ubs global oil and gas conference · 2017. 6. 23. · prices, and refining and petrochemical...

UBS Global Oil and Gas Conference

Greg Maxwell Executive Vice President and Chief Financial Officer May 21, 2013 Austin, TX

Cautionary Statement 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 crude oil, NGL, and natural gas prices, and refining 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 crude oil, natural gas, NGL, 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. A registration statement relating to Phillips 66 Partners LP securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities of Phillips 66 Partners LP in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

2

Delivering on Commitments

3

7 %

14 %

22 %

-1

1

3

5

7

2010 2011 2012

Adjusted Earnings and ROCE($B)

Midstream

Chemicals

Marketing & Specialties

Refining

Corporate

ROCE

Enhanced operating excellence Achieved solid financial results Captured opportunities Created shareholder value

0.4 0.4

1.8

0.3 0.4

1.1

0.3 0.4

1.2

0.2 0.3

0.9

Total Recordable Rates

Phillips 66 CPChem DCP

At Phillips 66 we take the time to work safely, every

job, every day.

Operating Excellence - Safety

Incidents per 200,000 Hours Worked

20

09

20

10

20

11

20

12

Industry Average

4

See appendix for footnotes.

Operating Excellence

Growth

Returns

Distributions

High-performing organization

Phillips 66 Strategy

5

Providing energy, improving lives

Midstream: Build on existing base

■ Grow Transportation and NGL Operations

■ Pursue organic growth through DCP

■ Filed S-1 for PSXP

Chemicals: Grow capacity and earnings

■ Pursue organic growth through CPChem

■ Execute mega-projects

Marketing & Specialties: Selective growth

■ Grow lubricants and European marketing

■ Ensure refinery pull-through

Refining: Enhance returns

■ Process advantaged crudes

■ Increase export capability

■ Optimize portfolio

Segment Strategy

6 Restricted Confidential – Business Information

http://downstream.conocophillips.net/refining/woodRiver/Technical+Services/Project+Engineering/

0.0

0.5

1.0

1.5

2.0

2010 2011 2012 2013Budget

Midstream - Large Platform for Growth

7

Capital Program ($B)

NGL Operations

DCP Midstream

Transportation

NGL Operations

Transportation

DCP Midstream

Fractionator

Storage

Gas Plant

Pipeline


DCP Midstream - Growth

8

2013 2014 2015+

Gathering and processing in execution $2 B

Gathering and processing expansions $2 B

Pipelines and logistics $2 B

Executing ~$6 B in growth projects from 2013 – 2015

G&P Plant

New Plant

Expansion/Restart

DCP Legacy

New/Growth

Transportation and NGL Operations - Adding Capacity

9

• Increasing access to advantaged crudes

• 2,000 additional crude rail cars

• Jones Act ships

• Bakken crude to Bayway via Global Partners

• Mississippian Lime to Ponca via pipeline

• Canadian/Bakken to West Coast via Targa

• Export facilities

• Sand Hills/Southern Hills NGL pipelines

• Gulf Coast fractionator

10

Chemicals - Focused Portfolio

S-Chem (SCP and JCP)

Saudi Polymers

Q-Chem and Q-Chem II

Chemicals - Growth

11

Middle East (Blb/y)

36 Manufacturing Sites Worldwide

2 Research Facilities

Sales into over 100 countries

United States (Blb/y)

0.8 7.7 8.0

2000 2012 2017

27.3 24.5 31.5

2000 2012 2017

CPChem Equity Production Capacity

Chemicals - Growth

12

0.0

0.2

0.4

0.6

2010 2011 2012 2013E


2012 2013 2014 2015 2016 2017+

USGC Petrochemicals 1,500 kMTA

NAO Expansion ~130 kMTA

SPCo Petrochemicals (35% ownership) 1,200 kMTA

Capital program denotes equity share of CPChem capital. See appendix for additional footnotes.

Sweeny Frac Expansion 22 MBD

1-Hexene 250 kMTA

Refining - Diversified Portfolio

13

MI

Germany

HU WG

Ireland

United Kingdom

ME

Malaysia

Western / Pacific 440 MBD Central Region 475 MBD Gulf Coast 733 MBD Atlantic Basin / Europe 588 MBD

LA

SF

FD

BI

BG PC

BW

AL SW

United States

WR

LC

Refining - Enhancing Returns

14

■ Extensive U.S. refining portfolio

■ Infrastructure and commercial capabilities

■ Shifting to 100% advantaged crude

U.S. Refining Crudes (MBD)

Current 3+ Years

LLS/ANS

Brent

Heavy

Canadian

WTI/WTS


■ Peer-leading distillate yield

East

Gulf

West

320

400

Current 3+ Years


15

Export Capacity (MBD)

