EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm
Exhibit 99.1

 


 
NEWS
RELEASE

2009-08

FOR IMMEDIATE RELEASE
Contact: Kristine Boyd
(713) 688-9600 x135

FRONTIER OIL REPORTS SECOND QUARTER 2009 RESULTS

HOUSTON, TEXAS, August 6, 2009 – Frontier Oil Corporation (NYSE: FTO) today announced quarterly net income of $49.8 million, or $0.47 per diluted share, for the quarter ended June 30, 2009, compared to net income of $59.3 million, or $0.57 per diluted share, for the quarter ended June 30, 2008.  The second quarter 2009 results include an after-tax inventory gain of $78.6 million, or $0.75 per diluted share, and an after-tax hedging loss of $18.4 million, or $0.18 per diluted share, compared to an after-tax inventory gain of $102.8 million, or $0.99 per diluted share, and an after-tax hedging loss of $71.9 million, or $0.69 per diluted share, for the comparable period in 2008.

For the six months ended June 30, 2009, net income totaled $123.3 million, or $1.18 per diluted share, compared to net income of $105.3 million, or $1.02 per diluted share, for the comparable period in 2008.  The results for the first six months of 2009 included an after-tax inventory gain of $99.9 million, or $0.95 per diluted share, and an after-tax hedging loss of $4.6 million, or $0.04 per diluted share.  Results for the comparable six months ended June 30, 2008 included an after-tax inventory gain of $165.3 million, or $1.60 per diluted share, and an after-tax hedging loss of $88.7 million, or $0.86 per diluted share.

Gasoline margins improved during the second quarter, offset by a steep decline in diesel margins.  Frontier’s gasoline crack spread averaged $10.85 per barrel in the second quarter of 2009, compared to $5.85 per barrel in the second quarter of 2008 and $7.04 per barrel in the first quarter of 2009.  Frontier’s diesel crack spread averaged $6.28 per barrel in the second quarter of 2009, down from $28.70 per barrel in the comparable period of 2008 and $11.69 per barrel in the first quarter of 2009.

Crude differentials narrowed further during the second quarter as a result of worldwide tightness in the supply of heavy and sour crude oils.  The light/heavy crude oil differential averaged $4.53 per barrel in the second quarter of 2009, compared to $21.25 per barrel in the comparable period of 2008 and $6.49 per barrel in the first quarter of 2009.  The WTI/WTS differential averaged $1.02 per barrel in the second quarter of 2009, down from $4.98 per barrel in the comparable period of 2008 and $1.69 per barrel in the first quarter of 2009.

Frontier’s total charges for the second quarter of 2009 averaged 181,152 barrels per day (“bpd”), up from an average of 161,380 bpd in the second quarter of 2008 mainly due to the planned shutdowns of the El Dorado crude unit and Cheyenne diesel hydrotreater during the second quarter of 2008.

Frontier’s President and CEO, Mike Jennings, commented, “Challenges in the domestic refining sector persisted in the second quarter, as crude differentials continued to narrow and distillate demand weakened with a struggling U.S. economy.  Our strong balance sheet continues to provide us with flexibility during this down cycle.  We have heightened our focus, particularly at the Cheyenne refinery, on reducing operating expenses and improving light product yields, and we continue to take advantage of opportunities in the crude and product markets as they become apparent.”

For the three months ended June 30, 2009, Frontier generated $84.9 million in cash flow before changes in working capital and as of June 30, 2009, maintained a cash balance of $488.4 million which exceeded debt by $141.0 million.  The cash balance declined from $631.7 million as of March 31, 2009, due to a $176.4 million increase in working capital requirements brought about by higher crude oil prices and a seasonal build in inventory.  In addition, the Company made $44.0 million in capital expenditures during the quarter.  There were no cash borrowings under the Company’s revolving credit facility, which had $334.7 million of borrowing base availability at quarter end.

Conference Call

A conference call is scheduled for today, August 6, 2009, 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 (international callers (847) 413-3238), confirmation number 24942152.  A recorded replay of the call may be heard through August 20, 2009 by dialing (888) 843-8996 (international callers (630) 652-3044), passcode 24942152.  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 130,000 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.


