PSX - Earnings call transcript Q3 2018

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Operator

Welcome to the third quarter Phillips 66 Earnings Conference Call. My name is Julie, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note, that this conference is being recorded. the to turn President, Dietert, now Relations. Investor will call Jeff over Vice I begin. may you Jeff,

Jeff Dietert

supplemental along Good XX to will found can information. and Executive we a results Safe that our call. here, included section Chairman morning, will forward-looking with welcome Relations operating results CEO; on Vice Participants Web Harbor materially today's earnings statement. and as we SEC well third and the making during The may filings. of as our and on X the conference President quarter contains be Actual from and Investor today's presentation presentation comments. Kevin financial using be Slide call and be Q&A include differ site, the It CFO. reminder statements in Garland, actual Factors to are the Greg Phillips session. differ cause Mitchell, our Phillips material XX that call the is during will could

I investor ask Before in asking Based the to to over session. everyone like we I'd question, yourself to question-and-answer our a a Greg, on point allow to out that and on our to you follow-up. call, change how opportunity improve one and the are limit to a feedback turn call question

call have If the Garland we to over queue. turn ask additional I'll Greg questions opening With you you rejoin that, the for remarks.

Greg Garland

joining thanks today. and Jeff. for us Good everyone, morning, Thanks,

Third a quarter $X.XX adjusted were earnings $X.X billion, share. record per

ran levels, strong corridor, attributing earnings. the we In demonstrated portfolio record the quarter, central capturing assets Refining Midstream value our strong of integrated our margins. and This at

or quarter. heavy earnings crude. margins last Midstream achieved in record we the adjusted initial earnings. largest repurchased product feedstocks record exchanged purchase solid advantaged We continue We nearly share XX% from to our to as per our over shares refined We've of years, this realized Canadian outstanding Marketing, six sales. And contributing of on the benefit industry's

our and returns billion continued to million the robust future attractive value investing projects commitment create through dividends shareholder and We returning to the allocation disciplined our $X.X distributions and We're fundamental by approach. for Strong in $XXX of repurchase portfolio quarter share a in with shareholder year. to drive capital distributions third remain growth.

Hub, from end the building the Refinery. Permian quarter, on million pipeline years. Partners of will a again by our schedule EBITDA. With per strength, Coast service by third Phillips two XX transportation Sweeny At the first the once at to to be including per Supported its storage record positioned well PSXP five be PSXP Ford Sweeny and and adjusted scale During day, pace adding Phillips X achieved Eagle the its grown NGL XXX,XXX day capacity of during rapid is in we're destinations, XX commitments, barrels has capital XXXX. Clemens project. the to oil operator Partners fund Phillips program Grey organic Pipeline XX and the sustain EBITDA will Grey a Gulf is Oak provide of barrels shipper is Oak in the future Caverns. owner largest Texas significant Partners XXX,XXX the growth. crude drive to fractionators, financial at and and

storage Hub and XX Midstream, with is in in capacity, Y-grade completed barrels fractionation when XXX,XXX late DCP the agreements place expansion of parties, will day to fractionators. new including the XXXX. per supply have to We barrels The million multiple of have

strong tight, strategically end crude service. total tanks the having that capacity XX.X the and barrels new from and additional fractionation there's oil contracted into Texas this is We're located crude we on interest recently capacity remains million terminal's Permian. and accessible to Gulf year. will the Beaumont by Hub future placed expansion XXX,XXX Sweeny Terminal, customers At barrels from construction Gulf Our of under projects. fully Coast Coast, storage increase of the the directly

a Basin. dock. expected across for position ethylene and barrels project do Sand to X is second CPChem third feedstock the ethane exports strategically of higher located Gateway world's Oak U.S. East. During for projects exports, growth Refining, In up about and Terminal in day we're focus Gulf Basin, The The high-return Coast per crude high-growth by is provide X.X demand polymers. expected In need the Abundant we assets, increased quarter, day making polyethylene barrels terminal of bottlenecks And XXX,XXX Coast capacity Corpus had continues Petrochemicals quarter. growing the in continued is of year. cost-advantaged has result the in new Hills is At Chemicals, its plant include two-third advantage Petrochemicals domestic third remain in begin to X portfolio Texas CPChem to production Middle to of continue will by growth. U.S. O'Connor to we XXX,XXX margins. upon DCP our opportunities. additional and lines completion capitalize of the to in U.S. improve that Pipeline U.S. on NGL product third crude for Christi. XXX,XXX Sand Gulf Beaumont, on with a in barrels is in Gulf in derivative investments we existing capacity expand cost pipeline's DCP Coast the anticipated at are early to to in expected DJ per and to the across late the to processing evaluating those owned the interest per optimize also recently the on Midstream gas multiple day is further In approved XX% in supplies completion the to project has Grey XX also PSXP to one-third in of the end growing by continues quarter, DCP units. XXXX. and end Mewbourn XXXX. and crude to developing Gulf connected Partners. further a million Phillips to second capacity. under CPChem meet development storage and X.X would increase assets storage for quarter the operations the South Hills barrels a demand Pipeline, expansion is Permian the the production million XXXX. CPChem's leading this supply DCP's the by plant started the

at our We quarter a Refinery Phillips that about petrochemical XXXX. have complete high-value isomerization infrastructure This project future an gasoline. XX growth higher in We're gasoline should octane across we unit. opportunistic NGL higher production This hydrocarbon project of XXXX. FCC optimization opportunities Partners Charles will our facilities, of new when pipelines, will the unit is increase third underway the octane the completed mid including With export in fractionation. Refinery, per XX,XXX for Sweeny opportunities of At Lake in barrel growing midstream day build-out, production and constructing products increase blend plays businesses. further see shale and components the production

is system opportunities refining well good expansion. capture for we chemicals Our low-cost to positioned crude future and feedstock, see

