HollyFrontier Corporation Reports Record Quarterly Net Income

  HollyFrontier Corporation Reports Record Quarterly Net Income

Business Wire

DALLAS -- November 07, 2012

HollyFrontier Corporation (NYSE: HFC) (“HollyFrontier” or the “Company”) today
reported third quarter net income attributable to HollyFrontier stockholders
of $600.4 million or $2.94 per diluted share for the quarter ended
September30, 2012, compared to $523.1 million or $2.48 per diluted share for
the quarter ended September30, 2011. For the nine months ended September30,
2012, net income attributable to HollyFrontier stockholders totaled $1,335.6
million or $6.44 per diluted share compared to $800.0 million or $5.63 per
diluted share for the nine months ended September30, 2011.

For the third quarter, net income attributable to our stockholders increased
by $77.3 million, or 15% compared to the same period of 2011, principally
reflecting higher third quarter refining margins. Refinery gross margins were
$30.55 per produced barrel, a 9% increase compared to $28.10 for the third
quarter of 2011. Production levels averaged approximately 457,000 barrels per
day (“BPD”) and crude oil charges averaged approximately 433,000 BPD for the
current quarter. Operating expenses for the quarter were $233.9 million or
$5.11 per barrel compared to $227.9 million or $5.07 per barrel for the third
quarter of last year.

HollyFrontier’s President & CEO, Mike Jennings, commented, “We had a
tremendous quarter with third quarter results reaching new record levels.
Exceptionally high inland to coastal crude oil differentials as well as robust
heavy crude oil differentials helped drive our refined product margins to all
time highs. Looking forward, we believe that the structural crude advantages
currently driving our strong operating margins will continue to positively
impact our operating income, allowing us to continue to pay both regular and
special dividends. We remain focused on increasing total shareholder return
while maintaining a strong balance sheet.”

For the third quarter of 2012, net cash provided by operations totaled $742.3
million. During the period, we paid dividends to shareholders of $132.7
million consisting of our $0.15 regular and a $0.50 special dividend. In
addition, we declared a second third quarter special dividend of $0.50 that
was paid early in the fourth quarter. At September30, 2012, our combined
balance of cash and short-term investments totaled $2.3 billion and our
consolidated debt was $1.3 billion. Our debt, exclusive of Holly Energy
Partners' debt which is nonrecourse to HollyFrontier, was $471.8 million at
September30, 2012, which reflects the redemption of our $200 million 8.5%
senior notes that were called in September 2012. 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, November 7,
2012, at 11:00 AM Eastern Time to discuss third quarter financial results.
This webcast may be accessed at:
https://event.webcasts.com/starthere.jsp?ei=1009187. An audio archive of this
webcast will be available using the above noted link through November 19,
2012.

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 44% 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 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.

RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)

                  Three Months Ended                 
                     September 30,                         Change from 2011
                     2012             2011               Change          Percent
                     (In thousands, except per share data)
Sales and            $ 5,204,798        $ 5,173,398        $ 31,400          0.6    %
other revenues
Operating
costs and
expenses:
Cost of
products sold
(exclusive of          3,898,736          3,989,927          (91,191   )     (2.3   )
depreciation
and
amortization)
Operating
expenses
(exclusive of          233,859            227,883            5,976           2.6
depreciation
and
amortization)
General and
administrative
expenses
(exclusive of          28,787             43,141             (14,354   )     (33.3  )
depreciation
and
amortization)
Depreciation
and                   65,112           43,240           21,872         50.6
amortization
Total
operating             4,226,494        4,304,191        (77,697   )     (1.8   )
costs and
expenses
Income from            978,304            869,207            109,097         12.6
operations
Other income
(expense):
Earnings of
equity method          852                532                320             60.2
investments
Interest               2,219              204                2,015           987.7
income
Interest               (21,103    )       (25,074    )       3,971           (15.8  )
expense
Merger
transaction           —                (9,100     )      9,100          (100.0 )
costs
                      (18,032    )      (33,438    )      15,406         (46.1  )
Income before          960,272            835,769            124,503         14.9
income taxes
Income tax            349,622          304,758          44,864         14.7
provision
Net income             610,650            531,011            79,639          15.0
Less net
income
attributable          10,277           7,923            2,354          29.7
to
noncontrolling
interest
Net income
attributable
to                   $ 600,373         $ 523,088         $ 77,285         14.8   %
HollyFrontier
stockholders
Earnings per
share
attributable
to
HollyFrontier
stockholders:
Basic                $ 2.95            $ 2.50            $ 0.45           18.0   %
Diluted              $ 2.94            $ 2.48            $ 0.46           18.5   %
Cash dividends
declared per         $ 1.15            $ 0.59            $ 0.56           94.9   %
common share
Average number
of common
shares
outstanding:
Basic                  203,557            209,583            (6,026    )     (2.9   )%
Diluted                204,434            210,579            (6,145    )     (2.9   )%
EBITDA               $ 1,033,991        $ 895,956          $ 138,035         15.4   %
                                                                             
