Phillips 66

Phillips 66 is a leading integrated downstream energy provider operating in the Midstream, Chemicals, Refining, Marketing and Specialties (M&S), and Renewable Fuels segments. The company's businesses are organized into five operating segments: Midstream, which provides crude oil and refined petroleum product transportation, terminaling and storage services, as well as natural gas and NGL gathering, processing, transportation, fractionation, storage and marketing services in the United States and exports LPG to global markets; Chemicals, consisting of its 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics on a worldwide basis; Refining, which refines crude oil and other feedstocks into petroleum products such as gasoline and distillates, including aviation fuels, and at December 31, 2025, included 10 refineries in the United States and Europe; M&S, which purchases for resale and markets refined products mainly in the United States and Europe, and includes the manufacturing and marketing of base oils and lubricants; and Renewable Fuels, which processes renewable feedstocks into renewable products at the Rodeo Renewable Energy Complex (Rodeo Complex) and at the Humber Refinery, and includes global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels. At December 31, 2025, the company had total assets of $73.7 billion ¹.

The company's competitive positioning is shaped by its integrated downstream portfolio. In the Midstream segment, competition relates primarily to quality of customer service and reliability, competitive rates, and the proximity of assets to customers and market hubs, and the segment competes to deliver natural gas and NGL to customers by economically securing the right to purchase raw natural gas for gathering systems, managing system pressure, operating efficient processing plants, and securing product placement. In the Refining, Chemicals, and Renewable Fuels segments, elements of competition include product improvement, new product development, low-cost structures, ability to source and run adequate and high-quality feedstocks, and efficient manufacturing and distribution systems. In the M&S segment, competitive factors include product properties, reliability of supply, customer service, price and credit terms, advertising and sales promotion, and development of customer loyalty to branded products. The company does not produce any of its crude oil feedstocks, while some competitors obtain a portion of their feedstocks from their own production and some have more extensive retail outlets, including those with greater brand-name recognition, who are at times able to offset losses from refining operations with profits from producing or retailing operations and may be better positioned to withstand periods of depressed refining margins or feedstock shortages. Some competitors also have materially greater financial and other resources.

The company generates revenue through five operating segments. The Midstream segment generates revenue by providing crude oil and refined petroleum product transportation, terminaling and storage services, as well as natural gas and NGL gathering, processing, transportation, fractionation, storage and marketing services in the United States, and by exporting LPG to global markets. The Chemicals segment generates revenue through its 50% equity investment in CPChem, which manufactures and markets petrochemicals and plastics worldwide. The Refining segment generates revenue by refining crude oil and other feedstocks into petroleum products such as gasoline and distillates, including aviation fuels. The M&S segment generates revenue by purchasing for resale and marketing refined products mainly in the United States and Europe, and by manufacturing and marketing specialty products such as base oils and lubricants. The Renewable Fuels segment generates revenue by processing renewable feedstocks into renewable products at the Rodeo Complex and at the Humber Refinery, and by procuring renewable feedstocks, managing certain regulatory credits, and marketing renewable fuels. The company's revenue mix is primarily transactional, driven by commodity prices and volumes, with recurring income from fee-based operations in the Midstream Transportation business.

