Phillips 66 first Quarter Conference Call

PHILLIPS 66 FIRST QUARTER 2017 CONFERENCE CALL April 28, 2017

CAUTIONARY STATEMENT 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.

2

EXECUTING THE STRATEGY

Beaumont Terminal, Beaumont, TX

3

OVERVIEW 1Q 2017 Adjusted earnings

$294 MM

Adjusted EPS

$0.56

Operating cash flow excluding working capital

$748 MM

Capital expenditures and investments

$470 MM

Shareholder distributions1

$611 MM

Net-debt-to-capital ratio

27%

Annualized adjusted YTD ROCE

5%

(1) Shareholder distributions include dividends and share repurchases

4

ADJUSTED EARNINGS 1Q 2017 $MM 1

93

(4) 77 294

44

83 4Q 2016 Adjusted Earnings

Midstream

Chemicals

Refining

Marketing & Specialties

Corporate & Other

77

201

(2)

141

(123)

1Q 2017 Adjusted Earnings

1Q 2017 Adjusted Earnings 5

MIDSTREAM 1Q 2017 23

$MM Seasonally lower maintenance costs in Transportation

9

12 77

First full quarter of Freeport LPG Export Terminal operations

Highest earnings since 3Q 2014 at DCP Midstream

33


Transportation

NGL

DCP Midstream

56

4

17



6

CHEMICALS 1Q 2017 $MM Higher O&P chain cash margin and benzene margin

21 56

0

201

Strong polyethylene demand 124

89% O&P capacity utilization 4Q 2016 Adjusted Earnings

Olefins & Polyolefins

Specialties, Aromatics & Styrenics

Other

161

45

(5)



REFINING 1Q 2017 $MM

84% crude utilization 80

85% clean product yield

(95)

(148)

$8.55/BBL realized margin

$299 MM pre-tax turnaround costs

118

(2)

43


Atlantic Basin / Europe

Gulf Coast

Central Corridor

West Coast

(50)

67

62

(81)



REFINING MARGINS – MARKET VS. REALIZED 1Q 2017 WORLDWIDE REFINING $/BBL

1.58

(1.94)

(0.67)

(2.66)

12.24

8.55

Market 3:2:1

Configuration

Secondary Products

Avg Market Crude: $53.24/BBL

Feedstock

Other

Realized Margin

70% Market Capture 9

MARKETING AND SPECIALTIES 1Q 2017 $MM Improved global Marketing margins

10 (9)

Lower seasonal demand 141

140

Excel Paralubes major turnaround 4Q 2016 Adjusted Earnings

Marketing & Other

Specialties

124

17



10

CORPORATE AND OTHER 1Q 2017 $MM 4Q 2016 Adjusted Net Loss

Net Interest Expense

Corporate Overhead & Other

(119)

1Q 2017 Adjusted Net Loss

(123)

6

(10)

11

CASH FLOW 1Q 2017 $B 0.7

(1.3)

0.5

(0.5)

2.7

(0.6)

December 31, 2016 Cash Balance*

CFO (excluding working capital)

Working Capital

Capital Expenditures & Investments

* Includes cash and cash equivalents. March 31 balance excludes $0.1 B of restricted cash.

Shareholder Distributions

1.5

Other

March 31, 2017 Cash Balance*

12

OUTLOOK 2Q 2017 Global Olefins & Polyolefins utilization

Mid-90%

Refining crude utilization

Mid-90%

Refining turnaround expenses (pre-tax)

$130 MM - $160 MM

Corporate & Other costs (after-tax)

$125 MM - $140 MM

13

PHILLIPS 66 FIRST QUARTER 2017 CONFERENCE CALL Questions and Answers

PHILLIPS 66 FIRST QUARTER 2017 CONFERENCE CALL Appendix

ESTIMATED SENSITIVITIES 2017 Annual Net Income $MM 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

Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators: $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) $1/BBL Widening LLS / WTI Differential (LLS less WTI) $1/BBL Widening ANS / Medium Sour Differential (ANS less Medium Sour)

10 10 10

$1/BBL Widening ANS / WCS Differential (ANS less WCS) 10¢/MMBtu Increase in Natural Gas price Sensitivities shown above are independent and are only valid within a limited price range

