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Press release from PR Newswire

HollyFrontier Corporation Reports Record Third Quarter 2011 Results

Tuesday, November 08, 2011

HollyFrontier Corporation Reports Record Third Quarter 2011 Results07:00 EST Tuesday, November 08, 2011DALLAS, Nov. 8, 2011 /PRNewswire/ -- HollyFrontier Corporation (NYSE: HFC) ("HollyFrontier" or the "Company") today reported record quarterly net income attributable to HollyFrontier stockholders of $523.1 million or $2.48 per diluted share for the quarter ended September 30, 2011, compared to $51.2 million or $0.48 per diluted share for the quarter ended September 30, 2010. For the nine months ended September 30, 2011, net income attributable to HollyFrontier stockholders totaled $800 million or $5.63 per diluted share compared to $89.2 million or $0.83 per diluted share for the nine months ended September 30, 2010.  The 2011 year-to-date results do not include $307 million in net income recorded by the legacy Frontier Oil operations for the first six months of 2011.For the third quarter, net income increased by $471.9 million, or 922% compared to the same period of 2010, reflecting both the effects of our recent merger and historically high refining gross margins, which were influenced by wide differentials between inland and coastal-sourced crude oils.  Overall refinery gross margins were $28.10 per produced barrel, a 170% increase compared to $10.41 for last year's third quarter, with overall production levels averaging just over 446,000 barrels per day ("BPD") and overall crude oil charges averaging 426,000 BPD for the current quarter.  The Company's Rocky Mountain refining margins were particularly strong, with average gross margins of $33.05 per barrel for the quarter.  The Southwest and Mid-Continent refining operations also yielded outstanding results, where quarterly gross margins averaged $28.34 and $26.64 per barrel, respectively.HollyFrontier's President & CEO, Mike Jennings, commented, "This quarter, our first as a newly merged company, marked the most profitable quarter in our history. Continued year-over-year margin improvements at each of our refineries combined with strong throughput produced an overall EBITDA of $896 million. Favorable WTI crude differentials contributed to the high transportation fuel crack spreads in each of our three regions. Aside from the exceptional margin environment, our third quarter witnessed a superb effort on the part of HollyFrontier employees in integrating the two legacy companies.  We are really pleased with this process and wish to publicly recognize the nearly seamless integration that has been achieved in approximately three months.  Looking forward, we believe our increased asset scale and operational synergies will combine with favorable refining economics in our markets, allowing us to generate strong returns on our invested capital and increasing shareholder value."Sales and other revenues for the third quarter of 2011 were $5.2 billion, a 147% increase compared to the three months ended September 30, 2010.  This increase was due primarily to the inclusion of revenues from the legacy Frontier refineries and to the effects of a 36% year-over-year increase in third quarter refined product sales prices.  Cost of products sold was approximately $4.0 billion, a 121% increase compared to the third quarter of 2010 reflecting third quarter sales from  the legacy Frontier refineries and a 19% year-over-year increase in third quarter crude oil acquisition costs.  Merger acquisition and integration related costs recognized during the quarter totaled $32 million, most of which were included among General and Administrative Costs and Merger Transaction Costs. Cash flows from operations totaled $631.2 million for the current quarter, of which $149.4 million was directed towards cash dividends to shareholders and share repurchases.  These strong cash flows contributed to the Company's combined balance of cash and short-term investments which stood at $1.7 billion on September 30, 2011.The Company has scheduled a webcast conference call for today, November 8, 2011, at 10:00 AM Eastern Time to discuss financial results.  This webcast may be accessed at: http://www.videonewswire.com/event.asp?id=82955.  An audio archive of this webcast will be available using the above noted link through November 21, 2011.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 100,000 barrels per stream day ("bpsd") refinery located in Artesia, New Mexico, a 125,000 bpsd refinery in Tulsa, Oklahoma, a 31,000 bpsd refinery in Woods Cross, Utah, a 135,000 bpsd refinery located in El Dorado, Kansas, and a 52,000 bpsd refinery located in Cheyenne, Wyoming.  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 34% interest (including the general partner interest) in Holly Energy Partners, L.P. 