2013 Annual Meeting of Stockholders

Transcription

1 2013 Annual Meeting of Stockholders Greg Garland Chief Executive Officer May 8, 2013 Houston, TX

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, 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. 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 the securities of Phillips 66 Partners LP has been filed with the Securities and Exchange Commission but has not 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 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 2012 Accomplishments - Operational Excellence Total Recordable Rates Incidents per 200,000 Hours Worked Industry Average 250 U.S. Refining Emissions (Lb/MBbl) (SOx, NOx, and Particulate Matter) Phillips 66 CPChem DCP See appendix for footnotes. 3

4 2012 Accomplishments - Growth Acquired one third interest in Sand Hills and Southern Hills Pipelines 369 DCP NGL Production (MBD) Increased DCP NGL production Expanded Chemicals capacity in M.E. Invested $2.1 B growth capital CPChem Equity Global Production Capacity (Blb/y) See appendix for footnotes. 4

5 2012 Accomplishments - Returns Increased ROCE from 14% to 22% 20% increase in advantaged feedstocks 7 5 Adjusted Earnings and ROCE ($B) Midstream Chemicals Marketing & Specialties Refining Corporate 14 % ROCE 22 % Expanded export capability by 10% 3 7 % Achieved 30 + % Chemicals returns

6 2012 Accomplishments - Distributions Regular dividends Secure Growing Competitive Share repurchase Discretionary Tax efficient Announced 1 st quarterly dividend of $0.20 Phillips 66 Debut Expanded share repurchase plan by $1 B and announced dividend increase to $1.25/year; purchased $356 MM of shares in 2012 Announced quarterly dividend increase of 25% Announced $1.0 B share repurchase plan May Jun Jul Aug Sep Oct Nov Dec 6

7 Building a High-Performing Organization Vision and values Collaborative culture Diversity and inclusion Empowerment and accountability Development and mentoring 7

8 Macro Environment - U.S. Advantage Advantaged feedstocks Low energy costs Scale and complexity Quality workforce 8

9 Macro Environment - Jobs and U.S. Economic Impacts U.S. Jobs Supported by Unconventional Oil and Gas Resources 4 (millions) $1.1 trillion total value added by the energy industry to the national economy in 2011 $62 billion annual amount contributed by the unconventional oil and gas industry to U.S. and state governments in taxes 9.6 million jobs supported by the oil and natural gas industry 1.8 million new jobs expected to be created by unconventional oil and natural gas resources by 2035 See appendix for footnotes. 9

10 Macro Environment - Refining N.A. Crude Production (MMBD) U.S. Refined Product Exports (MMBD) Other US ANS GOM Canadian Shale 2.0 Utilization Utilization 93.0% 82.9% 88.7% Net Exports Net Imports U.S. expected to maintain structural advantage Exports support strong refinery utilization See appendix for footnotes. 10

11 Macro Environment - U.S. Midstream 32 $100-$130 B of infrastructure capital required during this decade 24 6 % CAGR MMBbls/day 16 8 NGL Crude Oil 6 % CAGR 2 % CAGR Natural Gas and NGL $80 85 B Crude $10 25 B Natural Gas Actual Forecast Products $10-20 B See appendix for footnotes. 11

12 Macro Environment - Chemicals 3,000 U.S. Ethane Supply/ Demand Balance (MBD) Supply Range 1, Ethylene Production Cost Curve ($/ton) 2,000 Petchem Demand Ethane Exports 1,000 West Europe 1, U.S. Ethane U.S. Average SE Asia NE Asia ME Ethane Cumulative Ethylene Capacity (MM tons) See appendix for footnotes. Source: IHS 12

13 Phillips 66 Strategy Operating Excellence Growth Returns Distributions High-performing organization Providing energy, improving lives 13

14 Segment Strategy Refining: Enhance returns Process advantaged crudes Increase export capability Optimize portfolio Marketing & Specialties: Selective growth Grow Lubricants and European Marketing Ensure refinery pull-through 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 14

15 Refining - Enhancing Returns U.S. Refining Crudes (MBD) Brent LLS/ANS Heavy Canadian WTI/WTS Current 3+ Years Shifting to 100% advantaged crude See appendix for footnotes. 15

