HOUSTON - Phillips 66 (NYSE: NYSE:PSX), a major energy company, has announced that it will cease operations at its refinery in the Los Angeles area by the fourth quarter of 2025. This decision will affect approximately 600 employees and 300 contractors currently working at the facility.
The company's chairman and CEO, Mark Lashier, expressed awareness of the impact this closure will have on the workforce and the community and committed to supporting them through the transition. Phillips 66 plans to collaborate with the state of California to ensure that fuel markets are adequately supplied and consumer demand is met during and after the refinery's shutdown.
As part of the transition, Phillips 66 is exploring the future use of the refinery's properties in Wilmington and Carson, California, which span 650 acres. The company has engaged Catellus Development Corporation and Deca Companies, real estate development firms with experience in complex redevelopment projects, to advise on potential commercial development options that could benefit the regional economy and meet stakeholder objectives.
Lashier highlighted the opportunity to create a transformational project that could support the environment, generate economic development, create jobs, and improve critical infrastructure in the region.
Phillips 66 is also focusing on expanding its supply capabilities, particularly in renewable diesel and sustainable aviation fuels, from its Rodeo Renewable Energy Complex in the San Francisco Bay area. This move aligns with the California Energy Commission's analysis, which underscores the importance of expanding supply to meet consumer needs.
The company, headquartered in Houston, operates across various sectors, including Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels. It is committed to providing energy and improving lives while pursuing a lower-carbon future.
This announcement is based on a press release statement from Phillips 66 and contains forward-looking statements, which involve risks and uncertainties. Therefore, actual outcomes may differ materially from the statements made. The company has not specified any plans for the future employment of the affected workers or the exact timing of the refinery's closure within the fourth quarter of 2025.
In other recent news, Phillips 66 has made significant strides in its business operations. The company sold its 49% non-operated interest in the Swiss-based Coop Mineraloel AG for approximately $1.24 billion, a move deemed by CEO Mark Lashier as a key step in their divestiture program. This sale is part of Phillips 66's ongoing efforts to refine its portfolio and focus on long-term strategic assets.
Phillips 66 has also expanded its board of directors with the appointment of Grace Puma Whiteford, a veteran executive with extensive experience in major corporations like PepsiCo (NASDAQ:PEP), Inc. Her appointment is expected to bring valuable insights to the company's Human Resources and Compensation Committee, and Public Policy and Sustainability Committee.
These recent developments come alongside Phillips 66's strong second-quarter results, which reported adjusted earnings of $984 million. The company has also issued $1.8 billion in senior notes as part of its capital structure management strategy.
Analysts from Piper Sandler, Barclays, and TD Cowen have recently revised their ratings for Phillips 66, maintaining a positive outlook despite adjustments to the company's price targets. These changes reflect Phillips 66's ongoing operational and financial strategies, as well as current market conditions.
The company continues to actively engage in its strategies and adapt to market conditions. Phillips 66 aims to generate $14 billion in EBITDA by 2025, with a target of $3.6 billion in EBITDA in the midstream segment.
InvestingPro Insights
As Phillips 66 (NYSE: PSX) navigates this significant operational shift, investors may find valuable context in the company's financial metrics. According to InvestingPro data, Phillips 66 boasts a market capitalization of $55.39 billion, reflecting its substantial presence in the energy sector. The company's P/E ratio of 11.24 suggests that it's trading at a relatively modest valuation compared to its earnings, which could be attractive to value-oriented investors.
An InvestingPro Tip highlights that Phillips 66 has raised its dividend for 11 consecutive years, demonstrating a commitment to shareholder returns even as it undergoes strategic changes. This is further supported by the company's current dividend yield of 3.5%, which may appeal to income-focused investors looking for steady cash flows.
Another relevant InvestingPro Tip notes that analysts have recently revised their earnings expectations upwards for the company. This positive outlook could indicate that the market anticipates the refinery closure and subsequent strategic shifts to potentially improve Phillips 66's financial performance in the long term.
For readers interested in a deeper analysis, InvestingPro offers additional tips and metrics that could provide further insights into Phillips 66's financial health and future prospects as it executes this significant operational change.
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