PHILLIPS 66 FORM 8-K. (Current report filing) Filed 01/30/13 for the Period Ending 01/30/13

Transcription

1 PHILLIPS 66 FORM 8-K (Current report filing) Filed 01/30/13 for the Period Ending 01/30/13 Address 3010 BRIARPARK DRIVE HOUSTON, TX Telephone CIK Symbol PSX SIC Code Petroleum Refining Industry Oil & Gas - Integrated Sector Energy Fiscal Year 12/31 Copyright 2014, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): January 30, 2013 Phillips 66 (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of (Commission (I.R.S. Employer incorporation) File Number) Identification No.) 3010 Briarpark Drive, Houston, Texas (Address of principal executive offices and zip code) Registrant s telephone number, including area code: ( 281) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR ) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR e-4(c))

3 Item 2.02 Results of Operations and Financial Condition. On January 30, 2013, Phillips 66 issued a press release announcing the company's financial and operating results for the quarter ended December 31, A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference. Additional financial and operating information about the quarter is furnished as Exhibit 99.2 hereto and incorporated herein by reference. The information in this report and the exhibits hereto shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended. Item 9.01 Financial Statements and Exhibits. (d) Exhibits 99.1 Press release issued by Phillips 66 on January 30, Supplemental financial information. 2

4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PHILLIPS 66 January 30, 2013 /s/ C. Doug Johnson C. Doug Johnson Vice President and Controller 3

5 EXHIBIT INDEX Exhibit No. Description 99.1 Press release issued by Phillips 66 on January 30, Supplemental financial information. 4

6 Exhibit 99.1 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million or $1.11 Per Share Adjusted earnings of $1.3 billion or $2.06 per share Fourth-Quarter Highlights Achieved 91 percent refining utilization Processed a 67 percent advantaged crude slate in the U.S. Generated operating cash flow of $1.3 billion; $1.7 billion excluding working capital Recorded a $564 million impairment charge related to Melaka Refinery investment Strengthened balance sheet with $1.0 billion debt reduction Returned more than $400 million of capital to shareholders through dividends and share repurchases Received board approval for a 25 percent increase in the annual dividend rate and a $1.0 billion expansion of the share repurchase program Announced intent to form a master limited partnership HOUSTON--(BUSINESS WIRE)--January 30, Phillips 66 (NYSE: PSX) announces fourth-quarter earnings of $708 million and adjusted earnings of $1.3 billion. This compares with earnings of $2.0 billion and adjusted earnings of $379 million during the fourth quarter of Strong realized refining and chemicals margins improved our earnings during the quarter, said Greg Garland, Phillips 66 chairman and chief executive officer. Our $1 billion debt reduction strengthens our financial flexibility and resulted in a 25 percent debt-to-capital ratio at the end of the year. We were pleased to return more than $400 million in capital to shareholders in the quarter while also funding new investments including the Sand Hills and Southern Hills pipeline projects. We also announced our intent to contribute a portion of our transportation assets to form a master limited partnership, which we expect will highlight the value of our logistics and infrastructure assets, and serve as an efficient vehicle for funding growth investments. The company s solid financial performance in 2012 was underpinned by safe, reliable and efficient operations. Our differentiated portfolio allowed us to capture a number of market opportunities across the value chain resulting in significant cash generation and shareholder value creation, Garland added. Refining and Marketing (R&M) R&M fourth-quarter earnings were $497 million, which included a $564 million impairment of the company s equity investment in the Melaka Refinery. Within R&M, Refining recorded earnings of $319 million, and Marketing, Specialties and Other generated $178 million. R&M adjusted earnings were $1,096 million, an increase of $927 million from the same period last year. Page 1 of 8

