HF Sinclair Corporation (DINO) Q1 2017 Earnings Report, Transcript and Summary

Welcome to HollyFrontier Corporation's First Quarter 2017 Conference Call and Webcast. Hosting the call today from HollyFrontier is George Damiris, President and Chief Executive Officer. He is joined by Rich Voliva, Executive Vice President and Chief Financial Officer; and Tom Creery, President, Refining and Marketing (sic) [Senior Vice President, Commercial] (0:22). At this time, all participants have been placed in a listen-only mode, and the floor will be opened for questions following the presentation. [Operator Instructions] Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Director, Investor Relations. Craig, you may begin.

Thanks you, Sharon. Good morning, everyone, and welcome to HollyFrontier Corporation's first quarter 2017 earnings call. I'm Craig Biery, Director of Investor Relations for HollyFrontier. This morning, we issued a press release announcing results for the quarter ending March 31, 2017. If you would like a copy of the press release, you may find one on our website, hollyfrontier.com. Before George, Tom and Rich proceed with their remarks, please note the safe harbor disclosure statement in today's press release. In summary, it says statements made regarding management expectations, judgments or predictions are forward-looking statements. These statements are intended to be covered under the safe harbor provisions of federal security law. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings. Today's statements are not guarantees of future outcomes. The call also may include discussion of non-GAAP measures and please see the press release for reconciliations to GAAP financial measures. Also, please note that information presented on today's call speaks only as of today, May 3, 2017. Any time-sensitive information provided may no longer be accurate at the time of any webcast replay or reading of the transcript. And with that, I'll turn the call over to George Damiris.

Thanks, Craig. Good morning, everyone. Today we reported first quarter net loss attributable to HFC shareholders of $45.5 million, or $0.26 per diluted share. Certain items detailed in our earnings release that Rich will discuss in his prepared remarks, decreased net income by $12 million on an after-tax basis. Excluding these items, net loss for the quarter was $33.4 million versus a loss of $10 million for the same period last year. Adjusted EBITDA for the period was $85 million, a 10% decrease compared to the first quarter of 2016. This decrease is principally attributable to lower refinery segment production and sales volumes from heavy maintenance during the period, partially offset by earnings from our recently acquired Petro-Canada Lubricants business, PCLI. We're pleased to report the first two months of financial performance from PCLI in our consolidated earnings. Adjusted EBITDA for February and March was $28 million, in line with our annual guidance range. Our sales averaged 24,140 barrels per day and our operating costs were $36 million for the period. We are currently seeing strength in the base oil market driven by seasonal demand and look forward to recognizing a full quarter of earnings in the second quarter. This morning we published a lubricants primer on our HFC Investor Relations page to provide you with a deeper insight into our lubricants business. The integration of PCLI continues to progress smoothly. We appreciate the warm reception from our new, talented, knowledgeable and dedicated colleagues and welcome them and the skills and capabilities they bring to HFC. We remain confident in our $20 million per year synergy target and expect to realize these benefits as we further integrate our two lubricants businesses. Combining PCLI with our existing Tulsa specialty lubricants business creates scale, diversity, operational and financial synergies and a solid platform for growth. There is also opportunity to increase Group III base oil production through feedstock optimization, along for significant margin uplift potential. We are excited about our growing presence in the lubricants industry and are encouraged by our progress integrating PCLI into HollyFrontier. Our refining outlook for 2017 remains cautiously optimistic. We anticipate solid economic growth, but continue to support refined product demand and sustained growth in domestic crude oil production will lead to improved crude differentials. We're also optimistic that a more favorable regulatory environment could provide a tailwind for both the refining industry and the economy as a whole. With a large portion of our scheduled maintenance behind us, we are poised for strong financial and operational performance for the remainder of the year. Now, I'll turn the call over to Tom for an update on our operations and commercial activity.

