UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 333-163942

ALON REFINING KROTZ SPRINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State of incorporation)		74-2849682 (I.R.S. Employer Identification No.)
7616 LBJ Freeway, Suite 300, Dallas, Texas (Address of principal executive offices)		75251 (Zip Code)

Registrant’s telephone number, including area code: (972) 367-3600

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act: None

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No þ

          The registrant is a subsidiary of Alon USA Energy, Inc., a Delaware corporation, and there is no market for the registrant’s common stock. As of March 1, 2011, 50,110 shares of the registrant’s Class A common stock, par value $0.01, and 315 shares of the registrant’s Class B Common stock, par value $0.01, were outstanding.

          The aggregate market value for the registrant’s common stock held by non-affiliates as of June 30, 2010, the last day of the registrant’s most recently completed second fiscal quarter was $0.

          The registrant meets the conditions set forth in General Instruction I (1) (a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format permitted by General Instruction I(2).

     Documents incorporated by reference: None.

 

 

TABLE OF CONTENTS

		Page
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES		1
ITEM 1A. RISK FACTORS		7
ITEM 1B. UNRESOLVED STAFF COMMENTS		14
ITEM 3. LEGAL PROCEEDINGS		14
ITEM 4. RESERVED		14
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		15
ITEM 6. SELECTED FINANCIAL DATA		15
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		18
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		31
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		32
ITEM 9A. CONTROLS AND PROCEDURES		32
ITEM 9B. OTHER INFORMATION		33
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		34
ITEM 11. EXECUTIVE COMPENSATION		36
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		38
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		38
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES		39
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		40
EX-12.1
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-32.1

PART I

ITEMS 1. AND 2. BUSINESS AND PROPERTIES.

Statements in this Annual Report on Form 10-K, including those in Items 1 and 2, “Business and Properties,” and Item 3, “Legal Proceedings,” that are not historical in nature should be deemed forward-looking statements that are inherently uncertain. See “Forward-Looking Statements” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 for a discussion of forward-looking statements and of factors that could cause actual outcomes and results to differ materially from those projected.

This Form 10-K and other Securities and Exchange Commission filings of Alon Refining Krotz Springs, Inc. occasionally make references to our parent company, Alon USA Energy, Inc.(“Alon USA”), when describing actions, rights or obligations. These references reflect the fact that Alon Refining Krotz Springs, Inc. is consolidated with its respective parent companies for financial reporting purposes. However, these references should not be interpreted to imply that the parent company is actually undertaking the action or has the rights or obligations of the relevant subsidiary company or that the subsidiary company is undertaking an action or has the rights or obligations of its parent company or any other affiliate.

COMPANY OVERVIEW

     In this Annual Report, the words “we,” “our” and “us” refer to Alon Refining Krotz Springs, Inc., and not to any other person.

     We are a Delaware corporation formed in May 2008 in connection with the acquisition of Valero Refining Company—Louisiana by our parent company, Alon USA. We own and operate a high conversion crude oil refinery with a crude oil throughput capacity of approximately 83,100 barrels per day (“bpd”) in Krotz Springs, Louisiana. Our principal executive offices are located at 7616 LBJ Freeway, Suite 300, Dallas, Texas 75251, and our telephone number is (972) 367-3600.

     We file annual, quarterly and current reports, and file or furnish other information, with the Securities Exchange Commission (“SEC”). Our SEC filings are available to the public at the SEC’s website at www.sec.gov. In addition, our SEC filings are available free of charge through our parent company’s website at www.alonusa.com as soon as reasonably practicable after we file, or furnish, such material with the SEC. We will provide copies of our filings free of charge to our bondholders upon request to Alon Refining Krotz Springs, Inc., Attention: Investor Relations, 7616 LBJ Freeway, Suite 300, Dallas, Texas 75251.

BUSINESS

Our Refinery

     We own and operate a high conversion crude oil refinery with a crude oil throughput capacity of approximately 83,100 bpd. Placed into service in 1980, our refinery is the second newest complex, grassroots refinery built in the United States. Our refinery is strategically located on approximately 381 acres on the Atchafalaya River in central Louisiana at the intersection of two crude oil pipeline systems and has direct access to the Colonial products pipeline system (“Colonial Pipeline”), providing us with diversified access to both locally sourced and foreign crude oils, as well as distribution of our products to markets throughout the Southern and Eastern United States and along the Mississippi and Ohio Rivers.

     In industry terms, our refinery is characterized as a “mild residual cracking refinery,” which generally refers to a refinery utilizing vacuum distillation and catalytic cracking processes in addition to basic distillation and naphtha reforming processes to minimize low quality black oil production and to produce higher light product yields such as gasoline, light distillates and intermediate products. Our refinery’s Residual Fluid Catalytic Cracking Unit (“Residual FCCU”) allows us to produce a high percentage of light products with fewer processing units and lower maintenance costs compared to refineries utilizing conventional fluid catalytic cracking technologies. In

addition to the Residual FCCU, our refinery’s main processing units include a crude unit and an associated vacuum unit, a catalytic reformer unit, a polymerization unit, and an isomerization unit.

     Our refinery has the capability to process substantial volumes of low sulfur, or sweet, crude oils to produce a high percentage of light, high-value refined products. Typically, sweet crude oil has accounted for 100% of our refinery’s crude oil input. Located on the Atchafalaya River in central Louisiana at the intersection of two crude oil pipeline systems, our refinery has direct pipeline access to Light Louisiana Sweet (“LLS”), Heavy Louisiana Sweet (“HLS”) and foreign crude oils delivered through the Southbend/Sunset and Northline crude oil pipeline systems, as well as by barge.

     Our refinery’s processing units are structured to yield approximately 101.5% of total feedstock input, meaning that for each 100 barrels of crude oil and feedstocks input into our refinery, we typically produce 101.5 barrels of refined products. Of the 101.5% yield, on average 99.0% is light finished products such as gasoline and distillates, including diesel and jet fuel, petrochemical feedstocks and liquified petroleum gas, and the remaining 2.5% is primarily heavy oils.

     Our refinery connects to and distributes refined products into the Colonial Pipeline for distribution by our customers to the southern and eastern United States. The 5,519 mile Colonial Pipeline transports products to 267 marketing terminals located near the major population centers. The connection to the Colonial Pipeline provides us flexibility to optimize product flows into multiple regional markets. Products not shipped through the Colonial Pipeline are either transported via barge for sale or for further upgrading.

     Our refinery’s recent construction, configuration and modern equipment enable it to achieve low operating and maintenance costs and to produce fewer carbon emissions than many other refineries.

Parent Company

     Alon USA is an independent refiner and marketer of petroleum products operating primarily in the South Central, Southwestern and Western regions of the United States. Alon USA is listed on the NYSE under the symbol “ALJ” and had a market capitalization of $598.8 million as of March 1, 2011. Alon USA’s crude oil refineries are located in Paramount, Bakersfield and Long Beach, California; Big Spring, Texas; Willbridge, Oregon; and Krotz Springs, Louisiana and have a combined crude oil throughput capacity of approximately 250,000 bpd. Alon USA’s refineries produce various grades of gasoline, diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt and other petroleum-based products.

     The acquisition of the Krotz Springs refinery in 2008 increased Alon USA’s refining capacity by approximately 50% and provided Alon USA with further scale, diversification and flexibility to optimize feedstock and refined product mixes. Furthermore, our refinery’s strategic location in central Louisiana provided geographic diversification as well as increased opportunities for refined product marketing and distribution.

     In addition to its refining operations, Alon USA markets petroleum products through a network of approximately 630 retail locations under an exclusive license of the FINA brand in the South Central and Southwestern United States. Alon USA also markets asphalt products produced at its Big Spring, Willbridge and California refineries through 12 refinery/terminal locations in Texas (Big Spring), California (Paramount, Long Beach, Elk Grove, Bakersfield and Mojave), Oregon (Willbridge), Washington (Richmond Beach), Arizona (Phoenix, Flagstaff and Fredonia) and Nevada (Fernley) (50% interest) and through a 50% joint venture in Wright Asphalt Products Company. Alon USA, through its retail subsidiaries, is also the largest 7-Eleven licensee in the United States.

History

     In 1980, Hill Petroleum completed the initial construction of our refinery and commenced operations with a crude unit, vacuum unit and reformer. Our refinery subsequently went through several upgrades, including the addition of a fluid catalytic cracking unit in 1982, a 3,300 bpd polymerization unit in 1986, and a 4,500 bpd isomerization unit in 1992. Valero Energy Corporation (“Valero”) acquired our refinery in 1997, upgraded the FCCU to a 34,100 bpd Residual FCCU in 2002 and installed an 18,000 bpd gasoline desulfurization unit (“GDU”) in 2006.

     In July 2008, Alon USA acquired Valero Refining Company — Louisiana our refinery and related assets through the acquisition of all of the capital stock of Valero Refining Company — Louisiana from Valero. The purchase price was $333.0 million in cash plus $141.5 million for working capital, including inventories, as well as future consideration in the form of earnout payments. In August 2009, we amended the earnout agreement with Valero to replace future earnout payments with fixed future payments. As a result, we paid Valero approximately $19.7 million in 2009 and $8.8 million in 2010 and have agreed to pay Valero an additional sum of $6.5 million in three installments of approximately $2.2 million per quarter through the third quarter of 2011 for earnout payments in an aggregate amount of $35.0 million.

Refinery Throughput and Production

     In 2010, we averaged approximately 46% utilization of our crude oil throughput capacity. The following table summarizes our refinery’s throughput and production data for 2010, 2009 and 2008:

		Year Ended December 31,
		2010								2009								2008 (1)
		bpd				%				bpd				%				bpd				%
Refinery throughput:
Light sweet crude			23,810				60.7				22,942				47.5				43,361				74.5
Heavy sweet crude			14,535				37.0				22,258				46.0				11,979				20.6
Blendstocks			899				2.3				3,137				6.5				2,844				4.9
Total refinery throughput (2)			39,244				100.0				48,337				100.0				58,184				100.0
Refinery production:
Gasoline			15,812				40.1				22,264				45.4				25,195				42.8
Diesel/jet			18,986				48.2				21,318				43.4				26,982				45.9
Heavy oils			1,515				3.8				1,238				2.5				1,402				2.4
Other			3,107				7.9				4,258				8.7				5,258				8.9
Total refinery production (3)			39,420				100.0				49,078				100.0				58,837				100.0
Refinery utilization (4)							46.1	%							65.3	%							66.6	%

Production

     Gasoline. In 2010, gasoline accounted for approximately 40.1% of our refinery’s production. We produce 87 octane regular unleaded gasoline and use a computerized component blending system to optimize gasoline blending. Our refinery is capable of producing regular unleaded gasoline grades required in the southern and eastern United States.

     Distillates. In 2010, diesel, light cycle oil and jet fuel accounted for approximately 48.2% of our production. In connection with Alon USA’s acquisition of our refinery, we entered into an offtake agreement with Valero that provides for Valero to purchase, at market prices, light cycle oil and high-sulfur distillate blendstock for a period of five years.

     Heavy Oils and Other. In 2010, slurry oil, LPG and petrochemical feedstocks accounted for approximately 11.7% of our refinery’s production.

Raw Material Supply

     In 2010, sweet crude oil accounted for approximately 100% of our crude oil input at our refinery, of which approximately 62.1% was LLS crude oil and 37.9% was HLS crude oil. Our refinery has access to various types of domestic and foreign crude oils via a combination of two ExxonMobil (“EMPCo”) systems, barge delivery, or truck rack delivery. Approximately 80% of the crude oil is received by pipeline with the remainder delivered by barge or truck.

     We receive HLS, LLS and foreign crude oils from two EMPCo systems, the “Southbend/Sunset System” and the “Northline System”. The Southbend/Sunset System provides HLS crude oil from gathering systems at South Bend, Avery Island, Empire, Grand Isle and Fourchon, Louisiana. All of Southbend/Sunset’s current crude oil capacity is delivered to our refinery. The Northline system delivers LLS and foreign crude oils from the St. James, Louisiana crude oil terminalling complex. Our refinery also has access to foreign crude oils from the St. James terminal. Various Louisiana crude oils can also be delivered by barge, via the Intracoastal Canal, the Atchafalaya River, or directly by truck.

     Historically, approximately three-quarters of our refinery’s crude oil input requirements are purchased through term contracts with several suppliers. At present, J. Aron and Company (“J. Aron”), through arrangements with various oil companies, supplies the majority of our refinery’s crude oil input requirements. Other feedstocks, including butane and secondary feedstocks, are delivered by truck and marine transportation.

Sales

     Transportation Fuel Marketing. Substantially all of the refined products produced by our refinery are sold to J. Aron as they are produced. We market transportation fuel production through bulk sales and exchange channels. These bulk sales and exchange arrangements are entered into with various oil companies and traders and are transported to markets on the Mississippi River and the Atchafalaya River as well as to the Colonial Pipeline.

     Product Pipelines. Our refinery connects to and distributes refined products into the Colonial Pipeline for distribution by our customers to the Southern and Eastern United States. The 5,519 mile Colonial Pipeline transports products to more than 267 marketing terminals located near major population centers. The connection to the Colonial Pipeline provides us flexibility to optimize product flows into multiple regional markets.

     Barge. Products not shipped through the Colonial Pipeline, such as high sulfur diesel sold to Valero pursuant to our offtake agreement with Valero, are either transported via barge for sale or for further processing. Barges have access to both the Mississippi and Ohio Rivers.

     Railcar and Truck. Propylene/propane mix is sold via railcar and truck, to consumers at Mont Belvieu, Texas or in adjacent Louisiana markets. Mixed LPGs are shipped on to an LPG fractionator at Napoleonsville, Louisiana. We pay a fractionation fee and sell the ethane and propane to a regional chemical company under contract, transport the normal butane back to our refinery via truck for blending, and sell the isobutene and natural gasoline on a spot basis.

     Substantially all of our refined product sales in 2010 were to J. Aron and Valero.

Competition

     The petroleum refining industry continues to be highly competitive. Many of our principal competitors are integrated, multi-national oil companies (e.g., Valero, Chevron, ExxonMobil, Shell and ConocoPhillips) and other major independent refining and marketing entities that operate in our market areas. Because of their diversity, integration of operations and larger capitalization, these major competitors may have greater financial and other resources and may have a greater ability to bear the economic risks, operating risks and volatile market conditions associated with the petroleum refining industry.

     All of our crude oil and feedstocks are purchased from third-party sources, while some of our vertically-integrated competitors have their own sources of crude oil that they may use to supply their refineries.

     Substantially all of the refined products produced by our refinery are sold to J. Aron as they are produced. The majority of our refined fuel products produced at our refinery are sold on the spot market and shipped through the Colonial Pipeline to major demand centers throughout the Southern and Eastern United States. The market for refined products in these regions is also supplied by a number of refiners, including large integrated oil companies or independent refiners, that either have refineries located in the region or have pipeline access to these regions. These larger companies typically have greater resources and may have greater flexibility in responding to volatile market conditions or absorbing market changes.

     Financial returns in the refining and marketing industry depend on the difference between refined product prices and the prices for crude oil and other feedstock, also referred to as refining margins. Refining margins are impacted by, among other things, levels of crude oil and refined product inventories, balance of supply and demand, utilization rates of refineries and global economic and political events.