                                                                             
                     Nine Months Ended
                     September 30,                         Change from 2011
                     2012               2011               Change            Percent
                     (In thousands, except per share data)
Sales and            $ 14,943,217       $ 10,467,116       $ 4,476,101       42.8   %
other revenues
Operating
costs and
expenses:
Cost of
products sold
(exclusive of          11,767,417         8,421,639          3,345,778       39.7
depreciation
and
amortization)
Operating
expenses
(exclusive of          698,212            501,971            196,241         39.1
depreciation
and
amortization)
General and
administrative
expenses
(exclusive of          88,421             78,641             9,780           12.4
depreciation
and
amortization)
Depreciation
and                   178,162          106,380          71,782         67.5
amortization
Total
operating             12,732,212       9,108,631        3,623,581      39.8
costs and
expenses
Income from            2,211,005          1,358,485          852,520         62.8
operations
Other income
(expense):
Earnings of
equity method          2,455              1,739              716             41.2
investments
Interest               3,360              946                2,414           255.2
income
Interest               (81,360    )       (56,471    )       (24,889   )     44.1
expense
Gain on sale
of marketable          326                —                  326             —
securities
Merger
transaction           —                (15,114    )      15,114         (100.0 )
costs
                      (75,219    )      (68,900    )      (6,319    )     9.2
Income before          2,135,786          1,289,585          846,201         65.6
income taxes
Income tax            775,746          465,730          310,016        66.6
provision
Net income             1,360,040          823,855            536,185         65.1
Less net
income
attributable          24,472           23,838           634            2.7
to
noncontrolling
interest
Net income
attributable
to                   $ 1,335,568       $ 800,017         $ 535,551        66.9   %
HollyFrontier
stockholders
Earnings per
share
attributable
to
HollyFrontier
stockholders:
Basic                $ 6.46            $ 5.66            $ 0.80           14.1   %
Diluted              $ 6.44            $ 5.63            $ 0.81           14.4   %
Cash dividends
declared per         $ 2.40            $ 0.74            $ 1.66           224.3  %
common share
Average number
of common
shares
outstanding:
Basic                  206,657            141,353            65,304          46.2   %
Diluted                207,546            142,092            65,454          46.1   %
EBITDA               $ 2,367,476        $ 1,427,652        $ 939,824         65.8   %
                                                                             

Our consolidated financial and operating results reflect the operations of the
merged Frontier businesses beginning July 1, 2011.

Balance Sheet Data

                                             September 30,   December 31,
                                                2012              2011
                                                (In thousands)
Cash, cash equivalents and investments in       $  2,343,336      $  1,840,610
marketable securities
Working capital                                 $  2,554,761      $  2,030,063
Total assets                                    $  10,345,936     $  9,576,243
Long-term debt                                  $  1,346,227      $  1,214,742
Total equity                                    $  6,359,496      $  5,835,900
                                                                  

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.

