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Investor Day 2019 – Phillips 66

Phillips 66 · Nov 6, 2019 · 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. Investor Day 2019 – Phillips 66 – slide 1
    Sweeny Fracs 2, 3 and 4 construction OLD OCEAN, TX
  2. Investor Day 2019 – Phillips 66 – slide 2
    Agenda 8:30 11:30 am TOPIC SPEAKER Opening Remarks Greg Garland Market Update Jeff Dietert Midstream / PSXP Tim Roberts / Rosy Zuklic Chemicals Mark Lashier Refining Robert Herman Marketing & Specialties Brian Mandell BREAK…
  3. Investor Day 2019 – Phillips 66 – slide 3
    Opening Remarks GREG GARLAND CHAIRMAN & CHIEF EXECUTVE OFFICER Sweeny Fracs 2, 3 and 4 construction OLD OCEAN, TX Investor Day 4
  4. Investor Day 2019 – Phillips 66 – slide 4
    Leadership Team Greg Garland Jeff Dietert Tim Roberts Rosy Zuklic Mark Lashier Robert Herman Chairman & CEO VP, Investor Relations EVP, Midstream VP & COO, PSXP President & CEO, CPChem EVP, Refining Brian Mandell Kevin…
  5. Investor Day 2019 – Phillips 66 – slide 5
    Executing the Strategy GROWTH RETURNS DISTRIBUTIONS Pipelines to Gulf Coast Refinery yield projects Secure, competitive and Crude export capability growing dividend NGL value chain Clean product export capability Commitment to…
  6. Investor Day 2019 – Phillips 66 – slide 6
    Delivering on our Commitments EXECUTED EXECUTING / DEVELOPING Gray Oak Pipeline Sweeny Hub Red Oak and Liberty pipelines Freeport LPG Export Terminal Sweeny Fractionators 2, 3, 4 GROWTH Beaumont Terminal South Texas Gateway…
  7. Investor Day 2019 – Phillips 66 – slide 7
    Investments from 2012 to 2019 See appendix for footnotes Investor Day 8
  8. Investor Day 2019 – Phillips 66 – slide 8
    Investments from 2019 to 2022 See appendix for footnotes Investor Day 9
  9. Investor Day 2019 – Phillips 66 – slide 9
    Integrated Portfolio in 2022 See appendix for footnotes Investor Day 10
  10. Investor Day 2019 – Phillips 66 – slide 10
    Operating Excellence Total Recordable Rates Refining Crude Capacity Utilization INCIDENTS PER 200,000 HOURS WORKED % 96% 95% 95% Phillips 66 CPChem DCP Midstream 93% 93% Industry Average 91% 91% 91% 90% 90% 1.03 .86 .83 15 16…
  11. Investor Day 2019 – Phillips 66 – slide 11
    Environmental, Social, Governance 100% of Board of Directors meetings include ESG topics 6+ B invested in safety, environmental and reliability from 2012 to 2018 40+ ESG metrics in 2019 sustainability report 50% lower total…
  12. Investor Day 2019 – Phillips 66 – slide 12
    High-Performing Organization 14,500 employees live our values, every day VISION Providing Energy. Improving Lives. 94% retention of all employees, 96% retention of high performers 21% women and 26% U.S. minority CORE VALUES 44%…
  13. Investor Day 2019 – Phillips 66 – slide 13
    AdvantEdge66 UNLOCKING VALUE THROUGH BUSINESS TRANSFORMATION Total Enhancements 1.2 B total enhancements by 2022 50% - 70% value captured as mid-cycle EBITDA uplift End to end value chain optimization Asset Performance…
  14. Investor Day 2019 – Phillips 66 – slide 14
    Mid-Cycle Adjusted EBITDA Adjusted EBITDA Growth B 9 B mid-cycle adjusted EBITDA and 6.5 B mid-cycle CFO in 2019 2 B incremental mid-cycle adjusted EBITDA over three years Midstream growth investments 11 Refining and…
  15. Investor Day 2019 – Phillips 66 – slide 15
