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Healthy West Coast margins put Tesoro back in profit column
Allen Baker, Petroleum News Contributing Writer
It’s been a long time coming, but Tesoro Petroleum Corp. returned to the black in the first quarter, showing earnings of $20.4 million, against a loss of $55.6 million a year ago and red ink in every quarter since.
And the company took an $8.8 million charge related to early retirement and severance as it trimmed its work force, aiming to eliminate 214 jobs this year.
The big news was strong West Coast refining margins. The San Antonio company’s nearly billion-dollar purchase of a California refinery in May of last year is looking more like a paying proposition, rather than an anchor dragging Tesoro toward insolvency.
The former Valero refinery in the San Francisco Bay area delivered a refining margin of $10.56 a barrel on 157,800 barrels of crude daily in the quarter.
Asset sales Tesoro had to shed some gas stations in recent months as it worked to cut its debt.
For the Pacific Northwest pair of refineries, including the Nikiski, Alaska, facility, refining margins more than doubled to $6.19 a barrel from $2.48 a year earlier on 11 percent higher throughput of 149,900 barrels as day.
Tesoro’s average refining margin was $6.92 a barrel, not far from triple the $2.52 a barrel in the same quarter a year ago. It was also up smartly from $5.20 in the fourth quarter, when the company posted a loss of $27.7 million.
Total refining throughput averaged 464,500 barrels daily, down 2 percent from fourth quarter and an operating profit of $109.2 million versus the loss of $35.8 million a year ago. Improved finances Interest and financing costs came down to $47.2 million from $50.6 million in the fourth quarter. Debt was $1.91 billion at the end of the quarter, down $71 million from the $1.98 billion at the end of 2002.
The marketing segment showed a loss of $8.1 million, a slight improvement from a loss of $9.6 million in the same quarter of 2002.
Revenues reached $2.29 billion in the quarter, a 15 percent gain from $2 billion in the fourth quarter. The company collected $1.23 billion in revenues in the first quarter of 2002, but that was before the California acquisition.
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