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.

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Q4 2024

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

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Phillips 66

phillips 66

Welcome to the Q4 2024 Phillips 66 Earnings Conference Call. My name is Emily, and I'll be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded.

I will now turn the call over to Jeff Dieterdt, Vice President, Investor Relations. Jeff, you may begin.

Welcome to Phillips 66 earnings conference call. Participants on today's call will include Mark Lasier, Chairman and CEO Kevin Mitchell, CFO Don Baldridge, Midstream and Chemicals Rich Harbison, Refining and Brian Mandel, Marketing and Commercial. 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.

Thanks, Jeff. Our results reflect strong operating performance in a challenging margin environment.

The strength and stability of our midstream results provided a resilient platform, demonstrating the advantages of

the breadth of our integrated portfolio. In the Q4, we achieved our shareholder distribution target with $13,600,000,000 distributed through share repurchases and dividends since July 2022. In refining, we set goals to improve performance, lower costs and capture more of the market. This year was our 2nd consecutive year of above industry average crude utilization. We also set record clean product yields both this quarter and for the full year, while reducing our costs by $1 per barrel.

These results are a testament to the hard work, commitment and dedication to excellence by the people in Rich's organization. We exceeded our $400,000,000 synergy target on the DCP Midstream acquisition by capturing $500,000,000 of run rate synergies. In total, the DCP transaction has increased Midstream's mid cycle adjusted EBITDA by $1,500,000,000 We set an ambitious goal of $1,400,000,000 in run rate business transformation savings. We positioned the company for success through these cost reductions and exceeded our goal achieving $1,500,000,000 of savings. As part of the enhanced priorities in 2023, we committed to at least $3,000,000,000 of non core asset dispositions.

We have high graded the portfolio and are currently at $3,500,000,000 of announced asset divestitures. Although our net debt to capital ratio ended higher than our target level, we continue to have a strong balance sheet and we are making debt reduction a key component of our new commitments. We've completed the strategic priorities that we laid out in 2022, enhanced in 2023 and committed to achieving by the end of 2024. I'm proud of the work our employees have done to accomplish these important priorities and deliver on our commitments to shareholders while maintaining industry leading safety performance. Slide 4 shows the progress of the asset disposition program.

In January 2025, we received $2,100,000,000 of cash proceeds for the Co OP and Gulf Coast Express dispositions. This brings the cash proceeds to $3,500,000,000 which we're using to advance our new strategic priorities. We continue to evaluate our assets as part of our ongoing portfolio optimization. Slide 5 shows the growth of our midstream business, including the recent announcement of the EPIC NGL transaction. We've advanced our wellhead to market strategy through organic projects and strategic transactions that provided significant synergies and strong returns.

This nearly doubles EBITDA between 2021 and the anticipated transaction close later this year. Similar to the Pinnacle acquisition last year, we saw an opportunity to acquire high quality assets, which are complementary to our existing footprint and provide a platform for further growth opportunities at attractive returns. The transaction furthers our vision of being the leading integrated downstream energy provider and upon closing increases Midstream's mid cycle adjusted EBITDA to $4,000,000,000 We'll continue to capitalize on our growth platform to generate strong returns and significant free cash flow in 2025 beyond. Slide 6 outlines our new strategic priorities for 2025 through 2027. Supported by our world class operations, we are committed to returning over 50% of operating cash flow to shareholders.

We've set challenging yet achievable operational targets for our refining and midstream businesses. We have developed a culture of continuous improvement in refining and are targeting $5.50 per barrel adjusted controllable cost excluding turnarounds over the next 2 years. We will grow midstream and chemicals mid cycle adjusted EBITDA by an additional $1,000,000,000 in total by 2027. In Midstream, we have plans in place to continue to expand our wellhead to market strategy with high return opportunities. In Chemicals, the mega projects in the U.

