US-based oil and gas company Phillips 66 has announced earnings of $708m in the fourth-quarter of 2012, down from $2.0bn during the same quarter a year ago.

Phillips 66 chairman and chief executive officer Greg Garland said that the company’s earning during the quarter improved due to strong realized refining and chemicals margins.

"Our $1 billion debt reduction strengthens our financial flexibility and resulted in a 25 percent debt-to-capital ratio at the end of the year," Garland added.

The company’s refining and marketing (R&M) earnings in fourth-quarter were $497m, which included a $564m impairment of the company’s equity investment in the Melaka Refinery.

Refining’s adjusted earnings were $916m, higher than a year ago, mainly due to the result of improved refining margins.

Phillips 66 processed 135,000 barrels per day of shale crude in the fourth quarter of 2012, representing a 97% increase over the same period in 2011.

Export volumes increased by 5% to about 140,000 barrels per day when compared with the fourth quarter of 2011.

Phillips 66’s worldwide refining utilization was 91% for the quarter, which dropped 94% from a year ago.

The Midstream segment recorded earnings of $85m for the fourth quarter of 2012.

The company funded $894m in capital expenditures and investments, including $513m for its investments in the Sand Hills and Southern Hills pipeline projects.