UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): April 27, 2018

Phillips 66

(Exact name of registrant as specified in its charter)

Delaware		001-35349		45-3779385
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

2331 CityWest Blvd., Houston, Texas 77042

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (281) 293-6600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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Item 2.02 Results of Operations and Financial Condition.

On April 27, 2018, Phillips 66 issued a press release announcing the company's financial and operating results for the quarter ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference. Additional financial and operating information about the quarter is furnished as Exhibit 99.2 hereto and incorporated herein by reference.

The information in this report and the exhibits hereto shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

	99.1	—	Press release issued by Phillips 66 on April 27, 2018.
	99.2	—	Supplemental financial and operating information.

2

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		PHILLIPS 66
	By:	/s/ Chukwuemeka A. Oyolu
		Chukwuemeka A. Oyolu Vice President and Controller

Date: April 27, 2018

3

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EXHIBIT INDEX

Exhibit
No.	Description

99.1	Press release issued by Phillips 66 on April 27, 2018.

99.2	Supplemental financial and operating information.

4

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

				Exhibit 99.1

Phillips 66 Reports First-Quarter Earnings of $524 Million

or $1.07 Per Share

Adjusted earnings of $512 million or $1.04 per share

Highlights

•	Returned $3.8 billion to shareholders through dividends and share repurchases

•	Delivered strong results in Midstream and Chemicals

•	Generated $488 million in operating cash flow; $1.3 billion excluding working capital

•	CPChem returned to full operations and started up new world-scale ethane cracker

•	Refining successfully executed several large turnarounds

•	Phillips 66 Partners announced Gray Oak Pipeline project

•	Four refineries received industry recognition for exemplary 2017 safety performance

HOUSTON, April 27, 2018 – Phillips 66 (NYSE: PSX), an energy manufacturing and logistics company, announces first-quarter 2018 earnings of $524 million and adjusted earnings of $512 million. This compares with fourth-quarter 2017 earnings of $3.2 billion and adjusted earnings of $548 million. Fourth-quarter 2017 earnings included a $2.7 billion benefit from U.S. tax reform.

“We had a strong start to the year," said Greg Garland, chairman and CEO of Phillips 66. "We delivered solid earnings, operated well, advanced strategic initiatives, and continued rewarding our shareholders with significant distributions. Our earnings reflect the benefit of our diversified portfolio, and we are also seeing positive, ongoing impacts from U.S. tax reform. CPChem has fully recovered from Hurricane Harvey and contributed strong results in the quarter, while successfully starting up its new world-scale ethane cracker. We recently completed yield-enhancing projects at the Bayway and Wood River refineries, and successfully executed major turnarounds at multiple refineries.”

“Building on our strong record of rewarding our shareholders, we distributed $3.8 billion through share repurchases and dividends during the quarter," Garland continued. "We repurchased over 37 million of our shares, representing a 7 percent reduction in shares outstanding during the quarter. Since our company’s formation in 2012, we have returned over $20 billion to shareholders through dividends, share repurchases and share exchanges.”

Page 1

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

Midstream

	Millions of Dollars
	Net Income						Adjusted Net Income
	Q1 2018			Q4 2017			Q1 2018		Q4 2017
Transportation	$	136		105			136		108
NGL and Other	73			20			73		20
DCP Midstream	24			14			24		14
Midstream	$	233		139			233		142

Midstream first-quarter net income was $233 million, compared with $139 million in the fourth quarter of 2017. Midstream net income in the fourth quarter of 2017 included hurricane-related costs of $3 million.

Transportation adjusted net income for the first quarter of 2018 was $136 million, an increase of $28 million from the prior quarter. The increase reflects lower taxes and operating costs, partially offset by lower volumes, primarily from the impact of refinery turnarounds.

 

NGL and Other first-quarter adjusted net income was $73 million, compared with $20 million in the fourth quarter of 2017. First-quarter adjusted net income reflects improved realized margins and positive inventory impacts.

The company’s equity investment in DCP Midstream generated adjusted net income of $24 million in the first quarter, compared with $14 million in the prior quarter. First-quarter adjusted net income reflected hedging gains, lower taxes and the timing of incentive distributions. These items were partially offset by lower volumes in the quarter.

Chemicals

	Millions of Dollars
	Net Income						Adjusted Net Income
	Q1 2018			Q4 2017			Q1 2018		Q4 2017
Olefins and Polyolefins (O&P)	$	224		20			224		95
Specialties, Aromatics and Styrenics (SA&S)	18			15			18		34
Other	(10		)	(8	)		(10	)	(8	)
Chemicals	$	232		27			232		121

The Chemicals segment reflects Phillips 66's equity investment in Chevron Phillips Chemical Company LLC (CPChem). Chemicals' first-quarter net income was $232 million, compared with $27 million in the fourth quarter of 2017. Chemicals net income in the fourth quarter of 2017 included hurricane-related costs of $75 million and an asset impairment of $19 million.

CPChem's O&P business contributed $224 million of adjusted net income to the Chemicals segment in the first quarter of 2018. The $129 million increase from the prior quarter was primarily due to improved volumes and margins, reflecting the return to full operations at the Cedar Bayou facility, as well as lower taxes. Global O&P utilization was 96 percent for the quarter, up from 79 percent in the fourth quarter of 2017.

CPChem's SA&S business contributed $18 million of adjusted net income in the first quarter of 2018, a decrease of $16 million from the prior quarter. The decrease was due to turnaround activity.

Page 2

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

Refining

	Millions of Dollars
	Net Income						Adjusted Net Income
	Q1 2018			Q4 2017			Q1 2018		Q4 2017
Refining	$	91		371			89		358

Refining first-quarter net income was $91 million, compared with $371 million in the fourth quarter of 2017. Refining results in the first quarter included biodiesel tax credits of $2 million. Prior-quarter net income included favorable U.K. tax credits of $23 million, partially offset by hurricane-related costs of $7 million and pension settlement expense of $3 million.

Refining adjusted net income was $89 million in the first quarter of 2018, compared with $358 million in the fourth quarter of 2017. The decrease reflects lower volumes and higher costs due to heavy turnaround activity, partially offset by higher realized margins. Phillips 66’s worldwide crude utilization rate was 89 percent, compared with 100 percent in the fourth quarter. Pre-tax turnaround costs for the first quarter were $245 million, while clean product yield was 83 percent.

Marketing and Specialties

	Millions of Dollars
	Net Income						Adjusted Net Income
	Q1 2018			Q4 2017			Q1 2018		Q4 2017
Marketing and Other	$	139		86			129		87
Specialties	45			37			45		37
Marketing and Specialties	$	184		123			174		124

Marketing and Specialties (M&S) first-quarter net income was $184 million, compared with $123 million in the fourth quarter of 2017. M&S first-quarter net income included biodiesel tax credits of $10 million. Fourth-quarter 2017 results included pension settlement expense of $1 million.

Adjusted net income for Marketing and Other was $129 million in the first quarter of 2018, an increase of $42 million from the prior quarter. The increase was largely due to improved realized margins and lower operating costs and taxes, partially offset by decreased volumes. Refined product exports in the first quarter were 190,000 barrels per day (BPD).

Specialties generated adjusted net income of $45 million during the first quarter. The $8 million increase from the prior quarter was mainly due to lower taxes.

Corporate and Other

	Millions of Dollars
	Net Income						Adjusted Net Income
	Q1 2018			Q4 2017			Q1 2018		Q4 2017
Corporate and Other	$	(155	)	2,595			(162	)	(140	)

Corporate and Other first-quarter net costs were $155 million, compared with net income of $2.6 billion in the fourth quarter of 2017. The results in both periods included benefits from U.S. tax reform, primarily associated with the revaluation of net deferred tax liabilities.

Page 3

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

The $22 million increase in adjusted net costs in the first quarter reflects the ongoing impact of lower U.S. tax rates on the net costs included in Corporate and Other.

Financial Position, Liquidity and Return of Capital

During the first quarter, Phillips 66 generated $488 million in cash from operations. Excluding working capital impacts, operating cash flow was $1.3 billion. Additionally, the company issued $1.5 billion of senior notes.

Phillips 66 funded $3.5 billion in share repurchases, $327 million in dividends and $328 million of capital expenditures and investments during the quarter. First-quarter share repurchases included the repurchase of 35 million shares in a single transaction for $3.3 billion. The company ended the quarter with 466 million shares outstanding.

As of March 31, 2018, cash and cash equivalents were $842 million, and consolidated debt was $11.6 billion, including $2.9 billion at PSXP. The company's consolidated debt-to-capital ratio and net-debt-to-capital ratio were 32 percent and 31 percent, respectively. Excluding PSXP, the debt-to-capital ratio was 28 percent and net-debt-to-capital ratio was 27 percent.

Strategic Update

In Midstream, Phillips 66 Partners recently announced it has received sufficient binding commitments to proceed with construction of the Gray Oak Pipeline system. The Gray Oak Pipeline will provide crude oil transportation from West Texas to destinations in the Corpus Christi and Sweeny/Freeport markets, including the Phillips 66 Sweeny Refinery. A second binding open season is underway to determine the final scope and capacity of the pipeline system, which could be up to 700,000 BPD. Assuming the pipeline is fully subscribed, its capacity could ultimately be expanded to approximately 1 million BPD of long-haul takeaway. Phillips 66 Partners will initially own a 75 percent interest in the pipeline system. Other third parties have an option to acquire up to 32.75 percent interest in the joint venture. If all options are exercised, Phillips 66 Partners would own 42.25 percent. The pipeline is expected to be placed in service by the end of 2019.

