Phillips 66 (PSX) reported second-quarter earnings of $3.8 billion, or $9.55 a share, after $207 million, or $0.51 a share, in the first quarter, as the integrated downstream energy company reversed a quarter in which mark-to-market losses on short derivative hedges had compressed results.

Adjusted earnings were $3.8 billion, or $9.41 a share. Adjusted EBITDA was $5.891 billion.

The first quarter had absorbed $839 million of pre-tax mark-to-market losses on short derivative positions used as economic hedges, including $396 million in Refining, $323 million in Marketing and Specialties and $120 million in Renewable Fuels. Second-quarter results rebounded in refining, marketing and renewables partly because of favorable mark-to-market impacts, as well as higher realized margins, marketing margins and regulatory credits.

Refining was the largest swing. Pre-tax income was $3.062 billion, versus $208 million in the first quarter. Adjusted pre-tax income was $3.086 billion. Realized refining margins were $24.08 a barrel, versus $10.11 a barrel. Margins were primarily driven by an increase in market crack spreads and favorable mark-to-market impacts. Crude capacity utilization was 96%; clean product yield was 86%. Turnaround expense was $123 million. Successful turnarounds were completed at the Wood River and Humber refineries.

Marketing and Specialties pre-tax income was $583 million, versus a $161 million loss in the first quarter. Adjusted pre-tax income was $514 million, versus a $141 million loss. The increase was mainly due to higher global marketing margins and favorable mark-to-market impacts. Second-quarter results included a $69 million pre-tax special item in the segment, including a $110 million net gain on asset dispositions related to post-closing adjustments from the December 2025 sale of 65% of the Germany and Austria retail marketing business, and a $41 million legal accrual related to ongoing litigation with Propel Fuels, Inc.

Renewable Fuels pre-tax income was $544 million, versus a $41 million loss. Production was 53 MBD, versus 40 MBD. The increase was mainly due to higher regulatory credits from higher pricing and renewable fuels production, as well as favorable mark-to-market impacts.

Midstream pre-tax income was $785 million, versus $591 million. NGL fractionation volumes were a record 1,020 MBD. The increase was mainly due to higher margins and higher volumes largely driven by the absence of last quarter’s Winter Storm Fern impacts. It also reported record LPG export volumes.

Chemicals pre-tax income was $404 million, versus $114 million. Adjusted pre-tax income was $404 million, versus $85 million. Global O&P capacity utilization was 91%. The increase was mainly due to higher margins. Chevron Phillips Chemical Company LLC progressed the Golden Triangle Polymers Project in Orange, Texas, and Ras Laffan Polymers Project in Qatar, with full operations expected in 2027.

Corporate and Other pre-tax loss was $407 million. The loss decreased primarily due to lower net interest expense and employee-related costs.

Cash flow from operations was $7.259 billion, versus a $2.264 billion use in the first quarter. Cash flow from operations excluding working capital was $4.317 billion. Capital expenditures and investments were $726 million. Return of capital to shareholders was $887 million, including $379 million of share repurchases and $508 million of dividends.

Total debt decreased by $6.6 billion to $20.6 billion at June 30, 2026. Net debt was $16.5 billion. Debt-to-capital was 39%; net debt-to-capital was 33%. Cash and cash equivalents were $4.1 billion, with $6.4 billion of committed capacity available under credit facilities.

The company achieved full production at Dos Picos II, a 220 MMCFD gas plant in the Permian Basin, and announced construction of the 300 MMCFD Zeus Gas Plant in the Permian Basin and a 100 MBD Coastal Bend NGL Fractionator in Corpus Christi. Chairman and CEO Mark Lashier said second-quarter results reflect the strength of operations and the value of the integrated portfolio, and that the company remains committed to disciplined capital investment, dividends, share repurchases and debt reduction.