I'll disciplined trade a buyer And call financials. We capital. over that of the align projects of in our when to will provide a they and below growing We'll we'll long-term continue competitive, growth investing continue with to that, be dividend. turn with we'll to strategy, strong, a allocator value. remain With our shares Kevin review intrinsic attractive returns the

Kevin Mitchell

adjusted earnings an excluding four, third $X.XX. was per items, were Starting $X.X Hello, everyone. on Greg. you, slide billion. After special overview quarter share earnings with Thank

The tax was third rate XX%. quarter adjusted effective

offset million, earnings $XXX from excluding and increased growth in net was of by shows quarter lower the and results. tariffs million Midstream, six due Our net the quarter. rates, affiliates increased $X.X segment. adjusted quarter in adjusted Slide the cash and adjusted was million year-to-date were operating adjusted partially on Transportation earnings with our five million We earnings Midstream by the $XX quarter after-tax which for was higher flow $XXX million second with Working by was flow Quarter-over-quarter Chemicals volumes, a was pipeline quarter capital equity Marketing, spent employed income Operating was and million from outstanding. projects. compares reduced the quarter lower XX%. shares Distributions $XXX previous $X.X third $XXX record storage billion. income, to higher XXX million, return capital The third cash million. up costs. working $XXX driven Refining, Slide billion. spending by increase $XXX Capital quarter. for capital impacts ended

central benefited strong in corridor our utilization from the Our operating at refineries. pipelines

day. Bakken increased Southern Sand quarter [technical activity. $XX day. In and an addition, per $XXX,XXX the trading XXX,XXX and volumes the and Hills during throughput income Pipeline increase reflecting million, was propane difficulty] more and net barrels was Hills barrels averaged record than Sand pipeline third million, Hills a adjusted butane other per pipeline $XX NGL

Sweeny to continue the run We hub. at well

in of the quarter month and a adjusted averaged the XXX% the quarter, is hedging the DCP income $X fractionator higher improved export and previous up to During million utilization. volumes, third net from million Midstream results. XX cargoes NGL pipeline quarter prices increased facility the averaged due $XX

on Chemicals net asset slide the from due utilization a adjusted improved other XX% turnaround Global the the utilization the and by This polyethylene planned also quarter reflecting from million on million from increase was million, as downtime and income margins net polyethylene that mainly ethane margins. reflects million income adjusted Olefins higher was unplanned XX% gain higher $X costs. domestic Adjusted $X lower million CPChem impacted was third inventory. an partially power $XX for seven, feedstock income operated Bayou The second Cedar facility. than net SA&S from in the third $XX offset O&P segment outage to party quarter grew third for and $XXX to activities volumes increased Polyolefins, Turning sale. quarter. sales decreased at low in

third $XXX from the of cash CPChem. quarter, distributions million we During received

will we XXX% the was slide cover second on compared Crude with in quarter. Next Refining. utilization eight, XX%

normal quarter. yield a of third chart slide were change realized barrel. million. was costs the net the improved net returned a An unplanned partially and in to differentials income $XX increased adjusted million $XX was to provides a of the Gulf crude million view downtime turnaround per which corridor narrowing by $XXX quarter increase third heavy Canadian million due from offset Atlantic In net million, Refinery $XXX clean was adjusted following as of Pre-tax refining's $X crude central Our quarter. decreased basin, third reflecting in eight product volumes. was Refinery. increased Bayway downtime the heavy $XX.XX turnaround. The Refinery. operations the of previous and income Alliance Coast This quarter unplanned margin adjusted XX% higher net in differentials Adjusted regional income and and second Humber at decrease the at Permian the the quarter income

crack In the nine was for the a XX% crack. to was due was XXX%. Third in with covers West quarter in market capacity Slide The the market compared decline capture. $XX.XX barrel mainly market the quarter the decrease per third utilization second X:X:X $XX.XX Coast, gasoline quarter.

$X.XX second was premised market prior Our and per NGL realized crude improved improvements $X.XX relative quarter previous offset market than an third $X.XX barrel, the per Gulf the capture by partially more differentials, oil. to of to crude XX% quarter the barrel, less heavy capture lower Market of by crack. quarter Coast our XX%, the the than the margin decline barrel, in made refineries. distillate central was Losses narrowing from and were per from from by in of a improved overall corridor. impacted the of We $X.XX by to coke configuration realized barrel in per margins in prices quarter. secondary part due Feedstock primarily up due $XX.XX gasoline X:X:X for resulting in products

other $X.XX includes by margins barrel. improved The category impacts per product differentials, with inventory. RINs, freight and This associated realized category outgoing

Specialties XXXX from reflects cash billion. base the to program. was Other XX. Corporate income adjusted of and billion XXX,XXX move on $X excluding due year-to-date million, our was net debt XX quarter oil year net repayment re-imaged sequentially. expense overhead reflecting interest. entered and was which $XX flow prior impact On exports U.S. seasonally quarter to and debt realized We from Refine lower costs margins $X the Adjusted since slide Alliance, net third capital a billion. Slide income of quarter than by $X.X This in quarter. third with stronger conditions. well Other from and billion interest downtime quarter the of We were and changes use total costs Marketing decreased per working third domestic timing second increased due of Let's the from $X.X in quarter capital in impact cash net second $XX the quarter primarily due included start payments. Bayway build to market Cash during million Lower Corporate an the a to our U.S. capitalized up quarter increased and slightly $XXX $XXX volumes reduced day. million employee product Marketing the as unplanned received from Working the $X.X of at margins. during in change taxes. operations inventory receipts Specialties barrels and We second billion over severance the XX, of the $XXX balance branded marketing crude issuance highlights $X.X million higher cash. the as Slide first the higher sheet. segment has to debt and the cargo of in marketing third payments. X% quarter. the on the bringing the increased higher Europe, million, quarter, sites adjusted

billion of through of expenditures the and of funded During the million payment we year, to capital shares shareholders repurchase dividends. investments, we $X.X and $X.X and returned

