Welcome to HF Sinclair Corporation and Holly Energy Partners' 4th quarter 2022 conference call and webcast. Hosting the call today is Mike Jennings, Chief Executive Officer of HF Sinclair and Holly Energy Partners. He is joined by Tim Go, President and Chief Operating Officer of HF Sinclair, Atanas Atanasov, Chief Financial Officer of HF Sinclair, and John Harrison, Chief Financial Officer of Holly Energy Partners. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by again pressing the star one. If you should require operator assistance, please press star zero. We ask that you please 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 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, Rob. Good morning, everyone, and welcome to HF Sinclair Corporation and Holly Energy Partners' fourth quarter 2022 earnings call. This morning, we issued a press release announcing results for the quarter ending December 31st, 2022. If you would like a copy of the press release, you may find them on our websites at hfsinclair.com and hollyenergy.com. Before we proceed with remarks, please note the safe harbor disclosure statement in today's press releases. 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 security laws. The call also may include discussion of non-GAAP measures. Please see the earnings press releases 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. Thanks, Craig. Good morning, everyone. Today, we reported fourth quarter net income attributable to HF Sinclair shareholders of $587 million or $2.92 per diluted share. These results reflect special items that collectively decrease net income by $11 million. Excluding the items, adjusted net income for the fourth quarter was $598 million or $2.97 per diluted share compared to adjusted net loss of $18 million or -$0.11 per diluted share for the same period in 2021. Adjusted EBITDA for the fourth quarter was $1.0 billion, an increase of approximately $878 million compared to the fourth of 2021. In our refining segment, fourth quarter EBITDA was $864 million compared to $25 million in the same period last year. This increase was primarily driven by higher refining margins in both the West and MidCon regions and a 39% increase in sales of refined products year-over-year due to the acquisition of the Puget Sound Refinery and the acquired Sinclair businesses. Despite the winter storm impacts we experienced in December, crude oil charge averaged 628,000 barrels per day for the fourth quarter compared to 421,000 barrels per day in the fourth quarter of 2021. For full year 2022, we achieved records for annual crude charge of 607,000 barrels per day and refining segment EBITDA of $4.2 billion. Despite the tight supply environment in 2022, our continued focus on operational excellence allowed us to safely increase throughputs to meet customer demand for our transportation fuels. In our renewables segment, we reported adjusted EBITDA of negative $7 million for the fourth quarter and total sales volumes of 54 million gallons driven by unplanned downtime. We continue to increase throughput at our renewables facilities and expect to achieve normalized run rates in the second half of 2023. We remain constructive on the D4 RIN market and on our ability to source advantaged feedstocks for our renewable diesel plants. Our marketing segment reported EBITDA of $23 million for the fourth quarter and total branded fuel sales volumes were 336 million gallons, representing a 7 cent per gallon margin. We continue to make progress expanding the Dino brand as our number of branded sites grew by 24 during the fourth quarter and by 81 since the acquisition of the branded business from Sinclair in March of 2022. Lubricants and specialty products reported EBITDA of $67 million for the fourth quarter compared to EBITDA of $75 million for the fourth quarter of 2021. This decrease was largely driven by FIFO impact from consumption of higher-priced feedstock inventory in the fourth quarter of 2022. For full year 2022, lubricants performed well above our mid-cycle guidance, reporting annual EBITDA of $382 million due to strong demand for base oils and finished products. HEP reported adjusted EBITDA of $116 million in the fourth quarter compared to $80 million in the same period of last year. This increase was primarily driven by contributions from the Sinclair Transportation assets, which were acquired in March 2022, coupled with record volumes across our integrated system. We returned $475 million in cash to shareholders through share repurchases and dividends during the fourth quarter. Since the closing of the Sinclair acquisition on March 14, 2022, we have returned over $1.6 billion, which is well ahead of our initial target of returning $1 billion to our shareholders by the end of the first quarter of 2023. This represents a 2022 full year cash return of 16%. As of December 31, 2022, we have $662 million remaining on our share repurchase authorization and remain fully committed to our cash return strategy and payout ratio while maintaining a strong balance sheet and an investment-grade credit rating. We also announced today that our board of directors declared a regular quarterly dividend increase to $0.45 per share, payable on March 17, 2023, to our holders of record on March 7, 2023. This 12.5% increase reflects our constructive outlook on cash generation from our recently acquired assets and our board's commitment to returning excess cash to shareholders. Looking