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    Tesoro's Outlook Goes from Stable to Positive

    Company's efforts to reduce debt noted.

    NEW YORK -- Independent oil refiner and marketer Tesoro Petroleum Corp.'s financial outlook has been revised to positive from stable by the Standard & Poor's Ratings Services, reported Reuters.

    As of March 31, the San Antonio-based company had about $1.6 billion of debt outstanding.

    "The outlook improvement stems from recent strides Tesoro has made to reduce debt in the near term," said Standard & Poor's credit analyst John Thieroff.

    The company has amended its 8-percent senior secured notes due 2008, which will effectively allow Tesoro to call in its $300 million 9-percent senior subordinated notes due 2008.

    Tesoro has publicly stated it will make significant debt reduction in the third quarter of 2004, and the ability to call in these notes provides an opportunity to do so.

    "In addition, very strong refining on the West Coast have allowed the company to build cash balances very quickly, increasing the likelihood that the company will have cash on hand in the near term to effect a substantial debt reduction," said Thieroff.

    The positive outlook reflects the likelihood that Tesoro will be able to substantially reduce its debt burden over the next few quarters. Standard & Poor's will likely raise its ratings on Tesoro if the company achieves $300 million of net debt repayment during the near term.

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