-
Net earnings from continuing operations of $418
million, or $3.47 per diluted share, consolidated net earnings of
$449 million and EBITDA of $956 million, all include a pre-tax
benefit of $363 million related to lower of cost or market
inventory adjustment
-
Logistics operating income grew 20%
year-over-year to $125 million
-
Successfully raised approximately $1 billion of
debt and equity in Tesoro Logistics primarily to fund acquisitions
from Tesoro and future growth
-
Closed acquisition of Flint Hills Resources
wholesale marketing and logistics assets in Alaska
-
Closed acquisition of Dakota Prairie Refining,
LLC in North Dakota
-
Increased the quarterly cash dividend by 10% to
$0.55 per share
SAN ANTONIO -
August 3, 2016 - Tesoro Corporation (NYSE:TSO) today
reported second quarter net earnings from continuing operations of
$418 million, or $3.47 per diluted share compared to net earnings
from continuing operations of $586 million, or $4.62 per diluted
share a year ago. Consolidated net earnings were $449 million for
the second quarter 2016 compared to $620 million for the same
period last year. EBITDA for the second quarter of 2016 was $956
million compared to $1.2 billion last year. Second quarter 2016
earnings and EBITDA include a pre-tax benefit of $363 million ($220
million(a) after-tax)
related to a lower of cost or market (LCM) inventory
adjustment.
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
($ in millions, except per share data) |
2016 |
|
2015 |
|
2016 |
|
2015 |
Operating Income |
|
|
|
|
|
|
|
Refining |
$ |
520 |
|
|
$ |
757 |
|
|
$ |
420 |
|
|
$ |
942 |
|
TLLP |
125 |
|
|
104 |
|
|
251 |
|
|
208 |
|
Marketing |
161 |
|
|
212 |
|
|
388 |
|
|
345 |
|
Total Segment Operating Income |
$ |
806 |
|
|
$ |
1,073 |
|
|
$ |
1,059 |
|
|
$ |
1,495 |
|
Net
Earnings From Continuing Operations Attributable to
Tesoro |
$ |
418 |
|
|
$ |
586 |
|
|
$ |
476 |
|
|
$ |
731 |
|
|
|
|
|
|
|
|
|
Diluted EPS - Continuing Operations |
$ |
3.47 |
|
|
$ |
4.62 |
|
|
$ |
3.94 |
|
|
$ |
5.77 |
|
Diluted EPS - Discontinued Operations |
- |
|
|
(0.03 |
) |
|
0.09 |
|
|
(0.03 |
) |
Total Diluted EPS |
$ |
3.47 |
|
|
$ |
4.59 |
|
|
$ |
4.03 |
|
|
$ |
5.74 |
|
"Tesoro's integrated business
model continues to perform well, even with the Tesoro Index 6%
lower this quarter compared to the average of 2014 and 2015," said
Greg Goff, Chairman and CEO. "We continue to focus on driving
sustainable improvements to the business and growing Logistics and
Marketing to further enhance shareholder value."
For the second quarter, the
Company recorded segment operating income of $806 million compared
to segment operating income of $1.1 billion in the second quarter
of 2015. Second quarter 2016 results reflect lower operating income
in Refining and Marketing, offset by continued growth in
Logistics.
Tesoro previously provided
adjusted EBITDA, adjusted earnings and certain other metrics
including special adjustments for unusual items impacting quarterly
results. The Company decided to limit its disclosures of
non-GAAP financial measures to EBITDA (which has been revised to
include discontinued operations), segment EBITDA and debt to
capitalization, excluding Tesoro Logistics LP (NTSE:TLLP). The
Company also adjusted the presentation of certain items to conform
to recent guidance regarding non-GAAP measures. Tesoro will
continue to highlight significant items impacting quarterly results
in its earnings releases and quarterly SEC filings to facilitate
analysis of its results.
SEGMENT
RESULTS
REFINING. Refining operating income was $520
million for the second quarter 2016 compared to $757 million in
2015 and segment EBITDA was $692 million compared to $880 million
in 2015. The Tesoro Index(b) was $13.93
per barrel for the second quarter with a gross refining margin of
$15.70 per barrel or 113% capture of the Tesoro Index, compared to
a gross refining margin of $19.13 per barrel or 89% capture of the
Tesoro Index of $21.61 per barrel last year. Second quarter 2016
gross refining margin and segment EBITDA include a pre-tax benefit
of $363 million related to a LCM inventory adjustment. Total
refinery throughput for the quarter was 802 thousand barrels per
day, or 92% utilization. Manufacturing costs in the second quarter
of 2016 decreased $0.57 per barrel over last year to $5.01 per
barrel, due to a combination of higher throughput in 2016 and a
decline in natural gas prices. Throughput and capture rates in the
second quarter were impacted by an extension of planned maintenance
in the Kenai, Alaska refinery and unplanned unit downtime within
our California region.
LOGISTICS.
Logistics operating income increased to $125 million in the second
quarter 2016 from $104 million in 2015 and segment EBITDA increased
to $172 million from $149 million last year. This performance was
driven by volume growth in TLLP's crude oil gathering and natural
gas gathering and processing businesses as well as contributions
from the LA Storage and Handling Assets acquisition. Year-to-date,
TLLP has seen volume growth of approximately 23% in crude oil
pipeline gathering volumes, 5% in NGL processing throughput, 4% in
terminalling throughput and 4% in pipeline transportation volumes
over the same period last year.
MARKETING.
Marketing operating income was $161 million compared to $212
million a year ago and segment EBITDA was $173 million compared to
$223 million a year ago. In the quarter, the Company experienced
lower overall margins but continued to see high consumer demand and
growth in the branded network of retail stations. Total stations in
second quarter grew 8% over the same period last year. The
year-over-year decline in operating income was impacted by fuel
margins which declined to 10.5 cents per gallon from 13.7 cents per
gallon a year ago.
CORPORATE AND
OTHER
Corporate and unallocated costs for the second quarter 2016 were
$88 million. The effective tax rate was 34.5% for the quarter.
BALANCE SHEET AND
CASH FLOW
Tesoro ended the second quarter with $1.1 billion in cash and cash
equivalents compared to $942 million at the end of 2015. Tesoro has
$2.1 billion of availability under the Company's revolving credit
facility. Total debt, net of unamortized issuance costs, was $4.5
billion or 36% of total capitalization at the end of the second
quarter. Excluding TLLP debt and equity, total debt was $1.3
billion or 19% of total capitalization.
