Phillips 66 has moved quickly, definitively in crisis, CEO says
Phillips 66 Chairman and CEO Greg Garland said the company’s values and culture are driving its strong response to the global pandemic, one that focuses on protecting employees, preserving financial strength and supporting communities.
Speaking at the Bartlesville Chamber of Commerce Forum in Bartlesville, Oklahoma, on Aug. 18, Garland said the company’s track record of financial discipline and its long-term strategy will help it overcome the current challenging business environment.
“We were always built with a crisis in mind,” Garland said. “We’ve been diligent about protecting the balance sheet from the very start.”
Garland spoke at the company’s Adams Building auditorium in downtown Bartlesville, the birthplace of Phillips Petroleum and home to the Phillips 66 Bartlesville Business Operations and Innovation Center, which includes 17 business units and the Phillips 66 Research Center. The crowd, which included members of the company’s Executive Leadership Team and the chamber, was at reduced capacity to allow for social distancing.
$4.6 million invested in PPE
Garland said that Phillips 66 moved early with its three-pronged pandemic response.
The company invested $4.6 million in personal protective equipment to protect the health and safety of employees and ensure continuity of operations. The investment was on top of a suite of safety protocols, monitoring and guidance put in place to mitigate the risk of spreading COVID-19.
The company moved early to bolster its balance sheet, Garland said. Phillips 66 is reducing capital spending by $700 million and operating and administrative costs by more than $500 million. It also suspended share repurchases in mid-March, secured a term loan facility worth $2 billion and issued $2 billion of senior unsecured notes to provide additional liquidity.
“We moved definitively and quickly,” Garland said.
‘Have to get our economy back’
Staying true to its vision of providing energy and improving lives, Phillips 66 contributed $3 million to COVID-19 relief efforts in the U.S. and the United Kingdom in support of first responders, recovery funds, health care, food banks and other front-line organizations serving vulnerable populations.
Demand and profit margins for many of the products Phillips 66 manufactures remain impaired, though improved from April and May lows. The company, which operates 13 refineries globally, continues to match utilization with demand while trying to work through inventories, Garland said.
“We have to get our economy back before we can see further improvement,” said Garland, adding that he is optimistic the global economy will recover to pre-COVID-19 levels by mid-2021.
Key projects advance
Phillips 66 has been able to advance key growth projects despite the headwinds, Garland said, citing the recent startups of the Gray Oak crude-oil pipeline and the South Texas Gateway Terminal, both of which are partly owned by Phillips 66 Partners, the company’s master limited partnership. Phillips 66 also recently announced plans to convert the San Francisco Refinery’s Rodeo facility into the world’s largest renewable fuels plant in 2024.
Garland commended Phillips 66 employees, highlighting the company’s industry-leading safety performance and operating excellence through the first half of the year despite COVID-19-related challenges and disruptions.
“Across every metric, our people are putting up amazing numbers with amazing focus,” Garland said. “I’m proud of them.”