Phillips 66

Thank you for holding. Your conference will begin in two minutes. Thank you for your patience. Thank you. Thank you. Thank you. Welcome to the second quarter 2022 Phillips 66 earnings conference call. My name is Joanna 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'll now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

Good morning, and welcome to Phillips' 66th Second Quarter Earnings Conference Call. Participants on today's call will include Mark Lazor, President and CEO, Kevin Mitchell, EVP and CFO, Brian Mandel, EVP Marketing and Commercial, Tim Roberts, EVP Midstream, and Rich Harbison, SVP Refining. Today's presentation materials can be found on the investor relations section of the Phillips 66 website, along with supplemental financial and operating information. Slide two contains our safe harbor statement. We will be making forward-looking statements during today's call. Actual results may differ materially from today's comments. Factors that could cause actual results to differ are included here as well as in our SEC filings. Before we begin our discussion, I would like to highlight that we will be hosting an Investor Day in New York on November 9th. With that, I'll turn it over to Mark.

Thanks, Jeff. It's great to be here with you today as President and CEO. As I shared with our employees, it's an honor and a privilege to be taking on this role. And I'm happy to be part of a strong leadership team and humbled by the opportunity to lead such a great company. I'd also like to introduce Rich Harbison, our new Senior Vice President of Refining. Rich has over 30 years of experience in a variety of leadership roles across our refining, pipeline, and terminal organizations. Most recently, he was Vice President of the San Francisco Refinery, where he oversaw the Rodeo Renewed project. Our second quarter results reflect the strong market environment driven by a tight global supply and demand balance. We're focused on reliably providing critical energy products, including transportation fuels, to meet demand. We've maintained strong operations since successfully completing our spring turnaround activities early in the second quarter. Even with global refineries running near max capacities, gasoline and distillate inventories remain low, supporting elevated refining margins. In the second quarter, we had adjusted earnings of $3.3 billion, or $6.77 per share. We generated $1.8 billion in operating cash flow. Excluding working capital, operating cash flow was $3.6 billion. We returned $533 million to our shareholders through dividends and share repurchases. We resumed our share repurchase program in the second quarter and remain committed to a secure, competitive, and growing dividend. In May, we raised our dividend 5% to 97 cents per share. We've increased the dividend 11 times since our inception in 2012, resulting in an 18% compound annual growth rate. Our strategy remains consistent, supported by a strong foundation of operating excellence and a high-performing organization. We're focused on strategic return-enhancing growth investments in midstream, chemicals, and emerging energy, while selectively investing to increase returns in refining, and marketing and specialties. We continue to target a long-term capital allocation framework of 60% reinvestment in the business and 40% cash return to shareholders in the form of dividends and share repurchases. We've been successful in reducing pandemic debt, including paying down $1.5 billion of debt during the second quarter. In addition, we believe higher cash levels are prudent given the current uncertain economic environment. We're executing an enterprise-wide business transformation to achieve sustained annual cost savings of at least $700 million. David Erford, Senior Vice President and Chief Transformation Officer, has been leading the effort across our organization with engagement from over 1,000 employees. Initiatives are being implemented to position us for the future and ensure we remain competitive in any economic scenario. We look forward to sharing more details on our business transformation at our Investor Day in November. During the quarter, we continue to focus on operating excellence and advancing our strategic initiatives. In midstream, at the Sweeney Hub, we expect FRAC 4 to start up late this quarter. The total project cost for FRAC 4 is expected to be approximately $525 million. CP Chem is pursuing a portfolio of high-return projects, enhancing its asset base as well as optimizing its existing operations. CP Chem's total capital budget for 2022 is $1.4 billion, of which $1 billion is for growth projects with average expected returns above 20%. This includes growing its normal alpha-olefins business with a second world-scale unit to produce one hexene, a critical component of high-performance polyethylene. Construction is underway on the 586 million pounds per year unit located in Old Ocean, CPCAM is also building a new propylene splitter at its Cedar Bayou facility, which will expand its capacity by 1 billion pounds per year. Both the one hexene and propylene splitter projects are expected to start up in the second half of 2023. Recently, CPCAM announced plans to double its polyalpha-olefins capacity in Belgium to approximately 265 million pounds per year, which started expected in 2024. CP Chem continues to develop two world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Lathan, Qatar. A final investment decision for the U.S. Gulf Coast project is expected this year. In refining, we made a final investment decision to move forward with our Rodeo Renewed project to convert our San Francisco refinery into one of the world's largest renewable fuels facilities. The project is expected to cost approximately $850 million and begin commercial operations in the first quarter of 2024. Upon completion, Rodeo will have over 50,000 barrels per day of renewable fuels production capacity. In addition, the conversion is projected to reduce lifecycle carbon emissions by approximately 65%, or the equivalent of permanently removing 1.4 million cars from California roads. In July, we formed JET H2 Energy Austria, a 50-50 joint venture with H2 Energy Europe to develop up to 250 retail hydrogen refueling stations across Germany, Austria, and Denmark by 2026. Recently, we published our 2022 sustainability report, providing a comprehensive look at our actions to both prepare Phillips 66 to thrive in the energy future and deliver on our commitment to being one of the industry's best operators. The report includes a detailed analysis of the company's climate-related risks and opportunities as well as performance data on various environmental, social, and governance matters. Before we review the financial results, we'd like to recognize our employees' commitment to operating excellence. We're honored that our Midstream business was awarded the American Petroleum Institute's Distinguished Pipeline Safety Award for large operators for the second consecutive year. In addition, Midstream received the Platinum Safety Award in the large company division from the International Liquid Terminals Association. Congratulations to all the people working at these facilities. Well done. Now, I'll turn the call over to Kevin to review the financial results.