Phillips 66 10-Q 2026-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended			March 31, 2026

						or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from						to

Commission file number:			001-35349

Phillips 66

(Exact name of registrant as specified in its charter)

Delaware						45-3779385
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2331 CityWest Blvd., Houston, Texas 77042

(Address of principal executive offices) (Zip Code)

832-765-3010

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
			Title of each class						Trading Symbol(s)						Name of each exchange on which registered
			Common Stock, $0.01 Par Value						PSX						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒			Accelerated filer			☐			Non-accelerated filer			☐
Smaller reporting company			☐			Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 400,935,020 shares of common stock, $0.01 par value, outstanding as of March 31, 2026.

PHILLIPS 66

TABLE OF CONTENTS

			Page
Part I – Financial Information
Item 1. Financial Statements
Consolidated Statement of Income			1
Consolidated Statement of Comprehensive Income			2
Consolidated Balance Sheet			3
Consolidated Statement of Cash Flows			4
Consolidated Statement of Changes in Equity			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
Item 3. Quantitative and Qualitative Disclosures About Market Risk			64
Item 4. Controls and Procedures			64
Part II – Other Information
Item 1. Legal Proceedings			65
Item 1A. Risk Factors			66
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			66
Item 5. Other Information			66
Item 6. Exhibits			67
Signatures			68

PART I. FINANCIAL INFORMATION

Consolidated Statement of Income			Phillips 66

			Millions of Dollars
			Three Months Ended March 31
			2026						2025
Revenues and Other Income
Sales and other operating revenues			$	32,540					30,430
Equity in earnings of affiliates			252						153
Net gain on dispositions			6						1,087
Other income			204						56
Total Revenues and Other Income			33,002						31,726
Costs and Expenses
Purchased crude oil and products			29,216						27,660
Operating expenses			1,881						1,622
Selling, general and administrative expenses			537						519
Depreciation and amortization			558						791
Impairments			8						26
Taxes other than income taxes			234						233
Accretion on discounted liabilities			12						12
Interest and debt expense			286						221
Foreign currency transaction (gains) losses			10						(6)
Total Costs and Expenses			32,742						31,078
Income before income taxes			260						648
Income tax expense			41						122
Net Income			219						526
Less: net income attributable to noncontrolling interests			12						39
Net Income Attributable to Phillips 66			$	207					487
Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars)
Basic			$	0.51					1.19
Diluted			0.51						1.18
Weighted-Average Common Shares Outstanding (thousands)
Basic			402,036						409,182
Diluted			403,273						410,505
See Notes to Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income			Phillips 66

			Millions of Dollars
			Three Months Ended March 31
			2026						2025
Net Income			$	219					526
Other comprehensive income (loss)
Defined benefit plans
Amortization of net actuarial loss and settlements			4						5
Plans sponsored by equity affiliates			2						2
Income taxes on defined benefit plans			(1)						(1)
Defined benefit plans, net of income taxes			5						6
Foreign currency translation adjustments			(69)						90
Income taxes on foreign currency translation adjustments			—						(2)
Foreign currency translation adjustments, net of income taxes			(69)						88
Other Comprehensive Income (Loss), Net of Income Taxes			(64)						94
Comprehensive Income			155						620
Less: comprehensive income attributable to noncontrolling interests			12						39
Comprehensive Income Attributable to Phillips 66			$	143					581

See Notes to Consolidated Financial Statements.

Consolidated Balance Sheet			Phillips 66

			Millions of Dollars
			March 31 2026						December 31 2025
Assets
Cash and cash equivalents			$	5,150					1,116
Accounts and notes receivable (net of allowances of $66 million in 2026 and $68 million in 2025)			11,284						9,158
Accounts and notes receivable—related parties			626						613
Inventories			6,723						5,097
Prepaid expenses and other current

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Unless otherwise indicated, the “company,” “we,” “our,” “us” and “Phillips 66” are used in this report to refer to the businesses of Phillips 66 and its consolidated subsidiaries.

Management’s Discussion and Analysis is the company’s analysis of its financial performance, financial condition and significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes included elsewhere in this report. It contains forward-looking statements including, without limitation, statements relating to the company’s plans, strategies, objectives, expectations and intentions that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “priorities” and similar expressions often identify forward-looking statements, but the absence of these words does not mean a statement is not forward-looking. The forward-looking statements made in this Quarterly Report on Form 10-Q are based on events or circumstances as of the date on which the statements are made. The company does not undertake to update, revise or correct any of the forward-looking information included in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events unless required to do so pursuant to applicable law. Readers are cautioned that such forward-looking statements should be read in conjunction with the company’s disclosures under the heading: “CAUTIONARY STATEMENT FOR THE PURPOSES OF THE ‘SAFE HARBOR’ PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.”