                                                             Consolidations  
                                                    Corporate         and                Consolidated
                   Refining         HEP ^(2)        and Other         Eliminations       Total
                   ^(1)
                   (In thousands)
Three Months
Ended
September
30, 2012
Sales and
other              $ 5,192,649      $ 72,496        $ 352             $  (60,699   )     $ 5,204,798
revenues
Depreciation
and                $ 47,890         $ 12,636        $ 4,793           $  (207      )     $ 65,112
amortization
Income
(loss) from        $ 973,651        $ 37,137        $ (31,871   )     $  (613      )     $ 978,304
operations
Capital            $ 70,069         $ 5,683         $ 3,765           $  —               $ 79,517
expenditures
                                                                                         
Three Months
Ended
September
30, 2011
Sales and
other              $ 5,164,853      $ 49,131        $ 299             $  (40,885   )     $ 5,173,398
revenues
Depreciation
and                $ 35,070         $ 7,505         $ 872             $  (207      )     $ 43,240
amortization
Income
(loss) from        $ 884,997        $ 24,587        $ (40,135   )     $  (242      )     $ 869,207
operations
Capital            $ 46,294         $ 68,101        $ 3,523           $  —               $ 117,918
expenditures
                                                                                         
Nine Months
Ended
September
30, 2012
Sales and
other              $ 14,907,849     $ 207,250       $ 912             $  (172,794  )     $ 14,943,217
revenues
Depreciation
and                $ 133,087        $ 38,683        $ 7,013           $  (621      )     $ 178,162
amortization
Income
(loss) from        $ 2,207,253      $ 100,843       $ (89,899   )     $  (7,192    )     $ 2,211,005
operations
Capital            $ 171,865        $ 29,302        $ 6,370           $  —               $ 207,537
expenditures
                                                                                         
Nine Months
Ended
September
30, 2011
Sales and
other              $ 10,432,720     $ 144,916       $ 1,100           $  (111,620  )     $ 10,467,116
revenues
Depreciation
and                $ 81,875         $ 22,407        $ 2,719           $  (621      )     $ 106,380
amortization
Income
(loss) from        $ 1,357,739      $ 75,700        $ (73,689   )     $  (1,265    )     $ 1,358,485
operations
Capital            $ 92,078         $ 175,795       $ 6,350           $  —               $ 274,223
expenditures
                                                                                         
September
30, 2012
Cash, cash
equivalents
and
investments        $ 557            $ 1,993         $ 2,340,786       $  —               $ 2,343,336
in
marketable
securities
Total assets       $ 6,567,224      $ 1,409,151     $ 2,426,067       $  (56,506   )     $ 10,345,936
Long-term          $ —              $ 874,434       $ 487,843         $  (16,050   )     $ 1,346,227
debt
                                                                                         
December 31,
2011
Cash, cash
equivalents
and
investments        $ —              $ 6,369         $ 1,834,241       $  —               $ 1,840,610
in
marketable
securities
Total assets       $ 6,280,426      $ 1,418,660     $ 1,997,601       $  (120,444  )     $ 9,576,243
Long-term          $ —              $ 598,761       $ 705,331         $  (89,350   )     $ 1,214,742
debt
                                                                                         

        The Refining segment reflects the operations of the El Dorado and
(1)   Cheyenne Refineries beginning July 1, 2011 (date of Holly-Frontier
        merger).
        HEP acquired our 75% interest in the UNEV Pipeline in July 2012. We
        have recast our HEP segment information to include the UNEV Pipeline
(2)     operations for all periods presented. For the three and nine months
        ended September 30, 2012, UNEV Pipeline revenues were $3.0 million and
        $10.8 million, respectively. The UNEV Pipeline was previously included
        in Corporate and Other.
        

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 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 Ended            Nine Months Ended
                        September 30,                   September 30,
                        2012          2011            2012          2011 ^(10)
Mid-Continent
Region (El Dorado
and Tulsa
Refineries)
Crude charge              256,850         263,260         252,110         160,230
(BPD) ^(1)
Refinery
throughput (BPD)          278,990         283,970         270,380         168,150
^ (2)
Refinery
production (BPD)          268,310         272,790         262,830         162,900
^(3)
Sales of produced
refined products          246,360         263,180         249,320         159,230
(BPD)
Sales of refined
products (BPD)            248,690         268,680         253,050         161,750
^(4)
Refinery                  98.8    %       101.3   %       97.0    %       94.0    %
utilization ^(5)
                                                                        
Average per
produced barrel
^(6)
Net sales               $ 121.83        $ 122.82        $ 120.19        $ 122.74
Cost of products         92.84         96.18         96.49         100.32  
^(7)
Refinery gross            28.99           26.64           23.70           22.42
margin
Refinery
operating                4.71          4.57          4.72          5.09    
expenses ^(8)
Net operating           $ 24.28        $ 22.07        $ 18.98        $ 17.33   
margin
                                                                        
