Phillips 66 (PSX) 29 Oct 242024 Q3 Earnings call transcript

Welcome to the Third Quarter 2024 Phillips 66 Earnings Conference Call. My name is Emily, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded.

I will now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

Earnings XX Phillips to Conference Call. Welcome harbor Commercial. Today's today's CEO; operating X Kevin on Rich Relations Refining; Marketing section safe call the Phillips contains found Midstream with will and Chairman Harbison supplemental and Mandell, Brian website, Lashier, of Mark and can Mitchell, Investor information. Slide statement. Chemicals, be on include and Participants presentation XX CFO; along the Baldridge, Don and financial our

materially as differ today's We to filings. call. in making Actual that will cause comments. our forward-looking today's could may be Factors during differ statements results are well SEC from actual results included here as

With that, I'll Mark. turn call to over the

the everyone, Welcome, strength results challenging Jeff. benefits of Thanks, differentiated our demonstrates a of portfolio. downstream our call. our third quarter earnings in The market to refining

target. In continued billion clean our product our During to in well. we July in improvement $XX Since execute through share dividends. the and cost The operating run strategic reflects repurchases our to billion our shareholders on XXXX, continue projects. barrel per strong delivered priorities to $XX refining, high-return, we and yield to approaching investments we quarter, and billion performance. have $X system by $XX.X returned reduced our We're low-capital we

in billion. assets Switzerland-based to evaluate $X.XX optimization. interest all sell retail part We approximately portfolio continue strategic joint for of as a and to our XX% our ongoing our venture priorities of We agreed recently

our use shareholders priorities, now to expected cash including dispositions are the support billion debt plan Our exceed strategic reduction. and the asset $X target. We proceeds to to to returns

X of priorities the achieved we targets the During X on the ahead schedule. of quarter,

we reduction work, billion driven $X.X our in permanent diligent of a We've accomplished target. culture and with the improvement. a way continuous have business transformation shift we cost we remain First,

job cover this incredible are as results clear, on and employees later. Kevin delivering an will commitment the done have Our

the adjusted This in the we million NGL total wellhead-to-market achieved chain. our mid-cycle business. synergy integrating EBITDA Midstream billion, DCP and of from $XXX across acquiring to X value our brings successfully Secondly, growth shows our $X.X uplift target Midstream. Slide

advanced and have strong projects organic through strategic significant synergies provided We strategy transactions our that wellhead-to-market returns. and

Sweeny X further completion The largest strengthened by with second XXXX. expanded hub DCP with business Frac this quarter Our value we of of Midstream. Pinnacle the third NGL fully in the the in the competitive chain. transactions U.S. our became Hub of In the integrating acquisition the XXXX, position fractionation

an billion has On ago. XX-month adjacent We in also from with $X.X mid-XXXX. trailing processing start-up of billion increased a to X $X.X approved EBITDA adjusted Midstream's the expected years construction plant basis,

In addition, the Midstream this adjusted EBITDA XXXX sustaining The capital. is dividend cash from stable and covers gas guidance despite NGL prices. natural company's our generation ahead of weaker and business

significant We strong to and and our continue our growth platform returns capitalize cash to generate flow. high on grade portfolio free

up comments, were of cease dynamics refinery at acknowledge my the decision. Before Los Angeles uncertainty to long-term the the announced The in opening fourth I want operations this and in factors of I XXXX. our previously quarter of key market wrap plans sustainability the to refinery

of to use work state to with fuels California of and supply the future evaluating We continue customer property meet the are to we'll demand. transportation the

on we're As focus our continued for operating towards excellence. safety we and grateful work employees' decommissioning,

employees We and the and are treating of all to our process. throughout committed contractors respectfully fairly

an priorities strategic We look update call. targets. the our deliver and providing on earnings continue to next I on forward to

Kevin. to over Now

of detail level the end Thank provides at the same total quarter through Slide period the cost XXXX. third Mark. compared X with the of you, company

in realized our inflationary mitigating of approximately business while growth reductions, transformation Through capture. and supported $XXX including costs. of we impacts have through cost million WRB year, the the months first share synergy have We X

prioritize to lowered spend have per logistics sustaining gross per costs We year-to-date. operations. Slide cost safe transformation flow Adjusted margin. refining million. are In reliable barrel These excluding through controllable shows the and costs, by barrel. $XXX we turnaround, reduced capital $X.XX and to reduction business continue addition, X spend

