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Executives

Jeff Beyersdorfer – SVP, Treasurer, and Director, IR

Jeff Stevens – President and CEO

Gary Dalke – CFO

Mark SmithPresident, Refining and Marketing

Analysts

Jacques Rousseau – RBC

Joe Citarrella – Goldman Sachs

Chi Chow – Macquarie Capital

Ben Hur – Morgan Stanley

Kathryn O’Connor – Deutsche Bank

Wayne Cooperman – Cobalt Capital

Bradley Bennett – Gleacher

Vance Shaw – Credit Suisse

Western Refining, Inc. (WNR) Q4 2010 Earnings Conference Call March 3, 2011 10:00 AM ET

Operator

Good morning and welcome to the fourth quarter and full year 2010 Western Refining earnings conference call. After the speakers’ opening remarks there will be a question and answer period. (Operator Instructions) As a reminder ladies and gentlemen this conference call is being recorded and your participation implies consent to our recording of this call. If you do not agree with these terms please disconnect at this time.

Thank you. I would now like to turn the call over to Mr. Jeff Beyersdorfer, Treasurer and Director of Investor Relations of Western Refining. Mr. Beyersdorfer, please go ahead sir.

Jeff Beyersdorfer

Thank you Melissa. Good morning. I would like to thank you for taking the time to listen in today and for your continued interest in Western Refining. Again my name is Jeff Beyersdorfer; I’m the company’s Treasurer and Director of Investor Relations. Joining me for today’s call are Jeff Stevens, President and CEO; Gary Dalke, our CFO; Mark Smith our President – Refining and Marketing; and other members of our senior management team.

If you need a copy of the earnings release, you may obtain one from the investor relations section of our website at wnr.com. Before we proceed, I would like to make the following Safe Harbor statement.

Today’s presentation will contain forward-looking statements and I incorporate and refer you to the forward-looking statement section of our earnings release and recent filings with the SEC. we assume no obligation to update or revise any forward looking statements to reflect new or changed events or circumstances.

In addition to reporting financial results in accordance with Generally Accepted Accounting Principles or GAAP, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which can be found in the press release, which is posted on the investor relations section of our website.

I will now turn the call over to Jeff.

Jeff Stevens

Thanks Jeff. Welcome to everybody on the call. Today we will discuss our fourth quarter and full year performance and in particular how the actions that we have taken have positioned us to capitalize on improved industry market conditions we have seen through the beginning of 2011. After my opening remarks Gary will review our earnings report detail and provide operating guidance for Q1 2011. And then we will open the call up for your questions.

The fourth quarter marked a strong end to 2010. Our quarterly and full year results were significantly improved compared to 2009 due in large part to higher refinery margins in the South West reduced exposure to the East Coast refining market and continued savings from our cost reduction initiatives.

Crude oil differentials have also had a positive effect on our results. The discount of WTI to Brent was $2.76 wider in Q4 2010 compared to Q4 2009. In addition, the WTI/WTS differential was modestly wider in Q4 2010 compared to Q4 2009 and has continued to widen in early 2011. As a result our refinery is generating gross margin improvements with El Paso up by more than $3 a barrel or 52% and our Four Corners by more than $2 per barrel or 17% relative to Q4 2009. I would also like to point out that both El Paso and Gallup have solid quarters operating reliable based and at full capacity.

In our other business wholesale posted better results compared to the same quarter last year as the demand for transportation fuels continued to improve in the South West. Our retail business kept up its most profitable year since becoming part of Western with another outstanding quarter both fuel volume and merchandize sales were up from Q4 2009.

Moving to the East Coast business we successfully transitioned the Yorktown facility into a terminal operation and continue to supply the region with finished products. Also we have executed an agreement to connect the terminal to the Colonial Pipeline and we expect to have the tie end work completed by May of this year.

As we stated in the past our priority is to maximize the long-term value of Yorktown and we continue discussions with a number of prospects interested in third party terminal services. We are also engaged in discussions with parties interested in acquiring the terminal asset we will keep you updated on Yorktown as (Inaudible). As you can see by our results we continue to benefit from the Fourth Corners refinery consolidation and other costs reduction initiatives we’ve successfully implemented. We are pleased to report that we achieved our goal of $50 million of sustainable savings in 2010.

