Oil refining company Frontier Oil Corp. (FTO) reported Thursday a decline in its second-quarter net profit, reflecting a decrease in revenues and drop in diesel margins and crude oil differential.
For the second quarter, net income dropped to $49.84 million or $0.47 per share from $59.32 million or $0.57 per share in the previous year.
The results of the latest quarter included an after-tax inventory gain of $78.6 million, or $0.75 per diluted share, and an after-tax hedging loss of $18.4 million, or $0.18 per diluted share. The prior-year results included inventory gain of $102.8 million and hedging loss of $71.9 million.
On average, 12 analysts polled by Thomson Reuters expected the company to report loss of $0.07 per share in the second quarter. Analysts' estimates typically exclude special items.
Revenues for the period decreased to $1.10 billion from $1.77 billion, reflecting a steep decline in diesel margins. Three analysts were expecting revenue of $1.08 billion in the second quarter.
Mike Jennings, Frontier's chief executive, said, "Challenges in the domestic refining sector persisted in the second quarter, as crude differentials continued to narrow and distillate demand weakened with a struggling U.S. Economy." The average light/heavy crude oil differential dropped to $4.53 per barrel from $21.25 per barrel. The WTI/WTS differential averaged $1.02 per barrel, down from $4.98 per barrel in the comparable period of 2008.
Total charges averaged 181,152 barrels per day or bpd, up from an average of 161,380 bpd, chiefly because of the planned shutdowns of the El Dorado crude unit and Cheyenne diesel hydrotreater in the year ago quarter.
For the first half of fiscal 2009, net income rose to $123.30 million or $1.18 per share from $105.28 million or $1.02 per share last year. However, revenues dipped to $1.95 billion from $2.95 billion.
FTO is currently trading at $13.76, down $0.70 or 4.84%, on the NYSE.
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