ANDV
$108.90
Andeavor
($1.50)
(1.36%)
Earnings Details
3rd Quarter September 2017
Wednesday, November 08, 2017 5:00:47 PM
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Summary

Andeavor (ANDV) Recent Earnings

Andeavor (ANDV) reported 3rd Quarter September 2017 earnings of $2.70 per share on revenue of $9.8 billion. The consensus earnings estimate was $3.03 per share on revenue of $11.6 billion.

Results
Reported Earnings
$2.70
Earnings Whisper
-
Consensus Estimate
$3.03
Reported Revenue
$9.84 Bil
Revenue Estimate
$11.63 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Andeavor Reports Third Quarter 2017 Results

- Reported earnings of $551 million, or $3.49 per diluted share; results included the following pre-tax items: $209 million related to a LCM inventory benefit, a $19 million environmental accrual and acquisition and integration costs of $45 million

- Returned $345 million to shareholders including $252 million in share repurchases; expect to repurchase $300 million of shares in the fourth quarter 2017

- Total retail and branded stations up 27% year-over-year to 3,124 stores

- On October 30, 2017, Andeavor Logistics closed its $1.7 billion acquisition of Western Refining Logistics

- On October 30, 2017, Andeavor and Andeavor Logistics completed the IDR Buy-In transaction for 78.0 million ANDX units valued at $3.6 billion

- On October 31, 2017, Andeavor Logistics upgraded to BBB- by S&P

- On November 8, 2017, announced drop down of Anacortes Logistics Assets for $445 million

SAN ANTONIO, TEXAS - November 8, 2017 - Andeavor (ANDV) today reported third quarter earnings of $551 million, or $3.49 per diluted share, compared to $170 million, or $1.43 per diluted share a year ago. Consolidated net earnings were $601 million for the third quarter 2017 compared to $201 million for the same period last year. EBITDA for the third quarter 2017 was $1.2 billion compared to $577 million last year.

Third quarter 2017 results included the following pre-tax items: $209 million benefit related to a lower of cost or market (LCM) inventory adjustment, a $19 million environmental accrual, acquisition and integration costs of $32 million related to the Western Refining (Western) acquisition and acquisition costs of $13 million related to Andeavor Logistics LP’s (ANDX) acquisition of Western Refining Logistics, LP (WNRL) and the IDR Buy-In transaction. In addition, a planned turnaround of the fluid catalytic cracker unit (FCCU) at the Martinez, California refinery was extended into early September. The extension and other unplanned maintenance associated with the restart negatively impacted operating income by an estimated $42 million. The maintenance was completed by the end of the third quarter 2017. Third quarter 2016 results included a pre-tax benefit of $20 million related to a LCM inventory adjustment.

Three Months Ended September 30,
Nine Months Ended September 30,
(Unaudited) ($ in millions, except per share data)
2017
2016
2017
2016
Operating Income
Marketing
$
175
$
273
$
544
$
661
Logistics
164
127
481
364
Refining
762
58
841
492
Total Segment Operating Income
$
1,101
$
458
$
1,866
$
1,517
Net Earnings From Continuing Operations Attributable to Andeavor (a) $
551
$
170
$
641
$
646
Diluted EPS - Continuing Operations
$
3.49
$
1.43
$
4.71
$
5.37
Diluted EPS - Discontinued Operations
0.05
(0.01
)
0.06
0.08
Total Diluted EPS
$
3.54
$
1.42
$
4.77
$
5.45

(a) Referred to in the body of this press release as "earnings."

"Our business delivered strong results across our integrated value chain for the quarter. Our marketing business is well positioned for continued growth following the Western Refining and Northern California Retail acquisitions which bring more secure and profitable earnings to the portfolio. Andeavor Logistics completed the acquisition of WNRL and the IDR buy-in transaction, which positions us to capture significant organic growth in the Permian Basin," said Greg Goff, Chairman and CEO.

"Our strong cash generation and financial discipline allow us to continue to invest in the business for growth and return cash to shareholders. In addition to the $400 million of share repurchases through the third quarter, we expect to repurchase $300 million of shares in the fourth quarter," added Goff.

SEGMENT RESULTS

MARKETING. Marketing segment operating income was $175 million and segment EBITDA was $193 million in the third quarter 2017. This compares to segment operating income of $273 million and segment EBITDA of $285 million last year.

Overall fuel margins were 10.0 cents per gallon in the third quarter 2017, compared to 14.9 cents per gallon last year. Retail and Branded fuel margins were 19.3 cents per gallon compared to 25.3 cents per gallon in 2016. With a significant increase in product spot prices during the first half of the quarter, Andeavor’s integrated business reflected the value of this rise in the Refining segment’s results for the quarter. The Company still expects Marketing segment fuel margins to average 11 to 14 cents per gallon over time.

Merchandise margin increased to $54 million from $3 million in 2016 driven by the Western acquisition. Andeavor continued to grow its network of branded stores, increasing by 657 stores, or 27%, to 3,124. This was primarily driven by the additional stores from the Western and Northern California Retail acquisitions and the continued execution of the Company’s organic growth plan.

LOGISTICS. Logistics segment operating income increased to $164 million in the third quarter 2017 from $127 million a year ago and segment EBITDA increased to $252 million from $177 million last year. Results included a $19 million environmental accrual related to the expected final remediation costs for the 2013 crude oil pipeline release at Tioga, North Dakota and $9 million of acquisition costs related to Andeavor Logistics’ acquisition of WNRL and the IDR Buy-In transaction. The increase in segment operating income and segment EBITDA was primarily driven by strong California refinery utilization and summer demand for refined products, contributions from the North Dakota Gathering and Processing Assets acquisition completed in early 2017, contributions from the drop downs completed in 2016, and as a result of the Company’s Permian and Northern Great Plains logistics and wholesale operations added as part of the Western acquisition.

REFINING. Refining segment operating income was $762 million for the third quarter 2017 compared to segment operating income of $58 million in 2016. Segment EBITDA was $940 million compared to $208 million in 2016. Segment operating income and segment EBITDA included a pre-tax benefit related to a LCM inventory adjustment of $209 million and $20 million in the third quarter 2017 and the third quarter 2016, respectively. The strong performance was driven by high crude oil and feedstock throughput and reliable operations, however we did experience additional costs and extended downtime during the planned FCCU turnaround at the Martinez refinery.

Refining margin was $1.6 billion, or $15.09 per barrel for the third quarter 2017. This compares to a refining margin of $729 million, or $9.08 per barrel in the third quarter 2016. Other than the LCM impact and the Martinez turnaround, the year-over-year increase in refining margin reflects the continued delivery of improvements to operating income, contributions from the Western acquisition and a stronger refining crack spread environment.

CORPORATE AND OTHER

Corporate and unallocated costs for the third quarter 2017 were $158 million and included $36 million of costs related to the integration of Western and costs incurred by Andeavor in connection with Andeavor Logistics’ acquisition of WNRL and the IDR Buy-In transaction. Net interest was $97 million in the third quarter 2017. The effective tax rate for the third quarter 2017 was 31.6%.

BALANCE SHEET AND CASH FLOW

Andeavor ended the third quarter with $528 million in cash and cash equivalents. This was down from $3.3 billion at the end of 2016 primarily due to the closing of the Western acquisition, timing of working capital impacts and Andeavor Logistics’ acquisition of the North Dakota Gathering and Processing Assets. Andeavor has approximately $2.0 billion of availability under its revolving credit facility. Total debt, net of unamortized issuance costs, was $7.7 billion at the end of the third quarter. Excluding Andeavor Logistics and WNRL debt, total debt was $3.6 billion.