Capital spending for the second
quarter was $167 million for Tesoro and $42 million for TLLP.
Turnaround expenditures for the second quarter were $191
million.
The Company repurchased 1.3
million shares for approximately $100 million in the second quarter
and has $1.3 billion remaining under its previously approved share
repurchase programs. Tesoro is well positioned to continue to
execute its financial priorities of investing in high-return
capital projects, returning cash to shareholders and maintaining a
strong balance sheet.
Tesoro today announced that the
board of directors has increased the quarterly cash dividend by 10%
to $0.55 per share payable on September 15, 2016, to all
holders of record as of August 31, 2016.
STRATEGIC
UPDATE
In June, Tesoro closed the acquisition of Flint Hills Resources
wholesale marketing and logistics assets in Anchorage and
Fairbanks, Alaska. This acquisition enhances the Company's
capabilities to efficiently and reliably serve customers in the
state of Alaska. In addition, the Company acquired Dakota Prairie
Refining, LLC, which owns a refinery near Dickinson, North
Dakota, with strategic access to Bakken crude oil and is located
just 100 miles west of the Tesoro Mandan Refinery. Tesoro plans to
continue to market the ultra-low sulfur diesel to local customers
and utilize the naphtha and resid in its integrated value chain
system.
On July 1, 2016, Tesoro
executed an agreement for the sale of storage and terminalling
assets in Alaska to TLLP for a total consideration of $444 million.
The Alaska Storage and Terminalling Assets include crude oil,
feedstock and refined product storage tanks in Kenai, Alaska and
refined product terminals in Anchorage and Fairbanks. The first
phase, the storage portion of the acquisition, closed on
July 1, 2016. The second phase, the acquisition of the
Anchorage and Fairbanks terminals, is expected to close in the
third quarter once the Consent Decree with the State of Alaska
becomes effective. The Consent Decree is related to Tesoro's
acquisition of certain Flint Hills Resources Alaska assets, which
closed on June 20, 2016. The total acquisition price of $444
million includes cash proceeds to Tesoro of $400 million and the
issuance of common and general partner units to Tesoro, valued at
approximately $44 million.
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 $0.11 to $0.14 per gallon, crude oil differentials
reflecting transportation costs and year-over-year improvements
from higher utilization and operational efficiencies of $500 to
$600 million. Through the first half 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. Refining
utilization is at the low end of the Company's expectations,
primarily due to unplanned maintenance and, as a result, Tesoro now
expects year-over-year improvements from higher utilization and
operational efficiencies of $400 to $500 million.
In addition, 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. Tesoro remains confident in delivering these annual
improvements to operating income. Through the first half of the
year, estimated Refining improvements are trending towards the high
end of the range, Marketing improvements are on track with full
year expectations and estimated Logistics improvements are tracking
slightly below the range, primarily attributable to slower than
expected organic growth due to the weak commodity price
environment.
PUBLIC INVITED TO LISTEN TO
ANALYST AND INVESTOR CONFERENCE CALL
At 7:30 a.m. CT tomorrow morning, Tesoro will broadcast, live, its
conference call with analysts regarding second 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.
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 certain statements that are "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
concerning the ability of our integrated business model to continue
performing well, even in a challenging refining margin environment;
our ability to continue driving sustainable improvements to the
business and grow Logistics and Marketing to further enhance
shareholder value; our positioning and ability to continue
executing our financial priorities of investing in high-return
capital projects, returning cash to shareholders, and maintaining a
strong balance sheet; the ability of our recently acquired
wholesale marketing and logistics assets to enhance our
capabilities to efficiently and reliability serve customers in the
state of Alaska; our expectations to continue to market ultra-low
sulfur diesel to local customers from our recently acquired
refinery near Dickinson, North Dakota and utilize the naphtha and
residuals in our integrated value chain system; our expectations
regarding the sale of storage and terminalling assets in Alaska to
TLLP, including the timing of closing for the second phase of the
transaction; the impact of crude differentials on our capture
rates, refining profitability and other factors on our expectations
for 2016 and our revised expectations for year-over-year
improvements from higher utilization and operational efficiencies;
our ability to deliver anticipated annual improvements to operating
income in 2016 and the impact of the weak commodity price
environment on our targeted 2016 Logistics improvements;
expectations for throughput, manufacturing costs, depreciation,
corporate expense and interest expense in the third quarter of
2016; and our outlook for 2016 capital expenditures. For more
information concerning factors that could affect these statements
see our annual report on Form 10-K and quarterly reports on Form
10-Q, filed with the Securities and Exchange Commission. We
undertake no obligation to publicly release the result of any
revisions to any such forward-looking statements that may be made
to reflect events or circumstances that occur, or which we become
aware of, after the date hereof.
Contact:
Investors:
Sam Ramraj, Vice President, Investor Relations, (210) 626-4757
Media:
Tesoro Media Relations, media@tsocorp.com, (210) 626-7702
(a) After-tax amount
utilizes the marginal tax rate.
(b) 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
THIRD QUARTER 2016 GUIDANCE (Unaudited)
Throughput (Mbpd) |
|
California |
515 - 540 |
Pacific Northwest |
180 - 190 |
Mid-Continent |
140 - 155 |
Consolidated |
835 - 885 |
|
|
Manufacturing Cost ($/throughput barrel) |
|
California |
$5.40 - 5.65 |
Pacific Northwest |
$3.60 - 3.85 |
Mid-Continent |
$4.50 - 4.75 |
Consolidated |
$4.85 - 5.10 |
|
|
Corporate/System ($ millions) |
|
Refining depreciation |
$150 |
TLLP
depreciation |
$45 |
Corporate expense (before depreciation) |
$90 - 100 |
Interest expense (before interest income) |
$65 |
Noncontrolling Interest |
$40 - 45 |
2016 CAPITAL
OUTLOOK (Unaudited) (in millions)
|
2016 Capital Expenditures
Outlook |
Capital Expenditures |
|
Tesoro
Corporation |
$ |
700 |
|
Tesoro
Logistics LP |
270 |
|
Total Capital Expenditures |
$ |
970 |
|
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 expense
("EBITDA");
-
Segment EBITDA is defined as a segment's U.S.
