PSX - Earnings call transcript Q3 2021

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Operator

Welcome to the third quarter 2021, Phillips 66 Earnings Conference Call. My name is Sia, 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 -- 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,

Jeffrey Dietert

Good Phillips Greg and Kevin refining. on CEO. morning, Brian welcome Lashier Mitchell, today's call. earnings Mark Bob call Participants EVP conference Mandell, and will Herman, and EVP include President Garland, CFO, website, and XX, Chairman financial Relations CEO. third EVP Today's be found can operating and And section the X safe marketing of material contains commercial. supplemental Tim harbor presentation Roberts, along Phillips Slide information. statement. XX the and EVP Investor with midstream. our on quarter

We included may making over statements differ here, in our as and results With that presentation results today's will from actual be Factors well I call comments. as during Q&A the today's filings. will turn materially could to SEC Actual are forward-looking that, differ session. Greg. cause our to

Greg Garland

Okay. adjusted and good We week, XX Thanks, today. billion, grade held all everyone. third and us this capital pre credit to morning, of approximately debt, year. units agreement spending made flow exceeded the to quarter, remain publicly which debt thank of joining for X.X meaningfully seeing supporting investment earnings on We're allocation. our acquire And discipline billion you strong Jeff. Balance operating of cash reducing and so signs Good capital by $XX we cash-generations our of we to dividends to We're $X.X had In our $X an of far generated billion. shareholders Sheet, level We've -pandemic progress Phillips billion path $X.XX committed announced growing the debt share. the as returned $XXX a ratings. million Partners. repayment, to Earlier in this sustainable October, the returned improvement. believe we to We on balance our during a dividend. strengthening and we Since increased we've quarter. we secure, quarterly Company, dividend through competitive, dividends in the shareholders We and per formed

greater corporate equity unit Phillips transaction our Your shareholders XX simplifies holders. drive Phillips partners structure positions and us value for to and XX

our wide We believe continue to began We're and year that these initiated process next across to for updating operations an forward significantly on early the necessary we long-term emissions that to position we We the advance our competitiveness. from portfolio. in transformation our announced reduce identify cost carbon Recently, XXXX. effort efforts strengthening Company recently progress. is in targets our of opportunities gas reductions scoping We by you greenhouse reduce XXXX. look costs the intensity to to

our demonstrate over Our turn meeting to targets some the additional commitment Mark With I'll future. to call needs to sustainability and in the to provide that, and comments. energy world's today the

Mark Lashier

complete X/X business generation. X a earnings earnings in quarter cash approximately we Thanks, reported had Polyolefins improvement and about Greg. we quarter the In the Sweeny saw and advance significant meaningful Olefins capital and third Good Frac its in realized quarter, Midstream, of best the quarterly already In in ever. XX% the Midstream and refining, the with margins. and hub specialties, second and continue spent. at record we marketing earnings improvement captured to In construction morning. had strong chemicals,

and facilities Pipeline. CP Qatar. construction to of on we in partners petrochemical Additionally, recently Laffan Phillips of XX development U.S. X Ras the completed CXG world-scale pursue Chem Coast, continues Gulf

remain and a is end hexene. business its Chem unit with from Hurricane of - this shutdown sustained world-scale produce Ida Olefins expanding will In X Alliance year. the through significant impacts addition, Refineries CP The to

continue We strategic the for to options refinery. assess future

transportation Upon fuels. diesel permitting we're over produced lower-carbon will in conversion reduce sites converting of XX,XXX early California The sell branded retail per expected XXX Rodeo is subject production facility. XXXX, capacity. In from fuel progress Rodeo to approvals. and day in renewable barrels renewable continue to have We which completion, completed to and marketing, Rodeo will produce renewed, by emissions facility to the be

Our capture, hydrogen. our investment we're value recent fuels, presence our carbon emerging in the and is opportunities in Novonix, advancing batteries, With in energy renewable battery chain. expanding group

Additionally, allocation returns. with Power excited returns. in green We'll for we that to advance future. lower commitment with and to disciplined hydrogen identify this recently our the our and combined announced opportunities. We're transition, generate collaboration the well-positioned participation energy and strong continue initiatives strong on to dynamic focus capital We're Plug carbon about

the Now, turn to financial over call to Kevin results. I'll review the

Kevin Mitchell

four, summarize billion, Starting which an items We Alliance amounted on results. with of the loss was reported quarter impairment third during $XXX Thank overview earnings after-tax $X of Special comprised quarter the largely we Refinery. of to you, everyone. an our of Hello, an Slide Mark. million.

quarter cash items, of cash flow from $XXX dividends. we billion, spending $X.X distributions special $XXX of earnings million. for the share. adjusted investment operating growth Excluding $XXX $X.X $X.XX a or million. including paid We Capital was million was equity per and $XXX million, We $XXX had in of billion working for capital Novonix. of generated benefit project, million including million affiliates a $XXX in

and of Slide shows This substantial improvement and quarter $X.X refining slide continued from billion Midstream, from X. second the to contributions to the Marketing quarter. change and results third Moving Specialties. An in with Chemicals adjusted in the strong increase a

