Phillips 66 earnings climb despite Hurricane Harvey

Excluding special items, adjusted earnings were US$858 million, compared with 2Q17 adjusted earnings of US$569 million.

Greg Garland, Chairman and CEO of Phillips 66, said: “We operated well during the quarter while facing the challenges associated with Hurricane Harvey […] While the storm impacted our Gulf Coast operations, we delivered strong financial results from our diverse business portfolio. We are proud of how our employees responded during the storm. They assisted families, friends and neighbours and worked tirelessly to safeguard our assets and communities. Through their efforts, we were able to ensure business continuity and supply critical energy products to first responders and consumers.”

Refining

The company’s refining segment’s 3Q17 earnings were US$550 million, compared with US$224 million in the 2Q17. These earnings included favourable settlements of US$18 million, mostly offset by pension settlement expense of US$8 million and hurricane-related costs of US$8 million. 2Q17 earnings included pension settlement expense of US$22 million, partially offset by an insurance claim reimbursement of US$13 million.

Refining's adjusted earnings were US$548 million in 3Q17, compared with US$233 million in 2Q17. This increase was largely driven by higher distillate and gasoline margins, as the market crack spreads were up 41% and 24%, respectively.

Chemicals

Phillips 66's chemicals segment, which includes equity investment in Chevron Phillips Chemical Co. LLC (CPChem), reported 3Q17 earnings of US$121 million, compared with US$196 million in 2Q17. Chemicals' earnings in 3Q17 included hurricane-related costs of US$32 million.

During the quarter, CPChem's O&P business contributed US$137 million of adjusted earnings to the Chemicals segment. The US$42 million decrease from the prior quarter was primarily due to lower margins and volumes. Global O&P utilization was 83%, reflecting hurricane-related downtime at US Gulf Coast facilities. Utilisation in 2Q17 stood at 98%.

Strategic update

CPChem’s US Gulf Coast Petrochemicals Project is nearing completion. During 3Q17, CPChem commissioned and successfully started up the new polyethylene units in Old Ocean, Texas, US. Due to impacts from Hurricane Harvey, commissioning of the ethane cracker at the Cedar Bayou facility in Baytown, Texas, is now expected to begin in 1Q18. The project will increase CPChem’s global ethylene and polyethylene capacity by approximately one-third.

In refining, the company is progressing return projects to improve clean product yields. A diesel recovery project at the Ponca City Refinery is expected to start up in 4Q17. The company is modernising fluid catalytic cracking (FCC) units at both the Bayway and Wood River refineries with an anticipated completion during 1H18.

Read the article online at: https://www.hydrocarbonengineering.com/petrochemicals/30102017/phillips-66-earnings-climb-despite-hurricane-harvey/