GAAP operating income before depreciation and amortization expense
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 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 CONSOLIDATING BALANCE SHEETS (Unaudited)
(In millions)
|
June 30,
2016 |
|
December 31,
2015 |
ASSETS |
Current Assets |
|
|
|
Cash
and cash equivalents (TLLP: $682 and $16, respectively) |
$ |
1,121 |
|
|
$ |
942 |
|
Receivables, net of allowance for doubtful accounts |
1,065 |
|
|
792 |
|
Inventories (c) |
2,422 |
|
|
2,302 |
|
Prepayments and other current assets |
263 |
|
|
271 |
|
Total
Current Assets |
4,871 |
|
|
4,307 |
|
Net
Property, Plant and Equipment (TLLP: $3,086 and $3,450, respectively) |
9,642 |
|
|
9,541 |
|
Other
Noncurrent Assets (TLLP: $1,453 and $1,190, respectively) |
3,099 |
|
|
2,484 |
|
Total Assets |
$ |
17,612 |
|
|
$ |
16,332 |
|
|
|
|
|
LIABILITIES AND EQUITY |
Current Liabilities |
|
|
|
Accounts payable |
$ |
1,763 |
|
|
$ |
1,568 |
|
Other
current liabilities |
904 |
|
|
962 |
|
Total Current Liabilities |
2,667 |
|
|
2,530 |
|
Deferred Income Taxes |
1,353 |
|
|
1,222 |
|
Other
Noncurrent Liabilities |
889 |
|
|
773 |
|
Debt,
Net of Unamortized Issuance Costs (TLLP: $3,218 and $2,844, respectively) |
4,501 |
|
|
4,067 |
|
Equity |
8,202 |
|
|
7,740 |
|
Total Liabilities and Equity |
$ |
17,612 |
|
|
$ |
16,332 |
|
(c) We recorded
a lower of cost or market ("LCM") adjustment to cost of sales of
$143 million and $359 million at June 30, 2016 and
December 31, 2015, respectively, 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. We reverse any lower of cost or market reserve in
the subsequent period because the inventories are sold or used and
then perform a complete lower of cost or market assessment of
ending inventories at the end of each reporting period to determine
if a reserve is required.
TESORO CORPORATION
RESULTS OF CONSOLIDATED OPERATIONS (Unaudited) (In
millions, except per share amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
$ |
6,285 |
|
|
$ |
8,232 |
|
|
$ |
11,386 |
|
|
$ |
14,695 |
|
Costs and Expenses: |
|
|
|
|
|
|
|
Cost
of sales (excluding the lower of cost or market inventory valuation
adjustment) |
5,019 |
|
|
6,352 |
|
|
8,880 |
|
|
11,659 |
|
Lower
of cost or market inventory valuation adjustment (c) |
(363 |
) |
|
- |
|
|
(216 |
) |
|
(42 |
) |
Operating expenses |
606 |
|
|
601 |
|
|
1,222 |
|
|
1,178 |
|
Selling, general and administrative expenses (d) |
94 |
|
|
84 |
|
|
176 |
|
|
182 |
|
Depreciation and amortization expense |
210 |
|
|
182 |
|
|
422 |
|
|
361 |
|
Loss on asset disposals and impairments |
1 |
|
|
4 |
|
|
5 |
|
|
8 |
|
Operating Income |
718 |
|
|
1,009 |
|
|
897 |
|
|
1,349 |
|
Interest and financing costs, net |
(60 |
) |
|
(54 |
) |
|
(120 |
) |
|
(109 |
) |
Equity
in earnings of equity method investments |
3 |
|
|
2 |
|
|
5 |
|
|
3 |
|
Other income (expense), net (e) |
25 |
|
|
1 |
|
|
32 |
|
|
(1 |
) |
Earnings Before Income Taxes |
686 |
|
|
958 |
|
|
814 |
|
|
1,242 |
|
Income tax expense |
237 |
|
|
334 |
|
|
267 |
|
|
430 |
|
Net Earnings From Continuing Operations |
449 |
|
|
624 |
|
|
547 |
|
|
812 |
|
Earnings (Loss) from discontinued operations, net of
tax |
- |
|
|
(4 |
) |
|
11 |
|
|
(4 |
) |
Net Earnings |
449 |
|
|
620 |
|
|
558 |
|
|
808 |
|
Less: Net earnings from continuing operations attributable
to noncontrolling interest |
31 |
|
|
38 |
|
|
71 |
|
|
81 |
|
Net Earnings Attributable to Tesoro
Corporation |
$ |
418 |
|
|
$ |
582 |
|
|
$ |
487 |
|
|
$ |
727 |
|
Net Earnings (Loss) Attributable to Tesoro
Corporation: |
|
|
|
|
|
|
|
Continuing operations |
$ |
418 |
|
|
$ |
586 |
|
|
$ |
476 |
|
|
$ |
731 |
|
Discontinued operations |
- |
|
|
(4 |
) |
|
11 |
|
|
(4 |
) |
Total |
$ |
418 |
|
|
$ |
582 |
|
|
$ |
487 |
|
|
$ |
727 |
|
Net Earnings (Loss) Per Share - Basic: |
|
|
|
|
|
|
|
Continuing operations |
$ |
3.50 |
|
|
$ |
4.67 |
|
|
$ |
3.98 |
|
|
$ |
5.84 |
|
Discontinued operations |
- |
|
|
(0.03 |
) |
|
0.09 |
|
|
(0.03 |
) |
Total |
$ |
3.50 |
|
|
$ |
4.64 |
|
|
$ |
4.07 |
|
|
$ |
5.81 |
|
Weighted average common shares outstanding - Basic |
119.5 |
|
|
125.2 |
|
|
119.5 |
|
|
125.2 |
|
Net Earnings (Loss) Per Share - Diluted: |
|
|
|
|
|
|
|
Continuing operations |
$ |
3.47 |
|
|
$ |
4.62 |
|
|
$ |
3.94 |
|
|
$ |
5.77 |
|
Discontinued operations |
- |
|
|
(0.03 |
) |
|
0.09 |
|
|
(0.03 |
) |
Total |
$ |
3.47 |
|
|
$ |
4.59 |
|
|
$ |
4.03 |
|
|
$ |
5.74 |
|
Weighted average common shares outstanding - Diluted |
120.6 |
|
|
126.3 |
|
|
120.8 |
|
|
126.6 |
|
(d) Includes
stock-based compensation expense of $11 million and $7 million for
the three months ended June 30, 2016 and 2015, respectively,
and expense of $8 million and $35 million for the six months ended
June 30, 2016 and 2015, respectively. The significant impact
to stock-based compensation expense is primarily a result of
changes in Tesoro's stock price.
