2018
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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-K
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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, 2018
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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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Phillips 66
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(Exact name of registrant as specified in its charter)
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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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2331 CityWest Blvd., Houston, Texas 77042
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(Address of principal executive offices) (Zip Code)
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Registrant’s telephone number, including area code:
281-293-6600
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.01 Par Value
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New York Stock Exchange
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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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Midstream—
Provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and natural gas liquids (NGL) transportation, storage, processing and marketing services, mainly in the United States.
This segment includes our master limited partnership (MLP), Phillips 66 Partners LP (Phillips 66 Partners), as well as our
50 percent
equity investment in DCP Midstream, LLC (DCP Midstream).
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2)
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Chemicals—
Consists of our
50 percent
equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics on a worldwide basis.
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3)
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Refining—
Refines crude oil and other feedstocks into petroleum products (such as gasoline, distillates and aviation fuels) at
13
refineries in the United States and Europe.
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4)
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Marketing and Specialties (M&S)—
Purchases for resale and markets refined petroleum products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of specialty products (such as base oils and lubricants), as well as power generation operations.
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•
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Transportation
—Transports crude oil and other feedstocks to our refineries and other locations, delivers refined petroleum products to market, and provides terminaling and storage services for crude oil and refined petroleum products.
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•
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NGL and Other
—Transports, stores, fractionates, exports and markets NGL and provides other fee-based processing services.
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•
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DCP Midstream
—Gathers, processes, transports and markets natural gas and transports, fractionates and markets NGL.
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Name
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State of
Origination/Terminus
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Interest
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Length
(Miles)
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Gross Capacity
(MBD)
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Crude Oil
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Bakken Pipeline †
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North Dakota/Texas
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25
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%
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1,915
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525
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Bayou Bridge †
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Texas/Louisiana
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40
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49
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480
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Clifton Ridge †
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Louisiana
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100
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10
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260
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CushPo †
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Oklahoma
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100
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62
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130
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Eagle Ford Gathering †
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Texas
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100
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28
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54
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Glacier †
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Montana
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79
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865
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126
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Line 100
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California
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100
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79
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54
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Line 200
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California
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100
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228
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93
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Line 300
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California
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100
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61
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|
48
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Line 400
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California
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100
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153
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|
40
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Line O †
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Oklahoma/Texas
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100
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276
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37
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Louisiana Crude Gathering
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Louisiana
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100
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80
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25
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New Mexico Crude †
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New Mexico/Texas
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100
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227
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106
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North Texas Crude †
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Texas
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100
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224
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28
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Oklahoma Crude †
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Texas/Oklahoma
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100
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217
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100
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Sacagawea †
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North Dakota
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50
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95
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175
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STACK PL †
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Oklahoma
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50
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149
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250
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Sweeny Crude
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Texas
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100
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56
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265
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West Texas Crude †
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Texas
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100
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1,064
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156
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Refined Petroleum Products
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ATA Line †
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Texas/New Mexico
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50
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293
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34
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Borger to Amarillo †
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Texas
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100
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93
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76
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Borger-Denver
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Texas/Colorado
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70
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397
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38
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Cherokee East †
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Oklahoma/Missouri
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100
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287
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55
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Cherokee North †
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Oklahoma/Kansas
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100
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29
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57
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Cherokee South †
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Oklahoma
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100
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98
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46
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Cross Channel Connector †
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Texas
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100
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5
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180
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Explorer †
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Texas/Indiana
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22
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1,830
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660
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Gold Line †
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Texas/Illinois
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100
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686
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120
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Harbor
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New Jersey
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33
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80
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171
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Heartland*
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Kansas/Iowa
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50
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49
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30
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LAX Jet Line
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California
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50
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19
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50
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Los Angeles Products
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California
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100
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22
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112
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Paola Products †
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Kansas
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100
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106
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96
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Pioneer
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Wyoming/Utah
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50
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562
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63
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Richmond
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California
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100
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14
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26
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SAAL †
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Texas
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33
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102
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33
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SAAL †
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Texas
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54
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19
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30
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Seminoe †
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Montana/Wyoming
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100
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342
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33
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Standish †
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Oklahoma/Kansas
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100
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92
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72
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Sweeny to Pasadena †
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Texas
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100
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120
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294
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Torrance Products
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California
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100
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8
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161
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Watson Products
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California
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100
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9
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238
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Yellowstone
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Montana/Washington
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46
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710
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66
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Name
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State of
Origination/Terminus
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Interest
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Length
(Miles)
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Gross Capacity
(MBD)
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NGL
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Blue Line
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Texas/Illinois
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100
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%
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688
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29
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Brown Line †
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Oklahoma/Kansas
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100
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76
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26
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Chisholm
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Oklahoma/Kansas
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50
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202
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42
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Conway to Wichita
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Kansas
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100
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55
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38
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Medford †
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Oklahoma
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100
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42
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10
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Powder River
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Wyoming/Texas
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100
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705
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14
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River Parish NGL†
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Louisiana
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100
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510
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133
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Sand Hills †
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Texas
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33
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1,466
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485
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Skelly-Belvieu
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Texas
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50
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571
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45
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Southern Hills †
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Kansas/Texas
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33
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941
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192
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Sweeny LPG
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Texas
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100
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232
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942
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Sweeny NGL
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Texas
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100
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18
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204
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TX Panhandle Y1/Y2
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|
Texas
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|
100
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289
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61
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Natural Gas
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Rockies Express**
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East to West
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Ohio/Illinois
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25
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670
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2.6 Bcf/d
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West to East
|
|
Colorado/Ohio
|
|
25
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1,712
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1.8 Bcf/d
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Facility Name
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Location
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Commodity Handled
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Interest
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Gross Storage Capacity (MBbl)
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Gross Rack Capacity (MBD)
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Albuquerque †
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New Mexico
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Refined Petroleum Products
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|
100
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%
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|
274
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18
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Amarillo †
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Texas
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Refined Petroleum Products
|
|
100
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|
|
296
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|
|
29
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Beaumont
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Texas
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Crude Oil, Refined Petroleum Products
|
|
100
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|
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14,600
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|
8
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Billings
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|
Montana
|
|
Refined Petroleum Products
|
|
100
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|
|
88
|
|
|
16
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|
Billings Crude †
|
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Montana
|
|
Crude Oil
|
|
100
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|
|
236
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|
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N/A
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Borger
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|
Texas
|
|
Crude Oil
|
|
50
|
|
|
772
|
|
|
N/A
|
|
Bozeman
|
|
Montana
|
|
Refined Petroleum Products
|
|
100
|
|
|
130
|
|
|
13
|
|
Buffalo Crude †
|
|
Montana
|
|
Crude Oil
|
|
100
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|
|
303
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|
|
N/A
|
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Casper †
|
|
Wyoming
|
|
Refined Petroleum Products
|
|
100
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|
|
365
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|
|
7
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|
Clemens †
|
|
Texas
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|
NGL
|
|
100
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|
|
9,000
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|
|
N/A
|
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Clifton Ridge †
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|
Louisiana
|
|
Crude Oil
|
|
100
|
|
|
3,800
|
|
|
N/A
|
|
Coalinga
|
|
California
|
|
Crude Oil
|
|
100
|
|
|
817
|
|
|
N/A
|
|
Colton
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|
California
|
|
Refined Petroleum Products
|
|
100
|
|
|
207
|
|
|
21
|
|
Cushing †
|
|
Oklahoma
|
|
Crude Oil
|
|
100
|
|
|
675
|
|
|
N/A
|
|
Cut Bank †
|
|
Montana
|
|
Crude Oil
|
|
100
|
|
|
315
|
|
|
N/A
|
|
Denver
|
|
Colorado
|
|
Refined Petroleum Products
|
|
100
|
|
|
310
|
|
|
43
|
|
Des Moines
|
|
Iowa
|
|
Refined Petroleum Products
|
|
50
|
|
|
217
|
|
|
15
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|
East St. Louis †
|
|
Illinois
|
|
Refined Petroleum Products
|
|
100
|
|
|
2,031
|
|
|
78
|
|
Freeport
|
|
Texas
|
|
Crude Oil, Refined Petroleum Products, NGL
|
|
100
|
|
|
3,624
|
|
|
N/A
|
|
Glenpool †
|
|
Oklahoma
|
|
Refined Petroleum Products
|
|
100
|
|
|
571
|
|
|
19
|
|
Great Falls
|
|
Montana
|
|
Refined Petroleum Products
|
|
100
|
|
|
198
|
|
|
12
|
|
Hartford †
|
|
Illinois
|
|
Refined Petroleum Products
|
|
100
|
|
|
1,468
|
|
|
25
|
|
Helena
|
|
Montana
|
|
Refined Petroleum Products
|
|
100
|
|
|
195
|
|
|
10
|
|
Jefferson City †
|
|
Missouri
|
|
Refined Petroleum Products
|
|
100
|
|
|
103
|
|
|
16
|
|
Jones Creek
|
|
Texas
|
|
Crude Oil
|
|
100
|
|
|
2,580
|
|
|
N/A
|
|
Junction
|
|
California
|
|
Crude Oil
|
|
100
|
|
|
524
|
|
|
N/A
|
|
Kansas City †
|
|
Kansas
|
|
Refined Petroleum Products
|
|
100
|
|
|
1,410
|
|
|
66
|
|
Keene †
|
|
North Dakota
|
|
Crude Oil
|
|
50
|
|
|
503
|
|
|
N/A
|
|
La Junta
|
|
Colorado
|
|
Refined Petroleum Products
|
|
100
|
|
|
109
|
|
|
10
|
|
LCPL Storage
|
|
Louisiana
|
|
Refined Petroleum Products
|
|
50
|
|
|
3,143
|
|
|
N/A
|
|
Lincoln
|
|
Nebraska
|
|
Refined Petroleum Products
|
|
100
|
|
|
217
|
|
|
21
|
|
Linden †
|
|
New Jersey
|
|
Refined Petroleum Products
|
|
100
|
|
|
360
|
|
|
121
|
|
Los Angeles
|
|
California
|
|
Refined Petroleum Products
|
|
100
|
|
|
156
|
|
|
75
|
|
Lubbock †
|
|
Texas
|
|
Refined Petroleum Products
|
|
100
|
|
|
182
|
|
|
17
|
|
Medford Spheres †
|
|
Oklahoma
|
|
NGL
|
|
100
|
|
|
70
|
|
|
N/A
|
|
Missoula
|
|
Montana
|
|
Refined Petroleum Products
|
|
50
|
|
|
365
|
|
|
29
|
|
Moses Lake
|
|
Washington
|
|
Refined Petroleum Products
|
|
50
|
|
|
216
|
|
|
13
|
|
Mount Vernon †
|
|
Missouri
|
|
Refined Petroleum Products
|
|
100
|
|
|
365
|
|
|
46
|
|
North Salt Lake
|
|
Utah
|
|
Refined Petroleum Products
|
|
50
|
|
|
755
|
|
|
41
|
|
North Spokane
|
|
Washington
|
|
Refined Petroleum Products
|
|
100
|
|
|
492
|
|
|
N/A
|
|
Odessa †
|
|
Texas
|
|
Crude Oil
|
|
100
|
|
|
521
|
|
|
N/A
|
|
Oklahoma City †
|
|
Oklahoma
|
|
Crude Oil, Refined Petroleum Products
|
|
100
|
|
|
355
|
|
|
48
|
|
Facility Name
|
|
Location
|
|
Commodity Handled
|
|
Interest
|
|
Gross Storage Capacity (MBbl)
|
|
Gross Rack Capacity (MBD)
|
|||
Palermo †
|
|
North Dakota
|
|
Crude Oil
|
|
70
|
%
|
|
235
|
|
|
N/A
|
|
Paola †
|
|
Kansas
|
|
Refined Petroleum Products
|
|
100
|
|
|
978
|
|
|
N/A
|
|
Pasadena †
|
|
Texas
|
|
Refined Petroleum Products
|
|
100
|
|
|
3,234
|
|
|
65
|
|
Pecan Grove †
|
|
Louisiana
|
|
Crude Oil
|
|
100
|
|
|
177
|
|
|
N/A
|
|
Ponca City †
|
|
Oklahoma
|
|
Refined Petroleum Products
|
|
100
|
|
|
51
|
|
|
23
|
|
Ponca City Crude †
|
|
Oklahoma
|
|
Crude Oil
|
|
100
|
|
|
1,229
|
|
|
N/A
|
|
Portland
|
|
Oregon
|
|
Refined Petroleum Products
|
|
100
|
|
|
650
|
|
|
33
|
|
Renton
|
|
Washington
|
|
Refined Petroleum Products
|
|
100
|
|
|
243
|
|
|
20
|
|
Richmond
|
|
California
|
|
Refined Petroleum Products
|
|
100
|
|
|
343
|
|
|
28
|
|
River Parish †
|
|
Louisiana
|
|
NGL
|
|
100
|
|
|
1,500
|
|
|
N/A
|
|
Rock Springs
|
|
Wyoming
|
|
Refined Petroleum Products
|
|
100
|
|
|
132
|
|
|
19
|
|
Sacramento
|
|
California
|
|
Refined Petroleum Products
|
|
100
|
|
|
146
|
|
|
13
|
|
San Bernard
|
|
Texas
|
|
Refined Petroleum Products
|
|
100
|
|
|
231
|
|
|
N/A
|
|
Santa Margarita
|
|
California
|
|
Crude Oil
|
|
100
|
|
|
398
|
|
|
N/A
|
|
Sheridan †
|
|
Wyoming
|
|
Refined Petroleum Products
|
|
100
|
|
|
94
|
|
|
15
|
|
Spokane
|
|
Washington
|
|
Refined Petroleum Products
|
|
100
|
|
|
351
|
|
|
24
|
|
Tacoma
|
|
Washington
|
|
Refined Petroleum Products
|
|
100
|
|
|
316
|
|
|
17
|
|
Torrance
|
|
California
|
|
Crude Oil, Refined Petroleum Products
|
|
100
|
|
|
2,128
|
|
|
N/A
|
|
Tremley Point †
|
|
New Jersey
|
|
Refined Petroleum Products
|
|
100
|
|
|
1,701
|
|
|
25
|
|
Westlake
|
|
Louisiana
|
|
Refined Petroleum Products
|
|
100
|
|
|
128
|
|
|
16
|
|
Wichita Falls †
|
|
Texas
|
|
Crude Oil
|
|
100
|
|
|
225
|
|
|
N/A
|
|
Wichita North †
|
|
Kansas
|
|
Refined Petroleum Products
|
|
100
|
|
|
769
|
|
|
19
|
|
Wichita South †
|
|
Kansas
|
|
Refined Petroleum Products
|
|
100
|
|
|
272
|
|
|
N/A
|
|
Facility Name
|
|
Location
|
|
Commodity Handled
|
|
Interest
|
|
Gross Loading Capacity*
|
||
Marine
|
|
|
|
|
|
|
|
|
||
Beaumont
|
|
Texas
|
|
Crude Oil, Refined Petroleum Products
|
|
100
|
%
|
|
60
|
|
Clifton Ridge †
|
|
Louisiana
|
|
Crude Oil
|
|
100
|
|
|
48
|
|
Freeport
|
|
Texas
|
|
Crude Oil, Refined Petroleum Products, NGL
|
|
100
|
|
|
46
|
|
Hartford †
|
|
Illinois
|
|
Refined Petroleum Products
|
|
100
|
|
|
3
|
|
Pecan Grove †
|
|
Louisiana
|
|
Crude Oil
|
|
100
|
|
|
6
|
|
Portland
|
|
Oregon
|
|
Crude Oil
|
|
100
|
|
|
10
|
|
Richmond
|
|
California
|
|
Crude Oil
|
|
100
|
|
|
3
|
|
San Bernard
|
|
Texas
|
|
Refined Petroleum Products
|
|
100
|
|
|
2
|
|
Tacoma
|
|
Washington
|
|
Crude Oil
|
|
100
|
|
|
12
|
|
Tremley Point †
|
|
New Jersey
|
|
Refined Petroleum Products
|
|
100
|
|
|
7
|
|
Rail
|
|
|
|
|
|
|
|
|
||
Bayway †
|
|
New Jersey
|
|
Crude Oil
|
|
100
|
|
|
75
|
|
Beaumont
|
|
Texas
|
|
Crude Oil
|
|
100
|
|
|
20
|
|
Ferndale †
|
|
Washington
|
|
Crude Oil
|
|
100
|
|
|
30
|
|
Missoula
|
|
Montana
|
|
Refined Petroleum Products
|
|
50
|
|
|
41
|
|
Palermo †
|
|
North Dakota
|
|
Crude Oil
|
|
70
|
|
|
100
|
|
Thompson Falls
|
|
Montana
|
|
Refined Petroleum Products
|
|
50
|
|
|
41
|
|
Petroleum Coke
|
|
|
|
|
|
|
|
|
||
Lake Charles
|
|
Louisiana
|
|
Petroleum Coke
|
|
50
|
|
|
N/A
|
|
•
|
A U.S. Gulf Coast NGL market hub comprised of the Freeport LPG Export Terminal and Phillips 66 Partners’ 100,000-BPD Sweeny Fractionator. These assets are supported by 9 million barrels of gross capacity at Phillips 66 Partners’ Clemens Caverns storage facility. We refer to these facilities as the “Sweeny Hub.”
|
•
|
A 22.5 percent interest in Gulf Coast Fractionators, which owns an NGL fractionation plant in Mont Belvieu, Texas. We operate the facility, and our net share of its capacity is 32,625 BPD.
|
•
|
A 12.5 percent undivided interest in a fractionation plant in Mont Belvieu, Texas. Our net share of its capacity is 30,250 BPD.
|
•
|
A 40 percent undivided interest in a fractionation plant in Conway, Kansas. Our net share of its capacity is 43,200 BPD.
|
•
|
Phillips 66 Partners owns the River Parish NGL logistics system in southeast Louisiana, comprising approximately 500 miles of pipeline and a storage cavern connecting multiple fractionation facilities, refineries and a petrochemical facility.
|
•
|
Phillips 66 Partners owns a direct one-third interest in both the DCP Sand Hills Pipeline, LLC (Sand Hills) and DCP Southern Hills Pipeline, LLC, which own NGL pipeline systems that connect the Eagle Ford, Permian Basin and Midcontinent production areas to the Mont Belvieu, Texas, market hub.
|
•
|
Phillips 66 Partners, through its ownership of Merey Sweeny LLC, successor to Merey Sweeny, L.P. (both referred to herein as Merey Sweeny), owns a vacuum distillation unit with a capacity of 125,000 BPD and a delayed coker unit with a capacity of 70,000 BPD located at our Sweeny Refinery in Old Ocean, Texas.
|
•
|
Construction of the 200-million-cubic-feet-per-day (MMcf/d) Mewbourn 3 natural gas processing plant located in the Denver-Julesburg (DJ) Basin was completed in the third quarter of 2018.
|
•
|
Continued construction of the 300-MMcf/d O'Connor 2 natural gas processing facility and associated gathering infrastructure in the DJ Basin. The O’Connor 2 facility will have 200 MMcf/d of processing capacity and up to 100 MMcf/d of bypass capacity, which are expected to be placed into service in the second and third quarters of 2019, respectively.
|
•
|
Development of the Gulf Coast Express pipeline project (GCX project), in which DCP Midstream owns a 25 percent interest. The GCX project is designed to transport up to approximately 2 Bcf/d of natural gas to the Gulf Coast markets. The mostly 42-inch pipeline would traverse approximately 500 miles and be placed in service in the fourth quarter of 2019.
|
•
|
The Cheyenne Connector pipeline will provide takeaway solutions with capacity of at least 600 MMcf/d for DCP Midstream's DJ Basin assets, connecting natural gas to Rockies Express Pipeline LLC’s Cheyenne Hub, where it can then be delivered to numerous markets across the country. DCP Midstream holds an option to invest in this pipeline at a later date.
|
•
|
Expansion of the Sand Hills Pipeline to 485,000 BPD was completed in the fourth quarter of 2018. This expansion included a partial looping of the pipeline and the addition of new pump stations.
|
|
Millions of Pounds per Year*
|
||||
|
U.S.
