Investor Update May NYSE: PSX

Transcription

1 Investor Update May 2016 NYSE: PSX

2 Cautionary Statement This presentation contains forward-looking statements. 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 forwardlooking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to the operations of Phillips 66 and Phillips 66 Partners LP (including joint venture operations) are based on management s expectations, estimates and projections, their 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 can be found in filings by Phillips 66 and Phillips 66 Partners LP with the Securities and Exchange Commission. Phillips 66 and Phillips 66 Partners LP are under no obligation (and expressly disclaim any such obligation) to update or alter their forward-looking statements, whether as a result of new information, future events or otherwise. This presentation includes non-gaap financial measures. You can find the reconciliations to comparable GAAP financial measures at the end of the presentation materials or in the Investors section of the websites of Phillips 66 and Phillips 66 Partners LP. 2

3 Diversified Downstream Company Midstream: Growth Chemicals: Growth Refining: Enhance Returns Marketing & Specialties: Selective Growth Execute Sweeny Hub Grow CPChem organically Optimize crude slate Grow integrated transportation system Advance olefins and polyolefins projects Expand export capability Expand European retail marketing Increase yields Grow lubricants PSXP as a funding vehicle Capitalize on domestic feedstock advantage Maintain cost discipline Ensure domestic refinery pull-through Pursue organic and M&A opportunities Leverage proprietary technology Enhance portfolio 3

4 Strategy Operating Excellence Adjusted EBITDA ($B) Growth Returns Distributions High-Performing Organization Refining M&S Chemicals DCP Midstream See appendix for footnotes. 4

5 Operating Excellence Total Recordable Rates (Incidents per 200,000 Hours Worked) Industry Average Refining Environmental Metrics Phillips 66 CPChem DCP Operating Costs and SG&A ($B) Refining Capacity Utilization (%) Growth Planned Maintenance & Turnarounds 3% 3% 4% 5% % 93% 94% 91% See appendix for footnotes. 5

6 Market Dynamics Brent ($/bbl) Global Market Crack ($/bbl) YTD NGL Weighted Average (cpg) YTD PE Cash Chain Margin (cpp) YTD YTD See appendix for footnotes. 6

7 Value Chains 7

8 Midstream 8

9 Midstream Growth Sweeny Midstream Hub Sweeny Fractionator One and Clemens Caverns in operation 4Q 2015 Freeport LPG Export Terminal startup expected 2H 2016 DAPL/ETCOP Mechanical completion expected in 4Q 2016 Beaumont Terminal projects 2.5 MMBbls new crude/products tanks planned by 2H 2016 EBITDA ($B) EBITDA Remaining at PSX Bakken JVs (PSXP) Sacagawea Pipeline expected startup 2H 2016 Bayou Bridge System (PSXP) Lake Charles segment in operation 1Q 2016 St. James segment targeted in-service 2H PSXP Current Run-Rate EBITDA 0.8 PSX Operating Assets Projects Under Construction Planned E Run-Rate EBITDA EBITDA in PSXP DCP EBITDA excluded. See appendix for additional footnotes. 9

10 Phillips 66 Partners LP Strategic relationship with PSX Stable and predictable cash flows Low cost capital source Financial flexibility 10

11 DCP Midstream Strengthened balance sheet Significant self-help initiatives Cash flow breakeven reduction to below 35 cpg NGL Operating improvements Contract realignment System rationalization Capital discipline Natural Gas Total Throughput (Tbtu/d) NGL Production (MMBD) 90% investment-grade end-use customers Expected to be self-funding No DCP Midstream debt maturities until

12 Chemicals 12

13 Global Chemicals Demand Global Ethylene Demand and Utilization (MM Metric Tons and %) Petrochemical demand driven by global economic growth 86.1% 86.6% 86.9% 87.7% Demand outpaced capacity additions Source: Wood Mackenzie Demand Operating Rate 13

14 Chemicals Production Costs Petrochemical production costs reduced globally E vs 2015 Average Ethylene Production Cost Curve ($/ton) E Asia Coal CPChem location-advantaged feedstock position continues CPChem Asia LPG/Ethane Rest of World W. Europe LPG M.E. LPG/Naphtha N.A. Naphtha W. Europe Naphtha Asia Naphtha 150 M.E. Ethane N.A. LPG N.A. Ethane Cumulative Capacity MM Tons Source: Wood Mackenzie. 14