Thanks, George, and good morning, everyone. On the operations side we had a first quarter crude surplus of 371,000 barrels per day versus our guidance of 350,000 to 360,000 barrels a day, as driven by a heavy maintenance schedule. During the quarter, we successfully completed the very large turnaround at our Navajo refinery. In fact, this turnaround was one of the largest in company history and included the revamps to multiple units as part of our $40 million efficiency and de-bottleneck project, thereby increasing Navajo's overall throughput capacity and allowing us to run more of the higher API gravity crude oils coming out of the Delaware Basin. We had unplanned maintenance on our Tulsa reformer, and planned maintenance of the El Dorado vacuum tower. During the Tulsa outage, we were able to accelerate other maintenance and a catalyst upgrade originally planned for later this year, all of which allowed us to benefit from higher liquid yields and octane during the summer driving season. We have no major planned downtime until our scheduled turnaround at Tulsa West in November of this year. We are focused on improving operations and reliability at our Cheyenne plant, and we expect our performance to continue trending in the right direction in the Rockies region. During the quarter, we ran an average crude rate of 74,710 barrels per day. Cheyenne operations are improving, and we ran at a very strong 48,300 barrels per day crude rate in the month of March. Adjusting for HEP tariffs embedded in the Woods Cross and Rocky Mountain, OpEx was $8.91 per barrel. This amounted to a 10% reduction over fourth quarter of 2016. On the commercial side, we ran 26% sour and 19% WCS and black wax crude. Our average laid-in crude cost under WTI was $0.61 in the Mid-Con, $3.83 in the Rockies and $1.70 in the Southwest. We are continuing to see compressed differentials in both the synthetic and WCS crudes due to the Canadian synthetic production interruption coupled with apportionments on the import line from Canada. We are optimizing our crude slates to minimize these effects by increasing volumes of Permian Basin crudes that can be delivered to the El Dorado refinery by the Centurion and Osage pipelines. First quarter consolidated refinery gross margin was $7.74 per barrel, a slight increase over the $7.59 recorded in the first quarter of 2016. In the Mid-Con and Southwest, our realized margin was impacted by our maintenance at our Tulsa, El Dorado and Navajo refineries. In the Rockies, our realized margin was impacted by the temporary Salt Lake City pipeline outage. However, we were able to backfill a certain portion of our crude slate and capture the increase in product cracks. During the increase in our laid-in crude costs, improved operations at Woods Cross and Cheyenne helped us realize almost a $4 increase versus the prior quarter. Our RINs expense in the quarter was $66 million. We remain optimistic that flaws and inequities that are inherent with the mandate will be addressed by the present administration. For the second quarter of 2017 we expect to run between 440,000 and 450,000 a day of crude oil. And with that, let me turn the call over to Rich.

Thank you, Tom. First quarter included several unusual items. Pre-tax earnings were negatively impacted by $15.6 million in acquisition-related charges, a $12 million lower cost or market charge, $10.2 million in charges attributable to the inventory value step-up at PCLI and a $4.5 million charge for HollyFrontier's share of Holly Energy Partners early extinguishment of debt. These charges were partially offset by a $24.5 million gain from foreign currency hedges related to the purchase of PCLI. As George mentioned, we have included a reconciliation of these items in our press release. PCLI's adjusted EBITDA over two months was $28 million. HollyFrontier realized a $10.2 million non-cash charge through PCLI's cost of goods sold for the step-up in inventory valuation associated with purchase accounting. We expect to realize a final $5 million of this non-cash step-up in the second quarter. While it is early days, we are very pleased with the performance of PCLI, and look forward to the opportunities to come. For the first quarter of 2017, cash flow consumed by operations was $39.4 million, including turnaround spending of $48 million. HollyFrontier's standalone CapEx totaled $49 million for first quarter. For 2017 we expect to spend between $375 million and $425 million of standalone capital, including turnarounds. This is a decrease of $25 million compared to our original guidance. Additionally, we expect to spend $40 million of capital for HEP and $30 million for PCLI. As of March 31, 2017, our total cash and marketable securities balance stood at $130 million. During the first quarter we announced and paid a $0.33 regular dividend, putting our yield at 4.7% as of last night's close. As of March 31 we have $1 billion of standalone debt, and no drawings under our $1.35 billion credit facility. This puts our liquidity at a very healthy $1.5 billion, and debt to capital at a modest 18%. On Monday HollyFrontier received an investment grade rating of BBB- with a stable outlook from Fitch ratings. We now hold investment grade ratings from S&P, Moody's and Fitch, to illustrate our strong balance sheet. HollyFrontier owns 36% of Holly Energy Partners, including a 2% general partner interest. HEP units continue to perform well and the current market value of HollyFrontier's LP units is over $800 million. First quarter general partner distributions were $79.8 million, a 43% increase over the same quarter 2016. As part of the lubricant primer posted today, we have posted benchmark margins for Group I, Group II and Group III base oils. Going forward we will publish these lubricant indicators monthly, along with the WTI base 3-2-1 margins for each of our operating regions. These regional product and base oil indicators do not reflect actual sales data and are meant to show monthly trends. Realized first margin per barrel may differ from indicators for a variety of reasons. You can find this data on the investor page of www.hollyfrontier.com. Finally, we'll be hosting an Analyst Day on the afternoon of December 7 at the New York Stock Exchange. More details will follow. And with that, Sharon, we're ready to take questions.

