Phillips 66 shares dip after first day of NYSE trading
BY EDWARD KLUMP & BRADLEY OLSON Bloomberg News
Wednesday, May 02, 2012
5/02/12 at 4:00 AM
Shares of Phillips 66 fell 3.8 percent Tuesday in their first day of trading after the company was spun off by ConocoPhillips.
Phillips 66, which trades under the ticker PSX, declined to $32.76 at the close on the New York Stock Exchange. Houston-based ConocoPhillips rose 3.5 percent to $56.51 after its share price was adjusted for the spinoff.
At Tuesday's price, Phillips 66 has a market capitalization of about $21 billion, surpassing Marathon Petroleum Corp. and Valero Energy Corp. as the most valuable U.S. refiner without oil wells.
Phillips 66 has stakes in 15 operating refineries as well as a chemical joint venture with Chevron Corp. and a pipeline unit with Spectra Energy Corp.
"The breadth of our portfolio, the geographic size, the scale, the scope of the businesses really does differentiate from our pure-play refining competitors," Greg Garland, chairman and CEO of Houston-based Phillips 66, said in a telephone interview today.
The company has touted future growth from pipelines and chemicals as it seeks to reduce its refining holdings. On Monday it announced an agreement to sell its refinery in Trainer, Pa., to Delta Air Lines Inc.
Phillips 66 has seen some interest in its Alliance refinery in Louisiana, including a "handful" of serious bidders, Garland said. The company will need to get a "really good value" for the plant to sell it, or it may keep and run the facility, he said. Garland said he hopes to make a decision on whether to sell the refinery by midyear.
Phillips 66 may seek to put more assets into an existing master-limited partnership, or MLP, related to its pipeline venture, Garland said, or the company also may look at forming a new MLP. Garland said more clarity on Phillips 66's MLP plans may come by the end of the year.
"It's part of the value equation that we have as a company," he said.
Phillips 66 plans to increase its 80-cents-a-share annual dividend "modestly" over time, Garland said. The company believes in annual dividend increases, and Phillips 66 will release a plan for share repurchases over time, he said.
Phillips 66 got its name from a high-octane gasoline that in 1927 allowed a vehicle to reach a cruising speed of 66 mph on Route 66, according to a company website.
The spinoff, announced July 14, makes its former parent ConocoPhillips the biggest U.S. independent oil and natural-gas producer, topping Apache Corp. and Anadarko Petroleum Corp. Independent producers don't own refineries or chemical units.
ConocoPhillips shareholders got one share of Phillips 66 for each two shares they held as of April 16.
ConocoPhillips announced the spinoff to focus spending on exploration and production amid rising oil prices.
The exploration company has positioned itself with analysts and investors as offering a "balance of growth and returns," ConocoPhillips Chief Financial Officer Jeff Sheets said in a telephone interview Monday. The company will compete against other independent oil companies as well as major integrated companies, he said.
ConocoPhillips has said it sees profit margins and production each rising 3 percent to 5 percent a year in the future. Sheets said the company is committed to boosting its dividend, though perhaps at a lower rate than previous years. ConocoPhillips's current dividend yield of about 4.7 percent exceeds its major peers.
"We'd like to be here 10 years from now saying, 'We've raised the dividend every year for the last 10 years,' " Sheets said.
Original Print Headline: Shares of Phillips 66 debut on the NYSE
Phillips 66 has a market capitalization of about $21 billion, surpassing Marathon Petroleum Corp. and Valero Energy Corp. as the most valuable U.S. refiner without oil wells. Bloomberg file