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Press Release
May 6, 2015

HollyFrontier Corporation Reports Quarterly Net Income

Dallas, Texas, May 6, 2015 ‑‑ HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported first quarter net income attributable to HollyFrontier stockholders of $226.9 million or $1.16 per diluted share for the quarter ended March 31, 2015, compared to $152.1 million or $0.76 per diluted share for the quarter ended March 31, 2014.

For the first quarter, net income attributable to our stockholders increased by $74.8 million compared to the same period of 2014, principally reflecting higher first quarter refining margins. Refinery gross margins were $16.69 per produced barrel, a 13% increase compared to $14.75 for the first quarter of 2014. Production levels averaged approximately 431,000 barrels per day (“BPD”) and crude oil charges averaged 417,000 BPD for the current quarter. Operating expenses for the quarter were $263.6 million or $5.87 per barrel compared to $274.0 million or $6.29 per barrel for the first quarter of last year.

HollyFrontier’s President & CEO, Mike Jennings, commented, “The strength of our first quarter earnings reflect outstanding operational reliability across our refining system.  Crude throughput was 94% of nameplate capacity and 104% of capacity adjusted for planned turnaround activity in the quarter. Realized margin per barrel increased 13% compared to the same period last year driving a 53% improvement in earnings per share. March refinery performance was particularly strong averaging 444,000 BPD of crude charge and 465,000 BPD of production. The second quarter is off to a very good start with new record crude rates being reached at several of our plants.  Given low planned maintenance for the rest of 2015, I expect continued high refinery utilization rates for the balance of the year.”

For the first quarter of 2015, net cash provided by operations totaled $246.9 million. During the period, we declared $0.32 regular dividends to shareholders totaling approximately $62.0 million and repurchased $55.0 million in common stock under our Board-approved share repurchase program. At March 31, 2015, our combined balance of cash and short-term investments totaled $1.0 billion and our consolidated debt was $1.1 billion. Our debt, exclusive of Holly Energy Partners' debt, which is nonrecourse to HollyFrontier, was $186.6 million at March 31, 2015. We had no cash borrowings or outstanding principal under our credit facility during the quarter.

The Company has scheduled a webcast conference call for today, May 6, 2015, at 8:30 AM Eastern Time to discuss first quarter financial results. This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1060741. An audio archive of this webcast will be available using the above noted link through May 20, 2015.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high-value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier operates through its subsidiaries a 135,000 barrels per stream day (“BPSD”) refinery located in El Dorado, Kansas, two refinery facilities with a combined capacity of 125,000 BPSD located in Tulsa, Oklahoma, a 100,000 BPSD refinery located in Artesia, New Mexico, a 52,000 BPSD refinery located in Cheyenne, Wyoming and a 31,000 BPSD refinery in Woods Cross, Utah. HollyFrontier markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. A subsidiary of HollyFrontier also owns a 39% interest (including the general partner interest) in Holly Energy Partners, L.P.


1



The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in the Company’s markets, the demand for and supply of crude oil and refined products, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, effects of governmental and environmental regulations and policies, the availability and cost of financing to the Company, the effectiveness of the Company’s capital investments and marketing strategies, the Company’s efficiency in carrying out construction projects, the ability of the Company to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any future acquired operations, the possibility of terrorist attacks and the consequences of any such attacks, general economic conditions and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.


2



RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)
 
Three Months Ended March 31,
 
Change from 2014
 
2015
 
2014
 
Change
 
Percent
 
(In thousands, except per share data)
Sales and other revenues
$
3,006,626

 
$
4,791,053

 
$
(1,784,427
)
 
(37
)%
Operating costs and expenses:
 
 
 
 
 
 
 
Cost of products sold:
 
 
 
 
 
 
 
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)
2,251,373

 
4,138,620

 
(1,887,247
)
 
(46
)
Lower of cost or market inventory adjustment
(6,546
)
 

 
(6,546
)
 

 
2,244,827

 
4,138,620

 
(1,893,793
)
 
(46
)
Operating expenses
263,596

 
273,966

 
(10,370
)
 
(4
)
General and administrative expenses
29,569

 
26,923

 
2,646

 
10

Depreciation and amortization
80,012

 
80,548

 
(536
)
 
(1
)
Total operating costs and expenses
2,618,004

 
4,520,057

 
(1,902,053
)
 
(42
)
Income from operations
388,622

 
270,996

 
117,626

 
43

Other income (expense):
 
 
 
 
 
 
 
