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Phillips 66 Partners LP  (NYSE:PSXP)
Q1 2019 Earnings Call
April 30, 2019, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the First Quarter 2019 Phillips 66 Partners Earnings Conference Call. My name is Julie, and I will 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 recorded.

I will now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

Jeff Dietert -- Vice President, Investor Relations

Good afternoon. And welcome to the Phillips 66 Partners first quarter earnings conference call. Participants on today's call will include Kevin Mitchell, Vice President and CFO; Tim Roberts, Vice President, Operations; and Rosy Zuklic, Vice President and Chief Operating Officer. The presentation materials we will 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.

Slide two contains our Safe Harbor statement. It is a reminder that we will be making forward-looking statements during the presentation and the Q&A session. Actual results may differ materially from what we present today. Factors that could cause actual results to differ are included here, as well as in our SEC filings.

With that, I will turn the call over to Kevin.

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Thank you, Jeff, and good afternoon, everyone. In the first quarter, we operated well and delivered solid financial results during a period that was impacted by significant refinery turnarounds. We also advanced our major growth projects, including construction of the Gray Oak Pipeline. During the quarter, the Sand Hills Pipeline achieved record volumes of 494,000 barrels per day following its fourth quarter expansion. And the second phase of the Bayou Bridge Pipeline was completed. Our Board of Directors recently approved a first quarter distribution of $0.845 per common unit, an increase of $0.01 from the previous quarter and 18% higher than the first quarter 2018 cash distribution. We have increased the distribution every quarter since the IPO in July 2013. Looking forward, we remain committed to delivering a competitive and growing distribution, while maintaining strong coverage and leverage ratios. Our portfolio of organic projects and financial strength position us well for future growth.

Moving on to slide four to discuss the financial results. Partners reported first quarter adjusted EBITDA of $281 million, compared with $309 million in the prior quarter. The decrease reflects lower volumes from our wholly owned assets due to the impact of turnarounds at refineries operated by Phillips 66. Earnings from our equity affiliates declined as a result of lower volumes on the Bakken and Explorer Pipelines, partially offset by higher Sand Hills Pipeline volumes. First quarter distributable cash flow was $226 million, a decrease of $12 million from the prior quarter, primarily due to lower earnings from our wholly owned assets, partially offset by lower maintenance (Technical Difficulty).

Slide five highlights our financial flexibility and liquidity. We ended the first quarter with $2 million of cash and $15 million of outstanding borrowings under our $750 million revolving credit facility. Our debt-to-EBITDA ratio on a revolver covenant basis was 2.8 times. Our distribution coverage ratio is 1.3 times. Long-term, we are targeting leverage of 3.5 times and distribution coverage of over 1.2 times.

The Partnership continues to advance its major projects. In the first quarter, our growth capital spend was $195 million, including investment in the Gray Oak Pipeline project, as well as the new isomerization unit at the Phillips 66 Lake Charles Refinery and the Clemens Caverns expansion. The Partnership's strong financial position enables us to fund our capital program with operating cash flow and debt capacity.

I'll now turn it over to Rosy to provide an update on our growth projects.

Rosy Zuklic -- Vice President & Chief Operating Officer

Thanks, Kevin, and hello, everyone. Slide six lists the projects we have ongoing that will drive EBITDA growth for the next two years. During the quarter, we advanced our growth projects. I'll just take a moment to comment on a couple of the larger projects. We made progress in the Gray Oak Pipeline. This 900,000-barrel per day pipeline will transport crude oil from the Permian and the Eagle Ford to Texas Gulf Coast destination. Construction continues on the 850 miles of pipeline and the 17 facilities. We have purchased all the pipes, most of which has been delivered. 98% of the right of away has been acquired and 17 -- and all 17 foundations have been poured.

We are experiencing cost pressures from higher fuel costs, labor rates and right of away. The total cost of the project is now expected to be approximately $2.7 billion. We have all Army Corps of Engineer permits and the pipeline remains on track to start up in the fourth quarter of this year. Gray Oak will connect to multiple terminals in Corpus Christi, including the South Texas Gateway Terminal in which PSXP has a 25% ownership.

