On October 27, Phillips 66 provided an update on its Rodeo Refinery as they work to turn it into the largest renewable fuels facility.
According to Phillips:
- Phillips 66 is converting its San Francisco Refinery in Rodeo, California, into one of the world’s largest renewable fuels facilities. Construction continues on the Rodeo Renewed refinery conversion project that is expected to begin operations in the first quarter of 2024. The total project will cost approximately $1.25 billion. The conversion will reduce emissions from the facility and produce lower carbon-intensity transportation fuels. Upon completion, the facility will have over 50,000 BPD (800 million gallons per year) of renewable fuel production capacity.
- The company recently acquired a marketing business on the U.S. West Coast to optimize the placement of renewable diesel that will be produced at the Rodeo facility.
- Refining pre-tax turnaround costs for the third quarter were $111 million. In addition, there were $37 million of turnaround costs related to the Rodeo renewables facility. Crude utilization rate was 95% and clean product yield was 85%.
Press Release:
Phillips 66 Reports Third-Quarter 2023 Financial Results and Update to Strategic Priorities
Third-Quarter Results
- Reported third-quarter earnings of $2.1 billion or $4.69 per share; adjusted earnings of $2.1 billion or $4.63 per share
- Generated $2.7 billion of operating cash flow, $2.4 billion excluding working capital
- Returned $1.2 billion to shareholders through dividends and share repurchases
- Continued strong Refining operations with crude utilization rate of 95%, highest since 2019
Strategic Priorities Update
- Raise shareholder distributions target to a range of $13 billion to $15 billion, supported by $5 billion increase in share repurchase authorization
- Monetize over $3 billion of non-core assets
- Return at least 50% of operating cash flow to shareholders
- Increase business transformation run-rate target to $1.4 billion by year-end 2024, with over 50% from Refining
- Further improve market capture and integrated value by increasing commercial supply and trading contributions
- Raise mid-cycle adjusted EBITDA growth target to $4 billion by 2025
HOUSTON–(BUSINESS WIRE)– Phillips 66 (NYSE: PSX), a diversified energy company, announces third-quarter results and updates to the strategic priorities first presented at its November 2022 Investor Day.
“Phillips 66’s focus on strong operating performance and execution on our strategic priorities, coupled with favorable market conditions, enabled us to achieve significant improvement in earnings and cash generation,” said Mark Lashier, Phillips 66 president and CEO. “Today we are raising the bar by putting forth enhanced, ambitious and achievable plans that will reward shareholders now and well into the future.”
Strategic Priorities Update
Phillips 66 is on track to exceed its original strategic priority targets. The company is successfully executing operational enhancements in Refining and delivering business transformation cost reductions. In Midstream, the implementation of the company’s NGL wellhead-to-market strategy has exceeded expectations and enabled an increase to the synergy target. Given the company’s substantial progress on these strategic priorities, combined with plans to increase commercial contributions, Phillips 66 is increasing its mid-cycle adjusted EBITDA growth target from $3 billion to $4 billion by 2025.
Phillips 66 returned $6.7 billion through share repurchases and dividends since July 2022 and is on pace to exceed the original $10 billion to $12 billion target. The company is now increasing this target to a range of $13 billion to $15 billion and plans to return at least 50% of operating cash flow to shareholders. The Board of Directors of Phillips 66 approved an additional $5 billion in share repurchase authorization. This is in addition to its previous authorization, which had approximately $3.1 billion remaining as of September 30. Since 2012, the Board has authorized share repurchases totaling $25 billion.
Phillips 66’s business transformation will deliver over $1 billion in run-rate cost and capital reductions by the end of 2023. The company is now targeting a $1.4 billion run-rate by the end of 2024.
The company also plans to monetize non-core assets that are expected to generate over $3 billion in proceeds that will be deployed to further strategic priorities, including returns to shareholders. In August, Phillips 66 sold its 25% interest in South Texas Gateway Terminal for $275 million. The company’s total proceeds from asset dispositions were $370 million through the third quarter of 2023.
Third-Quarter Results
For the third quarter 2023, Phillips 66 announces earnings of $2.1 billion compared with earnings of $1.7 billion in the second quarter. Excluding special items of $27 million, the company had adjusted earnings of $2.1 billion in the third quarter, compared with second-quarter adjusted earnings of $1.8 billion.
Aug 13, 2020 – Phillips 66 to Transform Refinery into World’s Largest Renewable Fuels Plant