5 (10) 16

CAPITAL STRUCTURE 2014 – 2017 Consolidated PSX

Excluding PSXP 30%

30% 28%

27%

28%

27%

26%

26%

25% 24%

22% 20%

18%

17% 13%

23. 9

22. 0

14%

23. 7

23. 1

23. 7

10. 2

10. 1 8. 9

8. 6 5.2

2014

8. 6 3.1

2015

Equity $B

2.7

2016

Debt $B

22. 4

22. 4

21. 6

5.2

3.0

1.5

1Q 2017

Cash & Cash Equivalents $B

2014

2015

Debt-to-Capital

7. 9

7. 7

7. 8

2.7

2016

1.5

1Q 2017

Net-Debt-to-Capital 17

REFINING MARGINS – MARKET VS. REALIZED 1Q 2017 ATLANTIC BASIN / EUROPE $/BBL Brent: $53.78/BBL

70% Crude Capacity Utilization

59% Market Capture

(1.38)

0.28

(1.54) 10.62

(1.69) 6.29

Market 3:2:1

Configuration

Secondary Products

Feedstock

Other

Realized Margin

Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH 18

REFINING MARGINS – MARKET VS. REALIZED 1Q 2017 GULF COAST $/BBL LLS: $53.51/BBL


2.07

(2.21) 10.69

75% Market Capture

0.35

(2.87)

8.03

Market 3:2:1

Configuration

Secondary Products

Feedstock

Other

Realized Margin

Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm 19

REFINING MARGINS – MARKET VS. REALIZED 1Q 2017 CENTRAL CORRIDOR $/BBL WTI: $51.83/BBL


80% Market Capture

3.52 (1.36) (1.75) (3.05) 13.18 10.54

Market 3:2:1

Configuration

Secondary Products

Feedstock

Other

Realized Margin

Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3 20

REFINING MARGINS – MARKET VS. REALIZED 1Q 2017 WEST COAST $/BBL ANS: $53.83/BBL


60% Market Capture

1.83

(2.38) (3.22)

(2.75)

16.47

9.95

Market 3:2:1

Configuration

Secondary Products

Feedstock

Other

Realized Margin

Market 3:2:1 – ANS Spot / Los Angeles CARBOB / Los Angeles No. 2 CARB 21

ADJUSTED EARNINGS 1Q 2017 VS. 1Q 2016 $MM 45

37 (88)

4 (64)

360 294


Midstream

Chemicals

Refining

Marketing & Specialties

Corporate & Other

77

201

(2)

141

(123)



22

MIDSTREAM 1Q 2017 VS. 1Q 2016 $MM 38

15

77

40

(16)


Transportation

NGL

DCP Midstream

56

4

17



CHEMICALS 1Q 2017 VS. 1Q 2016 $MM

29

0

16

201

156


Olefins & Polyolefins

161

Specialties, Aromatics & Styrenics

45

Other


(5)


REFINING 1Q 2017 VS. 1Q 2016 $MM

42

86

(54)


(1)

Atlantic Basin / Europe

Gulf Coast

(50)

67

Central Corridor

62


(75)

(2)

West Coast


(81) 25

MARKETING AND SPECIALTIES 1Q 2017 VS. 1Q 2016 $MM

(38) (26) 205 141


Marketing & Other

Specialties

124

17



26

CORPORATE AND OTHER 1Q 2017 VS. 1Q 2016 $MM 1Q 2016 Adjusted Net Loss

Net Interest Expense

Corporate Overhead & Other

1Q 2017 Adjusted Net Loss

(123)

(127)

15 (11)

27

NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2016 4Q

2017 1Q

1Q

Phillips 66 Net Income (Loss) Attributable to Phillips 66

$

535

$

163

$

385

Pre-tax Adjustments: Impairments by equity affiliates

33

-

Pending claims and settlements

-

-

(45)

Equity affiliate ownership restructuring

-

33

-

Railcar lease residual value deficiencies and related costs

-

40

-

-

-

(32)

-

Gain on consolidation of business

(423)

Certain tax impacts *

-

Tax impact of adjustments **

149

Other tax impacts

-

6

(27)

14

(94)

-

Adjusted Net Income (Loss) Attributable to Phillips 66

$

294

$

83

$

360

Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) ***

$

1.02

$

0.31

$

0.72

Adjusted Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) ***

$

0.56

$

0.16

$

0.67

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. * **

28

NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2017 1Q Midstream Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Pending claims and settlements Impairments by equity affiliates Equity affiliate ownership restructuring Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Chemicals Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Impairments by equity affiliates Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66