X effective income adjusted our Slide rate was tax XX%. results. shows midstream Our

earnings $XXX higher million, income $XX adjusted XX% -tax in unrealized previous well other million contributed the The Bakken million the quarter Third Gray pre a Novonix, compared driven was prior million in was Transportation was quarter. from adjusted second adjusted $XXX related $XX $XXX Oak quarter. we million gain $XXX increase from the million, increase In $XXX Novonix. as of with September, income acquired to quarter. due primarily impacts. million, to -tax a pre the pre interest investment increase inventory and NGL from as The income up pipelines. an and by of equity -tax was

midstream Complex, XXX thousand end due quarter. will to reporting up of Sweeny at adjusted investment barrels in previous be million -tax income Fractionation DCP impacts. million, their in and hedging cargoes record, day per pre loaded margins improved facility, mainly from Export the Freeport Our $XX quarter, LPG mark-to-market was the period. the the averaged of each $XX third XX

sales million We and income another previous down on to in with income from strong from Adjusted Slide quarter higher volumes quarter million. record the the driven million polyethylene million tight margins, had began was which income Global SA&S Turning by O&P demand, offset costs. adjusted partially decreased by of $XX -tax to million to was higher quarter, delivered utility to The X. driven $XXX Olefins for XXX% market primarily $XX utilization continued chemicals by chemicals pre second the compared pre the quarter. following adjusted conditions. pre second -tax strong quarter. of $XXX due lower normalize for $XX increase -tax Polyolefins

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

from Slide higher differentials. shutdown from on XXX% crack quarter million, at on the all of adjusted the $XXX to lowering pre reflects was primarily driven barrel, advance was margins realized regions. third XX% million, second the with was quarter. higher due costs Refinery, income quarter, refining Turning XXth per -tax Realized safely $XX Pre second refining $XXX of $XXX by by in market Hurricane to -tax costs, to improved increased margins eight, turnaround Alliance the which spreads, XX%, quarter $X.XX across million an improvement utilization product downtime down August Crude prior million compared quarter. Lower in and in Ida. the were utilization for

barrel the improved supported an in market to XX%. FCC by of the was quarter per Market XX% previous per third quarter clean Market yield up last is The by refineries. capture X% operations. X:X:X compared was configuration $X.XX third XX%. covers in and X of the per margin quarter, resulted Realized from second product The crack $XX.XX quarter $XX.XX for in capture impacted capture quarter. market barrel was our the capture. overall market barrel was Slide

refineries more indicator. weighted than Our market distillate heavily towards are production the

crack per from the the barrel as in the per $X.XX barrel. strengthened. increased $X.XX prices quarter from of per distillate products per previous barrel $X.XX barrel During of quarter improved $X.XX improved. the gasoline crack secondary NGL Losses

from Our feedstock per declined the per quarter. of $X.XX by barrel $X.XX prior advantage barrel

The $X.XX lean realized margins inventory product realizations, and other This impacts. freight barrel. s, RIN includes per costs, category by category reduced

marketing quarter. XX, was adjusted income Slide million -tax quarter the on in specialties $XXX to pre prior third million and compared Moving with $XXX

by strong continued other million from timing due environmental in employee-related realized balance. the $XXX Refined partially quarter. product from the prior generated segment margins costs primarily volumes XX We billion. from million prior Specialties third billion net quarter, for thousand third XX, $X.X $XX $XX oil had exports $XX and to Cash adjusted and change a to income interest restrictions. offset pre quarter business cash with demand the quarter. base barrels expenses, XXX $X.X the the international for -tax of up and expense. operations related easing by the This other shows costs, million, Slide On the was per largely primarily and and marketing were Slide so to started margins. lower prior of quarter day. higher the improved -tax higher quarter adjusted the was of Marketing of an pre products. in due corporate improvement in of cash COVID-XX driven million million the $XX margins is due to Our increasing quarter from increased this

our cash million was of Excluding the from and a $XXX of covered million capital $XXX working debt million, $X.X dividend, operations $XXX of capital $XXX which spend, repayment. million for benefit billion, early

the $X.X Our financial was This ending of my cash balance results. concludes review operating and billion.

we mid-XXs. O utilization be the P worldwide outlook quarter items. Next, refining, to I the fourth we expect In utilization rate expect few chemicals the global in be will to a rate the in cover crude fourth-quarter In low-XXs. and

We to quarter. remain for full the expect shutdown Refinery the Alliance

expenses costs come corporate million. and expect quarter fourth $XXX pretax We $XXX pretax. and $XXX million, turnaround between other between We and in to be fourth-quarter anticipate $XXX to

open will questions. for the we line Now

Operator

Thank you.

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

for a ahead Please call participants, the your go question. open limit will courtesy please follow-up. and a question from Your Read Wells one first questions, question to we Instructions] with with As [Operator to yourself Roger come as all Fargo.

Roger Read

Good morning.

Greg Garland

Morning, Roger.

