Petroleum refiner Sunoco said Wednesday that it plans to spin off its metallurgical coke manufacturing operations as part of a plan to boost the value of its shares, the Associated Press reports.
It also said it expects its refining business to report a profit for the quarter for the first time since the first quarter of 2009.
Its shares rose $1.58, or 4.8 percent, to $33.82 in morning trading Wednesday.
Sunoco said SunCoke Energy will be split from the company in the first half of 2011. Coke is a key ingredient used to make steel. The company provides coke for steel manufactures in the U.S. and Brazil.
“The fuels and coke units are distinct businesses with different business models, different sets of customers and no significant integration or synergies,” Lynn Elsenhans, Sunoco’s chairman and CEO, said in a statement.
Elsenhans said spinning off SunCoke Energy will provide SunCoke independent access to capital markets to finance its growth.
SunCoke Energy has operations in Virginia, Indiana, Ohio and Illinois. It also is building a plant in Middletown, Ohio, that is slated to produce 550,000 tons of coke and 46 megawatts of electricity when fully operational in the second half of 2011. It also operates and has a stake in a 1.7 million tons-per-year coke-making operation in Vitoria, Brazil.
Elsenhans credited steps the company has taken and slight improvement in market conditions for the turnaround in the company’s refining operations.
Refineries that turn oil into gasoline, diesel and other fuels have struggled financially as crude prices rebounded last year on bets by investors that a recovering economy will mean more demand for fuel. But consumption has remained weak and that has kept refiners from being able to fully pass along the higher costs of crude to customers.
