Millions of Dollars
Three Months Ended
March 31
2020
2019

Bakken Pipeline $ 57
51
Bayou Bridge 10
4
Sand Hills 41
36
Southern Hills 11
13
Explorer 7
3
Gray Oak Pipeline, LLC 5
—
Liberty —
—
Paradigm 4
3
Phillips 66 Partners Terminal —
6
South Texas Gateway Terminal —
—
STACK 1
3
Total equity in earnings of affiliates $ 136
119


	Millions of Dollars
	Three Months Ended March 31
	2021		2020

Bakken Pipeline	$	44	57
Bayou Bridge	7		10
Sand Hills	27		41
Southern Hills	12		11
Explorer	3		7
Gray Oak Pipeline, LLC	21		5
Liberty	0		0
Paradigm	5		4
Phillips 66 Partners Terminal	0		0
South Texas Gateway Terminal	4		0
STACK	1		1
Total equity in earnings of affiliates	$	124	136

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)

In ~~February 2020, we entered into~~March 2019, a ~~Purchase~~wholly owned subsidiary of Dakota Access issued $2.5 billion aggregate principal amount of senior unsecured notes. Dakota Access and Sale Agreement with Phillips 66 PDI to acquire its 50% interest in the Liberty Pipeline joint venture for $75 million. The purchase price reflected the reimbursement of project costs incurred by Phillips 66 prior to the effective dateETCO have guaranteed repayment of the transaction. The transaction was funded through a combination of cash on hand and our revolving credit facility and closed on March 2, 2020. Liberty was formed to develop and construct the Liberty Pipeline system which, upon completion, will transport crude oil from the Rockies and Bakken production areas to Cushing, Oklahoma. On March 24, 2020,notes. In addition, we and our ~~co-venturer announced we are deferring~~co-venturers in Dakota Access provided a Contingent Equity Contribution Undertaking (CECU) in conjunction with the ~~development~~notes offering. Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the ongoing litigation related to an easement granted by the U.S. Army Corps of Engineers (USACE) to allow the pipeline to be constructed under Lake Oahe in North Dakota. Contributions may be required if Dakota Access determines that the issues included in any such final judgment cannot be remediated and ~~construction~~Dakota Access has or is projected to have insufficient funds to satisfy repayment of the ~~Liberty Pipeline system as~~notes. If Dakota Access undertakes remediation to cure issues raised in a ~~result~~final judgment, contributions may be required if any series of the ~~current challenging business environment.~~notes become due, whether by acceleration or at maturity, during such time, to the extent Dakota Access has or is projected to have insufficient funds to pay such amounts. At March 31, 2021, our share of the maximum potential equity contributions under the CECU was approximately $631 million.

~~Liberty~~In July 2020, the trial court presiding over the litigation vacated Dakota Access’ easement under Lake Oahe and ordered the Dakota Access Pipeline to be shut down and emptied of crude oil pending the preparation of an Environmental Impact Statement (EIS) by the USACE, which had been ordered by the court in March 2020 and is ~~considered~~now expected to be completed by March 2022. In August 2020, pending an appeal of the trial court’s decisions, an appellate court denied Dakota Access’ motion to stay the order vacating the easement, but granted its motion to stay the order that the pipeline be shut down while the EIS is prepared. In January 2021, the appellate court affirmed the trial court’s order vacating the easement and directing the USACE to prepare an EIS and reversed the order directing the pipeline to be shut down. Notwithstanding that the easement has been vacated, in April 2021, the USACE indicated that it currently intends to allow the pipeline to continue to operate while it proceeds with the EIS. Currently, there is a ~~variable interest entity (VIE) because it does~~motion for a permanent injunction to shut down the pipeline before the trial court that could be decided at any time. Additionally, Dakota Access has requested the appellate court to stay its January 2021 decision pending a filing and disposition of a petition for writ of certiorari to the U.S. Supreme Court.

If the pipeline is required to cease operations, either permanently or pending the preparation of the EIS, and should Dakota Access and ETCO not have sufficient ~~equity at risk~~funds to ~~fully fund the construction of all assets~~pay ongoing expenses, we also could be required ~~for principal operations. We have determined we are not the primary beneficiary because we and~~to support our co-venturer jointly direct the activities of Liberty that most significantly impact economic performance. At March 31, 2020, our maximum exposure to loss was $103 million, which represented the aggregate book value of our equity investment in Liberty. At March 31, 2020, Phillips 66 had an outstanding guarantee of $113 million to vendors for our proportionate share of the ~~payment~~ongoing expenses, including scheduled interest payments on the notes of ~~certain purchase~~approximately $25 million annually, in addition to the potential obligations under the CECU.

Summarized financial information for 100% of ~~Liberty.~~Dakota Access is as follows:


	Millions of Dollars
	Three Months Ended March 31
	2021		2020

Revenues	$	215	258
Income before income taxes	142		186
Net income	142		186

Gray Oak Pipeline, LLC

We have a consolidated holding company that owns 65% of Gray Oak Pipeline, LLC. After deducting a co-venturer’s pending acquisition of a 35% interest in the consolidated holding company, we have an effective ownership interest of 42.25% in Gray Oak Pipeline, LLC. Gray Oak Pipeline, LLC was formed to develop and construct the Gray Oak Pipeline, which transports crude oil from the Permian and Eagle Ford to Texas Gulf Coast destinations that include Corpus Christi and the Sweeny area, including the Phillips 66 Sweeny Refinery, as well as access to the Houston market. ~~On April 1, 2020,~~We have a consolidated holding company that owns 65% of Gray Oak Pipeline, LLC. In December 2018, a third party exercised its option to acquire a 35% interest in the holding company. Because the holding company’s sole asset was its ownership interest in Gray Oak Pipeline, LLC, which was considered a financial asset, and because certain restrictions were placed on the third party’s ability to transfer or sell its interest in the holding company during the construction of the Gray Oak Pipeline, the legal sale of the 35% interest did not qualify as a sale under GAAP at that time. The Gray Oak Pipeline commenced full operations ~~from West Texas to Texas Gulf Coast destinations. The Eagle Ford segment~~in the second quarter of 2020 and the restrictions placed on the co-venturer were lifted on June 30, 2020, resulting in the recognition of the ~~pipeline commenced operations later in April.~~sale under GAAP. Accordingly, at June 30, 2020, the co-venturer’s 35% interest in the holding company ~~is expected to be~~was recharacterized from a long-term obligation to a noncontrolling interest on our consolidated balance ~~sheet~~sheet. We have an effective ownership interest of 42.25% in the second quarter. Also at that time, the premium paid by the co-venturer will be recharacterized from a long-term obligation to a gain in our consolidated statement of income. For the three months ended March 31, 2020, the co-venturer contributed an aggregate of $23 million to the holding company to fund its portion of Gray Oak Pipeline, LLC’s cash calls.