S. Gulf Coast and Qatar are expected to start up in late 2026. These milestones are expected to bring our non refining mid cycle EBITDA to $10,000,000,000 by 2027, which we expect will represent 2 thirds of our total company EBITDA. We also plan to reduce total debt to $17,000,000,000 as early as the end of this year, depending on the margin environment and the timing of planned dispositions. We will continue to increase shareholder value through strong operating performance and disciplined capital allocation as we deliver on our new strategic priorities.

Now over to Kevin to cover our quarterly results.

Thank you, Mark. Reported earnings were $8,000,000 or $0.01 per share. The adjusted loss was $61,000,000 or $0.15 per share. Both the reported earnings and adjusted loss include a $230,000,000 pre tax impact of accelerated depreciation due to our plan to cease operations at the Los Angeles refinery at the end of 2025. This reduced earnings per share by $0.43 We generated operating cash flow of $1,200,000,000 and returned $1,100,000,000 to shareholders, including $647,000,000 of share repurchases.

I will now move to slide 8 to cover the segment results. Total company adjusted earnings decreased $920,000,000 compared with the prior quarter. Midstream results increased mostly due to record fractionation and LPG export volumes in addition to higher margins on LPG exports. In Chemicals, results decreased mainly due to lower polyethylene chain margins and higher costs related to turnarounds and maintenance. Lower refining results primarily reflect weaker crack spreads and a full quarter of accelerated depreciation for Los Angeles refinery.

Capture of the new market indicator was 105%. The increase in market capture was partly the result of record clean product yield for the quarter, which included the benefits of butane blending. Marketing and Specialties results were mostly lower due to seasonally lower margins. In Renewable Fuels, results increased due to higher margins of the Rodeo complex as well as stronger international results. Slide 9 shows the change in cash flow for the Q4.

Cash from operations excluding working capital was $901,000,000 There was a working capital benefit of $297,000,000 mainly reflecting a reduction in inventories. We returned $1,100,000,000 to shareholders through share repurchases and dividends, and we funded $506,000,000 of capital spending. Our ending cash balance was $1,700,000,000 Looking ahead to the Q1 of 2025. In Chemicals, we expect the global O and P utilization rate to be in the mid-90s. In Refining, we have a heavy turnaround quarter and expect the worldwide crude utilization rate to be in the low 80s and turnaround expense to be between $290,000,000 $310,000,000 We anticipate corporate and other costs to be between $310,000,000 $330,000,000 For the full year, we expect turnaround expenses to be between $500,000,000 $550,000,000 Depreciation and amortization will be approximately $3,300,000,000 This includes $230,000,000 per quarter of accelerated depreciation at the Los Angeles refinery.

Now we will 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. Our first question today comes from the line of Neil Mehta with Goldman Sachs. Neil, please go ahead.

Yes. Good morning, Mark. Thank you. Good morning, Mark and team. I want to kick off on the midstream transformation.

It does feel that the business is evolving to where midstream is becoming a major focus and a much more important part of the business. And want your perspective on what's the to the extent that is true, what's the best way to get there? To get there organically or to get there through M and A? And how fast can this business grow? Any parameters around that would be helpful.

Good morning, Neil. Thanks for your question. I'll talk about the high level view and then Don can dive into the details. But several years ago, we rolled up DCP, got control of those assets to align with the wholly owned assets that Phillips 66 had with fractionation capacity. And that allowed us to consolidate into a full wellhead to market strategy that we've been talking about.

But we knew that we had opportunities to fill out that strategy and to really leverage that position. And that's what you've been seeing both from an organic perspective and an inorganic perspective. And as you look at the inorganic things that we've done, the acquisitions we've done, they've been very focused on getting the right assets for the right value that could be accretive to us immediately based on the inorganic piece, but allow us to also have a footprint to grow organically and to capture more of the volumes coming out of the Permian. So both the Pinnacle and the Epic acquisitions really are prime examples of that. So we believe there are opportunities to do both.

But I'll let Don dive into more of the details.

