HOUSTON, Aug. 26, 2019 – The Board of Directors of CITGO Petroleum Corporation is pleased to report significant progress on top company goals. Following its appointment in February 2019, the CITGO Board outlined three main objectives for the company: improving financial and operational stability; protecting assets; and enhancing corporate governance. After only six-months at the helm of the company, the Board recently confirmed details regarding the company’s progress in all three areas.
Notably, on August 14, the Board appointed Carlos Jordá as the Chief Executive Officer after a thorough, extensive, and competitive search process that began earlier this year. His five decades of experience, and deep knowledge of the refining industry, combined with his understanding of CITGO, its shareholder, and the geopolitical landscape in which the company operates, ensures a promising new era of leadership for the company, its dedicated employees and its valued customers.
“As a Board, we quickly agreed that increasing transparency is critical to strengthening our corporate governance, said Board Chairwoman Luisa Palacios. “That is why we are publicly releasing this six-month update. It is also why we provided a detailed update on our work to our shareholder last week. We are grateful to all of the CITGO leadership and employees whose dedication has been essential to help achieve our top goals, and we are committed to ensuring that we remain focused on those objectives moving forward.”
Of his first days as CEO, Jordá said, “I am excited to return to a company about which I care deeply. I look forward to working with the Board to continue to advance its objectives. Having had the ability to spend time with the Board, the leadership team and our employees, it is clear to me that the company has best-in-class talent dedicated to meeting the strong demand for our products. I look forward to building on the company’s more than one-hundred-year legacy as an industry leader.”
Earlier in the month, on August 1, CITGO Holding Inc., the parent company of CITGO Petroleum Corporation, announced a successful debt refinancing that will result in an estimated savings for the company of more than $200 million over five years. The company’s $1.870 billion in notes that were set to mature in 2020 were replaced by a four-year $500 million Term Loan B and $1.37 billion of five-year bonds.
This refinancing was significantly oversubscribed, with participation from more than 200 institutions, demonstrating strong market confidence in CITGO. Fitch Ratings also upgraded the associated ratings of CITGO Holding, Inc. and reaffirmed the ratings of CITGO Petroleum Corporation with a stable outlook. The refinancing was completed as CITGO announced second quarter earnings and a net income of $122 million, during a heavy turnaround season and a changing market environment.
Total refinery throughput was 722,000 barrels-per-day (bpd) in Q2 2019, despite a major turnaround at the Corpus Christi refinery and several other planned maintenance projects at both the Lake Charles and Lemont refineries, all of which were executed safely and reliably with limited unplanned downtimes.
The company has also successfully replaced Venezuelan crude oil with alternate sources. Due to the flexibility of its refineries, CITGO continued maximizing margins through purchases of economical crudes, and set a new record for domestic crude runs in the Gulf Coast at 69 percent of the Gulf Coast crude slate. Its three crude oil refineries located in Lake Charles, La., Corpus Christi, Texas and Lemont, Ill. continue to operate safely and reliably.
CITGO leadership has also made notable progress on enhancing corporate governance overall, including examining all processes and procedures across the company to ensure best practices are being followed. As part of the ongoing review, at the outset of the Board’s tenure and under its direction, the company engaged a leading accounting firm to complete an audit, which is guiding it in revising internal controls and processes. CITGO leadership is pleased to report that the diagnostic phase of the review is complete, and the company has begun to implement its findings. Alongside the independent audit, CITGO leadership also engaged a highly reputable outside counsel to conduct an independent investigation, including a thorough review of procurement activities with a focus on activities prior to 2019. As a result of the audit and the ongoing investigation, the Board decided unanimously to eliminate the Company’s shareholder procurement function.
As part of the six-month update, the Board expressed its gratitude to the Company’s dedicated employees emphasizing that employees’ efforts are critical to ensuring the company delivers quality products, provides excellent customer service, and supports the local communities where it operates.
CITGO is proud of the significant progress the company has made in the last six months and will continue to focus on making strides in its three focus areas.