EX-99.1 2 exhibit99_1.htm EXHIBIT 99.1 Exhibit 99.1

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RELEASE

2005-20

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

FRONTIER OIL REPORTS MOST PROFITABLE QUARTER IN COMPANY HISTORY

HOUSTON, TEXAS, November 3, 2005 - Frontier Oil Corporation (NYSE: FTO) today announced record quarterly net income of $109.2 million, or $1.91 per diluted share for the quarter ended September 30, 2005, compared to net income of $23.8 million, or $0.43 per diluted share, for the same period of 2004. For the nine months ended September 30, 2005, net income totaled a record $209.6 million, or $3.70 per diluted share, compared to $69.5 million, or $1.27 per diluted share for the nine months ended September 30, 2004.

Frontier’s record quarterly earnings are attributable to outstanding diesel and gasoline crack spreads, wide crude oil differentials and improved refinery utilization. Although our refineries operated at their maximum capacity during the third quarter 2005, hurricanes Rita and Katrina caused substantial damage to refineries located on the Gulf Coast. Gasoline and diesel crack spreads increased sharply during the third quarter 2005, due in part to Gulf Coast refinery outages, as well as to the lack of domestic refining capacity. The diesel crack spread increased to an average of $18.38 per barrel for the third quarter 2005, well above the $8.10 per barrel in the third quarter of 2004. The gasoline crack spread also improved significantly to an average of $18.11 per barrel in the third quarter of 2005 compared to an average of $8.88 per barrel in the third quarter 2004. The light/heavy crude oil differential increased to $14.93 per barrel for the quarter ended September 30, 2005 compared to $9.28 for the quarter ended September 30, 2004. Similarly, the WTI/WTS crude oil differential increased to $3.13 per barrel for the quarter compared to $2.95 per barrel for the third quarter of 2004.

Frontier’s crude oil charge for the third quarter 2005 averaged 161,416 barrels per day (bpd), approximately 8,700 bpd more than the average 152,724 bpd the Company charged in the third quarter of 2004. As a result, total product sales averaged 177,196 bpd for the third quarter 2005, compared to 174,204 bpd in the third quarter of 2004.

For the nine months ending September 30, 2005, Frontier generated $239.7 million cash from operating activities while incurring $78.5 million of capital expenditures. Frontier’s balance sheet remains in excellent shape at quarter end with a cash balance of $286.6 million and no borrowings under the Company’s revolving credit facility. Frontier’s cash exceeded its debt by $136.6 million as of September 30, 2005.

Frontier’s Chairman, President and CEO, James Gibbs, commented, “Our year to date earnings have been exceptional and our October results were also outstanding. We have amassed significant cash from operations and along with considering capital improvement projects at our refineries, our Board of Directors will evaluate a number of alternatives to return value to our shareholders at the board meeting scheduled for the end of this month.”
 
The third quarter 2005 results include an after-tax inventory gain of approximately $25.4 million, or $0.44 per diluted share, compared to a gain of $13.1 million, or $0.24 per diluted share, for the same period of 2004. The nine months ended September 30, 2005 include an after-tax inventory gain of $43.7 million, or $0.77 per diluted share, compared to a gain of $27.9 million, or $0.51 per diluted share, for the nine-month period ended September 30, 2004.
 
Conference Call

A conference call is scheduled for today, November 3, 2005, at 11:00 a.m. eastern time, to discuss the financial results. To access the call, please dial (800) 289-0496. For those individuals outside the United States, please call (913) 981-5519. A recorded replay of the call may be heard through November 17, 2005 by dialing (888) 203-1112 (international callers (719) 457-0820) and entering the code 3285148. 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.


 
 
FRONTIER OIL CORPORATION
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
Three Months Ended
 
 
 
September 30
 
September 30
 
 
 
2005
 
2004
 
2005
 
2004
 
INCOME STATEMENT DATA ($000's except per share)
 
 
 
 
 
 
 
 
 
Revenues
 
$
2,850,850
 
$
2,058,312
 
$
1,185,930
 
$
785,076
 
Raw material, freight and other costs
 
 
2,282,546
 
 
1,719,851
 
 
931,495
 
 
671,400
 
Refinery operating expenses, excluding depreciation
    
173,877
    
162,124
    
58,702
    
55,721
  
Selling and general expenses
 
 
25,118
 
 
20,921
 
 
8,677
 
 
7,075
 
Merger termination and legal costs
 
 
47
 
 
3,820
 
 
10
 
 
157
 
Operating income before depreciation
 
 
369,262
 
 
151,596
 
 
187,046
 
 
50,723
 
Depreciation and amortization
 
 
26,661
 
 
23,928
 
 
9,796
 
 
8,166
 
Operating income
 
 
342,601
 
 
127,668
 
 
177,250
 
 
42,557
 
Interest expense and other financing costs
 
 
8,335
 
 
17,618
 
 
2,359
 
 
5,813
 
Interest and investment income
 
 
(3,864
)
 
