FOURTH QUARTER 2017 CONFERENCE CALL February 2, 2018 CAUTIONARY - - PowerPoint PPT Presentation

PHILLIPS 66 FOURTH QUARTER 2017 CONFERENCE CALL

February 2, 2018

This presentation 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,” “intends,” “objectives,” “projects,” “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 presentation 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, petroleum products and natural gas prices, and refining, marketing and petrochemical 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

• f 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. This presentation includes non-GAAP financial measures. You can find the reconciliations to comparable GAAP financial measures at the end of the presentation materials or in the “Investors” section of our website.

CAUTIONARY STATEMENT

2

3

EXECUTING THE STRATEGY

Billings Refinery, Billings, MT

4

OVERVIEW 4Q 2017

Adjusted earnings $548 MM Adjusted EPS $1.07 Operating cash flow $1,931 MM Capital expenditures and investments $537 MM Shareholder distributions1 $816 MM

(1) Shareholder distributions include share repurchases of $463 MM and dividends of $353 MM

858 548 43 (32) (190) (87) (13) (31) 3Q 2017 Adjusted Earnings Midstream Chemicals Refining Marketing & Specialties Corporate & Other Noncontrolling Interests 4Q 2017 Adjusted Earnings

4Q 2017 Adjusted Net Income

$MM

142 (140) 358 121 124

ADJUSTED EARNINGS 4Q 2017

5

(57)

99 142 10 20 13

3Q 2017 Adjusted Net Income Transportation NGL and Other DCP Midstream 4Q 2017 Adjusted Net Income

MIDSTREAM 4Q 2017

108 20 14 4Q 2017

$MM Completed Merey Sweeny and Bakken Pipeline interest dropdown to PSXP Transportation benefited from higher volumes Record Sweeny Hub volumes DCP Midstream benefited from higher commodity prices and volumes

6

153 121 (42) 12 (2)

3Q 2017 Adjusted Net Income Olefins & Polyolefins Specialties, Aromatics & Styrenics Other 4Q 2017 Adjusted Net Income

CHEMICALS 4Q 2017

95 34 (8) 4Q 2017

$MM 79% O&P capacity utilization Cedar Bayou hurricane recovery New ethane cracker at Cedar Bayou achieved mechanical completion SA&S improved margins and volumes

7

548 358 (52) (5) (6) (127) 3Q 2017 Adjusted Net Income Atlantic Basin / Europe Gulf Coast Central Corridor West Coast 4Q 2017 Adjusted Net Income

$MM

REFINING 4Q 2017

8

120 192 72 (26) 4Q 2017

100% crude utilization 87% clean product yield $8.98/BBL realized margin $99 MM pre-tax turnaround costs

13.98 8.98 (1.44) (1.99) 0.82 (2.39) Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin

WORLDWIDE REFINING $/BBL

REFINING MARGINS – MARKET VS. REALIZED 4Q 2017

9

Avg Market Crude: $59.89/BBL 64% Market Capture

211 124 (76) (11)

3Q 2017 Adjusted Net Income Marketing & Other Specialties 4Q 2017 Adjusted Net Income

MARKETING AND SPECIALTIES 4Q 2017

87 37 4Q 2017

10

Marketing margins impacted by rising prices Seasonally lower demand Re-imaged over 140 branded sites Lower base oil and finished lubricants margins $MM

(127) (140) 1 (14) 3Q 2017 Adjusted Net Loss Net Interest Expense Corporate Overhead & Other 4Q 2017 Adjusted Net Loss

$MM

CORPORATE AND OTHER 4Q 2017

11

12

OVERVIEW 2017

Adjusted earnings $2.3 B Adjusted EPS $4.38 Operating cash flow $3.6 B Capital expenditures and investments $1.8 B Shareholder distributions1 $3.0 B

(1) Shareholder distributions include share repurchases of $1.6 B and dividends of $1.4 B

Net-debt-to-capital ratio 20% Adjusted ROCE 8% PSXP equity proceeds $1.2 B

2.7 3.1 (1.8) 0.4 3.6 1.2 (3.0)

December 31, 2016 Cash Balance* Operating Cash Flow PSXP Equity Proceeds Capital Expenditures & Investments Shareholder Distributions Other December 31, 2017 Cash Balance*

$B

CASH FLOW 2017

13

* Includes cash and cash equivalents

Global Olefins & Polyolefins utilization Mid-90% Refining crude utilization Mid-80% Depreciation and amortization $1.4 B Effective income tax rate Low-to-Mid-20% Corporate & Other costs (after-tax) $160 MM - $180 MM Refining turnaround expenses (pre-tax) $230 MM - $260 MM 2018 Refining turnaround expenses (pre-tax) $520 MM - $570 MM Corporate & Other costs (after-tax) $640 MM - $680 MM 1Q 2018