compared We key financial million. The in were $X.XX operating Earnings shareholders. I have offset with earnings cover results the sale mostly $XXX target exports. Rockies Adjusted seasonal in results $X.X a by now Express costs eliminated These We $X interest margins the adjusted higher maintenance legal quarter. quarter. which Adjusted metrics. Midstream per of decreased $XXX will of to to $X.X covers Slide segment or X schedule. Slide ahead decreased decreases due special X costs, the $XXX earnings, million were lower flow move achieving our to returned to results. earnings third the barrel on pipeline. and include items, reflecting per cash of our billion prior share. the and exclude partially accrual equity million of were generated LPG billion

new increased to costs. capture In weaker previous indicator with the in lower XX%, and results margins Lower reflect Chemicals, polyethylene chain quarter. results the crack spreads, mainly due was higher primarily line of refining

In at was third addition, in operations our refinery in quarter Angeles The acceleration to resulted the plan million. impact depreciation. Los the cease $XX the of

impact cash mainly billion, our capital, was businesses. fuels, expect quarter flow. depreciation to use of per stronger the X reflecting XX,XXX renewable lower mostly and In falling approximately of in million. margins. shows the Marketing noncore produced of the forward, and the Marketing $X.X by $XXX through decreased operations, million Specialties fuels we XXXX. Working excluding working the during fourth Midstream quarter. Slide prices. sale received seasonally to Also Specialties higher, $XXX Energy change results $XXX from due a stability and proceeds results during Renewable Rodeo capital July, the Going Midstream approximately was per $XXX third we of quarter, due quarter additional Complex of margins. barrels commodity assets. Midstream from Cash In for supported cash million acquired were the Pinnacle of of we realized day renewable The of million,

quarter. turnaround year we expect expense utilization the Refining, costs Full between reduction In from come million other crude the we worldwide the $XXX to million low to O&P This be in $XXX and expected turnaround is and to million be fourth be expense the be to mid-XXs ahead global $XXX to and our than in In anticipate rate $XXX rate the million. guidance. original mid-XXs. expect to to of corporate between $XXX million. Chemicals, Looking now and more in a to million. $XXX We is $XXX million utilization

wrap the open up which questions, will Mark call. we Now the will for line after

[Operator comes Instructions] JPMorgan. John with Our Royall question from first

how on regulatory that changes even in about decision? you talk planned was had decision? So my this did play just capacity your first something decision Can question what much you Or recent shutter that? into California. just into remaining that And conventional is your absent to that went

we an John, assets. ongoing will as evaluation of our our stated all priorities, of we've in do strategic

if so pressure. L.A. under refinery, And And about been that's the California has historically, originally significant production, part think XX%. decision in-state it really of the crude And was market process by designed was declined refinery back Angeles that. Los you and the to

So a outlook in California in face pretty continued demand and the the was one. diesel of tough declining gasoline

going California California that have we face, forward. away and outlook from that for fossil up. we to pretty typical when only also going expected and we maintenance be in And that's market factor also markets took refining policy move a challenging stated regulatory we And spending the given to the fuels, so and

earlier so go announced made refinery these decisions review an the the are And to are review after this lot idle that exhaustive do alternatives, factors And into of we that as we of decisions. exhaustive there all these a us and only led month.

policy changes so And wasn't been reaction any it face a California. of in This has of long-term knee analysis. jerk kind in any the

business of pieces balance finish the and Great. business potentially things. and my And could perhaps around there talk for your and finish where But maybe is sheet year the leverage then could working guidance the sheet. the you any just the about recognizing and sale Germany year balance on a you think the you are Swiss on where the sheet. other follow-up on the lot moving on outlook And of following and some capital just balance can you Austria

it's Kevin. John, Yes,

are to bulk to from asset that XXXX. certainly of cash the reflected be So by net partly finish than with be position expect a And going will where stronger but dispositions, proceeds currently. the or is we year debt that

that So in the to business, -- Austria and active Germany still the the Swiss And year. we negotiations business close retail in transaction next first expect that. quarter we're of around

as return year. about a a just And and standpoint, business. priority $X is a sheet we item And think will us flexibility balance as so lot XXXX from give dispositions from shareholders well. in first a proceeds about per also to the that capital cash added reminder, more to the allocation continuing priorities, be nonetheless, sustaining But capital. That's investment the billion as

after second for The of company approximately is then dividend of debt And $X in that, investing which is a shareholders, balance reduction. and that obviously per available the to the repurchases priority year. growth, sheet part is in billion the share the dividend, but returning and cash everything

metric, It and objective. we're different take expect to to of closer the on our but that way the leverage the of our be So components that, will look when equity target while moving and expect we off bit debt little a that. get a you we to at towards

