Phillips 66 (PSX)

Phillips 66 reported third-quarter 2026 earnings of $5.6 billion on 28 October, or $14.08 per share, against $133 million in the same quarter of 2025 1. Refining did most of the work: the segment earned $6.0 billion before tax, up from $3.1 billion in the second quarter, on higher realized margins and volumes 1.

The company said its margins rose mainly because market crack spreads widened, the gap between what crude costs and what gasoline and diesel sell for 1. Its refineries ran at 98 percent of capacity, and the Central Corridor plants processed a record 848 thousand barrels a day 1. The second quarter had already been strong, with earnings of $3.8 billion after a first quarter of $207 million 3.

The cash went to debt and to shareholders: total debt fell by $2.0 billion to $18.5 billion in the quarter, and $2.8 billion went out in dividends and buybacks 1. On 16 October the board raised the quarterly dividend to $1.33 per share, its second increase of 2026 10. The open questions are the appeal of the Propel Fuels judgment and the start of the Coastal Bend expansion, with first volumes expected in the fourth quarter of 2026 61.

Phillips 66 began as the downstream side of ConocoPhillips, the part that refines crude, moves it and sells the fuel 2. It was incorporated in Delaware in 2011 for the split, and ConocoPhillips handed its shares to its own shareholders after the market closed on 30 April 2012 2.

Revenue was $107.3 billion in 2019, 4 percent lower than the year before, mainly because prices for fuels and crude fell 13. Then the pandemic emptied roads and airports: in 2020 revenue fell 40 percent to $64.1 billion and the company lost $4.0 billion 13.

Its refineries ran at only 76 percent of capacity that year, and it suspended share buybacks in March 2020 to keep cash 13. In the same year it announced Rodeo Renewed, a plan to convert its San Francisco Refinery in Rodeo, California, to make renewable fuels 13.

Prices came back fast: revenue rose to $111.5 billion in 2021 and to $170.0 billion in 2022, mainly on higher prices for fuels, crude and NGL 14. Earnings reached $11.0 billion in 2022 as refining margins widened with market crack spreads 14. In March 2022 it bought out the public owners of Phillips 66 Partners, its listed pipeline arm, and in July 2022 Mark Lashier became chief executive 14.

It then went deeper into natural gas liquids (NGL), the ethane, propane and butane separated from raw natural gas 2. A realignment announced in August 2022 gave it control of DCP Midstream, LP, and in June 2023 it bought out the public unitholders, raising its economic interest from 43.3 percent to 86.8 percent 15. That buyout cost $4.1 billion 15.

Revenue eased to $147.4 billion in 2023 and $143.2 billion in 2024, and earnings fell from $7.0 billion to $2.1 billion as crack spreads narrowed 2. In early 2024 it stopped processing crude at the San Francisco Refinery as the plant became the Rodeo Renewable Energy Complex 16.

In 2025 the activist investor Elliott Management argued that owning both pipelines and refineries made the company inefficient, and on 21 May shareholders gave two board seats to Elliott's nominees 12. The company reshaped itself on its own terms: it bought the Coastal Bend NGL pipelines in April and the other half of the Wood River and Borger refineries from Cenovus in October 2.

It sold 65 percent of its German and Austrian fuel stations in December 2025 and stopped making fuel at its Los Angeles Refinery in the fourth quarter 2. Revenue fell 8 percent to $132.4 billion on lower prices, but earnings rose to $4.4 billion from $2.1 billion, helped by a $1.9 billion gain on the German sale 2.

The first quarter of 2026 brought a sharp rise in oil prices, and the company's hedges, contracts that offset price swings on its fuel stocks, cost about $900 million before tax 5. Operations used $2.3 billion of cash in the quarter once money tied up in stocks and bills is counted, and debt rose to $27.1 billion at the end of March 4.

Refining

Refining turns crude oil into gasoline, diesel and jet fuel, and at the end of 2025 the segment had 10 refineries in the United States and Europe 2. The largest are Wood River in Illinois, Sweeny and Borger in Texas, Bayway in New Jersey and Lake Charles in Louisiana, with Humber in England 2.

Refining sold $26.9 billion to outside customers in 2025, about 20 percent of revenue (computed), and passed a further $48.0 billion of fuel to the company's own other segments 2. It lost $274 million before tax that year, after a $948 million write-down of the Wood River and Borger venture 2.

In the third quarter of 2026 the refineries ran at 98 percent, with a record distillate yield of 41 percent 1. The clean product yield, the share of each barrel that became gasoline, diesel or jet fuel, was 86 percent 1. The realized margin was $38.00 a barrel, against $24.08 in the second quarter 1.

