DALLAS, Aug. 6 TX-Holly-2Q-Results
DALLAS, Aug. 6 /PRNewswire-FirstCall/ -- Holly Corporation (NYSE: HOC)
("Holly" or the "Company") today reported second quarter net income of $11.5
million ($0.23 per basic and diluted share) compared to $158.6 million ($2.89
per basic and $2.84 per diluted share) for the same period of 2007. For the
six months ended June 30, 2008, net income was $20.1 million ($0.40 per basic
and $0.39 per diluted share) compared to $226.2 million ($4.11 per basic and
$4.03 per diluted share) for the first six months of 2007.
Our refinery production levels decreased 15% and 4% for the three and six
months ended June 30, 2008 as compared to the same periods in 2007,
respectively, mainly as a result of reduced production at both our refineries
during the second quarter of 2008. In May 2008, our Navajo Refinery
experienced unplanned downtime for repairs to its fluid catalytic cracking
unit ("FCC") following an instrument control malfunction. This downtime not
only lowered overall production levels in May but also reduced gross margins
per barrel due to the substantial reduction in the yield of higher value
products during the FCC outage. Additionally, our Woods Cross Refinery
operated at reduced rates during the quarter primarily resulting from multiple
power interruptions. We estimate that our refinery operating income for the
second quarter was reduced by approximately $40.0 million, or $0.52 per share
on a net tax basis as a result of downtime in the quarter.
Net income for both the second quarter and six months ended June 30, 2008
as compared to the prior year periods decreased due to reduced refined product
margins combined with production declines, lower yields and higher operating
expenses at our refineries. For the 2008 second quarter, overall refinery
gross margins were $9.09 per produced barrel compared to $28.36 for the last
year's second quarter. For the first six months of 2008, our overall refinery
gross margins were $8.35 per produced barrel compared to $22.35 for the first
six months of 2007.
Sales and other revenues increased 43% for the three months ended June 30,
2008 and 50% for the six months ended June 30, 2008, as compared to the three
and six months ended June 30, 2007, respectively, due principally to higher
refined product sales prices. Cost of products sold increased 81% for the
three months ended June 30, 2008 and 82% for the six months ended June 30,
2008, as compared to the three and six months ended June 30, 2007,
respectively, due principally to higher crude oil acquisition costs.
Operating expenses for both the three and six month periods increased
primarily due to the inclusion of Holly Energy Partners, L.P. (NYSE: HEP)
("HEP") operating costs beginning March 1, 2008, higher utility costs and
increased maintenance costs associated with unplanned downtime.
In February 2008, HEP acquired our crude pipelines and tankage assets. As
a result of this transaction, we determined that our beneficial interest in
HEP exceeds 50%, therefore, we reconsolidated HEP effective March 1, 2008. We
no longer record our share of its earnings under the equity method of
accounting. Accordingly, a significant increase in operating costs and
expenses in the current year was due to the inclusion of $13.7 million of
HEP's operating expenses and $8.2 million of additional depreciation and
amortization resulting from our consolidation of HEP. This press release
includes key segment information that shows the impact of this reconsolidation
on certain balance sheet and income statement amounts.
"To date, 2008 has been a challenging year. Although second quarter
margins improved from first quarter levels, unplanned downtime prevented us
from fully capitalizing on these higher margin levels. Despite the downtime,
we remained profitable for the quarter, and we continue to have one of the
strongest balance sheets among our peers," said Matthew Clifton, Chairman of
the Board and Chief Executive Officer of Holly. "Regarding our Woods Cross
and Navajo expansion and crude flexibility capital projects, we continue to
make substantial progress. In July, we announced a pipeline agreement with
Centurion Pipeline L.P. to deliver heavy Canadian crude oil from Cushing,
Oklahoma to a point located at Slaughter, Texas. We are proceeding with plans
to construct a new 70 mile pipeline that will deliver this crude oil to our
Navajo Refinery complex in New Mexico. Also, we expect to commence the start-
up of the Woods Cross projects early in the fourth quarter and to be capable
of operating at full capacity at year-end. These projects will ultimately help
in improving our profitability at both refineries by reducing raw material
costs. Additionally, we recently purchased a terminal and rail facility
located near Cedar City, Utah that will serve as a key component of our UNEV
joint venture pipeline project."
