Phillips 66 (PSX) Chris Orndorff

Post Spin-Off Price Performance 88% price appreciation since spin-off in May 2012

1 Year Performance of Oil versus PSX PSX has been more resilient than oil

Selected Security Statistics Share Price$ WK Range$57.33 – TTM P/E 10.7 Forward P/E Year Avg ROIC13.82% Current ROIC16.59% 5-Year Avg ROE15.77% Current ROE20.51% Targeted 5-Yr Growth10.1% PEG1.0

Additional Security Stats

Operating Segments Refining ▫Transforms crude oil into petroleum products ▫One of the largest refiners in U.S. and globally ▫15 refineries and processing capacity of 2.2 MMBD Midstream ▫Transports crude oil, refined products, natural gas, and NGL ▫Gathers, processes, and markets natural gas to power businesses, heat homes, and provide feedstock to petrochemical industry

Operating Segments Chemicals ▫CPChem is JV with Chevron ▫Manufactures and markets petrochemicals, polymers, and plastics ▫North America’s largest producer of high-density polyethylene and fourth-largest ethylene producer Marketing & Specialties ▫Global fuel marketing and lubricants business ▫Base oil, petroleum coke, waxes, solvents, and polypropylene

Phillips 66 has a Global Reach

Forecast of U.S. Production

Capital Program Sizable investments into PSX’s Midstream operations will evolve PSX’s current business operations over time

Significant portion of capital spending being allocated to Midstream growth

Focus on the Midstream PSX is forecasting for a 360% increase in Midstream EBITDA by 2018

Midstream Growth

Other Midstream Highlights Constructing Sweeny Fractionator One in Texas ▫100,000 barrels-per-day capacity ▫Pipelines will supply the NGL Constructing Freeport LPG terminal in Texas ▫4.4 million barrels per month of LPG export capacity expected ▫Meet growing global demand for U.S. products These two projects represent $3 billion in capital spending

Chemicals

Phillips 66 believes that, in addition to its Midstream operations, its chemicals segment has significant potential for growth ▫USGC Petrochemicals Project  3.3 Blb/Y ethane cracker and 1.1 Blb/Y polyethylene facilities  $6 B investment to increase ethylene capacity by 40%+ ▫Rise of U.S. shale expected to result in cost- advantaged feedstocks and lower energy costs  Low cost feedstocks increase ROCE in refining and chemicals

Refining

Industry-leading distillate yield of 40% Global refinery utilization rate well above industry average

Profitability

Planned Capital Allocation Investment ▫Sustain operations, fund capacity growth, and generate competitive returns Distributions ▫Plan to grow dividends at a double-digit rate ▫Continue share buybacks Capital Structure ▫Keep financial flexibility and keep D/E between 0.2 to 0.3

In all but the current year in the last six years, PSX has managed to convert its net income into cash flows from operations that exceed its net income. PSX has also been able to cover its new investments in property in all but one of the last six years with just its cash flows from operations.

Despite EPS improvement, PSX has experienced notable P/E multiple compression in addition to compressions in other metrics as well. In-line with its growing EPS, PSX has also been increasing its dividend payout.

P/E Valuation Book Valuation

My Recommendation - BUY Phillips 66 seems well positioned to continue to capitalize on the growth in the North American oil boom ▫Flexible capital structure with access to financing ▫Extensive physical assets currently existing with additional capacity and transportation assets coming online ▫Building export terminals and infrastructure to satiate a growing global demand for U.S. petroleum products Phillips 66 also has demonstrated management ability and a commitment to shareholders ▫Strong ROE, ROIC, and improvement in margins ▫Committed to buybacks and dividends

Sources Phillips 66 Investor Relations ▫2014 Fact Book ▫Barclays CEO Energy-Power Conference (09/14) Morningstar Yahoo! Finance

Disclaimer Chris Orndorff currently holds a direct investment in Phillips 66 common stock. He has no intention to initiate new trades related to this position within the next 48 hours. Chris Orndorff did not receive compensation for this presentation in any manner.