What Independent Financial Analysts Say About Phillips 66

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Conoco and Phillips 66 announced on November 18, 2001 that their boards of directors had unanimously approved a definitive agreement for a "merger of equals". The merged company, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name of a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Photo: Hugh Pickens all rights reserved.

by Hugh Pickens, Ponca City Oklahoma

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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal <html>
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Corporate

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Strategic and Financial

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Business Segments

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Stock Market

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Reference

Refining Business Segment

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Increasing Profitability in Refining Business Segment

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Detailed Look at Ponca City Refinery

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Other Phillips Refineries

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Other Locations


Contents

Master Index of Articles about Phillips 66

File:Refinery crane.jpg
The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the Refinery Complex in Ponca City. The supercrane was used to move two new 232 ton coker reactor units within the refinery on September 29, 2013. Phillips was willing to invest $70 million in the two new coker reactor units because the Ponca City Refinery is one of the best run, safest, and most profitable of Phillips' fifteen worldwide refineries and Garland wants the refinery in Ponca City to continue to run smoothly and profitably. This photograph of the supercrane in Ponca City was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.
File:Pickens and Garland.jpg
Hugh Pickens, an analyst who closely follows Phillips 66, speaks with Phillips CEO Greg Garland (right) about the disposition of the North Tower, South Tower, and Research West at Phillips' Ponca City Refinery after Garland's speech to the Bartlesville Chamber of Commerce on August 13, 2014.

by Hugh Pickens, Ponca City Oklahoma

<html>
</html>

The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal <html>
</html>

Corporate

<html>
</html>

Strategic and Financial

<html>
</html>

Business Segments

<html>
</html>

Stock Market

<html>
</html>

Reference

Refining Business Segment

<html>
</html>

Increasing Profitability in Refining Business Segment

<html>
</html>

Detailed Look at Ponca City Refinery

<html>
</html>

Other Phillips Refineries

<html>
</html>

Other Locations


Introduction

File:Wallstreetbull.jpg
Wall Street Bull. Phillips 66 will be a publicly traded company (PSX) and a number of independent financial analysts will be following the company. The purpose of this web site is to also follow Phillips 66 and document and discuss the company's plans and policies with an emphasis on understanding the impact of Phillips 66' business decisions on the community of Ponca City, Oklahoma. Photo: Scott Beale / Laughing Squid Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

On May 1, 2012 ConocoPhillips split into two separate publicly-traded companies: an upstream company that will retain the name ConocoPhillips and concentrate on exploration and production, and a downstream company, to be named Phillips 66, that will include refining and marketing (R&M), chemicals, and midstream business segments. The refinery in Ponca City, with over 700 employees the single largest employer in Ponca City, is part of the R&M segment and will go into Phillips 66. Phillips 66 will be a publicly traded company (PSX) and a number of independent financial analysts will be following the company. The purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the refinery in Ponca City, Oklahoma.

What Independent Financial Analysts Say About Phillips 66

November, 2014

November 18, 2014: Goldman Sachs Initiates Coverage on Phillips with Buy Rating

Ticker Report reported on November 18, 2014 that Goldman Sachs began coverage on shares of Phillips 66 in a research note setting a “buy” rating and a $103.00 price target on the stock. Goldman Sachs’ target price indicates a potential upside of 41.52% from the stock’s previous close.[1]

October, 2014

October 14, 2014: Barclays Reaffirms Price Target of $109 for Phillips

Ticker Report reported on October 14, 2014 that Barclays reiterated its “overweight” rating for Phillips. They currently have a $109.00 target price on the stock, up from their previous target price of $100.00. Barclays’ price objective points to a potential upside of 49.21% from the company’s current price.[2]

October 9, 2014: Deutsche Bank Sets Price Target of $99 for Phillips

Benzinga reported on October 9, 2014 that Deutsche Bank initiated coverage of Phillips 66 with a Hold rating and price target of $99.[3]

October 9, 2014: Citigroup Upgrades Phillips to Buy

WKRB reported on October 9, 2014 that Citigroup Inc. upgraded shares of Phillips 66 from a neutral rating to a buy rating and maintained their previous $88.00 price objective on the stock.[4]

October 1, 2014: RBC Capital Sets Price Target of $92 for Phillips 66

WatchList News reported on October 3, 2014 that RBC Capital began coverage on shares of Phillips 66 in a research note issued to investors on October 1, 2014 and issued a sector perform rating and a $92.00 price target on the stock.[5]

September, 2014

September 28, 2014: Tulsa World Says Phillips Seems to Be Firing on All Cylinders

Rod Walton reported in the Tulsa World on September 28, 2014 that Philips seems to be firing on all cylinders tripling its stock price since it became and independent company in spring 2012 and increasing its dividend by nearly a third just this year. Keith Goddard, CEO of Capital Advisors Inc., ranked Phillips 66 as his No. 2 stock for the Tulsa World Investment Guide because of its diversity beyond crude oil refining and retail outlets. “Phillips 66 is distinguished from other refiners by its heavier interest in chemical and midstream operations,” Goddard said. “The company hopes to increase its presence in both businesses over the next several years to dampen the volatility of the refinery business.” Goddard sees strength in that potential diversity of Phillips 66. “If management is successful in growing the midstream and chemical businesses over the next few years, the valuation multiple for the stock might improve,” he said.[6]

September 23, 2014: JP Morgan Sets Overweight on Phillips 66

Mideast Times reported on September 23, 2014 that PMorgan Chase & Co. assumed coverage on shares of Phillips 66 setting an “overweight” rating on the stock.[7]

September 23, 2014: Zacks Reinstates Neutral Rating on Phillips 66

Ticker Report reported on September 23, 2014 that Phillips 66 stock had its “neutral” rating restated by Zacks in a research report issued. They currently have a $88.00 price target on the stock. “We are maintaining our Neutral recommendation on one of the world’s largest independent refiners, Phillips 66. Our bullishness stems from the refiner’s diversified presence across the U.S. supported by extensive transportation and logistics assets which provide steady supply of crude from domestic, Canadian and international sources. We believe management’s steady dividend increases, the ongoing share repurchase program and recent acquisition of Beaumont Terminal could further boost shareholder value. However, we find the current valuation fair and adequately reflecting the company’s growth prospects. Moreover, Phillips 66’s capital intensive core business is also faced with a high degree of volatility. This is expected to limit its ability to post positive earnings surprises. As a result, our long-term total return expectation for Phillips 66 remains muted."[8]

September 15, 2014: Howard Weil Raises Phillips 66 Price Target from $87to $95

Analysts at Howard Weil raised their price target on shares of Phillips 66 from $87.00 to $95.00 in a research note on Monday, September 15th. They now have a “sector outperform” rating on the stock.[9]

July 2014

July 27, 2014: Bullish: Howard Weil Upgrades Phillips to Sector Outperform

Watchlist News reported on Juy 27, 2014 that research analysts at Howard Weil upgraded their rating for Phillips to “sector outperform” rating.[10]

July 11, 2014: Bullish: Citigroup Raises Phillips Price Target to $88

Watchlist News reported on Juy 27, 2014 that research analysts at Citigroup raised their price target for Phillips on July 11, 2014 from $84 to $88.[11]

June 2014

June 20, 2014: Bullish: Zacks Reiterates Neutral Rating for Phillips with Price Target of $90

Watchlist News reported on Juy 27, 2014 that research analysts at Zacks reiterated their “neutral” rating and price target for Phillips on June 20, 2014 of $90.[12]

June 4, 2014: Bullish: JP Morgan reiterated Overweight Rating on Phillips

Watchlist News reported on Juy 27, 2014 that research analysts at JP Morgan reiterated their “overweight” rating and price target for Phillips on June 4, 2014 of $68.[13]

May 2014

May 5, 2014: Neutral at 83.53: Citigroup Reiterates Hold Rating on Phillips

Ticker report reported on May 5, 2014 that Citigroup reiterated its hold rating on Phillips with a price objective of $84.00 indicating a potential upside of 0.08% from the stock’s previous close.[14]

April 2014

April 17, 2014: Bullish at 81.11: TheStreet Upgrades Phillips from Hold to Buy

Ticker Report reported on April 17, 2014 that analysts at TheStreet upgraded Phillips from a “hold” rating to a “buy” rating. The analysts wrote, “Phillips 66 (PSX) has been upgraded by TheStreet Ratings from hold to buy. The company’s strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins.”[15]

