Tesoro Makes A Far-Sighted Acquisition With Its Virent Deal
Tristan R. Brown
Tristan R. Brown
Wed, Jun. 22, 11:43 AM
- Southern California refiners are bracing for potential disruptions ahead of possible blackouts this summer as state regulators to warn of power and gas shortages.
- On top of a heat wave that has swept the region, testing power grids that rely heavily on natural gas for fuel, power generators face strained gas supplies as SoCalGas' Aliso Canyon facility remains out of commission following last year's huge gas leak.
- Any stoppages at the refineries likely would cause gasoline prices to rise in California, already the largest and most expensive gasoline market in the continental U.S.
- Tesoro (TSO +0.1%), which operates two refineries in the region, says the Watson cogeneration facility at its Los Angeles refinery utilizes natural gas to produce steam to operate the refinery.
- Exxon Mobil (XOM -0.2%), Chevron (CVX -0.4%), Valero Energy (VLO +1.1%) and Phillips 66 (PSX +0.9%) also operate southern California refineries.
Mon, Jun. 20, 12:30 PM
Wed, Jun. 15, 10:58 AM
- Tesoro (TSO +1.3%) is downgraded to Neutral from Outperform at Credit Suisse, which says the company's West Coast margins have underperformed despite strong vehicle miles traveled while the mid-con business faces narrower crude advantages.
- "We and others have been talking about earnings shortfalls since March but the net result has been an earnings downgrade cycle all year. Our Q2 forecasts had been below consensus but now seem too high," Credit Suisse says.
- The firm says TSO's annual EBITDA might drop 30% in the current year from 2015 as oil demand has risen by some 1.5M bbl/day.
Wed, Jun. 8, 6:39 PM
- Gasoline profit margins have fallen to their narrowest seasonal levels since 2010, dropping by $5/bbl in slightly more than two weeks, as high imports have kept U.S. inventories elevated even as gasoline demand rises.
- The decline was not stemmed by yesterday’s EIA projection that summer gasoline demand will rise to a record 9.5M bbl/day, as gasoline imports into the U.S. east coast, which primarily come from refineries in eastern Canada and Europe, have kept U.S. inventories at the highest levels in at least 20 years.
- "We’re seeing the economics change to the point that many refiners along the coast are looking at maximizing jet fuel and diesel at the expense of gasoline," analyst Andy Lipow tells Bloomberg.
- The falling margins are hurting refiners, with Bloomberg's North America Refining & Marketing index down 28% Y/Y; in today's trade, WNR -3.1%, HFC -2.7%, CVRR -2.2%, VLO -2.2%, TSO -2%, NTI -0.8%, ALJ -0.8%.
Mon, Jun. 6, 10:26 AM
- Union Pacific (UNP -0.3%) says it is resuming service immediately to the area in Oregon where Friday's oil train derailment sparked a fire that prompted the evacuation of some residents from the city of Mosier.
- UNP says the cars filled with oil have been moved off to the side of the tracks, and as a precaution operating trains will pass through the area at speeds of only 10 mph; the company says some kind of track failure likely was the cause of the derailment.
- While rail shipments have dropped from more than 1M bbl/day in 2014 because of weaker oil prices, the first such crash in a year may reignite the debate over safety concerns surrounding transporting crude by rail.
- The director of the Columbia Riverkeeper advocacy group says the crash should raise concerns about Tesoro's (TSO -1%) proposed 360K bbl/day railport in Vancouver, Wash., which would be the largest in the U.S.
- Officials from Washington state say there is no sign of oil in the Columbia River or Rock Creek.
Thu, May 19, 6:48 PM
- Oil refiners are returning to normal after a period of high differentials, and are thus no longer a safe place for investors to wait out the energy downturn, UBS analysts say.
- UBS believe refiners have reached an inflection point where headwinds outnumber tailwinds, likely driving refining margins to more normal levels; the firm expects a rising crude price to eventually compress refining margins that were supported by wide basis differentials that have now narrowed.
- UBS initiates Tesoro (NYSE:TSO) with a Buy rating, as it expects TSO to derive more of its EBITDA from retail and marketing vs. refining by 2018 than comparable peers under coverage.
- However, the firm starts Marathon Petroleum (NYSE:MPC) with a Sell rating; Phillips 66 (NYSE:PSX), Valero Energy (NYSE:VLO) and CVR Refining (NYSE:CVRR) are rated Neutral.
Wed, May 4, 5:37 PM
- Tesoro (NYSE:TSO): Q1 EPS of $1.19 beats by $0.17.
- Revenue of $5.1B (-21.1% Y/Y) beats by $270M.
Tue, May 3, 5:35 PM
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Thu, Apr. 28, 7:17 PM
- Q1 earnings reports illustrate the end of U.S. refiners' years-long boom from cheap and plentiful crude, Reuters reports, as rising oil inventories and weak demand hurt profits and pushed revenues to their lowest in years.
- PBF Energy (NYSE:PBF) and CVR Energy (NYSE:CVI) reported respective quarterly losses of $66.5M and $68M (I, II), while Marathon Petroleum (NYSE:MPC) eked out a $1M profit following earnings of nearly $900M a year ago, and reported their weakest revenue totals in at least four years.
