Frontier's record quarterly earnings are attributable to outstanding diesel and gasoline crack spreads, wide crude oil differentials and improved refinery utilization. Although our refineries operated at their maximum capacity during the third quarter 2005, hurricanes Rita and Katrina caused substantial damage to refineries located on the Gulf Coast. Gasoline and diesel crack spreads increased sharply during the third quarter 2005, due in part to Gulf Coast refinery outages, as well as to the lack of domestic refining capacity. The diesel crack spread increased to an average of $18.38 per barrel for the third quarter 2005, well above the $8.10 per barrel in the third quarter of 2004. The gasoline crack spread also improved significantly to an average of $18.11 per barrel in the third quarter of 2005 compared to an average of $8.88 per barrel in the third quarter 2004. The light/heavy crude oil differential increased to $14.93 per barrel for the quarter ended September 30, 2005 compared to $9.28 for the quarter ended September 30, 2004. Similarly, the WTI/WTS crude oil differential increased to $3.13 per barrel for the quarter compared to $2.95 per barrel for the third quarter of 2004.
Frontier's crude oil charge for the third quarter 2005 averaged 161,416 barrels per day (bpd), approximately 8,700 bpd more than the average 152,724 bpd the Company charged in the third quarter of 2004. As a result, total product sales averaged 177,196 bpd for the third quarter 2005, compared to 174,204 bpd in the third quarter of 2004.
For the nine months ending September 30, 2005, Frontier generated $239.7 million cash from operating activities while incurring $78.5 million of capital expenditures. Frontier's balance sheet remains in excellent shape at quarter end with a cash balance of $286.6 million and no borrowings under the Company's revolving credit facility. Frontier's cash exceeded its debt by $136.6 million as of September 30, 2005.
Frontier's Chairman, President and CEO, James Gibbs, commented, "Our year to date earnings have been exceptional and our October results were also outstanding. We have amassed significant cash from operations and along with considering capital improvement projects at our refineries, our Board of Directors will evaluate a number of alternatives to return value to our shareholders at the board meeting scheduled for the end of this month."
The third quarter 2005 results include an after-tax inventory gain of approximately $25.4 million, or $0.44 per diluted share, compared to a gain of $13.1 million, or $0.24 per diluted share, for the same period of 2004. The nine months ended September 30, 2005 include an after-tax inventory gain of $43.7 million, or $0.77 per diluted share, compared to a gain of $27.9 million, or $0.51 per diluted share, for the nine-month period ended September 30, 2004.
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