Exhibit 99
Premcor Logo
Premier People,
Products and Services
NEWS RELEASE ------------------
Premcor Inc.
1700 East Putnam Avenue
Suite 500
Old Greenwich, CT 06870
203-698-7500
203-698-7925 fax
PREMCOR ANNOUNCES THIRD QUARTER 2002 RESULTS
OLD GREENWICH, Connecticut, November 7, 2002---Premcor Inc. (NYSE: PCO)
today reported a net loss of $24.5 million, or $.43 per share, in the third
quarter of 2002 compared to net earnings of $44.3 million, or $1.28 per share,
in the third quarter of 2001. Excluding the effect of the special items
discussed below, the third quarter 2002 net loss was $15.5 million, or $.27 per
share, compared to net earnings of $54.1 million, or $1.57 per share, in the
third quarter of 2001.
For the nine months ended September 30, 2002, Premcor reported a net loss
of $164.3 million, or $3.57 per share, as compared to net earnings of $187.1
million, or $5.42 per share, in the first nine months of 2001. Excluding the
effect of the special items discussed below, the first nine months of 2002
resulted in a net loss of $45.2 million, or $.98 per share, compared to net
earnings of $272.5 million, or $7.90 per share, in the first nine months of
2001.
Commenting on the quarter, Thomas D. O'Malley, Premcor's Chairman, Chief
Executive Officer, and President, said, "High gasoline and distillate
inventories kept pressure on prices for these products through mid-September.
The price spread between heavy sour Mexican Maya crude oil and light sweet West
Texas Intermediate crude oil remained below historical levels for most of the
quarter. Premcor's Port Arthur refinery relies on Maya crude oil as its
principal feed, so a narrow Maya-WTI spread has a negative effect on Premcor's
results. Product prices started to improve in September, which, combined with a
widening of the Maya-WTI spread, led to a profitable September for Premcor. Port
Arthur's throughput was negatively impacted at the end of September by Hurricane
Isidore."
Looking ahead, O'Malley said, "Prospects for the fourth quarter are much
brighter. Hurricane Isidore in late September was followed by Hurricane Lili in
early October. These storms affected production at a substantial number of Gulf
Coast refineries, and also curtailed crude oil shipments to inland refineries
serviced by Gulf Coast pipelines, thus reducing refinery production there as
well. Due to these and other factors, refined product inventories have now
declined toward the levels seen in 2000 and early 2001. In fact, on a
demand-adjusted basis they are currently at five-year lows. The Maya-WTI spread
also showed some improvement this month, but it is still below historical
levels. Based on our first month of operations, and assuming seasonal market
conditions and normal operations for the rest of the period, we currently expect
Premcor to generate after-tax earnings of roughly $0.40 per share in the fourth
quarter."
On the continuing transformation of Premcor, O'Malley said, "We have
recently taken a number of actions to improve our crude oil acquisition
economics. On October 1, we entered into a new supply contract for our Lima
refinery that should lower its crude costs by $0.20 per barrel. We have also
reduced, effective October 1, our Mexican offtake for Port Arthur to the minimum
allowed under the supply contract and begun substituting other heavy crude oils
at superior economics. Mexican Maya crude oil has been trading at artificially
high prices, and we will continue to de-emphasize its use until the market
normalizes."
O'Malley continued, "The steps we have taken over the past nine months have
lowered our processing costs and improved our crude oil acquisition economics.
These improved economics have put us in a position to be profitable even in poor
margin environments like the first ten months of 2002. The current First Call
(Wall Street consensus) 2003 earnings estimate for Premcor is $2.32 per share. A
review of individual research reports indicates that this earnings estimate is
based on the following market indicators: $3.50 for the Gulf Coast 3:2:1 crack
spread, $4.80 for the Chicago 3:2:1 crack spread, $6.16 for the Maya-WTI
differential, and $21.60 for WTI. If these indicator levels are achieved,
Premcor would expect to meet or exceed the First Call estimate for 2003."
O'Malley concluded, "We continue to work on improving our economics, and we
are focused on achieving a safe and reliable operation that offers significant
returns to our shareholders."
