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Q2 2015 Earnings Call – Phillips 66

Phillips 66 · Aug 13, 2015 · 58 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. Q2 2015 Earnings Call – Phillips 66 – slide 1
    Investor Update Second Quarter 2015
  2. Q2 2015 Earnings Call – Phillips 66 – slide 2
    Execution Investor Update Second Quarter 2015 NYSE: PSX www.phillips66.com
  3. Q2 2015 Earnings Call – Phillips 66 – slide 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…
  4. Q2 2015 Earnings Call – Phillips 66 – slide 4
    Phillips 66 Financial Highlights Segment Adjusted EBITDA 2Q 2015 3.0 B Adjusted EBITDA 2.1 B 2.0 Capital expenditures 1.2 B 1.0 Distributions 0.6 B 0.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Average 2013 2014 2015 M&S Chemicals…
  5. Q2 2015 Earnings Call – Phillips 66 – slide 5
    Operating Excellence Total Recordable Rates Refining Environmental Metrics Incidents per 200,000 Hours Worked Industry Average 08 10 12 14 880 450 430 300 Phillips 66 CPChem DCP 2008 2010 2012 2014 Operating Costs and SG&A…
  6. Q2 2015 Earnings Call – Phillips 66 – slide 6
    Energy Landscape Historical and Forward Crude Oil Prices /bbl Markets seeking balance 120 Brent WTI Global economic boost from 90 lower energy prices should stimulate demand 60 Reduced E&P investment slows 30 U.S.…
  7. Q2 2015 Earnings Call – Phillips 66 – slide 7
    Segment Strategy Midstream: Growth Chemicals: Growth Refining: Marketing and Enhance Returns Specialties: Selective Growth Execute Sweeny hub Grow CPChem organically Optimize crude slate Expand European retail Grow integrated…
  8. Q2 2015 Earnings Call – Phillips 66 – slide 8
    Midstream NGL 2014 EBITDA 2018E EBITDA 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…
  9. Q2 2015 Earnings Call – Phillips 66 – slide 9
    Midstream EBITDA Growth B 2.3 2018E and in-flight 0.4 projects EBITDA 1.2 Remaining at PSX 0.9 PSXP 0.7 EBITDA 1.1 0.3 PSXP 2Q 2015 Run-Rate PSX Operating Assets Projects Under Planned Run Rate EBITDA EBITDA…
  10. Q2 2015 Earnings Call – Phillips 66 – slide 10
    Phillips 66 Partners Growth B Fee-based business model 8 - 10 1.1 Dropdown Proceeds Growing cash flows Distributions 30% distribution CAGR through 2018 0.3 1.9 Funding Midstream growth 2Q 2015 2018E 2Q 2015 2018E…
  11. Q2 2015 Earnings Call – Phillips 66 – slide 11
    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…
  12. Q2 2015 Earnings Call – Phillips 66 – slide 12
    Chemicals Environment Global Ethylene Production /MT Cost Supply Curve 900 W. Europe Narrowing spread of ethane/LPG Naphtha 800 feedstocks 700 Asia Naphtha 600 M.E. LPG/ W. Europe Naphtha LPG Record 2014 ethane chain margins, 500…
  13. Q2 2015 Earnings Call – Phillips 66 – slide 13
    CPChem Phillips 66 Chemicals Adjusted ROCE Leading petrochemical company 35% Feedstock advantaged 30% 10.5 B Lb/yr worldwide ethylene capacity 25% Strong global aromatics position 20% USGC Petrochemicals project on track 15% 6 B…
  14. Q2 2015 Earnings Call – Phillips 66 – slide 14
    Refining 2.2 MMBD Global Refining Capacity Optimizing crude slate Improving yields Central Expanding export capability Atlantic Corridor West Coast Basin/Europe 492 MBD 360 MBD 588 MBD Managing costs Gulf Coast Heavy…
  15. Q2 2015 Earnings Call – Phillips 66 – slide 15
    Marketing and Specialties Adjusted EBITDA High-returning businesses 1.5 B U.S. Marketing Avg. 1.2 B Wholesale network 8,600 branded sites 1.0 International Marketing Low-cost, high-volume business 0.5 1,520 sites…
