Overall, 2007 was a strong year for IW 50 Best Manufacturer Frontier Oil Corp. The Houston-based refiner concluded 2007 with a record $499.2 million profit, or $4.62 per share, compared with the previous all-time-high in 2006 of $379.3 million, or $3.37 per share.
But lower refining margins and high crude oil prices during the fourth quarter led to a profit decline of 17.2% from the year-earlier period. Net income totaled $43.4 million, or 41 cents per share, compared with $52.4 million, or 47 cents per share, during the same period in 2006.
Refinery production in the quarter fell to 157,772 barrels per day compared with 173,613 barrels per day in 2006 because of throughput constraints from heavier crude and a fire in the coking unit at the Cheyenne, Wyoming, refinery. When the company released its earnings in late February President and CEO James Gibbs said it was on track to expand crude production to 120,000 barrels per day at Frontier's El Dorado, Kansas, refinery. Previous output was 110,000 barrels per day, according to Reuters news service.
"Although we are disappointed in the lost opportunity that resulted from the fourth-quarter fire in our Cheyenne coking unit, we are very proud of the nearly $500 million of net income we reported this year," said Gibbs in a statement.
Earlier in the quarter, the company agreed in principle to pay $10 million to settle lawsuits brought by more than 1,000 former students, employees and nearby residents of Beverly Hills High School in California who claimed emissions from nearby oil fields operated by a Frontier subsidiary caused cancers and various other health problems.
The settlement is subject to approval by the Los Angeles Superior Court, which should resolve all litigation against the company, including pending appeals.
| At A Glance Frontier Oil Corp. Houston, Texas Primary Industry: Petroleum & Coal Products Number of Employees: 747 2006 In Review Revenue: $5.2 billion Profit Margin: 7.91% Sales Turnover: 3.15 Inventory Turnover: NA Revenue Growth: 19.86% Return On Assets: 31.57% Return On Equity: 85.22% |
"We are pleased to be able to put this litigation behind us," said Gibbs, when the settlement was announced in October. "The proposed settlement will remove uncertainty inherent in this litigation, minimize future legal costs, and allow us to focus on the business of the company."
Frontier said its share of the cost is $6.2 million, which will be funded through its commutation account with the insurance provider. When the first lawsuits were filed in 2003 the company paid $6.25 million to an insurance provider for loss-mitigation and funded with the insurance company a $19.5 million account to cover policy costs, including defense claims. Frontier will retain the insurance in the event of additional claims.
The subsidiary, Wainoco Oil & Gas Co., owned and operated the oil field from 1985 to 1995.
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