(e) Other income (expense), net for the three and six
months ended June 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 six months ended
June 30, 2016.
TESORO CORPORATION
SELECTED SEGMENT OPERATING DATA (Unaudited) (In
millions)
|
Three Months
Ended
June 30, |
|
Six Months
Ended
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Earnings Before Income Taxes |
|
|
|
|
|
|
|
Refining |
$ |
520 |
|
|
$ |
757 |
|
|
$ |
420 |
|
|
$ |
942 |
|
TLLP |
125 |
|
|
104 |
|
|
251 |
|
|
208 |
|
Marketing |
161 |
|
|
212 |
|
|
388 |
|
|
345 |
|
Total
Segment Operating Income |
806 |
|
|
1,073 |
|
|
1,059 |
|
|
1,495 |
|
Corporate and unallocated costs (d) |
(88 |
) |
|
(64 |
) |
|
(162 |
) |
|
(146 |
) |
Operating Income |
718 |
|
|
1,009 |
|
|
897 |
|
|
1,349 |
|
Interest and financing costs, net |
(60 |
) |
|
(54 |
) |
|
(120 |
) |
|
(109 |
) |
Equity
in earnings of equity method investments |
3 |
|
|
2 |
|
|
5 |
|
|
3 |
|
Other income (expenses), net |
25 |
|
|
1 |
|
|
32 |
|
|
(1 |
) |
Earnings Before Income Taxes |
$ |
686 |
|
|
$ |
958 |
|
|
$ |
814 |
|
|
$ |
1,242 |
|
Depreciation and Amortization Expense |
|
|
|
|
|
|
|
Refining |
$ |
148 |
|
|
$ |
121 |
|
|
$ |
298 |
|
|
$ |
240 |
|
TLLP |
44 |
|
|
44 |
|
|
88 |
|
|
88 |
|
Marketing |
12 |
|
|
11 |
|
|
24 |
|
|
23 |
|
Corporate |
6 |
|
|
6 |
|
|
12 |
|
|
10 |
|
Total Depreciation and Amortization Expense |
$ |
210 |
|
|
$ |
182 |
|
|
$ |
422 |
|
|
$ |
361 |
|
Segment EBITDA |
|
|
|
|
|
|
|
Refining |
$ |
692 |
|
|
$ |
880 |
|
|
$ |
741 |
|
|
$ |
1,180 |
|
TLLP |
172 |
|
|
149 |
|
|
352 |
|
|
300 |
|
Marketing |
173 |
|
|
223 |
|
|
412 |
|
|
368 |
|
Total Segment EBITDA |
$ |
1,037 |
|
|
$ |
1,252 |
|
|
$ |
1,505 |
|
|
$ |
1,848 |
|
Capital Expenditures |
|
|
|
|
|
|
|
Refining |
$ |
137 |
|
|
$ |
148 |
|
|
$ |
256 |
|
|
$ |
331 |
|
TLLP |
42 |
|
|
77 |
|
|
83 |
|
|
144 |
|
Marketing |
6 |
|
|
8 |
|
|
19 |
|
|
12 |
|
Corporate |
24 |
|
|
4 |
|
|
39 |
|
|
10 |
|
Total Capital Expenditures |
$ |
209 |
|
|
$ |
237 |
|
|
$ |
397 |
|
|
$ |
497 |
|
TESORO CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (In millions)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Reconciliation of Net Earnings to EBITDA |
|
|
|
|
|
|
|
Net earnings |
$ |
449 |
|
|
$ |
620 |
|
|
$ |
558 |
|
|
$ |
808 |
|
Depreciation and amortization expense |
210 |
|
|
182 |
|
|
422 |
|
|
361 |
|
Interest and financing costs, net |
60 |
|
|
54 |
|
|
120 |
|
|
109 |
|
Income tax expense |
237 |
|
|
334 |
|
|
267 |
|
|
430 |
|
EBITDA |
$ |
956 |
|
|
$ |
1,190 |
|
|
$ |
1,367 |
|
|
$ |
1,708 |
|
Reconciliation of Refining Operating Income to
Refining Segment EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
520 |
|
|
$ |
757 |
|
|
$ |
420 |
|
|
$ |
942 |
|
Depreciation and amortization expense |
148 |
|
|
121 |
|
|
298 |
|
|
240 |
|
Equity
in earnings (loss) of equity method investments |
- |
|
|
1 |
|
|
(2 |
) |
|
(1 |
) |
Other income (expense), net |
24 |
|
|
1 |
|
|
25 |
|
|
(1 |
) |
Segment EBITDA |
$ |
692 |
|
|
$ |
880 |
|
|
$ |
741 |
|
|
$ |
1,180 |
|
|
|
|
|
|
|
|
|
Reconciliation of TLLP Operating Income to TLLP
Segment EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
125 |
|
|
$ |
104 |
|
|
$ |
251 |
|
|
$ |
208 |
|
Depreciation and amortization expense |
44 |
|
|
44 |
|
|
88 |
|
|
88 |
|
Equity
in earnings of equity method investments |
3 |
|
|
1 |
|
|
7 |
|
|
4 |
|
Other income, net |
- |
|
|
- |
|
|
6 |
|
|
- |
|
Segment EBITDA |
$ |
172 |
|
|
$ |
149 |
|
|
$ |
352 |
|
|
$ |
300 |
|
|
|
|
|
|
|
|
|
Reconciliation of Marketing Operating Income to
Marketing Segment EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
161 |
|
|
$ |
212 |
|
|
$ |
388 |
|
|
$ |
345 |
|
Depreciation and amortization expense |
12 |
|
|
11 |
|
|
24 |
|
|
23 |
|
Segment EBITDA |
$ |
173 |
|
|
$ |
223 |
|
|
$ |
412 |
|
|
$ |
368 |
|
TESORO CORPORATION
OTHER SUMMARY FINANCIAL INFORMATION (Unaudited)
(In millions, except percentages)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Cash Flows From (Used in): |
|
|
|
|
|
|
|
Operating activities |
$ |
444 |
|
|
$ |
1,055 |
|
|
$ |
628 |
|
|
$ |
907 |
|
Investing activities |
(271 |
) |
|
(275 |
) |
|
(806 |
) |
|
(548 |
) |
Financing activities |
509 |
|
|
(261 |
) |
|
357 |
|
|
(381 |
) |
Increase (Decrease) in Cash and Cash Equivalents |
$ |
682 |
|
|
$ |
519 |
|
|
$ |
179 |
|
|
$ |
(22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016 |
|
December 31,
2015 |
Working capital (current assets less current liabilities) |
|
|
|
|
$ |
2,204 |
|
|
$ |
1,777 |
|
Total
market value of TLLP units held by Tesoro (f) |
|
|
|
|
$ |
1,607 |
|
|
$ |
1,633 |
