Morningstar Rating

Stock Research and Analysis

by Allen Good, CFA

Bulls Say

Tesoro will increase the flow of discount crude to the West Coast by 325 mb/d over the next few years, resulting in lower cost feedstock and improved yields.
The Carson acquisition essentially paid for itself thanks to the associated logistics assets. Not only did Tesoro add cheap capacity, but integration with the Wilmington refinery should lower costs.
Expansion of marketing channels should allow Tesoro to increase sales volumes and run its refineries at higher levels of capacity utilization. Read more 

Bears Say

Legislation designed to curb carbon emissions may target refiners and result in higher costs and significant capital requirements.
Tesoro should benefit from increased supplies of domestic crude, but its realized discounts will be less than Mid-Continent and Gulf Coast peers while also being most at risk.
The acquisition of Carson increases leverage to California where demand remains weak and excess refinery capacity results in periods of oversupply and lower margins. Read more 

Management

Bruce Smith retired as chairman and CEO in 2010, and the company named Greg Goff to take his place. Goff previously served as a senior vice president for the commercial segment at ConocoPhillips COP. He brings extensive experience to the position after   Read more 

Profile

Tesoro is engaged in the refining and retail marketing of refined petroleum products. The company operates seven refineries with a total crude oil capacity of 850,000 barrels   Read more 

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