As it gets out of refining, Sunoco unit posts a profit

Posted: August 04, 2012

Sunoco Inc.'s refining unit has returned to profitability, just in time for the company to exit the business.

The Philadelphia oil company, which will merge with Energy Transfer Partners L.P. later this year and leave the fuel-manufacturing business, reported strong quarterly earnings on Thursday, including a profit from refining.

Sunoco's refining unit earned $87 million for the second quarter, compared with a loss of $44 million during the same period last year. Overall, Sunoco reported net income of $248 million in the quarter, compared to a loss last year of $125 million.

The company had cited cumulative refining losses of about $1 billion in the last three years as its reason to get out of refining and concentrate on retail marketing of fuel and its logistics business. It sold two refineries and shut down two others - in Westville, Gloucester County, and in Marcus Hook. In September, it plans to transfer its last plant, the Philadelphia refinery, to a joint venture with the Carlyle Group.

The winding down of the business was one reason Sunoco said the results had improved. The company had fewer expenses because the Marcus Hook plant was shut down, and it booked less depreciation because it had written down the assets last year.

Mostly the business was profitable because margins improved. Refiners typically earn more when crude oil prices are in retreat, as they were in the second quarter. Sunoco reported margins of $7.43 a barrel during the second quarter, compared with a meager $1.83 a barrel during the first quarter, when crude oil prices were rising.


Contact Andrew Maykuth at 215-854-2947, amaykuth@phillynews.com, or follow @Maykuth on Twitter.

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