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Executives

Kristine Boyd - Investor Relations

Michael C. Jennings - President and Chief Executive Officer

W. Paul Eisman - Executive Vice President, Refining and Marketing Operations

Doug S. Aron - Executive Vice President and Chief Financial Officer

Analysts

Jeff Dietert - Simmons and Company

Mark Flannery - Credit Suisse

Paul Cheng - Barclays Capital

Blake Fernandez - Howard Weil

Chi Chow - Tristone

Daniel Burke - Johnson Rice

Mark Caruso - Millennium Partners

Frontier Oil Corporation (FTO) Q2 2009 Earnings August 6, 2009 11:00 AM ET

Operator

Good morning ladies and gentlemen and welcome to the Second Quarter 2009 Earnings Call hosted by Frontier Oil Corporation. At this time all participants are in listen-only mode. At the conclusion of the prepared remarks we will conduct the question-and-answer session. (Operator Instructions) Please note that this conference is being recorded.

I will now turn the call over to the Manager of Investor Relations, Kristine Boyd. You may begin the conference.

Kristine Boyd

Thank you, John. Good morning and thanks to all of you who are joining us this morning for our second quarter 2009 earnings call. Here with me this morning are Mike Jennings, President and CEO; Doug Aron, EVP and CFO; Paul Eisman, EVP of Refining and Marketing Operations; and Nancy Zupan, VP and Chief Accounting Officer.

Before we get started I would like to read our Safe Harbor Statement. The primary purpose of this conference call is to describe the assets, operations and certain current and historical financial conditions associated with Frontier Oil Corporation. This information and associated comments made during the course of this conference call may include forward-looking statements concerning the company. These may include statements of plans and objective for future operations, statements of future economic performance for assumptions or estimates.

The accuracy of these forward-looking statements is subject to a wide range of business risks and changes in circumstances, that is described in the company's reports that are filed from time to time with the Securities and Exchange Commission. Actual results and outcomes can different from expectations.

I would now like to turn the call over to our President and CEO, Mike Jennings.

Michael C. Jennings

Thank you, Christine and good morning to all of you. Frontier reported second quarter earnings this morning of $50 million or $0.47 per diluted share. Our FIFO inventory valuation gain for the quarter was $79 million after taxes and we recorded a hedging loss of $18 million after taxes. Net of these two effects, we had a loss in the second quarter of $11 million or $0.10 a share.

Market fundamental for the refining industry continued to weaken during the quarter, given downward by the sluggish U.S. and global economies. Declining distillate margins and narrow crude oil differentials contributed to softness in our profitability while relative improvement in gasoline demand through the first half of driving season provided some what of a boost for gasoline margins.

Comparisons to the fundamental just a year ago are pretty dramatic and emphasize the challenges that refiners currently face. In the second quarter of '09, our gasoline crack spread by grew $5 a barrel versus 2008. But we lost over $22 a barrel in diesel crack, $16 of barrel in light/heavy differential and about $4 a barrel in the sweet/sour differential.

For many years Frontier has benefited from the ability to process significantly discounted crude oil and the loss of that additional margin affects our second quarter earnings results. The crude oil differentials have been affected by pressure on both the supply and demand sides of the crude market. Crude prices in the 30 to $40 a barrel range seen earlier this year prompted global supply cuts of heavy and sour grades, through OPEC reductions and delays to additional Canadian production. In addition to the declining crude supply demand for the discounted barrels have increased with the expansion of complex refining capacity worldwide.

Looking forward, we don't expect these fundamentals in heavy and sour crude markets to reverse quickly. Longer term however, we believe that crude prices in excess of marginal production cost will encourage these heavy and sour barrels back into the market. Frontier has seen some improvement in the light/heavy differentials coming out of Canada in the recent months, though other heavy grades, particularly those supplied on the Gulf Coast remained pretty depressed.

To manage the weakened differentials Frontier continues to optimize our crude slate at each plant. And we are generally running a lighter slate right now. For the third quarter we have a cautious eye on U.S. product inventories which keeps us conservative in our planned crude planning and purchasing activities.

U.S. gasoline inventories have been at the top end of the five year range over the last several weeks while diesel inventories are approaching 50 days of forward supply, the highest level in recent history. Given this inventories situation production decisions by U.S. refiners will factor heavily into the near term prospects for our industry.

