HF Sinclair Pushes Back Westline Connect Decision, Won't Commit To $7.25 Refining Cost Target
The incoming CEO moved the pipeline decision to the first quarter of 2027 and held off on next year's capital spending.
HF Sinclair, the independent refiner, is pushing back its decision on the Westline Connect pipeline expansion, and Steve Ledbetter, its president and chief operating officer, said on the third-quarter earnings call he is "not committing to the 725" a barrel refining operating-cost target. Ledbetter becomes CEO on January 1, and he also declined to guide 2027 capital spending.
Cost target shelved
An analyst asked whether the $7.25-a-barrel refining operating-cost goal still holds for 2027. Ledbetter said the company wants to improve total earnings, not cost alone, and should not chase cost without weighing safety and reliability.
Refining operating costs rose from the second quarter. Ledbetter blamed one-time environmental accrual true-ups, employee benefit charges, inflation in catalysts and chemicals such as sulfuric acid, and maintenance work aimed at reliability. Excluding the one-time items, he said, cost efficiency is still improving.
Westline Connect slips a quarter
A Barclays analyst noted the company had earlier discussed taking a final investment decision in the fourth quarter. Ledbetter said options on route and scope could produce a better outcome, so the target moves to the first quarter of 2027.
The first phase would add about 35,000 barrels per day of capacity to move product from the Rockies into Utah and Nevada, targeted online in 2029. Management expects to pay for it with cash on hand and operating cash flow.
Pressed by Barclays on 2027 capital spending, Ledbetter said it is "a bit early to guide on 2027." He said turnaround and sustaining spending should stay in its cyclical range, and the company will give the incremental figure once it takes a final decision.
A $3.3 billion cash pile
HF Sinclair makes gasoline, diesel, jet fuel and renewable diesel, plus lubricants, and as of the end of 2025 owned seven refineries. Cash stood at about $3.3 billion on September 30, within total liquidity of about $5.3 billion. Ledbetter said management is comfortable carrying more cash while it completes evaluations and investment decisions.
The company returned $572 million to shareholders in the quarter, $93 million in dividends and $479 million in buybacks, and declared a quarterly dividend of $0.525 per share. Acting CFO Vivek Garg said it expects to end the year at its 50% payout target.
Third-quarter adjusted net income was $2.1 billion, or $11.75 per diluted share, against $459 million a year earlier. Adjusted EBITDA was $3 billion versus $870 million.
The next marker is the first-quarter 2027 decision on Westline Connect's first phase, after which management says it will give the spending figure.
Sources
- HF Sinclair (DINO) Q3 Earnings and Revenues Surpass Estimates — Yahoo Finance
- dino-20261028 — sec.gov
- HF Sinclair Non-GAAP EPS of $11.75 beats by $3.92, revenue of $10.86B beats by $1.97B — seekingalpha.com
- HF Sinclair names Ledbetter as new President and CEO, effective January 1 (DINO:NYSE) | Seeking Alpha — seekingalpha.com
- HF Sinclair started Overweight at Piper as quality refiner with strong return of capital commitment | Seeking Alpha — seekingalpha.com
