OLD GREENWICH, Conn., Jan. 27 /PRNewswire-FirstCall/ -- Premcor Inc.
(NYSE: PCO) today reported net income from continuing operations (excluding
special items) of $159.9 million, or $1.74 per share, for the fourth quarter
ended December 31, 2004 and net income from continuing operations (excluding
special items) of $497.5 million, or $5.75 per share, for the year ended
December 31, 2004. These results compare to net income from continuing
operations (excluding special items) of $13.1 million, or $.18 per share, for
the fourth quarter of 2003 and net income from continuing operations
(excluding special items) of $165.2 million, or $2.24 per share, for the year
ended December 31, 2003.
Including the impact of special items and discontinued operations, Premcor
reported net income of $153.4 million, or $1.67 per share, for the fourth
quarter of 2004, compared to a net loss of $10.4 million, or $.14 per share,
for the fourth quarter of 2003. For the year ended December 31, 2004,
Premcor's net income including special items and discontinued operations was
$477.9 million, or $5.52 per share, compared to net income of $116.6 million,
or $1.58 per share, for the year ended December 31, 2003.
The company believes the special items shown below are not indicative of
its core operating performance. The company's Board of Directors typically
excludes these items and stock option compensation expense in determining
incentive compensation. A reconciliation of net income before special items
and discontinued operations to the company's net income (loss) reported in
accordance with generally accepted accounting principles is as follows (in
millions, except per share amounts, unaudited):
Fourth quarter ended December 31,
2004 2003
Net Net
Income Per Income Per
(Loss) Share (Loss) Share
Net income from continuing
operations, excluding special items $159.9 $1.74 $13.1 $0.18
Special items:
Refinery restructuring and other
charges, net of $3.6 and $7.4
tax benefit (1) (5.5) (0.06) (12.5) (0.17)
Loss on extinguishment of debt, net
of nil and $6.4 tax benefit -- -- (10.7) (0.15)
Net income (loss) from
continuing operations 154.4 1.68 (10.1) (0.14)
Net loss from discontinued operations (1.0) (0.01) (0.3) -
Net income (loss) available
to common stockholders $153.4 $1.67 $(10.4) $(0.14)
Fourth quarter of 2004 included a pretax charge totaling $9.1 million
related to environmental charges and other non-operating costs. Fourth
quarter amounts in 2003 included pretax charges related to the relocation of
the company's St. Louis office to its Connecticut headquarters ($5.7 million),
environmental remediation and litigation costs associated with closed
facilities ($10.0 million), and additional closure costs and asset write-offs
for the Hartford and Blue Island refineries ($4.2 million).
Full Year 2004 Full Year 2003
Net Net
Income Per Income Per
(Loss) Share (Loss) Share
Net income from continuing
operations, excluding special items $497.5 $5.75 $165.2 $2.24
Special items:
Refinery restructuring and other
charges net of $7.7 and $14.3
tax benefit (1) (11.8) (0.14) (24.2) (0.33)
Loss on extinguishment of debt
net of $1.4 and $10.3 tax benefit (2.2) (0.03) (17.2) (0.23)
Net income from continuing operations 483.5 5.58 123.8 1.68
Loss from discontinued operations (5.6) (0.06) (7.2) (0.10)
Net income available
to common stockholders $477.9 $5.52 $116.6 $1.58
(1) Full year amounts in 2004 included a pretax charge totaling
$19.5 million, consisting of $7.3 million related to the relocation
of the company's St. Louis general office to its Connecticut
headquarters, $3.1 million related to non-operating assets and
$9.1 million related to environmental charges. Full year amounts in
2003 included pretax charges related to the relocation of the
company's St. Louis office to its Connecticut headquarters
($7.5 million), environmental remediation and litigation costs
associated with closed facilities ($10.2 million), and closure and
asset write-offs related to the sale of the Hartford refinery assets
and closure of the Blue Island refinery ($20.8 million).
Jefferson F. Allen, Premcor's Chief Executive Officer, said, "Our record
earnings for the quarter reflected to a large degree Premcor's ability to
capture the wider price differentials between light low-sulfur crude oil and
heavy high-sulfur crude oil processed at our Port Arthur and Delaware City
refineries. While the basic sweet crude oil refining margins were seasonally
good during the fourth quarter, the real story was in the light-heavy crude
oil spreads. The Maya/WTI differential averaged more than $16 per barrel
during the period, and the Arab Medium/WTI differential averaged more than $9
per barrel. The combination of worldwide crude production becoming heavier and
higher-sulfur; increasing demand for light low-sulfur crude oil; limited heavy
high-sulfur crude oil refining capacity; and tightening environmental
standards for products in many major global markets has led to a strong
environment for high-conversion, pure-play refiners."
