Oil refiner and marketer
Western Refining Inc.
) intends to make a private offering of senior notes worth $350
million. These notes will be due for redemption in 2021.
Simultaneously, Western Refining also announced commencement of a
tender offer to purchase its outstanding 11.250% senior secured
notes due 2017, worth $325 million.
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Western Refining plans to use the proceeds from notes offering,
together with available cash in hand, to buyback its outstanding
11.250% senior secured notes due 2017 in the tender offer. The
takings will also be utilized to pay solicitation fees, related
expenses, tender premiums and accrued interest on the existing
Western Refining is one of the largest independent oil refiners
in the U.S. with a combined crude oil processing capacity of
approximately 151,000 Bbl/d. A major advantage for the company is
its proprietary access to pipelines, which inhibits lower-cost
competitors from supplying Western Refining's key markets.
The company 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 1 to 3 months.
Late last month, the company reported better-than-expected fourth
quarter profits due to higher refining margins and strong product
values in Southwest U.S. Western Refining's earnings per share
(excluding special items) of $1.45 were much higher than
prior-year quarter's earnings of 50 cents. Earnings were also
above the Zacks Consensus Estimate of $1.37 per share.
However, the inherent volatility of the refining business reduces
the accuracy and reliability of long-term earnings and revenue
estimates. Additionally, results are exposed to unplanned
shutdowns that may have a lingering impact.
There are other oil refiners in the energy sector that offer
value and are worth buying now. These include
Marathon Petroleum Corporation
Valero Energy Corporation
). All of these stocks sport a Zacks Rank #2 (Buy).