Phillips 66 Q3 2023 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Manav Gupta - UBS Investment Bank, Research Division - Analyst : My question here is, and I know kind of answer, most likely you will not answer it, but we get this question a lot. A very strong result on the West Coast again. A weaker default in price environment. Is there a possibility you could let Rodeo run a little longer and capture higher margins and then just wait for LCFS to rebound later in 2024? So is there a way you could -- is there a possibility you could move the timing of startup of Rodeo to better coincide with higher LCFS prices and, in the meantime, make more money on the West Coast?

Question: Manav Gupta - UBS Investment Bank, Research Division - Analyst : That was very detailed, and I think the key is the flexibility part which you expressed. My quick follow-up here is, in your opening comments, you said you are more than a refiner, and yes, you have a very strong Marketing and Specialties business. Can we have some visibility, on the near and medium term, how that business is looking, both in Europe and in the U.S., if you could elaborate a little bit on the near-term outlook for that business?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : A couple of questions. On Marketing, the business seems like continued to do better than expected in a number of quarters. You've been adding retail stations and everything. So should we look at that your base and then what's considered mid-cycle have a structural improvement because of your -- the way that how you guided maybe changing the way how you run or adding to the asset? And if it is the case, what is the new good baseline that we can assume? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 27, 2023 / 4:00PM, PSX.N - Q3 2023 Phillips 66 Earnings Call

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : That's correct, that's correct. Because I mean, I think, historically, that it's sort of, like, mid-cycle is $400 million a quarter. But you certainly have done much better than that in the past 2 years. I think that 1 quarter, you can say, "Oh, maybe it's 1 risk," but it seems like it's pretty consistent that you guys have been performing better. I was just curious that, is it structurally that the business is stronger today as you add more retail station and everything? Or that this is truly that you think is just the market condition is much better than average?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : So Brian, that you don't feel comfortable that we have seen enough of the improvement, saying that the mid-cycle is that, indeed, that is now even better than what you had in mind, say, a couple of years ago?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay, fair enough. And maybe this one for Rich. Rich, can you share with us that -- what's the Phillips 66 turnaround activity look like for next year? Is it comparing to this year, whether it's going to be higher, lower or about the same? And also, what's your view about the industry turnaround activity for next year?

Question: John Macalister Royall - JPMorgan Chase & Co, Research Division - Analyst : So my first question is on the net debt target. You had guided to hitting the top end of your range on leverage by year-end. It's a pretty modest tailwind from working capital in 3Q, and Kevin mentioned you'll catch it up and get most of that 1H build back in 4Q. Do you need any help from price to hit that working capital number? Or could price conversely be a headwind that prevents you from getting it all back? And then does the worsening environment that we've seen here in 4Q in Refining potentially impact your ability to hit that target?

Question: John Macalister Royall - JPMorgan Chase & Co, Research Division - Analyst : Okay, great. And then I was just hoping for your latest views on WCS differentials. You should get some tailwinds from the widening we've seen here in 4Q. But where do you think the differential goes from here, particularly as we get close to the start-up of TMX? Although there's some debate over the timing there, but just any thoughts on WCS as we head into next year would be helpful.