Concerning the full year 2004, Allen said, "The successful acquisition and
integration of the Delaware City refinery during the year has given us local
production capability in the product-short East Coast market and enhanced the
quality and diversity of our asset base. Delaware City's ability to process
Arab medium and heavy crude oils has increased Premcor's heavy high-sulfur
refining capacity to over 55% of our total. With four quarters of strong
earnings and cash flows, we ended 2004 with a dramatically improved balance
sheet and improved liquidity despite heavy capital spending during the year.
At December 31, we had over $800 million in cash, over $500 million in
available credit under our bank facility, and a debt-to-capitalization ratio
of approximately 46%. The Company is in its strongest financial shape ever,
and is in a good position to both fund its capital program and take advantage
of whatever growth opportunities the market may bring."
Regarding the company's operations, Allen commented, "Our refineries ran
well during the quarter. However, fourth quarter results were limited by
scheduled turnaround maintenance at the Delaware City refinery's cat cracker.
That turnaround began on September 25 and ended on November 17, for a total
downtime of 54 days. The turnaround extended 14 days past the original plan
due to more extensive repairs being completed. For the fourth quarter, the
Port Arthur, Lima, Memphis and Delaware City refineries averaged 258,000,
148,000, 150,000, and 167,000 barrels per day of total throughput,
respectively."
Looking ahead, Allen said, "The light-heavy spreads remain wide as we head
into the first quarter, with the Maya/WTI spread over $16 per barrel and the
Arab Medium/WTI spread over $10 per barrel. However, our ability to
capitalize on these wide differentials will be limited by scheduled plant-wide
turnaround maintenance at our Port Arthur refinery. The crude unit, coker and
hydrocracker were all shut down the first week of January, and we expect these
units to be back on-line in early February. Scheduled maintenance on the Port
Arthur cat cracker and alkylation units will be performed in February and
March. Throughput rates, including intermediate feedstocks, for the entire
first quarter should average approximately as follows: Port Arthur at 150,000
to 160,000 bpd; Lima at 145,000 to 155,000 bpd; Memphis at 150,000 to 160,000
bpd; and Delaware City at 175,000 to 185,000 bpd."
Premcor also announced today that its Board of Directors has declared a
dividend of $.02 per share payable on March 15 to shareholders of record on
March 1.
The company's regular quarterly conference call concerning the quarter and
full year results will be webcast live today at 11:00 a.m. Eastern Time on the
Investor Relations section of the Premcor Inc. website at
http://www.premcor.com. Slides for the conference call will also be available
on the Investor Relations section of our website.
Premcor Inc. is one of the largest independent petroleum refiners and
marketers of unbranded transportation fuels and heating oil in the United
States.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including the
company's current expectations with respect to future market conditions,
future operating results, the future performance of its refinery operations,
and other plans. Words such as "expects," "intends," "plans," "projects,"
"believes," "estimates," "may," "will," "should," "shall," and similar
expressions typically identify such forward-looking statements. Even though
Premcor believes the expectations reflected in such forward-looking statements
are based on reasonable assumptions, it can give no assurance that its
expectations will be attained. Factors that could cause actual results to
differ materially from expectations include, but are not limited to,
operational difficulties, varying market conditions, potential changes in
gasoline, crude oil, distillate, and other commodity prices, government
regulations, and other factors contained from time to time in the reports
filed with the Securities and Exchange Commission by the company and its
subsidiary, The Premcor Refining Group Inc., including quarterly reports on
Form 10-Q, current reports on Form 8-K, and annual reports on Form 10-K.
