Phillips 66(PSX) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenues and other income for Q2 2024 were $38.911 billion, compared to$35.740 billion in Q2 2023, reflecting a growth of 8.9%[10] - Net income for Q2 2024 was $1.020 billion, a decrease from$1.734 billion in Q2 2023, representing a decline of 41.2%[13] - Comprehensive income attributable to Phillips 66 for Q2 2024 was $1.018 billion, down from$1.798 billion in Q2 2023, a decrease of 43.4%[13] - Net income attributable to Phillips 66 common stockholders for the three months ended June 30, 2024, is $1.015 billion, with net income available to common stockholders at$1.012 billion[54] - Earnings per share (EPS) for the three months ended June 30, 2024, is $2.39 (basic) and$2.38 (diluted)[56] - Net income attributable to Phillips 66 was $1 billion in Q2 2024, compared to$1.7 billion in Q2 2023, primarily due to a decline in realized refining margins[144] - Sales and other operating revenues increased by 9% in Q2 2024, driven by higher crude oil prices and refined petroleum product sales volumes[147] - Net gain on dispositions increased by $249 million in Q2 2024 and$215 million in the six-month period of 2024, primarily due to a $238 million before-tax gain from the sale of a 25$1 billion and cash provided by operating activities of $2.1 billion in the second quarter of 2024[132] Cash Flow and Capital Expenditures - Cash and cash equivalents decreased to$2.444 billion as of June 30, 2024, from $3.323 billion at the end of 2023, a reduction of 26.5$995 million, compared to $929 million in Q2 2023, an increase of 7.1$2.004 billion, slightly lower than $2.109 billion in Q2 2023, a decrease of 5.0$933 million, compared to $960 million in Q2 2023, a decline of 2.8$2.4 billion in the first six months of 2024, with $1.9 billion generated from operating activities and$685 million from asset dispositions[185] Balance Sheet and Debt - Total assets as of June 30, 2024, were $75.945 billion, up from$75.501 billion at the end of 2023, an increase of 0.6%[15] - Long-term debt as of June 30, 2024, was $17.180 billion, down from$17.877 billion at the end of 2023, a reduction of 3.9%[15] - Total debt increased to $19.96 billion as of June 30, 2024, with a debt-to-capital ratio of 40$1.5 billion in senior unsecured notes on February 28, 2024, including $600 million at 5.250$400 million at 5.300% due 2033, and $500 million at 5.650$700 million of its $1.25 billion delayed draw term loan on March 4, 2024[62] - Phillips 66 entered into a$400 million uncommitted credit facility on June 25, 2024, with $400 million outstanding as of June 30, 2024[65] - Phillips 66 has a$5 billion revolving credit agreement with a scheduled maturity date of February 28, 2029, and no borrowings were outstanding as of June 30, 2024[66] - Phillips 66 has a $5 billion uncommitted commercial paper program, with$899 million issued as of June 30, 2024[67] - Phillips 66 issued $1.5 billion in senior unsecured notes in February 2024, including$600 million at 5.250%, $400 million at 5.300$500 million at 5.650%[189] - The company entered into a $400 million uncommitted credit facility on June 25, 2024, with$400 million outstanding as of June 30, 2024[191] Acquisitions and Divestitures - Completed acquisition of DCP Midstream, LP, increasing the company's economic interest in DCP LP from 43.3% to 86.8% and in DCP Sand Hills and DCP Southern Hills from 62.2% to 91.2%[26] - Acquired a marketing business on the U.S. West Coast for $272 million to support renewable diesel placement, recording$146 million in amortizable intangible assets and $67 million in goodwill[28] - Entered into an agreement to acquire Pinnacle Midland Parent LLC for$566 million to expand natural gas operations in the Permian Basin[29] - Sold 25% ownership interest in Rockies Express Pipeline LLC for approximately $685 million, recognizing a before-tax gain of$238 million[51] - Entered into an agreement to sell ownership interests in certain gathering and processing assets in Louisiana and Alabama for approximately $170 million[52] - Phillips 66 sold its 25$685 million on June 14, 2024[195] - The company agreed to sell certain gathering and processing assets in Louisiana and Alabama for approximately $170 million, expected to close in Q3 2024[196] Segment Performance - Consolidated sales and other operating revenues for the six months ended June 30, 2024, were$73.94 billion, with refined petroleum products and renewable fuels contributing $53.81 billion[30] - Geographic revenue breakdown for the six months ended June 30, 2024: United States$58.84 billion, United Kingdom $7.10 billion, Germany$2.67 billion, and other countries $5.33 billion[31] - Total sales for the Refining segment increased from$22,016 million in Q2 2023 to $23,099 million in Q2 2024, with intersegment eliminations reducing net sales to$9,200 million[120] - Renewable Fuels segment sales grew from $1,235 million in Q2 2023 to$1,501 million in Q2 2024, with intersegment eliminations resulting in net sales of $350 million[120] - Midstream segment results increased by$147 million in Q2 2024 but decreased by $15 million in the six-month period of 2024[154] - Refining segment results decreased by$873 million in Q2 2024 and $2,251 million in the six-month period of 2024, primarily due to lower realized margins[168] - Marketing and Specialties segment results decreased by$118 million in Q2 2024 and $115 million in the six-month period of 2024, driven by lower U.S. marketing fuel margins[174] - Renewable Fuels segment produced 31 thousand barrels daily in Q2 2024, up from 