Vultures Up to Their Beaks in
TESORO PETROLEUM
Sightings from The Catbird Seat
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HISTORY
Tesoro was founded in 1968 as a company primarily engaged in petroleum exploration and production.
In 1969, Tesoro began operating Alaska's first refinery, near Kenai.
As of 2005, Tesoro is a FORTUNE 200 company and one of the largest independent petroleum refiners and marketers in the United States.
In the late-1990s, Tesoro methodically grew through a series of acquisitions and strategic initiatives that created Tesoro Corporation – a dynamic, competitive company focused on a single core business: petroleum refining and marketing.
Strategic acquisitions expanded refining capacity from 72,000 barrels per day to nearly 560,000 barrels per day, almost an 800 percent increase in volume. This transformation included the following milestones:
1998: Acquired refineries in Kapolei, Hawaii and Anacortes, Washington.
1999: Sold exploration and production operations.
2001: Purchased refineries in Mandan, North Dakota and Salt Lake City, Utah.
2002: Acquired Golden Eagle refinery in Martinez, California.
2003: Sold marine services. Also made a series of refinery acquisitions that boosted the company’s capacity output and positioned it for future expansion in key growth markets throughout the Western United States.
2005: Largest capital expansion program in the company’s history; record earnings.
http://en.wikipedia.org/wiki/Tesoro
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August 17, 2007
Isle investors buying Mid Pac fuel chain
The purchase includes 36 of 51 Union 76 gas stations
By Jennifer Sudick, Star-Bulletin
A group of local investors led by First Hawaiian Bank Chairman Walter Dods Jr. is purchasing Mid Pac Petroleum LLC from a Singaporean investment firm.
Hawaii-based Koko'oha Investments Inc., formed this month by Dods and three other investors, will buy the petroleum distributor and marketer for $44 million from k1 Ventures Ltd. Mid Pac owns 36 of the 51 Union 76-branded gas stations in Hawaii. It is the second time control of the brand and the stations has changed hands in three years.
"It's very rare in Hawaii that a top-50 type company becomes available," Dods said in an interview. "I loved the fact that we were able to bring the company back home."
There will be "no disruption" to the company's 100 employees, he said.
The cash purchase, expected to close Sept. 1, includes Union 76 stations on Oahu, Maui, Kauai and the Big Island, with fuel-supply contracts for Hawaii's independently operated Union 76 stations. The deal also includes Mid Pac's trucking assets, marketing programs, and fueling terminals at Hilo and Kawaihae on the Big Island.
The former longtime First Hawaiian chief executive, who will become chairman of the company, is being joined by David Hulihee, president of Hawaii-based construction company Royal Contracting Company Ltd.; Bill Mills, chairman of Hawaii-based real estate investment company the Mills Group; and Jim Yates, who will serve as president and CEO of Mid Pac.
Yates is stepping down at the end of this month as president and CEO of local natural-gas supplier the Gas Co., where he worked for 12 years.
"This company has been really well run in the last three years since it was started up, so to some extent it will be business as usual," Yates said in an interview. "As compared to a foreign owner, we are just going to be able to offer more to the local community. I'm excited about it."
The investors will have an equal share in the company, Dods said, with no immediate plans for other purchases.
"We take a long-term approach," he said. "We want to build the company. We would love to use the company to buy additional energy-related vehicles over time."
K1 Ventures formed Mid Pac in 2004 -- its second foray into the Hawaii energy market. It acquired the Gas Co., now owned by New York-based Macquarie Infrastructure Co., in 2002.
Mid Pac was ranked as the state's 52nd-largest company with annual sales of $170 million last year in Hawaii Business Magazine's August issue.
Dods, who retired as CEO of First Hawaiian Bank and parent BancWest Corp. in 2004 after 16 years at the helm, teamed with Hulihee and Mills as part of a group of a dozen investors for a $30 million stake in Hawaiian Telcom Communications Inc. A Washington, D.C.-based private-equity firm, the Carlyle Group, acquired Verizon Communications Inc.'s Hawaii assets for $1.6 billion in May 2005, changing the company name from Verizon Hawaii to Hawaiian Telcom.
The three investors and longtime friends also have a majority ownership of Hawaii-based construction material supplier and contractor Grace Pacific Corp., Dods said.
http://starbulletin.com/2007/08/17/news/story09.html
May 6, 2006
Tesoro agrees to buy 4 gas stations on Garden Island
By Dave Segal, Star-Bulletin
Kauai Petroleum Co. has agreed to sell its four company-owned gas stations, a storage facility at Nawiliwili Harbor and trucking operations to San Antonio-based Tesoro Corp., which operates Hawaii's largest refinery.
Kauai Petroleum, founded in 1948, is a supplier for Union 76. With the deal, Tesoro would be making its first entry into the Kauai market. The company has 33 branded stations on Oahu, Maui and the Big Island. Thirty of those are company operated and three are run by independent dealers.
"I'm glad we're being acquired by a major oil company," Kauai Petroleum General Manager Baltazar Manibog said yesterday. "Part of the reason why the owners wanted to sell is the margin on fuel as a (supplier) is diminishing. To keep up with the changes in the petroleum industry, you have to have more resources and deeper pockets, and we're just a small company."
Kauai Petroleum has nine full-time employees and nine part-timers, according to Manibog.
"They'll offer employment to our present employees they want to retain," he said.
Tesoro, which operates six refineries in the western United States and has more than 475 branded gas stations, said it was interested in Kauai Petroleum because it allows Tesoro to expand and capitalize on its operations in the state.
"Since ... Kauai is the fourth-largest fuel market in Hawaii and has the fastest-growing jet-fuel demand, we believe this acquisition will provide another strategic outlet for our gasoline and jet-fuel production from our (94,000-barrel-a-day) Kapolei facility," said Bruce Smith, chairman, president and chief executive of Tesoro.
Tesoro said it expects to complete its due-diligence review of Kauai Petroleum's assets within 30 days. The acquisition needs to be approved by Kauai Petroleum's three dozen shareholders before it can close.
Manibog said he was confident a majority of shareholders would approve the deal, and Tesoro said it expected the sale to close by the end of next month.
Kauai Petroleum has been hurt by the state gas-cap law that went into effect Sept. 1. The law linked the price of fuel in Hawaii to prices on the mainland and limited the margin that goes from the refinery to the service station.
However, state lawmakers voted this week to indefinitely suspend the gas cap law and allow gasoline companies to charge whatever the market will bear. Gov. Linda Lingle yesterday signed the legislation to suspend the cap, effective immediately.
