Attractive Midstream Growth Opportunities; Commitment to Disciplined
Capital Allocation
HOUSTON--(BUSINESS WIRE)--
Phillips 66 (NYSE: PSX), a diversified energy manufacturing and
logistics company, announces its 2019 capital program, investing in
attractive growth opportunities and funding safety and reliability
projects. The Phillips 66 capital budget, excluding Phillips 66
Partners, is $2.3 billion. The Phillips 66 Partners capital budget net
of $303 million expected cash capital contributions from noncontrolling
interests (“adjusted capital”) is $601 million.
“The 2019 capital program reflects our strong portfolio of growth
projects aligned with our long-term strategy,” said Chairman and CEO
Greg Garland. “We are building out our integrated Midstream
infrastructure network, including pipelines, export facilities, and
fractionation in support of growing hydrocarbon production in the key
domestic shale plays. CPChem is also pursuing petrochemicals expansion
opportunities on the U.S. Gulf Coast.”
“Disciplined capital allocation is a top priority for us, and we
continue to have a long-term objective to reinvest 60 percent of our
cash flow into the business and return 40 percent to our shareholders
through dividends and buybacks. We are committed to a secure and
competitive dividend with annual increases. Through our ongoing share
repurchase program, we buy our shares when they trade below intrinsic
value and have $2.1 billion remaining on our share repurchase
authorizations as of Sept. 30. Since 2012, we have returned $21.6
billion to shareholders through dividends, share repurchases and
exchanges.”
In the Midstream segment, the adjusted capital budget is $1.6 billion,
including $1.4 billion of adjusted growth capital. This adjusted capital
budget includes $601 million for Phillips 66 Partners, and reflects
expected joint venture-level financing to fund a portion of the Gray Oak
Pipeline construction.
Midstream growth capital at Phillips 66 includes 300,000 barrels per day
of additional fractionation capacity at the Sweeny Hub, as well as
ongoing expansion of the Beaumont Terminal and pipeline investments
providing integration across our value chain. Growth capital at Phillips
66 Partners supports organic projects, including the Gray Oak Pipeline,
South Texas Gateway Terminal, Clemens Caverns expansion, an
isomerization unit at the Phillips 66 Lake Charles Refinery, and the
Lake Charles products pipeline.
Phillips 66 plans $923 million of capital spending in Refining, with
$512 million for reliability, safety and environmental projects.
Refining growth capital of $411 million is for high-return projects to
enhance the yield of higher-value products, including an upgrade of the
fluid catalytic cracking unit at the Sweeny Refinery, as well as other
low-capital, quick-payout projects.
In the Marketing and Specialties segment, the company intends to invest
$161 million of growth and sustaining capital. The investment will
further grow and enhance retail sites in Europe.
The Corporate and Other capital budget primarily funds information
technology projects, including an investment in a new enterprise
resource planning system.
Phillips 66’s proportionate share of capital spending by joint ventures
Chevron Phillips Chemical Company LLC (CPChem), DCP Midstream, LLC (DCP
Midstream) and WRB Refining LP (WRB) is expected to be $1.2 billion.
Including these equity affiliates, the company’s total 2019 adjusted
capital program is projected to be $4.1 billion.
Phillips 66’s expected share of CPChem’s capital spending is $572
million, including $282 million of sustaining capital. CPChem’s growth
capital will fund continuing development of a second U.S. Gulf Coast
petrochemicals project for additional ethylene and derivative capacity,
as well as debottleneck opportunities on existing units. Phillips 66’s
expected share of DCP Midstream’s capital spending is $505 million,
reflecting growth projects such as the Gulf Coast Express Pipeline, DJ
Basin gas processing plants, and natural gas liquids (NGL) pipeline
expansions. Phillips 66’s expected share of WRB’s capital spending is
$165 million, including $78 million of sustaining projects. Capital
spending by these three major joint ventures is expected to be
self-funded.
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Millions of Dollars
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Sustaining
Capital
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Growth
Capital
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Capital
Program
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Adjusted Capital Program
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Midstream*
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$
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185
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847
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1,032
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Chemicals
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-
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-
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-
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Refining
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512
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411
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923
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Marketing and Specialties
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64
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97
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161
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Corporate and Other
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177
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-
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177
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Phillips 66*
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938
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1,355
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2,293
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Phillips 66 Partners**
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78
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523
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601
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Phillips 66 Consolidated
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1,016
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1,878
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2,894
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DCP Midstream
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55
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450
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505
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CPChem
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282
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290
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572
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WRB
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78
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87
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165
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Selected Equity Affiliates
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415
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827
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1,242
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Total Adjusted Capital Program
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$
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1,431
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2,705
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4,136
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*Excludes adjusted capital budget associated with Phillips
66 Partners.
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**Excludes $303 million of growth capital expected to be
cash funded by noncontrolling interests.
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Millions of Dollars
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Sustaining
Capital
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Growth
Capital
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Capital Program
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Midstream Adjusted Capital Budget
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Phillips 66*
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$
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185
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847
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1,032
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Phillips 66 Partners**
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78
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523
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601
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Consolidated Midstream Adjusted Capital Budget
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$
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263
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1,370
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1,633
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*Excludes adjusted capital budget associated with Phillips
66 Partners.
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**Excludes $303 million of growth capital expected to be
cash funded by noncontrolling interests.
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About Phillips 66
Phillips 66 is a diversified energy manufacturing and logistics company.
With a portfolio of Midstream, Chemicals, Refining, and Marketing and
Specialties businesses, the company processes, transports, stores and
markets fuels and products globally. Phillips 66 Partners, the company's
master limited partnership, is integral to the portfolio. Headquartered
in Houston, the company has 14,200 employees committed to safety and
operating excellence. Phillips 66 had $56 billion of assets as of
Sept. 30, 2018. For more information, visit www.phillips66.com
or follow us on Twitter @Phillips66Co.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release 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,”
“continues,” “intends,” “will,” “would,” “objectives,” “goals,”
“projects,” “efforts,” “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 news release 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 NGL, crude oil, and natural gas prices, and
petrochemical and refining 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
NGL, crude oil, natural gas, 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; the impact of adverse market conditions or other similar risks
to those identified herein affecting PSXP, as well as the ability of
PSXP to successfully execute its growth plans; 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 news release uses the terms “adjusted capital budget” and
“adjusted capital program.” These are non-GAAP financial measures that
are derived by reducing the company’s budgeted capital spending by that
portion expected to be cash funded by noncontrolling interests, thereby
demonstrating the amount of capital spending attributable to Phillips
66. The disaggregation of capital spending between sustaining and growth
is not a distinction recognized under generally accepted accounting
principles in the United States. The company provides such disaggregated
information to demonstrate management’s return expectations with respect
to capital spending.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181214005491/en/
Jeff Dietert (investors)
832-765-2297
jeff.dietert@p66.com
Brent Shaw (investors)
832-765-1932
brent.d.shaw@p66.com
Dennis Nuss (media)
832-765-1850
dennis.h.nuss@p66.com
Source: Phillips 66