8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 29, 2007

Tesoro Corporation

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)	1-3473 (Commission File Number)	95-0862768 (IRS Employer Identification No.)
300 Concord Plaza Drive San Antonio, Texas (Address of principal executive offices)		78216-6999 (Zip Code)

(210) 828-8484
(Registrant’s telephone number,
including area code)

Not Applicable
(Former name or former address, if
changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

Tesoro Corporation (“Tesoro” or the “Company”) on January 29, 2007 issued a press release announcing financial results for its fourth quarter ended December 31, 2006. The press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information above is being furnished, not filed, pursuant to Item 2.02 of Form 8-K. Accordingly, the information in Item 2.02 of this Current Report, including Exhibit 99.1, will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.

Item 7.01 Regulation FD Disclosure.

On January 29, 2007, Tesoro issued a press release announcing that its Board of Directors has approved agreements for the Company to purchase the Los Angeles refinery (Wilmington), Wilmington Products Terminal, and approximately 250 Southern California Shell-branded retail sites from Shell Oil Products US. The purchase price of Shell’s assets will be $1,630 million, plus the value of petroleum inventory at the time of closing, which at current prices, would be $180 to $200 million. Tesoro also signed a long-term agreement allowing the Company to continue to operate the retail sites under the Shell brand. The transaction will require regulatory approval and is expected to be completed in the second quarter of 2007. The purchase will be paid for by using cash on-hand, which at year-end was approximately $1.0 billion and borrowings. The exact amount of both is yet to be determined. The executed purchase agreement for the Los Angeles refinery will be filed in a subsequent Current Report on Form 8-K. The above press release is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Tesoro also announced in a press release on January 29, 2007 announcing that its Board of Directors has approved an agreement for the Company to purchase 140 USA Petroleum retail sites located primarily in California, a terminal located in New Mexico and select sites in other states. The purchase price of the assets and the USA brand is $277 million, plus the value of inventory at the time of closing which is currently estimated to be $10 to $15 million. The transaction requires regulatory approval and is expected to be completed in the second quarter of 2007. The executed purchase agreement will be filed in a subsequent Current Report on Form 8-K. The above press release is filed as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.

Tesoro has scheduled a conference call on January 29, 2007 to discuss the transactions. Additional information describing the transactions (the “Acquisitions Presentation”) will be presented by certain executives of Tesoro during the conference call. The Acquisitions Presentation will be available on the Company’s website at www.tsocorp.com at 9:00 a.m. CST on January 29, 2007. The Acquisitions Presentation is filed as Exhibit 99.4 to this Current Report on Form 8-K and is incorporated herein by reference.

The information above is being furnished, not filed, pursuant to Item 7.01 of Form 8-K. Accordingly, the information in Item 7.01 of this Current Report, including Exhibits 99.2 through 99.4, will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.

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Item 9.01 Financial Statements and Exhibits.

          (c)      Exhibits.

99.1	Press release announcing fourth quarter financial results issued on January 29, 2007 by Tesoro Corporation.
99.2	Press release announcing the purchase agreements with Shell Oil Products US issued on January 29, 2007 by Tesoro Corporation.
99.3	Press release announcing the purchase agreement with USA Petroleum issued on January 29, 2007 by Tesoro Corporation.
99.4	Acquisitions Presentation given on January 29, 2007 by Tesoro Corporation.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 29, 2007

TESORO CORPORATION
By:	/s/ GREGORY A. WRIGHT
	Gregory A. Wright
	Executive Vice President and Chief Financial Officer

4

Index to Exhibits

Exhibit Number	Description
99.1	Press release announcing fourth quarter financial results issued on January 29, 2007 by Tesoro Corporation.
99.2	Press release announcing the purchase agreements with Shell Oil Products US issued on January 29, 2007 by Tesoro Corporation.
99.3	Press release announcing the purchase agreement with USA Petroleum issued on January 29, 2007 by Tesoro Corporation.
99.4	Acquisitions Presentation given on January 29, 2007 by Tesoro Corporation.

5

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Contact:

Investors:
Scott Phipps, Manager, Investor Relations, (210) 283-2882

Media:
Natalie Silva, Manager, Public Relations, (210) 219-8189

Tesoro Corporation Announces 129% Increase in
Fourth Quarter Earnings and Record 2006 Full Year Results

     SAN ANTONIO – January 29, 2007 -Tesoro Corporation (NYSE:TSO) today reported record 2006 fourth quarter net income of $158 million, or $2.28 per share, and full year 2006 net income of $801 million, or $11.46 per share. Earnings for 2006 were almost $300 million ahead of last year.