Loss of equity method investments
(7,807
)
 
(801
)
 
(7,006
)
 
875

Interest income
962

 
1,405

 
(443
)
 
(32
)
Interest expense
(10,154
)
 
(12,347
)
 
2,193

 
(18
)
Gain on sale of assets
766

 

 
766

 

Loss on early extinguishment of debt

 
(7,677
)
 
7,677

 
(100
)
 
(16,233
)
 
(19,420
)
 
3,187

 
(16
)
Income before income taxes
372,389

 
251,576

 
120,813

 
48

Income tax provision
129,728

 
87,614

 
42,114

 
48

Net income
242,661

 
163,962

 
78,699

 
48

Less net income attributable to noncontrolling interest
15,785

 
11,901

 
3,884

 
33

Net income attributable to HollyFrontier stockholders
$
226,876

 
$
152,061

 
$
74,815

 
49
 %
Earnings per share attributable to HollyFrontier stockholders:
 
 
 
 
 
 
 
Basic
$
1.16

 
$
0.76

 
$
0.40

 
53
 %
Diluted
$
1.16

 
$
0.76

 
$
0.40

 
53
 %
Cash dividends declared per common share
$
0.32

 
$
0.80

 
$
(0.48
)
 
(60
)%
Average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
195,069

 
198,297

 
(3,228
)
 
(2
)%
Diluted
195,121

 
198,924

 
(3,803
)
 
(2
)%
EBITDA
$
445,808

 
$
338,842

 
$
106,966

 
32
 %

Balance Sheet Data
 
March 31,
 
December 31,
 
2015
 
2014
 
(In thousands)
Cash, cash equivalents and total investments in marketable securities
$
1,008,599

 
$
1,042,095

Working capital
$
1,543,375

 
$
1,531,595

Total assets
$
9,262,127

 
$
9,230,640

Long-term debt
$
1,077,369

 
$
1,054,890

Total equity
$
6,199,503

 
$
6,100,719



3



Segment Information

Our operations are organized into two reportable segments, Refining and HEP. Our operations that are not included in the Refining and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Consolidations and Eliminations. The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross refineries and NK Asphalt and involves the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. The petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States and northern Mexico. Additionally, specialty lubricant products produced at our Tulsa West facility are marketed throughout North America and are distributed in Central and South America. NK Asphalt manufactures and markets asphalt and asphalt products in Arizona, New Mexico, Oklahoma, Kansas, Missouri, Texas and northern Mexico.

The HEP segment involves all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics assets consisting of petroleum product and crude oil pipelines and terminal, tankage and loading rack facilities in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. Revenues are generated by charging tariffs for transporting petroleum products and crude oil through its pipelines and by charging fees for terminalling petroleum products and other hydrocarbons, and storing and providing other services at its storage tanks and terminals. The HEP segment also includes a 75% interest in the UNEV Pipeline (an HEP consolidated subsidiary) and a 25% interest in the SLC Pipeline. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations.

 
Refining
 
HEP
 
Corporate and Other
 
Consolidations and Eliminations
 
Consolidated Total
 
(In thousands)
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
Sales and other revenues
$
2,989,280

 
$
89,756

 
$
218

 
$
(72,628
)
 
$
3,006,626

Depreciation and amortization
$
63,275

 
$
14,290

 
$
2,654

 
$
(207
)
 
$
80,012

Income (loss) from operations
$
373,901

 
$
44,210

 
$
(28,949
)
 
$
(540
)
 
$
388,622

Capital expenditures
$
129,761

 
$
38,433

 
$
4,425

 
$

 
$
172,619

 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
Sales and other revenues
$
4,775,080

 
$
87,012

 
$
1,115

 
$
(72,154
)
 
$
4,791,053

Depreciation and amortization
$
63,541

 
$
15,184

 
$
2,030

 
$
(207
)
 
$
80,548

Income (loss) from operations
$
251,209

 
$
45,865

 
$
(25,555
)
 
$
(523
)
 
$
270,996

Capital expenditures
$
99,943

 
$
20,604

 
$
3,734

 
$

 
$
124,281

 
 
 
 
 
 
 
 
 
 
March 31, 2015
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and total investments in marketable securities
$
196

 
$
5,802

 
$
1,002,601

 
$

 
$
1,008,599

Total assets
$
7,015,682

 
$
1,458,019

 
$
1,106,374

 
$
(317,948
)
 
$
9,262,127

Long-term debt
$

 
$
890,742

 
$
186,627

 
$

 
$
1,077,369

 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and total investments in marketable securities
$
88

 
$
2,830

 
$
1,039,177

 
$

 
$
1,042,095

Total assets
$
6,965,245

 
$
1,434,572

 
$
1,150,865

 
$
(320,042
)
 
$
9,230,640

Long-term debt
$

 
$
867,579

 
$
187,311

 
$

 
$
1,054,890




4



Refining Operating Data

The following tables set forth information, including non-GAAP performance measures about our refinery operations. The cost of products and refinery gross and net operating margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.
 
