On April 1, 2025, Phillips 66 acquired all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, together with their respective subsidiaries, which own various long haul natural gas liquids pipelines, fractionation facilities and distribution systems, for cash consideration of $2.2 billion, net of cash acquired.

In January 2025, Phillips 66 closed on the sale of its 49% ownership in Coop Mineraloel AG (Coop) and DCP Midstream, LP's (DCP LP) 25% ownership in Gulf Coast Express Pipeline LLC (GCX) and received total proceeds of $2 billion.

Effective April 1, 2024, Phillips 66 changed the internal financial information reviewed by its chief executive officer to evaluate performance and allocate resources to its operating segments. This resulted in establishment of a Renewable Fuels operating segment, which includes renewable fuels activities and assets historically reported in its Refining, M&S and Midstream operating segments.

Phillips 66 is targeting reductions of total debt to $17 billion and to lower its debt to capital ratio. This is to be achieved through a variety of funding sources to support liquidity requirements, including cash from operations, debt and proceeds from dispositions.

Phillips 66 is focused on achieving operational excellence by optimizing utilization rates and product yield at its refineries through reliable and safe operations, which will enable us to capture the value available in the market in terms of prices and margins.

Phillips 66 is focused on operational and cost reduction targets intended to drive world-class operations across our portfolio, while maintaining emphasis on growing our Midstream and Chemicals businesses.

The ongoing litigation surrounding the Dakota Access Pipeline, including potential equity contributions under the Contingent Equity Contribution Undertaking (CECU), could have a material adverse effect on Phillips 66's results of operations and cash flows.

The Propel Court is expected to rule on motions filed by Propel Fuels seeking exemplary damages and attorneys' fees. To the extent Phillips 66 Company is required to pay exemplary damages, it may have a material adverse effect on our financial position and results of operations.

Laws regulating GHG emissions continue to evolve, and while it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation, such laws potentially could have a material impact on our results of operations and financial condition as a result of increasing costs of compliance, lengthening project implementation and agency reviews, or reducing demand for certain hydrocarbon products.

Our Refining segment results are driven by several factors, including market crack spreads, refinery throughput, feedstock costs, product yields, turnaround activity, and other operating costs. Market crack spreads are used as indicators of refining margins and measure the difference between market prices for refined petroleum products and crude oil.

Our Chemicals segment consists of our 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The chemicals and plastics industry is mainly a commodity-based industry where the margins for key products are based on supply and demand, as well as cost factors.

Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined products. While marketing fuel and lubricant margins are primarily driven by market factors, largely determined by the relationship between supply and demand, marketing fuel margins, in particular, are influenced by trends in spot prices, and where applicable, retail prices for refined products in the regions and countries where we operate.

Our worldwide refining crude oil capacity utilization rate was 80% and 92% for the three months ended March 31, 2025 and 2024, respectively. The decrease for the three months ended March 31, 2025, was primarily due to higher turnaround activity.

Operating expenses increased 12% for the three months ended March 31, 2025. The increase was primarily due to higher turnaround and utility costs.

We are working to continuously improve operational and energy efficiency through resource and energy conservation efforts throughout our operations.

Capital spending for Corporate and Other during the first three months of 2025 was $7 million, primarily related to information technology.

Phillips 66 is developing and protecting new technologies, and commercializing lower-carbon opportunities.

Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies, our investment in NOVONIX, and various other corporate activities.

We believe shareholder value is enhanced through, among other things, a secure, competitive and growing dividend, complemented by share repurchases. Our financial target aims to return greater than 50% of net cash provided by operating activities to shareholders through share repurchases and dividends.

We have budgeted $2.1 billion for 2025 capital expenditures and investments, exclusive of acquisitions, which includes $1.1 billion of growth capital, primarily in our Midstream segment.

For the three months ended March 31, 2025, we repurchased 2 million shares at an aggregate cost of approximately $0.2 billion.

Effective April 1, 2024, we changed the internal financial information reviewed by our chief executive officer to evaluate performance and allocate resources to our operating segments. This resulted in establishment of a Renewable Fuels operating segment, which includes renewable fuels activities and assets historically reported in its Refining, M&S and Midstream operating segments.

We consider and take into account anticipated future GHG emissions in designing and developing major facilities and projects, and implement energy efficiency initiatives to reduce GHG emissions.

We are working to continuously improve operational and energy efficiency through resource and energy conservation efforts throughout our operations.

Our Refining segment results are driven by several factors, including market crack spreads, refinery throughput, feedstock costs, product yields, turnaround activity, and other operating costs. Market crack spreads are used as indicators of refining margins and measure the difference between market prices for refined petroleum products and crude oil.

Our Chemicals segment consists of our 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The chemicals and plastics industry is mainly a commodity-based industry where the margins for key products are based on supply and demand, as well as cost factors.

Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined products. While marketing fuel and lubricant margins are primarily driven by market factors, largely determined by the relationship between supply and demand, marketing fuel margins, in particular, are influenced by trends in spot prices, and where applicable, retail prices for refined products in the regions and countries where we operate.