ubs global oil and gas conference · 2017. 6. 23. · prices, and refining and petrochemical...
TRANSCRIPT
UBS Global Oil and Gas Conference
Greg Maxwell Executive Vice President and Chief Financial Officer May 21, 2013 Austin, TX
Cautionary Statement This presentation 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 presentation 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. A registration statement relating to Phillips 66 Partners LP securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities of Phillips 66 Partners LP in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.
2
Delivering on Commitments
3
7 %
14 %
22 %
-1
1
3
5
7
2010 2011 2012
Adjusted Earnings and ROCE($B)
Midstream
Chemicals
Marketing & Specialties
Refining
Corporate
ROCE
Enhanced operating excellence Achieved solid financial results Captured opportunities Created shareholder value
0.4 0.4
1.8
0.3 0.4
1.1
0.3 0.4
1.2
0.2 0.3
0.9
Total Recordable Rates
Phillips 66 CPChem DCP
At Phillips 66 we take the time to work safely, every
job, every day.
Operating Excellence - Safety
Incidents per 200,000 Hours Worked
20
09
20
10
20
11
20
12
Industry Average
4
See appendix for footnotes.
Operating Excellence
Growth
Returns
Distributions
High-performing organization
Phillips 66 Strategy
5
Providing energy, improving lives
Midstream: Build on existing base
■ Grow Transportation and NGL Operations
■ Pursue organic growth through DCP
■ Filed S-1 for PSXP
Chemicals: Grow capacity and earnings
■ Pursue organic growth through CPChem
■ Execute mega-projects
Marketing & Specialties: Selective growth
■ Grow lubricants and European marketing
■ Ensure refinery pull-through
Refining: Enhance returns
■ Process advantaged crudes
■ Increase export capability
■ Optimize portfolio
Segment Strategy
6 Restricted Confidential – Business Information
0.0
0.5
1.0
1.5
2.0
2010 2011 2012 2013Budget
Midstream - Large Platform for Growth
7
Capital Program ($B)
NGL Operations
DCP Midstream
Transportation
NGL Operations
Transportation
DCP Midstream
Fractionator
Storage
Gas Plant
Pipeline
See appendix for footnotes.
DCP Midstream - Growth
8
2013 2014 2015+
Gathering and processing in execution $2 B
Gathering and processing expansions $2 B
Pipelines and logistics $2 B
Executing ~$6 B in growth projects from 2013 – 2015
G&P Plant
New Plant
Expansion/Restart
DCP Legacy
New/Growth
Transportation and NGL Operations - Adding Capacity
9
• Increasing access to advantaged crudes
• 2,000 additional crude rail cars
• Jones Act ships
• Bakken crude to Bayway via Global Partners
• Mississippian Lime to Ponca via pipeline
• Canadian/Bakken to West Coast via Targa
• Export facilities
• Sand Hills/Southern Hills NGL pipelines
• Gulf Coast fractionator
10
Chemicals - Focused Portfolio
S-Chem (SCP and JCP)
Saudi Polymers
Q-Chem and Q-Chem II
Chemicals - Growth
11
Middle East (Blb/y)
36 Manufacturing Sites Worldwide
2 Research Facilities
Sales into over 100 countries
United States (Blb/y)
0.8 7.7 8.0
2000 2012 2017
27.3 24.5 31.5
2000 2012 2017
CPChem Equity Production Capacity
Chemicals - Growth
12
0.0
0.2
0.4
0.6
2010 2011 2012 2013E
Capital Program ($B)
2012 2013 2014 2015 2016 2017+
USGC Petrochemicals 1,500 kMTA
NAO Expansion ~130 kMTA
SPCo Petrochemicals (35% ownership) 1,200 kMTA
Capital program denotes equity share of CPChem capital. See appendix for additional footnotes.
