PHILLIPS 66 SECOND QUARTER 2018 CONFERENCE CALL July 27, 2018 1 - PowerPoint PPT Presentation

PHILLIPS 66 SECOND QUARTER 2018 CONFERENCE CALL July 27, 2018 1

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 NGL, crude oil, petroleum products and natural gas prices, and refining, marketing 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 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; 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 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 our website. 2

EXECUTING THE STRATEGY Bayway Refinery, Linden, New Jersey 3

OVERVIEW 2Q 2018 $MM (unless otherwise noted) 2Q 2018 Adjusted earnings $ 1,322 2.80 Adjusted EPS 1 Operating cash flow 2,364 Capital expenditures and investments 538 602 Shareholder distributions 2 (1) Dollars per share (2) Shareholder distributions include dividends and share repurchases 4

ADJUSTED EARNINGS 2Q 2018 $MM 21 822 (21) (11) 1,322 30 (31) 512 1Q 2018 Midstream Chemicals Refining Marketing Corporate Noncontrolling 2Q 2018 Interests Adjusted & Specialties & Other Adjusted Earnings Earnings 202 262 911 195 (183) (65) 2Q 2018 Adjusted Net Income (Loss) 5

MIDSTREAM 2Q 2018 $MM Higher transportation volumes following refinery turnarounds 1 (23) (9) NGL volumes exceeded design capacity 233 202 Increased DCP volumes 1Q 2018 Transportation NGL and Other DCP 2Q 2018 Adjusted Midstream Adjusted Net Income Net Income 137 50 15 2Q 2018 6

CHEMICALS 2Q 2018 $MM 95% O&P capacity utilization 14 23 (7) Strong operations at new U.S. Gulf Coast assets 262 232 Higher SA&S results following 1Q turnarounds 1Q 2018 Olefins & Specialties, Other 2Q 2018 Polyolefins Aromatics & Adjusted Adjusted Styrenics Net Income Net Income 247 32 (17) 2Q 2018 7

REFINING 2Q 2018 $MM 100% crude utilization 155 84% clean product yield 189 274 $12.28/BBL realized margin 911 204 $60 MM pre-tax turnaround costs 89 1Q 2018 Atlantic Gulf Coast Central West Coast 2Q 2018 Basin / Adjusted Corridor Adjusted Europe Net Income Net Income 131 275 392 113 2Q 2018 8

REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 WORLDWIDE REFINING $/BBL 3.15 (2.17) (0.75) (2.81) 14.86 12.28 Market Secondary Realized Configuration Feedstock Other 3:2:1 Products Margin Avg Market Crude: $72.41/BBL 83% Market Capture 9

MARKETING AND SPECIALTIES 2Q 2018 $MM Strong marketing margins 5 16 Marketing volumes higher due to seasonal demand 195 174 Refined products exports of 200,000 BPD Reimaged 250 marketing sites 1Q 2018 Marketing Specialties 2Q 2018 Adjusted & Other Adjusted Net Income Net Income 145 50 2Q 2018 10

AND OTHER CORPORATE 2Q 2018 $MM 1Q 2018 Corporate 2Q 2018 Net Interest Adjusted Adjusted Overhead Expense Net Loss Net Loss & Other (162) (183) (12) (9) 11

CASH FLOW 2Q 2018 $B 0.7 1.7 (0.5) 0.1 (0.6) (0.3) 1.9 0.8 March 31 CFO Working Capital Shareholder Debt Other June 30 Cash (excluding Capital Expenditures Distributions Cash Balance* Working & Investments Balance* Capital) * Includes cash and cash equivalents 12

OUTLOOK 3Q 2018 Global Olefins & Polyolefins utilization Mid-90% Refining crude utilization Mid-90% Refining turnaround expenses (pre-tax) $60 MM - $80 MM Corporate & Other costs (after-tax) $170 MM - $190 MM 13