Kevin Mitchell

morning. Good

Roger Read

at but it take least the I'm PSXP. it the buy on level, curious, a the questions mean, I So is gotten help we've change, of at forward. high huge and why I reports just one shot, Company let's how going to first maybe you then guess how might I think kind now? mean I in the one us just as of that be should a decision don't

Greg Garland

take I'll stab Kevin, that, Mark, Well, and Okay. a help. then can at Tim

this First business. I of roll growing can acknowledge that, in think we all, all our probably, Midstream

into a perspective, sure grow business that -- of provide clear job ownership low if provide a is [Indiscernible] half Midstream. of more will look that market to pre so drop refuel then generated the we've helping And it an the at of you at from than AMMO. X% us point capital build also about parts of in the $XXX institutional that then really and a cost MLP in is Midstream. it applies XXs. from seen our And The -XXXX, the this PSXP, - trading say the doesn't back some of our time. [Indiscernible] substantial XXs nice If [Indiscernible]. pre sight million Midstream EBITDA, so basis. valuation Did The not I today. doesn't attractive just a on Consider really line from yield, business I'm

multiple potential essentially think a -- the them Midstream. we really a created then, able a up consolidation We're high-quality And into trade XX multiple know of We from nine you and we about future are about, as times think for as sum-of-the-parts basis. ish acquire Midstream and in to these well. - think assets. them Midstream So I it

up assets. gives think to I with of rolling the degrees value more those freedom us PSXP create

if that, able want those about a onto you and a to bifurcating by pipelines a future, certainly those, and MLP to discrete NGL diversity we'll assets as and terminals and take do are strength, that think that. assets Kevin an apart crude For products you long of think pipelines time the the we you lot be Mark, to welcome of add oil was or in the

Kevin Mitchell

in all reflected you've cutback our down third-party around results a today covered the Anyway, consolidated know, in Follow-up non-controlling the it Midstream have for that's as basis, the segment ownership. But of entity, Midstream our results. fully up. on MLP. No, see fully below all we go-forward what you as public in interest reflects I a think reporting you

to non-controlling want you is I so interest that closed, And results. this from transaction -- eliminate deduct bottom our once line will

really how So it's impact that's the going to reporting.

Roger Read

about he's it and if some for for I next Rodeo of say the don't pushback, but plug-in then Thanks let's what's think diesel if I've Okay. know conversion Jeff issues And been Bob that. going I there. regulatory on my call some on, renewable -- question of and I the but is with

we clarity in could the back, terms a And the so that's in or of depiction. hoping press seen an whether of of little being get scaled not size we've or maybe the I was on things the some accurate project

Mark Lashier

Thanks Yeah. Roger. question, that Okay. for

permit the a I that's think, so big County, to the path get the on difficult to you Costa whole in -- build there's critical most and land-use -- in a but something, project path one in of is for lots apply this is permits Contra the opportunity California, through.

about use was comment well. middle and say The working announced impact the been I the of going that permit, really part land it environmental since we that's for October. project released it's we've So public statement would of overall obtaining

comment a period. that's XX-day So

are to just put had you was to that project So project, it emissions you do greenhouse sign that's carbon We identify around, footprint to take commission and It us all that, environmental there that reduce gas that ground reduce good impact cost really reduce down in taken is This convert. the on very in the the equipment uses step that identified, there. where law, the We project, from the the as can with environmental on the the agreed of go smaller actually us. make reduction to they by we of that saw future the makes no that's shutting a efficient to environmental could everything the the and the anyone the make has it's lower impact. project. smaller they advocating every to that's to or the being project project a the the when alternatives the to fact built reflected opportunity that by impact sense, there the emissions for staff left. is that advocate one planning they plant, because only of We that took plant, will thing and that, it's to And means and as, that's was, smaller.

in will comment of start comments It'll mid-December. the in those, the we're take point we'll anticipate to period thing we'll the XQ. public close So some releasing middle work will frees this to At [Indiscernible] start And respond late to then permitted those. and to county through us, and sometime the quarter those, way the its probably that And and to be us responsive still we getting period go up construction.

Roger Read

glad Very government you're to I clear that you. and did for right on us direction. I'm know the because ease, but you still Thank good don't speak

Mark Lashier

got You it.

Operator

Neil will go question Please Sachs. ahead. come next from The with Mehta Goldman

Neil Mehta

team get capital The first Greg, question I XX and is we guess on typically that spending, the update.

next the in of spend over but weeks, been renewable. Here couple outside mode you've of relative maintenance

therefore, close thinking we to sustaining should business, and toggling the on or think you still how the into how, assume about the Just growth should some are business? capex? cadence levels the Is focus we deleveraging about of capex

Greg Garland

Well, of guidance of year essentially I'd renewed next up over project say. Yeah. period billion for we've We've get build less spend all front quarters Rodeo no going the we last so fits there's us come next here I that finish the CXG, within to But think XXXX. started finished the Midstream. year, to [Indiscernible] on $X and that year. anxious have big in Midstream, or given big up into we're couple will consistently of in this of in Obviously, we've

actually looking own for the at that's, board numbers timeframe. my in XXXX. the go numbers, December budget we're our to of approval capital that you But that's If for in

this probably I earnings you our certainly towards improving cash-generation mid-cycle can think I more results moving is as optimistic we're see from the think quarter, that that, profile we're more business. refining today on a of

really Midstream strong Our really has Kansas marketing this this has year. been really really, whole been has performing specialties strong year. strong year. this been

glide we get far with mentioned we And clearly, increased We debt. then opening down billion cash. pay -pandemic get the paid in but to around mid-cycle, What billion $XX that slope refining down this of year they the do comments, to more on something more optionality the want level. we've so a So that. to as cash, to we're pre a approaching as we back back

going And on a glide dividend. goes we when in. can we're as capital the back slope a to to us repurchases I next dollar start reduction, to start then for dollar So That we that. think get our thinking think allocation. to sustaining where about, we'll and first working about always hopefully point do to then is share But rule mileposts we capital go debt

So to add that. Kevin, anything you if want to

Kevin Mitchell

all. on No, and we'll reduction year, are the of of I that think I another in another the the debt would probably the you reduction, billion covered now in doing it year. get end anticipating between of end the before say we order $X.X

