OPIS Headlines

March 26, 2015
EasyJet Revenue Up on European Jet Fuel Price Falls

EasyJet has increased its forecast revenue for the first half of its financial year due to lower jet fuel prices and a revised hedging strategy, the budget airline said on March 26.

For the six-month period to March 31, Europe's second-largest budget carrier expects to record between a pre-tax loss of 5 million pounds ($7.44 million) and a profit of 10 million pounds ($14.89 million).

This is up from the airline's previous forecast of a pre-tax loss of between 10 million-30 million pounds ($14.89 million-$44.67 million) for the period.

The budget airline reported a pre-tax loss of 53 million pounds ($78.9 million) in the same period the year before.

EasyJet said a reduced jet fuel bill would boost its financial results for the first half of 2015 by 35 million pounds ($52 million). For the full year, lower jet fuel costs could save the airline between 90 million pounds ($133.9 million) and 120 million pounds ($178.6 million), it said.

"We continue to expect that lower fuel costs will be beneficial for our customers as fares adjust," Carolyn McCall, easyJet's chief executive said in a statement.

These forecasts are based on the assumption that European jet fuel prices will remain in a $550-$750 per metric ton (mt) trading range.

Northwest European jet fuel prices have averaged $564.11/mt this year, according to OPIS data. This is down from an average of $752.83/mt in the fourth quarter of 2014.

The airline has also revised its hedging strategy, helping to capitalize on the slump in jet fuel prices since July.

According to company figures released March 26, easyJet is now hedged for 82% of its fuel requirements at $908/mt for the six months to Sept. 30, 2015. For the full year ending Sept. 30, easyJet is 86% hedged at $929/mt.

The budget carrier said for the full year ending Sept. 30 2016, it is 71% hedged at a jet fuel price of $869/mt.

In January, the airline told OPIS that for the 12 months to the end of September this year, easyJet hedged 84% of its expected fuel buying at $936/metric ton (see OPIS alert, Jan. 27). For the year between September 2015 and 2016, the airline had previously hedged 63% of its fuel buying at $908/ton.

The airline said in will publish its full first half-year financial results -- for the six-month period to March 31 -- on May 12.

The OPIS Worldwide Jet Fuel Report is the only service providing in-depth coverage of airline jet fuel buying prices at the nation’s top airports and allows the carriers to plan routes more efficiently. Virtually every gallon of jet fuel sold to the nation’s biggest consumer – the Defense Fuel Supply Center – is benchmarked to an OPIS jet fuel price index. Go here www.opisnet.com/products/worldwide-jet-prices.aspx for more information and learn how you can start your 5-day no-obligation free trial.

March 23, 2015
Sunoco LP Gets $816 Million Retail Fuel Asset Dropdown

Sunoco LP said on Monday that it has has agreed to a second dropdown of a portion of Energy Transfer Partners' $816 million retail fuel distribution business to Sunoco LP.

Sunoco LP, formerly Susser Petroleum Partners LP, is a master limited partnership that primarily distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors. ETP had previously said it planned to bring Sunoco Inc. and Stripes together under unoco LP through a series of asset dropdowns.

Sunoco LP has agreed to acquire from ETP Retail Holdings, an affiliate of ETP, a 31.58% equity interest in Sunoco LP, which distributes about 5.3 billion gal per year of motor fuel to customers 26 states in the U.S. East, Midwest and Southeast.

The transaction is valued at approximately $816 million.  

Sunoco LP will pay $775 million in cash and issue $40.8 million of Sunoco LP common units to ETP Retail Holdings, based on the five-day volume-weighted average price of Sunoco LP's common units as of March 20, 2015.  

Sunoco LP expects to fund the acquisition using proceeds from the private offering of senior notes.

Sunoco LP supplies to Sunoco Inc. (owned by ETP) for resale at 440 company-operated Sunoco and APlus-branded convenience stores and other retail fuel outlets.

Sunoco LP also markets fuel to 882 Sunoco-branded dealer locations under long-term fuel supply agreements and other fuel distributors of Sunoco-branded fuel that supply an additional 3,640 third-party retail fuel outlets.

Sunoco LP also distributes fuel to approximately 400 other commercial customers under spot or short-term contracts.

Management expects that substantially all of the income from Sunoco LP's interest in Sunoco LLC will be qualifying income.

The transaction is expected to close in April, subject to customary closing conditions and completion of financing arrangements. It is expected to be immediately accretive to distributable cash flow of both Sunoco LP and ETP for 2015 and beyond.

"This transaction gives us new exposure to customers in 26 states from Maine to Florida to Louisiana, where the Sunoco fuel brand is very strong, complementing our current base of wholesale customers in the Southwest and Hawaii," said Robert W. Owens, CEO of Sunoco LP.

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March 19, 2015
Saudi Jet Exports Surge 65% To Surpass Kuwait as EU's Biggest Supplier

Saudi Arabia exports of jet fuel and kerosene surged 65% in 2014, as the kingdom became Europe's largest supplier of the middle distillate, overtaking Kuwait.