7 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million (Adjusted Earnings of $1.3 Billion) Refining s adjusted earnings were $916 million, significantly higher than a year ago, largely as a result of improved refining margins. The company benefitted from improved feedstock advantage with stronger Gulf Coast and Canadian crude differentials, as well as higher gasoline and distillate market spreads. During the quarter, 67 percent of the company s U.S. crude slate was considered advantaged, up from 57 percent in the fourth quarter of Phillips 66 processed 135,000 barrels per day of shale crude in the fourth quarter, representing a 97 percent increase over the same period last year. Clean product yield for the fourth quarter was 83 percent, with a distillate yield of 40 percent. Compared with the fourth quarter of 2011, export volumes increased by 5 percent to approximately 140,000 barrels per day as a result of stronger international markets. Phillips 66 s worldwide refining utilization was 91 percent for the fourth quarter, down from 94 percent a year ago. This decrease reflects significant turnaround activity in the Central Corridor and Western/Pacific regions, as well as adverse impacts from Hurricane Sandy, primarily at the Bayway Refinery. Pre-tax turnaround expenses were $84 million, excluding the company s share of WRB Refining s turnaround expense totaling $73 million. In addition, fourth-quarter expenses related to Hurricane Sandy were $56 million before-tax. Compared with the third quarter of 2012, worldwide market crack spreads decreased 33 percent. The impact of this decrease on Refining s earnings was mitigated by increased market capture in the fourth quarter due to the company s refinery configuration and improved clean product differentials. Refining s market capture increased to 95 percent from 79 percent in the third quarter of Marketing, Specialties and Other contributed adjusted earnings of $180 million during the fourth quarter, an increase of $38 million from the prior year. Compared to the same period last year, the company benefitted from improved margins, partially offset by lower volumes and higher environmental and legal costs. While international power production and U.S. marketing volumes were down in the fourth quarter, the company s lubricants and specialty products businesses grew volumes by 16 percent and 14 percent, respectively. Midstream The Midstream segment recorded earnings of $85 million for the fourth quarter of Midstream adjusted earnings were $62 million, compared with $113 million in the prior year. Fourth-quarter earnings related to the company s equity investment in DCP Midstream (DCP) were $38 million, $21 million lower than a year ago. The decrease was due to lower natural gas liquids (NGL) prices. This decline was partially offset by lower depreciation expense and improved production mix as DCP increased its NGL production in liquids-rich basins. Overall, NGL volumes remained flat. Adjusted earnings from Phillips 66 s other midstream operations were $24 million for the fourth quarter, compared with $54 million during the same period last year. The decrease was a result of higher taxes and less favorable inventory impacts. Chemicals Fourth-quarter Chemicals earnings were $246 million, an increase of $98 million from the same period last year, primarily attributable to improved margins. Externally marketed sales volumes increased to a total of 5.6 billion pounds in the fourth quarter. The majority of this improvement was in Olefins and Polyolefins (O&P), in which volumes were up 8 percent from the fourth quarter last year. Page 2 of 8

8 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million (Adjusted Earnings of $1.3 Billion) Global utilization for O&P was 90 percent during the quarter. Utilization rates were negatively impacted by downtime at Saudi Polymers Company. Excluding this impact, worldwide O&P utilization was near capacity during the quarter, enabling capture of strong olefins chain margins. Specialties, Aromatics and Styrenics benefitted from improved benzene margins driven by higher sales prices, partially offset by rising feedstock costs. Corporate and Other Corporate and Other costs were $120 million after-tax for the fourth quarter, including $47 million of net interest expense. Adjusted for special items, Corporate and Other costs were $92 million after-tax for the quarter. Financial Position, Liquidity and Return of Capital During the quarter, Phillips 66 generated $1.3 billion in cash from operations. Excluding working capital, operating cash flow was $1.7 billion. The company also funded $894 million in capital expenditures and investments, including $513 million for its investments in the Sand Hills and Southern Hills pipeline projects. In December, the company prepaid $1.0 billion of its amortizing three-year term loan and ended the year with $7.0 billion of debt and $3.5 billion of cash and cash equivalents. The company s debt-to-capital ratio was 25 percent, improved from 28 percent at the end of the third quarter. The net-debt-to-capital ratio was 14 percent at the end of the year. In the fourth quarter, Phillips 66 returned more than $400 million of capital to shareholders through $157 million in dividend payments and $245 million of share repurchases. In December, Phillips 66 s board of directors approved a 25 percent increase in the company s annual dividend rate, raising it to $1.25 per share for The board of directors also approved an additional $1.0 billion of share repurchases, increasing the total repurchase program to $2.0 billion. Full-year Financial Results Phillips 66 s full-year 2012 earnings were $4.1 billion or $6.48 per share. This compares with $4.8 billion or $7.52 per share for Fullyear adjusted earnings were $5.4 billion or $8.46 per share in 2012, compared with $3.6 billion or $5.66 per share in The company generated strong returns with a reported return on capital employed (ROCE) of 17 percent and an adjusted ROCE of 22 percent. During 2012, the company generated $4.3 billion in cash from operations. Excluding working capital, operating cash flow was $5.5 billion. Phillips 66 funded $1.7 billion in capital expenditures and investments. In addition, the company paid $282 million in dividends, and repurchased 7.6 million shares of common stock totaling $356 million. Strategic Initiatives Phillips 66 remains focused on value creation and growth in its Midstream and Chemicals segments. As announced in December, the company intends to form a master limited partnership. A registration statement is expected to be filed with the Securities and Exchange Commission in the second quarter of 2013 and, subject to final approval by Phillips 66 s board of directors, an initial public offering is anticipated during the second half of Page 3 of 8