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OUTLOOK

PHILLIPS 66 FOURTH QUARTER 2017 CONFERENCE CALL

Questions and Answers

PHILLIPS 66 FOURTH QUARTER 2017 CONFERENCE CALL

Appendix

Midstream - DCP (net to Phillips 66)

10¢/Gal Increase in NGL price 5 10¢/MMBtu Increase in Natural Gas price 1 $1/BBL Increase in WTI price 1

Chemicals - CPChem (net to Phillips 66)

1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 45

Worldwide Refining

$1/BBL Increase in Gasoline Margin 260 $1/BBL Increase in Distillate Margin 230 $1/BBL Widening WTI / WCS Differential (WTI less WCS) 50 $1/BBL Widening LLS / Maya Differential 40 $1/BBL Widening LLS / Medium Sour Differential 30 $1/BBL Widening LLS / WCS Differential 25 $1/BBL Widening WTI / WTS Differential 15 $1/BBL Widening LLS / WTI Differential 10 $1/BBL Widening ANS / WTI Differential 10 $1/BBL Widening Brent / WTI Differential 5 10¢/MMBtu Increase in Natural Gas price (15) Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators:

Annual Net Income $MM

ESTIMATED SENSITIVITIES 2018

17

Sensitivities shown above are independent and are only valid within a limited price range

23.9 23.7 23.7 23.8 24.0 27.4 23.1 22.4 22.4 22.4 22.6 25.1 8.9 10.1 10.2 10.0 10.2 10.1 7.8 7.7 7.6 7.6 7.8 7.2 3.1 2.7 1.5 2.2 1.5 3.1 3.0 2.7 1.5 2.2 1.5 2.9 27% 30% 30% 30% 30% 27% 25% 26% 25% 25% 26% 22% 20% 24% 27% 25% 27% 20% 17% 18% 21% 20% 22% 14%

2015 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 2015 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017

Equity $B Debt $B Cash & Cash Equivalents $B Debt-to-Capital Net-Debt-to-Capital

CAPITAL STRUCTURE 2015 – 2017

18

Consolidated PSX Excluding PSXP

13.43 8.32 (0.95) (0.11) (2.35) (1.70) Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin

ATLANTIC BASIN / EUROPE $/BBL

REFINING MARGINS – MARKET VS. REALIZED 4Q 2017

19

Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH Brent: $61.39/BBL 104% Crude Capacity Utilization 62% Market Capture

11.12 6.38 (1.72) (2.58) 2.31 (2.75) Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin

GULF COAST $/BBL

REFINING MARGINS – MARKET VS. REALIZED 4Q 2017

20

Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm LLS: $61.05/BBL 102% Crude Capacity Utilization 57% Market Capture

18.76 15.16 (1.20) (2.52) 2.66 (2.54) Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin

CENTRAL CORRIDOR $/BBL

REFINING MARGINS – MARKET VS. REALIZED 4Q 2017

21

Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3 WTI: $55.35/BBL 92% Crude Capacity Utilization 81% Market Capture

14.11 7.96 (1.01) (3.46) 1.14 (2.82) Market 3:2:1 Configuration Secondary Products Feedstock Other Realized Margin

WEST COAST $/BBL

REFINING MARGINS – MARKET VS. REALIZED 4Q 2017

22

Market 3:2:1 – ANS / Los Angeles CARBOB / Los Angeles No. 2 CARB ANS: $61.52/BBL 98% Crude Capacity Utilization 56% Market Capture

83 548 73 (3) 453 (16) (16) (26) 4Q 2016 Adjusted Earnings Midstream Chemicals Refining Marketing & Specialties Corporate & Other Noncontrolling Interests 4Q 2017 Adjusted Earnings

$MM

ADJUSTED EARNINGS 4Q 2017 VS. 4Q 2016

23

4Q 2017 Adjusted Net Income 142 (140) 358 121 124 (57)

69 142 40 13 20 4Q 2016 Adjusted Net Income Transportation NGL and Other DCP Midstream 4Q 2017 Adjusted Net Income

$MM

MIDSTREAM 4Q 2017 VS. 4Q 2016

24

108 20 14 4Q 2017

124 121 (10) 10 (3) 4Q 2016 Adjusted Net Income Olefins & Polyolefins Specialties, Aromatics & Styrenics Other 4Q 2017 Adjusted Net Income

