PSX

The finalized 2026-2027 Renewable Volume Obligation gives Darling Ingredients Inc. DAR a supportive policy backdrop for Diamond Green Diesel ("DGD"). The mandate is intended to increase domestic feedstock demand and renewable-fuel production, conditions that have coincided with much stronger DGD economics. The question is whether that support can carry through 2027. Recent results were unusually strong, but DGD still depends on Renewable Identification Number values, diesel pricing, feedstock costs and other market inputs. Darling Ingredients Inc. price-consensus-eps-surprise-chart | Darling Ingredients Inc. Quote Darling's share of DGD adjusted EBITDA reached $389.2 million in the second quarter of 2026, up from $42.6 million a year earlier. Production increased to 355.9 million gallons, while EBITDA per gallon sold climbed to $2.23 from 34 cents. The improvement gives DGD a much larger role in Darling's earnings profile. Valero Energy Corporation VLO, Darling's 50/50 DGD partner, reports the venture within its Renewable Diesel segment and says DGD has about 1.2 billion gallons of annual production capacity. Management expects continued tightness in Renewable Identification Numbers (RINs) to remain supportive of renewable-fuel production and DGD margins. Higher RIN values, diesel prices and production tax credits all contributed to the second-quarter improvement. Darling also believes the current Renewable Volume Obligation is appropriately sized when production increases, imports, small-refinery exemptions and normal deficit carryforwards are considered. Still, the company has said RINs need to remain supportive to keep incentivizing production and fulfill the mandate. DGD is expected to produce about 335 million gallons in the third quarter. Management views margins through 2027 as attractive under the current mandate, so maintaining high utilization remains an important part of the earnings opportunity. Phillips 66 PSX offers another renewable-fuels reference point. Its Rodeo Renewable Energy Complex has capacity of about 800 million gallons per year, and the company's second-quarter 2026 Renewable Fuels results benefited partly from higher regulatory credit pricing and renewable-fuels production. The second quarter included about $50.5 million of favorable International Emergency Economic Powers Act tariff recovery at the DGD entity level. That benefit means the quarter should not be treated as a clean recurring run rate even though the underlying market environment improved substantially. DGD profitability also remains exposed to renewable-fuel pricing, feedstock costs and broader market conditions. A softer RIN market, weaker diesel values or higher feedstock costs could narrow margins even if the policy framework continues supporting industry production. Image Source: Zacks Investment Research Policy support strengthens the DGD earnings case, but sustaining the second-quarter pace will require more than the Renewable Volume Obligation. RIN support, diesel values and feedstock economics need to remain favorable, while the tariff recovery makes the latest quarter an imperfect benchmark for future profitability. DAR currently carries a Zacks Rank #1 (Strong Buy), along with a Growth Score of A, VGM Score of A and Value Score of B. Its Momentum Score of D is the weaker signal. The mix favors the earnings-growth and broader style case, but the momentum reading supports a measured view of near-term price timing. You can see the complete list of today’s Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Darling Ingredients Inc. (DAR) : Free Stock Analysis Report Valero Energy Corporation (VLO) : Free Stock Analysis Report Phillips 66 (PSX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Kinder Morgan (KMI) is back in focus after joining Phillips 66 and HF Sinclair in the proposed US$5b Western Gateway Pipeline joint venture, and after reporting second quarter 2026 earnings that exceeded market expectations. See our latest analysis for Kinder Morgan. Kinder Morgan’s share price has climbed 18.44% year to date to US$32.82, with a 7 day share price return of 6.39% after the Western Gateway Pipeline announcement and earnings beat. The 5 year total shareholder return of 169.73% points to stronger momentum over a longer horizon. If this kind of infrastructure story has your attention, it could be a good moment to broaden your search and check out 38 power grid technology and infrastructure stocks The Western Gateway deal and earnings beat have pushed Kinder Morgan sharply higher in a short span. After this run, does the current price still offer an attractive balance of upside and risk for new money? The most followed Kinder Morgan narrative currently points to a fair value of $35.33 compared with the latest close at $32.82, and uses a 7.11% discount rate to weigh those future cash flows. Read the complete narrative. Want to see what underpins that LNG optimism and fair value gap? The narrative leans heavily on future revenue, margin resilience, and a richer earnings multiple than the sector. Result: Fair Value of $35.33 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Kinder Morgan’s high net debt near US$32.3b and the risk of overbuilt regions like the Permian affecting contract renewals could challenge this upbeat narrative. Find out about the key risks to this Kinder Morgan narrative. With Kinder Morgan attracting both optimism and caution, it makes sense to look at the underlying data yourself and not rely on any single story. To weigh these cross currents properly, start by reviewing the 3 key rewards and 2 important warning signs. If Kinder Morgan has sharpened your focus, do not stop here. Use the Simply Wall Street Screener to surface other opportunities that could suit your portfolio. Spot potential bargains early by checking stocks that appear mispriced compared to their quality with the help of 50 high quality undervalued stocks. Strengthen your income stream by reviewing companies that show up in the 10 dividend fortresses and assess whether their payouts fit your goals. Prioritise resilience by scanning companies that appear in the 83 resilient stocks with low risk scores and see which ones align with your comfort level. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include KMI. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Kinder Morgan recently reported second-quarter 2026 adjusted earnings of US$0.37 per share, beating estimates and improving its net debt-to-adjusted EBITDA ratio to 3.6X, while also agreeing with Phillips 66 and HF Sinclair to proceed with the proposed US$5.00 billion Western Gateway refined products pipeline joint venture targeted for completion in 2029. Together, the stronger results across its gas infrastructure and the long-distance Western Gateway project reinforce Kinder Morgan’s role as a key link in U.S. fuel and LNG supply chains. We’ll now examine how Kinder Morgan’s earnings beat and Western Gateway pipeline commitment may influence its existing investment narrative and expectations. We've uncovered the 10 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. To own Kinder Morgan, you need to believe in the durability of U.S. natural gas and refined products infrastructure and the company’s ability to translate that position into dependable cash flows despite relatively high leverage. The latest earnings beat and modest improvement in net debt to adjusted EBITDA are positives, but they do not fundamentally change the near term focus on balance sheet strength as a key risk and LNG driven throughput as a central catalyst. The decision to move ahead with the US$5.00 billion Western Gateway refined products pipeline joint venture stands out here, because it ties directly into Kinder Morgan’s role in U.S. fuel logistics while adding a large, long dated project to its growth backlog. For investors, that announcement sits alongside rising LNG related volumes as a reminder that Kinder Morgan’s investment case rests on long term fee based contracts across gas and refined products, rather than short term commodity moves. However, against these positives, Kinder Morgan’s still meaningful leverage and the capital needs of an aging, expanding network are risks investors should be aware of... Read the full narrative on Kinder Morgan (it's free!) Kinder Morgan's narrative projects $20.2 billion revenue and $3.7 billion earnings by 2029. This requires 4.8% yearly revenue growth and about a $0.4 billion earnings increase from $3.3 billion today. Uncover how Kinder Morgan's forecasts yield a $35.33 fair value, a 8% upside to its current price. Three fair value estimates from the Simply Wall St Community span roughly US$35 to US$55 per share, showing how differently individual investors can view Kinder Morgan’s potential. You can weigh those views against Kinder Morgan’s reliance on stable, fee based contracts to support earnings in a sector where long term fossil fuel demand and policy trends remain uncertain, and explore several alternative viewpoints before deciding how this fits your portfolio. Explore 3 other fair value estimates on Kinder Morgan - why the stock might be worth as much as 68% more than the current price! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Kinder Morgan research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision. Our free Kinder Morgan research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Kinder Morgan's overall financial health at a glance. These stocks are moving-our analysis flagged them today. Act fast before the price catches up: The latest GPUs need a type of rare earth metal called Terbium and there are only 28 companies in the world exploring or producing it. Find the list for free. Find 50 companies with promising cash flow potential yet trading below their fair value. AI is about to change healthcare. These 44 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include KMI. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Marathon Petroleum Corporation MPC has emerged as one of the standout names in the refining space after reporting exceptionally strong second-quarter results. The stock has surged 50.9% following the earnings release as investors responded to stronger refining margins, excellent operational execution and robust shareholder returns. Image Source: Zacks Investment Research The rally, however, changes the investment equation. While MPC's latest results and earnings outlook remain encouraging, investors must consider whether the recent gains have already priced in much of the improvement. Let's explore MPC’s growth drivers, risks, valuation and prospects while comparing it with refining peers Valero Energy VLO and Phillips 66 PSX. MPC's second-quarter performance provides a strong fundamental reason behind the stock's recent rally. Net income attributable to MPC jumped to $5.1 billion, or $17.73 per share, from $1.2 billion, or $3.96, in the year-ago quarter. Adjusted EBITDA surged to $8.46 billion from $3.29 billion. MPC's Refining & Marketing (R&M) segment was the biggest contributor. R&M adjusted EBITDA climbed to $6.66 billion from $1.89 billion, while R&M margin increased to $36.33 per barrel from $17.58. This improvement reflected stronger crack spreads and MPC's ability to optimize its crude and product flows. Operational execution adds another positive. MPC achieved its lowest level of unplanned downtime in a decade and operated the Gulf Coast system at 100% utilization during the quarter. R&M margin capture exceeded $1 billion in the second quarter and reached 108% for the first half, highlighting the company's ability to outperform benchmark market conditions. The refining market itself also remains supportive. Management highlighted more than 9 million barrels per day of global planned and unplanned refining capacity downtime, around 4 million barrels per day above historical norms. U.S. gasoline inventories remain below the five-year range, while distillate inventories are at the bottom of that range. MPC expects an enhanced mid-cycle refining environment through year-end and into 2027. The company also benefits from the integrated logistics network, which provides access to economically advantaged crude and allows it to optimize feedstocks and product yields. Two high-return projects at Robinson and El Paso came online during the second quarter, with management