PHILLIPS 66 SECOND QUARTER CONFERENCE CALL. July 31, 2013

Transcription

1 PHILLIPS 66 SECOND QUARTER CONFERENCE CALL July 31, 2013

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 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, and declared effective by, the Securities and Exchange Commission (SEC). This presentation shall not constitute an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of these securities 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

3 EXECUTING STRATEGY 3

4 COMPANY OVERVIEW earnings: EPS: operating cash flow*: Debt reduction: Dividends paid: Common shares repurchased: Annualized YTD ROCE: $935 MM $1.50 $1.2 B $502 MM $192 MM $546 MM 17% * Excluding working capital changes 4

5 COMPANY ADJUSTED EARNINGS VS. 2Q 2012 $MM (5) (61) (404) 25 (37) 1, Q 2012 Midstream Chemicals Refining Marketing & Specialties Corporate & Other (126) 5

6 COMPANY CASH FLOW $B 1.2 (0.2) (0.7) (0.5) (0.4) March 31 Cash Balance* CFO (excluding working capital) Working Capital Dividends & Share Repurchases Debt Repayment Capital Expenditures & Investments June 30 Cash Balance* * Includes cash and cash equivalents 6

7 CAPITAL STRUCTURE 2Q % 28% 25% 25% 23% 20% - 30% Q Q Q Q 2013 Equity $B Debt $B Debt to Capital 7

8 MIDSTREAM OVERVIEW Transportation: Higher throughput fees & improved volumes DCP Midstream: Asset dropdowns NGL Operations & Other: Inventory impacts Annualized YTD ROCE: 11% 8

9 MIDSTREAM ADJUSTED EARNINGS VS. 2Q 2012 $MM 26 (12) (19) Q 2012 Transportation DCP Midstream NGL Operations & Other 9

10 CHEMICALS OVERVIEW Olefins & Polyolefins: Specialties, Aromatics & Styrenics: Unplanned downtime Increased equity earnings Annualized YTD ROCE: 25% 10

11 CHEMICALS ADJUSTED EARNINGS VS. 2Q 2012 $MM (88) Q 2012 Olefins & Polyolefins Specialties, Aromatics & Styrenics Corporate & Other 11

12 REFINING OVERVIEW Realized refining margin: $9.88/BBL Refining crude utilization: 94% Clean product yield: 85% Advantaged U.S. crude slate: 68% Annualized YTD ROCE: 19% 12

13 REFINING ADJUSTED EARNINGS VS. 2Q 2012 $MM (77) 885 (248) (178) Q 2012 Atlantic Basin / Europe Gulf Coast Central Corridor Western / Pacific Other Refining 13

14 REFINING MARGINS MARKET VS. REALIZED WORLDWIDE REFINING $/BBL (2.69) (5.41) (1.58) 9.88 Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin Avg. Market Crude: $101.80/BBL 94% Crude Capacity Utilization 56% Market Capture 14

15 REFINING OPERATIONS YTD U.S. CRUDE SLATE WORLDWIDE CLEAN PRODUCT YIELD Advantaged 52% 62% 68% 83.6% 83.8% 84.3% Total 1.9% 2.1% 2.1% Other Brent Based 48% 38% 32% 39.7% 40.2% 39.6% Distillate Shale* 2% 7% 14% Other Heavy 27% 27% 23% Canadian Heavy 7% 10% 12% 42.0% 41.5% 42.6% Gasoline WTI Based 16% 18% 19% YTD YTD *Includes Rocky Mountain Sweet (Casper, Wyoming) and Mississippian Lime (Oklahoma) 15

16 MARKETING AND SPECIALTIES OVERVIEW Worldwide marketing margin: 5.2 cpg Flow improver sales volumes increase: 17% Lubricant volumes increase: 7% Annualized YTD ROCE: 29% 16

17 MARKETING AND SPECIALTIES ADJUSTED EARNINGS VS. 2Q 2012 $MM Q 2012 Marketing & Other Specialties 17

18 CORPORATE AND OTHER ADJUSTED NET LOSS VS. 1Q 2013 $MM 1Q 2013 Net Loss Net Interest Expense Corporate Overhead Other Net Loss (95) (126) 1 (2) (30) 18

