Dec. 3, 2013, 7:07 PM
- BofA Merrill Lynch makes a positive case for leading refiners HollyFrontier (HFC), Valero (VLO) and Tesoro (TSO), believing the rebound in crude spreads signals the early stages of crude saturation on the U.S. Gulf coast and introduces a new layer of seasonal margin volatility that plays to the benefit of the sector.
- The firm upgrades HFC to Buy from Neutral with a $60 price target, up from $51, after HFC has lagged the early seasonal rebound in the U.S. refining sector that has accompanied the expansion in crude differentials.
- VLO is BofA's top pick in the sector; poised to complete a second MLP, VLO can unlock $5-$9/share of value in the stock, the firm says.
- The firm likes TSO's west coast crude advantage and accelerated spending at its MLP.
Nov. 15, 2013, 3:09 PM
- The EPA is proposing a range of 15B-15.52B gallons of renewable fuel in 2014, nearly 3B fewer gallons of biofuel to be blended into gasoline than mandated by the original 2007 law.
- The new proposal angers farm groups, corn ethanol producers and supporters of biodiesel, but it's a victory for oil companies, which have long argued that if the content of ethanol in motor fuel exceeded 10% - i.e., the "blend wall" - it might damage cars, motorcycles and lawn mowers.
- The administration also is setting a 2B-2.5B gallon target range for all advanced biofuels (earlier).
- Among the biggest movers: PEIX +13%, ADM -2.9%.
- Refiners: VLO +0.8%, HFC -0.4%, PSX -0.5%, TSO -0.3%.
- ETF: CORN -1.2%.
Nov. 15, 2013, 11:24 AM
- Barron's is bullish on refiners HollyFrontier (HFC -0.2%) and Tesoro (TSO -0.3%), each of which has operations near the heart of the shale oil boom that should benefit from shifting oil price dynamics.
- HFC will continue to see cost benefits from its proximity to plentiful shale oil, which can be even cheaper than WTI, and is investing to improve the efficiency of its refineries which should give it an edge over competitors as delivery bottlenecks from booming oilfields are resolved with new pipelines.
- Like HFC, TSO has refineries with geographic advantages, which Credit Suisse says are among the best-positioned in U.S. refining; also, TSO's valuation may not reflect the benefits that will result as it moves pipeline, storage and other assets into its Tesoro Logistics (TLLP) MLP.
Nov. 14, 2013, 2:36 PM
- Refiners such as Marathon Petroleum (MPC +4.9%) and Valero (VLO +4%) are surging today, and Barron's Ben Levisohn says it’s all about the oil spread.
- While Brent crude has stayed steady for the last three months, trading at ~$109/bbl, WTI has dropped 12% to ~$94; the more expensive Brent is relative to WTI, the better it is for U.S. refiners.
- VLO, for example, has gained 17% during the past three months, and much of its price has followed the Brent-WTI spread.
- Also: PSX +2.1%, TSO +2.7%, HFC +3.2%, WNR +4.3%, ALJ +5.2%, ALDW +1.3%, CLMT +2.6%, CVI +1.3%.
Nov. 13, 2013, 5:35 PM
- HollyFrontier Corp. (HFC) declares $0.30/share quarterly dividend, in line with previous
- Forward yield 2.67%
- Payable Dec. 27; for shareholders of record Dec . 6; ex-div Dec. 4 .
- Additionally, the board declares special dividend of $0.50/share, payable Dec. 16; for shareholders of record Nov . 29; ex-div Nov .27 .
Nov. 11, 2013, 8:49 AM
- Holly Energy Partners (HEP) says its pipeline volume will be affected by a crude rate reduction at HollyFrontier's (HFC) Navajo refinery.
- HEP expects financial results for the current quarter will be negatively impacted if the reduction in the refinery's production lasts for an extended period of time, but minimum contractual commitments will limit the reduction in HEP's distributable cash flow.
Nov. 6, 2013, 7:06 AM
Nov. 6, 2013, 12:05 AM
Nov. 5, 2013, 5:30 PM
Oct. 15, 2013, 11:35 AM
- Shares of refining companies move higher after Howard Weil's positive note on the sector, whose relative underperformance provides an opportunity for investors who felt they had missed their opportunity to participate in the U.S. energy renaissance to have another shot.