     Quarterly gross refining margin rose 16% compared to 2005 more than offsetting the lower throughput primarily caused by a turnaround at the Anacortes refinery. Quarterly refining operating income of $284 million was nearly $40 million more than a year ago. “Our knowledge and experience in optimizing our system continues to develop and our decisions around crude oil purchasing and clean product management are significantly improving earnings. Our management team is excited because we continue to find new opportunities to add value,” said Bruce Smith, Chairman, President and CEO.

     Heavy turnaround activity on the West Coast in the fourth quarter strengthened margins versus last year. Jet fuel demand strengthened during the quarter, leading to

Page 2 of 3
Tesoro Reports Fourth Quarter Results

improved performance at our Alaska refinery. In addition, strong diesel demand in the mid-continent region contributed to the company’s profitability in this region. Increasingly favorable dynamics in our Salt Lake City and Mandan refining markets are improving the balance of the company’s earnings. “In 2005, these assets represented 19% of our total refining operating income. This year they contributed 26% as we have successfully and safely increased throughput and the production of clean fuels,” said Smith.

     Capital spending for the year was approximately $570 million of which $117 million was for turnaround expenditures. The company continues to reinvest cash flow to improve reliability, environmental compliance and operating income from our assets. EBITDA contributions from many of the projects initiated in 2006 are expected to be between $80-$125 million pre-tax in 2007.

     Cash at the end of the year was $986 million as compared to $440 million on December 31, 2005. The ratio of debt-to-capitalization was 29% compared to 36% a year ago.

Board Declares Quarterly Dividend

     Tesoro announced today that its Board of Directors has approved a regular quarterly cash dividend of $0.10 per share. The dividend is payable March 15, 2007 to shareholders of record as of March 1, 2007.

Public Invited to Listen to Analyst Conference Call via Internet

     At 9:00 a.m. CST Monday, January 29^th, 2007 Tesoro will broadcast its conference call with analysts regarding fourth quarter 2006 results. Interested parties may listen to the live conference call over the Internet by logging on to Tesoro’s Internet

site at http://www.tsocorp.com.

Page 3 of 3
Tesoro Reports Fourth Quarter Results

     Tesoro Corporation, a Fortune 150 Company, is an independent refiner and marketer of petroleum products. Tesoro operates six refineries in the western United States with a combined capacity of approximately 560,000 barrels per day. Tesoro’s retail-marketing system includes over 450 branded retail stations, of which nearly 200 are company owned and operated under the Tesoroâ and Mirastarâ brands.

     This earnings release contains certain statements that are “forward-looking” statements concerning future cash flows and capital expenditures within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For more information concerning factors that could affect these statements see our annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. We undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date hereof.”

###

TESORO CORPORATION
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions except per share amounts)

	Three Months Ended						Years Ended
	December 31,						December 31,
	2006			2005			2006			2005
Revenues	$	4,020		$	4,360		$	18,104		$	16,581
Costs and Expenses:
Costs of sales and operating expenses		3,652			4,036			16,314			15,170
Selling, general and administrative expenses (a)		50			36			176			179
Depreciation and amortization		64			58			247			186
Loss on asset disposals and impairments (b)		7			10			50			19
Operating Income		247			220			1,317			1,027
Interest and Financing Costs (c)		(17	)		(117	)		(77	)		(211	)
Interest Income and Other		14			9			46			15
Earnings Before Income Taxes		244			112			1,286			831
Income Tax Provision		86			43			485			324
Net Earnings	$	158		$	69		$	801		$	507
Net Earnings Per Share:
Basic	$	2.35		$	1.00		$	11.78		$	7.44
Diluted	$	2.28		$	0.97		$	11.46		$	7.20
Weighted Average Common Shares:
Basic		67.3			68.8			68.0			68.1
Diluted		69.2			70.8			69.9			70.4

(a)	During 2005, the Company recorded stock-based and other compensation charges totaling $11 million related to the termination and retirement of certain executive officers.
(b)	During 2006, the Company recorded charges totaling $28 million related to the termination of the delayed coker project at our Washington refinery.
(c)	During the three months ended December 31, 2005, the Company incurred pretax charges of $92 million consisting of tender and redemption premiums and the write-off of unamortized debt issuance costs in connection with the refinancing of its 9 5/8% senior subordinated notes and 8% senior secured notes. In April 2005, the Company voluntarily prepaid the remaining $96 million outstanding principal balance of the senior secured term loans at a prepayment premium of 1%, which resulted in a pretax charge of $3 million consisting of the write-off of unamortized debt issuance costs and the 1% prepayment premium.

