Phillips 66PSX is using its midstream business to build a more stable cash-flow base, alongside its refining operations. In the second quarter of 2026, Midstream adjusted EBITDA increased to $1.05 billion from $860 million in the first quarter, supported by record natural gas liquids fractionation and liquefied petroleum gas export volumes. Management expects the Midstream segment, along with the Marketing and Specialties segments, to provide consistent cash generation and targets a $4.5-billion Midstream adjusted EBITDA run rate by the end of 2027.
Western Gateway is likely to enhance PSX’s cash-flow potential, supported by its 49.9% ownership stake and $2.5 billion investment. The planned 1,300-mile refined-products system will initially have capacity of 230,000 barrels per day, with potential expansion to 320,000 barrels per day. Primarily 10-year take-or-pay contracts should support long-term cash generation once the project enters service in 2029. Its ability to expand capacity with limited additional capital and without new pipe could allow PSX to benefit from rising demand while limiting incremental investment.
Western Gateway is poised to strengthen Phillips 66’s refining business by connecting its Central Corridor and Gulf Coast refining assets with its West Coast and Southwest marketing network. This additional outlet will improve market access, logistics flexibility and product placement while supporting refinery throughput and regional margins. Thus, Western Gateway is expected to generate direct midstream returns while creating indirect benefits for PSX’s refining operations.
MPC & DINO Have Similar Advantages As PSX
Marathon PetroleumMPC and HF SinclairDINO stand out as peers with midstream operations that support their refining businesses through stronger logistics and market access.
Marathon Petroleum conducts its midstream business primarily through its majority ownership interest in MPLX, whose pipelines, terminals, storage and marine assets are integrated with MPC’s refining system. MPLX’s infrastructure moves crude and refined products and provides logistics flexibility, helping MPC optimize refinery feedstocks, product placement and access to higher-value markets. In second-quarter 2026, MPC’s Midstream adjusted EBITDA increased to $1.8 billion from $1.6 billion a year earlier, demonstrating the growing contribution of the business to MPC’s cash-generation profile.
HF Sinclair has an integrated midstream network that supports its refining and marketing operations across the Mid-Continent, Southwest and Northwest regions. DINO’s crude and petroleum-product pipelines, terminals and storage facilities provide logistics flexibility and help move refinery output to attractive markets. DINO is pursuing its Go-West pipeline initiative, which is expected to increase access to western markets and strengthen the connection between its refining assets and growing fuel demand.
PSX’s Price Performance, Valuation & Estimates
Phillips 66 shares have surged 95.9% over the past year compared with the industry’s 83.9% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, PSX trades at a trailing 12-month enterprise-value-to-EBITDA (EV/EBITDA) of 10.82X. This is above the broader industry average of 5.55X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PSX's third-quarter 2026 earnings has seen downward revisions over the past seven days. Meanwhile, estimates for fourth-quarter and 2026 earnings have seen upward revisions.
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