  16. Q2 2015 Earnings Call – Phillips 66 – slide 16
    EBITDA Growth Segment Adjusted EBITDA B More than 30% EBITDA growth 8.4 Cash flows less volatile by 2018E 6.4 2018E portfolio shift to higher-value businesses 20% Midstream 25% Chemicals 40% Refining 2009-2014 Avg. 2018E 15%…
  17. Q2 2015 Earnings Call – Phillips 66 – slide 17
    Financial Strategy 2014E 2016E Ensuring financial flexibility Investment grade credit rating Adequate liquidity Funding transformational growth Cash from operations Distributions Reinvestment Dropdowns to PSXP Returning capital…
  18. Q2 2015 Earnings Call – Phillips 66 – slide 18
    2015 Capital Budget 3.4 B Growth capital Sweeny Fractionator One LPG Export Terminal Bakken to Patoka/Beaumont pipelines Beaumont Terminal expansion 0.2 B for PSXP projects PSX Sustaining Refining Returns M&S Growth…
  19. Q2 2015 Earnings Call – Phillips 66 – slide 19
    Distributions Share Count and Capital Returned Dividend Growth Quarterly /share 7.0 B 56 624 MM 590 MM 20 538 MM 3Q 4Q 2Q 3Q 4Q 2Q 2012 2013 2015 2012 2013 2015 1.4 B remaining authorized share repurchases 180% dividend…
  20. Q2 2015 Earnings Call – Phillips 66 – slide 20
    Creating Value Enterprise Value Uniquely positioned portfolio Disciplined capital allocation More than 30% EBITDA growth Multiple expansion Commitment to distributions 2014 2018E Strong balance sheet Midstream PSXP Chemicals…
  21. Q2 2015 Earnings Call – Phillips 66 – slide 21
    Institutional Investors Contact Kevin Mitchell InvestorRelationsp66.com Vice President, Investor Relations 832-765-2297 C.W. Mallon Manager, Investor Relations
  22. Q2 2015 Earnings Call – Phillips 66 – slide 22
    Investor Update August 2015 NYSE: PSXP www.phillips66partners.com
  23. Q2 2015 Earnings Call – Phillips 66 – slide 23
    Phillips 66 Partners Ownership Structure (NYSE: PSX) 100% ownership interest PSXP Public Phillips 66 Partners GP LLC Unitholders 69% limited partner (PSXP General Partner) interest General Partner Units IDRs 29% limited…
  24. Q2 2015 Earnings Call – Phillips 66 – slide 24
    Phillips 66 Partners Strong alignment with Phillips 66 Highly integrated assets Stable and predictable cash flows Significant growth potential Financial flexibility Pecan Grove Marine Dock 26
  25. Q2 2015 Earnings Call – Phillips 66 – slide 25
    Phillips 66 Partners Financial Highlights 0.45 Distribution / LP Unit () 2Q 2015 0.40 Distributable cash flow 47.8 MM 0.35 0.30 Adjusted EBITDA 57.0 MM 0.25 0.40 0.37 0.34 0.20 0.3017 0.3168 Acquired interest in three…
  26. Q2 2015 Earnings Call – Phillips 66 – slide 26
    Q1 2015 Acquisition Drop down 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 1.1 B acquisition Asset-level 2015E EBITDA of 115…
  27. Q2 2015 Earnings Call – Phillips 66 – slide 27
    275 MM In Announced Organic Growth Cross-Channel Capital cost: 22 MM Connector Pipeline Increases access to export docks for shippers in Houston Ship Channel Expected completion in 4Q 2015 Capital cost: 50 MM Eagle Ford Crude…
  28. Q2 2015 Earnings Call – Phillips 66 – slide 28
    Highly Integrated Assets Palermo Rail Terminal expected to be operational Q4 2015. 30
  29. Q2 2015 Earnings Call – Phillips 66 – slide 29
    Fee-based, Long-term contracts provide stability Asset Initial Term (years) Maximum Term with Options (years) Clifton Ridge to Lake Charles 10 20 Sweeny to Pasadena 10 20 Pipelines Hartford Connector 23 * 23 Gold Line 10 15…
  30. Q2 2015 Earnings Call – Phillips 66 – slide 30