For the third quarter of 2002, pre-tax special items of $14.5 million
included $10.1 million related to the announced restructuring of the company's
workforce at its Port Arthur, Texas and Lima, Ohio facilities and additional
reductions in the St. Louis general and administrative operations, $4.2 million
related to the write-down of our 5% investment in the Clark Retail Group, Inc.
as a result of its recent bankruptcy filing, and $.2 million related to the
repurchase of some of our long-term debt. The total after-tax effect of these
special items on the quarter was a net loss of $9.0 million, equal to $.16 per
share. For the third quarter 2001, pre-tax special items of $17.5 million
included $17.2 million related to the closure of the company's Blue Island,
Illinois refinery, $9.0 million associated with the decommissioning of two idled
coker units at the Port Arthur facility, and $8.7 million in gains associated
with debt repurchases. The after-tax effect of these special items on the 2001
third quarter results was a net loss of $9.8 million, equal to $.28 per share.
For the first nine months of 2002, pre-tax special items of $192.4 million
included $137.4 million related to the closure of the Hartford refinery, $27.4
million primarily for severance and other charges related to the restructuring
of the company's Port Arthur, Texas and Lima, Ohio refineries and the St. Louis
general and administrative operations, $2.5 million related to the PRG and
Sabine restructuring, $1.4 million for idled equipment, $19.5 million related to
the early retirement of long-term debt, and $4.2 million related to the
write-down of the Clark Retail Group, Inc. minority interest. The after-tax
effect of these special items for the nine months of 2002 was $119.1 million, or
$2.59 per share. Special items for the first nine months of 2001 included
pre-tax charges of $176.2 million related to the closure of the Blue Island,
Illinois refinery and the decommissioning of two coker units at Port Arthur. The
net after-tax effect of these charges, partially offset by a $30 million income
tax benefit and a $8.7 million gain associated with debt repurchases, was $85.4
million, or $2.48 per share.
The company's regular quarterly conference call concerning the quarter's
results will be webcast live today at 11:00 am EST on the Investor Relations
section of the Premcor Inc. website at www.premcor.com. A 24-hour replay of the
call will be available until November 14, 2002 at (800) 944-7023, and the call
will be archived on the company's website.
Premcor Inc. is one of the largest independent petroleum refiners and
marketers of unbranded transportation fuels and heating oil in the United
States.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including the company's
current expectations with respect to future market conditions, future operating
results, the future performance of its refinery operations, and future debt
reductions. Words such as "expects," "intends," "plans," "projects," "believes,"
"estimates," "may," "will," "should," "shall," and similar expressions typically
identify such forward-looking statements. Even though Premcor believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations will be
attained. Factors that could cause actual results to differ materially from
expectations include, but are not limited to, operational difficulties, varying
market conditions, potential changes in gasoline, crude oil, distillate, and
other commodity prices, government regulations, and other factors contained from
time to time in the reports filed with the Securities and Exchange Commission by
the company and its subsidiaries, Premcor USA Inc. and The Premcor Refining
Group Inc., including the company's Form S-1 and the company's and its
subsidiaries' quarterly reports on Form 10-Q, reports on Form 8-K, and annual
reports on Form 10-K.
###
Contacts:
Premcor Inc.