Refinery
operating
expenses per            $ 4.16          $ 4.23          $ 4.35          $ 4.82
throughput barrel
^(9)
                                                                        
Feedstocks:
Sweet crude oil           69      %       75      %       70      %       84      %
Sour crude oil            9       %       7       %       8       %       4       %
Heavy sour crude          14      %       11      %       15      %       7       %
oil
Other feedstocks         8       %      7       %      7       %      5       %
and blends
Total                    100     %      100     %      100     %      100     %
                                                                        
Sales of produced
refined products:
Gasolines                 50      %       44      %       47      %       41      %
Diesel fuels              26      %       35      %       29      %       33      %
Jet fuels                 10      %       7       %       10      %       7       %
Fuel oil                  1       %       —               1       %       —
Asphalt                   2       %       2       %       2       %       4       %
Lubricants                5       %       4       %       5       %       7       %
Gas                       —               2       %       —               4       %
oil/intermediates
LPG and other            6       %      6       %      6       %      4       %
Total                    100     %      100     %      100     %      100     %
                                                                        

                 Three Months Ended            Nine Months Ended
                    September 30,                   September 30,
                    2012          2011            2012          2011 ^(10)
Southwest
Region
(Navajo
Refinery)
Crude charge          101,480         92,270          91,890          82,860
(BPD) ^(1)
Refinery
throughput            110,080         100,290         100,558         91,220
(BPD) ^ (2)
Refinery
production            108,810         100,100         98,980          90,230
(BPD) ^(3)
Sales of
produced
refined               106,370         99,530          97,470          91,310
products
(BPD)
Sales of
refined               110,760         102,940         102,450         95,980
products
(BPD) ^(4)
Refinery
utilization           101.5   %       92.3    %       91.9    %       82.9   %
^(5)
                                                                    
Average per
produced
barrel ^(6)
Net sales           $ 122.16        $ 120.67        $ 123.64        $ 119.84
Cost of              92.26         92.33         97.37         97.37  
products ^(7)
Refinery              29.90           28.34           26.27           22.47
gross margin
Refinery
operating            5.14          5.30          5.57          5.56   
expenses ^(8)
Net operating       $ 24.76        $ 23.04        $ 20.70        $ 16.91  
margin
                                                                    
Refinery
operating
expenses per        $ 4.97          $ 5.26          $ 5.40          $ 5.57
throughput
barrel ^(9)
                                                                    
Feedstocks:
Sweet crude           2       %       4       %       2       %       4      %
oil
Sour crude            75      %       70      %       78      %       72     %
oil
Heavy sour            16      %       18      %       11      %       15     %
crude oil
Other
feedstocks           7       %      8       %      9       %      9      %
and blends
Total                100     %      100     %      100     %      100    %
                                                                    
Sales of
produced
refined
products:
Gasolines             52      %       50      %       52      %       51     %
Diesel fuels          36      %       34      %       37      %       34     %
Jet fuels             —               1       %       —               1      %
Fuel oil              7       %       7       %       6       %       6      %
Asphalt               2       %       5       %       2       %       5      %
LPG and other        3       %      3       %      3       %      3      %
Total                100     %      100     %      100     %      100    %
                                                                    
Rocky
Mountain
Region
(Cheyenne and
Woods Cross
Refineries)
Crude charge          75,040          70,060          73,660          41,050
(BPD) ^(1)
Refinery
throughput            82,030          75,860          81,550          44,340
(BPD) ^ (2)
Refinery
production            79,500          73,620          79,650          43,030
(BPD) ^(3)
Sales of
produced
refined               81,200          72,400          79,360          42,390
products
(BPD)
Sales of
refined               83,080          74,410          81,590          43,090
products
(BPD) ^(4)
Refinery
utilization           90.4    %       84.4    %       88.7    %       84.6   %
^(5)
                                                                    

                 Three Months Ended            Nine Months Ended
                    September 30,                   September 30,
                    2012          2011            2012          2011 ^(10)
Rocky
Mountain
Region
(Cheyenne and
Woods Cross
Refineries)
Average per
produced
barrel ^(6)
Net sales           $ 120.44        $ 119.40        $ 117.51        $ 119.07
Cost of              84.35         86.35         88.87         90.00   
products ^(7)
Refinery              36.09           33.05           28.64           29.07
gross margin
Refinery
operating            6.30          6.55          6.30          6.44    
expenses ^(8)
Net operating       $ 29.79        $ 26.50        $ 22.34        $ 22.63   
margin
                                                                    