The Company has scheduled a conference call for today, August 6, 2008 at
10:00AM EDT to discuss financial results. Listeners may access this call by
dialing (888) 548-4639. The ID# for this call is 55825559. Listeners may
access the call via the internet at:
http://www.videonewswire.com/event.asp?id=49932. Additionally, listeners may
replay this call approximately two hours after the call concludes by dialing
(800) 642-1687. This audio archive will be available through August 20, 2008.
Holly Corporation, headquartered in Dallas, Texas, is an independent
petroleum refiner and marketer that produces high value light products such as
gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries
an 85,000 BPSD refinery located in Artesia, New Mexico and a 26,000 BPSD
refinery in Woods Cross, Utah. Also, a subsidiary of Holly owns a 46%
interest (including the 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 gathering pipelines in Texas, New Mexico, Utah
and Oklahoma, 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. Such
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 regulations and policies, the
availability and cost of financing to the Company, the effectiveness of the
Company's capital investments and marketing strategies, 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 efficiency in carrying out construction projects,
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
June 30,Change from 2007
2008 2007 Change Percent
(In thousands, except per share data)
Sales and other revenues $1,743,822 $1,216,997 $526,825 43.3%
Operating costs and expenses:
Cost of products sold
(exclusive of
depreciation, depletion
and amortization)1,620,550 897,237 723,313 80.6
Operating expenses
(exclusive of
depreciation, depletion
and amortization) 74,175 51,11623,059 45.1
General and administrative
expenses (exclusive of
depreciation, depletion
and amortization) 12,832 21,348(8,516) (39.9)
Depreciation, depletion
and amortization15,929 10,641 5,288 49.7
Exploration expenses,
including dry holes110 105 54.8
Total operating costs
and expenses 1,723,596 980,447 743,149 75.8
Income from operations 20,226 236,550 (216,324) (91.4)
Other income (expense):
Equity in earnings of HEP - 4,954(4,954)(100.0)
Minority interest in earnings
of HEP(493) - (493) -
Interest income 3,826 3,550 2767.8
Interest expense (6,251) (291) (5,960) 2,048.1
(2,918) 8,213 (11,131)(135.5)
Income from operations before
income taxes17,308 244,763 (227,455) (92.9)
Income tax provision 5,856 86,136 (80,280) (93.2)
Net income $11,452$158,627 $(147,175) (92.8)%
Net income per share - basic $0.23 $2.89$(2.66) (92.0)%
Net income per share - diluted$0.23 $2.84$(2.61) (91.9)%
Cash dividends declared per
common share $0.15 $0.12 $0.03 25.0%
Average number of common shares
outstanding:
Basic50,158 54,959(4,801) (8.7)%
Diluted 50,515 55,953(5,438) (9.7)%
Six Months Ended
June 30, Change from 2007
2008 2007 Change Percent
(In thousands, except per share data)
Sales and other revenues$3,223,806 $2,142,864 $1,080,942 50.4%
Operating costs and expenses:
Cost of products sold
(exclusive of
depreciation, depletion
and amortization) 3,003,987 1,648,951 1,355,036 82.2
Operating expenses
(exclusive of
depreciation, depletion
and amortization) 134,883 101,245 33,638 33.2
General and administrative
expenses (exclusive of
depreciation, depletion
and amortization) 25,664 37,195 (11,531) (31.0)
Depreciation, depletion
and amortization 29,238 22,092 7,146 32.3
Exploration expenses,
including dry holes 215 257 (42) (16.3)
Total operating costs
and expenses3,193,987 1,809,740 1,384,247 76.5
Income from operations 29,819 333,124(303,305) (91.0)
Other income (expense):
Equity in earnings of HEP2,990 8,300 (5,310) (64.0)
Minority interest in
earnings of HEP(1,295) - (1,295) (100.0)
Interest income 7,381 6,110 1,271 20.8
Interest expense(8,243) (543) (7,700) 1,418.0
833 13,867 (13,034) (94.0)
Income from operations before
income taxes 30,652 346,991(316,339) (91.2)
Income tax provision10,551 120,822(110,271) (91.3)
Net income $20,101$226,169 $(206,068) (91.1)%
Net income per share - basic $0.40 $4.11 $(3.71) (90.3)%
Net income per share - diluted $0.39 $4.03 $(3.64) (90.3)%
Cash dividends declared per
common share$0.30 $0.22 $0.08 36.4%
Average number of common
shares outstanding:
Basic 50,654 55,073 (4,419)(8.0)%
Diluted 51,015 56,079 (5,064)(9.0)%
Balance Sheet Data
June 30,December 31,
2008 2007
(In thousands)
Cash, cash equivalents and investments in
marketable securities$297,912 $329,784
Working capital $156,605 $216,541
Total assets$2,442,871$1,663,945
Long-term debt - HEP $339,909$-
Stockholders' equity $480,373 $593,794
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 and include the operations of
Holly Corporation, our parent company, and a small-scale oil and gas
exploration and production program.
