Tesoro Corporation (NYSE: TSO) announced that it will cease refining operations at its Kapolei refinery during April of this year, and begin the process of converting the refinery to an import, storage and distribution terminal. Tesoro Hawaii is committed to maintaining its focus on safe and environmentally sound operations during the shutdown and conversion process.
Tesoro Hawaii will maintain the existing distribution system to support marketing operations and fulfill its supply commitments while continuing to offer the terminal, distribution and retail assets for sale. Upon conversion of the refinery to an import, storage and distribution terminal, Tesoro Hawaii believes third party utilization of the terminal and associated logistics will facilitate ongoing supplies of refined products.
Tesoro expects to report one-time charges in the fourth quarter 2012 related to the conversion of the refinery to a terminal, including charges for asset impairment and asset retirement obligations. The one-time charges are estimated to be $1.00 - $1.10 per share. The Company also expects to realize between $300 million and $350 million in cash by the end of 2013, driven by a reduction in working capital needs as a result of this conversion.