Holly Corporation Reports First Quarter 2010 Results
Announces Regular Quarterly Cash Dividend
DALLAS, May 6 /PRNewswire-FirstCall/ -- Holly Corporation (NYSE: HOC) ("Holly" or the "Company") today reported first quarter 2010 financial results. For the quarter, the net loss attributable to Holly stockholders was $28.1 million ($0.53 per basic and diluted share) compared to net income attributable to Holly stockholders of $21.9 million ($0.44 per basic and diluted share) for the first quarter of 2009.
Holly also announced that its Board of Directors has declared a regular quarterly cash dividend in the amount of $0.15 per share, payable July 2, 2010 to holders of record on June 21, 2010.
For the quarter, net income attributable to our stockholders decreased by $50 million compared to the same period of 2009. This decrease was principally due to industry-wide, low refinery gross margins in the current year's first quarter. Overall refinery gross margins were $5.56 per produced barrel, a 53% decrease compared to $11.93 for the first quarter of 2009. For the three months ended March 31, 2010 our refinery production levels were at 217,000 barrels per day ("BPD"), an increase of 151% over the same period of 2009 due to production from our recently acquired Tulsa Refinery facilities combined with higher production levels at our Navajo and Woods Cross refineries.
"The difficult refining environment that we experienced in late 2009 continued into the early months of 2010," said Matthew Clifton, Chairman of the Board and Chief Executive Officer of Holly. "General weak demand for gasoline and distillate products combined with increased crude costs led to the 2010 first quarter loss. However, overall refinery margins compared somewhat favorably to the 2009 fourth quarter due to improvements late in the first quarter.
"Comparing to the 2009 first quarter, margin levels were reduced in the markets served by the Navajo Refinery, with gasoline and distillate cracks significantly less than the higher levels experienced in early 2009. Yet at the Woods Cross Refinery, margins compared favorably to the 2009 first quarter as strong demand combined with wide crude discounts led to the positive results. At our Tulsa Refinery, the lubes business generated good results, however this benefit was negated by the low crack on fuel products yielding an overall loss for our Tulsa operations. Additionally, our asphalt marketing results were significantly off as compared to its unusually strong contribution in the 2009 first quarter. Finally, our results benefited from improved earnings attributable to Holly Energy Partners' logistics business. Although we are disappointed with the loss for this quarter, we are cautiously optimistic about the remainder of 2010 as the margin environment has shown significant improvement heading into the summer."
"Operationally, at the Navajo Refinery production was somewhat reduced in the first quarter to complete certain upgrade projects that will permit us to run a wider range of lower priced crudes while increasing our flexibility in varying the mix of transportation fuels. At the Tulsa Refinery, we are making progress on our integration and optimization projects of the two facilities. During the first quarter, our production was just over 100,000 BPD.
"Looking forward, we remain confident that the enhanced capabilities of our assets, our expanded asset base, and the markets we serve, combined with our conservative financial condition will continue to allow us to meet the challenges presented by today's refining environment," Clifton said.
Sales and other revenues for the 2010 first quarter were $1,874 million, a 189% increase compared to the three months ended March 31, 2009. This was due to the effects of a 140% increase in year-over-year first quarter volumes of produced refined products sold combined with a 58% current quarter increase in refined product sales prices over the same period in 2009. The volume increase was primarily due to volumes attributable to our Tulsa Refinery operations. Cost of products sold was $1,724 million, a 237% increase compared to the three months ended March 31, 2009 due mainly to increased sales volumes combined with significantly higher crude oil acquisition costs.
Operating costs and expenses for the three months ended March 31, 2010 increased mainly due to the inclusion of costs attributable to the operations of our Tulsa Refinery facilities acquired on June 1 and December 1, 2009. Interest expense for the three months ended March 31, 2010 increased by $11.5 million primarily due to interest incurred on the $300 million Holly senior notes.
The Company has scheduled a webcast conference call for today, May 6, 2010 at 4:00 PM Eastern Time to discuss financial results. This webcast may be accessed at: http://www.videonewswire.com/event.asp?id=68093.
An audio archive of this webcast will be available using the above noted link through May 20, 2010.
Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and specialty lubricant products. Holly operates through its subsidiaries a 100,000 BPSD refinery located in Artesia, New Mexico, a 31,000 BPSD refinery in Woods Cross, Utah and a 125,000 BPSD refinery located in Tulsa, Oklahoma. Also, a subsidiary of Holly owns a 34% interest (including the 2% general partner interest) in Holly Energy Partners, L.P., which through subsidiaries owns or leases approximately 2,500 miles of petroleum product and crude oil pipelines in Texas, New Mexico, Utah and Oklahoma and tankage and refined product terminals in several Southwest and Rocky Mountain states.
The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are "forward-looking statements" based on management's beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in the Company's markets, the demand for and supply of crude oil and refined products, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, effects of governmental and environmental regulations and policies, the availability and cost of financing to the Company, the effectiveness of the Company's capital investments and marketing strategies, the Company's efficiency in carrying out construction projects, the ability of the Company to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any future acquired operations, the Company's ability to integrate the operations of the Tulsa refinery and the Sinclair refinery into a single facility and into its business, the possibility of terrorist attacks and the consequences of any such attacks, general economic conditions, and other financial, operational and legal risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
RESULTS OF OPERATIONS Financial Data (all information in this release is unaudited) |
|||||
Three Months Ended March 31, |
Change from 2009 |
||||
2010 |
2009 |
Change |
Percent |
||
(In thousands, except per share data) |
|||||
Sales and other revenues |
$ 1,874,290 |
$ 648,030 |
$ 1,226,260 |
189.2% |
|
Operating costs and expenses: |
|||||
Cost of products sold (exclusive of depreciation and amortization) |
1,723,864 |
511,654 |
1,212,210 |
236.9 |
|
Operating expenses (exclusive of depreciation and amortization) |
127,544 |
66,748 |
60,796 |
91.1 |
|
General and administrative expenses (exclusive of depreciation and amortization) |
17,869 |
11,756 |
6,113 |
52.0 |
|
Depreciation and amortization |
27,757 |
20,081 |
7,676 |
38.2 |
|
Total operating costs and expenses |
1,897,034 |
610,239 |
1,286,795 |
210.9 |
|
Income (loss) from operations |
(22,744) |
37,791 |
(60,535) |
(160.2) |
|
Other income (expense): |
|||||
Equity in earnings of SLC Pipeline |
481 |
175 |
306 |
174.9 |
|
Interest income |
59 |
2,196 |
(2,137) |
(97.3) |
|
Interest expense |
(17,722) |
(6,239) |
(11,483) |
184.1 |
|
(17,182) |
(3,868) |
(13,314) |
344.2 |
||
Income (loss) from continuing operations before income taxes |
(39,926) |
33,923 |
(73,849) |
(217.7) |
|
Income tax provision (benefit) |
(16,672) |
11,849 |
(28,521) |
(240.7) |
|
Income (loss) from continuing operations |
(23,254) |
22,074 |
(45,328) |
(205.3) |
|
Income from discontinued operations (1) |
- |
1,331 |
(1,331) |
(100.0) |
|
Net income (loss) |
(23,254) |
23,405 |
(46,659) |
(199.4) |
|
Less noncontrolling interest in net income |
4,840 |
1,460 |
3,380 |
231.5 |
|
Net income (loss) attributable to Holly Corporation stockholders |
$ (28,094) |
$ 21,945 |
$ (50,039) |
(228.0)% |
|
Earnings attributable to Holly Corporation stockholders: |
|||||
Income (loss) from continuing operations |
$ (28,094) |
$ 21,553 |
$ (49,647) |
(230.3)% |
|
Income from discontinued operations |
- |
392 |
(392) |
(100.0) |
|
Net income (loss) |
$ (28,094) |
$ 21,945 |
$ (50,039) |
(228.0)% |
|
Earnings per share attributable to Holly Corporation stockholders – basic and diluted: |
