Western Refining Still Looking Into Logistics MLP

EL PASO, Texas -- Western Refining Inc. (WNR) continues to entertain the formation of a midstream and logistics master limited partnership (MLP), President and CEO Jeff Stevens noted today during the company’s first-quarter earnings call.

"The board [of directors] authorized us to look into a traditional MLP of our logistics assets," Stevens said. "We continue to do so."

He did not expand on the comment or state if and when WNR would apply for the MLP with the U.S. Securities and Exchange Commission.

If the company does create an MLP, the spinoff would likely include its oil pipeline and transportation assets. WNR's retail division, consisting of 222 stores operating under the GIANT, Mustang, Sundial and Howdy's banners, would be undisturbed by the transaction.

As for its retail division, WNR reported a loss of $2.1 million in its latest quarter. That compares to a $478,000 gain in its 2012 first quarter. Although specifics about the retail division were not discussed during the call, Jeffrey Beyersdorfer, WNR's senior vice president, treasurer and director of investor relations, told CSNews Online afterward that lower crude oil margins were responsible for the retail division earnings decline.

Despite an earnings dip, WNR saw net sales, fuel gallons sold and merchandise sales improve at its retail division in the quarter ended March 31.

For the entire company, WNR earned a profit of $98.8 million in Q1, compared to a gain of $85.1 million in the year-ago period.

"Western is off to a great start in '13," stated Stevens, adding that the company's balance sheet is in such excellent shape that it may look into potential acquisitions in the future. He did not disclose what segment of the business would look to make a purchase.

To qualify for MLP status, a partnership must generate at least 90 percent of its income from what the Internal Revenue Service deems "qualifying" sources. Those qualifying sources include activities related to the production, processing or transportation of oil, natural gas and coal.