Government Regulation and Legislation

     Environmental Controls and Expenditures. Our operations are subject to extensive and frequently changing federal, state, regional and local laws, regulations and ordinances relating to the protection of the environment, including those governing emissions or discharges to the air, land and water, the handling and disposal of solid and hazardous waste and the remediation of contamination. We believe our operations are generally in substantial compliance with these requirements. Over the next several years our operations will have to meet new requirements being promulgated by the United States Environmental Protection Agency (“EPA”) and the states and jurisdictions in which we operate.

     The Clean Air Act and its implementing regulations require significant reductions in the sulfur content in gasoline and diesel fuel. These regulations required most refineries to reduce the sulfur content in gasoline to 30 ppm. Gasoline produced at our refinery currently meets the low sulfur gasoline standard. We do not manufacture low sulfur diesel fuel.

     In February 2007, the EPA adopted final rules to reduce the levels of benzene in gasoline on a nationwide basis. More specifically, the rule would require that beginning in 2011 refiners meet an annual average gasoline benzene content standard of 0.62%, which may be achieved through the purchase of benzene credits, and that beginning on July 1, 2012, refiners meet a maximum average gasoline benzene concentration of 1.30%, by volume on all gasoline produced, both reformulated and conventional and without benzene credits. We have determined that capital expenditures of approximately $10.5 million will be necessary in order for our refinery to install controls to meet the standards. Under the regulations, the EPA may grant extensions of time to comply with the annual average benzene standard if a refinery demonstrates that unusual circumstances exist that impose extreme hardship and significantly affect the ability of the refinery to comply. We have requested an extension of time to comply with the annual average standard at our refinery and are awaiting a response from the EPA.

     In May 2007, the EPA adopted a final rule that subjects refiners and importers of gasoline to a yearly renewable volume obligation that is based on the national renewable fuel standard. Due to our size, we were exempted from the requirements of this rule through December 31, 2010. In February 2010, the EPA finalized new regulations that replace and update the current rules and extend the renewable fuel standard to other finished products (e.g., diesel). Under the rule, we are required to blend renewable fuels (e.g., ethanol) into our finished products or purchase credits in lieu of blending. We will purchase credits (RINs) to satisfy the balance of our renewable fuel volume obligation

for the product that we do not blend with ethanol. At this time, we do not know how many credits we will need or how much they will cost when we will be required to purchase them for compliance.

     Regulation. Conditions may develop that require additional capital expenditures at our refinery for compliance with the Federal Clean Air Act and other federal, state and local requirements. The EPA recently promulgated regulations applicable to emissions of hazardous air pollutants from industrial heaters and boilers and reciprocating internal combustion engines, which may necessitate the installation of controls or additional monitoring at our refinery. In addition, the EPA recently passed greenhouse gas emission regulations, which may necessitate the installation of controls to reduce emissions of greenhouse gases if we construct new equipment or modify existing equipment in such a way that there is a significant increase in greenhouse gas emissions. Finally, the EPA will be finalizing rules applicable to refinery heaters, boilers, and flares that may necessitate the installation of controls or additional monitoring. We cannot currently determine the amounts of such future expenditures.

     Compliance. Although the U.S. House of Representatives passed the American Clean Energy and Security Act on June 26, 2009, which would have established a market-based “cap-and-trade” system to achieve yearly reductions in greenhouse gas (“GHG”) emissions, the 111th United States Congress did not pass comprehensive legislation addressing GHG emissions. While it is possible that Congress will adopt some form of federal mandatory GHG emission reductions legislation in the future, the timing and specific requirements of any such legislation are uncertain at this time, especially in light of several efforts by Republican members of Congress to stall the EPA’s efforts to regulate GHGs and repeal the authority of the EPA to regulate GHGs.

     Our refinery (which was then owned by Valero) became subject to a “global settlement” with the EPA under the National Petroleum Refining Initiative. In return for agreeing to the consent decree and implementing the reductions in emissions that it specifies, the refineries secured broad releases of liability that provide immunity from enforcement actions for alleged past non-compliance under each of the Clean Air Act programs covered by the Consent Decree. The major project for consent decree compliance for our refinery is installing NOx controls and monitors on heaters and boilers which is scheduled to be completed in 2011. Other projects include SO2 and NOx reduction measures from the FCCU. The current estimated capital cost is $13.0 million. If we are unable to meet the agreed upon reductions without add-on controls, our capital costs could increase. The refinery has completed many portions of the consent decree including compliance with particulate emissions from the FCCU, H2S in the fuel gas, flare operating requirements, Leak Detection and Repair and Benzene Waste Operations NESHAPs program enhancements. Because the refinery remains subject to the Valero consent decree, we entered into an agreement with Valero at the time of the acquisition allocating responsibilities under the consent decree. We are responsible for implementing only those portions of the consent decree that are specifically and uniquely applicable to the Krotz Springs refinery. In addition, with respect to certain system-wide emission limitations that apply across all of the Valero refineries, the Krotz Springs refinery was generally allocated emission limitations that did not necessitate substantial capital expenditures for add-on controls.

     Known Environmental Liabilities. In 2010, our refinery had an environmental reserve of $0.4 million. This reserve relates to the remediation of ground water.

Employees

     Approximately 200 people, including operations personnel and general and administrative personnel, are currently utilized to conduct and support our refinery’s operations. To facilitate and lower the costs of the provision and administration of employee payroll and benefits, the personnel utilized in our operations are employed through an affiliate of Alon USA with our company paying the costs of such payroll and benefits. None of our personnel are covered by collective bargaining agreements. We believe that our relations with our personnel are satisfactory.

Properties

     Our principal real property consists of approximately 260 acres of owned real property, which includes the land upon which our main refinery facilities are located and land adjacent thereto. In addition, we lease approximately 160 acres of land near and adjoining our refinery, which are used for activities ancillary to and in support of our refinery. The leased property is primarily held under five main leases, with current terms ranging from three to 20 years and options to permit the renewal of the leases for the majority of such leased property. The shortest term of

any such lease without a renewal right runs through December 31, 2017. We believe that our facility is sufficient for our operations and is maintained in a good state of repair in the ordinary course of business.

Insurance

     We are insured under our own insurance policies which cover physical damage (all risk property damage, business interruption and flood), third party liability and other miscellaneous items. The property insurance policy has a combined loss limit for a property loss and business interruption at our refinery of $650 million per occurrence. A deductible of $2 million applies to physical damage claims, with a 45-day wait period deductible for business interruption.

Litigation

There is no material litigation pertaining to our company.

ITEM 1A. RISK FACTORS.

     The occurrence of any of the events described in this Risk Factors section and elsewhere in this Annual Report on Form 10-K or in any other of our filings with the SEC could have a material adverse effect on our business, financial position, results of operations and cash flows. In evaluating an investment in any of our securities, you should consider carefully, among other things, the factors and the specific risks set forth below. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 for a discussion of the factors that could cause actual results to differ materially from those projected.

Risk Factors Relating to Our Business

The price volatility of crude oil, other feedstocks, refined products and fuel and utility services may have a material adverse effect on our earnings, profitability, cash flows and liquidity.

     Our refining earnings, profitability and cash flows from operations depend primarily on the margin above fixed and variable expenses (including the cost of refinery feedstocks, such as crude oil) at which we are able to sell refined products. When the margin between refined product prices and crude oil and other feedstock prices contracts, our earnings, profitability and cash flows are negatively affected. Refining margins historically have been volatile, and are likely to continue to be volatile, as a result of a variety of factors, including fluctuations in the prices of crude oil, other feedstocks, refined products and fuel and utility services. For example, in the last half of 2008, the price for West Texas Intermediate (“WTI”) crude oil fluctuated between $31.27 and $145.31 per barrel, while the price for Gulf Coast unleaded gasoline fluctuated between 76.8 cents per gallon, or cpg, and 474.6 cpg. Prices of crude oil, other feedstocks and refined products depend on numerous factors beyond our control, including the supply of and demand for crude oil, other feedstocks, gasoline, diesel and other refined products and the relative magnitude and timing of such changes. Such supply and demand are affected by, among other things:

	•		changes in global and local economic conditions;
	•		domestic and foreign demand for fuel products;
	•		worldwide political conditions, particularly in significant oil producing regions such as the Middle East, North and West Africa and Venezuela;
	•		the level of foreign and domestic production of crude oil and refined products and the level of crude oil, feedstock and refined products imported into the United States;
	•		utilization rates of U.S. refineries;
	•		development and marketing of alternative and competing fuels;
	•		commodities speculation;

	•		accidents, interruptions in transportation, inclement weather or other events that can cause unscheduled shutdowns or otherwise adversely affect our refinery, our machinery or equipment, or those of our suppliers or customers;
	•		federal and state government regulations; and
	•		local factors, including market conditions, weather conditions and the level of operations of other refineries and pipelines in our markets.

     Although we continually analyze refinery operating margins and seek to adjust throughput volumes to optimize our operating results based on market conditions, there are inherent limitations on our ability to offset the effects of adverse market conditions. For example, reductions in throughput volumes in a negative operating margin environment may reduce operating losses, but it would not eliminate them because we would still be incurring fixed costs and other variable costs.

     The nature of our business requires us to maintain substantial crude oil and refined product inventories. Because crude oil and refined products are commodities, we have no control over the changing market value of these inventories. Our inventory is valued at the lower of cost or market value under the last-in, first-out (“LIFO”), inventory valuation methodology. As a result, if the market value of our inventory were to decline to an amount less than our LIFO cost, we would record a write-down of inventory and a non-cash charge to cost of sales. Our investment in inventory is affected by the general level of crude oil prices, and significant increases in crude oil prices could result in substantial working capital requirements to maintain inventory volumes.

     In addition, the volatility in costs of fuel, principally natural gas, and other utility services, principally electricity, used by our refinery affect our operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our control, such as supply and demand for fuel and utility services in both local and regional markets. Future increases in fuel and utility prices may have a negative effect on our earnings, profitability and cash flows.

The recent recession and credit crisis and related turmoil in the global financial system has had and may continue to have an adverse impact on our business, results of operations and cash flows.

     Our business and profitability are affected by the overall level of demand for our products, which in turn is affected by factors such as overall levels of economic activity and business and consumer confidence and spending. Recent declines in global economic activity and consumer and business confidence and spending have significantly reduced the level of demand for our products. In addition, severe reductions in the availability and increases in the cost of credit have adversely affected our ability to fund our operations and operate our refinery at full capacity, and have adversely affected our operating margins. Together, these factors have had and may continue to have an adverse impact on our business, financial condition, results of operations and cash flows.

     Our business is indirectly exposed to risks faced by our suppliers, customers and other business partners. The impact on these constituencies of the risks posed by the recent recession and credit crisis and related turmoil in the global financial system have included or could include interruptions or delays in the performance by counterparties to our contracts, reductions and delays in customer purchases, delays in or the inability of customers to obtain financing to purchase our products and the inability of customers to pay for our products. Any of these events may have an adverse impact on our business, financial condition, results of operations and cash flows.

The dangers inherent in our operations could cause disruptions and could expose us to potentially significant losses, costs or liabilities. We are particularly vulnerable to disruptions in our operations because all of our refining operations are conducted at a single facility.

     Our operations are subject to significant hazards and risks inherent in refining operations and in transporting and storing crude oil, intermediate products and refined products. These hazards and risks include, but are not limited to, natural disasters, fires, explosions, pipeline ruptures and spills, third party interference and mechanical failure of equipment at our or third-party facilities, any of which could result in production and distribution difficulties and

disruptions, environmental pollution, personal injury or wrongful death claims and other damage to our properties and the property of others.

     There is also risk of mechanical failure and equipment shutdowns both in general and following unforeseen events. In such situations, undamaged refinery processing units may be dependent on or interact with damaged process units and, accordingly, are also subject to being shut down.

     Because all of our refining operations are conducted at a single refinery, any of such events at our refinery could significantly disrupt our production and distribution of refined products, and any sustained disruption could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are subject to interruptions of supply and distribution as a result of our reliance on pipelines for transportation of crude oil and refined products.

     Our refinery receives a substantial percentage of crude oil and delivers a substantial percentage of refined products through pipelines. We could experience an interruption of supply or delivery, or an increased cost of receiving crude oil and delivering refined products to market, if the ability of these pipelines to transport crude oil or refined products is disrupted because of accidents, earthquakes, hurricanes, governmental regulation, terrorism, other third party action or any of the types of events described in the preceding risk factor. Our prolonged inability to use any of the pipelines that we use to transport crude oil or refined products could have a material adverse effect on our business, results of operations and cash flows.

Our hedging activities may limit our potential gains and involve other risks.

     We regularly evaluate opportunities to enter into hedging arrangements to provide us with a minimum fixed cash flow stream on the volume of products hedged during the hedge term and to protect against volatility in commodity prices. However, our hedging arrangements may fail to fully achieve these objectives for a variety of reasons, including our failure to have adequate hedging arrangements, if any, in effect at any particular time and the failure of our hedging arrangements to produce the anticipated results. We may not be able to procure adequate hedging arrangements due to a variety of factors. Moreover, while intended to reduce the adverse effects of fluctuations in crude oil and refined product prices, such transactions may limit our ability to benefit from favorable changes in such prices. In addition, our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which:

	•		the volumes of our actual use of crude oil and/or production of the applicable refined products are less than the volumes subject to the hedging arrangement;
	•		accidents, interruptions in feedstock transportation, inclement weather or other events cause unscheduled shutdowns or otherwise adversely affect our refinery, or those of our suppliers or customers;
	•		there is a change in the historic correlation between crude oil and heating oil prices;
	•		the counterparties to our futures contracts fail to perform under the contracts; or
	•		a sudden, unexpected event materially impacts the commodity or crack spread subject to the hedging arrangement.

     In addition, these hedging activities involve basis risk. Basis risk in a hedging arrangement occurs when the index upon which the arrangement is based is more or less variable than the index upon which the hedged commodity is based, thereby making the hedge less effective. For example, a NYMEX index used for hedging certain volumes of crude oil or refined products may have more or less variability than the regional price index used for such crude oil or refined products.

Changes in our credit profile could affect our relationships with our suppliers, which could have a material adverse effect on our liquidity and our ability to operate our refinery at full capacity.

     Changes in our credit profile could affect the way crude oil suppliers view our ability to make payments and induce them to shorten the payment terms for our purchases or require us to post security prior to payment. Due to the large dollar amounts and volume of our crude oil and other feedstock purchases, any imposition by our suppliers of more burdensome payment terms on us may have a material adverse effect on our liquidity and our ability to make payments to our suppliers. This, in turn, could cause us to be unable to operate our refinery at full capacity. A failure to operate our refinery at full capacity could adversely affect our profitability and cash flows.

Competition in the refining and marketing industry is intense, and an increase in competition in the markets in which we sell our products could adversely affect our earnings and profitability.

     We compete with a broad range of companies in our refining and marketing operations. Many of these competitors are integrated, multinational oil companies that are substantially larger than we are. Because of their diversity, integration of operations, larger capitalization, larger and more complex refineries and greater resources, these companies may be better able to withstand disruptions in operations and volatile market conditions, to offer more competitive pricing and to obtain crude oil in times of shortage.

