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2014 ANALYST MEETING – Phillips 66

Phillips 66 · Apr 10, 2014 · 82 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. 2014 ANALYST MEETING – Phillips 66 – slide 1
    Investing Building Growing 2014 Analyst Meeting April 10, 2014 New York, N.Y.
  2. 2014 ANALYST MEETING – Phillips 66 – slide 2
    Vision and Strategy GREG GARLAND Chairman and Chief Executive Officer
  3. 2014 ANALYST MEETING – Phillips 66 – slide 3
    Vision Enterprise Value Operating excellence High-performing organization Refining Midstream M&S Differentiated value creation Chemicals 2013 2018 2
  4. 2014 ANALYST MEETING – Phillips 66 – slide 4
    Operating Excellence Safety and Environmental Total Recordable Rates Permit / Regulatory Exceedance Incidents per 200,000 Hours Worked Events 2.5 352 Industry Average 2.0 273 1.5 223 197 187 166 1.0 09 10 11 12 13 0.5 0.0…
  5. 2014 ANALYST MEETING – Phillips 66 – slide 5
    Operating Excellence Reliability and Costs Refining Capacity Utilization Operating Costs and SG&A % B 92% 93% 93% 5.8 5.7 5.6 5.5 90% 5.4 88% 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 See appendix for footnotes. 4
  6. 2014 ANALYST MEETING – Phillips 66 – slide 6
    Delivering on Commitments 2013 Key Initiatives Phillips 66 Stock Price Growth 80 Establish MLP Progress USGC petrochemical 70 complex 60 Returns Increase advantaged crude runs 50 Maintain capital discipline 40 Manage costs…
  7. 2014 ANALYST MEETING – Phillips 66 – slide 7
    Strategic Drivers North American oil and gas production growth U.S. feedstock and energy cost advantage Developing markets driving global demand Differentiated segment valuations 6
  8. 2014 ANALYST MEETING – Phillips 66 – slide 8
    Macro MacroEnvironment Environment-Midstream Midstream U.S. NGL Production and Demand MMBD 6 High Production Growing NGL production Low Production 4 Infrastructure needed to move production to market centers 2 MLP structure…
  9. 2014 ANALYST MEETING – Phillips 66 – slide 9
    Macro Environment Chemicals U.S. Ethane Production Ethylene Production Cost Curve and Demand /ton 3.0 MMBD 1,200 Europe LPG/Naphtha Other LPG/Naphtha High Production 2.5 900 Asia LPG/Naphtha N.A. LPG/Naphtha M.E. LPG/Naphtha 2.0…
  10. 2014 ANALYST MEETING – Phillips 66 – slide 10
    Macro Environment Refining Total N.A. Crude Production Total U.S. Waterborne Crude Imports MMBD MMBD Canada 8.0 Texas Light/Medium Sweet North Dakota 15.5 14.8 Light/Medium Sour Rest of U.S. Gulf of Mexico Heavy Sweet Alaska &…
  11. 2014 ANALYST MEETING – Phillips 66 – slide 11
    Manage Risks Major project execution Organizational capabilities Commodity and financial markets Regulatory and fiscal environment 10
  12. 2014 ANALYST MEETING – Phillips 66 – slide 12
    Differentiated DifferentiatedPortfolio Portfolio 2013 Capital Employed 2013 Capital Employed by Region by Segment Uniquely positioned Disciplined capital allocator Leading TSR North America Europe Midstream Chemicals Asia…
  13. 2014 ANALYST MEETING – Phillips 66 – slide 13
    Corporate Strategy Operating excellence Growth Returns Distributions High-performing organization 12
  14. 2014 ANALYST MEETING – Phillips 66 – slide 14
    Growth Enablers Assets Portfolio of projects Experienced project management High-performing organization Financial capacity 13
  15. 2014 ANALYST MEETING – Phillips 66 – slide 15
