2012
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(Mark One)
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[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
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December 31, 2012
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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to
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Commission file number:
001-35349
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Delaware
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45-3779385
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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TABLE OF CONTENTS
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Item
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Page
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1)
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R&M—
This segment purchases, refines, markets and transports crude oil and petroleum products, mainly in the United States, Europe and Asia. This segment also includes power generation operations. The R&M segment's “refining” and “marketing, specialties and other” operations are disclosed separately for supplemental reporting purposes.
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2)
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Midstream—
This segment gathers, processes, transports and markets natural gas; and transports, fractionates and markets natural gas liquids (NGL) in the United States. The Midstream segment includes our 50 percent equity investment in DCP Midstream, LLC (DCP Midstream).
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3)
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Chemicals
—
This segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Chemicals segment consists of our 50 percent equity investment in Chevron Phillips Chemical Company LLC (CPChem).
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Thousands of Barrels Daily
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||||||||||||
Region/Refinery
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Location
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Interest
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Net Crude Throughput
Capacity
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Net Clean Product
Capacity**
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Clean
Product
Yield
Capability
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||||||||
At
December 31, 2012
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Effective
January 1, 2013
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Gasolines
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Distillates
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Atlantic Basin/Europe
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Bayway
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Linden, NJ
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100.00
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%
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238
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238
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145
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115
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90
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%
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Humber
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N. Lincolnshire, United Kingdom
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100.00
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221
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221
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85
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115
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81
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Whitegate
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Cork, Ireland
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100.00
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71
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71
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15
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30
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65
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MiRO*
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Karlsruhe, Germany
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18.75
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58
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58
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25
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25
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85
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588
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588
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||||
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Gulf Coast
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||||||
Alliance
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Belle Chasse, LA
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100.00
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247
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247
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125
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120
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86
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Lake Charles
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Westlake, LA
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100.00
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239
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239
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90
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115
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70
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Sweeny
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Old Ocean, TX
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100.00
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247
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247
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125
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120
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87
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733
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733
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||||
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||||||
Central Corridor
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||||||
Wood River
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Roxana, IL
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49.60
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152
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154
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75
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55
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83
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Borger
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Borger, TX
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49.60
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72
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72
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50
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25
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89
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Ponca City
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Ponca City, OK
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100.00
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187
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190
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105
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80
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91
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Billings
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Billings, MT
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100.00
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58
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59
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35
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25
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89
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469
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475
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Western/Pacific
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Ferndale
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Ferndale, WA
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100.00
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100
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101
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55
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30
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75
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Los Angeles
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Carson/ Wilmington, CA
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100.00
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139
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139
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80
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65
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88
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San Francisco
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Arroyo Grande/San Francisco, CA
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100.00
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120
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120
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55
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60
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83
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Melaka
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Melaka, Malaysia
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47.00
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80
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80
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20
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50
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80
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439
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440
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2,229
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2,236
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Characteristics
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Sources
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Sweet
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Medium
Sour
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Heavy
Sour
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High
TAN
*
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United
States
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Canada
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South
America
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Europe
& Central Asia
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Middle East
& Africa
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Bayway
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l
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l
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l
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l
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Humber
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l
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l
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l
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l
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l
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Whitegate
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l
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l
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l
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MiRO
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l
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l
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l
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l
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Alliance
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l
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l
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l
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Lake Charles
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l
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l
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l
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l
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l
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l
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Sweeny
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l
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l
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l
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l
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l
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l
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Wood River
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l
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l
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l
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l
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l
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Borger
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l
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l
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l
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l
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Ponca City
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l
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l
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l
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l
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l
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Billings
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l
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l
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l
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Ferndale
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l
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l
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l
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l
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Los Angeles
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l
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l
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l
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l
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l
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l
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l
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San Francisco
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l
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l
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l
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l
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l
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l
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Melaka
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l
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l
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l
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l
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•
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Wood River Refinery
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•
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Borger Refinery
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Name
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Origination/Terminus
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Interest
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Size
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Miles
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Capacity
MBD
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Crude
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Coast and Valley System
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Central CA/Bay Area, CA
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100
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%
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8”-12”
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702
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307
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Clifton Ridge
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Clifton Ridge, LA/Westlake, LA
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100
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20”
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10
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270
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Cushing (CushPo)
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Cushing, OK/Ponca City, OK
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100
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18”
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62
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130
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WA Line
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Odessa, TX/Borger, TX
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100
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12”, 14”
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300
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118
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Oklahoma Mainline/CPL
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Wichita Falls, TX/Ponca City, OK
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100
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12”
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217
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100
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Line O
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Cushing, OK/Borger, TX
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100
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10”
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276
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37
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Line 80 (Gaines Borger)
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Gaines, TX/Borger, TX
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100
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8”, 12”
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237
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33
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Glacier
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Cut Bank, MT/Billings, MT
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79
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8”-12”
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865
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100
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|||
Petroleum Product
|
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Sweeny to Pasadena
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Sweeny, TX/Pasadena, TX
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100
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12”, 18”
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120
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264
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Gold Line
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Borger, TX/St. Louis, IL
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100
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8”-16”
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681
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120
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Standish
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Marland Junction, OK/Wichita, KS
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100
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18”
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100
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80
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Borger to Amarillo
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Borger, TX/Amarillo, TX
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100
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8”, 10”
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93
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76
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Wood River
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Ponca City, OK/Mt. Vernon, MO
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100
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10”, 12”
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250
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45
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Okla. City/Cherokee 8”
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Ponca City, OK/Okla. City, OK
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100
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8”
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215
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46
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Wichita/Ark City 1&2
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Ponca City, OK/Wichita, KS
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100
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8”, 10”
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105
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55
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Seminoe
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Billings, MT/Sinclair, WY
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100
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6”-10”
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342
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33
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Borger-Denver
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McKee, TX/Denver, CO
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70
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6”-12”
|
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405
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38
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Pioneer
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Sinclair, WY/Salt Lake City, UT
|
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50
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|
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8”, 12”
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562
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63
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ATA Line
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Amarillo, TX/Albuquerque, NM
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50
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6”, 10”
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293
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20
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Heartland
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McPherson, KS/Des Moines, IA
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50
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8”, 6”
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49
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30
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Yellowstone
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Billings, MT/Spokane, WA
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46
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6”-10”
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710
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66
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Harbor
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Woodbury, NJ/Linden, NJ
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33
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16”
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80
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104
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SAAL
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Amarillo, TX/Amarillo and
Lubbock, TX
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|
33
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6”
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121
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18
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Explorer
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Texas Gulf Coast/Chicago, IL
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14
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24”, 28”
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1,835
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500
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NGL
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|||
Line EZ
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Rankin, TX/Sweeny, TX
|
|
100
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*
|
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10”
|
|
434
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|
|
101
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Blue Line
|
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Borger, TX/St. Louis, IL
|
|
100
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|
|
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8”-12”
|
|
666
|
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|
29
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Powder River
|
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Douglas, WY/Borger, TX
|
|
100
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|
|
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6”-8”
|
|
695
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|
19
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Chisholm
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Kingfisher, OK/Conway, KS
|
|
50
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|
|
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8”-10”
|
|
202
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|
|
42
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Skelly-Belvieu
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Skellytown, TX/Mont Belvieu, TX
|
|
50
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|
|
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8”
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|
571
|
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|
29
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|||
LPG
|
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|
|
|
|
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Medford PBC
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Ponca City, OK/Medford, OK
|
|
100
|
|
|
|
4”-12”
|
|
42
|
|
|
60
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|
Conway to Wichita
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Conway, KS/Wichita, KS
|
|
100
|
|
|
|
12”
|
|
55
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38
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•
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Percentage-of-proceeds/index arrangements.
In general, DCP Midstream purchases natural gas from producers at the wellhead or other receipt points, gathers the wellhead natural gas through its gathering system, treats and processes it, and then sells the residue natural gas and NGL based on index prices from published market indices. DCP Midstream remits to the producers either an agreed-upon percentage of the actual proceeds received from the sale of the residue natural gas and NGL, or an agreed-upon percentage of the proceeds based on index-related prices for natural gas and NGL, regardless of the actual amount of sales proceeds which DCP Midstream receives. Certain of these arrangements may also result in DCP Midstream returning all or a portion of the residue natural gas and/or the NGL to the producer in lieu of returning sales proceeds. DCP Midstream's revenues from percentage-of-proceeds/index arrangements relate directly with the price of NGL and, to a lesser extent, natural gas and crude oil.
|
•
|
Fee-based arrangements.
DCP Midstream receives a fee or fees for one or more of the following services: gathering, processing, compressing, treating, storing or transporting natural gas and fractionating, storing and transporting NGL. Fee-based arrangements include natural gas purchase arrangements pursuant to which DCP Midstream purchases natural gas at the wellhead or other receipt points at an index-related price at the delivery point less a specified amount, generally the same as the fees it would otherwise charge for gathering the natural gas from the wellhead location to the delivery point. The revenue DCP Midstream earns from these arrangements is directly related to the volume of natural gas or NGL that flows through its systems and is not directly dependent on commodity prices. However, to the extent that a sustained decline in commodity prices results in a decline in volumes, DCP Midstream's revenues from these arrangements could be reduced.
|
•
|
Keep-whole and wellhead purchase arrangements.
DCP Midstream gathers raw natural gas from producers for processing, markets the NGL and returns to the producer residue natural gas with a British thermal unit (BTU) content equivalent to the BTU content of the natural gas gathered. This arrangement keeps the producer whole in regard to the thermal value of the natural gas received. Under the terms of a wellhead purchase contract, DCP Midstream purchases natural gas from the producer at the wellhead or defined receipt point for processing and markets the resulting NGL and residue gas at market prices. DCP Midstream is exposed to the difference between the value of the NGL extracted from processing and the value of the BTU-equivalent of the residue natural gas, or "frac spread." Under these type of contracts, DCP Midstream benefits in periods when NGL prices are higher relative to natural gas prices.
|
•
|
A one-third direct interest in both the Sand Hills and Southern Hills pipeline projects, which currently are under construction by DCP Midstream.
|
•
|
A 22.5 percent equity interest in Gulf Coast Fractionators, which owns an NGL fractionation plant in Mont Belvieu, Texas. We operate the facility, and our net share of capacity is 32,625 barrels per day. In July 2012, the previously announced expansion of Gulf Coast Fractionators became operational and the total capacity of the fractionation facility expanded to 145,000 barrels per day.
|
•
|
A 40 percent interest in a fractionation plant in Conway, Kansas. Our net share of capacity is 43,200 barrels per day.
|
•
|
A 12.5 percent equity interest in a fractionation plant in Mont Belvieu, Texas. Our net share of capacity is 26,000 barrels per day.
|
•
|
Marketing operations that optimize the flow of NGL and market propane on a wholesale basis.
|
|
Millions of Pounds per Year
|
||||
|
U.S.
|
|
|
Worldwide
|
|
O&P
|
|
|
|
||
Ethylene
|
7,830
|
|
|
10,305
|
|
Propylene
|
2,975
|
|
|
3,480
|
|
High-density polyethylene
|
4,205
|
|
|
6,500
|
|
Low-density polyethylene
|
620
|
|
|
620
|
|
Linear low-density polyethylene
|
420
|
|
|
420
|
|
Polypropylene
|
—
|
|
|
310
|
|
Normal alpha olefins
|
1,490
|
|
|
2,005
|
|
Polyalphaolefins
|
105
|
|
|
235
|
|
Polyethylene pipe
|
590
|
|
|
590
|
|
Total O&P
|
18,235
|
|
|
24,465
|
|
|
|
|
|
||
SA&S
|
|
|
|
||
Benzene
|
1,600
|
|
|
2,530
|
|
Cyclohexane
|
1,060
|
|
|
1,455
|
|
Paraxylene
|
1,000
|
|
|
1,000
|
|
Styrene
|
1,050
|
|
|
1,875
|
|
Polystyrene
|
835
|
|
|
1,335
|
|
K-Resin
®
SBC
|
100
|
|
|
170
|
|
Specialty chemicals
|
605
|
|
|
705
|
|
Ryton
®
PPS
|
55
|
|
|
75
|
|
Total SA&S
|
6,305
|
|
|
9,145
|
|
•
|
Changes in the global economy and the level of foreign and domestic production of crude oil and refined products.
|
•
|
Availability of crude oil and refined products and the infrastructure to transport crude oil and refined products.
|
•
|
Local factors, including market conditions, the level of operations of other refineries in our markets, and the volume of refined products imported.
|
•
|
Threatened or actual terrorist incidents, acts of war and other global political conditions.
|
•
|
Government regulations.
|
•
|
Weather conditions, hurricanes or other natural disasters.
|
•
|
The discharge of pollutants into the environment.
|
•
|
Emissions into the atmosphere (such as nitrogen oxides, sulfur dioxide and mercury emissions, and greenhouse gas emissions as they are, or may become, regulated).
|
•
|
The handling, use, storage, transportation, disposal and clean up of hazardous materials and hazardous and nonhazardous wastes.
|
•
|
The dismantlement, abandonment and restoration of our properties and facilities at the end of their useful lives.
|
•
|
Entering into any transaction pursuant to which all or a portion of our stock would be acquired, whether by merger or otherwise.
|
•
|
Issuing equity securities beyond certain thresholds.
|
•
|
Repurchasing our common stock beyond certain thresholds.
|
•
|
Ceasing to actively conduct the refining business.
|
•
|
Taking or failing to take any other action that prevents the distribution and related transactions from being tax-free.
|
Name
|
Position Held
|
Age*
|
|
|
|
|
|
Greg C. Garland
|
Chairman, President and Chief Executive Officer
|
55
|
|
C. Doug Johnson
|
Vice President and Controller
|
53
|
|
Paula A. Johnson
|
Senior Vice President, Legal, General Counsel and Corporate Secretary
|
49
|
|
Greg G. Maxwell
|
Executive Vice President, Finance and Chief Financial Officer
|
56
|
|
Tim G. Taylor
|
Executive Vice President, Commercial, Marketing, Transportation and Business Development
|
59
|
|
Lawrence M. Ziemba
|
Executive Vice President, Refining, Project Development and Procurement
|
57
|
|
*On February 15, 2013.
|
|
|
Item 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
Stock Price
|
|
|
||||||
|
High
|
|
Low
|
|
|
Dividends
|
|
||
2012
|
|
|
|
|
|||||
Second Quarter
|
$
|
34.91
|
|
28.75
|
|
|
—
|
|
|
Third Quarter
|
48.22
|
|
32.35
|
|
|
.20
|
|
||
Fourth Quarter
|
54.32
|
|
42.45
|
|
|
.25
|
|
Closing Stock Price at December 31, 2012
|
|
|
|
$
|
53.10
|
|
Closing Stock Price at January 31, 2013
|
|
|
|
$
|
60.57
|
|
Number of Stockholders of Record at January 31, 2013
|
|
|
|
49,200
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|||||
Period
|
Total Number of Shares Purchased*
|
|
|
Average Price Paid per Share
|
|
|
Total Number of Shares Purchased
as Part of Publicly Announced Plans
or Programs**
|
|
|
Approximate Dollar Value of Shares
that May Yet Be Purchased Under the Plans or Programs
|
|
||
|
|
|
|
|
|
|
|
||||||
October 1-31, 2012
|
1,514,825
|
|
|
$
|
45.64
|
|
|
1,511,300
|
|
|
$
|
820
|
|
November 1-30, 2012
|
1,618,344
|
|
|
48.05
|
|
|
1,618,344
|
|
|
742
|
|
||
December 1-31, 2012
|
1,881,822
|
|
|
52.19
|
|
|
1,879,852
|
|
|
1,644
|
|
||
Total
|
5,014,991
|
|
|
$
|
48.87
|
|
|
5,009,496
|
|
|
|
•
|
The selected income statement data for the year ended December 31, 2012, consists of the consolidated results of Phillips 66 for the eight months ended December 31, 2012, and of the combined results of the downstream businesses for the four months ended April 30, 2012. The selected income statement data for the years ended December 31, 2011, 2010, 2009 and 2008, consist entirely of the combined results of the downstream businesses.
|
•
|
The selected balance sheet data at December 31, 2012, consists of the consolidated balances of Phillips 66, while the selected balance sheet data at December 31, 2011, 2010, 2009 and 2008, consist of the combined balances of the downstream businesses.
|
|
Millions of Dollars Except Per Share Amounts
|
||||||||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales and other operating revenues
|
$
|
179,460
|
|
|
196,088
|
|
|
146,561
|
|
|
112,692
|
|
|
171,706
|
|
Net income
|
4,131
|
|
|
4,780
|
|
|
740
|
|
|
479
|
|
|
2,665
|
|
|
Net income attributable to Phillips 66
|
4,124
|
|
|
4,775
|
|
|
735
|
|
|
476
|
|
|
2,662
|
|
|
Per common share*
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
6.55
|
|
|
7.61
|
|
|
1.17
|
|
|
0.76
|
|
|
4.24
|
|
|
Diluted
|
6.48
|
|
|
7.52
|
|
|
1.16
|
|
|
0.75
|
|
|
4.19
|
|
|
Total assets
|
48,073
|
|
|
43,211
|
|
|
44,955
|
|
|
42,880
|
|
|
38,934
|
|
|
Long-term debt
|
6,961
|
|
|
361
|
|
|
388
|
|
|
403
|
|
|
417
|
|
|
Cash dividends declared per common share
|
0.45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
•
|
Refining and Marketing (R&M)
. This segment purchases, refines, markets and transports crude oil and petroleum products, mainly in the United States, Europe and Asia. This segment also includes power generation activities, as well as specialties businesses such as flow improvers and lubricants.
|
•
|
Midstream
. This segment gathers, processes, transports and markets natural gas; and transports, fractionates and markets natural gas liquids (NGL) in the United States. The Midstream segment includes our 50 percent equity investment in DCP Midstream, LLC (DCP Midstream).
|
•
|
Chemicals
. This segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Chemicals segment consists of our 50 percent equity investment in Chevron Phillips Chemical Company LLC (CPChem).
|
•
|
We increased our quarterly dividend rate by 25 percent in the fourth quarter of 2012, to $0.25 per share. We also announced in the fourth quarter of 2012 that the annual dividend rate would be further increased by an additional 25 percent, effective in 2013.
|
•
|
We initiated a $1 billion share repurchase program in the third quarter of 2012 and, in the fourth quarter, we increased the program to $2 billion. Through December 31, 2012, we repurchased
$356 million
of our common shares.
|
•
|
Operating safely, reliably and in an environmentally sound manner.
Safety and reliability are our first priority, and we are committed to protecting the health and safety of everyone who has a role in our operations and the communities in which we operate. Optimizing utilization rates at our refineries through reliable and safe operations enables us to capture the value available in the market in terms of prices and margins. During 2012, our worldwide refining capacity utilization rate was
93 percent
, compared with
92 percent
in 2011. Additionally, we strive to conduct our operations in a manner consistent with our environmental stewardship principles.
|
•
|
Improving our advantaged crude runs in our refineries.
U.S. crude production continued to increase and limited infrastructure for takeaway options resulted in lower feedstock costs for U.S. refiners with refineries that run advantaged crudes. Refineries capable of processing West Texas Intermediate (WTI) crude and crude oils that price relative to WTI, primarily the Midcontinent and Gulf Coast refineries, benefited from these lower regional feedstock prices. We are already running advantaged crude in eight of our refineries in the United States. We are moving advantaged crude by truck, rail, barge and ocean-going vessel to our refineries. We have expanded our truck, rail rack and marine capability, and we are leasing 2,000 additional railcars to deliver advantaged crude to our refineries.
|
•
|
Controlling costs and expenses.
Since we cannot control the prices of the commodity products we sell, controlling operating and overhead costs, within the context of our commitment to safety and environmental stewardship, are high priorities. Operating and overhead costs increased 5 percent in 2012, compared with 2011, primarily due to the Separation. However, we have established “Optimize 66,” a program that concentrates on not only cost reductions, but also on process improvements, to improve our overall effectiveness and eliminate the cost “dis-synergies” resulting from the Separation.
|
•
|
Funding growth and enhancing returns.
Our capital program plan for 2013 is $3.7 billion, 3 percent higher than the 2012 program. This includes our portion of planned capital spending by DCP Midstream, CPChem and WRB Refining LP (WRB) totaling $1.8 billion, which is not expected to require cash outlays by us. The other $1.9 billion represents our consolidated investments in R&M, Midstream and Corporate and Other. This program is designed to grow our Midstream and Chemicals segments and to improve returns in our R&M segment. We intend to grow our Midstream segment both through our ownership in DCP Midstream and our own Phillips 66 midstream assets. We have invested directly in the Sand Hills and Southern Hills pipelines, and we have announced our plans to form a master limited partnership to grow additional midstream and transportation infrastructure in the future. We intend to grow our Chemicals segment through our ownership in CPChem. CPChem has large olefins and polyolefins projects underway in the U.S. Gulf Coast region. In the R&M segment, we plan to improve returns through increasing our advantaged crude runs in our refineries, while selectively investing in smaller, higher-return projects.
|
|
Millions of Dollars
|
||||||||
|
Year Ended December 31
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
||||
R&M
|
$
|
3,729
|
|
|
3,848
|
|
|
146
|
|
Midstream
|
6
|
|
|
403
|
|
|
262
|
|
|
Chemicals
|
823
|
|
|
716
|
|
|
486
|
|
|
Corporate and Other
|
(434
|
)
|
|
(192
|
)
|
|
(159
|
)
|
|
Net income attributable to Phillips 66
|
$
|
4,124
|
|
|
4,775
|
|
|
735
|
|
•
|
A $1,437 million after-tax decrease in net gains on asset dispositions in 2012. 2011 results included significant gains on the disposition of three pipeline systems.
|
•
|
A $648 million after-tax increase in impairments in 2012, primarily reflecting 2012 impairments of our equity investments in Rockies Express Pipeline LLC (REX), a natural gas transmission system, and Malaysian Refining Company Sdn. Bdh. (MRC), a refining company in Melaka, Malaysia.
|
•
|
A $137 million after-tax increase in net interest expense, reflecting the issuance of $7.8 billion of debt during the first-half of 2012 in association with the Separation.
|
•
|
Lower NGL prices during 2012, which contributed to decreased earnings from our Midstream segment.
|
•
|
Improved refining margins in the R&M segment.
|
•
|
Improved ethylene and polyethylene margins in the Chemicals segment.
|
•
|
Improved results from our R&M segment, reflecting significantly higher domestic refining margins.
|
•
|
Higher net gains from asset dispositions. 2011 net gains from asset dispositions were $1,546 million after tax, compared with 2010 gains of $118 million after tax.
|
•
|
Lower property impairments. 2010 earnings included a $1,174 million after-tax impairment of our formerly owned Wilhelmshaven Refinery (WRG) in Germany, which was partly offset by a $303 million after-tax impairment and warehouse inventory write-down associated with our Trainer Refinery in 2011.
|
•
|
Increased earnings in the Chemicals segment, primarily due to higher margins and volumes in the olefins and polyolefins business line.
|
•
|
Improved earnings from the Midstream segment, mainly due to higher NGL prices.
|
•
|
Lower earnings from DCP Midstream, mainly due to a decrease in NGL prices.
|
•
|
Lower earnings from Excel Paralubes, Merey Sweeny, L.P. (MSLP) and MRC, mainly due to lower margins.
|
•
|
The absence of earnings from Colonial Pipeline Company, which was sold in December 2011.
|
•
|
Improved earnings from WRB, mainly due to higher refining margins.
|
•
|
Improved earnings from CPChem, primarily due to higher margins and volumes in the olefins and polyolefins business line and the startup of Q-Chem II at the end of 2010.
|
•
|
Improved earnings from DCP Midstream, primarily as a result of higher NGL prices.
|
|
Year Ended December 31
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
Millions of Dollars
|
||||||||
Net Income (Loss) Attributable to Phillips 66
|
|
|
|
|
|
||||
United States
|
$
|
3,730
|
|
|
3,637
|
|
|
1,013
|
|
International
|
(1
|
)
|
|
211
|
|
|
(867
|
)
|
|
|
$
|
3,729
|
|
|
3,848
|
|
|
146
|
|
|
|
|
|
|
|
||||
|
Dollars Per Barrel
|
||||||||
Refining Margins
|
|
|
|
|
|
||||
Atlantic Basin/Europe
|
$
|
9.36
|
|
|
5.96
|
|
|
6.81
|
|
Gulf Coast
|
9.02
|
|
|
8.01
|
|
|
7.24
|
|
|
Central Corridor
|
25.06
|
|
|
19.68
|
|
|
7.96
|
|
|
Western/Pacific
|
11.04
|
|
|
9.13
|
|
|
8.10
|
|
|
Worldwide
|
13.42
|
|
|
9.70
|
|
|
7.38
|
|
|
|
|
|
|
|
|
||||
|
Dollars Per Gallon
|
||||||||
U.S. Average Wholesale Prices*
|
|
|
|
|
|
||||
Gasoline
|
$
|
3.00
|
|
|
2.94
|
|
|
2.24
|
|
Distillates
|
3.19
|
|
|
3.12
|
|
|
2.30
|
|
|
*Excludes excise taxes.
