The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Energy sector dominated this year for the first time since 2008, with 28 companies featured on the list.

100 Fastest-Growing Companies

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are mining, oil and gas exploration and services, pipelines, refining, and utilities.

Fortune Sector Leaders: Energy

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

G500-2023-Phillips 66

Phillips 66, a major operator of refineries and gas stations, climbed 37 spots in the rankings on the back of soaring crude oil prices, which boosted its revenue by 53% to $175 billion in 2022. 
<ul> 
 	<li>In an effort to expand its already lucrative natural gas business—which generated $3.2 billion in profit in 2022—Phillips 66 acquired all the publicly available shares of pipeline company DCP Midstream, amassing an 87% equity stake.</li> 
 	<li>In October 2022 Phillips 66 laid off 1,100 employees as part of CEO Mark Lashier’s attempts to find $500 million in cost savings by year-end.</li> 
 	<li>As part of the oil company’s sustainability efforts, Phillips 66 has announced that it will convert a crude oil refinery in Northern California to a renewable fuels facility that will manufacture biofuels.</li> 
</ul>

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-Phillips 66

Phillips 66, a major operator of refineries and gas stations, climbed 12 spots in the rankings on the back of soaring crude oil prices, which boosted its revenue by 53% to $175 billion in 2022. 
<ul> 
 	<li>In an effort to expand its already lucrative natural gas business—which generated $3.2 billion in profit in 2022—Phillips 66 acquired all the publicly available shares of pipeline company DCP Midstream, amassing an 87% equity stake.</li> 
 	<li>In October 2022 Phillips 66 laid off 1,100 employees as part of CEO Mark Lashier’s attempts to find $500 million in cost savings by year-end.</li> 
 	<li>As part of the oil company’s sustainability efforts, Phillips 66 has announced that it will convert a crude oil refinery in Northern California to a renewable fuels facility that will manufacture biofuels.</li> 
</ul>

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 Phillips 66

As the world opened up in 2021, Phillips 66 bounced back; its revenue rose 75.4%, to $116 billion, boosted by the rebound in fuel consumption. As a major operator of refineries and gas stations, the company’s profit margins can be vulnerable when oil prices are particularly high, but Phillips was still able to produce $1.3 billion in profit. In April 2022, Mark Lashier, formerly president and CEO of the Chevron Phillips Chemical Company joint venture, succeeded Greg Garland as Phillips 66 CEO.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500 143 Phillips 66

It was a tumultuous year for Phillips 66, the Houston-based energy company. As lockdowns rippled around the globe, demand for transport fuels for cars and planes plunged, while losses mounted industrywide. Phillips 66 was no exception: The company lost $4 billion for the full year on a 40% drop in revenues. Like its peers, the company cut operating costs and slashed capital spending. The start of 2021, too, was rocky, as a crippling February storm in Texas hit operations in the state from refineries to pipelines.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-48-Phillips 66

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-061-Phillips 66

Phillips 66 continued to expand in 2019, extending its network of pipelines. It announced an $8 billion joint petrochemical venture with Chevron and Qatar Petroleum, and pushed for an offshore export terminal in the Gulf of Mexico. The Houston-based refiner was not hiding its ambition: it wanted to go all-in on the U.S. shale boom. But relatively weak prices in 2019 helped push the company’s adjusted earnings down by about 34% from last year's figure, to $3.7 billion. Across the oil sector, 2020 started with a jolt. The January price spike gave way to the coronavirus-fueled price crash, which quickly led refineries to cut back production.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-027-Philips-66

Phillips66 continued to expand in 2019, extending its network of pipelines. It announced an $8 billion joint petrochemical venture with Chevron and Qatar Petroleum, and pushed for an offshore export terminal in the Gulf of Mexico. The Houston-based refiner was not hiding its ambition: it wanted to go all-in on the U.S. shale boom. But relatively weak prices in 2019 helped push the company’s adjusted earnings down by about 34% from last year's figure, to $3.7 billion. Across the oil sector, 2020 started with a jolt. The January price spike gave way to the coronavirus-fueled price crash, which quickly led refineries to cut back production rates.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

