Phillips 66 completed Sweeny Frac 4 at its Sweeny refinery complex in Old Ocean, Tex. The NGL fractionator, which achieved full rates in early October, adds 150,000 b/d of processing capacity. Total Sweeny Hub fractionation capacity is 550,000 b/d.
Underpinned by long-term customer commitments, the new fractionator follow startup of the second and third in late 2020 and the first in late 2015 (OGJ Online, Nov. 21, 2020; Dec. 8, 2015).
The company provided the update as part of its third-quarter 2022 earnings update Nov. 1.
Phillips 66 increased earnings quarter-over-quarter to $5.4 billion in third-quarter 2022, compared with earnings of $3.2 billion in second-quarter 2022. Excluding special items of $2.3 billion, the company had adjusted earnings of $3.1 billion in the third quarter, compared with second quarter adjusted earnings of $3.3 billion.
During the quarter, the company returned $1.2 billion to shareholders through share repurchases and dividends.
Midstream
Midstream third-quarter 2022 pre-tax income was $3.6 billion, compared with $292 million in second-quarter 2022. Results include a net gain of $3 billion related to the consolidation of DCP Midstream, Sand Hills Pipeline, and Southern Hills Pipeline, and the transfer of interest in Gray Oak Pipeline.
Transportation adjusted pre-tax income was $229 million, compared with adjusted pre-tax income of $250 million in the second quarter. The decrease was mainly due to lower equity earnings from the Gray Oak Pipeline resulting from the merger.
NGL and other adjusted pre-tax income was $449 million in the quarter, compared with adjusted pre-tax income of $282 million in second-quarter 2022. The increase was mainly driven by the consolidation of DCP Midstream, Sand Hills Pipeline, and Southern Hills Pipeline.
Chemicals
The chemicals segment reflects Phillips 66’s equity investment in Chevron Phillips Chemical Co. LLC (CPChem). Chemicals third-quarter 2022 pre-tax income was $135 million, compared with $273 million in second-quarter 2022.
Refining
Refining third-quarter 2022 pre-tax income was $2.9 billion, compared with pre-tax income of $3 billion in second-quarter 2022. Refining results in the third quarter included a $24 million hurricane-related insurance recovery benefit. Second-quarter results included $70 million of costs related to the finalization of RIN obligations for prior year compliance periods and $26 million of costs related to the conversion of the Alliance Refinery to a terminal.
Adjusted pre-tax income for the segment was $2.8 billion in the third quarter, compared with adjusted pre-tax income of $3.1 billion in the second quarter. The decrease was primarily due to lower realized margins, partially offset by higher volumes.
Pre-tax turnaround costs for the quarter were $225 million, compared with second-quarter costs of $223 million. Crude utilization rate was 91% and clean product yield was 85% in the third quarter.
Marketing, specialties
Marketing and specialties third-quarter 2022 pre-tax income was $847 million, compared with $765 million in the second quarter of 2022.
Adjusted pre-tax income for Marketing and Other was $717 million in the third quarter compared with $656 million in the second quarter, reflecting higher international margins, partially offset by lower domestic results, including inventory impacts.
Specialties generated third-quarter adjusted pre-tax income of $130 million, up from $109 million in the prior quarter, largely due to improved base oil margins.
Corporate, other
Corporate and Other third-quarter 2022 pre-tax costs were $320 million, compared with pre-tax costs of $260 million in the second quarter of 2022. Pre-tax costs included $74 million and $25 million of business transformation restructuring costs in the third quarter and second quarter, respectively.
Adjusted pre-tax loss was $246 million in third-quarter 2022. The increase in the third quarter was mainly due to higher interest expense from the DCP Midstream consolidation, partially offset by increased interest income driven by higher interest rates and cash balances.
