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CITGO Reports Earnings For FY 2019


(Southside Light) -- The Citgo Corporation  Board of Directors recently reviewed the Company's 2019 annual financial results.  The Company's steady financial and operational performance includes $246 million in net income for the year, a strong liquidity position and debt-to-capitalization ratio, and one of the company's best years of safety and environmental performance, resulting in recognition for the Corpus Christi and Lemont refineries. These results were achieved despite a number of one-time, special items and a deteriorating market environment for refiners.
"While the COVID-19 pandemic and resulting market turmoil present a new layer of challenges for our industry, CITGO's increased resilience and flexibility positions us to manage the difficult economic and market environment for the remainder of 2020," said CITGO Board Chair Dr. Luisa Palacios. "We have taken important steps to improve our balance sheet, strengthen liquidity, and implement management controls that will serve us well in the months and years to come."
President and Chief Executive Officer Carlos Jordá also pointed to CITGO's strength and resilience, "The people of CITGO rose to the challenge in 2019 as they continued to make and sell the quality fuels and lubricants our customers expect from our brands, and they continue rising to the challenge today as we do the same while responding to the COVID-19 environment." Jordá also underscored CITGO's commitment to corporate governance, "I am particularly proud of the significant strides we've made in improving corporate governance, as we continue to emphasize the importance of ethics and integrity throughout the company."
Additional items of note include:
  • Refinery Runs. CITGO's three refineries continued to run at high capacity. Total refinery throughput for 2019 was 800,000 barrels-per-day (bpd), of which crude runs were 688,000 bpd, utilizing 89% of the rated crude refining capacity.
  • Market Environment. Crude oil market conditions also weighed on refiners. The adverse market environment in 2019 resulted from a 50% reduction of certain domestic crude discounts relative to 2018 resulting from the completion of several large pipelines from the Permian Basin to the Gulf Coast. More importantly, light to heavy crude differentials significantly narrowed in relation to 2018 due to heavy crude supply reduction, partially resulting from Venezuelan oil disruptions and Canadian crude curtailment.
  • Investments and Maintenance. The Company invested $280 million in capital projects and $442 million in turnaround maintenance and catalyst during 2019.
  • Exports. Exports continued to play an increasing role. For full year 2019, refined product exports totaled 194,000 bpd, just slightly below 2018 due to the significant turnaround work at the Corpus Christi Refinery in Q2 with exports ramping up to 226,000 bpd in Q4.
  • Awards and Recognitions: Committed to its core values of safety and environmental, CITGO refineries received two recognitions in 2019. The Lemont refinery received the AFPM Elite Gold Safety Award in recognition of top industry safety performance and excellence in program innovation and leadership over time. Additionally, the Corpus Christi refinery earned the 2019 ENERGY STAR designation from the Environmental Protection Agency (EPA).
  • Corporate governance. The company continues to expand and institutionalize measures to strengthen corporate governance with the appointment of a new Chief Compliance and Ethics officer with enhanced responsibilities, as well as updating its company-wide Code of Business Ethics.
  • Special items. Several one-time items that impacted our financials took place in 2019, principally a $60 million inventory write-down due to an unlawful and forceful taking in Venezuelan waters of that amount of crude oil owned by the Company aboard the tanker Gerd Knutsen on Feb. 9, 2020 and the tanker's failure to depart Venezuelan waters for approximately one year despite the Company's instructions to depart. Other items included a $30 million write off of insurance receivables related to the 2006 heavy rain event at the Lake Charles refinery for coverage placed through PDVIC, an insurance entity controlled by PDVSA in Venezuela forced into liquidation in 2018; and a $24 million charge representing the company's share of industry-wide class action settlements related to tractor hydraulic fluids litigation. These were partly offset by a $31 million benefit to earnings from dipping into less expensive historical LIFO inventory layers and a $21 million benefit from insurance reimbursements related to Athos litigation.

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