OLD GREENWICH, Conn., Nov. 7 /PRNewswire-FirstCall/ -- Premcor Inc.
(NYSE: PCO) today reported a net loss of $24.5 million, or $.43 per share, in
the third quarter of 2002 compared to net earnings of $44.3 million, or
$1.28 per share, in the third quarter of 2001. Excluding the effect of the
special items discussed below, the third quarter 2002 net loss was
$15.5 million, or $.27 per share, compared to net earnings of $54.1 million,
or $1.57 per share, in the third quarter of 2001.
For the nine months ended September 30, 2002, Premcor reported a net loss
of $164.3 million, or $3.57 per share, as compared to net earnings of
$187.1 million, or $5.42 per share, in the first nine months of 2001.
Excluding the effect of the special items discussed below, the first nine
months of 2002 resulted in a net loss of $45.2 million, or $.98 per share,
compared to net earnings of $272.5 million, or $7.90 per share, in the first
nine months of 2001.
Commenting on the quarter, Thomas D. O'Malley, Premcor's Chairman, Chief
Executive Officer, and President, said, "High gasoline and distillate
inventories kept pressure on prices for these products through mid-September.
The price spread between heavy sour Mexican Maya crude oil and light sweet
West Texas Intermediate crude oil remained below historical levels for most of
the quarter. Premcor's Port Arthur refinery relies on Maya crude oil as its
principal feed, so a narrow Maya-WTI spread has a negative effect on Premcor's
results. Product prices started to improve in September, which, combined with
a widening of the Maya-WTI spread, led to a profitable September for Premcor.
Port Arthur's throughput was negatively impacted at the end of September by
Hurricane Isidore."
Looking ahead, O'Malley said, "Prospects for the fourth quarter are much
brighter. Hurricane Isidore in late September was followed by Hurricane Lili
in early October. These storms affected production at a substantial number of
Gulf Coast refineries, and also curtailed crude oil shipments to inland
refineries serviced by Gulf Coast pipelines, thus reducing refinery production
there as well. Due to these and other factors, refined product inventories
have now declined toward the levels seen in 2000 and early 2001. In fact, on
a demand-adjusted basis they are currently at five-year lows. The Maya-WTI
spread also showed some improvement this month, but it is still below
historical levels. Based on our first month of operations, and assuming
seasonal market conditions and normal operations for the rest of the period,
we currently expect Premcor to generate after-tax earnings of roughly
$0.40 per share in the fourth quarter."
On the continuing transformation of Premcor, O'Malley said, "We have
recently taken a number of actions to improve our crude oil acquisition
economics. On October 1, we entered into a new supply contract for our Lima
refinery that should lower its crude costs by $0.20 per barrel. We have also
reduced, effective October 1, our Mexican offtake for Port Arthur to the
minimum allowed under the supply contract and begun substituting other heavy
crude oils at superior economics. Mexican Maya crude oil has been trading at
artificially high prices, and we will continue to de-emphasize its use until
the market normalizes."
O'Malley continued, "The steps we have taken over the past nine months
have lowered our processing costs and improved our crude oil acquisition
economics. These improved economics have put us in a position to be
profitable even in poor margin environments like the first ten months of 2002.
The current First Call (Wall Street consensus) 2003 earnings estimate for
Premcor is $2.32 per share. A review of individual research reports indicates
that this earnings estimate is based on the following market indicators:
$3.50 for the Gulf Coast 3:2:1 crack spread, $4.80 for the Chicago 3:2:1 crack
spread, $6.16 for the Maya-WTI differential, and $21.60 for WTI. If these
indicator levels are achieved, Premcor would expect to meet or exceed the
First Call estimate for 2003."
O'Malley concluded, "We continue to work on improving our economics, and
we are focused on achieving a safe and reliable operation that offers
significant returns to our shareholders."
For the third quarter of 2002, pre-tax special items of $14.5 million
included $10.1 million related to the announced restructuring of the company's
workforce at its Port Arthur, Texas and Lima, Ohio facilities and additional
reductions in the St. Louis general and administrative operations,
$4.2 million related to the write-down of our 5% investment in the Clark
Retail Group, Inc. as a result of its recent bankruptcy filing, and
$.2 million related to the repurchase of some of our long-term debt. The
total after-tax effect of these special items on the quarter was a net loss of
$9.0 million, equal to $.16 per share. For the third quarter 2001, pre-tax
special items of $17.5 million included $17.2 million related to the closure
of the company's Blue Island, Illinois refinery, $9.0 million associated with
the decommissioning of two idled coker units at the Port Arthur facility, and
$8.7 million in gains associated with debt repurchases. The after-tax effect
of these special items on the 2001 third quarter results was a net loss of
$9.8 million, equal to $.28 per share.
