How Phillips 66 Makes its Money: Revenue Breakdown
A breakdown of Phillips 66 (PSX) financials. See how Phillips 66 makes money from Refining, Marketing & Specialties, Midstream, and more using their 2024 annual report.
How Does Phillips 66 Make its Money?
Phillips 66 is a diversified energy manufacturing and logistics company, operating in four segments: Refining, Midstream, Chemicals (through its 50% stake in CPChem joint venture with Chevron), and Marketing & Specialties. Spun off from ConocoPhillips in 2012, the company operates 12 refineries with 1.8 million barrels per day of crude processing capacity. Phillips 66 has been investing in renewable fuels, converting its Rodeo, California refinery into the world’s largest renewable fuels facility capable of producing 50,000 barrels per day of renewable diesel and sustainable aviation fuel.
Phillips 66 (PSX) Business Model
Phillips 66 Competitors
Phillips 66’s key competitors and comparable public companies in the oil & gas sector include ExxonMobil, Chevron, Marathon Petroleum, and ConocoPhillips. Each of these companies competes for market share, investor attention, and revenue in overlapping segments. See how Phillips 66 stacks up by comparing their revenue breakdown, margins, and growth metrics.
Revenue Breakdown
| Segment | 2024 | 2023 | YoY Growth |
|---|---|---|---|
| Refining | $107,000 | $114,000 | -6.1% |
| Marketing & Specialties | $32,000 | $30,000 | +6.7% |
| Midstream | $10,300 | $9,800 | +5.1% |
| Chemicals (CPChem JV) | $1,200 | $1,400 | -14.3% |
| Total Revenue | $147,000 | $150,000 | -2.0% |
Refining — 73% of Revenue
The core business: purchasing crude oil and processing it through 12 refineries (1.8 million barrels per day capacity) into gasoline, diesel, jet fuel, and other petroleum products. Revenue declined 6.1% in 2024 as crack spreads (the margin between crude oil input costs and refined product output prices) normalized from the elevated levels of 2022-2023. Refining is Phillips 66’s largest segment by revenue but the most volatile — profitability swings wildly with crack spreads, which are driven by the supply-demand balance for refined products. When refineries are shut down for maintenance or storms (as happened during Hurricane Ida), the reduced supply pushes crack spreads higher across the industry.
Phillips 66 has been investing heavily in renewable fuels through the Rodeo Renewed project — converting the Rodeo, California refinery (formerly a petroleum refinery) into the world’s largest renewable fuels facility. The converted Rodeo facility can produce approximately 50,000 barrels per day of renewable diesel and sustainable aviation fuel (SAF) from used cooking oils, animal fats, and soybean oil. This positions Phillips 66 in the growing renewable fuels market where California’s Low Carbon Fuel Standard (LCFS) credits provide additional revenue.
Marketing & Specialties — 22% of Revenue
Revenue from selling refined products through branded (Phillips 66, Conoco, 76) and unbranded wholesale channels, plus specialty products like lubricants, polypropylene, and other petrochemicals. Revenue grew 6.7% in 2024. The marketing business provides a downstream outlet for refinery production and captures additional margin by selling branded gasoline at higher prices than spot-market wholesale. Specialty products (base oils, lubricants, polypropylene) carry higher margins than commodity fuels and provide diversification.
Midstream — 7% of Revenue
Phillips 66’s 50% ownership of DCP Midstream and its 100%-owned gathering, processing, transportation, and fractionation assets. Revenue grew 5.1% in 2024. Midstream assets gather natural gas and natural gas liquids (NGLs) from well sites, process them into marketable products, and transport them through pipelines to Gulf Coast fractionation and export facilities. The midstream business generates fee-based, relatively stable cash flows that are less volatile than refining — making it a valuable ballast in the portfolio. Phillips 66 acquired DCP Midstream’s remaining public units in 2023, consolidating full control.