    Strong Portfolio of Growth Opportunities Total Capital Program B 12 B growth projects 2014E 2016E 5.7 6.0 4.6 3.7 Focused on high-valued businesses 70% of capital program invested in growth 2013 2014E 2015E 2016E…
  16. 2014 ANALYST MEETING – Phillips 66 – slide 16
    Phillips 66 Partners 80% PSXP +61% since IPO Strong sponsorship from Phillips 66 60% Stable and predictable cash flows 40% Substantial growth potential 20% Low cost capital source 0% Financial flexibility Alerian MLP Index +5%…
  17. 2014 ANALYST MEETING – Phillips 66 – slide 17
    Industry-Leading Returns on Capital 2013 Midstream Chemicals Refining and M&S PSX PSX 15% PSX PSX 26% PSX 15% LYB 24% MPC 15% OKE 8% WLK 21% VLO 10% EPD 7% XOM 18% CVX 7% Chem KMP 6% DOW 9% TSO 5% See appendix for…
  18. 2014 ANALYST MEETING – Phillips 66 – slide 18
    Total Shareholder Return PSX +142% 140% 100% 60% S&P 100 +33% 20% -20% May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 See appendix for footnotes. 17
  19. 2014 ANALYST MEETING – Phillips 66 – slide 19
    Shareholder Distributions Distributions Regular dividends B Secure 6.0 Share Exchange Growing Dividends Share Repurchases Competitive 4.0 Share repurchase Immediate EPS growth 2.0 Below intrinsic value 0.0 Announced 5 B of…
  20. 2014 ANALYST MEETING – Phillips 66 – slide 20
    Disciplined Capital Allocation 2014E 2016E Investment Sustain operations Fund capacity growth Generate competitive returns Distributions Distributions Reinvestment Double-digit dividend growth rate Repurchase shares Capital…
  21. 2014 ANALYST MEETING – Phillips 66 – slide 21
    2014 Key Initiatives Growth Advance infrastructure projects Progress USGC petrochemicals complex Grow Phillips 66 Partners Returns Increase advantaged crude Expand export capability Maintain cost discipline Grow…
  22. 2014 ANALYST MEETING – Phillips 66 – slide 22
    Executing Growth Delivering Returns TIM TAYLOR EVP, Commercial, Marketing, Transportation and Business Development
  23. 2014 ANALYST MEETING – Phillips 66 – slide 23
    Global Portfolio Midstream Chemicals Refining Marketing & Specialties 18,000+ pipeline miles 50/50 CPChem JV 15 refineries 10,000+ global outlets 10,000+ rail cars 35 manufacturing facilities 410 MBD export capacity 2,158 MBD…
  24. 2014 ANALYST MEETING – Phillips 66 – slide 24
    Value Chains Crude pipelines, Refineries marine and rail Crude production Refined product markets Pipelines and terminals Well Head LPG markets Gas production Petrochemicals NGL and natural Fractionation gas G&P and…
  25. 2014 ANALYST MEETING – Phillips 66 – slide 25
    Midstream Portfolio NGL Capital Program B Pipelines and fractionation Export terminals 3.4 2.9 Transportation Crude and product pipelines 2.2 Terminals and storage 1.5 Rail, marine and trucks DCP Midstream Gathering and…
  26. 2014 ANALYST MEETING – Phillips 66 – slide 26
    NGL Growth Sweeny Fractionator I 2015 Freeport LPG 2016 Export Terminal Future investments 2017+ Fractionators Condensate splitters Pipelines 25
  27. 2014 ANALYST MEETING – Phillips 66 – slide 27
    Transportation EBITDA and CapEx B Crude oil logistics 0.5 0.4 Rail cars 0.4 Jones Act ships 0.2 Refined product exports 2013 2014E EBITDA CapEx Transportation EBITDA includes noncontrolling interests. 26
  28. 2014 ANALYST MEETING – Phillips 66 – slide 28
    Transportation Midcon Region Current Capacity (MBD) Crude Pipelines 30 140 Products Pipelines 10 130 Terminals 10 78 27
