Execution. Citi Global Energy and Utilities Conference May 13, 2015

Transcription

1 Execution Citi Global Energy and Utilities Conference May 13, 2015

2 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 NGL, crude oil, and natural gas prices, 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; 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. 2

3 Phillips 66 Diversified portfolio of leading downstream businesses Resilient cash flow through the commodity cycle Disciplined capital allocation Chemicals and Midstream growth Share repurchases and dividends Financial flexibility 3

4 Phillips 66 Financial Highlights 1Q Segment Adjusted EBITDA $B Adjusted EBITDA $1.8 B 2.0 Capital expenditures $1.1 B 1.0 Distributions $0.7 B 0.0 Cash from PSXP $1.3 B 1Q Q 3Q 4Q 1Q Q 3Q 4Q 1Q 2015 Average M&S Chemicals Midstream Refining See appendix for footnotes. 4

5 Phillips 66 Partners Financial Highlights Distribution / LP Unit ($) Distributable cash flow Adjusted EBITDA 1Q 2015 $41.9 MM $46.6 MM Coverage Ratio * (MQD) 3Q Q Q Q Q Q Q x 1.10x 1.10x 1.44x 1.32x 1.28x 1.14x Public equity issuance $396 MM Public debt issuance $1.1 B Acquired pipeline assets 33.3% interest in Sand Hills NGL pipeline 33.3% interest in Southern Hills NGL pipeline 19.5% interest in Explorer refined products pipeline * Represents the minimum quarterly distribution for 3Q 2013, actual distribution of $ equal to MQD prorated See appendix for footnotes. 5

6 Segment Strategy Midstream: Growth Chemicals: Growth Refining: Marketing and Enhance Returns Specialties: Selective Growth Execute Sweeny hub Grow integrated Transportation system PSXP as a funding vehicle Expand DCP G&P Pursue organic and M&A opportunities Grow CPChem organically Advance olefins and polyolefins projects Capitalize on domestic feedstock advantage Leverage proprietary technology Optimize crude slate Expand export capability Increase yields Maintain cost discipline Enhance portfolio Expand European retail marketing Grow lubricants Ensure domestic refinery pull-through 6

7 Midstream NGL NGL fractionation capacity growing to 200 MBD Fractionator One start up 3Q 2015 LPG export facility start up 4Q 2016 Transportation Beaumont crude/products hub Bakken to Patoka/Beaumont pipelines 2014 EBITDA Fee Based 2018E EBITDA Market Based DCP EBITDA excluded. See appendix for additional footnotes. 7

8 Midstream EBITDA Growth $B PSXP PSX Growth and in-flight projects ~ E ~ E and in-flight projects 0.4 1Q 2015 Run-Rate Annual EBITDA Refining Logistics Frac-1/ LPG Export Terminal Transportation & Other NGL Growth Run-Rate EBITDA DCP EBITDA excluded. See appendix for additional footnotes. 8

9 Phillips 66 Partners Growth Fee-based business model $B 8-10 Growing cash flows 1.1 Dropdown Proceeds Distributions 30% distribution CAGR through Funding Midstream growth 1Q E 1Q E Run-Rate Annual EBITDA Cumulative Cash to PSX since IPO See appendix for footnotes. 9

10 DCP Midstream Major U.S. midstream business Largest NGL producer Largest natural gas processing company Third largest NGL pipeline operator Footprint of strategically integrated assets Growing gathering and processing business 10

11 CPChem Leading petrochemical company Feedstock advantaged 10.5 B Lb/yr worldwide ethylene capacity Strong global aromatics position USGC Petrochemicals project on track $6 B estimated capital spend 40% complete, start-up 2Q B Lb/yr ethane cracker 2.2 B Lb/yr polyethylene production Self-funded capital program $ B/yr incremental EBITDA by % 30% 25% 20% 15% 10% 5% 0% Phillips 66 Chemicals Adjusted ROCE Range of peer ROCE Phillips 66 Chemicals Adjusted ROCE $1.3 $1.6 B estimated incremental EBITDA based on 2012 industry margins. See appendix for additional footnotes. 11

12 Refining 2.2 MMBD Global Refining Capacity Optimizing crude slate Improving yields West Coast 360 MBD Central Corridor 492 MBD Atlantic Basin/Europe 588 MBD Expanding export capability Managing costs Gulf Coast 738 MBD Heavy Light/ Medium Worldwide Enhancing portfolio 12

