Tesoro Makes A Far-Sighted Acquisition With Its Virent Deal
Tristan R. Brown
Tristan R. Brown
Mon, Nov. 28, 7:49 AM
Wed, Nov. 23, 7:47 PM
- The EPA today issued final regulations requiring that the amount of ethanol and other biofuels that must be blended into the U.S. fuel supply must increase by 6% next year.
- Since the result is a significant gain over the 4% the EPA recommended in an earlier draft proposal, it is a victory for ethanol makers and a defeat for oil companies that say using more biofuels in gasoline and diesel is costly and unachievable.
- The EPA set the 2017 target for total renewable fuel use at 19.28B gallons, higher than the initial proposal for 18.8B gallons as well as this year's 18.1B gallon requirement; the new mandate includes 15B gallons for conventional biofuel, which is mostly corn-based ethanol, vs. 14.5B gallons last year.
- Tesoro (NYSE:TSO) exec Stephen Brown says the plan is "unworkable" as it forces the use of biofuels beyond the blend wall and that it highlights the need for a legislative overhaul of the program.
- Shares in oil refiners mostly fell in today's trade: TSO -1.4%, VLO -0.8%, HFC -1.8%, MPC -0.3%, WNR -2.2%, PBF -3.5%, PSX +0.2%.
- Shares of biofuels producers rose: GEVO +8.5%, PEIX +7.1%, GPRE +2.1%, REGI +2%, REX +0.8%.
Mon, Nov. 21, 4:37 PM
- Tesoro Logistics (NYSE:TLLP) agrees to acquire North Dakota crude oil, natural gas and produced water gathering systems and two natural gas processing facilities from Whiting Petroleum (NYSE:WLL) for $700M, and terminalling and storage assets located in Martinez, Calif., from Tesoro (NYSE:TSO) for $400M.
- The North Dakota gathering and processing assets include 650-plus miles of crude oil, natural gas and produced water gathering pipelines, 170M cf/day of natural gas processing capacity and 18.7K bbl/day of fractionation capacity; The revenue from the assets is ~90% fee-based and backed by acreage dedications from 10 producers.
- The California terminalling and storage assets include 5.8M barrels of crude oil, feedstock and refined product storage capacity at TSO's Martinez refinery along with a marine terminal capable of handling up to 35K bbl/day of feedstock and refined product throughput.
- TLLP says the acquisitions will strengthen its position as a leading integrated midstream service provider and are expected to support distribution growth.
Fri, Nov. 18, 1:57 PM
- Tesoro (TSO -3.7%) and Western Refining (WNR -2.7%) are lower a day after their merger announcement that will make TSO the fourth biggest U.S. refiner by capacity.
- Analysts see the deal filling a gap in TSO's portfolio by giving it access to pipelines and refineries that connect to Texas' lucrative Permian Basin
- WNR's primary business in the formation is gathering - collecting oil from remote fields, pooling it together and bringing it to a hub - and TSO's acquisition is said to reflect the conviction that refiners with pipelines and other logistical assets can be profitable through volatile price cycles of crude oil and refined products.
- WNR is downgraded to Sector Perform from Outperform at RBC Capital, which says it does not foresee an increased offer or an alternate bidder for the company.
Thu, Nov. 17, 7:15 AM
- Tesoro (NYSE:TSO) agrees to acquire Western Refining (NYSE:WNR) in a stock deal valued at $6.4B, creating a company that will account for ~6% of crude processing capacity in the U.S.
- The deal values WNR at an implied $37.30/share - a 22% premium to WNR closing price yesterday - representing an enterprise value of $6.4B, including the assumption of $1.7B of WNR's net debt and the $605M market value of non-controlling interest in Western Refining Logistics (NYSE:WNRL).
- The combined company will have refining capacity of more than 1.1M bbl/day; TSO has refineries in California, Washington, Alaska, Utah and North Dakota, and WNR adds refineries in Texas, New Mexico and Minnesota.
- The merged company also will have a retail network of more than 3K convenience and gas stations.
- The companies say the combination will deliver $350M-$425M in annual synergies within two years.
Thu, Nov. 10, 5:48 PM
- The EPA says it will deny several petitions from oil groups to change the U.S. biofuels program, although it will open a 60-day public comment period.
- Valero Energy (NYSE:VLO), HollyFrontier (NYSE:HFC), Monroe Energy and the American Fuel and Petrochemical Manufacturers have petitioned the EPA to consider changing the rule to reduce the onus on refiners that have little capacity to blend biofuels at their operations.
- The change the refiners are requesting "would not address the challenges associated" with boosting availability of advanced fuels and getting more ethanol into the fuel system, the EPA says.
- Tesoro (NYSE:TSO) and Marathon Petroleum (NYSE:MPC), which have invested in biofuels blending capacity, say they support the EPA's move toward denying the change.
Wed, Nov. 9, 12:44 PM
- U.S. independent refiners are rallying as investors bet that a Trump administration will ease costly renewable fuel regulations.
- During the campaign, Trump unveiled an energy policy calling for the elimination of many regulations, including the system of buying and selling RINs, although Trump also has said he supports ethanol.
- RINs tracking ethanol use for 2016 have more than doubled in the past year, and RINs tracking biodiesel have jumped 59% Y/Y, according to Bloomberg data.
- In today's trade: CVI +22.5%, CVRR +15.4%, PBF +12.2%, HFC +11.7%, DK +6.1%, VLO +4.8%, WNR +4.4%, TSO +2.9%, MPC +2.8%, PSX +1.9%.
Mon, Oct. 31, 4:53 PM
Sun, Oct. 30, 5:35 PM
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.