The Midstream segment consists of two businesses: Transportation and NGL. The Transportation business transports crude oil and other feedstocks to refineries and other locations, delivers refined petroleum products to market, and provides terminaling and storage services for crude oil and refined petroleum products. At December 31, 2025, the Midstream segment owned or held partial interests in approximately 70,000 miles of crude oil, refined petroleum product, NGL and natural gas pipeline systems; 39 refined petroleum product terminals; 35 natural gas gathering and processing plants; 15 crude oil terminals; 10 NGL fractionation facilities; six NGL terminals; a petroleum coke exporting facility; and various other storage and loading facilities located in the United States. The NGL business gathers, processes, transports and markets natural gas; transports, fractionates, markets and exports NGL. A significant portion of the NGL business is conducted through DCP LP, a consolidated subsidiary in which the company holds an aggregate direct and indirect economic interest of 86.8% ². The NGL business owns or holds partial interests in 35 active natural gas processing plants with a net nameplate processing capacity of 5 billion cubic feet per day (Bcf/d) ³. The Sweeny Hub consists of four fractionators with an original nameplate fractionation capacity of 550,000 B/D ⁴, which has demonstrated an expansion of nameplate capacity to fractionate 675,000 B/D ⁵ as a result of engineering and optimization projects. The Freeport LPG Export Terminal has demonstrated a combined LPG export capacity of 300,000 B/D ⁶. In 2025, the company acquired the Coastal Bend assets, including two fractionators with processing capacity of 170,000 B/D ⁷ located near Corpus Christi, Texas. The Transportation business includes ownership interests in major pipeline systems such as the Bakken Pipeline (25% interest, 1,918 miles, gross capacity 750 MB/D) ⁸, Gray Oak Pipeline (7% interest, 862 miles, gross capacity 900 MB/D) ⁹, and Explorer (22% interest, 1,830 miles, gross capacity 660 MB/D) ¹⁰. The Transportation business also includes 28 international-flagged crude oil, refined product and NGL tankers under time charter contracts with capacities ranging in size from 300,000 to 1,100,000 barrels ¹¹, and a fleet of approximately 8,900 owned or leased railcars ¹².

The Chemicals segment consists of the company's 50% equity investment in CPChem. At December 31, 2025, CPChem owned or had joint venture interests in 29 manufacturing facilities located in Belgium, Colombia, Qatar, Saudi Arabia and the United States, and has two research and development centers in the United States. CPChem produces and markets ethylene and other olefin products, with ethylene primarily used to produce polyethylene, normal alpha olefins (NAO) and polyethylene pipe. CPChem also manufactures and markets aromatics and styrenics products such as benzene, cyclohexane, styrene and polystyrene, as well as a variety of specialty chemical products. CPChem's total worldwide product capacity is 40,540 million pounds per year ¹³, including ethylene capacity of 14,915 million pounds per year ¹⁴ and high-density polyethylene capacity of 7,030 million pounds per year ¹⁵. CPChem and a co-venturer are building world-scale petrochemical facilities on the U.S. Gulf Coast (Golden Triangle Polymers facility, which will include a 4.6 billion pounds per year ethane cracker and two high-density polyethylene units with a combined capacity of 4.4 billion pounds per year, with CPChem owning a 51% equity share) ¹⁶ and in Ras Laffan, Qatar (which will include a 4.6 billion pounds per year ethane cracker and two high-density polyethylene units with a total capacity of 3.7 billion pounds per year, with CPChem owning a 30% equity share) ¹⁷. Both facilities are expected to be fully operational in 2027. The Refining segment at December 31, 2025, included 10 refineries in the United States and Europe with a total net clean product capacity of 1,948 thousand barrels daily ¹⁸. In the fourth quarter of 2025, the company ceased fuel production and began idling the facilities at its Los Angeles Refinery. On October 1, 2025, the company acquired the remaining 50% equity interest in WRB Refining LP (WRB), which owned the Wood River and Borger refineries. The M&S segment markets gasoline, diesel and aviation fuel through marketer and joint venture outlets utilizing brands including Phillips 66, Conoco and 76. At December 31, 2025, the company had approximately 7,620 branded outlets in 48 states ¹⁹, with wholesale operations utilizing a network of marketers operating approximately 5,360 outlets ²⁰ and brand-licensing agreements covering approximately 1,460 sites ²¹. Retail joint ventures had approximately 780 outlets ²². In the United Kingdom, the company utilizes the JET brand and at December 31, 2025, had approximately 320 marketing outlets ²³, of which 11 were company owned and approximately 310 were dealer owned. The company also holds a 35% interest in approximately 960 predominantly JET-branded sites located in Germany and Austria ²⁴, held through JET Management Holding GmbH & Co. KG (JET Management Holding), formed on December 1, 2025. The Specialties business manufactures and sells automotive, commercial, industrial and specialty lubricants marketed worldwide under the Phillips 66, Kendall, Red Line and other private label brands, and owns a 50% interest in Excel Paralubes, a joint venture that owns a hydrocracked lubricant base oil manufacturing plant with capacity to produce 22,200 B/D ²⁵ of high-quality Group II clear hydrocracked base oils. The Renewable Fuels segment processes renewable feedstocks into renewable products at the Rodeo Complex, which can process approximately 50,000 B/D (800 million gallons per year) ²⁶ of renewable feedstocks, and at the Humber Refinery. During 2025, the company completed a 30.2 megawatt solar facility ²⁷ within the Rodeo Complex, which reduces the complex's grid power demand by 50% ²⁸ and is expected to avoid approximately 33,000 metric tons a year of carbon dioxide ²⁹. In November 2025, the company entered into an agreement to supply approximately 83 million gallons of sustainable aviation fuel (SAF) ³⁰ over three years to an international air cargo logistics company, expected to reduce life-cycle greenhouse gas emissions by approximately 737,000 metric tons ³¹ compared to conventional jet fuel over the agreement period.

