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Phillips 66 Announces 2016 Capital Budget and Increases Share Repurchase Program

October 12, 2015 8:00 AM EDT

Disciplined Capital Allocation

HOUSTON--(BUSINESS WIRE)-- 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.

Phillips 66
Kevin Mitchell, 832-765-2297 (investors)
[email protected]
C.W. Mallon, 832-765-2297 (investors)
[email protected]
Dennis Nuss, 832-765-1850 (media)
[email protected]

Source: Phillips 66



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