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To: bruwin who wrote (23179)	1/21/2006 3:46:31 AM
From: Broken_Clock	Read Replies (1) \| Respond to of 78632

I don't have a definitive answer buy here's what may have happened. See underlined comments in their press release below, Looks as though they had some downtime and built up excess inventories. Make sense to you? Their spreads were actually much higher but with the unplanned downtime they kept buying sour crude and storing it up for the 4th quarter. I'm not the greatest financial genius...that's about the best answer I can come up with. I guess we'll see in a couple of weeks when the 4th Q #'s come out. Press Release Source: Alon USA Energy, Inc. Alon USA Reports Strong Third Quarter Results Tuesday November 8, 4:25 pm ET - Company Schedules Conference Call for November 9, 2005 at 10:00 A.M. EST - DALLAS, Nov. 8 /PRNewswire-FirstCall/ -- Alon USA Energy, Inc. (NYSE: ALJ - News; "Alon") today announced net income for the three months ended September 30, 2005 increased to $24.4 million compared to net income of $6.1 million for the three months ended September 30, 2004, an increase of $18.3 million. Third quarter earnings per share were $0.57 compared to $0.17 for the comparable quarter last year. ADVERTISEMENT [0] Net income for the three months ended September 30, 2005 included $5.0 million of after-tax gain recognized on disposition of assets ("after-tax gain") relating to the contribution of certain pipeline and terminal assets to Holly Energy Partners, L.P. ("HEP") in the first quarter of this year. The amount of after-tax gain recognized was $4.2 million greater than planned due to the acceleration of a portion of the deferred gain relating to the HEP transaction. Net income for the three months ended September 30, 2005 excluding the effects of the accelerated deferred gain would have been $20.2 million, or $0.47 earnings per share, in line with Alon's previously announced third quarter earnings per share estimates. Net income for the nine months ended September 30, 2005 was $74.3 million, or $1.98 earnings per share, compared to net income of $22.9 million, or $0.65 earnings per share for the nine months ended September 30, 2004, an increase of $51.4 million. Excluding the accelerated $4.2 million of after- tax gain recognized in the third quarter, net income for the nine months ended September 30, 2005 would have been $70.1 million, or $1.86 earnings per share. The increases in net income for the three and nine months periods ended September 30, 2005 over the comparable periods in 2004 were primarily attributable to continued strong industry refining margins and favorable differentials between WTI and WTS crude oil ("WTI/WTS"). For the third quarter 2005, Gulf Coast 3-2-1 crack spreads increased to an average of $17.13 per barrel compared to an average of $6.71 for the third quarter 2004, primarily due to production interruptions in the Gulf Coast region in connection with hurricanes Katrina and Rita. WTI/WTS crude oil differentials for the third quarter 2005 increased to an average of $4.09 per barrel compared to an average of $3.87 barrel for the third quarter 2004. The positive impact of favorable refining margins and WTI/WTS crude oil differentials in the third quarter 2005 was partially offset by the Company's acceleration of a reformer catalyst regeneration that was previously scheduled for January 2006. As a result of downtime associated with the regeneration, refinery throughput for the third quarter 2005 decreased by approximately 5,400 barrels per day as compared to the second quarter 2005. Despite this reduction in throughput, overall refinery production of 66,747 barrels per day in the third quarter 2005 was 13.5%, or 7,944 barrels per day, higher than third quarter 2004 production due to the expansion of the Big Spring refinery's crude oil throughput capacity in the first quarter 2005. Jeff Morris, Alon's President and CEO, commented "In the third quarter, we were unexpectedly required to accelerate a reformer catalyst regeneration as previously disclosed on September 22, 2005. Now that this regeneration has been completed and the appropriate upgrades are being designed, we expect to avoid the regeneration previously scheduled in January of 2006 and to combine our next regeneration with our scheduled low sulfur fuel upgrade planned for April 2006. Operations are back to normal and we have returned to the consistent performance to which we have become accustomed. "Turning to the fourth quarter, we ran well in October, decreased our inventories and improved our cash position. We expect our cash balance to be further enhanced in the fourth quarter as we convert approximately 300,000 barrels of unfinished product to finished gasoline and diesel. Sweet/sour spreads in October increased over third quarter levels and refining margins remained strong even as Gulf Coast refineries came back on line. Thus, we believe we are on schedule to reduce inventories and increase our cash balances back to planned levels by year end. "During the remainder of 2005, we expect to complete an incremental expansion of our jet fuel hydrotreater from 4,000 barrels per day to 5,000 barrels per day. We expect to implement this expansion without impacting throughput at the Big Spring refinery. We also plan to begin investments in our asphalt facilities in Big Spring and in Bakersfield, California to grow our premium asphalt business. 2005 will be a record year for asphalt sales for us, as we sold out our entire Big Spring production of 150,000 tons and our Bakersfield facility will triple last year's sales volumes. These results further evidence the quality of our asphalt business."