Tesoro Corporation (TSO): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


We are maintaining our Neutral recommendation on Tesoro Corporation. In an effort to tighten fuel emissions, the EPA proposed new gasoline standards, asking refiners to significantly curb sulfur content in gasoline starting from 2017. Complying with the new rules is expected to push up capital expenditures for downstream operators like Tesoro. The company is also faced with volatile industry fundamentals and limited geographic diversification, which may further limit its ability to generate positive earnings surprises. Partially offsetting these negatives are the scale and diversification benefits afforded by Tesoro's portfolio of six refineries, as well as the recent acquisition of BP's Southern California refinery and its shareholder-friendly financial policy.


San Antonio, Texas-based Tesoro Corporation (TSO) is an independent refiner and marketer of refined petroleum products in the western U.S. The company operates in three segments: Refining (accounted for 81% of the company's total 2013 operating income), TLLP (8%) and Retail (11%).

Refining: The Refining segment manufactures and sells gasoline and gasoline-blend stocks, jet fuel, diesel fuel, and other refined products to customers, primarily in the mid-continental and the western U.S. This segment also markets liquefied petroleum gas, petroleum coke, and asphalt. The company owns and operates six refineries in the western U.S., with a combined crude oil processing capacity of approximately 850,000 Bbl/d. Tesoro's geographically focused refining business has made it the largest independent refiner on the U.S. West Coast.

TLLP: Tesoro Logistics L.P. (TLLP) is engaged in the ownership, operation, development and acquisition of crude oil and refined products logistics assets.

Retail: The Retail segment distributes motor fuels to wholesale and retail customers, as well as to commercial end-users through a network of more than 2,250 branded retail outlets, primarily under the Tesoro', Shell', USA Gasoline', and Mirastar' names.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: TSO , TLLP



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