"With the gas cap and all the changes in the petroleum industry, and the increased government regulations, the owners of the company decided that we should just exit the petroleum industry," Manibog said. "When the gas cap went into effect, I did lose some accounts. And when you lose accounts, your volume decreases."
http://starbulletin.com/2006/05/06/business/story02.html
March 31, 2002
Simon has millions in oil stocks as California fights offshore drilling
DON THOMPSON, Associated Press
SACRAMENTO ---- As California battles the Bush administration over plans to drill for oil off the state's coast, Republican candidate for governor Bill Simon has millions of dollars invested in companies that would benefit if drilling is allowed.
If drilling starts, the companies in which Simon owns stock could gain drilling contracts, ship the oil pumped from beneath the sea and then sell that oil. As governor, Simon could end California's legal efforts to stop drilling.
A Los Angeles millionaire and former oil company vice president, Simon has said repeatedly he opposes additional drilling off California's coast, but has defended his vast investments.
"Just because you're against offshore drilling in certain areas doesn't mean you're against offshore drilling worldwide," Simon said in January.
But his extensive ties to offshore oil interests don't comfort drilling opponents.
"To have someone heavily invested in the oil industry overseeing California's coast is a little scary," said Carl Zichella, the Sierra Club's regional director. "If he waffles (on offshore drilling) at all, it will be to his political detriment."
The Bush administration wants a federal appeals court to allow drilling off San Luis Obispo, Santa Barbara and Ventura counties. Democratic Gov. Gray Davis used the courts to block attempts to build the first new oil platforms off California's coast since 1994, rejected settlement offers and has sworn he will take the case to the U.S. Supreme Court if necessary.
Simon has at least tens of thousands of dollars invested in companies with direct interests in the dispute, financial disclosure documents show, and owns millions more in companies that drill, sell and ship oil by tankers and pipelines.
For example, he owns up to $100,000 of SeaRiver Maritime Financial Holdings Inc., a subsidiary of Exxon Mobil Corp., which is one of the companies holding the 36 leases at issue in the federal drilling case. It also owns currently producing leases. A SeaRiver subsidiary, formerly Exxon Shipping Co., operated the Exxon Valdez that ran aground and spilled oil off Alaska in 1989.
Through family trusts, Simon owns up to $100,000 of stock in USX-Marathon, an Exxon Mobil partner, and Occidental Petroleum, a Shell partner. The trusts own between $4,000 and $20,000 worth of stock in Royal Dutch Petroleum/Shell Oil Co. and ChevronTexaco; both hold California offshore leases.
While Simon owns some oil stock, campaign strategist Jeff Flint said, Davis has accepted hundreds of thousands of dollars in campaign contributions from companies including ChevronTexaco and Occidental, including $176,000 last year alone.
Simon also owns hundreds of thousands of dollars of stock in Seacor Smit Inc., a Houston-based drilling and shipping company, and its former subsidiary, Chiles Offshore Inc., which specializes in offshore drilling.
U.S. Securities and Exchange Commission documents indicate that one-third of Chiles Offshore's business comes from Shell. Seacor Smit, meanwhile, established what its chairman called a "toehold" on the California coast last year when it bought a West Coast supply vessel.
SEC documents and the Simon campaign indicate that South Street Capital LLC, an investment firm controlled by the Simon family, sold about $4 million in Chiles stock last year. Simon declared no income from the stock sale in the financial disclosure report he filed with the Fair Political Practices Commission, but reported owning a maximum of $1 million invested by South Street in the company.
Campaign finance reports and Simon's disclosure forms show some offshore oil money may have gone to his campaign. He sold hundreds of thousands worth of energy stocks last year as he poured more than $4 million of his own money into his campaign. Meanwhile, Simon's siblings, who share in family trust profits, have given him at least $750,000.
Last year, Simon sold as much as $100,000 worth of stock in Diamond Offshore Drilling of Houston, which engaged in three drilling projects off California's coast in the 1980s....
His father, William E. Simon, was President Nixon's "energy czar" through the Arab oil embargo of the early 1970s before becoming treasury secretary. In 1988, Simon and his brother joined their father in William E. Simon & Sons, an investment firm with substantial holdings in the energy industry.
Corporate records from Florida, Louisiana and Mississippi show Simon was a vice president and director through the mid-1990s in Paramount Oil Co. of Baton Rouge, La., and Shore Oil Co. of Houston, oil and exploration companies that had extensive holdings in the Gulf of Mexico region.
Paramount merged into Shore, which later merged with a firm that eventually became 3TEC Energy. Simon sold up to $100,000 in 3TEC shares last year; family trusts own as much as $1 million in 3TEC stock.
Those companies drilled off the Gulf of Mexico coast, Flint said, so it's not "fair to tie Bill's investments" to California.
Oil, gas and other energy company executives have also donated thousands to Simon's campaign, state campaign finance records show.
They include $5,000 from Tesoro Petroleum, a Texas-based company active in offshore drilling, and $22,000 from people and firms connected to Alvin V. Shoemaker, former chairman of First Boston Corp. and a director of Shore Oil and Paramount. Occidental contributed $10,000.
Davis this month accused Simon of profiting from California's energy crisis through business dealings with El Paso Natural Gas, which regulators alleged helped drive up gas and electricity prices last summer.
A Simon family investment company owns between $10,000 and $100,000 in El Paso stock. Simon also sold as much as $100,000 worth of stock last year in 3TEC Energy Corp., 20 percent of which is owned by an investment arm of El Paso.
Simon is a major investor and former board member of Houston-based Hanover Compressor Co., which does business with companies such as El Paso and the bankrupt energy giant Enron.
Davis himself is defending his acceptance since 1996 of $119,500 in campaign funds from Enron.
Simon's charitable foundation also benefits from extensive oil and gas investments, primarily Hanover Compressor.
While Simon was a board member, Hampton joined Enron in a Venezuela-based partnership, SEC records show, before Enron's collapse. After Simon left the board, Hanover ran into Enron-style accounting problems this year over its involvement in the Hampton Roads gas project off the coast of Nigeria with California leaseholder Shell Oil Co.
Though the California Coastal Commission and the state attorney general also are parties to California's suit against the Bush administration, Simon if he became governor could use his legal and budgetary power to end the state's efforts.
"He could make it not just difficult ---- impossible" to continue, said Nathan Barankin, spokesman for Democratic Attorney General Bill Lockyer.
Eleven environmental groups have joined the state's suit, arguing that most Californians want to defend their world-famous coastline.
