Sunoco Reports First Quarter Results

Sunoco, Inc. (NYSE:SUN) today reported net income attributable to Sunoco shareholders of $12 million ($0.10 per share diluted) for the first quarter of 2009 versus a net loss attributable to shareholders of $59 million ($0.50 per share diluted) for the first quarter of 2008. Income before special items was $59 million ($0.50 per share diluted) for the first quarter of 2009. There were no special items in the first quarter of 2008.

"In a period of significant demand weakness, we were able to earn $23 million in Refining and Supply by effectively optimizing operations in a very difficult market,” said Lynn Elsenhans, Sunoco’s Chairman and Chief Executive Officer. "In addition, our non-refining businesses earned $57 million in the first quarter. While lower demand and rising feedstock costs limited the contribution from Retail Marketing and Chemicals, Logistics earnings of $30 million reflected another record quarterly result from Sunoco Logistics Partners L.P. and our Coke segment earned $25 million.”

Commenting on the Company's outlook, Elsenhans said, "We continue to expect a challenging market for petroleum and chemical products due to ongoing economic weakness and additional global supply. However, the Company remains focused on executing its strategic plan. In the first quarter, we implemented the first phase of our business improvement initiative, and expect to reduce costs by more than $300 million on an annualized basis by year end. Our capital spending for 2009 is now expected to be approximately $200 million lower than planned. This reduction is primarily associated with the deferral of the Middletown, Ohio cokemaking construction project due to permitting delays and the deferral of certain other projects in Refining and Supply. In addition, we successfully completed debt offerings of $250 million by Sunoco, Inc. and $175 million by Sunoco Logistics Partners L.P. during the quarter. Further, in April, we executed a sales agreement for our Tulsa refinery and Sunoco Logistics Partners L.P. issued 2.25 million limited partnership units generating approximately $110 million of net proceeds from the offering. These actions along with our continued operating discipline will assist us in maintaining our financial flexibility and liquidity through 2009.”

DETAILS OF FIRST QUARTER RESULTS

REFINING AND SUPPLY

Refining and Supply earned $23 million in the first quarter of 2009 versus a loss of $123 million in the first quarter of 2008. The improvement was due to higher realized margins and lower expenses, partially offset by lower production volumes associated with market-driven rate reductions. During the quarter, we continued to optimize our production slate and run a broader mix of lower-cost crude oil grades resulting in an overall crude utilization rate of 74 percent for the quarter.

During April 2009, Sunoco entered into an agreement in principle to sell its Tulsa refinery to Holly Corporation for $65 million in cash plus inventory. The transaction is subject to customary closing conditions, such as regulatory and other approvals, and is expected to close on June 1, 2009.

RETAIL MARKETING

Retail Marketing earned $6 million in the current quarter versus $26 million in the first quarter of 2008. The decrease in earnings was due to lower margins, partially offset by lower expenses. Sales volumes were relatively flat, but margins were negatively affected by periods of rising wholesale prices and a weak demand environment.

CHEMICALS

Chemicals had a loss of $4 million in the first quarter of 2009 versus income of $18 million in the first quarter of 2008. The decrease in results was due primarily to lower margins and sales volumes, partially offset by a $10 million favorable after-tax lower of cost or market adjustment to its polypropylene inventory previously written down in the fourth quarter of 2008. In March 2009, Sunoco permanently shut down its 400 million pounds-per-year polypropylene manufacturing facility located in Bayport, TX.

LOGISTICS

Sunoco’s Logistics segment earned a record $30 million in the first quarter of 2009 versus $15 million in the first quarter of 2008. The increase was due to significantly higher lease acquisition results, increased crude oil pipeline and storage revenues, and earnings from a refined products pipeline and terminal system acquired in November 2008.

COKE

Coke earned $25 million in the first quarter of 2009, unchanged compared to the first quarter of 2008. The favorable impact of increased price realizations from coke production at Jewell was essentially offset by higher operating expenses at Haverhill.

