Phillips 66 (PSX), the Houston-based oil giant, announced plans to sell its 25% stake in the Gulf Coast Express pipeline in Texas to an affiliate of ArcLight Capital Partners for $865 million, per a Reuters report. This strategic move positions the U.S. refiner to surpass its $3 billion non-core asset divestiture target.

The company has already raised $2.7 billion through the sale of fuel terminals, pipelines and its stake in a Swiss retail joint venture. Phillips 66's CEO, Mark Lashier, emphasized the company's dedication to portfolio optimization and rationalization of non-core assets as part of its ongoing strategy.

Despite declining refining profits, Phillips 66 remains steadfast in maintaining stable investor returns. The company has pursued cost-cutting measures. It now expects costs to reduce from $1.07 billion in 2024 to $822 million in 2025.

For 2025, Phillips 66 projects overall expenditures of $2.1 billion, slightly below the $2.2 billion forecast for 2024. These adjustments reflect a prudent approach to navigating fluctuating refining margins.

While under pressure, U.S. refining margins are expected to stabilize in 2025. The Energy Information Administration attributes this to increased industrial demand and refinery closures, including Phillips 66’s Los Angeles facility.

This divestiture and cost optimization align with the company’s strategy to enhance financial health and sustain shareholder value amid a dynamic market environment.

PSX’s Zacks Rank & Key Picks

Currently, Phillips 66 carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like TechnipFMC plc FTI, FuelCell Energy FCEL and Nine Energy Service NINE, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. It focuses on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.

FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.

Nine Energy Service provides onshore completion and production services for unconventional oil and gas resource development. The company operates across key prolific basins in the United States, including the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus and Utica, as well as throughout Canada. With a sustained demand for oil and gas in the future, the demand for NINE’s services is anticipated to increase, which should position the company for growth in the long run.

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