* Profit up as focus increases on midstream and chemicals
* Company ordering more railcars to keep up with crude by
* Project to process more oil at Illinois refinery announced
(Adds financial details, executive comments, updates share
By Kristen Hays and Anna Driver
April 30 Phillips 66, the second-largest
independent U.S. oil refiner, reported a higher-than-expected
quarterly profit on Wednesday, helped by a big gain from a share
exchange and its chemicals and midstream businesses.
Crude oil and natural gas pumped from shale formations in
the United States have lowered feedstock costs for companies
such as Phillips, which is expanding its network of pipelines
and processing facilities for increasing onshore output.
Phillips, based in Houston, had a first-quarter profit of
$1.6 billion, or $2.67 per share, compared with $1.41 billion,
or $2.23 a share, in the same quarter of 2013.
Excluding a one-time gain of $706 million primarily related
to Berkshire Hathaway Inc's deal to swap its Phillips
66 shares for ownership of the company's specialty products
unit, Phillips 66 earned $1.47 per share.
Analysts, on average, had expected a profit of $1.34 per
share, according to Thomson Reuters I/B/E/S.
The results topped expectations on the performance of the
chemicals and midstream businesses, analysts at Credit Suisse
said in a note to clients.
Earnings in the company's refining business slumped to $306
million from $904 million in the first quarter of 2013, hurt by
plant maintenance and lower margins.
Profit from the company's interest in Chevron Phillips
Chemical company was $316 million, up 12 percent from a year
Phillips 66 is increasing its capability to receive North
Dakota crude via rail at its New Jersey and West Coast
refineries, and has ordered 1,200 new tank railcars to move it.
That is in addition to 2,000 railcars the company received
A spate of fiery crude train crashes last year has increased
regulatory scrutiny of the safety of the oil-by-rail movement,
which has boomed in tandem with growing U.S. inland oil
Last week Canadian regulators ordered that all tank railcars
that do not meet the industry's latest safety standards adopted
in October 2011 be phased out in three years, and U.S.
regulators are expected to recommend similar or possibly tougher
Phillips 66's new fleet and the railcars on order meet the
latest standard, Tim Taylor, executive vice president of
commercial, marketing, transportation and business development
for Phillips 66, told analysts on Wednesday. The company also is
working with contractors and shippers to ensure their fleets do
"Certainly we will comply, but we want them to meet the
newest specification," he said.
Also on Wednesday, Cenovus Energy Inc announced a
$100 million project to expand capacity at its joint-venture
333,000 barrels-per-day (bpd) refinery in Wood River, Illinois,
which Phillips 66 operates as part of the 50-50 agreement.
The project, which will allow the plant to fully utilize
processing capabilities after a $4 billion expansion to run more
Canadian heavy crude, will start up in the first quarter of
Shares of Phillips were up 4 cents at $83.79 on Wednesday
afternoon on the New York Stock Exchange.
(Reporting by Anna Driver; editing by Bernadette Baum and