Refinery
operating
expenses per        $ 6.24          $ 6.25          $ 6.13          $ 6.16
throughput
barrel ^(9)
                                                                    
Feedstocks:
Sweet crude           51      %       49      %       44      %       53      %
oil
Sour crude            2       %       3       %       2       %       2       %
oil
Heavy sour            28      %       31      %       33      %       20      %
crude oil
Black wax             11      %       10      %       11      %       18      %
crude oil
Other
feedstocks           8       %      7       %      10      %      7       %
and blends
Total                100     %      100     %      100     %      100     %
                                                                    
Sales of
produced
refined
products:
Gasolines             56      %       50      %       55      %       55      %
Diesel fuels          31      %       34      %       31      %       32      %
Jet fuels             —               —               —               1       %
Fuel oil              2       %       1       %       2       %       2       %
Asphalt               7       %       7       %       6       %       5       %
LPG and other        4       %      8       %      6       %      5       %
Total                100     %      100     %      100     %      100     %
                                                                              
Consolidated
Crude charge          433,370         425,590         417,660         284,140
(BPD) ^(1)
Refinery
throughput            471,100         460,120         452,488         303,710
(BPD) ^ (2)
Refinery
production            456,620         446,510         441,460         296,160
(BPD) ^(3)
Sales of
produced
refined               433,930         435,110         426,150         292,930
products
(BPD)
Sales of
refined               442,530         446,030         437,090         300,820
products
(BPD) ^(4)
Refinery
utilization           97.8    %       96.1    %       94.3    %       89.1    %
^(5)
                                                                    
Average per
produced
barrel ^(6)
Net sales           $ 121.66        $ 121.76        $ 120.48        $ 121.31
Cost of              91.11         93.66         95.28         97.91   
products ^(7)
Refinery              30.55           28.10           25.20           23.40
gross margin
Refinery
operating            5.11          5.07          5.21          5.43    
expenses ^(8)
Net operating       $ 25.44        $ 23.03        $ 19.99        $ 17.97   
margin
                                                                    
Refinery
operating
expenses per        $ 4.71          $ 4.79          $ 4.91          $ 5.24
throughput
barrel ^(9)
                                                                    
Feedstocks:
Sweet crude           50      %       55      %       49      %       55      %
oil
Sour crude            23      %       20      %       22      %       24      %
oil
Heavy sour            17      %       15      %       16      %       12      %
crude oil
Black wax             2       %       2       %       2       %       3       %
crude oil
Other
feedstocks           8       %      8       %      11      %      6       %
and blends
Total                100     %      100     %      100     %      100     %
                                                                              
                    Three Months Ended              Nine Months Ended
                    September 30,                   September 30,
                    2012            2011            2012            2011 ^(10)
Consolidated
Sales of
produced
refined
products:
Gasolines             51      %       47      %       50      %       47      %
Diesel fuels          29      %       35      %       31      %       33      %
Jet fuels             6       %       4       %       6       %       4       %
Fuel oil              3       %       2       %       2       %       2       %
Asphalt               3       %       4       %       3       %       4       %
Lubricants            3       %       2       %       3       %       4       %
Gas oil /             —               1       %       —               2       %
intermediates
LPG and other        5       %      5       %      5       %      4       %
Total                100     %      100     %      100     %      100     %
                                                                    

     (1)    Crude charge represents the barrels per day of crude oil
                   processed at our refineries.
                   Refinery throughput represents the barrels per day of crude
          (2)      and other refinery feedstocks input to the crude units and
                   other conversion units at our refineries.
                   Refinery production represents the barrels per day of
          (3)      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.
                   Represents crude charge divided by total crude capacity
          (5)      (BPSD). As a result of our merger effective July 1, 2011,
                   our consolidated crude capacity increased from 256,000 BPSD
                   to 443,000 BPSD.
                   Represents average per barrel amount for produced refined
                   products sold, which is a non-GAAP measure. Reconciliations
          (6)      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)      Represents operating expenses of our refineries, exclusive
                   of depreciation and amortization.
                   Represents refinery operating expenses, exclusive of
          (9)      depreciation and amortization divided by refinery
                   throughput.
                   We merged with Frontier effective July 1, 2011. Refining
                   operating data for the nine months ended September 30, 2011
          (10)     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 the nine months ended September 30, 2011.
                   

