OLD GREENWICH, Conn., July 28 /PRNewswire-FirstCall/ -- Premcor Inc.
(NYSE: PCO) today reported net income from continuing operations (excluding
special items) of $332.9 million, or $3.60 per share, for the second quarter
ended June 30, 2005. These results compare to net income from continuing
operations (excluding special items) of $140.1 million, or $1.61 per share,
for the second quarter of 2004. Including the impact of special items and
discontinued operations, Premcor reported net income of $329.4 million, or
$3.57 per share, for the second quarter of 2005, compared to net income of
$133.5 million, or $1.53 per share, for the second quarter of 2004.
For the six months ended June 30, 2005, Premcor reported net income from
continuing operations (excluding special items) of $462.1 million, or $5.02
per share, compared to net income from continuing operations (excluding
special items) of $192.9 million, or $2.37 per share, for the first six
months of 2004. Including the impact of special items and discontinued
operations, Premcor reported net income of $454.6 million, or $4.94 per share,
for the six months ended June 30, 2005, compared to net income of $183.2
million, or $2.25 per share, for the first six months 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 June 30,
2005 2004
Net Per Net Per
Income Share Income Share
Net income from continuing
operations, excluding special items $332.9 $3.60 $140.1 $1.61
Special items:
Refinery restructuring and other
charges, net of $0.2 and $1.8
tax benefit(1) (0.4) -- (2.9) (0.03)
Loss on extinguishment of debt, net
of nil and $1.4 tax benefit(2) -- -- (2.2) (0.03)
Net income from continuing operations 332.5 3.60 135.0 1.55
Net loss from discontinued operations (3.1) (0.03) (1.5) (0.02)
Net income available to common
stockholders $329.4 $3.57 $133.5 $1.53
(1) Second quarter of 2005 included a pretax charge totaling $0.6 million
associated with litigation and environmental matters at closed
refineries. Second quarter of 2004 included a pretax charge totaling
$4.7 million, consisting of $3.3 million related to the planned
relocation of the company's St. Louis general office to its
Connecticut headquarters and $1.4 million related to non-operating
assets.
(2) Second quarter of 2004 included a $3.6 million pretax loss on the
early retirement of debt.
For the six months ended June 30,
2005 2004
Net Per Net Per
Income Share Income Share
Net income from continuing operations,
excluding special items $462.1 $5.02 $192.9 $2.37
Special items:
Refinery restructuring and other
charges, net of $1.8 and $3.6
tax benefit(1) (2.9) (0.03) (5.7) (0.07)
Loss on extinguishment of debt, net of
nil and $1.4 tax benefit(2) -- (2.2) (0.03)
Net income from continuing operations 459.2 4.99 185.0 2.27
Net loss from discontinued operations (4.6) (0.05) (1.8) (0.02)
Net income available to common
stockholders $454.6 $4.94 $183.2 $2.25
(1) Six months of 2005 included a pretax charge totaling $4.7 million
associated with litigation and environmental matters at closed
refineries. Six months of 2004 included a pretax charge totaling $9.3
million, consisting of $7.3 million related to the planned relocation
of the company's St. Louis general office to its Connecticut
headquarters and $2.0 million related to non-operating assets.
(2) Six months of 2004 included a $3.6 million pretax loss on the early
retirement of debt.
Commenting on second quarter results, Jefferson F. Allen, Premcor's Chief
Executive Officer, said, "Premcor benefited from strong refining margins and
the continued wide differentials between light-sweet and heavy-sour crude oil
prices during the second quarter. High product prices, relatively inexpensive
heavy-sour crude oil, and high utilization rates at our refineries resulted in
our record quarterly earnings of $3.60 per share. Despite the increase in WTI
crude oil prices to over $60 per barrel and a commensurate rise in oil product
prices, worldwide demand for light products continues to grow year-over-year.
Our Port Arthur and Delaware City refineries benefited from the availability
of a wide selection of inexpensive heavy, high-sulfur crude oils. In
addition, on the product side of the equation, we benefited from the continued
robust gasoline market and strong distillate market during the second quarter.
