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February 2016 Investor Update – Phillips 66

Phillips 66 · Feb 4, 2016 · 56 slides

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Slides

  1. February 2016 Investor Update – Phillips 66 – slide 1
    Investor Update February 2016 NYSE: PSX www.phillips66.com
  2. February 2016 Investor Update – Phillips 66 – slide 2
    Strategy Operating Committed to safety, reliability and environmental stewardship while Excellence protecting shareholder value Reshaping our portfolio by capturing growth opportunities in Midstream Growth and Chemicals Enhancing…
  3. February 2016 Investor Update – Phillips 66 – slide 3
    Operating Excellence Total Recordable Rates Refining Environmental Metrics (Incidents per 200,000 Hours Worked) Industry Average 1.0 12 13 14 15 0.5 430 317 300 279 0.0 Phillips 66 CPChem DCP 2012 2013 2014 2015 Operating Costs…
  4. February 2016 Investor Update – Phillips 66 – slide 4
    Global Energy Landscape Global Oil Supply and Demand (MMBD) Abundant supply 97 95 Demand exceeding expectations 93 91 89 Energy efficiency increasing 87 85 2010 2011 2012 2013 2014 2015E Source: International…
  5. February 2016 Investor Update – Phillips 66 – slide 5
    U.S. Energy Landscape U.S. Liquids Production (MMBD) NGL production remains resilient 15 12 Pace of infrastructure investment 9 contingent on production growth 6 Stronger fuels demand 3 0 2010 2012 2014 2016 Crude &…
  6. February 2016 Investor Update – Phillips 66 – slide 6
    U.S. Downstream Advantage U.S. Refiners Advantage 10 Current Refiners and chemical Historical manufacturers remain advantaged 5 Low feedstock costs 0 Natural Gas, /MMBtu Brent - WTI, /bbl Low energy costs N.A. HDPE Chain…
  7. February 2016 Investor Update – Phillips 66 – slide 7
    Value of Integration EV/EBITDA Multiples Creating value across downstream Accelerating growth Leveraging existing portfolio Allocating capital efficiently Expanding multiple 4.9x 6.4x 6.7x 12.4x Refining PSX Chemicals…
  8. February 2016 Investor Update – Phillips 66 – slide 8
    Midstream EBITDA 2015 2016 2017 2018 (B) 2.3 Sweeny Midstream Hub Phase 1 0.4 EBITDA 1.2 Remaining Beaumont Terminal Expansion 0.9 at PSX Bakken Expansion (PSXP) EBITDA 0.7 1.1 in PSXP Bayou Bridge Pipeline 0.3 PSXP 2015…
  9. February 2016 Investor Update – Phillips 66 – slide 9
    PSXP Value to PSX Cumulative Cash from PSXP PSX Equity Value of PSXP (B) Distributions (B) Fee-based assets 15 15 Cumulative Dropdown Proceeds Growth opportunities Cumulative Organic 10 Distributions 10 Drop downs Selective…
  10. February 2016 Investor Update – Phillips 66 – slide 10
    DCP Midstream Placed following projects into service in 2015 Keathley Canyon National Helium Plant expansion Zia II Plant and Gathering Lucerne 2 Plant and Gathering Sand Hills Laterals DJ Basin Grand Parkway Self-help…
  11. February 2016 Investor Update – Phillips 66 – slide 11
    Chemicals 2015E vs 2014 Average Ethylene Production Cost Curve Petrochemical demand driven (/ton) by global GDP growth 1,200 2014 2015 1,050 900 Cost-advantaged feedstocks 750 CPChem W. Europe Naphtha 600 Asia Coal Asia…
  12. February 2016 Investor Update – Phillips 66 – slide 12
    CPChem Projects Update 1.5 B EBITDA growth by 2018 Completed 1-hexene project and 10th Sweeny furnace in 2014 NAO expansion 100 kMTA at Cedar Bayou, TX Completed 2Q 2015 USGC Petrochemicals 1,500 kMTA (ethylene) at Cedar Bayou,…
