HF Sinclair (DINO) 8 May 242024 Q1 Earnings call transcript

Company Profile

Participants

Craig Biery	executive
Timothy Go	executive
Atanas Atanasov	executive
Neil Mehta	analyst
Matt Joyce	executive
Steven Ledbetter	executive
Ryan Todd	analyst
Manav Gupta	analyst
Paul Cheng	analyst
Matthew Blair	analyst
Theresa Chen	analyst
Jason Gabelman	analyst

Call transcript

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Operator

Welcome to the HF Sinclair Corporation's First Quarter 2024 Conference Call and Webcast. Hosting the call today is Tim Go, Chief Executive Officer of HF Sinclair. He is joined by Atanas Atanasov, Chief Financial Officer; Steve Ledbetter, EVP of Commercial; Valerie Pompa, EVP of Operations; and Matt Joyce, SVP of Lubricants and Specialties. [Operator Instructions] Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Vice President, Investor Relations. Craig, you may begin.

Craig Biery

Kathleen. you, Thank and XXXX everyone, HF Corporation's Sinclair Good Call. welcome Quarter Earnings First morning, to This a we ending morning, issued March the results XX, quarter for XXXX. press release announcing

press our website hfsinclair.com. like of a If at may you on the would earnings one find release, copy you

be press filings. in statements may call are call Before GAAP call rereading proceed also to Tim. at to made results of federal harbor the are expectations, or including SEC note predictions non-GAAP statement financial expectations, regarding statements. turn webcast safe please include release. measures. These In our intended those safe harbor with differ of to Also, note measures. to many I'll longer or management time-sensitive no under we press The the the today's for summary, forward-looking the the provisions on release statements laws. There time information over provided any remarks, noted from security that, please reconciliations cause of disclosure factors in with accurate the earnings today's covered it be any may discussion Please transcript. And such judgments could see that of are replay

Timothy Go

morning, Good everyone.

We results first are quarter to our with pleased report XXXX you today.

advance flows support our to on to improving strategy. portfolio cash strong reliability, our focused continue corporate strategy our cash We generating optimizing and and integrating return

another reliable representing and During safe quarter successful the turnaround quarter, business our maintenance operations, of and execution. maintained

our shareholder in $X share quarter today new and $XXX to billion returned the returns. million demonstrating authorization, announced also to cash during shareholders We repurchase a commitment

for first weakness despite a over we of cover to quarter fuels. me our demand before generated let segment solid Atanas. In transportation seasonal turning Refining, the Now financials for experiencing XXXX, highlights

of first that Sound execution at resulting April, and continued in We the was maintenance. The completed our focus improved our during and the excellence months on on quarter of Refinery turnaround our operational continued in Puget successful winter time reliability assets, planned on the to scheduled into budget.

crude RINs by our for The in the the Canadian the improvements we've feedstocks lower and XXXX, diesel our optimization priorities. In differentials On first crude quarter, favorable and the renewable feedstock crude focus heavy decline Renewables, oil. fourth credit illustrate in economic for made CI resulted reducing the our to in compared to per the quarter towards increased capture OpEx the slate runs and XX% increasing with order of barrel in year-over-year oil low optimized LCFS progress our weakened reliability side, Commercial heavy throughput a we prices and rates, of continued feedstock our sour optimization we indicator Syncrude high-cost XXXX. Despite headwinds on quarter in and inventory.

the quarter fuels. sales In our decreasing sites Sinclair reliability costs. In to continued first addition, we XXXX, consistent marketing to our improving channel operating business by for segment renewable we the uplift branded and as strong with provide saw of in operations continued diesel a improve margin our Marketing branded value in the

in prices growth and our in the are mix XXXX. In annual to by optimization sales we our the oil Specialties, number in portfolio encouraged or base seeing target growth branded sites on across We continued focus pipeline despite products in and what more our strong store X% the finished are of Lubricants quarter weakened resulted for another period.

repurchases to resulting we of continues through returned run Midstream, with a we into $XXX EBITDA shareholders our consistently and HEP we'll volatile first share the deliver and opportunities market, for look continue a assets logistics rate to consolidated X business. In the portfolio, margins to to progress our million model dividends. integrating in Our optimize stable the quarter, are over years. In past the strong integrated pleased business in

REH This Co previous year-to-date. Since repurchase share, June transaction. $X our announced our remained, morning, and cash second declared shares our balance investment-grade new March billion a we which of dividend repurchased long-term approximately $X.XX to maintaining payout from XXXX, return we XX to we roughly commitment quarterly XX, holders count billion quarter, XX, our of million over $X record April million sheet our X, strategy or share and replacing on Directors regular reducing of have As in of repurchased for XXXX, over authorization, of Board payable we rating. Today, $XXX that by announced on XX% while shares of authorization, strong Sinclair per our long-term issued ratio XXXX. share XXX demonstrating a also the million XXXX, shares have million May additional X.X an the a

as expect and cash flow. With forward, that, we and corporate we progress strong summer to environment into favorable are against the combined generate season, we driving a our priorities, me positioned further earnings over market with head the we to call Atanas. Looking turn believe well let