Sure. Neal, I think what you see is, we've put together a midstream platform now, an NGL value chain that we believe we can grow organically at a mid single digits growth rate on an annual basis. That's what you see in the slide deck here growing to $500,000,000 of EBITDA. And being able to do that because we have clear line of sight to organic growth opportunities that we can execute within our $2,000,000,000 annual capital program. So I think it's really a testament to the strength of the platform that we have.

Certainly, from an acquisition standpoint, if there are opportunities that make sense that are attractive from a strategic standpoint and evaluation, we'll take a hard look at it. But our growth program here is premised on executing return enhancing organic opportunities within our footprint and not dependent on or require future M and A activity.

Yes. Neil, as you saw in our strategic priorities that we laid out, everything that we do, whether it's in refining or in midstream, we're focused on enhancing the return on capital employed in each of those businesses as we make these capital allocation choices. So we're very returns focused and value focused.

That's very helpful. And then the follow-up is just as midstream becomes a bigger part of the business, how do you think about the optimal capital structure? You're providing you disclosures today about being less than 3x net debt to midstream in marketing. So why is that the right number? And there's an argument that the business can run a little bit more levered as it has more fee based earnings.

Yes, Neal, it's Kevin. I mean, you're exactly right. Now as you will recall, we had objectives to reduce leverage over the course of last year, which we were not able to deliver on, partly because we lean pretty heavy into cash returns to shareholders. And so while we have set a target of getting the debt balance back to $17,000,000,000 in a sub-thirty percent debt to cap level, we also like to think of the balance sheet almost on a sum of the parts basis. And so the midstream and M and S segments bring the more stable earnings and cash generation approximately $2,000,000,000 sorry, dollars 6,000,000,000 at mid cycle and at a three times or maybe even less than 3 times debt level, we can think of ourselves as having a strong balance sheet in the context of those two segments, net zero for the refining business.

So in effect, the refining cash flows are all upside in the context of how you look at us look at the company from a balance sheet standpoint.

Our next question comes from Doug Leggate with Wolfe Research. Please go ahead.

Thank you. I appreciate the chance to ask the question, guys. Thanks so much. Mark, I think if I don't want to put words in your mouth, I think I heard you say something along the lines of our new disposal targets. I don't think I actually heard of this new disposal target.

So I realize you hit a lot of your targets early for 2025. But what is the scope of the scale to and I guess the way I heard it was drop your debt down $17,000,000,000 clearly or additional disposals. I wanted to ask specifically about where you are with the rest of the retail system in Europe. That's my first question. My follow-up is really a follow-up to Neil's.

We hear this a lot about the embedded value in Philips specifically around the midstream and where the midstream companies are trading. And obviously Epic is a terrific bolt on, but do you ever see a situation where midstream is somehow separated or is a standalone business? I know it's a bit of a curveball question, but just in terms of the scale, the importance and maybe, the failure of the market to recognize the value in your structure versus what you see for the standalone midstream players?

Thanks for your questions, Doug. This is Mark. On dispositions, we did not put another target out there. I think that we achieved our targets with what we've actually closed and received the cash for to date. We still have things that we're working on out there and one of them is the retail opportunity in Europe and Austria and Germany and that we're still in active discussions there.

We think we can strike a deal around that, but we found it a little bit counterproductive to put firm numbers out there when you're out negotiating these deals. We will always be looking at our portfolio to determine if we've got assets that have higher value to others. Sometimes we get inbound calls that people want to talk about things and we will entertain those calls as well. But it's always about value creation, how we can unlock value of what we view as trapped capital in some assets and redeploy those proceeds into our strategic priorities, whether it's returning it to shareholders, augmenting our balance sheet or investing in our businesses. And so we're going to be doing that ongoing, but you're not going to see firm targets put out there, which it's you can think about it as continuous improvement in our portfolio, just like we're focused on continuous improvement in our operations.

And then from the embedded value of midstream, we agree that we're not seeing the full value of the things that we've done in midstream, but we're really just getting started. I think that there's since our Epic acquisition, we've gotten a great response from the market, good questions, understanding people are showing some interest and excitement around that. We've got some great long onlys in our shares because of what we're doing in midstream. So we think that that story is still evolving and we're going to lean into that story going forward. There's always a question when you have an integrated business like we do, is it better to separate those businesses somehow?

