psx q3 2016 earnings slides final

PHILLIPS 66 THIRD QUARTER CONFERENCE CALL October 28, 2016

This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and

Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Words and

phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “intends,” “objectives,” “projects,”

“strategies” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a

statement is not forward-looking. Forward-looking statements relating to Phillips 66’s operations (including joint venture operations) are based on

management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this

presentation was prepared. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that

are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking

statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include

fluctuations in NGL, crude oil, petroleum products and natural gas prices, and refining, marketing and petrochemical margins; unexpected changes in

costs for constructing, modifying or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; lack of, or

disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas and refined products; potential liability from litigation or for

remedial actions, including removal and reclamation obligations, under environmental regulations; limited access to capital or significantly higher cost

of capital related to illiquidity or uncertainty in the domestic or international financial markets; and other economic, business, competitive and/or

regulatory factors affecting Phillips 66’s businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 is

under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new

information, future events or otherwise.

This presentation includes non-GAAP financial measures. You can find the reconciliations to comparable GAAP financial measures at the end of the

presentation materials or in the “Investors” section of our website.

CAUTIONARY STATEMENT

2

3

EXECUTING THE STRATEGY

4

OVERVIEW 3Q 2016

Adjusted Earnings $556 MM

Adjusted EPS $1.05

Operating cash flow $883 MM

Capital expenditures and investments $661 MM

Shareholder distributions 1 $508 MM

(1) Shareholder distributions include dividends and share repurchases

Net-debt-to-capital ratio 21%

Annualized adjusted YTD ROCE 7%

PSXP equity offering proceeds $299 MM

499 556

36 0

(18)

38 1

2Q 2016

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

3Q 2016

Adjusted

Earnings

3Q 2016 Adjusted Earnings

$MM

75 (110) 134 190 267

ADJUSTED EARNINGS 3Q 2016

5

39

75

18

(2)

20

2Q 2016

Adjusted

Earnings

Transportation NGL DCP

Midstream

3Q 2016

Adjusted

Earnings

MIDSTREAM 3Q 2016

63 3 9


6

$MM Transportation volumes impacted by

scheduled refinery downtime

NGL improved seasonal trading and

storage

DCP Midstream benefited from higher

natural gas prices and self-help

initiatives

18% increase in PSXP distributions to

Phillips 66

6

190 190

(5)

6

(1)

2Q 2016

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 3Q 2016

Adjusted

Earnings

CHEMICALS 3Q 2016

165 31 (6)


7

$MM Improved ethylene chain cash margin

and benzene margins

Increased unplanned downtime

91% O&P capacity utilization

7

152 134

87

(30)(18)

(57)

2Q 2016

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf Coast Central

Corridor

West Coast 3Q 2016

Adjusted

Earnings

$MM

REFINING 3Q 2016

8

5 142 (13) 0


97% crude utilization

$117 MM pre-tax turnaround costs

84% clean product yield

$7.23/BBL realized margin

12.96

7.23

(2.26)

(2.94)

1.27

(1.80)

Market

3:2:1

Configuration Secondary

Products

Feedstock Other Realized

Margin

WORLDWIDE REFINING $/BBL

REFINING MARGINS – MARKET VS. REALIZED 3Q 2016

9

Avg Market Crude: $45.68/BBL 56% Market Capture

229 267

29 9

2Q 2016

Adjusted

Earnings

Marketing

& Other

Specialties 3Q 2016

Adjusted

Earnings

MARKETING AND SPECIALTIES 3Q 2016

228 39


10

Strong global Marketing margins

Continued strong gasoline demand

Improved Base Oil margins and

volumes

$MM

(111) (110)

2

(1)

2Q 2016

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

3Q 2016

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 3Q 2016

11

3.1

2.3

1.0

1.8

0.5

(2.0)

(0.3)(1.8)

December 31,

2015Cash

Balance*

CFO

(excludingworking

capital)

Working

Capital

PSXP Equity

Proceeds

Capital

Expenditures& Investments

Shareholder

Distributions

Other September 30,

2016Cash

Balance*

$B

CASH FLOW YTD 2016

12 * Includes cash and cash equivalents

13

OUTLOOK 4Q 2016

Global Olefins & Polyolefins utilization Mid-80%

Refining crude utilization Low-90%

Effective income tax rate Mid-30%

Corporate & Other costs (after-tax) $130 MM - $140 MM

Refining turnaround expenses (pre-tax) $170 MM - $200 MM

PHILLIPS 66 THIRD QUARTER 2016 CONFERENCE CALL

Questions and Answers

PHILLIPS 66 THIRD QUARTER 2016 CONFERENCE CALL

Appendix

ESTIMATED SENSITIVITIES 2016

16 Sensitivities shown above are independent and only valid within a limited price range

Midstream - DCP (net to Phillips 66)

10¢/Gal Increase in NGL price 25

10¢/MMBtu Increase in Natural Gas price 2

$1/BBL Increase in WTI price 1

Chemicals - CPChem (net to Phillips 66)

