Phillips 66 (Phillips 66) is an integrated energy company. It collects, refines, moves, stores, and sells petroleum products like gasoline, diesel, aviation fuel, and lubricants as well as natural gas. Additionally, it fractionates, trades, and transports natural gas liquids (NGLs). At its refineries, the corporation processes crude oil and other feedstock before selling in the US and Europe. Plastics and petrochemicals are produced by Phillips 66. Additionally, it produces and sells specialty lubricants under the Red Line, Kendall, and Phillips 66 names. In addition to the US, the corporation is present in Europe, Asia, the Middle East, and Africa. Houston, Texas, in the US, serves as the company’s headquarters.
Historical Review of Phillips 66
Although Phillips 66 is still a young corporation, they have deep roots in the oil industry. Phillips 66 was a component of ConocoPhillips before separating into a separate company, along with Phillips Petroleum Company and Conoco Inc. Although Phillips 66 is relatively new, the corporation from which it sprung has a long and dynamic history.
L.E. and Frank Phillips, brothers, established the Phillips Petroleum Company on June 3, 1917. In Bartlesville, Oklahoma, the brothers launched their humble but small firm. Both brothers were in the banking industry before to getting into the oil business, but when World War I broke out, they both made the decision to liquidate their banking assets and go into the oil production industry. The business was able to expand to Kansas by the end of 1917, when it had 27 employees and assets worth around $3 million. However, the brothers and the business did not really take off until 1918. 1 The Phillips Petroleum Company contributed to the construction of a refinery in the Texas Panhandle gas region in 1918.
Phillips66 separated from ConocoPhillips on May 1, 2012, and started operating as a standalone business. Phillips 66 has become a business with enormous potential since the corporation was freed from the Conoco moniker. Phillips 66 occupied position #4 on the coveted Fortune 500 top performing companies list at the end of 2013. Phillips 66 seems to be a firm on the rise with a new management team and fresh goals for future endeavors and investments. The Industry’s History One of the biggest industries in the world is the petroleum sector. In a nutshell, the petroleum business is built on the extraction of unrefined crude oil from the earth and its subsequent processing into useful materials like oil and gasoline.
Business segments of Phillips 66
The operations of Phillis 66 are divided into four reportable business segments:
Midstream: In the US, midstream gathers, processes, moves, and sells natural gas. It also moves, fractionates, and sells natural gas liquids. It also moves crude oil and other feedstocks to refineries, moves finished goods to markets, and offers terminaling and storage services.
Chemicals, which produces and sells plastics and petrochemicals on a global scale and includes a 50% equity stake held by the Company in Chevron Phillips Chemical Company LLC;
Refinery: A network of 14 refineries, mostly in the US and Europe, that buys, sells, and refines crude oil and other feedstocks;
Marketing and Specialties: manufactures and sells specialty goods in addition to buying and reselling refined petroleum products, such as gasoline, distillates, and aviation fuels, mostly in the US and Europe.
Phillips 66 Business model
Across a variety of commercial industries, Phillips 66 makes and distributes a wide range of goods with various purposes. Customers in the following industries can purchase goods and services from the company, among others:
- Petrochemicals, includes different producers of petrochemicals.
- Automobiles and transportation, including automakers, aftermarket service providers, fleet managers, and transportation businesses.
- Plastics and packaging, including companies that produce a range of packaging materials.
- Chemicals and lubricants, including companies that produce them.
- Airfield services providers, aviation engineering firms, and other aerospace enterprises are all included in the aviation and aerospace industry.
- Energy, such as power plants and other upstream, midstream, and downstream energy companies.
Under its Phillips 66, Conoco, and 76 brands, Phillips 66 also offers a variety of automobile items geared toward consumers.
The US, where Phillips 66 is based, is its main market and the source of the vast bulk of its earnings. Additionally, the company provides services to a variety of overseas clients in several countries, particularly the UK and Germany.
Strategies for value proposition
In the following ways, Phillips 66 offers its clients value:
- Its standing and reputation within the industry, with the Company having a history of delivering top-notch services in a dependable and effective manner. The Company is a leading energy manufacturing and logistics company both domestically and internationally.