World's Most Admired Companies

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Phillips 66 is a multinational energy company focused on refining, midstream, chemicals, and marketing. As of 2026, Phillips 66 operates ten crude oil refineries in the U.S. Its midstream business focuses on crude oil and refined products, as well as collecting and processing natural gas. The company produces chemicals for various uses in the automotive, pharmaceutical, home, and electronics industries. The marketing arm includes 7,200 fuel stations with Phillips 66, Conoco, and 76 branding.

Q2 2026

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Phillips 66 (PSX): Company Profile, Stock Price, News, Rankings

legacy

Phillips 66

phillips 66

Welcome to the First Quarter twenty twenty five Phillips sixty six Earnings Conference Call. My name is Emily, and I'll be your operator for today's call. Please note that this conference is being recorded. I will now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

Welcome to Phillips sixty six earnings conference call. Participants on today's call include Mark Glaser, Chairman and CEO Kevin Mitchell, CFO Don Baldridge, Midstream and Chemicals Rich Harvison, Refining and Brian Mandel, Marketing and Commercial. Today's presentation can be found on the Investor Relations section of the Phillips sixty six website along with supplemental financial and operating information. Slide two 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.

Thanks, Jeff. Welcome everyone to our first quarter earnings call. During the quarter, we continued to execute on our transformational strategy and deliver returns to our shareholders. By staying focused on what we can control, we made important progress across our 2027 priorities, improving refining operations, enhancing our NGL value chain and executing on our growth opportunities. Underpinned by the strength of cash flow contributions from our midstream business, we returned $716,000,000 to shareholders this quarter.

We did this in a challenged macro environment in refining, renewables and chemicals. We also executed one of the largest spring turnaround programs in the history of Phillips sixty six that impacted volumes and margins. These important investments position us well for the future. While our results reflect the challenges of this environment, our ability to return significant capital to shareholders demonstrates the strength of our integrated business model. We remain focused on strategy execution, disciplined capital allocation and cash returns to shareholders.

Slide four shows how we continue to improve refining operations through targeted low capital, high return projects. These recent investments lead to greater feedstock flexibility and yield. Before I touch on some of these projects, I want to highlight the success of our spring turnaround program, which was completed safely, on time and under budget. Furthermore, our refineries not in turnaround this quarter ran well. These accomplishments would not have been possible without our employees' unwavering dedication to operating excellence and safety.

Thank you to the refining team. Well done. The bulk of the annual turnaround activity and associated costs are largely behind us, which you will see reflected in our guidance going forward. We are well positioned to capture upside in the market for the remainder of the year. During this quarter's turnarounds, we achieved meaningful project milestones.

At the Sweeny refinery, we removed constraints and enhanced crude flexibility. We now have an additional 40,000 barrels per day of heavy light crude switching capability. Depending on market conditions, we will run additional Permian barrels displacing imported heavy crudes. We expect this flexibility in a rapidly changing price environment will enhance long term margins at this strategic refinery. Also at our Bayway facility, we completed a project that increases our FCC native feedstock capabilities, reducing the need for VGO imports.

Both of these low capital and high return projects are enabling us to enhance market capture. We're committed to our refining business. We have a clear path to increase operational run time, improve yields and reduce cost per barrel. Moving to Slide five, midstream is critical to our integrated strategy. It's a key growth driver and creates ongoing value for shareholders.

We've made disciplined investments to build out our integrated wellhead to market strategy, a strategy that allows us to efficiently move products from the wellhead to high value end markets. This strategy provides significant stability to our financial results and adds material benefits to other segments. Our value chain creates optionality in product placement and supports reliable long term cash generation. We acquired EPIC NGL on April 1, which is immediately accretive and expands our takeaway capacity from the Permian. The acquired assets are highly integrated with the existing Phillips sixty six asset base and provide long term fee based earnings growth.

