Sunoco 2006 Annual Report Download - page 10

• Diversify, upgrade and grow the Company’s asset base through strategic acquisitions
and investments;
• Divest assets that do not meet the Company’s return-on-investment criteria;
• Optimize the Company’s capital structure; and
• Return cash to the Company’s shareholders through the payment of cash dividends
and the repurchase of Company common stock.
Sunoco has undertaken the following initiatives as part of this strategy:
• In January 2004, Sunoco completed the acquisition from El Paso Corporation of the
150 thousand barrels-per-day Eagle Point refinery and related assets located near the
Company’s existing Northeast Refining operations for $250 million, including
inventory.
• In January 2004, the Company completed the sale of its plasticizer business to BASF,
generating approximately $90 million of cash proceeds.
• In April 2004, Sunoco completed the $181 million purchase from ConocoPhillips of
340 Mobil®retail outlets located primarily in Delaware, Maryland, Virginia and
Washington, D.C.
• During the second quarter of 2004, Sunoco sold its private label consumer and commer-
cial credit card business and related accounts receivable to Citibank, generating $100
million of cash proceeds.
• In 2004, Sunoco completed a debt restructuring, which reduced its outstanding debt by
approximately $100 million and lowered its weighted-average interest rate. Pretax
interest expense declined approximately $20 million in 2005 as a result of the debt
restructuring.
• In March 2005, Sun Coke commenced cokemaking operations at its 550 thousand
tons-per-year Haverhill facility.
• During the 2004-2006 period, Sunoco Logistics Partners L.P. (the “Partnership”) issued
10.5 million limited partnership units in a series of public offerings, generating $399
million of net proceeds. Coincident with these offerings, the Partnership redeemed
5.0 million limited partnership units owned by Sunoco for $182 million. As a result of
these transactions, Sunoco’s ownership interest in this master limited partnership was
reduced from 75 percent to 43 percent.
• In August 2005, the Partnership completed the $100 million purchase from
ExxonMobil of a crude oil pipeline system and related storage facilities located in
Texas and, in the fourth quarter of 2005, completed the construction of a $16 million,
20-mile crude oil pipeline connecting these assets to the West Texas Gulf Pipeline,
which is 43.8 percent owned by the Partnership.
• In March 2006, the Partnership completed the purchase of two other crude oil pipeline
systems and related storage facilities located in Texas, one from Alon USA Energy,
Inc. for $68 million and the other from Black Hills Energy, Inc. for $41 million.
• In December 2006, Sunoco completed the $155 million purchase of the minority inter-
est in the Jewell cokemaking operation.
• In 2006, construction commenced on a $500 million project to expand the capacity of
one of the fluid catalytic cracking units at the Philadelphia refinery by 15 thousand
barrels per day, which is designed to result in an upgrade of approximately 25 thousand
barrels per day of residual fuel production into higher-value gasoline and distillate pro-
duction. Additionally in 2006, construction commenced on a $50 million project at
the Toledo refinery, which is designed to increase the facility’s refining capacity by
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