|
|
|
Worldwide
|
|
O&P
|
|
|
|
||
Ethylene**
|
11,635
|
|
|
14,110
|
|
Propylene
|
2,675
|
|
|
3,180
|
|
High-density polyethylene
|
5,305
|
|
|
7,470
|
|
Low-density polyethylene
|
620
|
|
|
620
|
|
Linear low-density polyethylene
|
1,590
|
|
|
1,590
|
|
Polypropylene
|
—
|
|
|
310
|
|
Normal alpha olefins
|
2,335
|
|
|
2,850
|
|
Polyalphaolefins
|
125
|
|
|
255
|
|
Polyethylene pipe
|
500
|
|
|
500
|
|
Total O&P
|
24,785
|
|
|
30,885
|
|
|
|
|
|
||
SA&S
|
|
|
|
||
Benzene
|
1,600
|
|
|
2,530
|
|
Cyclohexane
|
1,060
|
|
|
1,455
|
|
Styrene
|
1,050
|
|
|
1,875
|
|
Polystyrene
|
835
|
|
|
1,070
|
|
Specialty chemicals
|
440
|
|
|
575
|
|
Total SA&S
|
4,985
|
|
|
7,505
|
|
Total O&P and SA&S
|
29,770
|
|
|
38,390
|
|
|
|
|
|
|
|
Thousands of Barrels Daily
|
|
|
|||||||||||
Region/Refinery
|
|
Location
|
|
Interest
|
|
|
Net Crude Throughput
Capacity
|
|
Net Clean Product
Capacity**
|
|
Clean
Product
Yield
Capability
|
|
|||||||
At
December 31
2018
|
|
Effective January 1
2019
|
|
|
Gasolines
|
|
|
Distillates
|
|
|
|||||||||
Atlantic Basin/Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Bayway
|
|
Linden, NJ
|
|
100
|
%
|
|
258
|
|
258
|
|
|
155
|
|
|
130
|
|
|
92
|
%
|
Humber
|
|
N. Lincolnshire, United Kingdom
|
|
100
|
|
|
221
|
|
221
|
|
|
95
|
|
|
115
|
|
|
81
|
|
MiRO*
|
|
Karlsruhe, Germany
|
|
19
|
|
|
58
|
|
58
|
|
|
25
|
|
|
25
|
|
|
87
|
|
|
|
|
|
|
|
537
|
|
537
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gulf Coast
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Alliance
|
|
Belle Chasse, LA
|
|
100
|
|
|
247
|
|
250
|
|
|
130
|
|
|
120
|
|
|
87
|
|
Lake Charles
|
|
Westlake, LA
|
|
100
|
|
|
249
|
|
249
|
|
|
100
|
|
|
115
|
|
|
70
|
|
Sweeny
|
|
Old Ocean, TX
|
|
100
|
|
|
256
|
|
265
|
|
|
135
|
|
|
120
|
|
|
86
|
|
|
|
|
|
|
|
752
|
|
764
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Central Corridor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Wood River
|
|
Roxana, IL
|
|
50
|
|
|
157
|
|
167
|
|
|
85
|
|
|
60
|
|
|
81
|
|
Borger
|
|
Borger, TX
|
|
50
|
|
|
73
|
|
75
|
|
|
50
|
|
|
30
|
|
|
91
|
|
Ponca City
|
|
Ponca City, OK
|
|
100
|
|
|
203
|
|
213
|
|
|
120
|
|
|
100
|
|
|
93
|
|
Billings
|
|
Billings, MT
|
|
100
|
|
|
60
|
|
60
|
|
|
35
|
|
|
30
|
|
|
90
|
|
|
|
|
|
|
|
493
|
|
515
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
West Coast
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ferndale
|
|
Ferndale, WA
|
|
100
|
|
|
105
|
|
105
|
|
|
65
|
|
|
35
|
|
|
81
|
|
Los Angeles
|
|
Carson/Wilmington, CA
|
|
100
|
|
|
139
|
|
139
|
|
|
85
|
|
|
65
|
|
|
90
|
|
San Francisco
|
|
Arroyo Grande/San Francisco, CA
|
|
100
|
|
|
120
|
|
120
|
|
|
60
|
|
|
65
|
|
|
85
|
|
|
|
|
|
|
|
364
|
|
364
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
2,146
|
|
2,180
|
|
|
|
|
|
|
|
|
Characteristics
|
|
Sources
|
|||||||
|
Sweet
|
Medium
Sour
|
Heavy
Sour
|
High
TAN
*
|
|
United
States
|
Canada
|
South
America
|
Europe
|
Middle East
& Africa
|
Bayway
|
l
|
l
|
|
|
|
l
|
l
|
|
|
l
|
Humber
|
l
|
l
|
|
l
|
|
l
|
|
|
l
|
l
|
MiRO
|
l
|
l
|
l
|
|
|
|
|
|
l
|
l
|
Alliance
|
l
|
l
|
|
|
|
l
|
|
|
|
|
Lake Charles
|
l
|
l
|
l
|
l
|
|
l
|
l
|
l
|
|
l
|
Sweeny
|
l
|
l
|
l
|
l
|
|
l
|
l
|
l
|
|
|
Wood River
|
l
|
l
|
l
|
l
|
|
l
|
l
|
|
|
|
Borger
|
l
|
l
|
l
|
|
|
l
|
l
|
|
|
|
Ponca City
|
l
|
l
|
|
|
|
l
|
l
|
|
|
|
Billings
|
|
|
l
|
l
|
|
l
|
l
|
|
|
|
Ferndale
|
l
|
l
|
|
|
|
l
|
l
|
|
|
|
Los Angeles
|
|
l
|
l
|
l
|
|
l
|
l
|
l
|
|
l
|
San Francisco
|
l
|
l
|
l
|
l
|
|
l
|
l
|
l
|
|
l
|
•
|
Wood River Refinery
|
•
|
Borger Refinery
|
•
|
Changes in the global economy and the level of foreign and domestic production of crude oil, natural gas and NGL and refined petroleum, petrochemical and plastics products.
|
•
|
Availability of feedstocks and refined petroleum products and the infrastructure to transport them.
|
•
|
Local factors, including market conditions, the level of operations of other facilities in our markets, and the volume of products imported and exported.
|
•
|
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 quantity of renewable fuels that must be blended into motor fuels.
|
•
|
The handling, use, storage, transportation, disposal and cleanup of hazardous materials and hazardous and nonhazardous wastes.
|
•
|
The dismantlement and abandonment of our facilities and restoration of our properties at the end of their useful lives.
|
•
|
Requiring permits or other approvals that may impose unforeseen or unduly burdensome conditions or potentially cause delays in our operations.
|
•
|
Further limiting or prohibiting construction or other activities in environmentally sensitive or other areas.
|
•
|
Requiring increased capital costs to construct, maintain or upgrade equipment or facilities.
|
•
|
Restricting the locations where we may construct facilities or requiring the relocation of facilities.
|
Name
|
Position Held
|
Age*
|
|
|
|
|
|
Greg C. Garland
|
Chairman and Chief Executive Officer
|
61
|
|
Robert A. Herman
|
Executive Vice President, Refining
|
59
|
|
Paula A. Johnson
|
Executive Vice President, Legal and Government Affairs, General Counsel and Corporate Secretary
|
55
|
|
Brian M. Mandell
|
Senior Vice President, Marketing and Commercial
|
55
|
|
Kevin J. Mitchell
|
Executive Vice President, Finance and Chief Financial Officer
|
52
|
|
Chukwuemeka A. Oyolu
|
Vice President and Controller
|
49
|
|
Timothy D. Roberts
|
Executive Vice President, Midstream
|
57
|
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
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, 2018
|
1,972,339
|
|
|
$
|
108.57
|
|
|
1,972,339
|
|
|
$
|
1,890
|
|
November 1-30, 2018
|
1,339,525
|
|
|
96.47
|
|
|
1,339,525
|
|
|
1,761
|
|
||
December 1-31, 2018
|
1,761,225
|
|
|
87.35
|
|
|
1,761,225
|
|
|
1,607
|
|
||
Total
|
5,073,089
|
|
|
$
|
98.01
|
|
|
5,073,089
|
|
|
|
|
Millions of Dollars Except Per Share Amounts
|
||||||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales and other operating revenues*
|
$
|
111,461
|
|
|
102,354
|
|
|
84,279
|
|
|
98,975
|
|
|
161,212
|
|
Income from continuing operations
|
5,873
|
|
|
5,248
|
|
|
1,644
|
|
|
4,280
|
|
|
4,091
|
|
|
Income from continuing operations attributable to Phillips 66
|
5,595
|
|
|
5,106
|
|
|
1,555
|
|
|
4,227
|
|
|
4,056
|
|
|
Per common share
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
11.87
|
|
|
9.90
|
|
|
2.94
|
|
|
7.78
|
|
|
7.15
|
|
|
Diluted
|
11.80
|
|
|
9.85
|
|
|
2.92
|
|
|
7.73
|
|
|
7.10
|
|
|
Net income
|
5,873
|
|
|
5,248
|
|
|
1,644
|
|
|
4,280
|
|
|
4,797
|
|
|
Net income attributable to Phillips 66
|
5,595
|
|
|
5,106
|
|
|
1,555
|
|
|
4,227
|
|
|
4,762
|
|
|
Per common share
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
11.87
|
|
|
9.90
|
|
|
2.94
|
|
|
7.78
|
|
|
8.40
|
|
|
Diluted
|
11.80
|
|
|
9.85
|
|
|
2.92
|
|
|
7.73
|
|
|
8.33
|
|
|
Total assets
|
54,302
|
|
|
54,371
|
|
|
51,653
|
|
|
48,580
|
|
|
48,692
|
|
|
Long-term debt
|
11,093
|
|
|
10,069
|
|
|
9,588
|
|
|
8,843
|
|
|
7,793
|
|
|
Cash dividends declared per common share
|
3.10
|
|
|
2.73
|
|
|
2.45
|
|
|
2.18
|
|
|
1.89
|
|
•
|
Operating Excellence.
Our commitment to operating excellence guides everything we do. 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. Continuous improvement in safety, environmental stewardship, reliability and cost efficiency is a fundamental requirement for our company and employees. We employ rigorous training and audit programs to drive ongoing improvement in both personal and process safety as we strive for zero incidents. Since we cannot control commodity prices, controlling operating expenses and overhead costs, within the context of our commitment to safety and environmental stewardship, is a high priority. Senior management actively monitors these costs. We are committed to protecting the environment and strive to reduce our environmental footprint throughout our operations.
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
2018
, our worldwide refining crude oil capacity utilization rate was
95 percent
.
|
•
|
Growth.
We have budgeted
$3.2 billion
in capital expenditures and investments in 2019, including
$0.9 billion
for Phillips 66 Partners LP (Phillips 66 Partners). The Phillips 66 Partners’ capital budget includes
$0.3 billion
of capital expected to be cash funded by noncontrolling interests. Additionally, our share of expected self-funded capital spending by joint ventures DCP Midstream, LLC (DCP Midstream), Chevron Phillips Chemical Company LLC (CPChem) and WRB Refining LP (WRB) in 2019 is
$1.2 billion
. In Midstream, we will continue building out our integrated logistics infrastructure network, including pipelines, storage, export and fractionation facilities. In Chemicals, CPChem’s growth capital will fund continuing development of a second U.S. Gulf Coast petrochemicals project and debottlenecking opportunities on existing assets. Growth capital in Refining will be directed toward high-return projects to enhance the yield of higher-value products, as well as other low-capital, quick-payout projects, while in Marketing and Specialties (M&S) it will be to further grow and enhance retail sites in Europe.
|
•
|
Returns.
We plan to improve refining returns by increasing throughput of advantaged feedstocks, disciplined capital allocation and portfolio optimization. A disciplined capital allocation process ensures we focus investments in projects that generate competitive returns throughout the business cycle. In
2018
, our Midstream segment benefited from higher equity earnings and cash distributions from our investments in joint venture pipelines. Our Refining segment maintained a strong clean product yield and a high advantaged crude oil throughput rate at our U.S. refineries. Additionally, our M&S segment continued to enhance our network and brand by re-imaging sites in the United States.
|
•
|
Distributions.
We believe shareholder value is enhanced through, among other things, consistent growth of regular dividends, complemented by share repurchases. We increased our quarterly dividend rate by
14 percent
during
2018
, and have increased it every year since the company’s inception in 2012. Regular dividends demonstrate the confidence our Board of Directors and management have in our capital structure and operations’ capability to generate free cash flow throughout the business cycle. In
2018
, we repurchased
$4.6 billion
, or approximately
48 million
shares, of our common stock. At the discretion of our Board of Directors, we plan to increase dividends annually and fund our share repurchase program while continuing to invest in the growth of our business.
|
•
|
High-Performing Organization.
We strive to attract, develop and retain individuals with the knowledge and skills to implement our business strategy and who support our values and culture. Throughout the company, we focus on getting results in the right way and believe success is both what we do and how we do it. We encourage collaboration throughout our company, while valuing differences, respecting diversity, and creating a great place to work. We foster an environment of learning and development through structured programs focused on enhancing functional and technical skills where employees are engaged in our business and committed to their own, as well as the company’s, success.
|
|
Millions of Dollars
|
||||||||
|
Year Ended December 31
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Midstream
|
$
|
1,181
|
|
|
638
|
|
|
403
|
|
Chemicals
|
1,025
|
|
|
716
|
|
|
839
|
|
|
Refining
|
4,535
|
|
|
2,076
|
|
|
435
|
|
|
Marketing and Specialties
|
1,557
|
|
|
1,020
|
|
|
1,261
|
|
|
Corporate and Other
|
(853
|
)
|
|
(895
|
)
|
|
(747
|
)
|
|
Income before income taxes
|
7,445
|
|
|
3,555
|
|
|
2,191
|
|
|
Income tax expense (benefit)
|
1,572
|
|
|
(1,693
|
)
|
|
547
|
|
|
Net income
|
5,873
|
|
|
5,248
|
|
|
1,644
|
|
|
Less: net income attributable to noncontrolling interests
|
278
|
|
|
142
|
|
|
89
|
|
|
Net income attributable to Phillips 66
|
$
|
5,595
|
|
|
5,106
|
|
|
1,555
|
|
•
|
Higher realized refining and marketing margins.
|
•
|
Higher earnings from equity affiliates in our Midstream and Chemicals segments.
|
•
|
A lower U.S. federal corporate income tax rate beginning January 1, 2018, as a result of the U.S. Tax Cuts and Jobs Act (the Tax Act) enacted in December 2017.
|
•
|
A $2,735 million provisional income tax benefit from the enactment of the Tax Act recognized in December 2017, primarily due to the revaluation of deferred income taxes.
|
•
|
A $261 million noncash, after-tax gain from the consolidation of Merey Sweeny, L.P., predecessor to Merey Sweeny LLC (both referred to herein as Merey Sweeny), in 2017.
|
•
|
Higher net income attributable to noncontrolling interests primarily due to the contribution of assets to Phillips 66 Partners in the fourth quarter of 2017.
|
•
|
Higher interest and debt expense.
|
•
|
Recognition of the $2,735 million provisional income tax benefit from the enactment of the Tax Act in December 2017.
|
•
|
Higher realized refining margins.
|
•
|
Recognition of the $261 million after-tax gain from the consolidation of Merey Sweeny.
|
•
|
Improved equity earnings from affiliates in our Midstream segment.
|
•
|
Increased costs due to Hurricane Harvey, primarily impacting CPChem in our Chemicals segment.
|
•
|
Lower realized marketing margins.
|
•
|
Higher interest and debt expense.
|
•
|
Equity in earnings of WRB increased $483 million, primarily due to higher realized margins driven by improved feedstock advantage.
|
•
|
Equity in earnings of CPChem increased $312 million, primarily due to commencement of full operations at CPChem’s new U.S. Gulf Coast petrochemicals assets and lower hurricane-related costs and downtime in 2018.
|
•
|
Equity in earnings for our Midstream segment increased $222 million, primarily due to higher volumes on affiliate pipelines, including the Bakken Pipeline, which operated for a full year in 2018.
|
•
|
Equity in earnings from our Midstream segment increased $270 million due to improved results from DCP Midstream, primarily driven by improved margins, as well as higher equity in earnings from our pipeline affiliates, including our joint ventures that own the Bakken Pipeline, which started commercial operations in June 2017.
|
•
|
Equity in earnings of WRB increased $207 million, primarily due to higher market crack spreads, partially offset by lower feedstock advantage.
|
•
|
Equity in earnings of CPChem decreased $120 million, primarily due to hurricane-related costs and downtime.
|
|
Year Ended December 31
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
Millions of Dollars
|
||||||||
Income (Loss) Before Income Taxes
|
|
|
|
|
|
||||
Transportation
|
$
|
770
|
|
|
530
|
|
|
442
|
|
NGL and Other
|
305
|
|
|
32
|
|
|
(5
|
)
|
|
DCP Midstream
|
106
|
|
|
76
|
|
|
(34
|
)
|
|
Total Midstream
|
$
|
1,181
|
|
|
638
|
|
|
403
|
|
|
Thousands of Barrels Daily
|
|||||||
Transportation Volumes
|
|
|
|
|
|
|||
Pipelines*
|
3,441
|
|
|
3,320
|
|
|
3,321
|
|
Terminals
|
3,153
|
|
|
2,665
|
|
|
2,422
|
|
Operating Statistics
|
|
|
|
|
|
|||
NGL fractionated**
|
216
|
|
|
186
|
|
|
170
|
|
NGL extracted***
|
413
|
|
|
374
|
|
|
393
|
|
|
Dollars Per Gallon
|
||||||||
Weighted-Average NGL Price*
|
|
|
|
|
|
||||
DCP Midstream
|
$
|
0.75
|
|
|
0.62
|
|
|
0.46
|
|
|
Year Ended December 31
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
Millions of Dollars
|
||||||||
|
|
|
|
|
|
||||
Income Before Income Taxes
|
$
|
1,025
|
|
|
716
|
|
|
839
|
|
|
|
|
|
|
|
||||
|
Millions of Pounds
|
||||||||
CPChem Externally Marketed Sales Volumes
*
|
|
|
|
|
|
||||
Olefins and Polyolefins
|
18,435
|
|
|
15,870
|
|
|
16,011
|
|
|
Specialties, Aromatics and Styrenics
|
4,931
|
|
|
4,618
|
|
|
4,911
|
|
|
|
23,366
|
|
|
20,488
|
|
|
20,922
|
|
|
* Represents 100 percent of CPChem’s outside sales of produced petrochemical products, as well as commission sales from equity affiliates.
|
|||||||||
|
|
|
|
|
|
||||
Olefins and Polyolefins Capacity Utilization (percent)
|
94
|
%
|
|
87
|
|
|
91
|
|
|
Millions of Dollars
|
||||||||
|
Year Ended December 31
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Income (Loss) Before Income Taxes
|
|
|
|
|
|
||||
Net interest expense
|
$
|
(459
|
)
|
|
(408
|
)
|
|
(322
|
)
|
Corporate general and administrative expenses
|
(257
|
)
|
|
(268
|
)
|
|
(246
|
)
|
|
Technology
|
(88
|
)
|
|
(94
|
)
|
|
(91
|
)
|
|
Other
|
(49
|
)
|
|
(125
|
)
|
|
(88
|
)
|
|
Total Corporate and Other
|
$
|
(853
|
)
|
|
(895
|
)
|
|
(747
|
)
|
|
Millions of Dollars, Except as Indicated
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,019
|
|
|
3,119
|
|
|
2,711
|
|
Net cash provided by operating activities
|
7,573
|
|
|
3,648
|
|
|
2,963
|
|
|
Short-term debt
|
67
|
|
|
41
|
|
|
550
|
|
|
Total debt
|
11,160
|
|
|
10,110
|
|
|
10,138
|
|
|
Total equity
|
27,153
|
|
|
27,428
|
|
|
23,725
|
|
|
Percent of total debt to capital*
|
29
|
%
|
|
27
|
|
|
30
|
|
|
Percent of floating-rate debt to total debt
|
11
|
%
|
|
11
|
|
|
3
|
|
|
* Capital includes total debt and total equity.
|
•
|
In June 2018, Phillips 66 Partners completed its initial
$250 million
continuous offering of common units, or at-the-market (ATM) program, and commenced issuing common units under its second
$250 million
ATM program. Since inception in June 2016 through December 31, 2018, net proceeds of
$320 million
have been received under these programs.
|
•
|
In October 2017, Phillips 66 Partners received net proceeds of $643 million from the issuance of $500 million of 3.750% Senior Notes due March 2028 and $150 million of 4.680% Senior Notes due February 2045.
|
•
|
In October 2017, Phillips 66 Partners received net proceeds of $737 million from a private placement of 13,819,791 perpetual convertible preferred units, at a price of $54.27 per unit.
|
•
|
In October 2017, Phillips 66 Partners received net proceeds of $295 million from a private placement of 6,304,204 common units, at a price of $47.59 per unit.
|
•
|
In October 2016, Phillips 66 Partners received net proceeds of $1,111 million from the issuance of $500 million of 3.550% Senior Notes due October 2026 and $625 million of 4.900% Senior Notes due October 2046.
|
•
|
In August 2016, Phillips 66 Partners received net proceeds of $299 million from a public offering of 6,000,000 common units, at a price of $50.22 per unit.
|
•
|
In May 2016, Phillips 66 Partners received net proceeds of $656 million from a public offering of 12,650,000 common units, at a price of $52.40 per unit.
|
•
|
$500 million
of floating-rate Senior Notes due February 2021. Interest on these notes is equal to the three-month LIBOR plus
0.60%
per annum and is payable quarterly in arrears on February 26, May 26, August 26 and November 26, beginning on May 29, 2018.
|
•
|
$800 million
of
3.900%
Senior Notes due March 2028. Interest on these notes is payable semiannually on March 15 and September 15 of each year, beginning on September 15, 2018.
|
•
|
An additional
$200 million
of our
4.875%
Senior Notes due November 2044. Interest on these notes is payable semiannually on May 15 and November 15 of each year, beginning on May 15, 2018.
|
|
Millions of Dollars
|
||||||||||||||
|
Payments Due by Period
|
||||||||||||||
|
Total
|
|
|
Up to
1 Year
|
|
|
Years
2-3
|
|
|
Years
4-5
|
|
|
After
5 Years
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debt obligations (a)
|
$
|
11,076
|
|
|
50
|
|
|
1,450
|
|
|
2,000
|
|
|
7,576
|
|
Capital lease obligations
|
184
|
|
|
17
|
|
|
26
|
|
|
22
|
|
|
119
|
|
|
Total debt
|
11,260
|
|
|
67
|
|
|
1,476
|
|
|
2,022
|
|
|
7,695
|
|
|
Interest on debt
|
7,284
|
|
|
477
|
|
|
905
|
|
|
743
|
|
|
5,159
|
|
|
Operating lease obligations
|
1,581
|
|
|
509
|
|
|
573
|
|
|
207
|
|
|
292
|
|
|
Purchase obligations (b)
|
71,834
|
|
|
31,361
|
|
|
8,547
|
|
|
5,317
|
|
|
26,609
|
|
|
Other long-term liabilities (c)
|
|
|
|
|
|
|
|
|
|
||||||
Asset retirement obligations
|
261
|
|
|
7
|
|
|
44
|
|
|
20
|
|
|
190
|
|
|
Accrued environmental costs
|
447
|
|
|
76
|
|
|
132
|
|
|
89
|
|
|
150
|
|
|
Repatriation income tax liability (d)
|
181
|
|
|
14
|
|
|
32
|
|
|
46
|
|
|
89
|
|
|
Total
|
$
|
92,848
|
|
|
32,511
|
|
|
11,709
|
|
|
8,444
|
|
|
40,184
|
|
(a)
|
For additional information, see
Note 12—Debt
, in the Notes to Consolidated Financial Statements.
|
(b)
|
Represents any agreement to purchase goods or services that is enforceable, legally binding and specifies all significant terms. We expect these purchase obligations will be fulfilled with 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 raw NGL. The products are used to supply our refineries and fractionators and optimize our supply chain. Product purchase commitments with third parties totaled
$31,242 million
. In addition,
$20,642 million
are product purchases from CPChem, mostly for fuel gas and natural gasoline over the remaining contractual term of
81
years, and product purchases of
$4,797 million
from DCP Midstream entities for NGL over the remaining contractual term of
ten
years.
|
(c)
|
Excludes pensions and unrecognized income tax benefits. From
2019
through
2023
, we expect to contribute an average of
$120 million
per year to our qualified and nonqualified pension and other postretirement benefit plans in the United States and an average of
$25 million
per year to our non-U.S. plans. The U.S. five-year average consists of approximately
$60 million
for
2019
and
$135 million
per year for the remaining four years. Our minimum funding in
2019
is expected to be
$60 million
in the United States and
$30 million
outside the United States. Unrecognized income tax benefits of
$23 million
were also excluded because the ultimate disposition and timing of any payments to be made with regard to such amounts are not reasonably estimable.
