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PHILADELPHIA -- It's been a busy summer for the refining business and Sunoco has become just the latest oil company to exit the refining business.
This morning the locally based company announced it intends to sell its Philadelphia and Marcus Hook refineries as well as take a closer look at the company as a whole.
"Both of these decisions reflect our continued focus on delivering value to the shareholders of Sunoco," Chairman and CEO Lynn Elsenhans said in a conference call this morning.
Speaking to the sale of the refineries, she explained that the company will "pursue all options to sell these refineries but if a suitable transaction cannot be implemented we intent to idle the main processing units in July 2012."
Elsenhans cited a competitive global market as a key factor in Sunoco's decision. "Despite our best efforts our refining and supply business has lost money in eight out of the last 10 quarters and faces significant capital outlays to satisfy environmental requirements, and ensure safe and reliable operations," she said.
She added that the company did not come by the decision to exit the refining business lightly. "While we have made progress with increasing the efficiency of our refineries, we have determined it is in the best interest of the shareholders to exit the business and invest our capital resources in the retail and logistics businesses which have higher returns, gross potential and provide steady ratable cash flow," Elsenhans explained.
And with a number of changes on tap at Sunoco, the company is going ahead with a total strategic review. "With SunCoke's recent initial public offering, our complete exit from the chemical business and our plan to exit refining, we are making a significant shift away from manufacturing that repositions the company," she said.
"We plan to conduct a comprehensive strategic review to determine the best way to deliver value to shareholders including how to best utilize the company's strong cash position and maximize the potential for Sunoco logistics and retail businesses," Elsenhans added.
Sunoco will consider all options as it relates to the review and it has retained Credit Suisse to help navigate the process. She added that the company is "not yet providing a timetable to complete this review."
Sunoco is the third oil company to bow out of the refining business this year. Marathon Oil Co. led the charge earlier this year with its decision to spin off its refining business into an independent company. Marathon Petroleum Corp. officially became a separate entity on June 30.
Two weeks later, ConocoPhillips grabbed headlines with news that it was also splitting into two. ConocoPhillips will have one refining and marketing company, and another focused on exploration and production once the split is completed -- which is expected to happen in the first half of 2012.