The Bayou Bridge Pipeline, in which Phillips 66 Partners holds a 40 percent interest, currently operates from the Phillips 66 Beaumont Terminal to Lake Charles, Louisiana. Construction continues on the segment from Lake Charles to St. James, Louisiana, and commercial operations are expected to begin in the fourth quarter of 2018.

Phillips 66 Partners began construction of a new 25,000 BPD isomerization unit at the Lake Charles Refinery. The unit will increase production of higher octane gasoline blend components, with completion anticipated by the end of 2019.

Phillips 66 is constructing 3.5 million barrels of additional crude oil storage at the Beaumont Terminal that will bring the terminal's total crude and products storage capacity to 14.6 million barrels. The new capacity is anticipated to be online by the end of 2018.

DCP Midstream’s Sand Hills NGL Pipeline capacity was close to 400,000 BPD at the end of the first quarter. Further expansion of the line to above 450,000 BPD is expected in the second half of 2018. Sand Hills is owned two-thirds by DCP and one-third by Phillips 66 Partners.

Page 4

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

DCP continues construction of two additional gas processing plants in the high-growth DJ basin, each with a design capacity of 200 million cubic feet per day. The Mewbourn 3 plant is anticipated to be completed in the third quarter of 2018, and the O’Connor 2 plant is scheduled for completion in mid-2019.

DCP is participating in the Gulf Coast Express Pipeline project, which will provide an outlet for natural gas production in the Permian Basin to markets along the Texas Gulf Coast and has a total design capacity of approximately 2 billion cubic feet per day. DCP holds a 25 percent equity interest in the project, which is expected to be completed in the fourth quarter of 2019.

In Chemicals, CPChem has completed its world-scale U.S. Gulf Coast (USGC) Petrochemicals Project. The new ethane cracker at Cedar Bayou commenced operations in the first quarter, and reached full design rates in April. Along with the two polyethylene units that started up in the third quarter of 2017, the USGC project increased CPChem’s global ethylene and polyethylene capacity by approximately one-third.

In Refining, the company is progressing yield-enhancing projects that are expected to deliver a combined 25,000 BPD of additional clean products by the end of this year. This includes the modernization of fluid catalytic cracking (FCC) units at both the Bayway and Wood River refineries that were recently completed. At the Lake Charles Refinery, crude unit modifications to run more domestic crudes and reduce feedstock costs were completed, with additional improvements anticipated in the fourth quarter.

Four Phillips 66 refineries were recognized by the American Fuel and Petrochemical Manufacturers (AFPM) for exemplary safety performance in 2017. The Bayway Refinery received the Distinguished Safety Award, which is the highest annual safety award the industry recognizes, and the Sweeny Refinery received the second-highest recognition, the Elite Gold Award. The Alliance and Wood River refineries were both selected as recipients of the Elite Silver Award, which recognizes the top five percent of all sites for safety performance.

Page 5

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

Investor Webcast

Later today, members of Phillips 66 executive management will host a webcast at noon EDT to discuss the company’s first-quarter performance and provide an update on strategic initiatives. To access the webcast and view related presentation materials, go to www.phillips66.com/investors and click on "Events & Presentations." For detailed supplemental information, go to www.phillips66.com/supplemental.

Earnings
	Millions of Dollars
	2018				2017
	Q1				Q4		Q1
Midstream	$	233			139		112
Chemicals	232				27		181
Refining	91				371		259
Marketing and Specialties	184				123		141
Corporate and Other	(155		)		2,595		(130	)
Net Income	585				3,255		563
Less: Noncontrolling interests	61				57		28
Phillips 66	$	524			3,198		535
Adjusted Earnings
	Millions of Dollars
	2018				2017
	Q1				Q4		Q1
Midstream	$	233			142		112
Chemicals	232				121		201
Refining	89				358		(2	)
Marketing and Specialties	174				124		141
Corporate and Other	(162		)		(140	)	(130	)
Net Income	566				605		322
Less: Noncontrolling interests	54				57		28
Phillips 66	$	512			548		294

Page 6

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

About Phillips 66

Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Phillips 66 Partners, the company's master limited partnership, is integral to the portfolio. Headquartered in Houston, the company has 14,500 employees committed to safety and operating excellence. Phillips 66 had $52 billion of assets as of March 31, 2018. For more information, visit www.phillips66.com or follow us on Twitter @Phillips66Co.

- # # # -

CONTACTS
Jeff Dietert (investors)	Rosy Zuklic (investors)	Dennis Nuss (media)
832-765-2297	832-765-2297	832-765-1850
jeff.dietert@p66.com	rosy.zuklic@p66.com	dennis.h.nuss@p66.com

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS

OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Words and phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “continues,” “intends,” “will,” “would,” “objectives,” “goals,” “projects,” “efforts,” “strategies” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to Phillips 66’s operations (including joint venture operations) are based on management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this news release was prepared. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include fluctuations in NGL, crude oil, and natural gas prices, and petrochemical and refining margins; unexpected changes in costs for constructing, modifying or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; lack of, or disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas, and refined products; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; and other economic, business, competitive and/or regulatory factors affecting Phillips 66’s businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Information—This news release includes the terms adjusted earnings, adjusted earnings per share, and adjusted net income. These are non-GAAP financial measures that are included to help facilitate comparisons of company operating performance across periods and with peer companies, by excluding items that do not reflect the core operating results of our businesses in the current period. This release includes realized refining margin, a non-GAAP financial measure that demonstrates how well we performed relative to benchmark industry margins. This release also includes a debt-to-capital ratio excluding PSXP. This non-GAAP measure is provided to differentiate the capital structure of Phillips 66 compared with that of Phillips 66 Partners.

References in the release to earnings refer to net income attributable to Phillips 66. References to adjusted earnings refer to earnings excluding special items, as detailed in the tables to this release. References to net income are inclusive of noncontrolling interests.

Page 7

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

	Millions of Dollars
	Except as Indicated
	2018				2017
	Q1				Q4		Q1
Reconciliation of Earnings to Adjusted Earnings
Consolidated Earnings	$	524			3,198		535
Pre-tax adjustments:
Pension settlement expense	—				7		—
Impairments by equity affiliates	—				31		33
Certain tax impacts	(15		)		(23	)	—
Gain on consolidation of business	—				—		(423	)
Hurricane-related costs	—				140		—
Tax impact of adjustments*	3				(70	)	149
U.S. tax reform	—				(2,735	)	—
Adjusted earnings	$	512			548		294
Earnings per share of common stock (dollars)	$	1.07			6.25		1.02
Adjusted earnings per share of common stock (dollars)†	$	1.04			1.07		0.56
Reconciliation of Net Income to Adjusted Net Income by Segment
Midstream Net Income	$	233			139		112
Pre-tax adjustments:
Pension settlement expense	—				1		—
Hurricane-related costs	—				6		—
Tax impact of adjustments*	—				(4	)	—
Adjusted net income	$	233			142		112
Chemicals Net Income	$	232			27		181
Pre-tax adjustments:
Impairments by equity affiliates	—				31		33
Hurricane-related costs	—				122		—
Tax impact of adjustments*	—				(59	)	(13	)
Adjusted net income	$	232			121		201
Refining Net Income	$	91			371		259
Pre-tax adjustments:
Gain on consolidation of business	—				—		(423	)
Certain tax impacts	(2		)		(23	)	—
Pension settlement expense	—				5		—
Hurricane-related costs	—				12		—
Tax impact of adjustments*	—				(7	)	162
Adjusted net income (loss)	$	89			358		(2	)
Marketing and Specialties Net Income	$	184			123		141
Pre-tax adjustments:
Pension settlement expense	—				1		—
Certain tax impacts	(13		)		—		—
Tax impact of adjustments*	3				—		—
Adjusted net income	$	174			124		141
Corporate and Other Net Income (Loss)	$	(155	)		2,595		(130	)
U.S. tax reform	(7		)		(2,735	)	—
Adjusted net income (loss)	$	(162	)		(140	)	(130	)
*We generally tax effect taxable U.S.-based special items using a combined federal and state statutory income tax rate of approximately 25 percent beginning in 2018, and approximately 38 percent for periods prior to 2018. Taxable special items attributable to foreign locations likewise use a local statutory income tax rate. Nontaxable events reflect zero income tax. These events include, but are not limited to, most goodwill impairments, transactions legislatively exempt from income tax, transactions related to entities for which we have made an assertion that the undistributed earnings are permanently reinvested, or transactions occurring in jurisdictions with a valuation allowance.
†Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted earnings per share calculation.

Page 8

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Phillips 66 Reports First-Quarter Earnings of $524 Million (Adjusted Earnings of $512 Million)

	Millions of Dollars
	March 31, 2018
Debt-to-Capital Ratio
	Phillips 66 Consolidated			PSXP*		Phillips 66 Excluding PSXP
Total Debt	$	11,621		2,946		8,675
Total Equity	24,300			2,343		21,957
Debt-to-Capital Ratio	32		%			28	%
Total Cash	$	842		167		675
Net-Debt-to-Capital Ratio	31		%			27	%
*PSXP's third-party debt and Phillips 66's noncontrolling interests attributable to PSXP.

