January 12, 2021
Phillips 66 is ushering in the new year with long-term commitments to building a lower-carbon business platform and to advancing its strategy with financial discipline, Chairman and CEO Greg Garland said Thursday at the Goldman Sachs Global Energy Conference.
The company is launching a new organization dubbed Emerging Energy whose focus will be on commercializing and implementing emerging energy technology within Phillips 66 operations and portfolio of assets, Garland told investors and securities analysts at the virtual event.
“The ultimate goal here is to have an Emerging Energy business that will stand beside our Midstream, our Chemical, our Refining and our Marketing and Specialties businesses,” Garland said.
Phillips 66 continues to eye the back half of 2021 for economic recovery to approach midcycle conditions, Garland said. The company expects fewer growth opportunities in the near term and has adjusted its capital allocation priorities accordingly.
“The first dollar is still going to go toward sustaining capital; the next dollar will continue to fund the dividend,” Garland said. “Paying down debt is going to emerge as a priority as we see cash generation recover, and we also would like to resume share repurchases.”
Phillips 66 will focus on advancing existing projects as part of its recently announced $1.7 billion capital program. These include Rodeo Renewed, a project to transform the San Francisco Refinery into one of the world’s largest renewable fuel plants by 2024.
“These are near-term opportunities in emerging energy that we are pursuing to help reduce greenhouse gas emissions,” Garland said. “We will leverage our asset integration, our commercial expertise and our marketing channels as we build out this new business.”
These projects, together with existing technology and innovation resources such as the company’s Energy Research and Innovation organization, provide Phillips 66 with a competitive advantage, Garland said, and set a strong foundation for Emerging Energy.
“By the middle part of the decade, it’s not inconceivable you could have a business approaching $1 billion of EBITDA,” Garland said. “I see us by, certainly in a period of 10 years, having a business that stands up on its own.”