El Paso-Based Western Refining To Shut Down Virginia Plant
Western Refining, Inc. on Thursday announced it would be suspending operations of Yorktown, Virginia refinery due to the poor outlook for East Coast refining margins.
Western will continue to operate the Yorktown products terminal and supply the region with finished products. The Company is evaluating all strategic alternatives and if the situation improves would consider restarting refining operations. It will take about six weeks to for the shutdown to be completed.
“The decision to suspend refining operations at the Yorktown refinery was a difficult, but necessary decision driven by the on-going challenging refining margin environment experienced on the East Coast, the continued low price differentials between light/heavy crudes, and poor coking economics,” Jeff Stevens, Western’s President and Chief Executive Officer, said in a news release. “This was a market-driven decision and is not a reflection of the commitment of our Yorktown employees to run a safe and reliable operation. Western is committed to treating them fairly and with respect as we work through this transition.”
As a result of this decision, the Company will record a one-time cash charge totaling approximately $13 million during the second half of 2010.
The company on Thursday also released its quarterly report for the second quarter of 2010. The company reported a net income of $14.4 million, or $0.16 per diluted share, for the second quarter ended June 30, 2010 versus a net loss, excluding special items, of $28.5 million, or $0.39 per diluted share, for the same period in 2009. Including special items, the net loss for the second quarter of 2009 was $307.3 million, or $4.20 per diluted share, which included a non-cash goodwill impairment loss of $299.6 million. A reconciliation of net income (loss) to net income (loss) excluding special items, for all periods shown, is included in the accompanying financial tables.
“We are pleased with our second quarter results, which reflect improved refining margins and continued gains as a result of our cost savings initiatives,” Stevens said. “Our Southwest refineries operated well and took advantage of the margin environment which showed improvement from the first quarter of the year and the second quarter of 2009. In addition, our Retail and Wholesale businesses both delivered increased operating income due to continued fuel volume growth as market conditions improved in the Southwest.”
The Company reported that its cost savings initiatives are generating results ahead of plan. Consolidating the operations of the two Four Corners refineries into the Gallup refinery has generated $13 million in year-to-date savings and remains on track to achieve the original estimate of $25 million in annualized cost reductions. In addition to the savings realized in the Four Corners consolidation, the Company has realized $14 million in other cost reductions year-to-date and expects to exceed its original estimate of $25 million for 2010.
