Phillips 66 (PSX Quick QuotePSX - Free Report) disclosed a 2024 capital budget of $2.2 billion, with $923 million allocated to sustaining capital and $1.3 billion for growth capital.

The figure is lower than the company’s projected capital spending for 2023, which is estimated at $2.5 billion.

The budget aligns with the company’s strategic goal of returning $13-$15 billion to shareholders by the end of 2024.

The sustaining capital budget incorporates $300 million in efficiencies achieved through the company’s business transformation initiatives.

Before the business transformation, Phillips 66 historically spent an average of $1 billion per year on sustaining capital. With the inclusion of DCP Midstream consolidation, an additional $200 million in sustaining capital is accounted for.

The Midstream capital budget is $985 million, with $392 million for sustaining projects and $593 million for growth projects. Notably, $250 million of the growth capital is allocated for repaying PSX’s 25% share of the Bakken Pipeline joint venture’s debt in 2024.

Phillips 66 intends to allocate $1.1 billion in Refining, with $412 million allocated for sustaining capital. The Refining growth capital of $654 million encompasses the completion of the San Francisco Refinery conversion in Rodeo, transforming it into one of the world’s largest renewable fuels facilities.
The capital budget includes initiatives aimed at enhancing refining performance.

Phillips 66 anticipates that its share of capital spending in joint ventures Chevron Phillips Chemical Company LLC (“CPChem”) and WRB Refining LP (“WRB”) will reach $1 billion and will be internally financed. With the inclusion of Phillips 66’s proportionate share of capital spending in CPChem and WRB, the overall 2024 capital program for the company is estimated to be $3.2 billion.

Zacks Rank & Stocks to Consider

Phillips 66 currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Core Laboratories N.V.’s (CLB Quick QuoteCLB - Free Report) strong presence in the emerging shale plays and its global footprint provide for steady growth rates going forward.

Core Labs’ low capital expenditure needs and service-oriented nature differentiate it from peers and allow it to generate substantial free cash flows. This liquidity provides Core Labs with the opportunity to buy back shares and pay dividends.

Murphy USA’s (MUSA Quick QuoteMUSA - Free Report) unique high-volume low-cost business model helps it retain high profitability even in the fiercely competitive retail environment.

MUSA remains committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the fuel retailer recently approved a repurchase authorization of up to $1.5 billion following the completion of the existing $1 billion mandate. The move underscores MUSA’s sound financial position and commitment to reward its shareholders.

Liberty Energy (LBRT Quick QuoteLBRT - Free Report) offers hydraulic fracturing services to onshore upstream energy companies across multiple basins in North America.

Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Dec 20, 2023, to stockholders of record as of Dec 6, 2023. This dividend reflects a 40% rise from the previous quarter’s level. As part of its shareholder return policy, LBRT repurchased shares worth $29 million at an average price of $16.38 per share.