Commitment to Disciplined Capital
Allocation
Phillips 66 (NYSE: PSX), a diversified energy manufacturing and
logistics company, announces its 2020 capital program. The Phillips
66 capital budget is $3.3 billion, net of $0.5 billion expected
cash capital contributions from joint venture partners (“adjusted
capital”). The adjusted capital budget includes $0.9 billion for
Phillips 66 Partners.
“The 2020 capital program supports our strategy to grow
high-value businesses, improve returns, and ensure safe, reliable
and environmentally responsible operations,” said Greg Garland,
chairman and CEO of Phillips 66. “We are investing in attractive
growth and return projects that further build out and enhance our
integrated system, and funding $1.2 billion of sustaining capital
for operating excellence projects. The capital program is aligned
with our disciplined approach to capital allocation that is
underpinned with strong shareholder distributions. Our long-term
objective is to reinvest 60% of cash flow back into the business
and return 40% to shareholders through dividends and share
buybacks.”
The Midstream budget, excluding Phillips 66 Partners, primarily
reflects funding for the Liberty and Red Oak crude oil pipelines
and 450,000 barrels per day of additional fractionation capacity at
the Sweeny Hub.
The Phillips 66 Partners budget includes investments in the Gray
Oak Pipeline, the C2G Pipeline, the South Texas Gateway Terminal
and the Bakken Pipeline, as well as sustaining capital.
The Refining capital budget includes $0.6 billion for
reliability, safety and environmental projects. In addition,
Refining capital will fund fluid catalytic cracking (FCC) unit
upgrades at the Ponca City and Sweeny refineries, renewable diesel
projects and other high-return, quick-payout projects to enhance
margins.
The Marketing and Specialties budget primarily reflects the
development and improvement of our international retail sites.
The Corporate and Other capital budget will primarily fund
information technology projects, including an investment in a new
enterprise resource planning system.
Phillips 66’s proportionate share of capital spending by joint
ventures DCP Midstream, LLC (DCP Midstream), Chevron Phillips
Chemical Company LLC (CPChem) and WRB Refining LP (WRB) is expected
to be $1.2 billion. Capital spending by these three major joint
ventures is expected to be self-funded.
DCP Midstream’s expected capital spend includes funding for
Fracs 2 and 3 at the Phillips 66 Sweeny Hub. CPChem’s growth
capital will fund continuing development of world-scale
petrochemicals projects in the U.S. Gulf Coast and Qatar that would
add ethylene and derivative capacity, as well as debottlenecking
opportunities on existing units. WRB’s expected capital spend will
be directed to sustaining projects and distillate yield
enhancement.
Millions of Dollars
Sustaining
Growth
Capital
Capital
Capital
Program
Adjusted Capital Program
Midstream1
Phillips 662
$ 167
887
1,054
Phillips 66 Partners3
133
734
867
300
1,621
1,921
Chemicals
-
-
-
Refining4
600
450
1,050
Marketing and Specialties
82
79
161
Corporate and Other
204
-
204
Phillips 66 Consolidated5
1,186
2,150
3,336
DCP Midstream
50
300
350
CPChem
250
406
656
WRB
109
106
215
Selected Equity Affiliates
409
812
1,221
Total Adjusted Capital Program
$ 1,595
2,962
4,557
1) - Total consolidated Midstream capital spending inclusive of
cash funded by joint venture partners is expected to be $2.4
billion in 2020. 2) - Excludes $374 million of growth capital
expected to be cash funded by DCP Midstream for Fracs 2 and 3 at
the Phillips 66 Sweeny Hub. Also excludes adjusted capital budget
associated with Phillips 66 Partners. 3) - Excludes $95 million of
growth capital expected to be cash funded by Gray Oak joint venture
partners. 4) - Includes non-cash capitalized leases of $15 million
in Refining. 5) - Total consolidated capital spending inclusive of
cash funded by joint venture partners is expected to be $3.8
billion in 2020.
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 14,500 employees committed to safety and operating excellence.
Phillips 66 had $59 billion of assets as of Sept. 30, 2019. For
more information, visit http://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.
Use of Non-GAAP Financial Information—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 joint venture partners, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20191213005341/en/
Jeff Dietert (investors) 832-765-2297 jeff.dietert@p66.com
Brent Shaw (investors) 832-765-2297 brent.d.shaw@p66.com
Dennis Nuss (media) 855-841-2368 dennis.h.nuss@p66.com
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