Phillips 66 Reports Second-Quarter Earnings of $1.4 Billion or $3.12 Per Share

Adjusted earnings of $1.4 billion or $3.02 per share

Highlights

• Generated $1.9 billion in operating cash flow; returned $861 million to shareholders
• Increased quarterly dividend by 12.5% to $0.90 per common share
• Operated at 97% utilization in Refining
• Delivered record Midstream results
• Executing Red Oak and Liberty pipeline projects
• Sanctioned a fourth NGL fractionator at Sweeny Hub
• Announced elimination of PSXP incentive distribution rights
• CPChem announced plans to pursue joint development of petrochemical projects in the U.S. and Qatar

Phillips 66 (NYSE:PSX), a diversified energy manufacturing and logistics company, announces second-quarter 2019 earnings of $1.4 billion, compared with $204 million in the first quarter of 2019. Excluding special items of $45 million in the second quarter, adjusted earnings were $1.4 billion, compared with first-quarter adjusted earnings of $187 million.

"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."

"We returned $861 million to shareholders through dividends and share repurchases this quarter. We are committed to disciplined capital allocation and target reinvesting 60% of our operating cash flow back into the business and returning 40% to shareholders."

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.

The company's equity investment in DCP Midstream generated adjusted pre-tax income of $35 million in the second quarter, compared with $23 million in the first quarter. The increase primarily reflects favorable hedging impacts.

The Chemicals segment reflects Phillips 66's equity investment in Chevron Phillips Chemical Company LLC (CPChem). Chemicals' second-quarter pre-tax income was $275 million, compared with $227 million in the first quarter.

CPChem's Olefins and Polyolefins (O&P) business contributed $260 million of adjusted pre-tax income in the second quarter of 2019, compared with $219 million in the first quarter. The $41 million increase mainly reflects higher polyethylene margins, driven by lower feedstock costs, as well as lower utility costs. Global O&P utilization was 95% in the second quarter.

CPChem's Specialties, Aromatics and Styrenics (SA&S) business contributed $34 million of adjusted pre-tax income in the second quarter of 2019, an improvement of $8 million from the prior quarter, reflecting higher first-quarter turnaround activity.

Refining second-quarter pre-tax income was $983 million, compared with a pre-tax loss of $198 million in the first quarter of 2019. Refining results in the first quarter included $21 million of favorable claim settlements.

Refining adjusted pre-tax income was $983 million in the second quarter of 2019, compared with an adjusted pre-tax loss of $219 million in the first quarter of 2019. The improvement was largely due to higher realized margins and volumes. Realized margins for the quarter increased to $11.37 per barrel from $7.23 per barrel in the first quarter, primarily driven by higher gasoline crack spreads. The company's worldwide crude utilization rate was 97%, up from 84% in the first quarter.

Pre-tax turnaround costs for the second quarter were $67 million, compared with first-quarter costs of $148 million. Clean product yield was 84% in the second quarter.