Our review and results. was concludes the ending operational $XXX cash million. of This balance my financial

mid anticipate I'll In be crude the and comparable basis. In to segment line a the company million This be fourth in Next, make to are peers. for we'll Corporate after a only cover the utilization more that, million in we the million global mid the We reporting worldwide Refining, come next be Other turnaround change XXs. pretax to rate between costs Income our the segment $XXX to million. and With and to reflected XXs, expect taxes level. our we to items at in we our $XXX consolidated expenses quarter rate few O&P be be open on In between expect will will $XXX tax. pretax reporting now questions. changing quarter. utilization $XXX and closing, outlook the Chemicals, for

Operator

Thank you.

begin session. will the question-and-answer We now

Terreson courtesy as Please we all ISI. Instructions] open As follow-up. ahead. go to limit please for from yourself a questions, [Operator to one Doug and the to call participants, question Evercore

is line open. Your

Doug Terreson

everybody, morning great Good and on congratulations result. another

Greg Garland

morning, Doug. Good

Kevin Mitchell

Doug. Hi,

Doug Terreson

the in well guys you in with it leader distributions. pledging obviously whole Greg, And have spending worked spending. disciplined it's energy while your very balance a capital for starts been and shareholders, industry to

have spending And might beyond? some your on yet, could so point, while XXXX this you or that and wanted you not have guidance you on provide philosophy specific if see color may capital for to I maybe

Greg Garland

go now, $X.X all year. And for our December, given for we to but a we've think to share back the XX-XX, a dividend bit. at working want to I Yes, could approval. business, over XX% hard question of the This be for share budget year guidance little is we the back already and in we'll we're it's we XX% us going to around that I'd Doug, start from going sources given there's capital We'll to the no into strong year to reinvest hit that other given longer-term. from cash way, from hit. deviating repurchase. Any long-term billion XXXX bounce see that, goes we're be our the so of repurchases the shareholders, But Board, and

want out don't I ahead of too get that. to far So

we Oak, So Grey consolidated PSXP, And fracs. into even got the of PSX. it's though Oak, it and Grey gets course up a

number December. the the to billion you at between billion $X Board 'XX. probably at $X.X the in consolidated is what We'll tell looking get So the and level we're something in when

Doug Terreson

a lot, Thanks Sure. guys.

Greg Garland

You bet.

Operator

Sachs. Neil Mehta Please from ahead. Goldman go

open. is line Your

Neil Mehta

could Hey quarter-specific guys, forward. to if here. but had then questions, extrapolate them on Congrats see a quarter good morning. I also good want we two

if n model, central was your of where in big versus outperformance corridor in I was the one mid-con about think -- driver fact, the business. so drivers it And the of

talk into And see so and have then on into of gasoline can outlook also question, crude, you XXXX how components as Canadian lot quarter, fourth I a that about So you And follow-up. the region. the are your in going well? WTI, just Western Brent, a there views and margins that to

Greg Garland

questions five packed try deal we'll it. with to was Neil, one That but Okay. into

me have in kind So give level high and let Jeff views. the then start just I'll of our and step

no WCS, into able question XXX% well, also the first all, WTS capacity to think, We're in Borger large to differentials at some I Ponca. we And quarter. were differentials capture strong degree of so really ran on that So and utilization. but

ran able to we were I'll where we on needed really to our So spreads. run WCS and that well, well opportunity. of future in And we views comment Jeff capture let terms

Jeff Dietert

discounts. day both from Line of as with And benefit further Production Mountain wider one is of incrementally. for coming Yes, XXX,XXX crudes PSX Canadian the It's a Keystone XXXX lined kind and Enbridge is barrels to importer growth continuing these XXXX only well. growth The plus. up year. XXXX end in day next in development, we largest up exceed; so production XXXX, a infrastructure next full. roughly and the year barrels is pipelines Trans are are X XXX,XXX then and

the are fourth XXX,XXX DOE Canadian When day four imported For the last what well. do an storage time increase full to That record and we this a and is you at rail as next look can right about looks Canadian at contracts some signed for quarter. this we've year. barrels have being stats as rises at imports, be months. we industry. at and the high for the it are really rails been There point the more capacity that typically year levels to so later long-term during expect the

to Canadian things continue So differentials. be tight with

Neil Mehta

area was other marketing. the then And

there's seasonality is holding gasoline but up well. I put to very margin element that, guys as guess, You like a wholesale results. strong seems it

about and view and the carry specialties we the marketing strength talk can of So business for your forward? some

Jeff Dietert

there. strength seasonal is Yes, so there

month months of as has and versus third July in quarter well, summer the Day Labor the weekend second two there Fourth got only August, quarter. one The in July summer with and

second component really it's at and Europe big prices, were quarter as a the well strong they push to the is margins seasonal so stable through had third volatility flat for a environment. in segment. versus more in relatively so We easier When performance And you there. and price the wholesale there more the strong look in gasoline in margins overall marketing quarter

Kevin Mitchell

the But it XQ come expect seasonally to as does. normally Kevin this Neil into you look will would see as off is typically you -- -- demand

go would you weaker as the from so that segment you fourth And quarter third. the expect from results into

Neil Mehta

guys. Makes sense. Thanks again

Jeff Dietert

Thanks, Neil.

Operator

Please Fargo. Wells Roger Read ahead. from go

Your line open. is

Roger Read

and morning good thanks, Yes, impressive a very quarter.