    Disciplined Capital Allocation Sources and Uses of Cash B 1 7 B mid-cycle CFO in 2020 1.6 - 1.7 7 6 1.5 - 2.5 Sustaining capital for asset integrity, safety 1.5 - 2.5 and environmental projects Mid-Cycle Sust. FCF Dividends…
  16. Investor Day 2019 – Phillips 66 – slide 16
    Market Update JEFF DIETERT VICE PRESIDENT, INVESTOR RELATIONS Phillips 66 Headquarters HOUSTON, TX Investor Day 17
  17. Investor Day 2019 – Phillips 66 – slide 17
    U.S. Production Growth U.S. Oil Production EIA Outlooks for U.S. Oil Production Wellhead Breakeven1 vs. Drilling Activity MMBD MMBD 000S REMAINING HORIZONTAL DRILLING LOCATIONS 18 16 120 16 14 100 14 12 12 80 10 10 8 60 8…
  18. Investor Day 2019 – Phillips 66 – slide 18
    U.S. Gulf Coast Petroleum Exports Crude Oil LPG Finished Petroleum Products1 MMBD MMBD MMBD 6.0 Forecast 2.5 Forecast 3.5 Forecast 3.0 5.0 2.0 2.5 4.0 1.5 2.0 3.0 1.5 1.0 2.0 1.0 0.5 1.0 0.5 0.0 0.0 0.0 10 12 14 16 18 20…
  19. Investor Day 2019 – Phillips 66 – slide 19
    Natural Gas Liquids Value Chain U.S. NGL Production1 Global LPG Demand by Region U.S. Gulf Coast LPG Exports MMBD MMBD MMBD 6 Forecast 12 Forecast 2.0 Forecast Forecast Forecast 1.8 5 10 1.6 1.4 4 8 1.2 3 6 1.0 0.8 2 4 0.6…
  20. Investor Day 2019 – Phillips 66 – slide 20
    U.S. Ethane Fundamentals U.S. Ethane Production1 U.S. Ethane Demand Natural Gas and Ethane Pricing MMBD MMBD PER MMBTU 4.5 Forecast 4.5 Forecast 16 Forward Curve2 4.0 4.0 14 3.5 3.5 12 Rejection 3.0 3.0 10 2.5 2.5 8 2.0…
  21. Investor Day 2019 – Phillips 66 – slide 21
    Strong Demand for High Density Polyethylene Global HDPE Production Petrochemical Projects 2018-2024 U.S. HDPE Domestic Chain Margin MILLION METRIC TONS MILLION METRIC TONS ETHYLENE CAPACITY CENTS PER POUND 70 Forecast 45 40 60 CAGR…
  22. Investor Day 2019 – Phillips 66 – slide 22
    IMO Update Northwest Europe Cracks1 Medium Sour vs. Heavy Sweet Crude PER BARREL PER BARREL VS. BRENT Forecast 8.4 23.05 3.5 17.85 2.2 1.7 13.24 1.0 0.0 (11.51) (1.4) (2.6) (2.8) (23.88) (3.4) (2.9) (28.85) (5.1)…
  23. Investor Day 2019 – Phillips 66 – slide 23
    Canadian Oil Production vs. Infrastructure CAPP Production Forecast MMBD Forecast 6 5 Plus Line 3 4 Existing Pipeline Capacity 3 2 1 0 Pipeline 10 12 14 16 18 20 22 24 Capacity Western Canada Oil Production Eastern…
  24. Investor Day 2019 – Phillips 66 – slide 24
    Midstream TIM ROBERTS EXECUTIVE VICE PRESIDENT, MIDSTREAM ROSY ZUKLIC VICE PRESIDENT & CHIEF OPERATING OFFICER, PHILLIPS 66 PARTNERS Beaumont Terminal NEDERLAND, TX Investor Day 25
  25. Investor Day 2019 – Phillips 66 – slide 25
    Midstream Assets in 2012 18,000 miles of U.S. pipeline systems 102,000 barrels per day fractionation capacity 10 crude oil terminals 39 product terminals See appendix for footnotes Investor Day 26
  26. Investor Day 2019 – Phillips 66 – slide 26
    Midstream Assets in 2022 Growth since 2012 6,000 miles of U.S. pipeline systems 550,000+ barrels per day fractionation capacity 15 crude oil terminals 1,800,000 barrels per day crude export capacity 4 LPG…
  27. Investor Day 2019 – Phillips 66 – slide 27
    Building a Premier Midstream Business Adjusted EBITDA B Top-quartile safety performance 2.2 1.9 1.2 Diversified portfolio integrated with Refining and 1.0 1.0 Marketing Integrated crude system with optionality for 15 16 17 18…
  28. Investor Day 2019 – Phillips 66 – slide 28
    Crude Oil System in 2012 See appendix for footnotes Investor Day 29
  29. Investor Day 2019 – Phillips 66 – slide 29