Simon agrees "there should not be any new exploration or drilling off the coast of California," Flint said. However, he said Simon has taken no position on what he would do with existing contracts such as are at stake in the California suit.
"He would have to take a look at it," Flint said.
For more, see: William Simon Says
April 15, 2002
Oil companies note loophole
in gas price proposal
Pacific Business News (Honolulu) - by Prabha Natarajan
Oil companies say a legislative proposal to regulate gas prices doesn't address the 50 percent of Hawaii's gas stations that are company operated, since it doesn't specify any price cap for them and doesn't require dealers to pass on savings to drivers.
These factors could lead to a situation where wholesale prices are held down, but not necessarily retail gas prices, said Albert Chee, spokesman for Chevron Hawaii.
"This proposal doesn't ensure, require or regulate that dealers pass on savings to consumers," Chee said. "The proposal relies on dealers to pass on savings out of the goodness of their hearts."
Lawmakers are attempting to institute prices controls after a lawsuit by the state against the oil companies was settled out of court. The state settled its $2 billion lawsuit, filed in 1998 against Chevron, Texaco, Shell, Unocal and Tosco, for $20 million. In 1999, the state settled with Tesoro Hawaii and BHP Hawaii for $15 million.
Lawmakers who support price regulation argue it's in the interest of Hawaii's consumers to bring prices more in line with those charged on the mainland.
"I'm not a fan of regulation," said Rep. Ed Case, D-Manoa. "But we have no open market here. The state's antitrust lawsuit was not able to demonstrate it. The next step is to either wait for a market remedy that may lead us in the wrong direction, or go for regulation. Even if oil companies file a lawsuit against us, we have enough evidence to prevail."
Chevron will consider legal action if price controls are enacted, but hopes it doesn't come to that, Chee said.
"Most lawmakers agree; we don't want to rush to a conclusion. We don't want more lawsuits and, therefore, want to proceed with caution," Chee said. "We settled the lawsuit at 1 percent of the claim. That is a clear indication of nothing wrong going on here."
"Instead of acting hastily, we suggest they pause, take a look at all the information and determine what needs to be done," Chee added. "If measures are not given thorough examination, there could be unintended consequences of it."
Market forces should rule, said Faye Kurren, president of Tesoro Hawaii.
"We are a firm believer that the consumer is ultimate," Kurren said. "They are the ones who should decide, not government."
A group of bipartisan House representatives supported a measure to establish a wholesale gasoline price based on the average price of crude oil in four markets. The proposed price formula was introduced in a House bill at the beginning of session by Rep. Paul Whalen, R-N. and S. Kona-Ka`u, but it was not heard by the Senate.
The House later inserted the proposal in a Senate bill to keep the measure alive for discussion during conference committee.
The proposed price-setting formula in the bill calls for an average price per barrel of West Texas Intermediate, Alaska North Slope, Saudi Arabian Light and North Sea Brent crude oil, multiplied by 0.035 to arrive at the cost per gallon.
Whalen said he arrived at that number after speaking with mainland oil industry officials who look at the cost to produce oil and that the number is used within the industry to calculate the actual cost to produce a gallon of gas. Using this formula would reduce oil prices by at least 40 to 50 cents a gallon, Whalen said.
If the formula were applied to current rates of oil as reported in The Wall Street Journal on April 8, the wholesale price of gas comes to 89 cents a gallon....
Hosie, a San Francisco attorney, represented the state in its antitrust lawsuit, arguing oil companies reaped profits of 50 to 60 cents a gallon here, compared to 10 cents on the West Coast and 2 to 3 cents for the rest of nation....
Between 1988 and 1998, Chevron's average after-tax return on investment in Hawaii from dealer stations was 20.8 percent, compared to 1.9 percent in Los Angeles and 9.8 percent in San Francisco, according to the deposition.
"Without a doubt, for the past decade oil companies have made huge profits at the expense of Hawaii's consumers," said Rep. Kenneth Hiraki, D-Downtown-Ala Moana, House Consumer Protection and Commerce Committee chairman.
http://pacific.bizjournals.com/pacific/stories/2002/04/15/daily2.html
< < < FLASHBACK < < <
December 6, 1996
ENRON and Shell Win Bid in
Capitalization of YPFB's
Transportation Segment
LA PAZ, BOLIVIA – Enron Development Corp. and Shell International Gas Ltd. announced today that the government of Bolivia has named the companies the successful capitalizing company for the transportation segment of the state oil and gas company, Yacimientos Petroliferos...
Business Wire
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March 30, 1998
The following is an excerpt from a 10-K SEC Filing, filed by TESORO PETROLEUM CORP on 3/30/1998:
ACCESS TO NEW MARKETS
A lack of market access has constrained natural gas production in Bolivia. With little internal gas demand, all of the Company's Bolivian natural gas production is sold under contract to the Bolivian government for export to Argentina.
Major developments in South America indicate that new markets will open for the Company's production. Construction of a new 1,900-mile pipeline that will link Bolivia's extensive gas reserves with markets in Brazil commenced in 1997 and is expected to be operational in early 1999.
The owners of the new pipeline include Petrobras (the Brazilian state oil company), other Brazilian investors, Enron Corp., Shell International Gas Ltd., British Gas PLC, El Paso Energy Corp., BHP, and Bolivian pension funds.
When completed, the new pipeline will have a capacity of approximately 1 billion cubic feet ("Bcf") per day.
For more, see...
Citigroup: Vampires in the City
Dirty Money, Dirty Politics & Bishop Estate
Vultures Up to their Necks in Tesoro Petroleum
November 17, 2006
Founder of Tesoro Petroleum Dead at 85
Associated Press
Robert V. West Jr., who built Tesoro Petroleum Corp. from a small regional firm into one of the nation's largest independent oil producers, has died of respiratory failure. He was 85.
West, who died Thursday, started Tesoro with a $1,000 investment and said he learned how to make the company succeed in part through buying paperbacks in airports so he could "read about business law, accounting and finance as I traveled around the country to raise money."
His contemporaries said West, who retired in 1992, was forward-thinking in everything he did.
"Bob was not only an entrepreneur who got things done, he had a big view of what he wanted to happen to make San Antonio a base for major corporations," said Tom C. Frost Jr., senior chairman of Frost National Bank. "He did it, and he did it his way."
West, who took his company public to pay off debts to two banks, was the first to create and head a San Antonio-based company listed on the New York Stock Exchange, said banker Glenn Biggs...
Skeptics told West, who once said he "had oil in my veins since I was a child," that the company he founded in 1964 as a spinoff of Texstar Petroleum would fail...
