Phillips 66 Dumps Swiss Fuel Assets in Divestment Push

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Phillips 66 (NYSE:PSX) (Houston, Texas) said it was one step closer to its goal of shedding more than US$3 billion in assets by unloading its stake in a Swiss fuels provider.

The company said that, pending approval from Swiss authorities, it would sell its 49% non-operated interest in Coop Mineraloel, a retail service provider, for US$1.24 billion.

"This transaction marks significant progress in delivering on our commitment of over $3 billion in divestitures," said Mark Lashier, the chairman and chief executive officer of Phillips 66.

The Swiss company, through a controlling venture, operates 324 retail and petrol service stations across the country. The divestment in the Swiss market comes just as earnings season for the third quarter begins, amid a backdrop of companies returning value to shareholders rather than investing in new opportunities.

In its second-quarter earnings report, Phillips 66 said it had returned more than $11 billion to shareholders since July 2022 and was on target to reach a goal of between $13 billion and $15 billion by the end of the year.

"Share repurchases will continue to be a priority in our capital allocation plan," Lashier said at the time. "We are committed to returning over 50% of our operating cash flows to shareholders."

In announcing the Swiss divestment, Lashier said the company would continue to look to monetize assets that no longer fit within its long-term strategy.

Last month, Lashier's company sold off gas-gathering and production assets in the Haynesville Shale to Voyager Midstream Holdings, a portfolio company within Peal Energy Investments (Dallas, Texas), for undisclosed terms.

The assets included 550 miles of pipe, production assets and access to the Carthage Hub in the region, which can handle more than 1 billion cubic feet of natural gas per day.

Phillips 66 during the second quarter also took in about $685 million through the sale of its 25% non-operating interest in the Rockies Express natural gas pipeline, which stretches from Colorado to Ohio.

Elsewhere, Phillips 66 could show a hit to its refinery segment because of the busy hurricane season in the Gulf of Mexico. The company was forced to close its 256,000 barrel-per-day refinery in Sweeny, Texas, briefly in the wake of Hurricane Beryl, which dumped nearly a foot of rain on the greater Houston metropolitan area and triggered widespread power outages in July.

In the second quarter, the company took a loss in its refining segment due to lower market crack spreads. But growth from its midstream operations helped push net earnings into the black, with the 20% improvement over first quarter levels pushing total earnings to $984 million.

The company, among the largest of its kind in the world, releases its third-quarter earnings report on October 29. Along with commodity prices, shares in Phillips 66 were in the red in Tuesday trading.

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