$MM

CHEMICALS 4Q 2017 VS. 4Q 2016

25

95 (8) 34 4Q 2017

(95) 358 173 135 22 123 4Q 2016 Adjusted Net Loss Atlantic Basin / Europe Gulf Coast Central Corridor West Coast 4Q 2017 Adjusted Net Income

$MM

REFINING 4Q 2017 VS. 4Q 2016

26

120 192 72 (26) 4Q 2017

140 124 (27) 11 4Q 2016 Adjusted Net Income Marketing & Other Specialties 4Q 2017 Adjusted Net Income

$MM

MARKETING AND SPECIALTIES 4Q 2017 VS. 4Q 2016

27

87 37 4Q 2017

(124) (140) (13) (3) 4Q 2016 Adjusted Net Loss Net Interest Expense Corporate Overhead & Other 4Q 2017 Adjusted Net Loss

$MM

CORPORATE AND OTHER 4Q 2017 VS. 4Q 2016

28

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NON-GAAP RECONCILIATIONS

* We generally tax effect taxable U.S.-based special items using a combined federal and state statutory income tax rate of approximately 38 percent. 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. 2017 Year 4Q 3Q Year 4Q Phillips 66 Net Income Attributable to Phillips 66 5,106 $ 3,198 $ 823 $ 1,555 $ 163 $ Pre-tax Adjustments: Pending claims and settlements (60)

• (36)

(117)

• Pension settlement expense

83 7 21

• Impairments by equity affiliates

64 31

• 95
• Recognition of deferred logistics commitments
• 30
• Gain on consolidation of business

(423)

• Hurricane-related costs

210 140 70

• Equity affiliate ownership restructuring
• 33

33 Railcar lease residual value deficiencies and related costs

• 40

40 Certain tax impacts * (23) (23)

• (32)

(32) Tax impact of adjustments * 47 (70) (20) 4 (27) U.S. tax reform (2,735) (2,735)

• Other tax impacts
• (110)

(94) Adjusted Net Income Attributable to Phillips 66 2,269 $ 548 $ 858 $ 1,498 $ 83 $ Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars) ** 9.85 $ 6.25 $ 1.60 $ 2.92 $ 0.31 $ 2.82 Adjusted Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars) ** 4.38 $ 1.07 $ 1.66 $ 2.82 $ 0.16 $ Millions of Dollars Except as Indicated 2016

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NON-GAAP RECONCILIATIONS

Year 4Q 3Q Year 4Q Midstream Net Income 464 $ 139 $ 117 $ 280 $ 35 $ Pre-tax Adjustments: Pending claims and settlements (37) (37) (45) Pension settlement expense 12 1 3 Impairments by equity affiliates 6 Hurricane-related costs 10 6 4 Equity affiliate ownership restructuring 33 33 Tax impact of adjustments 5 (4) 12 2 (12) Other tax impacts 13 13 Adjusted Net Income 454 $ 142 $ 99 $ 289 $ 69 $ Chemicals Net Income 525 $ 27 $ 121 $ 583 $ 136 $ Pre-tax Adjustments: Impairments by equity affiliates 64 31 89 Hurricane-related costs 175 122 53 Tax impact of adjustments (93) (59) (21) Other tax impacts (12) (12) Adjusted Net Income 671 $ 121 $ 153 $ 660 $ 124 $ 2017 2016 Millions of Dollars Except as Indicated

31

NON-GAAP RECONCILIATIONS

Year 4Q 3Q Year 4Q Refining Net Income (Loss) 1,404 $ 371 $ 550 $ 374 $ (38) $ Pre-tax Adjustments: Pending claims and settlements (51) (30) (70) Pension settlement expense 53 5 13 Gain on consolidation of business (423) Hurricane-related costs 24 12 12 Recognition of deferred logistics commitments 30 Railcar lease residual value deficiencies and related costs 40 40 Certain tax impacts (23) (23) (32) (32) Tax impact of adjustments 153 (7) 3 1 (15) Other tax impacts (66) (50) Adjusted Net Income (Loss) 1,137 $ 358 $ 548 $ 277 $ (95) $ Marketing & Specialties Net Income 686 $ 123 $ 208 $ 891 $ 190 $ Pre-tax Adjustments: Pension settlement expense 11 1 3 Hurricane-related costs 1 1 Tax impact of adjustments (4) (1) Other tax impacts (50) (50) Adjusted Net Income 694 $ 124 $ 211 $ 841 $ 140 $ Corporate and Other Net Income (Loss) 2,169 $ 2,595 $ (147) $ (484) $ (129) $ Pre-tax Adjustments: Pending claims and settlements 28 31 (2) Pension settlement expense 7 2 Tax impact of adjustments (14) (13) 1 U.S. tax reform (2,735) (2,735) Other tax impacts 5 5 Adjusted Net (Loss) (545) $ (140) $ (127) $ (480) $ (124) $ 2017 2016 Millions of Dollars Except as Indicated