targeting returns of 25% or higher. Capital allocation is another positive. MPC returned $2.8 billion to its shareholders during the second quarter and repurchased $2.5 billion of stock. It had $6.1 billion remaining under existing repurchase authorizations at the end of June, while MPLX's growth strategy is expected to support 12.5% annual distribution growth in 2026 and 2027. However, the bullish thesis has meaningful risks. Refining is inherently cyclical, and the exceptional second-quarter margins were helped by unusually tight product markets, geopolitical disruptions and refinery downtime. If capacity returns and crack spreads normalize, MPC's earnings could retreat from current elevated levels. Capital requirements also remain significant. MPC and MPLX invested $2.64 billion in the first half, while the latter increased its 2026 growth capital outlook by $500 million to $2.9 billion to accelerate Gulf Coast fractionation and export projects. MPC's valuation remains a key positive. The stock trades at approximately 8.82x earnings, below the sub-industry average of 9.19x. This suggests that its shares are not excessively valued despite the sharp improvement in profitability. Image Source: Zacks Investment ResearchThe earnings outlook is also strengthening. The consensus estimates for MPC's 2026 and 2027 earnings have increased 45.09% and 25.50%, respectively, over the past 60 days. The upward revisions indicate that analysts are becoming more confident in the company's earnings potential. Image Source: Zacks Investment Research Still, investors should be cautious about interpreting the low P/E in isolation. Refiners often trade at lower multiples when earnings are near cyclical peaks. MPC's valuation is attractive, but sustained upside will depend on whether refining margins remain healthy enough to support current earnings expectations. MPC's performance should also be viewed against its major refining peers. Valero Energy offers similarly strong exposure to refining and can benefit from tight refined-product markets. Phillips 66 has a somewhat more diversified business model, with exposure to refining, midstream and chemicals. MPC's competitive advantage comes from its large refining footprint, extensive logistics network, strong optimization capabilities and ownership interest in MPLX. VLO provides a more concentrated refining investment case, while PSX offers greater diversification. The three companies therefore provide investors with different ways to participate in the favorable refining environment. Image Source: Zacks Investment Research MPC has outperformed its sub-industry and peers, gaining 75.3% compared with 71.7% for Valero Energy, 44.5% for the Oil Refining & Marketing sub-industry and 45.6% for Phillips 66. MPC's six-month rally also demonstrates that investors are currently placing a premium on strong refining execution. Whether that outperformance continues will depend heavily on margins, product demand and the industry's capacity outlook. MPC’s strong second-quarter results highlight its solid operating performance, supported by higher refining margins, improved reliability and substantial shareholder returns. The outlook also remains constructive, with management expecting a favorable refining environment through the end of 2026 and into 2027. Improving earnings estimates and a valuation below the sub-industry average provide additional support for the investment case. At the same time, the stock’s 50.9% post-earnings rally has raised expectations. Refining earnings are cyclical, and margins could moderate if product markets loosen or additional capacity returns. The recent share-price gains also mean that some of the improved fundamentals may already be reflected in the stock. With a Zacks Rank #3 (Hold), MPC presents a balanced risk-reward profile at current levels. The company’s strong fundamentals and earnings momentum are encouraging, but the sharp rally and cyclical nature of refining warrant some caution. Existing shareholders may continue to monitor the stock, while prospective investors may prefer to wait for a more favorable entry point or further evidence that elevated refining margins can be sustained. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report Valero Energy Corporation (VLO) : Free Stock Analysis Report Phillips 66 (PSX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 12:00 p.m. ET Vice President, Investor Relations and Chief Economist - Sean Maher Chairman and Chief Executive Officer - Mark Lashier Chief Financial Officer - Kevin Mitchell Midstream and Chemicals - Don Baldridge Refining - Rich Harbison Marketing, Commercial and Renewable fuels - Brian Mandell Operator: Welcome to the Second Quarter 2026 Phillips 66 Earnings Conference Call. My name is Hillary, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Sean Maher, Vice President, Investor Relations and Chief Economist. Sean, you may begin. Sean Maher: Hello, everyone. Good morning, and thank you for joining Phillips 66 Second Quarter 2026 Earnings Conference Call. Participants on today's call will include Mark Lashier, Chairman and CEO; Kevin Mitchell, CFO; Don Baldridge, Midstream and Chemicals; Rich Harbison, Refining; and Brian Mandell, Marketing, Commercial and Renewable fuels. Today's presentation can be found on the Investor Relations section of the Phillips 66 website, along with supplemental financial and operating information. Slide 2 contains our safe harbor statement. We will be making forward-looking statements during today's call. Actual results may differ materially from today's comments. Factors that could cause actual results to differ are included here as well as in our SEC filings. With that, I'll turn the call over to Mark. Mark Lashier: Thank you, Sean. This quarter's operating results reflect the dedication and work that our teams have delivered throughout the company's transformation over these past several years. Our system is operating well. Our assets are well positioned and the market environment is constructive. While there's more work to do, we believe our organization's earning power is becoming clear as we continue to drive execution and return capital to shareholders. Safety, reliability and operational excellence remain at the center of everything we do. We recently earned industry recognition for exemplary safety performance in Midstream, Refining and Chemicals. Due to our steadfast focus on reliability, our integrated businesses are available to supply U.S. and global energy needs. At Phillips 66, operational excellence is foundational. We remain focused on disciplined execution and continuous improvement. Our Midstream business continues to execute on its growth plan as expected. Over the past 2 years, we've increased fractionation capacity to over 1 million barrels per day and achieved greater than 100% average frac utilization. During the quarter, we also achieved record LPG export volumes. Our complete wellhead to market system allows us to move products across our integrated value chain and offers customers valuable optionality and global access. In Refining, our deliberate focus on operational improvement continues to deliver results. We have enhanced the portfolio, increased clean product yield, improved our cost structure, led the industry in utilization and increased our nameplate capacity. Supported by a strong contribution from our commercial organization, we captured 98% of our market indicator in the second quarter. In Renewables, we have scale, flexibility and strong operations at one of the largest renewable diesel facilities in the world. As the uncertainty over renewable credit regulations unfolded in 2025, we engaged constructively with state and federal regulators and continue to do so. We also focused on taking costs out of the system and improving reliability and flexibility. To that end, we ran above nameplate capacity during the quarter. In Chemicals, our industry-leading position is clear. These are advantaged assets positioned at the low end of the feedstock cost curve. Across all of our businesses, we continue to raise the bar. Make no mistake, we must compete every day. Our teams continue to find new ways to maximize value through improving operations, increasing yields, expanding margins and lowering costs. Moving to Slide 4. We process low-cost hydrocarbons from the U.S., Canada and Latin America and turn them into higher-value usable products for customers. As global supply and demand dynamics become more complex, our integrated model positions us for long-term value creation. We are investing for the next decade, not just the next quarter. The Midstream and Marketing and Specialties businesses deliver reliable cash flows while Refining, Chemicals and Renewables generate attractive incremental returns with commodity upside. We've built an integrated North America infrastructure system. We'll continue to focus on being the best in every segment of our portfolio, all while maximizing shareholder returns. That's what makes Phillips 66 unique. We have a resilient business model, advantaged assets, strong commercial capabilities and significant earnings potential. Now I'll turn the call over to Kevin as we move to Slide 5. Kevin Mitchell: Thank you, Mark. Last year, we committed to reduce total debt to $17 billion by year-end 2027 and to return greater than 50% of net operating cash flow, excluding working capital to shareholders. Our focus on these priorities has not wavered, and we expect to deliver on our debt commitment ahead of schedule. In the second quarter, we made significant progress on strengthening the balance sheet. We ended the quarter with total debt of $20.6 billion and net debt of $16.5 billion. This positions us better than where we started the year. And using current consensus estimates, we expect net debt to be less than $16 billion by the end of this year. We expect to achieve our debt target, while also returning greater than 50% of net operating cash flow to shareholders through dividends and share repurchases. This is a core strategic priority, and we expect to increase share repurchases in the second half of this year. Our disciplined capital allocation framework allows us to enhance our shareholder value proposition. We remain committed to a secure, competitive and growing dividend and to creating value for our stakeholders through disciplined capital investment, dividends, share repurchases and debt reduction. On Slide 6, second quarter reported and adjusted earnings were $3.8 billion. Reported and adjusted earnings per share were $9.55 and $9.41, respectively. The company's second quarter financial results were impacted by mark-to-market gains of approximately 50% of the first quarter mark-to-market losses. Operating cash flow, excluding working capital, was $4.3 billion. Capital spending for the quarter was $726 million. We returned $887 million to shareholders, including $379 million of share repurchases and $508 million of dividend payments. I will now cover the segment results on Slide 7. Total company adjusted earnings were $3.8 billion. Midstream results increased mainly due to higher margins as well as higher volumes, largely driven by the absence of last quarter's Winter Storm Fern impacts. In Chemicals, results increased mainly due to higher polyethylene margins driven by higher sales prices. Refining results increased mainly due to higher realized margins driven by an increase in market crack spreads. Marketing and Specialties results increased mainly due to higher global marketing margins. In Renewable Fuels, results increased mainly due to higher regulatory credits from higher pricing and renewable fuels production. Also included in the results are approximately $450 million of favorable mark-to-market impacts in the Refining, Marketing and Specialties and Renewable Fuel segments. In Corporate and Other, the pretax loss decreased primarily due to lower net interest expense and employee-related costs. Slide 8 shows cash flow for the quarter. We started the quarter with a $5.2 billion cash balance. Cash from operations, excluding working capital, was $4.3 billion. There was a $2.9 billion working capital benefit due to a reduction in inventory as well as the timing of tax payments. Total debt reduced significantly during the quarter as we paid off all outstanding commercial paper and