Phillips 66 Quarterly Report for Q2 Ended Jun 30, 2015

Summary

Phillips 66 reported solid financial results for the second quarter and the first six months of 2015, driven by strong performance in its Refining segment and the recognition of a deferred gain from a prior asset sale. Net income attributable to Phillips 66 was $1,012 million for the second quarter and $1,999 million for the first six months of 2015. This represents a significant increase compared to the same periods in 2014, primarily due to improved refining margins, which benefited from favorable crack spreads in both U.S. and European markets. The company also benefited from the recognition of a $132 million deferred gain related to the 2013 sale of the Immingham Combined Heat and Power Plant (ICHP), which boosted results in the Marketing and Specialties segment. Despite an overall strong performance, the Midstream segment experienced a notable decline in earnings, largely due to a significant goodwill impairment recorded by its equity affiliate, DCP Midstream, amidst falling commodity prices. The Chemicals segment also saw a decrease in earnings, primarily due to lower ethylene margins and higher turnaround costs. The company maintained a strong liquidity position with $5.1 billion in cash and cash equivalents and ample capacity under its credit facilities. Phillips 66 continued to return capital to shareholders through dividends and share repurchases, signaling confidence in its ongoing financial health and future prospects.

Key Highlights

• 1Phillips 66 reported a net income attributable to the company of $1,012 million for the second quarter of 2015, a substantial increase from $863 million in the prior year's quarter.
• 2For the first six months of 2015, net income attributable to Phillips 66 was $1,999 million, up from $1,729 million from continuing operations (or $2,435 million including discontinued operations) in the first six months of 2014, driven by improved refining operations and gain recognition.
• 3The Refining segment saw a significant year-over-year earnings increase, with net income rising to $604 million in Q2 2015 and $1,142 million in the first six months of 2015, primarily due to higher refining margins.
• 4The Marketing and Specialties segment also showed strong growth, with earnings more than doubling to $314 million in Q2 2015 and $618 million in the first six months of 2015, boosted by the recognition of a deferred gain from the ICHP sale.
• 5The Midstream segment experienced a decline in earnings, reporting a loss of $78 million in Q2 2015 and a net income of $11 million for the first six months, impacted by a $126 million after-tax goodwill impairment at DCP Midstream.
• 6The company maintained a healthy balance sheet with total assets of $49.9 billion and total equity of $23.2 billion as of June 30, 2015, and held $5.1 billion in cash and cash equivalents.
• 7Phillips 66 returned capital to shareholders through $574 million in dividends and $733 million in share repurchases during the first six months of 2015.

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