Frontier Oil, Refiner Earnings Lagging Peers (FTO, SUN, WNR, VLO)

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Frontier Oil (NYSE:FTO) released its third quarter earnings yesterday, and the news was not good. EPS was $0.70, down from $1.28 a year ago, and below analysts’ estimates of $0.73. Revenues rose to $2.2 billion, up 58% from a year ago.

Unlike Sunoco (NYSE:SUN) or Western Refining (NYSE:WNR), Frontier didnot say anything about trying to sell any assets. Valero Energy (NYSE:VLO) appears to have recently signaled that the worst is behind too.

Frontier noted an after-tax hedging gain of $64.2 million for thequarter and a $77.5 million after-tax inventory loss. The companydoubled its cash balance to $464 million, up from $221.2 million at theend of the 2008 second quarter. Most of that gain was due to theissuance of about $195 million in senior long-term debt.

The share prices of Frontier fell $0.06 yesterday and another $0.10after hours. Frontier’s stock is off its 52-week high by about 75% witha $12.45 close.  That is also about 45% above its recent lows.

Paul Ausick
November 7, 2008