This acquisition enhances our ability to offer producers unmatched flow assurance while expanding connectivity to end markets. We also continue to expand our natural gas gathering and processing footprint in the Permian Basin. Our Dos Pikos II expansion plant, which was part of our Pinnacle acquisition strategy, is expected to come online in the third quarter of twenty twenty five. Today, we're announcing the construction of another gas processing plant in the Permian. The Iron Mesa plant will serve Delaware and Midland Basin production and will be funded within our existing capital budget.

The facility is expected to come online in the first quarter of twenty twenty seven. Both of these projects are great examples of our highly strategic and selective investments at low build multiples. They contribute to our plan to organically grow midstream run rate adjusted EBITDA to $4,500,000,000 by 2027. At Phillips sixty six, we've embraced the culture of continuous improvement and have taken decisive actions to create long term value for our shareholders. Slide six shows some of the achievements over the past three years.

We have divested more than $3,500,000,000 of non core assets at high multiples, while making strategic acquisitions within midstream at attractive multiples to build a world class NGL value chain. In refining, we're improving competitiveness by optimizing our assets to align with long term demand trends. We've made operational improvements throughout the portfolio and we've rationalized our footprint with the sale of Alliance, conversion of Rodeo and plan to cease operations and repurpose the land at Los Angeles. We have taken steps to execute on our transformational strategy and we will do more. We remain committed to maintaining safe and reliable operations, investing in high return growth opportunities and capturing integration benefits.

We will return over 50% of net operating cash flow to shareholders through share repurchases and a secure competitive and growing dividend. Demonstrating this commitment, we recently announced a $05 per share increase in our quarterly dividend. Since our formation in 2012, the annual dividend has increased every year resulting in a significant 15% compounded annual growth rate. We have delivered over $14,000,000,000 to shareholders since July 2022. We will continue to create long term value for shareholders as we execute on our 2027 strategic priorities, maintaining operational excellence, pursuing disciplined growth, returning capital and ensuring financial strength.

Now over to Kevin to cover the results for the quarter.

Thank you, Mark. First quarter reported earnings were $487,000,000 or $1.18 per share. The adjusted loss was $368,000,000 or $0.90 per share. Both the reported earnings and adjusted loss include the $246,000,000 pretax impact of accelerated depreciation due to our plan to cease operations at the Los Angeles refinery at the end of twenty twenty five. The adjusted loss excludes the $1,000,000,000 pretax gain on disposition of our non operated interest in co op.

We generated $187,000,000 of operating cash flow and returned $716,000,000 to shareholders, including $247,000,000 of share repurchases. I will now cover the segment results on Slide eight. Total company adjusted loss increased $3.00 $7,000,000 compared with the prior quarter. Midstream results decreased mainly due to lower volumes because of the turnaround activity in refining. This was partly offset by the impact of higher commodity prices benefiting gathering and processing results.

Also during the quarter, the Sweeny Hub had record fractionation volumes of 650,000 barrels per day. In Chemicals, results increased mainly due to higher volumes and lower costs driven by turnaround activity in the prior quarter. Lower refining results reflect the impact of lower volumes and higher costs driven by turnaround activity and higher utility prices. This is partly offset by increased realized margins from higher market cracks. Marketing and Specialties results improved due to lower depreciation and higher margins in the international business.

In Renewable Fuels, results decreased mainly due to the transition from blenders tax credits to production tax credits, inventory impacts and lower international results. Slide nine shows cash flow for the first quarter. Cash from operations, including working capital, was $187,000,000 We received 2,000,000,000 from the sales of the non operated equity interest in co op and the Gulf Coast Express Pipeline. We paid down $1,300,000,000 of debt and returned $716,000,000 to shareholders through share repurchases and dividends. We funded $423,000,000 of capital spending.

Our ending cash balance was $1,500,000,000 Looking ahead to the second quarter of twenty twenty five on slide 10. In both Chemicals and Refining, we expect utilization rates to be in the mid-90s. In refining, we expect turnaround expense to be between 65,000,000 and $75,000,000 We anticipate corporate and other costs to be between $340,000,000 and $360,000,000 Now we will move to Slide 11 and open the line for questions, after which Mark will wrap up the call.