The Refining segment includes the operations of our Navajo Refinery, Woods
Cross Refinery and Holly Asphalt Company. The Refining segment involves the
purchase and refining of crude oil and wholesale and branded marketing of
refined products, such as gasoline, diesel fuel and jet fuel, and includes our
Navajo Refinery and Woods Cross Refinery. The petroleum products produced by
the Refining segment are marketed in Texas, New Mexico, Arizona, Utah,
Wyoming, Idaho, Washington and northern Mexico. The Refining segment also
includes Holly Asphalt Company which 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 effective March 1,
2008 (date of reconsolidation). 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 and Utah. Revenues are
generated by charging tariffs for transporting petroleum products and crude
oil through their pipelines and by charging fees for terminalling petroleum
products and other hydrocarbons, and storing and providing other services at
their storage tanks and terminals. The HEP segment also includes a 70%
interest in Rio Grande Pipeline Company ("Rio Grande") which provides
petroleum products transportation services. 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 and from HEP's interest in Rio Grande.
Consolidations
Corporate andConsolidated
RefiningHEP and Other Eliminations Total
(In thousands)
Three Months Ended
June 30, 2008
Sales and
other revenues $1,736,201 $26,774 $886 $(20,039) $1,743,822
Operating
expenses $64,183 $9,985 $7 $- $74,175
General and
administrative
expenses $(6) $1,359 $11,479 $- $12,832
Depreciation and
amortization $8,699 $6,220 $1,010 $- $15,929
Income (loss) from
operations$22,736 $9,210 $(11,720)$- $20,226
Three Months Ended
June 30, 2007
Sales and other
revenues $1,216,777 $- $114 $106 $1,216,997
Operating
expenses $51,113 $- $3 $- $51,116
General and
administrative
expenses $(3) $- $21,351 $- $21,348
Depreciation and
amortization $9,904 $- $737 $- $10,641
Income (loss) from
operations $258,632 $- $(22,082)$-$236,550
Consolidations
Corporate andConsolidated
RefiningHEP and Other Eliminations Total
(In thousands)
Six Months Ended
June 30, 2008
Sales and other
revenues $3,213,577 $36,716 $1,287 $(27,774) $3,223,806
Operating
expenses $121,399 $13,661 $7 $(184) $134,883
General and
administrative
expenses $1 $1,881 $23,782 $- $25,664
Depreciation and
amortization $18,980 $8,230 $2,028 $- $29,238
Income (loss) from
operations$41,620 $12,944 $(24,745)$- $29,819
Six Months Ended
June 30, 2007
Sales and other
revenues $2,142,359 $- $505 $- $2,142,864
Operating
expenses $101,231 $- $14 $-$101,245
General and
administrative
expenses $- $- $37,195 $- $37,195
Depreciation and
amortization $20,930 $- $1,162 $- $22,092
Income (loss) from
operations $371,247 $- $(38,123)$-$333,124
June 30, 2008
Cash, cash
equivalents and
investments in
marketable
securities $- $6,371 $291,541 $-$297,912
Total assets $1,671,633 $451,937 $331,841 $(12,540) $2,442,871
Total debt $- $359,909 $- $-$359,909
December 31, 2007
Cash, cash
equivalents and
investments in
marketable
securities $- $- $329,784 $-$329,784
Total assets $1,271,163 $- $392,782 $- $1,663,945
Refining Operating Data
Our refinery operations include the Navajo Refinery and the Woods Cross
Refinery. The following tables set forth information, including non-GAAP
performance measures about our refinery operations. The cost of products and
refinery gross margin do not include the effect of depreciation, depletion and
amortization. Reconciliations to amounts reported under GAAP are provided
under "Reconciliations to Amounts Reported Under Generally Accepted Accounting
Principles" below.