The Marine Terminal will have two deepwater docks with initial storage capacity of about 7 million barrels and up to 800,000 barrels per day of throughput capacity. The project has expanded since sanctioned and is supported by additional customer commitments. The facility is expected to start up by mid 2020. The remaining projects listed are on schedule to complete on time.

This concludes our prepared remarks. We will now open the lines for questions.

Questions and Answers:

Operator

Thank you. We will now begin the question-and- answer session. (Operator Instructions) Spiro Dounis from Credit Suisse. Please go ahead. Your line is open.

Spiro Michael Dounis -- Credit Suisse AG -- Analyst

Hey. Good afternoon, everyone. Maybe just starting off on Gray Oak, if you could, just looking at the cost increase. I guess, is there any impact or any flow through on -- so you said the tariffs you are going be charging or is this sort of eating at some of the project returns at this point?

Rosy Zuklic -- Vice President & Chief Operating Officer

Yeah. No. It's going to be eating into the project returns, but what I would say is that, what we have on the slide there with the project being 6 times to 8 times multiple, that's true for all the projects, because if you think about this project when it was originally sanctioned, it was sanctioned at 385,000 barrels per day. Obviously, the pipeline now at 900,000 barrels per day commitments of 800,000 barrels per day, obviously, it was first lending toward the lower end of the multiple, with the increase is now going to be lending toward the higher end of the multiple. But still a great project. We still are very excited about it and still expect to have great returns, and obviously, once the pipeline is up and running, we will, I'm sure find other opportunities around it.

Spiro Michael Dounis -- Credit Suisse AG -- Analyst

Okay. And that kind of answers my second question, which is, I guess, on an expansion that would presumably be at a very accretive multiples over time, there's room for you to work that multiple down again?

Rosy Zuklic -- Vice President & Chief Operating Officer

That's right.

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Yeah. Spiro, this is Kevin. Just to add...

Spiro Michael Dounis -- Credit Suisse AG -- Analyst

Okay.

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Just to add a little further on that. The returns that we show -- the EBIT -- those build multiples are for the projects on a stand-alone basis. As we've talked about we're going into project financing on this project also, which will further enhance the returns on a levered basis. So still looks very attractive to us.

Spiro Michael Dounis -- Credit Suisse AG -- Analyst

Okay. That's -- it was a good point. The second one, a question just with respect to some of the Midstream assets still up at PSX. Thinking specifically about Sweeny Frac expansion and the LPG export terminal, is there a logical pathway for those assets, making their way up to PSXP. And I fully understand that you guys have sort of shifted away from dropdowns, but it seems like there was some interesting comments on the PSX call around LPG export rates being around $0.10 right now, and I think, that could may be spark some long-term contracting, which makes this asset, maybe little more attractive from an MLP and Midstream standpoint?

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Yeah. So, looking at that from a PSX standpoint, clearly, the LPG export terminal and the fracs once complete, so fracs two and three, those assets would lend themselves to the MLP model, the MLP structure. So, while as you rightly point out, we've sort of transitioned away from dropdowns and a lot more organic focus that still doesn't preclude us from entering into dropdown transactions to get those assets finance the MLP and there are no plans to do that anytime soon, but it -- the potential is certainly out there.

Spiro Michael Dounis -- Credit Suisse AG -- Analyst

Got it. Appreciate the color. Thanks everyone.

Operator

Elvira Scotto from RBC Capital Markets. Please go ahead. Your line is open.

Elvira Scotto -- RBC Capital Markets. -- Analyst

Oh! Hi, everyone. So just going back to the Gray Oak cost overruns. So, is that going to be financed -- that incremental would that just be financed off the revolver or is that part of project financing or how do we think about that financing?

