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Phillips 66 Reports Fourth-Quarter Earnings Of $708 Million Or $1.11 Per Share

Currently, Phillips 66 has the capability to export up to 285,000 barrels per day of refined products from its domestic refineries. In the first quarter of 2013, the company expects to complete a project at the Ferndale Refinery to increase export capacity by approximately 20,000 barrels per day. Through further investment at its facilities on the Gulf and West Coasts, Phillips 66 expects to increase U.S. export capability to 370,000 barrels per day by the end of 2013.

Phillips 66 has a history of operating excellence, which includes personal and process safety, environmental performance, reliability and cost management, and the company is committed to continuously improving in these areas. In addition to extensive safety and environmental programs, the company has implemented an initiative called Optimize 66 to capture $200 million in before-tax savings, as well as additional value from operational process improvements and efficiencies, by the end of 2013.

Later today, Phillips 66 Chairman and Chief Executive Officer Greg Garland, Executive Vice President and Chief Financial Officer Greg Maxwell and Executive Vice President, Commercial, Marketing, Transportation and Business Development, Tim Taylor will host a webcast at 11 a.m. EST to discuss the company’s fourth-quarter performance and provide an update on strategic initiatives. To listen to the conference call and view related presentation materials, go to www.phillips66.com/investors and click on “Presentations and Conference Calls.” For detailed supplemental information, go to http://www.phillips66.com/EN/investor/financial_reports/earnings_reports/Pages/index.aspx .

                               

Earnings

Millions of Dollars
Fourth Quarter Twelve Months
2012         2011 2012         2011
Refining and Marketing (R&M)
Refining $ 319 $ 64 $ 3,158 $ 1,533
Marketing, Specialties and Other           178             1,737     571             2,315  
Total R&M 497 1,801 3,729 3,848
Midstream 85 113 6 403
Chemicals 246 148 823 716
Corporate and Other           (120 )           (51 )   (434 )           (192 )
Phillips 66         $ 708           $ 2,011   $ 4,124           $ 4,775  
 

Adjusted Earnings

Millions of Dollars
Fourth Quarter Twelve Months
2012         2011 2012         2011
Refining and Marketing (R&M)
Refining $ 916 $ 27 $ 3,785 $ 1,975
Marketing, Specialties and Other           180             142     699             689  
Total R&M 1,096 169 4,484 2,664
Midstream 62 113 286 403
Chemicals 246 148 980 716
Corporate and Other           (92 )           (51 )   (363 )           (192 )
Phillips 66         $ 1,312           $ 379   $ 5,387           $ 3,591  
 

About Phillips 66

Headquartered in Houston, Phillips 66 is an advantaged downstream energy company with segment-leading Refining and Marketing (R&M), Midstream and Chemicals businesses. The company has 13,500 employees worldwide. Phillips 66’s R&M operations include 15 refineries with a net crude oil capacity of 2.2 million barrels per day, 10,000 owned or supplied branded marketing outlets, and 15,000 miles of pipeline systems. The Midstream segment includes Phillips 66’s 50 percent interest in DCP Midstream, LLC, one of the largest natural gas gatherers and processors in the United States, with 7.2 billion cubic feet per day of gross natural gas processing capacity. Phillips 66’s Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC, one of the world’s top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. For more information, visit www.phillips66.com or follow us on Twitter @Phillips66Co .

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Words and phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “intends,” “objectives,” “projects,” “strategies” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to Phillips 66’s operations (including joint venture operations) are based on management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this news release was prepared. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include fluctuations in crude oil, NGL, and natural gas prices, refining and marketing margins and margins for our chemicals business; unexpected changes in costs for constructing, modifying or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; lack of, or disruptions in, adequate and reliable transportation for our crude oil, natural gas, NGL, and refined products; potential liability for remedial actions, including removal and reclamation obligations, under environmental regulations; potential liability resulting from litigation; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; and other economic, business, competitive and/or regulatory factors affecting Phillips 66’s businesses generally as set forth in our filings with the Securities and Exchange Commission, including our Form 10 Registration Statement. Phillips 66 is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

DISCLOSURES UNDER RULE 135

A registration statement relating to the common units of the MLP that would be sold in the offering referred to above is expected to be filed with the Securities and Exchange Commission, but has not been filed or become effective. This news release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities. This news release is being issued pursuant to, and in accordance with, Rule 135 under the Securities Act of 1933.