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              Nine Months Ended
                    September 30,                     September 30,
                    2012            2011            2012            2011
                    (In thousands)
                                                                        
Net income
attributable
to                  $ 600,373         $ 523,088       $ 1,335,568       $ 800,017
HollyFrontier
stockholders
Add income            349,622           304,758         775,746           465,730
tax provision
Add interest          21,103            25,074          81,360            56,471
expense
Subtract
interest              (2,219    )       (204    )       (3,360    )       (946      )
income
Add
depreciation         65,112          43,240        178,162         106,380   
and
amortization
EBITDA              $ 1,033,991      $ 895,956      $ 2,367,476      $ 1,427,652 
                                                                        

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 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 Margins

Below 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 revenues

                  Three Months Ended                Nine Months Ended
                     September 30,                       September 30,
                     2012            2011              2012             2011
                     (Dollars in thousands, except per barrel amounts)
                                                                            
Consolidated
Average sales
price per            $ 121.66          $ 121.76          $ 120.48           $ 121.31
produced
barrel sold
Times sales of
produced               433,930           435,110           426,150            292,930
refined
products (BPD)
Times number
of days in            92              92              274              273        
period
Refined
product sales        $ 4,856,857      $ 4,874,067      $ 14,067,859      $ 9,701,147  
from produced
products sold
                                                                            
Total refined        $ 4,856,857       $ 4,874,067       $ 14,067,859       $ 9,701,147
product sales
Add refined
product sales
from purchased        100,674         127,520         376,813          266,355    
products and
rounding ^(1)
Total refined          4,957,531         5,001,587         14,444,672         9,967,502
product sales
Add direct
sales of               187,196           148,989           378,036            422,890
excess crude
oil ^(2)
Add other
refining              47,922          14,277          85,141           42,328     
segment
revenue ^(3)
Total refining
segment                5,192,649         5,164,853         14,907,849         10,432,720
revenue
Add HEP
segment sales          72,496            49,131            207,250            144,916
and other
revenues
Add corporate
and other              352               299               912                1,100
revenues
Subtract
consolidations        (60,699   )      (40,885   )      (172,794   )      (111,620   )
and
eliminations
Sales and            $ 5,204,798      $ 5,173,398      $ 14,943,217      $ 10,467,116 
other revenues
                                                                            

Reconciliation of average cost of products per produced barrel sold to total cost of
products sold

                  Three Months Ended                Nine Months Ended
                     September 30,                       September 30,
                     2012            2011              2012             2011
                     (Dollars in thousands, except per barrel amounts)
Consolidated
Average cost
of products          $ 91.11           $ 93.66           $ 95.28            $ 97.91
per produced
barrel sold
Times sales of
produced               433,930           435,110           426,150            292,930
refined
products (BPD)
Times number
of days in            92              92              274              273       
period
Cost of
products for         $ 3,637,253      $ 3,749,221      $ 11,125,379      $ 7,829,852 
produced
products sold
                                                                            
Total cost of
products for         $ 3,637,253       $ 3,749,221       $ 11,125,379       $ 7,829,852
produced
products sold
Add refined
product costs
from purchased        100,078         128,857         377,476          268,390   
products sold
and rounding
^(1)
Total cost of
refined                3,737,331         3,878,078         11,502,855         8,098,242
products sold
Add crude oil
cost of direct
sales of               182,252           147,223           367,795            416,084
excess crude
oil ^(2)
Add other
refining
segment cost          38,678          4,696           61,580           17,032    
of products
sold ^(4)
Total refining
segment cost           3,958,261         4,029,997         11,932,230         8,531,358
of products
sold
Subtract
consolidations        (59,525   )      (40,070   )      (164,813   )      (109,719  )
and
eliminations
Costs of
products sold
(exclusive of        $ 3,898,736      $ 3,989,927      $ 11,767,417      $ 8,421,639 
depreciation
and
amortization)
                                                                            