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Cash distributions
received from TLLP (g): |
|
|
|
|
|
|
|
For common units
held |
$ |
27 |
|
|
$ |
19 |
|
|
$ |
52 |
|
|
$ |
38 |
|
For general
partner units held |
32 |
|
|
14 |
|
|
57 |
|
|
30 |
|
Total Cash
Distributions Received from TLLP |
$ |
59 |
|
|
$ |
33 |
|
|
$ |
109 |
|
|
$ |
68 |
|
TESORO CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (In millions)
|
June 30,
2016 |
|
December 31,
2015 |
Tesoro
consolidated debt (h) |
$ |
4,515 |
|
|
$ |
4,073 |
|
TLLP
debt (h) |
3,218 |
|
|
2,844 |
|
Tesoro Debt Excluding TLLP (h) |
$ |
1,297 |
|
|
$ |
1,229 |
|
|
|
|
|
Tesoro
consolidated equity |
$ |
8,202 |
|
|
$ |
7,740 |
|
Noncontrolling interest |
2,664 |
|
|
2,527 |
|
Tesoro Stockholder's Equity |
$ |
5,538 |
|
|
$ |
5,213 |
|
|
|
|
|
Tesoro
debt, net of unamortized issuance costs, to capitalization ratio
(h) |
36 |
% |
|
34 |
% |
Tesoro
debt, net of unamortized issuance costs, to capitalization ratio
excluding
TLLP and noncontrolling interest (h) |
19 |
% |
|
19 |
% |
(f) Represents
market value of the 32,445,115 common units held by Tesoro at both
June 30, 2016 and December 31, 2015. The market values
were $49.53 and $50.32 per unit based on the closing unit price at
June 30, 2016 and December 31, 2015,
respectively.
(g) Represents distributions received from TLLP during
the three and six months ended June 30, 2016 and 2015 on
common units and general partner units held by Tesoro.
(h) These amounts and calculations are shown net of
unamortized issuance costs.
TESORO CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions, except per barrel amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
REFINING SEGMENT |
2016 |
|
2015 |
|
2016 |
|
2015 |
Total Refining Segment |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy
crude (i) |
165 |
|
|
174 |
|
|
170 |
|
|
135 |
|
Light
crude |
586 |
|
|
542 |
|
|
574 |
|
|
544 |
|
Other feedstocks |
51 |
|
|
67 |
|
|
48 |
|
|
61 |
|
Total Throughput |
802 |
|
|
783 |
|
|
792 |
|
|
740 |
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
448 |
|
|
416 |
|
|
446 |
|
|
388 |
|
Diesel
fuel |
173 |
|
|
158 |
|
|
173 |
|
|
151 |
|
Jet
fuel |
101 |
|
|
118 |
|
|
108 |
|
|
118 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
134 |
|
|
144 |
|
|
118 |
|
|
130 |
|
Total Yield |
856 |
|
|
836 |
|
|
845 |
|
|
787 |
|
Refined Product Sales (Mbpd) (j) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
529 |
|
|
512 |
|
|
525 |
|
|
500 |
|
Diesel
fuel |
200 |
|
|
201 |
|
|
198 |
|
|
190 |
|
Jet
fuel |
141 |
|
|
152 |
|
|
138 |
|
|
155 |
|
Heavy fuel oils, residual products and other |
104 |
|
|
98 |
|
|
101 |
|
|
86 |
|
Total Refined Product Sales |
974 |
|
|
963 |
|
|
962 |
|
|
931 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (k) |
$ |
5,508 |
|
|
$ |
7,357 |
|
|
$ |
9,793 |
|
|
$ |
13,050 |
|
Crude
oil resales and other |
242 |
|
|
309 |
|
|
453 |
|
|
608 |
|
Refining Revenues |
5,750 |
|
|
7,666 |
|
|
10,246 |
|
|
13,658 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding lower of cost or market adjustments) |
4,967 |
|
|
6,303 |
|
|
8,776 |
|
|
11,567 |
|
Lower
of cost or market adjustments |
(363 |
) |
|
- |
|
|
(216 |
) |
|
(42 |
) |
Refining cost of sales |
4,604 |
|
|
6,303 |
|
|
8,560 |
|
|
11,525 |
|
Gross
refining margin (l) |
1,146 |
|
|
1,363 |
|
|
1,686 |
|
|
2,133 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Manufacturing costs |
365 |
|
|
397 |
|
|
760 |
|
|
794 |
|
Other
operating expenses |
111 |
|
|
81 |
|
|
204 |
|
|
144 |
|
Selling, general and administrative expenses |
2 |
|
|
4 |
|
|
4 |
|
|
7 |
|
Depreciation and amortization expense |
148 |
|
|
121 |
|
|
298 |
|
|
240 |
|
Loss on asset disposal and impairments |
- |
|
|
3 |
|
|
- |
|
|
6 |
|
Segment Operating Income |
$ |
520 |
|
|
$ |
757 |
|
|
$ |
420 |
|
|
$ |
942 |
|
Gross
Refining Margin ($/throughput barrel) (m) (n) |
$ |
15.70 |
|
|
$ |
19.13 |
|
|
$ |
11.70 |
|
|
$ |
15.93 |
|
Manufacturing Cost before Depreciation and Amortization Expense
($/throughput barrel) (m) |
$ |
5.01 |
|
|
$ |
5.58 |
|
|
$ |
5.28 |
|
|
$ |
5.93 |
|
(i) We define
heavy crude oil as crude oil with an American Petroleum Institute
gravity of 24 degrees or less.
(j) Sources of total refined product sales
include refined products manufactured at our refineries and refined
products purchased from third parties.
(k) Refined product sales include intersegment
sales to our marketing segment of $3.8 billion and $4.8 billion for
the three months ended June 30, 2016 and 2015, respectively,
and $6.8 billion and $8.5 billion for the six months ended
June 30, 2016 and 2015, respectively.