ahead, our focus remains on operating safely and reliably while executing on our integration strategy to fully optimize our new and more diverse asset base. We believe we've created a strong foundation as a downward integrated business with increased scale to drive growth and capital returns to shareholders. With that, let me turn the call to Atanas. Thank you, Mike, and good morning, everyone. Let's begin by reviewing HF Sinclair's financial highlights. Net cash provided by operations totaled $915 million, which included $47 million of turnaround spend in the quarter. HF Sinclair's standalone capital expenditures totaled $99 million for the fourth quarter. As of December 31, 2022, HF Sinclair's total liquidity stood at approximately $3.3 billion, comprised of a standalone cash balance of $1.7 billion, along with our undrawn $1.65 billion unsecured credit facility. As of December 31, we had $1.7 billion of standalone debt outstanding, with a debt-to-cap ratio of 16% and net debt-to-cap ratio of 1%. HEP distributions received by HF Sinclair during the fourth quarter totaled $21 million. Sinclair owns 59.6 million HEP limited partner units, which, following the acquisition of Sinclair Transportation, represents 47% of HEP's outstanding LP units at a market value of approximately $1.1 billion at last night's close. Let's go through some guidance items. With respect to capital spending for full year 2023, we expect to spend between $250 million-$280 million in refining, $25 million-$35 million in renewables, $35 million-$50 million in lubricants and specialty products, $20 million-$30 million in marketing, $50 million-$80 million in corporate, and $530 million-$630 million for turnarounds and catalysts. At HEP, we expect to spend between $25 million-$35 million in maintenance and $5 million-$10 million in expansion and joint venture investments. For the first quarter of 2023, we expect to run between 500,000 and 530,000 barrels per day of crude oil in our refining segment. We have plant turnarounds scheduled at our Puget Sound, Woods Cross, and El Dorado refineries in the period. Let me now turn the call over to John for an update on HEP. Thanks, Atanas. I'm pleased to report HEP's strong fourth quarter and full year earnings, driven by record volumes across our integrated system. HEP's fourth quarter 2022 net income attributable to Holly Energy Partners was $68.5 million, compared to $45.6 billion in the fourth quarter of 2021. The year-over-year increase was primarily attributable to earnings related to the Sinclair Transportation assets, partially offset by higher interest expense and operating costs. HEP's fourth quarter 2022 adjusted EBITDA was $115.7 million, compared to $79.7 million in the same period last year. A reconciliation table reflecting these adjustments can be found in HEP's press release. HEP generated distributable cash flow of $85.8 million, and we announced a fourth quarter distribution of $0.35 per LP unit, resulting in a distribution coverage ratio of 1.9x. Capital expenditures and joint venture investments during the quarter were approximately $18 million, including $11 million of expansion in joint venture investments, $5 million in maintenance CapEx, and $2 million for reimbursable CapEx. For 2023, we expect total CapEx of $30 million-$45 million. During 2022, we made good progress on reducing our leverage ratio and ended the year with a pro forma debt to trailing twelve-month adjusted EBITDA ratio of 3.6x. We expect to reach our target leverage ratio of 3.5x in mid-2023, at which time we will evaluate incremental cash return to unitholders, consistent with our previously announced capital allocation strategy. We are now ready to turn the call over to the operator for any questions. 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 questions, we welcome you to rejoin the queue. If at any point your question has been answered, you may remove yourself from the queue by again pressing the star one. Your first question today comes from the line of Theresa Chen from Barclays. Your line is open. Good morning. Thank you for taking my questions, and congratulations to Mike again for round two of retirement. Now that you've achieved $100 million of run rate synergies following the Sinclair acquisition, and have had assets under your umbrella for some time, how do you view, you know, the further stages of the integration effort? What phase are you at in terms of rolling out their the Sinclair marketing brand to the legacy HFC refining markets and downstream channels, and are there other aspects of integration and synergies that we should be anticipating? Good morning, Theresa. This is Tim Go. Let me take a stab at that first here. We're very pleased that we were able to achieve the $100 million of synergies so quickly, you know, just right out of the gate. We definitely see more opportunities for us to continue to take advantage of the larger refining portfolio, but more importantly, the integration with our marketing assets. That was, as you recall, one of the core objectives of our Sinclair/HollyFrontier merger was to be able to get that branded wholesale integration in our merchant refining markets that we currently didn't have any really exposure to in the past. We've done really well. Mike said in his prepared comments, we had 24 additional stores in the fourth quarter, 81 branded outlets for the year. We're really three-quarters of the year since we've owned Sinclair. We think