Does Western Gateway Pipeline Access to Los Angeles Change The Bull Case For Phillips 66 (PSX)?

• In December 2025, Phillips 66 and Kinder Morgan, Inc. announced that their proposed Western Gateway refined products pipeline had attracted substantial shipper commitments, prompting plans for a new open season in January 2026 that will connect Borger, Texas with Phoenix and extend access to Los Angeles via reversed SFPP lines.
• By reversing existing pipelines like the Gold Pipeline and SFPP segments to create east‑to‑west product flows, the Western Gateway project effectively links Midwestern refinery output to high-demand markets in Arizona, California, and Nevada, potentially reshaping regional fuel supply routes.
• Next, we’ll examine how this Western Gateway expansion, which opens new pipeline access into Los Angeles, may influence Phillips 66’s investment narrative.

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Phillips 66 Investment Narrative Recap

To own Phillips 66, you need to believe the company can turn its refining, midstream and renewable investments into steadier earnings despite thin recent margins and industry cyclicality. The Western Gateway news reinforces the focus on logistics and market access, but it does not materially change the near term earnings risk tied to refining volatility, turnaround costs and the upcoming Los Angeles refinery closure.

The most relevant recent announcement alongside Western Gateway is the approved US$2.4 billion 2026 capital budget, which leans into midstream NGL projects and higher return refining upgrades. Taken together, the new pipeline commitments and this spending plan highlight how much of the current catalyst story rests on improving the cash generation and reliability of Phillips 66’s midstream and refining footprint.

Yet, while Western Gateway could support that story over time, investors should be aware that...

Read the full narrative on Phillips 66 (it's free!)

Phillips 66's narrative projects $120.0 billion revenue and $5.2 billion earnings by 2028. This implies revenues declining by 3.4% per year and an earnings increase of about $3.5 billion from $1.7 billion today.

Uncover how Phillips 66's forecasts yield a $148.85 fair value, a 14% upside to its current price.

Exploring Other Perspectives

Eight members of the Simply Wall St Community now value Phillips 66 between about US$81 and US$392 per share, showing sharply different expectations for upside. You can set those views against the current catalyst story that leans heavily on midstream expansion projects like Western Gateway to offset pressure on refining margins and short term earnings, then explore which assumptions you find more convincing.

Explore 8 other fair value estimates on Phillips 66 - why the stock might be worth over 3x more than the current price!

Build Your Own Phillips 66 Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Phillips 66 research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Phillips 66 research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Phillips 66's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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