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, our ability to realize fully or at all the anticipated benefits of our "merger of equals" with Frontier, 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.RESULTS OF OPERATIONSFinancial Data (all information in this release is unaudited)Three Months EndedSeptember 30,Change from 201020112010 ChangePercent(In thousands, except per share data)Sales and other revenues                                 $  5,173,398$  2,090,988$  3,082,410147.4%Operating costs and expenses: Cost of products sold (exclusive of depreciation and amortization)3,989,9271,807,0442,182,883120.8 Operating expenses (exclusive of depreciation and amortization)227,883130,26397,62074.9 General and administrative expenses (exclusive of depreciation and amortization)43,14116,92526,216154.9 Depreciation and amortization                             43,24029,13814,10248.4  Total operating costs and expenses                     4,304,1911,983,3702,320,821117.0Income from operations                                   869,207107,618761,589707.7Other income (expense): Earnings in equity method investments                     532570(38)(6.7) Interest income                                        20464140218.8 Interest expense                                       (25,074)(17,368)(7,706)44.4 Merger transaction costs                                (9,100)-(9,100)-33,438(16,734)(16,704)99.8Income before income taxes                               835,76990,884744,885819.6Income tax provision                                     304,75831,494273,264867.7Net income                                             531,01159,390471,621794.1Less net income attributable to noncontrolling interest           7,9238,213(290)(3.5)Net income attributable to HollyFrontier stockholders             $  523,088$  51,177$  471,911922.1%Earnings per share attributable to HollyFrontier stockholders: Basic                                               $  2.50$  0.48$  2.02420.8% Diluted                                               $  2.48$  0.48$  2.00416.7%Cash dividends declared per common share                   $  1.09$  0.08$         1.011,262.5%Average number of common shares outstanding: Basic                                               209,583106,420103,16396.9% Diluted                                               210,579107,134103,44596.6%EBITDA                                                $  895,956$  129,113$  766,843593.9%Nine Months EndedSeptember 30,Change from 201020112010 ChangePercent(In thousands, except per share data)Sales and other revenues                                 $  10,467,116$  6,111,138$  4,355,97871.3%Operating costs and expenses: Cost of products sold (exclusive of depreciation and amortization)8,421,6395,379,1203,042,51956.6 Operating expenses (exclusive of depreciation and amortization)501,971378,638123,33332.6 General and administrative expenses (exclusive of depreciation and amortization)78,64150,62328,01855.3 Depreciation and amortization                             106,38085,71920,66124.1  Total operating costs and expenses                     9,108,6315,894,1003,214,53154.5Income from operations                                   1,358,485217,0381,141,447525.9Other income (expense): Earnings of equity method investments                     1,7391,5951449.0 Interest income                                        94675818824.8 Interest expense                                       (56,471)(56,113)(358)0.6 Merger transaction costs                                (15,114)-(15,114)-(68,900)(53,760)(15,140)28.2Income before income taxes                               1,289,585163,2781,126,307689.8Income tax provision                                     465,73054,476411,254754.9Net income                                             823,855108,802715,053657.2Less net income attributable to noncontrolling interest           23,83819,5574,28121.9Net income attributable to HollyFrontier stockholders             $  800,017$  89,245$  710,772796.4%Earnings per share attributable to HollyFrontier stockholders: Basic                                               $  5.66$  0.84$  4,82573.8% Diluted                                               $  5.63$  0.83$  4.80578.3%Cash dividends declared per common share                   $  1.24$  0.23$  1.01439.1%Average number of common shares outstanding: Basic                                               141,353106,34435,00932.9% Diluted                                               142,092107,06235,03032.7%EBITDA                                                $  1,427,652$  284,795$  1,142,857401.3%Balance Sheet DataSeptember 30, December 31,2011 2010 (In thousands)Cash, cash equivalents and investments in marketable securities                 $     1,759,353$  230,444Working capital                                                         $  1,998,248$  313,580Total assets                                                           $  9,916,463$  3,701,475Long-term debt                                                         $  1,224,987$  810,561Total equity                                                            $  5,660,790$  1,288,139Segment 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.  Prior to the merger, the Refining segment included the operations of our Navajo, Woods Cross and Tulsa refineries and NK Asphalt Partners ("NK Asphalt") and effective July 1, 2011, includes the El Dorado and Cheyenne Refineries.  Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel.  These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States and northern Mexico.  Additionally, the Refining segment includes specialty lubricant products produced at our Tulsa Refinery that are marketed throughout North America and are distributed in Central and South America.  NK Asphalt operates various asphalt terminals in Arizona, New Mexico and Texas.The HEP segment involves all of the operations of HEP.  HEP owns and operates a system of petroleum product and crude gathering pipelines in Texas, New Mexico, Oklahoma and Utah, distribution terminals in Texas, New Mexico, Arizona, Utah, Idaho, and Washington and refinery tankage in New Mexico, Utah and Oklahoma.  Revenues are generated by charging tariffs for transporting petroleum products and crude oil through its pipelines, by leasing certain pipeline capacity to Alon USA, Inc., by charging fees for terminalling refined products and other hydrocarbons, and storing and providing other services at its storage tanks and terminals. The HEP segment also includes a 25% interest in SLC Pipeline LLC ("SLC Pipeline") that services refineries in the Salt Lake City, Utah area.  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. RefiningHEP (1)Corporateand OtherConsolidationsandEliminationsConsolidatedTotal(In thousands)Three Months Ended September 30, 2011 Sales and other revenues            $  5,164,778$  49,288$    299$    (40,967)$  5,173,398 Depreciation and amortization         $  34,890$  7,326$    1,231$    (207)$  43,240 Income (loss) from operations         $  886,860$  25,261$    (42,354)$    (560)$  869,207 Capital expenditures                 $  46,294$  8,593$    63,031$    -$  117,918Three Months Ended September 30, 2010 Sales and other revenues            $  2,081,709$  46,558$  100$  (37,379)$  2,090,988 Depreciation and amortization         $  21,274$  6,830$  1,329$  (295)$  29,138 Income (loss) from operations         $  100,111$  24,588$   (16,652)$  (429)$  107,618 Capital expenditures                 $  47,623$  3,567$  219$  -$  51,409Nine Months Ended September 30, 2011 Sales and other revenues            $  10,433,096$  145,233$    1,100$    (112,313)$  10,467,116 Depreciation and amortization         $  81,351$  21,870$    3,780$    (621)$  106,380 Income (loss) from operations         $  1,359,994$  76,564$    (76,490)$    (1,583)$  1,358,485 Capital expenditures                 $  92,078$  31,493$    150,652$    -$  274,223Nine Months Ended September 30, 2010 Sales and other revenues            $  6,086,243$  132,730$  317$  (108,152)$  6,111,138 Depreciation and amortization         $  62,599$  20,822$  3,183$  (885)$  85,719 Income (loss) from operations         $  200,080$  65,737$  (47,529)$  (1,250)$  217,038 Capital expenditures                 $  118,387$  8,054$  1,498$  -$  127,939September 30, 2011 Cash, cash equivalents and investments in marketable securities$  -$  1,802$  1,757,551$    -$  1,759,353 Total assets                       $  3,114,748$  685,463$  6,148,879$    (32,627)$  9,916,463 Long-term debt                     $  -$  527,213$    714,349$    (16,575)$  1,224,987December 31, 2010 Cash, cash equivalents and investments in marketable securities$  -$  403$    230,041$    -$  230,444 Total assets                       $  2,490,193$  669,820$    573,531$    (32,069)$  3,701,475 Long-term debt                     $  -$  482,271$    345,215$    (16,925)$  810,561Refining Operating DataOur refinery operations include the Tulsa, Navajo and Woods Cross Refineries and, effective July 1, 2011, the El Dorado and Cheyenne Refineries. The following tables set forth information, including non-GAAP performance measures about our consolidated refinery operations.  The cost of products and refinery gross margin do not include the effect of depreciation and amortization.  Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.Three Months EndedSeptember 30,Nine Months EndedSeptember 30,201120102011(10)2010Mid-Continent Region (Tulsa and El Dorado Refineries)Crude charge (BPD) (1)                                  263,260114,820160,230112,340Refinery throughput (BPD) (2)                             283,970117,450168,150114,070Refinery production (BPD) (3)                             272,790110,670162,900108,830Sales of produced refined products (BPD)                   263,180113,040159,230107,950Sales of refined products (BPD) (4)                         268,680113,040161,750108,560Refinery utilization (5)                                   101.3%91.9%94.0%89.9%Average per produced barrel (6) Net sales                                           $  122.82$  89.22$  122.74$  88.91 Cost of products (7)                                   96.1879.80100.3281.26 Refinery gross margin                                 26.649.4222.427.65 Refinery operating expenses (8)                         4.574.805.095.10 Net operating margin                                   $  22.07$  4.62$  17.33$       2.55Refinery operating expenses per throughput barrel             $  4.23$  