Welcome to HollyFrontier Corporation's Third Quarter 2021 Conference Call and Webcast. Hosting the call today from HollyFrontier is Mike Jennings, President and Chief Executive Officer. He's joined with Rich Voliva, Executive Vice President and Chief Financial Officer, Tim Go, Executive Vice President and Chief Operating Officer, Tom Creery, President, Refining and Marketing, and Bruce Lerner, President, HollyFrontier Lubricants & Specialties. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your question following the presentation. If you would like to ask a question at that time, please press star one on your touchtone telephone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. If you should require operator assistance, please press star zero. We ask that you limit yourself to one question and one follow-up. Additionally, we ask that you pick up your handset to allow optimal sound quality. Please note that this conference call is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Vice President of Investor Relations. Craig, you may begin. Thank you, Rain. Good morning, everyone, and welcome to HollyFrontier Corporation's Third Quarter 2021 Earnings Call. This morning, we issued a press release announcing results for the quarter ending September 30th, 2021. If you would like a copy of the press release, you may find one on our website at hollyfrontier.com. Before we proceed with remarks, please note the safe harbor disclosure statement in today's press release. In summary, it says, "Statements made regarding management expectations, judgments, or predictions are forward-looking statements. These statements are intended to be covered under the safe harbor provisions of federal securities laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings. The call also may include discussion of non-GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures. Also, please note any time-sensitive information provided on today's call may no longer be accurate at the time of any webcast replay or rereading of the transcript. With that, I'll turn the call over to Mike Jennings. Hey, thanks, Craig. Good morning, everyone. Today, we reported third quarter net income attributable to HollyFrontier shareholders of $281 million or $1.71 per diluted share. These results reflect special items that collectively increased net income by $71 million. Excluding these items, adjusted net income for the third quarter was $210 million or $1.28 per diluted share versus an adjusted net loss of $67 million or -$0.41 per diluted share for the same period in 2020. Adjusted EBITDA for the period was $408 million, an increase of $342 million compared to the third quarter of 2020. The refining segment reported EBITDA of $295 million compared to a $39 million loss for the third quarter of 2020, and consolidated refinery gross margin was $14.87 per produced barrel, a 140% increase compared to the same period last year. This increase was primarily due to stronger product demand across the markets we serve. Third quarter crude throughput was approximately 416,000 bpd above our guidance of 380,000-400,000. We recently completed planned turnaround work at our Tulsa refinery, which was on time and on budget. At the beginning of October, we began a significant turnaround at the Navajo Refinery, which is scheduled to be completed in mid-November. Our lubricants and specialty product segment reported EBITDA of $168 million for the third quarter versus $61 million reported in the same period last year. Excluding an $86 million gain on the sale of property at our Mississauga plant, Adjusted EBITDA was $82 million. The rack back portion of this business continues to see outstanding margins and earnings driven by a combination of strong demand and limited global base oil supply due to a number of factors. In the rack forward portion, despite strong sales volumes and price increases, the continued rapid rise in base oil prices through the quarter compressed margins. Overall, we're encouraged by the consolidated earnings performance of the lubricants and specialties business this year, and we're optimistic that we'll see a solid finish to the year as demand for both base oils and finished products remains strong. Holly Energy Partners reported Adjusted EBITDA of $83 million for the third quarter compared to $86 million in the third quarter of last year. HEP delivered solid results in the quarter, supported by record volumes on the Salt Lake City and Frontier pipelines in the Rockies region. During the quarter, we completed the Cushing Connect Pipeline project, which will replace third-party providers as the primary source of crude supply for our Tulsa refinery. Now, I'd like to update on strategic business initiatives. Earlier this week, we closed on our previously announced acquisition of the Puget Sound Refinery for aggregate cash consideration of $613.6 million, which consisted of a base cash price of $350 million, hydrocarbon inventory with an estimated closing value of $266.2 million, and other