Reconciliation of average refinery operating expenses per produced barrel sold
to total operating expenses

                  Three Months Ended            Nine Months Ended
                     September 30,                   September 30,
                     2012          2011            2012          2011
                     (Dollars in thousands, except per barrel amounts)
Consolidated
Average
refinery
operating            $ 5.11          $ 5.07          $ 5.21          $ 5.43
expenses per
produced
barrel sold
Times sales of
produced               433,930         435,110         426,150         292,930
refined
products (BPD)
Times number
of days in            92            92            274           273     
period
Refinery
operating
expenses for         $ 203,999      $ 202,953      $ 608,346      $ 434,237 
produced
products sold
                                                                     
Total refinery
operating
expenses for         $ 203,999       $ 202,953       $ 608,346       $ 434,237
produced
products sold
Add other
refining
segment               8,848         10,080        26,933        26,156  
operating
expenses and
rounding ^(5)
Total refining
segment                212,847         213,033         635,279         460,393
operating
expenses
Add HEP
segment                21,324          15,015          61,799          41,872
operating
expenses
Add corporate
and other              42              291             1,302           117
costs
Subtract
consolidations        (354    )      (456    )      (168    )      (411    )
and
eliminations
Operating
expenses
(exclusive of        $ 233,859      $ 227,883      $ 698,212      $ 501,971 
depreciation
and
amortization)
                                                                     

Reconciliation of net operating margin per barrel to refinery gross margin per barrel to
total sales and other revenues

                  Three Months Ended                Nine Months Ended
                     September 30,                       September 30,
                     2012            2011              2012             2011
                     (Dollars in thousands, except per barrel amounts)
Consolidated
Net operating
margin per           $ 25.44           $ 23.03           $ 19.99            $ 17.97
barrel
Add average
refinery
operating             5.11            5.07            5.21             5.43       
expenses per
produced
barrel
Refinery gross
margin per             30.55             28.10             25.20              23.40
barrel
Add average
cost of
products per          91.11           93.66           95.28            97.91      
produced
barrel sold
Average sales
price per            $ 121.66          $ 121.76          $ 120.48           $ 121.31
produced
barrel sold
Times sales of
produced               433,930           435,110           426,150            292,930
refined
products (BPD)
Times number
of days in            92              92              274              273        
period
Refined
product sales        $ 4,856,857      $ 4,874,067      $ 14,067,859      $ 9,701,147  
from produced
products sold
                                                                            
Total refined
product sales        $ 4,856,857       $ 4,874,067       $ 14,067,859       $ 9,701,147
from produced
products sold
Add refined
product sales
from purchased        100,674         127,520         376,813          266,355    
products and
rounding ^(1)
Total refined          4,957,531         5,001,587         14,444,672         9,967,502
product sales
Add direct
sales of               187,196           148,989           378,036            422,890
excess crude
oil ^(2)
Add other
refining              47,922          14,277          85,141           42,328     
segment
revenue ^(3)
Total refining
segment                5,192,649         5,164,853         14,907,849         10,432,720
revenue
Add HEP
segment sales          72,496            49,131            207,250            144,916
and other
revenues
Add corporate
and other              352               299               912                1,100
revenues
Subtract
consolidations        (60,699   )      (40,885   )      (172,794   )      (111,620   )
and
eliminations
Sales and            $ 5,204,798      $ 5,173,398      $ 14,943,217      $ 10,467,116 
other revenues
                                                                            

                  We purchase finished products when opportunities arise that
     (1)   provide a profit on the sale of such products, or to meet
                  delivery commitments.
                  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
          (2)     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 carryover cost.
                  Other refining segment revenue includes the incremental
          (3)     revenues associated with NK Asphalt and miscellaneous
                  revenue.
                  Other refining segment cost of products sold includes the
          (4)     incremental cost of products for NK Asphalt and
                  miscellaneous costs.
                  Other refining segment operating expenses include the
          (5)     marketing costs associated with our refining segment and the
                  operating expenses of NK Asphalt.

Contact:

HollyFrontier Corporation
Douglas S. Aron, 214-871-3555
Executive Vice President and Chief Financial Officer
or
Julia Heidenreich, 214-871-3555
Investor Relations
 
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