15 CPChem Growth USGC Petrochemicals Project 1,500 kmta (ethylene) at Cedar Bayou, TX 1,000 kmta (polyethylene) at Old Ocean, TX Planned startup mid-2017 $1 B estimated EBITDA Healthy pipeline of self-funded growth opportunities Expect increased distributions post USGC project completion EBITDA estimate is on a CPChem 100% basis and is based on January 2016 IHS forecast premises. 15

16 Refining 16

17 Strong Refining Free Cash Flow FCF ($B) Averaged $2 B free cash flow over the last three years Global Realized Margin ($/bbl) Increased demand for refined products Expansive footprint provides opportunities for Midstream growth See appendix for footnotes. 17

18 Enhancing Refining Returns Investing to improve returns Quick payout, low cost projects Adjusted ROCE (%) Wood River projects Dilbit capacity increase, ULSD expansion, FCC modernization $200 MM capex, $100 MM EBITDA Bayway FCC modernization $150 MM capex, $75 MM EBITDA Total Capex ($B) Billings heavy crude project $300 MM capex, $125 MM EBITDA See appendix for footnotes E Sustaining Return WRB 18

19 Marketing & Specialties 19

20 Stable Marketing & Specialties Earnings Increased U.S. branded and unbranded gasoline sales FCF ($B) Upgraded 300 U.S. branded sites Increased U.K. inland gasoline placement by 11% Added 31 new retail sites in Germany and Austria Adjusted ROCE (%) Third largest U.S. finished lubricants supplier See appendix for footnotes. 20

21 Financial Strength Strong balance sheet BBB+ / A3 credit rating 23% net debt / cap Available Cash ($B) 7.2 Ample liquidity $1.7 B cash $5 B revolving credit facility Disciplined capital allocation 60% reinvestment 40% distributions Dividends Sustaining Capex Adjusted CFO PSXP Contributions See appendix for footnotes. 21

22 Capital Allocation Funding reinvestment Cash from operations PSXP proceeds E Returning capital to shareholders Dividend growth Ongoing share repurchases Distributions Reinvestment See appendix for footnotes. 22

23 Capital Spending Consolidated ($B) Capital Program ($B) E Refining M&S PSXP Midstream Investment in DCP Corporate E Consolidated WRB DCP CPChem See appendix for footnotes. 23

24 Distributions Annual Dividend ($/sh) Double-digit dividend growth 33% dividend CAGR since spin Ongoing share repurchase program 115 MM shares repurchased and exchanged E Cumulative Distributions ($B) $2.2 B authorization remaining Cumulative distributions include distributions from July 2012 through March See appendix for additional footnotes YTD Share Repurchases and Exchanges Dividends 24

25 Compelling Investment Shareholder returns PSX +162% 220% 180% Disciplined capital allocation Unique portfolio EBITDA growth Multiple expansion Peers +61% S&P % May-12 Feb-13 Nov-13 Aug-14 May-15 Feb % 100% 60% 20% -20% 25

26 Institutional Investors Contact Rosy Zuklic General Manager, Investor Relations C.W. Mallon Manager, Investor Relations

27 Investor Update May 2016 NYSE: PSXP

28 Phillips 66 Partners Ownership Structure (NYSE: PSX) 100% ownership interest Phillips 66 Partners GP LLC (PSXP General Partner) General Partner Units IDRs 2% general partner interest 61% limited partner interest PSXP Public Unitholders 37% limited partner interest (NYSE: PSXP) As of May 10, Operating Subsidiaries Joint Ventures 28

29 Phillips 66 Partners Strong alignment with Phillips 66 Highly integrated assets Stable and predictable cash flows Significant growth potential Financial flexibility Pecan Grove Marine Dock 29

30 Distribution Growth Distribution / LP Unit (cents) Q Q Q Q Q Q Q Q Q Q Q 2016 Coverage Ratio 1.13x 1.10x 1.10x 1.44x 1.32x 1.28x 1.14x 1.15x 1.40x 1.44x 1.15x 3Q 2013 distribution represents the minimum quarterly distribution, actual distribution of cents equal to MQD prorated. 30

31 Financial Performance Adjusted EBITDA ($MM) Q Q Q Q Q 2016 Distributable Cash Flow ($MM) Q Q Q Q Q 2016 Adjusted EBITDA and Distributable Cash Flow shown are attributable to PSXP. 31

32 Phillips 66 Partners Recent Dropdowns Recently acquired assets from Phillips 66 Sweeny Fractionator 100 MBD NGL fractionator Clemens NGL Caverns 7-8 MMBbl NGL storage facility Standish Pipeline Refined products pipeline 1Q 2016 $236 MM, 25% controlling interest in Sweeny Fractionator & Clemens NGL Caverns funded with: $24 MM take-back equity of PSXP LP and GP units $212 MM sponsor loan payable to PSX 2Q 2016 $775 MM, Standish Pipe & remaining 75% interest in Sweeny Fractionator & Clemens NGL Caverns funded with: $100 MM take-back equity of PSXP LP and GP units $675 MM sponsor loan payable to PSX Sponsor loan paid down to $19 MM with $656 MM net proceeds from public unit offering 32