April 13, 2014: Bearish at 76.75: Tudor Pickering Downgraded Shares of Phillips

Ticker Report reported on April 17, 2014 that analysts at Tudor Pickering downgraded shares of Phillips from a “buy” rating to an “accumulate” rating.[16]

April 11, 2013: Neutral at 76.69: Bank of America Reiterates Neutral Rating on Phillips

Ticker Report reported on April 17, 2014 that analysts at Bank of America reiterated a “neutral” rating on shares of Phillips in a research note on April 11, 2014 with a $95.00 price target on the stock, up previously from $86.00.[17]

April 9, 2014: Bearish at 77.59: UBS AG Lowers Price Target for Phillips from $91 to $90

WKRB reported on April 9, 2014 that UBS AG decreased their target price on shares of Phillips 66 (NYSE:PSX) from $91.00 to $90.00.[18]

April 4, 2014: Bearish at 79.57: Zacks Downgrades Phillips to Hold

Zacks reported on April 4, 2014 that they have downgraded to Hold. "Over the past one month, the company has seen a negative trend in earnings estimate revision. For the first quarter of 2014, two estimates moved down in the past 30 days, with no upward revision. For the full year, two estimates moved down while only one estimate was revised upward."[19]

February 2014

February 10, 2014: Bullish at 74.28: Argus Upgrades Phillips from Hold to Buy

WKRB reported on February 10, 2014 that Phillips was upgraded by equities researchers at Argus from a “hold” rating to a “buy” rating. The firm currently has a $90.00 price target on the stock. Argus’ price target points to a potential upside of 21.16% from the company’s current price.[20]

February 3, 2014: Bullish at 73.09: Barclays Sets Price Target of $90 for Phillips

Ticker Report reported on February 3, 2014 that Barclays upped their price objective on shares of Phillips 66 from $85.00 to $90.00. The firm currently has an “overweight” rating on the stock. Barclays’ price target indicates a potential upside of 23.14% from the stock’s previous close.[21]

January 2014

January 28, 2014: Bearish at 74.90: Phillips Rating Lowered to Neutral at Credit Suisse

WKRB reported on January 28, 2014 that Phillips was downgraded by investment analysts at Credit Suisse from an “outperform” rating to a “neutral” rating.[22]

January 10, 2014: Bullish at 78.13: Howard Weil Upgrades Phillips to 'Sector Outperform'

Northfork reported on January 10, 2014 that Howard Weil upgraded Phillips from a “sector perform” rating to a “sector outperform” and set a $85.00 price objective on the stock.[23]

December 2013

December 16, 2013: Bullish at 71.97: Goldman Sachs Raises Price Target from $77 to $89

WKRB reported on December 17, 2013 that Goldman Sachs raised its price objective from $77.00 to $89.00.[24]

December 9, 2013: Bullish at 71.23: J.P. Morgan Raises Price Target on Phillips from $68 to $81

Benzinga reported on December 9, 2013 that J.P. Morgan anaylst Katherine Lucas Minyard reiterated an Overweight rating on Phillips and raised the price target from $68.00 to $81.00. We believe PSX is positioning itself for healthy earnings and cash flow growth, with advantaged feedstock opportunities driving margin expansion, increasing exposure to international markets via export capacity growth, and an increasing contribution from the petrochemicals business as large-scale capacity additions are brought online. Our December 2014 price target of $81 for PSX results in 14% potential upside from current price levels, based on our margin modeling assumptions, with a 2.2% dividend yield supporting potential total returns.”[25]

December 9, 2013: Bullish at 71.23: Deutsche Bank Upgrades Phillips to Buy

WKRB reported on December 9, 2013 that Deutsche Bank upgraded Phillips from a “hold” rating to a “buy” rating and set a $80.00 price objective on the stock, up from their previous price objective of $64.00.[26]

December 3, 2013: Neutral at 70.60: Bank of America Says Philips is at Fair Value

Ticker Report reported on December 4, 2013 that Bank of America Corp. reaffirmed their fair value rating on shares of Phillips. “Phillips’ focus on non-refining investment is intended to diversify earnings away from what is still the most volatile aspect of the investment case. While it retains meaningful exposure to advantaged crude, this has already lifted the share prices to levels we believe now stand on the highest multiple in the sector, and with limited upside to fair value.,” Bank of America Corp.’s analyst wrote.[27]

November 2013

November 1, 2013: Bullish at 61.43: Credit Suisse Raises Phillips Price Target from $66 to $70

Ticker Report reported on December 4, 2013 that Credit Suisse raised their price target on shares of Phillips 66 from $66.00 to $70.00 in a research note to investors on Friday, November 1st. They now have an outperform rating on the stock.[28]

October 2013

For the month of October, 2013 overall analyst consensus is bearish with three analysts bearish. Cumulative for 2013 overall analyst consensus is bullish with nine analysts bullish, eight analysts bearish and three analysts neutral.

October 10, 2013: Bearish at 56.89: Credit Suisse Lowers Phillips Price Target from $70.00 to $66.00

Ticker Report reported on October 10, 2013 that Credit Suisse decreased their price objective on Phillips from $70.00 to $66.00 in a research report issued to clients and investors on October 9, 2013.. The firm currently has an “outperform” rating on the stock.[29]

October 4, 2013: Bearish at 59.17: Oppenheimer downgrades Phillips to Market Perform

Ticker Report reported on December 4, 2013 that Oppenheimer downgraded shares of Phillips 66 from an outperform rating to a market perform rating in a research note to investors on Friday, October 4th.[30]

October 1, 2013: Bearish at 57.90: Morgan Stanley Lowers Phillips Price Target to $71.00

Zolmax News reported on October 1, 2013 that Morgan Stanley cut their price target on shares of Phillips from $79.00 to $71.00. The firm currently has an “overweight” rating on the stock.[31]

September, 2013

For the month of September, 2013 overall analyst consensus is bullish with two analysts bullish, one analyst bearish, and one neutral. Cumulative for 2013 overall analyst consensus is bullish with nine analysts bullish, five analysts bearish and three analysts neutral.

September 19, 2013: Bullish at 59.13: Analyst Meryl Witmer is Bullish on Phillips

CNBC reported on September 19, 2013 that Berkshire Hathaway board member Meryl Witmer says that as value investors, "our style is really bottoms up. So we're looking at individual companies and try to find a cheap one, find something that's misperceived. I think one area is refining, and in particular Phillips 66, which is a position of ours," said Witmer. Besides refining, Phillips 66 also has a chemical business that's a "great niche, very high return on capital," and a "midstream business that moves oil and gas around," Witmer said. Witmer said she bought shares of Phillips 66 when it was spun out of Conoco Phillips in the spring of 2012. "We've [also] bought some since, even at around these current prices."[32]

September 18, 2013: Neutral at 57.25: Citigroup Initiates Coverage of Phillips with Neutral Rating

WKRB reported on September 18, 2013 that Citigroup Inc. had initiated coverage on shares of Phillips with a “neutral” rating on the stock.[33]

September 10, 2013: Bullish at 56.79: Oppenheimer Reiterates Buy Rating on Phillips

WKRB reported on Sepmber 10, 2013 that Oppenheimer reiterated its Buy rating on Phillips with a a $75.00 price target on the stock.[34]

September 9, 2013: Bearish at 57.47: Argus Downgrades Phillips from Buy to Hold

Seeking Alpha reported on September 9, 2013 that Argus had downgraded Phillips from Buy to Hold citing a 33% gain in PSX during the past 12 months vs. 16% for the S&P 500.[35]

August 2013

For the month of August, 2013 overall analyst consensus is bearish with one analyst bearish. Cumulative for 2013 overall analyst consensus is bullish with seven analysts bullish, four analysts bearish and two analysts neutral.

August 14, 2013: Bearish at 58.54: Oppenheimer Lower Target Price from $80 to $75

Zolmax reported on August 14, 2013 that Oppenheimer trimmed their target price for Phillips from $80.00 to $75.00. Oppenheimer currently has an outperform rating on the stock. The analysts noted that the move was a valuation call.[36]

July 2013

For the month of July, 2013 overall analyst consensus is bullish with one analyst bullish. Cumulative for 2013 overall analyst consensus is bullish with seven analysts bullish, three analysts bearish and two analysts neutral.

