Tesoro Profits Hit By Energy Costs, Hedging Losses
Refiner Tesoro said it expects second quarter results to be hurt by higher-than-expected energy costs and hedging losses.
The company said its regional operating costs will be 30 cents to 50 cents per barrel higher than previously forecast due to the increased costs. It said every $1 change in natural gas prices translates into an impact of about $100,000 per day for the company.
Tesoro said it closed its crude derivative positions associated with hedging, which it expects to result in a second-quarter hedging loss of $125 million.
It said it is reviewing its hedging strategy in light of the recent surge in crude oil prices.
The San Antonio company also said it is on schedule to realize its goal of generating $750 million to $1 billion of operating cash flow by reducing operating costs, cutting capital spending, and reducing inventory.
Tesoro shares closed at $22.80 on the New York Stock Exchange Monday.