The term “earnings” as used in Management’s Discussion and Analysis refers to net income attributable to Phillips 66. The terms “results,” “before-tax income” or “before-tax loss” as used in Management’s Discussion and Analysis refer to income (loss) before income taxes.

EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT

Phillips 66 is uniquely positioned as a leading integrated downstream energy provider operating with Midstream, Chemicals, Refining, Marketing and Specialties (M&S) and Renewable Fuels segments. At March 31, 2026, we had total assets of $84.1 billion. Our common stock trades on the New York Stock Exchange under the symbol PSX.

Executive Overview

In the first quarter of 2026, we reported earnings of $207 million. In response to the sharp increases in commodity prices and to preserve liquidity, we had net debt borrowings of $7.7 billion and increased our cash and cash equivalents by $4 billion. We used available cash to fund operating activities of $2.3 billion, capital expenditures and investments of $582 million, dividend payments to common stockholders of $509 million and repurchases of our common stock of $269 million. The use of cash in operating activities was primarily due to unfavorable net working capital impacts, which was primarily driven by an increase in inventory and higher accounts receivable, partially offset by higher accounts payable; as well as, the funding of approximately $3 billion of cash collateral on derivative positions. As of March 31, 2026, we had $5.2 billion of cash and cash equivalents and $0.8 billion of total committed capacity available under our credit facilities.

Strategic Priorities Update

In early 2025, we announced the next phase of the company’s strategic priorities along with financial and operational performance targets through year-end 2027. These targets demonstrate the company’s continued focus on world-class operations; disciplined growth and returns; financial strength and flexibility and shareholder returns.

• World-Class Operations** – We are focused on operational and cost reduction targets driving world-class operations across our portfolio. Optimizing utilization rates and product yield at our refineries through reliable and safe operations will enable us to capture the value available in the market in terms of prices and margins. We remain focused on a competitive cost structure and plan to enhance Refining segment returns and increase our utilization rates by focusing on low-capital, higher-return projects that increase asset reliability and improve market capture.

• We continue to focus on Refining performance, targeting an annual clean product yield of greater than 86%, crude oil capacity utilization rates higher than industry average and continuing to improve our competitive cost structure.

• Disciplined Growth and Returns** – A disciplined capital allocation process ensures we make investments that are expected to generate competitive returns. Our strategy remains focused on growing our Midstream and Chemicals businesses. Within our Midstream segment, we are primarily focused on maximizing the value of our fully integrated natural gas liquids (NGL) wellhead-to-market value chain.

• We budgeted $2.4 billion for 2026 capital expenditures and investments, exclusive of acquisitions and our share of capital spending by equity affiliates. This includes $1.3 billion of growth capital, primarily in our Midstream segment.

• Our financial targets through 2027 reflect our plans to organically grow our Midstream and Chemicals businesses, as well as maintain total annual capital expenditures and investments of approximately $2.5 billion.

• Financial Strength and Flexibility** – We use a variety of funding sources to support our liquidity requirements, including cash from operations, debt and proceeds from dispositions. Our focus remains on protecting the stable cash generation from the Midstream and M&S businesses while evaluating future opportunities to optimize our portfolio.

• We are targeting reductions of total debt to $17 billion and reductions of our debt-to-capital ratio by the end of 2027.

*•*Shareholder Returns – We believe shareholder value is enhanced through, among other things, a secure, competitive and growing dividend, complemented by share repurchases. Our financial target aims to return greater than 50% of net cash provided by operating activities, excluding working capital, to shareholders through share repurchases and dividends. This amount and timing of future dividend payments and the level and timing of future share repurchases is subject to the discretion of, and approval by, our Board of Directors and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans.

• In February and April 2026, our Board of Directors declared a quarterly cash dividend of $1.27 per common share, reflecting our commitment to a secure, competitive and growing dividend.

Business Environment

During March 2026, the business environment in which we operate was impacted by significant movements in commodity prices as a result of geopolitical events in the Middle East. The global crude oil market quickly shifted into structural deficit and the disruption materially reduced crude oil and refined products from the markets, pushing benchmark crude oil prices at the end of the quarter above $100 per barrel. In addition, natural gas, liquefied petroleum gas (LPG) and petrochemical markets have materially tightened. While these impacts were most notable during the last month of the quarter, due to the uncertainty regarding duration, continued disruptions could materially impact our future results.