closing adjustments and accrued liabilities of $2.6 million. This purchase price represents an attractive acquisition multiple of 1.5x-2x EBITDA net of inventory based on the refinery's historical financial performance. The Puget Sound Refinery has a strong record of financial and operational performance that we believe will complement our existing refining business. The refinery supplies transportation fuels into the premium Pacific Northwest region and sources advantaged Canadian crude, further enhancing and diversifying our refining asset base. We're committed to the continued safe and environmentally responsible operations of the facility, and I'd really like to welcome Puget Sound's highly skilled workforce to the HollyFrontier family. In our renewables segment, I'm pleased to announce that we are progressing ahead of schedule on the Cheyenne Renewable Diesel conversion project. The 6,000bpd renewable diesel unit is expected to be mechanically complete later this week, and we expect to run our first batch of feed by the end of the year. Given current economics between refined soybean oil and other feedstocks, we prioritize completion of the pretreatment unit located at the Artesia, New Mexico facility, and we now expect to complete the PTU in the first quarter of 2022, a full quarter ahead of schedule, allowing us to run a more favorable mix of feedstocks. The Artesia renewable diesel unit is now expected to be completed in the second quarter of 2022. We are still on budget and expect to spend a total of $800 million-$900 million for all three projects. In regard to our previously announced acquisition of assets from Sinclair, we still expect to close in mid-2022, subject to regulatory clearance and the satisfaction or waiver of all other closing conditions. We look forward to further diversifying our asset base with Sinclair's branded marketing, renewable diesel, refining and logistics businesses. Looking forward, we remain focused on executing these strategic initiatives, which we believe will allow us to reward our shareholders through the capital return plans we previously announced in August. With that, let me turn the call over to Rich. Thank you, Mike. As previously mentioned, the third quarter included a few unusual items. Pre-tax earnings were positively impacted by an $86 million gain on the sale of property at our Mississauga facility, partially offset by $4 million of pre-close acquisition integration costs, $7 million of charges related to the Cheyenne Refinery conversion to renewable diesel production, and severance charges totaling approximately $200,000. A table of these items can be found in our earnings press release. Cash flow from operations was $249 million in the third quarter, which included, excuse me, $65 million of turnaround spending and a $94 million increase in working capital, driven by the start of planned turnarounds at our Tulsa and Navajo Refineries. HollyFrontier standalone capital expenditures totaled $196 million for the quarter. As of September 30th, 2021, our total liquidity stood at approximately $2.8 billion, comprised of a standalone cash balance of $1.5 billion, along with our undrawn $1.35 billion unsecured credit facility. As of September 30th, we have $1.75 billion of standalone debt with a debt-to-cap ratio of 23% and a net debt-to-cap ratio of 4%. We anticipate recovering between $50 million-$60 million in cash tax benefits in 2021 from the loss carryback under the CARES Act during the fourth quarter of this year. HEP distributions received by HollyFrontier during the third quarter totaled $21 million. HollyFrontier owns 59.6 million HEP limited partner units, representing 57% of HEP's LP units at a market value of approximately $1.1 billion as of last night's close. With respect to capital spending in 2021, we are decreasing our guidance, specifically in the renewables segment, based on updated project timelines and in the turnarounds and catalyst bucket due to strong overall execution and some scope reduction at the Navajo turnaround. We now expect to spend between $550 million-$600 million in renewables for the full year of 2021 versus our previous guidance of $625 million-$675 million. In total, the renewables projects remain on budget, and we anticipate the remaining $175 million-$225 million to be incurred in 2022. We still expect to spend between $190 million-$200 million for capital at HollyFrontier Refining and $40 million-$50 million at HollyFrontier Lubricants and Specialty Products. We now expect to spend between $290 million-$320 million in turnarounds and catalysts versus our previous guidance of $320 million-$350 million. At HEP, we now expect to spend between $15 million and $20 million for maintenance capital, $40 million-$45 million for expansion capital, which includes our investments in the recently completed Cushing Connect joint venture, and $2 million-$4 million in refining the processing unit turnarounds. Given record base oil prices and more importantly, the speed of their