Turning to the first quarter of 2011, we completed a reform regeneration and other plant maintenance at our El Paso refinery in January. We will record approximately $3.4 million in maintenance expense in the first quarter associated with this work. In order to supply our customers during the planned downtime we temporarily build 500,000 barrels of finished products in the South West during the fourth quarter which we ultimately sold to our customers in the first quarter of this year.

As we announced earlier in the first quarter we also experienced unplanned downtime at our El Paso refinery due to record breaking cold temperatures in early February. The impact of the weather on our facility was compounded by reliability issues with our utility providers during this timeframe. Overall, this downtime resulted in approximately $1.8 million of total loss production.

We are completing our analysis on the total repair cost. Our uninsured property damage cost will be limited to our $5 million deductable. Although this was a difficult time I was pleased with the response of our employees, suppliers and customers as we’ve worked through this unplanned event. Although this weather impacted most of the refineries in the region our Gallup refinery remained operational throughout this unusual weather event and has run at near capacity thus far through the first quarter.

In terms of the market conditions we are seeing extraordinary refinery margin environment especially for this time of the year. As you know benchmark crack spreads have been proved significantly relative to the end of 2010 due to the widening Brent WTI spread and the WTI crude differential. This is primarily due to the growth of inland crude production and increased Canadian crude shipments and inventories at cushion.

As an inland refinery our crude place and location advantage allow the company to significantly benefit from these widening crude differentials. We are also seeing wider contango, which lowers our crude cost in El Paso. To capitalize on this unprecedented crack spread environment we have sold forward gasoline and diesel cracks these contracts represent approximately 10% of our 2011 production capacity.

Wrapping up we are encouraged by this very strong margin environment that we are seeing thus far in 2011. And we are optimistic that Western is well positioned for the future. Now Gary will go through our fourth quarter financials in more detail and provide operating guidance for the first quarter of 2011.

Gary Dalke

Thank you Jeff. For the fourth quarter we reported a net loss excluding special items of $3.5 million or $0.04 per diluted share. This compares to a Q4 2009 net loss excluding special items of $51.1 million or $0.58 per diluted share. The company reported a net loss excluding special items of $10.1 million or $0.11 per diluted share for the full year. This compares to a full year 2009 net loss excluding special items of $44.5 million or $0.56 per diluted share.

On a GAAP basis the company had a net loss in the quarter of $7.6 million or $0.09 per diluted share and a full year net loss of $17 million or $0.19 per diluted share in 2010. This compares to a Q4 2009 net loss of $97.5 million or $1.11 per diluted share and a full year 2009 net loss of $350.6 million or $4.43 per diluted share. A reconciliation of our net earnings to earnings excluding special items is included in our press release.

Gross margins at our refineries was $10.12 per throughput barrel during the fourth quarter and $8.88 per throughput barrel for the full year 2010. This compares to $4.89 per throughput barrel in Q4 2009 and $8.74 for the full year 2009. In the quarter gross margin at El Paso was $8.83 per barrel and Gallup came in at $14.13 per barrel both significantly approved relative to Q4 2009.

Direct operating expenses at our refineries were $5.46 per barrel for the quarter and $4.73 per barrel for the full year. This compares to $4.74 per throughput barrel in Q4 2009 and $4.77 for the full year 2009. These totals include Yorktown which have no production in the fourth quarter. Gallup’s operating costs were $6.91 per barrel for the quarter down from $9.55 per barrel for the combined Gallup and Bloomfield refineries in Q4 of 2009. El Paso’s costs were $3.57 per barrel for the quarter compared to $3.85 per barrel for Q4 2009. Strong refinery throughput volumes combined with our cost reduction efforts enabled us to deliver this competitive cost performance.

Cost related to the temporary suspension of refining operations at Yorktown were approximately $500,000 in Q4 2010 and $4.5 million for the full year 2010. The remaining suspension costs of approximately $10 million to $12 million will be expensed on the first half of 2011. Total company SG&A costs were $22.6 million for the quarter compared to $23.8 million in Q4 2009. For the full year 2010 SG&A costs were $84.2 million a reduction of more than 23% from 2009 levels.