(l) Gross refining margin approximates total
refining throughput multiplied by the gross refining margin per
barrel. Consolidated gross refining margin combines gross refining
margin for each of our regions adjusted for other amounts not
directly attributable to a specific region. Gross refining margin
includes the effect of intersegment sales to the marketing segment
and services provided by TLLP. Gross refining margin reflects the
incremental expense or benefit associated with the LCM adjustments
for all periods presented.
(m) Management uses various measures to evaluate performance
and efficiency and to compare profitability to other companies in
the industry, including gross refining margin per barrel,
manufacturing costs before depreciation and amortization expense
("Manufacturing Costs") per barrel. We calculate gross refining
margin per barrel by dividing gross refining margin (revenues for
manufactured refined products sold less costs of feedstocks,
purchased refined products, transportation and distribution) by
total refining throughput. We calculate Manufacturing Costs per
barrel by dividing Manufacturing Costs by total refining
throughput.
(n) Gross refining margin per throughput barrel on a
consolidated and regional basis includes the incremental expense or
benefit associated with the LCM adjustments for all periods
presented.
TESORO CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions, except per barrel amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
Refining By Region |
2016 |
|
2015 |
|
2016 |
|
2015 |
California (Martinez and Los Angeles) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy
crude (i) |
160 |
|
|
169 |
|
|
166 |
|
|
129 |
|
Light
crude |
314 |
|
|
313 |
|
|
289 |
|
|
305 |
|
Other feedstocks |
39 |
|
|
41 |
|
|
32 |
|
|
39 |
|
Total Throughput |
513 |
|
|
523 |
|
|
487 |
|
|
473 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
301 |
|
|
290 |
|
|
291 |
|
|
258 |
|
Diesel
fuel |
103 |
|
|
101 |
|
|
100 |
|
|
92 |
|
Jet
fuel |
65 |
|
|
80 |
|
|
65 |
|
|
76 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
89 |
|
|
98 |
|
|
74 |
|
|
86 |
|
Total Yield |
558 |
|
|
569 |
|
|
530 |
|
|
512 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (k) |
$ |
3,731 |
|
|
$ |
5,100 |
|
|
$ |
6,678 |
|
|
$ |
8,976 |
|
Crude oil resales and other |
73 |
|
|
171 |
|
|
183 |
|
|
396 |
|
Regional Revenue |
3,804 |
|
|
5,271 |
|
|
6,861 |
|
|
9,372 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding LCM) |
3,298 |
|
|
4,314 |
|
|
5,866 |
|
|
8,006 |
|
LCM |
(235 |
) |
|
- |
|
|
(144 |
) |
|
(30 |
) |
Regional Cost of Sales |
3,063 |
|
|
4,314 |
|
|
5,722 |
|
|
7,976 |
|
Gross
refining margin (l) |
741 |
|
|
957 |
|
|
1,139 |
|
|
1,396 |
|
Expenses |
|
|
|
|
|
|
|
Manufacturing costs |
255 |
|
|
280 |
|
|
538 |
|
|
567 |
|
Other
operating expenses |
54 |
|
|
50 |
|
|
94 |
|
|
86 |
|
Selling, general and administrative expenses |
2 |
|
|
4 |
|
|
4 |
|
|
6 |
|
Depreciation and amortization expense |
98 |
|
|
82 |
|
|
191 |
|
|
161 |
|
Loss
on asset disposals and impairments |
- |
|
|
- |
|
|
- |
|
|
2 |
|
Operating Income |
$ |
332 |
|
|
$ |
541 |
|
|
$ |
312 |
|
|
$ |
574 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($/throughput barrel) (m) (n) |
$ |
15.85 |
|
|
$ |
20.10 |
|
|
$ |
12.83 |
|
|
$ |
16.27 |
|
Manufacturing Cost before Depreciation and Amortization Expense
($/throughput barrel) (m) |
$ |
5.47 |
|
|
$ |
5.89 |
|
|
$ |
6.07 |
|
|
$ |
6.62 |
|
Capital Expenditures |
$ |
77 |
|
|
$ |
59 |
|
|
$ |
153 |
|
|
$ |
114 |
|
TESORO CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions, except per barrel amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Pacific Northwest (Alaska &
Washington) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy
crude (i) |
5 |
|
|
5 |
|
|
4 |
|
|
6 |
|
Light
crude |
146 |
|
|
126 |
|
|
157 |
|
|
132 |
|
Other feedstocks |
7 |
|
|
23 |
|
|
11 |
|
|
18 |
|
Total Throughput |
158 |
|
|
154 |
|
|
172 |
|
|
156 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
75 |
|
|
71 |
|
|
80 |
|
|
70 |
|
Diesel
fuel |
29 |
|
|
23 |
|
|
32 |
|
|
25 |
|
Jet
fuel |
26 |
|
|
31 |
|
|
32 |
|
|
32 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
33 |
|
|
34 |
|
|
34 |
|
|
34 |
|
Total Yield |
163 |
|
|
159 |
|
|
178 |
|
|
161 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (k) |
$ |
1,006 |
|
|
$ |
1,386 |
|
|
$ |
1,788 |
|
|
$ |
2,439 |
|
Crude oil resales and other |
6 |
|
|
1 |
|
|
5 |
|
|
4 |
|
Regional Revenue |
1,012 |
|
|
1,387 |
|
|
1,793 |
|
|
2,443 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding LCM) |
901 |
|
|
1,147 |
|
|
1,580 |
|
|
2,048 |
|
LCM |
(85 |
) |
|
- |
|
|
(52 |
) |
|
(8 |
) |
Regional Cost of Sales |
816 |
|
|
1,147 |
|
|
1,528 |
|
|
2,040 |
|
Gross
refining margin (l) |
196 |
|
|
240 |
|
|
265 |
|
|
403 |
|
Expenses |
|
|
|
|
|
|
|
Manufacturing costs |
57 |
|
|
60 |
|
|
121 |
|
|
122 |
|
Other
operating expenses |
16 |
|
|
16 |
|
|
30 |
|
|
30 |
|
Selling, general and administrative expenses |
- |
|
|
- |
|
|
- |
|
|
- |
|
Depreciation and amortization expense |
22 |
|
|
20 |
|
|
45 |
|
|
40 |
|
Loss
on asset disposals and impairments |
- |
|
|
- |
|
|
- |
|
|
- |
|
Operating Income |
$ |
101 |
|
|
$ |
144 |
|
|
$ |
69 |
|
|
$ |