Joe Watson, (203) 698-7510 (Media/Investors)
Karen Davis, (314) 854-1424 (Investors)
Michael Taylor, (314) 719-2304 (Investors)
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
(dollars in millions except per share amounts, unaudited) 2002 2001 2002 2001
-------- -------- -------- --------
Operating revenues $ 1,899.8 $ 1,666.2 $ 4,807.1 $ 5,170.9
Cost of sales 1,757.8 1,390.8 4,342.8 4,133.7
--------- --------- --------- ---------
Gross margin 142.0 275.4 464.3 1,037.2
Operating expenses 109.6 104.9 338.2 355.8
General and administrative expenses 11.9 16.1 40.8 45.3
Stock option compensation expense 4.2 - 9.9 -
--------- --------- --------- ---------
Adjusted EBITDA (1) 16.3 154.4 75.4 636.1
Depreciation and amortization 20.8 23.2 64.9 67.7
Restructuring and other charges 14.3 26.2 172.9 176.2
--------- --------- --------- ---------
Operating income (loss) (18.8) 105.0 (162.4) 392.2
Interest expense and finance income, net (20.5) (33.8) (81.5) (106.3)
Gain (loss) on extinguishment of long-term debt (0.2) 8.7 (19.5) 8.7
Income tax benefit (provision) 15.0 (31.4) 99.9 (78.7)
Minority interest - (1.5) 1.7 (12.4)
--------- --------- --------- ---------
Net income (loss) from continuing operations before
preferred stock dividends (24.5) 47.0 (161.8) 203.5
Discontinued operations, net of tax benefit - - - (8.5)
Preferred stock dividends - (2.7) (2.5) (7.9)
--------- --------- --------- ---------
Net income (loss) available to common
shareholders $ (24.5) $ 44.3 $ (164.3) $ 187.1
========= ========= ========= =========
Net income (loss) per common share (fully-diluted):
Income (loss) from continuing operations $ (0.43) $ 1.28 $ (3.57) $ 5.67
Discontinued operations - - - (0.25)
--------- --------- --------- ---------
Net income (loss) $ (0.43) $ 1.28 $ (3.57) $ 5.42
--------- --------- --------- ---------
Weighted average common shares outstanding (in millions) 57.5 34.5 46.0 34.5
(1) Earnings before interest, income taxes, depreciation,
amortization and restructuring and other charges.
September 30, December 31,
Summarized Balance Sheet Information 2002 2001
------------- ------------
Cash and short-term investments:
Premcor Inc. $ 47.0 $ 2.1
Premcor USA Inc. 1.5 25.5
The Premcor Refining Group Inc. 109.5 484.2
-------- --------
Consolidated cash and short-term investments 158.0 511.8
Cash restricted for debt service 51.9 30.8
Other working capital 81.8 (60.0)
Total assets 2,292.5 2,509.8
Long-term debt and exchangeable preferred stock:
Premcor USA Inc. 40.1 239.2
The Premcor Refining Group Inc. 869.6 1,247.0
-------- --------
Consolidated long-term debt 909.7 1,486.2
Total common stockholders' equity 658.6 294.7
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended Nine months ended
September 30, September 30,
------------------ -------------------
(unaudited) 2002 2001 2002 2001
------- ------ ------- -------
Selected Volumetric and Per Barrel Data
Production (Mbbls per day) 453.9 452.2 454.8 459.6
Crude oil throughput (Mbbls per day) 415.4 429.5 432.4 438.8
Per barrel of throughput:
Gross margin $ 3.72 $ 6.97 $ 3.93 $ 8.66
Operating expenses 2.87 2.65 2.87 2.97
Market Indicators (dollars per barrel)
West Texas Intermediate, or "WTI" (sweet) $ 28.34 $ 26.81 $ 25.41 $ 27.84
Crack Spreads:*
Gulf Coast 3/2/1 2.64 3.41 2.93 4.98
Gulf Coast 2/1/1 2.22 3.27 2.42 4.54
Chicago 3/2/1 4.80 9.21 4.59 9.04
Chicago 5/3/2 4.63 9.13 4.38 8.83
Crude Oil Differentials:
WTI less WTS (sour) 1.31 2.02 1.26 3.11
WTI less Maya (heavy sour) 4.92 7.63 4.90 9.57
WTI less Dated Brent (foreign) 1.37 1.43 1.01 1.68
Natural Gas (per mmbtu) 3.19 3.01 2.92 4.90
* Per barrel margin indicator for the conversion of crude oil into finished
products. The first number represents the number of barrels of West Texas
Intermediate crude oil, priced at Cushing, Oklahoma. The second and third
numbers represent the number of barrels of conventional gasoline and high
sulfur diesel fuel produced, priced in their respective regional market.
