Tesoro Corporation : Tesoro Corporation Reports 2012 Fourth Quarter and Full Year Results

 Tesoro Corporation : Tesoro Corporation Reports 2012 Fourth Quarter and Full
                                 Year Results

  *Net income of $0.19 per diluted share, or $1.34 per diluted share,
    excluding special items

  *Purchased $140 million in Tesoro shares to-date, nearly 30% of authorized
    buyback program

  *Increased the regular quarterly dividend 33% to $0.20 per share

  *Interim financing for BP Carson acquisition in place

  *Anacortes rail facility sold to Tesoro Logistics for $180 million

  *Agreement to acquire Chevron Northwest Products System by Tesoro Logistics
    

SAN ANTONIO - February 6, 2013 - Tesoro Corporation (NYSE:TSO) today  reported 
fourth quarter 2012  net income  of $27 million,  or $0.19  per diluted  share 
compared to a net  loss of $124  million, or $0.89 per  diluted share for  the 
fourth quarter of 2011. 

The fourth quarter 2012 results include after-tax expenses totaling $1.09  per 
diluted  share  related   to  asset  impairment   charges,  asset   retirement 
obligations and expense  accruals primarily  attributable to  the decision  to 
cease refining  operations  at  the  Hawaii  refinery.  Results  also  include 
after-tax expenses  totaling  $0.06 per  diluted  share primarily  related  to 
transaction costs from the announced  acquisition of BP's Southern  California 
refining and marketing  business. Excluding  these items,  the Company  earned 
$190 million, or $1.34 per diluted share in the fourth quarter.

For the full year 2012,  the Company reported net  income of $743 million,  or 
$5.25 per  diluted share,  versus net  income of  $546 million,  or $3.81  per 
diluted share for the  full year 2011. Excluding  special items, for the  full 
year 2012, the Company earned net income of $956 million, or $6.76 per diluted
share, versus an  adjusted net income  of $581 million,  or $4.05 per  diluted 
share for the full year 2011.

"Our solid operating performance  allowed us to  capture strong crack  spreads 
and report record fourth quarter adjusted earnings per share," said Greg Goff,
President and CEO. "For  the full year 2012,  we continued to demonstrate  our 
ability to drive fundamental improvements in the business while reporting  the 
highest adjusted earnings in the Company's history." With a focus on expanding
feedstock advantages  and improving  products  yields, the  Company  completed 
three  of  five  large  capital   refinery  projects  in  2012,   contributing 
significant additional  earnings during  the  year. In  an effort  to  deliver 
value-driven growth, the  Company added  over 225 retail  stations during  the 
year. Tesoro also executed three asset sales to Tesoro Logistics and announced
the acquisition of Chevron  Pipe Line Company's  Northwest Products System  by 
Tesoro Logistics, driving  significant growth in  that business. And  finally, 
the Company announced the acquisition of BP's Southern California refining and
marketing business, providing a  transformational growth opportunity for  both 
Tesoro and Tesoro Logistics.

For the fourth quarter, the Company recorded segment operating income of  $150 
million, or  $405  million excluding  special  items, compared  to  a  segment 
operating loss of $96 million, or $89 million excluding special items, in  the 
fourth quarter  of 2011.  The increase  in operating  income was  driven by  a 
higher margin environment and significantly improved crude oil  differentials. 


The Tesoro  Index was  $12.40 per  barrel (/bbl)  for the  fourth quarter,  up 
nearly $5/bbl relative to a year  ago. Higher light product crack spreads  and 
more attractive  heavy crude  oil discounts  on the  West Coast  enhanced  the 
benchmark. During the quarter, heavy California crude oil traded at an $11/bbl
discount relative to  Brent versus  a narrow discount  of $1/bbl  a year  ago. 
Additionally, in the  Mid-Continent, the discount  of West Texas  Intermediate 
(WTI) to Brent  widened by over  $6/bbl relative  to a year  ago. The  Company 
captured a gross margin of $14.25/bbl.
Driving the Company's gross margin performance  in excess of the Tesoro  Index 
was discounted crude  oil compared to  benchmark grades of  crude oil. On  the 
West Coast, foreign  heavy and  Canadian light  sweet crude  oil continued  to 
price at a discount to domestic alternatives. Total throughput in the  quarter 
was 604 thousand barrels per day (mbpd) or 89% utilization.

