Sunoco Reports Third Quarter 2009 Results

Sunoco, Inc. (NYSE: SUN) today reported a net loss attributable to Sunoco shareholders of $312 million ($2.67 per share diluted) for the third quarter of 2009 versus net income attributable to Sunoco shareholders of $549 million ($4.70 per share diluted) for the third quarter of 2008. Excluding special items, Sunoco had a loss for the 2009 third quarter of $34 million ($0.29 per share diluted) versus 2008 third quarter income of $559 million ($4.78 per share diluted).

For the first nine months of 2009, Sunoco reported a net loss attributable to Sunoco shareholders of $355 million ($3.04 per share diluted) versus net income attributable to Sunoco shareholders of $572 million ($4.88 per share diluted) for the first nine months of 2008. Excluding special items, Sunoco reported a loss of $6 million ($0.05 per share diluted) in the first nine months of 2009 versus 2008 first nine months income of $561 million ($4.79 per share diluted).

"During the third quarter, refining and chemicals results continued to be impacted by weak demand, but our other businesses continued to generate steady earnings,” said Lynn L. Elsenhans, Sunoco’s Chairman and Chief Executive Officer. "The earnings contribution from our non-refining businesses improved to $102 million in the third quarter, up from $78 million in the second quarter. Retail Marketing benefited from stable wholesale prices, earning $49 million, while Logistics earned $19 million and our Coke business earned $35 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 has taken steps to improve our competitive cost position and optimize our portfolio and operational performance. Specifically, on October 6, we announced the indefinite idling of the Eagle Point refinery in an effort to reduce losses in our refining business at a time when weak demand and increased global refining capacity have created margin pressure on the entire refining industry. This effort will shift current Eagle Point production to our nearby refineries in Marcus Hook and Philadelphia, which will operate at higher capacity utilization and allow us to reduce our breakeven costs. We also continued to make progress on cost reductions through our business improvement initiative and took steps to further optimize our portfolio through the divestiture of our retail heating oil and propane distribution business. Additionally, we have recently informed our employees of changes to our defined benefit pension plan and postretirement medical coverage which will reduce our employee-related costs and future cash needs to fund the plans. These initiatives, coupled with our spending discipline and our previously announced dividend reduction in 2010, will allow us to maintain our financial flexibility as we manage through this refining down cycle.”

DETAILS OF THIRD QUARTER RESULTS

REFINING AND SUPPLY- Continuing Operations

Refining and Supply had a loss from continuing operations totaling $118 million in the current quarter versus income of $398 million in the third quarter of 2008. The decrease in results was due to lower realized margins and lower production volumes, partially offset by lower expenses. Our realized margins and crude utilization rate were negatively affected by market weakness during the quarter. The overall crude utilization rate was 74 percent for the quarter which includes the impact of a planned turnaround at our Toledo refinery and a planned one-month maintenance outage at a fluid catalytic cracking unit in our Philadelphia refinery. The process for idling the Eagle Point refinery continues and all processing units have ceased production this week.

REFINING AND SUPPLY- Discontinued Operations

Discontinued Tulsa refining operations, which were divested on June 1, 2009, had income of $26 million in the third quarter of 2008.

RETAIL MARKETING

Retail Marketing earned $49 million in the current quarter versus $72 million in the third quarter of 2008. The decrease in earnings was primarily due to lower average retail gasoline margins, partially offset by lower expenses. Sales volumes were relatively flat versus the year-ago quarter. Retail gasoline margins in the third quarter of 2008 benefited from the rapid decrease in wholesale prices during that period.

CHEMICALS

Chemicals reported a loss of $1 million in the third quarter of 2009 versus income of $19 million in the third quarter of 2008. The decrease in results was due primarily to lower margins and sales volumes, partially offset by lower expenses.

LOGISTICS

Logistics earned $19 million in the third quarter of 2009 versus $20 million in the third quarter of 2008. Additional earnings from a refined products pipeline and terminal system acquired in November 2008 were essentially offset by lower lease acquisition results.

COKE

Coke earned $35 million in the third quarter of 2009 compared to $29 million in the third quarter of 2008. The increase in earnings was primarily due to improved results from Jewell operations largely associated with higher price realizations from coke production.

CORPORATE AND OTHER

Corporate Expenses – Corporate administrative expenses (income) were $6 million after tax in the third quarter of 2009 versus $(2) million after tax in the third quarter of 2008. Corporate expenses included favorable income tax consolidation adjustments amounting to $5 and $11 million in the third quarters of 2009 and 2008, respectively, which reversed unfavorable adjustments recorded in the first six months of those years.

Net Financing Expenses and Other – Net financing expenses and other were $12 million after tax in the third quarter of 2009 versus $7 million after tax in the third quarter of 2008. The increase was primarily due to higher interest expense.

SPECIAL ITEMS

During the third quarter of 2009, Sunoco recorded a $278 million after-tax provision in connection with its plan to idle indefinitely all process units at the Eagle Point refinery, of which $254 million represents non-cash charges; recorded a $14 million after-tax charge in connection with the business improvement initiative, all of which was attributable to a non-cash provision for pension and postretirement settlement losses; recorded a $12 million after-tax non-cash provision to write down to estimated fair value certain other assets in the Refining and Supply business; and recognized a $26 million after-tax gain on divestment of the retail heating oil and propane distribution business. The total net impact of special items during the third quarter of 2009 is a charge of $278 million after tax.

During the third quarter of 2008, Sunoco recognized a $10 million after-tax provision to write-off certain assets attributable to its discontinued Tulsa operations.

PENSION AND POSTRETIREMENT HEALTHCARE CHANGES

Effective June 30, 2010, pension benefits under the Company's defined benefit pension plans will be frozen for most employees. Similarly, postretirement medical benefits for the majority of future retirees will be phased out for those employees retiring after July 1, 2010. These moves will bring the Company more predictable retirement plan costs and cash flow. By freezing the benefits, Sunoco’s future financial liabilities and requirements for cash contributions to the pension plans and funding of retiree health care will be substantially reduced.

Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer and marketer of petroleum and petrochemical products. With 825 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 approximately 40 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 third quarter's results can monitor the Company's quarterly teleconference call, which is scheduled for 5:30 p.m. ET on November 5, 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 businesses. 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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