The comes from Wells with Fargo. Read Roger next question

the we it substantial offset there. $X.X I the would inflation we them maybe just together. have sounds the little stated bit pretty here, CPI the plan, in about just inflation a like X with savings for billion billion parts: questions dig moving those synergies throw the X I I'm reduction on Kevin, you're one, at savings, I which do the on the that's from how Slides by synergies, of to the X, out a using that's sorry, into overall -- look you think, standard Yes. there. and like $X.X two I'll as and One, think cost DCP, to

but mentioned of the And those inflationary impacted by at You net pressure and seasonality, how can basis? on cost, it be out maintenance by forth, going but should also that a the look so what's really forward? maybe operating we comes

Yes.

out, I the think inflationary as as you you impact. and look at point highlighted that we

say also our impact and you could of outside of the control. two similar there's versions market-driven. We they're They're highlight factors, market

a One years. of of them last has for been the couple headwind

been prices gas lower natural The tailwind a with other us has for primarily. one

within reduction that being our our part to we what reflected wouldn't so because and or And would a completely cost we're volume control reduction control, standpoint. I that's of are energy of expect chart. On our as from the in quantity are market, that directly reduction dismissive on bar be also, that of -- cost those of focus on is initiatives terms focused on outside things in trying you

of worst It's that on are basis. well. the on GHG a somewhat consistent so and with that the go-forward that. something expect basis, behind pressures around normalized that, as also our inflationary But is we'd a And us, very environmental I that has go-forward focused we're objectives think on

headwinds lesser the than of we So couple over have last experienced years.

in just as turnaround that, year? any related is L.A. a outperformance $XXX then to the the follow-up just And million the of issue, on costs. that the Or shutdown? reduction the during Is that

Rich. evaluate And half the That's were some is of the process chance factors really reduction defer $XXX to $XXX coming in planned to turnarounds. able roughly year us Half There's data enhanced to key a attributed this this It's turnarounds. we actually that place extend of we over of between million. we've years. outlook. was it's been on had Roger, that after inspection two turnarounds, that last so intervals our in several that to allowed those some this it, in million in putting

of half at And efficient through labor of we've million the other we the organization's now. our execution and -- that the fruits is put that execution of we're more number come in of initiatives They've $XXX through gotten place actually turnarounds, with the a the much work. seeing

The Mehta Sachs. from Neil Goldman next with question comes

a sheet do on pace and forward shareholders the the softer that balance and have capital you what amount allocation, to via Just appears environment? wanted going you about buyback guys in capital dividends. tremendous follow up commodity returning But think made to around and be a of how to of progress and comments

that -- for have or and commitment we it's Neil, been focused put our we buybacks. somewhat very X.X there, the the the $XX informed target, pace that decisions to longer, of out billion around Yes, $XX last years the has on billion

to cash to excess that, move sort we operating the shareholder cash shareholders. to -- of to return flow get assumption think, think the the about we in or returned I more of being We being I of talked operations on a As will that, of of around more XX% the from last that this call, XX% metric. is of go-forward end

I out for model think about this good that's a way to metric. XXXX as think you that into

some then peers of quarter in solid and to And into fourth a of next saw ticked that's your crude imagine X then helpful. up, strength year? about businesses we just can the some talk and those Chemicals the marketing think very we because softened at outlook relative the I the of sequential That's the But as business Okay. end quarter this would quarter. about early and you

Well, we've seen side that. to of And of CPChem's had at cut others have Neil, strong. I'll take costs. high chemicals rates able the back They're when performance operate to because

to locations lean have I much feedstock and think world operations got their Europe, the they that really in they've low-cost or any operation which advantaged in exposure don't is they've -- they into. -- that ethane able position, X in been beneficial

with demand They're increasing, and their of year, a little is macro as long we crude continue ability well. But capture makes prices there a good see the to They to bit on pretty that chemicals. see naphtha out impacted that make and do market see perspective continued continue seasonal producers, time from the progress. and softness of going which for their we You ago, some typical that and or coming the the they so this in in floor, to forward. improvement lower trough coming term, year of see

and Brian, falling marketing's margins marketing channels mentioned, And strongest by prices. both QX the improved spot you Neil, on had is this as the driven, is marketing quarter, U.S. the across during wholesale quarter. in typically side. franchise

