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Phillips 66 (PSX) Announces 2022 Spending Budget of $1.9B

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Phillips 66 PSX announced its 2022 capital spending budget of $1.9 billion. Of the total, sustaining capital spending will be $992 million to maintain operating efficiency for safe and reliable operations.

Phillips 66 sets $916 million for growth capital, 45% of which will be directed toward low-carbon opportunities. Along with a structured capital program, PSX will continue to focus on debt reduction and returns to shareholders.

For the midstream segment, Phillips 66 expects to spend $703 million next year, which involves $426 million for growth projects and $277 million for sustaining projects. The amount allocated for growth capital is intended for the Sweeny Frac 4 fractionator and the repayment of its 25% share of debt expected for the Bakken pipeline. Beside this, the midstream growth capital is meant for development opportunities to boost Phillips 66's low-carbon initiatives.

In refining, Phillips 66 will invest $896 million, of which $488 million will be spent for reliable, safe and environmental projects. Phillips 66 has allocated the remaining amount for the Rodeo Renewed project, which involves the conversion of its Rodeo refinery into a renewable fuel facility.

Once online, the Rodeo facility will produce 50,000 barrels per day of renewable diesel. This would make it one of the world's largest facilities of its kind. The conversion will lower emissions from the facility and produce low-carbon transportation fuel. The refining growth capital will also maintain opportunities for high-return, low-capital projects.

Phillips 66's share of capital expenditure by joint ventures, Chevron Phillips Chemical Company, WRB Refining and DCP Midstream, is expected to total $1.1 billion. With the company's proportionate share of capital spending for the large ventures, Phillips 66's capital program for 2022 is estimated to be $3 billion.

Company Profile & Price Performance

Headquartered in Houston, TX, Phillips 66's operations involve refining, midstream, marketing and specialties, and chemicals.

Shares of the company have outperformed the industry in the past three months. The stock has gained 12.5% compared with the industry's 11.3% growth.

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Zacks Rank & Other Key Picks

Phillips 66 currently sports a Zack Rank #1 (Strong Buy).

Investors interested in the energy sector might also look at the following companies that presently flaunt a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

Occidental Petroleum Corporation OXY is an integrated oil and gas company with significant exploration and production exposure. OXY is also a producer of various basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020-end, Occidental Petroleum's preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.

Occidental Petroleum's 2021 earnings are expected to surge 153% year over year. OXY has witnessed six upward revisions in the past 60 days. The company currently has a Zacks Style Score of B for Growth and A for Momentum. In the third quarter, OXY achieved its planned divestiture target of $10 billion by entering a deal to sell its interest in two offshore Ghana assets for $750 million.

Devon Energy Corporation DVN is an independent energy company engaged in the exploration, development and production of oil and natural gas. Devon's strong U.S. operations are spread across the key oil assets of Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. At 2020-end, Devon Energy proved reserves of approximately 752 million barrels of oil equivalent.

In the past year, the DVN stock has soared 220.1% compared with the industry's growth of 118.4%. Devon is also projected to see a year-over-year earnings surge of 3889% in 2021. DVN currently has a Zacks Style Score of A for both Growth and Momentum. Devon's free cash flow at the end of third-quarter 2021 was $1.1 billion, up eight-fold from the fourth-quarter 2020 levels. The company will continue to prioritize free cash flow generation in 2022 and deploy a major portion of the same to dividends and share buybacks.

PDC Energy PDCE is an independent upstream operator that engages in the exploration, development and production of natural gas, crude oil and natural gas liquids. PDCE, which reached its present form following the January 2020 combination with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020-end, PDC Energy's total estimated proved reserves were 731,073 thousand barrels of oil equivalent.

In the past year, shares of PDC Energy have gained 163.2% compared with the industry's growth of 100.5%. PDCE's earnings for 2021 are expected to surge 286.7% year over year. In the past 60 days, the Zacks Consensus Estimate for PDC Energy's 2021 earnings has been raised by 25%. PDCE beat the Zacks Consensus Estimate in the last four quarters, ending with an earnings surprise of 51.06%, on average.


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