increase in 2021, we have updated our rack forward guidance to reflect short-term margin compression in the finished product side of our lubricants and specialties segment. We now expect to earn between $65 million-$85 million in income from operations and $115 million-$135 million of EBITDA. We expect rack back earnings to remain at these elevated levels in the fourth quarter based on the favorable supply-demand dynamics. Within our refining segment for the fourth quarter of 2021, we expect to run between 450,000bpd-470,000 bpd of crude oil, which includes expected volumes from the Puget Sound Refinery in November and December. With that, Raine, we're ready to take questions. Thank you. The floor is now open for questions. At this time, if you have questions or comments, please press star one on your touchtone phone. We ask that you please limit yourself to one question and one follow-up. If you have additional question, we welcome you to rejoin the queue. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. Thank you. Our first question comes from Manav Gupta from Credit Suisse. Your line. Hey, Rich and Mike. My first question to you is about six months ago, you gave us the Puget Sound acquisition, and at that time, the guidance was $150 million-$200 million. I'm just trying to understand if anything has moved for that guidance to change. The reason I'm asking this question is, in the past, we have heard assets being acquired from majors and a high guidance number being given. When the results actually start coming in, they're pretty disappointing. That's why there's this like sour sentiment on buying a West Coast asset from a major. Just trying to understand, has anything changed for your guidance on the Puget Sound acquisition? Yeah, Manav, we're sticking with our guidance. The biggest variable is probably RINs pricing. The market demand out there is recovering, as you can probably see in the regional numbers, still probably 8%-10% below 2019 levels. The trajectory is upward. As we've gotten to know the asset better, we like it more, and we're sticking to our guidance. The second question, since you mentioned RINs, was we had a release out there from Reuters, which kind of put out some RVO numbers, which were actually very supportive of D4, but not so supportive of D6. Now, as I understand, once your RD facilities start, you would be long D4, you'd still be short D6, but maybe a little net short D6. But if there's a price spread difference between D4 to D6, so D4 premium goes up, you could still meet all your obligations. Can you just walk us through that math one more time? Yeah, Manav. It's Rich. Yes, you're right. We will be long D4 RINs prospective of the renewable diesel facilities coming online. As Mike alluded to, Puget Sound brings a little more obligation to us. Once the Sinclair transaction is closed, we will be long D4s, short D6, and basically balanced on an absolute number basis. To your point, from our perspective, a higher D4 price versus D6 price is beneficial. Thank you so much for taking my questions. Thanks, Manav. Your next question comes from Ryan Todd from Piper Sandler. Your line's open. Good. Thanks. Performance of the business, both in refining and lubes, has continued to exceed expectations since you announced the PSR acquisition earlier this year, including your cash flow of $10 million or $50 million this quarter. If the relatively constructive refining environment holds, how are you thinking about the dividend going forward? What do you need to see to feel comfortable in restarting the dividend? Any thoughts on that timing? Yeah, Ryan, thanks for the question. You're right. The refining and lubricants environments are both constructive for us and building. As well, our performance operationally in both is doing quite well. Looking forward, we're sticking to the capital plan that we laid out, the return of capital guidance, that we laid out in August, which is return of the dividend after the 12-month hiatus, and repurchase as suggested in that guidance. You know, how it develops from there, how aggressively we lean into it as we go forward, we'll see. We're very much sticking with the plan that we've laid out, and if anything, we're more constructive. Great. Thanks. You gave some guidance there on CapEx, which is helpful. I mean, as we think about, I guess maybe a couple of comments on the 2021 CapEx, the renewable diesel number coming down, is that just that's just clearly a matter of timing? As we think about 2022 CapEx, any high-level thoughts in terms of what the updated kind of maintenance capital? You've got a lot of moving pieces in your portfolio. You know, what's a good idea for or a good rule of thumb for kind of maintenance capital in 2022, and that growth CapEx wedge might look like as well? Good morning, Ryan. To your point on renewables, yes, the overall projects are still within an $800 million-$900 million range. We'd expect that balance to flow into 2022. At a high level, capital spending and turnaround