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Andeavor's 3Q17 Stock Performance Beat the S&P 500

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Part 12
Andeavor's 3Q17 Stock Performance Beat the S&P 500 PART 12 OF 14

Why Andeavor’s Refining Margin Fell in 2Q17

Andeavor’s refining margin in 2Q17

Before we look at Andeavor’s (ANDV) refining margin outlook for 3Q17 in the next part of this series, let’s look at ANDV’s refining margin in 2Q17.

Andeavor (ANDV) noted a fall in GRM (gross refining margin) of $6.3 per barrel YoY (year-over-year) to $9.5 per barrel in 2Q17. Its operating costs rose by $0.7 per barrel YoY to $5.7 per barrel in 2Q17. The fall in gross margin, coupled with an increase in operating costs led to a drop in net refining margin.

ANDV’s net refining margin fell by $7.0 per barrel YoY to $3.8 per barrel in 2Q17. Andeavor’s refining EBITDA (earnings before interest, tax, depreciation, and amortization) fell from $697 million in 2Q16 to $206 million in 2Q17.

Why Andeavor’s Refining Margin Fell in 2Q17

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ANDV’s refining margin fell across its operating zones in the Pacific Northwest, California, and the Mid-Continent. However, in 2Q17, Andeavor’s refinery throughput rose to 893 Mbpd (thousand barrels per day) from 802 Mbpd in 2Q16. This fall led to higher yields for refined products.

Andeavor peers’ refining margins

ANDV’s peers have also noted mixed trends year-over-year in their refining margins for 2Q17.

Valero Energy (VLO) saw growth in its gross refining margin by $0.07 per barrel YoY to $8.66 per barrel in 2Q17. Also, Phillips 66’s (PSX) global refining margin rose by $1.3 per barrel or 18% YoY to $8.4 per barrel in 2Q17.

But Marathon Petroleum’s (MPC) gross refining and marketing margin contracted by $1.4 per barrel YoY to $11.3 per barrel in 2Q17.

Read on to the next part of this series for Andeavor’s refining margin outlook for 3Q17.

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