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

 
NEWS
RELEASE

2007-10

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

FRONTIER OIL REPORTS MOST PROFITABLE QUARTER IN COMPANY HISTORY

HOUSTON, TEXAS, August 8, 2007 – Frontier Oil Corporation (NYSE: FTO) today announced record quarterly net income of $243.8 million, or $2.23 per diluted share for the quarter ended June 30, 2007, compared to the prior record quarterly net income of $145.9 million or $1.29 per diluted share, for the quarter ended June 30, 2006.  For the six months ended June 30, 2007 net income totaled $318.5 million, or $2.90 per diluted share, compared to $203.2 million or $1.80 per diluted share for the six months ended June 30, 2006.

Frontier’s record quarterly results were achieved despite a planned 30-day plant-wide shutdown at the Cheyenne Refinery.  As a result of the Cheyenne turnaround, total charges for the second quarter of 2007 fell to 163,991 barrels per day compared to 171,426 for the second quarter of 2006.  However, the Company stored intermediate and finished product inventories during the first quarter of this year, allowing product sales to average 173,888 barrels per day for the most recent quarter compared to 173,642 barrels per day for the second quarter of 2006.

Second quarter 2007 results were impacted by several competitor refinery outages that reduced gasoline and diesel supplies in our markets.  The gasoline crack averaged a record $36.73 per sales barrel for the second quarter of 2007 compared to $20.92 per sales barrel for the same period in 2006.  The diesel crack spread averaged a record $29.08 per sales barrel for the quarter ended June 30, 2007, compared to $23.49 per sales barrel for the second quarter of 2006.  For the second quarter of 2007, the Cheyenne Refinery’s light/heavy differential averaged $14.17 per barrel and the light/heavy spread at the El Dorado Refinery averaged $18.78 per barrel.  The WTI/WTS spread averaged $4.59 per barrel for the quarter ended June 30, 2007.

Frontier’s Chairman, President and CEO, James Gibbs, commented, “We are very pleased with our extraordinary quarterly results.  The coker and crude fractionation projects in Cheyenne are substantially complete, with the final phase of the coker project to be completed in the fourth quarter of this year.  We continue to make good progress on our expansion projects in El Dorado.  Although we have seen deterioration in product margins from the record cracks of the second quarter, our product markets continue to be among the best in the United States.  Additionally, both the light/heavy crude oil spread and the WTI/WTS spread have improved thus far in the third quarter.”

For the three months ending June 30, 2007, Frontier generated $248.9 million in cash before changes in working capital while investing approximately $94.4 million in capital expenditures.  Frontier’s cash balance at June 30, 2007 increased to $530.3 million despite $98.5 million in share repurchases during the quarter.    There were no borrowings under the Company’s revolving credit facility.  Frontier’s cash exceeded its debt by $380.3 million as of June 30, 2007.  For the six months ending June 30, 2007, Frontier generated $371.5 million in cash before changes in working capital while investing approximately $154.6 million in capital expenditures and $128.2 million in share repurchase.    The Company has spent an additional $20.0 million to repurchase its shares since June 30, 2007 and in 2007 has repurchased a total of 4.1 million shares and spent approximately $150.0 million of the current $200 million share repurchase authorization.
 
The second quarter 2007 results include an after-tax inventory gain of approximately $20.0 million or $0.18 per diluted share, compared to a gain of $23.6 or $0.21 per diluted share, for the same period of 2006.  The six months ended June 30, 2007 include an after-tax inventory gain of approximately $22.0 million or $0.20 per diluted share, compared to a gain of $23.6 million, or $0.21 per diluted share for the same period in 2006.

Conference Call

A conference call is scheduled for today, August 8, 2007, at 11:00 a.m. eastern time, to discuss the financial results.  To access the call, please dial (800) 500-0311.  For those individuals outside the United States, please call (719) 457-2698.  A recorded replay of the call may be heard through August 22, 2007 by dialing (888) 203-1112 (international callers (719) 457-0820) and entering the code 1478187.  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.



FRONTIER OIL CORPORATION            
                         
   
Six Months Ended
    
Three Months Ended
  
   
June 30,   
    
June 30,   
  
   
2007
    
2006 (1)
As Adjusted
    
2007
    
2006 (1)
As Adjusted
  
INCOME STATEMENT DATA ($000's except per share)
                        