Page 9

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Exhibit 99.2

Phillips 66 Earnings Release Supplemental Data

CONSOLIDATED INCOME STATEMENT
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Revenues and Other Income
Sales and other operating revenues*				23,595					23,595			22,894		24,087		25,627		29,746		102,354
Equity in earnings of affiliates				424					424			365		462		530		375		1,732
Net gain on dispositions				17					17			1		14		—		—		15
Other income				10					10			452		18		49		2		521
Total Revenues and Other Income				24,046					24,046			23,712		24,581		26,206		30,123		104,622
Costs and Expenses
Purchased crude oil and products				21,138					21,138			17,679		18,353		19,463		23,914		79,409
Operating expenses				1,246					1,246			1,270		1,137		1,134		1,158		4,699
Selling, general and administrative expenses				386					386			384		439		435		437		1,695
Depreciation and amortization				336					336			315		320		337		346		1,318
Impairments				—					—			2		15		1		6		24
Taxes other than income taxes*				110					110			3,156		3,356		3,456		3,494		13,462
Accretion on discounted liabilities				6					6			5		6		5		6		22
Interest and debt expense				123					123			105		107		112		114		438
Foreign currency transaction (gains) losses				(16	)				(16	)		(1	)	—		7		(6	)	—
Total Costs and Expenses				23,329					23,329			22,915		23,733		24,950		29,469		101,067
Income before income taxes				717					717			797		848		1,256		654		3,555
Income tax expense (benefit)				132					132			234		267		407		(2,601	)	(1,693	)
Net Income				585					585			563		581		849		3,255		5,248
Less: net income attributable to noncontrolling interests				61					61			28		31		26		57		142
Net Income Attributable to Phillips 66				524					524			535		550		823		3,198		5,106
* Includes excise taxes on sales of petroleum products for periods prior to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09 on January 1, 2018:												3,036		3,252		3,376		3,390		13,054
Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars)
Basic				1.07					1.07			1.02		1.06		1.60		6.29		9.90
Diluted				1.07					1.07			1.02		1.06		1.60		6.25		9.85
Weighted-Average Common Shares Outstanding (thousands)
Basic				487,065					487,065			521,647		517,785		512,923		508,148		515,090
Diluted				489,668					489,668			524,520		520,160		515,960		511,352		518,508
RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO NET INCOME ATTRIBUTABLE TO PHILLIPS 66
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream				233					233			112		96		117		139		464
Chemicals				232					232			181		196		121		27		525
Refining				91					91			259		224		550		371		1,404
Marketing and Specialties				184					184			141		214		208		123		686
Corporate and Other				(155	)				(155	)		(130	)	(149	)	(147	)	2,595		2,169
Net Income				585					585			563		581		849		3,255		5,248
Less: net income attributable to noncontrolling interests				61					61			28		31		26		57		142
Net Income Attributable to Phillips 66				524					524			535		550		823		3,198		5,106
SUMMARY OF NET INCOME (LOSS) BEFORE INCOME TAXES BY SEGMENT
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream				280					280			153		130		166		189		638
Chemicals				286					286			251		294		163		8		716
Refining				112					112			390		307		863		516		2,076
Marketing and Specialties				235					235			208		328		317		167		1,020
Corporate and Other				(196	)				(196	)		(205	)	(211	)	(253	)	(226	)	(895	)
Consolidated				717					717			797		848		1,256		654		3,555
EFFECTIVE TAX RATES
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream				16.8	%				16.8	%		26.8	%	26.2	%	29.5	%	26.5	%	27.3	%
Chemicals				18.9	%				18.9	%		27.9	%	33.3	%	25.8	%	(237.5	)%	26.7	%
Refining				18.8	%				18.8	%		33.6	%	27.0	%	36.3	%	28.1	%	32.4	%
Marketing and Specialties				21.7	%				21.7	%		32.2	%	34.8	%	34.4	%	26.3	%	32.7	%
Corporate and Other				20.9	%				20.9	%		36.6	%	29.4	%	41.9	%	1,248.2	%	342.3	%
Consolidated				18.4	%				18.4	%		29.4	%	31.5	%	32.4	%	(397.7	)%	(47.6	)%
RECONCILIATION OF ADJUSTED SEGMENT NET INCOME (LOSS) TO ADJUSTED SEGMENT NET INCOME ATTRIBUTABLE TO PHILLIPS 66
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream
Transportation				136					136			78		74		98		108		358
NGL and Other				73					73			17		14		—		20		51
DCP Midstream				24					24			17		13		1		14		45
Total Midstream				233					233			112		101		99		142		454
Chemicals				232					232			201		196		153		121		671
Refining
Atlantic Basin/Europe				(73	)				(73	)		(50	)	109		172		120		351
Gulf Coast				1					1			67		56		77		72		272
Central Corridor				203					203			62		29		198		192		481
West Coast				(42	)				(42	)		(81	)	39		101		(26	)	33
Total Refining				89					89			(2	)	233		548		358		1,137
Marketing and Specialties
Marketing and Other				129					129			124		185		163		87		559
Specialties				45					45			17		33		48		37		135
Total Marketing and Specialties				174					174			141		218		211		124		694
Corporate and Other				(162	)				(162	)		(130	)	(148	)	(127	)	(140	)	(545	)
Adjusted Net Income				566					566			322		600		884		605		2,411
Less: net income attributable to noncontrolling interests				54					54			28		31		26		57		142
Adjusted Net Income Attributable to Phillips 66				512					512			294		569		858		548		2,269

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SPECIAL ITEMS INCLUDED IN SEGMENT NET INCOME AND NET INCOME ATTRIBUTABLE TO PHILLIPS 66
(AFTER-TAX)
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream
Pending claims and settlements				—					—			—		—		23		—		23
Hurricane-related costs				—					—			—		—		(3	)	(3	)	(6	)
Pension settlement expense				—					—			—		(5	)	(2	)	—		(7	)
Total Midstream				—					—			—		(5	)	18		(3	)	10
Chemicals
Impairments by equity affiliates				—					—			(20	)	—		—		(19	)	(39	)
Hurricane-related costs				—					—			—		—		(32	)	(75	)	(107	)
Total Chemicals				—					—			(20	)	—		(32	)	(94	)	(146	)
Refining
Pending claims and settlements				—					—			—		13		18		—		31
Certain tax impacts				2					2			—		—		—		23		23
Hurricane-related costs				—					—			—		—		(8	)	(7	)	(15	)
Gain on consolidation of business				—					—			261		—		—		—		261
Pension settlement expense				—					—			—		(22	)	(8	)	(3	)	(33	)
Total Refining				2					2			261		(9	)	2		13		267
Marketing and Specialties
Certain tax impacts				10					10			—		—		—		—		—
Hurricane-related costs				—					—			—		—		(1	)	—		(1	)
Pension settlement expense				—					—			—		(4	)	(2	)	(1	)	(7	)
Total Marketing and Specialties				10					10			—		(4	)	(3	)	(1	)	(8	)
Corporate and Other
Pending claims and settlements				—					—			—		2		(19	)	—		(17	)
U.S. tax reform				7					7			—		—		—		2,735		2,735
Pension settlement expense				—					—			—		(3	)	(1	)	—		(4	)
Total Corporate and Other				7					7			—		(1	)	(20	)	2,735		2,714
Noncontrolling Interests
U.S. tax reform				(7	)				(7	)		—		—		—		—		—
Total Noncontrolling Interests				(7	)				(7	)		—		—		—		—		—
Total Phillips 66				12					12			241		(19	)	(35	)	2,650		2,837
SPECIAL ITEMS INCLUDED IN NET INCOME BY BUSINESS LINES/REGIONS
(AFTER-TAX)
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream
Transportation				—					—			—		—		21		(3	)	18
NGL and Other				—					—			—		(5	)	(3	)	—		(8	)
DCP Midstream				—					—			—		—		—		—		—
Total Midstream				—					—			—		(5	)	18		(3	)	10
Refining
Atlantic Basin/Europe				—					—			—		(2	)	(1	)	22		19
Gulf Coast				—					—			261		(3	)	(10	)	(8	)	240
Central Corridor				—					—			—		(2	)	(1	)	(1	)	(4	)
West Coast				2					2			—		(2	)	14		—		12
Total Refining				2					2			261		(9	)	2		13		267
Marketing and Specialties
Marketing and Other				10					10			—		(4	)	(3	)	(1	)	(8	)
Specialties				—					—			—		—		—		—		—
Total Marketing and Specialties				10					10			—		(4	)	(3	)	(1	)	(8	)
SPECIAL ITEMS INCLUDED IN INCOME BEFORE INCOME TAXES
(PRE-TAX)
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream
Pending claims and settlements				—					—			—		—		37		—		37
Hurricane-related costs				—					—			—		—		(4	)	(6	)	(10	)
Pension settlement expense				—					—			—		(8	)	(3	)	(1	)	(12	)
Total Midstream				—					—			—		(8	)	30		(7	)	15
Chemicals
Impairments by equity affiliates				—					—			(33	)	—		—		(31	)	(64	)
Hurricane-related costs				—					—			—		—		(53	)	(122	)	(175	)
Total Chemicals				—					—			(33	)	—		(53	)	(153	)	(239	)
Refining
Pending claims and settlements				—					—			—		21		30		—		51
Certain tax impacts				2					2			—		—		—		23		23
Hurricane-related costs				—					—			—		—		(12	)	(12	)	(24	)
Gain on consolidation of business				—					—			423		—		—		—		423
Pension settlement expense				—					—			—		(35	)	(13	)	(5	)	(53	)
Total Refining				2					2			423		(14	)	5		6		420
Marketing and Specialties
Hurricane-related costs				—					—			—		—		(1	)	—		(1	)
Certain tax impacts				13					13			—		—		—		—		—
Pension settlement expense				—					—			—		(7	)	(3	)	(1	)	(11	)
Total Marketing and Specialties				13					13			—		(7	)	(4	)	(1	)	(12	)
Corporate and Other
Pending claims and settlements				—					—			—		3		(31	)	—		(28	)
Pension settlement expense				—					—			—		(5	)	(2	)	—		(7	)
U.S. tax reform				16					16			—		—		—		—		—
Total Corporate and Other				16					16			—		(2	)	(33	)	—		(35	)
Total Phillips 66				31					31			390		(31	)	(55	)	(155	)	149
By Business Lines/Regions
Midstream
Transportation				—					—			—		—		34		(5	)	29
NGL and Other				—					—			—		(8	)	(4	)	(2	)	(14	)
DCP Midstream				—					—			—		—		—		—		—
Total Midstream				—					—			—		(8	)	30		(7	)	15
Refining
Atlantic Basin/Europe				—					—			—		(4	)	(2	)	22		16
Gulf Coast				—					—			423		(5	)	(14	)	(14	)	390
Central Corridor				—					—			—		(3	)	(1	)	(2	)	(6	)
West Coast				2					2			—		(2	)	22		—		20
Total Refining				2					2			423		(14	)	5		6		420
Marketing and Specialties
Marketing and Other				13					13			—		(7	)	(4	)	(1	)	(12	)
Specialties				—					—			—		—		—		—		—
Total Marketing and Specialties				13					13			—		(7	)	(4	)	(1	)	(12	)

