HollyFrontier posts record earnings in 2012
BY ROD WALTON World Staff Writer
Wednesday, February 27, 2013
2/27/13 at 8:25 AM
Strong margins in the segment that includes its Tulsa refinery helped HollyFrontier Corp. achieve record earnings in 2012, the Dallas-based company reported Tuesday.
HollyFrontier, which owns and operates the former Sunoco and Sinclair refineries in west Tulsa, netted $1.73 billion in full-year profit, compared with $1 billion in 2011.
Fourth-quarter net income rose 75 percent to $391.6 million, while overall production levels averaged 447,000 barrels per day. The Mid-Continent region, which includes Tulsa and the company's refinery in El Dorado, Kan., averaged nearly 265,000 bpd.
"For the fourth quarter, strength in inland to coastal crude oil differentials continued to contribute to attractive refined product margins, particularly considering the effects of lower seasonal demand that have historically yielded tighter margins," CEO Mike Jennings said in a news release.
"Looking to 2013, we believe that the structural crude advantages currently driving our operating margins will positively impact our operating income, allowing us to continue to pay both regular and special dividends."
The strong discount in the price of West Texas intermediate and other domestic grades of crude oil - compared with the offshore London Brent variety - has benefited HollyFrontier and other U.S. inland refiners. The net operating margin in the Mid-Continent section averaged $17.53 per barrel in the fourth quarter and $18.59 in all of 2012, both big improvements over the same periods in 2011.
The Tulsa West refinery, formerly Sunoco, finished its full maintenance turnaround in the fourth quarter but took three weeks longer than planned due to equipment reliability issues, HollyFrontier Chief Operating Officer Dave Lamp said in a conference call with analysts and media.
The maintenance project was HollyFrontier's first full turnaround at the plant since the company acquired it from Sunoco in 2009. The turnaround planned for Tulsa East was moved from March to May, including work on the crude unit reformer and naphtha hydrotreater, Lamp said.
Gasoline and diesel accounted for 81 percent of the Mid-Continent output for HollyFrontier in the fourth quarter. The refineries also produce jet fuel, asphalt and lubricant.
The Mid-Continent crack spread, or differential between the cost of a barrel of crude oil and the value of the products extracted from it, averaged $11 per barrel of gasoline and $33 of diesel in January, the company reported. The lubricants produced from those refineries averaged a crack spread of $69 per barrel.
HollyFrontier ended the quarter with a balance of $2.4 billion in cash and short-term investments, while consolidated debt totaled $1.3 billion.
Holly Frontier earnings
| 2012 4Q | 2011 4Q | 2012 Full-year | 2011 Full-year |
| Revenue | $5.15B | $4.97B | $15.8B | $15.4B |
| Net income (loss) | $391.6M | $223.4M | $1.73B | $1.06B |
| Net per share | $1.92 | $1.06 | $8.38 | $6.42 |
Original Print Headline: Refiner reports record earnings
Rod Walton 918-581-8457
rod.walton@tulsaworld.com
