) recently announced that it will shut down refinery operations
at its Kapolei, Hawaii refinery this April. Tesoro intends to
convert it into an import, storage and distribution terminal.
The Hawaii refinery has a capacity of about 94,000 barrels a day
and is one of the largest in the state. Around 200 positions will
be affected due to the closure of the same.
The existing distribution system will be operated by Tesoro to
continue marketing operations and accomplish its supply
commitments. The company plans to sell its terminal, distribution
and retail assets. After the conversion of the refinery, Tesoro
expects the terminal and associated logistics to simplify the
delivery of refined products.
The cost of conversion is estimated at $1.00-$1.10 per share,
including asset impairment and retirement charges. As a result of
this conversion, Tesoro expects to realize $300 million to $350
million in cash by the end of 2013 out of working capital
Texas-based Tesoro Corporation is an independent refiner and
marketer of refined petroleum products in western U.S. The
company operates in two segments: Refining and Retail. 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
western U.S. This segment also markets liquefied petroleum gas,
petroleum coke and asphalt.
We maintain our long-term Outperform recommendation on the stock,
supported by a Zacks Rank #2 (short-term Buy rating).
Tesoro is one of the largest independent oil refiners in the U.S.
with a combined crude oil processing capacity of approximately
675,000 Bbl/d. A major advantage for the company is the scale and
diversification benefits afforded by its portfolio of seven
Our positive stance also revolves around Tesoro's proposed
) Southern California refinery, which, apart from boosting
refinery capacity, will also improve the company's operational
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TESORO CORP (TSO): Free Stock Analysis Report
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