HollyFrontier, owner of El Dorado refinery, sees big drop in net income
11/06/2013 11:13 AM
11/06/2013 11:14 AM
HollyFrontier, which owns the refinery in El Dorado, reported net income of $82.3 million in the third quarter, compared with $600.4 million in the same quarter last year.
The biggest reason for the drop was that refinery gross margins were down 65 percent from last year, according to a statement from the company.
HollyFrontier, which is based in Dallas, and other Midwestern refiners had benefited greatly from the dramatic expansion of oil production in the Midwest and central Canada starting about five years ago. As that oil overwhelmed the pipeline and storage hub at Cushing, Okla., Midwest refiners were able to buy the oil at depressed prices and sell their refined products at relatively high margins.
With the expansion of pipeline capacity throughout the Midwest, and especially from Cushing to the Gulf Coast, that oil now sells for closer to world prices, reducing the margins for Midwestern refiners.
HollyFrontier's president and CEO, Mike Jennings, said he remains confident in the future, even as oil transportation infrastructure continues to catch up to production.
“Looking forward, we see continued growth in North American crude oil production and are confident that our geographic proximity and ability to process both light and heavy crude streams will create attractive opportunities, even as transportation logistics and related crude differentials are rationalized,” he said in a statement.
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