spending will decline in 2022 versus 2021. We expect to issue formal guidance in December, so we'll have some hard numbers for you in a few weeks. Great. Thanks, Rich and Mike. Your next question comes from Phil Gresh from J.P. Morgan. Your line's open. Yeah. Hey, good morning. First question, appreciate the update on the renewable diesel side of things. What are your latest thoughts on kind of the feedstock mix you're looking at at this point in time? Yeah, Phil, this is Tom. You know, we're still sticking to our guns on that one. You know, for Cheyenne, we're looking at a combination of soy and tallow. Just to make it clear, we have secured feedstocks at this time for startup, and we're in good shape. We haven't had any trouble buying feedstocks. As the PTU comes up, we will look at buying additional feedstocks, both degummed and low CI material. We're doing analysis on an ongoing basis to find the feedstocks that have the best value for us, it's not just price, because it's more about value than anything else at this point in time. Okay. Got it. Then just one question. When we read through your proxy filing, the guidance for the pro forma EBITDA of the company was a bit lower than the slide presentation you had given. Was that just conservatism or anything we should be thinking about there? Like, I guess, how would you suggest we think about, you know, your pro forma at mid-cycle versus what was stated? Yeah. Phil, it's Rich. It's important to emphasize that was a point in time snapshot from July, and it was best market views and frankly, the best forward curves we could come up with at the time. Clearly, the market has performed better than that, and it does not affect our view of mid-cycle. That's the assumption we had in July, largely based on where the oil market was at that point. Okay. You'd suggest we stick with kind of mid-cycle provided in the slide presentation. Absolutely. To prove that point further, right, obviously our third quarter earnings in several segments were above mid-cycle already. Right. Okay. Thank you. Our next question comes from Paul Cheng from Scotia Howard Weil. Your line is open. Hey, guys. Good morning. Hi, Paul. Two questions, please. Mike and Rich, there's a number of transactions happening in the midstream, consolidating and some people is either selling down or rolling it up. When you're looking at HEP as a granddaddy in the MLP, and at this point, does it really make sense for you to stay as an independent? Or, from the corporation standpoint, would it be more advantageous to simplify your profit structure and just roll it in? And if you don't really need the control, should you maybe it's time to just sell it and deconsolidate? That's the first question. The second question is related to this, to the MidCon. It's a really strong result. is there anything you need in this quarter other than, say, the WTI is down, that lead to such a strong margin capture, as well as the overall throughput is so strong? I want to see if the third quarter is a good base now to use for the MidCon region going forward? Okay, Paul, we're gonna take that on. We're gonna hammer it out among us. Rich and I will address the question around HEP deconsolidation. I will start with just how integral those assets are to our business strategy in terms of their ownership, and their use as we connect our refining assets to current supply sources and markets. Very strategic for us to own and operate those assets. The structure of ownership, I'll ask Rich to speak with around deconsolidation or retention of the MLP. Yeah. Thanks, Mike. Look, Paul, I think we demonstrated the value of HEP as a financial vehicle in the Sinclair transaction. But look, we're gonna do the right thing for the shareholder here. Whether HEP is a financial vehicle, is rolled up, consolidated, whatever, this is essentially a corporate finance discussion. To make any transaction like that accretive would require an incredible amount of cash, which we think is probably spoken for better by our shareholders. Look, we'll continue to monitor the situation, respond to the market, do the best thing for our shareholders. The second question, Paul, was are there any sort of unique good buys lingering around? Actually, can I just ask some questions first? Oh, absolutely, Paul. Rich, when you say that you take a lot of cash, if you want to roll it up, why that, I mean, like, PSX, they just did one by issuing the share of PSX in exchange for the HEP. So that's really involve no cash. If anything, then, they have a higher dividend yield than you guys, obviously, since that you didn't have any dividend. Even after you increase your stake, they probably still have a higher dividend yield. From that standpoint, on a going forward basis, you rolling it up actually improve your cash flow. Paul, we've done the math, we keep the math live. For us, it would not improve our cash flow. It would dilute it on a per-share basis. Obviously, look, we've got a very wide valuation difference between