-
Net earnings from continuing operations of $170
million, or $1.43 per diluted share, consolidated net earnings of
$201 million and EBITDA of $577 million
-
Total Refining throughput was 873 thousand
barrels per day and utilization was 98%
-
Logistics operating income grew 25%
year-over-year to $133 million
-
Marketing operating income of $273 million;
total branded stations increased by 178 year-over-year
-
Returned $215 million to shareholders; $150
million in share repurchases and $65 million in dividends
-
Closed sale of Alaska Storage and Terminalling
Assets to TLLP for $444 million
SAN ANTONIO -
October 31, 2016 - Tesoro Corporation (NYSE: TSO) today
reported third quarter net earnings from continuing operations of
$170 million, or $1.43 per diluted share, compared to net earnings
from continuing operations of $759 million, or $6.13 per diluted
share a year ago. Consolidated net earnings were $201 million for
the third quarter 2016 compared to $799 million for the same period
last year. EBITDA for the third quarter of 2016 was $577 million
compared to $1.5 billion last year.
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
(In millions, except per share data) |
2016 |
|
2015 |
|
2016 |
|
2015 |
Segment Operating Income |
|
|
|
|
|
|
|
Refining |
$ |
52 |
|
|
$ |
899 |
|
|
$ |
475 |
|
|
$ |
1,843 |
|
TLLP |
133 |
|
|
106 |
|
|
381 |
|
|
312 |
|
Marketing |
273 |
|
|
379 |
|
|
661 |
|
|
724 |
|
Total Segment Operating Income |
$ |
458 |
|
|
$ |
1,384 |
|
|
$ |
1,517 |
|
|
$ |
2,879 |
|
Net
Earnings From Continuing Operations Attributable to
Tesoro |
$ |
170 |
|
|
$ |
759 |
|
|
$ |
646 |
|
|
$ |
1,490 |
|
|
|
|
|
|
|
|
|
Diluted EPS - Continuing Operations |
$ |
1.43 |
|
|
$ |
6.13 |
|
|
$ |
5.37 |
|
|
$ |
11.85 |
|
Diluted EPS - Discontinued Operations |
(0.01 |
) |
|
- |
|
|
0.08 |
|
|
(0.03 |
) |
Total Diluted EPS |
$ |
1.42 |
|
|
$ |
6.13 |
|
|
$ |
5.45 |
|
|
$ |
11.82 |
|
"We are pleased with the results
for the quarter, which are attributable to our integrated business
model and the continued execution of our operating improvements,"
said Greg Goff, Chairman and CEO. "Our refining operational
reliability was very strong, resulting in 98% utilization. Combined
with our continued growth in logistics and marketing business, this
resulted in strong operating cash flows. Also, we returned $215
million to shareholders in the form of share repurchases and
dividends. We are successfully delivering the improvements to
operating income that we identified as part of our 2016 plan and
remain committed to meeting or exceeding our target of $400 to $500
million."
For the third quarter, the Company
recorded segment operating income of $458 million compared to
segment operating income of $1.4 billion in the third quarter of
2015. Operating income in the third quarter 2016 grew in Logistics
but was lower year-over-year in Refining and Marketing due to a
stronger than normal market environment in 2015.
SEGMENT
RESULTS
REFINING. Refining operating income was $52
million for the third quarter 2016 compared to $899 million in 2015
and segment EBITDA was $204 million compared to $1.0 billion in
2015. Third quarter 2016 operating income and segment EBITDA
include a pre-tax benefit of $20 million related to a lower of cost
or market (LCM) inventory adjustment offset by a $14 million charge
related to a contract dispute with a supplier.
The Tesoro Index(a) was
$12.45 per barrel for the third quarter with a gross refining
margin of $9.08 per barrel or 73% capture of the Tesoro Index. For
the year ago period, the Tesoro Index was $23.09 per barrel with a
gross refining margin of $19.43 per barrel or 84% capture of the
Tesoro Index. Refining margins in the third quarter 2016 were
negatively impacted by rising RINs prices and the resulting
transfer price to Marketing, and by a reduction of inventory in the
quarter. Total refinery throughput for the quarter was 873 thousand
barrels per day, or 98% utilization. Manufacturing costs in the
third quarter of 2016 increased $0.27 per barrel over last year to
$5.11 per barrel primarily due to the addition of the Dickinson
Refinery and the Tesoro Great Plains assets in 2016.
LOGISTICS.
Logistics operating income increased to $133 million in the third
quarter 2016 from $106 million in 2015 and segment EBITDA increased
to $181 million from $153 million last year. This performance was
driven by year-over-year growth in Tesoro Logistics LP (NYSE: TLLP)
crude oil gathering, terminalling and transportation throughput as
well as contributions from the acquisitions of Los Angeles Storage
and Pipeline Assets last year and the Alaska Storage and
Terminalling Assets completed during the quarter.
MARKETING.
Marketing operating income was $273 million, segment EBITDA was
$285 million and fuel margins were 14.9 cents per gallon in the
third quarter 2016. This compares to operating income of $379
million, segment EBITDA of $390 million and fuel margins of 20.5
cents per gallon a year ago. The year-over-year comparison to
operating results reflect the stronger than normal market
conditions in 2015. However, consumer demand remained strong in the
third quarter 2016 and the Company's total branded stations
increased by 178 over the year ago period.
CORPORATE AND
OTHER
Corporate and unallocated costs for the third quarter 2016 were $98
million. Net interest was $70 million, which includes a $6 million
write-off for the unamortized financing costs related to
refinancing Tesoro's revolving credit facility in the quarter. The
effective tax rate was 32% for the quarter.
BALANCE SHEET AND
CASH FLOW
Tesoro ended the third quarter with $1.4 billion in cash and cash
equivalents compared to $942 million at the end of 2015. Tesoro has
$2.0 billion of availability under its new revolving credit
facility. Total debt, net of unamortized issuance costs, was $4.7
billion or 36% of total capitalization at the end of the third
quarter. Excluding TLLP debt and equity, total debt was $1.3
billion or 19% of total capitalization.
Capital spending for the third
quarter was $185 million for Tesoro and $42 million for TLLP.
Turnaround expenditures for the third quarter were $42 million.
The Company executed 1.9 million
of share repurchases for approximately $150 million in the third
quarter and paid cash dividends of $65 million. Tesoro today
announced that its board of directors has declared a quarterly cash
dividend of $0.55 per share payable on December 15, 2016 to
all holders of record as of November 30, 2016. Tesoro
continues to maintain a strong balance sheet while investing in
high-return capital projects and acquisitions as well as returning
cash to shareholders.
STRATEGIC
UPDATE
During the quarter, Tesoro closed both portions of the sale of the
Alaska Storage and Terminalling Assets to TLLP for a total
consideration of $444 million, which included cash proceeds of $400
million and the issuance of common and general partner units to
Tesoro, valued at approximately $44 million.