Rosy Zuklic -- Vice President & Chief Operating Officer

Well, maybe let me talk about capital in total and maybe we can hit it this way. So, kind of -- if I think about back in October, the PSXP Board approved the $1.2 billion capital program. And so, that is now -- because of the Gray Oak financing -- or excuse me, the Gray Oak overage largely, it's trending more to be about 10% higher. So somewhere in the $1.3 billion, $1.32 billion. The $1.2 billion, the original budget was -- post project financing was around $600 million. Now it's looking to be between $700 million and $750 million. So, that kind of gives you an idea of how that's looking like kind of before project financing and after project financing, and how the Gray Oak overage is impacting both numbers.

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

So, to the extent that the net of financing capital budget for PSXP is increasing, which is what Rosy has just described then in effect that becomes -- that will be funded by essentially debt at the PSXP level, all other things being equal.

Rosy Zuklic -- Vice President & Chief Operating Officer

Right.

Elvira Scotto -- RBC Capital Markets. -- Analyst

Thank you. That's very helpful. And is there any change in outlook to your maintenance CapEx spend?

Rosy Zuklic -- Vice President & Chief Operating Officer

No. Not at this point. No, still around $80 million, $78 million, I believe is the number, yeah.

Elvira Scotto -- RBC Capital Markets. -- Analyst

Okay. Perfect. And then just on the Gray Oak Pipeline, can you just help us understand. So of the commitments, what you've got contracted on there. I mean, are you -- do those contracts all come on line day one? And then sort of as a follow-up to that, how do you expect the actual volumes to ramp on Grey Oak?

Rosy Zuklic -- Vice President & Chief Operating Officer

So from a volumes perspective, the way we're thinking about is the fourth quarter is when the pipeline is going to be available. And so the thought is as any major pipeline it's going to take some time for and also as when shippers are available effectively when there -- the production is available for them to bring in. It's going to take a little bit of time. And so I think that's kind of our involvement with obviously with the Bakken Pipeline. It took a couple of months for that pipeline to fully be -- to fully come to full -- it was -- having the pipeline full. So it will take at least a couple of months. So sometime in the first quarter is where we're really thinking that the pipeline will have the full capacity.

Elvira Scotto -- RBC Capital Markets. -- Analyst

Okay. Great. And then just in terms of because I know the pipeline can go to Corpus Christi and then also into Sweeney. How much capacity can actually move into Sweeney?

Rosy Zuklic -- Vice President & Chief Operating Officer

We haven't really given the split out. Tim, do you want to comment on that?

Timothy D. Roberts -- Director and Vice President, Operations

Yeah. I think it's -- what we can tell you on that line and we haven't disclosed that not for any other reason, with the exception that it is a new build pipeline. But we do expect that meet commitments for PSX. PSX, it is undertaking some commitment on the pipeline. We're not the anchor shipper, but obviously this helps optimize our Sweeney asset, having those barrels available. But it is a less -- the line is sized lower than where we would be going if we were going straight to Corpus.

Elvira Scotto -- RBC Capital Markets. -- Analyst

Got it. Okay. Great. Thank you very much.

Operator

Justin Jenkins from Raymond James. Please go ahead. Your line is open.

Justin Scott Jenkins -- Raymond James & Associates, Inc. -- Analyst

Hi. Thanks. Good afternoon, everybody. I guess I want to start on Bayou Bridge and maybe see if you could offer any comments in terms of how that ramps going here for the first month of operations. And then second question is, does that give you maybe a bigger leg up with the ACE Pipeline development process and how that maybe unfolds?

Rosy Zuklic -- Vice President & Chief Operating Officer

Yes. So, everything is going well with Bayou Bridge. As you know, as expected, the TSA started April 1, so we expect to see earnings starting a month later and then just the cash distributions a month after that. So everything is expected. From an ACE perspective, you've hit it on the head. I mean it'd be nice to have it all kind of as these kind of think about the way everything is planned out, you've got the Bakken Pipeline going down to Beaumont and then Bayou then take crude all the way to St. James. And then ACE would then complete it all the way to the Alliance or the PSX Alliance Refinery and so that would be a nice tie end to not only Lake Charles but the Alliance Refinery. So it's part of the plan.