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CASH FLOW INFORMATION
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Cash Flows From Operating Activities
Net income				585					585			563		581		849		3,255		5,248
Depreciation and amortization				336					336			315		320		337		346		1,318
Impairments				—					—			2		15		1		6		24
Accretion on discounted liabilities				6					6			5		6		5		6		22
Deferred income taxes				101					101			493		264		27		(2,670	)	(1,886	)
Undistributed equity earnings				119					119			(212	)	(40	)	(291	)	27		(516	)
Net gain on dispositions				(17	)				(17	)		(1	)	(14	)	—		—		(15	)
Gain on consolidation of business				—					—			(423	)	—		—		—		(423	)
Other				173					173			6		92		(332	)	48		(186	)
Net working capital changes				(815	)				(815	)		(1,297	)	641		(195	)	913		62
Net Cash Provided by (Used in) Operating Activities				488					488			(549	)	1,865		401		1,931		3,648
Cash Flows From Investing Activities
Capital expenditures and investments				(328	)				(328	)		(470	)	(458	)	(367	)	(537	)	(1,832	)
Proceeds from asset dispositions*				17					17			9		42		14		21		86
Collection of advances/loans—related parties				—					—			325		—		—		1		326
Restricted cash received from consolidation of business				—					—			318		—		—		—		318
Other				(46	)				(46	)		(24	)	(37	)	(28	)	45		(44	)
Net Cash Provided by (Used in) Investing Activities				(357	)				(357	)		158		(453	)	(381	)	(470	)	(1,146	)
Cash Flows From Financing Activities
Issuance of debt				1,509					1,509			712		1,891		480		425		3,508
Repayment of debt				(7	)				(7	)		(773	)	(2,137	)	(251	)	(517	)	(3,678	)
Issuance of common stock				10					10			4		2		17		12		35
Repurchase of common stock				(3,513	)				(3,513	)		(285	)	(381	)	(461	)	(463	)	(1,590	)
Dividends paid on common stock				(327	)				(327	)		(326	)	(360	)	(356	)	(353	)	(1,395	)
Distributions to noncontrolling interests				(45	)				(45	)		(24	)	(30	)	(29	)	(37	)	(120	)
Net proceeds from issuance of Phillips 66 Partners LP common and preferred units				9					9			40		131		—		1,034		1,205
Other				(45	)				(45	)		(34	)	(20	)	(12	)	(10	)	(76	)
Net Cash Provided by (Used in) Financing Activities				(2,409	)				(2,409	)		(686	)	(904	)	(612	)	91		(2,111	)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash				1					1			2		17		(22	)	20		17
Net Change in Cash, Cash Equivalents and Restricted Cash				(2,277	)				(2,277	)		(1,075	)	525		(614	)	1,572		408
Cash, cash equivalents and restricted cash at beginning of period				3,119					3,119			2,711		1,636		2,161		1,547		2,711
Cash, Cash Equivalents and Restricted Cash at End of Period				842					842			1,636		2,161		1,547		3,119		3,119
* Includes return of investments in equity affiliates.
CAPITAL PROGRAM
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Consolidated Capital Expenditures and Investments
Midstream				136					136			182		199		178		212		771
Chemicals				—					—			—		—		—		—		—
Refining				172					172			259		216		148		230		853
Marketing and Specialties				13					13			15		23		27		43		108
Corporate and Other				7					7			14		20		14		52		100
Total Consolidated				328					328			470		458		367		537		1,832
Proportional Share of Select Equity Affiliates Capital Expenditures and Investments*
DCP Midstream (Midstream)				95					95			44		60		62		102		268
CPChem (Chemicals)				161					161			256		131		119		270		776
WRB Refining (Refining)				40					40			42		22		27		35		126
Select Equity Affiliates				296					296			342		213		208		407		1,170
Total Capital Program*
Midstream				231					231			226		259		240		314		1,039
Chemicals				161					161			256		131		119		270		776
Refining				212					212			301		238		175		265		979
Marketing and Specialties				13					13			15		23		27		43		108
Corporate and Other				7					7			14		20		14		52		100
Total Capital Program				624					624			812		671		575		944		3,002
* Includes Phillips 66’s portion of self-funded capital spending by DCP Midstream, LLC (DCP Midstream), Chevron Phillips Chemical Company LLC (CPChem) and WRB Refining LP.

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MIDSTREAM
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Midstream Net Income (Loss) ($ Millions)
Transportation				136					136			78		74		119		105		376
NGL and Other				73					73			17		9		(3	)	20		43
DCP Midstream				24					24			17		13		1		14		45
Midstream Net Income (Loss)				233					233			112		96		117		139		464
Midstream Income (Loss) before Income Taxes ($ Millions)
Transportation				163					163			107		102		174		147		530
NGL and Other				86					86			19		6		(9	)	16		32
DCP Midstream				31					31			27		22		1		26		76
Midstream Income (Loss) before Income Taxes				280					280			153		130		166		189		638
Midstream Adjusted EBITDA ($ Millions)*
PSXP**				236					236			149		157		154		240		700
Other Midstream				127					127			70		54		107		55		286
Transportation and NGL and Other				363					363			219		211		261		295		986
DCP Midstream				76					76			71		65		42		70		248
Midstream Adjusted EBITDA				439					439			290		276		303		365		1,234
* See reconciliation of net income to Adjusted EBITDA on next page.
** Does not include certain PSXP adjustments made for PSXP stand-alone reporting purposes.
Depreciation and Amortization ($ Millions)
Transportation				36					36			33		35		46		44		158
NGL and Other				38					38			35		34		35		37		141
DCP Midstream				—					—			—		—		—		—		—
Total				74					74			68		69		81		81		299
Operating and SG&A Expense ($ Millions)
Transportation				178					178			161		177		187		185		710
NGL and Other				77					77			57		63		65		70		255
DCP Midstream				—					—			—		(1	)	—		—		(1	)
Total				255					255			218		239		252		255		964
Transportation Volumes (MB/D)
Pipelines*				3,407					3,407			3,469		3,430		3,447		3,658		3,501
Terminals**				2,669					2,669			2,395		2,581		2,675		3,008		2,665
* Pipelines represent the sum of volumes transported through each separately tariffed pipeline segment, including our share of equity volumes in Yellowstone and Lake Charles pipelines.
** Terminals include Bayway and Ferndale crude oil rail rack volumes.
PSX Other Volumes
NGL Fractionated (MB/D)*				184					184			175		177		177		215		186
* Excludes DCP Midstream.
100% DCP Midstream Results
Net Income Attributable, excludes parent company income tax related to DCP's earnings ($ Millions)*				60					60			53		42		3		49		147
Depreciation and Amortization ($ Millions)				94					94			94		94		94		97		379
Operating and SG&A Expense ($ Millions)				221					221			240		254		226		234		954
Net Interest Expense ($ Millions)*				70					70			76		73		77		72		298
* Net of interest income.
Capital Expenditures and Investments ($ Millions)				189					189			87		121		124		204		536
Selected DCP Operating Statistics
Wellhead Volume (Bcf/D)				4.5					4.5			4.6		4.5		4.5		4.6		4.6
NGL Production (MB/D)				380					380			341		367		378		411		374
Weighted Average NGL Price*
DCP Midstream ($/BBL)				29.41					29.41			25.31		22.94		26.12		30.39		26.19
DCP Midstream ($/gal)				0.70					0.70			0.60		0.55		0.62		0.72		0.62
* Based on index prices from the Mont Belvieu and Conway market hubs that are weighted by NGL component and location mix.
MLP Distributions ($ Millions)*
GP Distribution from PSXP to Phillips 66				51					51			32		36		43		47		158
LP Distribution from PSXP to Phillips 66				50					50			37		40		44		46		167
GP Distribution from DCP Midstream, LP to DCP Midstream***				**					—			23		23		43		83		172
LP Distribution from DCP Midstream, LP to DCP Midstream***				**					—			41		40		42		40		163
* Cash distributions declared attributable to general partner interest, common unit ownership and incentive distribution rights. These distributions are eliminated in the respective sponsors consolidated financial statements.
** Pending DCP Midstream release.
*** Represents 100 percent of DCP Midstream's distributions from DCP Midstream, LP.