33 $314 MM Announced 2016 Organic Growth Plan Bayou Bridge Pipeline Transports crude from Nederland, TX to Lake Charles, LA, and eventually to St. James, LA Increases crude supply options for LA refineries Nederland to Lake Charles leg began operations in April 2016 Expected completion of St. James segment in 2H 2017 Sacagawea Pipeline 76-mile Sacagawea Pipeline and central delivery facility for gathering systems Connection into 100 MBD Palermo crude oil rail-loading facility Provides increased logistics options for shippers in the Bakken region Terminal completed in 4Q 2015; pipeline expected completion 3Q 2016 Sand Hills Pipeline Adding lateral connections and increasing pumping capacity 33

34 Highly Integrated and Diversified Asset Portfolio 34

35 Fee-based, Long-term Contracts Provide Stability Asset Initial Term (years) Maximum Term with Options (years) Existing Pipelines Clifton Ridge to Lake Charles Sweeny to Pasadena Hartford Connector Gold Line Sand Hills Southern Hills Cross Channel Connector 5 - Eagle Ford Gathering 7 - Explorer Various Various Remaining weighted average contract life of ~10 years Existing Terminals / Storage NGL Services Clifton Ridge Terminal 5 20 Clifton Ridge / Pecan Grove Docks 5 20 Pasadena Terminal 5 20 Pasadena and Hartford Truck Racks 5 20 Gold Line Terminals 5 15 Medford Spheres Bayway Rail Rack Ferndale Rail Rack Sweeny Fractionator 10 - Clemens Caverns 10 - Remaining weighted average contract life of ~5 years PSX accounted for 96% and 95% of PSXP s transportation and terminaling revenues in 2015 and 2014, respectively Hartford Connector includes PSX JV Wood River Refinery to Hartford and Hartford to Explorer pipelines. The term of the Hartford Connector throughput and deficiency agreement began in January

36 Debt Profile $1.3 B Total Debt as of March 31, Year $300 MM notes, 2.646% coupon 10-Year $500 MM notes, 3.605% coupon 30-Year $300 MM notes, 4.680% coupon 5-Year $212 MM sponsor loan, 3.0% 0.2 Debt Maturity Profile ($B) Average cost of 3.48% BBB / Baa3 credit rating Sponsor Loan Senior Notes See appendix for footnotes. 36

37 Financial Flexibility Investment-grade credit rating Financial targets: 30% distribution CAGR x debt / EBITDA 1.1x annual coverage ratio Support Phillips 66 Midstream growth 37

38 Total Return Since IPO 300% 250% 200% PSXP 146% Alerian MLP Index -24% Closed $700 MM acquisition - Closed $340 MM acquisition - Closed $70 MM acquisition Closed $775 MM acquisition 150% 100% 50% IPO Closed $1.1 B acquisition - Closed $236 MM acquisition 0% -50% -100% Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Chart reflects total unitholder return July 22, 2013 to May 6, Distributions assumed to be reinvested in units. Source: Bloomberg. 38

39 Institutional Investors Contact Rosy Zuklic General Manager, Investor Relations C.W. Mallon Manager, Investor Relations

40 Appendix

41 Midcontinent Integrated Growth Midstream Palermo rail terminal/sacagawea pipeline (PSXP) DAPL/ETCOP Refining, Marketing & Specialties Ponca City Yield improvement project Tight oil processing flexibility 100% lease crude purchases Wood River Dilbit capacity increase ULSD expansion FCC modernization Billings Vacuum tower project Marketing & Specialties Grow branded fuels volumes Enhance Phillips 66 brand Marketing JVs and alliances 41

42 Western Gulf Creating a World-Class Energy Complex Midstream Sweeny Fractionator One (PSXP) Freeport LPG export terminal Eagle Ford crude pipeline Sweeny Fractionator Two Refining, Marketing & Specialties Sweeny Strategic asset integration Marketing & Specialties Grow unbranded fuels volumes Focus on high-quality branded assets Increase high-margin exports 42

