<PAGE>
                           FORM 10-Q

               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

           For the quarterly period ended June 30, 1999

                              OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934.

     For the transition period from _______ to _______.

                 Commission File Number: 1-10398

                      GIANT INDUSTRIES, INC.
      (Exact name of registrant as specified in its charter)

           Delaware                               86-0642718
(State or other jurisdiction of                (I.R.S. Employer
 incorporation or organization)                Identification No.)


  23733 North Scottsdale Road, Scottsdale, Arizona      85255
   (Address of principal executive offices)           (Zip Code)


        Registrant's telephone number, including area code:
                         (602) 585-8888

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.

                        Yes [X]    No [ ]

Number of Common Shares outstanding at July 31, 1999: 10,871,088 shares.

<PAGE>
              GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                              INDEX


PART I  - FINANCIAL INFORMATION

Item 1  - Financial Statements

          Condensed Consolidated Balance Sheets
          June 30, 1999 (Unaudited) and December 31, 1998

          Condensed Consolidated Statements of Earnings (Loss)
          Three and Six Months Ended June 30, 1999 and 1998
          (Unaudited)

          Condensed Consolidated Statements of Cash Flows
          Six Months Ended June 30, 1999 and 1998 (Unaudited)

          Notes to Condensed Consolidated Financial Statements
          (Unaudited)

Item 2  - Management's Discussion and Analysis of
          Financial Condition and Results of Operations

Item 3  - Quantitative and Qualitative Disclosures About Market Risk

PART II - OTHER INFORMATION

Item 1  - Legal Proceedings

Item 6  - Exhibits and Reports on Form 8-K

SIGNATUR

<PAGE>
<TABLE>
                                          PART I
                                  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                                   GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                               (In thousands)

<CAPTION>
                                                              June 30, 1999   December 31, 1998
                                                              -------------   -----------------
                                                               (Unaudited)
<S>                                                             <C>             <C>
ASSETS

Current assets:
  Cash and cash equivalents..............................       $  47,447       $  55,697
  Receivables, net.......................................          71,018          50,195
  Inventories............................................          59,166          51,349
  Prepaid expenses and other.............................           6,346           7,860
  Deferred income taxes..................................           6,625           6,625
                                                                ---------       ---------
     Total current assets................................         190,602         171,726
                                                                ---------       ---------
Property, plant and equipment............................         455,522         439,940
  Less accumulated depreciation and amortization.........        (149,373)       (138,008)
                                                                ---------       ---------
                                                                  306,149         301,932
                                                                ---------       ---------
Goodwill, net............................................          22,352          22,902
Other assets.............................................          26,019          29,225
                                                                ---------       ---------
                                                                $ 545,122       $ 525,785
                                                                =========       =========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt......................       $     241       $   1,200
  Accounts payable.......................................          69,307          42,903
  Accrued expenses.......................................          45,229          36,519
                                                                ---------       ---------
     Total current liabilities...........................         114,777          80,622
                                                                ---------       ---------
Long-term debt, net of current portion...................         258,490         282,484
Deferred income taxes....................................          29,058          26,793
Other liabilities and deferred income....................           6,748           8,184
Commitments and contingencies (Notes 5 and 6)
Common stockholders' equity..............................         136,049         127,702
                                                                ---------       ---------
                                                                $ 545,122       $ 525,785
                                                                =========       =========

See accompanying notes to condensed consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
                            GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
                                          (Unaudited)
                             (In thousands except per share data)

