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HOUSTON, May 9 /PRNewswire-FirstCall/ -- Frontier Oil Corporation
(NYSE: FTO) today announced record first quarter net income of $74.7
million, or $0.68 per diluted share for the quarter ended March 31, 2007,
compared to the prior record first quarter net income of $57.4 million or
$0.51 per diluted share, for the quarter ended March 31, 2006.
The first quarter 2007 results benefited from diesel crack spreads
which averaged $21.66 per barrel compared to $15.51 per barrel in the first
quarter of 2006. The gasoline crack spread also improved in the first
quarter of 2007 to $12.92 per barrel compared to $9.22 per barrel for the
first quarter of 2006. While Frontier continues to benefit from crude oil
differentials, both the light/heavy crude oil spread and the WTI/WTS spread
decreased from the first quarter of 2006 in part because WTI traded at a
discount to other light crude oils. For the first quarter of 2007, the
Cheyenne Refinery's light/heavy differential averaged $13.24 per barrel and
the light/heavy spread at the El Dorado Refinery averaged $12.46 per
barrel. The WTI/WTS spread averaged $4.34 per barrel for the quarter ended
March 31, 2007.
Frontier's total charges for the first quarter of 2007 were 166,529
barrels per day compared to 166,202 for the first quarter of 2006. Frontier
will begin an approximate 30 day plant-wide turnaround at the Cheyenne
Refinery on May 13.
Frontier's Chairman, President and CEO, James Gibbs, commented, "We are
pleased with the record quarterly results and are investing in our plants
to improve our reliability, expand our capacity and improve our yields. We
believe our current capital projects will help us achieve all of these
goals. The second quarter is off to an excellent start, product margins
have increased sharply thus far, particularly gasoline due to planned and
unplanned refinery outages in our geographic markets. Our Board recently
increased our share repurchase authorization by $100 million and increased
our dividend to $0.20 per share annually. Our outlook for the remainder of
the year is extremely positive."
For the three months ending March 31, 2007, Frontier generated $122.6
million in cash before changes in working capital while investing
approximately $60.1 million in capital expenditures. Frontier's cash
balance at March 31, 2007 increased to $454.5 million despite $29.7 million
in share repurchases during the quarter. There were no borrowings under the
Company's revolving credit facility. Frontier's cash exceeded its debt by
$304.5 million as of March 31, 2007.
The first quarter 2007 results include an after-tax inventory gain of
approximately $2.0 million or $0.02 per diluted share, compared to a loss
of $13,000, or $0.00 per diluted share, for the same period of 2006. As
expected the Company has earned the remaining approximate $8 million tax
credit from ultra-low sulfur diesel production in the first quarter of
2007. However, Frontier will recognize this benefit in its income tax
provision ratably (approximately $2 million per quarter) in each fiscal
quarter of this year.
Conference Call
A conference call is scheduled for today, May 9, 2007, at 11:00 a.m.
eastern time, to discuss the financial results. To access the call, please
dial (800) 500-0311. For those individuals outside the United States,
please call (719) 457-2698. A recorded replay of the call may be heard
through May 23, 2007 by dialing (888) 203-1112 (international callers (719)
457-0820) and entering the code 4177408. In addition, the real-time
conference call and a recorded replay will be webcast by PR Newswire. To
access the call or the replay via the Internet, go to
http://www.frontieroil.com and register from the Investor Relations page of
the site.
Frontier operates a 110,000 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 web site http://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
2007 2006
As Adjusted (1)
INCOME STATEMENT DATA
($000's except per share)
Revenues $1,047,883 $1,012,193
Raw material, freight and other costs 839,865 833,487
Refining operating expenses,
excluding depreciation 71,163 69,334
Selling and general expenses,
excluding depreciation 11,032 8,914
Loss on sale of assets 2,028 ---
Operating income before depreciation 123,795 100,458
Depreciation, accretion and amortization 11,123 8,867
Operating income 112,672 91,591
Interest expense and other financing costs 2,956 2,435
Interest and investment income (5,327) (2,546)
Provision for income taxes 40,323 34,349
Net income $74,720 $57,353
Net income per diluted share $0.68 $0.51
Average diluted shares outstanding (000's) 110,320 113,504
OTHER FINANCIAL DATA ($000's)
EBITDA (2) $123,795 $100,458
Cash flow before changes in working capital 122,602 68,821
Working capital changes 17,105 (118,632)
Net cash provided (used)
by operating activities 139,707 (49,811)
Net cash used in investing activities (60,139) (37,089)
OPERATIONS
Consolidated
Operations (bpd)
Total charges 166,529 166,202
Gasoline yields 77,545 83,564
Diesel yields 61,367 52,627
Total sales 170,744 164,661
Refinery operating margins information
($ per sales bbl)
Refined products revenue $68.33 $67.98
Raw material, freight and other costs 54.65 56.24
Refinery operating expenses,
excluding depreciation 4.63 4.68
Depreciation, accretion and amortization 0.72 0.59
Cheyenne Refinery light/heavy crude
oil differential ($ per bbl) $13.24 $18.99
WTI/WTS differential ($ per bbl) 4.34 6.44
El Dorado Refinery light/heavy
crude oil differential ($ per bbl) 12.46 24.65
BALANCE SHEET DATA ($000's) March 31, December 31,
2007 2006
Cash, including cash equivalents (a) $454,500 $405,479
Working capital 506,639 479,518
Short-term and current debt (b) --- ---
Total long-term debt (c) 150,000 150,000
Shareholders' equity (d) 824,354 775,854
Net debt to book
capitalization (b+c-a)/(b+c-a+d) -58.6% -49.1%
(1) During the fourth quarter of 2006, the Company adopted a change in
its accounting method for the costs of turnarounds from the accrual method
to the deferral method. Turnarounds are the scheduled and required
shutdowns of refinery processing units for significant overhaul and
refurbishment. Under the deferral accounting method, the costs of
turnarounds are deferred when incurred and amortized on a straight-line
basis over the period of time estimated to lapse until the next turnaround
occurs. The new method of accounting for turnarounds was adopted in order
to adhere to FSP No. AUG AIR-1 "Accounting for Planned Major Maintenance
Activities" which prohibits the accrual method of accounting for planned
major maintenance activities. The Company elected to early adopt the FSP in
the fourth quarter of 2006. The comparative financial statements for 2006
have been adjusted to apply the new method retrospectively.
(2) EBITDA represents income before interest expense and other
financing costs, interest and investment income, income tax, and
depreciation, 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 also
used for internal analysis and as a basis for financial covenants.
Frontier's EBITDA for the three months ended March 31, 2007 and 2006 is
reconciled to net income as follows:
Three Months Ended
March 31
2007 2006
Net income $74,720 $57,353
Add provision for income taxes 40,323 34,349
Add interest expense and other financing costs 2,956 2,435
Subtract interest and investment income (5,327) (2,546)
Add depreciation, accretion and amortization 11,123 8,867
EBITDA $123,795 $100,458
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