Phillips 66 Unveils $2.4 Billion Capital Spending Plan for 2026

Phillips 66 PSX, released a glimpse of its $2.4 billion capital budget for 2026, of which $1.1 billion is allocated to maintenance capital and the remaining $1.3 billion for growth capital. The $2.4 billion 2026 capital spending plan is up from its estimated $2.1 billion in 2025, indicating PSX’s strong focus on improving its core business areas.

For 2026, the refining player has allocated most of its spending to two of its core segments: midstream and refining. An insignificant portion is expected to be allocated to other segments, including marketing specialties, renewable fuels, and corporate and other operations.

For the midstream segment PSX has allocated $400 million towards sustaining projects and $700 million for growth projects adding up to $1.1 billion. As one of its core businesses, the integrated refining player is strengthening its NGL business by expanding its processing plants, pipelines, and fractionators through three projects.

First, the Iron Mesa gas processing plant in the Permian Basin, the most prolific basin in the United States, has a facility of 300 million cubic feet per day. This facility will likely commence operations in the first quarter of 2027.

Second, the Coastal Bend NGL pipeline expansion development is expected to be completed in late 2026. This project will expand daily transportation capacity to 350,000 barrels from 225,000 barrels.

Third, PSX has proposed an NGL fractionator in Corpus Christi which is expected to increase fractionation capacity by 100 thousand barrels per day. The development’s final investment decision is expected in early 2026, while the company anticipates the project’s completion in 2028.

 PSX’s midstream segment generates stable fee-based revenues, which are not vulnerable to the volatility of crude oil prices. Expansion projects in this segment will help to generate more revenues, enhancing the stability of the company’s business model.

For the refining segment, PSX has also allocated $1.1 billion in capital spending, including $590 million for sustaining projects and $520 million for growth projects. Notably, the company has identified more than 100 capital-efficient projects that it believes can generate attractive returns, since they enable the processing of crude from various sources to generate cleaner and higher-value fuels.

Phillips 66 added that it is mainly investing in the Humber gasoline quality improvement development, which needs a multi-year investment, and is expected to start operation in the second quarter of 2027. Currently, PSX carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PSX’s refining activities is highly vulnerable to the volatility in crude prices. Other key players in the downstream space are PBF Energy Inc. PBF, Valero Energy Corporation VLO, and Par Pacific Holdings, Inc. PARR. Both PBF Energy Inc. and Valero Energy Corporation carry a Zacks Rank of 3 while Par Pacific Holdings, Inc. is slightly better positioned and carries a Zacks Rank #2 (Buy), at present. With the price of West Texas Intermediate crude currently trading below the $60 per barrel mark, the refining operations of PSX, PBF, VLO and PARR are benefiting from relatively lower raw material costs.

Notably, PBF Energy, with highly advanced refining assets, has a total daily throughput capacity of 1.023 million barrels.  

Valero Energy has a strong focus on returning capital to its shareholders through both dividend payments and repurchases.

Par Pacific Holdings, headquartered in Houston, TX, is an integrated refining giant with daily refining capacity of 219,000 barrels. PARR also has 13 MMbbls of storage, and marine, rail and pipeline assets.

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This article originally published on Zacks Investment Research (zacks.com).

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