Significant operational developments during the period included several acquisitions, dispositions, and capital events. On April 1, 2025, the company acquired all issued and outstanding equity interests in Coastal Bend, which own various long haul NGL pipelines, fractionation facilities and distribution systems, for total consideration of $2.2 billion ³², net of cash acquired. On October 1, 2025, the company acquired the remaining 50% ownership interest in WRB from Cenovus for total cash consideration of $1.3 billion ³³, subject to post-closing adjustments, and assumed $450 million ³⁴ of short-term debt at acquisition which was fully repaid on October 1, 2025. On December 1, 2025, the company divested 65% of its interest in Germany and Austria retail marketing business for cash proceeds of $1.7 billion ³⁵ and retained a 35% non-operating equity interest through JET Management Holding. On January 31, 2025, the company sold its 49% ownership interest in Coop Mineraloel AG and received cash proceeds of $1.2 billion ³⁶, consisting of a sales price of $1.15 billion ³⁷ and a final dividend of $92 million ³⁸ from Coop. On January 30, 2025, DCP LP sold its 25% ownership interest in Gulf Coast Express Pipeline LLC for cash proceeds of $853 million ³⁹. On July 1, 2024, the company acquired Dos Picos in the Midstream segment for cash consideration of $565 million ⁴⁰. On October 1, 2024, the company acquired a marketing business on the U.S. West Coast for total consideration of $68 million ⁴¹. On September 18, 2025, Phillips 66 Company issued $2 billion ⁴² aggregate principal amount of junior subordinated notes, consisting of $1 billion ⁴³ aggregate principal amount of 5.875% Series A Junior Subordinated Notes due 2056 and $1 billion ⁴⁴ aggregate principal amount of 6.200% Series B Junior Subordinated Notes due 2056. On December 31, 2025, the company early redeemed $400 million ⁴⁵ of its 1.300% Senior Notes due February 2026. On December 4, 2025, the company repaid the remaining $550 million ⁴⁶ outstanding under the Term Loan Agreement and terminated this agreement. On June 27, 2025, DCP LP early redeemed the outstanding $525 million ⁴⁷ of its 5.375% Senior Notes due July 2025. In 2025, the company repurchased 9.7 million shares ⁴⁸ at an aggregate cost of $1.2 billion ⁴⁹. Since July 2012, the Board of Directors has authorized an aggregate of $25 billion ⁵⁰ of repurchases of outstanding common stock, and the company has repurchased 248 million shares ⁵¹ at an aggregate cost of $22.7 billion ⁵². In February 2026, the Board of Directors declared a quarterly cash dividend of $1.27 per common share ⁵³, representing a $0.07 increase ⁵⁴. The company also entered into a definitive agreement on January 5, 2026, to acquire the assets and associated infrastructure of the Lindsey Oil Refinery.