     We are not engaged in the exploration and production business and therefore do not produce any of our crude oil feedstocks. Certain of our competitors, however, obtain a portion of their feedstocks from company-owned production. Competitors that have their own crude production are at times able to offset losses from refining operations with profits from producing operations, and may be better positioned to withstand periods of depressed refining margins or feedstock shortages. In addition, we compete with other industries, such as wind, solar and hydropower, which provide alternative means to satisfy the energy and fuel requirements of our industrial, commercial and individual customers. If we are unable to compete effectively with these competitors, both within and outside our industry, there could be a material adverse effect on our business, financial condition, results of operations and cash flows.

We may incur significant costs to comply with new or changing environmental laws and regulations.

     Our operations are subject to extensive regulatory controls on air emissions, water discharges, waste management and the clean-up of contamination that can require costly compliance measures. If we fail to meet environmental requirements, we may be subject to administrative, civil and criminal proceedings by state and federal authorities, as well as civil proceedings by environmental groups and other individuals, which could result in substantial fines and penalties against us as well as governmental or court orders that could alter, limit or stop our operations.

     The U.S. House of Representatives and the U.S. Senate are in various stages of considering legislation intended to control and reduce emissions of “greenhouse gases,” or “GHGs,” in the United States. GHGs are certain gases, including carbon dioxide and methane, which may be contributing to warming of the Earth’s atmosphere and other climatic changes.

     Although it is not possible at this time to predict when the House and Senate may enact climate change legislation, any laws or regulations that may be adopted to restrict or reduce emissions of GHGs would likely require us to incur increased costs. If we are unable to sell our refined products at a price that reflects such increased costs, there could be a material adverse effect on our business, financial condition and results of operations. In addition, any increase in prices of refined products resulting from such increased costs could have an adverse effect on our financial condition, results of operations and cash flows.

     In addition to the climate change legislation under consideration by Congress, on December 7, 2009, the EPA issued an endangerment finding that GHGs endanger both public health and welfare, and that GHG emissions from motor vehicles contribute to the threat of climate change. Although the finding itself does not impose requirements on regulated entities, it allowed the EPA and the Department of Transportation to finalize a jointly proposed rule regulating greenhouse gas emissions from vehicles and establishing Corporate Average Fuel Economy standards for light-duty vehicles. National GHG tailpipe standards for passenger cars and light trucks were finalized on April 1, 2010.

     Once GHGs became regulated by the EPA for vehicles, they also became regulated pollutants under the Clean Air Act potentially triggering other Clean Air Act requirements. On May 13, 2010, EPA announced a final rule to raise the threshold amount of GHG emissions that a source would have to emit to trigger certain Clean Air Act permitting requirements and the need to install controls to reduce emissions of greenhouse gases. Beginning in January 2011, facilities already subject to the Prevention of Significant Deterioration and Title V operating permit programs that increase their emissions of GHGs by 75,000 tons per year will be required to install control technology, known as “Best Available Control Technology,” to address the GHG emissions. Both the endangerment finding and stationary source rule are being challenged, however. If the EPA’s actions withstand legal challenge, the new obligations finalized in the stationary source rule could require us to incur increased costs. If we are unable to sell our refined products at a price that captures such increased costs, there could be a material adverse effect on our business, financial condition and results of operations. In addition, any increase in prices of refined products resulting from such increased costs could have an adverse effect on our financial condition, results of operations and cash flows.

     In addition, new laws and regulations, new interpretations of existing laws and regulations, increased governmental enforcement or other developments could require us to make additional unforeseen expenditures. Many of these laws and regulations are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time. We are not able to predict the impact of new or changed laws or regulations or changes in the ways that such laws or regulations are administered, interpreted or enforced. The requirements to be met, as well as the technology and length of time available to meet those requirements, continue to develop and change. To the extent that the costs associated with meeting any of these requirements are substantial and not adequately provided for, our results of operations and cash flows could suffer.

We could incur substantial costs or disruptions in our business if we cannot obtain or maintain necessary permits and authorizations or otherwise comply with health, safety, environmental and other laws and regulations.

     From time to time, we have been sued or investigated for alleged violations of health, safety, environmental and other laws. If a lawsuit or enforcement proceeding were commenced or resolved against us, we could incur significant costs and liabilities. In addition, our operations require numerous permits and authorizations under various laws and regulations. These authorizations and permits are subject to revocation, renewal or modification and can require operational changes to limit impacts or potential impacts on the environment and/or health and safety. A violation of authorization or permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations, injunctions, and/or facility shutdowns. In addition, major modifications of our operations could require modifications to our existing permits or upgrades to our existing pollution control equipment. Any or all of these matters could have a negative effect on our business, results of operations, cash flows or prospects.

We are located in an area that has a history of hurricanes, the occurrence of which could materially affect our operations.

     In August 2008, our refinery sustained minor physical damage from Hurricane Gustav; however, the regional utilities were affected and, as a result, our refinery was without electric power for one week. Offshore crude oil production and gathering facilities were impacted by Gustav and a subsequent storm, which temporarily limited the availability of crude oil to our refinery. In the event a hurricane causes damage to our refinery, or the infrastructure necessary for the operation of the refinery, such as the availability of usable roads, electricity, water, or natural gas, we may experience a significant interruption in our refining operations. Such an interruption could have a material adverse effect on our business, results of operations and cash flows.

Terrorist attacks, threats of war or actual war may negatively affect our operations, financial condition, results of operations and prospects.

     Terrorist attacks, threats of war or actual war, as well as events occurring in response to or in connection with them, may adversely affect our operations, financial condition, results of operations and prospects. Energy-related assets (such as our refinery) may be at greater risk of terrorist attacks than other possible targets in the United States. A direct attack on our assets or assets used by us could have a

material adverse effect on our operations, financial condition, results of operations and prospects. In addition, any terrorist attack, threats of war or actual war could have an adverse impact on energy prices, including prices for our crude oil and refined products, and an adverse impact on refining margins. In addition, disruption or significant increases in energy prices could result in government-imposed price controls.

Our insurance policies do not cover all losses, costs or liabilities that we may experience.

     We maintain significant insurance coverage, but it does not cover all potential losses, costs or liabilities, and our business interruption insurance coverage does not apply unless a business interruption exceeds a period of 45 days. We could suffer losses for uninsurable or uninsured risks or in amounts in excess of our existing insurance coverage. Our ability to obtain and maintain adequate insurance may be affected by conditions in the insurance market over which we have no control. The occurrence of an event that is not fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations.

If we lose any of our key personnel, our ability to manage our business and continue our growth could be negatively affected.

     Our future performance depends to a significant degree upon the continued contributions of our senior management team and key technical personnel, most of who are employed by an affiliate of our corporate parent, Alon USA. We do not currently maintain key man life insurance with respect to any member of our senior management team. The loss or unavailability to us of any member of our senior management team or a key technical employee could significantly harm us. We face competition for these professionals from our competitors, our customers and other companies operating in our industry. To the extent that the services of members of our senior management team and key technical personnel would be unavailable to us for any reason, we would need to hire other personnel to manage and operate our refinery and to develop our products and technology. We cannot assure you that we would be able to locate or employ qualified personnel on acceptable terms or at all.

     To the extent members of our senior management team are performing services for Alon USA, this may divert their time and attention away from our business and may therefore adversely affect our business. In addition, we cannot assure you that the interests of our parent company will always be aligned with the interests of our company or the holders of our senior secured notes.

Risk Factors Relating to Outstanding Indebtedness and Debt Agreements

     As of December 31, 2010, we had $207.0 million of total debt outstanding, all of which is secured. Subject to restrictions in the Indenture governing our Senior Secured Notes, we may incur additional indebtedness. Our indebtedness could have important consequences to you and significant effects on our business, including the following:

	•		it may be more difficult for us to satisfy our financial obligations, including with respect to our Senior Secured Notes;
	•		our ability to obtain additional financing for working capital, capital expenditures or general corporate purposes may be impaired;
	•		we must use a substantial portion of our cash flow from operations to pay interest on our Senior Secured Notes as well as to fund excess cash flow offers on our Senior Secured Notes, which will reduce the funds available to use for operations and other purposes;
	•		our ability to fund a change of control offer may be limited;
	•		our ability to borrow additional funds may be limited;

	•		our indebtedness could place us at a competitive disadvantage compared to those of our competitors that may have proportionately less debt;
	•		our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited;
	•		we may be restricted from making strategic acquisitions or exploiting other business opportunities; and
	•		our level of indebtedness makes us more vulnerable to economic downturns and adverse developments in our business.

     We expect to use cash flow from operations to pay our expenses and scheduled interest and principal payments due under our Senior Secured Notes. Our ability to make these payments thus depends on our future performance, which is affected by financial, business, economic and other factors, many of which we cannot control. The recent recession and credit crisis and related turmoil in the global financial system has had and may continue to have an adverse effect on our business, financial condition, results of operations and cash flows. Consequently, our business may not generate sufficient cash flow from operations in the future and our anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay or pay interest on our Senior Secured Notes, or to fund other liquidity needs. If we do not have enough money, we may be required to refinance all or part of our Senior Secured Notes, sell assets or borrow more money. We cannot make any assurances that we will be able to accomplish any of these alternatives on terms acceptable to us, or at all. In addition, the terms the Indenture governing our Senior Secured Notes, may restrict us from adopting any of these alternatives. The failure to generate sufficient cash flow or to achieve any of these alternatives could significantly adversely affect the value of our Senior Secured Notes and our ability to pay the amounts due under our Senior Secured Notes. In addition, if we default in the payment of amounts due on our Senior Secured Notes, it would give rise to an event of default under the Indenture governing our Senior Secured Notes. In the event of any acceleration, there can be no assurance that we will have enough cash to repay our outstanding Senior Secured Notes.

Despite our current indebtedness level, we may still be able to incur substantially more debt, which could exacerbate the risks associated with our substantial leverage.

     We may be able to incur substantial additional indebtedness in the future. The terms of the Indenture governing our Senior Secured Notes do not fully prohibit us from doing so. If new debt is added to our current debt levels, the related risks that we now face could intensify.

Our Indenture governing our Senior Secured Notes imposes significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions.

     Our Indenture governing our Senior Secured Notes imposes, and future debt agreements may impose, significant operating and financial restrictions on us. These restrictions limit or prohibit, among other things, our ability to:

	•		incur additional indebtedness;
	•		repay our Senior Secured Notes prior to stated maturities;
	•		make acquisitions or investments;
	•		create or incur liens;
	•		transfer or sell certain assets or merge or consolidate with or into other companies;
	•		enter into certain transactions with affiliates; and
	•		otherwise conduct certain corporate activities.

     These restrictions could adversely affect our ability to finance our future operations or capital needs and pursue available business opportunities. A breach of any of these restrictions could result in a default in respect to our Senior Secured Notes.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

     None.

ITEM 3. LEGAL PROCEEDINGS.

     In the ordinary conduct of our business, we are subject to periodic lawsuits, investigations and claims, including environmental claims and employee related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, results of operations, cash flows or financial condition.

ITEM 4. RESERVED.

     Omitted under the reduced disclosure format permitted by General Instruction I(2)(a) of Form 10-K.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

     As of March 1, 2011, Alon USA is the only holder of all of the Company’s outstanding voting capital stock. There is no established public trading market for the Company’s common stock. We did not declare or pay dividends on our capital stock in 2010 or 2009. Our debt agreements contain provisions that limit our ability to pay dividends.

ITEM 6. SELECTED FINANCIAL DATA.

     The following tables set forth selected historical financial data of Alon Refining Krotz Springs, Inc. and its predecessor, Valero Refining Company—Louisiana, as of the dates and for the periods indicated. Alon Refining Krotz Springs, Inc. acquired Valero Refining Company—Louisiana effective July 1, 2008 by acquiring all the capital stock of Valero Refining Company—Louisiana and subsequently merging Valero Refining Company—Louisiana with and into Alon Refining Krotz Springs, Inc. We are required under GAAP to present our operating results separately for predecessor periods preceding the acquisition and successor periods following the acquisition. The financial statements of the “predecessor” are those of Valero Refining Company—Louisiana and of the “successor” are those of Alon Refining Krotz Springs, Inc.

     The selected historical financial data as of and for the years ended December 31, 2010 and 2009 has been derived from our audited financial statements, located elsewhere in this Annual Report on Form 10-K. The selected historical financial data as of and for the year ended December 31, 2008 has been derived by combining our predecessor’s audited financial statements for the six months ended June 30, 2008, which are included elsewhere in this Annual Report on Form 10-K, with the successor’s audited financial statements for the six months ended December 31, 2008. The selected historical financial data as of and for the years ended December 31, 2007 and 2006 has been derived from our predecessor’s audited financial statements, which are included elsewhere in this Annual Report on Form 10-K.

     The following selected historical financial data should be read in conjunction with Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

		Successor								Combined(1)				Predecessor
		Year Ended December 31,
		2010				2009				2008				2007				2006
										Unaudited
										(dollars in thousands)
Statement of Operations Data:
Net sales		$	1,254,663			$	1,156,883			$	2,594,026			$	2,293,486			$	2,450,200
Operating costs and expenses:
Cost of sales			1,222,647				1,031,368				2,531,201				2,143,920				2,245,070
Direct operating expenses			62,321				74,007				89,096				84,388				72,754
Selling, general and administrative expenses			6,890				7,328				2,812				4,632				4,921
Unrealized loss associated with consignment inventory			3,537				—				—				—				—
Depreciation and amortization expenses			21,844				20,485				13,333				9,677				8,259
Total operating costs and expenses			1,317,239				1,133,188				2,636,442				2,242,617				2,331,004
Operating income (loss)			(62,576	)			23,695				(42,416	)			50,869				119,196
Other income (expense), net			(4,105	)			17				258				1				34
Interest expense			(47,695	)			(69,090	)			(24,382	)			—				—
Income (loss) before income tax expense (benefit)			(114,376	)			(45,378	)			(66,540	)			50,870				119,230
Income tax expense (benefit)			—				—				(19,680	)			17,276				43,510
Net income (loss)		$	(114,376	)		$	(45,378	)		$	(46,860	)		$	33,594			$	75,720
Statement of Cash Flow Data:
Net cash provided by (used in) operating activities		$	29,700			$	153,237			$	(8,400	)		$	26,678			$	77,724
Net cash used in investing activities			(18,483	)			(45,381	)			(492,540	)			(9,992	)			(41,876	)
Net cash provided by (used in) financing activities			(37,101	)			(81,694	)			500,927				(16,684	)			(35,843	)
Capital expenditures			7,350				12,404				9,948				9,001				38,106
Capital expenditures for turnaround and catalyst			2,383				13,290				1,858				995				3,773
Balance Sheet Data (end of period):
Cash and cash equivalents		$	277			$	26,161			$	—			$	13			$	11
Property, plant and equipment, net			350,072				362,265				335,555				142,845				141,622
Total assets			406,245				482,837				633,903				229,152				207,452
Total debt			207,378				288,980				449,105				—				—
Stockholders’ equity			(4,133	)			62,003				87,790				186,520				169,610

		Predecessor				Successor				Combined
		Period from				Period from
		January 1,				July 1, Through				Year Ended
		Through June 30,				December 31,				December 31,
		2008				2008				2008
										(Unaudited)
						(Dollars in thousand)
Statement of Operations Data:
Net sales		$	1,539,629			$	1,054,397			$	2,594,026
Cost of sales			1,543,665				987,536				2,531,201
Direct operating expenses			43,721				45,375				89,096
Selling, general and administrative expenses			1,909				903				2,812
Depreciation and amortization expenses			4,841				8,492				13,333
Operating income (loss)			(54,507	)			12,091				(42,416	)
Other income, net			2				256				258
Interest expense			—				(24,382	)			(24,382	)
Loss before income tax benefit			(54,505	)			(12,035	)			(66,540	)
Income tax benefit			(19,680	)			—				(19,680	)
Net loss		$	(34,825	)		$	(12,035	)		$	(46,860	)
Statement of Cash Flow Data:
Net cash provided by (used in) operating activities		$	(20,208	)		$	11,808			$	(8,400	)
Net cash used in investing activities			(8,076	)			(484,464	)			(492,540	)
Net cash provided by financing activities			28,271				472,656				500,927
Capital expenditures			6,495				3,453				9,948
Capital expenditures for turnaround and catalyst			1,858				—				1,858

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     The following discussion of our financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, our financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K and the other sections of this Annual Report on Form 10-K, including Items 1 and 2 “Business and Properties,” and Item 6 “Selected Financial Data.”