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MIDSTREAM (continued)
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Reconciliation of Midstream Net Income to Adjusted EBITDA ($ Millions)
Midstream net income				233					233			112		96		117		139		464
Plus:
Income tax expense				47					47			41		34		49		50		174
Interest revenue				—					—			(1	)	—		—		—		(1	)
Depreciation and amortization				74					74			68		69		81		81		299
Midstream EBITDA				354					354			220		199		247		270		936
Special Item Adjustments (pre-tax):
Pending claims and settlements				—					—			—		—		(37	)	—		(37	)
Hurricane-related costs				—					—			—		—		4		6		10
Pension settlement expense				—					—			—		8		3		1		12
Midstream EBITDA, Adjusted for Special Items				354					354			220		207		217		277		921
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				—					—			—		1		1		(1	)	1
Proportional share of selected equity affiliates net interest				34					34			27		26		31		37		121
Proportional share of selected equity affiliates depreciation and amortization				51					51			43		42		54		52		191
Midstream Adjusted EBITDA				439					439			290		276		303		365		1,234
Midstream Adjusted EBITDA by Business Line
100% PSXP Results ($ Millions)
PSXP net income				172					172			110		119		131		164		524
Plus:
Income tax expense				2					2			—		1		1		2		4
Net interest expense				29					29			23		23		24		29		99
Depreciation and amortization				28					28			28		28		32		28		116
PSXP EBITDA				231					231			161		171		188		223		743
Adjustments (pre-tax):
EBITDA attributable to predecessors				—					—			(14	)	(17	)	(36	)	(2	)	(69	)
Special item - U.S. tax reform*				(10	)				(10	)		—		—		—		—		—
PSXP EBITDA, Adjusted for Predecessors and Special Item**				221					221			147		154		152		221		674
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				—					—			—		—		—		1		1
Proportional share of selected equity affiliates net interest				7					7			—		—		—		7		7
Proportional share of selected equity affiliates depreciation and amortization				8					8			2		3		2		11		18
PSXP Adjusted EBITDA**				236					236			149		157		154		240		700
* Represents a special item adjustment made for PSXP reporting purposes only.
** Does not include certain PSXP adjustments made for PSXP stand-alone reporting purposes.
Total Transportation and NGL and Other ($ Millions)
Total Transportation and NGL and Other net income				209					209			95		83		116		125		419
Plus:
Income tax expense				40					40			31		25		49		38		143
Interest revenue				—					—			(1	)	—		—		—		(1	)
Depreciation and amortization				74					74			68		69		81		81		299
Total Transportation and NGL and Other EBITDA*				323					323			193		177		246		244		860
Special Item Adjustments (pre-tax):
Pension settlement expense				—					—			—		8		3		1		12
Pending claims and settlements				—					—			—		—		(37	)	—		(37	)
Hurricane-related costs				—					—			—		—		4		6		10
Total Transportation and NGL and Other EBITDA, Adjusted for Special Items*				323					323			193		185		216		251		845
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				—					—			—		—		—		1		1
Proportional share of selected equity affiliates net interest				18					18			10		10		18		18		56
Proportional share of selected equity affiliates depreciation and amortization				22					22			16		16		27		25		84
Total Transportation and NGL and Other Adjusted EBITDA*				363					363			219		211		261		295		986
* Includes PSXP results above. Does not include certain PSXP adjustments made for PSXP stand-alone reporting purposes.
DCP Midstream ($ Millions)
DCP Midstream net income				24					24			17		13		1		14		45
Plus:
Income tax expense				7					7			10		9		—		12		31
DCP Midstream EBITDA				31					31			27		22		1		26		76
Special Item Adjustments (pre-tax):
None				—					—			—		—		—		—		—
DCP Midstream EBITDA, Adjusted for Special Items				31					31			27		22		1		26		76
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				—					—			—		1		1		(2	)	—
Proportional share of selected equity affiliates net interest				16					16			17		16		13		19		65
Proportional share of selected equity affiliates depreciation and amortization				29					29			27		26		27		27		107
DCP Midstream Adjusted EBITDA*				76					76			71		65		42		70		248
* Proportional share of selected equity affiliates is net of noncontrolling interests.

Page 5

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CHEMICALS
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Chemicals Net Income ($ Millions)				232					232			181		196		121		27		525
100% CPChem Results
Net Income (Loss), excludes parent company income tax related to CPChem's earnings ($ Millions)
Olefins and Polyolefins				535					535			461		537		295		27		1,320
Specialties, Aromatics and Styrenics				57					57			53		61		46		9		169
Corporate and Other				(7	)				(7	)		(11	)	(8	)	(10	)	(14	)	(43	)
Total				585					585			503		590		331		22		1,446
Income (Loss) before Income Taxes ($ Millions)
Olefins and Polyolefins				546					546			470		546		304		35		1,355
Specialties, Aromatics and Styrenics				61					61			62		65		51		13		191
Corporate and Other				(7	)				(7	)		(11	)	(8	)	(10	)	(13	)	(42	)
Total				600					600			521		603		345		35		1,504
Depreciation and Amortization ($ Millions)				116					116			73		75		85		118		351
Net Interest Expense ($ Millions)*				(3	)				(3	)		(1	)	(1	)	(3	)	(3	)	(8	)
* Net of interest income.
Investing Cash Flows ($ Millions)
Capital Expenditures and Investments				322					322			512		262		238		540		1,552
Advances to Equity Companies				—					—			6		2		3		—		11
Advance Repayments from Equity Companies				(33	)				(33	)		(7	)	—		—		(52	)	(59	)
Externally Marketed Sales Volumes (MM Lbs)*
Olefins and Polyolefins				4,427					4,427			4,016		4,137		3,842		3,875		15,870
Specialties, Aromatics and Styrenics				1,013					1,013			1,206		1,175		1,095		1,142		4,618
Total				5,440					5,440			5,222		5,312		4,937		5,017		20,488
* Represents 100 percent of CPChem's outside sales of produced petrochemical products, as well as commission sales from equity affiliates.
Olefins and Polyolefins Capacity Utilization (%)				96	%				96	%		89	%	98	%	83	%	79	%	87	%
Market Indicators*
U.S. Industry Prices
Ethylene, Average Acquisition Contract (cents/lb)				26.80					26.80			31.87		29.61		28.21		30.84		30.13
HDPE Blow Molding, Domestic Spot (cents/lb)				60.00					60.00			55.83		58.00		58.67		60.75		58.31
U.S. Industry Costs
Ethylene, Cash Cost Weighted Average Feed (cents/lb)				14.81					14.81			11.80		12.54		16.14		16.22		14.18
HDPE Blow Molding, Total Cash Cost (cents/lb)				39.81					39.81			44.90		42.59		41.13		43.78		43.10
Ethylene to High-Density Polyethylene Chain Cash Margin (cents/lb)				32.18					32.18			31.00		32.48		29.61		31.59		31.17
* Source: IHS, Inc.
Reconciliation of Chemicals Net Income to Adjusted EBITDA ($ Millions)
Chemicals net income				232					232			181		196		121		27		525
Plus:
Income tax expense (benefit)				54					54			70		98		42		(19	)	191
Chemicals EBITDA				286					286			251		294		163		8		716
Special Item Adjustments (pre-tax):
Impairments by equity affiliates				—					—			33		—		—		31		64
Hurricane-related costs				—					—			—		—		53		122		175
Chemicals EBITDA, Adjusted for Special Items				286					286			284		294		216		161		955
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				23					23			20		14		18		16		68
Proportional share of selected equity affiliates net interest				3					3			1		2		1		—		4
Proportional share of selected equity affiliates depreciation and amortization				92					92			69		70		76		92		307
Chemicals Adjusted EBITDA				404					404			374		380		311		269		1,334

