HOUSTON, Feb 25, 2010 (BUSINESS WIRE) -- Frontier Oil Corporation (NYSE: FTO) today announced a net loss of $75.1
million, or $0.72 per share, for the quarter ended December 31, 2009,
compared to net income of $119.0 million, or $1.15 per diluted share,
for the quarter ended December 31, 2008. For the twelve months ended
December 31, 2009, Frontier reported a net loss of $83.8 million, or
$0.81 per share, compared to net income of $226.1 million, or $2.18 per
diluted share, for the twelve months ended December 31, 2008.
During the fourth quarter of 2009, Frontier switched inventory valuation
accounting methods from the first-in, first-out (FIFO) method to the
last-in, first-out (LIFO) method. As a result of this accounting change,
Frontier will receive a one-time tax refund of $85.6 million. In
addition, Frontier's Board of Directors has suspended the Company's
quarterly cash dividend due to contractual limitations under the
restricted payments provision of the Company's senior notes indentures.
Weak demand for refined products, particularly distillates, and narrow
crude differentials were the primary contributors to the fourth quarter
and full year 2009 results. Average diesel crack spreads declined
steeply to $7.03 per barrel for the fourth quarter of 2009, compared to
$21.81 per barrel for the same period of 2008. This was partially offset
by the improvement in average gasoline crack spreads to $4.40 per barrel
in the most recent quarter, from negative $0.95 per barrel for the
fourth quarter of 2008. Similarly for the full year, average gasoline
crack spreads improved modestly by $2.85 per barrel between 2009 and the
prior year, while average diesel crack spreads dropped by $16.34 per
barrel over the same period.
Crude differentials in the fourth quarter of 2009, while slightly
improved over the first half of the year, remained significantly below
those of 2008 and prior years primarily due to the global decline in the
supply of heavy and sour crudes. The light/heavy crude differential
averaged $7.71 per barrel for the fourth quarter of 2009, compared to
$15.27 per barrel for the same period of 2008, and $6.34 per barrel for
the full year 2009, compared to $17.38 per barrel in 2008. The WTI/WTS
spread averaged $2.27 per barrel in the most recent quarter, compared to
$3.30 per barrel for the fourth quarter of 2008, and $1.65 per barrel
for the full year 2009, compared to $3.92 per barrel in 2008.
Also impacting the fourth quarter results was the reduced throughput at
the El Dorado refinery due to planned major turnaround maintenance on
the FCC unit, gasoil hydrotreater, and other associated units. As a
result, total crude charges in the fourth quarter for the El Dorado and
Cheyenne refineries combined were 121,840 barrels per day (bpd), down
from 168,301 bpd for the fourth quarter of 2008.
Frontier's President and CEO, Mike Jennings, commented, "While we are
displeased to report our first annual loss in a decade, we recognize the
cyclical nature of this industry and have confidence in the strengths
that define Frontier - advantaged markets, quality assets, and a
conservative balance sheet. We remain focused on reducing our operating
expenses and improving our yields at the Cheyenne refinery. While we do
not expect a near-term recovery for the refining industry, we believe we
are well positioned to participate in the recovery as the U.S. economy
strengthens."
During the three months ended December 31, 2009, Frontier produced a
loss of $6.1 million in operating cash flows, invested $49.2 million in
capital expenditures, and paid $6.3 million in dividends. For the twelve
months ended December 31, 2009, Frontier generated $140.9 million in
operating cash flows, invested $171.0 million in capital expenditures,
and paid $25.4 million in dividends. As of December 31, 2009, Frontier
had a cash balance of $425.3 million (which exceeded debt by $77.8
million) and had $498.2 million of working capital. In addition, there
were no cash borrowings under the Company's revolving credit facility,
which had $399.4 million of borrowing base availability at year end.