    Crude Oil System in 2022 Operational Bakken Pipeline Bayou Bridge Pipeline Beaumont Terminal Gray Oak Pipeline Executing Red Oak and Liberty pipelines Beaumont storage and dock expansion South Texas Gateway Terminal…
  30. Investor Day 2019 – Phillips 66 – slide 30
    NGL System in 2012 See appendix for footnotes Investor Day 31
  31. Investor Day 2019 – Phillips 66 – slide 31
    NGL System in 2022 Operational Sweeny Frac 1 LPG Export Terminal Clemens Caverns Sand and Southern Hills pipelines Executing Sweeny Fracs 2, 3 and 4 C2G Pipeline Clemens Caverns expansion Developing Sweeny Fracs 5 and 6…
  32. Investor Day 2019 – Phillips 66 – slide 32
    AdvantEdge66 BUSINESS TRANSFORMATION Predictive analytics Automation and digital field operations Pipeline Control Center BARTLESVILLE, OK Artificial Intelligence machine learning Data-driven operations Digital…
  33. Investor Day 2019 – Phillips 66 – slide 33
    DCP Midstream North 1.4 BCFD Mid-Continent 1.6 BCFD Logistics & Marketing and Gathering & Processing Diversified portfolio in premier basins Permian 1.3 BCFD Large scale U.S. NGL producer and gas processor Integrated NGL…
  34. Investor Day 2019 – Phillips 66 – slide 34
    Phillips 66 Partners Total Return Since IPO % 300% Supports Phillips 66 Midstream growth PSXP +215% 250% Alerian MLP Index (26%) Premier MLP with competitive cost of capital 200% Portfolio of highly integrated assets 150%…
  35. Investor Day 2019 – Phillips 66 – slide 35
    Phillips 66 Partners FINANCIAL STRENGTH AND FLEXIBILITY Adjusted EBITDA B 1.2 2020 exit run-rate adjusted EBITDA of 1.5 B 1.1 0.8 Maintain strong leverage and coverage ratios, 0.5 with long-term targets of 0.3 Up to 3.5x Debt /…
  36. Investor Day 2019 – Phillips 66 – slide 36
    Phillips 66 Partners GROWTH Adjusted Capital Expenditures and Investments B 0.9 Organic Gray Oak Pipeline 0.8 0.7 C2G Pipeline South Texas Gateway Terminal Clemens Caverns expansion 0.5 Sweeny to Pasadena pipeline expansion…
  37. Investor Day 2019 – Phillips 66 – slide 37
    Chemicals MARK LASHIER PRESIDENT & CHIEF EXECUTIVE OFFICER, CHEVRON PHILLIPS CHEMICAL COMPANY Polyethylene Units OLD OCEAN, TX Investor Day 38
  38. Investor Day 2019 – Phillips 66 – slide 38
    Feedstock Advantaged Chemicals Portfolio 1 HDPE producer worldwide 2 NAO producer worldwide 2 Propylene merchant producer on U.S. Gulf Coast See appendix for footnotes Investor Day 39
  39. Investor Day 2019 – Phillips 66 – slide 39
    Chemicals Value Chain Upgrade Serve growing low-cost global ethane middle class feedstock World-scale Produce manufacturing in-demand facilities and products proprietary technology 70,000+ end-user products…
  40. Investor Day 2019 – Phillips 66 – slide 40
    Chevron Phillips Chemical Company 100% CPChem Adjusted EBITDA B Industry-leading safety performance with focus on operating excellence 3.4 2.7 3.2 3.0 2.6 Proprietary technology 15 16 17 18 LTM Advantaged feedstock…
  41. Investor Day 2019 – Phillips 66 – slide 41
    Phillips 66 Proportional Share of CPChem Adjusted EBITDA Capital Expenditures and Investments B B 1.3 1.0 1.7 0.8 1.6 1.5 1.3 1.3 0.4 0.3 15 16 17 18 LTM 15 16 17 18 19E Sustaining Growth See appendix for…
  42. Investor Day 2019 – Phillips 66 – slide 42
    Macro Chemicals Outlook 2019E Ethylene Production Cost Curve CENTS PER POUND Asia Coal M.E. LPG M.E. Naphtha 40 Asia LPG N.A. Naphtha Asia Naphtha Well-positioned in North America and N.A. LPG W. Europe Naphtha 20 Middle…