Gray Oak Pipeline, LLC, ~~has a third-party term loan facility with a borrowing capacity of $1,379 million, inclusive of accrued interest. Borrowings under~~after considering our co-venturer’s 35% interest in the facility are due on June 3, 2022. We and our co-venturers provided a guarantee through an equity contribution agreement requiring proportionate equity contributions to Gray Oak Pipeline, LLC up to the total outstanding loan amount, plus any additional accrued interest and associated fees, if the term loan facility is fully utilized and Gray Oak Pipeline, LLC defaults on certain of its obligations thereunder. consolidated holding company.

At March 31, ~~2020,~~2021, we held a 50% interest in Liberty, a joint venture formed to develop and construct the ~~term loan facility~~Liberty Pipeline system. Liberty was ~~fully utilized by Gray Oak Pipeline, LLC and our 42.25% proportionate exposure under the equity contribution agreement was $583 million.~~

~~Gray Oak Pipeline, LLC is~~ considered a VIE because it ~~does~~did not have sufficient equity at risk to fully fund the construction of all assets required for principal operations. We ~~have~~ determined we ~~are~~were not the primary beneficiary because we and our ~~co-venturers~~co-venturer jointly ~~direct~~directed the activities of ~~Gray Oak Pipeline, LLC~~Liberty that most significantly impact economic performance.

In the first quarter of 2021, we decided to exit the Liberty Pipeline project, which had previously been deferred due to the challenging business environment created by the COVID-19 pandemic. As a result, we recorded a $198 million impairment to reduce the book value of our investment in Liberty at March 31, 2021, to our share of the estimated fair value of the joint venture’s pipeline assets and net working capital. The impairment is included in the “Impairments” line item on our consolidated statement of income (loss). This valuation resulted in a Level 3 nonrecurring fair value measurement. At March 31, ~~2020,~~2021, the book value of our investment in Liberty, and our maximum exposure to loss, was ~~$1,382 million, which represented our guarantee of the third-party term loan facility of $583 million and the aggregate book value of our equity method investment in Gray Oak Pipeline, LLC of $799~~$46 million.

In ~~March 2019, a wholly owned subsidiary of Dakota Access, LLC (Dakota Access) closed~~April 2021, we transferred our ownership interest in Liberty to our co-venturer for cash and certain pipeline assets with an offering of $2,500 million aggregate principal amount of unsecured senior notes. Dakota Access and Energy Transfer Crude Oil Company, LLC (ETCO) have guaranteed repayment of the notes. In addition, we andestimated fair value that approximated our co-venturers in Dakota Access provided a Contingent Equity Contribution Undertaking (CECU) in conjunction with the notes offering. Under the CECU, if Dakota Access receives an unfavorable court ruling in the litigation related to certain disputed construction permits and Dakota Access determines that an equity contribution trigger event has occurred, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access and ETCO up to an aggregate maximum of approximately $2,525 million. Our share of the maximum potential equity contributions under the CECU is approximately $631 millionbook value at March 31, 2020. In March 2020, the court in such litigation requested an Environmental Impact Statement from the U.S. Army Corps of Engineers, and requested additional information to make a further decision regarding whether the2021.

Dakota Access Pipeline should be shut down while the Environmental Impact Statement is being prepared. Currently, this ruling does not have any immediate impact on the operations of Dakota Access and ETCO.

~~Summarized financial information for 100% of Dakota Access is as follows:~~

Millions of Dollars
Three Months Ended
March 31
2020
2019

Revenues $ 258
236
Income before income taxes 186
157
Net income 186
157

Note 5—Net Income (Loss) Per Limited Partner Unit

~~Net~~We calculate net income (loss) attributable to the Partnership per limited partner unit ~~applicable to common units is computed~~ by dividing the limited partners’ interest in net income (loss) by the weighted-average number of common units outstanding for the period. ~~Prior to August 1, 2019, we had more than~~ ~~one~~ ~~class of participating securities and used~~After considering the ~~two-class method~~period’s cash distributions declared, the remaining undistributed earnings or excess distributions declared over earnings, if any, are allocated to calculate net income per unit applicable to the limited partners. The classes of participating securities prior to August 1, 2019, included common units, general partner units and incentive distribution rights (IDRs). Effective August 1, 2019, common units are the only participating securities. For the three months ended March 31, 2020 and 2019, our preferred units are potentially dilutive securities and were dilutive to net income per limited partner unit.

~~Net income earned by the Partnership is allocated between the classes of~~ participating securities in accordance with the contractual terms of our partnership agreement ~~after giving effect to priority income allocations to~~and as prescribed under the ~~holders of the~~two-class method for those periods in which we have participating securities. Our preferred ~~units. First, earnings are allocated based~~units became participating securities effective October 1, 2020. See Note 9—Equityfor additional information on ~~actual cash distributions declared to~~ our unitholders. To the extent net income exceeds or is less than cash distributions declared, this difference is allocated based on the unitholders’ respective ownership percentages, after consideration of any priority allocations of earnings. preferred units.

