phillips 66 first quarter conference...

PHILLIPS 66 FIRST QUARTER 2017 CONFERENCE CALL April 28, 2017

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, petroleum products and natural gas prices, and refining, marketing 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 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.

CAUTIONARY STATEMENT

2

3

EXECUTING THE STRATEGY

Beaumont Terminal, Beaumont, TX

4

OVERVIEW 1Q 2017

Adjusted earnings $294 MM

Adjusted EPS $0.56

Operating cash flow excluding working capital $748 MM

Capital expenditures and investments $470 MM

Shareholder distributions1 $611 MM

(1) Shareholder distributions include dividends and share repurchases

Net-debt-to-capital ratio 27%

Annualized adjusted YTD ROCE 5%

83

294 44

77

93 1

(4)

4Q 2016

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

1Q 2017

Adjusted

Earnings

1Q 2017 Adjusted Earnings

$MM

77 (123) (2) 201 141

ADJUSTED EARNINGS 1Q 2017

5

33

77

23

12

9

4Q 2016

Adjusted

Earnings

Transportation NGL DCP

Midstream

1Q 2017

Adjusted

Earnings

MIDSTREAM 1Q 2017

56 4 17


6

$MM

Seasonally lower maintenance

costs in Transportation

First full quarter of Freeport LPG

Export Terminal operations

Highest earnings since 3Q 2014

at DCP Midstream

6

124

201

56 21 0

4Q 2016

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 1Q 2017

Adjusted

Earnings

CHEMICALS 1Q 2017

161 45 (5)


7

$MM

Higher O&P chain cash margin

and benzene margin

Strong polyethylene demand

89% O&P capacity utilization

7

(95) (2)

(148)

118 43

80

4Q 2016

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf Coast Central

Corridor

West Coast 1Q 2017

Adjusted

Earnings

$MM

REFINING 1Q 2017

8

(50) 62 67 (81)


84% crude utilization

85% clean product yield

$8.55/BBL realized margin

$299 MM pre-tax turnaround costs

12.24

8.55

(1.94)

(2.66)

1.58

(0.67)

Market

3:2:1

Configuration Secondary

Products

Feedstock Other Realized

Margin

WORLDWIDE REFINING $/BBL

REFINING MARGINS – MARKET VS. REALIZED 1Q 2017

9

Avg Market Crude: $53.24/BBL 70% Market Capture

140 141

10

(9)

4Q 2016

Adjusted

Earnings

Marketing

& Other

Specialties 1Q 2017

Adjusted

Earnings

MARKETING AND SPECIALTIES 1Q 2017

124 17


10

Improved global Marketing margins

Lower seasonal demand

Excel Paralubes major turnaround

$MM

(119) (123)

(10)

6

4Q 2016

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

1Q 2017

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 1Q 2017

11

2.7

1.5

(0.5) 0.5

0.7

(1.3)

(0.6)

December 31,

2016Cash

Balance*

CFO

(excludingworking

capital)

Working

Capital

Capital

Expenditures& Investments

Shareholder

Distributions

Other March 31,

2017Cash

Balance*

$B

CASH FLOW 1Q 2017

12 * Includes cash and cash equivalents. March 31 balance excludes $0.1 B of restricted cash.

Global Olefins & Polyolefins utilization Mid-90%

Refining crude utilization Mid-90%

Corporate & Other costs (after-tax) $125 MM - $140 MM

Refining turnaround expenses (pre-tax) $130 MM - $160 MM

13

OUTLOOK 2Q 2017

PHILLIPS 66 FIRST QUARTER 2017 CONFERENCE CALL

Questions and Answers

PHILLIPS 66 FIRST QUARTER 2017 CONFERENCE CALL

Appendix

ESTIMATED SENSITIVITIES 2017

16 Sensitivities shown above are independent and are only valid within a limited price range

Midstream - DCP (net to Phillips 66)

10¢/Gal Increase in NGL price 5

10¢/MMBtu Increase in Natural Gas price 1

$1/BBL Increase in WTI price 1

Chemicals - CPChem (net to Phillips 66)

1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 35

Worldwide Refining

$1/BBL Increase in Gasoline Margin 215

$1/BBL Increase in Distillate Margin 190

$1/BBL Widening WTI / WCS Differential (WTI less WCS) 40

$1/BBL Widening LLS / Maya Differential (LLS less Maya) 35

$1/BBL Widening LLS / Medium Sour Differential (LLS less Medium Sour) 20

$1/BBL Widening WTI / WTS Differential (WTI less WTS) 10

$1/BBL Widening LLS / WTI Differential (LLS less WTI) 10

$1/BBL Widening ANS / Medium Sour Differential (ANS less Medium Sour) 10

$1/BBL Widening ANS / WCS Differential (ANS less WCS) 5

10¢/MMBtu Increase in Natural Gas price (10)

Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators:

Annual Net Income $MM

22. 0 23. 9 23. 7 23. 7

21. 6

23. 1

22. 4 22. 4

8. 6 8. 9

10. 1 10. 2

8. 6 7. 8 7. 7 7. 9

5.2 3.1 2.7

1.5

5.2 3.0 2.7 1.5

28%27%

30% 30%

28%

25% 26% 26%

13%

20%

24%

27%

14%

17%18%

22%

2014 2015 2016 1Q

2017

2014 2015 2016 1Q

2017

Equity $B Debt $B Cash & Cash Equivalents $B Debt-to-Capital Net-Debt-to-Capital

CAPITAL STRUCTURE 2014 – 2017

17

Consolidated PSX Excluding PSXP

10.62

6.29

(1.38)

(1.54)

(1.69)

0.28

Market

3:2:1


Products


Margin

ATLANTIC BASIN / EUROPE $/BBL


18

Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH

Brent: $53.78/BBL 70% Crude Capacity Utilization 59% Market Capture

10.69

8.03

(2.21)

(2.87)

2.07 0.35

Market

3:2:1


Products


Margin

GULF COAST $/BBL


19

Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm

LLS: $53.51/BBL 90% Crude Capacity Utilization 75% Market Capture

13.18

10.54

(1.36)

(3.05)

3.52

(1.75)

Market

3:2:1


Products


Margin

CENTRAL CORRIDOR $/BBL


20

Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3

WTI: $51.83/BBL 95% Crude Capacity Utilization 80% Market Capture

16.47

9.95

(2.38)

(3.22)

1.83

(2.75)

Market

3:2:1


Products


Margin

WEST COAST $/BBL


21

Market 3:2:1 – ANS Spot / Los Angeles CARBOB / Los Angeles No. 2 CARB

ANS: $53.83/BBL 78% Crude Capacity Utilization 60% Market Capture

360

294

37

45

(88)

(64)

4

1Q 2016

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

1Q 2017

Adjusted

Earnings


$MM

ADJUSTED EARNINGS 1Q 2017 VS. 1Q 2016

22

77 (123) (2) 201 141

40

77

38

(16)

15

1Q 2016

Adjusted

Earnings

Transportation NGL DCP

Midstream

1Q 2017

Adjusted

Earnings

$MM

MIDSTREAM 1Q 2017 VS. 1Q 2016

23

56 4 17


156

201

16

29 0

1Q 2016

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 1Q 2017

Adjusted

Earnings

$MM

CHEMICALS 1Q 2017 VS. 1Q 2016

24

161 (5) 45


86

(2)

(54) (1)

42

(75)

1Q 2016

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf

Coast

Central

Corridor

West Coast 1Q 2017

Adjusted

Earnings

$MM

REFINING 1Q 2017 VS. 1Q 2016

25

(50) 62 67 (81)


205

141

(38)

(26)

1Q 2016

Adjusted

Earnings

Marketing

& Other

Specialties 1Q 2017

Adjusted

Earnings

$MM

MARKETING AND SPECIALTIES 1Q 2017 VS. 1Q 2016

26

124 17


(127) (123)

(11)

15

1Q 2016

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

1Q 2017

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 1Q 2017 VS. 1Q 2016

27

28

NON-GAAP RECONCILIATIONS

* Pre-tax impact only. Tax-only adjusting items included in "other tax impacts”.

** We generally tax effect taxable U.S.-based special items using a combined federal and state statutory income tax rate of approximately 38 percent. Taxable special items attributable to foreign locations

likewise use a local statutory income tax rate. Nontaxable events reflect zero income tax. These events include, but are not limited to, most goodwill impairments, transactions legislatively exempt from

income tax, transactions related to entities for which we have made an assertion that the undistributed earnings are permanently reinvested, or transactions occurring in jurisdictions with a valuation

allowance.

*** Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted

earnings per share calculation.

