Phillips 66 (PSX) 2 Aug 232023 Q2 Earnings call transcript

Hello, and welcome to the Second Quarter 2023 Phillips 66 Earnings Conference Call. My name is Alex, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded.

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

and information. welcome can on XX financial website, Mark operating today's Kevin Relations Commercial. the Roberts, and and Brian of Refining; Conference Marketing section found Mandell, Lashier, Quarter with on Call. along and CEO; and Midstream Tim CFO; Participants call presentation Mitchell, XX Rich to morning, supplemental Harbison, Second and material Phillips Today's Earnings President, Chemicals; be Good Phillips will Investor include the

Slide safe our X contains statement. harbor

We making results statements that today's may to as during differ actual filings. Factors SEC here differ cause will comments. well forward-looking be our call. as are included materially Actual from could in results today's

I'll that, it Mark. turn With to over

joining we $X.XX second us today. Thanks, Good Jeff. In had billion or earnings for quarter, of per $X.X share. morning, and you adjusted the thank

our returned and to priorities continued billion We repurchases strategic on share shareholders dividends. to execute through and $X.X

to of delivering them improve and dedication strong mission to portfolio, thank operating employees for our reflect operating energy provide to operations. our want lives. reliable and excellence our across results to Our performance We the maintain on their demonstrating and commitment safe

rates, we NGL run to Refining, industry in above record In we Midstream, had frac average continue volumes. and

to cash and Sweeny on We strong value nameplate continue capacities operating our terminal demand. to create continue to strategic shareholders. to return We to export focus our and Hub and excellence meet run priorities fracs, at above to remain committed

summarizes X Slide toward our progress priorities. strategic

on return billion utilization we've period over of year-end crude through Refining, lower repurchases costs. cap $X.X between billion XXXX. shareholders or XXXX operating with XX to the had share last quarter market $XX through months, We're dividends. performance July billion another the of and XX% returned we XX% $XX XX-quarter operating our strong of Over In to and to track

provide more are the an of to Refining. than the $XXX cost will savings the Kevin a of our progress moment. business attributable run transformation million quarter, rate end in million update of on As $XXX

DCP We're executing faster our NGL expected. than wellhead capturing to strategy integration synergies and market

rate completed been XXXX. Our million acquisition $X.X our We've for million. DCP billion, June, common we run ended than million by target our net in current additional synergy XX% of to We is identifying $XXX public increase interest from $XXX $XXX In XX%. to opportunities over Midstream's more quarter from XX%. of the with to units debt-to-capital economic increasing the ratio a successful

our target We expect year-end. range within leverage to be by

facility higher-than-anticipated The permitting. our we're and of revised expected significantly from of to returns and due convert into billion. $X.XX to The well rates. gallon an material San cost Refining timing well the XX,XXX approximately remains similar In $X.XX remains production below scope hurdle labor barrels original our as per per and of capital is weather are world's day capital refinery to above The Refining, overall to impacts costs unchanged. projects, related as project announced around and the to one our be fuels anticipated increase This the is renewable Francisco fuels over facilities. converting premise largest renewable

We in to XXXX. operations expect first commercial begin of quarter the

CPChem up of its the of and splitter facilities and Qatar. building the Old third propylene expects jointly is are CPChem start in on quarter. world-scale by new X-hexene Chemicals, Energy the construction Laffan, Gulf in to in the Bayou fourth begin In petrochemical Qatar Texas, completed Ras at U.S. operations end Ocean, to expected facility the The and Coast unit Cedar quarter.

on financing start Both Polymers the XXXX. venture Coast, Gulf schedule joint projects later year. to up venture in to The has On Golden project place. remain the financing expects joint Ras project Laffan Triangle U.S. petrochemical complete this in

quarter call the transformation financial business second the Kevin and savings review turn to over to I'll results. Now

on progress. update Thank business you, Mark. transformation our Starting X an on with Slide

$X business target capital sustaining million savings $XXX reductions. of of cost billion million includes Our transformation $XXX and

We over actively permanently engaged the reduce to in employees organization costs, the across with X,XXX initiatives have identified transformation process.

have run-rate stacked chart with left savings the are for quarter. the by completed the cost our $XXX actual progress million reduction shows toward X,XXX target, value generating on the cost million $XXX of second cost shows We today. initiatives The end the our that of year at reductions bar category. The cumulative

to has $X.XX tools we to first range from benefited barrel. steam of savings. XXXX, Business majority of per portfolio across million use transformation of The new Refining, services to by assets cost relate energy. and half optimizing $XXX establishing these the reductions of cost about improve in Over initiatives realized which our

Organizationally, we strengthened drive our efficiencies. and consistency centralized to model for core functions

cost continue target to by initiatives year-end run achieve and implementing rate on track our We XXXX. savings are