For the diluted net income (loss) per limited partner unit calculation, the preferred units are assumed to be converted at the beginning of the period into common limited partner units on a ~~one-for-one~~1-for-one basis, and the distribution formula for available cash in our partnership agreement is recalculated, using the original available cash amount increased only for the preferred distributions declared which would not have been paid after conversion.Any potentially dilutive securities are excluded from the diluted earnings per unit computation if the effect of including such securities would be anti-dilutive.

*Distributions declared are attributable to the indicated periods.

Limited Partners’
Common Units

Limited Partners’
Preferred Units

Total
Three Months Ended March 31, 2020
Net income (millions):

Distributions declared $ 199
10
209
Distributions less than (more than) net income 17
—
17
Net income (basic) 216
10
226
Dilutive effect of preferred units 10

Net income (diluted) $ 226

Weighted-average units outstanding—basic 228,312,261

Dilutive effect of preferred units 13,819,791

Weighted-average units outstanding—diluted 242,132,052

Net income per limited partner unit—basic (dollars)
$ 0.95

Net income per limited partner unit—diluted (dollars)
0.93


	Limited Partners’ Common Units		Limited Partners’ Preferred Units	Total
Three Months Ended March 31, 2021
Net income (loss) attributable to the Partnership (millions):
Distributions declared	$	200	12	212
Distributions more than net income (loss) attributable to the Partnership	(230)		0	(230)
Net income (loss) attributable to the Partnership—basic	(30)		12	(18)
Dilutive effect of preferred units	0
Net income (loss) attributable to the Partnership—diluted	$	(30)

Weighted-average units outstanding—basic	228,340,146
Dilutive effect of preferred units	0
Weighted-average units outstanding—diluted	228,340,146

Net income (loss) attributable to the Partnership per limited partner unit—basic (dollars)	$	(0.13)
Net income (loss) attributable to the Partnership per limited partner unit—diluted (dollars)	(0.13)

Limited Partners’
Common Units
General Partner
(including IDRs)
Limited Partners’
Preferred Units
Total
Three Months Ended March 31, 2019
Net income (millions):

Distributions declared $ 105
69
10
184
Distributions less than net income 14
—
—
14
Net income (basic) 119
69
10
198
Dilutive effect of preferred units* 8

Net income (diluted) $ 127

Weighted-average units outstanding—basic 124,257,933

Dilutive effect of preferred units* 13,819,791

Weighted-average units outstanding—diluted 138,077,724

Net income per limited partner unit—basic (dollars)
$ 0.96

Net income per limited partner unit—diluted (dollars)
0.92

*The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.


	Limited Partners’ Common Units		Limited Partners’ Preferred Units	Total
Three Months Ended March 31, 2020
Net income attributable to the Partnership (millions):
Distributions declared	$	199	10	209
Distributions less than net income attributable to the Partnership	17		0	17
Net income attributable to the Partnership—basic	216		10	226
Dilutive effect of preferred units	10
Net income attributable to the Partnership—diluted	$	226

Weighted-average units outstanding—basic	228,312,261
Dilutive effect of preferred units	13,819,791
Weighted-average units outstanding—diluted	242,132,052

Net income attributable to the Partnership per limited partner unit—basic (dollars)	$	0.95
Net income attributable to the Partnership per limited partner unit—diluted (dollars)	0.93

On April ~~21, 2020,~~20, 2021, the Board of Directors of our General Partner declared a quarterly cash distribution of $0.875 per common unit, which ~~excluding distributions to holders of our preferred units,~~ will result in a total distribution of ~~$199~~$200 million attributable to the first quarter of ~~2020.~~2021. This distribution is payable on May 14, ~~2020,~~2021, to common unitholders of record as of ~~May 1, 2020.~~

Note 6—Properties, Plants and Equipment

Our investment in properties, plants and equipment (PP&E), with the associated accumulated depreciation, was:


	Millions of Dollars
	March 31 2021		December 31 2020

Land	$	19	19
Buildings and improvements	116		115
Pipelines and related assets*	1,527		1,518
Terminals and related assets*	849		847
Rail racks and related assets*	137		137
Processing and related assets*	1,064		1,063
Caverns and related assets*	733		732
Construction-in-progress	420		394
Gross PP&E	4,865		4,825
Accumulated depreciation	(1,219)		(1,186)
Net PP&E	$	3,646	3,639
*Assets for which we are the lessor.

Millions of Dollars
March 31
2020
December 31
2019

Land $ 19
19
Buildings and improvements 94
94
Pipelines and related assets*
1,447
1,424
Terminals and related assets*
761
741
Rail racks and related assets*
137
137
Processing and related assets*
1,047
1,041
Caverns and related assets*
585
585
Construction-in-progress 409
367
Gross PP&E 4,499
4,408
Accumulated depreciation (1,089 ) (1,059 )
Net PP&E $ 3,410
3,349
*Assets for which we are the lessor.


	Millions of Dollars
	March 31 2021		December 31 2020

2.450% Senior Notes due December 2024	$	300	300
3.605% Senior Notes due February 2025	500		500
3.550% Senior Notes due October 2026	500		500
3.750% Senior Notes due March 2028	500		500
3.150% Senior Notes due December 2029	600		600
4.680% Senior Notes due February 2045	450		450
4.900% Senior Notes due October 2046	625		625

Tax-exempt bonds due April 2021, at weighted-average rates of 0.260% and 0.360% at March 31, 2021, and December 31, 2020, respectively	50		50
Revolving credit facility borrowings due April 2021 at weighted-average rate of 1.345%	450		415
Debt at face value	3,975		3,940
Net unamortized discounts and debt issuance costs	(31)		(31)
Total debt	3,944		3,909
Short-term debt	(500)		(465)
Long-term debt	$	3,444	3,444

Millions of Dollars
March 31
2020
December 31
2019

2.450% Senior Notes due December 2024 $ 300
300
3.605% Senior Notes due February 2025 500
500
3.550% Senior Notes due October 2026 500
500
3.750% Senior Notes due March 2028 500
500
3.150% Senior Notes due December 2029 600
600
4.680% Senior Notes due February 2045 450
450
4.900% Senior Notes due October 2046 625
625
Tax-exempt bonds due April 2020 and April 2021 at 1.465% and 1.85% at
March 31, 2020, and December 31, 2019, respectively 75
75
Debt at face value 3,550
3,550
Net unamortized discounts and debt issuance costs (34 ) (34 )
Total debt 3,516
3,516
Short-term debt (25 ) (25 )
Long-term debt $ 3,491
3,491

The fair value of our fixed-rate and floating-rate debt is estimated based on observable market prices and is classified ~~in level~~as Level 2 of the fair value hierarchy. The fair value of our fixed-rate debt was ~~$3,083~~$3,679 million and ~~$3,650~~$3,752 million at March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively. The fair value of our floating-rate debt approximated carrying value of ~~$75~~$500 million and $465 million at March 31, ~~2020,~~2021, and December 31, ~~2019.~~2020, respectively.