West proved the skeptics wrong and eventually led the first Fortune 500 company from San Antonio and boasted a place in oil and gas production in the United States, Europe, Canada, Bolivia, Trinidad, and Indonesia.
Tesoro, which earned less than $250,000 in its first year, reported $507 million in earnings last year.
But there were rough spots along the way.
Shareholders sued the company over $3,100 paid to a prostitute for a finance minister from Trinidad on a trip to Canada.
West said the payment was a "goodwill gesture" designed to curry favor in future tax matters. After a five-month trial, a federal jury awarded nothing to the shareholders.
West was born in Kansas City, Mo., and grew up in Tulsa, Okla., before settling in Texas. He was active in community and civic groups, serving as chairman of the City Public Service Board and the San Antonio Economic Development Foundation.
West earned undergraduate degrees and a doctorate in chemical and petroleum engineering from the University of Texas at Austin.
www.forbes.com/feeds/ap/2006/11/17/ap3185994.html
April 4, 2004
Making gas is cheaper in isles,
report shows
Tesoro's low per-barrel costs bring into
question Hawaii's high prices
By Rob Perez, Star-Bulletin
The per-barrel cost of manufacturing petroleum products, including gasoline at Tesoro Petroleum Corp.'s Oahu refinery last year was about one-third to one-half the comparable tab at its five mainland refineries, according to Tesoro data.
The fact that it cost Tesoro substantially less to make petroleum products here than on the mainland tends to dilute one of the main arguments the industry has used to justify high pump prices in Hawaii.
For years, the industry has maintained that motorists pay more here than on the mainland partly because of the high cost of doing business in the islands.
But data from Tesoro's annual report recently filed with the Securities and Exchange Commission show that per-barrel manufacturing costs, before depreciation and amortization, at the company's California refinery in 2003 were more than three times the comparable amount at its Oahu refinery.
Manufacturing costs at Tesoro's two refinery regions that include Washington, Alaska, North Dakota and Utah were nearly twice the level of the Oahu tab, according to the annual report....
Tesoro's local refinery is the largest of two refineries at Campbell Industrial Park. The other is owned by ChevronTexaco Corp., which does not break out manufacturing costs by refinery.
Critics of the oil companies say the Tesoro numbers further undermine the industry's long-held argument that Hawaii's higher costs are a significant factor in explaining high pump prices.
"The bottom line is, their arguments don't hold water," said Tim Hamilton, a petroleum analyst in Washington state.
"It's more smoke and mirrors," agreed Frank Young, a former Oahu Chevron dealer and president of the Hawaii Automotive Repair and Gasoline Dealers Association.
But Eric Lee, regional retail manager for Tesoro in Hawaii, said the lower relative manufacturing costs don't reflect the higher expenses, such as land for gas stations, high gas taxes and medical benefits for employees that Tesoro incurs in distributing and marketing its products....
But Barry Pulliam, a Southern California economist who specializes in petroleum issues, said Hawaii's higher distribution costs historically have not been enough to account for the major differences between mainland and local gas prices.
Hawaii's distribution costs represented only several cents a gallon over mainland costs, said Pulliam, whose Econ One firm assisted with the state's $2 billion 1998 antitrust lawsuit against Hawaii's oil companies.
The main reason accounting for the big difference in pump prices was the companies' substantially greater levels of profitability here, the state claimed in the lawsuit, which accused the defendants of conspiring to overcharge Hawaii consumers in the 1990s while earning excessive profits.
The companies denied the allegations. They eventually paid the state $35 million to settle the lawsuit, without admitting any wrongdoing.
http://starbulletin.com/2004/04/04/news/index.html
August 25, 2003
Gas prices here linked to Japan power problem
By Sean Hao, Honolulu Advertiser
Blame for the latest increase in Hawai'i's gasoline prices may rest with a power supply problem that began last year in Japan, according to industry officials.
Controversy surrounding falsified inspection documents last August caused Japan to temporarily shutdown all 17 of its nuclear reactors this spring. To meet its power needs, Japan stepped up purchases of specialty crude oil from Indonesia, which drove up prices for Indonesian crude oil while prices for other crudes fell.
Since Hawai'i refiners import an estimated 45 percent to 55 percent of their crude oil from Indonesia, the state didn't benefit from an overall drop in oil prices that helped drive down prices at the pump elsewhere after the war in Iraq, said Widhyawan "Wawan" Prawiraatmadja, an energy researcher at the East-West Center.
That explains why the state's gasoline prices have remained at or near peak levels much of the year despite a drop in Mainland gas prices, he said. As of Friday, the average price of gasoline statewide was $2.094 a gallon, compared with $1.738 a year ago.
Albert Chee, a spokesman for ChevronTexaco Corp., said the refiner typically imports between 70 percent and 80 percent of its crude oil from Indonesia, where the company owns several oil fields. He said Indonesian oil prices have been declining, but on average are still up by more than 15 percent over last year....
"The demand from Japan has tapered off," said Esa Ramasamy, an editorial manager in the Singapore office of the price-reporting agency Platts. But crude oil "is still being held up because of the hot weather in Europe," which also buys Indonesian oil.
Still, the price for Indonesian benchmark Minas crude, which hit a 52-week high of $34.66 a barrel on Dec. 30, 2003, was down to $28.77 a barrel Friday, according to Bloomberg News. That's only about a dollar more than crude from Dubai in the United Arab Emirates, which is a barometer for Middle East oil prices. During the height of Japanese buying, the gap between Minas and Dubai crude was as much as $7 a barrel.
However, the disparity between Indonesian oil and other crudes doesn't fully explain Hawai'i's prices. The main reason prices in the state remained high all summer is a lack of wholesale-level competition, Wawan said. Competition in the state's relatively small gasoline market at the wholesale-level is limited to the two refiners ChevronTexaco and Tesoro Petroleum Corp.
"The cost of the crude matters a lot, but in a competitive market those who are accessing this crude will have to eat up those prices," Wawan said. "In Hawai'i you can pass (higher oil prices) on to your consumers because there's no marketplace that you have to compete with."...
David Leonard, vice president for Tesoro Hawaii, said the company buys a significant amount of crude from Indonesia, in addition to oil from other markets such as Alaska, Australia and the Middle East. He said prices at the pump are a result of a combination of factors not limited to crude oil costs....
June 11, 2003
PRESS RELEASE FROM SEN. DAN INOUYE:
STATE, ISLE FIRMS TO GET $7 MILLION
FOR HOMELAND SECURITY
WASHINGTON — Senator Daniel K. Inouye, a member of the Senate Appropriations Homeland Security Subcommittee, announced today that the State of Hawaii and four isle companies will be receiving more than $7 million in federal funds to help combat potential terrorist threats.
