Phillips 66 (PSX) Announces 2020 Capital Program

Phillips 66 (NYSE: PSX), a diversified energy manufacturing and logistics company, announces its 2020 capital program. The Phillips 66 capital budget is $3.3 billion, net of $0.5 billion expected cash capital contributions from joint venture partners (“adjusted capital”). The adjusted capital budget includes $0.9 billion for Phillips 66 Partners.

“The 2020 capital program supports our strategy to grow high-value businesses, improve returns, and ensure safe, reliable and environmentally responsible operations,” said Greg Garland, chairman and CEO of Phillips 66. “We are investing in attractive growth and return projects that further build out and enhance our integrated system, and funding $1.2 billion of sustaining capital for operating excellence projects. The capital program is aligned with our disciplined approach to capital allocation that is underpinned with strong shareholder distributions. Our long-term objective is to reinvest 60% of cash flow back into the business and return 40% to shareholders through dividends and share buybacks.”

The Midstream budget, excluding Phillips 66 Partners, primarily reflects funding for the Liberty and Red Oak crude oil pipelines and 450,000 barrels per day of additional fractionation capacity at the Sweeny Hub.

The Phillips 66 Partners budget includes investments in the Gray Oak Pipeline, the C2G Pipeline, the South Texas Gateway Terminal and the Bakken Pipeline, as well as sustaining capital.

The Refining capital budget includes $0.6 billion for reliability, safety and environmental projects. In addition, Refining capital will fund fluid catalytic cracking (FCC) unit upgrades at the Ponca City and Sweeny refineries, renewable diesel projects and other high-return, quick-payout projects to enhance margins.

The Marketing and Specialties budget primarily reflects the development and improvement of our international retail sites.

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

Phillips 66’s proportionate share of capital spending by joint ventures DCP Midstream, LLC (DCP Midstream), Chevron Phillips Chemical Company LLC (CPChem) and WRB Refining LP (WRB) is expected to be $1.2 billion. Capital spending by these three major joint ventures is expected to be self-funded.

DCP Midstream’s expected capital spend includes funding for Fracs 2 and 3 at the Phillips 66 Sweeny Hub. CPChem’s growth capital will fund continuing development of world-scale petrochemicals projects in the U.S. Gulf Coast and Qatar that would add ethylene and derivative capacity, as well as debottlenecking opportunities on existing units. WRB’s expected capital spend will be directed to sustaining projects and distillate yield enhancement.

1) - Total consolidated Midstream capital spending inclusive of cash funded by joint venture partners is expected to be $2.4 billion in 2020.
2) - Excludes $374 million of growth capital expected to be cash funded by DCP Midstream for Fracs 2 and 3 at the Phillips 66 Sweeny Hub. Also excludes adjusted capital budget associated with Phillips 66 Partners.
3) - Excludes $95 million of growth capital expected to be cash funded by Gray Oak joint venture partners.
4) - Includes non-cash capitalized leases of $15 million in Refining.
5) - Total consolidated capital spending inclusive of cash funded by joint venture partners is expected to be $3.8 billion in 2020.

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