9 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million (Adjusted Earnings of $1.3 Billion) DCP continues to execute its long-term growth plan. In December, the first phase of the Sand Hills pipeline, which extends from Eagle Ford to Mont Belvieu, was placed in service. The second phase of the project, with deliveries from the Permian Basin, is expected to be complete in the second quarter of Southern Hills is also on schedule with service from the midcontinent to Mont Belvieu anticipated by mid DCP expects to increase the initial projected capacity of Southern Hills from 150,000 barrels per day to 175,000 barrels per day. Chevron Phillips Chemical Company (CPChem) continues to advance several significant growth projects on the U.S. Gulf Coast, a region with access to advantaged petrochemicals feedstocks, low energy costs and established marketing networks to service customers worldwide. CPChem s Sweeny fractionation expansion is scheduled to be complete in 2013, and its 1-hexene project is expected to start up during the first half of Additionally, CPChem is evaluating an expansion of its normal alpha olefins capacity at the Cedar Bayou complex in Baytown, Texas, and expects to make a final investment decision in the third quarter of this year. Construction of the expansion would be targeted to commence in the first quarter of 2014, and the project would be completed in the fourth quarter of The final investment decision for CPChem s world-scale ethane cracker and related polyethylene units is expected later this year, with projected startup in Phillips 66 is enhancing Refining returns by increasing access to advantaged feedstocks, as well as increasing export capabilities at its coastal refineries. The company continues to increase the supply of advantaged crudes to its refineries, supported by investments in logistics infrastructure and third-party commitments. Phillips 66 expects to process more than 200,000 barrels per day of domestic shale crude in 2013, an increase from the 2012 average of 112,000 barrels per day. In January, Phillips 66 entered into a five-year transportation and logistics contract with Global Partners to move approximately 90 million barrels of Bakken crude to the Bayway Refinery. The agreement provides a reliable, long-term alternative to more expensive Brent-priced crudes. In addition, the first of two chartered Jones Act vessels was delivered in January, with the second expected to be delivered during the second quarter of Both vessels will transport Eagle Ford crude to the company s Gulf and East Coast refineries. The initial delivery of Phillips 66 s 2,000 railcars is expected to occur in early February. The railcars will be used to transport advantaged crude to the company s refineries on the East and West Coasts. Currently, Phillips 66 has the capability to export up to 285,000 barrels per day of refined products from its domestic refineries. In the first quarter of 2013, the company expects to complete a project at the Ferndale Refinery to increase export capacity by approximately 20,000 barrels per day. Through further investment at its facilities on the Gulf and West Coasts, Phillips 66 expects to increase U.S. export capability to 370,000 barrels per day by the end of Phillips 66 has a history of operating excellence, which includes personal and process safety, environmental performance, reliability and cost management, and the company is committed to continuously improving in these areas. In addition to extensive safety and environmental programs, the company has implemented an initiative called Optimize 66 to capture $200 million in before-tax savings, as well as additional value from operational process improvements and efficiencies, by the end of Later today, Phillips 66 Chairman and Chief Executive Officer Greg Garland, Executive Vice President and Chief Financial Officer Greg Maxwell and Executive Vice President, Commercial, Marketing, Transportation and Business Development, Tim Taylor will host a webcast at 11 a.m. EST to discuss the company s fourth-quarter performance and provide an update on strategic initiatives. To listen to the conference call and view related presentation materials, go to and click on Presentations and Conference Calls. For detailed supplemental information, go to Page 4 of 8

10 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million (Adjusted Earnings of $1.3 Billion) Earnings Millions of Dollars Fourth Quarter Twelve Months Refining and Marketing (R&M) Refining $ 319 $ 64 $ 3,158 $ 1,533 Marketing, Specialties and Other 178 1, ,315 Total R&M 497 1,801 3,729 3,848 Midstream Chemicals Corporate and Other (120) (51) (434) (192) Phillips 66 $ 708 $ 2,011 $ 4,124 $ 4,775 Adjusted Earnings Millions of Dollars Fourth Quarter Twelve Months Refining and Marketing (R&M) Refining $ 916 $ 27 $ 3,785 $ 1,975 Marketing, Specialties and Other Total R&M 1, ,484 2,664 Midstream Chemicals Corporate and Other (92) (51) (363) (192) Phillips 66 $ 1,312 $ 379 $ 5,387 $ 3,591 About Phillips 66 Headquartered in Houston, Phillips 66 is an advantaged downstream energy company with segment-leading Refining and Marketing (R&M), Midstream and Chemicals businesses. The company has 13,500 employees worldwide. Phillips 66 s R&M operations include 15 refineries with a net crude oil capacity of 2.2 million barrels per day, 10,000 owned or supplied branded marketing outlets, and 15,000 miles of pipeline systems. The Midstream segment includes Phillips 66 s 50 percent interest in DCP Midstream, LLC, one of the largest natural gas gatherers and processors in the United States, with 7.2 billion cubic feet per day of gross natural gas processing capacity. Phillips 66 s Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC, one of the world s top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. For more information, visit or follow us on Page 5 of 8

11 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million (Adjusted Earnings of $1.3 Billion) 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, 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 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 crude oil, NGL, and natural gas prices, refining and marketing margins and margins for our chemicals business; 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 for remedial actions, including removal and reclamation obligations, under environmental regulations; potential liability resulting from litigation; 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, including our Form 10 Registration Statement. 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. DISCLOSURES UNDER RULE 135 A registration statement relating to the common units of the MLP that would be sold in the offering referred to above is expected to be filed with the Securities and Exchange Commission, but has not been filed or become effective. This news release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities. This news release is being issued pursuant to, and in accordance with, Rule 135 under the Securities Act of Use of Non-GAAP Financial Information -- This press release includes the terms adjusted earnings, adjusted earnings per share, operating cash flow excluding working capital, and net-debt-to-capital ratio. These are non-gaap financial measures. Adjusted earnings, adjusted earnings per share, and operating cash flow excluding working capital are included to help facilitate comparisons of company operating performance across periods. The net-debt-to-capital ratio reduces debt and capital by the amount of cash and cash equivalents shown on the balance sheet for the reflected period, and is presented to reflect the net results if the company elected to utilize its cash balances to reduce debt in the future. References in the release to earnings refer to net income attributable to Phillips 66. Page 6 of 8