|||||
Income (loss) from continuing operations |
$ (0.53) |
$ 0.43 |
$ (0.96) |
(223.3)% |
|
Income from discontinued operations |
- |
0.01 |
(0.01) |
(100.0) |
|
Net income (loss) |
$ (0.53) |
$ 0.44 |
$ (0.97) |
(220.5)% |
|
Cash dividends declared per common share |
$ 0.15 |
$ 0.15 |
$ - |
-% |
|
Average number of common shares outstanding: |
|||||
Basic |
53,094 |
50,042 |
3,052 |
6.1% |
|
Diluted |
53,232 |
50,171 |
3,061 |
6.1% |
|
EBITDA from continuing operations |
$ 654 |
$ 57,526 |
$ (56,872) |
(98.9)% |
|
(1) On December 1, 2009, HEP sold its interest in Rio Grande. Results of operations of Rio Grande are presented in discontinued operations. |
|||||
Balance Sheet Data |
|||
March 31, |
December 31, |
||
2010 |
2009 |
||
(In thousands) |
|||
Cash, cash equivalents and investments in marketable securities |
$ 94,756 |
$ 125,819 |
|
Working capital |
$ 297,879 |
$ 257,899 |
|
Total assets |
$ 3,382,327 |
$ 3,145,939 |
|
Long-term debt – Holly Corporation |
$ 328,268 |
$ 328,260 |
|
Long-term debt – Holly Energy Partners |
$ 492,327 |
$ 379,198 |
|
Total equity |
$ 1,163,511 |
$ 1,207,781 |
|
Segment Information
Our operations are currently organized into two reportable segments, Refining and HEP. Our operations that are not included in the Refining and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Consolidations and Eliminations.
The Refining segment includes the operations of our Navajo, Woods Cross and Tulsa refineries and Holly Asphalt Company ("Holly Asphalt"). The Refining segment involves the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel, jet fuel and specialty lubricant products. The petroleum products produced by the Refining segment are primarily marketed in the Southwest, Rocky Mountain and Mid-Continent regions of the United States and northern Mexico. Additionally, the Refining segment includes specialty lubricant products produced at our Tulsa refinery that are marketed throughout North America and are distributed in Central and South America. Holly Asphalt manufactures and markets asphalt and asphalt products in Arizona, New Mexico, Texas and northern Mexico.
The HEP segment involves all of the operations of HEP. HEP owns and operates a system of petroleum product and crude gathering pipelines in Texas, New Mexico, Oklahoma and Utah, distribution terminals in Texas, New Mexico, Arizona, Utah, Idaho, and Washington and refinery tankage in New Mexico, Utah and Oklahoma. Revenues are generated by charging tariffs for transporting petroleum products and crude oil through its pipelines, by leasing certain pipeline capacity to Alon USA, Inc., by charging fees for terminalling refined products and other hydrocarbons, and storing and providing other services at its storage tanks and terminals. The HEP segment also includes a 25% interest in SLC Pipeline LLC ("SLC Pipeline") that services refineries in the Salt Lake City, Utah area. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations.
Refining |
HEP |
Corporate and Other |
Consolidations and Eliminations |
Consolidated Total |
||
(In thousands) |
||||||
Three Months Ended March 31, 2010 |
||||||
Sales and other revenues |
$ 1,867,174 |
$ 40,689 |
$ 66 |
$ (33,639) |
$ 1,874,290 |
|
Operating expenses |
$ 114,594 |
$ 13,060 |
$ 6 |
$ (116) |
$ 127,544 |
|
General and administrative expenses |
$ - |
$ 2,563 |
$ 15,306 |
$ - |
$ 17,869 |
|
Depreciation and amortization |
$ 20,726 |
$ 6,805 |
$ 521 |
$ (295) |
$ 27,757 |
|
Income (loss) from operations |
$ (24,579) |
$ 18,261 |
$ (15,767) |
$ (659) |
$ (22,744) |
|
Three Months Ended March 31, 2009 |
||||||
Sales and other revenues |
$ 636,910 |
$ 29,332 |
$ 99 |
$ (18,311) |
$ 648,030 |
|
Operating expenses |
$ 56,415 |
$ 10,342 |
$ 19 |
$ (28) |