|
(d)
|
We elected to pay the one-time deemed repatriation income tax on foreign-sourced earnings, recognized as a result of the Tax Act enacted in December 2017, in installments over eight years beginning in 2018. The amount represents the remaining income tax liability.
|
|
Millions of Dollars
|
|||||||||||
|
2019
Budget |
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Capital Expenditures and Investments
|
|
|
|
|
|
|
|
|||||
Midstream*
|
$
|
1,936
|
|
|
1,548
|
|
|
771
|
|
|
1,453
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Refining
|
923
|
|
|
826
|
|
|
853
|
|
|
1,149
|
|
|
Marketing and Specialties
|
161
|
|
|
125
|
|
|
108
|
|
|
98
|
|
|
Corporate and Other
|
177
|
|
|
140
|
|
|
100
|
|
|
144
|
|
|
|
$
|
3,197
|
|
|
2,639
|
|
|
1,832
|
|
|
2,844
|
|
|
|
|
|
|
|
|
|
|||||
Selected Equity Affiliates**
|
|
|
|
|
|
|
|
|||||
DCP Midstream
|
$
|
505
|
|
|
484
|
|
|
268
|
|
|
99
|
|
CPChem
|
572
|
|
|
339
|
|
|
776
|
|
|
987
|
|
|
WRB
|
165
|
|
|
156
|
|
|
126
|
|
|
164
|
|
|
|
$
|
1,242
|
|
|
979
|
|
|
1,170
|
|
|
1,250
|
|
•
|
Construction activities related to additional Gulf Coast fractionation capacity and Freeport LPG Export Terminal projects.
|
•
|
Construction activities related to increasing storage capacity at our crude oil and refined petroleum products terminal located near Beaumont, Texas.
|
•
|
Development of the Gray Oak Pipeline system, which will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Sweeny/Freeport markets on the Texas Gulf Coast. At December 31, 2018, Phillips 66 Partners had a 48.75 percent effective ownership interest in this pipeline system. In February 2019, another party exercised its option to acquire an interest in the pipeline system that reduced Phillips 66 Partners’ effective ownership interest to 42.25 percent.
|
•
|
Development of the Bayou Bridge Pipeline by Phillips 66 Partners’ 40-percent-owned joint venture.
|
•
|
Acquisition by Phillips 66 Partners of certain southeast Louisiana NGL logistics assets comprising approximately 500 miles of pipelines and a storage cavern connecting multiple fractionation facilities, refineries and a petrochemical facility.
|
•
|
Development of the Bakken Pipeline system project, in which Phillips 66 Partners owns a 25 percent interest.
|
•
|
Expansion activities on the Phillips 66 Partners’ 33-percent-owned Sand Hills Pipeline including investment in the transportation of NGL from the Permian Basin to the Texas Gulf Coast.
|
•
|
Construction activities related to Phillips 66 Partners’ new isomerization unit at the Lake Charles Refinery.
|
•
|
Expansion activities on the Phillips 66 Partners’ 50-percent owned STACK Pipeline joint venture.
|
•
|
Construction activities by joint ventures of Phillips 66 Partners in the Bakken production area of North Dakota, including the Palermo Rail Terminal, Sacagawea Crude Pipeline, the New Town injection point, Keene CDP Terminal and Sacagawea Gas Pipeline.
|
•
|
Spending associated with other return, reliability and maintenance projects in our Transportation and NGL business.
|
•
|
Installation of facilities to improve clean product yield at the Sweeny, Lake Charles, Ponca City, and Bayway refineries, as well as the jointly owned Wood River Refinery.
|
•
|
Installation of facilities to improve processing of advantaged crudes at the Billings and Lake Charles refineries, as well as the jointly owned Wood River Refinery.
|
•
|
Installation of facilities to comply with U.S. Environmental Protection Agency (EPA) Tier 3 gasoline regulations at the Alliance, Lake Charles, Bayway and Sweeny refineries, as well as the jointly owned Wood River Refinery.
|
•
|
Installation of a crude tank to increase accessibility of waterborne crude at the Los Angeles Refinery.
|
•
|
Installation of facilities to comply with EPA Tier 3 gasoline regulations at the Ferndale Refinery.
|
•
|
Installation of facilities to improve product value at the Sweeny and Lake Charles refineries, as well as the jointly owned Borger Refinery.
|
•
|
Installation of facilities for U.K. biofuels compliance at the Humber Refinery.
|
•
|
U.S. Federal Clean Air Act, which governs air emissions.
|
•
|
U.S. Federal Clean Water Act, which governs discharges into water bodies.
|
•
|
European Union Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), which governs the manufacture, placing on the market or use of chemicals.
|
•
|
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 Oil Pollution Act of 1990 (OPA90), under which owners and operators of onshore facilities and pipelines as well as 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 Union Emissions Trading Scheme (EU ETS), which uses a market-based mechanism to incentivize the reduction of greenhouse gas (GHG) emissions.
|
•
|
EU ETS, which is part of the European Union’s policy to combat climate change and is a key tool for reducing industrial GHG emissions. EU ETS impacts factories, power stations and other installations across all EU member states.
|
•
|
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 (as well as SB32, which requires further reduction of California's GHG emissions to 40 percent below the 1990 emission level by 2030, and AB398, which extends the California GHG emission cap-and-trade program through 2030). Other GHG emissions programs in the western U.S. states have been enacted or are under consideration or development, including amendments to California's Low Carbon Fuel Standard, Oregon's Low Carbon Fuel Standard, and Washington's carbon reduction programs.
|
•
|
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.
|
•
|
EPA's 2015 Final Rule regulating GHG emissions from existing fossil fuel-fired electrical generating units under the Federal Clean Air Act, commonly referred to as the Clean Power Plan, which remains the subject of litigation and administrative review.
|
•
|
Carbon taxes in certain jurisdictions.
|
•
|
GHG emission cap and trade programs in certain jurisdictions.
|
•
|
Whether and to what extent legislation or regulation is enacted.
|
•
|
The nature of the legislation or regulation (such as a cap and trade system or a tax on emissions).
|
•
|
The GHG reductions required.
|
•
|
The price and availability of offsets.
|
•
|
The demand for, and 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 or to meet our refinery requirements and marketing demand. In addition to cash settlement prior to contract expiration, exchange-traded futures contracts may be settled by physical delivery of the commodity.
|
•
|
Manage the risk to our cash flows from price exposures on specific crude oil, refined petroleum product, natural gas, NGL, 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 2018
|
|
|
|
|
|
|
|
|
|
|
||||
2019
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
50
|
|
|
3.65
|
%
|
2020
|
|
|
300
|
|
|
2.65
|
|
|
|
525
|
|
|
3.21
|
|
2021
|
|
|
—
|
|
|
—
|
|
|
|
625
|
|
|
3.23
|
|
2022
|
|
|
2,000
|
|
|
4.30
|
|
|
|
—
|
|
|
—
|
|
2023
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Remaining years
|
|
|
7,576
|
|
|
4.69
|
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
9,876
|
|
|
|
|
$
|
1,200
|
|
|
|
||
Fair value
|
|
$
|
9,727
|
|
|
|
|
$
|
1,200
|
|
|
|
|
Millions of Dollars, Except as Indicated
|
|||||||||||||
Expected Maturity Date
|
|
Fixed Rate Maturity
|
|
|
Average Interest Rate
|
|
|
Floating Rate Maturity
|
|
|
Average Interest Rate
|
|
||
Year-End 2017
|
|
|
|
|
|
|
|
|
|
|
||||
2018
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
25
|
|
|
1.94
|
%
|
2019
|
|
|
—
|
|
|
—
|
|
|
|
300
|
|
|
2.01
|
|
2020
|
|
|
300
|
|
|
2.65
|
|
|
|
775
|
|
|
2.31
|
|
2021
|
|
|
—
|
|
|
—
|
|
|
|
50
|
|
|
1.94
|
|
2022
|
|
|
2,000
|
|
|
4.30
|
|
|
|
—
|
|
|
—
|
|
Remaining years
|
|
|
6,576
|
|
|
4.78
|
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
8,876
|
|
|
|
|
$
|
1,150
|
|
|
|
||
Fair value
|
|
$
|
9,746
|
|
|
|
|
$
|
1,150
|
|
|
|
•
|
Fluctuations in NGL, crude oil, refined petroleum product and natural gas prices and refining, marketing and petrochemical margins.
|
•
|
Failure of new products and services to achieve market acceptance.
|
•
|
Unexpected changes in costs or technical requirements for constructing, modifying or operating our facilities or transporting our products.
|
•
|
Unexpected technological or commercial difficulties in manufacturing, refining or transporting our products, including chemical products.
|
•
|
Lack of, or disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas and refined petroleum products.
|
•
|
The level and success of drilling and quality of production volumes around our Midstream assets.
|
•
|
Our inability to timely obtain or maintain permits, including those necessary for capital projects.
|
•
|
Our inability to 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 capital 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 resulting from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations.
|
•
|
General domestic and international economic and political developments including: armed hostilities; expropriation of assets; changes in governmental policies relating to NGL, crude oil, natural gas or refined petroleum products pricing, regulation or taxation; and other political, economic or diplomatic developments.
|
•
|
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 changes to our credit profile or illiquidity or uncertainty in the domestic or international financial markets.
|
•
|
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 petrochemicals and refined petroleum products, such as gasoline, diesel, aviation fuel and home heating oil.
|
•
|
Governmental policies relating to exports of crude oil and natural gas.
|
•
|
Overcapacity or undercapacity in the midstream, chemicals and refining industries.
|
•
|
Fluctuations in consumer demand for refined petroleum products.
|
•
|
The factors generally described in Item 1A.—Risk Factors in this report.
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Greg C. Garland
|
|
/s/ Kevin J. Mitchell
|
|
|
|
Greg C. Garland
|
|
Kevin J. Mitchell
|
Chairman and
|
|
Executive Vice President, Finance and
|
Chief Executive Officer
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Income
|
Phillips 66
|
|
Millions of Dollars
|
|||||||||
Years Ended December 31
|
2018
|
|
|
2017
|
|
|
2016
|
|
||
Revenues and Other Income
|
|
|
|
|
|
|||||
Sales and other operating revenues*
|
$
|
111,461
|
|
|
102,354
|
|
|
84,279
|
|
|
Equity in earnings of affiliates
|
2,676
|
|
|
1,732
|
|
|
1,414
|
|
||
Net gain on dispositions
|
19
|
|
|
15
|
|
|
10
|
|
||
Other income
|
61
|
|
|
521
|
|
|
74
|
|
||
Total Revenues and Other Income
|
114,217
|
|
|
104,622
|
|
|
85,777
|
|
||
|
|
|
|
|
|
|||||
Costs and Expenses
|
|
|
|
|
|
|||||
Purchased crude oil and products
|
97,930
|
|
|
79,409
|
|
|
62,468
|
|
||
Operating expenses
|
4,880
|
|
|
4,699
|
|
|
4,275
|
|
||
Selling, general and administrative expenses
|
1,677
|
|
|
1,695
|
|
|
1,638
|
|
||
Depreciation and amortization
|
1,356
|
|
|
1,318
|
|
|
1,168
|
|
||
Impairments
|
8
|
|
|
24
|
|
|
5
|
|
||
Taxes other than income taxes*
|
425
|
|
|
13,462
|
|
|
13,688
|
|
||
Accretion on discounted liabilities
|
23
|
|
|
22
|
|
|
21
|
|
||
Interest and debt expense
|
504
|
|
|
438
|
|
|
338
|
|
||
Foreign currency transaction gains
|
(31
|
)
|
|
—
|
|
|
(15
|
)
|
||
Total Costs and Expenses
|
106,772
|
|
|
101,067
|
|
|
83,586
|
|
||
Income before income taxes
|
7,445
|
|
|
3,555
|
|
|
2,191
|
|
||
Income tax expense (benefit)
|
1,572
|
|
|
(1,693
|
)
|
|
547
|
|
||
Net Income
|
5,873
|
|
|
5,248
|
|
|
1,644
|
|
||
Less: net income attributable to noncontrolling interests
|
278
|
|
|
142
|
|
|
89
|
|
||
Net Income Attributable to Phillips 66
|
$
|
5,595
|
|
|
5,106
|
|
|
1,555
|
|
|
|
|
|
|
|
|
|||||
Net Income Attributable to Phillips 66 Per Share of Common Stock
(dollars)
|
|
|
|
|
|
|||||
Basic
|
$
|
11.87
|
|
|
9.90
|
|
|
2.94
|
|
|
Diluted
|
11.80
|
|
|
9.85
|
|
|
2.92
|
|
||
|
|
|
|
|
|
|||||
Weighted-Average Common Shares Outstanding
(thousands)
|
|
|
|
|
|
|||||
Basic
|
470,708
|
|
|
515,090
|
|
|
527,531
|
|
||
Diluted
|
474,047
|
|
|
518,508
|
|
|
530,066
|
|
||
* Includes excise taxes on sales of refined petroleum products for periods prior to the adoption of Accounting Standards Update No. 2014-09 on January 1, 2018:
|
|
|
$
|
13,054
|
|
|
13,381
|
|
||
See Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
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
|
|
Accum. Other
Comprehensive Loss |
|
Noncontrolling
Interests |
|
Total
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
$
|
6
|
|
19,145
|
|
(7,746
|
)
|
12,348
|
|
(653
|
)
|
838
|
|
23,938
|
|
Net income
|
—
|
|
—
|
|
—
|
|
1,555
|
|
—
|
|
89
|
|
1,644
|
|
|
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(342
|
)
|
—
|
|
(342
|
)
|
|
Dividends paid on common stock
|
—
|
|
—
|
|
—
|
|
(1,282
|
)
|
—
|
|
—
|
|
(1,282
|
)
|
|
Repurchase of common stock
|
—
|
|
—
|
|
(1,042
|
)
|
—
|
|
—
|
|
—
|
|
(1,042
|
)
|
|
Benefit plan activity
|
—
|
|
106
|
|
—
|
|
(13
|
)
|
—
|
|
—
|
|
93
|
|
|
Issuance of Phillips 66 Partners LP common units
|
—
|
|
308
|
|
—
|
|
—
|
|
—
|
|
483
|
|
791
|
|
|
Distributions to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(75
|
)
|
(75
|
)
|
|
December 31, 2016
|
6
|
|
19,559
|
|
(8,788
|
)
|
12,608
|
|
(995
|
)
|
1,335
|
|
23,725
|
|
|
Net income
|
—
|
|
—
|
|
—
|
|
5,106
|
|
—
|
|
142
|
|
5,248
|
|
|
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
378
|
|
—
|
|
378
|
|
|
Dividends paid on common stock
|
—
|
|
—
|
|
—
|
|
(1,395
|
)
|
—
|
|
—
|
|
(1,395
|
)
|
|
Repurchase of common stock
|
—
|
|
—
|
|
(1,590
|
)
|
—
|
|
—
|
|
—
|
|
(1,590
|
)
|
|
Benefit plan activity
|
—
|
|
72
|
|
—
|
|
(13
|
)
|
—
|
|
—
|
|
59
|
|
|
Issuance of Phillips 66 Partners LP common and preferred units
|
—
|
|
137
|
|
—
|
|
—
|
|
—
|
|
986
|
|
1,123
|
|
|
Distributions to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(120
|
)
|
(120
|
)
|
|
December 31, 2017
|
6
|
|
19,768
|
|
(10,378
|
)
|
16,306
|
|
(617
|
)
|
2,343
|
|
27,428
|
|
|
Cumulative effect of accounting changes
|
—
|
|
—
|
|
—
|
|
36
|
|
—
|
|
13
|
|
49
|
|
|
Net income
|
—
|
|
—
|
|
—
|
|
5,595
|
|
—
|
|
278
|
|
5,873
|
|
|
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(75
|
)
|
—
|
|
(75
|
)
|
|
Dividends paid on common stock
|
—
|
|
—
|
|
—
|
|
(1,436
|
)
|
—
|
|
—
|
|
(1,436
|
)
|
|
Repurchase of common stock
|
—
|
|
—
|
|
(4,645
|
)
|
—
|
|
—
|
|
—
|
|
(4,645
|
)
|
|
Benefit plan activity
|
—
|
|
63
|
|
—
|
|
(12
|
)
|
—
|
|
—
|
|
51
|
|
|
Issuance of Phillips 66 Partners LP common units
|
—
|
|
42
|
|
—
|
|
—
|
|
—
|
|
73
|
|
115
|
|
|
Distributions to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(207
|
)
|
(207
|
)
|
|
December 31, 2018
|
$
|
6
|
|
19,873
|
|
(15,023
|
)
|
20,489
|
|
(692
|
)
|
2,500
|
|
27,153
|
|
|
|
|
|
|
|
|
|
Shares in Thousands
|
|||
|
|
|
Common Stock Issued
|
|
Treasury Stock
|
|
|
|
|
|
|
||
December 31, 2015
|
|
|
639,336
|
|
109,926
|
|
Repurchase of common stock
|
|
|
—
|
|
12,901
|
|
Shares issued—share-based compensation
|
|
|
2,258
|
|
—
|
|
December 31, 2016
|
|
|
641,594
|
|
122,827
|
|
Repurchase of common stock
|
|
|
—
|
|
18,738
|
|
Shares issued—share-based compensation
|
|
|
2,241
|
|
—
|
|
December 31, 2017
|
|
|
643,835
|
|
141,565
|
|
Repurchase of common stock
|
|
|
—
|
|
47,961
|
|
Shares issued—share-based compensation
|
|
|
1,857
|
|
—
|
|
December 31, 2018
|
|
|
645,692
|
|
189,526
|
|
|
|
|
Dollars
|
|||
Years Ended December 31
|
|
|
Dividends Paid Per Share of Common Stock
|
|||
|
|
|
|
|||
2016
|
|
|
$
|
2.45
|
|
|
2017
|
|
|
2.73
|
|
||
2018
|
|
|
3.10
|
|
||
See Notes to Consolidated Financial Statements.
|
Notes to Consolidated Financial Statements
|
Phillips 66
|
▪
|
Consolidation Principles and Investments
—Our consolidated financial statements include the accounts of majority-owned, controlled subsidiaries and variable interest entities (VIEs) where we are the primary beneficiary. Undivided interests in pipelines, natural gas plants and terminals are consolidated on a proportionate basis. See
Note 27—Phillips 66 Partners LP
, for further discussion on our significant consolidated VIE.
|
▪
|
Recasted Financial Information
—Certain prior period financial information has been recasted to reflect the current year’s presentation.
|
▪
|
Use of Estimates
—The preparation of financial statements in conformity with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
|
▪
|
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 (loss) in stockholders’ equity. Foreign currency transaction gains and losses result from remeasuring monetary assets and liabilities denominated in a foreign currency into the functional currency of our subsidiary holding the asset or liability. We include these transaction gains and losses in current earnings. Most of our foreign operations use their local currency as the functional currency.
|
▪
|
Cash Equivalents
—Cash equivalents are highly liquid, short-term investments that are readily convertible to known amounts of cash and will mature within 90 days or less from the date of acquisition. We carry these investments at cost plus accrued interest.
|
▪
|
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. 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 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability that are used to measure fair value to the extent that relevant observable inputs are not available, and that reflect the assumptions we believe market participants would use when pricing an asset or liability for which there is little, if any, market activity at the measurement date.
|
▪
|
Derivative Instruments
—Derivative instruments are recorded on the balance sheet at fair value. We have master netting agreements with our exchange-cleared instrument counterparties and certain of our counterparties to other commodity instrument contracts (e.g., physical commodity forward contracts). We have elected to net derivative assets and liabilities with the same counterparty on the balance sheet if the legal right of offset exists and certain other criteria are met. We also net collateral payables and receivables against derivative assets and derivative liabilities, respectively.
|
▪
|
Loans and Long-Term Receivables
—We enter into agreements with other parties to pursue business opportunities, which may require us to provide loans or advances to certain affiliated and non-affiliated companies. Loans are recorded when cash is transferred or seller financing is provided to the affiliated or non-affiliated company pursuant to a loan agreement. The loan balance will increase as interest is earned on the outstanding loan balance and will decrease as interest and principal payments are received. Interest is earned at the loan agreement’s stated interest rate. Loans and long-term receivables are assessed for impairment when events indicate the loan balance may not be fully recovered.
|
▪
|
Impairment of Investments in Nonconsolidated Entities
—Investments in nonconsolidated entities accounted for under the equity method 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 determined based on quoted market prices, if available, or upon the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and a market analysis of comparable assets, if appropriate.
|
▪
|
Depreciation and Amortization
—Depreciation and amortization of properties, plants and equipment (PP&E) 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).
|
▪
|
Capitalized Interest
—A portion of 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 related asset, and is amortized over the useful life of the related asset.
|
▪
|
Impairment of Properties, Plants and Equipment
—PP&E 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 expected future pre-tax cash flows of an asset group is less than the carrying value of the asset group, including applicable liabilities, the carrying value of the PP&E included in the asset group is written down to estimated fair value and the write down is reported in the “Impairments” line on our consolidated statement of income in the period in which the impairment determination 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 assets (for example, at a refinery complex level). Because there is usually a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined using one or more of the following methods: the present values of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants; a market multiple of earnings for similar assets; or historical market transactions of similar assets, adjusted using principal market participant assumptions when necessary. Long-lived assets held for sale
|
▪
|
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 on 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.
|
▪
|
Goodwill
—Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination. It is not amortized, but is tested for impairment annually and when events or changes in circumstance indicate that the fair value of a reporting unit with goodwill is below its carrying value. The impairment test requires allocating goodwill and other assets and liabilities to reporting units. The fair value of each reporting unit is determined and compared to the book value of the reporting unit. If the fair value of the reporting unit is less than the book value, an impairment is recognized for the amount by which the book value exceeds the reporting unit’s fair value. A goodwill loss cannot exceed the total amount of goodwill allocated to that reporting unit. For purposes of testing goodwill for impairment, we have
three
reporting units with goodwill balances: Transportation, Refining, and Marketing and Specialties.
|
▪
|
Intangible Assets Other Than Goodwill
—Intangible assets with finite useful lives are amortized using 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 the indefinite useful life classification. Indefinite-lived intangible assets are considered impaired if their fair value is lower than their 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, the fair value of intangible assets is determined based upon the present values of expected future cash flows using discount rates and other assumptions 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.
|
▪
|
Asset Retirement Obligations and Environmental Costs
—The fair value of legal obligations to retire and remove long-lived assets are recorded in the period in which the obligation arises. When the liability is initially recorded, we capitalize this cost by increasing the carrying amount of the related PP&E. Over time, the liability is increased for the change in its present value, and the capitalized cost in PP&E is depreciated over the useful life of the related asset. If our estimate of the liability changes after initial recognition, we record an adjustment to the liability and PP&E.
|
▪
|
Guarantees
—The 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 has essentially been 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 for the excess amount above the guarantee’s book
|
▪
|
Treasury Stock
—We record treasury stock purchases at cost, which includes incremental direct transaction costs. Amounts are recorded as reductions of stockholders’ equity on the consolidated balance sheet.
|
▪
|
Revenue Recognition
—Our revenues are primarily associated with sales of refined petroleum products, crude oil and natural gas liquids (NGL). Each gallon, or other unit of measure of product, is separately identifiable and represents a distinct performance obligation to which a transaction price is allocated. The transaction prices of our contracts with customers are either fixed or variable, with variable pricing based upon various market indices. For our contracts that include variable consideration, we utilize the variable consideration allocation exception, whereby the variable consideration is only allocated to the performance obligations that are satisfied during the period. The related revenue is recognized at a point in time when control passes to the customer, which is when title and the risk of ownership passes to the customer and physical delivery of goods occurs, either immediately or within a fixed delivery schedule that is reasonable and customary in the industry. The payment terms with our customers vary based on the product or service provided, but usually are 30 days or less.
|
▪
|
Taxes Collected from Customers and Remitted to Governmental Authorities
—Effective for reporting periods ending after our adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09 on January 1, 2018, excise taxes on sales of refined petroleum products charged to our customers are presented net of taxes on sales of refined petroleum products owed to governmental authorities in the “Taxes other than income taxes” line on our consolidated statement of income. For reporting periods ending prior to January 1, 2018, excise taxes on sales of refined petroleum products charged to our customers are presented in the “Sales and other operating revenues” line on our consolidated statement of income, and excise taxes on sales of refined petroleum products owed to governmental authorities are presented in the “Taxes other than income taxes” line on our consolidated statement of income. See
Note 2—Changes in Accounting Principles
, for more information regarding our adoption of this ASU.
|
▪
|
Shipping and Handling Costs
—We have elected to account for shipping and handling costs as fulfillment activities and include these activities in the “Purchased crude oil and products” line on our consolidated statement of income. Freight costs billed to customers are recorded in “Sales and other operating revenues.”
|
▪
|
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.
|
▪
|
Share-Based Compensation
—We recognize share-based compensation expense over the shorter of: (1) the service period (i.e., the stated period of 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 as this is the minimum period of time required for an award not to be subject to forfeiture. Our equity-classified programs generally provide accelerated vesting (i.e., a waiver of the remaining period of service required to earn an award) for awards held by employees at the time they become eligible for retirement (at age
55
with
5
years of service). We have elected to recognize expense on a straight-line basis over the service period for the entire award, irrespective of whether the award was granted with ratable or cliff vesting, and have elected to recognize forfeitures of awards when they occur.
|
▪
|
Income Taxes
—Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Interest related to unrecognized income tax benefits is reflected in interest expense, and penalties in operating expenses.