For the year ended December 31, 2025, the company reported net income attributable to Phillips 66 of $4,403 million ⁵⁵, compared with $2,117 million ⁵⁶ for the year ended December 31, 2024. The increase was primarily due to a before-tax aggregate gain of $1.9 billion ⁵⁷ associated with the partial sale of Germany and Austria Marketing in December 2025, improved realized refining margins primarily driven by higher market crack spreads, as well as a before-tax gain of $1 billion ⁵⁸ associated with the sale of the investment in Coop recognized in January 2025 in the M&S segment. These increases were partially offset by a before-tax impairment of $948 million ⁵⁹ recognized in the third quarter of 2025 related to the equity method investment in WRB, as well as lower equity earnings from CPChem. The company generated $5 billion ⁶⁰ in cash from operating activities during 2025. Total assets at December 31, 2025, were $73.7 billion ⁶¹. The company funded capital expenditures and investments of $2.2 billion ⁶², completed acquisitions of $3.5 billion ⁶³ net of cash acquired, and received proceeds from asset dispositions of $3.5 billion ⁶⁴. The company paid $1.2 billion ⁶⁵ to repurchase common stock and $1.9 billion ⁶⁶ to fund dividends on common stock, and paid $0.4 billion ⁶⁷ of debt repayments, net of proceeds from debt issuances. Cash and cash equivalents at December 31, 2025, were $1,116 million ⁶⁸, compared with $1,738 million ⁶⁹ at December 31, 2024.

The company has announced financial and operational performance targets through year-end 2027. These targets include maintaining total annual capital expenditures and investments of approximately $2.5 billion ⁷⁰, including capital related to WRB following the consolidation on October 1, 2025. The company is targeting reductions of total debt to $17 billion ⁷¹ and reductions of its debt-to-capital ratio by the end of 2027. The company's financial target aims to return greater than 50% of net cash provided by operating activities, excluding working capital, to shareholders through share repurchases and dividends. The company budgeted $2.4 billion ⁷² for 2026 capital expenditures and investments, exclusive of acquisitions and the company's share of capital spending by equity affiliates, including $1.3 billion ⁷³ of growth capital, primarily in the Midstream segment. The 2026 capital budget includes $1.1 billion ⁷⁴ for sustaining capital and $1.3 billion ⁷⁵ for growth capital. The projected $2.4 billion capital budget excludes the company's portion of planned capital spending by CPChem totaling $680 million ⁷⁶.

A key growth vector is the expansion of the Midstream NGL wellhead-to-market platform. In 2025, the company completed the Coastal Bend acquisition for $2.2 billion ⁷⁷, which includes various long haul NGL pipelines, fractionation facilities and distribution systems, further enhancing the wellhead-to-market strategy. The Midstream capital budget for 2026 is $1.1 billion ⁷⁸, comprising $400 million ⁷⁹ for sustaining projects and $700 million ⁸⁰ for growth projects, advancing the integrated NGL wellhead-to-market value chain by strengthening the company's position in key basins, including by increasing gas processing, pipeline and fractionation capacity. The company's financial targets through 2027 reflect plans to organically grow the Midstream and Chemicals businesses. CPChem and a co-venturer are building world-scale petrochemical facilities on the U.S. Gulf Coast (Golden Triangle Polymers facility, with CPChem owning a 51% equity share) and in Ras Laffan, Qatar (with CPChem owning a 30% equity share), both expected to be fully operational in 2027.

Another growth vector is the expansion of the Renewable Fuels segment. The Rodeo Complex can process approximately 50,000 B/D (800 million gallons per year) ⁸¹ of renewable feedstocks into renewable fuels, including renewable diesel and renewable jet fuel. During 2025, the company completed a 30.2 megawatt solar facility ⁸² within the Rodeo Complex. In November 2025, the company entered into an agreement to supply approximately 83 million gallons of sustainable aviation fuel (SAF) ⁸³ over three years to an international air cargo logistics company. The company's renewables value chain in the United Kingdom globally sources a wide range of renewable feedstocks for co-processing at the Humber Refinery and supplies renewable feedstocks, including tallow, to the Rodeo Complex. The Renewable Fuels capital budget for 2026 is $40 million ⁸⁴, reflecting investments at the Rodeo Complex related to feedstock optimization and logistics for renewable diesel and sustainable aviation fuel production.