that's just the beginning. We think there are a lot more opportunities. We're seeing a lot of interest in the Southwest. We're seeing a lot of interest in the PNW to basically bring out the branded stores in those areas, which will couple with our again, our refining output to help us fully integrate that value chain. We also see a lot of opportunities just within our operating assets too. Procurement, combining processes to improve our reliability. There's a lot more opportunity out there. We're not ready at this point to give you a number. I can tell you that we are seeing a lot of opportunity, and we're going after it. Thank you so much, Tim, and congratulations on the new role. Turning to refining, can you give us a sense of what happened on the West Coast, this quarter? Further details on the capture results, and do you see this, you know, improving over the long term or medium term, taking into account, of course, the near-term downtime, that you have, you know, in the first half? Yeah, Theresa, this is Tim. Let me take that again. Basically, the fourth quarter impacts were about 20,000 barrels a day, less heavy crude than we typically run, primarily in the West, but again, primarily in the West. That was due to both planned and unplanned maintenance, as well as some higher natural gas prices that occurred that also impacted the West. On the planned basis, we had coker maintenance planned at our Parco refinery. We had coker maintenance planned at our PSR refinery. We had distill hydrotreater maintenance planned at our Puget Sound refinery, and then we had a distill hydrotreater maintenance planned at our El Dorado refineries. All of those contributed to the lower heavy crude runs as well as the lower distillate yields. We had some hydrogen outages, both planned and unplanned at our Navajo refinery and at our Parco refinery. That's what drove the lower West Coast productivity. If you're looking at OpEx and if you're looking at even some of the gross margin capture associated with natural gas, we saw some very high natural gas prices on the West Coast. The basis for the PNW, as well as for our Salt Lake City refinery, had gotten up to about $40-$50 in MMBtu above the Henry Hub baseline price in that December and really carrying over into the January timeframe. Those three factors, less heavy crude, less distillate yield, and higher natural gas prices really explain the weaker West results that we had. Thank you. Your next question comes from the line of Paul Cheng from Scotiabank. Your line is open. Hi, good morning. First, congratulations to both Mike and Tim for the retirement and promotion. Thank you, Mike, for all the help. I guess that I have two questions in here. Mike or Tim, when you're looking at LD, it's a little bit surprised that you're saying it will take until the second half of this year to reach the normalized run rate, given that you actually start up all the plan, say one in the first quarter, the other one is in the second quarter. Maybe that you can give us a little bit better understanding of why that I think a lot of people would have thought, by now you will, moving into the normalized run rate. What have you learned so far from the operation? Also whether you have already certified for the LCFS by now? That's on that. The second question is on the marketing. If I look at last year, for only 10 months of operation, you see about $63 million in EBITDA. Much better than at the time of the acquisition, you are referring to about $50 million a year in normalized cycle. Is last year just an exceptional year and that the baseline is still $50 million or that business is actually much better than what you had been assuming? Thank you. Thanks, Paul. Tim and I will split these up. I'll start with the renewables, questions. Yeah, to put it candidly, the renewables performance, operational performance to date, is not what we planned, and it's disappointing. We're pretty resilient, and we're gonna fix this thing. What's in front of us? There are a number of things. First, process optimization and catalyst performance, getting the renewable diesel yields up and getting the units to run more consistently. We ran just 14,000 barrels a day, which is 60% utilization in the fourth quarter. In a process industry, Paul, as you well know, that is too low. That number needs to be more toward 90%. In terms of availability and reliability of the underlying units and the catalyst performance, getting the renewable diesel yield higher at the expense of naphtha yield. As importantly, these processes are very hydrogen-dependent, and we've got two things going on there. First is base reliability of hydrogen production, and we've got a number of things working internally to improve that. But also with petroleum or conventional distillate margins as high as they are, we're needing to optimize hydrogen use across these refineries. That's a competition at present. Longer term, we need to increase the availability of the high-purity hydrogen that feeds these plants. You know, the nameplate-wise, they were specced to perform at capacity, and we found that we're not there. We have some initiatives working to improve, you know, that optimization within the refinery and longer term, improve gross availability of the hydrogen. There's a lot to do operationally here in these current six months to get toward considerably higher throughputs and yields in these plants. No, we've not yet achieved that, but