At March 31, ~~2020,~~2021, and December 31, ~~2019, 0 amount had been directly drawn~~2020, borrowings of $450 million and $415 million were outstanding under our $750 million revolving credit ~~facility; however, $3 million~~facility, respectively. At both March 31, 2021, and December 31, 2020, $1 million in letters of credit had been issued ~~under~~that were supported by this ~~facility at March 31, 2020, and December 31, 2019, respectively.~~facility.

On April 1, ~~2020,~~2021, we repaid ~~at maturity a~~the 2 remaining $25 million ~~tranche~~tranches of tax-exempt bonds ~~that was included~~due April 2021, totaling $50 million.

On April 6, 2021, we entered into a $450 million term loan agreement and borrowed the full amount. The term loan agreement has a maturity date of April 5, 2022, and the outstanding borrowings can be repaid at any time and from time to time, in ~~short-term debt~~whole or in part, without premium or penalty. Borrowings bear interest at ~~March 31, 2020.~~

a floating rate based on either a Eurodollar rate or a reference rate, plus a margin of 0.875%. Proceeds were primarily used to repay amounts borrowed under our $750 million revolving credit facility.

Note 8—Contingencies

From time to time, lawsuits involving a variety of claims that arise in the ordinary course of business are filed against us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is ~~less than certain.~~uncertain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include any contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

We are subject to federal, state and local environmental laws and regulations. We record accruals for contingent environmental liabilities based on management’s best estimates, using all information that is available at the time. We measure estimates and base liabilities on currently available facts, existing technology, and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the U.S. Environmental Protection Agency or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable. At March 31, 2021, and December 31, 2020, our total environmental accruals were not material.

In the future, we may be involved in additional environmental assessments, cleanups and proceedings.

Under our amended omnibus agreement, Phillips 66 provides certain services for our benefit, including legal support services, and we pay an operational and administrative support fee for these services. Phillips 66’s legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. The process facilitates the early evaluation and quantification of potential exposures in individual cases and enables tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, Phillips 66’s legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required. As of March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, we did not have any material accrued contingent liabilities associated with litigation matters.

Indemnification and Excluded Liabilities

Under our amended omnibus agreement and pursuant to the terms of various agreements under which we acquired assets from Phillips 66, Phillips 66 will indemnify us, or assume responsibility, for certain environmental liabilities, tax liabilities, litigation and any other liabilities attributable to the ownership or operation of the assets contributed to us and that arose prior to the effective date of each acquisition. These indemnifications and exclusions from liability have, in some cases, time limits and deductibles. When Phillips 66 performs under any of these indemnifications or exclusions from liability, we recognize noncash expenses and associated noncash capital contributions from our General Partner, as these are considered liabilities paid for by a principal unitholder.

We have authorized an aggregate of $750 million under 3 $250 million continuous offerings of common units, or at-the-market (ATM) programs. The first ~~two~~2 programs concluded in June 2018 and December 2019, respectively. ~~For~~We suspended issuances under the ATM program in the first quarter of 2020 due to low common unit prices. We did 0t issue any common units under the current ATM program during the three months ended March 31, 2021.

Beginning with the distribution to preferred unitholders attributable to the fourth quarter of 2020, the preferred unitholders are entitled to receive cumulative quarterly distributions equal to the greater of $0.678375 per unit, or the per-unit distribution amount paid to the common unitholders as if such preferred units had converted into common units immediately prior to the record date. The holders of the preferred units may convert their preferred units into common units, on a ~~settlement date~~1-for-one basis, we issued an aggregate of 40,570 common units under our ATM programs, generating net proceeds of $2 million. For the three months ended March 31, 2019, we issued an aggregate of 622,032 common units under our ATM programs, generating net proceeds of $32 million. Since inceptionat any time, in ~~June 2016 through March 31, 2020, we issued an aggregate of 9,487,055 common units under our ATM programs,~~full or in part, subject to minimum conversion amounts and generated net proceeds of $494 million, after broker commissions of $5 million and other costs of $3 million. The net proceeds from sales under the ATM programs are used for general partnership purposes, which may include debt repayment, acquisitions, capital expenditures and additions to working capital.

Note 10—Related Party Transactions

Commercial Agreements

We have entered into long-term, fee-based commercial agreements with Phillips 66 to provide transportation, terminaling, storage, stevedoring, fractionation, processing, and rail terminal services. Under these agreements, Phillips 66 commits to provide us with minimum transportation, throughput or storage volumes, or minimum monthly service fees. If Phillips 66 does not meet its minimum volume commitments under an agreement, Phillips 66 pays us a deficiency payment based on the calculation described in the agreement.

Amended and Restated Operational Services Agreement

Under our amended and restated operational services agreement, we reimburse Phillips 66 for certain operational services provided in support of our pipelines, terminaling, processing, and storage facilities. These services include routine and emergency maintenance and repair services, routine operational activities, routine administrative services, construction and related services and such other services as we and Phillips 66 may mutually agree upon from time to time.

