Disciplined Capital Allocation
Phillips 66 (NYSE: PSX) announces its 2016 capital budget of $3.6
billion, excluding Phillips 66 Partners’ capital program. The board of
directors of Phillips 66 also approved a $2.0 billion increase to the
company’s share repurchase program.
“The 2016 capital budget will fund Midstream growth and enhance returns
in Refining,” said chairman and CEO Greg Garland. “Cash from operating
activities, our MLP and a strong balance sheet allow us to fund business
growth while returning capital to shareholders.”
Excluding Phillips 66 Partners’ capital spending, Phillips 66 plans to
invest $2.0 billion in its Midstream business lines. In Natural Gas
Liquids (NGL), the company continues construction of the 4.4
million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf
Coast, with completion expected in the second half of 2016. In addition,
the budget includes spending associated with expansion of the Sweeny NGL
midstream hub.
In Transportation, the company is investing in the new DAPL and ETCOP
pipeline projects to move crude oil from the Bakken production area of
North Dakota to market centers throughout the United States. Storage
capacity is being added at the Beaumont Terminal in Nederland, Texas,
and the company is investing in the Bayou Bridge pipeline project to
move crude oil from Texas to Louisiana markets.
Phillips 66 plans $1.2 billion of capital expenditures in Refining, with
approximately 70 percent to be invested in reliability, safety and
environmental projects, including compliance with the new Tier 3
gasoline specifications. Discretionary Refining capital of about $400
million will improve product yields and lower feedstock costs. These
investments include a modernization of the FCC at Bayway, and an upgrade
of the vacuum tower at Billings.
In Marketing and Specialties, the company plans to invest about $135
million of growth and sustaining capital. This furthers Phillips 66’s
plans to expand and enhance its fuel marketing business, including new
retail sites in Europe.
Capital spending plans for 2016 for Phillips 66 Partners and for
self-funded joint ventures DCP Midstream, Chevron Phillips Chemical
Company, and WRB Refining will be announced later this year.
“Shareholder distributions are important to value creation,” said
Garland. “During 2016, we plan to increase regular dividends while
continuing to buy back PSX shares. Since 2012, we have increased
quarterly dividends by 180 percent while reducing share count by close
to 15 percent.”
The Phillips 66 Board of Directors has authorized an additional $2
billion for share repurchase, bringing total authorizations to $9
billion. Shares will be repurchased from time to time in the open market
at the company’s discretion, subject to market conditions and other
factors, and in accordance with applicable regulatory requirements. The
company may commence, suspend or discontinue purchases of common stock
under this authorization at any time or periodically without prior
notice. Phillips 66 anticipates funding the repurchases primarily with
available cash. Shares of stock repurchased will be held as treasury
shares.
|
$ Millions
|
|
Sustaining
Capital
|
Growth
Capital
|
Capital
Budget
|
Phillips 66
Midstream (1)
Chemicals
Refining
Marketing and Specialties
Corporate and Other
|
213
-
833
57
180
|
1,819
-
384
80
-
|
2,032
-
1,217
137
180
|
|
1,283
|
2,283
|
3,566
|
(1) Excludes Phillips 66 Partners.
|
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 an integral asset in the
portfolio. Headquartered in Houston, the company has 14,000 employees
committed to safety and operating excellence. Phillips 66 had $50
billion of assets as of June 30, 2015. 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 66 Partners LP is a separate, publicly traded entity
controlled by Phillips 66 and included in its consolidated financial
statements. Actual capital spending reported by Phillips 66 in
its consolidated financial statements is inclusive of Phillips 66
Partners.
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