that is the pathway to profitability. Paul, I'll take your second question on marketing. This is Tim. Again, we're very pleased with the results that we've seen on the marketing side. This is, again, one of our core objectives that we've been focused on as far as integration and again, for the reason for the Sinclair/HollyFrontier merger. You've asked if we're ready to change our $50 million year mid-cycle. I'd say probably not at this point, but I would tell you that we are operating above mid-cycle right now. We think that's the case because with inventories being low across the country and demand being fairly high, especially in our areas that we operate in, which in the Rockies, in particular, have low inventories and high demand, we're able to get a little bit more from our brand premium than maybe what we would during a mid-cycle type environment. More importantly, though, we saw a 5% growth rate last year in the number of stores that we have, and we think that we're gonna continue to see a 5%-10% growth rate in our branded wholesale market year-over-year. In fact, in 2023, we're hoping it'll be towards the upper end of that range. From that standpoint, we do think there'll be growth in our mid-cycle number. Thank you, Tim. Mike, can I circle back then about the LCFS? Have you achieved the certification on that? Paul, we're still operating with provisional for the Artesia facility, and we expect in the first quarter that we'll get the permanent certification. Okay. Thank you. That being for CI, yeah. Your next question comes from the line of Ryan Todd from Piper Sandler. Your line is open. Great. Thanks. Maybe one first of all on cash return to shareholders, and I guess just say congratulations, Mike and Tim, on the retirement and the promotion. On cash return to shareholders, which continue to be really impressive and obviously well in excess of your earlier guidance, can you talk about how you're thinking about that run rate going forward, how aggressive you may look to be there versus building additional cash on the balance sheet? In general, you know, is this kind of $400 million a quarter the type of run rate we should expect for a while? Or can you bookend us how to think about that going forward? Yeah. Good morning. This is Atenas. Thank you for your question. As Mike Jennings indicated in his prepared remarks, we remain fully committed to our capital return strategy. As we pointed out, 16% return for 2022 was very healthy. With respect to owing capital return for 2023, so far, 2023 is shaping up to be a nice year in terms of cracks. We remain fully committed to what we have been doing. With respect to pace, we're not gonna guide to pace, but we can say that we're not shy to exceed the 50% target payout ratio that we have talked about previously, both in terms of when you look in buybacks and obviously the dividends. Ryan, we're also starting from a position of privilege in that we began the year with $1.6 billion on the balance sheet, which does represent itself some excess cash. Yeah. On that cash on the balance sheet, is there a kind of an appropriate level of cash that we should expect you to carry on the balance sheet going forward? Yeah. Previously, we talked about, you know, the range of around, you know, $500 million, that's not a hard and fast number. We take into account our immediate capital needs, as we've indicated in our press release and remarks, we've got to write some pretty large checks early in the year. As we progress through the year, obviously we'll look at our cash balance. Again, focused on very robust OIN shareholder return, which includes looking at our cash balance. Great. Thank you. Maybe a follow-up on the earlier question on the renewable diesel business. Outside of... I appreciate the kind of the clarity on the operational issues. Outside of the operational issues, can you talk a little bit about what you've learned from nearly a year of operations on, in terms of, you know, placing renewable diesel product into the market, and feedstock acquisition? Maybe what type of feed mix you're running. You know, have product sales and feedstock acquisition been about as you expected, or have you seen any challenges there? I tell you that we're older and wiser and, but for some operational issues, we've learned a lot. I think we are more optimistic about what we see in the marketplace in respect of ability to place this product outside of California profitably, okay? There are many other markets that we've become involved with. And certainly with the current low LCFS price, that just opens the doors to placing these barrels otherwise. Much more opportunity to place the barrels than we initially understood. Beyond that, on the feedstock side, I think we've found that maybe being a little more conservative relative to volumes, and picking up the remainder in the spot market is probably the right strategy for us given operational issues. We've really worn the scars of pushing forward excess inventory into further periods in a backward market structure, and that's a big piece of cost in terms of our profitability. Probably a little different strategy on that front. With respect to the more strategic of, you know, what feedstocks are right for our plants, the PTU is operating like a gem. The yields coming off of that unit are higher than we anticipated, and the reliability is good. The downstream units, I can't say the same about, but we'll fix that. The PTU is great, and