A major American energy company that refines crude oil into gasoline, diesel, and jet fuel, and runs a vast network of pipelines, terminals, and chemical plants. It traces its roots to the Phillips Petroleum Company, founded in 1917 in Oklahoma by brothers Frank and L.E. Phillips, and was spun off from ConocoPhillips in 2012. The "66" in its name dates to 1927, when a test car hit exactly 66 mph on Route 66 while road-testing a new gasoline.
Refining margins more than doubled to $24.08/barrel, driving net income to $3.8B.
Refining margins rebounded sharply. rose 53% to $51.0B and reached $3.8B, or $9.55 per share, as the worldwide realized refining margin more than doubled to $24.08 per barrel and the Renewable Fuels swung to a $544 million profit on higher regulatory credit values. The quarter's cash generation funded $6.7 billion in repayments, advancing the company's target to reduce total debt to $17 billion by end-2027.
Key takeaways
rose to $3.8 billion from $877 million a year earlier, driven primarily by a more than doubling of the worldwide realized refining margin to $24.08 per barrel on higher market crack spreads.
The Refining swung to a $3.1 billion before-tax profit from $359 million, as the sharp increase in realized margins more than offset the absence of the prior year's $239 million in accelerated tied to the Los Angeles Refinery cessation.
The Renewable Fuels swung to a $544 million profit from a $133 million loss, primarily due to higher values of regulatory credits.
Section summaries
Management's Discussion and Analysis
Q2 2026 earnings surged to $3.8B, driven by sharply higher refining margins and renewable fuel regulatory credits.
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Consolidated rose to $3.8B from $0.9B, primarily on improved Refining realized margins and higher Renewable Fuels regulatory credit values.
Chemicals income rose to $404 million from $20 million, driven by improved polyethylene margins on higher sales prices at the joint venture.
was $7.3 billion for the quarter, enabling $6.7 billion in repayments and bringing total debt down from the $27.1 billion level reported at the end of the first quarter.
widened by 1.6 points to 14.4%, reflecting the improved refining and renewable fuels performance.
What changed
The worldwide realized refining margin rebounded to $24.08 per barrel, up from $10.88 in full-year 2025 and the $6.81 low flagged in Q1 2025, settling the trajectory of normalization that had been a watch item since 2022.
Chemicals income recovered to $404 million from $20 million a year earlier, addressing the prior flag on margin pressure from industry oversupply and lower sales prices.
The company made $6.7 billion in repayments during the quarter, a direct move toward the $17 billion total debt target by end-2027 that was set in the 2025 10-K and flagged after Q1 2026 borrowings pushed total debt to $27.1 billion.
The Renewable Fuels 's $544 million profit, driven by higher regulatory credit values, marks a reversal from the ramp-up losses at the that had been flagged in every filing since Q2 2024.
What to watch
Q3 2026 worldwide realized refining margin per barrel to see if the $24.08 level is sustained as Middle East conflict-driven volatility persists.
Resolution and payment impact of the $833 million judgment, with the company's opening appeal brief filed on July 10, 2026.
Total debt trajectory toward the $17 billion target by end-2027 after the $6.7 billion in Q2 repayments.
Sustainability of the Renewable Fuels 's profitability as regulatory credit values fluctuate.
Refining income before tax jumped to $3.1B from $0.4B, as the worldwide realized refining margin more than doubled to $24.08/barrel on higher market crack spreads.
Chemicals income before tax increased to $404M from $20M, driven by improved polyethylene margins on higher sales prices.
Renewable Fuels swung to a $544M profit from a $133M loss, primarily due to higher values of regulatory credits.
was $5B for the first half of 2026, up from $1B, enabling $6.7B in repayments and $1.7B returned to shareholders.
The company is targeting total debt reduction to $17B and a decrease by end-2027, while maintaining ~$2.5B in annual .
Quantitative and Qualitative Disclosures About Market Risk
Commodity-price risk is the primary market exposure; a 10% price move would impact pre-tax income by ~$350 million.
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Interest rate risk at June 30, 2026, did not differ materially from the risks disclosed in the 2025 10-K.
The company uses financial and commodity-based derivatives as for crude oil, refined products, NGL, natural gas, renewable feedstocks, renewable fuels, and electric power.
Derivatives are in earnings, while physical positions use LIFO, creating a timing difference expected to unwind in future periods.
A Monte Carlo VaR model (95% confidence, one-day holding period) showed increased risk versus year-end 2025 due to Middle East conflict-driven volatility.
A hypothetical 10% increase in commodity prices would reduce pre-tax income by ~$350 million; a 10% decrease would increase it by ~$350 million.
The sensitivity analysis excludes offsetting effects from underlying physical commodity positions, which could mitigate derivative losses.
No new material matters; one previously reported trade-secrets judgment is under appeal with $833M final judgment entered.
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The company states no matters, individually or in the aggregate, are expected to have a material adverse effect except as previously reported.
A final judgment of $833 million was entered against in the trade-secrets case, including $604.9M compensatory, $195M , and $33.3M .
filed an appeal on November 14, 2025, and submitted its opening brief on July 10, 2026, denying wrongdoing and contesting the verdict.
The company warns it may face losses exceeding the amount recorded and that an adverse final resolution could materially affect its financial position.
Two U.S. refinery consent decrees with the EPA and other agencies for alleged Clean Air Act violations remain ongoing, with potential for reported exceedances.