Amended Omnibus Agreement

The amended omnibus agreement addresses our payment of an operating and administrative support fee and our obligation to reimburse Phillips 66 for all other direct or allocated costs and expenses incurred by Phillips 66 in providing general and administrative services. Additionally, the omnibus agreement addresses Phillips 66’s indemnification to us and our indemnification to Phillips 66 for certain environmental and other liabilities. Further, it addresses the granting of a license from Phillips 66 to us with respect to the use of certain Phillips 66 trademarks.

The operational and administrative support fee is for the provision of certain services, including: logistical services; asset oversight, such as operational management and supervision; corporate engineering services, including asset integrity and regulatory services; business development services; executive services; financial and administrative services (including treasury and accounting); information technology; legal services; corporate health, safety and environmental services; facility services; human resources services; procurement services; investor relations; tax matters; and public company reporting services. We pay Phillips 66 an operational and administrative support fee under the terms of our amended omnibus agreement in the amount of $8 million per month.

We also reimburse Phillips 66 for all other direct or allocated costs incurred on behalf of us, pursuant to the terms of our amended omnibus agreement. The classification of these charges between operating and maintenance expenses and general and administrative expenses is based on the functional nature of the services performed for our operations. Under our amended and restated operational services agreement, we reimburse Phillips 66 for the provision of certain operational services in support of our operating assets. Additionally, we pay Phillips 66 for insurance services provided to us, and recoveries under these policies are recorded as an offset to our expenses. Operating and maintenance expenses also include volumetric gains and losses associated with volumes transported by Phillips 66.

Tax Sharing Agreement

Under our tax sharing agreement, we reimburse Phillips 66 for our share of state and local income and other taxes incurred by Phillips 66 due to our results of operations being included in a combined or consolidated tax return filed by Phillips 66. Any reimbursement is limited to the tax that we (and our subsidiaries) would have paid had we not been included in a combined group with Phillips 66. Phillips 66 may use its tax attributes to cause its combined or consolidated group to owe no tax; however, we would nevertheless reimburse Phillips 66 for the tax we would have owed, even though Phillips 66 had no cash expense for that period.

Related Party Transactions

Significant related party transactions included in our ~~total~~ costs and expenses were:

Millions of Dollars
Three Months Ended
March 31
2020
2019

Operating and maintenance expenses $ 48
105
General and administrative expenses 17
17
Total $ 65
122


	Millions of Dollars
	Three Months Ended March 31
	2021		2020

Operating and maintenance expenses	$	58	48
General and administrative expenses	15		17

Other related party balances were included in the following line items on our consolidated balance sheet, all of which were related to commercial agreements with Phillips 66:

Millions of Dollars
March 31
2020
December 31
2019

Prepaid expenses and other current assets $ 12
7
Other assets 48
44
Deferred revenues 18
16
Other current liabilities 1
1
Other liabilities 68
70


	Millions of Dollars
	March 31 2021		December 31 2020

Prepaid expenses and other current assets	$	11	7
Other assets	47		47
Deferred revenues	38		27
Other current liabilities	1		1
Other liabilities	63		64

Equity Affiliate Arrangements

In March 2019, we and our co-venturers in Dakota Access provided a CECU in conjunction with ana senior unsecured ~~senior~~ notes offering. See Note 4—Equity Investments, ~~and Loans,~~ for additional information.

In June 2019, we issued a guarantee through an equity contribution agreement for 42.25% of the third-party term loan facility for Gray Oak Pipeline, LLC. See Note 4—Equity Investments and Loans, for additional information.

Note 11—Cash Flow Information

Capital Expenditures and Investments

Our capital expenditures and investments consisted of:


	Millions of Dollars
	Three Months Ended March 31
	2021		2020

Cash capital expenditures and investments	$	78	236
Change in capital expenditure accruals	(20)		(2)
Total capital expenditures and investments	$	58	234

Millions of Dollars
Three Months Ended
March 31
2020
2019

Cash capital expenditures and investments $ 236
634
Change in capital expenditure accruals (2 ) (2 )
Total capital expenditures and investments $ 234
632

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise stated or the context otherwise indicates, all references to “Phillips 66 Partners,” “the Partnership,” “us,” “our,” “we,” or similar expressions refer to Phillips 66 Partners LP, including its consolidated subsidiaries. References to Phillips 66 may refer to Phillips 66 and/or its subsidiaries, depending on the context. References to our “General Partner” refer to Phillips 66 Partners GP LLC, and references to “Phillips 66 PDI” refer to Phillips 66 Project Development Inc., the Phillips 66 subsidiary that holds a limited partner interest in us and wholly owns our General Partner.

Management’s Discussion and Analysis is the Partnership’s analysis of its financial performance, financial condition, and of significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report. It contains forward-looking statements including, without limitation, statements relating to the Partnership’s plans, strategies, objectives, expectations and intentions. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions normally identify forward-looking ~~statements.~~statements, but the absence of these words does not mean that a statement is not forward-looking. The Partnership does not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the Partnership’s disclosures under the heading: “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.”

EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT ~~AND EXECUTIVE OVERVIEW~~

Partnership Overview

We are a growth-oriented master limited partnership formed to own, operate, develop and acquire primarily fee-based midstream assets. Our operations consist of crude oil, refined petroleum products and natural gas liquids (NGL) transportation, terminaling, processing and storage assets. We conduct our operations through both wholly owned and joint venture operations. The majority of our wholly owned assets are associated with, and are integral to the operation of, nine of Phillips 66’s owned or joint venture refineries.

Our common units trade on the New York Stock Exchange under the symbol PSXP.

How We Evaluate Our Operations

Our management uses a variety of financial and operating metrics to analyze our performance, including: (1) volumes handled; (2) operating and maintenance expenses; (3) net income (loss) before net interest expense, income taxes, depreciation and amortization (EBITDA); (4) adjusted EBITDA; and (5) distributable cash flow.

The amount of revenue we generate primarily depends on the volumes of crude oil, refined petroleum products and NGL that we handle in our pipeline, terminal, rail rack, processing, storage and fractionator systems. In addition, our equity affiliates generate revenue from transporting and terminaling crude oil, refined petroleum products and NGL. These volumes are primarily affected by the supply of, and demand for, crude oil, refined petroleum products and NGL in the markets served directly or indirectly by our assets, as well as the operational status of the refineries served by our assets. Phillips 66 has committed to minimum throughput volumes under many of our commercial agreements.