43 Eastern Gulf Refining Logistics and Midstream Growth Midstream Beaumont terminal expansion: +9 MMBbls Bayou Bridge pipeline Alliance clean products dock Refining, Marketing & Specialties Lake Charles Increase feedstock advantage Alliance Increase light crude runs Marketing & Specialties Grow unbranded fuels volumes Leverage brand value through licensing Increase high-margin exports Grow performance lubricants and export sales 43

44 West Coast Enhancing Returns Midstream Los Angeles waterborne crude tank Santa Maria rail rack Refining, Marketing & Specialties San Francisco Yield improvements Los Angeles FCC energy reduction Marketing & Specialties Grow branded and unbranded fuels volumes Enhance 76 brand Increase high-margin exports Grow export lubricant sales 44

45 Atlantic Basin Enhancing Returns Midstream Bayway LPG loading facility Refining, Marketing & Specialties Bayway FCC reactor modernization Yield improvements Marketing & Specialties Grow JET and COOP brands in Europe Increase unbranded volumes in the U.K. and U.S. Expand brand licensing in the U.S. 45

46 Historical Performance Adjusted EBITDA ($B) 9.7 Adjusted CFO ($B) Adjusted Earnings ($B) '10 '11 '12 '13 '14 ' '10 '11 '12 '13 '14 ' '10 '11 '12 '13 '14 '15 Adjusted EBITDA and Adjusted Earnings are adjusted for special items Adjusted EBITDA adjusted for non-controlling interest and proportional share of equity affiliates income taxes, net interest and D&A Adjusted CFO is cash from continuing operations and excludes working capital changes 46

47 Free Cash Flow Average Midstream ($B) Chemicals ($B) PSXP Contributions Adjusted CFO & PSXP Contributions Sustaining Capex Available Cash Flow CFO Sustaining Capex FCF Refining ($B) Marketing & Specialties ($B) CFO Sustaining Capex FCF CFO Sustaining Capex FCF CFO excludes working capital. Sustaining capex excludes capital leases. Midstream adjusted CFO excludes PSXP. PSXP contributions are calculated as consideration paid by PSXP to PSX in dropdown transactions plus quarterly cash distributions paid from PSXP to PSX. Midstream sustaining capex excludes PSXP. DCP Midstream, CPChem and WRB free cash flow calculated based on Phillips 66 s share of after tax cash flow at the enterprise level. 47

48 2015 Adjusted ROCE 40% M&S 30% 20% 35% Chemicals 19% Refining P66 Total 14% 10% 19% Midstream 0% -10% 5% Corporate -8% Average Capital Employed ($B) 48

49 Capital Structure Consolidated PSX Excluding PSXP 21% 28% 27% 22% 28% 25% 20-30% Equity $B Debt $B Cash & Cash Equivalents $B Debt to Capital 49

50 Debt and Liquidity Debt Maturity Profile ($B) Liquidity ($B) Bonds Revolving Credit Facility Cash Undrawn Revolving Credit Facility Total Committed Liquidity As of 3/31/2016. Excludes PSXP. Debt maturity profile excludes capital leases. Undrawn Revolving Credit Facility does not reflect $51 MM in letters of credit. 50

51 2016 Sensitivities Sensitivities shown above are independent and are only valid within a limited price range. 51

52 Phillips 66 Capital Program Consolidated Capital Expenditures and Investments Millions of Dollars 2016 Budget Sustaining Growth Total Midstream (1) 227 2,119 2,346 Chemicals Refining ,217 Marketing and Specialties Corporate (2) ,297 2,583 3,880 Select Equity Affiliates (3) DCP CPChem ,016 WRB ,423 Capital Program (3) Midstream 324 2,244 2,568 Chemicals ,016 Refining ,401 Marketing and Specialties Corporate ,764 3,539 5,303 (1) Includes 100% of Phillips 66 Partners (2) Includes non-cash capitalized lease of $3 million in Corporate (3) Includes Phillips 66 s portion of self-funded capital spending by DCP Midstream, CPChem, and WRB. 52

53 Footnotes Slide 4 Corporate not included in bars on chart, but included in totals. Adjusted EBITDA adjusted for special items, non-controlling interest and proportional share of selected equity affiliates income taxes, net interest and D&A. Midstream excludes DCP, which is presented separately in the chart. Slide 5 Injury statistics do not include major projects. Industry Averages are from: Phillips 66 American Fuel & Petrochemical Manufacturers (AFPM) refining data, Chevron Phillips Chemical Company LLC (CPChem) American Chemistry Council (ACC), DCP Gas Processors Association (GPA). Growth component of operating costs is estimated based on growth initiatives post

