"Refiners’ Q1 Reports Will Be A ‘Tale Of Two Cities’: Barclays" (MPC; WNR)

From Barron's Stocks to Watch:

Barclays’ Paul Cheng has a note out today previewing first-quarter earnings reports for energy companies, and while he expects the American-based oil majors under his coverage to report in-line with consensus, he expects refiners to have more varied results, with some widely missing the mark.

“Although the global product cracks and the North America crude oil differentials have widened sharply since early February, many refiners were unable to fully capture these better market conditions due to heavy planned and unplanned outages in the quarter,” he writes. This situation will be exacerbated further by the fact that the market’s expectations are elevated after watching oil’s fall.

Cheng believes that PBF Energy (PBF) and Western Refining (WNR) could see the biggest potential downside surprises:

PBF: Results appear to be hurt by high cost barrels purchased in October and November. In addition, NE region has suffered unplanned downtime with average throughput toward the low end of management’s previous guidance of 320-340 mb/d. Moreover, cash operating expenses have been higher than expected and are now estimated to be close to 10% higher sequentially from 4Q14 levels. We had previously assumed refinery cash operating costs flat to slightly lower.

WNR: Contrary to expectations, the Phoenix gasoline market has not benefited as much from the California outages. According to HFC, the southwest WTI 3-2-1 crack spread averaged only $19.0/b in 1Q15 compared to $16.1 and $19.0 per barrel, respectively, in 4Q14 and 1Q14....

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