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017*
|
|
|
2016*
|
|
|
Product Line and Services
|
|
|
|
|
|
||||
Refined petroleum products
|
$
|
87,967
|
|
|
85,405
|
|
|
73,385
|
|
Crude oil resales
|
16,419
|
|
|
11,808
|
|
|
7,594
|
|
|
NGL
|
6,161
|
|
|
4,670
|
|
|
3,107
|
|
|
Services and other
|
914
|
|
|
471
|
|
|
193
|
|
|
Consolidated sales and other operating revenues
|
$
|
111,461
|
|
|
102,354
|
|
|
84,279
|
|
|
|
|
|
|
|
||||
Geographic Location**
|
|
|
|
|
|
||||
United States
|
$
|
86,401
|
|
|
75,684
|
|
|
59,742
|
|
United Kingdom
|
11,054
|
|
|
10,626
|
|
|
9,895
|
|
|
Germany
|
4,352
|
|
|
6,692
|
|
|
6,128
|
|
|
Other foreign countries
|
9,654
|
|
|
9,352
|
|
|
8,514
|
|
|
Consolidated sales and other operating revenues
|
$
|
111,461
|
|
|
102,354
|
|
|
84,279
|
|
|
Millions of Dollars
|
|||||
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|||
Crude oil and petroleum products
|
$
|
3,238
|
|
|
3,106
|
|
Materials and supplies
|
305
|
|
|
289
|
|
|
|
$
|
3,543
|
|
|
3,395
|
|
|
Millions of Dollars
|
|||||
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|||
Equity investments
|
$
|
14,218
|
|
|
13,733
|
|
Other investments
|
106
|
|
|
114
|
|
|
Loans and long-term receivables
|
97
|
|
|
94
|
|
|
|
$
|
14,421
|
|
|
13,941
|
|
•
|
Chevron Phillips Chemical Company LLC (CPChem)
—
50
-percent-owned joint venture that manufactures and markets petrochemicals and plastics. We have multiple supply and purchase agreements in place with CPChem, ranging in initial terms from
one
to
99
years, with extension options. These agreements cover sales and purchases of refined petroleum products, solvents, and petrochemical and NGL feedstocks, as well as fuel oils and gases. All products are purchased and sold under specified pricing formulas based on various published pricing indices. At
December 31, 2018
and 2017, the book value of our investment in CPChem was
$6,233 million
and
$6,222 million
, respectively.
|
•
|
DCP Midstream, LLC (DCP Midstream)
—
50
-percent-owned joint venture that owns and operates gas plants, gathering systems, storage facilities and fractionation plants, through its subsidiary DCP Midstream, LP (DCP Partners). DCP Midstream markets a portion of its NGL to us and our equity affiliates under existing contracts. At
December 31, 2018
and 2017, the book value of our investment in DCP Midstream was
$2,240 million
and
$2,227 million
, respectively.
|
•
|
WRB Refining LP (WRB)
—
50
-percent-owned joint venture that owns the Wood River and Borger refineries located in Roxana, Illinois, and Borger, Texas, respectively, for which we are the operator and managing partner. At
December 31, 2018
and 2017, the book value of our investment in WRB was
$2,108 million
and
$2,269 million
, respectively.
|
•
|
Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)
—Phillips 66 Partners’
two
25
-percent-owned joint ventures. Dakota Access owns a pipeline system that delivers crude oil from the Bakken/Three Forks production area in North Dakota to Patoka, Illinois, and ETCO owns a connecting crude oil pipeline system from Patoka, Illinois, to Nederland, Texas. These two pipeline systems collectively form the Bakken Pipeline system, which is operated by a co-venturer. The Bakken Pipeline system went into service in June 2017. At
December 31, 2018
and 2017, the aggregate book value of Phillips 66 Partners’ investments in Dakota Access and ETCO was
$608 million
and
$621 million
, respectively.
|
•
|
DCP Sand Hills Pipeline, LLC (Sand Hills)
—Phillips 66 Partners’
33
-percent-owned joint venture that owns an NGL pipeline system that extends from the Permian Basin and Eagle Ford to facilities on the Texas Gulf Coast and to the Mont Belvieu, Texas market hub. The Sand Hills Pipeline system is operated by DCP Partners. At
December 31, 2018
and 2017, the book value of Phillips 66 Partners’ investment in Sand Hills was
$601 million
and
$515 million
, respectively.
|
•
|
Rockies Express Pipeline LLC (REX)
—
25
-percent-owned joint venture that owns a natural gas pipeline system that extends from Wyoming and Colorado to Ohio with a bi-directional section that extends from Ohio to Illinois. The REX Pipeline system is operated by our co-venturer. In July 2018, we contributed
$138 million
to REX to cover our
25 percent
share of a
$550 million
debt repayment. Our capital contribution was included in the “Capital expenditures and investments” line on our consolidated statement of cash flows. At
December 31, 2018
and 2017, the book value of our investment in REX was
$600 million
and
$445 million
, respectively.
|
•
|
Gray Oak Pipeline, LLC (Gray Oak)
—Phillips 66 Partners’ consolidated subsidiary, Gray Oak Holdings LLC (Holdings LLC), owned a
75
percent interest in a joint venture formed in 2018 to develop and construct the Gray Oak Pipeline system which, upon completion, will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Freeport markets on the Texas Gulf Coast. The pipeline system is expected to be placed in service by the end of 2019.
|
•
|
Bayou Bridge Pipeline, LLC (Bayou Bridge
)—Phillips 66 Partners’
40
-percent-owned joint venture that owns a pipeline that delivers crude oil from Nederland, Texas, to Lake Charles, Louisiana. The Bayou Bridge Pipeline is operated by our co-venturer. An extension of the pipeline from Lake Charles to St. James, Louisiana, is expected to be in service in March 2019. At
December 31, 2018
and 2017, the book value of our investment in Bayou Bridge was
$277 million
and
$173 million
, respectively.
|
•
|
DCP Southern Hills Pipeline, LLC (Southern Hills)
—Phillips 66 Partners’
33
-percent-owned joint venture that owns an NGL pipeline system that extends from the Midcontinent region to the Mont Belvieu, Texas market hub. The Southern Hills Pipeline system is operated by DCP Partners. At
December 31, 2018
and 2017, the book value of Phillips 66 Partners’ investment in Southern Hills was
$206 million
and
$209 million
, respectively.
|
•
|
OnCue Holdings, LLC (OnCue)
—
50
-percent-owned joint venture that owns and operates retail convenience stores. We fully guaranteed various debt agreements of OnCue, and our co-venturer did not participate in the guarantees. This entity is considered a VIE because our debt guarantees resulted in OnCue not being exposed to all potential losses. We have determined we are not the primary beneficiary because we do not have the power to
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Revenues
|
$
|
43,627
|
|
|
35,523
|
|
|
30,605
|
|
Income before income taxes
|
6,066
|
|
|
3,956
|
|
|
3,206
|
|
|
Net income
|
5,926
|
|
|
3,764
|
|
|
2,960
|
|
|
Current assets
|
6,791
|
|
|
7,325
|
|
|
7,097
|
|
|
Noncurrent assets
|
52,649
|
|
|
49,950
|
|
|
50,163
|
|
|
Current liabilities
|
8,047
|
|
|
5,248
|
|
|
5,173
|
|
|
Noncurrent liabilities
|
10,695
|
|
|
13,743
|
|
|
13,709
|
|
|
Noncontrolling interests
|
2,550
|
|
|
2,549
|
|
|
2,260
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
2018
|
|
2017
|
|||||||||||||||
|
Gross
PP&E
|
|
|
Accum.
D&A
|
|
|
Net
PP&E
|
|
|
Gross
PP&E
|
|
|
Accum.
D&A
|
|
|
Net
PP&E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Midstream
|
$
|
9,663
|
|
|
2,100
|
|
|
7,563
|
|
|
8,849
|
|
|
1,853
|
|
|
6,996
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Refining
|
22,640
|
|
|
9,531
|
|
|
13,109
|
|
|
22,144
|
|
|
8,987
|
|
|
13,157
|
|
|
Marketing and Specialties
|
1,671
|
|
|
926
|
|
|
745
|
|
|
1,658
|
|
|
909
|
|
|
749
|
|
|
Corporate and Other
|
1,223
|
|
|
622
|
|
|
601
|
|
|
1,091
|
|
|
533
|
|
|
558
|
|
|
|
$
|
35,197
|
|
|
13,179
|
|
|
22,018
|
|
|
33,742
|
|
|
12,282
|
|
|
21,460
|
|
|
Millions of Dollars
|
|||||||||||
|
Midstream
|
|
|
Refining
|
|
|
Marketing and Specialties
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at January 1, 2017
|
$
|
626
|
|
|
1,805
|
|
|
839
|
|
|
3,270
|
|
Adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance at December 31, 2017
|
626
|
|
|
1,805
|
|
|
839
|
|
|
3,270
|
|
|
Adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance at December 31, 2018
|
$
|
626
|
|
|
1,805
|
|
|
839
|
|
|
3,270
|
|
|
Millions of Dollars
|
|||||
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|||
Trade names and trademarks
|
$
|
503
|
|
|
503
|
|
Refinery air and operating permits
|
250
|
|
|
252
|
|
|
Other
|
—
|
|
|
1
|
|
|
|
$
|
753
|
|
|
756
|
|
|
Millions of Dollars
|
|||||
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|||
Asset retirement obligations
|
$
|
261
|
|
|
268
|
|
Accrued environmental costs
|
447
|
|
|
458
|
|
|
Total asset retirement obligations and accrued environmental costs
|
708
|
|
|
726
|
|
|
Asset retirement obligations and accrued environmental costs due within one year*
|
(84
|
)
|
|
(85
|
)
|
|
Long-term asset retirement obligations and accrued environmental costs
|
$
|
624
|
|
|
641
|
|
|
Millions of Dollars
|
|||||
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|||
Balance at January 1
|
$
|
268
|
|
|
244
|
|
Accretion of discount
|
10
|
|
|
10
|
|
|
Changes in estimates of existing obligations
|
3
|
|
|
17
|
|
|
Spending on existing obligations
|
(15
|
)
|
|
(14
|
)
|
|
Foreign currency translation
|
(5
|
)
|
|
11
|
|
|
Balance at December 31
|
$
|
261
|
|
|
268
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||
|
Basic
|
|
Diluted
|
|
|
Basic
|
|
Diluted
|
|
|
Basic
|
|
Diluted
|
|
|
Amounts Attributed to Phillips 66 Common Stockholders
(millions)
:
|
|
|
|
|
|
|
|
|
|||||||
Net income attributable to Phillips 66
|
$
|
5,595
|
|
5,595
|
|
|
5,106
|
|
5,106
|
|
|
1,555
|
|
1,555
|
|
Income allocated to participating securities
|
(6
|
)
|
—
|
|
|
(6
|
)
|
—
|
|
|
(6
|
)
|
(5
|
)
|
|
Net income available to common stockholders
|
$
|
5,589
|
|
5,595
|
|
|
5,100
|
|
5,106
|
|
|
1,549
|
|
1,550
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted-average common shares outstanding
(thousands)
:
|
467,483
|
|
470,708
|
|
|
511,268
|
|
515,090
|
|
|
523,250
|
|
527,531
|
|
|
Effect of share-based compensation
|
3,225
|
|
3,339
|
|
|
3,822
|
|
3,418
|
|
|
4,281
|
|
2,535
|
|
|
Weighted-average common shares outstanding—EPS
|
470,708
|
|
474,047
|
|
|
515,090
|
|
518,508
|
|
|
527,531
|
|
530,066
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Earnings Per Share of Common Stock
(dollars)
|
$
|
11.87
|
|
11.80
|
|
|
9.90
|
|
9.85
|
|
|
2.94
|
|
2.92
|
|
|
Millions of Dollars
|
|||||
|
2018
|
|
|
2017
|
|
|
Phillips 66
|
|
|
|
|||
4.300% Senior Notes due April 2022
|
$
|
2,000
|
|
|
2,000
|
|
3.900% Senior Notes due March 2028
|
800
|
|
|
—
|
|
|
4.650% Senior Notes due November 2034
|
1,000
|
|
|
1,000
|
|
|
5.875% Senior Notes due May 2042
|
1,500
|
|
|
1,500
|
|
|
4.875% Senior Notes due November 2044
|
1,700
|
|
|
1,500
|
|
|
Floating-rate notes due April 2019 at 2.009% at year-end 2017
|
—
|
|
|
300
|
|
|
Floating-rate notes due April 2020 at 3.186% and 2.109% at year-end 2018 and 2017, respectively
|
300
|
|
|
300
|
|
|
Term loan due April 2020 at 3.422% and 2.469% at year-end 2018 and 2017, respectively
|
200
|
|
|
450
|
|
|
Floating-rate Senior Notes due February 2021 at 3.289% at year-end 2018
|
500
|
|
|
—
|
|
|
Other
|
1
|
|
|
1
|
|
|
|
|
|
|
|||
Phillips 66 Partners
|
|
|
|
|||
2.646% Senior Notes due February 2020
|
300
|
|
|
300
|
|
|
3.605% Senior Notes due February 2025
|
500
|
|
|
500
|
|
|
3.550% Senior Notes due October 2026
|
500
|
|
|
500
|
|
|
3.750% Senior Notes due March 2028
|
500
|
|
|
500
|
|
|
4.680% Senior Notes due February 2045
|
450
|
|
|
450
|
|
|
4.900% Senior Notes due October 2046
|
625
|
|
|
625
|
|
|
Tax-exempt bonds due April 2020 and April 2021 at 1.885% and 1.935% at year-end 2018 and 2017, respectively
|
75
|
|
|
100
|
|
|
Revolving credit facility due January 2019 and October 2021 at weighted-average rate of 3.669% at year-end 2018
|
125
|
|
|
—
|
|
|
Debt at face value
|
11,076
|
|
|
10,026
|
|
|
Capitalized leases
|
184
|
|
|
192
|
|
|
Net unamortized discounts and debt issuance costs
|
(100
|
)
|
|
(108
|
)
|
|
Total debt
|
11,160
|
|
|
10,110
|
|
|
Short-term debt
|
(67
|
)
|
|
(41
|
)
|
|
Long-term debt
|
$
|
11,093
|
|
|
10,069
|
|
•
|
$500 million
of floating-rate Senior Notes due February 2021. Interest on these notes is equal to the three-month London Interbank Offered Rate (LIBOR) plus
0.60%
per annum and is payable quarterly in arrears on February 26, May 26, August 26 and November 26, beginning on May 29, 2018.
|
•
|
$800 million
of
3.900%
Senior Notes due March 2028. Interest on these notes is payable semiannually on March 15 and September 15 of each year, beginning on September 15, 2018.
|
•
|
An additional
$200 million
of our
4.875%
Senior Notes due November 2044. Interest on these notes is payable semiannually on May 15 and November 15 of each year, beginning on May 15, 2018.
|
|
Millions of Dollars
|
|||||||||||||||||
|
December 31, 2018
|
|
December 31, 2017
|
|||||||||||||||
|
Commodity Derivatives
|
Effect of Collateral Netting
|
|
Net Carrying Value Presented on the Balance Sheet
|
|
|
Commodity Derivatives
|
Effect of Collateral Netting
|
|
Net Carrying Value Presented on the Balance Sheet
|
|
|||||||
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|||||||||
Prepaid expenses and other current assets
|
$
|
1,257
|
|
(1,070
|
)
|
(89
|
)
|
98
|
|
|
43
|
|
(19
|
)
|
—
|
|
24
|
|
Other assets
|
2
|
|
—
|
|
—
|
|
2
|
|
|
7
|
|
(3
|
)
|
—
|
|
4
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other accruals
|
—
|
|
(23
|
)
|
—
|
|
(23
|
)
|
|
699
|
|
(746
|
)
|
21
|
|
(26
|
)
|
|
Other liabilities and deferred credits
|
5
|
|
(7
|
)
|
—
|
|
(2
|
)
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
Total
|
$
|
1,264
|
|
(1,100
|
)
|
(89
|
)
|
75
|
|
|
749
|
|
(769
|
)
|
21
|
|
1
|
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Sales and other operating revenues
|
$
|
192
|
|
|
(247
|
)
|
|
(451
|
)
|
Other income
|
(15
|
)
|
|
27
|
|
|
29
|
|
|
Purchased crude oil and products
|
(64
|
)
|
|
(18
|
)
|
|
(62
|
)
|
|
Net gain (loss) from commodity derivative activity
|
$
|
113
|
|
|
(238
|
)
|
|
(484
|
)
|
|
Open Position
Long / (Short)
|
||||
|
2018
|
|
|
2017
|
|
Commodity
|
|
|
|
||
Crude oil, refined petroleum products and NGL
(millions of barrels)
|
(17
|
)
|
|
(11
|
)
|
•
|
Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.
|
•
|
Level 2: Fair value measured either with: (1) adjusted quoted prices from an active market for similar assets or liabilities; or (2) other valuation inputs that are directly or indirectly observable.
|
•
|
Level 3: Fair value measured with unobservable inputs that are significant to the measurement.
|
•
|
Cash and cash equivalents
—The carrying amount reported on our consolidated balance sheet approximates fair value.
|
•
|
Accounts and notes receivable
—
The carrying amount reported on our consolidated balance sheet approximates fair value.
|
•
|
Derivative instruments
—We fair value our exchange-traded contracts based on quoted market prices obtained from the New York Mercantile Exchange, the Intercontinental Exchange or other exchanges, and classify them as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity, or are valued using either adjusted exchange-provided prices or non-exchange quotes, we classify those contracts as Level 2.
|
•
|
Rabbi trust assets
—These deferred compensation investments are measured at fair value using unadjusted quoted prices available from national securities exchanges and are therefore categorized as Level 1 in the fair value hierarchy.
|
•
|
Debt
—The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated based on observable market prices.
