Frontier Oil Corporation Q2 2010 Earnings Call Transcript

So for the quarter, we are showing a recurring expense level at Cheyenne of less than $5 a barrel for the first time in several years. Cheyenne had a good second quarter with the best gasoline and diesels yields in its history and was continuing this performance in July. And while there is never a good time for refinery fire, the incident on July 28 was particularly difficult given the progress being made in Cheyenne prior to this. We experienced a relatively large fire though it did not involve in explosion and damage to our production equipment was moderate. Most importantly there were no injuries to our employees or contractors.

The crude unit in Cheyenne will be shut down for what we currently estimate to be two to three weeks while repairs are completed. Jim Stump will provide more details on the status of Cheyenne later in this call. And I recognize the tendency to want to connect this incident to our recent rationalization efforts in Cheyenne. However, let me assure you the cause of this fire was absolutely unrelated to our cost cutting efforts of the past year and safety remains our highest priority at both plants. We will spend what is necessary to operate our plants safely.

Turning to the third quarter operating environment, we have seen higher refinery utilization rates overall and despite improved gasoline and diesel demand, national product inventories remain on the high side. Gasoline and diesel crack spreads have come down from May June levels, though with an approximately $10.211 in the Mid-Con and somewhat higher margins in the Rockies. Refinery margins are continuing what we believe will be a slow cycle of improvement along with the overall economy.

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