An increase in refining margins at Tesoro’s Hawaii operation helped maintain the company’s profitability in the first quarter as scheduled maintenance at plants in California weighed on earnings.
San Antonio-based Tesoro, which operates Hawaii’s largest oil refinery, reported net income of $56 million, or 39 cents a share in the first quarter, down from $107 million, or 74 cents a share in the same quarter a year earlier, the company reported Wednesday.
The earnings report did not include any information on Tesoro’s plans to sell its Hawaii operations. The company announced in January that it was putting its Campbell Industrial Park refinery and chain of 32 Hawaii gas stations up for sale.
Tesoro’s first-quarter operating income took a hit from scheduled maintenance, also known as "turnaround activity," at the company’s facilities in California.
Greg Goff, Tesoro’s president and chief executive officer, said the company was able to complete nearly half of its planned turnaround activity for 2012 in the first quarter. "We are pleased with our first-quarter results, which reflect a solid operating performance and continued execution of our strategic plan," Goff said.
Tesoro’s earnings, which were released after the markets closed, beat Wall Street’s expectation of a gain of 26 cents per share. Tesoro shares fell 34 cents to $22.90 at the close of regular trading, but rose 47 cents to $23.37 in after-hours activity.
Tesoro’s companywide gross refining margin, a key measure of profitability, fell to $12.15 a barrel in the first quarter from $14.33 a barrel in the same three-month period a year earlier.
The company’s Hawaii refinery, which can process up to 94,000 barrels of oil a day, saw its gross refining margin rise to $2.07 a barrel in the first quarter from a negative $3.05 a barrel a year earlier. By comparison, the gross refining margin at Tesoro’s California’s refineries fell to $7.98 a barrel in the first quarter from $16.66 a barrel a year earlier.
Tesoro’s Hawaii plant produces about half of the state’s gasoline and fuel oil for electricity generation. It also is the primary supplier of jet fuel and diesel.
The refinery has been considered underperforming by Tesoro in recent years. The company has said it expects to complete the sale no sooner than the second half of this year.
