Phillips 66 Books Q3 Profit Below Expectations

U.S. refiner Phillips 66 (NYSE: PSX) reported on Friday adjusted earnings of $4.63 per share for the third quarter, missing analyst expectations despite stronger refining margins compared to the second quarter.

Phillips 66, which also operates in the midstream and chemicals segments, reported adjusted earnings of $2.1 billion for the third quarter, up from $1.8 billion for the second quarter. In Q2, American refiners – including Phillips 66 – were hit by low refining margins.

For the third quarter, the adjusted earnings per share at Phillips 66 of $4.63 came in below the analyst consensus estimate of $4.82 compiled by The Wall Street Journal.

However, the crude utilization rate at Phillips 66 refineries was at 95%, the highest since 2019 amid strong summer fuel demand.

Higher realized margins supported by strong utilization lifted Phillips 66’s earnings for the third quarter compared to the second quarter of this year.

Realized margins rose from $15.32 per barrel in the second quarter to $18.96 per barrel in the third quarter, driven by higher market crack spreads, partially offset by inventory hedge impacts, lower secondary product margins, and lower Gulf Coast clean product realizations.  

In terms of returns to shareholders, Phillips 66 said it is on track to exceed its original $10 billion to $12 billion target, and increased this target to a range of $13 billion to $15 billion. The company plans to return at least 50% of operating cash flow to shareholders.  

“Today we are raising the bar by putting forth enhanced, ambitious, and achievable plans that will reward shareholders now and well into the future,” Phillips 66 president and CEO Mark Lashier said.

Earlier this week, Valero Energy (NYSE: VLO), the second largest U.S. refiner by capacity, opened the refiners’ earnings season, booking on Thursday higher-than-expected profits for the third quarter of 2023, amid continued strong product demand in America.

“Our refineries operated well and achieved 95 percent throughput capacity utilization, which is a testament to our team’s relentless focus on operational excellence,” said Lane Riggs, Valero’s CEO and president.

By Charles Kennedy for Oilprice.com

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