Posts for Ticker ‘TSO’

Unusual Options Trading Patterns (SUN, VLO, TSO, FTO, GE, GOOG, IBM, PFE, WYE)

We are starting to see some elevated options trading that appeared on the unusual volume screens.  Many of these are pre-earnings trading and some are on other expectations.  We have more detailed data on each over at VSinvestor.com with links on each stock individually:

OptionsHawk.com pointed out to us that there was a huge increase in refiners options trading in Sunoco Inc. (NYSE: SUN), Valero Energy Corp. (NYSE: VLO), Frontier Oil Corp. (NYSE: FTO) and in Tesoro Corporation (NYSE: TSO).

General Electric Co. (NYSE: GE) is starting to see some elevated options trading as well ahead of tomorrow’s earnings.

Google Inc. (NASDAQ: GOOG) is seeing increased options trading ahead of earnings, which was actually more active on a fully leveraged basis than the stock was.

International Business Machines Corp. (NYSE: IBM) is seeing increased options trading ahead of earnings.

Pfzer Inc. (NYSE: PFE) is seeing elevated stock trading on the Wyeth (NYSE: WYE) closing due to indexers like the S&P 500 and Russell adding shares, and we are seeing it in the call options as well.

As a reminder, OCT-2009 options expiration date is tomorrow, and all “out of the money” with an October expiration will expire with a value of ZERO.

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JON C. OGG
OCTOBER 15, 2009

Posted on: October 15, 2009 – 2:50 pm in Options, Trading Alert, , , , , , , , ,

Refiners’ Second Take: Valero’s Risk of Irreparable Harm (VLO, MRO, HES, TSO, SUN, TOT, VSUNQ)

Refinery ImageValero Energy Corp. (NYSE: VLO) may have caused some irreparable harm to itself and to shareholders this week.  Losing money is just not something that the investing public was ready to stomach.  Dumping news of a large secondary offering right on top of projecting a loss was no different than pouring salt and peroxide on your kid’s cut hand when he wasn’t looking.  This has added pressure on other refiners such as Marathon Oil Corporation (NYSE: MRO), Hess Corporation (NYSE: HES), Tesoro Corporation (NYSE: TSO), and Sunoco Inc. (NYSE: SUN).  Valero has always had what always looked like a dirt cheap price to earnings ratio, and now you know why.  This may have put some serious future questions on the sector, even if much of this news is company-specific.
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Posted on: June 4, 2009 – 12:06 pm in Oil & Gas, Secondary Offering, Trading Alert, Value Investing, , , , , , ,

Refiners in for More Trouble? (VLO, TSO, MRO, HES)

Refinery ImageThis week’s report from the Energy Information Administration noted that “strong supply availability from refiners now running at low utilizations in both Europe and the U.S. is likely to moderate gasoline price increases this summer.” That statement may be true, but even if it is, refiners could still be squeezed before the leaves begin to fall next September.  This has continued implications for Valero Energy Corp. (NYSE: VLO), Tesoro Corp. (NYSE: TSO), Marathon Oil Corporation (NYSE: MRO), Hess Corporation (NYSE: HES) and others.
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Posted on: May 22, 2009 – 8:53 am in Economy, Oil & Gas, , , ,

Refiner’s Earnings Mixed (VLO, MRO, TSO)

refinery-image5The best thing to say about the 2009 first quarter at refiner Valero Energy Corporation (NYSE:VLO) is that it was better than the first quarter a year ago. Refining margins are higher now, and the cost of energy to run the refinery is lower. Revenues, though, are sinking.  Valero is the first of the major refiners to report. Marathon Oil Corp. reports first quarter earnings on Thursday and Tesoro Corp. (NYSE:TSO) reports earnings next week. The overall story story line will probably not be much different.
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Posted on: April 28, 2009 – 7:46 am in Earnings, Oil & Gas, , ,

Refiners and Oil Prices, Conundrum and Quagmire (VLO, MRO, TSO, WNR, XOM, CVX)

There has been a never-ending battle between rapidly changing energy prices and the effect on margins at refineries.  Since the beginning of the year, the best-performing crude oil refiner has been Western Refining Inc. (NYSE:WNR).  With a market cap of $885 million, it is also the smallest of the large refiners among competitors Valero Energy Corp. (NYSE:VLO), Marathon Oil Corp. (NYSE:MRO), Tesoro Corp. (NYSE:TSO), and Frontier Oil Corp. (NYSE:FTO).