2017

1Q 4Q 1Q

Phillips 66

Net Income (Loss) Attributable to Phillips 66 535$ 163$ 385$

Pre-tax Adjustments:

Impairments by equity affiliates 33 - 6

Pending claims and settlements - - (45)

Equity affiliate ownership restructuring - 33 -

Railcar lease residual value deficiencies and related costs - 40 -

Gain on consolidation of business (423) - -

Certain tax impacts * - (32) -

Tax impact of adjustments ** 149 (27) 14

Other tax impacts - (94) -

Adjusted Net Income (Loss) Attributable to Phillips 66 294$ 83$ 360$

Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) *** 1.02$ 0.31$ 0.72$

Adjusted Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) *** 0.56$ 0.16$ 0.67$

Millions of Dollars

Except as Indicated

2016

29


1Q 4Q 1Q

Midstream

Net Income (Loss) Attributable to Phillips 66 77$ (1)$ 65$



Impairments by equity affiliates - - 6


Tax impact of adjustments - (12) 14

Other tax impacts - 13 -


Chemicals



Impairments by equity affiliates 33 - -

Tax impact of adjustments (13) - -



Except as Indicated

Millions of Dollars

2017 2016

30


1Q 4Q 1Q

Refining




Certain tax impacts - (32) -


Tax impact of adjustments 162 (15) -


Adjusted Net Income (Loss) Attributable to Phillips 66 (2)$ (95)$ 86$

Marketing & Specialties



Tax impact of adjustments - - -



Corporate and Other

Net Income (Loss) Attributable to Phillips 66 (123)$ (124)$ (127)$




Adjusted Net Income (Loss) Attributable to Phillips 66 (123)$ (119)$ (127)$

2017 2016

Millions of Dollars

Except as Indicated

31


1Q 4Q 1Q

Midstream - Transportation






Midstream - NGL

Net Income (Loss) Attributable to Phillips 66 4$ (10)$ (11)$




Adjusted Net Income (Loss) Attributable to Phillips 66 4$ (5)$ (11)$

Midstream - DCP Midstream




Impairments by equity affiliates - - 6


Tax impact of adjustments - (12) 14


Adjusted Net Income (Loss) Attributable to Phillips 66 17$ (6)$ (21)$

Millions of Dollars

Except as Indicated

2017 2016

32


1Q 4Q 1Q

Refining - Atlantic Basin / Europe

Net Income (Loss) Attributable to Phillips 66 (50)$ 163$ 4$



Certain tax impacts - (32) -

Tax impact of adjustments - (2) -


Adjusted Net Income (Loss) Attributable to Phillips 66 (50)$ 98$ 4$

Refining - Gulf Coast





Tax impact of adjustments 162 (6) -


Adjusted Net Income (Loss) Attributable to Phillips 66 67$ (51)$ 68$

2017 2016

Millions of Dollars

Except as Indicated

33


1Q 4Q 1Q

Refining - Central Corridor







Refining - West Coast

Net Income (Loss) Attributable to Phillips 66 (81)$ (167)$ (6)$





Adjusted Net Income (Loss) Attributable to Phillips 66 (81)$ (161)$ (6)$

Millions of Dollars

Except as Indicated

2017 2016

34


1Q 4Q 1Q

Marketing & Specialties - Marketing & Other






Marketing & Specialties - Specialties






Millions of Dollars

Except as Indicated

20162017

35

* Capital employed is total equity plus total debt


2017 March YTD Phillips 66

Numerator ($MM)

Net Income 563$

After-tax interest expense 68$

GAAP ROCE earnings 631$

After-tax special items (241)$

Adjusted ROCE earnings 390$

Denominator ($MM)

GAAP average capital employed * 33,899$

2017 Annualized GAAP ROCE 7%

2017 Annualized Adjusted ROCE 5%

36


* PSXP's third-party debt and Phillips 66's noncontrolling interest attributable to PSXP

Phillips 66

Consolidated

Phillips 66

Partners *

Adjusted

Phillips 66

Total Debt 10,210$ 2,359$ 7,851$

Total Equity 23,725$ 1,331$ 22,394$

Debt-to-Capital Ratio 30% 26%

Total Cash & Cash Equivalents 1,513$ 1$ 1,512$

Net-Debt-to-Capital Ratio 27% 22%

2017

1Q

Millions of Dollars

37


Growth Sustaining Total

Capital expenditures and investments

Midstream 148$ 34$ 182$

Refining 111$ 148$ 259$

Marketing & Specialties 8$ 7$ 15$

Corporate and Other -$ 14$ 14$

Total 267$ 203$ 470$

1Q

Millions of Dollars

2017

38


Millions of Dollars

2017

1Q

Effective Tax Rates

Income before taxes 797$

Special items (390)$

Adjusted income before taxes 407$

Provision for taxes 234$

Special items (149)$

Adjusted provision for taxes 85$

GAAP effective tax rate 29%

Adjusted effective tax rate 21%

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