Chemicals (CPChem JV) — 1% of Revenue
Phillips 66’s 50% equity interest in Chevron Phillips Chemical Company (CPChem), one of the world’s largest petrochemical producers. Revenue declined 14.3% in 2024. CPChem produces ethylene, polyethylene, and other products used in plastics, packaging, and industrial applications. The JV is constructing a new $8.5 billion world-scale ethylene cracker and polyethylene facility in Orange, Texas (Ras Laffan petrochemical complex in Qatar is another major JV project). Chemicals earnings are cyclical and tied to global petrochemical supply-demand balances.
Phillips 66 (PSX) Income Statement
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue | $147,000 | $150,000 |
| Cost of Revenue | $136,000 | $137,000 |
| Gross Profit | $11,000 | $13,000 |
| Operating Expenses | $4,400 | $4,200 |
| Operating Income | $6,600 | $8,800 |
| Net Income | $3,200 | $6,400 |
All values in millions USD unless otherwise stated.
Financial data sourced from Phillips 66 SEC Filings.
Phillips 66 (PSX) Key Financial Metrics
- Gross Margin: 7.5%
- Operating Margin: 4.5%
- Revenue Growth: -2.0%
Is Phillips 66 Profitable?
Yes, Phillips 66 is profitable, though margins are thin by design — refining is a high-volume, low-margin business where enormous revenue flows through the income statement but margins are compressed by crude oil input costs. The 7.5% gross margin and 4.5% operating margin are actually solid for a refiner of Phillips 66’s scale and reflect normalized crack spreads in 2024. Net income declined 50% to $3.2 billion from an exceptionally profitable 2023, when elevated crack spreads following the Russia-Ukraine energy shock generated outsized earnings across the refining industry. The revenue and earnings decline does not signal operational weakness — it reflects the inherent cyclicality of refining margins. Phillips 66’s diversified model (midstream provides stable fee-based income, chemicals adds petrochemical earnings, renewable fuels provide option value) helps dampen the volatility relative to pure-play refiners.
Phillips 66 (PSX): What to Watch
- Rodeo Renewed renewable fuels facility ramp-up — The converted Rodeo refinery is the world’s largest renewable fuels facility. Achieving nameplate capacity (50K bpd), securing feedstock (used cooking oil, animal fats) at economic prices, and generating positive margins from LCFS credits and SAF premiums is the most important strategic initiative.
- Refining crack spread outlook — Crack spreads are the single largest determinant of Phillips 66’s profitability. The global refining capacity balance (new capacity additions in the Middle East vs. aging refinery closures in developed markets) will drive margin trends.
- Midstream EBITDA growth from NGL expansion — Phillips 66 is investing in NGL fractionation and pipeline capacity along the Gulf Coast to capture growing Permian Basin production. Fee-based midstream earnings provide stability and should grow with US oil and gas production.
- CPChem petrochemical project completions — The $8.5 billion Orange, Texas cracker and the Ras Laffan Qatar project represent massive capital commitments that will significantly increase CPChem’s capacity and earnings potential once operational.
- Capital allocation and shareholder returns — Phillips 66 has been aggressively repurchasing shares and paying dividends. The balance between returning cash to shareholders, funding growth projects (Rodeo, midstream expansion), and managing debt through the commodity cycle is key.
Phillips 66 (PSX) Financial Summary
Phillips 66 is a diversified energy manufacturing and logistics company operating 12 refineries with 1.8 million barrels per day of capacity across Refining (73%), Marketing & Specialties (22%), Midstream (7%), and Chemicals (1%). Revenue declined 2.0% to $147 billion in 2024 as refining crack spreads normalized from elevated 2023 levels, and net income fell 50% to $3.2 billion — reflecting the inherent cyclicality of refining margins rather than operational weakness. The 4.5% operating margin is solid for a refiner at normalized spreads. The strategic focus is the transformation of the Rodeo, California refinery into the world’s largest renewable fuels facility (50K barrels per day of renewable diesel and SAF), combined with growing fee-based midstream earnings and the CPChem petrochemical joint venture with Chevron.
Weekly Company Breakdowns — Visualized
See how top companies actually make money. Visual revenue breakdowns delivered free every week.