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Tesoro profits dwindle in fourth quarter; company still posts record net for year
Allen Baker PNA Contributing Writer
Weaker refining margins pushed Tesoro Petroleum Corp. profits for the fourth quarter down to $4.0 million, just a sixth of the $24.4 million the company made a year earlier. Third-quarter profits were $32.8 million.
For the year, Tesoro’s earnings were $88 million, up 20 percent from 2000 and a record for the company.
Operating earnings from refining and marketing, by far the biggest part of the San Antonio, Texas-based company, dropped to $45.1 million for the quarter from $57.2 million in the same period of 2000.
“This drop was due primarily to the decline in our realized refining margin as the overall weak economy and unseasonably warm weather caused margin erosion,” Tesoro President Bruce A. Smith said in a statement.
Tesoro had a product spread for refining and marketing of $7.16 per barrel in the quarter, down exactly a dollar from the figure a year ago. Over the year, product spread increased to $7.65 from $6.99 in 2000. Acquisitions triple debt Offsetting part of the decline in margins for the quarter was $19 million in operating profits from the acquisition of two refineries and 130 stations from BP, he reported.
But those acquisitions more than tripled Tesoro’s debt at the end of the year to $1.147 billion from $311 million a year earlier. Interest costs for the quarter also tripled, to $21.4 million in 2001 from $7.1 million a year ago.
The purchase of the refineries in Salt Lake and North Dakota didn’t slake Tesoro’s thirst for growth, however. The company announced Feb. 5 that it’s buying a big 168,000-barrel-per-day refinery in California from Valero Energy, plus 70 stations, for $1.08 billion. The refinery will increase Tesoro’s total refinery production 47 percent.
The company’s Nikiski refinery processed 50,800 barrels daily in the fourth quarter, a couple hundred barrels more than the figure for the 2000 quarter. For the year, the facility averaged 50,000 barrels daily, up from 48,500 in 2000.
In addition to its refineries and gas outlets, Tesoro has a marine services division that brought in $700,000 in operating profit in the fourth quarter, down from $1.7 million a year ago.
Total revenues for the quarter were $1.28 billion, down 11 percent from the figure a year earlier. For the year, the company took in $5.22 billion, up 2 percent from 2000.
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