HollyFrontier's Profit Disappoints, Costs Up
U.S. refiner HollyFrontier Corp reported a lower-than-expected profit for the first time in four quarters, hurt by higher operating expenses.
The company said operating expenses rose 10 percent to $280.9 million, or $6.39 per barrel, in the third quarter ended Sept. 30.
A revamp of HollyFrontier's El Dorado refinery in Kansas and a temporary shutdown of a pipeline to the Cheyenne refinery in Wyoming weighed on refining operations.
However, the company's refinery gross margins shot up 47 percent to $15.59 per produced barrel in the third quarter.
HollyFrontier has benefited so far from access to cheap crude from U.S. shale fields. The company refines crude into products such as gasoline, diesel and jet fuel and sells them at prices linked to the more expensive global benchmark Brent.
The price differential between Brent crude and U.S. crude <CL-LCO1=R> is falling, halving to about $5 from over $10 at the beginning of the year.
Chief Executive Mike Jennings said the fourth quarter was "off to a strong start."
"We also expect the continued growth in North American crude supply will improve our overall access to refinery feedstocks and provide us with an enduring structural advantage versus other refining centers," he said in a statement.
Net income more than doubled to $175.0 million, or 88 cents per share, but missed the analysts' average estimate of 94 cents, according to Thomson Reuters I/B/E/S.
Sales and other revenue were nearly unchanged at $5.32 billion, but was above analysts' average estimate of $4.45 billion.
Up to Tuesday's close of $45.21, HollyFrontier shares had slipped about 9 percent this year.
Reporting by Swetha Gopinath
