US Refiners 'Cautiously Optimistic' About 2011--Analyst
07 Janvier 2011 - 10:57PM
Dow Jones News
Independent U.S. refiners remain "cautiously optimistic" about
2011, with the prospect of exporting products, restructuring and
other transactions on their collective radar screen, a leading
energy sector analyst said Friday.
Paul Sankey of Deutsche Bank said the mood at this year's
Refiner Conference held this week in Boston was more upbeat than 12
months ago.
"Last year they were totally miserable and refining was the
best-performing oil subsector for 2010," Sankey said in a note to
clients. "Sell early or buy late? We say buy late."
Sankey said the favorable trends that have driven stock prices
for refiners remain in place, such as an increase in economic
activity overseas and prospects for stronger fuel consumption in
the U.S., where demand for distillates--including heating oil and
diesel fuel--"is outright bullish."
Sankey reiterated his overweight ratings on Holly Corp. (HOC),
Frontier Oil Corp. (FTO) and CVR Energy Inc. (CVI).
Refinery companies are eying spinoffs of their pipeline and
terminal businesses into master limited partnerships in coming
months in order to raise capital, Sankey said. Companies pursuing
this strategy include Tesoro Corp. (TSO) and Sunoco Inc. (SUN).
Prospects for exports to Latin America remain a theme for
refiners such as Valero Energy Corp. (VLO) and Marathon Oil Corp.
(MRO).
Sankey also said expectations for gasoline exports to Mexico and
diesel-fuel shipments to Europe remain upbeat.
Further, PBF Energy Co. may be expected to remain a buyer of
refinery assets, he said. The private equity-owned firm is planning
to increase its refining capacity. Last year, PBF Energy bought
Valero's oil refinery in Paulsboro, N.J., and another in Delaware
City, Del. PBF is backed by Blackstone Group LP (BX) and First
Reserve Corp.
Managements are also focusing on cutting costs, improving
reliability and selling assets, he said.
Companies such as ConocoPhillips (COP), Holly, PBF Energy and
Alon USA Energy Inc. (ALJ) are also combining operations at
refineries to save operating costs and create a single, more
complex refinery with less overall crude-oil capacity, he said.
-By Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com
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