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
Thousands of Barrels Daily
|
||||||||
Operating Statistics
|
|
|
|
|
|
||||
Refining operations*
|
|
|
|
|
|
||||
Atlantic Basin/Europe
|
|
|
|
|
|
||||
Crude oil capacity
|
588
|
|
|
726
|
|
|
1,033
|
|
|
Crude oil processed
|
555
|
|
|
682
|
|
|
686
|
|
|
Capacity utilization (percent)
|
94
|
%
|
|
94
|
|
|
66
|
|
|
Refinery production
|
599
|
|
|
736
|
|
|
746
|
|
|
Gulf Coast
|
|
|
|
|
|
||||
Crude oil capacity
|
733
|
|
|
733
|
|
|
733
|
|
|
Crude oil processed
|
657
|
|
|
658
|
|
|
668
|
|
|
Capacity utilization (percent)
|
90
|
%
|
|
90
|
|
|
91
|
|
|
Refinery production
|
743
|
|
|
748
|
|
|
757
|
|
|
Central Corridor
|
|
|
|
|
|
||||
Crude oil capacity
|
470
|
|
|
471
|
|
|
471
|
|
|
Crude oil processed
|
454
|
|
|
433
|
|
|
427
|
|
|
Capacity utilization (percent)
|
97
|
%
|
|
92
|
|
|
91
|
|
|
Refinery production
|
471
|
|
|
448
|
|
|
443
|
|
|
Western/Pacific
|
|
|
|
|
|
||||
Crude oil capacity
|
439
|
|
|
435
|
|
|
420
|
|
|
Crude oil processed
|
398
|
|
|
393
|
|
|
375
|
|
|
Capacity utilization (percent)
|
91
|
%
|
|
91
|
|
|
89
|
|
|
Refinery production
|
419
|
|
|
419
|
|
|
395
|
|
|
Worldwide
|
|
|
|
|
|
||||
Crude oil capacity
|
2,230
|
|
|
2,365
|
|
|
2,657
|
|
|
Crude oil processed
|
2,064
|
|
|
2,166
|
|
|
2,156
|
|
|
Capacity utilization (percent)
|
93
|
%
|
|
92
|
|
|
81
|
|
|
Refinery production
|
2,232
|
|
|
2,351
|
|
|
2,341
|
|
|
*Includes our share of equity affiliates.
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
Thousands of Barrels Daily
|
|||||||
Operating Statistics
|
|
|
|
|
|
|||
NGL extracted*
|
201
|
|
|
192
|
|
|
184
|
|
NGL fractionated**
|
105
|
|
|
112
|
|
|
120
|
|
|
Year Ended December 31
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
Millions of Dollars
|
||||||||
|
|
|
|
|
|
||||
Net Income Attributable to Phillips 66
|
$
|
823
|
|
|
716
|
|
|
486
|
|
|
|
|
|
|
|
||||
|
Millions of Pounds
|
||||||||
CPChem Externally Marketed Sales Volumes
*
|
|
|
|
|
|
||||
Olefins and polyolefins
|
14,967
|
|
|
14,305
|
|
|
12,585
|
|
|
Specialties, aromatics and styrenics
|
6,719
|
|
|
6,704
|
|
|
6,318
|
|
|
|
21,686
|
|
|
21,009
|
|
|
18,903
|
|
|
*Represents 100 percent of CPChem's outside sales of produced petrochemical products, as well as commission sales from equity affiliates.
|
|
Millions of Dollars
|
||||||||
|
Year Ended December 31
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Net Loss Attributable to Phillips 66
|
|
|
|
|
|
||||
Net interest expense
|
$
|
(148
|
)
|
|
(11
|
)
|
|
—
|
|
Corporate general and administrative expenses
|
(116
|
)
|
|
(76
|
)
|
|
(71
|
)
|
|
Technology
|
(49
|
)
|
|
(53
|
)
|
|
(44
|
)
|
|
Repositioning costs
|
(55
|
)
|
|
—
|
|
|
—
|
|
|
Other
|
(66
|
)
|
|
(52
|
)
|
|
(44
|
)
|
|
|
$
|
(434
|
)
|
|
(192
|
)
|
|
(159
|
)
|
|
Millions of Dollars
Except as Indicated
|
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
4,296
|
|
|
5,006
|
|
|
2,092
|
|
|
Short-term debt
|
13
|
|
|
30
|
|
|
29
|
|
|
|
Total debt
|
6,974
|
|
|
391
|
|
|
417
|
|
|
|
Total equity
|
20,806
|
|
|
23,293
|
|
|
26,026
|
|
|
|
Percent of total debt to capital*
|
25
|
%
|
|
2
|
|
|
2
|
|
|
|
Percent of floating-rate debt to total debt
|
15
|
%
|
|
13
|
|
|
12
|
|
|
|
*Capital includes total debt and total equity.
|
|
•
|
Improved U.S. refining margins during 2012, reflecting improved market conditions and increasing access to lower-cost crude oil feedstocks.
|
•
|
Increased distributions from equity affiliates, particularly WRB, whose refineries are located in the Central Corridor region.
|
•
|
$0.8 billion aggregate principal amount of 1.950% Senior Notes due 2015.
|
•
|
$1.5 billion aggregate principal amount of 2.950% Senior Notes due 2017.
|
•
|
$2.0 billion aggregate principal amount of 4.300% Senior Notes due 2022.
|
•
|
$1.5 billion aggregate principal amount of 5.875% Senior Notes due 2042.
|
|
Millions of Dollars
|
||||||||||||||
|
Payments Due by Period
|
||||||||||||||
|
Total
|
|
|
Up to
1 Year
|
|
|
Years
2-3
|
|
|
Years
4-5
|
|
|
After
5 Years
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debt obligations (a)
|
$
|
6,968
|
|
|
12
|
|
|
1,828
|
|
|
1,531
|
|
|
3,597
|
|
Capital lease obligations
|
6
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
—
|
|
|
Total debt
|
6,974
|
|
|
13
|
|
|
1,830
|
|
|
1,534
|
|
|
3,597
|
|
|
Interest on debt
|
4,044
|
|
|
258
|
|
|
490
|
|
|
421
|
|
|
2,875
|
|
|
Operating lease obligations
|
1,843
|
|
|
424
|
|
|
714
|
|
|
324
|
|
|
381
|
|
|
Purchase obligations (b)
|
133,571
|
|
|
46,796
|
|
|
20,232
|
|
|
13,921
|
|
|
52,622
|
|
|
Other long-term liabilities (c)
|
|
|
|
|
|
|
|
|
|
||||||
Asset retirement obligations
|
314
|
|
|
16
|
|
|
19
|
|
|
17
|
|
|
262
|
|
|
Accrued environmental costs
|
530
|
|
|
88
|
|
|
117
|
|
|
85
|
|
|
240
|
|
|
Unrecognized tax benefits (d)
|
10
|
|
|
10
|
|
|
(d)
|
|
|
(d)
|
|
|
(d)
|
|
|
Total
|
$
|
147,286
|
|
|
47,605
|
|
|
23,402
|
|
|
16,302
|
|
|
59,977
|
|
(a)
|
For additional information, see
Note 13—Debt
, in the Notes to Consolidated Financial Statements.
|
(b)
|
Represents any agreement to purchase goods or services that is enforceable and legally binding and that specifies all significant terms. We expect these purchase obligations will be fulfilled by operating cash flows in the applicable maturity period. The majority of the purchase obligations are market-based contracts, including exchanges and futures, for the purchase of products such as crude oil and unfractionated NGL. The products are mostly used to supply our refineries and fractionators, optimize the supply chain, and resell to customers. Product purchase commitments with third parties totaled $82,634 million. In addition, $40,478 million are product purchases from CPChem, mostly for natural gas and NGL over the remaining contractual term of 87 years, and $7,245 million from Excel Paralubes, for base oil over the remaining contractual term of 12 years.
|
(c)
|
Excludes pensions. For the 2013 through 2017 time period, we expect to contribute an average of $170 million per year to our qualified and nonqualified pension and other postretirement benefit plans in the United States and an average of $55 million per year to our non-U.S. plans, which are expected to be in excess of required minimums in many cases. The U.S. five-year average consists of $65 million for 2013 and then approximately $200 million per year for the remaining four years. Our minimum funding in 2013 is expected to be $65 million in the United States and $55 million outside the United States.
|
(d)
|
Excludes unrecognized tax benefits of $148 million because the ultimate disposition and timing of any payments to be made with regard to such amounts are not reasonably estimable or the amounts relate to potential refunds. Also
|
|
Millions of Dollars
|
|||||||||||
|
2013
Budget
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Capital Expenditures and Investments
|
|
|
|
|
|
|
|
|||||
R&M
|
|
|
|
|
|
|
|
|||||
United States
|
$
|
1,034
|
|
|
833
|
|
|
751
|
|
|
798
|
|
International*
|
353
|
|
|
221
|
|
|
237
|
|
|
276
|
|
|
|
1,387
|
|
|
1,054
|
|
|
988
|
|
|
1,074
|
|
|
Midstream**
|
361
|
|
|
527
|
|
|
17
|
|
|
68
|
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate and Other
|
161
|
|
|
140
|
|
|
17
|
|
|
8
|
|
|
Total consolidated
|
$
|
1,909
|
|
|
1,721
|
|
|
1,022
|
|
|
1,150
|
|
|
|
|
|
|
|
|
|
|||||
WRB
|
$
|
112
|
|
|
136
|
|
|
414
|
|
|
644
|
|
DCP Midstream**
|
1,100
|
|
|
1,324
|
|
|
779
|
|
|
411
|
|
|
CPChem
|
549
|
|
|
371
|
|
|
222
|
|
|
185
|
|
|
Selected equity affiliates***
|
$
|
1,761
|
|
|
1,831
|
|
|
1,415
|
|
|
1,240
|
|
•
|
Installation of facilities to reduce emissions from the fluid catalytic cracker at the Sweeny Refinery.
|
•
|
Installation of facilities to reduce nitrous oxide emissions from the crude furnace and installation of a new high-efficiency vacuum furnace at Bayway Refinery.
|
•
|
Completion of gasoline benzene reduction projects at the Alliance, Bayway, and Ponca City refineries.
|
•
|
Installation of new coke drums at the Billings Refinery.
|
•
|
Installation of a new carbon monoxide boiler at the Bayway Refinery to control carbon monoxide emissions while providing steam production.
|
•
|
Installation of facilities to reduce nitrous oxide emissions from the fluid catalytic cracker at the Alliance Refinery.
|
•
|
Installation of new coke drums at the Ponca City Refinery.
|
•
|
Installation of a tail gas treating unit at the Humber Refinery to reduce emissions from the sulfur recovery units.
|
•
|
U.S. Federal Clean Air Act, which governs air emissions.
|
•
|
U.S. Federal Clean Water Act, which governs discharges to water bodies.
|
•
|
European Union Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals (REACH).
|
•
|
U.S. Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which imposes liability on generators, transporters and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur.
|
•
|
U.S. Federal Resource Conservation and Recovery Act (RCRA), which governs the treatment, storage and disposal of solid waste.
|
•
|
U.S. Federal Emergency Planning and Community Right-to-Know Act (EPCRA), which requires facilities to report toxic chemical inventories to local emergency planning committees and response departments.
|
•
|
U.S. Federal Safe Drinking Water Act, which governs the disposal of wastewater in underground injection wells.
|
•
|
U.S. Federal Oil Pollution Act of 1990 (OPA90), under which owners and operators of onshore facilities and pipelines, lessees or permittees of an area in which an offshore facility is located, and owners and operators of vessels are liable for removal costs and damages that result from a discharge of oil into navigable waters of the United States.
|
•
|
European Union Trading Directive resulting in the European Emissions Trading Scheme.
|
•
|
European Emissions Trading Scheme (ETS), the program through which many of the European Union (EU) member states are implementing the Kyoto Protocol.
|
•
|
California’s Global Warming Solutions Act, which requires the California Air Resources Board to develop regulations and market mechanisms that will target reduction of California’s GHG emissions by 25 percent by 2020.
|
•
|
The U.S. Supreme Court decision in
Massachusetts v. EPA
, 549 U.S. 497, 127 S.Ct. 1438 (2007), confirming that the EPA has the authority to regulate carbon dioxide as an “air pollutant” under the Federal Clean Air Act.
|
•
|
The EPA’s announcement on March 29, 2010 (published as “Interpretation of Regulations that Determine Pollutants Covered by Clean Air Act Permitting Programs,” 75 Fed. Reg. 17004 (April 2, 2010)), and the EPA’s and U.S. Department of Transportation’s joint promulgation of a Final Rule on April 1, 2010, that triggers regulation of GHGs under the Clean Air Act. These collectively may lead to more climate-based claims for damages, and may result in longer agency review time for development projects to determine the extent of potential climate change. Challenges to both the announcement and rulemaking were denied by the Court of Appeals for the D.C. Circuit (see
Coalition for Responsible Regulation v. EPA,
684 F. 3d 102 (D.C. Cir. 2012)), but may be subject to additional legal actions.
|
•
|
Carbon taxes in certain jurisdictions.
|
•
|
GHG emission cap and trade programs in certain jurisdictions.
|
•
|
Whether and to what extent legislation is enacted.
|
•
|
The nature of the legislation (such as a cap and trade system or a tax on emissions).
|
•
|
The GHG reductions required.
|
•
|
The price and availability of offsets.
|
•
|
The amount and allocation of allowances.
|
•
|
Technological and scientific developments leading to new products or services.
|
•
|
Any potential significant physical effects of climate change (such as increased severe weather events, changes in sea levels and changes in temperature).
|
•
|
Whether, and the extent to which, increased compliance costs are ultimately reflected in the prices of our products and services.
|
•
|
Balance physical systems. In addition to cash settlement prior to contract expiration, exchange-traded futures contracts also may be settled by physical delivery of the commodity, providing another source of supply to meet our refinery requirements or marketing demand.
|
•
|
Meet customer needs. Consistent with our policy to generally remain exposed to market prices, we use swap contracts to convert fixed-price sales contracts, which are often requested by refined product consumers, to a floating-market price.
|
•
|
Manage the risk to our cash flows from price exposures on specific crude oil, refined product, natural gas, and electric power transactions.
|
•
|
Enable us to use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades. Derivatives may be utilized to optimize these activities.
|
|
Millions of Dollars Except as Indicated
|
|
|||||||||||||
Expected Maturity Date
|
|
Fixed Rate Maturity
|
|
|
Average Interest Rate
|
|
|
Floating Rate Maturity
|
|
|
Average Interest Rate
|
|
|
||
Year-End 2012
|
|
|
|
|
|
|
|
|
|
|
|
||||
2013
|
|
$
|
12
|
|
|
7.00
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
2014
|
|
|
14
|
|
|
7.00
|
|
|
|
286
|
|
|
1.47
|
|
|
2015
|
|
|
814
|
|
|
2.04
|
|
|
|
714
|
|
|
1.47
|
|
|
2016
|
|
|
15
|
|
|
7.00
|
|
|
|
—
|
|
|
—
|
|
|
2017
|
|
|
1,516
|
|
|
2.99
|
|
|
|
—
|
|
|
—
|
|
|
Remaining years
|
|
|
3,552
|
|
|
5.00
|
|
|
|
50
|
|
|
0.24
|
|
|
Total
|
|
$
|
5,923
|
|
|
|
|
$
|
1,050
|
|
|
|
|
||
Fair value
|
|
$
|
6,507
|
|
|
|
|
$
|
1,050
|
|
|
|
|
•
|
Fluctuations in crude oil, NGL, and natural gas prices, refining and marketing margins and margins for our chemicals business.
|
•
|
Failure of new products and services to achieve market acceptance.
|
•
|
Unexpected changes in costs or technical requirements for constructing, modifying or operating facilities for manufacturing, refining or transportation projects.
|
•
|
Unexpected technological or commercial difficulties in manufacturing, refining or transporting our products, including chemicals products.
|
•
|
Lack of, or disruptions in, adequate and reliable transportation for our crude oil, natural gas, NGL and refined products.
|
•
|
The level and success of natural gas drilling around DCP Midstream’s assets, the level and quality of gas production volumes around its assets and its ability to connect supplies to its gathering and processing systems in light of competition.
|
•
|
Inability to timely obtain or maintain permits, including those necessary for capital projects; comply with government regulations; or make capital expenditures required to maintain compliance.
|
•
|
Failure to complete definitive agreements and feasibility studies for, and to timely complete construction of, announced and future refinery, chemical plant, midstream and transportation projects.
|
•
|
Potential disruption or interruption of our operations due to accidents, weather events, civil unrest, political events, terrorism or cyber attacks.
|
•
|
International monetary conditions and exchange controls.
|
•
|
Substantial investment or reduced demand for products as a result of existing or future environmental rules and regulations.
|
•
|
Liability for remedial actions, including removal and reclamation obligations, under environmental regulations.
|
•
|
Liability resulting from litigation.
|
•
|
General domestic and international economic and political developments, including armed hostilities; expropriation of assets; changes in governmental policies relating to crude oil, natural gas, NGL or refined product pricing, regulation or taxation; other political, economic or diplomatic developments; and international monetary fluctuations.
|
•
|
Changes in tax, environmental and other laws and regulations (including alternative energy mandates) applicable to our business.
|
•
|
Limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets.
|
•
|
Inability to obtain economical financing for projects, construction or modification of facilities and general corporate purposes.
|
•
|
The operation, financing and distribution decisions of our joint ventures.
|
•
|
Domestic and foreign supplies of crude oil and other feedstocks.
|
•
|
Domestic and foreign supplies of refined products, such as gasoline, diesel, jet fuel, home heating oil and petrochemicals.
|
•
|
Overcapacity or under capacity in the refining, midstream and chemical industries.
|
•
|
Fluctuations in consumer demand for refined products.
|
•
|
Crude oil/refined product inventory levels.
|
•
|
The factors generally described in Item 1A—Risk Factors in this report.
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Greg C. Garland
|
|
/s/ Greg G. Maxwell
|
|
|
|
Greg C. Garland
|
|
Greg G. Maxwell
|
Chairman, President and
|
|
Executive Vice President, Finance
|
Chief Executive Officer
|
|
and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
February 22, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
|
Phillips 66
|
|
|||||||||||||||
|
|
||||||||||||||||
|
Millions of Dollars
|
||||||||||||||||
|
Attributable to Phillips 66
|
|
|
||||||||||||||
|
Common Stock
|
|
|
|
|
|
|||||||||||
|
Par Value
|
|
Capital in Excess of Par
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Net Parent
Company
Investment
|
|
Accum. Other
Comprehensive
Income (Loss)
|
|
Noncontrolling
Interests
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2009
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
26,588
|
|
329
|
|
23
|
|
26,940
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
735
|
|
—
|
|
5
|
|
740
|
|
|
Net transfers to ConocoPhillips
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,536
|
)
|
—
|
|
—
|
|
(1,536
|
)
|
|
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(115
|
)
|
—
|
|
(115
|
)
|
|
Distributions to noncontrolling interests and other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
(3
|
)
|
|
December 31, 2010
|
—
|
|
—
|
|
—
|
|
—
|
|
25,787
|
|
214
|
|
25
|
|
26,026
|
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
4,775
|
|
—
|
|
5
|
|
4,780
|
|
|
Net transfers to ConocoPhillips
|
—
|
|
—
|
|
—
|
|
—
|
|
(7,420
|
)
|
—
|
|
—
|
|
(7,420
|
)
|
|
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(92
|
)
|
—
|
|
(92
|
)
|
|
Distributions to noncontrolling interests and other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
|
December 31, 2011
|
—
|
|
—
|
|
—
|
|
—
|
|
23,142
|
|
122
|
|
29
|
|
23,293
|
|
|
Net income
|
—
|
|
—
|
|
—
|
|
2,999
|
|
1,125
|
|
—
|
|
7
|
|
4,131
|
|
|
Net transfers to/from ConocoPhillips
|
—
|
|
—
|
|
—
|
|
—
|
|
(5,707
|
)
|
(540
|
)
|
—
|
|
(6,247
|
)
|
|
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
104
|
|
—
|
|
104
|
|
|
Reclassification of net parent company investment to capital in excess of par
|
—
|
|
18,560
|
|
—
|
|
—
|
|
(18,560
|
)
|
—
|
|
—
|
|
—
|
|
|
Issuance of common stock at the Separation
|
6
|
|
(6
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Cash dividends paid on common stock
|
—
|
|
—
|
|
—
|
|
(282
|
)
|
—
|
|
—
|
|
—
|
|
(282
|
)
|
|
Repurchase of common stock
|
—
|
|
—
|
|
(356
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(356
|
)
|
|
Benefit plan activity
|
—
|
|
172
|
|
—
|
|
(4
|
)
|
—
|
|
—
|
|
—
|
|
168
|
|
|
Distributions to noncontrolling interests and other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5
|
)
|
(5
|
)
|
|
December 31, 2012
|
$
|
6
|
|
18,726
|
|
(356
|
)
|
2,713
|
|
—
|
|
(314
|
)
|
31
|
|
20,806
|
|
|
|
|
Shares in Thousands
|
|||
|
|
|
Common Stock Issued
|
|
Treasury Stock
|
|
December 31, 2011
|
|
|
—
|
|
—
|
|
Issuance of common stock at the Separation
|
|
|
625,272
|
|
—
|
|
Repurchase of common stock
|
|
|
—
|
|
7,604
|
|
Shares issued—share-based compensation
|
|
|
5,878
|
|
—
|
|
December 31, 2012
|
|
|
631,150
|
|
7,604
|
|
See Notes to Consolidated Financial Statements.
|
Notes to Consolidated Financial Statements
|
Phillips 66
|
•
|
Our consolidated statements of income, comprehensive income and cash flows for the year ended December 31, 2012, consist of the consolidated results of Phillips 66 for the eight months ended December 31, 2012, and of the combined results of the downstream businesses for the four months ended April 30, 2012. Our consolidated statements of income, comprehensive income and cash flows for the years ended December 31, 2011 and 2010, consist entirely of the combined results of the downstream businesses.
|
•
|
Our consolidated balance sheet at December 31, 2012, consists of the consolidated balances of Phillips 66, while at December 31, 2011, it consists of the combined balances of the downstream businesses.
|
•
|
Our consolidated statement of changes in equity for the year ended December 31, 2012, consists of both the combined activity for the downstream businesses prior to April 30, 2012, and the consolidated activity for Phillips 66 completed at and subsequent to the Separation. Our consolidated statement of changes in equity for the years ended December 31, 2011 and 2010, consists entirely of the combined activity of the downstream businesses.
|
▪
|
Consolidation Principles and Investments
—Our consolidated financial statements include the accounts of majority-owned, controlled subsidiaries and variable interest entities where we are the primary beneficiary. The equity method is used to account for investments in affiliates in which we have the ability to exert significant influence over the affiliates’ operating and financial policies. When we do not have the ability to exert significant influence, the investment is either classified as available-for-sale if fair value is readily determinable, or the cost method is used if fair value is not readily determinable. Undivided interests in pipelines, natural gas plants and terminals are consolidated on a proportionate basis. Other securities and investments are generally carried at cost.
|
▪
|
Net Parent Company Investment
—In the consolidated balance sheet, net parent company investment includes, prior to the Separation, ConocoPhillips’ historical investment in us, our accumulated net earnings after taxes, and the net effect of transactions with, and allocations from, ConocoPhillips.
|
▪
|
Foreign Currency Translation
—Adjustments resulting from the process of translating foreign functional currency financial statements into U.S. dollars are included in accumulated other comprehensive income in stockholders' equity. Foreign currency transaction gains and losses are included in current earnings. Most of our foreign operations use their local currency as the functional currency.
|
▪
|
Use of Estimates
—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. Actual results could differ from these estimates.
|
▪
|
Revenue Recognition
—Revenues associated with sales of crude oil, natural gas liquids (NGL), petroleum and chemical products, and other items are recognized when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery of goods occurs, either immediately or within a fixed delivery schedule that is reasonable and customary in the industry.
|
▪
|
Cash Equivalents
—Cash equivalents are highly liquid, short-term investments that are readily convertible to known amounts of cash and have original maturities of 90 days or less from their date of purchase. They are carried at cost plus accrued interest, which approximates fair value.
|
▪
|
Shipping and Handling Costs
—We record shipping and handling costs in purchased crude oil and products. Freight costs billed to customers are recorded as a component of revenue.
|
▪
|
Inventories
—We have several valuation methods for our various types of inventories and consistently use the following methods for each type of inventory. Crude oil and petroleum products inventories are valued at the lower of cost or market in the aggregate, primarily on the last-in, first-out (LIFO) basis. Any necessary lower-of-cost-or-market write-downs at year end are recorded as permanent adjustments to the LIFO cost basis. LIFO is used to better match current inventory costs with current revenues and to meet tax-conformity requirements. Costs include both direct and indirect expenditures incurred in bringing an item or product to its existing condition and location, but not unusual/nonrecurring costs or research and development costs. Materials and supplies inventories are valued using the weighted-average-cost method.
|
▪
|
Fair Value Measurements
—We categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or our assumptions about pricing by market participants.
|
▪
|
Derivative Instruments
—Derivative instruments are recorded on the balance sheet at fair value. If the right of offset exists and certain other criteria are met, derivative assets and liabilities with the same counterparty are netted on the
|
▪
|
Capitalized Interest
—Interest from external borrowings is capitalized on major projects with an expected construction period of one year or longer. Capitalized interest is added to the cost of the underlying asset’s properties, plant and equipment and is amortized over the useful life of the assets.
|
▪
|
Intangible Assets Other Than Goodwill
—Intangible assets with finite useful lives are amortized by the straight-line method over their useful lives. Intangible assets with indefinite useful lives are not amortized but are tested at least annually for impairment. Each reporting period, we evaluate the remaining useful lives of intangible assets not being amortized to determine whether events and circumstances continue to support indefinite useful lives. These indefinite-lived intangibles are considered impaired if the fair value of the intangible asset is lower than net book value. The fair value of intangible assets is determined based on quoted market prices in active markets, if available. If quoted market prices are not available, fair value of intangible assets is determined based upon the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants, or upon estimated replacement cost, if expected future cash flows from the intangible asset are not determinable.
|
▪
|
Goodwill
—Goodwill resulting from a business combination is not amortized but is tested at least annually for impairment. If the fair value of a reporting unit is less than the recorded book value of the reporting unit’s assets (including goodwill), less liabilities, then a hypothetical purchase price allocation is performed on the reporting unit’s assets and liabilities using the fair value of the reporting unit as the purchase price in the calculation. If the amount of goodwill resulting from this hypothetical purchase price allocation is less than the recorded amount of goodwill, the recorded goodwill is written down to the new amount. For purposes of goodwill impairment calculations, Refining and Marketing (R&M) is our only reporting unit.
