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Refiner Phillips 66 said on Wednesday it plans to return up to $12 billion more to shareholders by end-2024 through dividends and stock buybacks, sending its shares up 2.3%.
Refiners have minted huge profits this year, with plants running at record levels to meet strong export demand due to a supply squeeze following Russia’s invasion of Ukraine and plant closures.
Phillips posted a bumper $5.4 billion profit for its third quarter ended Sept. 30, compared with $402 million a year earlier. It also returned $1.2 billion through share repurchases and dividends during the quarter.
The Phillips 66 gas station in Superior, Colorado, U.S., July 27, 2017. REUTERS/Rick Wilking/File Photo (Reuters Photos)
Analysts at Tudor, Pickering, Holt & Co, however, said Phillips’ total capital return yield severely lagged that of peers, despite larger-than-expected buybacks in the third quarter.
GAS PRICES TO REMAIN HIGH POST MIDTERMS
The company, which plans to boost adjusted earnings before interest, taxes, depreciation, and amortization by $3 billion over the next three years, said its board had approved an additional $5 billion for stock buybacks.
Phillips’ hefty investor-return plan comes at a time President Joe Biden has demanded that energy companies invest their profit into boosting production before considering shareholder returns.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PSX | PHILLIPS 66 | 104.22 | -0.92 | -0.88% |
US OIL REFINERS TO KEEP RUNNING AT BREAKNECK SPEEDS IN FOURTH QUARTER
An aerial view of Phillips 66 oil refinery is seen in Linden, New Jersey, United States on May 11, 2022. | Getty Images
The company also said it plans to reduce employee headcount by 1,100 by end-2022 as it seeks to meet its savings target of $500 million and aims to save $1 billion in costs by end-2023. It expects $2 billion in annual capital spend through 2024.
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“Improving our refining performance is absolutely key to enhancing our strong history of returning cash to shareholders,” CEO Mark Lashier said on the investor call, adding that shareholders can expect annual dividends to increase going forward.