the ability to put new and lower CI feeds in is gonna be strategically something that's really important to us. We're working on a venture at present that we can't disclose, but that really is a bit of a game changer if we can get it done, but is heavily dependent on having the PTU. You know, I'd say overall, while diesel prices have softened recently and that gets into the profitability, the overall market structure in terms of the ag oils has come down as well, and the RIN price kind of bridges that gap. We feel like the margin structure, if you will, or the market structure is there for us. The optimization will happen through improved operations, greater hydrogen availability, and new or second-generation feedstocks. Thanks, Mike. Yep. Your next question comes from a line of Doug Leggate from Bank of America. Your line is open. Good morning, guys. Excuse me. You, you caught me mid-coffee there. I apologize. Mike, I guess we only just got a short time to see each other recently, and, you're taking off again. Congratulations to both of you guys. To Tim- Thanks, Doug. Looking forward to seeing what you're gonna do here. That really is my kind of first question, if I may. Just at a high level, what should we expect as we look forward? Continuity of strategy or something different? I guess there's maybe a part A and a part B to this. That'll be my two questions. The part A is, Mike, you, it seems to me you were never really bought into the lubricants as a part of, at least a vertically integrated part of the portfolio, it seems. How does this position in the company going forward could be looking at potential monetization? That's number one. Number two is, and this is, a kind of tough one, I guess, but the legacy reliability of the standalone HollyFrontier business was always the Achilles heel in the portfolio relative, let's say, to your peers. It now seems the same thing is kinda happening on the acquired Sinclair assets. What assurances can you give the market that those reliabilities are somehow not, you know, structurally endemic to the portfolio or to the business that you can actually work on these going forward? I'll leave it there. Thank you. Yeah. Those are meaty questions, Doug. Thank you. Tim's gonna take on the bulk of it. For clarity, I would say, while I wasn't the one who bought the lubricants businesses, there's been no lack of commitment to growing those businesses and optimizing them, once in the portfolio. They've been a nice contributor to the company. As you recall, while refining was losing money during COVID, lubricants and specialties were kicking out a steady $30 million a month of EBITDA. That business has performed well and has been improved significantly under Tim's stewardship. Tim, I'll pitch it to you because really the future is about your vision and what you're gonna do with this business. Well, thanks, Mike. I mean, I am excited about the opportunity and the challenge ahead. Mike has done such a good job of setting this company up for success, starting with really the HollyFrontier combination that occurred 11, 12 years ago, and then now with the Sinclair addition to it as well as the Puget Sound addition to it. We are really set up with some nice assets, some nice people and capability, and really a bright future ahead of us, so I'm very excited about that. I can tell you there are some things that won't change, you know, as we, as we go forward, and that's the focus on long-term growth, which Mike has clearly demonstrated, and the commitment to cash return to our shareholder, which again, Mike has really shown and demonstrated here in the last few years. Things that we want more of, you hit the nail on the head. We need more progress, more focus on safety, reliability, operations excellence. That has been an area that we've been coming up from a, you know, a point of behind, I guess, the competition. We've been really trying over the last three years, at least that I've been here, to really catch up. I think that's gonna leverage my skill set and my experience a little bit, trying to focus more on that, trying to take us to the next level. In fact, I think that's almost my mandate from the board. I think we've made some good progress. Mike talked about on the prepared remarks how we set some annual records in not just crude throughput, but also in diesel and gasoline production. I will tell you that's not just because of the additional assets that we added in terms of Puget Sound and in terms of the Sinclair assets. Our individual plants, most of those legacy plants, El Dorado, Woods Cross, and Tulsa, set individual crude throughput records, distillate production records, and gasoline production records in 2022. I think that's a sign that we're heading in the right direction. We have the capability to deliver that higher safety, reliability, and operations excellence. It's gonna be an up and down, you know, journey as we go along. As long as we see that underlying kind of performance continuing to rise, kind of up and to the right, I like to say from a chart standpoint, it gives us confidence that we're doing the right things and we're heading in the right direction. I think from an integration and optimization standpoint, you know, we've got, it's almost feel like a kid at Christmas. We've got a lot of new opportunities, a lot of new assets, a lot of new people and capability that we still haven't tapped fully into, and we're gonna see more of that going