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Phillips 66 (PSX) Explores Asset Sale, CEO Upbeat on Future
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Phillips 66 (PSX - Free Report) , a prominent U.S. refiner and petrochemical manufacturer, is actively engaged in discussions regarding the sale of its non-core assets.
The announcement came during an energy conference, wherein chief executive Mark Lashier highlighted the company’s plan to monetize $3 billion in non-core assets in 2024, as part of a strategy to enhance returns by cutting costs and divesting non-essential holdings.
While the company has set a goal to monetize these assets this year, there is no fixed timeline for the potential sales. The decision will depend on whether potential buyers perceive greater value to these assets than the company itself.
Phillips 66 faced challenges in keeping pace with its industry rivals despite a period of higher fuel demand and increased margins across the sector. The company has also encountered scrutiny from activist investment firm Elliott Investment Management, particularly regarding its refining operations. Discussing the refining business, Lashier mentioned that inventories remained low but he expected strength in the sector heading into 2024.
While some analysts have suggested the possibility of a divestiture, Lashier expressed the company’s strong conviction in the enduring benefits of the chemicals business. He noted, after hitting rock bottom in 2023, the fundamentals of the chemicals business are continuing to improve.
In conclusion, Phillips 66’s exploration of asset sales reflects a strategic move to streamline its operations and boost returns. The company remains cautious and patient in its approach, considering the value proposition of potential buyers.
The Williams Companies (WMB - Free Report) is a premier energy infrastructure provider in North America. WMB has a thriving deepwater transportation business. The company’s deepwater portfolio includes a 3,500-mile natural gas and oil gathering and transmission pipeline, and is important for future cash flows.
WMB’s debt maturity profile is in good shape, with its $4.5-billion revolver maturing in 2023. It is also paying shareholders an attractive dividend yielding around 5%. Beside this, the company has a share repurchase program worth $1.5 billion, highlighting its commitment to shareholders.
Murphy USA’s (MUSA - Free Report) unique high-volume and 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 rewarding its shareholders.
Enbridge Inc. (ENB - Free Report) has the longest and most advanced crude and liquids pipeline system in the world. In Canada, the company is touted to be the largest natural gas distributor. Hence, a significant portion of its earnings is generated from transportation operations, driven by a string of long-term contracts.
Enbridge has a strong commitment toward returning capital to shareholders. The company consistently outperforms the composite stocks within the oil energy sector by offering higher dividends. Over the majority of the last five years, ENB consistently yielded higher dividends than its sector counterparts.
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Phillips 66 (PSX) Explores Asset Sale, CEO Upbeat on Future
Phillips 66 (PSX - Free Report) , a prominent U.S. refiner and petrochemical manufacturer, is actively engaged in discussions regarding the sale of its non-core assets.
The announcement came during an energy conference, wherein chief executive Mark Lashier highlighted the company’s plan to monetize $3 billion in non-core assets in 2024, as part of a strategy to enhance returns by cutting costs and divesting non-essential holdings.
While the company has set a goal to monetize these assets this year, there is no fixed timeline for the potential sales. The decision will depend on whether potential buyers perceive greater value to these assets than the company itself.
Phillips 66 faced challenges in keeping pace with its industry rivals despite a period of higher fuel demand and increased margins across the sector. The company has also encountered scrutiny from activist investment firm Elliott Investment Management, particularly regarding its refining operations. Discussing the refining business, Lashier mentioned that inventories remained low but he expected strength in the sector heading into 2024.
While some analysts have suggested the possibility of a divestiture, Lashier expressed the company’s strong conviction in the enduring benefits of the chemicals business. He noted, after hitting rock bottom in 2023, the fundamentals of the chemicals business are continuing to improve.
In conclusion, Phillips 66’s exploration of asset sales reflects a strategic move to streamline its operations and boost returns. The company remains cautious and patient in its approach, considering the value proposition of potential buyers.
Zacks Rank & Stocks to Consider
Phillips 66 currently has 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). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Williams Companies (WMB - Free Report) is a premier energy infrastructure provider in North America. WMB has a thriving deepwater transportation business. The company’s deepwater portfolio includes a 3,500-mile natural gas and oil gathering and transmission pipeline, and is important for future cash flows.
WMB’s debt maturity profile is in good shape, with its $4.5-billion revolver maturing in 2023. It is also paying shareholders an attractive dividend yielding around 5%. Beside this, the company has a share repurchase program worth $1.5 billion, highlighting its commitment to shareholders.
Murphy USA’s (MUSA - Free Report) unique high-volume and 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 rewarding its shareholders.
Enbridge Inc. (ENB - Free Report) has the longest and most advanced crude and liquids pipeline system in the world. In Canada, the company is touted to be the largest natural gas distributor. Hence, a significant portion of its earnings is generated from transportation operations, driven by a string of long-term contracts.
Enbridge has a strong commitment toward returning capital to shareholders. The company consistently outperforms the composite stocks within the oil energy sector by offering higher dividends. Over the majority of the last five years, ENB consistently yielded higher dividends than its sector counterparts.