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And particularly Phoenix which is unique spec, the specification it is more like the California gasoline prices, more on am LA spot type basis. So yes we are a refinery that has access to Permian Basin crude oil, but the way to think about it, it is 30 to 40% of our product is sold more on an LA spot basis and then that the balance is sold on Gulf Coast 3-to-1 basis.Basically we have seen a shift over the last four or five years in the refining, refiners that fit close to their crude sources and have markets similar to what I was talking about with the Phoenix specifications. What we have seen is a shift in profitability from complexity size, a simple refiner who is in the right market that has the right crude oil access have been the last year and a half more profitable than refineries that have historically waterborne type crudes and higher complexities. Obviously 2011 was a special year for refiners that had access to WTI and WTS crude. We saw historic margin realization, Western was no different. We had our call last week and we announced that $900 million plus of adjusted EBITDA which is obviously a record for us. When you look at 2011, we set out to do several things, but these are kind of some highlights. We had the fortunate ability because of Brent TI widened out as far as it did. We had the ability to basically sell forward some of our product. We put on crack spread hedges for 2012, a little over 30% of our production, 16% for 2013 and 2014. This is something, I have been in this business for 25 years. We have never had this opportunity to sell forward product at the levels that we did and I think we were very opportunistic to take advantage of that. We also added some retail sites and (inaudible) sites to enhance our wholesale and retail business and we did these through low capital. These were basically lease arrangements and these really just support our two refineries and give us ratable homes for our refined product.
In December we announced that we sold the Yorktown facility along with a underutilized crude line to Plains All American and those proceeds helped us with our ultimate goal of getting our debt paid down and getting us where we needed to be from a balance sheet standpoint.We also were opportunistic and redid our revolver, we increased the size for a $1 billion. Obviously we don't know where crude oil prices are coming, but we want to make sure that we have the right facility that allows us to operate the way we need to operate to maximize our profits. We also reduced our interest rate, we extended the maturity and we also most importantly were able to modify our covenants that just give us significant more flexibility in running our business. We also in the year reduced some high debt that we had, some floating rates, approximately about $275 million in debt reduction. And obviously that helps us from an interest expense standpoint. Like I said before, these are the crack spread hedges that we’ve got on. These are at a higher level than we have ever seen before and what this really does is if that Brent-TI or margins compress, this gives us some cushion on product that we've sold forward that just ensures the certain amount of profitability for us for the next couple of years. Just like I said when you look at this sheet and you look at the way margins go up and down, this gives us some stability in our profitability for the next couple of years. Read the rest of this transcript for free on seekingalpha.com