Phillips 66 Q3 Profit More Than Doubles

(RTTNews) - Oil refiner and chemical maker Phillips 66 (PSX) on Wednesday reported a profit for the third quarter that more than doubled from last year, reflecting higher earnings and margins at its refining as well as marketing and specialties segments.

Greg Garland, chairman and CEO of Phillips 66, said, "Our operations ran well during the third quarter, capturing strong margins in our refining and marketing businesses. Chemicals earnings were also strong despite the impact of unplanned downtime."

The Houston, Texas-based company's net earnings for the third quarter were $1.18 billion or $2.09 per share, up sharply from $535 million or $0.87 per share in the year-ago period.

Excluding items, adjusted net income for the quarter was $1.14 billion or $2.02 per share, compared to $521 million or $0.85 per share in the previous-year quarter.

On average, 16 analysts polled by Thomson Reuters expected earnings of $1.75 per share for the quarter. Analysts' estimates typically exclude one-time items.

However, revenues and other income for the quarter declined 8 percent to $41.05 billion from $44.79 billion in the year-ago period. Analysts were looking for revenue of $48.36 billion.

Total costs and expenses for the quarter were $39.32 billion, down 11 percent from $43.99 billion in the previous-year quarter.

The refining segment's profit for the quarter was $558 million, compared to loss of $30 million in the year-ago period. The segment's worldwide realized margin for the quarter was $10.89/bbl, compared to $5.94/bbl in the year-ago period.

Marketing and Specialties earnings for the quarter surged 44 percent from the year-ago period to $368 million.

Meanwhile, midstream earnings for the quarter declined 22 percent from the prior-year period to $115 million, while the chemical unit's earnings decreased 12 percent to $230 million and was impacted by unplanned downtime. The Chemicals segment reflects Phillips 66's investment in Chevron Phillips Chemical Co. LLC, or CPChem.

Phillips 66 recently announced its participation in two joint ventures to develop the Dakota Access Pipeline or DAPL, and Energy Transfer Crude Oil Pipeline or ETCOP.

The company owns 25 percent stakes in both projects and its estimated share of construction cost is about $1.2 billion. The DAPL and ETCOP projects are expected to begin commercial operations in the fourth quarter of 2016.

In support of its advantaged crude oil strategy, Phillips 66 has ordered an additional 500 rail cars during the third quarter and began operations at its 75,000 BPD rail rack at the Bayway Refinery.

The company expects the 30,000 BPD rail rack at the Ferndale Refinery to begin operations in the fourth quarter of 2014. In addition, the company is constructing a rail-loading facility on land recently acquired in North Dakota.

Phillips 66 Partners LP (PSXP) will acquire the new rail-unloading facilities at Bayway and Ferndale, as well as the Cross-Channel Connector Pipeline, from Phillips 66. The $340 million transaction is anticipated to close in early December 2014.

Meanwhile, CPChem is investing in domestic growth projects to realize the benefits of low-cost petrochemical feedstocks in the U.S. Gulf Coast. The unit is continuing construction on its world-scale USGC Petrochemicals Project, consisting of an ethane cracker and related polyethylene facilities, with startup anticipated in 2017.

In addition, the ethylene production expansion project to add a tenth furnace at CPChem's Sweeny facility is expected to start up in the fourth quarter of 2014.

PSX is currently trading at $82.06, down $0.41 or 0.50 percent on a volume of 628,371 shares.