Tesoro Corporation (NYSE: TSO) is a Fortune 100 and a Fortune Global 500 company headquartered in San Antonio, Texas, with 2008 annual revenues of $28.3 billion, and approximately 5,600 employees.
Tesoro is an independent refiner and marketer of petroleum products, operating seven refineries in the Western United States with a combined rated crude oil capacity of approximately 664,000 barrels per day. Tesoro’s retail-marketing system includes over 870 branded retail gas stations, of which more than 380 are company-operated under the Tesoro, Shell, Mirastar and USA Gasoline brands.
Tesoro Petroleum Corporation is an independent energy company principally involved in refining, distributing, and marketing petroleum products. With five refineries in Alaska, Hawaii, North Dakota, Utah, and Washington state having a combined capacity of 390,000 barrels per day, Tesoro is one of the largest independent refining and marketing firms in the western United States. On the marketing side, the company distributes its products in Alaska, Hawaii, and other western states through about 640 branded outlets, 160 of which are owned by the company. Through an agreement with Wal-Mart Stores, Inc., Tesoro sells its gasoline at selected Wal-Mart locations in the western United States, with these stations operating under the Mirastar brand, which was developed by the company exclusively for the retailing giant. Outside of its core refining and marketing activities, Tesoro also distributes petroleum products and provides logistical support services to the marine and offshore exploration and production sectors.
In its early years Tesoro grew rapidly through the acquisition of a wide spectrum of energy businesses. This growth weakened the company's financial status, however, and it was later forced to shed many of its subsidiaries and devote a large amount of its attention to avoiding takeover, both internal and external, and battling with dissident shareholders. Later, by the late 1990s, the company appeared to have found a formula for success by abandoning its upstream operations and beefing up its core downstream activities.
Tesoro Corporation (Tesoro), incorporated in 1968, is an independent petroleum refiners and marketers in the United States. The Company’s subsidiaries, operating through two business segments: manufacture and sell transportation fuels. Its refining operating segment (refining), which operates seven refineries in the western United States, refines crude oil and other feedstocks into transportation fuels, such as gasoline, gasoline blendstocks, jet fuel and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas, petroleum coke and asphalt. This operating segment sells refined products in wholesale and bulk markets to a range of customers within the operations area. Its retail operating segment (retail) sells transportation fuels and convenience products in 15 states through a network of 880 retail stations, under the Tesoro, Shell, USA Gasoline and Mirastar brands.
Refining
The Company owns and operates seven petroleum refineries located in the western United States and sells transportation fuels to a range of customers. Its refineries produce a transportation fuels which it sells, and purchases the remainder from other refiners and suppliers. As of December 31, 2010, the Company’s seven refineries had a combined crude oil capacity of 665 thousand barrels per day (Mbpd). It purchases crude oil and other feedstocks from both domestic and foreign sources either through term agreements with renewal provisions or in the spot market. Its refineries process both heavy and light crude oils. It receives crude oils and ship refined products through owned and third-party pipelines. During the year ended December 31, 2010, it owned and operated over 900 miles of crude oil and product pipelines, located in North Dakota, Montana, Alaska and Hawaii, through which it transports more than 355 thousand barrels per day within its refining system. It operates a trucking business at three of its refineries to transport crude oil to the refinery or refined products to its retail outlets and other customers. As of December 31, 2010, the Company operated 18 refined products terminals at its refineries and other locations in California, Washington, Alaska, Hawaii, North Dakota, Utah and Idaho. It also distributes products through third-party terminals and truck racks in its market areas and through purchases and exchange arrangements with other refining and marketing companies.
The Company’s 166 thousand barrels per day Golden Eagle refinery is located in Martinez, California. It sources crude oil for its Golden Eagle refinery from California, Alaska and foreign locations. The Golden Eagle refinery also processes intermediate feedstocks. The refinery produces transportation fuels, including gasoline and diesel fuel. The refinery also produces heavy fuel oils, liquefied petroleum gas and petroleum coke. It operates refined products terminals at Stockton, California and at the refinery. It distributes refined products through third-party terminals in its market areas and through purchase and exchange arrangements with other refining and marketing companies. It also lease third-party clean product tanks with access to the San Francisco Bay.
The Company’s 97 thousand barrels per day Los Angeles refinery is located in Wilmington, California. It sources crude oil for its Los Angeles refinery from California, as well as foreign locations. The Los Angeles refinery also processes intermediate feedstocks. The refinery produces transportation fuels, including gasoline and diesel fuel, as well as conventional gasoline, diesel fuel and jet fuel. The refinery also produces heavy fuel oils, liquefied petroleum gas and petroleum coke. Its Los Angeles refinery leases a marine terminal at the Port of Long Beach, which enables it to receive crude oil and ship refined products. It operates a refined products terminal at the Los Angeles refinery and distributes refined products through third-party terminals in its market areas and through purchases and exchange arrangements with other refining and marketing companies. It also leases refined product storage tanks at third-party terminals in Southern California.
