Phillips sees profit in ‘volatile market’
Phillips 66 said Friday that profits increased in the first quarter as demand for its products rose and the world market shifted into an environment it expects will be favorable for refiners for more than a year.
The Houston-based energy company said it made $582 million in the first three months of the year, compared with a $654 million loss during the same period in 2021. Revenue jumped 67 percent to $36.7 billion from $21.9 billion in the first quarter of last year.
“In the first quarter, we generated strong cash flow in a volatile market environment with seasonally lower margins across our businesses,” said Chairman and CEO Greg Garland. “While firstquarter results were lower quarter on quarter, we saw substantially improved financial results from our operations in March and expect continued strong performance in the second quarter.”
An economy recovering from the pandemic and low inventories of distillates including jet fuel and diesel will drive demand for Phillips 66’s services over the next year or two, executives said. Refiners are well positioned to take advantage of this moment in North America, where natural gas and crude feedstocks are more available at affordable prices. Executives said it could be ‘a golden age’ for North American refiners.
Overall fuel demand is back to pre-pandemic levels at a time when the world is operating with diminished refining capacity, giving another advantage to stillstrong refiners such as Phillips 66.
Regarding investment decisions, the company plans to take advantage of refining margins for as long as they are lucrative while also positioning its refiner
ies for the future, which may mean producing more petrochemicals, Chief Operating Officer Mark Lashier said. Lashier is poised to take over for Garland, who is stepping down July 1 ahead of his retirement in 2024.
He said the company also is exploring opportunities in alternative fuels, battery production, carbon capture and hydrogen. Lashier said the company is making progress on reconfiguring its Rodeo refinery near San Francisco into a biofuels facility. The project is expected to be complete in early 2024 at a cost of $850 million.
“We see some real opportunities to leverage our existing assets and our technologies to create sustainable value in emerging energies,” Lashier said.
LyondellBasell
LyondellBasell earnings jumped by 23 percent in the first quarter amid “robust demand” for its products.
The Houston chemical company said it made $1.3 billion in the first three months of the year, compared with $1.1 billion during the same period in 2021. Revenue rose by 45 percent to $13.2 billion from $9.1 billion in the first quarter of last year.
“LyondellBasell’s results reflect robust demand across our portfolio and exceptionally strong first-quarter margins from our (intermediates and derivatives segment),” said Ken Lane, the company’s interim CEO.
The company said the financial results are the strongest first-quarter figures it has seen since 2015. It said it is well-positioned to weather any potential recessions, noting that demand for polyethylene, one of its core products, does not normally dip during recessions.
The company said last week that it planned to close its Houston refinery next year and exit the refining business. Until then, it said, “we forecast a favorable outlook” for the segment.
It reported $148 million in operating income on the refinery, compared with a $130 million loss in the first quarter last year and a $496 million loss in the quarter ended Dec. 31.