Phillips66 Q4 2014 Press Release Slides

PHILLIPS 66 FOURTH QUARTER CONFERENCE CALL January 29, 2015

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. Words and

phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “intends,” “objectives,” “projects,”

“strategies” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a

statement is not forward-looking. Forward-looking statements relating to Phillips 66’s operations (including joint venture operations) are based on

management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this

presentation was prepared. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that

are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking

statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include

fluctuations in crude oil, NGL, and natural gas prices, and refining and petrochemical margins; unexpected changes in costs for constructing, modifying

or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; lack of, or disruptions in, adequate and

reliable transportation for our crude oil, natural gas, NGL, and refined products; potential liability from litigation or for remedial actions, including

removal and reclamation obligations, under environmental regulations; limited access to capital or significantly higher cost of capital related to

illiquidity or uncertainty in the domestic or international financial markets; and other economic, business, competitive and/or regulatory factors

affecting Phillips 66’s businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 is under no obligation

(and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or

otherwise.

This presentation includes non-GAAP financial measures. You can find the reconciliations to comparable GAAP financial measures at the end of the

presentation materials or in the “Investors” section of our website.

CAUTIONARY STATEMENT

2

3

EXECUTING STRATEGY

4

OVERVIEW 2014

Adjusted Earnings:

Adjusted EPS:

Operating cash flow excluding working capital:

Capital expenditures and investments:

Shareholder distributions:

Net-debt-to-capital ratio:

Adjusted ROCE:

$913 MM

$1.63

$1.1 B

$1.1 B

$807 MM

14 %

13 %

Shareholder distributions include dividends, share repurchases and the PSPI exchange

$3.8 B

$6.62

$4.5 B

$3.8 B

$4.7 B

14 %

14 %

2014 4Q

$MM

ADJUSTED EARNINGS 2014 VS. 2013

5

Segment 2013 2014 Increase

(Decrease)

Midstream 469 508 8%

Chemicals 986 1,209 23%

Refining 1,734 1,576 (9%)

M&S 885 882 0%

Corporate (431) (393) 9%

Phillips 66 3,643 3,782 4%

Adjusted EPS 5.89 6.62 12%

2013

Adjusted

Earnings

2014

Adjusted

Earnings

3,643 3,782

1,140

913

(18) (29)

(236)

65

(9)

3Q 2014

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

4Q 2014

Adjusted

Earnings

4Q 2014 Adjusted Earnings

$MM

97 (100) 322 270 324

ADJUSTED EARNINGS 4Q 2014 VS. 3Q 2014

6

7

MIDSTREAM OVERVIEW 4Q 2014

Transportation: Deferred tax asset write-off

DCP Midstream: Lower prices

NGL: Improved margins

2014 Adjusted ROCE: 13%

115 97

(5)

(42)

29

3Q 2014

Adjusted

Earnings

Transportation DCP

Midstream

NGL 4Q 2014

Adjusted

Earnings

$MM

MIDSTREAM 4Q 2014 VS. 3Q 2014

8

53 55 (11)


9

CHEMICALS OVERVIEW 4Q 2014

Olefins & Polyolefins: Port Arthur resumed operations

Specialties, Aromatics & Styrenics: Lower margins and volumes


299 270

(11)(19)

1

3Q 2014

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 4Q 2014

Adjusted

Earnings

$MM

CHEMICALS 4Q 2014 VS. 3Q 2014

10


248 (5) 27

11

REFINING OVERVIEW 4Q 2014

Realized refining margin: $9.30/BBL

Worldwide market capture: 89%

Refining crude utilization: 95%

Advantaged U.S. crude slate: 95%

Clean product yield: 84%


558

322

78

(31)

(94)

(64)

(125)

3Q 2014

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf Coast Central

Corridor

Western /

Pacific

Other

Refining

4Q 2014

Adjusted

Earnings

$MM

REFINING 4Q 2014 VS. 3Q 2014

12

203 (32) 206 12 (67)


10.45 9.30

0.14

(3.15)