19 OUTLOOK 19

20 PHILLIPS 66 SECOND QUARTER 2013 CONFERENCE CALL Questions and Answers

21 PHILLIPS 66 SECOND QUARTER 2013 CONFERENCE CALL Appendix

22 SENSITIVITIES 2013 Net Income $MM Midstream 1 /Gal Increase in NGL price 4 10 /MMBtu Increase in Natural Gas price 2 $1/BBL Increase in WTI price 2 Chemicals 1 /Lb Increase in Olefins Chain Margin (Ethylene, Polyethylene, NAO) 35 Worldwide Refining (assuming 95% refining utilization) $1/BBL Increase in Refining Margin 440 $1/BBL Increase in Crude Price Impact on Secondary Products (20) Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators: $1/BBL Widening LLS / Maya Differential (LLS less Maya) 55 $1/BBL Widening WTI / WCS Differential (WTI less WCS) 40 $1/BBL Widening WTI / WTS Differential (WTI less WTS) 20 $1/BBL Widening LLS / Brent Differential (LLS less Brent)* (20) $0.10/MMBtu Increase in Natural Gas price (10) Corporate and Other 1% Increase in Interest Rate (3) Sensitivities shown above are independent and are only valid within a limited price range *Assumes LLS is less expensive than Brent 22

23 REFINING MARGINS MARKET VS. REALIZED ATLANTIC BASIN / EUROPE $/BBL Brent: $102.44/BBL 94% Crude Capacity Utilization 42% Market Capture (2.34) (2.14) (2.87) (2.07) 6.83 Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin Market 3:2:1 Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH 23

24 REFINING MARGINS MARKET VS. REALIZED GULF COAST $/BBL LLS: $104.63/BBL 91% Crude Capacity Utilization 39% Market Capture (1.55) (6.43) 1.30 (0.15) 4.45 Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin Market 3:2:1 LLS / Gasoline 85 CBOB / Diesel 61 8ppm 24

25 REFINING MARGINS MARKET VS. REALIZED CENTRAL CORRIDOR $/BBL WTI: $94.12/BBL 100% Crude Capacity Utilization 71% Market Capture 6.98 (3.70) (6.02) (5.05) Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin Market 3:2:1 WTI / Gasoline Unl 87 Group 3 / ULSD Group 3 25

26 REFINING MARGINS MARKET VS. REALIZED WESTERN / PACIFIC $/BBL ANS: $104.52/BBL 95% Crude Capacity Utilization 46% Market Capture (3.17) (7.67) (3.83) 8.80 Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin Market 3:2:1 ANS Spot / Los Angeles CARBOB / Los Angeles No. 2 CARB 26

27 COMPANY ADJUSTED EARNINGS VS. 1Q 2013 $MM 7 (101) 1,381 (428) 107 (31) 935 1Q 2013 Midstream Chemicals Refining Marketing & Specialties Corporate & Other (126) 27

28 MIDSTREAM ADJUSTED EARNINGS VS. 1Q 2013 $MM Q 2013 Transportation DCP Midstream NGL Operations & Other 28

29 CHEMICALS ADJUSTED EARNINGS VS. 1Q 2013 $MM 282 (103) 6 (4) 181 1Q 2013 Olefins & Polyolefins Specialties, Aromatics & Styrenics Corporate & Other 29

30 REFINING ADJUSTED EARNINGS VS. 1Q 2013 $MM (62) (109) 909 (190) (27) (40) 481 1Q 2013 Atlantic Basin / Europe Gulf Coast Central Corridor Western / Pacific Other Refining 30

31 MARKETING AND SPECIALTIES ADJUSTED EARNINGS VS. 1Q 2013 $MM Q 2013 Marketing & Other Specialties 31

32 CORPORATE AND OTHER ADJUSTED NET LOSS $MM (42) (126) (36) (12) Net Interest Expense Corporate Overhead (36) Technology Other Corporate 32