repaid $1 billion of the March 2027 term loan. The remaining $1.25 billion balance on the term loan was paid off in July. We ended the quarter with $4.1 billion in cash and $6.4 billion in committed capacity, giving us total committed liquidity of $10.5 billion. Looking ahead to the third quarter on Slide 9. In Chemicals, we expect the global O&P utilization rate to be in the low 90s. In Refining, we expect the worldwide crude utilization rate to be in the mid-90s. Turnaround expense is expected to be between $100 million and $120 million. We anticipate Corporate and Other costs to be between $325 million and $350 million. Moving to Slide 10. Mark will now provide some final thoughts. We will then open the line for questions. Mark Lashier: Volatility in the first half of the year created both challenges and opportunities, and our team was prepared, agile and focused on execution. This enabled us to navigate the market and capture value through strong Refining performance, disciplined Midstream growth and flexible, opportunistic commercial execution across our portfolio. Looking ahead, the macro environment remains constructive. We are focused on continuous operating improvement, and our people are helping drive that progress as they leverage the advantages of our asset footprint. In any market, including this one, we will continue to maintain capital discipline and stay focused on the balance sheet while pursuing meaningful opportunities to drive long-term value. Our integrated model, together with our employees, provides resilience and opportunity, positioning us to manage through volatility and capture the benefits of a strengthening macro environment for shareholders. Operator: [Operator Instructions] Your first question comes from the line of Steve Richardson from Evercore. Stephen Richardson: Mark, I was wondering if you could talk a little bit about the environment and what you're seeing. The last time, Refining profitability was at this level for you and the industry was 2022. And I wonder if you could talk a little bit about what you're seeing versus that time. What the path to normalization looks like, if that's even possible to kind of envision at this point? And then how is Phillips 66 differentially positioned versus that time would also be helpful. Mark Lashier: Yes, Steve, that's a great question. When you think back to 2022 versus today, there are really a couple of major differences. You think about 2022, there was a demand surge coming out of COVID. Right about the time when the entire refining complex was getting its act back together, recovering from COVID, we were reluctant to take shutdowns. We were reluctant to do all the maintenance we needed to do during COVID for fear of an outbreak, and we had to catch up. And so those 2 things collided in 2022. And it's different than today because the resolution of those 2 things happened more quickly. Everyone got their maintenance completed. Actually took advantage of the run-up in margins to make the investments they needed to be more robust and the demand normalized a bit. And now when you look at what's going on, it's more of a supply shock than a demand shock. You've had significant refining capacity off-line and stocks are low. And so we see it taking a lot longer for that situation to normalize than what we saw in 2022. But the second piece of the story is Phillips 66. We're a very different company than we were in 2022. A big part of it during the business transformation, our culture evolved pretty dramatically. And we are a leaner company, we're more agile and more focused on continuous improvement in competition. We're embracing AI out at the front line level. We're doing a lot of things that are AI-enabled. So it's really enhanced how we respond to the market and how we do things. Refining has dramatically improved its performance. We've streamlined the portfolio. We've added capacity by rolling up WRB. And Rich and his spokes have cut over $1, headed towards $1.50 per barrel of cost of the Refining. And in the meantime, while we're cutting costs, we've been improving yields and improving utilizations. Underlying that, the Midstream portfolio is now a wellhead to market strategy fully in place and it's been growing. And so we've got a lot of strengths there and a great foundation. So the company is focused on driving and leaning into that integration value, focus on general interest, not just our functional earnings. And I would say that Phillips is positioned better than ever to successfully execute in this in any environment. And the headline should be that at this point in time, this is the case where preparation meets opportunity, and we're delivering. Stephen Richardson: That's great. I'd love to follow up just a little bit more if we could on commercial. Could you give us a sense of incrementally at least in the quarter and year-to-date what -- how the commercial teams are attacking this environment in terms of refining, anything incrementally on freight, transport, crude sourcing, the entire value chain would be helpful from a commercial perspective. Brian Mandell: Thanks, Steve. This is Brian. Appreciate the question on commercial. Maybe I'll start by saying I'm incredibly proud of the commercial team, particularly through this period of historical volatility. The team has done an excellent job. And for P66, commercial is kind of a key source of optimization value because it connects our physical assets to market dislocations and opportunities around the world. As you know, we have 6 global offices. The organization optimizes feedstocks, moves products into the highest value markets and also captures value from optionality from arbitrage, captures value from market structure opportunities as well. And our model at Phillips is an asset-backed model, which means we use our physical footprint. We use our logistics capabilities and integration and our market access to capture value when markets dislocate. So maybe just to give you some examples. In today's market, we can substitute lower-cost domestic grades for more expensive international grades in our U.S. refining system and then sell those more expensive international grades at a profit. Or as you talked about on freight, our time charter freight position has given us a lot of optionality in tight logistics markets. We've expanded our fleet fourfold in the past 2 years. And now it supports roughly 40% of our asset-backed demand while also generating a new third-party business. And then Jones Act is another example of how commercial creates value. We've been granted about 20% of the Jones Act waivers issued since the current waiver took effect in March. And combined with our freight position, these waivers have improved our ability to optimize feedstock and product flows from our Refining business, Marketing business and Midstream businesses. And then finally, as a result of our time charter fleet growth and increased Panama Canal transits, we now hold a favorable canal ranking. You haven't heard a lot of people talk about this. We're 26 out of 556, which allows us to schedule transits well in advance, avoid high auction fees and reduce waiting times and improve on-time reliability. So ultimately, I'd sum up by saying commercial is focused on creating value across our integrated businesses by capturing the embedded optionality within and across the system. Operator: Your next question comes from the line of Doug Leggate from Wolfe Re -- pardon me, from Wolfe Research. Douglas George Blyth Leggate: These are probably for Kevin. I apologize in advance. But Kevin, the step down in your net debt this quarter takes your net debt at least below your $17 billion total debt target. Now you've got line of sight to the end of the year. Previously, you justified this on a multiple of, call it, stable EBITDA. But I think whether you agree with elevated margins or not, elevated free cash flow currently, it seems to us that you've got an opportunity to reset that net debt target or that debt target substantially lower. So that's my question. What -- where do we go after the end of 2027 and maybe even before then? Then my follow-up very quickly is to Mark. You've had this 50% or more than 50% of operating cash flow target return to shareholders for a while. But there's 2 pieces to that, Mark. There's the buyback always at risk of being procyclical and there's a dividend. So how do you think about this debate of whatever mid-cycle and whatever Phillips 66 owned free cash flow potential might be going forward? What's the right dividend strategy for Phillips as you fulfill, for example, your Midstream growth and so on? And I'll leave it there. Kevin Mitchell: Yes, Doug. So you're exactly right in terms of where we were on debt target. And I will reiterate the $17 billion debt target that we had was a good target. We had sound logic for how we developed that, and it was a sub-3x multiple on the Midstream and M&S EBITDA that can comfortably support that debt level. But I do agree with you that in a period of strong cash generation, like we are in right now, we have the opportunity to go lower than that. $16.5 billion at the end of the second quarter, I expect that to go down between now and the end of the year. And so on a net debt level, I think of a next sort of target is something around about $13.5 billion, which would equate to a $15 billion or thereabouts balance sheet debt number. I don't want to reset the target in absolute debt level terms just because we're also restricted by the -- or impacted by the maturity schedule of the debt we have out there. And what I'm not going to do is make uneconomic decisions to retire debt early. So we'll manage that as best we can. But from a net debt standpoint, I think in terms of this sort of $13.5 billion to $14 billion as an appropriate next target that is certainly achievable based on the kind of environment that we're looking at right now. Mark Lashier: Yes, Doug, your second question, I think that I'd take you back to 2022, we made some pretty aggressive commitments to deliver returns to shareholders. We set our 50% target, but we also committed to dramatically improve Refining performance to roll up DCP and create a wellhead to market presence and to improve Refining, grow Refining, grow Midstream, all of those things required us to use the balance sheet as a tool along with asset sales. And if you look at what we did quite effectively over that time frame, it really positioned us to excel today when the macro is favorable. And so the payoff is that we're going to be able to lean into both share repurchases and debt reduction. And the share repurchases will allow us to keep pace with our dividend increases even more dramatically. So we'll be taking a close look at that and having conversations with our Board how best to go forward there. Douglas George Blyth Leggate: Does anyone would think you were an oil major, Mark? Mark Lashier: Thank you, Doug. Operator: Your next question comes from the line of Manav Gupta from UBS. Manav Gupta: Congrats on a strong quarter. I was wondering if I could do some quick maths with you. Your guidance for year-end run rate Midstream EBITDA is about $4.5 billion for 2027 year-end. If you take out the tax and interest expenses, it's about $3.3 billion in free cash that, that business generates. Now that number strikes us because that's exactly your dividend burden plus your sustaining CapEx. So what I'm trying to understand is, once you are at this $4.5 billion run rate EBITDA, can your Midstream fully support your sustaining CapEx for the full company and the dividend burden? And what I'm trying to get to is if that grows at like mid-single digits, the Midstream business from these projects that you're announcing, would that mean that Midstream could then support like a 4% to 5% dividend growth just on its own? If you could talk about some of those dynamics. Mark Lashier: Manav, first of all, you're quite good at math, and we appreciate you doing that for everyone. You're absolutely right. That's why we like the Midstream business. We think of the Midstream business as the foundation under our fortress of the rest of our portfolio that Midstream along with Marketing and Specialties provides that consistent cash generation to cover the sustaining capital and the dividends. And today, a significant portion