Phillips 66 (PSX) J.P. Morgan 2024 Energy, Power & Renewables Conference (Transcript)

Company Overview - Phillips 66 is a leading diversified, integrated downstream energy provider with a focus on midstream, refining, chemicals, and marketing specialties, positioning the company for value creation across economic cycles [2][4] - The company expects to grow its EBITDA from $10 billion in 2022 to $14 billion by 2025, with 75% of this growth coming from segments outside of refining [2][5] Strategic Focus - The company has honed its strategy to simplify its business and focus on value-driving assets, including the integration of DCP and the acquisition of Pinnacle Midstream, which is expected to add $1 billion in earnings [4][5] - Phillips 66 plans to generate over $3 billion from asset dispositions, focusing on non-core assets that do not align with its growth strategy [6][24] Refining Operations - The refining segment has achieved a 98% availability rate for crude units and has operated above the industry average utilization rate, with a 92% rate in 2023 compared to the industry average of 90% [8][10] - The company has implemented a cost-saving program targeting $1.4 billion in reductions, with over $600 million achieved in refining costs [10][21] Chemicals and Petrochemicals - CPChem, the company's chemicals segment, has seen margins recover from lows, with polyethylene chain margins increasing from 16.5 cents per pound in Q1 to 17.5 cents in Q2 [17] - CPChem is positioned to benefit from low-cost feedstock access in the US and the Middle East, allowing it to maintain high operational rates [17] Marketing and Specialties - The marketing and specialties business has achieved a return on capital employed of 32% in 2023, driven by strategic retail partnerships and a focus on high-value locations [19][20] - The company is divesting non-core international marketing assets, generating approximately $350 million in annual EBITDA from these operations [20][24] Financial Performance and Capital Allocation - The company maintains a target leverage ratio of 25% to 30%, currently above this range but comfortable due to strong cash flow and earnings growth potential [22] - Phillips 66 is committed to returning 50% of its operating cash flow to shareholders and has been actively repurchasing shares [25]