Also during the quarter, the
Company closed the acquisition of Virent, Inc., an innovative
renewable fuels and chemicals company that supports Tesoro's
renewable fuels strategy of developing high-quality, lower-carbon,
renewable feedstocks and blendstocks that can either be
co-processed in existing refineries or blended seamlessly with
traditional fuels. By generating valuable credits, this strategy
may lower Tesoro's compliance costs with the federal renewable fuel
standard and California's low carbon fuel standard.
On September 30, 2016, the
Company entered into a new $2.0 billion senior secured
revolving credit agreement. This new four-year cash flow credit
facility replaces Tesoro's previous $3.0 billion asset based credit
facility, which was scheduled to mature in November
2019. While the new credit facility is currently guaranteed by
certain Tesoro subsidiaries and collateral, these will be released
and the facility will become unsecured upon Tesoro achieving an
investment grade credit rating from either Moody's Investors
Service or S&P Global Ratings.
On October 14, 2016, S&P
Global Ratings upgraded TLLP's credit rating to BB+ with a stable
outlook from the previous rating of BB. This rating is now the same
rating as that of Tesoro and one level below investment grade.
At Tesoro's 2015 Investor and
Analyst Day, the Company provided its expectations for 2016. These
included a Tesoro Index of $12 to $14 per barrel, Marketing segment
fuel margins of 11¢ to 14¢ per gallon and crude oil differentials
reflecting transportation costs. Through the first nine months of
2016, the Tesoro Index and Marketing fuel margins are in line with
expectations. Crude oil differentials continue to be significantly
narrower than expectations and have resulted in lower capture rates
and lower refining profitability than the Company's expectations.
Tesoro continues to expect year-over-year improvements from higher
utilization and operational efficiencies of $400 to $500
million.
The Company committed to
delivering $400 to $500 million of annual improvements to operating
income in 2016, consisting of $200 to $250 million in Refining,
$175 to $200 million in Logistics and $25 to $50 million in
Marketing. Even in the current challenging market environment,
Tesoro remains confident in delivering these annual improvements to
operating income. Through the first nine months of the year,
estimated Refining and Marketing improvements are trending above
the range. However, estimated Logistics improvements are trending
slightly below the range, primarily due to the weak commodity price
environment, which has impacted organic growth and volumes.
PUBLIC INVITED TO
LISTEN TO ANALYST AND INVESTOR CONFERENCE CALL
Tesoro will live broadcast its conference call at 7:30 a.m. CT
tomorrow morning to discuss third quarter 2016 results and other
business matters. Interested parties may listen to the live
conference call over the Internet by logging on to
http://www.tsocorp.com.
2016 INVESTOR AND
ANALYST DAY
Tesoro Corporation will host its 2016 Investor and Analyst Day at
The St. Regis Hotel in New York City on December 6, 2016 at 9:00
a.m. ET. Because space is limited, reservations are required to
attend and will be accepted on a first-come, first-serve basis.
Interested parties can request an invitation by contacting the
Investor Relations department via email at irelations@tsocorp.com.
The presentation will also be webcast live at
http://www.tsocorp.com.
ABOUT TESORO
CORPORATION
Tesoro Corporation, a Fortune 100 company, is an independent
refiner and marketer of petroleum products. Tesoro, through its
subsidiaries, operates seven refineries in the western United
States with a combined capacity of over 895,000 barrels per day and
ownership in a logistics business, which includes an interest in
Tesoro Logistics LP (NYSE: TLLP) and ownership of its general
partner. Tesoro's retail-marketing system includes over 2,400
retail stations under the ARCO®,
Shell®,
Exxon®,
Mobil®, USA
Gasoline(TM), Rebel(TM) and Tesoro® brands.
This earnings
release contains "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including without limitation
statements concerning: our operational, financial and growth
strategies, including maintaining a strong balance sheet, investing
in high-return capital projects and acquisitions, returning cash to
our shareholders, and delivering our targeted annual improvements
to operating income; our ability to successfully effect those
strategies and the expected timing and results thereof; our
financial and operational outlook, and ability to fulfill that
outlook; our financial position, liquidity and capital resources;
the expected benefits to us of our recent acquisition of Virent,
Inc.; and expectations regarding annual improvements to operating
income, including expectations with respect to each segment. For
more information concerning factors that could affect these
statements, see our annual report on Form 10-K, quarterly reports
on Form 10-Q, and other public filings and press releases,
available at www.tsocorp.com. We undertake no obligation to revise
or update any forward-looking statements as a result of new
information, future events or otherwise.
Contact:
Investors:
Sam Ramraj, Vice President, Investor Relations, (210) 626-4757
Media:
Tesoro Media Relations, media@tsocorp.com, (210) 626-7702
(a) As a performance
benchmark, we utilize crack spreads and the Tesoro Index to measure
the difference between market prices for crude oil and refined
products. Crack spreads are a commonly used proxy within the
industry to estimate or identify trends in gross refining margins,
while the Tesoro Index is more specifically designed around
Tesoro's assets. Crack spreads and the Tesoro Index can fluctuate
significantly over time as a result of market conditions and supply
and demand balances. For example, The West Coast 321 crack spread
is calculated using three barrels of Alaska North Slope crude oil
(ANS) producing two barrels of Los Angeles CARB gasoline and one
barrel of Los Angeles CARB diesel. In comparison the Tesoro Index
uses several crude oils and approximately 8 to 10 products to
provide a potentially closer representation of the trends in the
available margin. Our actual gross refining margins differ from
these crack spreads and the Tesoro Index based on the actual slate
of crude oil we run at our refineries and the products we produce
or yield.
TESORO CORPORATION
2016 FOURTH QUARTER GUIDANCE (Unaudited)
Throughput (Mbpd) |
|
California |
500 - 525 |
Pacific Northwest |
180 - 190 |
Mid-Continent |
125 - 140 |
Consolidated |
805 - 855 |
|
|
Manufacturing Cost ($/throughput barrel) |
|
California |
$6.20 - 6.45 |
Pacific Northwest |
$3.90 - 4.15 |
Mid-Continent |
$4.65 - 4.90 |
Consolidated |
$5.45 - 5.70 |
|
|
Corporate/System ($ millions) |
|
Refining depreciation |
$150 |
TLLP
depreciation |
$50 |
Corporate expense (before depreciation) |
$95 - 105 |
Interest expense (before interest income) |
$72 |
Noncontrolling Interest |
$35 - 40 |
2016 CAPITAL
OUTLOOK (Unaudited) (in millions)
|
2016 Capital Expenditures
Outlook |
Capital Expenditures |
|
Tesoro
Corporation |
$ |
700 |
|
Tesoro
Logistics LP |
200 |
|
Total Capital Expenditures |
$ |
900 |
|
ITEMS IMPACTING
COMPARABILITY
The TLLP financial and operational
data presented include the historical results of all assets
acquired from Tesoro prior to the acquisition dates. The
acquisitions from Tesoro were transfers between entities under
common control. Accordingly, the financial information of TLLP
contained herein has been retrospectively adjusted to include the
historical results of the assets acquired in the acquisitions from
Tesoro prior to the effective date of each acquisition for all
periods presented. The TLLP financial data is derived from the
combined financial results of the TLLP predecessor (the "TLLP
Predecessor"). We refer to the TLLP Predecessor and, prior to each
acquisition date, the acquisitions from Tesoro collectively, as
"TLLP's Predecessors."
