Fri, Feb. 13, 11:18 AM
- All oil refiners are not the same, Goldman Sachs suggests as it upgrades Valero Energy (VLO +4%) to Buy from Neutral and adds it to the firm's Conviction Buy List while downgrading Tesoro (TSO -0.4%) to Neutral from Buy and removing it from the conviction list.
- Goldman thinks VLO offers investors a compelling turnaround story - similar to TSO in 2014 - with a clear, new strategy to reduce growth capex and return capital to shareholders; VLO also has not been impacted by USW strikes, unlike TSO.
- The firm also expect VLO to be as aggressive as any refiner in dropping down assets to its underlying Valero Energy Partners (NYSE:VLP) MLP, and feels the market generally has underappreciated this potential upside.
Thu, Feb. 12, 6:38 PM
- Tesoro (NYSE:TSO) tumbled 6.7% today following a "messy" Q4 that included a headline earnings miss and many adjustment, in contrast to better than expected results from peers Valero, Phillips 66 and Marathon Petroleum.
- TSO's earnings conference call was dominated by the United Steelworkers strike at three of its west coast refineries, including the idling of its Martinez, Calif., plant; TSO execs reiterated they already had planned maintenance at Martinez and said they are working on a plan to get the refinery back online.
- TSO says its logistics segment has seen "substantial growth" in operating income reflecting increased throughput in the High Plains Pipeline system and strong growth from west coast products distribution assets.
- Shares were downgraded to Neutral from Buy with a $68 price target at BofA/Merrill, but Cowen reiterated its Outperform rating and $90 price target as gasoline strength and a widening WTI-Brent differential that should support Bakken netbacks to the west coast through H1 likely helps offset negative impacts from the Martinez shutdown.
Wed, Feb. 11, 5:39 PM
Tue, Feb. 10, 5:35 PM
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Mon, Feb. 9, 4:59 PM
- Royal Dutch Shell (RDS.A, RDS.B) says it will resume negotiations tomorrow with the United Steelworkers union over a new labor contract for U.S. refinery workers.
- Worker walkouts affecting 11 plants including nine refineries that account for 13% of U.S. refining capacity today stretched into their ninth day.
- Over the weekend, walkouts widened to include BP's Whiting, Ind., refinery and its joint venture refinery with Husky Energy (OTCQB:HUSKF) in Toledo, Ohio; other facilities affected so far are owned by Tesoro (NYSE:TSO), Marathon Petroleum (NYSE:MPC) and LyondellBasell (NYSE:LYB).
Sat, Feb. 7, 8:25 AM
- BP says United Steelworkers members plan to go on strike at two of its refineries beginning at midnight tonight at its Whiting, Ind., refinery and a smaller plant it owns with Husky Energy (OTCQB:HUSKF) near Toledo, Ohio.
- The move follows the union's rejection Thursday of a sixth contract offer from Shell (RDS.A, RDS.B), the lead negotiator in talks with the union on wages, benefits and safety issues at dozens of oil facilities across the U.S.
- The nine plants already on strike plus the two refineries account for ~13% of U.S. refining capacity; a full strike of USW members employed at more than 200 U.S. refineries, fuel terminals, pipelines and chemical plants, would threaten to disrupt nearly two-thirds of U.S. fuel output.
- Facilities now hit by the strike are owned by BP, Shell, Tesoro (NYSE:TSO), Marathon Petroleum (NYSE:MPC) and LyondellBasell (NYSE:LYB).
Thu, Feb. 5, 7:12 PM
- The United Steelworkers union has rejected the latest offer from U.S. refiners, continuing the strike at nine plants over wages, benefits and safety issues.
- The nine affected sites include seven refineries that account for ~10% of U.S. fuel-making capacity, but the union’s action could be expanded if its terms aren’t met, as the United Steelworkers represent hourly workers at 65 refineries as well as dozens of other plants.
- The plants hit by the strike are owned by Royal Dutch Shell (RDS.A, RDS.B) - the lead negotiator in talks with the union - Tesoro (NYSE:TSO), Marathon Petroleum (NYSE:MPC) and LyondellBasell (NYSE:LYB), and are located in Washington, California, Texas and Kentucky.