of our interest expense, and we see that only getting better. And absolutely, as you look forward, that will contribute to our ability to drive that competitive growing and sustainable dividend. Manav Gupta: Perfect. My quick follow-up here is your partner was indicating that you are very close to the FID of Western Gateway. So I wanted to understand the benefits of that project, if you could reiterate? And should we expect FID sooner than later because it does add in a big way to your Midstream backlog when it does FID? Donald Baldridge: Manav, this is Don. I appreciate the Western Gateway question. We do expect that we would be able to FID the Western Gateway project here in a month or so. We are finalizing the definitive documents and finishing up the details around scope and ensuring we have a solid project execution plan. So with a summer FID, what we would expect is to be able to deliver reliable, secure fuel from the Mid-Continent to the Western U.S. by the latter part of 2029. We think that's a tremendous benefit to the market in the Western U.S., where the need for reliable, secure supply coming from the Mid-Continent of the U.S. will be a benefit. It's a great addition to the market. It will help the Mid-Continent set up as well. So I think as we've talked about, it's the right project at the right time. It will generate the right returns for Phillips 66. So very excited to advance the project and looking forward to its completion. Operator: Your next question comes from the line of Justin Jenkins from Raymond James. Justin Jenkins: I'd like to start maybe on the line of Steve's first question on Refining. Obviously, the macro has been incredibly favorable, but you've seen pretty solid capture rate momentum for a few quarters now. Mark, you touched on some of the internal drivers of that in your first answer, but how much more running room do we have with both self-help and maybe some quick hit projects in Refining to drive even more momentum here? Mark Lashier: Yes. Rich has a long list of self-help and quick hits. We're looking for high-return, quick-payout projects, but he can run through that with you. Richard Harbison: Justin, thanks for the question. And we've obviously been on a journey here for a couple of years on this particular subject. And that's really around growing our ability to capture the marketplace and be flexible in the marketplace and also controlling what we can control. That's the other part of this. So we've been keenly focused on molecule management inside of the fence. And then maybe after this, I'll turn it over to Brian a little bit, and he can talk about outside of the fence parts that we're doing to stabilize and lock in a high market capture rate for the assets. Inside the fence, we've done a series of actions. One, one is we've taken the time to evaluate every key process unit we have and look for opportunities to better manage the molecules inside of those. And that process has been completed. It was a very detailed exercise, and it has come up with a number of good opportunities that we have implemented or will be continuing to implement, which will improve the molecule management across the system. The other thing we've done as well is we've increased our -- restructured our organization. And the purpose of the restructure was really to focus key parts of the organization on key success points inside the operation of the plant and avoid distractions and really just focus that organization on achieving world-class operations. And then, of course, as you indicated, we've done a number of small capital projects as well. And these projects have very high returns on a very low capital base. And maybe just a couple of those, I'll rattle off here, and there's many of them. So I won't be able to touch on all of them, but one project we've got active right now, and it's due to start up next year is a low sulfur gasoline project at the Humber facility. And that's very timely actually for us as we've also picked up the Prax assets there, which provide great logistics for us, enhanced logistics to reach the inner markets of the U.K. and the London market. So the timing of those 2 asset purchase as well as the project is very good. We see some opportunities at the Ferndale facility as well. There's a project to increase jet production. It's a 2-phase project. We'll actually get first phase done this year. Second phase will finish up next year. And once that second phase is finished up, that will actually produce about 12,000 barrels a day of jet fuel out of the Ferndale facility. And Ferndale is also producing CARB gasoline as well. So it's become a nice point for us to pick up supply to bring into the California market from the West Coast, supported by a number of activities that Brian is doing. And maybe that's a good bridge over to Brian here, and you can talk about outside of the fence, what we're doing to harden the capture rate. Brian Mandell: Sure. Justin, maybe you've given me a chance to talk about our value chain optimization team because that's a core team that kind of looks at opportunities to drive market capture. They maximize profitability across regions, across segments and across our integrated value chains as opposed to just looking at individual assets. And we were an early adopter of the VCO model, and we continue to strengthen the team. And they use data-driven decision-making, clear accountability and look for execution to drive this kind of market capture. And so I'll just give you some examples of kind of what the team has been working on and some of the things they've been doing. A relentless focus on lowering feedstock costs to improve market capture, including building a leading position in advantaged crudes, such as Canadian crude, PMI fuel oil and now becoming the third largest buyer of Venezuelan crude worldwide. They've utilized our marine time charter fleet in conjunction with the Jones Act waiver to substitute foreign crudes with WTI-based crudes at our Bayway Refinery and that helped mitigate the impact of Middle East conflict. And then while continuing to maintain strong crude utilization, VCO also has strengthened integration across intermediate feedstock activity and refinery execution, enabling us higher confidence decisions to optimize intermediate purchases and drove record high secondary unit utilization in 2Q. And then finally, the team increased along with our refinery brethren, increased the distillate production by approximately 35,000 barrels a day in Q2. So all these examples demonstrate VCO's ability to translate market opportunities into commercial, operational and financial results. Operator: Your next question comes from the line of Arun Jayaram from JPMorgan Securities LLC. Arun Jayaram: I wanted to see if we could get a little bit of an update on your 2027 strategic priorities. You guys highlighted thoughts on shareholder returns and the balance sheet. But I wanted to see if you could maybe update us on your goal to reduce your operating costs by $500 million as well as the $1 billion growth in mid-cycle Midstream and Chemicals earnings power. Richard Harbison: This is Rich. I'll start with the Refining part of the 2027 goal. And that goal in Refining is to target an annualized $5.50 a barrel operating cost ex turnarounds. And as you can see in the second quarter here, we came in at $5.57, pretty close, pretty striking -- within striking range of the $5.50 number. But the annualized number is really what we're targeting, and that's what we want to -- our goal is to achieve next year. So with that, what are we doing to achieve that and hit that annual goal. And this will incorporate the volume impacts associated with turnarounds and all the seasonal changes and still achieve the $5.50 assuming a $3 MMBtu of Henry Hub price. So the project -- the organization is working on over 200 initiatives, targeting operating expense reduction. And these are really focused in a couple of areas. One is energy efficiency. And I'm often asked, "Well, give me an example of that." And the 2 examples that come to mind here that I recently saw were at our Bayway facility. We operate very large boilers there, especially associated with the FCC. And they've come up with a unique process to clean the tubes and make the boiler much more efficient through the run while it's online. And the second one is a heat recovery project, a nice project for Ferndale Refinery. Each of those 2 projects reduced operating expense by over $1 million a year independent of each other, right? So these are fantastic projects that the organization has been coming up with and working and executing. We're also trying to simplify our work processes out there and eliminate waste and other things that we got. And one of the key projects there that comes to mind is the acid consumption project at the Wood River refinery. And that, like those previous 2 I mentioned, also reduces well over $1 million from operating expense. So we have 200 of these projects we're working throughout the system to drive cost out. The other thing I'll mention, and this is, I think, helpful is we're an organization that is full of data. And the AI revolution here has really opened up our ability to analyze this data and look for trends. So we're actively engaged in doing that as well. And that's also bringing a lot of opportunities to light that I don't know that we otherwise would have seen because of the data -- the fog of too much data almost. Of course, on the other side of that equation, you got to run well. And having your equipment running reliably and assure it's ready to run, we're keenly focused on that as well. And then Brian's group is working hard to support filling up the downstream units that have available capacity to them and really working towards that, increasing the total process input for the site. So what I see in summary is that $5.50 is well within range and I fully expect us to achieve that goal next year. And those cost improvements that we are driving for our stock owners, these are structural. They're not going to work their way back into the system. There's structural changes that we're doing, and we're not done yet with this. Donald Baldridge: Arun, this is Don Baldridge. I'll take the $1 billion growth in Midstream and Chemicals that you asked. And really, we split that into 2 parts, 50-50, if you will. The first is the $500 million growth in Midstream. That's really their $4.5 billion run rate target by the end of '27. The 2 things I'd highlight there is the -- first, the execution on our large expansion projects. And then second is the successful optimization efforts that we're having around the footprint. First, the large expansion projects that we've announced already, like the Iron Mesa gas plant and our Coastal Bend NGL pipeline expansion. They remain on time and on budget and will be meaningful contributors in 2027 and allow us to meaningfully grow our earnings. But I'd also highlight the second one, which is just the execution on the smaller optimization opportunities around our footprint where we are continuing to see how we can grow our capacity in a very capital efficient way. You saw that in this quarter with our growth of record NGL fractionation, record NGL exports. Our operations teams continue to find ways to grow the capacity very capital efficiently and the commercial team readily fills it. So that's the strong team execution that's happening around Midstream. That gives me a lot of confidence in not only hitting our 2027 earnings growth target, but also just the growth rate beyond that. Within the Chemicals, that's really our CPChem business. And that's even a simpler story. We've got 2 large world-scale crackers that will meaningfully come online and contribute in 2027, and that's the predominant growth for that $500 million on the Chemical side. Arun Jayaram: Great. And my follow-up, I was wondering how we should think about, obviously, really good results in Refining. But how does this quarter's Refining, even Midstream strength, how does that influence how you think about the mid-cycle earnings power of each of those segments? Mark Lashier: I would say at a high level that given what's going on in the world, that there's some resilience in Refining. The macro looks strong. Even if peace broke out tomorrow, we saw strengthening fundamentals