Western’s share price has risen more than 60% since January, while the best the others can do is around 20%, with Valero actually dropping by nearly 10%. Valero’s purchase of the assets of failed ethanol maker VeraSun did not boost its shares. As if anyone really expected that to happen.

The increase in the refiners’ share prices has almost everything to do with the rise in crude oil prices. Or does it? Rising crude prices, provided they don’t rise too high too fast, usually benefit refiners that can market their refined products at higher prices and generally higher margins.

However, in today’s slow economy, demand for gasoline has been dropping steadily, forcing refiners to turn to distillates and other refined products in a search for profits. For a while, European demand for diesel fuel kept the party going, but that demand has now cooled.  Exxon Mobil Corp. (NYSE: XOM) has joined in the ranks of companies looking for reduced demand in oil ahead.

For a look into what may be in store for refiners, let’s ponder what Chevron Corp. (NYSE:CVX) had to say about refining in its interim update for the first quarter of 2009. Barrels/day of crude processed is flat with the fourth quarter of 2008, but up about 4% compared with the first quarter of 2008. Chevron’s refining margins rose on the US West Coast, but fell on the Gulf Coast.

Chevron’s marketing margins in the US were down substantially. In the fourth quarter of 2008, margins on the West Coast were at $9.11/barrel. In the first two months of the first quarter of 2009, the margin was $0.01/barrel, and the expecteded margin for the full first quarter is just $0.83/barrel. The Houston margin for Eastern gasoline is down nearly 40%.

Western’s gross refining margins for all of 2008 were about $4/barrel less than in 2007, and the first quarter of any year is typically a low-profit quarter for refining and marketing. Marathon’s refining margins for the 2008 fourth quarter were about 75% lower than the previous quarter. And while crude prices did gain some during the first quarter of this year, the prices are not substantially better than they were in December 2008.

Reduced gasoline consumption in the US, seasonal declines, and likely hits to marketing margins could lead to a tough first quarter for refiners.  The real debate may be on whether this dilemma is a quarterly issue or a much longer-term issue.

Paul Ausick
April 13, 2009

Posted on: April 13, 2009 – 10:02 am in Oil & Gas, , , , , ,

Fitch Ratings Looks at Refiners (VLO, FTO, TSO)

refinery-image1Fitch Ratings published a short report on the effect of the compression in crude oil spreads on refiners. We looked at this phenomenon about a month ago. Fitch concludes that the “relative cost advantage of higher complexity refiners”, that is, those that process heavy, sour crudes, “has been muted relative to less flexible sweet light peers.”  If the heavy sour crudes are not discounted relative to light, sweet WTI, refiners such as Valero Energy Corp. (NYSE:VLO), Frontier Oil Corporation (NYSE:FTO), and Tesoro Corporation (NYSE:TSO) face a period of “underperformance.”
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Posted on: March 23, 2009 – 8:26 am in Analyst Calls, Oil & Gas, , ,

Tesoro Facing Sharp Price-Revenue Issues (TSO)

Oil refiner Tesoro Corporation (NYSE:TSO) reported fourth quarter earnings of $317 million (EPS of $0.99), excluding special items. On a GAAP basis, the company earned $97 million (EPS of $0.70). The company wrote down an uncollectable receivable that cost it $0.41/share, or about $57 million.
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Posted on: February 20, 2009 – 11:01 am in Earnings, Earnings Warning, Oil & Gas,

