phillips 66 fourth-quarter earnings conference call

PHILLIPS 66 FOURTH QUARTER 2016 CONFERENCE CALL February 3, 2017

This presentation 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

presentation 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, petroleum products and natural gas prices, and refining, marketing 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 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.

This presentation includes non-GAAP financial measures. You can find the reconciliations to comparable GAAP financial measures at the end of the

presentation materials or in the “Investors” section of our website.

CAUTIONARY STATEMENT

2

3

EXECUTING THE STRATEGY

CPChem USGC Ethane Cracker, Baytown, TX

4

OVERVIEW 4Q 2016

Adjusted earnings $83 MM

Adjusted EPS $0.16

Operating cash flow $667 MM

Capital expenditures and investments $813 MM

Shareholder distributions1 $558 MM

(1) Shareholder distributions include dividends and share repurchases

556

83

(42)

(66)

(229)

(127) (9)

3Q 2016

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

4Q 2016

Adjusted

Earnings

4Q 2016 Adjusted Earnings

$MM

33 (119) (95) 124 140

ADJUSTED EARNINGS 4Q 2016

5

75

33

(15)

(19)

(8)

3Q 2016

Adjusted

Earnings

Transportation NGL DCP

Midstream

4Q 2016

Adjusted

Earnings

MIDSTREAM 4Q 2016

44 (5) (6)


6

$MM

Phillips 66 completed $1.3 B logistics

assets dropdown to PSXP

Transportation planned maintenance

LPG export terminal startup

DCP Midstream reliability and

maintenance spend

6

190

124

(60) (7)

1

3Q 2016

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 4Q 2016

Adjusted

Earnings

CHEMICALS 4Q 2016

105 24 (5)


7

$MM

Lower O&P chain cash margin

Completed major turnarounds

86% O&P capacity utilization

7

134

(95)

93

(38)

(123)

(161)

3Q 2016

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf Coast Central

Corridor

West Coast 4Q 2016

Adjusted

Earnings

$MM

REFINING 4Q 2016

8

98 19 (51) (161)


93% crude utilization

$205 MM pre-tax turnaround costs

86% clean product yield

$6.47/BBL realized margin

12.10

6.47

(1.50)

(2.69)

1.72

(3.16)

Market

3:2:1

Configuration Secondary

Products

Feedstock Other Realized

Margin

WORLDWIDE REFINING $/BBL

REFINING MARGINS – MARKET VS. REALIZED 4Q 2016

9

Avg Market Crude: $49.89/BBL 53% Market Capture

267

140

(114)(13)

3Q 2016

Adjusted

Earnings

Marketing

& Other

Specialties 4Q 2016

Adjusted

Earnings

MARKETING AND SPECIALTIES 4Q 2016

114 26


10

Marketing margins impacted by rising

prices

Strong export volumes

Lower lubricants margins and volumes

$MM

(110) (119)

(5) (4)

3Q 2016

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

4Q 2016

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 4Q 2016

11

12

OVERVIEW 2016

Adjusted earnings $1.5 B

Adjusted EPS $2.82

Operating cash flow $3.0 B

Capital expenditures and investments $2.8 B

Shareholder distributions1 $2.3 B

(1) Shareholder distributions include dividends and share repurchases

Net-debt-to-capital ratio 24%

Adjusted ROCE 5%

PSXP debt and equity proceeds $2.3 B

3.1 2.7

1.0

(2.8)

2.5 0.5

1.3

(2.3)

(0.6)

December 31,

2015Cash

Balance*

CFO

(excludingworking

capital)

Working

Capital

PSXP Equity

Proceeds

PSXP Debt Capital

Expenditures& Investments

Shareholder

Distributions

Other December 31,

2016Cash

Balance*

$B

CASH FLOW 2016

13 * Includes cash and cash equivalents

Global Olefins & Polyolefins utilization High-80%

Refining crude utilization Low-80%

Depreciation and amortization $1.3 B

Effective income tax rate Mid-30%

Corporate & Other costs (after-tax) $125 MM - $140 MM

Refining turnaround expenses (pre-tax) $300 MM - $350 MM

2017

Refining turnaround expenses (pre-tax) $625 MM - $675 MM

Corporate & Other costs (after-tax) $490 MM - $510 MM

1Q 2017

14

OUTLOOK

PHILLIPS 66 FOURTH QUARTER 2016 CONFERENCE CALL

Questions and Answers

PHILLIPS 66 FOURTH QUARTER 2016 CONFERENCE CALL

Appendix

ESTIMATED SENSITIVITIES 2017

17 Sensitivities shown above are independent and are only valid within a limited price range

Midstream - DCP (net to Phillips 66)