NET EARNINGS ADJUSTED FOR SPECIAL ITEMS
(Unaudited)
(In millions except per share amounts)

	Three Months Ended				Years Ended
	December 31,				December 31,
	2006		2005		2006		2005
Net Earnings — U.S. GAAP	$	158	$	69	$	801	$	507
Special Items, After-tax:
Delayed coker project termination costs (b)		—		—		17		—
Debt prepayment and financing costs (c)		—		57		—		58
Termination and retirement costs (a)		—		—		—		6
Net Earnings Adjusted for Special Items	$	158	$	126	$	818	$	571
Net Earnings Per Share — U.S. GAAP	$	2.28	$	0.97	$	11.46	$	7.20
Special Items Per Share, After-tax:
Delayed coker project termination costs (b)		—		—		0.24		—
Debt prepayment and financing costs (c)		—		0.81		—		0.82
Termination and retirement costs (a)		—		—		—		0.09
Net Earnings Per Share Adjusted for Special Items	$	2.28	$	1.78	$	11.70	$	8.11

Note: The special items present information that the Company believes is useful to investors. The Company believes that the special items described above are not indicative of its core operations.

TESORO CORPORATION
SELECTED OPERATING SEGMENT DATA
(Unaudited)
(In millions)

	Three Months Ended						Years Ended
	December 31,						December 31,
	2006			2005			2006			2005
Operating Income (Loss)
Refining (b)	$	284		$	247		$	1,476		$	1,194
Retail		—			(1	)		(21	)		(31	)
Total Segment Operating Income		284			246			1,455			1,163
Corporate and Unallocated Costs (a)		(37	)		(26	)		(138	)		(136	)
Operating Income		247			220			1,317			1,027
Interest and Financing Costs (c)		(17	)		(117	)		(77	)		(211	)
Interest Income and Other		14			9			46			15
Earnings Before Income Taxes	$	244		$	112		$	1,286		$	831
Depreciation and Amortization
Refining	$	57		$	51		$	221		$	160
Retail		4			4			16			17
Corporate		3			3			10			9
Depreciation and Amortization	$	64		$	58		$	247		$	186
Capital Expenditures
Refining	$	159		$	80		$	401		$	214
Retail		1			3			5			6
Corporate		7			9			47			42
Capital Expenditures	$	167		$	92		$	453		$	262

BALANCE SHEET DATA
(Unaudited)
(Dollars in millions)

	December 31,			December 31,
	2006			2005
Cash and Cash Equivalents	$	986		$	440
Total Assets	$	5,904		$	5,097
Total Debt	$	1,046		$	1,047
Total Stockholders’ Equity	$	2,505		$	1,887
Total Debt to Capitalization Ratio		29	%		36	%

TESORO CORPORATION
OPERATING DATA
(Unaudited)

	Three Months Ended				Years Ended
	December 31,				December 31,
	2006		2005		2006		2005
REFINING SEGMENT
Total Refining Segment
Throughput (thousand barrels per day)
Heavy crude		239		267		261		265
Light crude		249		259		250		245
Other feedstocks		13		15		18		20
Total Throughput		501		541		529		530
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks		225		249		245		248
Jet fuel		61		69		68		68
Diesel fuel		118		127		121		118
Heavy oils, residual products, internally produced fuel and other		115		117		115		115
Total Yield		519		562		549		549
Refining Margin ($/throughput bbl) (d)
Gross	$	12.95	$	11.19	$	13.82	$	11.81
Manufacturing cost before depreciation and amortization (d)	$	3.88	$	3.77	$	3.57	$	3.48
Segment Operating Income ($ millions)
Gross refining margin (after inventory changes) (e)	$	592	$	543	$	2,631	$	2,246
Expenses
Manufacturing costs		179		188		689		673
Other operating expenses		56		46		178		182
Selling, general and administrative		10		6		26		27
Depreciation and amortization (f)		57		51		221		160
Loss on asset disposals and impairments		6		5		41		10
Segment Operating Income	$	284	$	247	$	1,476	$	1,194
Product Sales (thousand barrels per day) (g)
Gasoline and gasoline blendstocks		268		292		280		294
Jet fuel		88		99		91		101
Diesel fuel		120		137		128		139
Heavy oils, residual products and other		88		76		87		75
Total Product Sales		564		604		586		609
Product Sales Margin ($/barrel) (g)
Average sales price	$	72.93	$	72.91	$	81.26	$	70.20
Average costs of sales		61.95		64.48		69.42		60.28
Product Sales Margin	$	10.98	$	8.43	$	11.84	$	9.92