Page 6

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REFINING
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Refining Net Income (Loss) ($ Millions)
Atlantic Basin/Europe				(73	)				(73	)		(50	)	107		171		142		370
Gulf Coast				1					1			328		53		67		64		512
Central Corridor				203					203			62		27		197		191		477
West Coast				(40	)				(40	)		(81	)	37		115		(26	)	45
Refining Net Income (Loss)				91					91			259		224		550		371		1,404
Refining Income (Loss) before Income Taxes ($ Millions)
Atlantic Basin/Europe				(108	)				(108	)		(98	)	120		247		179		448
Gulf Coast				—					—			521		86		109		93		809
Central Corridor				272					272			97		42		317		299		755
West Coast				(52	)				(52	)		(130	)	59		190		(55	)	64
Refining Income (Loss) before Income Taxes				112					112			390		307		863		516		2,076
Refining Net Income (Loss) ($/BBL)
Atlantic Basin/Europe				(1.86	)				(1.86	)		(1.25	)	2.07		3.27		2.59		1.86
Gulf Coast				0.01					0.01			4.91		0.73		0.95		0.84		1.79
Central Corridor				7.74					7.74			2.52		1.21		8.37		8.83		5.18
West Coast				(1.21	)				(1.21	)		(2.95	)	1.05		3.14		(0.75	)	0.34
Worldwide				0.54					0.54			1.63		1.23		3.01		1.98		1.97
Realized Refining Margins ($/BBL)*
Atlantic Basin/Europe				7.17					7.17			6.29		7.90		10.02		8.32		8.25
Gulf Coast				6.75					6.75			8.03		6.74		7.26		6.38		7.07
Central Corridor				16.11					16.11			10.54		9.96		14.04		15.16		12.44
West Coast				8.32					8.32			9.95		10.83		12.95		7.96		10.49
Worldwide				9.29					9.29			8.55		8.44		10.49		8.98		9.13
* See note on the use of non-GAAP measures below. Also, reconciliations of net income to realized refining margin for each period and by region are included in the "Realized Margin Non-GAAP Reconciliations" section below.
Depreciation and Amortization ($ Millions)*
Atlantic Basin/Europe				52					52			49		47		47		49		192
Gulf Coast				66					66			65		68		68		70		271
Central Corridor				35					35			27		27		32		33		119
West Coast				58					58			58		62		58		61		239
Total				211					211			199		204		205		213		821
* Excludes D&A of all equity affiliates.
Operating and SG&A Expense ($ Millions)*
Atlantic Basin/Europe				298					298			271		213		201		223		908
Gulf Coast				376					376			350		308		312		297		1,267
Central Corridor				115					115			144		191		131		161		627
West Coast				241					241			324		234		224		248		1,030
Total				1,030					1,030			1,089		946		868		929		3,832
* Excludes Operating and SG&A Expense of all equity affiliates.
Turnaround Expense ($ Millions), included in Operating and SG&A Expense*
Atlantic Basin/Europe				98					98			83		19		7		16		125
Gulf Coast				105					105			72		23		11		19		125
Central Corridor				2					2			27		79		14		47		167
West Coast				40					40			117		33		11		17		178
Total				245					245			299		154		43		99		595
* Excludes Turnaround Expense of all equity affiliates.
Taxes Other than Income Taxes, excluding Excise Taxes ($ Millions)
Atlantic Basin/Europe				15					15			16		13		14		13		56
Gulf Coast				25					25			27		23		23		23		96
Central Corridor				12					12			14		13		9		10		46
West Coast				27					27			20		21		—		23		64
Total				79					79			77		70		46		69		262
Foreign Currency Gains (Losses) After-Tax ($ Millions)				9					9			—		1		(5	)	5		1
Refining—Equity Affiliate Information ($ Millions)
Equity in earnings (losses) of affiliates				(64	)				(64	)		(6	)	22		144		162		322
Less: Share of equity affiliate gross margin included in Realized Refining Margin and other equity-affiliate-related costs*				(239	)				(239	)		239		(191	)	(262	)	(306	)	(520	)
Equity-affiliate-related expenses not included in Realized Refining Margins				(303	)				(303	)		233		(169	)	(118	)	(144	)	(198	)
Regional Totals
Atlantic Basin/Europe				(43	)				(43	)		(17	)	(18	)	25		17		7
Gulf Coast				(1	)				(1	)		428		(2	)	1		(1	)	426
Central Corridor				(259	)				(259	)		(178	)	(149	)	(144	)	(160	)	(631	)
Total				(303	)				(303	)		233		(169	)	(118	)	(144	)	(198	)
* Other costs associated with equity affiliates which do not flow through equity earnings.

Page 7

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REFINING (continued)
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Reconciliation of Refining Net Income to Adjusted EBITDA ($ Millions)
Refining net income				91					91			259		224		550		371		1,404
Plus:
Income tax expense				21					21			131		83		313		145		672
Depreciation and amortization				211					211			199		204		205		213		821
Refining EBITDA				323					323			589		511		1,068		729		2,897
Special Item Adjustments (pre-tax):
Pending claims and settlements				—					—			—		(21	)	(30	)	—		(51	)
Certain tax impacts				(2	)				(2	)		—		—		—		(23	)	(23	)
Hurricane-related costs				—					—			—		—		12		12		24
Gain on consolidation of business				—					—			(423	)	—		—		—		(423	)
Pension settlement expense				—					—			—		35		13		5		53
Refining EBITDA, Adjusted for Special Items				321					321			166		525		1,063		723		2,477
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				—					—			—		—		—		1		1
Proportional share of selected equity affiliates net interest				(2	)				(2	)		—		(1	)	(1	)	(1	)	(3	)
Proportional share of selected equity affiliates depreciation and amortization				68					68			65		65		68		70		268
Refining Adjusted EBITDA				387					387			231		589		1,130		793		2,743
Operating Statistics
Atlantic Basin/Europe*
Crude Oil Charge Input (MB/D)				419					419			366		533		536		543		494
Total Processed Inputs (MB/D)				436					436			446		569		569		597		546
Crude Oil Capacity Utilization (%)				78	%				78	%		70	%	103	%	103	%	104	%	95	%
Clean Product Yield (%)				84	%				84	%		88	%	87	%	88	%	89	%	88	%
* Includes our proportionate share of a refinery complex in Karlsruhe, Germany.
Gulf Coast
Crude Oil Charge Input (MB/D)				696					696			668		715		694		758		709
Total Processed Inputs (MB/D)				769					769			743		795		767		828		784
Crude Oil Capacity Utilization (%)				93	%				93	%		90	%	96	%	93	%	102	%	95	%
Clean Product Yield (%)				76	%				76	%		80	%	81	%	80	%	81	%	81	%
Central Corridor*
Crude Oil Charge Input (MB/D)				458					458			470		465		480		452		467
Total Processed Inputs (MB/D)				475					475			488		480		497		472		484
Crude Oil Capacity Utilization (%)				93	%				93	%		95	%	94	%	97	%	92	%	95	%
Clean Product Yield (%)				90	%				90	%		90	%	88	%	88	%	91	%	89	%
* Includes our proportionate share of the Borger Refinery and Wood River Refinery.
West Coast
Crude Oil Charge Input (MB/D)				340					340			279		366		368		353		342
Total Processed Inputs (MB/D)				367					367			304		388		398		378		367
Crude Oil Capacity Utilization (%)				93	%				93	%		78	%	102	%	102	%	98	%	95	%
Clean Product Yield (%)				86	%				86	%		87	%	87	%	86	%	89	%	87	%
Worldwide—Including Proportionate Share of Equity Affiliates
Crude Oil Charge Input (MB/D)				1,913					1,913			1,783		2,079		2,078		2,106		2,012
Total Processed Inputs (MB/D)				2,047					2,047			1,981		2,232		2,231		2,275		2,181
Crude Oil Capacity Utilization (%)				89	%				89	%		84	%	98	%	98	%	100	%	95	%
Clean Product Yield (%)				83	%				83	%		85	%	85	%	85	%	87	%	86	%
Refined Products Production (MB/D)
Atlantic Basin/Europe*
Gasoline				172					172			213		252		252		260		244
Distillates				185					185			163		228		230		254		219
Other				81					81			81		95		92		90		90
Total				438					438			457		575		574		604		553
* Includes our proportionate share of a refinery complex in Karlsruhe, Germany.
Gulf Coast
Gasoline				303					303			296		324		310		333		316
Distillates				260					260			275		292		286		311		291
Other				212					212			178		185		175		191		182
Total				775					775			749		801		771		835		789
Central Corridor*
Gasoline				242					242			253		241		253		251		249
Distillates				181					181			181		180		182		178		180
Other				56					56			59		64		68		48		60
Total				479					479			493		485		503		477		489
* Includes our proportionate share of the Borger Refinery and Wood River Refinery.
West Coast
Gasoline				180					180			154		197		198		189		185
Distillates				136					136			110		141		142		144		135
Other				53					53			41		50		58		44		48
Total				369					369			305		388		398		377		368
Worldwide—Including Proportionate Share of Equity Affiliates
Gasoline				897					897			916		1,014		1,013		1,033		994
Distillates				762					762			729		841		840		887		825
Other				402					402			359		394		393		373		380
Total				2,061					2,061			2,004		2,249		2,246		2,293		2,199

Page 8

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REFINING (continued)
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Market Indicators
Crude and Crude Differentials ($/BBL)
WTI				62.88					62.88			51.83		48.24		48.16		55.35		50.90
Brent				66.76					66.76			53.78		49.83		52.08		61.39		54.27
LLS				65.79					65.79			53.51		50.31		51.65		61.05		54.13
ANS				66.96					66.96			53.83		50.68		52.20		61.52		54.56
WTI less Maya				5.16					5.16			7.10		4.29		1.62		2.21		3.80
WTI less WCS				25.78					25.78			13.79		9.99		10.49		16.82		12.77
Natural Gas ($/MMBtu)
Henry Hub				3.01					3.01			3.00		3.05		2.93		2.86		2.96
Product Margins ($/BBL)
Atlantic Basin/Europe
East Coast Gasoline less Brent				9.23					9.23			9.46		15.53		19.17		11.26		13.85
East Coast Distillate less Brent				16.35					16.35			12.93		13.29		17.18		17.77		15.29
Gulf Coast
Gulf Coast Gasoline less LLS				8.65					8.65			9.92		10.86		14.90		8.95		11.16
Gulf Coast Distillate less LLS				15.15					15.15			12.26		11.59		16.44		15.48		13.94
Central Corridor
Central Gasoline less WTI				13.57					13.57			12.77		14.11		19.32		16.43		15.66
Central Distillate less WTI				19.85					19.85			14.00		14.59		21.98		23.43		18.50
West Coast
West Coast Gasoline less ANS				16.40					16.40			17.28		21.08		20.83		11.76		17.74
West Coast Distillate less ANS				17.28					17.28			14.84		14.32		20.45		18.81		17.10
Worldwide Market Crack Spread ($/BBL)*				13.12					13.12			12.24		14.06		18.19		13.98		14.62
* Weighted average based on Phillips 66 crude capacity.