Greg Garland

Roger. Thanks,

Kevin Mitchell

Thanks, Roger.

Roger Read

to Neil's think about follow-up little bit central Just the we capturing maybe and on question a in of as here, a dive corridor throughputs.

generally have a it it's transportation just south the should trying we differentials component a it the few potential So of of capture next get, the an you as doesn't think in crude a price? I'm rail has about by think narrow is quarters maybe for margin to border, or price to Hardesty know, adjusted WCS until there you up. opportunity about over

Greg Garland

look a in. Canadian just the lag. to Hardesty way just in compare the in easiest at we factor the go quarter as this XQ in do is and and this heavy difference into about think case We XQ XX-day at on the that change I Roger, discount a discount quarter So XQ on versus see

And so little sequential a is to changes. that lag it well. easiest as to But at look sense the way that makes I think bit just

Roger Read

appreciate I right. All it.

Greg Garland

Roger, invested in other we The that. add I'd allows infrastructure that thing to us capture have is

south. we've pipes So commitments we on at coming have got things Hardesty,

think when that it's well-positioned ARPU to I we're there. capture so And really

Roger Read

refining the across MLPs then space. unrelated And some pressure the PSXP, Thanks. obviously been follow-up, on Great. there's

You're in business. the assets of structured and the size terms differently of

need overall you're Just IDR, that issues you may where a wondering, do or something little of the in the that I up business just PSXP you change sector? are time how was you evaluating wondering ultimately maybe bit roll about to to seeing

Kevin Mitchell

to ones our We XX% portfolio up. story of at to different own going later of annual that's On I'd substantial plus Yes, than grown invest. for of great down story. out rolled capacity PSXP, growth some PSXP out afternoon compound distributions. projects we're a lay a point a a made drop spot that's has this rate, on organic It's that kind investable. we're right. dollar EBITDA, we've billion a the have the from at the organic pivot growth to its call

just we look help to as so, it And a at vehicle midstream grow business. us our

strong a portfolio. PSXP like we component. We valuable think so and And a part is entity of our that

by IDRs I IDRs. we on Now, IDRs a don't we topical do that think today. that a the there's I would a we to say are with asked is and what and we'd going question constraint this don't meeting don't think IDRs certainly created get that about go growth

be do IDRs that lifecycle there's people. is we you with only Although, a a that a we're is how shareholders. put at the to deal going path most holders that. and the willing in to but time, certainly to LP that is IDRs would We deal to have understand well-understood unit well-worn guide the with the path certainly to but say MLPs. I would acknowledge appropriate rails we fair that also manner it's by the And PSX to to

some get the at we'll point. So IDRs

Roger Read

Thanks. one to I'll stick the right. in All one.

Kevin Mitchell

Okay.

Operator

Phil JPMorgan. Gresh go from Please ahead.

is open. line Your

Phil Gresh

thank Yes, you.

there's just fundamentals bit you're on could been bit have? going to just and of long the there's fractionation contribute Greg, chemicals, a obviously costs take side pressure First Obviously, little just Maybe well. thoughts margin, question issues. be help talk tightness you as you're how about a any resolve to would been the margin viewing here on to how the recovery, on the feedstock some product of XXXX, but some in those it'll you that on

Greg Garland

ride, know, in quarter, high Yes, think I think, went more I the And doubled into the below high wild I industry keeping than and you up it's that well, down think XXs XXs I back today. just hard and with that. a a had time the had the during

we And margins compression. have the margin started come the there far, always with So new hitting frankly, market. these some that as compression that so materials it three did on, in be unit thought cause some would

was was frac so that ethane thing all missed know, And quickly it really capacity how and drove you prices that rapidly. up up. frac we think I quickly the that the going that build capacity

then result we the KIMS feedstock get and fracs our frac and pressure be couple of slates point a prices. and more ethane a coming to in their think the ethane this a great or saw that more see some think cracking obviously by There's on 'XX. propane day did adjusting tension I going on and some more job we're on in on of you at X, putting I can two 'XX including frac frac we'll X, then fracs until another 'XX. coming on three capacity and XXX,XXX But in

we I feedstock. 'XX, So as start move 'XX we'd into and think to resolve around that issue

in export and So course interim of is, what if happen feeling on the ethane will own the price think price. propane, fuel always I ethane the a is you of price value core

like supply but still more good in U.S. constructive views we're U.S., the a day really, growth, frac globally, Asia say Globally, plenty demand in And there's out are we we know, the we then looking 'XX of or I'd the it in still and see -- into of finally get in see 'XX. margin as the and the Europe you just look we and ethane, just could just terms out. Our that need across demand outlook. to where we into and fundamentals capacity rejection XXX,XXX 'XX,

Phil Gresh

Okay. Great.

would in this you one prepared question, be Second your for mentioned I remarks. since Kevin guess, it

margins coke that that strong that's there. looked your You I were base Atlantic was I maybe secondary products -- needle secondary presume if margin the really talked and to improvement about coke in contributor in that the

there? that could getting you the on you're just maybe So elaborate contribution

Kevin Mitchell

Yes.

NGL you've and impact, improved then coke, the strong to the across secondary combination. a NGL board across you and that So had coke, prices, so all coke coke, impact. all that that's not it's pricing It's product needle strong that, contributes of grades and so got so petroleum and pricing a

Phil Gresh

sustainable? that feel you And Okay.

Kevin Mitchell

Well, a on in if so. you moves around impact category as as depends it of can conditions markets the market where move do move the capture, back around terms overall go. so bit it will over I on time. that quite mean that That look

Phil Gresh

sounds it Okay, good.

