Phillips narrows its losses but still is hit hard
Houston refinery and pipeline operator Phillips 66 narrowed the company’s losses during the second three-month span affected by the coronavirus pandemic.
The company’s $141 million loss in the second quarter, compared with its $1.4 billion profit during the second quarter of 2019, shows how deeply the economic fallout of the pandemic continues to affect the industry. But it shows improvement over the first quarter, when the company lost $2.5 billion as COVID-19 began to spread globally.
Second-quarter revenue declined 61 percent to $11.2 billion from $28.5 billion during the same period a year earlier. It’s off 47 percent from $21.4 billion in the first quarter.
“Our second-quarter results reflect the disruption in refined product demand from COVID-19 and weak margins across our businesses,” said Phillips 66 CEO Greg Garland.
Despite the challenging environment, the company achieved three milestones during the second quarter.
The company’s pipeline arm began full operations along the Permian Basin-to-Gulf Coast Gray Oak Pipeline, as well as its South Texas Gateway Terminal at the Port of Corpus Christi.
Chevron Phillips Chemical, a joint venture with the Californiabased company, operated at 103 percent of capacity to meet high
er demand for plastics ingredients used in food packaging and medical supplies such as face masks and gloves.
The company’s retail arm completed the acquisition of 95 gas stations along the West Coast.
Reduced fracking hurts
Demand for sand used in hydraulic fracturing operations declined again in the second quarter, pushing Katy frac-sand mine operator U.S. Silica to a loss.
The company lost $32.4 million in the second quarter compared with a $6.2 million profit one year earlier as the coronavirus pandemic slashed fracking activity.
Second-quarter revenue fell 54 percent to $173 million from $395 million in the second quarter of 2019 as sales of frac sand declined 52 percent to 1.9 million tons from 3.9 million tons.
The oil and gas industry downturn caused by the pandemic forced frac sand companies Hi-Crush, Covia
and Vista Proppants to file for Chapter 11 bankruptcy over the past two months.
U.S. Silica has closed seven higher-cost frac sand plants and reduced activity at six more. The company also has laid off hundreds of employees, reducing the size of its workforce to about half of the 2,800 workers it had at the start of last year, CEO Bryan Shinn said.
LyondellBasell stays up
Houston petrochemical company LyondellBasell’s second-quarter showing suggests the company is managing the downturn caused by the coronavirus pandemic.
LyondellBasell made $314 million in the second quarter. While that’s a 70 percent falloff from the $1 billion profit in the second quarter of 2019, it’s more than double the $144 million the company made in the first quarter, which included the onset of the coronavirus pandemic.
Second-quarter revenue declined 39 percent to $5.5 billion from $9 billion in the same quarter of 2019.
During the second quarter, LyondellBasell saw demand fall for gasoline, diesel, jet fuel and polymers used by manufacturers in the automotive industry but it also saw strong demand for plastics ingredients used in food packaging and health care products such as face masks.
With operations around the world, LyondellBasell felt the disruptive effects of COVID-19 in Asia early in the first quarter. As the pandemic moved around the globe, CEO Bob Patel said the company was able to act quickly.
Looking ahead to the third quarter, there are signs that the worst may be behind the company.
Crude oil prices crashed in the second quarter but have since remained stable, hovering above $40 per barrel. Improved oil prices restored a price advantage for the chemical feedstock ethane in North America, where demand, prices and exports for the plastics ingredient polyethylene have improved.
“We believe the pandemic-driven decline in demand bottomed during the second quarter,” Patel said.