Three Months Ended March 31,
 
2015
 
2014
Mid-Continent Region (El Dorado and Tulsa Refineries)
 
 
 
Crude charge (BPD) (1)
257,960

 
255,030

Refinery throughput (BPD) (2)
269,140

 
266,910

Refinery production (BPD) (3)
259,230

 
261,170

Sales of produced refined products (BPD)
256,320

 
247,220

Sales of refined products (BPD) (4)
267,340

 
263,520

Refinery utilization (5)
99.2
%
 
98.1
%
 
 
 
 
Average per produced barrel (6)
 
 
 
Net sales
$
71.67

 
$
113.28

Cost of products (7)
54.44

 
98.69

Refinery gross margin (8)
17.23

 
14.59

Refinery operating expenses (9)
4.90

 
5.79

Net operating margin (8)
$
12.33

 
$
8.80

 
 
 
 
Refinery operating expenses per throughput barrel (10)
$
4.67

 
$
5.36

 
 
 
 
Feedstocks:
 
 
 
Sweet crude oil
61
%
 
74
%
Sour crude oil
21
%
 
4
%
Heavy sour crude oil
14
%
 
18
%
Other feedstocks and blends
4
%
 
4
%
Total
100
%
 
100
%
 
 
 
 
Sales of produced refined products:
 
 
 
Gasolines
48
%
 
47
%
Diesel fuels
34
%
 
29
%
Jet fuels
8
%
 
9
%
Fuel oil
1
%
 
2
%
Asphalt
1
%
 
3
%
Lubricants
5
%
 
4
%
LPG and other
3
%
 
6
%
Total
100
%
 
100
%



5



 
Three Months Ended March 31,
 
2015
 
2014
Southwest Region (Navajo Refinery)
 
 
 
Crude charge (BPD) (1)
91,200

 
96,190

Refinery throughput (BPD) (2)
104,060

 
108,620

Refinery production (BPD) (3)
101,900

 
106,660

Sales of produced refined products (BPD)
106,130

 
104,600

Sales of refined products (BPD) (4)
118,090

 
110,240

Refinery utilization (5)
91.2
%
 
96.2
%
 
 
 
 
Average per produced barrel (6)
 
 
 
Net sales
$
67.12

 
$
116.04

Cost of products (7)
50.93

 
101.81

Refinery gross margin (8)
16.19

 
14.23

Refinery operating expenses (9)
5.45

 
5.60

Net operating margin (8)
$
10.74

 
$
8.63

 
 
 
 
Refinery operating expenses per throughput barrel (10)
$
5.56

 
$
5.39

 
 
 
 
Feedstocks:
 
 
 
Sweet crude oil
30
%
 
5
%
Sour crude oil
58
%
 
77
%
Heavy sour crude oil
%
 
7
%
Other feedstocks and blends
12
%
 
11
%
Total
100
%
 
100
%
 
 
 
 
Sales of produced refined products:
 
 
 
Gasolines
57
%
 
55
%
Diesel fuels
35
%
 
37
%
Fuel oil
2
%
 
4
%
Asphalt
1
%
 
1
%
LPG and other
5
%
 
3
%
Total
100
%
 
100
%
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
 
 
 
Crude charge (BPD) (1)
67,460

 
64,990

Refinery throughput (BPD) (2)
74,320

 
70,840

Refinery production (BPD) (3)
70,070

 
68,030

Sales of produced refined products (BPD)
66,180

 
71,240

Sales of refined products (BPD) (4)
72,150

 
74,960

Refinery utilization (5)
81.3
%
 
78.3
%


6



 
Three Months Ended March 31,
 
2015
 
2014
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
 
 
 
Average per produced barrel (6)
 
 
 
Net sales
$
65.65

 
$
110.64

Cost of products (7)
50.23

 
94.54

Refinery gross margin (8)
15.42

 
16.10

Refinery operating expenses (9)
10.25

 
9.05

Net operating margin (8)
$
5.17

 
$
7.05

 
 