  43. Investor Day 2019 – Phillips 66 – slide 43
    Sustainability Enhancing efforts to eliminate plastic pellet spills by joining Operation Clean Sweep Blue Continue to combat plastic waste and improve perception of plastics Founding member of Alliance to End Plastic Waste…
  44. Investor Day 2019 – Phillips 66 – slide 44
    CPChem Growth Projects U.S. Gulf Coast II Jointly pursuing development with Qatar Petroleum CPChem 51% equity interest 2,000 kMTA ethylene cracker Two 1,000 kMTA polyethylene units FID no later than 2021 with startup in late…
  45. Investor Day 2019 – Phillips 66 – slide 45
    Refining ROBERT HERMAN EXECUTIVE VICE PRESIDENT, REFINING Billings Refinery BILLINGS, MT Investor Day 46
  46. Investor Day 2019 – Phillips 66 – slide 46
    Diversified Refining Portfolio Central Corridor West Coast 515 MBD 364 MBD Atlantic Basin / Europe 537 MBD Gulf Coast 764 MBD See appendix for footnotes Investor Day 47
  47. Investor Day 2019 – Phillips 66 – slide 47
    Enhancing Returns Adjusted EBITDA B Top-quartile HSE performance 5.7 4.8 4.7 2.7 Strong cash generation 1.4 15 16 17 18 LTM Capital and cost discipline Capital Expenditures and Investments B High-return capital…
  48. Investor Day 2019 – Phillips 66 – slide 48
    Refining Portfolio Competitiveness Peer Comparison % Distillate Canadian Coking Capacity / High distillate yield Production / Imports / Crude Capacity Throughput Crude Runs Largest purchaser of advantaged Canadian crude…
  49. Investor Day 2019 – Phillips 66 – slide 49
    North America Crude Feedstock Flexibility Crude Feedstock Slate % TOTAL CRUDE RUNS 22% 22% 22% 22% 23% 21% 17% 23% 23% 24% 27% 24% 24% 27% 20% 19% 17% 18% 18% 16% 17% 35% 36% 37% 34% 35% 37% 40% 13 14 15 16 17 18 19…
  50. Investor Day 2019 – Phillips 66 – slide 50
    Maintain Cost Discipline U.S. Industry Benchmarking Performance SOLOMON ASSOCIATES Top quartile non-energy operating cost 1st Quartile Maintenance and personnel costs trending to top quartile in industry 2nd Quartile Cost…
  51. Investor Day 2019 – Phillips 66 – slide 51
    AdvantEdge66 BUSINESS TRANSFORMATION End to end value chain optimization Deploying digital technology to provide real-time information Leveraging advanced analytics to enable agile decision making Empowering our people to improve…
  52. Investor Day 2019 – Phillips 66 – slide 52
    Enhancing Returns THROUGH CAPITAL INVESTMENTS Humber Refinery NORTH LINCOLNSHIRE, UK 2019 Lake Charles isomerization unit Borger diesel recovery Wood River LSFO hydrotreater High-return, quick Bayway LSFO hydrotreater payout…
  53. Investor Day 2019 – Phillips 66 – slide 53
    Marketing & Specialties BRIAN MANDELL EXECUTIVE VICE PRESIDENT, MARKETING & COMMERCIAL Phillips 66 Branded Marketing Site CAMDEN COUNTY, MO Investor Day 54
  54. Investor Day 2019 – Phillips 66 – slide 54
    Marketing & Specialties 2,200,000 barrels per day clean products sales volume 9,150 global outlets 13,000 barrels per day finished lubricants production Aviation brand See appendix for footnotes Investor Day 55
  55. Investor Day 2019 – Phillips 66 – slide 55
    Enhancing Returns Adjusted EBITDA B High-return, low-capital business 1.5 1.6 1.8 1.4 1.2 Refining product placement 15 16 17 18 LTM Fuel brands reimaging Integration through equity partnerships Capital Expenditures and…
  56. Investor Day 2019 – Phillips 66 – slide 56
