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Did Andeavor’s Refining Margin Expand in Q2 2018?

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Aug. 7 2018, Published 6:37 p.m. ET

Andeavor’s second-quarter refining margin

Andeavor (ANDV) posted its second-quarter earnings results on August 6. In the period, it surpassed estimates.

For more information, read Andeavor’s Second-Quarter Earnings Beat Estimates. Now let’s look at the company’s refining margin details.

Andeavor’s gross refining margin expanded $4.8 per barrel YoY (year-over-year) to $14.3 per barrel in the second quarter. Its operating costs fell $0.6 per barrel YoY to $5.1 per barrel in the second quarter. The expansion in its gross margin coupled with the fall in its operating costs led to the surge in its net refining margin. ANDV’s net refining margin expanded $5.4 per barrel YoY to $9.2 per barrel in the quarter.

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ANDV’s refining margin expanded across its operating regions of Inland (North Dakota, Utah, Minnesota, New Mexico, and Texas), the Pacific Northwest (Washington and Alaska), and California (Martinez and Los Angeles). Its refining margin in California expanded from $10.8 per barrel in the second quarter of 2017 to $12.2 per barrel in the second quarter of 2018. Its margin in the Pacific Northwest expanded from $4.7 per barrel in the second quarter of 2017 to $6.3 per barrel in the second quarter of 2018. In the Inland region, its refining margin expanded from $9.9 per barrel in the second quarter of 2017 to $19.6 per barrel in the second quarter of 2018.

Andeavor’s refinery throughput increased from 893 Mbpd (thousand barrels per day) in the second quarter of 2017 to 1.106 MMbpd (million barrels per day) in the second quarter of 2018, reflecting the impact of the Western Refining integration and leading to higher yields for its refined products.

Peer comparison

ANDV’s peer Valero Energy’s (VLO) gross refining margin expanded from $8.7 per barrel in the second quarter of 2017 to $10.8 per barrel in the second quarter of 2018. Marathon Petroleum’s (MPC) gross refining and marketing margin expanded $4.1 per barrel over the second quarter of 2017 to $15.4 per barrel in the second quarter of 2018. Phillips 66’s (PSX) worldwide refining margin expanded $3.8 per barrel, or 45%, YoY to $12.3 per barrel in the second quarter.

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