$XXX We will savings of the which cost of full barrel. realize in expect to cost Refining reductions $X.XX include million XXXX, per

affiliates with decrease including and use to shareholders to Adjusted The dividends. Now $X.XX spending in in growth our investment value results. fair financial shares of We the $X.X quarter Capital We billion earnings $X.X billion, share We million cash billion a earnings or was I'll share per the for of second $X.X of XXX $XXX cash of returned NOVONIX move repurchases and quarter working generated outstanding. capital $XXX quarter million $X flow the $XXX by per share. through projects. million million, million Slide $XXX X to for distributions the reduced cover of billion $X from $X.XX. equity of $XX ended including were million. billion operating

on results segment X. the cover I'll Slide

can referenced the by in the quarter. to this quarter Additional highlights appendix second adjusted the slide from results the details in first be presentation. to This segment change

in from adjusted $XXX and second earnings by Midstream, higher by million, This the Specialties. partially commodity down was our was quarter. in prior prices NGL volumes $XX driven of lower offset The improvement was million impact Refining decrease mostly partially pretax transportation. declining the due offset business. adjusted an in by In results million, income Marketing in to and $XXX decreased Midstream, quarter period, the During

the polyethylene chain industry The second million by income margin decreased Chemicals $X.XX adjusted to increased pound. $X.XX pretax per $X quarter. million to $XXX in

was However, by XX%. higher costs offset in O&P was Global the and utilization this turnaround maintenance quarter.

billion, adjusted to income down higher expenses. primarily pretax $X.X decline the The lower by the crude decreased from first quarter. was narrowing cracks. quarter and was differentials, gasoline crack volumes Realized million by margins a offset second to and due offset Refining partially decline heavy partially in operating due spreads margins, decrease distillate $XXX in improved

and In losses the margins addition, due secondary from of reflect NGL realized purchase. declining to products coke impact

million Specialties Corporate seasonally adjusted improved XX%, lower the quarter and of due pretax effective previous demand. to consistent prior costs quarter. tax higher $XXX segments reflects interests was $XXX quarter. of than marketing an also adjusted and the our million impact and June prior of global income previous the adjusted the $XX noncontrolling pretax Other compared quarter were The Marketing acquisition XX. mainly to DCP margins million, second strong rate on The The was was quarter, units continued with increase from on

Slide of $X XX was quarter. second excluding storage Cash capital increase of by quarter shows spending. year-end. impact the billion cash mostly million downtime from use related $X Refinery an inventory primarily cash we working the capital. opportunities. funded of unplanned around to mainly working that use started operations at a which We $XXX $X the We balance. There is seasonal a in inventory, during capital with reverse of billion, was in reflecting a Year-to-date and billion, change the $X billion, Bayway expect working capital included the to

million and This on In units transaction represented we are a to for June, loan preferred $X.XX billion. of $XXX DCP billion of the fund repurchase $X.X DCP's term B of noncontrolling partially the drew single-draw Series the of as acquisition units interests. redemption

returned $X.X billion we shareholders through and share Additionally, dividends. to repurchases

my balance Our the and cash billion. review financial results. This operating ending was of $X concludes

purchase third cover rate In global be units outlook be mid-XXs in Other quarter the $XXX between rate Refining, the third to second we to Chemicals, turnaround In DCP reflecting quarter $XXX come million few to I'll the million from expect costs be a items. worldwide crude funding utilization the million. Next, third expenses interest the $XXX of expect We between in mid-XXs. net and $XXX O&P to during and Corporate utilization higher and expense in we million, quarter and quarter. the anticipate

full Rodeo be billion of $XXX the In million spending above budget, approximately $X our Renewed. year to on XXXX, capital spend expect additional reflecting we

This just In addition, $XXX supports the optimizing closed the assets. we by Rodeo end project on sales renewable acquisition high-return a Renewed of marketing fuel customers. West our of million to value Coast acquisition full

$XXX Total objectives the divested our million. the Texas more long-term to interest meet Belle Gateway determine year, this we strategic they third approximately provide recently, in very parties. we Chasse value portfolio are if or Earlier Terminal, from transactions two Terminal. our review We and if sold South proceeds continue our to the assets to

Now will the closing for we make will comments. after open questions, Mark line which

Instructions]. [Operator

Doug your Please from America. first of Our line comes question go ahead. Leggate Bank today of is open. for now Doug

continued to not synergy delivery be Kevin, I'm of deferred taken the think But what account the into is wants in nauseam a appearance we Refining flow. sure could new more taxes we continued targets, this, about and the but to we've mid-cycle what obviously of operating who haven't importantly, talked cash answer reductions, maybe outlook. upgrade your your ad your faster cost

introduced? recent my guess that your flow you series for the convoluted cash do mid-cycle what question I looks like Kevin, changes somewhat these So, post sustainable you've free is, think company of

Yes, Doug.

at to Investor reality had $XX us of we $X $X on. So, increasing to Day billion of cash is we billion from flow. actions have to executed some the $XX the guided that bridge And billion billion

way certainly need because traditional And on the range, probably $X so, to we bit billion in the But mid-cycle, than billion at time, $XX billion. a maybe on. in are there execute we're our things But of point higher progress good to still this view all not we're little a -- we're that. $XX the other $X making somewhere Refining billion from to

on comment is year, to have Your deferred a cash we one. on expect taxes larger-than-normal slightly benefit This actually a tax relevant flow. deferred

