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AQR Capital Trims Phillips 66 Position by 28%

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AQR Capital’s holdings in Phillips 66

AQR Capital lowered its holdings in Phillips 66 (PSX) by reducing the number of shares held in the company by 28% from 3,015,130 in 3Q14 to 2,179,870 in 4Q14. The company formed 0.32% of the fund’s fourth-quarter portfolio.

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About Phillips 66

Phillips 66 manufactures gasoline, distillates, jet fuel, asphalt, lubricants, petrochemicals, and other refined products. The Texas-based energy firm separated from ConocoPhillips (COP)  and started operating independently as a publicly traded company on April 4, 2012. Phillips 66 Partners is the company’s master limited partnership.

PSX operates in the following segments:

  • Midstream
  • Chemicals
  • Refining
  • Marketing and Specialties

Phillips 66 is part of the iShares US Oil & Gas Exploration & Production ETF (IEO) and the Energy Select Sector SPDR Fund (XLE) with exposures of 6.28% and 2.72%, respectively.

4Q14 results

For the fourth quarter of 2014, PSX saw its revenue fall 19% to $34.96 billion. It had recorded revenue of $43.04 billion in 4Q13.

In 4Q14, the company’s net income totaled $1.14 billion. This was up 39% from $826 million in 4Q13. The surge in net profit came largely “from one-time gains in the refinery business as well as from improved profitability” in the company’s Marketing and Specialties business.

Despite the decreased revenue, PSX was able to improve its net income and margin in the latest quarter. Similarly, peer Valero Energy (VLO) reported a revenue decrease of 19% during this period.

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Transportation infrastructure

PSX is investing in transportation infrastructure for moving crude oil between the Bakken and Three Forks production area in North Dakota and US-wide market centers. The company expects to be in possession of 3,700 rail cars dedicated to the service of crude oil in early 2015.

Midstream projects

According to a news release on PSX’s website, “In Midstream, the 100,000 BPD Sweeny Fractionator One is more than 50 percent complete, with startup planned in the second half of 2015. Construction is also progressing on the 4.4 million-barrel-per-month Freeport LPG Export Terminal, with completion expected in the second half of 2016.” Currently, both of these projects are on schedule and within budgetary constraints.

North Dakota pipeline and rail terminal

Per the company’s website, “Phillips 66 Partners formed two joint ventures to develop the Palermo Rail Terminal and the Sacagawea Pipeline in North Dakota. The Palermo Rail Terminal is a crude oil rail-loading facility currently under construction. The terminal is anticipated to include a pipeline connection to the Sacagawea Pipeline, allowing increased outbound capacity and market access for oil producers and marketers in the Bakken region.”

In the next part of this series, we will cover the lowered position of AQR Capital in the Priceline Group (PCLN).

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