Phillips 66 (NYSE:PSX) Q3 2023 Earnings Call Transcript

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Mark Lashier: Yes. Ryan, this is Mark. Glad to answer that question. To answer your last question, the answer is yes. If we’re outperforming our – our desire is to hit the high end of that target, and we’ve provided the flexibility in the event that there is less cash available because of market conditions, we can pull back a little bit. Another thing I would point out is our $3 billion in asset dispositions, we have not factored that cash into the $13 billion to $15 billion. So there is another level of assurance there that we can hit that. And we really are focusing on the things that we can control. As you look at the business transformation, we see those numbers, we see the reality of those numbers, and we can capture that and use that value to drive those returns.

And we also see line of sight to the additional increments of EBITDA, the $4 billion that’s coming into play. And of course, that could be impacted by market as well. But when you factor all those things in, the risk of underperforming is fairly muted. So we’ve got a high level of confidence that we can deliver.

Ryan Todd: Okay. Perfect. That’s very helpful. And then maybe just a question on the Midstream. You’ve had a little bit of time now with the consolidated position there, DCP under your belt at this point. Synergies have moved a little bit higher from $300 million to $400 million. Maybe can you talk about how you view the opportunity set there, both in terms of what you’re seeing in terms of your ability to drive commercial improvements there and maybe incremental growth down the line?

Tim Roberts: Yes, sure. Ryan, this is Tim. So yes, great question. Glad you asked. If anything else, business transformation – and I’ll talk about that because business transformation, we started that process. And as we got into it, we just found more. We’re doing the same thing with the DCP integration. So as we brought this thing together – and by the way, we won’t be complete with the integration. We will get all the IT stuff done by the end of the first quarter. And I think it’s important to say that because once that’s done in the end of the first quarter, one, we can get some redundancies in people that will move away in supporting two different systems. The other is our commercial team and our ops team will all be reading off the same screens, the single source of data.

It will all be one versus trying to look at two different systems and trying to make some decisions there. So we think the real catalyst for optimization is going to happen – or further optimization will happen in that 1Q. But probably worth me giving an example here on the commercial side, so we are really excited about what – this venture and putting it together, really excited about it. And we also think the – as we have gotten into it, as I have mentioned, we really felt like we are finding more and more as we go. And the example I want to give you is one that just came up a couple of weeks ago for us, where commercially, we were able to move barrels. I won’t put any names in here, we were able to move barrels off one pipe, put it onto another pipe and allow more volume to go on the pipe we moved off of.

And that net impacts an additional $10 million a year for us. So, we could not have done that if we were two separate entities. So, yes, are we believers, yes. And do we think there is more there, yes. And are we encouraged once we get past the first quarter about there being more opportunity, absolutely.

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