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Mar. 25, 2015, 10:23 AM
- Striking workers are scheduled to end their nearly two-month walkout and return to their jobs next week at Royal Dutch Shell's (RDS.A, RDS.B) refinery at Deer Park, Tex., according to a United Steelworkers union official.
- Three Motiva Enterprises refineries in Louisiana and Texas co-owned by Shell and Saudi Aramco saw workers returning to their jobs this week, and USW members also are returning to work this week at Tesoro's (NYSE:TSO) Anacortes, Wash., and Carson, Calif., plants.
- Strikers at TSO's Martinez, Calif., refinery - the only refinery that actually was shut due to the strike - are set to vote on the new contract this week; however, negotiations between the union and management at BP's Whiting, Ind., refinery are said to be proceeding slowly.
Mar. 18, 2015, 3:24 PM
- Crude oil prices, in the doldrums yet again after U.S. inventories hit record highs for a 10th week and supplies at the futures' Cushing delivery hub hit a peak, turned around to finish higher following the Fed policy statement.
- Nymex crude rose 2.5% to settle at $44.66/bbl, pushing off earlier lows of $42.25 and the lowest intraday level since March 2009; Brent is up 4.5% at nearly $56.
- The gain could prove only a momentary recovery, however, as "speculation is going to grow about operational capacity being hit in Cushing and what that portends for prices,” according to Again Capital John Kilduff, adding that he sees U.S.crude testing $40 soon.
- U.S. refiners are enjoying big gains as the Brent/WTI spread surpasses $11: TSO +5.1%, CLMT +4.7%, CVI +4.8%, HFC +4.6%, MUR +4.5%, WNR +4.4%, VLO +3.9%, RDS.A +3.9%, CVRR +3.7%, MPC +3.3%, PSX +3.2%, ALJ +3.2%.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
Mar. 18, 2015, 12:44 PM
- United Steelworkers union members who have been on strike at the Motiva recovery in Port Arthur, Tex. - the largest in the U.S. - ratified a final contract last night, and workers are expected to return to their jobs next week after walking off their jobs on Feb. 21.
- The union also says workers at three Tesoro (TSO +2.1%) refineries on the west coast have made progress in finalizing contracts, with return-to-work agreements - usually the final step before ratification votes - under discussion.
- Union negotiators reached an industry-wide agreement to settle the strike with lead refinery rep Royal Dutch Shell (RDS.A, RDS.B) last Thursday; Shell is a co-owner of Motiva.
- The union says BP, Lyondell Basell (NYSE:LYB) and Marathon Petroleum (NYSE:MPC) "continue fights on tough local issues."
Mar. 17, 2015, 2:58 PM
- Oil refinery stocks are not as expensive as they look, Deutsche Bank analyst Todd Ryan writes, as he recommends buying Valero Energy (NYSE:VLO), Marathon Petroleum (NYSE:MPC), Tesoro (NYSE:TSO) and Phillips 66 (NYSE:PSX).
- After stripping out implied MLP-related valuations, Ryan finds "reasonable" stock price multiples at ~5.0x, in line with average levels seen in late 2013 and early 2014; more importantly, revisions are likely to remain a steady tailwind, with nearly 10% upside to 2015 EBITDA estimates using fairly conservative assumptions of $5/bbl Brent-WTI for 2015.
- With an overall healthy refining backdrop, a healthy Q1 EPS setup as estimates look low, and higher investor appreciation for the retail business with comps trading at ~1.5x turns above the five-year average, Ryan sees further upside for the group over the near term.
Mar. 16, 2015, 4:59 PM
- A tentative national agreement to end the six-week U.S. refinery strike has struggled to win ratification at eight plants as workers and companies try to settle local issues, union reps say.
- The deal reached Thursday by the United Steelworkers and lead industry negotiator Royal Dutch Shell (RDS.A, RDS.B) to end the biggest walkout of its kind in 35 years appears to be showing signs of quick passage at just four plants.