<CAPTION>
                                               Three Months Ended           Six Months Ended
                                                    June 30,                    June 30,
                                            ------------------------    ------------------------
                                               1999          1998          1999          1998
                                            ----------    ----------    ----------    ----------
<S>                                         <C>           <C>           <C>           <C>
Net revenues...........................     $  201,182    $  157,014    $  350,203    $  302,730
Cost of products sold..................        137,339       112,748       237,026       218,500
                                            ----------    ----------    ----------    ----------
Gross margin...........................         63,843        44,266       113,177        84,230
Operating expenses.....................         29,012        24,261        56,096        49,154
Depreciation and amortization..........          7,841         6,774        15,179        13,563
Selling, general and administrative
  expenses.............................          7,388         6,237        15,326        12,052
Loss on write-off of assets                      1,950                       1,950
                                            ----------    ----------    ----------    ----------
Operating income.......................         17,652         6,994        24,626         9,461
Interest expense, net..................          5,513         5,809        11,103        11,408
                                            ----------    ----------    ----------    ----------
Earnings (loss) before income taxes....         12,139         1,185        13,523        (1,947)
Provision (benefit) for income taxes...          4,734           426         5,260        (1,024)
                                            ----------    ----------    ----------    ----------
Net earnings (loss)....................     $    7,405    $      759    $    8,263    $     (923)
                                            ==========    ==========    ==========    ==========
Net earnings (loss) per common share:
  Basic................................     $     0.68    $     0.07    $     0.76    $    (0.08)
                                            ==========    ==========    ==========    ==========
  Assuming dilution....................     $     0.68    $     0.07    $     0.76    $    (0.08)
                                            ==========    ==========    ==========    ==========

See accompanying notes to condensed consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
                              GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (Unaudited)
                                         (In thousands)
<CAPTION>
                                                                        Six Months Ended
                                                                            June 30,
                                                                      --------------------
                                                                        1999        1998
                                                                      --------    --------
<S>                                                                   <C>         <C>
Cash flows from operating activities:
  Net earnings (loss)...........................................      $  8,263    $   (923)
  Adjustments to reconcile net earnings (loss) to net
    cash provided (used) by operating activities:
      Depreciation and amortization.............................        15,179      13,563
      Deferred income taxes.....................................         2,266        (125)
      Loss (gain) on disposal of assets.........................         1,890         (71)
      Other.....................................................           406         295
      Changes in operating assets and liabilities:
        (Increase) decrease in receivables......................       (20,629)      2,773
        Increase in inventories.................................        (7,669)     (2,679)
        Decrease (increase) in prepaid expenses and other.......         1,331      (1,331)
        Increase (decrease) in accounts payable.................        26,403     (12,356)
        Increase (decrease) in accrued expenses.................        10,681        (968)
                                                                      --------    --------
Net cash provided (used) by operating activities................        38,121      (1,822)
                                                                      --------    --------
Cash flows from investing activities:
  Acquisitions, net of cash received............................                   (26,260)
  Purchases of property, plant and equipment and other assets...       (19,737)    (38,378)
  Refinery acquisition contingent payment.......................        (2,039)     (7,244)
  Proceeds from sale of property, plant and equipment...........           324       2,191
                                                                      --------    --------
Net cash used by investing activities...........................       (21,452)    (69,691)
                                                                      --------    --------
Cash flows from financing activities:
  Proceeds from long-term debt..................................                     5,000
  Payments of long-term debt....................................       (24,953)    (13,850)
  Payment of dividends..........................................                    (1,100)
  Proceeds from exercise of stock options                                   84
  Deferred financing costs......................................           (50)        (67)
                                                                      --------    --------
Net cash used by financing activities...........................       (24,919)    (10,017)
                                                                      --------    --------
Net decrease in cash and cash equivalents.......................        (8,250)    (81,530)
Cash and cash equivalents:
  Beginning of period...........................................        55,697      82,592
                                                                      --------    --------
  End of period.................................................      $ 47,447    $  1,062
                                                                      ========    ========

Non-cash Investing and Financing Activities. In the second quarter of 1999 the Company received
87,036 shares of its own common stock valued at approximately $975,000 from two officers of the
Company as payment for the exercise of 108,857 common stock options. These shares were
immediately cancelled.


