Slide 1: Phillips 66 Third Quarter 2018 Conference Call
PHILLIPS 66 THIRD QUARTER 2018 CONFERENCE CALL October 26, 2018 1
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT 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. Wo
Slide 3: Executing the Strategy
EXECUTING THE STRATEGY New fractionation site and Sweeny Refinery, Old Ocean, Texas 3
Slide 4: Overview 3Q 2018
OVERVIEW 3Q 2018 $MM (unless otherwise noted) Adjusted earnings $ 1,456 Adjusted EPS1 3.10 Operating cash flow excluding working capital 2,065 Capital expenditures and investments 779 Shareholder distributions2 775 Adjusted YTD ROCE3 14% (1) Dollars per share (2) Shareholder distributions include di
Slide 5: Adjusted Earnings 3Q 2018
ADJUSTED EARNINGS 3Q 2018 $MM 95 59 48 (4) (12) (52) 1,456 1,322 2Q 2018 Midstream Chemicals Refining Marketing Corporate Noncontrolling 3Q 2018 Adjusted & Specialties & Other Interests Adjusted Earnings Earnings 261 210 959 290 (187) (77) 3Q 2018 Adjusted Net Income (Loss) 5
Slide 6: Midstream 3Q 2018
MIDSTREAM 3Q 2018 $MM Record Midstream net income 14 7 38 Higher transportation volumes on wholly owned and joint venture pipelines 261 202 Record volumes on Sand Hills and Southern Hills NGL pipelines 2Q 2018 Transportation NGL and Other DCP 3Q 2018 Adjusted Midstream Adjusted Net Income Net Income
Slide 7: Chemicals 3Q 2018
CHEMICALS 3Q 2018 $MM 91% O&P capacity utilization 9 9 Strong polyethylene volumes (70) Higher ethane prices reduced 262 210 O&P margins Continued strong cash distributions 2Q 2018 Olefins & Specialties, Other 3Q 2018 Adjusted Polyolefins Aromatics & Adjusted Net Income Styrenics Net Income 177 41 (
Slide 8: Refining 3Q 2018
REFINING 3Q 2018 $MM 93% crude utilization 241 44 84% clean product yield (128) (109) $13.36/BBL realized margin 911 959 $55 MM pre-tax turnaround costs 2Q 2018 Atlantic Gulf Coast Central West Coast 3Q 2018 Adjusted Basin / Corridor Adjusted Net Income Europe Net Income 175 166 633 (15) 3Q 2018 8
Slide 9: Refining Margins – Market vs. Realized 3Q 2018
REFINING MARGINS – MARKET VS. REALIZED 3Q 2018 WORLDWIDE REFINING $/BBL 2.50 0.26 (1.99) (1.62) 14.21 13.36 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Avg Market Crude: $73.70/BBL 94% Market Capture 9
Slide 10: Marketing and Specialties 3Q 2018
MARKETING AND SPECIALTIES 3Q 2018 $MM U.S. branded marketing volumes increased 2% compared with 2Q 98 (3) Re-imaged 384 marketing sites 290 195 Refined products exports of 190,000 BPD 2Q 2018 Marketing Specialties 3Q 2018 Adjusted & Other Adjusted Net Income Net Income 243 47 3Q 2018 10
Slide 11: Corporate and Other 3Q 2018
CORPORATE AND OTHER 3Q 2018 $MM 2Q 2018 Corporate 3Q 2018 Adjusted Net Interest Overhead Adjusted Net Loss Expense & Other Net Loss (183) (187) 11 (15) 11
Slide 12: Cash Flow YTD 2018
CASH FLOW YTD 2018 $B 5.0 1.2 (1.6) (1.6) 3.1 (5.2) 0.9 December 31, CFO Working Debt Capital Shareholder September 30, 2017 (excluding Capital Expenditures Distributions 2018 Cash Working & Investments Cash Balance* Capital) Balance* * Includes cash and cash equivalents 12
Slide 13: Outlook 4Q 2018
OUTLOOK 4Q 2018 Global Olefins & Polyolefins utilization Mid-90% Refining crude utilization Mid-90% Refining turnaround expenses (pre-tax) $110 MM - $130 MM Corporate & Other costs (after-tax) $170 MM - $190 MM 13
Slide 14: Questions and Answers
PHILLIPS 66 THIRD QUARTER 2018 CONFERENCE CALL Questions and Answers 14
Slide 15: Appendix
PHILLIPS 66 THIRD QUARTER 2018 CONFERENCE CALL Appendix 15