- Workers at four plants that are owned or co-owned by Shell, which include three Motiva Enterprises refineries, have scheduled or are expected to hold votes this week to ratify the agreement and could be back at work next week, but local labor talks are stalled at other plants.
- Other relevant tickers: TSO, BP, MPC, LYB, OTCQB:HUSKF
Mar. 12, 2015, 3:59 PM
- Negotiators for the United Steelworkers union have tentatively accepted a deal from Shell Oil (RDS.A, RDS.B) to settle the six-week-long strike that has affected refineries and chemical plants across the U.S., a USW statement says.
- The deal still requires approval of the union’s international policy committee and the local union representing workers at Shell’s Deer Park, Tex., refinery before it goes to a vote of union members nationwide.
- The union and Shell, which is representing the industry in the talks, had been in talks since Monday.
- Relevant tickers: TSO, BP, MPC, LYB, OTCQB:HUSKF.
Mar. 12, 2015, 2:12 PM
- Negotiators from the United Steelworkers union and Shell Oil (RDS.A, RDS.B) are continuing to meet today, part of a four-day stretch of negotiating that is the longest the two sides have met since the strike began Feb. 1.
- In a sign that union negotiators may see a deal coming, the Steelworkers sent a message last night to members that the union’s policy committee is traveling to Houston to be available to review any proposals that come out of the talks.
- The dispute started initially with nine facilities but has since expanded to 15 refineries and chemical plants across the U.S., affecting TSO, BP, MPC, LYB, OTCQB:HUSKF and Shell.
Mar. 10, 2015, 11:37 AM
- U.S. coastal refiners "could be a shore thing" for investors, Credit Suisse says, noting that the group can buy domestic crude when it is too cheap or profit from discounted waterborne barrels.
- Tesoro (NYSE:TSO) is "leading the charge," the firm says; with more than 350K bbl/day of crude capacity offline in a finely balanced market with growing vehicle miles traveled, west coast margins have spiked and could remain elevated for some time.
- PBF Energy (NYSE:PBF) is upgraded to Outperform from Neutral, as it is a key beneficiary of low crude prices, an oversupplied crude market for mediums and heavies, plus leverage to WTI domestic pricing.
- Phillips 66's (NYSE:PSX) target price is raised to $100 from $85, as Credit Suisse believes the longer-term upside looks strong and intact.
- Among others in the group, the firm says Marathon Petroleum’s (NYSE:MPC) self-help is underestimated, and Valero’s (NYSE:VLO) rising cash returns to shareholders and Delek’s (NYSE:DK) rising free cash flow should drive a re-rating of their equity.
Mar. 4, 2015, 3:28 PM
- Even as U.S. refiners and striking union workers returned to the bargaining table today for a new round of talks, the two sides appear to be digging in for a protracted struggle that could last through the spring.
- Royal Dutch Shell (RDS.A, RDS.B) said Monday that by midsummer its Deer Park refinery in Texas will be fully staffed with newly trained employees who are not affiliated with the United Steelworkers union, and added that ~20% of striking workers at the plant have defied the union and returned to work.
- Workers also have begun returning to their jobs at refineries owned by Shell and Saudi Aramco JV Motiva Enterprises, and LyondellBasell (NYSE:LYB) and Tesoro (NYSE:TSO) also say a growing number of employees are coming back to work.
- LYB said yesterday it had filed a complaint with the National Labor Relations Board alleging the union had threatened and harassed people trying to cross picket lines.
- The union has filed its own complaints to the NLRB in recent weeks, alleging Shell, LYB, TSO, BP and Marathon Petroleum (NYSE:MPC) have engaged in unfair practices, including threatening and coercing workers and failing to bargain in good faith.
Feb. 24, 2015, 6:57 PM
- Refinery profit margins on the U.S. west coast have spiked over the past week, as a refinery explosion and a spreading strike by refinery workers has taken almost 25% of the region's gasoline-making capacity offline, Platts reports.