Capital spending for the third quarter 2017 was $339 million for Andeavor, $51 million for Andeavor Logistics and $8 million related to WNRL. Turnaround expenditures for the third quarter were $98 million. The Company expects 2017 capital expenditures of approximately $1.3 billion, consisting of approximately $1.05 billion at Andeavor and $245 million at Andeavor Logistics. Turnaround expenditures for the full year 2017 are expected to be $540 million. The revised capital expenditure estimate reflects changes in the Company’s funding strategy for the Los Angeles Pipeline Interconnect System and the Conan Crude Oil Gathering Pipeline System (the Conan System). Andeavor anticipates transferring the Los Angeles Pipeline Interconnect System and the Conan System to Andeavor Logistics at cost when the projects are complete versus Andeavor Logistics making progress payments as capital expenditures during project construction.

Andeavor repurchased 2.6 million shares for approximately $252 million in the third quarter and has $1.7 billion remaining under its previously approved share repurchase programs. The Company paid cash dividends of $93 million in the third quarter 2017. Additionally, Andeavor today announced that the board of directors has declared a quarterly cash dividend of $0.59 per share payable on December 15, 2017 to all holders of record as of November 30, 2017. Andeavor is committed to maintaining a strong, investment grade balance sheet and has flexibility and discipline to continue to invest in high-return capital projects, pursue strategic acquisitions and return cash to shareholders through share repurchases and dividends.

STRATEGIC UPDATE

WESTERN SYNERGY UPDATE. Andeavor is committed to delivering an expected $350 to $425 million in annual run-rate synergies by June 2019, the second year following the close of the transaction. This includes approximately $120 to $160 million from value chain optimization, $130 to $140 million from operational improvements and $100 to $125 million from corporate efficiencies. Andeavor estimates it has achieved approximately $110 million in annual run-rate synergies though third quarter 2017, consisting primarily of approximately $85 million of corporate efficiencies and the remainder in value chain optimization and operational improvements.

MLP MERGER AND IDR BUY-IN. On October 30, 2017, Andeavor Logistics completed its $1.7 billion acquisition of Western Refining Logistics. Immediately following the closing of the WNRL acquisition, Andeavor and Andeavor Logistics completed its IDR Buy-In transaction whereby Andeavor Logistics issued 78.0 million ANDX common units to Andeavor in exchange for the cancellation of Andeavor Logistics’ IDRs and the conversion of its economic general partner interest into a non-economic general partner interest. The total value of the IDR Buy-In represents a $3.6 billion in value based on Andeavor Logistics’ closing unit price of $45.90 on October 30, 2017. Andeavor Logistics remains committed to achieving its target $625 to $725 million of annual net earnings and $1.2 to $1.3 billion of annual EBITDA for 2018, annual distribution growth of 6% or greater, distribution coverage ratio of approximately 1.1 times and debt-to-EBITDA at or below 4.0 times.

Over the next few years, Andeavor Logistics continues to expect to invest approximately $1 billion annually in organic growth projects, acquisitions and drop downs from Andeavor. Following the WNRL acquisition, the IDR Buy-In and achieving an investment grade credit rating, Andeavor Logistics is well positioned to capture growth with a much lower cost of capital. Following these transactions, Andeavor owns approximately 59% of Andeavor Logistics common units.

INVESTMENT GRADE CREDIT RATING AT ANDEAVOR LOGISTICS ACHIEVED. On October 31, 2017, S&P Global Ratings raised Andeavor Logistics’ corporate credit and senior unsecured issue ratings to "BBB-" with a stable outlook from "BB+". In February 2017, Fitch Ratings assigned a first-time Long-Term Issuer Default Rating of BBB- to Andeavor Logistics, marking the Company’s inaugural investment grade credit rating. As a result of Andeavor Logistics achieving a "BBB-" credit rating at both S&P and Fitch, Andeavor Logistics’ outstanding unsecured bond securities now meet the criteria to be included in the investment grade Bloomberg Barclays Global Aggregate and ICE BofAML Global Bond Indices. Andeavor Logistics is well positioned to enhance its existing capital structure and meet future financing needs at attractive rates with longer maturities in a more liquid market. Additionally, on October 26, 2017, Moody’s Investors Service upgraded Andeavor Logistics’ Corporate Family Rating to "Ba1" with a positive outlook from "Ba2".

DROP DOWN OF ANACORTES LOGISTICS ASSETS. Andeavor today announced Andeavor Logistics agreed to acquire logistics assets located in Anacortes, Washington from Andeavor for total consideration of $445 million. The Anacortes Logistics Assets are expected to provide annual net earnings of $30 to $35 million and annual EBITDA of $50 to $55 million. This represents a multiple of approximately 8.5 times annual EBITDA. In connection with the acquisition, Andeavor and Andeavor Logistics entered into long-term, fee-based agreements which are expected to provide stable cash flows to Andeavor Logistics. Andeavor Logistics paid $445 million, including $400 million of cash financed with borrowings on Andeavor Logistics revolving credit facilities and issuance of approximately $45 million in common units to Andeavor for the drop down. The equity consideration was based on the average daily closing price of Andeavor Logistics common units for the 10 trading days prior to closing, or $45.37 per unit in the form of 980,802 common units.

CONAN CRUDE OIL GATHERING PIPELINE SYSTEM. During the quarter, Andeavor announced that it received sufficient commitments from third party shippers to warrant construction of the Conan Crude Oil Gathering Pipeline system in the Delaware Basin. The Conan system will be approximately 130 miles in length and transport crude oil from origins in Lea County, New Mexico and Loving County, Texas to a terminal to be constructed in Loving County, Texas, where the gathering system interconnects with long-haul pipeline carriers. The first phase of the Conan system will provide capacity of approximately 250,000 barrels per day. Future phases of the system may expand capacity up to 500,000 barrels per day.

The system is under construction and is expected to begin commercial service in mid-2018. The estimated capital investment for the first phase of the gathering system is approximately $225 million of which $75 million is expected to be spent in 2017. This project is expected to be transferred to Andeavor Logistics at cost upon completion in 2018.

IMPROVEMENTS TO OPERATING INCOME. Andeavor continues to expect an Andeavor Index of $12 to $14 per barrel and Marketing segment fuel margins of 11 to 14 cents per gallon for 2017. The Company remains committed to delivering an estimated $475 to $575 million of improvements to operating income in 2017, which is comprised of $395 to $475 million from growth and productivity and $80 to $100 million from higher throughput and other operational improvements. These improvements consist of $45 to $70 million in Marketing, $125 to $150 million in Logistics and $305 to $355 million in Refining. All of these improvements exclude any expected synergies from the Western acquisition. Through third quarter 2017, the Company has delivered approximately 75% to 85% of the improvements.

PUBLIC INVITED TO LISTEN TO ANALYST AND INVESTOR CONFERENCE CALL

At 7:30 a.m. CT tomorrow morning, Andeavor will live broadcast its conference call with analysts regarding third quarter 2017 results and other business matters. Interested parties may listen to the conference call by logging on to http://www.andeavor.com.

2017 INVESTOR AND ANALYST DAY

Andeavor and Andeavor Logistics will host their 2017 Investor and Analyst Day at The St. Regis Hotel in New York City on December 5, 2017 at 9:00 a.m. ET. Because space is limited, reservations are required to attend and will be accepted on a first-come, first-serve basis. Interested parties can request an invitation by contacting the Investor Relations department via email at irelations@andeavor.com. The presentation will also be webcast live at http://www.andeavor.com and http://www.andeavorlogistics.com.

ABOUT ANDEAVOR

Andeavor is a premier, highly integrated marketing, logistics and refining company. Andeavor’s retail-marketing system includes more than 3,100 stores marketed under multiple well-known fuel brands, including ARCO(R), SUPERAMERICA(R), Shell(R), Exxon(R), Mobil(R), Tesoro(R), USA Gasoline(TM) and Giant(R). It also has ownership in Andeavor Logistics LP (ANDX) and its non-economic general partner. Andeavor operates 10 refineries with a combined capacity of approximately 1.2 million barrels per day in the mid-continent and western United States.