4.62$  4.82$  4.82Feedstocks: Sweet crude oil                                       75%83%84%90% Heavy sour crude oil                                   11%8%7%4% Sour crude oil                                        7%9%4%6% Other feedstocks and blends                            7%-%5%-% Total                                               100%100%100%100%Sales of produced refined products: Gasolines                                           44%39%41%39% Diesel fuels                                          35%30%33%31% Jet fuels                                             7%8%7%8% Lubricants                                           4%10%7%10% Gas oil / intermediates                                 2%4%4%3% Asphalt                                             2%6%4%5% LPG and other                                       6%3%4%4%100%100%100%100%Southwest Region (Navajo Refinery)Crude charge (BPD) (1)                                  92,27085,11082,86082,150Refinery throughput (BPD) (2)                             100,29093,97091,22092,310Refinery production (BPD) (3)                             100,10091,55090,23090,290Sales of produced refined products (BPD)                   99,53092,18091,31090,730Sales of refined products (BPD) (4)                         102,94094,90095,98093,780Refinery utilization (5)                                   92.3%85.1%82.9%82.2%Average per produced barrel (6) Net sales                                           $  120.67$  87.60$  119.84$  88.98 Cost of products (7)                                   92.3379.3997.3781.44 Refinery gross margin                                 28.348.2122.477.54 Refinery operating expenses (8)                         5.305.255.565.01 Net operating margin                                   $  23.04$  2.96$  16.91$  2.53Refinery operating expenses per throughput barrel             $  5.26$  5.15$  5.57$  4.92Three Months EndedSeptember 30,Nine Months EndedSeptember 30,201120102011(10)2010Feedstocks: Sour crude oil                                        70%81%72%84% Sweet crude oil                                       4%5%4%4% Heavy sour crude oil                                   18%6%15%2% Other feedstocks and blends                            8%8%9%10% Total                                               100%100%100%100%Sales of produced refined products: Gasolines                                           50%55%51%57% Diesel fuels                                          34%32%34%31% Jet fuels                                             1%2%1%4% Fuel oil                                             7%6%6%4% Asphalt                                             5%3%5%2% LPG and other                                       3%2%3%2% Total                                               100%100%100%100%Rocky Mountain Region (Woods Cross and Cheyenne Refineries)Crude charge (BPD) (1)                                  70,06027,44041,05026,870Refinery throughput (BPD) (2)                             75,86029,25044,34028,440Refinery production (BPD) (3)                             73,62028,41043,03027,940Sales of produced refined products (BPD)                   72,40027,54042,39028,260Sales of refined products (BPD) (4)                         74,41027,84043,09028,450Refinery utilization (5)                                   84.4%88.5%84.6%86.7%Average per produced barrel (6) Net sales                                           $  119.40$  94.86$  119.07$  93.71 Cost of products (7)                                   86.3573.0890.0074.02 Refinery gross margin                                 33.0521.7829.0719.69 Refinery operating expenses (8)                         6.556.116.445.86 Net operating margin                                   $  26.50$  15.67$  22.63$  13.83Refinery operating expenses per throughput barrel             $  6.25$  5.75$  6.16$  5.82Feedstocks: Sweet crude oil                                       49%61%53%60% Heavy sour crude oil                                   31%5%20%6% Black wax crude oil                                   10%30%18%29% Other feedstocks and blends                            3%-%2%-% Total                                               7%4%7%5%100%100%100%100%Sales of produced refined products: Gasolines                                            Diesel fuels                                          50%60%55%62% Jet fuels                                             34%33%32%31% Fuel oil                                             -%1%1%1% Asphalt                                             1%2%2%1% LPG and other                                       7%2%5%3% Total                                               8%2%5%2%100%100%100%100%Three Months EndedSeptember 30,Nine Months EndedSeptember 30,201120102011(10)2010ConsolidatedCrude charge (BPD) (1)                                  425,590227,370284,140221,360Refinery throughput (BPD) (2)                             460,120240,660303,710234,820Refinery production (BPD) (3)                             446,510230,630296,160227,060Sales of produced refined products (BPD)                   435,110232,760292,930226,940Sales of