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Western Refining Recaps 2016, Outlines 2017 Goals


EL PASO, Texas — Western Refining Inc. CEO Jeff Stevens summed up 2016 as "another very successful year" during the company’s recent fiscal fourth-quarter 2016 earnings call.

"Western had a successful 2016 despite a volatile crude oil price environment and challenging fourth quarter," Stevens stated.

The company reached record levels in total fuel volumes and merchandise sales. Specifically, for its operations in the Southwest, same-store fuel sales increased about 5 percent, while merchandise sales increased roughly 4 percent vs. the same quarter of 2015.

Western Refining's SuperAmerica network in the upper Midwest also contributed to the company's positive same-store sales results. In 2016, SuperAmerica fuel volumes experienced a 1-percent increase over 2015. Currently, Western Refining is expanding SuperAmerica’s retail distribution network by adding franchisee-operated stores to the network.

Companywide for the fourth quarter, Western Refining earned a net profit of $9.6 million vs. Q4 2015 net income of $13.5 million. Adjusted EBITDA for the quarter was $92.6 million, which includes Western Refining Logistics LP (WNRL) EBITDA of $36.7 million.

Q4 Highlights

Most notable among Western Refining’s successes in 2016 was the completion of the Northern Tier Energy (NTI) acquisition. Since closing the transaction, Western Refining has built itself into an enterprise valued at approximately $6 billion with approximately 7,300 employees, stated Dave Lamp, president and chief operating officer.

"We continue to benefit from the NTI and WNRL investments, realizing about $390 million in cash distribution since 2013," Lamp noted. 

At the end of December, the company also assumed full control of its East Coast wholesale marketing business from a third party. Following the transaction's completion, Western Refining plans "to optimize operations and geographically grow this business, and expects to generate approximately $20 million in annual EBITDA in 2017."

Additionally among the company’s accomplishments of 2016 was the enhancement of its logistics platform with investments in crude oil terminals, pipeline infrastructure and storage tanks. Between Western Refining and WNRL, the company now has 700 miles of pipeline and 13 million barrels of storage capacity.

Closing out 2016, the company returned approximately $228 million in cash to shareholders through dividends and share repurchases.

Looking ahead to 2017, Western will continue to look for opportunities to expand its presence in the Permian, San Juan and Williston Basins, Lamp cited.

In addition to completion of its pending acquisition by Tesoro Corp., Western Refining outlined its goals for 2017, which are to: continue to focus on safe and reliable operations; maximize the value of its logistics assets; capture additional synergies between the Western Refining and Tesoro merger; and capture additional operational opportunities across all business segments.

Pending Merger With Tesoro

Western Refining executives remained hushed and declined to speak about the pending merger with Tesoro during the recent earnings call. However, Stevens did remark that the company "views the combination of Western with Tesoro as the next positive step for Western shareholders."

As Convenience Store News previously reported, Western Refining and Tesoro signed a definitive merger agreement on Nov. 17 — a move that will make Tesoro a 3,000-plus station operation. Stockholders from both companies are set to meet for a vote on March 24.

However, the deal could be delayed. On Feb. 10, the Federal Trade Commission sent both companies a request for more information. The inquiry could extend the merger review for up to 30 days starting from the time both companies have filed their answers.

Tesoro stockholders and Western Refining stockholders have also filed separate class action suits against the transaction. 

"As we begin 2017, we are looking forward to the completion of the pending Tesoro transaction," Stevens concluded. "Meanwhile, we remain focused on safe and reliable operations, while emphasizing operational efficiencies and managing our costs. We will also continue to maximize the benefits of our investment in Western Refining Logistics. Overall, we have expanded and enhanced our asset base, which provides maximum flexibility in these volatile business conditions."

El Paso-based Western Refining is an independent refining and marketing company that operates refineries in El Paso and Gallup, New Mexico and St. Paul Park, Minnesota. Its retail operations includes retail service stations and convenience stores in Arizona, Colorado, Minnesota, New Mexico, Texas, and Wisconsin, operating primarily under the Giant, Howdy's and SuperAmerica brands.

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