$ 66,748 |
|
General and administrative expenses |
$ - |
$ 1,334 |
$ 10,520 |
$ (98) |
$ 11,756 |
|
Depreciation and amortization |
$ 11,951 |
$ 5,578 |
$ 2,552 |
$ - |
$ 20,081 |
|
Income (loss) from operations |
$ 38,705 |
$ 12,078 |
$ (12,992) |
$ - |
$ 37,791 |
|
March 31, 2010 |
||||||
Cash, cash equivalents and investments in marketable securities |
$ - |
$ 16,609 |
$ 78,147 |
$ - |
$ 94,756 |
|
Total assets |
$ 2,392,006 |
$ 686,022 |
$ 335,538 |
$ (31,239) |
$ 3,382,327 |
|
December 31, 2009 |
||||||
Cash, cash equivalents and investments in marketable securities |
$ - |
$ 2,508 |
$ 123,311 |
$ - |
$ 125,819 |
|
Total assets |
$ 2,142,317 |
$ 641,775 |
$ 392,007 |
$ (30,160) |
$ 3,145,939 |
|
Refining Operating Data
Our refinery operations include the Navajo, Woods Cross and Tulsa refineries. The following tables set forth information, including non-GAAP performance measures about our consolidated refinery operations. The cost of products and refinery gross margin do not include the effect of depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Navajo Refinery |
|||
Crude charge (BPD) (1) |
78,910 |
57,685 |
|
Refinery production (BPD) (2) |
87,530 |
63,061 |
|
Sales of produced refined products (BPD) |
86,930 |
62,147 |
|
Sales of refined products (BPD) (3) |
90,120 |
71,138 |
|
Refinery utilization (4) |
78.9% |
67.9% |
|
Average per produced barrel (5) |
|||
Net sales |
$ 88.06 |
$ 57.37 |
|
Cost of products (6) |
82.96 |
44.92 |
|
Refinery gross margin |
5.10 |
12.45 |
|
Refinery operating expenses (7) |
5.18 |
6.17 |
|
Net operating margin |
$ (0.08) |
$ 6.28 |
|
Feedstocks: |
|||
Sour crude oil |
87% |
87% |
|
Sweet crude oil |
4% |
8% |
|
Other feedstocks and blends |
9% |
5% |
|
Total |
100% |
100% |
|
Sales of produced refined products: |
|||
Gasolines |
59% |
61% |
|
Diesel fuels |
30% |
31% |
|
Jet fuels |
4% |
1% |
|
Fuel oil |
4% |
1% |
|
Asphalt |
1% |
3% |
|
LPG and other |
2% |
3% |
|
Total |
100% |
100% |
|
Woods Cross Refinery |
|||
Crude charge (BPD) (1) |
25,680 |
23,309 |
|
Refinery production (BPD) (2) |
26,540 |
23,286 |
|
Sales of produced refined products (BPD) |
28,170 |
27,024 |
|
Sales of refined products (BPD) (3) |
28,360 |
27,664 |
|
Refinery utilization (4) |
82.8% |
75.2% |
|
Average per produced barrel (5) |
|||
Net sales |
$ 89.52 |
$ 50.31 |
|
Cost of products (6) |
74.72 |
39.57 |
|
Refinery gross margin |
14.80 |
10.74 |
|
Refinery operating expenses (7) |
6.20 |
6.92 |
|
Net operating margin |
$ 8.60 |
$ 3.82 |
|
Feedstocks: |
|||
Sour crude oil |
8% |
3% |
|
Sweet crude oil |
61% |
66% |
|
Black wax crude oil |
28% |
29% |
|
Other feedstocks and blends |
3% |
2% |
|
Total |
100% |
100% |
|
Feedstocks: |
|||
Sour crude oil |
8% |
3% |
|
Sweet crude oil |
61% |
66% |
|
Black wax crude oil |
28% |
29% |
|
Other feedstocks and blends |
3% |
2% |
|
Total |
100% |
100% |
|
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Sales of produced refined products: |
|||
Gasolines |
64% |
68% |
|
Diesel fuels |
28% |
23% |
|
Jet fuels |
1% |
1% |
|
Fuel oil |
1% |
4% |
|
Asphalt |
3% |
1% |
|
LPG and other |
3% |
3% |
|
Total |
100% |
100% |
|
Tulsa Refinery |
|||
Crude charge (BPD) (1) |
103,600 |
- |
|
Refinery production (BPD) (2) |
102,890 |
- |
|
Sales of produced refined products (BPD) |
98,760 |
- |
|
Sales of refined products (BPD) (3) |
100,620 |
- |
|
Refinery utilization (4) |
82.9% |
-% |
|
Average per produced barrel (5) |
|||
Net sales |
$ 86.22 |
$ - |
|
Cost of products (6) |
82.89 |
- |
|
Refinery gross margin |
3.33 |
- |
|
Refinery operating expenses (7) |
5.91 |
- |
|
Net operating margin |
$ (2.58) |
$ - |
|
Feedstocks: |
|||
Sweet crude oil |
100% |
-% |
|
Sales of produced refined products: |
|||
Gasolines |
41% |
-% |
|
Diesel fuels |
30% |
-% |
|
Jet fuels |