Kevin Mitchell

and has that the market on probably no but improved, period so impacted time direction during coke also They the the they're that. around were of of there's down I amount that think secondary question that globally positive products

high they're like We markets by in ion grade specially to working we've implements have develop the probably batteries impacted the and cokes we've Humber made two great certainly two, valued not good specialty new production market and to and the a with developing to questions and so Lot sustainable the become he for three of of goes that's us. have global well. specially new continues is coke answer do our other or The anodes one been into there the common particularly troughs and last years and progress have furnace tied you of economy those refineries most as for cokes. lithium

about I Wood business gold billings, spread [indiscernible] quarter the but around, us you think well for about the on if in River you for small was relatively $XX will mix you do this component there. think think completely XX between saw the it overall a we it's overshadowed and by margin central improvement

Greg Garland

makeup it's prices. at grade, to we and think that needle of the I the depending the coke on note important Bill, coke. trade applications of grades for needle They many multiple different the different have quality,

disclose don't of duration contracts capture. we commercial sales the can In influence the which we addition that prices reasons our for

Phil Gresh

you color. Thank it. Appreciate for initial the

Greg Garland

You bet.

Operator

go Securities. ahead. from Please Sankey Paul Mizuho

line open. Your is

Paul Sankey

take Thank both you, volumes you that Thanks. morning. could that Could little good then just actually I for outlook and the they chemicals, Hi achieved, your guys. be great. a guess bit thought best you be what us give that results would we margins about an weaker would more

Greg Garland

quicker to and expected higher derivatives came so and the start we I some becomes quarter leading turnaround we at author ethylene. ran the that's adjusting the don't down. when and actually to we've compression the last the third Ethylene side new came ethylene cover inventory that but at and became on cracker than on case, new out high in of of inventories on but to a had better, specifically to Well, from margin fall we're seen and inventories we're that been up inventory. cracker selling quarter, built also are rates when relatively see inventories bring so still to

come seeing say are then happening still year. also. growth okay, you really constructive I going think lines up going back it we're for on So sales into The regions XXXX. quarter-over-quarter polyethylene are we're would about into sales all what's next across strong demand and volumes you margins the outlook strong

Paul Sankey

Are correct is your not you of terms hitting maximum in volumes sales?

Greg Garland

really was think but guidance are new operates Middle then Cedar so cracker a we running the global author kind the turn East I at mid around and that Bayou quarter of a our facility that old the the comfortable with which capacity XXs I rate OMP by ticked XX% pretty certainly I of down power put would, that for we outage assets impact guidance. the they and think we Cedar had we've but crackers had feel at Bayou, fourth given influenced

Paul Sankey

Great. could conference just then on is effect exceeded a going add little to at follow bit expectations to up there. and transitory that about little additionally that market what's gasoline, bit rising price the in And environment you moment like whether on already talk looks the very if gasoline Thanks. what on weak which discuss here our markets a again the is was anything to generally that's

Greg Garland

a to we of inventories on high are in to Europe refining they New definitely weakest pressure train change cuts crack you simple Atlantic especially New basin a Europe. into in is $X at the VP norms, as seasonality even negative year the a what split seeing side the relative look is in $XX Harbor are two barrel what a pool, more factor in the blending think are that's run York the Atlantic change that's distillate margins seasonal see high, starting we're I gasoline gasoline are Harbor big strain barrel in years we're economic Yes, the that York at so and seeing seven coming European

to a in imports We only see are the earlier day and were XXX,XXX U.S. they slow barrels this XXX,XXX XXX,XXX starting barrels day. gasoline year about they barrels fall a day into and a recently running

demand on year, is a gasoline up strong attractive about well-positioned side to complexity refining competitive fuel October strong X from as taxes addition were with the the and South expect for XXXX barrels at operating distillate day In and think barrels of for XX runs you high with in you higher runs distillate IMO complexity, this to million look cost improving, that when America we you really environment that discounts, capacity international the benefit into runs are equation we to is here refining. enjoy complexity but cracks. exports day look a a Low relative other the side U.S. so encouraging and over the crude low XXX,XXX markets, high diesel lower and XXXX,

Paul Sankey

Thanks her think yourself that Correct, was guys. year extremely made? you Jeff, helpful should maybe that about

Greg Garland

Thanks, Paul.

Operator

from Merrill of Doug Bank America go Lynch. Please ahead. Leggate

Your open. line is

Doug Leggate

There the or higher U.S. if in gasoline yields. is with other into us the Paul combination Actually next and going gasoline in can just action along I'm higher to Coast, runs see refiners, lighter you. thoughts Gulf to do IMO XXXX gasoline to my as words the your the up of you improving IMO to going seems light and Thanks. to out an offer Gray strength in on for if the capacity probably and XXXX another it's on be do about Jeff was European tossed when happen going Oak been waiting the think I in guess. runs, threat but pipe I it given in expanding was just my may to an curious world questions of you I'm year runs, how one question market for export sweet you crude so hold situations

Kevin Mitchell

winter through be going challenged I to Well, think gasoline the months. market's the

the we impact years reducing next as in in we distillate looking the U.S. be that component added FCC confidence yields so maximize for yields of focused It's opposed that, of runs we're the IMO into is blending to improve shift as I shifting to could yield more diesel possible think feedstock emphasizing have distillate going yields coming feedstock and around longer a have with Marine as an at into a and to really that's yield which IMO as yields tries year approaches product good FCC with gasoline and term months. the maximizing could well in distillate event to shifting there's on year number certainly that effort gasoline. those next summer a

how this, going of think we soft gasoline's to probably but that's out winter get through I months. the be

Doug Leggate

we to one is it's want going weakness, undervalued of publish your is Greg, every that what only it I the of seasonality to my rest the it. sort the but follow but very am agree for there to dividend number I so speak it. and and never point we you're our take the with all the now and be number, you because the hear and weakness immune the specific is, couple and have kind appreciate exposed Greg clearly guess you're going we're of between us market buyback you your I I up rest to offline, that I tell the not unfortunately this to but the ask and quarters is split stock the

program portfolio your this ratable bit you selling terms you than to more cut the buyback question the there. Thanks. cash, diversified leave dividend are in buybacks, your it my are your a of is you of towards to environment when swing in So a a wouldn't back I'll and are buybacks, and buyback and committed cut benefit more you of execute why

Greg Garland

never dividend… we've so the Well, cutting contemplated

Doug Leggate

"Cut," like I what no, dividends When of I mean in in mean cuts choice split. which phrase, buybacks no, of versus is No, way the of that I -- favor favor say, sorry.