NON-GAAP
MEASURES
Our management uses certain
performance "non-GAAP" measures to analyze operating segment
performance. Our management also uses additional measures that are
known as "non-GAAP" financial measures in its evaluation of past
performance and prospects for the future to supplement our
financial information presented in accordance with accounting
principles generally accepted in the United States of America
("U.S. GAAP"). These financial non-GAAP measures are important
factors in assessing our operating results and profitability and
include the following:
-
U.S. GAAP-based net earnings before interest,
income taxes, and depreciation and amortization expenses
("EBITDA");
-
Segment EBITDA is defined as a segment's U.S.
GAAP operating income before depreciation and amortization expenses
plus equity in earnings (loss) of equity method investments and
other income (expense), net; and
-
Debt to capitalization ratio excluding TLLP,
reflects the ratio achieved by dividing the net result of our
consolidated debt less all debt owed by TLLP (both net of
unamortized issuance costs) by the sum of our consolidated debt
less TLLP's total debt (both net of unamortized issuance costs) and
our total equity less noncontrolling interest associated with the
public ownership of TLLP.
We present the measures defined
above because we believe these measures help us analyze our results
of operations and liquidity in conjunction with our U.S. GAAP
results. Investors, analysts, lenders and ratings agencies may use
these measures to help analyze our results of operations and
liquidity in conjunction with our U.S. GAAP results, including but
not limited to the following:
-
our operating performance as compared to other
publicly traded companies in the refining, logistics and marketing
industries, without regard to historical cost basis or financing
methods;
-
our ability to incur and service debt and fund
capital expenditures; and
-
the viability of acquisitions and other capital
expenditure projects and the returns on investment of various
investment opportunities.
In addition, these measures are
used by management to assess internal performance. We believe these
measures, when supplemental to information presented under U.S.
GAAP, may provide meaningful information to the users of our
financial statements. Each of the performance measures should not
be used in isolation from their comparable U.S. GAAP measure and
thus should not be considered as alternatives to any U.S. GAAP
measure. Non-GAAP measures have important limitations as analytical
tools, because they exclude some, but not all, items that affect
net earnings and operating income.
TESORO
CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
|
September 30,
2016 |
|
December 31,
2015 |
ASSETS |
|
|
|
Current Assets |
|
|
|
Cash
and cash equivalents (TLLP: $497 and $16, respectively) |
$ |
1,387 |
|
|
$ |
942 |
|
Receivables, net of allowance for doubtful accounts |
1,037 |
|
|
792 |
|
Inventories, net (b) |
2,317 |
|
|
2,302 |
|
Prepayments and other current assets |
364 |
|
|
271 |
|
Total
Current Assets |
5,105 |
|
|
4,307 |
|
Property, Plant and Equipment, Net (TLLP:
$3,129 and $3,467, respectively) |
9,769 |
|
|
9,541 |
|
Other
Noncurrent Assets, Net (TLLP: $1,447 and $1,190, respectively) |
3,131 |
|
|
2,484 |
|
Total Assets |
$ |
18,005 |
|
|
$ |
16,332 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
1,547 |
|
|
$ |
1,568 |
|
Other
current liabilities |
1,146 |
|
|
962 |
|
Total Current Liabilities |
2,693 |
|
|
2,530 |
|
Deferred Income Taxes |
1,438 |
|
|
1,222 |
|
Other
Noncurrent Liabilities |
1,012 |
|
|
773 |
|
Debt,
Net of Unamortized Issuance Costs (TLLP: $3,382 and $2,844, respectively) |
4,667 |
|
|
4,067 |
|
Equity |
8,195 |
|
|
7,740 |
|
Total Liabilities and Equity |
$ |
18,005 |
|
|
$ |
16,332 |
|
(b) We recorded a
lower of cost or market ("LCM") reserve of $123 million and $359
million at September 30, 2016 and December 31, 2015,
respectively, to cost of sales for our crude oil, refined products,
oxygenates and by-product inventories to adjust carrying value of
our inventories to reflect replacement cost as of those reporting
dates.
TESORO
CORPORATION
RESULTS OF CONSOLIDATED OPERATIONS (Unaudited) (in
millions, except per share amounts)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
$ |
6,544 |
|
|
$ |
7,743 |
|
|
$ |
17,930 |
|
|
$ |
22,438 |
|
Costs and Expenses: |
|
|
|
|
|
|
|
Cost
of sales (excluding the lower of cost or market inventory valuation
adjustment) |
5,232 |
|
|
5,429 |
|
|
14,114 |
|
|
17,090 |
|
Lower
of cost or market inventory valuation adjustment (b) |
(20 |
) |
|
83 |
|
|
(236 |
) |
|
41 |
|
Operating expenses |
652 |
|
|
640 |
|
|
1,872 |
|
|
1,816 |
|
Selling, general and administrative expenses (c) |
107 |
|
|
103 |
|
|
283 |
|
|
285 |
|
Depreciation and amortization expenses |
211 |
|
|
192 |
|
|
633 |
|
|
553 |
|
Loss on asset disposals and impairments |
2 |
|
|
4 |
|
|
7 |
|
|
12 |
|
Operating Income |
360 |
|
|
1,292 |
|
|
1,257 |
|
|
2,641 |
|
Interest and financing costs, net |
(70 |
) |
|
(54 |
) |
|
(190 |
) |
|
(163 |
) |
Equity
in earnings of equity method investments |
7 |
|
|
6 |
|
|
12 |
|
|
9 |
|
Other income, net (d) |
- |
|
|
13 |
|
|
32 |
|
|
12 |
|
Earnings Before Income Taxes |
297 |
|
|
1,257 |
|
|
1,111 |
|
|
2,499 |
|
Income tax expense |
95 |
|
|
458 |
|
|
362 |
|
|
888 |
|
Net Earnings From Continuing Operations |
202 |
|
|
799 |
|
|
749 |
|
|
1,611 |
|
Earnings (loss) from discontinued operations, net of
tax |
(1 |
) |
|
- |
|
|
10 |
|
|
(4 |
) |
Net Earnings |
201 |
|
|
799 |
|
|
759 |
|
|
1,607 |
|
Less: Net earnings from continuing operations attributable
to noncontrolling interest |
32 |
|
|
40 |
|
|
103 |
|
|
121 |
|
Net Earnings Attributable to Tesoro
Corporation |
$ |
169 |
|
|
$ |
759 |
|
|
$ |
656 |
|
|
$ |
1,486 |
|
Net Earnings (Loss) Attributable to Tesoro
Corporation: |
|
|
|
|
|
|
|
Continuing operations |
$ |
170 |
|
|
$ |
759 |
|
|
$ |
646 |
|
|
$ |
1,490 |
|
Discontinued operations |
(1 |
) |
|
- |
|
|
10 |
|
|
(4 |
) |
Total |
$ |
169 |
|
|
$ |
759 |
|
|
$ |
656 |
|
|
$ |
1,486 |
|
Net Earnings (Loss) Per Share - Basic: |
|
|
|
|
|
|
|
Continuing operations |
$ |
1.44 |
|
|
$ |
6.19 |
|
|
$ |
5.43 |
|
|
$ |
11.98 |
|
Discontinued operations |
(0.01 |
) |
|
- |
|
|
0.08 |
|
|
(0.03 |
) |
Total |
$ |
1.43 |
|
|
$ |
6.19 |
|
|
$ |
5.51 |
|
|
$ |
11.95 |
|
Weighted average common shares outstanding - Basic |
118.2 |
|
|
122.5 |
|
|
119.1 |
|
|
124.3 |
|
Net Earnings (Loss) Per Share - Diluted: |
|
|
|
|
|
|
|
Continuing operations |
$ |
1.43 |
|
|
$ |
6.13 |
|
|
$ |
5.37 |
|
|
$ |
11.85 |
|
Discontinued operations |
(0.01 |
) |
|
- |
|
|
0.08 |
|
|
(0.03 |
) |
Total |
$ |
1.42 |
|
|
$ |
6.13 |
|
|
$ |
5.45 |
|
|
$ |
11.82 |
|
Weighted average common shares outstanding - Diluted |
119.3 |
|
|
123.8 |
|
|
120.4 |
|
|
125.7 |
|
(c) Includes
stock-based compensation expense of $13 million and $22 million for
the three months ended September 30, 2016 and 2015,
respectively, and expense of $21 million and $57 million for the
nine months ended September 30, 2016 and 2015, respectively.