Slide 16: Estimated Sensitivities
ESTIMATED SENSITIVITIES 2018 Annual Net Income $MM 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) 45 Wor
Slide 17: Capital Structure
CAPITAL STRUCTURE 2015 – 2018 Consolidated PSX Excluding PSXP 32% 31% 31% 30% 31% 29% 28% 28% 27% 27% 27% 26% 27% 26% 25% 24% 23% 25% 20% 22% 20% 18% 17% 27.4 23.9 24.3 25.0 25.8 25.1 14% 23.7 23.1 22.6 23.4 22.4 22.0 11.6 11.4 11.3 8.9 10.1 10.1 7.8 7.7 8.7 8.4 8.4 1.9 7.2 1.7 0.8 0.9 0.7 0.8 3.1 2
Slide 18: Refining Margins – Atlantic Basin / Europe
REFINING MARGINS – MARKET VS. REALIZED 3Q 2018 ATLANTIC BASIN / EUROPE $/BBL Brent: $75.27/BBL 87% Crude Capacity Utilization 83% Market Capture 1.93 (1.98) (1.57) (0.79) 13.89 11.48 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – Dated Brent / Gasoline 8
Slide 19: Refining Margins – Gulf Coast
REFINING MARGINS – MARKET VS. REALIZED 3Q 2018 GULF COAST $/BBL LLS: $74.31/BBL 87% Crude Capacity Utilization 83% Market Capture 2.04 (2.00) (0.32) (1.56) 10.93 9.09 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm
Slide 20: Refining Margins – Central Corridor
REFINING MARGINS – MARKET VS. REALIZED 3Q 2018 CENTRAL CORRIDOR $/BBL WTI: $69.71/BBL 108% Crude Capacity Utilization 126% Market Capture 3.10 6.66 (1.78) (3.08) 23.61 18.71 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – WTI / Gasoline Unl Sub Octane Gro
Slide 21: Refining Margins – West Coast
REFINING MARGINS – MARKET VS. REALIZED 3Q 2018 WEST COAST $/BBL ANS: $75.55/BBL 97% Crude Capacity Utilization 62% Market Capture (1.67) 2.03 15.37 (4.27) (1.93) 9.53 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – ANS / Los Angeles CARBOB / Los Angeles N
Slide 22: Adjusted Earnings 3Q 2018 vs. 3Q 2017
ADJUSTED EARNINGS 3Q 2018 VS. 3Q 2017 $MM 79 411 (60) (51) 162 57 1,456 858 3Q 2017 Midstream Chemicals Refining Marketing Corporate Noncontrolling 3Q 2018 Adjusted & Specialties & Other Interests Adjusted Earnings Earnings 261 210 959 290 (187) (77) 3Q 2018 Adjusted Net Income (Loss) 22
Slide 23: Midstream 3Q 2018 vs. 3Q 2017
MIDSTREAM 3Q 2018 VS. 3Q 2017 $MM 21 64 77 261 99 3Q 2017 Transportation NGL and Other DCP 3Q 2018 Adjusted Midstream Adjusted Net Income Net Income 175 64 22 3Q 2018 23
Slide 24: Chemicals 3Q 2018 vs. 3Q 2017
CHEMICALS 3Q 2018 VS. 3Q 2017 $MM 19 40 (2) 210 153 3Q 2017 Olefins & Specialties, Other 3Q 2018 Adjusted Polyolefins Aromatics Adjusted Net Income & Styrenics Net Income 177 41 (8) 3Q 2018 24
Slide 25: Refining 3Q 2018 vs. 3Q 2017
REFINING 3Q 2018 VS. 3Q 2017 $MM 435 (116) 89 3 959 548 3Q 2017 Atlantic Gulf Central West Coast 3Q 2018 Adjusted Basin / Coast Corridor Adjusted Net Income Europe Net Income 175 166 633 (15) 3Q 2018 25
Slide 26: Marketing and Specialties 3Q 2018 vs. 3Q 2017
MARKETING AND SPECIALTIES 3Q 2018 VS. 3Q 2017 $MM 80 (1) 290 211 3Q 2017 Marketing Specialties 3Q 2018 Adjusted & Other Adjusted Net Income Net Income 243 47 3Q 2018 26
Slide 27: Corporate and Other 3Q 2018 vs. 3Q 2017
CORPORATE AND OTHER 3Q 2018 VS. 3Q 2017 $MM 3Q 2017 Corporate 3Q 2018 Adjusted Net Interest Overhead Adjusted Net Loss Expense & Other Net Loss (127) (187) (21) (39) 27
Slide 28: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Phillips 66 Consolidated Earnings $ 3,355 1,492 1,339 1,908 823 Pre-tax Adjustments: Pending claims and settlements 21 21 — (60) (36) Pension settlement expense 49 49 — 76 21 Impairments by equity aff
