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‘Milestone Quarter’ for Western Refining

Completes acquisition of Northern Tier

EL PASO, Texas – With the completion of the transaction to fully acquire Northern Tier Energy LP (NTI), second-quarter 2016 was a “milestone quarter” for Western Refining Inc., said CEO Jeff Stevens.

Western Refining entered into an agreement and plan of merger Dec. 21, 2015, with Northern Tier, under which Western Refining would acquire all of Northern Tier's outstanding common units it did not already own. It completed the deal in June.

Northern Tier, based in Tempe, Ariz., was an independent downstream energy company with refining, retail and logistics operations. It operated a refinery located in St. Paul Park, Minn. It also operated approximately 165 convenience stores and supported approximately 102 franchised convenience stores, primarily in Minnesota and Wisconsin, under the SuperAmerica brand, and a bakery and commissary under the SuperMom's brand.

Western Refining reported second-quarter 2016 net income of $65.4 million, compared to $133.9 million for second-quarter 2015. For the six months ending June 30, 2016, Western Refining reported net income of $96 million, compared to $239.9 million for the same period in 2015.

"This was a milestone quarter as we completed the Northern Tier (NTI) transaction and began operating our combined assets as one team. All three refineries ran well during the quarter, retail fuel volumes were strong compared to second-quarter 2015, and we did a good job managing our expenses,” said Stevens. “Also, through our integrated retail and wholesale marketing supply system, we were able to mitigate our [renewable identification number] expenses during a time that RINs increased in cost."

The U.S. Environmental Protection Agency (EPA) uses RINs to track renewable transportation fuels.

In its retail business, fuel volumes were up 7% in the Southwest on same-store sales basis and total volume for SuperAmerica was up 5% including both company-owned and franchise locations compared to second-quarter 2015. The growth was primarily driven by low gas prices and the resulting increase in consumer demand, the company said.

Western Refining continued to see good demand gasoline and diesel, particularly in the Southwest. And with the recent drop in crude prices, retail margins have improved significantly since the end of second quarter.

Looking forward, Stevens said, "The third quarter has started off well as gasoline demand remains good. … Over the near term, we will focus on debt reduction from cash flow from operations, the sale of assets to [Western Refining Logistics] and distributions received from WNRL, while continuing to return cash to shareholders."

Western Refining is an independent refining and marketing company based in El Paso, Texas. It operates refineries in El Paso, Gallup, N.M., and St. Paul Park, Minn. The company’s retail operations include gas stations and convenience stores in Arizona, Colorado, Minnesota, New Mexico, Texas and Wisconsin, operating primarily under the Giant, Howdy’s and SuperAmerica brands. Western Refining also owns the general partner and approximately 61% of the limited partnership interest of Western Refining Logistics LP.

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