The floor is now opened for questions. Our first question is coming from Doug Leggate from Bank of America Merrill Lynch. Please go ahead.

Thanks. Good morning, everybody. And thanks for the additional detail on lubes. I think we all needed a little bit of help with that. So I've got two questions, if I may. So the first one is on obviously capture rate was hit by maintenance and associated opportunity costs this quarter, but I'm trying to understand the impact of the RINs impact, the RINs cost. And I wonder if you could walk us through the sequential change in costs. And what I'm really trying to get at is my understanding is you were kind of over-inventoried on RINs at the end of last year. Does that mean that you get a delayed impact from the reduction in RIN costs? In other words, will we see it show up a little more aggressively in subsequent quarters? And I've got a follow-up, please.

Hey, Doug, it's Rich. So the short answer is yes, you're correct. We did consume some RIN inventory during the quarter, and we use a weighted average cost of accounting for those RINs, so we did have – we were running RINs that are higher than market through the P&L during the first quarter. So long story short, yes, you're correct, we'll see a delayed benefit from the improvement RIN market.

Can you quantify the impact, Rich? The impact of the delay? In other words, if you were using spot RINs versus inventoried RINs, what would the difference be?

It'd be about a $15 million to $20 million difference.

Okay. That's really helpful. Thanks. I guess my follow-up is – I've got a number of things I wanted to ask but I'll just keep it to two questions. So I'll just go with PCLI. You've had heard it for a couple months now I guess. The run rate seems to be a little bit above the $150 million – the greater than $150 million guidance you suggested for EBITDA. What are you seeing good and bad from as you integrate that business? And are you still comfortable with that guidance? What I'm really getting at is, it looks like there may be some upside to that guidance. I'll leave it there. Thanks.

Yeah, I wouldn't bake in that upside just yet. I mean, it's still very early, two months into this. But the original question regarding the good and the bad, what we're seeing from PCLI, it's all on the good side. I mean the people we're getting have been very impressive, they've been very cooperative. It's basically they feel like they've been unleashed and freed up to do a lot more creative thinking and doing than they have under prior ownership. So that's a testament to them, and I think that's a testament also to the culture we have at HFC. But we, across the board, as far as both the base business and the potential upsides we see through synergies and feedstock optimization, all that is exactly as we expected, if not better, than when we walked in the door.

I appreciate that, guys. And Rich, Craig, congrats on getting your first quarter under your belt.

Thanks, sir.

Your next question comes from Blake Fernandez from Scotia Howard Weil. Your line is open.

Hey, guys. Good morning. I'll ask two questions, both on lubes. For one, I'm not as familiar with the volatility or seasonality of the market so I'm just curious, is 1Q typically a stronger or weaker period? So in other words, is it fair to kind of extrapolate those two months across the year? And then maybe I'll just ask both questions and then you can respond. The second question is on the synergies of $20 million through 2018. For one, I wanted to confirm that that is not part of your original $150 million midpoint of EBITDA. And then secondly when do you think that we can maybe start to see some of that beginning to flow through and actually hit the EBITDA stream? Thanks.

Sure, I'll try to take those. As far as seasonality or what February and March are indicators versus the full year I would say that February and March are not necessarily the peak season. I think the peak is really coming more in the second quarter. But there is not as much seasonality as perhaps our prepared remarks meant to imply here. It's more of a stable business but if you want to call one quarter more seasonal than the other I'd probably call the second quarter in preparation for driving season and warmer weather when people tend to change out their oil more. As far as the synergies, again we're very early in to this. We're just getting to know each other between our Tulsa and our PCLI lubricants businesses. But I think you can start to expect some of that to flow through late this year but most of it will start coming in 2018.

And George, just to confirm, that is not part of kind of the EBITDA of $150 million that you articulated, wouldn't you...

That's right. That's above the base expectation for the business, Blake.

Okay. Thanks, guys.

Sure.

Your next question comes from Paul Cheng from Barclays. Your line is open.

I think my first question is for Rich. Rich, on the roughly $23 million in operating profit and EBITDA about $20 million, do you have a split between the base oil side, the manufacturing side and what is the lubricant side, the wholesale, or the marketing side? And also whether the result is pretty even between factory or module, one is substantially better than the other?

