Philadelphia, Pennsylvania-based Sunoco, Inc. said a much improved refining environment led the company’s net income captured for the first quarter to $86 million, which compares with a $107 million net loss for the same three months in 2002.

“We have had an excellent start to 2003,” said John G. Drosdick, Sunoco chairman and CEO. “Financially, our earnings and cash generation for the quarter were quite strong and strategically we took several important steps designed to profitably grow the company.”

Included in those steps is Sunoco’s intent to acquire 193 high-quality, company-operated Speedway retail sites in the southeast United States, with the company reaching the deal during the first quarter. Sunoco said the acquisition will expand its presence in Florida and elsewhere in the southeastern U.S.

For the retail sector, Sunoco also said it will sell its interests in 190 retail sites in Ohio and Michigan. While selling the outlets, Sunoco said it expects to continue supplying the retail locations through new agreements with Sunoco distributors.

“Importantly, we have the financial capacity to execute this growth,” said Drosdick. The CEO said the company closed its $198 million transaction with Equistar and still reduced net debt by $66 million during the quarter.

“For the quarter, we earned $86 million, largely on the strength of much improved Refining and Supply results,” said Drosdick. “The improvement in refining fundamentals and margins that began in late 2002 continued during the recent quarter,” he continued, saying the year began with refined product supply at below-average inventory levels.

Drosdick said the low supply level was further impacted by reduced crude oil and product supply from Venezuela, a high level of industry-wide refinery maintenance activity and increased product demand associated with the exceptionally cold winter in the U.S. and Europe.

“Despite significantly higher crude oil and transportation costs, refining margins were very strong, especially in our northeast U.S. refining system,” said Drosdick.

“While we experienced some cold-weather-related downtime at our facilities, overall our refineries ran at a very high utilization level and did a good job maximizing and optimizing production during the quarter,” he continued.