See accompanying notes to condensed consolidated financial statements.
</TABLE

<PAGE>
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

     Giant Industries, Inc., a Delaware corporation ("Giant" or, together
with its subsidiaries, the "Company"), through its wholly-owned subsidiary
Giant Industries Arizona, Inc. ("Giant Arizona"), is engaged in the refining
and marketing of petroleum products in New Mexico, Arizona, Colorado and
Utah, with a concentration in the Four Corners where these states adjoin. In
addition, Phoenix Fuel Co., Inc. ("Phoenix Fuel"), a wholly-owned subsidiary
of Giant Arizona, operates an industrial/commercial petroleum fuels and
lubricants distribution operation. (See Note 2 for further discussion of
Company operations.)

     The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments and reclassifications considered necessary for a fair and
comparable presentation have been included and are of a normal recurring
nature. Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1999. The enclosed financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which was originally to be
effective for the Company's financial statements as of January 1, 2000. In
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of Effective Date of FASB
Statement No. 133." The SFAS No. 137 defers the effective date of SFAS No.
133 by one year in order to give companies more time to study, understand and
implement the provisions of SFAS No. 133 and to complete information system
modifications. The SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires that entities record all derivatives as either assets or
liabilities, measured at fair value, with any change in fair value recognized
in earnings or in other comprehensive income, depending on the use of the
derivative and whether it qualifies for hedge accounting. If certain
conditions are met, a derivative may be specifically designated as (a) a
hedge of the exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the exposure to
variable cash flows of a forecasted transaction, or (c) a hedge of the
foreign currency exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale security, or a foreign-
currency-denominated forecasted transaction.

     Under this Statement, an entity that elects to apply hedge accounting is
required to establish at the inception of the hedge the method it will use
for assessing the effectiveness of the hedging derivative and the measurement
approach for determining the ineffective aspect of the hedge. Those methods
must be consistent with the entity's approach to managing risk. The Company
is in the process of evaluating the effects that this Statement will have on
its financial reporting and disclosures.

     Certain reclassifications have been made to the 1998 financial
statements and notes to conform to the statement classifications used in
1999.

<PAGE>
NOTE 2 - COMPANY OPERATIONS

     The Company is organized into three operating segments based on
manufacturing and marketing criteria. These segments are the Refining Group,
the Retail Group and Phoenix Fuel. A description of each segment and its
principal products and operations are as follows:

     - Refining Group: The Refining Group consists of the Company's two
refineries, its fleet of crude oil and finished product truck transports, its
crude oil pipeline gathering operations and its finished product terminaling
operations. The Company's two refineries manufacture various grades of
gasoline, diesel fuel, jet fuel and other products from crude oil, other
feedstocks and blending components. These products are sold through company-
operated retail facilities, independent wholesalers and retailers,
industrial/commercial accounts and sales and exchanges with major oil
companies. Crude oil, other feedstocks and blending components are purchased
from third party suppliers.

     - Retail Group: The Retail Group consists of service station/convenience
stores and one travel center. These operations sell various grades of
gasoline, diesel fuel, general merchandise and food products to the general
public through retail locations. The petroleum fuels sold by the Retail Group
are supplied by the Refining Group, which either manufactures these refined
products or acquires them through exchange arrangements, third party
purchases, or from Phoenix Fuel. General merchandise and food products are
obtained from third party suppliers.

     - Phoenix Fuel: Phoenix Fuel is an industrial/commercial petroleum fuels
and lubricants distribution operation, which includes a number of bulk
distribution plants, an unattended fleet fueling ("cardlock") operation and a
fleet of finished product truck transports. The petroleum fuels and
lubricants sold are primarily obtained from third party suppliers and to a
lesser extent from the Refining Group.

     Operations that are not included in any of the three segments are
included in the category "Other" and consist primarily of corporate office
operations, including selling, general and administrative expenses of
$6,868,000 and $5,478,000 for the three months ended June 30, 1999 and 1998,
respectively, and $14,047,000 and $10,441,000 for the six months ended June
30, 1999 and 1998, respectively.

     Operating income for each segment consists of net revenues less cost of
products sold, operating expenses, depreciation and amortization and the
segment's selling, general and administrative expenses. The sales between
segments are made at market prices. Cost of products sold reflect current
costs adjusted for LIFO and lower of cost or market inventory adjustments.

