Exhibit 99.1
NEWS
RELEASE
2008-06
FOR IMMEDIATE RELEASE
Contact: Doug Aron
(713) 688-9600 x145
FRONTIER OIL REPORTS FIRST QUARTER 2008 RESULTS
HOUSTON, TEXAS, May 7, 2008 – Frontier Oil Corporation (NYSE: FTO) today announced quarterly net income of $46.0 million, or $0.44 per diluted share, for the quarter ended March 31, 2008, compared to net income of $74.7 million, or $0.68 per diluted share, for the quarter ended March 31, 2007. The decrease in earnings was due to lower refining margins and reduced throughput resulting from a planned turnaround at the El Dorado refinery.
Frontier’s diesel crack spread remained strong for the first quarter of 2008, averaging $20.71 per barrel, compared to $21.66 per barrel in the first quarter of 2007. As a result of high crude oil prices and weaker demand, Frontier’s gasoline crack spread declined to $4.04 per barrel for the first quarter of 2008, compared to $12.92 per barrel in the first quarter of 2007. In contrast to the decline in crack spreads, light/heavy crude oil differentials improved significantly. For the first quarter of 2008, the light/heavy crude oil differential averaged $19.69 per barrel, compared to $13.05 in the first quarter of 2007. The WTI/WTS spread averaged $4.64 per barrel in the first quarter of 2008, compared to $4.34 per barrel in the first quarter of 2007.
Frontier’s total charges for the first quarter of 2008 were 126,018 barrels per day (“bpd”) compared to 166,529 bpd in the first quarter of 2007. The decrease was mainly due to reduced throughput at the El Dorado refinery during the 39-day planned maintenance turnaround which began on March 1, 2008. During the shutdown, a new vacuum tower was successfully installed, increasing the total crude throughput capacity and increasing El Dorado’s capability to process higher levels of heavy crude oil. Frontier’s combined percentage of heavy crude oil processed in the first quarter of 2008 was 50.2 percent, compared to 25.0 percent in the first quarter of 2007. For the second quarter, total crude throughput is expected to be approximately 143,500 bpd.
Frontier’s Chairman, President, and CEO, James Gibbs, commented, “Despite the difficulties in the market this past quarter with the sharp increase in crude oil prices and lower gasoline demand, Frontier continues to operate as a profitable, efficient processor of heavy crude oils. To maximize the crude advantages in our markets, we have invested in our plants’ abilities to process these less expensive heavy and sour crudes. Our new vacuum tower in El Dorado is one of the largest in the nation. Despite the downtime in El Dorado, Frontier processed an average of 52,000 barrels per day of heavy crude in the first quarter, compared to 38,000 barrels per day of heavy crude in the first quarter of 2007. We are also maximizing our distillate yield to take full advantage of the strong diesel market. In the second quarter, we will continue to capitalize on heavy crude oil throughput and diesel margin strength in our focus to maximize profitability for our shareholders.”
For the three months ending March 31, 2008, Frontier generated $64.8 million in cash flow before changes in working capital. Frontier’s cash balance at March 31, 2008 was $154.3 million, down from $297.4 million at December 31, 2007 due to $64.1 million in share repurchases, $43.6 million in net capital expenditures, and $91.1 million used in working capital changes. As of March 31, 2008, there were no borrowings under the Company’s revolving credit facility, and the net debt to book capitalization ratio was negative 0.4 percent.
The first quarter 2008 results include an after-tax hedging loss of $16.8 million, or $0.16 per diluted share, compared to an after-tax loss of $1.4 million, or $0.01 per diluted share, for the first quarter of 2007. The first quarter 2008 results also include an after-tax inventory gain of approximately $62.5 million, or $0.60 per diluted share, compared to a gain of $2.0 million, or $0.02 per diluted share, for the same period of 2007.
