EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1
 
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NEWS
RELEASE

2005-16

FOR IMMEDIATE RELEASE
Contact: Doug Aron
(713) 688-9600 x145

FRONTIER OIL REPORTS RECORD QUARTER AND SIX-MONTH RESULTS

HOUSTON, TEXAS, August 4, 2005 - Frontier Oil Corporation (NYSE: FTO) today announced net income of $66.0 million, or $1.16 per diluted share for the quarter ended June 30, 2005, compared to net income of $49.5 million, or $0.91 per diluted share, for the same period of 2004. Frontier’s income before taxes of $105.7 million for the second quarter of 2005 is a record for the Company, significantly higher than the previous record $92.8 million earned in the second quarter of 2001. For the six months ended June 30, 2005, net income totaled a record $100.4 million, or $1.78 per diluted share, considerably above the $45.7 million, or $0.84 per diluted share for the six months ended June 30, 2004 and our previous record of $83.4 million, or $1.53 per diluted share for the six months ended June 30, 2001.

Frontier continues to benefit from record diesel crack spreads and wide crude oil differentials. The diesel crack spread increased to an average of $15.51 per barrel for the recent quarter, more than double the $7.39 per barrel in the second quarter of 2004 while the gasoline crack spread declined to an average of $12.50 per barrel in the second quarter compared to an average $14.23 per barrel in 2004. The light/heavy crude oil differential increased to $14.15 per barrel for the quarter compared to $8.81 for same period in 2004. Similarly, the WTI/WTS crude oil differential increased to $4.67 per barrel for the quarter compared to $3.29 per barrel for the second quarter of 2004.

Frontier’s high refinery utilization rates also contributed to the outstanding second quarter 2005 results. Crude oil charge for the quarter averaged 156,352 barrels per day. In addition, Frontier had built significant intermediate inventory in the first quarter of 2005 due to turnaround activity at its El Dorado Refinery and was able to process that inventory into finished products in the second quarter. As a result, total product sales averaged 176,514 barrels per day for the second quarter 2005, compared to 171,460 barrels per day in the second quarter of 2004.

Frontier’s Chairman, President and CEO, James Gibbs, commented, “Our net income of $100.4 million for the first six months of this year is close to the record $107.7 million we earned for the entire year of 2001. Crack spreads and crude oil differentials remain strong and we are extremely confident 2005 should be the best year in our Company’s history. ”

Frontier’s balance sheet was in excellent shape at quarter end with a cash balance of $168.0 million and no borrowings under the Company’s revolving credit facility. Frontier’s cash exceeded its debt by $18 million as of June 30, 2005.
 
The second quarter 2005 results include an after-tax inventory loss of approximately $1.0 million, or $0.02 per diluted share, compared to a gain of $5.7 million, or $0.11 per diluted share, for the same period of 2004. The six months ended June 30, 2005 include an after-tax inventory gain of $18.4 million, or $0.33 per diluted share, compared to a gain of $14.7 million, or $0.27 per diluted share, for the six-month period ended June 30, 2004.
 
 
 
 
 
Conference Call

A conference call is scheduled for today, August 4, 2005, at 11:00 a.m. eastern time, to discuss the financial results. To access the call, please dial (800) 949-2165. For those individuals outside the United States, please call (312) 461-0285. A recorded replay of the call may be heard through August 18, 2005 by dialing (888) 203-1112 (international callers (719) 457-0820) and entering the code 5477634. In addition, the real-time conference call and a recorded replay will be webcast by PR Newswire. To access the call or the replay via the Internet, go to www.frontieroil.com and register from the Investor Relations page of the site.

Frontier operates a 110,000 barrel-per-day refinery located in El Dorado, Kansas, and a 52,000 barrel-per-day 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 web site 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 facts, 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.

10000 Memorial Drive, Suite 600 Houston, Texas 77024-3411 (713) 688-9600 Fax (713) 688-0616
 
 
 

 
FRONTIER OIL CORPORATION
 
 
  
 
  
 
 
 
Six Months Ended
 
Three Months Ended
 
 
 
June 30
 
June 30
 
 
 
2005
 
2004
 
2005
 
2004
 
INCOME STATEMENT DATA ($000's except per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
1,664,920
 
$
1,273,236
 
$
972,280
 
$
735,904
 
Raw material, freight and other costs
 
 
1,351,051
 
 
1,048,451
 
 
792,728
 
 
583,868
 
Refining operating expenses, excluding depreciation
 
 
115,175
 
 
106,403
 
 
53,824
 
 
51,113
 
Selling and general expenses, excluding depreciation
 
 
16,441
 
 
13,846
 
 
9,402
 
 
7,171
 
Merger termination and legal costs
 
 
37
 
 
3,663
 
 
33
 
 
376
 
Operating income before depreciation and amortization
 
 
182,216
 
 
100,873
 
 
116,293
 
 
93,376
 
Depreciation and amortization
 
 
16,865
 
 
15,762
 
 
8,605
 
 
7,943
 
Operating income
 
 
165,351
 
 
85,111
 
 
107,688
 
 
85,433
 
Interest expense and other financing costs
 
 
5,976
 
 
11,805
 
 
2,939
 
 
5,949
 
Interest income
 
 
(1,727
)
 