Neil Mehta

could that's widens and things Do that think out about refining participants Thanks, on this The environment, surprised translate I Could as now. production QX. WTI start seen follow-up back? you the numbers? of strong the refining how between into Can moment do tight distillate then widen going you U.S. set comes about little talk WCS if refining. Greg results as momentum of quarter. into is structural? talk the is seeing Or one take just bit you're just differentials, We've matters that you a Brent has which market a perform for you to how this And the to and think a spread Mid-Con Kevin. think

Greg Garland

I'll at step take a that.

setting well, think we market in gasoline know, in now, distillate up the So we're distillate you forward U.S. as market too, over Chicago, but continue our the well winter. we're better for every will versus is as through the gasoline up, going kit heavy setting optimistic and

helped are got issues in Coast, think there that a happy the -- barrels, the we're going where also now. seen WCS the barrels dips past it why dip were Gulf is we problems but You've the will weekend off. come diffs Canada, to Canadian this which dip. reasons the few weaken a some and We a pipeline Mid-Con bit just strengthen weaken finding we And forward, WCS also followed. in dip

In to terms TI needs seen, of relatively s, the tight Brent as Brent you've TI stay

Kevin Mitchell

keep the crude we that the to inventory. to differential. to - Brent WTI When need tighten and U.S. Cushing that in the best is do happens, way

it think to the stay we going will $X So range in $X forward.

by up the setting and we think XXXX. good So, market's and large certainly QX is a for good a

Greg Garland

think be I discount, to from. that into sour should I result barrels those (ph) kit would is market, OPEC which add medium puts sour benefits disproportionately the a as barrels and wider heavy are going are heavy more and in

Operator

is with Theresa The from next Barclays. Please question ahead. Chen go

Theresa Chen

Hi, thank you taking my for questions.

on just PSXP the itself. First, transaction

to tax that expectation the PSX, be take into Just PSXP be net an for curiosity, taking speaking, the MLP PSXP what basis. to generally and that have of in more account step-up of effect post will Midstream out just all be will a And tax fact you electing of what tax, earnings subject once do rolling? will will 's step-up your

Kevin Mitchell

it's Yes, Kevin. Theresa,

tax get a benefit in which that depreciation basis So step-up be to will PSX, actually for tax on additional also. we'll purposes, bonus taking in from depreciation. We result

it year. following reduced XXXX paid. will And of cash -- million then million And of about the so $XXX think taxes cash $XXX about as in the be another net effect

They're in on the the it's we a the standpoint, $XXX cash aggregate, excluding recognize what Phillips XX. ongoing step-up tax to basis, primary So an going the about that, a be benefit that on becomes basis, From tax to and formerly as from of is -- so today will million impact us, that become impact in be those units -- on we formerly earnings owned -- that public. the shown our that to earnings. -- those from is taxed get the the on by non-controlling taxable we'll the interest,

Theresa Chen

evolving as talk energy marketing answer. the both near-term your benefiting costs outlook on continues the if detailed that rebound about or ease, well demand you could refining for front. and European to see U.S. restrictions impact as U.S. for in water but hydrocrackers you not mobility you do Maybe this your as Clearly your the but Thank and [Indiscernible] clear assets, also it does place cost How the that specifically. read finish to root assets, Gulf had for the European situation won products Coast only at how assets for on and export? a

Greg Garland

on And on start the in to recent. can and assets Bob ahead the go jump refining marketing assets.

if part you In marketing, in quarter second was we comments, ever. terms best Europe. why its marketing listened -- continue build to Kevin's the to retail of reason of We've that had had

pumps seeing but that's update percent, for overseas, then, people which And continue demands, building Switzerland well. some increase over to other in opportunities hydrogen the for we the coming As looking looking back demand emerging in in things in XXXX we're energy some as near us some and we're it's and stores about opportunities. put there, in future. re-image been come stores back we're and our to as -- And well. X% We've electric more in over giving

Robert Herman

those have you got generating our have refinery then fleet. side, all refining the and are the the efficient that on got most pretty that add to and a units. cokers Refinery. you And it's X Humber actually gas large and fuel It's the then there to we think cracker we cat fact Yeah, in about

And next does to producer Margins impact, complex a natural lot to the rise, run come day, the by the refinery. third-party see is so at and in online. power not steam Humber think we, have overall end that additional There Refinery of door. refining highest of a We a in cost [Indiscernible] through the operated costs I about purchases gas that's by right? but the cost or Europe, the

floats and Humber. all over we've [Indiscernible] of with that them I that Humber and -- think will recipient seen boats be And the so everybody at

a but for headwind, large means, a headwind it's not by Humber. So any it's

Greg Garland

much demand day of high are million look impact globally. demand it's the barrels on a as day as as an think and we I perhaps incremental Asia demand, prices New incremental gas a at York a barrel million the to natural $X.X especially

nice as on well. product the increase So side

Theresa Chen

you. Thank

Operator

Gresh JPMorgan, Philip The next from is question please go ahead. with

Philip Gresh

a less than would anything there of working Good deferred in afternoon. relative unique tax is other Cash bit it's around that, earnings, some I to and that? the flow quarter in and the there. that maybe the before strength expected capital, things little there's drove Kevin, have

Kevin Mitchell

an capital, is. and between there that accounts working actually is receivable deferred Phil There offset tax. Yeah,