211 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($/throughput barrel) (m) (n) |
$ |
13.66 |
|
|
$ |
17.12 |
|
|
$ |
8.46 |
|
|
$ |
14.29 |
|
Manufacturing Cost before Depreciation and Amortization Expense
($/throughput barrel) (m) |
$ |
3.95 |
|
|
$ |
4.28 |
|
|
$ |
3.87 |
|
|
$ |
4.36 |
|
Capital Expenditures |
$ |
37 |
|
|
$ |
29 |
|
|
$ |
67 |
|
|
$ |
55 |
|
TESORO CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions, except per barrel amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Mid-Continent (North Dakota and Utah) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Light
crude |
126 |
|
|
103 |
|
|
128 |
|
|
107 |
|
Other feedstocks |
5 |
|
|
3 |
|
|
5 |
|
|
4 |
|
Total Throughput |
131 |
|
|
106 |
|
|
133 |
|
|
111 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
72 |
|
|
55 |
|
|
75 |
|
|
60 |
|
Diesel
fuel |
41 |
|
|
34 |
|
|
41 |
|
|
34 |
|
Jet
fuel |
10 |
|
|
7 |
|
|
11 |
|
|
10 |
|
Heavy fuel oils, residual products, internally produced
fuel and other |
12 |
|
|
12 |
|
|
10 |
|
|
10 |
|
Total Yield |
135 |
|
|
108 |
|
|
137 |
|
|
114 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Refined products (k) |
$ |
771 |
|
|
$ |
871 |
|
|
$ |
1,327 |
|
|
$ |
1,635 |
|
Crude oil resales and other |
163 |
|
|
137 |
|
|
265 |
|
|
208 |
|
Regional Revenue |
934 |
|
|
1,008 |
|
|
1,592 |
|
|
1,843 |
|
Cost of Sales |
|
|
|
|
|
|
|
Cost
of sales (excluding LCM) |
768 |
|
|
842 |
|
|
1,330 |
|
|
1,513 |
|
LCM |
(43 |
) |
|
- |
|
|
(20 |
) |
|
(4 |
) |
Regional Cost of Sales |
725 |
|
|
842 |
|
|
1,310 |
|
|
1,509 |
|
Gross
refining margin (l) |
209 |
|
|
166 |
|
|
282 |
|
|
334 |
|
Expenses |
|
|
|
|
|
|
|
Manufacturing costs |
53 |
|
|
57 |
|
|
101 |
|
|
105 |
|
Other
operating expenses |
41 |
|
|
15 |
|
|
80 |
|
|
28 |
|
Selling, general and administrative expenses |
- |
|
|
- |
|
|
- |
|
|
1 |
|
Depreciation and amortization expense |
28 |
|
|
19 |
|
|
62 |
|
|
39 |
|
Loss
on asset disposals and impairments |
- |
|
|
3 |
|
|
- |
|
|
4 |
|
Operating Income |
$ |
87 |
|
|
$ |
72 |
|
|
$ |
39 |
|
|
$ |
157 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($/throughput barrel) (m) (n) |
$ |
17.56 |
|
|
$ |
17.15 |
|
|
$ |
11.69 |
|
|
$ |
16.68 |
|
Manufacturing Cost before Depreciation and Amortization Expense
($/throughput barrel) (m) |
$ |
4.51 |
|
|
$ |
5.94 |
|
|
$ |
4.17 |
|
|
$ |
5.22 |
|
Capital Expenditures |
$ |
23 |
|
|
$ |
60 |
|
|
$ |
36 |
|
|
$ |
163 |
|
TESORO CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
TLLP SEGMENT |
2016 |
|
2015 |
|
2016 |
|
2015 |
Gathering |
|
|
|
|
|
|
|
Gas
gathering throughput (thousands of MMBtu/day) (o) |
854 |
|
|
1,071 |
|
|
878 |
|
|
1,046 |
|
Average gas gathering revenue per MMBtu (o) |
$ |
0.51 |
|
|
$ |
0.48 |
|
|
$ |
0.52 |
|
|
$ |
0.43 |
|
Crude
oil gathering pipeline throughput (Mbpd) |
208 |
|
|
187 |
|
|
212 |
|
|
173 |
|
Average crude oil gathering pipeline revenue per barrel |
$ |
1.72 |
|
|
$ |
1.71 |
|
|
$ |
1.74 |
|
|
$ |
1.80 |
|
Crude
oil gathering trucking volume (Mbpd) |
30 |
|
|
45 |
|
|
29 |
|
|
46 |
|
Average crude oil gathering trucking revenue per barrel |
$ |
3.30 |
|
|
$ |
3.32 |
|
|
$ |
3.27 |
|
|
$ |
3.28 |
|
Processing |
|
|
|
|
|
|
|
NGLs
processing throughput (Mbpd) |
7.4 |
|
|
7.8 |
|
|
7.8 |
|
|
7.4 |
|
Average keep-whole fee per barrel of NGLs |
$ |
36.60 |
|
|
$ |
35.14 |
|
|
$ |
35.81 |
|
|
$ |
33.60 |
|
Fee-based processing throughput (thousands of MMBtu/
day) |
645 |
|
|
768 |
|
|
660 |
|
|
729 |
|
Average fee-based processing revenue per MMBtu |
$ |
0.43 |
|
|
$ |
0.36 |
|
|
$ |
0.43 |
|
|
$ |
0.40 |
|
Terminalling and Transportation |
|
|
|
|
|
|
|
Terminalling throughput (Mbpd) |
994 |
|
|
913 |
|
|
950 |
|
|
916 |
|
Average terminalling revenue per barrel |
$ |
1.24 |
|
|
$ |
1.10 |
|
|
$ |
1.27 |
|
|
$ |
1.10 |
|
Pipeline transportation throughput (Mbpd) |
867 |
|
|
801 |
|
|
845 |
|
|
810 |
|
Average pipeline transportation revenue per barrel |
$ |
0.40 |
|
|
$ |
0.38 |
|
|
$ |
0.40 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
Segment Operating Income |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Gathering |
|
|
|
|
|
|
|
Gas
gathering |
$ |
40 |
|
|
$ |
46 |
|
|
$ |
83 |
|
|
$ |
82 |
|
Crude
oil gathering pipeline |
32 |
|
|
30 |
|
|
67 |
|
|
57 |
|
Crude
oil gathering trucking |
9 |
|
|
13 |
|
|
18 |
|
|
27 |
|
Other |
1 |
|
|
- |
|
|
5 |
|
|
- |
|
Processing |
|
|
|
|
|
|
|
NGLs
processing |
25 |
|
|
25 |
|
|
51 |
|
|
45 |
|
Fee-based processing |
25 |
|
|
24 |
|
|
51 |
|
|
53 |
|
Other
processing |
18 |
|
|
18 |
|
|
37 |
|
|
36 |
|
Terminalling and transportation |
|
|
|
|
|
|
|
Terminalling |
112 |
|
|
92 |
|
|
220 |
|
|
182 |
|
Pipeline transportation |
31 |
|
|
27 |
|
|
61 |
|
|
56 |
|
TLLP
Revenues (p) |
293 |
|
|
275 |
|
|
593 |
|
|
538 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses (q) |
102 |
|
|
99 |
|
|
207 |
|
|
189 |
|
General and administrative expenses (r) |
22 |
|
|
28 |
|
|
46 |
|
|
53 |
|
Depreciation and amortization expense |
44 |
|
|
44 |
|
|
88 |
|
|
88 |
|
Gain
on asset disposals and impairments |
- |
|
|
- |
|
|
1 |
|
|
- |
|
Segment Operating Income |
$ |
125 |
|
|
$ |
104 |
|
|
$ |
251 |
|
|
$ |
208 |
|
(o) Prior to TLLP's
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 its results of operations.