Expecting a difficult margin environment for the reminder of the year we're moving to improve liquid yields and reduced operating costs particularly at our Cheyenne refinery. We'll provide more details on those efforts a little later this year. As we see it the current operating environment is one where only the better petroleum refiners will be viable in the long-term, meaning able to generate cash returns that allow them to both maintain their plants and provide a reward for the capital deployed in their business.

We at Frontier are conscious of this dynamic. And we're taking steps to see that our plants and our company remain in this group of viable refiners as I have defined it for years to come.

With that I'll turn it over to Paul Eisman; our EVP of Operations for the discussion of second quarter operations.

W. Paul Eisman

Thanks, Mike and good morning everyone. The second quarter was one in which our two refineries faced economic conditions very different from what we've seen over the last several years. The collapse of the light/heavy and sweet/sour differentials caused us to optimize around the Crude's rate as much lighter and sweeter than we typically utilized in the recent past.

We've also moved from an extended period where distillate production was most highly valued to one where we are optimizing to maximize gasoline production. The El Dorado refinery ran very well during the quarter. For the second quarter our average crude rate was approximately 127,000 barrels per day. Heavy crude oil made up 11% of the charge to the refinery, down from 19% in the same quarter last year. Sweet crude charge to the refinery increased to 38%, opposed to 24% in the second quarter of 2008.

El Dorado had one significant unplanned event during the quarter and that was a loss of power resulting from a severe thunderstorm in which refinery experienced 90 miles per hour winds on May 7. The event shutdown most of the refinery but our people did an excellent job to bring the refinery down safely and restart it expeditiously. Most of our units were put back into service quickly and the refinery was returned to full rates by May 14. We incurred increased direct cost for repairs and overtime of approximately $1.6 million and suffered a production loss with an estimated opportunity cost of $2.7 million from this event.

The Cheyenne refinery is designed to operate with a very heavy crude slate. As a result the core light/heavy differentials had a greater impact on the operations there. The heavy crude component of our crude charged during the quarter was 54%, down from almost 82% in the second quarter of 2008. Most of the heavy crude was replaced with light sweet crude oils.

The refinery is limited by how much light product it can handle in the crude unit and this lighter crude light limits the refinery charge rate to about 42,000 barrels per day during the quarter. At the same time the lighter crude slate allows us to produce a higher percentage of light product and less residual product. Our combined production of gasoline and diesel at Cheyenne during the quarter was almost 79% of total oil charge which is the highest that's it's been since the refinery was configured to run heavy crude oils.

We continue to push to lower expenses at both refineries. Our combined refinery cash operating expense before depreciation was 4.17 per barrel for the quarter. This was significantly lower than the 5.52 per barrel reported in the same quarter of 2008. This OpEx reduction was partially due to the higher rate at El Dorado this quarter and the drop in the natural gas prices which accounted for about $0.35 per barrels of the savings. But was also due to lower maintenance costs and reduced fuel gas purchases. We believe there are opportunities to further reduce these costs and are continuing to pursue this opportunities.

Looking forward to the rest of 2009, we expect to see more the same. Canadian light/heavy differentials level improved somewhat in the last couple of months, but we do not expect them to return to the levels that we have seen over the last several years. We are beginning to see some minor improvement in demand for finished products as the economy stabilizes but an overhang of diesel inventory will likely keep the diesel crack in check for the remainder of the year.

We expect to see charge rates in our third and fourth quarters below what we have seen for the first half of the year. This is due to a combination of lower anticipated margins and a significant turnaround event at the El Dorado refinery in the fourth quarter. All of our major projects continue to go well with one exception. We had a delay in the fabrication of our reformer reactor and now expect this project to complete in the second quarter of 2010 rather than in the first quarter as previously communicated.

At this point all projects remain on budget. We are preparing for the El Dorado reformer, FTC and diesel hydrotreater turnaround scheduled for the fourth quarter of this year and have no major turnarounds planned for the remainder of the year at Cheyenne.

And with that, Doug is going to wrap up our call.

Doug S. Aron

Thank you Paul and thanks to all of you us that are joining us this morning on what has become up a very busy day for the Independent Refining Community.

I'd like start off by reviewing cash flows for the second quarter. We generated $85 million in operating cash flows before changes in working capital. With the tough $20 increase in crude oil price and a seasonal build in inventories working capital requirements increased by over a $175 million during the quarter. Capital spending in the second quarter was $44 million, bringing us to a total of about $77 million so far this year.

