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DALLAS -- Net income for Alon USA Energy was $43.1 million for the second quarter of 2006, an increase from $27.5 million a year ago. The 57 percent increase has prompted the company's board of directors to approve a regular quarterly cash dividend of 4 cents per share along with a special $2.50 cash dividend per share of the company's common stock.
Net income for Alon for the first half of 2006 was $97.3 million, an increase of 95 percent over the first half of 2005, when the company recorded a net income of $49.9 million. Net income for the second quarter increased to $41.7 million. The company reported $26.5 million in net income for the same period in 2005.
Alon attributes the positive quarter to continued strong industry refining margins and favorable differentials between WTI (sweet) and WTS (sour) crude oil. WTI/WTS crude oil differentials increased to an average of $4.72 per barrel, compared to a 2005 second quarter average of $3.74 per barrel.
The impact of increased refining margins was somewhat subtracted by the completion of the Big Spring refinery upgrade. The refinery, located in Big Spring, Texas, was updated to meet new diesel sulfur content standards required by the U.S. Environmental Protection Agency's Clean Air Act.
As a result of the $17.5 million in refinery improvements, Alon reported that refinery production for the second quarter decreased by 15,882 barrels per day to 55,720 barrels per day.
"We are pleased with our second quarter 2006 results," said Alon president and CEO Jeff Morris. "Our refinery achieved a significant accomplishment in meeting the new diesel sulfur content requirements for a total investment of $17.5 million. We are returning to normal operations and we expect to reduce inventories and increase our cash balances to planned levels by the end of the third quarter."
Alon's second quarter was filled with new acquisitions. Along with various pipeline agreements and the completed acquisition of Paramount Petroleum Corp., the company entered acquisition arrangements for 40 Good Time Stores, increasing its Southwest Convenience Store segment to 207 stores under the 7-Eleven brand. The acquisition of Edgington Oil is still underway as the FTC continues the investigation.
"We are very excited about these acquisitions and the opportunities they will bring. We look forward to smooth and expedient transitions," said Morris.