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How HollyFrontier’s Refining Margin Trended in Q1 2019

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HollyFrontier’s refining margin

HollyFrontier (HFC) posted earnings on May 2. HollyFrontier’s gross refining margin fell by $0.1 per barrel over Q1 2018 to $12.7 per barrel in Q1 2019. Its operating costs also rose by $1.3 per barrel over Q1 2018. The fall in HollyFrontier’s gross refining margin and an increase in its operating cost led to the drop in HFC’s net refining margin. HollyFrontier’s net refining margin decreased by $1.4 per barrel over Q1 2018 to $5.8 per barrel in Q1 2019.

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HollyFrontier’s margin by region

HollyFrontier’s Mid-Continent region’s (where the El Dorado and Tulsa refineries are located) net refining margin fell from $5.5 per barrel in Q1 2018 to $4.5 per barrel in Q1 2019. The situation was similar for the Rocky Mountain region, where the Cheyenne and Woods Cross refineries are located. The net refining margin in the Rockies region fell sharply from $13.4 per barrel in Q1 2018 to $1.4 per barrel in Q1 2019. The Midcon and Rockies regions combined accounted for 73% of HollyFrontier’s refining throughput in Q1 2019.

However, net refining margins rose in the Southwest region, where the Navajo refinery is located. The margin increased from $5.9 per barrel in Q1 2018 to $11.0 per barrel in Q1 2019. Overall, the year-over-year fall in refining margins in the Midcon and Rockies regions led to a fall in HollyFrontier’s consolidated net refining margin.

HollyFrontier’s peers

Peer Valero Energy’s (VLO) gross refining margin fell from $8.7 per barrel in Q1 2018 to $8.0 per barrel in Q1 2019. This was due to the decline in oil spreads and gasoline cracks. Phillips 66’s (PSX) worldwide refining margin fell by $2.1 per barrel YoY to $7.2 per barrel in Q1 2019, which was due to the fall in refining margins in three of its four operating regions.

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