Executives at HF Sinclair Corp., Dallas, have outlined their 2023 spending plans, which will skew far more heavily toward turnaround and catalyst work than this year’s outlays.
HF Sinclair, born this year from HollyFrontier Corp.’s acquisition of most of the assets of Sinclair Cos., plans to spend $910 million to $1.1 billion across its businesses (excluding the Holly Energy Partners limited partnership) next year. Turnarounds and catalyst projects are expected to account for $530-630 million of that figure. That’s more than double the spending of the next-biggest category, refining, and the more than 57% share of total capex is more than three times as large as its 2022 share.
HF Sinclair’s leaders earlier this year started to ramp up their turnaround and catalyst spend even as they have guided down their overall 2022 spending guidance in the wake of integrating the Sinclair assets. Chief executive officer Mike Jennings told analysts last month that the very high utilization rates of his team’s refineries in recent quarters will result in more outages, planned and unplanned, next year (OGJ Online, Nov. 8, 2022).
“These plants have been running full and hard for quite a long time trying to prevent supply shortfalls,” Jennings said at the time, later adding that maintenance spending would grow further.
With some sectors of the economy showing more signs of slowing in recent weeks, HF Sinclair and its peers may find more breathing room in coming quarters for infrastructure maintenance work. But JPMorgan analyst John Royall said the company’s 2023 guidance for turnaround spending is “materially higher than we had forecast” and could meaningfully lower utilization and profits in 2023.
HF Sinclair’s 2023 capex guidance also estimates the company will spend the following on other business segments:
- $250-280 million on refining projects.
- $25-35 million on renewables.
- $35-50 million on lubricants and specialty products.
- $20-30 million marketing projects.
Shares of HF Sinclair (Ticker: DINO) were down 6% to $57.15 in Dec. 2 afternoon trading. They are still up more than 10% over the past 6 months, which has grown the company’s market capitalization to more than $11 billion.
