Execution 2014 ANNUAL REPORT PHILLIPS 66 2014 ANNUAL REPORT Phillips 66 P.O. Box 4428 Houston, TX 77210 www.phillips66.com © 2015 Phillips 66 Company. All rights reserved. 73708phiD1R4.indd 1-3 3/12/15 3:59 PM Financial Highlights Shareholder Information (Millions of Dollars Except Per Share Amounts) 2014 2013 ANNUAL MEETING INFORMATION REQUESTS COPIES OF FORM 10-K AND PROXY STATEMENT Sales and other operating revenues $ 161,212 $ 171,596 Phillips 66’s annual meeting of For information about dividends and stockholders will be held: certificates or to request a chane of Copies of the Annual Report on Form Income from continuing operations 4,091 3,682 Wednesday, May 6, 2015 at the address form, shareholders may contact: and the Proxy tatement, as filed Income from continuing operations attributable to Phillips 66 4,056 3,665 Marriott Houston Westchase, 2900 with the U.S. Securities and Exchange Computershare Commission, are available free by making Per common share Briarpark Drive, Houston, TX 77042 P.O. Box 30170 a request on the company’s website, Basic 7.15 5.97 Notice of the meeting and proxy materials College Station, TX 77842-3170 calling 918-977-4133 or writing: are being provided to all shareholders. Toll-free number: 1-866-437-0009 Diluted 7.10 5.92 Outside the U.S.: 201-680-6578 Phillips 66 Net income 4,797 3,743 DIRECT STOCK PURCHASE AND DIVIDEND TDD for hearing impaired: 800-231-5469 2014 Form 10-K REINVESTMENT PLAN 310 W 5th Net income attributable to Phillips 66 4,762 3,726 TDD outside the U.S.: 201-680-6610 Phillips 66’s Investor Services Program www.computershare.com/investor PRN-252 Per common share is a direct stock purchase and Bartlesville, OK 74003 Personnel in the folloin offices also Basic 8.40 6.07 dividend reinvestment plan that offers shareholders a convenient way to buy can answer investors’ questions about Additional copies of this Annual Report Diluted 8.33 6.02 additional shares and reinvest their the company: may be obtained by calling 918-977-4133 or writing: Cash and cash equivalents 5,207 5,400 common stock dividends. Purchases INSTITUTIONAL INVESTORS Total assets 48,741 49,798 of company stock through direct cash 800-624-6440 Phillips 66 payment are commission-free. [email protected] 2014 Annual Report Long-term debt 7,842 6,131 310 W 5th Please call Computershare to request INDIVIDUAL INVESTORS Total equity 22,037 22,392 an enrollment package: 866-437-0009 PRN-252 Cash from operating activities 3,529 6,027 Toll-free number: 1-866-437-0009 [email protected] Bartlesville, OK 74003 Cash dividends declared per common share 1.8900 1.3275 INTERNET You may also enroll online at COMPLIANCE AND ETHICS www.phillips66.com www.computershare.com/investor. For guidance, to express concerns or to ask questions about compliance The website includes resources of interest Registered shareholders can access and ethics issues, call Phillips 66’s to investors, including news releases important investor communications online Ethics Helpline toll free: 855-318-5390, and presentations to securities analysts; CUMULATIVE TOTAL ADJUSTED EARNINGS ADJUSTED RETURN ON CAPITAL and sign up to receive future shareholder available 24 hours a day, seven days copies of Phillips 66’s Annual Report SHAREHOLDER RETURN EMPLOYED (ROCE) materials electronically by going to ($ in millions) a week. and Proxy Statement; reports to the U.S. ($100 invested May 1, 2012) www.computershare.com/investor and Securities and Exchange Commission; and following the enrollment instructions. he ethics office also may e contacted data on Phillips 66’s health, safety and $250 via email at [email protected], the Internet environmental performance. Phillips 66 PRINCIPAL AND REGISTERED OFFICES at www.phillips66.ethicspoint.com or Peer Group* S&P 500 Phillips 66 by writing: Other websites with information on topics S&P 100 P.O. Box 4428 Attn loal thics ffice included in this annual report include: $200 Houston, TX 77210 Phillips 66 www.cpchem.com www.dcpmidstream.com 3,782 14% 2711 Centerville Road 3010 Briarpark Drive www.phillips66partners.com 3,643 14% Wilmington, DE 19808 Houston, TX 77042 5,339 22% $150 STOCK TRANSFER AGENT AND REGISTRAR Computershare 250 Royall Street $100 Canton, MA 02021 5/1/12 12/31/12 12/31/13 12/31/14 1312 14 1312 14 www.computershare.com/investor *Dow, Marathon Petroleum, Tesoro and Valero DISCLOSURE STATEMENTS Certain disclosures in this Annual Report may be considered “forward-looking” statements. These are made pursuant to “safe harbor” provisions of the ON THE FRONT COVER: Phillips 66 is building the Clemens Private Securities Litigation Reform Act of 1995. The “Cautionary Statement” in Management’s Discussion and Analysis should be read in conjunction storage caverns near Sweeny, Texas, with such statements. “Phillips 66,” “the company,” “we,” “us” and “our” are used interchangeably in this report to refer to the businesses of Phillips 66 which will initially have the capacity and its consolidated subsidiaries. to hold 6 million barrels of propane, butane, and other natural gas liquids. 