16 Marketing & Specialties Refinery pull-through Increasing Jet sites 14% Branded Market Share >20% 10-20% 5 10% 0.1-5% 0% Manufacturing Locations: Lubricants PSPI Flow Improvers Refinery Locations Power Generation Growing lubricants 16

17 Midstream - Large Platform for Growth Executing ~$6 B in DCP growth projects Expanding logistics Pursuing new fractionator capacity NGL Operations Transportation DCP Midstream Fractionator Storage Gas Plant Pipeline PSXP Initial Public Offering

18 Chemicals - Growth SPCo Petrochemicals (35% ownership) 1,200 kmta Growing CPChem Equity U.S. Production Capacity (Blb/y) 31.5 Sweeny Frac Expansion 22 MBD Hexene 250 kmta USGC Petrochemicals 1,500 kmta NAO Expansion ~130 kmta Specialties, Aromatics & Styrenics Olefins & Polyolefins See appendix for footnotes. 18

19 Financial Strategy Disciplined capital allocation Growing shareholder distributions Enhanced financial flexibility 19

20 Capital Allocation 2013E Sources and Uses of Cash ($B) Share Repurchases Debt Repayment Sustaining capital Increasing distributions Growth Capital Dividends Growth capital 1.0 Sustaining Capital Financial flexibility Cash from Operations Uses 2013E cash from operations based on First Call consensus 5/3/2013. Dividends based on current dividend of $1.25/share. 20

21 Disciplined Capital Investments ($B) Budget Midstream Chemicals Refining Marketing & Specialties Corporate Capital program includes our net share of certain equity affiliate investments See appendix for additional footnotes. 21

22 Total Shareholder Return PSX Stock Price May 1, 2012 $32.76 December 31, 2012 $ % 55.8% 61.7% 63.6% Group Average = 22.4% 35.1% 39.7% 43.6% -1.4% 0.5% 0.6% 0.7% 1.1% 1.4% 1.8% 2.4% 2.4% DOW EPD DJIA OKE BP XOM KMP S&P 100 CVX WLK VLO LYB MPC HFC PSX TSO Refining Integrated Chemicals Midstream S&P 100 Phillips 66 DJIA See appendix for footnotes. 22

23 A Promising Future Operating excellence Growth Returns Distributions High-performing organization 23

24 Appendix

25 Footnotes All Slides 2012 information is full year unless otherwise noted YTD is through March 31, 2013 unless otherwise noted. Slide 3 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) U.S. Refining emissions exclude Trainer. Values are calculated as pounds of Sox, Nox, and particulate matter per thousand barrels of clean product produced. WRB is included at 50%. Slide 4 Growth capital includes our net share of certain equity affiliate investments. Slide 9 Source for new jobs created by and U.S. and state taxes paid by unconventional oil and natural gas: IHS Study, Oct 23, 2012: America s New Energy Future: The Unconventional Oil and Gas Revolution and the Economy. Source for total jobs supported by the oil and natural gas industry: PricewaterhouseCoopers LLP, The Economic Impacts of the Oil and Natural Gas Industry on the U.S. Economy in 2011, Dec Slide 10 Source for U.S. Crude production: Phillips 66 internal analysis. Source for U.S. Refined Products Exports: U.S. Department of Energy Slide 11 Historical data from U.S. Energy Information Administration (EIA) dry gas, crude oil, and natural gas liquids field production. Forecast from internal Phillips 66 analysis. CAGR based on 2012 to 2020 growth. Source of infrastructure capital information: Internal Phillips 66 analysis. 25

26 Footnotes, cont d Slide 12 Source for supply/demand: Internal P66 Analysis Source for U.S. Expansions: Hodson Report October 2012 and P66 internal data Source for ethylene production cost curve: IHS Slide 15 U.S. advantaged crude percentages are on an equity basis. Light and medium Canadian crude are in the WTI/WTS category. Slide 18 Project capacities are gross capacity. SPCo Petrochemicals and USGC Petrochemicals projects include ethylene capacity only. Capacity shown does not include derivatives production. Slide E cash from operations based on First Call consensus 4/23/2013. Dividends based on current dividend of $1.25/share. Slide 21 Refining capital program includes equity share of WRB capital as well as non-cash capital leases. Midstream capital program includes equity share of DCP Midstream capital Midstream 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 Chemicals capital program denotes equity share of CPChem capital. Slide 22 Total shareholder return = stock price appreciation plus reinvested dividend yield. Dividends assumed to be reinvested in stock on payment date. 26

