Phillips 66

Hello and welcome to the second quarter 2023 Philips 66 earnings conference call. My name is Alex and I'll 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 Detert, Vice President, Investor Relations. Jeff, you may begin.

Good morning and welcome to Phillips 66 second quarter earnings conference call. Participants on today's call will include Mark Lazor, President and CEO, Kevin Mitchell, CFO, Tim Roberts, Midstream and Chemicals, Rich Harbison, Refining, and Brian Mandel, Marketing and Commercial. Today's presentation material can be found on the investor relations section of the Phillips 66 website. along with supplemental financial and operating information. Slide 2 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. With that, I'll turn it over to Mark.

Thanks, Jeff. Good morning, and thank you for joining us today. In the second quarter, we had adjusted earnings of $1.8 billion, or $3.87 per share. We continued to execute on our strategic priorities and returned $1.8 billion to shareholders through share repurchases and dividends. Our results reflect strong operating performance across our portfolio, demonstrating the commitment of our employees to maintain safe and reliable operations. We want to thank them for their dedication to operating excellence and delivering on our mission provide energy and improve lives. In refining, we continued to run above industry average rates, and in midstream, we had record NGL frac volumes. We continued to run our Sweeney Hub fracs and export terminal at above nameplate capacities to meet strong demand. We remain committed to operating excellence and continue to focus on our strategic priorities to create value and return cash to shareholders. Slide 4 summarizes progress toward our strategic priorities. Over the last 12 months, we've returned 14% of our market cap, or $5.4 billion, to shareholders through share repurchases and dividends. We're on track to return $10 to $12 billion over the 10-quarter period between July 2022 through year-end 2024. In refining, we had another quarter of strong operating performance with crude utilization of 93%, and lower operating costs. As at the end of the quarter, more than $300 million of the $550 million run rate cost savings are attributable to refining. Kevin will provide an update on our business transformation progress in a moment. We're executing our NGO well head-to-market strategy and capturing DCP integration synergies faster than expected. Our current synergy run rate is over $200 million. We've been successful in identifying additional opportunities to increase our target from $300 million to more than $400 million by 2025. In June, we completed the acquisition of DCP Midstream's public common units for $3.8 billion, increasing our economic interest from 43% to 87%. We ended the quarter with a net debt-to-capital ratio of 35%. We expect leverage to be within our target range by year-end. In refining, we're converting our San Francisco refinery into one of the world's largest renewable fuels facilities. The capital to convert the facility to over 50,000 barrels per day of renewable fuels production is anticipated to be approximately $1.25 billion. This is an increase from our original premise due to higher than anticipated material and labor costs, as well as impacts related to weather and permitting. The revised capital cost of around $1.60 per gallon remains well below similar announced projects, and the expected returns are significantly above our refining hurdle rates. The overall project timing and scope remains unchanged. We expect to begin commercial operations in the first quarter of 2024. In chemicals, CP Chem completed construction of the one hexing unit in Old Ocean, Texas, and expects to begin operations by the end of the third quarter. The new propylene splitter at its Cedar Bayou facility is expected to start up in the fourth quarter. CP Chem and Qatar Energy are jointly building world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar. On the U.S. Gulf Coast, the Golden Triangle Polymers joint venture has project financing in place. The Ras Laffan petrochemical joint venture expects to complete project financing later this year. Both projects remain on schedule to start up in 2026. Now I'll turn the call over to Kevin to review the business transformation savings and second quarter financial results.