So, million I for think had to guided I benefit $XXX year. about to $XXX million the of previously

be that, of the to DCP to should to we million million, of $XXX more expect And because We more $XXX buy-in to level. mainly million like that's a sort $XXX $XXX revert traditional after that that. million of on and impact

not that is be of clear, view to mid-cycle your margins, have changed right? you Just

correct. is That

than mid-cycle We view have environment that mid-cycle, of not margin currently. a acknowledge in stronger but we changed would are we our

X a just been supply, overall for downturn, we time, year-plus, reasonable major that that given actually balances years. will continue exist economic period barring And think X.X demand last have the any We of the for globally.

Okay. you the piece. guidance XXXX. delayed it have might buyback My I not you. look just Is perhaps things us through a pace a step-up if which back gave that quite my $X point quick process? a billion and DCP I other that consequence of But one. to follow-up, billion you a things is as I'm is you. the transitory elevated the what pace seems mind, in an The Thank sure beyond maintain well well, to XXXX, to to two $X certainly come could guess

on I'll leave and So, could I you cash it there. wonder could just strategy, the just if return touch Thanks.

fundamentals, as really XXXX the when -- Yes, a that's a share quite the right. the been. have business our been impact not to function I relative period, an second quarter our pace than COVID from the elevated back positive much and we was think of we've recognize of mean, we in it you More so started the was the other had like been transaction. to time that it The up know, since we consistently buying where program. during pace terms in opportunity we which at the overall good was I of shares outlook, seemed price DCP

good expect to say guided end of once to it it a return either. billion sit like that things hit we $X $XX that threshold we certainly that total And threshold stop The hit at billion billion where Investor that's that based mean either we XXXX, to doesn't of the does before billion can't It minimum mean a that our and today, we decision we meet. $XX Day, on part. looks on $X sort to not

go I of our of sort to so, guidance at returned flow of normal shareholders through XX% And the cash and traditional to dividend back buybacks. our -- least

Sachs. Goldman Our of next question Mehta comes from Neil

Your ahead. go line is open. now Please

guys Talk to Thank want XX%, you structure. expect stay lower you but to that kind on debt topic capital indicated to indicated, as the net to ticked you. of you year-end. of move by it up The capital, I for should of And your that how need the items are in things exit moving favor working capital some metric? mind. in margin addition strong to about the back to keep rate we that think or environment, that into other we about

Yes, Neil.

think increase the we to of we that completed the had units. guidance buy-in once debt we I DCP our cap given expected to

landed number. between the to you The a that where wasn't to, drivers the two on we surprise it big now are back bring what us so, working of and capital. And year that pointed will that end

between that's earnings, year, about to inflow strong and cash see billion ongoing the just and then earnings, generate now $X also the So equity. to to and we expect end in of build generate the that ability

range. that cash So, on think we working end around range. year so But around environment quarter-over-quarter within a market depending going we able sustain end trajectory on we on be move in on items math, thing the like this right and XX% of reasonable to in nonetheless, Obviously, what's terms we're think of will that target at capital. fundamentally, the to top level, but our the overall target range, the still

Thanks. Renewed. then follow-up on the just is And Rodeo

sounds Some capital scope like in the changes, here. it

walk we against your And capital, as on EBITDA Thank you type Just spend the of drivers asset the mid-cycle changes? asset, view that can then about you those that from the of you. time think through more project? the can of us how you has evolved generate the from as

it's can the from experienced we've But execution, Mark. it rainfall. recognize bit. cover I'll what going And because as commenced far at project so this the the too we high the from the in the we realized of of challenges. the we had exceed And heavy schedule. we little deferred -- project start Rich level earnings a then even a are course, stick San a Neil, a Yes, and believe earnings we of of lot essentially, there was drill to date that to little Francisco bit permitting refinery we to wanted

to around during the incurred delays productivity permitting. weather and So, some loss more compensate we cost for bad

project We was big also the this inflationary in sanctioned, pressures saw some hit inflation. hadn't When run-up yet.

is purview having seeing haven't to we're that really or And the care only of our that so, project at inflation in impact the so for we realized kind where take we're accounted that. of sanction,

still competitive. look incredibly a $X.XX that we So, as at gallon

retail And competitiveness we've online, disruption we're the our The look traditional much The almost minimal. pull-through in is the competitive diesel will with The presence asset advantage. advantage. to as the we got this a you we're facility overall strong. as renewable at bringing location, as bring market off is be of so as competitive taking diesel market,

really of are we cost around very this are and project, So, that to want we you see bullish Rich, the the still economics robust spite go... do in increases.