  29. 2014 ANALYST MEETING – Phillips 66 – slide 29
    Transportation Rockies Region Current Capacity (MBD) Crude Pipelines 54 100 Products Pipelines 33 66 Terminals 10 41 28
  30. 2014 ANALYST MEETING – Phillips 66 – slide 30
    Transportation West Coast Region Current Capacity (MBD) Current Capacity (MBD) Crude Pipelines 40 103 Products Pipeline 26 Terminals 17 33 Terminals 13 28 29
  31. 2014 ANALYST MEETING – Phillips 66 – slide 31
    Transportation Gulf Coast Region Current Capacity (MBD) Crude Pipelines 22 440 Products Pipelines 175 500 Terminals 16 30
  32. 2014 ANALYST MEETING – Phillips 66 – slide 32
    Transportation Rail and Marine Hardisty, AB Stampede, ND Enhancing logistics optionality Clatskanie, OR Berthold, ND 2 Jones Act ships Albany, NY Casper, WY 14 crude barges Chicago, IL Philadelphia, PA Bakersfield, CA…
  33. 2014 ANALYST MEETING – Phillips 66 – slide 33
    Midstream and Refining Logistics EBITDA B NGL fractionators and pipelines Crude and product pipelines 1.5 Terminals and storage 0.5 2013 Frac I Refining Other 2017E Truck and rail Midstream LPG Export logistics Midstream…
  34. 2014 ANALYST MEETING – Phillips 66 – slide 34
    Phillips 66 Partners IPO in July 2013 Phillips 66 ownership 73% LP interest 2% GP interest Top-quartile distribution growth 700 MM acquisition in March 2014 140 - 145 MM annualized EBITDA 33
  35. 2014 ANALYST MEETING – Phillips 66 – slide 35
    Phillips 66 Partners Unlocks Value Enterprise Value B Value uplift for existing portfolio 3.7 Public Provides advantaged capital for Midstream growth PSX 0.9 Ownership Increases financial flexibility PSX Multiple PSXP LP…
  36. 2014 ANALYST MEETING – Phillips 66 – slide 36
    DCP Midstream Financials EBITDA B 2 B capex total in execution Goliad In Service 1.5 1.6 Front Range In Service 1.3 OConnor Plant Expansion In Service 1.2 National Helium Plant Expansion 2Q 2014 Keathley Canyon Connector 4Q…
  37. 2014 ANALYST MEETING – Phillips 66 – slide 37
    DCP Midstream Executing Growth 2010 2016E Growth CapEx 8 B 2010 2016E 8 B Assets 16 B+ 58 No. of plants 70+ Processing 5.1 volume 6.2+ (BCFD) NGL production 369 525+ (MBD) NGL pipeline Top-tier gatherer 1,400 miles…
  38. 2014 ANALYST MEETING – Phillips 66 – slide 38
    Chemicals Chevron Phillips Chemical Company Capital Program B Market leader 2.6 Largest global HDPE producer 2.1 2.0 2nd largest global alpha olefins producer 1.2 4th largest N.A. ethylene producer Highest returns amongst…
  39. 2014 ANALYST MEETING – Phillips 66 – slide 39
    Chemicals CPChem Portfolio 50/50 JV with Chevron 11 joint ventures 2 research facilities Sales into 139 countries Total Net Capacity 2013 Income Before Taxes from Continuing 2013 Operations SA&S SA&S Intl O&P O&P…
  40. 2014 ANALYST MEETING – Phillips 66 – slide 40
    Chemicals CPChem Growth Plans 2013 2014 2015 2016 2017 1-Hexene Unit Capacity growth 250 kMTA 36% U.S. O&P Sweeny Ethylene 90 kMTA Estimated growth spending 6.5 7 B USGC Petrochemicals 1,500 kMTA (ethylene) 1,000 kMTA…
  41. 2014 ANALYST MEETING – Phillips 66 – slide 41
    Refining 15 refineries worldwide 2.2 MMBD crude capacity Capital Program B 1.2 1.2 1.2 1.1 Ireland United Kingdom Malaysia Germany 2013 2014E 2015E 2016E 40
  42. 2014 ANALYST MEETING – Phillips 66 – slide 42
