Tesoro: Potential For Great Growth Not Worth The Risk
Nov. 7, 2013, 2:28 PM
- 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.
Nov. 6, 2013, 5:22 PM
Nov. 1, 2013, 8:07 AM
- 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.
Oct. 23, 2013, 11:56 AM
- 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.
Oct. 17, 2013, 5:42 PM
Oct. 15, 2013, 2:13 PM
- Tesoro Logistics (TLLP; TSO) says it will repair and replace a 200-ft. section of the North Dakota pipeline that leaked ~20K barrels of Bakken oil onto a farm, and is developing a plan to reroute the pipeline.
- TLLP is declining to give any details of the plan, which will be shared with federal authorities; it is not commenting on the cause of the leak, and has not provided a date for the possible restart of the line.
Oct. 11, 2013, 5:48 PM
- Corrosion may have led to the leak of 20K barrels of oil from a Tesoro Logistics (TLLP, TSO) pipeline in North Dakota, according to an initial investigation.
- The 20-year-old pipeline was carrying crude oil from the Bakken shale to the Stampede rail facility outside Columbus, N.D.; the spill was largely contained and clean-up efforts were estimated at ~$4M.
- The incident is raising questions about North Dakota's ability to handle its energy boom after it was not reported to the public for 12 days; the governor, who says he wasn’t even told about the spill until two days ago, says the state is now investigating its procedures for reporting spills.
Oct. 11, 2013, 11:46 AM
- Refiners continue to rise a day after news of a leaked EPA proposal that would significantly scale back biofuel blending requirements next year.
- The EPA's rationale for a cut in the volume of ethanol that must be blended echoes an argument the oil industry has made for months: The U.S. fuel chain cannot absorb more ethanol.
- Let the lawsuits begin: "Any plan to roll back the targets... under the guise of addressing the blend wall would be patently unlawful," says the head of the Renewable Fuels Association.
- TSO +4.4%, VLO +3.4%, PSX +3.1%, MPC +2.2%, WNR +4.5%, HFC +2.2%, ALJ +6.8%, CVI +2.6%, NTI +2%, DK +7.8%, CLMT +1.8%.
Oct. 10, 2013, 2:18 PM
- Chevron (CVX -0.4%) is lower after warning "significantly lower" earnings from its refining division would send Q3 EPS down Q/Q.
- J.P. Morgan believes investors were anticipating relatively soft downstream results given the currently weak refining margin environment; perhaps that's why refiners are holding up very well today: VLO +4.4%, TSO +3.7%, PSX +2.3%, ALJ +6.7%, MPC +4.5%, WNR +3.7%, HFC +4.2%, CVI +4.6%.
- Citigroup worries about CVX's upstream business too; it was expecting a much larger increase in Q3 production which would put CVX on track to meet its full year guidance of 2,650M boe/day.
Oct. 7, 2013, 2:47 PM
- Refining stocks are lower as HollyFrontier (HFC -0.7%) is hit with a downgrade from Imperial Capital, which dropped its rating to In-Line from Outperform, reduces its price target to $41 from $49, and cuts its 2013 EPS estimate to $3.83 from $4.83 and 2014 EPS estimate to $3.50 from $4.00.
- The firm sees continued contraction in refining margins and crude price differentials, especially as the southern leg of the Keystone XL pipeline commences operation later this month.
- Other refiners: VLO -0.6%, TSO -0.8%, MPC -1.4%, PSX -1.5%, WNR -1.4%, ALJ -2.5%, CVI -2.5%.
Oct. 4, 2013, 3:23 PM
- Refiners generally face a "deteriorating earnings outlook," and any potential stock gains in the next six months may not be enough to offset "the inherent downside risk from weaker earnings," Oppenheimer says.
- The firm downgrades HollyFrontier (HFC flat), Marathon Petroleum (MPC -0.1%), Phillips 66 (PSX -0.5%), Tesoro (TSO +1%) and Valero (VLO +0.9%) to Perform from Outperform, and removes price targets for the stocks.