forward in terms of trying to optimize, in particular, the Rockies area. The whole west area with Puget Sound and Southwest, I think, are real fertile grounds, as we've mentioned earlier, more synergy opportunities there, more opportunities for higher utilization, better capture rates, and lower costs, which is what we're gonna go after. The last point, Doug, is, we are really pleased with how our lubes and specialty business has performed over the last three years. We've been working very hard to improve the profitability of that business, and I'm pleased to say that, you know, we set a record last year. In fact, it's the third year in a row that we've set a record on lubes and specialties earnings, and we're pleased to see that improve. With that, we still think there's more out there, and we're going after that. That's another testament to our focus on operations excellence and margin improvement. With that better performance, more doors open. Yeah, we can consider more strategic opportunities. I'd say in the short term, we're focused on improving that business. I'd say in the mid term, there may be more opportunities to look at for our lubes business to maximize shareholder value. Terrific, full answers to my questions, Tim and Mike. Thanks very much indeed, guys, and we'll see you, we'll virtually see you next week. Thanks so much. Excellent. Thank you, Doug. Your next question comes from the line of John Royall from JP Morgan. Your line is open. Hi. Good morning. Thanks for taking my question. You've called out a heavy maintenance year in refining with your full year guide, and the 1Q throughput guidance looks, you know, like pretty heavy maintenance early in the year. As we think about how maintenance might progress throughout the year, any guidance in terms of maybe first half versus second half or just anything more granular timing-wise? Yeah, John, this is Tim. We put out the guidance of 500,000-530,000 barrels a day in the first quarter. I think Atanas mentioned that in the prepared remarks. That is a combination of lingering winter storm effects as well as the, as well as the turnaround impacts in the first quarter. That, of course, is a lower utilization than what we normally run. We do believe if you look at the second quarter and on that we'll be back into the low 90% utilization type range, as we get through the first quarter turnarounds. We'll still have some more turnaround work throughout the year, but the impact on crude rate and the impact on utilization is clearly front-end weighted here in the first quarter. If you think about, low 90s utilization, that's really back to normal in terms of what we typically produce in those, in the rest of the year. Okay. Thank you. Then, I was just wondering your view on Brent WTI, you know, given your exposure there. It's, it's remained relatively wide even with the SPR release ending. Can you talk about the drivers there and how you think that could progress in 2023? Yeah. There's a lot of drivers, of course, in the Brent TI spread. I think the one that seems to be taking the biggest impact right now is just the high freight rates, dirty freight rates and globally. I think the Russia-Ukraine conflict has created even more pressure on shipping rates. What you're seeing. We've always said that the Brent TI spread is basically determined by shipping rates of TI into the rest of the world, and we're seeing that play out with the higher freight rates now, keeping that Brent TI spread wide. We're also pretty happy with the WCS WTI spread that we continue to see. Now, it jumped up to in the $25-$30 discount here in the fourth quarter, and it's come off that since then. We still are fairly bullish that, you know, a $20 or so WCS WTI spread for the rest of the year feels pretty good to us. The last thing that I'll just point out ANS has been pricing at a discount to Brent here over the last few months. That has a big impact in our Puget Sound refinery. We think that's associated with the higher ANS crude that we've seen production-wise coming out of the North Slope, and we think that's gonna continue to advantage our PNW location. Thank you. Your next question comes from the line of Neil Mehta from Goldman Sachs & Co. Your line is open. Yeah. Congrats, Tim, and congrats, Mike, to both of you. I had a follow-up on the return of capital question. I don't know if you can comment on the Sinclair family and their intentions, but one of the things that's been nice over the last year is even as they've been monetizing the position, you've been in a position to take down some stock, December notwithstanding. You know, just your views on whether you can continue to be over the wall and your capacity to mitigate any outflows from them. Neil, thanks for the question. We, as you know, are very close to the individuals. We have two of their representatives, one Sinclair family member on our board, and we speak frequently. Yes, December notwithstanding, which, you know, it was an interesting trade, we expect to continue to buy shares from them as they liquidate some of their position. I don't think they have an intention to sell down to zero by any stretch, but they do want some liquidity. It has been, you know, fairly synergistic relationship, as you will, in that we're buying in chunky quantities at a discount to market, and that to us benefits our shareholders. We would expect to do more of that, assuming they're still willing. Okay. That's helpful, Mike. Then