July 8, 2013: Bullish at 57.24: Wells Fargo Upgrades Phillips 66 (PSX) to Outperform

StreetInsider reported on July 8, 2013 that Wells Fargo has upgraded Phillips 66 from Market Perform to Outperform and adjusted its valuation range to $58-$68 from $64-$67. Based on the significant narrowing of the Brent/WTI differential and a narrower light/heavy spread likely to start in Q3 2013, they are lowering 2013 EPS estimates across the refining sector.[37]

June 2013

For the month of June, 2013 overall analyst consensus is neutral with two analysts neutral. Cumulative for 2013 overall analyst consensus is bullish with six analysts bullish, three analysts bearish and two analysts neutral.

June 16, 2013: Neutral at 63.81: Simon Moore Says Phillips Has No Upside Left

Simon Moore wrote on Seeking Alpha on June 16, 2013 that Phillips has had a good run since going independent in 2012 rising 90% in the last 12 months, but that there is no longer upside given the substantial move up in the stock price. "The increased valuation is primarily because the market is willing to pay higher multiples for chemical businesses than a year ago, and to a lesser extent, because Philips 66 has bought back shares and paid down debt with free cashflow, somewhat offset by a rise in corporate costs," writes Moore. "As a result, there is no reason to rush to own Philips 66 since it is reasonably valued." Moore adds that although he currently holds Phillips, he will exit when he finds a better opportunity. "We should not expect Philips 66's performance to diverge materially from the broader stock market in the coming months," concludes Moore.[38]

June 10, 2013: Neutral at 65.11: TheStreet Gives "Hold" Rating to Phillips

Utah People's Post reported on June 10, 2013 that Phillips had its “hold” rating reaffirmed by investment analysts at TheStreet. “Phillips 66 (PSX) has been reiterated by TheStreet Ratings as a hold with a ratings score of C-. The company’s strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company’s profit margins have been poor overall.”[39]

May 2013

For the month of May, 2013 overall analyst consensus is bullish with one analyst bullish and none bearish. Cumulative for 2013 overall analyst consensus is bullish with six analysts bullish and three analysts bearish.

May 2, 2013: Bullish at 59.67: UBS AG Raises Phillips Price Target from $70.00 to $71.00

Mideast Times reported on May 6, 2013 that UBS AG raised its price target for Phillips from $70.00 to $71.00 in a report released on May 2, 2013. UBS AG currently has a buy rating on the stock.[40]

April 2013

For the month of April, 2013 overall analyst consensus is bearish with one analyst bearish and none bullish. Cumulative for 2013 overall analyst consensus is bullish with five analysts bullish and three analysts bearish.

April 17, 2013: Bearish at 57.99: Deutsche Lowers Phillips Price Target to $64

Barrons reported on April 17, 2013 that Deutsche had lowered its price target for Phillips to $64 and given the stock a hold rating. Deutsche said that producing gasoline is getting less profitable because of cost increases, or the threat of them caused by the higher cost of Renewable Identification Numbers (RINs), and stricter vehicle-emission and gasoline standards. "The narrowing spread between domestic and global oil prices is another problem for profits," writes Dimitra DeFotis. "Oil prices have dropped significantly in recent weeks: West Texas Intermediate crude is down to about $87 per barrel, and the global benchmark, Brent, has fallen even more, to near $100. The spread between the two, once $20, was $13 at the end of the first quarter, and could be $8 to $9 by the end of the third quarter, Deutsche says. This matters most for U.S. refiners that use domestic oil sources, but export gasoline with Brent prices."[41]

March 2013

For the month of March, 2013 no financial analysts issued new ratings for Phillips. Cumulative for 2013 overall analyst consensus is bullish with five analysts bullish and two analysts bearish.

February 2013

For the month of February, 2013 overall analyst consensus is bullish with four analysts bullish and none bearish.

For the year of 2013 overall analyst consensus is bullish with five analysts bullish and two analysts bearish.

February 11, 2013: Bullish at 64.02: Oppenheimer Raises Phillips Price Target from $60.00 to $80.00

Marketwatch reported on February 11, 2013 that Oppenheimer raised their price target for Phillips from $60.00 to $80.00 saying it expects strong performance "to continue longer than many expected." Oppenheimer kept an overweight rating on the stock.[42]

February 11, 2013: Bullish at 64.02: Deutsche Bank Raises Phillips Price Target from $60.00 to $69.00

Jags Report reported on February 11, 2013 that Deutsche Bank raised their price target for Phillips from $60.00 to $69.00. They currently have a hold rating on the stock.[43]

February 4, 2013: Bullish at 62.75: UBS AG Raises Price Target from $64.00 to $68.00

Zomax News reported on February 4, 2013 that UBS AG has raised their price target for Phillips from $64.00 to $68.00.[44]

February 1, 2013: Bullish at 60.57: Argus Raises Phillips Price Target from $67.00 to $75.00

Jags Report reported on February 11, 2013 that Argus raised their price target for Phillips from $67.00 to $75.00. They now have a buy rating on the stock.[45]

January 2013

For the month of January, 2013 overall analyst consensus is bearish with one analyst bullish and two analysts bearish.

January 12, 2013: Bullish at 50.58: Barclays Capital Raises Phillips Price Target from $70.00 to $80.00

Zolmax News reported on January 12, 2013 that Phillips 66 had its price target lifted by Barclays Capital from $70.00 to $80.00 in a research note released on January 9, 2013. Barclays currently has an overweight rating on Phillips.[46]

January 10, 2013: Bearish at 51.32: Zacks Downgrades Phillips Rating

Jags Report reported on February 11, 2013 that Zacks downgraded shares of Phillips 66 from an outperform rating to a neutral rating in a research note to investors on Thursday, January 10th. They now have a $58.00 price target on the stock.[47]

January 7, 2013: Bearish at 51.36: Howard Weil Downgrades Phillips to Market Perform

The Jags Report reported on January 7, 2013 that Howard Weil had downgraded shares of Phillips 66 from an outperform rating to a market perform rating. They currently have $61.00 target price on Phillips.[48]

December 2012

For the month of December, 2012 overall analyst consensus is bullish with two analysts bullish.

December 14, 2012: Bullish at 52.17: Oppenheimer Raises Phillips Price Target to $60

Dividend.com reported on December 14, 2012 that analysts at Oppenheimer raised their price target to $60 for Phillips 66 and gave Phillips an “Outperform” rating after a positive investors meeting on December 13, 2014.[49]

December 10, 2012: Bullish at 52.31: Credit Suisse Says Phillips Theoretical Target Price is $77

Nasdaq reported on December 10, 2012 that Credit Suisee says that although investors are nervous about a transition from "supernormal" WTI-Brent spreads to a new normal as pipeline infrastructure is added through 2013-14, Credit Suisse thinks Phillips has substantial non-refining value and can "force valuation" during the adjustment period. "PSX's refining business has a good share of higher multiple Mid-Con EBITDA (65%) and we expect PSX to provide an update on capturing higher volumes of cheap domestic crude across its system which could lead to EBITDA upgrades," write Credit Suisse analysts. "Free cash generation is strong, supportive of a higher dividend payout and continued share repurchases. Our theoretical value is $77/share."[50]

November 2012

For the month of November, 2012 overall analyst consensus is bullish with two analysts bullish.

November 9, 2012: Bullish at 49.00: Deutsche Bank Lowers Phillips from a “Buy” Rating to a “Hold” Rating

The Daily Political reported on November 9, 2012 that analysts at Deutsche Bank have downgraded Phillips from a “buy” rating to a “hold” rating in a research report issued to clients and investors.[51]

November 6, 2012: Bullish at 47.76: Tudor Pickering Initiates Coverage with a "Buy" Rating

The Daily Political reported on November 9, 2012 that analysts at Tudor Pickering have initiated coverage of Phillips on November 6, 2012 with a “buy” rating[52] and a price target of $79. "We all dream of finding a dusty muscle car with an engine in perfect running shape. For us finance types, [Phillips 66] is close," the analysts said. "The engine keeps humming."[53]

October 2012

For the month of October, 2012 overall analyst consensus is bullish with four analysts bullish.

