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What a $3.6 Billion 2016 Phillips 66 Capex Budget Tells Investors

The largest U.S. oil refiner by market cap is Phillips 66 (NYSE: PSX), and the company announced Monday morning that it has set its capital spending budget for 2016 at $3.6 billion. Phillips 66 will also add $2 billion to its share repurchase plan. It pays to be a refining company these days.

The largest piece of the capex budget is $2 billion earmarked for the company’s joint venture to build two pipeline systems that will move crude oil from North Dakota to Texas by way of Patoka, Ill. Phillips 66 has taken a 25% stake in the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline (ETCOP) projects. The majority owners are Energy Transfer Equity L.P. (NYSE: ETE) and Energy Transfer Partners L.P. (NYSE: ETP), which together hold the remaining 75% of the projects.

The DAPL project is expected to cost about $3.7 billion to build a new 1,134-mile 30-inch pipeline from the Bakken play in North...