     The total assets of each segment consist primarily of net property,
plant and equipment, inventories, accounts receivable and other assets
directly associated with the segment's operations. Included in the total
assets of the corporate office operations are a majority of the Company's
cash and cash equivalents, various accounts receivable, net property, plant
and equipment and other long-term assets.


<PAGE>
     Disclosures regarding the Company's reportable segments with
reconciliations to consolidated totals for the three months ended
June 30, 1999 and 1998, are presented below.


</TABLE>
<TABLE>
<CAPTION>

                                       As of and for the Three Months Ended June 30, 1999   (In thousands)
                                       -------------------------------------------------------------------
                                       Refining   Retail   Phoenix           Reconciling
                                        Group     Group      Fuel    Other     Items      Consolidated
                                       --------  --------  -------- -------  -----------  ------------
<S>                                    <C>       <C>       <C>      <C>       <C>           <C>
Customer net revenues...............   $ 53,372  $ 85,971  $ 61,776 $    63                 $201,182
Intersegment net revenues...........     46,422               2,378           $(48,800)
                                       --------  --------  -------- -------   --------      --------
Total net revenues..................   $ 99,794  $ 85,971  $ 64,154 $    63   $(48,800)     $201,182
                                       --------  --------  -------- -------   --------      --------
Operating income....................   $ 20,011  $  3,249  $  3,147 $(6,805)  $ (1,950)     $ 17,652
Interest expense....................                                                          (6,117)
Interest income....................                                                              604
                                                                                            --------
Earnings before income taxes........                                                        $ 12,139
                                                                                            --------
Depreciation and amortization.......   $  3,872  $  2,251  $    564 $ 1,154                 $  7,841
Capital expenditures................   $  3,086  $  4,878  $    224 $ 2,019                 $ 10,207
</TABLE>

<TABLE>
<CAPTION>

                                       As of and for the Three Months Ended June 30, 1998   (In thousands)
                                       -------------------------------------------------------------------
                                       Refining   Retail   Phoenix           Reconciling
                                        Group     Group      Fuel    Other     Items      Consolidated
                                       --------  --------  -------  -------  -----------  ------------
<S>                                    <C>       <C>       <C>      <C>       <C>           <C>
Customer net revenues...............   $ 49,694  $ 64,081  $ 43,347 $  (108)                $157,014
Intersegment net revenues...........     31,071       691     3,425           $(35,187)
                                       --------  --------  -------- -------   --------      --------
Total net revenues..................   $ 80,765  $ 64,772  $ 46,772 $  (108)  $(35,187)     $157,014
                                       --------  --------  -------- -------   --------      --------
Operating income....................   $  8,155  $  2,847  $  1,578 $(5,586)                $  6,994
Interest expense....................                                                          (6,232)
Interest income....................                                                              423
                                                                                            --------
Earnings before income taxes........                                                        $  1,185
                                                                                            --------
Depreciation and amortization.......   $  3,302  $  2,140  $    480 $   852                 $  6,774
Capital expenditures................   $ 20,625  $  4,287  $    622 $   161                 $ 25,695
</TABLE>


<PAGE>
     Disclosures regarding the Company's reportable segments with
reconciliations to consolidated totals for the six months ended
June 30, 1999 and 1998, are presented below.

