OLD GREENWICH, Conn., April 28 /PRNewswire-FirstCall/ -- Premcor Inc.
(NYSE: PCO) today reported net income from continuing operations (excluding
special items) of $129.2 million, or $1.41 per share, for the first quarter
ended March 31, 2005. These results compare to net income from continuing
operations (excluding special items) of $52.8 million, or $.70 per share, for
the first quarter of 2004. Including the impact of special items and
discontinued operations, Premcor reported net income of $125.2 million, or
$1.36 per share, for the first quarter of 2005, compared to a net income of
$49.7 million, or $.66 per share, for the first quarter of 2004.
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 in determining incentive compensation. A reconciliation of net
income before special items and discontinued operations to the company's net
income reported in accordance with generally accepted accounting principles is
as follows (in millions, except per share amounts, unaudited):
For the quarter ended March 31,
2005 2004
Net Net
Income Per Income Per
(Loss) Share (Loss) Share
Net income from
continuing operations,
excluding special
items $129.2 $ 1.41 $ 52.8 $ 0.70
Special item:
Refinery restructuring
and other charges,
net of $1.6 and $1.8
tax benefit (1) (2.5) (0.03) (2.8) (0.04)
Net income from
continuing operations 126.7 1.38 50.0 0.66
Net loss from
discontinued operations (1.5) (0.02) (0.3) -
Net income available to
common stockholders $125.2 $ 1.36 $ 49.7 $ 0.66
(1) First quarter of 2005 included a pretax charge totaling $4.1 million
associated with litigation and environmental matters at closed
refineries. First quarter of 2004 included a pretax charge totaling
$4.6 million, consisting of $4.0 million related to the planned
relocation of the company's St. Louis general office to its
Connecticut headquarters and $0.6 million related to litigation and
environmental matters at closed refineries.
Commenting on first quarter results, Jefferson F. Allen, Premcor's Chief
Executive Officer, said, "Refining margins remained strong during the first
quarter while the benchmark crude oil price differentials were at record
highs. Demand for light low-sulfur crude oil, ample supply of heavy high-
sulfur crude oil, limited complex refining capacity and increasingly strict
sulfur specifications around the world continue to drive margins and
differentials. The growth in our earnings per share of over 100% from the
first quarter of last year reflects these strong margins, the wide crude oil
price differentials and of course our growth strategy.
"Our results for the quarter were, however, significantly limited by
scheduled plant-wide turnaround maintenance at the Port Arthur refinery. The
turnaround, which was completed on schedule, included maintenance activity on
all of the major units at the refinery. All of the units have since been
restarted in a safe and environmentally sound manner and are running reliably.
Our employees accomplished a very difficult task and I complement them for it.
Unfortunately, our first quarter results were further limited by unscheduled
downtime at our Memphis and Delaware City refineries. Throughput rates at the
Memphis refinery were reduced beginning on March 9 when the continuous
catalytic reformer (CCR) unit was shut down to conduct repairs to its heater.
The repair work was completed on April 23. At the Delaware City refinery,
throughput rates were reduced as a result of the shutdown of its CCR and
hydrogen plant as well as a series of boiler outages. The gasification units
were also shut down for maintenance late in the quarter. All units are now
back in service."
Concerning capital structure, Allen said, "Premcor's financial position
continues to strengthen. Our dept-to-capitalization ratio at March 31 was
just under 45 percent. Despite the heavy turnaround maintenance and peak-
level capital spending, we ended the quarter with $570 million in cash and
short-term investments and over $500 million of available credit under our
bank facility. We have ample liquidity, and we expect to fund our 2005
capital program with cash on hand and available cash flows from operations."
Looking ahead, Allen said, "Industry conditions in the second quarter to
date have been robust with refining margins even stronger than during the
first quarter and crude oil price differentials only slightly weaker.
Premcor's results will continue to be positively impacted by these wide
discounts as our Port Arthur refinery processes primarily Mexican Maya crude
oil and our Delaware City refinery processes primarily Arab medium-heavy
blends. We continue to see strong demand for refined products with worldwide
and U.S. petroleum demand approximately 2.6% and 1.7%, respectively, greater
than the 2004 levels year to date. This strong demand for refined products is
reflected in a Gulf Coast 2-1-1 crack spread of $10.47, a Chicago 3-2-1 crack
spread of $12.15 and a NYH RFG 3-2-1 crack spread of $10.87 for the month of
April to date."
