Frontier Oil Reports Most Profitable Year in Company History

Frontier Oil Corporation reported quarterly net income of $43.4 million, or $0.41 per diluted share for the quarter ended December 31, 2007, compared to net income of $52.4 million or $0.47 per diluted share, for the quarter ended December 31, 2006. For the twelve months ended December 31, 2007, net income totaled a record $499.1 million, or $4.62 per diluted share, compared to the previous record $379.3 million or $3.37 per diluted share for the twelve months ended December 31, 2006.

Frontier benefited from wide crude oil differentials in the fourth quarter of 2007, which helped offset lower product margins. The light/heavy crude oil spread averaged $29.40 per barrel for the fourth quarter of 2007 compared to $14.28 per barrel for the fourth quarter of 2006. The WTI/WTS spread averaged $6.95 per barrel in the most recent quarter compared to $4.84 per barrel for the fourth quarter of 2006. Refined product margins were substantially lower in the fourth quarter of 2007 than in 2006 due in part to high crude oil prices and moderating demand for gasoline, particularly in the Rocky Mountain region. The gasoline crack spread averaged $3.27 per barrel for the quarter ended December 31, 2007, compared to $7.96 per barrel for the quarter ended December 31, 2006. The diesel crack spread averaged $16.06 per barrel for the most recent quarter compared to $20.21 for the same period in 2006.

Frontier's Chairman, President and CEO, James Gibbs, commented, "Although we are disappointed in the lost opportunity that resulted from the fourth quarter fire in our Cheyenne coking unit, we are very proud of the nearly $500 million of net income we reported this year. The gasoline crack spread was weak for the latter part of the fourth quarter and the first half of January, however diesel margins were and continue to be strong. We will begin a 38-day crude unit turnaround at the El Dorado Refinery on March 1, 2008 during which we will tie-in our new vacuum tower. The new vacuum tower should allow us to run a minimum of 120,000 barrels per day of crude oil, including 25,000 barrels per day of heavy crude."

For the three months ended December 31, 2007, Frontier generated cash flow before changes in working capital of $57.4 million. Frontier's cash balance at December 31, 2007 was $297.4 million, down from $432.7 million in the previous quarter due to $44.4 million in share repurchases, $62.4 million in net capital expenditures and an $81.3 million increase in working capital. There were no borrowings under the Company's revolving credit facility. For the twelve months ended December 31, 2007, Frontier generated $566.2 million in cash before changes in working capital while investing approximately $280.0 million in net capital expenditures and $248.5 million in share repurchases. Subsequent to December 31, 2007, Frontier has spent an additional $52.5 million to repurchase its shares.

The fourth quarter 2007 results include an after-tax hedging loss of $31.5 million, or $0.30 per diluted share, compared to an after-tax gain of $6.9 million, or $0.06 per diluted share for the fourth quarter of 2006. For the twelve months ended December 31, 2007, the after-tax hedging loss totaled $53.6 million, or $0.50 per diluted share, compared to an after-tax hedging gain of $21.5 million, or $0.19 per diluted share for the twelve months ended December 31, 2006. The fourth quarter 2007 results also include an after-tax inventory gain of approximately $40.8 million or $0.39 per diluted share, compared to a loss of $24.0 million or $0.22 per diluted share, for the same period of 2006. The twelve months ended December 31, 2007 include an after-tax inventory gain of approximately $78.4 million or $0.73 per diluted share, compared to a loss of $16.1 million, or $0.14 per diluted share for the same period in 2006.

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