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Tesoro follows other refiners with loss for third quarter Lower margins, imports lead to red ink; company also paying higher interest and financing following refinery purchase Allen Baker PNA Contributing Writer
Tesoro Petroleum Corp. followed the pattern for refiners with a loss of $15.8 million for the third quarter, compared with a profit of $32.8 million in the third quarter of 2001. The company lost $17.9 million in the second quarter.
Refiners and the refining operations of the majors have posted losses for much of this year due to high crude prices they haven’t been able to pass on to consumers.
The San Antonio company’s refining segment posted an operating income of $33.3 million for the quarter, but that’s compared with $81.8 million in the third quarter of 2001 when the company’s operations were much smaller. Retailing showed an operating income of $3.5 million, against $5 million a year earlier, with far fewer outlets.
Meanwhile, interest and financing costs rose to $43.6 million, two and a half times the figure a year ago, as the company added the debt taken on with its California refinery purchase and other recent acquisitions.
Crude prices higher “Industry crack spreads declined from the levels experienced during the second quarter due to higher crude prices coupled with record gasoline production from domestic refiners and record gasoline imports from foreign producers,” said Tesoro CEO Bruce Smith. European refineries have been sending larger shipments of gasoline to the United States recently because of the increasing popularity of diesel vehicles on that continent.
Margins in the industry rose in the last half of October, according to Smith, so the fourth quarter could be stronger. For this year’s third quarter, overall refining gross margins slid by more than $2, or 27 percent, to $5.59 per throughput barrel.
Production rose to 77 percent 537,300 barrels a day as Tesoro added the former Valero refinery in California to its system, as well as a full quarter’s production from its North Dakota and Salt Lake City refineries, purchased two-thirds of the way through 2001’s third quarter. Gasoline sales up, but margin down On the retail front, the 699 stations supplied by Tesoro sold more than twice as much fuel in the quarter as its 388 stations did a year ago, 222 million gallons compared with 106 million a year ago. Fuel margin slid to 14 cents a gallon from 18 cents, however. And while merchandise sales also more than doubled to $39 million, the merchandise margin slipped a bit to 29 percent from 32 percent.
Revenues rose 54 percent to $2.17 billion, reflecting the addition of the California refinery and a full quarter’s production from Salt Lake and North Dakota operations.
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