    Adjusted EBITDA and DCF Adjusted EBITDA (MM) Distributable Cash Flow (MM) 57.0 49.0 47.8 43.7 41.9 37.6 37.2 35.9 34.3 33.4 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 32
  31. Q2 2015 Earnings Call – Phillips 66 – slide 31
    Balanced Debt Maturity Profile 10-year notes 1.1 B debt issuance February 2015 3.605% coupon 5-Year 300 MM notes 500 MM 10-Year 500 MM notes 30-Year 300 MM notes 5-year notes 30-year notes 2.646% coupon 4.68% coupon 300…
  32. Q2 2015 Earnings Call – Phillips 66 – slide 32
    Financial Flexibility Investment grade credit rating Target 3.5x debt / EBITDA 30% distribution CAGR through 2018 Target 1.1x annual coverage ratio Support Phillips 66 Midstream growth 34
  33. Q2 2015 Earnings Call – Phillips 66 – slide 33
    Total Return Since IPO 250% Closed 2nd PSXP 172% acquisition - 230% Alerian MLP Index -10% 340 MM 210% 190% Closed 1st 170% acquisition - 150% 700 MM 130% 110% Closed 3rd IPO acquisition - 90% 1.1 B 70% 50% 30% 10% -10%…
  34. Q2 2015 Earnings Call – Phillips 66 – slide 34
    Institutional Investors Contact Kevin Mitchell - Investor Relations Kevin.Mitchellp66.com 832-765-2297 C.W. Mallon - Investor Relations C.W.Mallonp66.com 832-765-2297
  35. Q2 2015 Earnings Call – Phillips 66 – slide 35
    Capital Structure Fully consolidated Excluding PSXP 28% 28% 29% 26% 20- 30% 22% 22% 22.4 22.0 23.2 22.0 21.6 22.4 8.7 9.0 8.7 7.9 6.2 5.4 6.2 5.0 5.2 5.0 5.2 5.1 2013 2014 2Q 2015 2013 2014 2Q 2015 Equity B Debt B…
  36. Q2 2015 Earnings Call – Phillips 66 – slide 36
    Free Cash Flow Midstream Chemicals B B 0.2 0.3 0.8 0.9 0.7 0.5 CFO (excl. WC) Sustaining Capex Free Cash Flow CFO (excl. WC) Sustaining Capex Free Cash Flow Refining Marketing & Specialties B B 0.9 0.1 2.5 0.7 0.6…
  37. Q2 2015 Earnings Call – Phillips 66 – slide 37
    2014 Adjusted ROCE 40% M&S 30% Chemicals 32% 20% 27% P66 Total Midstream Refining 14% 10% 13% 12% Corporate 0% -5% -10% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Average Capital Employed (B) 41
  38. Q2 2015 Earnings Call – Phillips 66 – slide 38
    2014 Adjusted CROCE 40% M&S 30% Chemicals 36% Refining P66 Total 20% 27% Midstream 17% 10% 17% 15% Corporate 0% -2% -10% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Average Capital Employed (B) CROCE defined as Adjusted…
  39. Q2 2015 Earnings Call – Phillips 66 – slide 39
    Adjusted EBITDA B 10 8 Avg. 6.4 B 6 4 2 0 2009 2010 2011 2012 2013 2014 2018E -2 Refining Midstream Chemicals M&S Corporate Average is 2009 through 2014. 43
  40. Q2 2015 Earnings Call – Phillips 66 – slide 40
    Chemicals CPChem Adjusted EBITDA B 4.2 3.4 3.4 2.5 1.9 1.1 2009 2010 2011 2012 2013 2014 Reflects 100% CPChem. 44
  41. Q2 2015 Earnings Call – Phillips 66 – slide 41
    Midstream DCP Adjusted EBITDA B 1.4 1.2 1.0 0.9 1.0 0.8 2009 2010 2011 2012 2013 2014 Reflects 100% DCP Midstream. 45
  42. Q2 2015 Earnings Call – Phillips 66 – slide 42
    2015 Sensitivities Phillips 66 Annual Net Income MM Midstream - DCP (net to Phillips 66) 10/Gal Increase in NGL price 30 1/MMBtu Increase in Natural Gas price 25 10/BBL Increase in WTI price 15 Chemicals - CPChem (net to Phillips…
  43. Q2 2015 Earnings Call – Phillips 66 – slide 43
    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 1,931 167 2,996 3,163 Chemicals - -…
  44. Q2 2015 Earnings Call – Phillips 66 – slide 44
    Non-GAAP Reconciliations Millions of Dollars Year ending February 29 2016 Reconciliation of PSXP Estimated EBITDA to Estimated Net Income* Estimated net income 82 Plus: Depreciation 20 Interest expense 4 Income taxes 9 Estimated…
