May 13, 2008
Editor's note: This news release may be found in more detail here
EL PASO, Texas, May 12, 2008 (BUSINESS WIRE) -- Western Refining, Inc. (NYSE:WNR) today reported a net loss of $40.4 million, or $0.60 per diluted share, for the first quarter ended March 31, 2008, versus net earnings of $62.6 million, or $0.93 per diluted share, for the same period in 2007.
While throughput at the Four Corners and Yorktown refineries continued to improve in the first quarter of 2008, the benefit of this increase was more than offset by rising crude oil prices. The increase in feedstock costs, coupled with softness in finished product prices, particularly gasoline and lower valued products such as asphalt, fuel oil and petroleum coke, resulted in lower refining margins compared to the same period last year.
"Despite the challenging refining environment, we are continuing to make significant progress on our operational improvement initiatives, which led to improved operating performance at our refineries in the first quarter," said Paul Foster, Western's President and Chief Executive Officer.
Total refinery throughput for the first quarter of 2008 was 231,233 barrels per day, which included 209,902 barrels per day of crude oil. Total refinery throughput for the first quarter of 2007 was 133,939 barrels per day, including 118,889 barrels per day of crude oil. Refinery gross margin per throughput barrel was $5.60 for the quarter ended March 31, 2008, compared to $12.43 for the same period in 2007. The financial information for the first quarter of 2008 includes the results of the three refineries and the wholesale and retail operations acquired from Giant on May 31, 2007. The acquired operations of Giant are not included in the operating results prior to May 31, 2007.
Total capital expenditures in the 2008 first quarter totaled $70.6 million, and included spending on low sulfur gasoline projects at the El Paso and Yorktown refineries. The Company had $40.3 million of cash and cash equivalents as of March 31, 2008, and increased the borrowing capacity of its revolving credit facility in February 2008, increasing it from $500 million to $800 million.
"We are pleased with the support of our lenders, who have demonstrated their confidence in Western and our management team," said Foster. "Enhancing the financial flexibility of the Company is a priority for us, and given the options available and the support of our lenders, we are confident that we will continue to successfully execute on this priority as we have on others."
2008 Operating Initiatives
Western today affirmed that it remains on track with the implementation of its previously announced operational enhancements and financial improvement initiatives. Achievements in the first quarter include:
-- Successful start up of the low sulfur gasoline unit at Yorktown refinery. With the ability to produce low sulfur gasoline grades, Western expects to begin realizing higher product margins, as well as lower transportation costs in the second quarter, through additional sales in the local markets near the Yorktown refinery. In addition, this new unit has the capacity to allow Western the opportunity to purchase external high sulfur gasoline stocks, which can be upgraded to higher valued low sulfur gasoline. It also enables the Company to increase throughput of heavier and cost advantaged crudes at Yorktown. Western expects the project to begin contributing approximately $2.0 million to $2.5 million per month of increased earnings in the second quarter of 2008.
-- Completion of the DuPont SAR project at the El Paso refinery. Processing of acid gas began in the first quarter of 2008, when Western began raising sour crude runs from approximately 10% to 20% of crude throughput at the refinery.
Additional initiatives for 2008 are proceeding on schedule and include:
-- Continuing the low sulfur gasoline project at the El Paso refinery. Completion of this project is anticipated in the second quarter of 2009, at which time Western will have the ability to raise sour crude runs up to 50% of crude oil throughput at the refinery.
-- Continuing to work on a number of operational initiatives at all four refineries, targeted at reducing processing costs and improving energy efficiency.
Commenting on current market conditions, Foster said, "While refining margins in the first quarter were very disappointing, we have begun to see some improvement in gasoline margins as a result of inventory draws and continued low refinery utilization rates as we begin the spring and summer driving season. Distillate margins also continue to be strong despite pressure from high crude oil costs."