Phillips 66 (NYSE: PSX) reported its third-quarter results Wednesday before the U.S. markets opened as $2.02 in earnings per share on $41.05 billion in revenue. Thomson Reuters had consensus estimates of $1.75 in earnings per share and $48.36 billion in revenue. In the third quarter from the previous year, the oil refiner posted $0.87 in earnings per share on $44.20 billion in revenue.
The company’s Midstream segment is pursuing a few growth opportunities to take advantage of the increasing production in North America. Phillips 66 is partnering with Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline in the Bakken and Three Forks production area in North Dakota. These projects are expected to begin commercial operations in the fourth quarter of 2016.
To further support its advantaged crude oil strategy, the company has acquired an additional 500 rail cars for the Bayway Refinery and the Ferndale Refinery. Phillips 66 also is constructing a rail-loading facility on land in North Dakota. The facility is expected to have up to a 200,000 barrel per day of capacity, which should further expand Phillips 66 and third-party access to Bakken crude oil.
Chairman and CEO Greg Garland said:
Our operations ran well during the third quarter, capturing strong margins in our refining and marketing businesses. … Chemicals earnings were also strong despite the impact of unplanned downtime.
We recently announced the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, which provide integration opportunities with our Beaumont Terminal. We are executing our Midstream growth strategy with increasing momentum.
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Phillips 66 reported adjusted earnings in its segments, compared to the third quarter in the previous year, as:
- Midstream down roughly 22% to $115 million
- Chemicals up 14% to $299 million
- Refining up to $558 million from a loss of $30 million
- Marketing and Specialties up about 1.5% to $259 million
- Corporate and Other a loss of $91 million up from a loss of $113 million
Barclays reiterated an Overweight rating for Phillips 66 and lifted its price target to $109 from $100 on October 13. Deutsche Bank initiated coverage for the stock with a Hold rating and a price target of $99 on October 8.
Shares of Phillips 66 closed Tuesday up 2.7% at $77.53. Following the release of the earnings report, the initial response in the premarket was positive and shares were up over 2% at $79.23. In Wednesday morning trading, shares were down 1% at $76.77.
The consensus analyst price target is $93.36, and the 52-week trading range is $63.05 to $87.98. Phillips 66 has a market cap of $43 billion.
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