For the first nine months of 2002, pre-tax special items of $192.4 million
included $137.4 million related to the closure of the Hartford refinery,
$27.4 million primarily for severance and other charges related to the
restructuring of the company's Port Arthur, Texas and Lima, Ohio refineries
and the St. Louis general and administrative operations, $2.5 million related
to the PRG and Sabine restructuring, $1.4 million for idled equipment,
$19.5 million related to the early retirement of long-term debt, and
$4.2 million related to the write-down of the Clark Retail Group, Inc.
minority interest. The after-tax effect of these special items for the nine
months of 2002 was $119.1 million, or $2.59 per share. Special items for the
first nine months of 2001 included pre-tax charges of $176.2 million related
to the closure of the Blue Island, Illinois refinery and the decommissioning
of two coker units at Port Arthur. The net after-tax effect of these charges,
partially offset by a $30 million income tax benefit and a $8.7 million gain
associated with debt repurchases, was $85.4 million, or $2.48 per share.
The company's regular quarterly conference call concerning the quarter's
results will be webcast live today at 11:00 am EST on the Investor Relations
section of the Premcor Inc. website at http://www.premcor.com . A 24-hour
replay of the call will be available until November 14, 2002 at
(800) 944-7023, and the call will be archived on the company's 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 future debt reductions. 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
subsidiaries, Premcor USA Inc. and The Premcor Refining Group Inc., including
the company's Form S-1 and the company's and its subsidiaries' quarterly
reports on Form 10-Q, reports on Form 8-K, and annual reports on Form 10-K.
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended Nine months ended
September 30, September 30,
(dollars in millions except per
share amounts, unaudited) 2002 2001 2002 2001
Operating revenues $1,899.8 $1,666.2 $4,807.1 $5,170.9
Cost of sales 1,757.8 1,390.8 4,342.8 4,133.7
Gross margin 142.0 275.4 464.3 1,037.2
Operating expenses 109.6 104.9 338.2 355.8
General and administrative
expenses 11.9 16.1 40.8 45.3
Stock option compensation expense 4.2 -- 9.9 --
Adjusted EBITDA (1) 16.3 154.4 75.4 636.1
Depreciation and amortization 20.8 23.2 64.9 67.7
Restructuring and other charges 14.3 26.2 172.9 176.2
Operating income (loss) (18.8) 105.0 (162.4) 392.2
Interest expense and finance
income, net (20.5) (33.8) (81.5) (106.3)
Gain (loss) on extinguishment of
long-term debt (0.2) 8.7 (19.5) 8.7
Income tax benefit (provision) 15.0 (31.4) 99.9 (78.7)
Minority interest -- (1.5) 1.7 (12.4)
Net income (loss) from
continuing operations before
preferred stock dividends (24.5) 47.0 (161.8) 203.5
Discontinued operations, net of
tax benefit -- -- -- (8.5)
Preferred stock dividends -- (2.7) (2.5) (7.9)
Net income (loss) available to
common shareholders $(24.5) $44.3 $(164.3) $187.1
Net income (loss) per common share
(fully-diluted):
Income (loss) from continuing
operations $(0.43) $1.28 $(3.57) $5.67
Discontinued operations -- -- -- (0.25)
Net income (loss) $(0.43) $1.28 $(3.57) $5.42
Weighted average common shares
outstanding (in millions) 57.5 34.5 46.0 34.5
(1) Earnings before interest, income taxes, depreciation,
amortization and restructuring and other charges.