 
 
 


FRONTIER OIL CORPORATION
  
                         
   
Six Months Ended
    
Three Months Ended
  
   
June 30,
    
June 30,
  
   
2009
    
2008
    
2009
    
2008
  
INCOME STATEMENT DATA ($000's except per share)
                    
Revenues
  
$
1,948,092
    
$
2,952,339
    
$
1,101,844
    
$
1,766,556
  
Raw material, freight and other costs
    
1,533,989
      
2,574,026
      
914,092
      
1,574,898
  
Refining operating expenses, excluding depreciation
    
148,474
      
168,594
      
72,598
      
81,034
  
Selling and general expenses, excluding depreciation
    
25,287
      
22,503
      
12,866
      
12,148
  
Gain on sale of assets
    
-
      
44
      
-
      
7
  
Operating income before depreciation
    
240,342
      
187,260
      
102,288
      
98,483
  
Depreciation, amortization and accretion
    
36,127
      
31,437
      
17,983
      
16,497
  
Operating income
    
204,215
      
155,823
      
84,305
      
81,986
  
Interest expense and other financing costs
    
14,337
      
4,563
      
6,917
      
2,924
  
Interest and investment income
    
(1,287
)
    
(3,635
)
    
(771
)
    
(1,322
)
Provision for income taxes
    
67,865
      
49,610
      
28,318
      
21,068
  
Net income
  
$
123,300
    
$
105,285
    
$
49,841
    
$
59,316
  
Diluted earnings per share of common stock
  
$
1.18
    
$
1.02
    
$
0.47
    
$
0.57
  
Average shares outstanding (000's)
    
104,697
      
103,620
      
104,999
      
103,471
  
                                 
OTHER FINANCIAL DATA ($000's)
                                
Adjusted EBITDA (1)
  
$
240,342
    
$
187,260
    
$
102,288
    
$
98,483
  
Cash flow before changes in working capital
    
187,763
      
137,941
      
84,948
      
73,180
  
Working capital changes
    
(91,019
)
    
(18,162
)
    
(176,436
)
    
72,951
  
Net cash provided by (used in) operating activities
    
96,744
      
119,779
      
(91,488
)
    
146,131
  
Net cash used in investing activities
    
(76,709
)
    
(122,476
)
    
(43,966
)
    
(71,410
)
Net cash used in financing activities
    
(15,210
)
    
(73,462
)
    
(7,911
)
    
(7,742
)
                                 
OPERATIONS
                                
Consolidated
                                
Operations (bpd)
                                
    Total charges
    
181,810
      
143,699
      
181,152
      
161,380
  
    Gasoline yields
    
83,248
      
69,351
      
83,723
      
73,203
  
    Diesel yields
    
72,418
      
46,522
      
74,059
      
54,220
  
    Total sales
    
185,291
      
147,958
      
191,106
      
158,766
  
                                 
Refinery operating margins information ($ per bbl)
                                
    Refined products revenue
  
$
58.15
    
$
114.73
    
$
64.87
    
$
130.26
  
    Raw material, freight and other costs
    
45.74
      
95.59
      
52.56
      
109.01
  
    Refinery operating expenses, excluding depreciation
    
4.43
      
6.26
      
4.17
      
5.61
  
    Depreciation, amortization and accretion
    
1.07
      
1.16
      
1.03
      
1.14
  
                                 
Cheyenne Refinery light/heavy crude oil differential ($ per bbl)
  
$
5.39
    
$
19.45
    
$
4.93
    
$
20.54
  
WTI/WTS differential ($ per bbl)
    
1.36
      
4.81
      
1.02
      
4.98
  
El Dorado Refinery light/heavy crude oil differential ($ per bbl)
    
5.72
      
11.76
      
3.90
      
22.44
  
                                 
                                 
BALANCE SHEET DATA ($000's)
  
At June 30, 2009
    
At December 31, 2008
  
Cash, including cash equivalents (a)
         $  
 
488,357
            
     $
483,532
  
Working capital
            
745,146
              
651,352
  
Short-term and current debt (b)
            
-
              
-
  
Total long-term debt (c)
            
347,350
              
347,220
  
Shareholders' equity (d)
            
1,167,263
              
1,051,141
  
Net debt to book capitalization (b+c-a)/(b+c-a+d)
            
-13.7
%
            
-14.9
%


(1) 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 six months and three months ended June 30, 2009 and 2008 is reconciled to net income as follows:

   
Six Months Ended
    
Three Months Ended
  
   
June 30,
    
June 30,
  
   
2009
    
2008
    
2009
    
2008
  
                         
Net income
  
$
123,300
    
$
105,285
    
$
49,841
    
$
59,316
  
Add provision for income taxes
    
67,865
      
49,610
      
28,318
      
21,068
  
Add interest expense and other financing costs
    
14,337
      
4,563
      
6,917
      
2,924
  
Subtract interest and investment income
    
(1,287
)
    
(3,635
)
    
(771
)
    
(1,322
)
Add depreciation, amortization and accretion
    
36,127
      
31,437
      
17,983
      
16,497
  
Adjusted EBITDA
  
$
240,342
    
$
187,260
    
$
102,288
    
$
98,483
  



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