"The grants, specifically for port security, will be key to ensuring the safety of Hawaii's ports," Senator Inouye said. "As we all know, Hawaii is very dependent on maritime traffic. Our ports are vital lifelines for our islands."
The grant recipients are:
State of Hawaii, Department of Land and Natural Resources in Kailua-Kona - $1,450,000
State of Hawaii, Department of Transportation - $ 645,000
Tesoro Hawaii Corporation - $2,850,000
Matson Navigation Company - $ 805,000
The Gas Company - $ 630,561
Chevron Products Company – Hawaii Refinery $ 625,000
The six grants are a combined total of $7,005,561.
The grants are part of the $150 million funded in the 2003 Omnibus Appropriations Act, and $20 million from the 2003 Supplemental Appropriations Act.
For more information, contact the grant recipients.
http://inouye.senate.gov/03pr/20030611pr02.html
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See also: http://www.kycbs.net/Federal-Contractors-Hawaii-2000.mht
For more, GO TO > > > The Department of Homeland Security
May 12, 2003
Mission accomplished
for Faye Kurren
Mission accomplished. Time to move on to the next challenge.
That's the reason, says Faye Kurren, president of Tesoro Hawaii Corp., for her early retirement from the company.
"As part of the management team here we did a great job in introducing Tesoro and growing the business here," she said. "We understand businesses change and adapt, so many people [on that team] have left the organization and gone on to do new and different things as a personal decision.
"We've reached one level of accomplishment and we've done it well," she said. "Now it's time to go on and everybody does whatever they want to do next. It's life cycle. It's American business today."
Kurren was part of a 13-member management team at Tesoro Hawaii that built out the company's operations since 1998, when San Antonio-based Tesoro Petroleum Corp. purchased the company. Tesoro Hawaii operated as a self-contained unit and Kurren's team established Tesoro's brand name locally and developed its retail gas stations.
Since September, Tesoro has eliminated about 50 positions in Hawaii including 15 people who took the early retirement option. Of the original management team only five are left. At present, Tesoro Hawaii employs 613 people.
Since last year, the company has begun consolidating its operations and selling assets to find efficiencies, partly in an effort to cut $500 million in debt. This meant cutting 214 people, or 5 percent of its work force, to save $20 million annually.
"Over the past several months, Tesoro implemented cost-cutting initiatives, including offering an enhanced early retirement package to eligible employees," said Bill Van Kleef, COO of Tesoro Petroleum Corp. "Unfortunately, one of the downsides to offering an early retirement program is that you lose valuable employees with extensive experience and history with the company."
"I think the reasons that many of us, myself included, did so is because it was a program that would enhance our retirement and we found the benefits attractive," Kurren said.
Last to be centralized
Tesoro Petroleum has been operating all its state units as part of a centralized system, and Hawaii is the last to join in after Alaska, Kurren said.
"This is the way the company is managed everywhere else," she said. "I'm the last regional manager in the Tesoro system. And we've been working on this transition for a while now."
"As things evolved, in order to take advantage of economies of scale and more efficiencies, some of the duties that were formerly done in Alaska and Hawaii as self-contained units migrated to San Antonio," Kurren said.
For instance, the accounting department moved from Hawaii to San Antonio. Tesoro Hawaii no longer runs local advertisements and instead works with a mainland-controlled marketing program.
"Tesoro recognized Hawaii was a different market and that we needed to introduce the brand here and become established -- those circumstances and that mission is done," Kurren said.
She said she sent in her retirement papers in March, but employees had been aware of her decision even before that. The company asked Kurren to stay on longer while the other retirees left at the end of March.
Future plans
"I am looking to doing something new and challenging," Kurren said.
Kurren, who at 45 began her transition to a managerial role from being an attorney, began working for Tesoro's predecessor, BHP Hawaii, in 1984. Nearly 14 years later, when Tesoro acquired BHP, she became the regional president of the company.
A self-proclaimed flower child, Kurren always claimed her belief system qualified her to run an oil company.
"Who better to run an oil company than somebody who cares about the environment," Kurren told PBN earlier. "I live here, I want clean water, clean beaches and clean air just like everybody else. I am fortunate that I'm in a position to do something about it."
Kurren, a Punahou, Stanford and University of Hawaii alum, plans to remain in Hawaii and is looking at various opportunities.
www.bizjournals.com/pacific/stories/2003/05/12/story4.html
March 20, 2003
Tesoro to receive crude
oil from Russia
Pacific Business News (Honolulu)
Tesoro Petroleum Corp. will receive in May the first U.S. West Coast crude oil from Russia, according to sources who didn't want to be named.
The company has refineries in Hawaii, Alaska, Washington state and California and is the first company on record to bring Russian crude to the U.S.
Approximately 700,000 barrels will be delivered in equal amounts to its refineries in Hawaii, Alaska and the San Francisco Bay Area.
The name of the company that sold the Urals oil cargo was not identified.
www.bizjournals.com/pacific/stories/2003/03/17/daily60.html
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For more, GO TO > > > Buzzards in The Bank of New York
September 7, 2001
Tesoro buys more refineries
Pacific Business News (Honolulu)
Tesoro Petroleum Corp., owner of the larger of two petroleum refineries on Oahu, has completed the purchase of two more refineries for a total of five.
BP, the former Sinclair oil company until purchased decades ago by British Petroleum, sold Tesoro its refineries in Salt Lake City and Mandan, N.D. The purchase was brokered by Lehman Brothers and was financed with debt.
Tesoro now has daily refining capacity of almost 400,000 barrels, making it the second-largest independent refiner and marketer in the West. Its marketing system includes more than 600 branded retail stations, about 160 company-owned.
www.bizjournals.com/pacific/stories/2001/09/03/daily47.html
January 18, 2001
State: Big oil firms tried to
cripple Aloha Petroleum
Attorneys for several firms dispute the allegations that
they conspired against Aloha's lower prices
By Rob Perez, Star-Bulletin
The major oil companies in Hawaii tried to cripple Aloha Petroleum in the 1990s because its lower gas prices undermined a scheme that produced high profits for the industry and high costs for consumers, the state alleges in court documents.
Aloha's pricing strategy prompted the other companies to boycott Aloha until it started importing gasoline, the state says in documents filed as part of a $2 billion antitrust lawsuit against the major companies. Aloha began importing in 1997.