Forward-Looking Statements

     Certain statements contained in this report and other materials we file with the SEC, or in other written or oral statements made by us, other than statements of historical fact, are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “will,” “future” and similar terms and phrases to identify forward-looking statements.

     Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows. See Item 1A “Risk Factors.”

     Actual events, results and outcomes may differ materially from our expectations due to a variety of factors. Although it is not possible to identify all of these factors, they include, among others, the following:

	•		changes in general economic conditions and capital markets;
	•		changes in the underlying demand for our products;
	•		the availability, costs and price volatility of crude oil, other refinery feedstocks and refined products;
	•		changes in the spread between West Texas Intermediate crude oil and Light Louisiana and Heavy Louisiana Sweet crude oil;
	•		the effects of transactions involving forward contracts and derivative instruments;
	•		actions of customers and competitors;
	•		changes in fuel and utility costs incurred by our refinery;
	•		disruptions due to equipment interruption, pipeline disruptions or failure at third-party facilities;
	•		the execution of planned capital projects;
	•		adverse changes in the credit ratings assigned to our trade credit and debt instruments;
	•		the effects of and cost of compliance with current and future state and federal environmental, economic, safety and other laws, policies and regulations;
	•		operating hazards, natural disasters, casualty losses and other matters beyond our control;
	•		the global financial crisis’ impact on our business and financial condition in ways that we currently cannot predict; and
	•		the other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2010 under the caption “Risk Factors.”

     Any one of these factors or a combination of these factors could materially affect our future results of operations and could influence whether any forward-looking statements ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward looking statements. We do not intend to update these statements unless we are required by the securities laws to do so.

Format of Presentation

     Financial and operating data for the year ended December 31, 2008 included elsewhere in this Annual Report on Form 10-K, is presented for two periods: predecessor and successor, which relate to the period preceding the acquisition of all the capital stock of Valero Refining Company — Louisiana by Alon Refining Krotz Springs, Inc. (reflecting the audited financial and other operating data of Valero Refining Company — Louisiana for the six months ended June 30, 2008) and the period succeeding such acquisition (reflecting the audited financial and other operating data of Alon Refining Krotz Springs, Inc. for the six months ended December 31, 2008, as applicable), respectively. Immediately following the acquisition of the capital stock of Valero Refining Company — Louisiana, Valero Refining Company — Louisiana was merged with and into Alon Refining Krotz Springs, Inc.

     The discussions in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2008 are presented on an unaudited combined basis for the predecessor and successor periods. The results for these periods are presented, but are not discussed, separately. We believe that the discussion on a combined basis is more meaningful as it allows the results of operations to be analyzed to comparable periods in 2010 and 2009.

     The financial reporting periods are presented as follows:

	•		The year ended December 31, 2010 compared to the year ended December 31, 2009. The year ended December 31, 2010 and 2009, respectively, represent the audited financial and other operating data of Alon Refining Krotz Springs, Inc.
	•		The year ended December 31, 2009 compared to the year ended December 31, 2008. The year ended December 31, 2008 is presented on an unaudited combined basis for the predecessor and successor periods discussed above.

Refinery Overview

     We own and operate a high conversion crude oil refinery with a crude oil throughput capacity of approximately 83,100 bpd. Placed into service in 1980, our refinery is the second newest complex, grassroots refinery built in the United States. Our refinery is strategically located on approximately 381 acres on the Atchafalaya River in central Louisiana at the intersection of two crude oil pipeline systems and has direct access to the Colonial Pipeline, providing us with diversified access to both locally sourced and foreign crude oils, as well as distribution of our products to markets throughout the Southern and Eastern United States and along the Mississippi and Ohio Rivers.

     Our refinery has the capability to process substantial volumes of low-sulfur, or sweet, crude oils to produce a high percentage of light, high-value refined products. Sweet crude oil typically comprises 100% of our refinery’s crude oil input.

     Our refinery’s Residual Fluid Catalytic Cracking Unit (“Residual FCCU”) allows us to produce a high percentage of light products with fewer processing units and lower maintenance costs compared to refineries utilizing conventional fluid catalytic cracking technologies. Our refinery’s assets are structured to yield approximately 101.5%, meaning that for each 100 barrels of crude oil and feedstocks input into our refinery, we typically produce 101.5 barrels of refined products. Of the 101.5%, on average 99.0% is light finished products such as gasoline and distillates, including diesel and jet fuel, petrochemical feedstocks and LPG, and the remaining 2.5% is primarily heavy oils.

Refinery History

     In 1980, Hill Petroleum completed the initial construction of our refinery and commenced operations with a crude unit, vacuum unit and reformer. Our refinery subsequently went through several upgrades, including the addition of an FCCU in 1982, a 3,300 bpd polymerization unit in 1986, and a 4,500 bpd isomerization unit in 1992. Valero Energy Corporation (“Valero”) acquired our refinery in 1997, upgraded the FCCU to a 34,100 bpd Residual FCCU in 2002 and installed an 18,000 bpd gasoline desulfurization unit (“GDU”) in 2006.

     Effective July 1, 2008, Alon USA completed the acquisition of our refinery and related assets through the acquisition of all of the capital stock of Valero Refining Company — Louisiana from Valero. The purchase price was $333.0 million in cash plus $141.5 million for working capital, including inventories, as well as future consideration in the form of earnout payments. In August 2009, we amended the earnout agreement with Valero to replace future earnout payments with fixed future payments. As a result, we paid Valero approximately $8.8 million in 2010 and $19.7 million in 2009, respectively. We have agreed to pay Valero an additional sum of approximately $6.5 million in three installments of approximately $2.2 million per quarter through the third quarter of 2011 for earnout payments in an aggregate amount of $35.0 million.

Major Influences on Results of Operations

     Our earnings and cash flows are primarily affected by the difference between refined product prices and the prices for crude oil and other feedstocks. The cost to acquire crude oil and other feedstocks and the price of the refined products we ultimately sell depends on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined products which, in turn, depends on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation. While our sales and operating revenues fluctuate significantly with movements in crude oil and refined product prices, it is the spread between crude oil and refined product prices, and not necessarily fluctuations in those prices, which affects our earnings.

     In order to measure our operating performance, we compare our per barrel refinery operating margins to certain industry benchmarks. We compare our refinery’s per barrel operating margin to the Gulf Coast 2/1/1 crack spread. The Gulf Coast 2/1/1 crack spread is calculated assuming that two barrels of a benchmark crude oil are converted, or cracked, into one barrel of gasoline and one barrel of diesel. We calculate the Gulf Coast 2/1/1 crack spread using the market values of Gulf Coast unleaded gasoline and Gulf Coast high sulfur diesel and the market value of WTI crude oil.

     Our refinery has the capability to process substantial volumes of low-sulfur, or sweet, crude oils to produce a high percentage of light, high-value refined products. Sweet crude oil typically comprises 100% of our refinery’s crude oil input. This input is comprised of equal amounts of Heavy Louisiana Sweet, or HLS crude oil, and Light Louisiana Sweet, or LLS crude oil. We measure the cost of refining these lighter sweet crude oils by calculating the difference between the average value of LLS crude oil (which also approximates the value of HLS crude oil) and the average value of WTI crude oil. A narrowing of this spread can favorably influence the refinery operating margins of our refinery.

     Our results of operations are also significantly affected by our refinery’s operating costs, particularly the cost of natural gas used for fuel and the cost of electricity. Natural gas prices have historically been volatile. For example, between January 1, 2008 and December 31, 2009, natural gas prices ranged between $2.51 and $13.58 per million British thermal units. Typically, electricity prices fluctuate with natural gas prices.

Factors Affecting Comparability

     Factors which are fundamental to understanding comparisons of our period-to-period financial performance for both historical and future periods include those discussed below.

Senior Secured Notes

     In October 2009, we issued $216.5 million in aggregate principal amount of 13.50% senior secured notes (the “Senior Secured Notes”) in a private offering. We received gross proceeds of $205.4 million from the sale of the Senior Secured Notes (before fees and expenses related to the offering). In connection with the closing, we prepaid in full the outstanding principal balance of our Term Loan of $163.8 million. As a result of the prepayment of the Term Loan, a write-off of unamortized debt issuance costs of $20.5 million was recorded as interest expense in 2009.

Refinery Acquisition

     Effective July 1, 2008, Alon USA completed the acquisition of our refinery and related assets through the acquisition of all of the capital stock of Valero Refining Company — Louisiana from Valero. The purchase price was $333.0 million in cash plus $141.5 million for working capital, including inventories, as well as future consideration due in the form of earnout payments. The purchase of our refinery by Alon USA and related financing transactions increased the property, plant and equipment value to $341.7 million, inventories to $145.0 million, and debt by $443.5 million. Additionally, inventory adjustments of $127.4 million were made to cost of sales for the six months ended December 31, 2008, related to the July 1, 2008 acquisition. In 2009, we increased property, plant and equipment by an additional $35.0 million as a result of an amended earnout agreement with Valero.

Throughput

     Safety, reliability and the environmental performance of our refinery is critical to our financial performance. The financial impact of planned downtime, such as a turnaround or major maintenance project, is mitigated through a diligent planning process that considers product availability, margin environment and the availability of resources to perform the required maintenance. Due to the refinery operating margin environment, we accelerated the turnaround that was originally scheduled for the first quarter of 2010 to November 2009. Operations at our refinery resumed in June 2010. In 2009, refinery throughput was reduced due to our optimization of throughput to respond to declining margins, to reduce borrowings under our Revolving Credit Facility prior to the amendments to our credit facilities in April 2009 and due to the effects of regularly scheduled maintenance. In 2008, refinery throughput was reduced due to the hurricane activity discussed below and the effects of regularly scheduled maintenance during the first nine months of 2008.

2008 Hedging Agreement

     Contemporaneously with the acquisition of our refinery, we entered into a hedging agreement consisting of futures contracts for the forward purchase of crude oil and the forward sale of heating oil covering 14,849,750 barrels over a 27 month period (the “2008 Hedging Agreement”). As of December 31, 2008, the mark-to-market value of the heating oil crack spread hedge was $116.7 million and was recorded as a reduction to cost of sales. In April 2009, the 2008 Hedging Agreement was terminated at a value of $139.3 million for which we received proceeds of $133.6 million and recorded a charge to interest expense of $5.7 million. In connection with the termination of the 2008 Hedging Agreement, we also received $50.0 million from the release of cash collateral previously pledged by us to support obligations under the 2008 Hedging Agreement.

Hurricane Activity

     The aftermath of Hurricanes Gustav and Ike in the third quarter of 2008 resulted in the shutdown of approximately 25% of the refining capacity in the United States which greatly influenced the production and supply of both crude oil and refined products throughout the United States. Hurricane Gustav directly affected our refinery causing power outages and crude oil supply disruption.

ALON REFINING KROTZ SPRINGS INC.

										Predecessor				Successor				Combined
										Six Months				Six Months				Twelve Months
		Year Ended				Year Ended				Ended				Ended				Ended
		December 31,				December 31,				June 30,				December 31,				December 31,
		2010				2009				2008				2008				2008
																		(Unaudited)
		(Dollars in thousands, except per barrel data and pricing statistics)
Statement of Operations Data:
Net sales		$	1,254,663			$	1,156,883			$	1,539,629			$	1,054,397			$	2,594,026
Operating costs and expenses:
Cost of sales			1,222,647				1,031,368				1,543,665				987,536				2,531,201
Direct operating expenses			62,321				74,007				43,721				45,375				89,096
Selling, general and administrative expenses			6,890				7,328				1,909				903				2,812
Unrealized loss associated with consignment inventory (1)			3,537				—				—				—				—
Depreciation and amortization expenses			21,844				20,485				4,841				8,492				13,333
Total operating costs and expenses			1,317,239				1,133,188				1,594,136				1,042,306				2,636,442
Operating income (loss)			(62,576	)			23,695				(54,507	)			12,091				(42,416	)
Other income (expense), net			(4,105	)			17				2				256				258
Interest expense			(47,695	)			(69,090	)			—				(24,382	)			(24,382	)
Loss before income tax benefit			(114,376	)			(45,378	)			(54,505	)			(12,035	)			(66,540	)
Income tax benefit			—				—				(19,680	)			—				(19,680	)
Net loss		$	(114,376	)		$	(45,378	)		$	(34,825	)		$	(12,035	)		$	(46,860	)
Operating Data:
Refinery Throughput (bpd):
Light sweet crude			23,810				22,942												35,785
Heavy sweet crude			14,535				22,258												24,421
Blendstocks			899				3,137												2,323
Total refinery throughput (2)			39,244				48,337												62,529
Refinery Production (bpd):
Gasoline			15,812				22,264												26,403
Diesel/Jet			18,986				21,318												29,624
Heavy oils			1,515				1,238												1,484
Others			3,107				4,258												5,892
Total refinery production (3)			39,420				49,078												63,403
Key Operating Statistics:
Refinery utilization (4)			46.1	%			65.3	%											72.5	%
Per barrel of throughput:
Refinery operating margin (5)		$	2.24			$	5.66											$	3.21
Refinery direct operating expense (6)			4.36				4.22												3.89
Capital expenditures			7,350				12,404												9,948
Capital expenditures for turnaround and catalyst			2,383				13,290												1,858
Pricing Statistics:
WTI crude oil (per barrel)		$	79.41			$	61.82											$	99.56
LLS crude oil (per barrel)			82.76				64.39												102.24
LLS less WTI spread			3.35				2.57												2.68
2/1/1 Gulf Coast high sulfur diesel crack spread (per barrel)			7.75				6.50												11.28
Gulf Coast unleaded gasoline(cpg)			205.2				163.5												247.1
Gulf Coast high sulfur diesel (cpg)			209.9				161.9												280.8
Natural gas (per mmbtu)		$	4.38			$	4.16											$	8.90

Year ended December 31, 2010 compared to year ended December 31, 2009

     Net Sales. Net sales in 2010 increased by $97.8 million, or 8.4%, to $1,254.7 million from $1,156.9 million in 2009. The increase in net sales was primarily due to higher refined product prices partially offset by lower refinery throughput in 2010 due to the refinery shutdown for turnaround activities until its restart in June 2010. The average price of Gulf Coast unleaded gasoline in 2010 increased 41.7 cpg, or 25.5%, to 205.2 cpg, compared to 163.5 cpg for 2009. The average Gulf Coast high sulfur diesel price in 2010 increased 48.0 cpg, or 29.6%, to 209.9 cpg compared to 161.9 cpg in 2009. Total refinery throughput in 2010 averaged 39,244 bpd compared to 48,337 bpd in 2009, a decrease of 18.8%.