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended September 30, 2002 Three months ended September 30, 2001
------------------------------------- -------------------------------------
Port Port
Selected Refinery Data (unaudited) Arthur Lima Hartford Total Arthur Lima Hartford Total
- ---------------------------------- ------- ------- -------- ------- ------- ------- -------- -------
Operating results (dollars in millions):
Gross margin:
Gulf Coast 3/2/1 $ 52.5 $ 34.1 $ 14.3 $ 100.9 $ 67.5 $ 47.0 $ 20.0 $ 134.5
Chicago 3/2/1 vs. Gulf Coast 3/2/1 - 27.9 11.7 39.6 - 80.0 34.1 114.1
Crude oil differentials to benchmark 67.1 (14.3) 4.4 57.1 111.0 (16.2) 14.1 108.9
Product differentials to benchmark (31.8) (7.7) (16.1) (55.6) (39.4) (27.4) (15.3) (82.1)
------- ------- ------- ------ ------- ------- ------- -------
Realized gross margin 87.8 40.0 14.2 142.0 139.1 83.4 52.9 275.4
Operating expenses 64.3 26.3 19.0 109.6 60.9 26.3 17.7 104.9
------- ------- ------- ------ ------- ------- ------- -------
Net refining margin 23.5 13.7 (4.8) 32.4 78.2 57.1 35.2 170.5
Depreciation and amortization 13.0 5.9 - 18.9 12.1 5.7 4.0 21.8
Per barrel of throughput (in dollars):
Gross margin:
Gulf Coast 3/2/1 $ 2.64 $ 2.64 $ 2.64 $ 2.64 $ 3.41 $ 3.41 $ 3.41 $ 3.41
Chicago 3/2/1 vs. Gulf Coast 3/2/1 - 2.16 2.16 1.04 - 5.80 5.80 2.89
Crude oil differentials to benchmark 3.38 (1.11) 0.81 1.49 5.60 (1.17) 2.40 2.76
Product differentials to benchmark (1.60) (0.59) (2.98) (1.45) (1.99) (1.99) (2.60) (2.08)
------- ------- ------- ------ ------- ------- ------- -------
Realized gross margin 4.42 3.09 2.63 3.72 7.02 6.04 9.00 6.97
Operating expenses 3.24 2.03 3.51 2.87 3.07 1.91 3.01 2.65
------- ------- ------- ------ ------- ------- ------- -------
Net refining margin 1.18 1.06 (0.89) 0.85 3.94 4.14 5.99 4.32
Depreciation and amortization 0.65 0.46 - 0.49 0.61 0.41 0.68 0.55
Calculation methodology:
Although the Company manages its refinery business, including feedstock
acquisition and product marketing, on an integrated basis, for analytical
purposes, the business results shown here have been allocated to the individual
refineries. The foundation for determining realized gross margin by refinery is
a daily valuation of actual refinery feedstocks at market and a daily valuation
of actual refinery production at market. The result of this calculation is a
standard refinery gross margin. Since it is not possible to ratably deliver
priced feedstocks to our refineries and since it is not possible to realize the
value of refinery production on the day it is produced, the actual refinery
gross margin differs from the standard. These differences arise from the fact
that crude oil is often purchased and priced well in advance of the time that it
is consumed and the value of refinery production can be fixed before or after it
is produced and is further determined by the channel of trade through which it
is marketed. Inventory fluctuations and hedging activities with their attendant
product grade, location and time basis risks lead to further deviations from the
standard daily feedstock and product valuations. These variations from the
standard are allocated to each refinery on a reasonable basis, usually driven by
volume of crude input. As a result of these allocations, the individual refinery
realized gross margins presented here do not reflect the results that would be
reported if separately accounted for in accordance with generally accepted
accounting principles.