Use of Non-GAAP Financial Information -- This press release includes the terms adjusted earnings, adjusted earnings per share, operating cash flow excluding working capital, and net-debt-to-capital ratio. These are non-GAAP financial measures. Adjusted earnings, adjusted earnings per share, and operating cash flow excluding working capital are included to help facilitate comparisons of company operating performance across periods. The net-debt-to-capital ratio reduces debt and capital by the amount of cash and cash equivalents shown on the balance sheet for the reflected period, and is presented to reflect the net results if the company elected to utilize its cash balances to reduce debt in the future.

References in the release to earnings refer to net income attributable to Phillips 66.

                               
Reconciliation of Earnings to Adjusted Earnings
 
Millions of Dollars
Except as Indicated
2012 2011
4Q         Year 4Q         Year
Consolidated
Earnings (loss) $ 708 $ 4,124 $ 2,011 $ 4,775
Adjustments:
Net (gain) loss on asset sales - (106 ) (1,660 ) (1,545 )
Impairments 580 979 - 318
Canceled projects - - 28 28
Severance accruals - - - 15
Pending claims and settlements (23 ) 34 - -
Premium on early debt retirement - 89 - -
Repositioning costs 12 55 - -
Repositioning tax impacts - 177 - -
Hurricane-related costs           35             35     -             -  
Adjusted earnings         $ 1,312           $ 5,387   $ 379           $ 3,591  
 
Earnings per share of common stock (dollars)* $ 1.11 $ 6.48 $ 3.17 $ 7.52
 
Adjusted earnings per share of common stock (dollars)*         $ 2.06           $ 8.46   $ 0.60           $ 5.66  
* Assumes the dilutive securities outstanding at April, 30 2012 were also outstanding for each of periods prior to the separation.
 
R&M
Earnings (loss) $ 497 $ 3,729 $ 1,801 $ 3,848
Adjustments:
Net (gain) loss on asset sales - (106 ) (1,660 ) (1,545 )
Impairments 564 633 - 318
Canceled projects - - 28 28
Severance accruals - - - 15
Pending claims and settlements - 57 - -
Repositioning tax impacts - 136 - -
Hurricane-related costs           35             35     -             -  
Adjusted earnings         $ 1,096           $ 4,484   $ 169           $ 2,664  
 
Refining
Earnings (loss) $ 319 $ 3,158 $ 64 $ 1,533
Adjustments:
Net (gain) loss on asset sales - (104 ) (65 ) 81
Impairments 564 606 - 318
Canceled projects - - 28 28
Severance accruals - - - 15
Pending claims and settlements - 19 - -
Repositioning tax impacts - 73 - -
Hurricane-related costs           33             33     -             -  
Adjusted earnings         $ 916           $ 3,785   $ 27           $ 1,975  
 
Marketing, Specialties and Other
Earnings (loss) $ 178 $ 571 $ 1,737 $ 2,315
Adjustments:
Net (gain) loss on asset sales - (2 ) (1,595 ) (1,626 )
Impairments - 27 - -
Pending claims and settlements - 38 - -
Repositioning tax impacts - 63 - -
Hurricane-related costs           2             2     -             -  
Adjusted earnings         $ 180           $ 699   $ 142           $ 689  
 
Midstream
Earnings (loss) $ 85 $ 6 $ 113 $ 403
Adjustments:
Impairments - 303 - -
Pending claims and settlements           (23 )           (23 )   -             -  
Adjusted earnings         $ 62           $ 286   $ 113           $ 403  
 
Chemicals
Earnings (loss) $ 246 $ 823 $ 148 $ 716
Adjustments:
Impairments - 27 $ - $ -
Premium on early debt retirement - 89 - -
Repositioning tax impacts           -             41     -             -  
Adjusted earnings         $ 246           $ 980   $ 148           $ 716  
 
Corporate and Other
Earnings (loss) $ (120 ) $ (434 ) $ (51 ) $ (192 )
Adjustments:
Impairments 16 16 - -
Repositioning costs           12             55     -             -  
Adjusted earnings         $ (92 )         $ (363 ) $ (51 )         $ (192 )
 

       
Millions of Dollars
2012
4Q         Year
Cash Flows from Operating Activities        
 
Net Cash Provided by Operating Activities, excluding working capital $ 1,703 $ 5,452
Working capital adjustments
Decrease (increase) in accounts and notes receivable 534 (143 )
Decrease (increase) in inventories 2,308 55
Decrease (increase) in prepaid expenses and other current assets 218 (48 )
Increase (decrease) in accounts payable (2,897 ) (985 )
Increase (decrease) in taxes and other accruals   (561 )           (35 )
Net Cash Provided by Operating Activities $ 1,305           $ 4,296  
 




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