Below is a discussion of additional factors impacting our environment during the three months ended March 31, 2026 as compared to the same period of 2025.

Our Midstream segment includes our Transportation and NGL businesses. Our Transportation business contains fe

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Our interest rate risk at March 31, 2026, did not differ materially from the risks disclosed under Item 7A of our 2025 Annual Report on Form 10-K. See Note 9—Debt for information related to debt.

We are exposed to market risks produced by changes in commodities, such as crude oil, refined petroleum products, NGL, natural gas, renewable feedstocks and renewable fuels, and electric power. We use financial and commodity-based derivative contracts as economic hedges to manage exposures to fluctuation in commodity prices. These derivatives are marked-to-market at the end of the period and reflected in current period earnings; however, the associated physical positions are valued on the balance sheet using last-in, first-out (LIFO) accounting rules. This could create a timing difference in earnings recognition that is expected to unwind in future periods.

Our use of derivative instruments is governed by an “Authority Limitations” document approved by our Board of Directors. This document prohibits the use of highly leveraged derivatives or derivative instruments without sufficient market liquidity for comparable valuations, and establishes Value at Risk (VaR) limits. Compliance with these limits is monitored daily by our global risk group. We use a VaR model to estimate the loss in fair value that could potentially result on a single day from the effect of adverse changes in market conditions on the derivative commodity instruments held or issued.

As a result of the elevated commodity price volatility driven by ongoing conflict in the Middle East, the VaR using Monte Carlo simulation with a 95% confidence level and a one-day holding period for derivative commodity instruments issued or held at March 31, 2026, increased compared with those instruments held at December 31, 2025. A hypothetical 10% increase in the market prices of commodities for our outstanding financial commodity derivative instruments as of March 31, 2026, would reduce the income before income taxes by approximately $647 million, and a hypothetical 10% decrease in the market prices of commodities would increase the income before income taxes by approximately $647 million. We remain at risk for possible changes in the market value of commodity derivative instruments; however, such risk could be mitigated by price changes in the underlying physical commodity. Effects of these offsets are not reflected in the above sensitivity analysis. We evaluate our portfolio of commodity derivative instruments on an ongoing basis and add or revise strategies in anticipation of and reaction to changes in market conditions and in risk profiles. Changes to our portfolio after March 31, 2026, would cause future income before income tax impacts to differ from those presented above.

For additional information about our use of derivative instruments, see Note 13—Derivatives and Financial Instruments, in the Notes to Consolidated Financial Statements.

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Act, is recorded, processed, summarized and reported within the time periods specified in U.S. Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. As of March 31, 2026, with the participation of management, our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer carried out an evaluation, pursuant to Rule 13a-15(b) of the Act, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Act). Based upon that evaluation, our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were operating effectively as of March 31, 2026.

There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) of the Act, in the quarterly period ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

From time to time, we may be involved in litigation and claims arising out of our operations in the normal course of business. Additionally, we have elected a $1 million threshold to disclose certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party to the proceedings. Except as previously reported, we do not believe we are subject to any matters, individually or in the aggregate, that would have a material adverse effect on our business, financial condition, results of operations or cash flows. During the first quarter of 2026, there were no new matters and two material developments with respect to matters previously reported.

Further, our U.S. refineries are implementing two separate consent decrees, regarding alleged violations of the Federal Clean Air Act, with the EPA, five states and one local air pollution agency. Some of the requirements and limitations contained in the decrees provide for stipulated penalties for violations. Stipulated penalties under the decrees are not automatic but must be requested by one of the agency signatories. As part of periodic reports under the decrees or other reports required by permits or regulations, we occasionally report matters that could be subject to a request for stipulated penalties. If a specific request for stipulated penalties meeting the reporting threshold set forth in U.S. Securities and Exchange Commission rules is made pursuant to these decrees based on a given reported exceedance, we will separately report that matter and the amount of the proposed penalty.

