Tesoro Makes A Far-Sighted Acquisition With Its Virent Deal
Tristan R. Brown
Tristan R. Brown
Tue, Oct. 18, 6:16 PM
- Chevron (NYSE:CVX) completed an initial round of bidding on its Burnaby, B.C., refinery late last week, with Tesoro (NYSE:TSO) among the bidders, Reuters reports.
- The refinery can process 52K bbl/day of oil but not bitumen, the heavy, tar-like substance extracted from Canada's oil sands, and so it may be less attractive to Canadian producers, according to the report.
- Par Pacific Holdings (NYSEMKT:PARR), which was seen as a possible contender for the plant, reportedly is not pursuing the refinery.
Tue, Oct. 11, 3:25 PM
- Oil refiners have lagged to the point that “value signals are getting investors interested," Credit Suisse says while cautioning that it wants to see global product inventories drawn down before buying shares, and the process is only just getting started.
- Nevertheless, the firm upgrades Tesoro (TSO +0.8%) and Alon USA Energy (ALJ +2.4%) to Outperform from Neutral, joining Marathon Petroleum (MPC -1.1%) and Western Refining (WNR +0.5%) as its favorites names in the group, while stressing that November-January is the typical entry point.
- Meanwhile, Credit Suisse downgrades PBF Energy (PBF -4.3%) and Delek USA (DK -3.6%) to Neutral; PBF has the largest macro sensitivity to refining and RINs, which are depressing PBF earnings at a time when net debt has been elevated after the Torrance and Chalmette acquisition, the firm notes.
Mon, Oct. 3, 5:47 PM
- Tesoro (NYSE:TSO) says it is changing from an asset-based credit facility to one that is cash flow-based, replacing its $3B asset-based facility which was scheduled to mature in November 2019 with a $2B four-year cash-flow credit facility.
- TSO says the new credit facility is not subject to borrowing base redeterminations and is guaranteed by certain TSO subsidiaries and collateral, which would be released once it achieves an investment-grade credit rating from Moody's or S&P.
- The new credit facility can be expanded up to an aggregate $2.25B prior to TSO achieving an investment-grade rating and up to $3B after the company achieves an investment-grade rating.
Thu, Sep. 29, 2:03 PM
Mon, Sep. 26, 2:12 PM
- Tesoro (NYSE:TSO), along with Marathon Petroleum (NYSE:MPC), remains one of only two Buy ratings among independent refiners at BofA Merrill Lynch, even while the firm remains cautious on the sector.
- BofA analyst Doug Leggate believes TSO's marketing business deserves a 3x multiple uplift and that the market is ignoring the prospects of the business.
- Leggate also expects TSO to display improved operating margins vs. peers for Q3 on a reversal of seasonal margin trends, as the firm raises its price target on the shares to $109 from $95.
Tue, Sep. 6, 5:12 PM
- Tesoro (NYSE:TSO) agrees to acquire renewable fuels and chemical company Virent for an undisclosed amount.
- TSO says it plans to provide resources and expertise to support the scale-up and commercialization of Virent's technology, which involves biomass that can be converted and blended into other fuels and used as renewable chemical, including a component of polyester.
- TSO also believes the acquisition may lower its compliance costs with the federal renewable fuel standard and California`s low carbon fuel standard.
Mon, Aug. 29, 8:36 AM
- Tesoro (NYSE:TSO) had declared $0.55/share quarterly dividend, 10% increase from prior dividend of $0.50.
- Forward yield 2.97%
- Payable Sept. 15; for shareholders of record Aug. 31; ex-div Aug. 29.
Tue, Aug. 23, 3:38 PM
- Tesoro (TSO +1.2%) and Tesoro Logistics (TLLP +0.8%) are initiated at Jefferies with respective Buy and Hold ratings and target prices of $101 and $49.
- Jefferies cites TSO's premier set of western U.S. energy assets, $500M-$800M of identified EBITDA suitable for potential drop-down into TLLP, dividend and distribution growth potential, and asset diversity which offers cash flow support amid commodity price volatility.
- However, the firm thinks TSO support may be needed for TLLP to achieve its stated year-end 2017 EBITDA target and sees upside capped without it.