Revenues
   $
2,482,583
     $
2,327,559
     $
1,434,700
     $
1,315,366
  
Raw material, freight and other costs
    
1,804,805
      
1,829,095
      
964,940
      
995,608
  
Refining operating expenses, excluding depreciation
    
140,977
      
139,881
      
69,814
      
70,547
  
Selling and general expenses, excluding depreciation
    
24,615
      
21,729
      
13,583
      
12,815
  
Loss on sale of assets
    
2,028
      
-
      
-
      
-
  
Operating income before depreciation
    
510,158
      
336,854
      
386,363
      
236,396
  
Depreciation, accretion and amortization
    
23,193
      
18,908
      
12,070
      
10,041
  
Operating income
    
486,965
      
317,946
      
374,293
      
226,355
  
Interest expense and other financing costs
    
4,948
      
5,282
      
1,992
      
2,847
  
Interest and investment income
     (11,647 )     (6,456 )     (6,320 )     (3,910 )
Provision for income taxes
    
175,181
      
115,903
      
134,858
      
81,554
  
Net income
   $
318,483
     $
203,217
     $
243,763
     $
145,864
  
Net income per diluted share
   $
2.90
     $
1.80
     $
2.23
     $
1.29
  
Average shares outstanding (000's)
    
109,877
      
113,211
      
109,304
      
113,336
  
                                 
OTHER FINANCIAL DATA ($000's)
                                
EBITDA (2)
   $
510,158
     $
336,854
     $
386,363
     $
236,396
  
Cash flow before changes in working capital
    
371,500
      
232,308
      
248,898
      
163,487
  
Working capital changes
    
37,275
       (70,251 )    
20,170
      
48,381
  
Net cash provided by operating activities
    
408,775
      
162,057
      
269,068
      
211,868
  
Net cash used by investing activities
     (154,581 )     (74,801 )     (94,442 )     (37,712 )
                                 
OPERATIONS
                                
Consolidated
                                
Operations (bpd)
                                
    Total charges
    
165,253
      
168,828
      
163,991
      
171,426
  
    Gasoline yields
    
78,740
      
81,680
      
79,921
      
79,817
  
    Diesel yields
    
58,386
      
53,748
      
55,437
      
54,857
  
    Total sales
    
172,324
      
169,176
      
173,888
      
173,642
  
                                 
Refinery operating margins information ($ per bbl)
                                
    Refined products revenue
   $
79.55
     $
75.85
     $
90.44
     $
83.23
  
    Raw material, freight and other costs
    
57.86
      
59.73
      
60.98
      
63.01
  
    Refinery operating expenses, excluding depreciation
    
4.52
      
4.57
      
4.41
      
4.46
  
    Depreciation, accretion and amortization
    
0.74
      
0.61
      
0.76
      
0.63
  
                                 
Cheyenne Refinery light/heavy crude oil differential ($ per bbl)
   $
13.71
     $
17.09
     $
14.17
     $
15.19
  
WTI/WTS crude oil differential ($ per bbl)
    
4.47
      
5.66
      
4.59
      
4.89
  
El Dorado Refinery light/heavy crude oil differential ($ per bbl)
    
15.59
      
25.22
      
18.78
      
25.41
  
                                 
                                 
BALANCE SHEET DATA ($000's)
  
At June 30, 2007
    
At December 31, 2006
  
Cash, including cash equivalents (a)
           $
530,321
             $
405,479
  
Working capital
            
539,541
              
479,518
  
Short-term and current debt (b)
            
-
              
-
  
Total long-term debt (c)
            
150,000
              
150,000
  
Shareholders' equity (d)
            
967,202
              
775,854
  
Net debt to book capitalization (b+c-a)/(b+c-a+d)
             -64.8 %             -49.1 %
 

(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 2006 have been adjusted to apply the new method retrospectively.

(2) EBITDA represents income before interest expense and other financing costs, interest and investment income, income tax, and depreciation, and amortization. EBITDA is not a calculation based upon generally accepted accounting principles; however, the amounts included in the EBITDA calculation are derived from amounts included in the consolidated financial statements of the Company.  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. EBITDA is not necessarily comparable to similarly titled measures of other companies.  EBITDA is also used for internal analysis and as a basis for financial covenants. Frontier’s EBITDA for the six months and three months ended June 30, 2007 and 2006 is reconciled to net income as follows:

 
   
Six Months Ended
    
Three Months Ended
  
   
June 30,   
    
June 30,   
  
   
2007
    
2006 (1)
As Adjusted
    
2007
    
2006 (1)
As Adjusted
  
                         
Net income (loss)
   $
318,483
     $
203,217
     $
243,763
     $
145,864
  
Add provision (benefit) for income taxes
    
175,181
      
115,903
      
134,858
      
81,554
  
Add interest expense and other financing costs
    
4,948
      
5,282
      
1,992
      
2,847
  
Subtract interest and investment income
     (11,647 )     (6,456 )     (6,320 )     (3,910 )
Add depreciation, accretion and amortization
    
23,193
      
18,908
      
12,070
      
10,041
  
EBITDA
   $
510,158
     $
336,854
     $
386,363
     $
236,396
  
 
 

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