High diesel prices are the result of tight supplies and rising demand for
diesel around the world. The growth in our earnings per share of over 100%
from the second quarter of last year reflects these strong margins, the wide
crude oil price differentials, a full three months of the Delaware City
refinery operations, and, of course, the continued safe and reliable
operations of our refineries. This marks the fifth quarter in a row year-
over-year, of more than 100% growth.
"Our results for the quarter directly reflect the high throughput rates
that our refineries achieved during the period. With the exception of our
Memphis refinery, all of our refineries were able to run above plan rates due
to improved operations and excellent reliability. Results at Memphis were
limited by the completion of repairs to its continuous catalytic reformer
early in the quarter and its fluid catalytic cracker late in the quarter."
Commenting on the company's balance sheet, Allen said, "Premcor's
financial position has strengthened dramatically. Our debt-to-capitalization
ratio at June 30 was approximately 41 percent. During the quarter, we also
entered into a new $260 million cash-backed credit facility to support our
letter of credit and liquidity needs. With the new credit facility in place,
we ended the quarter with approximately $1.4 billion in cash and $520 million
of available credit under our $1 billion primary bank facility. We have ample
liquidity, and will fund the remainder of our 2005 capital program with cash
on hand and available cash flows from operations as previously expected."
Regarding the outlook for third quarter, Allen said, "The market to-date
is off to an excellent start, with margins remaining strong and while there
has been a drop in the Arab Medium price differential, the Mexican Maya price
differential has been higher than during the second quarter. Premcor's
results will continue to be positively impacted by our ability to capture the
benefit of processing the cheaper heavy, high-sulfur crude oils at our Port
Arthur and Delaware City refineries. In addition, demand for light products
continues to be strong as we progress through the peak driving season and is
reflected in a Gulf Coast 2-1-1 crack spread of $8.95, a Chicago 3-2-1 crack
spread of $10.79 and a NYH RFG 3-2-1 crack spread of $12.92 for the month of
July to-date."
Concerning operations, Allen said, "With the exception of the Delaware
City coker and hydrocracker turnarounds beginning the last week of September,
we have no major scheduled maintenance at our refineries during the third or
fourth quarters. The turnaround at the Delaware City refinery is estimated to
last 40-45 days. Throughput rates, including intermediate feedstocks, for the
third quarter should average approximately as follows: Port Arthur at 255,000
to 265,000 bpd; Lima at 145,000 to 155,000 bpd; Memphis at 140,000 to 150,000
bpd; and Delaware City at 180,000 to 190,000 bpd."
On the pending acquisition of Premcor by Valero, Allen commented,
"Consummation of the merger is subject to the customary conditions, including
approval of the Premcor stockholders and the expiration or termination of the
Hart-Scott-Rodino waiting period. A special meeting will be held on August
30, 2005 for Premcor stockholders of record as of July 8, 2005, to vote on
adopting the Agreement and Plan of Merger. On June 27, 2005, the Federal
Trade Commission issued a request for additional information pursuant to the
Hart-Scott-Rodino Act. We are complying with this request. The transaction
is expected to close in the third quarter of 2005, and we anticipate a smooth
transition."
Premcor also announced today that its board of directors has declared a
dividend of $.02 per share payable on September 15 to shareholders of record
on August 29.