The Company’s 120 thousand barrels per day Anacortes, Washington refinery is located in northwest Washington. It sources its Washington refinery’s crude oil from Alaska, Canada and other foreign locations. The Washington refinery also processes intermediate feedstocks, including heavy vacuum gas oil, produced by some of its other refineries and purchased in the spot-market from third-parties. The refinery produces transportation fuels, such as gasoline, including gasoline and components for gasoline, diesel fuel and jet fuel. The refinery also produces heavy fuel oils, liquefied petroleum gas and asphalt. Its Washington refinery receives Canadian crude oil through a third-party pipeline originating in Edmonton, Alberta, Canada.
The Company receives other crude oils through its Washington refinery’s marine terminal. The refinery ships transportation fuels, including gasoline, jet fuel and diesel fuel through a third-party pipeline system, which serves western Washington and Portland, Oregon. It also delivers refined products through its marine terminal through ships and barges to West Coast and Pacific Rim markets. It operates a distillate terminal at its Washington refinery and operates refined products terminals at Port Angeles and Vancouver, Washington, all of which are supplied primarily by its refinery. It also distributes refined products through third-party terminals in its market areas, and through purchases and exchange arrangements with other refining and marketing companies.
The Company’s 72 thousand barrels per day Alaska refinery is located on the Cook Inlet. Its Alaska refinery processes crude oil from Alaska and foreign locations. The refinery produces transportation fuels, including gasoline and gasoline blendstocks, jet fuel and diesel fuel, as well as other products, including heating oil, heavy fuel oils, liquefied petroleum gas and asphalt. It receives crude oil into its Kenai marine terminal by tanker and through its owned and operated crude oil pipeline. It also owns and operates a common-carrier refined products pipeline that runs from the Alaska refinery to its two terminal facilities in Anchorage and to the Anchorage International Airport. It also delivers refined products through its Kenai marine terminal and from the Port of Anchorage marine facility to customers through ships and barges. It operates refined products terminals at Nikiski and Anchorage, which are supplied by its Alaska refinery. It also distributes refined products through a third-party terminal which is supplied through an exchange arrangement with another refining company.
The Company’s 94 thousand barrels per day Hawaii refinery is located in Kapolei. It supplies the refinery with crude oil from Southeast Asia, the Middle East, Russia and other foreign sources. The refinery produces gasoline and gasoline blendstocks, jet fuel, diesel fuel, heavy fuel oils, liquefied petroleum gas and asphalt. It transports crude oil to Hawaii in tankers, which discharge through its single-point mooring, approximately two miles offshore from the refinery. It owns and operates a refined products pipeline from its Hawaii refinery to its Sand Island terminal and third-party terminals on the island of Oahu. It operates refined products terminals on Maui and on the Big Island of Hawaii and operates a diesel terminal on Oahu. It also has an aviation fuel terminal in Kauai, and distributes refined products from its refinery to customers through third-party terminals in its market areas.
The Company’s 58 thousand barrels per day North Dakota refinery is located on the Missouri River. It supplies the refinery primarily with crude oil produced from the Williston Basin gathered and transported by its crude oil pipeline system. The refinery produces transportation fuels, including gasoline, diesel fuel and jet fuel, as well as other products, including heavy fuel oils and liquefied petroleum gas. It owns a crude oil pipeline system, consisting of an approximate 23 thousand barrels per day truck-based crude oil gathering operation and approximately 700 miles of trunkline and gathering pipelines. The Company distributes its refinery’s production through a third-party refined products pipeline system, which serves areas from Mandan, North Dakota to Minneapolis, Minnesota.
The Company’s 58 thousand barrels per day Utah refinery is located in Salt Lake City. Its Utah refinery processes crude oils primarily from Utah, Colorado, Wyoming and Canada. The refinery produces transportation fuels, including gasoline, diesel fuel and jet fuel, as well as other products, including heavy fuel oils and liquefied petroleum gas. Its Utah refinery receives crude oil through third-party pipelines from oil fields in Utah, Colorado, Wyoming and Canada. It operates a refined products terminal adjacent to its refinery. Refined products received at this terminal are sold locally and regionally by both it and third-parties through its truck loading rack. It also owns and operates refined products terminals in Boise and Burley, Idaho.