Slide 29: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Midstream Net Income $ 675 240 202 325 117 Pre-tax Adjustments: Pending claims and settlements 21 21 — (37) (37) Pension settlement expense 7 7 — 11 3 Hurricane-related costs — — — 4 4 Tax impact of a
Slide 30: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Refining Net Income $ 1,937 936 910 1,033 550 Pre-tax Adjustments: Pending claims and settlements — — — (51) (30) Gain on consolidation of business — — — (423) — Certain tax impacts (2) (1) 1 — — Pens
Slide 31: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Corporate and Other Net Loss $ (498) (136) (207) (426) (147) Pre-tax Adjustments: Pending claims and settlements — — — 28 31 Pension settlement expense 4 4 — 7 2 Tax impact of adjustments (1) (1) — (1
Slide 32: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Midstream - Transportation Net Income $ 448 175 137 271 119 Pre-tax Adjustments: Pending claims and settlements — — — (37) (37) Hurricane-related costs — — — 3 3 Tax impact of adjustments — — — 13 13
Slide 33: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Refining - Atlantic Basin / Europe Net Income $ 228 170 131 228 171 Pre-tax Adjustments: Pending claims and settlements — — — (7) (2) Certain tax impacts (1) (1) — — — Pension settlement expense 8 8 —
Slide 34: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Refining - Central Corridor Net Income $ 1,222 627 392 286 197 Pre-tax Adjustments: Pending claims and settlements — — — (7) (2) Pension settlement expense 7 7 — 11 3 Tax impact of adjustments (1) (1)
Slide 35: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Sep YTD 3Q 2Q Sep YTD 3Q Marketing & Specialties - Marketing & Other Net Income $ 597 271 187 465 160 Pre-tax Adjustments: Certain tax impacts (113) (44) (56) — — Pension settlement expense 6 6 — 10 3 Hurricane-related costs
Slide 36: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars 2018 3Q Atlantic Central Basin/ Gulf Coast Corridor West Coast Worldwide Realized Refining Margins Net income (loss) $ 170 158 627 (19) 936 Plus: Income tax expense (benefit) 39 52 212 (7) 296 Taxes other than income taxes 13 23 10 26 72 Depreciation, amo
Slide 37: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 2018 September YTD Phillips 66 Numerator ($MM) Net Income $ 3,557 After-tax interest expense 303 GAAP ROCE earnings $ 3,860 After-tax Special items (71) Adjusted ROCE earnings $ 3,789 Denominator ($MM) GAAP average capital employed* $ 37,336 2018 Annualized GAAP ROCE 14% 201
Slide 38: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars 2018 3Q Phillips 66 Phillips 66 Adjusted Consolidated Partners * Phillips 66 Total Debt $ 11,337 2,922 8,415 Total Equity 25,795 2,440 23,355 Debt-to-Capital Ratio 31% 26% Total Cash & Cash Equivalents $ 924 100 $ 824 Net-Debt-to-Capital Ratio 29% 25% * P
Slide 39: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Millions of Dollars 2018 2018 3Q September YTD Growth Sustaining Total Growth Sustaining Total Capital Expenditures and Investments Midstream $ 447 56 503 $ 850 128 978 Refining 65 135 200 165 360 525 Marketing & Specialties 25 12 37 37 28 65 Corporate an
Slide 40: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS PSX Effective Tax Rate: Millions of Dollars 2018 3Q Effective Tax Rates Income before taxes $ 1,975 Special items 25 Adjusted income before taxes $ 2,000 Income tax expense $ 407 Special items 60 Adjusted provision for taxes $ 467 GAAP effective tax rate 20.6% Adjusted effec