This earnings release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation statements concerning: our operational, financial and growth strategies, including continued growth, maintaining a strong, investment grade balance sheet, investing in high-return capital projects, pursuing strategic acquisitions, returning cash to our shareholders, and driving growth and improvements; our ability to successfully effect those strategies and the expected timing and results thereof; our financial and operational outlook, and ability to fulfill that outlook; our financial position, liquidity and capital resources; expectations regarding future stock repurchases; expectations regarding future economic and market conditions and their effects on us; delivery of synergies, including expected annual run-rate synergies from the Western acquisition and the sources thereof; the amount and timing of future dividends; statements regarding Andeavor Logistics’ acquisition of WNRL and the IDR Buy-in, and the expected benefits thereof, including projected annual net earnings and EBITDA; marketing acquisition projected annual net earnings and EBITDA; Andeavor Logistics’ annual distribution growth, distribution coverage ratio and debt-to-EBITDA targets; Andeavor Logistics’ expected annual investment in growth projects; the expected benefits to Andeavor Logistics of being investment grade; statements regarding the announced drop down of Anacortes logistics assets to Andeavor Logistics, including the expected benefits and timing thereof, and the expected annual net earnings and annual EBITDA provided thereby; statements regarding the Conan Crude Oil Gathering Pipeline system, including expected capacity, timing and capital investment; the planned transfer of the Conan System and the Los Angeles Pipeline Interconnect System to Andeavor Logistics; and our 2017 outlook, including expectations relating to the Andeavor Index, marketing segment fuel margins, annual improvements to operating income and the drivers thereof, including expectations with respect to each segment, 2017 total capital expenditures and the allocation thereof, including turnaround expenditures, and fourth quarter 2017 guidance. For more information concerning factors that could affect these statements, see our annual report on Form 10-K, quarterly reports on Form 10-Q, and other public filings and press releases, available at www.andeavor.com. We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Contact:

Investors:

Brian Randecker, Investor Relations, (210) 626-4757

Media:

Andeavor Media Relations, media@andeavor.com, (210) 626-7702

(b) As a performance benchmark, we utilize crack spreads and the Andeavor Index to measure the difference between market prices for crude oil and refined products. Crack spreads are a commonly used proxy within the industry to estimate or identify trends in refining margins, while the Andeavor Index is more specifically designed around Andeavor’s assets. Crack spreads and the Andeavor Index can fluctuate significantly over time as a result of market conditions and supply and demand balances. For example, The West Coast 321 crack spread is calculated using three barrels of Alaska North Slope crude oil (ANS) producing two barrels of Los Angeles CARB gasoline and one barrel of Los Angeles CARB diesel. In comparison the Andeavor Index uses several crude oils and products to provide a potentially closer representation of the available margin. Our actual refining margins differ from these crack spreads and the Andeavor Index based on the actual slate of crude oil we run at our refineries and the products we produce or yield.

ANDEAVOR

FOURTH QUARTER 2017 GUIDANCE (Unaudited)

Throughput (Mbpd)
California
520 - 545
Pacific Northwest
165 - 175
Mid-Continent
385 - 405
Consolidated
1,070 - 1,125
Manufacturing Cost ($/throughput barrel)
California
$ 5.90 - 6.15
Pacific Northwest
$ 4.60 - 4.85
Mid-Continent
$ 4.35 - 4.60
Consolidated
$ 5.15 - 5.40
Corporate/System ($ millions)
Refining depreciation and amortization
$ 175 - 180
Logistics depreciation and amortization
$ 80 - 85
Marketing depreciation and amortization
$ 15 - 20
Corporate and other depreciation and amortization
$ 5 - 10
Corporate expense (before depreciation and integration costs) $ 155 - 165
Interest expense (before interest income)
$ 100 - 105
Noncontrolling Interest
$ 55 - 65

NON-GAAP MEASURES

Our management uses certain "non-GAAP" performance measures to analyze operating segment performance and "non-GAAP" financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:

EBITDA-U.S. GAAP-based net earnings before interest, income taxes, and depreciation and amortization expenses;

- Segment EBITDA-a segment’s U.S. GAAP operating income before depreciation and amortization expenses plus equity in earnings (loss) of equity method investments and other income (expense), net;

Fuel margin-the difference between total marketing revenues and marketing cost of fuels and other;

Fuel margin per gallon-fuel margin divided by our total fuel sales volumes in gallons;

Merchandise margin-the difference between merchandise sales and purchases of merchandise;

-- Merchandise margin percentage-merchandise margin divided by merchandise sales;

- Average margin on NGL sales per barrel-the difference between the NGL sales revenues and the amounts recognized as NGL expenses divided by our NGL sales volumes in barrels presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period, (92 days for both the three months ended September 30, 2017 and 2016, 273 days for the nine months ended September 30, 2017 and 274 days for the nine months ended September 30, 2016);

- Average wholesale fuel sales margin per gallon-the difference between total wholesale fuel revenues and wholesale’s cost of fuel divided by our total wholesale fuel sales volumes in gallons;

- Refining margin-the difference between total refining revenues minus total cost of materials and other;

- Refining margin per throughput barrel-refining margin divided by our total refining throughput in barrels multiplied by 1,000 and multiplied by the number of days in the period as stated above;

- Manufacturing costs (excluding depreciation and amortization) per throughput barrel-manufacturing costs divided by our total refining throughput in barrels multiplied by 1,000 and multiplied by the number of days in the period as stated above (representing direct operating expenses incurred by our Refining segment for the production of refined products); and

- Total debt excluding Andeavor Logistics and WNRL-our consolidated Andeavor debt less all debt owed by Andeavor Logistics and WNRL (both net of unamortized debt issuance costs).

We present these measures because we believe they may help investors, analysts, lenders and ratings agencies analyze our results of operations and liquidity in conjunction with our U.S. GAAP results, including but not limited to:

- our operating performance as compared to other publicly traded companies in the refining, logistics and marketing industries, without regard to historical cost basis or financing methods;

- our ability to incur and service debt and fund capital expenditures; and

- the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Management also uses these measures to assess internal performance. Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. See "Non-GAAP Reconciliations" below for reconciliations between non-GAAP measures and their most directly comparable U.S. GAAP measures.

ITEMS IMPACTING COMPARABILITY

On June 1, 2017, we closed the Western acquisition. Our results include the operations from Western for the period of June 1, 2017 to September 30, 2017 and thus prior periods may not be comparable. With the Western acquisition, we have updated our segments to reflect the results and operations of Western and WNRL. Our Marketing segment reflects our expanded marketing business that, combined with Western, now consists of expanded wholesale marketing operations and approximately 3,100 retail stores marketed under multiple well-known fuel brands including ARCO(R), SUPERAMERICA(R), Shell(R), Exxon(R), Mobil(R), Conoco(R), Tesoro(R), USA GasolineTM and Giant(R). Our renamed Logistics segment includes the combined results of Andeavor Logistics and WNRL. We now report the Logistics segment’s results for the combined Gathering and Processing, Terminalling and Transportation and Wholesale business lines. Our Refining segment reports the results of our refining system that now consists of ten refineries in the mid-continent and western United States with a combined capacity of approximately 1.2 million barrels per day. The Refining segment includes the results from Andeavor’s existing Refining segment and Western’s Refining segment, excluding third-party wholesale marketing operations that are now reported in our Marketing segment.