Atanas Atanasov

everyone. good and morning, Tim, you, Thank

reported Let's million. items highlights. quarter net increased HS net we $X.XX Sinclair million Sinclair's collectively of These share. that by financial to reflect first begin results attributable HF income special reviewing Today, diluted shareholders or by $XXX income per $XXX

improved for the for both for This product EBITDA or our increase million quarter a million refineries regions our the XXXX. 'XX. principally Renewables of our to quarter the first adjusted In segment volumes demand XXX,XXX compared these of year. In decreased first the for the quarter million to result and fuels, quarter and of was per the of weakened $XXX for transportation million, and EBITDA for result Total was refinery million $X the million XXXX, per reliability reported was quarter Refining same $X period seasonal negative $XXX the first the quarter per or XXXX. the to sales items, was in volumes. Crude income offset quarter $XXX at XX lower for $XX a first compared first in LCFS $XXX to first XXX,XXX share first higher EBITDA refined barrels West net compared of to were of primarily for was of diluted RINs first XX million segment, of barrels charge compared the last $X.XX for the quarter primarily first quarter weakness first XXXX. Adjusted income margins first gallons partially of averaged driven $XXX by XXXX. Excluding This as $XXX we Refining quarter by oil million the same decrease diluted adjusted gallons XXXX. in period Mid-Con day million compared turnaround due EBITDA activities segment, for per to compared sales day to net of adjusted compared prices million quarter in credit the gross first as to quarter share of adjusted

$XX branded were for the $X for million gallons the fuel the of compared the EBITDA volumes quarter reported segment to branded million for Marketing for wholesale first first quarter sales quarter of first margins. stronger of to 'XX. gallons by million quarter XXX primarily Total XXX 'XX, Our first driven compared million as

first quarter Our first EBITDA EBITDA $XX quarter This Specialties reported of base first oil in the largely to decrease Lubricants prices segment was lower for the and the driven of 'XX. by of million million 'XX. quarter $XX of for compared

to in in million, quarter $XX in included the Midstream Net to totaled higher of from the million $XXX compared segment million million spend turnaround the 'XX. totaled period quarter. HF increases million of quarter cash the same provided Our by Sinclair's operations revenues which EBITDA $XX the $XX primarily last of first $XXX for quarter. capital first in expenditures reported first tariff due year,

Sinclair's billion, HF includes XXXX, XX, total the at credit $X.X of HEP March $XXX undrawn unsecured availability of facility $X.X and our billion $X.XX approximately billion, credit facility. which million As liquidity balance cash stood on a

million paying debt reduced by outstanding revolver. down a approximately our our the $XX quarter, the under by the portion -- During we HEP debt net of

XX% XX%. with ratio and we billion of As debt-to-cap of debt debt-to-cap outstanding of March XX, $X.X a net ratio had of

Let's With guidance we respect catalysts. including and to in spending items. sustaining capital year for still capital, spend $XXX turnaround full 'XX, go to some million approximately expect through

our addition, spend capital in In expect across million to investments segments. we $XX business growth

turnarounds to in period between reliability expect ready across and audience. from fleet. We're to operations quarter Refining Parco now questions XXXX, take refineries second crude reflects improved our XXX,XXX and planned XXX,XXX in our Sound the the the barrels run oil segment, our at which day per For Operator? of and of during we Puget

Operator

Goldman [Operator Instructions] Mehta Your first of question Sachs. Neil comes from line the of

Neil Mehta

a couple of nonrefining had questions I actually.

then, first good this was but event. lubricants, one quarter monetization your I you think represents The the new potential of talked I that love just business, you've Tim, as a really on a XXXX at whether more lubes this maybe perspective normal. And is -- business. the about think on

around thinking Just well. that any as latest

Timothy Go

Yes, Neil, the thanks for question.

lubes very are execute capability to provide on performing. It's start, to example how because a me of and color have let shareholders. we value with pleased we business then and So our the our some business and improved ask good our deliver Matt it's lubes to more happy I'll that

Our by basis asset evaluate any strong of cycle our on at value like levels to continued oil eye value. Neil, delivering regardless which an provide. have environment. give able don't the XXXX. But the way, has integrating optimizing we portfolio financial optimizing We What the great we more assets that results as of And are near color announcements believe a to and for see, business strategic do, shareholder Matt business how little bottom priority. despite it's we X this all saw with of a the our stated and updates an ask lubes is cracks, a team would business our significant Lubes simplification this over in the and past done Lubricants macro and bit you is our on Lubricants previously, our to I've market to as back ongoing business, job is Lubricants I review of can perform of base or years. maximizing time, though, in