Justin Scott Jenkins -- Raymond James & Associates, Inc. -- Analyst

Got it. Thanks, Rosy. And I guess second question, maybe on the operating cost side of things -- increase pretty big quarter-over-quarter, looks like a similar offset on the revenue line. But any color on maybe the choppiness there, Kevin, in terms of how the sequential costs played out?

Rosy Zuklic -- Vice President & Chief Operating Officer

Sure, Well, what actually would happened there, Justin, if you allow me, the MSOP turnaround is what you're seeing there. There is about $50 million to $55 million associated with the MSOP turnaround and so what you're seeing in the expense line is the expense for the turnaround and the revenue is the reimbursement. So when we drop that asset in, there was a pre-arrangement for PSX to reimbursement PSXP for turnaround expense. And so the same phenomenon has actually happened in back in the first quarter of 2018, it's just that the number was much more less, it was about $20 million. But that's really what you're seeing there.

Justin Scott Jenkins -- Raymond James & Associates, Inc. -- Analyst

Got it. Thanks, Rosy.

Operator

Theresa Chen from Barclays. Please go ahead. Your line is open.

Theresa Chen -- Barclays -- Analyst

My questions. First, in terms of the potential expansion of the Bakken JV pipeline above the 570 current capacity. Can you remind us what is the potential hydraulic capacity of this system if you do add additional pumping and storage capabilities, but still taking into account the 24-inch segments of ed (ph) cup?

Rosy Zuklic -- Vice President & Chief Operating Officer

So the pipeline today is at 570,000 barrels per day. As far as getting above the 570, I think, from what I have seen, the pipeline has the ability to go up to 800,000 barrels. But that's not necessarily what we're expanding to with this further expansion. We're currently just -- the partnership -- the partners are looking into the -- what further expansion to do, but we're not talking about actually doing any sort of looping. We're really just talking about it in pumping and storage.

Theresa Chen -- Barclays -- Analyst

And the 800,000 barrels per day, would that include looping or would that still be within the 24-inch?

Rosy Zuklic -- Vice President & Chief Operating Officer

No. That -- I believe that would just be adding just pumping, I don't believe that would be any sort of looping.

Theresa Chen -- Barclays -- Analyst

Got it. And then I wanted to touch on the recent open season to expand Bayou Bridge with various origins, including Bakken, PRB, Cushing, Permian and such. What are you seeing in terms of interest from shippers so far and given these origins points, I'm guessing this implies potential connectivity with your other projects under development, be it Liberty and Red Oak at the parent or the Gray Oak lube at PSXP. Can you provide an update on how these projects are progressing?

Timothy D. Roberts -- Director and Vice President, Operations

Yeah. Theresa, this Tim Roberts. And from a PSX view, because of the projects we are working on as far as the open seasons with Red Oak and Liberty, I'll probably -- I will weigh in on that. Look from Bayou Bridge, where it's located at and the connectivity it's got from Beaumont and you've got the Bakken coming in and there are other pipelines are going to be coming into that particular area to get barrels either to the Beaumont, Nederland area or get barrels to St. James, or get barrels down to lube, or get barrels potentially to the refining system in Southeast Louisiana. So we see some of these pipelines are going to be coming in and we're a logical alternative to getting down to Houston or other destinations. So we're just at this point working with our partners as far as a joint tariff opportunities through a binding open season to see what the interest level is. It's no more than that. We think we're creating more optionality into the Louisiana side and we'll see what the interest is from people getting barrels in different basins down to that region.

Theresa Chen -- Barclays -- Analyst

Got it. And on the revenue reimbursement related to maintenance from the dropdowns. Is that like a forever type of thing or do you pour like a certain amount of years and then it stops?

Rosy Zuklic -- Vice President & Chief Operating Officer

So we have a contractual agreement with MSPL for 15 years. And so we have -- we'll obviously have to renegotiate this once the contract is done. But this was just something that we did at the time of the drop.

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Specific to that asset.

Rosy Zuklic -- Vice President & Chief Operating Officer

Correct.

Theresa Chen -- Barclays -- Analyst

What about the other assets?

Rosy Zuklic -- Vice President & Chief Operating Officer

No. We do not.