1.41 0.45

Market

3:2:1

Configuration Secondary

Products

Feedstock Other Realized

Margin

WORLDWIDE REFINING $/BBL

REFINING MARGINS – MARKET VS. REALIZED 4Q 2014

13

Avg. Market Crude: $75.39/BBL 95% Crude Capacity Utilization 89% Market Capture

14

MARKETING AND SPECIALTIES OVERVIEW 4Q 2014

Marketing & Other: Continued strong margins

Specialties: Higher margins


259

324

40 25

3Q 2014

Adjusted

Earnings

Marketing

& Other

Specialties 4Q 2014

Adjusted

Earnings

$MM

MARKETING AND SPECIALTIES 4Q 2014 VS. 3Q 2014

15

256 68


(91)(100)

7

(8)(8)

3Q 2014

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead Other

4Q 2014

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 4Q 2014 VS. 3Q 2014

16

20.8 22.4 21.8 22.0 22.2 22.0

7.0 6.2 6.2 6.2 6.2 8.7

3.5 5.4 5.3 5.0

3.1 5.2

25%

22% 22% 22% 22%

28%

2012 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014

Equity $B Debt $B Cash & Cash Equivalents $B Debt to Capital

20% - 30%

CAPITAL STRUCTURE 2012 – 4Q 2014

17

3.1

5.2

1.1

(0.2)

2.5

0.6

(1.1)(0.3)

(0.5)

September 30

Cash Balance*

CFO

(excludingworking

capital)

Working

Capital

Debt

Issuance

Asset

Dispositions

Capital

Expenditures& Investments

Dividends Share

Repurchases

December 31

Cash Balance*

$B

CASH FLOW 4Q 2014

18

* Includes cash and cash equivalents

Distributions

Capital

Expenditures

&

Investments

Cash From

Operations

Asset

Sales

Debt

Cash Draw

& Other

SOURCES AND USES 2014

19

Cash Sources

$7.6 B

Cash Uses

$7.6 B

$2.5 B

Debt-to-Capital 28%

Net-Debt-to-Capital 14%

$3.8 B

Share Repurchases $2.7 B

Dividends $1.1 B

$3.8 B

Growth $2.7 B

Sustaining $1.1 B

Debt $3.5 B

CFO (Excl. WC) $4.5 B

Working Capital ($1.0) B

Cash From Operations Capex & Investments Distributions

Share repurchases includes a $450 MM cash flow impact from the PSPI exchange

20

OUTLOOK

PHILLIPS 66 FOURTH QUARTER 2014 CONFERENCE CALL

Questions and Answers

PHILLIPS 66 FOURTH QUARTER 2014 CONFERENCE CALL

Appendix

ESTIMATED SENSITIVITIES 2015

23 Sensitivities shown above are independent and are only valid within a limited price range

Midstream - DCP (net to Phillips 66)

10¢/Gal Increase in NGL price 40

$1/MMBtu Increase in Natural Gas price 30

$10/BBL Increase in WTI price 20

Chemicals - CPChem (net to Phillips 66)

1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 35

Worldwide Refining (assuming 91% refining utilization)

$1/BBL Increase in Gasoline Margin 220

$1/BBL Increase in Distillate Margin 200

$1/BBL Widening LLS / Maya Differential (LLS less Maya) 50

$1/BBL Widening WTI / WCS Differential (WTI less WCS) 40

$1/BBL Widening WTI / WTS Differential (WTI less WTS) 15

$1/BBL Widening LLS / Medium Sour Differential (LLS less Medium Sour) 10

$1/BBL Widening ANS / WCS Differential (ANS less WCS) 10

10¢/MMBtu Increase in Natural Gas price (10)

Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators:

Annual

Net Income

$MM

13.14 11.04

(0.27)

(1.30)(0.69)

0.16

Market

3:2:1


Products


Margin

ATLANTIC BASIN / EUROPE $/BBL


24

Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH

Brent: $76.27/BBL 96% Crude Capacity Utilization 84% Market Capture

5.37

6.58

0.70

(4.38)