    Secure Product Placement United States 3,700 sites reimaged since program inception 5,600 sites implemented mobile pay Direct consumer engagement Expanding partnerships with private labels Europe Proven low-cost, high-volume…
  57. Investor Day 2019 – Phillips 66 – slide 57
    West Coast Marketing Joint Venture 50 / 50 joint venture with large wholesale / retail operator Proven retail operational expertise Participate in retail fuel margins and store sales 250 - 325 MM capital investment 50 - 60 MM…
  58. Investor Day 2019 – Phillips 66 – slide 58
    Clean Product Export Capability U.S. Refinery Clean Product Export Capacity MBD 150 700 50 Expand clean products export capability 80 100 550 160 80 Leverage optionality to maximize value 110 Expand sales into new global…
  59. Investor Day 2019 – Phillips 66 – slide 59
    IMO 2020 Strategically positioned for IMO 2020 transition Utilize global market presence to maximize returns Optimize refinery feedstock selection Capitalize on distillate production for bunker fuel blending Phillips 66 IMO…
  60. Investor Day 2019 – Phillips 66 – slide 60
    Renewable Diesel Portfolio approach for renewable diesel production Humber UCO renewable diesel project San Francisco renewable diesel production Ferndale renewable diesel processing Offtake agreement with Ryze Renewables…
  61. Investor Day 2019 – Phillips 66 – slide 61
    AdvantEdge66 BUSINESS TRANSFORMATION Go-to-Market Value Enablers Efficiency Enhanced Mobile Pay platform Develop Artificial Intelligence Enhance optimization tools machine learning Improved digital customer experience Automate…
  62. Investor Day 2019 – Phillips 66 – slide 62
    Financial Update KEVIN MITCHELL EXECUTIVE VICE PRESIDENT, FINANCE & CHIEF FINANCIAL OFFICER Phillips 66 Headquarters HOUSTON, TX Investor Day 63
  63. Investor Day 2019 – Phillips 66 – slide 63
    Financial Strategy Phillips 66 Headquarters HOUSTON, TX Disciplined capital allocation Committed to a secure, competitive and growing dividend Intrinsic value approach to share repurchases Maintain financial flexibility, strong…
  64. Investor Day 2019 – Phillips 66 – slide 64
    Financial Strength Equity and Debt B UNLESS NOTED Flexibility to execute strategy through the cycle Investment grade credit ratings 30% 27% 29% 31% 27% PSX: A3 (Moodys), BBB+ (S&P) PSXP: Baa3 (Moodys), BBB (S&P) 25% 26% 25% 22%…
  65. Investor Day 2019 – Phillips 66 – slide 65
    EBITDA and Returns Adjusted Return on Capital Employed % AFTER-TAX Peer-leading ROCE Strong EBITDA generation Peer Avg 14% 16% 16% 8% EBITDA enhancement from capital investments 5% and business transformation initiatives 15 16…
  66. Investor Day 2019 – Phillips 66 – slide 66
    Cash Generation Cash From Operations Free Cash Flow Yield B % 18 7.6 8.0 7.3 16 7.0 5.7 6.0 14 5.0 12 12.99 Realized Crack 3.6 11.76 per4.0 barrel 9.4% 10 11.84 3.0 3.0 9.13 6.3% 8 2.0 6 6.99 3.4% 1.0 4 - 15 16…
  67. Investor Day 2019 – Phillips 66 – slide 67
    Disciplined Capital Allocation 2020 Sources and Uses of Cash Fund sustaining capital to maintain asset integrity B Committed to a secure, competitive and growing dividend 1 1.6 - 1.7 Investing in growth projects with attractive…
  68. Investor Day 2019 – Phillips 66 – slide 68
    Adjusted Capital Expenditures 2019E Adjusted Capital Spending Adjusted Capital Expenditures and Investments B 4.3 3.3 - 3.6 3.0 - 3.5 2.8 2.6 Midstream Sustaining PSX 1.8 Refining and Marketing Midstream Midstream…
