August 1, 2012:

Phillips 66 reported a 14 percent jump in second quarter profits, benefiting from lower crude prices, in its first full period as an independent refiner, the company reported Wednesday. The Houston-based company, which spun off from ConocoPhillips in April, banked $1.2 billion in earnings, or $1.86 per share, over the three month period ending June 30. That compares to $1 billion, or $1.64 per share, for the same period in 2011. “We’re off to a solid start, running well in a positive margin environment,” said CEO Greg Garland. “The location of our domestic refining, midstream and chemicals facilities enabled us to access advantaged feedstocks, creating strong earnings and cash flow.”

Phillips 66 operates refineries across the U.S. and in Europe, as well as pipeline, processing and chemical facilities. Profits from the company’s refining division grew to $882 million, a 77 percent increase for the second quarter, largely fueled by stronger refining margins in Europe and the United States midcontinent region. Crude oil prices were boosted last year by political unrest and global economic concerns. Leaders credited the sale of the Trainer refinery in Pennsylvania to Delta Airlines, announced in April, for some of the improved financial results. The refinery largely operated on Brent-priced crude, which carries a heftier cost than domestic oil. Phillips 66’s pipeline and fuel storage segment reported $91 million loss. The division suffered a $170 million non-cash impairment of Phillips 66’s 25 percent interest in the Rockies Express Pipeline, a natural gas system from Colorado to Ohio. The company noted that the price of natural gas liquids has dropped 38 percent over the year as operating costs have risen.

Phillips 66’s investment in DCP Midstream, its natural gas processing joint venture with Spectra Energy, recorded a 53 percent drop in second quarter in earnings, banking a $42 million profit. While the system’s fuel volumes grew more than 5 percent in South Texas and Rocky Mountain areas, natural gas processing in the Gulf Coast declined, according to the company. Meanwhile, the company’s chemicals division benefited from lower prices of ethane and propane. Chevron Phillips Chemical, the company’s joint venture with Chevron, uses the natural gas liquids it purchases to make chemicals. The segment’s second quarter profits rose 9 percent to $207 million. The company also announced that it will repurchase of up to $1 billion of its outstanding common shares.

By Fuelfix