Phillips 66 has announced second quarter earnings of US$ 863 million, compared with the first quarter of 2014 earnings of US$ 1.572 million and adjusted earnings off US$ 866 million.
Midstream earnings were US$ 108 million in Q2, compared with earnings of US$ 188 million in Q1. The transportation business generated earnings of US$ 60 million in Q2 compared with US$ 62 million in Q1 of this year. The decrease has been attributed to increased maintenance activity, partially offset by improved throughput volume.
Second quarter earnings related to the company’s equity investment in DCP Midstream, LLC, stood at US$ 33 million, compared to US$ 83 million in Q1. The drop reportedly reflects lower gains recorded by Phillips 66 on unit issuances. Also, earnings were impacted by increased maintenance activity and lower NGL prices. Earnings from the NGL business were US$ 15 million in Q2.
Q2 earnings were US$ 324 million and reflect the company’s equity investment in Chevron Phillips Chemical Company LLC (CPChem). During Q2, CPChem’s olefins and polyolefins business contributed US$ 310 million to Phillip 66’s chemicals earnings, an increase from Q1. The increase was primarily due to improved realised olefins and polyolefins chain margins, partially offset by higher maintenance costs.
CPChem’s specialities, aromatics and styrenics business contributed US$ 21 million of earnings during Q2, US$ 17 million lower than in Q1. The decrease has mainly been attributed to lower equity earnings and increased operating costs.
Q2 earnings were US$ 390 million, up from US$ 306 million in Q1. The increase was due to higher volumes, partially offset by weaker realised refining margins. Volumes improved during the second quarter following the completion of planned turnaround and maintenance activities.
Worldwide market crack spreads increased, however realised refining margins decreased. The decrease reflects the company’s refinery configuration producing more distillate than the 3:2:1 marker implies, coupled with weaker distillate cracks. In addition, realised margins were also impacted by reduced seasonal gasoline blending activity, lower secondary product realisations and tightening crude differentials.
During Q2, 93% of the company’s US crude slate was advantaged, compared with 91% in Q1. This increase is reportedly largely due to higher crude capacity utilisation as a result of less turnaround activity, as well as running more advantaged crudes in place of Brent.
Around the world, Phillips 66’s refining utilisation was 96% and clean product yield was 93% in Q2 2014.
Marketing and specialties
Q2 earnings were US$ 162 million, compared with US$ 137 million in Q1 of the year. Earnings from Marketing and Other were US$ 119 million in Q2, compared with US$ 93 million in Q1. The improvement reportedly reflects higher volumes due to seasonal demand and increased exports. Refined product exports totalled 181 000 bpd in Q2. The Specialities businesses generated SU$ 43 million during Q2 compared with US$ 44 million in Q1.
Greg Garland, Chairman and CEO, Phillips 66 said, ‘we ran well during the quarter. Chemicals earnings were driven by strong olefin and polyolefin chain margins. Refining benefitted from higher utilisation; however, our market capture rate declined.
‘We continued our disciplined approach to capital allocation. We increased our dividend in the second quarter and the board recently approved an additional US$ 2 billion share repurchase program. In July, we increased our 2014 capital budget to fund acquisitions in our midstream and specialties businesses, and to support organic growth projects.’
Adapted by Claira Lloyd
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