United States oil refiner, Sunoco Inc. (NYSE: SUN), says it will either sell or shutdown its last two facilities.
Sunoco is a Philadelphia-based company that has owned refineries for the past 117 years. The company was previously called Sun Oil Company of Ohio and the first oil refinery was purchased in 1894.
Sunoco sells gasoline and runs their convenience stores in at least 23 U.S. states.
Oil refining is profitable when the company can sell refined petroleum products for a higher price than the crude oil it buys as feedstock.
Sunoco is leaving the refineries behind because their returns on the refined oil to gasoline have given unfavorable results.
The Philadelphia and Marcus Hook, PA refineries have had “unacceptable financial performance,” Lynn Elsenhans, chairman and CEO of the company, said in a statement today. It’s in the interest of shareholders to “focus on our profitable retail and logistics businesses which have higher returns, growth potential, and provide steady, ratable cash flow.”
The statement given also said that the company will idle the main processing units in July if the refineries do not sell.
Because of this decision to exit refining, Sunoco expects to have a pretax charge as much as $2.2 billion in the third quarter. If the units are not sold there may be additional charges of up to $500 million, says Sunoco.
Two potential buyers could be Norwegian oil company Statoil (NYSE: STO) and Russia’s second-biggest oil producer LUKOIL.
In New York this morning Sunoco fell 20 cents to $35.91. Overall, the shares have fallen 10 percent this year.
Until next time.