Our capital budget for 2009 is expected to come in around $200 million. As Paul mentioned the diesel hydrotreater event at El Dorado is progressing on budget with about $35 million remaining to be spent on this project. Of this about 25 million will be spent in 2009 with the remainder to be spent in 2010. Our balance sheet remained strong with a cash balance of $488 million. Net working capital of $257 million and a debt-to-cap ratio of 23% as of June 30.

In addition we had $334 million of borrowing base availability at quarter end. For the time being we have no plans for either share repurchase or onetime distribution of capital to shareholder. This reflects our guarded view of near term margin environment as well as our continuing belief that capital remains difficult to access and may provide strategic alternatives not available to all smaller refiners.

Lastly I'd like to update you on the quarterly days crack spreads. For Cheyenne the gasoline crack spread averaged $9.79 in July and has been $10 month-to-date August. In Cheyenne, the diesel crack spread averaged $7.73 for July and $5.37 month-to-date in August. For El Dorado, the gas crack averaged $9.62 for July, $12.55 month-to-date in August. And the diesel crack spread averaged $7.84 for July and $9.40 month-to-date in August.

And with that, John I believe we are ready to take questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions). Our first question comes from Jeff Dietert from Simmons. Please go ahead.

Jeff Dietert - Simmons and Company

Good morning.

Michael Jennings

Hi, Jeff.

Jeff Dietert - Simmons and Company

The Cushing inventories have been building every week over the last six weeks. Could you talk about the major influences there and what you expect going forward to Cushing? And the influence that could have on your crude cost.

Michael Jennings

Paul, you want to take that?

W. Paul Eisman

You bet. Yeah, obviously Cushing I think approached 50 million barrels of storages week last time when the Contango blew out like it did earlier in the year. I think we are up to 53 million. So we are approaching that. Quarterly there has been some -- there is a lot of barrels going in to Cushing and frankly there is fewer ways to get out. There has been some refinery outages. There has been some refinery turnarounds and frankly with some of these margins, refiners are looking at the value of the incremental barrel and are cutting back. So we expect the Cushing inventories to continue to increase and see the potential for future CMA advantage in that.

The current monthly roll is up above $2 now somewhere in the 2.20 range. Second month is 1.50, third month is a buck. And frankly we think that is -- if this Cushing inventories continue to expand we can see that widen out.

Jeff Dietert - Simmons and Company

You starting to see some influence on pricing of domestic crudes and other crude that are tied to WTI as far as steeper discounts for light/sweet?

W. Paul Eisman

It's interesting as what we are seeing is Cushing being depressed versus almost any other market. And you look at the comparable crudes, all the Gulf Cost maintained today to be $2 to 2.50 about the same crude quality that you see in Cushing and frankly that hurts us a little bit in terms of the light heavy differential. The Chicago refiners, who really don't have access to Cushing, tend to compare the cost of Canadian crude versus a Gulf Cost barrel. And, so that tends to hurt sometimes, the heavy, light heavy differential, you've seen that come in from $12 to about 10.50 today.

Jeff Dietert - Simmons and Company

And 10.50 is where you are seeing Canadian heavy discounts now?

W. Paul Eisman

Right. That's the current line.

Jeff Dietert - Simmons and Company

Okay. And what -- does that still lean you towards a lighter crude slate or coking economics improving enough to shift?

W. Paul Eisman

No. I mean 10.50 we are still, we are kind of on bubble it's pretty close to breakeven. So it's hard to tell what going to happen. Coking economics have been a pretty poor as you have seeing throughout the industry. And with us too, our Cheyenne coker is running at minimum rates because of two reasons. Number one is obviously the light/heavy differential, lighter crude slate, but also up there we got a pretty good asphalt market.

In El Dorado we have the advantage of the backing channel. We actually dig very, very deep into our asphalt and actually get very good recoveries of gasoline. So we produce very heavy asphalt there. It's not specification and we get lower price for that. So we actually are running our coker full because that's more economic then selling a non-specification product in that market.

Jeff Dietert - Simmons and Company

You seen any impact from the stimulus on asphalt demand?

W. Paul Eisman

Not really. I mean what we are seeing is asphalt demand being relatively weak. And what we think is happing is that the states and localities with lack of tax revenue are taking lot of stimulus money using it to pay for other things.

Jeff Dietert - Simmons and Company

Thanks, Paul.

W. Paul Eisman

You bet.

Operator

Our next question comes from Mark Flannery from Credit Suisse. Please go ahead.