32

NON-GAAP RECONCILIATIONS

Year 4Q 3Q Year 4Q Midstream - Transportation Net Income 376 $ 105 $ 119 $ 311 $ 70 $ Pre-tax Adjustments: Pending claims and settlements (37) (37) Hurricane-related costs 8 5 3 Tax impact of adjustments 11 (2) 13 Other tax impacts (2) (2) Adjusted Net Income 358 $ 108 $ 98 $ 309 $ 68 $ Midstream - NGL and Other Net Income (Loss) 43 $ 20 $ (3) $ 2 $ 2 $ Pre-tax Adjustments: Pension settlement expense 12 1 3 Hurricane-related costs 2 1 1 Tax impact of adjustments (6) (2) (1) Other tax impacts 5 5 Adjusted Net Income 51 $ 20 $

• $

7 $ 7 $ Midstream - DCP Midstream Net Income (Loss) 45 $ 14 $ 1 $ (33) $ (37) $ Pre-tax Adjustments: Pending claims and settlements (45) Impairments by equity affiliates 6 Equity affiliate ownership restructuring 33 33 Tax impact of adjustments 2 (12) Other tax impacts 10 10 Adjusted Net Income (Loss) 45 $ 14 $ 1 $ (27) $ (6) $ Millions of Dollars Except as Indicated 2017 2016

33

NON-GAAP RECONCILIATIONS

Year 4Q 3Q Year 4Q Refining - Atlantic Basin / Europe Net Income 370 $ 142 $ 171 $ 204 $ 163 $ Pre-tax Adjustments: Pending claims and settlements (7) (2) Pension settlement expense 14 1 4 Recognition of deferred logistics commitments 30 Railcar lease residual value deficiencies and related costs 5 5 Certain tax impacts (23) (23) (32) (32) Tax impact of adjustments (3) (1) (13) (2) Other tax impacts (52) (36) Adjusted Net Income 351 $ 120 $ 172 $ 142 $ 98 $ Refining - Gulf Coast Net Income (Loss) 512 $ 64 $ 67 $ 52 $ (51) $ Pre-tax Adjustments: Pending claims and settlements (9) (2) (70) Pension settlement expense 18 2 4 Gain on consolidation of business (423) Hurricane-related costs 24 12 12 Railcar lease residual value deficiencies and related costs 16 16 Tax impact of adjustments 150 (6) (4) 21 (6) Other tax impacts (10) (10) Adjusted Net Income (Loss) 272 $ 72 $ 77 $ 9 $ (51) $ 2017 2016 Millions of Dollars Except as Indicated

34

NON-GAAP RECONCILIATIONS

Year 4Q 3Q Year 4Q Refining - Central Corridor Net Income 477 $ 191 $ 197 $ 234 $ 17 $ Pre-tax Adjustments: Pending claims and settlements (7) (2) Pension settlement expense 13 2 3 Railcar lease residual value deficiencies and related costs 11 11 Tax impact of adjustments (2) (1) (4) (4) Other tax impacts (5) (5) Adjusted Net Income 481 $ 192 $ 198 $ 236 $ 19 $ Refining - West Coast Net Income (Loss) 45 $ (26) $ 115 $ (116) $ (167) $ Pre-tax Adjustments: Pending claims and settlements (28) (24) Pension settlement expense 8 2 Railcar lease residual value deficiencies and related costs 8 8 Tax impact of adjustments 8 8 (3) (3) Other tax impacts 1 1 Adjusted Net Income (Loss) 33 $ (26) $ 101 $ (110) $ (161) $ Millions of Dollars Except as Indicated 2017 2016

35

NON-GAAP RECONCILIATIONS

Year 4Q 3Q Year 4Q Marketing & Specialties - Marketing & Other Net Income 551 $ 86 $ 160 $ 747 $ 158 $ Pre-tax Adjustments: Pension settlement expense 11 1 3 Hurricane-related costs 1 1 Tax impact of adjustments (4) (1) Other tax impacts (44) (44) Adjusted Net Income 559 $ 87 $ 163 $ 703 $ 114 $ Marketing & Specialties - Specialties Net Income 135 $ 37 $ 48 $ 144 $ 32 $ Pre-tax Adjustments: Tax impact of adjustments Other tax impacts (6) (6) Adjusted Net Income 135 $ 37 $ 48 $ 138 $ 26 $ Millions of Dollars Except as Indicated 2016 2017

36

NON-GAAP RECONCILIATIONS

* Adjusted total processed inputs include our proportional share of processed inputs of equity affiliates. ** Net income (loss) 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.

