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EL PASO, Texas -- Western Refining Inc. reported a first quarter net loss of $40.4 million, marking a significant drop from its earnings of $62.6 million for the same period in 2007.
The report noted the Four Corners and Yorktown refineries continued to improve, however, increases were offset by rising crude oil prices. Due to the increase in feedstock costs, the softness in finished product prices, especially gasoline and lower valued products such as asphalt, fuel oil and petroleum coke, the company realized lower refinery margins.
"Despite the challenging refining environment, we are continuing to make significant progress on our operational improvement initiatives, which led to improved operating performance at our refineries in the first quarter," Paul Foster, Western's president and CEO, said in a released statement.
The company's total refinery throughout the first quarter was 231,233 barrels per day, which included 209,902 barrels per day of crude oil. In comparison, total refinery throughput for the first quarter of 2007 was 133,939 barrels per day, including 118,889 barrels per day of crude oil.
According to the report, capital expenditures totaled $70.6 million, which included spending on low sulfur gasoline projects at the El Paso and Yorktown refineries. The company had $40.3 million of cash and cash equivalents as of March 31, 2008, and increased the borrowing capacity of its revolving credit facility in February 2008, increasing it from $500 million to $800 million.
"We are pleased with the support of our lenders, who have demonstrated their confidence in Western and our management team," Foster said in a released statement. "Enhancing the financial flexibility of the company is a priority for us, and given the options available and the support of our lenders, we are confident that we will continue to successfully execute on this priority as we have on others."
Operating initiatives noted in the report include the continuation of its low sulfur gasoline project at the El Paso refinery. Completion of this project is anticipated in the second quarter of 2009, at which time Western will have the ability to raise sour crude runs up to 50 percent of crude oil throughput at the refinery, the report stated.
Despite current market conditions, Foster is optimistic. "While refining margins in the first quarter were very disappointing, we have begun to see some improvement in gasoline margins as a result of inventory draws and continued low refinery utilization rates as we begin the spring and summer driving season. Distillate margins also continue to be strong despite pressure from high crude oil costs," he said in a released statement.