most you just to of I think I Yes, it. that, Mark. covered Maybe color of little a bit can add

we and the costs. the inflationary material timing it when talked this labor As for of the and to drivers about prior And estimated primary the was were increase you approved think project, about, period. heavy

the that's development occurred Half duration of experience So, this we're project. the year. pressure those realizing that inflationary over of costs we'll of the

allocation. next The capital year's other half into flow will

is is project work gallon, competitive very happy on projects. it construction, ahead very very And continue $X.XX in with on operation full that we're and remains other that the indicated, we a still announced quarter commercial at and steam Mark and first track XXXX. to As versus for capital efficient the

And to feedstock and well level. of impacting the programs, around I too, renewable state know a of economics well. other around be these that Now project four other costs each state two diesel of change. And with reality of the all well as as are are But this, working the centered recognize price been California and the as are federal credits as of around over this there's the seem retail LCFS as lower the the the recent focus in lot markets diesel. programs interrelationally those at

momentum we project So, look interrelationship, be when on the to very still and very at continue we EBITDA see strong about of optimistic the overall movement all it. the for this returns and economics

in modest it manage billion you year, look and but will we 'XX, that for within require increase when capital a 'XX our going And billion $X target this in forward of cost additional XXXX. those across target increases our $X will at

Fargo. Roger from comes question of Read next Our Wells

Your line Please is now ahead. go open.

the understand And you. Thank while would morning. cost call I building was that's gone integrated follow on guess to just transaction, you've we truly model. this I up DCP far. the was transaction raised another savings, the, on it, hoping how part Good I so revenue side, synergy of a

near medium seamless maybe I together on or the So, transaction what even you've comes term curious date, was on just a expect in in you the the organization. as of terms maybe to term that that seen what how

as started the Roger, transaction At of a soon year, for $XXX Thanks bring closed we're we first third that as of contracts And But year, We of working could XXXX. we to of rolling of beginning so would quarter part fall through this value parties that's we the the together. that last full the some last this integration them felt of be get going question. of and are got in system. on million is sight Tim. that the we off this for way had all we the by the felt we back our captured when could initial the most teams XXXX. line into we

and got dug everybody's teams together. as engaged, the involved, in, Well, working we've we

job in there. Now of the more digging a employees couple have done finding deeper a good really and gems

talking going because that through you this first dig about at of now that's continue increase some quarter the to why to I to is upside So hoping integration more continue point, And can actually million. give $XXX comfortable XXXX. to an we're going I'm we as

tone and in in on our got optimization. maintenance, now operations. XX% system XX-XX call so together commercial, number, two-third when commercially, more $XXX the working we and million optimization on more more we'll the was is now, big cost. it we again, then number, based in cost, The on to right But and -- our setting are probably We XX% as a $XXX our early cost now dug we've in had more is system one-third driver that and on, teams million there activities. on that the procurement, commercial found And worth

of So breakdown. the kind that's

right driver systems quarter the And us first XXXX through the integration. real is now of for

it of it lot work team, got done a by the but time So, and right. to takes good you being get just

be to be time we'll the spending I mode quarter. done normal the first are then a we what as consider operation, we in regard end business. how the do a And we'll that, to with and So, of steady-state by run

just like targets. little to Tim on is coming And how I'd impact. Yes, indication after were the bit noted, well XX teams the against a the a integrating, started the This of of and entity comment the our as Enbridge teams are really the running that, Phillips we able executing team, clear DCP control really had to the together. operational once ground hit transaction, integration we

teams a getting the looking driving been. those numbers and more this ways culture, a from and we future And And these to move this, that's best the commercial capture one cost see best really perspective measure excited integrated, is both biggest we see teams and the of successful value, how of taking one visible perspective. team, the about up and at

going so, are they this do forward. what from what this they to is point And and be

get allowing $X.XX to number. in location structure? up I follow-up Can like Is is for centralized of overall come a then a the you us It's seeing cost mentioned things impressive look that. goal an the back Refining best I what -- a idea OpEx to of Thanks, mean, cash cost the over practice just to at do? unrelated But you the And $X.XX. process expanded, give reductions, know sustainable to savings, time. an Yes. this margin, it barrel Just certainly you it's very one that? being like to

in did time $X.XX that And here? you confident so, you on the the you've set? I was get line where are just did curious of How How you kind start?

And to way, is been Roger, announced that is barrel about this in entire on per for you exciting engaged Day process. or Rich. Investor during the November. organization last the committed $X.XX you this to Yes, know what's as process the savings our indicated, whole well this organization, we me most our We're really has target how

really But So identified yes, most of to local accepting improve site some site to challenge best there business. these the opportunities of in practices. activity the is by are activities oversharing that organization,

And to is process, opportunities how work efficient and to more fundamentally changing they're business. ultimately out of the inefficiencies reduce be of process out uncovering drive their right? business, then these -- in which changing And work the costs that occurring

about we So, a $X.XX already you talked about, year-to-date. barrel if think

by, calculate impressive. and seeing financial that's If calculated you take to into the drive our been you barrels you that line number of the report $X.XX, -- we've that's that quite back can year-to-date if our the to run there. bottom And we're

run And on we've in as a comments, Mark queue, lot the his got indicated rate. the more with

