HF Sinclair Corp., Dallas, reported third-quarter net income of $954 million, more than triple those of the prior-year quarter, as its refining net operating margin climbed to nearly $20 from less than $8 in third-quarter 2021.
Refining segment operating income at HF Sinclair came in at more than $1.3 billion in third-quarter 2022 versus $219 million in third-quarter 2021 while total revenues more than doubled year over year to $29.2 billion. The company benefited from higher margins in its West and Mid-Continent regions while consolidated throughput climbed 54% to about 685,000 b/d.
Speaking to analysts on a conference call, chief operating officer Mike Jennings said his team during the quarter reached its goal of $100 million in cost savings from the acquisition earlier this year by the former HollyFrontier Corp. of most of Sinclair Cos.’ assets. He and his team also said the environment for HF Sinclair remains positive thanks to high product margins, low inventories, and wide crude differentials.
“We definitely see a better for longer scenario here where we think refining margins will continue to deliver above mid-cycle returns here for the foreseeable future,” president and chief operating officer Tim Go said. “We're in a structurally short market. We continue to see that with refinery rationalizations that have occurred over the last couple of years, the Russia-Ukraine conflict that is causing trade flow disruptions. As you look forward, it's hard to see that changing significantly in the near term.”
For the fourth quarter, HF Sinclair’s team is looking for company refineries to handle 620,000-650,000 b/d. They also have trimmed their capital spending forecast for 2022 for the second quarter in a row and now expect it to come at $740-885 million versus previous guidance of $785-950 million (OGJ Online, Aug. 8, 2022). The most notable components of that change are spending on renewables (down $20-40 million) and corporate functions (down $15-20 million) but the team raised the upper bound for turnaround and catalyst projects by $20 million to reflect its refineries’ high utilization rates.
“The high run rates that we and others have attempted to produce in order to meet US fuel demand is going to create additional maintenance outages," Jennings said. “These plants have been running full and hard for quite a long time trying to prevent supply shortfalls," he said, adding that the result may be both planned and unplanned maintenance in 2023.
Shares of HF Sinclair (Ticker: DINO) rose slightly Nov. 7 to $63.47. Over the past 6 months, they have climbed 50%, growing the company’s market capitalization to more than $13 billion.