- The firm singles out three stocks for upgrades: HollyFrontier (HFC +2%) and Valero (VLO +0.2%) are upgraded to Outperform from Sector Perform, while Marathon Petroleum (MPC +1.6%) is made a Focus Stock.
Oct. 11, 2013, 11:46 AM
- Refiners continue to rise a day after news of a leaked EPA proposal that would significantly scale back biofuel blending requirements next year.
- The EPA's rationale for a cut in the volume of ethanol that must be blended echoes an argument the oil industry has made for months: The U.S. fuel chain cannot absorb more ethanol.
- Let the lawsuits begin: "Any plan to roll back the targets... under the guise of addressing the blend wall would be patently unlawful," says the head of the Renewable Fuels Association.
- TSO +4.4%, VLO +3.4%, PSX +3.1%, MPC +2.2%, WNR +4.5%, HFC +2.2%, ALJ +6.8%, CVI +2.6%, NTI +2%, DK +7.8%, CLMT +1.8%.
Oct. 10, 2013, 2:18 PM
- Chevron (CVX -0.4%) is lower after warning "significantly lower" earnings from its refining division would send Q3 EPS down Q/Q.
- J.P. Morgan believes investors were anticipating relatively soft downstream results given the currently weak refining margin environment; perhaps that's why refiners are holding up very well today: VLO +4.4%, TSO +3.7%, PSX +2.3%, ALJ +6.7%, MPC +4.5%, WNR +3.7%, HFC +4.2%, CVI +4.6%.
- Citigroup worries about CVX's upstream business too; it was expecting a much larger increase in Q3 production which would put CVX on track to meet its full year guidance of 2,650M boe/day.
Oct. 7, 2013, 6:26 PM
- HollyFrontier's (HFC) credit rating is upgraded two notches to Baa3 - into investment grade - at Moody's, citing the refiner's low leverage and history of conservative financial policies.
- HFC "will continue to be one of the industry leaders in through-the-cycle profitability given its crude procurement advantages emanating from the locations of its refineries near the major shale plays in the U.S.," the ratings agency says.
Oct. 7, 2013, 2:47 PM
- Refining stocks are lower as HollyFrontier (HFC -0.7%) is hit with a downgrade from Imperial Capital, which dropped its rating to In-Line from Outperform, reduces its price target to $41 from $49, and cuts its 2013 EPS estimate to $3.83 from $4.83 and 2014 EPS estimate to $3.50 from $4.00.
- The firm sees continued contraction in refining margins and crude price differentials, especially as the southern leg of the Keystone XL pipeline commences operation later this month.
- Other refiners: VLO -0.6%, TSO -0.8%, MPC -1.4%, PSX -1.5%, WNR -1.4%, ALJ -2.5%, CVI -2.5%.
Oct. 4, 2013, 3:23 PM
- Refiners generally face a "deteriorating earnings outlook," and any potential stock gains in the next six months may not be enough to offset "the inherent downside risk from weaker earnings," Oppenheimer says.
- The firm downgrades HollyFrontier (HFC flat), Marathon Petroleum (MPC -0.1%), Phillips 66 (PSX -0.5%), Tesoro (TSO +1%) and Valero (VLO +0.9%) to Perform from Outperform, and removes price targets for the stocks.
- On a more positive note, the firm says refiners it follows are now in their best shape operationally and financially in years.
- Outlooks for refiners have been mostly pessimistic, although Citigroup upgraded VLO and TSO earlier this week.
Oct. 2, 2013, 4:57 PM
- More on Citigroup's take on oil refiners: The firm expects to see a bottoming of earnings in Q4 for most names, but companies overweight the Midcontinent and/or Midwest could experience a difficult earnings environment through Q1 2014.
- The diverging earnings performance will result in positive price appreciation for some refiners - such as Valero (VLO) and Tesoro (TSO), which earn upgrades to Buy - but underperformance for others, such as on Alon USA (ALDW), CVR Refining (CVRR), Holly Frontier (HFC) and PBF Energy (PBF), which will remain pressured by narrowing price differences between WTI and Brent crude.
- TSO will benefit next year from a tighter gasoline market in California, and VLO will benefit from wider heavy-light differentials in H2 2014 as increased Canadian heavy crude flows to the U.S. Gulf coast, Citi says (earlier: I, II).
HFC vs. ETF Alternatives
HollyFrontier Corp is an independent petroleum refiner. It produces high-value light products such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. It operates in two segments; Refining and HEP.
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