Tesoro Makes A Far-Sighted Acquisition With Its Virent Deal
Tristan R. Brown
Tristan R. Brown
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
- AEL, AGO, AGU, ALB, ALIM, ALL, ANDE, AREX, ATO, AWK, AWR, BBRG, BFAM, BGC, BIO, BKH, BNFT, BREW, BYD, CABO, CBPX, CCRN, CDI, CECO, CF, CHDN, CIM, CLR, CNAT, CODI, CPA, CSGS, CSII, CTL, CXW, DENN, DEPO, DK, DKL, DPM, ECR, EPE, EPR, EQIX, ERII, ETE, ETP, EVC, EVHC, EXAR, EXEL, EXTR, FIVN, FOXA, FRGI, FRSH, FSLR, G, GBDC, GDDY, GERN, GPOR, HABT, HASI, HI, HIL, HIVE, HLF, HOS, HR, HRTG, HUBS, IAG, IL, INOV, IO, IRG, ITRI, JACK, JCOM, JONE, JRVR, LGCY, LHCG, LNC, LPI, MASI, MC, MED, MET, MNR, MRO, MTDR, MUSA, MWA, NBIX, NKTR, NLY, NNBR, NP, NSIT, NSTG, OAS, OME, OSUR, PDM, PE, PEGA, PMT, PODD, PRA, PRU, PRXL, QLYS, QTWO, QUIK, REXR, RICE, RIG, RIGP, RLJ, RMP, RNG, RP, RST, RYN, SBY, SEMI, SGMO, SNCR, SQ, SQNM, SRC, SSS, STAA, STR, SUN, SWM, SXL, TCAP, TDOC, TEAR, TEP, TLLP, TRIP, TRNC, TROX, TS, TSLA, TSLX, TSO, TTEC, TWO, UHAL, VTAE, VVC, WCN, WGL, WMC, WPG, WPX, WU, XEC, XPO
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.
Fri, Jul. 15, 10:10 AM
- Wells Fargo ticks off 20 S&P 500 stocks with the most upside potential vs. consensus, and the 20 with the most downside risk vs. consensus.
- The list is compiled by comparing the midpoint of Wells Fargo Securities valuation ranges to consensus fair value estimates, volatility adjusting the percentage difference, and ranking the resulting score.
- Upside: AEE, BEN, CCL, DVA, EIX, ES, EXC, FTR, HUM, INTC, JNJ, LNT, PEG, PNW, SCG, T, WEC, WU, XEL, XOM.
- Downside: ANTM, C, CI, COF, EQT, FOXA, FSLR, GS, KIM, LH, MON, MSI, MYL, NVDA, NWSA, SLG, TIF, TSO, UA, WLTW.
Wed, Jul. 13, 3:56 PM
- Phillips 66 (PSX -0.2%) is downgraded to Equal Weight from Overweight with an $86 price target, lowered from $93, at Barclays, which sees limited upside especially if refining margins rebound and offer greater valuation growth potential to its large-cap peers, including Tesoro (TSO -2.6%), Valero (VLO +0.4%) and Marathon Petroleum (MPC -1.6%).
- Barclays also downgrades Delek US Holdings (DK -4.7%) to Equal Weight from Overweight with a $15 price target, cut from $20, on valuation and continuously challenged margin capture at both DK refineries, neither of which show visibility toward material improvement.
- Meanwhile, the firm upgrades Alon USA (ALJ +0.1%) to Equal Weight from Underweight after the company has significantly underperformed since the end of 2012.
Mon, Jul. 11, 6:25 PM
- Tesoro (NYSE:TSO) CEO Gregory Goff said at an industry conference today that he supports the lifting of the U.S. oil export ban, saying it actually is in the best interest for the refining industry.
- "We believe a healthy free market economy is the way to address things," Goff said. "Based upon that, we felt was in the best interest to lift the ban to allow the economy to move forward. Crude oil is sold and priced around the world and is very transparent."
- The ban's removal was good news for U.S. producers as it opened up additional markets, but refiners such as Valero Energy were some of the biggest advocates for keeping the ban.
- Goff also said he does not object to advances in renewable energy as long as a strong business case could be made, but he criticized out the Obama administration for supporting overreaching regulations.
Wed, Jul. 6, 2:12 PM
Thu, Jun. 30, 12:47 PM
- Exxon Mobil (XOM +0.8%), Chevron (CVX +1.2%) and Tesoro (TSO -0.5%) are among refiners being investigated by California's attorney general over allegations they withheld supply in an attempt to artificially raise gasoline prices in the state, WSJ reports.
- The subpoenas were sent in late May and seek information about trading, maintenance and repair activities at the companies since 2014, according to the report.
- Other companies receiving subpoenas reportedly also included Phillips 66 (PSX -0.9%), Valero (VLO -2.1%) and Royal Dutch Shell (RDS.A, RDS.B).
- "Many factors that determine the price of gasoline," a TSO spokesperson says, including "the cost of crude oil, distribution and marketing costs, refining costs and federal and state taxes. Market conditions, such as supply and demand, determine the price that consumers pay at the pump.”
Wed, Jun. 29, 3:58 PM
- Tesoro (TSO +1.9%) is upgraded to Buy from Neutral with a $100 price target, lifted from $96, at Goldman Sachs, citing a more constructive outlook for the California refining market, underappreciated value in non-refining assets, and limited risk from higher RINs and a lower Brent-WTI spread.
- Goldman thinks the California refining market will remain well-balanced, despite Torrance returning to service, driven by growing regional demand and the currently low inventories, and that investors have not been giving TSO fair value for its non-refining businesses.
- At the same time, the firm downgrades PBF Energy (PBF +1.2%) to Neutral from Buy with a $26 price target, cut from $37, expecting the company to be “disproportionately negatively impacted” by expectations of higher RINs prices.
- Along with TSO, Goldman rates Valero (VLO +0.1%) and Marathon Petroleum (MPC +4%) as Buys among refiners, while maintaining Sell ratings on Phillips 66 (PSX +1.2%), HollyFrontier (HFC +0.1%), CVR Energy (CVI -0.4%) and CVR Refining (CVRR -1%).
Tue, Jun. 28, 8:27 AM
- Calumet Specialty Products Partners (NASDAQ:CLMT) sells its 50% equity interest in the Dakota Prairie Refining joint venture to MDU Resources Group (NYSE:MDU), which then sells the entire JV to Tesoro (NYSE:TSO).
- TSO winds up acquiring Dakota Prairie Refining in exchange for the continued servicing of DPR's $66M term loan debt and ~$10M towards working capital.
- DPR's refinery has a crude oil capacity of 20K bbl/day and produces ultra-low sulfur diesel, naphtha and resid; TSO says it will continue to market the ultra-low sulfur diesel to local customers and utilize the naphtha and resid in its integrated value chain system.