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The Honolulu Advertiser
Posted on: Friday, April 30, 2010

Hawaii slowdown contributes to Tesoro losses in 1st quarter

BY Greg Wiles
Advertiser Staff Writer

Tesoro Corp. lost $155 million in the first three months of the year, in part because of lower gross profits at its Hawai'i refinery.

The company reported a loss of $1.11 per share as it swung from a profit in the similar quarter a year earlier, when it reported net income of $51 million.

San Antonio-based Tesoro said its loss primarily was related to lower gasoline and diesel fuel profit margins on the West Coast.

The company operates seven independent refineries in the Western U.S., including Hawai'i's largest oil processing plant.

Figures released by Tesoro show the local 94,000-barrel-a-day refinery continues to operate at about 70 percent capacity and that gross refining margin a measure of profits had slipped to 5 cents per throughput barrel.

That was down from $8.53 cents per barrel a year earlier.

"Although we aren't pleased with these results, we did see signs of improving gasoline demand and subsequently margins during the quarter," Bruce Smith, Tesoro chief executive officer, said in a media statement.

The company said the bottom-line results were also hurt by a $12 million write-off related to a project at its Los Angeles refinery and a $7 million charge it took as a result of the passage of the Patient Protection and Affordable Care Act and another law.

The Hawai'i refinery had the lowest gross refining margin of any of Tesoro's regions. The company earlier this year initiated a review of the refinery to examine whether it should stop refining crude oil here and use the Campbell Industrial Park site as a terminal from which to distribute product.

At that time in March the company said the refinery had lost money last year and was continuing to lose money this year.

The refiner produces about half of the state's gasoline and feedstock for utility generators. It also is the primary supplier of jet fuel and diesel used in transportation.

Tesoro's loss was about 97 cents a share when adjusted for one-time charges. That was higher than the about 84 cents a share loss forecast by analysts polled by Bloomberg L.P.

The company released its results after the close of regular trading, during which its shares rose 33 cents to $13.41.