- Cracking margin netbacks for west coast refiners reached $31.75/bbl on Monday, up from $18.96/bbl prior to last Wednesday's explosion at Exxon Mobil's (NYSE:XOM) 149.5K bbl/day refinery in Torrance.
- Meanwhile, the strike by U.S. refinery workers that began Feb. 1 also weighs on west coast operations, with Tesoro's (NYSE:TSO) 166K bbl/day Golden Eagle refinery in Martinez, Calif., idled.
- The three west coast refineries hit by the strike all are owned by TSO; the other two are the 251K bbl/day Carson, Calif., refinery and the 120K bbl/day plant in Anacortes, Wash.
Feb. 23, 2015, 8:26 AM
- The United Steelworkers union expanded its strike over the weekend to the Motiva Enterprises refinery in Port Arthur, Tex., a 50-50 joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Saudi Aramco which produces more than 600K bbl/day, as well as a Shell chemical plant in Louisiana.
- The union and Shell, the lead negotiator for the refinery companies, reportedly will meet on Wednesday for the first time since negotiations broke up on Feb. 20 without a deal.
- The union says it is seeking protections for worker safety and fatigue; Shell is now saying the strike is all about the desire of national union leaders to replace routine maintenance contractors with union-represented workers.
- The strike already has affected refineries and chemical plants owned by LyondellBasell (NYSE:LYB), Marathon Petroleum (NYSE:MPC), Tesoro (NYSE:TSO) and BP.
Feb. 21, 2015, 7:05 AM
- Lead negotiator Shell (RDS.A, RDS.B) says last night's face-to-face negotiations with the United Steelworkers union again failed to reach an agreement to end the 20-day-old U.S. refinery strike.
- Workers at several refineries and chemical plants were waiting for instructions to join the 5K-plus workers at 11 plants, including nine refineries accounting for 13% of U.S. production capacity.
- The strike has hit refineries and plants owned by Shell, BP, LyondellBasell (NYSE:LYB), Marathon Petroleum (NYSE:MPC) and Tesoro (NYSE:TSO) in California, Kentucky, Texas and Washington state; temporary replacement workers so far have kept plants running at nearly normal levels.
- The USW is seeking a three-year, industry-wide pact that would cover 30K workers at 63 U.S. refineries that together account for two-thirds of domestic capacity.
Feb. 18, 2015, 6:26 PM
- California's workplace safety agency has ordered the shutdown of the 100K bbl/day central gasoline producing unit at Exxon Mobil's (NYSE:XOM) Torrance refinery, which was heavily damaged today after an explosion and fire, until its investigation is complete.
- The agency says the shutdown of the unit could last up to six months, which pushed up spot prices for California gasoline today by nearly $0.12 to $2.01; oil analyst Tom Kloza thinks local retail gas prices in the area could rise to as much as $3.25/gallon by April from a recent average in California of ~$2.80.
- XOM shares tumbled 2.2% in today's trade; Tesoro (NYSE:TSO), which has three California refineries and may benefit from the XOM incident, rose 4.6%.
Feb. 18, 2015, 8:56 AM
- Tesoro (NYSE:TSO) says it will spend almost $400M on two projects at its Anacortes, Wash., refinery - an isomerization project that will enhance its ability to produce clean projects and help it comply with expected regulations to reduce sulfur in gasoline, and a petrochemical project to make xylene.
- TSO has said the global market for xylene, used to make polyester fibers for clothing and films for food packaging and beverage containers, is growing by 5%-7%/year and is driven mostly by demand in Asia; TSO expects the xylene project to be complete in 2017, and the isomerization project in 2018.
- TSO says the xylene project may signal an expansion of its trading activities in Asia, and should increase the competitiveness of the Anacortes refinery and support additional growth in TSO’s Washington-based business.
Feb. 13, 2015, 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.
Feb. 12, 2015, 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.
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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