- Its product line, which includes petrochemicals, distillates, and gasolines, as well as a variety of ancillary services, is designed to meet the needs of a wide range of industries, including the energy and automotive sectors.
- its global reach, with the company serving both a network of overseas clients as well as a sizable local customer base in the US, particularly in Germany and the UK.
- Its proprietary technologies allow it to offer distinctive products that cannot be obtained from rival companies. The company also allocates a portion of its resources to the development of cutting-edge products and processes.
- its knowledge of the sector, its experience, the fact that it employs technical experts across all of its operating segments, a group of seasoned industry leaders, and has a long-standing relationship with major oil and gas companies.
Operational channels
At www.phillips66.com, Phillips 66 has a website where it posts details on its numerous goods, services, and other undertakings. The company does not have an internet sales channel or give customers access to a client management portal online.
A large portion of Phillips 66’s sales are generated by an internal direct sales force that is organized by operational segment and geographic region. The Company has a network of offices spread throughout the Americas and Europe from which these sales agents work. Additionally, the company sells its gasoline, diesel, and aviation fuel products in the US through about 8,350 outlets in 48 states that are marketer-owned or -supplied. The Phillips 66, Conoco, or 76 brands are used on these websites. The company also has a network of marketers running about 6,700 stores as part of its wholesale infrastructure.
Additionally, Phillips 66 runs a vast pipeline network and its own network of refineries throughout the US, which enable it to offer customers a variety of midstream and refining services.
Strategic partnerships
To ensure the effective and dependable functioning of its numerous operations, Phillips 66 collaborates closely with a wide network of partner firms and organizations. The following categories can be used to organize these partners:
- Supplier and Vendor Partners, includes suppliers of the raw materials, machinery, and tools used in the refinery processes of the Company, as well as suppliers of the services and technologies used more widely throughout the organization.
- Channel & Distribution Partners, such as the network of marketing and sales representatives the company employs to support its wholesale operations in the US.
- Joint Venture Partners, such as various logistics and refining firms, with which the Company jointly offers goods and services through businesses that are both owned by them.
- Partners in Sustainability: The Company works on sustainability and community projects, especially in the US, with a variety of non-profits and philanthropic organizations.
In recent years, Phillips 66 has started a lot of partnerships. Included in this are a branding arrangement with CST Brands, a relationship with foodpros.com that offers nationwide discount pricing on foodservice equipment and merchandising goods, and an education and research agreement with the University of Oklahoma.
How does Phillips 66 stay in business?
The main assets of Phillips 66 are its intellectual rights and technologies, raw materials and supply chain, pipeline network, other sales and distribution infrastructure, partnerships, and workforce.
The 404 active patents that Phillips 66 has in 30 nations, including 260 active US patents, are used in the manufacture and sale of its goods. A number of patent applications filed in the name of Phillip 66 have been found in searches of records kept by the US Patent and Trademark Office. These applications include those for a “Injector nozzle for quenching within piping systems,” “Upgrading sugar-alcohol derived gas oil in a gas oil hydrocracker,” and “Slurry oil upgrading while preserving aromatic content.”
Physical infrastructure owned by Phillips 66 is essential to the company’s operations. In addition to its many refinery, storage, and terminal facilities, this also refers to its interest in significant pipeline networks throughout the US.
Revenue generation strategy
Sales of various petrochemical and chemical goods, along with the provision of related terminaling, storage, and other connected items, are how Phillips 66 makes money.
Phillips 66 reported total operations and sales revenue of $98.98 billion in 2015, a significant decrease from the 161.21 billion the company reported the year before. The fall in sales was attributed by the company to a general decline in the average price of petroleum products, crude oil, and natural gas liquids.
The Marketing and Specialties sector, which alone generated $73.15 billion in operational and sales revenue for the year, was responsible for the majority of the company’s revenue. The Refining segment, which reported $23.15 billion in sales and operating revenue, was responsible for the majority of the remaining revenue.