October 26, 2012: Bullish at 47.50: Credit Suisse Upgrades Phillips to Outperform

The Jags Report reported on October 26, 2012 that Credit Suisse has upgraded shares of Phillips 66 from a neutral rating to an outperform rating in a report released on Friday. Credit Suisse currently has $60.00 target price on the stock.[54]

October 17, 2012: Bullish at 46.49: Zacks Says Phillips 66 is a True Value Pick with an Impressive Valuation

Zacks reported on Seeking Alpha on October 17, 2012 that Phillips 66 is a true value pick with price-to-book (P/B) and price-to-sales (P/S) ratios of just 1.46 and 0.14, respectively. Over the past 30 days, the Zacks Consensus Estimate for 2012 is up nearly 9% to $6.91, as 7 of 13 estimates were revised upward. Given the $6.37 per share earned in 2011, the projected growth rate stands at 8.5% for 2012. The company has a price-to-book (P/B) ratio of 1.46 and a price-to-sales (P/S) ratio of just 0.14, well under the cut off of 3.0 and 1.0, respectively, for a value stock. The PEG ratio comes in at 0.71, a 29% discount to the benchmark of 1 for a fairly priced stock. Going forward, there is an untapped potential locked in the stock.[55]

October 8, 2012: Bullish at 46.02: Argus Sets $54 Price Target for Phillips 66

Jags Report reported on October 8, 2012 that Argus has raised their price target for Phillips 66 from $43.00 to $54.00.[56]

October 4, 2012: Bullish at 45.39: Zacks gives Phillips a Short-term Strong Buy Rating

Zacks Equity Service reported on October 4, 2012 that Phillips 66's latest payout hike reflects reflects the company's commitment towards returning value to shareholders with its strong cash generation capabilities. "Phillips 66 has a good capital deployment policy through share repurchase and payment of dividends," writes Zacks. "We believe that the increase in dividend and share repurchase programs will boost investor confidence in the stock, thereby driving share value." Phillips 66 currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.[57]

September 2012: Analyst Consensus is Neutral

For the month of September, 2012 overall analyst consensus is neutral. Two analysts are bullish and two bearish.

September 20, 2012: Bullish at 45.57: Oppenheimer Raises Price Target on Phillips

The Daily Political reported on September 20, 2012 that analysts at Oppenheimer have raised their price target on shares of Phillips 66 from $48.00 to $55.00 in a research note issued to investors. The firm currently has an “outperform” rating on the stock.[58]

September 17, 2012: Bearish at 46.14: Credit Suisse Downgrades Phillips 66

The Daily Political reported on September 20, 2012 that analysts at Credit Suisse have downgraded shares of Phillips 66 from an “outperform” rating to a “neutral” rating in a research note to investors on Tuesday. They now have a $53.00 price target on the stock, up previously from $46.00.[59]

September 17, 2012: Bearish at 46.73: Citigroup Downgrades Philips 66 from Buy to Neutral

Jags Report reported on September 17, 2012 that analysts at itgroup downgraded Philips 66 from a buy rating to a neutral rating. They currently have $49.00 target price on the stock, up from their previous target price of $40.00.[60]

September 12, 2012: Bullish at 46.28: Morgan Stanley upgraded shares of Phillips

The Daily Political reported on September 20, 2012 that analysts at Morgan Stanley have upgraded shares of Phillips 66 from an “equalweight” rating to an “overweight” rating in a research note to investors on Wednesday, September 12th. They now have a $67.00 price target on the stock.[61]

August 2012: Analyst Consensus is 60% Bullish

For the month of August, 2012 overall analyst consensus is bullish. Three analysts are bullish, one neutral, and one bearish.

August 8, 2012: Bearish at 39.77: Sean Williams at Motley Fool Not Convinced that Recent Run-up in Phillips' Share Price Can Go Much Higher

Sean Williams wrote at Motley Fool on August 8. 2012 that Phillips 66 reported a 53% jump in refining and marketing earnings in the second quarter but what's really important to understand about refiners is that their businesses are highly cyclical and subject to margin contraction if oil prices rise so keep in mind that these results can turn on a dime. "Now for the $64,000 question: What's next for Phillips 66? That question really depends on what happens with oil prices, the crack spreads that regulate Phillips 66's margins, and if oil demand remains strong," writes Williams. "The recent run-up in its share price, coupled with the cyclicality of its business, doesn't often make refiners a favorable long-term hold. Usually, you can pilfer double the yield from the upstream side of the oil business, so it really requires you to be picky with regard to when to buy into the refiners' story. Don't get me wrong, I really like Phillips 66 and think Conoco's decision to spin off its refining operations is one of the smartest moves it could have made, but I'm not convinced it can head much higher from its current levels."[62]

August 6, 2012: Bullish at 40.07: Robert Broens at Seeking Alpha Says Phillips 66 is an excellent addition to any long-term portfolio

Robert Broens at Seeking Alpha wrote on August 6, 2012 that Phillips 66 reported a decent set of second quarter results and as a vote of confidence, the board of Phillips 66 approved the repurchase of $1 billion of the company's outstanding shares. "CEO Garland already indicated that future growth will be geared toward pipeline and chemical investments. He hopes to diversify away from the refining activities, which typically report low and volatile earnings," writes Broens. "Phillips 66 operates in an extremely beneficial environment for refiners, with lower spot prices and price differentials between crude. Short-term profits will enjoy a boost from these market conditions, allowing the company to boost the payout to shareholders and finance its growth plans."[63]

August 3, 2012: Bullish at 39.67: Rich Duprey at Motley Fool says Phillips Couldn't have Found a Better Time to go Public

Rich Duprey wrote on Motley Fool on August 3, 2012 that a year ago oil companies were looking to divest themselves of their refining businesses but now 12 months later, the refineries are showing profits and doing better than the oil companies in some cases. "A large part of the explanation is that natural gas remains cheap and the fuel source is a key component of the refining process," writes Duprey. "Because there's something of a glut in crude oil but prices for gasoline remain relatively high, refineries are paying less for their input costs but receiving premiums on their output. They're even able to export their gasoline and still make a profit." On the back of the strong showing, Phillips 66 says it will be buying back $1 billion worth of stock and stock buybacks are generally considered a bullish signal on Wall Street. "They return capital to shareholders, while declaring management's belief that its own cheap shares are its best return on investment," adds Duprey. "Not only should Phillips 66 be buying its stock, but perhaps investors ought to as well."[64]

August 2, 2012: Neutral at 40.32: Stone Fox Capital Says Phillips is a Compelling Value, but Not the Cheapest in the Sector

Stone Fox Capital wrote on August 2, 2012 that Phillips reported earnings that smashed estimates reporting a fantastic $1.4 billion in adjusted earnings, or $2.23 per share. But the majority of the earnings came from the Refining sector leaving limited earnings provided by the midstream and chemicals businesses, where investors hope for growth. "The stock remains cheap, especially considering the cash flow and the ability to fund a much more aggressive shareholder payout plan," wrote Stone Fox Capital. "The stock is a compelling value, but it is not the cheapest in the sector. Until the pipeline and chemicals businesses show stronger growth potential, it will be difficult to get beyond that investment thesis as refining profits swings will dominate this stock for now."[65]

August 1, 2012: Bullish at 37.60: Michael Fitzsimmons at Seeking Alpha Says Phillips Hit a Home Run on its First Quarter

Michael Fitzsimmons wrote on Seeking Alpha on August 1, 2012 that Phillips is currently enjoying a very profitable refining business due to its ability to capitalize on using WTI (currently $87.95/barrel) for its feedstock and selling refined product in a market more tied to Brent (currently $104.92/barrel). "The results were a home run. In fact, the ball was knocked out of the park." In February, 2012 Fitzsimmons wrote that the price differential between WTI and Brent (then $19/barrel) would tighten up once the Seaway pipeline was reversed. "I was wrong in my prediction. What I missed was the huge increase in oil production coming out of the Bakken (now over 600,000 bpd) and Eagle Ford shales," writes Fitzsimmons. "While I was expecting production to increase, I had no idea it would increase at such a rate as to pretty much fill up Seaway and still be left with the same problem as before it was reversed."[66]

July 2012: Analyst Consensus is 66% Bullish

For the month of July, 2012 overall analyst consensus is bullish. Four analysts are bullish, one neutral, and none bearish.