(d)	Management uses gross refining margin per barrel to evaluate performance, allocate resources and compare profitability to other companies in the industry. Gross refining margin per barrel is calculated by dividing gross refining margin before inventory changes by total refining throughput and may not be calculated similarly by other companies. Management uses manufacturing costs per barrel to evaluate the efficiency of refinery operations and allocate resources. Manufacturing costs per barrel may not be comparable to similarly titled measures used by other companies. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered as alternatives to segment operating income, revenues, costs of sales and operating expenses or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America.
(e)	Gross refining margin is revenues less costs of refining feedstocks, purchased products, transportation and distribution. Gross refining margin approximates total refining segment throughput times gross refining margin per barrel, adjusted for changes in refined product inventory due to selling a volume and mix of product that is different than actual volumes manufactured. Also includes the effect of intersegment sales to the retail segment at prices which approximate market.
(f)	Includes manufacturing depreciation and amortization per throughput barrel of approximately $1.17 and $0.95 for the three months ended December 31, 2006 and 2005, respectively, and $1.06 and $0.75 for the years ended December 31, 2006 and 2005, respectively.
(g)	Sources of total product sales include products manufactured at the refineries, products drawn from inventory balances and products purchased from third parties. Total product sales margin includes margins on sales of manufactured and purchased products and the effects of inventory changes. Total product sales were reduced by 18 Mbpd and 23 Mbpd in the three months and year ended December 31, 2006, respectively, as a result of recording certain purchases and sales transactions with the same counterparty on a net basis beginning in the 2006 first quarter upon adoption of EITF Issue No. 04-13, “Accounting for Purchases and Sales of Inventory with the Same Counterparty.”

TESORO CORPORATION
OPERATING DATA
(Unaudited)

	Three Months Ended				Years Ended
	December 31,				December 31,
	2006		2005		2006		2005
Refining By Region
California (h)
Throughput (thousand barrels per day)
Heavy crude		153		157		153		151
Light crude		5		4		3		6
Other feedstocks		8		9		9		8
Total Throughput		166		170		165		165
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks		95		95		96		93
Diesel fuel		55		54		49		49
Heavy oils, residual products, internally produced fuel and other		26		32		30		31
Total Yield		176		181		175		173
Refining Margin ($/throughput bbl)
Gross	$	18.15	$	15.05	$	19.51	$	17.88
Manufacturing cost before depreciation and amortization	$	5.50	$	6.07	$	5.57	$	5.56
Pacific Northwest (Alaska & Washington) (h)
Throughput (thousand barrels per day)
Heavy crude		60		82		81		85
Light crude		82		88		81		78
Other feedstocks		2		3		5		8
Total Throughput		144		173		167		171
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks		49		72		67		74
Jet fuel		31		30		31		31
Diesel fuel		19		28		27		25
Heavy oils, residual products, internally produced fuel and other		48		47		47		46
Total Yield		147		177		172		176
Refining Margin ($/throughput bbl)
Gross	$	10.44	$	7.80	$	11.61	$	9.68
Manufacturing cost before depreciation and amortization	$	3.57	$	2.97	$	2.88	$	2.74
Mid-Pacific (Hawaii) (h)
Throughput (thousand barrels per day)
Heavy crude		26		28		27		29
Light crude		51		62		58		54
Total Throughput		77		90		85		83
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks		17		23		20		20
Jet fuel		19		28		26		26
Diesel fuel		12		13		13		12
Heavy oils, residual products, internally produced fuel and other		30		27		27		26
Total Yield		78		91		86		84
Refining Margin ($/throughput bbl)
Gross	$	6.33	$	8.56	$	6.59	$	6.25
Manufacturing cost before depreciation and amortization	$	2.23	$	1.61	$	1.84	$	1.85

(h) The Company experienced reduced throughput and yield levels during scheduled maintenance turnarounds for the following refineries and periods: the Washington refinery during the 2006 fourth quarter; the Alaska refinery during the 2006 second quarter; the California refinery during the 2006 first quarter; the Hawaii refinery during the 2005 second quarter; and the California and Washington refineries during the 2005 first quarter.