<TABLE>
<CAPTION>

                                       As of and for the Six Months Ended June 30, 1999   (In thousands)
                                       -----------------------------------------------------------------
                                       Refining   Retail   Phoenix           Reconciling
                                        Group     Group      Fuel    Other     Items      Consolidated
                                       --------  --------  -------  -------  -----------  ------------
<S>                                    <C>       <C>       <C>      <C>       <C>           <C>
Customer net revenues...............   $ 86,426  $154,222  $109,450 $    105                $350,203
Intersegment net revenues...........     77,786               3,546           $ (81,332)
                                       --------  --------  -------  --------   --------     --------
Total net revenues..................   $164,212  $154,222  $112,996 $    105  $ (81,332)    $350,203
                                       --------  --------  -------- --------   --------     --------
Operating income....................   $ 30,650  $  4,590  $  5,278 $(13,942) $  (1,950)    $ 24,626
Interest expense....................                                                         (12,168)
Interest income.....................                                                           1,065
                                                                                            --------
Earnings before income taxes........                                                        $ 13,523
                                                                                            --------
Depreciation and amortization.......   $  7,712  $  4,356  $  1,119 $  1,992                $ 15,179
Total assets........................   $260,710  $133,702  $ 71,975 $ 78,735                $545,122
Capital expenditures................   $  5,307  $ 11,534  $    566 $  2,330                $ 19,737
</TABLE>

<TABLE>
<CAPTION>

                                       As of and for the Six Months Ended June 30, 1998   (In thousands)
                                       -----------------------------------------------------------------
                                       Refining   Retail   Phoenix           Reconciling
                                        Group     Group      Fuel    Other     Items      Consolidated
                                       --------  --------  -------  -------  -----------  ------------
<S>                                    <C>       <C>       <C>      <C>       <C>           <C>
Customer net revenues...............   $ 95,618  $120,593  $ 86,525 $     (6)               $302,730
Intersegment net revenues...........     59,520     1,370     4,178           $ (65,068)
                                       --------  --------  -------  --------   --------     --------
Total net revenues..................   $155,138  $121,963  $ 90,703 $     (6) $ (65,068)    $302,730
                                       --------  --------  -------- --------   --------     --------
Operating income....................   $ 11,876  $  5,184  $  2,848 $(10,447)               $  9,461
Interest expense....................                                                         (12,732)
Interest income.....................                                                           1,324
                                                                                            --------
Loss before income taxes............                                                        $ (1,947)
                                                                                            --------
Depreciation and amortization.......   $  6,746  $  4,191  $    961 $  1,665                $ 13,563
Capital expenditures................   $ 28,380  $  8,023  $  1,080 $    664                $ 38,147
</TABLE

<PAGE>
NOTE 3 - EARNINGS PER SHARE:

     The following is a reconciliation of the numerators and denominators of
the basic and diluted per share computations for net earnings (loss):


</TABLE>
<TABLE>
<CAPTION>
                                                Three Months Ended June 30,
                             -------------------------------------------------------------------
                                           1999                               1998
                             --------------------------------   --------------------------------
                                                        Per                                Per
                              Earnings       Shares    Share     Earnings       Shares    Share
                             (Numerator) (Denominator) Amount   (Numerator) (Denominator) Amount
                             ----------- ------------- ------   ----------- ------------- ------
<S>                           <C>          <C>          <C>      <C>         <C>          <C>
Earnings per common
  share - basic

  Net earnings.............   $7,405,000   10,848,784   $0.68    $ 759,000   10,993,267   $ 0.07

  Effect of dilutive
    stock options..........                    59,842                           150,948
                              ----------   ----------   -----    ---------   ----------   ------
Earnings per common
  share - assuming dilution

  Net earnings.............   $7,405,000   10,908,626   $0.68    $ 759,000   11,144,215   $ 0.07
                              ==========   ==========   =====    =========   ==========   ======
</TABLE>

<TABLE>
<CAPTION>
                                                 Six Months Ended June 30,
                             -------------------------------------------------------------------
                                           1999                               1998
                             --------------------------------   --------------------------------
                                                        Per                                Per
                              Earnings       Shares    Share        Loss        Shares    Share
                             (Numerator) (Denominator) Amount   (Numerator) (Denominator) Amount
                             ----------- ------------- ------   ----------- ------------- ------
<S>                           <C>          <C>          <C>      <C>         <C>          <C>
Earnings (loss) per common
  share - basic

  Net earnings (loss)......   $8,263,000   10,843,803   $0.76    $(923,000)  10,993,267   $(0.08)

  Effect of dilutive
    stock options..........                    34,180                                       *
                              ----------   ----------   -----    ---------   ----------   ------
Earnings (loss) per common
  share - assuming dilution

  Net earnings (loss)......   $8,263,000   10,877,983   $0.76    $(923,000)  10,993,267   $(0.08)
                              ==========   ==========   =====    =========   ==========   ======
</TABLE>

*Additional shares would be antidilutive due to the net loss.

