If you caught Frontier Oil's (NYSE:FTO) conference call today, you heard the CEO cracking jokes and generally having a good time. This doesn't seem to jive with this morning's trading activity, which spiked shares down more than 4% in response to somewhat light top- and bottom-line results. Who's appraising this company correctly: management or the market?

A quick look at the numbers reveals modest revenue gains of 3.5% on essentially flat charges, meaning the amount of crude oil processed at the firm's two refineries. Reported earnings of $74.7 million, or $0.68 per share, fell short of expectations because of various deferrals, not any serious operational issues. Free cash flow clocked in slightly higher at $79.6 million, enabling the company to buy back shares and hike its dividend.

Management didn't feel the need to justify its results by spelling out all the aforementioned deferrals in its press release. Nevertheless, I think two are worth exploring, because they give a clearer picture of the company's outlook.

Pigging out
As I mentioned in my forecast, the company's real comparative advantage is its ability to process a wide range of crude oil, including the heavy and sour stuff. One issue that arises with the processing of heavy crude is the build-up of a bunch of junk in the pipes, as cholesterol does in the arteries. Cleaning out these deposits is called "pigging." Frontier is running so much heavy crude that they accelerated pigging from July to March. This lowered quarterly charge, but there's a silver lining -- gas prices are up, and the light/heavy crude differential has widened, meaning the company will be running higher throughput at better margins.

You say Dorado, I say Dorado
Also, at the El Dorado (pronounced like Laredo), Kan., refinery, a technical glitch led to higher naphtha inventories. Due to excess capacity, Frontier is handily working off the stockpile, and selling it in the form of gasoline -- at higher prices than it would have last quarter! It's kind of a perverse incentive -- screw up, make more money -- but it's to be expected in an industry with such high barriers to entry.

If you were looking for a monster quarter, there's nothing to be disappointed about here. The entire earnings shortfall, and then some, is set to hit the bottom line in Q2. CEO Jim Gibbs stated that he's never seen conditions any better, and judging by the current spot rates on gasoline and our proximity to peak driving season, there's no reason to expect the fortunes of Frontier -- or competitors Tesoro (NYSE:TSO) and Holly (NYSE:HOC) -- to reverse any time soon.

Refined Foolishness:

Fool contributor Toby Shute intends to pig out at Charles' Southern Style Kitchen in Harlem before he leaves New York City. He doesn't own shares in any company mentioned. The Motley Fool's disclosure policy goes whole hog.