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TSO vs. ETF Alternatives
Tesoro Corporation is an independent petroleum refiner and marketer in the United States. Its subsidiaries, operating through three business segments, primarily transport crude oil and manufacture, transport and sell transportation fuels.
Friday, Dec 202013, 3:18 PM
Friday, Dec 202013, 3:18 PM| 27 Comments
- Shrinking crude spreads - WTI has gained 7.2% while Brent has risen just 1.7% so far in December - likely will hold back refiners during the first six months of 2014, Cowen's Sam Margolin says.
- Extremely favorable refining conditions from last month are deteriorating amid higher utilization and continued reduction in crude imports, limiting supply and causing U.S. prices to melt higher, the firm explains, adding that investors need to "manage near-term expectations" while "remain(ing) constructive on the refining story for 2014."
- Margolin keeps Outperform ratings for Western Refining (WNR +4%), Marathon Petroleum (MPC +2.6%), Tesoro (TSO +0.4%), Valero (VLO +1.4%) and PBF Energy (PBF +1.7%); HollyFrontier (HFC +2.4%), Delek (DK +2.3%), Northern Tier (NTI +0.6%), Alon USA (ALJ +1.7%) and Calumet Specialty Products (CLMT +3.8%).
Friday, Dec 202013, 11:49 AM
Friday, Dec 202013, 11:49 AM| 2 Comments
- With the threat of more supply hanging over the market, Credit Suisse narrows its list of top energy stock picks for 2014 to those that can truly have top upside gains in 2014.
- Chevron (CVX) is the only major domestic integrated on the Credit Suisse list; it may be looking to expand domestic production by acquiring one of the top E&P stocks, CS says.
- Phillips 66 (PSX) and Tesoro (TSO) are the firm's best-liked refiners.
- The firm's three favorite E&P names - PDC Energy (PDCE), Diamondback Energy (FANG) and EOG Resources (EOG) - were all considered takeover candidates during 2013.
- Among oil services companies, the firm thinks Halliburton (HAL) is making a strong comeback in the North American drilling market.
- Offshore driller Rowan (RDC) should roughly double its EBITDA in two years, CS says.
Wednesday, Dec 112013, 12:52 PM
Wednesday, Dec 112013, 12:52 PM| 1 Comment
- Tesoro (TSO -1.8%) apparently didn't offer enough good news at yesterday's analyst day, as shares tumble despite the general perception from the meeting as "incrementally positive."
- The key messages in the meeting surrounded progress of the synergy capture from the Carson acquisition, continued margin improvement through feedstock and product optimization and driving additional logistics growth.
- TSO sees rail unloading capacity along the U.S. west coast for North Dakota crude oil growing to nearly 1M bbl/day through 2015; TSO's $100M rail-to-barge project in Washington is the largest of the offloading projects announced so far.
- Imperial Capital raises its TSO price target TSO to $63 from $57, and Howard Weil lifts its target to $66 from $62.
- Other refiners are lower too: VLO -1.3%, PSX -0.7%, MPC -1.8%, WNR -2.6%, HFC -1.6%, ALJ -1%, NTI -0.2%, DK -1.9%, CLMT -2.7%.
Monday, Dec 92013, 10:47 AM
Monday, Dec 92013, 10:47 AM| 2 Comments
- J.P. Morgan is the latest investment banker to turn bullish on refiners, upgrading HollyFrontier (HFC +2%), Valero Energy (VLO +1.8%) and Marathon Petroleum (MPC +0.9%) on its expectation for a larger difference between Brent and West Texas oil prices.
- The firm revises its view on oil prices, forecasting Brent prices averaging $105.50/bbl for 2014 and $100.30 for 2015 vs. WTI prices of $91.50/bbl for 2014 and $85.30 for 2015, suggesting a $14-$15 differential, which should increase U.S. refining margins.
- In particular, the firm believes HFC's inland refining system is "well positioned to benefit from growth in production of disadvantaged inland North American crudes, and expect(s) HFC to capture Brent-WTI price differentials as higher gross margins across the majority of its throughput."
- HFC is upgraded to Overweight from Underweight, VLO and MPC are raised to Neutral from Underweight, and Phillips 66 (PSX +1.5%) and Tesoro (TSO +1.2%) are maintained at Overweight.