|
|
Millions of Dollars
|
|||||||||||||||||||
|
December 31, 2018
|
|||||||||||||||||||
|
Fair Value Hierarchy
|
|
Total Fair Value of Gross Assets & Liabilities
|
|
Effect of Counterparty Netting
|
|
Effect of Collateral Netting
|
|
Difference in Carrying Value and Fair Value
|
|
Net Carrying Value Presented on the Balance Sheet
|
|
||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||||||||||
Commodity Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Exchange-cleared instruments
|
$
|
674
|
|
|
547
|
|
|
—
|
|
|
1,221
|
|
(1,075
|
)
|
(89
|
)
|
—
|
|
57
|
|
Physical forward contracts
|
—
|
|
|
39
|
|
|
4
|
|
|
43
|
|
—
|
|
—
|
|
—
|
|
43
|
|
|
Interest rate derivatives
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
—
|
|
—
|
|
—
|
|
15
|
|
|
Rabbi trust assets
|
104
|
|
|
—
|
|
|
—
|
|
|
104
|
|
N/A
|
|
N/A
|
|
—
|
|
104
|
|
|
|
$
|
778
|
|
|
601
|
|
|
4
|
|
|
1,383
|
|
(1,075
|
)
|
(89
|
)
|
—
|
|
219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Exchange-cleared instruments
|
$
|
605
|
|
|
472
|
|
|
—
|
|
|
1,077
|
|
(1,075
|
)
|
—
|
|
—
|
|
2
|
|
Physical forward contracts
|
—
|
|
|
20
|
|
|
—
|
|
|
20
|
|
—
|
|
—
|
|
—
|
|
20
|
|
|
OTC instruments
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
|
Floating-rate debt
|
—
|
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
N/A
|
|
N/A
|
|
—
|
|
1,200
|
|
|
Fixed-rate debt, excluding capital leases
|
—
|
|
|
9,727
|
|
|
—
|
|
|
9,727
|
|
N/A
|
|
N/A
|
|
49
|
|
9,776
|
|
|
|
$
|
605
|
|
|
11,422
|
|
|
—
|
|
|
12,027
|
|
(1,075
|
)
|
—
|
|
49
|
|
11,001
|
|
|
Millions of Dollars
|
|||||||||||||||||||
|
December 31, 2017
|
|||||||||||||||||||
|
Fair Value Hierarchy
|
|
Total Fair Value of Gross Assets & Liabilities
|
|
Effect of Counterparty Netting
|
|
Effect of Collateral Netting
|
|
Difference in Carrying Value and Fair Value
|
|
Net Carrying Value Presented on the Balance Sheet
|
|
||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|||||||||||
Commodity Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Exchange-cleared instruments
|
$
|
333
|
|
|
395
|
|
|
—
|
|
|
728
|
|
(721
|
)
|
—
|
|
—
|
|
7
|
|
Physical forward contracts
|
—
|
|
|
20
|
|
|
1
|
|
|
21
|
|
—
|
|
—
|
|
—
|
|
21
|
|
|
Interest rate derivatives
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
—
|
|
—
|
|
—
|
|
14
|
|
|
Rabbi trust assets
|
112
|
|
|
—
|
|
|
—
|
|
|
112
|
|
N/A
|
|
N/A
|
|
—
|
|
112
|
|
|
|
$
|
445
|
|
|
429
|
|
|
1
|
|
|
875
|
|
(721
|
)
|
—
|
|
—
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Exchange-cleared instruments
|
$
|
369
|
|
|
373
|
|
|
—
|
|
|
742
|
|
(721
|
)
|
(21
|
)
|
—
|
|
—
|
|
Physical forward contracts
|
—
|
|
|
23
|
|
|
4
|
|
|
27
|
|
—
|
|
—
|
|
—
|
|
27
|
|
|
Floating-rate debt
|
—
|
|
|
1,150
|
|
|
—
|
|
|
1,150
|
|
N/A
|
|
N/A
|
|
—
|
|
1,150
|
|
|
Fixed-rate debt, excluding capital leases
|
—
|
|
|
9,746
|
|
|
—
|
|
|
9,746
|
|
N/A
|
|
N/A
|
|
(978
|
)
|
8,768
|
|
|
|
$
|
369
|
|
|
11,292
|
|
|
4
|
|
|
11,665
|
|
(721
|
)
|
(21
|
)
|
(978
|
)
|
9,945
|
|
|
Millions of Dollars
|
|||||
|
Capital Lease Obligations
|
|
|
Operating Lease Obligations
|
|
|
|
|
|
|
|||
2019
|
$
|
23
|
|
|
509
|
|
2020
|
19
|
|
|
392
|
|
|
2021
|
18
|
|
|
181
|
|
|
2022
|
16
|
|
|
124
|
|
|
2023
|
16
|
|
|
83
|
|
|
Remaining years
|
138
|
|
|
292
|
|
|
Total
|
230
|
|
|
1,581
|
|
|
Less: income from subleases
|
—
|
|
|
38
|
|
|
Net minimum lease payments
|
$
|
230
|
|
|
1,543
|
|
Less: amount representing interest
|
46
|
|
|
|
||
Capital lease obligations
|
$
|
184
|
|
|
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Minimum rentals
|
$
|
669
|
|
|
680
|
|
|
669
|
|
Contingent rentals
|
5
|
|
|
6
|
|
|
6
|
|
|
Less: sublease rental income
|
71
|
|
|
73
|
|
|
95
|
|
|
|
$
|
603
|
|
|
613
|
|
|
580
|
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
|||||||||
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
|
|
|
|||
Change in Benefit Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Benefit obligations at January 1
|
$
|
3,043
|
|
|
1,209
|
|
|
2,881
|
|
|
1,055
|
|
|
232
|
|
|
225
|
|
Service cost
|
136
|
|
|
29
|
|
|
132
|
|
|
32
|
|
|
6
|
|
|
6
|
|
|
Interest cost
|
104
|
|
|
28
|
|
|
108
|
|
|
27
|
|
|
7
|
|
|
8
|
|
|
Plan participant contributions
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
3
|
|
|
Net actuarial loss (gain)
|
(167
|
)
|
|
(165
|
)
|
|
267
|
|
|
(5
|
)
|
|
(9
|
)
|
|
6
|
|
|
Benefits paid
|
(386
|
)
|
|
(27
|
)
|
|
(345
|
)
|
|
(20
|
)
|
|
(20
|
)
|
|
(16
|
)
|
|
Curtailment gain
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Foreign currency exchange rate change
|
—
|
|
|
(64
|
)
|
|
—
|
|
|
118
|
|
|
—
|
|
|
—
|
|
|
Benefit obligations at December 31
|
$
|
2,730
|
|
|
1,007
|
|
|
3,043
|
|
|
1,209
|
|
|
220
|
|
|
232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Change in Fair Value of Plan Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fair value of plan assets at January 1
|
$
|
2,751
|
|
|
972
|
|
|
2,274
|
|
|
796
|
|
|
—
|
|
|
—
|
|
Actual return on plan assets
|
(122
|
)
|
|
(29
|
)
|
|
399
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
Company contributions
|
134
|
|
|
34
|
|
|
423
|
|
|
35
|
|
|
16
|
|
|
13
|
|
|
Plan participant contributions
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
3
|
|
|
Benefits paid
|
(386
|
)
|
|
(27
|
)
|
|
(345
|
)
|
|
(20
|
)
|
|
(20
|
)
|
|
(16
|
)
|
|
Foreign currency exchange rate change
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
Fair value of plan assets at December 31
|
$
|
2,377
|
|
|
902
|
|
|
2,751
|
|
|
972
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Funded Status at December 31
|
$
|
(353
|
)
|
|
(105
|
)
|
|
(292
|
)
|
|
(237
|
)
|
|
(220
|
)
|
|
(232
|
)
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
|||||||||
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
|
|
|
|||
Amounts Recognized in the Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Noncurrent assets
|
$
|
—
|
|
|
78
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Current liabilities
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(16
|
)
|
|
(16
|
)
|
|
Noncurrent liabilities
|
(328
|
)
|
|
(183
|
)
|
|
(267
|
)
|
|
(237
|
)
|
|
(204
|
)
|
|
(216
|
)
|
|
Total recognized
|
$
|
(353
|
)
|
|
(105
|
)
|
|
(292
|
)
|
|
(237
|
)
|
|
(220
|
)
|
|
(232
|
)
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
|||||||||
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Unrecognized net actuarial loss (gain)
|
$
|
539
|
|
|
64
|
|
|
545
|
|
|
190
|
|
|
(8
|
)
|
|
1
|
|
Unrecognized prior service credit
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(4
|
)
|
|
(6
|
)
|
|
(7
|
)
|
|
Millions of Dollars
|
|||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
|||||||||
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
|
|
|
|||
Sources of Change in Other Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net actuarial gain (loss) arising during the period
|
$
|
(125
|
)
|
|
102
|
|
|
(14
|
)
|
|
14
|
|
|
9
|
|
|
(6
|
)
|
Curtailment gain
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Amortization of net actuarial loss and settlements included in income
|
131
|
|
|
19
|
|
|
153
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
Net change in unrecognized net actuarial loss (gain) during the period
|
$
|
6
|
|
|
126
|
|
|
139
|
|
|
37
|
|
|
9
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Prior service cost (credit) arising during the period
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of prior service cost (credit) included in income
|
—
|
|
|
(1
|
)
|
|
3
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
Net change in unrecognized prior service cost (credit) during the period
|
$
|
—
|
|
|
(1
|
)
|
|
3
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
Millions of Dollars
|
|||||||||||
|
Pension Benefits
|
|||||||||||
|
2018
|
|
2017
|
|||||||||
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
|
|
|
|
|
|
|
|
|||||
Accumulated benefit obligations
|
$
|
123
|
|
|
345
|
|
|
143
|
|
|
368
|
|
Fair value of plan assets
|
—
|
|
|
182
|
|
|
—
|
|
|
196
|
|
|
Millions of Dollars
|
|||||||||||
|
Pension Benefits
|
|||||||||||
|
2018
|
|
2017
|
|||||||||
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
|
|
|
|
|
|
|
|
|||||
Projected benefit obligations
|
$
|
2,730
|
|
|
365
|
|
|
3,043
|
|
|
1,209
|
|
Fair value of plan assets
|
2,377
|
|
|
182
|
|
|
2,751
|
|
|
972
|
|
|
Millions of Dollars
|
||||||||||||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||||||||||||
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
|
|
|
|
|
||||
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service cost
|
$
|
136
|
|
|
29
|
|
|
132
|
|
|
32
|
|
|
127
|
|
|
32
|
|
|
6
|
|
|
6
|
|
|
7
|
|
Interest cost
|
104
|
|
|
28
|
|
|
108
|
|
|
27
|
|
|
116
|
|
|
28
|
|
|
7
|
|
|
8
|
|
|
8
|
|
|
Expected return on plan assets
|
(169
|
)
|
|
(46
|
)
|
|
(146
|
)
|
|
(40
|
)
|
|
(128
|
)
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Amortization of prior service cost (credit)
|
—
|
|
|
(1
|
)
|
|
3
|
|
|
(1
|
)
|
|
3
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
Amortization of net actuarial loss
|
59
|
|
|
19
|
|
|
70
|
|
|
23
|
|
|
72
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Settlements
|
72
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total net periodic benefit cost*
|
$
|
202
|
|
|
29
|
|
|
250
|
|
|
41
|
|
|
198
|
|
|
35
|
|
|
12
|
|
|
12
|
|
|
14
|
|
|
Pension Benefits
|
|
Other Benefits
|
|||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
U.S.
|
|
|
Int’l.
|
|
U.S.
|
|
Int’l.
|
|
|
|
|
Assumptions Used to Determine Benefit Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
4.30
|
%
|
|
2.59
|
|
3.60
|
|
2.36
|
|
4.15
|
|
3.35
|
Rate of compensation increase
|
4.00
|
|
|
3.34
|
|
4.00
|
|
3.74
|
|
—
|
|
—
|
Interest crediting rate on cash balance plan
|
3.25
|
|
|
—
|
|
3.00
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions Used to Determine Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
3.60
|
%
|
|
2.36
|
|
3.95
|
|
2.46
|
|
3.35
|
|
3.65
|
Expected return on plan assets
|
6.50
|
|
|
4.78
|
|
6.75
|
|
4.74
|
|
—
|
|
—
|
Rate of compensation increase
|
4.00
|
|
|
3.74
|
|
4.00
|
|
3.78
|
|
—
|
|
—
|
Interest crediting rate on cash balance plan
|
3.00
|
|
|
—
|
|
3.55
|
|
—
|
|
—
|
|
—
|
•
|
Fair values of equity securities and government debt securities are based on quoted market prices.
|
•
|
Fair values of corporate debt securities 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 value is calculated by pricing models that benchmark the security against other securities with actual market prices.
|
•
|
Fair values of mutual funds are valued based on quoted market prices, which represent the net asset value (NAV) of shares held.
|
•
|
Cash and cash equivalents are valued at cost, which approximates fair value.
|
•
|
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 investments in common/collective trusts and real estate funds are valued at NAV as a practical expedient. The NAV is based on the underlying net assets owned by the fund and the relative interest of each participating investor in the fair value of the underlying assets. These investments valued at NAV are not classified within the fair value hierarchy, but are presented in the fair value table to permit reconciliation of total plan assets to the amounts presented in the notes to consolidated financial statements.
|
|
Millions of Dollars
|
|||||||||||||||||||||||
|
U.S.
|
|
International
|
|||||||||||||||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity securities
|
$
|
421
|
|
|
—
|
|
|
—
|
|
|
421
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Government debt securities
|
610
|
|
|
—
|
|
|
—
|
|
|
610
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate debt securities
|
—
|
|
|
129
|
|
|
—
|
|
|
129
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and cash equivalents
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
Insurance contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|
Total assets in the fair value hierarchy
|
1,081
|
|
|
129
|
|
|
—
|
|
|
1,210
|
|
|
7
|
|
|
—
|
|
|
14
|
|
|
21
|
|
|
Common/collective trusts measured at NAV
|
|
|
|
|
|
|
1,048
|
|
|
|
|
|
|
|
|
873
|
|
|||||||
Real estate funds measured at NAV
|
|
|
|
|
|
|
119
|
|
|
|
|
|
|
|
|
8
|
|
|||||||
Total
|
$
|
1,081
|
|
|
129
|
|
|
—
|
|
|
2,377
|
|
|
7
|
|
|
—
|
|
|
14
|
|
|
902
|
|
|
Millions of Dollars
|
|||||||||||||||||||||||
|
U.S.
|
|
International
|
|||||||||||||||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity securities
|
$
|
589
|
|
|
—
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Government debt securities
|
632
|
|
|
—
|
|
|
—
|
|
|
632
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Mutual funds
|
129
|
|
|
—
|
|
|
—
|
|
|
129
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and cash equivalents
|
90
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
Insurance contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|
Total assets in the fair value hierarchy
|
1,440
|
|
|
—
|
|
|
—
|
|
|
1,440
|
|
|
6
|
|
|
—
|
|
|
14
|
|
|
20
|
|
|
Common/collective trusts measured at NAV
|
|
|
|
|
|
|
1,311
|
|
|
|
|
|
|
|
|
944
|
|
|||||||
Real estate funds measured at NAV
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
8
|
|
|||||||
Total
|
$
|
1,440
|
|
|
—
|
|
|
—
|
|
|
2,751
|
|
|
6
|
|
|
—
|
|
|
14
|
|
|
972
|
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense
|
$
|
100
|
|
|
142
|
|
|
156
|
|
Income tax benefit
|
(45
|
)
|
|
(74
|
)
|
|
(59
|
)
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
||||||
|
Options
|
|
|
Weighted-
Average
Exercise Price
|
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
|
Aggregate
Intrinsic Value |
|
|||
|
|
|
|
|
|
|
|
|||||||
Outstanding at January 1, 2018
|
4,838,855
|
|
|
$
|
58.34
|
|
|
|
|
|
||||
Granted
|
650,000
|
|
|
94.85
|
|
|
$
|
20.69
|
|
|
|
|||
Forfeited
|
(49,027
|
)
|
|
89.93
|
|
|
|
|
|
|||||
Exercised
|
(687,020
|
)
|
|
57.61
|
|
|
|
|
$
|
37
|
|
|||
Outstanding at December 31, 2018
|
4,752,808
|
|
|
$
|
63.11
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Vested at December 31, 2018
|
3,941,271
|
|
|
$
|
57.79
|
|
|
|
|
$
|
109
|
|
||
|
|
|
|
|
|
|
|
|||||||
Exercisable at December 31, 2018
|
3,331,259
|
|
|
$
|
53.51
|
|
|
|
|
$
|
106
|
|
|
2018
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Risk-free interest rate
|
2.81
|
%
|
|
2.28
|
|
1.71
|
Dividend yield
|
2.80
|
%
|
|
2.90
|
|
3.00
|
Volatility factor
|
25.41
|
%
|
|
26.91
|
|
28.68
|
Expected life (years)
|
7.18
|
|
|
7.22
|
|
7.08
|
|
|
|
|
|
Millions of Dollars
|
|
||||
|
Stock Units
|
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
|
Total Fair Value
|
|
||
|
|
|
|
|
|
|||||
Outstanding at January 1, 2018
|
2,496,425
|
|
|
$
|
77.20
|
|
|
|
||
Granted
|
822,457
|
|
|
96.16
|
|
|
|
|||
Forfeited
|
(63,977
|
)
|
|
84.61
|
|
|
|
|||
Issued
|
(995,076
|
)
|
|
75.77
|
|
|
$
|
102
|
|
|
Outstanding at December 31, 2018
|
2,259,829
|
|
|
$
|
84.52
|
|
|
|
||
|
|
|
|
|
|
|||||
Not Vested at December 31, 2018
|
1,565,641
|
|
|
$
|
84.99
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
||||
|
Performance
Share Units
|
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
|
Total Fair Value
|
|
||
|
|
|
|
|
|
|||||
Outstanding at January 1, 2018
|
2,558,278
|
|
|
$
|
52.06
|
|
|
|
||
Granted
|
494,277
|
|
|
99.74
|
|
|
|
|||
Forfeited
|
(16,716
|
)
|
|
69.90
|
|
|
|
|||
Issued
|
(639,060
|
)
|
|
59.15
|
|
|
$
|
70
|
|
|
Cash settled
|
(494,277
|
)
|
|
99.74
|
|
|
49
|
|
||
Outstanding at December 31, 2018
|
1,902,502
|
|
|
$
|
49.52
|
|
|
|
||
|
|
|
|
|
|
|||||
Not Vested at December 31, 2018
|
153,236
|
|
|
$
|
65.59
|
|
|
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Income Tax Expense (Benefit)
|
|
|
|
|
|
||||
Federal
|
|
|
|
|
|
||||
Current
|
$
|
739
|
|
|
9
|
|
|
(105
|
)
|
Deferred
|
257
|
|
|
(1,960
|
)
|
|
645
|
|
|
Foreign
|
|
|
|
|
|
||||
Current
|
326
|
|
|
126
|
|
|
66
|
|
|
Deferred
|
53
|
|
|
3
|
|
|
(84
|
)
|
|
State and local
|
|
|
|
|
|
||||
Current
|
255
|
|
|
61
|
|
|
(24
|
)
|
|
Deferred
|
(58
|
)
|
|
68
|
|
|
49
|
|
|
|
$
|
1,572
|
|
|
(1,693
|
)
|
|
547
|
|
|
Millions of Dollars
|
|||||
|
2018
|
|
|
2017
|
|
|
Deferred Tax Liabilities
|
|
|
|
|||
Properties, plants and equipment, and intangibles
|
$
|
3,074
|
|
|
2,942
|
|
Investment in joint ventures
|
2,041
|
|
|
1,923
|
|
|
Investment in subsidiaries
|
602
|
|
|
594
|
|
|
Inventory
|
66
|
|
|
—
|
|
|
Other
|
14
|
|
|
18
|
|
|
Total deferred tax liabilities
|
5,797
|
|
|
5,477
|
|
|
|
|
|
|
|||
Deferred Tax Assets
|
|
|
|
|||
Benefit plan accruals
|
395
|
|
|
314
|
|
|
Asset retirement obligations and accrued environmental costs
|
109
|
|
|
121
|
|
|
Loss and credit carryforwards
|
59
|
|
|
96
|
|
|
Other financial accruals and deferrals
|
16
|
|
|
44
|
|
|
Inventory
|
—
|
|
|
10
|
|
|
Other
|
—
|
|
|
3
|
|
|
Total deferred tax assets
|
579
|
|
|
588
|
|
|
Less: valuation allowance
|
8
|
|
|
28
|
|
|
Net deferred tax assets
|
571
|
|
|
560
|
|
|
Net deferred tax liabilities
|
$
|
5,226
|
|
|
4,917
|
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Balance at January 1
|
$
|
34
|
|
|
70
|
|
|
82
|
|
Additions for tax positions of prior years
|
1
|
|
|
1
|
|
|
5
|
|
|
Reductions for tax positions of prior years
|
(2
|
)
|
|
(5
|
)
|
|
(17
|
)
|
|
Settlements
|
(10
|
)
|
|
(32
|
)
|
|
—
|
|
|
Balance at December 31
|
$
|
23
|
|
|
34
|
|
|
70
|
|
|
Millions of Dollars
|
|
Percentage of
Income Before Income Taxes
|
|||||||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
$
|
5,716
|
|
|
2,799
|
|
|
1,713
|
|
|
76.8
|
%
|
|
78.7
|
|
|
78.2
|
|
Foreign
|
1,729
|
|
|
756
|
|
|
478
|
|
|
23.2
|
|
|
21.3
|
|
|
21.8
|
|
|
|
$
|
7,445
|
|
|
3,555
|
|
|
2,191
|
|
|
100.0
|
%
|
|
100.0
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Federal statutory income tax
|
$
|
1,563
|
|
|
1,244
|
|
|
767
|
|
|
21.0
|
%
|
|
35.0
|
|
|
35.0
|
|
State income tax, net of federal benefit
|
155
|
|
|
79
|
|
|
12
|
|
|
2.1
|
|
|
2.2
|
|
|
0.6
|
|
|
Tax Cuts and Jobs Act
|
36
|
|
|
(2,721
|
)
|
|
—
|
|
|
0.5
|
|
|
(76.5
|
)
|
|
—
|
|
|
Foreign rate differential
|
(91
|
)
|
|
(210
|
)
|
|
(152
|
)
|
|
(1.2
|
)
|
|
(5.9
|
)
|
|
(6.9
|
)
|
|
Noncontrolling interests
|
(58
|
)
|
|
(46
|
)
|
|
(26
|
)
|
|
(0.8
|
)
|
|
(1.3
|
)
|
|
(1.2
|
)
|
|
Change in valuation allowance
|
(20
|
)
|
|
(4
|
)
|
|
(81
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
(3.7
|
)
|
|
Federal manufacturing deduction
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
Other
|
(13
|
)
|
|
(17
|
)
|
|
27
|
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|
1.2
|
|
|
|
$
|
1,572
|
|
|
(1,693
|
)
|
|
547
|
|
|
21.1
|
%
|
|
(47.6
|
)
|
|
25.0
|
|
|
Millions of Dollars
|
|||||||||||
|
Defined
Benefit
Plans
|
|
|
Foreign
Currency
Translation
|
|
|
Hedging
|
|
|
Accumulated
Other
Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|||||
December 31, 2015
|
$
|
(662
|
)
|
|
11
|
|
|
(2
|
)
|
|
(653
|
)
|
Other comprehensive income (loss) before reclassifications
|
(112
|
)
|
|
(296
|
)
|
|
5
|
|
|
(403
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss*
|
|
|
|
|
|
|
|
|||||
Amortization of defined benefit plan items**
|
|
|
|
|
|
|
|
|||||
Net actuarial loss, prior service cost (credit) and settlements
|
61
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
Net current period other comprehensive income (loss)
|
(51
|
)
|
|
(296
|
)
|
|
5
|
|
|
(342
|
)
|
|
December 31, 2016
|
(713
|
)
|
|
(285
|
)
|
|
3
|
|
|
(995
|
)
|
|
Other comprehensive income before reclassifications
|
3
|
|
|
259
|
|
|
4
|
|
|
266
|
|
|
Amounts reclassified from accumulated other comprehensive loss*
|
|
|
|
|
|
|
|
|||||
Amortization of defined benefit plan items**
|
|
|
|
|
|
|
|
|||||
Net actuarial loss, prior service cost (credit) and settlements
|
112
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
Net current period other comprehensive income
|
115
|
|
|
259
|
|
|
4
|
|
|
378
|
|
|
December 31, 2017
|
(598
|
)
|
|
(26
|
)
|
|
7
|
|
|
(617
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
14
|
|
|
(192
|
)
|
|
4
|
|
|
(174
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
|
|
|
|
|
|||||
Amortization of defined benefit plan items**
|
|
|
|
|
|
|
|
|||||
Net actuarial loss, prior service cost (credit) and settlements
|
112
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
Foreign currency translation
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
Hedging
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
Net current period other comprehensive income (loss)
|
126
|
|
|
(202
|
)
|
|
1
|
|
|
(75
|
)
|
|
December 31, 2018
|
$
|
(472
|
)
|
|
(228
|
)
|
|
8
|
|
|
(692
|
)
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Cash Payments (Receipts)
|
|
|
|
|
|
||||
Interest
|
$
|
465
|
|
|
421
|
|
|
311
|
|
Income taxes*
|
984
|
|
|
(257
|
)
|
|
(375
|
)
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
Operating revenues and other income (a)
|
$
|
3,514
|
|
|
2,596
|
|
|
2,174
|
|
Purchases (b)
|
12,755
|
|
|
10,468
|
|
|
8,109
|
|
|
Operating expenses and selling, general and
administrative expenses (c)
|
59
|
|
|
79
|
|
|
125
|
|
(a)
|
We sold NGL and other petrochemical feedstocks, along with solvents, to CPChem, gas oil and hydrogen feedstocks to Excel Paralubes (Excel), and refined petroleum products to OnCue. We also sold certain feedstocks and intermediate products to WRB and acted as agent for WRB in supplying crude oil and other feedstocks for a fee. In addition, we charged several of our affiliates, including CPChem, for the use of common facilities, such as steam generators, waste and water treaters and warehouse facilities.
