Sunoco 2005 Annual Report Download - page 4

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2
In any margin environment, but particularly
in those we have experienced over the past
several years, the signifi cant improvements
made in our refi ning operations have been
especially benefi cial. We have been on a
consistent trend of improvement in key
measures of safety, reliability and energy
effi ciency. In 2005, our refi nery throughput
and production were at record levels, with
crude oil and conversion unit utilization levels
at 98 percent and 101 percent, respectively. In
a year of record refi ning margins, we produced
eight million barrels more than we did in 2004
— truly “getting more from existing assets.”
While Refi ning and Supply has led the way,
our other businesses — Retail Marketing,
Chemicals, Logistics and Coke — have also
made advancements in the quality and
competitiveness of their asset portfolios and
provide a good base of more steady earnings
and cash fl ow for the Company. Over the
past three years, total earnings from these
non-refi ning businesses have averaged $213
million per year. In a more normalized market
environment for crude oil prices and refi ning
margins, and with continued development
of our cokemaking technology and business,
we would expect these businesses to show
increasing earnings power in the future.
We are also distinctive by our share repurchase
activity, which has been a consistent and
material element of our overall strategy. Over
the past six years, we have spent almost $1.7
billion towards share repurchases — over 60
million shares at an average price of $27.84 per
share — and reduced our shares outstanding
by 26 percent. Our biggest investment has
been in Sunoco — and it has been an important
contributor to growing shareholder value.
We believe there is still signifi cant
improvement to be gained by continuing
to execute our core strategies. Substantial
investment and organic growth is planned
for our Refi ning and Supply business — $1.9
billion over 2006-08 to increase capacity by 11
percent (100,000 barrels per day), increase our
crude oil fl exibility, improve our product yields
and reduce our overall breakeven margin. In
any margin environment, this program will
signifi cantly strengthen our refi ning operations.
We will continue to be conservative regarding
acquisitions and the management of our
fi nancial capacity as we retain a healthy
awareness of the unpredictability and fragile
tipping point from good to poor markets in
our businesses. The market values, and our
shareholders expect, such behavior.
Our success over the past few years could not
have been achieved without the hard work and
dedication of our employees. They remain the
cornerstone of Sunoco and I thank them for
their contribution. I would also like to thank
our Board of Directors for their thoroughness
and counsel and you, our shareholders, for
your continued support and confi dence. I also
offer a special thanks to Rick Lenny who will
be leaving our Board in May. His wisdom and
energy will be missed.
While “staying the course,” we recognize
the market will change and provide various
challenges and opportunities. We are confi dent
we can approach either from a stronger
position than ever before.
’
JOHN G. DROSDICK
Chairman, Chief Executive
Offi cer and President