 
 
Refinery operating expenses per throughput barrel (10)
$
9.13

 
$
9.10

 
 
 
 
Feedstocks:
 
 
 
Sweet crude oil
41
%
 
43
%
Sour crude oil
%
 
2
%
Heavy sour crude oil
38
%
 
31
%
Black wax crude oil
12
%
 
16
%
Other feedstocks and blends
9
%
 
8
%
Total
100
%
 
100
%
 
 
 
 
Sales of produced refined products:
 
 
 
Gasolines
58
%
 
53
%
Diesel fuels
36
%
 
31
%
Fuel oil
2
%
 
2
%
Asphalt
2
%
 
6
%
LPG and other
2
%
 
8
%
Total
100
%
 
100
%
Consolidated
 
 
 
Crude charge (BPD) (1)
416,620

 
416,210

Refinery throughput (BPD) (2)
447,520

 
446,370

Refinery production (BPD) (3)
431,200

 
435,860

Sales of produced refined products (BPD)
428,630

 
423,060

Sales of refined products (BPD) (4)
457,580

 
448,720

Refinery utilization (5)
94.0
%
 
94.0
%
 
 
 
 
Average per produced barrel (6)
 
 
 
Net sales
$
69.61

 
$
113.51

Cost of products (7)
52.92

 
98.76

Refinery gross margin (8)
16.69

 
14.75

Refinery operating expenses (9)
5.87

 
6.29

Net operating margin (8)
$
10.82

 
$
8.46

 
 
 
 
Refinery operating expenses per throughput barrel (10)
$
5.61

 
$
5.96

 
 
 
 
Feedstocks:
 
 
 
Sweet crude oil
50
%
 
52
%
Sour crude oil
26
%
 
21
%
Heavy sour crude oil
15
%
 
17
%
Black wax crude oil
2
%
 
3
%
Other feedstocks and blends
7
%
 
7
%
Total
100
%
 
100
%


7



 
Three Months Ended March 31,
 
2015
 
2014
Consolidated
 
 
 
Sales of produced refined products:
 
 
 
Gasolines
52
%
 
50
%
Diesel fuels
34
%
 
32
%
Jet fuels
5
%
 
5
%
Fuel oil
1
%
 
2
%
Asphalt
2
%
 
3
%
Lubricants
3
%
 
2
%
LPG and other
3
%
 
6
%
Total
100
%
 
100
%

(1)
Crude charge represents the barrels per day of crude oil processed at our refineries.
(2)
Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.
(3)
Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries.
(4)
Includes refined products purchased for resale.
(5)
Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 443,000 BPSD.
(6)
Represents average per barrel amount for produced refined products sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.
(7)
Transportation, terminal and refinery storage costs billed from HEP are included in cost of products.
(8)
Excludes lower of cost or market inventory valuation adjustment of $6.5 million for the three months ended March 31, 2015.
(9)
Represents operating expenses of our refineries, exclusive of depreciation and amortization.
(10)
Represents refinery operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.



8



Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. EBITDA is not a calculation provided for under accounting principles generally accepted in the United States; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA.
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
 
 
 
 
Net income attributable to HollyFrontier stockholders
$
226,876

 
$
152,061

    Add income tax provision
129,728

 
87,614

    Add interest expense (1)
10,154

 
20,024

    Subtract interest income
(962
)
 
(1,405
)
    Add depreciation and amortization
80,012

 
80,548

EBITDA
$
445,808

 
$
338,842


(1) Includes loss on early extinguishment of debt of $7.7 million for the three months ended March 31, 2014.

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis.

Refinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments or depreciation and amortization. Each of these component performance measures can be reconciled directly to our consolidated statements of income.

Other companies in our industry may not calculate these performance measures in the same manner.

Refinery Gross and Net Operating Margins

Below are reconciliations to our consolidated statements of income for (i) net sales, cost of products (exclusive of lower of cost or market inventory valuation adjustment) and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin. Due to rounding of reported numbers, some amounts may not calculate exactly.