  45. Q2 2015 Earnings Call – Phillips 66 – slide 45
    Non-GAAP Reconciliations Millions of Dollars 2009 2010 2011 2012 2013 2014 Phillips 66 Chemicals Segment ROCE Numerator Net Income 228 486 716 823 987 1,137 After-tax interest expense - - - - - - GAAP ROCE earnings 228 486 716 823 987…
  46. Q2 2015 Earnings Call – Phillips 66 – slide 46
    Non-GAAP Reconciliations Millions of Dollars Millions of Dollars 2009-2014 2009-2014 Marketing & Specialties Adjusted EBITDA Reconciliation 2009 2010 2011 2012 2013 2014 Average Marketing & Specialties Adjusted EBITDA Reconciliation…
  47. Q2 2015 Earnings Call – Phillips 66 – slide 47
    Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Midstream Midstream net income attributable to Phillips 66 384 384 2,147 52 469 507 657 Plus:…
  48. Q2 2015 Earnings Call – Phillips 66 – slide 48
    Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Refining Refining net income (loss) attributable to Phillips 66 (556) (661) 1,369 3,091 1,747…
  49. Q2 2015 Earnings Call – Phillips 66 – slide 49
    Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Marketing and Specialties Marketing and Specialties net income attributable to Phillips 66 541…
  50. Q2 2015 Earnings Call – Phillips 66 – slide 50
    Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Phillips 66 Phillips 66 net income attributable to Phillips 66 476 735 4,775 4,124 3,726 4,762…
  51. Q2 2015 Earnings Call – Phillips 66 – slide 51
    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 - -…
  52. Q2 2015 Earnings Call – Phillips 66 – slide 52
    Non-GAAP Reconciliations Millions of Dollars 2014 Marketing & Phillips 66 Midstream Chemicals Refining Specialties Corporate Phillips 66 ROCE Numerator Net Income 4,797 541 1,137 1,771 1,034 (393) After-tax interest expense 173 - -…
  53. Q2 2015 Earnings Call – Phillips 66 – slide 53
    Non-GAAP Reconciliations Average 2009-2014 Marketing & Midstream Chemicals Refining Specialties FCF Yield Numerator Cash From Operations GAAP 559 230 2,615 563 Less: Change in Non-Cash Working Cap. (13) - 152 (127) Cash From…
  54. Q2 2015 Earnings Call – Phillips 66 – slide 54
    Non-GAAP Reconciliations Millions of Dollars 2009 2010 2011 2012 2013 2014 100% CPChem Net Income 615 1,388 1,970 2,403 2,743 3,288 Plus: Income taxes 26 42 57 67 71 86 Net interest expense 58 63 18 8 (3) (2) Depreciation and…
  55. Q2 2015 Earnings Call – Phillips 66 – slide 55
    Non-GAAP Reconciliations Millions of Dollars 2013 2014 2015 Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Average Midstream Midstream net income 114 92 152 128 194 117 124 107 78 (62) 104 Plus: Provision…
  56. Q2 2015 Earnings Call – Phillips 66 – slide 56
    Non-GAAP Reconciliations Millions of Dollars 2013 2014 2015 Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Average Refining Refining net income 904 455 (30) 418 306 390 558 517 538 604 466 Plus: Provision…
  57. Q2 2015 Earnings Call – Phillips 66 – slide 57
    Non-GAAP Reconciliations Millions of Dollars 2013 2014 2015 Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Average Corporate Corporate net income (loss) (95) (126) (113) (97) (81) (121) (91) (100) (126)…
  58. Q2 2015 Earnings Call – Phillips 66 – slide 58
    Adjusted EBITDA and Distributable Cash Flow Reconciliation to Net Income MM 2Q 2015 1Q 2015 4Q 2014 3Q 2014 2Q 2014 Net Income 42.0 35.4 36.3 30.0 30.9 Plus: Depreciation 5.3 5.1 4.5 4.2 3.9 Net interest expense 9.5 5.8 2.1 1.4 1.3…

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