Earnings soared for Phillips 66

Phillips 66 saw earnings soar in the second quarter of 2019 as earnings rose to $1.4 billion compared to $204 million in the first quarter of the year. The company stated that excluding special items of $45 million in the second quarter, its adjusted earnings totaled $1.4 billion compared with $187 million in adjusted earnings in the first quarter.

“During the quarter we delivered solid financial results and demonstrated our commitment to operating excellence through safe and reliable operations,” said Greg Garland, chairman and CEO of Phillips 66. “Refining achieved 97% utilization and captured favorable margins. Midstream delivered record results, and at PSXP we are simplifying the capital structure with the elimination of IDRs.”

“We are further expanding our integrated crude oil network with the additions of the Liberty and Red Oak pipelines, and we are moving forward with a fourth NGL fractionator at our Sweeny Hub. In Chemicals, CPChem announced strategic partnerships to develop ethylene and polyethylene capacity on the U.S. Gulf Coast and in the Middle East. These projects align with our strategy to grow our higher-value Midstream and Chemicals businesses.”

As a result of the earnings, the company returned $861 million to shareholders through dividends and share repurchases in the quarter.

Phillips 66 generated $1.9 billion in cash from operations during the second quarter, including $509 million of cash distributions from equity affiliates. CPChem and WRB Refining distributed $190 million and $105 million, respectively, to Phillips 66 in the second quarter. Excluding working capital impacts, operating cash flow was $1.7 billion.

During the quarter, Phillips 66 funded $406 million of dividends, $455 million of share repurchases and $631 million of capital expenditures and investments. The company ended the quarter with 449 million shares outstanding.

As of June 30, 2019, cash and cash equivalents were $1.8 billion, and consolidated debt was $11.4 billion, including $3.3 billion at Phillips 66 Partners (PSXP). The company’s consolidated debt-to-capital ratio was 30%, and its net debt-to-capital ratio improved to 26%. Excluding PSXP, the debt-to-capital ratio was 25% and the net debt-to-capital ratio was 21%.

In Midstream, Phillips 66 announced a joint venture to construct the Liberty Pipeline that will provide crude oil transportation from the Rockies and Bakken production areas to Cushing, Oklahoma. Liberty is supported by long-term shipper commitments and initial service is targeted for the first quarter of 2021. Phillips 66 owns a 50% interest in Liberty and will construct and operate the pipeline.

Phillips 66 also announced a joint venture to construct the Red Oak Pipeline system that will provide crude oil transportation from Cushing and the Permian Basin to multiple destinations along the Gulf Coast, including Corpus Christi, Ingleside, Houston and Beaumont, Texas. Red Oak is supported by long-term shipper commitments and initial service is targeted for the first quarter of 2021. Our co-venturer will construct and Phillips 66 will operate the pipeline. Phillips 66 owns a 50% interest in the venture.

Midstream second-quarter pre-tax income was $423 million, compared with $316 million in the first quarter of 2019.

Transportation second-quarter adjusted pre-tax income of $245 million was $42 million higher than the first quarter, primarily due to higher pipeline and terminal volumes at both wholly owned and joint venture operations.

NGL and Other adjusted pre-tax income for the second quarter was $143 million, a $53 million increase from the first quarter. The improvement was due to higher margins and volumes at the Sweeny Hub and improved butane trading results.