West Coast independent refiner Tesoro
For the first quarter, Tesoro's net loss amounted to $155 million, or $1.11 per share. Excluding after-tax items -- an asset impairment charge and a hit related to health-care reform -- the situation improves only modestly, to a loss of $0.97 per share.
At the heart of the sequential increase was a wider gross refining margin. That metric averaged $5.37 per barrel in 2009's fourth quarter, but advanced to $6.36 in the just-completed period.
Elsewhere in the industry, integrated giants ConocoPhillips
Hunting for some more positive news, Tesoro management reported that gasoline demand and related margins did improve during the quarter. Also, for the year, the company plans to deliver $160 million to $170 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) from its non-capital efficiency program. That should nicely complement the annual EBITDA savings -- possibly as much as $30 million -- from the $60 million management expects to spend on quick-execution, high-return capital projects in 2010.
Going forward, the one company-specific unknown regards an April 2 fire at Tesoro's Washington state refinery, which resulted in seven fatalities. Unfortunately, that places Tesoro alongside deepwater driller Transocean, which more recently suffered both accident and human loss. Currently, processing units at the refinery are shut down, and as recently as April 10, Tesoro said that refinery throughput reductions were not expected to have a "material impact" on financial results. Whether there'll be litigation and other related costs, we'll have to wait and see.
Zooming out to the big-picture, long-term view of things, management noted, "we believe the structure of the West Coast market has not changed ...." In other words, the company should eventually feel the benefit of its West Coast advantage.
Just how significant that benefit will be, well, that's another matter, and certainly the biggest unknown of all.