Operating and Maintenance Expenses

Our management seeks to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses primarily consist of labor expenses (including contractor services), utility costs, and repair and maintenance expenses. Operating and maintenance expenses generally remain relatively stable across broad ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities,

particularly maintenance activities, performed during the period. Our processing assets are periodically subject to major maintenance, or turnaround activities, which can significantly increase operating and maintenance expenses in a given year. Although we seek to manage our maintenance expenditures on our facilities to avoid significant variability in our quarterly cash flows, we balance this approach with our high standards of safety and environmental stewardship, such that critical maintenance is regularly performed.

Our operating and maintenance expenses are also affected by volumetric gains/losses resulting from variances in meter readings and other measurement methods, as well as volume fluctuations due to pressure and temperature changes. Under certain commercial agreements with Phillips 66, the value of any crude oil, refined petroleum product and NGL volumetric gains and losses are determined by reference to the monthly average reference price for the applicable commodity. Any gains/losses under these provisions decrease or increase, respectively, our operating and maintenance expenses in the period in which they are realized. These contractual volumetric gain/loss provisions could increase variability in our operating and maintenance expenses.

EBITDA, Adjusted EBITDA and Distributable Cash Flow

We define EBITDA as net income (loss) plus net interest expense, income taxes, depreciation and amortization.

Adjusted EBITDA is EBITDA attributable to the Partnership after deducting the adjusted EBITDA attributable to noncontrolling interest, further adjusted for:

•The proportional share of equity affiliates’ net interest expense, income taxes, ~~and~~ depreciation and ~~amortization.~~amortization, and impairments.

•Transaction costs associated with acquisitions.

•Certain other noncash items, including ~~expenses indemnified by Phillips 66.~~gains and losses on asset sales and asset impairments.

Distributable cash flow is defined as adjusted EBITDA less (i) equity affiliate distributions less than proportional adjusted EBITDA, (ii) maintenance capital expenditures, (iii) net interest expense, (iv) income taxes paid and (v) preferred unit distributions, plus adjustments for deferred revenue impacts.

EBITDA, adjusted EBITDA, and distributable cash flow are not presentations made in accordance with generally accepted accounting principles in the United States (GAAP). EBITDA, adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management believes external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may find useful to assess:

•Our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA and adjusted EBITDA, financing methods.

•The ability of our business to generate sufficient cash to support our decision to make distributions to our unitholders.

•Our ability to incur and service debt and fund capital expenditures.

•The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

The GAAP performance measure most directly comparable to EBITDA and adjusted EBITDA is net ~~income.~~income (loss). The GAAP liquidity measure most directly comparable to EBITDA and distributable cash flow is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income (loss) or net cash provided by operating activities. They have important limitations as analytical tools because they exclude some items that affect net income (loss) and net cash provided by operating activities. Additionally, because EBITDA, adjusted EBITDA, and distributable cash flow may be defined differently by other companies in our industry, our definition of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Business Environment

~~Since we~~We do not own any of the crude oil, refined petroleum products and NGL we handle and do not engage in the trading of ~~crude oil, refined petroleum products~~those commodities, and ~~NGL, we~~therefore have limited direct exposure to risks associated with fluctuating commodity prices, although these risks indirectly influence our activities and results of operations over the long term.

Our throughput volumes primarily depend on the volume of crude oil processed and refined petroleum products produced at Phillips 66’s owned or operated refineries with which our assets are integrated. These volumes are primarily dependent on Phillips 66’s refining margins and maintenance schedules. Refining margins depend on the price of crude oil or other feedstocks and the price of refined petroleum products. These prices are affected by numerous factors beyond our or Phillips 66’s control, including the domestic and global supply of and demand for crude oil and refined petroleum products. Throughput volumes of our equity affiliates primarily depend on upstream drilling activities, refinery performance and product supply and demand.

The ~~global markets for crude oil and petroleum products were materially disrupted during the first quarter of 2020 by two significant events:~~

~~We expect these events may result~~NGL prices. During the first quarter of 2021, however, winter storms significantly impacted the Central and Gulf Coast regions, which resulted in reduced ~~transportation~~throughput volumes on both our and ~~terminaling volumes~~our joint ventures’ assets, as well as higher costs.

Our customers, including Phillips 66, may continue to experience adverse economic effects in the near ~~term. In March 2020, we announced that we were reducing our planned capital spending in 2020, including deferring~~term as the ~~Liberty Pipeline project and postponing a final investment decision on the ACE Pipeline.~~

OPEC has agreed to crude oil production cuts into 2022, but the near-term outlook for petroleum product demand remains highly uncertain, prices remain volatile, and margins and volumes remain challenged. The depth and duration of the economic consequences of the COVID-19 pandemic ~~are currently unknown. However, the adverse economic effects on~~remain uncertain. We continuously monitor our ~~customers, including Phillips 66, will likely be significant~~asset and investment portfolio for impairments in this challenging business environment. We recorded an impairment totaling $198 million in the ~~near term.~~first quarter of 2021, and additional impairments may be required in the future.

While we believe we and the majority of our joint ventures have substantially mitigated our indirect exposure to commodity price fluctuations through the minimum volume commitments included in our commercial ~~agreements with Phillips 66 and a majority of our joint ventures during the respective terms of those~~ agreements, our ability to execute our ~~growth~~ strategy will depend, in part, on the availability of attractively priced crude oil in the areas served by our crude oil pipelines and rail racks, demand for refined petroleum products in the markets served by our refined petroleum product pipelines and terminals, and the general demand for midstream services, including NGL transportation and fractionation.

RESULTS OF OPERATIONS

Unless otherwise indicated, discussion of results for the three months ended March 31, ~~2020~~,2021, is based on a comparison with the corresponding period of ~~2019.~~2020.


