09 April 2012 18:34 [Source: ICIS news]
HOUSTON (ICIS)--US-based Phillips 66 will shift more capital to its higher earning businesses such as chemicals and midstream, the company's chief executive said on Monday.
Phillips 66 is the downstream spinoff of ConocoPhillips, which will become an exploration company.
Phillips 66 will become an independent company on April 30. It includes ConocoPhillips' 50% stake in Chevron Phillips Chemical (CP Chem).
CEO Greg Garland said while ConocoPhillips's refining, marketing and specialties business accounted for 84% of employed capital in 2011, it represented only 64% of its earnings.
"And if you look at just refining, only 40% of our average earnings of the 2009-2011 time period are from refining," he said.
He said the commodity elements in the company's marketing, specialty, midstream and chemicals businesses help mitigate the volatility seen in its base refining segment.
"So our plan is to shift more capital towards these higher returning businesses," he said. "We are not your normal refining company."
ConocoPhillips has plans to sell its Trainer refinery in Pennsylvania and its Alliance refinery in Louisiana.
Garland said they will continue to “shore up their refining portfolio”.
However, he said the recent resurgence of on-shore drilling in plays such as the Bakken shale in North Dakota and Eagle Ford shale in Texas have increased domestic oil production.
"After years of steady decline, US on-shore oil production is forecast to grow by over 2m bbl/day," he said. "This presents a significant opportunity for the refining industry, especially in the inland markets."
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