saw also volumes. stronger some We

in Additionally, we cycle improved M&S earnings. what going in QX base prices. forward, with lubricants expectations with feedstock But for seasonal pullback just are segment oil the also earnings margins falling consistent call the business, QX a in

next The from Ryan question with comes Todd Sandler. Piper

the guess, for one side. Maybe I refining me, on

thoughts lot struggling and in capture cost a margins a mid-cycle our terms improving the of rate improvement and like current still business. rate I environment. still you earnings you ways target reliability seems utilization -- next made next of any but even looking now, for terms environment. they're reducing in we're But still Refining below improvement I in -- of months right for a over leg guess from Refining the it in on little business struggling mid-cycle there? everybody, for to drive be think what do in still what in your of the in XX achieving are You've progress mean where the even structure, are as we Refining And profitability? of Refining kind clearly progress you're you but should order the

cost is this level do believe we're and I to do at enhanced I'll Ryan, We've our that that pretty Yes, on continue journey. still that so. just comment position, dramatically we'll Mark. a high

our enhance projects very priorities, see things are that that strategic And see focused that ability 'XX. 'XX, our working We by we in market. competitive being And payouts journey. capture continuing in things on got -- we've happening been things just that also these to we've deliberate we away small and in got have in the quick that we've

so away And increase to we in list of to our from capture things a that competitive long can position at work value we've and refining the continue enhance marketplace. our got to ability

Yes.

So maybe a add more Rich. to just that. This color I'll little is

refining. X focuses in had primary we So improvement

very for over original out now cost Refining. expectations organization's on digging And in it of million It First -- $XXX out the the effort sticky. these organizational slog, cost lot It's exceeded that is a a out are very expenses expectations, and this. right? do happy to profile that's pulling we've pit, reduction. getting that. the of I'm performance mud removed we've cost with And and takes our of

with declaring So we're infinite success that. not

equipment those. out I'll move across projects see about, projects improvement to our that but And here also we're making which the continue to move I shift the of to, system. taken we'll return. focus that will that the laundry cost. highest a now on And We continuous high attention is value earnings to organization's of a level continue on there's what of But capital was talking execute mode call, as Mark to barrel sure the utilize advantage future. into small will the has existing what have of still with we We those the opportunities and that. efforts We're that to and going We extracting we list extract value go, focus the that some out. per

extracting lot we've And is glue that model have the out initiatives integrated organization really value a working about keeps of got is the then, Brian's and of organization working on, This front. entire the of on that we're of that chain. we diligently. that value the together course, And is commercial number that

all to You these of billion up, pricing. our they're $X add earnings at well over impact mid-cycle

back the that that the to mid-cycle earnings. $X $X -- So pricing I'm very refining when billion the get hit see you'll we scenarios of confident range of to performance billion to organization

And maybe the renewable diesel to drive are path Can some are of think Or your maybe kind improvement the -- of in the What in you improvement path maybe of think both and do what the you that look then pieces, terms profitability and how terms there? moving about things you are as of the market? do the broader at Rodeo levers? improvement drive specifically, improvement Great. think to backdrop macro in the of through to that one terms we XXXX, you're you will then more, we about there. in walk going

is we still Brian. a of today, start segment. Renewable This Sure. in are the startup for mode we're kind Ryan. Maybe where to

but CI QX. CI, in some lower we've think running -- also higher startup also costs. I had now we're some or higher So We're running

going beyond, margins QX if think diesel you to are think and margins going strengthen. renewable into we I think about

are of remained even on some will There less production, markets continue the production Coast. credit U.S., competitors disincentivizing to of reasons, feedstock going with the West CARB number jet tightening of biodiesel renewable competitors of the production credit the a number we of imports do West be Gulf stronger We've diesel to seen Coast Coast then And depressed. of prices our a with the RD the into just struggle, from like some some the converted tighter those and issues. plans renewable the from are market into that Coast into as well. There is Gulf and refinery markets diesel our production. come For

together, margins stronger drive things I as will forward. renewable those go we think, diesel all So

The from with next question UBS. comes Manav Gupta

I your on wanted little to focus bit a Corridor Central earnings.

strong You quarter-over-quarter were region. we million something helping to quarter-over-quarter. helped help It's the we us to good a understand or there, XX% up is seen out result, you Central generally That have Corridor. And over very such in the $XX you what a were strong but us performance understand talk assets what in haven't Mid-Con deliver out. you very factors really