July 30, 2012: Bullish at 37.60: Barlcays Increases Rating to Overweight

Daily Political reported on July 30, 2012 that Barclays Capital increased Phillips 66's rating from “equalweight” rating to“overweight."[67] Barclays raised their price target for Phillips 66 from $37 to $60. Barclays analyst Paul Cheng thinks that U.S. refiners are entering a new “golden age,” where cash flow will be boosted by the regional crude price discount and low natural gas prices that could lead to higher dividends. "Regional crude differential sustainability and the emerging structural U.S. crude cost advantage will not only support increased cash return to shareholders in our opinion, but could also trigger expansion of the current shareholder base and a related upward revaluation of the shares," writes Cheng.[68]

July 16, 2012: Bullish at 34.94: Oppenheimer Gives Phillips 66 an 'Outperform' Rating

Dividend.com reported on July 16, 2012 that analysts at Oppenheimer gave Phillips66 an 'outperform' rating and set a $42 price target for the stock. "PSX’s business strategy is to de-emphasize refining, while aggressively expanding its two other businesses, maximizing return on capital by investing in profitable growth and controlling costs," said the report. "The company intends to grow its cash dividend and repurchase its shares, while maintaining strong financial flexibility. We believe this unique asset mix, large scale and balanced operations give PSX a competitive advantage throughout the business cycle.”[69]

July 13, 2012: Bullish at 33.01: Berkshire Hathaway Makes Investment in Phillips 66

Bloomberg reported on July 13, 2012 that Berkshire Hathaway’s Warren Buffett announced an investment in Phillips 66. Phillips 66, based in Houston, climbed 5.9 percent to $34.94 at the close in New York. The stock, which began trading on May 1, had its biggest gain since May 9. Berkshire reduced its holding in ConocoPhillips and bought into “some of the refining operation,” Chairman and Chief Executive Officer Buffett said in an interview today on Bloomberg Television’s “In the Loop With Betty Liu” from the Allen & Co. media conference in Sun Valley, Idaho. Phillips 66 has touted future growth from pipelines and chemicals as it seeks to reduce refining holdings.[70]

Buffett, 81, apologized to Berkshire shareholders in February 2009 for his bet on ConocoPhillips the prior year, before gas prices plummeted. Omaha, Nebraska-based Berkshire took about $3 billion in impairments on the investment in 2009. The billionaire’s firm cut its stake in ConocoPhillips to 29.1 million shares on March 31 from 84 million shares at the end of the third quarter of 2008, with most of the reduction in 2009, according to data compiled by Bloomberg.[71]

Phillips Investment Not Made by Warren Buffet Himself

Tim McAleenan wrote in Seeking Alpha on July 16, 2012 that contrary to some business reporting the investment in Phillips 66 by Berkshire Hathaway doesn't actually represent an investment made by Buffett himself but was made by Berkshire investment managers Todd Combs or Ted Weschler. "It's a shame that some media outlets will report any Berkshire (BRK.B) move as an action by Warren Buffett. In this case, it's wrong to assume that Buffett has been gobbling up shares of Phillips 66. To the extent that Buffett's moves affect your own investment calculus, extra diligence may be required in determining whether Buffett or his assistants are making a particular stock purchase. It's just a shame that sorting through prominent media misreporting is part of the process."[72]

July 11, 2012: Neutral at 32.69: Wells Fargo sets "Market Perform" rating on Phillips 66

Daily Political reported on July 11, 2012 that equities research analysts at Wells Fargo & Co. initiated coverage on shares of Phillips 66 and set a “market perform” rating on the stock.[73]

July 2, 2012: Bullish at 33.24: Deutsche Bank Raises Phillips 66 to Buy

Latisha Jones wrote on the Daily Political on July 2, 2012 that Deutsche Bank has upgrade Phillips 66 from a “hold” rating to a “buy” with a $42.00 target price on the stock on expectations export-oriented processing manufacturers will benefit from increased oil and gas production. The top beneficiary of the "secular long-term boom" in U.S. oil and gas production will be export-oriented processing manufacturers, with refining the "biggest, most undervalued sector," the firm says.[74][75]

June 2012: Analyst Consensus is 100% Bullish

For the month of June, 2012 overall analyst consensus is bullish. Four analysts are bullish, none neutral, and none bearish.

June 13, 2012: Bullish at 32.77: Tony Daltorio at Motley Fool says Phillips 66 Will Ride the US Shale Boom

Tony Daltorio at Motley Fool wrote on June 13, 2012 that the shale boom and the resulting cheap, abundant natural gas and natural gas liquids has set off a renaissance in American industry and Phillips 66 will be one of the winners. "The shale boom has led to a surge in production of natural gas liquids (NGLs) such as ethane and propane. That has sent the price of NGLs tumbling. That has created a large cost advantage for US chemicals manufacturers that use these liquids as a feedstock when compared to rivals in Europe and Asia that use naphtha and other products derived from crude oil." Phillips will participate in this petrochemicals upturn through its 50/50 joint venture with Chevron, Chevron Phillips Chemical and is considering investing in a second large new petrochemical plant in the Gulf of Mexico region to benefit from the cheap feedstock unlocked by the shale revolution. "A good way for investors to play this macro theme is through newly spun-off Phillips 66."[76]

June 8, 2012: Bullish at 31.83: Credit Suisse Believes Phillips 66 could announce a Buyback

Credit Suisse wrote on June 8, 2012 that they believe Phillips 66 could announce a buyback at the July board meeting given increased near-term free cash flow and relative valuation. Shares are Outperform rated with a $42 price target.[77]

June 7, 2012: Bullish at 31.83: Quinn Bredl at Seeking Alpha says Phillips Should Have More Upside

Quinn Bredl wrote in Seeking Alpha on June 7, 2012 that many investors see Phillips as a refiner, a reason for its deeply discounted share price; but the midstream and chemical businesses can be quite profitable and are much less volatile than refining, which should offset volatility to some extent. "While both companies are undervalued, I feel that Phillips is cheaper based on growth potential, while also paying a modest dividend," writes Bredl. "In regards to growth, Phillips should have more upside due to its interest in non refining businesses."[78]

June 3, 2012: Bullish at: 29.92: Simon Moore Proposes that Phillips Increase their Participation in Midstream and Chemical Joint Ventures

Simon Moore wrote in Seeking Alpha on June 3, 2012 that Phillips could increase its investment in the Midstream Business Segment by buying out Spectra's portion of DCP Midstream, LLC, a 50 percent joint venture with Spectra Energy and one of the largest natural gas gatherers and processors in the United States. Moore estimates that the midstream business may be worth about $8B meaning the cost to buyout Spectra's portion would be approximately $4B. Any purchase of Spectra's portion for less than $4B would be a positive for shareholder value in Moore's opinion. However "it is unlikely Phillips 66 [will] have the liquidity for this in the near term, but increasing their stake over time is a clear possibility," writes Moore.[79]

To increase Phillips' capital investment in the Chemical Business Segment, Phillips could buy out Chevron's 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Moore estimates the value of the chemicals business at about $10B, so a buyout price under $5B would be a positive for Phillips' stockholder value in Moore's view. "On a longer term view, Phillips 66 may look to buy out joint venture partners, but it doesn't appear to have the liquidity to do that for at least the next few years, these may be a positive for the share price by removing a lack of control premium on those assets, given that control is shared with a partner," writes Moore. "It will be interesting to watch Phillips 66's moves over the coming months to determine whether their actions match their stated shareholder friendly goals, and enable the value in the stock to be realized."[80]

Moore also proposes increased pipeline investment and formation of an MLP for transportation and logistics assets as short term strategies to increase shareholder value.[81]

Phillips 66 CEO Greg Garland told financial analysts at an investors conference on June 5, 2012 that Phillips 66 may also consider spinning off its logistics business into a master-limited partnership, or MLP.[82]

For May 2012: Analyst Consensus is 70% Bullish

For the month of May, 2012 overall analyst consensus is bullish. Twelve analysts are bullish, three neutral, and two bearish.

