Operating Segments (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Schedule of segment reporting information, by segment

Segment information related to continuing operations is as follows:

	Three Months Ended March 31,
	2015			2014
	(In millions)
Revenues
Refining:
Refined products	$	5,838		$	9,500
Crude oil resales and other	299			272
TLLP:
Gathering	77			25
Processing	67			—
Terminalling and transportation	119			102
Retail:
Fuel (a)	2,195			3,024
Other non-fuel (b)	16			61
Intersegment sales	(2,148		)	(3,051		)
Total Revenues	$	6,463		$	9,933
Segment Operating Income
Refining (c)	$	190		$	185
TLLP (d)	108			60
Retail (c)	126			19
Total Segment Operating Income	424			264
Corporate and unallocated costs (e)	(84		)	(26		)
Operating Income	340			238
Interest and financing costs, net (f)	(55		)	(77		)
Other expense, net	(1		)	(1		)
Earnings Before Income Taxes	$	284		$	160
Depreciation and Amortization Expense
Refining	$	119		$	101
TLLP	44			16
Retail	12			10
Corporate	4			3
Total Depreciation and Amortization Expense	$	179		$	130
Capital Expenditures
Refining	$	184		$	68
TLLP	66			26
Retail	4			5
Corporate	6			4
Total Capital Expenditures	$	260		$	103

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(a) Federal and state motor fuel taxes on sales by our retail segment are included in both revenues and cost of sales in our condensed statements of consolidated operations. These taxes totaled $140 million and $141 million for the three months ended March 31, 2015 and 2014, respectively.

(b) Includes merchandise revenue for the three months ended March 31, 2014.

(c) Our refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. Effective April 1, 2013, we changed our intersegment pricing methodology and no longer reduced the amount retail pays for the biofuels by the market value of the RINs due to significant volatility in the value of RINs. At the end of 2014, given the price of RINs has become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our retail segment pays to our refining segment. We made this change effective January 1, 2015. We have not adjusted financial information presented for our refining and retail segments for the period ended March 31, 2014. Had we made this change effective January 1, 2014, operating income in our refining segment would have been reduced by $28 million with a corresponding increase to operating income in our retail segment.

(d) We present TLLP’s segment operating income net of general and administrative expenses totaling $12 million and $4 million representing TLLP’s corporate costs for the three months ended March 31, 2015 and 2014, respectively, that are not allocated to TLLP’s operating segments.

(e) Includes stock-based compensation expense of $28 million and benefit of $18 million for the three months ended March 31, 2015 and 2014, respectively. The significant impact to stock-based compensation expense during the three months ended March 31, 2015 compared to the prior period is primarily a result of changes in Tesoro’s stock price.

(f) Includes charges totaling $31 million for premiums and unamortized debt issuance costs associated with the redemption of the 5.50% Senior Notes due 2019 during the three months ended March 31, 2014.