Tuesday, Dec 32013, 7:07 PM
Tuesday, Dec 32013, 7:07 PM| Comment!
- BofA Merrill Lynch makes a positive case for leading refiners HollyFrontier (HFC), Valero (VLO) and Tesoro (TSO), believing the rebound in crude spreads signals the early stages of crude saturation on the U.S. Gulf coast and introduces a new layer of seasonal margin volatility that plays to the benefit of the sector.
- The firm upgrades HFC to Buy from Neutral with a $60 price target, up from $51, after HFC has lagged the early seasonal rebound in the U.S. refining sector that has accompanied the expansion in crude differentials.
- VLO is BofA's top pick in the sector; poised to complete a second MLP, VLO can unlock $5-$9/share of value in the stock, the firm says.
- The firm likes TSO's west coast crude advantage and accelerated spending at its MLP.
Monday, Nov 252013, 3:55 PM
Monday, Nov 252013, 3:55 PM| 15 Comments
- Apple (AAPL), Google (GOOG), and AIG are the most popular (long) holdings of hedge funds, according to Goldman's latest hedge fund monitor, which analyzed the positions of 783 hedge funds with $1.7T of gross assets. Hedge fund holdings of AIG, however, account for 14 of the company's float compared to negligible amounts for Apple and Google.
- The 20 most concentrated hedge fund holdings as defined by the percent of equity cap owned by the funds has consistently been a significant outperformer, according to Goldman. In order: AN, STZ, JCP, FDO, THC, HRB, BEAM, MU, NWSA, VRSN, CBG, NFLX, GT, TSO, ETFC, MSI, WPX, WYN, HES, CCI. The top 20 last quarter is here.
- Overall, the studied hedge funds' performance leaves a bit to be desired, with average return of 6% YTD. Fewer than 5% outperformed the S&P 500, and 20% of funds posted an absolute loss.
Monday, Nov 182013, 4:35 PM
Monday, Nov 182013, 4:35 PM| Comment!
- Tesoro Logisitcs (TLLP) agrees to acquire Tesoro's (TSO) Los Angeles Logistics Assets, consisting of two marine terminals, a marine storage terminal, a products terminal, a petroleum coke handling and storage facility, more than 100 miles of active crude oil and refined products pipelines, and other related properties, for $650M.
- To pay for the deal, TLLP announces a public offering of 6.3M common units.
- Shares -3.6% AH.
Friday, Nov 152013, 3:09 PM
Friday, Nov 152013, 3:09 PM| 88 Comments
- The EPA is proposing a range of 15B-15.52B gallons of renewable fuel in 2014, nearly 3B fewer gallons of biofuel to be blended into gasoline than mandated by the original 2007 law.
- The new proposal angers farm groups, corn ethanol producers and supporters of biodiesel, but it's a victory for oil companies, which have long argued that if the content of ethanol in motor fuel exceeded 10% - i.e., the "blend wall" - it might damage cars, motorcycles and lawn mowers.
- The administration also is setting a 2B-2.5B gallon target range for all advanced biofuels (earlier).
- Among the biggest movers: PEIX +13%, ADM -2.9%.
- Refiners: VLO +0.8%, HFC -0.4%, PSX -0.5%, TSO -0.3%.
- ETF: CORN -1.2%.
Friday, Nov 152013, 11:24 AM
Friday, Nov 152013, 11:24 AM| Comment!
- Barron's is bullish on refiners HollyFrontier (HFC -0.2%) and Tesoro (TSO -0.3%), each of which has operations near the heart of the shale oil boom that should benefit from shifting oil price dynamics.
- HFC will continue to see cost benefits from its proximity to plentiful shale oil, which can be even cheaper than WTI, and is investing to improve the efficiency of its refineries which should give it an edge over competitors as delivery bottlenecks from booming oilfields are resolved with new pipelines.
- Like HFC, TSO has refineries with geographic advantages, which Credit Suisse says are among the best-positioned in U.S. refining; also, TSO's valuation may not reflect the benefits that will result as it moves pipeline, storage and other assets into its Tesoro Logistics (TLLP) MLP.
