Investment Directed to Growing Midstream and
Chemicals Businesses
Phillips 66 (NYSE: PSX) announces its 2015 capital budget of
$4.6 billion. These investments are intended to support midstream
business growth, including that of the company’s master limited
partnership, Phillips 66 Partners LP, as well as ensure ongoing
operating excellence. Including the company’s portion of capital
spending by joint ventures DCP Midstream (DCP), Chevron Phillips
Chemical Company (CPChem) and WRB Refining, all of which are
expected to be self-funded, the company’s total 2015 capital
program is expected to be $6.8 billion.
“The 2015 capital program reflects our commitment to grow our
higher-value businesses while enhancing returns in Refining,” said
chairman and CEO Greg Garland. “We are executing a portfolio of
major Midstream and Chemicals projects while evaluating a
significant backlog of investment opportunities.
“We remain committed to returning capital to shareholders
through dividend growth and our share repurchase program. During
the year we increased our dividend 28 percent, and through Sept.
30, 2014, we returned $3.9 billion of capital to shareholders
through dividends, share repurchases and the PSPI exchange. We
expect double-digit increases in dividends for the next two years,
and $2.6 billion remained available at the end of the third quarter
under our share repurchase authorization.
“Our capital structure and financial flexibility allow us to
fund shareholder distributions while investing in the growth of our
businesses, even in this lower commodity price environment. Sources
of capital include our strong balance sheet, debt and equity
issuances by our MLP, and operating cash flows from a
high-returning portfolio of businesses,” said Garland.
In Midstream, excluding DCP, Phillips 66 plans to invest $3.2
billion in its Natural Gas Liquids (NGL) and Transportation
business lines. Midstream capital includes approximately $200
million expected to be spent by Phillips 66 Partners to support
organic growth projects. In NGL, the company continues construction
of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4
million-barrel-per-month Freeport LPG Export Terminal on the U.S.
Gulf Coast. In Transportation, the company is investing in pipeline
and rail infrastructure projects to move crude oil from the
Bakken/Three Forks production area of North Dakota to market
centers throughout the U.S. In addition, expansion of the Beaumont
Terminal and related infrastructure opportunities are being
pursued.
Additional Midstream investments are planned within DCP, a 50-50
joint venture with Spectra Energy that also includes DCP Midstream
Partners. DCP will leverage its infrastructure to launch new
gathering, processing, and NGL growth projects, mainly in the
Niobrara, Denver-Julesburg, Eagle Ford and Permian basins. DCP also
expects to increase natural gas processing capacity in these basins
and complete other gathering system expansions during 2015.
Phillips 66’s share of DCP’s 2015 planned capital expenditures is
$550 million.
In Chemicals, CPChem, a 50-50 joint venture with Chevron, is
investing in projects aimed at capturing cost-advantaged
petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s
share of CPChem’s 2015 capital expenditures is expected to be $1.4
billion. Funding supports advancement of CPChem’s 3.3
billion-pound-per-year ethane cracker and two 1.1
billion-pound-per-year polyethylene facilities. The expected
start-up for these facilities is mid-2017. In addition, the 220
million-pound-per-year expansion of CPChem’s normal alpha olefins
production capacity at Cedar Bayou continues, with estimated
completion in mid-2015.
Phillips 66 plans $1.1 billion of capital expenditures in
Refining, approximately 75 percent of which will be sustaining
capital. These investments are related to reliability and
maintenance, safety and environmental projects, including
compliance with the new EPA Tier 3 gasoline specifications.
Discretionary Refining capital investments will be directed toward
small, high-return, quick pay-out projects, primarily to enhance
use of advantaged crudes and improve product yields.
In Marketing and Specialties, the company plans to invest $170
million for growth and sustaining capital. The growth investment
reflects Phillips 66’s continued plans to expand and enhance its
fuel marketing business.
In Corporate and Other, Phillips 66 plans to fund $155 million
in projects primarily related to information technology and
facilities.
“Our plans for significant growth in enterprise value are
supported by our 2015 capital budget and our commitment to a 60/40
ratio of reinvestment to distributions. Disciplined capital
allocation and operating excellence remain our top priorities,”
concluded Garland.
$ Millions Sustaining Growth
Capital Capital Capital
Program
Phillips 66
Consolidated
Midstream (1) 167 2,996 3,163 Chemicals - - - Refining (2) 813 299
1,112 Marketing and Specialties 78 92 170 Corporate and Other (2)
155 - 155 1,213 3,387
4,600
Selected Equity
Affiliates
DCP 175 375 550 CPChem 188 1,261 1,449 WRB 150 53
203 513 1,689 2,202 Total
Capital Program 1,726 5,076 6,802 (1) Includes
100% of Phillips 66 Partners. (2) Includes non-cash capitalized
leases of $11 million in Refining and $21 million in Corporate and
Other.
$ Millions Phillips 66 Partners
Growth 195 Sustaining 12 Total Capital Expenditures
207 100% of Phillips 66 Partners.
About Phillips 66
Built on more than 130 years of experience, Phillips 66 is a
growing energy manufacturing and logistics company with
high-performing Midstream, Chemicals, Refining, and Marketing and
Specialties businesses. This integrated portfolio enables Phillips
66 to capture opportunities in the changing energy landscape.
Headquartered in Houston, the company has 14,000 employees who are
committed to operating excellence and safety. Phillips 66 had $50
billion of assets as of Sept. 30, 2014. 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,” “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 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
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.
Phillips 66Dennis Nuss, 832-765-1850 (media)dennis.h.nuss@p66.comRosy Zuklic, 832-765-2297
(investors)rosy.zuklic@p66.com
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