HOUSTON -- Phillips 66 emerged Tuesday as an independent midstream and downstream energy company with interests in refining, marketing and chemicals. Created through a spinoff of these assets from ConocoPhillips, Phillips 66 begins regular trading on the New York Stock Exchange this morning under the ticker symbol PSX [UPDATE: Watch video below of Phillips 66 executives ringing the May 2 opening bell at the New York Stock Exchange].
Greg C. Garland, the new chairman and CEO of Houston-based Phillips 66, has more than 30 years of experience in the oil and gas and chemicals industries.
"Our strategic approach combines one of the world's most competitive refining and marketing operations with rapidly growing midstream and chemicals businesses," Garland said. "Phillips 66 will be clearly differentiated from pure-play refining companies with specific plans for enhancing returns and growing shareholder distributions. We have an exciting future ahead of us."
Phillips 66's plans to enhance returns in refining and marketing include disciplined capital allocation, portfolio optimization and increased margins through building access to advantaged feedstocks and improving clean product yield. The company's refining and marketing operations include 15 refineries with a net crude oil capacity of 2.2 million barrels per day, 15,000 miles of pipeline systems and 10,000 branded retail outlets.
Phillips 66 owns or has an interest in 11 refineries in the United States, three in Europe and one in Asia. Its Transportation business provides strategic, timely and environmentally safe delivery of crude oil, refined products, natural gas and natural gas liquids (NGL) throughout the United States. Phillips 66 markets gasoline, diesel, aviation fuel and lubricants, under the brand names Phillips 66, Conoco, 76, JET and Kendall.
"Our U.S. marketing organization consists of operations in 49 states, and we market under the brands of Phillips 66, Conoco and 76. So we look at our marketing operations as allowing for refinery pullthrough and also a source of income and good return on capital employed," Garland said during an analyst update in April. "Our existing R&M business, our chemicals and midstream business all provide good solid cash flow, and we can use this cash flow to fund strategic growth, we can use it to improve returns and also for distribution to shareholders. And I think another benefit of the spinoff is you will see a greater granularity regarding asset performance and the financial results in all three segments."
Phillips 66 primarily conducts its midstream operations through DCP Midstream LLC, a 50% joint venture with Spectra Energy and one of the largest natural gas gatherers and processors in the United States, as well as the largest producer of NGL in North America. DCP Midstream has $4 billion in major projects currently in execution, including two major pipeline projects.
Phillips 66's Midstream business also consists of directly held assets and other equity affiliates. These include natural gas gathering and processing operations, NGL fractionation and marketing businesses and a 25% interest in Rockies Express Pipeline.
Phillips 66's Chemicals business is conducted through its 50% interest in Chevron Phillips Chemical Co. LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly owned subsidiary of Chevron Corp.
"Phillips 66 starts out with a clear advantage over many other downstream companies," said Garland. "We have a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce and a continued commitment to safety and operating excellence. We have an unparalleled foundation for success."
After the market closed yesterday, shareholders of ConocoPhillips received one share of Phillips 66 common stock for every two shares of ConocoPhillips common stock held as of the April 16 record date.
With the completion of this transaction, Houston-based ConocoPhillips is the world's largest independent exploration and production (E&P) company, based on proved reserves and production of liquids and natural gas.
"ConocoPhillips will truly be unique as an independent E&P company. Our unmatched size, scope and capability position us to compete successfully in this business," said Ryan Lance, chairman and CEO. "With an exclusive focus on exploration and production, we will pursue opportunities and take actions to create value for all our stakeholders."
(Click here for previous CSP Daily News coverage of the split.)
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