54 Footnotes Slide YTD data is through May 5, 2016 unless otherwise noted. Global Market Crack refers to worldwide market crack spread based on Phillips 66 global crude capacity. NGL weighted average prices are based on index prices from the Mont Belvieu and Conway market hubs that are weighted by DCP Midstream, LLC s (DCP s) NGL component and location mix. PE cash chain margins are ethylene to high-density polyethylene cash chain margins YTD is through April. Source: IHS, Inc. Slide 9 PSX operating assets EBITDA includes Refining Logistics. Refining Logistics represents terminaling, storage and other logistics assets currently embedded in the Refining segment. Amount represents an estimate of the EBITDA potential of these assets if they were transferred to Midstream and market-based fees for their use were charged to the Refining segment. Projects under construction and planned EBITDA growth is 2018 estimated run-rate EBITDA of projects completed 2016 or later. PSXP EBITDA includes EBITDA attributable to non-controlling interests. Planned EBITDA includes projects that have not yet reached final investment decision. 54

55 Footnotes Slide 17 FCF is CFO less sustaining capital, excluding working capital. WRB Refining LP (WRB) free cash flow is calculated based on P66 s share of after tax cash flow at the enterprise level. Global realized margin is based on total processed inputs and includes proportional share of refining margins contributed by certain equity affiliates. Realized margin excludes special items. Slide 18 Project capex and annual EBITDA are current estimates. Wood River Projects capex and EBITDA shown at 100% WRB. Refining capex excludes capital leases but includes Phillips 66 s portion of self-funded capital spending by WRB. Slide 20 Items highlighted occurred in FCF is CFO less sustaining capital, excluding working capital. 55

56 Footnotes Slide 21 Net debt/cap and cash figures are consolidated, as of March 31, $4.9 B is available under revolving credit facility, as $51 MM in letters of credit are outstanding. Adjusted CFO excludes PSXP and excludes working capital. PSXP contributions are calculated as consideration paid by PSXP to PSX in dropdown transactions plus quarterly cash distributions paid from PSXP to PSX. Sustaining capex excludes capital leases and excludes PSXP. Slide 22 Reinvestment excludes Phillips 66 s portion of self-funded capital spending by DCP, CPChem and WRB. Includes $1.5 B equity contribution to DCP in Distributions include the 2014 PSPI share exchange. Slide 23 Capital program includes Phillips 66 s portion of self-funded capital spending by DCP, CPChem and WRB. 56

57 Footnotes Slide share repurchases and exchanges include the PSPI share exchange. Annual dividend reflects sum of declared quarterly dividends. Slide 25 Chart reflects total shareholder return May 1, 2012 to May 6, Dividends assumed to be reinvested in stock. Source: Bloomberg. Peer average includes Delek US Holdings, Inc., HollyFrontier Corporation, Marathon Petroleum Corporation, PBF Energy Inc., Tesoro Corporation, Valero Energy Corporation, Western Refining, Energy Transfer Equity, L.P., Enterprise Products Partners L.P., ONEOK, Inc., Targa Resources Corp., Celanese Corporation, The Dow Chemical Company, Eastman Chemical Company, Huntsman Corporation and Westlake Chemical Corporation. Slide 36 Debt and sponsor loans outstanding, as of March 31,

58 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation Millions of Dollars Adjusted EBITDA by Segment Reconciliation Midstream (excluding DCP Midstream) Midstream net income attributable to Phillips 66 (127) Plus: Net income attributable to noncontrolling interests Provision for income taxes (71) Depreciation and amortization Midstream (excluding DCP Midstream) EBITDA (108) Adjustments (pretax): EBITDA attributable to Phillips 66 noncontrolling interests (13) (24) (45) (73) Proportional share of selected equity affiliates income taxes Proportional share of selected equity affiliates net interest Proportional share of selected equity affiliates depreciation and amortization Lower-of-cost-or-market inventory adjustments Gain on asset dispositions Gain on share issuance by equity affiliate Impairments Pending Claims and settlements (37) Hurricane-related costs Pension settlement expense Midstream (excluding DCP Midstream) Adjusted EBITDA* * Proportional share of selected equity affiliates is net of noncontrolling interests. Proportional Share of DCP Midstream Proportional Share of DCP Midstream net income attributable to Phillips (324) Plus: Net income attributable to noncontrolling interests Provision for income taxes (139) Depreciation and amortization Proportional Share of DCP Midstream EBITDA (463) Adjustments (pretax): EBITDA attributable to Phillips 66 noncontrolling interests Proportional share of selected equity affiliates income taxes (2) Proportional share of selected equity affiliates net interest Proportional share of selected equity affiliates depreciation and amortization Lower-of-cost-or-market inventory adjustments Gain on asset dispositions (30) Gain on share issuance by equity affiliate Impairments in equity affiliates Pending Claims and settlements Hurricane-related costs Proportional Share of DCP Midstream Adjusted EBITDA* * Proportional share of selected equity affiliates is net of noncontrolling interests. 58

