An Independent Evaluation of Phillips 66, its Business Strategy, and Execution

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Conoco and Phillips 66 announced on November 18, 2001 that their boards of directors had unanimously approved a definitive agreement for a "merger of equals". The merged company, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name of a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Photo: Hugh Pickens all rights reserved.

by Hugh Pickens, Ponca City Oklahoma

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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal <html>
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Corporate

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Strategic and Financial

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Business Segments

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Stock Market

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Reference

Refining Business Segment

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Increasing Profitability in Refining Business Segment

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Detailed Look at Ponca City Refinery

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Other Phillips Refineries

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Other Locations


Contents

Master Index of Articles about Phillips 66

File:Refinery crane.jpg
The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the Refinery Complex in Ponca City. The supercrane was used to move two new 232 ton coker reactor units within the refinery on September 29, 2013. Phillips was willing to invest $70 million in the two new coker reactor units because the Ponca City Refinery is one of the best run, safest, and most profitable of Phillips' fifteen worldwide refineries and Garland wants the refinery in Ponca City to continue to run smoothly and profitably. This photograph of the supercrane in Ponca City was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.
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Hugh Pickens, an analyst who closely follows Phillips 66, speaks with Phillips CEO Greg Garland (right) about the disposition of the North Tower, South Tower, and Research West at Phillips' Ponca City Refinery after Garland's speech to the Bartlesville Chamber of Commerce on August 13, 2014.

by Hugh Pickens, Ponca City Oklahoma

<html>
</html>

The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal <html>
</html>

Corporate

<html>
</html>

Strategic and Financial

<html>
</html>

Business Segments

<html>
</html>

Stock Market

<html>
</html>

Reference

Refining Business Segment

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</html>

Increasing Profitability in Refining Business Segment

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</html>

Detailed Look at Ponca City Refinery

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</html>

Other Phillips Refineries

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Other Locations


Introduction

File:Marlandrefinery2.jpg
A photo of part of Marland Refinery in Ponca City, Oklahoma taken in 1919. An article from Petroleum Age in 1922 said that Marland Refinery in Ponca City had a production of 10,000-barrel per day and Marland Refinery included nearly two million barrels of steel storage for crude and finished products. An article from Petroleum Age in 1928 said "Marland refinery at Ponca City is one of the largest complete plants in the Mid-Continent field with a crude capacity of 35,000 barrels per day of which approximately half can be run down to wax. The plant is equipped with four large Dubbs units, two Cross units, and 18 Fleming stills." Derivative Photo: Hugh Pickens

by Hugh Pickens, Ponca City Oklahoma On May 1, 2012 ConocoPhillips split into two separate publicly-traded companies: an upstream company that will retain the name ConocoPhillips and concentrate on exploration and production, and a downstream company, to be named Phillips 66, that will include refining and marketing (R&M), chemicals, and midstream business segments. The refinery in Ponca City, with over 700 employees the single largest employer in Ponca City, is part of the R&M segment and will go into Phillips 66. Phillips 66 will be a publicly traded company (PSX) and a number of independent financial analysts will be following the company.

The purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the refinery in Ponca City, Oklahoma. Some of the conclusions I have reached after analysis of publicly available information on Phillips 66 include the following:

  • The Refining and Marketing Business Segment will be more important to Phillips 66 than it was to ConocoPhillips.
  • The refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips.
  • The Refining and Marketing Business Segment is the least profitable Business Segment and will be de-emphasized with unprofitable refineries closed or sold off.
  • There will be a reduction in the capital allocated to the Refining and Marketing Segment.
  • Although Phillips 66 sold the Trainer refinery on May 1, 2012 and has tried to sell the Alliance refinery, the refinery in Ponca City is unlikely to be closed or sold for at least three to five years as margins have been strong in the Mid-Continent Segment and are expected to remain high for the medium term.
  • Profits are presently very high for the Mid-Continent refineries of which the refinery at Ponca City forms a part. The Ponca City Refinery earned profits in excess of $500 million in 2011 and based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line. But these profits are due to the glut of crude oil pouring into the region from newly tapped shale oil like North Dakota’s Bakken and the high Brent to West Texas Intermediate differential and these high profits are not expected to persist for more than three to five years.
  • Phillips 66 plans and strategy to increase profitability by moving away from the low COBE and cyclical Refining and Marketing Business Segment and making massive investments in the high COBE Chemical Business Segment and Midstream Business Segment appear sound. The question for Phillips 66 now becomes now becomes one of executing the plan.[1][2]

Creation of Phillips 66

File:Phillips history.jpg
On May 1, 2012 Phillips 66 issued a press release announcing that Phillips 66 had emerged as an independent downstream energy company with industry-leading businesses in refining and marketing, midstream, and chemicals. Created through a spin-off of these assets from ConocoPhillips, Phillips 66 begins regular trading on the New York Stock Exchange this morning under the ticker symbol PSX. "Our strategic approach combines one of the world's most competitive refining and marketing operations with rapidly growing midstream and chemicals businesses," said CEO Greg Garland. "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."[3] Graphic Created by: Granger Meador Used with permission
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"Phillips 66 has strong brand recognition and value and it provides a link between our rich history and our exciting future," says Greg Garland, designated chairman and chief executive officer of Phillips 66. The new company's name capitalizes on public awareness and gives tribute to history, adds Garland. Photo: ConocoPhillips

Rationale for the ConocoPhillips Split

There are two ways to look at the decision to split off the downstream segment from ConocoPhillips with the creation of Phillips 66. According to Christopher Helman writing in Forbes magazine the ConocoPhillips’ split can be seen as the upstream guys seizing an opportunity to jettison their lower-returning downstream assets all at once rather than piecemeal, as they’ve been doing. On the other hand, the split "liberates downstream to pursue its own growth opportunities," according to incoming Philips 66 CEO Greg Garland. "As an integrated oil company we were pushing a lot of our capital to the Exploration and Production (E&P) space, which was the right thing to do as an integrated oil company."[4]

"If Phillips 66 has been left with the wrong end of the deal, then Greg Garland is putting in a spirited effort to persuade investors otherwise. He says the creation of Phillips 66 represents an opportunity to ensure that his company is in a strong position to make the best of the uncertain conditions in the downstream sector," writes Shaun Polczer in "The Petroleum Economist on May 25, 2012. "The company hopes that ...Phillips 66 will be better able to capitalise on its options to maintain a steady income stream from mid and downstream operations. "[5]

Simone Sebastian and Emily Pickrell writes in the Houston Chronicle that Mulva abandoned the super-major model that its retiring leader helped engineer a decade ago leaving behind "a more modest oil exploration and production company, streamlined by the aggressive asset sell-off that has defined his final years at the helm." Mulva is the last of a group of oil executives who orchestrated the model of building companies that delivered fuel from the ground to gas tanks through their own international networks of exploration, refining and distribution assets. "He appreciated the changing paradigm in the industry a decade ago when all the oil companies were combining," said Doug Terreson, head of energy research for ISI. "The oil industry is shifting toward a new competitive paradigm now and separation makes a great deal of logic."[6]

Rod Walker writes in the Tulsa World on April 28, 2012 that "the separation of ConocoPhillips and Phillips 66 is the final achievement of CEO Jim Mulva's eight-year reign atop the integrated company" although questions abound regarding the rationale behind the split one decade after the merger that created ConocoPhillips. "Why was it better to get bigger 10 years ago and not now?" asks Bruce DeShazo, assistant vice president and investment adviser at American Heritage Bank of Sapulpa. "I would think the reason they'd do something like this is to divest those losing assets. They're just having a hard time making money in refining." Outgoing ConocoPhillips CEO Jim Mulva wants to reduce the company's exposure to refining by spinning off Phillips 66. "We said sell non-core assets, position for growth. Essentially, 90 percent of our capital spending is directed towards exploration and production, and reduce our exposure to refining."[7]

According to Mulva in his presentation to financial analysts on July 14, 2011, the question is why would you spin out the downstream versus to stay integrated. "We believe more value is created in the formation of two very clear, standalone companies versus accomplishing our objectives of rationalizing our downstream within the integrated oil structure. There is generally greater external transparency of the business performance when the marketplace looks at the pure plays versus being accomplished in the integrateds. And we also believe there is more focus and attention and greater probability of success by the management team by having pure-play separate upstream and downstream companies. Our investors, we believe, have the better ability to adjust to overweight or underweight their views of investing in these segments of integration, upstream and downstream. And as I just said, there is greater management focus to customize strategies, both upstream and downstream. And we also believe with this, it really allows us to attract, retain and compensate the talent we need to create the highest probability of success upstream and downstream."[8][9]

"I think that world and that marketplace has pretty well changed. So if we look out the medium- and the long-term, we face this challenge, whether we are viewed as independent or viewed as an integrated company, the issue of competitive growth is the same, whether it is a company bigger than ourselves or it is an independent smaller than ourselves. So it doesn't change with the accomplishment of doing this transaction and spinning out the downstream. We are faced with the same challenge. Some also could argue that the larger you are, the more difficult it is, given the access issues, and in many places in the world, an emphasis of trying to move IOCs or independents more towards service contracts than it is taking equity interest. So all we are saying is whether we are classified as independent or classified as an integrated, or however we are classified and what we are structured, we still have the issue of how do we take our current reserve position and our production, how do we grow it and do it with competitive finding and development cost. So we have got the same challenge. Now, if we do that well, whether we are integrated or we are viewed as independent pure plays, if we do that well, it will be recognized in the marketplace. And that is really where we are coming from. We are not doing something cleverly just to get a higher PE multiple, but we do think the pure plays are better understood in the marketplace, and it is going to put a lot more focus on our management and our leadership to accomplish the objective, which is to convert the resources that we have. We like to always get more resource, but convert those resources to reserves, and do that really well with competitive finding and development cost, we will grow our production and we will do it in a value-creating way."[10][11]

"The other thing is we look at our Company in the marketplace, we have a number of investors that would say you are making the investment decision for us. You are putting us in both the upstream and downstream business, where we would like to make that investment decision ourselves. So by being separated, you can take your choice. You want to invest in the downstream, you want to invest in the upstream. So if you look at the integrated company, you can say, well, I think the downstream part of the company is holding back on the value creation and recognition of your E&P business. And then on the other hand, those people who are interested in the downstream would say, you are not getting recognition for the quality or the contribution of the downstream. And then there is another issue that we have seen, unfortunately. But from an enterprise risk management point of view, having two separate companies is -- we think is something that makes a lot of sense. And so it is for these different reasons and putting more focus both upstream and downstream at attention, and clear peer plays, not so much that the market can look and make the decision where they want to invest, but the leadership of the company knows clearly what business they are in and they dedicate their attention to doing it in a value-creating way."[12][13]

See also

Implementation of the ConocoPhillips Split

On May 1, 2012 Phillips 66 issued a press release announcing that Phillips 66 had emerged as an independent downstream energy company with industry-leading businesses in refining and marketing, midstream, and chemicals. Created through a spin-off of these assets from ConocoPhillips, Phillips 66 begins regular trading on the New York Stock Exchange this morning under the ticker symbol PSX. "Our strategic approach combines one of the world's most competitive refining and marketing operations with rapidly growing midstream and chemicals businesses," said CEO Greg Garland. "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."[16]

On November 11, 2011 the Tulsa World reported that Phillips 66 would be the name for the new independent oil and gasoline refining and marketing firm, created as ConocoPhillips splits into two companies. ConocoPhillips will keep the current name of the company and will concentrate on the exploration and production side while Phillips 66 will include refining and marketing portions of the company. Each company will be run independently and will have different tocker names in the stock market. The refinery in Ponca City employs about 700 people while Bartlesville will be the global center for the Phillips 66 technology organization as well as the transaction services organizations for both companies.[17] ConocoPhillips CEO Jim Mulva will resign once the split is complete and Greg Garland will be the new CEO of Phillips 66.[18] The decision to name the new entity for Phillips 66 is because of name recognition and branding. "Phillips 66 has strong brand recognition and value, and it provides a link between our rich history and our exciting future," Garland said Thursday in a news release. "Our name reflects an independent spirit and drive."[19]

On April 4, 2012 ConocoPhillips' board of directors gave its final approval for the spin-off of its downstream businesses into Phillips 66.[20] ConocoPhillips executive vice president and CFO Jeffrey Sheets announced on April 23, 2012 that ConocoPhillips is putting its final touches on its spinoff of Phillips 66 this week, and the transaction will take place as scheduled on May 1, 2012.[21]

Garland Says the Spin-off of Phillips 66 Was Executed Flawlessly

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that spin-off of Phillips 66 was executed flawlessly. "I think it's a real tribute to the dedication and the capability of the Phillips 66 employees. They did a great job of getting our feet underneath this. The Company has stood up. We're ready to go. The systems are operating well. We've been running well and capturing good opportunities in the market.[22]

Decision to Name the Downstream Company Phillips 66

ConocoPhillips announced on November 11, 2011 that the new independent downstream company created through its previously announced strategic repositioning will be named Phillips 66. "With a history that goes all the way back to petroleum industry "birthplace," in Bartlesville, Oklahoma in 1917, the company will be a leading independent company with refining, marketing, midstream and chemicals businesses operating across the globe. "Phillips 66 has strong brand recognition and value and it provides a link between our rich history and our exciting future," said Greg Garland, designated chairman and chief executive officer of Phillips 66. "Our name reflects an independent spirit and drive--two attributes of our future company."[23] According to the ConocoPhillips web site "the name Phillips 66 was chosen [for the new downstream company] because it has strong brand recognition and value, which allows us to link our rich history and our exciting future. The name represents the independent spirit and drive that will be part of the culture of Phillips 66."[24] The new company's name capitalizes on the public awareness and gives tribute to history, Garland added.[25]

The company launched a new Phillips 66 website: www.phillips66.com, that provides some history of the brand:

Frank and L.E. Phillips were two of the original experts in gas. They started prospecting for oil in 1903 and founded Phillips Petroleum Company in 1917. Since then, the company has grown considerably and has expanded its product offerings through its commitment to innovation and meeting customer needs. That’s fancy talk for "we keep making it better." Phillips 66® also has a history with US Highway 66. In 1927, on the "Mother Road" during a test drive of a newly developed high-octane gasoline, the vehicle reached a cruising speed of 66 mph. The new fuel was named Phillips 66. Even the logo was inspired by the road signs that dot the length of the historic highway. And the rest is history. And gas. Very High quality gas.[26]

The Houston Chronicle reported on November 10, 2011 that according to ConocoPhillips spokesman John Roper, while Phillips 66 products will retain the traditional logo, executives haven't decided whether to make it the corporate logo as well.[27]

The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that "the downstream energy company — named Phillips 66 in a tip of the cap to its product lineage begun right here in Bartlesville — will be a leading independent refining, marketing, midstream and chemicals business."[28]

Strategic Vision for Phillips 66

File:Phillipsbusinesssegments.JPG
There are three leading operating segments in the new company: Chemicals, Midstream, and Refining and Marketing. The refinery in Ponca City falls in the Refining and Marketing Business Segment (R&M) which in 2011 had a much lower ROCE (Return on Capital Employed) than the other two Phillips 66 business segments. ROCE is a ratio used in finance, valuation, and accounting that compares earnings with capital invested in the company is used to prove the value the business gains from its assets and liabilities. Derivative Photo: Hugh Pickens
File:Rocecomparison02.JPG
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that he expects a 15% ROCE in the R&M Business Segment going forward. "My view is that, refining historically has been kind of a 10% to 12% business," said Garland. "We think we have plans in place to advantage crude capture, yields, cost reduction, that we can move it 400 basis points. So it’s a 15% business going forward for us versus a 30% return business in Chemicals. And probably Midstream business 15% to 17% returns is kind of what we’re looking in fact. So, to the extent that we have 30% and 40% return projects in refining, we’re going to do those. I think, I mean we do get challenged by people all the time or we under investing in refining. At this point, we don’t think so. I don’t think there’s any opportunities out there, we feel that we’ve missed in terms of an investment opportunity in the refining space. Our focus is going to be very disciplined. We’re going to restrict capital in this space. We’re going to improve returns in this space. And so we don’t see a change required in our strategy at this point in time."[29] Derivative Photo: Hugh Pickens
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In 2011 about 84% of Phillips 66 capital was allocated to Refinery and Marketing with 11% allocated to Chemicals and 5% to Midstream. Phillips 66 plans a major change in this allocation. "Long-term we have a vision that about 50% of our capital employed will be directed towards the R&M segment. And the other 50% will be directed towards Midstream and Chemicals." Derivative Photo: Hugh Pickens

On April 9, 2012, Greg Garland, the designated CEO of Phillips 66, presented an overview of the new company and his plans for Phillips 66. There are three leading operating segments in the new company: Chemicals, Midstream, and Refining and Marketing.[30][31][32]

The basic Phillips 66 strategy to increase profitability is to focus on the business segments that have the highest return on capital invested which are the Chemical Business Segment and the Midstream Business Segment. This means that the Refining and Marketing Business Segment which has the lowest profitability will be de-emphasized. Capital allocations for the business segments with the highest profitability will be increased. Capital allocation for the R&M business segment will be reduced. Unprofitable refineries in the R&M Business Segment will be sold or closed. Ponca City falls into the Refining and Marketing business segment of Phillips 66.

See also:

Benefits of Being an Independent Company

Garland talked about the benefits of Phillips 66 being an independent company. "As I think about the spin and really the strategy and the rationale behind the spin, it creates opportunity for Phillips 66 to create value that we just couldn't pursue as part of the integrated ConocoPhillips. 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 distributions to shareholders. I think another benefit of the spin is you will see greater granularity regarding asset performance and the financial results in all three segments."[33][34][35]

Simon Moore wrote at Seeking Alpha on May 10, 2012 that ConocoPhillips was a slower, more lumbering entity but with Phillips 66 newly reduced size, its growth should accelerate.[36]

The Houston Business Journal reported on August 10, 2012 in a profile of Chevron Phillips CEO Pete Cella that with the ConocoPhillips split of its upstream and downstream business in May, Chevron Phillips makes up a more prominent part of the Phillips 66 business, which is good because the company gets more attention, said Cella.[37]

Laurie Winslow reported in the Tulsa World on October 3, 2012 that with Phillips 66 up 40.3 percent in the five months since its divestiture on May 1, 2012, the market has applauded the move by ConocoPhillips to split its exploration and production company from its refining business, creating Phillips 66. "In past years, refiners have been the dogs of the energy sector, and in 2012 they find themselves the darling of the energy sector. Phillips 66 really has spread its wings since the spinoff from ConocoPhillips, and it's gotten quite a bit of international attention," says Jake Dollarhide, CEO of Longbow Asset Management Co. "A lot of people felt that ConocoPhillips with all of the businesses together wasn't getting the market valuation it deserved."[38]

Differentiated Portfolio Creates Value Through Lower Risk, Lower Cost of Capital, and Ability to See Across Entire Value Chain

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the three pieces of Phillips 66 business, the Refining and Marketing; the Midstream business, and the Chemicals business are more valuable together and that value is created through lower risk, lower cost of capital, the ability to see across the entire value chain. "We think we have a clear strategy in terms of capturing growth opportunities, margin enhancement opportunities, and driving return improvement in our business. I would also say that we are very purposeful and thoughtful. We're very purposeful and thoughtful about the assets that we've put in to Phillips 66 as we started the Company. We think that the three pieces of our business, the Refining and Marketing, Specialties, Transportation; the Midstream business, and the Chemicals business are more valuable together. We think value is created through lower risk, lower cost of capital, the ability to see across the entire value chain. We think it makes us better allocators of capital ultimately. We think you'll see the benefits of our management of these three businesses as we go forward."[39]

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that a differentiated portfolio is a competitive advantage for Phillips. "I would just say over the last 3.5 years, about 40% of our adjusted earnings came out of R&M or specifically refining. Then you can see 60% came out of marketing specialties and other businesses, our Chemicals business and Midstream business. The point here, we have a differentiated portfolio. We like this portfolio. We think it's a competitive advantage for us."[40]

Enhance the Return on Capital Employed (ROCE)

ROCE (Return on Capital Employed) is a ratio used in finance, valuation, and accounting that compares earnings with capital invested in the company is used to prove the value the business gains from its assets and liabilities.[41] The three operating segments of Phillips 66 have very different ROCE's. In 2011 the ROCE of the Refining and Marketing segment was 12%, the ROCE of the Midstream segment was 30%, and the ROCE of the Chemical segment was 28%. Because the ROCE of the Chemical segments and the Midstream segments is so much higher than the ROCE in the R&M segment, Garland plans to plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company.

