) has closed the divestment of its 100% ownership in Tesoro
Hawaii LLC to a fully owned affiliate of Houston-based Par
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TESORO CORP (TSO): Free Stock Analysis Report
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Tesoro Hawaii is the operator of Kapolei refinery, which has a
refining capacity of 94,000 barrels per day and is also the owner
of retail stations and related logistic properties.
Tesoro has sold the asset for a consideration of roughly $325.0
million. The sale price also comprises an earn-out agreement of
up to $40 million, which will be paid over a span of three years.
San Antonio, Texas-based Tesoro Corporation 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, primarily in the
mid-continental and the western U.S. This segment also markets
liquefied petroleum gas, petroleum coke and asphalt.
Tesoro Corporation is paying greater attention to improving
business processes, reducing operating costs, enhancing the
integration of the refining portfolio and investing in organic
growth. The company is involved with a number of high-return
projects that are expected to be cost effective. These projects
will not only boost the company's competitive position but will
also provide significant earnings and cash flow growth
However, in an effort to reduce pollution, the Environmental
Protection Agency (EPA) has recently outlined a proposal that
would require refiners to reduce sulfur content in gasoline by
67% starting 2017. To comply with the new standards, Tesoro
Corporation will have to increase its capital expenditure, which
will adversely impact earnings and cash flow.
Tesoro Corporation currently retains a Zacks Rank #3 (Hold),
implying that it is expected to be in line with the broader U.S.
equity market over the next one to three months.
Meanwhile, one can look at energy firms like
Magellan Midstream Partners LP
China Petroleum & Chemical Corp.
) that offer better prospects. All the stocks sport a Zacks Rank
#1 (Strong Buy).