Ampol's Lytton refinery update

Ampol (ASX:ALD) has announced the successful completion of repairs on the regenerator of its Fluidised Catalytic Cracking Unit (FCCU) at the Lytton refinery. The unit is now in the start-up process, with production for 2024 expected to reach around 5.2 billion litres. The planned Turnaround and Inspection (T&I) of the FCCU has been postponed from the latter half of 2025 to the first half of 2026.

Key takeaways and future outlook for Ampol

Ampol has completed repairs on the FCCU at the Lytton refinery, setting its production for 2024 at an expected 5.2 billion litres. The T&I has been rescheduled to align with the ULSF project, now set for early 2026. The company plans to issue subordinated notes to refinance debt and manage capital strategically. Ampol projects a capital expenditure of $650 million in 2024, potentially impacting leverage, but anticipates returning to its targeted range by 2025. The company continues to focus on cost reduction, aiming for a $50 million target in 2025, while navigating varying market conditions across its operations.

Executive insights on Ampol's strategic moves

Ampol is planning to issue Australian Dollar-denominated subordinated notes to the wholesale market, subject to market conditions, with proceeds to refinance maturing debt facilities and for general corporate purposes. This is part of Ampol’s capital management strategy, with further pricing details to be announced. Net capital expenditure for 2024 is projected to be around $650 million, which includes investments in the ULSF project and the recently completed FCCU maintenance at Lytton. The timing of capital expenditure and recent refining performance may increase leverage at the end of 2024 to above the targeted range of 2.0 to 2.5 times Adjusted Net Debt / RCOP EBITDA. Ampol expects to return to its targeted leverage range by 2025 as refinery performance stabilizes.