Attorneys for several of the oil companies strongly denied the state's allegations.
"That's just nonsense," said Alan Grimaldi, a Washington, D.C., attorney representing Texaco Inc. "There's absolutely no evidence of that."...
Attorney John Myrdal, who represents Unocal Corp., likewise dismissed the state's allegations. "These are totally false," he said....
Had 20-year contract
Aloha also had a 20-year supply contract with BHP Petroleum, which used to own one of Oahu's two refineries, until 1997, Grimaldi said.
Few details of the state's allegations have been made public, and Spencer Hosie, the San Francisco attorney heading the state's case, did not respond to requests for comment. Aloha Petroleum also did not return phone calls seeking comment.
The allegations are briefly mentioned in an October 2000 federal court filing by Texaco, a defendant in the antitrust case.
One state document referred to in the Texaco filing said Unocal, also known as Union Oil, refused in 1993 to provide Aloha with fuel that could be obtained directly from Unocal's suppliers. Unocal at the time got its supply from BHP and Chevron, which owned the other Oahu refinery, in exchange for providing gas to the two companies elsewhere.
Unocal refused for the next two years to provide fuel or "terminaling" to Aloha, according to the state.
"This refusal confirms that Union had joined with its 'exchange partners' to control and cripple Aloha as a price competitor in the Hawaii market," the document said.
Chevron did not respond
A Chevron spokesman did not respond to a request for comment. A spokesman for Australia-based BHP, which sold its Hawaii refinery and gas stations to Tesoro Petroleum Corp. in 1998 and no longer is in the market, could not be reached for comment.
In the court document, the state said Unocal considered Aloha to be a price cutter whose marketplace conduct reduced profit margins for Unocal and its exchange partners.
The state then quoted from a 1995 Unocal memo to support its contention.
"Aloha is a fast growing independent competitor generally not looked upon favorably by our competitors or Unocal dealers and marketers because of their price cutting actions at retail and wholesale," the March 1995 Unocal document said.
Little additional information about the alleged effort to gang up on Aloha is found in the public portion of the lawsuit file. Most details are in documents still under seal and unavailable for public inspection.
But in a 1994 report on Hawaii's high gas prices, the state attorney general's office said Aloha claimed it could not obtain competitive exchange agreements with Chevron and BHP.
Yet the other companies that did not make gasoline here had exchange agreements with the two refinery operators.
The exchange agreements, the state alleges in the lawsuit, were only available to companies that would not compete on price, preserving high profit margins. Those agreements were used to allocate market share among the companies and to fix prices, according to the state.
Tim Hamilton, a mainland petroleum analyst who has studied Hawaii's market, said he wasn't surprised by the state's allegations.
'Common business practice'
In mainland markets where independent gas marketers aggressively cut prices to try to build volume, the major oil companies pressured the independents to retreat or face being driven out of business, Hamilton said.
"This has been found and shown and documented before," he said. "It's a common business practice."
Hamilton said Aloha likely was pressured into keeping its per-gallon prices within a few cents of the stations run by the oil companies. That way, Hamilton said, Aloha could not continue taking market share from the other companies.
Dealers at competing gas stations say Aloha, an $80 million company with roughly 15 percent of the Oahu market, does not price as aggressively today as it did in the early 1990s. Aloha stations, which are operated by the company instead of dealers, generally are in the low end of the price range on Oahu.
When the state filed its antitrust lawsuit in October 1998, Aloha was the only major gas company in Hawaii that was not named as a defendant.
Hosie at the time said Aloha was excluded because it initially wasn't part of the group that conspired to keep Hawaii prices artificially high.
When Aloha bought gas locally, it was charged a higher price than the other major suppliers that got fuel from Hawaii's refiners, Hosie said.
Once Aloha started importing less-expensive gas, however, it did not pass on the savings to consumers and benefited from the alleged conspiracy, Hosie said in the October 1998 interview.
The oil companies have denied the conspiracy charge. The lawsuit is scheduled to go to trial in September.
www.starbulletin.com/2001/01/18/business/story1.html
Tesoro to pay fine of $681,720 for
1995 sulfur dioxide release
It also owes the city $50,000 in
emergency response equipment
Star-Bulletin staff, Honolulu Star-Bulletin
Tesoro Hawaii will pay a $681,720 penalty to settle violations at its Campbell Industrial Park oil refinery in 1995 where the release of sulfur dioxide sickened dozens of people.
At that time the refinery was owned and operated by BHP Petroleum Americas Refining Inc.
In addition to the fines, Tesoro is required to modify its sulfur recovery unit to avoid unplanned shutdowns and prevent excess sulfur dioxide air emissions, and increase the capacity and effectiveness of its secondary containment areas to prevent oils spills from reaching the ocean.
Tesoro also must give the city $50,000 worth of equipment to support emergency responses to hazardous-material incidents.
In a complaint filed by the Environmental Protection Agency, Tesoro was charged with failing to follow good air pollution practices, burning fuel gas that contained excess hydrogen sulfide, failing to comply with leak detection and repair requirements to prevent volatile organic compound emissions, and failing to comply with work practice and reporting requirements.
http://starbulletin.com/2000/04/12/news/story13.html
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See also: http://www.kycbs.net/Federal-Contractors-Hawaii-2000.mht
November 23, 1999
BHP, Tesoro settle; companies to
help state gather evidence
The settlement beefs up the state's
$2 billion suit, experts say
By Rob Perez, Star-Bulletin
The state has substantially bolstered its $2 billion antitrust lawsuit against Hawaii oil companies by striking a proposed settlement with two defendants who have agreed to assist in the evidence-gathering process, antitrust and industry experts say.
In a surprising development late yesterday afternoon, the state, BHP Hawaii Inc. and Tesoro Petroleum Corp. announced a tentative settlement that dismisses the two companies and Tesoro's Hawaii subsidiary from the lawsuit in exchange for $15 million and a pledge of continued cooperation in the case.
The agreement, under which BHP and Tesoro deny wrongdoing or liability, still must be approved by a federal judge.
'This creates massive problems for the rest of the (defendants).'
Experts say getting the cooperation of two key industry players -- a past and current owner of one of only two Hawaii refineries -- will be instrumental as the price-fixing case moves toward trial in February 2001.
"This is very significant," said Robert F. Miller, who headed the state's antitrust division in the Attorney General's office from 1979 to 1981 and now is in private practice. He has characterized the state's case in the past as very weak.
Tim Hamilton, a mainland petroleum analyst who accused oil companies of gouging Hawaii consumers even before the state filed the lawsuit, said the proposed settlement is a major plus for the state.