HollyFrontier and HEP. That could easily change over time and change this discussion. To your point, HEP trades at a much lower dividend yield than PSXP does, for example, that colors this discussion. You're headed down the right path here. The math, from our perspective, does not work currently for that kind of transaction, but we will continue to monitor it. Yeah. I think the other comment is that it would be a levering transaction to do so, just in respect of capital structure. HEP supports 3.5 x debt to EBITDA, while our target on the HFC side is considerably lower in order to maintain our investment-grade credit rating. I think we have to look at both cash flow and the immediate cash impact of the transaction. For us, it would be a levering transaction, as Rich said. I think that capital is better returned to our shareholders than in a buyout of HEP. Thank you. Yeah. Second question was around refining results in this quarter. I'm gonna ask Tim to speak to that, and then whether there are any particular good things rolling around in 3Q, or is this a good model for going forward? Yeah, Paul, this is Tim Go. We're very pleased with MidCon performance this quarter. The three biggest factors, stronger gasoline margins associated with stronger demand, stronger base oil margins, which I know you've been watching, and then, of course, lower RIN impacts to the region. You're asking, you know, should we expect this type of performance going forward? Really, if you look back at the second quarter, we also demonstrated strong MidCon results then, both on volumes and demand and margins. I think you're seeing an improved performance just overall over the last six months. Seasonally, we'll see some weaker demand in the winter that you would expect. Overall, we've been trying to take full advantage of not just the markets in the group, but we've also been able to see some of the strong margins in the Rockies and move some of our barrels that direction as well. We hope to be able to continue to do that in years to come. Thank you. Yeah. Our next question comes from Theresa Chen from Barclays. Your line is open. Morning. I wanted to ask about the lubes business, and given the updated guidance, and the rack forward portion, just was curious, is this purely as a result of needing time to pass through the higher base oil costs, or is this likely to persist for, you know, some time for the foreseeable period? What is your outlook there? Your assumption is correct. Base oil prices are ramping at a faster rate than we can apply price and pass through price increases for that specific component. In this business, we have a fair proportion of finished lubricants clients that are contracted, and so there's some limiters on the timing. It's not that we can't push the price through, but on the timing. You see a lag between the ability to raise the price on the finished side versus the instantaneous impact of the base oil markets increasing. Got it. On the renewable diesel side, Tom, I was hoping you could kind of go back to your comments about feedstocks and understand that, you know, you've had no trouble buying feedstocks for startup at this point. Can you just give us a sense of the execution, around that on a go-forward basis? Are you going to be in the spot market, perpetually? Is any of it, you know, bought forward or bought on a contracted basis? What is your expectation as these units start up? Okay, Theresa, we'll give it a shot here. We are buying spot right now. By spot, I'd say, you know, it's not very long, you know, maybe term of 3-6 months on some contracts, but mostly it would be, I would call spot. However, we are investigating other opportunities. For example, we are looking at participating in crush plant economics, to get a little further back in the value chain. We've been talking to various partners, in that field, trying to learn, you know, what's going on and whether there's room for us and what kind of role that we could play on a going forward basis. We've also been talking to producers of DCO as well along the same vein. Early phases at this point in time, we're still evaluating the markets, but it's definitely one of those things that we are looking at, as we move forward and become a regular off-taker. Thank you. Thanks, Theresa. Our next question comes from Connor Lynagh from Morgan Stanley. Your line is open. Yes, thanks. Just trying to piece together the sort of phasing of the renewable diesel projects here. As we think through the sort of mid-cycle targets that you guys have laid out there, is that a number that we should expect, you know, sort of hit a run rate of in 2022? Do you think it takes some more time to, you know, iron out the kinks in operations, et cetera? How should we think about when that's a realizable earnings number? That's gonna be realizable in the second half of 2022. You know, as we start the PTU up, line out Cheyenne and get the RDU and Artesia, you know, it's gonna take us some time, and we're gonna have to get into it. Definitely