So tax either there's deferred. a re-classification on receivables, into short-term and

And that the is in the effect, benefit do inflated Statement. benefits what my the cash of, capital pre rest we've the order Cash -working mind, in reducing $X.X you really working math flow. billion like. so -- in -- offset working -- million of Flow looks of the That's working about can at within the capital think capital inventory expense the and the I on and then so Because a about on the real being, $XXX

Philip Gresh

was of area one Got the I at was other much the that provide, bridge sequentially. if part the huge question refining. there. of wondering you you it. the at an improved on sustainability And That's bridges -- the results Central just helpful. I of look XQ If just results, look could Corridor improvement,

Kevin Mitchell

Yeah.

because outage River, one issues for and the hit us about and [Indiscernible] was we that. XQ XQ had think freeze to So to real Wood of significant another at a X impairment That [Indiscernible] turnaround. Ponca the was the down I effects freeze. which so of [Indiscernible] last to weeks

to to RIN other, of, the don't you of on in-flight the in barrels a of So it math, run been also obviously, lot effect, some extent, tends quarter, [Indiscernible] -- the last you combined. other a start lot there's that kind When a when all [Indiscernible] doing

quarter in and ran just would now classify of additive things there So normal. and well, Mid-Con us that in Mid-Con second we as once a hit at lot I the all third aren't our ran quarter, the we in

Greg Garland

market third say, harvest had We no It the would started us quarter. in weather for I which an also, really early atypical, up delays. early set is September, season. the

we about competitors during well, We the had kit. favors quarter also talked we're third us low as issues our and the that distillate WCS Some to steps, And inventories wider. had out. help of our which

So all us helped those in. things

Operator

Bank go The ahead. next please Douglas of with question from is Leggate America,

Douglas Leggate

Hi. low I'm utilization are Good fall I'm I could guidance playing is it's in you but don't I guess this an what denominator? the we're Alliance football we're seeing because for follow-up? curious everybody. the we for Guys, fourth refining on that are on trajectory start if I a the you the specifically where about refining? just this next wonder at of write-down. I And still long morning, point, -- update the And Alliance quarter. point out. including at if so with how recovery here, what you so, see kind steps Maybe could rate at that how for think us utilization give the looking

Robert Herman

let about part your Okay. write-down, I'll the take two Kevin the first so question part, I'll there. talk

anticipate As the we said, we don't with Alliance in running fourth quarter.

have A so little been XX% been utilization basis normal would quarter, the too we if running guiding. So of turnaround activity you in about bit during on can think about heavy. not we a a as, that XQ, would've

in our So of to back system I it. would characterize a condition. running kind We're normal

dictate coming run it's until to we economics incense keep the Alliance But several the assets diffs our not yeah, denominator the coming, then as and run harder. us that heavy we'll of so crude in particularly wider, usually in And the with denominator.

Kevin Mitchell

the on specifically impairment. Doug, Yeah,

So with due the hurricane fair and the a that. us [Indiscernible] by sustained around the value analysis that gave damage hurricane

that today. value mission of we that and in And -tax taken the reflects we result that a have impairment so resulting XXX once of $X.X analysis, that and billion that's carrying about took work as a pre

Douglas Leggate

is else's This much repairs point again operate are to at you things on a see [Indiscernible] Kevin. unlikely or labor [Indiscernible] think? for hands point? want your this to back [Indiscernible] [Indiscernible] hand required at a than restart Is future do don't I it the or in someone to you for diamond going so aligns

Kevin Mitchell

Yeah.

and hit you we have it, I way through particularly how point, significant system that our their the painstakingly working there. think assessment do of on we [Indiscernible] electrical operations continue, been restore

is. outcome or capacity, So Alliance to third call the that again it make the Refinery facility. with as we soon continue a And either as seek will It continue the as some actual to to announced we buyers operate for in refinery we us to continue see as that will parties work then or those before, else. is other to, for too somebody what

Douglas Leggate

I Thank you. the bringing My follow-up, if just talk could coming you meaningful going there us Are I But consolidation of guys, wonder on you numbers through. quick be but not And are so big is targets don't and know fully just leverage the obviously, consolidated here. synergies a number, consent. on. out any of Company the PSXP. don't Thanks. function terribly think back. now my forward it to going incremental one how accounting the for if a targets And could that? you've I or tag combined the that should Again, got about to that wonder have we just on

Kevin Mitchell

How big many associated of small the that? it's in with synergies the the In pretty scheme things. rollout, was terms questions of

already Now costs, on coming corporate sheet. leverage associated balance so that some with fact that's needle PSXP at costs going as a the anything the will standpoint it's that when and to there's look had all results. not the our financial debt consolidated be there's public will but there impact, clearly, there disappear, are modest the go and entity a some MLP levels, that debt step and our of we consolidated and you move all of back From that

anything, the so a go-forward also PSXP leverage was though, of Greg one, cash little because distributed to the really context of all flexibility more excess we about cash, options that and think of how well. in we bit -pandemic consider as as us reduction, well. PSXP have does to think access change Until give debt coverage either [Indiscernible] debt our levels And available to have PSXP, The available that trying objectives. paying for around Distributions we it terms that we included roll-up debt we dying as have [Indiscernible] -- LP that in talked, previously pre becomes debt the us or to excess was the debt cash, the we're as

more So flexibility. a just us give bit

Operator

go from ahead. is Paul question please Cheng next The with Scotia,

Paul Cheng

U.S you don't that consume can give not morning. in I Bob. Hey, us of you in lot lot overall that -- guys. That that gas, but you saying have can Good for Maybe in an a -- natural Europe. is first of you a and know one Humber -- you're the

seeing? that I that every the For bigger own is more your engaged degree, you stations. your on Building change to in energy that. Europe. we're margin defining the basis. are Is and own change more the on the become -- optics it store, barrel per per Any towards that given $X some the and -- and transition and plan it all doing of in dollar intact the capture UV aggressive People your MCF mean, charger owning some a become customers and to

also So is were -- something that replicate, capital-light trying to that you the model? wholesale

Robert Herman

Nothing changed.