Manav, very Corridor the this is here out. We're that played outperform. the of happy a that Rich. into performance Thanks operation. factors of with for pointing Central There's the couple

margins inventory favorable our a One which hedges. impact due on -- mainly of to higher, the were increased

with the So WTI that. positive that on a tailwind price falling was us quarter-over-quarter, hedge for

benefit There of diffs, the had was increase also XX% seen in for which in the in benefits quarter-over-quarter but indicator that as are included crude area the was well. Mid-Con the cracks region. the our a We heavy also WCS

product see there. move well. result differentials, a we that of positive lower did as that see did we So though, And as

product really very crude quarter. And all for for pricing this good tailwind We into secondary improved and very, we performance all intermediates. We this which X assets. also pulled the the all XXX% good in XX% performances operating utilization heavy are products is -- together yields, by had and very saw with the region. Our the NGLs this both the clean played

is you sale Perfect. follow-up at you asset a package are My still $X.X the Europe. have but here marketing $X there of in billion quick on billion, out

should proceeds the X months? how So about or asset sales we next for think XX

is defined think We've It's it's part -- would are ongoing. you way that, it, we I should the noncore about assets. of say portfolio think we think that what Manav, to And I a forward any as us. And with view considered we was that floor billion hit. evaluate as move we would noncore will and continue X assets for that dispositions that optimization. favorable we

Perfect.

target, billion $X the not the was floor, sorry. So

comes from The Tudor, next with Blair Matthew question Holt. Pickering,

blending Refining versus a butane well capture expectations about Your Or lower volumes. tailwinds for hold sorry, quarter-over-quarter? the -- pretty quarter it's Do from Typically, in quarter, Could XX% your too small XX% some higher the fourth or quarter? at you in third in improvement in think just like is say? capture here. refiners things it you up early fourth expect talk to the QX. to reasonable see

too to opportunity year. still into the I for through the as think there's of end volatility early Matthew, say, X go we it's just month some quarter, the

Phillips Coast your and good. West And challenging of some quarter. the Sounds then the pretty seemed peers third for in

capture fell XX% levels think the versus strong QX. in I to

you the made improvement obviously in headwinds any about whether in You the fourth Angeles talk And Los close the to there's Can been so decision a far refinery. quarter? the Coast? West in third quarter the

of the I'll West the actually. There's of Coast. on moving is some a parts, about This talk headwinds we lot Rich. saw

So feedstock cracks saw and advantages. weaker market primarily, a we weaker

decreased those were earnings to the in our indicator So that XX%. Margins driving with about falling region. keys Coast West lower both

in driven Angeles prior this that gasoline delivered in pipeline crude as cracks. Crude Canada. impact There as of were injection if deliveries -- price So out you're we Los our was by declining primarily along benchmark. well And also versus in indicator, those a that and coming well. saw played the see from Portland an into north month you a the of we by tracking environment, also

drawdown impacts product of heavy intermediate to Secondary inventory. related primarily

as then And we price declining that and market built in second environment drawdown intermediate both the in quarter, the capture. In at the Angeles inventories activity maintenance third and happened well, to heavy Los impacting a occurred the occur actually result as quarter, Ferndale. of a

down to experiencing some also wind are associated forget costs don't the want about We the operation. Rodeo with I continuing of that. crude

currently there of a quarter. be announcement we end his indicated to million number to in The the ongoing idle the from the costs well cost prepare was our in for are complete that demolition the of into demolition. majority prepare the reserved impacted earnings see but of that to in that this assets expect is that year-end One by that something couple for demolition as is entries ARO, earlier, we'll We operations. a of through this the recap the LAR year. And quarter $XX accelerated Kevin depreciation, as as work

a The special of million, obligations yield some the associated other $XX that well assets. recognizing quarter actually all XX% announcement. was said, operated assets for item the benefit for the product and utilization That with a at crude XX% clean

primarily So factors market-driven there.

next Cowen. with Our Jason question Gabelman from comes TD

I change the projects tough portfolio wanted that. XXXX. the XXXX have on by to It on indicator. involved given underpinned capture in from involved how those guidance and But in compare XXXX, been there some capture some sounds X% And you're much in there discrete Day, say delayed. the track business. maybe capture projects with Refining to first back would ask like improvement? think projects improvement of has And margin a I for kind across really that tell. And that was the optimization that improved was I you bit some Analyst in can't the

these mentioned those is on together I track. Rich that's those return. And XXXX, with projects assuming market improvement we're And earlier. associated bit with is a projects. in series is returned X% each high in XX This completed mid-cycle again. a we XX are how and Yes. small of all a little projects projects, capture and But Short series return XXXX about capital story of pricing year. roughly coming to

