MOSCOW (MRC) -- Phillips 66, a diversified energy manufacturing and logistics company, announces fourth-quarter 2021 earnings of USD1.3 billion, compared with earnings of USD402 million in the third quarter of 2021, as per the company's press release.
Excluding special items of USD25 million, the company had adjusted earnings of USD1.3 billion in the fourth quarter, compared with third-quarter adjusted earnings of USD1.4 billion.
Midstream fourth-quarter 2021 pre-tax income was USD593 million, compared with USD629 million in the third quarter of 2021. Midstream results in the fourth quarter included asset retirement costs of USD70 million related to the shutdown of the Alliance Refinery in connection with plans to convert it to a terminal, USD4 million of hurricane-related costs and USD1 million of pension settlement expense. Third-quarter results included a USD10 million impairment and USD3 million of pension settlement expense.
Transportation fourth-quarter adjusted pre-tax income was USD273 million, compared with USD254 million, mainly reflecting the recognition of deferred revenue.
NGL and Other adjusted pre-tax income was USD284 million in the fourth quarter, compared with USD357 million in the third quarter. The decrease was primarily due to lower unrealized investment gains related to NOVONIX Ltd., partially offset by inventory impacts. The increase in value of the company’s investment in NOVONIX was USD146 million in the fourth quarter, compared with USD224 million in the third quarter.
The company’s equity investment in DCP Midstream, LLC generated fourth-quarter adjusted pre-tax income of USD111 million, an USD80 million increase from the prior quarter. The increase was mainly driven by favorable hedging impacts.
The Chemicals segment reflects Phillips 66’s equity investment in Chevron Phillips Chemical Company LLC (CPChem). Chemicals fourth-quarter 2021 pre-tax income was USD436 million, compared with USD631 million in the third quarter of 2021. Chemicals results in the fourth quarter included a USD14 million benefit from insurance proceeds associated with winter-storm-related damages, partially offset by a USD2 million reduction to equity earnings for pension settlement expense. Third-quarter results included a USD2 million reduction to equity earnings for pension settlement expense and USD1 million of hurricane-related repair costs.
CPChem’s Olefins and Polyolefins (O&P) business contributed USD405 million of adjusted pre-tax income in the fourth quarter, compared with USD613 million in the third quarter. The USD208 million decrease was primarily due to lower polyethylene margins, reduced sales volumes, as well as increased utility costs. Global O&P utilization was 97% for the quarter.
CPChem’s Specialties, Aromatics and Styrenics (SA&S) business contributed fourth-quarter adjusted pre-tax income of USD36 million, compared with USD37 million in the third quarter.
Refining had fourth-quarter 2021 pre-tax income of USD346 million, compared with a pre-tax loss of USD1.1 billion in the third quarter of 2021. Refining results in the fourth quarter included USD122 million of asset retirement and exit costs related to the shutdown of the Alliance Refinery in connection with plans to convert it to a terminal, as well as USD30 million of hurricane-related costs and USD5 million of pension settlement expense. These costs were partially offset by an USD88 million reduction in estimated RIN obligations for the 2020 compliance year and other tax benefits of USD11 million. Third-quarter results included a USD1.3 billion impairment of the Alliance Refinery, USD12 million of pension settlement expense and USD10 million of hurricane-related costs.
Refining had adjusted pre-tax income of USD404 million in the fourth quarter, compared with adjusted pre-tax income of USD184 million in the third quarter. The increase was primarily due to higher realized margins and improved volumes, partially offset by higher costs. Fourth-quarter realized margins were USD11.60 per barrel, up from USD8.57 per barrel. Impacts from lower market crack spreads were more than offset by lower RIN costs from a reduction in the estimated 2021 compliance year obligation and lower RIN prices, as well as favorable inventory impacts and improved clean product differentials.
Pre-tax turnaround costs for the fourth quarter were USD106 million, compared with third-quarter costs of USD81 million. Crude utilization rate was 90% and clean product yield was 86% in the fourth quarter.
Phillips 66 generated USD1.8 billion in cash from operations in the fourth quarter of 2021, including cash distributions from equity affiliates of USD757 million. Excluding working capital impacts, operating cash flow was USD1.4 billion.
During the quarter, Phillips 66 funded $597 million of capital expenditures and investments, paid USD403 million in dividends and repaid USD450 million of floating rate senior notes due 2024. Additionally, Phillips 66 closed its public offering of USD1 billion in senior unsecured notes due 2052 and used the proceeds to redeem USD1 billion in senior notes due April 2022.
In 2021, Phillips 66 generated USD6.0 billion in cash from operations, funded USD1.9 billion in capital expenditures, distributed USD1.6 billion to shareholders and paid down USD1.5 billion in debt.
As of Dec. 31, 2021, Phillips 66 had USD8.8 billion of liquidity, reflecting USD3.1 billion of cash and cash equivalents and approximately USD5.7 billion of total committed capacity under revolving credit facilities. Consolidated debt was USD14.4 billion at Dec. 31, 2021, including USD3.9 billion at Phillips 66 Partners. The company’s consolidated debt-to-capital ratio was 40% and its net debt-to-capital ratio was 34%.
As MRC reported earlier, in December 2021, Six Pines Investments LLC, a wholly-owned, sustainable investment subsidiary of CPChem, announced its equity investment in two leading circular plastics recyclers, Nexus Circular LLC (Nexus) and Mura Technology Ltd. (Mura).
We remintd that Chevron Phillips Chemical will make a final investment decision on a new cracker in far southeast Texas in 2022, followed by an FID in 2023 on an USD8 billion joint venture petrochemical complex along the US Gulf Coast in 2023, said Phillips 66 CEO Greg Garland in early August.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.
Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Headquartered in Houston, the company has 14,000 employees committed to safety and operating excellence. Phillips 66 had USD56 billion of assets as of Dec. 31, 2021.