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended Twelve months ended
December 31, December 31,
(in millions except per share
amounts, unaudited) 2004 2003* 2004 2003*
Net sales and operating revenues $4,801.7 $2,256.1 $15,334.8 $8,803.9
Cost of sales 4,173.0 2,016.5 13,287.2 7,719.2
Gross margin 628.7 239.6 2,047.6 1,084.7
Operating expenses 255.7 138.5 819.4 524.9
General and administrative
expenses 38.4 17.8 130.9 67.1
Stock-based compensation 5.0 4.4 19.7 17.6
Depreciation and amortization 42.5 29.1 153.9 106.2
Restructuring and other charges 9.1 19.9 19.5 38.5
Operating income 278.0 29.9 904.2 330.4
Interest and finance expense, net (31.6) (30.2) (128.3) (115.1)
Loss on extinguishment of debt -- (17.1) (3.6) (27.5)
Income tax (provision) benefit (92.0) 7.3 (288.8) (64.0)
Income (loss) from continuing
operations 154.4 (10.1) 483.5 123.8
Loss from discontinued
operations, net of tax (1.0) (0.3) (5.6) (7.2)
Net income (loss) $153.4 $(10.4) $477.9 $116.6
Net income (loss) per common
share (fully-diluted):
Income (loss) from continuing
operations $1.68 $(0.14) $5.58 $1.68
Discontinued operations (0.01) - (0.06) (0.10)
Net income (loss) $1.67 $(0.14) $5.52 $1.58
Weighted average common shares
outstanding (in millions) 91.6 74.1 86.5 73.6
* Revenues and cost of sales in 2003 have been reclassified to reflect
the 4th quarter 2003 application of EITF 03-11. The reclassification
had no effect on previously reported operating income or net income.
December 31,
Summarized Balance Sheet Information 2004 2003
Cash and short-term investments:
Premcor Inc. $143.1 $52.8
Premcor USA Inc. 1.0 1.2
The Premcor Refining Group Inc. 609.2 378.6
Consolidated cash and short-term investments 753.3 432.6
Cash restricted for debt service 69.1 66.6
Other working capital 401.9 360.9
Total assets 5,689.6 3,715.3
Long-term debt, including current maturities:
Premcor USA Inc. 10.0 10.3
The Premcor Refining Group Inc. 1,817.5 1,441.8
Consolidated long-term debt 1,827.5 1,452.1
Total common stockholders' equity 2,134.4 1,145.2
Premcor Inc. and Subsidiaries
Earnings Release
Twelve months
Three months ended ended
December 31, December 31,
(unaudited) 2004 2003 2004 2003
Selected Volumetric
and Per Barrel Data
Production (Mbbls per day) 734.4 510.8 649.7 548.9
Crude unit throughput
(Mbbls per day) 704.1 500.1 609.2 525.8
Total throughput (Mbbls per day) 721.8 508.6 638.7 541.6
Total throughput
(millions of barrels) 66.4 46.8 233.8 197.7
Per barrel of total throughput:
Gross margin $9.47 $5.12 $8.76 $5.49
Operating expenses 3.85 2.96 3.51 2.66
Market Indicators
(dollars per barrel)
West Texas Intermediate,
or "WTI" (sweet) $48.29 $31.20 $41.41 $31.15
Crack Spreads: *
Gulf Coast 2/1/1 4.85 3.59 5.81 4.06
Chicago 3/2/1 4.86 4.66 7.52 6.39
NYH RFG 3/2/1 (since May 1, 2004) 5.72 ** 7.97 **
Crude Oil Differentials:
WTI less Maya (heavy sour) 16.07 6.85 11.45 6.87
WTI less Arab Medium
(since May 1, 2004) 9.02 ** 7.11 **
WTI less WTS (light sour) 5.60 2.38 3.96 2.73
WTI less Dated Brent (foreign) 4.40 1.74 3.22 2.31
Natural Gas (per mmbtu) 6.10 4.94 5.73 5.36
* Per barrel margin indicator for the conversion of crude oil into
finished products. The first number represents the number of barrels
of West Texas Intermediate crude oil, priced at Cushing, Oklahoma.
The second and third numbers represent the number of barrels of
gasoline, conventional unless otherwise stated, and high sulfur diesel
fuel produced, priced in their respective regional market.