Matt Joyce

on question. Neil, all about thanks continued execution our And Tim. of Thanks, strategy. a for focus This the is

always effectively our to to safety. safe, performance and outstanding though, strengths our the stay well ability we and business to have quarter delivering in to for some building it is and with development, base are our really, execute And that for excellent every foremost, the safety on hard business strategy, First to the on also that that a But and need together operationally for us, build this and business. We've lubricants assets which more these we're business great growth begins of execute improve and catalyst working who was oils recognize we're got in-house utilizing our it needs. We're in teammates future. a the market day. being we development, finished of respond integration perfect

a synergies efficiency and Red that portfolio. And Giant Joshua, give enable that over plant. whole in that been Texas supporting specifically of lubes moving a is finished which the Let really examples, that into of me lubricants growth. of you we now our Oil some couple had this One the We're by low-cost, we And quarter invested we're enabled facility, the quick winning that's captured historically particular the past increase markets quarter, capacity strategic formulations coming and we've and wanting significant is where to given Texas, us to our continue to XX% over a leverage our nearly Joshua, the project year. to course developments. in of location hit and this are grow our

our industry, light last process facility. this quarter well, industry And the to the it and use quarter and a material markets fourth large kicking as and first also that we of better construction the side lot capital some the year tire market the testing team we're and business, found can then Tulsa I that year a we're is we've some doing On found They in approved give at tire instituting go of underway needs of technology the to this in into OEMs. And discovered our credit. we investment oil with that. off serve

base quarter will captive we're and big new facility Mississauga we for lubricants PCMO oil the in of for advantaged year to where that's investment a come deal, more cost and then, the base if base XXXX. And satisfying both a integration, own then leveraging us theme to needs have total a for fourth in specifications. This of Motors' oil more the I integration. look oil to in that's introduced that General as meet new our our as well U.S. We've developed at first introduction this and tend technology giving So oil our sales in as base a business. common through it, this and enable cut formulated is business finished abroad, the markets that

bit be a quarters, tell, have can a we'll work more up you hopefully, there's of about operational able that pieces regional drive next coming these number growth. core that in together the the So we share add to little to And underway. excellence, transformational

Timothy Go

with last expecting. not earnings at million you This examples others over demonstrated and than that we to probably detail power being near know right base that is were Lubes cycle to has performing something been want that So now not our more you our by conditions. just business X-plus But running that do of well, oil accident. and it's more Neil, was and it's probably happened. We've Lubricants increased, has the of the despite range years $XXX the $XXX bottom the indicators million business in is

Neil Mehta

Yes. that up showed No, this quarter.

a it frank to at other here. of your where profitability. And the perspective Tim, not about And the was been love side you? the thought point. quarter diesel, another just On happy being performance tough this probably from path performance, renewable You've with profitability very are on would

in the are of we think terms that you do of where business? transformation So

Timothy Go

Yes.

happy Neil, out. not are the as with results, you point We

we're We talk I'll going some got initiatives and about progress Steve though, let are of pleased that with on. that the making, we've the

Steven Ledbetter

Neil, this is Steve Ledbetter.

at an focus we optimization allows backward by really And a to is financial macro issues. place of optimal months. exposure We're take that minimize things mentioned, some do the saw run will low than buy prompt the us the to We're full given very lag which February small to to feedstock projects driving we're and profitable of feedstock in QX. We The CI X some couple we to most at feedstock our going [indiscernible] Tim rate opportunities quite to things then Happy think real to have do an the driving in story deliver moving CI the across run and most the first hydrogen barrels challenging trains month. the our to and we masked barrels our we about our the then cap backwardation accelerating logistical big best good economic -- to of placing related And aggressively low March and unloading pressures. mine on we're us more note margin Tinto think injected highest XXX% difficult think the some that delivery feedstock. We're is this announced truck continue accelerated be the that our fleet market. We'll with. are low moving some issue, we fleet. we're RD to chance continuously of and profitability and QX profitability. these performance, to we're CI of on this that our on we have maximize markets. but improvements OpEx efficiencies. success were all allow have had outcomes. of optimal our our advantage. some really to terms terms improving a on downtime on And the catalyst runs under is to happy this we steep CI again, some drive As market, in gotten utilization, of previously inventories that, And that's a seeing, We Rio operational low and feedstock to in focusing pathways of feedstock, the milestones. that favorable performance look one the our low synergies a give Again, where trying economic purpose, very economic we're

Timothy Go

were that Yes. our hydrogen point diesel Thanks, first in renewable quarter, out Steve. I not in we will the operations. limited

