Tesoro Normalized Earnings Increase More Than 20 Percent
SAN ANTONIO--(BUSINESS WIRE)--July 24, 1998--Tesoro Petroleum Corporation (NYSE:TSO - news) announced
today that normalized net earnings rose more than 20 percent to $9.9 million or 37 cents per basic share for the second
quarter compared to normalized earnings of $8 million or 30 cents per share a year ago when excluding certain non-recurring
items from both quarters.
The non-recurring items in the second quarter of 1998 included $14 million after-tax income from receipt of funds no longer
needed as a contingency reserve for litigation, a $13.1 million after-tax charge for a special incentive compensation program,
and a $4.6 million after-tax extraordinary loss on the early extinguishment of debt. The second quarter of 1997 included $1.7
million of after-tax income primarily from the collection of a Bolivian receivable.
Reported net earnings for the 1998 second quarter were $6.2 million or 23 cents per share compared to $9.7 million or 36
cents per share for the same quarter of 1997.
''The performance of each of our business units was strong, particularly our downstream operations,'' stated Bruce A. Smith,
chairman, president and chief executive officer for Tesoro Petroleum Corporation. ''Tesoro has been dramatically transformed
in the first half of 1998 to capture greater shareowner value and meet our commitment to achieve a 30 percent annual increase
in earnings per share over the next two years.
''During the second quarter, we began integrating the first of two refinery acquisitions which will make us the second largest
independent refiner in the PADD V region. We have also financially positioned ourselves for continued growth through the
successful debt and equity offerings that raised in excess of $500 million and by syndicating a $500 million credit facility.''
Downstream Second Quarter Profits More Than Double
Tesoro's combined downstream profits for the second quarter of 1998 more than doubled from the same quarter a year ago to
$21.6 million from $9.3 million for the second quarter of 1997. Refining and Marketing profits more than doubled to $20
million in the second quarter versus $8.8 million in the 1997 quarter. The increase was primarily due to higher throughput
volumes and improved refined product yields. In addition, higher sales within our Alaska and recently acquired Hawaii markets
also contributed to the increase.
The company's Marine Services segment more than tripled its operating profit to $1.6 million in the second quarter of 1998
compared to $0.5 million in the second quarter 1997. The increase in profit is attributable to higher volumes and margins on
fuel sales.
Although the acquisition of the Hawaiian refinery and marketing operations from The Broken Hill Proprietary Company closed
in May, the refinery was in turnaround for all but three weeks of June and while it contributed to earnings, it is still expected to
have a neutral impact for the year. The acquisition of Shell's Anacortes refinery is pending FTC approval and is expected to
close in the third quarter of this year.
Upstream Operations
Exploration and Production reported a normalized profit of $7.9 million for the second quarter of 1998 compared to $8.2
million for the second quarter of 1997.
Domestic Exploration and Production generated a normalized operating profit of $7.2 million compared to $6.3 million for the
second quarter of 1997. The 14 percent rise in domestic operating profit over the previous year's quarter was the result of
higher production volumes from recent drilling success and higher gas prices. Total domestic natural gas production was 95
mmcfed in the second quarter of 1998 versus 86 mmcfed for the same quarter of 1997.
In Bolivia, operating profit for the second quarter of 1998 was $0.7 million compared to the second quarter of 1997
normalized profit of $1.9 million. This quarter-to-quarter decrease was primarily attributable to a more than 30 percent decline
in natural gas prices, which are indexed to posted fuel oil prices, together with a charge for prior-period taxes. The decrease
was partially offset by increased net production volumes of 31 mmcfed in the second quarter of 1998 versus 20 mmcfed in the
second quarter of 1997.
Normalized Earnings Increase for Six Month Period
Excluding non-recurring items, net earnings in the first half of 1998 were $16 million or 60 cents per basic share, versus $13
million or 49 cents per share for the first six months of 1997. For the six months ended June 30, reported net earnings were
$12.3 million or 47 cents per basic share, versus $15.8 million or 60 cents per basic share a year ago. Reported segment
operating profit was $68.7 million compared to $34.9 million a year earlier.
Tesoro Petroleum Corporation is a natural resource company engaged in petroleum refining and marketing, natural gas
exploration and production, marketing and distributing petroleum products and providing marine logistics services.
This news release contains certain statements that are ''forward-looking'' statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Any number of important factors could cause
actual results to differ materially from those in the forward-looking statements herein. For more information concerning factors
that could cause such a difference, see the company's annual report on Form 10-K and quarterly reports on Form 10-Q. The
company undertakes no obligation to publicly release the result of any revisions to any such forward-looking statements that
may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. |