Greg Garland

$X billion kind in got think $X at we the guidance every pretty of we guidance look an good to I repurchase It did, year me, February years consistently of but a forward, opportunity to Look, share going quarter. couple guided of still had this is I big definition to was what think Berkshire, a Obviously Scottish take this stock with of years. of price okay. swing we past we've billion

Doug, and we I of into stock We kind I the so we to the XXXX give consistent out that of lot you'd two billion buy, and but normally every buying have be think quarter think look at we that share do a will purchases been as price every XXXX that grid range will more quarter that for $X fell would also. that $X share guidance us to grid, reset in and billion the want weeks we've past a

Doug Leggate

sort that Greg. well as desirability Thanks a for Yes, looking was lot I I of as looking guess for.

Operator

Prashant Rao from Citigroup. Please ahead. go

open. Your line is

Prashant Rao

flows question. I particular the on in cash to cash circle flow taking from operations. for wanted back Thanks

that ups say saw to run step you're want just a that but and an sort CSSP the a going where model we further as anything about, just any sense up much chemical. equity of a to to affiliate any GFFO, to to material of that of queue coming needs we get front more don't distributions forward on offset maybe could going being of sense and on of become call, of think CapEx cash One part how on move on to could queue get be I flows cadence wanted sort in midstream and the in

Kevin Mitchell

is the, In operating capital the entities. because the at that midstream, Kevin. what back little Yes, the operating capital flow and are the is this the affiliates or their in level. contributions at level mean at most CPChem, equity is distributing, flows affiliate, drives they're equity way of spending the to all funded a by of the I less of most affiliates cash those expansion the undertaking the capital JB fundamentally those not within from being case then growth different bit in distributions less that cash that WRB the it's

the more to complete all with environment year the WRB partnership WRB quite been sitting benefited will in significantly essentially incentive, that's this very owner off capital over come so is most about fund just distribute have is it coming have So it a we're the so so of a bit third think now its far program million coming neither the of out over behind no on There's operations, lower third and so from distributions which seen us sit in the quarter, refineries and function that's spending you've does and $XXX been. distributions this well it's overall will differential do so the billion the this distribution crude than of than as with you spend that year-to-date both has of big back well $X needs WRB quarter part of cash. some robust had so a capital through incentivized year just to and has CPChem, so it cash a project cash ongoing the is

be million $XXX with became healthy we've to and $XXX distributions that of outlook for pretty distribution quarter, the to And distributions. coming position million had quarter in fourth another through the standpoint. third continue pretty that so they're We healthy in certainly guided the to it's a million perceive $XXX could so done possible from year

Prashant Rao

with that on sort something quarter, we there that's going of? that for to out volatility, next of in we That's I -- you up very breakeven very Okay, you then much. we swing Kevin, end a expect year just the if of that to we that residual detail quick working thank and most reverse capital full or prepared sort this follow-up, and should the apologize saw in if is the helpful quarter, your so should remarks, anything of be mindful

Kevin Mitchell

I close breakeven. with so that a and to amount within hard forecast parts would working high there get year reverse too to are working expect level we the reasonable given that's to No, capital always that is something think precision the It's of moving assumption. much capital full reasonably but

Prashant Rao

the Okay, thanks for very gentlemen. much time

Operator

Paul from Barclays. Please Cheng go ahead.

Your open. line is

Paul Cheng

to capability the medium short Hey, on have first increase is the that guys that do coke, guys. also within on term, increase you any be quick able to the any six the questions, Two needle you months next and production term the capacity? to on have say or seem plan there for so

Jeff Dietert

And highlight important is with capital with most We capital and so it refining businesses you've the cook us the the seen FCC. shows year. highlight segment, segment. portfolio Lake projects. refinery, up our that Charles FCCs -- Refinery now our Bayway we refining River every the the Sweeney all Wood the large Humber within In in projects The and refining

highlighted haven't we capital reasonable that a fact a the large it's that so, one. not And assumption project; there's probably

Paul Cheng

think the going cooking function that oil you you you I cook they me guys is. cooker? a that, you wrong, because that into actually need it maybe specially little Right, the can of areas coke choose So if designed that Thank don't be for to is of Jeff. and better? get what these needle a into I But type maybe that, but think understand bit I help

Jeff Dietert

needle leading do it process. associated we is a with different production, industry technology coke Well, have

And in so regard. unique are that we very

Operator

with Capital RBC Brad line your Heffern is Markets. go Please open. ahead,

Brad Heffern

can Coast a on? more project, timeline little Hey, progressing a talking candid fighting there potentially everyone. I to when a and second give chemicals, you were U.S. it guys this wondering, back so Gulf could morning, of you sense Switching quarter the good was see a about

Greg Garland

to think early required decision with we've Well, FID are But that progressing 'XX guided a of 'XX, XX that joint that think late I our facility. partner, timing I type designed initial still early late around the location, for or permits XXXX around kind site of as of kind we a FID, it's in facility. work terms that the

Brad Heffern

just what in X Do that in wondering guys rerouted see is capacity or it tanks or X, Appalachia Bellevue. about was then, getting guess produced the could the side, get you forward Mt. to production the you on or next does I in grade frac do And playing sort when an Okay, is U.S. months how got you Conway there NGL incremental out? frac see the of Thanks. I over it. the capacity for talk if path

Greg Garland

going ship maintained the forward, you see we'll barrels. how of at high fractionate to to probably we interesting be people it's heavier attempt rejection Yes, see gas and levels the as to move plants to

stay So rejection high. I think that relatively will

capacity in because this the think likely fractionator drilling as is will go capacity activities Permian. and additional as we continue I to grow forward, pipeline additional to continuing encourage NGL supply we

XXX a month and a drilling month. only wells XXX wells completing are We

once every duck accelerate the month, completions online, will the comes the infrastructure infrastructure. those by fill So is and XXX then inventory growing in

more add supply then then So I infrastructure, infrastructure supply. to think add we're going add add

that kind in We of are cycle.