Sweeny Frac Expansion 22 MBD
1-Hexene 250 kMTA
Refining - Diversified Portfolio
13
MI
Germany
HU WG
Ireland
United Kingdom
ME
Malaysia
Western / Pacific 440 MBD Central Region 475 MBD Gulf Coast 733 MBD Atlantic Basin / Europe 588 MBD
LA
SF
FD
BI
BG PC
BW
AL SW
United States
WR
LC
Refining - Enhancing Returns
14
■ Extensive U.S. refining portfolio
■ Infrastructure and commercial capabilities
■ Shifting to 100% advantaged crude
U.S. Refining Crudes (MBD)
Current 3+ Years
LLS/ANS
Brent
Heavy
Canadian
WTI/WTS
See appendix for footnotes.
■ Peer-leading distillate yield
East
Gulf
West
320
400
Current 3+ Years
Refining - Enhancing Returns
15
Export Capacity (MBD)
■ Capability to export 30% of coastal production
■ Product placement to maximize margins
39.5% 39.9% 40.2%
40.8%
35.8%
37.1% 37.4%
2010 2011 2012 2013E
Distillate Yield (Percentage of processed inputs)
Industry
See appendix for footnotes.
$500
Adv Crude Yields &Exports
Costs 3+ Years
Refining - Enhancing Returns
16
Anticipate mid-cycle Refining ROCE improves to 15%
Constant Margin Net Income Expected Improvement
($MM)
0.0
1.0
2.0
2010 2011 2012 2013E
Refining Refining Logistics WRB
Capital Program ($B)
Capital program includes equity share of WRB capital. See appendix for additional footnotes.
Marketing & Specialties
17
>20% 10 - 20% 5 - 10%
Branded Market Share
0.1 - 5% 0%
0.0
0.1
0.2
2010 2011 2012 2013E
Capital Program ($B)
Lubricants PSPI - Flow Improvers Power Generation Refinery Locations
Manufacturing Locations:
Disciplined capital allocation
Growing shareholder distributions
Enhanced financial flexibility
Financial Strategy
18
Capital Allocation
19
Sustaining capital
Increasing distributions
Growth capital
Financial flexibility
2013E cash from operations based on First Call consensus 5/3/2013. See appendix for additional footnotes.
6.0
1.0
0.8
0.8
1.0
Cash fromOperations
Uses
Share Repurchases
Debt Repayment
Growth Capital
Dividends
Sustaining Capital
2013E Sources and Uses of Cash ($B)
Regular dividends
Secure
Growing
Competitive
Share repurchase
Discretionary
Tax efficient
$1.2 B capital returned to shareholders since spin
Shareholder Distributions
20
Phillips 66 Debut
Q3 dividend of $0.20/share
Q3 share repurchases of $111 MM
Q4 share repurchases of $245 MM
Q4 dividend of $0.25/share
Jun Jul Aug Sep Oct Nov Dec May Jan Feb Mar
Q1 share repurchases of $382 MM
Q1 dividend of $0.3125/share
A Promising Future
21
Operating excellence
Growth
Returns
Distributions
High-performing organization
Appendix
Institutional Investors Contact: Rosy C. Zuklic [email protected] Manager, Investor Relations 832-765-2297
Footnotes Slide 4 Injury statistics do not include major projects. Industry Averages are from: Phillips 66 –American Fuels and Petrochemical Manufacturers (AFPM) refining data, CPChem – American Chemistry Council (ACC), DCP – Gas Processors Association (GPA
Slide 7
DCP Midstream capital program includes equity share of DCP Midstream capital.
2012 Transportation includes acquisition costs for one-third interest of Sand Hills and Southern Hills Pipelines totaling approx $0.5 B. This amount was also included in DCP Midstream's capital spending, primarily in 2012
Slide 12
Project capacities are gross capacity.
SPCo Petrochemicals and USGC Petrochemicals projects include ethylene capacity only. Capacity shown does not include derivatives production.
Chemicals capital program denotes equity share of CPChem capital.
