Refiners’ operating models
Refiners’ operating incomes are mainly derived from their core operations—refining. But many are now focusing on diversifying their earnings models to shield themselves from the volatile refining environment. Phillips 66 (PSX) leads the pack, with just 36% of its total operating income coming from its refining segment.
Notably, PSX derives 15% from its midstream segment, 35% from marketing segment, 21% from chemicals, with the remaining percentage attributable to “corporate and other” activities during the first nine months of 2016.
Tesoro (TSO) is second in line, with 38% of its operating income coming from refining, 30% from midstream, 53% from marketing, and -21% from corporate and others. Marathon Petroleum (MPC) also has a diversified operating model. MPC derives 34% and 31% of operating income of midstream and marketing segments, respectively. Valero Energy’s (VLO) operating income is predominantly derived from the refining segment.