Three Months Ended Six Months Ended
June 30, June 30,
2008 20072008 2007
Navajo Refinery
Crude charge (BPD) (1)72,800 82,730 78,000 79,790
Refinery production (BPD) (2) 76,960 90,940 85,800 88,540
Sales of produced refined
products (BPD) 79,910 90,660 86,980 88,040
Sales of refined products
(BPD) (3)88,720 100,840 97,070 98,610
Refinery utilization (4) 85.6%99.7% 91.8% 96.1%
Average per produced barrel (5)
Net sales$133.89 $93.17 $117.33 $84.69
Cost of products (6) 125.8265.63 110.15 62.45
Refinery gross margin 8.0727.547.18 22.24
Refinery operating
expenses (7) 5.68 4.264.98 4.22
Net operating margin $2.39 $23.28 $2.20 $18.02
Feedstocks:
Sour crude oil 83% 78% 81%76%
Sweet crude oil 10% 10% 9%10%
Other feedstocks and blends 7% 12% 10%14%
Total 100% 100%100% 100%
Sales of produced refined products:
Gasolines55% 58% 57%59%
Diesel fuels 34% 30% 33%29%
Jet fuels 1% 3% 1% 3%
Fuel oil 3% 3% 3% 3%
Asphalt 4% 3% 3% 3%
LPG and other 3% 3% 3% 3%
Total 100% 100%100% 100%
Woods Cross Refinery
Crude charge (BPD) (1)23,980 25,800 24,470 25,230
Refinery production (BPD) (2) 23,540 27,280 24,490 26,920
Sales of produced refined
products (BPD) 23,790 26,130 24,550 27,120
Sales of refined products
(BPD) (3)24,490 26,230 26,010 27,390
Refinery utilization (4) 92.2%99.2% 94.1% 97.0%
Average per produced barrel (5)
Net sales$133.09 $96.51 $117.56 $83.67
Cost of products (6) 120.6065.29 105.05 60.95
Refinery gross margin 12.4931.22 12.51 22.72
Refinery operating
expenses (7) 8.13 4.227.17 4.50
Net operating margin $4.36 $27.00 $5.34 $18.22
Three Months Ended Six Months Ended
June 30, June 30,
20082007 2008 2007
Woods Cross Refinery
Feedstocks:
Sour crude oil -% 2% 2%1%
Sweet crude oil98%90% 94% 90%
Other feedstocks and blends 2% 8% 4%9%
Total 100% 100% 100% 100%
Sales of produced refined products:
Gasolines 62%58% 65% 61%
Diesel fuels 29%31% 26% 28%
Jet fuels -% 3% -%2%
Fuel oil6% 7% 5%7%
Asphalt 2% -% 1%-%
LPG and other 1% 1% 3%2%
Total 100% 100% 100% 100%
Consolidated
Crude charge (BPD) (1) 96,780 108,530 102,470 105,020
Refinery production (BPD) (2) 100,500 118,220 110,290 115,460
Sales of produced refined
products (BPD) 103,700 116,790 111,530 115,160
Sales of refined products
(BPD) (3)113,210 127,070 123,080 126,000
Refinery utilization (4) 87.2% 99.6%92.3% 96.3%
Average per produced barrel (5)
Net sales $133.71 $93.92 $117.38$84.45
Cost of products (6) 124.62 65.56 109.03 62.10
Refinery gross margin9.09 28.36 8.35 22.35
Refinery operating expenses (7) 6.244.25 5.46 4.29
Net operating margin$2.85 $24.11$2.89$18.06
Feedstocks:
Sour crude oil 63% 60% 63% 59%
Sweet crude oil31% 28% 28% 29%
Other feedstocks and blends 6% 12% 9% 12%
Total 100%100% 100% 100%
Sales of produced refined products:
Gasolines 56% 58% 58% 59%
Diesel fuels 32% 30% 31% 29%
Jet fuels 1% 3% 1%3%
Fuel oil4% 4% 4%4%
Asphalt 4% 2% 3%2%
LPG and other 3% 3% 3%3%
Total 100%100% 100% 100%
(1) Crude charge represents the barrels per day of crude oil processed at
the crude units 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 from 109,000 BPSD to
111,000 BPSD in mid-year 2007.