Marketing and Specialties

This segment buys and resells fuel, mostly through stations other businesses run, and makes lubricants 2. It brought in $83.7 billion of outside sales in 2025, about 63 percent of the total (computed), but earned $4.5 billion before tax, including the $1.9 billion German sale gain 2.

In the United States it sells under the Phillips 66, Conoco and 76 brands at about 7,620 branded outlets in 48 states 2. In the United Kingdom it has about 320 JET outlets, and it keeps a 35 percent stake in about 960 JET sites in Germany and Austria 2. Its lubricants go out under the Phillips 66, Kendall and Red Line names 2.

Midstream

Midstream moves and processes oil, gas and NGL 2. At the end of 2025 it held interests in about 70,000 miles of pipelines, 35 gas processing plants and 10 NGL fractionation facilities, which split mixed liquids into separate products 2. It sold $18.6 billion to outside customers in 2025, about 14 percent of revenue (computed), and earned $2.8 billion before tax, close to each of the two years before 2.

The center is the Sweeny Hub, about 65 miles southwest of Houston, with four fractionators and the Freeport terminal, which can export 300,000 barrels a day of LPG, propane and butane 2. In the third quarter of 2026 the segment fractionated about 1 million barrels a day, and the Freeport dock ran at 105 percent utilization 1.

Chemicals

Chemicals is a 50 percent stake in Chevron Phillips Chemical (CPChem), which makes ethylene and the polyethylene plastic used in packaging and pipe 2. At the end of 2025 CPChem had 29 plants in Belgium, Colombia, Qatar, Saudi Arabia and the United States 2. Its pre-tax result for the company fell to $297 million in 2025 from $876 million, as the polyethylene margin shrank to 7.1 cents a pound from 17.7 cents 2.

The annual report blames higher ethane costs and too much new capacity across the industry 2. In the third quarter of 2026 the segment earned $311 million, down from $404 million, on lower polyethylene margins 1.

Renewable Fuels

The Rodeo Complex in California can turn about 50,000 barrels a day of used cooking oil, vegetable oils and other waste oils into renewable diesel and renewable jet fuel 2. The segment lost $380 million before tax in 2025, the first year after a federal biodiesel blender tax credit expired at the end of 2024 2. It earned $191 million in the third quarter of 2026, down from $544 million, on lower margins and higher costs 1.

Plants, research and people

Besides the plants above, the company runs a 440-acre research campus in Bartlesville, Oklahoma, and had about 12,600 employees at the end of 2025 2. Mark Lashier, chairman and chief executive since May 2024, ran CPChem from 2017 to 2021, and Kevin Mitchell has been finance chief since January 2016 2.

Refining chief Richard Harbison retires on 31 December 2026 7. Chris Chandler, most recently chief operating officer of Plains All American Pipeline, takes over refining on 1 January 2027 8.

Rivals

The annual report measures the company against refiners Marathon Petroleum, Valero Energy, HF Sinclair, PBF Energy, CVR Energy and Delek US 2. Its other named peers are ONEOK, Targa Resources and Williams in pipelines, and Dow, LyondellBasell and Westlake in chemicals 2. In refining, the report says, companies compete on low costs, the crude they can run and efficient plants and distribution 2.

Problems

Propel Fuels sued in February 2022, saying the company misused its renewable fuels trade secrets, and a court entered an $833 million judgment in August 2025 6. The company denies wrongdoing and filed its opening appeal brief on 10 July 2026, while interest of 10 percent a year accrues 6.

Separately, a deferred prosecution agreement entered on 20 January 2026 obliges the company to pay an $8 million penalty over wastewater permit violations at the Carson part of the Los Angeles Refinery 2.

The umbrella, in words

The subsidiaries exhibit to the 2025 annual report names, among many others, Phillips 66 Company, Phillips 66 Limited, DCP Midstream, LP, WRB Refining LP and Sentinel Transportation, LLC 18. The company owns an 86.8 percent economic interest in DCP Midstream, LP, its gas gathering and processing arm, and since October 2025 all of Wood River and Borger 2.

Its stakes include 50 percent of CPChem, 50 percent of the Excel Paralubes base oil plant and 18.75 percent of the MiRO refinery in Germany 2. It also owns 25 percent of the Bakken crude pipeline and 35 percent of JET Management Holding, which holds the German and Austrian stations 2.

Its land includes the idled Los Angeles Refinery sites in Carson and Wilmington, five miles apart, and the 440-acre Bartlesville research campus 2. Its common stock is listed on the New York Stock Exchange, and Vanguard Capital Management reported holding 7.52 percent of it in its newest Schedule 13G 219.

