Phillips 66 (PSX) Q2 Earnings Top on Solid Midstream Business

Core Viewpoint - Phillips 66 reported better-than-expected second-quarter 2024 results, beating both earnings and revenue estimates, but the stock price has declined by 6.2% due to broader market concerns and high oil prices impacting refining operations [1][4]. Refining Business - Phillips 66 operates 13 refineries with a total capacity of 2.2 million barrels per day, relying on purchased feedstocks, which exposes the company to cost volatility [2]. - The refining segment is facing challenges due to high oil prices affecting profitability, leading to a focus on diversifying into midstream, renewables, and chemicals [2]. Midstream Business - Significant investments have been made in the midstream sector, including new pipelines and storage facilities, aimed at diversifying earnings and reducing reliance on refining [3]. - The midstream operations involve transportation, storage, and processing of crude oil and natural gas, aligning with industry trends towards stable, fee-based revenue [3]. Better-Than-Expected Q2 Results - Adjusted earnings for Q2 2024 were $2.31 per share, exceeding the Zacks Consensus Estimate of $2.12, but lower than $3.87 from the previous year [4]. - Total revenues reached $38.9 billion, surpassing the estimate of $32 billion and improving from $35.7 billion year-over-year [4]. Segmental Results - Midstream: Adjusted pre-tax earnings were $753 million, up from $642 million year-over-year, driven by higher NGL volumes and margins [5]. - Refining: Adjusted pre-tax earnings fell to $302 million from $1.19 billion in the previous year, missing projections due to lower market crack spreads [6]. - Realized refining margins declined significantly across various regions, with global margins dropping to $10.01 per barrel from $15.55 year-over-year [7].