Phillips 66 profit beats estimates
BY BRADLEY OLSON Bloomberg News
Thursday, January 31, 2013
1/31/13 at 5:35 AM
Phillips 66 said Wednesday that fourth-quarter profit beat estimates as the company benefited from an abundance of cheap domestic oil.
Per-share profit excluding a refinery writedown was $2.06 a share, 37 cents more than the $1.69 average of 16 analysts' estimates compiled by Bloomberg. Net income fell to $708 million, or $1.11 a share, from $2 billion, or $3.17, a year earlier, when results were boosted by gains from asset sales, said the Houston-based company, the largest U.S. independent refiner by revenue since its spinoff from ConocoPhillips last year.
Shares of Phillips 66 climbed 1.5 percent to close at a record $60.76 on the New York Stock Exchange. The shares have risen 80 percent since the May 1 spinoff.
Phillips 66 no longer needs to buy imported light, sweet oil for its plants on the Gulf Coast, Chairman and CEO Greg Garland told investors on a conference call.
The company has rallied along with other U.S. refiners by boosting access to a growing supply of domestic crude that has become cheaper than overseas oil. U.S. refiners in some regions paid an average of $17.48 less for every barrel they processed compared to the global benchmark oil price, according to data compiled by Bloomberg.
"They're taking advantage of the God-given gift of very wide crude discounts and cheap natural gas," Fadel Gheit, a New York-based analyst with Oppenheimer & Co., said in a telephone interview. "They are putting the money to good use, and it's reflected in the stock price."
Refiners awash in cash are in turn rewarding shareholders. Phillips 66 announced plans Wednesday to expand a share buyback program by $1 billion and boost the annual dividend to $1.25 a share in 2013 from a previous rate of $1 a share.
The difference between the cost of crude and the price at which refiners sell fuel on the Gulf Coast averaged $5.11 a barrel in the October-to-December period, the most since 2005 and more than double the average during the same time last year, according to data compiled by Bloomberg.
Phillips 66 is seeking growth opportunities in the company's chemical and pipeline segments. The company announced plans in December to raise as much as $400 million in an initial public offering this year for a minority interest in some of its pipeline and logistics assets.
"Our differentiated portfolio has allowed us to capture a number of market opportunities across the value chain, resulting in significant cash generation and shareholder value creation," Garland said.
Adjusted profits from refining and marketing, which exclude a writedown of the value of the company's interest in a plant in Malaysia, rose more than five-fold to $1.1 billion from $169 million a year ago.
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.
Original Print Headline: Phillips' 4Q profit beats estimates
An artwork representing Phillips 66 sits in front of the Price Tower Arts Center in Bartlesville. Houston-based Phillips 66 employs about 2,000 people in support operations in Bartlesville. MATT BARNARD / Tulsa World file