27 2013 Guidance 2013 $ B Corporate Segment Net Expense (after-tax) 0.4 Turnaround Costs (pre-tax) 0.4 Depreciation and Amortization Expense (pre-tax) 1.0 Cash Capital Expenditures

28 2013 Sensitivities Sensitivities shown above are only valid within a limited price range. *Assumes LLS is less expensive than Brent. 28

29 PSX Non GAAP Reconciliations Reconciliation of Earnings to Adjusted Earnings Millions of Dollars Consolidated Earnings (loss) $ 4,124 $ 4,775 $ 735 Adjustments: Net (gain) loss on asset sales (106) (1,545) (116) Impairments ,118 Pending claims and settlements 34 - (35) Canceled projects Severance accruals Premium on early debt retirement Repositioning costs Repositioning tax impacts Hurricane-related costs Adjusted earnings $ 5,387 $ 3,591 $ 1,759 References to earnings refer to net income attributable to Phillips

30 PSX Non GAAP Reconciliations Millions of Dollars Midstream Earnings (loss) $ 53 $ 2,149 $ 386 Adjustments: Net (gain) loss on asset sales - (1,618) - Impairments Pending claims and settlements (23) - - Hurricane-related costs Adjusted earnings $ 362 $ 535 $ 386 Chemicals Earnings (loss) $ 823 $ 716 $ 486 Adjustments: Impairments Premium on early debt retirement Repositioning tax impacts Adjusted earnings $ 980 $ 716 $ 486 Millions of Dollars Refining Earnings (loss) $ 3,217 $ 1,529 $ (545) Adjustments: Net (gain) loss on asset sales (104) 96 - Impairments ,110 Pending claims and settlements Canceled projects Severance accruals Repositioning tax impacts Hurricane-related costs Adjusted earnings $ 3,844 $ 1,982 $ 622 Marketing and Specialties Earnings (loss) $ 465 $ 573 $ 567 Adjustments: Net (gain) loss on asset sales (2) (23) (116) Impairments Pending claims and settlements 38 - (35) Repositioning tax impacts Adjusted earnings $ 564 $ 550 $ 424 Corporate and Other Earnings (loss) $ (434) $ (192) $ (159) Adjustments: Impairments Repositioning costs Adjusted earnings $ (363) $ (192) $ (159) References to earnings refer to net income attributable to Phillips

31 PSX Non GAAP Reconciliations Phillips 66 Capital Program Millions of Dollars 2013E Consolidated Capital Expenditures and Investments Midstream Refining* 1, Marketing and Specialties Corporate and Other Total 1,909 1,721 1,022 1,150 Proportional Share of Select Equity Affiliates Capital Expenditures and Investments** DCP Midstream*** 1,100 1, CPChem WRB Refining Total 1,761 1,831 1,415 1,240 Total Capital Program** Midstream*** 1,686 2, Chemicals Refining 1, ,185 1,530 Marketing and Specialties Corporate and Other Total 3,670 3,552 2,437 2,390 * 2013 budget includes non-cash capital lease of $152 million ** Includes Phillips 66 s portion of self-funded capital spending by WRB Refining, DCP Midstream, and Chevron Phillips Chemical Company. *** 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 was also included in DCP Midstream's capital spending, primarily in References to earnings refer to net income attributable to Phillips

32 PSX Non GAAP Reconciliations Phillips 66 - ROCE Numerator ($MM) Net income 740 4,780 4,131 After-tax interest expense GAAP ROCE earnings 741 4,791 4,291 Special Items 1,024 (1,184) 1,263 Adjusted ROCE earnings 1,765 3,607 5,554 Denominator ($MM) GAAP average capital employed* 26,906 25,064 25,732 Annualized Adjusted ROCE 7% 14% 22% Annualized GAAP ROCE 3% 19% 17% * Total equity plus total debt References to earnings refer to net income attributable to Phillips

33 PSX Non GAAP Reconciliations Chemicals - ROCE 2012 Numerator ($MM) Net income 823 After-tax interest expense - GAAP ROCE earnings 823 Special Items 157 Adjusted ROCE earnings 980 Denominator ($MM) GAAP average capital employed* 3,142 Annualized Adjusted ROCE 31% Annualized GAAP ROCE 26% * Total equity plus total debt References to earnings refer to net income attributable to Phillips