HF Sinclair Corporation (NYSE:DINO) Q3 2023 Earnings Call Transcript

Valerie Pompa: As we said earlier, we are very focused on each asset putting forward, reliability improvement plans. We are focused both on competitive spend, write dollars to buy down operating risk to improve reliability and making sure our money is going in the right places and improving reliability, which will ultimately get our utilization up. We are more challenged in the West and those facilities are primary focus for our efforts, particularly our Sinclair assets along with Woods Cross and PSR are all working improved structure on cost. But again, our biggest opportunity is reliable assets, produce more barrels, they are safer and we get a better outcome in performance and execution.

Paul Cheng: [Indiscernible] do you guys have a number that you can share with at the West unit cost on the longer term basis that you are targeting in?

Tim Go: No, we are not ready to give out any specific numbers or guidance in that area. But we do believe there is plenty of opportunities in the West that we are going after.

Paul Cheng: Second question is that as you are about to post HEP and roll it back up, once that you have done that, is it just business as usual and then you simplify your corporate structure or that that’s going to see real actual operating benefit? Just want to see that whether we should expect some improvement or that is just say reducing the corporate structure capacity?

Atanas Atanasov: Your observation is correct. We are seeing opportunities for simplification and optimizing our portfolio. To give you just an example, what used to be at times complicated negotiation on contracts, inter-company contracts now is going to be a more simplified process, which would really help us to focus on efficiencies and commercial opportunities. So the simplification part of that benefit is going to be meaningful to us. And with respect to the corporate structure, you will get your run of the mills savings of essentially running one public company as opposed to having two public companies. And on top of that, we also see some synergies with respect to the debt as the growth gets rolled up at the DINO level. So all good outcomes for us.

Paul Cheng: Atanas, is there a number that you can share in terms of the operating synergies? Excluding, I mean, the debt, we can understand, but also like the financial lower interest, I mean, the real operating benefit. Is there a number you can share?

Atanas Atanasov: We will be in better position to shed more light on that after the close of the transaction.

Operator: Your next question comes from the line of Matthew Blair from TPH.

Matthew Blair: Do you have any early thoughts on refining capture in fourth quarter? I think Q3 was around 60%. It seems like the fourth quarter would include some pretty considerable tailwinds from things like wider WCS discounts, butane blending, lower rims and then it looks like lower refinery maintenance.

Steve Ledbetter: And I always appreciate the questions that always have the thesis included, in terms of the answer, and that was one of those. So we do see also a cleaner quarter ahead in Q4. We do think that the diffs, WCS in particular, TI dif will blow out and has already in the forward strip. And we have minimal planned maintenance, we are finishing up the Tulsa turnaround. So supportive structure and margin in terms of distillate diesel on jet, we’ll be moving gas around and we’re in max diesel and jet mode for Q4. So we think we have some opportunities to have a cleaner quarter ahead. But we are not giving explicit guidance on what that number is but we do see a good path ahead.

Tim Go: We’ve got some good tailwinds, as you mentioned, Matt. But seasonally, the fourth quarter always tends to be a little lower on capture too, just because margin is compressed. So that will be the offset to some of the tailwinds that we are seeing.

Matthew Blair: And then I am not sure if this has been addressed yet. But any thoughts on the potential for large scale refinery M&A from HF Sinclair here?