I there. are for LCFS the we But now focused what impossible we control. think our team it's the diesel going operations. And things a RINs optimizing regular to know for look, on in to Neil, are mid-cycle terms that's can with that numbers accomplishment and with the conditions right of volatility So be the big

be advantaged utilization, costs. positive, product feedstocks, LCFS team we the can believe breakeven the our operating netbacks, So lower to working levels, at RINs and slightly that's what and And towards. current is business

Operator

Piper Your comes Todd Sandler. of question Ryan next the of line from

Ryan Todd

was I during to could [ West was the switch And just of but on markets. provide updates a Maybe if Talk Coast, the seeing the what it Great. ask market. about think in terms will your you're there It seems weak X. then couple maybe refining -- fairly I be Rockies a side. seeing quarter, maybe what to of strengthening to you're in post first of the good PADD that general of ] in it late. And market chunk closure, on dynamics you

Steven Ledbetter

the Rockies terms bit of Ryan, crack support the market that environment. started weaker some weather by for the you this take of Yes, in end as was Yes, saw a pretty events see mentioned, positioning is we started the the in towards Steve. of to driving season, as environment. crack impacted some Demand quarter significant also you I'll off and one. terms

Our and value allows flexible front range go advantage look ability and or to we barrels group the to the to into chain. us to to the take be across move optimize that, of continue

volumes to the for On look of total that. Coast. export barrels in go better, of volume place I picture challenged in capabilities we but the in you picture movements the distillate with see is market think supply and coming Coast, take look to the to do for the local looked capability on, the West Pacific have RD what Gasoline terms our distillate advantage we where West market and Northwest distillate gasoline, also the across

seeing the Northwest, to So come things group structure we demand coming both QX. and look we nothing in the and of and margin into back the structurally, in seasonal Pacific that moving off. and advantage see We're Rockies some take

Timothy Go

weaker being Gulf unplanned, lot of some Coast just strong. There is don't that it's the Gulf first opposed that maintenance, as just of planned both so this being created and in in the much was in strength as quarter know regions if Mid-Con in. Rockies Coast I Tim. Ryan, the region. and a chime Yes, our I'll to

As Coast. you the assets don't we know, in have Gulf any

we in the So of data always course, see and same the regions. look in our historical historical trends seasonal we comparison that. When weak the at we our -- that see to look our regions trends,

concerned. And are demand We up significantly not pick seeing now. fact, are we in right

As planting as that RVP pretty season up and bullish. [ demand ] we're place so transition a begins, Gasoline diesel result took been has the up. demand of is just picking picking

And in the and had the seasonally see we're you terms that we just quarter. above published, what If typically first what the at quarter. what look April of cracks realized here were bodes one's the we $X expecting well cracks last we in second that for

Ryan Todd

lean on Okay. some made follow-up competing is to Perfect. strong to little to buyback? And heavily left maybe a first you things quarter, I the the into new we on cash this how continuing is to your really do that. the to any maybe got year excess there And how maybe overhang And the spooked there a continue approach approaching any in market open to you're are thinking see of you that it pretty then shareholder over market, through out expect Sinclair you look Can potential buyback then should the flow XXXX, frame up side? you of how returns. family on family continue -- are shares earlier whether how other mean shares the there? about as comments when authorization there much repurchase the remainder out for

Timothy Go

your for Thanks Ryan. Yes, question.

chime in. Let Atanas to ask me

Atanas Atanasov

our to shareholder what to returns, questions continued returns. capital quarter clearly commitment respect your with Ryan, first in did demonstrates we on the

through million now. shareholder share earlier As what are, an are seen, respect sell year, buy at extent of buybacks. And year. back one April very market. how We'll early continue that method lean million early per But $XXX to obviously, which see respect have as $XXX in from at probably we family, down. shareholder, to we and us ratio. With continuing no them. the generally, to shares puts preferred exceed transaction X%, also shares this shares currently, continuing worth we heavily above you've overhang, think have And go with payout an we That's noticed, our I we'll you the April, saw they return repurchased our continue to of the of to total in don't to that you they're open the our you into in see to you'll control continue seen repurchases may right to additional as which environment, mid-cycle longer largest in

their view of intent one Now would keeping X% as their don't point now. overhang or to but better, we they seat, also board of as which indicated an current just ownership right

Timothy Go

Tim. is to talked and this got about. I addition out that. But what you to, a I'll saw just Ryan, the And will in spooked in chime Atanas point we bit, little market absolutely Yes. mentioned

we it's If put you open than X% the think dropped a look well at as to in with since point bought that important in REH and this into made more purchases open just that the market. And has actually to as open the market made that they have the Atanas that have longer I this transaction, Sinclair Co we context largest latest market for shareholder. people transaction, they're no sold

in addition our capital Atanas that February we Remember, the our mentioned. this to buybacks And $X dividend commitment clear that just we in return XX%. is by of shareholder reauthorization Our announced commitment morning billion our strategy. course, just returns to is the continuing raised to share