The Company sells refined products, including gasoline and gasoline blendstocks, jet fuel, diesel fuel, heavy fuel oils and residual products in both the bulk and wholesale markets. As of December 31, 2010, it sold over 250 thousand barrels per day in the wholesale market primarily through independent unbranded distributors that sell refined products purchased from it through more than 60 owned and third-party terminals. Its bulk sales are primarily to independent unbranded distributors, other refining and marketing companies, utilities, railroads, airlines and marine and industrial end-users. These products are distributed by pipelines, ships, barges, railcars and trucks. It sells gasoline and gasoline blendstocks in both the bulk and wholesale markets in the western United States.
The Company sells, at wholesale, to unbranded distributors and high-volume retailers, and it distributes refined product through owned and third-party terminals. It supplies jet fuel to passenger and cargo airlines at airports in Alaska, Hawaii, California, Washington, Utah and other western states. It also supplies jet fuel to the United States military from its refineries in Alaska, Hawaii and North Dakota. It sells diesel fuel on a wholesale basis for marine, transportation, industrial and agricultural use. It sells lesser amounts to end-users through marine terminals and for power generation in Hawaii and Washington.
The Company sells heavy fuel oils to other refiners, third-party resellers, electric power producers and marine and industrial end-users. Its refineries supply substantially all of the marine fuels, which it sells through facilities at Port Angeles, Seattle, and Tacoma, Washington, and Portland, Oregon, and through its refinery terminals in Washington, Alaska and Hawaii. Its Golden Eagle and Los Angeles refineries produce petroleum coke, which it sells to industrial end-users. Tesoro is also a supplier of liquid asphalt for paving and construction companies in Washington, Alaska and Hawaii.
Retail
The Company sells gasoline and diesel fuel in the western United States through the Company-operated retail stations and agreements with third-party branded dealers and distributors (jobber/dealers). Its retail network provides a committed outlet for a portion of the transportation fuels produced by its refineries. During 2010, it operated retail stations including convenience stores, which sells a range of merchandise items. As of December 31, 2010, its retail segment included a network of 880 branded retail stations under the Tesoro, Shell, USA Gasoline and Mirastar brands. As of December 31, 2010, its Mirastar brand was used at 29 Wal-Mart stores in eight western states. It also operates under the Shell brand at certain retail stations in California and owns the rights to the USA Gasoline brand in California, New Mexico and Washington.
Freed from the distractions of takeover battles and disgruntled shareholders, Tesoro was able to focus on developing a longer range plan to secure the company's future. Eventually, near the end of the century, the company decided to focus on its downstream operations. To that end, Tesoro in May 1998 completed the acquisition of a refinery and retail outlets in Hawaii that had been owned by Broken Hill Proprietary Co. Ltd. The $252.2 million deal included a 95,000-barrel-per-day refinery, located about 22 miles west of Honolulu at Kapolei, and 32 retail gasoline service stations. Tesoro then gained its third refinery in August 1998 when it acquired a 108,000-barrel-per-day refinery in Anacortes, Washington, from Shell Oil Company for $280.1 million. The acquisitions increased the company's revenues to $1.49 billion for 1998, a significant increase over the $937.9 million figure of the preceding year.
This expansion also increased the company's debt load from $148 million to $520 million, which highlighted the need for a paring down of operations. In early 1999, then, the company announced that it would seek to sell or spin off its exploration and production operations. The divestment of the upstream side of the company was completed in December 1999 through two transactions. The domestic assets were sold to EEX Corporation for $215 million, while the Bolivian exploration and production operations were sold to U.K.-based BG PLC for $100 million. The divestments enabled Tesoro to reduce its debt to less than $400 million.
In addition to its newly bolstered refining operations, Tesoro in early 2000 also had a retail network consisting of about 245 stations, 64 of which were company owned and operated. In January 2000 the company moved to expand its retail side by entering into an agreement with Wal-Mart Stores, Inc. to build and operate filling stations at Wal-Mart stores in 11 western states--later expanded to 17 states. The companies later agreed to use a new brand, Mirastar, for the stations. By the end of 2000, there were 20 Mirastar outlets in operation, with plans for an additional 80-90 units to be opened each year from 2001 to 2003. Tesoro reported 2000 earnings of $73.3 million on revenues of $5.1 billion.
In September 2001 Tesoro further expanded both its refining and retailing operations through a $677 million deal with BP p.l.c. Acquired thereby were a refinery in Salt Lake City with a capacity of 55,000 barrels a day and a 60,000-barrel-per-day refinery in Mandan, North Dakota. This brought Tesoro's total refinery capacity to 390,000 barrels per day. Also included in the deal were 45 retail gasoline stations, contracts to supply 300 Amoco-branded stations, as well as associated pipelines, bulk storage facilities, and product distribution terminals. Around this same time, Tesoro announced that it would spend more than $85 million on a major upgrade of its refinery in Washington. The company also said that it was exploring its options regarding its marine services unit. A divestment of the unit would enable Tesoro to be fully focused on refining and retailing and perhaps to pay down some of its debt, which had increased to more than $1 billion following the BP deal. In November 2001 Tesoro acquired 37 retail gas stations with convenience stores from Gull Industries, Inc. The stations were located in Washington, Oregon, and Idaho.