13 Marketing and Specialties High-returning businesses U.S. Marketing Wholesale network ~8,600 branded sites International Marketing Low-cost, high-volume business ~1,520 sites Specialties Finished lubricants Base oil joint venture Avg. $1.2 B Adjusted EBITDA $B U.S. Marketing International Marketing Specialties 13

14 Financial Strategy Ensuring financial flexibility Investment grade credit rating Adequate liquidity 2014E 2016E Funding transformational growth Cash from operations Dropdowns to PSXP Distributions Reinvestment Returning capital to shareholders Dividend growth Ongoing share repurchases 14

15 2015 Capital Budget $3.4 B Growth capital Sweeny Fractionator One LPG Export Terminal Bakken to Patoka/Beaumont pipelines Beaumont Terminal expansion PSX Sustaining M&S Growth PSXP Growth Refining Returns Midstream Growth $0.2 B for PSXP projects $1.2 B Sustaining capital 15

16 Distributions Share Count and Capital Returned 624 MM $6.6 B Dividend Growth Quarterly /share MM 542 MM 20 3Q Q Q Q Q Q 2015 $1.7 B remaining authorized share repurchases 180% dividend growth See appendix for footnotes. 16

17 Creating Value Uniquely positioned portfolio Enterprise Value Disciplined capital allocation More than 30% EBITDA growth Multiple expansion Commitment to distributions Strong balance sheet E Midstream PSXP Chemicals M&S Refining 17

18 Appendix Institutional Investors Contact Kevin Mitchell Vice President, Investor Relations Rosy Zuklic Manager, Investor Relations

19 Footnotes Slide 4 PSXP is a consolidated subsidiary of PSX. Accordingly, quarterly cash distributions paid from PSXP to PSX, and consideration paid by PSXP to PSX in a dropdown transaction, both eliminate in consolidation and do not impact PSX s consolidated cash balance. PSX s consolidated cash balance increases to the extent PSXP funds consideration for a dropdown transaction with public debt and equity offerings. The chart represents look-through EBITDA and the Corporate segment EBITDA is excluded. Average Corporate adjusted quarterly EBITDA for is ($86) MM. Slide 5 Debt and equity issuance amounts are gross of fees. Transaction between PSX and PSXP eliminate in consolidation. Slide 7 EBITDA excludes DCP but includes 100% PSXP EBITDA. Slide 8 PSXP EBITDA includes EBITDA attributable to Phillips 66 noncontrolling interests. Refining Logistics represents terminaling, storage and other logistics assets currently embedded in the Refining segment. Amount represents an estimate of the EBITDA potential of these assets if they were transferred to Midstream. 19

20 Footnotes Slide 9 See footnote to slide 4 for information on the elimination in consolidation of transactions between PSXP and Phillips 66. Slide 11 Growth capital reflects 100% CPChem growth capital. Growth EBITDA (& start-up year) includes: 1- hexene (2014), 10th Sweeny furnace (2014), NAO expansion project (2015) and USGC petrochemical project (2017). Peers: Dow, ExxonMobil Chemical, LyondellBasell, Westlake 20

21 2015 Sensitivities Phillips 66 Net Income Midstream $MM 10 /Gal Increase in NGL price 30 $1/MMBtu Increase in Natural Gas price 25 $10/BBL Increase in WTI price 15 Chemicals 1 /Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 35 Worldwide Refining (assuming 91% refining utilization) For a $1/BBL Increase in Gasoline Margin 220 For a $1/BBL Increase in Distillate Margin 200 Impacts due to Actual Crude Feedstocks Differing from Feedstock Assumed in Market Indicators: $1/BBL Widening LLS / Maya Differential (LLS less Maya) 50 $1/BBL Widening WTI / WCS Differential (WTI less WCS) 40 $1/BBL Widening WTI / WTS Differential (WTI less WTS) 15 $1/BBL Widening LLS / Medium Sour Differential (LLS less Medium Sour) 10 $1/BBL Widening ANS / WCS Differential (ANS less WCS) 10 $0.10/MMBtu Increase in Natural Gas price (10) Sensitivities shown above are independent and are only valid within a limited price range. 21

