Refining and Marketing (R&M)
The Company’s refining and marketing business generated a quarterly profit from continuing operations of $38.5 million in the fourth quarter 2012 compared to a profit of $61.0 million in the same quarter a year earlier. U.S. R&M continuing operations generated earnings of $22.0 million in the fourth quarter of 2012 compared to earnings of $50.7 million in the 2011 quarter. The earnings reduction for this business in 2012 was principally the result of an impairment charge of $39.6 million after taxes to reduce the carrying value of the Hereford, Texas ethanol plant. The Company’s U.S. ethanol plants experienced weaker operating results in the 2012 quarter compared to the prior year due to depressed ethanol crush spreads. U.S. retail marketing operations reflected improved results as margins for this business averaged 14.1 cents per gallon in the 2012 quarter compared to 13.0 cents per gallon in the 2011 quarter. Retail operations also benefited from improved merchandise margins in the current quarter compared to a year ago. The U.K. R&M operations posted a net profit of $16.5 million in the 2012 quarter compared to a profit of $10.3 million in 2011, with the improved results based on better overall unit margins for this business.
|Three Mos. Ended||Years Ended|
|December 31||December 31|
|U.S. Retail Fuel Margins – Per gallon||$||0.141||0.130||0.129||0.156|
|U.S. Retail Merchandise sales per store month||$||154,730||157,425||156,429||158,144|
|U.K. Refinery Inputs – Bbls. per day||133,599||138,492||132,613||135,391|
|U.K. R&M Unit Margins – Per Bbl.||$||2.21||1.38||1.94||(0.67||)|
|Total Petroleum and Other Product Sales –|
|Bbls. per day*||494,406||465,946||474,949||556,434|
|*Includes 122,361 bbls. per day in the 2011 year related to discontinued operations.|
Corporate activities incurred after-tax costs of $21.1 million in the fourth quarter of 2012, well below the net costs of $34.3 million in the 2011 quarter. The 2012 cost reduction was primarily related to favorable effects from transactions denominated in foreign currencies. The 2012 quarter included an after-tax benefit of $3.5 million from foreign currencies, compared to an after-tax charge of $11.6 million in the 2011 quarter. The Company also had lower net interest expense in the 2012 quarter due to capitalizing a larger portion of its financing costs to oil development projects in the current period. Administrative expenses were higher in the 2012 quarter compared to a year earlier due to additional costs for professional services and employee compensation.
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