Phillips 66 Sees Profit Plunge 46% As Refiners Are Hit By Lower Margins

Phillips 66 (NYSE: PSX) reported adjusted earnings of $1.8 billion for the second quarter, down by 46% compared to $3.3 billion earned in the same period of 2022, due to lower refining margins that have led to profit declines at the other major American refiners, too.

In the refining segment alone, Phillips 66 reported second-quarter 2023 reported and adjusted pre-tax income was $1.1 billion, down from pre-tax income of $1.6 billion for the first quarter of 2023 and $3.2 billion for the second quarter of 2022.

“Realized margins decreased from $20.72 per barrel in the first quarter to $15.32 per barrel in the second quarter, primarily due to the decline in market crack spreads and lower feedstock advantage,” Phillips 66 said in a statement.

“Realized margins decreased primarily due to the decline in distillate crack spreads and narrowing heavy crude differentials, partially offset by improved gasoline cracks,” Kevin Mitchell, Executive Vice President and chief financial officer, said on the earnings call.

Phillips 66 joins Valero and Marathon Petroleum in reporting a decline in earnings for the second quarter of this year, compared to the same period of 2022 when refining margins were skyrocketing after the oil market turmoil following the Russian invasion of Ukraine.

Valero Energy reported last week significantly lower net income for the second quarter compared to the same period of 2022, as refining margins halved from a year ago. Total revenues plunged to $34.5 billion from $51.6 billion for the second quarter of 2022.

Valero’s refining margin per barrel of throughput halved to $15.62, from $30.01 in the second quarter of 2022, as refining margins globally were hit by higher Chinese fuel exports, weaker economic activity, and higher global refining capacity.

Earlier this week, Marathon Petroleum reported a net income of $2.2 billion, or $5.32 per diluted share, for the second quarter of 2023. The income for the latest quarter is more than halved compared with the net income of $5.9 billion, or $10.95 per diluted share, for the second quarter of 2022. Marathon Petroleum’s refining and marketing margin slumped to $22.10 per barrel, from $37.54 for the second quarter of 2022.

By Tsvetana Paraskova for Oilprice.com

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