$XXX Our mean we've now Over bottom that's what's bottom run organization, to right? And assigned course, drive it's identified, and target the doesn't to to opportunities $XXX is about of to million. the that it And the pushing impressive rate currently is just get really it's most pushed the identified Refining. means these in. it's But million line, line. locked to of that realized, got

the drive just cost every change what mindset value on from do most in the focus get you're the organization, transformation mindset have our day. most value, easy you going at cost the cost and we this between and see is on And to to some those the do it's we talk And where we about to that Midstream the thing the seeing to and business create see easy it's together. better and most But create phenomenal it's the Refining organization do Yes. process, that really commonalities the employees impact if it's how And real. they targets. move

the team and way It's other every searching more ways VCO end. across refineries. just Whether organization that's real. that savings having value integrated for term. optimize And the going refinery leadership chain these organized that's cost to capture going we've it's business refineries, to to our way optimization to coordinate it's it's that going going make day, synergy the and and the folks And for sustainable sitting drive with it's the do synergistically the just mindset, we on It's not forward. long -- be

John Our next question Royall comes of from JPMorgan.

is line Please open. Your now go ahead.

question. taking Thanks Hi. my for

question the So, FCC. first Bayway on is my

last I July. mid-July around end statement saw restart. was if was been that the confirmed. sure official after for the think your that, We I'm not of reports that's it

if can it's expect us on status and the now. you up of not unit it you the when So, just update and if running full

Rich. units John, the phenomenal so it operations, repair the specification did is they that a producing work. very job efficiently. this normal plan. is assets The back all how complete as team to FCC our running getting done Very are the the running is there complete excited XX. about all Bayway repairs that July itself to and work The performed that date back refinery and unit to up and were of actual on material. That's was online

is of in our as assets each performance utilization record had West City Coast, as little ended our highest parts since Mark's we pick about other when also really teammates in talking this in were of additionally, And just we Bayway. a activity, it and our system-wide struggling help all mindset Ponca organization They Billings. the utilization phenomenal up in crude XX%, And that which XXXX. up refineries a our well and saw bit our to performance on saw Sweeney, focused

to into and that forward quarter. continuing looking So the momentum third and building this -- on we're

early know on Refining. maybe then And but it's sticking I Great. with

you dips expectations a fair XQ. for You takes puts still We've very but on us your weave off could maybe widened some amount tight. give from and bottoms here. out around possibly look can of view relatedly, And then some captures on WCS in

there into would XH views any [ph] helpful. So, be

It's Brian. give with products sense X%. by five-year Distillate, I'll under starts basically of thinking inventories. The averages Gasoline, demand, strength what U.S. low we're lot. talk for in about five-year averages QX. under just product a XX%. averages, we're by That's Maybe we're you a

U.S., in new we've more of the a even lot but have online coming than had the new We outages capacity. capacity

the us, we're last X% U.S. up about globally. about seeing over For X% in gasoline demand year and

So that's strong demand.

the But bit we mostly it globally, segments. we in have distillate, U.S., On the have industrial down a manufacturing demand up. on

We X% continue have in of lots distillate remain really up and to of diesel America, demand cracks Asia up strong X%, Latin pockets strong.

fact, throughout into demand we in over lot perform and gasoline believe every into now. stronger the winter season In distillate as higher the they've we and U.S. that planning they'll a gotten year where continue pad to head

And then are back levels. also inventories, on bit U.S. remain and jet strength numbers diesel. higher domestic finally Global TSA marginal the to in the strong. to essentially jet's travels. add jet, so interestingly, levels. international is the a XXXX demand that little increasing to seat flat throughput Low XXXX And [ph] U.S. some should yields

of, I anybody And on at which WCS, the started WCS right. of here think, then have best interest -- And there is. the widen. heavy crude started mostly we dips, buy the you're has WCS most to widening we've general, to because widen again, seen is in in our

you'll X will very swell which blending, see as being strong. crude. volume in also Canadian if turnarounds start see which fall of month, we'll next remember pad We in then Dillon September, the to And

putting and So, to advantage. dips have those on our been all pressure things the widening

comes question of Ryan next Our from Sandler. Todd Piper

Please ahead. Your line is now open. go

Hi, Marketing structurally generally have in thanks. than first fairly -- guided and kind in you so we your basis, of maybe stronger to much We I Marketing, you've continued are contributions line what year-end the business a Marketing. just side? contributions, don't structurally Or Marketing was which often to? strength appreciated maybe half attribute Is that regular last it on expectations continues do year's talk that first think higher-than-expected kind of exceed about as with half business, but generally

XXXX. We really well thing. since is European in had them added in happy Western business. about U.S. which in this we've have certainly Exceeding have a roughly volumes domestic Brian. mentioned, expectations higher performed up JVs and a of in retail the and a stores, Kevin bunch both a had that. added markets as our retail since QX. We're bit. XQ. strong We're We did XXX good We've at Ryan, quarter is We margins,

