Elliott Accepts Phillips 66's Performance Goals, CEO Lashier Says

(Reuters) — Activist investor Elliott Investment Management has accepted the performance improvement plan that U.S. oil refiner Phillips 66 laid out to boost shareholder returns and share price, Chief Executive Mark Lashier said in an interview on Tuesday.

"They've bought into our plans that we already had in place," the CEO of one of the largest U.S. oil refiners said in a briefing at its Houston headquarters.

Elliott sent a letter to the company's board last fall, disclosing a $1 billion stake in the company, and calling for additions to its board of directors and a focus on improving its oil refining business.

Since the activist firm publicly disclosed its recommendations, Phillips 66 shares have climbed 32%, to $156.37 per share, compared to a 15% increase in the S&P 500 Index.

"Elliott sees the progress. I think they've done quite well as any investor has that entered the shares over the last couple of years," he said.

An Elliott spokesperson did not immediately reply to a request for comment.

Last month, Phillips 66 appointed Robert Pease, a veteran refining executive, as a director, and said it was looking to add a second candidate. Elliott had urged the company last fall to add directors with refining experience that could address underperformance in refining and speed up cost-cutting efforts.

The oil refiner and pipeline operator's performance improved in 2023's fourth quarter after a two-year period in which the company's overall earnings lagged rivals.

Despite the share price gains, Lashier said the company is undervalued by investors waiting for it to deliver on profit targets.

Phillips is ahead of schedule on a plan to repurchase $6 billion to $8 billion in shares by year-end, he said. The company has committed to deliver $13 billion to $15 billion in total shareholder returns by the end of 2024.

Phillips 66 remains in discussions with potential buyers on a goal of raising $3 billion from asset sales, but is in no hurry to sell, Lashier added.

The company is in the final stages of converting its oil refinery in Rodeo, California, to produce about 50,000 barrels a day of sustainable aviation fuel and renewable diesel after it stopped processing crude oil in February, he said.

The facility will ramp up across the second quarter and expect to be in full operation by the end of the second quarter, Lashier added.

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