Tesoro Q4 Loss Caused by Sudden Changes in Crude Oil Prices

Tesoro Corp. experienced a loss in quarter four due to a sudden alteration in crude oil prices that affect its margins.

Following one year of high profits, Tesoro disappointed investors during the previous months by showing an unforeseen loss in the last three months. It cited pressure from abnormally steep crude oil prices in California as well as deteriorating cost benefits for crudes in the Midwest as the reasons for its loss.

Greg Goff, the company’s President and Chief Executive, recently said that quarter four was a difficult period because of significant changes in the gap of crude oil prices.

A lot of refiners showed strong results in the early parts of the previous year as the spread between the West Texas Intermediate and Brent Crude oil contracts increased their margins. That difference in cost declined in the last quarter.

The recent results of Tesoro also encountered a strong comparison versus its previous-year’s revenue that was strengthened by a gain that is related to insurance.

Recently, the independent refiner said that it will seek to sell its assets in Hawaii in the latter parts of the year so that it can concentrate more on its refining operations in the continental regions of the United States.

Tesoro showed a loss amounting to $124 million or 89 cents per share versus its profit in the previous year of $3 million or 2 cents per share. Without including write downs and other items, Tesoro’s loss would have been 13% a share last year.

The severe guidance of the company in January led to a loss of about 55 to 80 cents per share.

Revenue grew by 40 percent to $7.71 billion. The surveyed analysts of Thomson Reuters anticipated a loss of $5.48 billion.

Gross refining margins declined from $12.33 to $6.02 per barrel with the disappearance of the crude-oil spread. The overall refining throughput declined by 6.9% from quarter three to a total of 567,000 barrels per day.

Recently, Tesoro’s shares were down by 4cents to end at $24.80. Stocks rose by 25% in the previous year until its close in the past days.

By Chris Termeer