(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 costs billed from HEP are included in cost of
products.
(7) Represents operating expenses of our refineries, exclusive of
depreciation, depletion, 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 plus (i) interest expense net
of interest income, (ii) income tax provision, and (iii) depreciation,
depletion and amortization. EBITDA is not a calculation based upon 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.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Income $11,452 $158,627 $20,101 $226,169
Add provision for income tax 5,85686,136 10,551 120,822
Add interest expense 6,251 2918,243 543
Subtract interest income (3,826) (3,550) (7,381) (6,110)
Add depreciation and
amortization15,92910,641 29,23822,092
EBITDA $35,662 $252,145 $60,752 $363,516
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, depletion and amortization. Each of these component performance
measures can be reconciled directly to our 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 both of
our refineries on a consolidated basis is calculated as shown below.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Average per produced barrel:
Navajo Refinery
Net sales $133.89 $93.17 $117.33$84.69
Less cost of products125.8265.63110.15 62.45
Refinery gross margin $8.07 $27.54 $7.18$22.24
Woods Cross Refinery
Net sales $133.09 $96.51 $117.56$83.67
Less cost of products120.6065.29105.05 60.95
Refinery gross margin$12.49 $31.22$12.51$22.72
Consolidated
Net sales $133.71 $93.92 $117.38$84.45
Less cost of products124.6265.56109.03 62.10
Refinery gross margin $9.09 $28.36 $8.35$22.35
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 both of our
refineries on a consolidated basis is calculated as shown below.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Average per produced barrel:
Navajo Refinery
Refinery gross margin $8.07 $27.54 $7.18$22.24
Less refinery operating
expenses 5.68 4.26 4.98 4.22
Net operating margin $2.39 $23.28 $2.20$18.02
Woods Cross Refinery
Refinery gross margin$12.49 $31.22$12.51$22.72
Less refinery operating
expenses 8.13 4.22 7.17 4.50
Net operating margin $4.36 $27.00 $5.34$18.22
Consolidated
Refinery gross margin $9.09 $28.36 $8.35$22.35
Less refinery operating
expenses 6.24 4.25 5.46 4.29
Net operating margin $2.85 $24.11 $2.89$18.06
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 Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Navajo Refinery
Average sales price per
produced barrel sold $133.89 $93.17$117.33 $84.69
Times sales of produced
refined products sold (BPD)79,910 90,660 86,980 88,040
Times number of days in
period 91 91182 181
Refined product sales from
produced products sold $973,623 $768,658 $1,857,376 $1,349,555
Woods Cross Refinery
Average sales price per
produced barrel sold $133.09 $96.51$117.56 $83.67
Times sales of produced
refined products sold (BPD)23,790 26,130 24,550 27,120
Times number of days in
period 91 91182 181
Refined product sales from
produced products sold $288,125 $229,484 $525,270$410,713
Sum of refined products
sales from produced products
sold from our two
refineries (4) $1,261,748 $998,142 $2,382,646 $1,760,268
Add refined product sales
from purchased products and
rounding(1) 120,310 91,747255,556 171,093
Total refined products sales 1,382,0581,089,889 2,638,202 1,931,361
Add direct sales of excess
crude oil(2) 314,486 91,843517,437 153,523
Add other refining segment
revenue(3) 39,657 35,045 57,938 57,475
Total refining segment
revenue 1,736,2011,216,777 3,213,577 2,142,359
Add HEP segment sales and
other revenue 26,774- 36,716 -
Add corporate and other
revenues 886 114 1,287 505
Subtract consolidations and
eliminations (20,039) 106(27,774) -
Sales and other revenues$1,743,822 $1,216,997 $3,223,806 $2,142,864
(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 Company and revenue derived from 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 EndedSix Months Ended