Thu, Feb. 5, 6:57 PM
- Tesoro (NYSE:TSO), the biggest supplier of gasoline to the western U.S. and now the no. 1 target in the current strike of refineries by the United Steelworkers union, has emerged as the top-performing energy stock in the past five years after expanding its business beyond just making fuels.
- TSO has gained the most of any energy company in the S&P 500 during the period with less volatility, making it the least-risky energy investment with the highest returns, according to Bloomberg data.
- “No other U.S. refiner has successfully completed more meaningful strategic initiatives over the past four years," Tudor Pickering Holt says.
- One of TSO’s biggest risks has been to invest more in California despite the state’s reputation for regulation hostile to fossil fuels, but the result has been a more than doubling in refinery operating profits in a place where most investors and industry experts had expected low profits.
- CEO Greg Goff says TSO looks to continue spending on pipelines and processing; it's also part of a joint venture awaiting regulatory approval to build a facility in Washington state that would move crude to its west coast refineries.
Tue, Feb. 3, 6:24 PM
- Tesoro (NYSE:TSO) has been hit the hardest in the strike at U.S. oil refiners, with workers walking out of three of its plants, as the United Steelworkers union targets the company, according to a Bloomberg report.
- More than 1,400 TSO employees were called to strike, more than a third of the total workers who walked out nationally, and that's no accident: TSO won a reputation in negotiations with local union members three years ago for being an especially hard bargainer, which has put a bullseye on the company during the current negotiations.
- The union also called for strikes at two plants owned by Shell (RDS.A, RDS.B), two refineries and a co-generation unit owned by Marathon Petroleum (NYSE:MPC), and a LyondellBasell (NYSE:LYB) refinery; modern refineries are highly automated, and plant owners say they will be able to sustain normal operations during the strike by using non-union workers.
- Negotiations are resuming tonight between union leaders and Shell, the lead negotiator for the refineries, amid increasingly strident language.
Mon, Feb. 2, 8:19 AM
- One of the nine U.S. oil refineries and chemical plants where union workers are striking has shut down, but the other refineries so far are running normally as operators initiated contingency plans, calling on trained managers as replacement workers.
- Tesoro (NYSE:TSO) says its 166K bbl/day Martinez, Calif., refinery, was being shut because it was in the midst of planned maintenance work; TSO says management was operating its refinery in Carson, Calif., and that managers were set to take over from union workers at its plant in Anacortes, Wash.
- Other companies hit by the strike so far are Royal Dutch Shell (RDS.A, RDS.B), Marathon Petroleum (NYSE:MPC) and LyondellBasell (NYSE:LYB).
- If a new agreement isn’t hammered out this week and the strike spreads, “You can forget about $2 gasoline,” says Carl Larry, director of oil and gas at the Frost & Sullivan consulting firm. “People are going to be freaked out."
- Crude oil prices are rising this morning, as investors focus on the falling U.S. rig count that signals lower production ahead; WTI +0.5% at $48.50/bbl, Brent +1.1% at $53.60.
Wed, Jan. 28, 6:31 PM
- Citigroup's energy team lowers earnings estimates by an average of 20% on U.S. refiners such as Marathon Petroleum (NYSE:MPC) and Phillips 66 (NYSE:PSX) even while reaffirming its bullish stance on the group, believing crude oil differentials eventually will widen back out over the next 12-18 months once oil storage reaches capacity.
- After running the numbers, Citi's estimates for MPC and PSX are above consensus, and figures MPC likely will post higher Y/Y earnings in 2015 despite the recent decline in crude spreads.
- However, the firm downgrades Tesoro (NYSE:TSO) to Neutral from Buy on valuation.
Tue, Jan. 27, 6:52 PM
- Few energy plays have held up as well of late as U.S. refiners such as Valero (NYSE:VLO), Tesoro (NYSE:TSO) and Marathon Petroleum (NYSE:MPC), and Barclays analysts see more strength ahead for the group.