So Paul, on the first question, I think it's too early for us to get to that level of granularity. We'll work to that over the course of the year. As we mentioned, right, we expect to have more disclosure over time here. On your second question, I think it's pretty evenly split basically between February and March. There was no major difference between the months.

And second question for, I think this is probably for George. George, is there any particular good reason that you want to keep the GP instead of say, maybe restructure and in exchange of a more maybe transparent vehicle in the LP, given that is already in the high speed? And also that, I mean, by doing so that maybe it would allow the HEP have a lower capital cost and perhaps that improve the competitive position in the market?

Okay. So I think the answer to your first part of your question is regarding the GP, I think there is a simple one-word answer for that, and that's control. So we want to keep the GP for very simple control reasons. I think your larger question is really intended at the cost of capital side, and I think we said previously, and we're still in the very early stages of pursuing this, Paul, we do want to look at the IDRs and see if there is some sort of deal that can be struck between HFC and HEP that's a win-win for both, that basically lowers HEP's cost of capital as a result.

Do you have any kind of timeline in mind when that you may make the decision?

Well, we think we can get something scoped out this year. As you know, these things have a lot of tax details associated with them, and our people have been a little bit tied up with PCLI, those that we need to really take the deep dive on the detailed issues here. So now that we're...

I'm sure Rich doesn't need to sleep, so he would be able to work for the...

Well, Rich is already growing fangs from being a vampire with no sleep, so...

Well, thank you.

Bottom line though, Paul, we think we'll have something fleshed out either way by the end of the year.

Got it. Thank you.

Your next question comes from Ed Westlake from Credit Suisse. Your line is open. Edward Westlake - Credit Suisse Securities (USA) LLC Yes, good morning. I guess two questions. One, you shouted out some improvements in the assets of Navajo and then Tulsa from the turnaround work that you did in the first quarter. I wonder if you can quantify the EBITDA uplift you think in a normal steady state that would come from those improvements? And then the second question's around the contracting of Bakken and WCS crude. Obviously, those diffs (22:20) have tightened because of dapple (22:22) and syncrude, that clearly would have a negative impact. And I'm just wondering if there's anything you can do to mitigate or any color you can add to that? Appreciate they're temporary (22:32).

Yeah. Sure, sure, Ed. I think we've given a little bit of directional indication of what we think we can do with the projects at Navajo and at Tulsa. And again, directionally at Navajo, it's going to buy us a little bit more crude rate, and make us more efficient in our downstream units by eliminating recycled streams that will basically get us a few thousand barrels per day more capacity in some of our downstream units like the DHT and NHT. But I don't think we want to put an EBITDA dollar figure to those, Ed. I mean it's just... Edward Westlake - Credit Suisse Securities (USA) LLC We can do that work. That's fine.

Okay. And same thing at Tulsa. I mean, Tulsa, the new catalyst gets us better yields and more octane capability. But again, assigning a specific EBITDA range or target to that is not something we'd like to do. On the crude supply side, as you said, Bakken and WCS have tightened up and I'll let Tom give you a little bit more feel and flavor for that.

Sure. Morning, Ed. Let's just talk about WCS first. As previously mentioned, what we did at the El Dorado refinery is we increased runs of what we call the Permian sour blend that we can source in the Permian Basin and bring it over, so those during the month of March, we got as high as 65,000 barrels a day of deliveries from the Permian Basin, which was an all-time record for us. So that helped us reposition our crude slate to take advantage of higher WCS prices at Cushing for those barrels. And then at Cheyenne, what we've seen in the Cheyenne market, we've seen very high asphalt prices this spring that still allows us to run WCS at a good margin there. So what we've done is we've trimmed back our Coker and made more asphalt and optimized profitability there. And Bakken prices, we buy everything on a delivered basis at Cushing on Bakken and we saw some tightening towards the end of the quarter because of dapple that we will readjust as we move forward and replace with other grades as per the LP. Edward Westlake - Credit Suisse Securities (USA) LLC And then just a very quick one on lubes. The data pack you've put out has a bump in margins in March. Is that just the seasonality you're referring to for the 2Q peak, or is that just declining oil prices and some stickiness on the base oil prices relative to oil? Just trying to get a sense of how this process works and...

Yeah, that's more attributable to the seasonality. Edward Westlake - Credit Suisse Securities (USA) LLC Okay. Thank you.