Brad Heffern

Okay. Appreciate thought. the Thanks.

Operator

Tudor, Matthew Pickering, Blair from ahead. Please go Holt.

Your line is open.

Matthew Blair

was of with at just morning, good be chem's and timing cracker as also as a capacity units? brand-new that the comments intrigued of sense here PE I by general in about talking some existing give occur Could your the you well bottleneck unit. the everyone. in Hey, you'd of de-bottlenecks the these

Greg Garland

cracker. think say to we room have across through assets de-bottleneck But I additional answer probably have the the some opportunities The some and the de-bottlenecking. is of we would do I to platform, older new we yes,

assets. to on not to where a value So of opportunities asset But I portfolio the are CPChem volumes going today we kind terms in more that. some out those get the give existing think of internal that has number of of great can a they portfolio

the know, you typically projects prosecute we bottlenecks As those. portfolio, will so do are easiest the the returning ones to in highest

Matthew Blair

then going of the forward, over to And to railcars? this and what and in any, lack a right. do just quarter expect XXXJ Right, Bayway the your refining, were would Bakken if how rail you you de-bottleneck potentially ramp volumes see is

Greg Garland

Coast the as an East the rail on benefit from volumes Bakken shipper West We and both Coast. the to owner differentials do Yes, pipeline. and we blocking

specific We are up acceleration but we barrels haven't oil are XX,XXX an XXX,XXX you day the being bottleneck year-on-year, and we The but in over right Bakken talk there. barrels it's specifically, procurement feedstock accelerating a disclosed productions seeing I really it's rail compliant actually refinery tight, don't think growth about the new are those largely the logistics a with a are up full, pipelines quarter-on-quarter. day railcars

December in wide. later maintenance this but differentials refining heavy we the in some remain had November Bakken up lead have We into will do expect as we to mid-continent quarter get which and

Matthew Blair

you. Thank

Greg Garland

Okay.

Operator

open. Manav is Please your ahead, line Gupta from Suisse. go Credit

Manav Gupta

PSX a PSX ignoring resin look investing at Sweeney the of open upgrade guys, administration, I the of projects. resin would right or location, next one it's any leaders cooking no of John's to mean, destruction be the Refinery chance delay, is in IMO indicating in capacity Creek. global to Hi and you so given

on a so it? good Coker, can there, WCS you lot source be your a so So build more this wanted could views just a to candidate

Greg Garland

significant positioned significant IMO capacity, investments and really future we number this for is Yes, and portfolio, portfolio previous yields leader well are the investment are our to relative in achieve requirements environment. a higher through our capacity without so really positioned so we peers and with the well our we diesel of yes coking global hydro treating capital

Manav Gupta

follow-up crew a DCS, help uptake fights actually And in Okay. that you the increase on big the did quick the Permian up? that Delta an Mid-con, drive

Greg Garland

Permian Gulf volume mid-continent into refinery mortar PSX well So the U.S. the well. discounts from and on as and refineries barrels benefits Coast transporting as as

been barrels facility. benefited grey from pipeline ownership also a XXX,XXX PSXP the Texas gateway We the and day and South the

So quarter. Permian dish the the beneficiaries those the wide of were primary during

Kevin Mitchell

first. our ran also Maybe

quarter out the also Permian or our first to. We to ran train this around this of year around

Greg Garland

Beaumont.

Jeff Dietert

Beaumont.

Kevin Mitchell

Yes.

Greg Garland

doing out we're everything I opportunities. can we these of the value around to portfolio think create So,

Manav Gupta

so Thank you, guys. Thank you much.

Greg Garland

Okay.

Operator

from go ahead. Brothers. Please Shere Craig Tuohy

Your line is open.

Craig Shere

Good afternoon.

Greg Garland

afternoon. Good

Craig Shere

to consolidating to or either PSX a point, apart midstream Roger's growth down opposite the NLP gone terms kind the worrying space, approach are the of on there seems Picking this to think still of assets a the and kind envision one have it how IDRs of it have substantial NLP around industry at extent in peers lot Summit up other direction or having midstream? you which and or major and back an they bit, at the their question the longer-term you about PSXP, about this from the do then the structure is existing midstream still parent, Summit C-Corp putting PSXP just comfortable all collapsing of have course pronged just kind simplification a all dual of you of projects

Greg Garland

grown at opportunities that we has investable probably longtime to our we that don't XXX do it it the right, need PSXP such PSX EBIT be are help of just think array zero executed making we need resides are tell XXXX. would we be any although And will have dollars are we many in a a do that all almost budget to about million the from you for a times, that's over at execute business suspect a comfort I our qualifying over there balancing million that, have we a think to to it all, to mid-stream, get will grow projects we've afternoon, PSXP XXX are we level. we indeed, $XXX could say capital have today. or business, drops, comfortable very going strong need and investments them, portfolio level, said a is gives billion this of you those I We of XXX this just to with first capability vehicle so midstream structure, year. the be to in before budget organic the EBITDA comfortable and finding we we but us PSXP I a see that And MOP Well, we the the PSXP to to