    Refining Crude Mix Heavy Light/ Atlantic Basin Central Corridor Medium Worldwide Gulf Coast Western Pacific See appendix for footnotes. 41
  43. 2014 ANALYST MEETING – Phillips 66 – slide 43
    Improving Refining Returns Constant Crack Spreads Increasing advantaged crude ROCE Improvement Improving yields Expanding export capacity 15% 11% Managing costs 5-Yr Avg Adv Crude Yields & Costs 2018E Exports 42
  44. 2014 ANALYST MEETING – Phillips 66 – slide 44
    Capturing Advantaged Crude U.S. Refining Crudes % Brent Other Light/Medium Heavy Canadian WTI/WTS Current 2016E See appendix for footnotes. 43
  45. 2014 ANALYST MEETING – Phillips 66 – slide 45
    Improving Yields Distillate yield of 41% Additional improvements LPG recovery Technology enhancements Product optimization Clean product yield of 85% 44
  46. 2014 ANALYST MEETING – Phillips 66 – slide 46
    Growing Exports Export Capacity MBD 550 West 410 West Gulf Gulf East East 2013 2016E 45
  47. 2014 ANALYST MEETING – Phillips 66 – slide 47
    Marketing and Specialties CapEx B U.S. Marketing 0.2 Ensure refinery placement International Marketing 0.1 0.1 0.1 Retail growth in Europe Specialties Selective Lubricants growth 2013 2014E 2015E 2016E 46
  48. 2014 ANALYST MEETING – Phillips 66 – slide 48
    Commercial Minimize feedstock costs Optimize product channel of trade Capture market opportunities Ensure compliance 47
  49. 2014 ANALYST MEETING – Phillips 66 – slide 49
    2014 Initiatives Midstream Creating logistics optionality Expanding pipelines Increasing rail capability Advancing Sweeny Hub Refining Investing in advantaged crude Growing export capacity Chemicals Advancing USGC projects…
  50. 2014 ANALYST MEETING – Phillips 66 – slide 50
    Financial Update GREG MAXWELL Executive Vice President, Finance and Chief Financial Officer
  51. 2014 ANALYST MEETING – Phillips 66 – slide 51
    Financial Strategy Dividends and capital funding Double-digit dividend growth rate Share repurchase program PSXP as additional funding source Investment-grade credit ratings 50
  52. 2014 ANALYST MEETING – Phillips 66 – slide 52
    Shareholder Return Growth 2 B Share Repurchase 76.65 PSX Begins Authorized Completed Trading PSXP IPO 25% Dividend 700 MM Increase PSXP Acquisition 1 B Share Repurchase PSPI 1.4 B Authorized 1 B Share 1 B Share Exchange…
  53. 2014 ANALYST MEETING – Phillips 66 – slide 53
    Capital Structure 23.8 20% - 30% 22.4 19.0 8.0 6.2 6.4 2Q 2012 2013 2014E Equity (B) Debt (B) PSXP (B) Debt-to-Capital (%) 52
  54. 2014 ANALYST MEETING – Phillips 66 – slide 54
    Funding Growth Capital Allocation Consensus Cash from Operations B B 6.1 6.0 4.8 5.1 2.7 1.8 2013 2014E 2013 2014E Cash Distributions Growth & Investment CapEx Sustaining CapEx Consolidated CapEx Total 53
  55. 2014 ANALYST MEETING – Phillips 66 – slide 55
    Capital Program Total Capital Program Growth Capital 12 B B 5.7 6.0 4.6 3.7 2013 2014E 2015E 2016E 2014E 2016E CPChem DCP Midstream Refining WRB M&S Sustaining See appendix for footnotes. 54
  56. 2014 ANALYST MEETING – Phillips 66 – slide 56
    Shareholder Distributions Phillips 66 Common Stock Dividend Growth MM shares /share 7.75 (42) (17) 4.6 6.25 5.00 1.4 625 39 566 3.2 20 April Share PSPI PSPI March B Q3 2012 Q4 2012 Q1 2013 Q4 2013 Q1 2014 2012…
  57. 2014 ANALYST MEETING – Phillips 66 – slide 57