22 Phillips 66 Capital Program Millions of Dollars 2015 Budget Sustaining Growth Total Capital Expenditures and Investments Consolidated Midstream (1) Transportation 148 1,084 1,232 NGL 19 1,912 1, ,996 3,163 Chemicals Refining (2) ,112 Marketing and Specialties Corporate (2) ,213 3,387 4,600 Selected Equity Affiliates DCP CPChem 187 1,266 1,453 WRB ,594 2,056 Capital Program (3) Midstream Transportation 148 1,084 1,232 DCP NGL 19 1,912 1, ,271 3,563 Chemicals 187 1,266 1,453 Refining ,315 Marketing and Specialties Corporate ,675 4,981 6,656 (1) Includes 100% of Phillips 66 Partners (2) Includes non-cash capitalized leases of $11 million in Refining and $21 million in Corporate and Other (3) Includes Phillips 66's share of capital spending by DCP, CPChem and WRB, which are expected to be selffunded. 22

23 Non-GAAP Reconciliations PSXP Run Rate EBITDA PSXP 2014 and 2018 run rate EBITDA estimates were derived on an EBITDA-only basis. Accordingly, elements of net income including tax and depreciation information are not available. Together, these items generally result in a significant uplift in EBITDA over net income. Run rate EBITDA reflects annualized EBITDA projections of assets immediately upon acquisition. 2018E Adjusted EBITDA/ EBITDA project backlog post 2018 Adjusted EBITDA forecasts were derived on an EBITDA-only basis. Accordingly, elements of net income including tax and depreciation information are not available. Together, these items generally result in a significant uplift in EBITDA over net income. 23

24 Non-GAAP Reconciliations Phillips 66 Chemicals Segment ROCE Numerator Net Income $ ,137 After-tax interest expense GAAP ROCE earnings ,137 Special Items Adjusted ROCE earnings $ ,209 Denominator GAAP average capital employed* $ 2,024 2,275 2,563 3,142 3,825 4,489 *Total equity plus debt. Millions of Dollars Annualized Adjusted ROCE (percent) 11% 21% 28% 31% 26% 27% Annualized GAAP ROCE (percent) 11% 21% 28% 26% 26% 25% 24

25 Non-GAAP Reconciliations Millions of Dollars Marketing & Specialties Adjusted EBITDA Reconciliation Average Millions of Dollars Marketing & Specialties Adjusted EBITDA Reconciliation Average U.S. Marketing U.S. Marketing net income attributable to Phillips 66 $ Provision for income taxes Net interest expense (47) (41) (32) - (0) (0) (20) Depreciation and amortization U.S. Marketing EBITDA $ Specialties Specialties net income attributable to Phillips 66 $ Provision for income taxes Net interest expense Depreciation and amortization Specialties EBITDA $ Adjustments (pretax): Gain on asset dispositions $ (22) (234) - (4) - - (43) Impairments Pending claims and settlements - (56) - 62 (25) (44) (11) Tax law impacts (6) - (1) U.S. Marketing Adjusted EBITDA* $ International Marketing International Marketing net income attributable to Phillips 66 $ Provision for income taxes Net interest expense Depreciation and amortization International Marketing EBITDA $ Adjustments (pretax): Gain on asset dispositions $ (125) (20) International Marketing Adjusted EBITDA* $ Adjustments (pretax): Gain on asset dispositions $ - - (43) - (40) - (14) Exit of a business line Specialties Adjusted EBITDA* $ Marketing & Specialties Consolidated Segment Marketing and Specialties net income attributable to Phillips 66 $ , Provision for income taxes Net interest expense (44) (41) (32) - (0) (0) (20) Depreciation and amortization Marketing and Specialties EBITDA $ 1,085 1,153 1,218 1,010 1,430 1,569 1,244 Adjustments (pretax): Gain on asset dispositions $ (22) (234) (40) (4) (40) (125) (78) Impairments Pending claims and settlements - (56) - 62 (25) (44) (11) Exit of a business line Tax law impacts (6) - (1) Marketing and Specialties Adjusted EBITDA $ 1, ,178 1,068 1,413 1,400 1,176 25