     Cost of Sales. Cost of sales in 2010 increased by $191.2 million, or 18.5%, to $1,222.6 million from $1,031.4 million in 2009. The increase in cost of sales was primarily due to higher crude oil prices in 2010, a widening of the LLS to WTI spread for the period since the refinery’s restart in June 2010 and the realized gain recognized in 2009 for the unwind of the heating oil hedge partially offset by lower refinery throughput in 2010. The average price of WTI crude oil in 2010 increased $17.59 per barrel, or 28.5%, to $79.41 per barrel, compared to $61.82 per barrel in 2009. The average LLS to WTI spread increased $0.78 per barrel, or 30.4%, to $3.35 per barrel in 2010 from $2.57 per barrel in 2009.

     Direct Operating Expenses. Direct operating expenses in 2010 decreased to $62.3 million from $74.0 million in 2009, a decrease of approximately $11.7 million, or 15.8%. This decrease was primarily attributable to lower refinery throughput due to the refinery shutdown for turnaround activities until its restart in June 2010 and lower catalyst expenditures partially offset by higher natural gas prices in 2010.

     Selling, General and Administrative Expenses. SG&A expenses in 2010 decreased to $6.9 million from $7.3 million in 2009, a decrease of approximately $0.4 million, or 5.5%. This decrease was primarily due to lower corporate overhead and marketing expenses.

     Depreciation and Amortization Expenses. Depreciation and amortization expenses in 2010 increased to $21.8 million from $20.5 million in 2009, an increase of approximately $1.3 million, or 6.3%. This increase was primarily attributable to depreciation expense related to capital expenditures placed into service and amortization expense on the turnaround completed in 2010.

     Operating income (loss). Operating income (loss) in 2010 decreased to ($62.6) million from $23.7 million in 2009, a decrease of $86.3 million. This decrease was primarily attributable to the decreased refining margin, realized gains recognized from the unwind of the heating oil hedge in 2009 and higher depreciation expenses in 2010 partially offset by lower direct operating expenses. The refinery operating margin for 2010 was $2.24 per barrel compared to $5.66 per barrel for 2009.

     Interest expense. Interest expense for 2010 was $47.7 million compared to $69.1 million in 2009. The decrease is primarily due to $20.5 million of unamortized debt issuance costs written off as a result of the prepayment of $163.8 million of term debt in 2009 and $5.7 million of interest expenses related to the liquidation of our heating oil hedge in 2009. This was partially offset by $6.7 million of debt issuance costs written off associated with our prepayment of our revolving credit facility in 2010.

     Income tax benefit. Income tax benefit in 2010 and 2009 was $0.0 million. Our effective tax rate was 0.0% in both 2010 and 2009.

     Net loss. Net loss increased to $114.4 million in 2010 from $45.4 million in 2009. This increase in net loss was attributable to the factors discussed above.

Year ended December 31, 2009 compared to year ended December 31, 2008

     Net Sales. Net sales in 2009 decreased by $1,437.1 million, or 55.4%, to $1,156.9 million from $2,594.0 million in 2008. The decrease in net sales was primarily due to lower refined product prices and lower refinery throughput. The decrease in refined product prices we experienced was similar to the price decrease experienced in the Gulf Coast markets. The average price of Gulf Coast unleaded gasoline in 2009 decreased 83.6 cpg, or 33.8%, to 163.5 cpg, compared to 247.1 cpg for 2008. The average Gulf Coast high sulfur diesel price in 2009 decreased 118.9 cpg, or 42.3%, to 161.9 cpg compared to 280.8 cpg in 2008. Total refinery throughput in 2009 averaged 48,337 bpd compared to a total refinery throughput average of 62,529 bpd in 2008, a decrease of 22.7%.

     Cost of Sales. Cost of sales in 2009 decreased by $1,499.8 million, or 59.3%, to $1,031.4 million from $2,531.2 million in 2008. The decrease in cost of sales was primarily due to lower crude oil prices and lower refinery throughput. Additionally, cost of sales in 2008 included inventory adjustments in the first six months of 2008 of $57.8 million (“predecessor” charges) and inventory adjustments related to the acquisition of our refinery in the last six months of 2008 of $127.4 million. The average price of WTI crude oil in 2009 decreased $37.74 per barrel, or 37.9%, to $61.82 per barrel, compared to $99.56 per barrel in 2008.

     Direct Operating Expenses. Direct operating expenses in 2009 decreased to $74.0 million from $89.1 million in 2008, a decrease of approximately $15.1 million, or 16.9%. This decrease was primarily attributable to lower refinery throughput, lower catalyst expenditures and also lower natural gas prices in 2009.

     Selling, General and Administrative Expenses. SG&A expenses in 2009 increased to $7.3 million from $2.8 million in 2008, an increase of approximately $4.5 million, or 160.7%. This increase was primarily due to increased costs resulting from the further integration of our refinery with Alon USA’s consolidated operations.

     Depreciation and Amortization Expenses. Depreciation and amortization expenses in 2009 increased to $20.5 million from $13.3 million in 2008, an increase of approximately $7.2 million, or 54.1%. This increase was primarily attributable to the depreciation expense related to the fair market value adjustments for assets acquired in the acquisition of our refinery in July 2008 and the increase to property, plant and equipment in 2009 related to the amended earnout agreement with Valero.

     Operating income (loss). Operating income (loss) in 2009 increased to $23.7 million from ($42.4) million in 2008, an increase of $66.1 million. This increase was primarily attributable to the previously mentioned inventory charges to cost of sales in 2008 and higher direct operating expenses in 2008. This increase in operating income in 2009 was partially offset by higher SG&A and depreciation expenses in 2009.

     Interest expense. Interest expense for 2009 was $69.1 million compared to $24.4 million in 2008. The increase was primarily due to interest on our borrowings and letter of credit fees related to the acquisition of our refinery in July 2008, interest expenses related to the liquidation of our heating oil hedge in 2009 of $5.7 million and the write-off of unamortized debt issuance costs of $20.5 million as a result of the prepayment of the Term Loan in 2009.

     Income tax expense (benefit). Income tax expense (benefit) in 2009 was $0.0 million compared to income tax expense (benefit) of ($19.7) million in 2008. The increase resulted from no income tax benefit recognized on our pre-tax loss in 2009 compared to a partial benefit recognized on our pre-tax loss in 2008. Our effective tax rate was 0.0% in 2009, compared to an effective tax rate of 29.6% in 2008.

     Net income (loss). Net income (loss) decreased to ($45.4) million in 2009 from ($46.9) million in 2008. This decrease was attributable to the factors discussed above.

Liquidity and Capital Resources

     Our primary sources of liquidity are cash on hand and cash generated from operating activities. Although our parent company and its parent have no obligation to make any capital contributions in the future, they both have previously made several contributions to our capital. In addition, our parent company has a $60.0 million letter of credit facility that may be available to us.

     In April 2010, we entered into a Supply and Offtake Agreement, which was amended in May 2010 and March 2011 (the “Supply and Offtake Agreement”), with J. Aron & Company (“J. Aron”), to support the operation of the refinery at a minimum of 72,000 bpd. Pursuant to the Supply and Offtake Agreement, (i) J. Aron agreed to sell to us, and we agreed to buy from J. Aron, at market price, crude oil for processing at the refinery and (ii) we agreed to sell, and J. Aron agreed to buy, at market price, certain refined products produced at the refinery.

     Our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive and other factors beyond our control. In addition, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors, including the costs of such future capital expenditures related to the expansion of our business.

     Depending upon conditions in the capital markets and other factors, we will from time to time consider the issuance of debt or equity securities, or other possible capital markets transactions, the proceeds of which could be used to refinance current indebtedness or for other corporate purposes. Pursuant to our growth strategy, we will also consider from time to time acquisitions of, and investments in, assets or businesses that complement our existing assets and businesses. Acquisition transactions, if any, are expected to be financed through cash on hand and from operations, bank borrowings, the issuance of debt or equity securities or a combination of two or more of those sources.

Cash Flows

     The following table summarizes our net cash provided by or used in our operating activities, investing activities and financing activities for 2010, 2009 and 2008:

		Successor				Successor				Combined
		Year Ended December 31,
		2010				2009				2008
										(Unaudited)
Net cash provided by (used in):
Operating activities		$	29,700			$	153,237			$	(8,400	)
Investing activities			(18,483	)			(45,382	)			(492,540	)
Financing activities			(37,101	)			(81,694	)			500,927
Net increase (decrease) in cash and cash equivalents		$	(25,884	)		$	26,161			$	(13	)

Cash Flows Provided By (Used In) Operating Activities

     Net cash provided by operating activities was $29.7 million in 2010 compared to cash provided by operating activities of $153.2 million in 2009. The decrease in cash provided by operating activities primarily reflects the lower net loss in 2009 compared to 2010, adjusted for non-cash reconciling items, and the receipt of proceeds in April 2009 from the termination of the 2008 Hedging Agreement.

     Net cash provided by operating activities was $153.2 million in 2009 compared to cash used in operating activities of ($8.4) million in 2008. The increase in cash provided by operating activities primarily reflects the higher net income in 2009 compared to the same period in 2008, adjusted for non-cash reconciling items, and the receipt of proceeds in April 2009 from the termination of the 2008 Hedging Agreement.

Cash Flows Used In Investing Activities

     Net cash used in investing activities has principally been used for capital expenditures, including expenditures for turnarounds and catalysts. Capital expenditures were $9.7 million, $25.7 million and $3.5 million in 2010, 2009 and 2008, respectively. We made payments under the amended earnout agreement of $8.8 million and $19.7 million in 2010 and 2009, respectively. Cash used in investing activities in 2008 included $481.0 million used to purchase our refinery and working capital items, including initial inventories.

Cash Flows Provided By (Used In) Financing Activities

     Net cash used in financing activities was ($37.1) million in 2010 compared to net cash used in financing activities of ($81.7) million in 2009. This decrease in cash used in 2010 was primarily due to lower net payments on long-term debt in 2010. Additionally, in 2010 we received an equity contribution from our parent of $41.0 million and proceeds of $6.3 million received under an inventory supply agreement. In 2009, payments on long- term debt were offset by proceeds of $205.4 million received from the issuance of the senior secured notes in late 2009 (net of debt issuance costs of $16.5 million), proceeds of $20.2 million received under an inventory supply agreement and equity contributions of $25.0 million received from our parent company and its parent company.

     Net cash used in financing activities was ($81.7) million in 2009 compared to net cash provided by financing activities of $500.9 million in 2008. This increase in cash used in 2009 was primarily the utilization of cash from the termination of the 2008 Hedging Agreement, equity contributions received from our parent company and its parent company and cash from operations used for the repayment of borrowings under the Term Loan and Revolving Credit Facility. Cash provided by financing activities for 2008 reflects the proceeds from the Term Loan and Revolving Credit Facility and contributions from our parent company and its parent company, used for the acquisition of our refinery and working capital items, including initial inventories.

Summary of Indebtedness

     Senior Secured Notes. In October 2009, we issued 13.50% senior secured notes (the “Senior Secured Notes”) in aggregate principal amount of $216.5 million in a private offering. In February 2010, we exchanged $216.5 million of Senior Secured Notes for an equivalent amount of Senior Secured Notes (“Exchange Notes”) registered under the Securities Act of 1933. The Exchange Notes will mature on October 15, 2014 and the entire principal amount is due at maturity. Interest is payable semi-annually in arrears on April 15 and October 15. The Exchange Notes are substantially identical to the Senior Secured Notes, except that the Exchange Notes have been registered with the Securities and Exchange Commission and are not subject to transfer restrictions. The Senior Secured Notes were issued at an offering price of 94.857% and we received gross proceeds of $205.4 million (before fees and expenses related to the offering). We used the proceeds to repay in full all outstanding obligations under our term loan at that time. The remaining proceeds from the offering were used for general corporate purposes.

     The terms of the Senior Secured Notes are governed by an indenture (the “Indenture”) and the obligations under the Indenture are secured by a first priority lien on our property, plant and equipment and a second priority lien on our cash, accounts receivable and inventory.

     The Indenture also contains restrictive covenants such as restrictions on loans, mergers, sales of assets, additional indebtedness and restricted payments. The Indenture does not contain any maintenance financial covenants.

     At December 31, 2010 and December 31, 2009, the Senior Secured Notes had an outstanding balance (net of unamortized discount) of $207.4 million and $205.7 million, respectively. We are utilizing the effective interest method to amortize the original issue discount over the life of the Senior Secured Notes.

     Short-Term Credit Facility. In March 2010, we entered into a $65.0 million short-term credit facility with Bank Hapoalim B.M. (the “Term Facility”). The Term Facility was drawn upon closing and all outstanding amounts were repaid during 2010.

     Revolving Credit Facility. In March 2010, we terminated our revolving credit facility agreement and repaid all outstanding amounts thereunder. As a result of the prepayment of the revolving credit facility, we recorded a write-off of unamortized debt issuance costs of $6.7 million as interest expense in the first quarter of 2010.

     Borrowings of $83.3 million and outstanding letters of credit of $2.8 million were outstanding under the revolving credit facility at December 31, 2009.

Capital Spending

Capital Spending

     Each year our Board of Directors approves capital projects, including regulatory and planned turnaround projects that our management is authorized to undertake in our annual capital budget. Additionally, at times when conditions warrant or as new opportunities arise, other projects or the expansion of existing projects may be approved. Our capital expenditure budgets, including expenditures for chemical catalyst and turnarounds, for 2011 and 2012 are $10.5 million and $28.0 million, respectively.

     The following table summarizes our expected capital expenditures for 2011 and 2012 by major category:

		2011				2012
		(dollars in thousands)
Sustaining maintenance		$	8,587			$	12,335
Growth/profit improvement/other			1,600				11,200
Chemical catalyst and turnaround			350				4,500
Total Capital Expenditures		$	10,537			$	28,035

     Turnaround and Chemical Catalyst Costs. Our 2010 turnaround and chemical catalyst costs were $2.4 million.

     Between our major turnarounds, we also perform periodic scheduled turnaround projects on various units at our refinery. A summary of our expected turnaround and chemical catalyst costs for the following five years are as follows:

		2011				2012				2013				2014				2015
		(dollars in thousands)
Scheduled turnaround costs		$	—			$	4,500			$	7,500			$	4,300			$	15,400
Chemical catalyst costs			350				—				350				7,000				350
Total		$	350			$	4,500			$	7,850			$	11,300			$	15,750

Contractual Obligations

     Our contractual obligations as of December 31, 2010 are summarized by years to maturity as follows:

		Payment Due by Period
						Less Than				1-3				3-5				More Than
		Total				1 Year				Years				Years				5 Years
		(dollars in thousands)
Contractual Cash Obligations:
Long-term debt obligations		$	207,378			$	—			$	—			$	207,378			$	—
Operating lease obligations			3,276				535				815				725				1,201
Earnout agreement with Valero			6,562				6,562				—				—				—
Total contractual cash obligations		$	217,216			$	7,097			$	815			$	208,103			$	1,201

Off-Balance Sheet Arrangements

     We are not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material current or future impact on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Earnout Agreement with Valero

     In connection with Alon USA’s acquisition of our refinery, we entered into an earnout agreement with Valero, dated as of July 3, 2008, providing for three payments over a three-year period to Valero based on the average market prices for crude oil, regular unleaded gasoline, and ultra-low sulfur diesel in each of the three twelve-month periods following the acquisition compared to minimum thresholds. Each of the earnout payments, if applicable, was to be paid within 30 days of each of the first three anniversaries of the date of the earnout agreement. In August 2009, we amended the earnout agreement with Valero to replace future earnout payments with fixed future payments. As a result, we paid Valero approximately $8.8 million in 2010 and $19.7 million in 2009. We have agreed to pay an additional sum of approximately $6.5 million in three installments of approximately $2.2 million per quarter through the third quarter of 2011 for earnout payments in an aggregate amount of $35.0 million.