The company's regular quarterly conference call concerning the quarter's
results will be webcast live today at 10:00 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 Six months ended
June 30, June 30,
(in millions except per share
amounts, unaudited) 2005 2004 2005 2004
Net sales and operating revenues $5,308.5 $3,573.7 $9,472.8 $6,125.4
Cost of sales 4,402.2 3,034.7 8,018.0 5,269.2
Gross margin 906.3 539.0 1,454.8 856.2
Operating expenses 265.4 197.5 502.7 344.5
General and administrative
expenses 65.2 43.2 107.0 65.7
Depreciation and amortization 43.0 36.8 89.3 70.9
Restructuring and other charges 0.6 4.7 4.7 9.3
Operating income 532.1 256.8 751.1 365.8
Interest and finance expense, net (21.5) (33.7) (48.4) (63.3)
Loss on extinguishment of debt -- (3.6) -- (3.6)
Income tax provision (178.1) (84.5) (243.5) (113.9)
Income from continuing operations 332.5 135.0 459.2 185.0
Loss from discontinued
operations, net of tax (3.1) (1.5) (4.6) (1.8)
Net income $329.4 $133.5 $454.6 $183.2
Net income per common share
(fully-diluted):
Income from continuing operations $3.60 $1.55 $4.99 $2.27
Discontinued operations (0.03) (0.02) (0.05) (0.02)
Net income $3.57 $1.53 $4.94 $2.25
Diluted weighted average common
shares outstanding (in millions) 92.3 87.3 92.1 81.5
Summarized Financial Information
June 30, December 31,
2005 2004
Cash and short-term investments:
Premcor Inc. $346.2 $143.1
Premcor USA Inc. 1.9 1.0
The Premcor Refining Group Inc. 994.8 609.2
Consolidated cash and short-term
investments 1,342.9 753.3
Restricted cash and cash equivalents 75.4 69.1
Total assets 6,656.1 5,689.6
Long-term debt, including current
maturities:
Premcor USA Inc. 9.7 10.0
The Premcor Refining Group Inc. 1,803.2 1,817.5
Consolidated long-term debt 1,812.9 1,827.5
Total common stockholders' equity 2,596.8 2,134.4
Six months ended
June 30,
2005 2004
Net cash provided by operating
activities 1,038.9 298.8
Net cash used in investing activities (593.1) (1,037.2)
Net cash (used in) provided by
financing activities (15.1) 863.0
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended Six months ended
June 30, June 30,
(unaudited) 2005 2004 2005 2004
Selected Volumetric and
Per Barrel Data
Total production (Mbbls per day) 756.8 649.1 695.1 567.6
Total crude throughput
(Mbbls per day):
Port Arthur 255.6 213.6 204.8 210.3
Lima 150.5 127.5 142.2 116.9
Memphis 125.3 140.5 125.6 141.9
Delaware City (1) 174.0 112.5 164.0 56.3
Total crude throughput
(Mbbls per day) 705.4 594.1 636.6 525.4
Total throughput (Mbbls per day):
Port Arthur 263.5 236.5 223.7 225.8
Lima 152.4 125.9 143.4 116.0
Memphis 132.5 157.1 133.7 154.7
Delaware City (1) 192.4 117.3 182.3 58.7
Total throughput (Mbbls per day) 740.8 636.8 683.1 555.2
Total throughput
(millions of barrels) 67.4 57.9 123.6 101.0
Gross margin (per barrel of
total throughput):* $13.45 $9.30 $11.77 $8.47
Port Arthur 18.28 11.15 16.57 10.62
Lima 9.02 7.41 7.66 6.32
Memphis 8.98 7.48 7.96 6.54
Delaware City*** 11.17 11.87 10.54 11.87
Operating expenses (per barrel
of total throughput):* $3.94 $3.41 $4.07 $3.41
Port Arthur 4.27 3.94 4.59 4.01
Lima 2.46 2.51 2.62 2.85
Memphis 3.38 2.44 3.21 2.52
Delaware City*** 5.02 4.59 5.17 4.59
Market Indicators (dollars per barrel)
West Texas Intermediate, or "WTI"
(sweet) $53.17 $38.31 $51.48 $36.78
Industry Refining Margins:**
Gulf Coast 2/1/1 9.60 7.18 8.08 6.28
Chicago 3/2/1 10.50 10.85 8.68 8.91
NYH RFG 3/2/1 10.42 11.61 *** 8.21 11.61 ***
Crude Oil Price Differentials:
WTI less Maya (heavy sour) 13.11 8.73 15.10 9.05
WTI less Arab Medium 8.12 5.90 *** 8.80 5.90 ***
WTI less Dated Brent (foreign) 1.55 2.97 1.92 3.12
Natural Gas (per mmbtu) 6.85 6.00 6.50 5.70
* 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.
*** Represents an average since May 1, 2004.
(1) We acquired the Delaware City refinery effective May 1, 2004 and the
throughput for the three and six months ended June 30, 2004 relected
61 days of operations over that period. Total throughput was 175,100
bpd during the 61 days of operations in 2004.
SOURCE Premcor Inc.
 back to top
Related links:
http://www.premcor.com
CONTACT:
Media/Investors, Karyn Ovelmen,
+1-203-698-5669, or Investors, Colin Murray, +1-203-698-5921,
both of Premcor Inc.
|