1.33

3.56

Market

3:2:1


Products


Margin

GULF COAST $/BBL


25

Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 61 8ppm

LLS: $76.38/BBL 97% Crude Capacity Utilization 122% Market Capture

13.28 14.01

0.25

(3.45)

2.91 1.02

Market

3:2:1


Products


Margin

CENTRAL CORRIDOR $/BBL


26

Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3

WTI: $73.41/BBL 96% Crude Capacity Utilization 106% Market Capture

12.21

6.52

0.42

(3.58)

3.07

(5.60)

Market

3:2:1


Products


Margin

WESTERN / PACIFIC $/BBL


27

Market 3:2:1 – ANS Spot / Los Angeles CARBOB / Los Angeles No. 2 CARB

ANS: $74.76BBL 92% Crude Capacity Utilization 53% Market Capture

808 913

(24)

9

(96)

219

(3)

4Q 2013

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

4Q 2014

Adjusted

Earnings


$MM

97 (100) 322 270 324

ADJUSTED EARNINGS 4Q 2014 VS. 4Q 2013

28

121

97

3

(48)

21

4Q 2013

Adjusted

Earnings

Transportation DCP

Midstream

NGL 4Q 2014

Adjusted

Earnings

$MM

MIDSTREAM 4Q 2014 VS. 4Q 2013

29

53 55 (11)


261 270

(14)

18 5

4Q 2013

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 4Q 2014

Adjusted

Earnings

$MM

CHEMICALS 4Q 2014 VS. 4Q 2013

30

248 (5) 27


418 322

342

(173)

(173)

(109)

17

4Q 2013

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf

Coast

Central

Corridor

Western /

Pacific

Other

Refining

4Q 2014

Adjusted

Earnings

$MM

REFINING 4Q 2014 VS. 4Q 2013

31

203 (32) 206 12 (67)


105

324

202 17

4Q 2013

Adjusted

Earnings

Marketing

& Other

Specialties 4Q 2014

Adjusted

Earnings

$MM

MARKETING AND SPECIALTIES 4Q 2014 VS. 4Q 2013

32

256 68


(97) (100)

(4)

3

(2)

4Q 2013

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead Other

4Q 2014

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 4Q 2014 VS. 4Q 2013

33

16% 18% 18% 18%

7%10% 12% 11%

26%27% 24% 23%

3%

7%14% 18%

6%

24%

2011 2012 2013 2014

18% 19% 17% 17%

12% 12% 11% 11%

24% 22%22% 23%

15% 17% 19% 21%

22% 23% 26% 23%

Q1 2014 Q2 2014 Q3 2014 Q4 2014

REFINING U.S. ADVANTAGED CRUDE SLATE

34

QUARTERLY

* Includes Shale Oil, Rocky Mountain Sweet (Casper, Wyoming), Mississippian Lime

(Oklahoma) and Granite Wash (Texas Panhandle)

Other Light/Medium

Tight Oil*

Other Heavy

Canadian Heavy

WTI Based

Total 91% 93% 95% 95% 52% 62% 74% 94% Total

ANNUAL

Other Light/Medium

Tight Oil*

Other Heavy

Canadian Heavy

WTI Based

Year 4Q 3Q Year 4Q

Phillips 66

Net Income (Loss) Attributable to Phillips 66 4,762$ 1,147$ 1,180$ 3,726$ 826$

Adjustments:

Asset dispositions (494) (385) (109) (23) -

Impairments 200 131 69 - -

Exit of business line - - - 34 -

Tax law impacts - - - (17) -

Pending claims and settlements (10) (10) - (16) -

Lower-of-cost-or-market inventory adjustments 30 30 - - -

Discontinued Operations (706) - - (61) (18)

Adjusted Net Income (Loss) Attributable to Phillips 66 3,782$ 913$ 1,140$ 3,643$ 808$

Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) 8.33$ 2.05$ 2.09$ 6.02$ 1.37$

Adjusted Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) 6.62$ 1.63$ 2.02$ 5.89$ 1.34$