Slide 14
U.S. advantaged crude percentages are on an equity basis. Light and medium Canadian crude are in the WTI/WTS category.
Slide 15
Industry yield data from EIA. Distillate yield calculations exclude Trainer and Wilhelmshaven refineries.
Slide 16
Refining capital program includes equity share of WRB capital as well as non-cash capital leases.
Slide 17
Marketing & Specialties capital program excludes $23 MM of capital expenditures related to Downstream Technology and includes non-cash capital leases.
Slide 19
2013E cash from operations based on First Call consensus 5/3/2013.
Dividends based on current dividend of $1.25/share.
23
24 References to earnings refer to net income attributable to Phillips 66.
Non-GAAP Reconciliations
Reconciliation of Earnings to Adjusted Earnings
Millions of Dollars
1Q13 1Q12 4Q12 2012 2011 2010 2009
Consolidated
Earnings (loss) 1,407$ 636$ 708$ 4,124$ 4,775$ 735$ 476$
Adjustments:
Net (gain) loss on asset sales - - - (106) (1,545) (116) (32)
Gain on share issuance by equity affiliate (27) - - - - - (88)
Impairments - 42 580 979 318 1,118 116
Pending claims and settlements (16) 19 (23) 34 - (35) 25
Canceled projects - - - - 28 29 -
Severance accruals - - - - 15 28 -
Premium on early debt retirement - - - 89 - - -
Repositioning costs - - 12 55 - - -
Repositioning tax impacts - 67 - 177 - - -
Exit of business line 34 - - - - - -
Tax law impacts (17) - - - - - -
Hurricane-related costs - - 35 35 - - -
Adjusted earnings 1,381$ 764$ 1,312$ 5,387$ 3,591$ 1,759$ 497$
25 References to earnings refer to net income attributable to Phillips 66.
Non-GAAP Reconciliations
Reconciliation of Earnings to Adjusted Earnings
Millions of Dollars
1Q13 1Q12 4Q12 2012 2011 2010 2009
Midstream
Earnings (loss) 110$ 108$ 92$ 53$ 2,149$ 386$ 386$
Adjustments:
Net (gain) loss on asset sales - - - - (1,618) - (19)
Impairments - - - 330 4 - 79
Gain on share issuance by equity affiliate (27) - - - - - (88)
Pending claims and settlements - - (23) (23) - - -
Hurricane-related costs - - 2 2 - - -
Adjusted earnings 83$ 108$ 71$ 362$ 535$ 386$ 358$
Chemicals
Earnings (loss) 282$ 217$ 246$ 823$ 716$ 486$ 228$
Adjustments:
Impairments - - - 27 - - -
Premium on early debt retirement - - - 89 - - -
Repositioning tax impacts - - - 41 - - -
Adjusted earnings 282$ 217$ 246$ 980$ 716$ 486$ 228$
26
Non-GAAP Reconciliations
References to earnings refer to net income attributable to Phillips 66.
