A quantitative analysis is made of the phase changes during the phase inversion temperature (PIT) emulsification process of an aqueous hexadecane emulsion stabilized by a tetra-ethylene glycol dodecyl ether surfactant. The mechanical dispersion part of the process takes place at the PIT, at which temperature the emulsion contains three phases: (1) water, with only minute fractions of surfactant and hydrocarbon; (2) an inverse micellar solution, with modest fractions of solubilized water; and (3) a bicontinuous microemulsion, with large concurrent solubilization of both water and hydrocarbon. After the mechanical action at the PIT, the emulsion is immediately cooled to temperatures beneath the PIT range, reducing the number of phases in the emulsion to two, an oil/water (O/W) microemulsion with moderate surfactant and hydrocarbon content, and an inverse micellar hydrocarbon solution with a significantly greater surfactant fraction. The emulsion is characterized by its large fraction of extremely small oil drops, significantly smaller than expected from the mechanical process. These drops are commonly assumed to emanate from the hydrocarbon fraction of the original bicontinuous microemulsion, the small size of the oil drops being a rational consequence of the colloidal dispersion prior to the phase separation. The quantitative analysis of the phase fractions versus temperature revealed this assumption to be premature. The original water phase is not the final aqueous phase in the emulsion; this phase is instead formed from the microemulsion phase by absorbing the original water phase, gradually modifying its own structure to become water-continuous with the originally large hydrocarbon fraction reduced to modest levels. In the process, a part of the original microemulsion is separated, forming the small oil drops.