And base falling business, as have prices in well has been our business performing been base the finally, oil than feedstock the oil prices. more really lubricants the

tell of you're the when our assuming you thinking mid-cycle our for be So, I'd line in normal demand. QX, with earnings about kind QX, expectations, seasonal should

Yes. us, again in they've on for execution through capitalize and joint and this we that in just compliment And we the years expectations for the everywhere. markets very is very his comment to Brian participate opportunities strategy. and team on. a well-executed make surgical. go don't over of sense Marketing it's that It's strength these several go a that It's would have venture is that it exceeding to and there's strategy I and held competitive so advantage intentional, do

that commercial risks things on And about follow-up some challenges should do your between view legal maybe you're looking from Are start-up required, here -- a comments first of quarter quick and an or there as eye earlier. kind we be start-up until keeping any of just the from we in there kind permits the there? Or Thanks. think on now Rodeo Great. any 'XX, are potential you exist outstanding and at? that -- of how pathway

lower even in projects facility. a challenging, to project conventional transportation Yes, to to is California a any oil Ryan. Permitting production intensity refinery crude facility convert complete very carbon fuel

of by NGOs the did in we state. environmental for our was the document to supporting permits. report that news appeal This So, recently impact couple a an on receive is filed

three the construction work good XX. And issues the news ruling several of project notably, with favor And to can most in of notably the county resolve Phillips continue the the found is issues. the Renewed Rodeo is court

the project we're to courts to track confident in Renewed to And provide and So, Rodeo remain the start issues. necessary information closely XXXX. open we is reconsider county commercial the on very quarter first that working the of with the operation

Okay, thank you.

Thank you.

Thank you.

Our comes next Gabelman of question Cowen. Jason from

Your line go is open please ahead.

result River. a and just droughts thanks question. of advantage on XQ, XQ. of margin when on take were you Ryan's XQ I moves I my Marketing There those think early you're for follow wanted and Hey, for positioned happens, of outlook strength up Rhine taking in that well to in seen supply there. or the to outages? region reports typically as And now question any Have that the

And outperformance then conversely, on would margins chain you're chems, seen a expect, we've And continued as fall seeing July. you in in into Marketing XQ? what result,

beyond Just to mid-cycle? expect and any margins back into views move when outlook that on you to Chemical XQ the then there

Hey Jason, Brian. it's

So, levels yet. if seen where far do to Rhine, on But predict we'll enough the is gotten lower, levels benefit. have some they're we they haven't the Europe Western low we but get haven't get water going in if true water benefit us. then QX, from go levels to Can't there that. benefit water It in really low,

it's this supply regard Yes. Yes, supply, an is And on margins. with got Chemicals, plenty of where -- Tim they're up. interesting Roberts demand, about currently available, matching chain regard this. been and at talk here. with you've to we're With Obviously, not run

So, therefore, the quarters. chain several last been seen you've margins over have dropping

set and we is, feedstock look North look now Where producers, would right high-cost advantaged IHS those really think what at at the Asia price. in America that in will those And in is are it seeing and the at the margins. this going locations is that way now, forward hard, Europe probably and I are we're you're $X.XX are chain the right both in that and about And Middle East. keep going run to added running in which

in to or manage having are other or While capacity those earlier. shut production to having mentioned I reasons any

off in Now working five-year inventory. you above Ethylene and fundamentally, North though, supply are match got inventories got the up demand to you've start here to and get to average. America

to you're thing seeing regard that we products in to CPChem see our a start JV. And main polyethylene, of the needs So, its that's two same so, way down. with direction working got the that

running regard Exports really with as here. North are strong because we're However, on strong we're to well America feedstock. advantaged

our cost, start usually, can you before back So, your accelerate. get would can goes bottom costs is way this is solve got drive say to inflection a we how outlook And but can't it the bottom to up. you lot is yes, working as the prices. where hit then that low of point, you say you soon will directions different the and prices typically cash low in and I

constructive to population constructive that you we outlook fundamentally, got be is still in going still So, and that think growth. the do

all China You still at of not economies have cylinders, being their been churning them. that have one

think that's still saying not be And is all. to not at solid never there will, a going they We good economic position of growth.

global. You're consistent it seeing not just

and we into balance So, up back that case. get mid-cycle and into soak do more out that's will there, will happen help anticipate the capacity that that, a some of you back the bring of markets

divestments. is helpful. And on really follow-up and just my acquisitions That's Great.

mentioned portfolio. top you evaluate to at call You the the the of that continue it

are you positions broader have maybe across Thanks. the how you some thoughts M&A you gaps? in, market? portfolio operate look viewing noncore have on As And any you segments or various where you the

Yes.

