Regional Factors Slowing Refiner HF Sinclair

2025-02-09 20:44:18 ET

Summary

• Inland refiner HF Sinclair has a $6.8 billion market cap. It pays a 5.45% dividend.
• Refiner's large margins last year after SPR crude release have normalized and become considerably narrower.
• HF Sinclair faces more competition and thus higher prices for less expensive crudes, particularly from Canada, than it has previously.

HF Sinclair ( DINO ) owns 678,000 BPD of US oil refining capacity ( seven refineries) in the US, three renewable diesel units, lube oil facilities in Canada and Pennsylvania, a specialty chemicals operation in Amsterdam, and a sizable gasoline retail operation under the Sinclair brand.

HF Sinclair will report fourth quarter Q24 results February 20, 2025.

Despite its 5.45% dividend, and a new US energy secretary whose policies run toward energy addition rather than energy subtraction, I am ranking this $6.8 billion market cap refiner and retailer as a hold.

This is less due to the risk of tariffs on Canadian crude, although that it is a risk should President Trump’s administration put them in place, and instead due to:

*Increased waterborne access for Canadian crude in British Columbia after a tripling of TMX pipeline capacity means that Canadian crude is discounted less than it was and so is more expensive for HF Sinclair. It is still discounted to WTI on a quality basis (sulfur, weight) but far less so since its customer pool has widened away from just the US to include many Asian refiners....

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