Page 9

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MARKETING AND SPECIALTIES
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Marketing and Specialties Net Income ($ Millions)
Marketing and Other				139					139			124		181		160		86		551
Specialties				45					45			17		33		48		37		135
Marketing and Specialties Net Income				184					184			141		214		208		123		686
Marketing and Specialties Income before Income Taxes ($ Millions)
Marketing and Other				176					176			181		275		242		110		808
Specialties				59					59			27		53		75		57		212
Marketing and Specialties Income before Income Taxes				235					235			208		328		317		167		1,020
Marketing Net Income ($/BBL)
U.S.				0.64					0.64			0.52		0.75		0.65		0.34		0.56
International				1.30					1.30			1.59		2.31		1.79		1.54		1.81
Realized Marketing Fuel Margins ($/BBL)*
U.S.				1.39					1.39			1.47		1.74		1.63		1.09		1.48
International				3.32					3.32			3.70		4.95		4.45		3.72		4.21
* See note on the use of non-GAAP measures below. Also, reconciliations of net income to realized marketing fuel margin for each period and by region are included in the "Realized Margin Non-GAAP Reconciliations" section below.
Realized Margins not included in Marketing Fuel Margin ($ Millions)*
Marketing and Other				147					147			133		142		160		130		565
Specialties				94					94			72		97		120		103		392
Total				241					241			205		239		280		233		957
* Excludes Gain on Dispositions and Excise Tax Income.
Depreciation and Amortization ($ Millions)
Marketing and Other				24					24			22		21		24		25		92
Specialties				5					5			5		5		5		5		20
Total				29					29			27		26		29		30		112
Operating and SG&A Expense ($ Millions)
Marketing and Other				266					266			245		283		292		284		1,104
Specialties				36					36			38		37		39		39		153
Total				302					302			283		320		331		323		1,257
Marketing Petroleum Products Sales (MB/D)
U.S. Marketing
Gasoline				1,024					1,024			1,073		1,188		1,188		1,197		1,162
Distillates				706					706			667		751		780		866		766
Other				1					1			—		—		1		1		1
Total				1,731					1,731			1,740		1,939		1,969		2,064		1,929
International Marketing
Gasoline				81					81			82		87		84		83		84
Distillates				173					173			168		161		166		165		165
Other				19					19			15		18		17		20		17
Total				273					273			265		266		267		268		266
Worldwide Marketing
Gasoline				1,105					1,105			1,155		1,275		1,272		1,280		1,246
Distillates				879					879			835		912		946		1,031		931
Other				20					20			15		18		18		21		18
Total				2,004					2,004			2,005		2,205		2,236		2,332		2,195
Foreign Currency Gains (Losses) After-Tax ($ Millions)				4					4			1		—		1		(3	)	(1	)
Reconciliation of Marketing and Specialties Net Income to Adjusted EBITDA ($ Millions)
Marketing and Specialties net income				184					184			141		214		208		123		686
Plus:
Income tax expense				51					51			67		114		109		44		334
Depreciation and amortization				29					29			27		26		29		30		112
Marketing and Specialties EBITDA				264					264			235		354		346		197		1,132
Special Item Adjustments (pre-tax):
Hurricane-related costs				—					—			—		—		1		—		1
Pension settlement expense				—					—			—		7		3		1		11
Certain tax impacts				(13	)				(13	)		—		—		—		—		—
Marketing and Specialties EBITDA, Adjusted for Special Items				251					251			235		361		350		198		1,144
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				—					—			—		—		—		—		—
Proportional share of selected equity affiliates net interest				—					—			—		—		1		—		1
Proportional share of selected equity affiliates depreciation and amortization				3					3			3		3		2		3		11
Marketing and Specialties Adjusted EBITDA				254					254			238		364		353		201		1,156

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CORPORATE AND OTHER
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Corporate and Other Net Income (Loss) ($ Millions)				(155	)				(155	)		(130	)	(149	)	(147	)	2,595		2,169
Detail of Net Income (Loss) ($ Millions)
Net interest expense				(89	)				(89	)		(65	)	(65	)	(68	)	(68	)	(266	)
Corporate overhead				(47	)				(47	)		(39	)	(47	)	(45	)	(44	)	(175	)
Technology				(18	)				(18	)		(15	)	(14	)	(16	)	(17	)	(62	)
U.S. tax reform				7					7			—		—		—		2,735		2,735
Other				(8	)				(8	)		(11	)	(23	)	(18	)	(11	)	(63	)
Total				(155	)				(155	)		(130	)	(149	)	(147	)	2,595		2,169
Pre-Tax Net Interest Expense ($ Millions)
Interest expense				(123	)				(123	)		(114	)	(113	)	(112	)	(114	)	(453	)
Capitalized interest				—					—			9		6		—		—		15
Interest revenue				11					11			5		7		8		10		30
Total				(112	)				(112	)		(100	)	(100	)	(104	)	(104	)	(408	)
Reconciliation of Corporate and Other Net Income (Loss) to Adjusted EBITDA ($ Millions)
Corporate and Other net income (loss)				(155	)				(155	)		(130	)	(149	)	(147	)	2,595		2,169
Plus:
Income tax benefit				(41	)				(41	)		(75	)	(62	)	(106	)	(2,821	)	(3,064	)
Net interest expense				112					112			100		100		104		104		408
Depreciation and amortization				22					22			21		21		22		22		86
Corporate and Other EBITDA				(62	)				(62	)		(84	)	(90	)	(127	)	(100	)	(401	)
Special Item Adjustments (pre-tax):
Pension settlement expense				—					—			—		5		2		—		7
Pending claims and settlements				—					—			—		—		31		—		31
U.S. tax reform				(16	)				(16	)		—		—		—		—		—
Corporate and Other EBITDA, Adjusted for Special Items				(78	)				(78	)		(84	)	(85	)	(94	)	(100	)	(363	)
Other Adjustments (pre-tax):
None				—					—			—		—		—		—		—
Corporate and Other Adjusted EBITDA				(78	)				(78	)		(84	)	(85	)	(94	)	(100	)	(363	)
Foreign Currency Gains (Losses) After-Tax ($ Millions)				—					—			—		(1	)	(1	)	2		—
Phillips 66 Total Company Debt
Total Debt ($ Millions)				11,621					11,621			10,210		9,965		10,201		10,110		10,110
Debt-to-Capital Ratio (%)				32	%				32	%		30	%	30	%	30	%	27	%	27	%
Total Equity ($ Millions)				24,300					24,300			23,725		23,806		23,959		27,428		27,428
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
				Millions of Dollars
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Net income				585					585			563		581		849		3,255		5,248
Plus:
Income tax expense (benefit)				132					132			234		267		407		(2,601	)	(1,693	)
Net interest expense				112					112			99		100		104		104		407
Depreciation and amortization				336					336			315		320		337		346		1,318
Phillips 66 EBITDA				1,165					1,165			1,211		1,268		1,697		1,104		5,280
Special Item Adjustments (pre-tax):
Impairments by equity affiliates				—					—			33		—		—		31		64
Pending claims and settlements				—					—			—		(21	)	(36	)	—		(57	)
Certain tax impacts				(15	)				(15	)		—		—		—		(23	)	(23	)
Gain on consolidation of business				—					—			(423	)	—		—		—		(423	)
Pension settlement expense				—					—			—		55		21		7		83
Hurricane-related costs				—					—			—		—		70		140		210
U.S. tax reform				(16	)				(16	)		—		—		—		—		—
Phillips 66 EBITDA, Adjusted for Special Items				1,134					1,134			821		1,302		1,752		1,259		5,134
Other Adjustments (pre-tax):
Proportional share of selected equity affiliates income taxes				23					23			20		15		19		16		70
Proportional share of selected equity affiliates net interest				35					35			28		27		32		36		123
Proportional share of selected equity affiliates depreciation and amortization				214					214			180		180		200		217		777
EBITDA attributable to Phillips 66 noncontrolling interests				(80	)				(80	)		(46	)	(47	)	(49	)	(87	)	(229	)
Phillips 66 Adjusted EBITDA				1,326					1,326			1,003		1,477		1,954		1,441		5,875
Use of Non-GAAP Financial Information—This earnings release supplemental data includes the terms EBITDA and Adjusted EBITDA and Realized refining margins per barrel and Realized marketing fuel margins per barrel. These are non-GAAP financial measures. EBITDA and Adjusted EBITDA are included to help facilitate comparisons of operating performance across periods, to help facilitate comparisons with other companies in our industry and to help facilitate determination of enterprise value. The GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income. Realized refining margin per barrel is calculated on a similar basis as industry crack spreads and we believe it provides a useful measure of how well we performed relative to benchmark industry margins. Realized marketing fuel margin per barrel demonstrates the value uplift our marketing operations provide by optimizing the placement and ultimate sale of our refineries' fuel production. The most directly comparable GAAP measure to both realized margin per barrel measures is net income per barrel. Reconciliations of net income to realized refining margin and realized marketing fuel margin for each period and by region are included in the "Realized Margin Non-GAAP Reconciliations" section below.