Critical Accounting Policies

     Our accounting policies are described in the notes to our audited financial statements included elsewhere in this Annual Report on Form 10-K. We prepare our financial statements in conformity with GAAP. In order to apply these principles, we must make judgments, assumptions and estimates based on the best available information at the time. Actual results may differ based on the accuracy of the information utilized and subsequent events, some of which we may have little or no control over. Our critical accounting policies, which are discussed below, could materially affect the amounts recorded in our financial statements.

     Inventory. Crude oil, refined products and blendstocks are priced at the lower of cost or market value. Cost is determined using the LIFO valuation method. Under the LIFO valuation method, we charge the most recent acquisition costs to cost of sales, and we value inventories at the earliest acquisition costs. We selected this method because we believe it more accurately reflects the cost of our current sales. If the market value of inventory is less than the inventory cost on a

LIFO basis, then the inventory is written down to market value. An inventory write-down to market value results in a non-cash accounting adjustment, decreasing the value of our crude oil and refined products inventory and increasing our cost of sales.

     Environmental and Other Loss Contingencies. We record liabilities for loss contingencies, including environmental remediation costs, when such losses are probable and can be reasonably estimated. Our environmental liabilities represent the estimated cost to investigate and remediate contamination at our properties. Our estimates are based upon internal and third-party assessments of contamination, available remediation technology and environmental regulations. Accruals for estimated liabilities from projected environmental remediation obligations are recognized no later than the completion of the remedial feasibility study. These accruals are adjusted as further information develops or circumstances change. We do not discount environmental liabilities to their present value unless payments are fixed and determinable. We record them without considering potential recoveries from third parties. Recoveries of environmental remediation costs from third parties are recorded as assets when receipt is deemed probable. We update our estimates to reflect changes in factual information, available technology or applicable laws and regulations.

     Turnarounds and Chemical Catalyst Costs. We record the cost of planned major refinery maintenance, referred to as turnarounds, and chemical catalyst used in the refinery process units, which are typically replaced in conjunction with planned turnarounds, in “Other assets” in our financial statements. Turnaround and catalyst costs are currently deferred and amortized on a straight-line basis beginning the month after the completion of the turnaround and ending immediately prior to the next scheduled turnaround. The amortization of deferred turnaround and chemical catalysts costs are presented in “Depreciation and amortization” in our financial statements.

     Impairment of Long-Lived Assets. We account for impairment of long-lived assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 360-10, Property, Plant, and Equipment. In evaluating our assets, long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of an asset to future net cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its expected future cash flows, an impairment loss is recognized based on the excess of the carrying value of the impaired asset over its fair value. These future cash flows and fair values are estimates based on our judgment and assumptions. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs of disposition.

     Deferred Income Taxes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Our results of operations are included in the consolidated U.S. Federal income tax return of Alon USA. For financial reporting purposes, federal tax expense is allocated to us as if a separate return was filed.

     Asset Retirement Obligations. We use ASC Subtopic 410-20, Asset Retirement Obligations, which established accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement costs. The provisions of ASC Subtopic 410-20 apply to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal operation of a long-lived asset. ASC Subtopic 410-20 also requires companies to recognize a liability for the fair value of a legal obligation to perform asset retirement activities that are conditional on a future event, if the amount can be reasonably estimated.

     In order to determine fair value, management must make certain estimates and assumptions including, among other things, projected cash flows, a credit-adjusted risk-free rate and an assessment of market conditions that could significantly impact the estimated fair value of the asset retirement obligation. These estimates and assumptions are subjective.

     Intangible Assets. Intangible assets are assets that lack physical substance (excluding financial assets). Intangible assets with indefinite useful lives are not amortized and intangible assets with finite useful lives are amortized on a straight-line basis over 1 to 40 years. Intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired. The Company uses December 31 of each year as the valuation date for annual impairment testing purposes.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Quantitative and Qualitative Disclosure About Market Risk

     Changes in commodity prices and purchased fuel prices are our primary sources of market risk. Alon USA’s risk management committee oversees all activities associated with the identification, assessment and management of our market risk exposure.

Commodity Price Risk

     We are exposed to market risks related to the volatility of crude oil and refined product prices, as well as volatility in the price of natural gas used in our refinery operations. Our financial results can be affected significantly by fluctuations in these prices, which depend on many factors, including demand for crude oil, gasoline and other refined products, changes in the economy, worldwide production levels, worldwide inventory levels and governmental regulatory initiatives. Alon USA’s risk management strategy identifies circumstances in which we may utilize the commodity futures market to manage risk associated with these price fluctuations.

     In order to manage the uncertainty relating to inventory price volatility, we have consistently applied a policy of maintaining inventories at or below a targeted operating level. In the past, circumstances have occurred, such as timing of crude oil cargo deliveries, turnaround schedules or shifts in market demand that have resulted in variances between our actual inventory level and our desired target level. Upon the review and approval of Alon USA’s risk management committee, we may utilize the commodity futures market to manage these anticipated inventory variances. In addition, we have entered into and regularly evaluate opportunities to provide us with a minimum fixed cash flow stream on the volume of products hedged during the hedge term and to protect against volatility on commodity prices.

     We maintain inventories of crude oil, refined products, and blendstocks, the values of which are subject to wide fluctuations in market prices driven by world economic conditions, regional and global inventory levels and seasonal conditions. As of December 31, 2010, we held approximately 0.3 million barrels of crude oil and product inventories valued under the LIFO valuation method with an average cost of $54.64 per barrel. Market value exceeded carrying value of LIFO costs by $9.8 million. We refer to this excess as our LIFO reserve. If the market value of these inventories had been $1.00 per barrel lower, our LIFO reserve would have been reduced by $0.3 million.

     In accordance with fair value provisions of ASC 825–10, all commodity futures contracts are recorded at fair value and any changes in fair value between periods is recorded in the profit and loss section of our financial statements. “Forwards” represent physical trades for which pricing and quantities have been set, but the physical product delivery has not occurred by the end of the reporting period. “Futures” represent trades which have been executed on the New York Mercantile Exchange which have not been closed or settled at the end of the reporting period. A “long” represents an obligation to purchase product and a “short” represents an obligation to sell product.

     The following table provides information about our derivative commodity instruments as of December 31, 2010:

		Contract
		Volume				Wtd Avg				Wtd Avg				Contract
Description of Activity		(in barrels)				Price				Price				Value				Fair Value				Gain (Loss)
														(in thousands)
Forwards — long (Crude)			101,475				91.93				—			$	9,329			$	9,552			$	223
Forwards — short (Crude)			(143,466	)			—				91.93				(13,189	)			(13,505	)			(316	)
Forwards — long (Gasoline)			168,731				94.00				—				15,861				16,535				674
Forwards — short (Slurry)			(36,999	)			—				69.71				(2,579	)			(2,628	)			(49	)
Forwards — long (Catfeed)			9,641				91.54				—				883				919				36
Forwards — short (Slop)			(10,976	)			—				79.23				(870	)			(893	)			(23	)
Forwards — long (Diesel)			226,067				101.44				—				22,932				23,533				601
Forwards — short (Diesel)			(50,012	)			—				101.03				(5,053	)			(5,218	)			(165	)

		Contract				Wtd Avg				Wtd Avg
		Volume				Contract				Market				Contract
Description of Activity		(in barrels)				Spread				Spread				Value				Fair Value				Gain (Loss)
														(in thousands)
Futures — swaps (Heating Oil)			218,800				11.38				8.26			$	2,489			$	1,808			$	(681	)
Futures — calls (Heating oil)			(3,008,500	)			13.43				14.49				(40,394	)			(43,581	)			(3,187	)

Interest Rate Risk

     As of December 31, 2010, all of our outstanding debt was at fixed rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The Financial Statements and Schedule are included as an annex of this Annual Report on Form 10-K. See the Index to Financial Statements and Schedule on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

     Our management has evaluated, with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or furnish under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms including, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or furnish under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control over Financial Reporting

     Our management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act) for Alon Refining Krotz Springs, Inc. Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2010. In management’s evaluation, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Management believes that as of December 31, 2010, our internal control over financial reporting was effective based on those criteria.

Changes in Internal Control Over Financial Reporting

     There has been no change in our internal control over financial reporting during the quarter ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Certifications

     Included in this Annual Report on Form 10-K are certifications of our Chief Executive Officer and Chief Financial Officer which are required in accordance with Rule 13a-14 of the Exchange Act. This section includes the information concerning the controls and controls evaluation referred to in the certifications.

ITEM 9B. OTHER INFORMATION.

     None.

PART III

     Certain portions of Items 10, 11 and 12 of this Part III of Form 10-K have been omitted under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Management

     Our current directors and executive officers, their ages as of January 31, 2011, and their business experience during the past five years are set forth below:

Name		Age				Position
David Wiessman			56			Executive Chairman of the Board of Directors
Jeff D. Morris			59			Director and Chief Executive Officer
Paul Eisman			55			Director and President
Shai Even			42			Director, Senior Vice President and Chief Financial Officer
Joseph Israel			39			Director, Chief Operating Officer
Joseph A. Concienne, III			60			Director
Claire A. Hart			55			Senior Vice President
Alan Moret			56			Vice President of Supply
Michael Oster			39			Vice President of Mergers and Acquisitions
William Wuensche			50			Vice President of Refining

     David Wiessman has served as Executive Chairman of our Board of Directors since July 2008. Mr. Wiessman has also served as Executive Chairman of the Board of Directors of Alon USA since July 2000 and served as President and Chief Executive Officer of Alon USA from its formation in 2000 until May 2005. Mr. Wiessman has over 25 years of oil industry and marketing experience. Since 1994, Mr. Wiessman has been Chief Executive Officer, President and a director of Alon Israel Oil Company, Ltd., or Alon Israel, Alon USA’s parent company. In 1992, Bielsol Investments (1987) Ltd. acquired a 50% interest in Alon Israel. In 1987, Mr. Wiessman became Chief Executive Officer of, and a stockholder in, Bielsol Investments (1987) Ltd. In 1976, after serving in the Israeli Air Force, he became Chief Executive Officer of Bielsol Ltd., a privately-owned Israeli company that owns and operates gasoline stations and owns real estate in Israel. Mr. Wiessman is also Executive Chairman of the Board of Directors of Alon Holdings Blue Square-Israel, Ltd., which is listed on the New York Stock Exchange, or NYSE, and the Tel Aviv Stock Exchange, or TASE; Executive Chairman of Blue Square Real Estate Ltd., which is listed on the TASE, and Executive Chairman of the Board and President of Dor-Alon Energy in Israel (1988) Ltd., which is listed on the TASE, and all of which are subsidiaries of Alon Israel.

     Jeff D. Morris has served as our Chief Executive Officer and a director and officer since July 2008. Mr. Morris also served as our President from July 2008 until March 2010 and has served as director and Chief Executive Officer of Alon USA since May 2005, President of Alon USA from May 2005 until March 2010 and has served as the President and Chief Executive Officer of other operating subsidiaries of Alon USA since July 2000. Prior to joining Alon USA, he held various positions at FINA, Inc., where he began his career in 1974. Mr. Morris served as Vice President of FINA’s SouthEastern Business Unit from 1998 to 2000 and as Vice President of its SouthWestern Business Unit from 1995 to 1998. In these capacities, he was responsible for both the Big Spring refinery and FINA’s Port Arthur refinery and the crude oil gathering assets and marketing activities for both business units.

     Paul Eisman has served as our President since March 2010 and a director since August 2010. Mr. Eisman has served as the President of Alon USA since March 2010. Prior to joining Alon, Mr. Eisman was Executive Vice President, Refining & Marketing Operations at Frontier Oil Corporation from 2006 to 2009 and held various positions at KBC Advanced Technologies from 2003 to 2006, including Vice President of North American Operations. During 2002, Mr. Eisman was Senior Vice President of Planning for Valero Energy Corporation following Valero’s acquisition of Ultramar Diamond Shamrock. Prior to the acquisition, Mr. Eisman had a 24-year career with Ultramar Diamond Shamrock, serving in many technical and operational roles including Executive Vice President of Corporate Development and Refinery Manager at the McKee refinery.

     Shai Even is our Senior Vice President and Chief Financial Officer and has served as an officer since July 2008 and a director since May 2008. Mr. Even has also served as a Senior Vice President of Alon USA since August 2008 and as Alon USA’s Chief Financial Officer since December 2004. Mr. Even served as a Vice President of Alon USA from May 2005 to August 2008 and Treasurer from August 2003 until March 2007.

     Joseph Israel is our Chief Operating Officer and has served as a director and officer since July 2008. Mr. Israel has also served as Chief Operating Officer of Alon USA since August 2008. Mr. Israel served as Alon USA’s Vice President of Mergers & Acquisitions from March 2005 to August 2008 and as Alon USA’s General Manager of Economics and Commerce from September 2000 to March 2005. Prior to joining Alon USA, Mr. Israel held positions with several Israeli government entities beginning in 1995, including the Israeli Land Administration, the Israeli Fuel Administration and most recently as Economics and Commerce Vice President of Israel’s Petroleum Energy Infrastructure entity.

     Joseph A. Concienne, III has served as a director since July 2008 and served as our Vice President from July 2008 until his retirement in February 2011. Mr. Concienne also served as Senior Vice President of Refining of Alon USA from August 2008 to February 2011and served as Senior Vice President of Refining and Transportation of Alon USA from May 2007 to August 2008 and Vice President of Refining and Transportation of Alon USA from March 2001 to May 2007. Prior to joining Alon USA, Mr. Concienne served as Director of Operations/General Manager for PolyOne Corporation in Seabrook, Texas from 1998 to 2001. He served as Vice President/General Manager for Valero Refining and Marketing, Inc. in 1998, and as Manager of Refinery Operations and Refinery Manager for Phibro Energy Refining (now known as Valero Refining and Marketing, Inc.) from 1985 to 1998.

     Claire A. Hart is our Senior Vice President and has served as an officer since July 2008. Mr. Hart has also served as Senior Vice President of Alon USA since January 2004 and served as Alon USA’s Chief Financial Officer and Vice President from August 2000 to January 2004. Prior to joining Alon USA, he held various positions in the Finance, Accounting and Operations departments of FINA for 13 years, serving as Treasurer from 1998 to August 2000 and as General Manager of Credit Operations from 1997 to 1998.

     Alan Moret is our Vice President of Supply and has served as an officer since July 2008. Mr. Moret has also served as Senior Vice President of Supply of Alon USA since August 2008. Mr. Moret served as Alon USA’s Senior Vice President of Asphalt Operations from August 2006 to August 2008, with responsibility for asphalt operations and marketing at Alon USA’s refineries and asphalt terminals. Prior to joining Alon USA, Mr. Moret was President of Paramount Petroleum Corporation from November 2001 to August 2006. Prior to joining Paramount Petroleum Corporation, Mr. Moret held various positions with Atlantic Richfield Company, most recently as President of ARCO Crude Trading, Inc. from 1998 to 2000 and as President of ARCO Seaway Pipeline Company from 1997 to 1998.