September 30, December 31,
Summarized Balance Sheet Information 2002 2001
Cash and short-term investments:
Premcor Inc. $47.0 $2.1
Premcor USA Inc. 1.5 25.5
The Premcor Refining Group Inc. 109.5 484.2
Consolidated cash and short-term
investments 158.0 511.8
Cash restricted for debt service 51.9 30.8
Other working capital 81.8 (60.0)
Total assets 2,292.5 2,509.8
Long-term debt and exchangeable
preferred stock:
Premcor USA Inc. 40.1 239.2
The Premcor Refining Group Inc. 869.6 1,247.0
Consolidated long-term debt 909.7 1,486.2
Total common stockholders' equity 658.6 294.7
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended Nine months ended
September 30, September 30,
(unaudited) 2002 2001 2002 2001
Selected Volumetric and Per Barrel Data
Production (Mbbls per day) 453.9 452.2 454.8 459.6
Crude oil throughput (Mbbls per day) 415.4 429.5 432.4 438.8
Per barrel of throughput:
Gross margin $3.72 $6.97 $3.93 $8.66
Operating expenses 2.87 2.65 2.87 2.97
Market Indicators (dollars per barrel)
West Texas Intermediate, or "WTI"
(sweet) $28.34 $26.81 $25.41 $27.84
Crack Spreads:*
Gulf Coast 3/2/1 2.64 3.41 2.93 4.98
Gulf Coast 2/1/1 2.22 3.27 2.42 4.54
Chicago 3/2/1 4.80 9.21 4.59 9.04
Chicago 5/3/2 4.63 9.13 4.38 8.83
Crude Oil Differentials:
WTI less WTS (sour) 1.31 2.02 1.26 3.11
WTI less Maya (heavy sour) 4.92 7.63 4.90 9.57
WTI less Dated Brent (foreign) 1.37 1.43 1.01 1.68
Natural Gas (per mmbtu) 3.19 3.01 2.92 4.90
* 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
Three months ended September 30, 2002
Port
Selected Refinery Data (unaudited) Arthur Lima Hartford Total
Operating results (dollars in millions):
Gross margin:
Gulf Coast 3/2/1 $52.5 $34.1 $14.3 $100.9
Chicago 3/2/1 vs. Gulf Coast 3/2/1 -- 27.9 11.7 39.6
Crude oil differentials
to benchmark 67.1 (14.3) 4.4 57.1
Product differentials to benchmark (31.8) (7.7) (16.1) (55.6)
Realized gross margin 87.8 40.0 14.2 142.0
Operating expenses 64.3 26.3 19.0 109.6
Net refining margin 23.5 13.7 (4.8) 32.4
Depreciation and amortization 13.0 5.9 -- 18.9
Per barrel of throughput (in dollars):
Gross margin:
Gulf Coast 3/2/1 $2.64 $2.64 $2.64 $2.64
Chicago 3/2/1 vs. Gulf Coast 3/2/1 -- 2.16 2.16 1.04
Crude oil differentials
to benchmark 3.38 (1.11) 0.81 1.49
Product differentials to benchmark (1.60) (0.59) (2.98) (1.45)
Realized gross margin 4.42 3.09 2.63 3.72
Operating expenses 3.24 2.03 3.51 2.87
Net refining margin 1.18 1.06 (0.89) 0.85
Depreciation and amortization 0.65 0.46 -- 0.49
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended September 30, 2001
Port
Selected Refinery Data (unaudited) Arthur Lima Hartford Total
Operating results (dollars in millions):
Gross margin:
Gulf Coast 3/2/1 $67.5 $47.0 $20.0 $134.5
Chicago 3/2/1 vs. Gulf Coast 3/2/1 -- 80.0 34.1 114.1
Crude oil differentials to
benchmark 111.0 (16.2) 14.1 108.9
Product differentials to benchmark (39.4) (27.4) (15.3) (82.1)
Realized gross margin 139.1 83.4 52.9 275.4
Operating expenses 60.9 26.3 17.7 104.9
Net refining margin 78.2 57.1 35.2 170.5
Depreciation and amortization 12.1 5.7 4.0 21.8
Per barrel of throughput (in dollars):
Gross margin:
Gulf Coast 3/2/1 $3.41 $3.41 $3.41 $3.41
Chicago 3/2/1 vs. Gulf Coast 3/2/1 -- 5.80 5.80 2.89
Crude oil differentials to
benchmark 5.60 (1.17) 2.40 2.76
Product differentials to benchmark (1.99) (1.99) (2.60) (2.08)
Realized gross margin 7.02 6.04 9.00 6.97
Operating expenses 3.07 1.91 3.01 2.65
Net refining margin 3.94 4.14 5.99 4.32
Depreciation and amortization 0.61 0.41 0.68 0.55
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 a daily valuation of actual refinery feedstocks at market and a
daily valuation of actual refinery production at market. The result of this
calculation is a standard refinery gross margin. Since it is not possible to
ratably deliver daily priced feedstocks to our refineries and since it is not
possible to realize the value of refinery production on the day it is
produced, the actual refinery gross margin differs from the standard. These
differences arise from the fact that 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 and is further
determined by the channel of trade through which it is marketed. Inventory
fluctuations and hedging activities with their attendant product grade,
location and time basis risks lead to further deviations from the standard
daily feedstock and product valuations. These variations from the standard
are allocated to each refinery on a reasonable basis, usually driven by volume
of crude input. As a result of these 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 generally accepted
accounting principles.
