TransMontaigne Inc. Discusses Refined Product Price Disparities and Announces Conference Call
07 10월 2005 - 4:03AM
Business Wire
TransMontaigne Inc. (NYSE: TMG) today announced that it is
continuing to witness substantial price disparities and market
disruptions in the wholesale products market that previously have
been reported in various news sources, including the Oil Price
Information Service (OPIS) and The Wall Street Journal. During
September and October 2005, the major refiners have priced their
branded products substantially below the price at which they are
offering unbranded products in the wholesale market. The price of
unbranded product in the wholesale market generally reflects the
cost of product at the tailgate of the refinery adjusted for the
cost of transportation to the wholesale market. OPIS -- September
26, 2005 "Major oil companies are not passing through the full cost
of Gulf Coast product to downstream supply points. The result is
two tiers of pricing, one for branded customers, another for
unbranded. The difference is staggering with some unbranded
marketers paying 30 cents more for fuel than their branded
counterparts. Branded and unbranded marketers face product
shortages and allocations, but the restrictions are much more
severe for unbranded accounts. Some have been shut off completely
by suppliers so (they) have no choice but to buy expensive spot
replacement barrels or let their systems run dry... Major oil
companies have been reluctant to pass along the full throttle of
spot replacement costs wanting to avoid the specter of price
gouging. So they can use their own refinery supply and downstream
earnings to subsidize lower-priced branded rack prices." Wall
Street Journal -- October 1, 2005 "In essence, these giants (the
major refiners) are using robust refining margins to challenge
their competition. (T)he move is both helping big oil companies
deflect political flak amid record profits and putting considerable
pressure on their competition, especially big-box retailers and
economy gasoline chains." On September 7, 2005, nine days after
Hurricane Katrina, TransMontaigne informed certain contracted
customers at its Southeast facilities that it temporarily suspended
the sale of unbranded product to them under contracts with OPIS
indexes during the price disparities because the OPIS indexes
include the significantly lower branded product prices in the
wholesale market. As a result of the unexpected price disparities,
the OPIS indexes do not currently reflect normal markets or either
party's expectations at the time those indexes were selected as
benchmarks. TransMontaigne historically sold approximately 80,000
barrels per day of unbranded product at its Southeast facilities
under contracts with OPIS indexes and is currently delivering
approximately 45,000 barrels per day under contracts with interim
pricing provisions. According to the National Association of
Convenience Stores, the United States Congress' Gas Price Task
Force has asked the Federal Trade Commission for its explanation of
these price disparities. "For nine days following Hurricane
Katrina, we sold product at our Southeast facilities to our
customers under contracts with OPIS indexes in the face of the
price disparities and disruptions in the wholesale product market,"
said William S. Dickey, Chief Operating Officer. "When we saw those
price disparities and disruptions continuing, we had to evaluate
our options. We concluded that we could not sell our inventory
below its replacement cost, which could be illegal in many states,
and we did not want to suspend sales altogether, which would harm
both wholesale marketers and retail customers. As a result, we
informed our customers that we would sell unbranded product to them
to the extent we had product available at prices based on our
replacement costs," Mr. Dickey said. "When these price disparities
and market disruptions cease to exist, TransMontaigne will resume
selling unbranded product under existing contractual provisions."
The price disparities and market disruptions have not had a similar
effect on TransMontaigne's marketing and distribution activities at
its Florida facilities. TransMontaigne currently sells
approximately 55,000 barrels per day of unbranded product at its
Florida facilities under contracts with OPIS indexes.
TransMontaigne continues to sell unbranded product to its contract
customers at its Florida facilities under contracts with OPIS
indexes as those contracts currently do not result in the sale of
product below the Company's replacement cost. "Fortunately, our
terminals did not suffer significant damage from the hurricanes,"
said Donald H. Anderson, Chief Executive Officer. "We anticipate
that the current price disparities and market disruption caused by
Hurricanes Katrina and Rita will be short-lived due to the
impending arrival of foreign supply and the return of normal
operations at domestic refineries." "For the nine days following
Hurricane Katrina, when we were selling unbranded product to our
contract customers at our Southeast facilities under OPIS indexes,
we experienced an unfavorable impact on our marketing margins,
which will negatively affect our reported results for the quarter
ended September 30, 2005," said Randall J. Larson, Chief Financial
Officer. "We believe that our accomplishments over the last year,
which have lowered our debt levels and improved our liquidity, have
put TransMontaigne in a financial position to cope with these price
disparities and disruptions in the wholesale product markets. At
June 30, 2005, TransMontaigne had net working capital of
approximately $320 million and common stockholders' equity in
excess of $326 million." Conference Call TransMontaigne Inc. also
announced that it has scheduled a conference call for Monday,
October 10, 2005, at 3:00 p.m. (MDT) regarding the above
information. Analysts, investors and other interested parties are
invited to listen to management's presentation by accessing the
call as follows: 800-230-1096 Ask for: TransMontaigne A playback of
the conference call will be available from 6:30 p.m. (MDT) on
Monday, October 10, 2005, until 11:59 p.m. (MDT) on Monday, October
17, 2005, by calling: USA: 800-475-6701 International: 320-365-3844
Access Code: 799295 TransMontaigne Inc. is a refined petroleum
products marketing and distribution company based in Denver,
Colorado, with operations in the United States, primarily in the
Gulf Coast, Midwest and East Coast regions. The Company's principal
activities consist of (i) terminal and tug and barge operations,
(ii) marketing and distribution, (iii) supply chain management
services and (iv) operating its consolidated subsidiary,
TransMontaigne Partners L.P. (NYSE: TLP), a publicly traded master
limited partnership that engages in refined petroleum products
terminal and pipeline operations. The Company's customers include
refiners, wholesalers, distributors, marketers, and industrial and
commercial end-users of refined petroleum products. Corporate news
and additional information about TransMontaigne Inc. is available
on the Company's Web site: www.transmontaigne.com. Forward-Looking
Statements This press release includes statements that may
constitute forward-looking statements made pursuant to the safe
harbor provision of the Private Securities Litigation Reform Act of
1995. This information may involve risks and uncertainties that
could cause actual results to differ materially from the forward-
looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are based
on reasonable assumptions, such statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected.
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