refined products (BPD) (4)                         446,030235,780300,820230,790Refinery utilization (5)                                   96.1%88.8%89.1%86.5%Average per produced barrel (6) Net sales                                           $  121.76$  89.25$  121.31$  89.53 Cost of products (7)                                   93.6678.8497.9180.43 Refinery gross margin                                 28.1010.4123.409.10 Refinery operating expenses (8)                         5.075.145.435.16 Net operating margin                                   $  23.03$  5.27$  17.97$  3.94Refinery operating expenses per throughput barrel             $  4.79$  4.97$  5.24$  4.98Feedstocks: Sour crude oil                                        20%36%24%36% Sweet crude oil                                       55%49%55%53% Heavy sour crude oil                                   15%7%12%3% Black wax crude oil                                   2%4%3%4% Other feedstocks and blends                            8%4%6%4% Total                                               100%100%100%100%Sales of produced refined products: Gasolines                                           47%48%47%49% Diesel fuels                                          35%31%33%31% Jet fuels                                             4%5%4%6% Fuel oil                                             2%3%2%2% Asphalt                                             4%4%4%3% Lubricants                                           2%5%4%5% Gas oil / intermediates                                 1%2%2%1% LPG and other                                       5%2%4%3% Total                                               100%100%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).  As a result of our merger effective July 1, 2011 our consolidated crude capacity increased from 256,000 BPSD to 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" following Item 3 of Part I of this Form 10-Q.(7)Transportation costs billed from HEP are included in cost of products. (8)Represents operating expenses of our refineries, exclusive of depreciation and amortization.(9)Represents refinery operating expenses, exclusive of depreciation and amortization divided by refinery throughput(10)We merged with Frontier effective July 1, 2011. Refining operating data for the nine months ended September 30, 2011 include crude oil processed and products yielded from the El Dorado and Cheyenne Refineries for the period from July 1, 2011 through September 30, 2011 only, and averaged over the 273 days in nine months ended September 30, 2011. Reconciliations to Amounts Reported Under Generally Accepted Accounting PrinciplesReconciliations 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 EndedSeptember 30,Nine Months EndedSeptember 30,2011201020112010(In thousands)Net income attributable to HollyFrontier stockholders             $  523,088$  51,177$  800,017$  89,245 Add income tax provision                                304,75831,494465,73054,476 Add interest expense                                   25,07417,36856,47156,113 Subtract interest income                                 (204)(64)(946)(758) Add depreciation and amortization                         43,24029,138106,38085,719EBITDA                                                $  895,956$  129,113$1,427,652$  284,795Reconciliations 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 effect of 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 MarginsBelow are reconciliations to our Consolidated Statements of Income for (i) net sales, cost of products 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.Reconciliations of refined product sales from produced products sold to total sales and other revenuesThree Months EndedSeptember 30,Nine Months EndedSeptember 30,2011201020112010(Dollars in thousands, except per barrel amounts)ConsolidatedAverage sales price per produced barrel sold                 $  121.76$  89.25$  121.31$  89.53Times sales of produced refined products sold (BPD)           435,110232,760292,930226,940Times number of days in period                             9292273273Refined product sales from produced products sold             $  4,874,067$  1,911,192$  9,701,147$  5,546,797Total refined product sales$  4,874,067$  1,911,192$  9,701,147$  5,546,797Add refined product sales from purchased products and rounding (1)127,52024,495266,35593,447Total refined product sales                                 5,001,5871,935,6879,967,5025,640,244Add direct sales of excess crude oil (2)                      148,989106,364422,890355,381Add other refining segment revenue (3)                       14,20439,65842,70490,618Total refining segment revenue                             5,164,7802,081,70910,433,0966,086,243Add HEP segment sales and other revenues                   49,28846,558145,233132,730Add corporate and other revenues                          2971001,100317Subtract consolidations and eliminations                      (40,967)(37,379)(112,313)(108,152)Sales and other revenues                                 $  5,173,398$  2,090,988$  10,467,116$  6,111,138Reconciliation of