HF Sinclair's bid for Holly Energy overshadows profit beat, shares down
Reuters
Published May 04, 2023 06:29AM ET
Updated May 04, 2023 12:12PM ET
By Sourasis Bose
(Reuters) -U.S. refiner HF Sinclair Corp beat estimates for first-quarter profit on Thursday and said it had offered to buy all outstanding shares that it does not already own in Holly Energy Partners (NYSE:HEP) LP.
Shares of HF Sinclair fell 7% to $38.98, with Wall Street analysts suggesting that the quarterly beat could be outweighed by the non-binding buyout proposal.
The deal could be taken negatively if the company management discusses the need to de-leverage at a time when the market is unsure of refining outlook, TD Cowen analyst Jason Gabelman wrote in a note to investors.
Global energy markets have been volatile as risks of a potential recession have raised worries about fuel demand outlook, and concerns have grown about the health of the U.S. banking sector.
HF Sinclair, however, said the deal would simplify its corporate structure and reduce cost.
According to Refinitiv data, HF Sinclair already owns 47.16% of Holly Energy, which had a market value of $2.01 billion as of Wednesday's close.
HIGHER MARGINS DRIVE Q1 BEAT
HF Sinclair, formerly known as HollyFrontier, said its gross margin jumped 87% to $23.70 per produced barrel in the first quarter, helping offset a decline in refinery throughput.
Refinery throughput, or the amount of crude processed, slipped about 1.2% to 558,130 barrels per day due to maintenance activities after last year's high utilization rates to meet a rise in demand. Refinery utilization stood at 73.5%, compared with 88.6% a year earlier.
On an adjusted basis, the Dallas-based energy firm posted a quarterly profit of $2 per share, compared with analysts' average estimate of $1.52 per share, according to Refinitiv data.
"1Q EPS comfortably above Street, largely driven by high refining margins as well as strong performance across segments," said RBC Capital Markets Analyst TJ Schultz.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.