This summary is based on the first quarter fiscal 2008 earnings call conducted Sunoco Inc. (SUN: chart) on May 1, 2008.

Management:

Sr. VP and CFO: Thomas W Hofmann
VP, IR and Planning: Terence P Delaney

Key Investor Issues:

- Q1 net loss was 50 cents versus net income of $1.44 a year ago quarter.
- Quarterly revenues increased year-over-year from $9.3 billion to $12.8 billion.
- Non-refining businesses aggregate earnings were $84 million for the quarter versus $36 million a year ago quarter.

First-Quarter Financial Highlights

The quarterly net loss of $59 million or 50 cents per share was due to weakness in refining margins, particularly for gasoline.

- The weakened refining margins more than offset a very strong quarter for the non-refining businesses.
- The management reported that crude unit utilization for the quarter was about 85% of rated capacity and net refinery production was 77 million barrels, about 11 million barrels lower than the record levels in the fourth quarter last year.

- The quarterly net cash from operating activities dipped from $237 million in the last year quarter to $39 million for the current quarter.

The total quarterly CapEx was $257 million compared with $332 million in the same period last year.

- The Refining and Supply business recorded the largest capital expenditure portion of $178 million whilst Chemicals recorded the least at $6 million.
- The comparable figures for the same period last year were $270 million and $14 million respectively.
- The capital expenditure for Retail Marketing remained unchanged at $13 million quarter-over-quarter whilst Coke capital expenditure increased from $17 million last year quarter to $37 million in the current quarter.

Segment Analysis

Refining and Supply

- The segment posted a loss of $123 million in the first quarter of 2008 versus net income of $76 million in the first quarter of 2007. The decrease in earnings was a result of lower realized margins and higher expenses partly offset by higher production volumes.
- The lower margins were due to the negative impact of much higher average crude oil costs and lower product demand than a year ago.
- The higher expenses were a result of increased prices for purchased fuel.

- The production volumes rose during the quarter although planned and unplanned maintenance work reduced production by about 11 million barrels throughout the refining system versus the record level of production in Q4 of 2007.
- Q1 production was negatively affected by major turnaround and expansion work at the Philadelphia refinery as well as downtime at the Tulsa and Marcus Hook refineries.
- In the Northeast, realized margins were only $3.50 a barrel for the quarter and the realized crude costs in Atlantic Basin were $2.92 a barrel higher than the Dated Brent plus $1 and $1.25 a barrel marker.
- In Mid-Continent, the realized margins of $3.21 a barrel were also negatively impacted by the higher realized crude cost.
- As a result of several winter operating problems with up graders in Canada, the prices of Canadian Syncrude relative to WTI increased significantly on approximately 50,000 barrels a day of Syncrude that the company ran in Toledo during the quarter.

Retail Marketing

- Retail Marketing earned $26 million during the quarter compared with $7 million in the first quarter of 2007.
- The earnings increase was due to higher average retail gasoline margins and lower expenses, partially offset by lower gasoline and distillate volumes.

Chemicals

- Chemicals earned $18 million in the current quarter compared with $9 million in Q1 of 2007. The higher earnings were due to lower expenses and higher sales volume.
- The lower expenses during Q1 of 2008 were due to the transfer of cumene and propylene splitter assets to Refining and Supply effective January 1, 2008.
- The asset transfer also reduced margins during the quarter which was offset by higher realized margins on both phenol and polypropylene sales.
- With this asset transfer, the management re-allocated the associating operating expenses and adjusted the transfer prices for the benzene and propylene feed stock purposes, purchases from refining and supply to reflect the current market alternatives for both feed stocks.
- The management advised that the net after tax benefit is expected to be favorable to chemicals by about $4 million to $5 million per quarter in 2008.

Logistics