Tesoro Corp., the largest independent refiner on the U.S. West Coast, rose to the highest level in more than four years as profit surged 78 percent and the company announced a $500 million share buyback plan.
Tesoro climbed 14 percent to $31.79 at the close in New York, the biggest jump since Nov. 21, 2008, and the highest price since April 2, 2008. Second-quarter net income rose to $387 million, or $2.75 a share, from $218 million, or $1.52, a year earlier, San Antonio-based Tesoro said in a statement today. Per-share profit was 61 cents more than the average of 17 analysts’ estimates compiled by Bloomberg.
Chief Executive Officer Gregory Goff today said the company will reinstate a 12-cent quarterly dividend, reduce debt, buy back $500 million in shares and sell pipeline assets into a master-limited partnership it controls. The planned sale could generate as much as $450 million, Deutsche Bank AG analyst Paul Sankey said in a note today to clients.
“Greg Goff delivered another outstanding result,” said Sankey, who is based in New York and rates Tesoro the equivalent of a buy.
Tesoro didn’t set a time frame for the buybacks, according to the statement.
With refineries in North Dakota, Utah and Washington that have access to U.S.-produced oil that trades at a discount to global varieties, Tesoro has seen its value more than double since Goff took over on May 1, 2010. The month before, a chemical blast at the company’s Anacortes, Washington, plant killed seven workers, the deadliest U.S. refinery accident since 2005.
The crack spread, a measure of refining profitability, averaged $29.05 a barrel for companies that have plants near new U.S. crude production. That was the highest total ever in the April-to-June period, according to data compiled by Bloomberg.
Independent refiners don’t explore for or produce oil.