26 Non-GAAP Reconciliations Adjusted EBITDA by Segment Reconciliation Midstream Average Midstream net income attributable to Phillips 66 $ , Net income attributable to noncontrolling interests Provision for income taxes Depreciation and amortization Midstream EBITDA $ , Adjustments (pretax): EBITDA attributable to Phillips 66 noncontrolling interests $ - (9) (10) (13) (24) (45) (17) Proportional share of selected equity affiliates income taxes Proportional share of selected equity affiliates net interest Proportional share of selected equity affiliates depreciation and amortization Lower-of-cost-or-market inventory adjustments Gain on asset dispositions (15) - (1,830) (308) Gain on share issuance by equity affiliate (135) (23) Impairments Pending Claims and settlements (37) - - (6) Hurricane-related costs Midstream Adjusted EBITDA* $ , ,067 1,170 1,021 * Proportional share of selected equity affiliates is net of noncontrolling interests. Chemicals Chemicals net income attributable to Phillips 66 $ , Millions of Dollars Provision for income taxes Chemicals EBITDA $ ,189 1,361 1,632 1,021 Adjustments (pretax): Proportional share of selected equity affiliates income taxes $ Proportional share of selected equity affiliates net interest Proportional share of selected equity affiliates depreciation and amortization Impairments Premium on early debt retirement Lower-of-cost-or-market inventory adjustments Chemicals Adjusted EBITDA $ ,257 1,681 1,710 2,101 1,377 26

27 Non-GAAP Reconciliations Adjusted EBITDA by Segment Reconciliation Refining Average Refining net income (loss) attributable to Phillips 66 $ (556) (661) 1,369 3,091 1,747 1,771 1,127 Provision for income taxes (296) (121) 808 1,998 1, Net interest expense (1) (2) (1) (1) Depreciation and amortization Refining EBITDA $ (212) (125) 2,840 5,744 3,467 3,171 2,481 Adjustments (pretax): Millions of Dollars Proportional share of selected equity affiliates income taxes $ (4) 3 2 Proportional share of selected equity affiliates net interest (179) (160) (140) (118) (95) (19) (119) Proportional share of selected equity affiliates depreciation and amortization Net (gain) loss on asset dispositions (185) - (145) (16) Impairments - 1, Canceled projects Pending claims and settlements Severence accruals Hurrican-related costs Tax law impacts (22) - (4) Lower-of-cost-or-market inventory adjustments Refining Adjusted EBITDA $ (173) 1,519 3,690 6,373 3,583 3,449 3,074 27

28 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation Average Marketing and Specialties Marketing and Specialties net income attributable to Phillips 66 $ , Provision for income taxes Net interest expense (44) (40) (32) (19) Depreciation and amortization Marketing and Specialties EBITDA $ 1,086 1,153 1,218 1,010 1,430 1,570 1,245 Adjustments (pretax): Gain on asset dispositions $ (22) (234) (40) (4) (40) (125) (78) Impairments Pending claims and settlements - (56) - 62 (25) (44) (11) Exit of a business line Tax law impacts (6) - (1) Marketing and Specialties Adjusted EBITDA $ 1, ,178 1,068 1,413 1,401 1,176 Corporate Corporate net income (loss) attributable to Phillips 66 $ (140) (159) (192) (434) (431) (393) (292) Provision for income taxes (75) (93) (97) (239) (263) (287) (176) Net interest expense Depreciation and amortization Corporate EBITDA $ (213) (250) (268) (421) (365) (329) (308) Adjustments (pretax): Impairments $ Repositioning Costs Corporate Adjusted EBITDA $ (213) (250) (268) (311) (365) (329) (289) 28

29 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation Average Phillips 66 Phillips 66 net income attributable to Phillips 66 $ ,775 4,124 3,726 4,762 3,100 Less: Income from discontinued operations Net income attributable to noncontrolling interests Provision for income taxes ,822 2,473 1,844 1,654 1,452 Net interest expense (44) (41) (16) Depreciation and amortization Phillips 66 EBITDA $ 1,646 2,105 7,445 7,693 6,731 6,986 5,434 Adjustments (pretax): EBITDA attributable to Phillips 66 noncontrolling interests $ - (9) (10) (13) (24) (45) (17) Proportional share of selected equity affiliates income taxes Proportional share of selected equity affiliates net interest (26) (6) (27) (20) Proportional share of selected equity affiliates depreciation and amortization Gain on asset dispositions (37) (234) (1,636) (189) (40) (270) (401) Gain on share issuance by equity affiliate (135) (23) Impairments 129 1, , Cancelled projects Severence accruals Exit of a business line Pending claims and settlements 39 (56) - 56 (25) (21) (1) Premium on early debt retirement Repositioning Costs Hurricane-related costs Tax law impacts (28) - (5) Lower-of-cost-or-market inventory adjustments Phillips 66 Adjusted EBITDA $ 2,220 4,049 7,010 9,673 7,408 7,792 6,359 29

