The Ampol Ltd (ASX: ALD) share price is pushing higher today as the company provided an update regarding the performance of the Lytton refinery. The fuel and convenience giant also announced it would be undertaking a review of the refinery. At the time of writing, the Ampol share price is trading 1.72% higher at $24.77.
What does Ampol do?
Ampol, formerly known as Caltex, is a fuel supplier and convenience retailer. The company is involved in the purchase, refinement and sale of petroleum products and the operation of convenience stores. Ampol operates throughout Australia and on the north island of New Zealand.
Ampol's roots track all the way back to 1900 and the company has been listed on the ASX in its current form since 1980. The fuel provider is an established part of the S&P/ASX 200 Index (ASX: XJO).
How has the refinery performed?
As expected, the refinery made an unaudited loss of $82 million in Q3, which takes the total loss for the year to $141 million. Furthermore, the impact of COVID-19 has already largely been priced in to the Ampol share price and, as such, the loss is of no surprise. It's quite likely that the bounce in the Ampol share price today reflects the fact that shareholders were expecting a worse outcome.
Lytton refinery is now back in operation with production for Q4 expected to be 1.3 billion litres (BL). This will take the full year production for 2020 up to 3.4 BL, down from 5.8 BL for FY2019.
Refinery review
Due to the challenging conditions experienced as a result of the pandemic, Ampol will commence a comprehensive review of the Lytton refinery and its related supply chains to determine the best operating model over the medium term.
The review will consider options for the facility's operations and the markets it serves. These options may involve closure, with permanent transition to an import model or the continuation of existing refining operations among other alternate models of operation.
Ampol Managing Director and CEO, Matt Halliday, said:
The review will consider all relevant strategic, economic and operational factors, including the recent measures announced by the Australian Government to support refining and bolster fuel security, and the potential impacts on employees, suppliers and other stakeholders.
About the Ampol share price
With the Ampol share price up 1.72% in trading today, shareholders are clearly beginning to see the light as the refinery's large loss has not stopped investors bidding up the price today.
However, the Ampol share price is still trading around 27% down for the year so far, with the decline in oil prices slashing its margins.