** Not meaningful
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended December 31, 2004
Selected Refinery Data Port Delaware Price Risk
(unaudited) Arthur Lima Memphis City Results Total
Operating results
(dollars in millions):
Gross margin:
Gulf Coast 2/1/1 $114.9 $-- $66.9 $-- $-- $181.8
Chicago 3/2/1 -- 66.1 -- -- -- 66.1
NYH RFG 3/2/1 -- -- -- 87.5 -- 87.5
Throughput
differentials
to benchmark 352.9 (12.2) (13.6) 135.9 -- 463.0
Product differentials
to benchmark (105.6) 14.4 23.2 (99.0) -- (167.0)
Price risk results -- -- -- -- (2.7) (2.7)
Realized gross margin 362.2 68.3 76.5 124.4 (2.7) 628.7
Operating expenses (96.0) (38.3) (35.2) (86.2) -- (255.7)
Net refining margin $266.2 $30.0 $41.3 $38.2 $(2.7) $373.0
Depreciation and
amortization $20.8 $6.2 $4.0 $8.0 $-- $39.0
Per barrel of throughput
(in dollars):
(Based on total
throughput data
shown on following page)
Gross margin:
Gulf Coast 2/1/1 $4.85 $-- $4.85 $-- $-- $2.74
Chicago 3/2/1 -- 4.86 -- -- -- 1.00
NYH RFG 3/2/1 -- -- -- 5.72 -- 1.32
Throughput
differentials
to benchmark 14.89 (0.90) (0.99) 8.88 -- 6.97
Product differentials
to benchmark (4.46) 1.06 1.68 (6.47) -- (2.52)
Price risk results -- -- -- -- (0.04) (0.04)
Realized gross margin 15.28 5.02 5.54 8.13 (0.04) 9.47
Operating expenses (4.05) (2.81) (2.55) (5.63) -- (3.85)
Net refining margin $11.23 $2.21 $2.99 $2.50 $(0.04) $5.62
Depreciation and
amortization $0.88 $0.46 $0.29 $0.52 $-- $0.59
Calculation Methodology:
Although the Company manages its refinery business, including feedstock
acquisition and product marketing, on an integrated basis, for analytical
purposes the business results shown here have been allocated to the individual
refineries. The foundation for determining realized gross margin by refinery
is the actual delivered cost of refinery feedstocks and a daily valuation of
actual refinery production at market. Since crude oil is often purchased and
priced well in advance of the time that it is consumed and the value of
refinery production can be fixed before or after it is produced, our actual
results may significantly vary from those that would be determined with
reference to benchmark market indicators. We manage this inherent price risk
on a total Company basis and may purchase futures contracts that correspond
volumetrically with all or a portion of our fixed price purchase and sale
commitments. As a result, we have separately identified the financial effects
of this price risk, net of any risk mitigation activities, under the caption
"price risk results". Also included in the price risk results are our forward
sale of crack spreads. As a result of this methodology, together with certain
necessary allocations, the individual refinery realized gross margins
presented here do not reflect the results that would be reported if separately
accounted for in accordance with GAAP. The Company believes that this
individual refinery and price risk information is helpful in understanding our
overall operating results.
Premcor Inc. and Subsidiaries
Earnings Release
Twelve months ended December 31, 2004
Price
Selected Refinery Data Port Delaware Risk
(unaudited) Arthur Lima Memphis City Results Total
Operating results
(dollars in millions):
Gross margin:
Gulf Coast 2/1/1 $504.3 $-- $325.9 $-- $-- $830.2
Chicago 3/2/1 -- 362.3 -- -- -- 362.3
NYH RFG 3/2/1 -- -- -- 339.7 -- 339.7
Throughput
differentials
to benchmark 859.7 (39.8) (48.0) 283.3 -- 1,055.2
Product differentials
to benchmark (317.2) (28.8) 86.7 (247.8) -- (507.1)
Price risk results -- -- -- -- (32.7) (32.7)
Realized
gross margin 1,046.8 293.7 364.6 375.2 (32.7) 2,047.6
Operating expenses (343.3) (130.8) (138.7) (206.6) -- (819.4)
Net refining margin $703.5 $162.9 $225.9 $168.6 $(32.7) $1,228.2
Depreciation and
amortization $73.4 $32.1 $15.5 $20.1 $-- $141.1
Per barrel of throughput
(in dollars):
(Based on total throughput
datashown on
following page)
Gross margin:
Gulf Coast 2/1/1 $5.81 $-- $5.81 $-- $-- $3.55
Chicago 3/2/1 -- 7.52 -- -- -- 1.55
NYH RFG 3/2/1 -- -- -- 7.97 -- 1.45
Throughput differentials
to benchmark 9.90 (0.83) (0.86) 6.64 -- 4.51
Product differentials
to benchmark (3.65) (0.60) 1.55 (5.82) -- (2.17)