	Millions of Dollars
	Three Months Ended March 31
	2021		2020
Revenues and Other Income
Operating revenues—related parties	$	245	258
Operating revenues—third parties	7		9
Equity in earnings of affiliates	124		136
Other income	—		1
Total revenues and other income	376		404

Costs and Expenses
Operating and maintenance expenses	95		88
Depreciation	34		30
Impairments	198		—
General and administrative expenses	17		17
Taxes other than income taxes	10		11
Interest and debt expense	33		29
Other expenses	—		2
Total costs and expenses	387		177
Income (loss) before income taxes	(11)		227
Income tax expense	—		1
Net Income (Loss)	(11)		226
Less: Net income attributable to noncontrolling interest	7		—
Net Income (Loss) Attributable to the Partnership	(18)		226
Less: Preferred unitholders’ interest in net income (loss) attributable to the Partnership	12		10
Limited Partners’ Interest in Net Income (Loss) Attributable to the Partnership	$	(30)	216

Net Cash Provided by Operating Activities	$	227	274

Adjusted EBITDA	$	289	321

Distributable Cash Flow	$	233	269

Millions of Dollars
Three Months Ended
March 31
2020
2019
Revenues and Other Income
Operating revenues—related parties $ 258
296
Operating revenues—third parties 9
6
Equity in earnings of affiliates 136
119
Other income 1
2
Total revenues and other income 404
423

Costs and Expenses
Operating and maintenance expenses 88
139
Depreciation 30
29
General and administrative expenses 17
18
Taxes other than income taxes 11
11
Interest and debt expense 29
27
Other expenses 2
—
Total costs and expenses 177
224
Income before income taxes 227
199
Income tax expense 1
1
Net income 226
198
Less: Preferred unitholders’ interest in net income 10
10
Less: General partner’s interest in net income —
69
Limited partners’ interest in net income $ 216
119

Net cash provided by operating activities $ 274
205

Adjusted EBITDA $ 321
281

Distributable cash flow $ 269
226

Pipeline revenues (millions of dollars)

Pipeline volumes⁽¹⁾ (thousands of barrels daily)

Pipeline volumes(1) (thousands of barrels daily)

Average pipeline revenue per barrel (dollars)

Terminal revenues (millions of dollars)

Terminal throughput (thousands of barrels daily)

Average terminaling revenue per barrel (dollars)

Storage, processing and other revenues (millions of dollars)

Total operating revenues (millions of dollars)

Total Operating Revenues (millions of dollars)

Joint Venture Operating Data⁽³⁾

Joint Venture Operating Data(3)

Crude oil, refined petroleum products and NGL (thousands of barrels daily)

⁽¹⁾Represents the sum of volumes transported through each separately tariffed pipeline segment.

⁽²⁾Bayway and Ferndale rail rack volumes included in crude oil terminals.

⁽³⁾Proportional share of total pipeline and terminal volumes of joint ventures consistent with recognized equity in earnings of affiliates.

The following tables present reconciliations of EBITDA and adjusted EBITDA to net income (loss), and EBITDA and distributable cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Deferred revenue impacts*^†

Deferred revenue impacts*†

Maintenance capital expenditures^†

Maintenance capital expenditures†

*Difference between cash receipts and revenue recognition.

^†Excludes Merey Sweeny capital reimbursements and turnaround impacts.

Deferred revenue impacts*^†

Deferred revenue impacts*†

Maintenance capital expenditures^†

Maintenance capital expenditures†

*Difference between cash receipts and revenue recognition.

^†Excludes Merey Sweeny capital reimbursements and turnaround impacts.

Statement of Income (Loss) Analysis

Operating revenues decreased ~~$35~~$15 million, or ~~12%~~6%, in the first quarter of ~~2020.~~2021. The decrease was primarily attributable to reduced volumes resulting from market demand and the ~~recognition~~effects of ~~deferred revenues in~~winter storms impacting the ~~first quarter of 2019 related to turnaround activity at Merey Sweeny LLC (Merey Sweeny),~~Central and Gulf Coast regions, partially offset by ~~higher volumes on wholly owned~~additional assets ~~during~~placed in operation, including additional storage capacity at the ~~three-month period of 2020.~~Clemens Caverns in mid-2020.


		Page
Part I – Financial Information		1

		~~Page~~
~~Part I – Financial Information~~	1

Item 1. Financial Statements	1
Consolidated Statement of Income (Loss)		1
Consolidated Statement of Comprehensive Income (Loss)		2
Consolidated Balance Sheet		3
Consolidated Statement of Cash Flows		4
Consolidated Statement of Changes in Equity		5
Notes to Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3. Quantitative and Qualitative Disclosures About Market Risk		33

Item 4. Controls and Procedures		33

Part II – Other Information		34

Item 1. Legal Proceedings		34

Item 1A. Risk Factors		34

Item 6. Exhibits		35

Signatures		36



	Millions of Dollars
	March 31 2020			December 31 2019
Assets
Cash and cash equivalents	$	92		286
Accounts receivable—related parties	91			101
Accounts receivable—third parties	4			4
Materials and supplies	13			13
Prepaid expenses and other current assets	14			10
Total current assets	214			414
Equity investments	3,136			2,961
Net properties, plants and equipment	3,410			3,349
Goodwill	185			185
Other assets	52			52
Total Assets	$	6,997		6,961

Liabilities
Accounts payable—related parties	$	24		19
Accounts payable—third parties	75			84
Accrued interest	46			42
Deferred revenues	19			16
Short-term debt	25			25
Accrued property and other taxes	12			10
Other current liabilities	3			3
Total current liabilities	204			199
Long-term debt	3,491			3,491
Obligation from equity interest transfer	356			343
Other liabilities	93			94
Total Liabilities	4,144			4,127

Equity
Preferred unitholders (2020 and 2019—13,819,791 units issued and outstanding)	747			746
Common unitholders—public (2020—58,580,009 units issued and outstanding; 2019—58,539,439 units issued and outstanding)	2,723			2,717
Common unitholder—Phillips 66 (2020 and 2019—169,760,137 units issued and outstanding)	(616		)	(628	)
Accumulated other comprehensive loss	(1		)	(1	)
Total Equity	2,853			2,834
Total Liabilities and Equity	$	6,997		6,961
See Notes to Consolidated Financial Statements.



