I think for balance you want to own pieces of both. I sold a few shares of the refinery (about 20%) but that was before the decision to create the MLP where PSX is the General Partner. My concern was the refinery business can be very cyclical w/ large fluctuations in earnings due to changes in the "crack" spreads. For the last 18 months these spreads have been large and growing and as a result, the refinery side of the business has been very profitable.
PSX also owns the pipelines that bring product to their refineries. These assets produce a predictable steady revenue stream which is not subject to commodity price swings. Also, it is this business that can sustain a nice dividend for shareholders. PSX as the operator and GP receives a slightly higher percentage of this revenue stream. Therefore, one always wants to own shares in the GP and/or parent organization. You get the higher payout. However, if you own just a piece of the MLP, you only have exposure to those assets in the MLP (ie not the refinery).
So, I will see exactly how they structure the MLP and will set my final allocation: (a) new COP shares, (b) PSX shares and (c) MLP shares (if specific just to the pipeline assets and "only" those revenue streams).
For me, its having pieces of all the revenue streams that generate sustainable increasing dividends. The new COP may deliver a better "future" growth component but they already stated that their current dividend payout may be fixed for the next five years. PSX will be composed of assets from (1) their refinery and (2) from their pipeline and could see a larger swing in their EPS due to changes in future crack spread pricing. Finally, shares in the MLP pipeline may provide a steady income stream and could provide a good addition to the group.
For now, I own shares in the "new" COP and PSX. Future adds maybe in the new MLP and/or COP if I can get it 10%-15% lower in price.
There was another integrated oil ( can not remember now) that discussed the possibility of spinning off their refinery business. If that company sells down, it may be a candidate to buy too. FWIW, I also like XOM and CVX but at lower prices. Here you get all the pieces in one bundled price.
IMO, every dividend portfolio needs either the bundled integrated Oil company or pieces of the unbundled company. Recently I have bought many more of the MLP pieces as I like the stability of the income generated from the pipeline and gathering systems. My largest holdings in the portfolio(s) are still CVX & COP + PSX.
EKS |