"Here's how we plan to enhance returns on capital," says Garland in the April9, 2012 financial analysts meeting. "I think you will see continued portfolio optimization, margin improvement from us. We will drive our capital employed to higher returning businesses. You can see on the chart on the right in 2012 we plan to high grade, to move more investment to Chemicals and Midstream. And by the way, these are our equity share of the investments in Chemicals and Midstream. While we're pursuing aggressive growth at both the DCP Midstream and the Chemicals Midstream, our view is that they're going to be self funding and at the same time they will dividend cash back to Phillips 66."

Allocation of Capital to More Profitable Business Segments

Garland says that long-term Phillips 66 has "a vision that about 50% of our capital employed will be directed towards the R&M segment. And the other 50% will be directed towards Midstream and Chemicals.We'll preferentially invest in the higher return businesses and we will be very selective in how we invest in the lower return businesses."

Garland told financial analysts at an investors conference on June 5, 2012 that Phillips 66 would keep investments in its refining assets to a minimum, instead focusing on expanding its chemical-and-logistics business and that Phillips 66 will spend $2 billion on capital projects in its midstream-logistics segment, including natural-gas-liquids processing and exports infrastructure.[42]

Molly Ryan reported in the Houston Business Journal on February 11, 2014 that Phillips' decision to move forward with more than $3 billion worth of projects reflects the company’s strategic decision to chase higher-margin markets. "Midstream spending is expected to pick up in 2014 since energy companies are increasingly realizing the profits that can be found in moving the massive amount of oil and gas coming from U.S. shale plays," writes Ryan. "Phillips 66 specifically hopes to cash in on this through its new liquefied petroleum gas terminal, which will store and transport fluids, and its new fractionator facility, which will supply and transport natural gas liquid products to petrochemical companies."[43]

Plan to Aggressively Grow Chemicals and Midstream segments of Phillips 66

Garland plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company. "Over the past three years we've reduced refining capacity about 450,000 barrels a day. In our Chemicals segment we've been growing primarily through investments in the Middle East. In our Midstream segment, growth has come from expansions around the shale liquids and gas producing areas."[44][45][46] "The refining business is currently a difficult business and one where the outlook doesn't change a lot going forward," said Mark Gilman, an independent oil and gas analyst. "Phillips 66's asset quality in the refining space is, at best, kind of average."[47] The best performing divisions for Phillips 66 are expected to be its midstream joint venture and a petrochemicals company.[48]

Simon Moore wrote on Seeking Alpha on May 10, 2012 that now that Phillips 66 is no longer part of ConocoPhillips, management is planning a clear cut move to greater emphasis on Midstream and Chemicals Business Segments. "New management's long term plan is to move to 50% Refining and Marketing, 25% Chemicals, and 25% Midstream. These latter two businesses have a much higher ROCE (return on capital employed) for PSX."[49]

Phillips Capital Programs

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Capital Program for Refining and Marketing Business Segment. Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips wants to try to hold sustaining capital in the Refining Business Segment to depreciation or less, or about $700 million a year. "We've got about a $1 billion program in 2014. So we've got about $300 million of high return, quick hit, fast payout projects that we're going to do. These are 40% type return projects. So these are the, what I would call, is a value accretive project that we're going to do in refining. Around export facilities, increasing yields, it's around incremental investments to process more light sweet crude. It's around capturing more LPG streams and upgrading the value of LPG streams."[50] Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.
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Capital Program for Midstream Business Segment. Phillips reported on December 6, 2013 that they plan to invest $2.167 Billion in 2014 in their Midstream Business Segment including $1.417 in direct investment and $0.750 Billion in investment with affiliate groups. Phillips expects to begin construction of a 100,000 barrel-per-day NGL fractionator and a 4.4 million-barrel-per-month liquefied petroleum gas export terminal on the U.S. Gulf Coast. In addition, several rail offloading facilities and other crude handling projects will increase the company’s access to advantaged refining feedstocks. Phillips 66 Transportation is also developing pipeline expansion and connection projects that will grow capacity and allow for greater refined product exports.[51] Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.
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Capital Program for Chemical Business Segment. Phillips reported on December 6, 2013 that they plan to invest $1.0 Billion in 2014 in their Refining and Marketing Business Segment down from $1.149 in 2013. Approximately 70 percent of the investment will be for sustaining capital related to reliability and maintenance, safety and environmental projects, including those to comply with Tier 3 emission standards. Other Refining capital investments will be directed toward relatively small, high-return projects, primarily to enhance use of advantaged crudes, as well as to improve product yields, increase energy efficiency and expand export capability.[52] Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.

December 5, 2014: Phillips Capital Progam for 2015

Phillips 66 announced on December 5, 2014 that Phillips plans a 2015 capital budget of $4.6 billion. “The 2015 capital program reflects our commitment to grow our higher-value businesses while enhancing returns in Refining,” said chairman and CEO Greg Garland. “We are executing a portfolio of major Midstream and Chemicals projects while evaluating a significant backlog of investment opportunities. We remain committed to returning capital to shareholders through dividend growth and our share repurchase program. During the year we increased our dividend 28 percent, and through Sept. 30, 2014, we returned $3.9 billion of capital to shareholders through dividends, share repurchases and the PSPI exchange. We expect double-digit increases in dividends for the next two years, and $2.6 billion remained available at the end of the third quarter under our share repurchase authorization. Our capital structure and financial flexibility allow us to fund shareholder distributions while investing in the growth of our businesses, even in this lower commodity price environment. Sources of capital include our strong balance sheet, debt and equity issuances by our MLP, and operating cash flows from a high-returning portfolio of businesses."[53]

Phillips to Invest $1.1 Billion in 2015 in Refining and Marketing Business Segment

Phillips 66 plans $1.1 billion of capital expenditures in Refining, approximately 75 percent of which will be sustaining capital. These investments are related to reliability and maintenance, safety and environmental projects, including compliance with the new EPA Tier 3 gasoline specifications. Discretionary Refining capital investments will be directed toward small, high-return, quick pay-out projects, primarily to enhance use of advantaged crudes and improve product yields.

Phillips to Invest $3.750 Billion in 2015 in Midstream Business Segment

In Midstream, excluding DCP, Phillips 66 plans to invest $3.2 billion in its Natural Gas Liquids (NGL) and Transportation business lines. Midstream capital includes approximately $200 million expected to be spent by Phillips 66 Partners to support organic growth projects. In NGL, the company continues construction of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast. In Transportation, the company is investing in pipeline and rail infrastructure projects to move crude oil from the Bakken/Three Forks production area of North Dakota to market centers throughout the U.S. In addition, expansion of the Beaumont Terminal and related infrastructure opportunities are being pursued.

Additional Midstream investments are planned within DCP, a 50-50 joint venture with Spectra Energy that also includes DCP Midstream Partners. DCP will leverage its infrastructure to launch new gathering, processing, and NGL growth projects, mainly in the Niobrara, Denver-Julesburg, Eagle Ford and Permian basins. DCP also expects to increase natural gas processing capacity in these basins and complete other gathering system expansions during 2015. Phillips 66’s share of DCP’s 2015 planned capital expenditures is $550 million.

Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment

In Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in projects aimed at capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2015 capital expenditures is expected to be $1.4 billion. Funding supports advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The expected start-up for these facilities is mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem’s normal alpha olefins production capacity at Cedar Bayou continues, with estimated completion in mid-2015.

Phillips to Invest $170 Million in 2014 in Marketing and Specialties

In Marketing and Specialties, the company plans to invest $170 million for growth and sustaining capital. The growth investment reflects Phillips 66’s continued plans to expand and enhance its fuel marketing business.

Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities

In Corporate and Other, Phillips 66 plans to fund $155 million in projects primarily related to information technology and facilities.

December 6, 2014: Phillips Capital Program for 2014

On December 6, 2013 Phillips announced their plans for capital expenditures in 2014 at a level of $2.7 billion, approximately 40 percent higher than its 2013 capital target. Phillips total 2014 capital program including investments in joint ventures with DCP Midstream (DCP), Chevron Phillips Chemical Company (CPChem) and WRB Refining is expected to be $4.6 billion. “The 2014 capital program is consistent with our plans to significantly grow our Midstream and Chemicals segments,” said Chairman and CEO Greg Garland. “These are businesses that can directly capitalize on North America’s energy renaissance. Our disciplined approach to capital allocation balances reinvestment in higher-valued businesses along with growing shareholder distributions. We continue to focus on funding the most attractive growth opportunities across our portfolio.”[54]

Phillips to Invest $1.0 Billion in 2014 in Refining and Marketing Business Segment

Phillips reported on December 6, 2013 that they plan to invest $1.0 Billion in 2014 in their Refining and Marketing Business Segment down from $1.149 in 2013. Approximately 70 percent of the investment will be for sustaining capital related to reliability and maintenance, safety and environmental projects, including those to comply with Tier 3 emission standards. Other Refining capital investments will be directed toward relatively small, high-return projects, primarily to enhance use of advantaged crudes, as well as to improve product yields, increase energy efficiency and expand export capability.[55]

Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips wants to try to hold sustaining capital in the Refining Business Segment to depreciation or less, or about $700 million a year. "We've got about a $1 billion program in 2014. So we've got about $300 million of high return, quick hit, fast payout projects that we're going to do. These are 40% type return projects. So these are the, what I would call, is a value accretive project that we're going to do in refining. Around export facilities, increasing yields, it's around incremental investments to process more light sweet crude. It's around capturing more LPG streams and upgrading the value of LPG streams."[56]

Phillips to Invest $2.167 Billion in 2014 in Midstream Business Segment

Phillips reported on December 6, 2013 that they plan to invest $2.167 Billion in 2014 in their Midstream Business Segment including $1.417 in direct investment and $0.750 Billion in investment with affiliate groups. Phillips expects to begin construction of a 100,000 barrel-per-day NGL fractionator and a 4.4 million-barrel-per-month liquefied petroleum gas export terminal on the U.S. Gulf Coast. In addition, several rail offloading facilities and other crude handling projects will increase the company’s access to advantaged refining feedstocks. Phillips 66 Transportation is also developing pipeline expansion and connection projects that will grow capacity and allow for greater refined product exports.[57]

Phillips expects to invest $750 Million in DCP, a 50/50 joint venture with Spectra Energy. DCP anticipates leveraging its existing NGL infrastructure to initiate new gathering and processing growth projects, mainly in the North and Permian regions. DCP also expects to increase natural gas processing capacity in the Denver-Julesburg Basin and complete other gathering system expansions during 2014.[58]

Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment

Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.[59]

Phillips to Invest $140 Million in 2014 in Marketing and Specialties

Phillips reported on December 6, 2013 that they plan to invest $140 Million in 2014 in Marketing and Specialties growth and sustaining capital. The growth investment reflects Phillips 66’s intent to expand its international fuel marketing business. The company plans to add approximately 200 new retail sites in Europe over the next five years.[60]

July 10, 2014: Phillips to Increase 2014 Budget for $1.2 Billion

FueldFix reported on July 10, 2014 that Phillips will increase its 2014 capital budget by $1.2 billion for 2014 in order to fund its liquefied petroleum gas project as well as a recent acquisition. The increase will allow the company to put more cash towards the development of a new fractionator at its Sweeny refinery and a liquid petroleum gas export terminal in Freeport, among other projects. The fractionator is expected to come online in the third quarter of 2015, and the export terminal is expected to be operational in mid-2016. The fracionator will separate natural gas liquids into components including ethane, propane and butane. Some of those products will then be exported as liquefied petroleum gas from Freeport. The entire project is slated to cost $3 billion.[61]

Phillips Capital Program for 2013

Phillips reported on December 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.[62]

Phillips to Invest $1.149 Billion in 2013 in Refining and Marketing Business Segment

Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they intend to invest $1.149 Billion in 2013 in their Refining and Marketing Business Segment to improve capital efficiency. The company has identified sources of additional advantaged crudes and is taking steps to move these lower cost feedstocks to its refineries and expects to replace 500,000 BPD of higher cost feedstocks with new or advantaged crudes over the next few years.[63]

Other initiatives to improve margins in the R&M Business Segment include increasing clean product yields in refining and controlling costs, targeting cost reductions and value capture in excess of $200 million before-tax by the end of 2013. “Our ability to capture advantaged feedstocks, coupled with the growing international demand for refined products, enables us to maintain high utilization rates and reduce costs per unit,” said Garland. “We will continue to primarily serve domestic markets and will explore opportunities to meet growing demand overseas. Export markets support a more positive balance of trade and promote economic benefits, and jobs, here in the United States.”[64]

Phillips to Invest $2.2 Billion in 2013 in Midstream Business Segment

Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that DCP Midstream plans to invest $2.2 billion primarily for new logistics infrastructure and NGL production during 2013.[65]

Phillips to Invest $1.1 Billion in 2013 in Chemical Business Segment

Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.[66]

Phillips to Transfer Transportation Assets To A Master Limited Partnership

Marketwatch reported on Decemeber 13, 2012 that Phillips will transfer transportation assets to a master limited partnership that will debut in the stock market in 2013. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL, analysts at Simmons said in a note.[67] “We expect to use the master limited partnership as an efficient vehicle to fund growth investments in the transportation and midstream sectors,” said Phillips 66 Chairman and CEO Greg Garland. “We believe the proposed MLP will enable us to enhance value for our shareholders and increase the transparency of our business.”[68]

Governance of Phillips 66

File:Jimmulva.jpg
Jim Mulva is the chairman and chief executive officer of ConocoPhillips and conceived and executed the idea of splitting up ConocoPhillips. The Houston Chronicle reported on April 23, 2012 that Jim Mulva retired on May 1, 2012 when ConocoPhillips' refining, pipelines and chemicals units spun off to form an independent, publicly traded company called Phillips 66.[69] "The separation of ConocoPhillips and Phillips 66 is the final achievement of CEO Jim Mulva’s eight-year reign atop the integrated company," writes Rod Walton. "Mulva helped oversee the 2002 merger as head of Phillips Petroleum and now walks offstage into retirement as the one company becomes two."[70] Photo: by EnergyTomorrow Flickr Creative Commons. Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

Jim Mulva, Chairman and CEO of ConocoPhillips

Although Jim Mulva will not be a corporate officer of Phillips 66, Mulva was the chairman and chief executive officer of ConocoPhillips who conceived and executed the idea of splitting up ConocoPhillips which resulted in the creation of Phillips 66. Mulva retired on May 1, 2012 when the split was accomplished.

Mulva served as president and chief executive officer of ConocoPhillips from 2002 to 2004. Prior to that, he served as chairman and chief executive officer of Phillips Petroleum Company from 1999 to 2002. Mulva served as Phillips’ president and chief operating officer beginning in May 1994 and executive vice president since January 1994. Mulva had been senior vice president in 1993 and chief financial officer since 1990, at which time he joined the company's management committee. Mulva began his career with Phillips in 1973.

Mulva graduated from the University of Texas in 1968 with a bachelor's degree and a master's degree in business administration finance in 1969.[71]

The Houston Chronicle reported on April 23, 2012 that Jim Mulva retired May 1, 2012 when ConocoPhillips' refining, pipelines and chemicals units spun off to form an independent, publicly traded company called Phillips 66.[72]

Rod Walton writes in the Tulsa World on April 28, 2012 that ConocoPhillips decided that bigger was better when Phillips Petroleum Co. and Conoco Inc. merged in 2002, but now has turned 180 degrees around in 10 short years now believing that smaller is what investors want. ConocoPhillips, the nation’s third-largest integrated energy firm, will now become known as a “pure play” independent when the refining and chemical side is spun off into a new company called Phillips 66. "Mulva helped oversee the 2002 merger as head of Phillips Petroleum and now walks offstage into retirement as the one company becomes two," writes Walton.[73] "Outgoing Chairman and CEO Jim Mulva, who has expertly led the company for a decade — and several years prior to that as Chairman and CEO of Bartlesville-based Phillips Petroleum Co. — steps into retirement having proven to be a true friend to the City of Bartlesville," editorialized the Bartlesville Examiner-Enterprise.[74]

Mulva Received $156 Million Severance Package in 2012

The New York Times reported on June 29, 2013 that Jim Mulva received the biggest package of any CEO in 2012 when he stepped down as CEO of ConocoPhillips. Mulva's total severance package was about $156 million and his exit sum is on top of salary, bonus and other compensation received while working for the company. "We calculated severance pay as the total of any amounts given in connection with end of service as C.E.O.,” said Aaron Boyd, director of governance research at Equilar. In Mulva’s case, much of the payout came from the market value of stock gains he received. But he also received payouts from a cash severance, a bonus and additional retirement distributions. ConocoPhillips said that the pay packages were fully disclosed to shareholders and that they were “the same pension and benefits programs as described in the proxy statement as any other retiring executive.” “The vast majority of Mulva’s compensation that he earned during his long and successful career as an executive remained in the form of company stock at his time of retirement,” Aftab Ahmed, a spokesman for ConocoPhillips, said in an e-mail.[75]

Mulva's Post-ConocoPhillips Activities

December 14, 2016: Jim Mulva Donates $75 million to University of Texas for Medical Research

The Austin Business Journal reported on December 14, 2016 that Jim and Miriam Mulva and the Mulva Family Foundation are giving $75 million to a pair of University of Texas institutions to further medical research. The donation will include $50 million to create the Mulva Clinic for the Neurosciences, to be located at the Dell Medical School at UT Austin and $25 million for cancer research at the University of Texas MD Anderson Cancer Center in Houston. “We are pleased to establish a new and innovative neurology clinic combining UT Austin’s state-of-the-art research with advanced clinical operations for these widespread and difficult diseases that impact so many people and families,” Jim and Miriam Mulva said in the announcement. “Furthermore, we have a passion and commitment to help MD Anderson — the premier cancer center in the world — treat and ultimately eradicate cancer.” The $25 million grant supports MD Anderson’s efforts in melanoma and prostate cancer research under the direction of Dr. Patrick Hwu, chairman of the Melanoma Medical Oncology Department; and Dr. Christopher Logothetis, chairman of the Genitourinary Medical Oncology Department. “I deeply appreciate the Mulva family’s continual support of the university and especially this transformational gift for the advancement of neurosciences across many disciplines at UT Austin,” Gregory Fenves, president of UT Austin, said in the announcement.[76]

April 28, 2016: Jim Mulva Donates $13 million to St. Norbert College for Expansion of the Schuldes Sports Center

Fox 11 reported on April 28, 2016 that James J. and Miriam B. Mulva of De Pere are giving $13 million toward the renovation and expansion of the Schuldes Sports Center at St. Norbert College. In recognition of the donation, the college plans to call the expanded facility the Mulva Family Fitness and Sports Center. The fitness and sports center will be the third building on the St. Norbert campus to be named for the Mulvas. The couple has previously given donations toward the Mulva Library and the Gehl-Mulva Science Center. Both James and Miriam Mulva are from De Pere. A former naval officer, James Mulva recently retired as chairman and CEO of ConocoPhillips. He also serves on the boards of General Electric, General Motors, Green Bay Packaging and the University of Texas M.D. Anderson Cancer Center, among others. Miriam Mulva is a member of St. Norbert's board of trustees.[77]

Mulva received "an astonishing $260 million from his former employer" when he left ConocoPhillips in June, 2013 and $141 million in combined compensation and stock options in 2011.[78]

February 10, 2016: ValueWalk Analyzes the Relation Between ConocoPhillips' Stock Buybacks and the Dividend Cut

ConocoPhillips recent dividend cut from $0.74 to $0.25 per share was a jolt to many investors. 720 Global published an analysis piece on February 10, 2016 about the hidden damage buybacks impose on shareholders and the economy as well as the questionable motives driving most of these decisions and using ConocoPhillips as an example, writes that "buybacks promote higher short-term stock prices that serve largely only to benefit [management's] own compensation. The costs of these actions are felt later as the future growth for the respective companies, employees and entire economy are robbed."

