HollyFrontier Corp (

HFC

)

Q4 2011 Earnings Call

February 28, 2012 11:00 a.m. ET

Executives

Neale Hickerson – VP, IR

Mike Jennings – CEO and President

Dave Lamp – EVP and COO

Doug Aron – EVP and CFO

Analysts

Chi Chow – Macquarie Capital

Jeff Dietert – Simmons and Company

Ed Westlake – Credit Suisse

Arjun Murti – Goldman Sachs

Sam Margolin – Global Hunter Securities

Evan Calio – Morgan Stanley

Faisal Khan – Citigroup

Blake Fernandez – Howard Weil, Inc.

Presentation

Operator

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Welcome to the HollyFrontier Corporation Fourth Quarter Earnings Call. My name is Kim and I’ll be your operator for today’s call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Mr. Neale Hickerson. Mr. Hickerson, you may begin.

Neale Hickerson

Thanks Kim, good morning. Today we are proud to present our fourth quarter and full year 2011 results. I’m Neale Hickerson, Vice President of Investor Relations at HollyFrontier. On our call today are Mike Jennings, our CEO and President; Dave Lamp, our Chief Operating Officer; and Doug Aron, our Executive Vice President and CFO. We also have other key members of our management team here with us today to assist in the Q&A portion of our webcast.

We issued a press release this morning which announced results for our fourth quarter and full year 2011. This press release can be found on our website at www.hollyfrontier.com.

For our call this morning Mike, Dave and Doug will have prepared remarks and details around our operating and financial performance for the fourth quarter. After these remarks we will be ready to take your questions.

Before we move to these prepared remarks, please note the Safe Harbor disclosure statement that’s in our press release today. Statements today and in our press release are made under the Private Securities Litigation Reform Act of 1995. In summary, the Safe Harbor statement says that statements made regarding management’s expectation, judgments or predictions are forward-looking statements and these statements are intended to be covered by the Safe Harbor provisions of federal securities laws. There are many factors that could affect our results and outcomes, we’ve noted many of these in our 10-K and other filings with the SEC.

Today’s statements are not guarantees of future outcomes. This morning’s webcast may also include presentation and discussion of non-GAAP financial measures that we use in analyzing our financial results, please refer to today’s press release and our financial filings for required reconciliations to GAAP financial measures and other related disclosures.

Lastly, please note that information presented on today’s call speaks only as of today February 28, 2012, and any time sensitive information provided may no longer be accurate at the time of any webcast replay, or rereading of the transcript of our call.

I would like to turn things over to Mike Jennings.

Mike Jennings

Great, thanks Neale. Good morning, thank you all for joining us on HollyFrontier’s fourth quarter earnings call. This is our first year-end report following our July 1st merger, and I’ll tell you that we are really pleased with progress today, both financial performance and progress combining our operations to generate earnings through synergy.

Today, we reported fourth quarter net income attributable to HFC shareholders of $223 million or $1.06 per diluted share, which compares favorably to the $14.7 million or $0.13 a share posted in the fourth quarter of 2010 by Holly Corporation standalone.

Full year 2011 net income was $1.02 billion or $6.42 per diluted share. Fourth quarter EPS was about 7.5 times the 2010 fourth quarter and the full year result represented a 550% increase over the full year of 2010. Our prior year comparable results exclude the Frontier oil earnings but are considered indicative given the stock consideration in our merger.

Our biggest single achievement in 2011 was the completion of the merger, but throughout the year we also generated very strong financial results including $1.84 billion of EBITDA for the 12 months which is approximately 3.5 times the comparable 2010 numbers which included Frontier oil. Fourth quarter EBITDA remain solid at $414 million and those seasonally lower than the third quarter EBITDA of $896 million that was about 300% above the 2010 fourth quarter EBITDA figure of a $104 million which did include legacy Frontier oil results.

During fourth quarter of 2011, inland versus coastal sweet crude differentials came in from the very wide levels we saw in the third quarter, but our gross margins remained attractive. Throughout the year our plants ran well and with high throughput rates to deliver earnings cash flow against the margin opportunities served up the market. As much as we expect consistent operating performance from the plants it only happens through the diligent and disciplined efforts of our people, so my hats off to them and to their 2011 operating achievement.

For the fourth quarter we observed an average Brent-TI differential of about $14, which is marginally higher than the $13 indicated by the forward market for the remainder of 2012.

Inland crude production growth remains bolstered by strong liquids prices, good geology, and capital diverted from competing base such as the U.S. Gulf of Mexico. Transportation infrastructure project such as Seaway reversal and Keystone XL will provide an outlook for some of this crude. However, we believe that our geographic markets for both crude and products have enduring advantages due to new logistical bottlenecks and long term transportation costs, and we remain optimistic about our refining margins in the Mid-Con, Rockies, and Southwest markets that we serve.

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