Adjusted EBITDA for the quarter was $63.5 million and $288.1 million for the full year. This compares to adjusted EBITDA of negative $24.7 million for Q4 2009 and a positive $191.4 million for the full year 2009. Depreciation and amortization expense for the quarter was $34.3 million and for the full year was $138.6 million. Interest expense was $35.4 million a $2.1 million increase compared to Q4 2009 primarily a result of modestly higher interest rates.

Our effective tax rate for the fourth quarter was 57.4% the effective tax rate was higher than historical levels due to the federal income tax credits we realized related to the production of ultra low sulfur diesel fuel. Generally such credits will lower our tax expense and effective tax rate when we have positive pretax earnings and increase our tax benefit and effective tax rate when we have a pretax loss.

We generated cash flow from operations of $41 million in the fourth quarter and $134.5 million for the full year. This compares to a negative $7.7 million in Q4 2009 and a positive $140.8 million for the full year 2009. Again the primary driver of this quarter’s strong performance was improved refining margins. As Jeff mentioned earlier we temporarily build finished products inventory in our South West business during Q4 in anticipation of our planned downtime in January amounting to approximately $70 million. However, overall non-cash working capital was reduced by approximately $14 million during Q4 mostly a result of reduced inventories at Yorktown and improvements in accounts payable on prepaid expenses.

Total capital expenditures for the fourth quarter were $21.4 million and for the full year $78.1 million well below our original budget of $100 million. As of December 31, total debt stood at $1.07 billion a $47 million reduction versus year end 2009. Total liquidity which we define as cash and availability under our revolver was approximately $400 million at the end of the year and is averaged approximately $385 million thus far in 2011.

As we announced previously the company has renegotiated its revolving credit facility which lowers interest cost, extends the facilities maturity, eliminates maintenance covenants in the revolver and adds additional borrowing capacity. Lastly, as part of our continuing goal to improve our balance sheet we have repaid $25 million on the term loan in February and the anticipate repaying another $25 million later this month.

Our operating guidance for Q1 2011 is as follows; we expect crude oil throughput at El Paso to be approximately 85,000 to 90,000 barrels per day and total throughput to be approximately 95,000 to 100,000 barrels per day. These figures include the impact of the reform or regeneration that was performed in January and the unplanned downtime at February that Jeff mentioned. We expect crude oil throughput at Gallup to be approximately 21,000 to 23,000 barrels per day and total throughput to be approximately 23,000 to 25,000 barrels per day.

In the quarter we expect operating costs to be approximately $5 per barrel at the El Paso refinery and approximately $6.75 per barrel at the Gallup refinery. These figures take into account the lower production volumes of both the planned and unplanned downtime at El Paso and also the expenses associated with the plant regeneration work during the quarter.

However, the estimates for El Paso do not include the yet to be finalized casts of repairs associated with the unplanned downtime in February. Starting with Q2 2011 we expect our per barrel refining operating cost to return to normal levels similar to our 2010 averages. We expect total SG&A in the first quarter to be approximately $22 million interest expense will be about $36 million and depreciation and amortization will be approximately $34 million for the quarter. Capital expenditures for the full year of 2011 are expected to be approximately $62 million.

I will now turn the call back over to Jeff Stevens.

Jeff Stevens

Thanks Gary. Overall, it was a very good quarter and we are pleased with how we finish 2010. Western continues to benefit from location advantages and the crude slates of our refineries. Both El Paso and Gallup are running at capacity and with these outstanding margin environment that we are seeing we feel very optimistic about 2011.

Melissa we will now open the call for your questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from Jacques Rousseau of RBC.

Jacques Rousseau – RBC

Good morning gentlemen.

Jeff Stevens

Good morning Jacques.

Jacques Rousseau – RBC

Just wanted to see if you could give us a status of the various debt reduction initiatives you have outstanding in terms of after sales and monetization and then also just comment on whether the improved margin conditions has changed any of your thinking. Thanks.

Jeff Stevens

I will let Jeff answer that question.

Jeff Beyersdorfer

Jacque it’s Jeff Beyersdorfer as we’ve shared prior to this we have got several initiatives we are working on including platinum monetization of which we completed some in the fourth quarter and still have some to go here in the first half of 2011. We have a crude oil monetization that we continue to look at Jeff touched on Yorktown in our discussions with potential shooters of the Yorktown and then clearly cash flow from operations will be used to reduce debt. And then clearly the margin environment probably is going to lead to some higher cash flow from operations than we anticipated 2010.