We believe we can create more shareholder value by keeping the midstream business integrated with our refining and our NGL midstream business out to the

petrochemical businesses. And you'll hear more about that as we move on through the year.

Doug, it's Kevin. Just to add on to Mark's comments, part of the question was more around would we create a vehicle that has a public marker on it, not a complete separation, but helps provide some

We went down that path before. That's a major decision to make. And over time, you look back over history, there are times where we've traded at full some of the parts. There have been times where we haven't and we feel we're probably in that phase right now.

And I don't think that's the immediate response to that. I think as the way Mark described it really leaning in and providing the appropriate messaging and the investor disclosures around the midstream business, the integration value that comes from the value the 2 primary value chains that we have and focus on that at this point in time. That what you suggested is that option is always there. And so we would never say never, but it's not going to be the near term plan.

I appreciate it. If I may, I'll risk a quick follow-up at the risk of Jeff's wrath here. But the example, obviously, I was thinking about was MPLX because clearly there's a marker there, but I take your point. My follow-up really quick, Mark, is just remind us what the EBITDA is on the German Austria business, because we can all put multiple on that, I guess.

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

Hi. Thank you for taking my questions. First on the leverage update, can you think about can you help us think about the path forward to achieve the below 30% net debt to capital? What time frame would you expect to get to that? And are future asset sales including the German Austrian assets earmarked for that?

Yes, Therese. It's a the path forward to the sub-thirty percent and I think you look at the absolute $17,000,000,000 debt level in the same way because one I'm not saying that one will definitely enable the other, but they won't be too far apart in that context. And in fact, there's a kind of neat symmetry between all of those metrics that we put out, the $17,000,000,000 less than 30% and the less than 3 times midstream and M and S EBITDA all kind of come together reasonably well. But it's really a combination of if you look at our capital allocation model with 50% plus distributed to shareholders, so dividend plus buybacks. Our sustaining capital is $1,000,000,000 The organic capital program is $1,000,000,000 And if you do the math based on a mid cycle set of assumptions, and I know we're not in mid cycle right now, but on mid cycle, you've got about $10,000,000,000 of cash generation.

And so $5,000,000,000 goes to shareholders, that's the 50%, a $1,000,000,000 $2,000,000,000 of capital budget. So that's $7,000,000,000 that leaves $3,000,000,000 that's a lot of flexibility to either do debt reduction, incremental buybacks and or bolt on acquisitions that make sense like some of the things you've seen us do. In addition, we are still working on the Germany Austria retail business. And so there's a fair amount of flexibility there in terms of how we get there. So we feel pretty comfortable that those targets are all achievable, including our ongoing commitment to returning cash to shareholders.

Thank you. And then going back to the topic of additional midstream growth, when thinking about other M and A opportunities here, totally understanding Don's comments about doing what's right from both a strategic and economic perspective. When we think about the midstream assets that have been in the market, there are some that seem like more obvious acquisition candidates for you considering potential synergies in both Permian and DJ and then coupling that with who the bigger shippers on both Sand Hills and EPIC, as well as the visible need for incremental Permian processing. Is FTC also a major concern here? Do you think that would preclude some of the more obvious opportunities along your midstream footprint?

Yes. Teresa, I think that obviously we always have to take FTC considerations into play, but I don't think that's necessarily what would have us shy away from looking at any particular assets. But we do take into consideration a broad range of assets that are out there and we focus on what provides us the greatest value creation opportunity. And we know intimately how easy it is to connect those assets to our system, what it does from a G and P perspective, what it does from a transportation perspective and quite importantly, what additional opportunities does it open up for us to grow organically? Because we really see the upside in returns in going in and building things at a low build multiple and realizing that full uptick, while adding inorganically things at attractive pricing that also are accretive to our returns and our earnings.