Atlantic Basin/Europe Gulf Coast Central Corridor West Coast Worldwide Realized Refining Margins Net income (loss) 142 $ 64 $ 191 $ (26) $ 371 $ Plus: Income tax expense (benefit) 37 29 108 (29) 145 Taxes other than income taxes 13 23 10 23 69 Depreciation, amortization and impairments 49 70 33 61 213 Selling, general and administrative expenses 16 15 10 13 54 Operating expenses 207 282 151 235 875 Equity in (earnings) losses of affiliates 2 2 (166) (162) Other segment (income) expense, net (2) (1) 1 (2) Proportional share of refining gross margins contributed by equity affiliates 14 325 339 Special Items: Certain tax impacts (23) (23) Realized refining margins 455 $ 485 $ 661 $ 278 $ 1,879 $ Total processed inputs (thousands of barrels) 54,897 76,213 21,643 34,736 187,489 Adjusted total processed inputs (thousands of barrels)* 54,897 76,213 43,451 34,736 209,297 Net income (loss) (dollars per barrel)** 2.59 $ 0.84 $ 8.83 $ (0.75) $ 1.98 $ Realized refining margins (dollars per barrel)*** 8.32 $ 6.38 $ 15.16 $ 7.96 $ 8.98 $ Millions of Dollars 2017 4Q

37

* Capital employed is total equity plus total debt

NON-GAAP RECONCILIATIONS

2017 Phillips 66 Numerator ($MM) Net Income 5,248 $ After-tax interest expense 285 $ GAAP ROCE earnings 5,533 $ After-tax special items (2,837) $ Adjusted ROCE earnings 2,696 $ Denominator ($MM) GAAP average capital employed * 35,700 $ 2017 GAAP ROCE 15% 2017 Adjusted ROCE 8%

38

NON-GAAP RECONCILIATIONS

* Phillips 66 Partners’ third-party debt and Phillips 66's noncontrolling interest attributable to Phillips 66 Partners

Phillips 66 Consolidated Phillips 66 Partners * Adjusted Phillips 66 Total Debt 10,110 $ 2,945 $ 7,165 $ Total Equity 27,428 $ 2,314 $ 25,114 $ Debt-to-Capital Ratio 27% 22% Total Cash & Cash Equivalents 3,119 $ 185 $ 2,934 $ Net-Debt-to-Capital Ratio 20% 14% 2017 December 31 Millions of Dollars

39

NON-GAAP RECONCILIATIONS

Growth Sustaining Total Growth Sustaining Total Capital Expenditures and Investments Midstream 152 $ 60 $ 212 $ 597 $ 174 $ 771 $ Refining 58 $ 172 $ 230 $ 323 $ 530 $ 853 $ Marketing & Specialties 24 $ 19 $ 43 $ 62 $ 46 $ 108 $ Corporate and Other 52 $ 52 $ 100 $ 100 $ Total 234 $ 303 $ 537 $ 982 $ 850 $ 1,832 $ Millions of Dollars Millions of Dollars 2017 2017 4Q Year

40

NON-GAAP RECONCILIATIONS

PSX Effective Tax Rate 4Q Year Effective Tax Rates Income before taxes 654 $ 3,555 $ Special items 155 $ (149) $ Adjusted income before taxes 809 $ 3,406 $ Provision for taxes (2,601) $ (1,693) $ Special items 2,805 $ 2,688 $ Adjusted provision for taxes 204 $ 995 $ GAAP effective tax rate (398)% (48)% Adjusted effective tax rate 25% 29% PSXP Run-rate EBITDA: PSXP’s run-rate EBITDA is a forecast of future EBITDA, and is based on the Partnership’s projections of annual EBITDA inclusive of both currently owned assets and future potential acquisitions by the Partnership. Run-rate EBITDA is included to demonstrate the historical growth of the Partnership, as well as management’s intention of future growth through acquisitions and organic projects. We are unable to present a reconciliation of run-rate EBITDA to net income, which is the nearest GAAP financial measure, because certain elements of net income, including interest, depreciation and taxes, were not used in the forecasts and are therefore not available. Together, these items generally result in run-rate EBITDA being significantly greater than net income. Millions of Dollars 2017