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    United Refining Sees Operating Loss Despite Sales Increase

    Increase in sales offset by negative refining margins.

    WARREN, Pa. -- Regional refiner and marketer of petroleum products, United Refining Co., saw net sales for its first fiscal quarter increase 11.1 percent over the year prior, but still recorded a significant operating loss caused by negative margins.

    Net sales for the three months ended Nov. 30, 2008, and Nov. 30, 2007, were $770.5 million and $693.6 million, respectively. The increase of $76.9 million was primarily due to increases in selling prices, the company said in a statement.

    The company's operating loss for the three months was $91.5 million, a decrease of $120.6 million from operating income of $29.1 million for the same quarter a year prior. The operating loss was primarily the result of negative margins due to the rapidly declining prices for crude and petroleum products, the company said.

    United Refining purchases crude oil approximately one month in advance of its delivery to the refinery for processing into refined products. In the declining market, the lag created negative margins, the company explained.

    Net loss for the three months ended Nov. 30, 2008, was $59.6 million, a decrease of $73 million from net income of $13.4 million for the quarter.

    United Refining's liquidity position remains strong, the company noted. As of Nov. 30, 2008, the company's working capital was $132.6 million; the current ratio was 2.2. Borrowings on the company's bank revolving credit facility as of Nov. 30, 2008 were $19 million, with unused availability of $110.6 million. As of Jan. 20, 2009, there were no borrowings on the $130 million credit facility and the company has full access to it.

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