The Logistics segment’s financial and operational data presented include the historical results of all assets acquired from Andeavor prior to the acquisition dates. The acquisitions from Andeavor were transfers between entities under common control. Accordingly, the financial information contained herein has been retrospectively adjusted to include the historical results of the assets acquired from Andeavor prior to the effective date of each acquisition for all periods presented and do not include revenue for transactions with Andeavor. The Logistics segment’s financial data is derived from the combined financial results of the Logistics segment’s predecessor (the "Predecessor"). We refer to the Predecessor and, prior to each acquisition date, the acquisitions from Andeavor collectively, as "Predecessors."

ANDEAVOR

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions)

September 30, 2017
December 31, 2016
ASSETS
Current Assets
Cash and cash equivalents (Logistics: $38 and $688, respectively)
$
528
$
3,295
Receivables, net of allowance for doubtful accounts
1,649
1,108
Inventories
3,791
2,640
Prepayments and other current assets
577
371
Total Current Assets
6,545
7,414
Property, Plant and Equipment, Net (Logistics: $4,422 and $3,444, respectively)
14,410
9,976
Other Noncurrent Assets, Net (Logistics: $1,560 and $1,478, respectively)
6,931
3,008
Total Assets
$
27,886
$
20,398
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
$
2,830
$
2,032
Current maturities of debt
28
465
Other current liabilities
1,593
1,057
Total Current Liabilities
4,451
3,554
Deferred Income Taxes
2,200
1,428
Debt, Net of Unamortized Issuance Costs (Logistics: $4,079 and $4,053, respectively) 7,633
6,468
Other Noncurrent Liabilities
992
821
Total Equity
12,610
8,127
Total Liabilities and Equity
$
27,886
$
20,398

ANDEAVOR

RESULTS OF CONSOLIDATED OPERATIONS (Unaudited) (In millions, except per share amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Revenues
$
9,836
$
6,544
$
24,323
$
17,930
Costs and Expenses:
Cost of materials and other (excluding items shown separately below)
7,750
5,236
19,393
14,125
Lower of cost or market inventory valuation adjustment
(209
)
(20
)
-
(236
)
Operating expenses (excluding depreciation and amortization)
899
648
2,292
1,861
Depreciation and amortization expenses
273
211
739
633
General and administrative expenses
168
107
552
283
(Gain) loss on asset disposals and impairments
1
2
(20
)
7
Operating Income
954
360
1,367
1,257
Interest and financing costs, net
(97
)
(70
)
(273
)
(190
)
Equity in earnings of equity method investments
11
7
14
12
Other income (expense), net
(1
)
-
10
32
Earnings Before Income Taxes
867
297
1,118
1,111
Income tax expense
274
95
351
362
Net Earnings From Continuing Operations
593
202
767
749
Earnings (loss) from discontinued operations, net of tax
8
(1
)
8
10
Net Earnings
601
201
775
759
Less: Net earnings from continuing operations attributable to noncontrolling interest 42
32
126
103
Net Earnings Attributable to Andeavor
$
559
$
169
$
649
$
656
Net Earnings (Loss) Attributable to Andeavor
Continuing operations
$
551
$
170
$
641
$
646
Discontinued operations
8
(1
)
8
10
Total
$
559
$
169
$
649
$
656
Net Earnings (Loss) per Share - Basic
Continuing operations
$
3.52
$
1.44
$
4.75
$
5.43
Discontinued operations
0.05
(0.01
)
0.06
0.08
Total
$
3.57
$
1.43
$
4.81
$
5.51
Weighted average common shares outstanding - Basic
156.6
118.2
135.0
119.1
Net Earnings (Loss) per Share - Diluted
Continuing operations
$
3.49
$
1.43
$
4.71
$
5.37
Discontinued operations
0.05
(0.01
)
0.06
0.08
Total
$
3.54
$
1.42
$
4.77
$
5.45
Weighted average common shares outstanding - Diluted
157.8
119.3
136.1
120.4

ANDEAVOR

SELECTED SEGMENT OPERATING DATA (Unaudited) (In millions)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Earnings Before Income Taxes
Marketing
$
175
$
273
$
544
$
661
Logistics
164
127
481
364
Refining
762
58
841
492
Total Segment Operating Income
1,101
458
1,866
1,517
Corporate and unallocated costs
(158
)
(98
)
(508
)
(260
)
Intersegment eliminations
11
-
9
-
Operating Income
954
360
1,367
1,257
Interest and financing costs, net
(97
)
(70
)
(273
)
(190
)
Equity in earnings of equity method investments 11
7
14
12
Other income (expense), net
(1
)
-
10
32
Earnings Before Income Taxes
$
867
$
297
$
1,118
$
1,111
Depreciation and Amortization Expenses
Marketing
$
18
$
12
$
45
$
36
Logistics
83
47
209
139
Refining
173
146
474
440
Corporate
6
6
20
18
Intersegment eliminations
(7
)
-
(9
)
-
Total Depreciation and Amortization Expenses
$
273
$
211
$
739
$
633
Segment EBITDA
Marketing
$
193
$
285
$
589
$
697
Logistics
252
177
700
519
Refining
940
208
1,327
959
Total Segment EBITDA
$
1,385
$
670
$
2,616
$
2,174
Capital Expenditures
Marketing
$
18
$
3
$
31
$
22
Logistics
59
61
153
181
Refining
264
134
550
353
Corporate
57
29
157
68
Total Capital Expenditures
$
398
$
227
$
891
$
624
Turnaround Expenditures and Branding Costs
Turnarounds and catalysts
$
98
$
42
$
405
$
233
Marketing branding
20
15
57
55
Total Turnaround Expenditures and Branding
$
118
$
57
$
462
$
288
Costs

ANDEAVOR

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP (Unaudited) (In millions)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Reconciliation of Net Earnings to EBITDA
Net Earnings
$
601
$
201
$
775
$
759
Depreciation and amortization expenses
273
211
739
633
Interest and financing costs, net
97
70
273
190
Income tax expense
274
95
351
362
EBITDA
$
1,245
$
577
$
2,138
$
1,944
Reconciliation of Marketing Operating Income to Marketing Segment EBITDA
Marketing Segment Operating Income
$
175
$
273
$
544
$
661
Depreciation and amortization expenses
18
12
45
36
Segment EBITDA
$
193
$
285
$
589
$
697
Reconciliation of Logistics Operating Income to Logistics Segment EBITDA
Logistics Segment Operating Income
$
164
$
127
$
481
$
364
Depreciation and amortization expenses
83
47
209
139
Equity in earnings of equity method investments
2
3
7
10
Other income, net
3
-
3
6
Segment EBITDA
$
252
$
177
$
700
$
519
Reconciliation of Refining Operating Income to Refining Segment EBITDA
Refining Segment Operating Income
$
762
$
58
$
841
$
492
Depreciation and amortization expenses
173
146
474
440
Equity in earnings of equity method investments
9
4
7
2
Other income (expense), net
(4
)
-
5
25
Segment EBITDA
$
940
$
208
$
1,327
$
959

ANDEAVOR

OTHER SUMMARY FINANCIAL INFORMATION (Unaudited) (In millions)

Western Refining Acquisition - Summary of Integration, Acquisition and Deal-Related Costs (Consolidated)
Three Months Ended
Cumulative Total
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
General and administrative expenses $
32
$
124
$
16
$
3
$
175
Interest and financing costs, net
-
11
17
21
49
Total before income taxes
$
32
$
135
$
33
$
24
$
224
Components of Our Cash Flows
Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Cash Flows From (Used in):
Operating activities
$
431
$
573
$
1,201
$
1,201
Investing activities
(525
)
(214
)
(1,973
)
(1,020
)
Financing activities
(439
)
(93
)
(1,995
)
264
Increase (Decrease) in Cash and Cash Equivalents $
(533
)
$
266
$
(2,767 )
$
445
Other Financial Information
September 30,
December 31,
2017
2016
Total market value of Andeavor Logistics units held by Andeavor (a) $
1,705
$
1,730
Total market value of WNRL units held by Andeavor (b)
$
826
$
-
Cash Distributions Received From Andeavor Logistics and WNRL (c):
Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
For common units held
$
48
$
27
$
111
$
79
For general partner units held
46
38
131
95
Total Cash Distributions Received from Andeavor Logistics and WNRL $
94
$
65
$
242
$
174

(a) Represents market value of the 34,055,042 common units held by Andeavor at both September 30, 2017, and December 31, 2016, respectively. The market values were $50.06 and $50.81 per unit based on the closing unit price at September 30, 2017 and December 31, 2016, respectively.