over the second half of 2022, that would be our expectations. Okay, that's helpful. Maybe just pivoting to Puget Sound. I'm just trying to piece together some of the comments you made just in terms of obviously the market was improved. RINs are still a challenge. Net-net, do you feel that that asset is operating at or near the mid-cycle level that you've put out for that? How should we think about sort of the near-term earnings contribution of that? Yeah. The short answer to that question is yes. You probably understand that there's seasonality, particularly in that geography, throughput in the winter is lower. But in terms of the overall market structure and margin opportunity versus what we've put out, yeah, we see it consistent with the guidance we've given. Okay. Maybe a little bit lower in the near term, but moving towards that in 2022. Yeah. All right. Thanks very much. Hey, Connor, just to follow that up, I think if you look at the proxy statement we put out in association with Sinclair, there are numbers for Puget Sound up through the first half of 2021 that'll probably give you some help there. All right. Next question comes from Roger Read from Wells Fargo. Your line's open. Yeah, thank you. Good morning. Hi, Roger. Just like to catch up on the lubes business, maybe a little bit understand the rack forward, rack back and your supply of base oil relative to the amount of product you sell. In other words, are you 100% sourced, 80% sourced, 120%? Just trying to understand the balance in this business as things transition from tight base oil into, I don't know, I guess we'll call it more normalized market, hopefully in 2022. Our base oil production is fully capable of covering all of our finished lubricants business as well as our formulated such as railroad engine oil business as well. We are, of course, in the specialty area heavily backward integrated into our own feedstock supplies out of Tulsa, but we do purchase some feedstocks like waxes and other base oils externally for some of the former Sonneborn products that are in the specialty business. That's why we have a portion of the business that is in excess of finished that we sell as straight base oils. Reasonable to presume as the base oil market normalizes, and the pricing catches up on the rack forward side, the level of performance you're seeing now could slip a little bit, but for the most part, ought to remain fairly strong? Yes. We think that's the case. Of course, it's a little bit of, you know, in this pricing, in between the two, a little bit of left pocket, right pocket in that sense. Rack forward recognizes the full extent of the price increases as they catch up with the clientele, even if the base oil was declined a bit, we make it up on the other side. Okay, thanks. That's helpful. I don't know if this question is for you, Rich, or not, but of the guidance of remaining, I shouldn't say necessarily remaining, but the total CapEx guidance, and then thinking about what's remaining on the renewable diesel projects, the range of $800-$900, I'm surprised it's still quite so wide, you know, this far through the projects. What are the remaining sort of risk factors that would affect the higher or lower end of that range? Let me take a first pass at this, and I'll ask Tom to add on if I miss anything, Roger. I think there are really two issues right now. We are seeing the universally applicable supply chain issues right now, and they pop up unexpectedly, to be honest. That's still out there. Obviously then COVID and our ability to keep workforce on site and working can really affect schedule and by extension cost. Yes. The only other thing that I would add, Roger, is that we're getting into winter here in the Northern Hemisphere, and that's gonna have an impact. We've already seen it in our Cheyenne operations. They've had snow a couple of times, freezing rain, which impedes our ability to get workers out in the field. We expect to see that as we go forward at Artesia as well. That's a big unknown at this point in time. Okay. Appreciate it. Thank you. Okay. Your next question comes from Neil Mehta from Goldman Sachs. Your line's open. Good morning, team. Nice quarter here. The first question I had was around refining, specifically around crude differentials. We've seen Brent-TI trade pretty tight, and we've seen some backwardation show back up in this market. Just your thoughts on the outlook for Cushing and navigating the crude differential environment. Yeah, Neil, this is Tim. I'll take that. We are definitely seeing the tightness, short term at least in the Brent-TI diff. All the things you talked about, the low cushion inventories, the backwardation, Capline reversal, all of those contributing, we believe in the short term. But if you look at the long-term structure and long-term fundamentals, we still believe the Brent-TI spread's gonna be in that $3 range. If you look at our kind of our assets, though, it's it helps to look at each one to understand what the impact of this