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended September 30, 2002
Selected Volumetric Data
(in thousands of Port
barrels per day) Arthur Lima Hartford Total
Feedstocks:
Crude oil throughput:
Sweet -- 136.2 -- 136.2
Light/Medium sour 36.5 4.4 58.9 99.8
Heavy sour 179.4 -- -- 179.4
Total crude oil 215.9 140.6 58.9 415.4
Unfinished and blendstocks 23.0 (6.7) 5.6 21.9
Total feedstocks 238.9 133.9 64.5 437.3
Production:
Light products:
Conventional gasoline 92.4 70.1 28.0 190.5
Premium and reformulated
gasoline 21.0 13.6 7.1 41.7
Diesel fuel 63.0 16.1 20.4 99.5
Jet fuel 26.0 22.9 -- 48.9
Petrochemical products 20.6 6.9 2.6 30.1
Total light products 223.0 129.6 58.1 410.7
Petroleum coke and sulfur 27.0 2.8 3.4 33.2
Residual oil 6.8 2.2 1.0 10.0
Total production 256.8 134.6 62.5 453.9
Three months ended September 30, 2001
Selected Volumetric Data
(in thousands of Port
barrels per day) Arthur Lima Hartford Total
Feedstocks:
Crude oil throughput:
Sweet -- 149.5 8.3 157.8
Light/Medium sour 41.2 0.5 48.9 90.6
Heavy sour 174.4 -- 6.7 181.1
Total crude oil 215.6 150.0 63.9 429.5
Unfinished and blendstocks 17.9 (8.1) 3.1 12.9
Total feedstocks 233.5 141.9 67.0 442.4
Production:
Light products:
Conventional gasoline 82.2 73.3 30.0 185.5
Premium and reformulated
gasoline 24.0 13.7 6.5 44.2
Diesel fuel 76.1 18.5 22.0 116.6
Jet fuel 17.9 25.8 -- 43.7
Petrochemical products 17.2 7.0 2.7 26.9
Total light products 217.4 138.3 61.2 416.9
Petroleum coke and sulfur 22.5 3.1 3.7 29.3
Residual oil 4.3 1.9 (0.2) 6.0
Total production 244.2 143.3 64.7 452.2
Premcor Inc. and Subsidiaries
Earnings Release
Nine months ended September 30, 2002
Port
Selected Refinery Data (unaudited) Arthur Lima Hartford Total
Operating results (dollars in millions):
Gross margin:
Gulf Coast 3/2/1 $183.2 $112.8 $49.8 $345.7
Chicago 3/2/1 vs. Gulf Coast 3/2/1 -- 63.6 28.1 91.7
Crude oil differentials
to benchmark 247.6 (30.0) 22.5 240.2
Product differentials to benchmark (142.8) (26.7) (43.8) (213.3)
Realized gross margin 288.0 119.7 56.6 464.3
Operating expenses 198.2 83.5 56.5 338.2
Net refining margin 89.8 36.2 0.1 126.1
Depreciation and amortization 39.4 17.5 2.9 59.8
Per barrel of throughput (in dollars):
Gulf Coast 3/2/1
Chicago 3/2/1 vs. Gulf Coast 3/2/1 $2.93 $2.93 $2.93 $2.93
Chicago 3/2/1 vs. Gulf Coast 3/2/1 -- 1.65 1.65 0.78
Crude oil differentials to benchmark 3.96 (0.78) 1.32 2.03
Product differentials to benchmark (2.28) (0.69) (2.58) (1.81)
Realized gross margin 4.60 3.11 3.33 3.93
Operating expenses 3.17 2.17 3.32 2.87
Net refining margin 1.44 0.94 0.01 1.07
Depreciation and amortization 0.63 0.45 0.17 0.51
Premcor Inc. and Subsidiaries
Earnings Release
Nine months ended September 30, 2001
Selected Refinery Data (unaudited)
Port Blue
Arthur Lima Hartford Island* Total
Operating results (dollars in millions):
Gross margin:
Gulf Coast 3/2/1 $305.9 $194.3 $88.7 $7.2 $596.1
Chicago 3/2/1 vs.