(b) Represents market value of the 32,018,847 common units held by Andeavor at September 30, 2017. The market values were $25.80 per unit based on the closing unit price at September 30, 2017.

(c) Represents distributions received from Andeavor Logistics and WNRL during the three and nine months ended September 30, 2017 and 2016 on common units and general partner units held by Andeavor.

ANDEAVOR

SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($ in millions, except cents per gallon)

Three Months Ended September 30,
Nine Months Ended September 30,
MARKETING SEGMENT
2017
2016
2017
2016
Revenues
$
5,864
$
4,141
$
14,772
$
11,558
Expenses
Cost of fuels and other (excluding items shown separately below)
5,503
3,778
13,834
10,625
Operating expenses (excluding depreciation and amortization)
164
73
334
221
Depreciation and amortization expenses
18
12
45
36
Selling, general and administrative expenses
4
5
14
12
Loss on asset disposals
-
-
1
3
Segment Operating Income
$
175
$
273
$
544
$
661
Fuel Sales (millions of gallons)
Retail
500
304
1,131
887
Branded
884
872
2,558
2,527
Total Retail and Branded
1,384
1,176
3,689
3,414
Unbranded
1,399
1,135
3,575
3,284
Total Fuel Sales
2,783
2,311
7,264
6,698
Fuel Margin (d)(e)
Retail and Branded
$
267
$
298
$
738
$
838
Unbranded
13
46
62
42
Total Fuel Margin
$
280
$
344
$
800
$
880
Merchandise Margin (e)
$
54
$
3
$
77
$
7
Fuel Margin (?/gallon) (d)(e)
Retail and Branded Fuel Margin
19.3
?
25.3
?
20.0
?
24.6
?
Unbranded Fuel Margin
0.9
?
4.1
?
1.7
?
1.3
?
Total Fuel Margin
10.0
?
14.9
?
11.0
?
13.2
?
Merchandise Margin % (e)
27.6
%
35.1
%
28.0
%
35.4
%
Number of Branded Stores (at the end of the period)
September 30, 2017
September 30, 2016
Company operated
479
-
MSO-operated
611
590
Total Retail Stores
1,090
590
Jobber/Dealer operated
2,034
1,877
Total Retail and Branded Stores
3,124
2,467

(d) Management uses fuel margin and fuel margin per gallon to compare fuel results and merchandise margin percentage to compare retail results to other companies in the industry. There are a variety of ways to calculate fuel margin, fuel margin per gallon and merchandise margin percentage and different companies may calculate these measures in different ways. Refer to "Non-GAAP Measures" for details on how these metrics are calculated. Fuel margin and fuel margin per gallon include the effect of intersegment purchases from the Refining segment.

(e) See "Non-GAAP Measures" and "Non-GAAP Reconciliations" for further information regarding these non-GAAP measures.

ANDEAVOR

SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($ in millions, except per barrel amounts)

LOGISTICS SEGMENT
Three Months Ended September 30,
Nine Months Ended September 30,
Segment Operating Income
2017
2016
2017
2016
Revenues
Terminalling and transportation
Terminalling
$
188
$
125
$
492
$
345
Pipeline transportation
34
32
97
93
Gathering and Processing
NGL sales (g)
90
24
254
78
Gas gathering and processing
85
67
252
198
Crude oil and water gathering
67
33
147
100
Pass-thru and other revenue
37
27
111
87
Wholesale
Fuel sales
565
-
730
-
Other wholesale
18
-
28
-
Logistics Revenues (f)
1,084
308
2,111
901
Expenses
Terminalling and Transportation
Operating expenses (excluding depreciation and amortization) (i) 65
48
174
143
Gathering and Processing
NGL expense (excluding items shown separately below) (g)(h)
64
1
179
2
Operating expenses (excluding depreciation and amortization) (i) 100
58
259
179
Wholesale
Cost of fuel (excluding items shown separately below)
554
-
716
-
Operating expenses (excluding depreciation and amortization) (i) 19
-
29
-
Depreciation and amortization expenses
83
47
209
139
General and administrative expenses (j)
34
25
89
71
Gain (loss) on asset disposals and impairments
1
2
(25
)
3
Segment Operating Income
$
164
$
127
$
481
$
364
Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Terminalling and Transportation
Terminalling throughput (Mbpd)
1,718
1,038
1,346
1,013
Average terminalling revenue per barrel (k)
$
1.19
$
1.31
$
1.34
$
1.25
Pipeline transportation throughput (Mbpd)
907
908
887
866
Average pipeline transportation revenue per barrel (k)
$
0.40
$
0.38
$
0.40
$
0.39
Gathering and Processing
NGL sales (Mbpd) (l)
7.0
6.8
7.3
7.7
Average margin on NGL sales per barrel (e)(g)(h)(k)
$
38.30
$
38.71
$
38.27
$
36.48
Gas gathering and processing throughput (thousands of MMBtu/d)
961
885
955
881
Average gas gathering and processing revenue per MMBtu (k)
$
0.96
$
0.82
$
0.97
$
0.82
Crude oil and water gathering volume (Mbpd)
333
206
285
210
Average crude oil and water gathering revenue per barrel (k)
$
2.19
$
1.71
$
1.89
$
1.73
Wholesale
Fuel sales (millions of gallons)
320
-
421
-
Average wholesale fuel sales margin per gallon (e)(k)
$
0.03
$
-
$
0.03
$
-

(f) Included in our Refining segment’s cost of materials and other were Logistics segment revenues for services provided to our Refining segment of $461 million and $184 million for the three months ended September 30, 2017 and 2016, respectively, and $935 million and $521 million for the nine months ended September 30, 2017 and 2016, respectively. These amounts are eliminated upon consolidation.

(g) For the three months ended September 30, 2017, our Logistics segment had 21.1 Mbpd of gross natural gas liquids ("NGL") sales under percent of proceeds ("POP") and keep-whole arrangements. Our Logistics segment retained 7.0 Mbpd under these arrangements. For the nine months ended September 30, 2017, Logistics had 21.0 Mbpd of NGL sales under POP and keep-whole arrangements. Our Logistics segment retained 7.3 Mbpd under these arrangements.The difference between gross sales barrels and barrels retained is reflected in NGL expense resulting from the gross presentation required for the POP arrangements associated with the North Dakota Gathering and Processing Assets.

(h) Included in NGL expense for the nine months ended September 30, 2017 were approximately $2 million of cost of sales related to crude oil volumes obtained in connection with the North Dakota Gathering and Processing Assets acquisition. The corresponding revenues were recognized in pass-thru and other revenue. As such, the calculation of the average margin on NGL sales per barrel for the nine months ended September 30, 2017 excludes this amount.

(i) Our Logistics segment operating expenses include amounts billed by Andeavor for services provided to our Logistics segment under various operational contracts. Amounts billed by Andeavor totaled $49 million and $38 million for the three months ended September 30, 2017 and 2016, respectively, and $132 million and $107 million for the nine months ended September 30, 2017 and 2016, respectively. The net amounts billed include reimbursements of $7 million and $3 million for the three months ended September 30, 2017 and 2016, and $12 million for both the nine months ended September 30, 2017 and 2016. These amounts are eliminated upon consolidation. Logistics segment third-party operating expenses related to the transportation of crude oil and refined products related to Andeavor’s sale of those refined products during the ordinary course of business are reclassified to cost of materials and other upon consolidation.