Operator

of Gupta Manav question next line the comes UBS. of from Your

Manav Gupta

side. progress to we look there what's through trying to bolt-on fully or terms in understand going also now or on Midstream acquisitions? is flat Midstream of My the HEP that look HF part through it's relatively stay overall some business? at Sinclair? upside? business your going Is the probably more then And of projects ahead, at this question organic And should grow is portfolio grow How is this now synergy integration I'm do and integrated. over you that how

Steven Ledbetter

question. Manav, the for Thanks Steve. this is

I'm enough back in to the As mix. be of now fortunate December, Midstream

my know, that's As you path.

complete we the as integration. goes, integration the are As with much pretty far

moving refinery. moved some through We entire the process to replacing the have and units refining of back the of processing

commit things of of looking consistently the and We're we're a environment, we're synergies have are. number we that infancy some that point. But stage see where some and opportunities We on the operating side to do we entire looking sure can take this kind Midstream. the best to just the not Refining either of make across of beginning, at the kind where practices both doing we're things

some real there's think and continue we value that. we'll drive there, So to

look we this as important we business, it go integral that a to sense reason value and very made that we we're it was have at we are see we for as to unlock back bring assets it utilized on yet take the to them, of business time, grow. chain, beginning right how we into more our where we get it's thought which as fold, a business think with the continue I drive look us opportunity, see helping can real But continue that. the look to at right opportunities piece do our or to to look that we'll that advantage molecule at and we critical to the untapped of markets a go the to that. Where

Manav Gupta

at you on top far -- process table? is the the the gross different you to top higher I'm here the make of that where barrel that to that put process? follow-up you like needs out Tim, have putting be be then mean is you of to done you a past in would How that, highest would looks going? of capture. And refiner the more them giving -- what you I every in there end margin My you thinking per terms way, Perfect. said just And the company towards one said, like trying of are to understand

Timothy Go

believe as regional about one; optimization, looking of we that doing you optimization portfolio Steve, to about, we're advantages, to and give number competitive that. We've reliability, us integration, talk Manav, we on advantages And number talked of Yes, some side? things want our two. we're exploit continue and been our integration to the working, significant the

Steven Ledbetter

absolutely. Yes,

into before, then So chain. make and it to of right acquisition leveraging sense, mix the right most of mentioned of, most And as getting markets is processing having feedstock, the our take value advantage the go the I'm assets. that way right cost and getting that efficient the the integrated looking we

and take But chain that see that of our value see placements the to So we the than chain one chain our things on asphalt to heavy we some continue and light upgrading we'll the the over just and value pipeline heavy with business and element. our that. differential advantage being oil more value enjoy

to sales, opportunity like over diesel So premium prioritize as drive that, through and going we connected marketing then chain. And allows us kits an on that jet different the and placed right our example, we and increasing to again, to well to on believe an our hubs. crude -- integrate very many that value increased demand really are capture balance, have we're to things wholesale

continue And optimize And to we're so put allow components truly right molecule of to there. And us market. focus crude us the flexibility and optimizing what we all going decision to on. our slate best go think that's gives these things really to best the the in

Timothy Go

tell improve was around what they the and yields, expect lower just quick-hit would of projects. them what year. And costs. We These small, to are higher those Manav, CapEx million plans on $XX just we've are lot that us to this margin million the op continue you, in I add $XX growth our CapEx. our what for a we talked these help said execute They covered to of just covering IRR had projects. put improve projects, per And Steve for to about we growth in gross XX% continue on can barrel. we Steve A is target those of I of typically or

Operator

the Cheng from Paul question Scotiabank. comes of of next Your line

Paul Cheng

going Sound A&S. I mean How I your right change Sound start very yield? is that TMX ramp with mostly soon up running now, Puget crude will is maybe up slate Team or starting or up. to or be should think product Puget

going going like? standpoint? think on you and benefiting how look going to to have defensive your barrel, Or it to do that run be is any a physical product is your that So yield you're from will impact

Timothy Go

Yes, Paul, our this have in to Mid-Con. Sound May X, ask will on both is think I'll Tim. it impact Steve Puget an TMX comment at started and up and we that.

