Phillips 66 Profit Declines as Refining Margins Narrowby
Gasoline spreads slipped vs. previous quarter to $12.72/barrel
First segment of Bayou Bridge pipeline expected to sart in Q1
Phillips 66, the largest U.S. independent refiner by market value, reported a decline in profit as refining margins narrowed.
Net income fell to $650 million, or $1.20 a share, from $1.15 billion, or $2.05, a year earlier, the Houston-based company said in a statement Friday. Excluding one-time items, Phillips 66 earned $710 million, or $1.31 per share, in the fourth quarter, 5 cents more than the average of 15 analysts’ estimates compiled by Bloomberg. For the year, the company’s net income was $4.23 billion.
Refining profits slipped to $410 million, from $1 billion in the third quarter. The decrease was largely due to a 35 percent decline in so-called crack spreads, or the difference between the cost of oil and the price of refined products, the company said in the statement. Gasoline spreads slipped to $12.72 a barrel in the fourth quarter, from $21.44 in the prior three months.
"Our financial performance in 2015 demonstrates the resiliency of our diversified portfolio in a low commodity price environment," Chief Executive Officer Greg Garland said in the statement.
The company also said the first segment of the Bayou Bridge pipeline, which will deliver crude to Lake Charles, Louisiana, from Nederland, Texas, is expected to be in operation by the end of the first quarter. Construction for the first segment is under way.
Earlier this month, Warren Buffett’s Berkshire Hathaway Inc. boosted its stake in Phillips 66 to 13 percent after adding shares for seven straight trading days, making the oil refiner the sixth-largest holding in Buffett’s portfolio. Berkshire had previously disclosed a $4.5 billion stake in Phillips 66 in August and increased shares again in September.
Phillips 66 has more than doubled in value since its spin-off from ConocoPhillips in 2012. Refiners overall have benefited from U.S. shale drilling, though the end of a ban on most crude exports may damp margins in the long run as American producers have the option to seek better prices from buyers elsewhere. Shares rose 1.8 percent to close at $80.14 in New York.