Fuel provider Sunoco said it will sell off its refineries, becoming the latest U.S. energy company to quit the low-margin refining business.
Sunoco intends to sell its two refineries, located in Pennsylvania, and has launched a "strategic review" to reassess the future direction of its business, the company said.
The two refineries, located in Philadelphia and Marcus Hook, together have a crude-oil processing capacity of 505,000 barrels per day.
"We have made progress in increasing the efficiency of our refineries over the last several years," said Sunoco CEO Lynn Elsenhans. "But given the unacceptable financial performance of these assets, it is clear that it is in the best interests of shareholders to exit this business and focus on our profitable retail and logistics businesses, which have higher returns, growth potential, and provide steady, ratable cash flow."
In July, Houston-based ConocoPhillips said it would split itself into two companies, one focusing on refining and marketing and the other on the higher-risk field of crude-oil exploration and production. Another energy firm, Marathon Oil, made a similar move in January.
Investors have generally welcomed the moves.
"The exit of SUN from the refining business will remove a capital-intensive, deeply cyclical business from SUN's portfolio," said Harry Mateer, an analyst with Barclays Capital, referring to Sunoco by its three-letter stock ticker.
However, he also warned that "SUN is likely to face a difficult divestiture process in light of its refineries' ongoing profitability challenges."
Philadelphia-based Sunoco has been in the refining business since 1894, not long after the discovery of crude oil in Pennsylvania launched the global petroleum industry.
Besides the refineries, Sunoco also owns 4,900 gasoline stations in the eastern United States and a network of pipelines. It also owns an 81% stake in SunCoke Energy, a maker of coking coal for use in the steel industry that Sunoco has announced it wants to spin off.
Copyright Agence France-Presse, 2011