before the Iran conflict kicked in. And so we think that it will even be stronger coming out of that conflict. And so whatever your view of mid-cycle was, we think it will be stronger going forward, and we think that it will be persistent going forward. So we think it's very constructive and has some legs under Refining. Midstream has been very consistent. And I think that, that's the beauty of the Midstream business. Like I said earlier is that it's that solid rock foundation under the rest of our businesses. And the growth there will be our organic growth and delivering on those projects and enhancing that. Operator: Your next question comes from the line of Theresa Chen from Barclays. Theresa Chen: I appreciate some of the comments related to long-term structural drivers for the Refining macro. I wanted to ask near term, are we -- as we move through the remainder of summer driving season into the fall, which factors do you view as the most important upside or downside risk to crack spreads over the next quarter? Is it demand elasticity? Is it Chinese exports? And maybe putting a finer point on the capture discussion, what are your expectations at this point for third quarter capture? Brian Mandell: Theresa, it's Brian. Maybe I'll start with just a list of things that give us a lot of confidence, list of tailwinds for kind of higher cracks going into Q3 and carrying on through the rest of next year. Refining fundamentals, as Mark talked about, are very tight and getting tighter with the issues in Russia and the Mid East. We have 7 million barrels a day of refineries down in Asia and the Mid East and another 1.4 million barrels down in Russia. And the refineries, depending on the damage and the ability to get spare parts, are going to take a good long time to get back online. We have low product inventories in the U.S. and around the world. Chinese exports of products have been low, half of what they have been over the last 2 years. And the Chinese have shown discipline over the last number of years. We've seen -- we'll see the need to refill SPRs over time, and there will likely be new SPRs that develop to protect against these type of geopolitical problems. We're also forecasting high turnarounds in '27 and '28 and likely more unplanned turnarounds in the near term as refiners push work out to take advantage of the higher margins. You have the typical inflationary pressures on operating expenses and CapEx. We have high RIN prices. We have elevated our freight rates. And the marginal refining barrels in Europe where structural costs are higher, carbon is higher, electricity is higher, labor is higher, all much higher than the U.S. So with the opening of the Strait, we also see crude supply will exceed product supply, and that drives stronger margins, too. And the final point that we've been talking about for a while is net refinery additions are lower over the coming years and importantly, lower-than-expected demand increases. So this really sets us up for stronger margins through Q3 and the rest of perhaps next year. Theresa Chen: Super helpful. With one of the large Canadian infrastructure operators proposing a project that would shift incremental WCS volumes from the Mid-Con to the Gulf Coast, potentially tightening heavy crude differentials in the Mid-Con while improving availability in the Gulf Coast, how would you expect that to affect the capture rates and Refining profitability across your system? And more broadly, how do you see WCS egress evolving over time? And what do you view as the most likely pathways for incremental barrels to reach market? Brian Mandell: Well, our general view on WCS is that differentials are going to wider structurally over time, driven primarily by growing heavy crude supply out of Canada and Venezuela. Canadian production, which has been offline from weather and turnarounds was back online mostly by the end of last month, and we're heading into a diluent blending season. Also Venezuelan imports into the U.S. are already up 300% since January, which should add downward pressure on heavy crude pricing over time. And then we expect the strong pull of U.S. barrels and higher freight rates and lightering costs to contribute to wider WTI/WCS differential as the inland heavy crude lags the export-driven strength of WTI and competes with Venezuelan barrels. But -- and I think once there's clarity on the movements from the Strait, we'll see increased supply of barrels moving into the market. Those will be primarily medium sours, but they'll also support wider heavy differentials. And just as a reminder to all of you on the phone, every dollar the WTI/WCS spread widens is an incremental $140 million impact to our annual EBITDA. Kevin Mitchell: Theresa, this is Kevin. In your question, you had asked about capture in the third quarter, and Brian went through a lot of factors that we see in terms of how this market is going to play out. But just specifically, as we think about capture rates, we've historically guided to about 95%, and we don't see any reason why that would be any different this year in terms of where we are -- in terms of what we see currently with regard to third quarter. Operator: Your next question comes from the line of Neil Mehta from Goldman Sachs. Neil Mehta: Just wanted your perspective first on Renewable diesel. Even if I was to normalize for margins closer to that $1.50 mid-cycle, you'd probably be above the $700 million that you guided to a while ago. And so just love your perspective on that business? And is there a new run rate of profitability at this level of utilization? And any perspectives on how we should be thinking about the modeling of it going forward? Mark Lashier: Yes, Neil, great question. I think that, first, it starts with the existential crisis that asset had a year ago when there was uncertainty around what the RVO would be, what any of the incentives to run that place would be. And the team there took it quite seriously. They readjusted their logistics opportunities. They cut costs, dramatically streamlined and they are operating extraordinarily well. So that really sets the base for what is possible. And Brian can talk about the fundamentals going forward. But when you look at the distillate macro, just that in its own right, provides another good, solid layer underlying the value of that asset. So Brian, you can talk about the other. Brian Mandell: Yes. I certainly agree with Mark. We had strong earnings in Q2, driven by credits and strong diesel margins, largely a function of the Iran war. Renewable diesel prices in RINs roughly doubled versus 2025 due to the Iranian situation. RINs remain an important driver to the segment's profitability. And there's ongoing regulatory policy risk, including the concern that foreign feedstock RIN generation will be cut in half after the end of next year. We also had a onetime help in Q2 of $100 million, primarily due to tariff refunds. As Mark mentioned, Rodeo ran above nameplate capacity with record utilization of 106%. And then our Renewables segment isn't just Rodeo. And outside of the Rodeo complex and within the segment, we had good performance from our U.K. and our Asian businesses in the quarter. And in the segment also, we had mark-to-market pretax gain of $47 million carried over from Q1. So we continue to engage with state and federal administrations to ensure the long-term viability of that facility. And just one point of clarity for modelers. We've updated our Renewable diesel indicator beginning this month to reflect the new 2026 45Z guidelines released in June to include $0.40 per gallon of PTC benefit in the indicator. Neil Mehta: That's great. So from one hard market to another, I just wanted your perspective on China. It is probably something that we have really tough time getting visibility into as an investment community. And we know runs are down a lot from the beginning of the year in China, and there's some talk of the quotas growing back. And so just your perspective on that in the context of your bullish refining view. Does this represent a risk? Brian Mandell: Yes. I think as you said, it is tough to get information about China. We have seen their refineries about 2.5 million barrels a day of refinery runs offline. They're buying about 4 million barrels of crude -- less crude than they had been 12 million barrels of imported crude to about 8 million barrels. Their exported products are now about 400,000 barrels a day from 800,000 barrels a day. So it is possible that they could increase the exports of products. They haven't been doing that in a number of years past. They've been pretty disciplined, but it's hard to tell what they'll do going forward. So I think our guess will be, just like yours, do they want to help manage the worldwide product shortage or not. Mark Lashier: And I would add to that, you have to recall that China is coming off of a materially lower crude pricing basis than the rest of the world because they were buying huge quantities of deeply discounted Venezuelan crude, Iranian crude, Russian crude, anything they could get their hands on. That's gone now. So that changes their perspective on their ability to supply products to the rest of the world, both, I think, on a refining basis as well as petrochemicals. And our petrochemical folks are seeing them already respond to higher cost basis in petrochemicals and raising the prices of polyethylene, for instance. So they are very price sensitive, and they will respond to price signals. And I think that their price basis is much, much higher in crude than the impact the rest of the world has seen post war. Operator: Your next question comes from the line of Matthew Blair from TPH. Matthew Lovseth Blair: I was hoping you could talk about the appeal and refining environment in the Atlantic Basin. If I look at your July indicators, Atlantic Basin was up the most quarter-over-quarter. And of course, you have more exposure than a lot of your peers to the region. Is Russian downtime the main drivers here? Any other factors that you'd call out? And is this something that you'll be able to capture in Q3? Richard Harbison: Yes. I'll start with the answer to that, Matt, and then turn it over to Brian. This is Rich here. When we looked at the Atlantic Basin, Q1 capture rate was pretty high at 182%. And then Q2 was on the other end of that spectrum at 79%. I really think the way you have to look at this with all the noise in the system over those 2 quarters is you got to look at it on a first half basis. And the first half capture rate was just well over -- not well over, but 112% on average. So it's a decent capture rate. And so I think the assets are performing well. And that also includes the effects of the Humber turnaround during that time frame. And when we look at that first half annual average of 112%, we did go back and look at it from '23 to 2025, and we averaged about 96% in this. So I would say the assets are running well. They've been operating reliably. And it's been pretty impressive to increase that capture rate with the strong backwardation in the marketplace. And maybe that's a good bridge over to you, Brian, on the market. Brian Mandell: Yes. I think one of the things I'd say in Q3 is that backwardation has started to come off some. And certainly, from Q2, the historic crude differentials we saw in Q2 have come up as well. A lot of the crude that we buy for Bayway is Brent-based, so that will help in Q3. And as I mentioned, we were also moving barrels through the Jones Act of crude -- U.S. crude around to Bayway, too, and that helps also. So we'll continue to do that as well. Matthew Lovseth Blair: Sounds good. And then the $450 million mark-to-market impact in Q2, I think you might have said that Renewable Fuels was $47 million boost. Do you have the same breakout for Refining and M&S? Kevin Mitchell: Yes. Matt, it's Kevin. So that $450 million, I'll give you the breakdown by segment. So Refining was about $240 million of that. And just -- I think as everyone knows, but just to emphasize, that is built into the indicator and so not a variance from a capture standpoint. So $240 million Refining, Marketing and Specialties is about $160 million. And then Renewables is just shy of $50 million. And so you put those together, you get that $450 million total. Operator: Your next question