9% |
-% |
|
Lubricants |
10% |
-% |
|
Asphalt |
4% |
-% |
|
Gas oil / intermediates |
2% |
-% |
|
LPG and other |
4% |
-% |
|
Total |
100% |
-% |
|
Consolidated |
|||
Crude charge (BPD) (1) |
208,190 |
80,994 |
|
Refinery production (BPD) (2) |
216,960 |
86,347 |
|
Sales of produced refined products (BPD) |
213,860 |
89,171 |
|
Sales of refined products (BPD) (3) |
219,100 |
98,802 |
|
Refinery utilization (4) |
81.3% |
69.8% |
|
Average per produced barrel (5) |
|||
Net sales |
$ 87.40 |
$ 55.23 |
|
Cost of products (6) |
81.84 |
43.30 |
|
Refinery gross margin |
5.56 |
11.93 |
|
Refinery operating expenses (7) |
5.65 |
6.40 |
|
Net operating margin |
$ (0.09) |
$ 5.53 |
|
Feedstocks: |
|||
Sour crude oil |
36% |
64% |
|
Sweet crude oil |
56% |
24% |
|
Black wax crude oil |
3% |
8% |
|
Other feedstocks and blends |
5% |
4% |
|
Total |
100% |
100% |
|
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Sales of produced refined products: |
|||
Gasolines |
51% |
63% |
|
Diesel fuels |
30% |
29% |
|
Jet fuels |
6% |
1% |
|
Fuel oil |
2% |
2% |
|
Asphalt |
3% |
2% |
|
Lubricants |
4% |
-% |
|
Gas oil / intermediates |
1% |
-% |
|
LPG and other |
3% |
3% |
|
Total |
100% |
100% |
|
(1) Crude charge represents the barrels per day of crude oil processed at our refineries. (2) Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries. (3) Includes refined products purchased for resale. (4) Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity was increased by 15,000 BPSD effective April 1, 2009 (our Navajo refinery expansion), 85,000 BPSD effective June 1, 2009 (our Tulsa Refinery west facility acquisition) and 40,000 BPSD effective December 1, 2009 (our Tulsa refinery east facility acquisition), increasing our consolidated crude capacity to 256,000 BPSD. (5) Represents average per barrel amount for produced refined products sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below. (6) Transportation, terminal and refinery storage costs billed from HEP are included in cost of products. (7) Represents operating expenses of our refineries, exclusive of depreciation and amortization. |
|||
Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles
Reconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") to amounts reported under generally accepted accounting principles in financial statements.
Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income attributable to Holly Corporation stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. EBITDA is not a calculation provided for under accounting principles generally accepted in the United States; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.
Set forth below is our calculation of EBITDA from continuing operations.
Three Months Ended March 31, |
|||
2010 |
2009 |
||
(In thousands) |
|||
Income (loss) from continuing operations |
$ (23,254) |
$ 22,074 |
|
Subtract noncontrolling interest in income from continuing operations |
(4,840) |
(521) |
|
Add (subtract) income tax provision (benefit) |
(16,672) |
11,849 |
|
Add interest expense |
17,722 |
6,239 |
|
Subtract interest income |
(59) |
(2,196) |
|
Add depreciation and amortization |
27,757 |
20,081 |
|
EBITDA from continuing operations |
$ 654 |
$ 57,526 |
|
Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.
Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis.
We calculate refinery gross margin and net operating margin using net sales, cost of products and operating expenses, in each case averaged per produced barrel sold. These two margins do not include the effect of depreciation and amortization. Each of these component performance measures can be reconciled directly to our Consolidated Statements of Income.
Other companies in our industry may not calculate these performance measures in the same manner.
