Phillips 66 : Announces 2018 Capital Program

Phillips 66 (NYSE: PSX), an energy manufacturing and logistics company, announces its 2018 capital budget of $2.3 billion, which includes $1.4 billion of growth capital and $0.9 billion of sustaining capital.

“The 2018 capital program demonstrates our commitment to disciplined capital allocation and operating excellence,” said chairman and CEO Greg Garland. “We continue to make sustaining capital investments to maintain the integrity of our assets and ensure safe, reliable and environmentally responsible operations. Our growth budget promotes value through investment in capital projects offering attractive returns. Long-term, we continue to target re-investing 60 percent of our cash flow back into the business and returning 40 percent to our shareholders.”

In Midstream, Phillips 66 plans to invest $1.2 billion, including $1.0 billion of growth capital, in its Natural Gas Liquids (NGL) and Transportation businesses. The company is developing growth projects integrated with its existing assets and infrastructure, such as ongoing expansion of the Beaumont Terminal, additional Gulf Coast fractionation capacity, and investment in pipelines and other terminals.

Midstream capital includes budgeted spending of $595 million by Phillips 66 Partners, with $85 million directed toward maintenance. Growth capital at the partnership will support organic projects, such as the Sand Hills Pipeline expansion, completion of the Bayou Bridge Pipeline eastern segment, and an isomerization unit at the Phillips 66 Lake Charles Refinery.

Phillips 66 plans $827 million of capital spending in Refining, with $541 million for reliability, safety and environmental projects. Refining growth capital of $286 million is for small, high-return, quick payout projects primarily to increase clean product yields. Projects include completion of the fluid catalytic cracking (FCC) unit modernization at the Bayway Refinery and FCC optimization at the Sweeny Refinery.

In Marketing and Specialties, the company intends to invest $140 million of growth and sustaining capital. The growth investment will further increase retail sites in Europe.

In Corporate and Other, the company plans to fund $116 million in projects, primarily related to information technology and facilities.

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 $946 million. Including these equity affiliates, the company’s total 2018 capital program is projected to be $3.2 billion.

In Chemicals, Phillips 66’s share of CPChem’s 2018 capital expenditures is expected to be $398 million, a decrease of about 45 percent from 2017 due to completion of the U.S. Gulf Coast Petrochemicals Project. The new polyethylene units included in this project started up during the third quarter of 2017, while commissioning of the ethane cracker at the Cedar Bayou facility is expected to begin in the first quarter of 2018. Phillips 66’s expected share of DCP Midstream’s 2018 capital spending is $405 million, with $350 million targeted for growth projects including the Sand Hills Pipeline expansion and two DJ Basin gas processing plants. The company’s expected share of WRB’s capital expenditures is $143 million, and includes completion of the Wood River Refinery FCC unit modernization to increase clean product yield. Capital spending by these three major joint ventures is expected to be self-funded.

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 14,600 employees committed to safety and operating excellence. Phillips 66 had $53 billion of assets as of Sept. 30, 2017. 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,” “continues,” “intends,” “will,” “would,” “objectives,” “goals,” “projects,” “efforts,” “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 NGL, crude oil, and natural gas prices, and petrochemical and refining 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.

The disaggregation of capital spending between sustaining and growth is not a distinction recognized under generally accepted accounting principles in the United States. The company provides such disaggregated information to demonstrate management’s return expectations with respect to capital spending.

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