COP consistently paid a dividend since 1990 and during that 25 year period the dividend was increased 19 times. COP had never decreased their dividend until now. Even during the financial crisis of 2008/09, COP raised its dividend despite the price of crude oil dropping $100 per barrel. But since 2011, COP repurchased 251.316 million shares representing roughly 20% of their shares outstanding, at an approximate cost of $14.168 billion. According to 720 Global had ConocoPhillips' management and the board of directors not engaged in repurchases, COP would still have the $14.168 billion spent on buybacks since 2011, which could be used to support the $0.74 per share dividend for almost 5 years. "More importantly, the company could be in the envious position of employing the capital to buy assets that are being liquidated by other companies at cents on the dollar. Shareholders are suffering in many ways from the abuses of management in years past and will continue to do so for years to come."

"Fortunately for James Mulva, COP’s CEO during the 2011/2012 stock buyback era, his overly generous compensation is beyond COP’s ability to reclaim. Mr. Mulva retired in June of 2012 after repurchasing approximately 20% of the company’s outstanding shares. Upon retirement he received a $260 million golden parachute from the company. That was on top of $141 million in total compensation he received in 2011. The board of directors and shareholders must have been enamored with Mulva’s performance despite poor earnings trends in his final 2 years. From 2011 to 2012 the company earnings per share fell 25% from $8.97/share to $6.72/share. Had the board factored in the effect of buybacks on earnings per share when determining Mr. Mulva’s compensation, they would have realized that earnings per share were actually 40% lower at $5.37 per share."[79]

720 Global writes that this isn’t the first time Mulva put himself before the interests of others. "In January [2009], CEO James J. Mulva cut 4% of the Houston oil giant’s workforce," wrote Jena McGregor and Nanette Byrnes in Bloomberg Businessweek. "Two months later the company announced that Mulva had earned $29 million in 2008, on top of nearly $100 million he had made in the two prior years. In Bartlesville, Okla., where a chunk of the layoffs hit, many are still looking for work. The fact that Mulva took a $10 million stock grant in 2008 instead of the $38 million he got the year before hasn’t been much comfort to former employees there, some of whom lost their homes."[80]

October 27, 2015: Jim Mulva in Talks to Help Build Proposed Cultural Center for De Pere

We Are Green Bay reported on October 27, 2015 that the De Pere City Council has given their approval to the preliminary concept, allowing planning to move forward on the $7- $9 million facility to be built by Jim and Miriam Mulva. Mulva and his wife donated $7 million towards construction of a new library at St. Norbert College dedicated six years ago. For the past year they have been in discussions with Walsh on the construction of a cultural facility. "I don't think you could have any better two people to bring this forward than the Mulva family," said De Pere Mayor Mike Walsh. The two, or three story building will offer performance spaces for both musical and theatrical groups, an atrium, meeting spaces and a Veterans Memorial. It will also have a gallery hosting two to three nationally renowned exhibits per year. De Pere will donate the building site to the Mulva's project. Walsh says the hope is to open the facility in 2017. The design team, Haley Sharpe Design, is still working on renderings of the facility. They are expected in the coming months.[81]

March 28, 2013: Jim Mulva Got $260 Million from Golden Parachute On His Way Out The Door

The Huffington Post reported on March 28, 2013 that ConocoPhillips CEO James Mulva received "an astonishing $260 million from his former employer" when he left ConocoPhillips in June, 2013 USA Today reports. Apparently, the $141 million in combined compensation and stock options he received in 2011 wasn't enough to ensure a smooth exit from the company. Unfunnily enough, Mulva's expansive severance package, or golden parachute as it's also known, is almost as large as the $266 million compensation package ConocoPhillips agreed to pay China in April after polluting 6,200 square kilometers of water off the northern coast of the country."[82]

April 26, 2012: Mulva Joins Board of Directors of General Motors

The Detroit News reported on April 26, 2012 that Mulva has been asked to join the board of directors of General Motors. "Jim's extensive experience and expertise in the energy industry and in-depth background in finance will be invaluable to GM," said General Motors Co. CEO and Chairman Dan Akerson. Mulva already serves on the board for GE, which has a partnership with GM to accelerate deploying electric vehicle charging stations in China.[83] Your Houston News reported on September 4, 2012 that Mulva will be headlining the Adult Learning Program’s Fall Session at St. John Vianney Church in Houston by speaking on the oil industry and its future in Texas on September 25, 2012.[84]

January 24, 2014: Mulva Family Donates $60 Million to Business and Engineering Schools

The University of Texas reported on January 24, 2014 that the Mulva Family Foundation has made a $60 million multiyear pledge to The University of Texas at Austin to support the McCombs School of Business and the Cockrell School of Engineering, once again demonstrating a deep commitment to the university’s future and to a continued vision of excellence in teaching and research.

  • Of the gift, $20 million will go toward the construction of the EERC, which will include the James J. and Miriam B. Mulva Conference Center and Auditorium when it is completed in 2017.
  • Another $40 million will be used to renovate the Graduate School of Business and College of Business Administration buildings, upon consideration and approval of the University of Texas System Board of Regents. The buildings will collectively be renamed the James J. and Miriam B. Mulva Hall.

"Jim Mulva's career has exemplified innovation. I am so pleased that his name and Miriam’s name will be seen by thousands of students every week in the premier facility in the U.S. for engineering innovation — and that so many students will directly benefit from the Mulvas’ gift," said Provost Gregory L. Fenves, who is a former dean of the Cockrell School of Engineering.[85]

Greg Garland, Chairman, President and CEO of Phillips 66

File:Greggarland.jpg
Greg Garland was designated the Chairman and CEO of Phillips 66, the new Downstream company created with the split-up of ConcoPhillips on May 1, 2012. Garland is expected to take charge on May 1, 2012. Greg Garland was senior vice president, Exploration and Production, Americas for ConocoPhillips at the time of the split. Photo: ConocoPhillips
File:Phillips66sculpture.jpg
A sculpture of Phillips 66 in front of the Price Tower (designed by Frank Lloyd Wright) in Bartlesville, a city in NorthEast Oklahoma that was formerly the headquarters of Phillips Petroleum Company. "I picked this company because of Bartlesville," said Phillips 66 CEO Greg Garland. "Four times over the course of 32 years I've lived here. We have good memories of Bartlesville, Oklahoma, and it's always going to be a very special place to me personally." Bartlesville has the same pride in Frank Phillips and of its century-long oil heritage as Ponca City has of oil pioneer EW Marland.
Greg Garland, Chairman, President and CEO of Phillips 66

On October 7, 2011, Greg Garland was designated the Chairman and CEO of Phillips 66, the new Downstream company created with the split-up of ConcoPhillips on May 1, 2012. Greg Garland was senior vice president, Exploration and Production, Americas for ConocoPhillips at the time of the split. Garland was previously president and chief executive officer of Chevron Phillips, a joint venture between ConocoPhillips and Chevron, with approximately 5,000 employees that is one of the world's top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics.[86][87]

According to George Pilko, founder of Pilko & Associates, a Houston- based company that advises chemical and energy companies on risk, Garland understands strategy, is a good leader and has a demeanor that makes him well liked by people who work for him. "He's got a very effective, relaxed manner," says Pilko. "Many CEOs are so hyper and wound tight, and Greg is always relaxed and in control."[88]

Garland's Education and Background

Garland was the first in his family to go to college.[89] Garland received a Bachelor of Science degree in chemical engineering from Texas A&M University in 1980. Texas A&M reported on October 30, 2014 that Garland presented a check for $1 million on behalf of Phillips 66 to the Texas A&M Foundation that will support the university’s new Engineering Education Complex (EEC). “Phillips 66 is committed to investing in education,” said Greg C. Garland, chairman and CEO of Phillips 66, and a Texas A&M chemical engineering graduate. “We need leaders from schools such as Texas A&M who will challenge the status quo and create solutions to meet rising energy needs in the decades ahead.” The company’s contribution will be used to create the “Phillips 66 Experiential Learning Laboratory” within the EEC. The new lab will help better prepare engineering students to meet the evolving needs of the engineering marketplace.[90][91]

Garland has more than 30 years of industry experience in technical and executive leadership positions with ConocoPhillips, its predecessor Phillips Petroleum Company, and Chevron Phillips Chemical Company. Garland has been with Phillips for his entire 32-year career. Garland was previously president and chief executive officer of Chevron Phillips, a joint venture between ConocoPhillips and Chevron. Before his election to that position, Garland served Chevron Phillips as senior vice president, Planning & Specialty Chemicals.[92][93]

Garland served as general manager of Qatar/Middle East for Phillips, a position he assumed in 1997.[94] Garland said that taking the job in Qatar in 1997 to manage one of the first oil operations in the Middle East for Phillips was a turning point in his career. Garland says that although he didn't want to take the job initially, he learned to view the company with a broad perspective.[95]

From 1995 to 1997, he served as general manager of natural gas liquids after serving as manager of planning and development in planning and technology. From 1992 to 1994, he was manager of the K-Resin® business unit. Garland began his career with Phillips in 1980 as a project engineer for the Plastics Technical Center. He later worked as a sales engineer for Phillips' plastics resins, business service manager for advanced materials, business development director, and olefins manager for chemicals.[96]

How Garland Was Selected for CEO of Phillips

By October 2010, CEO James Mulva was expected to retire within two years and wanted to establish a cabinet of possible successors. On October 7, 2010, ConocoPhillips announced a sweeping overhaul of its executive suite. The executive changes included the departure of the president and chief operating officer, John Carrig, and the chief financial officer, Sigmund Cornelius, as well as two senior level vice presidents. ConocoPhillips spokeswoman Cathy Cram said the changes are part of a plan to provide for a smooth transition in anticipation of Mulva's retirement. "You can assume the next leader will come from this team," Cram said. "They've been taking a lot of steps to position the company as well as they can for Mulva's successor," said Phil Weiss, an energy analyst with Argus Research who said he was pleased the company had lined up management with strong operations experience. "One of the biggest issues that many people believe Conoco faces is a somewhat lackluster production portfolio, as compared to other large integrated companies," he said. "I was of the opinion that to have someone with an operating background would be better than somebody that doesn't."[97]

Tom Fowler reported in FuelFix on October 7, 2010 that the management team reporting to Mulva at the end of the shakeup consisted of:

  • Alan Hirshberg, senior vice president, planning & strategy; formerly vice president, worldwide deep-water and Africa projects, for Exxon Mobil;
  • Greg Garland, senior vice president, exploration and production-Americas; formerly president and CEO of Chevron Phillips Chemical Co;
  • Jeff Sheets, senior vice president, finance and chief financial officer; formerly senior vice president, commercial and planning and strategy;
  • Willie C.W. Chiang, senior vice president, refining, marketing & transportation, adding responsibility for the company's commercial business activities;
  • Ryan Lance, senior vice president, exploration and production, international, and
  • Larry Archibald, senior vice president, exploration and business development, continuing in those roles.[98]

Tom Fowler reported in FuelFix on October 7, 2010 that since 2006 about a dozen executive-vice-president-level staff members moved on from ConocoPhillips, for a wide range of reasons and that a number of observers note there's been an oversized churn of talented executives from ConocoPhillips who one might have expected to stick around longer. According to Fowler some observers think the turnover may have more to do with the command-and-control management style of Chairman and CEO Jim Mulva than the day-to-day stress of working at an oil major. "It sounds like the head coach firing all the assistant coaches for a bad season, when it's really the head coach who's the problem," said one analyst. A former ConocoPhillips executive puts it another way: The company is seen by many as a major international corporation with an Oklahoma mentality (he's referring to the Bartlesville, Okla. roots of Phillips Petroleum, where Mulva worked when the firm merged with Conoco in 2002). "The latest round of departures is to clear the way for a likely successor to Mulva, who is expected to leave in a couple of years," writes Fowler. "It appears outgoing COO John Carrig didn't have the operations background the company wanted to fill that role."[99]

Brian Youngberg, an analyst with Edward Jones, says Garland's selection as CEO of Phillips was likely due to Garland's experience as chief executive officer of Chevron Phillips because he brings a wider view to Phillips including chemicals, the likely growth engine for the downstream company. Youngberg said Phillips will continue to de-emphasize refining over time, so "having someone with a broader background like Garland makes sense." ConocoPhillips brought in Garland in 2010 to oversee exploration and production in a management shake-up that included the retirement of former Chief Operating Officer John Carrig, who had been seen as Mulva's successor.[100]

Garland, who formerly headed Chevron Phillips Chemical, was selected to head the new company over Willy Chiang, senior vice president of ConocoPhillips' refining division.[101] Oxy reported on May 23, 2012 that Chiang left Phillips 66 and went to work as Executive Vice President, Operations at Occidental Petroleum Corporation with responsibility for oversight of Occidental's Midstream businesses.[102] Kristen Hays wrote at Reuters on October 7, 2011 that according to Deutsche Bank analyst Paul Sankey "we believe that Chiang sees himself as a future CEO, and he would have to find that role in a different company."[103]

Latest News About Greg Garland

March 22, 2017: Greg Garland's Salary Increases from $22.9 million in 2015 to $25.1 million in 2016

Reuters reported on March 22, 2017 that according to SEC filings Phillips 66 CEO Greg Garland's salary increased from $22.9 million in 2015 to $25.1 million in 2016.[104]

November 14, 2016: Garland Sells $6.4 Million in Phillips 66 Stock

Gurufocus reported on November 14, 2016 that Phillips 66 CEO Greg C. Garland sold 76,165 shares of Phillips on November 10, 2016 at an average price of $83.48 a share for a total sale of $6.4 million.[105]

June 6, 2016: Garland Sells 62,500 Shares of Phillips Stock

The Bibey Post reported on June 6, 2016 that the Chairman and CEO of Phillips 66 and company’s insider Greg Garland sold 62,500 shares of Phillips stock at $80.0 of a share. The transaction’s shares had a value of around $4,996,881 U.S. Dollars. Garland now owns 122,930 shares of Phillips stock.[106]

November 9, 2015: Garland Elected Chair of the Finance Committee at American Petroleum Institute

The American Petroleum Institute announced on November 9, 2015 that Phillips CEO Greg Garland has been elected cchair of the Finance Committee at the American Petroleum Institute. “Greg Garland’s long record of leadership and unique insight as well as operational knowledge of the industry’s financial landscape will maximize value for our members and provide guidance for API’s strategy. API is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. API’s more than 625 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 25 million Americans.[107]

July 25, 2015: Oil is Down but Garland's Pay is Up
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The Houston Chronicle reported on July 25, 2015 that despite domestic oil's long and lingering swoon that began last summer, Phillips CEO Greg Garland's pay is up for 2014. Garland ranked No 2 in pay for CEO's of publicaly traded companies just behind Ryan Lance of ConocoPhillips.[108] Photo: Houston Chronicle

The Houston Chronicle reported on July 25, 2015 that despite domestic oil's long and lingering swoon that began last summer, Phillips CEO Greg Garland's pay is up for 2014. Garland ranked No 2 in pay for CEO's of publicaly traded companies just behind Ryan Lance of ConocoPhillips.[109] Phillips 66's Board of Directors cut Chief Executive Greg Garland's bonus pay by 35 percent in 2014, citing market conditions and stock performance. While the company performed well against financial and operational targets, the filing states, "market conditions and stock performance at the end of 2014 did not, in the Compensation Committee's view, justify a full payout" of the incentive pay that Garland and other top executives were eligible to receive.[110]

June 29, 2015: Greg Garland is No 1 Houstonian to Know in 2015 Despite Phillips Decrease in Revenue and Stock Price

B. Candace Beeke wrote in Houston Business Journal on June 29, 2015 that Greg Garland, CEO and chairman of Phillips 66 — is still holding tight to the No. 1 spot of the "Top 100 Public Companies" based in Houston. Phillips 66 "saw one of the largest decreases in revenue, stock price and assets on The List, year over year," writes Beeke. "Despite that, it’s still No. 1 in revenue and high on the list of total assets in fiscal year 2014."[111]

March 9, 2015: Board of Directors Cuts Garland's Bonus By 35 percent after Phillips 2014 Share Decline

Reuters reported on March 9, 2015 that Phillips 66's Board of Directors cut Chief Executive Greg Garland's bonus pay by 35 percent in 2014, citing market conditions and stock performance. While the company performed well against financial and operational targets, the filing states, "market conditions and stock performance at the end of 2014 did not, in the Compensation Committee's view, justify a full payout" of the incentive pay that Garland and other top executives were eligible to receive.