|
▪
|
Depreciation and Amortization
—Depreciation and amortization of properties, plants and equipment are determined by either the individual-unit-straight-line method or the group-straight-line method (for those individual units that are highly integrated with other units).
|
▪
|
Impairment of Properties, Plants and Equipment
—Properties, plants and equipment used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the future cash flows expected to be generated by an asset group. If indicators of potential impairment exist, an undiscounted cash flow test is performed. If the sum of the undiscounted pre-tax cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value through additional amortization or depreciation provisions and reported as impairments in the periods in which the determination of the impairment is made. Individual assets are grouped for impairment purposes at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets—generally at an entire refinery complex level. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined based on the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants or based on a multiple of operating cash flows validated with historical market transactions of similar assets where possible. Long-lived assets held for sale are accounted for at the lower of amortized cost or fair value, less cost to sell, with fair value determined using a binding negotiated price, if available, or present value of expected future cash flows as previously described.
|
▪
|
Impairment of Investments in Nonconsolidated Entities
—Investments in nonconsolidated entities are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred. When indicators exist, the fair value is estimated and compared to the investment carrying value. If any impairment is judgmentally determined to be other than temporary, the carrying value of the investment is written down to fair value. The fair value of the impaired investment is based on quoted market prices, if available, or upon the present value of expected future cash flows using discount rates believed to be consistent with those used by principal market participants, plus market analysis of comparable assets owned by the investee, if appropriate.
|
▪
|
Maintenance and Repairs
—Costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Major refinery maintenance turnarounds are expensed as incurred.
|
▪
|
Property Dispositions
—When complete units of depreciable property are sold, the asset cost and related accumulated depreciation are eliminated, with any gain or loss reflected in the “Net gain on dispositions” line of our consolidated statement of income. When less than complete units of depreciable property are disposed of or retired, the difference between asset cost and salvage value is charged or credited to accumulated depreciation.
|
▪
|
Asset Retirement Obligations and Environmental Costs
—Fair value of legal obligations to retire and remove long-lived assets are recorded in the period in which the obligation is incurred. When the liability is initially recorded, we capitalize this cost by increasing the carrying amount of the related properties, plants and equipment. Over time, the liability is increased for the change in its present value, and the capitalized cost in properties, plants and equipment is depreciated over the useful life of the related asset. For additional information, see
Note 11—Asset Retirement Obligations and Accrued Environmental Costs
.
|
▪
|
Guarantees
—Fair value of a guarantee is determined and recorded as a liability at the time the guarantee is given. The initial liability is subsequently reduced as we are released from exposure under the guarantee. We amortize the guarantee liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of guarantee. In cases where the guarantee term is indefinite, we reverse the liability when we have information indicating the liability is essentially relieved or amortize it over an appropriate time period as the fair value of our guarantee exposure declines over time. We amortize the guarantee liability to the related income statement line item based on the nature of the guarantee. When it becomes probable we will have to perform on a guarantee, we accrue a separate liability if it is reasonably estimable, based on the facts and circumstances at that time. We reverse the fair value liability only when there is no further exposure under the guarantee.
|
▪
|
Stock-Based Compensation
—We recognize stock-based compensation expense over the shorter of: (1) the service period (i.e., the time required to earn the award); or (2) the period beginning at the start of the service period and ending when an employee first becomes eligible for retirement, but not less than six months, which is the minimum time required for an award to not be subject to forfeiture. We have elected to recognize expense on a straight-line basis over the service period for the entire award, whether the award was granted with ratable or cliff vesting.
|
▪
|
Income Taxes
—For periods prior to the Separation, our taxable income was included in the U.S. federal income tax returns and in a number of state income tax returns of ConocoPhillips. In the accompanying consolidated financial statements for periods prior to the Separation, our provision for income taxes is computed as if we were a stand-alone tax-paying entity.
|
▪
|
Taxes Collected from Customers and Remitted to Governmental Authorities
—Excise taxes are reported gross within sales and other operating revenues and taxes other than income taxes, while other sales and value-added taxes are recorded net in taxes other than income taxes.
|
▪
|
Treasury Stock
—We record treasury stock purchases at cost, which includes incremental direct transaction costs. Amounts are recorded as reductions in stockholders' equity in the consolidated balance sheet.
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|||
Crude oil and petroleum products
|
$
|
3,138
|
|
|
3,193
|
|
Materials and supplies
|
292
|
|
|
273
|
|
|
|
$
|
3,430
|
|
|
3,466
|
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|||
Equity investments
|
$
|
10,291
|
|
|
10,233
|
|
Long-term receivables
|
132
|
|
|
68
|
|
|
Other investments
|
48
|
|
|
5
|
|
|
|
$
|
10,471
|
|
|
10,306
|
|
•
|
WRB Refining LP—
49.6 percent
owned business venture with Cenovus Energy Inc. (Cenovus)—owns the Wood River and Borger refineries.
|
•
|
DCP Midstream—
50 percent
owned joint venture with Spectra Energy Corp—owns and operates gas plants, gathering systems, storage facilities and fractionation plants.
|
•
|
CPChem—
50 percent
owned joint venture with Chevron Corporation—manufactures and markets petrochemicals and plastics.
|
•
|
Malaysian Refining Company Sdn. Bdh. (MRC)—
47 percent
owned business venture with Petronas, the Malaysian state oil company—owns the Melaka, Malaysia refinery.
|
•
|
Rockies Express Pipeline LLC (REX)—
25 percent
owned joint venture with Tallgrass Energy Partners L.P. and Sempra Energy Corp.—owns and operates a natural gas pipeline system from Cheyenne, Colorado to Clarington, Ohio.
|
•
|
DCP Sand Hills Pipeline, LLC and DCP Southern Hills Pipeline, LLC—one-third owned joint ventures with DCP Midstream and Spectra Energy—own and operate NGL pipeline systems from the Eagle Ford and Midcontinent region to Mont Belvieu, Texas.
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
||||
Revenues
|
$
|
55,401
|
|
|
59,044
|
|
|
45,123
|
|
Income before income taxes
|
6,265
|
|
|
6,083
|
|
|
3,659
|
|
|
Net income
|
6,122
|
|
|
5,742
|
|
|
3,390
|
|
|
Current assets
|
9,646
|
|
|
8,752
|
|
|
8,515
|
|
|
Noncurrent assets
|
37,269
|
|
|
34,329
|
|
|
33,923
|
|
|
Current liabilities
|
8,319
|
|
|
6,837
|
|
|
6,978
|
|
|
Noncurrent liabilities
|
9,251
|
|
|
10,279
|
|
|
11,957
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
2012
|
|
2011*
|
|||||||||||||||
|
Gross
PP&E
|
|
|
Accum.
D&A
|
|
|
Net
PP&E
|
|
|
Gross
PP&E
|
|
|
Accum.
D&A
|
|
|
Net
PP&E
|
|
|
R&M
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Refining
|
$
|
19,010
|
|
|
6,157
|
|
|
12,853
|
|
|
19,333
|
|
|
6,630
|
|
|
12,703
|
|
Transportation
|
2,394
|
|
|
966
|
|
|
1,428
|
|
|
2,359
|
|
|
931
|
|
|
1,428
|
|
|
Marketing and other
|
1,479
|
|
|
834
|
|
|
645
|
|
|
1,386
|
|
|
766
|
|
|
620
|
|
|
Total R&M
|
22,883
|
|
|
7,957
|
|
|
14,926
|
|
|
23,078
|
|
|
8,327
|
|
|
14,751
|
|
|
Midstream
|
66
|
|
|
50
|
|
|
16
|
|
|
64
|
|
|
51
|
|
|
13
|
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate and Other
|
880
|
|
|
415
|
|
|
465
|
|
|
14
|
|
|
7
|
|
|
7
|
|
|
|
$
|
23,829
|
|
|
8,422
|
|
|
15,407
|
|
|
23,156
|
|
|
8,385
|
|
|
14,771
|
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|||
Balance at January 1
|
$
|
3,332
|
|
|
3,633
|
|
Goodwill allocated to assets sold
|
(25
|
)
|
|
(273
|
)
|
|
Tax and other adjustments
|
37
|
|
|
(28
|
)
|
|
Balance at December 31
|
$
|
3,344
|
|
|
3,332
|
|
|
Millions of Dollars
|
|||||
|
Gross Carrying
Amount
|
|||||
|
2012
|
|
|
2011
|
|
|
Indefinite-Lived Intangible Assets
|
|
|
|
|||
Trade names and trademarks
|
$
|
494
|
|
|
494
|
|
Refinery air and operating permits
|
207
|
|
|
207
|
|
|
|
$
|
701
|
|
|
701
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
R&M
|
|
|
|
|
|
||||
United States
|
$
|
45
|
|
|
470
|
|
|
83
|
|
International
|
608
|
|
|
2
|
|
|
1,616
|
|
|
|
653
|
|
|
472
|
|
|
1,699
|
|
|
Midstream
|
480
|
|
|
—
|
|
|
—
|
|
|
Corporate
|
25
|
|
|
—
|
|
|
—
|
|
|
|
$
|
1,158
|
|
|
472
|
|
|
1,699
|
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|||
Asset retirement obligations
|
$
|
314
|
|
|
378
|
|
Accrued environmental costs
|
530
|
|
|
542
|
|
|
Total asset retirement obligations and accrued environmental costs
|
844
|
|
|
920
|
|
|
Asset retirement obligations and accrued environmental costs due within one year*
|
(104
|
)
|
|
(133
|
)
|
|
Long-term asset retirement obligations and accrued environmental costs
|
$
|
740
|
|
|
787
|
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|||
Balance at January 1
|
$
|
378
|
|
|
332
|
|
Accretion of discount
|
13
|
|
|
15
|
|
|
New obligations
|
3
|
|
|
3
|
|
|
Changes in estimates of existing obligations
|
(14
|
)
|
|
52
|
|
|
Spending on existing obligations
|
(16
|
)
|
|
(20
|
)
|
|
Property dispositions
|
(53
|
)
|
|
(2
|
)
|
|
Foreign currency translation
|
3
|
|
|
(2
|
)
|
|
Balance at December 31
|
$
|
314
|
|
|
378
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Basic EPS Calculation
|
|
|
|
|
|
||||
Allocation of earnings:
|
|
|
|
|
|
||||
Net income attributable to Phillips 66
(millions)
|
$
|
4,124
|
|
|
4,775
|
|
|
735
|
|
Income allocated to participating securities
(millions)
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
Income available to common stockholders
(millions)
|
$
|
4,122
|
|
|
4,775
|
|
|
735
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding—basic
(thousands) |
628,835
|
|
|
627,628
|
|
|
627,628
|
|
|
|
|
|
|
|
|
||||
Earnings per share—basic
|
$
|
6.55
|
|
|
7.61
|
|
|
1.17
|
|
|
|
|
|
|
|
||||
Diluted EPS Calculation
|
|
|
|
|
|
||||
Allocation of earnings:
|
|
|
|
|
|
||||
Net income attributable to Phillips 66
(millions)
|
$
|
4,124
|
|
|
4,775
|
|
|
735
|
|
Income allocated to participating securities
(millions)
|
—
|
|
|
—
|
|
|
—
|
|
|
Income available to common stockholders
(millions)
|
$
|
4,124
|
|
|
4,775
|
|
|
735
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding—basic
(thousands) |
628,835
|
|
|
627,628
|
|
|
627,628
|
|
|
Dilutive effect of stock-based compensation
(thousands)
|
7,929
|
|
|
7,017
|
|
|
7,017
|
|
|
Weighted-average common shares outstanding—diluted
(thousands) |
636,764
|
|
|
634,645
|
|
|
634,645
|
|
|
|
|
|
|
|
|
||||
Earnings per share—diluted
|
$
|
6.48
|
|
|
7.52
|
|
|
1.16
|
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|||
1.95% Senior Notes due 2015
|
$
|
800
|
|
|
—
|
|
2.95% Senior Notes due 2017
|
1,500
|
|
|
—
|
|
|
4.30% Senior Notes due 2022
|
2,000
|
|
|
—
|
|
|
5.875% Senior Notes due 2042
|
1,500
|
|
|
—
|
|
|
7.68% Notes due 2012
|
—
|
|
|
7
|
|
|
Industrial Development Bonds due 2018 through 2022 at 0.09%–0.32% at year-end 2012 and 0.08%–5.75% at year-end 2011
|
50
|
|
|
234
|
|
|
Term loan due 2014 through 2015 at 1.465% at year-end 2012
|
1,000
|
|
|
—
|
|
|
Note payable to Merey Sweeny, L.P. due 2020 at 7% (related party)
|
122
|
|
|
134
|
|
|
Other
|
1
|
|
|
1
|
|
|
Debt at face value
|
6,973
|
|
|
376
|
|
|
Capitalized leases
|
6
|
|
|
14
|
|
|
Net unamortized premiums and discounts
|
(5
|
)
|
|
1
|
|
|
Total debt
|
6,974
|
|
|
391
|
|
|
Short-term debt
|
(13
|
)
|
|
(30
|
)
|
|
Long-term debt
|
$
|
6,961
|
|
|
361
|
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
Assets
|
|
|
|
|||
Prepaid expenses and other current assets
|
$
|
767
|
|
|
665
|
|
Other assets
|
3
|
|
|
5
|
|
|
Liabilities
|
|
|
|
|||
Other accruals
|
766
|
|
|
703
|
|
|
Other liabilities and deferred credits
|
3
|
|
|
1
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
||||
Sales and other operating revenues
|
$
|
3
|
|
|
(620
|
)
|
|
(257
|
)
|
Equity in earnings of affiliates
|
6
|
|
|
—
|
|
|
—
|
|
|
Other income
|
39
|
|
|
12
|
|
|
(33
|
)
|
|
Purchased crude oil and products
|
32
|
|
|
162
|
|
|
151
|
|
|
Open Position
Long / (Short)
|
||||
|
2012
|
|
|
2011
|
|
Commodity
|
|
|
|
||
Crude oil, refined products and NGL (millions of barrels)
|
(8
|
)
|
|
(13
|
)
|
|
Millions of Dollars
|
|||||||||||||||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|||||||||||||||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity derivatives
|
$
|
380
|
|
|
385
|
|
|
2
|
|
|
767
|
|
|
389
|
|
|
270
|
|
|
6
|
|
|
665
|
|
Rabbi trust assets
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total assets
|
430
|
|
|
385
|
|
|
2
|
|
|
817
|
|
|
389
|
|
|
270
|
|
|
6
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity derivatives
|
393
|
|
|
372
|
|
|
1
|
|
|
766
|
|
|
428
|
|
|
267
|
|
|
4
|
|
|
699
|
|
|
Total liabilities
|
393
|
|
|
372
|
|
|
1
|
|
|
766
|
|
|
428
|
|
|
267
|
|
|
4
|
|
|
699
|
|
|
Net assets (liabilities)
|
$
|
37
|
|
|
13
|
|
|
1
|
|
|
51
|
|
|
(39
|
)
|
|
3
|
|
|
2
|
|
|
(34
|
)
|
|
Millions of Dollars
|
|||||||||||
|
|
|
Fair Value
Measurements Using
|
|
|
|||||||
|
Fair Value*
|
|
|
Level 1
Inputs
|
|
|
Level 3
Inputs
|
|
|
Before-
Tax Loss
|
|
|
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|||||
Net PP&E (held for use)
|
$
|
84
|
|
|
84
|
|
|
—
|
|
|
68
|
|
Net PP&E (held for sale)
|
32
|
|
|
32
|
|
|
—
|
|
|
42
|
|
|
Equity method investments
|
781
|
|
|
—
|
|
|
781
|
|
|
1,044
|
|
•
|
Cash and cash equivalents: The carrying amount reported on the balance sheet approximates fair value.
|
•
|
Accounts and notes receivable: The carrying amount reported on the balance sheet approximates fair value.
|
•
|
Debt: The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated based on quoted market prices as a Level 2 fair value.
|
•
|
Commodity swaps: Fair value is estimated based on forward market prices and approximates the exit price at period end. When forward market prices are not available, fair value is estimated using the forward prices of a similar commodity with adjustments for differences in quality or location.
|
•
|
Futures: Fair values are based on quoted market prices obtained from the New York Mercantile Exchange, the InterContinental Exchange Futures, or other traded exchanges.
|
•
|
Forward-exchange contracts: Fair values are estimated by comparing the contract rate to the forward rate in effect at the end of the respective reporting periods and approximating the exit price at those dates.
|
|
Millions of Dollars
|
|
|||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
|||||||||
|
2012
|
|
|
2011
|
|
|
2012
|
|
2011
|
|
|
||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivatives
|
$
|
84
|
|
|
73
|
|
|
84
|
|
|
73
|
|
|
Rabbi trust assets
|
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivatives
|
|
49
|
|
|
52
|
|
|
49
|
|
|
52
|
|
|
Total debt, excluding capital leases
|
|
6,968
|
|
|
377
|
|
|
7,558
|
|
|
406
|
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
||||
Minimum rentals
|
$
|
554
|
|
|
576
|
|
|
652
|
|
Contingent rentals
|
8
|
|
|
5
|
|
|
6
|
|
|
Less: sublease rental income*
|
93
|
|
|
97
|
|
|
114
|
|
|
|
$
|
469
|
|
|
484
|
|
|
544
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
|
2011
|
|
|||||||||
|
U.S.
|
|
|
Int'l.
|
|
|
U.S.
|
|
|
Int'l.
|
|
|
|
|
|
|||
Change in Benefit Obligation
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Benefit obligation at January 1
|
$
|
—
|
|
|
237
|
|
|
—
|
|
|
230
|
|
|
—
|
|
|
—
|
|
Service cost
|
82
|
|
|
22
|
|
|
—
|
|
|
5
|
|
|
4
|
|
|
—
|
|
|
Interest cost
|
65
|
|
|
25
|
|
|
—
|
|
|
13
|
|
|
5
|
|
|
—
|
|
|
Plan participant contributions
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
Plan amendments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
Actuarial loss
|
90
|
|
|
83
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
Benefits paid
|
(78
|
)
|
|
(12
|
)
|
|
—
|
|
|
(10
|
)
|
|
(1
|
)
|
|
—
|
|
|
Liabilities assumed from Separation
|
2,465
|
|
|
396
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
Foreign currency exchange rate change
|
—
|
|
|
4
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
Benefit obligation at December 31*
|
$
|
2,624
|
|
|
757
|
|
|
—
|
|
|
237
|
|
|
191
|
|
|
—
|
|
*Accumulated benefit obligation portion of above at December 31:
|
$
|
2,265
|
|
|
563
|
|
|
—
|
|
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Change in Fair Value of Plan Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fair value of plan assets at January 1
|
$
|
—
|
|
|
120
|
|
|
—
|
|
|
119
|
|
|
—
|
|
|
—
|
|
Actual return on plan assets
|
91
|
|
|
35
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
Company contributions
|
37
|
|
|
36
|
|
|
—
|
|
|
12
|
|
|
1
|
|
|
—
|
|
|
Plan participant contributions
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
Benefits paid
|
(78
|
)
|
|
(12
|
)
|
|
—
|
|
|
(10
|
)
|
|
(1
|
)
|
|
—
|
|
|
Assets received from Separation
|
1,712
|
|
|
344
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Foreign currency exchange rate change
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
Fair value of plan assets at December 31
|
$
|
1,762
|
|
|
527
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Funded Status at December 31
|
$
|
(862
|
)
|
|
(230
|
)
|
|
—
|
|
|
(117
|
)
|
|
(191
|
)
|
|
—
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
|
2011
|
|
|||||||||
|
U.S.
|
|
|
Int'l.
|
|
|
U.S.
|
|
|
Int'l.
|
|
|
|
|
|
|||
Amounts Recognized in the Consolidated Balance Sheet at December 31
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Current liabilities
|
$
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
Noncurrent liabilities
|
(854
|
)
|
|
(230
|
)
|
|
—
|
|
|
(117
|
)
|
|
(188
|
)
|
|
—
|
|
|
Total recognized
|
$
|
(862
|
)
|
|
(230
|
)
|
|
—
|
|
|
(117
|
)
|
|
(191
|
)
|
|
—
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
|
2011
|
|
|||||||||
|
U.S.
|
|
|
Int'l.
|
|
|
U.S.
|
|
|
Int'l.
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Unrecognized net actuarial loss (gain)
|
$
|
839
|
|
|
161
|
|
|
—
|
|
|
36
|
|
|
(4
|
)
|
|
—
|
|
Unrecognized prior service cost (credit)
|
15
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
|
2011
|
|
|||||||||
|
U.S.
|
|
|
Int'l.
|
|
|
U.S.
|
|
|
Int'l.
|
|
|
|
|
|
|||
Sources of Change in Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net loss arising during the period
|
$
|
(78
|
)
|
|
(72
|
)
|
|
—
|
|
|
(8
|
)
|
|
(2
|
)
|
|
—
|
|
Amortization of (gain) loss included in income
|
49
|
|
|
7
|
|
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
—
|
|
|
Net change during the period
|
$
|
(29
|
)
|
|
(65
|
)
|
|
—
|
|
|
(5
|
)
|
|
(3
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Prior service credit arising during the period
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
Amortization of prior service cost (credit) included in income
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net change during the period
|
$
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
Millions of Dollars
|
||||||||||||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|||||||||||||
|
U.S.
|
|
|
Int'l.
|
|
|
U.S.
|
|
|
Int'l.
|
|
|
U.S.
|
|
|
Int'l.
|
|
|
|
|
|
|
|
||||
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service cost
|
$
|
82
|
|
|
22
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
4
|
|
|
—
|
|
|
—
|
|
Interest cost
|
65
|
|
|
25
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
12
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
Expected return on plan assets
|
(81
|
)
|
|
(21
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Amortization of prior service cost
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Recognized net actuarial loss (gain)
|
49
|
|
|
7
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
Subtotal net periodic benefit cost
|
117
|
|
|
32
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
Allocated benefit cost from ConocoPhillips
|
71
|
|
|
13
|
|
|
199
|
|
|
39
|
|
|
234
|
|
|
47
|
|
|
7
|
|
|
19
|
|
|
26
|
|
|
Total net periodic benefit cost
|
$
|
188
|
|
|
45
|
|
|
199
|
|
|
52
|
|
|
234
|
|
|
60
|
|
|
15
|
|
|
19
|
|
|
26
|
|
|
Millions of Dollars
|
||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
|||||
|
U.S.
|
|
|
Int'l.
|
|
|
|
||
|
|
|
|
|
|
||||
Unrecognized net actuarial loss
|
$
|
84
|
|
|
16
|
|
|
—
|
|
Unrecognized prior service cost (credit)
|
3
|
|
|
(2
|
)
|
|
(1
|
)
|
|
Pension Benefits
|
|
Other Benefits
|
|||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|||||
|
U.S.
|
|
|
Int'l.
|
|
U.S.
|
|
Int'l.
|
|
|
|
|
Assumptions Used to Determine Benefit Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
3.60
|
%
|
|
4.20
|
|
—
|
|
5.30
|
|
3.70
|
|
—
|
Rate of compensation increase
|
3.85
|
|
|
3.60
|
|
—
|
|
2.60
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions Used to Determine Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
4.20
|
%
|
|
5.10
|
|
—
|
|
5.40
|
|
4.20
|
|
—
|
Expected return on plan assets
|
7.00
|
|
|
5.80
|
|
—
|
|
5.80
|
|
—
|
|
—
|
Rate of compensation increase
|
3.75
|
|
|
3.60
|
|
—
|
|
2.60
|
|
—
|
|
—
|
•
|
Fair values of equity securities and government debt securities categorized in Level 1 are primarily based on quoted market prices.
|
•
|
Fair values of corporate debt securities, agency and mortgage-backed securities and government debt securities categorized in Level 2 are estimated using recently executed transactions and market price quotations. If there have been no market transactions in a particular fixed income security, its fair market value is calculated by pricing models that benchmark the security against other securities with actual market prices. When observable price quotations are not available, fair value is based on pricing models that use something other than actual market prices (e.g., observable inputs such as benchmark yields, reported trades and issuer spreads for similar securities), and these securities are categorized in Level 3 of the fair value hierarchy.
|
•
|
Fair values of investments in common/collective trusts are determined by the issuer of each fund based on the fair value of the underlying assets.
|
•
|
Fair values of mutual funds are valued based on quoted market prices, which represent the net asset value of shares held. Certain mutual funds are categorized in Level 2 as they are not valued on a daily basis.
|
•
|
Cash and cash equivalents are valued at cost, which approximates fair value.
|
•
|
Fair values of derivatives are generally calculated from pricing models with market input parameters from third-party sources.
|
•
|
Fair values of insurance contracts are valued at the present value of the future benefit payments owed by the insurance company to the plans' participants.
|
•
|
Fair values of real estate investments are valued using real estate valuation techniques and other methods that include reference to third-party sources and sales comparables where available.
|
|
Millions of Dollars
|
|||||||||||||||||||||||
|
U.S.
|
|
International
|
|||||||||||||||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S.
|
$
|
529
|
|
|
—
|
|
|
—
|
|
|
529
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
100
|
|
International
|
340
|
|
|
—
|
|
|
—
|
|
|
340
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
Common/collective trusts
|
—
|
|
|
237
|
|
|
—
|
|
|
237
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
97
|
|
|
Mutual funds
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
160
|
|
|
54
|
|
|
—
|
|
|
214
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
Corporate
|
—
|
|
|
287
|
|
|
1
|
|
|
288
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Agency and mortgage-backed securities
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Common/collective trusts
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
112
|
|
|
Mutual funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Cash and cash equivalents
|
42
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
Derivatives
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Insurance contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
|
Real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
Total*
|
$
|
1,071
|
|
|
684
|
|
|
1
|
|
|
1,756
|
|
|
295
|
|
|
209
|
|
|
22
|
|
|
526
|
|
|
Millions of Dollars
|
|||||||||||||||||||||||
|
U.S.
|
|
International
|
|||||||||||||||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S.