Steven Ledbetter

Yes.

the for thanks question. this is Paul, Steve, So

and variety typically And So as blend have -- capability sour. we heavy crude get an A&S crudes to with light up crude far them Puget a fact barrels for of via that ability out pipe were successful on connected the first and as and NS, some some slate go running really go advantaged in we're crudes what's to we this run we to of placing Canada, spec. The ability of barrels take in dock we take waterborne to capacity. happening is and and go round nominating advantage our in pipe the our

up more things TMX the water, fill continue is and home that gives go location the over the the have for compete to proximity We get to us advantage as -- that's also and because well looking will those the there we as well out on dock a on dock to barrels. pipe to believe very be for longer-term barrels an that our and as ability ability our going

So long multiple And believe hubs, costs that trading out for don't of tighter from we're our the the a the we before, the in widen I crude about think additional we market when Puget, and a quarter. But assets, the X we mentioned as we other Mid-Con that's coming advantage of larger we'll that to impact, major that and we're as of flexibility slate. have clear associated see will will of our we egress footprint take to We mentioned We've connected think already years think eclipses And out. back as don't X the project. Thinking about to differential. that we interim, the end earlier, seen think differentials that production going with temporarily term. those and also the in then we see will compete. to ability the it Parco probably

So we'll we but to one, major these situations our that to continue see do we've as problem. this ability with a carefully, navigate shown and don't it

Timothy Go

Yes. Tim. this And is Paul,

As is course, you of know of commented just spring WCS/WTI And and place with has of but some fill startup. see this line ahead is at associated we related maintenance May took narrowed, as some others the X that that that that quarter, directly the this time. seasonally the normal have to spread of

will spread now. mentioned, as widen, out, even and we we Steve further If in WCS/WTI you see the look that believe, the that strip

range similar kind of be I of a of middle the and years, WCS/WTI and in you the at think look a will X-year others if the X really stabilize last right that averages spread. have view

Paul Cheng

my back can question. Steve, I just go But into

trying to you that is WCS, out. to mix with slate case? the Or on one that really that, do your with that grade impact able then if be that be really that not it think curious And other to run in will I more going to Just it figure what product make WCS more I'm Puget Sound, you means more A&S-type? does

Timothy Go

Yes. more in take let at Having try good crude is Paul, is to shot This that. around a a thing. me Tim. always Washington our refinery

available via more And and TMX to going via to both advantage well having Sound. barrels us, is water the pipeline as be so an start the Puget having up the as for

So to Puget designed Sound was XXX% run A&S.

the fit that the know, to MSW A&S And the we so the you up side. Canadian blend as XXX% the what can and may we Canadian of run both heavy Syn and basically do, from we barrels, the and profile, is

the So Cat month at with the have of coker we advantage a refinery. unique in unit crude both whatever because slate in and we is are basically the to Puget right our optimize configuration Sound. that and crudes have We're pick order real to able choose

lowering a Sound. view at terms So flexibility of cost positive us Puget we our and in crude this as giving

Paul Cheng

it after development, delayed has the and terms been cost that was the up during the has watch also that whether operation in project challenging. is been got you it's challenging, and second challenging it's my probably And and Tim, ]. Okay. economic a How has you it's startup been because not [ being sanctioned also question of question when not under start the fair that, your overrunning

I learned learned? what forward? look have evaluation is that the And terms future process project back, lesson as that devaluation? So or in organization your have we the changing I what mean, going FID of how

Timothy Go

the interference, our something time. But of control, be around be was We occurred to And change long the has our and going there's our all that lots knew it right knew to to about Paul, not RINs. to be pointed the to learned, lessons going going that as the do. that was about I it's to have may and external we renewable we guess, we thing the We still was has that talk and you would it thing business been say, of management right we word. But for think the couple thought right forward. here been we out that still was that Board I be amongst a I going subject market do our think working Yes, on out. the talk team. of LCFS biggest diesel And a years, dynamics

that not on that. And investors sure not business. as were improvements given that our want in the our we up with diesel to first made. hydrogen by know limited believe have I quarter. I operational renewable still just the we We make And mentioned, we've

an from standpoint, of RINs smoothly. results were operations LCFS. When around first look we at quarter ran in limited that the the that in economics reasons in fact, also the by our fourth the feedstock you market, the one pretty We was backwardation the were In lower were quarter. and than

will know It those be cyclical. turn will So around. we

It so the may will keep and are California that mind, take or plan continue tightening a make we'll a position Board markets to And credits. in RINs ourselves slightly does to that that, LCFS the LCFS signaled change, so And we get But think improve. if so a, change, our do that the market is be the be when to in has happen. to they don't going the b, breakeven conditions and positive. to year

the the competitively out now, significantly our plants currently way up their announced the are market right renewal biodiesel You diesel plant renewable look located shaping has the you saw are diesel that -- benefit New just in out own New plants we that program the market is LCFS that Mexico are the that's disadvantaged at believe versus will Mexico. And in there.

