Joseph Israel: I will only add by reminding everyone that previous earnings call, we discussed the $1 per barrel of additional OpEx in Big Spring just for the second half of this year. So it will include the 4Q to really address integrity, reliability opportunities that are giving us those fruits. So not much more than that and really nothing on the CapEx side that we need to accomplish to get all the benefits that we discussed earlier.
Avigal Soreq: So that gives you the more overview Doug, on the P&L initiative, we started ahead of time. Obviously, the balance sheet, as Reuven said is the working capital in some of the parts. So for us, we were ahead of the game, preparing ourselves and not waited for the clock to turn.
Q – Doug Leggate: Great stuff. Thanks so much, and Joseph looking forward to seeing you next week.
Joseph Israel: Great. Good to see you.
Operator: Our next question comes from Matthew Blair with Tudor, Pickering, Holt. Please go ahead.
Matthew Blair: Hey, good morning. Joseph, you outlined expected improvements in Big Spring refining margin capture. Could you talk a little bit about what’s driving that? Does that involve any commercial efforts to perhaps increase your exposure to Arizona? Or is this more on the refining side in terms of liability and yield improvement?
Joseph Israel: Matthew, at this point, it’s really fundamentals. And this is the low-hanging fruits, no rocket science there, and this is the beauty of it. By putting the right leadership team out there and really implementing the best practice and the fundamentals on the process side, on the refining side, will improve reliability, and as you know, with better reliability comes the capture and the OpEx side, what you are talking about is really my Phase 2 and 3, when it comes to commercial and good selection and logistics and other opportunities, it will really start with fun.
Matthew Blair: Looking forward to it. And then on the wholesale and asphalt contribution, I believe it was $35 million in the third quarter versus $80 million in the second quarter. What is like a normalized either quarter or year for this business?
Joseph Israel: Yeah. We’ve provided guidance, I think, in the previous quarter when we opened up that supply and marketing line for you guys to model, so asphalt is season, as you know, first and fourth quarter is about $5 million contribution in average, not including oil price changes. And then in the second and third quarter during the season it’s going to be more like $20 million per quarter. Wholesale is more stable. It’s going to be between $20 million to $40 million a quarter.
Matthew Blair: Sounds good. Thank you.
Joseph Israel: Thank you, Michael.
Reuven Spiegel: Thank you.
Operator: Our next question comes from Paul Cheng with Scotiabank. Please go ahead.
Paul Cheng: Hey guys, good morning.
Joseph Israel: Good morning.
Paul Cheng: First, I just want to add my best switches for everyone and their family in Israel and hope everyone is good and okay.
Joseph Israel: Thank you, Paul. I appreciate it.
Paul Cheng: I have a quick question that, Reuven that in the third quarter, is there any meaningful impact from the benefit of mark-to-market on the RVO due to the much lower wind prices?
Reuven Spiegel: No.
Paul Cheng: And that maybe this is for Joseph. In the fourth quarter, we have – in the gasoline market, we have – from a margin standpoint some opposing forces, the butane branding and the mine asset branding economy are extremely good. On the other hand, that the gasoline crack’s sell is poor. So when we combine that how your gasoline yields in the fourth quarter versus the third quarter is going to look like? Historically, I think the industries probably see a couple of percent increase sequentially, but given the dynamic we see that what is your operating plan currently is suggesting?
Reuven Spiegel: So you’re absolutely right. So the butane is growing our favor, but the crack is going the other way. Also, the RVO is a tailwind other than headwinds for us. So big picture, gasoline crack spreads still low versus what we’ve seen last year, but it’s not off the charts on a FY three, two basis cost versus historical in Q4. So we remain very optimistic about the future. I don’t know, Joseph, if you have anything to add to that?
Joseph Israel: Yeah. Just to wrap it up. So other than Krotz Springs, which is producing light products to the Colonial pipeline, really the rest of our system is rack sales based and this would provide us the access to blending and gives us the opportunity versus our average peer to participate in this opportunity. So we are definitely looking on different things in the fourth quarter. On butane blending, like you say, and then the sour heavy spreads will motivate us to look at the lower cost grades on the crude side as we’re going into it and take the advantage from it.
Paul Cheng: Joseph, do you expect the fourth quarter gasoline yield going to be higher than the third quarter?
Joseph Israel: I don’t think so. We are a distillate mode. And we will probably be as close as we can to 42%.
Paul Cheng: Okay. So even with the more building branding and not that you’re not expecting the yield going to be higher?
Joseph Israel: I agree. It’s not going to be enough unless there is a significant change in gasoline distillate economics later in the quarter, which — how to believe.
Paul Cheng: Okay. A final one for me, one that you sort of fixed up Big Spring, what’s the longer-term normal refinery run that we should expect on an annual basis for your system and also what is the cash operating cost under let’s call it, say, $4 Henry Hub any kind of guidance that you can give us? And what is the sustaining CapEx for the company going to look like?
Joseph Israel: Yeah, I’ll start with the Big Spring throughput. So in our plan, we’re basically going back to where Big Spring was in the past. We’re not trying to reinvent the wheels. Unfortunately, most of it again is low-hanging fruit. So we give very precise estimates how we were looking at things. So 66.5% is the year to-date throughput. We spoke about adding 5,000 barrels per day. And I’m talking about calendar type of throughput I’m not talking about peak. So you’re looking at 71, low-70s, really on the ongoing as a new team. And we’re talking about starting really in 2024, 2025. So this is not something for the long run. It’s really coming and with the 71, we are still leaving the normal 4%, 5% downtime for potential surprises, right? So we’re going to run it in the normal industry utilization rate. Can you please repeat your rehab?