projects mid-cycle add earnings a profile. market In of to 'XX, have now. XX that executing we're about And X% we projects priced additional will capture right those

years it essentially X So to pricing. up X%. equivalent add number That up earnings those comes to the is the of mid-cycle X% at this, million on all program $XXX

go if a see will have that we'll and confident seeing the into indicator, market recreate -- see that impact through existing and and capture to numbers bridge that if very indicator. that to I'm environment, we're the that actually hit you the we back So traditional we

targets and debt. distributions XX% follow-up is My of $XX There's the back sheet Okay. back a next should deleveraging billion There's terms on to the some between the few balance of question debt how year, going year to of do There's metric year? buying and going in into net concern there market balance environment? cap. shares. XX% of buyback to feel commentary capacity is the next What's about the to kind given net look investors the you all preferred determine at around next debt. refining what And the out

it's Jason, Yes, Kevin.

equity Let that, that a that. of level, absolute environment the there me -- XX% just it's make level, XX% acknowledge may to but we calculation. a also comments on and not the The leverage and is the while to but take target drive get couple that given debt that current debt

net debt We at also are looking a basis. on at absolute debt a sub- billion $XX

were $XX into is we be because a we level, have the while a we're than billion like would weaker debt -- think of at going do end an next year of refining fair lower than bit that. third like. amount net little that the at and the So quarter, we'd environment to going to we're We flexibility

are The very other well. performing businesses

the healthy the some cash you're portfolio we will have that seeing through of benefits We broader and also that. the have become And asset available disposition.

So of this point realized announced billion, while half we've $X.X been actually that has time. than in less at

in transactions to working a So come we've that other fair still there's amount and on. we're got

as know, have is on one we'll priorities our be which cash return sheet, progress make meet as still of you and lot of well. to balance I So flexibility the objectives strategic able think our to a

Our next question comes Research. from Doug Wolfe Leggate with

the number, -- program Can idea not the small a out take if we EBITDA laid from of either, go your if back targets acquisition you guessing losses you one, there Mark, EBITDA in back this but I in guess but but you the some far? what wasn't the at to disposal and the $X.X I DCP program, the explicit I'm know give disposal us of don't was want so in targets. billion it's look XXXX disposals

mentioning Yes. that, No, thanks Doug. for

capacity XXXX. earnings at the mid-cycle billion As we at $XX step back projection and of our by look end at

and and the recognizing revised We -- also of and to where gives that be is not And number that, sometime mid-cycle and and we'll of in in capacity come year, that early puts number, that earnings takes out out earnings earnings in at our capacity on our and mid-cycle the there's that. landing look updating takes moving a we're with projection XXXX, everyone XXXX, but a recognize really are we're going is parts just portfolio. around that we'll next

this You can put at billion a $X.X point? number around

right do now. prepared We're to year. early We'll revise next not that that

is and a And guess of refining I follow-up But in is what obviously target better guess, I a midcycle hold years $X when to want XX a you've make a still quarters, pointed out. as some or the you've next $XX embedded was I'm historically my obviously mid-cycle. obviously. what obviously you a -- you misspeak higher whether are And as the to of that been we at we're press you been we year, kiboshed the I what capacity, industry. billion view been is there you billion. couple of for whether if need It's in the quite mid-cycle seen person actually about think takes related until 'XX. about I'm might think mid-cycle the don't for -- maybe mid-cycle, -- Okay. think had And what that by average. sure on for over but are to curious be battling as you us a capacity mid-cycle thought to to But wait curious last about that that's last of a little vocal globally there case your you forward just

Well, we will lot the of has down. last part our XX I where all years. inside back has inflation that crack think mid-cycle see happened is changed certainly, what review in respect And a in the step to and comes spreads, with

significantly to refining more than capture ability our I earnings value, of Rich of in different trade marketplace our the but our value from assets things enhanced how of think in commercial it's creating around and list our years that believe value XX we our the strength to has our the and see ago, refining. we capability a capture do integration long and assets, combination was very in different talked posture enhanced ability mid-cycle around has it about group in we more

at beyond impact we of coming that that XXXX, And that very coming we're exceed XXXX, the yes, we announcements going beyond net mid-cycle but forward rationalization going capacity that addition see XXXX. we'll and beyond look little will on don't refineries you also if believe very be the more now, seeing at believe X in And us demand at are and 'XX that growth global additions you're big capacity little rationalizations. to

