Oil refiner and marketer
Western Refining Inc.
) reported better-than-expected fourth quarter profits due to
higher refining margins and strong product values in the
CALUMET SPECLTY (CLMT): Free Stock Analysis
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WESTERN REFING (WNR): Free Stock Analysis
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The company reported earnings per share (excluding special items)
of $1.45, much higher than prior-year quarter's earnings of 50
cents. Earnings were also above the Zacks Consensus Estimate of
$1.37 per share.
Quarterly net sales of $2.25 billion also surpassed the Zacks
Consensus Estimate of $2.15 billion. However, the results were
lower than the year-ago level of $2.28 billion.
Refining Segment: Analysis
: Total refining throughput averaged 152,280 barrels per day
(Bbl/d), compared with 144,643 Bbl/d in the year-ago quarter.
Overall, throughput volumes at the El Paso refinery were up 8.2 %
year over year to 130,785 Bbl/d, while those in the Gallup unit
were down 9.6% from the year-ago quarter at 21,495 Bbl/d.
: Gross refining margin (excluding unrealized losses on hedging)
was up 49.7% year over year to $30.75 per barrel. In terms of
different regions, refining margin was up 48.6% at El Paso to
$30.77 per barrel and 55.4% at Gallup to $30.26 per
: Direct operating expenses at El Paso during the quarter
averaged $4.36 per barrel, down 9.9% year over year. Costs at
Gallup were up 38.2% from the year-ago period to $11.43 per
barrel. Hence, direct operating expenses at the company's units
were $5.93 per barrel for the three months ended December 31,
2012, down from $6.59 per barrel in the year-ago period. The cost
decrease was due to lesser crude oil expenses.
Capital Expenditure & Balance Sheet
El Paso, Texas-headquartered Western's total capital spending
during the quarter was $71.4 million, much higher than $39.2
million in the fourth quarter of 2011. As of Dec 31, 2012,
Western had cash and cash equivalents of $454.0 million and total
debt of approximately $499.9 million, representing a
debt-to-capitalization ratio of 35.5%.
For the first quarter of 2013, total refinery throughput is
anticipated to be approximately 105,000-110,000 Bbl/d at the El
Paso refinery and 23,000-26,000 Bbl/d at the Gallup refinery. The
company expects capital spending for 2013 to $206 million.
The company currently retains a Zacks Rank #2 (Buy), implying
that it is expected to outperform the broader U.S. equity market
over the next 1 to 3 months.
Western Refining is one 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.
In particular, Western Refining's easy access to the lower-priced
West Texas Intermediate (WTI) crude gives a cost advantage that
is reflected in the company's high gross margins vis-à-vis its
There are other oil refiners in the energy sector that offer
value and are worth buying now. These include
Calumet Specialty Products Partners LP
Global Partners LP
NGL Energy Partners
). All of these stocks sport a Zacks Rank #1 (Strong Buy).