Phillips 66 (NYSE:PSX) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 11:00 am ET


Phillips 66 (NYSE:PSX) Q4 2014 Earnings Conference Call - Final Transcript


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Welcome to the Fourth Quarter 2014 Phillips 66 Earnings Conference Call. My name is Paulette and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Kevin Mitchell, VP, IR. Kevin Mitchell, you may begin.

Kevin Mitchell

Thank you, Paulette. Good morning and welcome to the Phillips 66 fourth quarter earnings call. With me this morning are Chairman and CEO, Greg Garland; President, Tim Taylor; EVP and CFO, Greg Maxwell; and EVP, Clayton Reasor. The presentation material we will be using this morning can be found on the Investor Relations section of the Phillips 66 website along with supplemental, financial and operating information.

[Forward-Looking Cautionary Statements]

With that, I'll turn the call over to Greg Garland for some opening remarks.

Greg Garland

Thank you, Kevin. Good morning, everyone, and thanks for being with us today. We ended 2014 with a strong quarter. Adjusted earnings were 913 million and we generated more than 1 billion of cash. Full-year 2014 adjusted earnings were $3.8 billion. We accomplished a lot this year starting with operating excellence, we spent just over $1 billion in maintenance capital and from an operating reliability perspective, our businesses ran well. 2014 was our safest year so far. Refining, midstream, and chemicals were all top performers in the recordable injury rates. We also made progress in our environmental performance.

The strategy we shared first three years ago remains unchanged. Enhancing returns continues to be a key strategic objective. During 2014, total company adjusted return on capital employed was 14%. Chemicals, and marketing and specialties, both increased returns over 2013 at 27% and 32% respectively. Refining's adjusted return on capital employed was 12%. We continue to take steps in refining to enhance capital efficiency. From a portfolio perspective, we sold our interest in the Melaka refinery.

We continue to limit growth in capital employed in our refining business. We completed several projects to access advantage crews. We've doubled Eagle Ford and Bakken lease volumes. Around the Ponca City refinery, we've built out infrastructure for direct access to Mississippian Lime crude. At Alliance refinery, we modified the crude unit, increasing our ability to run shale crudes from 45,000 to 90,000 barrels a day. In addition, at Sweeny and Lake Charles refineries, we completed upgrades of FCC units improving yields.

All these actions were taken to increase the returns of the business with relatively small investments. We continue to shift our portfolio into higher-valued businesses. In 2014, we've made significant advances on our growth plans. We reinvested $2.7 billion on growth projects. In midstream, we made good progress on NGL frac-1 project. It's now over 50% complete. The picture on the slide is the recent one of the site. We look forward to sharing with you updates as we near completion of this project later this year. We also advanced the LPG export terminal due to