Garland received a total of $24.5 million for the year, up from $19.8 million in 2013, driven largely by a higher value calculated for future pension payments. Garland's base salary rose to $1.51 million in 2014 from $1.44 million in 2013. But the value of incentive payments to Garland fell to $2.66 million in 2014 from $4.11 million in 2013. [112]

March 2, 2015: Garland Sees Brent-WTI Spread Widening to $6-10/bl

Argus Media reported on March 2, 2015 that Phillips CEO Greg Garland sees the Brent-WTI differential widening to $6-10/bl. Inventories of crude storage at Cushing have gained for 12 consecutive weeks at an average pace of 2mn bl per week. Inventories climbed during the week ending 20 February by 2.4mn bl to 48.7mn bl, the highest level since June 2013. Stock levels have doubled since the end of October, growing at a pace unmatched in more than 10 years of records kept by the Energy Information Administration (EIA). "I believe that Cushing is going to fill or close to fill to the operating level, and that will carry over through a decent portion of the year in terms of impacting inland versus coastal crude differentials," says HollyFrontier chief executive Mike Jennings.[113]

September 25, 2014: Garland Places Ethics and Safety at the Top of His List

The Daily Cougar reported on September 25, 2014 that Phillips CEO Greg Garland spoke to students at the Bauer College of Business at the University of Houston on September 23, 2014 about the importance of ethical responsibility in the business world and the place of responsible, socially conscious decisions in modern commercial enterprise as part of the school's ongoing "Distinguished Leaders Program." "You've got to have high standards if you're going to be ethical. It has to start at the very top," Garland said. "(I) fundamentally disagree with people who say that energy companies can't be good corporate citizens … I think that good ethics makes for good business." Garland stressed that aside from being the responsible and morally correct decision, good ethical business and environmental safety is also profitable long-term. "We have people who invest literally billions of dollars in our company, and I want them to know they're investing in safety," Garland said. "One major accident can absolutely devastate shareholder value." Garland also offered some words of encouragement to UH students entering the energy industry. "Your education is actually just the launching pad for a lifetime and career of learning in this industry," Garland said. "And if you're at the top of your class, I want to talk to you after the show."[114]

August 13, 2014: Garland Wants to Find a Company to Lease the North and South Towers in Ponca City
The North Tower and the South Tower, part of Phillips 66's Refinery Complex in Ponca City, contain over 250,000 square feet of Class A office space that is essentially unused. Photo: Hugh Pickens
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Ponca City resident Hugh Pickens (left) speaks with Phillips CEO Greg Garland (right)[115] about the disposition of the North Tower, South Tower, and Research West after Garland's speech to the Bartlesville Chamber of Commerce on August 13, 2014.
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The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the Refinery Complex in Ponca City. The supercrane was used to move two new 232 ton coker reactor units within the refinery on September 29, 2013. Phillips was willing to invest $70 million in the two new coker reactor units because the Ponca City Refinery is one of the best run, safest, and most profitable of Phillips' fifteen worldwide refineries and Garland wants the refinery in Ponca City to continue to run smoothly and profitably. This photograph of the supercrane in Ponca City was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.
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Some of Phillips 66's other refineries do not run as safely or trouble-free as the refinery in Ponca City says Hugh Pickens, a private investor who closely follows Phillips' worldwide refinery operations. "For example, the Borger Refinery, operated by Phillips 66 since 1927[116], has a troubled history that includes two employee deaths and eleven injured by deadly fumes from a paralyzing gas in 1979 for which OSHA cited Phillips for "willful and serious" safety violations," says Pickens. More recently Phillips' Borger Refinery suffered three serious employee injuries in March, 2014, an employee fatality in 2012, a penalty for violations of the Clean Air Act in 2014, and an unscheduled shutdown in July, 2014 that closed down the refinery for 35 days for repairs. "Borger hasn't run well this year," says Garland.[117][118] [119] [120] [121][122] [123] [124] [125] [126] [127] [128][129] Borger Refinery Photo by: Philip Klein All Rights Reserved. Photo used with permission of the photographer
Ponca: A Core Asset. Phillips CEO Greg Garland told members of the Bartlesville Chamber of Commerce on August 27, 2013 that the refinery at Ponca is a 'core asset' of Phillips 66. The refinery in Ponca City "is making very good money for us," Garland told his Bartlesville audience. Garland added that he expects gas demands in the U.S. to decline by 20 percent in the next 10 years, but that demand for refined products in South America and Africa will more than offset that decline.[130]

Phillips 66 CEO Greg Garland spoke to over 250 community leaders at the Bartlesville Chamber of Commerce on August 13, 2014 about initiatives Phillips is taking to benefit communities in the state of Oklahoma including Phillips 66's new initiative to expand the Research Center in Bartlesville and Phillips 66's gift of $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects.[131][132]

With regard to Ponca City, Garland announced at the forum that Phillips 66 has been working hard with state and local officials to figure out what to do with the North and South Towers and if Phillips and Ponca City can find a company or companies that would like to use those buildings, "I think we would like to go down that route." Garland praised the buildings and their condition effusively. "I did a refinery review in Ponca City the week before last. We actually had our review in the Marland Board Room. It is a beautiful building, a great facility," said Garland. "There is no question that these are great buildings that are part of the rich heritage of Ponca City."[133]

Garland's public statement about the North and South Towers came in response to a question from the audience from Ponca City resident Hugh Pickens. "Phillips 66 has two beautiful, nine-story office buildings in Ponca City, the North and South Towers, that together contain over 250,000 square feet of Class A office space suitable for several hundred employees that have been essentially vacant for several years," said Pickens. "Could you talk about what options you are considering for these two empty office towers? Specifically, what are the chances that you are going to continue to leave the buildings vacant, tear the two buildings down, or sell or lease them to a company or companies that could utilize them to benefit the community of Ponca City and could you share your rationale for your decision."[134]

The reason there is so much unused office space at the refinery complex is that on February 17, 2009 ConocoPhillips announced they had decided to relocate all of its 750 non-refinery positions out of Ponca City within two years and that the first 250 jobs would be moved in 2009 with 180 jobs going to Houston and 70 jobs to Bartlesville. The positions moving first included jobs in technical services, research and development, engineering and support, human resources and Internet technology, among others. Management met with hundreds of Ponca City employees to tell them the news. "It's a difficult time in general for all ConocoPhillips employees," said ConocoPhillips spokesman Tracy Harlow. "We made the strategic decision to consolidate locations for the most effective corporate operations." The decision to consolidate operations in Bartlesville and Houston was made by ConocoPhillips CEO Jim Mulva, formerly President and CEO of Phillips 66 before the merger with Conoco.[135]

"What can citizens of Ponca City do to support and encourage Greg Garland's initiative? First, if you are an employee of Phillips 66, thank Refinery Manager Tim Seidel for Garland's initiative and for Phillips 66's willingness to work with our community. Tell Mr. Seidel how important this is for Ponca City and offer your support for Phillips' decision to work with local Ponca City officials at the Ponca City Development Authority (PCDA) to find companies that will come to Ponca City to occupy space in the North Tower, South Tower, and Research West," says Pickens. "It is also extremely important that retirees of Conoco, ConocoPhillips, and Phillips 66 make their voices heard. Retirees are very influential because they know first hand the world-class resources at the refinery complex and how they have gone unused for so many years. For example, when you meet with Phillips managers and executives at retiree meetings, tell them that you do not want to see the North and South Towers torn down, that these facilities still have many years of good service left in them, and tell Phillips managers and executives that you know that Phillips 66, working together with the community of Ponca City, can use these buildings to benefit both Phillips and Ponca City."

Garland told community leaders at the Bartlesville Regional Chamber of Commerce forum that the company's commitment to Bartlesville continues and that there are no plans to close any of the Bartlesville facilities or move any of Phillips' 2,000 employees out of Bartlesville. "Bartlesville is a special and unique place," said Garland. "It has a rich part of our heritage and our legacy. It is important today. It will be important in the future of Phillips 66… A big part of the day-to-day operations and the successes of Phillips 66 are born by the people here in Bartlesville." Even with expansion at the Houston headquarters, Garland said that the space there is already at capacity and the Bartlesville facilities will continue to be full as well. Garland talked about an expansion that is currently underway at the Research Center in Bartlesville to continue the development of polyethylene technologies.[136]

During his talk to the Bartlesville Chamber, Garland also announced that Phillips will be giving $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. "We want to create a place where our students will come and be excited, be challenged and hopefully be encouraged to follow a career at a place like Phillips 66," Garland said. "We want to put the right kind of tools in the hands of students in Bartlesville so they can be more successful."[137] An application by the Ponca City School System for a STEM grant under the Signature Community Initiative was turned down by Phillips 66.[138]

The funds came through a Phillips 66 Signature Community Initiative grant application submitted to the company under an effort spearheaded by Scott Bilger, a Bartlesville school board member and Phillips 66 employee, and Granger Meador, a physics teacher who heads up Bartlesville High's science department. The new laboratories and major new course offerings will be at the high school, along with Madison and Central Middle Schools. "We are just really, really excited about the opportunity this is going to provide our students," Superintendent Gary Quinn said. "It cannot be overstated what this is going to mean to our students."[139]

October 16, 2013: Garland Appointed to Board of Directors of Amgen

On October 16, 2013 Amgen Inc. announced the appointment of Garland to the Company's Board of Directors. Garland will serve on the Governance and Nominating Committee and the Audit Committee of the Board. "We are pleased to welcome Greg Garland to the Amgen Board," said Robert A. Bradway, Chairman and CEO of Amgen. "In addition to his leadership experiences as a chief executive officer, Greg brings more than 30 years of international experience in a highly regulated industry. At a time when Amgen is expanding its global presence to serve more patients, we look forward to Greg's contributions to the Board."[140]

August 27, 2013: Garland Recognizes Contribution of E. W. Marland

ConocoPhillips announced on November 11, 2011 that the new independent downstream company created through its previously announced strategic repositioning would be named Phillips 66. When Phillips went public on May 1, 2012, Garland recognized the contribution of Frank and L.E. Phillips and the company's "birthplace" in Bartlesville, Oklahoma in 1917. "With a history that goes all the way back to petroleum industry "birthplace," in Bartlesville, Oklahoma in 1917, the company will be a leading independent company with refining, marketing, midstream and chemicals businesses operating across the globe. "Phillips 66 has strong brand recognition and value and it provides a link between our rich history and our exciting future," said Greg Garland, designated chairman and chief executive officer of Phillips 66. "Our name reflects an independent spirit and drive--two attributes of our future company."[141] According to the ConocoPhillips web site "the name Phillips 66 was chosen [for the new downstream company] because it has strong brand recognition and value, which allows us to link our rich history and our exciting future. The name represents the independent spirit and drive that will be part of the culture of Phillips 66."[142] The new company's name capitalizes on the public awareness and gives tribute to history, Garland added.[25]

On August 27, 2013 Garland spoke to the Bartlesville Chamber of Commerce and said that the reputation and success of Phillips were built from the "giants" who first created the company and recognized E. W. Marland's contribution for the first time. "We are standing on the shoulders of giants," said Garland. "People like E. W. Marland, who started Marland Oil in 1911, and Frank and L. E. Phillips that started Phillips Petroleum in 1917. I could go on and on and list the giants that have come before us that have so well positioned this company for the success that we enjoy today."[143]

September 11, 2012: Bartlesville a Special Place for Garland

The Tulsa World reported on September 12, 2012 that Garland spoke on September 11, 2012 at a packed Bartlesville Area Chamber of Commerce Forum at the city's community center downtown carrying on a tradition started several years ago by his predecessor, ConocoPhillips CEO Jim Mulva. Garland was adamant that Bartlesville's value as a global web center, combined with its heritage as home city of the original Phillips Petroleum Co. always make it important to the company's future plans. "We have deep roots here," Garland said adding that he visits the company's local operations several times a year. "It's a cost-efficient place for us to do business. I think we made the right decision." Garland noted that office space is almost maxed out locally, so he does not see more than "modest growth" adding to the 2,000 jobs Phillips 66 already has in Bartlesville. Garland was recruited out of Texas A&M by Phillips and lived many years in Bartlesville with his wife and four children.[144]

The Bartlesville Examiner-Enterprise reported on September 12, 2012 that Garland went to work for Phillips 66 as his first job out of college because of Bartlesville. "I picked this company because of Bartlesville. Four times over the course of 32 years I've lived here. We have good memories of Bartlesville, Oklahoma, and it's always going to be a very special place to me personally," said Garland. "As we were approaching the repositioning and spinning Phillips 66 out of ConocoPhillips, there was never any question that Bartlesville would continue to be a strategic and important part of our company, in the support of our company operations, for a very long time."[145]

September 11, 2012: Conoco the Only Company That Didn't Offer Garland a Job

In an anecdote that reveals Garland's humorous side and long memory, Garland told members of the Bartlesville Chamber of Commerce during his speech in September 2012 that when Garland was looking for his first job as a chemical engineer after graduating with honors from Texas A&M in 1980, Garland interviewed with 17 companies but only received job offers from 16 of the companies. More than thirty years later, Garland was still able to quote from memory to his Bartlesville audience the contents of the rejection letter he received from the only company that did not offer him a job. According to Jessica Miller writing in the Bartlesville Examiner-Enterprise, when Garland disclosed the name of the one company that did not offer him a job, "his revelation of the company - Conoco - garnered laughter from the audience."[146]

Garland's Compensation as CEO of Phillips

Businessweek reports that as of the fiscal year 2012 Garland's Total Annual Calculated Compensation is $14,423,038 including his salary and stock options.[147]

John Lowe, Member of the Phillips 66 Board of Directors

Apart from Greg Garland, J.E. (John) Lowe is the only present or former employee of ConocoPhillips serving as a member of the Board of Directors of Phillips 66. Lower was executive vice president, planning, strategy and corporate affairs, of ConocoPhillips with responsibility for emerging businesses, as well as government affairs and communications. Lowe previously served as senior vice president, corporate strategy and development and was responsible for the forward strategy, development opportunities and public relations functions of Phillips Petroleum Company. Lowe was named to this position in 2001 after serving as senior vice president of planning and strategic transactions in 2000 and vice president of planning and strategic transactions in 1999. Lowe currently serves on the board of directors for Chevron Phillips Chemical Company, Duke Energy Field Services and the Houston Museum of Natural Science.

Lowe was born in 1959 in Oskaloosa, Iowa. Lowe received a bachelor of science degree in finance and accounting from Pittsburg State University in Pittsburg, Kansas, in 1981. Lowe is a certified public accountant.[148]

Board of Directors

On April 16, 2012 Phillips 66 announced the names of the seven members of its future board of directors. Greg Garland will serve as Phillips 66' chairman, president and CEO. He most recently served as senior vice president, Exploration and Production -- Americas for ConocoPhillips. The other members of the board will be:

  • Greg Garland, Phillips 66 chairman, president and CEO
  • John Lowe, who has served as assistant to the CEO of ConocoPhillips. Lower currently serves as assistant to the CEO of ConocoPhillips, a position he has held since 2008. He previously held a series of executive positions with ConocoPhillips, including executive vice president, Exploration & Production, from 2007 to 2008 and executive vice president, Commercial, from 2006 to 2007. He currently serves on the board of Agrium Inc.
  • J. Brian Ferguson, retired chairman and CEO of Eastman Chemical Co. Ferguson served as chairman of Eastman Chemical Company (Eastman) in 2010 until his retirement and as CEO of Eastman in 2009. He became the chairman and CEO of Eastman in 2002. He currently serves on the boards of Owens Corning and NextEra Energy Inc.
  • William Loomis Jr., an independent advisor who formerly served as CEO of Lazard LLC . Loomis has been an independent financial advisor since 2009. He was a general partner and managing director of Lazard Freres & Co. from 1984 to 2002, the CEO of Lazard LLC from 2000 to 2001 and a limited managing director of Lazard LLC from 2002 to 2004. He currently serves on the boards of Pacific Capital Bancorp and Limited Brands Inc., and is also a senior advisor to Lazard LLC and China International Capital Corporation.
  • Harold McGraw III, current chairman, president and CEO of The McGraw Hill Companies. McGraw currently serves as chairman, president and CEO of The McGraw-Hill Companies. Prior to his service as chairman, he served as president and CEO from 1998 to 2000 and president and chief operating officer from 1993 to 1998. He currently serves on the boards of The McGraw-Hill Companies, ConocoPhillips and United Technologies Corporation.
  • Glen Tilton, chairman of the Midwest and was formerly chairman and CEO of United Airlines. Tilton currently serves as chairman of the Midwest of JPMorgan Chase & Co. He was chairman and CEO of United Airlines Inc. from 2002 to 2010, having previously spent more than 30 years in increasingly senior roles with Texaco Inc. including chairman and CEO in 2001. He currently serves on the boards of United Continental Holdings Inc. (as non-executive chairman), Abbot Laboratories and Corning Inc.
  • Victoria Tschinkel, chairwoman of 1000 Friends of Florida. Tschinkel served as state director of the Florida Nature Conservancy from 2003 to 2006, was senior environmental consultant to Landers & Parsons, a Tallahassee, Florida law firm, from 1987 to 2002, and was the secretary of the Florida Department of Environmental Regulation from 1981 to 1987. She currently serves on the board of ConocoPhillips.
  • Dr. Marna C. Whittington, chief executive officer of Allianz Global Investors Capital, a diversified global investment firm, from 2002 until her retirement in January 2012. Whittington was chief operating officer of Allianz Global Investors, the parent company of Allianz Global Investors Capital, from 2001 to 2011. Prior to that, she was managing director and chief operating officer of Morgan Stanley Asset Management. Whittington started in the investment management industry in 1992, joining Philadelphia-based Miller Anderson & Sherrerd. The election of Dr. Whittington on May 9, 2012 increases the total number of Phillips 66 directors to eight.[149]

"We have assembled a strong board of directors, consisting of individuals with appropriate skills and experiences to meet their governance responsibilities and contribute effectively to our company," said Garland. "Our board reflects a range of talents, diversity and expertise, particularly in the areas of accounting and finance, domestic and international markets, government and regulatory affairs, management and leadership and petroleum-related industries, sufficient to provide sound and prudent guidance with respect to our operations and interests."[150][151]

October 7, 2016: Phillips 66 Board Elects New Directors

Businesswire reported on October 7, 2016 that board of directors of Phillips 66 elected Denise L. Ramos and Gary K. Adams to serve as independent directors. The election on October 6, 2016, increases the total number of Phillips 66 directors to 10.

Ramos will serve on the Audit and Finance Committee, the Nominating and Governance Committee and the Public Policy Committee. Adams will serve on the Human Resources and Compensation Committee and the Public Policy Committee.

Ramos, 60, was appointed chief executive officer, president and a director of ITT Inc. (formerly ITT Corporation) in October 2011. She previously served as senior vice president and chief financial officer of ITT. Prior to joining ITT, Ms. Ramos served as chief financial officer for Furniture Brands International from 2005 to 2007. From 2000 to 2005, Ms. Ramos served as senior vice president and corporate treasurer at Yum! Brands, Inc. and chief financial officer for the U.S. division of KFC Corporation. Ms. Ramos began her career in 1979 at Atlantic Richfield Company (ARCO), where she spent more than 20 years serving in a number of finance positions including corporate general auditor and assistant treasurer. Ms. Ramos served on the board of Praxair, Inc. from April 2014 to September 2016. She serves on the board of trustees for the Manufacturers Alliance for Productivity and Innovation, and is also a member of the Business Roundtable and the Business Council.

