$12.00
$100.00
bear $12.00
base $68.00
bull $100.00
margin of safety $35.00
market price* $125.29
HF Sinclair operates seven US refineries (El Dorado, Kansas; two in Tulsa, Oklahoma; Puget Sound in Anacortes, Washington; Navajo in Artesia and Lovington, New Mexico; Woods Cross, Utah; Parco and Casper, Wyoming), three renewable diesel units, the Petro-Canada and Sonneborn lubricants businesses, a branded fuel marketing arm and pipelines and terminals. Refining is by far the largest earner, and it is a price-taker business: profit depends on the gap between crude costs and product prices, which swings widely. How we measured earnings. We start from cash from operations and remove working-capital swings (inventory, receivables and payables), stock compensation and capital spending. Two judgements matter. First, the company spends $400-550 million a year on planned refinery shutdowns for maintenance (437 million in 2025, 413 million in 2024, 556 million in 2023); these are real recurring costs and are already deducted in operating cash flow, so we left them in. Second, we treated all capital spending as maintenance, because the revenue changes at a refiner come from crude prices and the 2022 Sinclair acquisition, not new capacity. We then added back cash interest, valued the business before its lenders, and subtracted debt separately. Owner earnings per share were roughly 0.33 dollars in 2024, 6.09 dollars in 2025 and 10.48 dollars in 2023 (business cash flow before interest 1.18, 6.84 and 11.54 dollars). Earlier years belong to the smaller pre-Sinclair company (2020 and 2021 were weak) or to the 2022 war-driven margin spike, which we excluded as unrepresentative. Anchor. We used 2023-2025, the completed years since the Sinclair combination that contain a strong year, a trough (2024) and a middle year. The median is 6.84 dollars a share, or about 1.28 billion dollars of business cash flow, which is about 7.11 dollars on the current 179.4 million shares. Growth check: actual owner earnings per share rose sharply in 2025 from a very low 2024; we assume 0% growth from the anchor in year one, so nothing is assumed beyond the level already earned. In the first half of 2026 net income was 1.54 billion dollars against 579 million for all of 2025. Two strong quarters do not move a through-cycle level, so we did not raise the anchor, though the cash they generated is counted in net debt. What growth was credited. None. Refining capacity is flat, there is no signed contract or backlog that adds earnings, and the renewable diesel units, lubricant expansion and any acquisitions have no proven repeatable growth record, so they are excluded. In all cases the cash flow is held level for ten years, then fades to zero, because nothing we can name and evidence secures refinery earnings beyond that: refiners have no pricing power, and the company itself notes that it retired its Cheyenne refinery in 2020 because it was uncompetitive. Debt. Borrowings are about 2.77 billion dollars of senior notes at roughly 4.5-6.25 percent (close to our 6 percent rate, so no adjustment), plus about 90 million dollars of finance leases and 65 million dollars of outside ownership interests. Cash was 2.26 billion dollars at June 30, 2026, but roughly 600 million was a temporary working-capital inflow and we keep about 500 million for operations, leaving about 1.14 billion of excess cash. Net obligations are therefore about 1.79 billion dollars, or 9.96 dollars a share. There is no near-term maturity wall, no borrowings on the 2 billion dollar credit facility, and covenants were met at year-end 2025. Bear case (about 12 dollars a share). Margins resemble the weakest years on record (2020, 2021 and 2024 averaged under 1 dollar a share of business cash flow), so we assume a decade averaging one-third of the anchor, about 2.37 dollars a share (about 425 million dollars, comfortably above the roughly 150 million dollar interest bill), fading to zero over the following ten years. Business worth about 22 dollars a share, less 9.96 of net obligations, leaves about 12 dollars. Base case (about 68 dollars). Business cash flow stays at the 7.11 dollar anchor for ten years then fades linearly to zero over twenty years. Business worth about 78 dollars a share, less 9.96, leaves about 68 dollars. Bull case (about 100 dollars). The company's demonstrated 2022-2025 average of about 9 dollars, with the strength shown in the first half of 2026, is taken as 10 dollars a share, level for ten years then fading over twenty. Business worth about 110 dollars, less 9.96, leaves about 100 dollars. What could make this wrong. If 2026's very high margins prove durable, the base case is too low; if demand for gasoline and diesel declines faster than the fade assumes, or West Coast regulation (Washington's carbon program at Puget Sound) erodes that refinery's returns, it is too high. The spread between cases is wide because refining profit is the single biggest driver and cannot be forecast with precision. The margin-of-safety price of 35 dollars sits far below the base case and above the bear case, reflecting the cyclical, price-taking nature of the business. Small inconsistencies we could not reconcile: the 2023 and 2022 capital spending figures were restated slightly in later filings, and we used the latest figures.