  13. February 2016 Investor Update – Phillips 66 – slide 13
    Refining Enhancing Returns 2009 2014 Average Annual Free Cash Flow (B) Significant free cash flow generation 0.9 2.5 High-return projects creating 1.6 sustainable earnings increases CFO Sustaining Capex FCF Increasing ROCE 4% by…
  14. February 2016 Investor Update – Phillips 66 – slide 14
    Marketing & Specialties High-returning businesses 35% ROCE U.S. Marketing Wholesale model Enhancing fuels brands Volume growth International Marketing Retail / wholesale model Adding 100+ sites Specialties Grow Lubricants…
  15. February 2016 Investor Update – Phillips 66 – slide 15
    Phillips 66 Available Cash Flow Annual Available Cash Flow (B) Diversified cash generation 2.4 Funding transformational growth Growing distributions 1.0 1.5 6.6 Financial flexibility 3.7 2.7 Strong free cash flow yield…
  16. February 2016 Investor Update – Phillips 66 – slide 16
    Capital Allocation 2014 2016E Ensuring financial flexibility Investment grade credit rating Strong balance sheet Funding growth Cash from operations Distributions Reinvestment PSXP proceeds Returning capital to shareholders…
  17. February 2016 Investor Update – Phillips 66 – slide 17
    Capital Budget Announced 2016 3.9 B 2.6 B Growth capital Legacy, scalable Midstream assets Fee-based assets suitable for PSXP dropdown Quick payout Refining projects 1.3 B Sustaining capital Sustaining Refining Returns M&S…
  18. February 2016 Investor Update – Phillips 66 – slide 18
    Distributions Dividend Growth Share Count and Capital Returned (Quarterly /share) 7.7 B 624 MM 56 590 MM 529 MM 20 3Q2012 4Q2013 4Q2015 3Q2012 4Q2013 4Q2015 See appendix for footnotes. 19
  19. February 2016 Investor Update – Phillips 66 – slide 19
    Delivering Value Adjusted Constant Margin EBITDA (B) 45% EBITDA growth 9.3 Growing Midstream and Chemicals 6.4 Enhancing returns in Refining Realizing benefits of reinvestment 2009 - 2014 Midstream Chemicals Refining M&S…
  20. February 2016 Investor Update – Phillips 66 – slide 20
    Compelling Investment 220% PSX +166% Shareholder returns 180% 140% Unique portfolio 100% EBITDA growth 60% Disciplined capital allocation S&P 100 +48% 20% -20% Multiple expansion May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15…
  21. February 2016 Investor Update – Phillips 66 – slide 21
    Institutional Investors Contact Rosy Zuklic InvestorRelationsp66.com General Manager, Investor Relations 832-765-2297 C.W. Mallon Manager, Investor Relations
  22. February 2016 Investor Update – Phillips 66 – slide 22
    Investor Update February 2016 NYSE: PSXP www.phillips66partners.com
  23. February 2016 Investor Update – 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. February 2016 Investor Update – 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. February 2016 Investor Update – Phillips 66 – slide 25
    Distribution Growth 0.50 0.40 Dist / LP Unit () 0.30 0.4580 0.4280 0.4000 0.3700 0.3400 0.20 0.3017 0.3168 0.2743 0.2125 * 0.2248 (MQD) 0.10 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013 2013 2014 2014 2014 2014 2015 2015…
  26. February 2016 Investor Update – Phillips 66 – slide 26
    Adjusted EBITDA and DCF Adjusted EBITDA (MM) Distributable Cash Flow (MM) 87.1 74.0 73.4 64.5 57.0 47.8 49.0 43.7 41.9 37.2 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 28
  27. February 2016 Investor Update – Phillips 66 – slide 27