"This creates massive problems for the rest of the (defendants)," Hamilton said. "They are in big trouble."
Suit accused 7 companies
Following a series of Star-Bulletin articles in 1998 on Hawaii's high gas prices, the state in October of that year filed a federal lawsuit accusing seven oil companies and several related subsidiaries of conspiring to fix Hawaii's wholesale gas prices.
The conspiracy, the state alleged, resulted in hundreds of millions of dollars in excess profits for the companies throughout the 1990s. The government also alleged the defendants concealed the conspiracy for years.
The companies have steadfastly denied the allegations.
Chevron Corp., the state's market leader and one of the remaining defendants, yesterday said it will continue fighting the charges....
In the retail market, BHP -- and subsequently Tesoro, which acquired BHP Hawaii in May 1998 --had only an 11.9 percent share, according to the state. Chevron has the largest chunk at roughly 30 percent and owns Hawaii's other, larger refinery.
"We can focus on the larger players now, and that's what we're going to do," said Spencer Hosie, the San Francisco attorney whose law firm is handling the antitrust case on behalf of the state....
Faye Kurren, president of Tesoro Hawaii Corp., had a more benign take on yesterday's announcement.
The agreement simply means Tesoro and BHP will continue cooperating with the state -- providing information and documents -- just as the companies have in years past when the attorney general's office investigated the local industry, Kurren said.
"It's not anything that's extraordinary by any means," Kurren said.
Some industry watchers were skeptical, however, saying such a reaction would be expected because Tesoro and BHP's parent still are part of the industry and want to downplay whatever help they may provide that could be used against the other defendants.
First settlers get discount
Under the proposed settlement, BHP has agreed to pay $12 million and Tesoro $3 million, reflecting the fact that Tesoro entered the Hawaii market via the BHP acquisition only months before the lawsuit was filed.
The state said the settlement reflects a discount that was offered to the two companies because they were the first to settle. Presumably, any other settlements would come at a steeper price.
Kurren said the agreement does not require Tesoro to change any of its business practices. The two companies made a purely business decision to settle even though the state's allegations were untrue, she said.
Over the past year, Tesoro alone spent well over $1 million in outside legal fees and costs, plus substantial staff time has been devoted to the case, Kurren said.
Faced with the prospect that the lawsuit could drag on for several more years, the companies -- at the state's initiative -- began settlement negotiations, she said. The negotiations took about one month to complete.
"It's just a sound business decision." Kurren said. "We settled basically for what amounts to less than three years of legal fees."
Miller, the antitrust lawyer, and some industry analysts scoffed at such reasoning, noting that one of the industry's defenses has been that the lawsuit lacked merit and was politically motivated, allegedly designed to help in Gov. Ben Cayetano's 1998 re-election bid. The complaint was filed a month before Cayetano won re-election.
If the lawsuit was just political posturing, companies wouldn't consider settling, they said.
"Somebody doesn't give you $15 million ... to settle a political shibai case," said Miller, who last year represented Texaco dealers in an unrelated lawsuit against Texaco Inc., one of the remaining defendants in the state case.
The other main defendants include Shell Oil Co., Tosco Corp. and Unocal Corp.
Timing called a surprise
Another antitrust lawyer who asked not to be named said the amount of the proposed payment suggests that the case has enough merit to prompt the two companies to avoid potentially greater liability down the road.
The settlement would free the two companies from any claims stemming from the state's lawsuit.
Several experts said they were surprised a settlement came so early in the process. The trial isn't scheduled to begin until February 2001, and discovery -- the evidence-gathering process -- is nowhere near finished.
Among those still to be questioned is Cayetano. He is expected to answer in writing more than 200 questions from Chevron, including what role the Star-Bulletin's coverage played in a decision to file the lawsuit. Lawyers for the state previously have said that coverage was a key factor....
Chevron spokesman Albert Chee Jr. declined to comment on the two defendants' decisions to settle and assist in the state's discovery. Chee said Chevron's intent remains unchanged. "Simply put, we plan to prove the state's charges of price-fixing are absolutely unfounded."...
The state yesterday filed a motion asking the court to approve the proposed settlement agreement. A hearing is expected to be held early next year.
~ ~ ~
First funds will filter to consumers slowly
A portion of the initial settlement will go toward paying
litigation expenses, both present and future
By Rob Perez, Star-Bulletin
If a federal judge approves the proposed settlement involving two oil companies, Hawaii consumers could get some of the $15 million.
But don't plan your holiday shopping based on an expected share.
Even if the proposal is approved, any money that filters to consumers likely won't be seen for years.
The state wants to use about $1.23 million of the $15 million settlement amount to reimburse litigation costs the state and private lawyers helping the government have incurred so far in the case.
The San Francisco law firm of Hosie Frost Large & McArthur, which the state hired on a contingency basis to handle the lawsuit, also would get about 20 percent of any settlement proceeds after costs are reimbursed. That amounts to an estimated $2.7 million.
In addition, the state wants to set aside $3 million for future litigation costs to pursue the lawsuit against the remaining defendants.
(Tesoro Petroleum Corp. and BHP Hawaii Inc. are the two main defendants who agreed to the proposed settlement and would be dismissed from the lawsuit. Five other main defendants would remain).
What money is left would be deposited in an interest-bearing account and probably held until the lawsuit is resolved, a process that could take several years at a minimum.
If consumers don't like this proposed settlement and figure they can do better on their own, they can ask the court to be excluded from this deal.
The state filed the $2 billion antitrust lawsuit on behalf of Hawaii residents.
A federal judge ultimately will decide whether the proposed settlement is fair and, if so, how the money will be distributed. The soonest a hearing will be held is early next year.
http://starbulletin.com/1999/11/23/news/story2.html
October 6, 1998
STICKUP AT THE PUMP IN HAWAII?
Why does gas cost so much more in Hawaii than on the mainland? Hawaii's attorney general believes that price-fixing has something to do with it.
The AG has filed an antitrust suit in federal court seeking as much as $500 million in damages for profits gained from the alleged price-fixing and collusion.
Named in the suit were Hawaii's two oil refiners: Chevron Corp. and Tesoro Hawaii Corp. as well as past and present Hawaii gasoline wholesalers Unocal, BHP Hawaii, Shell Oil, Tosco, and Texaco. All strongly deny the charges.
The state has long suspected collusion in Hawaii's gas business and has mounted investigations three times over the past decade. Retail prices of unleaded gasoline in the Aloha State have consistently tracked between 15 cents and 25 cents above those on the West Coast -- far above what oil business watchdogs claim is a reasonable price differential.
