Phillips 66 Seeks Direct Venezuelan Crude Deal, Boosts Dividend, Price Target to $155
Phillips 66 seeks Treasury approval to buy heavy Venezuelan crude directly from PDVSA in April, after purchasing it at a $9-per-barrel Brent discount. It raised its quarterly dividend by $0.07 to $1.27 per share, while analysts lifted the price target to $155 on 45,000 bpd capacity and lower refining costs.
1. Direct Venezuelan Crude Purchase Plan
Phillips 66 has applied for U.S. Treasury approval to buy heavy crude directly from PDVSA starting in April, aiming to bypass intermediaries and capitalize on a previous purchase priced at a $9-per-barrel discount to Brent. Its Gulf Coast refineries’ flexibility to process heavy oil underpins the strategy.
2. Dividend Increase and Growth
The board approved a quarterly dividend increase of $0.07 to $1.27 per share, payable March 4 to shareholders of record on February 23. This marks the 14th consecutive annual increase, sustaining a 15% compound annual growth rate since 2012 and reflecting confidence in cash flow generation.
3. Analyst Upgrade and Capacity Expansion
TD Cowen raised its price target on Phillips 66 to $155 from $151 and maintained a Buy rating, citing lower refining costs and the addition of 45,000 barrels-per-day of capacity. Seasonal demand and favorable Canadian crude differentials are expected to support refining margins in the near term.
4. Regulatory and Financing Hurdles
Transactions with Venezuela’s state oil company require special U.S. Treasury licenses, and banks remain cautious about financing PDVSA-linked trades. These regulatory and financing uncertainties could delay or increase the cost of direct crude purchases.