OLD GREENWICH, Conn., April 29 /PRNewswire-FirstCall/ -- Premcor Inc.
(NYSE: PCO) today reported net income from continuing operations excluding
special items of $52.8 million, or $.70 per share, for its first quarter ended
March 31, 2004, compared to net income from continuing operations excluding
special items of $55.4 million, or $.80 per share, in the first quarter of
2003. Including the impact of special items and the loss from discontinued
operations, Premcor reported net income of $49.7 million, or $.66 per share,
for the first quarter ended March 31, 2004, compared to net income of
$37.5 million, or $.54 per share, in the first quarter of 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 special items to the company's
results reported in accordance with generally accepted accounting principles
is as follows (in millions, except per share amounts, unaudited):
First quarter ended March 31,
2004 2003
Net Per Net Per
Income Share Income Share
Net income from continuing
operations excluding
special items $52.8 $0.70 $55.4 $0.80
Special items:
Refinery restructuring
and other charges, net
of $1.8 and $5.7
tax benefit (A) (2.8) (0.04) (9.3) (0.14)
Loss on extinguishment
of debt, net of $2.7
tax benefit (B) -- -- (4.3) (0.06)
Net income from continuing
operations 50.0 0.66 41.8 0.60
Loss from discontinued
operations (0.3) -- (4.3) (0.06)
Net income available to
common stockholders $49.7 $0.66 $37.5 $0.54
(A) 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 non-operating assets. First quarter of 2003
special items included a pretax charge of $16.6 million relating to
the disposition of the company's Hartford, Illinois refinery assets
and a $1.6 million pretax reduction in the reserve the company
established last year for the restructuring of its corporate office
activities.
(B) First quarter of 2003 special items included a pretax loss of $7.0
million on the early retirement of debt.
Commenting on first quarter results, Thomas D. O'Malley, Premcor's
Chairman and Chief Executive Officer, said, "The results reflect strong
refining margins in our Gulf Coast and Midwestern markets offset by heavy
turnaround activity. Crude oil throughputs at Port Arthur were lower due to 36
days of scheduled turnaround maintenance and 14 days of unscheduled downtime.
Our Lima refinery was taken out of service on March 5th for a plant-wide
turnaround and maintenance program that also included work necessary for the
Tier II gasoline project. Lima will be the last of our three refineries to
complete the investment required to meet the new sulfur standards. We
currently produce gasoline under the new EPA sulfur standards at our Port
Arthur and Memphis refineries. The Lima turnaround continued through April
10th. We also had an unscheduled shutdown of the crude unit at Port Arthur
lasting 10 days during April."
Looking ahead, O'Malley said, "The month of April is ending with
extraordinarily high refining margins, evidenced by a Gulf Coast 2-1-1 crack
of $6.03 and a Chicago 3-2-1 crack of $9.99. The differential between light
and heavy crude is substantial with WTI/Maya trading at a differential of
about $9/barrel for the month of April to date. If differentials and cracks
continue at these levels, and we avoid additional capacity loss due to
unscheduled maintenance, we should exceed Wall Street's current First Call
estimates of $0.91 for earnings per share, on our current asset base,
excluding any contribution from Delaware City, and excluding special items."
O'Malley went on to say, "The Delaware City Refinery acquisition is
expected to close May 1. We have obtained all the required permits and
satisfied all the conditions necessary to complete the purchase of the
refinery. We have also completed three major financing transactions for the
continued improvement of our capital structure and for the purchase of the
Delaware City refinery complex. In April, we expanded our senior secured
credit facility to $1.0 billion from $785 million, and completed common stock
and senior notes offerings. The $890 million in net proceeds from the common
stock and senior notes offerings will be used, in part, to purchase the
Delaware City refinery complex. We look forward to the closing and the
successful integration of the Delaware City assets into our refining system.
We expect this refinery to be profitable from day one."
As for operations, O'Malley commented that, "Currently, the Port Arthur
total throughput rate, including intermediate feedstocks, is running at
255,000 bpd; Lima is at 158,000 bpd; and Memphis is at 171,000 bpd. Throughput
rates, including intermediate feedstocks, for the entire second quarter, after
scheduled maintenance and the unscheduled downtime on the crude unit at Port
Arthur should average, approximately as follows: Port Arthur at 240,000 bpd;
Lima at 140,000 bpd; and Memphis at 165,000 bpd. We plan to run the Delaware
City refinery at 175,000 bpd starting May 1."
The company's regular conference call concerning the quarter's results
will be webcast live today at 11:00 a.m. Eastern Time on the Investor
Relations section of the Premcor Inc. Web site at http://www.premcor.com. Slides for
the conference call will also be included on the Investor Relations section of
our Web site.
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
March 31,
(in millions except per share
amounts, unaudited) 2004 2003*
Net sales and operating revenues $2,551.7 $1,968.9
Cost of sales 2,234.5 1,701.5
Gross margin 317.2 267.4
Operating expenses 147.0 117.2
General and administrative expenses 17.6 11.7
Stock-based compensation 4.9 4.3
Depreciation and amortization 34.1 24.1
Restructuring and other charges 4.6 15.0
Operating income 109.0 95.1
Interest and finance expense, net (29.6) (25.3)
Loss on extinguishment of long-term debt -- (7.0)
Income tax provision (29.4) (21.0)
Income from continuing operations 50.0 41.8
Loss from discontinued operations, net of tax (0.3) (4.3)
Net income $49.7 $37.5
Net income per common share (fully-diluted):
Income from continuing operations $0.66 $0.60
Discontinued operations (0.00) (0.06)
Net income $0.66 $0.54
Weighted average common shares
outstanding (in millions) 75.7 69.6
* 2003 revenues and cost of sales 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.