"People expect it to be expensive in Hawaii," says Spencer Hosie, a San Francisco private attorney who is spearheading Hawaii's litigation team. "But the oil comes into Hawaii on a boat from Alaska, and it's the same boat that goes to Los Angeles and San Francisco. Sometimes the oil comes from Indonesia and sails right by the Hawaiian Islands on its way to Los Angeles."
According to Hosie, who has litigated numerous oil business cases, the cost of crude oil purchases typically represents 87 percent of total refining costs. The remaining margin, which is subject to regional costs, is so small that the price differential between Hawaii and the West Coast should be no more three or four cents in a competitive market. But over the past year, Hawaii prices have risen to levels almost 40 cents a gallon higher than those on the West Coast despite record low prices of crude oil worldwide.
Price changes among competing oil companies in Hawaii have moved in virtual lockstep for years and land prices -- long considered a major added cost in Hawaii -- are now on a par with those in Los Angeles and San Francisco. What's more, bulk buyers, like the State of Hawaii and the federal government, fill their cars' tanks at prices only a few cents more than prices for similar bulk contracts in California.
Add to this a Byzantine set of marketing and preferential pricing agreements among Hawaii oil companies, and Hosie believes he has a case. "There is abundant evidence that they allocated the market amongst themselves, they understood the allocation, and they agreed to live with the allocation," Hosie says.
According to the state AG's office, the collusion is costing Hawaii consumers $200,000 per day in allegedly illegal profits.
The oil companies cry foul. They say high prices are due to higher costs of doing business in a small, expensive, and isolated market like Hawaii.
"It simply costs more to do business in Hawaii, and that cost difference is reflected not only in the price of gasoline but also in most other goods and services," says Chevron's Hawaii pricing manager Michael R. Neeley, who says the market is highly competitive with constant price changes. Neeley called the lawsuit preposterous and pointed to the upcoming gubernatorial election where Hawaii's incumbent Democratic governor is trailing badly in the polls as possible reasons behind the lawsuit.
One point is indisputable: The high price of gas is no help to an economy reeling from steep declines in Asian tourism and the collapse of the local construction industry.
By Alex Salkever in Honolulu
www.businessweek.com/bwdaily/dnflash/oct1998/nf81006d.htm
FOR IMMEDIATE RELEASE
May 01, 1998
AG INVITES COMMENTS ON
ANACORTES REFINERY BUYER
SEATTLE – Today, the Shell Oil Company announced that it plans to sell its Anacortes refinery to the Tesoro Petroleum Corporation, which supplies gas to approximately 30 retail locations in Southwestern Washington and Oregon and owns refineries in Alaska and Hawaii.
As part of its review process, all of the potential purchasers of the refinery, including Tesoro, were investigated by the Attorney General's Office. Each potential purchaser's financial history, environmental compliance, industry experience, and relationships in communities where they operate were examined.
“Our initial investigation of Tesoro indicates that it meets the required legal criteria and appears to be a good fit with the community and its work force,” said Attorney General Christine Gregoire. “However, over the next 30 days we will be looking forward to receiving public comments about any managerial, operational or financial capabilities of Tesoro that would impact its capability to compete and maintain the refinery as a viable, ongoing operation."
Gregoire is very pleased that Tesoro has scheduled meetings with refinery employees early next week and is planning to hold a community meeting soon.
Written comments should be received by May 20, 1998 and will be reviewed and considered in the Attorney General's final decision to accept or reject the proposed buyer. The Oregon Attorney General and the Federal Trade Commission must also approve the purchaser.
The sale of the refinery was required under consent decrees signed with the Washington and Oregon Attorneys General and the FTC after concerns were raised that antitrust laws would be violated and gas prices could go up when Shell and Texaco combined their refining and marketing operations in the western United States.
The Attorneys General must notify Shell of their approval or rejection of Tesoro as a purchaser of the refinery by May 30, 1998. If the company is rejected as a potential buyer, another viable purchaser must be identified by Shell.
About 85 percent of the gasoline in Washington is supplied by one of four major refiners in the state. The four are Shell, Texaco, Arco and Tosco. A combined Texaco and Shell operation would have produced 43 percent of the gasoline manufactured in the Pacific
Northwest. After the sale, the new owner of the refinery will have an 18.2 percent share of the refining market. Arco's market share will be approximately 34 percent and Tosco will have just over 17 percent.
Written comments about the Tesoro Company should be sent to the Antitrust Section of the Attorney General's Office, 900 Fourth Avenue, Suite 2000, Seattle, WA 98164.
http://www.atg.wa.gov/pressrelease.aspx?&id=4768
Harken Makes Bid for Tesoro
The New York Times
The Harken Energy Corporation, an energy development company, today offered to acquire the Tesoro Petroleum Corporation of San Antonio for $11.75 a share, or about $190 million, in cash.
Tesoro's board has turned down several other, higher offers to sell the company, whose major asset is considered to be its Alaska-based refining and marketing business.
The chairman of Harken's board, Alan G. Quasha, said in an interview that he felt confident that the Tesoro board would be willing to consider an offer at this time.
He said he believed that the company's three major shareholders, which control about 40 percent of the shares, would also support the sale.
The Metropolitan Life Insurance Company, which controls 25 percent of Tesoro's shares and has two members on Tesoro's board, indicated earlier this year that it wanted to sell its stake.
G. Bryan Dutt, an oil and gas industry analyst at the Howard Weil Corporation in New Orleans, said Harken's offer was substantially lower than the breakup value of the company, which he placed at $15 a share.
Tesoro's share price rose 1.25 today, to $10.875, in New York Stock Exchange trading.
* * *
Harken Withdraws Offer for Tesoro
The New York Times
The Harken Energy Corporation withdrew its offer to acquire the Tesoro Petroleum Corporation for $11.75 a share, or about $190 million, in cash. Harken's chairman, Alan G. Quasha, said in a letter to Tesoro's chairman, Dr. Richard V. West Jr., that Harken had concluded the San Antonio-based oil refining and marketing company's board was not interested in maximizing shareholder value.
It was unclear whether Harken, a diversified energy company, would now make a hostile offer for Tesoro, whose largest operations are in Alaska. The Metropolitan Insurance Company, which holds about one-fourth of the company's shares, indicated previously that it was interested in divesting itself of its shares.
Tesoro shares closed today at $8.75, down 62.5 cents, or 6.7 percent, in New York Stock Exchange trading. Harken fell 37.5 cents, or 6.8 percent, to $5.125.
# # #
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