Thank you. We will now begin the question and answer session. As we open the call for questions, as a courtesy to all participants, please limit yourself to one question and a follow-up. If you have a question, please press star then one on your touch tone phone. If you wish to be removed from the queue, please press then 2.

Our first question today comes from Doug Leggate with Wolfe Research. Please go ahead, Doug. Your line is open.

Thanks. Good morning or good afternoon, everybody. Thanks for taking my question. I guess it is still morning, sorry. Mark, obviously, there has been a lot of dialogue, lot of backwards and forwards between yourselves and Elliot regarding the right structure for the business.

I guess my question is, I had an opportunity to chat to you about this a month or so ago. And our understanding at least is you guys have looked at a lot of these proposals before and made decisions that are perhaps different. I wonder if you could share the extent of which you did look at some of these ideas that they're putting forward, for example, separating the midstream and and kind of rationalize why you came to a different outcome? Think everyone would would probably like to hear your perspectives on that. I've got a quick follow-up, please.

Sure, Doug. I I I welcome that question. And I think when we're talking about strategic alternatives or the strategy that drives the company forward, it really is important to understand the mindset of our board. And we've got a strong board. We've got talented board members that have deep experience.

Many of them have deep experience in refining and energy. And they have high expectations for us when it comes to, preparing and delivering strategic alternatives for them. And they expect a very detailed, intelligent overview of all the options available, and they want to fully understand the risks and the unintended consequences of any strategic actions that we might recommend. In fact, they wanna understand the risks and the unintended consequences of not making strategic actions as well. So it's very comprehensive, and it's not just some simple high level spreadsheet that they might rubber stamp.

They are, I would I would put them in the classification of brilliant. They ask tough questions, and they us deeply accountable. And my experience with the board really goes back to when I came back to Phillips sixty six in 02/2021, and I was asked to prepare the strategic materials for our our fall deep dive into strategy. And what we did is we took the board through scenario planning because if you remember back in '21, all the rates was net zero twenty fifty. And so we we span the whole spectrum from net zero twenty fifty to a scenario where the world realized that there was a strong need over the long term for hydrocarbons, and we established milestones to track.

And this analysis informed our strategic alternatives that then we did a deep dive on with with the board members. And and we've reviewed all of those options and refreshed our views on those options in the subsequent years. And I would say every board meeting, the board asks us strong questions around the the strategy and the implementation of the strategy. What's changed? What's new?

Should we should we move this way or that way? And and we talk about our stock valuation and the evolving market conditions and the strategic alternatives. And we do this every board meeting. And then in the fall, again, we'll take them into another deep dive to review what's changed since the prior year, what is our most recent view of where we stand in those in those scenarios. And and I'll tell you that one of the underlying principles of every discussion is that everything in our portfolio is for sale at the right price, But the board expects us to understand the full consequences if we should dispose of an asset or or or spin out a part of our company that they wanna understand what's the impact on the remaining assets?

What's the impact on the remaining company? What are the unintended consequences? What are all the financial impacts? And I'd say that some of the parts is a part of that discussion, but it's not always the total driver of that discussion. One thing that we've learned, and I believe many of you observed this as well, is that really when you talk about the multiple a company realizes in the marketplace, it's really correlated strongly with earnings volatility.

And that's midstream business has become such an important part of our business. It generates very steady earnings and we've grown those earnings quite quickly from right around $2,000,000,000 of EBITDA a year to $4,000,000,000 and increasing. And so if there was a spin off opportunity for that business, I will tell you that our board would be the first ones to challenge us to take a look at that, and they have challenges to take a look at that. When you step back and look at our board, you know, the people that we have on our board and the two new new nominees that we have, amongst them, they've overseen more than 300,000,000,000 in major separation transactions during their careers. You know, this includes sales and spin offs.