■ Capability to export 30% of coastal production

■ Product placement to maximize margins

39.5% 39.9% 40.2%

40.8%

35.8%

37.1% 37.4%

2010 2011 2012 2013E

Distillate Yield (Percentage of processed inputs)

Industry


$500

Adv Crude Yields &Exports

Costs 3+ Years


16

Anticipate mid-cycle Refining ROCE improves to 15%

Constant Margin Net Income Expected Improvement

($MM)

0.0

1.0

2.0

2010 2011 2012 2013E

Refining Refining Logistics WRB


Capital program includes equity share of WRB capital. See appendix for additional footnotes.

Marketing & Specialties

17

>20% 10 - 20% 5 - 10%

Branded Market Share

0.1 - 5% 0%

0.0

0.1

0.2

2010 2011 2012 2013E


Lubricants PSPI - Flow Improvers Power Generation Refinery Locations

Manufacturing Locations:

Disciplined capital allocation

Growing shareholder distributions

Enhanced financial flexibility

Financial Strategy

18

Capital Allocation

19

Sustaining capital

Increasing distributions

Growth capital

Financial flexibility

2013E cash from operations based on First Call consensus 5/3/2013. See appendix for additional footnotes.

6.0

1.0

0.8

0.8

1.0

Cash fromOperations

Uses

Share Repurchases

Debt Repayment

Growth Capital

Dividends

Sustaining Capital

2013E Sources and Uses of Cash ($B)

Regular dividends

Secure

Growing

Competitive

Share repurchase

Discretionary

Tax efficient

$1.2 B capital returned to shareholders since spin

Shareholder Distributions

20

Phillips 66 Debut

Q3 dividend of $0.20/share

Q3 share repurchases of $111 MM



Jun Jul Aug Sep Oct Nov Dec May Jan Feb Mar



A Promising Future

21

Operating excellence

Growth

Returns

Distributions

High-performing organization

Appendix

Institutional Investors Contact: Rosy C. Zuklic [email protected] Manager, Investor Relations 832-765-2297

Footnotes Slide 4 Injury statistics do not include major projects. Industry Averages are from: Phillips 66 –American Fuels and Petrochemical Manufacturers (AFPM) refining data, CPChem – American Chemistry Council (ACC), DCP – Gas Processors Association (GPA

Slide 7

DCP Midstream capital program includes equity share of DCP Midstream capital.

2012 Transportation includes acquisition costs for one-third interest of Sand Hills and Southern Hills Pipelines totaling approx $0.5 B. This amount was also included in DCP Midstream's capital spending, primarily in 2012

Slide 12

Project capacities are gross capacity.

SPCo Petrochemicals and USGC Petrochemicals projects include ethylene capacity only. Capacity shown does not include derivatives production.

Chemicals capital program denotes equity share of CPChem capital.

Slide 14

U.S. advantaged crude percentages are on an equity basis. Light and medium Canadian crude are in the WTI/WTS category.

Slide 15

Industry yield data from EIA. Distillate yield calculations exclude Trainer and Wilhelmshaven refineries.

Slide 16

Refining capital program includes equity share of WRB capital as well as non-cash capital leases.

Slide 17

Marketing & Specialties capital program excludes $23 MM of capital expenditures related to Downstream Technology and includes non-cash capital leases.

Slide 19

2013E cash from operations based on First Call consensus 5/3/2013.

Dividends based on current dividend of $1.25/share.

23

24 References to earnings refer to net income attributable to Phillips 66.

Non-GAAP Reconciliations

Reconciliation of Earnings to Adjusted Earnings

Millions of Dollars

1Q13 1Q12 4Q12 2012 2011 2010 2009

Consolidated

Earnings (loss) 1,407$ 636$ 708$ 4,124$ 4,775$ 735$ 476$

Adjustments:

Net (gain) loss on asset sales - - - (106) (1,545) (116) (32)

Gain on share issuance by equity affiliate (27) - - - - - (88)

Impairments - 42 580 979 318 1,118 116

Pending claims and settlements (16) 19 (23) 34 - (35) 25

Canceled projects - - - - 28 29 -

Severance accruals - - - - 15 28 -

Premium on early debt retirement - - - 89 - - -

Repositioning costs - - 12 55 - - -

Repositioning tax impacts - 67 - 177 - - -

Exit of business line 34 - - - - - -

Tax law impacts (17) - - - - - -

Hurricane-related costs - - 35 35 - - -

Adjusted earnings 1,381$ 764$ 1,312$ 5,387$ 3,591$ 1,759$ 497$

25 References to earnings refer to net income attributable to Phillips 66.



Millions of Dollars

1Q13 1Q12 4Q12 2012 2011 2010 2009

Midstream

Earnings (loss) 110$ 108$ 92$ 53$ 2,149$ 386$ 386$

Adjustments:

Net (gain) loss on asset sales - - - - (1,618) - (19)

Impairments - - - 330 4 - 79

Gain on share issuance by equity affiliate (27) - - - - - (88)

Pending claims and settlements - - (23) (23) - - -


Adjusted earnings 83$ 108$ 71$ 362$ 535$ 386$ 358$

Chemicals

Earnings (loss) 282$ 217$ 246$ 823$ 716$ 486$ 228$

Adjustments:

Impairments - - - 27 - - -

Premium on early debt retirement - - - 89 - - -

Repositioning tax impacts - - - 41 - - -


26


References to earnings refer to net income attributable to Phillips 66.


Millions of Dollars

1Q13 1Q12 4Q12 2012 2011 2010 2009

Refining

Earnings (loss) 922$ 393$ 363$ 3,217$ 1,529$ (545)$ (536)$

Adjustments:

Net (gain) loss on asset sales - - - (104) 96 - -

Impairments - 42 564 606 314 1,110 -

Pending claims and settlements - 19 - 19 - - 25

Canceled projects - - - - 28 29 -

Severance accruals - - - - 15 28 -

Repositioning tax impacts - - - 73 - - -



Adjusted earnings 909$ 454$ 960$ 3,844$ 1,982$ 622$ (511)$

Marketing and Specialties

Earnings (loss) 188$ (12)$ 127$ 465$ 573$ 567$ 538$

Adjustments:

Net (gain) loss on asset sales - - - (2) (23) (116) (13)

Impairments - - - - - 8 37

Pending claims and settlements (16) - - 38 - (35) -

Repositioning tax impacts - 67 - 63 - - -

Exit of business line 34 - - - - - -



Corporate and Other

Earnings (loss) (95)$ (70)$ (120)$ (434)$ (192)$ (159)$ (140)$

Adjustments:

Impairments - - 16 16 - - -

Repositioning costs - - 12 55 - - -

Adjusted earnings (95)$ (70)$ (92)$ (363)$ (192)$ (159)$ (140)$

Non-GAAP Reconciliations 2009 2010 2011 2012 2013 YTD

Phillips 66 - ROCE

Numerator ($MM)

Net Income 479$ 740$ 4,780$ 4,131$ 1,410$

After-tax interest expense 1 1 11 160 46

GAAP ROCE earnings 480 741 4,791 4,291 1,456

Special Items 21 1,024 (1,184) 1,263 (26)

Adjusted ROCE earnings 501$ 1,765$ 3,607$ 5,554$ 1,430$

Denominator ($MM)

GAAP average capital employed* 26,417$ 26,906$ 25,064$ 25,732$ 28,065$

Annualized Adjusted ROCE 2% 7% 14% 22% 20%

Annualized GAAP ROCE 2% 3% 19% 17% 21%

2010 2011 2012 2013 YTD

Midstream - ROCE

Numerator ($MM)

Net Income 391$ 2,154$ 60$ 113$

After-tax interest expense - - - -

GAAP ROCE earnings 391 2,154 60 113

Special Items - (1,614) 309 (27)

Adjusted ROCE earnings 391$ 540$ 369$ 86$

Denominator ($MM)

GAAP average capital employed* 3,289$ 3,163$ 3,030$ 3,106$

Annualized Adjusted ROCE 12% 17% 12% 11%

Annualized GAAP ROCE 12% 68% 2% 15%

2010 2011 2012 2013 YTD

Chemicals - ROCE

Numerator ($MM)

Net Income 486$ 716$ 823$ 282$


GAAP ROCE earnings 486 716 823 282

Special Items - - 157 -


Denominator ($MM)




* Total equity plus total debt 27


28 * Total equity plus total debt

2010 2011 2012 2013 YTD

Refining - ROCE

Numerator ($MM)

Net Income (545)$ 1,529$ 3,217$ 922$


GAAP ROCE earnings (545) 1,529 3,217 922

Special Items 1,167 453 627 (13)

Adjusted ROCE earnings 622$ 1,982$ 3,844$ 909$

Denominator ($MM)



Annualized GAAP ROCE -3% 10% 22% 26%

2010 2011 2012 2013 YTD

Marketing & Specialties - ROCE

Numerator ($MM)

Net Income 567$ 573$ 465$ 188$


GAAP ROCE earnings 567 573 465 188

Special Items (143) (23) 99 14


Denominator ($MM)




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