Refinery Gross Margin
Refinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. Refinery gross margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Average per produced barrel: |
|||
Navajo Refinery |
|||
Net sales |
$ 88.06 |
$ 57.37 |
|
Less cost of products |
82.96 |
44.92 |
|
Refinery gross margin |
$ 5.10 |
$ 12.45 |
|
Woods Cross Refinery |
|||
Net sales |
$ 89.52 |
$ 50.31 |
|
Less cost of products |
74.72 |
39.57 |
|
Refinery gross margin |
$ 14.80 |
$ 10.74 |
|
Tulsa Refinery |
|||
Net sales |
$ 86.22 |
$ - |
|
Less cost of products |
82.89 |
- |
|
Refinery gross margin |
$ 3.33 |
$ - |
|
Consolidated |
|||
Net sales |
$ 87.40 |
$ 55.23 |
|
Less cost of products |
81.84 |
43.30 |
|
Refinery gross margin |
$ 5.56 |
$ 11.93 |
|
Net Operating Margin
Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. Net operating margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Average per produced barrel: |
|||
Navajo Refinery |
|||
Refinery gross margin |
$ 5.10 |
$ 12.45 |
|
Less refinery operating expenses |
5.18 |
6.17 |
|
Net operating margin |
$ (0.08) |
$ 6.28 |
|
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Woods Cross Refinery |
|||
Refinery gross margin |
$ 14.80 |
$ 10.74 |
|
Less refinery operating expenses |
6.20 |
6.92 |
|
Net operating margin |
$ 8.60 |
$ 3.82 |
|
Tulsa Refinery |
|||
Refinery gross margin |
$ 3.33 |
$ - |
|
Less refinery operating expenses |
5.91 |
- |
|
Net operating margin |
$ (2.58) |
$ - |
|
Consolidated |
|||
Refinery gross margin |
$ 5.56 |
$ 11.93 |
|
Less refinery operating expenses |
5.65 |
6.40 |
|
Net operating margin |
$ (0.09) |
$ 5.53 |
|
Below are reconciliations to our Consolidated Statements of Income for (i) net sales, cost of products and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin. Due to rounding of reported numbers, some amounts may not calculate exactly.
Reconciliations of refined product sales from produced products sold to total sales and other revenue
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Navajo Refinery |
|||
Average sales price per produced barrel sold |
$ 88.06 |
$ 57.37 |
|
Times sales of produced refined products sold (BPD) |
86,930 |
62,147 |
|
Times number of days in period |
90 |
90 |
|
Refined product sales from produced products sold |
$ 688,955 |
$ 320,884 |
|
Woods Cross Refinery |
|||
Average sales price per produced barrel sold |
$ 89.52 |
$ 50.31 |
|
Times sales of produced refined products sold (BPD) |
28,170 |
27,024 |
|
Times number of days in period |
90 |
90 |
|
Refined product sales from produced products sold |
$ 226,960 |
$ 122,362 |
|
Tulsa Refinery |
|||
Average sales price per produced barrel sold |
$ 86.22 |
$ - |
|
Times sales of produced refined products sold (BPD) |
98,760 |
- |
|
Times number of days in period |
90 |
- |
|
Refined product sales from produced products sold |
$ 766,358 |
$ - |
|
Sum of refined products sales from produced products sold from our three refineries (4) |
$ 1,682,273 |
$ 443,246 |
|
Add refined product sales from purchased products and rounding (1) |
41,506 |
53,646 |
|
Total refined products sales |
1,723,779 |
496,892 |
|
Add direct sales of excess crude oil (2) |
134,862 |
121,255 |
|
Add other refining segment revenue (3) |
8,533 |
18,763 |
|
Total refining segment revenue |
1,867,174 |
636,910 |
|
Add HEP segment sales and other revenues |
40,689 |
29,332 |
|
Add corporate and other revenues |
66 |
99 |
|
Subtract consolidations and eliminations |
(33,639) |
(18,311) |
|
Sales and other revenues |
$ 1,874,290 |
$ 648,030 |
|
(1) We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments. (2) We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost. (3) Other refining segment revenue includes the revenues associated with Holly Asphalt and revenue derived from feedstock and sulfur credit sales. (4) The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. |
|||
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Average sales price per produced barrel sold |
$ 87.40 |
$ 55.23 |
|
