HOUSTON, July 30 /PRNewswire-FirstCall/ -- Frontier Oil Corporation
(NYSE: FTO) announced a net loss of ($992,000), or ($0.04) per share, for the
second quarter ended June 30, 2003, compared to a net loss of ($3.0) million,
or ($0.12) per share, for the same period of 2002. For the six months ended
June 30, 2003, Frontier recorded a net loss of ($4.7) million, or ($0.18) per
share, compared to a net loss of ($2.7) million, or ($0.11) per share, for the
six month period ended June 30, 2002.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010411/FTOLOGO )
Operating results, although improved over the second quarter of 2002, were
reflective of both margins that continued to be below five-year averages and
high natural gas costs. The second quarter 2003 refined product margin
averaged $4.50 per barrel compared with $3.80 per barrel in the year-ago
quarter. While crack spreads for both gasoline and diesel lagged the five-
year averages, the weakest performer was diesel in the mid-continent markets
served by the El Dorado Refinery. The diesel crack spread there averaged
$3.39 in the second quarter 2003 compared to $2.22 for the same period of 2002
and $4.50 for the five-year average. On the crude margin side, the
light/heavy spread at the Cheyenne Refinery, which averaged $5.48 per barrel,
was a significant improvement from $3.52 per barrel in the second quarter of
2002.
Higher volumes of crude charges and sales helped improve the Company's
second quarter results relative to 2002. For the three months ended
June 30, 2003, crude charges averaged 156,197 barrels per day, up 5% from the
2002 crude charge rate of 148,501 barrels per day. Similarly, the product
sales average of 171,215 barrels per day, 1,850 barrels per day higher than
the 169,365 barrels per day in the second quarter of 2002.
Contributing to the loss in the quarter was the additional interest
expense incurred by the Company in connection with the $220 million of 8%
senior notes due 2013 that were issued in April 2003. The proceeds are being
held in escrow pending the closing of the previously-announced merger with
Holly Corporation. Due to the issuance of the new senior notes, Frontier
incurred $3.4 million in additional interest expense, which was approximately
$2.1 million, or $0.08 per share, on an after-tax basis.
Higher natural gas costs were the predominant reason for higher operating
expenses compared to last year. However, operating expenses actually
decreased at Cheyenne to $3.01 per barrel, due to reduced usage of natural
gas, higher throughputs and other expense savings. At El Dorado, natural gas
costs were $2.6 million higher, resulting in operating expenses for the second
quarter of 2003 of $34.5 million, or $3.23 per sales barrel, compared to
$30.4 million, or $2.81 per sales barrel, for the same period of 2002. Also
contributing to the higher operating costs at El Dorado was $1.1 million in
process chemical and catalyst change, a portion of which is expected to yield
higher gasoline octane in the months of June through September.
The second quarter results included an after-tax inventory loss of
approximately ($3.5) million, or ($0.14) per share, compared to a gain of
$7.6 million, or $0.29 per share, for the same period of 2002. Year-to-date
2003 results include FIFO inventory benefits of $1.6 million, or $0.06 per
share, compared to a gain of $16.2 million, or $0.63 per share, for the six
months ended June 30, 2002.
Frontier's Chairman, President and CEO, James Gibbs, commented, "Refined
product demand was sluggish in the quarter due to the high price of crude oil
and a weak overall economy. Our plants ran very well during the quarter and
unfortunately demand was not as strong as anticipated, particularly distillate
demand. In an effort to reduce our natural gas costs, we were able to cut our
natural gas usage by approximately 5% on a quarter-over-quarter basis, which
saved the Company approximately $660,000."
Frontier's current cash balance of $77.8 million as of June 30, 2003, does
not include $231.7 million of restricted cash being held in escrow related to
the April issuance of the 8% senior notes described above.
Frontier operates a 110,000 barrel-per-day refinery located in El Dorado,
Kansas, and a 46,000 barrel-per-day 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.