Mark Flannery - Credit Suisse

Yeah. Good morning. In the press release and in the conference call you have alluded to still being interested in potential strategic transactions which you may mean acquisitions. Given what's happened to light/heavy spread and your expectation that it may take some time to recover, could you update us on what kind of assets you would now be interested in, obviously not asking for specific assets but is it still the same type of asset that you were targeting in the past?

Michael Jennings

Mark it is. In the current environment there is precious little distinction between the economics of a complex versus a simple plant. If you run in the same TI barrel . Longer term we still see great value to having complex refining capacity, particularly in our geography which has good proximity to Canada. So our focus haven't changed, it's geographic, its quality of assets and hopefully some market overlap.

And it's frankly an industry that is begging for some consolidation. There is just simply more capacity then can be demanded by customers today. So we keep our eyes open. We don't have anything to report or wish to discuss. But we still feel that the fundamental drive toward consolidation and toward acquiring a good asset is very valid.

Mark Flannery - Credit Suisse

Okay. And can I -- just a quick follow-up on that. Can I confirm that your interest is really limited to assets rather than corporate kind of transactions?

Michael Jennings

Well. Any buyer wants to buy an asset to the extent that its necessary to do a company deal in order to get the asset or you have look it at the liabilities and then some of the things that come along with a corporate deal. So I wouldn't exclude that. But certainly our preference is to be a little more laser focused on the assets that we are interested in.

Mark Flannery - Credit Suisse

Great, thank you very much.

Operator

Our next question comes from Paul Cheng from Barclays Capital. Please go ahead.

Paul Cheng - Barclays Capital

Thank you. I guess as a follow-up to the earlier questions, when we looking, from Mark, and that's I think happened two, maybe six months that you guys have been pretty active, you really want to do a transaction because you think that it's the great time to do it. And that may be you are -- now seems like your more cautious view on the near term market condition. Is the priority for the next twelve months for the company or six months for the company, is it still pursuing M&A opportunity or that is trying to protect the balance sheet in the near term? What may be the priority now?

Michael Jennings

Paul, our priority is and will always be running the assets that we have as well as we can. That's where we focus 99% of our time. We still think that this environment is going to offer up some very interesting opportunities to grow and to make us a strong company for the future. And so we are pursuing that. But we are not dependent on it, in terms of our gratification nor do we think our share price relies on it. It's something that will do as we can to make for a stronger company in the future.

Paul Cheng - Barclays Capital

You are not necessary, now some of your peers are saying that given the uncertainty in the market outlook that they are not really pursuing actively in them and you are still looking at if there is any good opportunity come along then you will strike?

Michael Jennings

We have a different posture than Fissore as an example who articulate a desire not to do acquisitions. We are sort at the other side of that.

Paul Cheng - Barclays Capital

Okay. That's great. And I think this is for Paul. Paul you were earlier saying that light/heavy differential for Canadian is 10.50. Is that on the same basis as when we look Cheyenne on the second quarter light/heavy differential of A-72 or that this is a different set of bases that you are talking here?

W. Paul Eisman

The 10.50 deferential is (inaudible) versus TI

Paul Cheng - Barclays Capital

Okay. So there is not that your company realization.

W. Paul Eisman

No. And we don't take transportation cost to refineries.

Paul Cheng - Barclays Capital

Okay. And then maybe that either Paul or Doug, will you be kind enough to give us some quarter-to-date light/heavy differential numbers, I mean Cheyenne and El Dorado on the basis of what you report, I mean Cheyenne in the second quarter you say 8.72, what is in the quarter-to-date and El Dorado is 3.90 for the quarter-to-date?

Doug Aron

I don't know that we have those numbers right at our finger tips. I don't have on here. We'd have to get back to you that.

Paul Cheng - Barclays Capital

Okay. No problem. And Doug do you have a 2010 CapEx number I know it's early time, but a rough number that you can share, year 2009 is going to be 200?

Doug Aron

I know we'll be targeting a number substantially less than that. But Paul we haven't presented a number yet to our Board for 2010. What I tell you is that we focused on really a maintenance level of CapEx plus completion of the (inaudible) project that Paul talked about. Potentially some opportunities for cost savings at Cheyenne but we expect a number significantly lower than what we spent this year. And till we have a number that even rough or been presented to the board, I wouldn't feel comfortable giving that you.

Paul Cheng - Barclays Capital

Okay, So I mean you can't even share with us that what maybe the minimum that you have to spend there?