Preliminary Bad News From Refinery Sector (MRO, TSO, VLO)

Oil_refinery_image_Lower oil prices were supposed to be good for the refiners.  Yesterday, Marathon Oil Corporation (NYSE:MRO) released its interim update for the fourth quarter of 2008. Today, Tesoro Corporation (NYSE:TSO) followed suit, releasing preliminary fourth quarter results. The short version is that neither company anticipates matching third quarter results, or for that matter, even coming close.  Valero Corporation (NYSE:VLO), another major refiner, has not publishedan interim report, but plans to report third quarter results on January27th.

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Posted on: January 14, 2009 – 1:49 pm in Earnings, Earnings Warning, Oil & Gas, , ,

Second Round Analyst Downgrades (AINV, T, GSIC, MFE, NVLS, SNH, TSO, TXRH, VZ)

Burning_money_picIt seems that the early bird analyst calls did not capture the notion that analysts are starting 2009 with more opportunities to downgrade stocks.  Here are some additional pre-market analyst downgrades from Wall Street this Monday morning:

  • Apollo Investment Corporation (NASDAQ: AINV) Cut to Sell at Stifel Nicolaus; shares are down over 5% on the call.
  • AT&T (NYSE: T) Cut to Market Perform at Bernstein; shares down over 2%.
  • GSI Commerce (NASDAQ: GSIC) Cut to Hold at Stifel Nicolaus.
  • McAfee (NYSE: MFE) Cut to Neutral at Credit Suisse.
  • Novellus (NASDAQ: NVLS) Cut to Underperform at Credit Suisse.
  • Senior Housing (NYSE: SNH) Cut to Neutral at UBS; shares indicated down 2%.
  • Tessoro (NYSE: TSO) Cut to Sell at Soleil.
  • Texas Roadhouse (NASDAQ: TXRH) Cut to Neutral at Credit Suisse.
  • Verizon Communications (NYSE: VZ) Cut to Underperform at Bernstein; shares down almost 3%.

Here are the top 10 pre-market analyst upgrades and downgrades:

Jon C. Ogg
January 5, 2009

Posted on: January 5, 2009 – 9:24 am in Analyst Calls, , , , , , , , ,

Early Bird Analyst Upgrades (ACOR, BIIB, BKC, CHRT, OSG, SLB, TSO, WMT)

These are some of the top pre-market upgrades from analysts which we have seen in the early hours this Monday morning:

  • Acorda Therapeutics (ACOR) Raised to Outperform at Baird.
  • Biogen Idec (BIIB) Raised to Outperform at Baird and Raised to Buy at Deutsche Bank.
  • Burger King (BKC) Raised to Outperform at Wachovia.
  • Chartered Semiconductor (CHRT) Raised to Neutral from Sell at Goldman Sachs.
  • Overseas Shipholding (OSG) Raised to Outperform at Oppenheimer.
  • Schlumberger (SLB) Raised to Buy at Goldman Sachs.
  • Tesoro (TSO) Raised to Neutral at JPMorgan.
  • Wal-Mart Stores (WMT) Raised to Overweight at JPMorgan.

Jon C. Ogg
November 3, 2008

Posted on: November 3, 2008 – 7:38 am in Analyst Calls, , , , , , , ,

Tesoro Emanates Trends of Refiners (TSO)

Oil_refinery_imageAfter the market closed yesterday, oil refiner Tesoro (NYSE:TSO) put up some solid good news. For the third quarter, Tesoro’s EPS hit $1.86 on net income of $259 million and revenues of $8.7 billion. Analysts had expected EPS of $1.48 and revenues of $7.81 billion. The company’s share price jumped 4.55% in after-hours trading, finishing at $10.35. In the same period a year ago, Tesoro reported EPS of $0.34 on revenues of $5.9 billion.