Direct manufacturing  costs  in  the fourth  quarter  averaged  $4.70/bbl,  up 
$0.28/bbl, a result of higher natural gas prices and lower refinery throughput
relative to the third quarter of 2012.

Retail fuel sales  volumes in the  fourth quarter were  up 20%  year-over-year 
driven by the addition of  over 225 retail stations  in 2012. Same store  fuel 
sales during the  quarter were  lower by over  2% on  a year-over-year  basis, 
while retail fuel margins were up relative to last year.

Corporate and unallocated costs, net  of $9 million of corporate  depreciation 
and excluding $7 million in variable stock-based compensation expense and  $10 
million of transaction  costs, primarily  related to the  acquisition of  BP's 
Southern California refining and marketing  business, were $43 million in  the 
fourth quarter.

Capital Spending and Liquidity
Capital spending for the full year 2012 was $559 million. Turnaround  spending 
for the  full  year  was  $261  million.  The  Company  currently  anticipates 
consolidated capital  spending  in  2013 to  be  approximately  $530  million. 
Expectations for full year  2013 turnaround spending  remain at $310  million. 
The Company ended the year with over $1.6 billion in cash and remained undrawn
with nearly $1.2 billion of  availability on the Tesoro Corporation  revolving 
credit facility. Tesoro Logistics  ended the quarter  undrawn on its  separate 
credit facility.

2013 Strategic Focus
"Looking back at 2012, we continued to deliver sustainable improvements in the
business, we reinvested free cash  flow into high-return capital projects,  we 
drove significant  value growth  in Tesoro  Logistics and  we began  returning 
excess cash to  shareholders, all in-line  with our plan  for the year,"  said 
Goff. Looking to 2013, the Company remains focused on delivering the announced
large capital  refining  projects,  strengthening  its  West  Coast  business, 
capitalizing  on  its  advantaged  position  in  the  Mid-Continent,   driving 
additional growth in Tesoro Logistics and executing a cash strategy focused on
investing for growth and returning cash to shareholders.

Hawaii Refinery Conversion to Terminal
On January 8, 2013, Tesoro Corporation  announced that it will cease  refining 
operations at its  Hawaii refinery during  April of this  year, and begin  the 
process of  converting the  refinery to  an import,  storage and  distribution 
terminal. Tesoro  Hawaii will  maintain the  existing distribution  system  to 
support  marketing  operations  and  fulfill  its  supply  commitments   while 
continuing to offer the terminal, distribution and retail assets for sale. The
Company expects to realize between $300 to  350 million in cash by the end  of 
2013, driven by  a reduction  in working  capital needs  as a  result of  this 
conversion.

Acquisition Funding Update
Tesoro has put in  place interim financing facilities  for the acquisition  of 
BP's Southern California refining and marketing business. On January 4,  2013, 
Tesoro  amended  its  revolving  credit  facility  expanding  total  available 
capacity from  $1.85 billion  to $3.0  billion. Additionally,  on January  28, 
2013, Tesoro closed a three year  $500 million term loan credit facility  with 
attractive borrowing rates and flexible repayment provisions. Both  facilities 
become effective  upon  the  transaction close.  With  the  additional  credit 
capacity in place, the  Company expects to fund  the transaction with  between 
$500 and $600 million of  cash and $500 million  in term loan borrowings.  The 
remaining $1.2  billion of  required  funds is  expected  to be  sourced  with 
revolver borrowings and proceeds from the  sale of a portion of the  logistics 
assets to Tesoro Logistics  at closing. The terms  of the logistics sale  have 
yet to be determined or negotiated.

Returning Cash to Shareholders
Tesoro Corporation today announced that the board of directors has approved  a 
33% increase in the Company's regular  quarterly cash dividend from $0.15  per 
share to $0.20  per share, effective  with the quarterly  dividend payable  on 
March 15, 2013 to holders of record  at the close of business on February  28, 
2013.

During  the  fourth  quarter  of   2012,  Tesoro  returned  $100  million   to 
shareholders via the purchase of over two and a half million of the  Company's 
shares. Recognizing the  continued value  opportunity, the  Company bought  an 
additional $40 million of  shares during the first  quarter of 2013,  bringing 
total purchases  to $140  million or  nearly 30%  of the  outstanding  buyback 
program.

Public Invited to Listen to Analyst Conference Call
At 7:30 a.m. CST tomorrow morning, Tesoro will broadcast, live, its conference
call with analysts  regarding fourth quarter  and full year  2012 results  and 
other business matters. Interested parties may listen to the live  conference 
call over the Internet by logging on to http://www.tsocorp.com.