TESORO CORPORATION
OPERATING DATA
(Unaudited)

	Three Months Ended				Years Ended
	December 31,				December 31,
	2006		2005		2006		2005
Mid-Continent (North Dakota & Utah)
Throughput (thousand barrels per day)
Light crude		111		105		108		107
Other feedstocks		3		3		4		4
Total Throughput		114		108		112		111
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks		64		59		62		61
Jet fuel		11		11		11		11
Diesel fuel		32		32		32		32
Heavy oils, residual products, internally produced fuel and other		11		11		11		12
Total Yield		118		113		116		116
Refining Margin ($/throughput bbl)
Gross	$	12.64	$	12.70	$	14.16	$	10.10
Manufacturing cost before depreciation and amortization	$	3.02	$	3.25	$	2.96	$	2.73

TESORO CORPORATION
OPERATING DATA
(Unaudited)

	Three Months Ended						Years Ended
	December 31,						December 31,
	2006			2005			2006			2005
RETAIL SEGMENT
Number of Stations (end of period)
Company-operated		194			210			194			210
Branded jobber/dealer		266			268			266			268
Total Stations		460			478			460			478
Average Stations (during period)
Company-operated		194			210			204			213
Branded jobber/dealer		264			270			261			281
Total Average Retail Stations		458			480			465			494
Fuel Sales (millions of gallons)
Company-operated		59			59			248			258
Branded jobber/dealer		48			41			186			191
Total Fuel Sales		107			100			434			449
Fuel Margin ($/gallon) (i)	$	0.19		$	0.27		$	0.17		$	0.16
Merchandise Sales ($ millions)	$	33		$	34		$	141		$	138
Merchandise Margin ($ millions)	$	9		$	9		$	38		$	36
Merchandise Margin %		27	%		26	%		27	%		26	%
Segment Operating Income (Loss) ($ millions)
Gross Margins
Fuel (j)	$	20		$	26		$	72		$	71
Merchandise and other non-fuel margin		10			10			41			39
Total Gross Margins		30			36			113			110
Expenses
Operating expenses		20			22			87			90
Selling, general and administrative		6			6			25			25
Depreciation and amortization		4			4			16			17
Loss on asset disposals and impairments		—			5			6			9
Segment Operating Income (Loss)	$	—		$	(1	)	$	(21	)	$	(31	)

(i)

Management uses fuel margin per gallon to compare profitability to other companies in the industry. Investors and analysts use fuel margin per gallon to help analyze and compare companies in the industry on the basis of operating performance. Fuel margin per gallon is calculated by dividing fuel gross margin by fuel sales volumes. Fuel margin per gallon may not be calculated similarly by other companies.

(j)

Includes the effect of intersegment purchases from the refining segment at prices which approximate market.

EX-99.2

EXHIBIT 99.2

FOR IMMEDIATE RELEASE

Contact:

Investors:
Scott Phipps, Manager, Investor Relations, (210) 283-2882

Media:
Natalie Silva, Manager, Public Relations, (210) 219-8189

Tesoro Corporation Announces Agreements to Purchase Shell’s Los Angeles
Refinery and Approximately 250 Southern California Retail Sites

Assets Complement Tesoro’s Existing Operations

SAN ANTONIO – January 29, 2007 -Tesoro Corporation (NYSE:TSO) announced today that the Board has approved agreements for the company to purchase the Los Angeles refinery (Wilmington), Wilmington Products Terminal, and approximately 250 Southern California Shell-branded retail sites from Shell Oil Products US. The purchase price of Shell’s assets will be $1,630 million, plus the value of petroleum inventory at the time of closing, which at current prices, would be $180 to $200 million. Tesoro also signed a long-term agreement allowing the company to continue operating the retail sites under the Shell brand. The transaction will require regulatory approval and is expected to be completed in the second quarter of 2007.

Page 2 of 4
Tesoro Reports Fourth Quarter Results

“These assets are a tremendous complement to our existing operations on the West Coast and will be immediately accretive to our earnings and cash flow,” said Bruce Smith, Chairman, President and CEO. “The refinery fits perfectly with our system, and we expect to quickly integrate the facility into our network. With the unique focus we have as an independent refiner-marketer in the region, we expect to realize synergies immediately through crude purchasing and shipping logistics, as well as by optimizing the output of our refineries to maximize the production of clean fuel products for the California market.”

Shell Assets

Shell’s Wilmington refinery, located south of Los Angeles, is a 100,000 barrel per day (bpd) heavy, sour crude refinery producing clean fuels that meet California’s stringent requirements. Tesoro expects to generate significant system synergies through integrating the supply of heavy, sour crudes with our Golden Eagle refinery and by utilizing our unique West Coast shipping logistics capabilities. These system synergies are expected to generate EBITDA of $100 million in our first 12 months of ownership. Additionally, Tesoro plans to make investments at Wilmington to improve reliability, upgrade environmental performance, and increase the production of clean products at the plant over the next several years. These investments are anticipated to generate an additional $125 to $150 million of annual EBITDA and should be fully implemented by 2011.

The plant’s major processing units include a 40,000 bpd Delayed Coker, a 36,000 bpd Fluid Catalytic Cracker, a 32,000 bpd Hydrocracking Unit, 32,500 bpd of Reforming capacity in two units, and 101,250 bpd of hydrotreating capacity in four units. The facility has a Nelson Complexity Index rating of 16.4.

