HF Sinclair tops Q3 profit estimates on steady demand for refined products

By Tanay Dhumal

(Reuters) -U.S. refiner HF Sinclair on Thursday beat third-quarter profit estimates, helped by resilient demand for refined products amid tight supplies.

Shares of the company were up 4.2% at $58.10 in morning trading.

Demand for refined products remained stable during the quarter after the voluntary production cut from top OPEC+ oil producers Saudi Arabia and Russia, low levels of crude stockpiles in the U.S. and increased exports kept supplies tight.

The company's third-quarter adjusted profit of $4.06 per share topped analysts' average estimate of $3.67, according to LSEG data.

However, its quarterly refinery gross margin contracted 15.5% to $26.59 per barrel, compared with last year, but managed to beat expectations of several brokerages.

Bigger rivals Marathon Petroleum and Valero Energy's earnings also took a hit from lower refining margins.

U.S. refiners' margins came under pressure during the quarter after crude prices eased from last year's Russia-Ukraine conflict.

HF Sinclair's refinery throughput fell nearly 6% to 645,100 barrels per day (bpd) for the reported quarter, while refinery utilization was 88.8% compared with 95.2% last year.

The decline was primarily a result of turnarounds at Tulsa and Casper refineries, the company said.

For the current quarter, it expects to run 590,000 to 620,000 bpd through its refineries.

"We think that DINO should benefit in 2024, given that refined product inventories continue to remain tight while demand continues to stay resilient," Jonnathan Handshoe, equity analyst at CFRA Research.

HF Sinclair's earnings got a boost from the lubricants and specialty products unit as the quarterly core profit from the segment rose to $118.4 million, compared with $15.2 million reported last year.

The company returned $669.2 million to stockholders in the third quarter.

(Reporting by Tanay Dhumal in Bengaluru; Editing by Shweta Agarwal)