73708phiD1R4.indd 4-6 3/12/15 9:37 PM AAD Chairman and Chief Executive Ocer MARCH 2015 Dear shareholders, The 14,000 people of Phillips 66 are executing the plan that has guided the company since our creation almost three years ago: deliver growth, returns and distributions on a foundation of operating excellence and a highly performing organization. In 2014, we achieved our safest year ever, delivered OPERATING EXCELLENCE on Midstream growth initiatives and generated solid here is nothin more important to all of us ho operatin and financial results e achieed a work at Phillips 66 than achieving the highest levels 14 percent adjusted return on capital employed of operatin excellence e strie for ero inuries (ROCE) and continued our disciplined capital approach, and incidents and work to reduce our environmental returnin illion of capital to our shareholders footprint nsurin safety is paramount, and e are hile inestin in our usinesses determined to e the safest and most reliale company in our industry aintainin a stron alance sheet enales us to ro our usinesses and shareholder distriutions y focusin on safe, reliale and efficient operations, throuh the commodity cycles of our industry he e protect each other, contriute to the ellein of company ended ith a netdettocapital the communities that support us and deliver quality ratio of percent products to our customers 1 There is nothing more important to all of us who work at Phillips 66 than achieving the highest levels of operating excellence. CREATING SHAREHOLDER VALUE THROUGH DISCIPLINED GROWTH TOTAL RECORDABLE INJURY RATE Value creation is the focus of our four energy FOR COMBINED WORKFORCE (Incidents per 200,000 hours worked) manufacturing and logistics businesses: Midstream, hemicals, efinin, and aretin and pecialties 0.3 hese dierse and complementary usinesses enale us to spot trends early, moe quicly and allocate 0.2 capital to the hihestreturnin opportunities A ey element in our stratey is to reshape the 0.1 company’s portfolio y deployin capital to hiher valued businesses, and we continuously test our 0 allocation decisions through a range of economic 2010 2011 2012 2013 2014 and maret scenarios Contractors mployees Combined or , illion of our illion capital udet ill fund roth in our idstream sement he remainder will focus on enhancing returns in our efinin usiness and maintainin its hih leels of BEST YEAR EVER FOR TOTAL safety and reliaility efinin is a ey usiness for us, RECORDABLE RATE AND LOST WORKDAY eneratin free cash o for reinestment as ell as CASE RATE distriutions to shareholders DELIVERING MIDSTREAM GROWTH COMBINED TOTAL RECORDABLE RATE OF Our Midstream segment is at the core of our business deelopment actiities he usiness includes 0.19 our natural as, natural as liquids s and transportation usinesses, Phillips Partners P, and our percent interest in DP idstream, LOST WORKDAY RATE OF t is ellpositioned to support the sinificant increase in oil, as and production in orth America 0.03 n idstream enerated approximately million of earnins efore interest, taxes, depreciation and amortiation DA, excludin earnins from DP idstream ith the proects e hae underay, 2 PHILLIPS 66 2014 ANNUAL REPORT 73708phiD1R4.indd 8 3/12/15 9:39 PM EXPANDING OUR EXPORT CAPABILITY Phillips ’s reeport iquefied Petroleum as xport erminal is located in our existin marine terminal in reeport, exas, and ill leerae our midstream, transportation and storae infrastructure to supply petrochemical, heatin and transportation marets loally he P export terminal ill hae an initial export capacity of million arrels per month, ith a shiploadin rate of , arrels per hour e expect the export terminal to start up in the second half of THE LPG EXPORT TERMINAL WILL HAVE AN INITIAL EXPORT CAPACITY OF 4.4 MILLION BARRELS PER MONTH. BUILDING STORAGE CAVERNS We are installing a new salt dome storage facility near Sweeny, Texas, with an initial 6 million barrels of underground storage. This capacity will be expandable to 32 million barrels and will facilitate the rapid and efficient loadin of ery large LPG transport ships. OUR STORAGE CAVERNS CAPACITY IS EXPANDABLE TO 32 MILLION BARRELS. 4 PHILLIPS 66 2014 ANNUAL REPORT 73708phiD1R4.indd 10 3/12/15 3:27 PM e expect to sinificantly increase idstream’s Pipelines ill connect our eeny facilities to the DA y ost of this roth ill come from terminal, hich ill hae the capacity to handle aout the fees e chare for transportin, storin and , arrels