Tesoro's New CEO Gets to Work

SAN ANTONIO -- Tesoro Corp.'s new CEO Greg Goff is looking to slash 15 percent from the budget in 2011, the San Antonio Express-News reported.

"The plans to achieve that will be completed in 45 days, but the savings themselves are targeted to be achieved in 2011," Tesoro spokesman Lynn Westfall said via e-mail.

Asked if layoffs are possible, Westfall responded: "We are developing our plans to reach the 15 percent target now, but have no specifics at this point."

Goff, who was appointed CEO of the independent San Antonio-based refiner May 1, joined Tesoro at a tumultuous time. The company posted a $155 million loss in the first quarter of 2010 and a loss of $140 million for 2009, as refining margins have been squeezed by weak demand for its products, according to the report.

In addition, Goff must deal with the fallout from the closure of the company's refinery in Anacortes, Wash., where an April 2 explosion and fire killed seven employees.

Some units at the plant continued to operate after the accident, but Tesoro decided to temporarily close the plant April 30. An investigation of the disaster continues.

Analyst Jacques Rousseau, of RBC Capital Markets, told clients in a note last week he believes Tesoro "will consider permanently closing" the Anacortes refinery, one of several it owns, because it had struggled to break even.

But Tesoro has made no such decision, Westfall told the newspaper.

"We are currently planning to restart the facility in early September," he said.

Rousseau raised his earnings estimate for Tesoro for the second quarter because of stronger margins in California, where the company has two plants. And he said Tesoro would see improved margins at its Hawaii refinery if the state's Public Utility Commission approves a new contract the company has negotiated with Hawaiian Electric Co.

Under the present contract, Westfall has said Tesoro is selling fuel oil to the utility at below-market price, and the new contract would be "much improved."

Related News:

New Tesoro Chief to Face Refinery Blast Probes

It's Official: Tesoro Announces New Chief Executive
This ad will auto-close in 10 seconds