Conference Call
A conference call is scheduled for today, February 25, 2010 at 10:00
a.m. central time, to discuss the financial results. To access the call,
which is open to the public, please dial (800) 447-0521 several minutes
prior to the call. (international callers (847) 413-3238), passcode
26237001. A recorded replay of the call may be heard through March 11,
2010 by dialing (888) 843-8996 (international callers (630) 652-3044)
passcode 26237001. In addition, the real-time conference call and a
recorded replay will be available via webcast by registering from the
Investor Relations page of our website www.frontieroil.com.
Frontier operates a 135,000 bpd refinery located in El Dorado, Kansas,
and a 52,000 bpd refinery located in Cheyenne, Wyoming, and markets its
refined products principally along the eastern slope of the Rocky
Mountains and in other neighboring plains states. Information about the
Company may be found on its website www.frontieroil.com.
This press release includes "forward-looking statements" as defined
by the Securities and Exchange Commission. Such statements are those
concerning strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical fact,
included in this press release that address activities, events or
developments that the Company expects, believes or anticipates will or
may occur in the future are forward-looking statements. These
statements are based on certain assumptions made by the Company based on
its experience and perception of historical trends, current conditions,
expected future developments and other factors it believes are
appropriate in the circumstances. Such statements are subject to a
number of assumptions, risks and uncertainties, many of which are beyond
the control of the Company. Investors are cautioned that any such
statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected in
the forward-looking statements.
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FRONTIER OIL CORPORATION
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Twelve Months Ended
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Three Months Ended
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December 31,
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December 31,
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As Adjusted (1)
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As Adjusted (1)
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2009
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2008
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2009
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2008
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INCOME STATEMENT DATA ($000's except per share)
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Revenues
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$
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4,237,213
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$
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6,498,780
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$
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1,088,539
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$
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1,348,139
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Raw material, freight and other costs
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3,888,308
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5,716,091
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1,073,967
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1,035,566
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Refining operating expenses, excluding depreciation
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321,299
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321,364
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89,124
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76,503
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Selling and general expenses, excluding depreciation
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58,668
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44,169
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19,731
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11,790
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Gain on sale of assets
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-
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44
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-
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-
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Operating income (loss) before depreciation
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(31,062
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)
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417,200
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(94,283
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)
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224,280
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Depreciation, amortization and accretion
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74,308
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65,756
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20,082
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17,684
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Operating income (loss)
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(105,370
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)
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351,444
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(114,365
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)
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206,596
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Interest expense and other financing costs
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28,187
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15,130
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7,141
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8,087
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Interest and investment income
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(2,279
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)
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(5,425
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)
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(331
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)
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(734
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)
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Provision (benefit) for income taxes
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(47,518
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)
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115,686
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(46,121
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)
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80,267
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Net income (loss)
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$
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(83,760
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)
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$
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226,053
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$
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(75,054
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)
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$
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118,976
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Diluted earnings (loss) per share of common stock
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$
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(0.81
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)
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$
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2.18
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$
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(0.72
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)
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$
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1.15
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Average shares outstanding (000's)
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103,597
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103,607
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103,774
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103,211
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OTHER FINANCIAL DATA ($000's)
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Adjusted EBITDA (2)
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$
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(31,062
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)
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$
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417,200
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$
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(94,283
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)
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$
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224,280
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Cash flow before changes in working capital
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42,833
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466,684
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(51,370
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)
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347,569
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Working capital changes
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98,109
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(169,409
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)
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45,246
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(270,684
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)