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
International
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Common/collective trusts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
56
|
|
|
Mutual funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Agency and mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Common/collective trusts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
|
Mutual funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Insurance contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
|
Real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
Total
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
98
|
|
|
20
|
|
|
120
|
|
•
|
Provide for a company match of participant contributions up to
5 percent
of eligible pay.
|
•
|
Eliminate the stock savings feature.
|
•
|
Add “Success Share,” a discretionary company contribution to thrift feature participants that can range from
0
to
6
percent of eligible pay, with a target of
2 percent
.
|
•
|
Exercisable awards of stock options and stock appreciation rights were converted in accordance with the Employee Matters Agreement so that the grantee received options to purchase both ConocoPhillips and Phillips 66 common stock.
|
•
|
Unexercisable awards of stock options held by Phillips 66 employees were replaced with substitute awards to purchase only Phillips 66 common stock.
|
•
|
Restricted stock and PSUs awarded for completed performance periods under the ConocoPhillips Performance Share Program (PSP) were converted in accordance with the Employee Matters Agreement so that the grantee received both ConocoPhillips and Phillips 66 restricted stock and PSUs.
|
•
|
Restricted stock and RSUs received under all programs other than the PSP were replaced entirely with Phillips 66 restricted stock and RSUs.
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
||||||
|
Options
|
|
|
Weighted-
Average
Exercise Price
|
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
|
Aggregate
Intrinsic Value |
|
|||
|
|
|
|
|
|
|
|
|||||||
Outstanding at April 30, 2012
|
12,597,240
|
|
|
$
|
23.06
|
|
|
|
|
|
|
|||
Granted
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|||
Forfeited
|
(140,086
|
)
|
|
32.03
|
|
|
|
|
|
|
||||
Exercised
|
(4,045,922
|
)
|
|
16.06
|
|
|
|
|
$
|
123
|
|
|||
Expired or canceled
|
(55,312
|
)
|
|
31.80
|
|
|
|
|
|
|||||
Outstanding at December 31, 2012
|
8,355,920
|
|
|
$
|
26.24
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Vested at December 31, 2012
|
7,429,422
|
|
|
$
|
25.78
|
|
|
|
|
$
|
145
|
|
||
|
|
|
|
|
|
|
|
|||||||
Exercisable at December 31, 2012
|
5,530,006
|
|
|
$
|
24.52
|
|
|
|
|
$
|
103
|
|
|
2012
|
|
|
2011
|
|
2010
|
Assumptions used
|
|
|
|
|
|
|
Risk-free interest rate
|
1.62
|
%
|
|
3.10
|
|
3.23
|
Dividend yield
|
4.00
|
%
|
|
4.00
|
|
4.00
|
Volatility factor
|
33.30
|
%
|
|
33.40
|
|
33.80
|
Expected life (years)
|
7.42
|
|
|
6.87
|
|
6.65
|
|
2012
|
|
2011
|
|
2010
|
|||||||
|
High
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
Ranges used
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
1.62
|
%
|
|
1.62
|
|
3.10
|
|
3.10
|
|
3.23
|
|
3.23
|
Dividend yield
|
4.00
|
|
|
4.00
|
|
4.00
|
|
4.00
|
|
4.00
|
|
4.00
|
Volatility factor
|
33.30
|
|
|
33.30
|
|
33.40
|
|
33.40
|
|
33.80
|
|
33.80
|
|
|
|
|
|
Millions of Dollars
|
|
||||
|
Stock Units
|
|
|
Weighted-Average
Grant-Date Fair Value
|
|
|
Total Fair Value
|
|
||
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
Outstanding at April 30, 2012
|
5,325,118
|
|
|
$
|
28.52
|
|
|
|
||
Granted
|
163,407
|
|
|
31.17
|
|
|
|
|||
Forfeited
|
(48,783
|
)
|
|
30.33
|
|
|
|
|||
Issued
|
(213,132
|
)
|
|
27.74
|
|
|
$
|
9
|
|
|
Outstanding at December 31, 2012
|
5,226,610
|
|
|
$
|
28.62
|
|
|
|
||
|
|
|
|
|
|
|||||
Not Vested at December 31, 2012
|
3,643,894
|
|
|
$
|
28.82
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
||||
|
Performance
Share Stock Units
|
|
|
Weighted-Average
Grant-Date Fair Value
|
|
|
Total Fair Value
|
|
||
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
Outstanding at April 30, 2012
|
2,972,039
|
|
|
$
|
34.30
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|||
Forfeited
|
(1,300
|
)
|
|
38.04
|
|
|
|
|||
Issued
|
(378,465
|
)
|
|
33.89
|
|
|
$
|
18
|
|
|
Outstanding at December 31, 2012
|
2,592,274
|
|
|
$
|
34.36
|
|
|
|
||
|
|
|
|
|
|
|||||
Not Vested at December 31, 2012
|
814,421
|
|
|
$
|
35.19
|
|
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Income Taxes
|
|
|
|
|
|
||||
Federal
|
|
|
|
|
|
||||
Current
|
$
|
1,993
|
|
|
733
|
|
|
335
|
|
Deferred
|
69
|
|
|
746
|
|
|
484
|
|
|
Foreign
|
|
|
|
|
|
||||
Current
|
160
|
|
|
126
|
|
|
180
|
|
|
Deferred
|
45
|
|
|
(9
|
)
|
|
(489
|
)
|
|
State and local
|
|
|
|
|
|
||||
Current
|
254
|
|
|
133
|
|
|
54
|
|
|
Deferred
|
(21
|
)
|
|
115
|
|
|
15
|
|
|
|
$
|
2,500
|
|
|
1,844
|
|
|
579
|
|
|
Millions of Dollars
|
|||||
|
2012
|
|
|
2011
|
|
|
Deferred Tax Liabilities
|
|
|
|
|||
Properties, plants and equipment, and intangibles
|
$
|
3,721
|
|
|
3,339
|
|
Investment in joint ventures
|
2,183
|
|
|
2,233
|
|
|
Investment in foreign subsidiaries
|
386
|
|
|
647
|
|
|
Other
|
24
|
|
|
107
|
|
|
Total deferred tax liabilities
|
6,314
|
|
|
6,326
|
|
|
Deferred Tax Assets
|
|
|
|
|||
Benefit plan accruals
|
614
|
|
|
44
|
|
|
Inventory
|
92
|
|
|
78
|
|
|
Asset retirement obligations and accrued environmental costs
|
234
|
|
|
255
|
|
|
Other financial accruals and deferrals
|
166
|
|
|
122
|
|
|
Loss and credit carryforwards
|
313
|
|
|
359
|
|
|
Other
|
59
|
|
|
4
|
|
|
Total deferred tax assets
|
1,478
|
|
|
862
|
|
|
Less valuation allowance
|
329
|
|
|
210
|
|
|
Net deferred tax assets
|
1,149
|
|
|
652
|
|
|
Net deferred tax liabilities
|
$
|
5,165
|
|
|
5,674
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
||||
Balance at January 1
|
$
|
169
|
|
|
166
|
|
|
178
|
|
Additions based on tax positions related to the current year
|
3
|
|
|
11
|
|
|
11
|
|
|
Additions for tax positions of prior years
|
35
|
|
|
27
|
|
|
88
|
|
|
Reductions for tax positions of prior years
|
(47
|
)
|
|
(32
|
)
|
|
(46
|
)
|
|
Settlements
|
(2
|
)
|
|
(2
|
)
|
|
(65
|
)
|
|
Lapse of statute
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
Balance at December 31
|
$
|
158
|
|
|
169
|
|
|
166
|
|
|
Millions of Dollars
|
|
Percent of Pre-tax Income
|
|||||||||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Income (loss) before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
$
|
6,267
|
|
|
6,172
|
|
|
2,283
|
|
|
94.5
|
%
|
|
93.2
|
|
|
173.1
|
|
Foreign
|
364
|
|
|
452
|
|
|
(964
|
)
|
|
5.5
|
|
|
6.8
|
|
|
(73.1
|
)
|
|
|
$
|
6,631
|
|
|
6,624
|
|
|
1,319
|
|
|
100.0
|
%
|
|
100.0
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Federal statutory income tax
|
$
|
2,321
|
|
|
2,318
|
|
|
462
|
|
|
35.0
|
%
|
|
35.0
|
|
|
35.0
|
|
Goodwill allocated to assets sold
|
9
|
|
|
96
|
|
|
25
|
|
|
0.1
|
|
|
1.4
|
|
|
1.9
|
|
|
Capital loss utilization
|
—
|
|
|
(619
|
)
|
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
|
—
|
|
|
Tax on foreign operations
|
141
|
|
|
(61
|
)
|
|
72
|
|
|
2.1
|
|
|
(0.9
|
)
|
|
5.5
|
|
|
Federal manufacturing deduction
|
(124
|
)
|
|
(53
|
)
|
|
(15
|
)
|
|
(1.8
|
)
|
|
(0.8
|
)
|
|
(1.1
|
)
|
|
State income tax, net of federal benefit
|
151
|
|
|
161
|
|
|
45
|
|
|
2.3
|
|
|
2.4
|
|
|
3.4
|
|
|
Other
|
2
|
|
|
2
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
|
$
|
2,500
|
|
|
1,844
|
|
|
579
|
|
|
37.7
|
%
|
|
27.8
|
|
|
43.9
|
|
|
Millions of Dollars
|
|||||||||||
|
Defined
Benefit
Plans
|
|
|
Foreign
Currency
Translation
|
|
|
Hedging
|
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|||||
December 31, 2009
|
$
|
(99
|
)
|
|
433
|
|
|
(5
|
)
|
|
329
|
|
Other comprehensive income (loss)
|
(17
|
)
|
|
(99
|
)
|
|
1
|
|
|
(115
|
)
|
|
December 31, 2010
|
(116
|
)
|
|
334
|
|
|
(4
|
)
|
|
214
|
|
|
Other comprehensive income (loss)
|
(29
|
)
|
|
(64
|
)
|
|
1
|
|
|
(92
|
)
|
|
December 31, 2011
|
(145
|
)
|
|
270
|
|
|
(3
|
)
|
|
122
|
|
|
Other comprehensive income (loss)
|
(93
|
)
|
|
196
|
|
|
1
|
|
|
104
|
|
|
Net transfer from ConocoPhillips*
|
(540
|
)
|
|
—
|
|
|
—
|
|
|
(540
|
)
|
|
December 31, 2012
|
$
|
(778
|
)
|
|
466
|
|
|
(2
|
)
|
|
(314
|
)
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Noncash Investing and Financing Activities
|
|
|
|
|
|
||||
Transfer of PP&E in accordance with the Separation and Distribution Agreement with ConocoPhillips
|
$
|
374
|
|
|
—
|
|
|
—
|
|
Transfer of employee benefit obligations in accordance with the Separation and Distribution Agreement with ConocoPhillips
|
1,234
|
|
|
—
|
|
|
—
|
|
|
Increase in deferred tax assets associated with the employee benefit liabilities transferred in accordance with the Separation and Distribution Agreement with ConocoPhillips
|
461
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
||||
Cash Payments
|
|
|
|
|
|
||||
Income taxes*
|
$
|
2,183
|
|
|
197
|
|
|
195
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
||||
Operating revenues and other income (a)
|
$
|
8,227
|
|
|
9,034
|
|
|
7,411
|
|
Gain on dispositions (b)
|
—
|
|
|
156
|
|
|
—
|
|
|
Purchases (c)
|
22,448
|
|
|
34,558
|
|
|
26,754
|
|
|
Operating expenses and selling, general and
administrative expenses (d)
|
208
|
|
|
361
|
|
|
401
|
|
|
Net interest expense (e)
|
8
|
|
|
10
|
|
|
10
|
|
(a)
|
We sold crude oil to MRC. NGL, solvents and petrochemical feedstocks were sold to CPChem, gas oil and hydrogen feedstocks were sold to Excel and refined products were sold primarily to CFJ Properties. Beginning in the third quarter of 2010, CFJ was no longer considered a related party due to the sale of our interest. Crude oil, blendstock and other
|
(b)
|
In 2011, we sold the Seaway Products Pipeline Company to DCP Midstream for cash proceeds of
$400 million
, resulting in a before-tax gain of
$156 million
.
|
(c)
|
We purchased refined products from WRB. We purchased natural gas and NGL from DCP Midstream and CPChem for use in our refinery processes and other feedstocks from various affiliates. We purchased refined products from MRC. We also paid fees to various pipeline equity companies for transporting finished refined products. In addition, we paid a price upgrade to MSLP for heavy crude processing. We purchased base oils and fuel products from Excel for use in our refining and marketing businesses.
|
(d)
|
We paid utility and processing fees to various affiliates.
|
(e)
|
We incurred interest expense on a note payable to MSLP. See
Note 7—Investments, Loans and Long-Term Receivables
and
Note 13—Debt
, for additional information on loans with affiliated companies.
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
||||
Net transfers to ConocoPhillips per the consolidated statement of changes in equity
|
$
|
(5,707
|
)
|
|
(7,420
|
)
|
|
(1,536
|
)
|
Non-cash adjustments
|
|
|
|
|
|
||||
Foreign currency translation adjustments on net parent company investment
|
(118
|
)
|
|
(18
|
)
|
|
136
|
|
|
Net transfers of assets and liabilities with ConocoPhillips
|
570
|
|
|
(33
|
)
|
|
(11
|
)
|
|
Distributions to ConocoPhillips per the consolidated statement of cash flows
|
$
|
(5,255
|
)
|
|
(7,471
|
)
|
|
(1,411
|
)
|
1)
|
R&M
—This segment purchases, refines, markets and transports crude oil and petroleum products, mainly in the United States, Europe and Asia. At December 31, 2012, we owned or had an interest in
11
refineries in the United States,
one
in the United Kingdom,
one
in Ireland,
one
in Germany, and
one
in Malaysia. This segment also includes power generation operations. The R&M segment’s "refining" and "marketing, specialties and other" operations are disclosed separately for reporting purposes.
|
2)
|
Midstream—This segment gathers, processes, transports and markets natural gas; and transports, fractionates and markets NGL in the United States. The Midstream segment includes our
50 percent
equity investment in DCP Midstream.
|
3)
|
Chemicals—This segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Chemicals segment consists of our
50 percent
equity investment in CPChem.
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Sales and Other Operating Revenues
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
39,437
|
|
|
51,512
|
|
|
36,720
|
|
Marketing, Specialties & Other
|
134,132
|
|
|
136,800
|
|
|
103,250
|
|
|
Intersegment eliminations
|
(277
|
)
|
|
(509
|
)
|
|
(402
|
)
|
|
R&M
|
173,292
|
|
|
187,803
|
|
|
139,568
|
|
|
Midstream
|
|
|
|
|
|
||||
Total sales
|
6,431
|
|
|
8,770
|
|
|
7,383
|
|
|
Intersegment eliminations
|
(287
|
)
|
|
(499
|
)
|
|
(407
|
)
|
|
Midstream
|
6,144
|
|
|
8,271
|
|
|
6,976
|
|
|
Chemicals
|
11
|
|
|
11
|
|
|
11
|
|
|
Corporate and Other
|
13
|
|
|
3
|
|
|
6
|
|
|
Consolidated sales and other operating revenues
|
$
|
179,460
|
|
|
196,088
|
|
|
146,561
|
|
|
|
|
|
|
|
||||
Depreciation, Amortization and Impairments
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
1,262
|
|
|
1,128
|
|
|
2,302
|
|
Marketing, Specialties & Other
|
281
|
|
|
247
|
|
|
274
|
|
|
Total R&M
|
1,543
|
|
|
1,375
|
|
|
2,576
|
|
|
Midstream
|
481
|
|
|
2
|
|
|
2
|
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate and Other
|
47
|
|
|
3
|
|
|
1
|
|
|
Consolidated depreciation, amortization and impairments
|
$
|
2,071
|
|
|
1,380
|
|
|
2,579
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Equity in Earnings of Affiliates
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
1,542
|
|
|
1,270
|
|
|
589
|
|
Marketing, Specialties & Other
|
77
|
|
|
108
|
|
|
130
|
|
|
Total R&M
|
1,619
|
|
|
1,378
|
|
|
719
|
|
|
Midstream
|
323
|
|
|
490
|
|
|
362
|
|
|
Chemicals
|
1,192
|
|
|
975
|
|
|
684
|
|
|
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
Consolidated equity in earnings of affiliates
|
$
|
3,134
|
|
|
2,843
|
|
|
1,765
|
|
|
|
|
|
|
|
||||
Income Taxes
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
2,059
|
|
|
920
|
|
|
(27
|
)
|
Marketing, Specialties & Other
|
308
|
|
|
559
|
|
|
363
|
|
|
Total R&M
|
2,367
|
|
|
1,479
|
|
|
336
|
|
|
Midstream
|
6
|
|
|
210
|
|
|
142
|
|
|
Chemicals
|
366
|
|
|
252
|
|
|
194
|
|
|
Corporate and Other
|
(239
|
)
|
|
(97
|
)
|
|
(93
|
)
|
|
Consolidated income taxes
|
$
|
2,500
|
|
|
1,844
|
|
|
579
|
|
|
|
|
|
|
|
||||
Net Income Attributable to Phillips 66
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
3,158
|
|
|
1,533
|
|
|
(466
|
)
|
Marketing, Specialties & Other
|
571
|
|
|
2,315
|
|
|
612
|
|
|
Total R&M
|
3,729
|
|
|
3,848
|
|
|
146
|
|
|
Midstream
|
6
|
|
|
403
|
|
|
262
|
|
|
Chemicals
|
823
|
|
|
716
|
|
|
486
|
|
|
Corporate and Other
|
(434
|
)
|
|
(192
|
)
|
|
(159
|
)
|
|
Consolidated net income attributable to Phillips 66
|
$
|
4,124
|
|
|
4,775
|
|
|
735
|
|
|
Millions of Dollars
|
||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Investments In and Advances To Affiliates
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
4,571
|
|
|
5,186
|
|
|
5,045
|
|
Marketing, Specialties & Other
|
328
|
|
|
307
|
|
|
394
|
|
|
Total R&M
|
4,899
|
|
|
5,493
|
|
|
5,439
|
|
|
Midstream
|
1,868
|
|
|
1,743
|
|
|
1,898
|
|
|
Chemicals
|
3,524
|
|
|
2,998
|
|
|
2,518
|
|
|
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
Consolidated investments in and advances to affiliates
|
$
|
10,291
|
|
|
10,234
|
|
|
9,855
|
|
|
|
|
|
|
|
||||
Total Assets
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
23,384
|
|
|
24,045
|
|
|
25,289
|
|
Marketing, Specialties & Other
|
10,231
|
|
|
9,913
|
|
|
10,142
|
|
|
Goodwill
|
3,344
|
|
|
3,332
|
|
|
3,633
|
|
|
Total R&M
|
36,959
|
|
|
37,290
|
|
|
39,064
|
|
|
Midstream
|
2,528
|
|
|
2,900
|
|
|
3,128
|
|
|
Chemicals
|
3,816
|
|
|
2,999
|
|
|
2,732
|
|
|
Corporate and Other
|
4,770
|
|
|
22
|
|
|
31
|
|
|
Consolidated total assets
|
$
|
48,073
|
|
|
43,211
|
|
|
44,955
|
|
|
|
|
|
|
|
||||
Capital Expenditures and Investments
|
|
|
|
|
|
||||
R&M
|
|
|
|
|
|
||||
Refining
|
$
|
738
|
|
|
770
|
|
|
886
|
|
Marketing, Specialties & Other
|
316
|
|
|
218
|
|
|
188
|
|
|
Total R&M
|
1,054
|
|
|
988
|
|
|
1,074
|
|
|
Midstream
|
527
|
|
|
17
|
|
|
68
|
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate and Other
|
140
|
|
|
17
|
|
|
8
|
|
|
Consolidated capital expenditures and investments
|
$
|
1,721
|
|
|
1,022
|
|
|
1,150
|
|
|
|
|
|
|
|
||||
Interest Income and Expense
|
|
|
|
|
|
||||
Interest income
|
|
|
|
|
|
||||
R&M
|
$
|
—
|
|
|
33
|
|
|
42
|
|
Corporate
|
18
|
|
|
—
|
|
|
—
|
|
|
|
18
|
|
|
33
|
|
|
42
|
|
|
Interest and debt expense
|
|
|
|
|
|
||||
Corporate
|
$
|
246
|
|
|
17
|
|
|
1
|
|
|
|
|
|
|
|
||||
Sales and Other Operating Revenues by Product Line
|
|
|
|
|
|
||||
Refined products
|
$
|
141,151
|
|
|
146,834
|
|
|
108,182
|
|
Crude oil resales
|
28,730
|
|
|
38,259
|
|
|
28,836
|
|
|
NGL
|
8,533
|
|
|
10,024
|
|
|
8,468
|
|
|
Other
|
1,046
|
|
|
971
|
|
|
1,075
|
|
|
Consolidated sales and other operating revenues by product line
|
$
|
179,460
|
|
|
196,088
|
|
|
146,561
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
Sales and Other Operating Revenues*
|
|
Long-Lived Assets**
|
|||||||||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
$
|
120,514
|
|
|
134,499
|
|
|
100,914
|
|
|
22,285
|
|
|
21,196
|
|
|
21,224
|
|
United Kingdom
|
35,361
|
|
|
26,976
|
|
|
20,125
|
|
|
2,018
|
|
|
1,927
|
|
|
1,929
|
|
|
Germany
|
11,751
|
|
|
10,647
|
|
|
9,070
|
|
|
567
|
|
|
547
|
|
|
849
|
|
|
Other foreign countries
|
11,834
|
|
|
23,966
|
|
|
16,452
|
|
|
828
|
|
|
1,335
|
|
|
1,262
|
|
|
Worldwide consolidated
|
$
|
179,460
|
|
|
196,088
|
|
|
146,561
|
|
|
25,698
|
|
|
25,005
|
|
|
25,264
|
|
•
|
Phillips 66 and Phillips 66 Company (in each case, reflecting investments in subsidiaries utilizing the equity method of accounting).
|
•
|
All other nonguarantor subsidiaries.
|
•
|
The consolidating adjustments necessary to present Phillips 66's results on a consolidated basis.
