October 13, 2014

PCOR’s upgraded oil refinery all set for comercial operations

News portal interaksyon.com today quoted the president of Petron Corp (PCOR) as saying the company is all set for the commercial operations of its upgraded oil refinery. The Vacuum Pipestill 2, a key unit of the Refinery Master Plan 2, is reportedly slated to start operations in the coming weeks and this will be able to convert 47,000 barrels per day of negative margin fuel oil into higher-margin products. The company also reportedly said that the entire facility is on track for full commercial by early 2015.

Our take: The scheduled completion and full commercial operations of the upgraded facility is well-flagged by the company and expected by the market. This is largely seen to be major catalyst for PCOR given potential positive implications to long-term margins and earnings.

However, it remains to be seen if the expected rise in revenues and margins will be enough to compensate for possible pre-operating expenses that will be booked progressively as well as the potential rise in interest charges which are now being capitalized prior to the operations of the facility. 3Q14 refining operations may also continue to suffer due to lower crack spreads. – Wealthsec