May 24, 2012: Bullish at 31.63: Allen Good at Morningstar says Return Improvement Initiatives Should Eventually Improve Phillips Competitive Position

Allen Good wrote at Morningstar on May 24, 2012 that he presently views Phillips' assets as a mixed bag but that return improvement initiatives like selling underperforming assets, increasing cost-advantaged feedstock processing, and increasing exports should eventually improve Phillips 66's competitive position. In the R&M Business Segment Allen views that Mid-Continent refineries as some of the company's best positioned, given their access to discount domestic and Canadian crudes while the three Gulf Coast facilities have suffered with the relatively high waterborne crude prices and narrow heavy differentials and will become a smaller portion with the divestment of Alliance and the two refineries in California face higher costs and environmental regulation, which weighs on their value. For the midstream segment, "higher oil prices and growth projects should support earnings, though lower oil prices could pose a threat to our estimates" and Allen "expects volume growth, thanks to DCP expansion projects like Sand Hills and Southern Hills." For the Chemical Business Segment, Allen forecasts continued earnings growth as the global economy recovers and as volumes rise with the startup of additional capacity at the Cedar Bayou chemical complex but forecasts a return to lower earnings levels in the mid-term. Allen sets a valuation of $34 per share for Phillips assuming a continuation of the West Texas Intermediate discount, an improving economy, and a robust export market.[83]

May 21, 2012: Bullish at 31.38: Poonkulali Thangavelu at Seeking Alpha sees Growth Potential at Phillips 66

Poonkulali Thangavelu wrote at Seeking Alpha on May 21, 2012 that Phillips 66 is also likely to benefit from management's plans to grow the Midstream and Chemical Business Segments divisions while reducing the current refining and marketing focus of the company. "The company's midstream unit produced a 30% ROCE in 2011," writes Thangavelu. "The chemicals segment, which turned in a 28% ROCE for 2011, ... uses natural gas liquids and other inputs to produce petrochemicals that it sells for use as input in the production of plastics and chemicals." However Philips faces various risks because of the nature of the industry it operates in. "For instance, there are various federal and state environmental reporting laws that PSX has to operate under, such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) at the federal level, and greenhouse gas legislation."[84]

May 18, 2012: Bearish at 31.38: Tim Plaehn at Seeking Alpha says Phillips 66 appears to be about 25% over-valued

Tim Plaehn wrote at Seeking Alpha on May 18, 2012 that Phillips 66 has a much higher market valuation than its primary competitor, Valero, without producing any additional levels of profit and that according to his analysis, Phillips 66 is 25% overvalued. Phaehn recommends a pair trade shorting Phillips 66 against Valero as a low-risk way to profit if the market brings the value the two companies together in the future. Phaehn recognizes that the refining part of Phillips business is very cyclical and discounts the profit contribution of Phillips Chemical and Midstream Business Segments. "Profits from the crude oil refining business are very volatile," writes Plaehm. "Investors may place a higher valuation on the Phillips 66 chemical and midstream business, although those two segments also reported significantly lower earnings in 2010 compared to 2011."[85]

May 18, 2012: Bullish at 31.38: Bret Jensen at Seeking Alpha says Phillips 66 Looks Undervalued for Patient Investors

Bret Jensen wrote at Seeking Alpha on May 18, 2012 that there are three reasons Phillips 66 is undervalued at $31.00: the company has a forward PE of under 7 while Valero, a comparable company has a forward PE of 8; Phillips 66 management is more focused after the spinoff; and "in addition to refining, it has assets in the midstream business and has joint ventures in chemicals. This should diversify its earnings streams and cause it to be slightly less volatile than pure refiners. Non-refining earnings represent 40% of total earnings."[86]

May 17, 2012: Bullish at 31.38: Howard Weil began coverage on Phillips 66 with "Outperform" Rating

Financial analysts at Howard Weil began coverage on Phillips 66 on May 17, 2012 with a “outperform” rating and a price target of $38.00.[87]

May 17, 2012: Bullish at 31.38: UBS AG began coverage on Phillips 66 with "Buy" Rating

Financial analysts at UBS AG began coverage on Phillips 66 on May 17, 2012 with a “buy” rating and a price target of $37.00.[88]

May 15, 2012: Bullish at 31.67: Citigroup says PSX will deploy its Capital into Chemical and Midstream Generating Higher Returns than Refining

Financial analysts at Citigroup began coverage on shares of Phillips 66 on May 15, 2012 setting a “buy” rating and a $40.00 price target. "Its chemical assets are taking advantage of cheap US feedstocks. Its midstream and pipeline assets are taking advantage of the growing volume of hydrocarbons in the US. PSX’s key strategy is to deploy 50% of its capital into the chemical and midstream business where we estimate it will generate higher risk adjusted returns than on refining.”[89]

May 12, 2012: Bullish at 31.83: Andrew Bary at the Wall Street Journal says if management executes well, Phillips 66 Could Appreciate Nicely

Andrew Bary at the Wall Street Journal wrote on May 12, 2012 that as the Phillips story becomes better understood on Wall Street, and if management executes well, the shares could rise nicely. US Refiners usually trade for low P/E ratios "because of the volatility of their profit margins and because Phillips and other domestic refiners have been reaping a windfall from relatively low-priced oil produced in the middle of the country. Investors worry that this bonanza won't last." However, investors don't fully appreciate Phillips' non-refining assets in the Chemical Business Segment and the Midstream Business Segment, which produce about 40% of its earnings. "If Mr. Garland meets his objectives, Phillips could be another spinoff winner."[90]

May 11, 2012: Bearish at 31.83: Jim Cramer says the Bottom Line is Phillips 66 is a Refiner and not a Great One at That

Drew Sandholm writes on May 11, 2012 on CNBC that Jim Cramer says that although CEO Greg Garland has gone out of his way to highlight the “non-refinery side of things,” such as its pipeline and chemicals divisions, but the bottom line is that the company gets roughly half of its value from refining so it is a refiner and not a great one at that. "The refining business is currently plagued by low growth and high margins, so Cramer recommends staying away. Additionally, PSX isn’t necessarily a cheap stock, considering it currently sells for nearly 7 times earnings."[91]

May 10, 2012: Bullish at 32.48: Simon Moore at Seeking Alpha Says Phillips 66 Refining Margins Remain the Biggest Uncertainty for the Stock

Simon Moore wrote at Seeking Alpha on May 10, 2012 that price to pro forma book, price to pro forma earnings, price to 5 year average earnings, sum of the parts and dividend yield all indicate there is upside to Phillips 66 stock price, "suggesting the potential for 25% price appreciation from current levels on a fundamental basis." Moore noted that risk factors include that Phillips 66 is a new, untested company, that "uch of the valuation hinges on refining margins, which are volatile and the stock would likely trade down in a weak refining environment," and that Phillips 66 costs may rise due to its inability to leverage the shared infrastructure with ConocoPhillips. Moore is long PSX.[92]

May 10, 2012: Bullish at 32.51: David White at Seeking Alpha says Phillips 66 Has a Lot Of Upside Potential

David White wrote on Seeking Alpha on May 10, 2012 that Phillips 66 has received a number of analyst upgrades since it went public and the reason is that Phillips 66 is not just a refiner but has a chemicals arm and a midstream arm and now that Phillips 66 is no longer part of COP, management is planning a clear cut move to greater emphasis on these latter two businesses which have much higher ROCE's. In the Chemical Business Segment, the margins on certain chemicals, such as ethylene, are much higher when they are manufactured from NGLs versus naphtha (oil derived). " Ethane derived ethylene has a cash margin of more than $600/ton currently," writes White. "Naptha derived (oil derived) ethylene has a cash margin of only $100-$200 per ton." In the R&M Business Segment, Phillips 66 stands to benefit from the extra crude that will be piped from Cushing to the Gulf Coast that will soon become relatively cheaper. In the Midstream Business Segment, Phillips 66 has approximately $4B of growth projects in the execution phase and an additional $2B in opportunities. "The bottom line is that this is a newly smaller company with great assets. It was a slower, more lumbering entity when it was a part of the bigger company . With its newly reduced size, its growth should accelerate."[93]

May 10, 2012: Neutral at 32.51: Goldman Sachs Prefers Mid-Continent-focused Peers that show Greater Upside

Benzinga reported on May 10, 2012 that Goldman Sachs has initiated coverage of Phillips 66 (NYSE: PSX) with a Neutral rating and a price target of $39. "Within our refining coverage, we continue to prefer Mid-Continent-focused peers that show even greater upside such as Buy-rated HollyFrontier (CL) and Western Refining, with MidCon comprising only a portion of PSX's asset base. We view PSX's exposure to midstream and chemicals assets, each of which is housed in a 50/50 JV, as favorably differentiating it from other diversified refiners, though the lack of a controlling interest could keep PSX from getting full credit."[94]

May 9, 2012: Neutral at 32.51: Morgan Stanley says the rise in crude oil production provides cost advantages for Mid-Con and Gulf Coast refining, US Chemicals

Zolmax News reported on May 9, 1012 that Morgan Stanley had started coverage of Phillips 66 with an “equal weight” rating and a $40.00 price target. “We estimate 73% of PSX earnings are exposed to secular growth businesses. We believe that the secular rise in North American crude oil production provides cost advantages for Mid-Con and Gulf Coast refining, US Chemicals, and need for further build out of US midstream infrastructure. Current strategy includes plan to increase advantaged feedstock at US refineries, and grow US chemicals and midstream asset base.”[95]