    Sources and Uses of Cash 2014 Outlook B 5.1 (2.7) 0.8 (3.4) 5.4 5.2 Beginning Cash Capital Distributions Other Ending Cash from Expenditures Cash Jan 1, 2014 Operations Dec 31, 2014 Cash from Operations is based on…
  58. 2014 ANALYST MEETING – Phillips 66 – slide 58
    Debt and Liquidity Debt Maturity Profile Liquidity B B 0.7 4.5 (0.1) 10.6 10.5 4.5 5.4 0.7 2.1 1.5 1.5 0.8 2015 2016 2017 2018 2019-22 2023-50 Cash Revolver Receivable Total Letters of Available Facility Securitization…
  59. 2014 ANALYST MEETING – Phillips 66 – slide 59
    Phillips 66 Partners Financial Strategy Investment-grade credit rating Target 3.0x debt / EBITDA Top-quartile distributions Annual coverage ratio 1.1x Support Phillips 66 Midstream growth 58
  60. 2014 ANALYST MEETING – Phillips 66 – slide 60
    Financial Performance Average Capital Employed Average Capital Employed B by Segment 2014E Midstream Corporate 28 29 Chemicals 2013 2014E M&S Refining Consensus Adjusted 13.7% ROCE 13.7% 3.6 B Earnings 4.2 B 5.89/share…
  61. 2014 ANALYST MEETING – Phillips 66 – slide 61
    Strategic Focus Ensure investment-grade credit ratings Fund capital program Increase distributions Deliver leading total shareholder return 60
  62. 2014 ANALYST MEETING – Phillips 66 – slide 62
    Compelling Investment Shareholder returns PSX +142% 140% Unique portfolio 100% EBITDA growth S&P 100 +33% 60% Disciplined capital allocation 20% Multiple expansion May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14…
  63. 2014 ANALYST MEETING – Phillips 66 – slide 63
    Appendix 2014 Analyst Meeting April 10, 2014 New York, N.Y.
  64. 2014 ANALYST MEETING – Phillips 66 – slide 64
    Phillips 66 Midstream and Refining Logistics Crude and 4,100 miles of crude pipelines with 1,200 MBD capacity Product Pipelines 6,600 miles of product pipelines with 1,000 MBD capacity 25% interest in REX natural gas pipeline with 1.8…
  65. 2014 ANALYST MEETING – Phillips 66 – slide 65
    DCP Midstream Regional Growth 2013 NGL Processing CapEx Production Capacity 2014E-2016E MBD BCFD B Permian 130 1.4 1.0 - 1.5 South 130 3.2 .50 - 1.0 North 49 0.9 1.0 - 1.5 Midcon 120 2.0 .75 - 1.0 Logistics N/A N/A .75 - 1.0…
  66. 2014 ANALYST MEETING – Phillips 66 – slide 66
    2014 Sensitivities 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…
  67. 2014 ANALYST MEETING – Phillips 66 – slide 67
    2014 Guidance After-Tax Corporate Segment Net Income Losses 0.4 B Pre-Tax Turnaround Costs 0.4 B Pre-Tax Depreciation and Amortization Expense 1.0 B Effective Tax Rate Mid-30's 70
  68. 2014 ANALYST MEETING – Phillips 66 – slide 68
    Capital Program Millions of Dollars Years Ended December 31 2013 2014E 2015E 2016E Capital Expenditures and Investments* Consolidated Midstream Transportation 226 388 385 400 NGL 302 1,029 2,027 2,537 528 1,417 2,412 2,937 Chemicals…
  69. 2014 ANALYST MEETING – Phillips 66 – slide 69
    Capital Program Millions of Dollars Millions of Dollars Years Ended December 31 2013 2014E 2015E 2016E Years Ended December 31 2013 2014E 2015E 2016E Growth Capital Sustaining Capital* Consolidated Consolidated Midstream Midstream…
  70. 2014 ANALYST MEETING – Phillips 66 – slide 70
    Non-GAAP Reconciliations Use of Non-GAAP Financial Information This presentation includes the terms adjusted earnings, adjusted earnings per share, EBITDA and return on capital employed. These are non-GAAP financial measures.…
  71. 2014 ANALYST MEETING – Phillips 66 – slide 71