59 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation Millions of Dollars Adjusted EBITDA by Segment Reconciliation Chemicals Chemicals net income attributable to Phillips , Plus: Provision for income taxes Chemicals EBITDA 1,189 1,361 1,632 1,315 Adjustments (pretax): Proportional share of selected equity affiliates income taxes Proportional share of selected equity affiliates net interest Proportional share of selected equity affiliates depreciation and amortization Impairments by equity affiliates Premium on early debt retirement Lower-of-cost-or-market inventory adjustments Chemicals Adjusted EBITDA 1,681 1,710 2,101 1,701 Refining Refining net income (loss) attributable to Phillips 66 3,091 1,747 1,771 2,555 Plus: Provision for income taxes 1,998 1, ,104 Net interest expense Depreciation and amortization Refining EBITDA 5,744 3,467 3,171 4,397 Adjustments (pretax): Proportional share of selected equity affiliates income taxes 5 (4) 3 (3) Proportional share of selected equity affiliates net interest (118) (95) (19) - Proportional share of selected equity affiliates depreciation and amortization Net (gain) loss on asset dispositions (185) - (145) (8) Impairments Canceled projects Pending claims and settlements Severence accruals Hurrican-related costs Tax law impacts - (22) - - Lower-of-cost-or-market inventory adjustments Pension settlement expenses Refining Adjusted EBITDA 6,373 3,583 3,449 4,774 59

60 Non-GAAP Reconciliations Millions of Dollars Adjusted EBITDA by Segment Reconciliation Millions of Dollars Adjusted EBITDA by Segment Reconciliation Marketing and Specialties Marketing and Specialties net income attributable to Phillips ,034 1,187 Plus: Provision for income taxes Net interest expense (2) Depreciation and amortization Marketing and Specialties EBITDA 1,010 1,430 1,570 1,747 Adjustments (pretax): Asset dispositions (4) (40) (125) (242) Impairments Pending claims and settlements 62 (25) (44) - Exit of a business line Tax law impacts - (6) - - Pension settlement expenses Marketing and Specialties Adjusted EBITDA 1,068 1,413 1,401 1,516 Corporate Corporate net income (loss) attributable to Phillips 66 (434) (431) (393) (490) Plus: Net income attributable to noncontrolling interests (8) Provision for income taxes (239) (263) (287) (231) Net interest expense Depreciation and amortization Corporate EBITDA (421) (365) (329) (328) Adjustments (pretax): Impairments Repositioning Costs Pending claims and settlements Tax impacts Pension settlement expense Corporate Adjusted EBITDA (311) (365) (329) (321) 60

61 Non-GAAP Reconciliations Millions of Dollars Phillips 66 Phillips 66 net income attributable to Phillips ,775 4,124 3,726 4,762 4,227 Less: Income from discontinued operations Plus: Net income attributable to noncontrolling interests Provision for income taxes ,822 2,473 1,844 1,654 1,764 Net interest expense (44) (41) (16) Depreciation and amortization ,078 Phillips 66 EBITDA 1,646 2,105 7,445 7,693 6,731 6,986 7,405 Adjustments (pretax): EBITDA attributable to Phillips 66 noncontrolling interests - (9) (10) (13) (24) (45) (73) Proportional share of selected equity affiliates income taxes Proportional share of selected equity affiliates net interest (26) (6) (27) (20) Proportional share of selected equity affiliates depreciation and amortization Gain on asset dispositions (37) (234) (1,636) (189) (40) (270) (280) Gain on share issuance by equity affiliate (135) Impairments 129 1, , Impairments by equity affiliates Cancelled projects Severence accruals Exit of a business line Pending claims and settlements 39 (56) - 56 (25) (21) 30 Premium on early debt retirement Repositioning Costs Hurricane-related costs Tax law impacts (28) - - Lower-of-cost-or-market inventory adjustments Pension settlement expense Phillips 66 Adjusted EBITDA 2,220 4,049 7,010 9,673 7,408 7,792 8,513 61

62 Non-GAAP Reconciliations Forecasted EBITDA We are unable to present reconciliations of the various forecasted EBITDA included in this presentation, because certain elements of net income, including interest, depreciation and income taxes, are not reasonably available. Together, these items generally result in EBITDA being significantly greater than net income. 62