So Phillips sixty six itself was the result of a spin off. So John Lowe, one of our key members, has was involved in that, and he's one of the architects of the spin off. You know, you've got the DowDuPont, three way break up into DowDuPont and and Cortiva. Our nominee, Howard Ungerleader, he was one of the architects of that and was right in the middle of all that in the decision making there. You look at United Technologies.

That was a conglomerate that was was broken. It went through a three way breakup into Carrier, Otis and RTX. Greg Hayes was the architect of that. And Abbott Laboratories spin off into AbbVie. Glenn Tilton was right in the middle of that as well.

So I would say that few, if any, boards in this country have more experience in executing such transformational transactions than the Phillips sixty six board. They know how to do it when it makes sense, and they're challenging us every step of the way to explain to them what makes sense and what doesn't make sense. And, you know, when I mentioned the split up of United Technologies, a con conglomerate. That word's been used in the same sentence as Phillips sixty six. And the first time I heard that, I thought, well, I thought I knew what a conglomerate was, but I better look it up to be sure.

When I looked it up, there was nothing there that resembled Phillips sixty six. We are a hydrocarbon transporter and processor. We gather and transport hydrocarbons from the oil fields or from imports, and we move those to our transportation assets, and we convert those materials into high value products that you use every day. And whether it's the crude value chain or the NGL value chain, it's very synergistic, and we're in the business of managing molecules, optimizing them every day. And if you look at what we have down at our Sweeney complex, all of those value chains come together in a deeply integrated way, whether it's the fractionators where we've got we've got massive fractionation capacity.

We've got we've got 260,000 barrel per day refinery, 550,000 barrel per day fractionation capacity. There's three ethane crackers on that site owned and operated by CPChem. We've got 37,000,000 barrels of capacity in 23 salt dome caverns at our Clemens Dome, and we've got direct access to Freeport export terminals. And we leverage that in that infrastructure. We leverage it in an integrated way every day, moving the molecules where they can create the most value.

And we've got a commercial organization that trades around that information every day. So there is no no hint of conglomerate in what we do. And if you look at if you look at the potential to spin off businesses, the board also asked us to bring in third parties to get a cold eyes review of what we do. And we've hired, you the best investment banks out there to look at strategic alternatives. And when you look at the midstream organization specifically, the third party independent analysis will tell you that there are incredible dis synergies based on that deep physical integration, that there's massive tax burden that any spin would realize and that there are just economies of scale.

We've got a very strong balance sheet as as an integrated company. The balance sheets of RemainCo and SpinCo would be would be impaired compared to what we have today. You throw additional SG and A on those remaining businesses. And the public company costs, you know, none of these things are fully reflected in a simple sum of the parts analysis. And so we take that into account, and we make sure that our board understands every step of the way and is verified by independent parties.

And then if you look at just you know, you you just heard in our narrative that, you know, the accomplishments we've had over the last three years, the board was front and center in all those decisions. We took bold actions to to make sure that we were in position to be successful over the long term, the 3 and a half billion dollars of non core assets. The only way we could define non core assets is to have a well defined strategy that was blessed by our board. That's how we define what is core and what is noncore. We expand our NGL wellhead to market strategy with the Pinnacle and Epic acquisitions fully supported by our board.

We sold the Alliance Refinery. We converted Rodeo, and we have planned to cease the Los Angeles Refinery. Every one of those major strategic actions have been deeply considered, vetted, and approved by our board. In refining operations, we've improved we've improved utilization, we've raised clean clean product yield and reduced operating costs over the last three years, and we have plans for further progress. Again, part and parcel of our conversations with our board every time that we meet, every action that we take.

And because of all these actions that we put in place with the blessing of our board, we believe there's substantial upside to our stock as we implement our 2027 strategic priorities. And we're going to maintain operational excellence, We're pursuing disciplined growth, and we're returning capital and ensuring financial strength. And I just finally the final point I want to make, be crystal clear on is we're making these strategic decisions at the board level, as we're making operational decisions at the operating and the management level, we are focused on data. We are focused on facts. We don't act out of fear or short term trends.