1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 35

Worldwide Refining

$1/BBL Increase in Gasoline Margin 230

$1/BBL Increase in Distillate Margin 200

$1/BBL Widening LLS / Maya Differential (LLS less Maya) 45

$1/BBL Widening WTI / WCS Differential (WTI less WCS) 40

$1/BBL Widening WTI / WTS Differential (WTI less WTS) 20

$1/BBL Widening LLS / Medium Sour Differential (LLS less Medium Sour) 15

$1/BBL Widening ANS / WCS Differential (ANS less WCS) 10

10¢/MMBtu Increase in Natural Gas price (10)

Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators:

Annual Net Income $MM

22.0 23.9 23.6 24.1 24.3

21.6 23.1 22.8 22.9 22.9

8.6 8.9 8.8 8.9 8.9 8.6 7.8 7.7 7.7 7.7

5.2 3.1

1.7 2.2 2.3

5.2 3.0

1.7 2.2 2.3

28%27% 27% 27% 27%

28%

25% 25% 25% 25%

13%

20%

23%

22% 21%

14%

17%

21%

19% 19%

2014 2015 1Q

2016

2Q

2016

3Q

2016

2014 2015 1Q

2016

2Q

2016

3Q

2016

Equity $B Debt $B Cash & Cash Equivalents $B Debt-to-Capital Net-Debt-to-Capital

CAPITAL STRUCTURE 2014 – 2016

17

Consolidated PSX Excluding PSXP

13.11

5.04

(2.48)

(1.64)

(1.42)

(2.53)

Market

3:2:1


Products


Margin

ATLANTIC BASIN/EUROPE $/BBL


18

Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH

Brent: $45.85/BBL 100% Crude Capacity Utilization 38% Market Capture

10.45

5.47

(2.20)

(3.50)

2.71

(1.99)

Market

3:2:1


Products


Margin

GULF COAST $/BBL


19

Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm

LLS: $46.53/BBL 94% Crude Capacity Utilization 52% Market Capture

14.57

11.18

(1.96)

(3.46)

2.91

(0.88)

Market

3:2:1


Products


Margin

CENTRAL CORRIDOR $/BBL


20

Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3

WTI: $44.88/BBL 99% Crude Capacity Utilization 77% Market Capture

15.66

9.07

(2.03)

(3.28)

0.49

(1.77)

Market

3:2:1


Products


Margin

WEST COAST $/BBL


21

Market 3:2:1 – ANS Spot / Los Angeles CARBOB / Los Angeles No. 2 CARB

ANS: $44.78/BBL 96% Crude Capacity Utilization 58% Market Capture

1,647

556

(16)(82)

(918)(77)

2

3Q 2015

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

3Q 2016

Adjusted

Earnings


$MM

ADJUSTED EARNINGS 3Q 2016 VS. 3Q 2015

22

75 (110) 134 190 267

91 75

27

(14)

(29)

3Q 2015

Adjusted

Earnings

Transportation NGL DCP

Midstream

3Q 2016

Adjusted

Earnings

$MM

MIDSTREAM 3Q 2016 VS. 3Q 2015

23

63 3 9


272

190

(96)

14 0

3Q 2015

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 3Q 2016

Adjusted

Earnings

$MM

CHEMICALS 3Q 2016 VS. 3Q 2015

24

165 (6) 31


1,052

134

(188)

(298)

(230)

(202)

3Q 2015

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf

Coast

Central

Corridor

West Coast 3Q 2016

Adjusted

Earnings

$MM

REFINING 3Q 2016 VS. 3Q 2015

25

5 142 (13) 0


344

267

(63)(14)

3Q 2015

Adjusted

Earnings

Marketing

& Other

Specialties 3Q 2016

Adjusted

Earnings

$MM

MARKETING AND SPECIALTIES 3Q 2016 VS. 3Q 2015

26

228 39


(112) (110)

(7)

9

3Q 2015

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

3Q 2016

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 3Q 2016 VS. 3Q 2015

27

28

NON-GAAP RECONCILIATIONS

2016

Sep YTD 3Q 2Q Sep YTD 3Q

Phillips 66

Net Income (Loss) Attributable to Phillips 66 1,392$ 511$ 496$ 3,577$ 1,578$

Pre-tax Adjustments:

Asset dispositions - - - (280) (30)

Pension settlement expense - - - 75 75

Impairments by equity affiliates 95 89 - 218 24

Certain tax impacts - - - (5) -

Pending claims and settlements (117) (72) - 30 30

Recognition of deferred logistics commitments 30 - 30 - -

Tax impact of adjustments * 15 28 (27) (132) (30)

Adjusted Net Income (Loss) Attributable to Phillips 66 1,415$ 556$ 499$ 3,483$ 1,647$

Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) ** 2.61$ 0.96$ 0.93$ 6.52$ 2.90$

Adjusted Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) ** 2.66$ 1.05$ 0.94$ 6.34$ 3.02$

Millions of Dollars

Except as Indicated

2015

* We generally tax effect taxable U.S.-based special items using a combined federal and state statutory income tax rate of approximately 38 percent. Taxable special items attributable to

foreign locations likewise use a local statutory income tax rate. Nontaxable events reflect zero income tax. These events include, but are not limited to, most goodwill impairments,

transactions legislatively exempt from income tax, transactions related to entities for which we have made an assertion that the undistributed earnings are permanently reinvested, or

transactions occurring in jurisdictions with a valuation allowance.

** Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the

GAAP diluted earnings per share calculation.

29



Midstream

Net Income (Loss) Attributable to Phillips 66 179$ 75$ 39$ 90$ 101$



Impairments by equity affiliates 6 - - 198 4


Pending claims and settlements (45) - - - -

Tax impact of adjustments 14 - - (61) 7

Adjusted Net Income (Loss) Attributable to Phillips 66 154$ 75$ 39$ 206$ 91$

Chemicals



Impairments by equity affiliates 89 89 - 20 20

Tax impact of adjustments - - - - -


Millions of Dollars

Except as Indicated

2016 2015

30



Refining

Net Income (Loss) Attributable to Phillips 66 412$ 177$ 149$ 2,145$ 1,003$


Asset dispositions - - - (8) -




Tax impact of adjustments - 27 (27) (65) (30)

Adjusted Net Income (Loss) Attributable to Phillips 66 372$ 134$ 152$ 2,151$ 1,052$

Marketing & Specialties





Tax impact of adjustments - - - (4) (4)


Corporate and Other

Net Income (Loss) Attributable to Phillips 66 (347)$ (109)$ (111)$ (364)$ (116)$


Pending claims and settlements (2) (2) - - -


Certain tax impacts - - - (5) -

Tax impact of adjustments 1 1 - (2) (3)

Adjusted Net Income (Loss) Attributable to Phillips 66 (348)$ (110)$ (111)$ (364)$ (112)$

Millions of Dollars

Except as Indicated

2016 2015

31



Midstream - Transportation





Midstream - NGL

Net Income (Loss) Attributable to Phillips 66 (25)$ 3$ (17)$ 48$ 26$




Adjusted Net Income (Loss) Attributable to Phillips 66 (25)$ 3$ (17)$ 54$ 32$

Midstream - DCP Midstream

Net Income (Loss) Attributable to Phillips 66 4$ 9$ (9)$ (165)$ (2)$


Impairments by equity affiliates 6 - - 198 4

Pending claims and settlements (45) - - - -


Tax impact of adjustments 14 - - (58) 10

Adjusted Net Income (Loss) Attributable to Phillips 66 (21)$ 9$ (9)$ (55)$ (18)$

Millions of Dollars

Except as Indicated

2016 2015

32



Refining - Atlantic Basin / Europe




Pending claims and settlements - - - 8 8


Tax impact of adjustments (27) - (27) (46) (8)


Refining - Gulf Coast





Tax impact of adjustments 27 27 - (10) (10)

Adjusted Net Income (Loss) Attributable to Phillips 66 60$ (13)$ 5$ 439$ 285$

Millions of Dollars

Except as Indicated

2016 2015

33



Refining - Central Corridor







Refining - West Coast

Net Income (Loss) Attributable to Phillips 66 51$ -$ 57$ 568$ 194$






Adjusted Net Income (Loss) Attributable to Phillips 66 51$ -$ 57$ 571$ 202$

Millions of Dollars

Except as Indicated

2016 2015

34



Marketing & Specialties - Marketing & Other







Marketing & Specialties - Specialties





Millions of Dollars

Except as Indicated

20152016

35

* Total equity plus total debt


2016 September YTD Phillips 66

Numerator ($MM)

Net Income 1,450$

After-tax interest expense 162$

GAAP ROCE earnings 1,612$

Special Items 23$

Adjusted ROCE earnings 1,635$

Denominator ($MM)

GAAP average capital employed * 32,997$

2016 Annualized Adjusted ROCE 7%

2016 Annualized GAAP ROCE 7%

36


Phillips 66

Consolidated

Phillips 66

Partners *

Adjusted

Phillips 66

Total Debt 8,858$ 1,141$ 7,717$

Total Equity 24,311$ 1,373$ 22,938$

Debt-to-Capital Ratio 27% 25%

Total Cash 2,337$ 19$ 2,318$

Net-Debt-to-Capital Ratio 21% 19%

Millions of Dollars

2016

3Q

* PSXP's third-party debt and Phillips 66's noncontrolling interest attributable to PSXP

37


Growth Sustaining Total Growth Sustaining Total

Capital expenditures and investments

Midstream 269$ 46$ 315$ 920$ 125$ 1,045$

Refining 83$ 206$ 289$ 252$ 575$ 827$

Marketing & Specialties 12$ 14$ 26$ 34$ 29$ 63$

Corporate and Other 1$ 30$ 31$ 3$ 93$ 96$

Total 365$ 296$ 661$ 1,209$ 822$ 2,031$

Millions of Dollars

2016

September YTD

Millions of Dollars

2016

3Q

38


Millions of Dollars

2016

3Q

Effective Tax Rates

Income before taxes 813$

Special items 17$

Adjusted income before taxes 830$

Provision for taxes 277$

Special items (28)$

Adjusted provision for taxes 249$

GAAP effective tax rate 34%

Adjusted effective tax rate 30%

psx q3 2016 earnings slides final

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