Yes. I'll just add Theresa. I think along the lines of that value creation, just the M and A our M and A lens will really be focused on what is opportunities that we see that are scalable, that really enhance our platform and that's really what drives our thought process, not FTC lens. It's just that's well down the path as we evaluate opportunities. But again, I think I go back to we just see a lot of organic opportunities within our footprint.

And so we're very focused on executing those and growing our business that way 1st and foremost.

Yes. We recognize our capital constraints. We're not going to grow midstream just to grow midstream, just to get bigger. We're going to grow midstream to create more value for our shareholders. And we're very disciplined around that.

We've got capital constraints and we're going to be very picky about what we do.

Our next question comes from Manav Gupta with UBS. Please go ahead.

Good morning. Switching gears a little, we saw relatively weaker ethylene chain margins here. And I know it's a seasonally weaker quarter. I'm just trying to understand in management's opinion when can we start moving towards closer to the mid cycle margins as it relates to the ethylene chain margins and chemicals?

Yes, Manav, that's a great question. I think in the Q4, CPChem saw a couple of things going on in their chain margin. Of course, ethane pricing strengthened, crude pricing weakened, which they've got a great advantage with their ethane position. But when both of those things happen, I think their impact will show up. I think in the longer term, the macro is supportive, demand continues to grow.

You're seeing rationalizations in Europe, you're seeing temporary shutdowns in Europe. I think this year, North American producers had record exports that tells you about the strength of our economics here in North America versus other locations in the world. I think for the first time ever more than half of the polyethylene produced in North America was exported into the world market. So they're playing to CPChem strengths in the mid term and long term. You can see that in their operating rates.

And we see continued margin improvement and actually it's good and healthy that you see slow recovery, slow climb outs and we see that continuing this year into next year really on through 2026 and then their new assets will be stepping right into pretty healthy margins by the end of 2026.

Perfect. My quick follow-up here is very big improvement in renewable fuels. Congratulations, breaking even. Help us understand quarter over quarter some of the dynamics that went your way, which allowed you to almost raise earnings in renewable fuels by like $150,000,000

Hey, Paimonov, this is Brian. We'll start off by saying, yes, we did $28,000,000 in the quarter. We're happy with that as a start. We ran well in the quarter. We continue to lower our cost profile.

As we discussed last earnings call, we processed a higher CI feed in the corner as we ran off less valuable feedstock prior to the implementation of the BTC credit. Additionally, because of the higher CI material, we didn't produce renewable jet fuel for the quarter. We did announce in Q4 a deal to sell United Airlines 8,000,000 gallons, up to 8,000,000 gallons of SAF and we've secured a couple more contracts in Q1 to supply SAF to airlines. But just thinking about looking forward at renewable diesel margins, we anticipate continued weakness mostly on the regulatory uncertainty that keeps the market on somewhat weak footing. We'll need to have additional clarity on a number of factors affecting renewable margins, including the PTC, the RVO, LCFS rules, tariffs, renewable, our small refinery exemptions, just to name a few.

So we'll continue to manage our flexible system. We buy a lot of feedstock, we buy more feedstock than our system needs and so we can move those net feedstock around and manage the optionality in the system, but we'll continue to use the LP at the refinery to provide the most favored renewable feedstock.

Our next question comes from Jean Ann Salisbury with Bank of America. Please go ahead.

Hi. Thank you. I wanted to follow-up on Teresa's question about the Epic acquisition. I think most midstream investors I talked to were a little surprised by the move to add more Engil pipeline capacity without getting more processing to fill those pipelines. Given that you were already kind of under indexed to processing before the deal compared to peers, I know the pipes are contracted medium term, but does this put pressure on you to get more processing either organically or inorganically in the next few years as those contracts start to roll off?

Hi, Jean Ann. This is Don. As you heard from Mark, the EPYC acquisition is very compelling to us and for a variety of reasons. And but to kind of unpack and address your question regarding kind of capacity and supply because it's certainly a question we've had a couple of times. But I'll focus on this one key attribute and that is that EPIC provides us and brings us needed Permian pipeline capacity that is already in an expansion program that is very capital efficient, cost effective.