Concerning operations, Allen said, "We have no major scheduled maintenance
at our refineries during the second quarter, so our ability to capture these
margins and crude price differentials should be limited only by the reduced
rates at Memphis for the CCR repairs in April. Throughput rates, including
intermediate feedstocks, for the second quarter should average approximately
as follows: Port Arthur at 240,000 to 250,000 bpd; Lima at 140,000 to 150,000
bpd; Memphis at 130,000 to 140,000 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 June 15 to shareholders of record on
June 1.
The company's regular quarterly conference call concerning the quarter
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.
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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, 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
March 31,
(in millions except per share
amounts, unaudited) 2005 2004
Net sales and operating revenues $4,164.3 $2,551.7
Cost of sales 3,615.8 2,234.5
Gross margin 548.5 317.2
Operating expenses 237.3 147.0
General and administrative expenses 41.8 22.5
Depreciation and amortization 46.3 34.1
Restructuring and other charges 4.1 4.6
Operating income 219.0 109.0
Interest and finance expense, net (26.9) (29.6)
Income tax provision (65.4) (29.4)
Income from continuing operations 126.7 50.0
Loss from discontinued operations,
net of tax (1.5) (0.3)
Net income $125.2 $49.7
Net income per common share (fully-
diluted):
Income from continuing operations $1.38 $0.66
Discontinued operations (0.02) -
Net income $1.36 $0.66
Diluted weighted average common
shares outstanding (in millions) 91.8 75.7
March 31, December 31,
Summarized Balance Sheet Information 2005 2004
Cash and short-term investments:
Premcor Inc. $141.8 $143.1
Premcor USA Inc. 1.5 1.0
The Premcor Refining Group Inc. 366.8 609.2
Consolidated cash and short-term
investments 510.1 753.3
Cash restricted for debt service 57.4 69.1
Other working capital 513.2 401.9
Total assets 5,680.1 5,689.6
Long-term debt, including current
maturities:
Premcor USA Inc. 9.8 10.0
The Premcor Refining Group Inc. 1,803.2 1,817.5
Consolidated long-term debt 1,813.0 1,827.5
Total common stockholders' equity 2,262.9 2,134.4
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended
March 31,
(unaudited) 2005 2004
Selected Volumetric and Per Barrel Data
Total production (Mbbls per day) 634.7 494.3
Total crude throughput (Mbbls per day):
Port Arthur 153.5 207.2
Lima 133.8 106.3
Memphis 125.9 143.4
Delaware City 153.8 -
Total crude throughput (Mbbls per day) 567.0 456.9
Total throughput (Mbbls per day):
Port Arthur 183.5 222.1
Lima 133.9 105.5
Memphis 135.3 153.7
Delaware City 172.1 -
Total throughput (Mbbls per day) 624.8 481.3
Total throughput (millions of barrels) 56.2 43.8
Gross margin (per barrel of total
throughput):* $9.76 $7.24
Port Arthur 14.32 9.74
Lima 6.16 5.02
Memphis 6.87 5.58
Delaware City 9.83 -
Operating expenses (per barrel of
total throughput):* $4.22 $3.36
Port Arthur 5.05 3.96
Lima 2.80 3.26
Memphis 3.03 2.55
Delaware City 5.38 -
Market Indicators (dollars per barrel)
West Texas Intermediate, or "WTI" (sweet) $49.79 $35.25
Industry Refining Margins:**
Gulf Coast 2/1/1 6.56 5.39
Chicago 3/2/1 6.86 6.98
NYH RFG 3/2/1 6.00 ***
Crude Oil Price Differentials:
WTI less Maya (heavy sour) 17.09 9.36
WTI less Arab Medium 9.48 ***
WTI less Dated Brent (foreign) 2.30 3.28
Natural Gas (per mmbtu) 6.15 5.39
* The Company manages its refinery business, including feedstock
acquisition and product marketing, on an integrated basis, however for
analytical purposes the business results shown here have been
allocated to the individual refineries. 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 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, 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 information is helpful in understanding our overall operating
results.
** 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 relevant.
SOURCE Premcor Inc.
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Related links:
http://www.premcor.com
CONTACT:
Karyn Ovelmen, +1-203-698-5669
(Media/Investors), or Colin Murray, +1-203-698-5921 (Investors),
both of Premcor Inc.
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