|
(b)
|
We purchased crude oil, refined petroleum products and NGL from WRB and also acted as agent for WRB in distributing solvents. We also purchased natural gas and NGL from DCP Midstream and CPChem, as well as other feedstocks from various affiliates, for use in our refinery and fractionation processes. In addition, we purchased base oils and fuel products from Excel for use in our specialty and refining businesses. We paid NGL fractionation fees to CPChem. We also paid fees to various pipeline affiliates for transporting crude oil, refined petroleum products and NGL.
|
(c)
|
We paid utility and processing fees to various affiliates.
|
1)
|
Midstream—
Provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and NGL transportation, storage, processing and marketing services, mainly in the United States. The Midstream segment includes our master limited partnership (MLP), Phillips 66 Partners, as well as our
50 percent
equity investment in DCP Midstream.
|
2)
|
Chemicals—
Consists of our
50 percent
equity investment in CPChem, which manufactures and markets petrochemicals and plastics on a worldwide basis.
|
3)
|
Refining—
Refines crude oil and other feedstocks into petroleum products (such as gasoline, distillates and aviation fuels) at
13
refineries in the United States and Europe.
|
4)
|
Marketing and Specialties—
Purchases for resale and markets refined petroleum products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of specialty products, as well as power generation operations.
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Capital Expenditures and Investments
|
|
|
|
|
|
||||
Midstream
|
$
|
1,548
|
|
|
771
|
|
|
1,453
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
Refining
|
826
|
|
|
853
|
|
|
1,149
|
|
|
Marketing and Specialties
|
125
|
|
|
108
|
|
|
98
|
|
|
Corporate and Other
|
140
|
|
|
100
|
|
|
144
|
|
|
Consolidated capital expenditures and investments
|
$
|
2,639
|
|
|
1,832
|
|
|
2,844
|
|
|
Millions of Dollars
|
||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||
United States
|
$
|
34,587
|
|
|
33,457
|
|
|
32,619
|
|
United Kingdom
|
1,191
|
|
|
1,254
|
|
|
1,177
|
|
|
Germany
|
570
|
|
|
593
|
|
|
505
|
|
|
Other foreign countries
|
91
|
|
|
97
|
|
|
88
|
|
|
Worldwide consolidated
|
$
|
36,439
|
|
|
35,401
|
|
|
34,389
|
|
|
Millions of Dollars
|
|||||
|
December 31
2018 |
|
|
December 31
2017 |
|
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
1
|
|
|
185
|
|
Equity investments*
|
2,448
|
|
|
1,932
|
|
|
Net properties, plants and equipment
|
3,052
|
|
|
2,918
|
|
|
Long-term debt
|
2,998
|
|
|
2,920
|
|
•
|
Net proceeds of
$737 million
from a private placement of
13,819,791
perpetual convertible preferred units, at a price of
$54.27
per unit.
|
•
|
Net proceeds of
$295 million
from a private placement of
6,304,204
common units, at a price of
$47.59
per unit.
|
•
|
A portion of the
$643 million
of net proceeds from a public offering of
$650 million
of Senior Notes. See
Note 12—Debt
, for additional information on the Senior Notes.
|
•
|
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, 2018
|
||||||||||
Statement of Income
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Revenues and Other Income
|
|
|
|
|
|
||||||
Sales and other operating revenues
|
$
|
—
|
|
85,486
|
|
25,975
|
|
—
|
|
111,461
|
|
Equity in earnings of affiliates
|
5,918
|
|
4,030
|
|
747
|
|
(8,019
|
)
|
2,676
|
|
|
Net gain on dispositions
|
—
|
|
8
|
|
11
|
|
—
|
|
19
|
|
|
Other income
|
—
|
|
33
|
|
28
|
|
—
|
|
61
|
|
|
Intercompany revenues
|
—
|
|
3,493
|
|
14,085
|
|
(17,578
|
)
|
—
|
|
|
Total Revenues and Other Income
|
5,918
|
|
93,050
|
|
40,846
|
|
(25,597
|
)
|
114,217
|
|
|
|
|
|
|
|
|
||||||
Costs and Expenses
|
|
|
|
|
|
||||||
Purchased crude oil and products
|
—
|
|
79,559
|
|
35,563
|
|
(17,192
|
)
|
97,930
|
|
|
Operating expenses
|
—
|
|
3,769
|
|
1,193
|
|
(82
|
)
|
4,880
|
|
|
Selling, general and administrative expenses
|
7
|
|
1,297
|
|
383
|
|
(10
|
)
|
1,677
|
|
|
Depreciation and amortization
|
—
|
|
926
|
|
430
|
|
—
|
|
1,356
|
|
|
Impairments
|
—
|
|
3
|
|
5
|
|
—
|
|
8
|
|
|
Taxes other than income taxes
|
—
|
|
321
|
|
104
|
|
—
|
|
425
|
|
|
Accretion on discounted liabilities
|
—
|
|
18
|
|
5
|
|
—
|
|
23
|
|
|
Interest and debt expense
|
402
|
|
146
|
|
250
|
|
(294
|
)
|
504
|
|
|
Foreign currency transaction gains
|
—
|
|
—
|
|
(31
|
)
|
—
|
|
(31
|
)
|
|
Total Costs and Expenses
|
409
|
|
86,039
|
|
37,902
|
|
(17,578
|
)
|
106,772
|
|
|
Income before income taxes
|
5,509
|
|
7,011
|
|
2,944
|
|
(8,019
|
)
|
7,445
|
|
|
Income tax expense (benefit)
|
(86
|
)
|
1,093
|
|
565
|
|
—
|
|
1,572
|
|
|
Net Income
|
5,595
|
|
5,918
|
|
2,379
|
|
(8,019
|
)
|
5,873
|
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
278
|
|
—
|
|
278
|
|
|
Net Income Attributable to Phillips 66
|
$
|
5,595
|
|
5,918
|
|
2,101
|
|
(8,019
|
)
|
5,595
|
|
|
|
|
|
|
|
||||||
Comprehensive Income
|
$
|
5,520
|
|
5,843
|
|
2,291
|
|
(7,856
|
)
|
5,798
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2017
|
||||||||||
Statement of Income
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Revenues and Other Income
|
|
|
|
|
|
||||||
Sales and other operating revenues
|
$
|
—
|
|
74,640
|
|
27,714
|
|
—
|
|
102,354
|
|
Equity in earnings of affiliates
|
5,336
|
|
3,256
|
|
559
|
|
(7,419
|
)
|
1,732
|
|
|
Net gain on dispositions
|
—
|
|
1
|
|
14
|
|
—
|
|
15
|
|
|
Other income
|
3
|
|
471
|
|
47
|
|
—
|
|
521
|
|
|
Intercompany revenues
|
—
|
|
1,610
|
|
13,457
|
|
(15,067
|
)
|
—
|
|
|
Total Revenues and Other Income
|
5,339
|
|
79,978
|
|
41,791
|
|
(22,486
|
)
|
104,622
|
|
|
|
|
|
|
|
|
||||||
Costs and Expenses
|
|
|
|
|
|
||||||
Purchased crude oil and products
|
—
|
|
63,812
|
|
30,379
|
|
(14,782
|
)
|
79,409
|
|
|
Operating expenses
|
—
|
|
3,672
|
|
1,085
|
|
(58
|
)
|
4,699
|
|
|
Selling, general and administrative expenses
|
7
|
|
1,300
|
|
399
|
|
(11
|
)
|
1,695
|
|
|
Depreciation and amortization
|
—
|
|
892
|
|
426
|
|
—
|
|
1,318
|
|
|
Impairments
|
—
|
|
20
|
|
4
|
|
—
|
|
24
|
|
|
Taxes other than income taxes
|
—
|
|
5,784
|
|
7,678
|
|
—
|
|
13,462
|
|
|
Accretion on discounted liabilities
|
—
|
|
17
|
|
5
|
|
—
|
|
22
|
|
|
Interest and debt expense
|
348
|
|
70
|
|
236
|
|
(216
|
)
|
438
|
|
|
Total Costs and Expenses
|
355
|
|
75,567
|
|
40,212
|
|
(15,067
|
)
|
101,067
|
|
|
Income before income taxes
|
4,984
|
|
4,411
|
|
1,579
|
|
(7,419
|
)
|
3,555
|
|
|
Income tax benefit
|
(122
|
)
|
(925
|
)
|
(646
|
)
|
—
|
|
(1,693
|
)
|
|
Net Income
|
5,106
|
|
5,336
|
|
2,225
|
|
(7,419
|
)
|
5,248
|
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
142
|
|
—
|
|
142
|
|
|
Net Income Attributable to Phillips 66
|
$
|
5,106
|
|
5,336
|
|
2,083
|
|
(7,419
|
)
|
5,106
|
|
|
|
|
|
|
|
||||||
Comprehensive Income
|
$
|
5,484
|
|
5,714
|
|
2,498
|
|
(8,070
|
)
|
5,626
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2016
|
||||||||||
Statement of Income
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Revenues and Other Income
|
|
|
|
|
|
||||||
Sales and other operating revenues
|
$
|
—
|
|
58,822
|
|
25,457
|
|
—
|
|
84,279
|
|
Equity in earnings of affiliates
|
1,797
|
|
1,839
|
|
296
|
|
(2,518
|
)
|
1,414
|
|
|
Net gain (loss) on dispositions
|
—
|
|
(9
|
)
|
19
|
|
—
|
|
10
|
|
|
Other income
|
—
|
|
42
|
|
32
|
|
—
|
|
74
|
|
|
Intercompany revenues
|
—
|
|
864
|
|
9,160
|
|
(10,024
|
)
|
—
|
|
|
Total Revenues and Other Income
|
1,797
|
|
61,558
|
|
34,964
|
|
(12,542
|
)
|
85,777
|
|
|
|
|
|
|
|
|
||||||
Costs and Expenses
|
|
|
|
|
|
||||||
Purchased crude oil and products
|
—
|
|
48,171
|
|
24,102
|
|
(9,805
|
)
|
62,468
|
|
|
Operating expenses
|
—
|
|
3,465
|
|
846
|
|
(36
|
)
|
4,275
|
|
|
Selling, general and administrative expenses
|
6
|
|
1,236
|
|
406
|
|
(10
|
)
|
1,638
|
|
|
Depreciation and amortization
|
—
|
|
821
|
|
347
|
|
—
|
|
1,168
|
|
|
Impairments
|
—
|
|
1
|
|
4
|
|
—
|
|
5
|
|
|
Taxes other than income taxes
|
—
|
|
5,477
|
|
8,211
|
|
—
|
|
13,688
|
|
|
Accretion on discounted liabilities
|
—
|
|
16
|
|
5
|
|
—
|
|
21
|
|
|
Interest and debt expense
|
366
|
|
21
|
|
124
|
|
(173
|
)
|
338
|
|
|
Foreign currency transaction gains
|
—
|
|
—
|
|
(15
|
)
|
—
|
|
(15
|
)
|
|
Total Costs and Expenses
|
372
|
|
59,208
|
|
34,030
|
|
(10,024
|
)
|
83,586
|
|
|
Income before income taxes
|
1,425
|
|
2,350
|
|
934
|
|
(2,518
|
)
|
2,191
|
|
|
Income tax expense (benefit)
|
(130
|
)
|
553
|
|
124
|
|
—
|
|
547
|
|
|
Net Income
|
1,555
|
|
1,797
|
|
810
|
|
(2,518
|
)
|
1,644
|
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
89
|
|
—
|
|
89
|
|
|
Net Income Attributable to Phillips 66
|
$
|
1,555
|
|
1,797
|
|
721
|
|
(2,518
|
)
|
1,555
|
|
|
|
|
|
|
|
||||||
Comprehensive Income
|
$
|
1,213
|
|
1,455
|
|
451
|
|
(1,817
|
)
|
1,302
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2018
|
||||||||||
Balance Sheet
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
—
|
|
1,648
|
|
1,371
|
|
—
|
|
3,019
|
|
Accounts and notes receivable
|
9
|
|
4,255
|
|
3,202
|
|
(1,293
|
)
|
6,173
|
|
|
Inventories
|
—
|
|
2,489
|
|
1,054
|
|
—
|
|
3,543
|
|
|
Prepaid expenses and other current assets
|
2
|
|
373
|
|
99
|
|
—
|
|
474
|
|
|
Total Current Assets
|
11
|
|
8,765
|
|
5,726
|
|
(1,293
|
)
|
13,209
|
|
|
Investments and long-term receivables
|
32,712
|
|
22,799
|
|
9,829
|
|
(50,919
|
)
|
14,421
|
|
|
Net properties, plants and equipment
|
—
|
|
13,218
|
|
8,800
|
|
—
|
|
22,018
|
|
|
Goodwill
|
—
|
|
2,853
|
|
417
|
|
—
|
|
3,270
|
|
|
Intangibles
|
—
|
|
726
|
|
143
|
|
—
|
|
869
|
|
|
Other assets
|
9
|
|
335
|
|
173
|
|
(2
|
)
|
515
|
|
|
Total Assets
|
$
|
32,732
|
|
48,696
|
|
25,088
|
|
(52,214
|
)
|
54,302
|
|
|
|
|
|
|
|
||||||
Liabilities and Equity
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
—
|
|
5,415
|
|
2,464
|
|
(1,293
|
)
|
6,586
|
|
Short-term debt
|
—
|
|
11
|
|
56
|
|
—
|
|
67
|
|
|
Accrued income and other taxes
|
—
|
|
458
|
|
658
|
|
—
|
|
1,116
|
|
|
Employee benefit obligations
|
—
|
|
663
|
|
61
|
|
—
|
|
724
|
|
|
Other accruals
|
66
|
|
227
|
|
149
|
|
—
|
|
442
|
|
|
Total Current Liabilities
|
66
|
|
6,774
|
|
3,388
|
|
(1,293
|
)
|
8,935
|
|
|
Long-term debt
|
7,928
|
|
54
|
|
3,111
|
|
—
|
|
11,093
|
|
|
Assets retirement obligations and accrued environmental costs
|
—
|
|
458
|
|
166
|
|
—
|
|
624
|
|
|
Deferred income taxes
|
1
|
|
3,541
|
|
1,735
|
|
(2
|
)
|
5,275
|
|
|
Employee benefit obligations
|
—
|
|
676
|
|
191
|
|
—
|
|
867
|
|
|
Other liabilities and deferred credits
|
55
|
|
4,611
|
|
4,287
|
|
(8,598
|
)
|
355
|
|
|
Total Liabilities
|
8,050
|
|
16,114
|
|
12,878
|
|
(9,893
|
)
|
27,149
|
|
|
Common stock
|
4,856
|
|
24,960
|
|
8,754
|
|
(33,714
|
)
|
4,856
|
|
|
Retained earnings
|
20,518
|
|
8,314
|
|
1,249
|
|
(9,592
|
)
|
20,489
|
|
|
Accumulated other comprehensive loss
|
(692
|
)
|
(692
|
)
|
(293
|
)
|
985
|
|
(692
|
)
|
|
Noncontrolling interests
|
—
|
|
—
|
|
2,500
|
|
—
|
|
2,500
|
|
|
Total Liabilities and Equity
|
$
|
32,732
|
|
48,696
|
|
25,088
|
|
(52,214
|
)
|
54,302
|
|
|
Millions of Dollars
|
||||||||||
|
Year Ended December 31, 2017
|
||||||||||
Balance Sheet
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
|
Assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
—
|
|
1,411
|
|
1,708
|
|
—
|
|
3,119
|
|
Accounts and notes receivable
|
10
|
|
5,317
|
|
4,476
|
|
(2,297
|
)
|
7,506
|
|
|
Inventories
|
—
|
|
2,386
|
|
1,009
|
|
—
|
|
3,395
|
|
|
Prepaid expenses and other current assets
|
2
|
|
276
|
|
92
|
|
—
|
|
370
|
|
|
Total Current Assets
|
12
|
|
9,390
|
|
7,285
|
|
(2,297
|
)
|
14,390
|
|
|
Investments and long-term receivables
|
32,125
|
|
23,483
|
|
9,959
|
|
(51,626
|
)
|
13,941
|
|
|
Net properties, plants and equipment
|
—
|
|
13,117
|
|
8,343
|
|
—
|
|
21,460
|
|
|
Goodwill
|
—
|
|
2,853
|
|
417
|
|
—
|
|
3,270
|
|
|
Intangibles
|
—
|
|
722
|
|
154
|
|
—
|
|
876
|
|
|
Other assets
|
12
|
|
266
|
|
158
|
|
(2
|
)
|
434
|
|
|
Total Assets
|
$
|
32,149
|
|
49,831
|
|
26,316
|
|
(53,925
|
)
|
54,371
|
|
|
|
|
|
|
|
||||||
Liabilities and Equity
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
—
|
|
7,272
|
|
3,052
|
|
(2,297
|
)
|
8,027
|
|
Short-term debt
|
—
|
|
9
|
|
32
|
|
—
|
|
41
|
|
|
Accrued income and other taxes
|
—
|
|
451
|
|
551
|
|
—
|
|
1,002
|
|
|
Employee benefit obligations
|
—
|
|
513
|
|
69
|
|
—
|
|
582
|
|
|
Other accruals
|
55
|
|
298
|
|
102
|
|
—
|
|
455
|
|
|
Total Current Liabilities
|
55
|
|
8,543
|
|
3,806
|
|
(2,297
|
)
|
10,107
|
|
|
Long-term debt
|
6,972
|
|
50
|
|
3,047
|
|
—
|
|
10,069
|
|
|
Assets retirement obligations and accrued environmental costs
|
—
|
|
467
|
|
174
|
|
—
|
|
641
|
|
|
Deferred income taxes
|
—
|
|
3,349
|
|
1,661
|
|
(2
|
)
|
5,008
|
|
|
Employee benefit obligations
|
—
|
|
639
|
|
245
|
|
—
|
|
884
|
|
|
Other liabilities and deferred credits
|
8
|
|
4,700
|
|
3,814
|
|
(8,288
|
)
|
234
|
|
|
Total Liabilities
|
7,035
|
|
17,748
|
|
12,747
|
|
(10,587
|
)
|
26,943
|
|
|
Common stock
|
9,396
|
|
24,952
|
|
10,125
|
|
(35,077
|
)
|
9,396
|
|
|
Retained earnings
|
16,335
|
|
7,748
|
|
1,306
|
|
(9,083
|
)
|
16,306
|
|
|
Accumulated other comprehensive loss
|
(617
|
)
|
(617
|
)
|
(205
|
)
|
822
|
|
(617
|
)
|
|
Noncontrolling interests
|
—
|
|
—
|
|
2,343
|
|
—
|
|
2,343
|
|
|
Total Liabilities and Equity
|
$
|
32,149
|
|
49,831
|
|
26,316
|
|
(53,925
|
)
|
54,371
|
|
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
|
|
|||||||||
2018
|
|
|
|
|
|
|
|
|||||||
First
|
$
|
23,595
|
|
717
|
|
585
|
|
524
|
|
|
1.07
|
|
1.07
|
|
Second
|
28,980
|
|
1,835
|
|
1,404
|
|
1,339
|
|
|
2.86
|
|
2.84
|
|
|
Third
|
29,788
|
|
1,975
|
|
1,568
|
|
1,492
|
|
|
3.20
|
|
3.18
|
|
|
Fourth
|
29,098
|
|
2,918
|
|
2,316
|
|
2,240
|
|
|
4.85
|
|
4.82
|
|
|
|
|
|
|
|
|
|
|
|||||||
2017
|
|
|
|
|
|
|
|
|||||||
First
|
$
|
22,894
|
|
797
|
|
563
|
|
535
|
|
|
1.02
|
|
1.02
|
|
Second
|
24,087
|
|
848
|
|
581
|
|
550
|
|
|
1.06
|
|
1.06
|
|
|
Third
|
25,627
|
|
1,256
|
|
849
|
|
823
|
|
|
1.60
|
|
1.60
|
|
|
Fourth**
|
29,746
|
|
654
|
|
3,255
|
|
3,198
|
|
|
6.29
|
|
6.25
|
|
(a)
|
1.
|
Financial Statements and Supplementary Data
The financial statements and supplementary information listed in the Index to Financial Statements, which appears on page 71, are filed as part of this Annual Report on Form 10-K.
|
|
|
|
|
2.
|
Financial Statement Schedules
All financial statement schedules are omitted because they are not required, not significant, not applicable, or the information is shown in the financial statements or notes thereto.
|
|
|
|
|
3.
|
Exhibits
The exhibits listed in the Index to Exhibits, which appears on pages 142 to 145, are filed as part of this Annual Report on Form 10-K.
