ENERGY EXPLORATION & PRODUCTION Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : ENERGY EXPLORATION & PRODUCTION

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: Dennis Roth	2/27/2008 5:34:47 AM
	Read Replies (1) of 111

Frontier Oil Corp. (FTO): Maintain CL-Buy; Frontier a key beneficiary of bullish refining view - Goldman Sachs - February 26, 2008 What's changed Frontier Oil reported adjusted 4Q2007 EPS of $0.02 (or $0.32 excluding a $31.5 million post-tax hedging loss), below our estimate of $0.45 and the First Call consensus estimate of $0.46. The variance versus our estimate was caused by a combination of a greater hedging loss than we had been assuming, higher operating costs that were partly the result of a fire at the company's Cheyenne refinery, and slightly lower-than-expected refining margins. We typically include the impact of the company's hedging program in ongoing income, though the magnitude of the loss in 4Q we believe can be considered extraordinary. We are adjusting our 1Q-4Q 2008 and FY2009-2012 EPS estimates primarily to reflect the company's upcoming planned maintenance activity at its El Dorado refinery as well as a slightly lower tax rate. Implications We do not consider the 4Q2007 shortfall material to our outlook for Frontier and reiterate our Conviction Buy rating. The key driver of our positive view of Frontier shares remains the company's significant leverage to our bullish outlook for Mid-Continent refining margins and Canadian light-heavy spreads, as well as its ability to execute successfully on several key capital projects which will increase the company's exposure to both. We also view favorably Frontier's capability and willingness to continue to repurchase shares despite 2008 being an above-average year for capital spending given the growth projects it is pursuing. Valuation We see 34% upside to our unchanged, $52 12-month target price, which is based on asset value, P/E and cash flow valuation analyses. Key risks Key risk is sustained lower refining margins.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next