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2012
|
||||||||||
Income Statement
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Revenues and Other Income
|
|
|
|
|
|
||||||
Sales and other operating revenues
|
$
|
—
|
|
117,574
|
|
61,886
|
|
—
|
|
179,460
|
|
Equity in earnings of affiliates
|
4,284
|
|
3,269
|
|
445
|
|
(4,864
|
)
|
3,134
|
|
|
Net gain on dispositions
|
—
|
|
192
|
|
1
|
|
—
|
|
193
|
|
|
Other income (loss)
|
2
|
|
(15
|
)
|
148
|
|
—
|
|
135
|
|
|
Intercompany revenues
|
1
|
|
2,739
|
|
23,346
|
|
(26,086
|
)
|
—
|
|
|
Total Revenues and Other Income
|
4,287
|
|
123,759
|
|
85,826
|
|
(30,950
|
)
|
182,922
|
|
|
|
|
|
|
|
|
||||||
Costs and Expenses
|
|
|
|
|
|
||||||
Purchased crude oil and products
|
—
|
|
106,687
|
|
73,785
|
|
(25,989
|
)
|
154,483
|
|
|
Operating expenses
|
—
|
|
3,329
|
|
759
|
|
(56
|
)
|
4,032
|
|
|
Selling, general and administrative expenses
|
4
|
|
1,312
|
|
447
|
|
(41
|
)
|
1,722
|
|
|
Depreciation and amortization
|
—
|
|
668
|
|
245
|
|
—
|
|
913
|
|
|
Impairments
|
—
|
|
71
|
|
1,087
|
|
—
|
|
1,158
|
|
|
Taxes other than income taxes
|
—
|
|
5,155
|
|
8,587
|
|
(1
|
)
|
13,741
|
|
|
Accretion on discounted liabilities
|
—
|
|
18
|
|
7
|
|
—
|
|
25
|
|
|
Interest and debt expense
|
212
|
|
29
|
|
4
|
|
1
|
|
246
|
|
|
Foreign currency transaction gains
|
—
|
|
—
|
|
(29
|
)
|
—
|
|
(29
|
)
|
|
Total Costs and Expenses
|
216
|
|
117,269
|
|
84,892
|
|
(26,086
|
)
|
176,291
|
|
|
Income before income taxes
|
4,071
|
|
6,490
|
|
934
|
|
(4,864
|
)
|
6,631
|
|
|
Provision (benefit) for income taxes
|
(53
|
)
|
2,206
|
|
347
|
|
—
|
|
2,500
|
|
|
Net income
|
4,124
|
|
4,284
|
|
587
|
|
(4,864
|
)
|
4,131
|
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
7
|
|
—
|
|
7
|
|
|
Net Income Attributable to Phillips 66
|
$
|
4,124
|
|
4,284
|
|
580
|
|
(4,864
|
)
|
4,124
|
|
|
|
|
|
|
|
||||||
Comprehensive Income
|
$
|
3,549
|
|
4,217
|
|
485
|
|
(4,016
|
)
|
4,235
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2011
|
||||||||||
Income Statement
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Revenues and Other Income
|
|
|
|
|
|
||||||
Sales and other operating revenues
|
$
|
—
|
|
131,761
|
|
64,327
|
|
—
|
|
196,088
|
|
Equity in earnings of affiliates
|
4,775
|
|
2,835
|
|
723
|
|
(5,490
|
)
|
2,843
|
|
|
Net gain (loss) on dispositions
|
—
|
|
1,867
|
|
(229
|
)
|
—
|
|
1,638
|
|
|
Other income
|
—
|
|
10
|
|
35
|
|
—
|
|
45
|
|
|
Intercompany revenues
|
—
|
|
4,887
|
|
27,249
|
|
(32,136
|
)
|
—
|
|
|
Total Revenues and Other Income
|
4,775
|
|
141,360
|
|
92,105
|
|
(37,626
|
)
|
200,614
|
|
|
|
|
|
|
|
|
||||||
Costs and Expenses
|
|
|
|
|
|
||||||
Purchased crude oil and products
|
—
|
|
124,772
|
|
80,157
|
|
(32,092
|
)
|
172,837
|
|
|
Operating expenses
|
—
|
|
3,278
|
|
838
|
|
(44
|
)
|
4,072
|
|
|
Selling, general and administrative expenses
|
—
|
|
995
|
|
414
|
|
—
|
|
1,409
|
|
|
Depreciation and amortization
|
—
|
|
655
|
|
253
|
|
—
|
|
908
|
|
|
Impairments
|
—
|
|
468
|
|
4
|
|
—
|
|
472
|
|
|
Taxes other than income taxes
|
—
|
|
4,801
|
|
9,487
|
|
—
|
|
14,288
|
|
|
Accretion on discounted liabilities
|
—
|
|
13
|
|
8
|
|
—
|
|
21
|
|
|
Interest and debt expense
|
—
|
|
16
|
|
1
|
|
—
|
|
17
|
|
|
Foreign currency transaction gains
|
—
|
|
(1
|
)
|
(33
|
)
|
—
|
|
(34
|
)
|
|
Total Costs and Expenses
|
—
|
|
134,997
|
|
91,129
|
|
(32,136
|
)
|
193,990
|
|
|
Income before income taxes
|
4,775
|
|
6,363
|
|
976
|
|
(5,490
|
)
|
6,624
|
|
|
Provision for income taxes
|
—
|
|
1,588
|
|
256
|
|
—
|
|
1,844
|
|
|
Net income
|
4,775
|
|
4,775
|
|
720
|
|
(5,490
|
)
|
4,780
|
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
5
|
|
—
|
|
5
|
|
|
Net Income Attributable to Phillips 66
|
$
|
4,775
|
|
4,775
|
|
715
|
|
(5,490
|
)
|
4,775
|
|
|
|
|
|
|
|
||||||
Comprehensive Income
|
$
|
4,683
|
|
4,683
|
|
747
|
|
(5,425
|
)
|
4,688
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2010
|
||||||||||
Income Statement
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Revenues and Other Income
|
|
|
|
|
|
||||||
Sales and other operating revenues
|
$
|
—
|
|
97,786
|
|
48,775
|
|
—
|
|
146,561
|
|
Equity in earnings of affiliates
|
735
|
|
957
|
|
770
|
|
(697
|
)
|
1,765
|
|
|
Net gain on dispositions
|
—
|
|
18
|
|
223
|
|
—
|
|
241
|
|
|
Other income
|
—
|
|
88
|
|
1
|
|
—
|
|
89
|
|
|
Intercompany revenues
|
—
|
|
1,771
|
|
17,831
|
|
(19,602
|
)
|
—
|
|
|
Total Revenues and Other Income
|
735
|
|
100,620
|
|
67,600
|
|
(20,299
|
)
|
148,656
|
|
|
|
|
|
|
|
|
||||||
Costs and Expenses
|
|
|
|
|
|
||||||
Purchased crude oil and products
|
—
|
|
89,428
|
|
55,228
|
|
(19,564
|
)
|
125,092
|
|
|
Operating expenses
|
—
|
|
3,367
|
|
859
|
|
(37
|
)
|
4,189
|
|
|
Selling, general and administrative expenses
|
—
|
|
978
|
|
406
|
|
—
|
|
1,384
|
|
|
Depreciation and amortization
|
—
|
|
609
|
|
271
|
|
—
|
|
880
|
|
|
Impairments
|
—
|
|
51
|
|
1,648
|
|
—
|
|
1,699
|
|
|
Taxes other than income taxes
|
—
|
|
4,859
|
|
9,127
|
|
(1
|
)
|
13,985
|
|
|
Accretion on discounted liabilities
|
—
|
|
14
|
|
8
|
|
—
|
|
22
|
|
|
Interest and debt expense
|
—
|
|
(1
|
)
|
2
|
|
—
|
|
1
|
|
|
Foreign currency transaction (gains) losses
|
—
|
|
(2
|
)
|
87
|
|
—
|
|
85
|
|
|
Total Costs and Expenses
|
—
|
|
99,303
|
|
67,636
|
|
(19,602
|
)
|
147,337
|
|
|
Income (loss) before income taxes
|
735
|
|
1,317
|
|
(36
|
)
|
(697
|
)
|
1,319
|
|
|
Provision (benefit) for income taxes
|
—
|
|
582
|
|
(3
|
)
|
—
|
|
579
|
|
|
Net income (loss)
|
735
|
|
735
|
|
(33
|
)
|
(697
|
)
|
740
|
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
5
|
|
—
|
|
5
|
|
|
Net Income (Loss) Attributable to Phillips 66
|
$
|
735
|
|
735
|
|
(38
|
)
|
(697
|
)
|
735
|
|
|
|
|
|
|
|
||||||
Comprehensive Income (Loss)
|
$
|
620
|
|
620
|
|
(143
|
)
|
(472
|
)
|
625
|
|
|
Millions of Dollars
|
||||||||||
|
At December 31, 2012
|
||||||||||
Balance Sheet
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
—
|
|
2,410
|
|
1,064
|
|
—
|
|
3,474
|
|
Accounts and notes receivable
|
47
|
|
2,889
|
|
8,456
|
|
(989
|
)
|
10,403
|
|
|
Inventories
|
—
|
|
1,938
|
|
1,492
|
|
—
|
|
3,430
|
|
|
Prepaid expenses and other current assets
|
11
|
|
403
|
|
241
|
|
—
|
|
655
|
|
|
Total Current Assets
|
58
|
|
7,640
|
|
11,253
|
|
(989
|
)
|
17,962
|
|
|
Investments and long-term receivables
|
28,796
|
|
20,784
|
|
4,403
|
|
(43,512
|
)
|
10,471
|
|
|
Net properties, plants and equipment
|
—
|
|
11,714
|
|
3,693
|
|
—
|
|
15,407
|
|
|
Goodwill
|
—
|
|
3,344
|
|
—
|
|
—
|
|
3,344
|
|
|
Intangibles
|
—
|
|
710
|
|
14
|
|
—
|
|
724
|
|
|
Other assets
|
78
|
|
114
|
|
9
|
|
(36
|
)
|
165
|
|
|
Total Assets
|
$
|
28,932
|
|
44,306
|
|
19,372
|
|
(44,537
|
)
|
48,073
|
|
|
|
|
|
|
|
||||||
Liabilities and Equity
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
17
|
|
7,014
|
|
4,668
|
|
(989
|
)
|
10,710
|
|
Short-term debt
|
—
|
|
13
|
|
—
|
|
—
|
|
13
|
|
|
Accrued income and other taxes
|
—
|
|
245
|
|
656
|
|
—
|
|
901
|
|
|
Employee benefit obligations
|
—
|
|
391
|
|
50
|
|
—
|
|
441
|
|
|
Other accruals
|
50
|
|
279
|
|
88
|
|
—
|
|
417
|
|
|
Total Current Liabilities
|
67
|
|
7,942
|
|
5,462
|
|
(989
|
)
|
12,482
|
|
|
Long-term debt
|
6,795
|
|
165
|
|
1
|
|
—
|
|
6,961
|
|
|
Asset retirement obligations and accrued environmental costs
|
—
|
|
563
|
|
177
|
|
—
|
|
740
|
|
|
Deferred income taxes
|
—
|
|
4,478
|
|
1,002
|
|
(36
|
)
|
5,444
|
|
|
Employee benefit obligations
|
—
|
|
1,094
|
|
231
|
|
—
|
|
1,325
|
|
|
Other liabilities and deferred credits
|
1,434
|
|
1,421
|
|
3,936
|
|
(6,476
|
)
|
315
|
|
|
Total Liabilities
|
8,296
|
|
15,663
|
|
10,809
|
|
(7,501
|
)
|
27,267
|
|
|
Common stock
|
18,376
|
|
25,951
|
|
8,287
|
|
(34,238
|
)
|
18,376
|
|
|
Retained earnings
|
2,713
|
|
3,145
|
|
87
|
|
(3,232
|
)
|
2,713
|
|
|
Accumulated other comprehensive income (loss)
|
(453
|
)
|
(453
|
)
|
158
|
|
434
|
|
(314
|
)
|
|
Noncontrolling interests
|
—
|
|
—
|
|
31
|
|
—
|
|
31
|
|
|
Total Liabilities and Equity
|
$
|
28,932
|
|
44,306
|
|
19,372
|
|
(44,537
|
)
|
48,073
|
|
|
Millions of Dollars
|
||||||||||
|
At December 31, 2011
|
||||||||||
Balance Sheet
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Accounts and notes receivable
|
—
|
|
6,497
|
|
4,307
|
|
(779
|
)
|
10,025
|
|
|
Inventories
|
—
|
|
2,048
|
|
1,418
|
|
—
|
|
3,466
|
|
|
Prepaid expenses and other current assets
|
—
|
|
110
|
|
347
|
|
—
|
|
457
|
|
|
Total Current Assets
|
—
|
|
8,655
|
|
6,072
|
|
(779
|
)
|
13,948
|
|
|
Investments and long-term receivables
|
23,264
|
|
12,810
|
|
3,623
|
|
(29,391
|
)
|
10,306
|
|
|
Net properties, plants and equipment
|
—
|
|
11,304
|
|
3,467
|
|
—
|
|
14,771
|
|
|
Goodwill
|
—
|
|
3,332
|
|
—
|
|
—
|
|
3,332
|
|
|
Intangibles
|
—
|
|
713
|
|
19
|
|
—
|
|
732
|
|
|
Other assets
|
—
|
|
105
|
|
17
|
|
—
|
|
122
|
|
|
Total Assets
|
$
|
23,264
|
|
36,919
|
|
13,198
|
|
(30,170
|
)
|
43,211
|
|
|
|
|
|
|
|
||||||
Liabilities and Equity
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
—
|
|
6,845
|
|
4,726
|
|
(779
|
)
|
10,792
|
|
Short-term debt
|
—
|
|
23
|
|
7
|
|
—
|
|
30
|
|
|
Accrued income and other taxes
|
—
|
|
427
|
|
660
|
|
—
|
|
1,087
|
|
|
Employee benefit obligations
|
—
|
|
13
|
|
51
|
|
—
|
|
64
|
|
|
Other accruals
|
—
|
|
332
|
|
79
|
|
—
|
|
411
|
|
|
Total Current Liabilities
|
—
|
|
7,640
|
|
5,523
|
|
(779
|
)
|
12,384
|
|
|
Long-term debt
|
—
|
|
361
|
|
—
|
|
—
|
|
361
|
|
|
Asset retirement obligations and accrued environmental costs
|
—
|
|
606
|
|
181
|
|
—
|
|
787
|
|
|
Deferred income taxes
|
—
|
|
4,814
|
|
989
|
|
—
|
|
5,803
|
|
|
Employee benefit obligations
|
—
|
|
—
|
|
117
|
|
—
|
|
117
|
|
|
Other liabilities and deferred credits
|
—
|
|
234
|
|
2,631
|
|
(2,399
|
)
|
466
|
|
|
Total Liabilities
|
—
|
|
13,655
|
|
9,441
|
|
(3,178
|
)
|
19,918
|
|
|
Net ConocoPhillips investments
|
23,142
|
|
23,142
|
|
3,436
|
|
(26,578
|
)
|
23,142
|
|
|
Accumulated other comprehensive income
|
122
|
|
122
|
|
292
|
|
(414
|
)
|
122
|
|
|
Noncontrolling interests
|
—
|
|
—
|
|
29
|
|
—
|
|
29
|
|
|
Total Liabilities and Equity
|
$
|
23,264
|
|
36,919
|
|
13,198
|
|
(30,170
|
)
|
43,211
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2012
|
||||||||||
Statement of Cash Flows
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
||||||
Net Cash Provided by (Used in) Operating Activities
|
$
|
1,334
|
|
7,042
|
|
(4,080
|
)
|
—
|
|
4,296
|
|
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities
|
|
|
|
|
|
||||||
Capital expenditures and investments
|
—
|
|
(861
|
)
|
(870
|
)
|
10
|
|
(1,721
|
)
|
|
Proceeds from asset dispositions
|
—
|
|
240
|
|
46
|
|
—
|
|
286
|
|
|
Advances/loans—related parties
|
—
|
|
—
|
|
(100
|
)
|
—
|
|
(100
|
)
|
|
Collection of advances/loans—related parties
|
—
|
|
—
|
|
7
|
|
(7
|
)
|
—
|
|
|
Other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Net Cash Used in Investing Activities
|
—
|
|
(621
|
)
|
(917
|
)
|
3
|
|
(1,535
|
)
|
|
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities
|
|
|
|
|
|
||||||
Contributions from (distributions to) ConocoPhillips
|
(7,469
|
)
|
(3,837
|
)
|
6,051
|
|
—
|
|
(5,255
|
)
|
|
Issuance of debt
|
7,794
|
|
—
|
|
—
|
|
—
|
|
7,794
|
|
|
Repayment of debt
|
(1,000
|
)
|
(208
|
)
|
(9
|
)
|
7
|
|
(1,210
|
)
|
|
Issuance of common stock
|
47
|
|
—
|
|
—
|
|
—
|
|
47
|
|
|
Repurchase of common stock
|
(356
|
)
|
—
|
|
—
|
|
—
|
|
(356
|
)
|
|
Dividends paid on common stock
|
(282
|
)
|
—
|
|
—
|
|
—
|
|
(282
|
)
|
|
Other
|
(68
|
)
|
34
|
|
5
|
|
(10
|
)
|
(39
|
)
|
|
Net Cash Provided by (Used in) Financing Activities
|
(1,334
|
)
|
(4,011
|
)
|
6,047
|
|
(3
|
)
|
699
|
|
|
|
|
|
|
|
|
||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
—
|
|
—
|
|
14
|
|
—
|
|
14
|
|
|
|
|
|
|
|
|
||||||
Net Change in Cash and Cash Equivalents
|
—
|
|
2,410
|
|
1,064
|
|
—
|
|
3,474
|
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
2,410
|
|
1,064
|
|
—
|
|
3,474
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2011
|
||||||||||
Statement of Cash Flows
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
||||||
Net Cash Provided by Operating Activities
|
$
|
—
|
|
3,038
|
|
1,968
|
|
—
|
|
5,006
|
|
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities
|
|
|
|
|
|
||||||
Capital expenditures and investments
|
—
|
|
(717
|
)
|
(305
|
)
|
—
|
|
(1,022
|
)
|
|
Proceeds from asset dispositions
|
—
|
|
2,517
|
|
110
|
|
—
|
|
2,627
|
|
|
Collection of advances/loans—related parties
|
—
|
|
550
|
|
—
|
|
—
|
|
550
|
|
|
Other
|
—
|
|
51
|
|
286
|
|
—
|
|
337
|
|
|
Net Cash Provided by Investing Activities
|
—
|
|
2,401
|
|
91
|
|
—
|
|
2,492
|
|
|
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities
|
|
|
|
|
|
||||||
Distributions to ConocoPhillips
|
—
|
|
(5,421
|
)
|
(2,050
|
)
|
—
|
|
(7,471
|
)
|
|
Repayment of debt
|
—
|
|
(18
|
)
|
(8
|
)
|
—
|
|
(26
|
)
|
|
Other
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
Net Cash Used in Financing Activities
|
—
|
|
(5,439
|
)
|
(2,059
|
)
|
—
|
|
(7,498
|
)
|
|
|
|
|
|
|
|
||||||
Net Change in Cash and Cash Equivalents
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2010
|
||||||||||
Statement of Cash Flows
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
||||||
Net Cash Provided by Operating Activities
|
$
|
—
|
|
1,370
|
|
722
|
|
—
|
|
2,092
|
|
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities
|
|
|
|
|
|
||||||
Capital expenditures and investments
|
—
|
|
(743
|
)
|
(407
|
)
|
—
|
|
(1,150
|
)
|
|
Proceeds from asset dispositions
|
—
|
|
58
|
|
604
|
|
—
|
|
662
|
|
|
Long-term advances/loans—related parties
|
—
|
|
(200
|
)
|
—
|
|
—
|
|
(200
|
)
|
|
Collection of advances/loans—related parties
|
—
|
|
20
|
|
—
|
|
—
|
|
20
|
|
|
Other
|
—
|
|
—
|
|
16
|
|
—
|
|
16
|
|
|
Net Cash Provided by (Used in) Investing Activities
|
—
|
|
(865
|
)
|
213
|
|
—
|
|
(652
|
)
|
|
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities
|
|
|
|
|
|
||||||
Distributions to ConocoPhillips
|
—
|
|
(487
|
)
|
(924
|
)
|
—
|
|
(1,411
|
)
|
|
Repayment of debt
|
—
|
|
(18
|
)
|
(8
|
)
|
—
|
|
(26
|
)
|
|
Other
|
—
|
|
—
|
|
(3
|
)
|
—
|
|
(3
|
)
|
|
Net Cash Used in Financing Activities
|
—
|
|
(505
|
)
|
(935
|
)
|
—
|
|
(1,440
|
)
|
|
|
|
|
|
|
|
||||||
Net Change in Cash and Cash Equivalents
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Selected Quarterly Financial Data
(Unaudited)
|
|
Millions of Dollars
|
|
Per Share of Common Stock**
|
|||||||||||
|
Sales and Other Operating Revenues*
|
|
Income Before Income Taxes
|
|
Net Income
|
|
Net Income Attributable to Phillips 66
|
|
|
Net Income Attributable to Phillips 66
|
||||
|
|
Basic
|
|
Diluted
|
|
|||||||||
2012
|
|
|
|
|
|
|
|
|||||||
First
|
$
|
45,783
|
|
1,069
|
|
638
|
|
636
|
|
|
1.01
|
|
1.00
|
|
Second
|
46,747
|
|
1,894
|
|
1,182
|
|
1,181
|
|
|
1.88
|
|
1.86
|
|
|
Third
|
42,945
|
|
2,449
|
|
1,601
|
|
1,599
|
|
|
2.53
|
|
2.51
|
|
|
Fourth
|
43,985
|
|
1,219
|
|
710
|
|
708
|
|
|
1.12
|
|
1.11
|
|
|
|
|
|
|
|
|
|
|
|||||||
2011
|
|
|
|
|
|
|
|
|||||||
First
|
$
|
44,779
|
|
1,095
|
|
677
|
|
676
|
|
|
1.08
|
|
1.07
|
|
Second
|
52,594
|
|
1,628
|
|
1,040
|
|
1,039
|
|
|
1.66
|
|
1.64
|
|
|
Third
|
50,610
|
|
1,550
|
|
1,051
|
|
1,049
|
|
|
1.67
|
|
1.65
|
|
|
Fourth
|
48,105
|
|
2,351
|
|
2,012
|
|
2,011
|
|
|
3.20
|
|
3.17
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
(a)
|
1.
|
Financial Statements and Supplementary Data
The financial statements and supplementary information listed in the Index to Financial Statements, which appears on page 54, are filed as part of this annual report.
|
|
|
|
|
2.
|
Financial Statement Schedules
Schedule II—Valuation and Qualifying Accounts appears below. All other schedules are omitted because they are not required, not significant, not applicable or the information is shown in another schedule, the financial statements or the notes to consolidated financial statements.
The financial statements of WRB Refining LP, which follow on pages 116 to 134, are included pursuant to Rule 3-09 of Regulation S-X.
|
|
|
|
|
3.
|
Exhibits
The exhibits listed in the Index to Exhibits, which appears on pages 135 to 137, are filed as part of this annual report.