	Millions of Dollars
	Three Months Ended March 31
	Preferred Unitholders Public			Common Unitholders Public		Common Unitholder Phillips 66		General Partner Phillips 66		Accum. Other Comprehensive Loss		Total

December 31, 2019	$	746		2,717		(628	)	—		(1	)	2,834
Issuance of common units	—			2		—		—		—		2
Net income	10			55		161		—		—		226
Quarterly cash distributions to unitholders ($0.875 per common unit)	(9		)	(51	)	(149	)	—		—		(209	)
March 31, 2020	$	747		2,723		(616	)	—		(1	)	2,853

December 31, 2018	$	746		2,485		592		(1,313	)	(1	)	2,509
Cumulative effect of accounting change	—			(1	)	—		—		—		(1	)
Issuance of common units	—			32		—		—		—		32
Net income	10			53		66		69		—		198
Quarterly cash distributions to unitholders and General Partner ($0.835 per common unit)	(9		)	(46	)	(58	)	(67	)	—		(180	)
Other contributions to Phillips 66	—			—		—		(4	)	—		(4	)
March 31, 2019	$	747		2,523		600		(1,315	)	(1	)	2,554



	Units
	Three Months Ended March 31
	Preferred Units Public	Common Units Public	Common Units Phillips 66	General Partner Units Phillips 66	Total Units

December 31, 2019	13,819,791	58,539,439	169,760,137	—	242,119,367
Units issued in public equity offerings	—	40,570	—	—	40,570
March 31, 2020	13,819,791	58,580,009	169,760,137	—	242,159,937

December 31, 2018	13,819,791	55,343,918	68,760,137	2,480,051	140,403,897
Units issued in public equity offerings	—	622,032	—	—	622,032
March 31, 2019	13,819,791	55,965,950	68,760,137	2,480,051	141,025,929



	Millions of Dollars

Remainder of 2020	$	527
2021	698
2022	685
2023	642
2024	521
Remaining years	1,386
Total future minimum lease payments from customers	$	4,459



			Millions of Dollars
	Percentage Ownership		March 31 2020		December 31 2019

Dakota Access, LLC and Energy Transfer Crude Oil Company, LLC (Bakken Pipeline)	25.00	%	$	595	592
Bayou Bridge Pipeline, LLC (Bayou Bridge)	40.00		296		294
DCP Sand Hills Pipeline, LLC (Sand Hills)	33.34		598		595
DCP Southern Hills Pipeline, LLC (Southern Hills)	33.34		218		215
Explorer Pipeline Company (Explorer)	21.94		102		105
Gray Oak Pipeline, LLC	65.00		799		759
Liberty Pipeline LLC (Liberty)	50.00		103		—
Paradigm Pipeline LLC (Paradigm)	50.00		143		143
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal)	70.00		67		70
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)	25.00		102		74
STACK Pipeline LLC (STACK)	50.00		113		114
Total equity investments			$	3,136	2,961



	Limited Partners’ Common Units		Limited Partners’ Preferred Units	Total
Three Months Ended March 31, 2020
Net income (millions):
Distributions declared	$	199	10	209
Distributions less than (more than) net income	17		—	17
Net income (basic)	216		10	226
Dilutive effect of preferred units	10
Net income (diluted)	$	226

Weighted-average units outstanding—basic	228,312,261
Dilutive effect of preferred units	13,819,791
Weighted-average units outstanding—diluted	242,132,052

Net income per limited partner unit—basic (dollars)	$	0.95
Net income per limited partner unit—diluted (dollars)	0.93



	Limited Partners’ Common Units		General Partner (including IDRs)	Limited Partners’ Preferred Units	Total
Three Months Ended March 31, 2019
Net income (millions):
Distributions declared	$	105	69	10	184
Distributions less than net income	14		—	—	14
Net income (basic)	119		69	10	198
Dilutive effect of preferred units*	8
Net income (diluted)	$	127

Weighted-average units outstanding—basic	124,257,933
Dilutive effect of preferred units*	13,819,791
Weighted-average units outstanding—diluted	138,077,724

Net income per limited partner unit—basic (dollars)	$	0.96
Net income per limited partner unit—diluted (dollars)	0.92
*The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.


~~Item 2.~~	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit Number	Filing Date	SEC File No.

1.1	Equity Distribution Agreement, dated as of February 25, 2020, by and among the Partnership and the General Partner, on the one hand, and RBC Capital Markets, LLC, BofA Securities, Inc., Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., BTIG, LLC, CIBC World Markets Corp., Citigroup Global Markets Inc., Commerz Markets LLC, Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Jefferies LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC, and Wells Fargo Securities, LLC.	8-K	1.1	2/25/2020	001-36011

	As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the partnership has not filed with this Quarterly Report on Form 10- Q certain instruments defining the rights of holders of long-term debt of the partnership and its subsidiaries because the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the partnership and its subsidiaries on a consolidated basis. The partnership agrees to furnish a copy of such agreements to the Commission upon request.

10.1*	Eighth Amendment to the Omnibus Agreement, dated as of March 1, 2020, by and among Phillips 66 Partners LP, Phillips 66 Partners GP LLC, Phillips 66 Company, Phillips 66 Pipeline LLC, Phillips 66 Partners Holdings LLC, and Phillips 66 Carrier LLC.

31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32*	Certifications pursuant to 18 U.S.C. Section 1350.

101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*	Inline XBRL Taxonomy Extension Schema Document.

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*	Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


			PHILLIPS 66 PARTNERS LP

			~~PHILLIPS 66 PARTNERS LP~~

	By: Phillips 66 Partners GP LLC, its general partner

			/s/ Chukwuemeka A. Oyolu
			Chukwuemeka A. Oyolu Vice President and Controller (Chief Accounting and Duly Authorized Officer)