comes from the line of Joe Laetsch from Morgan Stanley. Joseph Laetsch: So I wanted to follow up on the Chemical side. Can you just talk about what you're seeing in the market currently? It looked like margins have come in a bit from the peak earlier this year. Can you just talk to how you're thinking about the macro set up? And then it also looked like utilization rates during Q2 came in above guidance as well. Mark Lashier: Yes. Thanks, Joe. Yes, certainly, Chemicals saw a surge during the height of the crisis around the Straits of Hormuz. And they've come back down a bit with peace breaking out and that being factored in a bit. There's still considerable oversupply in the market that will come back into play once things normalize around the Straits. We think that will take some time. But even when that happens, we see a higher floor kicking in because, as I mentioned earlier, China is -- has lost its access to deeply discounted crude, so they're going to have to reset where they are from that perspective. And we see that impact of about $0.07 per pound over where we saw the kind of the bottom of the cycle in 2025 at about $0.07 per pound. Put that in perspective, at the bottom of the cycle, our portion of CPChem's EBITDA was about $845 million at that $0.07 per pound. So they still have relatively robust performance. And so you'll see considerable upside even just resetting at that higher floor going forward. And so we see things relatively more stable, though they'll be below mid-cycle. They shot above mid-cycle temporarily. They'll be coming back down to something around $0.14, $0.15 a pound. Joseph Laetsch: Mark, that's helpful. And then I wanted to ask just on M&S. So this is one of the segments that came in a bit above our expectations during the quarter. I think a falling crude environment and the strong summer driving season probably helped the volumes are up a little bit year-over-year. Could you just unpack some of the drivers in 2Q and talk about the outlook for the back half of the year as well? Brian Mandell: Yes. This is Brian. I'll give you kind of a chat on M&S. One of the things that helped us was just margins in the business were very, very strong. I think M&S is going to be also a function of spot prices. Whether spot prices are moving up or moving down, that also affects our business. We had some favorable regulatory credits in the quarter. And also our lubricants business, which we don't talk about all that much, benefited from stronger base oil spreads with roughly about 1/3 of the global Group 3 base oil production offline. So I just think going forward, the tailwinds are going to include a favorable market, particularly with the ongoing Iranian war and the RIN prices. We also see some regulatory upside in Q3 as well. Tailwinds, again, are the rising spot prices. Operator: Your next question comes from the line of Jason Gabelman from TD Cowen. Jason Gabelman: The NGL segment within Midstream has been pretty volatile over the past few quarters. So just wanted to level set where we are right now if 2Q kind of represented a normalized environment for that segment just given the moving parts with commodities moving higher, projects coming online? Any color would be helpful. Donald Baldridge: Thanks, Jason. This is Don. Yes, I think we're still hovering around in the Midstream segment around that $1 billion a quarter mark with some ups and downs depending on commodity prices and depending on just some volume variances. But largely, we're solid in that run rate. Certainly, first quarter, we were impacted from Winter Storm Fern that impacted volumes. We also saw impacts of shut-ins when we had really low negative prices in the Permian. That is largely a pass-through. We've got new pipelines coming -- that have come online. We're seeing positive prices in Waha. As a point of reference, our June Permian volumes on our gathering and processing were a record high. I think that's a testament to producers turning on more volumes and having comfort of continuing to drill and grow now that there's good egress out of Waha. So we're on track to hit that $4.5 billion by 2027. What gives me confidence of that is we've got these large capacity projects that are going to come online in 2027. And we already have a lot of that volume that we're processing with third parties or moving on third-party pipelines. So when Iron Mesa turns on, I expect us to be able to readily fill that capacity within the first part of 2027. And then those NGLs would obviously flow into our Coastal Bend pipeline expansion that comes online end of this year and fills that capacity up. So on track with hitting the targets and continue to see the growth trajectory from where we are today. Jason Gabelman: Great. My follow-up is just on the Marketing segment. And I think in the past when Rhine River levels have been low, the international Marketing business has done extremely well. There have been some changes in the portfolio. So wondering if you still retain that upside exposure given Rhine River levels are currently low. Mark Lashier: Because Germany is no longer short diesel, the Rhine impact is much smaller going forward. So you won't see that like we've seen in the past. Operator: Your final question comes from the line of Phillip Jungwirth from BMO. Phillip Jungwirth: Great. I was hoping you could talk about the Midstream portfolio and just current thoughts around optimizing here, whether it's divesting noncore assets or bolt-ons across core areas. And generally, do you see value in Midstream M&A? Or do you feel like with the organic projects you have like Zeus, Coastal Bend frac, which were announced intra-quarter plus Western Gateway are sufficient enough to drive competitive EBITDA growth beyond the $4.5 billion annualized run rate by year-end '27? Donald Baldridge: Thanks, Phillip. This is Don. And we are excited about the organic growth projects. We do think they are the best returns. The opportunity set that we have around the portfolio is dominated by the organic growth. We're seeing the customer response from a producer standpoint with volumes that are filling our system and enabling us to add capacity and grow that business. So it's a high bar when we think about M&A or bolt-ons. They have to be something that is highly strategic. It has to be of a bolt-on size that would be something that we could readily scale. Pinnacle was a great example. EPIC was a great example, where we could do something that was -- make our system more competitive as well as be able to scale it up quickly. But right now, we -- our focus is executing on the organic growth plan that we have in front of us. That's where we think the best opportunities are. In terms of the overall portfolio, we've always said that, hey, there's certainly some nonoperated Midstream assets that aren't necessarily core, but they're nice assets. If they're worth more to others than to us, we'd certainly consider that. But we don't have any predetermined divestiture targets, but we're always looking at ways to make the portfolio more competitive, more durable and drive the earnings profile that we like in Midstream. Phillip Jungwirth: Great. And then, Mark, you sounded excited about this in the script. So just wondering different ways Phillips is implementing new technologies or AI across the Refining business just as it relates to optimizing commercial operations, executing or predicting turnarounds or lowering operating costs. And if it is more broad-based across the other businesses, I'd also love to hear about that also. Mark Lashier: Yes, Phillip, it is broad-based. We've implemented an AI program that really is normalizing the use of AI inside the company. We have people focused on use cases and then extrapolating those use cases across the organization. I think it's pretty exciting to see what's going on out in the front lines with the engineers out of the front lines using AI to -- as Rich alluded to it, capturing the data and extracting the data and getting solutions out deployed faster than we've ever thought about being able to do before. So it enhances the performance of the assets in almost real time. And to see their intellectual capacity just augmented by their use of AI to drive performance that they would normally drive over time, but it may take months or years to get to the same place they're getting to in days and weeks. And that is being spread across every part of the organization. And we've been at it for a long time with machine learning to enhance maintenance, to enhance our ability to shorten our turnarounds and increase the duration between turnarounds, but we're just building on that with really this human-centered approach to AI deployment. Operator: This concludes the question-and-answer session. I will now turn the call back to Sean Maher for closing remarks. Sean Maher: Thank you for your interest in Phillips 66. If you have any questions or feedback after today's call, please reach out to Kirk or myself. Thank you. Have a great day. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Phillips 66, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Phillips 66 wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Phillips 66. The Motley Fool has a disclosure policy. Phillips 66 (PSX) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Ann M. Kluppel, SVP and controller, sold 7,834 shares of Phillips 66 (NYSE:PSX) at $210.78 per share, according to an SEC Form 4 filing. Transaction value based on SEC Form 4 weighted average sale price ($210.78); post-transaction value based on the August 10 market close ($215.52). What was the structural nature of this transaction?The transaction was an exercise-and-sell event where Ann M. Kluppel exercised 7,834 stock options at strike prices of $89.05 and $100.435 per share. These shares were then sold in the open market at a weighted average price of $210.78, with execution occurring across two trading days. What is the insider's remaining equity exposure in the company?Following these sales, the SVP and Controller retains 25,401 shares held directly and 3,638 shares held indirectly through the Phillips 66 Savings Plan. The insider also continues to hold derivative securities in the form of stock options. What financial metrics define the company at the time of these transactions?Phillips 66, a Houston-based energy company with a market capitalization of $86.4 billion, reported trailing twelve-month revenue of $153.6 billion and net income of $7.1 billion. The stock was priced at $215.52 at the August 10 market close. Phillips 66 operates a diversified energy platform spanning midstream infrastructure, chemical manufacturing, petroleum refining, and marketing & specialties, generating revenue across the full value chain from crude oil transportation to refined product distribution. The company generates earnings through four primary business segments: Midstream operations managing energy commodity transportation and storage; Chemicals producing specialty chemical products; Refining converting crude oil into petroleum products; and Marketing & Specialties distributing refined products and specialty fuels to end markets. The company serves a broad customer base, including petroleum refineries, petrochemical manufacturers, transportation fuel consumers, and industrial end-users requiring specialty chemical products and energy logistics solutions. Phillips 66 is a diversified energy company headquartered in Houston, with an $86.4 billion market capitalization. The company operates an integrated business model spanning midstream logistics, chemical manufacturing, refining, and product marketing, generating $153.6 billion in TTM revenue with $7.1 billion in net income. As a vertically integrated energy infrastructure operator, Phillips 66 maintains competitive advantages through its extensive pipeline and terminal network, refining capacity, and downstream distribution capabilities. Kluppel exercised options struck around $89 and $100 against a stock north of $210, so this was a controller converting years-old equity at more than double the grant price, the kind of well-earned cash-in that follows a strong run rather than any warning. She kept more than 25,000 shares directly, so the position that remains dwarfs what she sold across the two days.And to be clear, the run behind it was extraordinary. Phillips 66 posted second-quarter net income of $3.8 billion, up from $877 million a year earlier, as refining margins jumped to $24 a barrel and the company ran its plants at 96% of capacity. It cut total debt by $6.6 billion in the quarter and lifted its buyback authorization by $10 billion. Of course, refining is deeply cyclical, and margins this fat rarely hold, so much of this quarter's power came from conditions that tend to swing back.Ultimately, that cyclicality is the real thing to weigh, not a controller's option exercise, because the same refining spreads that drove a fivefold jump in profit can compress just as fast, and this quarter almost certainly caught them near a high. Before you buy stock in Phillips 66, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Phillips 66 wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Phillips 66. The Motley Fool has a disclosure policy. A Phillips 66 Insider Cashed In Options After a Blowout Quarter. Here's What to Know was originally published by The Motley Fool

