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Petroleum industry

Tesoro Petroleum Corporation Reports Significant Earnings Growth and Operational Success in 1997

Strategic Insights

— 2 min read

Tesoro Petroleum Corporation, a leading natural resource company, announced a substantial increase in earnings for 1997, doubling net earnings to $30.7 million, or $1.16 per share, when excluding certain nonrecurring items. This significant growth was driven by improved profitability in the downstream operations, increased reserves through exploration and production activities, and a reduction in interest expense. Chairman and CEO Bruce Smith highlighted the company's progress towards its goal of enhancing asset profitability, citing the doubling of downstream operating profit and the expansion of reserves.

Key Takeaways:

  • Net earnings for 1997 were $30.7 million, or $1.16 per share, a significant increase from $13.9 million, or 53 cents per share, in 1996.
  • Downstream operations doubled in profitability, with operating profit for the Refining and Marketing segment more than tripling to $20.5 million in 1997.
  • Exploration and Production segment operating profit increased to $45.9 million, with U.S. natural gas production flat year-over-year and several domestic discoveries.
  • Interest expense was sharply lower due to the redemption of high-cost debt in late 1996, resulting in a debt-to-capital ratio of 26% at year-end 1997.
  • The company's capital expenditures increased nearly 75% to $147.5 million, supporting its expansion and growth strategies.
  • Refining and Marketing's operating profit for the fourth quarter was $4.2 million, compared to a $2.7 million operating loss in the same quarter of 1996.
  • Exploration and Production had operating profit of $12.0 million in the fourth quarter, compared to $72.4 million in the prior year, which included a $60 million settlement related to an above-market-price gas contract.

Statistics:

  • Net earnings for 1997: $30.7 million
  • Net earnings for 1996 (excluding nonrecurring items): $13.9 million
  • Operating profit for Refining and Marketing: $20.5 million (1997) vs. $6.0 million (1996)
  • Interest expense: sharply lower due to redemption of high-cost debt
  • Capital expenditures: $147.5 million (1997) vs. $84.3 million (1996)
  • Debt-to-capital ratio: 26% at year-end 1997
  • U.S. natural gas production: 87 million cubic feet equivalent per day (essentially flat year-over-year)
  • Average natural gas sales price ($/Mcf): not explicitly stated
  • Exploration and Production's operating profit for the fourth quarter: $12.0 million (1997) vs. $72.4 million (1996)

Sources:

  • Tesoro Petroleum Corporation, "Tesoro Petroleum Corporation Reports 1997 Results" (January 29, 1998)
  • PR Newswire, "Tesoro Petroleum Corporation /CONTACT: Susan Pirotina of Tesoro Petroleum Corporation, 210-283-2631/ (TSO) CO: Tesoro Petroleum Corporation ST: Texas IN: OIL SU: ERN JS-MS -- DATH003 -- 8056 01/29/98 09:00 EST"

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