Conference Call
A conference call is scheduled for today, May 7, 2008 at 11:00 a.m. eastern time, to discuss the financial results. To access the call, please dial (877) 852-6561. For those individuals outside the United States, please call (719) 325-4771. A recorded replay of the call may be heard through May 21, 2008 by dialing (888) 203-1112 (international callers (719) 457-0820) and entering the code 9792242. In addition, the real-time conference call and a recorded replay will be available via webcast. 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 120,000 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 | |
| | | | | | | |
| | | Three Months Ended | |
| | | March 31, | |
| | | 2008 | | | 2007 | |
INCOME STATEMENT DATA ($000's except per share) | | | | | | |
| Revenues | | $ | 1,185,783 | | | $ | 1,047,883 | |
| Raw material, freight and other costs | | | 999,128 | | | | 839,865 | |
| Refining operating expenses, excluding depreciation | | | 87,560 | | | | 71,163 | |
| Selling and general expenses, excluding depreciation | | | 10,355 | | | | 11,032 | |
| (Gain) Loss on sale of assets | | | (37 | ) | | | 2,028 | |
| Operating income before depreciation | | | 88,777 | | | | 123,795 | |
| Depreciation, accretion and amortization | | | 14,940 | | | | 11,123 | |
| Operating income | | | 73,837 | | | | 112,672 | |
| Interest expense and other financing costs | | | 1,639 | | | | 2,956 | |
| Interest and investment income | | | (2,313 | ) | | | (5,327 | ) |
| Provision for income taxes | | | 28,542 | | | | 40,323 | |
| Net income | | $ | 45,969 | | | $ | 74,720 | |
| Net income per diluted share | | $ | 0.44 | | | $ | 0.68 | |
| Average shares outstanding (000's) | | | 104,018 | | | | 110,320 | |
| | | | | | | | | |
OTHER FINANCIAL DATA ($000's) | | | | | | | | |
| EBITDA (1) | | $ | 88,777 | | | $ | 123,795 | |
| Cash flow before changes in working capital | | | 64,761 | | | | 122,602 | |
| Working capital changes | | | (91,113 | ) | | | 17,105 | |
| Net cash provided (used) by operating activities | | | (26,352 | ) | | | 139,707 | |
| Net cash used by investing activities | | | (51,066 | ) | | | (60,139 | ) |
| | | | | | | | | |
| OPERATIONS | | | | | | | | |
| Consolidated | | | | | | | | |
Operations (bpd) | | | | | | | | |
| Total charges | | | 126,018 | | | | 166,529 | |
| Gasoline yields | | | 65,498 | | | | 77,545 | |
| Diesel yields | | | 38,824 | | | | 61,367 | |
| Total sales | | | 137,129 | | | | 170,744 | |
| | | | | | | | | |
Refinery operating margins information ($ per sales bbl) | | | | | | | | |
| Refined products revenue | | $ | 96.77 | | | $ | 68.33 | |
| Raw material, freight and other costs | | | 80.06 | | | | 54.65 | |
| Refinery operating expenses, excluding depreciation | | | 7.02 | | | | 4.63 | |
| Depreciation, accretion and amortization | | | 1.19 | | | | 0.72 | |
| | | | | | | | | |
Cheyenne Refinery light/heavy crude oil differential ($ per bbl) | | $ | 18.56 | | | $ | 13.24 | |
WTI/WTS Differential ($ per bbl) | | | 4.64 | | | | 4.34 | |
El Dorado Refinery light/heavy crude oil differential ($ per bbl) | | | 21.68 | | | | 12.39 | |
| | | | | | | | | |
| | | | | | | | | |
BALANCE SHEET DATA ($000's) | | March 31, 2008 | | | December 31, 2007 | |
| Cash, including cash equivalents (a) | | $ | 154,261 | | | $ | 297,399 | |
| Working capital | | | 461,672 | | | | 529,510 | |
| Short-term and current debt (b) | | | - | | | | - | |
| Total long-term debt (c) | | | 150,000 | | | | 150,000 | |
| Shareholders' equity (d) | | | 1,021,847 | | | | 1,038,614 | |
| Net debt to book capitalization (b+c-a)/(b+c-a+d) | | | -0.4 | % | | | -16.5 | % |
(1) EBITDA represents income before interest expense and other financing costs, interest and investment income, income tax, and depreciation, accretion 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 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. EBITDA is also used for internal analysis and as a basis for financial covenants. Frontier’s EBITDA for the three months ended March 31, 2008 and 2007 is reconciled to net income as follows:
| | | Three Months Ended | |
| | | March 31, | |
| | | 2008 | | | 2007 | |
| Net income | | $ | 45,969 | | | $ | 74,720 | |
| Add provision for income taxes | | | 28,542 | | | | 40,323 | |
| Add interest expense and other financing costs | | | 1,639 | | | | 2,956 | |
| Subtract interest and investment income | | | (2,313 | ) | | | (5,327 | ) |
| Add depreciation, accretion and amortization | | | 14,940 | | | | 11,123 | |
| EBITDA | | $ | 88,777 | | | $ | 123,795 | |
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