33 NON-GAAP RECONCILIATIONS Millions of Dollars Millions of Dollars Except as Indicated Except as Indicated Q 1Q 2Q Year Year Year Phillips 66 (loss) $ 958 $ 1,407 $ 1,181 $ 4,124 $ 4,775 $ 735 Adjustments: Net (gain) loss on asset sales (23) - (106) (106) (1,545) (116) Gain on share issuance by equity affiliate - (27) Impairments ,118 Canceled projects Severance accruals Exit of business line Tax law impacts - (17) Pending claims and settlements - (16) (35) Premium on early debt retirement Repositioning costs Repositioning tax impacts Hurricane-related costs earnings $ 935 $ 1,381 $ 1,417 $ 5,387 $ 3,591 $ 1,759 per share of common stock (dollars)* $ 1.53 $ 2.23 $ 1.86 $ 6.48 $ 7.52 $ 1.16 earnings per share of common stock (dollars)* $ 1.50 $ 2.19 $ 2.23 $ 8.46 $ 5.66 $ 2.77 * Assumes the dilutive securities outstanding at April 30, 2012 were also outstanding for each of the periods prior to the separation. References to earnings refer to net income attributable to Phillips 66 33

34 NON-GAAP RECONCILIATIONS Millions of Dollars Millions of Dollars Except as Indicated Except as Indicated Q 1Q 2Q Year Year Year Midstream (loss) $ 90 $ 110 $ (75) $ 53 $ 2,149 $ 386 Adjustments: Net (gain) loss on asset sales (1,618) - Impairments Pending claims and settlements (23) - - Gain on share issuance by equity affiliate - (27) Hurricane-related costs earnings $ 90 $ 83 $ 95 $ 362 $ 535 $ 386 Chemicals (loss) $ 181 $ 282 $ 207 $ 823 $ 716 $ 486 Adjustments: Impairments Premium on early debt retirement Repositioning tax impacts earnings $ 181 $ 282 $ 242 $ 980 $ 716 $ 486 References to earnings refer to net income attributable to Phillips 66 34

35 NON-GAAP RECONCILIATIONS Millions of Dollars Millions of Dollars Except as Indicated Except as Indicated Q 1Q 2Q Year Year Year Refining (loss) $ 481 $ 922 $ 916 $ 3,217 $ 1,529 $ (545) Adjustments: Net (gain) loss on asset sales - - (104) (104) 96 - Impairments ,110 Canceled projects Severance accruals Tax law impacts - (13) Pending claims and settlements Repositioning tax impacts Hurricane-related costs earnings $ 481 $ 909 $ 885 $ 3,844 $ 1,982 $ 622 Marketing & Specialties (loss) $ 332 $ 188 $ 252 $ 465 $ 573 $ 567 Adjustments: Net (gain) loss on asset sales (23) - (2) (2) (23) (116) Impairments Pending claims and settlements - (16) (35) Exit of business line Tax law impacts - (4) Repositioning tax impacts - - (4) earnings $ 309 $ 202 $ 284 $ 564 $ 550 $ 424 References to earnings refer to net income attributable to Phillips 66 35

36 NON-GAAP RECONCILIATIONS 2013 YTD Phillips 66 Midstream Chemicals Refining Marketing & Specialties Numerator ($MM) Net Income 2, , After-tax interest expense GAAP ROCE earnings 2, , Special Items (49) (27) - (13) (9) ROCE earnings 2, , Denominator ($MM) GAAP average capital employed* 27,970 3,135 3,649 14,312 3,578 Annualized ROCE 17% 11% 25% 19% 29% Annualized GAAP ROCE 18% 13% 25% 20% 29% * Total equity plus total debt 36

37 NON-GAAP RECONCILIATIONS Cash Flows from Operating Activities Millions of Dollars Q Net Cash Provided by Operating Activities, excluding working capital $ 1,174 Working capital adjustments Decrease (increase) in accounts and notes receivable 126 Decrease (increase) in inventories 777 Decrease (increase) in prepaid expenses and other current assets (83) Increase (decrease) in accounts payable (833) Increase (decrease) in taxes and other accruals (193) Net Cash Provided by Operating Activities $