30 Non-GAAP Reconciliations 100% CPChem Incremental Project Earnings Projections Millions of Dollars Estimated incremental net income $ 1,000 1,313 Low High Estimated income taxes Estimated net interest expense - - Estimated depreciation Estimated EBITDA $ 1,300 1,600 Millions of Dollars Phillips 66 Consolidated 1Q 2015 Phillips 66 Partners Adjusted Phillips 66 Total Debt $ 8,949 $ 1,100 $ 7,849 Total Equity $ 22,595 $ 801 $ 21,794 Debt-to-Capital Ratio 28% 26% Total Cash $ 5,390 $ 138 $ 5,252 Net-Debt-to-Capital Ratio 14% 11% 30

31 Non-GAAP Reconciliations Millions of Dollars Phillips 66 Midstream Chemicals Refining Marketing & Specialties Corporate Phillips 66 ROCE Numerator Net Income $ 4, ,137 1,771 1,034 (393) After-tax interest expense GAAP ROCE earnings 4, ,137 1,771 1,034 (220) Special Items (981) 1 72 (195) (152) 0 Adjusted ROCE earnings $ 3, ,209 1, (220) Denominator GAAP average capital employed* $ 29,634 4,207 4,489 13,377 2,743 4,722 Discontinued Operations (96) Adjusted average capital employed* $ 29,537 4,207 4,489 13,377 2,743 4,722 *Total equity plus debt. Annualized Adjusted ROCE (percent) 14% 13% 27% 12% 32% -5% Annualized GAAP ROCE (percent) 17% 13% 25% 13% 38% -5% 2014 Phillips 66 Midstream Chemicals Refining Marketing & Specialties Corporate Phillips 66 CROCE Numerator Net Income $ 4, ,137 1,771 1,034 (393) After-tax interest expense Depreciation and amortization , ,137 2,475 1,129 (114) Special Items (981) 1 72 (195) (152) 0 Adjusted CROCE earnings $ 4, ,209 2, (114) Denominator GAAP average capital employed* $ 29,634 4,207 4,489 13,377 2,743 4,722 Discontinued Operations (96) Adjusted average capital employed* $ 29,537 4,207 4,489 13,377 2,743 4,722 *Total equity plus debt. Adjusted CROCE (percent) 17% 15% 27% 17% 36% -2% Net Income/ GAAP Average Capital Employed (percent) 16% 13% 25% 13% 38% -8% 31

32 Non-GAAP Reconciliations Millions of Dollars Average Midstream Chemicals Refining Marketing & Specialties FCF Yield Numerator Cash From Operations GAAP $ , Less: Change in Non-Cash Working Cap. (13) (0) 152 (127) Cash From Operations (excluding WC) , Less: P66 Equity affiliate cash from ops Add: Equity look through cash from ops Adjusted FCF (excl WC) $ , Total Capex GAAP 2,173-1, Less: Growth Capex 2, Sustaining Capex Less: P66 Equity affiliate sustaining capex Add: Equity look through sustaining capex Adjusted Sustaining Capex $ Free Cash Flow $ , Denominator GAAP average capital employed* $ 3,346 3,053 15,052 3,382 Less: P66 Equity affiliate capital employed 512 3,053 2,507 - Add: Equity look through capital employed 3,667 3,515 5,231 - Adjusted average capital employed* $ 6,501 $ 3,515 $ 17,776 $ 3,382 *Total equity plus debt. Adjusted FCFY (percent) 8% 20% 9% 19% GAAP CFO/ GAAP Capital Employed (percent) 17% 8% 17% 17% 32

33 Non-GAAP Reconciliations Millions of Dollars % CPChem Net Income $ 615 1,388 1,970 2,403 2,743 3,288 Income taxes Net interest expense (3) (2) Depreciation and amortization EBITDA $ 984 1,748 2,303 2,743 3,089 3,668 Adjustments (pre-tax): Proportional share of equity affiliates income taxes Proportional share of equity affiliates net interest expense Proportional share of equity affiliates depreciation and amortization Impairments Premium on early debt retirement Lower-of-cost-or-market inventory adjustments Adjusted EBITDA $ 1,140 1,944 2,548 3,386 3,442 4,224 Millions of Dollars % DCP Midstream Net Income $ Income taxes Net interest expense Depreciation and amortization EBITDA $ 1,016 1,263 1, , Adjustments (pre-tax): Proportional share of equity affiliates income taxes (1) - - (1) (3) (6) Proportional share of equity affiliates net interest expense (18) (20) (25) (32) (40) (67) Proportional share of equity affiliates depreciation and amortization (41) (50) (59) (43) (67) (86) Adjusted EBITDA $ 956 1,193 1,