12 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million (Adjusted Earnings of $1.3 Billion) Reconciliation of Earnings to Adjusted Earnings Millions of Dollars Except as Indicated Q Year 4Q Year Consolidated Earnings (loss) $ 708 $ 4,124 $ 2,011 $ 4,775 Adjustments: Net (gain) loss on asset sales - (106) (1,660) (1,545) Impairments Canceled projects Severance accruals Pending claims and settlements (23) Premium on early debt retirement Repositioning costs Repositioning tax impacts Hurricane-related costs Adjusted earnings $ 1,312 $ 5,387 $ 379 $ 3,591 Earnings per share of common stock (dollars)* $ 1.11 $ 6.48 $ 3.17 $ 7.52 Adjusted earnings per share of common stock (dollars)* $ 2.06 $ 8.46 $ 0.60 $ 5.66 * Assumes the dilutive securities outstanding at April, were also outstanding for each of periods prior to the separation. R&M Earnings (loss) $ 497 $ 3,729 $ 1,801 $ 3,848 Adjustments: Net (gain) loss on asset sales - (106) (1,660) (1,545) Impairments Canceled projects Severance accruals Pending claims and settlements Repositioning tax impacts Hurricane-related costs Adjusted earnings $ 1,096 $ 4,484 $ 169 $ 2,664 Refining Earnings (loss) $ 319 $ 3,158 $ 64 $ 1,533 Adjustments: Net (gain) loss on asset sales - (104) (65) 81 Impairments Canceled projects Severance accruals Pending claims and settlements Repositioning tax impacts Hurricane-related costs Adjusted earnings $ 916 $ 3,785 $ 27 $ 1,975 Marketing, Specialties and Other Earnings (loss) $ 178 $ 571 $ 1,737 $ 2,315 Adjustments: Net (gain) loss on asset sales - (2) (1,595) (1,626) Impairments Pending claims and settlements Repositioning tax impacts Hurricane-related costs Adjusted earnings $ 180 $ 699 $ 142 $ 689 Midstream Earnings (loss) $ 85 $ 6 $ 113 $ 403 Adjustments:

13 Impairments Pending claims and settlements (23) (23) - - Adjusted earnings $ 62 $ 286 $ 113 $ 403 Chemicals Earnings (loss) $ 246 $ 823 $ 148 $ 716 Adjustments: Impairments - 27 $ - $ - Premium on early debt retirement Repositioning tax impacts Adjusted earnings $ 246 $ 980 $ 148 $ 716 Corporate and Other Earnings (loss) $ (120) $ (434) $ (51) $ (192) Adjustments: Impairments Repositioning costs Adjusted earnings $ (92) $ (363) $ (51) $ (192) Page 7 of 8

14 Phillips 66 Reports Fourth-Quarter Earnings of $708 Million (Adjusted Earnings of $1.3 Billion) Cash Flows from Operating Activities Millions of Dollars Q Year Net Cash Provided by Operating Activities, excluding working capital $ 1,703 $ 5,452 Working capital adjustments Decrease (increase) in accounts and notes receivable 534 (143) Decrease (increase) in inventories 2, Decrease (increase) in prepaid expenses and other current assets 218 (48) Increase (decrease) in accounts payable (2,897) (985) Increase (decrease) in taxes and other accruals (561) (35) Net Cash Provided by Operating Activities $ 1,305 $ 4,296 CONTACT: Phillips 66 Alissa Hicks (media), alissa.k.hicks@p66.com or Rosy Zuklic (investors), rosy.zuklic@p66.com Page 8 of 8

15 Exhibit 99.2 Phillips 66 Earnings Release Supplemental Data CONSOLIDATED INCOME STATEMENT Millions of Dollars st 2nd 3rd 4th YTD 1st 2nd 3rd 4th YTD Revenues and Other Income Sales and other operating revenues* 44,779 52,594 50,610 48, ,088 45,783 46,747 42,945 43, ,460 Equity in earnings of affiliates , ,134 Net gain (loss) on dispositions 3 43 (221) 1,813 1, (1) Other income Total Revenues and Other Income 45,473 53,430 51,263 50, ,614 46,520 47,827 43,907 44, ,922 Costs and Expenses Purchased crude oil and products 39,348 46,600 43,905 42, ,837 40,328 40,398 36,189 37, ,483 Operating expenses 1,042 1,018 1, ,072 1, ,072 4,032 Selling, general and administrative expenses , ,722 Depreciation and amortization Impairments (16) ,158 Taxes other than income taxes* 3,480 3,631 3,674 3,503 14,288 3,420 3,475 3,410 3,436 13,741 Accretion on discounted liabilities Interest and debt expense Foreign currency transaction (gains) losses (43) (31) (34) (15) 8 (15) (7) (29) Total Costs and Expenses 44,378 51,802 49,713 48, ,990 45,451 45,933 41,458 43, ,291 Income before income taxes 1,095 1,628 1,550 2,351 6,624 1,069 1,894 2,449 1,219 6,631 Provision for income taxes , ,500 Net Income 677 1,040 1,051 2,012 4, ,182 1, ,131 Less: net income attributable to noncontrolling interests Net Income Attributable to Phillips ,039 1,049 2,011 4, ,181 1, ,124 * Includes excise taxes on petroleum products sales: 3,383 3,554 3,596 3,422 13,955 3,321 3,389 3,312 3,349 13,371 Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars) Basic Diluted Average Common Shares Outstanding (in thousands) Basic 627, , , , , , , , , ,835