Page 3 of 4
Tesoro Reports Fourth Quarter Results

The acquisition also includes approximately 250 high volume Shell-branded retail sites located in Southern California which average approximately 225,000 gallons per month per site. These sites match the current output of California-grade gasoline from the Los Angeles refinery. The purchase includes the underlying real estate at many of the sites.

“We are excited about adding new talent and intellectual capital to Tesoro,” said Smith. “We have grown through acquisitions, and each time we have added people to our organization who have been able to take our company to a new level of performance. We also look forward to working with the local communities and extending our commitment to community giving and volunteerism in Los Angeles and Wilmington.”

Transaction Financing

The purchase will be paid for by using cash on-hand, which at year-end was approximately $1.0 billion and borrowings. The exact amount of both is yet to be determined, but the pro-forma debt-to-capitalization ratio is expected to be less than 50% at the time of closing. The company plans to quickly reduce debt through internally generated cash flow and has set a goal to reduce debt to 40% of capitalization by the end of 2007. Lehman Brothers served as Tesoro’s financial advisor for the transaction.

Conference Call

Tesoro has scheduled a conference call to discuss these transactions today at 10:00 a.m. EST / 7 a.m. PST. Interested parties may listen to the live conference call and view the webcast on the Investor Relations section of the Tesoro website at www.tsocorp.com

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Tesoro Reports Fourth Quarter Results

     Tesoro Corporation, a Fortune 150 Company, is an independent refiner and marketer of petroleum products. Tesoro operates six refineries in the western United States with a combined capacity of approximately 560,000 barrels per day. Tesoro’s retail-marketing system includes over 450 branded retail stations, of which over 200 are company owned and operated under the Tesoroâ and Mirastarâ brands.

     This earnings release contains certain statements that are “forward-looking” statements concerning future cash flows, debt reduction and capital expenditures within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For more information concerning factors that could affect these statements see our annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. We undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date hereof.”

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EX-99.3

EXHIBIT 99.3

FOR IMMEDIATE RELEASE

Contact:

Investors:
Scott Phipps, Manager, Investor Relations, (210) 283-2882

Media:
Natalie Silva, Manager, Media Relations, (210) 219-8189

Tesoro Corporation Announces Agreement to Purchase
140 Retail Sites and Other Related Assets from USA Petroleum

Acquisition Preserves Strong Independent Market in California

SAN ANTONIO – January 29, 2007 -Tesoro Corporation (NYSE:TSO) announced today that its Board of Directors has approved an agreement for the company to purchase 140 USA Petroleum retail sites located primarily in California, a terminal located in New Mexico and select sites in other states.

     The purchase price of the assets and the USA brand is $277 million, plus the value of inventory at the time of closing which is currently estimated to be $10 – $15 million. Of the 140 retail sites, 125 use the USA brand and 15 use other major brands.

     “USA Petroleum has been an independent marketer in California for many years,” said Bruce Smith, Chairman, President and CEO. “We are committed to maintaining the independent USA retail brand and growing our business with other independent customers.”

     “The acquisition provides us with locations near our California refineries that allow us to run the refineries at full capacity, invest in refinery improvements and deliver more clean products into the market,” said Smith. “As an independent refiner and marketer, our strategy is to meet the product demand of a diverse customer base, including other independent retailers while also working to increase the amount of clean products available in the market.”

     “We value the unique experience that new employees bring to Tesoro,” said Smith. “We are excited to welcome the USA Petroleum employees into the Tesoro family and look forward to the contributions they will make toward achieving operational excellence. We also plan to extend our commitment to community giving and volunteerism in the communities in which we operate.”

     The transaction requires regulatory approval and is expected to be completed in the second quarter of 2007.

USA Petroleum Assets

     The 140 high volume retail sites include 132 operating sites in California, six sites in the Pacific Northwest and two sites and a terminal in New Mexico. The high volume locations average 185,000 gallons per month and most sites include the underlying real estate, contributing to the high value of the sites.

     The USA Petroleum sites are estimated to contribute approximately $30 million per year in additional EBITDA.

Conference Call

     Tesoro has scheduled a conference call to discuss this transaction today at 10:00 a.m. EST / 7 a.m. PST. Interested parties may listen to the live conference call and view the webcast on the Investor Relations section of the Tesoro website at www.tsocorp.com

     Tesoro Corporation, a Fortune 150 Company, is an independent refiner and marketer of petroleum products. Tesoro operates six refineries in the western United

States with a combined capacity of approximately 560,000 barrels per day. Tesoro’s retail-marketing system includes over 450 branded retail stations, of which over 200 are company owned and operated under the Tesoro^â and Mirastar^â brands.

