Weak West Coast demand spells $155M Tesoro loss


POSTED: Friday, April 30, 2010

Tesoro Corp., which operates the larger of two refineries in Hawaii, lost $155 million in the first quarter as weak fuel demand cut into its margins.

The San Antonio-based firm also said yesterday in conjunction with its earnings release that it is temporarily shutting down all processing units at its Washington state refinery following an April 2 fire that killed seven employees.

A year ago, Tesoro posted a profit of $51 million in the first quarter. The company had a loss per share of $1.11 last quarter versus a net of 37 cents a share a year earlier. Tesoro's first-quarter loss included an after-tax write-off of $12 million associated with the deferral of a capital project at its Los Angeles refinery, as well as a $7 million tax charge due to the passage of this year's federal health care reform.

; “;The combination of excess gasoline inventories and seasonally weak product demand on the West Coast significantly impacted our first-quarter financial results,”; said Bruce Smith, chairman, president and chief executive officer. “;Although we aren't pleased with these results, we did see signs of improving gasoline demand and subsequently margins during the quarter.”;

Revenue for the period rose 40.5 percent to $4.6 billion from $3.3 billion.

Tesoro's refining margin in Hawaii shrunk to 5 cents a barrel last quarter from $8.53 a barrel in the year-earlier period. The refining margin is the spread between the cost of crude oil and price of refined products.

The Campbell Industrial Park facility's yield, or the total number of barrels of refined products of gas, jet fuel, diesel fuel and heavy oils, fell 9.3 percent to 68,000 barrels a day from 75,000 barrels a day. The total throughput in Hawaii decreased 9.6 percent to 66,000 barrels a day from 73,000 barrels a day.