(j) Our Logistics segment general and administrative expenses include amounts charged by Andeavor for general and administrative services provided to our Logistics segment under various operational and administrative contracts. These amounts totaled $23 million and $19 million for the three months ended September 30, 2017 and 2016, respectively, and $62 million and $52 million for the nine months ended September 30, 2017 and 2016, respectively, and are eliminated upon consolidation. General and administrative expenses are reclassified to cost of materials and other as it relates to Andeavor’s sale of refined products in our statements of consolidated operations upon consolidation.

(k) Our Logistics segment uses average margin per barrel, average revenue per MMBtu, average margin per gallon and average revenue per barrel to evaluate performance and compare profitability to other companies in the industry.

Average terminalling revenue per barrel-calculated as total terminalling revenue divided by total terminalling throughput;

Average pipeline transportation revenue per barrel-calculated as total pipeline transportation revenue divided by total pipeline transportation throughput;

Average margin on NGL sales per barrel-calculated as the difference between the NGL sales revenues and the amounts recognized as NGL expense divided by our NGL sales volumes;

Average gas gathering and processing revenue per Million British thermal units ("MMBtu")-calculated as total gathering and processing fee-based revenue divided by total gas gathering throughput;

Average crude oil and water gathering revenue per barrel-calculated as total crude oil and water gathering fee-based revenue divided by total crude oil and water gathering throughput; and

Average wholesale fuel sales margin per gallon-calculated as the difference between the fuel sales and the costs associated with the fuel sales divided by total fuel sales volumes.

There are a variety of ways to calculate these measures; other companies may calculate these in a different way.

(l) Volumes represent barrels sold under Logistics’ keep-whole arrangements, net barrels retained under its percent of proceeds ("POP") arrangements and other associated products.

ANDEAVOR

SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($ in millions, except per barrel amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
REFINING SEGMENT
2017
2016
2017
2016
Revenues
Refined products (m)
$
8,551
$
5,641
$
21,021
$
15,434
Crude oil resales and other
457
257
1,092
710
Refining Revenues
9,008
5,898
22,113
16,144
Refining Cost of Materials and Expense
Cost of materials and other (excluding items shown separately below) (f)
7,633
5,189
19,060
13,965
Lower of cost or market adjustments
(209
)
(20
)
-
(236
)
Operating expenses (excluding depreciation and amortization):
Manufacturing costs (n)
529
412
1,410
1,172
Other operating expenses
118
113
317
307
Total operating expenses
647
525
1,727
1,479
Depreciation and amortization expenses
173
146
474
440
General and administrative expenses
2
-
7
4
Loss on asset disposals
-
-
4
-
Segment Operating Income
$
762
$
58
$
841
$
492
Refining margin (e)(o)
$
1,584
$
729
$
3,053
$
2,415
Refining margin ($/throughput barrel) (e)(o)
$
15.09
$
9.08
$
11.72
$
10.75
Manufacturing costs (excluding depreciation and amortization) per throughput barrel (e)(n)(o) $
5.03
$
5.11
$
5.41
$
5.22
Total Refining Segment
Throughput (Mbpd)
Heavy crude
194
186
270
176
Light crude
879
636
612
595
Other feedstocks
68
52
72
48
Total Throughput
1,141
874
954
819
Yield (Mbpd)
Gasoline and gasoline blendstocks
573
455
576
449
Diesel fuel
287
202
269
183
Jet fuel
142
133
138
117
Other
144
143
126
126
Total Yield
1,146
933
1,109
875
Refined Product Sales (Mbpd) (p)
Gasoline and gasoline blendstocks
741
531
608
527
Diesel fuel
287
215
233
204
Jet fuel
163
158
153
145
Other
133
112
131
105
Total Refined Product Sales
1,324
1,016
1,125
981

(m) Refined product sales include intersegment sales to our Marketing segment of $4.2 billion and $3.6 billion for the three months ended September 30, 2017 and 2016, respectively, and $11.9 billion and $10.2 billion for the nine months ended September 30, 2017 and 2016, respectively.

(n) Manufacturing costs represent direct operating expenses incurred by our Refining segment for the production of refined products.

(o) Management uses various measures to evaluate performance and efficiency and to compare profitability to other companies in the industry, including refining margin, refining margin per barrel of throughput and manufacturing costs before depreciation and amortization expenses ("Manufacturing Costs") per throughput barrel. Refer to "Non-GAAP Measures" for details on how these metrics are calculated.

(p) Sources of total refined product sales include refined products manufactured at our refineries and refined products purchased from third parties. Total refined product sales include sales of manufactured and purchased refined products. Refined product sales include all sales through our Marketing segment as well as in bulk markets and exports through our Refining segment.

ANDEAVOR

SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($ in millions, except per barrel amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
Refining By Region
2017
2016
2017
2016
California (Martinez and Los Angeles)
Revenues
Refined products (m)
$
4,128
$
3,680
$
12,100
$
10,358
Crude oil resales and other
75
55
296
157
Regional Revenue
4,203
3,735
12,396
10,515
Refining Cost of Materials and Expenses
Cost of materials and other (excluding items shown separately below)
3,660
3,292
10,760
9,076
LCM
(98
)
(10
)
-
(154
)
Operating expenses (excluding depreciation and amortization):
Manufacturing costs (n)
285
285
871
823
Other operating expenses
66
55
181
141
Total operating expenses
351
340
1,052
964
Depreciation and amortization expenses
98
92
285
280
General and administrative expenses
1
(1
)
5
3
Loss on asset disposals
-
-
4
-
Operating Income
$
191
$
22
$
290
$
346
Refining margin (e)(o)
$
641
$
453
$
1,636
$
1,593
Refining margin per throughput barrel (e)(o)
$
13.37
$
9.24
$
11.59
$
11.54
Manufacturing costs (excluding depreciation and amortization) per throughput barrel (e)(n)(o) $
5.95
$
5.79
$
6.17
$
5.97
Capital Expenditures
$
117
$
72
$
258
$
188
Throughput (Mbpd)
Heavy crude
158
177
159
170
Light crude
322
321
319
301
Other feedstocks
41
35
39
33
Total Throughput
521
533
517
504
Yield (Mbpd)
Gasoline and gasoline blendstocks
260
297
277
293
Diesel fuel
118
120
114
107
Jet fuel
73
79
72
71
Other
79
86
65
78
Total Yield
530
582
528
549

ANDEAVOR

SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($ in millions, except per barrel amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Pacific Northwest (Washington and Alaska)
Revenues
Refined products (m)
$
1,306
$
1,146
$
3,572
$
2,934
Crude oil resales and other
52
89
170
175
Regional Revenue
1,358
1,235
3,742
3,109
Refining Cost of Materials and Expenses
Cost of materials and other (excluding items shown separately below)
1,122
1,117
3,259
2,778
LCM
(46
)
(8
)
-
(60
)
Operating expenses (excluding depreciation and amortization):
Manufacturing costs (n)
65
69
205
190
Other operating expenses
21
15
59
43
Total operating expenses
86
84
264
233
Depreciation and amortization expenses
26
25
80
69
General and administrative expenses
-
1
-
1
Operating Income
$
170
$
16
$
139
$
88
Refining margin (e)(o)
$
282
$
126
$
483
$
391
Refining margin per throughput barrel (e)(o)
$
15.03
$
7.17
$
9.46
$
8.02
Manufacturing costs (excluding depreciation and amortization) per throughput barrel (e)(n)(o) $
3.46
$
3.87
$
4.02
$
3.87
Capital Expenditures
$
38
$
29
$
103
$
96
Throughput (Mbpd)
Heavy crude
9
9
8
6
Light crude
180
171
163
161
Other feedstocks
15
11
16
11
Total Throughput
204
191
187
178
Yield (Mbpd)
Gasoline and gasoline blendstocks
88
79
81
79
Diesel fuel
39
37
34
34
Jet fuel
41
40
39
34
Other
33
42
30
36
Total Yield
201
198
184
183

