Our second quarter results continue to show the benefits of the aggressive actions that we’ve taken to address the business issues within our control, and I’m pleased with the progress we’re making.Our focus on margin capture and the decisive actions we’ve taken to reduce cost and improve reliability have returned our refining business to profitability for the first time since Q1 2009, and enabled our non-refining businesses to generate value and allowed us to build our cash position to $1.5 billion. As you can see from Slide #3 and #4, we earned $158 million in net income excluding special items, or $1.31 per share. I’ll describe how we achieved that result in three parts. First, we brought our refining business back to profitability by improving our margin capture and continuing to drive our cost. We also ran our refineries very well during the second quarter achieving 92% crude utilization rate. That’s the highest level since 2007. The combination of better margin capture, plus cost reduction, plus safe and reliable operations along with some help from improved benchmarked margins enabled us to earn $86 million in refining alone. The second part of this story involves our non-refining businesses which earned $166 million pretax. In addition to providing steady earnings for yet another quarter, they continued to grow and create value. Sunoco Logistics recently announced the purchase of Texon, a butane blending business, which holds great promise for increasing earning, and represents real progress towards offering this state-of-the-art blending capabilities at terminals that differentiate Sunoco Logistics from competitors and help Sunoco to become the premier provider of transportation fuels in its markets. In addition the recent announcement of Project Mariner, an effort to move ethane from Western Pennsylvania’s Marcellus Shale to Philadelphia for eventual transport to the Gulf Coast is another promising opportunity for Logistics.
The partnership also announced that it has exercised certain rights to increase its ownership interest in Mid-Valley Pipeline Company, West Texas Gulf Pipe Line Company and West Shore Pipe Line Company. These three pipeline transactions are expected to close within the next 30 days for an aggregate purchase price of approximately $100 million.Sunoco Logistics isn’t the only area of the business where good things are happening. In June, we also started operations at our ethanol facility plant at Fulton New York as the largest ethanol plant in Northeast where much of our retail network is located. The plant is uniquely situated to serve our ethanol requirements. At full production, it will provide up to 20% of our ethanol needs. As always, we continue to actively evaluate additional opportunities for growth within both the Retail and Logistics business. The third and very important, development of our second quarter story is the strength of our balance sheet, which Brian will talk about in more detail later. We currently have about $1.5 billion in cash on hand and net debt of zero at the Sunoco parent level. We have come a long way and intend to continue protecting our balance sheet going forward. As we get deeper into 2010, we expect market conditions for petroleum and chemical products to remain challenging. Demand is weak, product inventories across the industry are high, and margins are still pressured. However, we believe we are prepared. We are working hard to further lower our break-even cost per barrel, so that we are profitable even in the worst of times. We are focusing on sustaining the progress we have made in margin capture and we are going to continue to run our refinery safely and reliable at the optimal capacity utilization. This relentless focus on the fundamentals of our business will get us through the rest of the current down cycle in refining, but it’s delivering to shareholders on the promise of our brand-led future in the fuels business and to separate SunCoke Energy that we are really preparing for. Read the rest of this transcript for free on seekingalpha.com