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Posted on: October 30, 2008 – 7:57 am in Earnings, Oil & Gas,

Are Refiners Coming Back? (VLO, MRO, TSO, RDS, XOM)

Tx00338coilwellgusherodessatexasp_2Oil refiners have had a very tough year. Since January, Marathon’s (NYSE:MRO) stock is off nearly 30%, Valero (NYSE:VLO) has plunged more than 50%, and Tesoro (NYSE:TSO) is off more than 60%. All got a bit of a boost yesterday as a result of the approaching hurricane and refinery shutdowns caused by the storm. Valero’s Port Arthur refinery (325,000 b/d), Shell’s (NYSE:RDS.A/RDS.B) Motiva refinery in Port Arthur  (285,000 b/d), and Exxon’s (NYSE:XOM) Beaumont refinery (349,000 b/d) plan to shutter operations today. But the outlook could be stronger and longer term than that.

The Energy Information Agency’s weekly status report showed that commercial stocks of crude oil are down 6.7% from the same time last year, and 1.9% from a week earlier. Total gasoline inventories are also lower than last year by 3.5%. Refinery utilization was down to 78.3%.

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Posted on: September 12, 2008 – 8:18 am in Oil & Gas, , , , ,

Energy Watch Part II: Refining Woes Remain (WNR, ALJ, DK, TSO, VLO, XOM, CVX, COP)

Refinery_pic_3It’s no secret the oil refining margins have been dropping like a rock for the past few quarters. When pump prices began to approach a US-wide average of about $4/gallon, US drivers started changing their habits.The latest numbers indicate miles driven dropped by 12.2 billion miles, almost 5%, in June. That translates into millions of gallons of gasoline that were either not refined or were not sold. This decrease has hit refiners hard.

The award for largest drop in value goes to Western Refining (NYSE:WNR), down nearly 84% from a 52-week high of $55.72 to close yesterday at $9.23. Next on the list are two refiners that are majority-owned by Isreali parents: Alon USA Energy Inc (NYSE:ALJ) fell by almost 72%, from a high of $41.25 to $10.49; and Delek US Holdings (NYSE:DK) dropped by 69%, from $28.34 to $8.64. Tesoro (NYSE:TSO) fell by 64%, from $65.98 to $18.43, and Valero (NYSE:VLO) fell by nearly 50%, from $75.75 to $34.79.

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Posted on: August 14, 2008 – 8:29 am in Oil & Gas, , , , , , , ,

Archer Daniels Midland Heads For Fresh Lows (ADM, VLO, TSO)

Adm_logo_2Today’s earnings report from Archer Daniels Midland (NYSE:ADM) not only missed analyst’s targets, but may have missed the broad side of the barn.

Analyst expected EPS of $0.67, and got EPS of $0.58. Revenues jumped substantially to $21.78 billion for the quarter, way above estimates of $16.03 billion.  But the earnings may just be the start of the problems.

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Posted on: August 5, 2008 – 9:35 am in Agriculture, Earnings, Food, , ,

Top Analyst Downgrades (BBY, KO, EBAY, GILD, IGT, MAC, SUN, TSO, VRTU)

These are not all of the Downgrades or negative analyst calls seen this morning but these are some of the top calls seen this Friday morning:

  • Best Buy (NYSE: BBY) Cut to Outperform from Top Pick at RBC Capital.
  • Coca Cola (NYSE: KO) removed from Goldman Sachs Conviction Buy List.
  • EBay (NASDAQ: EBAY) Cut to Neutral from Buy at Goldman Sachs.
  • Gilead Sciences (NASDAQ: GILD) Cut to Hold from Buy at Jefferies.
  • International Game Technology (NYSE: IGT) Cut to Hold from Buy at Citigroup; Cut to Perform at Oppenheimer.
  • Macerich (NYSE: MAC) Cut To Neutral From Buy By Goldman Sachs
  • Sunoco (NYSE: SUN) and Tesoro (NYSE: TSO) Cut to Market Perform from Outperform at Bernstein.
  • Virtusa (NASDAQ: VRTU) Cut to Neutral from Overweight at JPMorgan.