Interested in Phillips 66? Here are five stocks we like better. Phillips 66 reported a strong second quarter, with adjusted earnings of $3.8 billion, or $9.41 per share, supported by higher refining margins, stronger midstream performance, marketing margins and renewable-fuel credits. The company generated $4.3 billion in operating cash flow excluding working capital and returned $887 million to shareholders. Management expects net debt to fall below $16 billion by year-end 2026 and plans to increase share repurchases in the second half. Phillips 66 remains focused on operational improvements and midstream expansion, targeting a $4.5 billion midstream EBITDA run rate by the end of 2027 while advancing projects such as Western Gateway and Iron Mesa. Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Phillips 66 (NYSE:PSX) reported second-quarter 2026 adjusted earnings of $3.8 billion, or $9.41 per share, as higher refining margins, midstream volumes, marketing margins and renewable fuel credits lifted results. Reported earnings were also $3.8 billion, or $9.55 per share. Chief Financial Officer Kevin Mitchell said operating cash flow excluding working capital totaled $4.3 billion during the quarter, while capital spending was $726 million. The company returned $887 million to shareholders, including $379 million in share repurchases and $508 million in dividends. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Marathon Petroleum Is Back, But Cycles Still Matter “Our system is operating well. Our assets are well-positioned, and the market environment is constructive,” Chairman and CEO Mark Lashier said. He said the company’s transformation has made it leaner, more agile and more focused on operating improvement, capital discipline and shareholder returns. Phillips 66 ended the second quarter with total debt of $20.6 billion and net debt of $16.5 billion. Mitchell said the company expects net debt to fall below $16 billion by the end of 2026 using current consensus estimates. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High 3 Oil Refiners Built to Cash In on Higher Crack Spreads The company has targeted reducing total debt to $17 billion by year-end 2027 and returning more than 50% of net operating cash flow, excluding working capital, to shareholders. Mitchell said Phillips 66 expects to meet the debt goal ahead of schedule and plans to increase share repurchases in the second half of the year. During the quarter, the company repaid all outstanding commercial paper and $1 billion of its March 2027 term loan. The remaining $1.25 billion on that loan was repaid in July. Phillips 66 ended the quarter with $4.1 billion in cash and $6.4 billion in committed capacity, for total committed liquidity of $10.5 billion. → No Hangover: Revisiting Microsoft One Week After Earnings In response to an analyst question, Mitchell said the company sees a net-debt level of roughly $13.5 billion to $14 billion as a potential next target, equivalent to about $15 billion of balance-sheet debt. He said management would not make uneconomic decisions to retire debt early because of the company’s debt maturity schedule. Refining earnings increased primarily because of stronger realized margins as market crack spreads rose. Lashier said the current refining environment differs from 2022, when a post-pandemic demand surge coincided with maintenance catch-up across the industry. He characterized current conditions as more of a supply shock, citing offline refining capacity and low inventories. Phillips 66 captured 98% of its market indicator in the second quarter, supported by its commercial organization. For the third quarter, Mitchell said the company continues to expect refining capture of approximately 95%, in line with its historical guidance. Executive Vice President of Refining Rich Harbison said the company is pursuing more than 200 operating-expense reduction initiatives and expects to achieve its target of $5.50 per barrel in annualized refining operating costs excluding turnarounds next year. Second-quarter operating costs were $5.57 per barrel. Harbison highlighted projects at the Humber and Ferndale refineries. A low-sulfur gasoline project at Humber is expected to start next year, while a two-phase jet fuel project at Ferndale is expected to lift jet production to about 12,000 barrels per day after the second phase is completed next year. Executive Vice President of Marketing, Commercial and Renewable Fuels Brian Mandell said commercial operations used the company’s physical footprint and logistics network to optimize feedstock and product flows. He said the company has expanded its time-charter freight fleet fourfold over the past two years, supporting roughly 40% of its asset-backed demand while building a third-party business. Mandell also said Phillips 66 has received about 20% of Jones Act waivers issued since the current waiver took effect in March. He said the waivers, combined with the company’s freight position, improved its ability to optimize feedstock and product movements across refining, marketing and midstream operations. Midstream results rose on higher margins and volumes, largely reflecting the absence of first-quarter Winter Storm Fern impacts. Lashier said Phillips 66 has increased fractionation capacity to more than 1 million barrels per day over the past two years and achieved average fractionation utilization above 100%. The company also recorded LPG export volumes during the quarter. Executive Vice President of Midstream and Chemicals Don Baldridge said the company remains on track to reach a $4.5 billion midstream EBITDA run rate by the end of 2027. He cited large expansion projects, including the Iron Mesa gas plant and the Coastal Bend NGL Pipeline Expansion, as well as lower-capital optimization opportunities throughout the system. Baldridge said Phillips 66 expects to make a final investment decision on its Western Gateway project within about a month. If approved during the summer, the project is expected to begin supplying fuel from the Mid-Continent to the western U.S. in the latter part of 2029. Management said it is prioritizing organic midstream projects over acquisitions. Baldridge said potential bolt-on deals would need to be highly strategic and readily scalable, while the company would consider selling non-operated assets if they were worth more to other owners. Chemicals earnings increased as polyethylene sales prices and margins rose. Lashier said market conditions strengthened during the crisis around the Strait of Hormuz before easing, and he expects chemical margins to settle around $0.14 to $0.15 per pound, below mid-cycle levels. He also said two world-scale crackers are expected to begin contributing materially in 2027. Renewable Fuels results improved on higher regulatory credit pricing and production. Mandell said the Rodeo renewable diesel facility operated at a record 106% utilization rate during the quarter and ran above nameplate capacity. He said the segment also benefited from a $47 million pre-tax mark-to-market gain carried over from the first quarter and approximately $100 million of one-time benefits, primarily tariff refunds. Mandell said Phillips 66 updated its renewable diesel indicator to include a $0.40-per-gallon production tax credit benefit under 2026 45Z guidelines released in June. He added that regulatory-policy risks remain, including possible changes to renewable identification number generation for foreign feedstocks after next year. For the third quarter, Phillips 66 expects global olefins and polyolefins utilization in the low 90% range and worldwide crude utilization in the mid-90% range. The company forecasts turnaround expenses of $100 million to $120 million and Corporate and Other costs of $325 million to $350 million. Phillips 66 (NYSE: PSX) is an independent energy manufacturing and logistics company engaged primarily in refining, midstream transportation, marketing and chemicals. The company processes crude oil into transportation fuels, lubricants and other petroleum products, operates pipeline and storage infrastructure, and participates in petrochemical production through strategic investments. Phillips 66 serves commercial, industrial and retail customers and positions its operations across the value chain of the downstream energy sector. The company's principal activities include refining crude oil into gasoline, diesel, jet fuel and feedstocks for petrochemical production; operating midstream assets such as pipelines, terminals and fractionators that move and store crude oil and natural gas liquids; and marketing and distributing fuels and lubricants through wholesale and retail channels. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Phillips 66 Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Adjusted Earnings: $3.8 billion in the second quarter of 2026. Reported Earnings: $3.8 billion in the second quarter of 2026. Adjusted Earnings Per Share: $9.41. Reported Earnings Per Share: $9.55. Operating Cash Flow (excluding working capital): $4.3 billion. Capital Spending: $726 million for the quarter. Share Repurchases: $379 million returned to shareholders. Dividend Payments: $508 million returned to shareholders. Total Debt: $20.6 billion at the end of the quarter. Net Debt: $16.5 billion at the end of the quarter. Total Committed Liquidity: $10.5 billion, including $4.1 billion in cash. Midstream: Results increased due to higher margins and volumes, aided by the absence of Winter Storm Fern impacts. Chemicals: Results increased due to higher polyethylene margins from higher sales prices. Refining: Results increased due to higher realized margins from higher market crack spreads. Marketing and Specialties: Results increased due to higher global marketing margins. Renewable Fuels: Results increased due to higher regulatory credits from higher pricing and production. Mark-to-Market Impacts: Approximately $450 million of favorable impacts in Refining, Marketing & Specialties, and Renewable Fuels segments. Warning! GuruFocus has detected 9 Warning Signs with PSX. Is PSX fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Phillips 66 (NYSE:PSX) delivered strong Q2 2026 results with adjusted earnings of $3.8 billion and EPS of $9.41, driven by robust refining margins and operational excellence. The company is ahead of schedule on its debt reduction target, ending Q2 with net debt of $16.5 billion and expecting to reach ~$13.5 billion by year-end, while maintaining a strong liquidity position of $10.5 billion. Midstream achieved record LPG export volumes and over 100% frac utilization, with growth projects like Iron Mesa and Coastal Bend pipeline on track to support the $4.5 billion EBITDA run-rate target by 2027. Refining captured 98% of its market indicator in Q2, supported by commercial optimization, increased distillate production, and cost reduction initiatives targeting $5.50 per barrel operating costs. Renewables ran above nameplate capacity at 106% utilization, benefiting from higher regulatory credits and strong diesel margins, with ongoing engagement to ensure long-term viability. The company returned $887 million to shareholders in Q2, including $379 million in buybacks, and plans to increase repurchases in H2 2026 while maintaining a competitive dividend. Chemicals (CPChem) is positioned