Phillips 66 Unveils Capital Budget and Divests Pipeline Stake
Phillips 66 (NYSE: PSX) shares fell by 3% following two separate announcements that could potentially affect investor sentiment. The energy company announced a capital budget for 2025 and the sale of a stake in a pipeline; both developments appear to have impacted stock performance.
The company's capital budget for 2025 is set at $2.1 billion. Of this budget, $998 million is allocated for maintenance capital, while $1.1 billion is dedicated to growth projects. Chairman and CEO Mark Lashier highlighted the company's commitment to capital discipline and strategic investments aimed at enhancing competitiveness in the natural gas liquids (NGL) value chain as well as refining.
The budget includes significant investments across various sectors of the company’s operations. A total of $975 million is earmarked for midstream activities; of this, $429 million will be used for maintenance projects, and $546 million will be directed towards growth, aiming to strengthen the company's position in key basins and increase gas processing capacity. The refining sector will see an investment of $822 million, nearly equally split between maintenance and growth capital to support high-return, low-capital projects. Additional funds are allocated for the Marketing and Specialties sector, as well as for the Rodeo Renewable Energy Complex focusing on renewable diesel and sustainable aviation fuel production.
Additionally, Phillips 66 announced the sale of its 25% non-operated equity interest in Gulf Coast Express Pipeline LLC for approximately $865 million to an affiliate of ArcLight Capital Partners, LLC, subject to adjustments. This transaction exceeds the company’s $3 billion divestiture goal, and Lashier emphasized ongoing efforts to optimize the portfolio and rationalize non-core assets. This move reflects the company’s strategy to enhance its asset base and strengthen its position as an integrated downstream energy provider.
Phillips 66 and its joint ventures, Chevron Phillips Chemical Company LLC (CPChem) and WRB Refining LP (WRB), are expected to have total capital expenditures of $3 billion. While CPChem continues to finance the construction of petrochemical facilities, WRB will focus on maintenance projects.
This information is based on Phillips 66’s press release. The company's stock response indicates that investors are assessing the impact of these strategic decisions on the company's future performance and financial health.