Adams, 65, is currently the chief advisor of chemicals for IHS Inc. He started his chemical industry career with Union Carbide. After 15 years serving in a number of positions at Union Carbide, Mr. Adams joined Chemical Market Associates Inc. (CMAI). He served as president, CEO and chairman of the board of CMAI from 1997 until its acquisition by IHS in 2011. Mr. Adams is a director of Trecora Resources and previously served on the boards of Westlake Chemical Partners LP from July 2014 to October 2016, and Phillips 66 Partners LP from September 2013 to August 2016.[152]

Management and Governance Effectiveness at Phillips 66

December 3, 2012: Standard and Poor Judges Management and Governance to be 'Fair' at Phillips 66

Standard and Poor reported on December 3, 2012 that they judged Phillips 66 Co.'s management and governance to be 'fair' based on a consolidated approach to the Phillips 66 entities. "While the best positioned of Phillips 66 Co.'s refineries are highly competitive, the overall quality of its operations is mixed, with some facilities being, in our view, candidates for divestiture or closure over the next few years."[153]

Financial Stability of Phillips 66 and Risk Management

September 7, 2015: Phillips 66 Receives 'A' Credit Rating from Morningstar

WatchList News reported on September 7, 2015 that Phillips 66 has earned an “A” credit rating from analysts at Morningstar. The firm’s “A” rating suggests that the company is a low default risk. They also gave their stock a three star rating.[154]

April 27, 2015: Phillips 66 Receives 'A' Credit Rating from Morningstar

Mideast Times reported on April 27, 2015 that Phillips 66 has received an “A” credit rating from analysts at Morningstar. The research firm’s “A” rating indicates that the company is a low default risk.[155]

August 26, 2014: Moody's Upgrades Phillip from Baa1 to A3

Moody's reported on August 26, 2014 that they have upgraded Phillips from Baa1 to A3. The rating outlook is stable. "The upgrade of Phillips 66's senior unsecured ratings to A3 reflects the company's clearly delineated strategic focus and capital structure since its spinoff from ConocoPhillips (A1 stable) in May 2012," said Terry Marshall, Moody's Senior Vice President. "The company's significant equity investments in Chevron Phillips Chemical Company LLC (CPChem, A3 positive) and DCP Midstream LLC (Baa2 stable) add a material credit enhancement to Phillips 66's large and diversified refining assets." According to Moody's "Phillip 66's A3 senior unsecured rating is driven by the scope and diversity of its refining business, which represents about half of its proportionate EBITDA, coupled with the further diversity provided by ownership of fast-growing chemicals and midstream businesses and moderate financial leverage. The equity investments add business diversification and are two of the three principal growth vehicles for Phillips 66 along with its in-house midstream and transportation businesses. The rating is further supported by excellent liquidity, and management's commitment to balancing shareholder returns with a strong balance sheet."[156]

June 6, 2013: A.M. Best Affirms Excellent Rating for Phillips' Captive Insurer

The Fort Mills Times reported on June 6, 2013 that A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Spirit Insurance Company of Burlington, VT, the captive insurer for its ultimate parent, Phillips 66. "Business written by Spirit has a history of strong underwriting results and operating returns. The company’s loss experience has remained favorable due in part to its strong loss control program at the parent. Phillips 66 will conduct periodic reviews of Spirit’s potential loss exposures through a specialist in industrial risks," reads the report.[157]

However the report also observes that a single occurrence could result in a large loss that approaches Spirit’s limits, that partially offsetting A.M. Best's positive rating factors are Spirit’s exposure to large losses due to the limits offered on its policies as well as its significant dependence on reinsurance protection and that although the majority of Spirit’s capital is loaned to its parent, there is limited counterparty risk due to the affiliation of the two companies.[158]

December 3, 2012: Standard and Poor Assigns BBB/Stable/A-2 Corporate Credit Rating, Judges Financial Risk Profile as 'Intermediate'

Standard and Poor reported on December 3, 2012 that they had assigned a BBB/Stable/A-2 corporate credit rating to Phillips 66 Co. based on a consolidated approach to the Phillips 66 entities. "The rating on Phillips 66 Co. reflects Standard & Poor's assessment of the company's business risk profile as 'satisfactory' and financial risk profile as 'intermediate' (as our criteria define these terms)," says the report prepared by Primary Credit Analyst Mark Habib. "We view the refining sector as having significantly higher-than-average industry risk, given its exceptional degree of volatility and fixed- and working-capital intensity. Notwithstanding the relatively favorable market conditions at times over the past year, we view long-range industry fundamentals as difficult given persisting excess production capacity globally and a secular decline in demand for some key transportation fuel products in developed markets."[159]

Government Relations

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Phil Brady, the president of National Automobile Dealers Association, was named senior vice president of government affairs for Phillips 66 on July 30, 2012. Brady, who will be based in Washington, will be responsible for the company's federal, state and international policy and governmental affairs efforts.[160] Photo: Businesswire

October 20, 2014: Candidates for US Congress Discuss Wood River Refinery

The Telegraph reported on October 20, 2014 that Republican challenger for the Illinois Congressional District 12, Mike Bost, was joined by fellow Republican, John Shimkus (R- IL Dist. 15) at the Phillips 66 refinery in Wood River to discuss energy issues that affect Illinois residents. Shimkus is on the Congressional Energy Subcommittee, and was at the refinery to support Bost as well as future legislation regarding the controversial Keystone Pipeline XL. Shimkus said that the general public was not aware of how many pipelines there were in everyday use. “It is the safest, cheapest, and most environmentally sound way to move liquid product,” said Shimkus and added that Democrats in Congress were “dragging their feet” on the matter and he said that it was “ridiculous.” The two were discussing the expansion of the Keystone Pipeline with Phillips 66 in the background to display how many jobs American energy creates. According to representatives from Phillips 66, the refinery employs as many as 850 people directly and 400 indirectly through contract work. Many jobs were created when the refinery spent $4 billion to prepare for the incoming Canadian crude oil according to Shimkus. “They gave us jobs in a time when there wasn’t a lot of jobs in the area,” said Shimkus. After their short statements at the Phillips 66 refinery in Wood River, Shimkus and Bost went to Percy, Ill. to tour the Nighthawk Coal Mine.[161]

February 20, 2013: Phillips Retains Van Ness Feldman as New DC Lobbyists

Legal Times reported on February 20, 2013 that Phillips has retained Van Ness Feldman as their first outside firm to lobby in Washington to advocate for it on oil and gas industry matters, tax reform and the looming $85 billion in spending cuts known as the sequester, according to lobbying registration paperwork filed with Congress.[162]

February 20, 2013: Phillips Spent $1.5 million Lobbying Federal Government in 2012

Legal Times reported on February 20, 2013 that according to congressional records, Phillips has spent $1.5 million on federal government advocacy since it submitted lobbying registration paperwork to Congress in June 2012 and deployed three of its employees to lobby for it. In 2012 Phillips lobbied on U.S. Environmental Protection Agency issues concerning the oil and gas industry, the EPA's renewable fuel standard program and refinery rulemaking.[163]

November 14, 2012: Greg Garland Expects More Government Regulations During Second Obama Term

Fuel Fix reported on November 14, 2012 that Greg Garland expects President Barack Obama’s second term to bring a wave of regulations on their industry that portends another four years of policies that will reduce demand for their refineries’ petroleum-based fuels. “With the election now decided, I see a very active regulatory environment for the next four years,” says Garland. "There’s no question, between renewables and CAFE standards, over the next 10 to 20 years, you’re looking at a 10 to 20 percent reduction in gasoline demand. That’s something that concerns us.” Garland and Marathon Petroleum CEO Gary Heminger said new and expanded federal regulations, including the Renewable Fuel Standard and the Corporate Average Fuel Economy (CAFE) standards, have cost their companies billions over the years while cutting use of their products.[164]

July 30, 2012: Phil Brady Named Top Lobbyist for Phillips 66

The Detroit News reported on July 30, 2012 that Phil Brady, the president of National Automobile Dealers Association, has been named senior vice president of government affairs for Phillips 66. Brady, who will be based in Washington, will be responsible for the company's federal, state and international policy and governmental affairs efforts. Brady has previously served in senior White House positions for President Ronald Reagan and President George H.W. Bush and also served as general counsel at the U.S Transportation Department, and in senior positions with the U.S. Justice Department and Congress.[165] “It is important that our key constituents understand the economic value that energy companies like Phillips 66 bring to our country as a U.S. manufacturer, and Phil will help us to effectively share that story,” says Phillips 66 CEO Greg Garland. “Over just the past few months as an independent company, Phillips 66 has already put together an exceptional management team and strategy to grow in meeting the energy needs of this country,” says Brady. “I look forward to joining the team to help re-introduce this iconic energy company to our government leaders.”[166]

Public Relations and Media Relations

March 6, 2015: Phillips 66 Us Marketing Wins The American Marketing Association Houston Chapter 2014 Marketer Of The Year Award

TESTING Virtual Strategy reported on March 6, 2015 that the Houston Chapter of the American Marketing Association award Phillips 66 the Marketer Of The Year Award for 2014. To address the challenge of B2B customers bypassing their US Fuels sales representatives during initial stages of the buying process, the Phillips 66 US Marketing launched an online business-to-business digital marketing program to assist sales in acquiring new customers and retaining existing customers that included a campaign geared to cross-sell/up-sell Convenience Store Alliance (CSA) to existing customers plus other tactical programs. The campaign increased the number of customers adopting programs from an average of 16 customers per month to 103 and achieved an overall 246% increase in existing customers participating in the CSA program.[167]

December 31, 2014: The Shredder Writes: "There’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community"

Anonymous columnist "The Shredder" wrote in the New Times on December 31, 2014 that there's "here’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community, how much Phillips 66 cares about us all, and how very much it would hurt Phillips 66’s feelings if we denied the company its rail spur project. The problem is, Phillips 66 has greased the verbal wheels by giving these people a lot of money, and then turned around and given even more money to a local PR firm to tell the rest of the community just how great Phillips 66 really is. Call me a cynic, but as soon as I know someone’s been paid to say something, they lose credibility in my eyes, and I’m speaking as someone who has never been paid. Maybe they really mean it. But if that were the case, why wouldn’t they say it without being paid?"

The reality is that Phillips 66’s “good neighbor” moments tend to be choreographed, right down to photographs of a smiling spokesperson handing over an enormous check. And that’s OK. That’s what for-profit corporations do. It is not, however, what good neighbors do. I know, because my neighbor is still miffed about the time I offered to pay up front so my dog can freely pop squats in his yard. In fact, a company is not a neighbor at all, regardless of how many times a PR company repeats the term. A corporation is not a human being with human concerns; corporations are motivated by one thing: profit.

While I don’t fault Phillips 66 for behaving like a corporation any more than I fault a wild animal for behaving like a wild animal, I don’t much appreciate the fact that they’re trotting out platitudes about being there for the community in lieu of substantive discussion about the impacts of what they’re proposing. Hiring a company to attempt to wrangle and limit the media while feeding the public a heavily manipulated image of an oil company as Mr. Rogers—if Mr. Rogers was in the habit of doling out enormous checks—is a fairly oily thing to do.[168]

December 23, 2014: Judge Rules That Phillips 66 Policy Prohibiting Santa Maria Refinery Employees from Talking to the Media Violates the Law

David Minsky reports at the Santa Maria Sun that on November 25, 2014 a National Labor Relations Board administrative law judge found that Phillips policy of prohibiting Phillips employees at the Santa Maria Refinery from speaking to reporters violated the law. According to case documents, attorneys representing Phillips 66 argued in court that the policy was meant to prohibit employees from speaking on the company’s behalf about any confidential operations. But the judge rejected this argument, saying the policy was ambiguous and violates the law because employees could “reasonably construe” that it would prohibit them from discussing, among other things, labor disputes or conditions of work. Reached by email last week, Phillips 66 spokesperson Dennis H. Nuss said the company is aware of the recent decision, but didn’t make specific comments about the case. However Nuss did write: “Our company’s top priority is the safety of everyone who works at our sites and lives in our neighboring communities. In 2012, Phillips 66 redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria Refinery, and there were no staff reductions. These changes have helped maintain and improve the refinery’s high standards for safety performance.”[169]

January 2, 2013: Gregg Laskoski at US News and World Report is Critical of Lack of Tranparency at Phillips 66

Gregg Laskoski wrote at US News and World Report on January 2, 2013 that after Reuters reported that some 7,700 gallons of fuel spilled from Phillips 66's Bayway refinery in Linden, N.J., after Hurricane Sandy in November, 2012, New Jersey environmental protection officials said they were not made aware of a major spill at the Bayway plant, and the refinery failed to respond to inquiries from Reuters reporters. "Too many times, history has shown us, the Phillips 66 response or lack thereof characterizes the standard practice of the oil industry. Refineries often fail or are slow to communicate problems that create significant disruptions to fuel supplies and spikes in retail gasoline prices. More often than not, scant information is provided reluctantly, if at all," writes Laskoski. "When such things occur is silence from refineries acceptable? Or does our government and the electorate who put them there have a right to know what's really going on? "[170]

November 5, 2012: Motor Trend Journalist Takes Money To Be Spokesperson For Phillip 66

Matt Hardigree reported on Jalopnik on November 5, 2012 that Motor Trend's Jessi Lang is being paid to represent oil company Phillips 66 as a spokesperson who is trying to help influence young people to buy their gas, "something Motor Trend doesn't appear to be telling its readers." Last month a PR firm hired by Phillips 66 reached out to reporters with the results of a survey designed to evaluate the buying habits of "millenials" and offered a quote from Lang, who they identified as a spokesperson and host of Motor Trend's weekly automotive news roundup "Wide Open Throttle" on YouTube. "Taking payment from a potential newsmaker is a generally frowned upon practice, but Lang, and the PR firm representing Phillips 66, say Motor Trend approves of her simultaneously representing an automotive publication and a company that's part of the automotive industry," writes Hardigree who asked Lang if it was proper for her to take money from Phillips 66 and work as a journalist for Motor Trend at the same time. "I get paid by Motor Trend to be a journalist and to help educate others and that doesn't at all call into question my integrity as a writer," said Lang adding that "anyone within a capitalist society" should be compensated for their work. Motor Trend's Editor-in-Chief Ed Loh declined to comment if there is a conflict of interest. "In the case of Lang, Motor Trend, and Phillips 66 it seems they've skipped ahead from trying to woo car writers with free trips to paying them outright," writes Hardigree.[171]

September 6, 2012: Motor Trend's Jessi Lang says Drivers Can Clean Their Engines with Top Tier Gas Like Phillips 66

PR Newswire reported on September 6, 2012 that Jessi Lang, host of Motor Trend's "Wide Open Throttle" and Phillips 66 spokesperson, says that "millennials think they're saving money by seeking out cheaper gas, but what they don't realize is that the unbranded gasoline they're buying actually can cost them money in the long run by compromising their fuel economy and causing build-up in their engine. "By using branded TOP TIER gas like Phillips 66, 76 and Conoco, these drivers can clean up their engines and accrue significant savings over time -- especially now that these brands have had the detergent additive treat rate increased by more than 25 percent in all fuel grades."[172]

New Phillips 66 Headquarters

December 17, 2014: Phillips Places Final Beam in New Headquarters

The Houston Business Journal reported on December 17, 2014 that the final beam was cautiously placed at the highest level of Phillips' new headquarters building with a ceremonial 22-foot tree placed on top. The topping off construction milestone for the headquarters will soon "bring everybody home" from a geographically fractured family of seven Phillips 66 buildings in the Houston area, said Mike Wirkowski, Phillips 66 general manager for projects. "It's a great symbol of the commitment our company has to our employees," added Debbie Adams Phillips 66 senior vice president of HSE, projects and procurement, as well as a symbol of an old company being new again. The headquarters project is running on time for Phillips 66 even though the company switched contractors from Houston-based W.S. Bellows Construction to Rhode Island-based Gilbane Building Co. in November for undisclosed reasons.[173]

October 31, 2014: Phillips Switches Building Contractors on New Houston Headquarters

Jordan Blum reported at the Houston Business Journal on October 31, 2014 that Phillips is switching contractors for its big corporate headquarters under construction in the Westchase District terminating its deal with Houston-based W.S. Bellows Construction and has contracted with Rhode Island-based Gilbane Building Co. Dennis Nuss, Phillips 66 media relations director, did not disclose the reason for the change calling it a private contractual matter. but says that the scope, cost and timeline of the project will not be impacted, although he would not elaborate on the reason for the change. "The construction of the new Phillips 66 campus remains on schedule and is expected to be completed by mid-2016." The Phillips 66 campus is designed to house the downstream company that spun off from Houston oil major ConocoPhillips (NYSE: COP) two years ago, and will include a soccer field, café, fitness center, credit union, covered parking and training and development center. The company has leased 210,745 square feet of space for its interim headquarters at Pinnacle Westchase.[174]

November 22, 2013: Phillips Breaks Ground on New Headquarters Building

The Houston Business Journal reported on November 22, 2013 that Phillips broke ground on November 22, 2013 on its new 1.1 million-square-foot corporate campus in the Westchase District that will house all of the company’s 1,800 Houston-area employees once construction is finished in about three years.[175]

July 23, 2013: Phillips Shares Conceptual Rendering of New HQ

The Houston Chronicle reported on July 23, 2013 that Phillips' new headquarters, still in "conceptual design phase,” will include about 1.1 million square-feet of space in multiple buildings, along with a cafeteria, fitness center, coffee shop and conference center. The new facility, located on about 14 acres, will provide office space for the 1,800 employees that work for the company in Houston. Construction is expected to start by the end of the year. We are excited about our new state-of-the art Phillips 66 headquarters facility, which when built, will provide a location for all of our Houston employees to work together at one location, and it will provide our global employees with a place to meet, train and grow,” said spokeswoman Janet Grothe.[176]

September 12, 2012: Phillips Selects Site for New Global Headquarters

Phillips reported on September 9, 2012 that the company will build its new global headquarters at a 14-acre site located off Beltway 8 West, between Westheimer Road and Briar Forest Drive. “We searched for several months for the right site to build a headquarters campus where our employees and future employees can come together to work, and develop their skills and talents,” said Greg C. Garland, chairman and chief executive officer of Phillips 66. “This property is conveniently located in the Westchase District and a location that aligns with our commitment to making our company a great place to work.” Once ground is broken at the new site, construction is expected to take between 24-36 months.[177]

July 9, 2012: Interim Headquarters Selected

CSPNet reported on July 9, 2012 that Janet Grothe, senior adviser for health, safety and the environment at Phillips 66, confirmed that Phillips 66 has settled on a temporary headquarters in the Pinnacle Westchase building near ConocoPhillips' home office in the Houston "Energy Corridor." ConocoPhillips' headquarters is about eight miles away. In March, 2012 it sent an email to employees that said the new headquarters would be constructed near Interstate 10, within 10 miles of ConocoPhillips' current headquarters. The Pinnacle Westchase building fits that general description.[178]

March 20, 2012: Phillips 66 Headquarters to be Located in Houston

Houston Business Journals reported on March 20, 2012 that according to an email sent to employees, the new headquarters of refining and marketing spin-off company Phillips 66 will be near Interstate 10 and Beltway 8, within 10 miles of ConocoPhillips' current headquarters at 600 N. Dairy Ashford Road. The decision to locate in Houston was made because the company’s oil and gas infrastructure is already present. During the two- to three-year construction period on the new facility, Phillips 66 employees will be located in temporary locations in the company’s current space.[179]

Bartlesville Technology Hub

January 24, 2015: Phillips Is Looking at Controllable Expenses Not Personnel Cuts

Bartlesville Radio KWON reported on January 23, 2015 that Phillips 66 is looking at controllable costs including travel, supplies, hiring, the use of consultants, memberships and projects or resources that aren’t critical to the business. Company spokesman Summer Austin says Phillips 66 is asking all of its employees to identify areas where expenses can be cut or controlled because of lower oil prices and other economic factors. Although rumors are circulating that Phillips is looking at personnel costs and possible personnel cuts, Austin says she has not been told of any specific job cuts and when it comes to the possibility of layoffs, Phillips 66 executive leadership views layoffs as a last resort — never as a prime strategy.[180]

January 23. 2015: Phillips 66's Commitment to Bartlesville Will Remain Strong

The Bartlesville Examiner-Enterprise reported on January 24, 2015 that Merl Lindstrom, vice president of technology for Phillips 66, told Bartlesville’s Daybreak Rotary Club on January 23, 2015 that the company’s commitment to the local area will remain strong. “This is a time of upheaval in the energy industry,” Lindstrom said. “Things are changing pretty quickly, and so as we move through the next few months we will certainly have some changes (in the industry), but we will do our best… We’ve been here (in Bartlesville) many, many years. We’ve been around refining since the early 1900s and continue to be there.”

