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    C-store Chains Report Mixed Q2 Earnings

    Alon USA, Delek, Murphy, Sunoco and Western Refining report second quarter earnings.

    NEW YORK -- During the second quarter 2009, lower crude oil prices and refining margins compared to the same period last year caused several companies—among them Alon USA, Sunoco, Murphy Oil and Western Refining—to see lower profits.

    Alon USA Energy Inc. suffered a net loss during the quarter ended June 30, of $15.3 million, compared to net income of $18.2 million for the same period last year. Excluding special items, including a $1 million after tax loss on the sale of assets, Alon recorded a net loss of $14.4 million for the 2009 second quarter, vs. a net loss of $59.7 million a year ago.

    Cash flow from operating activities was $177.4 million during the second quarter 2009, primarily due to heating oil hedging activities, Jeff Morris, Alon president and CEO, said in a statement.

    "Our second quarter 2009 results reflect the impact of industry wide declines in light product crack spreads and the reduction in the sweet/sour and light/heavy spreads on crude oil, both of which negatively impacted the operating margins at our refineries," Morris said.

    In Alon's retail convenience store and branded fuel segment, net sales fell to $206 million in the second quarter 2008 from $377 million in the year-ago period. Operating income for the segment jumped to $2.39 million in the just-ended quarter from an operating loss of $168,000 in the second quarter 2008. Retail fuel sales increased to 30.1 million gallons from 24.4 million gallons a year ago, and on a per-site basis, stores sold on average 33,000 gallons per month, up from the 27,000 gallons sold on average in the second quarter 2008.

    Merchandise sales increased to $70.6 million in the second quarter 2009, and on a per-site basis, were up $2,000 to an average $76,000 per month. Merchandise margin fell, however, to 30.2 percent during the quarter from 31,5 percent a year ago.

    Delek US Holdings
    Second quarter 2009 earnings for Delek US Holdings Inc., a refiner and marketer, and convenience store operator, were impacted by the effects of a 2008 fire at the company’s Tyler, Texas, refinery, which was undergoing a restart during the quarter.

    Net income from continuing operations was $26.3 million, in the second quarter 2009, vs. net income of $3.3 million in the second quarter 2008.

    "The Tyler refinery resumed operations during the second quarter 2009," Uzi Yemin, president and CEO of Delek US, said in a statement. "Our second quarter results benefited from the receipt of more than $57 million in gross insurance proceeds, in addition to a significant decline in commodity prices when compared to the prior year period."

    Refining margin during the quarter was $14.52 per barrel sold, compared to $10.49 for the same quarter last year, benefiting from a decline in crude oil prices.

    In the company's retail segment, contribution margin declined to $9.9 million in the second quarter 2009 from $15.6 million in the year-ago quarter, primarily attributable to lower retail fuel margins, which averaged 12.3 cents per gallon during the second quarter 2009, compared to 17.4 cents per gallon in the second quarter 2008, the company stated.

    Same store retail fuel gallons sold also declined 0.8 percent in the second quarter 2009, while same-store merchandise sales saw a 1.3-percent decline. Dropping sales in the beer and dairy categories, which were offset by an increase in cigarette and other tobacco sales, according to the company.

    In the first six months of 2009, the retail segment reimaged 21 stores, and from the start of its reimaging program in 2006 through the just-ended quarter, approximately 25 percent of the company’s total store base has been reimaged.

    Murphy Oil
    Murphy Oil Corp. saw net income tumble from $619.2 million in the second quarter 2008 to $158.8 million in the second quarter 2009.

    Net income from continuing exploration and production operations fell to $118.3 million from $576.5 million on a year-over-year basis, primarily due to lower crude oil and natural gas sale prices. In its refining and marketing segment, income dropped nearly $50 million to $27.8 million, due to weaker refining margins in the U.K. Refining and marketing operations in North America increased to $21.4 million in the 2009 quarter, from $5.0 million in the 2008 period. U.S. refining margins were improved during the second quarter 2009 compared to the same quarter in 2008, the company stated.

    "Our downstream businesses in the United States and United Kingdom both showed improved operating profits in the second quarter compared to the previous quarter, but we anticipate continued tight refining margins for the remainder of 2009," David M. Wood, president and CEO, said in a statement.

    In a separate statement, the company revealed changes in its corporate management. Roger W. Jenkins, current president of Murphy's exploration and production subsidiary, was elected to the position of executive vice president of the company.

    Meanwhile, Harvey Doerr, currently executive vice president, downstream, will leave Murphy Oil to work as a consultant for a Murphy subsidiary. Tom McKinlay, who is in charge of supply and transportation for U.S. downstream, was elected vice president of the company with responsibility for all domestic manufacturing operations, the company stated.

    In addition, Henry J. "Hank" Heithaus, head of the retail marketing division, was elected vice president of Murphy Oil with responsibility for all domestic marketing, supply and transportation operations.

    And Charles Ganus, head of Murphy Oil's United Kingdom office, was elected to the position of vice president of the company with responsibility for all international downstream operations.

    Sunoco
    Sunoco Inc. saw a net loss of $55 million for the second quarter 2009 vs. net income of $82 million for the year-ago period, attributed to weak demand in refining and chemicals, along with rising crude prices.

    "The earnings contribution from our non-refining businesses improved to $78 million in the second quarter, up from $47 million in the prior-year period," Lynn Elsenhans, Sunoco chairman and CEO, said in a statement. "Retail marketing modestly improved from the prior year, although weak demand and rising feedstock costs continued to limit its contributions."

    The company's refining and supply segment saw a loss from continuing operations totaling $77 million in the current quarter, vs. income of $27 million in the comparable quarter, due to lower realized margins, lower production volumes and special items.

    Retail marketing earned $10 million in the second quarter 2009, compared to break-even results in the year-ago period, due to lower expenses that were only partially offset by lower retail gas margins. While sales volumes were flat compared to the second quarter 2008, retail gasoline margins were negatively affected by rising wholesale prices and a weak demand environment, according to the company.

    Average monthly merchandise sales per store at the company's convenience stores increased $6 million over last year to $92 million during the second quarter 2009. Merchandise margins declined one percentage point to 27 percent for the second quarter 2009.

    "We continue to expect a challenging market for petroleum and chemical products due to ongoing economic weakness and additional global supply. However, the company remains focused on executing our strategic plan by improving our competitive cost position and optimizing our portfolio and operational performance," Elsenhans said.

    Western Refining
    Western Refining Inc. reported a net loss of $7.8 million for the second quarter 2009, compared to net income of $8.2 million for the same period in 2008.

    Operating income for the second quarter of 2009 was $31.7 million, compared to operating income $59.0 million for the comparable quarter, primarily due to lower refined product margins and other factors.

    However, Western Refining reported quarterly operating income for its retail segment at $4.1 million, which showed an increase from 2.6 million the year prior, excluding a non-cash loss from the impairment of goodwill of approximately $27.6 million.

    Fuel gallons sold declined slightly to 52.2 million during the second quarter 2009 from 52.9 million in the comparable quarter. However, fuel margin increased 3 cents per gallon to 18 cents per gallon in the just completed quarter.

    Merchandise sales also increased to $49.2 million in the second quarter of this year, from $47.8 million last year.

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