Brent-TI spread really means to each of them. So in El Dorado's case- Because they have 30% of their crude slate associated with WCS, and the WCS spread, as you see, has widened. It's providing some offset and some cushion, I guess, over at El Dorado. If you look at the Permian and our Navajo refinery, the WTS spread has weakened significantly here as you see, the market discounting the WTS and the high sour crudes. That's helping our Artesia refinery. Of course, we talked about Tulsa a little bit already. The base oil margins are strong still and will continue to justify the tighter spread or the Brent TI spread. If you look at our assets that are mostly affected by the WTI Brent spread, we still are very positive going forward. Okay. You think, Tim, $3 is the right number over the medium term to anchor to based on transportation economics? That's right. Yeah. Okay. That's helpful. Rich, the follow-up's for you, just around capital returns. To execute the recent M&A, there was obviously the decision to cut the dividend. What is your perspective on, in terms of the resumption of capital returns, in what form, whether it be buybacks or a dividend payout? Neil, you know, we reiterate the guidance we gave concurrent with the Sinclair acquisition, which is we'd expect to return the dividend, as Mike said, in the first half of 2022. Through the first quarter of 2023, we'd expect to return $1 billion of total cash to our shareholders in both dividends and share repurchase. Then through 2023 and beyond, we intend to go to a 50% payout ratio of net income based on both dividends and share repurchase. Thanks, Rich. Appreciate it. Your next question comes from Kalei Akamine from Bank of America. Your line's open. Hey, good morning, guys. I'm standing in for Doug, so thanks for taking the question. Maybe first off, I'm interested in the marketing options at Puget Sound. My understanding is that Vancouver is advantaged over Seattle, so I'm wondering about your ability to sell there as a way to step up margins. Additionally, what the crude differentials look like for the Canadian medium that you run up there, noting that WCS has widened out, but they're not exactly the same. Yeah, this is Tim. I'll take that question on Puget Sound. We do have the ability to move products into Canada, and we do so even today. We'll continue to look for those opportunities. Typically, they go on smaller barges as we move them up onto the West Coast there. We have ability to move both into Canada as well as into California. As we see the CARB gasoline market improve, we'll have the opportunities to play into that market too. As far as crude diffs, yeah, we still believe that the Canadian crude represents price advantaged opportunities for us. We generally tend to blend that Canadian crude mix to match kind of an ANS type quality as we bring it into the Puget Sound Refinery. We do see opportunities to continue to bring that advantaged crude into Puget Sound. Thank you. My follow-up is just on capital expenditures again. I think your guidance implies a big step-up in renewable spend for first quarter of 2022. I'm just hoping that you could put it all together for us, the outlays for this quarter and next, considering that this will be the peak period for spend and Puget Sound is closed. Kalei, as we said, we'd expect to spend between $500 million-$600 million for 2021 in renewables. That leaves about $150 million-$175 million to go in 2021. As guided, for 2022, we'd expect to spend between $175 million-$225 million in renewables. Is most of that gonna be in the first quarter or the first half? First half. We'll be done in the first half. I don't have enough insight to a quarterly split at this point. Okay, that's perfect. Thanks, Rich. Your next question comes from Jason Gabelman from Cowen. Your line's open. Morning. Thanks for taking my questions. I first wanted to ask on the Rockies, or I should say the West region. The indicators have held up pretty well, and as demand kind of normalizes here in a refining environment that looks different with some assets gone, can you just discuss if there's a step change in the supply-demand balances in those west regions relative to where they were pre-COVID, or if there were some transitory items benefiting in 3Q and seemingly as we move into 4Q? Second, I wanted to ask about the Sinclair acquisition. Understanding there's some sensitivities as you're going through the closing process. The Biden administration has been vocal on looking more closely at oil and gas mergers, and I'm wondering if that has resulted in a more in-depth process, I guess I could put it, relative to what you would have expected, or Mike, even relative to when Holly and Frontier combined in 2011. Just looking for general Thoughts if you could compare this process versus that one. Thanks. Sure. Look, I'll give you a little insight on question two. I'll ask Tim to speak to your first question. It won't surprise you that at this point, we are deep into the regulatory process