Times sales of produced refined products sold (BPD) |
213,860 |
89,171 |
|
Times number of days in period |
90 |
90 |
|
Refined product sales from produced products sold |
$ 1,682,273 |
$ 443,246 |
|
Reconciliation of average cost of products per produced barrel sold to total cost of products sold
Three Months Ended March 31, |
||||
2010 |
2009 |
|||
Navajo Refinery |
||||
Average cost of products per produced barrel sold |
$ 82.96 |
$ 44.92 |
||
Times sales of produced refined products sold (BPD) |
86,930 |
62,147 |
||
Times number of days in period |
90 |
90 |
||
Cost of products for produced products sold |
$ 649,054 |
$ 251,248 |
||
Woods Cross Refinery |
||||
Average cost of products per produced barrel sold |
$ 74.72 |
$ 39.57 |
||
Times sales of produced refined products sold (BPD) |
28,170 |
27,024 |
||
Times number of days in period |
90 |
90 |
||
Cost of products for produced products sold |
$ 189,438 |
$ 96,241 |
||
Tulsa Refinery |
||||
Average cost of products per produced barrel sold |
$ 82.89 |
$ - |
||
Times sales of produced refined products sold (BPD) |
98,760 |
- |
||
Times number of days in period |
90 |
- |
||
Cost of products for produced products sold |
$ 736,759 |
$ - |
||
Sum of cost of products for produced products sold from our three refineries (4) |
$ 1,575,251 |
$ 347,489 |
||
Add refined product costs from purchased products sold and rounding (1) |
41,464 |
57,760 |
||
Total refined cost of products sold |
1,616,715 |
405,249 |
||
Add crude oil cost of direct sales of excess crude oil (2) |
133,667 |
120,682 |
||
Add other refining segment cost of products sold (3) |
6,051 |
3,908 |
||
Total refining segment cost of products sold |
1,756,433 |
529,839 |
||
Subtract consolidations and eliminations |
(32,569) |
(18,185) |
||
Costs of products sold (exclusive of depreciation and amortization) |
$ 1,723,864 |
$ 511,654 |
||
(1) We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments. (2) We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost. (3) Other refining segment cost of products sold includes the cost of products for Holly Asphalt and costs attributable to feedstock and sulfur credit sales. (4) The above calculations of cost of products for produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. |
||||
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Average cost of products per produced barrel sold |
$ 81.84 |
$ 43.30 |
|
Times sales of produced refined products sold (BPD) |
213,860 |
89,171 |
|
Times number of days in period |
90 |
90 |
|
Cost of products for produced products sold |
$ 1,575,251 |
$ 347,489 |
|
Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Navajo Refinery |
|||
Average refinery operating expenses per produced barrel sold |
$ 5.18 |
$ 6.17 |
|
Times sales of produced refined products sold (BPD) |
86,930 |
62,147 |
|
Times number of days in period |
90 |
90 |
|
Refinery operating expenses for produced products sold |
$ 40,527 |
$ 34,510 |
|
Woods Cross Refinery |
|||
Average refinery operating expenses per produced barrel sold |
$ 6.20 |
$ 6.92 |
|
Times sales of produced refined products sold (BPD) |
28,170 |
27,024 |
|
Times number of days in period |
90 |
90 |
|
Refinery operating expenses for produced products sold |
$ 15,719 |
$ 16,831 |
|
Tulsa Refinery |
|||
Average refinery operating expenses per produced barrel sold |
$ 5.91 |
$ - |
|
Times sales of produced refined products sold (BPD) |
98,760 |
- |
|
Times number of days in period |
90 |
- |
|
Refinery operating expenses for produced products sold |
$ 52,530 |
$ - |
|
Sum of refinery operating expenses per produced products sold from our three refineries (2) |
$ 108,776 |
$ 51,341 |
|
Add other refining segment operating expenses and rounding (1) |
5,818 |
5,074 |
|
Total refining segment operating expenses |
114,594 |
56,415 |
|
Add HEP segment operating expenses |
13,060 |
10,342 |
|
Add corporate and other costs |
6 |
19 |
|
Subtract consolidations and eliminations |
(116) |
(28) |
|