The company is focused on a competitive cost structure and plans to enhance Refining segment returns and increase utilization rates by focusing on low-capital, higher-return projects that increase asset reliability and improve market capture. The company targets an annual clean product yield of greater than 86% ⁸⁵ and crude oil capacity utilization rates higher than industry average. During 2025, the worldwide refining crude oil capacity average utilization rate was 94% ⁸⁶, and the worldwide refining clean product yield was 87% ⁸⁷. In the fourth quarter of 2025, the company ceased fuel production and began idling the facilities at the Los Angeles Refinery. The Refining capital budget for 2026 is $1.1 billion ⁸⁸, including $590 million ⁸⁹ for sustaining capital and $490 million ⁹⁰ for growth capital supporting high-return, low-capital projects that will increase asset reliability and improve market capture.

The company's operational outlook includes a focus on world-class operations, with plans to optimize utilization rates and product yield at refineries through reliable and safe operations. The company is targeting reductions of total debt to $17 billion ⁹¹ and reductions of its debt-to-capital ratio by the end of 2027. The company uses a variety of funding sources to support liquidity requirements, including cash from operations, debt and proceeds from dispositions. At December 31, 2025, the company had $5.7 billion ⁹² of total committed capacity available under its credit facilities. The company's focus remains on protecting the stable cash generation from the Midstream and M&S businesses while evaluating future opportunities to optimize the portfolio.

The company's capital allocation strategy includes a 2026 capital budget of $2.4 billion ⁹³, exclusive of acquisitions and the company's share of capital spending by equity affiliates. The budget includes $1.3 billion ⁹⁴ of growth capital, primarily in the Midstream segment, and $1.1 billion ⁹⁵ for sustaining capital. The projected $2.4 billion capital budget excludes the company's portion of planned capital spending by CPChem totaling $680 million ⁹⁶. The Midstream capital budget of $1.1 billion ⁹⁷ comprises $400 million ⁹⁸ for sustaining projects and $700 million ⁹⁹ for growth projects. The Refining capital budget of $1.1 billion ¹⁰⁰ includes $590 million ¹⁰¹ for sustaining capital and $490 million ¹⁰² for growth capital. The M&S capital budget is $80 million ¹⁰³, the Renewable Fuels capital budget is $40 million ¹⁰⁴, and the Corporate and Other capital budget is $70 million ¹⁰⁵. The company's financial target aims to return greater than 50% of net cash provided by operating activities, excluding working capital, to shareholders through share repurchases and dividends. In February 2026, the Board of Directors declared a quarterly cash dividend of $1.27 per common share ¹⁰⁶, representing a $0.07 increase ¹⁰⁷. Since July 2012, the Board of Directors has authorized an aggregate of $25 billion ¹⁰⁸ of repurchases of outstanding common stock.

The company faces structural headwinds from the cyclical and volatile nature of margins for the products it produces, which are largely dependent on factors beyond its control including global and local demand, production levels of feedstocks and refined products by competitors, import and export capabilities, seasonality and weather conditions, transportation availability and cost, changes in energy prices, economic and political conditions domestically and internationally including imposition of tariffs, the impacts of OPEC and non-OPEC member producing nations, geopolitical risks, technological advances affecting energy consumption and supply, and consumer preferences and the use and availability of substitute products. The company also faces headwinds from changes to government policies relating to renewable feedstocks and renewable fuels that adversely affect programs like the renewable fuels standards program, low-carbon fuels standards and tax credits for processing certain renewable feedstocks. The company's operations are subject to planned and unplanned downtime, business interruptions, and operational hazards including explosions, fires, refinery or pipeline releases, power outages, labor disputes, global health crises, restrictive governmental regulation, and natural or man-made disasters such as geopolitical conflicts and acts of terrorism including cyber intrusion.