Kevin Mitchell

take I'll retail [Indiscernible]. talked plans. Brian about

it gas quarter about provided and about about we million sold, $XX through that million and in goods in you steam net the we third cost then $XXX that $XXX XXX it's million and the purchases. year buy our electricity natural the for into cost comes hydrogen. a in line gas So of fleet. And is other BTU of to pure change as can is primarily about turn think price, in dollar global Of that [Indiscernible] across million, natural every million gas,

without to we there. of do to drive any the and fuel that's We've within the more and and refineries decide what novel day turning refining to on ability cat of have gas. making up So a little a bit really, butane the the cracker severity got also propane lot the of system. Obviously, mitigating steps we'll economics

the sensitivity, into that moving block to So think is $XXX parts a year. way million there's a just X a it lot simplest about is of but

can $XX or a so we that million call quarter. So

Brian Mandell

venture XXXX on retail years dozen less retail in we storage like we City, ago. the stated few Mid-Con. we to export, retail the want Oklahoma the a U.S. you're in Paul, joint be In -- markets that, small retail three side, in business, markets had especially where And opportunities more

in stores the have as wanes So sure Middle of we end to the buy those U.S. stores to we're where about with retail venture XXX will we Particularly, the the find pull-through. going year, to we're have, integrate continuing America, in stores make the refinery complex stores by our in joint gasoline and U.S., demand

for market retail But U.S. small So that in of will portion the pursuing. it's whole still the remain us -- actively remain will a a we're it

Operator

please Credit The ahead. Gupta Suisse, go is from with next Manav question

Manav Gupta

Hi, everybody.

If you NVX us idea some give could deal. of this

come battery in Stepping out? into something. taking did them. it How is You're interest XX%

or to but seen Corp or mean, we I'm know haven't you NVX what that you get any if know there it's you to the Melee I that We you refiner deal what make is they're (ph) do much you Corp, understand before did. between synergies some -- to (ph) trying is, Melee and us trying make won't how tell and we price to I'm

Robert Herman

that. want in that's I'll focus renewables, take we've that X and we that in. Novonix areas capture. hydrogen, identified batteries, renewables strong key to will returns carbon generate I jump to on

the of process technology can low move electric and low they liked it's top manufacturing a technologies us falls carbon They've into went be you very screening team, to supply graphite for employing. battery anode got They're into in and rose And screening the synthetic vehicles and filler. great for as are building where liked the a place feedstock synthetic ways opportunity like And those were produce so those vehicles? the at these used a good generate electric that noted, intensity Novonix value and in got through way this the are carbon the a looking and chain America, we provide graphite. we've get supporting the growth in shorter battery to options can North a we locating chain they go we anodes, electricity, particularly to producers up process, that their to to services -- need in that that to

Brian Mandell

the drive end the anodes batteries. how creation, day, that. better that I how of the, more specialty we special, we make about that, But think we add around might thing a and the and goes maybe coat to other further lot properties that the is, make know into tailor up I the the the at those value and, can right? And value can we properties more the get, chain can so we understand

of And the in to so it what's market. seek ultimate -- driving part customers that's understand this this

drive performance. can we So help

Jeffrey Dietert

I that market. think the and an in And thing facilities there of U.S. local is increased on advantage U.S. add Europe. serving other within is, I'd the content the having focus

Manav Gupta

$X.XX for Jeff one My mid-cycle changed $X.XX in your that. last, of means quick look, fundamentally the standard opinion, pandemic could or per the understand which follow-up we or margins number, the the XX be what Thanks has plastics, whatever over $X.XX is, here but X were demand would off pound. to not chemical for disposable

the outlook understand before next chemical maybe margins capacity your mid-cycle to the X some or X space, expansion. for trying just we the in as So years see

Mark Lashier

the We have may a been, mid-cycle plastics that industry benefited there think during margins I have that pandemic. clearly the

things as may But be think and think some equipment with respect there I effects personal to and that. see see pandemic, And and the we've I going back it contributed seen, that don't we strong think demand but And [Indiscernible] to a world we things the beyond moves there, residual I protective like it a situation. more to supply normal as the growth

Manav Gupta

Thank you.