Jacques Rousseau – RBC

Okay, one additional question in terms of the Gallup operating costs I noticed they jumped up some this quarter and your guidance is a little bit higher in the first quarter also want to see if there is anything we should be watching for there.

Mark Smith

Jacque, its Mark Smith. In the quarter we saw costs related to definitive comps, some overtime or some work certain catalyst costs and we had engineering costs for our 2012 turn around. So between the catalyst costs and engineering costs we don’t expect those to recur. So certainly I think as we get into the summer months we will be seeing the cost structure lower than we saw in the fourth quarter.

Jacques Rousseau – RBC

Great, thank you gentlemen.

Jeff Stevens

Thanks Jacque.

Operator

Your next question comes from Joe Citarrella of Goldman Sachs.

Joe Citarrella – Goldman Sachs

Thank you. You know clearly the discount here at WTI has been (Inaudible) as is the recent (Inaudible) of Permian Basin production growth and well maybe you could comment both on what you are seeing today and your longer term expectations for Permian growth and somewhat related question I will tell you expect the bottle necks around Cushing today to play out going forward. Thank you.

Jeff Stevens

Thank you well clearly we are seeing a lot of activity in the Permian Basin we are starting to take advantage of that not only through the lower price of TI relative to other crudes around the world but it’s also giving us the ability to look at different crudes from a yield standpoint and be able to further lower our cost at El Paso. You know clearly the market will eventually reach and figure out how to move some of these crudes around but it’s you know it’s really our belief that it’s probably we are probably going to see this type of situation in the Permian Basin for the next two to three years as pipelines are contemplated the bottleneck and the crude finds its way to other markets.

Joe Citarrella – Goldman Sachs

Yeah you know if I could just follow up on that last point maybe specifically how are you thinking about you know potentially reversing along or in line at the Permian from the Permian are you expecting that project to move forward and maybe from a high level what kind of impact do you think that could have?

Jeff Stevens

I can’t comment on whether it will happen or not happen certainly there is demand with all this new crude coming on to move it East. I really don’t see a impact in as one way or the other I think that the crude that they are looking at moving we don’t currently receive or don’t have access to that crude today so I don’t think it will impact to crude and from a product standpoint we just really haven’t seen much impact from their product side I wouldn’t see much change in the market from a product standpoint.

Joe Citarrella – Goldman Sachs

That’s really helpful I appreciate the color.

Jeff Stevens

Thanks.

Operator

Your next question comes from Chi Chow of Macquarie Capital.

Chi Chow – Macquarie Capital

Thanks. Good morning guys.

Jeff Stevens

Good morning.

Chi Chow – Macquarie Capital

Jeff on the hedging could you walk us through your decision process on putting those hedge positions on.

Jeff Stevens

Yeah, I mean as we, as we started in getting into 2011 Chi not only did we see an increase in the current quarter’s margins than we’ve historically seen but those margins went all the way out through the fourth quarter and they are certainly unprecedented and certainly you know much higher than they’ve historically been. So you know we just took an opportunity to go out and lock up some Gulf Coast cracks that would you know we think in terms of just kind of pre-selling some of our inventory and take advantage of what we see cracks that are unprecedented. So we just decided to take a little bit off the table and see where we go from here.

Chi Chow – Macquarie Capital

Okay, can you give us a sense of the cracks that you’ve locked in and are these hedge positions ratable across all quarters this year or they weighted towards a particular period.

Jeff Stevens

They are pretty much weighted by quarter I guess the way to think about it is that on a 211 Gulf Coast crack it would be in 1650 range.

Chi Chow – Macquarie Capital

Okay, great. Okay, I guess another question back on operating expenses. With the Yorktown refineries shut down I was a bit surprised to see the high refining operating expenses number in the fourth quarter. Can you help us out on how the quarterly OpEx will trend going forward it seems like there is a chunk in it that’s not associated with either El Paso and Four Corners and Gary you gave us some guidance on. And will the Yorktown expenses be out of the numbers going forward.