We act on what we believe will create the most long term value for our shareholders each and every time. And I will tell you that since the activists launched their campaign in February, the investor sentiment around their thesis has become more and more negative, and they become more and more positive around the process that or the progress that we've made in our refining in all of our businesses. And so we believe we're in a strong position. We're committed to it. And we're going to base it on data and facts going forward.

So Doug, thank you for that question. And I look forward to your follow-up.

Well, I think first of all, Mark, thanks for the thorough answer. I think I've taken enough time. I want to be respectful to my sales side colleagues. I'll I did have a follow-up, but I'll pass it back. Thanks so much for the answer.

Thank you. The next question comes from John Royall with JPMorgan. John, please go ahead.

Hi, good morning. Thanks for taking my question. Tough to follow that back and forth, but maybe go with a balance sheet question. So you're remaining well above your target at 38%. You got the big turnaround quarter for the year in the rearview and you also have a potential asset sale coming, which is good.

But also the macro environment remains uncertain. So my question is, what do you view as your path to getting back to 30%? And does the path include maybe buying back a little less stock than your framework would otherwise imply?

Yes. John, it's Kevin. Let me respond to that question. It's a very valid question. It's one we put a lot of focus on.

We have targets on leverage, the 30%. The real target that I focus on is the $17,000,000,000 absolute debt level. That's what I'm and the 30% becomes an output because it's a measure of debt and equity as you know. And so our expectation is that between the cash that comes in from disposition of assets and some improvement in the overall operating environment from where we were in the fourth quarter and the first quarter combined with in refining now being very well set for the remainder of the year to run at high utilization and you combine that with some margin recovery, which we have seen. As you look into April, we're seeing margins that are sort of $3 to $4 per barrel higher than where we were on average in the first quarter then that should position us quite well in terms of being able to make progress on debt reduction.

I'd love to hit that $17,000,000,000 number by the end of this year. I can't guarantee that will happen. It will be dependent on where operating cash flow comes out. But the overlay here is we're still committed to the 50% or more cash returns to shareholders, in terms of operating cash flow. So that's the sort of basic criteria around returning cash to shareholders fifty percent or more of operating cash flow and at the same time through hopefully strong cash generation and proceeds from asset dispositions be able to make progress on debt reduction.

Great. Thank you, Kevin. And then my next question is on renewables. This was a little bit of a noisy quarter with the PTC coming into effect mid quarter. Can you help us really as detailed as you're willing to be on what the post PTC world kind of looks like in your renewables business?

If you could give us any kind of sense for maybe the proportion of production that's eligible and how much you expect to receive on a per gallon basis based on your current feedstock slate that would be very helpful. Thank you.

Yes. John, let me first just clear the first quarter result because that was a it was somewhat of a messy result to be honest. And let me just walk through what drove that and then Brian will give a bit of the sort of forward expectations around it. So we had a significant drop from fourth quarter to first quarter. The transition from BTC was a significant impact.

It was the largest driver of that drop. But we also had LIFO inventory impacts from drawing down low CI feedstock inventory where the LIFO rate exceeded market prices. That was about a 60,000,000 hit in the first quarter. And then also in international, the recognition of The U. K.

Credits, these are the RTFC credits is not ratable. So we recognize about $50,000,000 of those in the fourth quarter. We did not have any credit recognition in the first quarter. And so when you put all those things together, you get back to why the result was where it sits. So maybe Brian can give a forward look.

Yes. So I would say, it's hard to provide guidance for Q2. And you can tell I'm losing my voice, so I'm going try as hard as I can. But with so many outstanding policy issues, including the tariffs and the RVO for RINs that hasn't been set yet, It's difficult, but we believe the RVO will need to strengthen the D4 RIN or the biodiesel RIN to continue to provide an incentive for RD production. And margins continue to be challenged even in April and the current market has us running the plant at reduced rates.

