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Where Is Andeavor Headed in 4Q17?

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Where Is Andeavor Headed in 4Q17? PART 1 OF 15

How Andeavor’s Refining Margin Trended in 3Q17

Series outline

In this series, we’ll evaluate Andeavor’s (ANDV) current financial and market performance metrics to determine its outlook for 4Q17. In the next few parts, we’ll evaluate the outlook for ANDV’s refining margin for 4Q17, followed by the crack spreads trend in the current quarter.

We’ll also look at Andeavor’s leverage and liquidity position, analyst ratings on the stock, and its dividend outlook. We’ll examine ANDV’s market performance, including its stock returns, implied volatility based on stock price range estimates, and changes in short interest.

How Andeavor’s Refining Margin Trended in 3Q17

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We’ll examine the changes in the institutional stock holdings in ANDV, and we’ll wrap the series up by looking at its peer comparisons based on the forward valuations. Let’s begin by looking at ANDV’s refining margin in 3Q17.

Andeavor’s refining margin in 3Q17

Andeavor (ANDV) reported growth of $6.00 per barrel in its gross refining margin over 3Q16 to $15.10 per barrel in 3Q17. The company’s refining operating costs fell by $0.10 per barrel over 3Q16 to $5.00 per barrel in 3Q17.

The rise in gross margin combined with a fall in operating costs led to an increase in Andeavor’s net refining margin. ANDV’s net refining margin increased by $6.10 per barrel over 3Q16 to $10.10 per barrel in 3Q17. Andeavor’s refining EBITDA1 grew from $208.0 million in 3Q16 to $940.0 million in 3Q17.

ANDV’s refining margin rose across its operating zones in the Pacific Northwest, the Midcontinent, and California. Andeavor’s refinery throughput increased from 874 Mbpd (thousand barrels per day) in 3Q16 to 1141 Mbpd in 3Q17. This increase reflects the impact of the Western Refining integration and led to higher yields of refined products.

Refining margins of ANDV’s peers

Andeavor’s peers have also seen year-over-year increases in their refining margins in 3Q17. Phillips 66’s (PSX) refining margin rose $3.30 per barrel (45% year-over-year) to $10.50 per barrel in 3Q17.

Valero Energy (VLO) noted a year-over-year rise of $2.20 per barrel in its refining margin to $10.90 per barrel in 3Q17. Marathon Petroleum’s (MPC) refining margin rose $3.50 per barrel year-over-year to $14.10 per barrel in 3Q17.

Move on to the next part for a review of Andeavor’s refining index trend in 4Q17.

  1. earnings before interest, tax, depreciation, and amortization
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