Premcor Inc. and Subsidiaries
Earnings Release
Three months ended September 30, 2002 Three months ended September 30, 2001
Selected Volumetric Data ------------------------------------- ---------------------------------------
- ------------------------ Port Port
(in thousands of barrels per day) Arthur Lima Hartford Total Arthur Lima Hartford Total
- --------------------------------- ------- ------- -------- ------- ------- ------- -------- -------
Feedstocks:
Crude oil throughput:
Sweet - 136.2 - 136.2 - 149.5 8.3 157.8
Light/Medium sour 36.5 4.4 58.9 99.8 41.2 0.5 48.9 90.6
Heavy sour 179.4 - - 179.4 174.4 - 6.7 181.1
----- ----- ---- ----- ----- ----- ---- -----
Total crude oil 215.9 140.6 58.9 415.4 215.6 150.0 63.9 429.5
Unfinished and blendstocks 23.0 (6.7) 5.6 21.9 17.9 (8.1) 3.1 12.9
----- ----- ---- ----- ----- ----- ---- -----
Total feedstocks 238.9 133.9 64.5 437.3 233.5 141.9 67.0 442.4
===== ===== ==== ===== ===== ===== ==== =====
Production:
Light products:
Conventional gasoline 92.4 70.1 28.0 190.5 82.2 73.3 30.0 185.5
Premium and reformulated gasoline 21.0 13.6 7.1 41.7 24.0 13.7 6.5 44.2
Diesel fuel 63.0 16.1 20.4 99.5 76.1 18.5 22.0 116.6
Jet fuel 26.0 22.9 - 48.9 17.9 25.8 - 43.7
Petrochemical products 20.6 6.9 2.6 30.1 17.2 7.0 2.7 26.9
----- ----- ---- ----- ----- ----- ---- -----
Total light products 223.0 129.6 58.1 410.7 217.4 138.3 61.2 416.9
Petroleum coke and sulfur 27.0 2.8 3.4 33.2 22.5 3.1 3.7 29.3
Residual oil 6.8 2.2 1.0 10.0 4.3 1.9 (0.2) 6.0
----- ----- ---- ----- ----- ----- ---- -----
Total production 256.8 134.6 62.5 453.9 244.2 143.3 64.7 452.2
===== ===== ==== ===== ===== ===== ==== =====
Premcor Inc. and Subsidiaries
Earnings Release
Nine months ended September 30, 2002 Nine months ended September 30, 2001
--------------------------------------- ----------------------------------------------
Port Port Blue
Selected Refinery Data (unaudited) Arthur Lima Hartford Total Arthur Lima Hartford Island* Total
- --------------------------------- --------- -------- -------- ------- ------- ------- -------- ------- --------
Operating results (dollars in millions):
Gross margin:
Gulf Coast 3/2/1 $ 183.2 $112.8 $49.8 $ 345.7 $ 305.9 $ 194.3 $ 88.7 $ 7.2 $ 596.1
Chicago 3/2/1 vs. Gulf Coast 3/2/1 - 63.6 28.1 91.7 - 158.7 72.5 5.9 237.1
Crude oil differentials to benchmark 247.6 (30.0) 22.5 240.2 441.2 (65.6) 52.7 1.4 429.7
Product differentials to benchmark (142.8) (26.7) (43.8) (213.3) (143.5) (32.2) (42.9) (7.1) (225.7)
-------- ------- ------ -------- ------- ------- ------ ------- --------
Realized gross margin 288.0 119.7 56.6 464.3 603.6 255.2 171.0 7.4 1,037.2
Operating expenses 198.2 83.5 56.5 338.2 211.1 85.1 54.2 5.4 355.8
-------- ------- ------ -------- ------- ------- ------ ------- --------
Net refining margin 89.8 36.2 0.1 126.1 392.5 170.2 116.8 1.9 681.4
Depreciation and amortization 39.4 17.5 2.9 59.8 35.0 16.3 11.8 1.1 64.2
Per barrel of throughput (in dollars):
Gulf Coast 3/2/1
Chicago 3/2/1 vs. Gulf Coast 3/2/1 $ 2.93 $ 2.93 $ 2.93 $ 2.93 $ 4.98 $ 4.98 $ 4.98 $ 4.98 $ 4.98
Chicago 3/2/1 vs. Gulf Coast 3/2/1 - 1.65 1.65 0.78 - 4.07 4.07 4.07 1.98
Crude oil differentials to benchmark 3.96 (0.78) 1.32 2.03 7.18 (1.68) 2.95 0.96 3.59
Product differentials to benchmark (2.28) (0.69) (2.58) (1.81) (2.33) (0.83) (2.41) (4.91) (1.88)
Realized gross margin --------- -------- -------- -------- -------- -------- ------ ------- ---------
4.60 3.11 3.33 3.93 9.82 6.54 9.59 5.10 8.66
Operating expenses 3.17 2.17 3.32 2.87 3.41 2.18 3.04 3.75 2.97
--------- -------- -------- -------- -------- -------- ------ ------- ---------