The significant impact to stock-based compensation expense is
primarily a result of changes in Tesoro's stock price.
(d) Other income, net for the nine months ended
September 30, 2016 included insurance proceeds related to a
shipment of contaminated crude oil that was received in 2014 as
well as a refund of certain tariff charges that were disputed.
Additionally, a gain recognized by TLLP on a settlement of amounts
disputed by one of its customers on the annual calculation of the
natural gas gathering rate is included for the nine months ended
September 30, 2016. During the three and nine months ended
September 30, 2015, we recorded a gain of $11 million as other
income for insurance proceeds related to the settlement of claims
associated with the Washington Refinery Fire.
TESORO
CORPORATION
SELECTED SEGMENT OPERATING DATA (Unaudited) (in
millions)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Earnings Before Income Taxes |
|
|
|
|
|
|
|
Refining |
$ |
52 |
|
|
$ |
899 |
|
|
$ |
475 |
|
|
$ |
1,843 |
|
TLLP |
133 |
|
|
106 |
|
|
381 |
|
|
312 |
|
Marketing |
273 |
|
|
379 |
|
|
661 |
|
|
724 |
|
Total
Segment Operating Income |
458 |
|
|
1,384 |
|
|
1,517 |
|
|
2,879 |
|
Corporate and unallocated costs (c) |
(98 |
) |
|
(92 |
) |
|
(260 |
) |
|
(238 |
) |
Operating Income |
360 |
|
|
1,292 |
|
|
1,257 |
|
|
2,641 |
|
Interest and financing costs, net |
(70 |
) |
|
(54 |
) |
|
(190 |
) |
|
(163 |
) |
Equity
in earnings of equity method investments |
7 |
|
|
6 |
|
|
12 |
|
|
9 |
|
Other income, net (d) |
- |
|
|
13 |
|
|
32 |
|
|
12 |
|
Earnings Before Income Taxes |
$ |
297 |
|
|
$ |
1,257 |
|
|
$ |
1,111 |
|
|
$ |
2,499 |
|
Depreciation and Amortization Expenses |
|
|
|
|
|
|
|
Refining |
$ |
148 |
|
|
$ |
133 |
|
|
$ |
445 |
|
|
$ |
373 |
|
TLLP |
45 |
|
|
45 |
|
|
134 |
|
|
133 |
|
Marketing |
12 |
|
|
11 |
|
|
36 |
|
|
34 |
|
Corporate |
6 |
|
|
3 |
|
|
18 |
|
|
13 |
|
Total Depreciation and Amortization Expenses |
$ |
211 |
|
|
$ |
192 |
|
|
$ |
633 |
|
|
$ |
553 |
|
Segment EBITDA |
|
|
|
|
|
|
|
Refining |
$ |
204 |
|
|
$ |
1,036 |
|
|
$ |
947 |
|
|
$ |
2,219 |
|
TLLP |
181 |
|
|
153 |
|
|
531 |
|
|
451 |
|
Marketing |
285 |
|
|
390 |
|
|
697 |
|
|
758 |
|
Total Segment EBITDA |
$ |
670 |
|
|
$ |
1,579 |
|
|
$ |
2,175 |
|
|
$ |
3,428 |
|
Capital Expenditures |
|
|
|
|
|
|
|
Refining |
$ |
153 |
|
|
$ |
152 |
|
|
$ |
409 |
|
|
$ |
483 |
|
TLLP |
42 |
|
|
93 |
|
|
125 |
|
|
237 |
|
Marketing |
3 |
|
|
8 |
|
|
22 |
|
|
20 |
|
Corporate |
29 |
|
|
6 |
|
|
68 |
|
|
16 |
|
Total Capital Expenditures |
$ |
227 |
|
|
$ |
259 |
|
|
$ |
624 |
|
|
$ |
756 |
|
TESORO
CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (in millions)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Reconciliation of Net Earnings to EBITDA |
|
|
|
|
|
|
|
Net earnings |
$ |
201 |
|
|
$ |
799 |
|
|
$ |
759 |
|
|
$ |
1,607 |
|
Depreciation and amortization expenses |
211 |
|
|
192 |
|
|
633 |
|
|
553 |
|
Interest and financing costs, net |
70 |
|
|
54 |
|
|
190 |
|
|
163 |
|
Income tax expense |
95 |
|
|
458 |
|
|
362 |
|
|
888 |
|
EBITDA |
$ |
577 |
|
|
$ |
1,503 |
|
|
$ |
1,944 |
|
|
$ |
3,211 |
|
Reconciliation of Refining Operating Income to
Refining Segment EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
52 |
|
|
$ |
899 |
|
|
$ |
475 |
|
|
$ |
1,843 |
|
Depreciation and amortization expenses |
148 |
|
|
133 |
|
|
445 |
|
|
373 |
|
Equity
in earnings of equity method investments |
4 |
|
|
4 |
|
|
2 |
|
|
3 |
|
Other income, net (d) |
- |
|
|
- |
|
|
25 |
|
|
- |
|
Segment EBITDA |
$ |
204 |
|
|
$ |
1,036 |
|
|
$ |
947 |
|
|
$ |
2,219 |
|
|
|
|
|
|
|
|
|
Reconciliation of TLLP Operating Income to TLLP
Segment EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
133 |
|
|
$ |
106 |
|
|
$ |
381 |
|
|
$ |
312 |
|
Depreciation and amortization expenses |
45 |
|
|
45 |
|
|
134 |
|
|
133 |
|
Equity
in earnings of equity method investments |
3 |
|
|
2 |
|
|
10 |
|
|
6 |
|
Other income, net (d) |
- |
|
|
- |
|
|
6 |
|
|
- |
|
Segment EBITDA |
$ |
181 |
|
|
$ |
153 |
|
|
$ |
531 |
|
|
$ |
451 |
|
|
|
|
|
|
|
|
|
Reconciliation of Marketing Operating Income to
Marketing Segment EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
273 |
|
|
$ |
379 |
|
|
$ |
661 |
|
|
$ |
724 |
|
Depreciation and amortization expenses |
12 |
|
|
11 |
|
|
36 |
|
|
34 |
|
Segment EBITDA |
$ |
285 |
|
|
$ |
390 |
|
|
$ |
697 |
|
|
$ |
758 |
|
TESORO
CORPORATION
OTHER SUMMARY FINANCIAL INFORMATION (Unaudited)
(in millions)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Cash Flows From (Used in): |
|
|
|
|
|
|
|
Operating activities |
$ |
573 |
|
|
$ |
940 |
|
|
$ |
1,201 |
|
|
$ |
1,847 |
|
Investing activities |
(214 |
) |
|
(235 |
) |
|
(1,020 |
) |
|
(783 |
) |
Financing activities |
(93 |
) |
|