Exports from the kingdom totaled 6.27 million metric tons last year, according to the Joint Organisations Data Initiative. Imports of jet fuel from Saudi Arabia to the 28 member countries of Europe were 77% higher, at 3.97 million tons, data from the Eurostat, the European Commission statistics bureau show.

That means nearly two-thirds, or 63%, of the Saudi jet and kerosene exports were shipped to Europe last year.

Jet fuel production in the kingdom climbed in 2014 as the 400,000-b/d SATORP refinery, a joint venture with France's TOTAL, became fully operational after being commissioned in late 2013.

Exports from Saudi Arabia hit a record 702,000 tons in December, Eurostat figures show.

Total refinery output of jet fuel and kerosene in Saudi Arabia was 9.2 million tons last year versus 7.4 million tons in 2013, according to JODI data.

Kuwait, previously the biggest supplier of jet fuel to Europe, shipped 3.8 million tons last year to the 28 member countries, down from just over 4 million tons the prior year.

The OPIS Worldwide Jet Fuel Report is the only service providing in-depth coverage of airline jet fuel buying prices at the nation’s top airports and allows the carriers to plan routes more efficiently. Virtually every gallon of jet fuel sold to the nation’s biggest consumer – the Defense Fuel Supply Center – is benchmarked to an OPIS jet fuel price index. Go here www.opisnet.com/products/worldwide-jet-prices.aspx for more information and learn how you can start your 5-day no-obligation free trial.

March 19, 2015
Puma Energy Enters Colombian Retail Gasoline Supply Market

Puma Energy, a globally integrated midstream and downstream energy company, is continuing its rapid expansion across the globe and moving into the Colombian retail gasoline market, it announced.

Puma Energy, which is 48.7% owned by Trafigura, said on Thursday that it had acquired 100% shares of Save Combustibles, SAS, which includes all its of its assets, sales and distribution facilities in Colombia.

Save Combustibles is a Colombian fuel supplier of over 135 retail gasoline service stations.

The asset purchase extends Puma Energy's acquisition spree so far this month. Last week, Puma Energy bought the Australian bitumen assets from BP and a shuttered oil refinery at Milford Haven in Wales from Murco.

With this first step into the Colombian market, Puma Energy will maintain its focused strategy of connecting supply from international markets to local distribution demand, the company said.

OPIS notes that Colombia is a regular importer of U.S. refined products.

In December, Colombia imported 1.2 million bbl of gasoline and 2.6 million bbl of diesel from the U.S., according to the Energy Information Administration.

Colombia's total products imports in December from the U.S. were pegged at 4.6 million bbl.

Become a better fuel buyer without ever leaving your desk –sign up now for the OPIS Basics of Fuel Buying eLearning course. Taught by 30+ year industry veteran Scott Berhang, this 11-module online training program will guide you through everything you need to know about purchasing physical fuel. Visit www.opisnet.com/events/fuel-buying-online.aspx or call our eLearning team toll-free at 888-301-2645 for more details and to get started.

March 16, 2015
More Oil Supply on Iranian Sanctions Relief Could Spark Sell-off: Barclays

Iran's crude and condensate exports may increase by 300,000 b/d by June from February's level, and the perception that global oil supply would increase further due to sanctions relief for Tehran could trigger a new round of oil price sell-off, according to Barclays Capital.

"The prospect of an increase in Iranian oil sales as part of a new agreement in the next couple of months will only exacerbate OPEC oversupply to the market, as well as raise additional uncertainty about the timing of such oil sales increasing," the U.K. bank told clients in a note Monday.

On Monday, the United States and Iran appeared inching closer to an agreement that would allow Iran to resume crude exports in exchange for Tehran's promise to give up its nuclear ambitions. The news helped send U.S. West Texas Intermediate prices to six-year lows at under $44/bbl.

In 2011, prior to the West's sanctions taking effect, Iran was among the world's top crude oil supplier with output estimated at around 2.5 million b/d, according to the U.S. CIA World Factbook.

Barclays expects WTI prices to average $39/bbl in the second quarter this year, before rebounding to $47/bbl and $52/bbl, respectively, in Q3 and Q4. For the full year, the bank is forecasting an average price of $46/bbl.

The expected 300,000-b/d increase in Iranian crude and condensate output in June versus February would be a function of lower domestic demand in Iran and increased South Pars condensate exports, regardless of a change in the sanctions regime, the bank said. Iran's crude and condensate exports totaled 1.3 million b/d in February, according to Barclays, citing International Energy Agency (IEA) data.

Become a better fuel buyer without ever leaving your desk –sign up now for the OPIS Basics of Fuel Buying eLearning course. Taught by 30+ year industry veteran Scott Berhang, this 11-module online training program will guide you through everything you need to know about purchasing physical fuel. Visit www.opisnet.com/events/fuel-buying-online.aspx or call our eLearning team toll-free at 888-301-2645 for more details and to get started.