Lindstrom said that approximately 1,750 Phillips 66 employees work out of the company’s offices in downtown Bartlesville and another 450 are based at the Research Center in west Bartlesville. “This is one of the largest sites anywhere in the world for the concentration of Phillips 66 employees,” Lindstrom said. “Currently, I can’t see anything changing. Our Bartlesville operations and the Research Center is a great place to be. There’s none like it. This is a great place, and we have no problems attracting people to Bartlesville.”

Lindstrom said that approximately 75 percent of the work done at the Research Center is dedicated to refining, and as the technology in producing the elements in oil and gas products evolves, Phillips 66 will be able to evolve with it. Lindstrom said the Bartlesville facility — with its partnerships with ConocoPhillips, ChevronPhillips and other companies — will be at the forefront to develop new methods and technologies.[181]

December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay including Pilot Plant and PPS Assets in Bartlesville

Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.[182]

December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville

The Tulsa World reported on December 19, 2014 that Chevron Phillips Chemical Co. LP plans to build a polyethylene pilot plant at its research and technology facility in Bartlesville that should be completed in 2017. The new facility will replace the current site, which has been focused on “developing improvements in current resins or new polymer kind of innovations” since the 1970s. “As a global producer of polyethylene, we strive to support our customers with the latest technological advances and process improvements through the efforts of our research and development personnel,” said Don Lycette, vice president of research and technology for Chevron Phillips Chemical, in a written statement. “Chevron Phillips Chemical continues to build on a long history of scientific discoveries, particularly at our facility in Bartlesville, which was originally built in 1950 by Phillips Petroleum Co.” The new pilot plant will incorporate Chevron Phillips Chemical’s proprietary MarTech process for polyethylene production and technology that enables production of bimodal polyethylene resins for advanced applications.[183]

Philips CEO Greg Garland previously made mention of the expansion at the Research Center when he spoke to the Bartlesville Chamber of Commerce in August 2014.[184]

December 5, 2014: Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities

Phillips 66 announced on December 5, 2014 that in Corporate and Other, Phillips 66 plans to fund $155 million in projects primarily related to information technology and facilities.[185]

November 19, 2014: Phillips Donates $50,000 to Restore Goff Tower in Bartlesville

KWON reported on November 19, 2014 that Phillips 66 donated $50,000 and the Lyons Foundation donated $20,875 to help restore Goff Tower, designed by famed architect Bruce Goff and presented in 1964 as a gift from Mrs. H.C. Price to the children of Bartlesville. Citizens are invited for the re-opening ceremony of the Sooner Park Play Tower scheduled for Wednesday, November 26th at 2 pm.[186]

August 13, 2014: Phillips Has No Plans to Close Any Bartlesville Facilities

Nathan Thompson reported in the Bartlesville Examiner-Enterprise on August 13, 2014 that Greg Garland told a group of community leaders at the Bartlesville Regional Chamber of Commerce forum on August 12, 2014 that the company’s commitment to Bartlesville continues and that there are no plans to close any of the Bartlesville facilities. “Bartlesville is a special and unique place,” said Garland. “It has a rich part of our heritage and our legacy. It is important today. It will be important in the future of Phillips 66… A big part of the day-to-day operations and the successes of Phillips 66 are born by the people here in Bartlesville.” Garland mentioned an expansion that is currently underway at the Research Center to continue the development of polyethylene technologies. We also have a world-class research facility here in Bartlesville,” Garland said. “That differentiates us from a Valero (Energy Corporation), or a Marathon (Oil Corporation). It is very unique to our space (in the market).” Even with expansion at the Houston headquarters, Garland said the the space is already at capacity — and the Bartlesville facilities continue to be full as well.[187]

August 13, 2014: Phillips Pledges $1,700,000 to Support STEM Education in Bartlesville

The Tulsa World reported on August 13, 2014 that Phillips will be giving $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. “We want to create a place where our students will come and be excited, be challenged and hopefully be encouraged to follow a career at a place like Phillips 66,” he said. “We want to put the right kind of tools in the hands of students in Bartlesville so they can be more successful.”[188]

The funds came through a Phillips 66 Signature Community Initiative grant application submitted to the company under an effort spearheaded by Scott Bilger, a Bartlesville school board member and Phillips 66 employee, and Granger Meador, a physics teacher who heads up Bartlesville High’s science department. The new laboratories and major new course offerings will be at the high school, along with Madison and Central Middle Schools. “We are just really, really excited about the opportunity this is going to provide our students,” Superintendent Gary Quinn said. “It cannot be overstated what this is going to mean to our students.” Phillips 66 has about 2,000 workers in Bartlesville.[189]

September 1, 2013: Garland Praises Bartlesville

The Bartlesville Examiner-Enterprise reported on September 1, 2013 that Garland praised the Bartlesville and state of Oklahoma for its “rich heritage” and as a source of employee talent it provides to the company. “Oklahoma is a special place to Phillips 66,” Chairman/CEO Greg Garland told a crowd at the first forum in a series hosted by the Bartlesville Regional Chamber of Commerce held Tuesday afternoon. “This is where it all started for us. It became a rich heritage.” Of the company’s 13,500 employees worldwide, Garland said Bartlesville and Houston are the two largest population centers for employees. The headquarters in Houston employs approximately 1,800. “We have nearly three thousand employees in Oklahoma today — two thousand right here in Bartlesville,” he said. “… It’s where our global services are headquartered out of, and really the service is a machine that runs Phillips 66 each and every day, so it is a very important place.” Garland also said the reputation and success of the company were built from the “giants” who first created it, and that success continues because of those giants. “We are standing on the shoulders of giants,” said Garland. “People like E. W. Marland, who started Marland Oil in 1911, and Frank and L. E. Phillips that started Phillips Petroleum in 1917. I could go on and on and list the giants that have come before us that have so well positioned this company for the success that we envoy today.”[190]

October 27, 2012: Bartlesville Research Center Dodges a Bullet

Rod Walton reported in the Tulsa World on October 27, 2012 that with Phillips decision not to build a long-planned major research and training center in Colorado, Bartlesville employees are breathing a sigh of relief because many feared that their piece of the company might be headed to the Rocky Mountains. "Any time a major employer in the community makes a sizable investment in another location, it generates concerns," said David Wood, president of Bartlesville Development Corp. "The formal announcement that Phillips 66 will be selling the Louisville property puts this issue to rest." The Bartlesville research center has a long history. Phillips Petroleum Co. had its headquarters in the city from the early 20th century until the merger with Conoco Inc. in 2002. Now it looks like the research center is safe and sound for some years to come. "Without being complacent, indications are that the research center will continue to be a large, high-wage employer in Bartlesville for the foreseeable future," Wood said. "We couldn't be more pleased with that outcome."[191]

September 12, 2012: Bartlesville a Special Place for Garland

The Tulsa World reported on September 12, 2012 that Garland spoke on September 11, 2012 at a packed Bartlesville Area Chamber of Commerce Forum at the city's community center downtown carrying on a tradition started several years ago by his predecessor, ConocoPhillips CEO Jim Mulva. Garland was adamant that Bartlesville's value as a global web center, combined with its heritage as home city of the original Phillips Petroleum Co. always make it important to the company's future plans. "We have deep roots here," Garland said adding that he visits the company's local operations several times a year. "It's a cost-efficient place for us to do business. I think we made the right decision." Garland noted that office space is almost maxed out locally, so he does not see more than "modest growth" adding to the 2,000 jobs Phillips 66 already has in Bartlesville. Garland was recruited out of Texas A&M by Phillips and lived many years in Bartlesville with his wife and four children.[192]

The Bartlesville Examiner-Enterprise reported on September 12, 2012 that Garland went to work for Phillips 66 as his first job out of college because of Bartlesville. “I picked this company because of Bartlesville. Four times over the course of 32 years I’ve lived here. We have good memories of Bartlesville, Oklahoma, and it’s always going to be a very special place to me personally," said Garland. “As we were approaching the repositioning and spinning Phillips 66 out of ConocoPhillips, there was never any question that Bartlesville would continue to be a strategic and important part of our company, in the support of our company operations, for a very long time."[193]

May 1, 2012: Phillips Has 'Deep Roots' in Bartlesville

ConocoPhillips CEO Ryan Lance and Phillips 66 CEO Greg Garland reassured its employees in Oklahoma in an op-ed they wrote for the Bartlesville Examiner-Enterprise titled "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" that "ConocoPhillips and Phillips 66 together employ nearly 4,500 people in Oklahoma, an increase in recent years. Going forward, we will both maintain Global Services Centers in Bartlesville providing essential finance, information technology and other vital support to our personnel around the world. Elsewhere, Phillips 66 will continue operating the Ponca City Refinery, by far Oklahoma’s largest, and will remain the leading gasoline marketer. ConocoPhillips will continue producing oil and natural gas from the Anadarko Basin and the Panhandle area." Lance and Garland added that "we continue encouraging both current and incoming employees to maintain our proud tradition of community service. Bartlesville is a special place to work, live and raise a family, and we want to help keep it that way. This is an exciting time for ConocoPhillips and Phillips 66. All of our Oklahoma communities are great homes to our people and businesses, and we both look forward to long and bright futures here."[194]

April 29, 2012: Jim Mulva is a "True Friend of Bartlesville

The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that Jim Mulva has "proven to be a true friend to the City of Bartlesville."[195] According to Rod Walton, Bartlesville was a big beneficiary of the ConocoPhillips merger and seems to have lived a charmed life economically over the past ten years. Although the home of Frank Phillips doesn't employ 9,000 company workers as it did in the early days, the 1,000 employees added since 2002 have kept downtown buildings such as Plaza and Adams full of mid-level computer, credit and other support personnel. But now Bartlesville operations are in flux and there is much uncertainty about the future. "All employees are being moved to one of the two companies, with co-workers who once sat side to side now literally shifted to separate buildings," writes Walton. ConocoPhillips will employ about 1,700 people in the downtown Plaza and Frank Phillips Tower Center buildings and in the Adams warehouse. Phillips 66's Bartlesville workforce will number 1,900 people, housed in the main Adams and Phillips buildings and the Research and Development Center on the west edge of the city.[196] The Bartlesville Examiner-Enterprise reported on April 29, 2012 that the "split or 'repositioning' as it has been called by company officials, has required many existing local employees to shift jobs and even physically move from one building to another within the extensive downtown Bartlesville office complex" adding that "while no one can predict the future with perfect clarity, Bartlesville appears no worse for the wear during this complex process."[197]

The Stock Market and Investor Relations

File:Stockprice2013a.jpg
Phillips 2013 Stock Performance. Phillips 66 (PSX) finished 2013 with its stock price at 77.34 up 24.24 points from its clsoing price of 53.10 on December 31, 2012 for an appreciation of 45.6% over its closing price for 2013.[198] Graphic: Hugh Pickens
File:Psxperformance2012.jpg
Phillips 2012 Stock Performance. Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.[199] Graphic: Hugh Pickens

Stock Market

Stock Performance

January 1, 2014: Phillips Stock Appreciates 45.6% in 2013

Phillips 66 (PSX) finished 2013 with its stock price at 77.34 up 24.24 points from its closing price of 53.10 on December 31, 2012 for an appreciation of 57.4% over its closing price for 2013.[200]

January 1, 2013: Phillips Stock Appreciates 53.10% in 2012

Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.[201]

Dividends and Stock Repurchase

February 4, 2015: Phillips Declares Quarterly dividend of 50 Cents

Phillips 66 reported on February 4, 2015 that the board of directors of Phillips 66 has declared a quarterly dividend of 50 cents per share on Phillips 66 common stock. The dividend is payable on March 2, 2015, to shareholders of record as of the close of business on Feb. 17, 2015.[202]

October 1, 2014: Phillips Declares Quarterly dividend of 50 Cents

The Herald Online reported on October 1, 2014 that the board of directors of Phillips 66 declared a quarterly dividend of 50 cents per share on Phillips 66 common stock payable on Dec. 1, 2014 to shareholders of record as of the close of business on Nov. 14, 2014.[203]

July 10, 2014: Phillips Declares Quarterly dividend of 50 Cents

Watchlist News reported on July 10, 2014 that Phillips announced that investors of record on August 15th will be paid a dividend of 0.50 per share on September 2nd.[204]

May 7, 2014: Phillips Declares Quarterly Dividend of 50 Cents

Reuters reported on May 7, 2014 that Phillips declared a dividend of 50 cents payable on June 2 to common shareholders of record by May 19 raising its quarterly dividend by 28 percent.[205]

February 14, 2014: Garland Says Phillips Believes in Bulletproof Dividends

Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips believes in bulletproof dividends. "We think that growing shareholder distributions is key to growing total shareholder return. We believe in bullet proof dividends. We believe in not only secure but growing dividends and competitive dividends. We nearly doubled the dividends since the spin."[206]

February 7, 2014: Phillips Declares Quarterly Dividend of 39 cents

Marketwatch reported on February 7, 2014 that the board of directors of Phillips has declared a quarterly dividend of 39 cents per share on Phillips 66 common stock payable on March 3, 2014, to shareholders of record at the close of business on Feb. 18, 2014.[207]

December 6, 2013: Phillips Announces New $2 Billion Share Repurchase Program

Businesswire reported on December 6, 2013 that Phillips' board of directors has approved a new $2 billion share repurchase program, consistent with the company's strategy to grow shareholder distributions. “Returning capital to our shareholders is fundamental to creating value and delivering superior total shareholder returns,” said Phillips 66 Chairman and CEO Greg Garland. “Our disciplined capital allocation process complements these distributions with capital spending and reinvestment in our higher-valued businesses.” The shares will be repurchased from time to time in the open market at the company's discretion, subject to market conditions and other factors, and in accordance with applicable regulatory requirements.[208]

October 2, 2013: Phillips Increases Quarterly Dividend to 39 cents

Seeking Alpha reported on October 2, 2013 that the board of directors of Phillips declared a quarterly dividend of 39 cents per share on Phillips 66 common stock, representing an increase of approximately 25 percent from the prior quarter. The dividend is payable on Dec. 2, 2013, to shareholders of record at the close of business on Nov. 14, 2013. "Our objective is to consistently increase shareholder distributions, while also capturing attractive opportunities to reinvest in our businesses and grow future returns," said Phillips 66 Chairman and CEO Greg Garland. Returning capital to our shareholders remains a priority for Phillips 66, and we are pleased to deliver another increase in our quarterly dividend."[209]

July 10, 2013: Phillips Declares Quarterly Dividend of 31.25 cents

istockanalyst reported on July 10, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on September 3, 2013, to shareholders of record at the close of business on August 16, 2013.[210]

May 8, 2013: Phillips Declares Quarterly Dividend of 31.25 cents

The Wall Street Journal reported on May 8, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on June 3, 2013, to shareholders of record at the close of business on May 20, 2013.[211]

February 11, 2013: Phillips Declares Quarterly Dividend of 31.25 cents

Investors Business Daily reported on February 11, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on March 1, 2013, to shareholders of record at the close of business on Feb. 18, 2013.[212]

December 7, 2012: Phillips Increases Quarterly Dividend from 25 cents to 31.25 cents

Bloomberg reported on December 7, 2012 that Phillips has announced that the company is raising its quarterly dividend to 31.25 cents per share from 25 cents. The new dividend will be paid in the first quarter of 2013. Phillips 66 also said it approved the repurchase of another $1 billion in company stock. It approved the repurchase of $1 billion shares during the third quarter as well.[213]

October 3, 2012: Phillips Increases Quarterly Dividend from 20 cents to 25 cents

Businesswire reported on October 3, 2012 that Phillips has declared a quarterly dividend of 25 cents per share on Phillips 66 common stock, representing a 25 percent increase from the prior quarter. “This 25 percent increase reinforces our objective to provide competitive and growing dividends,” said Phillips 66 Chairman and CEO Greg Garland. “Allocating capital to dividends and repurchases while continuing to invest in the growth of our business is fundamental to our philosophy of delivering shareholder value.”[214]

July 12, 2012: Phillips 66 Initiates $0.20 Quarterly Dividend

Michael Aneiro reported on Barrons on July 11, 2012 that Phillips 66 announced a quarterly common stock dividend of 20 cents per share, payable Sept. 4 to stockholders as of July 23. “Phillips 66 has a clear strategy to improve returns and to deliver a strong, competitive dividend program to our investors,” said compay chairman and CEO Greg C. Garland. “We are convinced that returns, growth and distributions create value.”[215]

Stockholder's Meetings

May 8, 2013: Phillips Holds First Stockholder's Meeting in Houston

Greg Garland told Phillips stockholders at the first meeting that Phillips had executed the spin-off from ConocoPhillips flawlessly. "When you think about the Company, we had a strong operating performance. We ran well," said Garland. "We stood up the Company in a very favorable margin environment, so all those things came together for really strong year of financial performance for our Company. We delivered $5.4 billion of [adjusted] net income in 2012. Our return on capital employed was 22%. We're so proud of our employees and what they accomplished in standing up the Company, but also for their commitment and their dedication in creating and capturing value for our shareholders."[216]

Garland received questions from stockholders John Pajak who works at the Bayway Refinery and commended Phillips for its repsonse to Hurricane Sandy. Stockholder Jimmie Dunn commended Phillips on its first year performance and asked why Phillips bought back stock rather than increasing the dividends. Stockholder Governor Clements said he was very pleased with Phillips' performance. Stockholder Jim White said he was a suppler to Phillips and commended Phillips for the response post superstorm Sandy and for Phillips ongoing commitment to family values and safety. Stockholder Michael Mulvany, the business manager for a local steamfitters union headquartered out of North New Jersey, thanked Phillips for their commitment to safety. "My union's relationship with that refinery goes back 103 years when Mr. John D. Rockefeller opened up Standard Oil," said Mulvany. "We've been there when it was Exxon, Tosco, ConocoPhillips and now Phillips 66. And we're hoping to be there another 103 years with all you fellows, and your good team of leadership." Stockholder Caroline Hockley asked about Phillips controlled pipelines and Garland responded that Phillips has "a state-of-the-art controlled facility, one of the newest and, I think, best in the industry in Bartlesville, Oklahoma." Stockholder Jimmie Dunn asked how he could get a tide in ConocoPhillips "beautiful hot air balloon."[217]

April 17, 2013: Phillips Announces First Annual Stockholder's Meeting

The Herald Online reported on April 17, 2013 that will host its First Annual Meeting of Stockholders on Wednesday, May 8, 2013 at 9:00 a.m. CDT at the Marriott Houston Westchase at 2900 Briarpark Drive, Houston 77042. Stockholders must present an admission ticket or proof of ownership of Phillips 66 stock, as well as valid picture identification, to enter the meeting. Phillips also encourages company employees to attend the meeting.[218]

Earnings Conferences

2014 Q3: October 29, 2014: Phillips Earnings Beat Q3 Estimates on Higher Margins

Nasdaq reported on October 29, 2014 that Phillips posted adjusted third-quarter 2014 earnings of $2.02 per share, beating the Zacks Consensus Estimate of $1.69. Substantial improvement in the company's refining segment and higher marketing margins led to the outperformance.[219]