Looking back, Tesoro had moved far beyond the scattershot ways of its not too distant past, when it consisted of a far-flung collection of mostly unrelated parts. With a sell-off of the marine services unit a distinct possibility, Tesoro seemed to be on the verge of completing its transformation into a leading independent refining and retailing company concentrating on the western United States. The company was very interested in bolstering its presence in the huge California market, and it seemed likely that the firm would pursue the acquisition of a refinery--as well as retail outlets--in that state. Opportunities stemming from the continued consolidation and reshuffling of the U.S. oil industry were bound to arise. Overall, Tesoro Petroleum seemed well on its way to putting its troubled past behind it.
Principal Subsidiaries: Tesoro Alaska Company; Tesoro Hawaii Corporation; Tesoro Marine Services Holding Company; Tesoro Marine Services, Inc.; Tesoro Petroleum Companies, Inc.; Tesoro Refining, Marketing & Supply Company; Tesoro West Coast Company.
Principal Competitors: Exxon Mobil Corporation; BP p.l.c.; ChevronTexaco Corporation; Phillips Petroleum Company; Valero Energy Corporation; Arctic Slope Regional Corporation
OVERALL
Beta: 1.35
Market Cap (Mil.): $3,421.73
Shares Outstanding (Mil.): 143.77
Annual Dividend: --
Yield (%): --
FINANCIALS
TSO Industry Sector
P/E (TTM): 14.61 19.18 11.76
EPS (TTM): 165.25 -- --
ROI: 3.74 0.96 4.62
ROE: 7.43 1.77 6.06
Statistics:
Public Company
Incorporated: 1964
Employees: 2,100
Sales: $5.1 billion (2000)
Stock Exchanges: New York Pacific
Ticker Symbol: TSO
NAIC: 324110 Petroleum Refineries; 422710 Petroleum Bulk Stations and Terminals; 447190 Other Gasoline Stations; 447110 Gasoline Stations with Convenience Stores
Key Dates:
1964: Robert V. West, Jr., founds Tesoro Petroleum Corporation as a spinoff of Texstar Corporation.
1968: Tesoro merges with Intex Oil Company and Sioux Oil Company.
1969: The company acquires half-interest in British Petroleum's oil-producing operations in Trinidad and Tobago, with the island nation's government holding the other half; Tesoro begins construction of an oil refinery on the west coast of Alaska.
1971: The company enters the marketing sector through the purchase of the S&N Investment Company and the Digas Company, operator of gasoline service stations.
1974: Following the purchase of two sizable exploratory tracts in Bolivia, Tesoro Inter-American Production Company is formed and takes responsibility for Caribbean and Latin American operations.
1975: The company spends $83 million for a 36.7 percent interest in the Puerto Rican firm Commonwealth Oil Refining Company (Corco).
1977: Tesoro writes off $59 million of its investment in Corco, which soon files for bankruptcy.
1980: The company fends off the first of several takeover attempts, this one by Diamond Shamrock Corporation.
1985: The company sells its share of Trinidad-Tesoro to the island nation's government.
1988: Tesoro sells its domestic oil and gas producing properties to American Exploration.
1995: The company sells some of its oil and gas production properties in Texas to Coastal Corporation for $74 million.
1998: The company acquires two refineries in Hawaii and Washington state, as well as 32 retail gas stations in Hawaii.
1999: The company's exit from exploration and production is completed by selling domestic operations to EEX Corporation and the Bolivian-based activities to BG PLC.
2000: An agreement is reached with Wal-Mart Stores, Inc. to open and operate filling stations at Wal-Mart outlets under the name Mirastar.
2001: Tesoro acquires refineries in Utah and North Dakota and 45 gas stations in a $677 million deal with BP p.l.c.
Name Age Since Current Position
Steven Grapstein 53 2010 Non-Executive Independent Chairman of the Board
Gregory Goff 54 2010 President, Chief Executive Officer, Director
G. Scott Spendlove 47 2011 Chief Financial Officer, Senior Vice President
Charles Parrish 53 2009 Executive Vice President, General Counsel, Secretary
Dan Romasko 2011 Executive Vice President - Operations
Claude Flagg 57 2010 Senior Vice President - Strategy and Business Development
Tracy Jackson 41 2011 Vice President - Finance, Treasurer
Arlen Glenewinkel 54 2006 Vice President, Controller
Robert Goldman 69 2004 Independent Director
Michael Wiley 60 2005 Independent Director
Rodney Chase 67 2006 Independent Director
James Nokes 64 2007 Independent Director
Patrick Yang 63 2010 Independent Director
Susan Tomasky 57 2011 Independent Director
Address:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
U.S.A.