(724 |
) |
|
264 |
|
|
(1,105 |
) |
Increase (Decrease) in Cash and Cash Equivalents |
$ |
266 |
|
|
$ |
(19 |
) |
|
$ |
445 |
|
|
$ |
(41 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016 |
|
December 31,
2015 |
Working capital (current assets less current liabilities) |
|
|
|
|
$ |
2,412 |
|
|
$ |
1,777 |
|
Total
market value of TLLP common units held by Tesoro (e) |
|
|
|
|
$ |
1,608 |
|
|
$ |
1,633 |
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Cash distributions
received from TLLP (f): |
|
|
|
|
|
|
|
For common units
held |
$ |
27 |
|
|
$ |
20 |
|
|
$ |
79 |
|
|
$ |
58 |
|
For general
partner units held |
38 |
|
|
18 |
|
|
95 |
|
|
48 |
|
Total Cash
Distributions Received from TLLP |
$ |
65 |
|
|
$ |
38 |
|
|
$ |
174 |
|
|
$ |
106 |
|
TESORO
CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (in millions, except percentages)
|
September 30,
2016 |
|
December 31,
2015 |
Tesoro
consolidated debt (g) |
$ |
4,682 |
|
|
$ |
4,073 |
|
TLLP
debt (g) |
3,382 |
|
|
2,844 |
|
Tesoro Debt Excluding TLLP (g) |
$ |
1,300 |
|
|
$ |
1,229 |
|
|
|
|
|
Total
equity |
$ |
8,195 |
|
|
$ |
7,740 |
|
Noncontrolling interest |
2,695 |
|
|
2,527 |
|
Tesoro Corporation Stockholders' Equity |
$ |
5,500 |
|
|
$ |
5,213 |
|
|
|
|
|
Tesoro
debt, net of unamortized issuance costs, to capitalization ratio
(g) |
36 |
% |
|
34 |
% |
Tesoro
debt, net of unamortized issuance costs, to capitalization ratio
excluding
TLLP and noncontrolling interest (g) |
19 |
% |
|
19 |
% |
(e) Represents market
value of the 33,194,109 and 32,445,115 common units held by Tesoro
at September 30, 2016 and December 31, 2015,
respectively. The market values were $48.44 and $50.32 per unit
based on the closing unit price at September 30, 2016 and
December 31, 2015, respectively.
(f) Represents distributions received from TLLP
during the three and nine months ended September 30, 2016 and
2015 on common units and general partner units held by
Tesoro.
(g) These amounts and calculations are shown net of
unamortized issuance costs.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited)
(dollars in millions, except per barrel amounts)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
REFINING SEGMENT |
2016 |
|
2015 |
|
2016 |
|
2015 |
Total Refining Segment |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy
crude (h) |
186 |
|
|
178 |
|
|
176 |
|
|
150 |
|
Light
crude |
636 |
|
|
635 |
|
|
595 |
|
|
575 |
|
Other feedstocks |
51 |
|
|
48 |
|
|
49 |
|
|
56 |
|
Total Throughput |
873 |
|
|
861 |
|
|
820 |
|
|
781 |
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
455 |
|
|
438 |
|
|
449 |
|
|
405 |
|
Diesel
fuel |
202 |
|
|
195 |
|
|
183 |
|
|
166 |
|
Jet
fuel |
133 |
|
|
122 |
|
|
117 |
|
|
119 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
143 |
|
|
158 |
|
|
126 |
|
|
140 |
|
Total Yield |
933 |
|
|
913 |
|
|
875 |
|
|
830 |
|
Refined Product Sales (Mbpd) (i) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
531 |
|
|
530 |
|
|
527 |
|
|
510 |
|
Diesel
fuel |
215 |
|
|
213 |
|
|
204 |
|
|
198 |
|
Jet
fuel |
158 |
|
|
148 |
|
|
145 |
|
|
153 |
|
Heavy fuel oils, residual products and other |
112 |
|
|
101 |
|
|
105 |
|
|
91 |
|
Total Refined Product Sales |
1,016 |
|
|
992 |
|
|
981 |
|
|
952 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (j) |
$ |
5,641 |
|
|
$ |
6,817 |
|
|
$ |
15,434 |
|
|
$ |
19,867 |
|
Crude
oil resales and other |
257 |
|
|
172 |
|
|
710 |
|
|
780 |
|
Refining Revenues |
5,898 |
|
|
6,989 |
|
|
16,144 |
|
|
20,647 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding lower of cost or market adjustments) |
5,189 |
|
|
5,367 |
|
|
13,965 |
|
|
16,934 |
|
Lower
of cost or market adjustments (b) |
(20 |
) |
|
83 |
|
|
(236 |
) |
|
41 |
|
Refining cost of sales |
5,169 |
|
|
5,450 |
|
|
13,729 |
|
|
16,975 |
|
Gross
refining margin (k) |
729 |
|
|
1,539 |
|
|
2,415 |
|
|
3,672 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Manufacturing costs |
412 |
|
|
383 |
|
|
1,172 |
|
|
1,177 |
|
Other
operating expenses |
116 |
|
|
117 |
|
|
318 |
|
|
259 |
|
Selling, general and administrative expenses |
1 |
|
|
5 |
|
|
5 |
|
|
12 |
|
Depreciation and amortization expenses |
148 |
|
|
133 |
|
|
445 |
|
|
373 |
|
Loss on asset disposals and impairments |
- |
|
|
2 |
|
|
- |
|
|
8 |
|
Segment Operating Income |
$ |
52 |
|
|
$ |
899 |
|
|
$ |
475 |
|
|
$ |
1,843 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($/throughput barrel) (l) (m) |
$ |
9.08 |
|
|
$ |
19.43 |
|
|
$ |
10.75 |
|
|
$ |
17.22 |
|
Manufacturing Cost before Depreciation and Amortization Expenses
($/throughput barrel) (l) |
$ |
5.11 |
|
|
$ |
4.84 |
|
|
$ |
5.22 |
|
|
$ |
5.53 |
|
(h) We define heavy
crude oil as crude oil with an American Petroleum Institute gravity
of 24 degrees or less.