And in terms of tailwinds, there are some tailwinds we were seeing biodiesel plants closing given the tight margins. And we've also seen demand for renewable diesel permitting and that's a seasonal firming of demand. And finally, we look forward to collaborating with the administration to support U. S. Manufacturing by addressing the unintended consequences of tariffs on feedstocks given international RD imports to The U.

S. Are untariffed with which disadvantages domestic producers like Rodeo.

Thank you. Our next question comes from the line of Roger Read with Wells Fargo. Roger, please go ahead.

Yes. Thank you. Good morning. Maybe just to kick this off, update on where you are on kind of final asset dispositions. I think there's still some stuff in retail, maybe something in the midstream space.

Yes, Roger. It's Kevin. So as you know, we've done $3,500,000,000 of dispositions to date. So we're ahead of the target that we laid out, back in almost a couple of years ago, guess. The major item we're still working is the Europe retail, so the JET Germany, Austria.

That is a very active process. And I know I've said this several times, but we are legitimately in in-depth negotiations, on that and hope to have some updates soon.

Yeah. As far as this is Mark. As far as other asset dispositions, we have other assets that we would define as non core, non operated assets. Many of them are in the midstream. We're not we're not going to name any specific assets, but certainly, we're we're we know what what the value of those assets are and we know that there are potential buyers out there.

And as a follow-up on that, how should we think about the use of cash flows or cash raised, I guess, maybe I should say, from those asset sales at this point? Do you see it, Kevin, as you were talking earlier in terms of return of capital to shareholders? Or is most of this targeted for debt reduction?

I would expect most of this to be debt reduction and think of the the cash returns to shareholders being the relative to operating cash generation. So different, you know, different part of the cash flow statement driving the cash returns.

Okay. And then if I could just toss in one more that didn't count as my, my follow-up, Jeff. I apologize if I'm I'm violating the rules. But heavy maintenance q one in refining, very low in q two. Were you essentially wrapped up as we started q two?

Or is there a little lingering into q two that we should think of within that mid nineties guidance?

Yeah. This is Rich, Roger. Thanks for the question. You know, the q q one was the heavy concentration of of the turnaround activity, and you can tell by the guidance that we provided for the second quarter there that the there there is a little bit of linger that comes from quarter to quarter, but it it's certainly winding down in the second quarter. And you you see that in the in the overall guidance.

Thank you. The next question comes from Manav Gupta with UBS. Please go ahead. Your line is now open.

Good morning, team. Can you help us better understand how some of these LPG exports will have to reset to accommodate around tariffs? Because I think you were sending like 48% of our ethane to China and about 22% of propane to China. So how do these NGL exports now reset globally to work around the tariffs?

Manav, this is Brian. I'd say, like you said, the majority of China's LPG supply, which is primarily propane, comes from The U. S. Tariffs will likely alter those routes for Chinese supply. It's possible that China could get their supply from the AG, from Australia, from Southeast Asia.

And then The U. S. Will just supply will backfill the hole left by those regions, just rerouting trade flows And maybe bringing it back to our assets, our Freeport LPG is mostly termed up, and we haven't seen any FOB cancellations for cargoes. We also have a strong international trading team and that they manage deliberate cargoes, which allows us to capture additional value and optimize the Freeport exports when we see changes to fundamentals or when we have market dislocations like those caused by tariffs.

Perfect. My quick follow-up here is on the polyethylene chain margin. It was weaker even before the tariffs were announced. And again, some portion of polyethylene resin definitely moves to China, made into products and sold back into U. S.

Those flows cannot be sustainable with the tariffs. So your medium term outlook for the polyethylene chain margin here?

I think that there certainly is pressure from the tariff situation, purchasing decisions, they are going to be impacted. I do believe that CPChem has minimized their exposure to China And they've also they've got the ability to source material from The Middle East similar to to the propane discussion, and so they there would be rebalancing. But but, no, it is certainly that you know, clear that tariffs do. The uncertainty around tariffs causes people to slow down their decision making. You see that across the economy.