Tesoro is an independent refiner and marketer of petroleum products, operating seven refineries in the Western United States with a combined rated crude oil capacity of approximately 664,000 barrels per day. Tesoro’s retail-marketing system includes over 870 branded retail gas stations, of which more than 380 are company-operated under the Tesoro, Shell, Mirastar and USA Gasoline brands.
Tesoro Petroleum Corporation is an independent energy company principally involved in refining, distributing, and marketing petroleum products. With five refineries in Alaska, Hawaii, North Dakota, Utah, and Washington state having a combined capacity of 390,000 barrels per day, Tesoro is one of the largest independent refining and marketing firms in the western United States. On the marketing side, the company distributes its products in Alaska, Hawaii, and other western states through about 640 branded outlets, 160 of which are owned by the company. Through an agreement with Wal-Mart Stores, Inc., Tesoro sells its gasoline at selected Wal-Mart locations in the western United States, with these stations operating under the Mirastar brand, which was developed by the company exclusively for the retailing giant. Outside of its core refining and marketing activities, Tesoro also distributes petroleum products and provides logistical support services to the marine and offshore exploration and production sectors.
In its early years Tesoro grew rapidly through the acquisition of a wide spectrum of energy businesses. This growth weakened the company's financial status, however, and it was later forced to shed many of its subsidiaries and devote a large amount of its attention to avoiding takeover, both internal and external, and battling with dissident shareholders. Later, by the late 1990s, the company appeared to have found a formula for success by abandoning its upstream operations and beefing up its core downstream activities.
Tesoro Corporation (Tesoro), incorporated in 1968, is an independent petroleum refiners and marketers in the United States. The Company’s subsidiaries, operating through two business segments: manufacture and sell transportation fuels. Its refining operating segment (refining), which operates seven refineries in the western United States, refines crude oil and other feedstocks into transportation fuels, such as gasoline, gasoline blendstocks, jet fuel and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas, petroleum coke and asphalt. This operating segment sells refined products in wholesale and bulk markets to a range of customers within the operations area. Its retail operating segment (retail) sells transportation fuels and convenience products in 15 states through a network of 880 retail stations, under the Tesoro, Shell, USA Gasoline and Mirastar brands.
Refining
The Company owns and operates seven petroleum refineries located in the western United States and sells transportation fuels to a range of customers. Its refineries produce a transportation fuels which it sells, and purchases the remainder from other refiners and suppliers. As of December 31, 2010, the Company’s seven refineries had a combined crude oil capacity of 665 thousand barrels per day (Mbpd). It purchases crude oil and other feedstocks from both domestic and foreign sources either through term agreements with renewal provisions or in the spot market. Its refineries process both heavy and light crude oils. It receives crude oils and ship refined products through owned and third-party pipelines. During the year ended December 31, 2010, it owned and operated over 900 miles of crude oil and product pipelines, located in North Dakota, Montana, Alaska and Hawaii, through which it transports more than 355 thousand barrels per day within its refining system. It operates a trucking business at three of its refineries to transport crude oil to the refinery or refined products to its retail outlets and other customers. As of December 31, 2010, the Company operated 18 refined products terminals at its refineries and other locations in California, Washington, Alaska, Hawaii, North Dakota, Utah and Idaho. It also distributes products through third-party terminals and truck racks in its market areas and through purchases and exchange arrangements with other refining and marketing companies.
The Company’s 166 thousand barrels per day Golden Eagle refinery is located in Martinez, California. It sources crude oil for its Golden Eagle refinery from California, Alaska and foreign locations. The Golden Eagle refinery also processes intermediate feedstocks. The refinery produces transportation fuels, including gasoline and diesel fuel. The refinery also produces heavy fuel oils, liquefied petroleum gas and petroleum coke. It operates refined products terminals at Stockton, California and at the refinery. It distributes refined products through third-party terminals in its market areas and through purchase and exchange arrangements with other refining and marketing companies. It also lease third-party clean product tanks with access to the San Francisco Bay.
The Company’s 97 thousand barrels per day Los Angeles refinery is located in Wilmington, California. It sources crude oil for its Los Angeles refinery from California, as well as foreign locations. The Los Angeles refinery also processes intermediate feedstocks. The refinery produces transportation fuels, including gasoline and diesel fuel, as well as conventional gasoline, diesel fuel and jet fuel. The refinery also produces heavy fuel oils, liquefied petroleum gas and petroleum coke. Its Los Angeles refinery leases a marine terminal at the Port of Long Beach, which enables it to receive crude oil and ship refined products. It operates a refined products terminal at the Los Angeles refinery and distributes refined products through third-party terminals in its market areas and through purchases and exchange arrangements with other refining and marketing companies. It also leases refined product storage tanks at third-party terminals in Southern California.