May 9, 2012: Bullish at 32.51: Edward Westlake at Credit Suisse Says Phillips 66 Chemical Business is one of the Most Profitable among its Peers

Businessweek reported May 9, 2012 that Credit Suisse analyst Edward Westlake has rated Phillips 66 with an "Outperform" rating and set a $42 price target as Phillips 66 is expected to benefit in a variety of ways from America's natural gas boom. The chemical business already is one of the most profitable in the industry as natural gas has dropped in price during the past yea, cutting production costs even further for Phillips 66 chemical plants. Lower crude costs should continue to benefit the company's refining business. Phillips 66 "can win in more ways than the average independent" says Westlake.[96]

May 9, 2012: Bullish at 32.51: Deutsche Bank Has a Cautious 12-Month View of Phillips 66 Refining

Zolmax News reported on May 9, 2012 that equities researchers at Deutsche Bank have began coverage on shares of Phillips 66 with a a “hold” rating and a $37.00 price target on the stock. "Although we see this as a premium refiner to direct comp Valero, with NGL gathering & chemicals growth and an MLP kicker, we have a cautious 12 month view on refining," write the analysts. "We struggle to find 20%+ upside, and initiate with HOLD and a $37 PT.”[97]

May 6, 2012: Bullish at 30.16: Barron's says Phillips 66 is Undervalued as a Refiner

Barrons' writes on May 6, 2012 that has been undervalued by investors, and could see its shares climb 30 percent or more because investors have overlooked the potential of its chemical and transportation businesses. Phillips is being valued like a refiner when it gets 40 percent of its earnings from high-return chemical and midstream businesses," Doug Terreson, the ISI Group's energy analyst, told Barron's. Terreson has a "buy" rating and a $44 price target on Phillips.[98]

May 3, 2012: Neutral at 30.39: Simon Moore at Seeking Alpha Thinks Phillips may Offer a Buying Opportunity but Could Suffer Stock Price Declines with Declining Refining Margins

Simon Moore writes on Seeking Alpha on May 3, 2012 that looking back historically, spin-offs offer opportunity for investors because post spin offs, investors have a tendency to sell the asset they are less familiar with and the spin off tends to decline presenting a buying opportunity. "Earnings are volatile given the commodity nature of refining, and the intent is to invest disproportionately in midstream and chemicals which offer higher and less volatile returns than refining," writes Moore. "Phillips 66 appear shareholder friendly in terms of their commitment to the idea of dividend growth and buybacks, and indeed sold a refinery for cash of April 30." Moore adds that as a predominantly refining business, Phillips 66 will be cyclical and could suffer stock price declines with declining refining margins.[99]

April 2012

April 30, 2012: Christopher Helman at Forbes Magazine is Skeptical that Phillips 66 will trade at a higher multiple than ConocoPhillips

Christopher Helman wrote in Forbes magazine on April 30, 2012 that the chasm between how investors value oil finders versus oil refiners is ultimately what the split of ConocoPhillips is all about. Helman notes that the return on capital employed on the Phillips 66 side has improved dramatically, from 1% in 2009 to 5% in 2010 to 13% in 2011. But they are continually outstripped by the upstream, which managed 8%, 12% and 16% in those years. Greg Garland hopes that the downstream will trade at a higher multiple than 8 times earnings which is what ConocoPhillips traded at before the split. “You never really heard us talk about chemicals," says Garland. "You never heard us talk about midstream, and both of those businesses trade at higher multiples than the refining business.”

"The trouble is, if I want to own chemicals I could buy Dow or Celanese. If I want to own pipelines I could go for Kinder Morgan or Enbridge," writes Helman. "As for refineries — I really don’t want to own them at all. I hope Garland has some cool tricks up his sleeve, but otherwise investors have to ask themselves this: ConocoPhillips didn’t want to own this stuff, why should I?"[100]

April 25, 2012: Jason Simpkins at Wall Street Daily says Phillips 66 is a Better Investment than ConocoPhillips

On April 25, 2012 Jason Simpkins reported in the Wall Street Daily that if you’re wondering which will be the better investment when ConocoPhillips splits into two companies, the answer is Phillips 66. "As the proprietor of ConocoPhillips’ pipeline and chemicals business, Phillips 66 controls two of the current company’s most dynamic assets. In the first quarter, Conoco’s midstream business, which includes pipelines, saw a 27.4% jump in profit. Its chemical business raised profits by 13%." Simpkins sees the R&M segment as a drag on the company. "Phillips 66 is looking to shirk its burdensome refining segment in favor of more profitable businesses. The company has plans to shut down its Trainer refinery in Pennsylvania, as well as its Alliance plant in Louisiana. Together, those facilities account for about one-sixth of the company’s refinery capacity." Simplins sees Phillips 66 expanding in Chemicals and Midstream which are more profitable businesses. "Conoco’s earnings from chemicals surged from $498 million in 2010 to $745 million last year. Midstream profits rose from $306 million to $458 million." Finally Simpkins is very impressed with Phillips 66' CEO Greg Garland who formerly headed Chevron Phillips Chemicals Co. – Conoco’s joint venture with Chevron Corp whose stewardship there resulted in a 42% jump in profit last year.[101]

April 5, 2012: Isac Simon at The Motley Fool sees Phillips 66 becoming a Master Limited Partnership

On April 5, 2012 Isac Simon wrote on "The Motley Fool" that management of Phillips 66 plans to run the integrated downstream company as a tax-free distribution. "This means, in all likelihood, that Phillips 66 will become a master limited partnership -- an MLP, in short," writes Simon. "Since MLPs are required to distribute a major percentage of their profits to shareholders as dividends, this kind of a corporate structure might not attract strong investor interest for the downstream company -- at least till the refining industry recovers."

"But that doesn't necessarily mean failure. There's still a lot to look forward to. Post spin-off, Phillips 66 will become the country's second largest independent refiner, with a working interest in 12 refineries. Out of these, six are located in the Mid-Continental region and the Gulf coast. Refineries in these regions have the advantage of being located close to the delivery point of WTI crude oil in Cushing, Okla. These refineries could obtain the cheaper WTI blend as compared with the more expensive Brent crude, the international benchmark."[102]