16 Diluted 634, , , , , , , , , ,764 SUMMARY OF INCOME (LOSS) ATTRIBUTABLE TO PHILLIPS 66 BY SEGMENT 1st 2nd Millions of Dollars rd 4th 1st 2nd 3rd YTD 4th YTD R&M ,801 3, ,184 1, ,729 Midstream (91) (77) 85 6 Chemicals Corporate and Other (58) (36) (47) (51) (192) (70) (119) (125) (120) (434) Consolidated 676 1,039 1,049 2,011 4, ,181 1, ,124 SUMMARY OF INCOME (LOSS) BEFORE TAXES BY SEGMENT 1st 2nd Millions of Dollars rd 4th 1st 2nd 3rd YTD 4th YTD R&M 830 1,247 1,173 2,082 5, ,916 2, ,103 Midstream (152) (102) Chemicals ,189 Corporate and Other (90) (56) (73) (70) (289) (105) (177) (171) (220) (673) Consolidated 1,095 1,628 1,550 2,351 6,624 1,069 1,894 2,449 1,219 6,631 EFFECTIVE TAX RATES 1st 2nd rd 4th 1st 2nd 3rd YTD 4th YTD R&M 41.1 % 37.9 % 32.9 % 13.4 % 27.7 % 45.2 % 38.2 % 33.6 % 48.4 % 38.8 % Midstream 36.5 % 35.8 % 36.6 % 28.5 % 34.3 % 36.4 % 40.1 % 24.5 % 32.5 % 50.0 % Chemicals 28.6 % 28.0 % 26.9 % 18.2 % 26.0 % 27.7 % 32.6 % 35.2 % 28.9 % 30.8 % Corporate and Other 35.6 % 35.7 % 35.6 % 27.1 % 33.6 % 33.3 % 32.8 % 26.9 % 45.5 % 35.5 % Consolidated 38.2 % 36.1 % 32.2 % 14.4 % 27.8 % 40.3 % 37.6 % 34.6 % 41.8 % 37.7 % 1

17 SPECIAL ITEMS INCLUDED IN NET INCOME ATTRIBUTABLE TO PHILLIPS 66 (AFTER-TAX) 1st 2nd Millions of Dollars rd 4th 1st 2nd 3rd YTD R&M Gain (loss) on asset sales 2 26 (143) 1,660 1, Impairments - - (318) - (318) (42) - (27) (564) (633) Canceled projects (28) (28) Pending claims and settlements (19) (38) - - (57) Repositioning tax impacts (67) (69) - - (136) Severance accrual - - (15) - (15) Hurricane-related costs (35) (35) Total R&M 2 26 (476) 1,632 1,184 (128) (1) (27) (599) (755) Midstream Impairments (170) (133) - (303) Pending claims and settlements Total Midstream (170) (133) 23 (280) Chemicals Impairments (27) - (27) Premium on early debt retirement (35) (54) - (89) Repositioning tax impacts (41) - (41) Total Chemicals (35) (122) - (157) Corporate and Other Impairments (16) (16) Repositioning costs (30) (13) (12) (55) Total Corporate and Other (30) (13) (28) (71) Total Phillips (476 ) 1,632 1,184 (128 ) (236 ) (295 ) (604 ) (1,263 ) Refining- Regional Totals Atlantic Basin/Europe - - (464) 65 (399) (42) 31 - (33) (44) Gulf Coast Central Corridor (28) (28) Western/Pacific (564) (564) Other Refining - - (15) - (15) (19) (19) Total Refining - - (479) 37 (442) (61) 31 - (597) (627) Marketing, Specialties & Other- Regional Totals Marketing, Specialties & Other- U.S ,595 1,629 - (36) (27) (2) (65) Marketing, Specialties & Other- Int'l - - (3) - (3) (67) (63) Total Marketing, Specialties & Other ,595 1,626 (67) (32) (27) (2) (128) Total R&M 2 26 (476) 1,632 1,184 (128) (1) (27) (599) (755) SPECIAL ITEMS INCLUDED IN INCOME BEFORE INCOME TAXES (PRE-TAX) 4th YTD 1st 2nd Millions of Dollars rd 4th 1st 2nd 3rd YTD 4th YTD