average cost of products per produced barrel sold to total cost of products soldThree Months EndedSeptember 30,Nine Months EndedSeptember 30,2011201020112010(Dollars in thousands, except per barrel amounts)ConsolidatedAverage cost of products per produced barrel sold             $  93.66$  78.84$  97.91$  80.43Times sales of produced refined products sold (BPD)           435,110232,760292,930226,940Times number of days in period                             9292273273Cost of products for produced products sold                  $  3,749,221$  1,688,273$  7,829,852$  4,983,010Total cost of products for produced products sold              $ 3,749,221$ 1,688,273$  7,829,852$  4,983,010Add refined product costs from purchased products sold and rounding (1)128,85724,648268,39093,923Total cost of refined products sold                           3,878,0781,712,9218,098,2425,076,933Add crude oil cost of direct sales of excess crude oil (2)         147,223105,091416,084351,643Add other refining segment cost of products sold (4)            4,69625,55517,03256,186Total refining segment cost of products sold                   4,029,9971,843,5678,531,3585,484,762Subtract consolidations and eliminations                      (40,070)(36,523)(109,719)(105,642)Costs of products sold (exclusive of depreciation and amortization)$  3,989,927$  1,807,044$  8,421,639$  5,379,120Reconciliation of average refinery operating expenses per produced barrel sold to total operating expensesThree Months EndedSeptember 30,Nine Months EndedSeptember 30,2011201020112010(Dollars in thousands, except per barrel amounts)ConsolidatedAverage refinery operating expenses per produced barrel sold   $  5.07$  5.14$  5.43$  5.16Times sales of produced refined products sold (BPD)           435,110232,760292,930226,940Times number of days in period                            9292273273Refinery operating expenses for produced products sold       $  202,953$  110,068$  434,237$  319,686Total refinery operating expenses for produced products sold   $  202,953$  110,068$  434,237$  319,686Add other refining segment operating expenses and rounding (5) 10,0806,68926,15619,116Total refining segment operating expenses                   213,033116,757460,393338,802Add HEP segment operating expenses                       14,68913,63241,85140,187Add corporate and other costs                             291611724Subtract consolidations and eliminations                     (130)(132)(390)(375)Operating expenses (exclusive of depreciation and amortization) $  227,883$  130,263$  501,971$  378,638Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenuesThree Months EndedSeptember 30,Nine Months EndedSeptember 30,2011201020112010(Dollars in thousands, except per barrel amounts)ConsolidatedNet operating margin per barrel                             $  23.03$  5.27$  17.97$  3.94Add average refinery operating expenses per produced barrel    5.075.145.435.16Refinery gross margin per barrel                            28.1010.4123.409.10Add average cost of products per produced barrel sold         93.6678.8497.9180.43Average sales price per produced barrel sold                 $  121.76$  89.25$  121.31$  89.53Times sales of produced refined products sold (BPD)           435,110232,760292,930226,940Times number of days in period                             9292273273Refined product sales from produced products sold             $  4,874,067$  1,911,192$  9,701,147$  5,546,797Total refined product sales from produced products sold         $  4,874,067$   1,911,192$  9,701,147$  5,546,797Add refined product sales from purchased products and rounding (1)127,52024,495266,35593,447Total refined product sales                                 5,001,5871,935,6879,967,5025,640,244Add direct sales of excess crude oil (2)                      148,989106,364422,890355,381Add other refining segment revenue (3)                       14,20439,65842,70490,618Total refining segment revenue                             5,164,7802,081,70910,433,0966,086,243Add HEP segment sales and other revenues                   49,28846,558145,233132,730Add corporate and other revenues                          2971001,100317Subtract consolidations and eliminations                      (40,967)(37,379)(112,313)(108,152)Sales and other revenues                                 $  5,173,398$  2,090,988$  10,467,116$  6,111,138(1)We purchase finished products when opportunities arise that provide a profit on the sale of such products, 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, 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 carryover cost.(3)Other refining segment revenue includes the incremental revenues associated with NK Asphalt and miscellaneous revenue.(4)Other refining segment cost of products sold includes the incremental cost of products for NK Asphalt 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.SOURCE HollyFrontier CorporationFor further information: Douglas S. Aron, Executive Vice President and Chief Financial Officer, or M. Neale Hickerson, Vice President, Investor Relations, both of HollyFrontier Corporation, +1-214-871-3555