     Michael Oster is our Vice President of Mergers and Acquisitions and has served as an officer since August 2009. Mr. Oster has also served as Senior Vice President of Mergers and Acquisitions of Alon USA since August 2008 and General Manager of Commercial Transactions of Alon USA from January 2003 to August 2008. Prior to joining Alon USA, Mr. Oster was a partner in the Israeli law firm, Yehuda Raveh and Co.

     William Wuensche is our Vice President of Refining and has served as an officer since January 2009, with responsibility for operations at our refinery. He has also served as Vice President of Refining — Krotz Springs of Alon USA since March 2009. Mr. Wuensche joined Alon USA in July 2008. Prior to joining Alon USA, Mr. Wuensche was with Valero Refining Company — Louisiana from June 2006 to July 2008, as Vice President and General Manager of Valero’s Krotz Springs Refinery and Valero Refining Company from February 2004 to June 2006, as Vice President and General Manager of Valero’s McKee Refinery. Earlier in his career, Mr. Wuensche held various positions of increasing responsibilities in the engineering, economics and planning and refinery operations areas.

Corporate Governance

     We do not have an audit committee or a compensation committee. The executive officers of our parent company serve as members of our board of directors. Our executive officers are subject to the Corporate Governance Guidelines and Code of Business Conduct and Code of Ethics of our parent company. Copies of such documents are available free of charge through our parent’s internet website at www.alonusa.com. We do not have an internet website.

ITEM 11. EXECUTIVE COMPENSATION.

     The following table sets forth the name and title of our principal executive officer and principal financial officer and our three other most highly compensated executive officers, which we refer to as the named executive officers:

Name		Title
Jeff D. Morris		Chief Executive Officer
Shai Even		Senior Vice President and Chief Financial Officer
Joseph Israel		Chief Operating Officer
Michael Oster		Vice President of Mergers and Acquisitions
Alan Moret		Vice President of Supply

     Our named executive officers are also executive officers and employees of our parent company and are compensated by our parent company in their capacities as such. See “Certain Relationships and Related Party Transactions.” We do not directly employ our named executive officers. Our parent company’s compensation committee establishes the base salary, bonus and other elements of compensation for its executive officers, and such determinations are not subject to approvals by our board of directors.

     The objectives of our parent company’s compensation policies are to attract, motivate and retain qualified management and personnel who are highly talented while ensuring that executive officers and other employees are compensated in a manner that advances both the short and long-term interests of stockholders. In pursuing these objectives, our parent company’s compensation committee believes that compensation should reward executive officers and other employees for both their personal performance and the performance of our parent company and its subsidiaries.

     Our parent company’s management provides compensation recommendations to its compensation committee. However, the final determination of a compensation package for the named executive officers is made solely by the compensation committee, except with respect to the compensation packages of Messrs. Wiessman and Morris, who are the compensation committee members. The compensation package for Mr. Morris is determined by Mr. Wiessman in consultation with our parent company’s board of directors, excluding Mr. Morris. The compensation package for Mr. Wiessman is determined by our parent company’s board of directors, excluding Mr. Wiessman. Our parent company does not currently engage any consultants relating to executive and/or director compensation practices.

Employment Agreements and Change of Control Arrangements

     Jeff D. Morris. Our parent company is party to an Executive Employment Agreement with Jeff Morris, the initial term of which was through April 30, 2003, and the term of which automatically renews for one-year terms unless terminated by either party. Mr. Morris currently receives a base salary of $333,100 per year and is eligible for annual merit increases. Under his employment agreement, Mr. Morris is entitled to participate in our parent company’s annual cash bonus plans, pension plan and benefits restoration plan and stock option plans of Alon USA Operating, Inc. and Alon Assets, Inc., each subsidiaries of our parent company. Additionally, our parent company is required to provide Mr. Morris with additional benefits to the extent such benefits are made available to other employees, including disability, hospitalization, medical and retiree health benefits and life insurance. Mr. Morris is subject to a covenant not to compete during the term of his employment and for nine months after the date of his termination. In the event that Mr. Morris is terminated without cause (as defined in the agreement) or resigns upon at least 30 days’ prior written notice for good reason (as defined in the agreement) he will be entitled to receive his base salary through the termination date, the prorated share of his annual bonus and a severance payment equal to

nine months’ base salary. This agreement also prohibits Mr. Morris from disclosing our parent company’s proprietary information received through his employment.

     Shai Even. Our parent company is a party to an Executive Employment Agreement with Shai Even to serve initially through August 1, 2006, and subsequently for one-year terms upon automatic renewal unless terminated by either party. Mr. Even currently receives a base salary of $300,000 per year and is eligible for annual merit increases. Under his employment agreement, Mr. Even is entitled to participate in our parent company’s annual cash bonus plans, pension plan and benefits restoration plan. Additionally, our parent company is required to provide Mr. Even with additional benefits to the extent such benefits are made available to other employees, including disability, hospitalization, medical and retiree health benefits and life insurance. Mr. Even is subject to a covenant not to compete during the term of his employment. In the event that Mr. Even is terminated without cause (as defined in the agreement) or resigns upon at least 30 days’ prior written notice for good reason (as defined in the agreement), he will be entitled to receive his base salary through the termination date, the prorated share of his annual bonus and a severance payment equal to nine months’ base salary. This agreement also prohibits Mr. Even from disclosing our parent company’s proprietary information received through his employment.

     Joseph Israel. Our parent company is a party to a Management Employment Agreement with Joseph Israel to serve through April 30, 2010, which automatically renews for one-year terms unless terminated by either party. Mr. Israel currently receives a base salary of $288,500 per year and is eligible for annual merit increases. Under his employment agreement, Mr. Israel is entitled to participate in our parent company’s annual cash bonus plans, pension plan and benefits restoration plan. Additionally, our parent company is required to provide Mr. Israel with additional benefits to the extent such benefits are made available to other employees, including disability, hospitalization, medical and retiree health benefits and life insurance. Mr. Israel is subject to a covenant not to compete during the term of his employment. In the event that Mr. Israel is terminated without cause (as defined in the agreement) or resigns upon at least 30 days’ prior written notice for good reason (as defined in the agreement), he will be entitled to receive his base salary through the termination date, the prorated share of his annual bonus and a severance payment equal to nine months’ base salary. This agreement also prohibits Mr. Israel from disclosing our parent company’s proprietary information received through his employment.

     Michael Oster. Our parent company is party to a Management Employment Agreement with Michael Oster to serve initially through January 1, 2006, and subsequently for one-year terms upon automatic renewal unless terminated by either party. Mr. Oster currently receives a base salary of $255,000 per year and is eligible for annual merit increases. Under his employment agreement, Mr. Oster is entitled to participate in our parent company’s annual cash bonus plans, pension plan and benefits restoration plan. Additionally, our parent company is required to provide Mr. Oster with additional benefits to the extent such benefits are made available to other employees, including disability, hospitalization, medical and retiree health benefits and life insurance. Mr. Oster is subject to a covenant not to compete during the term of his employment. In the event that Mr. Oster is terminated without cause (as defined in the agreement) or resigns upon at least 30 days’ prior written notice for good reason (as defined in the agreement), he will be entitled to receive his base salary through the termination date, the prorated share of his annual bonus and a severance payment equal to nine months’ base salary. This agreement also prohibits Mr. Oster from disclosing our parent company’s proprietary information received through his employment.

     Alan Moret. Our parent company is party to an Employment Agreement with Alan Moret, the initial term of which was through November 2005, and the term of which automatically renews for one-year terms unless terminated by either party. Mr. Moret currently receives a base salary of $318,101 per year and is eligible for annual merit increases. Under his employment agreement, Mr. Moret is entitled to participate in our parent company’s annual cash bonus plans and a 401(k) plan with matching contribution from Alon of up to 6% of Mr. Moret’s base salary. Additionally, our parent company is required to provide Mr. Moret with additional benefits to the extent such benefits are made available to other employees, including disability, hospitalization, medical and retiree health benefits and life insurance. In the event that (i) Mr. Moret is terminated without cause (as defined in the agreement), (ii) our parent company does not elect to extend the employment term (as defined in the agreement) or (iii) Mr. Moret resigns upon at least 90 days’ prior written notice for good reason (as defined in the agreement), he will be entitled to receive any earned but unpaid annual bonus as of the date of termination for the previous year and a severance payment equal to four years’ base salary, provide that, he will receive an additional years’ base salary if our parent company terminates his employment prior to the then effective employment term. In the event that Mr. Moret’s employment is terminated due to death or disability (as defined in the agreement), he will be entitled to

receive any earned but unpaid annual bonus as of the date of termination for the previous year, the prorated share of his annual bonus for the current year and a severance payment equal to four years’ base salary. This agreement also prohibits Mr. Moret from disclosing our parent company’s proprietary information received through his employment.

Compensation of Directors

     Our directors do not receive any compensation in respect of their services as directors of our company.

Compensation Committee Interlocks and Insider Participation

     We do not have a compensation committee. Our parent company has a compensation committee consisting of Jeff D. Morris, its and our Chief Executive Officer, and David Wiessman, its and our Executive Chairman of the Board. Our parent company’s compensation committee determines the compensation of the executive officers.

     Compensation for our executive officers other than Messrs. Wiessman and Morris is determined by Messrs. Wiessman and Morris, with Mr. Morris’ compensation being determined by Mr. Wiessman in consultation with our parent company’s board of directors, excluding Mr. Morris. Mr. Wiessman’s compensation is determined by our parent company’s board of directors, excluding Mr. Wiessman.

     None of our executive officers, other than Messrs. Wiessman and Morris, serves as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of the board of directors. As described above, Messrs. Wiessman and Morris serve as members of the board of directors and compensation committee of our parent company, whose executive officers serve as members of our board of directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

     Omitted under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

     A portion of the purchase price for the acquisition of our refinery from Valero was provided through an $80 million equity investment in our direct parent company, Alon Refining Louisiana, Inc., (“ARL”), by Alon Israel Oil Company, Ltd. (“Alon Israel”), the majority stockholder of Alon USA, together with a $21.7 million equity investment by Alon USA and its affiliates. Also in connection with the acquisition, Alon Israel, together with Alon USA and its affiliates, arranged for the issuance of $66.0 million of standby letters of credit, without recourse to us, to support increased borrowing capacity under our revolving credit facility.

     In connection with the loan amendments in April 2009, Alon Israel, together with Alon USA and its affiliates, invested an additional $25.0 million in the equity of ARL, which was contributed by ARL to our company, and arranged for the issuance of an additional $25.0 million of standby letters of credit without recourse to us.

     In 2010, Alon USA invested an additional $41.0 million in the equity of ARL, which was contributed by ARL to our Company. Also in 2010, in connection with the termination of our revolving credit facility, $76.0 million of letters of credit support was returned to Alon Israel and Alon USA and its affiliates.

     These contributions, together with the equity and letters of credit support provided at the time of the acquisition, resulted in approximately $167.7 million of equity and $15.0 million of letters of credit support provided to our company from Alon Israel and Alon USA and its affiliates.

     As a subsidiary of Alon USA, we operate as a component of the integrated operations of Alon USA and its other subsidiaries. As such, the executive officers of Alon USA, who are employed by another subsidiary of Alon USA, also serve as executive officers of our company and Alon USA’s other subsidiaries and Alon USA performs general corporate and administrative services and functions for our company and Alon USA’s other subsidiaries, which include accounting, treasury, cash management, tax, information technology, insurance administration and claims processing, legal, environmental, risk management, audit, payroll and employee benefit processing, and internal audit services and functions. Alon USA allocates the expenses actually incurred by it in performing these services to our company and to its other subsidiaries based primarily on the amount of time the individuals performing such

services devote to our business and affairs relative to the amount of time they devote to the business and affairs of Alon USA’s other subsidiaries. We record the amount of such allocations to our company in our financial statements as selling, general and administrative expenses. For the years ended December 31, 2010 and December 31, 2009, we recorded selling, general and administrative expenses of $6.8 million and $7.3 million, respectively, with respect to allocations from Alon USA for such services.

     In each of May, June, July and August of 2009, we entered into separate commodity fixed/floating price swap arrangements, each for terms of less than one month, with a subsidiary of Alon USA with respect to certain of our transactions for products delivered into the Colonial Pipeline. The effect of such arrangements was to replace market pricing for the products based on the date of the contract for such transaction with pricing based on the average market price for the month of delivery of such products. All pricing terms in such arrangements were based on actual published market prices and such arrangements were based on general market terms and conditions and the provisions of an International Swap Dealers Association (ISDA) Master Agreement dated as of May 1, 2009. We received payments in the amount of $5.8 million for the year ended December 31, 2009, upon settlement of the swaps.

     Alon USA currently owns all of our outstanding voting capital stock. As a result, Alon USA can control the election of our directors, exercise control or significant influence over our corporate and management policies and generally determine the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. So long as Alon USA continues to own a majority of the outstanding shares of our voting capital stock, Alon USA will continue to be able to effectively control or influence the outcome of such matters.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     Audit Fees. The aggregate fees billed by KPMG LLP (“KPMG”) for professional services rendered for the audit of our annual financial statements, the review of the financial statements included in our annual report on Form 10-K and quarterly reports on Form 10-Q were $0.2 million for the year ended December 31, 2010.

     Audit-Related Fees. There were no fees billed by KPMG for assurance and related services related to the performance of audits or review of our financial statements and not described above under “Audit Fees” in 2010.

     Tax Fees. No fees were billed by KPMG for professional services rendered for tax compliance, tax advice and tax planning in 2010.

     All Other Fees. No fees were billed by KPMG for products and services not described above in 2010.

     Pre-Approval Policies and Procedures. In general, all engagements of our outside auditors, whether for auditing or non-auditing services, must be pre-approved by the Board of Directors. During 2010, all of the services performed for us by KPMG were pre-approved by the Board of Directors. The Board of Directors has considered the compatibility of non-audit services with KPMG’s independence.

PART IV

      ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)		The following documents are filed as part of this report:
(1)		Financial Statements and Schedule, see “Index to Financial Statements and Schedule” on page F-1.
(a)		Schedule II — Valuation and Qualifying accounts is included in the Notes to Financial Statements.
(2)		Exhibits: Reference is made to the Index of Exhibits immediately preceding the exhibits hereto, which index is incorporated herein by reference.

