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Phillips 66 (NYSE:PSX) +5% in Tuesday’s trading to its highest in more than two months after reporting better than expected Q2 adjusted earnings, helped in part by strength in its midstream unit.
Q2 net income fell to $1.015B, or $2.38/share, from $1.7B, or $3.72/share, in the year earlier quarter, but net income at the midstream segment, which transports natural gas and crude oil, jumped 38% compared to Q1, as midstream natural gas liquids fractionated volumes rose 9.5% to 744K bbl/day.
Phillips 66 (PSX) reported a “much stronger than expected 2Q result” that is “clearly a step in the right direction,” Piper Sandler analyst Ryan Todd writes; “most of the upside came from stronger Midstream results and less of a drag from Renewables than expected,” according to Tudor Pickering Holt’s Matthew Blair, according to Bloomberg.
However, a tepid summer driving season led to a drop in Q2 refining margins to $10.01/bbl from $15.32/bbl a year ago, and the refining segment’s overall earnings sank 75% Y/Y to $302M.
The company achieved a 98% crude utilization rate, “our highest in five years, and we lowered our costs by nearly a dollar per barrel, reflecting the success of our business transformation efforts,” CEO Mark Lashier said.
But refining margins are “weaker than we’ve seen in a little while,” CFO Kevin Mitchell said on the earnings conference call, so the company plans to take the opportunity to perform some discretionary maintenance.
Phillips 66’s (PSX) renewable fuels segment posted a $55M loss in Q2, swinging from a profit of $68M in the prior-year period.
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