8 Best Oil Refinery Stocks To Invest In

03. Phillips 66 (NYSE:PSX)

Number of Hedge Fund Holders: 33

Phillips 66 (NYSE:PSX) is a major player in the oil refining industry, operating as an energy manufacturing and logistics company. Its refining segment converts crude oil and other feedstocks into a variety of petroleum products such as gasoline, diesel, and aviation fuels. With refining being one of its primary operations, Phillips 66 (NYSE:PSX) has established itself as a leading company in the sector. The stock’s robust financial performance, strategic investments, and commitment to operational excellence make it a compelling addition to the list of the best oil refinery stocks to invest in.

In its Q2 2024 earnings report, Phillips 66 (NYSE:PSX) exceeded market expectations, reporting earnings per share (EPS) of $2.31 against an expected $1.98. This solid performance was primarily driven by high crude utilization rates and an improved cost structure. The company’s refining operations achieved a utilization rate of 98%, the highest in over five years. Moreover, Phillips 66 (NYSE:PSX) demonstrated efficiency by reducing its refining costs by nearly $1 per barrel, achieving adjusted controllable costs of $5.93 per barrel.

One of the key highlights of the quarter was Phillips 66 (NYSE:PSX) strategic acquisition of Pinnacle Midstream, enhancing its midstream capabilities and bolstering its presence in the Permian Basin. The move is expected to contribute to stable earnings through high-quality, fee-based contracts. Additionally, the company successfully executed the sale of its 25% non-operated interest in the Rockies Express Pipeline, generating $685 million in proceeds, which helped Phillips 66 (NYSE:PSX) surpass its target of $3 billion from asset dispositions.

The company’s disciplined approach to capital allocation is reflected in its commitment to returning more than 50% of operating cash flows to shareholders through dividends and share repurchases. Since July 2022, Phillips 66 (NYSE:PSX) has returned over $11 billion to shareholders, with plans to reach $13 billion to $15 billion by the end of the year. This strong cash flow generation, coupled with prudent cost management and strategic investments, underscores the company’s financial strength and long-term growth prospects. Overall, Phillips 66 (NYSE:PSX) focus on maximizing shareholder value, expanding its asset base, and achieving operational excellence positions it well among the top oil refinery stocks to invest in.