The Company’s 120 thousand barrels per day Anacortes, Washington refinery is located in northwest Washington. It sources its Washington refinery’s crude oil from Alaska, Canada and other foreign locations. The Washington refinery also processes intermediate feedstocks, including heavy vacuum gas oil, produced by some of its other refineries and purchased in the spot-market from third-parties. The refinery produces transportation fuels, such as gasoline, including gasoline and components for gasoline, diesel fuel and jet fuel. The refinery also produces heavy fuel oils, liquefied petroleum gas and asphalt. Its Washington refinery receives Canadian crude oil through a third-party pipeline originating in Edmonton, Alberta, Canada.
The Company receives other crude oils through its Washington refinery’s marine terminal. The refinery ships transportation fuels, including gasoline, jet fuel and diesel fuel through a third-party pipeline system, which serves western Washington and Portland, Oregon. It also delivers refined products through its marine terminal through ships and barges to West Coast and Pacific Rim markets. It operates a distillate terminal at its Washington refinery and operates refined products terminals at Port Angeles and Vancouver, Washington, all of which are supplied primarily by its refinery. It also distributes refined products through third-party terminals in its market areas, and through purchases and exchange arrangements with other refining and marketing companies.
The Company’s 72 thousand barrels per day Alaska refinery is located on the Cook Inlet. Its Alaska refinery processes crude oil from Alaska and foreign locations. The refinery produces transportation fuels, including gasoline and gasoline blendstocks, jet fuel and diesel fuel, as well as other products, including heating oil, heavy fuel oils, liquefied petroleum gas and asphalt. It receives crude oil into its Kenai marine terminal by tanker and through its owned and operated crude oil pipeline. It also owns and operates a common-carrier refined products pipeline that runs from the Alaska refinery to its two terminal facilities in Anchorage and to the Anchorage International Airport. It also delivers refined products through its Kenai marine terminal and from the Port of Anchorage marine facility to customers through ships and barges. It operates refined products terminals at Nikiski and Anchorage, which are supplied by its Alaska refinery. It also distributes refined products through a third-party terminal which is supplied through an exchange arrangement with another refining company.
The Company’s 94 thousand barrels per day Hawaii refinery is located in Kapolei. It supplies the refinery with crude oil from Southeast Asia, the Middle East, Russia and other foreign sources. The refinery produces gasoline and gasoline blendstocks, jet fuel, diesel fuel, heavy fuel oils, liquefied petroleum gas and asphalt. It transports crude oil to Hawaii in tankers, which discharge through its single-point mooring, approximately two miles offshore from the refinery. It owns and operates a refined products pipeline from its Hawaii refinery to its Sand Island terminal and third-party terminals on the island of Oahu. It operates refined products terminals on Maui and on the Big Island of Hawaii and operates a diesel terminal on Oahu. It also has an aviation fuel terminal in Kauai, and distributes refined products from its refinery to customers through third-party terminals in its market areas.
The Company’s 58 thousand barrels per day North Dakota refinery is located on the Missouri River. It supplies the refinery primarily with crude oil produced from the Williston Basin gathered and transported by its crude oil pipeline system. The refinery produces transportation fuels, including gasoline, diesel fuel and jet fuel, as well as other products, including heavy fuel oils and liquefied petroleum gas. It owns a crude oil pipeline system, consisting of an approximate 23 thousand barrels per day truck-based crude oil gathering operation and approximately 700 miles of trunkline and gathering pipelines. The Company distributes its refinery’s production through a third-party refined products pipeline system, which serves areas from Mandan, North Dakota to Minneapolis, Minnesota.
The Company’s 58 thousand barrels per day Utah refinery is located in Salt Lake City. Its Utah refinery processes crude oils primarily from Utah, Colorado, Wyoming and Canada. The refinery produces transportation fuels, including gasoline, diesel fuel and jet fuel, as well as other products, including heavy fuel oils and liquefied petroleum gas. Its Utah refinery receives crude oil through third-party pipelines from oil fields in Utah, Colorado, Wyoming and Canada. It operates a refined products terminal adjacent to its refinery. Refined products received at this terminal are sold locally and regionally by both it and third-parties through its truck loading rack. It also owns and operates refined products terminals in Boise and Burley, Idaho.
The Company sells refined products, including gasoline and gasoline blendstocks, jet fuel, diesel fuel, heavy fuel oils and residual products in both the bulk and wholesale markets. As of December 31, 2010, it sold over 250 thousand barrels per day in the wholesale market primarily through independent unbranded distributors that sell refined products purchased from it through more than 60 owned and third-party terminals. Its bulk sales are primarily to independent unbranded distributors, other refining and marketing companies, utilities, railroads, airlines and marine and industrial end-users. These products are distributed by pipelines, ships, barges, railcars and trucks. It sells gasoline and gasoline blendstocks in both the bulk and wholesale markets in the western United States.
