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HollyFrontier’s Refining Margin Widen in Q4

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Feb. 21 2019, Published 8:05 a.m. ET

HollyFrontier’s refining margin

HollyFrontier (HFC) posted its fourth-quarter results on February 20. The company’s adjusted EPS was $2.3 in the fourth quarter—higher than analysts’ estimate of $1.9. HollyFrontier’s refining earnings rose steeply. To learn more, read HollyFrontier’s Q4 Earnings Rose and Refining Margins Expanded. Now, we’ll discuss HollyFrontier’s refining margin.

HollyFrontier’s gross refining margin rose by $9.6 per barrel compared to the fourth quarter of 2017 to $22.2 per barrel in the fourth quarter. The operating costs also rose by $1.2 per barrel compared to the fourth quarter of 2017. HollyFrontier’s net refining margin increased by $8.5 per barrel from the fourth quarter of 2017 to $15.1 per barrel in the fourth quarter. The refining margin increased due to a rise in HollyFrontier’s gross refining margin. The increase was partially offset by an increase in the company’s operating cost per barrel YoY (year-over-year) in the fourth quarter.

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HollyFrontier’s refining margin by region

HollyFrontier’s Mid-Continent region’s (where the El Dorado and Tulsa refineries are located) net refining margin rose from $6.3 per barrel in the fourth quarter of 2017 to $12.5 per barrel in the fourth quarter. The situation was similar for the Southwest region where the Navajo refinery is located. The net refining margin in the Southwest region rose from $8.2 per barrel in the fourth quarter of 2017 to $17.3 per barrel in the fourth quarter. The Midcon and Southwest regions combined accounted for 81% of HollyFrontier’s refining throughput in the fourth quarter.

The net refining margins rose in the Rocky Mountain region where the Cheyenne and Woods Cross refineries are located.

Overall, the YoY rise in the refining margins across all three of the regions led to a rise in HollyFrontier’s consolidated net refining margin.

HollyFrontier’s peers

Valero Energy’s (VLO) gross refining margin rose from $8.8 per barrel in the fourth quarter of 2017 to $11.0 per barrel in the fourth quarter. Marathon Petroleum’s (MPC) gross refining and marketing margin rose by $2.0 per barrel from the fourth quarter of 2017 to $15.1 per barrel in the fourth quarter. Similarly, Phillips 66’s (PSX) worldwide refining margin rose by $7.6 per barrel or 84% YoY to $16.5 per barrel in the fourth quarter.

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