Thank you. The next question comes from Neil Mehta with Goldman Sachs. Please go ahead, Neil.

Yes. Thank you. Appreciate the thorough answer to the question around some of the parts. Kevin, I had a follow-up for you around the midstream side of the equation because that's where I think there's been a lot of focus around you've built a good business, but it makes sense to try to monetize it. And I think you made a comment that there's significant tax leakage around monetization.

Is that in the case of the spin as well? And then can you provide a little bit more detail or help us quantify framework for thinking about tax leakage associated with midstream monetization?

Yeah, Neil. That, the the tax hit is in the context of a sale of the business. A spin off you would expect would be structured in a tax free manner. And so, I would expect minimal tax implications from a spin. But in in terms of an actual disposition of the business, it is significant tax effect because the majority of those assets were constructed or acquired during a period where we had accelerated depreciation.

So the tax basis is extremely low. So just to put some context around that, you can depending on what number you use for valuation and there's a $50,000,000,000 number that's out there that would drive a $10,000,000,000 tax, hit, to sort of quantify what we mean by significant tax impacts.

Got it. And there's no clear offsets that you could put against that it sounds like?

All right. And then the follow-up for the team is really on the refining side. It's obviously challenging conditions in Q1, but you guys are going to be running better here in Q2. Just love your thoughts on the path back to mid cycle. And one of the factors that's suppressing profitability has been the tightness of WCS.

Just how do you guys see that moving from here as we work through turnaround? And can that be a tailwind?

Neil. It's Brian. I'll try to get this out just on market outlook. And maybe the caveat is geopolitics and the slowing economy make everything hard to predict. But what we've seen, Kevin's mentioned is The U.

Margins in April are firming a good bit and you can see that in our market indicator. We're estimating about 1,000,000 barrels worth of the global refining capacity shutting this year, and most of that rationalization will be in The US and in Europe. And in fact, if you look out through the end of the decade, we only show about 300,000 barrels a day of net additions per year, and we're likely to see that number to continue to decrease. But on gasoline, we're forecasting global gasoline demand to be about 05% up for the year and U. S.

Gasoline demand to be up about 1%. If you take a look at first quarter, that was 1.1% year on year growth in The U. S. Lower pump prices, good unemployment numbers, less working from home all contributed to that strength. U.

S. Gasoline inventories are now currently at about five year averages. And our current gasoline supply outlook is for those inventories to continue to tighten, particularly as we get in gasoline season and particularly in The U. S. On the distillate side, we see demand globally up about 1% and in The U.

S. Up about 2% for the year. Part of the demand increase will come from lower biodiesel and renewable diesel production driven by the weaker renewable margins. And also there's a shift to Mediterranean eco fuel in May, which will help. U.

S. Diesel inventories are really sitting at very low five year seasonal lows in part due to kind of ongoing maintenance, both in the Gulf Coast and in the Mid Con. And then finally on jet, at 1Q twenty five global jet demand was up about 2.3% year on year. We're forecasting 2025 global jet demand to be up 2%. I know a lot of the airlines have talked about they can't predict for the rest of the year.

And in some ways, if you think there's going to be a recession or more tariffs, the bets are off. But this is if you don't think those things are gonna happen, this is kind of our view. And we're starting to see trimming of of near month flights, so it's really hard to tell. US jet demand, 1.4% up. That's from fleet and flight schedule growth.

Again, it's very, very difficult to tell. And then on the you mentioned on the Canadian differentials. In Q2, we anticipate about 358,000 barrels a day off the market, mostly driven by planned maintenance at production facilities. And then as you kind of look across the year, we see differentials start to widen out. You'll get the seasonal benefit of diluent in the product.

And also, you'll get more OPEC barrels on the market, which will also help weaken the heavy differentials.

That's all great color. Thank you so much.

Thank you. The next question comes from Theresa Chen with Barclays. Please go ahead, Theresa.

Phillips 66 (PSX) Q1 2025 Earnings Call Transcript

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