The Company sells, at wholesale, to unbranded distributors and high-volume retailers, and it distributes refined product through owned and third-party terminals. It supplies jet fuel to passenger and cargo airlines at airports in Alaska, Hawaii, California, Washington, Utah and other western states. It also supplies jet fuel to the United States military from its refineries in Alaska, Hawaii and North Dakota. It sells diesel fuel on a wholesale basis for marine, transportation, industrial and agricultural use. It sells lesser amounts to end-users through marine terminals and for power generation in Hawaii and Washington.
The Company sells heavy fuel oils to other refiners, third-party resellers, electric power producers and marine and industrial end-users. Its refineries supply substantially all of the marine fuels, which it sells through facilities at Port Angeles, Seattle, and Tacoma, Washington, and Portland, Oregon, and through its refinery terminals in Washington, Alaska and Hawaii. Its Golden Eagle and Los Angeles refineries produce petroleum coke, which it sells to industrial end-users. Tesoro is also a supplier of liquid asphalt for paving and construction companies in Washington, Alaska and Hawaii.
Retail
The Company sells gasoline and diesel fuel in the western United States through the Company-operated retail stations and agreements with third-party branded dealers and distributors (jobber/dealers). Its retail network provides a committed outlet for a portion of the transportation fuels produced by its refineries. During 2010, it operated retail stations including convenience stores, which sells a range of merchandise items. As of December 31, 2010, its retail segment included a network of 880 branded retail stations under the Tesoro, Shell, USA Gasoline and Mirastar brands. As of December 31, 2010, its Mirastar brand was used at 29 Wal-Mart stores in eight western states. It also operates under the Shell brand at certain retail stations in California and owns the rights to the USA Gasoline brand in California, New Mexico and Washington.
Freed from the distractions of takeover battles and disgruntled shareholders, Tesoro was able to focus on developing a longer range plan to secure the company's future. Eventually, near the end of the century, the company decided to focus on its downstream operations. To that end, Tesoro in May 1998 completed the acquisition of a refinery and retail outlets in Hawaii that had been owned by Broken Hill Proprietary Co. Ltd. The $252.2 million deal included a 95,000-barrel-per-day refinery, located about 22 miles west of Honolulu at Kapolei, and 32 retail gasoline service stations. Tesoro then gained its third refinery in August 1998 when it acquired a 108,000-barrel-per-day refinery in Anacortes, Washington, from Shell Oil Company for $280.1 million. The acquisitions increased the company's revenues to $1.49 billion for 1998, a significant increase over the $937.9 million figure of the preceding year.
This expansion also increased the company's debt load from $148 million to $520 million, which highlighted the need for a paring down of operations. In early 1999, then, the company announced that it would seek to sell or spin off its exploration and production operations. The divestment of the upstream side of the company was completed in December 1999 through two transactions. The domestic assets were sold to EEX Corporation for $215 million, while the Bolivian exploration and production operations were sold to U.K.-based BG PLC for $100 million. The divestments enabled Tesoro to reduce its debt to less than $400 million.
In addition to its newly bolstered refining operations, Tesoro in early 2000 also had a retail network consisting of about 245 stations, 64 of which were company owned and operated. In January 2000 the company moved to expand its retail side by entering into an agreement with Wal-Mart Stores, Inc. to build and operate filling stations at Wal-Mart stores in 11 western states--later expanded to 17 states. The companies later agreed to use a new brand, Mirastar, for the stations. By the end of 2000, there were 20 Mirastar outlets in operation, with plans for an additional 80-90 units to be opened each year from 2001 to 2003. Tesoro reported 2000 earnings of $73.3 million on revenues of $5.1 billion.
In September 2001 Tesoro further expanded both its refining and retailing operations through a $677 million deal with BP p.l.c. Acquired thereby were a refinery in Salt Lake City with a capacity of 55,000 barrels a day and a 60,000-barrel-per-day refinery in Mandan, North Dakota. This brought Tesoro's total refinery capacity to 390,000 barrels per day. Also included in the deal were 45 retail gasoline stations, contracts to supply 300 Amoco-branded stations, as well as associated pipelines, bulk storage facilities, and product distribution terminals. Around this same time, Tesoro announced that it would spend more than $85 million on a major upgrade of its refinery in Washington. The company also said that it was exploring its options regarding its marine services unit. A divestment of the unit would enable Tesoro to be fully focused on refining and retailing and perhaps to pay down some of its debt, which had increased to more than $1 billion following the BP deal. In November 2001 Tesoro acquired 37 retail gas stations with convenience stores from Gull Industries, Inc. The stations were located in Washington, Oregon, and Idaho.