June 30, June 30,
2008 2007 2008 2007
Average sales price per
produced barrel sold $133.71 $93.92$117.38 $84.45
Times sales of produced
refined products
sold (BPD) 103,700116,790111,530115,160
Times number of days in
period 91 91182181
Refined product sales from
produced products sold $1,261,748 $998,142 $2,382,646 $1,760,268
Reconciliation of average cost of products per produced barrel sold to
total costs of products sold
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Navajo Refinery
Average cost of products per
produced barrel sold$125.82 $65.63$110.15$62.45
Times sales of produced refined
products sold (BPD) 79,910 90,660 86,98088,040
Times number of days in period91 91182 181
Cost of products for produced
products sold $914,939 $541,451 $1,743,714 $995,156
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Woods Cross Refinery
Average cost of products per
produced barrel sold $120.60 $65.29$105.05 $60.95
Times sales of produced
refined products sold (BPD)23,790 26,130 24,550 27,120
Times number of days in
period 91 91182181
Cost of products for produced
products sold$261,086 $155,249 $469,374 $299,186
Sum of cost of products for
produced products sold from
our two refineries (4) $1,176,025 $696,700 $2,213,088 $1,294,342
Add refined product costs
from purchased products
sold and rounding (1) 123,226 86,404258,415168,556
Total refined cost of
products sold 1,299,251 783,104 2,471,503 1,462,898
Add crude oil cost of direct
sales of excess crude oil(2) 311,963 92,054514,176153,906
Add other refining segment
costs of products sold(3) 29,375 21,973 45,898 32,147
Total refining segment cost
of products sold1,640,589 897,131 3,031,577 1,648,951
Subtract consolidations and
eliminations (20,039) 106(27,590) -
Costs of products sold
(exclusive of depreciation,
depletion and
amortization) $1,620,550 $897,237 $3,003,987 $1,648,951
(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 Company and costs attributable to sulfur
credit sales.
(4) The above calculations of costs of products 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 EndedSix Months Ended
June 30, June 30,
2008 2007 2008 2007
Average cost of products per
produced barrel sold $124.62$65.56 $109.03 $62.10
Times sales of produced
refined products sold (BPD) 103,700 116,790 111,530115,160
Times number of days in
period9191 182181
Cost of products for produced
products sold $1,176,025 $696,700 $2,213,088 $1,294,342
Reconciliation of average refinery operating expenses per produced barrel
sold to total operating expenses
Three Months EndedSix Months Ended
June 30, June 30,
2008 20072008 2007
Navajo Refinery
Average refinery operating
expenses per produced barrel
sold $5.68 $4.26 $4.98 $4.22
Times sales of produced refined
products sold (BPD) 79,910 90,660 86,98088,040
Times number of days in period 91 91 182 181
Refinery operating expenses for
produced products sold $41,304$35,145 $78,835 $67,247
Woods Cross Refinery
Average refinery operating
expenses per produced barrel
sold $8.13 $4.22 $7.17 $4.50
Times sales of produced refined
products sold (BPD) 23,790 26,130 24,55027,120
Times number of days in period 91 91 182 181
Refinery operating expenses for
produced products sold $17,601$10,034 $32,036 $22,089
Three Months EndedSix Months Ended
June 30, June 30,
2008 20072008 2007
Sum of refinery operating
expenses per produced products
sold from our two
refineries (2) $58,905$45,179$110,871 $89,336
Add other refining segment
operating expenses and
rounding (1) 5,278 5,934 10,52811,895
Total refining segment operating
expenses64,183 51,113 121,399 101,231
Add HEP segment operating
expenses 9,985 - 13,661 -
Add corporate and other costs 7 3(177) 14
Operating expenses (exclusive of
depreciation, depletion and
amortization) $74,175$51,116$134,883 $101,245
(1) Other refining segment operating expenses include the marketing costs
associated with our refining segment and the operating expenses of
Holly Asphalt Company.