Theresa Chen -- Barclays -- Analyst

Got it. Thanks you very much.

Operator

Jeremy Tonet from JP Morgan. Please go ahead. Your line is open.

Jeremy Bryan Tonet -- JP Morgan Chase & Co -- Analyst

Hi. Good afternoon. Just want to -- hope that you could clarify a little bit for me, when you talk about the Liberty Pipeline in the DAPL expansion. Do these projects kind of overlap in any sense or could you kind of clarify, I guess, what the objectives are with the two expansions?

Timothy D. Roberts -- Director and Vice President, Operations

Yeah. I think they're really serving two different purposes. This is Tim Roberts again, by the way, sorry, from the PSX view and I'll talk specifically to Liberty. Liberty really is trying to access some different basins on the west side of the Bakken coupled with Powder River, DJ Wattenberg. So Liberty's really hitting a different part that Bakken doesn't really fully serve currently. So that's really the difference between the two pipelines. We still think there's room for continued expansion on the eastern side of the Bakken and then, obviously, on the western side as we head out toward, again, Powder River and those other basins.

Jeremy Bryan Tonet -- JP Morgan Chase & Co -- Analyst

That's helpful. Thanks. And just wanted to go to Gray Oak real quick. Just a clarifying question, with regards to the economics being closer to an 8 times bill multiple at this point. Our understanding is that, PSXP received a promote in the whole kind of formation of the partners coming in. And so when you state that level of economics is that before or after considering that promote payment?

Rosy Zuklic -- Vice President & Chief Operating Officer

It is after.

Jeremy Bryan Tonet -- JP Morgan Chase & Co -- Analyst

Got it. That's it from me. Thank you.

Operator

Dennis Coleman from Bank of America Merrill Lynch. Please go ahead. Your line is open.

Dennis Paul Coleman -- Bank of America Merrill Lynch -- Analyst

I guess just one last question on Gray Oak. Any guidance you can -- I mean, how much has been spent? Where do you stand percentage wise with the project? I guess really what I'm trying to get at is what the spend level is from here?

Rosy Zuklic -- Vice President & Chief Operating Officer

So maybe I'll try to tackle this question kind of holistically. So the project is about 50% done and this is all inclusive engineering and construction, obviously, in and of itself is going to be at a different stage than engineering. But as I think about the projects being 50% done from a spend perspective, it's largely there maybe a little bit more weighted toward the back half with some of it falling in 2020. So the vast majority is going to be remaining in 2019. Obviously, because you're going to have a little bit of spending in 2020, and maybe you're going to see that in the first quarter of 2020.

Dennis Paul Coleman -- Bank of America Merrill Lynch -- Analyst

Okay. Thanks for that. All my other questions have been asked.

Operator

Barrett Blaschke from MUFG Securities. Please go ahead. Your line is open.

Barrett Auten Blaschke -- MUFG Securities Americas Inc. -- Analyst

Hey, guys. Most of my have been addressed, but I did want to ask. Rosy, you said before kind of what the three drivers were for cost increases on Gray Oak. Can you give us a little breakdown? Is it mostly coming from materials costs, labor or right of away, just if you are kind of quantify it a bit?

Rosy Zuklic -- Vice President & Chief Operating Officer

No. I can't. But additionally one of the things that I'd also want to touch on and Greg spoke to it in the PSX calls, is that we also have facilities. One of the things that Gray Oak offers that some of the other pipelines don't offer is optionality and that optionality has been built into our facilities. And so the facilities also are adding -- have added also some costs. But I'm not going to be able to give you a split between those things.

Barrett Auten Blaschke -- MUFG Securities Americas Inc. -- Analyst

Okay. Thanks.

Operator

Michael Blum from Wells Fargo. Please go ahead. Your line is open.

Michael Blum -- Wells Fargo -- Analyst

Thanks. Thanks for taking my questions. Just a couple more on the Bakken Pipeline. So just to clarify. Do you intend to get to the 800,000 of capacity by late 2020? And -- that was the first part. And then the second part is, what capital would be involved with that? And then, I guess, the third part of that is, is this an FID project, because I don't -- it's not listed on the slide? Thanks.