- Refiners "were incentivized to run at higher rates and put more barrels in inventory. That's the overhang we're seeing right now," CVR CEO Jack Lipinski said in today's earnings conference call.
- PBF also coped with downtime at its Delaware plant because of a weather-related power outage in January.
- Phillips 66 (NYSE:PSX) is scheduled to report Q1 results tomorrow, with Valero Energy (NYSE:VLO), Tesoro (NYSE:TSO) and others coming next week.
- Now read The best of the best in the refining industry
Thu, Apr. 7, 3:58 PM
- Tesoro's (TSO -0.7%) plans to build a 360K bbl/day oil terminal on the Columbia River in Washington state may be in jeopardy, as Port of Vancouver staff recommends against extending a lease for the project.
- The Vancouver Energy projects partners, TSO and Savage Cos., is seeking a two-year extension to secure permits beyond an August deadline; if the amendment is denied and permits are not granted by the deadline, language in the existing contract between the port and the project allows either to vacate the agreement.
- Port commissioners are expected to vote on the request on April 15.
- Now read Tesoro set to outperform with strong business momentum and internal initiatives
Fri, Mar. 11, 11:19 PM
- Energy Transfer Equity (NYSE:ETE) has held talks to sell gas station and convenience store operator Sunoco (NYSE:SUN), in a deal that could fetch more than $2B, Reuters reports.
- A 36.4% stake in the limited partnership in SUN owned by Energy Transfer Partners (NYSE:ETP) also would have been divested, according to the report.
- While the discussions were preliminary, they show ETE's efforts to improve its balance sheet after the plunge in oil prices made its pending acquisition of Williams Cos. (NYSE:WMB) more financially burdensome than it had expected.
- The talks about a sale reportedly did not advance further because of disagreements over SUN's valuation, but ETE could still revisit the issue if it receives new interest.
- Mentioned in the report as potential buyers of SUN's network of 900 convenience stores and fuel outlets are Valero Energy (NYSE:VLO), Tesoro (NYSE:TSO) and Alimentation Couche-Tard (OTCPK:ANCUF).
Thu, Mar. 3, 3:23 PM
- The stocks of most U.S. refiners are trading significantly below their mid-cycle valuations, while the companies likely are heading into another strong U.S. gasoline season, BoA Merrill Lynch analyst Doug Leggate says as he upgrades several stocks in the group.
- Leggate says he continues to view refiners as a volatile sector where momentum follows margin trends, but that the balance of risk has moved in favor of a short-term rebound.
- Marathon Petroleum (MPC +7.4%) is upgraded to Buy from Neutral with a $50 price target, believing the MLP overhang on the shares is overdone and noting that MPC indicated it would do what needs to be done to support MPLX because it is optimistic about the long-term growth opportunities of the business.
- Tesoro (TSO +4%) also is upgraded to Buy from Neutral with a $116 target, anticipating that once winter margin weakness subsides, TSO likely follows summer margin strength higher as the most exposed refiner to seasonal west coast trends.
- Leggate also raises Valero Energy (VLO +2.6%) and PBF Energy (PBF +6.4%) to Neutral from Underperform with respective price targets of $78 and $34.
Sat, Feb. 13, 12:07 AM
- Valero Energy's (NYSE:VLO) proposed crude-by-rail project at its 145K bbl/day Benicia refinery in northern California was rejected by local planners this week, the first such facility on the U.S. west coast to end a years-long wait for permits with a rejection.
- The Benicia Planning Commission late Thursday unanimously rejected VLO's request to build the rail facility following of four consecutive public hearings dominated by opponents, Reuters reports.
- VLO could still ask Benicia's city council to override the planning commission and approve a permit for the project.
- Several other west coast rail projects await decisions by local or state governments, including Tesoro's (NYSE:TSO) proposed 360K bbl/day railport in Washington state and Phillips 66's (NYSE:PSX) 25K bbl/day facility at its Santa Maria refinery in Arroyo Grande, Calif.
Fri, Feb. 5, 2:58 PM
- Tesoro (TSO -4.4%) agrees to pay $8M to 769 United Steelworkers union members at refineries in California and Washington state who were denied bonuses while on strike in 2015, the U.S. National Labor Relations Board says.
- Complaints were filed last year with the NLRB by workers at TSO's Carson, Calif., and Anacortes, Wash., refineries alleging failure to pay the bonuses was done in retaliation for the strike and an unlawful modification of the agreement.
Tue, Feb. 2, 12:26 PM
- Tesoro (NYSE:TSO) plunges to a 52-week low after reporting Q4 earnings of $1.83/share, $0.24 worse than analyst consensus estimate of $2.07, on revenues of $6.27B, down 25.7% Y/Y and above the $5.92B consensus.
- TSO's refining income plunged to just $4M in Q4 from $90M a year ago, hurt by unplanned downtime at its Los Angeles refinery; total refinery throughput for the quarter was 807K bbl/day (95% utilization), roughly flat Y/Y.
- Q4 direct manufacturing costs were $5.62/bbl, up $0.78/bbl from Q3, primarily due to unplanned repairs and maintenance.
- TSO says it expects to deliver $400M-$500M of improvements in 2016 through driving operational improvements and growth in its logistics and marketing business segments.
- TSO -7.7%.
Sun, Jan. 31, 5:35 PM