across there's as we'll to specific on because portfolio strategic Kevin across place opportunities. I we our others that. have us and looked I that dimensions a may mentioned again, our it's in our assets think value different evaluate wouldn't interest greater and some comment any earlier, may and where to continue not portfolio,

in relatively enhance we some Rodeo and And to up small likewise, they're as we done did doing to running, acquisitions the of we've and series with it's well. opportunities -- California a and quite once Marketing made all those around

we'd nothing we midsized in look that And if and but look significant in nothing things. and we've to opportunistic those. And you some come digest smaller on. transactions But to so, comment them, through some at It's accretive done find where very queue about the small, drive from, time pretty we've Midstream. can those at things, of we'd to kinds value think there's we'll want

smaller that We've got there backbone a shown strong the industry great quite that are and investments in attractive. has can attract backbone that history

our commitment going very very that return. on done would scale. a and of But approach terms going like with got of We've high be would we're and in small, Marketing around think XXXX, high-return disciplined anything accretive, $X So, stick our forward. to for in be we've disciplined billion opportunities around

thanks for call. Great the

you. Thank

UBS. from of comes Manav question next Our Gupta

ahead. Your line is please open go

margin on East like the I significant drop That's Coast talk primarily significant to outage a want XX% you that on such was capture. the Was That the capture? it and some at factors Bayway? Can led start a East of margin the Coast. to from drop quarter. about the a last

Yes. distillate by was what crack. barrel lower and decreasing barrel. lower played to those. cracks volumes a higher the there. that, a primarily gasoline then with to the did it we quarter-over-quarter $XX in That The look there less capture when $XX a market turnaround No, as a Bayway due a at And refer margin into this crack Rich. quite due lower weaker have Configuration at the offset Atlantic costs Basin, were increasing margins. to is played also this impacts was Over But by differentials by and the into those activity bit. market product you realized we lower lot of

the goes this lower. on in and a product of both and then margins that petroleum really experienced also those both products. for secondary the differentials. And market that product other bit sold unnoticed cost the were then And is the And little Humber lower one Bayway secondary NGLs Humber out coke

in capture saw So, lower Atlantic those primary reasons market there you Basin. are the

-- expansion? starting on WTI moving in the year. talk There's What also Coast you your that about would the of coming and little change opinion? West capacity Can a outlook a next differential WCS, to the Okay. the would how crude bit TMX lot

fill Hey for Manav, early that probably TMX this on first, is our come think in year, is forecasted later view will the I Brian. QX. is Well, although line

completely. will That's our not line the think filled I be view.

the to I get some barrels of will feel VLCCs It's there. hard that Asia. I happens. those to see think exported lines, those We'll like on if be are

you fact, can't load In VLCCs.

You ship outside of to them have load ship L.A. to

But -- it to we'll benefit be the Coast could So, that going it's West having forward. what see crude. of happens certainly, a more

Thank you.

Thank you.

of Matthew comes question from Tudor, Blair next Our Pickering, Holt.

ahead. go Your line is open please

for good question. my taking thanks Hey, morning

side, Midstream the could you And hedges? DCP, gas that if Nat in and flowed NGL, of any Midstream unwind Phillips so, EBITDA impact the did the through QX? the quantify On

Yes, overall it we our them We flow less off of through. let NGL appropriate project We those exposure price them Matt, have have Kevin. that when natural this commodity hedging And has did same that roll we portfolio. in Nat of had is did. let have Refining that that. in gas don't products, the -- but in our unwind We consumer to also or have felt DCP on a to as more you our factor position just historically offsets we the

done And so, we that. have

that I no hedges have is those any we place. specific number. don't are a out the I sensitivities Midstream fact reflect we done given think for haven't updated longer to given know number we've there. What in the

commodity sensitivity before. higher the Midstream And so, slightly a price see to you than

to refined but sounds Latin XXX,XXX give was if day. a shift to Okay, with product seeing per year more I for it, How then did And I fewer ago, mix QX? a don't I good. out missed in number did this are And it it year? you a barrels exports know trend you think and Europe headed barrels America?

we Russia more barrels exporting was to large barrels, exporting barrels more we Europe. XXX,XXX This Latin diesel others been quarter, have is some and particularly Brian. part, exported Sweeny Europe In XXX,XXX into refinery exported our sulfur importing where have more Like from and up. making is barrels said, distillate over was XXX,XXX to We higher America. to which that this change as flows U.S. barrels, Russia Brazil, to trade

Thank Brain. you.

you. Thank

Cheng from Paul of comes question next Our Scotiabank.

line please Your ahead. open go is

morning good you, guys. Thank

and is biodiesel. this that be being Mark. we Mark, probably that renewable think still refinery. you you several XXX%. for years' at may California if look by of I in have and end the Today, combined Wilmington, consumed Carson California, in XX% time, the up And diesel to

your facility may So, what's of to like, and need going how the configuration to change? role that look

as on level. at a well. cover going high on Paul, what's It'll some that there think views I Yes. has Brian help

at the I at is that facility. we're a could spectrum, big look doing to provide And end we what LAX from jet and of think certainly well jet. would opportunity more one connected we there, to

renewable mitigant market. of San will replacement diesel we that is as opportunity take gallon-for-gallon diesel well. one that go almost with a away the production the so offline, leave there is as an that And that think it's and I Francisco refinery

out. balance from And an on think Brian I to California that are can that, things but and opportunity that's -- so, we comment today there further exports