And fairly outlook so we've got a bullish term. the medium in

from question next from Chen The comes Barclays. Theresa

to business, may the related your way competitors and from cost with bolster that a in impacting a we have footprint contango, earnings How on a due And that, to be Permian, chain, capacity being of Chem Chem of across value to could contango option natural because the perhaps just ethane that also volumes, First, into incremental the XXXX? your least for option residue XXXX. at and or cannot? into side you perspective ethane way project margins given out the the to see gas your macro midstream that project in through allowing for coming some to extract Chem processing do integrated for

this is Don. Theresa,

term as from the I to ethane of relates standpoint it think to an think long CPChem, I continue and will be there ethane term. advantage near

for be continue to outlook will about market. I good position So feel that in how chemical CPChem's that and beneficial the

conditions do our of about assets, flexibility we assets how and based rejection, market push basis decisions obviously, we in infrastructure downstream on and day-by-day we how our and a have, With it, as what maximize think profitability make both those of barrels those with and throughput is lot processing terms gas regard associated downstream. and the as ethane those with a recovery well our to as assets we on to the

optimize and So as we player, really to ethane a to good think that we've and a play industry. petchem across the gas got, as into integrated feedstock utilize ethane an then kit

going execute able we'll on as through the it's down be set to near that future. So the be well as opportunity we here think an on term to in

multiple a in love transacted GCX sold interest nearly a you capital? X XXX% a use of other residue hear cost $X.X the Got how the to double-digit there? a that mind thoughts to in on gas get your I'd side best Permian. have love turning that GCX it. your And asset consistently the your sense of your And your going interests recently FID-ed outside you've billion to in with an in pipe as I'd view basis. core exposure Permian. also and the business, expansion there. you Is view to that's the Do the to keeping transmission of

And see and the Well, first, we of big a to of are excited the I'd do the moving volume the given which beneficiary gas out very to of that's our productivity vote GCX think confidence space outlook there. in a support participant customer say expansion. the We Permian, as obviously gas behind in basin. we we're of the residue an footprint that marketing active and growth are

is then with that And reiterate our probably regularly way that's and situate capital opportunities high we for think allocated sense. portfolio we're mean, best right opportunities. look to what mean, said. to just just evaluate grade Mark where it the to So from I I ensure things We our pleased has makes the where standpoint.

when of time and it in terms than assets interest, GCX will decision sense. the So it other in continually be part the no will portfolio. a evaluate make make We'll our our just opportunities different -- be and of the

Cheng Paul next The from comes with Scotiabank. question

The is first question for Kevin.

should have objective. bit -- is that you than -- than more longer-term maybe we lesser of of the past, the the the higher just $XX are know saying volatility you to market still after at still about the the debt cash XX% commitment. on in that And don't be a the your for and finish whether the also, is cash longer $X out level I a will term. Should the that or flow the given in talked $X billion we say what today, in curious I'm you're least balance. that prefer think you seeing I paying payout we already the billion to $XX billion the billion

first the that's question. So

The for is Rich. second question

derivative that Central mentioned you other kind Is that are you the not just you hedges. to presume I for WTI of physical of operation referring CMA, benefit Corridor, -- Corridor operation? You need from Central you're you the your the the your into. you hedges rest the get are CMI actually doing in that or

Paul, take your Yes. first Kevin. it's question. I'll

cash. other $X also of uses competitors got billion, billion us plenty to is number $X one said to available And level, billion of us. $X sounds liquidity to of we've it $X our adequate that for the think flexibility. course, sort I cash billion gives We've ideal like our which of

is saying So the cash been to $X $X of number terms billion we've in billion balance. that

And can end quarter. billion. see were still reasonable on we pretty -- of more. the On go-forward is a XX% The cash than at can third slightly objective, you or lower you an basis as the that dividend as XX% returns, feels $X

that our view think a for a we And And the that emphasize to around be want so leaves to we growth -- our flexibility other theory, we program, accomplish. I capital that's how as that. -- it. disciplined the while commitment. on also that's That's capital. would very continue things we there's room very much not XX% still a adequate about in -- That's

the have capital billion X budget. $X years and 'XX of we back said So next couple ago, a for years, we'd 'XX,

we'll make around for laid to XXXX yet, our -- haven't decisions. out how we're continue we we to discipline budget those have expect While capital going we that that

when So XX% number. together, is that I you still a all the put think reasonable

Paul, this is Brian.

and until Just don't have it's for sold moved. you GAAP or mark accounting, mark accounting, the your on hedges the physical to you

doesn't the physical And get money so in a and falling the market, make hedges marked.

