Tesoro Reports Strong Earnings
SAN ANTONIO--(BUSINESS WIRE)--Oct. 30, 2001--Tesoro Petroleum Corporation (NYSE:TSO - news) today reported third-quarter 2001 net earnings of $33 million, or $0.79 per share, which includes the Company's newly acquired operations since closing the acquisition on Sept. 6.
Special charges related to the acquisition financing and integration decreased third-quarter 2001 earnings by approximately $0.13 per share. For the third-quarter 2000, the Company recorded earnings of $0.60 per diluted share.
``We believe our third-quarter results begin to reflect the earnings power of our assets and the accretion potential for the business units we recently acquired,'' stated Bruce A. Smith, chairman, president and CEO of Tesoro. ``Operating profit for the Refining and Marketing segment was $87 million, an increase of 42 percent compared to last year's third quarter, and our newly acquired operations in Utah and North Dakota contributed approximately $13 million to operating profit for 25 days of operations.''
Record refinery throughput combined with lower delivered crude costs benefited third-quarter 2001 results. Excluding the newly acquired refineries, throughput increased more than 11,000 barrels per day (bpd) compared to the third quarter of 2000. Among other things, Tesoro's crude cost benefited from lower foreign-flag shipping rates compared to the year-ago quarter.
``Tesoro's refinery spread was $8.10 per barrel, or 10 percent higher than the prior year's quarter. Margins in our markets have declined from the peaks reached in this year's third quarter and are now responding to seasonally lower demand, but are at relatively strong levels for October,'' stated Smith.
During the 2001 third quarter, operating expenses for the Refining and Marketing segment were $127 million, or approximately 14 percent higher than the same period last year, reflecting approximately one month of operations for Tesoro's two additional refineries and increased throughput for the Company's other refineries.
General and administrative expenses were $16 million for the 2001 third quarter, an increase of 41 percent versus the corresponding quarter of 2000, primarily due to acquisition-related integration costs of approximately $3 million. Interest and financing costs increased by nearly $10 million compared to the year-ago quarter primarily due to $6 million of one-time costs related to financing for the acquisition, and higher borrowings.
Nine Months Results
For the nine months ended Sept. 30, 2001, net earnings were $84 million, or $2.00 per diluted share, compared to net earnings of $49 million, or $1.17 per diluted share for the corresponding period in 2000. Operating profit increased 52 percent to $214 million, compared to the same period for the prior year. This improvement was mainly due to an increase of $1.29 per barrel in refined product spread combined with higher refinery throughput.
Update
``Our recent acquisition expanded our company-owned and jobber retail operations. We have completed re-branding the exterior signage for our company-owned stores in Utah and expect to finish re-branding our company-owned North Dakota stores by mid-November. As we continue to expand our retail brand, jobbers will be an important part of our retail strategy; therefore, I am encouraged by the response we have received from the BP jobber network that was part of this acquisition,'' explained Smith.
The Company has received final approval from the North Dakota Public Service Commission to purchase the crude oil pipeline that supplies its North Dakota refinery. At closing, Tesoro will pay $90 million for the pipeline and expects to close on this transaction on Nov. 1.
``One of the two major units that are being constructed as part of our Washington refinery Heavy Oil Conversion Project, a de-asphalting unit, has been in operation since late September. While this unit is contributing to profitability, the full benefit will not be achieved until the project completion in the first quarter of 2002,'' concluded Smith. |
