Kevin Mitchell
Chief Financial Officer at Phillips 66
Thank you, Mark. I'll start on slide 5 with an update on our business transformation progress and how we are reducing costs to sustain higher cash generation. We achieved $1.2 billion in run rate savings as of yearend 2023, comprised of $900 million of cost reductions and $300 million of sustaining capital efficiencies.
Sustaining capital is one of our business transformation success stories. Our sustaining capital historically averaged about $1 billion per year, and we added approximately $200 million with the consolidation of DCP midstream. Despite the additional sustaining capital requirements from DCP, we reduced our sustaining capital spend to under $900 million in 2023. This $300 million benefit is also reflected in our 2024 capital plan. Through the end of 2023, we realized $630 million in cost reductions. The majority of these cost reductions relate to refining, operating and SG&A expenses, as well as benefits to equity earnings and gross margin.
On slide 6, we provide more detail on the cost reductions at the total company level. Adjusted controllable costs were $8.4 billion in 2023, compared with $8.1 billion in 2022. The chart illustrates the main cost drivers year-over-year, including the impact of a full year of DCP consolidation. We continue to realize cost synergies from the DCP acquisition and subsequent integration.
Our successful business transformation has already reduced costs, including our share of WRB costs, by approximately $500 million, and this work continues.
Slide 7 provides a breakdown of refining costs. Refining adjusted controllable costs, including turnaround expense and our proportionate share of WRB and MiRO controllable costs decreased over $550 million to $5.2 billion in 2023.
Business transformation savings reduced refining costs by approximately $300 million. Additionally, lower turnaround expense and market impacts, primarily from lower utility prices, further reduced costs. These cost reductions more than offset inflationary impacts.
On a dollar per barrel basis, adjusted controllable costs were $7.56 or $6.57 per barrel, excluding turnaround expense. This is a fully burdened cost that includes about $1 per barrel for refining, share of corporate allocations and SG&A expenses. The business transformation savings reduced our 2023 adjusted costs by over $0.40 per barrel. We expect to achieve our full $1 per barrel run rate target by the end of 2024. Additional details can be referenced in the appendix to this presentation.
Slide 8 summarizes our fourth quarter results. Adjusted earnings were $1.4 billion or $3.09 per share. We generated operating cash flow of $2.2 billion, including cash distributions from equity affiliates of $226 million. Capital spending for the quarter was $634 million. We distributed $1.6 billion to shareholders through $1.2 billion of share repurchases and $457 million of dividends. Net debt to capital ratio was 34% at year-end 2023, and return on capital employed was 16% for the year.
Slide 9 highlights the change in results by segment from the third quarter to the fourth quarter. During the period, adjusted earnings decreased $708 million, mostly due to lower results in refining and marketing in specialties, partially offset by improved results in midstream.
In midstream, fourth quarter adjusted pretax income of $754 million was a record, up $185 million from the prior quarter, reflecting improvements in both NGL and transportation. The NGL business increased primarily due to higher margins and record volumes at the Sweeney hub, as well as lower operating costs. Transportation results were also higher, mainly reflecting the recognition of deferred revenue related to throughput and efficiency agreements.
Chemicals adjusted pretax income increased $2 million to $106 million in the fourth quarter. This increase was mainly due to higher margins, mostly offset by lower equity earnings from CPChem's affiliates and decreased sales volumes from lower seasonal demand. Global O&P utilization was 94%.
Refining fourth quarter adjusted pretax income was $797 million, down $943 million from the third quarter. The decrease was primarily due to lower realized margins. Realized margins decreased due to lower market crack spreads, partially offset by inventory hedge impacts, higher Gulf coast clean product realizations, wider heavy crude discounts and strong commercial results.
Market capture increased from 66% to 107%. Marketing and specialty's adjusted fourth quarter pretax income was $432 million, a decrease of $201 million from the previous quarter. The decrease was mainly due to a seasonal decline in domestic wholesale fuel margins, primarily in the midcontinent. Our adjusted effective tax rate was 23%.
Slide 10 shows the change in cash during the fourth quarter. We started the quarter with a $3.5 billion cash balance. Cash from operations excluding working capital was $2 billion. There was a working capital benefit of $207 million, mainly reflecting a reduction in inventory that was mostly offset by movements in accounts receivables and payables, which included the impact of declining commodity prices.
We funded $634 million of capital spending and repaid approximately $100 million of debt. Additionally, we returned $1.6 billion to shareholders through share repurchases and dividends. Our ending cash balance was $3.3 billion.
This concludes my review of the financial and operating results. Next, I'll cover a few outlook items for the first quarter. In chemicals we expect the first quarter global ONP utilization rate to be in the mid 90s. In refining, we expect the first quarter worldwide crude utilization rate to be in the low 90s, and turnaround expense to be between $110 million and $130 million.
Our turnaround expense guidance excludes costs associated with the conversion and startup of the Rodeo Renewable fuels facility. At our San Francisco refinery, we are executing the Rodeo Renewed project. The facility operated as a crude oil refinery in January [Technical Issues]
