Could 4 (Reuters) – U.S. refiner HF Sinclair Corp (DINO.N) beat estimates for first-quarter revenue on Thursday and mentioned it had provided to purchase all excellent shares that it doesn’t already personal in Holly Vitality Companions LP (HEP.N).
Shares of HF Sinclair fell 7% to $38.98, with Wall Avenue analysts suggesting that the quarterly beat may very well be outweighed by the non-binding buyout proposal.
The deal may very well be taken negatively if the corporate administration discusses the necessity to de-leverage at a time when the market is uncertain of refining outlook, TD Cowen analyst Jason Gabelman wrote in a notice to traders.
International vitality markets have been unstable as dangers of a possible recession have raised worries about gasoline demand outlook, and considerations have grown concerning the well being of the U.S. banking sector.
HF Sinclair, nevertheless, mentioned the deal would simplify its company construction and scale back value.
In line with Refinitiv knowledge, HF Sinclair already owns 47.16% of Holly Vitality, which had a market worth of $2.01 billion as of Wednesday’s shut.
HIGHER MARGINS DRIVE Q1 BEAT
HF Sinclair, previously generally known as HollyFrontier, mentioned its gross margin jumped 87% to $23.70 per produced barrel within the first quarter, serving to offset a decline in refinery throughput.
Refinery throughput, or the quantity of crude processed, slipped about 1.2% to 558,130 barrels per day on account of upkeep actions after final yr’s excessive utilization charges to satisfy an increase in demand. Refinery utilization stood at 73.5%, in contrast with 88.6% a yr earlier.
On an adjusted foundation, the Dallas-based vitality agency posted a quarterly revenue of $2 per share, in contrast with analysts’ common estimate of $1.52 per share, based on Refinitiv knowledge.
“1Q EPS comfortably above Avenue, largely pushed by excessive refining margins in addition to robust efficiency throughout segments,” mentioned RBC Capital Markets Analyst TJ Schultz.
Reporting by Sourasis Bose in Bengaluru; Modifying by Subhranshu Sahu
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