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Cheap Oil Fuels Earnings Beat at Phillips 66

Phillips 66 (NYSE: PSX  ) is out with its fourth-quarter earnings this morning. The company delivered earnings of $826 million, or $1.37 per share. That crushed analysts' estimates by $0.26 per share. Earnings were also well above the $708 million the company earned in last year's fourth quarter. However, last year's earnings were affected by a writedown, which is why on an adjusted basis, earnings did fall from the $1.3 billion it earned in last year's fourth quarter.

The non-adjusted earnings beat, however, was fueled in part due to Phillips 66 using more domestically produced crude oil. In the quarter, 94% of the oil it used was advantaged crude oil, which is up from just 67% last year. 

One other factor that contributed to the company's success this quarter was that it exported record volumes of refined product. The company was able to export 197,000 barrels of refined product per day. While refining margins were tighter throughout most of Phillips 66's portfolio, exports provided a nice boost to the margins of its Gulf Coast refineries. 

In addition to solid refining returns for the quarter, Phillips 66 also delivered strong returns at both its midstream and chemical segments. Midstream earnings jumped from $92 million last year to $121 million in this quarter thanks to higher fees and volumes. Meanwhile, chemical segment earnings rose by $15 million over the same period last year, to $261 million in the most recent quarter, thanks to better volumes and margins.

In commenting on the quarter, CEO Greg Garland noted that the company "ran well in the quarter, allowing us to capitalize on favorable crude differentials while exporting record volumes of refined products." Further, he sees the company's integrated asset base uniquely positioning the company to grow as the energy landscape changes.


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Matt DiLallo

Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:

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8/28/2015 4:02 PM
PSX $77.23 Up +2.21 +2.95%
Phillips 66 CAPS Rating: *****