SAN ANTONIO -- On the same day that it announced the acquisition of a total of nearly 400 gas stations from Shell and USA Petroleum (see related story in this issue of CSP Daily News), Tesoro Corp. has reported record 2006 fourth-quarter net income of $158 million, or $2.28 per share, and full-year 2006 net income of $801 million, or $11.46 per share. Earnings for 2006 were almost $300 million ahead of last year.
Quarterly gross refining margin rose 16% compared to 2005 more than offsetting the lower throughput primarily caused by a turnaround at the [image-nocss] Anacortes refinery. Quarterly refining operating income of $284 million was nearly $40 million more than a year ago.
Our knowledge and experience in optimizing our system continues to develop and our decisions around crude oil purchasing and clean product management are significantly improving earnings. Our management team is excited because we continue to find new opportunities to add value, said Bruce Smith, chairman, president and CEO.
Heavy turnaround activity on the West Coast in the fourth quarter strengthened margins versus last year. Jet fuel demand strengthened during the quarter, leading to improved performance at the company's Alaska refinery. In addition, strong diesel demand in the Mid-Continent region contributed to its profitability in this region.
Increasingly favorable dynamics in Tesoro's Salt Lake City and Mandan refining markets are improving the balance of the company's earnings. In 2005, these assets represented 19% of our total refining operating income. This year they contributed 26% as we have successfully and safely increased throughput and the production of clean fuels, said Smith.
Capital spending for the year was approximately $570 million of which $117 million was for turnaround expenditures. The company continues to reinvest cash flow to improve reliability, environmental compliance and operating income from assets. EBITDA contributions from many of the projects initiated in 2006 are expected to be between $80 million $125 million pre-tax in 2007. Cash at the end of the year was $986 million as compared to $440 million on Dec. 31, 2005. The ratio of debt-to-capitalization was 29% compared to 36% a year ago.
San Antonio-based Tesoro is an independent refiner and marketer of petroleum products. Not counting the just-announced deals, Tesoro operates six refineries in the western United States with a combined capacity of approximately 560,000 barrels per day. Tesoro's retail-marketing system includes more than 450 branded retail stations, of which nearly 200 are company owned and operated under the Tesoro and Mirastar brands.
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