Reconciliation of Earnings to Adjusted Earnings
Millions of Dollars
1Q13 1Q12 4Q12 2012 2011 2010 2009
Refining
Earnings (loss) 922$ 393$ 363$ 3,217$ 1,529$ (545)$ (536)$
Adjustments:
Net (gain) loss on asset sales - - - (104) 96 - -
Impairments - 42 564 606 314 1,110 -
Pending claims and settlements - 19 - 19 - - 25
Canceled projects - - - - 28 29 -
Severance accruals - - - - 15 28 -
Repositioning tax impacts - - - 73 - - -
Tax law impacts (13) - - - - - -
Hurricane-related costs - - 33 33 - - -
Adjusted earnings 909$ 454$ 960$ 3,844$ 1,982$ 622$ (511)$
Marketing and Specialties
Earnings (loss) 188$ (12)$ 127$ 465$ 573$ 567$ 538$
Adjustments:
Net (gain) loss on asset sales - - - (2) (23) (116) (13)
Impairments - - - - - 8 37
Pending claims and settlements (16) - - 38 - (35) -
Repositioning tax impacts - 67 - 63 - - -
Exit of business line 34 - - - - - -
Tax law impacts (4) - - - - - -
Adjusted earnings 202$ 55$ 127$ 564$ 550$ 424$ 562$
Corporate and Other
Earnings (loss) (95)$ (70)$ (120)$ (434)$ (192)$ (159)$ (140)$
Adjustments:
Impairments - - 16 16 - - -
Repositioning costs - - 12 55 - - -
Adjusted earnings (95)$ (70)$ (92)$ (363)$ (192)$ (159)$ (140)$
Non-GAAP Reconciliations 2009 2010 2011 2012 2013 YTD
Phillips 66 - ROCE
Numerator ($MM)
Net Income 479$ 740$ 4,780$ 4,131$ 1,410$
After-tax interest expense 1 1 11 160 46
GAAP ROCE earnings 480 741 4,791 4,291 1,456
Special Items 21 1,024 (1,184) 1,263 (26)
Adjusted ROCE earnings 501$ 1,765$ 3,607$ 5,554$ 1,430$
Denominator ($MM)
GAAP average capital employed* 26,417$ 26,906$ 25,064$ 25,732$ 28,065$
Annualized Adjusted ROCE 2% 7% 14% 22% 20%
Annualized GAAP ROCE 2% 3% 19% 17% 21%
2010 2011 2012 2013 YTD
Midstream - ROCE
Numerator ($MM)
Net Income 391$ 2,154$ 60$ 113$
After-tax interest expense - - - -
GAAP ROCE earnings 391 2,154 60 113
Special Items - (1,614) 309 (27)
Adjusted ROCE earnings 391$ 540$ 369$ 86$
Denominator ($MM)
GAAP average capital employed* 3,289$ 3,163$ 3,030$ 3,106$
Annualized Adjusted ROCE 12% 17% 12% 11%
Annualized GAAP ROCE 12% 68% 2% 15%
2010 2011 2012 2013 YTD
Chemicals - ROCE
Numerator ($MM)
Net Income 486$ 716$ 823$ 282$
After-tax interest expense - - - -
GAAP ROCE earnings 486 716 823 282
Special Items - - 157 -
Adjusted ROCE earnings 486$ 716$ 980$ 282$
Denominator ($MM)
GAAP average capital employed* 2,275$ 2,563$ 3,142$ 3,620$
Annualized Adjusted ROCE 21% 28% 31% 31%
Annualized GAAP ROCE 21% 28% 26% 31%
* Total equity plus total debt 27
Non-GAAP Reconciliations
28 * Total equity plus total debt
2010 2011 2012 2013 YTD
Refining - ROCE
Numerator ($MM)
Net Income (545)$ 1,529$ 3,217$ 922$
After-tax interest expense - - - -
GAAP ROCE earnings (545) 1,529 3,217 922
Special Items 1,167 453 627 (13)
Adjusted ROCE earnings 622$ 1,982$ 3,844$ 909$
Denominator ($MM)
GAAP average capital employed* 16,829$ 15,160$ 14,331$ 14,337$
Annualized Adjusted ROCE 4% 13% 27% 25%
Annualized GAAP ROCE -3% 10% 22% 26%
2010 2011 2012 2013 YTD
Marketing & Specialties - ROCE
Numerator ($MM)
Net Income 567$ 573$ 465$ 188$
After-tax interest expense - - - -
GAAP ROCE earnings 567 573 465 188
Special Items (143) (23) 99 14
Adjusted ROCE earnings 424$ 550$ 564$ 202$
Denominator ($MM)
GAAP average capital employed* 3,421$ 3,271$ 3,411$ 3,664$
Annualized Adjusted ROCE 12% 17% 17% 22%
Annualized GAAP ROCE 17% 18% 14% 21%