  69. Investor Day 2019 – Phillips 66 – slide 69
    Distributions Annual Dividend PER SHARE Secure, competitive and growing dividend 12.5% increase in 2Q19 to 0.90 per share 3.10 3.50 25% CAGR with nine increases since May 2012 2.45 2.73 2.18 Committed to intrinsic value…
  70. Investor Day 2019 – Phillips 66 – slide 70
    Phillips 66 Partners STRATEGIC FIT Total Return Since IPO % 250% PSXP: 200% Competitive cost of capital +215% 150% 100% Strong partnership fundamentals 50% 0% AMZ: Robust growth profile (26%) -50% High distribution coverage…
  71. Investor Day 2019 – Phillips 66 – slide 71
    Financial Flexibility Strong and growing cash flow generation from diverse and integrated portfolio Peer-leading balance sheet with additional capacity Highest credit rating among peers Low debt to capital ratio Significant…
  72. Investor Day 2019 – Phillips 66 – slide 72
    Closing GREG GARLAND CHAIRMAN & CHIEF EXECUTVE OFFICER Sweeny Fracs 2, 3 and 4 construction OLD OCEAN, TX Investor Day 73
  73. Investor Day 2019 – Phillips 66 – slide 73
    Key Messages Mid-Cycle Adjusted EBITDA B Operating safely with technology-enabled cost efficiencies Growing Midstream and Chemicals Enhancing returns in Refining and Marketing & Specialties 11 Secure, competitive and growing…
  74. Investor Day 2019 – Phillips 66 – slide 74
    Compelling Investment Total Shareholder Return % 340% PSX +328% OPERATING EXCELLENCE 300% Peers +163% 260% S&P 100 +148% GROWTH 220% RETURNS 180% 140% DISTRIBUTIONS 100% HIGH-PERFORMING ORGANIZATION 60% 20%…
  75. Investor Day 2019 – Phillips 66 – slide 75
    Clifton Ridge Marine Terminal SULPHUR, LA
  76. Investor Day 2019 – Phillips 66 – slide 76
    2019 Sensitivities Annual EBITDA (MM) Midstream - DCP (net to Phillips 66) 10 /Gal Increase in NGL price 6 10 /MMBtu Increase in Natural Gas price 1 1/BBL Increase in WTI price 1 Chemicals - CPChem (net to Phillips 66) 1 /Lb…
  77. Investor Day 2019 – Phillips 66 – slide 77
    Value Chain Investor Day 78
  78. Investor Day 2019 – Phillips 66 – slide 78
    Midstream Organic Growth EXPECTED GROSS CAPITAL OWNERSHIP PSX PROJECT START-UP CAPACITY (MM) (%) Beaumont Terminal expansion phase IV 1Q 2020 2.2 MMB 80 100 Beaumont Terminal Dock IV1 3Q 2020 200 MBD 70 100 Sweeny Fractionators 2 and…
  79. Investor Day 2019 – Phillips 66 – slide 79
    PSXP Gray Oak, South Texas Gateway Gray Oak Pipeline Crude oil pipeline from Permian and Eagle Ford to Texas Gulf Coast Expected initial service 4Q 2019 900 MBD West Texas crude capacity 42.25% PSXP ownership South Texas Gateway…
  80. Investor Day 2019 – Phillips 66 – slide 80
    Liberty, Red Oak Crude Oil Pipeline Systems Liberty Pipeline From the Rockies and Bakken to Cushing, Oklahoma Initial service expected 1H 2021 24-inch pipeline 50% PSX ownership Red Oak Pipeline From West Texas and Cushing,…
  81. Investor Day 2019 – Phillips 66 – slide 81
    Sweeny Hub Sweeny Hub Expansion Adding 450 MBD fractionation capacity by 2Q 2021 Increasing Clemens Storage to 16 MMB by 4Q 2020 Secured y-grade feedstock supply agreements with firm volume commitments Reduces cost of supply for 200…
  82. Investor Day 2019 – Phillips 66 – slide 82
    PSXP Ownership Structure PSXP Public Non-economic general Common partner interest and 75% Unitholders limited partner interest 25% limited partner interest (NYSE: PSXP) Operating Subsidiaries Joint Ventures As…

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