quarter. following So that will get marked in the

the that region, you -- it business that other in in Corridor hedges? or that for Yes. you Central other have But is only Brian, also have

have it regions. we Yes, in all

have in all regions? it you So

much correct. just significant. more It's That's

The volume big was a this. on move higher are and on there WTI

the only WTI your hedges? it's So

Yes. We correct. generally hedge with WTI crude,

The America. with comes Jean Bank question from Salisbury of Ann next

enterprise you that to I up started TW has believe margins the PADD PADD impact in X that seeing yet? Products X. pipeline Are

No, not yet.

expected sure I is, until How quarters does comments, to referenced that And kind online. the export wide, to over aware. extremely Okay. And export you that does way but this as of the LPG my I'm arbs the exposure more stay next PSX quarters? then few ? you're have And increase few they're for think I comes follow-up arbs have think gotten that a capacity in much

I LPGs value contracts long-term our as at a for short across we and say NGL of is mix just really Don. well are and we this Yes, would At Freeport, strong experiencing demand whole as have Freeport chain. portfolio there

-- of headwinds, where in lets on Gulf sort any at positives the system. we NGL margin it portfolio point helps time standpoint and capitalize opportunities this like from a have It across approach the So some us some value chain, navigate today across you so chain, see today it vessels but Coast. across that markets, international supply real just healthy ample seeing given the existing kind the fees out and a capacity value then dock level the to spread across really tight helps of of we dock are

foreseeable we So for healthy you and mentioned, the share pretty it's outlook, of as believe we'll a that, quarters. get a

with Stanley. question comes Laetsch next The Morgan from Joe

gasoline, outlook. as for within system you're side, comments macro just side outlook earlier your your your the the talk on diesel seeing well on to thanks you supply So here? jet to Could what on demand the from as and

Global hybrid and Sure. prior considerably X%, falling the higher growing were sales in year-to-date, higher 'XX. with prices that This former that retail bright spot XQ. with European seeing gasoline. of growth gasoline we're prices. is is versus XQ X% up. than gasoline-powered supporting a about about Brian. demand X% Starting with demand spot vehicles gasoline is U.S. performed over XQ the XQ well, -- Part of too,

freight the about comments last some from out optimistic followed in On distillate, which companies. positive XQ. we for reported U.S., Also UPS, global of distillate third container the in We're X% seeing year-to-date, X.X% the lower saw cautiously demand -- growth subpar up. volumes are XQ years of global in week, came was instance, quarter, in container it the lower than global nearly profit some X the revenue business, performance. and about

signs high, there. seeing they record positive In hit in some so a fact, August,

back 'XX, than the largely is of Asia. those to aircraft and fleet. higher X.X% about driven jet U.S. is demand back in jet demand by because isn't demand Europe levels, the flight global but efficiency XXXX mostly year-to-date levels, to quite Jet,

Great. renewables. And then to just shifting

a SAF about premium demand talked SAF RD. standpoint a over you What Rodeo? seeing at are for Some peers for seeing from have commercial

Yes.

as premium expect We caution I'll prepare we by production for -- renewable to also we're a credit but currently higher jet next not renewable likely in at to QX, next diesel off in CI see state that the production. complex year, renewable feedstocks renewable we we're of be jet plant year. for running the QX for tax steady produce

then, producing should see And jet. us renewable you so by

Maybe We fuel just bit there. in little color sustainable a did to actually produce September. add aviation that to Yes.

the So There's of our that we talking have market aviation fourth in marketplace. the sustainable the will sustainable intend fuel. limit be past about Brian was a in supplier We here that this fully did quarter that aviation production. produce indicated that, anomaly that is a will But intention. we fuel to successfully to

turn will call comments. This session. concludes I Lashier question-and-answer over back the closing for the now Mark to

run portfolio. cost Thanks our per $X synergy and differentiated achieved transformation barrel. for reductions lowered delivered all by cost with strong growth its billion downstream Business target refining achieved and stable rate $X.X provide across questions. Midstream earnings of performance opportunities. our your attractive We

signed having We exceed agreements billion generate proceeds target, expect disposition to in to date. asset our billion $X $X.X to

part our I'm in employees' continued Thank of execution targets. ongoing your confident continue for achievements as remaining to you toward of our the XX. significant our our commitments. evaluate and We proud Phillips in optimization. We're assets on portfolio interest strategy

If questions Owen. today's call Jeff or have please you after call,

This today. you may disconnect us now our joining lines. your for everyone, call, you, Thank concludes and