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REALIZED MARGIN NON-GAAP RECONCILIATIONS
RECONCILIATION OF NET INCOME (LOSS) TO REALIZED REFINING MARGINS
				$ Millions, Except as Indicated
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
ATLANTIC BASIN/EUROPE
Net income (loss)				(73	)				(73	)		(50	)	107		171		142		370
Plus:
Income tax expense (benefit)				(35	)				(35	)		(48	)	13		76		37		78
Taxes other than income taxes				15					15			16		13		14		13		56
Depreciation, amortization and impairments				52					52			49		47		47		49		192
Selling, general and administrative expenses				13					13			14		15		16		16		61
Operating expenses				285					285			257		198		185		207		847
Equity in losses of affiliates				2					2			4		2		3		2		11
Other segment income				(7	)				(7	)		(3	)	(3	)	(2	)	(2	)	(10	)
Proportional share of refining gross margins contributed by equity affiliates				29					29			14		16		15		14		59
Special items:
Certain tax impacts				—					—			—		—		—		(23	)	(23	)
Realized refining margins				281					281			253		408		525		455		1,641
Total processed inputs (thousands of barrels)				39,218					39,218			40,116		51,749		52,306		54,897		199,068
Adjusted total processed inputs (thousands of barrels)*				39,218					39,218			40,116		51,749		52,306		54,897		199,068
Net income (loss) (dollars per barrel)**				(1.86	)				(1.86	)		(1.25	)	2.07		3.27		2.59		1.86
Realized refining margins (dollars per barrel)***				7.17					7.17			6.29		7.90		10.02		8.32		8.25
GULF COAST
Net income				1					1			328		53		67		64		512
Plus:
Income tax expense (benefit)				(1	)				(1	)		193		33		42		29		297
Taxes other than income taxes				25					25			27		23		24		23		97
Depreciation, amortization and impairments				66					66			67		68		68		70		273
Selling, general and administrative expenses				10					10			12		14		14		15		55
Operating expenses				366					366			338		294		298		282		1,212
Equity in (earnings) losses of affiliates				1					1			(7	)	2		(1	)	2		(4	)
Other segment (income) expense, net				(1	)				(1	)		(422	)	1		—		—		(421	)
Proportional share of refining gross margins contributed by equity affiliates				—					—			1		—		—		—		1
Realized refining margins				467					467			537		488		512		485		2,022
Total processed inputs (thousands of barrels)				69,207					69,207			66,848		72,346		70,544		76,213		285,951
Adjusted total processed inputs (thousands of barrels)*				69,207					69,207			66,848		72,346		70,544		76,213		285,951
Net income (dollars per barrel)**				0.01					0.01			4.91		0.73		0.95		0.84		1.79
Realized refining margins (dollars per barrel)***				6.75					6.75			8.03		6.74		7.26		6.38		7.07
CENTRAL CORRIDOR
Net income				203					203			62		27		197		191		477
Plus:
Income tax expense				69					69			35		15		120		108		278
Taxes other than income taxes				12					12			14		13		9		10		46
Depreciation, amortization and impairments				35					35			27		37		32		33		129
Selling, general and administrative expenses				7					7			8		8		8		10		34
Operating expenses				108					108			136		183		123		151		593
Equity in (earnings) losses of affiliates				61					61			9		(26	)	(146	)	(166	)	(329	)
Other segment (income) expense, net				(4	)				(4	)		2		4		8		(1	)	13
Proportional share of refining gross margins contributed by equity affiliates				198					198			169		175		290		325		959
Realized refining margins				689					689			462		436		641		661		2,200
Total processed inputs (thousands of barrels)				26,236					26,236			24,647		22,331		23,525		21,643		92,146
Adjusted total processed inputs (thousands of barrels)*				42,765					42,765			43,921		43,718		45,733		43,451		176,823
Net income (dollars per barrel)**				7.74					7.74			2.52		1.21		8.37		8.83		5.18
Realized refining margins (dollars per barrel)***				16.11					16.11			10.54		9.96		14.04		15.16		12.44

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RECONCILIATION OF NET INCOME (LOSS) TO REALIZED REFINING MARGINS (continued)
				$ Millions, Except as Indicated
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
WEST COAST
Net income (loss)				(40	)				(40	)		(81	)	37		115		(26	)	45
Plus:
Income tax expense (benefit)				(12	)				(12	)		(49	)	22		75		(29	)	19
Taxes other than income taxes				25					25			20		21		—		23		64
Depreciation, amortization and impairments				58					58			58		67		58		61		244
Selling, general and administrative expenses				11					11			11		12		12		13		48
Operating expenses				230					230			313		222		212		235		982
Other segment expense				3					3			1		1		2		1		5
Realized refining margins				275					275			273		382		474		278		1,407
Total processed inputs (thousands of barrels)				33,051					33,051			27,414		35,304		36,635		34,736		134,089
Adjusted total processed inputs (thousands of barrels)*				33,051					33,051			27,414		35,304		36,635		34,736		134,089
Net income (loss) (dollars per barrel)**				(1.21	)				(1.21	)		(2.95	)	1.05		3.14		(0.75	)	0.34
Realized refining margins (dollars per barrel)***				8.32					8.32			9.95		10.83		12.95		7.96		10.49
WORLDWIDE
Net income				91					91			259		224		550		371		1,404
Plus:
Income tax expense				21					21			131		83		313		145		672
Taxes other than income taxes				77					77			77		70		47		69		263
Depreciation, amortization and impairments				211					211			201		219		205		213		838
Selling, general and administrative expenses				41					41			45		49		50		54		198
Operating expenses				989					989			1,044		897		818		875		3,634
Equity in (earnings) losses of affiliates				64					64			6		(22	)	(144	)	(162	)	(322	)
Other segment (income) expense, net				(9	)				(9	)		(422	)	3		8		(2	)	(413	)
Proportional share of refining gross margins contributed by equity affiliates				227					227			184		191		305		339		1,019
Special items:
Certain tax impacts				—					—			—		—		—		(23	)	(23	)
Realized refining margins				1,712					1,712			1,525		1,714		2,152		1,879		7,270
Total processed inputs (thousands of barrels)				167,712					167,712			159,025		181,730		183,010		187,489		711,254
Adjusted total processed inputs (thousands of barrels)*				184,241					184,241			178,299		203,117		205,218		209,297		795,931
Net income (dollars per barrel)**				0.54					0.54			1.63		1.23		3.01		1.98		1.97
Realized refining margins (dollars per barrel)***				9.29					9.29			8.55		8.44		10.49		8.98		9.13
* Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate.
** Net income divided by total processed inputs.
*** Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts due to rounding.

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RECONCILIATION OF NET INCOME TO REALIZED MARKETING FUEL MARGINS
				$ Millions, Except as Indicated
				2018								2017
				1st Qtr		2nd Qtr	3rd Qtr	4th Qtr	YTD			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
UNITED STATES
Net income				99					99			81		132		118		64		395
Plus:
Income tax expense				33					33			48		79		73		33		233
Taxes other than income taxes*				(10	)				(10	)		1,278		1,375		1,409		1,419		5,481
Depreciation and amortization				4					4			4		3		3		4		14
Selling, general and administrative expenses				176					176			174		193		193		191		751
Equity in earnings of affiliates				(2	)				(2	)		—		(2	)	(2	)	(1	)	(5	)
Other operating revenues*				(84	)				(84	)		(1,354	)	(1,459	)	(1,499	)	(1,503	)	(5,815	)
Other segment income				—					—			(1	)	(14	)	—		—		(15	)
Realized marketing fuel margins				216					216			230		307		295		207		1,039
Total fuel sales volumes (thousands of barrels)				155,780					155,780			156,548		176,419		181,110		189,851		703,928
Net income (dollars per barrel)				0.64					0.64			0.52		0.75		0.65		0.34		0.56
Realized marketing fuel margins (dollars per barrel)**				1.39					1.39			1.47		1.74		1.63		1.09		1.48
INTERNATIONAL
Net income				32					32			38		56		44		38		176
Plus:
Income tax expense (benefit)				5					5			10		19		14		(2	)	41
Taxes other than income taxes*				(2	)				(2	)		1,756		1,881		1,970		1,972		7,579
Depreciation and amortization				18					18			15		16		17		19		67
Selling, general and administrative expenses				70					70			60		63		70		71		264
Equity in earnings of affiliates				(18	)				(18	)		(19	)	(22	)	(22	)	(20	)	(83	)
Other operating revenues*				(7	)				(7	)		(1,760	)	(1,883	)	(1,973	)	(1,978	)	(7,594	)
Other segment (income) expense, net				(5	)				(5	)		(1	)	1		(1	)	3		2
Marketing Margins				93					93			99		131		119		103		452
Less: Margin for non-fuel related sales				12					12			11		11		10		10		42
Realized marketing fuel margins				81					81			88		120		109		93		410
Total fuel sales volumes (thousands of barrels)				24,534					24,534			23,885		24,229		24,596		24,636		97,346
Net income (dollars per barrel)				1.30					1.30			1.59		2.31		1.79		1.54		1.81
Realized marketing fuel margins (dollars per barrel)**				3.32					3.32			3.70		4.95		4.45		3.72		4.21
* Includes excise taxes on sales of petroleum products for periods prior to the adoption of FASB ASU No. 2014-09 on January 1, 2018. Other operating revenues also includes other non-fuel revenues.
** Realized marketing fuel margins per barrel, as presented, are calculated using the underlying realized marketing fuel margin amounts, in dollars, divided by sales volumes, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts due to rounding.

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