Tesoro Corporation,  a Fortune  150  company, is  an independent  refiner  and 
marketer of petroleum  products. Tesoro, through  its subsidiaries,  operates 
seven refineries in  the western  United States  with a  combined capacity  of 
approximately 675,000  barrels  per  day.  Tesoro's  retail-marketing  system 
includes over 1,400 branded retail stations, of which 595 are company operated
under the Tesoro^®, Shell^® and USA Gasoline(TM) brands.

This earnings release contains  certain statements that are  "forward-looking" 
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 concerning our expectations
about capital and turnaround spending, the Company's focus in 2013, cash to be
generated from the  reduction of working  capital in Hawaii,  funding for  the 
acquisition of BP's Southern California  refining and marketing business,  and 
the sale of a portion of the logistics assets to Tesoro Logistics LP. For more
information concerning  factors that  could affect  these statements  see  our 
annual report on Form 10-K and quarterly reports on Form 10-Q, filed with  the 
Securities and Exchange  Commission. We  undertake no  obligation to  publicly 
release the result  of any  revisions to any  such forward-looking  statements 
that may be made to  reflect events or circumstances  that occur, or which  we 
become aware of, after the date hereof.

Contact:
Investors:
Louie Rubiola, Director, Investor Relations, (210) 626-4355

Media:
Tesoro Media Relations, media@tsocorp.com, (210) 626-7702

                              TESORO CORPORATION
                    STATEMENTS OF CONSOLIDATED OPERATIONS
                                 (Unaudited)
                    (In millions except per share amounts)

                                   Three Months Ended        Years Ended
                                     December 31,          December 31,
                                    2012       2011        2012        2011
Revenues                          $ 8,273    $ 7,713    $ 32,974    $ 30,303
Costs and Expenses:
Cost of sales                       7,340      7,307      29,002      27,007
Operating expenses                    408        378       1,544       1,495
Selling, general and
administrative expenses                72         71         310         237
Depreciation and amortization
expense                               117        105         445         417
Loss on asset disposals and
impairments (a)                       255          7         271          67
Operating Income (Loss) (b) (c)        81       (155 )     1,402       1,080
Interest and financing costs,
net (d)                               (29 )      (37 )      (166 )      (179 )
Interest income                         -          -           2           2
Other income (expense), net (e)        (5 )        1         (26 )         2
Earnings (Loss) Before Income
Taxes                                  47       (191 )     1,212         905
Income tax expense (benefit)           12        (73 )       442         342
Net Earnings (Loss)                    35       (118 )       770         563
Less net earnings attributable
to noncontrolling interest              8          6          27          17
NET EARNINGS (LOSS) ATTRIBUTABLE
TO TESORO CORPORATION             $    27    $  (124 )  $    743    $    546
Net Earnings (Loss) Per Share:
Basic                             $  0.19    $ (0.89 )  $   5.33    $   3.86
Diluted (f)                       $  0.19    $ (0.89 )  $   5.25    $   3.81
Weighted Average Common Shares:
Basic                               139.1      138.7       139.4       141.4
Diluted (f)                         141.6      138.7       141.5       143.3

________________
(a)Includes impairment charges and asset retirement obligations of $228
million and $20 million, respectively, for the three months and year ended
December 31, 2012, as a result of the decision to cease refining operations at
our Hawaii refinery, and begin the process of converting the refinery to an
import, storage and distribution terminal. Also includes impairment charges
related to the change in scope of a capital project at our Wilmington refinery
of $51 million for the year ended December31, 2011. The after-tax impact of
losses on asset disposals and impairments was approximately $154 million and
$4 million for the three months ended December 31, 2012 and 2011,
respectively, and $165 million and $41 million for the years ended December
31, 2012 and 2011, respectively. The loss on asset disposals and impairments
is included in refining segment operating income but excluded from the
regional operating costs per barrel. 
(b) Includes $37 million in business interruption and property damage
insurance recoveries pre-tax, or $23 million after-tax related to the April
2010 incident at our Washington refinery for the year ended December31, 2011.
(c) Includes an expense of $9 million for the year ended December 31, 2012,
for a supplemental vacation accrual related to a change in benefits for
retirement eligible employees. The after-tax impact of the expense was $5
million.
(d) Includes charges of $28 million, pre-tax, or $17 million, after-tax, for
premiums and unamortized debt issuance costs associated with the redemption of
our 6.625% and 6.500% Senior Notes, for the year ended December 31, 2012.
Also includes charges of $22 million, pre-tax, or $13 million, after-tax,
related to the early redemption of the Junior Subordinated Notes due 2012 and
a portion of our 6.250% and 6.500% Senior Notes for the year ended December
31, 2011.
(e) Includes pre-tax expenses related to certain legal matters of $4 million
for the three months ended December 31, 2012, and $26 million and $7 million
for the years ended December 31, 2012 and 2011, respectively. The after-tax
impact of these expenses was $3 million for the three months ended December
31, 2012, and $16 million and $4 million for the years ended December 31, 2012
and 2011, respectively.
(f) The assumed conversion of common stock equivalents produced anti-dilutive
results for the three months ended December31, 2011, and was not included in
the dilutive calculation.