for growth with two new world-scale crackers coming online in 2027, and the company sees a higher floor for polyethylene margins due to China's loss of discounted crude access. Commercial team leveraged time charter fleet and Jones Act waivers to optimize feedstock flows, enhancing capture rates and mitigating geopolitical risks. Management expects a constructive refining macro environment with tight supply, low inventories, and reduced Chinese exports, supporting sustained strong margins. AI and data-driven initiatives are being deployed across operations to improve efficiency, reduce costs, and enhance decision-making, with over 200 cost-reduction projects in refining. Q2 results included $450 million in favorable mark-to-market gains, which may not be repeatable and could distort underlying earnings. Refining capture rates in the Atlantic Basin were volatile, with Q2 at 79% versus Q1's 182%, though the first-half average was 112%. Renewable fuels segment faces regulatory policy risk, including potential cuts to foreign feedstock RIN generation after 2025, which could impact profitability. Chemicals margins have come off their peak and are expected to remain below mid-cycle, with oversupply in the market likely to persist. The company's debt reduction target is being achieved partly due to strong cash flow, but management is cautious about making uneconomic early debt retirements, which could limit flexibility. Midstream NGL segment remains volatile due to commodity price swings and weather-related disruptions, as seen in Q1's Winter Storm Fern impact. Marketing and Specialties results were boosted by favorable regulatory credits and strong base oil spreads, which may not be sustainable in the long term. The company faces potential headwinds from rising RIN prices, elevated freight rates, and inflationary pressures on operating costs and CapEx. Geopolitical risks, such as the Iran conflict and Russian refinery outages, create uncertainty in supply chains and could impact operations. While the macro environment is favorable, management acknowledges that normalization of refining margins could take longer than expected, but risks remain from potential demand elasticity and Chinese export increases. Q: Mark, can you discuss the current refining environment versus 2022 and how Phillips 66 is differentially positioned?A: Mark Lashier (Chairman and CEO) explained that unlike the 2022 demand surge post-COVID, the current environment is driven by a supply shock with significant refining capacity offline and low inventories, which will take longer to normalize. He highlighted that Phillips 66 is a much different company than in 2022, being leaner, more agile, and focused on continuous improvement. He cited dramatic improvements in Refining performance, streamlined portfolio, added capacity from WRB, and over $1 per barrel of cost cuts, positioning the company to execute successfully in any environment. Q: Kevin, with net debt already below your $17 billion target, where do you see the debt target going, and how should we think about the dividend strategy?A: Kevin Mitchell (CFO) stated that while the $17 billion target was sound, strong cash generation allows them to go lower, targeting a net debt level of around $13.5 billion to $14 billion. Mark Lashier added that the payoff from past investments allows them to lean into both share repurchases and debt reduction, which will support even more dramatic dividend increases, with ongoing Board discussions on the best path forward. Q: Can you provide an update on your 2027 strategic priorities, specifically the $500 million operating cost reduction goal and the $1 billion growth in Midstream and Chemicals earnings power?A: Richard Harbison (EVP of Refining) detailed that the Refining goal is an annualized $5.50 per barrel operating cost, with Q2 coming in at $5.57. Over 200 initiatives are focused on energy efficiency and process simplification, with structural cost improvements expected to be permanent. Donald Baldridge (EVP of Midstream and Chemicals) confirmed the $1 billion growth target is split 50/50, with Midstream growth driven by projects like Iron Mesa and Coastal Bend, and Chemicals growth driven by two new world-scale crackers at CPChem coming online in 2027. Q: How should we think about the near-term upside and downside risks to crack spreads, and what are your expectations for Q3 capture?A: Brian Mandell (EVP of Marketing and Commercial) listed several tailwinds for higher cracks, including tight refining fundamentals, low product inventories, disciplined Chinese exports, and high turnaround forecasts. Kevin Mitchell added that they continue to guide to a 95% capture rate for Q3, seeing no reason for a change. Q: Can you provide an update on the Western Gateway project and its expected benefits?A: Donald Baldridge (EVP of Midstream and Chemicals) stated they expect to reach FID on the Western Gateway project within a month, with completion expected by late 2029. The project will deliver reliable fuel from the Mid-Continent to the Western US, benefiting the market and generating the right returns for Phillips 66. Q: How much more running room is there for self-help and quick-hit projects in Refining to drive momentum?A: Richard Harbison (EVP of Refining) detailed a long list of high-return, quick-payout projects, including a low sulfur gasoline project at Humber and a jet production increase at Ferndale. Brian Mandell added that the value chain optimization team is focused on lowering feedstock costs, utilizing the marine fleet and Jones Act waivers, and driving record secondary unit utilization to harden the capture rate. Q: Can you discuss the Renewable Fuels business, its current profitability, and the outlook?A: Mark Lashier (Chairman and CEO) noted the team has dramatically streamlined operations and improved reliability, running above nameplate capacity. Brian Mandell (EVP of Marketing and Commercial) highlighted strong Q2 earnings driven by credits and diesel margins, with RINs remaining an important driver. He noted a one-time $100 million benefit from tariff refunds and updated the renewable diesel indicator to reflect new 45Z guidelines. Q: What is your perspective on China's refining exports and does it represent a risk to your bullish refining view?A: Brian Mandell (EVP of Marketing and Commercial) noted China's refinery runs are down significantly and exports have halved, but it's hard to predict their future actions. Mark Lashier added that China has lost access to deeply discounted crude, changing their cost basis and perspective on supplying products to the rest of the world, making them more price-sensitive. Q: Can you discuss the Atlantic Basin refining environment and the Q2 capture rate?A: Richard Harbison (EVP of Refining) explained that Q1 capture was high at 182% and Q2 was low at 79%, but on a first-half basis, the capture rate averaged 112%, which is strong. Brian Mandell added that backwardation has started to come off, and Brent-based crude costs for Bayway will help in Q3. Q: Can you provide the breakdown of the $450 million mark-to-market impact by segment?A: Kevin Mitchell (CFO) provided the breakdown: Refining was approximately $240 million, Marketing & Specialties was approximately $160 million, and Renewables was just shy of $50 million, totaling the $450 million. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Phillips 66 (PSX) reported $52.04 billion in revenue for the quarter ended June 2026, representing a year-over-year increase of 55.3%. EPS of $9.41 for the same period compares to $2.38 a year ago. The reported revenue represents a surprise of +43.88% over the Zacks Consensus Estimate of $36.17 billion. With the consensus EPS estimate being $7.68, the EPS surprise was +22.53%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Phillips 66 performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Refining Margins - Western/Pacific (Per Barrel): $29.65 compared to the $19.93 average estimate based on four analysts. Refining Margins - Worldwide (Per Barrel): $24.08 compared to the $23.15 average estimate based on four analysts. Refining Margins - Atlantic Basin/Europe (Per Barrel): $14.44 versus $19.77 estimated by four analysts on average. Refining Margins - Gulf Coast (Per Barrel): $24.25 versus $22.42 estimated by four analysts on average. Refining Margins - Central Corridor (Per Barrel): $29.56 versus the four-analyst average estimate of $26.35. Chemicals - CPChem Externally Marketed Sales Volumes: 5,006.00 Mlbs versus 5,432.52 Mlbs estimated by three analysts on average. Refining operations - Central Corridor - Capacity utilization (percent): 101% compared to the 95.1% average estimate based on three analysts. Refining operations - Central Corridor - Crude oil processed: 800 thousands of barrels of oil compared to the 754.31 thousands of barrels of oil average estimate based on three analysts. Refining operations - Central Corridor - Crude oil capacity: 793 thousands of barrels of oil versus 793 thousands of barrels of oil estimated by three analysts on average. Revenues and Other Income- Sales and other operating revenues: $51 billion versus $35.95 billion estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +53.1% change. Revenues and Other Income- Equity in earnings of affiliates: $635 million versus $386.78 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +315% change. Total sales and other operating revenues- Renewable Fuels: $2.56 billion versus the two-analyst average estimate of $855.36 million. The reported number represents a year-over-year change of +58.7%. View all Key Company Metrics for Phillips 66 here>>> Shares of Phillips 66 have returned +8.3% over the past month versus the Zacks S&P 500 composite's +2.3% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Phillips 66 (PSX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, Phillips 66 (PSX) reported revenue of $52.04 billion, up 55.3% over the same period last year. EPS came in at $9.41, compared to $2.38 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $36.17 billion, representing a surprise of +43.88%. The company delivered an EPS surprise of +22.53%, with the consensus EPS estimate being $7.68. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Phillips 66 performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Refining Margins - Worldwide (Per Barrel): $24.08 compared to the $23.15 average estimate based on four analysts. Refining Margins - Western/Pacific (Per Barrel): $29.65 versus $19.93 estimated by four analysts on average. Refining Margins - Central Corridor (Per Barrel): $29.56 versus $26.35 estimated by four analysts on average. Refining Margins - Gulf Coast (Per Barrel): $24.25 versus the four-analyst average estimate of $22.42. Refining Margins - Atlantic Basin/Europe (Per Barrel): $14.44 versus the four-analyst average estimate of $19.77. Refined Petroleum Products Sales - U.S. Marketing - Total - Barrels Per Day: 2115 thousands of barrels of oil per day compared to the 2027.08 thousands of barrels of oil per day average estimate based on three analysts. Total Petroleum products sales volumes: 2329 thousands of barrels of oil compared to the 2299.3 thousands of barrels of oil average estimate based on three analysts. Refined Petroleum Products Production - Gulf Coast: 596 millions of barrels of oil versus 571.67 millions of barrels of oil estimated by two analysts on average. Refined Petroleum Products Production - Central Corridor: 832 millions of barrels of oil versus the two-analyst average estimate of 779.61 millions of barrels of oil. Refined Petroleum Products Production - West Coast: 93 millions of barrels of oil versus 106.56 millions of barrels of oil estimated by two analysts on average. Revenues and Other Income- Sales and other operating revenues: $51 billion versus $35.95 billion estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +53.1% change. Revenues and Other Income- Equity in earnings of affiliates: $635 million versus $386.78 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +315% change. View all Key Company Metrics for Phillips 66 here>>> Shares of Phillips 66 have returned +15.1% over the past month versus the Zacks S&P 500 composite's +3.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Phillips 66 (PSX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research