(i) Sources of total refined product sales
include refined products manufactured at our refineries and refined
products purchased from third parties.
(j) Refined product sales include intersegment
sales to our Marketing segment of $3.6 billion and $4.5 billion for
the three months ended September 30, 2016 and 2015,
respectively, and $10.2 billion and $12.8 billion for the nine
months ended September 30, 2016 and 2015,
respectively.
(k) Gross refining margin approximates total
refining throughput multiplied by the gross refining margin per
barrel. Consolidated gross refining margin combines gross refining
margin for each of our regions adjusted for other amounts not
directly attributable to a specific region. Gross refining margin
includes the effect of intersegment sales to the Marketing segment
and services provided by TLLP. Gross refining margin reflects the
incremental expense or benefit associated with the LCM adjustments
for all periods presented.
(l) Management uses various measures to evaluate
performance and efficiency and to compare profitability to other
companies in the industry, including gross refining margin per
barrel, manufacturing costs before depreciation and amortization
expenses ("Manufacturing Costs") per barrel. We calculate gross
refining margin per barrel by dividing gross refining margin
(revenues for manufactured refined products sold less costs of
feedstocks, purchased refined products, transportation and
distribution) by total refining throughput. We calculate
Manufacturing Costs per barrel by dividing Manufacturing Costs by
total refining throughput.
(m) Gross refining margin per throughput barrel on a
consolidated and regional basis includes the incremental expense or
benefit associated with the LCM adjustments for all periods
presented.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited)
(dollars in millions, except per barrel amounts)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
Refining By Region |
2016 |
|
2015 |
|
2016 |
|
2015 |
California (Martinez and Los
Angeles) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy
crude (h) |
177 |
|
|
172 |
|
|
170 |
|
|
144 |
|
Light
crude |
321 |
|
|
328 |
|
|
301 |
|
|
313 |
|
Other feedstocks |
35 |
|
|
34 |
|
|
33 |
|
|
37 |
|
Total Throughput |
533 |
|
|
534 |
|
|
504 |
|
|
494 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
297 |
|
|
279 |
|
|
293 |
|
|
265 |
|
Diesel
fuel |
120 |
|
|
111 |
|
|
107 |
|
|
98 |
|
Jet
fuel |
79 |
|
|
76 |
|
|
71 |
|
|
76 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
86 |
|
|
109 |
|
|
78 |
|
|
94 |
|
Total Yield |
582 |
|
|
575 |
|
|
549 |
|
|
533 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (j) |
$ |
3,680 |
|
|
$ |
4,525 |
|
|
$ |
10,358 |
|
|
$ |
13,501 |
|
Crude oil resales and other (n) |
55 |
|
|
94 |
|
|
157 |
|
|
233 |
|
Regional Revenue |
3,735 |
|
|
4,619 |
|
|
10,515 |
|
|
13,734 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding LCM) (n) |
3,292 |
|
|
3,547 |
|
|
9,076 |
|
|
11,296 |
|
LCM |
(10 |
) |
|
56 |
|
|
(154 |
) |
|
26 |
|
Regional Cost of Sales |
3,282 |
|
|
3,603 |
|
|
8,922 |
|
|
11,322 |
|
Gross
refining margin (k) |
453 |
|
|
1,016 |
|
|
1,593 |
|
|
2,412 |
|
Expenses |
|
|
|
|
|
|
|
Manufacturing costs |
285 |
|
|
284 |
|
|
823 |
|
|
851 |
|
Other
operating expenses |
57 |
|
|
78 |
|
|
152 |
|
|
164 |
|
Selling, general and administrative expenses |
1 |
|
|
5 |
|
|
4 |
|
|
11 |
|
Depreciation and amortization expenses |
95 |
|
|
88 |
|
|
285 |
|
|
249 |
|
Loss
on asset disposals and impairments |
- |
|
|
1 |
|
|
- |
|
|
3 |
|
Operating Income |
$ |
15 |
|
|
$ |
560 |
|
|
$ |
329 |
|
|
$ |
1,134 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($/throughput barrel) (l) (m) |
$ |
9.24 |
|
|
$ |
20.68 |
|
|
$ |
11.54 |
|
|
$ |
17.88 |
|
Manufacturing Cost before Depreciation and Amortization Expenses
($/throughput barrel) (l) |
$ |
5.79 |
|
|
$ |
5.79 |
|
|
$ |
5.97 |
|
|
$ |
6.32 |
|
Capital Expenditures |
$ |
91 |
|
|
$ |
85 |
|
|
$ |
244 |
|
|
$ |
198 |
|
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions, except per barrel amounts)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Pacific Northwest (Washington and
Alaska) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy
crude (h) |
9 |
|
|
6 |
|
|
6 |
|
|
6 |
|
Light
crude |
171 |
|
|
177 |
|
|
161 |
|
|
147 |
|
Other feedstocks |
11 |
|
|
9 |
|
|
11 |
|
|
15 |
|
Total Throughput |
191 |
|
|
192 |
|
|
178 |
|
|
168 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
79 |
|
|
84 |
|
|
79 |
|
|
74 |
|
Diesel
fuel |
37 |
|
|
41 |
|
|
34 |
|
|
31 |
|
Jet
fuel |
40 |
|
|
36 |
|
|
34 |
|
|
33 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
42 |
|
|
38 |
|
|
36 |
|
|
36 |
|
Total Yield |
198 |
|
|
199 |
|
|
183 |
|
|
174 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (j) |
$ |
1,146 |
|
|
$ |
1,332 |
|
|
$ |
2,934 |
|
|
$ |
3,771 |
|
Crude oil resales and other (n) |
89 |
|
|
53 |
|
|
175 |
|
|
314 |
|
Regional Revenue |
1,235 |
|
|
1,385 |
|
|
3,109 |
|
|
4,085 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding LCM) (n) |
1,117 |
|
|
1,129 |
|
|
2,778 |
|
|
3,434 |
|
LCM |
(8 |
) |
|
18 |
|
|
(60 |
) |
|
10 |
|
Regional Cost of Sales |
1,109 |
|
|
1,147 |
|
|
2,718 |
|
|
3,444 |
|
Gross
refining margin (k) |
126 |
|
|
238 |
|
|
391 |
|
|
641 |
|
Expenses |
|
|
|
|
|
|
|
Manufacturing costs |
69 |
|
|
59 |
|
|
190 |
|
|
181 |
|
Other
operating expenses |
16 |
|
|
20 |
|
|
43 |
|
|
48 |
|
Selling, general and administrative expenses |
- |
|
|
- |
|
|
1 |
|
|
- |
|
Depreciation and amortization expenses |
24 |
|
|
24 |
|
|
69 |
|
|
64 |
|
Loss
on asset disposals and impairments |
- |
|
|
1 |
|
|
- |
|
|
1 |
|
Operating Income |
$ |
17 |
|
|
$ |
134 |
|
|
$ |
88 |
|
|
$ |
347 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($/throughput barrel) (l) (m) |
$ |
7.17 |
|
|
$ |
13.47 |
|
|
$ |
8.02 |
|