18 R&M 3 43 (751 ) 1,767 1,062 (73 ) 127 (43 ) (620 ) (609 ) Midstream (275 ) (205 ) 37 (443 ) Chemicals (57 ) (130 ) - (187 ) Corporate and Other (46 ) (21 ) (43 ) (110 ) Total Phillips (751 ) 1,767 1,062 (73 ) (251 ) (399 ) (626 ) (1,349 ) Refining- Regional Totals Atlantic Basin/Europe - - (734) (6) (740) (42) (54) 89 Gulf Coast Central Corridor (44) (44) Western/Pacific (564) (564) Other Refining - - (24) - (24) (31) (31) Total Refining - - (758) (50) (808) (73) (618) (506) Marketing, Specialties & Other- Regional Totals Marketing, Specialties & Other- U.S ,817 1,873 - (58) (43) (2) (103) Marketing, Specialties & Other- Int'l - - (3) - (3) Total Marketing, Specialties & Other ,817 1,870 - (58) (43) (2) (103) Total R&M 3 43 (751) 1,767 1,062 (73) 127 (43) (620) (609) 2

19 CASH FLOW INFORMATION 1st 2nd Millions of Dollars rd 4th 2nd 3rd YTD 1st 4th YTD Cash Flows From Operating Activities Net income 677 1,040 1,051 2,012 4, ,182 1, ,131 Depreciation and amortization Impairments (16) ,158 Accretion on discounted liabilities Deferred taxes (67) Undistributed equity earnings (308) (500) (292) 149 (951) (349) (212) (367) 56 (872) Net (gain)/loss on dispositions (3) (43) 221 (1,813) (1,638) (2) (188) 1 (4) (193) Other (58) 136 (61) (178) (12) 69 Net working capital changes (2,091) 1,845 (1,083) 1, (903) (26) 171 (398) (1,156) Net Cash Provided by (Used in) Operating Activities (1,500) 3, ,731 5,006 (361) 1,434 1,918 1,305 4,296 Cash Flows From Investing Activities Capital expenditures and investments (165) (228) (260) (369) (1,022) (218) (270) (339) (894) (1,721) Proceeds from asset dispositions ,423 2, Advances/loans related parties (100) - (100) Collection of advances/loans related parties Other Net Cash Provided by (Used in) Investing Activities (133) ,335 2,492 (212) (36) (420) (867) (1,535) Cash Flows From Financing Activities Contributions from (distributions to) parent company 1,639 (3,306) (744) (5,060) (7,471) 891 (6,146) - - (5,255) Issuance of debt ,794 2, ,794 Repayment of debt (6) (7) (7) (6) (26) (7) (191) (8) (1,004) (1,210) Issuance of common stock Repurchase of common stock (111) (245) (356) Dividends paid on common stock (125) (157) (282) Change in restricted cash (6,050) 6, Other - (1) - - (1) (55) (12) 27 1 (39) Net Cash Provided by (Used in) Financing Activities 1,633 (3,314) (751) (5,066) (7,498) 573 1,703 (196) (1,381) 699 Effect of Exchange Rate Changes (13 ) 14 Net Change in Cash and Cash Equivalents ,104 1,326 (956) 3,474 Cash and cash equivalents at beginning of period ,104 4,430 - Cash and Cash Equivalents at End of Period ,104 4,430 3,474 3,474 CAPITAL PROGRAM Millions of Dollars

20 1st 2nd 3rd 4th YTD 1st 2nd 3rd 4th YTD Consolidated Capital Expenditures and Investments R&M ,054 Midstream** Chemicals Corporate and Other Total Consolidated , ,721 Proportional Share of Select Equity Affiliates Capital Expenditures and Investments* WRB Refining (R&M) DCP Midstream (Midstream)** ,324 CPChem (Chemicals) Select Equity Affiliates , ,842 Total Capital Program* R&M , ,190 Midstream** ,851 Chemicals Corporate and Other Total Capital Program , ,441 3,563 * Includes Phillips 66 s portion of self-funded capital spending by WRB Refining, DCP Midstream, and Chevron Phillips Chemical Company. ** 4th quarter 2012 consolidated amount includes acquisition of a one-third interest in the Sand Hills and Southern Hills pipeline projects from DCP Midstream for $459 million. This amount is also included in DCP Midstream's capital spending, primarily in