    314 MM Announced 2016 Organic Growth Plan Transports crude from Nederland, TX to Lake Charles, LA, and St. James, LA Bayou Bridge Pipeline Increases crude supply options for LA refineries Expected completion of Lake Charles leg in 1Q…
  28. February 2016 Investor Update – Phillips 66 – slide 28
    Highly Integrated Assets 30
  29. February 2016 Investor Update – 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. February 2016 Investor Update – Phillips 66 – slide 30
    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…
  31. February 2016 Investor Update – Phillips 66 – slide 31
    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 33
  32. February 2016 Investor Update – Phillips 66 – slide 32
    Total Return Since IPO PSXP 159% Closed 2nd acquisition - 250% Alerian MLP Index -35% 340 MM 200% Closed 1st acquisition - 700 MM 150% Closed 3rd IPO acquisition - 100% 1.1 B Closed 4th acquisition - 70 MM 50% 0%…
  33. February 2016 Investor Update – Phillips 66 – slide 33
    Institutional Investors Contact Rosy Zuklic General Manager, Investor Relations Rosy.Zuklicp66.com 832-765-2297 C.W. Mallon Manager, Investor Relations C.W.Mallonp66.com 832-765-2297
  34. February 2016 Investor Update – Phillips 66 – slide 34
    Appendix
  35. February 2016 Investor Update – Phillips 66 – slide 35
    Segment Strategy Marketing and Refining: Midstream: Growth Chemicals: Growth Specialties: Enhance Returns Selective Growth Execute Sweeny hub Grow CPChem organically Optimize crude slate Expand European retail Grow integrated…
  36. February 2016 Investor Update – Phillips 66 – slide 36
    Midcontinent Integrated Growth Midstream 280 MM EBITDA growth Palermo rail terminal/Sacagawea pipeline (PSXP) Dakota Access/ETCO crude pipelines Refining, Marketing & Specialties 430 MM EBITDA growth Ponca City Yield improvement…
  37. February 2016 Investor Update – Phillips 66 – slide 37
    Western Gulf Creating a World-Class Energy Complex Midstream 750 MM EBITDA growth Sweeny Fractionator One Freeport LPG export terminal Cross-channel connector (PSXP) Eagle Ford crude pipeline Sweeny Fractionator Two Refining,…
  38. February 2016 Investor Update – Phillips 66 – slide 38
    Eastern Gulf Refining Logistics and Midstream Growth Midstream 200 MM EBITDA growth Beaumont terminal expansion: +7 MMBbls Bayou Bridge pipeline Alliance clean products dock Refining, Marketing & Specialties 150 MM EBITDA growth…
  39. February 2016 Investor Update – Phillips 66 – slide 39
    West Coast Enhancing Returns Midstream 60 MM EBITDA growth Completed Ferndale rail rack 4Q 2014 (PSXP) Los Angeles waterborne crude tank Santa Maria rail rack Refining, Marketing & Specialties 60 MM EBITDA growth San Francisco…
  40. February 2016 Investor Update – Phillips 66 – slide 40
    Atlantic Basin Enhancing Returns Midstream 50 MM EBITDA growth Completed Bayway rail rack 3Q 2014 (PSXP) Bayway LPG loading facility Refining, Marketing & Specialties 200 MM EBITDA growth Bayway FCC reactor modernization…
  41. February 2016 Investor Update – Phillips 66 – slide 41
    Free Cash Flow 2013 1H 2015 Average Midstream (B) Chemicals (B) PSXP Drop 0.3 0.2 Proceeds 0.7 1.2 1.0 1.3 0.9 CFO & Drop Proceeds Sustaining Capex Available Cash Flow CFO Sustaining Capex FCF Refining (B) Marketing &…
  42. February 2016 Investor Update – Phillips 66 – slide 42
    2015 Adjusted ROCE 40% M&S 30% 35% Refining Chemicals P66 Total 20% 19% 14% 10% 19% Midstream 5% Corporate 0% -8% -10% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 Average Capital Employed (B) 44