     This earnings release contains certain statements that are “forward-looking” statements concerning future cash flows and capital expenditures within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For more information concerning factors that could affect these statements see our annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. We undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date hereof.”

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EX-99.4

EXHIBIT  99.4

Tesoro West Coast Acquisitions January 29, 2007

Transaction Highlights Acquisition of Shell's 100,000 bpd Los Angeles refinery, Wilmington products terminal and approximately 250 Southern California retail sites Purchase price: $1,630 million (additional inventories approx. $180 to $200 million) System optimization synergies of $100 million in first 12 months Additional $125 - $150 million annual EBITDA from future growth opportunities. Acquisition of 140 retail sites from USA Petroleum Purchase price: $277 million (additional inventories approx. $10-15 million) Sites fit our Golden Eagle and Wilmington production - primarily Northern and Southern California Transactions fit Tesoro Fit into established Pacific Rim asset system Leverage our proven ability to optimize assets Achieve objective of increasing our exposure to heavy sour crudes Growth at a Good Price $550 million of first year EBITDA1 Immediately accretive to both EPS and cash flow Prices compare favorably to recent transactions and Tesoro's valuation 1) Internal estimate based on 2004-2006 average crack spread environment

Los Angeles Refinery 100,000 bpd high conversion, heavy crude oil refinery located in Wilmington, 10 miles south of Los Angeles Increases Tesoro's total refining capacity by 18% Increases Tesoro's average complexity from 8.5 to 9.7 Receives crude via pipeline from California's San Joaquin Valley and Los Angeles Basin as well as imported crudes via Port of Long Beach 42,000 bpd Wilmington Product Terminal Dedicated tankage at Carson terminal 16.4 Nelson Complexity Crude average API gravity of 21.9 Sulfur content of 2.7% (2nd most sour in California1) Projected first 12 months EBITDA: $365 million2 plus $100 million of synergies Baker O'Brien PRISM, November 2006 Internal estimate based on 2004-2006 average crack spread environment

Los Angeles Refinery Details Major Units* *Source: 2006 Oil & Gas Journal Historical Charge of 95 mbpd Historical Yield

Crude Supply California Crudes Shell will supply California crude for six to nine months Longer-term, will integrate into a broader California crude program Foreign Crudes Existing foreign crude supplied from South America. Tesoro will integrate with the supply of heavy, sour crudes for Golden Eagle which opens up new sources of economic supply to both refineries Combined heavy, sour crude dispositions on the West Coast allows for larger shipments of Far East, Middle East and West African grades The Los Angeles refinery will be integrated into our present supply patterns and open new optimization opportunities for the refinery and our other Pacific Rim assets

Product Supply Gasoline Current CARB gasoline production volume from the Los Angeles refinery is approximately the same offtake as the acquired Shell retail sites Additional volumes from expansion of CARB production will be sold through the USA Petroleum sites and other independent marketers Ability to produce blendstocks and California-grade products from the company's other Pacific Rim and Salt Lake facilities is enhanced with Southern California retail presence Diesel/Jet Tesoro's diesel and jet customers in S. California currently supplied by purchased or exchanged product will be directly supplied by Wilmington production

Capital & Turnaround Plans Capital Tesoro plans major investments at Los Angeles refinery over the next five years to meet compliance standards and improve operational reliability Regulatory spending of $375 - $400 million is focused on NOx compliance, wastewater treatment and flare gas recovery Maintenance spending is approximately $80 million per year Improvement spending of $325 - $350 million reflects upgrading the plant to full capabilities enabling crude flexibility and increasing throughput and yields Turnaround Plans Most major units will complete turnaround during spring 2007 (prior to closing) at Shell's cost Next major planned maintenance is scheduled for 2009

Significant System Optimization Opportunities Anticipate $100 million of annual recurring synergies Full realization in 12 months - minimal capital required Crude Optimization - The LA refinery takes many of the same heavy, sour crudes as Golden Eagle, allows for larger and more ratable volumes Cat Feed Balance - The LA refinery is a net consumer of cat feed whereas Tesoro is presently long in the existing system Gasoline Component Upgrades - provides additional opportunities to upgrade naphtha and alkylate from the company's other refineries into CARB gasoline Ability to shift production of Arizona- grade gasoline into CARB