Operating expenses (exclusive of depreciation and amortization) |
$ 127,544 |
$ 66,748 |
|
(1) Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of Holly Asphalt. (2) The above calculations of refinery operating expenses from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. |
|||
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Average refinery operating expenses per produced barrel sold |
$ 5.65 |
$ 6.40 |
|
Times sales of produced refined products sold (BPD) |
213,860 |
89,171 |
|
Times number of days in period |
90 |
90 |
|
Refinery operating expenses for produced products sold |
$ 108,776 |
$ 51,341 |
|
Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Navajo Refinery |
|||
Net operating margin per barrel |
$ (0.08) |
$ 6.28 |
|
Add average refinery operating expenses per produced barrel |
5.18 |
6.17 |
|
Refinery gross margin per barrel |
5.10 |
12.45 |
|
Add average cost of products per produced barrel sold |
82.96 |
44.92 |
|
Average sales price per produced barrel sold |
$ 88.06 |
$ 57.37 |
|
Times sales of produced refined products sold (BPD) |
86,930 |
62,147 |
|
Times number of days in period |
90 |
90 |
|
Refined products sales from produced products sold |
$ 688,955 |
$ 320,884 |
|
Woods Cross Refinery |
|||
Net operating margin per barrel |
$ 8.60 |
$ 3.82 |
|
Add average refinery operating expenses per produced barrel |
6.20 |
6.92 |
|
Refinery gross margin per barrel |
14.80 |
10.74 |
|
Add average cost of products per produced barrel sold |
74.72 |
39.57 |
|
Average sales price per produced barrel sold |
$ 89.52 |
$ 50.31 |
|
Times sales of produced refined products sold (BPD) |
28,170 |
27,024 |
|
Times number of days in period |
90 |
90 |
|
Refined products sales from produced products sold |
$ 226,960 |
$ 122,362 |
|
Tulsa Refinery |
|||
Net operating margin per barrel |
$ (2.58) |
$ - |
|
Add average refinery operating expenses per produced barrel |
5.91 |
- |
|
Refinery gross margin per barrel |
3.33 |
- |
|
Add average cost of products per produced barrel sold |
82.89 |
- |
|
Average sales price per produced barrel sold |
$ 86.22 |
$ - |
|
Times sales of produced refined products sold (BPD) |
98,760 |
- |
|
Times number of days in period |
90 |
- |
|
Refined products sales from produced products sold |
$ 766,358 |
$ - |
|
Sum of refined products sales from produced products sold from our three refineries (4) |
$ 1,682,273 |
$ 443,246 |
|
Add refined product sales from purchased products and rounding (1) |
41,506 |
53,646 |
|
Total refined products sales |
1,723,779 |
496,892 |
|
Add direct sales of excess crude oil (2) |
134,862 |
121,255 |
|
Add other refining segment revenue (3) |
8,533 |
18,763 |
|
Total refining segment revenue |
1,867,174 |
636,910 |
|
Add HEP segment sales and other revenues |
40,689 |
29,332 |
|
Add corporate and other revenues |
66 |
99 |
|
Subtract consolidations and eliminations |
(33,639) |
(18,311) |
|
Sales and other revenues |
$ 1,874,290 |
$ 648,030 |
|
(1) We purchase finished products when opportunities arise that provide a profit on the sale of such products or to meet delivery commitments. (2) We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost. (3) Other refining segment revenue includes the revenues associated with Holly Asphalt and revenue derived from feedstock and sulfur credit sales. (4) The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. |
|||
Three Months Ended March 31, |
|||
2010 |
2009 |
||
Net operating margin per barrel |
$ (0.09) |
$ 5.53 |
|
Add average refinery operating expenses per produced barrel |
5.65 |
6.40 |
|
Refinery gross margin per barrel |
5.56 |
11.93 |
|
Add average cost of products per produced barrel sold |
81.84 |
43.30 |
|
Average sales price per produced barrel sold |
$ 87.40 |
$ 55.23 |
|
Times sales of produced refined products sold (BPD) |
213,860 |
89,171 |
|
Times number of days in period |
90 |
90 |
|
Refined product sales from produced products sold |
$ 1,682,273 |
$ 443,246 |
|
SOURCE Holly Corporation
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