|
|
Millions of Dollars
|
||||||||||||||||
Description
|
Balance at
January 1
|
|
|
Charged to
Expense
|
|
|
Other (a)
|
|
|
Deductions
|
|
|
|
|
Balance at
December 31
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deducted from asset accounts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts and notes receivable
|
$
|
13
|
|
|
36
|
|
|
—
|
|
|
1
|
|
|
(b)
|
|
50
|
|
Deferred tax asset valuation allowance
|
210
|
|
|
61
|
|
|
54
|
|
|
4
|
|
|
|
|
329
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deducted from asset accounts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts and notes receivable
|
$
|
7
|
|
|
7
|
|
|
—
|
|
|
(1
|
)
|
|
(b)
|
|
13
|
|
Deferred tax asset valuation allowance
|
165
|
|
|
54
|
|
|
(9
|
)
|
|
—
|
|
|
|
|
210
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deducted from asset accounts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts and notes receivable
|
$
|
16
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(b)
|
|
7
|
|
Deferred tax asset valuation allowance
|
41
|
|
|
131
|
|
|
(2
|
)
|
|
(5
|
)
|
|
|
|
165
|
|
|
Year Ended December 31
|
||||||||
|
2012
|
2011
|
2010
|
||||||
|
(In Thousands)
|
||||||||
Revenues and other income
|
|
|
|
||||||
Related-party sales
|
$
|
10,306,627
|
|
$
|
10,050,921
|
|
$
|
6,940,947
|
|
Third-party sales
|
8,014,763
|
|
7,472,624
|
|
5,933,014
|
|
|||
Other operating revenue (loss)
|
24,648
|
|
4,882
|
|
(12,614
|
)
|
|||
Related-party interest and other income
|
236,782
|
|
279,076
|
|
320,299
|
|
|||
Total revenues and other income
|
18,582,820
|
|
17,807,503
|
|
13,181,646
|
|
|||
|
|
|
|
||||||
Costs and expenses
|
|
|
|
||||||
Cost of sales
|
14,459,184
|
|
14,795,819
|
|
11,858,804
|
|
|||
Operating expenses
|
963,037
|
|
781,522
|
|
785,558
|
|
|||
Selling, general, and administrative expenses
|
82,235
|
|
66,363
|
|
62,880
|
|
|||
Depreciation and amortization
|
475,076
|
|
368,544
|
|
338,355
|
|
|||
Impairments
|
1,487
|
|
88,161
|
|
73,082
|
|
|||
Taxes other than income taxes
|
68,825
|
|
65,139
|
|
42,114
|
|
|||
Other expenses
|
4,880
|
|
3,896
|
|
3,241
|
|
|||
Total costs and expenses
|
16,054,724
|
|
16,169,444
|
|
13,164,034
|
|
|||
|
|
|
|
||||||
Income before taxes
|
2,528,096
|
|
1,638,059
|
|
17,612
|
|
|||
Texas margin tax
|
9,427
|
|
7,267
|
|
2,144
|
|
|||
Net income
|
$
|
2,518,669
|
|
$
|
1,630,792
|
|
$
|
15,468
|
|
|
December 31
|
|||||
|
2012
|
2011
|
||||
|
(In Thousands)
|
|||||
Assets
|
|
|
||||
Cash and cash equivalents
|
$
|
346,152
|
|
$
|
325,825
|
|
Accounts receivable
|
184,390
|
|
230,243
|
|
||
Accounts receivable - related parties
|
335,185
|
|
257,129
|
|
||
Inventories
|
1,127,461
|
|
941,648
|
|
||
Other current assets
|
9,938
|
|
4,083
|
|
||
Total current assets
|
2,003,126
|
|
1,758,928
|
|
||
|
|
|
||||
Property, plant, and equipment
|
12,692,719
|
|
12,564,761
|
|
||
Less: Accumulated depreciation and amortization
|
2,165,748
|
|
1,806,619
|
|
||
Net property, plant, and equipment
|
10,526,971
|
|
10,758,142
|
|
||
|
|
|
||||
Intangible assets, net and other
|
15,911
|
|
15,557
|
|
||
Total assets
|
$
|
12,546,008
|
|
$
|
12,532,627
|
|
|
|
|
||||
Liabilities and partners' capital
|
|
|
||||
Accounts payable
|
$
|
164,174
|
|
$
|
119,505
|
|
Accounts payable - related parties
|
952,583
|
|
1,320,050
|
|
||
Income and other taxes payable
|
29,823
|
|
36,444
|
|
||
Short-term capital lease obligation
|
1,830
|
|
1,759
|
|
||
Other accruals
|
3,958
|
|
3,454
|
|
||
Total current liabilities
|
1,152,368
|
|
1,481,212
|
|
||
|
|
|
||||
Asset retirement obligations
|
71,805
|
|
103,484
|
|
||
Long-term capital lease obligation
|
14,237
|
|
16,067
|
|
||
Deferred tax liabilities and other
|
27,535
|
|
20,377
|
|
||
Total liabilities
|
1,265,945
|
|
1,621,140
|
|
||
|
|
|
||||
Partners' capital
|
11,280,063
|
|
10,911,487
|
|
||
Total liabilities and partners' capital
|
$
|
12,546,008
|
|
$
|
12,532,627
|
|
|
Year Ended December 31
|
||||||||
|
2012
|
2011
|
2010
|
||||||
|
(In Thousands)
|
||||||||
Operating activities
|
|
|
|
||||||
Net income
|
$
|
2,518,669
|
|
$
|
1,630,792
|
|
$
|
15,468
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
475,076
|
|
368,544
|
|
338,355
|
|
|||
Impairments
|
1,487
|
|
88,161
|
|
73,082
|
|
|||
Accretion on discounted liabilities
|
4,143
|
|
3,681
|
|
3,182
|
|
|||
Other
|
(5,489
|
)
|
(7,195
|
)
|
(12,182
|
)
|
|||
Working capital adjustments:
|
|
|
|
||||||
Decrease (increase) in accounts and notes receivable
|
(32,203
|
)
|
(14,434
|
)
|
(24,821
|
)
|
|||
Decrease (increase) in inventories
|
(185,831
|
)
|
(221,371
|
)
|
(30,795
|
)
|
|||
Decrease (increase) in other current assets
|
(5,856
|
)
|
2,126
|
|
(1,011
|
)
|
|||
Increase (decrease) in accounts payable
|
(317,779
|
)
|
400,501
|
|
130,302
|
|
|||
Increase (decrease) in taxes payable and other accruals
|
(6,117
|
)
|
23,535
|
|
2,872
|
|
|||
Net cash provided by operating activities
|
2,446,100
|
|
2,274,340
|
|
494,452
|
|
|||
|
|
|
|
||||||
Investing activities
|
|
|
|
||||||
Capital expenditures and investments
|
(273,921
|
)
|
(828,168
|
)
|
(1,288,790
|
)
|
|||
Sale of investment, net
|
—
|
|
—
|
|
4,986
|
|
|||
Net cash used in investing activities
|
(273,921
|
)
|
(828,168
|
)
|
(1,283,804
|
)
|
|||
|
|
|
|
||||||
Financing activities
|
|
|
|
||||||
Distributions paid to partners
|
(2,881,564
|
)
|
(1,000,000
|
)
|
—
|
|
|||
Partner contributions - promissory note repayment
|
731,471
|
|
689,180
|
|
649,335
|
|
|||
Partner loans
|
—
|
|
—
|
|
1,086,000
|
|
|||
Repayment of partner loans
|
—
|
|
(1,100,000
|
)
|
(686,000
|
)
|
|||
Repayment of capital lease obligation
|
(1,759
|
)
|
(653
|
)
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
(2,151,852
|
)
|
(1,411,473
|
)
|
1,049,335
|
|
|||
|
|
|
|
||||||
Net change in cash and cash equivalents
|
20,327
|
|
34,699
|
|
259,983
|
|
|||
Cash and cash equivalents at beginning of year
|
325,825
|
|
291,126
|
|
31,143
|
|
|||
Cash and cash equivalents at end of year
|
$
|
346,152
|
|
$
|
325,825
|
|
$
|
291,126
|
|
|
ConocoPhillips WRB Partner LLC
(GP)
|
Cenovus
GPco LLC
(GP)
|
ConocoPhillips
(LP)
|
Cenovus
(LP)
|
Phillips 66 Company (LP)
|
Total
Partners'
Capital
|
||||||||||||
|
(In Thousands)
|
|||||||||||||||||
|
|
|
||||||||||||||||
Balance as of December 31, 2009
|
$
|
—
|
|
$
|
—
|
|
$
|
7,314,825
|
|
$
|
1,611,887
|
|
$
|
—
|
|
$
|
8,926,712
|
|
Member contribution - promissory note repayment
|
—
|
|
—
|
|
—
|
|
649,335
|
|
—
|
|
649,335
|
|
||||||
Net income
|
—
|
|
—
|
|
7,734
|
|
7,734
|
|
—
|
|
15,468
|
|
||||||
Equity transfer (LLC to LP restructuring)
|
14,645
|
|
4,538
|
|
(14,645
|
)
|
(4,538
|
)
|
—
|
|
—
|
|
||||||
Balance as of December 31, 2010
|
14,645
|
|
4,538
|
|
7,307,914
|
|
2,264,418
|
|
—
|
|
9,591,515
|
|
||||||
Member contribution - promissory note repayment
|
—
|
|
1,378
|
|
—
|
|
687,802
|
|
—
|
|
689,180
|
|
||||||
Net income
|
1,631
|
|
1,631
|
|
813,765
|
|
813,765
|
|
—
|
|
1,630,792
|
|
||||||
Distributions to members
|
(1,000
|
)
|
(1,000
|
)
|
(499,000
|
)
|
(499,000
|
)
|
—
|
|
(1,000,000
|
)
|
||||||
Balance as of December 31, 2011
|
15,276
|
|
6,547
|
|
7,622,679
|
|
3,266,985
|
|
—
|
|
10,911,487
|
|
||||||
Member contribution - promissory note repayment
|
—
|
|
1,463
|
|
—
|
|
730,008
|
|
—
|
|
731,471
|
|
||||||
Equity transfer
|
—
|
|
—
|
|
(7,553,420
|
)
|
—
|
|
7,553,420
|
|
—
|
|
||||||
Net income
|
2,519
|
|
2,519
|
|
397,640
|
|
1,256,816
|
|
859,175
|
|
2,518,669
|
|
||||||
Distributions to Members
|
(3,282
|
)
|
(3,282
|
)
|
(408,317
|
)
|
(1,437,500
|
)
|
(1,029,183
|
)
|
(2,881,564
|
)
|
||||||
Balance as of December 31, 2012
|
$
|
14,513
|
|
$
|
7,247
|
|
$
|
58,582
|
|
$
|
3,816,309
|
|
$
|
7,383,412
|
|
$
|
11,280,063
|
|
|
2012
|
|
2011
|
||||
|
(In Thousands)
|
||||||
|
|
|
|
||||
Crude oil and petroleum products
|
$
|
1,086,286
|
|
|
$
|
903,316
|
|
Materials, supplies, and other
|
41,175
|
|
|
38,332
|
|
||
|
$
|
1,127,461
|
|
|
$
|
941,648
|
|
|
2012
|
|
2011
|
||||||||||||||||
|
Gross
PP&E
|
Accumulated
D&A
|
Net
PP&E
|
|
Gross
PP&E
|
Accumulated
D&A
|
Net
PP&E
|
||||||||||||
|
(In Thousands)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Borger
|
$
|
3,708,012
|
|
$
|
876,454
|
|
$
|
2,831,558
|
|
|
$
|
3,606,186
|
|
$
|
752,465
|
|
$
|
2,853,721
|
|
Wood River
|
8,983,351
|
|
1,289,294
|
|
7,694,057
|
|
|
8,958,512
|
|
1,054,154
|
|
7,904,358
|
|
||||||
Headquarters
|
1,356
|
|
—
|
|
1,356
|
|
|
63
|
|
—
|
|
63
|
|
||||||
Total
|
$
|
12,692,719
|
|
$
|
2,165,748
|
|
$
|
10,526,971
|
|
|
$
|
12,564,761
|
|
$
|
1,806,619
|
|
$
|
10,758,142
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
(In Thousands)
|
||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
||||||
Technology licenses
|
$
|
14,000
|
|
|
$
|
6,857
|
|
|
$
|
7,143
|
|
Balance at December 31, 2012
|
$
|
14,000
|
|
|
$
|
6,857
|
|
|
$
|
7,143
|
|
|
|
|
|
|
|
||||||
Technology licenses
|
$
|
14,000
|
|
|
$
|
6,300
|
|
|
$
|
7,700
|
|
Balance at December 31, 2011
|
$
|
14,000
|
|
|
$
|
6,300
|
|
|
$
|
7,700
|
|
|
2012
|
|
2011
|
||||
|
(In Thousands)
|
||||||
|
|
|
|
||||
Asset retirement obligations
|
$
|
75,763
|
|
|
$
|
106,938
|
|
Asset retirement obligation costs due within one year*
|
(3,958
|
)
|
|
(3,454
|
)
|
||
Long-term asset retirement obligations
|
$
|
71,805
|
|
|
$
|
103,484
|
|
|
2012
|
|
2011
|
||||
|
(In Thousands)
|
||||||
|
|
|
|
||||
Beginning of period
|
$
|
106,938
|
|
|
$
|
89,930
|
|
Accretion of discount
|
4,143
|
|
|
3,681
|
|
||
Changes in estimates of existing obligations
|
(31,418
|
)
|
|
19,778
|
|
||
Spending on existing obligations
|
(3,900
|
)
|
|
(6,451
|
)
|
||
Balance at December 31
|
$
|
75,763
|
|
|
$
|
106,938
|
|
•
|
Meet customer needs. Consistent with the policy to generally remain exposed to market prices, swap contracts are used to convert fixed-price sales contracts, which are often requested by refined product consumers, to a floating market price.
|
•
|
Manage the risk to WRB's cash flows from price exposures on specific crude oil and refined product transactions.
|
•
|
Manage the price risk of WRB inventories.
|
|
December 31
|
||||||
|
2012
|
|
2011
|
||||
|
(In Thousands)
|
||||||
Assets
|
|
|
|
||||
Other current assets
|
$
|
3,731
|
|
|
$
|
1,278
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Other accruals
|
$
|
4,617
|
|
|
$
|
3,889
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In Thousands)
|
||||||||||
|
|
|
|
|
|
||||||
Third-party sales
|
$
|
6,951
|
|
|
$
|
(563
|
)
|
|
$
|
(18,418
|
)
|
Cost of sales
|
983
|
|
|
9,237
|
|
|
21,928
|
|
|
Open Position
Long/(Short)
|
||||
|
December 31
2012
|
|
December 31
2011
|
||
Commodity
|
|
|
|
||
Crude oil, refined products, and natural gas liquids
(thousands of barrels)
|
(301
|
)
|
|
285
|
|
•
|
Level 1: Quoted prices (unadjusted) in an active market for identical assets or liabilities
|
•
|
Level 2: Inputs other than quoted prices that are directly or indirectly observable
|
•
|
Level 3: Unobservable inputs that are significant to the fair value of assets or liabilities
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
|
(In Thousands)
|
||||||||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodity derivatives
|
$
|
3,731
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,731
|
|
|
$
|
599
|
|
$
|
679
|
|
$
|
—
|
|
$
|
1,278
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commodity derivatives
|
4,617
|
|
—
|
|
—
|
|
4,617
|
|
|
2,454
|
|
1,435
|
|
—
|
|
3,889
|
|
||||||||
Net assets (liabilities)
|
$
|
(886
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
(886
|
)
|
|
$
|
(1,855
|
)
|
$
|
(756
|
)
|
$
|
—
|
|
$
|
(2,611
|
)
|
•
|
Cash and cash equivalents: The carrying amount reported on the balance sheet approximates fair value.
|
•
|
Accounts and notes receivable: The carrying amount reflects normal credit terms and management's assessment of collectability and approximates fair value.
|
•
|
Commodity swaps: Fair value is estimated based on forward market prices and approximates the exit price at period-end. When forward market prices are not available, fair value is estimated using the forward prices of a similar commodity with adjustments for differences in quality or location.
|
•
|
Futures: Fair values are based on quoted market prices obtained from the New York Mercantile Exchange, the InterContinental Exchange Futures, or other traded exchanges.
|
|
Carrying Amount
|
|
Fair Value
|
||||||||||||
|
December 31
2012
|
|
December 31
2011
|
|
December 31
2012
|
|
December 31
2011
|
||||||||
|
(In Thousands)
|
||||||||||||||
Financial Assets
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
$
|
—
|
|
|
$
|
117
|
|
|
$
|
—
|
|
|
$
|
117
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total debt, excluding capital leases
|
—
|
|
|
377
|
|
|
—
|
|
|
406
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In Thousands)
|
||||||||||
|
|
||||||||||
Operating/Other revenues (a)(d)
|
$
|
10,541,927
|
|
|
$
|
10,324,759
|
|
|
$
|
7,254,711
|
|
Cost of sales (b)(d)
|
13,853,123
|
|
|
14,290,159
|
|
|
11,522,842
|
|
|||
Operating expenses and selling, general, and administrative expenses (c)
|
429,626
|
|
|
433,584
|
|
|
465,524
|
|
(a)
|
WRB sells petroleum finished products to Phillips 66 under the terms of existing agreements. Interest income is earned from CUH related to CUH's promissory note; see Note 2 — Contribution of Assets to WRB Refining. In 2012, 2011 and 2010, this amount totaled $235.3 million, $278.2 million and $318.7 million, respectively. Interest income receivable was $54.7 million and $65.6 million at December 31, 2012 and 2011, respectively, and is included in accounts receivable - related parties. Certain revenues for which Phillips 66 acts as an agent which were previously classified as related-party sales, are now classified as third-party sales.
|
(b)
|
Crude oil, natural gas, natural gas liquids, and other feedstocks are purchased from Phillips 66 for use in refinery processes as per the Feedstock Supply Agreement. Fees are paid to various pipeline companies related to Phillips 66 for transporting crude oil and finished refined products.
|
(c)
|
WRB pays Phillips 66 for payroll and benefits related to refinery personnel, G&A from various Phillips 66 corporate service providers, and natural gas that Phillips 66 acquired for the refineries.
|
(d)
|
A portion of WRB's economic hedging activities are done through derivative transactions with Phillips 66. As of December 31, 2012, there are no unrealized derivative assets with Phillips 66 reflected on the balance sheet. As of December 31, 2011, unrealized derivative assets of $0.1 million with Phillips 66 are reflected in other assets on the balance sheet. In 2012, derivative transactions with Phillips 66 resulted in $0.4 million in gains, reflected in cost of sales. In 2011, derivative transactions with Phillips 66 resulted in $5.7 million in gains, reflecting a $4.4 million loss in revenues along with a $10.1 million gain in cost of sales. In 2010, derivative transactions with Phillips 66 resulted in $4.9 million in losses, which are reflected in revenues.
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
Form
|
Exhibit
Number
|
|
Filing
Date
|
SEC
File No.
|
|
|
|
|
|
|
|
|
2.1
|
|
Separation and Distribution Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012.
|
8-K
|
2.1
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Phillips 66.
|
8-K
|
3.1
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated By-Laws of Phillips 66.
|
8-K
|
3.2
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
4.1
|
|
Indenture, dated as of March 12, 2012, among Phillips 66, as issuer, Phillips 66 Company, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee, in respect of senior debt securities of Phillips 66.
|
10
|
4.3
|
|
04/05/12
|
001-35349
|
|
|
|
|
|
|
|
|
4.2*
|
|
Form of the terms of the 1.950% Senior Notes due 2015, the 2.950% Senior Notes due 2017, the 4.300% Senior Notes due 2022 and the 5.875% Senior Notes due 2042, including the form of the 1.950% Senior Notes due 2015, the 2.950% Senior Notes due 2017, the 4.300% Senior Notes due 2022 and the 5.875% Senior Notes due 2042.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Credit Agreement among Phillips 66, Phillips 66 Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders named therein, dated as of February 22, 2012.
|
10
|
4.1
|
|
03/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.2
|
|
Term Loan Agreement among Phillips 66, Phillips 66 Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders named therein, dated as of February 22, 2012.
|
10
|
4.2
|
|
03/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.3
|
|
Receivables Purchase Agreement, dated as of April 27, 2012, among Phillips 66 Receivables Funding LLC, Phillips 66 Company, Royal Bank of Canada, as Administrative Agent and Structuring Agent, certain committed purchasers and conduit purchasers that are parties thereto from time to time and the other parties thereto from time to time.
|
8-K
|
10.6
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.4
|
|
Purchase and Contribution Agreement, dated as of April 27, 2012, by and between Phillips 66 Company and Phillips 66 Receivables Funding LLC.
|
8-K
|
10.7
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.5
|
|
Third Amended and Restated Limited Liability Company Agreement of Chevron Phillips Chemical Company LLC, effective as of May 1, 2012.
|
10-Q
|
10.14
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.6
|
|
Second Amended and Restated Limited Liability Company Agreement of Duke Energy Field Services, LLC, dated July 5, 2005, by and between ConocoPhillips Gas Company and Duke Energy Enterprises Corporation.
|
10
|
10.12
|
|
03/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.7
|
|
First Amendment to Second Amended and Restated Limited Liability Company Agreement of Duke Energy Field Services, LLC, dated August 11, 2006, by and between ConocoPhillips Gas Company and Duke Energy Enterprises Corporation.
|
10
|
10.13
|
|
03/01/12
|
001-35349
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
Form
|
Exhibit
Number
|
|
Filing
Date
|
SEC
File No.
|
|
|
|
|
|
|
|
|
10.8
|
|
Second Amendment to Second Amended and Restated Limited Liability Company Agreement of DCP Midstream, LLC (formerly Duke Energy Field Services, LLC), dated February 1, 2007, by and between ConocoPhillips Gas Company, Spectra Energy DEFS Holding, LLC, and Spectra Energy DEFS Holding Corp.
|
10
|
10.14
|
|
03/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.9
|
|
Third Amendment to Second Amended and Restated Limited Liability Company Agreement of DCP Midstream, LLC (formerly Duke Energy Field Services, LLC), dated April 30, 2009, by and between ConocoPhillips Gas Company, Spectra Energy DEFS Holding, LLC, and Spectra Energy DEFS Holding Corp.
|
10
|
10.15
|
|
03/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.10
|
|
Fourth Amendment to Second Amended and Restated Limited Liability Company Agreement of DCP Midstream, LLC (formerly Duke Energy Field Services, LLC), dated November 9, 2010, by and between ConocoPhillips Gas Company, Spectra Energy DEFS Holding, LLC, and Spectra Energy DEFS Holding Corp.
|
10
|
10.16
|
|
03/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.11
|
|
Indemnification and Release Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012.
|
8-K
|
10.1
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.12
|
|
Intellectual Property Assignment and License Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012.
|
8-K
|
10.2
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.13
|
|
Tax Sharing Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012.
|
8-K
|
10.3
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.14
|
|
Employee Matters Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012.
|
8-K
|
10.4
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.15
|
|
Transition Services Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012.
|
8-K
|
10.5
|
|
05/01/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.16
|
|
Omnibus Stock and Performance Incentive Plan of Phillips 66.**
|
S-8
|
4.1
|
|
05/01/12
|
333-181080
|
|
|
|
|
|
|
|
|
10.17
|
|
Phillips 66 Key Employee Supplemental Retirement Plan.**
|
10-Q
|
10.15
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.18*
|
|
First Amendment to the Phillips 66 Key Employee Supplemental Retirement Plan.**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
Phillips 66 Executive Severance Plan.**
|
10-Q
|
10.16
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.20*
|
|
First Amendment to the Phillips 66 Executive Severance Plan.**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21
|
|
Phillips 66 Deferred Compensation Plan for Non-Employee Directors.**
|
10-Q
|
10.17
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.22
|
|
Phillips 66 Key Employee Deferred Compensation Plan
-
Title I.**
|
10-Q
|
10.18
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.23
|
|
Phillips 66 Key Employee Deferred Compensation Plan
-
Title II.**
|
10-Q
|
10.19
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
Form
|
Exhibit
Number
|
|
Filing
Date
|
SEC
File No.
|
|
|
|
|
|
|
|
|
10.24*
|
|
First Amendment to the Phillips 66 Key Employee Deferred Compensation Plan Title II.**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
Phillips 66 Defined Contribution Make-Up Plan
Title I.**
|
10-Q
|
10.20
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.26*
|
|
Phillips 66 Defined Contribution Make-Up Plan
Title II.**
|
|
|
|
|
|
|
|
|
|
||||
10.27*
|
|
Phillips 66 Key Employee Change in Control Severance Plan.**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
Annex to the Phillips 66 Nonqualified Deferred Compensation Arrangements.**
|
10-Q
|
10.23
|
|
08/03/12
|
001-35349
|
|
|
|
|
|
|
|
|
10.29*
|
|
Form of Stock Option Award Agreement under the Omnibus Stock and Performance Incentive Plan of Phillips 66.**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30*
|
|
Form of Restricted Stock or Restricted Stock Unit Award Agreement under the Omnibus Stock and Performance Incentive Plan of Phillips 66.**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31*
|
|
Form of Performance Share Unit Award Agreement under the Omnibus Stock and Performance Incentive Plan of Phillips 66.**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12*
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21*
|
|
List of Subsidiaries of Phillips 66.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1*
|
|
Consent of Ernst & Young LLP, independent registered public accounting firm.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.2*
|
|
Consent of Ernst & Young LLP, independent auditors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32*
|
|
Certifications pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH*
|
|
XBRL Schema Document.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL*
|
|
XBRL Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB*
|
|
XBRL Labels Linkbase Document.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE*
|
|
XBRL Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF*
|
|
XBRL Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PHILLIPS 66
|
|
|
|
|
|
|
February 22, 2013
|
/s/ Greg C. Garland
|
|
Greg C. Garland
Chairman of the Board of Directors, President
and Chief Executive Officer
|
Signature
|
|
Title
|
|
|
|
|
|
|
|
|
|
/s/ Greg C. Garland
|
|
Chairman of the Board of Directors, President
|
Greg C. Garland
|
|
and Chief Executive Officer
|
|
|
(Principal executive officer)
|
|
|
|
|
|
|
/s/ Greg G. Maxwell
|
|
Executive Vice President, Finance
|
Greg G. Maxwell
|
|
and Chief Financial Officer
|
|
|
(Principal financial officer)
|
|
|
|
|
|
|
/s/ C. Doug Johnson
|
|
Vice President and Controller
|
C. Doug Johnson
|
|
(Principal accounting officer)
|
|
|
|
|
|
|
|
|
|
/s/ J. Brian Ferguson
|
|
Director
|
J. Brian Ferguson
|
|
|
|
|
|
|
|
|
/s/ William R. Loomis Jr.
|
|
Director
|
William R. Loomis Jr.
|
|
|
|
|
|
|
|
|
/s/ John E. Lowe
|
|
Director
|
John E. Lowe
|
|
|
|
|
|
|
|
|
/s/ Harold W. McGraw III
|
|
Director
|
Harold W. McGraw III
|
|
|
|
|
|
|
|
|
/s/ Glenn F. Tilton
|
|
Director
|
Glenn F. Tilton
|
|
|
|
|
|
|
|
|
/s/ Victoria J. Tschinkel
|
|
Director
|
Victoria J. Tschinkel
|
|
|
|
|
|
|
|
|
/s/ Marna C. Whittington
|
|
Director
|
Marna C. Whittington
|
|
|
PHILLIPS 66
|
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
|
|
|
|
|
PHILLIPS 66 COMPANY
|
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
|
By:
|
|
|
Authorized Signatory
|
|
|
Dated:
|
|
Date of Exchange
|
Amount of
Decrease in
Principal Amount
of this Global Security
|
Amount of
Increase in
Principal Amount
of this Global Security
|
Principal Amount
of this Global
Security Following
Such Decrease
or Increase
|
Signature of
Authorized Officer
of Trustee or
Security Custodian
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Insert assignee’s social security or tax I.D. number)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Print or type assignee’s name, address and zip code)
|
“(e)
|
Notwithstanding anything herein to the contrary, any right or interest of a Participant under this Plan is subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. A Participant’s rights or interests under this Plan are also subject to forfeiture or recoupment in the event such Participant’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit Committee of the Board.”
|
(a)
|
The amount that is the Severed Employee's Credited Compensation, multiplied by (i) 2, in the case of a Tier 1 Employee or (ii) 1.5 in the case of a Tier 2 Employee.
|
(b)
|
The amount that is the present value, determined as of the Severed Employee's Severance Date, of the increase in benefits under the Retirement Plans that would result if the Severed Employee was credited with the following number of additional years of age and service (including pay credits and interest credits under a cash balance formula, if applicable) under the Retirement Plans: (i) 2, in the case of a Tier 1 Employee or (ii) 1.5, in the case of a Tier 2 Employee; provided, however, that in calculating (b), if the Severed Employee is entitled under the Retirement Plans to any additional credited service due to the circumstances of the Severed Employee’s termination, then the amount of the present value of the increased benefits called for in the determination of (b) shall be reduced by the amount of the present value of the increased benefits under the Retirement Plans calculated after taking into account the circumstances of the Severed Employee’s termination, but not below zero. Present value shall be determined based on the assumptions utilized under the Phillips 66 Retirement Plan for purposes of determining contributions under Code Section 412 for the most recently completed plan year. With respect to a Severed Employee who was actively participating in a cash balance formula under the Retirement Plans, the Severance Pay amount determined under this subsection shall be equal to the increase in benefits under the Retirement Plans that would result if the Severed Employee was credited with the following number of additional years of pay credits and interest credits under the Retirement Plans as of the Severance Date: (i) 2, in the case of a Tier 1 Employee or (ii) 1.5, in the case of a Tier 2 Employee. The pay credits shall be calculated taking into account the additional years of age and service recognized under this subsection, and the interest credits shall be based on the applicable interest rate in effect on the Severance Date.
|
(c)
|
The amount that is equal to the sum of (i) and (ii), plus (iii), if applicable:
|
(i)
|
An amount equal to 24 times (in the case of a Tier 1 Employee) or 18 times (in the case of a Tier 2 Employee) the difference between the monthly COBRA participant contribution amount and the monthly active employee contribution amount, each as of the
|
(ii)
|
An amount equal to 24 times (in the case of a Tier 1 Employee) or 18 times (in the case of a Tier 2 Employee) the difference between the monthly COBRA participant contribution amount and the active employee contribution amount, each as of the Severance Date, based on the active dental coverage for which the Severed Employee was enrolled on the Severance Date; provided that if the Severed Employee was not enrolled as of the Severance Date, the amount shall be determined using the Phillips 66 dental option coverage.
|
(iii)
|
If any persons qualified as eligible dependents of the Severed Employee under the applicable company-sponsored medical or dental coverage in which the Severed Employee was enrolled on the Severance Date, an amount equal to 24 times (in the case of a Tier 1 Employee) or 18 times (in the case of a Tier 2 Employee) the sum of the differences, for each such eligible dependent, between the monthly COBRA eligible dependent contribution amount and the monthly eligible dependent contribution amount for eligible dependents of active employees, each as of the Severance Date, for the medical and/or dental coverage in which the Severed Employee was enrolled on the Severance Date, as applicable; provided, that if the Severed Employee was not enrolled for medical or dental coverage, then the eligibility and amount for each dependent shall be determined as if the Severed Employee had been enrolled in the high deductible health plan option coverage or the Phillips 66 dental option coverage, as applicable, on the Severance Date.
|
(d)
|
The amount that is equal to 24 times (in the case of a Tier 1 Employee) or 18 times (in the case of a Tier 2 Employee) the difference between the total monthly cost and the monthly active employee contribution amount, each as of the Severance Date, for the company-sponsored life insurance coverage (including basic, executive basic, supplemental, and dependent) and personal accident insurance coverage for which the Severed Employee and any eligible dependents were enrolled on the Severance Date.”
|
“(e)
|
Notwithstanding anything herein to the contrary, any right or interest of a Participant under this Plan is subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. A Participant’s rights or interests under this Plan are also subject to forfeiture or recoupment in the event such Participant’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit Committee of the Board.”