Doug Aron

Well let's look at it this way. We have got two carry over projects that will be ongoing; the reformer, which we are going to complete in 2010. The gas hydrotreater which is also a low sulfur gasoline project. Between the two of those we may spend on the order of 30-$40 million in 2010. We have said in the past that that dollar maintenance level of our capital budget is in the 50 to 60 range. So that pretty well sets our approximate baseline and the things that we know right now.

As Doug said we are also looking at opportunities in Cheyenne to improve their saturated and unsaturated gas recoveries effectively getting liquids out of the fuel gas stream. And there appears to be good profit in doing that. So that could be added to what I'm talking about but that kind of scopes for what we mean by maintenance level capital budget plus the carry over projects

Paul Cheng - Barclays Capital

That's great guys. And final question, what is you CMA crude adjustment benefit in El Dorado in the second quarter?

W. Paul Eisman

Yeah. It was just little bit less then $2 a barrel on a something little bit -- 100,000 barrel a day

Paul Cheng - Barclays Capital

A 100,000 barrel per day.

W. Paul Eisman

Yeah.

Paul Cheng - Barclays Capital

And so the $2 just applies to the 100,000, not for the entire facility?

W. Paul Eisman

Correct

Unidentified Analyst

Okay. Very good. Thank you.

Operator

Our next question comes from Blake Fernandez from Howard Weil. Please go ahead.

Blake Fernandez - Howard Weil

Good morning. My question is on the cost side of things. You mentioned in press release the opportunity to reduce cost at Cheyenne. But its look in the quarter you actually saw a pretty significant down tick in cost at El Dorado as well. I am just wondering is that one of type of situation or can that considered continued in the future?

W. Paul Eisman

I think we are obliviously working hard to control expenses in this current environment. If you look at El Dorado in the second quarter, I mean there were two or three things that really happen and contributed to that. Obviously we talked about the reduction in fuels gas price quarter-over-quarter, which is about 35% I am sorry $0.35 a barrel on average. But adjacent to that we actually purchased a whole lot less gas, about 40% less gas. And the reason for that is that we are running El Dorado much harder.

We have increased we put crude backing unit towers online and we have been able to increase the throughput in those. We also increased the throughput in the downstream process units. Those units tend to produce gas. And so we are producing gas which reduces our need to purchase gas. So that's another component of that reduction in costs.

On a per barrel basis we had significantly increased throughputs at El Dorado. And obviously if you increase the devisors then reduce the per barrel cost. And lastly we had a pretty significant reduction in maintenance cost in the quarter.

So we think there are further opportunities, as we said in our earlier comments to reduce cost at both refineries. You know given that Cheyenne has a higher per barrel cost partially because it's a small refinery. We are focusing on that. But we think there are opportunities at both refineries.

Blake Fernandez - Howard Weil

Okay. Great, and there's not any specific numerical type of target or anything that you're trying achieve right?

W. Paul Eisman

Well. We are developing that as we speak and we are going to communicate that to the Board and at some point we'll be communicating that to everyone.

Blake Fernandez - Howard Weil

Okay, great. And then my other question is on the light crude that you are running. I see it pretty significant uptick in the amount of light crude that you ran through the system in second quarter. And I'm just wondering are you now at a point where you can continue to increase that, or do you feel that you are kind of running at a max.

W. Paul Eisman

At El Dorado we have quite a bit of flexibility. The refinery has some really nice downstream flexibility of the crude units, and frankly within the crude unit itself. So we get essentially get out of heavy crude if it's uneconomic at the El Dorado refinery. At Cheyenne, here we mentioned I think 54% heavy crude in the second quarter. Our projection in third quarter actually reduces that to about 36%. And so I really do have to compliment the people at the refinery, it's a heavy crude refinery and we had no idea that they could achieve light crude rates at these kinds of levels. So they have a very good job getting there. But at some point we'll reach a limit at Cheyenne but our guys are working very hard everyday to push that.

Blake Fernandez - Howard Weil

Okay. Great. Thank you very much.

W. Paul Eisman

Thank you.

Operator

Our next question comes from Chi Chow from Tristone. Please go ahead.

Chi Chow - Tristone

Thank you. Doug do you have a cash balance as of today?

Michael Jennings

Well, we do.

Doug Aron

We do have a cash balance, what it is, you know Chi as yesterday I want to say it was slightly over $400 million. But as you can imagine with the working capital requirements of this business you can see moves of 40 or $50 million in a given day.

What I would tell you is that in terms of a forecasted number at the end of this quarter my guess is it will be roughly flat to down, very slightly not the same kind of move we saw from first quarter to second quarter.