                              TESORO CORPORATION
                       SELECTED OPERATING SEGMENT DATA
                                 (Unaudited)
                                (In millions)

                                      Three Months Ended      Years Ended
                                         December 31,        December 31,
                                        2012      2011      2012       2011
Operating Income (Loss)
Refining (a) (b)                      $  106    $ (123 )  $ 1,552    $ 1,179
Retail                                    44        27        132         89
Total Segment Operating Income
(Loss)                                   150       (96 )    1,684      1,268
Corporate and unallocated costs (g)      (69 )     (59 )     (282 )     (188 )
Operating Income (Loss) (c)               81      (155 )    1,402      1,080
Interest and financing costs, net
(d)                                      (29 )     (37 )     (166 )     (179 )
Interest income                            -         -          2          2
Other income (expense), net (e)           (5 )       1        (26 )        2
Earnings (Loss) Before Income Taxes   $   47    $ (191 )  $ 1,212    $   905
Depreciation and Amortization
Expense
Refining                              $   98    $   93    $   380    $   369
Retail                                    10        10         39         38
Corporate                                  9         2         26         10
Depreciation and Amortization
Expense                               $  117    $  105    $   445    $   417
Capital Expenditures
Refining                              $  144    $  100    $   472    $   262
Retail                                    28        21         74         41
Corporate                                  4         8         13         17
Capital Expenditures                  $  176    $  129    $   559    $   320

                              BALANCE SHEET DATA
                                 (Unaudited)
                            (Dollars in millions)

                                                    December 31,  December 31,
                                                        2012          2011
Cash and cash equivalents                           $    1,639    $     900
Inventories (h)                                     $    1,578    $   1,763
Total Assets                                        $   10,702    $   9,892
Current maturities of debt                          $        3    $     418
Long-Term Debt                                      $    1,587    $   1,283
Total Equity                                        $    4,737    $   3,978
Total Debt to Capitalization Ratio                          25 %         30 %
Total Debt to Capitalization Ratio excluding TLLP
(i)                                                         23 %         31 %

_______________
(g) Includes stock-based compensation expense of $11 million and $28 million
for the three months ended December31, 2012 and 2011, respectively, and $103
million and $53 million for the years ended December 31, 2012 and 2011,
respectively. The volatility is primarily a result of changes in Tesoro's
stock price during the periods as compared to the prior periods.
(h) The total carrying value of our crude oil and refined product inventories
was less than replacement cost by approximately $1.6 billion and $1.7 billion
at December31, 2012 and 2011, respectively.
(i) Excludes Tesoro Logistic LP's ("TLLP") total debt of $354 million and $50
million and noncontrolling interest of $486 million and $310 million as of and
for the years ended December 31, 2012 and 2011, respectively. TLLP's debt was
primarily comprised of $350 million aggregate principal amount of Tesoro
Logistics LP Senior Notes and $50 million of borrowings on TLLP's revolving
credit facility as of December 31, 2012 and 2011, respectively, which are
non-recourse to Tesoro, except for Tesoro Logistics GP.

