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Phillips 66’s Segments in 1Q16: Refining Earnings Plunge

Michelle Rey

Phillips 66's 1Q16 Earnings Miss the Estimates

(Continued from Prior Part)

Phillips 66’s segments analyzed in its 1Q16 Review

In 1Q16, Phillips 66’s (PSX) total adjusted net income of $360 million fell yearly and sequentially by 57% and 49%, respectively. In 1Q16, PSX’s Refining segment contributed $86 million, or 24%, to its adjusted net income.

The highest contributor to its total adjusted net income was the Marketing and Specialty segment, which contributed $205 million, or 57%. The company’s Chemicals segment contributed $156 million, and its midstream segment contributed $40 million to its adjusted net income in 1Q16.

PSX’s refining margin in 1Q16

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In 1Q16, gasoline cracks have improved in its operating areas of the Atlantic Basin and Europe compared to 1Q15. However, the Gulf Coast, the Central Corridor, and the West Coast registered a decline in gasoline cracks in 1Q16 over 1Q15. Plus, distillate cracks have registered a decline across all the four operating zones in 1Q16 over 1Q15.

Even distillate cracks have shown a mixed performance. In 1Q16, distillate cracks fell in the West Coast and the Central Corridor compared to 1Q15. The Atlantic Basin-Europe and the Gulf Coast registered a rise in distillate cracks in 1Q16 over 1Q15.

PSX’s peers’ refining margins in the previous quarter

Phillips 66 (PSX) noted a marginal rise in its refining margin in the previous quarter, 4Q15. On the other hand, PSX’s peers Valero Energy Corporation (VLO) and Tesoro Corporation (TSO) saw their refining margins narrow by $0.30 and $3.00 per barrel over 4Q14 to $10.90 and $12.80 per barrel, respectively, in 4Q15.

Marathon Petroleum Corporation’s (MPC) gross refining and marketing margin fell by $2.40 per barrel over 4Q14 to $12.70 per barrel in 4Q15. Also, Western Refining (WNR) saw its refining margin fall in 4Q15 compared to 4Q14.

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