The company faces execution risks related to large capital-intensive projects that can take many years to complete, during which time political and regulatory environments or market conditions could change significantly from those anticipated, negatively impacting expected project returns. The company's plans to expand or construct assets or develop new technologies are subject to risks associated with societal and political pressures and other forms of opposition to the future development, transportation and use of petroleum-based and renewables-based fuels. The company may not be able to identify or execute growth projects, and those that are identified may not be completed on schedule or at the budgeted cost. The company's ability to achieve its GHG emissions intensity reduction targets depends on many factors beyond its control, such as advancements enabling broad commercial deployment of lower-carbon technologies, global policies that fund and incentivize the development of a lower-carbon energy system, changes in consumer behavior and energy choices, the availability of materials throughout the supply chain, evolving regulatory requirements, competitor actions, the availability of renewable feedstocks, and acquisition and divestiture activities.

Margins for the products the company produces are cyclical and volatile due to changes in market conditions largely dependent on factors beyond its control, including global and local demand, production levels of feedstocks and refined products by competitors, import and export capabilities, seasonality and weather conditions, transportation availability and cost, changes in energy prices, economic and political conditions domestically and internationally including imposition of tariffs, the impacts of OPEC and non-OPEC member producing nations, geopolitical risks, technological advances affecting energy consumption and supply, and consumer preferences and the use and availability of substitute products. The company does not produce crude oil and other feedstocks and must purchase all of the feedstocks it processes, and the prices for these feedstocks can fluctuate based on global, regional and local market conditions. Changes to government policies relating to renewable feedstocks and renewable fuels that adversely affect programs like the renewable fuels standards program, low-carbon fuels standards and tax credits for processing certain renewable feedstocks impact the company's financial condition and results of operations. The company is subject to a variety of legal proceedings, including the Propel Fuels litigation where a final judgment was entered against Phillips 66 Company in the amount of $833 million ¹⁰⁹ on August 5, 2025, which includes a $604.9 million ¹¹⁰ jury verdict, $195 million ¹¹¹ of exemplary damages, and $33.3 million ¹¹² of pre-judgment interest at 7%, with post-judgment interest of 10% ¹¹³ accruing from the date of the final judgment. The company's operations are subject to planned and unplanned downtime, business interruptions, and operational hazards such as explosions, fires, refinery or pipeline releases, power outages, labor disputes, global health crises, restrictive governmental regulation, and natural or man-made disasters including cyber intrusion. The company's investments in joint ventures decrease its ability to manage risk, as joint venture partners may have economic, business or legal interests or goals that are inconsistent with the company's, and the company may be required to fulfill obligations alone if joint venture participants are unable to meet their economic or other obligations.

Management's message emphasizes the company's strategic priorities focused on world-class operations, disciplined growth and returns, financial strength and flexibility, and shareholder returns. The company announced financial and operational performance targets through year-end 2027, including maintaining total annual capital expenditures and investments of approximately $2.5 billion ¹¹⁴, targeting reductions of total debt to $17 billion ¹¹⁵ and reductions of the debt-to-capital ratio by the end of 2027, and aiming to return greater than 50% of net cash provided by operating activities, excluding working capital, to shareholders through share repurchases and dividends. Management highlighted the company's focus on Refining performance, targeting an annual clean product yield of greater than 86% ¹¹⁶ and crude oil capacity utilization rates higher than industry average. During 2025, the worldwide refining crude oil capacity average utilization rate was 94% ¹¹⁷ and the worldwide refining clean product yield was 87% ¹¹⁸. Management noted the company's disciplined capital allocation process ensures investments that are expected to generate competitive returns, with a strategy focused on growing the Midstream and Chemicals businesses. In 2025, the company funded capital expenditures and investments of $2.2 billion ¹¹⁹ and completed a Midstream acquisition of $2.2 billion ¹²⁰ and the acquisition of the remaining 50% interest in WRB for $1.3 billion ¹²¹. Management also emphasized the company's commitment to a secure, competitive and growing dividend, with the Board of Directors declaring a quarterly cash dividend of $1.27 per common share ¹²² in February 2026, representing a $0.07 increase ¹²³.