and frankly have very little to say about it, other than we think the transaction is clearly designed to close, and we look forward to serving these customers. As to how the FTC is seeing it and what questions they're asking, that's a little too intimate right now, so we'll pass on that piece, and we're working hard at it. Tim? Yeah, Jason, your question on the West refining region, again, we're very pleased with the execution that we've had, not just in the third quarter, but the second quarter as well. We're seeing, we saw stronger gasoline margins, stronger diesel margins, and then again, lower RINs costs that were basically boosting our capture on the West. Structurally, as you pointed out, we've taken out a lot of fixed costs by converting our Cheyenne refinery into the renewable diesel project, and that's basically helping our overall economics in the West as we continue to serve those markets just with one less facility. Once again, if you have a question, you may press star one on your touchtone phone at this time. Your next question comes from Paul Cheng from Scotiabank Howard Weil. Your line is open. Hey, just a curiosity. A number of your peers, the independent refiner, including some small, some bigger ones have said, due to the energy transition, they really have no plan to further expand their refining footprint, neither in the organic investment or the inorganic. You guys probably are just the exception here. From your standpoint, after you're finishing care, do you think that you have sufficient of the capacity or that, say, after you digest it, you will still be interested if there's a right opportunity to further expand your refining footprint and how you see that differently comparing to your peers on that? Yeah. Well, Paul, obviously, every company has its own strategy, and ours is not intentionally contrarian. But we actually do believe in petroleum fuels, and those are the fuels of today, and most consumers still use gasoline and diesel. Our intention is to serve those customers reliably, safely, and at a very reasonable cost. At the same time, we're not ignorant to energy transition, and we're doing things inside our company around renewable fuels, the supply chain around feedstocks and in potential opportunities around carbon capture. I think we have a portfolio outlook that also includes specialties like lubricants and our own integrated transportation network. What we're trying to be is very competitive company that generates high returns internally and ultimately with cash to return to our shareholders. It doesn't favor renewables relative to petroleum fuels. We believe in both. What we wanna do is to produce both really well in markets that reward us for that. I hope that describes the strategy from a very high level. Obviously, as time rolls forward, we'll look at individual opportunities. We don't believe in generic capacity acquisition for its own sake. At the same time, when we're able to add solid assets like that of Puget Sound Refinery, that can really help our portfolio with operational capability and serve a premium market, you bet we're gonna do that. Yeah, that's what we're doing going forward. Right now, we've got a very full plate. Execution is our mantra, and we really need to focus on bringing these things that we've committed to across renewables, Puget Sound, and Sinclair home to the benefit of our company and our shareholders, and that's what we're working on doing. My second question is that from a high level, some of your peers when they're looking at the energy transition, they also expand into maybe beyond or outside the traditional refining space, including one of your peer getting into investment into the factory business and then maybe also doing the CCS. How HollyFrontier looking at those? I mean, if those over the next five years that the company may be interested to branch out beyond your current business mix or that over the next five years, you're going to stick with your current business mix. Yeah. Paul, our principal skills are in liquid fuels production and distribution. That's what we're gonna favor. We're gonna try to reduce carbon intensity through time in our renewables efforts, and also look inside the fence line in terms of Scope 1 and 2 emissions, and potentially invest in carbon capture and storage. Batteries, that feels like a stretch for us. I like to never say never, but really we're gonna focus on those things that we can provide skill and advantage to, and I think I've called those out here. Thank you. You bet. There is no further question at this time. I would now like to turn the call over to Craig for closing remarks. Thanks, everyone. We appreciate you taking the time to join us on today's call. If you have any follow-up questions, as always, reach out to Investor Relations. Otherwise, we look forward to sharing our fourth quarter results with you in February. Thank you. This concludes today's conference call. Please disconnect your line at this time, and have a wonderful day.