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

NEWS
RELEASE

2007-03

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

FRONTIER OIL REPORTS FOURTH QUARTER EARNINGS

HOUSTON, TEXAS, February 27, 2007 - Frontier Oil Corporation (NYSE: FTO) today announced quarterly net income of $52.4 million, or $0.47 per diluted share for the quarter ended December 31, 2006, compared to net income of $63.0 million or $0.55 per diluted share, for the quarter ended December 31, 2005. For the twelve months ended December 31, 2006, Frontier reported record net income of $379.3 million, or $3.37 per diluted share, compared to the prior record net income of $275.2 million, or $2.42 per diluted share, for the twelve months ended December 31, 2005.

Frontier’s fourth quarter 2006 net income of $52.4 was lower than the $63.0 million earned in the fourth quarter of 2005 primarily because the strong gasoline and diesel crack spreads following hurricanes Katrina and Rita in 2005 were not repeated in 2006. Additionally, Frontier had a $24 million after tax inventory loss in the fourth quarter of 2006 compared to a $14.3 million loss for the same period of 2005. The quarter ended December 31, 2006 was the second best fourth quarter in Company history. The gasoline crack spread averaged $7.96 for the fourth quarter of 2006 compared to $8.59 in 2005. The diesel crack spread remained strong at $20.21 for the fourth quarter 2006 compared to $24.69 in 2005. Frontier continues to benefit from the ability to process both heavy and sour crude oils. The light/heavy crude oil spread averaged $14.35 per barrel at the Cheyenne Refinery and $13.99 per barrel at the El Dorado Refinery for the most recent quarter. The WTI/WTS spread averaged $4.84 per barrel for the fourth quarter of 2006.

Frontier’s total charges for the fourth quarter of 2006 averaged 173,613 barrels per day (bpd), versus an average 175,589 bpd the Company charged in the fourth quarter of 2005. For the twelve months ended December 31, 2006, total charges averaged a record 171,819 bpd compared to 168,604 bpd in 2005. Total crude oil charge averaged 154,473 bpd for the year 2006, also a Company record. The Cheyenne Refinery will begin a plant wide turnaround in mid-May of 2007.

Frontier’s Chairman, President and CEO, James Gibbs, commented, “Our 2006 net income eclipsed last year’s record by over $100 million. This year’s record earnings allowed us to make substantial reinvestment in our Refineries and repurchase a significant amount of our stock. We were particularly pleased with our throughput record for 2006 as our employees did an excellent job of running our Refineries to maximize our earnings. For 2007, we remain focused on trying to keep our expansion projects on time and on budget, and we continue to seek ways to realize superior shareholder returns.”

For the three months ending December 31, 2006, Frontier generated $75.8 million in cash before changes in working capital, while investing approximately $36.1 million in capital expenditures and repurchasing 354,724 shares of its common stock for a total cost of $8.8 million. Frontier’s cash balance of $405.5 million exceeded debt by $255.5 million as of December 31, 2006. There were no borrowings under the Company’s revolving credit facility. For the twelve months ended December 31, 2006, Frontier generated $446.7 million in cash before changes in working capital, invested $137.2 million in capital expenditures, repurchased approximately $99.0 million in common stock (3.7 million shares) and paid $67.5 million in dividends.
 
The fourth quarter 2006 results include an after-tax inventory loss of approximately $24.0 million or $0.22 per diluted share, compared to a loss of $14.3 million, or $0.13 per diluted share, for the fourth quarter of 2005. The twelve months ended December 31, 2006 include an after-tax inventory loss of approximately $16.1 million or $0.14 per diluted share compared to a gain of $29.4 million, or $0.26 per diluted share for the same period in 2005.

Conference Call

A conference call is scheduled for today, February 27, 2007, at 11:00 a.m. eastern time, to discuss the financial results. To access the call, please dial (800) 310-6649. For those individuals outside the United States, please call (719) 457-2693. A recorded replay of the call may be heard through March 13, 2007 by dialing (888) 203-1112 (international callers (719) 457-0820) and entering the code 1325274. 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 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 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 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
Three Months Ended
 
 
 
December 31
 
December 31
 
 
 
2006
 
2005
As Adjusted (1)
 
2006
 
2005
As Adjusted (1)
 
INCOME STATEMENT DATA ($000's except per share)
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
4,795,953
 
$
4,001,162
 
$
1,087,267
 
$
1,150,315
 
Raw material, freight and other costs
 
 
3,850,937
 
 
3,247,372
 
 
911,628
 
 
964,826
 
Refining operating expenses, excluding depreciation
 
 
277,129
 
 
241,445
 
 
73,321
 
 
71,514
 
Selling and general expenses, excluding depreciation
 
 
52,488
 
 
30,763
 
 
15,665
 
 
5,598
 
(Gain) on sale of assets
 
 
(8
)
 
(3,644
)
 
-
 
 
(3,641
)
Operating income before depreciation
 
 
615,407
 
 
485,226
 
 
86,653
 
 
112,018
 
Depreciation and amortization
 
 
41,213
 
 
35,213
 
 
11,167
 
 
8,552
 
Operating income
 
 
574,194
 
 
450,013
 
 
75,486
 
 
103,466
 
Interest expense and other financing costs
 
 
12,139
 
 
10,341
 
 
3,241
 
 
2,006
 
Interest and investment income
 
 
(18,059
)
 
(7,583
)
 
