Phillips 66 increases share repurchase programme

Phillips 66 has announced its 2016 capital budget of US$3.6 billion, excluding Phillips 66 Partners’ capital programme. The board of directors of Phillips 66 also approved a US$2.0 billion increase to the company’s share repurchase programme.

“The 2016 capital budget will fund Midstream growth and enhance returns in Refining,” said Chairman and CEO, Greg Garland. “Cash from operating activities, our MLP and a strong balance sheet allow us to fund business growth while returning capital to shareholders.”

Excluding Phillips 66 Partners’ capital spending, Phillips 66 plans to invest US$2.0 billion in its Midstream business lines. In Natural Gas Liquids (NGL), the company continues construction of the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the US Gulf Coast, with completion expected in 2H16. In addition, the budget includes spending associated with expansion of the Sweeny NGL midstream hub.

In Transportation, the company is investing in the new DAPL and ETCOP pipeline projects to move crude oil from the Bakken production area of North Dakota to market centers throughout the United States. Storage capacity is being added at the Beaumont Terminal in Nederland, Texas, and the company is investing in the Bayou Bridge pipeline project to move crude oil from Texas to Louisiana markets.

Phillips 66 plans US$1.2 billion of capital expenditures in Refining, with approximately 70% to be invested in reliability, safety and environmental projects, including compliance with the new Tier 3 gasoline specifications. Discretionary Refining capital of about US$400 million will improve product yields and lower feedstock costs. These investments include a modernisation of the FCC at Bayway, and an upgrade of the vacuum tower at Billings.

In Marketing and Specialties, the company plans to invest about US$135 million of growth and sustaining capital. This furthers Phillips 66’s plans to expand and enhance its fuel marketing business, including new retail sites in Europe.

Capital spending plans for 2016 for Phillips 66 Partners and for self-funded joint ventures DCP Midstream, Chevron Phillips Chemical Company, and WRB Refining will be announced in 2015.

“Shareholder distributions are important to value creation,” said Garland. “During 2016, we plan to increase regular dividends while continuing to buy back PSX shares. Since 2012, we have increased quarterly dividends by 180% while reducing share count by close to 15%.”

The Phillips 66 Board of Directors has authorised an additional US$2 billion for share repurchase, bringing total authorisations to US$9 billion. Shares will be repurchased from time to time in the open market at the company’s discretion, subject to market conditions and other factors, and in accordance with applicable regulatory requirements. The company may commence, suspend or discontinue purchases of common stock under this authorisation at any time or periodically without prior notice. Phillips 66 anticipates funding the repurchases primarily with available cash. Shares of stock repurchased will be held as treasury shares.

Edited from press release by

Published on 13/10/2015

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