And we see that as being very important to us. And the reason that is, is right now our supply portfolio runs at about 125% of our Sand Hills capacity. So that means we move a lot of product on 3rd party pipelines. And if you kind of look through 2025 and out the years, that supply level will continue to grow this year as well as next as we bring on our expansion plant at Pinnacle in July of 2025, as we bring on a third party plant that's dedicated to us. I'd also expect that we'll be in a position to announce expansion of another plant in the Permian later this year.

And so when you think about all of that supply coming on, it really combines very well and fits very well with the EPIC capacity. We'll be able to move product off the 3rd party pipelines as our G and P volumes grow, we'll be able to fill in the expansion capacity that comes online at the end of 'twenty six with EPIC. So it really gives us room to continue to grow our G and P footprint. So that's what's quite exciting. So for us, EPYC is really the right size and the right time, time from an expansion and capacity standpoint.

It fits really well with our existing assets. We're already highly connected in a lot of spots with them. So when you think about integration and synergies, it's a very straightforward approach with really minimal integration cost to achieve. So very excited to bring this in, allow us to continue to grow our supply, pull supply off third party lines and put it all in our system, provide really good service to the Gulf Coast for our shippers and our producers.

Thanks, Don. That's very helpful and I appreciate the color there. I'll leave it there. Thank you.

Our next question comes from Roger Read with Wells Fargo. Please go

to refining, if that's all right. Kind of 2 main questions. 1, just as you look at the overall fundamentals, kind of how do you see the market here? And then the second part of that digging in a little deeper on crude supply, crude availability. You've got obviously a lot of moving parts on the policy side tariffs, sanctions on countries that have been supplying crude here that sort of thing.

Just kind of a broad question, but how do you see things?

Hey, Roger, it's Brian. Maybe we'll start with kind of product demand and supply and then we'll work on crude and tariffs. On gasoline, we saw 2024 gasoline demand up a bit, mostly on lower Asian demand growth. We saw strong vehicle switching in Europe, where demand was up almost 3%. U.

S. Demand increased a bit too, driven by lower retail prices. The demand outlook, we think looks stronger for 2025 with stable GDP outlooks and Chinese vehicle fleet showing a reduction in the growth in EV sales. So our demand forecast for 2025 for gasoline, globally is up 0.8% and up 0.2% in the U. S.

And on the distillate side, 2024 global distillate demand was 0.9% lower than 2023. 4Q 2024 U. S. Demand was actually up 0.4% versus 4Q prior year. Currently, U.

S. Distillate inventories are about 8% under 5 year averages, quite a bit. We're forecasting global distillate demand for 2025 at 1% over 24% with gains particularly focused across India, Malaysia and Indonesia and U. S. Distillate demand up about 2%.

On the tariff question, I think first of all, we don't know if we're going to have tariffs, but assuming that there are tariffs in Canada and Mexico, our view is that both markets will act a little bit differently. So we think tariffs in Canada, the first thing that happens is TMX gets filled. The second thing that happens is currently the inventories are low, the inventories will start to fill. But ultimately the differentials, the WCS differential will widen to incentivize crude to move into the U. S.

Because crude actually has to move into the U. S. There's a lot of value in Canadian crude before there's any production cuts. I think in PADD IV and parts of PADD II where there aren't as many alternative supplies, the crackers will also have to do some work. And then on the Mexico side, Mexican tariffs, there's about 450,000 barrels a day of Mexican crude that comes into the U.

S. We think that crude will be displaced. It will move to Europe, maybe Asia and other crudes will come in. We would expect to see the heavy crudes

bit just on the inefficiency of logistics. But as the year goes on and OPEC puts more barrels back onto the market, we would expect those differentials to widen back out.

Very comprehensive. I'll turn it back. Thanks.

Phillips 66 (PSX) Q4 2024 Earnings Call Transcript

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