|
(a)
|
"Beneficiary"
shall mean a person or persons designated by a Participant to receive, in the event of death, any unpaid portion of a Participant's Benefit from this Plan. Any Participant may designate one or more persons primarily or contingently as beneficiaries in writing upon forms supplied by and delivered to the Company, and may revoke such designations in writing. If a Participant fails to properly
designate a beneficiary, then the Benefits will be paid in the following order of priority:
|
(i)
|
Surviving spouse; then
|
(ii)
|
Surviving children in equal shares; then
|
(iii)
|
To the estate of the Participant.
|
(b)
|
"Benefit"
shall mean an obligation of the Company to pay amounts from this Plan.
|
(c)
|
"Board"
shall mean the Board of Directors of the Company, as it may be comprised from time to time.
|
(d)
|
"Code"
shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
|
(e)
|
"Company"
shall mean Phillips 66 Company, a Delaware corporation, or any successor corporation. The Company is a Subsidiary of Phillips 66.
|
(f)
|
"Controlled Group"
shall mean Phillips 66 and its Subsidiaries.
|
(g)
|
"DCMP Pay"
shall mean
"
Pay
"
as defined in the Savings Plan without regard to Pay Limitations or voluntary salary reduction under provisions of the KEDCP.
|
(h)
|
"Election Form"
shall mean a written form, including one in electronic format, provided by the Plan Administrator pursuant to which a Participant may elect the time and form of payment of his or her Benefit.
|
(i)
|
"Employee"
shall mean any individual who is a salaried employee of the Company or any Participating Subsidiary.
|
(j)
|
"ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor statute.
|
(k)
|
"Frozen Plan"
shall mean Title I of the Phillips 66 Defined Contribution Make-Up Plan.
|
(l)
|
"Highly Compensated Employee"
shall mean an Employee whose DCMP Pay exceeds the amount set forth in Code section 401(a)(17), as amended from time to time, or who is eligible to elect a voluntary salary reduction under the provisions of the KEDCP.
|
(m)
|
"Investment Options"
shall mean the investment options, as determined from time to time by the Plan Administrator, used to credit earnings, gains, and losses on Supplemental Thrift Account and Supplemental Success Share Account balances.
|
(n)
|
"KEDCP"
shall mean the Phillips 66 Key Employee Deferred Compensation Plan or any similar or successor plan maintained by a member of the Controlled Group.
|
(o)
|
"Ongoing Plan"
shall mean Title II of the Phillips 66 Defined Contribution Make-Up Plan.
|
(p)
|
"Participant"
shall mean an Employee who is eligible to receive a Benefit from this Plan as a result of being a Highly Compensated Employee and any person for whom a Supplemental Thrift Account and/or a Supplemental Success Share Account is maintained.
|
(q)
|
"Participating Subsidiary"
shall mean a Subsidiary which has adopted the Savings Plan, and one or more Employees of which are Participants eligible to make deposits to the Savings Plan, or are eligible for Benefits pursuant to this Plan.
|
(r)
|
"Pay Limitations"
shall mean the compensation limitations applicable to the Savings Plan that are set forth in Code section 401(a)(17), as adjusted.
|
(s)
|
"Phillips 66"
shall mean Phillips 66, a Delaware corporation, or any successor corporation. Phillips 66 is a publicly held corporation and the parent of the Company.
|
(t)
|
"Plan"
shall mean the Phillips 66 Defined Contribution Make-Up Plan. The Plan is sponsored and maintained by the Company.
|
(u)
|
"Plan Administrator"
shall mean the Manager, Benefits of the Company, or such person’s successor.
|
(v)
|
"Plan Year"
means January 1 through December 31.
|
(w)
|
"Pay"
shall mean
"
Pay
"
as defined in the Savings Plan.
|
(x)
|
"Savings Plan"
shall mean the Phillips 66 Savings Plan.
|
(y)
|
"Separation from Service"
shall mean the date on which the Participant separates from service with the Controlled Group within the meaning of Code section 409A, whether by reason of death, disability, retirement, or otherwise. In determining Separation from Service, with regard to a bona fide leave of absence that is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29-month period of absence shall be substituted for the six-month period set forth in section 1.409A-1(h)(1)(i) of the regulations issued under section 409A of the Code, as allowed thereunder.
|
(z)
|
"Stock"
shall mean shares of common stock, $0.01 par value, issued by Phillips 66.
|
(aa)
|
"Subsidiary"
shall mean any corporation or other entity that is treated as a single employer with Phillips 66 under section 414(b) or (c) of the Code. In applying section 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under section 414(b) of the Code and for purposes of determining trades or businesses (whether or not incorporated) under common control under regulation section 1.414(c)-2 for purposes of section 414(c) of the Code, the language “at least 80%” shall be used without substitution as allowed under regulations pursuant to section 409A of the Code.
|
(ab)
|
"Success Share"
shall mean the Success Share component of the Savings Plan.
|
(ac)
|
"Supplemental Success Share Contributions"
shall mean an amount equal to the Participant’s DCMP Pay for an applicable Success Share Contribution period that is in excess of the Participant’s Pay for such Success Share Contribution period multiplied by the applicable Success Share Contribution percentage.
|
(ad)
|
"Supplemental Success Share Account"
shall mean the Plan Benefit account of a Participant that reflects the portion of his or her Benefit that is intended to replace certain Success Share benefits to which the Participant might otherwise be entitled but for the application of the Pay Limitations and/or a voluntary salary reduction under the KEDCP.
|
(ae)
|
"Supplemental Thrift Contributions"
shall mean an amount equal to 5% of the amount of the Participant’s DCMP Pay for a Plan Year that is in excess of the Participant’s Pay for such Plan Year.
|
(af)
|
"Supplemental Thrift Account"
shall mean the Plan Benefit account of a Participant which reflects the portion of his or her Benefit which is intended to replace certain Thrift benefits to which the Participant might otherwise be entitled but for the application of the Pay Limitations and/or a voluntary salary reduction under the KEDCP.
|
(ag)
|
"Thrift"
shall mean the Thrift component of the Savings Plan.
|
(ah)
|
"Trustee"
shall mean the trustee of the grantor trust established for this Plan by a trust agreement between the Company and the trustee, or any successor trustee.
|
(ai)
|
"Valuation Date"
shall mean “Valuation Date” as defined in the Savings Plan.
|
Section 4.1
|
Supplemental Thrift Account Earnings
|
Section 5.1
|
Supplemental Success Share Account Earnings
|
(b)
|
annual, semi-annual, or quarterly installments, using a declining balance method, over a period ranging from one to fifteen years.
|
(a)
|
The election to change the time or form of payment may not take effect until at least twelve months after the date on which such election is made;
|
(b)
|
Payment under such election may not be made earlier than at least five years from the date the payment would have otherwise been made or commenced;
|
(c)
|
Such payment may commence as of the beginning of any calendar quarter;
|
(d)
|
An election to receive payments in installments shall be treated as a single payment for purposes of these rules;
|
(e)
|
The election may not result in an impermissible acceleration of payment prohibited under Code section 409A;
|
(f)
|
No more than four such elections shall be permitted with respect to Benefits credited to a Participant’s Accounts for a Plan Year; and
|
(g)
|
No payment may be made after the date that is twenty (20) years after the date of the Participant’s Separation from Service.
|
(a)
|
The Plan shall be administered by the Plan Administrator. The Plan Administrator may delegate to employees of the Company or any member of the Controlled Group the authority to execute and deliver such instruments and documents, to do all such acts and things, and to take such other steps deemed necessary, advisable, or convenient for the effective administration of the Plan in accordance with its terms and purpose, except that the Plan Administrator may not delegate any discretionary authority with respect to substantive decisions or functions regarding the Plan or Benefits hereunder.
|
(b)
|
Any claim for benefits hereunder shall be presented in writing to the Plan Administrator for consideration, grant, or denial. Claimants will be notified in writing of approved claims, which will be processed as claimed. A claim is considered approved only if its approval is communicated in writing to a claimant.
|
(c)
|
In the case of a denial of a claim respecting benefits paid or payable with respect to a Participant, a written notice will be furnished to the claimant within 90 days of the date on which the claim is received by the Plan Administrator. If special circumstances (such as for a hearing) require a longer period, the claimant will be notified in writing, prior to the expiration of the 90-day period, of the reasons for an extension of time; provided, however, that no extensions will be permitted beyond 90 days after the expiration of the initial 90-day period. A denial or partial denial of a claim will be dated and signed by the Plan Administrator and will clearly set forth:
|
(1)
|
the specific reason or reasons for the denial;
|
(2)
|
specific reference to pertinent Plan provisions on which the denial is based;
|
(3)
|
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
|
(4)
|
an explanation of the procedure for review of the denied or partially denied claim set forth below, including the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.
|
(d)
|
Upon denial of a claim, in whole or in part, a claimant or his duly authorized representative will have the right to submit a written request to the Trustee for a full and fair review of the denied claim by filing a written notice of appeal with the Trustee within 60 days of the receipt by the claimant of written notice of the denial of the claim. A claimant or the claimant’s authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits and may submit issues and comments in writing. The review will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the claimant fails to file a request for review within 60 days of the denial notification, the claim will be deemed abandoned and the claimant precluded from reasserting it. If the claimant does file a request for review, his request must include a description of the issues and evidence he deems relevant. Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.
|
(e)
|
The Trustee will provide a prompt written decision on review. If the claim is denied on review, the decision shall set forth:
|
(1)
|
the specific reason or reasons for the adverse determination;
|
(2)
|
specific reference to pertinent Plan provisions on which the adverse determination is based;
|
(3)
|
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and
|
(4)
|
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures, as well as a statement of the claimant’s right to bring an action under ERISA section 502(a).
|
(f)
|
A decision will be rendered no more than 60 days after the Trustee’s receipt of the request for review, except that such period may be extended for an additional 60 days if the Trustee determines that special circumstances (such as for a hearing) require such extension. If an extension of time is required, written notice of the extension will be furnished to the claimant before the end of the initial 60-day period.
|
(g)
|
To the extent permitted by law, decisions reached under the claims procedures set forth in this Section shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the claimant has exhausted his remedies under this Section. In any such legal action, the claimant may only present evidence and theories which the claimant presented during the claims procedure. Any claims which the claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived. Judicial review of a claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the claimant presented during the claims procedure.
|
Section 9.
|
Awards in Foreign Countries.
|
(a)
|
No right or interest of a Participant under this Plan shall be assignable or transferable, in whole or in part, directly or indirectly, by operation of law or otherwise (excluding devolution upon death or mental incompetency). This Ongoing Plan applies to amounts that were earned or vested after December 31, 2004. The distribution of amounts that were earned and vested (within the meaning of Code section 409A and official guidance issued thereunder) under the Frozen Plan prior to January 1, 2005 (and earnings thereon), and are exempt from the requirements of Code section 409A, shall be made in accordance with the terms of the Frozen Plan as in effect on December 31, 2004.
|
(b)
|
No amount accrued or payable hereunder shall be deemed to be a portion of an Employee's compensation or earnings for the purpose of any other employee benefit plan adopted or maintained by the Company, nor shall this Plan be deemed to amend or modify the provisions of the Savings Plan.
|
(c)
|
This Plan shall be construed, regulated, and administered in accordance with the laws of the State of Texas except to the extent that said laws have been preempted by the laws of the United States.
|
(d)
|
Except as otherwise provided herein, the Plan shall be binding upon the Company, its successors and assigns, including but not limited to any corporation which may acquire all or substantially all of the Company's assets and business or with or into which the Company may be consolidated or merged.
|
(e)
|
It is the intention of the Company that, so long as any of Phillips 66's equity securities are registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, this
|
(f)
|
Notwithstanding anything herein to the contrary, any right or interest of a Participant under this Plan is subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. A Participant’s rights or interests under this Plan are also subject to forfeiture or recoupment in the event such Participant’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit Committee of the Board.
|
SECTION 1.
|
DEFINITIONS
. As hereinafter used:
|
(b)
|
The amount that is the present value, determined as of the Severed Employee's Severance Date, of the increase in benefits under the Retirement Plans that would result if the Severed Employee was credited with the following number of additional years of age and service under the Retirement Plans: (i) 3, in the case of a Tier 1 Employee or (ii) 2, in the case of a Tier 2 Employee; provided, however, that in calculating (b), if the Severed Employee is entitled under the Retirement Plans to any additional credited service due to the circumstances of the Severed Employee’s termination, then the amount of the present value of the increased benefits called for in the determination of (b) shall be reduced by the amount of the present value of the increased benefits under the Retirement Plans calculated after taking into account the circumstances of the Severed Employee’s termination, but not below zero. Present value shall be determined based on the assumptions utilized under the Phillips 66 Retirement Plan for purposes of determining contributions under Code Section 412 for the most recently completed plan year. With respect to a Severed Employee who was actively participating in a cash balance formula under the Retirement Plans, the Severance Pay amount determined under this subsection shall be equal to the increase in benefits under the Retirement Plans that would result if the Severed Employee was credited with the following number of additional years of pay credits and interest credits under the Retirement Plans as of the Severance Date: (i) 3, in the case of a Tier 1 Employee or (ii) 2, in the case of a Tier 2 Employee. The pay credits shall be calculated taking into account the additional years of age and service recognized under this subsection, and the interest credits shall be based on the applicable interest rate in effect on the Severance Date.
|
(c)
|
The amount that is equal to the sum of (i) and (ii), plus (iii), if applicable:
|
(i)
|
An amount equal to 36 times (in the case of a Tier 1 Employee) or 24 times (in the case of a Tier 2 Employee) the difference between the monthly COBRA participant contribution amount and the monthly active employee contribution amount, each as of the Severance Date, based on the active medical coverage for which the Severed Employee was enrolled as of the Severance Date; provided that if the Severed Employee was not enrolled as of the Severance Date, the amount shall be determined as if the Severed Employee had been enrolled in the high deductible health plan option coverage.
|
(ii)
|
An amount equal to 36 times (in the case of a Tier 1 Employee) or 24 times (in the case of a Tier 2 Employee) the difference between the monthly COBRA participant contribution amount and the active employee contribution amount, each as of the Severance Date, based on the active dental coverage for which the Severed Employee was enrolled on the Severance Date; provided that if the Severed Employee was not enrolled as of the Severance Date, the amount shall be determined using the Phillips 66 dental option coverage.
|
(iii)
|
If any persons qualified as eligible dependents of the Severed Employee under the applicable company-sponsored medical or dental coverage in which the Severed Employee was enrolled on the Severance Date, an amount equal to 36 times (in the case of a Tier 1 Employee) or 24 times (in the case of a Tier 2 Employee) the sum of the differences, for each such eligible dependent, between the monthly COBRA eligible dependent contribution amount and the monthly eligible dependent contribution amount for eligible dependents of active employees, each as of the Severance Date, for the medical and/or dental coverage in which the Severed Employee was enrolled on the Severance Date, as applicable; provided, that if the Severed Employee was not enrolled for medical or dental coverage, then the eligibility and amount for each dependent shall be determined as if the Severed Employee had been enrolled in the high deductible health plan option coverage or the Phillips 66 dental option coverage, as applicable, on the Severance Date.
|
(d)
|
The amount that is equal to 36 times (in the case of a Tier 1 Employee) or 24 times (in the case of a Tier 2 Employee) the difference between the total monthly cost and the monthly active employee contribution amount, each as of the Severance Date, for the company-sponsored life insurance coverage (including basic, executive basic, supplemental, and dependent) and personal accident insurance coverage for which the Severed Employee and any eligible dependents were enrolled on the Severance Date.
|
2.5
|
(a) Anything in this Plan to the contrary notwithstanding, in the event it shall be determined that the Parachute Value of all Payments, reduced by all U.S. federal, state and local taxes applicable thereto, including the Excise Tax, is less than the Safe Harbor Amount, then the amounts payable under this Plan shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Plan (and no other Payments) shall be reduced. If the reduction of the amount payable under this Plan to an Eligible Employee would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable to the Eligible Employee under the Plan shall be reduced pursuant to this Section 2.5(a).
|
(a)
|
In the case of a denial of a claim respecting benefits paid or payable with respect to a Participant, a written notice will be furnished to the claimant within 90 days of the date on which the claim is received by the Plan Administrator. If special circumstances (such as for a hearing) require a longer period, the claimant will be notified in writing, prior to the expiration of the 90-day period, of the reasons for an extension of time;
|
(i)
|
the specific reason or reasons for the denial;
|
(ii)
|
specific reference to pertinent Plan provisions on which the denial is based;
|
(iii)
|
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
|
(iv)
|
an explanation of the procedure for review of the denied or partially denied claim set forth below.
|
(b)
|
Upon denial of a claim, in whole or in part, a claimant or his duly authorized representative will have the right to submit a written request to a committee of individuals established by the Board (the "Claims Committee") for a full and fair review of the denied claim by filing a written notice of appeal with the Claims Committee within 60 days of the receipt by the claimant of written notice of the denial of the claim. A claimant or the claimant’s authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits and may submit issues and comments in writing. The review will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the claimant fails to file a request for review within 60 days of the denial notification, the claim will be deemed abandoned and the claimant precluded from reasserting it. If the claimant does file a request for review, his request must include a description of the issues and evidence he deems relevant. Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.
|
(c)
|
The Claims Committee will provide a prompt written decision on review. If the claim is denied on review, the decision shall set forth:
|
(i)
|
the specific reason or reasons for the adverse determination;
|
(ii)
|
specific reference to pertinent Plan provisions on which the adverse determination is based;
|
(iii)
|
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and
|
(iv)
|
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures.
|
(d)
|
A decision will be rendered no more than 60 days after the Claims Committee’s receipt of the request for review, except that such period may be extended for an additional 60 days if the Claims Committee determines that special circumstances (such as for a hearing) require such extension. If an extension of time is required, written notice of the extension will be furnished to the claimant before the end of the initial 60-day period.
|
(e)
|
To the extent permitted by law, decisions reached under the claims procedures set forth in this Section shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the claimant has exhausted his remedies under this Section. In any such legal action, the claimant may only present evidence and theories which the claimant presented during the claims procedure. Any claims which the claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived. Judicial review of a claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the claimant presented during the claims procedure.
|
(f)
|
Except as provided in the preceding portion of this Section 3.2, all disputes under this Plan shall be settled exclusively by binding arbitration in Houston, Texas, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction.
|
4.2
|
(a) If a Change in Control has not occurred, this Plan may be amended from time to time during its term by the Company acting through its Board of Directors or, to the extent authorized by the Board of Directors, its officers, provided that any such amendment which shall in any manner reduce, diminish, or otherwise adversely affect any benefit which is or may at any time in the future become payable hereunder, or any such amendment which shall alter the definition of Change in Control shall be made effective not less than two years after the action of the Company authorizing such amendment, unless, and then only to the extent that such amendment is or becomes necessary in order to assure continued compliance by this Plan with any applicable state or federal law or regulation.
|
(b)
|
The Company may, by action of its Board of Directors, terminate this Plan, provided, however, that the effective date of such termination shall be not less than two years from the date of such Board action. Provided further that in the event a Change in Control shall occur prior to the effective date of termination, the provisions of Section 4.2(c) shall apply.
|
(c)
|
If a Change in Control shall occur while this Plan is in effect, no then-pending amendment or termination shall take effect, this Plan shall remain in full force and effect as at the Change in Control, and this Plan shall terminate automatically without further action on behalf of the Company immediately following the making of all payments to Eligible Employees under this Plan.
|
SECTION 5.
|
GENERAL PROVISIONS
.
|
1.
|
Type and Size of Grant
. Subject to the Plan and this Agreement, the Company grants to certain eligible Employees a Nonqualified Stock Option to purchase all or any part of an aggregate number of shares of Common Stock of the Company. In certain countries, grants will be in the form of SARs. Individual awards will be as set forth in the Annual Award Summary given to each Employee to whom an Award is granted. The Annual Award Summary for each Employee is made a part of this Agreement with regard to such Employee.
|
2.
|
Grant Date, Price, and Plan
. The grant date is [
●
] and the Grant Price is $[
●
]. Awards are made under the Omnibus Stock and Performance Incentive Plan of Phillips 66.
|
3.
|
Term of Awards, Exercise Installments, and Last Date to Exercise
. Except as otherwise noted in this Agreement, the following summary table describes term of awards, exercise installments, and last date to exercise, subject to the more detailed provisions set forth below:
|
Summary of Exercise Rules
|
||
Status
|
Condition
|
Last Date to Exercise
|
Active Employee
|
|
10 years from grant date
|
Retirement (age 55 and 5 years of service)
|
Prior to 6 months from grant date
|
Canceled upon Termination
|
6 months from grant date & after
|
10 years from grant date
|
|
Layoff
|
Prior to 6 months from grant date
|
Canceled upon Termination
|
6 months to 1 year from grant date
|
10 years from grant date (award is prorated)
|
|
1 year from grant date & after
|
10 years from grant date
|
|
Disability
|
Any date after grant date
|
10 years from grant date
|
Death
|
Any date after grant date
|
10 years from grant date
|
Divestitures, outsourcing, and moves to joint ventures
|
Any date after grant date
|
Canceled upon Termination, unless approval otherwise
|
All other Terminations
|
|
Canceled upon Termination
|
(a)
|
Exercise Installments and Expiration
. Stock Options/SAR’s granted under this Agreement will become exercisable to the extent that one third of the number of shares of Stock subject to the Stock Option/SAR (rounded down to nearest whole share) shall be exercisable on the first anniversary date of the Stock Option/SAR grant. On the second anniversary date of the Stock Option/SAR grant, an additional one third of the number of shares of Stock (rounded down to nearest whole share) shall become exercisable. On the third anniversary date of the Stock Option/SAR grant, the remaining shares shall become exercisable. To the extent that an installment is not exercised when it becomes first exercisable, it will remain exercisable at any time thereafter until the Award shall be canceled, expire, or be surrendered. A Stock Option or SAR expires on the tenth anniversary of the date on which it was granted.
|
(i)
|
General Rule for Termination
. If, prior to the exercise of Stock Options/SAR grants, the Optionee's employment with a Participating Company shall be terminated for any reason except death, Disability, Retirement, or Layoff, such Award shall be canceled and all rights thereunder shall cease; provided that the Authorized Party may, in its or his sole discretion, determine that all or any portion of any other Award shall not be canceled due to Termination of Employment.
|
(ii)
|
Layoff Within Six Months
. If, prior to a date six months from the date an Award is granted, the Optionee's employment with a Participating Company shall be terminated by reason of Layoff, such Award shall be canceled and all rights thereunder shall cease.
|
(iii)
|
Layoff After Six Months but Within One Year
. If, on or after a date six months from the date an Award is granted but prior to a date one year from the date an Award is granted, the Optionee's employment with a Participating Company shall be terminated by reason of Layoff, the Optionee shall retain a prorated number of the Award shares granted. The number of Award shares retained will be computed by multiplying the original number of Award shares granted by a fraction, the numerator of which is the number of full months of employment from the first day of the month in which the Award was granted until the date the employee is terminated and the denominator of which is 12. Such calculation shall be rounded down to the nearest whole share.
|
(iv)
|
Layoff After One Year
. If, on or after a date one year from the date an Award is granted, the Optionee's employment with a Participating Company shall be terminated by reason of Layoff, the Optionee shall retain all rights provided by the Award at the time of such Termination of Employment.
|
(v)
|
Retirement After Six Months
. If, on or after a date six months from the Grant Date of an Award, the Optionee's employment with a Participating Company shall be terminated by reason of Retirement, the Optionee shall retain all rights provided by the Award at the time of such Termination of Employment.
|
(vi)
|
Disability
. If, after the date the Award is granted, an Optionee shall terminate employment following Disability of the Optionee, the Optionee shall retain all rights provided by the Award at the time of such Termination of Employment.
|
(vii)
|
Death
. If, after the date an Award is granted, an Optionee shall die while in the employ of a Participating Company
,
or after Termination of Employment by reason of Retirement, Disability, or Layoff (and prior to the cancellation of the Award), the executor or administrator of the estate of the Optionee or the person or persons to whom the Award shall have been validly transferred by the executor or the administrator pursuant to will or the laws of descent and distribution shall have the right to exercise the Award to the same extent the Optionee could have, had the Optionee not died. No transfer of an Award by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the will and such other evidence as the Company may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Award.
|
(viii)
|
Transfers and Leaves
. Transfer of employment between Participating Companies shall not constitute Termination of Employment for the purpose of any Award granted under the Program. Whether any leave of absence shall constitute Termination of Employment for the purposes of any Award granted under the Program shall be determined in each case in accordance with applicable law and by application of the policies and procedures adopted by the Company in relation to such leave of absence.
|
(ix)
|
Divestiture, Outsourcing, or Move to Joint Venture
. If, after the date the Award is granted, an Optionee ceases to be employed by a Participating Company as a result of (a) the outsourcing of a function, (b) the sale or transfer of all or a portion of the equity interest of such Participating Company (removing it from the controlled group of companies of which the Company is a part), (c) the sale of all or substantially all of the assets of such Participating Company to another employer outside of the controlled group of corporations (whether the Optionee is offered employment or accepts employment with the other employer), (d) the Termination of the Optionee by Participating Company followed by employment within a reasonable time with a company or other entity in which the Company owns, directly or indirectly, at least a 50% interest, prior to exercise of an Award, or (e) any other sale of assets determined by the Authorized Party to be considered a divestiture under this program, the Authorized Party may, in its or his sole discretion, determine that all or a portion of any such Award shall not be canceled.
|
(i)
|
If the Authorized Party determines that, subsequent to the grant of any Award, the Employee has engaged or is engaging in any activity which, in the sole judgment of the Authorized Party, is or may be detrimental to the Company or a subsidiary, the Authorized Party may suspend the right of the Employee to exercise, refuse to honor the exercise of such Employee's Awards already requested, or cancel all or part of the Award or Awards granted to that Employee.
