Discontinued Operations

12 Months Ended

Dec. 31, 2011

Discontinued Operations

Note C – Discontinued Operations

In July 2010, the Company announced that it planned to exit the U.S. refining and U.K. refining and marketing businesses. On September 30, 2011, the Company sold the Superior, Wisconsin refinery and related assets for $214,000,000, plus certain capital expenditures between July 25 and the date of closing and the fair value of all associated hydrocarbon inventories at these locations. On October 1, 2011, the Company sold its Meraux, Louisiana refinery and related assets for $325,000,000, plus the fair value of associated hydrocarbon inventories. The Company began to account for the results of the Superior, Wisconsin and Meraux, Louisiana refineries and associated marketing assets as discontinued operations beginning in the third quarter 2011. All prior periods presented have been reclassified to conform to this presentation of the Superior and Meraux operating results as discontinued operations. The after-tax gain from disposal of the two refineries netted to $18,724,000, made up of a gain on the Superior refinery (including associated inventories) of $77,585,000 and a loss on the Meraux refinery (including associated inventories) of $58,861,000. The gain on disposal was based on refinery selling prices, plus the sales of all associated inventories at fair value, which was significantly above the last-in, first-out carrying value of the inventories sold. The net gain on sale of the refineries included an after-tax benefit of $179,152,000 from liquidation of inventories formerly carried mostly under the last-in, first-out cost method. The U.S. refineries sold were formerly reported in the U.S. manufacturing segment. The sale process for the U.K. refining and marketing assets continues.

The major assets and liabilities related to the Superior and Meraux refineries and associated marketing assets at the time of their sale are presented in the following table.

(Thousands of dollars)
Current assets:
Accounts receivable	$	1,191
Liquid inventories		115,014
Materials and supplies inventories		39,853
Total current assets – U.S. refineries		156,058
Noncurrent assets:
Property, plant and equipment, net of accumulated depreciation, depletion and amortization		723,980
Other		48,604
Total noncurrent assets – U.S. refineries		772,584
Total assets – U.S. refineries	$	928,642
Liabilities:
Current liabilities	$	2,637
Other noncurrent liabilities		14,133
Liabilities associated with assets sold – U.S. refineries	$	16,770

On March 12, 2009, the Company sold its operations in Ecuador for net cash proceeds of $78,900,000. The acquirer also assumed certain tax and other liabilities associated with the Ecuador properties sold. The Ecuador properties sold included 20% interests in producing Block 16 and the nearby Tivacuno area. The Company recorded a gain of $103,596,000, net of income taxes of $13,961,000, from the sale of the Ecuador properties in 2009. Ecuador operating results prior to the sale, and the resulting gain on disposal, have been reported as discontinued operations. The major assets and liabilities associated with the Ecuador properties at the time of the sale are presented in the following table.

(Thousands of dollars)
Current assets	$	4,214
Property, plant and equipment, net of accumulated depreciation, depletion and amortization		65,178
Other noncurrent assets		683
Assets sold – Ecuador	$	70,075
Current liabilities	$	105,185
Other noncurrent liabilities		35
Liabilities associated with assets sold – Ecuador	$	105,220

The results of operations associated with these discontinued operations are presented in the following table.

(Thousands of dollars)	2011		2010		2009
Revenues:
U.S. refineries	$	3,700,789		3,175,353		2,117,186
Ecuador E&P operations		0		0		125,654
Total revenues	$	3,700,789		3,175,353		2,242,840
Income (loss) from operations before income taxes:
U.S. refineries	$	188,231		25,521		41,760
Ecuador E&P operations		0		0		(7,692	)
		188,231		25,521		34,068
Gain on sale before income taxes:
U.S. refineries		12,684		0		0
Ecuador E&P operations		0		0		117,557
		12,684		0		117,557
Total income from discontinued operations before taxes		200,915		25,521		151,625
Provision for income taxes		69,145		6,999		27,858
Income from discontinued operations	$	131,770		18,522		123,767