Jon C. Ogg
July 18, 2008

Posted on: July 18, 2008 – 6:46 am in Analyst Calls, , , , , , , , ,

Marathon Shows Refining is Still Reeling (MRO, TSO, VLO)

Marathon Oil (NYSE:MRO) stock is indicated lower this morning in pre-open trading following release of the company’s interim update for the second quarter.  Shares of Tesoro Corp. (NYSE: TSO) and Valero Corp. (NYSE: VLO) have been under pressure on an almost daily basis that would currently give you the feeling that energy prices this high are impossible for these players whether they rise or fall.

Marathon’s production is expected to reach 372,000 boe/d, slightly above previous guidance, but slightly below the year ago production of 375,000 boe/d. Estimates for sold barrels is off by 22,000 boe/day. Production is expected to be 20% below earlier guidance in Marathon’s oil sands operations, but climbing prices for bitumen cover that up pretty well.Price realizations for oil and natural gas are up, but the company expects a $250 million after-tax write-down on its derivative hedges for synthetic oil sales.

But refining margins are the really bad news. Marathon expects second quarter refined products sales to be lower than last year by about 4%. Gross margins drop nearly 80% y-o-y, from $0.3925 in 2007 to $0.0850 this year. Derivative instrument losses on refined products adds another $190 million worth of bad news.

Then there’s Tesoro Corp. (NYSE:TSO), which hit a 52-week low yesterday. Tesoro issued second quarter guidance in June, aiming for a 10% reduction in their inventory by the end of the second quarter. The company hopes to reduce demands for working capital by reducing inventory. Hedges will cost the company $125 million in the quarter, and higher than expected energy costs will increase expenses by $0.30-$0.50/b. The news from Marathon didn’t help Tesoro, although its stock is up marginally after a nightmare Wednesday.

Finally, there’s Valero Corp. (NYSE:VLO). Yesterday the company announced a quarterly cash dividend of $0.15 per share. This morning, the stock is trading down again at levels challenging its 52-week low. Valero has not issued an interim update on its operations yet, but don’t expect any good news if and when it does.

As bad as things were for refiners last quarter, they’re only going to get worse this quarter. Watch EIA crude and refined products inventory reports. Commercial crude inventories are below the lower boundary of the average range for this time of year. Inventory management is the single best weapon refiners have for managing operational costs and cash flow. There aren’t many other arrows in their quivers.

Paul Ausick
July 10, 2008

Posted on: July 10, 2008 – 8:04 am in Oil & Gas, , ,

The 52-Week Low Club (FRE)(WB)(MER)(TSO)

Freddie Mac (FRE) sells down 25% to $9.88 on concerns raising capital will wipe out shareholders. The company’s 52-week high is $67.20.

Wachovia (WB) Panic selling in financial shares knocks this down to $14.28 from 52-week high of $53.10.

Merrill Lynch (MER) falls on concerns the company may have to raise over $5 billion. Down to $29.44 from 52-week high of $89.23.

Tesoro  (TSO) Refining companies seeing margins squeezed. Drops to $17.24 from 52-week high of $65.98.

Douglas A. McIntyre

Posted on: July 9, 2008 – 2:55 pm in HI/LOW, , , ,

What Happens To Oil Prices When Refiners Stop Producing? (VLO, WNR, TSO)

As we’ve pointed out earlier, oil refining is not the business to be in these days. Refiners have been hit hard by skyrocketing crude oil prices because they are unable to pass along those price increases to consumers. Because they generally have no E&P division, they are forced to purchase crude at the ever-increasing spot price, whereas integrated oil companies can take advantage of long-term supply contracts from their E&P divisions to help moderate the price that their refining and marketing divisions have to pay.