Gary Dalke

Yeah, see this is Gary. During the fourth quarter we did see $13 million of operating costs at Yorktown we continue to ramp those down some of the costs will take longer to ramp down such as in the area of property taxes those will go down overtime they are still high now but as we progress in the next year those will definitely ramp down. Interest expense is still running high but we actually expect to see premium adjustments related to that so that will definitely come down in the future.

We continue the costs of operating the terminal for our own operations right now and we also have some unusual environmental expenses related to the defines remediation going on there. And you know that’s kind of credit for a while but we did have an increase in that crude oil of approximately $123 million for the quarter.

As we move on we would expect to you know certainly see those expenses ramp down it will be over a period of time. We are going to have expenses from the island refining operations probably around $8 million in the first quarter and then ramping down to $4 million in the second quarter and then $2 million or $3 million thereafter. On our onetime suspension costs you know we I mentioned that those would be in the $10 million to $12 million and I don’t know exactly how they are going to fall but you know soon that $5 million in each of the first and the second quarters. And then related to our terminal operations going forward there we would expect to see about $3 million a quarter or $12 million for the year.

Chi Chow – Macquarie Capital

Okay, great I guess that’s really helpful. On the Yorktown terminal did you generate any income from terminal operations in the fourth quarter or so far here in the first quarter and how do you plan on reporting that in the financials.

Gary Dalke

We don’t have any third party terminal link revenue reported yet we are operating the terminal for our wholesale business so we are certainly seeing margin from the wholesale operations I think going forward we may look at changing the way we reported you know as we get more into the third party terminal link services we would certainly contemplate that so maybe for the next quarter or two it will be similar to the way we reported but certainly we would expect to see that evolve overtime.

Chi Chow – Macquarie Capital

Okay, great thanks a lot I appreciate it.

Jeff Stevens

Thanks Chi.

Operator

Your next question comes from Evan Calio of Morgan Stanley.

Ben Hur – Morgan Stanley

Hey, good morning gentlemen. It’s actually Ben Hur. Just a couple of follow up questions here I know the question was asked on what are you doing to like sharp your balance sheet are you still taking these initiatives to try to monetize some of the assets that you talk about Yorktown and you’ve said you’ve done some great things by hooking up to Colonial. But is there anything hindering out there the ability to get you know maybe an asset monetization there are you still in the works for trying to do a sale back lease back on inventory at El Paso and is there anything still going on with any of the South West assets as possible monetization’s or MLPs.

Mark Smith

Well let’s start with Yorktown Ben. Our goal is to obviously preserve and have the most value we can of that asset and you know we are as Gary just pointed out you know getting the expenses ramped down so that if there was an interested party there they could understand the value and put a real EBITDA number to it. So we are going through that process and taking those steps and you now as we’ve said before we do have parties that are looking at that. As far as any other formal process going on right now related to any other assets we do not have anything going on. But as Jeff said we are still looking at monetizing the crude the line fill essentially at the El Paso facility has some other things. But certainly the best way and the fastest way to pay down this debt is to continue to run and take advantage of these margins that we have today.

Ben Hur – Morgan Stanley

So that’s line fill at El Paso but not like actual crude inventory that you hold at the refinery.

Jeff Stevens

It’s a combination but a big part of it is line fill it’s I think we’ve said before it’s a total of about 1 million barrel.

Ben Hur – Morgan Stanley

And then when I just, another follow up here obviously we see that contango Gulf Coast treats one cracker near $17 and that’s similar to second quarter of $6. Is there any other reasons other than Yorktown not Yorktown sorry El Paso being down and you know some lower capacity there. Is there any reason why you are not going to capture these types of margins?

Jeff Stevens

Well I mean.

Ben Hur – Morgan Stanley

I guess on a go forward normalized basis without the incident I guess this quarter.

Jeff Stevens

Yeah I mean obviously January we were impacted by the regeneration of El Paso and then obviously the downtime in February was an issue as we’ve point out but yeah I mean we are running full today and you know we are taking advantage of you know you’ve watched the sweet sour last year was probably the differential was just under $2 for most of the year and we’ve seen that widened out to $5 to $6 and so we are running more sour at El Paso. Last year I want to say we probably average 13,000 barrels a day we are running a little over 23,000 barrels a day so we are taking advantage of that. You know the contango widened out in March and so yeah clearly we are doing everything we can to take advantage of these unprecedented margins.

