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Phillips 66 Sets 2019 Capital Expenditure at $2.3 Billion
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Phillips 66 (PSX - Free Report) has released 2019 capital budget of an estimated $2.3 billion, unchanged from the estimated capex for 2018. Of the total, $1.4 billion will be allocated to growth capital and the remaining $900 million will be allocated to sustaining capital.
Phillips 66 has apportioned $1 billion toward the Midstream segment, of which $847 million is for growth capital and the rest is for sustaining capital. The company will allocate growth capital for natural gas liquids (NGLs) and transportation businesses. An additional fractionation capacity of 300,000 barrels per day at the Sweeny Hub is included under the allocation. The development projects are integrated with current assets and infrastructure. This includes the expansion of the Beaumont Terminal that is underway as well as investment in organic projects. Some of these projects are Gray Oak Pipeline, South Texas Gateway Terminal, Clemens Caverns expansion, an isomerization unit at the Phillips 66 Lake Charles Refinery and the Lake Charles products pipeline.
The company plans to invest $923 million in the Refining segment, with $512 million allocated toward consistency, security and environmental projects. Refining growth capital of $411 million is for small, high return, rapid payout projects to boost clean product yields. Such projects include the upgrade of the fluid catalytic cracking (FCC) unit at the Sweeny Refinery along with low-capital, quick-payout projects.
Phillips 66 has allocated $161 million of the total capital spending to Marketing and Specialties. The company will invest $97 million for growth projects and focus on enhancing retail sites in Europe.
The company intends to fund $177 million in the Corporate and Other projects, related to information technology and facilities.
Taking into consideration the total capex allocation for Phillips 66 Partners L.P. the total capex for 2019 would be $2.9 billion. Phillips 66 Partners’ total capital allocation of $601 million will be completely directed towards the Midstream segment.
Phillips 66’s proportionate share of capital spending by joint ventures — Chevron Phillips Chemical Company LLC (CPChem), DCP Midstream, LLC (DCP Midstream) and WRB Refining LP (WRB) — is estimated at $1.2 billion. Including these equity associates, the company’s total 2019 capital program is projected at $4.1 billion.
Phillips 66’s share of CPChem’s 2019 capital expenditures is projected at $572 million, with $290 million targeted toward growth projects including the development of a second U.S. Gulf Coast petrochemicals project for additional ethylene and derivative capacity. It also includes debottleneck opportunities on existing units.
Phillips 66’s expected share of DCP Midstream’s 2019 capital spending is $505 million, down 24.7% from 2018 levels. The amount will primarily be allocated toward growth projects that include the Gulf Coast Express Pipeline, DJ Basin gas processing plants and expansion of natural gas liquids pipeline.
The company’s allocation toward WRB’s capital expenditures is projected at $165 million. All the three major joint ventures are expected to finance their capital spending internally.
The 2019 capital budget of Phillips 66 is in sync with its long-term strategy and reflects strong portfolio of growth projects. Moreover, midstream business is in high demand in the United States due to higher requirement for fresh pipeline and infrastructure properties in the flourishing shales stemming from existing bottleneck problems. Consequently, Phillips 66 is planning to allocate most of the 2019 capital budget to midstream operations.
The company is strongly committed in returning cash to shareholders through dividend payments and share repurchases. Since 2012, the company has returned $21.6 billion to shareholders through dividends, share repurchases and exchanges.
Zacks Rank & Key Picks
Currently, Phillips 66 carries a Zacks Rank #3 (Hold).
Headquartered in Houston, TX, Enterprise Products Partners is among the leading midstream energy players in North America. It pulled off an average positive earnings surprise of 9.3% in the last four quarters.
SunCoke acquires, owns and operates the coke making and coal mining operations. The company delivered an average positive earnings surprise of 302.6% in the last four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Phillips 66 Sets 2019 Capital Expenditure at $2.3 Billion
Phillips 66 (PSX - Free Report) has released 2019 capital budget of an estimated $2.3 billion, unchanged from the estimated capex for 2018. Of the total, $1.4 billion will be allocated to growth capital and the remaining $900 million will be allocated to sustaining capital.
Phillips 66 has apportioned $1 billion toward the Midstream segment, of which $847 million is for growth capital and the rest is for sustaining capital. The company will allocate growth capital for natural gas liquids (NGLs) and transportation businesses. An additional fractionation capacity of 300,000 barrels per day at the Sweeny Hub is included under the allocation. The development projects are integrated with current assets and infrastructure. This includes the expansion of the Beaumont Terminal that is underway as well as investment in organic projects. Some of these projects are Gray Oak Pipeline, South Texas Gateway Terminal, Clemens Caverns expansion, an isomerization unit at the Phillips 66 Lake Charles Refinery and the Lake Charles products pipeline.
The company plans to invest $923 million in the Refining segment, with $512 million allocated toward consistency, security and environmental projects. Refining growth capital of $411 million is for small, high return, rapid payout projects to boost clean product yields. Such projects include the upgrade of the fluid catalytic cracking (FCC) unit at the Sweeny Refinery along with low-capital, quick-payout projects.
Phillips 66 has allocated $161 million of the total capital spending to Marketing and Specialties. The company will invest $97 million for growth projects and focus on enhancing retail sites in Europe.
The company intends to fund $177 million in the Corporate and Other projects, related to information technology and facilities.
Taking into consideration the total capex allocation for Phillips 66 Partners L.P. the total capex for 2019 would be $2.9 billion. Phillips 66 Partners’ total capital allocation of $601 million will be completely directed towards the Midstream segment.
Phillips 66’s proportionate share of capital spending by joint ventures — Chevron Phillips Chemical Company LLC (CPChem), DCP Midstream, LLC (DCP Midstream) and WRB Refining LP (WRB) — is estimated at $1.2 billion. Including these equity associates, the company’s total 2019 capital program is projected at $4.1 billion.
Phillips 66’s share of CPChem’s 2019 capital expenditures is projected at $572 million, with $290 million targeted toward growth projects including the development of a second U.S. Gulf Coast petrochemicals project for additional ethylene and derivative capacity. It also includes debottleneck opportunities on existing units.
Phillips 66’s expected share of DCP Midstream’s 2019 capital spending is $505 million, down 24.7% from 2018 levels. The amount will primarily be allocated toward growth projects that include the Gulf Coast Express Pipeline, DJ Basin gas processing plants and expansion of natural gas liquids pipeline.
The company’s allocation toward WRB’s capital expenditures is projected at $165 million. All the three major joint ventures are expected to finance their capital spending internally.
The 2019 capital budget of Phillips 66 is in sync with its long-term strategy and reflects strong portfolio of growth projects. Moreover, midstream business is in high demand in the United States due to higher requirement for fresh pipeline and infrastructure properties in the flourishing shales stemming from existing bottleneck problems. Consequently, Phillips 66 is planning to allocate most of the 2019 capital budget to midstream operations.
The company is strongly committed in returning cash to shareholders through dividend payments and share repurchases. Since 2012, the company has returned $21.6 billion to shareholders through dividends, share repurchases and exchanges.
Zacks Rank & Key Picks
Currently, Phillips 66 carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Enterprise Products Partners L.P. (EPD - Free Report) and SunCoke Energy, Inc (SXC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Houston, TX, Enterprise Products Partners is among the leading midstream energy players in North America. It pulled off an average positive earnings surprise of 9.3% in the last four quarters.
SunCoke acquires, owns and operates the coke making and coal mining operations. The company delivered an average positive earnings surprise of 302.6% in the last four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>