Refinery company HollyFrontier sees profits tripleAssociated Press
Oil refiner HollyFrontier Corp, which counts the El Dorado Refinery among its operations, said Monday that its first-quarter profit almost tripled but fell short of Wall Street expectations.
The company said profit margins might be squeezed this year.
Its shares fell more than 2 percent in midday trading.
CEO Mike Jennings said the company benefited in the first quarter from the difference in oil prices in the central United States versus prices on the coasts. HollyFrontier operates refineries primarily in the mid-U.S., where oil prices are lower than they are on the coasts or in global markets.
The differential means the company can buy oil at a discount compared to refineries on the coasts, which typically pay price dictated by global markets. HollyFrontier can then sell refined oil products into a strong retail market and reap fatter profit margins.
Jennings said the oil price difference is likely to narrow in part because of oil industry pipeline expansion. That could cut the company’s profit advantage over coastal companies. But Jennings said increasing domestic oil production would likely keep crude oil at lower prices in the central U.S.
HollyFrontier, which was known as Holly Corp. before combining with Frontier Oil Corp. in July, said that its net income rose to $241.7 million, or $1.16 per share, for the quarter ended March 31 compared to $84.7 million, or 79 cents per share, a year earlier. That was short of the $1.20 per share that analysts expected, according to a survey by FactSet.
Revenue more than doubled after the combination to $4.93 billion, from $2.33 billion in the prior year period. That was higher than the $4.53 billion analysts expected.
The Dallas company’s shares fell 69 cents, or 2.4 percent, to $28.82 in midday trading. The stock is down from a 52-week high of $38.90 in early July but is up 36 percent from its mid-December low of $21.13.
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