Two directors elected in 2025, Sigmund Cornelius and Michael Heim, were Elliott's nominees, and Elliott called itself one of the company's largest investors 12.

The company says it aims to return more than 50 percent of its operating cash flow, before working capital, to shareholders, and to cut total debt to $17 billion by the end of 2027 2. It budgeted $2.4 billion of capital spending for 2026, $1.3 billion of it for growth, mostly in Midstream, and plans about $2.5 billion a year through 2027 2.

In August 2026 the company, Kinder Morgan and HF Sinclair took the final investment decision on Western Gateway, a $5 billion, 1,300-mile fuel pipeline system 9. It links St. Louis and the Gulf Coast with Arizona and California 9. Under the joint venture agreement Phillips 66 owns 49.9 percent, expects to put in about $2.5 billion in cash and builds about 900 miles of new pipe from Borger, Texas, to Phoenix 9.

The system is designed for 230,000 barrels a day, is backed mainly by 10-year take-or-pay contracts, and the partners target completion in 2029, subject to permits 9.

Closer in, the company expects first volumes from the Coastal Bend NGL expansion in the fourth quarter of 2026 and the full 350 thousand barrels a day in early 2027 1. It said the 300 million cubic feet a day Iron Mesa gas plant is on schedule to start in the first quarter of 2027 4. It has also announced the Zeus gas plant in the Permian Basin and a 100 thousand barrel a day fractionator at Corpus Christi 3.

CPChem expects its Golden Triangle Polymers plant in Orange, Texas, and its Ras Laffan plant in Qatar to be fully running in 2027 1. In the United Kingdom the company bought the closed Lindsey Oil Refinery's assets for $115 million in April 2026 to serve Humber, and decided not to restart Lindsey as a stand-alone refinery 611.

Rigzone reported that the company expects to start up a project to make higher-quality gasoline at Humber in the second quarter of 2027 11. In Carson, California, a plan filed with the city in April 2026 would replace the idled refinery's Carson plant with six industrial buildings of about 3.91 million square feet 17.

Past

Phillips 66's revenue moved from $111 billion in fiscal 2018 to $132 billion in fiscal 2025, up 2.5% a year over eight filed years, rising in only two of seven years and suffering a 42% fall from fiscal 2018 to fiscal 2020 Net income was positive in seven of eight years , though the company posted a loss of $3.97 billion in fiscal 2020 and returned to profit thereafter Over the three fiscal years to 2025, the diluted share count shrank about 4.9% a year , concentrating ownership. Dividends and buybacks returned about 89% of operating cash flow over those three years The grade's past tense reads 5.9 of 10 123

Present

Return on equity stood at 15 cents of profit per dollar of shareholders' money; gross profitability reached 22 cents per dollar of everything the company owns; leverage was 59 cents owed per dollar of assets; and the share count shrank 3.3% over the year Phillips 66's $132 billion revenue ranks in the top 23% by size among 17 graded names in its industry family, with a net margin of 3.3% in the top 32% Mark E. Lashier is Chairman and CEO, filing under that title since 2022-07-06 with 4.3 years in the role; the 22 officers and directors filing in the last fifteen months have a median of 4.6 years on the record The grade's present tense reads 6.0 of 10 13

Future

A quarterly report for the quarter ending 2026-09-30 is due by 2026-11-09 An annual report for the fiscal year ending 2026-12-31 is due by 2027-03-01 Cash of $1.1 billion against debt of $19 billion leaves the company with net debt equal to 23.8% of assets, in the bottom 44% of its family; cash from operations less capital spending is 3.7% of revenue in the bottom 41% Revenue grew negative 8% a year over the last three filed years against 2.5% over all eight years, marking a slowdown; the newest year fell 7.5% The grade's future tense reads 4.3 of 10 413

How the company operates

By geography, the United States accounted for 79% of revenue, the United Kingdom 10%, other countries 8%, and Germany 4% Marketing Speciality brought in $84 billion, Refining $27 billion, Midstream $19 billion, with two of four lines growing against the prior year 31

New moves

On 2026-08-21, the company filed an 8-K reporting a major agreement signed and new debt or an obligation taken on On 2025-09-30, the company filed an 8-K reporting a major agreement signed and new debt or an obligation taken on On 2026-09-30, diesel slipped from its record as the White House weighed a tax break, with the Energy Information Administration's survey putting diesel at 6.382 dollars a gallon and refineries running at 92.5 percent utilization On 2026-09-24, missiles over Yanbu accompanied Saudi Arabia's sale of 100 million barrels to Asia, with the East-West pipeline restarted at a low rate after a September 22 restart 45