PHILADELPHIA -- The changing of the guard at Philadelphia-based refiner Sunoco Inc. could signal a long-term change for the company, according to a Dow Jones report. Lynn Laverty Elsenhans will succeed John Drosdick on August 8 as the company's CEO, following Drosdick's retirement Tuesday, about a month ahead of his 65th birthday. He has been at Sunoco's helm for eight years.
Elsenhans played a major role at Royal Dutch Shell, which has trimmed its refining portfolio, focusing investments on its largest, most potentially lucrative refineries.
"Lynn's record at Shell speaks for itself&[image-nocss] mdash;she knows the industry intimately and has proven to be a capable manager of a large and complex business," Drosdick said. Elsenhans had been executive vice president of global manufacturing at Shell since 2005. She was responsible for Shell's refining and chemical operations, which included more than 40 plants. Previously, Elsenhans served as president and CEO of Shell Products US, where she ran the company's American refining and marketing businesses.
In these roles, Elsenhans was a central figure in the many recent refinery divestitures by Shell, including the sale of the Wilmington and Bakersfield plants in California and three refineries in France, analyst Chi Chow of Tristone Capital, Denver, told the news agency. "Given Ms. Elsenhans' level of experience in re-positioning Shell's downstream business, we view the transition as a positive step in resolving some of the remaining strategic issues at Sunoco," he said.
Philadelphia-based Sunoco has faced significant pressure from decreased refining margins in the past year, which have sent its shares downward significantly, said the report. Since July of last year, Sunoco's shares have lost more than half of their value, falling to $ 34.13 from $82.32 a year ago. Margins have fallen, pressured by high crude oil prices and weak gasoline demand.
Sunoco's asset base has been unchanged recently, though the company has suggested it might spin off one refinery and its chemical assets. Sunoco is the second-largest refiner, operating five refineries with 900,000 barrels-per-day (bpd) of capacity. The company has a large network of gas stations, which are concentrated on the East Coast, but span 24 states. The company has an extensive crude and refined products network and 38 product terminals.
Despite its girth, Sunoco is viewed as a quieter player in the sector, the report said. Of the independent refiners, Sunoco has been viewed as a conservative pick, as it has maintained its focus upon refining light sweet crude, primarily on the East Coast, despite a shift among some competitors to focus upon discounted, cheaper grades of crude oil.
Sunoco last did a deal in 2004, when it bought two products terminals. The company's last refinery purchase was in 2003, when it acquired the 150,000-bpd Eagle Point, N.J., refinery from El Paso Corp.
"Longer-term, Ms. Elsenhans could potentially alter the conservative culture at Sunoco, if Shell's aggressive moves to divest underperforming downstream assets are any indication of her management style," Chow added.
Beyond strategic significance, Elsenhans' appointment may indicate that the refining sector is opening up to female leaders Dow Jones said. The move vaults her into a unique position as the only female CEO of a large U.S. energy company. While some integrated companies, such as Shell, BP PLC and Marathon Oil Corp., have appointed women to lead divisions, few of these executives are in refining, which remains a male-dominated sector. Elsenhans, who once managed a refinery, is one of two women to have led refining divisions of major companies. The other, Chevron's Patricia Woertz, now serves as CEO of agribusiness giant Archer Daniels Midland Co.
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