And additional think so we attrition. be there'll some

here and off You quarter announced the and biodiesel cyclical here. the will think some lows in the market saw world renewable in first back come its of recover we that diesel already

the talk here we Paul, up believe continues over as set that improve. time that learnings, and about for of can some lots going So success a to do to beer. market be we're we But

Operator

the Matthew comes next Blair Your question from TPH. of of line

Matthew Blair

but here? segment, the business quarter-over-quarter. pretty a is actually tough know environment, EBITDA talk you your that in up posted small Could Marketing things a Wholesale about positive I right are going it's

Steven Ledbetter

this Matt, is question. for Steve. Yes, the Thanks

about very Marketing business and in about quarter. our performance are the excited the excited very We

Some of a the improvement perspective. is quarter opportunities some 'XX associated performance X taken to versus with integration of we bringing from quarter go the overall improve full margin slate on the 'XX. But have X,

creating than we're this, on the bottom go people line. much XXX% seeing to sure we're can allocating happen. And to clear and branding the untapped as sure capital to and that brand. We the really capturing grow really and the in XX% and picture in make value the and very strategic a resources think plan, our and as tremendous pricing that from between and go we're revenue we're this explore perspective, retail looking We're fleet that new expanding get very and lever, we're things to volume value make put yet a how we're market our at from it that to is we're that network partnerships I a that making go strategically is both believe growth place we fully more replacement putting some that average. we on, value sites a drop

continues we take So we This to is and more, look continue move seeing advantage margin do as overall we which that go structure and improve. continue forward. to to more we're the look we to something to grow, as of volume picture

Timothy Go

Marketing Matt, the thanks I'll And noticing for in. Again, chime segment. just

think absolutely of core gets strategy. it's overlooked, something often it's part our I but that

performance really So that here Midstream, call, those is combine together remember, the see, Refining, Marketing; chain HF brought be Sinclair. strong. to And offer value in you'll core was earlier up we segments X at our it our Midstream

Marketing is better picture you our of combine business, Refining earnings our core get with when potential that strong. And mentioned a just the our business. You is what you of performance

refining in Some our in understand trying out, the our other of got peers their marketing to include of of really what able midstream market look to to refining. terms X but to include in we're be ours you've together to the their at offer kind We or they portfolio. break

Matthew Blair

Refinery. for I wanted then And the Sound ask for your Puget good. diesel about Sounds outlet to market

was or the new refinery to this there that West markets, Canada think And instead? earlier possibly that typically look have so, a has is Mexico barrels increasing or for send I diesel to occurring? California? to impacted sending to still RD do those Coast Or down penetration. Does -- been if comment you barrels Asia by barrels

Steven Ledbetter

Yes, Matt, this is Steve.

Latin look comments, so it. If But have the to we placement do West to supply local into look balance we're have follow on up we on the also opportunities are penetration some the that demand and with make we think I'll I we growth, RD sure at the going there and diesel go move Coast made where to logistics that. America. that I

are more the and But Moving that's our the things and in think we well going. of that Jones opportunity, with where barrels or compete Latin over into some into are of Act water some cargoes States we California. impact barrels, America -- those United makes an difficult see we

Timothy Go

diesel Puget given Yes. time it's that a renewable it's more a And probably expected, little to the refinery LCFS into to Matt, the the unit was credits. But get producing the the portfolio, we that at competitively Sound refinery push Refinery than I would of a I that the and CARB we Sound just brought gasoline. think Refinery diesel out was gasoline Puget point we our the Sound was out acknowledged diesel we it long and Puget when advantaged, Cat like that going the is had playing And make Refinery producing with able there. fact

are moving take we're the continue are to California. And so gasoline advantage up opening And to of we to arbs that's to diesel that we think California, there. moving not going while

and have refineries we X take that benefiting Phoenix to in the move Mexico of shortages think barrels recent of We through west also for our as access gasoline PADD in that the Las with New conversions are our our gasoline also and and shortage. that to Rockies also markets, which advantage tailwind particular, a that's we California refineries Vegas,

Operator

question next from of line Theresa Your Barclays. of Chen the comes

Theresa Chen

the on sales. more follow First, the up comment earlier into your front, premium to on capture about I leaning wanted

the how you octane can margin observing, of backdrop for capability that we're production a or spread in Just sense summer? your and us gasoline -- enhancement octane have outlook system give the the given overall you the much with of

Steven Ledbetter

again. Yes. Good Steve. is speak to this with Theresa, you

underrepresented believe we in overall we So the are make on that markets. terms in of our premium, premium our

really logistic ability our where need value also it's our and a compete to us channel competitive above of from subgrade And improvement and few in chain And we and to on. that and branded do That's comes to other we focus our on, improvement the on. something next integrated that and is better to our is that we're quarters. allow through locations see percentage some advantages to something premium over to that, capture, really honestly, so we all quite of focus we more believe go it's going terms place of the wholesale more the go here against compete continue the that into perspective. And will

Timothy Go

back you're Yes. And good to is voice. hear It Theresa, on. Tim. I'm glad this is your

and it is hydrogen in of are our side we've our hydrogen the what's diesel in Parco, we've giving making of benefits, making say, that available consequences also better. bit in One for And on I would unintended both Artesia octane and focus had what more plants, our that's reformers that us reformers our the octane. than past. running been And little a making renewable are

fuel our improve benefiting we those operations been side, that's well. as to so And as continue