Gulf Coast 3/2/1 -- 158.7 72.5 5.9 237.1
Crude oil differentials to
benchmark 441.2 (65.6) 52.7 1.4 429.7
Product differentials to
benchmark (143.5) (32.2) (42.9) (7.1) (225.7)
Realized gross margin 603.6 255.2 171.0 7.4 1,037.2
Operating expenses 211.1 85.1 54.2 5.4 355.8
Net refining margin 392.5 170.2 116.8 1.9 681.4
Depreciation and
amortization 35.0 16.3 11.8 1.1 64.2
Per barrel of throughput (in dollars):
Gulf Coast 3/2/1
Chicago 3/2/1 vs. Gulf Coast
3/2/1 $4.98 $4.98 $4.98 $4.98 $4.98
Chicago 3/2/1 vs. Gulf Coast
3/2/1 -- 4.07 4.07 4.07 1.98
Crude oil differentials to
benchmark 7.18 (1.68) 2.95 0.96 3.59
Product differentials to
benchmark (2.33) (0.83) (2.41) (4.91) (1.88)
Realized gross margin 9.82 6.54 9.59 5.10 8.66
Operating expenses 3.41 2.18 3.04 3.75 2.97
Net refining margin 6.40 4.36 6.55 1.34 5.69
Depreciation and
amortization 0.57 0.42 0.66 0.76 0.54
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 a daily valuation of actual refinery feedstocks at market and a
daily valuation of actual refinery production at market. The result of this
calculation is a standard refinery gross margin. Since it is not possible to
ratably deliver daily priced feedstocks to our refineries and since it is not
possible to realize the value of refinery production on the day it is
produced, the actual refinery gross margin differs from the standard. These
differences arise from the fact that 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 and is further
determined by the channel of trade through which it is marketed. Inventory
fluctuations and hedging activities with their attendant product grade,
location and time basis risks lead to further deviations from the standard
daily feedstock and product valuations. These variations from the standard
are allocated to each refinery on a reasonable basis, usually driven by volume
of crude input. As a result of these 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 generally accepted
accounting principles.
* Closed January 2001
Premcor Inc. and Subsidiaries
Earnings Release
Nine months ended September 30, 2002
Selected Volumetric Data Port
(in thousands of barrels per day) Arthur Lima Hartford Total
Feedstocks:
Crude oil throughput:
Sweet -- 137.7 -- 137.7
Light/Medium sour 39.5 3.3 59.1 101.9
Heavy sour 189.6 -- 3.2 192.8
Total crude oil 229.1 141.0 62.3 432.4
Unfinished and blendstocks 5.7 (6.0) 4.2 3.9
Total feedstocks 234.8 135.0 66.5 436.3
Production:
Light products:
Conventional gasoline 83.5 73.1 29.9 186.5
Premium and
reformulated gasoline 21.6 11.4 6.3 39.3
Diesel fuel 64.7 17.4 20.8 102.9
Jet fuel 27.7 22.1 -- 49.8
Petrochemical products 18.3 7.5 3.0 28.8
Total light products 215.8 131.5 60.0 407.3
Petroleum coke and sulfur 29.9 2.8 4.1 36.8
Residual oil 7.3 2.0 1.4 10.7
Total production 253.0 136.3 65.5 454.8
Premcor Inc. and Subsidiaries
Earnings Release
Nine months ended September 30, 2001
Selected Volumetric Data Port Blue
Arthur Lima Hartford Island* Total
(in thousands of barrels per day)
Feedstocks:
Crude oil throughput:
Sweet -- 138.3 4.5 4.2 147.0
Light/Medium sour 48.8 4.7 54.9 1.1 109.5
Heavy sour 176.4 -- 5.9 -- 182.3
Total crude oil 225.2 143.0 65.3 5.3 438.8
Unfinished and blendstocks 10.8 (5.4) 1.4 0.5 7.3
Total feedstocks 236.0 137.6 66.7 5.8 446.1
Production:
Light products:
Conventional gasoline 81.9 71.0 29.4 0.2 182.5
Premium and reformulated
gasoline 24.6 12.2 6.9 3.4 47.1
Diesel fuel 74.4 20.6 22.1 1.5 118.6
Jet fuel 18.6 23.2 -- -- 41.8
Petrochemical products 18.9 6.9 3.1 0.1 29.0
Total light products 218.4 133.9 61.5 5.2 419.0
Petroleum coke and sulfur 26.5 2.9 4.0 -- 33.4
Residual oil 4.6 2.1 -- 0.5 7.2
Total production 249.5 138.9 65.5 5.7 459.6
* Closed January 2001
SOURCE Premcor Inc.
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Related links:
http://www.premcorinc.com
CONTACT:
Media & Investors, Joe Watson,
+1-203-698-7510, or Investors, Karen Davis, +1-314-854-1424, or
Michael Taylor, +1-314-719-2304, all of Premcor Inc.
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