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
Form
|
Exhibit
Number
|
|
Filing
Date
|
SEC
File No.
|
|
|
|
|
|
|
|
|
|
8-K
|
2.1
|
|
05/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
3.1
|
|
05/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
3.1
|
|
02/09/2017
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10
|
4.3
|
|
04/05/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
|
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the company has not filed with this Annual Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the company and its subsidiaries because the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the company and its subsidiaries on a consolidated basis. The company agrees to furnish a copy of such agreements to the Commission upon request.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
4.1
|
|
03/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.1
|
|
05/01/2014
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-K
|
10.3
|
|
02/20/2015
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-K
|
10.4
|
|
02/17/2017
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.14
|
|
08/03/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-K
|
10.6
|
|
02/23/2018
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.1
|
|
07/27/2018
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number |
|
Exhibit Description
|
Form
|
Exhibit
Number |
|
Filing
Date |
SEC
File No. |
|
|
|
|
|
|
|
|
|
10
|
10.12
|
|
03/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10
|
10.13
|
|
03/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10
|
10.14
|
|
03/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10
|
10.15
|
|
03/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10
|
10.16
|
|
03/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.1
|
|
10/30/2014
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
10.1
|
|
05/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
10.2
|
|
05/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
10.3
|
|
05/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
10.4
|
|
05/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.1
|
|
05/02/2013
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
10.5
|
|
05/01/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number |
|
Exhibit Description
|
Form
|
Exhibit
Number |
|
Filing
Date |
SEC
File No. |
|
|
|
|
|
|
|
|
|
DEF14A
|
App. A
|
|
03/27/2013
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.15
|
|
08/03/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-K
|
10.18
|
|
02/22/2013
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.1
|
|
07/29/2016
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.17
|
|
08/03/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.18
|
|
08/03/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.19
|
|
08/03/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-K
|
10.24
|
|
02/22/2013
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.20
|
|
08/03/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-K
|
10.26
|
|
02/22/2013
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-K
|
10.27
|
|
02/22/2013
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
8-K
|
10.1
|
|
11/08/2013
|
001-35349
|
||
|
|
|
|
|
|
|
|
|
10-Q
|
10.23
|
|
08/03/2012
|
001-35349
|
||
|
|
|
|
|
|
|
|
10.33
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
10.34
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
10.35
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
8-K
|
10.1
|
|
02/14/2018
|
001-35349
|
||
|
|
|
|
|
|
|
|
21
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
23.1
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
31.1
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number |
|
Exhibit Description
|
Form
|
Exhibit
Number |
|
Filing
Date |
SEC
File No. |
|
|
|
|
|
|
|
|
31.2
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
32
*
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
Date:
|
February 22, 2019
|
/s/ Greg C. Garland
|
|
|
Greg C. Garland
Chairman of the Board of Directors
and Chief Executive Officer
|
Signature
|
|
Title
|
|
|
|
|
|
|
|
|
|
/s/ Greg C. Garland
|
|
Chairman of the Board of Directors
|
Greg C. Garland
|
|
and Chief Executive Officer
|
|
|
(Principal executive officer)
|
|
|
|
|
|
|
/s/ Kevin J. Mitchell
|
|
Executive Vice President, Finance
|
Kevin J. Mitchell
|
|
and Chief Financial Officer
|
|
|
(Principal financial officer)
|
|
|
|
|
|
|
/s/ Chukwuemeka A. Oyolu
|
|
Vice President and Controller
|
Chukwuemeka A. Oyolu
|
|
(Principal accounting officer)
|
|
|
|
|
|
|
|
|
|
/s/ Gary K. Adams
|
|
Director
|
Gary K. Adams
|
|
|
|
|
|
|
|
|
/s/ J. Brian Ferguson
|
|
Director
|
J. Brian Ferguson
|
|
|
|
|
|
|
|
|
/s/ John E. Lowe
|
|
Director
|
John E. Lowe
|
|
|
|
|
|
|
|
|
/s/ Harold W. McGraw III
|
|
Director
|
Harold W. McGraw III
|
|
|
|
|
|
|
|
|
/s/ Denise L. Ramos
|
|
Director
|
Denise L. Ramos
|
|
|
|
|
|
|
|
|
/s/ Glenn F. Tilton
|
|
Director
|
Glenn F. Tilton
|
|
|
|
|
|
|
|
|
/s/ Victoria J. Tschinkel
|
|
Director
|
Victoria J. Tschinkel
|
|
|
|
|
|
|
|
|
/s/ Marna C. Whittington
|
|
Director
|
Marna C. Whittington
|
|
|
Grant Date:
|
[•]
|
Grant Price:
|
[•]
|
Vesting Schedule:
|
One third on each anniversary date of grant in the first three years
|
•
|
Authorized Party
means the person who is authorized to approve an Award, exercise discretion, or take action under the Program pursuant to the Plan. With regard to the CEO and Senior Officers, the Committee is the Authorized Party. With regard to other Employees, the CEO is the Authorized Party, although the Committee may act concurrently as the Authorized Party.
|
•
|
Award
means cash, stock option, performance share unit, restricted stock unit or any other form of equity or cash pursuant to the Program’s applicable terms, conditions and limitations as the Authorized Party may provide in order to fulfill the objectives of the Program.
|
•
|
Award Agreement
means any written or electronic agreement setting forth, or incorporating by reference, the terms, conditions, and limitations applicable to an Award to a Participating Employee. An Award Agreement may be unilaterally issued by the Company and need not be executed or countersigned by the Participating Employee.
|
•
|
Board
means the Board of Directors of Phillips 66.
|
•
|
CEO
means the Chief Executive Officer of Phillips 66. Where applicable, CEO also refers to the person holding that title but acting as a Special Equity Award Committee pursuant to the authority granted by the Board.
|
•
|
Committee
means the Human Resources and Compensation Committee of the Board of Directors of the Company, or any successor committee to it.
|
•
|
Company
means Phillips 66, a Delaware Corporation.
|
•
|
Disability
means a disability for which the Employee in question has been determined to be entitled to either, (i) benefits under the applicable long-term disability plan of the Participating Company or (ii) disability benefits under the Social Security Act. In the absence of any determination, the Authorized Party may make a determination that the Employee has a Disability.
|
•
|
Eligible Employee
shall include Employees that meet the participation requirements for this Program. Being an Eligible Employee does not guarantee an Award.
|
•
|
Employee
shall include employees of Phillips 66 and its subsidiaries, as designated in the records of the Company and its subsidiaries.
|
•
|
Fair Market Value
means, as of a particular date, the mean between the highest and lowest sales price per share on the consolidated transaction reporting system for the principal national securities exchange on which shares are listed on that date rounded to 5 decimals, or, if there is no sale reported on that date, on the next preceding date on which a sale is reported or, at the discretion of the Committee, the price prevailing on the exchange at a designated time.
|
•
|
Grant Date
means the date the Award is granted.
|
•
|
Grant Price
is a simplified way of describing “Fair Market Value as of Grant Date”. It is the price at which Employees may exercise their right to receive cash or shares under the terms of an Award.
|
•
|
Layoff
means an applicable Termination due to layoff under the Phillips 66 Severance Pay Plan, Phillips 66 Executive Severance Plan, or the Phillips 66 Key Employee Change in Control Severance Plan, or layoff or redundancy under any similar layoff or redundancy plan which the Participating Company may adopt from time to time. If all or any portion of the benefits under the redundancy or layoff plan are contingent on the Employee’s signing a Release of Liability or covenant not to compete or both, the Termination shall not be considered as a “Layoff” for purposes of the Program unless the Employee executes and does not revoke a Release of Liability, a covenant not to compete, or both, acceptable to the Company, under the terms of the layoff or redundancy plan.
|
•
|
Participating Company
includes Phillips 66 and its 100% owned subsidiaries, including both those directly owned and those owned through subsidiaries, whose participation has been approved by the Authorized Party.
|
•
|
Participating Employee
shall include Eligible Employee receiving an Award under this Program. Being a Participating Employee does not guarantee a distribution.
|
•
|
Plan Administrator
means the Phillips 66 Employee internally responsible for the administration of Programs.
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•
|
Release of Liability
is a form provided to an Employee upon Layoff. Unless the Participating Employee executes and does not revoke the Release of Liability, the Participating Employee forfeits all Awards.
|
•
|
Retirement
means Termination at age 55 or older with a minimum of 5 years of service with a Participating Company; provided, however, that with regard to an Employee not on the United States payroll, the Authorized Party may approve the use of a different definition. Service is defined by the policies of the Participating Company.
|
•
|
Senior Officer
means all officers of the Company who report directly to the CEO, and all other officers of the Company who are a Senior Vice President and above, or who are reporting officers under Section 16 of the Securities Exchange Act of 1934.
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•
|
Shares
means shares of PSX common stock.
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•
|
Stock Option
means a right to purchase a specified number of Shares at a specified Grant Price pursuant to the applicable terms, conditions, and limitations established by the Authorized Party. Stock Options issued will be nonqualified, which means they can be issued to Employees or members of the Board.
|
•
|
Termination
means cessation of employment with the Participating Companies, determined in accordance with the policies and practices of the Participating Company for whom the Employee was last performing services.
|
•
|
Termination Date
is defined as the first date an Employee is no longer employed by and performing services for a Participating Company.
|
1.
|
The Committee, or to the extent authorized by the Committee, the CEO, or another designated individual or committee, shall have the right to terminate, suspend, withdraw, amend, or modify the Program in whole or in part at any time. The CEO shall review and approve this document and may amend it as necessary.
|
2.
|
Awards are 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 Participating 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. If the Authorized Party determines that, subsequent to the receipt of any Award, the Participating 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 Participating Company, the Authorized Party may cancel all or part of any or all Awards to that Participating Employee.
|
3.
|
Upon any change in the outstanding stock of the Company by reason of any stock dividend, stock split, reverse stock split, recapitalization, reclassification, or other similar changes, the Committee shall make corresponding adjustments, as appropriate.
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4.
|
In addition to the terms and conditions described, 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 the Award Agreement and as to findings of fact shall be final, conclusive, and binding.
|
5.
|
No provision of this document shall confer any right upon the Employee to continue employment with any Participating Company.
|
6.
|
The Award Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware.
|
7.
|
Without the consent of the Employee, the Award Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision which may be defective or inconsistent with any other provision, 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
|
1.
|
Death. If a Participating Employee dies while in the employ of a Participating Company, the Participating Employee’s rights to any Award will pass to the beneficiary on file with the third-party administrator, or in the absence of a designated beneficiary, to the executor or administrator of the estate of the Participating Employee. However, the Award will be subject to the terms and conditions that applied to the Participating Employee before their death. Rights cannot be assigned or transferred other than by will or the laws of descent and distribution. No transfer of an Award by the Participating Employee 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 any 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 the Award. In the
|
2.
|
Disability. If a Participating Employee terminates employment by reason of Disability and has Awards with restrictions, the Participating Employee shall retain all rights provided by the Award at the time of Termination.
|
3.
|
Layoff. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Layoff:
|
•
|
If
the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff prior to a date six months from Grant Date, the Award shall be canceled and all rights thereunder shall cease.
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff on or after six months from Grant Date, prior to a date one year from the Grant Date, and the Participating Employee completes the required Release of Liability, then the Participating Employee shall retain a prorated portion of the Award. The percent of the Award to be retained will be computed by multiplying the original number of Shares granted by a percentage. The calculation shall be rounded to the nearest whole share. If a Participating Employee is terminated by reason of Layoff, but meets the definition of Retirement, Retirement disposition prevails.
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff on or after one year from Grant Date and the Participating Employee completes the required Release of Liability, then the Participating Employee shall retain all rights provided by the Award at the time of the Termination.
|
4.
|
Retirement. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Retirement:
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Retirement prior to a date six months from Grant Date, the Award shall be canceled and all rights thereunder shall cease.
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Retirement on or after a date six months from Grant Date, the Participating Employee shall retain all rights provided by the Award at the time of Termination.
|
5.
|
If the Participating Employee Terminates for any reason other than death, Disability, Layoff, or Retirement, the Award shall be canceled and all rights thereunder shall cease; however, the Authorized Party may, in its sole discretion, determine that all or any portion of the Award shall not be cancelled due to Termination.
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6.
|
Leaves. Whether any leave of absence shall constitute Termination for the purposes of any Award granted under these Programs shall be determined by the Plan Administrator 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.
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7.
|
Divestiture, Outsourcing or Move to Joint Venture. If, after the date the Award is granted, a Participating Employee 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 the 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 the Participating Company to another employer outside of the controlled group of corporations (whether the Participating Employee is offered employment or accepts employment with the other employer), (d) the Termination of the Participating 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, or (e) any other sale of assets determined by the Authorized Party to be considered a divestiture under this Program, the Award shall be forfeited unless (i) the Authorized Party may, in its or his sole discretion, determine that all or a portion of any Award shall not be canceled or (ii) the Award is retained as a result of another provision of this Program.
|
8.
|
Transfer. Transfer of employment between Participating Companies shall not constitute Termination for the purpose of any Award granted under the Program.
|
9.
|
Change in Control. If a Change in Control occurs and the Participating Employee is Terminated, all restrictions applicable to any Award shall lapse and the Stock Options will remain exercisable for the rest of their term.
|
1.
|
Upon the vesting of restrictions, the Participating Employee can initiate exercising the Stock Options by contacting the third-party administrator designated by the Plan Administrator.
|
2.
|
In all cases, if a Participating Employee is subject to trading restrictions, authorization prior to exercising of Stock Options must be obtained by Senior Counsel SEC.
|
3.
|
Upon exercise the Participating Employee is responsible for paying the cost of the Shares at Grant Price, along with applicable taxes and fees (see Taxation of Distributions). The payment may be made in cash or by tendering Shares.
|
1.
|
Exercise of a Participating Employee’s Award will generally result in required tax withholding or expatriate hypothetical tax obligation. The Participating Employee is responsible for required withholding taxes associated with an exercise.
|
2.
|
The Company will generally withhold Shares for taxes to meet tax obligations. The value of the Shares withheld for this purpose shall not exceed the minimum withholding amount required by applicable laws and regulations. With the Plan Administrator’s approval, Participating Employees may request a different withholding rate.
|
3.
|
If the Participating Employee spent time as an expatriate outside of their home country the Participating Employee will be tax equalized, with the intent that the Participating Employee
|
4.
|
The Company may take appropriate measures to ensure that corrective actions related to withholding tax obligations are completed in a timely manner. The Plan Administrator will take steps, as it deems necessary or desirable for the withholding of any taxes that are required by laws or regulations of any governmental authority in connection with any distribution.
|
Grant Date:
|
[•]
|
Grant Price US/UK:
|
[•]
|
Grant Price Global:
|
[•]
|
Vesting Schedule:
|
Third Anniversary of Grant Date
|
•
|
Authorized Party
means the person who is authorized to approve an Award, exercise discretion, or take action under the Program pursuant to the Plan. With regard to the CEO and Senior Officers, the Committee is the Authorized Party. With regard to other Employees, the CEO is the Authorized Party, although the Committee may act concurrently as the Authorized Party.
|
•
|
Award
means cash, stock option, performance share unit, restricted stock unit or any other form of equity or cash pursuant to the Program’s applicable terms, conditions and limitations as the Authorized Party may provide in order to fulfill the objectives of the Program.
|
•
|
Award Agreement
means any written or electronic agreement setting forth, or incorporating by reference, the terms, conditions, and limitations applicable to an Award to a Participating Employee. An Award Agreement may be unilaterally issued by the Company and need not be executed or countersigned by the Participating Employee.
|
•
|
Board
means the Board of Directors of Phillips 66.
|
•
|
CEO
means the Chief Executive Officer of Phillips 66. Where applicable, CEO also refers to the person holding that title but acting as a Special Equity Award Committee pursuant to the authority granted by the Board.
|
•
|
Committee
means the Human Resources and Compensation Committee of the Board of Directors of the Company, or any successor committee to it.
|
•
|
Company
means Phillips 66, a Delaware Corporation.
|
•
|
Disability
means a disability for which the Employee in question has been determined to be entitled to either, (i) benefits under the applicable long-term disability plan of the Participating Company or (ii) disability benefits under the Social Security Act. In the absence of any determination, the Authorized Party may make a determination that the Employee has a Disability.
|
•
|
Dividend Equivalents
means, with respect to Restricted Stock Units, an amount equal to ordinary dividends that are payable to stockholders of record during the Restriction Period on a like number of Shares.
|
•
|
Eligible Employee
shall include Employees that meet the participation requirements for this Program. Being an Eligible Employee does not guarantee an Award.
|
•
|
Employee
shall include employees of Phillips 66 and its subsidiaries, as designated in the records of the Company and its subsidiaries.
|
•
|
Fair Market Value
means, as of a particular date, the mean between the highest and lowest sales price per share on the consolidated transaction reporting system for the principal national securities exchange on which shares are listed on that date rounded to 5 decimals, or, if there is no sale reported on that date, on the next preceding date on which a sale is reported or, at the discretion of the Committee, the price prevailing on the exchange at a designated time.
|
•
|
Grant Date
means the date the Award is granted.
|
•
|
Layoff
means an applicable Termination due to layoff under the Phillips 66 Severance Pay Plan, Phillips 66 Executive Severance Plan, or the Phillips 66 Key Employee Change in Control Severance Plan, or layoff or redundancy under any similar layoff or redundancy plan which the Participating Company may adopt from time to time. If all or any portion of the benefits under the redundancy or layoff plan are contingent on the Employee’s signing a Release of Liability or covenant not to compete or both, the Termination shall not be considered as a “Layoff” for purposes of the Program unless the Employee executes and does not revoke a Release of Liability, a covenant not to compete, or both, acceptable to the Company, under the terms of the layoff or redundancy plan. To be considered a “Layoff” under this Program, a Termination must also be considered a Separation from Service.
|
•
|
Participating Company
includes Phillips 66 and its 100% owned subsidiaries, including both those directly owned and those owned through subsidiaries, whose participation has been approved by the Authorized Party.
|
•
|
Participating Employee
shall include Eligible Employee receiving an Award under this Program. Being a Participating Employee does not guarantee a distribution.
|
•
|
Plan Administrator
means the Phillips 66 Employee internally responsible for the administration of Programs.
|
•
|
Release of Liability
is a form provided to an Employee upon Layoff. Unless the Participating Employee executes and does not revoke the Release of Liability, the Participating Employee forfeits all Awards.
|
•
|
Restricted Stock Unit
means a unit equal to one Share that is subject to forfeiture provisions or that has certain restrictions attached to the ownership thereof. Restricted Stock Units do not have any voting rights or other rights generally associated with Shares, and are merely an obligation of the Company to register stock in accordance with the terms and conditions applicable to the Restricted Stock Units.
|
•
|
Retirement
means Termination at age 55 or older with a minimum of 5 years of service with a Participating Company; provided, however, that with regard to an Employee not on the United States payroll, the Authorized Party may approve the use of a different definition. Service is defined by the policies of the Participating Company.
|
•
|
Salary Grade
means a classification level for Employees under the practices of the Participating Company.
|
•
|
Senior Officer
means all officers of the Company who report directly to the CEO, and all other officers of the Company who are a Senior Vice President and above, or who are reporting officers under Section 16 of the Securities Exchange Act of 1934.
|
•
|
Separation from Service
means “separation from service” as that term is used in section 409A of the Internal Revenue Code.
|
•
|
Shares
means shares of PSX common stock.
|
•
|
Termination
means cessation of employment with the Participating Companies, determined in accordance with the policies and practices of the Participating Company for whom the Employee was last performing services.
|
•
|
Termination Date
is defined as the first date an Employee is no longer employed by and performing services for a Participating Company.
|
1.
|
The Committee, or to the extent authorized by the Committee, the CEO, or another designated individual or committee, shall have the right to terminate, suspend, withdraw, amend, or modify the Program in whole or in part at any time. The CEO shall review and approve this document and may amend it as necessary.
|
2.
|
Awards are 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 Participating 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. If the Authorized Party determines that, subsequent to the receipt of any Award, the Participating 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 Participating Company, the Authorized Party may cancel all or part of any or all Awards to that Participating Employee.
|
3.
|
Upon any change in the outstanding stock of the Company by reason of any stock dividend, stock split, reverse stock split, recapitalization, reclassification, or other similar changes, the Committee shall make corresponding adjustments, as appropriate.
|
4.
|
In addition to the terms and conditions described, 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 the Award Agreement and as to findings of fact shall be final, conclusive, and binding.
|
5.
|
No provision of this document shall confer any right upon the Employee to continue employment with any Participating Company.
|
6.
|
The Award Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware.
|
7.
|
Without the consent of the Employee, the Award Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision which may be defective or inconsistent with any other provision, 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 the Award 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 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 the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities or tax laws.
|
1.
|
Death. If a Participating Employee dies while in the employ of a Participating Company, the Participating Employee’s rights to any Award will pass to the beneficiary on file with the third-party administrator, or in the absence of a designated beneficiary, to the executor or administrator of the estate of the Participating Employee. However, the Award will be subject to the terms and conditions that applied to the Participating Employee before their death. Rights cannot be assigned or transferred other than by will or the laws of descent and
|
2.
|
Disability. If a Participating Employee terminates employment by reason of Disability and has Awards with restrictions, the Participating Employee shall retain all rights provided by the Award at the time of Termination.
|
3.
|
Layoff. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Layoff:
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff prior to a date six months from Grant Date, the Award shall be canceled and all rights thereunder shall cease.
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff on or after six months from Grant Date, prior to a date one year from the Grant Date, and the Participating Employee completes the required Release of Liability, then the Participating Employee shall retain a prorated portion of the Award. The percent of the Award to be retained will be computed by multiplying the original number of Shares granted by a percentage. The calculation shall be rounded down to the nearest whole share. If a Participating Employee is terminated by reason of Layoff, but meets the definition of Retirement, Retirement disposition prevails.