Price risk results -- -- -- -- (0.14) (0.14)
Realized
gross margin 12.06 6.09 6.50 8.79 (0.14) 8.76
Operating expenses (3.96) (2.71) (2.47) (4.85) -- (3.51)
Net refining margin $8.10 $3.38 $4.03 $3.94 $(0.14) 5.25
Depreciation and
amortization $0.85 $0.67 $0.28 $0.47 $-- $0.60
Calculation Methodology:
Although the Company manages its refinery business, including feedstock
acquisition and product marketing, on an integrated basis, for analytical
purposes the business results shown here have been allocated to the individual
refineries. The foundation for determining realized gross margin by refinery
is the actual delivered cost of refinery feedstocks and a daily valuation of
actual refinery production at market. Since crude oil is often purchased and
priced well in advance of the time that it is consumed and the value of
refinery production can be fixed before or after it is produced, our actual
results may significantly vary from those that would be determined with
reference to benchmark market indicators. We manage this inherent price risk
on a total Company basis and may purchase futures contracts that correspond
volumetrically with all or a portion of our fixed price purchase and sale
commitments. As a result, we have separately identified the financial effects
of this price risk, net of any risk mitigation activities, under the caption
"price risk results". Also included in the price risk results are our forward
sale of crack spreads. As a result of this methodology, together with certain
necessary allocations, the individual refinery realized gross margins
presented here do not reflect the results that would be reported if separately
accounted for in accordance with GAAP. The Company believes that this
individual refinery and price risk information is helpful in understanding our
overall operating results.
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended December 31,
2004
Selected Volumetric Data
(in thousands of barrels Port Delaware
per day, unaudited) Arthur Lima Memphis City Total
Throughput:
Crude unit throughput 256.8 145.7 140.8 160.8 704.1
Other throughputs 0.7 2.2 9.0 5.8 17.7
Total throughput 257.5 147.9 149.8 166.6 721.8
Total throughput, in
millions of barrels 23.7 13.6 13.8 15.3 66.4
Production (2):
Light products:
Conventional gasoline 100.6 66.2 55.5 49.4 271.7
Premium and
reformulated gasoline 23.0 20.1 11.6 16.2 70.9
Diesel fuel 74.9 23.4 44.7 37.4 180.4
Jet fuel 20.2 22.7 30.7 24.6 98.2
Other products /
blendstocks, net 17.4 13.4 1.8 27.0 59.6
Total light products 236.1 145.8 144.3 154.6 680.8
Solid by products /
residual oil 35.2 5.3 5.1 8.0 53.6
Total production 271.3 151.1 149.4 162.6 734.4
Premcor Inc. and Subsidiaries
Earnings Release
Twelve months ended December 31,
2004
Selected Volumetric Data
(in thousands of barrels Port Delaware
per day, unaudited) Arthur Lima Memphis City (1) Total
Throughput:
Crude unit throughput 225.9 131.0 141.2 111.1 609.2
Other throughputs 11.3 0.8 12.0 5.4 29.5
Total throughput 237.2 131.8 153.2 116.5 638.7
Total throughput, in
millions of barrels 86.8 48.2 56.1 42.6 233.8
Production (2):
Light products:
Conventional gasoline 90.2 56.5 62.1 36.7 245.5
Premium and reformulated
gasoline 22.1 19.9 10.6 17.7 70.3
Diesel fuel 62.9 19.0 44.2 24.0 150.1
Jet fuel 22.1 20.5 25.8 16.9 85.3
Other products /
blendstocks, net 21.7 12.7 4.9 12.3 51.6
Total light products 219.0 128.6 147.6 107.6 602.8
Solid by products /
residual oil 30.4 4.6 5.3 6.6 46.9
Total production 249.4 133.2 152.9 114.2 649.7
(1) We acquired the Delaware City refinery effective May 1, 2004 and the
total throughput for the twelve months ended December 31, 2004
reflect 245 days of operations over that period. Total throughput
averaged 174,100 bpd during the 245 days of operations in 2004.
(2) Does not include produced fuel that is consumed in the refining or
congeneration process.
SOURCE Premcor Inc.
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Related links:
http://www.premcor.com
CONTACT:
Media and Investors, Karyn Ovelmen,
+1-203-698-5669, or Investors, Colin Murray, +1-203-698-5921,
both of Premcor Inc.
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