10¢/Gal Increase in NGL price 5

10¢/MMBtu Increase in Natural Gas price 1

$1/BBL Increase in WTI price 1

Chemicals - CPChem (net to Phillips 66)

1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 35

Worldwide Refining

$1/BBL Increase in Gasoline Margin 215

$1/BBL Increase in Distillate Margin 190

$1/BBL Widening WTI / WCS Differential (WTI less WCS) 40

$1/BBL Widening LLS / Maya Differential (LLS less Maya) 35

$1/BBL Widening LLS / Medium Sour Differential (LLS less Medium Sour) 20

$1/BBL Widening WTI / WTS Differential (WTI less WTS) 10

$1/BBL Widening LLS / WTI Differential (LLS less WTI) 10

$1/BBL Widening ANS / Medium Sour Differential (ANS less Medium Sour) 10

$1/BBL Widening ANS / WCS Differential (ANS less WCS) 5

10¢/MMBtu Increase in Natural Gas price (10)

Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators:

Annual Net Income $MM

22. 0 23. 9 23. 6 24. 1 24. 3 23. 7

21. 6

23. 1 22. 8 22. 9 22. 9 22. 4

8. 6 8. 9 8. 8 8. 9 8. 9 10. 1 8. 6

7. 8 7. 7 7. 7 7. 7 7. 7 5.2

3.1 1.7 2.2 2.3 2.7

5.2 3.0

1.7 2.2 2.3 2.7

28%27% 27% 27% 27%

30%28%

25% 25% 25% 25% 26%

13%

20%

23%

22% 21%

24%

14%

17%

21%19% 19%

18%

2014 2015 1Q

2016

2Q

2016

3Q

2016

4Q

2016

2014 2015 1Q

2016

2Q

2016

3Q

2016

4Q

2016

Equity $B Debt $B Cash & Cash Equivalents $B Debt-to-Capital Net-Debt-to-Capital

CAPITAL STRUCTURE 2014 – 2016

18

Consolidated PSX Excluding PSXP

14.18

8.19

(1.71)

(1.39)

(1.41)

(1.48)

Market

3:2:1


Products


Margin

ATLANTIC BASIN / EUROPE $/BBL


19

Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH

Brent: $49.46/BBL 102% Crude Capacity Utilization 58% Market Capture

10.18

4.61

(1.56)

(3.34)

2.67

(3.34)

Market

3:2:1


Products


Margin

GULF COAST $/BBL


20

Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm

LLS: $50.54/BBL 94% Crude Capacity Utilization 45% Market Capture

10.95

7.50

(0.90)

(3.03)

4.10

(3.62)

Market

3:2:1


Products


Margin

CENTRAL CORRIDOR $/BBL


21

Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3

WTI: $49.18/BBL 97% Crude Capacity Utilization 68% Market Capture

14.62

6.30

(1.72)

(3.02)

1.17

(4.75)

Market

3:2:1


Products


Margin

WEST COAST $/BBL


22

Market 3:2:1 – ANS Spot / Los Angeles CARBOB / Los Angeles No. 2 CARB

ANS: $50.14/BBL 71% Crude Capacity Utilization 43% Market Capture

710

83

(9)(58)

(471)

(87) (2)

4Q 2015

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

4Q 2016

Adjusted

Earnings


$MM

ADJUSTED EARNINGS 4Q 2016 VS. 4Q 2015

23

33 (119) (95) 124 140

42

33

28

(34) (3)

4Q 2015

Adjusted

Earnings

Transportation NGL DCP

Midstream

4Q 2016

Adjusted

Earnings

$MM

MIDSTREAM 4Q 2016 VS. 4Q 2015

24

44 (5) (6)


182

124

(76)

15 3

4Q 2015

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 4Q 2016

Adjusted

Earnings

$MM

CHEMICALS 4Q 2016 VS. 4Q 2015

25

105 (5) 24


376

(95)

1

(198)

(102)

(172)

4Q 2015

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf

Coast

Central

Corridor

West Coast 4Q 2016

Adjusted

Earnings

$MM

REFINING 4Q 2016 VS. 4Q 2015

26

98 19 (51) (161)


227

140

(84) (3)

4Q 2015

Adjusted

Earnings

Marketing

& Other

Specialties 4Q 2016

Adjusted

Earnings

$MM

MARKETING AND SPECIALTIES 4Q 2016 VS. 4Q 2015

27

114 26


(117) (119)

(8)

6

4Q 2015

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

4Q 2016

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 4Q 2016 VS. 4Q 2015

28

29

NON-GAAP RECONCILIATIONS

* Pre-tax impact only. Tax-only adjusting items included in "other tax impacts”.

