Phillips 66 (PSX:US), the largest U.S. independent refiner by sales, said first-quarter profit more than doubled as the margin between oil costs and fuel prices widened and its chemical business improved.
Net income rose to $1.41 billion, or $2.23 a share, from $636 million, or $1, a year earlier, the Houston-based company said in a statement on Business Wire today. Excluding one-time costs, per-share profit exceeded the $1.89 average of 16 analysts’ estimates (PSX:US) compiled by Bloomberg.
Phillips 66, which has the capacity to refine 2.2 million barrels of oil a day, was spun off from ConocoPhillips last year as that company sought to become a pure exploration and production business. Chairman and Chief Executive Officer Greg Garland has said he’s focused on chemicals, pipelines and natural gas processing to reduce the volatility that comes with refining earnings.
“This company is a different animal because the growth opportunities are not on the refining side of the business,” Fadel Gheit, an analyst at Oppenheimer & Co. in New York who rates Phillips 66 the equivalent of a buy and doesn’t own the shares, said in a phone interview before earnings were announced.
The margin between the cost of West Texas Intermediate oil and the price at which refiners sell fuel rose 20 percent to an average of $32.689 a barrel in the January-to-March period, according to data compiled by Bloomberg.
The company, whose third-largest shareholder is Warren Buffett’s Berkshire Hathaway Inc., plans to raise as much as $300 million in an initial public offering this year for a minority interest in some of its pipeline and logistics assets, according to a filing last month.
Phillips 66 dropped 1.4 percent to $60.95 yesterday in New York. The shares, which have 13 buy and eight hold ratings from analysts, have risen 15 percent this year.
Independent refiners don’t own exploration or production assets.
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