Ryan M. Todd

Ryan M. Todd inquired about the refining segment's performance, specifically the headwinds leading to lower capture across regions when excluding the SRE tailwind, and asked for a regional breakdown of gross margins without SREs. He also congratulated the company on the marketing joint venture (Green Trail Fuels) and asked about its tangible benefits and potential for driving additional growth.

Answer

Steve Ledbetter (EVP of Commercial, HF Sinclair) explained that the crack environment was strong in the first half of the quarter but fell significantly in the second half, impacting inventory liquidation following planned and unplanned maintenance. He expressed bullishness on refining outcomes and underlying business improvements. Regarding the marketing JV, Mr. Ledbetter highlighted its role in accelerating Sinclair brand growth, providing exposure to attractive rack-to-retail margins, capturing synergies with integrated assets, and serving as a template for future growth.

Ryan M. Todd sought clarification on the $115 million and $56 million benefits from small refinery exemptions (SREs) and HF Sinclair's view on the future SRE process. He also inquired about Q4 refining margin capture trends.

Answer

Tim Go, CEO, clarified the $115 million as a direct SRE benefit to cost of sales (cumulative prior expenses) and the $56 million as an indirect trading benefit from RINs optimization, expressing confidence in future SREs. Atanas Atanasov, CFO, confirmed the $115 million was cumulative. Steve Ledbetter, EVP of Commercial, and Tim Go, CEO, discussed expectations for Q4, noting flattening backwardation, better roll, strong jet/diesel cracks, and butane blending opportunities.

Ryan Todd asked about any insights on the timing of the RVO ruling and potential 'gives and takes' in Washington discussions. He also inquired about the pluses and minuses for Darling Ingredients regarding the preliminary 45Z rules, particularly concerning factors for low CI (Carbon Intensity) and the definition of a qualified buyer.

Answer

CFO Bob Day believes the EPA has a heavy administrative burden but expects a final RVO proposal to OMB soon, likely with a February date. Regarding 45Z, Mr. Day stated that nothing was unexpected, and the changes are generally positive for Darling and DGD. He highlighted that DGD was quick to produce R-100 for qualified buyers, which aided credit sales. The main flexibility would be if R-99 could also qualify, but it's not a dependency.

Ryan M. Todd asked about the timing of the RVO ruling and any insights from Washington on ongoing discussions. He also inquired about the perceived pluses and minuses for Darling from the preliminary 45Z rules.

Answer

Bob Day, Chief Financial Officer, believes key stakeholders are comfortable with the plans, and the EPA is working through administrative burdens, expecting a final proposal to OMB soon, likely in February. Regarding 45Z, Mr. Day found nothing unexpected, with positive changes. He noted the definition of a 'qualified buyer' as the biggest factor, and while DGD quickly adapted to produce R-One Hundred, qualifying R-Ninety-Nine would add flexibility without being a dependency. Overall, he views the changes as positive with no negative impact on the business.

Ryan M. Todd asked about other potential regulatory uncertainties beyond the RVO and reallocation, such as changes in foreign biofuel import approaches or domestic feedstock treatment (carbon intensity, land use penalties). He also inquired about the functioning of the PTC monetization market, stability of discounts, and ratability of the process.

Answer

Randall Stuewe (CEO) and Robert Day (CFO) highlighted that American agriculture is a key focus in D.C., with discussions around a large RVO and 100% reallocation being the 'easy button.' They noted that PTCs do not encourage foreign feedstocks, and the EPA and U.S. trade are collaborating to manage foreign feedstock rules. On PTC monetization, Robert Day (CFO) and Randall Stuewe (CEO) explained that initial difficulties due to unfamiliarity and unclear tax liabilities have improved, leading to robust demand and confidence in monetizing a majority of 2025 credits ratably through 2026.

Ryan M. Todd asked about other potential risks or positive outcomes from the final RVO ruling beyond the high-level RVO and reallocation, such as changes to foreign biofuel imports or domestic feedstock treatment. He also inquired about the functioning of the PTC monetization market, the stability of discounts, and the ratability of the process.

Answer

CEO Randall Stuewe and CFO Bob Day highlighted that American agriculture is a key focus in D.C., with discussions around a large RVO and 100% reallocation being the 'easy button.' They noted that PTCs disincentivize foreign feedstocks, and the EPA is collaborating with U.S. trade to manage this. Day explained that PTC monetization has improved significantly as counterparties became familiar with the credit and tax liabilities became clearer, making the process more ratable with robust demand.

Ryan M. Todd asked about ConocoPhillips' approach to Lower 48 activity levels in relation to commodity prices, what conditions would prompt faster growth, and the company's medium to longer-term outlook on crude oil prices.

Answer

Ryan Lance, Chairman and CEO of ConocoPhillips, explained that 2026 plans were set based on anticipated commodity price softness, focusing on efficiency and modest growth without additional capital. He stated the company is built to handle market volatility with its strong balance sheet and remains constructive on crude oil prices long-term, especially with LNG and Willow projects coming online. Future ramp-ups in the Lower 48 would depend on macro views and costs.