Phillips 66 beats estimates as strong refining profits help offset lower midstream performance

Updates share price, adds executive quote in paragraph 13

By Tanay Dhumal and Nicole Jao

NEW YORK, Feb 4 (Reuters) - Phillips 66 PSX.N outperformed Wall Street expectations in the fourth quarter, as a weaker-than-expected midstream performance, robust refining margins and high throughput fueled profits, offsetting

Shares of the company were up more than 4% at $155.12 in afternoon trading.

Top fuelmakers reaped unexpected profits last year as product margins, driven largely by Russia's war in Ukraine and refinery outages, rebounded from the multi-year lows seen in 2024 when earnings eased from post-pandemic highs. Quarterly U.S. refinery margins, measured by the 3-2-1 crack spread CL321-1=R, were up about 45% on average in the fourth quarter from a year earlier.

Valero Energy VLO.N and Marathon Petroleum MPC.N beat quarterly earnings estimates on the back of a rebound in refining margins and record throughput volume.

In the fourth quarter, Phillips 66's realized margin more than doubled to $12.48 per barrel, lifting its refining earnings to $542 million, compared to a $759 million loss from a year ago.

The refiner's quarterly crude capacity utilization rose to 99% from 94% a year earlier, while turnaround expenses climbed nearly 10% to $135 million. It expects first-quarter utilization in the low 90% range and turnaround costs of $170 million to $190 million.

Piper Sandler analyst Ryan Todd said the company's refining helped offset lower midstream performance in the fourth quarter, but added that lower utilization and higher expenses are expected to weigh on first-quarter estimates.

The refiner said it cut debt by $2 billion during the quarter, ending the year at $19.7 billion, aided by the December sale of a 65% stake in its German and Austrian fuel retail business at a $2.8 billion valuation.

Phillips 66 reported an adjusted profit of $2.47 per share for the fourth quarter, compared with analysts' average estimate of $2.16 per share, according to data compiled by LSEG.

VENEZUELA

U.S. refiners are expected to benefit from the resumption of Venezuelan oil exports and lower fuel costs.

Reuters reported Phillips 66 purchased a cargo of Venezuelan crude from trading house Vitol last month.

Phillips 66's refining system can process about 250,000 barrels of Venezuelan crude a day, CEO Mark Lashier said during the call, "if you look at that as a percentage of our total crude processing capacity, I think we're more heavily weighted, more opportunities there than our peers."

(Reporting by Nicole Jao in New York, Tanay Dhumal and Sumit Saha in Bengaluru; Editing by Maju Samuel and Nick Zieminski)

((Tanay.Dhumal@thomsonreuters.com; Twitter: https://twitter.com/TanayDhumal;))