Significant Improvement Opportunities Anticipate $125 to $150 million of annual benefit from investments focused on increasing reliability, throughput and supply of clean fuels by an estimated 21 mbpd - fully realized by 2011 Reliability Upgrades Replace existing boilers 98% lower NOx emissions, better fuel efficiency Replace existing cogeneration facility 50% reduction in NOx emissions Improve plant electrical infrastructure Conversion Efficiency Install new coker heater to increase coker throughput Realign hydroprocessing units to increase distillate yields Crude Flexibility Upgrade waterborne crude oil receiving system and crude tankage allowing additional waterborne shipments Wilmington Production Plans Excludes planned turnaround performed prior to closing mbpd Total 121 Total 95

Shell Retail Assets 2501 Shell branded retail sites Located throughout Southern California Very high volume sites at approximately 225,000 gallons per month - total volume approximates Los Angeles refinery's current production of California-grade gasoline San Diego Los Angeles Long-term development agreement allows for use of the Shell brand Projected first year EBITDA: $55 million2 Comparable site values range from $400,000 (leased real estate) to $3.0 million (fee-owned) 1) Approximate 2) Internal estimate

USA Petroleum 140 Operating Retail Sites 132 retail sites in California 73 in Northern California 59 in Southern California Remaining sites in Washington and New Mexico High volume sites - approximately 185,000 gallons per month per site San Diego Los Angeles San Francisco Projected first year EBITDA: $30 million1 Includes USA brand which will be retained Sites are company operated - most sites include real estate, remainder are leased Comparable site values range from $400,000 (leased real estate) to $3.0 million (fee-owned) 1) Internal estimate

Transaction Metrics Enterprise Value as a Multiple of 2007 EBITDA (1) Total purchase price, including inventories, divided by Tesoro's internal estimate of first 12 months EBITDA estimates based on a 2004 -2006 average margin environment, including synergies (2) Reflects present Enterprise Value (Market Cap + Debt - Cash) divided by Tesoro's internal estimate of 2007 EBITDA using 2004-2006 average margin environment including all announced capital project benefits (3) Reflects reported transaction value (Source: John S. Herold Reports) divided by the product of Nelson Complexity Index multiplied by Crude Capacity (Oil & Gas Journal) Recent Refinery Transactions ($/Complexity Barrels) /3 /3

Financing Assumptions Acquisition assumptions Shell Assets: $1,630 million additional inventory of approximately $180 -$200 million at closing USA Petroleum Assets: $277 million additional inventory of approximately $10-$15 million at closing Assumed financing structure At least $700 million cash -- $986 million at 2006 year-end Remainder in borrowings Provides maximum financial flexibility for quick de-levering based on significant free cash flow outlook Pro-forma outlook Enhances credit profile - expect to maintain or upgrade our credit ratings Debt:Total Capitalization at close less than 50% Near-term free cash flow allows quick de-levering of balance sheet

Pro-Forma 2007 Earnings

Pro-Forma 2007 Cash Flow

Summary Continues Tesoro's track record of building shareholder value Past successes of expanding production and maximizing output of acquired assets Immediately accretive to earnings and cash flow Growth at a good price - enhances Tesoro value proposition Expect at least $100 million of annual recurring synergies in the first 12 months Diversifies earnings and cash with additional exposure to heavy, sour crude oil Expands opportunity to build synergies from Pacific Rim market optimization expertise Opens crude sourcing opportunities Additional channels for maximizing clean fuels production Maximize use of unique shipping and logistics capabilities Opportunities to expand clean fuels production and throughput at Wilmington provides future earnings growth

Kenai, Alaska 72 mbpd 4.9 complexity Key product: Jet Anacortes, Washington 115 mbpd 8.2 complexity Key product: Gasoline Mandan, North Dakota 58 mbpd 7.8 complexity Key products: Gasoline & Diesel Salt Lake City, Utah 58 mbpd 6.3 complexity Key products: Gasoline & Diesel Kapolei, Hawaii 94 mbpd 4.5 complexity Key product: Jet Pro-Forma Tesoro System Corporate Office Denver Office London Office Singapore Office Auburn Office Long Beach Office Martinez, California 166 mbpd 13.5 complexity Key products: CARB Gasoline & CARB Diesel Los Angeles, California 100 mbpd 16.4 complexity Key products: CARB Gasoline & CARB Diesel Calgary Office Tesoro System Highlights 7 Refineries 663,000 bpd total crude capacity 9.7 complexity Retail network of approximately 860 sites Over 6,000 Employees

Forward Looking Statements This Presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, projections of refining margins, debt reduction, cash flows and capital expenditures. We have used the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "should", "will" and similar terms and phrases to identify forward-looking statements in this Presentation. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors which are described in greater detail in our filings with the SEC. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this Presentation.