** We generally tax effect taxable U.S.-based special items using a combined federal and state statutory income tax rate of approximately 38 percent. Taxable special items attributable to foreign locations

likewise use a local statutory income tax rate. Nontaxable events reflect zero income tax. These events include, but are not limited to, most goodwill impairments, transactions legislatively exempt from

income tax, transactions related to entities for which we have made an assertion that the undistributed earnings are permanently reinvested, or transactions occurring in jurisdictions with a valuation

allowance.

*** Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted

earnings per share calculation.

2016

Year 4Q 3Q Year 4Q

Phillips 66

Net Income (Loss) Attributable to Phillips 66 1,555$ 163$ 511$ 4,227$ 650$

Pre-tax Adjustments:

Asset dispositions - - - (280) -

Pension settlement expense - - - 80 5

Impairments by equity affiliates 95 - 89 390 172

Lower-of-cost-or-market inventory adjustments - - - 53 53

Pending claims and settlements (117) - (72) 30 -

Recognition of deferred logistics commitments 30 - - - -

Equity affiliate ownership restructuring 33 33 - - -

Railcar lease residual value deficiencies and related costs 40 40 - - -

Certain tax impacts * (32) (32) - (9) (4)

Tax impact of adjustments ** 4 (27) 28 (181) (86)

Other tax impacts (110) (94) - (117) (80)

Adjusted Net Income (Loss) Attributable to Phillips 66 1,498$ 83$ 556$ 4,193$ 710$

Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) *** 2.92$ 0.31$ 0.96$ 7.73$ 1.20$

Adjusted Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) *** 2.82$ 0.16$ 1.05$ 7.67$ 1.31$

Millions of Dollars

Except as Indicated

2015

30


Year 4Q 3Q Year 4Q

Midstream

Net Income (Loss) Attributable to Phillips 66 178$ (1)$ 75$ 13$ (77)$



Pending claims and settlements (45) - - - -

Impairments by equity affiliates 6 - - 366 168

Pension settlement expense - - - 9 -


Tax impact of adjustments 2 (12) - (125) (64)

Other tax impacts 13 13 - 15 15

Adjusted Net Income (Loss) Attributable to Phillips 66 187$ 33$ 75$ 248$ 42$

Chemicals

Net Income (Loss) Attributable to Phillips 66 583$ 136$ 101$ 962$ 212$


Impairments by equity affiliates 89 - 89 24 4

Tax impact of adjustments - - - - -



Except as Indicated

2016 2015

Millions of Dollars

31


Year 4Q 3Q Year 4Q

Refining

Net Income (Loss) Attributable to Phillips 66 374$ (38)$ 177$ 2,555$ 410$








Certain tax impacts (32) (32) - - -

Tax impact of adjustments 1 (15) 27 (49) (22)


Adjusted Net Income (Loss) Attributable to Phillips 66 277$ (95)$ 134$ 2,527$ 376$

Marketing & Specialties

Net Income (Loss) Attributable to Phillips 66 891$ 190$ 267$ 1,187$ 231$




Tax impact of adjustments - - - (4) -



Corporate and Other

Net Income (Loss) Attributable to Phillips 66 (471)$ (124)$ (109)$ (490)$ (126)$


Pending claims and settlements (2) - (2) - -


Certain tax impacts - - - (9) (4)

Tax impact of adjustments 1 - 1 (3) -


Adjusted Net Income (Loss) Attributable to Phillips 66 (467)$ (119)$ (110)$ (481)$ (117)$

2016 2015

Millions of Dollars

Except as Indicated

32


Year 4Q 3Q Year 4Q

Midstream - Transportation






Midstream - NGL

Net Income (Loss) Attributable to Phillips 66 (35)$ (10)$ 3$ 49$ 1$




Other tax impacts 5 5 - (3) (3)

Adjusted Net Income (Loss) Attributable to Phillips 66 (30)$ (5)$ 3$ 52$ (2)$

Midstream - DCP Midstream

Net Income (Loss) Attributable to Phillips 66 (33)$ (37)$ 9$ (324)$ (159)$



Pending claims and settlements (45) - - - -

Impairments by equity affiliates 6 - - 366 168


Tax impact of adjustments 2 (12) - (122) (64)