Operator

The next ahead. Pickering, is Holt. from Matt go Please question

Matthew Blair

the a could Thanks for it a morning. over thin Good your taking know call Chem share next, CP don't here. outlook you year. question my I

that need crackers projection guess from So see being just incremental production covered of ramp demand or to [Indiscernible] we do incremental do some levels? new I ethane or either, pull starting exports. we you Do overall by inventory up have

Timothy Roberts

a is that. things is drivers happening are and Roberts, there's that a of this in Matt, there. Yes. on Tim of X -- couple couple

you've incented got a million pool you barrels still obviously got come being to a all, be that's sitting out. of to there First about rejected, sufficient have so that's

will quarter, -- here new stream little feel quarters. And to flip on in a coming last supply the of that pull to so a we little out. is incented be bit next be There recently. two with actually bit there. fundamentally, to over actually the going couple a We've this next come was seen it up But that here crackers of the

will continue very And gas so here. maximizing production. side, it the be there sure coming to out feels of maintain seeing, then quite that's There's We're off crude natural you an sufficient sufficient. for make incentive also they're out get the folks and is then it people on, and side, NGL with there are going seeing gas, rejection the and production, to

Matthew Blair

the for your Got renewable it, there something on just plant and near-term out? are or so, prospects and any if that much be like then using would further side, renewable And potentially hydrogen Rodeo? for

Robert Herman

hydrogen There we project there. of explore part that Yes. those a And continue in we're party mostly to the to avenues, fact, possibility today. running and it is do not is third

supplier But actually could gas we natural that question way the them. would a then recover carbon there opportunities that find run California and eventually are diesel will by to hydrogen intensity its lower overall make. the that for the being renewable really in it's So to of

Matthew Blair

Sounds good. you. Thank

Operator

is Ryan Piper question next The Todd with Sandler. from

Ryan Todd

about $XX.X -pandemic the before about quarter. down billion your balance you have I to Maybe In you're as Flow dividend thanks. would I target. cash this terms Yeah, debt Balance likely mean, that pre in flow $XX about reduction. or talked we versus capital question. Cash the the million in $XXX I fourth when. Sheet here, mean, capex billion in rough guess quarter, exporting reduction equal very sheet think during your amounts know another debt you roughly and I

to $XX cash we balance need in about before. of sheet down level billion As XXXX, the think uses get about and you

buybacks of excess So for kind at of the cash what potential a the does flow? part point become

Kevin Mitchell

Yeah, Ryan, And credit of want thereabouts but levels. balance trying is, the those a here cash-generation to Kevin. to the AX we're there of We BBB-plus back is ratings, maintain ratings of also is Balance grade. it's mid-cycle ratings. strong Sheet at the where first What to priority or credit getting was, function to it protect part in investment

capital progress line we're once reduction. down alternatives a alternatives, to levels some to sight should start thinking around reduce continue I debt type allocation. flexibility of when We're on we're generating very clearly flow. to as we more is are ability of mid-cycle we think And have we to so The continue about position we're the want see $XX a We billion of consider and in to think the deliver already we deliver, debt environment. [Indiscernible] that good long as clear can the back there our clearly -- in mid-cycle cash-generation ability that to to And There's the to way to. that as before about making to cash get the

Ryan Todd

guess maybe, to then I that. a as and maybe Thanks, follow-up

mid-cycle at large see and the the on who as earlier XXXX of below prior now overall mid-cycle mid-cycle When XXXX, it potentially side peers their for As for where you environment in supply an trends look see expectations? they to see business, terms and above refining you -- reported of various your kind about relative talked mid-cycle it you one of in being refining expectations industry, year refining. you dynamics the do demand and being

Kevin Mitchell

we -- And least make a seem It's to right up shaping be to now wrong. at be there to are think things we we when close invariably, differentials. I prediction, the not that's because to composition But it get the somewhere always call hard mid-cycle. crude X

more barrels differentials. we're back lagging we the market. But to crude end the start tunnel OPEC on some at into heavy as So of on well there's light that putting still see as the

this our at I is that start what's little see behind to opened in up could us favor. that -- time, -- in but But little bit So probably back a mid-cycle we point come to maybe being a keeping

Brian Mandell

the low Part crude from both is I costly, say Dubai the with more to so products costly. so starting government come see drive -- up hydrogen to that back, We've now, vaccinated we'll jet-fuel overseas, would sweet see travel expansion. to of and late that quite people I continue expand think this opening with travelers by Brent expand. even also light, July to is heavy where a MEH think desulfurization to continue where to I November bit across is, seen international all DIBS inventories X, we'll use

-- to light to diet. switch want more switch to to want people crude So probably

if hear to decrease. on, XXXX. things that, are We than it, for continue think good us. setting may be average year I for call that a So depending inventories it an But we'll up better

Greg Garland

RIN or to crack, a realized this And XX at ish X, X, barrel give Look It's XX, $X.XX- X in quarter. take. $XX-$XX adjusted. we're

grow we're not XX raised yet, the were time think time I but the had you on and to today refining margins do say. I towards earlier, moving don't in to XXXX well, we're constructive mid-cycle think but a than that that quite to we months, think more crack, back I -- in orange any probably bullish. I point we're So We past would mid-cycle

Operator

Cowen, from is ahead. please with Jason question Gabelman go next The

Jason Gabelman

questions. Hey, my taking thanks for

wanted ask about First, waterfall other it's couple chart, been to volatile refining bucket this that the past quarters. margin in

high, you wanted to I on now NGL refining mostly are to X to secondly, any due there last to right range an back some of you think going ability was And next the Is ability do butane low. in I as Thanks. business are and blending down Is are propane high pretty winter as an see prices and quantify barrel business. that have difference coming then inventories things quarter, to across quarter. there trending your this $X strength a to that to other related Do just where the conversely? over would capture the impact ask that or about quarters. that exposure help. and the NGL business but price in Midstream,