63 Non-GAAP Reconciliations Refining FCF Numerator Millions of Dollars Cash From Operations GAAP $ 3,700 1,374 2,770 Less: Change in Non-Cash Working Cap. 818 (1,599) (441) Cash From Operations (excluding WC) $ 2,882 2,973 3,211 Less: P66 Equity affiliate cash from ops 1, Add: Equity look through cash from ops Adjusted FCF (excl WC) $ 2,710 2,486 3,424 Total Capex GAAP 820 1,038 1,069 Less: Growth Capex Sustaining Capex $ Less: P66 Equity affiliate sustaining capex Add: Equity look through sustaining capex Adjusted Sustaining Capex $ ,031 Refining Free Cash Flow $ 1,962 1,595 2,393 63

64 Non-GAAP Reconciliations Millions of Dollars Refining ROCE Numerator Net Income 1,747 1,771 2,554 After-tax interest expense GAAP ROCE earnings 1,747 1,771 2,554 Special Items (13) (195) (28) Adjusted ROCE earnings 1,734 1,576 2,526 Denominator GAAP average capital employed* 13,940 13,377 13,582 Discontinued Operations Adjusted average capital employed* 13,940 13,377 13,582 *Total equity plus debt. Adjusted ROCE (percent) 12% 12% 19% GAAP ROCE (percent) 13% 13% 19% *Total equity plus debt. 64

65 Non-GAAP Reconciliations M&S FCF Numerator Millions of Dollars Cash From Operations GAAP $ 757 1,663 1,736 Less: Change in Non-Cash Working Cap. (217) Cash From Operations (excluding WC) $ 974 1,012 1,060 Less: P66 Equity affiliate cash from ops Add: Equity look through cash from ops Adjusted FCF (excl WC) $ 974 1,012 1,060 Total Capex GAAP Less: Growth Capex Sustaining Capex $ Less: P66 Equity affiliate sustaining capex Add: Equity look through sustaining capex Adjusted Sustaining Capex $ M&S Free Cash Flow $

66 Non-GAAP Reconciliations Millions of Dollars M&S ROCE Numerator Net Income 894 1,034 1,187 After-tax interest expense GAAP ROCE earnings 894 1,034 1,187 Special Items (9) (152) (239) Adjusted ROCE earnings Denominator GAAP average capital employed* 3,160 2,743 2,735 Discontinued Operations Adjusted average capital employed* 3,160 2,743 2,735 *Total equity plus debt. Adjusted ROCE (percent) 28% 32% 35% GAAP ROCE (percent) 28% 38% 43% *Total equity plus debt. 66

67 Non-GAAP Reconciliations Phillips 66 Available Cash Millions of Dollars Cash From Continuing Operations GAAP $ 5,942 3,527 5,713 Less: Change in Non-Cash Working Cap. 880 (1,020) (221) Cash From Operations (excluding WC) $ 5,062 4,547 5,934 Less: PSXP cash from operations Adjusted CFO $ 5,038 4,447 5,758 Add: PSXP contributions ,478 Total Available Cash $ 5,058 4,983 7,236 Total Phillips 66 Sustaining Capex $ 1,028 1,095 1,186 Less: PSXP Sustaining Capex Sustaining Capex excluding PSXP $ 1,025 1,083 1,178 Remaining capital expenditures 754 2,690 4,586 GAAP capital expenditures $ 1,779 3,773 5,764 67

68 Non-GAAP Reconciliations Phillips 66 Cash from Operations Millions of Dollars Cash From Continuing Operations GAAP $ 917 2,054 4,953 4,259 5,942 3,527 5,713 Less: Change in Non-Cash Working Cap. 393 (195) 314 (1,140) 880 (1,020) (221) Cash From Continuing Operations (excluding WC) $ 524 2,249 4,639 5,399 5,062 4,547 5,934 68

69 Non-GAAP Reconciliations Millions of Dollars Except as Indicated Reconciliation of Earnings to Adjusted Earnings Consolidated Earnings ,775 4,124 3,726 4,762 4,227 Adjustments: Gain on share issuance by equity affiliate (88) Asset dispositions (32) (116) (1,545) (106) (23) (494) (265) Impairments 116 1, Impairments by equity affiliates Canceled projects Severance accruals Pending claims and settlements 25 (35) - 34 (16) (10) (23) Premium on early debt retirement Repositioning costs Exit of business line Repositioning tax impacts Certain tax impacts (17) - (84) Hurricane-related costs Lower-of-cost-or-market inventoyr adjustments Pension settlement expenses Discontinued operations (19) (30) (43) (48) (61) (706) - Adjusted earnings 478 1,729 3,548 5,339 3,643 3,782 4,193 69

