Mixed Results for United Refining

It was a tough first quarter for United Refining, but the Warren, Pa.-based refiner-marketer remains optimistic it will have a strong second quarter.

Net sales for the three months ended November 30, 2008 were $770.5 million, a $76.9 million increase over the $693.6 million reported for the same period in 2007. The 11.1% rise in sales for the quarter was due primarily to increases in fuel prices, the company said.

Operating loss for the first quarter of 2008 was $91.5 million, a decrease of $120.6 million from operating income of $29.1 million for the same quarter in 2007. The operating loss for the current reporting period was primarily the result of negative margins due to the rapidly declining prices for crude and petroleum products. The company purchases crude oil approximately one month in advance of its delivery to the refinery for processing into refined products. This "lag" effect creates negative margins in a declining market, the company said.

Net loss for the first quarter was $59.6 million, a decrease of $73 million from net income of $13.4 million for the quarter of 2007.

The liquidity position of the Company remains strong. As of November 30, 2008, the Company’s working capital was $132.6 million and the current ratio was 2:2. Borrowings on the Bank Revolving Credit facility at Nov. 30, 2008 were $19 million with unused availability of $110.6 million. As of Jan. 20, 2009, there are no borrowings on the $130 million Credit facility and the Company has full access to it.

United Refining operates a 70,000 bpd refinery in Warren, Pa. In addition to its wholesale markets, the company also operates 369 Kwik Fill/Red Apple and Country Fair convenience stores located primarily in New York and Pennsylvania.

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