    Non-GAAP Reconciliations 2013 Average Capital Percent of Employed in Average Millions of Capital Dollars Employed Reconciliation of Capital Employed* Midstream GAAP Average Capital Employed 3,158 13% Plus: Proportional share of…
  72. 2014 ANALYST MEETING – Phillips 66 – slide 72
    Non-GAAP Reconciliations 2013 2013 Average Average Capital Percent of Capital Percent of Employed in Average Employed Average Millions of Capital in Millions Capital Dollars Employed of Dollars Employed Reconciliation of Capital…
  73. 2014 ANALYST MEETING – Phillips 66 – slide 73
    Non-GAAP Reconciliations Millions of Dollars Year Ended December 31, 2013 Refining Midstream Chemicals and M&S Numerator Net income 486 986 2,641 After-tax interest expense - - - GAAP ROCE earnings 486 986 2,641 Special items - -…
  74. 2014 ANALYST MEETING – Phillips 66 – slide 74
    Non-GAAP Reconciliations Millions of Dollars First Year Sweeny Fractionator and Freeport Export Facility Estimated net income 210 Plus: Estimated income taxes 135 Estimated net interest expense 5 Estimated depreciation and…
  75. 2014 ANALYST MEETING – Phillips 66 – slide 75
    Non-GAAP Reconciliations Millions of Dollars Years Ended December 31 2013 2014E Transportation Net Income Attributable to Phillips 66 200 222 Plus: Net income attributable to noncontrolling interests 17 41 Income taxes 110 148…
  76. 2014 ANALYST MEETING – Phillips 66 – slide 76
    Non-GAAP Reconciliations Millions of Dollars Year Ended December 31 2013 Transportation and NGL Net Income Attributable to Phillips 66 259 Plus: Net income attributable to noncontrolling interests 17 Income taxes 143 Depreciation and…
  77. 2014 ANALYST MEETING – Phillips 66 – slide 77
    Non-GAAP Reconciliations Millions of Dollars Years Ended December 31 2014E Phillips 66 Partners LP Net Income 119.0 - 124.0 Plus: Depreciation 15.0 Net interest expense 5.4 Amortization of deferred rentals 0.4 Provision for income…
  78. 2014 ANALYST MEETING – Phillips 66 – slide 78
    Non-GAAP Reconciliations Millions of Dollars Years Ended December 31 2013 2014E 2015E 2016E 100% DCP Midstream Net Income Attributable to Members' Interest 491 510 545 555 Plus: Net income attributable to noncontrolling interests 93…
  79. 2014 ANALYST MEETING – Phillips 66 – slide 79
    Non-GAAP Reconciliations Millions of Dollars Low High 100% CPChem Incremental Project Earnings Projections Estimated incremental net income 1,000 1,313 Plus: Estimated income taxes 20 27 Estimated net interest expense - - Estimated…
  80. 2014 ANALYST MEETING – Phillips 66 – slide 80
    Non-GAAP Reconciliations Millions of Dollars Except as Indicated Years Ended December 31 5-Year Average Refining - ROCE Numerator Average 2009 - 2013 net income 1,103 After-tax interest expense - GAAP ROCE earnings 1,103 Special Items…
  81. 2014 ANALYST MEETING – Phillips 66 – slide 81
    Non-GAAP Reconciliations Millions of Dollars Year Ended December 31 2013 Net Income Attributable to Phillips 66 3,726 Adjustments: Net gain on asset sales (23) Exit of business line 34 Tax law impacts (17) Pending claims and…
  82. 2014 ANALYST MEETING – Phillips 66 – slide 82
    Non-GAAP Reconciliations Millions of Dollars Millions of Dollars Except as Indicated Years Ended December 31 5-Year Average Marketing and Specialties Year Ended December 31 2013 Net Income Attributable to Phillips 66 558 Phillips 66 -…

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