Attractive Midstream Growth Opportunities;
Commitment to Disciplined Capital Allocation
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.
Millions of Dollars
Sustaining
Capital
Growth
Capital
Capital Program
Adjusted Capital Program
Midstream* $ 185 847 1,032 Chemicals - - - Refining 512 411 923
Marketing and Specialties 64 97 161 Corporate and Other
177 - 177
Phillips 66*
938
1,355
2,293
Phillips 66 Partners** 78
523 601
Phillips 66 Consolidated
1,016
1,878
2,894
DCP Midstream 55 450 505 CPChem 282 290 572 WRB
78 87 165
Selected Equity Affiliates
415
827
1,242
Total Adjusted Capital Program
$
1,431
2,705
4,136
*Excludes adjusted capital budget
associated with Phillips 66 Partners.
**Excludes $303 million of growth capital
expected to be cash funded by noncontrolling interests.
Millions of Dollars
Sustaining
Capital
Growth
Capital
CapitalProgram
Midstream Adjusted Capital
Budget
Phillips 66* $ 185 847 1,032 Phillips 66 Partners**
78 523 601
Consolidated Midstream Adjusted Capital
Budget
$
263
1,370
1,633
*Excludes adjusted capital budget
associated with Phillips 66 Partners.
**Excludes $303 million of growth capital
expected to be cash funded by noncontrolling interests.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20181214005491/en/
Jeff Dietert (investors)832-765-2297jeff.dietert@p66.com
Brent Shaw (investors)832-765-1932brent.d.shaw@p66.com
Dennis Nuss (media)832-765-1850dennis.h.nuss@p66.com
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