ANDEAVOR

SEGMENT OPERATING DATA AND RESULTS (Unaudited) ($ in millions, except per barrel amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Mid-Continent (North Dakota, Utah, New Mexico, Texas, and Minnesota)
Revenues
Refined products (m)
$
3,117
$
815
$
5,349
$
2,142
Crude oil resales and other
330
113
626
378
Regional Revenue
3,447
928
5,975
2,520
Refining Cost of Materials and Expenses
Cost of materials and other (excluding items shown separately below)
2,851
780
5,041
2,111
LCM
(65
)
(2
)
-
(22
)
Operating expenses (excluding depreciation and amortization):
Manufacturing costs (n)
179
58
334
159
Other operating expenses
31
43
77
123
Total operating expenses
210
101
411
282
Depreciation and amortization expenses
49
29
109
91
General and administrative expenses
1
-
2
-
Operating Income
$
401
$
20
$
412
$
58
Refining margin (e)(o)
$
661
$
150
$
934
$
431
Refining margin per throughput barrel (e)(o)
$
17.27
$
10.94
$
13.68
$
11.40
Manufacturing costs (excluding depreciation and amortization) per throughput barrel (e)(n)(o) $
4.68
$
4.27
$
4.89
$
4.21
Capital Expenditures
$
109
$
33
$
189
$
69
Throughput (Mbpd)
Heavy Crude
27
-
103
-
Light crude
377
144
130
133
Other feedstocks
12
5
17
5
Total Throughput
416
149
250
138
Yield (Mbpd)
Gasoline and gasoline blendstocks
225
79
218
77
Diesel fuel
130
45
121
42
Jet fuel
28
14
27
12
Other
32
15
31
12
Total Yield
415
153
397
143

NON-GAAP RECONCILIATIONS

FUEL MARGIN AND MERCHANDISE MARGIN CALCULATION (dollars in millions, except cents per gallon and percents)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Segment Operating Income
$
175
$
273
$
544
$
661
Add back:
Operating expenses
164
73
334
221
Depreciation and amortization expenses
18
12
45
36
General and administrative expenses
4
5
14
12
Loss on asset disposals
-
-
1
3
Marketing Margin
$
361
$
363
$
938
$
933
Revenues
Retail and Branded fuel sales
$
3,074
$
2,315
$
8,074
$
6,637
Unbranded fuel sales
2,561
1,803
6,356
4,856
Total fuel sales
5,635
4,118
14,430
11,493
Merchandise
197
7
274
19
Other sales
32
16
68
46
Total Revenues
5,864
4,141
14,772
11,558
Cost of Fuel and Other (excluding depreciation and amortization)
Retail and Branded fuel costs
2,807
2,017
7,336
5,799
Unbranded fuel costs
2,548
1,757
6,294
4,814
Total fuel costs
5,355
3,774
13,630
10,613
Purchases of merchandise
143
4
197
12
Other costs
5
-
7
-
Total Cost of Fuel and Other
5,503
3,778
13,834
10,625
Marketing Margin
Retail and Branded fuel margin
267
298
738
838
Unbranded fuel margin
13
46
62
42
Total fuel margin
280
344
800
880
Merchandise margin
54
3
77
7
Other margin
27
16
61
46
Marketing Margin
$
361
$
363
$
938
$
933
Merchandise Margin Percentage (q)
27.6
%
35.1
%
28.0
%
35.4
%
Fuel Sales (millions of gallons)
Retail and Branded fuel sales
1,384
1,176
3,689
3,414
Unbranded fuel sales
1,399
1,135
3,575
3,284
Total Fuel Sales
2,783
2,311
7,264
6,698
Retail and Branded Fuel Margin (?/gallon) (q)
19.3
?
25.3
?
20.0
?
24.6
?
Unbranded Fuel Margin (?/gallon) (q)
0.9
?
4.1
?
1.7
?
1.3
?
Total Fuel Margin (?/gallon) (q)
10.0
?
14.9
?
11.0
?
13.2
?

(q) Amounts may not recalculate due to rounding of dollar and volume information.

AVERAGE MARGIN ON NGL SALES PER BARREL CALCULATION (in millions, except per barrel amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Segment Operating Income
$
164
$
127
$
481
$
364
Add back:
Cost of fuel and other
554
-
716
-
Operating expenses
184
106
462
322
Depreciation and amortization expenses
83
47
209
139
General and administrative expenses
34
25
89
71
(Gain) loss on asset disposals and impairments
1
2
(25
)
3
Other commodity purchases
-
-
2
-
Subtract:
Terminalling revenues
(188
)
(125
)
(492
)
(345
)
Pipeline transportation revenues
(34
)
(32
)
(97
)
(93
)
Gas gathering and processing revenues
(85
)
(67
)
(252
)
(198
)
Crude oil gathering revenues
(67
)
(33
)
(147
)
(100
)
Pass-thru and other revenues
(37
)
(27
)
(111
)
(87
)
Fuel sales
(565
)
-
(730
)
-
Other wholesale revenues
(18
)
-
(28
)
-
Margin on NGL sales
$
26
$
23
$
77
$
76
Divided by Total Volumes for the Period:
NGLs sales volumes (Mbpd)
7.0
6.8
7.3
7.7
Number of days in the period
92
92
273
274
Total volumes for the period (thousands of barrels) 648.5
630.1
1,979.8
2,109.0
(q)
Average Margin on NGL Sales per Barrel (q)
$
38.30
$
38.71
$
38.27
$
36.48

AVERAGE WHOLESALE FUEL SALES MARGIN PER GALLON CALCULATION (in millions, except per gallon amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Segment Operating Income
$
164
$
127
$
481
$
364
Add back:
NGL expense
64
1
179
2
Operating expenses
184
106
462
322
Depreciation and amortization expenses
83
47
209
139
General and administrative expenses
34
25
89
71
(Gain) Loss on asset disposals and impairments
1
2
(25
)
3
Subtract:
Terminalling revenues
(188
)
(125
)
(492
)
(345
)
Pipeline transportation revenues
(34
)
(32
)
(97
)
(93
)
NGL sales
(90
)
(24
)
(254
)
(78
)
Gas gathering and processing revenues
(85
)
(67
)
(252
)
(198
)
Crude oil gathering revenues
(67
)
(33
)
(147
)
(100
)
Pass-thru and other revenues
(37
)
(27
)
(111
)
(87
)
Other wholesale revenues
(18
)
-
(28
)
-
Wholesale Fuel Sales Margin
$
11
$
-
$
14
$
-
Divided by Total Volumes for the Period:
Fuel sales volumes (millions of gallons) (q)
320
-
421
-
Average Wholesale Fuel Sales Margin per Gallon (q) $
0.03
$
-
$
0.03
$
-

REFINING MARGIN PER THROUGHPUT BARREL CALCULATION (in millions, except per barrel amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Segment Operating Income
$
762
$
58
$
841
$
492
Add back:
Manufacturing costs (excluding depreciation and amortization)
529
412
1,410
1,172
Other operating expenses (excluding depreciation and amortization) 118
113
317
307
Depreciation and amortization expenses
173
146
474
440
General and administrative expenses
2
-
7
4
Loss on asset disposals and impairments
-
-
4
-
Refining Margin
$
1,584
$
729
$
3,053
$
2,415
Divided by Total Volumes:
Total refining throughput (Mbpd)
1,141
874
954
819
Number of days in the period
92
92
273
274
Total volumes for the period (millions of barrels) (q)
104.9
80.4
260.5
224.5
Refining Margin per Throughput Barrel (q)
$
15.09
$
9.08
$
11.72
$
10.75

