Tue, Feb. 24, 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.
Mon, Feb. 23, 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.
Sat, Feb. 21, 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.
Wed, Feb. 18, 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%.
Wed, Feb. 18, 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.
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.
TSO vs. ETF Alternatives
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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