Net refining margin 1.44 0.94 0.01 1.07 6.40 4.36 6.55 1.34 5.69
Depreciation and amortization 0.63 0.45 0.17 0.51 0.57 0.42 0.66 0.76 0.54
Calculation methodology:
Although the Company manages its refinery business, including feedstock
acquisition and product marketing, on an integrated basis, for analytical
purposes, the business results shown here have been allocated to the
individual refineries. The foundation for determining realized gross margin by
refinery is a daily valuation of actual refinery feedstocks at market and a
daily valuation of actual refinery feedstocks at market and a daily valuation
of actual refinery production at market. The result of this calculation is a
standard refinery gross margin. Since it is not possible to ratably deliver
daily priced feedstocks to our refineries and since it is not possible to
realize the value of refinery production on the day it is produced, the actual
refinery gross margin differs from the standard. These differences arise from
the fact that crude oil is often purchased and priced well in advance of the
time that it is consumed and the value of refinery production can be fixed
before or after it is produced and is further determined by the channel of
trade through which it is marketed. Inventory fluctuations and hedging
activities with their attendant product grade, location and time basis risks
lead to further deviations from the standard daily feedstock and product
valuations. These valuations from the standard are allocated to each refinery
on a reasonable basis, usually driven by volume of crude input. As a result of
these allocations, the individual refinery realized gross margins presented
here do not reflect the results that would be reported if separately accounted
for in accordance with generally accepted accounting principles.
Premcor Inc. and Subsidiaries
Earnings Release
Nine months ended September 30, 2002 Nine months ended September 30, 2001
------------------------------------- ----------------------------------------------
Selected Volumetric Data Port Port Blue
(in thousands of barrels per day) Arthur Lima Hartford Total Arthur Lima Hartford Island* Total
- ---------------------------------- ------ ----- -------- ------- ------ ------ -------- ------- ------
Feedstocks:
Crude oil throughput:
Sweet - 137.7 - 137.7 - 138.3 4.5 4.2 147.0
Light/Medium sour 39.5 3.3 59.1 101.9 48.8 4.7 54.9 1.1 109.5
Heavy sour 189.6 - 3.2 192.8 176.4 - 5.9 - 182.3
----- ----- ---- ----- ----- ----- ---- --- -----
Total crude oil 229.1 141.0 62.3 432.4 225.2 143.0 65.3 5.3 438.8
Unfinished and blendstocks 5.7 (6.0) 4.2 3.9 10.8 (5.4) 1.4 0.5 7.3
----- ----- ---- ----- ----- ----- ---- --- -----
Total feedstocks 234.8 135.0 66.5 436.3 236.0 137.6 66.7 5.8 446.1
===== ===== ==== ===== ===== ===== ==== === =====
Production:
Light products:
Conventional gasoline 83.5 73.1 29.9 186.5 81.9 71.0 29.4 0.2 182.5
Premium and reformulated gasoline 21.6 11.4 6.3 39.3 24.6 12.2 6.9 3.4 47.1
Diesel fuel 64.7 17.4 20.8 102.9 74.4 20.6 22.1 1.5 118.6
Jet fuel 27.7 22.1 - 49.8 18.6 23.2 - - 41.8
Petrochemical products 18.3 7.5 3.0 28.8 18.9 6.9 3.1 0.1 29.0
----- ----- ---- ----- ----- ----- ---- --- -----
Total light products 215.8 131.5 60.0 407.3 218.4 133.9 61.5 5.2 419.0
Petroleum coke and sulfur 29.9 2.8 4.1 36.8 26.5 2.9 4.0 - 33.4
Residual oil 7.3 2.0 1.4 10.7 4.6 2.1 - 0.5 7.2
----- ----- ---- ----- ----- ----- ---- --- -----
Total production 253.0 136.3 65.5 454.8 249.5 138.9 65.5 5.7 459.6
===== ===== ==== ===== ===== ===== ==== === =====
* Closed January 2001