Phillips 66 Responds to Challenging Business Environment
March 24 2020 - 07:00AM
Business Wire
Phillips 66 (NYSE: PSX), a diversified energy manufacturing and
logistics company, announces actions in response to the challenging
business environment.
“Phillips 66 is well positioned to manage through the
challenging environment with our high-quality, diversified asset
base and strong balance sheet,” said Greg Garland, chairman and CEO
of Phillips 66. “Our top priorities remain the well-being of our
employees, our communities, and safe and reliable operations. We
are taking action to maintain our financial strength to ensure
security of our dividend, execute capital growth projects that are
near completion, and maintain our strong investment grade credit
rating. We remain focused on disciplined capital allocation and
creating long-term value for our shareholders.”
The company is taking the following actions:
- Reducing 2020 consolidated capital spending by $700 million to
$3.1 billion.
- Capital spending net of cash capital contributions from joint
venture partners (“adjusted capital”) is now expected to be $3.0
billion. This reduction in adjusted capital from the $3.3 billion
budget reflects a $700 million reduction in our consolidated
capital spending, partially offset by a $400 million reduction in
cash capital contributions anticipated from DCP Midstream.
- In Midstream, the Red Oak Pipeline and Sweeny Frac 4 projects,
as well as Phillips 66 Partners’ Liberty Pipeline, will all be
deferred. Phillips 66 Partners has also postponed its final
investment decision on ACE Pipeline. Phillips 66 does not expect
DCP Midstream to exercise its option to participate in Sweeny Fracs
2 and 3 in 2020.
- In Refining, the company is deferring and cancelling certain
discretionary projects.
- Reducing operating and administrative costs by $500 million in
2020.
- Temporarily suspended share repurchases effective March 18.
Share repurchases during the first quarter of 2020 were
approximately $440 million. Phillips 66 will evaluate timing to
resume share repurchases.
- Secured a new $1 billion, 364-day term loan facility. This
facility provides additional liquidity and financial flexibility in
addition to the existing $5 billion revolving credit facility.
Phillips 66 Partners has a $750 million revolving credit
facility.
“We will continue to closely monitor market conditions and
evaluate the impact on our portfolio. We are prepared to take
additional action as needed. During these times of uncertainty, the
people of Phillips 66 remain fully committed to providing energy
and improving lives,” said Garland.
The company will host a conference call on March 24 at 9 a.m.
EDT to discuss these actions. To access the call, go to the
Phillips 66 Investors site, www.phillips66.com/investors, and click
on “Events and Presentations.” A replay of the call will be
archived on the Investors site approximately two hours after the
live call, and a transcript also will be available at a later
date.
Millions of Dollars
2020 Guidance
2020 Budget1
Sustaining
Growth
Total
Total
Capital Spending
Midstream
Phillips 662
$
137
821
958
1,428
Phillips 66 Partners3
132
800
932
962
269
1,621
1,890
2,390
Chemicals
-
-
-
-
Refining
485
350
835
1,035
Marketing and Specialties
80
129
209
161
Corporate and Other
163
-
163
204
Phillips 66 Consolidated
997
2,100
3,097
3,790
Less: capital expenditures funded by joint
venture partners4
-
69
69
469
Adjusted Capital Spending
$
997
2,031
3,028
3,321
1) - As previously announced in December 2019. 2) - Excludes
capital budget associated with Phillips 66 Partners. 3) - Phillips
66 Partners capital spending net of $69 million in growth capital
to be cash funded by joint venture partners is expected to be $863
million in 2020. The previously announced Phillips 66 Partners 2020
capital budget net of $95 million in cash funded by joint venture
partners was $867 million. Phillips 66 Partners capital spending
excludes amounts associated with acquisition of assets from
Phillips 66. 4) - Included in the Midstream segment.
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 Dec. 31, 2019. 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
included in this news release are based on management’s
expectations, estimates and projections as of the date they are
made. These statements are not guarantees of future performance and
you should not unduly rely on them as they 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;
potential disruption of our operations due to accidents, weather
events, including as a result of climate change, terrorism or
cyberattacks; general economic and political developments
including: armed hostilities; expropriation of assets; changes in
governmental policies relating to NGL, crude oil, natural gas or
refined petroleum products pricing, regulation or taxation; and
other political, economic or diplomatic developments, including
those caused by public health issues and outbreaks; 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
spending.” These are non-GAAP financial measures that are derived
by reducing the company’s planned 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/20200324005114/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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