So you evolving. can that is the see strategy

in do with And grow needed our we it. we it's helping to terms what of comfortable business are so, midstream doing us and to

Craig Shere

my Fair the on market little question, all LPG you enough. second And for is opportunities? bit how export looking incremental a can update contracting

Greg Garland

a would say we've which XXX,XXX I day barrels running that, kind XXX,XXX demonstrated design we of so terminal our day XXX,XXX export Well, are was a barrels a about day. barrels

out coming NGLs going all us, on market Ford absorb grow and indeed, the LPG's to U.S. man the constructive to need for because export growth to that. at the at to we're U.S. Permian, view, we Our the export going not other when the basins, enough of LPG the are to just look we and fast clear Eagle markets

there. comfortable are see we with think I growth the So we profile out

around a questions seeing the pivoting and markets think today. the tariffs doing, people what what we I lot are tariffs they are of tariffs have as around of

certainly that the So tariff I basis. and a medium think will cargo And the to our buyers view shipping but working maybe then point now Chinese think in longer China markets don't the we long-term we I that a so necessarily at just we aren't today. for are have time to Gulf this on about in solve concerned trade term issue,

still given day issue profile, we barrels our think XXX,XXX is asset these around are, U.S. the we doc XX%. I that think the XXX,XXX we So that where see our of at utilizations fees from view are kind is like in still XX%, dock underperforming the the even a expectations to

But to opportunity I a move don't say, improving. we improve. the 'XX, interested $X.XX earn taking fees think see into utilizations would will we contract be as today, think market in this at we long-term in those We Let's

Kevin Mitchell

growth well From residential and internationally, as for we especially continuing commercial as side domain chemical the perspective, LPGs in a see feedstocks. in for Asia,

Craig Shere

a what return market, would you And to summary, contracting think economic by just in could second the 'XX? multi-year begin half

Greg Garland

start that to capability up need eventually export contracting. existing there the which moves of to will LPG utilization will from over those the we the And XXs out expect be additional opportunity push margins widen across for and margins a the as capacity those some offer will Yes, XX%, for dock.

Operator

Sighinolfi Jefferies. go Please Chris ahead. from

Your line is open.

Christopher Sighinolfi

this guys. afternoon. Thanks Hi, added color for the

Greg Garland

thanks. Yes,

Christopher Sighinolfi

just circle really sales color it back I on the was CPChem, to the helpful third want in quickly on inventory quarter.

is should profile, remains think be up inventory the implicitly, to I we what how some talked having encountered. shape with had of how get mentioned, power to But guess liquidated, future how XQ? look sales that that that periods we and related that complications of shape, I'm the I and about, as you guess, much normalized, excess regard you the curious And asking built you outages as and about as inventories, into might what might I

Greg Garland

I part think in part, not the from an is industry ethylene the inventory derivative of perspective, excess the chain. really

Christopher Sighinolfi

Okay.

Greg Garland

look production line. side adjustments to back when making mean, ethylene margin. into ethylene full we people really the the inventories it's at, at look you the bring on So chain I And

I shifts comeback ethylene of ethylene as full they of inventories kind of into they, the seen But, some because chain. a margin that's And perspective. that of really integrated back the perspective, so capture normal, what that couple that they're to through from shifted more agnostic, I kind the from value derivatives side. that over of CPChem the value you've last quarters. the mean, And suspect totally being margins But into is the

so, And and and part is capital around just inventory capital. managing working discipline tackling blocking good of

at, the look continues to the look So not, Middle inventory is the is system. And, clearing to East, be up at running, what course, in fundamentally it's demand I this us be inventory we appears strong seem docks, that that, stacking to good think kind and the of it's U.S. we fundamentally. of a at asset buyer through so very

business. from I are move is demand in just that increasing a -- which fundamental constructive we we balance And forward rates, XXXX So supply outlook operating as we think in I see and towards issue, in our constructive margin 'XX.

of think quarter. and specific around I so, comments really fourth inventory And around that are the the kind third

to in into of ethylene I you as terms side. get clear 'XX, out the start think, those slide

Christopher Sighinolfi

PSXP influencing at it I around questions, XXX Two Okay, on upside or that's is volumes One run as public. on want I really the just contact real don't is said, the it's any it to as early of earlier comments like? additional superior capital this budgeting from point something guess helpful. quickly, initially then 'XX what Gray just Oak. there and from Enbridge I'm targeted is contract gears indication, second XXX and an with will your you discussions is switching the or regarding do the guess, provided based just option. what else XQ to board entering I I is looks that capacity about, purely asking with was

Greg Garland

barrels they a uplift day. there're parties multiple XXX,XXX would Yes, say involved so to and I

So regardless. the line XX-inch line a we building are

to in and option farm to it an but option commitments I so, expires be those nice in And that it has certainly come able to up Enbridge think. November, was

a fourth by I I have partner, visibility if and They think great keep are quarter exercise so, hope don't they are And or the say option their it's great willing you'll share. to I where they to they not. we that decide project. do.

some that. you'll more insight have into So

options would. will people was because is XX.XX% know, going your Gray all I bet I people fact, to think our come be I November. do to going In to the to that If have come I other in options think by their exercise the ownership money to so have line, into the it, Oak on to I

Christopher Sighinolfi

Thanks.

Jeff Dietert

for all Thank you right, -- you XX. for your interest interest in Phillips thank in your

If please or have additional Thank you questions, me. call Rosie you.

Operator

you. Thank today's this conference. Ladies and concludes gentlemen,

You disconnect. may now

Phillips 66 (PSX) 26 Oct 182018 Q3 Earnings call transcript