                              TESORO CORPORATION
                                OPERATING DATA
                                 (Unaudited)

                                    Three Months Ended        Years Ended
                                       December 31,           December 31,
REFINING SEGMENT                     2012        2011       2012       2011
Total Refining Segment
Throughput (thousand barrels
("bbls") per day)
Heavy crude (j)                         152        148         161        171
Light crude                             408        385         387        373
Other feedstocks                         44         34          37         35
Total Throughput                        604        567         585        579
Yield (thousand bbls per day)
Gasoline and gasoline blendstocks       313        281         290        285
Jet fuel                                 84         80          83         79
Diesel fuel                             145        138         132        135
Heavy fuel oils, residual
products, internally produced
fuel and other                           95        100         111        112
Total Yield                             637        599         616        611
Gross refining margin
($/throughput bbl) (k)             $  14.25   $   6.02    $  16.37   $  13.94
Manufacturing costs before
depreciation and amortization
expense
($/throughput bbl) (k)             $   4.70   $   5.03    $   4.72   $   4.98
Segment Operating Income (Loss)
($ millions)
Gross refining margin (l)          $    792   $    313    $  3,503   $  2,944
Expenses
Manufacturing Costs                     261        263       1,009      1,052
Other operating expenses                 66         65         260        241
Selling, general and
administrative expenses                   9         11          40         43
Depreciation and amortization
expense (m)                              98         93         380        369
Loss on asset disposal and
impairments (a)                         252          4         262         60
Segment Operating Income (Loss)
(b)                                $    106   $   (123 )  $  1,552   $  1,179
Refined Product Sales (thousand
bbls per day) (n)
Gasoline and gasoline blendstocks       354        341         357        341
Jet fuel                                 97         93          97         91
Diesel fuel                             158        153         154        143
Heavy fuel oils, residual
products and other                       85         92          85         85
Total Refined Product Sales             694        679         693        660
Refined Product Sales Margin
($/bbl) (k) (n)
Average sales price                $ 115.72   $ 119.00    $ 123.20   $ 121.09
Average costs of sales               105.18     112.89      110.76     109.96
Refined Product Sales Margin       $  10.54   $   6.11    $  12.44   $  11.13

________________
(j)We define heavy crude oil as crude oil with an American Petroleum
Institute gravity of 24 degrees or less.
(k)Management uses gross refining margin per barrel to evaluate performance
and compare profitability to other companies in the industry. There are a
variety of ways to calculate gross refining margin per barrel; different
companies may calculate it in different ways. We calculate gross refining
margin per barrel by dividing gross refining margin (revenues less costs of
feedstocks, purchased refined products, transportation and distribution) by
total refining throughput. Management uses manufacturing costs before
depreciation amortization expense ("Manufacturing Costs") per barrel to
evaluate the efficiency of refining operations. There are a variety of ways to
calculate Manufacturing Costs per barrel; different companies may calculate it
in different ways. We calculate Manufacturing Costs per barrel by dividing
Manufacturing Costs by total refining throughput. Management uses refined
product sales margin per barrel to evaluate the profitability of manufactured
and purchased refined products sales. There are a variety of ways to calculate
refined product sales margin per barrel; different companies may calculate it
in different ways. We calculate refined products sales margin per barrel by
dividing refined product sales and refined product cost of sales by total
refining throughput, and subtracting refined product cost of sales per barrel
from refined product sales per barrel. Investors and analysts use these
financial measures to help analyze and compare companies in the industry on
the basis of operating performance. These financial measures should not be
considered alternatives to segment operating income, revenues, costs of sales
and operating expenses or any other measure of financial performance presented
in accordance with accounting principles generally accepted in the United
States of America ("U.S. GAAP").
(l)Consolidated gross refining margin combines gross refining margin for
each of our regions adjusted for other amounts not directly attributable to a
specific region. Other amounts resulted in an increase of $2 million for both
the three months ended December31, 2012 and 2011, respectively, and $4
million and $6 million for the years ended December31, 2012 and 2011,
respectively. Gross refining margin includes the effect of intersegment sales
to the retail segment at prices which approximate market. Gross refining
margin approximates total refining throughput times gross refining margin per
barrel.
(m)Includes manufacturing depreciation and amortization expense per
throughput barrel of approximately $1.60 and $1.70 for the three months ended
December31, 2012 and 2011, respectively, and $1.67 for both the years ended
December31, 2012 and 2011.
(n)Sources of total refined product sales include refined products
manufactured at our refineries and refined products purchased from third
parties. Total refined product sales margins include margins on sales of
manufactured and purchased refined products.

