Phillips 66 (PSX), the Houston-based oil giant, revealed its 2025 capital budget last week, totaling $2.1 billion, with a strategic focus on sustaining capital and growth investments. The company plans to allocate $998 million for sustaining capital, with $1.1 billion earmarked for growth initiatives.

Mark Lashier, chairman and CEO of Phillips 66, highlighted the company's continued focus on capital discipline, ensuring that investments are aligned with its strategic priorities. The budget reflects Phillips 66's commitment to delivering shareholder value by supporting growth in the NGL wellhead-to-market value chain and further strengthening refining competitiveness.

A significant portion of the capital budget, $975 million, will be dedicated to the Midstream segment, with $429 million allocated for sustaining projects and $546 million for growth projects. This investment will focus on strengthening Phillips 66’s position in key basins, including increasing gas processing capacity, which should further enhance the integrated NGL value chain.

The company has also committed $822 million to its Refining division, with $414 million allocated for sustaining capital. The remaining $408 million for growth capital will support high-return, low-capital projects aimed at improving refining competitiveness.

In Marketing and Specialties, Phillips 66 plans continued investments in its branded network, while the Renewable Fuels division will see further investments at the Rodeo Renewable Energy Complex, optimizing feedstocks and logistics for renewable diesel and sustainable aviation fuel production.

The Corporate and Other capital allocation will focus on information technology projects to enhance internal capabilities.

Phillips 66's proportionate share of capital spending by joint ventures, including Chevron Phillips Chemical Company (CPChem) and WRB Refining LP (“WRB”), is expected to total $877 million. These joint ventures are expected to be self-funded. CPChem’s growth capital will support the construction of world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar, set to start operations in 2026. Meanwhile, WRB’s capital spending will focus primarily on sustaining projects.

Overall, Phillips 66's total capital program for 2025, including its share of joint venture investments, is projected to reach $3 billion, demonstrating the company’s ongoing focus on strategic growth and operational optimization.

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, Oceaneering International, Inc. OII and Nine Energy Service NINE. While TechnipFMC presently sports a Zacks Rank #1 (Strong Buy), Oceaneering and Nine Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank 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.

Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. With a geographically diverse asset portfolio and a balanced revenue mix between domestic and international operations, the company effectively mitigates risk. As a leading provider of offshore equipment and technology solutions to the energy sector, OII benefits from strong relationships with top-tier customers, ensuring revenue visibility and business stability.

Nine Energy 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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