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Net cash provided (used) by operating activities
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140,942
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297,275
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(6,124
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)
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76,885
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Net cash used by investing activities
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(170,770
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)
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(216,835
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(49,196
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)
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(49,161
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)
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Net cash provided (used) by financing activities
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(28,424
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)
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105,693
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(6,714
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)
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(8,220
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)
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OPERATIONS
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Consolidated
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Operations (bpd)
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Total charges
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169,911
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161,837
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138,673
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185,599
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Gasoline yields
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80,201
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76,573
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69,493
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88,680
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Diesel yields
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66,039
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58,748
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52,360
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75,256
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Total sales
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175,272
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166,372
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152,672
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191,952
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Refinery operating margins information ($ per sales bbl)
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Refined products revenue
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$
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66.32
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$
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104.15
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$
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78.01
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$
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65.57
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Raw material, freight and other costs (1)
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60.78
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93.87
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76.46
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58.64
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Refinery operating expenses, excluding depreciation
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5.02
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5.28
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6.35
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4.33
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Depreciation, amortization and accretion
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1.16
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1.08
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1.42
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1.00
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Cheyenne Refinery light/heavy crude oil differential ($ per bbl)
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$
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6.61
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$
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17.15
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$
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8.56
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$
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15.68
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WTI/WTS crude oil differential ($ per bbl)
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1.65
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3.92
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2.27
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3.30
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El Dorado Refinery light/heavy crude oil differential ($ per bbl)
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6.01
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17.85
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6.93
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14.40
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BALANCE SHEET DATA ($000's)
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At December 31, 2009
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At December 31, 2008
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Cash, including cash equivalents (a)
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$
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425,280
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$
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483,532
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Working capital
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498,190
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639,188
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Short-term and current debt (b)
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-
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-
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Total long-term debt (c)
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347,485
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347,220
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Shareholders' equity (d)
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943,976
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1,038,976
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Net debt to book capitalization (b+c-a)/(b+c-a+d)
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-9.0
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%
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-15.1
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%
|
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(1)
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During the fourth quarter of 2009, the Company changed its crude
oil, unfinished and finished product inventory valuation method to
the LIFO method from the FIFO method. The comparative financial
statements for 2008 have been adjusted to apply the new method
retrospectively.
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(2)
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Adjusted EBITDA represents income before interest expense and
other financing costs, interest and investment income, income tax,
and depreciation, accretion and amortization. Adjusted EBITDA is
not a calculation based upon generally accepted accounting
principles; however, the amounts included in the Adjusted EBITDA
calculation are derived from amounts included in the consolidated
financial statements of the Company. Adjusted EBITDA should not be
considered as an alternative to net income or operating income, as
an indication of operating performance of the Company or as an
alternative to operating cash flow as a measure of liquidity.
Adjusted EBITDA is not necessarily comparable to similarly titled
measures of other companies. Adjusted EBITDA is presented here
because the Company believes it enhances an investor's
understanding of Frontier's ability to satisfy principal and
interest obligations with respect to Frontier's indebtedness and
to use cash for other purposes, including capital expenditures.
Adjusted EBITDA is also used for internal analysis and as a basis
for financial covenants. Frontier's Adjusted EBITDA for the twelve
months and three months ended December 31, 2009 and 2008 is
reconciled to net income as follows:
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|
|
|
|
|
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Twelve Months Ended
|
|
Three Months Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
As Adjusted (1)
|
|
|
|
As Adjusted (1)
|
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss)
|
|
|
$
|
(83,760
|
)
|
|
$
|
226,053
|
|
|
$
|
(75,054
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)
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|
$
|
118,976
|
|
|
Add provision (benefit) for income taxes
|
|
|
|
(47,518
|
)
|
|
|
115,686
|
|
|
|
(46,121
|
)
|
|
|
80,267
|
|
|
Add interest expense and other financing costs
|
|
|
|
28,187
|
|
|
|
15,130
|
|
|
|
7,141
|
|
|
|
8,087
|
|
|
Subtract interest and investment income
|
|
|
|
(2,279
|
)
|
|
|
(5,425
|
)
|
|
|
(331
|
)
|
|
|
(734
|
)
|
|
Add depreciation, amortization and accretion
|
|
|
|
74,308
|
|
|
|
65,756
|
|
|
|
20,082
|
|
|
|
17,684
|
|
|
Adjusted EBITDA
|
|
|
$
|
(31,062
|
)
|
|
$
|
417,200
|
|
|
$
|
(94,283
|
)
|
|
$
|
224,280
|
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SOURCE: Frontier Oil Corporation
Frontier Oil Corporation
Kristine Boyd, (713) 688-9600 x135
Copyright Business Wire 2010