2016 4Q

$

77

1Q

$

(1) $

65

$

77

$

33 (12) 13 33 $

$

181

$

136

$

156

$

33 (13) 201

$

(12) 124 $

156

(45) 6 14 40

29

NON-GAAP RECONCILIATIONS 2017 1Q Refining Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Railcar lease residual value deficiencies and related costs Certain tax impacts Gain on consolidation of business Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Marketing & Specialties Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Corporate and Other Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66

$

259

Millions of Dollars Except as Indicated 2016 4Q

1Q

$

(38) $

86

$

(423) 162 (2)

$

40 (32) (15) (50) (95) $

86

$

141

$

190

$

205

$

141

$

(50) 140 $

205

$

(123)

$

(124) $

(127)

$

(123)

$

5 (119) $

(127)

30

NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2017 1Q Midstream - Transportation Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Midstream - NGL Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Midstream - DCP Midstream Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Pending claims and settlements Impairments by equity affiliates Equity affiliate ownership restructuring Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66

2016 4Q

$

56

$

56

$

4

$

1Q 46

$

72

$

(2) 44 $

72

$

(10) $

(11)

-

(11)

-

$

4

$

5 (5) $

$

17

$

(37) $

$

17

$

33 (12) 10 (6) $

4 (45) 6 14 (21)

31


2017 1Q Refining - Atlantic Basin / Europe Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Railcar lease residual value deficiencies and related costs Certain tax impacts Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Refining - Gulf Coast Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Gain on consolidation of business Railcar lease residual value deficiencies and related costs Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66

$

(50)

$

(50)

$

328

$

(423) 162 67

$

163

1Q

$

4 -

$

5 (32) (2) (36) 98 $

$

(51) $

68

$

16 (6) (10) (51) $

68

4

32

NON-GAAP RECONCILIATIONS

Millions of Dollars Except as Indicated 2016 4Q

2017 1Q Refining - Central Corridor Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Railcar lease residual value deficiencies and related costs Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Refining - West Coast Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Railcar lease residual value deficiencies and related costs Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66

$

62

1Q

$

17

$

20

$

62

$

11 (4) (5) 19 $

20

$

(81)

$

(167) $

$

(81)

$

8 (3) 1 (161) $

(6) (6)

33


2017 1Q Marketing & Specialties - Marketing & Other Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66 Marketing & Specialties - Specialties Net Income (Loss) Attributable to Phillips 66 Pre-tax Adjustments: Tax impact of adjustments Other tax impacts Adjusted Net Income (Loss) Attributable to Phillips 66

$

124

1Q

$

158

$

162

$

124

$

(44) 114 $

162

$

17

$

$

17

32

$

43

(6) 26 $

43

$

34

NON-GAAP RECONCILIATIONS 2017 March YTD

Phillips 66

Numerator ($MM) Net Income After-tax interest expense GAAP ROCE earnings After-tax special items Adjusted ROCE earnings

$ $ $ $ $

Denominator ($MM) GAAP average capital employed *

$

2017 Annualized GAAP ROCE 2017 Annualized Adjusted ROCE

563 68 631 (241) 390

33,899 7% 5%

* Capital employed is total equity plus total debt

35

NON-GAAP RECONCILIATIONS Millions of Dollars 2017 1Q Phillips 66 Consolidated

Phillips 66 Partners *

Adjusted Phillips 66

Total Debt Total Equity Debt-to-Capital Ratio

$ $

10,210 23,725 30%

$ $

2,359 1,331

$ $

7,851 22,394 26%

Total Cash & Cash Equivalents Net-Debt-to-Capital Ratio

$

1,513 27%

$

1

$

1,512 22%

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

36

NON-GAAP RECONCILIATIONS

Growth Capital expenditures and investments Midstream Refining Marketing & Specialties Corporate and Other Total

$ $ $ $ $

Millions of Dollars 2017 1Q Sustaining

148 111 8 267

$ $ $ $ $

34 148 7 14 203

$ $ $ $ $

Total 182 259 15 14 470

37

NON-GAAP RECONCILIATIONS Millions of Dollars 2017 1Q Effective Tax Rates Income before taxes Special items Adjusted income before taxes

$ $ $

797 (390) 407

Provision for taxes Special items Adjusted provision for taxes

$ $ $

234 (149) 85

GAAP effective tax rate

29%

Adjusted effective tax rate

21%

38