Adjusted Net Income (Loss) Attributable to Phillips 66 (27)$ (6)$ 9$ (89)$ (34)$

Millions of Dollars

Except as Indicated

2016 2015

33


Year 4Q 3Q Year 4Q

Refining - Atlantic Basin / Europe



Pending claims and settlements - - - 8 -




Certain tax impacts (32) (32) - - -

Tax impact of adjustments (13) (2) - (9) (1)



Refining - Gulf Coast

Net Income (Loss) Attributable to Phillips 66 52$ (51)$ 30$ 551$ 128$





Tax impact of adjustments 21 (6) 27 (11) (1)

Other tax impacts (10) (10) - 18 18

Adjusted Net Income (Loss) Attributable to Phillips 66 9$ (51)$ (13)$ 586$ 147$

2016 2015

Millions of Dollars

Except as Indicated

34


Year 4Q 3Q Year 4Q

Refining - Central Corridor







Tax impact of adjustments (4) (4) - (26) (20)

Other tax impacts (5) (5) - 2 2


Refining - West Coast

Net Income (Loss) Attributable to Phillips 66 (116)$ (167)$ -$ 578$ 10$






Tax impact of adjustments (3) (3) - (3) -


Adjusted Net Income (Loss) Attributable to Phillips 66 (110)$ (161)$ -$ 582$ 11$

Millions of Dollars

Except as Indicated

2016 2015

35


Year 4Q 3Q Year 4Q

Marketing & Specialties - Marketing & Other

Net Income (Loss) Attributable to Phillips 66 747$ 158$ 228$ 1,004$ 199$







Marketing & Specialties - Specialties






Millions of Dollars

Except as Indicated

20152016

36

* Total equity plus total debt


2016 December YTD Phillips 66

Numerator ($MM)

Net Income 1,644$

After-tax interest expense 220$

GAAP ROCE earnings 1,864$

Special Items (57)$

Adjusted ROCE earnings 1,807$

Denominator ($MM)

GAAP average capital employed * 33,344$

2016 GAAP ROCE 6%

2016 Adjusted ROCE 5%

37


* PSXP's third-party debt and Phillips 66's noncontrolling interest attributable to PSXP

Phillips 66

Consolidated

Phillips 66

Partners *

Adjusted

Phillips 66

Total Debt 10,138$ 2,411$ 7,727$

Total Equity 23,725$ 1,306$ 22,419$

Debt-to-Capital Ratio 30% 26%

Total Cash & Cash Equivalents 2,711$ 2$ 2,709$

Net-Debt-to-Capital Ratio 24% 18%

Millions of Dollars

2016

4Q

38


Growth Sustaining Total Growth Sustaining Total

Capital expenditures and investments

Midstream 347$ 61$ 408$ 1,267$ 186$ 1,453$

Refining 92$ 230$ 322$ 344$ 805$ 1,149$

Marketing & Specialties 13$ 22$ 35$ 47$ 51$ 98$

Corporate and Other -$ 48$ 48$ 3$ 141$ 144$

Total 452$ 361$ 813$ 1,661$ 1,183$ 2,844$

4Q December YTD

Millions of Dollars Millions of Dollars

2016 2016

39


Midstream Chemicals RefiningMarketing

& SpecialtiesCorporate

4Q 4Q 4Q 4Q 4Q 4Q Year

Effective Tax Rates

Income before taxes 56$ 171$ (172)$ 201$ (194)$ 62$ 2,191$

Special items 33$ -$ 8$ -$ -$ 41$ 49$

Adjusted income before taxes 89$ 171$ (164)$ 201$ (194)$ 103$ 2,240$

Provision for taxes 21$ 35$ (134)$ 11$ (65)$ (132)$ 547$

Special items (1)$ 12$ 65$ 50$ (5)$ 121$ 106$

Adjusted provision for taxes 20$ 47$ (69)$ 61$ (70)$ (11)$ 653$

GAAP effective tax rate 37.5% 20.5% 77.9% 5.5% 33.5% -212.9% 25.0%

Adjusted effective tax rate 22.5% 27.5% 42.1% 30.3% 36.1% -10.7% 29.2%

Millions of Dollars

2016

Phillips 66

phillips 66 fourth-quarter earnings conference call

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