21 R&M 1st 2nd rd 4th 1st 2nd 3rd YTD 4th YTD R&M Net Income (Loss) Attributable to Phillips 66 ($ Millions) Refining Atlantic Basin/Europe 6 (45) (365) 68 (336) Gulf Coast (53) 489 (42) Central Corridor , ,124 Western/Pacific (72) 30 (4) (35) 135 (488) (392) Other Refining (18) (38) 8 (64) (112) Total , , ,158 Marketing, Specialties & Other U.S ,679 2, International (17) Total ,737 2, R&M Net Income Attributable to Phillips ,801 3, ,184 1, ,729 R&M Income (Loss) before Income Taxes ($ Millions) Refining Atlantic Basin/Europe 37 (53) (569) 13 (572) Gulf Coat (77) 743 (64) Central Corridor , , ,274 Western/Pacific (102) (23) 210 (448) (248) Other Refining (20) (52) 25 (82) (129) Total , ,510 2, ,216 Marketing, Specialties & Other U.S ,915 2, International Total ,014 2, R&M Income before Income Taxes 830 1,247 1,173 2,082 5, ,916 2, ,103 Realized Refining Margins ($/BBL)* Atlantic Basin/Europe Gulf Coast Central Corridor Western/Pacific Worldwide * Based on total processed inputs and includes proportional share of refining margins contributed by certain equity affiliates. Realized Marketing, Specialties & Other Margins Marketing Fuel Margin ($/BBL)* U.S International * 3rd Party Petroleum Products Sales Gross Margins not included in Marketing Fuel Margin ($ Millions)** U.S International Total , ,296 ** Gross Margin excludes Transportation, Gain on Dispositions and Excise Tax Income Depreciation and Amortization ($ Millions)* Refining

22 Atlantic Basin/Europe Gulf Coast Central Corridor Western/Pacific Other Refining Total Marketing, Specialties & Other** U.S International Total * Excludes D&A of all equity affiliates ** Excludes Transportation D&A totaling: Proportionate share of WRB D&A: Operating and SG&A Expense ($ Millions)* Refining Atlantic Basin/Europe , Gulf Coast , ,211 Central Corridor Western/Pacific Other Refining (4) Total , ,590 Marketing, Specialties & Other** U.S International Total , ,267 * Excludes Operating and SG&A Expense of all equity affiliates ** Excludes Transportation Proportionate share of WRB Operating and SG&A Expense: Turnaround Expense ($ Millions), included in Operating and SG&A Expense* Atlantic Basin/Europe Gulf Coast Central Corridor Western/Pacific Total * Excludes Turnaround Expense of all equity affiliates Proportionate share of WRB Turnaround Expense: Foreign Currency Gains (Losses) After-Tax ($ Millions) (16) (13) (10)

23 1st 2nd R&M (continued) rd 2nd 3rd 4th YTD 1st 4th YTD Atlantic Basin/Europe* Crude Oil Charge Input (MB/D) Total Charge Input (MB/D) Crude Oil Capacity Utilization (%) 93 % 93 % 93 % 97 % 94 % 98 % 95 % 100 % 84 % 94 % Clean Product Yield (%) 85 % 84 % 84 % 86 % 85 % 85 % 85 % 84 % 82 % 84 % * Includes our proportionate share of a refinery complex in Karlsruhe, Germany. Gulf Coast Crude Oil Charge Input (MB/D) Total Charge Input (MB/D) Crude Oil Capacity Utilization (%) 84 % 91 % 91 % 93 % 90 % 82 % 91 % 88 % 97 % 90 % Clean Product Yield (%) 80 % 82 % 82 % 82 % 82 % 80 % 84 % 80 % 81 % 81 % Central Corridor* Crude Oil Charge Input (MB/D) Total Charge Input (MB/D) Crude Oil Capacity Utilization (%) 88 % 95 % 94 % 91 % 92 % 102 % 95 % 102 % 88 % 97 % Clean Product Yield (%) 85 % 87 % 86 % 88 % 87 % 88 % 87 % 87 % 88 % 88 % * Includes our proportionate share of the Borger Refinery and Wood River Refinery. Western/Pacific* Crude Oil Charge Input (MB/D) Total Charge Input (MB/D) Crude Oil Capacity Utilization (%) 91 % 85 % 91 % 96 % 91 % 85 % 89 % 97 % 91 % 91 % Clean Product Yield (%) 83 % 79 % 83 % 83 % 82 % 86 % 80 % 83 % 85 % 83 % * Includes our proportionate share of a refinery in Melaka, Malaysia. Worldwide - Including Proportionate Share of Equity Affiliates Crude Oil Charge Input (MB/D) 2,145 2,196 2,223 2,101 2,166 2,027 2,068 2,138 2,020 2,064 Total Charge Input (MB/D) 2,315 2,398 2,393 2,250 2,338 2,188 2,229 2,288 2,159 2,216 Crude Oil Capacity Utilization (%) 89 % 91 % 92 % 94 % 92 % 91 % 93 % 96 % 91 % 93 % Clean Product Yield (%) 83 % 83 % 84 % 84 % 84 % 84 % 84 % 83 % 83 % 84 % Refined Products Production (MB/D) Atlantic Basin/Europe* Gasoline Distillates Other Total * Includes our proportionate share of a refinery complex in Karlsruhe, Germany.