The Refining segment generated adjusted earnings of $558 million compared with a loss of $30 million in the prior-year quarter. Substantial improvement in refining margins drove the impressive results. During the quarter, the company's refining utilization was 94% and clean product yield was 84%.[220] Phillips said its realized refining margin was $10.89 a barrel and that a record 95 percent of its crude slate came from so-called advantaged U.S. crudes. "Our operations ran well during the third quarter, capturing strong margins in our refining and marketing businesses," said Garland.[221]

The Midstream segment generated adjusted quarterly earnings of $115 million compared with $147 million in the year-ago comparable quarter. The Chemicals segment generated adjusted earnings of $299 million compared with $262 million in the year-ago quarter. Earnings in the Marketing and Specialties (M&S) segment were $259 million, up from $255 million in the prior-year comparable quarter. Reduced production costs led to higher global margins which aided the results.[222]

2014 Q2: July 30, 2014: Phillips Falls Short with 10% Drop in Earnings

The Houston Business Journal reported on July 30, 2014 that Phillips fell short of estimates with a nearly 10 percent drop in second-quarter earnings from the same period in 2013 with $863 million in earnings compared to $958 million for the the second quarter of 2013. The company was boosted by its growth in the chemical sector, but its refining revenues dipped noticeably decreasing 14 percent to $390 million partly to weaker refining margins . "Chemicals earnings were driven by strong olefin and polyolefin chain margins," said Garland. "Refining benefited from higher utilization; however, our market capture rate declined."[223][224]

Garland did not elaborate on a recent fire in July at a Chevron Phillips Chemical Company LLC plant in Port Arthur that involved injuries, but he did say the facility should not be shut down for much longer. "There's no reason for that unit to be down for a prolonged period of time," he said.[225]

Phillips also reported growth in its midstream segment growing earnings from $90 million in the April-June quarter of 2013 to $108 million this year. But Jeff Dietert, an analyst with Simmons & Company International, said the results fell short of his projection that the midstream segment would report $150 million in second-quarter profit.[226]

2014 Q1: April 30, 2014: Phillips Meet Expectations with First-Quarter Earnings of $1.6 Billion

The Wall Street Journal reported on April 30, 2014 that Phillips announced first-quarter earnings of $1.6 billion and adjusted earnings of $866 million excluding $706 million primarily related to the realized gain on the Phillips Specialty Products Inc. (PSPI) exchange. This compares with fourth-quarter 2013 earnings of $826 million and adjusted earnings of $808 million. "We delivered a strong quarter, with solid performance and improved margins in our Midstream and Chemicals businesses," said Greg Garland, chairman and CEO of Phillips 66. "Our Refining results were impacted by planned downtime at several of our Gulf Coast and Central Corridor refineries and tightening crude spreads."[227]

Midstream recorded $188 million of earnings during the first quarter of 2014, $67 million higher than the prior quarter. The Chemicals segment reflecting Phillips's equity investment in Chevron Phillips Chemical Company LLC (CPChem) reported first-quarter 2014 Chemicals earnings of$316 million, an increase of $55 million from the prior quarter. Refining earnings were $306 million during the first quarter of 2014, compared with earnings of $418 million during the previous quarter. The decrease was primarily attributed to lower volumes due to planned turnaround and maintenance activities, as well as weaker realized refining margins. Despite higher worldwide market crack spreads, realized margins decreased mostly due to tightening crude spreads, lower clean product realizations and negative inventory impacts.[228]

2013 Year: January 29, 2014: Phillips 2013 Earnings Beat Expectations But Fall Short Of The Prior Year

The Houston Business Journal reported on January 29, 2014 that Phillips reported full-year 2013 earnings of $3.7 billion, or $6.02 per share, and adjusted earnings of $3.6 billion, or $5.89 per share. Analysts had expected full-year earnings of $5.64 per share. In 2012, Phillips 66 had earnings of $4.1 billion, or $6.48 per share, and adjusted earnings of $5.3 billion, or $8.38 per share.[229]

The Refining Business Segment TBD

The Chemical Business Segment TBD

The Midstream Business Segment TBD

2013 Q4: January 29, 2014: Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year

The Houston Business Journal reported on January 29, 2014 that Phillips fourth-quarter earnings beat analysts’ expectations with earnings of $826 million, or $1.37 per share, and adjusted earnings of $808 million, or $1.34 per share. Analysts polled by Thomson Reuters had estimated earnings of $1.10 per share. In the fourth quarter of 2012, Phillips 66 had earnings of $708 million, or $1.11 per share, and adjusted earnings of $1.3 billion, or $2.04 per share.[230]

The Refining Business Segment earnings were up 24 percent to $450 million, but that’s also down 53 percent from adjusted earnings of $960 million in the fourth quarter of 2012. Phillips attributed the drop to lower margins in all regions except the Gulf Coast. "Margins were negatively impacted by weaker worldwide market crack spreads; however, this was partially offset by improved market capture compared with the same period last year," the company said. Marketing and specialties earnings were also down 35 percent to $73 million, due to the sale of its U.K. power generation business and lower marketing margins attributable to rising product prices in the U.S.[231]

The Chemicial Business Segment generated adjusted earnings of $261 million compared with $246 million in the comparable quarter last year. Higher polyethylene margins, equity earnings and ethylene volumes led to the increase. This was partially offset by higher costs and lower benzene margins.[232]

The Midstream Business Segment generated adjusted earnings of $450 million compared with earnings of $960 million in the year-ago quarter. The dismal results can be traced to lower realized refining margins, owing to decline in the average worldwide market crack spread. During the quarter, Phillips 66's refining utilization was at 92% and clean product yield was 84%.[233]

Segmental earnings for Marketing and Specialities were $73 million, down from $113 million from the comparable quarter last year. The decrease was primarily due to the sale of the U.K. power generation business in Jul 2013, and lower marketing margins. This was partially offset by reduced costs and higher volumes.[234]

In the reported quarter, Phillips 66 generated $865 million of cash from operations. It also returned $876 million of capital to shareholders. Of this, $232 million was disbursed as dividends while $644 million was used to repurchase 9.9 million shares of common stock.[235]

2013 Q3: October 30, 2013:Phillips Profits are Down in Third Quarter Due to Refining Losses

Olivia Pulsinelli reported in the Houston Business Journal that Phillips' earnings for the third quarter were $535 million, or 87 cents per share, compared to $1.6 billion, or $2.51 per share, a year earlier. Analysts polled by Thomson Reuters had expected a profit of 94 cents per share. Although the company’s midstream, chemicals, and marketing and specialties businesses were up compared to last year, the refining business posted a $2 million loss. "We ran well during the quarter," said Garland. "Weaker refining margins had a significant impact on our earnings. Chemicals posted strong earnings as a result of solid utilization rates and good margins."[236]

2013 Q2: July 31, 2013: Phillips Earnings Disappoint with 19% Drop in Earnings for 2nd Quarter

FuelFix reported on July 131, 2013 that Phillips underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. “We should have run better and our earnings results reflect this,” said Garland. Phillips 66′s adjusted earnings per share of about $1.50 was well below analyst expectations of about $1. 81 for that figure.[237]

Garland cited two reasons for the disappointing earnings. First, Phillips' extended downtime at its facilities, including a refinery and a chemical plant, contributed to $175 million in lost profit. One of the outages, an extended maintenance period at a chemical plant in Port Arthur, lasted for 91 days, the duration of an entire quarter of the year. Second, higher domestic oil prices pushed down profits as the gap between the price of West Texas Intermediate, a benchmark for domestic crude, and Brent, a measure of international oil prices, narrowed substantially during the second quarter. That trend is expected to continue through the remainder of the year, with Brent currently around $107 and WTI at about $105. U.S. refiners had previously enjoyed a huge advantage over their foreign competitors because WTI prices were as much as $20 lower than Brent prices , with some U.S. crudes priced far lower because there was limited access to foreign markets.[238]

2013 Q1: May 1, 2013: Phillips' Profit in 1st Quarter Doubles from Previous Year to $2.23 per Share

Bloomberg reported on May 1, 2013 that Phillips net income for the 1st quarter rose to $1.41 billion, or $2.23 a share, from $636 million, or $1, a year earlier as the margin between oil costs and fuel prices widened and its chemical business improved. Greg Garland has said he’s focused on chemicals, pipelines and natural gas processing to reduce the volatility that comes with refining earnings. “This company is a different animal because the growth opportunities are not on the refining side of the business,” said Fadel Gheit, an analyst at Oppenheimer & Co. Refining profits rose as the margin between the cost of West Texas Intermediate oil and the price at which refiners sell fuel rose 20 percent to an average of $32.689 a barrel in the January-to-March period, according to data compiled by Bloomberg.[239]

Phillips 66 has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.[240]

2012 Q4: January 31, 2013: Phillips 66 Adjusted Profit Beats 4th Quarter Estimates But Gross Profits Down 65% When Including Impairment Charge

Bloomberg reported on January 31, 2013 that Phillips beat fourth-quarter profit estimates by 37 cents more than the $1.69 average of 16 analysts' estimates compiled by Bloomberg. Adjusted earnings for the quarter were $1.31 billion or $2.06 per share, compared to adjusted earnings of $379 million or $0.60 per share in the same period last year. However these adjusted profit figures exclude a writedown of the value of the company's interest in a plant in Malaysia of $2.06 a share. If the writedown is included, then the company reported a 65 percent decline in profit for the fourth quarter from last year as an impairment charge more than offset higher refining and chemical margins.[241][242]

The company has rallied along with other U.S. refiners by boosting access to a growing supply of domestic crude that has become cheaper than overseas oil. U.S. refiners in some regions paid an average of $17.48 less for every barrel they processed compared to the global benchmark oil price, according to data compiled by Bloomberg. "They're taking advantage of the God-given gift of very wide crude discounts and cheap natural gas," Fadel Gheit, a New York-based analyst with Oppenheimer & Co., said in a telephone interview. "They are putting the money to good use, and it's reflected in the stock price."[243]

2012 Q3: October 31, 2012: Phillips 66 Beats Analyst Expectations with 3rd Quarter Profits of $1.6 billion or $2.51 per share

Reuters reported on October 31, 2012 that Phillips announced 3rd quarters profits of $1.6 billion or $2.51 per share, compared with $1 billion or $1.65 per share a year earlier. Analysts on average had expected a profit of $2.35 per share, according to Thomson Reuters I/B/E/S.[244]

Increased access to cheaper crude oil from the United States and Canada boosted Phillips 66's quarterly profits above analyst expectations with more than half of the company's refining capacity in the central corridor of the U.S. with access to cheaper crudes in North Dakota, Texas, Kansas and other states, executives told analysts during Phillips 66's third-quarter earnings conference call. "Our U.S. advantaged crudes increased from 52 percent last year to 61 percent to date in 2012," Chief Financial Officer Greg Maxwell said.[245]

October 10, 2012: Phillips 66 to Announce Third-Quarter Financial Results on October 31

Phillips announced on October 10, 2012 that the company will release its third-quarter financial results on October 31, 2012 and host a conference call to discuss the company’s third-quarter performance and provide an update on strategic initiatives.[246]

2012 Q2: August 1, 2012: Phillips announces Profits up 14% in Second-Quarter Earnings Call

Reuters reported on August 2, 2012 that Phillips 66 posted a 14 percent jump in second-quarter profit with a net income of $1.18 billion, or $1.86 per share, up from $1.04 billion, or $1.64 per share, a year earlier. Chief Financial Officer Greg Maxwell told analysts the company's capital expenditures for 2012 would range between $1 billion and $1.5 billion. Phillips 66 said it would retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there. Garland said Phillips 66 "really likes" its Midwest and Gulf Coast refineries, which have easier access to cheaper Canadian and inland U.S. crudes. "The East and West Coast refineries are challenged refineries, and we think there are opportunities to improve them," Garland told Reuters in a post-call interview. Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude. Garland said the Bayway Refinery and Ferndale Refinery were "absolutely" more likely to stay in the company's portfolio if Phillips 66 can increase the amount of Bakken crude they run, backing out other more expensive crudes. Bayway can run up to 100,000 bpd of light crude, while Ferndale can run 50,000 and Phillips plans to rail Bakken crude to both plants. Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems. Garland says that the company is not planning potential acquisitions -- refineries or other assets -- at this time. "There's nothing really interesting to us at this time," says Garland.[247]

Plan to Get Advantaged Crudes to Every Refinery

Garland said that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day. "We are trying to get those crudes to every refinery we can. But clearly to Ferndale on the West Coast to Bayway on the East Coast, we think Ferndale can probably run 50,000 barrels a day of Bakken crude. Wood River, we can run up to 90,000 to 120,000 barrels a day of shale type crudes there. Ponca about 60,000 barrels a day. Bayway, 100,000 barrels a day of shale type crudes that we can advantage, that we can move into Bayway. Smaller Rodeo we can get at 30,000 barrels a day and Sweeny about 40,000 barrels a day. And then Alliance, we are running today Eagle Ford crude and some Bakken crude in Alliance, but ultimately 50,000 to 90,000 barrels a day. So we have a plan to get advantaged crude into most of our refineries."[248]

June 28, 2012: Phillips 66 to Hold First Earnings Call on August 1

Phillips 66 issued a press release on June 28, 2012 announcing that Phillips will issue its second-quarter earnings report on August 1 and Greg Garland and Executive Vice President and Chief Financial Officer Greg G. Maxwell will host a webcast to discuss the company’s second-quarter performance and provide an update on how the company is delivering on its strategy.[249]

Investor Conferences

September 4, 2014: Phillips Presents at Barclay CEO Energy-Power Conference

Greg Garland made a presentation to analysts at the Barclay CEO Energy-Power Conference on September 3, 2014. "So here is our strategy, growth, returns, distributions. We have an unyielding commitment to operational excellence, which for us is personal safety, process safety, environmental excellence reliability, cost management and a commitment to have a high performing organization. So right people, at the right place, at the right time to execute the plan, and having people that know how to win and are committed to differentiating shareholder value. So that's kind of the strategy."[250]

"As we look at our refining business, it's run well, it's optimized, it's minimized capital investments. We won't invest in advantaged crude at the front end, exports on the backend, yield capture, energy efficiency, but really very disciplined capital investment in our refining business. Midstream business, aggressive growth and we'll go through that today as we move into the presentation. Chemicals, aggressive growth; selective growth in our marketing and specialties businesses. We're executing well. We've identified lot of growth opportunities in the company, we'll talk about today. A lot of them around midstream and logistics, ultimately destined for our master limited partnership. We've raised the dividend 28% in May and June. The board approved additional $2 billion share repurchase, so we're at $7 billion total authorization on share repurchases."[251]

May 21, 2014: Phillips 66 presents at UBS Global Oil & Gas Conference

TBD

April 10, 2014: Phillips Presents at Phillips 66 Analyst Meeting

Phillips reported that Greg Garland, Clayton Reasor, Tim Taylor, and Greg Maxwell presented at an Analyst Meeting on April 10, 2014. "Part of our vision is to double the enterprise value of our Company based upon its historical implied value, said Garland. "We were thoughtful, we are very purposeful in how we structured Phillips 66 from the very beginning and the assets that went into the Company. We believe that our four main business segments are more valuable together than they would be separated, and we do test that continually. We think that we access lower cost of capital. We think that, looking across the value chain, that we can optimize. We can direct capital to its highest and most best use. And then finally, we can grow quicker."[252]

March 6, 2014: Phillips 66 presents at Bank of America Merrill Lynch 2014 Refining Conference

Phillips reported that Clayton Reasor and Greg Maxwell presented at Bank of America Merrill Lynch 2014 Refining Conference on March 6, 2014. "We’ve got two very good refineries on the West Coast – one in San Francisco, one in L.A. – about 230,000 barrels a day of total capacity, 110,000 barrels a day of coking capacity. They are positive cash flow, they are positive net income," said Reasor. "Capital requirements aren’t that significant. So those refineries are well positioned, but they’re generating single-digit returns and struggle as far as attracting capital. We’ve talked about how to improve performance in California, and for us, it’s around increasing the amount of advantaged crude, so how do we find ways of getting Canadian crude into California? We’re in the comment period right now at Santa Maria, a 30,000 or 35,000-barrel-a-day unit train rail unloading facility, and hopefully that will be permitted. We’re also looking at other things in California to improve the performances of those businesses. But for us, we believe California will struggle being competitive in the export market, given the costs there and the lack of advantaged crudes, and longer term, we look at California and wonder if it’s something that we need to continue to own in order to grow our chemicals industry business."[253]

February 12, 2014: Phillips presents at Credit Suisse Energy Summit

Phillips reported that Greg Garland Clayton Reasor presented at the Credit Suisse Energy Summit on February 12, 2014. Garland told security analysts that the Refining Business Segment is always is going to be a very volatile business for Phillips. "We don't see that changing in the future. I think small changes in operating rates in infrastructure are going to create dislocations. I think having a large system like we have, having a very sophisticated and large commercial organization like we have, we're going to be able to take advantage of those opportunities that come our way."[254]

August 29, 2013: Phillips presents at Barclays CEO Energy-Power Conference

Phillips reported that Greg Garland presented at Barclays CEO Energy-Power Conference on August 29, 2013. "It's going to be an energy century as you think about it; it's going to be a century of opportunity," said Garland. "We're very optimistic about the growth in U.S. manufacturing as people see $3.50 natural gas; they're looking at 8% unemployment. They see the investment that the industry is making in infrastructure and petrochemical facilities and etc. And we think at Phillips 66 we're extremely well-positioned to play our part in this changing American energy landscape and that we can be one of the premier companies in this space in terms of creating jobs, capturing value, providing energy and improving lives."[255]

May 21, 2013: Phillips Presents at UBS Global Oil & Gas Conference

Phillips reported that Greg Maxwell presented at the UBS Global Oil & Gas Conference on May 21, 2013. "We can run some lights in San Francisco. As far as working towards getting advantaged crudes into that, we're looking at options to take down via pipeline -- I mean via rail cars, and then also going over to the waterfront and barging down into those refineries," said Maxwell. "With regard to San Francisco and LA, land is expensive and short to come by. We have to do some permitting. And then also, bringing it in via tankers, we have to get some permitting as well. So all that's underway."[256]

May 15, 2013: Phillips Presents at the Citi Global Energy and Utilities Conference

Phillips reported that Tim Taylor and Greg Maxwell presented at the Citi Global Energy and Utilities Conference on May 15, 2013. "Rail for us is a relatively minor percentage of our total movement, and so we look at rail as a mobile pipeline," said Taylor at the conference. "And clearly today some of the northern plays are more oriented toward rail versus the access that you have by pipe in the southern part of the U.S. So I see rail as playing a role, but we still like pipelines. It’s more economical. But there is a lot of flexibility in rail, so I think rail continues to be a piece, but it’s not going to become the dominant mode or the primary focus."[257]

March 18, 2013: Phillips Presents at the Howard Weil 41st Annual Energy Conference

Phillips reported that they presented at the Howard Weil 41st Annual Energy Conference on March 18, 2013.[258]

February 28, 2013: Phillips to Present at Bank of America Merrill Lynch 2013 Refining Conference on March 7

The Fort Mills Times reports that Larry Ziemba, executive vice president, Refining, Project Development and Procurement of Phillips 66 will speak at the Bank of America Merrill Lynch 2013 Refining Conference in New York on Thursday, March 7 to discuss the company’s plans to enhance refining returns, as well as its overall strategy for growth and value creation.[259]

February 5, 2013: Taylor Tells Credit Suisse Energy Summit That Canadian Crude is Being Transported to California Refineries

Reuters reported on February 5, 201 that Tim Taylor, Phillips executive vice president for commercial, marketing, transportation and business development, told the Credit Suisse energy conference that Phillips has begun moving cut-price Canadian crude to its California refineries at Los Angeles and San Francisco via rail. "We're beginning to deliver Canadian crude to our California refineries by rail," said Taylor. Garland told Reuters on January 30, 2013 that Phillips was looking at coiled tube cars that are suited to bitumen in Canada's heavy oil deposits that must be heated in order to flow.[260]

January 22, 2013: Phillips 66 to Present at Credit Suisse Energy Summit on February 5, 2013

Daily Finance reported on January 22, 2013 that Tim Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 will speak to investors and securities analysts at the Credit Suisse Energy Summit in Vail, Colo. on February 5, 2013 to discuss the company's strategy to enhance refining returns, grow midstream infrastructure and chemicals capacity, and increase distributions to shareholders.[261]

December 13, 2012: Phillips Announces 2013 Capital Program at Inaugural Analyst Meeting

Phillips reported on Decmeber 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.[262]

November 27, 2012: Greg Garland to Host Inaugural Analyst Meeting on December 13

Marketwatch reported on November 27, 2012 that Greg Garland and other executives at Phillip 66 will discuss the company's strategic objectives, including its plans to enhance returns, grow profitably and increase shareholder distributions at an Inaugural Analyst Meeting in New York on December 13, 2012.