                             TESORO CORPORATION
                                OPERATING DATA
                                 (Unaudited)
               (Dollars in millions except per barrel amounts)

                                        Three Months Ended     Years Ended
                                           December 31,        December 31,
Refining By Region                        2012      2011      2012      2011
California (Martinez and Wilmington)
Throughput (thousand bbls per day) (o)
Heavy crude (j)                              141      138       151       156
Light crude                                   83       75        67        60
Other feedstocks                              25       28        24        25
Total Throughput                             249      241       242       241
Yield (thousand bbls per day)
Gasoline and gasoline blendstocks            145      135       132       134
Jet fuel                                      18       19        21        20
Diesel fuel                                   74       69        61        63
Heavy fuel oils, residual products,
internally produced fuel and other            35       39        48        45
Total Yield                                  272      262       262       262
Gross refining margin                   $    255   $   38   $ 1,005   $ 1,071
Gross refining margin ($/throughput
bbl) (k)                                $  11.14   $ 1.72   $ 11.35   $ 12.19
Manufacturing costs before
depreciation and amortization expense
($/throughput bbl) (k)                  $   6.48   $ 6.76   $  6.30   $  6.90
Capital expenditures                    $     48   $   46   $   170   $   121
Pacific Northwest (Alaska &
Washington)
Throughput (thousand bbls per day) (o)
Heavy crude (j)                                3        1         4         3
Light crude                                  142      137       142       144
Other feedstocks                              15        1         9         6
Total Throughput                             160      139       155       153
Yield (thousand bbls per day)
Gasoline and gasoline blendstocks             75       59        69        66
Jet fuel                                      31       28        31        30
Diesel fuel                                   25       25        25        27
Heavy fuel oils, residual products,
internally produced fuel and other            34       31        35        35
Total Yield                                  165      143       160       158
Gross refining margin                   $    197   $   76   $   919   $   693
Gross refining margin ($/throughput
bbl) (k)                                $  13.42   $ 5.96   $ 16.23   $ 12.40
Manufacturing costs before
depreciation and amortization expense
($/throughput bbl) (k)                  $   3.72   $ 4.31   $  3.83   $  3.64
Capital expenditures                    $     27   $   21   $   114   $    59

                              TESORO CORPORATION
                                OPERATING DATA
                                 (Unaudited)
               (Dollars in millions except per barrel amounts)

                                       Three Months Ended      Years Ended
                                          December 31,         December 31,
                                         2012      2011       2012      2011
Mid-Pacific (Hawaii)
Throughput (thousand bbls per day)
(o)
Heavy crude (j)                              8         9          6        12
Light crude                                 64        63         62        59
Total Throughput                            72        72         68        71
Yield (thousand bbls per day)
Gasoline and gasoline blendstocks           20        19         20        19
Jet fuel                                    21        20         19        18
Diesel fuel                                 14        13         13        13
Heavy fuel oils, residual products,
internally produced fuel and other          18        22         18        22
Total Yield                                 73        74         70        72
Gross refining margin                  $    23   $   (29 )  $   174   $   105
Gross refining margin ($/throughput
bbl) (k)                               $  3.57   $ (4.33 )  $  6.96   $  4.08
Manufacturing costs before
depreciation and amortization expense
($/throughput bbl) (k)                 $  3.38   $  3.11    $  3.43   $  3.65
Capital expenditures                   $     2   $     5    $    16   $    13
Mid-Continent (North Dakota and Utah)
Throughput (thousand bbls per day)
Light crude                                119       110        116       110
Other feedstocks                             4         5          4         4
Total Throughput                           123       115        120       114
Yield (thousand bbls per day)
Gasoline and gasoline blendstocks           73        68         69        66
Jet fuel                                    14        13         12        11
Diesel fuel                                 32        31         33        32
Heavy fuel oils, residual products,
internally produced fuel and other           8         8         10        10
Total Yield                                127       120        124       119
Gross refining margin                  $   315   $   226    $ 1,401   $ 1,069
Gross refining margin ($/throughput
bbl) (k)                               $ 27.88   $ 21.38    $ 32.00   $ 25.59
Manufacturing costs before
depreciation and amortization expense
($/throughput bbl) (k)                 $  3.11   $  3.51    $  3.40   $  3.55
Capital expenditures                   $    67   $    28    $   172   $    69

________________
(o)  We experienced reduced throughput due to scheduled turnarounds at our
Martinez refinery during the 2012 first quarter and 2011 second quarter, and
our Alaska and Hawaii refineries during the 2012 second quarter.