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff on or after one year from Grant Date and the Participating Employee completes the required Release of Liability, then the Participating Employee shall retain all rights provided by the Award at the time of the Termination.
|
•
|
In the case of Layoff, if a Participating Employee is eligible to retain an Award, the Fair Market Value will be determined as of:
|
◦
|
For US employees, the eighth day following the signed date of the Release of Liability.
|
◦
|
For UK, Canada, Singapore, and Austria employees, Termination Date.
|
4.
|
Retirement. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Retirement:
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Retirement prior to a date six months from Grant Date, the Award shall be canceled and all rights thereunder shall cease.
|
•
|
If the Participating Employee’s employment with a Participating Company is terminated by reason of Retirement on or after a date six months from Grant Date, the Participating Employee shall retain all rights provided by the Award at the time of the Termination.
|
5.
|
If the Participating Employee Terminates for any reason other than death, Disability, Layoff, or Retirement, the Award shall be canceled and all rights thereunder shall cease; however, the
|
6.
|
Leaves. Whether any leave of absence shall constitute Termination for the purposes of any Award granted under these Programs shall be determined by the Plan Administrator 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.
|
7.
|
Divestiture, Outsourcing or Move to Joint Venture. If, after the date the Award is granted, a Participating Employee 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 the 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 the Participating Company to another employer outside of the controlled group of corporations (whether the Participating Employee is offered employment or accepts employment with the other employer), (d) the Termination of the Participating 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, or (e) any other sale of assets determined by the Authorized Party to be considered a divestiture under this Program, the Award shall be forfeited unless (i) the Authorized Party may, in its or his sole discretion, determine that all or a portion of any Award shall not be canceled or (ii) the Award is retained as a result of another provision of this Program.
|
8.
|
Transfer. Transfer of employment between Participating Companies shall not constitute Termination for the purpose of any Award granted under the Program.
|
9.
|
Change in Control. If a Change in Control occurs and the Participating Employee is Terminated, all restrictions applicable to any Award shall lapse and the Shares will become immediately vested.
|
1.
|
Restricted Stock Units shall lapse on the third anniversary date of grant.
|
2.
|
Restricted Stock Units granted to Participating Employees who are on the US/UK Payroll and are resident in the US/UK on the Grant Date shall be paid a Dividend Equivalent at the same times as an ordinary cash dividend is determined by the Company to be paid, generally quarterly. Current tax law dictates these payments are taxable as compensation (ordinary income) in the year they are distributed. This payment will be paid through the standard payroll process and cannot be reinvested.
|
3.
|
Restricted Stock Units granted to Participating Employees who are either not on the US/UK Payroll or are not resident in the US/UK on the Grant Date, shall not accrue a Dividend Equivalent. The value of their Award is increased to reflect no payment of a Dividend Equivalent.
|
4.
|
Upon the lapsing of restrictions, the number of Shares registered to the Participating Employee will be equal to the Restricted Stock Units for which the restrictions have lapsed. Shares shall be registered no later than 2 ½ months after the end of the calendar year in which the restrictions lapse.
|
5.
|
If the Plan Administrator determines that registering the Shares is prohibited by law, regulation, or decree, or where the cost of legal compliance to issue the Shares would be unreasonably expensive, the Fair Market Value of the Shares shall be paid in cash instead of registering Shares. Cash payouts are only permitted where legal restrictions exist. Cash payout shall be made no later than 2 ½ months after the end of the calendar year in which the restrictions lapse.
|
6.
|
No Award or distribution that is considered income pursuant to Section 409A of the Internal Revenue Code, shall be settled or paid prior to six months after the Employee’s Termination from the Company and its subsidiaries (or, if earlier, the date of death).
|
7.
|
If applicable, court ordered garnishments or tax levies will be withheld.
|
8.
|
The Participating Employee’s distribution, and any required taxation, will be communicated to the Participating Employee at time of the distribution.
|
1.
|
Distribution of a Participating Employee’s Award will reflect required tax withholding or expatriate hypothetical tax obligation. The Participating Employee is responsible for required withholding taxes associated with a distribution.
|
2.
|
If six months following Grant Date a Participating Employee is determined to be eligible for Retirement, the Award is considered vested for FICA purposes because there is no longer a substantial risk of forfeiture. At this time, FICA tax and income tax related to the FICA withholding, will be paid by withholding Shares from the Award. Later, on the third anniversary of Grant Date, the remaining Award will lapse. At this time, the company will withhold Shares to cover the federal tax (and state and local tax, where applicable).
|
3.
|
The Company will generally withhold Shares for taxes to meet tax obligations. The value of the Shares withheld for this purpose shall not exceed the minimum withholding amount required by applicable laws and regulations.
|
4.
|
If the Participating Employee spent time as an expatriate outside of their home country the Participating Employee will be tax equalized, with the intent that the Participating Employee receives no adverse tax consequences for their expatriate service, which could be different depending upon each country. The Participating Employee’s distribution will reflect any expatriate hypothetical tax obligation.
|
5.
|
The Company may take appropriate measures to ensure that corrective actions related to withholding tax obligations are completed in a timely manner. The Plan Administrator will
|
6.
|
The Authorized Party may remove Award restrictions to provide Shares to satisfy withholding tax obligation.
|
•
|
Authorized Party
means the person who is authorized to approve an Award, exercise discretion, or take action under the Program pursuant to the Plan. With regard to the CEO and Senior Officers, the Committee is the Authorized Party. With regard to other Employees, the CEO is the Authorized Party, although the Committee may act concurrently as the Authorized Party.
|
•
|
Award
means cash, stock option, performance share unit, restricted stock unit or any other form of equity or cash pursuant to the Program’s applicable terms, conditions and limitations as the Authorized Party may provide in order to fulfill the objectives of the Program.
|
•
|
Award Agreement
means any written or electronic agreement setting forth, or incorporating by reference, the terms, conditions, and limitations applicable to an Award to a Participating Employee. An Award Agreement may be unilaterally issued by the Company and need not be executed or countersigned by the Participating Employee.
|
•
|
Board
means the Board of Directors of Phillips 66.
|
•
|
Cash Denominated Distribution
means a full distribution made from the Program, paid to the Participating Employee in cash
.
|
•
|
CEO
means the Chief Executive Officer of Phillips 66. Where applicable, CEO also refers to the person holding that title but acting as a Special Equity Award Committee pursuant to the authority granted by the Board.
|
•
|
Committee
means the Human Resources and Compensation Committee of the Board of Directors of the Company, or any successor committee to it.
|
•
|
Company
means Phillips 66, a Delaware Corporation.
|
•
|
Disability
means a disability for which the Employee in question has been determined to be entitled to either, (i) benefits under the applicable long-term disability plan of the Participating Company or (ii) disability benefits under the Social Security Act. In the
|
•
|
Distribution
means the value that is given to the Participating Employee after approval by the Committee. In most cases, Distributions will be made in the form of cash, however the Committee reserves the right to make Distributions in the form of grants of share-based Awards, or any other form the Committee determines appropriate.
|
•
|
Eligible Employee
shall include Employees that meet the participation requirements for this Program. Being an Eligible Employee does not guarantee an Award.
|
•
|
Employee
shall include employees of Phillips 66 and its subsidiaries, as designated in the records of the Company and its subsidiaries.
|
•
|
Fair Market Value
means, as of a particular date, the mean between the highest and lowest sales price per share on the consolidated transaction reporting system for the principal national securities exchange on which shares are listed on that date rounded to 5 decimals, or, if there is no sale reported on that date, on the next preceding date on which a sale is reported or, at the discretion of the Committee, the price prevailing on the exchange at a designated time.
|
•
|
Layoff
means an applicable Termination due to layoff under the Phillips 66 Severance Pay Plan, Phillips 66 Executive Severance Plan, or the Phillips 66 Key Employee Change in Control Severance Plan, or layoff or redundancy under any similar layoff or redundancy plan which the Participating Company may adopt from time to time. If all or any portion of the benefits under the redundancy or layoff plan are contingent on the Employee’s signing a Release of Liability or covenant not to compete or both, the Termination shall not be considered as a “Layoff” for purposes of the Program unless the Employee executes and does not revoke a Release of Liability, a covenant not to compete, or both, acceptable to the Company, under the terms of the layoff or redundancy plan.
|
•
|
Participating Company
includes Phillips 66 and its 100% owned subsidiaries, including both those directly owned and those owned through subsidiaries, whose participation has been approved by the Authorized Party.
|
•
|
Participating Employee
shall include Eligible Employees receiving a Share Denominated Target. Being a Participating Employee does not guarantee a Distribution.
|
•
|
Performance Measures
means the performance criteria that will be used to value the performance of the Company at the conclusion of the Performance Period, prior to the Distribution.
|
•
|
Performance Period
means January 1, [•] through December 31, [•].
|
•
|
Plan Administrator
means the Phillips 66 Employee, internally responsible for administration of Programs.
|
•
|
Release of Liability
is a form provided to an Employee upon Layoff. Unless the Participating Employee executes and does not revoke the Release of Liability, the Participating Employee forfeits all Awards.
|
•
|
Retirement
means Termination at age 55 or older with a minimum of 5 years of service with a Participating Company; provided, however, that with regard to an Employee not on the United States payroll, the Authorized Party may approve the use of a different definition. Service is defined by the policies of the Participating Company.
|
•
|
Salary
means the annual base pay in effect on December 31st of the year preceding the beginning of the Performance Period in which the Eligible Employee becomes a Participating Employee.
|
•
|
Salary Grade
means a classification level for Employees under the practices of the Participating Company.
|
•
|
Senior Officer
means all officers of the Company who report directly to the CEO, and all other officers of the Company who are a Senior Vice President and above, or who are reporting officers under Section 16 of the Securities Exchange Act of 1934.
|
•
|
Share Denominated Distribution
, expressed as a number of shares, means the value of a Share Denominated Target if a full distribution was made from the Program and granted to the Participating Employee in equity. At the time of Distribution, the Committee determines if the Share Denominated Distribution will be granted to the Participating Employee or if it will be converted to a Cash Denominated Distribution.
|
•
|
Share Denominated Target
means the value calculated for a Participating Employee, denominated in shares. Share Denominated Targets are evaluated based on Performance Measures at the conclusion of the Performance Period and then distributed to the Participating Employee. Share Denominated Targets are rounded to the nearest whole share.
|
•
|
Termination
means cessation of employment with the Participating Companies, determined in accordance with the policies and practices of the Participating Company for whom the Employee was last performing services.
|
1.
|
The Committee, or to the extent authorized by the Committee, the CEO, or another designated individual or committee, shall have the right to terminate, suspend, withdraw, amend, or modify the Program in whole or in part at any time. The CEO shall review and approve this document and may amend it as necessary.
|
2.
|
Awards are 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 Participating 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. If the Authorized Party determines that, subsequent to the receipt of any Award, the Participating 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 Participating Company, the Authorized Party may cancel all or part of any or all Awards to that Participating Employee.
|
3.
|
Upon any change in the outstanding stock of the Company by reason of any stock dividend, stock split, reverse stock split, recapitalization, reclassification, or other similar changes, the Committee shall make corresponding adjustments, as appropriate.
|
4.
|
In addition to the terms and conditions described, Awards are subject to all other applicable provisions of the Plan. The decisions of the Committee with respect to questions arising as
|
5.
|
No provision of this document shall confer any right upon the Employee to continue employment with any Participating Company.
|
6.
|
The Award Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware.
|
7.
|
Without the consent of the Employee, the Award Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision which may be defective or inconsistent with any other provision, 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 the Award 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 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 the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities or tax laws.
|
1.
|
Death. If a Participating Employee dies during the Performance Period, the Share Denominated Target under the Program shall not be reduced, regardless of the number of months during the Performance Period the Eligible Employee was a Participating Employee. The Participating Employee’s rights to any Share Denominated Target will pass to the designated beneficiary on file with the third-party administrator or in the absence of a designated beneficiary, to the executor or administrator of the estate of the Participating
|
2.
|
Disability. If a Participating Employee terminates employment by reason of Disability during the Performance Period and has a Share Denominated Target under the Program, the Share Denominated Target shall not be reduced, regardless of the number of months during the Performance Period the Eligible Employee was a Participating Employee. The Participating Employee shall retain all rights provided by the Award at the time of Termination.
|
3.
|
Retirement or Layoff, at least 12 months. Provided the Participating Employee has completed at least 12 months of the Performance Period, if Termination occurs prior to the conclusion of the Performance Period as a result of Retirement or Layoff, the Participating Employee’s Share Denominated Target shall be prorated by a fraction, the numerator of which is the number of full calendar months of participation during the Performance Period completed prior to the applicable event and the denominator is the number of calendar months in the Performance Period.
|
4.
|
Retirement or Layoff, less than 12 months. Provided the Participating Employee has not completed at least 12 months of the Performance Period, if Termination occurs prior to the conclusion of the Performance Period as a result of Retirement or Layoff, the Participating Employee’s Share Denominated Target shall be reduced to zero.
|
5.
|
If the Participating Employee Terminates for any reason other than death, Disability, Layoff, or Retirement, the Share Denominated Target shall be canceled and all rights thereunder shall cease.
|
6.
|
Leaves. Whether any leave of absence shall constitute Termination for the purposes of any Share Denominated Target granted under these Programs shall be determined by the Plan Administrator. The determination will be made 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.
|
7.
|
Divestiture, Outsourcing or Move to Joint Venture. If, after the date a Share Denominated Target is granted, a Participating Employee 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 the 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 the Participating Company to another employer outside of the controlled group
|
8.
|
Transfer. Transfer of employment between Participating Companies shall not constitute Termination for the purpose of this Program.
|
9.
|
Change in Control. If a Change in Control occurs the Authorized Party has discretion to determine the effect on Share Denominated Targets.
|
1.
|
Cash Denominated Distributions provided under this Program will be settled in the form of cash, to be paid out as soon as administratively feasible after the date approved by the Authorized Party, provided that the cash payment be made no later than 2½ months after the end of the calendar year in which the Authorized Party has approved the Cash Denominated Distribution.
|
•
|
The value of a Cash Denominated Distribution shall be determined by multiplying the Share Denominated Distribution by an average of the Fair Market Value of Phillips 66 stock for the last 20 trading days of the Performance Period.
|
2.
|
If applicable, court ordered garnishments or tax levies will be withheld.
|
3.
|
The Participating Employee’s Distribution, and any required taxation, will be communicated to the Participating Employee at time of the Distribution.
|
1.
|
In all cases the Participating Employee will be responsible to pay all required withholding taxes associated with a Distribution. 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.
|
2.
|
The Company may take appropriate measures to ensure that corrective actions related to withholding tax obligations are completed in a timely manner. The Plan Administrator will take the steps, as it deems necessary or desirable for the withholding of any taxes that are required by laws or regulations of any governmental authority in connection with any Distribution.
|
3.
|
If the Participating Employee spent time as an expatriate outside of their home country the Participating Employee will be tax equalized, with the intent that the Participating Employee receives no adverse tax consequences for their expatriate service, which could be different depending upon each country. The Participating Employee’s Distribution will reflect any expatriate hypothetical tax obligation.
|
Company Name
|
Incorporation
Location
|
Asamera Oil (US) Inc.
|
Montana
|
C.S. Land, Inc.
|
California
|
Danube Limited
|
Bermuda
|
Douglas Oil Company of California
|
California
|
Gray Oak Holdings LLC
|
Delaware
|
JET Energy Trading GmbH
|
Germany
|
JET Petrol Limited
|
Northern Ireland
|
JET Petroleum Limited
|
England
|
JET Tankstellen Austria GmbH
|
Austria
|
JET Tankstellen Deutschland GmbH (CPGG)
|
Germany
|
Kansas City Retail and Convenience LLC
|
Delaware
|
Kayo Oil Company
|
Delaware
|
KHQ LLC
|
Delaware
|
Linden Urban Renewal Limited Partnership
|
New Jersey
|
Merey Sweeny LLC
|
Delaware
|
NJB Enterprise Limited
|
England
|
NJB Services Limited
|
England
|
OK CNG 5, LLC
|
Oklahoma
|
Phillips 66 Alliance Dock LLC
|
Delaware
|
Phillips 66 Asia Ltd.
|
Bermuda
|
Phillips 66 Asia Pacific Investments Ltd.
|
Bermuda
|
Phillips 66 Aviation LLC
|
Delaware
|
Phillips 66 Canada Ltd.
|
Alberta
|
Phillips 66 Carrier LLC
|
Delaware
|
Phillips 66 Central Europe Inc.
|
Delaware
|
Phillips 66 Communications Inc.
|
Delaware
|
Phillips 66 Company
|
Delaware
|
Phillips 66 Continental Holding GmbH
|
Germany
|
Phillips 66 Crude Condensate Pipeline A LLC
|
Delaware
|
Phillips 66 Crude Condensate Pipeline B LLC
|
Delaware
|
Phillips 66 Crude Condensate Pipeline LLC
|
Delaware
|
Phillips 66 CS Limited
|
England
|
Phillips 66 DAPL Holdings LLC
|
Delaware
|
Phillips 66 ETCO Holdings LLC
|
Delaware
|
Phillips 66 European Power Limited
|
England
|
Phillips 66 Export Terminal Alpha LLC
|
Delaware
|
Phillips 66 Export Terminal Bravo LLC
|
Delaware
|
Phillips 66 Export Terminal Charlie LLC
|
Delaware
|
Phillips 66 Export Terminal Delta LLC
|
Delaware
|
Phillips 66 Export Terminal LLC
|
Delaware
|
Phillips 66 Funding Ltd.
|
Cayman
|
Phillips 66 GmbH
|
Switzerland
|
Phillips 66 Gulf Coast Pipeline LLC
|
Delaware
|
Phillips 66 Gulf Coast Properties Alpha LLC
|
Delaware
|
Phillips 66 Gulf Coast Properties Bravo LLC
|
Delaware
|
Phillips 66 Gulf Coast Properties LLC
|
Delaware
|
Phillips 66 International Holdings Company
|
Delaware
|
Phillips 66 International Inc.
|
Delaware
|
Phillips 66 International Investments Ltd.
|
Cayman
|
Phillips 66 International Trading Pte. Ltd.
|
Singapore
|
Phillips 66 Ireland Pension Trust Limited
|
Ireland
|
Phillips 66 LCR Isomerization LLC
|
Delaware
|
Phillips 66 Limited
|
England
|
Phillips 66 Partners Finance Corporation
|
Delaware
|
Phillips 66 Partners GP LLC
|
Delaware
|
Phillips 66 Partners Holdings LLC
|
Delaware
|
Phillips 66 Partners LP
|
Delaware
|
Phillips 66 Payment Systems LLC
|
Delaware
|
Phillips 66 Pension Plan Trustee Limited
|
England
|
Phillips 66 Pipeline LLC
|
Delaware
|
Phillips 66 Polypropylene Canada Inc.
|
Delaware
|
Phillips 66 Power Holdings Ltd.
|
Cayman
|
Phillips 66 Project Development Inc.
|
Delaware
|
Phillips 66 Sand Hills LLC
|
Delaware
|
Phillips 66 Southern Hills LLC
|
Delaware
|
Phillips 66 Spectrum Corporation
|
Delaware
|
Phillips 66 Stillwater Retail Corporation
|
Delaware
|
Phillips 66 Sweeny Crude Export LLC
|
Delaware
|
Phillips 66 Sweeny Frac 2 A LLC
|
Delaware
|
Phillips 66 Sweeny Frac 2 B LLC
|
Delaware
|
Phillips 66 Sweeny Frac 2 C LLC
|
Delaware
|
Phillips 66 Sweeny Frac 2 LLC
|
Delaware
|
Phillips 66 Sweeny Frac LLC
|
Delaware
|
Phillips 66 Sweeny-Freeport 2 Pipeline LLC
|
Delaware
|
Phillips 66 Sweeny-Freeport A LLC
|
Delaware
|
Phillips 66 Sweeny-Freeport B LLC
|
Delaware
|
Phillips 66 Sweeny-Freeport LLC
|
Delaware
|
Phillips 66 Trading Limited
|
England
|
Phillips 66 Treasury Limited
|
England
|
Phillips 66 TS Limited
|
England
|
Phillips 66 UK Development Limited
|
England
|
Phillips 66 UK Funding Limited
|
England
|
Phillips 66 UK Holdings Limited
|
England
|
Phillips 66 WRB Partner LLC
|
Delaware
|
Phillips Chemical Holdings LLC
|
Delaware
|
Phillips Gas Company LLC
|
Delaware
|
Phillips Gas Company Shareholder, Inc.
|
Delaware
|
Phillips Gas Pipeline Company
|
Delaware
|
Phillips Utility Gas Corporation
|
Delaware
|
Pioneer Investments Corp.
|
Delaware
|
Pioneer Pipe Line Company
|
Delaware
|
Qingdao Phillips 66 Energy Co. Ltd.
|
China
|
R.A.Z. Properties, Inc.
|
California
|
Radius Insurance Company
|
Cayman
|
Salt Lake Terminal Company
|
Delaware
|
Seagas Pipeline Company
|
Delaware
|
Sentinel Transportation, LLC
|
Delaware
|
SHC Insurance Company
|
Texas
|
Spirit Insurance Company
|
Vermont
|
Sweeny Cogeneration LLC
|
Delaware
|
WesTTex 66 Pipeline LLC
|
Delaware
|
(1)
|
Registration Statement (Form S-8 No. 333-181080), as amended, pertaining to the Phillips 66 Savings Plan,
|
(2)
|
Registration Statement (Form S-8 No. 333-188564) pertaining to the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66, the Phillips 66 U.K. Share Incentive Plan, and the Phillips 66 Ireland Share Participation Plan, and
|
(3)
|
Registration Statement (Form S-3 No. 333-181079) of Phillips 66;
|
|
|
|
|
|
|
/s/ Ernst & Young LLP
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Phillips 66;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
|
/s/ Greg C. Garland
|
|
Greg C. Garland
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Phillips 66;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
|
/s/ Kevin J. Mitchell
|
|
Kevin J. Mitchell
|
|
Executive Vice President, Finance
and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Greg C. Garland
|
|
Greg C. Garland
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
|
|
/s/ Kevin J. Mitchell
|
|
Kevin J. Mitchell
|
|
Executive Vice President, Finance and
Chief Financial Officer
|