Hey, Ed, thank you.

Your next question comes from Phil Gresh from JPMorgan. Your line is open.

Hey. Good morning. The first question's just a follow-up on the RINs. I believe in the first quarter of last year it was $46 million and I know you mentioned the $15 to $20 million difference using weighted-average cost. I just want to get a sense of how you think the rest of the year would progress based on the current RINs price relative to what the full-year cost was for last year.

Phil, look, we're going to shy of – given how absurd this market is, we can't even pretend to give you guidance on what RINs are going to do going forward.

Okay, so moving on to my next question then. So for HFC, how are you thinking about the droppable EBITDA at this point to HEP and do you anticipate this year potentially having any drops?

So we're not anticipating a drop-down in 2017. Obviously we did an outsized drop-down with the Woods Cross processing unit last year. We think we've probably got a little more runway in the drop-downs of processing units. Obviously we've done all the traditional logistics in terms of pipes and tanks. But really what we'd like to do, and this gets to the IDR discussion is we'd like to see HEP continue to grow externally if you will. I think the other major area where we still have opportunities to leverage HFC for HEP's benefit is replacing other third-party service providers with HEP. Again we spend about $1 billion a year moving things around at HFC. Not meaning to imply that all of that is addressable through this strategy but there is still opportunities for us to give some of that business to HEP.

If I go back to the analyst day I believe you had talked about $200 million of dropped proceeds per year and I know you had a larger one last year so maybe nothing in the queue for this year. But I thought that there was more in the backlog I guess.

Yes. So Phil, at the time we mentioned that those were going to be lumpy so the $200 million was not meant to be ratable by year but it was the easiest way to portray the math. It's also somewhat related obviously to the pace of projects and projects that fit the models, if you will, at HollyFrontier. So obviously we've cut capital spending back a little bit. So I think we'd expect – again we've got some more runway there but we wouldn't expect to do anything in 2017.

Sure. Okay. And this last question just on the CapEx. Can you remind us how much is the sustaining capital requirements underlying those numbers you gave and just the turnaround piece of that? How much of that was for turnarounds and whether you'd consider this a normal number or a higher than normal number?

So, I think a turnaround number this is year is, call it, $150 million to $165 million, that's higher than normal this year just based on timing of maintenance. Sustaining capital on a run rate basis, call it, about $100 million a year.

Okay. Thanks.

Your next question comes from Roger Read from Wells Fargo. Your line is open.

Yeah, thanks. Good morning.

Morning, Roger.

I guess, maybe just following up a little bit on the PCLI piece here. You've obviously highlighted not a lot of volatility on the business, a little better March. Curious as you look forward though, and maybe a little bit back from the time you acquired it, on pricing and some of the moves in crude, because we had the big move in crude in kind of December and January. Has the company, has the business caught up with that move in crude and so we're okay from this point assuming no major price moves, or is there still more catch-up to occur and that feeds into some of the guidance for the full year?

I think as you're hinting at, there is generally a lag between crude moves and lubricant price moves so to the extent that crude prices have moved up in the last few months, I think there is still some catch-up to be done on the lubes price side.

And is there a rule of thumb you think we can use on that? I mean, 60, 90, 120 days, or...

There really is no one number, but I would say somewhere between two months to four months, so maybe 90 days on average. Again...

Okay. Great, thanks. I'm sorry. Go ahead. I didn't mean to cut you off, George.

That's all right, Roger. It's just tough to give a specific guidance here because there's so many different products that are produced and so many different pricing relationships, so we'll be able to provide more color as we get further into the details of the business as well.

Sure, absolutely, and then back to I think it was Ed's question about EBITDA out of the refineries post some of these improvements. Maybe if you don't want to talk about EBITDA guidance, can you give us an idea of maybe, Navajo, huge turnaround as you said, kind of expectations for either higher run rates or a higher level of utilization and maybe also with some of the other units here?

Yes, I think the highest level again, I think we expect to get about 5,000 barrels per day more crude capacity at Navajo. So we have typically run in the low 100,000, somewhere 103,000, 105,000 barrels per day. We hope to be pushing as high as 110,000 with the modifications that were made during this turnaround.

Thanks for that. And then I guess really I was trying to get to maybe like a reliability aspect. I mean, I know you until you run it you can't say for certain. But is there an expectation that reliability is improved here and at some of the other units, including Tulsa, following some of this work?