                              TESORO CORPORATION
                                OPERATING DATA
                                 (Unaudited)

                                        Three Months Ended     Years Ended
                                           December 31,        December 31,
Retail Segment                            2012      2011      2012      2011
Number of Stations (end of period)
Company-operated (p)                       595       376       595       376
Branded jobber/dealer                      807       799       807       799
Total Stations                           1,402     1,175     1,402     1,175
Average Stations (during period)
Company-operated (p)                       595       376       524       377
Branded jobber/dealer                      800       804       794       780
Total Average Retail Stations            1,395     1,180     1,318     1,157
Fuel Sales (millions of gallons)
Company-operated (p)                       270       185       953       733
Branded jobber/dealer                      192       199       787       793
Total Fuel Sales                           462       384     1,740     1,526
Fuel margin ($/gallon) (q)              $ 0.26    $ 0.19    $ 0.22    $ 0.18
Merchandise Sales ($ millions)          $   53    $   47    $  212    $  200
Merchandise Margin ($ millions)         $   13    $   13    $   54    $   53
Merchandise Margin %                        25 %      28 %      25 %      27 %
Segment Operating Income ($ millions)
Gross Margins
Fuel (q)                                $  121    $   73    $  385    $  274
Merchandise and other non-fuel margin       20        20        84        78
Total Gross Margins                        141        93       469       352
Expenses
Operating expenses                          79        50       273       202
Selling, general and administrative
expenses                                     5         4        17        17
Depreciation and amortization expense       10        10        39        38
Loss on asset disposals and
impairments                                  3         2         8         6
Segment Operating Income                $   44    $   27    $  132    $   89

________________
(p) Reflects the acquisition of 49 stations from SUPERVALU, Inc. and the
transition of 174 retail stations from Thrifty Oil Co. during 2012.
(q)  Management uses fuel margin per gallon to compare profitability to other
companies in the industry. There are a variety of ways to calculate fuel
margin per gallon; different companies may calculate it in different ways. We
calculate fuel margin per gallon by dividing fuel gross margin by fuel sales
volumes. Investors and analysts use fuel margin per gallon to help analyze and
compare companies in the industry on the basis of operating performance. This
financial measure should not be considered an alternative to revenues, segment
operating income or any other measure of financial performance presented in
accordance with U.S. GAAP. Fuel margin and fuel margin per gallon include the
effect of intersegment purchases from the refining segment at prices which
approximate market.



                              TESORO CORPORATION
              RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
                          (Unaudited) (In millions)

                                      Three Months Ended      Years Ended
                                         December 31,         December 31,
                                        2012      2011      2012       2011
Reconciliation of Net Earnings
(Loss) to EBITDA
Net earnings (loss)                   $   27    $ (124 )  $   743    $   546
Add: Depreciation and amortization
expense                                  117       105        445        417
Add: Interest and financing costs,
net (r)                                   29        36        165        177
Add: Income tax expense (benefit)         12       (73 )      442        342
Less: Interest income                      -         -         (2 )       (2 )
EBITDA (s)                            $  185    $  (56 )  $ 1,793    $ 1,480
Reconciliation of Cash Flows from
(used in) Operating Activities to
EBITDA
Net cash from (used in) operating
activities                            $  410    $ (173 )  $ 1,585    $   689
Less: Loss on asset disposals and
impairments                              255         7        271         67
Add: Changes in assets and
liabilities                             (170 )     184       (270 )      524
Add: Deferred income tax benefit
(expense)                                113       (26 )        8       (200 )
Add: Deferred charges                     68        35        277        105
Add: Interest and financing costs,
net (r)                                   29        36        165        177
Add: Income tax expense (benefit)         12       (73 )      442        342
Less: Stock-based compensation
expense                                   12        28        105         53
Less: Net earnings attributable to
noncontrolling interest                    8         6         27         17
Less: Amortization of debt issuance
costs and discounts                        3         3         12         17
Add: Other credits (charges)               1         5          1         (3 )
EBITDA (s)                            $  185    $  (56 )  $ 1,793    $ 1,480

                                         Three Months Ended     Year Ended
                                         December 31, 2012   December 31, 2012
EBITDA (s)                               $         185       $       1,793
Add: Hawaii impairment and asset
retirement obligations (a)                         248                 248
Adjusted EBITDA (s)                      $         433       $       2,041

