Holly Corp.: Refining Its Operations

Feb. 28, 2007
Oil refiner embarks on expansion projects to increase crude capacity after record-setting profits.

Dallas-based Holly Corp. isn't done growing, even after posting all-time-high quarterly and annual profits. The company recently announced $325 million in expansion projects aimed at increasing crude capacity.

In February, Holly -- one of IndustryWeek's 50 Best Manufacturers for 2006 -- said it would revamp its Navajo refinery in Artesia, N.M., to increase crude capacity to 100,000 barrels per day (bpd). Holly also will install its second crude unit and a new solvent de-asphalter at Navajo. Other previously approved Navajo expansion projects include a new 15,000-bpd hydrocracker and a 28-million-standard-cubic-feet hydrogen plant. The Navajo projects are part of the company's plan to develop pipeline access at the facility for heavy Canadian crude oil and other foreign heavy crude oils transported from the Cushing, Okla., area.

In December 2006, Holly's board of directors approved a new 15,000 bpd-hydrocracker along with sulfur recovery and desalting equipment at its Woods Cross refinery. These additions will expand the Woods Cross Refinery's crude processing capabilities from 26,000 bpd to 31,000 bpd. It also will allow the refinery to process up to 10,000 bpd of high-value, low-priced Black Wax crude oil and up to 5,000 bpd of low-priced heavy Canadian crude oils. The Woods Cross project also is expected to be completed in 2008.

After achieving a record fourth-quarter profit of $47.7 million, up 20% from the year-earlier period, and record net income of $266.6 million for the year, a 59% increase, CEO Matthew Clifton said refining projects should contribute to future growth.

Holly Corp.
At A Glance

Holly Corp.
Dallas, Texas
Primary Industry: Petroleum and coal products
Number of Employees: 3,600
2005 In Review
Revenue: $3.2 billion
Profit Margin: 5.22%
Sales Turnover: 2.81
Inventory Turnover: 24.39
Revenue Growth: 43.02%
Return On Assets: 17.06%
Return On Equity: 49.32%

"Operationally, we capitalized on the successful completion of value-added refining projects including our ROSE unit start-up in December 2005, our Navajo and Woods Cross ULSD (ultra low sulfur diesel) conversions and the 8,000-barrels-per-day expansion at our Navajo refinery," he said in a Feb. 12 statement. "Looking forward, we remain convinced that the strong industry fundamentals will remain in our favor, as demand for refined products should continue to press refining supply capabilities for at least the next several years. This, combined with our high sour crude oil processing capabilities, our continued execution of value-added refining initiatives and the high-growth markets we serve, should keep our earnings at healthy levels."

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