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Which Region Hit HollyFrontier’s Refining Margin in Q1?

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HollyFrontier’s refining segment

HollyFrontier’s (HFC) refining segment is crucial for its overall earnings. The adjusted EBITDA from HollyFrontier’s refining segment fell 4% YoY (year-over-year) to $193 million in the first quarter due to lower refining margins and throughputs.

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Regional refining margin

HollyFrontier’s gross refining margin fell from $12.8 per barrel in the first quarter of 2018 to $12.7 per barrel in the first quarter. The lower gross refining margin was led by a steep fall in the margin in the Rockies region, which accounted for 20% of the company’s throughput in the first quarter. The gross refining margin in the Rockies fell 47% YoY to $12.1 per barrel in the first quarter.

The impact of the fall in the Rockies margin was partially offset by the rise in the gross margins in the Midcon and Southwest regions. HollyFrontier’s Midcon region, which holds the El Dorado and Tulsa refineries, saw a 5% YoY rise in its gross refining margin to $11.1 per barrel in the first quarter. The Southwest region, which contains the Navajo refinery, saw a 62% YoY rise in the gross margin to $16.0 per barrel in the first quarter. Combined, the Midcon and Southwest regions accounted for 80% of HollyFrontier’s refining throughput in the first quarter.

Peers’ margins

Valero Energy’s (VLO) gross refining margin fell from $8.7 per barrel in the first quarter of 2018 to $8.0 per barrel in the first quarter. The gross refining margin fell 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 the first quarter. The worldwide refining margin fell due to lower refining margins in three of the company’s four operating regions. However, Marathon Petroleum’s (MPC) gross refining and marketing margin rose by $0.6 per barrel since the first quarter of 2018 to $11.2 per barrel in the first quarter.

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