34 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Average Midstream Midstream net income $ Provision for income taxes Depreciation and amortization Midstream EBITDA $ Adjustments (pretax): EBITDA attributable to Phillips 66 noncontrolling interests $ (5) (4) (7) (8) (8) (12) (13) (12) (16) (9) Proportional share of selected equity affiliates income taxes (1) 1 1 Proportional share of selected equity affiliates net interest Proportional share of selected equity affiliates depreciation and amortizat Lower-of-cost-or-market inventory adjustments Midstream Adjusted EBITDA* $ * Proportional share of selected equity affiliates is net of noncontrolling interests. Chemicals Chemicals net income $ Provision for income taxes Chemicals EBITDA $ Adjustments (pretax): Proportional share of selected equity affiliates income taxes $ Proportional share of selected equity affiliates net interest Proportional share of selected equity affiliates depreciation and amortizat Impairments Lower-of-cost-or-market inventory adjustments Chemicals Adjusted EBITDA $

35 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Average Refining Refining net income $ (30) Provision for income taxes (64) Depreciation and amortization Refining EBITDA $ 1, , Adjustments (pretax): Proportional share of selected equity affiliates income taxes $ (7) (0) Proportional share of selected equity affiliates net interest (26) (24) (23) (22) (19) (13) Proportional share of selected equity affiliates depreciation and amortizati Asset dispositions (145) (8) (17) Impairments Pending claims and settlements Tax law impacts (22) (2) Lower-of-cost-or-market inventory adjustments Refining Adjusted EBITDA $ 1, , Marketing and Specialties Marketing and Specialties net income $ Provision for income taxes Depreciation and amortization Marketing and Specialties EBITDA $ Adjustments (pretax): Asset dispositions $ - (40) (109) (16) (110) (31) Pending claims and settlements (25) (44) - (8) Exit of a business line Tax law impacts (6) (1) Marketing and Specialties Adjusted EBITDA $

36 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Average Corporate Corporate net income (loss) $ (95) (126) (113) (97) (81) (121) (91) (100) (126) (106) Provision for income taxes (80) (60) (43) (80) (78) (61) (58) (90) (63) (68) Net interest expense Depreciation and amortization Corporate EBITDA $ (97) (103) (69) (96) (74) (101) (71) (83) (82) (86) Adjustments (pretax): Impairments $ - $ - $ - $ - $ - $ - $ - $ - $ - - Corporate Adjusted EBITDA $ (97) (103) (69) (96) (74) (101) (71) (83) (82) (86) Phillips 66 Phillips 66 net income $ 1, , ,189 1, ,060 Less: Income from discontinued operations Provision for income taxes Net interest expense Depreciation and amortization Phillips 66 EBITDA $ 2,365 1,748 1,102 1,516 1,595 1,658 2,031 1,702 1,722 1,715 Adjustments (pretax): EBITDA attributable to Phillips 66 noncontrolling interests $ (5) (4) (7) (8) (8) (12) (13) (12) (16) (9) Proportional share of selected equity affiliates income taxes Proportional share of selected equity affiliates net interest (2) Proportional share of selected equity affiliates depreciation and amortizat Asset dispositions - (40) (109) (161) (118) (48) Impairments Exit of a business line Tax law impacts (28) (3) Pending claims and settlements (25) (21) - (5) Lower-of-cost-or-market inventory adjustments Phillips 66 Adjusted EBITDA $ 2,527 1,883 1,290 1,708 1,792 1,866 2,227 1,907 1,813 1,890 36

37 Adjusted EBITDA and Distributable Cash Flow Reconciliation to Net Income $ MM 1Q Q Q Q Q 2014 Net Income $ 35.4 $ 36.3 $ 30.0 $ 30.9 $ 27.2 Depreciation Net interest expense Amortization of deferred rentals Provision for income taxes EBITDA Less: EBITDA attributable to predecessors (1.2) 10.1 Adjusted EBITDA Adjustments related to minimum volume commitments 1.1 (2.4) 1.4 (0.7) 2.3 Phillips 66 prefunded projects and indemnities Transaction costs associated with acquisitions Distributions in excess of equity earnings Less: Net interest Income taxes paid Maintenance capital expenditures Distributable Cash Flow