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  30. Ticker Report. "Phillips 66 Receives Fair Value Rating from Bank of America Corp. (PSX" December 4, 2013.
  31. Zolmax News. "Morgan Stanley Lowers Phillips 66 Price Target to $71.00 (PSX)" by John Perry. Octoer 1, 2013.
  32. CNBC. "'A bit of a bubble' in stocks: Berkshire director" by Matthew J. Belvedere. September 19, 2013.
  33. WKRB. "Phillips 66 Now Covered by Citigroup Inc. (PSX)" September 18, 2013.
  34. WKRB. "Phillips 66 Receives “Buy” Rating from Oppenheimer (PSX)" September 10, 2013.
  35. Seeking Alpha. "Phillips 66 cut to Hold from Buy at Argus" September 9, 2013.
  36. [http://zolmax.com/phillips-66-price-target-lowered-to-75-00-at-oppenheimer-psx/96305/ Zolmax. "Phillips 66 Price Target Lowered to $75.00 at Oppenheimer (PSX)" August 14, 2013.}
  37. StreetInsider. "Wells Fargo Upgrades Phillips 66 (PSX) to Outperform; Downgrades Western Refining (WNR) to Market Perform" July 8, 2013.
  38. Seeking Alpha. "Phillips 66 - Disciplined Company, But No Upside Left" by Simon Moore. June 16, 2013.
  39. Utah People's Post. "Phillips 66 Given “Hold” Rating at TheStreet (PSX)" by Kristian Gore. June 10, 2013.
  40. Mideast Times. "Phillips 66 Price Target Increased to $71.00 by Analysts at UBS AG" May 6, 2013.
  41. Barron's "As Refiner Earnings Weaken, Deutsche Reiterates Hold Ratings" by Dimitra DeFotis. April 17, 2013.
  42. Marketwatch. "Oppenheimer ups Phillips 66 price target to $80" February 11, 2013.
  43. Jags Report. "Deutsche Bank Raises Price Target on Phillips 66" February 11, 2013.
  44. Zolmax News. "Phillips 66 Given New $68.00 Price Target at UBS AG (PSX" February 4, 2013.
  45. Jags Report. "Deutsche Bank Raises Price Target on Phillips 66" February 11, 2013.
  46. Zolmax News. "Phillips 66 Price Target Increased to $80.00 by Analysts at Barclays Capital" January 12, 2013.
  47. Jags Report. "Deutsche Bank Raises Price Target on Phillips 66" February 11, 2013.
  48. Jags Report. "Phillips 66 Stock Rating Lowered by Howard Weil (PSX" January 7, 2013.
  49. Dividend.com "Phillips 66 Has Price Target and Earnings Estimates Raised at Oppenheimer (PSX" December 14, 2012.
  50. Nasdaq. "Analyst Actions: Credit Suisse Raises Ests For Tesoro Corp, Phillips 66; TSO Up Near 3%, PSX Hits 52 Week Highs" December 10, 2012.
  51. Daily Political. "Phillips 66 Rating Lowered to Hold at Deutsche Bank (PSX)" November 9, 2012.
  52. Daily Political. "Phillips 66 Rating Lowered to Hold at Deutsche Bank (PSX)" November 9, 2012.
  53. Marketwatch. "Phillips 66 up 2.7%; 'muscle car' among refiners" November 6, 2012.
  54. Jags Report. "Phillips 66 Stock Rating Upgraded by Credit Suisse (PSX)" October 26, 2012.
  55. Seking Alpha. "Phillips 66: Impressive Valuation" by Zacks Investment Research. October 17, 2012.
  56. Jags Report. "Phillips 66 PT Raised to $54.00 (PSX" October 8, 2012.
  57. Nasdaq. "Phillips 66 Hikes Dividend by 25% - Analyst Blog" by Zacks Equity Service. October 4, 2012.
  58. Daily Political. "Oppenheimer Boosts Price Target on Phillips 66 (PSX)" September 20, 2012.
  59. Daily Political. "Oppenheimer Boosts Price Target on Phillips 66 (PSX)" September 20, 2012.
  60. Jags Report. "Analysts’ Downgrades for September, 17th (AHS, AKS, ALGN, AMD, ATW, AUMN, BBVA, BECN, BT, CLF)" September 17, 2012.
  61. Daily Political. "Oppenheimer Boosts Price Target on Phillips 66 (PSX)" September 20, 2012.
  62. The Motley Fool. "Is It Time to Dig Into Phillips 66, or Cut and Run?" by Sean Williams. August 8, 2012.
  63. Seeking Alpha. "Phillips 66: Favorable Refining Environment Makes This Stock A Favorite Value Play" by Robert Broens. August 6, 2012.
  64. Daily Finance. "Is Phillips 66 Wasting Your Money?" by Rich Duprey. August 3, 2012.
  65. Seeking Alpha. "Phillips 66 Reports Solid Earnings, Limited Non-Refining Profits" by Stone Fox Capital. August 2, 2012.
  66. Seeking Alpha. "Phillips 66 Hits A Home Run" by Michael Fitzsimmons. August 1. 2012.
  67. Daily Political. "Phillips 66 Rating Increased to Overweight at Barclays Capital" July 30, 2012.
  68. Barrons. "Phillips 66 and Other Refiners Have Huge Upside, Says Barclays" by Avi Salzman. July 30, 2012.
  69. Dividen.com "Phillips 66 Started as an “Outperform” at Oppenheimer; Sees Several Catalysts (PSX)" July 16, 2012.
  70. Bloomberg. "Buffett Says Berskhire Has Invested In Phillips 66" by Edward Klump and Noah Buhayar. July 13, 2012.
  71. Bloomberg. "Buffett Says Berskhire Has Invested In Phillips 66" by Edward Klump and Noah Buhayar. July 13, 2012.
  72. Seeking Alpha. "Be Careful Following Claims Of Buffett Investments" by Tim McAleenan. July 16, 2012.
  73. Daily Political. "Wells Fargo & Co. Analysts Begin Coverage on Phillips 66 (PSX)" July 11, 2012.
  74. Daily Political. "Deutsche Bank Raises Phillips 66 to Buy" by Latisha Jones. July 2, 2012.
  75. Seeking Alpha. "Phillips 66 jumps after Deutsche Bank upgrades the refiner to Buy from Hold" July 2, 2012.
  76. The Motley Fool. "Phillips 66 to Ride the US Shale Boom" by Tony Daltorio. June 13, 2012.
  77. Wall Street Cheat Sheet. "Analyst Alerts: Comverse Technology, Phillips 66, Gilead Sciences, Western Digital, Lululemon June 8th" by Derek Hoffman. June 8, 2012.
  78. Seeking Alpha. "Conoco And Phillips 66: Sum Of Parts Now Worth Less Than Whole" by Quinn Bredl. June 7, 2012.
  79. Seeking Alpha. "What Phillips 66 May Do Next" by Simon Moore. June 3, 2012.
  80. Seeking Alpha. "What Phillips 66 May Do Next" by Simon Moore. June 3, 2012.
  81. Seeking Alpha. "What Phillips 66 May Do Next" by Simon Moore. June 3, 2012.
  82. Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.
  83. Seeking Alpha. "ConocoPhillips And Phillips 66 Stand Apart From Peers" by Allen Good. May 23, 2012.
  84. Seeking Alpha. "Phillips 66: An S&P 500 Addition With Growth Prospects" by Poonkulali Thangavelu. May 21, 2012.
  85. Seeking Alpha. "Putting A Value On The Conoco / Phillips 66 Spinoff" by Tim Plaehn. May 18, 2012.
  86. Seeking Alpha. "Phillips 66: This Energy Spin-Off Will Reward Patient Investors" by Bret Jensen. "May 18, 2012.
  87. LocalizedUSA. "Howard Weil Analysts Begin Coverage on Phillips 66" by LUSA Staff. May 18th, 2012
  88. Zolmax. "UBS AG Analysts Begin Coverage on Phillips 66" bby Wayne Rhoads. May 18th, 2012
  89. Zolmax News. "Citigroup Analysts Begin Coverage on Phillips 66 (PSX)" posted by Bonnie Powley. May 15, 2012.
  90. Wall Street Journal. "An Old Name With a New Story" by Andrew Bary. May 12, 2012.
  91. CNBC. "Cramer’s Stock Call: ConocoPhillips or Phillips 66?‎" by Drew Sandholm. May 11,2012.
  92. Seeking Alpha. "Phillips 66 Valuation Suggests 45% Upside" by Simon Moore. May 10, 2012.
  93. Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by David White. May 10, 2012.
  94. Benzinga. "Goldman Sachs Initiates Coverage on Phillips 66" by Delores Land. May 10, 2012.
  95. Zolmax News. "Morgan Stanley Initiates Coverage on Phillips 6" by Bonnie Powley. May 9, 2012.
  96. Businessweek. "Phillips 66 shares up on positive analyst comments" May 9, 2012.
  97. Zolmax News. "Deutsche Bank Initiates Coverage on Phillips 66 (PSX" bby Tammy Falkenburg. May 9th, 2012.
  98. Reuters. "Phillips 66 is undervalued: Barron's" May 6, 2012.
  99. Seeking Alpha. "Phillips 66 Offers Opportunity After Spin" by Simon Moore. May 3, 2012
  100. Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
  101. Wall Street Daily. "The ConocoPhillips Spin-Off: A Profit Opportunity Three Years in the Making" by Jason Simpkins. April 25, 2012
  102. The Motley Fool. "This New Refining Stock Could Be a Winner" by Isac Simon. April 5, 2012.
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Master Index of Articles about Phillips 66

The North Tower and the South Tower, part of Phillips 66's Refinery Complex in Ponca City, contain over 250,000 square feet of Class A office space that is essentially unused. Research West contains another 230,000 square feet of unused Class A office space. Photo: Hugh Pickens
Ponca: A Core Asset. Phillips CEO Greg Garland told members of the Bartlesville Chamber of Commerce on August 27, 2013 that the refinery at Ponca is a 'core asset' of Phillips 66. The refinery in Ponca City "is making very good money for us," Garland told his Bartlesville audience. Garland added that he expects gas demands in the U.S. to decline by 20 percent in the next 10 years, but that demand for refined products in South America and Africa will more than offset that decline.

by Hugh Pickens, Ponca City Oklahoma

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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal <html>
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Corporate

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Strategic and Financial

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Business Segments

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Stock Market

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Reference

Refining Business Segment

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Increasing Profitability in Refining Business Segment

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Detailed Look at Ponca City Refinery

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Other Phillips Refineries

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Other Locations