Ben Hur – Morgan Stanley

Great, great to hear. Thanks.

Jeff Stevens

Thanks Ben.

Operator

Your next question comes from Kathryn O’Connor of Deutsche Bank.

Kathryn O’Connor – Deutsche Bank

Hey, I just have a few follow ups to the previous questions. When you move back at moving back to hedging would you just see how much you would be willing to hedge in the future if you would hedge beyond where you are now and then to the extent that you might have any limitations in terms of posting collateral on those hedges.

Jeff Stevens

Well certainly we are looking at it every week and it’s something that the senior management is very involved in and certainly one of the components is the margin requirements and with the rising price of crude oil we have to be very careful that you know that we make sure that we can do both so those are factors that go into it. But it’s something that we talk about on a daily basis and make a decision we will make a decision on a go forward basis.

Kathryn O’Connor – Deutsche Bank

In terms of the hedges you’ve already put on I mean how much can you give us an idea of how much collateral that used up to let’s say 10% of 2011 production hedge.

Jeff Stevens

You know I want to say it’s in the $40 million to $45 million.

Kathryn O’Connor – Deutsche Bank

Okay.

Jeff Stevens

And obviously that moves around as if the cracks go up and down.

Kathryn O’Connor – Deutsche Bank

Great, great okay and then just a follow up maybe from last conference call I think you said you still had $40 million of inventory you could liquidity from Yorktown did you liquidate any of that during the quarter.

Jeff Stevens

No we still have that inventory there.

Kathryn O’Connor – Deutsche Bank

Okay, so still $40 millions.

Jeff Stevens

In today’s market that’s about where it would be.

Kathryn O’Connor – Deutsche Bank

Okay, and then I think one of the hurdles to possibly doing an MLP was just lack of financials for some of those like logistics asset are you working on that or you working on financials which could eventually do an MLP.

Jeff Stevens

Well, we’ve certainly are we’ve identified what we believe our assets that would be MLP qualified and you know we are running some models to see what they would look like and how much EBITDA they would produce so we are going to that process.

Kathryn O’Connor – Deutsche Bank

Okay and do you have any idea how long that would take to get to a sort of a point where you feel comfortable with having a P&L for those assets.

Jeff Stevens

I think that it would be probably somewhere in the six to nine month timeframe.

Kathryn O’Connor – Deutsche Bank

Okay and then.

Jeff Stevens

And I’m sorry Gary has got to correct something I did say.

Gary Dalke

Yeah, in terms of the Yorktown inventory we did have a liquidation of a part of that inventory during the fourth quarter in about $18 million. We still do carry some inventory there as forth the wholesale business and some other smaller inventories that we are in the process of getting rid of. So I don’t know that we expect to liquidate you know we will liquidate a little bit when we are beyond that but we definitely did liquidate $18 million during the quarter.

Kathryn O’Connor – Deutsche Bank

Okay, so maybe I guess we shouldn’t think of it anymore meaningful liquidation of inventory coming from Yorktown than that were mostly done if there was just any of the inventory that you have.

Gary Dalke

Well further liquidations that will certainly carry inventory related to our wholesale volume business there.

Kathryn O’Connor – Deutsche Bank

So is it okay to think about the target for further liquidation as being come to 40 number you guys drew on the last call and then projecting that 18 you could say $22 million of liquidation.

Jeff Stevens

Yeah, it’s probably a bit higher than that 40 just a change in value in the market from the fourth quarter to the where we are today.

Kathryn O’Connor – Deutsche Bank

Okay and then just last question from me in terms of debt and targeting got paid down I’m assuming that you paid down for a term loan as that you would pay down?

Gary Dalke

Yes, that would be correct.

Kathryn O’Connor – Deutsche Bank

Okay, thanks a lot.

Jeff Stevens

Thank you.

Operator

Your next question comes from Wayne Cooperman of Cobalt Capital.

Wayne Cooperman – Cobalt Capital

Hey guys, how are you?

Jeff Stevens

Good. How are you?