Chi Chow - Tristone

Okay. I guess given the decline in cash in the first quarter and your comments on acquisitions, has that changed your thoughts that all on returning excess cash to shareholders at some point later this year?

Doug Aron

I think the comment that we made in the opening remarks was that we are going to be a little bit more cautious. And for the near term don't have any plan to have share buyback or dividends. At this point until we get a better flavor, what the rest of the year's going to look like.

Michael Jennings

Chi let me elaborate a little bit. I mean we saw our peer companies issuing debt with double-digit coupons, up in to the 12, 13% yield arena. Obviously capital is dear right now, generally for this non investment grade companies but specifically in the refining sector. So that does go into our view of opportunity cost and what if we need to raise capital. I think it caused us to be a little bit more cautious in distributing it out.

Chi Chow - Tristone

I think I missed your comments earlier, Doug on the August the month-to-date diesel cracks at each refinery, could you repeat those?

Doug Aron

Chi, if it's all right. We'll can I just call you with those and they should be available on the transcript but we will call you right after the call and give them to you.

Chi Chow - Tristone

No problem. All right. Thanks a lot.

Operator

Our next question comes from Daniel Burke from Johnson Rice. Please go ahead.

Daniel Burke - Johnson Rice

Good afternoon all.

Michael Jennings

Hi Daniel.

Daniel Burke - Johnson Rice

I will follow-up on Chi's question this way. It looks like the diesel market in the Rockies has slipped a bit more into August. Anything going on there other than the refiners around you maybe running a little better than they did in the first half year?

Michael Jennings

Yes, Paul.

W. Paul Eisman

Yeah. I think that, that's the case. We see inventories in the Rockies for diesel significantly above what we were this time last year. Obviously there are continuing to be demand issues in the economy has probably stabilized but we don't see it growing that quickly right now. And so there is plenty of capacity to produce diesel. And so there is some diesel out there but the Rockies is well supplied.

Daniel Burke - Johnson Rice

Okay. And then most questions have been answered. Doug, did you guys adjust you hedge position at all during Q2, given that you continued to shift to a bit more of the sweet diet at El Dorado?

Doug Aron

Daniel I don't it relates so much to the switch toward a sweet diet. So that would affect the number of barrels in our system. We have taken a renewed view of what our base level inventory is above which we hedge. And we have taken that up through the course of this year from a million barrels with respect to crude oil to now 2.75 million. That reflects higher throughput rates at El Dorado and an expectation that we continue to run some number of Canadian barrels at the El Dorado plant, probably five to ten a day in that.

It also frankly was driven in part at list the review driven by our view of the crude market which was obviously weak earlier in the year and a point where we could reduce our short position.

Daniel Burke - Johnson Rice

Fair enough, thanks guys.

Operator

Our next question comes from Mark Caruso from Millennium Partners. Please go ahead.

Mark Caruso - Millennium Partners

Good morning guys. I just wanted to circle back, Chi asked one of my questions. The second one is going back on M&A, Mike you mentioned the opportunity to go out there potentially get some assets. But how do you, I want to get your thoughts on how you weigh that with the new kind of legislation and with that are you incentivized at this stage smaller or if you get bigger it may be more difficult to what that legislation still is out there right now.

Michael Jennings

Well, the legislation is one among many things that are on our radar screen as it relates to acquisitions. In point of fact what the house was willing to provide the small refiners was pretty minimal and wouldn't by itself cause us to walk away from a quality transaction that made us bigger.

Looking forward I think it's pretty unrealistic to think that smaller refiners will get a free pass in this climate change legislation if it comes to pass. But I would also tell you that our company and our industry are fighting hard against it. The bill that came out of the house was an abomination in my opinion. And it's bad of course you said it well. It's bad for the economy, bad for our country and bad for our employees and companies and it's just plan bad. So we are going be fighting it hard. But through time something will probably come out on greenhouse gases and I expect it will be pretty broadly across the refining industry.

Mark Caruso - Millennium Partners

And then on the just clarification on the repurchase and distribution. You said no plans, was it something you guys are going to still review every Board meeting or not something, you'll address in to the end of the year at this point.

Michael Jennings

No we, we review it at every Board meeting.

Mark Caruso - Millennium Partners

Got you. Thanks.

Operator

We've no further questions at this time. I'll now turn the conference over to Mr. Jennings for any closing remarks.

Michael Jennings

Okay, well. We certainly appreciate you all joining us for this update and hope you have a good day. Thank you.

Operator

Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating. You may all disconnect.

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