Western Refining Reports Fourth-Quarter Loss on Hedging

SuperAmerica net income down for Northern Tier on fuel

Published in CSP Daily News

EL PASO, Texas & RIDGEFIELD, Conn. -- Western Refining Inc. reported a fourth-quarter 2013 net loss of $7.3 million compared to net income of $207.6 million for fourth- quarter 2012. Special items for fourth-quarter 2013 contributing to the loss included a noncash unrealized pretax hedging loss of $100.6 million.

Western's financial results reflect the consolidation of financial results of both Western Refining Logistics LP, a fee-based master limited partnership (MLP) of which Western Refining owns the general partner and approximately 65% of the limited partnership interests and Northern Tier Energy LP, a variable distribution MLP, of which Western Refining owns the general partner and 38.7% of the limited partnership interests.

Western Refining recorded full-year 2013 net income of $276 million compared to full-year 2012 net income of $398.9 million.

Jeff Stevens, Western Refining's president and CEO, said, "Western had a truly transformational year in 2013. In the fourth quarter, we continued to benefit from our refinery locations which have both direct pipeline access to cost-advantaged crude oils and service areas with strong refined product values. We launched [Western Refining Logistics] as a platform to grow our logistics business, and acquired [Northern Tier Energy] to further diversify our asset base and expand our direct pipeline access to cost-advantaged crude sources."

He concluded, "We successfully achieved our ambitious goals that we set for 2013."

Northern Tier Energy reported fourth-quarter 2013 net earnings of $20.6 million compared with fourth-quarter 2012 net earnings of $84.5 million. Adjusted EBITDA for fourth-quarter 2013 was $69.4 million, a decrease of $93 million compared to $162.4 million for fourth-quarter 2012. This decrease was primarily also driven by less favorable operating results in the refining segment.

Full-year 2013 net earnings were $231.1 million compared to $197.6 million of net earnings for the full year 2012. Adjusted EBITDA for the full year 2013 was $363.2 million compared to Adjusted EBITDA of $739.7 million for the full year 2012. This decrease was primarily driven by less favorable operating results in the refining segment on a year-over-year basis.

"This past year was an investment year for Northern Tier Energy both operationally and commercially," said Chet Kuchta, COO of Northern Tier Energy "During this time, we also gained a new, strategic partner in Western Refining. With this partnership and our recent investments, we are confident we can continue to capture strong crude dynamics and improve margins in 2014."

The refining segment's operating income was $38 million for fourth-quarter 2013 compared to $147 million for fourth-quarter 2012.

Retail operating income for the SuperAmerica convenience store chain was $2.2 million in fourth-quarter 2013 compared to $3.5 million in fourth-quarter 2012. Fuel margins were 19 cents per gallon for fourth-quarter 2013 compared to 20 cents per gallon for fourth-quarter 2012. Fuel gallons sold at company-operated retail stores were down less than 1% during fourth-quarter 2013 compared to fourth-quarter 2012.

Western Refining is an independent refining and marketing company based in El Paso, Texas. The retail segment includes 229 gas stations and convenience stores in Arizona, Colorado, New Mexico and Texas under the under the Giant, Mustang, Sundial and Howdy's brands, the refining segment operates refineries in El Paso, and Gallup, N.M., and the wholesale segment includes a fleet of crude oil and finished product truck transports and wholesale petroleum products operations in Arizona, California, Colorado, Georgia, Maryland, Nevada, New Mexico, Texas and Virginia. Western Refining owns the general partner and approximately 65% of the limited partnership interest of Western Refining Logistics LP. It also owns the general partner and approximately 39% of the limited partnership interest in Northern Tier Energy.

Ridgefield, Conn.-based Northern Tier Energy is an independent downstream energy company with refining, retail and pipeline operations that serves the PADD II region of the United States. Northern Tier Energy operates refinery in St. Paul Park, Minn. It has 163 c-stores and 74 franchised c-stores primarily in Minnesota and Wisconsin, under the SuperAmerica brand