(890
)
 
(2,137
)
 
(485
)
Gain on involuntary conversion of assets
 
 
-
 
 
(594
)
 
-
 
 
-
 
Provision for income taxes
 
 
128,548
 
 
42,009
 
 
67,843
 
 
13,437
 
Net income
 
$
209,582
 
$
69,525
 
$
109,185
 
$
23,792
 
Net income per diluted share
 
$
3.70
 
$
1.27
 
$
1.91
 
$
0.43
 
Average shares outstanding (000's)
 
 
56,699
 
 
54,598
 
 
57,303
 
 
54,890
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER FINANCIAL DATA ($000's)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA (1)
 
$
369,262
 
$
152,190
 
$
187,046
 
$
50,723
 
Cash flow before changes in working capital
 
 
286,192
 
 
124,222
 
 
139,534
 
 
40,799
 
Working capital changes
 
 
(46,450
)
 
(18,766
)
 
1,044
 
 
1,259
 
Net cash provided by operating activities
 
 
239,742
 
 
105,456
 
 
140,578
 
 
42,058
 
Net cash used in investing activities
 
 
(78,533
)
 
(33,120
)
 
(20,158
)
 
(3,020
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations (bpd)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total charges
 
 
166,249
 
 
164,818
 
 
176,566
 
 
169,436
 
Gasoline yields
 
 
80,449
 
 
81,918
 
 
85,827
 
 
84,477
 
Diesel and jet fuel yields
 
 
54,216
 
 
52,487
 
 
55,409
 
 
55,057
 
Total sales
 
 
166,656
 
 
164,803
 
 
177,196
 
 
174,204
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Refinery operating margin information ( per sales bbl)
 
 
 
 
 
 
 
 
 
 
 
 
 
Refined products revenue
 
$
62.69
 
$
45.84
 
$
72.85
 
$
49.39
 
Raw material, freight and other costs
 
 
50.17
 
 
38.09
 
 
57.14
 
 
41.89
 
Refinery operating expenses, excluding depreciation
 
 
3.82
 
 
3.59
 
 
3.60
 
 
3.48
 
Depreciation and amortization
 
 
0.58
 
 
0.51
 
 
0.60
 
 
0.49
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Light/Heavy crude oil differential (per bbl)
 
$
14.39
 
$
8.75
 
$
14.93
 
$
9.28
 
WTI/WTS crude oil differential (per bbl)
 
 
4.16
 
 
3.04
 
 
3.13
 
 
2.95
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET DATA ($000's)
 
 
At September 30, 2005
 
 
At December 31, 2004
 
Cash, including cash equivalents (a)
 
 
 
 
 
$ 286,553
 
 
 
 
  
$ 124,389
 
Working capital
 
 
 
 
 
295,045
 
 
 
 
 
97,261
 
Short-term and current debt (b)
 
 
 
 
 
-
 
 
 
 
 
-
 
Total long-term debt (c)
 
 
 
 
 
150,000
 
 
 
 
 
150,000
 
Shareholders’ equity (d)
 
 
 
 
 
471,033
 
 
 
 
 
240,113
 
Net debt to book capitalization (b+c-a)/(b+c-a+d)
          
-40.8
%
        
9.6
%

 
(1) Adjusted EBITDA represents income before interest expense, interest and investment 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 nine and three months ended September 30, 2005 and 2004 is reconciled to net income as follows:

 
 
Nine Months Ended
 
Three Months Ended
 
 
 
September 30
 
September 30
 
 
 
2005
 
2004
 
2005
 
2004
 
Net income
 
$
209,582
 
$
69,525
 
$
109,185
 
$
23,792
 
Add provision for income taxes
 
 
128,548
 
 
42,009
 
 
67,843
 
 
13,437
 
Add interest expense and other financing costs
 
 
8,335
 
 
17,618
 
 
2,359
 
 
5,813
 
Subtract interest and investment income
 
 
(3,864
)
 
(890
)
 
(2,137
)
 
(485
)
Add depreciation and amortization
 
 
26,661
 
 
23,928
 
 
9,796
 
 
8,166
 
Adjusted EBITDA
 
$
369,262
 
$
152,190
 
$
187,046
 
$
50,723
 


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