Rosy Zuklic -- Vice President & Chief Operating Officer

I guess, I'm sure I understand by late 2020, you mean by or...

Timothy D. Roberts -- Director and Vice President, Operations

Mike, I think, energy transfer is really the right person to ask that as the operator of the pipeline.

Rosy Zuklic -- Vice President & Chief Operating Officer

Oh! I'm sorry. It wasn't Grey Oaks. I'm sorry.

Timothy D. Roberts -- Director and Vice President, Operations

Yeah. Bakken.

Rosy Zuklic -- Vice President & Chief Operating Officer

Bakken.

Michael Blum -- Wells Fargo -- Analyst

Okay. I'm just referencing in your press release where it says the partner are progressing plans to further increase the capacity by late 2020. That's what I'm referencing.

Rosy Zuklic -- Vice President & Chief Operating Officer

Right. No. That's right. That's right. No. The partnership -- the partners are talking about, obviously, increasing the capacity of the pipeline. And so, at this point, Michael, we're talking through the details of exactly what we're going to do. So we don't have much more to give you at this time. And as far as that timing, we're going to work through the permitting and all that stuff. Hopefully, we do it before 2020, but we don't really have more color to give you.

Michael Blum -- Wells Fargo -- Analyst

Okay. Thank you very much.

Operator

Ryan Levine from Citi. Please go ahead. Your line is open.

Ryan Michael Levine -- Citigroup Inc -- Analyst

Good afternoon. I just wanted to clarify one point on Bayou Bridge, given the open season that's outstanding. Is there any potential for the existing contracts to be altered in connection with that open season or would everything be additive?

Rosy Zuklic -- Vice President & Chief Operating Officer

It would be additive. Yeah. The contracts that we have in place are long-term contracts, five to 10 years. And so really -- we're really looking for additive.

Ryan Michael Levine -- Citigroup Inc -- Analyst

Okay. That's all for me. Thank you.

Operator

Chris Sighinolfi from Jefferies. Please go ahead. Your line is open.

Chris Sighinolfi -- Jefferies -- Analyst

Hey. Good afternoon. Thanks for taking my question. Kevin, if I could just start, I want to follow-up with on Spiro's dropdown question, but asking in the context of Greg's comment from the PSX, called out the potential to eliminate PSXP IDRs. He had noted desire to have such a transaction be accretive to the LP unitholder. And I'm just curious if that means slightly to entail a combination of dropdown and IDR elimination at one time. And then also how we might think about accretion relative to -- you've noted a competitive and growing distribution, but one where a numerical growth rate hasn't been provided. Any help with that would be really helpful?

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Yeah. So certainly doing a dropdown transaction and doing an IDR elimination at the same time is a -- it's a formula you have seen out there, that's been done by several others. And we would certainly give that consideration. But I would say, at this point, while we -- and so Greg laid out our thinking around IDRs in terms of acknowledgment that this is something we need to get to and we will get to and we want to make sure we do this in a way that works for both the MLP and for the general partner.

We don't have any specific guidance to give on either when it's going to happen exactly other than sooner than we would have originally anticipated, or exactly what that structure is going to look like. So you've highlighted that due to the dropdown along with that is something that we could consider and would consider, but that's not to say that we've -- we don't have any firm plans to do that as such.

And then from a distribution standpoint, we have steered away from giving specific growth guidance. We -- you see the portfolio of organic projects that we have and the approximate timing of when those projects complete, and the estimates of the EBITDA generation that will come from that and so you can see that we have a portfolio that will allow us to continue to grow the distribution. But we're not going to get into -- get caught up in a sort of specified target or objective around exactly what that growth needs to be. We want it to be competitive. But we also are mindful of the need to manage the big picture in terms of the balance sheets, leverage metrics, coverage metrics, the ability to continue to fund growth, given that this is predominantly pretty much mostly a self-funding model now and so we just try to balance all of those factors.