CORPORATE AND OTHER

Corporate Expenses – Corporate administrative expenses were $11 million after tax in the first quarter of 2009 versus $17 million after tax in the first quarter of 2008. The decrease was primarily due to the absence of a $9 million unfavorable income tax consolidation adjustment that was recorded in the prior-year period.

Net Financing Expenses and Other – Net financing expenses and other were $10 million after tax in the first quarter of 2009 versus $3 million after tax in the first quarter of 2008. The increase was primarily due to lower interest income and higher interest expense.

SPECIAL ITEMS

During the first quarter of 2009, Sunoco established a $34 million after-tax accrual for employee terminations and related costs in connection with a business improvement initiative; established a $4 million after-tax accrual for a contract loss, employee terminations and other exit costs in connection with the shutdown of the Bayport, TX polypropylene plant; and recorded a $9 million after-tax provision to write down to estimated fair value certain assets primarily in the Refining and Supply business.

Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer and marketer of petroleum and petrochemical products. With 910 thousand barrels per day of refining capacity, approximately 4,700 retail sites selling gasoline and convenience items, approximately 6,000 miles of crude oil and refined product owned and operated pipelines and 43 product terminals, Sunoco is one of the largest independent refiner-marketers in the United States. Sunoco is a significant manufacturer of petrochemicals with annual production capacity of approximately five billion pounds, largely chemical intermediates used to make fibers, plastics, film and resins. Utilizing a unique, patented technology, Sunoco’s cokemaking facilities in the United States have the capacity to manufacture approximately 3.0 million tons annually of high-quality metallurgical-grade coke for use in the steel industry. Sunoco also is the operator of, and has an equity interest in, a 1.7 million tons-per-year cokemaking facility in Vitória, Brazil.

Anyone interested in obtaining further insights into the first quarter's results can monitor the Company's quarterly teleconference call, which is scheduled for 3:00 p.m. ET on May 7, 2009. It can be accessed through Sunoco's website - www.SunocoInc.com. It is suggested that you visit the site prior to the teleconference to ensure that you have downloaded any necessary software.

Those statements made in this release that are not historical facts are forward-looking statements intended to be covered by the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon assumptions by the Company concerning future conditions, any or all of which ultimately may prove to be inaccurate, and upon the current knowledge, beliefs and expectations of Company management. These forward-looking statements are not guarantees of future performance. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements are inherently uncertain and involve significant known and unknown risks and uncertainties (many of which are beyond the control of the Company) that could cause actual results to differ materially from those discussed in this release.

Such risks and uncertainties include economic, business, competitive and/or regulatory factors affecting the Company’s business, as well as uncertainties related to the outcomes of pending or future litigation, legislation, or regulatory actions. Among such risks are: changes in crude oil or natural gas prices, refining, marketing and chemicals margins, or other market conditions affecting the oil and gas industry; higher-than-expected costs of, or delays in, planned development or completion of repair projects, capital projects, acquisitions, or dispositions; operational interruptions, unforeseen technical difficulties and/or changes in technical or operating conditions; general domestic and international economic and political conditions, wars and acts of terrorism or sabotage; the outcome of commercial negotiations; the actions of competitors or regulators; the competitiveness of alternate-energy sources or product substitutes; technological developments; liability resulting from pending or future litigation; significant investment or product changes and/or liability for remedial actions or assessments under existing or future environmental regulations; gains and losses related to the acquisition, disposition or impairment of assets; recapitalizations; access to, or significantly higher costs of, capital; the effects of changes in accounting rules applicable to the Company; and changes in tax, environmental and other laws and regulations applicable to the Company’s business. Unpredictable or unknown factors not discussed in this release also could have material adverse effects on forward-looking statements.

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company has included in its Annual Report on Form 10-K for the year ended December 31, 2008 and in its subsequent Form 10-Q and Form 8-K filings, cautionary language identifying other important factors (though not necessarily all such factors) that could cause future outcomes to differ materially from those set forth in the forward-looking statements. For more information concerning these factors, see the Company’s Securities and Exchange Commission filings, available on the Company’s website at www.SunocoInc.com.

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