I producer is would by LA best the of neighboring Paul, exported add, states. amount at to actually pipeline distillate And

at that we of a lot refinery. don't So, distillate make California

So, it's, nonissue. least for at a us,

Okay.

your And any the to Or think portfolio? on that. if that you is I basis, political given plan there do think to should of a part that and have -- there are Rodeo? what mean, you you environment be do longer-term that, So, something that everything, may done

politically that's very in Well, publicly, But Paul, do difficult frankly, environment. looking we going very that at their the so we refinery we're believe And I products LA California be there, challenging that market. the environment yeah may the it's doing that keep think supplying be environment. to implement in can watching been competitive it's EV challenging overplayed. It in it's everything market's and is, everything to mandates. aspirations we're refinery keep to to whether carefully EVs our that But a around LA competitive and for control

Corridor, margin from at Okay. condition Central recovery either actually doing benefit your capture realization or we just you. the that first And we for Rich it's see margin downtime is normal market When and the final the one, this that I quarter? that Thank Is maybe think your one-off there in look better Kevin. we or thought. you're in any or than

really to Paul, last as this running and I'll is of the City reason Rich. yield, those well a have improving strong facilities facilities It's with is the there. on market there. very, exceeding very which answer. The Billings an from seeing specifically here our off Central start Corridor, product quarters several that it is utilization Ponca continue over refinery. performance primary Both the clean and well operate, been capture expectations as the you're

a all described. of operational, as clarify, function are items not just Rich to It is that it's And benefiting. one-off

you. Thank

Stanley. question ahead. next comes go your please Morgan live Joe question of from Laetsch Our is

Beyond. on thanks Great

topics to hit wanted a I of we've to go already So, back on first Chemicals. But couple on.

could XXXX that? about half us give should the just the environment back the with from how up projects, of earnings you just projects So, we year, and a sense two contribution CPChem think of probably two on a margin uplift, those starting normalized in

in that, On expected start are XXXX. Yes. up to those probably to projects clarify, Joe,

And so, okay. on the hexene units,

has X unit, show was yes, my hexene So, to apologies third to at the been should the probably start quarter. the up that earnings And level the Sweeny. completed They'll start regard of that, some in at I bigger here. thinking quarter. to of be was through with in you projects. mode start-up completed. see X-hexene fourth down We're looking

excuse splitter which or sometime at this to of quarter, Cedar the The me. in end also ready be up they're mid-fourth Bayou, completed is to completion is final project that point project, at the in going everything the by get

up. you're getting So, they toward going really anything probably not starts probably go out them the probably And landing may really something there. units, to you to started be shaking before for grueling show more as see meaningful first both through quarter a of up them,

in Yes. that's And well CPChem it I executed the environment. as so and budget brought under this hexene think notable in project

potential just the on And could to to well. just renewable made going you any timing I Thank. progress there? jet to Can Rodeo. talked fuel produce produce talk about Any you facility you've be thoughts when made about a of have that as then all decision Great. SAF? know the out back

from on crude renewable sustainable with of really Yes, shift aviation this the do a missing sustainable the to a market fuel What's barrels able the jet The The project, will capability it's that. of in to equation as designed, we that's facility jet is is will SAF. aviation whole barrels to producing that's oil-based indicator production. produce of be jet Rich. as production. quickly will as day blended renewable of XX,XXX place, traditional backbone XX,XXX And soon day have a the fuel

something the diesel of that some away to us Yes. incent produce SAF. some. yields. path renewable SAF of renewable will There into so about you part negative just would be Rodeo, produce produce are the an economics today favor We fuels. not would to important renewable additional that at from toward just SAF because require But our that that's maximize believe diesel divert would more will saying SAF. diesel And investment any But renewable

production is the level. increase And that and capability invest to there

Yes.

you. thank Great

back you. to the call Thank now closing This for Mark concludes remarks. I'll the turn question-and-answer Lashier session. over

thanks and for executed second-quarter things questions. Alex, results to November. all you focusing your as financial our control, and by strategic strong to commitments owners importantly, the Thank our We priorities operating we delivered we on made the on we most in you, of

of healthy to quarter -- pace crude had We And utilization above-industry with another we continued shareholders. and in strong operating returning Refining, of Refinery costs. cash a average operating performance lower

to business our buy-in a to and annual rate year-end our raised our transactions Midstream enterprise. are achieve of NGL savings completed our the drive executing $X targets and units business. up to of across billion value a NGL transformation $XXX wellhead-to-market million, in mindset over series creation track by We're of the least while initiatives at We're and wrapping run foundational synergy realizing on strategy transformative driving DCP's

deliver strategic remain And financial The we committed all we current you look third outstanding you our for your As shareholders. capture capital disciplined allocation, to to XX. and cash strength, our Thank priorities, we operational us to updating to forward in returning position interest strong performance on will in on the quarter. environment the progress. market Phillips

call. for today's you Thank joining

disconnect your now may You lines.