The dramatic decline in oil prices has led to a decision by Phillips 66 to reduce its remaining 2020 capital expenditures by $700 million, lowering the budget to$3.1 billion. It also suspended its share repurchase program.
Greg Garland, chairman and CEO made the announcement, reassuring investors that the company is well positioned to manage through the challenging environment with its high-quality, diversified asset base and strong balance sheet.
“Our top priorities remain the well-being of our employees, our communities, and safe and reliable operations. We are taking action to maintain our financial strength to ensure security of our dividend, execute capital growth projects that are near completion, and maintain our strong investment grade credit rating. We remain focused on disciplined capital allocation and creating long-term value for our shareholders.”
He explained that capital spending is now expected to be $3 billion and the trimming of the budget by $700 million is partially offset by a $400 million reduction in cash capital contributions anticipated from DCP Midstream.
The company moved to defer its midstream projects Red Oak Pipeline and Sweeny Frac 4 as well as its Phillips 66 Partners’ Liberty Pipeline. A final investment decision on the ACE Pipeline has been postponed and the company does not expect DCP Midstream will exercise its option to participate in Sweeny Fraces 2 and 3 this year.
The company also announced it is deferring and cancelling certain discretionary projects in its Refining sector and reducing its operating and administrative costs by $500 million this year.
As for the suspension of its share repurchases, the company said the move was effective March 18 after share repurchases in the first quarter totaled $440 million.
The company also announced it secured a new $1 billion 364-day term loan facility in addition to its existing $5 billion revolving credit facility.
“We will continue to closely monitor market conditions and evaluate the impact on our portfolio. We are prepared to take additional action as needed. During these times of uncertainty, the people of Phillips 66 remain fully committed to providing energy and improving lives,” said Garland.
Source: BusinessWire