November 13, 2012: Tim Taylor Presents at Bank of America Merrill Lynch 2012 Global Energy Conference

4-traders reported on November 5, 2013 that Tim G. Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 spoke to investors and securities analysts at the Bank of America Merrill Lynch 2012 Global Energy Conference in Miami, Fla. on November 13, 2012 with an overview of the company and its strategic initiatives.[263]

September 5, 2012: Garland Speaks at Barclays CEO Energy-Power Conference

Phillips 66 reported that Phillips CEO Greg C. Garland spoke to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[264]

August 22, 2012: Garland to Speak at Barclays CEO Energy-Power Conference on September 5

Marketwatch reported on August 22, 2012 that Phillips CEO Greg C. Garland will speak to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 20120 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[265]

June 5, 2012: Garland Presents Phillips Strategy for Growth to the Citi Global Energy Conference

On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.[266]

Refining and Marketing Strategy

Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."[267]

There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."[268]

Phillips also wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.[269]

When asked a question about rationalizing refining capacity by closing down plants Garland said it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."[270]

Midstream Strategy

Garland said there are s large opportunities in terms of midstream investment in gas gathering and processing, NGL fractionation, and distribution and that Phillips has a a very aggressive investment profile in the midstream space. "We have about $7 billion of projects identified, underway in this space and so you think at the DCP JV level spending kind of $500 million a year, historical capex, we’re moving that up to about $2 billion a year," said Garland. "We also have our own embedded midstream business within Phillips 66. It’s primarily pipelines and ownership in fractionators at Conway, Borger, and Belvieu. Good business generates good returns for us in a growth area for us and we would consider growth in this area around fractionation, around LPG exports."[271]

Chemical Strategy

Garland says the NGLs that are coming on over the next 10 years are going to be feedstocks for the petrochemicals business and that the Joint Venture with Chevron is well positioned for that.[272]

June 5, 2012: Garland Presents to Investors at Citi Global Energy Conference

On May 29, 2012 Phillips 66 announced that CEO Greg Garland will speak to investors and securities analysts on June 5, 2012 at the 2012 Citi Global Energy Conference partipating n a roundtable discussion, providing a brief company overview and engaging in Q&A with investors.[273]

May 24, 2012: Clayton Reasor Presents to UBS Global Oil and Gas Conference

On May 17, 2012 Phillips 66 announced that Clayton Reasor, Phillips 66 senior vice president for Investor Relations, Strategy and Corporate Affairs, will speak to investors and securities analysts on May 24, 2012 at the UBS Global Oil and Gas Conference in Austin, Texas about Phillips 66's strategic priorities, including plans for growth and returns enhancement.[274]

Other Investor News

July 23, 2013: Phillips 66 Partners raises $377.8 million in IPO

Businessweek reported on July 23, 2013 that Phillips 66 Partners LP raised $377.8 million from its initial public offering of stock. 16.4 million shares sold at at $23 up from 15 million shares the partnership had expected to sell for $19 to $21 each. The banks managing the deal may buy another 2.5 million shares if there's demand for them and if they do, the public will own about 26 percent of Phillips 66 Partners. Phillips 66 will own the rest of it. The shares are expected to start trading on the New York Stock Exchange Tuesday under the "PSXP" ticker symbol.[275]

July 15, 2013: Phillips 66 Partners Plans $315 million IPO

Fox Business reported on July 15, 2013 that Phillips 66 Partners plans an initial public offering will likely total as much as $315 million that will include certain pipeline, terminal and storage systems—used for crude oil and refined petroleum product—in the Central and Gulf Coast regions. The IPO of approximately 15 million shares is expected to price in a range of $19 to $21 a share, according to a filing with the Securities and Exchange Commission.[276]

March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO

Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.[277]

July 3, 2012: Phillips Recommends Stockholders Reject TRC Mini-Tender Offer

CSP Net reported on July 3, 2012 that Phillips 66 Co. has recommended that shareholders not tender their shares in response to an unsolicited mini-tender offer that TRC Capital Corp. TRC is offering to purchase up to three million shares, or less than 0.48% of Phillips 66's outstanding common stock at an offer price of $31.30 per share represents a 4.78% discount to the Phillips 66 closing share price on June 25, 2012, the day prior to the commencement of TRC's mini-tender offer. "Phillips 66 strongly recommends investors obtain current market quotes for their shares of common stock and consult with their financial advisors with respect to TRC's offer," the company said. "The company does not endorse and is not associated with TRC's unsolicited mini-tender offer."[278]

June 7, 2012: Garland says Phillips Deserves a Higher P/E

On June 7, 2012 Barrons reported that Greg Garland said that Phillips is a lot more than just an oil refiner and deserves a higher price/earnings multiple than the paltry P/E ratio that refiners now garner. "We don't want the Street to just give us a refining multiple," Garland said in an interview in New York. Philips shares, at around 32, trade for less than seven times projected-2012 profits of $4.90 a share and yield 2.5% based on the company's targeted quarterly dividend of 20 cents that is set to begin in the third quarter. Garland says that Phillips has gotten about 60% of its profits on average over the past three years from higher-return businesses, principally chemicals and so-called midstream assets, including pipelines and processing facilities that handle natural-gas liquids. The chemical and midstream operations generate 20%-plus returns on capital and offer significant reinvestment opportunities.[279]

May 2, 2012: Phillips Rings Wall Street's Opening Bell

On May 2, 2012, executives and employees from Phillips 66 celebrated the company's first week of regular trading on the New York Stock Exchange by ringing the opening bell. Chairman and Chief Executive Officer Greg C. Garland led the delegation, which included employees from its Houston Headquarters and Bayway Refinery in Linden, N.J.[280]

April 23, 2012: Phillips to Join S&P 500

It was announced on April 23, 2010 that Phillips 66 will join the the S&P 500.[281]

April 17, 2012: Howard Thill says Phillips Will Have Increased Flexibility

On April 17, 2012 Howard Thill, Marathon Oil’s vice president of investor relations and public affairs, spoke about the ConocPhillips split at Oklahoma State University’s energy conference in Oklahoma City. “It’s about enhanced flexibility — the ability to focus on an individual asset or set of assets,” Thill said. “When you have a very large conglomerate, it’s very difficult to be able to generate enough information at a low enough level to give investors that transparency into the business,” Thill said. “Independent refiners and independent exploration and production companies disclose much more information about their companies than a major integrated because from a major integrated standpoint, the scale is so large that it just doesn’t make a difference in that respect.”[282]

April 4, 2012: ConocoPhillips Board of Directors Votes to Create Two New Companies

On April 4, 2012 ConocoPhillips' board of directors announced that two new companies will be separated through the distribution of shares of Phillips 66 to holders of ConocoPhillips common stock. This distribution is expected to occur after market close on April 30, 2012. ConocoPhillips shareholders will receive one share of Phillips 66 common stock for every two shares of ConocoPhillips common stock held at the close of business on the record date of April 16, 2012.[283]

Operational Excellence

File:Recordablerates.jpg
OSHA recordable rates are standard industrial safety performance measures that represent health and safety incidents per 200,000 work hours, a unit of measure chosen by the agency because it approximates the annual work of 100 employees. Lost-time incidents are those injuries or occupational illnesses that result in time away from work.[284]

Greg Garland told financial analysts on April 9, 2012 that operational excellence would be a focus at Phillips 66 and part of his strategy to grow the company. "We'll always focus on operational excellence. We'll focus on building a great organization to execute our plans."[285][286][287]

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips 66 has a long legacy of being good operators and of operational excellence. "I have a real passion for this. It's the foundation that provides the opportunity to create sustainable value growth. I'm proud of our progress here. We have more work to do."[288]

In mid 2012, Phillips 66 rolled out its five-point strategy to its employees and Tim Taylor and other senior leaders of the company have hosted dozens of town-hall meetings to convey the strategy to workers across all levels of the organization. "Taylor approaches each town-hall gathering in three steps," wrote Morey Stettner in Investor's Business Daily on June 21, 2013. "If it's held at a refinery, he begins by huddling with the site managers to review operating metrics such as safety performance. He applies 'operational excellence' principles that encourage continuous improvement. Second, he visits control rooms to get an overview of the operation. Chatting with employees, he learns about different aspects of their job and the challenges they face. Finally, he hosts town halls. Between 100 and 200 employees usually attend. After Taylor's opening remarks, he engages in a lively Q&A." Taylor and other top executives at Phillips 66 use cross-functional teams to generate ideas. For example, an internal group of 10 to 15 crude oil buyers, logistics experts, refinery technicians, salespeople and others proposed that the company use railcars to transport oil. Thanks to the team's analysis, the company announced in June 2012 that it would buy up to 2,000 railroad tank cars to ship oil from inland shale fields to coastal refineries. One year later, the use of rail is already proving a winner in helping Phillips 66 boost results. "We were an early mover in rail and I'm proud (our team) came up with that," Taylor said. "Without them, we would not have made progress as rapidly as we have."[289]

Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Operational Excellence is job one for Phillips. "We have to get this done right. We believe that we protect and enhance shareholder value when we do this well. When we send every employee home safely every day without getting hurt, when we operate the processes in control, when we operate them reliably, when we reduce our environmental footprint and we manage our costs well, we create value for the owners of our Company."[290]

Components of Operational Excellence

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that operational excellence is holistic in our view and includes personal safety, process safety, environmental excellence, reliability, and cost management. "It's all those elements wrapped together."[291]

Personal Safety, Process Safety, and Environment

Reliability

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that reliability has improved over the past couple of years. "We operate above industry average rates."[292]

Cost Management

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that part of Phillips' heritage is stringent, prudent, detailed cost management. "We have all grown up in commodity businesses. We understand the importance of cost, cost structure, and managing those costs every day."[293]

August 1, 2012: Plan to Reduce Controllable Cost by 5% with Optimize 66 Program

Phillips was asked by Paul Sankey of Deutsche Bank during their second-quarters earnings report on August 1, 2012 about the $4 billion of controllable costs and if Phillips had set a target for a 5% reduction in controllable costs for around $200 million of savings. "Yes. Controllable cost, we put a number out there $200 million. We think it is a good number," said Garland. "I frankly think we will do better than that. We tend to always exceed. We have got a program we call Optimize 66 that we are working across this budgeting process, which we are in the middle of now. And people are looking at all avenues to improve efficiency and reduce costs. And, frankly, [the boys] have come up with some great ideas from their early work that I have seen. So I think that the $200 million is a good number for a target."[294]
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  117. The statement that Borger refinery has a "troubled history" is the result of analysis by Hugh Pickens. See following footnotes.
  118. The Frederick Daily Leader reported on October 26, 1979 that two refinery workers trying to repair equipment at the Phillips Petroleum refinery at Borger, Texas were killed and 11 other were injured by deadly fumes from a paralyzing gas or acid lead in the area where they were working. One of the injured was in "very critical" condition. The accident occurred when either hydrogen sulfide gas or hydrflouric acid began leaking. "Apparently, ther was just a leakage of gas, said Jim Ormsby, director of human resources at Phillips. Ormsby said the situation had been brought under control and work at the plant was not interrupted. Frederick Daily Leader. "Fumes at Refinery Kill Two, Injure 11 Borger Workers" October 26, 1979.
  119. Officials said they were relatively certain the disabling fumes were from hydrogen sulfide gas that dissipated quickly, but the substance could have been dhydroflouric acid. A Lubbock, Texas, doctor said strong doses of hydrogen sulfide immediately paralyze the respiratory system and can kill within seconds. The gas is very dangerous, the doctor said, because it quickly overcomes a person's sense of smell. Ormsby said the 13 workers had been overhauling an "alkylation unit" at refinery unit 22 in recent weeks and "were getting it ready to start up." The fumes from the leak drifted over a platform crowded with workers after 1 pm, Ormsby said. Times-Union. "Fumes From Leakage At Refinery Kill 2" October 26, 1979.
  120. Phillips Petroleum was fined $19,600 for violating government safety regulations in connection with the death of the two workers at Borger Refinery. OSHA cited Phillips for "two willful and two serious" safety violations after the two workers fell to their deaths after they inhaled lethal gas on October 25, 1979 during a maintenance check of a special refinery tower at the refinery. Willful violations are those committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act and OSHA regulations. A serious violation is defined as one in which there is a substantial probability that death or serious physical harm could result, and the employer knew or should have known of the hazard. Jerry Bailey, OSHA's area director, said that while the autopsies were inconclusive, there was "strong evidence" to show the men died from hydrogen sulfide poisoning. The Prescott Courier. "Oil Firm Fined in Deaths" December 28, 1979.
  121. Bailey added that an OSHA inspector noted the two men did not have respirators, breathing equipment or facial protection available to them when toxic gas spewed from a pipe thought to be empty. "We feel that had Phillips been in compliance with regulations, the deaths could have been prevented," Bailey said. Lawrence Journal-World "Report Says Phillips Hit with Safety Fine" December 30, 1979.
  122. Dan Murtaugh reported at Businessweek on July 3, 2014 that Phillips plans to shut most of its Borger Refinery for as long as 35 days after it was unable to recover from a power failure, according to a report from Energy News Today. Phillips declined to comment on the report when contacted by Bloomberg. Businessweek. "Trains Keep Rolling From Permian Basin on Crude Discounts" by Dan Murtaugh. July 3, 2014.
  123. Greg Garland told analysts during the 2nd quarter earnings conference on July 30, 2014 that with Borger's major turnaround in March and the 30-day-plus outage in July, Borger hasn't run well this year. "So we're working on improving operational reliability at Borger really to me are expectations. But the July event, by the way Borger is back up and running today. But July then was unplanned outage." Seeking Alpha. "Phillips 66's (PSX) CEO Greg Garland on Q2 2014 Results - Earnings Call Transcript" July 30, 2014.
  124. Phillips said it would shut most of the production units at its refinery in Borger, Texas, over the July Fourth weekend to start a month of repairs following a power outage early this week, said sources familiar with operations at the refinery. The company had already been planning to shut the refinery's 25,000 b/d delayed coking unit over the weekend for a three-week overhaul, sources told Reuters. Trade sources have said the refinery was planning a multi-unit overhaul this month to correct operational problems created by the power outage. US Department of Energy. "Energy Assurance Daily" July 7, 2014
  125. CSP Daily News reported on March 26, 2014 that Phillips will pay a $500,000 penalty for violations of the Clean Air Act at the Borger Refinery in Borger, Texas, the Lake Charles Refinery in Westlake, La., the Wood River Refinery in Roxana, Ill., the Alliance Refinery in Belle Chasse, La., the Sweeny Refinery in Old Ocean, Texas, and several terminals across the country. Phillips also agreed to retire more than 21 billion sulfur credits that could have been used in the production of gasoline, which could potentially lead to significantly less pollution from vehicles. In a administrative settlement agreement, the EPA alleged that the company generated invalid sulfur credits between 2006 and 2012 and that Phillips failed to comply with recordkeeping, reporting, sampling and testing requirements at the five refineries. EPA discovered these violations during facility inspections and through a review of company records, which included the results of third-party company audits required by the Clean Air Act. CSP Daily News. "Phillips 66 to Pay $500,000 Over Clean Air Act Violations" March 26, 2014.
  126. Channel 7 Amarillo reported on March 18, 2014 that two Phillips employees and a contractor were injured in an accident at Borger refinery that took place at about 5 pm on March 18, 2014. The injured were taken to Golden Plains Community Hospital to receive medical treatment and the condition of the individuals is not life threatening. One employee is at Golden Plains Community Hospital, the second has been transported to the Lubbock Burn Center, and the contract worker is under observation at Golden Plains Community Hospital. Scanner traffic indicated the injured had been exposed to hydrogen sulfide. Phillips is investigating the incident. Channel 7 Connect Amarillo. "Phillips 66 employees hospitalized" by Larry Lemon. March 18, 2014.
  127. According to the "Borger News-Herald" the incident occurred during turnaround at the unit that handles hydrofluric (HF) acid. The hydrofluric acid unit was shut down at the time the accident occurred. Phillips did not confirm the exact nature of the incident. Phillips is investigating the cause and implications of the incident and details are still being clarified as the influx of turnaround workers has increased traffic inside the plant. "We want to figure out exactly what happened," said Dennis Nuss, a Senior Advisor for Phillips 66 who works with Project Communications. "We want to make sure that something similar will not happen again." When asked if the incident was due to either a chemical exposure or a fire, Nuss said, "There was no fire." The Borger News-Herald is reaching out to contract companies and contractors for more information and will update the story as more information is released. Borger News-Herald. "Workers injured in industrial accident at Phillps 66" by JC Cortez. March 19, 2014.
  128. KVII-TV in Amarillo, Texas, reported on May 1, 2012 an employee at the Phillips 66 refinery in Borger, Texas fell from a height of 100 feet at about 3pm and was taken to the Golden Plains Community Hospital in Borger where he died. "ConocoPhillips deeply regrets the loss of our employee and wishes to extend sympathy to the employee's family, friends and co-workers," said spokesman Rich Johnson. "ConocoPhillips is investigating the cause of the accident." Officials with Phillips 66 say the incident remains under investigation. It is reported that this is the first fatality at the refinery in 25 years. Reuters. "Employee dies after fall at Phillips refinery" May 1, 2012.
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  131. Presentation to the Bartlesville Chamber of Commerce by Phillips CEO Greg Garland. August 13, 2014
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  133. Presentation to the Bartlesville Chamber of Commerce by Phillips CEO Greg Garland. August 13, 2014
  134. Presentation to the Bartlesville Chamber of Commerce by Phillips CEO Greg Garland. August 13, 2014
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  138. Pickens' source for the information on the Phillips 66 Signature Community Initiative grant application that was turned down is a Ponca City official who spoke on background and requested that he remain an unnamed source. The source added that Phillips provided very little information on why the application was turned down or how the application could be improved in a future round of grants. Comment made on August 22, 2014.
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