(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 Six Months Ended
June 30, June 30,
2008 20072008 2007
Average refinery operating
expenses per produced barrel
sold $6.24 $4.25 $5.46 $4.29
Times sales of produced
refined products
sold (BPD) 103,700116,790 111,530 115,160
Times number of days in
period 91 91 182 181
Refinery operating expenses
for produced products sold $58,905$45,179$110,871 $89,336
Reconciliation of net operating margin per barrel to refinery gross margin
per barrel to total sales and other revenues
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Navajo Refinery
Net operating margin per
barrel$2.39 $23.28 $2.20 $18.02
Add average refinery
operating expenses per
produced barrel5.68 4.26 4.984.22
Refinery gross margin per
barrel 8.07 27.54 7.18 22.24
Add average cost of products
per produced barrel sold 125.82 65.63 110.15 62.45
Average net sales per
produced barrel sold$133.89 $93.17$117.33 $84.69
Times sales of produced
refined products sold (BPD) 79,910 90,660 86,980 88,040
Times number of days in
period 91 91182 181
Refined products sales from
produced products sold $973,623 $768,658 $1,857,376 $1,349,555
Woods Cross Refinery
Net operating margin per
barrel$4.36 $27.00 $5.34 $18.22
Add average refinery
operating expenses per
produced barrel8.13 4.22 7.174.50
Refinery gross margin per
barrel12.49 31.22 12.51 22.72
Add average cost of products
per produced barrel sold 120.60 65.29 105.05 60.95
Average net sales per
produced barrel sold$133.09 $96.51$117.56 $83.67
Times sales of produced
refined products sold (BPD) 23,790 26,130 24,550 27,120
Times number of days in
period 91 91182 181
Refined products sales from
produced products sold $288,125 $229,484 $525,270$410,713
Sum of refined products
sales from produced
products sold from our
two refineries (4) $1,261,748 $998,142 $2,382,646 $1,760,268
Add refined product sales
from purchased products
and rounding (1)120,310 91,747255,556 171,093
Total refined products
sales 1,382,058 1,089,889 2,638,202 1,931,361
Add direct sales of excess
crude oil(2)314,486 91,843517,437 153,523
Add other refining segment
revenue (3) 39,657 35,045 57,938 57,475
Total refining segment
revenue 1,736,201 1,216,777 3,213,577 2,142,359
Add HEP segment sales and
other revenues 26,774 - 36,716 -
Add corporate and other
revenues886114 1,287 505
Subtract consolidations and
eliminations(20,039) 106(27,774) -
Sales and other revenues $1,743,822 $1,216,997 $3,223,806 $2,142,864
(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 Company and revenue derived from 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 EndedSix Months Ended
June 30, June 30,
2008 200720082007
Net operating margin per
barrel$2.85$24.11 $2.89 $18.06
Add average refinery
operating expenses per
produced barrel6.24 4.255.464.29
Refinery gross margin per
barrel 9.09 28.368.35 22.35
Add average cost of
products per produced
barrel sold 124.62 65.56 109.03 62.10
Average sales price per
produced barrel sold$133.71$93.92 $117.38 $84.45
Times sales of produced
refined products sold (BPD) 103,700 116,790 111,530 115,160
Times number of days in
period 9191 182 181
Refined product sales from
produced products sold $1,261,748 $998,142 $2,382,646 $1,760,268
SOURCE Holly Corporation