Third party volumes associated with RGS, included in gas gathering
volume for the three and six months ended June 30, 2015, were
both 146 thousand MMBtu/d and reduced our average gas gathering
revenue per MMBtu by $0.05 for each period. These volumes are no
longer included in TLLP operational data.
(p) TLLP segment revenues from services provided to our
refining segment were $168 million and $154 million for the three
months ended June 30, 2016 and 2015, respectively, and $337
million and $302 million for the six months ended June 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 $34 million
and $29 million for the three months ended June 30, 2016 and
2015, respectively, and $71 million and $58 million for the six
months ended June 30, 2016 and 2015, respectively. Operating
expenses also include imbalance gains and reimbursements pursuant
to the Amended Omnibus Agreement of $5 million and $11 million for
the three months ended June 30, 2016 and 2015, respectively,
and $12 million and $19 million for the six months ended
June 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 $16 million and
$18 million for the three months ended June 30, 2016 and 2015,
respectively, and $33 million and $35 million for the six months
ended June 30, 2016 and 2015, respectively, and are eliminated
upon consolidation. General and administrative expenses are
reclassified to cost of sales as it relates to Tesoro's sale of
refined products in our condensed statements of consolidated
operations upon consolidation.
TESORO CORPORATION
SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($
in millions, except cents per gallon)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
MARKETING SEGMENT |
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
|
|
|
|
|
|
|
Fuel |
$ |
4,077 |
|
|
$ |
5,051 |
|
|
$ |
7,375 |
|
|
$ |
8,999 |
|
Other non-fuel |
22 |
|
|
16 |
|
|
42 |
|
|
32 |
|
Total
Revenues |
4,099 |
|
|
5,067 |
|
|
7,417 |
|
|
9,031 |
|
Cost of Sales |
|
|
|
|
|
|
|
Fuel |
3,843 |
|
|
4,764 |
|
|
6,839 |
|
|
8,508 |
|
Other non-fuel |
4 |
|
|
1 |
|
|
8 |
|
|
3 |
|
Total
Cost of Sales |
3,847 |
|
|
4,765 |
|
|
6,847 |
|
|
8,511 |
|
Gross Margin |
|
|
|
|
|
|
|
Fuel
(s) |
234 |
|
|
287 |
|
|
536 |
|
|
491 |
|
Other non-fuel |
18 |
|
|
15 |
|
|
34 |
|
|
29 |
|
Total
Gross Margins |
252 |
|
|
302 |
|
|
570 |
|
|
520 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses |
76 |
|
|
72 |
|
|
148 |
|
|
141 |
|
Selling, general and administrative expenses |
2 |
|
|
6 |
|
|
7 |
|
|
9 |
|
Depreciation and amortization expense |
12 |
|
|
11 |
|
|
24 |
|
|
23 |
|
Loss on asset disposals and impairments |
1 |
|
|
1 |
|
|
3 |
|
|
2 |
|
Segment Operating Income |
$ |
161 |
|
|
$ |
212 |
|
|
$ |
388 |
|
|
$ |
345 |
|
|
|
|
|
|
|
|
|
Fuel
Sales (millions of gallons) |
2,221 |
|
|
2,099 |
|
|
4,387 |
|
|
4,159 |
|
Fuel
Margin (¢/gallon) (s) |
10.5 |
¢ |
|
13.7 |
¢ |
|
12.2 |
¢ |
|
11.8 |
¢ |
|
|
|
|
|
|
|
|
Number of Branded Stations (at the end of the
period) |
|
|
|
|
|
|
|
MSO
operated |
|
|
|
|
590 |
|
|
582 |
|
Jobber/Dealer operated |
|
|
|
|
1,856 |
|
|
1,683 |
|
Total Stations |
|
|
|
|
2,446 |
|
|
2,265 |
|
(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)
|
Expected Annual EBITDA
Contribution |
|
FHR Alaska Assets Dropdown |
|
Martinez Assets Dropdown |
|
Total Asset Dropdown |
Reconciliation of Projected Net Earnings to
Projected Annual EBITDA: |
|
|
|
|
|
Projected net earnings |
$ |
36 |
|
|
$ 16 -
36 |
|
$ 52 -
72 |
Add:
Depreciation and amortization expenses |
4 |
|
|
13 |
|
|
17 |
|
Add:
Interest and financing costs, net |
11 |
|
|
11 |
|
|
22 |
|
Expected Annual EBITDA |
$ |
51 |
|
|
$ 40 - 60 |
|
$ 91 - 111 |
|
TLLP 2017 Annual Expected Segment
EBITDA |
Reconciliation of Projected Net Earnings to
Projected Annual Segment EBITDA: |
|
Projected operating income |
$ |
825 |
|
Add:
Depreciation and amortization expenses |
175 |
|
Projected Annual Segment EBITDA |
$ |
1,000 |
|
|
Marketing 2018 Annual Expected Segment
EBITDA |
Reconciliation of Projected Operating Income to
Projected Annual Segment EBITDA: |
|
Projected operating income |
$ |
960 |
|
Add:
Depreciation and amortization expenses |
48 |
|
Projected Annual Segment EBITDA |
$ |
1,008 |
|
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX 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
HUG#2033050
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