Yes. I would say that Navajo has been one of our more solid performers, from a reliability perspective. They can get locked into 105,000 for extended periods of time and we look forward to getting them locked at 110,000 for extended periods of time.

Okay. Great. Thank you.

Thank you, Roger.

Your next question comes from Chi Chow from Tudor, Pickering, Holt. Your line is open.

Thank you. George, you mentioned that you've undertaken focused efforts to improve operations in the Rockies. Can you provide some specific details on those initiatives? And what results have you seen so far?

Yes. We've dedicated a lot of our talent across our refining system. That's corporate resources from Dallas, as well as resources from our other refineries, especially our El Dorado refinery. So our thanks go to all those dedicated people that are spending time in Cheyenne, Wyoming, versus with their families in the evenings to get this done. We've been at this since our last earnings call in earnest. And we are very encouraged by what we've seen. I can't remember the exact number, but from the fourth quarter of last year, we ran roughly in the mid-30s. And as Tom said in his prepared remarks, in March we ran 48,000 barrels per day. There is a lot of days where we're hitting 50,000 barrels per day. And that's where we need Cheyenne to be, in that high 40s to 50,000 barrel per day range. That fills up all the downstream units. And we're looking at the downstream units, especially the DHT and the FCC to get another 1,000 or 2,000 barrels per day more throughputs to those units. So it's a very focused effort. It's led by Tom Shetina who heads up our reliability group here at corporate in Dallas. So kudos to Tom and many, many others that are making that sacrifice to get this done for us.

George, can you talk about operating costs in that region? Any sort of guidance going forward, what we can expect on OpEx?

Look, we'd expect to see continued improvement, to George's point, certainly on a per barrel basis on an aggregate number, two things to highlight there. That should remain relatively stable at that point. And keep in mind that our Rockies OpEx includes tariffs associated with the dropdown to HEP.

Yeah.

So that's not – if you want to think about, like, true or clean operating cost – look, we expect to see continuing improvements certainly on a per-barrel basis as throughputs continue to rise.

So as Rich is getting – our improvements are going to come more from the denominator key as we get the barrels up and we would like to get the Rockies to $7 per barrel and that excludes HEP types of drop-downs that really we can't hang on our operating group. That's more of a corporate finance decision.

Great. Thanks. And then Rich, what was the working capital change in the quarter?

We did draw working capital I want to say around – I don't have the number right in front of me – between $50 million and $100 million this quarter.

Okay. And is that something that reverses out here in Q2 or the balance of the year?

Yeah, I would expect over the next couple of quarters. So a lot of that was driven by the Navajo turnaround. We stored up a lot of refined products so we could supply our customers during that time period. We also typically do a lot of time trades during that period, storing barrels early in the first quarter for subsequent sale in the second quarter.

Okay. And your cash balance was pretty low at quarter end. Do you have a more current cash balance figure and what sort of minimum cash levels are you comfortable with on running the business?

So order of magnitude the cash balances remain basically the same. Obviously there's a lot of volatility intra-month with timing of crude payments. Generally speaking our liquidity is very comfortable at $1.5 billion. I don't know that we necessarily think about it as a cash balance, it's more of a liquidity question than anything.

Okay, great, thanks. Appreciate it, Rich.

Thanks, Chi.

Your next question comes from Paul Cheng from Barclays. Your line is open.

Hey, guys. Two quick follow-ups. In terms of the RIN carryover from last year, Richard, by the end of the first quarter should we assume that it's already over so that the second quarter forward that your RIN cost will essentially base on the spot?

Yeah, Paul, I don't think we want to get into that detail because it starts getting into the commercial side of our business and I don't think we want to tip our hand to the market there.

All right. That's fine. The second one is that with all the turnaround planned and unplanned, do you have any rough estimate what's the opportunity cost associated with each one, the planned and the unplanned including the loss of opportunities?

Yes, I would probably put it in the $40 million range, Paul. That's excluding the large turnaround at Navajo because we don't typically look at LP associated with large planned turnarounds like that.

So the $40 million is essentially for the unplanned downtime?

That's essentially for Tulsa and El Dorado. For the planned downtime at El Dorado, for the vacuum tower, and the unplanned outage at the Tulsa CCR.

Okay. Very good. Thank you.

At this time, I will turn the call over to Mr. Biery.

Thanks, everyone. We appreciate you taking the time to join us on today's call. If you have any follow-up questions, as always, reach out to Investor Relations; otherwise, we look forward to sharing our second quarter results with you in August.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.