Conference Call
A conference call is scheduled for this afternoon, July 30, 2003 at
3:00 p.m. EDT, to discuss second quarter results. To access the call, please
dial (800) 838-4403. For those outside the U.S., please call (973) 317-5319.
A replay may be heard through August 13 by dialing (800) 428-6051 and entering
the passcode 300677. To access the call or the replay via the Internet, go to
http://www.frontieroil.com and register on the Investor Relations page.
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
contemplated transaction and strategic plans, expectations and objectives for
future operations. All statements, other than statements of historical facts,
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. This includes completion of the Holly
merger, realization of expected synergies from the transaction, future
financial performance, future equity issuance and other matters. 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
Six Months Ended Three Months Ended
June 30 June 30
2003 2002 2003 2002
INCOME STATEMENT DATA
($000's except per
share)
Revenues $1,032,797 $795,512 $533,413 $459,162
Refining operating
costs, excluding
depreciation 999,242 765,832 512,627 446,554
Selling and general
expenses, excluding
depreciation 9,794 8,004 5,116 4,201
Operating income
before depreciation
(EBITDA) 23,761 21,676 15,670 8,407
Depreciation 14,031 13,374 7,071 6,776
Operating income 9,730 8,302 8,599 1,631
Interest expense, net 16,932 12,814 9,879 6,502
Provision (Benefit)
for income taxes (2,510) (1,766) (288) (1,864)
Net income (loss) $(4,692) $(2,746) $(992) $(3,007)
Net income (loss)
per share $(0.18) $(0.11) $(0.04) $(0.12)
Average shares
outstanding (000's) 25,897 25,721 25,929 25,814
OTHER FINANCIAL
DATA ($000's)
Cash flow before
changes in working
capital $9,003 $9,940 $6,345 $2,585
Working capital
changes (9,027) (23,104) 12,970 (5,705)
Net cash provided
(used) by operating
activities (24) (13,164) 19,315 (3,120)
Net cash provided
(used) by investing
activities (19,563) (26,195) (12,956) (10,560)
Net cash provided
(used) by financing
activities (14,955) 45,085 (42,468) 15,494
BALANCE SHEET
DATA ($000's)
Cash, including cash
equivalents (a) $77,822 $109,721
Restricted cash 231,684 ---
Working capital 79,630 100,926
Short-term and
current debt (b) 8,000 46,800
Total long-term
debt (c) 426,231 208,966
Shareholders'
equity (d) 161,441 167,099
Net debt to book
capitalization
calculation ((b+c-a)/
(b+c-a+d))(A) 68.8% 46.6%
(A) Includes the new senior notes held in escrow and does not include the
restricted cash held in escrow.
FRONTIER OIL CORPORATION
Six Months Ended Three Months Ended
June 30 June 30
2003 2002 2003 2002
OPERATIONS
Consolidated
Operations (bpd)
Total charges 159,297 161,213 173,610 165,074
Gasoline yields 79,863 82,077 85,056 82,050
Diesel yields 51,087 52,739 59,324 54,190
Total sales 158,141 161,664 171,215 169,366
Operating Margins
($ per bbl)
Revenues $36.03 $27.15 $34.24 $29.81
Raw material,
freight and other
costs 31.40 23.14 29.74 26.01
Refined product
margin 4.63 4.01 4.50 3.80
Operating costs
excluding
depreciation 3.51 3.03 3.16 2.96
Margin before
depreciation 1.12 0.98 1.34 0.84
Depreciation 0.49 0.45 0.45 0.43
Net margin $0.63 $0.53 $0.89 $0.41
Light/Heavy crude
spread ($ per
bbl)(B) $5.88 $3.64 $5.48 $3.52
WTI/WTS Differential
($ per bbl) $2.78 $1.38 $3.19 $1.22
KEY TERMS: bpd = barrels per day; bbl = barrel
(B) Based on delivered crude costs to the Cheyenne Refinery.
SOURCE Frontier Oil Corporation
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