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Phillips 66 PSX

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Phillips 66 Suffers Loss in Second Quarter, but Worst Likely Behind It; Shares Undervalued

Allen Good, CFA Sector Strategist

Analyst Note

| Allen Good, CFA |

Phillips 66 saw earnings deteriorate during the second quarter, but this probably marked a low point as market conditions have already begun to improve. The company reported a second-quarter adjusted loss of $324 million compared with adjusted earnings of $1.4 billion a year ago due to a sharp decline in earnings across all segments, but primarily in refining. Midstream adjusted earnings fell to $245 million from $423 million last year on lower natural gas liquids volumes and lower pipeline volumes. Chemical adjusted earnings fell to $89 million from $275 million a year ago on lower margins. Refining reported adjusted earnings of a $867 million loss compared with earnings of $983 million a year ago on lower margins and reduced volumes. The marketing and specialties segment adjusted earnings fell to $293 million from $353 million a year earlier on lower volumes and lower realized margins.

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Company Profile

Business Description

Phillips 66 is an independent refiner with 13 refineries that have a total throughput capacity of 2.1 million barrels per day. Its DCP Midstream joint venture holds 61 natural gas processing facilities, 12 natural gas liquids fractionation plants, and a natural gas pipeline system with 64,000 miles of pipeline. Its CPChem chemical joint venture operates facilities in the United States and the Middle East and primarily produces olefins and polyolefins. Phillips 66 also holds a 75% interest in Phillips 66 Partners after exchanging its general partner incentive distribution rights for limited partner units.

Contact
2331 CityWest Boulevard
Houston, TX, 77042
T +1 281 293-6600
Sector Energy
Industry Oil & Gas Refining & Marketing
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 14,500

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