Wayne Cooperman – Cobalt Capital

Excuse me if this was answered already because I stepped out for a few minutes. Just could you give us any color on I guess the current spreads and how much of that coming through to the bottom line I mean given we are already in March could you talk about January, February or kind of a first quarter projections and if you are capturing this any idea if this is going to if you expect these spreads to stay where they are now or at least wider than normal for a longer period of time.

Jeff Stevens

Well obviously just for the color of crack spreads they’ve as we got into January they started ramping up as the month went through and February they continued to ramp and now we are kind of a peak of from a Gulf Coast 321 spread of where we have been. And obviously these are unprecedented margins particularly for this time of year interesting on a forward curve.

Historically we would have seen when we had higher margins like this we would have seen that curve fall off pretty, pretty far but that’s why we took advantage and locked in some of the cracks you know Q2, 3 and 4. How long it’s going to last I can’t say I think it’s really the Brent TI spread and where that goes I think will impact as we go forward. But right now all I can tell you is the forward curve is saying that it’s going to last the next year to two years now whether that happens or not I can’t predict. But the fundamentals are therefore to stay wide or wider than it’s historically been.

Wayne Cooperman – Cobalt Capital

Can you give us a color on I mean I could sit here with the spreadsheet and run numbers I mean is it are you guys capturing the spreads that I would think you are looking at a screen or there are other new one where you know things aren’t quite as good as the screens might indicate.

Jeff Stevens

No I mean you know obviously we had the downtime in January and February that you got to factor in but in March today we are running both refineries full and we are still capturing our normal premium to the Gulf Coast and we are also getting the benefit West Coast margins on top of that.

Wayne Cooperman – Cobalt Capital

Are you benefiting just proportionately I guess Frontier one of their plants was down for a while that affecting you in your markets as well.

Jeff Stevens

Frontier we really don’t compete with them in any markets I will tell you in February most of the refineries in our region were down or had significant downtime I think there are still some lingering issues out there and we are seeing that in the margin environment.

Wayne Cooperman – Cobalt Capital

Okay, you won’t tell us what your EBITDA was for January and February or forecast for the first quarter at this point.

Gray Dalke

We haven’t done that in the past.

Wayne Cooperman – Cobalt Capital

Okay, thanks.

Gary Dalke

Thank you.

Operator

Your next question comes from Bradley Bennett of Gleacher.

Bradley Bennett – Gleacher

Good morning it sounds like from your prepared remarks that your plans for Yorktown are unchanged and given that Brent WTI spread I could take another answer to this question but does the current credit spread environment you know which as you mentioned is extraordinary does that complicate the decision to suspend refining operations at Yorktown.

Jeff Stevens

You know I guess I should preference the fact that you know the crack spreads that we are enjoying now are only the refineries that have access to inland crudes the TIs, TSs and I guess the Canadian crude too. But the majority of the refineries on the East Coast and Gulf Coast really aren’t enjoying these robust cracks because. Their differentials have widened relative to TI. So when we look and we model what we will be doing at Yorktown our crude cost like everybody else on the East Coast would be significantly higher than it historically have been on a relative basis. So really you know to restart that facility we need a change in that you know spread between Brent and TI to go the other way and to see wider differentials on the heavy light spread so you know we think it’s. Go ahead.

Bradley Bennett – Gleacher

I figured this one I just kind of wanted to make sure.

Jeff Stevens

Okay.

Operator

Your final question comes from Vance Shaw of Credit Suisse.

Vance Shaw – Credit Suisse

Yes this is Vance Shaw from Credit Suisse on the buy side. Thanks guys all my questions were answered excellent quarter.

Jeff Stevens

Thank you, Vance.

Operator

Thank you. I would now like to turn the call over to Mr. Jeff Stevens for closing remarks.

Jeff Stevens

Thanks Melissa. Before we close I would like to thank our employees for their hard work and dedication as we completed some significant maintenance work and also recovered from the weather even that we experience in February. I would like to thank everybody for participating in today’s call and your continued interest in Western Refining.

Operator

Thank you. That concludes today’s fourth quarter and full year 2010 Western Refining earnings conference call. You may now disconnect your lines at this time and have a wonderful day.

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Source: Western Refining CEO Discusses Q4 2010 Results - Earnings Call Transcript
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