we talked a little bit about the crude markets, but love your perspective on the product markets. It's hard to make sense of the EIA weeklies these days. There's a lot of noise, it seems, in the data, but what are you seeing through your own wholesale channels in terms of, and retail channels in terms of demand, and how does that influence the way you think about the way both diesel and gasoline are set up into the summer? Yeah, Neil, this is Tim. That EIA data is confusing. Every week, it's interesting just to see how it plays out. What I can tell you is on the product side, we're seeing strong demand in our markets. For example, on the gas side, I would say we're seeing demand that's 98% of what our 2019 peaks were. That's in the MidCon, the Southwest, and the Rockies. It's up versus 2021, but about maybe 2% down versus 2019. On the diesel side, we're seeing demand maybe 10% higher than what we saw in 2019 in the areas that we operate in. On the jet side, which has been lagging, I guess, through most of the COVID period, we're seeing that at about 90% of where we operated at the peak in 2019. We continue to think that as this year plays out, tha jet demand's gonna continue to climb. We also think, as most people do, that with the China situation opening back up, that there'll be some more global demand pull for these products and that we're really shaping up for another strong rest of the year in terms of refining. You know, there's been a lot of talk about macro factors and drivers for the refining industry, and I don't really have anything more to add to that. What I can tell you is that if you look at our regional advantages, that really is something that we're excited about here the rest of the year. You look at our presence in the Rockies, you look at our position on the West Coast in the PNW, and especially you look at our asset in the Southwest, we think that regional advantage gives us a step up above even the macro drivers that we've been talking about. You know, our demographics in those areas are still growing, so that overall demand for transportation fuels continues to go up just with demographics. We've got access to advantage crudes that we've talked about earlier at each of those locations. Of course, we've got these strong local product markets that we're excited about, especially in the summer months, when there's a lot of travel and there's a lot of activity going on in the pad four and really in the West Coast and the Southwest. Neil, we're pretty bullish on this year. We still think that despite the EIA reports, that our areas and our markets are shaping up to have a nice year. Your next question comes from a line of Matthew Blair from TPH. Your line is open. Hey, good morning and congrats, Tim, on the new role and Mike on the retirement. I was hoping you could walk through the moving parts on lubricants in Q4. Why did your Rack Back EBITDA improve even though the base oil indicators moved down? What was the FIFO impact in the quarter? The volume seemed a little low. Was that due to, like, maintenance or turnarounds on your side, or was that more due to just, like, weaker demand and matching production levels to the current demand in the market? Thanks. Yeah, Matt, this is Tim. Let me just say again, we've been very pleased with the results for our lubes and specialties business. We did see lower volumes in the fourth quarter. That's a combination of just some softer seasonal demand that we typically see in the fourth quarter. As prices were dropping, we saw a lot of customers just slowing down, waiting for those prices to drop before they put in their orders. More importantly, we have been rationalizing some of our low profit opportunity areas. We've talked about SKU rationalization many quarters now. That continued to play out in the fourth quarter. We are purposefully trying to shed barrels or gallons that we think are low margin in favor of focusing on the areas that are higher margin. What you'll see is lower volumes, as you pointed out, but you'll see a higher gross margin per gallon, which you'll see as well play out in the fourth quarter and really for the year. That's on purpose, and we think that's gonna continue as we continue to streamline our business and focus on profitability. The other thing I'll mention, FIFO impacts. We had headwinds in the fourth quarter. It was about a $7 and a half million headwind. The, so you can add that back on to the 64 if you wanna kind of get a feel for run rate, kind of numbers. We'll continue to see headwinds in the first quarter, but we believe that underlying business will still show strength. Seasonally, the first half of the year is always a little bit better for lubes. Finally, what I would tell you is that the roughly $300 million run rate that we're seeing here in the fourth quarter, we think will play out as we continue here in 2023. The strength of the Rack Back business, as you pointed out, is really on the Group III margins. Your overall comment about base oil margins coming down is true, but it applies specifically to Group I and Group II. Group III margins have actually stayed fairly robust. You see that in our published indexes, about $130 a barrel still, and we continue to take full advantage of that in our Rack Back business. We think that will continue at least here through the first quarter, probably the second quarter as well. Sounds good. Thanks for all the color. Then, Tim, I think you mentioned that