|
(ii)
|
If the Authorized Party, in its or his sole discretion, determines that the exercise of any Award has the possibility of violating any law, regulation, or decree pertaining to the Company, a subsidiary, or the Employee, the Authorized Party may freeze or suspend the Employee’s right to exercise until such time as the exercise of the Award would no longer, in the sole discretion of the Authorized Party, have the possibility of violating such law, regulation, or decree.
|
(iii)
|
Notwithstanding anything herein to the contrary, any Award is subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. Awards are also subject to forfeiture or recoupment in the event a Key Employee’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit & Finance Committee of the Board.
|
4.
|
Exercising the Stock Option
. The Company has retained outside firms to administer Stock Options (and SARs) granted under the Plans (the “third party administrators”). The Option (or SAR) must be exercised in accordance with methods and at times set by the third party administrator and by the Employee’s delivering to the third party administrators such authorization as may be required.
|
5.
|
Payment for Shares
. The Grant Price for all shares of Stock purchased upon the exercise of a Stock Option, or a portion thereof, shall be paid in full at the time of such exercise. Such payment may be made in cash or by tendering shares of Stock having a value on the date of exercise equal to the Grant Price. Such value shall be the average of the high and low trading prices of the stock on the day of exercise. If the Optionee makes payment of the Grant Price by tendering shares of Stock, such Stock must be registered in the sole name of the Optionee on the exercise date or an appropriate Stock Power acceptable to the Company to transfer such stock to the sole name of the Optionee must be provided at the time of exercise. In the case of an Optionee who makes payment of the Grant Price by tendering shares of Stock, if the Company deems it appropriate, and if allowed by the applicable laws, regulations and rulings, the Company may accept an attestation from the Optionee in lieu of actual physical delivery to the Company of the shares to be tendered. The attestation must indicate the number of shares held, and if deemed necessary by the Company, the certificate numbers if the Stock is held in certificate form, or the broker and brokerage account number if the shares are held in a brokerage account, and any other information necessary to confirm ownership of the shares. The Company may not accept an attestation in lieu of physical delivery of the shares unless the shares are held in the sole name of the Optionee either in certificate form, or in a single brokerage account, or in such other form as the Company may deem appropriate. Depending on its source, Stock tendered in the exercise of a Stock Option must have met the appropriate holding period required by current tax, accounting, legal, or other applicable rules and regulations. At the election of the Optionee (but subject to any administrative limitations on exercise of Stock Options or permissible methods of option exercise imposed), the Stock Option may also be exercised by a "net-share settlement" method for exercising outstanding nonqualified stock options. The Committee, in its sole discretion and judgment, limit the extent to which shares of Stock may be used in exercising Stock Options or limit the use of any method or time of option exercise.
|
6.
|
Assignment of Option and Exercises After Death
. Rights under the Plans and this Agreement cannot be assigned or transferred other than by (i) will, (ii) beneficiary designation, or (iii) the laws of descent and distribution. In the event that a beneficiary designation conflicts with an assignment by will or under the laws of descent and distribution, the beneficiary designation will prevail. Upon the death of an Employee, exercise of the grant will be permitted only by the Employee’s designated beneficiary, executor, or personal representative of the Employee’s estate.
|
7.
|
Tax Withholding
. In the U.S. and many countries, the difference between the Grant Price and the value of the stock at the time of an Option exercise multiplied by the number of shares purchased is compensation subject to tax withholding. The Option exercise will not be completed until all federal, state, local and other governmental withholding tax requirements have been met. Should a withholding tax obligation arise upon the exercise of a Stock Option, the
|
8.
|
Shareholder Rights
. The Employee shall not have the rights of a shareholder until the Option has been exercised and ownership of shares of Common Stock has been transferred to the Employee. SARs never convey shareholder rights.
|
9.
|
Certain Adjustments
. In the event certain corporate transactions, recapitalizations, or stock splits occur while a Stock Option (or SAR) is outstanding, the Grant Price and the number of Stock Option Shares (or SARs) shall be correspondingly adjusted.
|
10.
|
Relationship to the Plan
. In addition to the terms and conditions described in this Agreement, Awards are subject to all other applicable provisions of the Plan. The decisions of the Committee with respect to questions arising as to the interpretation of the Plan or this Agreement and as to findings of fact shall be final, conclusive, and binding.
|
11.
|
No Employment Guarantee
. No provision of this Agreement shall confer any right upon the Employee to continued employment with any Participating Company.
|
12.
|
Governing Law
. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware.
|
13.
|
Amendment
. Without the consent of the Employee, this Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or (ii) to add to the covenants and agreements of the Company for the benefit of an Employee or to add to the rights of an Employee or to surrender any right or power reserved to or conferred upon the Company in this Agreement, provided, in each case, that such changes or corrections shall not adversely affect the rights of the Employee with respect to the grant of an Option (or SAR) evidenced hereby without the Employee’s consent, or (iii) to make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in or of the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities or tax laws.
|
1.
|
Type and Size of Grant
. Subject to the Plans and this Agreement, the Company grants to certain eligible Employees Restricted Stock or Restricted Stock Units. Individual awards will be as set forth in the Annual Award Summary given to each Employee to whom an Award is granted. The Annual Award Summary for each Employee is made a part of this Agreement with regard to such Employee.
|
2.
|
Grant Date, Price, and Plan
. The grant date is [●]
.
The Grant Price is set forth on the Award Summary provided to each Employee who receives an Award. Awards are made under the Omnibus Stock and Performance Incentive Plan of Phillips 66.
|
3.
|
Restrictions, Forfeiture, and Lapse of Restrictions
. The Restricted Stock or Restricted Stock Units subject hereto may be canceled or forfeited as set forth herein. Except as otherwise noted in this Agreement, the following summary table describes restrictions and terms, forfeiture, and lapse of restrictions, subject to the more detailed provisions set forth below:
|
Summary of Termination Rules
|
||
Status
|
Termination Date
|
Forfeiture or Lapsing of Restrictions
|
Retirement (age 55 and 5 years of service)
|
Prior to 6 months from grant date
|
Canceled upon Termination
|
6 months from grant date & after
|
Restrictions lapse on Termination date
|
|
Layoff
|
Prior to 6 months from grant date
|
Canceled upon Termination
|
6 months to 1 year from grant date
|
Award is prorated and restrictions on remaining stock/units lapse on Termination date
|
|
1 year from grant date & after
|
Restrictions lapse on Termination date
|
|
Disability
|
Any date after grant date
|
Restrictions lapse on Termination date
|
Death
|
Any date after grant date
|
Restrictions lapse on Termination date
|
Divestitures, outsourcing, and moves to joint ventures
|
Any date after grant date
|
Canceled upon Termination, unless approval otherwise
|
All other Terminations
|
|
Canceled upon Termination
|
(i)
|
The Award shall be held in escrow by the Company until the lapsing of restrictions placed upon the Award. The Employee shall not have the right to sell, transfer, assign, or otherwise dispose of Restricted Stock or Restricted Stock Units granted in an Award until the escrow is terminated. Except as set forth below, the Award shall be forfeited and the related Restricted Stock or Restricted Stock Units canceled upon the Employee’s Termination of Employment with the Company prior to the lapsing of restrictions. Restrictions shall lapse on the Restricted Stock or Restricted Stock Units granted in an Award on the third anniversary of the Grant Date. Upon the lapsing of restrictions, the number of shares of unrestricted Stock equal to the number of shares of Restricted Stock or Restricted Stock Units for which the restrictions have so lapsed shall be registered in the Employee’s name, and the related shares of Restricted Stock or Restricted Stock Units shall be canceled; provided, however, that the Administrator may choose instead to issue any Restricted Stock with the restrictions removed, rather than cancel such Restricted Stock and issue unrestricted Stock; and further provided, however, that in places where it is determined by the Administrator that payout in the form of unrestricted Stock is prohibited by law, regulation, or decree, or where the cost of legal compliance to issue the unrestricted Stock would be unreasonably expensive, the Fair Market Value of such unrestricted Stock shall be paid in cash instead of settlement of the Award
|
(ii)
|
Restricted Stock Units do not have any voting rights or other rights generally associated with Stock, and are merely an obligation of the Company to make settlement in accordance with the terms and conditions applicable to such Restricted Stock Units. Restricted Stock Units granted to Employees who are resident in the United States or the United Kingdom on the Grant Date shall accrue a dividend equivalent at such times as an ordinary quarterly cash dividend is paid on the Stock of the Company, which dividend equivalent shall be paid in cash to the Employee to whom the Award was made. Restricted Stock Units granted to Employees other than those described in the previous sentence shall not accrue a dividend equivalent. Payment of a dividend equivalent, if any, shall be made on the first day of the third month of each calendar quarter (or, if the New York Stock Exchange is not open on such day, the first day that the New York Stock Exchange is open thereafter), and, in any event, shall be made no later than March 15 of the year following the year in which the ordinary quarterly cash dividend is paid.
|
(iii)
|
When an Award is made of Restricted Stock, such Restricted Stock will be held in escrow for the Employee to whom the Award is made. The Employee to whom the Award is made will have all rights of ownership to such stock including, but not limited to, voting rights and the right to receive dividends, except that the Employee to whom the Award is made shall not have the right to sell, transfer, assign, or otherwise dispose of such shares until the escrow is terminated. The escrow shall end upon, and to the extent of, the lapsing of restrictions.
|
(i)
|
General Rule for Termination
. If, prior to the date on which restrictions lapse in accordance with the schedule set forth in the Award, the Employee's employment with a Participating Company shall be terminated for any reason except death, Disability, Retirement, or Layoff, any Restricted Stock or Restricted Stock Units remaining in escrow pursuant to such Award shall be canceled and all rights thereunder shall cease; provided, however, that the Authorized Party may, in its or his sole discretion, determine that all or any portion of an Award shall not be canceled due to Termination of Employment.
|
(ii)
|
Layoff Within Six Months
. If, prior to a date six months from the date an Award is granted, the Employee's employment with a Participating Company shall be terminated by reason of Layoff, such Award shall be canceled and all rights thereunder shall cease.
|
(iii)
|
Layoff Within One Year
. If, on or after a date six months from the date an Award is granted but prior to a date one year from the date an Award is granted, the Employee's employment with a Participating Company shall be terminated by reason of Layoff, the Employee shall retain a prorated number of the Award shares or units granted. The number of Award shares or units retained will be computed by multiplying the original number of Award shares or units granted by a fraction, the numerator of which is the number of full months of employment from the first day of the month in which the Award was granted until the date the employee is terminated and the
|
(iv)
|
Layoff After One Year
. If, on or after a date one year from the date an Award is granted, the Employee's employment with a Participating Company shall be terminated by reason of Layoff, the Employee shall retain all rights provided by the Award at the time of such Termination of Employment. In such case, the restrictions on the Award shall lapse on the date of Termination of the Employee from the employ of the Company and its subsidiaries, and settlement shall be made in accordance with the settlement provisions above.
|
(v)
|
Retirement After Six Months
. If, on or after a date six months after the Grant Date of an Award, the Employee's employment with a Participating Company shall be terminated by reason of Retirement, the Employee shall retain all rights provided by the Award at the time of such Termination of Employment. In such case, the restrictions on the Award shall lapse on the date of Termination of the Employee from the employ of the Company and its subsidiaries, and settlement shall be made in accordance with the settlement provisions above.
|
(vi)
|
Disability
. If, after the date the Award is granted, an Employee shall terminate employment following Disability of the Employee, the Employee shall retain all rights provided by the Award at the time of such Termination of Employment. In such case, the restrictions on the Award shall lapse on the date of Termination of Employment from the employ of the Company and its subsidiaries, and settlement shall be made in accordance with the settlement provisions above.
|
(vii)
|
Death
. If, after the date an Award is granted, an Employee shall die while in the employ of a Participating Company
,
or after Termination of Employment by reason of Retirement, Disability, or Layoff (and prior to the cancellation of the Award), the executor or administrator of the estate of the Employee or the person or persons to whom the Award shall have been validly transferred by the executor or the administrator pursuant to will or the laws of descent and distribution shall have the right to settlement of the Award to the same extent the Employee would have, had the Employee not died. In such case, the restrictions on the Award shall lapse upon the determination of death by the Administrator, and settlement shall be made in accordance with the settlement provisions above. No transfer of an Award, or of the unrestricted Stock or other proceeds of an Award, by the Employee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Administrator shall have been furnished with written notice thereof and a copy of the will and such other evidence as the Administrator may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Award.
|
(viii)
|
Transfers and Leaves
. Transfer of employment between Participating Companies shall not constitute Termination of Employment for the purpose of any Award granted under the Program. Whether any leave of absence shall constitute Termination of Employment for the purposes of any Award granted under the Program shall be
|
(ix)
|
Divestiture, Outsourcing, or Move to Joint Venture
. If, after the date the Award is granted, an Employee ceases to be employed by Participating Company as a result of (a) the outsourcing of a function, (b) the sale or transfer of all or a portion of the equity interest of such Participating Company (removing it from the controlled group of companies of which the Company is a part), (c) the sale of all or substantially all of the assets of such Participating Company to another employer outside of the controlled group of corporations (whether the Employee is offered employment or accepts employment with the other employer), (d) the Termination of the Employee by a Participating Company followed by employment within a reasonable time with a company or other entity in which the Company owns, directly or indirectly, at least a 50% interest, prior to exercise of an Award, or (e) any other sale of assets determined by the Authorized Party to be considered a divestiture under this program, the Authorized Party may, in its or his sole discretion, determine that all or a portion of any such Award shall not be canceled. In such cases, the restrictions on the Award shall lapse on the date of Termination of the Employee from the employ of the Company and its subsidiaries, and settlement shall be made in accordance with the settlement provisions above.
|
(x)
|
Change of Control
. In the event of a Change of Control, as defined hereafter, unless explicitly provided otherwise in the applicable Award Agreement, all restrictions and other limitations applicable to any Restricted Stock or Restricted Stock Units granted in any Award shall lapse. With regard to such Restricted Stock, it shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant. With regard to such Restricted Stock Units, the Employee shall be vested in the Restricted Stock Units and the Restricted Stock Units shall be non-forfeitable upon the Change of Control. Settlement in unrestricted Stock or cash shall be made at the same times and upon the same events as it would otherwise have been made in accordance with the settlement provisions above.
|
(xi)
|
Notwithstanding anything herein to the contrary, in the event that this Award or the dividend equivalents associated with this Award are includible in income pursuant to section 409A of the Internal Revenue Code, settlement of the Award or any other distribution hereunder due to Separation from Service with the Company and its subsidiaries shall not be made to a “specified employee” (as that term is defined in section 409A(a)(2)(B)(i)) prior to six months after the specified employee’s Separation from Service from the Company and its subsidiaries (or, if earlier, the date of death of the specified employee).
|
(i)
|
If the Authorized Party determines that, subsequent to the grant of any Award, the Employee has engaged or is engaging in any activity which, in the sole judgment of the Authorized Party, is or may be detrimental to the Company or a subsidiary, the Authorized Party may cancel all or part of the Restricted Stock or Restricted Stock Units held in escrow pursuant to the Award or Awards granted to that Employee.
|
(ii)
|
If the Authorized Party, in its or his sole discretion, determines that the lapsing of restrictions on Restricted Stock or Restricted Stock Units held in escrow pursuant to any Award has the possibility of violating any law, regulation, or decree pertaining to the Company or Employee, the Authorized Party may freeze or suspend the Employee’s right to settlement or payout of the Award until such time as the lapse of restrictions would no longer, in the sole discretion of the Authorized Party, have the possibility of violating such law, regulation, or decree.
|
(iii)
|
Notwithstanding anything herein to the contrary, any Award is subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. Awards are also subject to forfeiture or recoupment in the event a Key Employee’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit & Finance Committee of the Board.
|
4.
|
Assignment of Award Upon Death
. Rights under the Plans and this Agreement cannot be assigned or transferred other than by (i) will or (ii) the laws of descent and distribution.
|
5.
|
Tax Withholding
. In all cases the Employee will be responsible to pay all required withholding taxes associated with an Award. Should a withholding tax obligation arise with regard to an Award or the lapsing of restrictions on Restricted Stock or Restricted Stock Units granted in an Award, the withholding tax may be satisfied by withholding shares of Stock. The value of the shares of Stock withheld for this purpose shall not exceed the minimum withholding amount required by applicable laws and regulations. In cases where a withholding tax obligation arises prior to the lapse of restrictions on Restricted Stock or Restricted Stock Units granted in an Award, the withholding tax may be satisfied instead by payment of cash by the Employee. Payment of cash shall not be allowed unless the Employee has elected to make such payment by payroll withholding over a period of six months following the date the obligation shall arise, which election must be made within thirty days of the Grant Date of the relevant Award. If any interest is required under local laws, regulations, or decrees to be charged on or imputed against the payroll withholding, the Employee shall be responsible for paying such interest, which shall be withheld from pay over the same six-month period. In cases where payment by payroll withholding cannot be made due to circumstances arising after the election or where the Administrator has determined that such withholding would violate any applicable law, regulation, or decree, shares of Stock shall be withheld instead. When necessary, lapsing of restrictions may be accelerated by the Authorized Party to the extent necessary to provide shares of Stock to satisfy any withholding tax obligation. This withholding tax obligation includes, but is not limited to, federal, state, and local taxes, including applicable non-U.S. taxes such as U.K. PAYE. The Company may take appropriate measures to ensure that corrective actions related to withholding tax obligations are completed in a timely manner.
|
6.
|
Shareholder Rights for Restricted Stock Units
. The Employee shall not have the rights of a shareholder until the Restricted Stock Unit has been canceled and ownership of shares of Stock has been transferred to the Employee. As described above, the Company may pay dividend equivalents with regard to Restricted Stock Units in certain circumstances.
|
7.
|
Certain Adjustments
. In the event certain corporate transactions, recapitalizations, or stock splits occur while Restricted Stock or Restricted Stock Units are outstanding, the Grant Price
|
8.
|
Relationship to the Plan
. In addition to the terms and conditions described in this Agreement, Awards are subject to all other applicable provisions of the Plan. The decisions of the Committee with respect to questions arising as to the interpretation of the Plan or this Agreement and as to findings of fact, shall be final, conclusive, and binding.
|
9.
|
No Employment Guarantee
. No provision of this Agreement shall confer any right upon the Employee to continued employment with any Participating Company.
|
10.
|
Governing Law
. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware.
|
11.
|
Amendment
. Without the consent of the Employee, this Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or (ii) to add to the covenants and agreements of the Company for the benefit of an Employee or to add to the rights of an Employee or to surrender any right or power reserved to or conferred upon the Company in this Agreement, provided, in each case, that such changes or corrections shall not adversely affect the rights of the Employee with respect to the grant of an Award evidenced hereby without the Employee’s consent, or (iii) to make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in or of the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities or tax laws.
|
AWARD
:
|
Performance Stock Unit (PSU) Award granted by the Authorized Party under the provisions of the Plan. The PSUs will be noted in a book entry account created for the Grantee.
|
PSU
:
|
A unit evidencing the right to receive one share of Phillips 66 Stock, $0.01 par value, under the circumstances described in these Terms and Conditions.
|
1.
|
The Termination of the Grantee’s employment as a result of Layoff of the Grantee;
|
2.
|
The Termination of the Grantee’s employment after attainment of age 55 and completion of 5 years of service with the Company or its subsidiaries;
|
3.
|
The Termination of the Grantee’s employment due to death;
|
4.
|
The Termination of the Grantee’s employment following Disability of the Grantee;
|
5.
|
The Termination of the Grantee’s employment following a Change of Control; or
|
6.
|
February 7, 2018.
|
1.
|
one lump sum payment of unrestricted stock of the Company settled six months after Separation from Service with the Company and its subsidiaries, or
|
2.
|
in a series of annual installments, using a declining balance method, over a period of three, five, ten, or fifteen years after Separation from Service with the Company and its subsidiaries.
|
1.
|
The election to change the time or form of payment may not take effect until at least twelve months after the date on which such election is made;
|
2.
|
Payment under such election may not be made earlier than at least five years from the date the payment would have otherwise been made or commenced;
|
3.
|
An election may provide for either a lump sum payment or installment payments;
|
4.
|
An election to receive payments in installments shall be treated as a single payment for purposes of these rules;
|
5.
|
Installment payments may be made only annually, over a period of from one to fifteen years as elected;
|
6.
|
The election may not result in an impermissible acceleration of payment prohibited under section 409A of the Internal Revenue Code;
|
7.
|
No more than four such elections shall be permitted with respect to the PSUs subject to this Award; and
|
8.
|
No payment may be made after the date that is twenty (20) years after the date of the Grantee’s Separation from Service.
|
|
Millions of Dollars
|
||||||||||||||
|
Year Ended December 31
|
||||||||||||||
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Earnings Available for Fixed Charges
|
|
|
|
|
|
|
|
|
|
||||||
Income from continuing operations before income taxes and noncontrolling interests that have not incurred fixed charges
|
$
|
6,624
|
|
|
6,619
|
|
|
1,314
|
|
|
843
|
|
|
4,111
|
|
Distributions less than equity in earnings of affiliates
|
(872
|
)
|
|
(951
|
)
|
|
(723
|
)
|
|
(562
|
)
|
|
(106
|
)
|
|
Fixed charges, excluding capitalized interest*
|
376
|
|
|
142
|
|
|
153
|
|
|
160
|
|
|
208
|
|
|
|
$
|
6,128
|
|
|
5,810
|
|
|
744
|
|
|
441
|
|
|
4,213
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fixed Charges
|
|
|
|
|
|
|
|
|
|
||||||
Interest and expense on indebtedness, excluding capitalized interest
|
$
|
246
|
|
|
17
|
|
|
1
|
|
|
1
|
|
|
42
|
|
Capitalized interest
|
—
|
|
|
—
|
|
|
4
|
|
|
57
|
|
|
41
|
|
|
Interest portion of rental expense
|
121
|
|
|
116
|
|
|
133
|
|
|
153
|
|
|
160
|
|
|
|
$
|
367
|
|
|
133
|
|
|
138
|
|
|
211
|
|
|
243
|
|
Ratio of Earnings to Fixed Charges
|
16.7
|
|
|
43.7
|
|
|
5.4
|
|
|
2.1
|
|
|
17.3
|
|
Company Name
|
Incorporation
Location
|
Phillips 66 Canada ULC
|
Alberta
|
Phillips 66 Communications Inc.
|
Delaware
|
Phillips 66 Company
|
Delaware
|
Phillips 66 Continental Holding GmbH
|
Germany
|
Phillips 66 CS Limited
|
England
|
Phillips 66 European Power Limited
|
England
|
Phillips 66 Finance LLC
|
Delaware
|
Phillips 66 Funding Ltd.
|
Cayman Islands
|
Phillips 66 GmbH
|
Switzerland
|
Phillips 66 Holdings Ltd.
|
Cayman Islands
|
Phillips 66 ICHP Limited
|
England
|
Phillips 66 International Inc.
|
Delaware
|
Phillips 66 International Investments Ltd.
|
Cayman Islands
|
Phillips 66 International Trading Pte. Ltd.
|
Singapore
|
Phillips 66 Ireland Limited
|
Ireland
|
Phillips 66 Ireland Pension Trust Limited
|
Ireland
|
Phillips 66 Limited
|
England
|
Phillips 66 Pension Plan Trustee Limited
|
England
|
Phillips 66 Pipeline LLC
|
Delaware
|
Phillips 66 Power Operations Limited
|
England
|
Phillips 66 Receivables Funding LLC
|
Delaware
|
Phillips 66 Resources Ltd.
|
Cayman Islands
|
Phillips 66 Sand Hills LLC
|
Delaware
|
Phillips 66 Services (Malaysia) Sdn. Bhd.
|
Malaysia
|
Phillips 66 Southern Hills LLC
|
Delaware
|
Phillips 66 Trading Limited
|
England
|
Phillips 66 Treasury Limited
|
England
|
Phillips 66 TS Limited
|
England
|
Phillips 66 TVEC Limited
|
England
|
Phillips 66 UK Development Limited
|
England
|
Phillips 66 UK Funding Limited
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England
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Phillips 66 UK Holdings Limited
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England
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Phillips 66 Whitegate Refinery Limited
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Ireland
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Phillips Chemical Holdings Company
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Delaware
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Phillips Gas Company Shareholder, Inc.
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Delaware
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Phillips Gas Pipeline Company
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Delaware
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Phillips Gasification Services Company
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Delaware
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Phillips Specialty Products Inc.
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Delaware
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Phillips Texas Pipeline Company, Ltd.
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Texas
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Phillips Utility Gas Corporation
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Delaware
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R.A.Z. Properties, Inc.
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California
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Radius Insurance Company
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Cayman Islands
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Seagas Pipeline Company
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Delaware
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Smile Loyalty Limited
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England
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Southern Energy UK Generation Limited
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England
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Company Name
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Incorporation
Location
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Spirit Insurance Company
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Vermont
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Tees Valley CHP Limited
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England
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Tees Valley Energy Centre LLP
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England
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The ConocoPhillips Heritage Museums, Inc.
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Oklahoma
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WesTTex 66 Pipeline Company
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Delaware
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Phillips 66
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Form S-3
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File No. 333-181079
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Phillips 66
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Form S-8
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File No. 333-181080
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Phillips 66
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Form S-3
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File No. 333-184765
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/s/ Ernst & Young LLP
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Phillips 66
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Form S-3
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File No. 333-181079
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Phillips 66
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Form S-8
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File No. 333-181080
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Phillips 66
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Form S-3
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File No. 333-184765
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/s/ Ernst & Young LLP
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1.
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I have reviewed this annual report on Form 10-K of Phillips 66;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Greg C. Garland
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Greg C. Garland
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Chairman, President and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Phillips 66;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Greg G. Maxwell
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Greg G. Maxwell
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Executive Vice President, Finance and
Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Greg C. Garland
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Greg C. Garland
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Chairman, President and
Chief Executive Officer
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/s/ Greg G. Maxwell
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Greg G. Maxwell
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Executive Vice President, Finance
and Chief Financial Officer
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