Phillips 66 PSX announces its 2015 capital budget of $4.6 billion.
These investments are intended to support midstream business growth, including
that of the company's master limited partnership, Phillips 66 Partners LP, as
well as ensure ongoing operating excellence. Including the company's portion
of capital spending by joint ventures DCP Midstream (DCP), Chevron Phillips
Chemical Company (CPChem) and WRB Refining, all of which are expected to be
self-funded, the company's total 2015 capital program is expected to be $6.8
billion.
“The 2015 capital program reflects our commitment to grow our higher-value
businesses while enhancing returns in Refining,” said chairman and CEO Greg
Garland. “We are executing a portfolio of major Midstream and Chemicals
projects while evaluating a significant backlog of investment opportunities.
“We remain committed to returning capital to shareholders through dividend
growth and our share repurchase program. During the year we increased our
dividend 28 percent, and through Sept. 30, 2014, we returned $3.9 billion of
capital to shareholders through dividends, share repurchases and the PSPI
exchange. We expect double-digit increases in dividends for the next two
years, and $2.6 billion remained available at the end of the third quarter
under our share repurchase authorization.
“Our capital structure and financial flexibility allow us to fund shareholder
distributions while investing in the growth of our businesses, even in this
lower commodity price environment. Sources of capital include our strong
balance sheet, debt and equity issuances by our MLP, and operating cash flows
from a high-returning portfolio of businesses,” said Garland.
In Midstream, excluding DCP, Phillips 66 plans to invest $3.2 billion in its
Natural Gas Liquids (NGL) and Transportation business lines. Midstream capital
includes approximately $200 million expected to be spent by Phillips 66
Partners to support organic growth projects. In NGL, the company continues
construction of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4
million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast.
In Transportation, the company is investing in pipeline and rail
infrastructure projects to move crude oil from the Bakken/Three Forks
production area of North Dakota to market centers throughout the U.S. In
addition, expansion of the Beaumont Terminal and related infrastructure
opportunities are being pursued.
Additional Midstream investments are planned within DCP, a 50-50 joint venture
with Spectra Energy that also includes DCP Midstream Partners. DCP will
leverage its infrastructure to launch new gathering, processing, and NGL
growth projects, mainly in the Niobrara, Denver-Julesburg, Eagle Ford and
Permian basins. DCP also expects to increase natural gas processing capacity
in these basins and complete other gathering system expansions during 2015.
Phillips 66's share of DCP's 2015 planned capital expenditures is $550
million.
In Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in
projects aimed at capturing cost-advantaged petrochemical feedstocks on the
U.S. Gulf Coast. Phillips 66's share of CPChem's 2015 capital expenditures is
expected to be $1.4 billion. Funding supports advancement of CPChem's 3.3
billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year
polyethylene facilities. The expected start-up for these facilities is
mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem's
normal alpha olefins production capacity at Cedar Bayou continues, with
estimated completion in mid-2015.
Phillips 66 plans $1.1 billion of capital expenditures in Refining,
approximately 75 percent of which will be sustaining capital. These
investments are related to reliability and maintenance, safety and
environmental projects, including compliance with the new EPA Tier 3 gasoline
specifications. Discretionary Refining capital investments will be directed
toward small, high-return, quick pay-out projects, primarily to enhance use of
advantaged crudes and improve product yields.
In Marketing and Specialties, the company plans to invest $170 million for
growth and sustaining capital. The growth investment reflects Phillips 66's
continued plans to expand and enhance its fuel marketing business.
In Corporate and Other, Phillips 66 plans to fund $155 million in projects
primarily related to information technology and facilities.
“Our plans for significant growth in enterprise value are supported by our
2015 capital budget and our commitment to a 60/40 ratio of reinvestment to
distributions. Disciplined capital allocation and operating excellence remain
our top priorities,” concluded Garland.
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