- For a refiner the price of oil is an input, so cheaper oil cuts its costs, and U.S. refiners generally do better when the price difference between U.S. crude and international benchmarks is widening - and that’s exactly what Barclays believes will happen.
- Brent-LLS and Brent-WTI Cushing spreads have tightened significantly in recent weeks, but the firm thinks the differentials are unsustainable; storage capacity at Cushing and the Gulf coast will inhibit the ability to store excess barrels indefinitely, and the upcoming turnaround season should expedite the speed at which Cushing and Gulf coast inventory meets maximum storage capacity, eventually forcing differentials to re-widen and begin to reflect transportation costs.
- In conclusion, Barclays believes U.S. independent refiners will benefit from the re-widening of North American differentials in the coming months.
Sat, Jan. 10, 8:25 AM
- Kinder Morgan (NYSE:KMI) tops Credit Suisse's list of its nine favorite energy and utility stocks to own for 2015, believing KMI’s recent MLP acquisitions will lower the company’s cost of capital and open the door for double-digit dividend growth and additional potential acquisitions.
- Noble Corp. (NYSE:NE) is the top pick among offshore drillers, despite the fact that analysts don’t believe the inflection point in the drilling down-cycle is coming until at least 2016; fulfilling the firm's $30 price target would mean nearly 90% upside.
- Also recommended: SUNE, EXC, RDS.A, RDS.B, TSO, DVN, PDCE, SLB.
- SandRidge Energy (NYSE:SD) is one of Credit Suisse's five energy and utility stocks to avoid despite an upbeat quarterly report, believing the risk associated with SD’s extremely high leverage likely will lead to significant capex cuts, thus limiting production growth and cash flows.
- The firm also would avoid CVRR, SFY, YGE and SO.
Dec. 20, 2014, 10:20 AM
- With crude oil prices near five-year lows, some analysts say gas stations may be the best way to play the energy sector right now, with CST Brands (NYSE:CST), Murphy USA (NYSE:MUSA) and Marathon Petroleum (NYSE:MPC) as pure plays worth watching.
- Gasoline retailers enjoy their largest profit margins in falling price environments such as today, says Again Capital's John Kilduff.
- The gas station trend is clearly seen with refinery Valero's (NYSE:VLO) 2013 spinoff of its retail CST Brands, which operates 1,900 gas stations in North America and whose stock has easily outperformed VLO in recent months; Gabelli last week increased its 2014 EPS estimate on CST because of lower oil prices.
- MUSA and MPC, also created as gas station spinoffs from refineries, have outperformed their parent companies as well.
- Tesoro (NYSE:TSO) said its retail segment enjoyed record performance in the most recent quarter, while big box stores such as Costco (NASDAQ:COST) that have gas stations connected to their stores also noted the benefit of lower oil prices in their earnings reports.
Dec. 12, 2014, 4:38 PM
- QEP Midstream Partners (NYSE:QEPM) spiked higher into the close after a 13D filing disclosed that Tesoro (NYSE:TSO) had acquired a 56.9% active stake in the company.
- In the filing, Tesoro Logistics (NYSE:TLLP) proposes acquiring all outstanding units of QEPM not owned by QEPM or by QEP Field Services.
Dec. 10, 2014, 2:49 PM
- Tesoro (TSO -3.5%) moves lower along with nearly all energy names, despite receiving analyst praise following its update of growth strategies including expectations for 2015 annual improvements of $550M-$670M.
- Barclays analysts say TSO is on track to exceed original 2014 improvement targets, reiterating its Overweight rating and raising its price target to $114 from $104.
- Credit Suisse reiterates an Outperform rating and lifts its price target to $100 from $86, saying that "self-help" is driving upside.
- BofA calls TSO a Buy and raises its price target to $88 from $70, noting that TSO's review combined for the first time the strategy update from Tesoro Logistics (TLLP -6.2%).
Tesoro Corp is an independent petroleum refiner and marketer in the United States. Its subsidiaries operate through three business segments, transport crude oil and manufacture, transport and sell transportation fuels.
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