Steve Ledbetter: Hey, Theresa, this is Steve. Good to speak with you again. Yes, so on our premium, we believe that we are underrepresented in terms of the overall premium make in our markets. And so, we also believe that our locations and our logistic advantages allow us to go compete better. And all of that improvement in terms of more premium percentage over and above subgrade is improvement to capture and it’s something that we’re going to focus on that’s really from a competitive perspective and we see our ability to go compete against some of the other through our branded wholesale channel is really the place where the integrated value chain comes on. And it’s something that quite honestly we need to focus more on and we will continue to do that here into the next few quarters.
Tim Go: Yes. And Theresa, this is Tim. It is good to hear your voice and glad you’re back on. One of the side benefits, I would say, unintended consequences of our focus on hydrogen and making it available for our renewable diesel plants, both in Artesia and in Parco is that, we’ve been running our reformers better. And our reformers that are making hydrogen are also making octane. And that’s what’s giving us a little bit more octane than what we’ve had in the past. And so that’s been benefiting our fuel side as we continue to improve those operations as well.
Theresa Chen: Thank you for that detailed answer and it’s great to speak with all of you again as well. Second question related to the movement of product from Pad 4 to Pad 5, specifically following up on your comments related to the tightness in gasoline in California over time. [indiscernible] pipeline system, are you seeing higher utilization in that and if this is really going to be a structural move, is there a capability to expand that?
Tim Go: Yes. So, I think as far as movements go, things are still balancing out in terms of where products are going to come from in terms of the new demand patterns. We see our footprint from a midstream perspective very well positioned to carry our products out of the Salt Lake Valley into the market and compete well with products coming from the West Coast. And that’s one advantage we see. And we will look to take advantage of continuing to do that through the integrated value chain, both on our production runs, as well as on our midstream assets. And then the other thing is, Tim made a point earlier on being able to produce some carb gasoline and we will continue to look to do that. That actually looks to be like something that is getting shorter as some of these refineries convert on the west coast.
So we will try to fill some of those gaps from our Puget refinery, and then we will also try to take advantage of the marketplace out of the Salt Lake Valley and the Rockies into those markets like Cedar City and Las Vegas.
Theresa Chen: Thank you.
Operator: Your next question comes from the line of Jason Gabelman of TD Cowen. Please go ahead.
Jason Gabelman: Hey, good morning. Thanks for taking my questions. I wanted to ask about the updated mid-cycle refining EBITDA that you provided shortly after last earnings call. It included a higher OpEx per barrel and this is a decent amount of time after the acquisition. So wondering if that was just a delayed update or something else going on there? And then you had in the past broken out the mid-cycle margin between the Gulf Coast crack, the TI brent spread, and then the product transportation to HF Sinclair markets. And that mid-cycle margin moved higher on this update so just wondering what drove that. Thanks.
Tim Go: Yes, Jason, thanks for the question. At the last earnings call we told you that we have now had a couple years under our belt of running these new assets in our portfolio, Puget Sound and the Sinclair assets in particular. And we told you we were going to take a look at what we’ve seen and what we’ve learned from doing that. And that’s what we did when we updated our mid-cycle guidance. We did increase our operating costs because we do see, at least in the near-term, higher than the $6 to $6.50 a barrel target. And we still have long-term, but we just don’t think that’s near term. And so, we raise those op costs to reflect more of what we’re seeing on the West portfolio. But at the same time, we’re actually seeing higher earnings potential out of these assets as well.
And so, that’s why we raised the gross margin per barrel in the mid-cycle estimates as well. We believe and what we’re seeing is that, the gross margin that these assets are bringing in is higher than what we saw. So net-net, the actual impact on our mid-cycle estimate for refining was actually up $250 million to reflect both increased synergies, as well as the increased earnings power that we see from the Puget Sound and from the Sinclair assets that more than offset the higher OpEx.
Jason Gabelman: Okay, got it. To be clear, the increase in the gross margin estimate was not a function of higher Gulf Coast index assumptions. Is that fair?
Tim Go: I think there’s always a mix of all of that Jason, but I think you can think about it as synergies. You can think about it as competitive advantage that we think these assets have in those markets that are out there.
Theresa Chen: Okay, great, thanks. And then my final question is just a couple of clarifications I was hoping you can provide with the 1Q results. I’ll just fire off a few of them. Was there any FIFO impact in the lubricants business? Was there any working capital impact on cash flow? And then can you remind us how much Syncrude you run through your system and if that’s in the West region or the Mid-Con region? Thanks.
Atanas Atanasov: Good morning. This is Atanas. I’ll take the first two. With respect to the FIFO impact on lubricants, it was minimal. It was just a little over $1 million, so practically none for this quarter. And with respect to overall working capital impact on cash flow, we saw a tailwind of approximately $70 million with respect to working capital this quarter. Which makes sense because prices rose in Q1 and generally that’s conducive to working capital.
Tim Go: Yes, I’ll answer on this end. So not given a specific number, but it was significantly discounted early in the quarter. And as we mentioned, we looked to optimize our crude slate flexibility, and we ran a significant amount, both at Puget, El Dorado, and Parco. And it was a record for our runs for the core.
Jason Gabelman: Okay, thanks.
Operator: There are no further questions at this time. I will turn the call back over to Tim for any closing remarks.
Tim Go: Thank you, Kathleen. Before we close, I wanted to welcome our new board member, Jeanne Johns, who was appointed in February. Jeanne is an accomplished business leader and brings strong executive and industry experience and expertise to us, and we are proud to have her on our board. I know we covered a lot of ground this morning, including our bullish outlook for second quarter. But going forward, I want to remind you that our priorities remain the same. We are focused on executing our plan by: one, improving our reliability; two, integrating and optimizing our new portfolio of assets; and three, returning excess cash to our shareholders. Thank you for joining our call, and have a great day.
Operator: This concludes today’s conference. Please disconnect your line at this time and have a wonderful day.