How bad are things? Today, Western Refining (NYSE:WNR) announced that it had abandoned all covenants on its credit facilities for the quarter just ended. The covenants will be reinstated at the end of the third quarter, with no change to the amounts available under the credit facilities. However, Western has agreed to eliminate quarterly dividends on common stock through the end of 2009, and has added a new revolving credit facility for $75 million to the $800 million in revolving credit that it already has. In early trading, the stock is down about $0.25, more than 80% off its 52-week high.

The story is unfortunately no better for Valero (NYSE:VLO) or Tesoro (NYSE:TSO). Tesoro is off about $0.45, just a buck above its 52-week low, and down about 70% from its 52-week high. Valero is off $0.78 for the day, off almost 50% from its 52-week high and near its 52-week low set in May.

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Posted on: July 1, 2008 – 11:28 am in Oil & Gas, , ,

The 52-Week Low Club (RF)(STI)(TSO)(VSE)(FITB)

Regions Financial  (RF) Another beating for bank stocks. Down to $10.75 from 52-week high of $34.60.

SunTrust Banks (STI) More regional bank pain. Drops to $$35.95 from 52-week high of $90.90.

Tesoro Corporation (TSO) Margins being squeezed at oil refiners. Falls to $20.60 from 52-week high of $65.98.

Verasun Energy (VSE) Corn prices hit ethanol stocks. Down to $3.84 from 52-week high of $17.75.

Fifth Third Bancorp (FITB) Big dilution coming along with concerns about further write-offs. Sells down to $10.10 from $43.20 as 52-week high.

Douglas A. McIntyre

Posted on: June 18, 2008 – 2:48 pm in HI/LOW, , , , ,

Oil & Gas Hedges Galore (APL, TSO, PXP)

It looks like Joe Public isn’t the only one who thought oil and gas prices were through the roof.  It seems that some of the big boys started locking-in prices that seemed extremely high.  This is called hedging or collaring, but we have seen fresh announcements from teh likes of Atlas Pipeline Partners LP (NYSE:APL), Tesoro (NYSE:TSO), and Plains Exploration and Production (NYSE:PXP).

Atlas Pipeline Partners LP (NYSE:APL) announced yesterday that it would discontinue its current hedging strategy in favor of returning to a strategy it had followed until June 2007. The company had hedged about 86% of its natural gas liquids production using crude oil derivative contracts. Because crude oil prices are skyrocketing, the hedges have become "less effective." The terminated contracts run through the next six quarters. Atlas raised its guidance from $1.90-$2.00 per common unit to $2.00-$2.20. That’s the good news.

The not-so-good news is that Atlas will take a charge against earnings of about $10 million for the second quarter, with a total dollar loss on the derivative contracts of approximately $250 million. The stock price is up less than 0.1% in early trading.

Tesoro (NYSE:TSO), an independent refiner/marketer, has also closed its crude oil derivative positions and expects a charge against earnings this quarter of $125 million. The company also lowered guidance by $0.30-$0.50, blaming the change on high energy costs. The refining business is not getting any easier.

Finally today, Plains Exploration and Production (NYSE:PXP) announced that it had acquired crude oil puts on 40,000 b/d of production for 2009 and 2010. The average deferred premium plus interest on the 2009 contracts is $6.19 per barrel and the strike price is $106.16 per barrel. The 2010 contracts carry a strike price of $111.49 per barrel, and an averaged deferred premium plus interest of $12.08 per barrel. Plains also acquired $10-$20 collars on 150 million cubic feet of natural gas production for 2008 and 2009. The company plans to use marked-to-market accounting for these hedges.

There are a couple of morals to these stories. First, try not to be a refining/marketing company. That one’s pretty obvious. Second, crude oil derivative contracts are not effective hedges in the current market. Their cost is too high and the continuously rising cost of crude almost guarantees that the hedge will be ineffective. Expect more of this kind of news from almost every oil and gas company that hedges physical barrels.

Paul Ausick
June 17, 2008

Posted on: June 17, 2008 – 9:59 am in Oil & Gas, , ,