|
$ |
13.98 |
|
Manufacturing Cost before Depreciation and Amortization Expenses
($/throughput barrel) (l) |
$ |
3.87 |
|
|
$ |
3.35 |
|
|
$ |
3.87 |
|
|
$ |
3.97 |
|
Capital Expenditures |
$ |
29 |
|
|
$ |
32 |
|
|
$ |
95 |
|
|
$ |
87 |
|
(n) Certain of our foreign
operations that are typically reported with our Pacific Northwest
region were erroneously reported in our California region during
the three and six months ended June 30, 2016 and 2015 with no
impact on regional or consolidated gross refining margins presented
for those periods. For the three and nine month periods ended
September 30, 2016 and 2015 presented above, those foreign
operations are reported in the correct regions impacting
comparability period over period.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions, except per barrel amounts)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Mid-Continent (North Dakota and
Utah) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Light
crude |
144 |
|
|
130 |
|
|
133 |
|
|
115 |
|
Other feedstocks |
5 |
|
|
5 |
|
|
5 |
|
|
4 |
|
Total Throughput |
149 |
|
|
135 |
|
|
138 |
|
|
119 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
79 |
|
|
75 |
|
|
77 |
|
|
66 |
|
Diesel
fuel |
45 |
|
|
43 |
|
|
42 |
|
|
37 |
|
Jet
fuel |
14 |
|
|
10 |
|
|
12 |
|
|
10 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
15 |
|
|
11 |
|
|
12 |
|
|
10 |
|
Total Yield |
153 |
|
|
139 |
|
|
143 |
|
|
123 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (j) |
$ |
815 |
|
|
$ |
960 |
|
|
$ |
2,142 |
|
|
$ |
2,595 |
|
Crude oil resales and other |
113 |
|
|
25 |
|
|
378 |
|
|
233 |
|
Regional Revenue |
928 |
|
|
985 |
|
|
2,520 |
|
|
2,828 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding LCM) |
780 |
|
|
691 |
|
|
2,111 |
|
|
2,204 |
|
LCM |
(2 |
) |
|
9 |
|
|
(22 |
) |
|
5 |
|
Regional Cost of Sales |
778 |
|
|
700 |
|
|
2,089 |
|
|
2,209 |
|
Gross
refining margin (k) |
150 |
|
|
285 |
|
|
431 |
|
|
619 |
|
Expenses |
|
|
|
|
|
|
|
Manufacturing costs |
58 |
|
|
40 |
|
|
159 |
|
|
145 |
|
Other
operating expenses |
43 |
|
|
19 |
|
|
123 |
|
|
47 |
|
Selling, general and administrative expenses |
- |
|
|
- |
|
|
- |
|
|
1 |
|
Depreciation and amortization expenses |
29 |
|
|
21 |
|
|
91 |
|
|
60 |
|
Loss
on asset disposals and impairments |
- |
|
|
- |
|
|
- |
|
|
4 |
|
Operating Income |
$ |
20 |
|
|
$ |
205 |
|
|
$ |
58 |
|
|
$ |
362 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($/throughput barrel) (l) (m) |
$ |
10.94 |
|
|
$ |
22.95 |
|
|
$ |
11.40 |
|
|
$ |
19.05 |
|
Manufacturing Cost before Depreciation and Amortization Expenses
($/throughput barrel) (l) |
$ |
4.27 |
|
|
$ |
3.19 |
|
|
$ |
4.21 |
|
|
$ |
4.45 |
|
Capital Expenditures |
$ |
33 |
|
|
$ |
35 |
|
|
$ |
70 |
|
|
$ |
198 |
|
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited)
(dollars in millions, except per barrel and MMBtu amounts)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
TLLP SEGMENT |
2016 |
|
2015 |
|
2016 |
|
2015 |
Gathering |
|
|
|
|
|
|
|
Gas
gathering throughput (thousands of MMBtu/day) (o) |
887 |
|
|
1,115 |
|
|
881 |
|
|
1,069 |
|
Average gas gathering revenue per MMBtu (o) |
$ |
0.48 |
|
|
$ |
0.45 |
|
|
$ |
0.51 |
|
|
$ |
0.44 |
|
Crude
oil gathering pipeline throughput (Mbpd) |
206 |
|
|
199 |
|
|
210 |
|
|
182 |
|
Average crude oil gathering pipeline revenue per barrel |
$ |
1.71 |
|
|
$ |
1.71 |
|
|
$ |
1.73 |
|
|
$ |
1.77 |
|
Crude
oil trucking volume (Mbpd) |
32 |
|
|
34 |
|
|
30 |
|
|
42 |
|
Average crude oil trucking revenue per barrel |
$ |
3.25 |
|
|
$ |
3.14 |
|
|
$ |
3.26 |
|
|
$ |
3.24 |
|
Processing |
|
|
|
|
|
|
|
NGLs
processing throughput (Mbpd) |
6.7 |
|
|
7.8 |
|
|
7.4 |
|
|
7.5 |
|
Average keep-whole fee per barrel of NGLs |
$ |
38.35 |
|
|
$ |
35.75 |
|
|
$ |
36.58 |
|
|
$ |
34.26 |
|
Fee-based processing throughput (thousands of MMBtu/
day) |
625 |
|
|
767 |
|
|
648 |
|
|
742 |
|
Average fee-based processing revenue per MMBtu |
$ |
0.50 |
|
|
$ |
0.39 |
|
|
$ |
0.45 |
|
|
$ |
0.40 |
|
Terminalling and Transportation |
|
|
|
|
|
|
|
Terminalling throughput (Mbpd) |
1,023 |
|
|
964 |
|
|
998 |
|
|
932 |
|
Average terminalling revenue per barrel |
$ |
1.33 |
|
|
$ |
1.05 |
|
|
$ |
1.27 |
|
|
$ |
1.08 |
|
Pipeline transportation throughput (Mbpd) |
908 |
|
|
838 |
|
|
866 |
|
|
819 |
|
Average pipeline transportation revenue per barrel |
$ |
0.38 |
|
|
$ |
0.40 |
|
|
$ |
0.39 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
Segment Operating Income |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Gathering |
|
|
|
|
|
|
|
Gas
gathering |
$ |
39 |
|
|
$ |
46 |
|
|
$ |
122 |
|
|
$ |
128 |
|
Crude
oil gathering pipeline |
33 |
|
|
31 |
|
|
100 |
|
|
88 |
|
Crude
oil trucking |
9 |
|
|
10 |
|
|
27 |
|
|
37 |
|
Other |
1 |
|
|
- |
|
|
6 |
|
|
- |
|
Processing |
|
|
|
|
|
|
|
NGLs
processing |
23 |
|
|
26 |
|
|
74 |
|
|
71 |
|
Fee-based processing |
29 |
|
|
28 |
|
|
80 |
|
|
81 |
|
Other
processing |
17 |
|
|
17 |
|
|
54 |
|
|
53 |
|
Terminalling and transportation |
|
|
|
|
|
|
|
Terminalling |
125 |
|
|
93 |
|
|
345 |
|
|
275 |
|
Pipeline transportation |
32 |
|
|
31 |
|
|
93 |
|
|
87 |
|
TLLP
Revenues (p) |
308 |
|
|
282 |
|
|
901 |
|
|
820 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses (q) |
104 |
|
|
103 |
|
|
313 |
|
|
294 |
|
General and administrative expenses (r) |
24 |
|
|
28 |
|
|
70 |
|
|
81 |
|
Depreciation and amortization expenses |
45 |
|
|
45 |
|
|
134 |
|
|
133 |
|
Gain
on asset disposals and impairments |
2 |
|
|
- |
|
|
3 |
|
|
- |
|
Segment Operating Income |
$ |
133 |
|
|
$ |
106 |
|
|
$ |
381 |
|
|
$ |
312 |
|
(o) Prior to the
deconsolidation of Rendezvous Gas Services, L.L.C. ("RGS") as of
January 1, 2016, fees paid by TLLP to RGS were eliminated upon
consolidation and third-party transactions, including revenue and
throughput volumes, were included in TLLP's results of operations.