- On a more positive note, the firm says refiners it follows are now in their best shape operationally and financially in years.
- Outlooks for refiners have been mostly pessimistic, although Citigroup upgraded VLO and TSO earlier this week.
Oct. 2, 2013, 4:57 PM
- More on Citigroup's take on oil refiners: The firm expects to see a bottoming of earnings in Q4 for most names, but companies overweight the Midcontinent and/or Midwest could experience a difficult earnings environment through Q1 2014.
- The diverging earnings performance will result in positive price appreciation for some refiners - such as Valero (VLO) and Tesoro (TSO), which earn upgrades to Buy - but underperformance for others, such as on Alon USA (ALDW), CVR Refining (CVRR), Holly Frontier (HFC) and PBF Energy (PBF), which will remain pressured by narrowing price differences between WTI and Brent crude.
- TSO will benefit next year from a tighter gasoline market in California, and VLO will benefit from wider heavy-light differentials in H2 2014 as increased Canadian heavy crude flows to the U.S. Gulf coast, Citi says (earlier: I, II).
Oct. 2, 2013, 3:26 PM
- It's a pretty good day for refiners, even as most energy stocks slip, as Phillips 66 (PSX +2.1%), Valero (VLO +1.2%), Tesoro (TSO +0.2%), Western Refining (WNR +1.2%), Marathon Petroleum (MPC +1.2%) and HollyFrontier (HFC +0.4%) all post gains.
- PSX rises the most among energy companies in the S&P 500 after announcing a 25% increase in its quarterly dividend, VLO and TSO are upgraded to Buy from Neutral at Citigroup (I, II), and WNR rolls out a 12.5M-share IPO of its logistics unit.
- Refiners generally have come in for criticism recently; Barclays, for one, believes most refiners will miss consensus earnings expectations by a wide margin, with VLO the exception.
- ETFs: IEO, IEZ, IYE, PXE, PXI, XES, XLE, XOP, VDE, RYE, FXN, OIH, PXJ, PSCE, ERX, DIG, ERY, DUG, DDG.
Oct. 2, 2013, 10:28 AM
- Tesoro (TSO +0.6%) is upgraded to Buy from Neutral at Citigroup, which says the refiner should enjoy a boost from an economic recovery in California.
- TSO's new refinery in Carson City will double its capacity in the state; the firm notes that California's economic recovery thus far has been skewed toward the northern part of the state, where gasoline demand is much lower than in the southern part, but reserve capacities will shrink as the economic recovery spreads, boosting profits for TSO.
- However, profits will remain pressured through Q4 due to the seasonality of gasoline profits and demand; the firm lowers its price target on TSO shares to $55 from $60.
Sep. 11, 2013, 4:59 PM
- Credit Suisse is concerned that 2013 Q4 and 2014 EPS estimates are too high for the refiners group, but the firm thinks Western Refining (WNR) and Tesoro (TSO) are best equipped to weather the storm.
- CS lowers TSO's earnings power on more conservative West Coast cracks, but thinks shares still look undervalued in absolute and relative terms.
- The firm raises Valero's (VLO) earnings, seeing Q3 as an important test as capture rates should bounce back; otherwise investors will worry that the Q2 weakness was structural.
- Deutsche Bank also says it's too soon to buy the group.
Sep. 10, 2013, 3:17 PM
- It's still not time to buy the refiners, Deutsche Bank says, even after the beat-down which has sent Valero (VLO) -7.3%, Marathon Petroleum (MPC) -17%, Tesoro (TSO) -21%, Phillips 66 (PSX) -13% and HollyFrontier (HFC) -7.7% in the past three months.
- The firm sees a potential entry point around October/November, but a Q3 round of earnings downgrades likely will bring lower equity prices; it's better to wait, "as global oil markets have become weakened by super-high oil prices and demand may be too damaged to allow for a strong winter for refining."
- Several sell-side firms have expressed similar trepidations recently.
TSO vs. ETF Alternatives
Tesoro Corp 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.
Other News & PR