Chris Sighinolfi -- Jefferies -- Analyst

Okay. No. That is very helpful. I appreciate that color. I did have two follow-ups, I think, probably, for Rosy. It was helpful the reminder on the MSLP reimbursement as it pertains to the income statement. I also noticed that as it pertains to the maintenance capital, you had a footnote there. Looks like there's a modest differential between maintenance capital and then what's recorded in the DCF and it seems like that's attributable to the same thing. I just wanted to make sure I understood that correctly?

Rosy Zuklic -- Vice President & Chief Operating Officer

I believe so. I am sorry. Yeah.

Chris Sighinolfi -- Jefferies -- Analyst

It looked like you had 15 versus 9, and I just didn't know if that was related to the same 15-year agreement on turnarounds, which we saw last year as well.

Rosy Zuklic -- Vice President & Chief Operating Officer

Yes. I believe that is the case. I will probably -- I will look into it, because I don't know that I've confirmed that for you. But I believe that is the case.

Chris Sighinolfi -- Jefferies -- Analyst

Okay. And then the final question for you on this, Rosy, obviously, predominantly the capital programs being debt financed. I did see a little bit noted in the PSX release in terms of what PSXP had raised, I think, it was $32 million in the period. I was just curious if there was any formal expectation for an equity component to sort of merry alongside the debt being raised?

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Yeah. This is Kevin. Certainly, not from the standpoint of doing an actual equity offering. We have the ATM program in place and we utilize that, which provides a little bit of funding, but that's really minor in the context of the overall capital program.

Chris Sighinolfi -- Jefferies -- Analyst

Okay. So we shouldn't expect what we saw in the first quarter to be sort of a run rate or anything of that nature?

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

So, first quarter was $32 million or so, which is...

Chris Sighinolfi -- Jefferies -- Analyst

Yeah.

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

...that's all ATM. So, I mean, it's not unreasonable to assume they'll be something like that will continue. But what -- you're not going to see as a several $100 million equity offering...

Chris Sighinolfi -- Jefferies -- Analyst

Understood. Understood. Okay. Thanks a lot guys. Appreciate the time.

Operator

Theresa Chen from Barclays. Please go ahead. Your line is open.

Theresa Chen -- Barclays -- Analyst

Thank you for letting me back in the queue. I just had a quick follow-up related to one of Elvira's questions on the Gray Oak ramp. So, Rosy, completely understand that it's going to take a couple of months to get to full capacity, so sometime within Q1 of 2020. But for the commitments, will they also ramp around the same timeframe when we get to 800 by Q1 2020 as well or will the actual commitments and volumes, is it expected to ramp at a slower pace versus capacity?

Rosy Zuklic -- Vice President & Chief Operating Officer

No. It'd be consistent with capacity.

Theresa Chen -- Barclays -- Analyst

Great. Thank you very much.

Operator

We have no further questions at this time. I will now turn the call back over to Jeff.

Jeff Dietert -- Vice President, Investor Relations

Thank you for your interest in Phillips 66 this afternoon and Phillips 66 Partners. If you have any questions, please call Brent or me. Thank you.

Operator

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect.

Duration: 32 minutes

Call participants:

Jeff Dietert -- Vice President, Investor Relations

Kevin J. Mitchell -- Director, Vice President and Chief Financial Officer

Rosy Zuklic -- Vice President & Chief Operating Officer

Spiro Michael Dounis -- Credit Suisse AG -- Analyst

Elvira Scotto -- RBC Capital Markets. -- Analyst

Timothy D. Roberts -- Director and Vice President, Operations

Justin Scott Jenkins -- Raymond James & Associates, Inc. -- Analyst

Theresa Chen -- Barclays -- Analyst

Jeremy Bryan Tonet -- JP Morgan Chase & Co -- Analyst

Dennis Paul Coleman -- Bank of America Merrill Lynch -- Analyst

Barrett Auten Blaschke -- MUFG Securities Americas Inc. -- Analyst

Michael Blum -- Wells Fargo -- Analyst

Ryan Michael Levine -- Citigroup Inc -- Analyst

Chris Sighinolfi -- Jefferies -- Analyst

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