PSX - Elliott reveals a $1.0 billion stake in Phillips 66: here's what it wants

2023-11-29 10:09:07 ET

Phillips 66 (NYSE: PSX) opened about 3.0% up on Wednesday after Elliott Investment Management revealed a sizable stake in the crude refining company.

Elliott is pushing for board seats at Phillips 66

The activist investor has built a stake worth $1.0 billion and is pushing for two board seats.

Elliott attributes the recent underperformance in Phillips 66 to insufficient focus on the refining business. A continued increase in its operating expense per barrel has also shaken “investor confidence in the company’s ability to run its refining operations efficiently”.

The news arrives about a month after Phillips 66 reported earnings for its fiscal third quarter that came in shy of Street estimates as revenue decline year-on-year.

Note that Elliott Investment Management did also announce a $2.0 billion stake in Crown Castle this week as Invezz reported here .

Elliott is behind CEO Lashier’s recent plan

Mark Lashier – the Chief Executive of Phillips 66 recently committed to increasing focus on refining, unloading $3.0 billion worth of non-core assets, and improving the long-term capital return policy.

All in all, he’s targeting $14 billion of EBITDA by 2025. In its letter to the board on Wednesday, Elliott said it’s behind these goals that, if delivered, could see the energy stock climb a whopping 75% from here.

At the same time, we find market skepticism to be understandable. Board must take steps to reassure investors that Phillips 66 is in best possible position to achieve its value-creation potential.

If Phillips 66 fails to hit what it’s targeting for 2025, however, the activist investor would consider pushing for a new chief executive, it added.

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