Exhibit Index

Exhibit
Number		Description
3.1		Certificate of Incorporation of Alon Refining Krotz Springs, Inc., as amended by the Certificate of Amendment to Certificate of Incorporation of Alon Refining Krotz Springs, Inc. (incorporated by reference to Exhibit 3.1 to Form S-4, filed by Alon Refining Krotz Springs, Inc. on December 22, 2009, SEC File No. 333-163942).
3.2		Amended and Restated Bylaws of Alon Refining Krotz Springs, Inc. (incorporated by reference to Exhibit 3.2 to Form S-4, filed by Alon Refining Krotz Springs, Inc. on December 22, 2009, SEC File No. 333-163942).
4.1		Indenture, dated as of October 22, 2009, by and among Alon Refining Krotz Springs, Inc. and Wilmington Trust FSB, as Trustee (incorporated by reference to Exhibit 4.1 to Form 8-K, filed by Alon USA Energy, Inc. on October 23, 2009, SEC File No. 001-32567).
10.1		Stock Purchase Agreement, dated May 7, 2008, between Valero Refining and Marketing Company and Alon Refining Krotz Springs, Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on May 13, 2008, SEC File No. 001-32567).
10.2		First Amendment to Stock Purchase Agreement, dated as of July 3, 2008, by and among Valero Refining and Marketing Company, Alon Refining Krotz Springs, Inc. and Valero Refining Company-Louisiana (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on July 10, 2008, SEC File No. 001-32567).
10.3		Registration Rights Agreement, dated October 22, 2009, between Alon Refining Krotz Springs, Inc. and Jefferies & Company, Inc. (incorporated by reference to Exhibit 10.2 to Form 8-K, filed by Alon USA Energy, Inc. on October 23, 2009, SEC File No. 001-32567).
10.4		Purchase Agreement, dated October 13, 2009, between Alon Refining Krotz Springs, Inc. and Jefferies & Co. (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on October 19, 2009, SEC File No. 001-32567).
10.5†		Offtake Agreement, dated as of July 3, 2008, by and between Valero Marketing and Supply Company and Alon Refining Krotz Springs, Inc. (incorporated by reference to Exhibit 10.5 to Form S-4/A, filed by Alon Refining Krotz Springs, Inc. on January 12, 2010, SEC File No. 333-163942).
10.6†		Earnout Agreement, dated as of July 3, 2008, by and between Valero Refining and Marketing Company and Alon Refining Krotz Springs, Inc. (incorporated by reference to Exhibit 10.6 to Form S-4/A, filed by Alon Refining Krotz Springs, Inc. on January 12, 2010, SEC File No. 333-163942).
10.7†		First Amendment to Earnout Agreement, dated as of August 27, 2009, by and between Valero Refining and Marketing Company and Alon Refining Krotz Springs, Inc. (incorporated by reference to Exhibit 10.7 to Form S-4/A, filed by Alon Refining Krotz Springs, Inc. on January 12, 2010, SEC File No. 333-163942).
10.8		Loan and Security Agreement, dated as of July 3, 2008, by and among Alon Refining Louisiana, Inc., Alon Refining Krotz Springs, Inc., the lenders party thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.3 to Form 8-K, filed by Alon USA Energy, Inc. on July 10, 2008, SEC File No. 001-32567).
10.9		First Amendment to Loan and Security Agreement, dated as of December 18, 2008, by and among Alon Refining Louisiana, Inc., Alon Refining Krotz Springs, Inc., the lenders party thereto and Bank of America, N.A. (incorporated by reference to Exhibit 10.28 to Form 10-K, filed by Alon USA Energy, Inc. on April 10, 2009, SEC File No. 001-32567).
10.10		Second Amendment to Loan and Security Agreement, dated as of April 9, 2009, by and among Alon Refining Louisiana, Inc., Alon Krotz Springs, Inc., the lenders party thereto and Bank of America, N.A., as agent (incorporated by reference to Exhibit 10.2 to Form 8-K, filed by Alon USA Energy, Inc. on April 27, 2009, SEC File No. 001-32567).

Exhibit
Number		Description
10.11		Amended and Restated Loan and Security Agreement, dated as of October 22, 2009 (as amended, supplemented or otherwise modified from time to time), among Alon Refining Louisiana, Inc., Alon Refining Krotz Springs, Inc., each other party joined as a borrower thereunder from time to time, the Lenders party thereto, and Bank of America, N.A., as Agent (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on October 23, 2009, SEC File No. 001-32567).
10.12		Term Loan Agreement, dated as of July 3, 2008, by and among Alon Refining Louisiana, Inc., Alon Refining Krotz Springs, Inc., the lenders party thereto and Credit Suisse, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 to Form 8-K, filed by Alon USA Energy, Inc. on July 10, 2008, SEC File No. 001-32567).
10.13		First Amendment Agreement, dated as of April 9, 2009, by and among Alon Refining Louisiana, Inc., Alon Krotz Springs, Inc., the lenders party thereto and Wells Fargo Bank, National Association, as successor to Credit Suisse, Cayman Islands Branch, as agent (incorporated by reference to Exhibit 10.1 to Form 10-Q, filed by Alon USA Energy, Inc. on August 6, 2009, SEC File No. 001-32567).
10.14*		Executive Employment Agreement, dated as of July 31, 2000, between Jeff D. Morris and Alon USA GP, Inc., as amended by the Amendment to Executive/Management Employment Agreement, dated May 1, 2005 (incorporated by reference to Exhibit 10.23 to Form S-1, filed by Alon USA Energy, Inc. on May 11, 2005, SEC File No. 333-124797).
10.15*		Second Amendment to Executive Employment Agreement, dated as of November 4, 2008, between Jeff D. Morris and Alon USA GP, LLC (incorporated by reference to Exhibit 10.9 to Form 10-Q, filed by Alon USA Energy, Inc. on November 7, 2008, SEC File No. 001-32567).
10.16*		Executive Employment Agreement, dated as of August 1, 2003, between Shai Even and Alon USA GP, LLC (incorporated by reference to Exhibit 10.49 to Form 10-K, filed by Alon USA Energy, Inc. on March 15, 2007, SEC File No. 001-32567).
10.17*		Amendment to Executive Employment Agreement, dated as of November 4, 2008, between Shai Even and Alon USA GP, LLC. (incorporated by reference to Exhibit 10.14 to Form 10-Q, filed by Alon USA Energy, Inc. on November 7, 2008, SEC File No. 001-32567).
10.18*		Management Employment Agreement, dated as of October 30, 2008, between Michael Oster and Alon USA GP, LLC (incorporated by reference to Exhibit 10.71 to Form 10-K, filed by Alon USA Energy, Inc. on April 10, 2009, SEC File No. 001-32567).
10.19*		Management Employment Agreement, dated as of September 1, 2000, between Yosef Israel and Alon USA GP, LLC (incorporated by reference to Exhibit 10.33 to Form 10-K, filed by Alon USA Energy, Inc. on March 15, 2006, SEC File No. 001-32567).
10.20*		Amendment to Executive/Management Employment Agreement, dated as of May 1, 2005 between Yosef Israel and Alon USA GP, LLC (incorporated by reference to Exhibit 10.34 to Form 10-K, filed by Alon USA Energy, Inc. on March 15, 2006, SEC File No. 001-32567).
10.21*		Second Amendment to Executive/Management Employment Agreement, dated as of November 4, 2008, between Yosef Israel and Alon USA GP, LLC (incorporated by reference to Exhibit 10.13 to Form 10-Q, filed by Alon USA Energy, Inc. on November 7, 2008, SEC File No. 001-32567).
10.22*		Description of Annual Bonus Plans (incorporated by reference to Exhibit 10.2 to Form 10-Q, filed by Alon USA Energy, Inc. on May 6, 2008, SEC File No. 001-32567).
10.23*		Change of Control Incentive Bonus Program (incorporated by reference to Exhibit 10.29 to Form S-1, filed by Alon USA Energy, Inc. on May 11, 2005, SEC File No. 333-124797).
10.24*		Form of Officer Indemnification Agreement (incorporated by reference to Exhibit 10.32 to Form S-1, filed by Alon USA Energy, Inc. on May 11, 2005, SEC File No. 333-124797).
10.25*		Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.33 to Form S-1, filed by Alon USA Energy, Inc. on May 11, 2005, SEC File No. 333-124797).

Exhibit
Number		Description
10.26*		Alon USA Energy, Inc. 2005 Incentive Compensation Plan, as amended on November 7, 2005 (incorporated by reference to Exhibit 10.2 to Form 8-K, filed by Alon USA Energy, Inc. on November 8, 2005, SEC File No. 001-32567).
10.27*		Form of Restricted Stock Award Agreement relating to Director Grants pursuant to Section 12 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on August 5, 2005, SEC File No. 001-32567).
10.28*		Form of Restricted Stock Award Agreement relating to Participant Grants pursuant to Section 8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on August 23, 2005, SEC File No. 001-32567).
10.29*		Form II of Restricted Stock Award Agreement relating to Participant Grants pursuant to Section 8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to Form 8-K, filed by Alon USA Energy, Inc. on November 8, 2005, SEC File No. 001-32567).
10.30*		Form of Appreciation Rights Award Agreement relating to Participant Grants pursuant to Section 7 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on March 12, 2007, SEC File No. 001-32567).
10.31*		Form of Amendment to Appreciation Rights Award Agreement relating to Participant Grants pursuant to Section 7 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Form 8-K, filed by Alon USA Energy, Inc. on January 27, 2010, SEC File No. 001-32567).
10.32*		Form II of Appreciation Rights Award Agreement relating to Participant Grants pursuant to Section 7 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on January 27, 2010, SEC File No. 001-32567).
10.33		Credit Agreement dated as of March 15, 2010 (as amended, supplemented or otherwise modified from time to time), among the Company, each other party joined as a borrower thereunder from time to time, the Lenders party thereto, and Bank Hapoalim B.M., as Administrative Agent (incorporated by reference to Exhibit 10.35 to Form 10-K, filed by Alon Refining Krotz Springs, Inc. on March 16, 2006, SEC File No. 333-163942).
10.34		Amendment No. 1 to Credit Agreement, dated May 28, 2010, among Alon Refining Krotz Springs, Inc., each other party joined as a borrower thereunder from time to time, the Lenders party thereto, and Bank Hapoalim B.M., as Administrative Agent (incorporated by reference to Exhibit 10.3 to Form 10-Q, filed by Alon USA Energy, Inc. on August 9, 2010, SEC File No. 333-124797).
10.35		Amendment No. 2 to Credit Agreement, dated June 15, 2010, among Alon Refining Krotz Springs, Inc., each other party joined as a borrower thereunder from time to time, the Lenders party thereto, and Bank Hapoalim B.M., as Administrative Agent (incorporated by reference to Exhibit 10.4 to Form 10-Q, filed by Alon USA Energy, Inc. on August 9, 2010, SEC File No. 333-124797).
10.36		Amendment No. 3 to Credit Agreement, dated August 11, 2010 (as amended, supplemented or otherwise modified from time to time), among Alon Refining Krotz Springs, Inc., each other party joined as a borrower thereunder from time to time, the Lenders party thereto, and Bank Hapoalim B.M., as Administrative Agent (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by Alon USA Energy, Inc. on August 13, 2010, 2010, SEC File No. 001-32567).
10.37		Credit Agreement, dated May 28, 2010, by and between Alon Refining Krotz Springs, Inc. and Goldman Sachs Bank USA, as Issuing Bank (incorporated by reference to Exhibit 10.5 to Form 10-Q, filed by Alon USA Energy, Inc. on August 9, 2010, SEC File No. 333-124797).
10.38		Amended and Restated Supply and Offtake Agreement, dated May 26, 2010 by and between Alon Refining Krotz Springs, Inc. and J. Aron & Company (incorporated by reference to Exhibit 10.6 to Form 10-Q, filed by Alon USA Energy, Inc. on August 9, 2010, SEC File No. 333-124797).
12.1		Statement Regarding Computation of Ratio of Earnings to Fixed Charges.

Exhibit
Number		Description
23.1		Consent of KPMG LLP
23.2		Consent of KPMG LLP
31.1		Certifications of Chief Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
31.2		Certifications of Chief Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

ALON REFINING KROTZ SPRINGS, INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

		Page
Audited Financial Statements:
Independent Auditors’ Report		F-2
Balance Sheets as of December 31, 2010 and 2009		F-3
Statements of Operations for the years ended December 31, 2010, 2009, and the period from July 1, 2008 (inception) through December 31, 2008		F-4
Statements of Stockholders’ Equity for years ended December 31, 2010, 2009 and the period from July 1, 2008 (inception) through December 31, 2008		F-5
Statements of Cash Flows for the years ended December 31, 2010, 2009 and the period from July 1, 2008 (inception) through December 31, 2008		F-6
Notes to Financial Statements		F-7
Krotz Springs Refining Business of Valero Energy Corporation
Audited Financial Statements:
Independent Auditors’ Report		F-22
Balance Sheets as of June 30, 2008 and December 31, 2007 and December 31, 2006		F-23
Statements of Operations for the six months ended June 30, 2008 and each of the years in the two-year period ended December 31, 2007		F-24
Statements of Changes in Net Parent Investment for the six months ended June 30, 2008 and each of the years in the two-year period ended December 31, 2007.		F-25
Statements of Cash Flows for the six months ended June 30, 2008 and each of the years in the two-year period ended December 31, 2007		F-26
Notes to Financial Statements		F-27

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Alon Refining Krotz Springs, Inc.:

We have audited the accompanying balance sheets of Alon Refining Krotz Springs, Inc. as of December 31, 2010 and 2009, and the related statements of operations, stockholders’ equity and cash flows for each of the years in the two year period ended December 31, 2010 and for the period from July 1, 2008 (date of inception) through December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alon Refining Krotz Springs, Inc. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2010 and for the period from July 1, 2008 (date of inception) through December 31, 2008, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas
March 14, 2011

ALON REFINING KROTZ SPRINGS, INC.

		As of December 31,
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	277			$	26,161
Accounts receivable			5,805				8,344
Inventories			18,561				54,623
Prepaid expenses			1,958				615
Total current assets			26,601				89,743
Property, plant and equipment, net			350,072				362,265
Other assets			29,572				30,829
Total assets		$	406,245			$	482,837
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	152,741			$	92,682
Accrued liabilities			22,662				31,299
Total current liabilities			175,403				123,981
Other non-current liabilities			27,597				7,873
Long-term debt			207,378				288,980
Total liabilities			410,378				420,834
Stockholders’ equity:
Class A Common stock, par value $0.01, 75,000 shares authorized; 50,110 and 36,219 shares issued and outstanding at December 31, 2010 and 2009, respectively			—				—
Class B Common stock, par value $0.01, 1,000 shares authorized; 315 and 405 shares issued and outstanding at December 31, 2010 and 2009, respectively			—				—
Additional paid-in capital			167,656				126,656
Accumulated other comprehensive loss, net of income tax			—				(7,240	)
Retained deficit			(171,789	)			(57,413	)
Total stockholders’ equity			(4,133	)			62,003
Total liabilities and stockholders’ equity		$	406,245			$	482,837

The accompanying notes are an integral part of these financial statements.

ALON REFINING KROTZ SPRINGS, INC.

										Period from
										July 1, 2008
		For the Year				For the Year				(inception)
		Ended				Ended				through
		December 31,				December 31,				December 31,
		2010				2009				2008
Net sales		$	1,254,663			$	1,156,883			$	1,054,397
Operating costs and expenses:
Cost of sales			1,222,647				1,031,368				987,536
Direct operating expenses			62,321				74,007				45,375
Selling, general and administrative expenses			6,890				7,328				903
Unrealized loss associated with consignment inventory			3,537				—				—
Depreciation and amortization expense			21,844				20,485				8,492
Total operating costs and expenses			1,317,239				1,133,188				1,042,306
Operating income (loss)			(62,576	)			23,695				12,091
Interest expense			(47,695	)			(69,090	)			(24,382	)
Other income (expense), net			(4,105	)			17				256
Loss before income tax benefit			(114,376	)			(45,378	)			(12,035	)
Income tax benefit			—				—				—
Net loss		$	(114,376	)		$	(45,378	)		$	(12,035	)