REFINING MARGIN PER THROUGHPUT BARREL CALCULATION BY REGION (in millions, except per barrel amounts)

California
Pacific Northwest (Washington and Alaska)
Mid-Continent (North Dakota, Utah, Minnesota, New Mexico and Texas)
(Martinez and
Los Angeles)
Three Months Ended September 30,
2017
2016
2017
2016
2017
2016
Segment Operating Income
$
191
$
22
$
170
$
16
$
401
$
20
Add back:
Manufacturing costs (excluding depreciation and amortization)
285
285
65
69
179
58
Other operating expenses (excluding depreciation and amortization) 66
55
21
15
31
43
Depreciation and amortization expenses
98
92
26
25
49
29
General and administrative expenses
1
(1
)
-
1
1
-
Refining Margin
$
641
$
453
$
282
$
126
$
661
$
150
Divided by Total Volumes:
Total refining throughput (Mbpd)
521
533
204
191
416
149
Number of days in the period
92
92
92
92
92
92
Total volumes for the period (millions of barrels) (q)
47.9
49.1
18.7
17.6
38.3
13.7
Refining Margin per Throughput Barrel (q)
$
13.37
$
9.24
$
15.03
$
7.17
$
17.27
$
10.94

REFINING MARGIN PER THROUGHPUT BARREL CALCULATION BY REGION (in millions, except per barrel amounts)

California
Pacific Northwest (Washington and Alaska)
Mid-Continent (North Dakota, Utah, Minnesota, New Mexico and Texas)
(Martinez and
Los Angeles)
Nine Months Ended September 30,
2017
2016
2017
2016
2017
2016
Segment Operating Income
$
290
$
346
$
139
$
88
$
412
$
58
Add back:
Manufacturing costs (excluding depreciation and amortization)
871
823
205
190
334
159
Other operating expenses (excluding depreciation and amortization) 181
141
59
43
77
123
Depreciation and amortization expenses
285
280
80
69
109
91
General and administrative expenses
5
3
-
1
2
-
Loss on asset disposals and impairments
4
-
-
-
-
-
Refining Margin
$
1,636
$
1,593
$
483
$
391
$
934
$
431
Divided by Total Volumes:
Total refining throughput (Mbpd)
517
504
187
178
250
138
Number of days in the period
273
274
273
274
273
274
Total volumes for the period (millions of barrels) (q)
141.2
137.8
51.0
48.9
68.3
37.8
Refining Margin per Throughput Barrel (q)
$
11.59
$
11.54
$
9.46
$
8.02
$
13.68
$
11.40

MANUFACTURING COSTS (EXCLUDING DEPRECIATION AND AMORTIZATION) PER THROUGHPUT BARREL

CALCULATION (in millions, except per barrel amounts)

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Total Refining Segment operating expenses (excluding depreciation and amortization)
$
647
$
525
$
1,727
$
1,479
Subtract:
Other operating expenses (excluding depreciation and amortization)
(118
)
(113
)
(317
)
(307
)
Manufacturing Costs (excluding depreciation and amortization)
$
529
$
412
$
1,410
$
1,172
Divided by Total Volumes:
Total refining throughput (Mbpd)
1,141
874
954
819
Number of days in the period
92
92
273
274
Total volumes for the period (millions of barrels) (q)
104.9
80.4
260.5
224.5
Manufacturing Costs (excluding depreciation and amortization) per Throughput Barrel (q) $
5.03
$
5.11
$
5.41
$
5.22

MANUFACTURING COSTS (EXCLUDING DEPRECIATION AND AMORTIZATION) PER THROUGHPUT BARREL CALCULATION BY REGION (in millions, except per barrel amounts)

California
Pacific Northwest (Washington and Alaska)
Mid-Continent (North Dakota, Utah, Minnesota, New Mexico and Texas)
(Martinez and
Los Angeles)
Three Months Ended September 30,
2017
2016
2017
2016
2017
2016
Total operating expenses
$
351
$
340
$
86
$
84
$
210
$
101
Subtract:
Other operating expenses (excluding depreciation and amortization)
(66
)
(55
)
(21
)
(15
)
(31
)
(43
)
Manufacturing Costs (excluding depreciation and amortization)
$
285
$
285
$
65
$
69
$
179
$
58
Divided by Total Volumes:
Total refining throughput (Mbpd)
521
533
204
191
416
149
Number of days in the period
92
92
92
92
92
92
Total volumes for the period (millions of barrels) (q)
47.9
49.1
18.7
17.6
38.3
13.7
Manufacturing Costs (excluding depreciation and amortization) per Throughput Barrel (q) $
5.95
$
5.79
$
3.46
$
3.87
$
4.68
$
4.27

MANUFACTURING COSTS (EXCLUDING DEPRECIATION AND AMORTIZATION) PER THROUGHPUT BARREL

CALCULATION BY REGION (in millions, except per barrel amounts)

California
Pacific Northwest (Washington and Alaska)
Mid-Continent (North Dakota, Utah, Minnesota, New Mexico and Texas)
(Martinez and
Los Angeles)
Nine Months Ended September 30,
2017
2016
2017
2016
2017
2016
Total operating expenses
$
1,052
$
964
$
264
$
233
$
411
$
282
Subtract:
Other operating expenses (excluding depreciation and amortization)
(181
)
(141
)
(59
)
(43
)
(77
)
(123
)
Manufacturing Costs (excluding depreciation and amortization)
$
871
$
823
$
205
$
190
$
334
$
159
Divided by Total Volumes:
Total refining throughput (Mbpd)
517
504
187
178
250
138
Number of days in the period
273
274
273
274
273
274
Total volumes for the period (millions of barrels) (q)
141.2
137.8
51.0
48.9
68.3
37.8
Manufacturing Costs (excluding depreciation and amortization) per Throughput Barrel (q) $
6.17
$
5.97
$
4.02
$
3.87
$
4.89
$
4.21

TOTAL DEBT EXCLUDING ANDEAVOR LOGISTICS AND WNRL (in millions)

September 30,
December 31,
2017
2016
Total debt excluding Andeavor Logistics and WNRL:
Andeavor consolidated debt (r)
$
7,661
$
6,933
Andeavor Logistics debt (r)
3,766
4,054
WNRL debt (r)
345
-
Andeavor total debt excluding Andeavor Logistics and WNRL (r) $
3,550
$
2,879

(r) These amounts and calculations are shown net of unamortized issuance costs.

ANDEAVOR

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP (Unaudited) (in millions, except percentages)

Anacortes Logistics Assets
Projected Annual EBITDA
Reconciliation of Projected Net Earnings to Projected Annual EBITDA
Projected net earnings
$
30-35
Add: Depreciation and amortization expenses
5
Add: Interest and financing costs, net
15
Projected Annual EBITDA
$
50-55
MLP Merger and Buy-in
2018 Projected Annual EBITDA
Reconciliation of Projected Net Earnings to Projected Annual EBITDA
Projected net earnings
$
625-725
Add: Depreciation and amortization expenses
325
Add: Interest and financing costs, net
250
Projected Annual EBITDA
$
1,200-1,300
Marketing Acquisition
Projected Annual EBITDA
Reconciliation of Projected Net Earnings to Projected Annual EBITDA
Projected net earnings
$
10
Add: Depreciation and amortization expenses
10
Add: Interest and financing costs, net
5
Projected Annual EBITDA
$
25

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Andeavor via Globenewswire