Phillips 66's (PSX) second-quarter earnings rose 14% as lower U.S. oil prices helped improve margins at its refining and chemicals businesses, the company said Wednesday.

Phillips 66 and other refiners have benefited from the 20% fall in oil prices during the quarter. Phillips 66, with many of its refineries in the U.S. Midwest, particularly benefited from increased oil drilling in the region.

In the company's first financial report after being spun off from ConocoPhillips (COP) in April, Phillips 66, now one of the largest independent U.S. refiners, reported a profit of $1.18 billion, or $1.86 a share, up from $1.04 billion, or $1.64 a share, a year earlier. Revenue decreased 6.7% to $47.83 billion. Analysts polled by Thomson Reuters most recently projected earnings of $1.78 a share on revenue of $54.55 billion.

"We ran well, we had better margins this quarter," Phillips 66 Chief Executive Greg Garland said during a call with investors.

Houston-based Phillips 66 also said it has decided not to sell its 247,000 barrel-a-day Alliance refinery in Belle Chasse, La. ConocoPhillips put the refinery and its plant in Trainer, Pa., up for sale last year as coastal oil prices rose, but only sold the Trainer refinery.

Phillips 66 will instead spend about $1 billion in 2012 to increase the amount of domestic crude its refineries can process. The company will also expand the export capacity of the Alliance refinery to about 220,000 barrels a day by 2013, Mr. Garland said. With U.S. fuel demand stagnant, refiners are growing sales of diesel to Europe and gasoline to Latin America. Phillips exported 90,000 barrels a day of fuel in the second quarter, Mr. Garland said.

Refining margins should improve at Alliance as the growing supply of light, sweet crude produced in the mid-continent region push down the price for Gulf Coast crude benchmarks, said Allen Good, analyst at Morningstar.

"The economics have changed to relative to where they were even a year ago," Mr. Good said.

The refining segment adjusted earnings rose 71% to $851 million amid stronger margins. The marketing, specialties and other segment reported adjusted earnings were up 34% to $334 million as U.S. wholesale fuel margins improved amid a steep decline in product costs that fell more rapidly than prices.

Meanwhile, Phillips 66's board authorized a $1 billion stock repurchase program to be paid from operating cash flow.

The company's midstream segment saw adjusted earnings fall 29% amid lower natural-gas liquids prices and higher operating costs.

The chemicals segment saw adjusted earnings grow 27% to $242 million mostly on improved margins and lower utility costs.

ConocoPhillips last week reported second-quarter earnings fell 33% during its first reporting period as a stand-alone producer of oil and gas, however adjusted earnings from continuing operations topped Wall Street forecasts even as low oil prices cut into on-target production results.

Phillips 66 shares closed Tuesday at $37.60 and were up 1% at 38.13 in recent trading.

Write to Ben Lefebvre at ben.lefebvre@dowjones.com

--Tess Stynes contributed to this article