Third party volumes associated with RGS, included in gas gathering
volume for the three and nine months ended September 30, 2015,
were 142 thousand and 145 thousand MMBtu/d and reduced our average
gas gathering revenue per MMBtu for both periods by
$0.05.
(p) TLLP segment revenues from services provided to our
Refining segment were $184 million and $152 million for the three
months ended September 30, 2016 and 2015, respectively, and
$521 million and $454 million for the nine months ended
September 30, 2016 and 2015, respectively. These amounts are
eliminated upon consolidation.
(q) TLLP segment operating expenses include amounts
billed by Tesoro for services provided to TLLP under various
operational contracts. Amounts billed by Tesoro totaled $40 million
and $33 million for the three months ended September 30, 2016
and 2015, respectively, and $113 million and $93 million for the
nine months ended September 30, 2016 and 2015, respectively.
Operating expenses also include imbalance gains and reimbursements
pursuant to the Amended Omnibus Agreement of $5 million and $12
million for the three months ended September 30, 2016 and
2015, respectively, and $17 million and $31 million for the nine
months ended September 30, 2016 and 2015, respectively. These
amounts are eliminated upon consolidation. TLLP segment third-party
operating expenses related to the transportation of crude oil and
refined products related to Tesoro's sale of those refined products
during the ordinary course of business are reclassified to cost of
sales in our condensed statements of consolidated operations upon
consolidation.
(r) TLLP segment general and administrative
expenses include amounts charged by Tesoro for general and
administrative services provided to TLLP under various operational
and administrative contracts. These amounts totaled $18 million and
$16 million for the three months ended September 30, 2016 and
2015, respectively, and $51 million for both the nine months ended
September 30, 2016 and 2015, respectively, and are eliminated
upon consolidation. General and administrative expenses are
reclassified to cost of sales as it relates to Tesoro's sale of
refined products in our condensed statements of consolidated
operations upon consolidation.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited)
(dollars in millions, except cents per gallon)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
MARKETING SEGMENT |
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
|
|
|
|
|
|
|
Fuel |
$ |
4,118 |
|
|
$ |
5,144 |
|
|
$ |
11,493 |
|
|
$ |
14,143 |
|
Other non-fuel |
23 |
|
|
16 |
|
|
65 |
|
|
48 |
|
Total
Revenues |
4,141 |
|
|
5,160 |
|
|
11,558 |
|
|
14,191 |
|
Cost of Sales |
|
|
|
|
|
|
|
Fuel |
3,773 |
|
|
4,684 |
|
|
10,612 |
|
|
13,192 |
|
Other non-fuel |
5 |
|
|
- |
|
|
13 |
|
|
3 |
|
Total
Cost of Sales |
3,778 |
|
|
4,684 |
|
|
10,625 |
|
|
13,195 |
|
Gross Margin |
|
|
|
|
|
|
|
Fuel
(s) |
345 |
|
|
460 |
|
|
881 |
|
|
951 |
|
Other non-fuel |
18 |
|
|
16 |
|
|
52 |
|
|
45 |
|
Total
Gross Margins |
363 |
|
|
476 |
|
|
933 |
|
|
996 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses |
73 |
|
|
82 |
|
|
221 |
|
|
223 |
|
Selling, general and administrative expenses |
5 |
|
|
3 |
|
|
12 |
|
|
12 |
|
Depreciation and amortization expenses |
12 |
|
|
11 |
|
|
36 |
|
|
34 |
|
Loss on asset disposals and impairments |
- |
|
|
1 |
|
|
3 |
|
|
3 |
|
Segment Operating Income |
$ |
273 |
|
|
$ |
379 |
|
|
$ |
661 |
|
|
$ |
724 |
|
|
|
|
|
|
|
|
|
Fuel
Sales (millions of gallons) |
2,311 |
|
|
2,249 |
|
|
6,698 |
|
|
6,408 |
|
Fuel
Margin (¢/gallon) (s) |
14.9 |
¢ |
|
20.5 |
¢ |
|
13.2 |
¢ |
|
14.8 |
¢ |
|
|
|
|
|
|
|
|
Number of Branded Stations (at the end of the
period) |
|
|
|
|
|
|
|
MSO
operated |
|
|
|
|
590 |
|
|
579 |
|
Jobber/Dealer operated |
|
|
|
|
1,877 |
|
|
1,710 |
|
Total Stations |
|
|
|
|
2,467 |
|
|
2,289 |
|
(s) Management
uses fuel margin per gallon to compare fuel results to other
companies in the industry. There are a variety of ways to calculate
fuel margin per gallon and different companies may calculate it in
different ways. We calculate fuel margin per gallon by dividing
fuel gross margin by fuel sales volumes. Fuel margin and fuel
margin per gallon include the effect of intersegment purchases from
the Refining segment.
TESORO
CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (in millions)
|
Northern California
Assets Acquisition |
Reconciliation of Projected Net Earnings to
Projected Annual EBITDA: |
|
Projected net earnings |
$ 28 -
33 |
Add:
Depreciation and amortization expenses |
8 |
|
Add:
Interest and financing costs, net |
9 |
|
Expected Annual EBITDA |
$ 45 - 50 |
|
TLLP 2017 Annual Expected Segment
EBITDA |
Reconciliation of Projected Operating Income to
Projected Annual Segment EBITDA: |
|
Projected operating income |
$ |
820 |
|
Add:
Depreciation and amortization expenses |
180 |
|
Projected Annual Segment EBITDA |
$ |
1,000 |
|
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Tesoro Corporation via Globenewswire
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