10 thousand barrels daily in the same period of 2023[177] - Renewable Fuels segment decreased by$123 million in Q2 2024 and $252 million in the six-month period of 2024, driven by higher feedstock costs and lower emissions credits, partially offset by increased renewable fuel sales and tax credits[178] Environmental and Regulatory - Total environmental accruals were$448 million at June 30, 2024, compared to $446 million at December 31, 2023[81] - The Rodeo Renewable Energy Complex (RREC) processes approximately 50,000 barrels per day of renewable feedstocks and is expected to produce sustainable aviation fuel in Q3 2024[133] - The composite 3:2:1 market crack spread decreased to an average of$18.96 per barrel in Q2 2024, from $28.65 per barrel in Q2 2023[139] Derivatives and Commodities - Commodity derivative assets and liabilities were$3,283 million and $3,387 million, respectively, at June 30, 2024[90] - Net gain (loss) from commodity derivative activity was$97 million for the three months ended June 30, 2024[92] - Open position for crude oil, refined petroleum products, NGL, and renewable feedstocks was (51) million barrels at June 30, 2024[93] - Open position for natural gas was (6) billion cubic feet at June 30, 2024[93] - More than 90% of derivative contract volumes are set to expire within the next 12 months[91] - Commodity derivative assets increased from $3,395 million in December 2023 to$3,474 million in June 2024, with exchange-cleared instruments rising from $3,129 million to$3,210 million[102][102] Pension and Benefits - Net periodic benefit cost for pension benefits in the U.S. increased from $25 million in Q2 2023 to$32 million in Q2 2024, driven by higher service and interest costs[106] - The company contributed $18 million to U.S. pension and postretirement benefit plans in the first half of 2024, with an additional$17 million expected for the remainder of the year[106] - Accumulated other comprehensive loss increased from $282 million in December 2023 to$309 million in June 2024, primarily due to foreign currency translation losses[110] Other Financial Metrics - Contract-related assets increased to $563 million at June 30, 2024, from$537 million at December 31, 2023, while contract liabilities decreased to $162 million from$187 million[32] - Remaining performance obligations for minimum volume commitment contracts amounted to $394 million, expected to be recognized through 2031[33] - Inventories valued on the LIFO basis totaled$5.93 billion at June 30, 2024, with an estimated excess of current replacement cost over LIFO cost of approximately 5.9 billion[39] - Gross investment in PP&E for Midstream segment is 26.277 billion with accumulated depreciation and amortization of $5.085 billion, resulting in a net value of$21.192 billion[53] - Total impairments for the three months ended June 30, 2024, are $225 million, primarily related to Midstream segment assets in Texas[57] - Impairments increased by$221 million in Q2 2024 and $378 million in the six-month period of 2024, driven by Midstream segment charges related to Texas assets and Refining segment charges in California[148] - Net interest expense increased by$18 million in Q2 2024 and $80 million in the six-month period of 2024, primarily due to lower interest income and higher average debt principal balances[181] - Corporate overhead and other costs decreased by$14 million in Q2 2024 and $31 million in the six-month period of 2024, mainly due to reduced consulting fees[181] - The fair value of the investment in NOVONIX declined by$7 million in Q2 2024 and $2 million in the six-month period of 2024[182] - Fixed-rate debt, excluding finance leases and software obligations, increased from$16,718 million in December 2023 to $17,497 million in June 2024, with a fair value adjustment from$17,126 million to $18,415 million[102][102] - Performance obligations secured by letters of credit and bank guarantees amounted to$1.1 billion at June 30, 2024[83] - Trade receivables primarily have payment terms of 30 days or less[95] - Derivative instruments are classified as Level 1, 2, or 3 based on the observability of valuation inputs[99] - Investment in NOVONIX Limited is categorized as Level 1 in the fair value hierarchy[101] - Phillips 66 has residual value guarantees totaling $514 million for its headquarters facility lease and$172 million for railcar, airplane, and truck leases[71] - The establishment of a Renewable Fuels operating segment in April 2024 reclassified renewable fuels activities previously reported in Refining, M&S, and Midstream segments[116] - The effective income tax rate for the three and six months ended June 30, 2024, was 22%, compared to 23% and 22% for the corresponding periods in 2023[122] - DCP Midstream Class A Segment's net properties, plants, and equipment were $8,967 million as of June 30, 2024, compared to$9,319 million as of December 31, 2023[123] - The DCP LP Merger increased the company's economic interest in DCP LP from 43.3% to 86.8%, with a cash consideration of $3,796 million paid to common unitholders[124] - DCP LP made cash distributions of$12 million and $24 million during the three and six months ended June 30, 2024, respectively, compared to$51 million and $102 million in the same periods in 2023[126] - Phillips 66 Partners' 25$215 million[204] - Potential annual interest payments on the notes could amount to approximately $10 million if operations cease[204] - The CECU may require co-venturers to make proportionate equity contributions if there is an unfavorable final judgment in ongoing litigation[204]