Matters Previously Reported (unresolved or resolved since the 2025 Annual Report on Form 10-K)

As described further in the “Legal Proceedings” section of Note 12—Contingencies and Commitments, in the Notes to Consolidated Financial Statements, on February 17, 2022, Propel Fuels, Inc. (Propel Fuels) filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. Based on the willfulness finding, Propel Fuels asked the Propel Court to award $1.2 billion in exemplary damages, and Phillips 66 Company filed a brief in opposition to that request. A hearing on exemplary damages was held on March 4, 2025, and the Propel Court awarded Propel Fuels $195 million in exemplary damages on July 30, 2025. On August 5, 2025, the Propel Court entered a final judgment against Phillips 66 Company in the amount of $833 million. The judgment includes the $604.9 million jury verdict, $195 million of exemplary damages, and $33.3 million of pre-judgment interest at 7%. From the date of final judgment, post-judgment interest of 10% is accruing. On August 25, 2025, Phillips 66 Company filed three post-trial motions requesting that the Propel Court render judgment in favor of Phillips 66 Company, grant a new trial, and/or reduce the damages award. On October 20, 2025, the Propel Court denied Phillips 66 Company’s motions. On November 14, 2025, Phillips 66 Company filed its Notice of Appeal, which has been assigned to Division Two of the First District Court of Appeal. Phillips 66 Company intends to file its opening appellate brief in accordance with the applicable appellate deadlines and any extensions thereto. Separately, on October 24, 2025, Propel Fuels filed additional motions with the Propel Court seeking attorney’s fees and costs. Phillips 66 Company filed its opposition to that request on January 13, 2026. The Propel Court heard argument on the motions on February 10, 2026, and took the motions under submission. Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position. While Phillips 66 Company believes the jury verdict is not legally or factually supported, there can be no assurances that such defense efforts will be successful. Until the final resolution of this matter, we may be exposed to losses in excess of the amount recorded, and such amounts may have a material adverse effect on our financial position.

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)

See the “Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)” section of Note 6—Investments, Loans and Long-Term Receivables and Note 12—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding Legal Proceedings and other regulatory actions.

There have been no material changes from the risk factors disclosed in Item 1A of our 2025 Annual Report on Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

																		Millions of Dollars
Period			Total Number of Shares Purchased*						Average Price Paid per Share**			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs***						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1-31, 2026			655,144						$	141.63		655,144						$	2,214
February 1-28, 2026			532,936						155.91			532,936						2,131
March 1-31, 2026			545,993						175.01			545,993						2,035
Total			1,734,073						$	156.53		1,734,073
** Includes repurchase of shares of common stock from company employees in connection with the company’s broad-based employee incentive plans, when applicable.*
*** Average price paid per share includes excise taxes.*
**** Since the inception of our share repurchase program in 2012, our Board of Directors has authorized an aggregate of $25 billion of repurchases of our outstanding common stock. Our share repurchase authorizations do not expire. Any future share repurchases will be made at the discretion of management and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans. Shares of stock repurchased are held as treasury shares.*

Insider Trading Arrangements

On March 17, 2026, Vanessa A. Sutherland, Executive Vice President, Government Affairs, General Counsel and Corporate Secretary, adopted a trading plan intended to satisfy Rule 10b5-1(c) under the Act, providing for the sale of up to 9,003 shares of our common stock between June 18, 2026 and June 17, 2027.

									Incorporated by Reference
Exhibit Number						Exhibit Description			Form			Exhibit Number			Filing Date			SEC File No.
3.1						Amended and Restated Certificate of Incorporation of Phillips 66.			8-K			3.1			05/01/2012			001-35349
3.2						Amended and Restated By-Laws of Phillips 66.			8-K			3.1			12/09/2022			001-35349
10.1						Term Loan Credit Agreement dated as of March 18, 2026, among Phillips 66 Company, as borrower, Phillips 66, as guarantor, the lenders party thereto, and Mizuho Bank, Ltd., as administrative agent.			8-K			10.1			03/18/2026			001-35349
10.2						Fourth Amendment to Receivables Purchase and Financing Agreement dated as of March 13, 2026, among Phillips 66 Receivables LLC, the persons from time to time party thereto as purchaser/lenders, PNC Bank, National Association, as Administrative Agent, Phillips 66 Company, as servicer, and PNC Capital Markets LLC, as structuring agent.			8-K			10.2			03/18/2026			001-35349
22*						List of Guarantor Subsidiaries.
31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32**						Certifications pursuant to 18 U.S.C. Section 1350.
101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Schema Document.
101.CAL*						Inline XBRL Calculation Linkbase Document.
101.LAB*						Inline XBRL Labels Linkbase Document.
101.PRE*						Inline XBRL Presentation Linkbase Document.
101.DEF*						Inline XBRL Definition Linkbase Document.
104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
** Filed herewith.*
*** Furnished herewith.*

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						PHILLIPS 66
						/s/ Ann M. Kluppel
						Ann M. Kluppel Senior Vice President and Controller (Chief Accounting and Duly Authorized Officer)

Date: April 29, 2026