Looking back, Tesoro had moved far beyond the scattershot ways of its not too distant past, when it consisted of a far-flung collection of mostly unrelated parts. With a sell-off of the marine services unit a distinct possibility, Tesoro seemed to be on the verge of completing its transformation into a leading independent refining and retailing company concentrating on the western United States. The company was very interested in bolstering its presence in the huge California market, and it seemed likely that the firm would pursue the acquisition of a refinery--as well as retail outlets--in that state. Opportunities stemming from the continued consolidation and reshuffling of the U.S. oil industry were bound to arise. Overall, Tesoro Petroleum seemed well on its way to putting its troubled past behind it.
Principal Subsidiaries: Tesoro Alaska Company; Tesoro Hawaii Corporation; Tesoro Marine Services Holding Company; Tesoro Marine Services, Inc.; Tesoro Petroleum Companies, Inc.; Tesoro Refining, Marketing & Supply Company; Tesoro West Coast Company.
Principal Competitors: Exxon Mobil Corporation; BP p.l.c.; ChevronTexaco Corporation; Phillips Petroleum Company; Valero Energy Corporation; Arctic Slope Regional Corporation
OVERALL
Beta: 1.35
Market Cap (Mil.): $3,421.73
Shares Outstanding (Mil.): 143.77
Annual Dividend: --
Yield (%): --
FINANCIALS
TSO Industry Sector
P/E (TTM): 14.61 19.18 11.76
EPS (TTM): 165.25 -- --
ROI: 3.74 0.96 4.62
ROE: 7.43 1.77 6.06
Statistics:
Public Company
Incorporated: 1964
Employees: 2,100
Sales: $5.1 billion (2000)
Stock Exchanges: New York Pacific
Ticker Symbol: TSO
NAIC: 324110 Petroleum Refineries; 422710 Petroleum Bulk Stations and Terminals; 447190 Other Gasoline Stations; 447110 Gasoline Stations with Convenience Stores
Key Dates:
1964: Robert V. West, Jr., founds Tesoro Petroleum Corporation as a spinoff of Texstar Corporation.
1968: Tesoro merges with Intex Oil Company and Sioux Oil Company.
1969: The company acquires half-interest in British Petroleum's oil-producing operations in Trinidad and Tobago, with the island nation's government holding the other half; Tesoro begins construction of an oil refinery on the west coast of Alaska.
1971: The company enters the marketing sector through the purchase of the S&N Investment Company and the Digas Company, operator of gasoline service stations.
1974: Following the purchase of two sizable exploratory tracts in Bolivia, Tesoro Inter-American Production Company is formed and takes responsibility for Caribbean and Latin American operations.
1975: The company spends $83 million for a 36.7 percent interest in the Puerto Rican firm Commonwealth Oil Refining Company (Corco).
1977: Tesoro writes off $59 million of its investment in Corco, which soon files for bankruptcy.
1980: The company fends off the first of several takeover attempts, this one by Diamond Shamrock Corporation.
1985: The company sells its share of Trinidad-Tesoro to the island nation's government.
1988: Tesoro sells its domestic oil and gas producing properties to American Exploration.
1995: The company sells some of its oil and gas production properties in Texas to Coastal Corporation for $74 million.
1998: The company acquires two refineries in Hawaii and Washington state, as well as 32 retail gas stations in Hawaii.
1999: The company's exit from exploration and production is completed by selling domestic operations to EEX Corporation and the Bolivian-based activities to BG PLC.
2000: An agreement is reached with Wal-Mart Stores, Inc. to open and operate filling stations at Wal-Mart outlets under the name Mirastar.
2001: Tesoro acquires refineries in Utah and North Dakota and 45 gas stations in a $677 million deal with BP p.l.c.
Name Age Since Current Position
Steven Grapstein 53 2010 Non-Executive Independent Chairman of the Board
Gregory Goff 54 2010 President, Chief Executive Officer, Director
G. Scott Spendlove 47 2011 Chief Financial Officer, Senior Vice President
Charles Parrish 53 2009 Executive Vice President, General Counsel, Secretary
Dan Romasko 2011 Executive Vice President - Operations
Claude Flagg 57 2010 Senior Vice President - Strategy and Business Development
Tracy Jackson 41 2011 Vice President - Finance, Treasurer
Arlen Glenewinkel 54 2006 Vice President, Controller
Robert Goldman 69 2004 Independent Director
Michael Wiley 60 2005 Independent Director
Rodney Chase 67 2006 Independent Director
James Nokes 64 2007 Independent Director
Patrick Yang 63 2010 Independent Director
Susan Tomasky 57 2011 Independent Director
Address:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
U.S.A.