PHILLIPS 66 SECOND QUARTER 2018 CONFERENCE CALL Questions and Answers 14

PHILLIPS 66 SECOND QUARTER 2018 CONFERENCE CALL Appendix 15

ESTIMATED SENSITIVITIES 2018 Annual Net Income $MM Midstream - DCP (net to Phillips 66) 10¢/Gal Increase in NGL price 5 10¢/MMBtu Increase in Natural Gas price 1 $1/BBL Increase in WTI price 1 Chemicals - CPChem (net to Phillips 66) 1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 45 Worldwide Refining $1/BBL Increase in Gasoline Margin 260 $1/BBL Increase in Distillate Margin 230 Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators: $1/BBL Widening WTI / WCS Differential (WTI less WCS) 50 $1/BBL Widening LLS / Maya Differential 40 $1/BBL Widening LLS / Medium Sour Differential 30 $1/BBL Widening LLS / WCS Differential 25 $1/BBL Widening WTI / WTS Differential 15 $1/BBL Widening LLS / WTI Differential 10 $1/BBL Widening ANS / WTI Differential 10 $1/BBL Widening Brent / WTI Differential 5 10¢/MMBtu Increase in Natural Gas price (15) 16 Sensitivities shown above are independent and are only valid within a limited price range

CAPITAL STRUCTURE 2015 – 2018 Consolidated PSX Excluding PSXP 32% 31% 30% 31% 28% 27% 27% 28% 27% 27% 26% 25% 24% 23% 22% 20% 20% 18% 17% 27.4 14% 25.1 25.0 24.3 23.9 23.7 23.1 22.6 22.4 22.0 11.6 11.4 10.1 10.1 8.9 8.7 8.4 7.8 7.7 7.2 1.9 1.7 0.8 0.7 3.1 3.1 3.0 2.7 2.7 2.9 2015 2016 2017 1Q 2Q 2015 2016 2017 1Q 2Q 2018 2018 2018 2018 Equity $B Debt $B Cash & Cash Equivalents $B Debt-to-Capital Net-Debt-to-Capital 17

REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 ATLANTIC BASIN / EUROPE $/BBL Brent: $74.35/BBL Crude Capacity Utilization 92% 73% Market Capture (2.03) (0.42) (1.10) (0.21) 14.18 10.42 Market Secondary Feedstock Other Realized Configuration 3:2:1 Products Margin Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH 18

REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 GULF COAST $/BBL LLS: $73.11/BBL 102% Crude Capacity Utilization 87% Market Capture 4.22 (1.14) (1.92) (2.62) 11.39 9.93 Configuration Secondary Feedstock Other Realized Market Products Margin 3:2:1 Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm 19

REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 CENTRAL CORRIDOR $/BBL WTI: $67.99/BBL 104% Crude Capacity Utilization 97% Market Capture 6.16 (0.69) (1.79) (4.21) 18.04 17.51 Market Secondary Feedstock Other Realized Configuration 3:2:1 Products Margin Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3 20

REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 WEST COAST $/BBL ANS: $74.10/BBL 100% Crude Capacity Utilization 68% Market Capture 2.26 (2.59) (0.98) (4.66) 18.74 12.77 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – ANS / Los Angeles CARBOB / Los Angeles No. 2 CARB 21

ADJUSTED EARNINGS 2Q 2018 VS. 2Q 2017 $MM 678 (23) (35) (34) 66 101 1,322 569 2Q 2017 Midstream Chemicals Refining Marketing Corporate Noncontrolling 2Q 2018 Adjusted & Specialties & Other Interests Adjusted Earnings Earnings 202 262 911 195 (183) (65) 2Q 2018 Adjusted Net Income (Loss) 22

MIDSTREAM 2Q 2018 VS. 2Q 2017 $MM 2 36 63 202 101 2Q 2017 Transportation NGL and Other DCP 2Q 2018 Adjusted Midstream Adjusted Net Income Net Income 137 50 15 2Q 2018 23

CHEMICALS 2Q 2018 VS. 2Q 2017 $MM 11 68 (13) 262 196 2Q 2017 Olefins & Specialties, Other 2Q 2018 Adjusted Polyolefins Aromatics Adjusted Net Income & Styrenics Net Income 247 32 (17) 2Q 2018 24