Phillips 66 to Upgrade FCCUs at Sweeny and Ponca City Refineries in 2020

Reuters, November 6, 2019

U.S. oil refiner Phillips 66 said on Wednesday its 2020 capital spending budget would fall as much as 10% below this year’s plans which include $300 million for a West Coast marketing campaign. Executives at the fourth largest U.S. refiner by capacity said in a presentation to Wall Street analysts that next year’s outlays would range from $3 billion to $3.5 billion, compared with the estimated $3.3 billion to $3.5 billion this year.

Phillips 66 has a consistent, proven strategy to create value for shareholders,” Chief Executive Greg Garland said in New York. “Our strategic priorities of growth, returns and distributions are supported by a strong foundation of operating excellence and a high-performing organization.”

The 2019 capital budget was boosted in part by $300 million to pay for a retail-fuels joint marketing campaign with an undisclosed partner on the West Coast, executives said. Phillips markets fuels under the Phillips66 and Union 76 brands.

A Phillips 66 spokesman did not respond to a request for more details.

At the high end of next year’s spending, the company would have “$1.5 billion to $2.5 billion for share repurchases, ahead of our expectations of $1.2 billion,” Credit Suisse analysts said in a note on Wednesday. “Another strong dividend increase for 2020 indicated (we expect a 10% hike).”

During the presentation, which was webcast, analysts questioned whether the capital budget fully reflected its spending for major oil pipeline and other projects being constructed.

An executive said two major pipelines being developed are financed by shippers. CEO Garland also said Phillips 66 discloses its financing arrangements to credit rating agencies.

We’re completely transparent,” he said.

In the coming year, Phillips 66’s budget will include work on gasoline-producing fluidic catalytic cracking units (FCCU) at its Sweeny, Texas, and Ponca City, Oklahoma, refineries in 2020. At the 265,000 barrel-per-day (bpd) Sweeny refinery south of Houston, Phillips 66 plans to continue modernizing the two FCCUs. Work at the 207,000 bpd Ponca City refinery in northern Oklahoma will focus on improving the yield from the FCCUs.

Also for 2020, the company is planning projects to produce diesel fuels from renewable resources at the 120,200 bpd Rodeo, California, refinery in the San Francisco Bay area and at the 221,000 bpd Humber, England, refinery.

(Reporting by Erwin Seba; Editing by Chizu Nomiyama and Richard Chang)

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