(405
)
 
(990
)
 
(204
)
Gain on involuntary conversion of assets
 
 
-
 
 
(594
)
 
-
 
 
(594
)
Provision for income taxes
 
 
60,705
 
 
28,572
 
 
39,778
 
 
30,813
 
Net income
 
$
100,397
 
$
45,733
 
$
65,961
 
$
49,469
 
Net income per diluted share
 
$
1.78
 
$
0.84
 
$
1.16
 
$
0.91
 
Average shares outstanding (000's)
 
 
56,390
 
 
54,448
 
 
56,820
 
 
54,625
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER FINANCIAL DATA ($000's)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA (1)
 
$
182,216
 
$
101,467
 
$
116,293
 
$
93,970
 
Cash flow before changes in working capital
 
 
146,658
 
 
83,423
 
 
88,690
 
 
79,696
 
Working capital changes
 
 
(47,494
)
 
(20,025
)
 
32,221
 
 
(448
)
Net cash provided by operating activities
 
 
99,164
 
 
63,398
 
 
120,911
 
 
79,248
 
Net cash used by investing activities
 
 
(58,375
)
 
(30,100
)
 
(29,904
)
 
(12,111
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations (bpd)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total charges
 
 
161,005
 
 
162,484
 
 
171,316
 
 
172,951
 
Gasoline yields
 
 
77,715
 
 
80,625
 
 
88,306
 
 
86,782
 
Diesel yields
 
 
53,610
 
 
51,188
 
 
58,060
 
 
54,917
 
Total sales
 
 
161,297
 
 
160,050
 
 
176,514
 
 
171,460
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Refinery operating margins information ($ per bbl)
 
 
 
 
 
 
 
 
 
 
 
 
 
Refined products revenue
 
$
57.01
 
$
43.88
 
$
60.46
 
$
47.27
 
Raw material, freight and other costs
 
 
46.28
 
 
35.99
 
 
49.35
 
 
37.42
 
Refinery operating expenses excluding depreciation
 
 
3.95
 
 
3.65
 
 
3.35
 
 
3.28
 
Refinery depreciation and amortization
 
 
0.57
 
 
0.52
 
 
0.53
 
 
0.49
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Light/Heavy crude spread ($ per bbl)
 
$
14.13
 
$
8.49
 
$
14.15
 
$
8.81
 
WTI/WTS Differential ($ per bbl)
 
 
4.68
 
 
3.09
 
 
4.67
 
 
3.29
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 BALANCE SHEET DATA ($000's)
 
 
At June 30, 2005
 
 
  At December 31, 2004
 
Cash, including cash equivalents (a)
 
 
 
 
$
167,997
 
 
 
 
$
124,389
 
Working capital
 
 
 
 
 
190,264
 
 
 
 
 
97,261
 
Short-term and current debt (b)
 
 
 
 
 
-
 
 
 
 
 
-
 
Total long-term debt (c)
 
 
 
 
 
150,000
 
 
 
 
 
150,000
 
Shareholders' equity (d)
 
 
 
 
 
350,678
 
 
 
 
 
240,113
 
Net debt to book capitalization (b+c-a)/(b+c-a+d)
 
 
 
 
 
-5.4
%
 
 
 
 
9.6
%

10000 Memorial Drive, Suite 600 Houston, Texas 77024-3411 (713) 688-9600 Fax (713) 688-0616
 
 
 


(1) Adjusted EBITDA represents income before interest expense, interest income, income tax, and depreciation 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 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 six and three months ended June 30, 2005 and 2004 is reconciled to net income as follows:

 
 
Six Months Ended
 
Three Months Ended
 
 
 
June 30
 
June 30
 
 
 
2005
 
2004
 
2005
 
2004
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
100,397
 
$
45,733
 
$
65,961
 
$
49,469
 
Add provision for income taxes
 
 
60,705
 
 
28,572
 
 
39,778
 
 
30,813
 
Add interest expense and other financing costs
 
 
5,976
 
 
11,805
 
 
2,939
 
 
5,949
 
Subtract interest income
 
 
(1,727
)
 
(405
)
 
(990
)
 
(204
)
Add depreciation and amortization
 
 
16,865
 
 
15,762
 
 
8,605
 
 
7,943
 
Adjusted EBITDA
 
$
182,216
 
$
101,467
 
$
116,293
 
$
93,970
 




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