70 Non-GAAP Reconciliations Average Midstream Chemicals Refining Marketing & Specialties FCF Numerator Cash From Operations GAAP $ ,615 1,385 Less: Change in Non-Cash Working Cap. (46) 0 (407) 370 Cash From Operations (excluding WC) $ ,022 1,015 Less: P66 Equity affiliate cash from ops Add: Equity look through cash from ops 378 1, Adjusted FCF (excl WC) $ 1,055 1,147 2,874 1,015 Total Capex GAAP 2, Less: Growth Capex 1, Sustaining Capex $ Less: P66 Equity affiliate sustaining capex Add: Equity look through sustaining capex Adjusted Sustaining Capex $ PSXP Contributions $ Free Cash Flow $ 1, ,

71 Non-GAAP Reconciliations Millions of Dollars 2015 Phillips 66 Midstream Chemicals Refining Marketing & Specialties Corporate ROCE Numerator Net Income $ 4, ,554 1,187 (497) After-tax interest expense GAAP ROCE earnings 4, ,554 1,187 (296) Special Items (34) 235 (10) (28) (240) 9 Adjusted ROCE earnings $ 4, , (287) Denominator GAAP average capital employed* $ 31,749 6,793 4,921 13,582 2,735 3,718 Discontinued Operations Adjusted average capital employed* $ 31,749 6,793 4,921 13,582 2,735 3,718 *Total equity plus debt. Adjusted ROCE (percent) 14% 5% 19% 19% 35% -8% GAAP ROCE (percent) 14% 1% 20% 19% 43% -8% *Total equity plus debt. 71

72 Non-GAAP Reconciliations Adjusted Phillips 66 Millions of Dollars Phillips 66 Partners Phillips 66 Consolidated 2013 Cash and cash equivalents 4, ,400 Total Debt 6,126-6,126 Total Equity 21, ,392 Debt-to-capital ratio 22% 21% 2014 Cash and cash equivalents 5, ,207 Total Debt 8, ,635 Total Equity 21, ,037 Debt-to-capital ratio 28% 28% 2015 Cash and cash equivalents 3, ,074 Total Debt 7,796 1,091 8,887 Total Equity 23, ,938 Debt-to-capital ratio 25% 27% 72

73 PSXP Non-GAAP Reconciliations 1Q 2015 Phillips 66 Partners Acquisition Millions of Dollars Year ending February Reconciliation of PSXP Estimated EBITDA to Estimated Net Income* Estimated net income $ 82 Plus: Depreciation 20 Interest expense 4 Income taxes 9 Estimated EBITDA $ 115 *Amounts reflect the sum of EBITDA and net income forecasts within each joint venture, multiplied by PSXP's expected ownership interest. 73

74 PSXP Adjusted EBITDA and Distributable Cash Flow Reconciliation to Operating Cash Flow Millions of Dollars Q Q Q Q Q Net cash provided by operating activities Plus: Net interest expense Provision for (benefit from) income taxes (0.1) 0.2 Changes in working capital 14.5 (16.4) 13.9 (14.9) 3.2 Undistributed equity earnings (0.6) (2.6) (0.9) (2.2) 5.8 Accrued environmental costs (0.2) (0.5) (0.1) Other (6.6) (7.8) (4.6) 0.1 (0.8) EBITDA Distributions in excess of equity earnings Expenses indemnified or prefunded by Phillips Transaction costs associated with acquisitions EBITDA attributable to noncontrolling interests (5.2) EBITDA attributable to Predecessors (10.1) Adjusted EBITDA Plus: Deferred revenue impacts** 1.4 (1.6) Less: Net interest Income taxes paid (0.1) 0.4 Maintenance capital expenditures Distributable Cash Flow *Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control. **Difference between cash receipts and revenue recognition. 74

75 PSXP Adjusted EBITDA and Distributable Cash Flow Reconciliation to Net Income Millions of Dollars Q Q Q Q Q Net Income Plus: Depreciation Net interest expense Provision for (benefit from) income taxes (0.1) 0.2 EBITDA Distributions in excess of equity earnings Expenses indemnified or prefunded by Phillips Transaction costs associated with acquisitions EBITDA attributable to noncontrolling interests (5.2) EBITDA attributable to Predecessors (10.1) Adjusted EBITDA Plus: Deferred revenue impacts** 1.4 (1.6) Less: Net interest Income taxes paid (0.1) 0.4 Maintenance capital expenditures Distributable Cash Flow *Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control. **Difference between cash receipts and revenue recognition. 75