WCS spreads have been a relative bright spot. What's your outlook going forward on WCS spreads, especially given this Trans Mountain pipeline expansion? Yeah. There's a lot of speculation on what will happen when Trans Mountain starts up. Of course, the published start date is still in the fourth quarter of this year. There is a possibility that that could slip further as it has in the past, but we are planning for that to happen. There'll be some line fill impacts as they try to put some barrels in the line to start that thing going, which will tighten the spread, of course. We also tend to see seasonal tightening in that WCS-WTI spread in the spring when the spring maintenance activities come into full activity up there in Canada. We're not surprised to see the WCS spread come off from the $28-$30 diff to the, call it $18-$20 diff that we're at right now. We would expect that to hold in this kind of area here for the next couple quarters. Great. Thank you. Your next question comes from a line of Jason Gabelman from Cowen. Your line is open. We'll move on to the next question from the line of Doug Irwin from Citi. Your line is open. Hey, everyone. Thanks for the question. Just had one on the midstream side. I was wondering if you could just expand a bit on the capital allocation strategy at HEP. I guess specifically around a potential distribution increase, kind of how you're thinking about balancing the flexibility of being almost 2 times covered versus also being able to kind of achieve your leverage target and maintain that going forward. Sure. Thanks, Doug. This is John Harrison. Our capital allocation strategy really remains the same here. We've kept the distribution flat while we've reduced leverage, and we're really pleased with the progress that we've made there. Happy to report we're at 3.6x on a pro forma basis. We do have that short-term target of 3.5x leverage, and we expect to hit that in mid-2023. Longer term, we plan to maintain leverage in that 3.0x to 3.5x with a coverage ratio of at least 1.3x. Fair to say, incremental cash return is top of mind for us. As we approach our leverage target over the next couple of quarters, we'll communicate what we're gonna do in terms of incremental cash return to shareholders. Got it. Then I guess on the HEP outlook, I mean, you're already kind of squarely in the low half of the pro forma range you outlined after the Sinclair acquisition. Could you maybe just talk a little bit about some of the puts and takes for kind of 2023 and maybe your ability to kind of push towards the higher end of that range this year? Sure. We are. We're in the middle of that range already. We're really pleased with that. That includes obviously only three-quarters of the Sinclair Transportation assets, so we have some room there. Also, we also have inflation adders to our contracts for HEP that really is applicable to all of our revenue at HEP. Definitely inflation can be a tailwind for the HEP piece of the business here. Got it. That's all I have. Thanks for the time. There are no further questions at this time. I will now turn the call back over to Craig Biery for some final closing remarks. Thanks, Rob. This is Mike Jennings. I wanted to wrap up with just a couple points. 2022 was obviously a pivotal year for our company as we completed the Sinclair acquisition and established ourselves as HF Sinclair, a downstream integrated company, and further integrated the Puget Sound acquisition that had been done just in the previous year. Really dramatic changes in our business and at the same time, operating full and well, to serve the needs of our customers and generating really tremendous income and returns to our own shareholders. We executed well. We executed on some really key points, which would have included getting these acquisitions integrated, realizing that initial $100 million of synergies, completing our startups within Renewable Diesel, and importantly, returning over $1.6 billion of cash to our owners, proving up our commitment to get this done and frankly, get it done early. Moving forward, I think Tim has called out priorities well, and they include, continuing to optimize this portfolio, improving our reliability, and obviously, you know, maintaining our foot on the accelerator in terms of cash returns to shareholders. We get it that that's a fundamentally important part of the investment equation, within this sector and for this company. I'm gonna finish up with a little note on Tim Go. I wanna publicly congratulate him for the announced appointment to President and CEO of HF Sinclair. This culminates a multi-year succession planning process on the part of our board to find and develop the right leader for our company's future. I've had great pleasure of working with Tim Go for almost three years now and have come to admire his knowledge of the business, desire to improve and optimize our operations, an important ability to attract and retain strong talent for the key roles, and a tremendous passion for our company and for his job. While it will be with some regret that I step down simply because I love working in this industry and with the great people at this company who are committed to our success, get past the sentimentality. We're really fortunate to have Tim and the rest of this great team on board and engaged. I believe that they will together get the job done, for our owners. Thanks a lot. Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.