Robert Herman

of at that. pieces I'll take of a shot couple a

there's we minus so see, to in in straightforward other sorts quite We'll you've freight bit particularly disconnect cracks product European up you've We've got volatility our effects to bucket You're Atlantic will those now The of volatile hard the market a to products we [Indiscernible] is that and and severe isn't things from inventory comes Coast. the East category buy can in category, quarter-to-quarter. show other because the and down. the pretty impact our right, the when very structure category and things are Coast. corneal it that there. right of in volatile got just move It's realizations other and then dish so that can the few our basin Atlantic of also between, call timing includes It's in that a numbers always the there, because products That places the steady RIN that effects there, themselves everything renefex or on differential The slow RIN -- kind our the market the the steady, quarters. Inventories, to really the accounting outsized we there, there, overall there of in but say get like there. product. plus in move is got and for volatility most month-to-month also inventory really product is in in just that we in be pipeline

On [Indiscernible]. gasoline. blending the into NGL, Butane

it's do fair a if it We You amount. run to economic. want

and secondary if Overall put refining the NGLs run won't. So off the it our we X% make products, complexes. doesn't of in make prices as in we part X%, it NGLs to gasoline, sense refining up

a lowers So for off NGLs, better the higher price the we our usually income. to the are and negative that,

gasoline lot overall, store own the sense. if frankly, bring sell butane year and So in our a but we to blend market more it of quite into will we every that makes back

Timothy Roberts

-- advantage On piece, more taking with regard the of opportunity. along of to exposure, the the lines

You're here not predominantly, do tripled right, we're we in in exposed composite barrel's significantly year. been I mean, commodity pretty active. But effectively the price our were it's with cycle what in last system, there.

we we structured. are way So business are fee-based really the

we Now, we managing we're kit much what have the assistant, is, we refining do, with do around. like do

the That's buy try we play the from that. the barrels we how to to head, in corners for as our But those end them we barrels of to to and and optimize that as us it's opportunities this kit, the in the sure, barrels they market all system asset and make around process. create place, up really are and buying we couple clip are there our and optimize So in position capture to to manage our way well selling a point

LPG, exports, that excuse Map commodity have but fee-based So should as a lot by well, that's up most a our me. don't business. business we be of LPG bit turned little by of design. that was which little of a a design, exposure. was bit considered has on It but

Operator

with is ahead. final Stanley, please Morgan Connor from go The question Lynagh

Connor Lynagh

your know alter if diesel federal to going you're how how configure I had I right couple first or incremental a Aviation but and or the the thinking you. and affect at renewable things Thank of discussed around policy are aviation around the credit days, on questions sustainable as early is to it's plant that fuel? Rodeo going Credit would between Blenders now fuel,

Robert Herman

Yes.

not at so today having to incent So make aviation the really today, opportunity credit the that may It's refinery what that to said point. XX% to of X% do close. in that. is do is envisioned the that currently reconfigure the design this But as itself plan there fuel that, we there permit's may blenders yield or us sustainable will tax to the not fairly done,

So aviation fuel commodity everything else we to diesel. let it will And dictate. we'll goes or point, the that economics depend renewable make like sustainable on business, the actually at everything into else the in margin want whether make that

plenty I and the think develops of aviation develops market sustainable for as fuel opportunity, there's that

Robert Herman

$X.X government than of make come at that add anticipating it's make and but over going putting back do renewed probably to bit aviation more a bottlenecking - probably a a the we'll to de fuel kit make to take more sustainable or little there, is Rodeo time out to sense, that is and happen. there

Connor Lynagh

[Indiscernible] a couple.

have carbon opportunity. others And and capture. guys as study The carbon an you know I on discussed, capture

You've for your carbon intensity. got these new target reducing out there

third-party incentives would are seem how developers that? that if thinking willingness increase So systems. certainly you to would And it passed the about enhanced build

projects, thinking balance would would that look? about you set others? the to in So use And How you you? your were think how are largest on you just for Would of you you rely it broadly sheet? opportunity Gulf pursue some do If terms

Timothy Roberts

think this But to the going we look, as the of there, large currently, It's and evolving is some capture XXXX this. capture in do piece of mean, key not out I XXXX. forward I in certainly that. piece is targets maybe just of able set overall by play transition mean, in that. move been in carbon have meet key it's do still But goals already we that to and be scale. participate a to to whether current we being

where a of there's so having heavy piece is a carbon key got areas you've And capture. concentration. that going I have to be of mean, big concentration to to

other the our areas, our where opportunities and areas about And that, does industrialized of there make products well. do metro to it heard sense. we think structure that You've may the do as We there that some assets certainly or processes with and are Houston. and stuff be

it's to is, work whether it's challenge with sense relationships, it's next the equation, and it technology to whether organic, Whether economic make both We're partnerships. sense? equity sides fits? makes Now, with regard does going that what see, a whether to partner, what it's

what's We're this to going at we're on think in not value path I point out is is going and determine the maximize the way. and optimize one best what values. time, to opportunity and what single in to find then

Operator

We have reached Jeff. of I back the call. the today's will call over to end now turn

Jeffrey Dietert

Tim. Thank all you Thank Phillips for in interest you your XX.

have today's me. you questions Shannon or If contact please after Thank call, you.

Operator

today's Thank you, concludes gentlemen. ladies conference. and This

You may now disconnect.

Phillips 66 (PSX) 29 Oct 212021 Q3 Earnings call transcript