24 Gulf Coast Gasoline Distillates Other Total Central Corridor* Gasoline Distillates Other Total * Includes our proportionate share of the Borger Refinery and Wood River Refinery. Western/Pacific* Gasoline Distillates Other Total * Includes our proportionate share of a refinery in Melaka, Malaysia. Worldwide - Including Proportionate Share of Equity Affiliates Gasoline 986 1,013 1, Distillates Other Total 2,331 2,408 2,398 2,268 2,351 2,208 2,248 2,296 2,176 2,232 Petroleum Products Sales (MB/D) Total U.S. Gasoline 1,099 1,218 1,134 1,066 1, ,088 1,019 1,055 1,030 Distillates Other Total 2,388 2,464 2,443 2,361 2,414 2,093 2,263 2,164 2,180 2,175 Total International Gasoline Distillates Other Total Worldwide Gasoline 1,270 1,409 1,300 1,256 1,309 1,131 1,283 1,211 1,246 1,218 Distillates 1,203 1,177 1,250 1,245 1,219 1,135 1,162 1,161 1,105 1,141 Other Total 3,060 3,154 3,189 3,108 3,128 2,718 2,977 2,858 2,889 2,861 5

25 R&M (continued) st 2nd 3rd 4th YTD 1st 2nd 3rd 4th YTD Market Indicators Crude and Crude Differentials ($/BBL) WTI Brent LLS ANS WTI less Maya 4.67 (0.65) (8.88) (9.35) (3.55) (5.94) (5.58) (5.38) (4.73) (5.41) WTI less WCS Natural Gas ($/MCF) Henry Hub Product Margins ($/BBL) Atlantic Basin/Europe East Coast Gasoline less Brent East Coast Distillate less Brent Gulf Coast Gulf Coast Gasoline less LLS (1.97) (1.34) 6.88 Gulf Coast Distillate less LLS Central Corridor Central Gasoline less WTI Central Distillate less WTI Western/Pacific West Coast Gasoline less ANS West Coast Distillate less ANS Worldwide Market Crack Spread ($/BBL)* * Weighted average based on Phillips 66 crude capacity. 6

26 MIDSTREAM st 2nd 3rd 4th YTD 1st 2nd 3rd 4th YTD Midstream Net Income (Loss) Attributable to Phillips 66 ($ Millions)* (91) (77) 85 6 * Includes DCP Midstreamrelated earnings: Capex and Investments ($ Millions) D&A ($ Millions) % DCP Midstream Results Net Income, excludes parent company income tax related to DCP's earnings ($ Millions) Capex and Investments ($ Millions) , ,647 D&A ($ Millions) Net Interest Expense ($ Millions)* * Net of interest income Selected DCP Volumes and Gross Margin by Major Contract Type (excludes current quarter) Percentage of Proceeds (long NGL / long Gas)* Volume (TBtu/d) ** ** Gross Margin ($ Millions) , ** ** Keep-whole (long NGL / short Gas) * Volume (TBtu/d) ** ** Gross Margin ($ Millions) ** ** Fee-based Gas (primarily gathering & transport)* Volume (TBtu/d) ** ** Gross Margin ($ Millions) ** ** Fee-based NGL Transport and Fractionation Volume (MB/D) ** ** Gross Margin ($ Millions) ** ** Total Throughput (TBtu/d) NGL Production (MB/D) * Certain volumes earn duplicate revenue streams (i.e. both fee plus processing economics). ** Pending DCP release Weighted Average NGL Price ($/BBL)* DCP Midstream * Prices are based on index prices from the Mont Belvieu and Conway market hubs that are weighted by natural gas liquids component and location mix. PSX Other Volumes

27 NGL Fractionated (MB/D)

28 1st 2nd CHEMICALS rd 2nd 3rd 4th YTD 1st 4th YTD Chemicals Net Income Attributable to Phillips 66 ($ Millions) % CPChem Results Net Income, excludes parent company income tax related to CPChem's earnings ($ Millions) Olefins & Polyolefins , ,598 Specialties, Aromatics and Styrenics (10) Corporate and Other 9 (33) (27) (42) (93) (10) (134) (210) (45) (399) Total , ,403 Income (Loss) before Income Taxes ($ Millions) Olefins & Polyolefins , ,634 Specialties, Aromatics and Styrenics (2) Corporate and Other 8 (32) (28) (42) (94) (9) (133) (210) (45) (397) Total , ,470 Investing Cash Flows ($ Millions) Capex and Investments Advances to Equity Companies Advance Repayments from Equity Companies (103) (63) (54) (83) (303) D&A ($ Millions) Net Interest Expense ($ Millions)* (6) (1) 9 * Net of interest income Externally Marketed Sales Volumes (MM Lbs) Olefins & Polyolefins 3,362 3,473 3,758 3,712 14,305 3,640 3,510 3,811 4,006 14,967 Specialties, Aromatics, and Styrenics 1,687 1,732 1,722 1,563 6,704 1,793 1,811 1,545 1,570 6,719 Total 5,049 5,205 5,480 5,275 21,009 5,433 5,321 5,356 5,576 21,686 Olefins & Polyolefins Capacity Utilization (%) 94 % 92 % 97 % 96 % 94 % 94 % 92 % 97 % 90 % 93 % Market Indicators Industry Prices* Ethylene, Net Transaction Price (cents/lb) HDPE Blow Molding (cents/lb) Industry Costs* Ethylene, Cash Cost Weighted Average Feed (cents/lb) HDPE, Total Cash Cost (cents/lb) * Released by IHS. Reflect the IHS analysis of historical market indicators.