Thursday, Nov 142013, 2:36 PM
Thursday, Nov 142013, 2:36 PM| 13 Comments
- Refiners such as Marathon Petroleum (MPC +4.9%) and Valero (VLO +4%) are surging today, and Barron's Ben Levisohn says it’s all about the oil spread.
- While Brent crude has stayed steady for the last three months, trading at ~$109/bbl, WTI has dropped 12% to ~$94; the more expensive Brent is relative to WTI, the better it is for U.S. refiners.
- VLO, for example, has gained 17% during the past three months, and much of its price has followed the Brent-WTI spread.
- Also: PSX +2.1%, TSO +2.7%, HFC +3.2%, WNR +4.3%, ALJ +5.2%, ALDW +1.3%, CLMT +2.6%, CVI +1.3%.
Friday, Nov 82013, 12:38 PM
Friday, Nov 82013, 12:38 PM| 9 Comments
- The price of West Texas crude has dropped nearly 9% during the past month, and Credit Suisse thinks it’s time for investors to take another look at refiners, particularly Tesoro (TSO +1.2%).
- TSO's "Northern Mid-Con and Pacific North-West are among the best positioned in U.S. refining, with a decade of free cashflow ahead," the firm writes, adding that west coast results demonstrate TSO’s above average asset quality which Carson synergies will cement further.
- The firm upgrades Calumet Specialty Products (CLMT +1.8%) to Neutral from Underperform as "the themes which drove expected underperformance have now become more visible"; Western Refining (WNR +0.3%) and Delek US (DK -1%) are "interesting."
Thursday, Nov 72013, 2:28 PM
Thursday, Nov 72013, 2:28 PM| Comment!
- Tesoro (TSO +2.3%) is one of few energy companies gaining ground today, despite Q3 earnings that fell 77% Y/Y and came up short of analyst estimates.
- Gross margins in the quarter fell to $9.22/bbl vs. $19.67/bbl for the year-earlier period; a smaller discount on benchmark WTI crude relative to international crude also had an effect in the midcontinent.
- However, revenues jumped 41.5% to $11.24B from $7.94B a year ago, attributable to improved throughput and better performance by the retail segment.
- CEO Greg Goff says TSO remains focused on executing its strategic plan, citing improved refinery run rates which rose to 863K bbl/day vs. 548K a year ago; throughput volumes in California surged 114% Y/Y to 557K bbl/day.
Wednesday, Nov 62013, 5:22 PM
Friday, Nov 12013, 8:07 AM
Friday, Nov 12013, 8:07 AM| Comment!
- Tesoro (TSO; TLLP) accepts a federal order requiring upgrades on its 200-mile High Plains oil pipeline system spanning North Dakota and Montana, clearing it to restart a section shut since a 20K-barrel spill discovered Sept. 29.
- A preliminary Department of Transportation analysis indicates that “a strong electrical discharge” such as lightning caused the pipe failure.
Wednesday, Oct 232013, 11:56 AM
Wednesday, Oct 232013, 11:56 AM| 1 Comment
- Refining stocks are headed for a roller coaster ride, Simmons analysts say, believing Q3 earnings will be weak across the board and the only question is whether the letdown could be more severe than Wall Street expects; the firm also sees a downtrend for Q4, with 2014 "a volatile period."
- Refiners have enjoyed strong during the past year, but the U.S. gasoline market now is oversupplied and entering a time of planned refinery maintenance and diminishing demand.
- Valero (VLO +0.7%) and Phillips 66 (PSX -0.1%), which the firm rates as Overweight, report earnings next week; Tesoro (TSO +1.8%) is rated Neutral.
Thursday, Oct 172013, 5:42 PM
- View all 3 replies
Ray44:: my taste is for the covered call--stings less to me when it goes against you.
- View all 1 replies
TFCAB:: nice recap Elliott; thanks
- View all 4 replies
markrpat:: I suspect spread will widen again, my concern is how refiners hedged or not.
markrpat:: Another concern, interest rates may have impact on futures contracts....not exactly sure how yet.
- View all 3 replies
TFCAB:: i think they will blow out earnings in a couple of weeks
Ray44:: makes more sense than the action we are seeing today