OLD GREENWICH, Conn., May 20 /PRNewswire-FirstCall/ --
Premcor Inc. (NYSE: PCO) today announced plans to expand its refinery in Port
Arthur, Texas. Thomas D. O'Malley, Premcor's Chairman and Chief Executive
Officer, made the announcement at today's annual meeting of shareholders. The
plans include increasing the refinery's crude oil throughput capacity from its
current rate of 250,000 barrels per day, or bpd, to approximately 325,000 bpd.
In addition, the refinery's coker unit, already one of the largest in the
world, will be expanded from its current stated capacity of 80,000 bpd to
105,000 bpd. The project, which is estimated to cost between $200 million and
$220 million, is expected to be completed in the fourth quarter of 2005.
The complete text of O'Malley's comments on Premcor's plans at the annual
meeting follows:
"The management and board of directors of Premcor have the objective of
growing the profitability of our U.S.-based refining business. During 2002 we
took the first step in this effort by reducing costs and closing our small
Hartford refinery.
"We made a great stride to enhanced profitability on March 3, 2003, by
acquiring the 170,000 bpd Memphis refinery from The Williams Companies. When
we first announced this acquisition last fall, we indicated on our web site
that we expected Memphis to add about 43 cents to Premcor's after-tax earnings
per share. Our experience over the first 45 days of ownership is that we
should exceed this number. We are always hesitant to try to predict
profitability from quarter to quarter in this business, but all indications
seem to point to a sustained period of enhanced profitability for the U.S.
refining business over the next few years.
"Premcor continues to examine various acquisition possibilities to expand
our profitability. We will maintain a disciplined approach in this area,
focusing on high-quality U.S. assets that can be purchased at a price that
gives meaningful accretion to our earnings per share based on realistic crack
spreads and reasonable financing. In addition, Premcor continues to review
expansion and improvement projects within its existing system, and the board
of directors today approved an expansion and improvement project at Premcor's
large Port Arthur refinery.
"This investment will expand Port Arthur's overall capacity by 75,000 bpd
and will also increase its ability to process very heavy, high-sulfur crude
oil. Port Arthur's current capacity is 250,000 bpd, 80 percent of which is
heavy, high-sulfur processing capacity, with the remaining 20 percent
processing medium-sulfur, medium-gravity crude oil. The project approved by
the board today will enable Port Arthur to process roughly 300,000 bpd of a
100 percent heavy, high-sulfur crude slate. At an 80/20 crude slate similar
to today's, the refinery would be able to process up to 325,000 bpd. This
project is expected to cost between $200 million and $220 million, and should
be completed in the fourth quarter of 2005. It has an extremely attractive
rate of return, and accretion per share should exceed the accretion generated
from the Memphis acquisition. We expect to arrange financing for this project
later this year. Premcor will continue to focus on balance sheet improvement
and credit enhancement.
"Premcor's goal and objective is to be a premier independent U.S. refining
company, running cost-effective, safe, and environmentally sound industrial
facilities. We are committed to growing long-term value for our
shareholders."
Additional information on the Port Arthur expansion project is available
on the Investor Relations/Presentation Section of the company's website at
http://www.premcor.com .
In other news from Premcor's annual meeting of shareholders, the company's
shareholders re-elected directors O'Malley (Chairman), Jefferson F. Allen,
Wayne A. Budd, Stephen I. Chazen, Marshall A. Cohen, David I. Foley, Robert L.
Friedman, Richard C. Lappin, and Wilkes McClave III. The shareholders also
ratified the appointment of Deloitte & Touche LLP as the company's independent
auditor for the year ending December 31, 2003.
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, reports on Form 8-K, and annual reports on Form 10-K.
SOURCE Premcor Inc.
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Related links:
http://www.premcor.com
CONTACT:
Media-Investors, Joe Watson, +1-203-698-7510,
Investors, Karen Davis, +1-314-854-1424, or Investors, Michael
Taylor, +1-314-719-2304, all of Premcor Inc.
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