  43. February 2016 Investor Update – Phillips 66 – slide 43
    Capital Structure 29% 25% 20- 30% 22% 22.0 23.1 21.6 8.7 7.8 6.2 5.0 5.2 3.0 2013 2014 2015 Equity B Debt B Cash & Cash Equivalents B Debt to Capital Excludes PSXP. 45
  44. February 2016 Investor Update – Phillips 66 – slide 44
    2016 Sensitivities Phillips 66 Sensitivities shown above are independent and are only valid within a limited price range. 46
  45. February 2016 Investor Update – Phillips 66 – slide 45
    Phillips 66 2016 Capital Program 47
  46. February 2016 Investor Update – Phillips 66 – slide 46
    1Q 2015 Phillips 66 Partners 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…
  47. February 2016 Investor Update – Phillips 66 – slide 47
    Non-GAAP Reconciliations Forecasted EBITDA Forecasted EBITDA estimates were primarily derived on an EBITDA-only basis (revenue and cost projections). Accordingly, all the elements required for forecasted net income, including income…
  48. February 2016 Investor Update – Phillips 66 – slide 48
    Non-GAAP Reconciliations Millions of Dollars Average 2009-2014 Refining Free Cash Flow Numerator Cash From Operations GAAP 2,615 Less: Change in Non-Cash Working Cap. 152 Cash From Operations (excluding WC) 2,463 Less: P66 Equity…
  49. February 2016 Investor Update – Phillips 66 – slide 49
    Non-GAAP Reconciliations Millions of Dollars Average 2009-2014 Marketing & Refining Specialties ROCE Numerator Net Income 1,127 727 After-tax interest expense 0 0 GAAP ROCE earnings 1,127 727 Special Items 344 (34) Adjusted…
  50. February 2016 Investor Update – Phillips 66 – slide 50
    Non-GAAP Reconciliations Millions of Dollars Average 2009-2014 Phillips 66 Free Cash Flow Numerator Cash From Operations GAAP 3,650 Less: Change in Non-Cash Working Cap. (128) Cash From Operations (excluding WC) 3,737 Total…
  51. February 2016 Investor Update – Phillips 66 – slide 51
    Non-GAAP Reconciliations Millions of Dollars Average 2009 - 2014 Marketing & Midstream Chemicals Refining Specialties Corporate Phillips 66 Adjusted EBITDA by Segment Reconciliation Net income attributable to Phillips 66 657 729…
  52. February 2016 Investor Update – Phillips 66 – slide 52
    Non-GAAP Reconciliations Millions of Dollars Average 2013-1H 2015 Marketing & Midstream Chemicals Refining Specialties FCF Yield Numerator Cash From Operations GAAP 750 597 2,557 1,177 Less: Change in Non-Cash Working Cap. 12 -…
  53. February 2016 Investor Update – Phillips 66 – slide 53
    Non-GAAP Reconciliations Millions of Dollars 2015 Marketing & Phillips 66 Midstream Chemicals Refining Specialties Corporate ROCE Numerator Net Income 4,280 74 962 2,554 1,187 (497) After-tax interest expense 201 - - - - 201 GAAP…
  54. February 2016 Investor Update – Phillips 66 – slide 54
    Non-GAAP Reconciliations Millions of Dollars Phillips 66 Phillips 66 Adjusted Consolidated Partners Phillips 66 2013 Total Debt 6,155 - 6,155 Total Equity 22,392 409 21,983 Debt-to-Capital Ratio 22% 22% 2014 Total Debt 8,684…
  55. February 2016 Investor Update – Phillips 66 – slide 55
    PSXP 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…
  56. February 2016 Investor Update – Phillips 66 – slide 56
    PSXP Adjusted EBITDA and Distributable Cash Flow Reconciliation to Net Income MM 4Q 2015 3Q 2015 2Q 2015 1Q 2015 4Q 2014 Net Income 64.5 52.3 42.0 35.4 36.3 Plus: Depreciation 5.7 5.7 5.3 5.1 4.5 Net interest expense 9.2 9.1 9.5 5.8…

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