Phillips 66 Announces 2020 Capital Program

Commitment to Disciplined Capital Allocation

HOUSTON–(BUSINESS WIRE)–Phillips 66 (NYSE: PSX), a diversified energy manufacturing and logistics company, announces its 2020 capital program. The Phillips 66 capital budget is $3.3 billion, net of $0.5 billion expected cash capital contributions from joint venture partners (“adjusted capital”). The adjusted capital budget includes $0.9 billion for Phillips 66 Partners.

The 2020 capital program supports our strategy to grow high-value businesses, improve returns, and ensure safe, reliable and environmentally responsible operations,” said Greg Garland, chairman and CEO of Phillips 66. “We are investing in attractive growth and return projects that further build out and enhance our integrated system, and funding $1.2 billion of sustaining capital for operating excellence projects. The capital program is aligned with our disciplined approach to capital allocation that is underpinned with strong shareholder distributions. Our long-term objective is to reinvest 60% of cash flow back into the business and return 40% to shareholders through dividends and share buybacks.”

The Midstream budget, excluding Phillips 66 Partners, primarily reflects funding for the Liberty and Red Oak crude oil pipelines and 450,000 barrels per day of additional fractionation capacity at the Sweeny Hub.

The Phillips 66 Partners budget includes investments in the Gray Oak Pipeline, the C2G Pipeline, the South Texas Gateway Terminal and the Bakken Pipeline, as well as sustaining capital.

The Refining capital budget includes $0.6 billion for reliability, safety and environmental projects. In addition, Refining capital will fund fluid catalytic cracking (FCC) unit upgrades at the Ponca City and Sweeny refineries, renewable diesel projects and other high-return, quick-payout projects to enhance margins.

The Marketing and Specialties budget primarily reflects the development and improvement of our international retail sites.

The Corporate and Other capital budget will primarily fund information technology projects, including an investment in a new enterprise resource planning system.

Phillips 66’s proportionate share of capital spending by joint ventures DCP Midstream, LLC (DCP Midstream), Chevron Phillips Chemical Company LLC (CPChem) and WRB Refining LP (WRB) is expected to be $1.2 billion. Capital spending by these three major joint ventures is expected to be self-funded.

DCP Midstream’s expected capital spend includes funding for Fracs 2 and 3 at the Phillips 66 Sweeny Hub. CPChem’s growth capital will fund continuing development of world-scale petrochemicals projects in the U.S. Gulf Coast and Qatar that would add ethylene and derivative capacity, as well as debottlenecking opportunities on existing units. WRB’s expected capital spend will be directed to sustaining projects and distillate yield enhancement.

 

 

Millions of Dollars

 

 

Sustaining

 

Growth

 

Capital

Capital

Capital

Program

Adjusted Capital Program

 

 

 

 

 

 

Midstream1

 

 

 

 

 

 

Phillips 662

 

$ 167

 

887

 

1,054

Phillips 66 Partners3

 

133

 

734

 

867

 

 

300

 

1,621

 

1,921

Chemicals

 

 

 

Refining4

 

600

 

450

 

1,050

Marketing and Specialties

 

82

 

79

 

161

Corporate and Other

 

204

 

 

204

Phillips 66 Consolidated5

 

1,186

 

2,150

 

3,336

 

 

 

 

 

 

 

DCP Midstream

 

50

 

300

 

350

CPChem

 

250

 

406

 

656

WRB

 

109

 

106

 

215

Selected Equity Affiliates

 

409

 

812

 

1,221

 

 

 

 

 

 

 

Total Adjusted Capital Program

 

$ 1,595

 

2,962

 

4,557

1) – Total consolidated Midstream capital spending inclusive of cash funded by joint venture partners is expected to be $2.4 billion in 2020.

2) – Excludes $374 million of growth capital expected to be cash funded by DCP Midstream for Fracs 2 and 3 at the Phillips 66 Sweeny Hub. Also excludes adjusted capital budget associated with Phillips 66 Partners.

3) – Excludes $95 million of growth capital expected to be cash funded by Gray Oak joint venture partners.

4) – Includes non-cash capitalized leases of $15 million in Refining.

5) – Total consolidated capital spending inclusive of cash funded by joint venture partners is expected to be $3.8 billion in 2020.

About Phillips 66

Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Phillips 66 Partners, the company’s master limited partnership, is integral to the portfolio. Headquartered in Houston, the company has 14,500 employees committed to safety and operating excellence. Phillips 66 had $59 billion of assets as of Sept. 30, 2019. For more information, visit http://www.phillips66.com or follow us on Twitter @Phillips66Co.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release 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,” “continues,” “intends,” “will,” “would,” “objectives,” “goals,” “projects,” “efforts,” “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 news release 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, and natural gas prices, and petrochemical and refining 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; the impact of adverse market conditions or other similar risks to those identified herein affecting PSXP, as well as the ability of PSXP to successfully execute its growth plans; 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.

Use of Non-GAAP Financial Information—This news release uses the terms “adjusted capital budget” and “adjusted capital program.” These are non-GAAP financial measures that are derived by reducing the company’s budgeted capital spending by that portion expected to be cash funded by joint venture partners, thereby demonstrating the amount of capital spending attributable to Phillips 66. The disaggregation of capital spending between sustaining and growth is not a distinction recognized under generally accepted accounting principles in the United States. The company provides such disaggregated information to demonstrate management’s return expectations with respect to capital spending.

Contacts

Jeff Dietert (investors)

832-765-2297

jeff.dietert@p66.com

Brent Shaw (investors)

832-765-2297

brent.d.shaw@p66.com

Dennis Nuss (media)

855-841-2368

dennis.h.nuss@p66.com

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