Tue, Aug. 16, 4:42 AM
- Billionaire investor Carl Icahn has called on the EPA to make changes to the market for renewable fuel credits or else risk "the mother of all short squeezes" that could bankrupt refiners.
- "The RIN market is the quintessential example of a 'rigged' market where large gas station chains, big oil companies and large speculators are assured to make windfall profits at the expense of small and midsized independent refineries which have been designated the 'obligated parties' to deliver RINs."
- Related tickers: VLO, NTI, CLMT, MPC, TSO, ALDW, CVI, WNR, PBF, DK, HFC, CVRR, NTI, ALJ, TSO, WNR, PSX, XOM, PBF
Thu, Aug. 11, 6:57 PM
- Major U.S. refiners are on track to pay record amounts this year for credits to comply with U.S. renewable fuel rules, a trend that is bound to continue to hurt profits for the group, Reuters reports.
- A group of 10 refinery owners including Marathon Petroleum (NYSE:MPC) and Valero Energy (NYSE:VLO) spent at least $1.1B buying RINs, according to a Reuters review of their filings, placing them on track to surpass the annual record of $1.3B spent by the same group in 2013.
- RINs averaged ~$0.78 each during Q2, ~25% above the same period a year ago, according to the analysis, due to more ambitious targets from U.S. regulators on the volumes of ethanol required to be blended with gasoline.
- Other relevant tickers include PBF, CVRR, HFC, TSO, PSX, WNR, DK.
Wed, Aug. 3, 6:01 PM
Tue, Aug. 2, 5:35 PM
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Mon, Jul. 25, 12:56 PM
- Some U.S. refiners, stuck with the highest inventories of gasoline for this time of year in a quarter of a century, have started blending winter grade gasoline a month earlier than usual to sell later in the year, Reuters reports.
- Looking to cut costs, refiners and blenders reportedly are making an early move to mix cheap butane - a cheaper blending component than most other ingredients - to convert the summer barrels into winter barrels.
- Mixing more winter gasoline now threatens to worsen the glut later, but that's a risk willingly taken by an industry left with few other choices, the report says.
- Independent U.S. refiners are expected to post another quarter of weak earnings en route to possibly the worst year since the shale boom began in 2011.
- Refiners are broadly lower today as crude oil prices drop: PSX -1.6%, VLO -0.7%, MPC -2.3%, TSO -1.6%, HFC -0.7%, WNR -0.3%, PBF -1.5%, DK -0.6%, ALJ -1.7%.
Tue, Jul. 19, 9:57 AM
- Tesoro (TSO +0.3%) is upgraded to Buy from Neutral with a $92 price target at Citigroup following the recent pullback in the stock.
- Citi's Faisel Khan cautions that despite the growth in crack spreads, material headwinds remain for refiners due to higher RIN costs and increased gasoline inventories, but also notes that TSO obtains a meaningful part of its cash flows from its marketing and midstream assets, and that the value of these assets has “held up better than pure refining assets.”
- For Q2, Khan expects TSO to report a Q/Q improvement in margins, although significantly below prior estimates.
Mon, Jul. 18, 2:19 PM
- Tesoro (TSO +1.8%) says it has reached a $400M-plus settlement with the U.S. Department of Justice and EPA for air quality violations at refineries in six western states.
- Under the settlement, TSO pledges to invest $400M in technology to better control air emissions at operations in Alaska, northern California, North Dakota, Utah, Hawaii and Washington, as well as pay a $10.4M civil penalty.
- The U.S. attorney general, EPA administrator, attorneys general for Alaska and Hawaii, and the Northwest Clean Air Agency had filed a complaint against TSO for Clean Air Act violations.
Fri, Jul. 15, 5:56 PM
- California proposes a series of regulations aimed at strengthening workplace and environmental safety at the state’s 18 oil refineries, four years after a leaky pipe triggered a fire at Chevron’s (NYSE:CVX) Richmond plant and sent 15K people to the hospital.
- The new rules would require increased employer accountability for mechanical integrity of refinery equipment, adoption of inherently safer designs and systems, periodic workplace safety culture assessments, and more.
- CVX has acknowledged problems at Richmond and agreed to pay $2M in fines but rejected accusations of lax safety attitudes at the plant.
- Other relevant tickers include TSO, VLO, PSX, ALJ, RDS.A, RDS.B.