March 31, December 31,
Summarized Balance Sheet Information 2004 2003
Cash and short-term investments:
Premcor Inc. $54.3 $52.8
Premcor USA Inc. 1.6 1.2
The Premcor Refining Group Inc. 327.5 378.6
Consolidated cash and short-term investments 383.4 432.6
Cash restricted for debt service 54.9 66.6
Other working capital 398.3 360.9
Total assets 3,519.3 3,715.3
Long-term debt, including current maturities:
Premcor USA Inc. 10.3 10.3
The Premcor Refining Group Inc. 1,431.8 1,441.8
Consolidated long-term debt 1,442.1 1,452.1
Total common stockholders' equity 1,201.1 1,145.2
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended
March 31,
(unaudited) 2004 2003
Selected Volumetric and Per Barrel Data
Production (Mbbls per day) 494.3 445.2
Crude unit throughput (Mbbls per day) 456.9 430.1
Total throughput (Mbbls per day) 481.3 436.5
Total throughput (millions of barrels) 43.8 39.3
Per barrel of total throughput:
Gross margin $7.24 $6.81
Operating expenses 3.36 2.98
Market Indicators (dollars per barrel)
West Texas Intermediate, or "WTI" (sweet) $35.25 $34.13
Crack Spreads:*
Gulf Coast 2/1/1 5.39 5.51
Chicago 3/2/1 6.98 6.42
Crude Oil Differentials:
WTI less Maya (heavy sour) 9.36 7.62
WTI less WTS (sour) 3.48 3.61
WTI less Dated Brent (foreign) 3.28 2.60
Natural Gas (per mmbtu) 5.39 6.05
* 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 conventional gasoline and
high sulfur diesel fuel produced, priced in their
respective regional market.
Premcor Inc. and Subsidiaries
Earnings Release
First quarter ended March 31, 2004
Price
Port Risk
Selected Refinery Data (unaudited) Arthur Lima Memphis Results Total
Operating results
(dollars in millions):
Gross margin:
Gulf Coast 2/1/1 $108.9 $-- $75.4 $-- $184.3
Chicago 3/2/1 -- 67.0 -- -- 67.0
Throughput differentials to
benchmark 137.9 (4.3) (17.0) -- 116.6
Product differentials to benchmark (50.0)(14.5) 19.6 -- (44.9)
Price risk results -- -- -- (5.8) (5.8)
Realized gross margin 196.8 48.2 78.0 (5.8) 317.2
Operating expenses (80.0)(31.3) (35.7) -- (147.0)
Net refining margin $116.8 $16.9 $42.3 $(5.8) $170.2
Depreciation and amortization $17.5 $10.3 $3.6 $-- $31.4
Per barrel of throughput (in dollars):
(Based on total throughput data
shown on following page)
Gross margin:
Gulf Coast 2/1/1 $5.39 $-- $5.39 $-- $4.21
Chicago 3/2/1 -- 6.98 -- -- 1.53
Throughput differentials to
benchmark 6.82 (0.45) (1.22) -- 2.66
Product differentials to benchmark (2.48)(1.51) 1.40 -- (1.03)
Price risk results -- -- -- (0.13) (0.13)
Realized gross margin 9.74 5.02 5.58 (0.13) 7.24
Operating expenses (3.96)(3.26) (2.55) -- (3.36)
Net refining margin $5.78 $1.76 $3.03 $(0.13) $3.89
Depreciation and amortization $0.87 $1.07 $0.26 $-- 0.72
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". 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
Selected Volumetric Data Three months ended March 31, 2004
(in thousands of barrels per day, Port
unaudited) Arthur Lima Memphis Total
Throughput:
Crude unit throughput:
Sweet crude oil 6.3 100.3 143.4 250.0
Light/Medium sour crude oil 4.3 6.0 -- 10.3
Heavy sour crude oil 196.6 -- -- 196.6
Total crude unit throughput 207.2 106.3 143.4 456.9
Other throughputs 14.9 (0.8) 10.3 24.4
Total throughput 222.1 105.5 153.7 481.3
Total throughput, in millions of
barrels 20.2 9.6 14.0 43.8
Production:
Light products:
Conventional gasoline 69.3 61.9 61.0 192.2
Premium and reformulated gasoline 21.8 5.5 8.5 35.8
Diesel fuel 57.7 14.5 49.4 121.6
Jet fuel 20.8 16.9 24.5 62.2
Other products / blendstocks, net 36.9 4.9 5.6 47.4
Total light products 206.5 103.7 149.0 459.2
Petroleum coke and sulfur 26.1 2.5 0.2 28.8
Residual oil -- 1.1 5.2 6.3
Total production 232.6 107.3 154.4 494.3
SOURCE Premcor Inc.
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Related links:
http://www.premcor.com
CONTACT:
(Media/Investors): Karyn Ovelmen,
+1-203-698-5669, or (Investors): Michelle Kilic, +1-203-698-5921,
both of Premcor Inc.
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