Theresa Chen

of again you as great speak all And with to well.

on California related Second X gasoline the the tightness comments from time. in specifically, up X your to following PADD PADD product movement to of over to question is related in

seeing move, Your to capability is be unit that? structural expand you system, a to that? And are this there pipeline utilization if in really higher is going a

Steven Ledbetter

Yes.

terms look compete market the West we Salt and very look well coming see far Midstream on our is, terms we continue where patterns. We think our to as Coast. positioned to in looks out take carry and of assets. And do demand are value come advantage will are both actually that. integrated we or to that from as things that's convert made of some well something shorter Tim So the still as and products gasoline, a be And carb of production the perspective, from going then West these out a advantage our able of new Valley in will with on refineries balancing do of Coast, through footprint getting midstream products our see. being products to well some as thing produce earlier to to like go, chain, to the I that the point from other continuing runs the on on the into to is movements Lake one That

of markets some we to those will we Vegas. Las advantage like the So out those of into and Cedar fill the take marketplace to gaps of the will try our Rockies try and from Refinery, then Salt Puget also and Valley City Lake

Operator

of Your next line Gabelman of question Jason comes from Cowen. the TD

Jason Gabelman

acquisition. this OpEx the I wanted amount a a to earnings last after ask and decent time about provided the barrel call, updated mid-cycle and included of shortly per you that after higher refining EBITDA is

this there? And I'm on to was broken TI delayed So that something then then transportation higher the Coast you between the product Brent markets past, that margin margin spread or if out in crack, just mid-cycle else the and the update. wondering on had, and moved mid-cycle going Sinclair the HF a Gulf update

drove what wondering just So that.

Timothy Go

particular. Sinclair to running what seen for we've Sound a assets our question. Puget that going thanks call, Jason, had the look belt at And new these now were told told we did we've at near last do assets we of portfolio, of we Yes, barrel the what the near earnings At target you we that a because couple than think that's years our we doing that. And you under we have take $X and in least higher the increase term, some have but that's long the term. see, we in costs just term, to from We what still learned guidance. operating our updated mid-cycle we don't our we when $X.XX a and did in

of seeing costs time, at the to higher as actually of op seeing more potential West And same the well. so what those we're earnings we these out assets But we're portfolio. reflect on raised

that than the these we in we're estimates raised And bringing assets believe margin is in is per mid-cycle gross gross so saw. the in why we what barrel that's margin We what higher seeing are that the as well.

refining the both from actual and synergies mid-cycle power our that million offset $XXX actually from increased Puget estimate higher net-net, earnings was the see Sinclair as for reflect to So up OpEx. impact that than Sound increased the the we well on assets more the as

Jason Gabelman

Okay. Got that Gulf the estimate it. was To gross be clear, fair? the of higher Coast Is a margin not assumptions. in function index increase

Timothy Go

all But about it a synergies. always that, think you think I of mix of think as I there's Jason. can

in competitive there. a those You that we it as think can these are assets have think that advantage markets out about

Jason Gabelman

then few impact results. I you of follow-up fire is them. was off was couple of just question XQ Okay. FIFO with hoping Great. just And a my could clarifications. I'll a the there any provide -- The the there then or working impact can Lubricants capital through your on run Was remind you the cash in you us Syncrude how business? in region? system West any much that's and region flow? And if Mid-Con the

Atanas Atanasov

Atanas. This is

approximately rose prices -- a impact in sense working quarter, because flow, take lubricants, just so we first with respect the conducive generally, that's makes impact million million, X. over tailwind I'll FIFO respect minimal. capital. So to a which capital to with little and was $X this on capital QX saw to practically for on cash of the was respect It it working quarter. And overall this $XX to on working With none

Steven Ledbetter

I'll Yes. the Syn. answer on

as we for was significant the significantly and early And but mentioned, And Dorado amount it ran specific crude a number, look at optimize quarter. record our Not was slate discounted quarter. Puget, flexibility, we a El runs the So and a our both Parco. to giving for we in

Operator

further back remarks. Tim at I call no closing any are the this questions to over time. There will turn for

Timothy Go

Thank Kathleen. you,

wanted new I is to expertise and experience welcome business Jeanne we we for proud priorities bullish in and accomplished a on we an of to member, board. I lot outlook leader executive that ground appointed second to you same. Jeanne are our quarter, was this the industry want morning, covered have I our forward, remain but to remind her know and our brings including our going February. Johns, strong and Before close, Board who us,

of great our integrating optimizing new three, cash our by: focused our reliability; to our and call, shareholders. Thank executing and We you one, on a assets, returning joining and have portfolio plan are day. improving excess for our two,

Operator

today's conference. Please this day. your a and concludes line disconnect wonderful time, at This have

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