9



Reconciliation of produced refined product sales to total sales and other revenues
 
Three Months Ended March 31,
 
2015
 
2014
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
Average sales price per produced barrel sold
$
69.61

 
$
113.51

Times sales of produced refined products (BPD)
428,630

 
423,060

Times number of days in period
90

 
90

Produced refined product sales
$
2,685,324

 
$
4,321,939

 
 
 
 
Total produced refined product sales
$
2,685,324

 
$
4,321,939

Add refined product sales from purchased products and rounding (1)    
167,555

 
269,615

Total refined product sales
2,852,879

 
4,591,554

Add direct sales of excess crude oil (2)    
100,269

 
165,407

Add other refining segment revenue (3)    
36,132

 
18,119

Total refining segment revenue
2,989,280

 
4,775,080

Add HEP segment sales and other revenues
89,756

 
87,012

Add corporate and other revenues
218

 
1,115

Subtract consolidations and eliminations
(72,628
)
 
(72,154
)
Sales and other revenues
$
3,006,626

 
$
4,791,053


Reconciliation of average cost of products per produced barrel sold to total cost of products sold
 
Three Months Ended March 31,
 
2015
 
2014
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
Average cost of products per produced barrel sold
$
52.92

 
$
98.76

Times sales of produced refined products (BPD)
428,630

 
423,060

Times number of days in period
90

 
90

Cost of products for produced products sold
$
2,041,479

 
$
3,760,327

 
 
 
 
Total cost of products for produced products sold
$
2,041,479

 
$
3,760,327

Add refined product costs from purchased products sold and rounding (1)
170,722

 
268,808

Total cost of refined products sold
2,212,201

 
4,029,135

Add crude oil cost of direct sales of excess crude oil (2)    
97,730

 
166,283

Add other refining segment cost of products sold (4)    
12,950

 
14,304

Total refining segment cost of products sold
2,322,881

 
4,209,722

Subtract consolidations and eliminations
(71,508
)
 
(71,102
)
Costs of products sold (exclusive of lower of cost or market inventory valuation adjustment and depreciation and amortization)
$
2,251,373

 
$
4,138,620



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Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses
 
Three Months Ended March 31,
 
2015
 
2014
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
Average refinery operating expenses per produced barrel sold
$
5.87

 
$
6.29

Times sales of produced refined products (BPD)
428,630

 
423,060

Times number of days in period
90

 
90

Refinery operating expenses for produced products sold
$
226,445

 
$
239,494

 
 
 
 
Total refinery operating expenses for produced products sold
$
226,445

 
$
239,494

Add other refining segment operating expenses and rounding (5)    
9,324

 
11,114

Total refining segment operating expenses
235,769

 
250,608

Add HEP segment operating expenses
27,966

 
22,812

Add corporate and other costs
234

 
868

Subtract consolidations and eliminations
(373
)
 
(322
)
Operating expenses (exclusive of depreciation and amortization)
$
263,596

 
$
273,966


Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues
 
Three Months Ended March 31,
 
2015
 
2014
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
Net operating margin per barrel
$
10.82

 
$
8.46

Add average refinery operating expenses per produced barrel
5.87

 
6.29

Refinery gross margin per barrel
16.69

 
14.75

Add average cost of products per produced barrel sold
52.92

 
98.76

Average sales price per produced barrel sold
$
69.61

 
$
113.51

Times sales of produced refined products (BPD)
428,630

 
423,060

Times number of days in period
90

 
90

Produced refined product sales
$
2,685,324

 
$
4,321,939

 
 
 
 
Total produced refined product sales
$
2,685,324

 
$
4,321,939

Add refined product sales from purchased products and rounding (1)    
167,555

 
269,615

Total refined product sales
2,852,879

 
4,591,554

Add direct sales of excess crude oil (2)    
100,269

 
165,407

Add other refining segment revenue (3)    
36,132

 
18,119

Total refining segment revenue
2,989,280

 
4,775,080

Add HEP segment sales and other revenues
89,756

 
87,012

Add corporate and other revenues
218

 
1,115

Subtract consolidations and eliminations
(72,628
)
 
(72,154
)
Sales and other revenues
$
3,006,626

 
$
4,791,053


(1)
We purchase finished products to facilitate delivery to certain locations or to meet delivery commitments.
(2)
We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, at times we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at cost.
(3)
Other refining segment revenue includes the incremental revenues associated with NK Asphalt, product purchased and sold forward for profit as market conditions and available storage capacity allows and miscellaneous revenue.
(4)
Other refining segment cost of products sold includes the incremental cost of products for NK Asphalt, the incremental cost associated with storing product purchased and sold forward as market conditions and available storage capacity allows and miscellaneous costs.
(5)
Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of NK Asphalt.


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FOR FURTHER INFORMATION, Contact:

Douglas S. Aron, Executive Vice President and
Chief Financial Officer
Julia Heidenreich, Vice President
Investor Relations
HollyFrontier Corporation
214/954-6510


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