Independent refiner Tesoro Corporation ( TSO ) reported bright
first quarter 2013 results on the back of higher margins and
favorable market conditions.EPL OIL&GAS INC (EPL): Free Stock Analysis
ReportHARVEST NATURAL (HNR): Free Stock Analysis
ReportNEWPARK RESOUR (NR): Free Stock Analysis ReportTESORO CORP (TSO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment
Earnings per share (excluding special items) came in at 73 cents,
managing to beat the Zacks Consensus Estimate of 71 cents but
significantly above the year-ago adjusted profit of 39 cents per
Tesoro reported revenues of $8,156.0 million for the three-month
period ended Mar 31. This was 13.7% above our projection and was
also up 4.3% year over year on the back of higher throughput and
solid refining margins.
Refining: The segment posted an
operating income of $283 million, reflecting an increase from $191
million in the year-earlier quarter. The improvement can be
attributed to higher refinery throughput rates.
Retail: The Retail unit earned $17
million during the March quarter against a loss of $4 million in
the first quarter of 2012. The growth was aided by higher fuel
Total refining throughput averaged 579 thousand barrels per day
(MBbl/d) compared with 529 MBbl/d in the year-ago quarter.
Overall throughput volumes in California (consisting of the Golden
Eagle and Los Angeles refineries) and the Mid-Continent (North
Dakota & Utah) increased 36.0% and 5.9% year over year to 257
MBbl/d and 125 MBbl/d, respectively.
Throughput in Tesoro's Mid-Pacific (Hawaii) operations remained
unchanged from the first quarter of 2012 at 69 MBbl/d and decreased
16.1% to 130 MBbl/d for the Pacific Northwest (Alaska and
Gross refining margin saw an increase of 12.6% year over year to
$13.68 per barrel.
In terms of different regions, refining margin increased in
California (by 47.0% year over year to $11.73 per barrel), in
Mid-Pacific (by 122.2% to $4.60 per barrel) and Pacific Northwest
(by 2.9% to $13.33 per barrel). But in Mid-Continent, refining
margin decreased by 3.3% to $22.73 per barrel.
Realized Costs & Prices
Manufacturing costs before depreciation and amortization fell 2.2%
from the year-earlier level to $4.86 per barrel, in keeping with
Tesoro's stated objectives of reducing operating costs and
increasing throughput rates.
Total refined product sales during the quarter averaged 679
MBbl/d, up 3.3% year over year. Average price realized on product
sales decreased 4.1% year over year to $121.92 per barrel and
average cost per barrel also decreased 5.5% to $111.29 per
Capital Expenditure & Balance Sheet
Tesoro's total capital spending during the quarter under review
was $119 million (91.6% directed toward refining segment). The
company expects capital spending for 2013 at around $560 million,
together with turnaround spending of around $310 million.
As of Mar 31, 2013, Tesoro had $1,972.0 million cash on hand and
total debt of $1,593.0 million, representing a
debt-to-capitalization ratio of 24%.
Tesoro announced its quarterly dividend of 20 cents per share, or
80 cents per share annualized. The dividend is payable on Jun 14,
2013 to shareholders of record on May 31.
Tesoro currently retains a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity market
over the next one to three months.
Meanwhile, there are certain other companies in the energy sector
that are expected to perform better in the short term. These
include Zacks Ranked #1 (Strong Buy) EPL Oil & Gas
Inc. ( EPL
), Harvest Natural Resources Inc. ( HNR ) and
Newpark Resources Inc. ( NR ).