Phillips 66: Petrochemical giant with a $39 billion market cap



Phillips 66 overview

Phillips 66 (PSX) released its 4Q14 earnings on January 29. Before we analyze the company’s performance, here is an overview of its business.

Phillips 66 (PSX) is a Texas-based energy company. The company primarily focuses on refining, chemicals, midstream operations, and the marketing of refined and specialties products. It manufactures gasoline, distillates, jet fuel, asphalt, lubricants, petrochemicals, and other refined products.

Valero Energy (VLO) is another major petrochemical refining and marketing company in the US.

Phillips 66 started operating independently as a publicly traded company on April 4, 2012, when it separated from ConocoPhillips (COP).

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Phillips 66 business segments

The company has four primary operating segments:

  1. Midstream
  2. Chemicals
  3. Refining
  4. Marketing and Specialties

In 2013, Phillips 66, or PSX, formed Phillips 66 Partners (PSXP), a master limited partnership, or MLP, to operate its midstream functions that include the transportation of crude oil and petroleum products though pipelines and terminals. PSX owns the general partnership and has a 73% limited partnership in PSXP.

PSX’s Midstream segment includes a 50% equity investment in DCP Midstream, LLC, a subsidiary of DCP Midstream Partners (DPM).

PSX’s Chemical segment consists of a 50% equity investment in Chevron Phillips Chemical Company, or CPChem, which is a joint venture between Chevron Corporation (CVX) and Phillips Petroleum Company.

PSX makes up 2.65% of the Energy Sector Select SPDR ETF (XLE).

Phillips 66 international operations

The company has operations in the United States, the United Kingdom, Germany, and other foreign countries.

Phillips 66 shares up

Following the quarterly results release on January 29, PSX shares went up 3% over the previous day’s close. Phillips 66 (PSX) currently trades at ~$73, down ~1% in the last year. Later in the series, you’ll discover how the company’s earnings fared against analyst estimates.

At ~$39.7 billion, the company’s current market capitalization is one of the largest in the US downstream industry. Its enterprise value is ~$41.5 billion. Enterprise value is approximately the summation of its equity value and net debt.

Read the following parts in this series to learn about Phillips 66’s 4Q14 earnings.


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