Alon USA Energy Inc. Reports Operating Results (10-K)

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Mar 15, 2011
Alon USA Energy Inc. (ALJ, Financial) filed Annual Report for the period ended 2010-12-31.

Alon Usa Energy Inc. has a market cap of $618.7 million; its shares were traded at around $11.42 with and P/S ratio of 0.2. The dividend yield of Alon Usa Energy Inc. stocks is 1.4%.

Highlight of Business Operations:

On July 28, 2005, our stock began trading on the New York Stock Exchange under the trading symbol ALJ. We are a controlled company under the rules and regulations of the New York Stock Exchange because Alon Israel Oil Company, Ltd. (Alon Israel) holds more than 50% of the voting power for the election of our directors through its ownership of approximately 75% of our outstanding common stock. Alon Israel, an Israeli limited liability company, is the largest services and trade company in Israel. Alon Israel entered the gasoline marketing and convenience store business in Israel in 1989 and has grown to become a leading marketer of petroleum products and one of the largest operators of retail gasoline and convenience stores in Israel. Alon Israel is a controlling shareholder of Alon Holdings Blue Square-Israel Ltd. (Blue Square), a leading retailer in Israel, which is listed on the New York Stock Exchange and the Tel Aviv Stock Exchange, and Blue Square is a controlling shareholder of Dor-Alon Energy in Israel (1988) Ltd. (Dor-Alon), a leading Israeli marketer, developer and operator of gas stations and shopping centers, which is listed on the Tel Aviv Stock Exchange.

Our Big Spring refinery produces ultra-low sulfur gasoline, ultra-low sulfur diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt and other petroleum products. This refinery typically converts approximately 90.0% of its feedstock into finished products such as gasoline, diesel, jet fuel and petrochemicals, with the remaining 10.0% primarily converted to asphalt and liquefied petroleum gas.

Sour crude oil has typically accounted for more than 90% of our crude oil input at the Big Spring refinery, of which approximately 93% was West Texas Sour (WTS) crude oil prior to 2007. In late 2006, we began to use different crudes and feedstocks shipped from the Texas Gulf Coast on the Amdel pipeline to diversify our crude sources and to improve production yields. As a result, in 2008 WTS was approximately 63% of the Big Spring Refinerys sour crude oil input. WTS was approximately 78% of the Big Spring Refinerys sour crude oil input in 2009 and approximately 84% of the Big Spring Refinerys sour crude oil input in 2010. Our Big Spring refinery is the closest refinery to Midland, Texas, which is the largest origination terminal for West Texas crude oil. We believe this location provides us with the lowest transportation cost differential for West Texas crude oil of any refinery.

Asphalt. Asphalt accounted for approximately 5.8% of our Big Spring refinerys production in 2010. Approximately 39.1% of our Big Spring refinerys asphalt production is blended paving grades and 60.9% is asphalt blendstocks. We have an exclusive license to use FINAs asphalt blending technology in West Texas, Arizona, New Mexico and Colorado and a non-exclusive license in Idaho, Montana, Nevada, North Dakota, Utah and Wyoming. Our asphalt facilities are capable of producing up to 30 different product formulations, including both polymer modified asphalt (PMA) and ground tire rubber (GTR) asphalt. Asphalt produced at the Big Spring refinery is transferred to our asphalt segment at prices substantially determined by reference to the cost of crude oil, which is intended to approximate bulk wholesale market prices.

Our refining and unbranded marketing segment sells refined products from our Big Spring refinery in both the wholesale rack and bulk markets. Our marketing of transportation fuels produced at our Big Spring refinery is focused on portions of Texas, Oklahoma, New Mexico and Arizona through our physically integrated system. We refer to these areas as our physically integrated system because our distributors in this region are supplied with motor fuels produced at our Big Spring refinery and distributed through a network of pipelines and terminals which we either own or have access to through leases or long-term throughput agreements. During 2010, approximately 63% of the gasoline and 22% of the diesel motor fuels produced at our Big Spring Refinery were transferred to our retail and branded marketing segments at prices substantially determined by reference to commodity pricing information published by Platts.

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