UPDATE: Phillips 66 (PSX) says capital budget is $2.3 billion

Phillips 66 (NYSE: PSX), a diversified energy manufacturing and logistics company, announces its 2019 capital program, investing in attractive growth opportunities and funding safety and reliability projects. The Phillips 66 capital budget, excluding Phillips 66 Partners, is $2.3 billion. The Phillips 66 Partners capital budget net of $303 million expected cash capital contributions from noncontrolling interests (“adjusted capital”) is $601 million.

“The 2019 capital program reflects our strong portfolio of growth projects aligned with our long-term strategy,” said Chairman and CEO Greg Garland. “We are building out our integrated Midstream infrastructure network, including pipelines, export facilities, and fractionation in support of growing hydrocarbon production in the key domestic shale plays. CPChem is also pursuing petrochemicals expansion opportunities on the U.S. Gulf Coast.”

“Disciplined capital allocation is a top priority for us, and we continue to have a long-term objective to reinvest 60 percent of our cash flow into the business and return 40 percent to our shareholders through dividends and buybacks. We are committed to a secure and competitive dividend with annual increases. Through our ongoing share repurchase program, we buy our shares when they trade below intrinsic value and have $2.1 billion remaining on our share repurchase authorizations as of Sept. 30. Since 2012, we have returned $21.6 billion to shareholders through dividends, share repurchases and exchanges.”

In the Midstream segment, the adjusted capital budget is $1.6 billion, including $1.4 billion of adjusted growth capital. This adjusted capital budget includes $601 million for Phillips 66 Partners, and reflects expected joint venture-level financing to fund a portion of the Gray Oak Pipeline construction.

Midstream growth capital at Phillips 66 includes 300,000 barrels per day of additional fractionation capacity at the Sweeny Hub, as well as ongoing expansion of the Beaumont Terminal and pipeline investments providing integration across our value chain. Growth capital at Phillips 66 Partners supports organic projects, including the Gray Oak Pipeline, South Texas Gateway Terminal, Clemens Caverns expansion, an isomerization unit at the Phillips 66 Lake Charles Refinery, and the Lake Charles products pipeline.

Phillips 66 plans $923 million of capital spending in Refining, with $512 million for reliability, safety and environmental projects. Refining growth capital of $411 million is for high-return projects to enhance the yield of higher-value products, including an upgrade of the fluid catalytic cracking unit at the Sweeny Refinery, as well as other low-capital, quick-payout projects.

In the Marketing and Specialties segment, the company intends to invest $161 million of growth and sustaining capital. The investment will further grow and enhance retail sites in Europe.

The Corporate and Other capital budget primarily funds information technology projects, including an investment in a new enterprise resource planning system.

Phillips 66’s proportionate share of capital spending by joint ventures Chevron Phillips Chemical Company LLC (CPChem), DCP Midstream, LLC (DCP Midstream) and WRB Refining LP (WRB) is expected to be $1.2 billion. Including these equity affiliates, the company’s total 2019 adjusted capital program is projected to be $4.1 billion.

Phillips 66’s expected share of CPChem’s capital spending is $572 million, including $282 million of sustaining capital. CPChem’s growth capital will fund continuing development of a second U.S. Gulf Coast petrochemicals project for additional ethylene and derivative capacity, as well as debottleneck opportunities on existing units. Phillips 66’s expected share of DCP Midstream’s capital spending is $505 million, reflecting growth projects such as the Gulf Coast Express Pipeline, DJ Basin gas processing plants, and natural gas liquids (NGL) pipeline expansions. Phillips 66’s expected share of WRB’s capital spending is $165 million, including $78 million of sustaining projects. Capital spending by these three major joint ventures is expected to be self-funded.

You May Also Be Interested In

• Phillips 66 (PSX) PT Raised to $335 at Wells Fargo
• Energy Vault’s 100 MW AI Infrastructure Project in Sardinia Receives Italian Government Designation as Project of Pre-Eminent National Strategic Interest
• Teck and Anglo American extend special dividend payment timeline