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HollyFrontier reports on strong second quarter performance

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Hydrocarbon Engineering,

HollyFrontier Corporation reported second quarter net income attributable to HollyFrontier stockholders of US$360.8 million, or US$1.88 per diluted share, for the quarter ended 30 June 2015, compared to US$176.4 million, or US$0.89 per diluted share, for the quarter ended 30 June 2014. Included in the current quarter results was a non-cash inventory valuation adjustment that increased earnings by US$82.7 million, after tax, or US$0.43 per share.

The company also announced that its Board of Directors declared a regular quarterly dividend of US$0.33 per share. This dividend will be paid on 25 September 2015 to holders of record of common stock on 2 September 2015.

For the second quarter, net income attributable to stockholders, excluding the lower of cost or market inventory valuation adjustment, increased by US$101.7 million compared to the same period of 2014, principally reflecting improved margins and strong refining results across the system. Crude oil charges averaged 446 000 bpd, the highest level achieved since the HollyFrontier merger in July 2011. Production levels averaged approximately 460 000 bpd. On a per barrel basis, consolidated refinery gross margin was US$17.42 per produced barrel, a 20% increase compared to US$14.54 for the second quarter of 2014. Total operating expenses for the quarter were US$246.2 million compared to US$271.7 million for the second quarter of last year, and refining operating expenses averaged US$5.14 per produced barrel sold compared to US$5.69 per barrel for the same period of 2014.

"Second quarter earnings reflect excellent operational reliability across our refining system. We reported a record quarter in terms of utilisation rate, averaging 446 000 bpd of crude. Strong operations, improved realized margins and lower costs drove a greater than 60% increase in earnings per share compared to the second quarter of 2014. During the quarter we significantly reduced our share count through repurchases. Together with our quarterly dividend we returned US$388.0 million in cash to shareholders, 108% of reported net income. July refinery performance continues to be strong with several of our plants currently operating at record crude processing levels. We expect high refinery utilisation rates together with a constructive margin environment to drive solid financial results for the remainder of the year," said HollyFrontier's President & CEO, Mike Jennings.

For the second quarter of 2015, net cash provided by operations totalled US$323.0 million. The company executed US$325.0 million in share repurchases: US$25.0 million in open market purchases and US$300.0 million through an accelerated share repurchase programme for which the company received 5.5 million shares of its common stock. The remaining shares to be repurchased under the programme are expected to be determined and received in the third quarter. The company declared and paid a US$0.33 regular dividend to shareholders in the second quarter totalling approximately US$63.0 million. Additionally, HollyFrontier redeemed its US$150 million aggregate principal amount of 6.875% senior notes at a redemption cost of US$155.2 million. At 30 June 2015, the combined balance of cash and short term investments totalled US$626.2 million and consolidated debt was US$933.2 million. Debt, exclusive of Holly Energy Partners' debt, which is nonrecourse to HollyFrontier, was US$32.3 million at 30 June 2015. There were no cash borrowings or outstanding principal under the credit facility during the quarter.

Adapted from press release by Rosalie Starling

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