Millions of Dollars

Except as Indicated

20132014

35

NON-GAAP RECONCILIATIONS

36


Year 4Q 3Q Year 4Q

Midstream

Net Income (Loss) Attributable to Phillips 66 507$ 96$ 115$ 469$ 121$

Adjustments:


Adjusted Net Income (Loss) Attributable to Phillips 66 508$ 97$ 115$ 469$ 121$

Chemicals

Net Income (loss) Attributable to Phillips 66 1,137$ 267$ 230$ 986$ 261$

Adjustments:

Impairments 69 - 69 - -


Adjusted Net Income (Loss) Attributable to Phillips 66 1,209$ 270$ 299$ 986$ 261$

Millions of Dollars

Except as Indicated

20132014

37


Year 4Q 3Q Year 4Q

Refining

Net Income (Loss) Attributable to Phillips 66 1,771$ 517$ 558$ 1,747$ 418$

Adjustments:

Asset dispositions (369) (369) - - -

Impairments 131 131 - - -



Pending claims and settlements 17 17 - - -

Adjusted Net Income (Loss) Attributable to Phillips 66 1,576$ 322$ 558$ 1,734$ 418$

Marketing & Specialties

Net Income (Loss) Attributable to Phillips 66 1,034$ 367$ 368$ 894$ 105$

Adjustments:

Asset dispositions (125) (16) (109) (23) -





Millions of Dollars

Except as Indicated

20132014

38


Year 4Q 3Q Year 4Q

Refining - Atlantic Basin/Europe

Net Income (Loss) Attributable to Phillips 66 203$ 72$ 125$ 27$ (139)$

Adjustments:

Impairments 131 131 - - -


Adjusted Net Income (Loss) Attributable to Phillips 66 334$ 203$ 125$ 20$ (139)$

Refining - Gulf Coast


Adjustments: - - - - -


Refining - Central Corridor

Net Income (Loss) Attributable to Phillips 66 942$ 191$ 300$ 1,481$ 379$

Adjustments:



Adjusted Net Income (Loss) Attributable to Phillips 66 957$ 206$ 300$ 1,478$ 379$

Millions of Dollars

Except as Indicated

2014 2013

39


Year 4Q 3Q Year 4Q

Refining - Western/Pacific

Net Income (Loss) Attributable to Phillips 66 306$ 291$ (3)$ 44$ 42$

Adjustments:

Asset dispositions (369) (369) - - -


Tax law impacts - - (2) -

Adjusted Net Income (Loss) Attributable to Phillips 66 (52)$ (67)$ (3)$ 42$ 42$

Refining - Other

Net Income (Loss) Attributable to Phillips 66 70$ (49)$ 93$ 136$ (49)$

Adjustments:

Pending claims and settlements 17 17 - - -


Adjusted Net Income (Loss) Attributable to Phillips 66 87$ (32)$ 93$ 135$ (49)$

Millions of Dollars

Except as Indicated

2014 2013

40


Year 4Q 3Q Year 4Q

Marketing & Specialties - Marketing & Other


Adjustments:

Asset dispositions (125) (16) (109) - -




Marketing & Specialties - Specialties


Adjustments:

Asset dispositions - - - (23) -



Except as Indicated

2014 2013

Millions of Dollars

41 * Total equity plus total debt


2014 YTD Phillips 66 Midstream Chemicals RefiningMarketing

& Specialties

Numerator ($MM)

Net Income 4,797 541 1,137 1,771 1,034

After-tax interest expense 173 - - - -

GAAP ROCE earnings 4,970 541 1,137 1,771 1,034

Special Items (980) 1 72 (195) (152)

Adjusted ROCE earnings 3,990 542 1,209 1,576 882

Denominator ($MM)

GAAP average capital employed* 29,634 4,207 4,489 13,377 2,743

Discontinued Operations (96) - - - -

Adjusted average capital employed 29,538 4,207 4,489 13,377 2,743

2014 Adjusted ROCE 14% 13% 27% 12% 32%

2014 GAAP ROCE 17% 13% 25% 13% 38%

Investor Relations

Phillips66 Q4 2014 Press Release Slides