________________
(r)Excludes foreign exchange loss of $1 million for the three months ended
December 31, 2011, and foreign exchange losses of $1 million and $2 million
for the years ended December 31, 2012 and 2011, respectively, in order to
reconcile EBITDA. Foreign exchange losses are included in interest and
financing costs, net in our statements of consolidated operations.
(s)EBITDA represents earnings (loss) before depreciation and amortization
expense, interest and financing costs, net, income taxes and interest income.
We define Adjusted EBITDA as EBITDA plus the impairment charges and asset
retirement obligations related to our Hawaii refinery of $248 million for the
three months and year ended December 31, 2012, respectively. We present
EBITDA and Adjusted EBITDA because we believe some investors and analysts use
EBITDA and Adjusted EBITDA to help analyze our cash flows including our
ability to satisfy principal and interest obligations with respect to our
indebtedness and use cash for other purposes, including capital expenditures.
EBITDA and Adjusted EBITDA is also used by some investors and analysts to
analyze and compare companies on the basis of operating performance and by
management for internal analysis. EBITDA and Adjusted EBITDA should not be
considered as an alternative to U.S. GAAP net income or net cash from
operating activities. EBITDA and Adjusted EBITDA have important limitations as
an analytical tool, because it excludes some, but not all, items that affect
net income and net cash from operating activities.

          SEGMENT OPERATING INCOME (LOSS) ADJUSTED FOR SPECIAL ITEMS
                          (Unaudited) (In millions)

                                        Three Months Ended  Three Months Ended
                                        December 31, 2012   December 31, 2011
Total Segment Operating Income (Loss)   $         150       $         (96 )
Special Items, before-tax:
Loss on asset disposals and
impairments (a)                                   255                   7
Segment Operating Income (Loss)
Adjusted for Special Items (t)          $         405       $         (89 )

                NET EARNINGS (LOSS) ADJUSTED FOR SPECIAL ITEMS
              (Unaudited) (In millions except per share amounts)

                                         Three Months Ended     Years Ended
                                           December 31,       December 31,
                                          2012      2011      2012      2011
Net Earnings (Loss) - U.S. GAAP          $   27   $  (124 )  $  743   $  546
Special Items, After-tax:
Loss on asset disposals and impairments
(a)                                         154         4       165       41
Transaction costs (u)                         6         -         8        -
Legal accrual (e)                             3         -        16        4
Debt redemption charges (d)                   -         -        17       13
Supplemental vacation accrual (c)             -         -         5        -
MF Global Holding Ltd. loss (v)               -         -         2        -
Washington refinery incident (b)              -         -         -      (23 )
Net Earnings (Loss) Adjusted for
Special Items (t)                           190      (120 )     956      581
Net Earnings (Loss) per Diluted Share -
U.S. GAAP                                $ 0.19   $ (0.89 )  $ 5.25   $ 3.81
Special Items Per Share, After-tax:
Loss on asset disposals and impairments
(a)                                        1.09      0.02      1.17     0.28
Transaction costs (u)                      0.04         -      0.06        -
Legal accrual (e)                          0.02         -      0.11     0.03
Debt redemption charges (d)                   -         -      0.12     0.09
Supplemental vacation accrual (c)             -         -      0.04        -
MF Global Holding Ltd. loss (v)               -         -      0.01        -
Washington refinery incident (b)              -         -         -    (0.16 )
Net Earnings (Loss) per Diluted Share
Adjusted for
Special Items (t)                        $ 1.34   $ (0.87 )    6.76     4.05

________________
(t)  We present segment operating income (loss) adjusted for special items
("Adjusted Segment Income"), net earnings (loss) adjusted for special items
("Adjusted Earnings") and net earnings (loss) per diluted share adjusted for
special items ("Adjusted Diluted EPS") as management believes that the impact
of these items on segment operating income, net earnings and diluted earnings
per share is important information for an investor's understanding of the
operations of our business and the financial information presented. Adjusted
Segment Income, Adjusted Earnings and Adjusted Diluted EPS should not be
considered as an alternative to segment operating income (loss), net earnings
(loss), earnings (loss) per diluted share or any other measure of financial
performance presented in accordance with U.S. GAAP. Adjusted Segment Income,
Adjusted Earnings and Adjusted Diluted EPS may not be comparable to similarly
titled measures used by other entities.
(u)  Represents the after-tax impact of $10 million and $13 million
transaction and integration costs related to the BP Acquisition, TLLP's
purchase of the Northwest Products System and the sales of various assets to
TLLP for the three months and year ended December 31, 2012, respectively.
(v)Includes a loss of $2 million, after-tax, related to the liquidation
of our outstanding accounts receivable balance with MF Global Holding Ltd. for
the year ended December 31, 2012.

TSO 4Q 2012 Earnings Release

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Source: Tesoro Corporation via Thomson Reuters ONE
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