(5,666
)
 
(3,719
)
Provision for income taxes
 
 
200,837
 
 
169,594
 
 
25,477
 
 
39,633
 
Income before cumulative effect of accounting changes
 
 
379,277
 
 
277,661
 
 
52,434
 
 
65,546
 
Cumulative effect of accounting changes, net of taxes
 
 
-
 
 
(2,503
)
 
-
 
 
(2,503
)
Net income
 
$
379,277
 
$
275,158
 
$
52,434
 
$
63,043
 
Net income per diluted share
 
$
3.37
 
$
2.42
 
$
0.47
 
$
0.55
 
Average shares outstanding (000's)
 
 
112,512
 
 
113,636
 
 
110,741
 
 
114,326
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER FINANCIAL DATA ($000's)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA (2)
 
$
615,407
 
$
485,226
 
$
86,653
 
$
112,018
 
Cash flow before changes in working capital
 
 
446,667
 
 
346,170
 
 
75,759
 
 
82,091
 
Working capital changes
 
 
(106,150
)
 
14,167
 
 
(18,655
)
 
38,505
 
Net cash provided (used) by operating activities
 
 
340,517
 
 
360,337
 
 
57,104
 
 
120,596
 
Net cash provided (used) by investing activities
 
 
(137,195
)
 
(109,568
)
 
(36,085
)
 
(31,036
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations (bpd)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total charges
 
 
171,819
 
 
168,604
 
 
173,613
 
 
175,589
 
Gasoline yields
 
 
81,484
 
 
83,574
 
 
83,283
 
 
92,850
 
Diesel yields
 
 
57,678
 
 
55,151
 
 
60,950
 
 
57,926
 
Total sales
 
 
172,038
 
 
170,381
 
 
174,252
 
 
181,437
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Refinery operating margins information ($ per bbl)
 
 
 
 
 
 
 
 
 
 
 
 
 
Refined products revenue
 
$
75.80
 
$
64.32
 
$
67.13
 
$
68.77
 
Raw material, freight and other costs
 
 
61.33
 
 
52.22
 
 
56.87
 
 
57.80
 
Refinery operating expenses, excluding depreciation
 
 
4.41
 
 
3.88
 
 
4.57
 
 
4.28
 
Depreciation, accretion and amortization
 
 
0.65
 
 
0.56
 
 
0.69
 
 
0.51
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cheyenne Refinery Light/Heavy crude oil differential ($ per bbl)
 
$
16.21
 
$
15.32
 
$
14.35
 
$
18.11
 
WTI/WTS Differential ($ per bbl)
 
 
5.22
 
 
4.51
 
 
4.84
 
 
5.56
 
El Dorado Refinery Light/Heavy crude oil differential ($ per bbl)
 
 
18.13
 
 
n/a
 
 
13.99
 
 
n/a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET DATA ($000's)
 
 
At December 31, 2006
 
 
At December 31, 2005
 
Cash, including cash equivalents (a)
 
 
 
 
$
405,479
 
 
 
 
$
356,065
 
Working capital
 
 
 
 
 
479,518
 
 
 
 
 
270,145
 
Short-term and current debt (b)
 
 
 
 
 
-
 
 
 
 
 
-
 
Total long-term debt (c)
 
 
 
 
 
150,000
 
 
 
 
 
150,000
 
Shareholders' equity (d)
 
 
 
 
 
775,854
 
 
 
 
 
478,692
 
Net debt to book capitalization (b+c-a)/(b+c-a+d)
 
 
 
 
 
-49.1
%
 
 
 
 
-75.6
%

 
 
 

(1) During the fourth quarter of 2006, the Company adopted a change in its accounting method for the costs of turnarounds from the accrual method to the deferral method. Turnarounds are the scheduled and required shutdowns of refinery processing units for significant overhaul and refurbishment. Under the deferral accounting method, the costs of turnarounds are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs. The new method of accounting for turnarounds was adopted in order to adhere to FSP No. AUG AIR-1 “Accounting for Planned Major Maintenance Activities” which prohibits the accrual method of accounting for planned major maintenance activities. The Company elected to early adopt the FSP in the fourth quarter of 2006. The comparative financial statements for 2005 have been adjusted to apply the new method retrospectively.
 
(2) Adjusted EBITDA represents income before cumulative effect of accounting change, interest expense and other financing costs, 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 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, 2006 and 2005 is reconciled to net income as follows:


 
 
Twelve Months Ended
 
Three Months Ended
 
 
 
December 31
 
December 31
 
 
 
2006
 
2005
 
2006
 
2005
 
Net income (loss)
 
$
379,277
 
$
275,158
 
$
52,434
 
$
63,043
 
Add cumulative effect of accounting changes
 
 
-
 
 
2,503
 
 
-
 
 
2,503
 
Add provision (benefit) for income taxes
 
 
200,837
 
 
169,594
 
 
25,477
 
 
39,633
 
Add interest expense and other financing costs
 
 
12,139
 
 
10,341
 
 
3,241
 
 
2,006
 
Subtract interest and investment income
 
 
(18,059
)
 
(7,583
)
 
(5,666
)
 
(3,719
)
Add depreciation, accretion and amortization
 
 
41,213
 
 
35,213
 
 
11,167
 
 
8,552
 
Adjusted EBITDA
 
$
615,407
 
$
485,226
 
$
86,653
 
$
112,018
 


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