Add one more in what's becoming a string of ugly quarters for independent refiner Frontier Oil
For the first quarter of 2010, Frontier lost $40.3 million, which works out to $0.39 per share. In the year-ago period, the company earned $0.56 per share. However, results did improve from the previous quarter, thanks to more favorable market dynamics.
And Frontier fell with the rest of the best. Fellow independent Tesoro
In fact, when it comes to U.S. refining, it appears that the only place to hide in Q1 was in Chevron
Going forward, however, the picture decidedly brightens. In April and so far in May, crude oil differentials widened substantially, which bodes well for Q2 profitability. Also, by the end of the quarter, management had wrung out $1.50 per barrel in refining gross margin at the Cheyenne facility, roughly marking the halfway point to its ultimate efficiency target.
All of that noted, I caution investors against wild bullishness. Some of the recent improvement in product margins stems from temporary maintenance-related shutdowns across the industry. In terms of other big-picture dynamics, Frontier management aptly cautioned:
"we will need a continuing recovery in product demand to absorb high refined product inventories and the potential production from underutilized industry capacity."
For those who've been following my industry coverage, that should sound strikingly familiar.