Phillips 66 (PSX) announces its 2015 capital budget of $4.6 billion. These investments are intended to support midstream business growth, including that of the company’s master limited partnership, Phillips 66 Partners LP, as well as ensure ongoing operating excellence. Including the company’s portion of capital spending by joint ventures DCP Midstream (DCP), Chevron Phillips Chemical Company (CPChem) and WRB Refining, all of which are expected to be self-funded, the company’s total 2015 capital program is expected to be $6.8 billion.

“The 2015 capital program reflects our commitment to grow our higher-value businesses while enhancing returns in Refining,” said chairman and CEO Greg Garland. “We are executing a portfolio of major Midstream and Chemicals projects while evaluating a significant backlog of investment opportunities.

“We remain committed to returning capital to shareholders through dividend growth and our share repurchase program. During the year we increased our dividend 28 percent, and through Sept. 30, 2014, we returned $3.9 billion of capital to shareholders through dividends, share repurchases and the PSPI exchange. We expect double-digit increases in dividends for the next two years, and $2.6 billion remained available at the end of the third quarter under our share repurchase authorization.

“Our capital structure and financial flexibility allow us to fund shareholder distributions while investing in the growth of our businesses, even in this lower commodity price environment. Sources of capital include our strong balance sheet, debt and equity issuances by our MLP, and operating cash flows from a high-returning portfolio of businesses,” said Garland.

In Midstream, excluding DCP, Phillips 66 plans to invest $3.2 billion in its Natural Gas Liquids (NGL) and Transportation business lines. Midstream capital includes approximately $200 million expected to be spent by Phillips 66 Partners to support organic growth projects. In NGL, the company continues construction of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast. In Transportation, the company is investing in pipeline and rail infrastructure projects to move crude oil from the Bakken/Three Forks production area of North Dakota to market centers throughout the U.S. In addition, expansion of the Beaumont Terminal and related infrastructure opportunities are being pursued.

Additional Midstream investments are planned within DCP, a 50-50 joint venture with Spectra Energy that also includes DCP Midstream Partners. DCP will leverage its infrastructure to launch new gathering, processing, and NGL growth projects, mainly in the Niobrara, Denver-Julesburg, Eagle Ford and Permian basins. DCP also expects to increase natural gas processing capacity in these basins and complete other gathering system expansions during 2015. Phillips 66’s share of DCP’s 2015 planned capital expenditures is $550 million.

In Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in projects aimed at capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2015 capital expenditures is expected to be $1.4 billion. Funding supports advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The expected start-up for these facilities is mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem’s normal alpha olefins production capacity at Cedar Bayou continues, with estimated completion in mid-2015.

Phillips 66 plans $1.1 billion of capital expenditures in Refining, approximately 75 percent of which will be sustaining capital. These investments are related to reliability and maintenance, safety and environmental projects, including compliance with the new EPA Tier 3 gasoline specifications. Discretionary Refining capital investments will be directed toward small, high-return, quick pay-out projects, primarily to enhance use of advantaged crudes and improve product yields.

In Marketing and Specialties, the company plans to invest $170 million for growth and sustaining capital. The growth investment reflects Phillips 66’s continued plans to expand and enhance its fuel marketing business.

In Corporate and Other, Phillips 66 plans to fund $155 million in projects primarily related to information technology and facilities.

“Our plans for significant growth in enterprise value are supported by our 2015 capital budget and our commitment to a 60/40 ratio of reinvestment to distributions. Disciplined capital allocation and operating excellence remain our top priorities,” concluded Garland.

$ Millions
Sustaining Growth Capital
Capital Capital Program

Phillips 66 Consolidated

Midstream (1) 167 2,996 3,163
Refining (2) 813 299 1,112
Marketing and Specialties 78 92 170
Corporate and Other (2) 155 155
1,213 3,387 4,600

Selected Equity Affiliates

DCP 175 375 550
CPChem 188 1,261 1,449
WRB 150 53 203
513 1,689 2,202
Total Capital Program 1,726 5,076 6,802
(1) Includes 100% of Phillips 66 Partners.
(2) Includes non-cash capitalized leases of $11 million in Refining and $21 million in Corporate and Other.
$ Millions
Phillips 66
Growth 195
Sustaining 12
Total Capital Expenditures 207
100% of Phillips 66 Partners.

About Phillips 66

Built on more than 130 years of experience, Phillips 66 is a growing energy manufacturing and logistics company with high-performing Midstream, Chemicals, Refining, and Marketing and Specialties businesses. This integrated portfolio enables Phillips 66 to capture opportunities in the changing energy landscape. Headquartered in Houston, the company has 14,000 employees who are committed to operating excellence and safety. Phillips 66 had $50 billion of assets as of Sept. 30, 2014. For more information, visit or follow us on Twitter @Phillips66Co.

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