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Phillips 66 reported a net income of $2.01 billion for the third quarter, compared to $5.39 billion in the same period in 2022.
The oil refiner’s adjusted net income for the quarter was $2.07 billion, or $4.63 per share, compared to $3.12 billion in the prior-year quarter. Phillips 66 missed the Zack’s Consensus Estimate of $4.78 per share.
Phillips 66 generated $2.7 billion in cash from operations in the third quarter, which included pension plan contributions of $358 million, according to an earnings release Friday. Excluding working capital impacts, the company’s operating cash flow was $2.4 billion. During the quarter, Phillips 66 funded $855 million of capital expenditures and investments, $752 million of share repurchases, and $465 million in dividends. Further, the company received proceeds of $280 million from asset dispositions, according to the release.
The company’s Midstream segment posted a pre-tax income of $712 million, compared with $604 million in the previous quarter. The results included a gain of $101 million on the sale of an investment and a gain of $46 million from a change in inventory method for an acquired business, partially offset by $4 million of integration-related restructuring costs, Phillips 66 said. The Transportation segment’s third-quarter adjusted pre-tax income was $285 million, flat quarter over quarter compared to $284 million in the second quarter.
Phillips 66 said it remains focused on capturing over $400 million of commercial and operating synergies across its wellhead-to-market value chain by 2025. The run-rate synergy capture at the end of the third quarter was approximately $250 million, it noted.
For its NGL and Other segment, Phillips 66 reported an adjusted pre-tax income of $293 million in the quarter, compared with an adjusted pre-tax income of $357 million in the previous quarter. The company attributed the decrease mainly to the timing of cargo freight costs, as well as higher employee, integration, and utility costs, partially offset by increased margins from improved commodity prices.
The Chemicals segment, which reflects Phillips 66’s equity investment in Chevron Phillips Chemical Company LLC (CPChem), posted third-quarter adjusted pre-tax income of $104 million, compared with $192 million in the second quarter. The decrease was mainly due to lower margins, partially offset by higher volumes, the company said, adding that global olefins and polyolefins utilization was 99 percent for the quarter.
Meanwhile, CPChem and QatarEnergy are building joint-venture petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar. On the U.S. Gulf Coast, the Golden Triangle Polymers (GTP) facility will include a 4.6 billion pounds per year ethane cracker and two high-density polyethylene units with a combined capacity of 4.4 billion pounds per year. CPChem owns a 51 percent equity share in the joint venture, which has secured project financing. The GTP facility is expected to begin operations in 2026, the release said.
The Ras Laffan Petrochemical (RLP) facility will include an ethane cracker with a capacity of 4.6 billion pounds per year, as well as two high-density polyethylene units with a total capacity of 3.7 billion pounds per year. The joint venture, owned 30 percent by CPChem, secured $4.4 billion in financing earlier in the month. The RLP facility is expected to start up in late 2026, Phillips 66 said.
For its Refining segment, Phillips 66 reported third-quarter adjusted pre-tax income of $1.7 billion, compared with pre-tax income of $1.1 billion in the previous quarter. The third-quarter figure included a $30 million legal accrual, while the second-quarter figure included a $14 million loss related to a sale of assets, the company noted, adding that the increase was primarily due to higher realized margins supported by strong utilization. Refining pre-tax turnaround costs for the third quarter were $111 million, the company said. In addition, there were $37 million of turnaround costs related to the Rodeo renewables facility.
On the renewables front, Phillips 66 said it is converting its San Francisco Refinery in Rodeo, California, into one of the world’s largest renewable fuels facilities, expected to begin operations in the first quarter of 2024. The total project will cost approximately $1.25 billion. Upon completion, the facility will have over 50,000 barrels per day, or 800 million gallons per year, of renewable fuel production capacity. The company added that it recently acquired a marketing business on the U.S. West Coast to optimize the placement of renewable diesel that will be produced at the Rodeo facility.
“Phillips 66’s focus on strong operating performance and execution on our strategic priorities, coupled with favorable market conditions, enabled us to achieve significant improvement in earnings and cash generation”, Phillips 66 President and CEO Mark Lashier said. “Today we are raising the bar by putting forth enhanced, ambitious, and achievable plans that will reward shareholders now and well into the future”.
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