SAN ANTONIO (AP) ¿ Independent oil refiner Tesoro Corp. on Monday said its net income tumbled 87 percent as lower energy prices cut away at margins. Crude oil prices have climbed steadily since March, but gasoline prices haven't matched the pace, hurting margins for refiners. Tesoro said lower margins for distillates and weaker discounts for heavy crudes especially hurt margins. However, West Coast spot gasoline prices improved during the quarter, softening the blow. "We continue to view the West Coast as an attractive market in which to do business, especially with the increasing stability in gasoline demand we are experiencing through our retail channels," said CEO Bruce Smith. Earnings for the quarter ended Sept. 30 fell to $33 million, or 24 cents per share, compared with $259 million, or $1.86 per share during the same period last year. Analysts polled by Thomson Reuters estimated a profit of 1 cent per share, on average. Revenue declined 45 percent to $4.74 billion, down from $8.68 billion in the prior-year period. Analysts forecast an average revenue of $4.71 billion.
Looking ahead to the full-year, Tesoro said it plans to spend less than its capital budget of $600 million. The company estimated 2010 capital spending of $675 million. Tesoro's board of directors lowered the company's quarterly dividend to 5 cents per share, down from its second-quarter dividend of 10 cents per share. The dividend is payable Dec. 15 to shareholders of record as of Dec. 1. Shares of the company fell 37 cents, or 2.6 percent, to $13.60 in morning trading.