     There were no transactions subsequent to June 30, 1999, that if the
transactions had occurred before June 30, 1999, would materially change the
number of common shares or potential common shares outstanding as of June 30,
1999.



<PAGE>
NOTE 4 - INVENTORIES:

<TABLE>
<CAPTION>
                                         June 30, 1999  December 31, 1998
                                         -------------  -----------------
                                                (In thousands)
<S>                                       <C>                <C>
Inventories consist of the following:

First-in, first-out ("FIFO") method:
  Crude oil............................   $ 9,757            $ 8,419
  Refined products.....................    23,325             17,956
  Refinery and shop supplies...........     9,898              9,648
  Merchandise..........................     4,454              4,568
Retail method:
  Merchandise..........................     7,718              7,460
                                          -------            -------
                                           55,152             48,051
Adjustment for last-in,
  first-out("LIFO") method.............     5,872             14,758
Allowance for lower of cost
  or market............................    (1,858)           (11,460)
                                          -------            -------
                                          $59,166            $51,349
                                          =======            =======
</TABLE>

     The portion of inventories valued on a LIFO basis totaled $35,287,000
and $30,423,000 at June 30, 1999 and December 31, 1998, respectively. The
following data will facilitate comparison with the operating results of
companies using the FIFO method of inventory valuation.

     If inventories had been determined using the FIFO method at June 30,
1999 and 1998, net earnings and diluted earnings per share for the three
months ended June 30, 1999 and 1998 would have been higher by $1,653,000 and
$0.15, and $379,000 and $0.03, respectively, and the net earnings and diluted
earnings per share for the six months ended June 30, 1999 and 1998 would have
been lower by $430,000 and $0.04, and $1,834,000 and $0.17 respectively.


<PAGE>
NOTE 5 - LONG-TERM DEBT:

     The Company has issued $150,000,000 of 9% senior subordinated notes due
2007 (the "9% Notes") and $100,000,000 of 9 3/4% senior subordinated notes
due 2003 (the "9 3/4% Notes", and collectively with the 9% Notes, the
"Notes"). The Indentures supporting the Notes contain restrictive covenants
that, among other things, restrict the ability of the Company and its
subsidiaries to create liens, to incur or guarantee debt, to pay dividends,
to repurchase shares of the Company's common stock, to sell certain assets or
subsidiary stock, to engage in certain mergers, to engage in certain
transactions with affiliates or to alter the Company's current line of
business. At June 30, 1999, the Company was in compliance with the covenants
relating to these Notes.

The Company had been precluded from making restricted payments since
the third quarter of 1998 because it did not satisfy a financial ratio test
contained in one of the covenants relating to the 9 3/4% Notes. This included
the payment of dividends and the repurchase of shares of the Company's common
stock. The terms of the Indenture also had restricted the amount of money the
Company could otherwise borrow since the third quarter of 1998. The Company
is no longer subject to these restrictions, as the Company satisfied the
covenant's financial ratio test at June 30, 1999.

     Subject to certain conditions, the Company is obligated to offer to
purchase a portion of the Notes at a price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase, with the net cash proceeds of certain sales or other dispositions
of assets. Upon a change of control, the Company would be required to offer
to purchase all of the Notes at 101% of the principal amount thereof, plus
accrued interest, if any, to the date of purchase.

     In accordance with the Indentures supporting the Notes, the Company may
either use the net proceeds of approximately $50,100,000 from a sale-
leaseback transaction between the Company and FFCA Capital Holding
Corporation ("FFCA") completed in December 1998, in which the Company sold
eighty-three service stations/convenience stores to FFCA and leased them
back, to make a permanent reduction in senior indebtedness (as defined in the
respective Indentures), or make an investment in capital assets used in the
Company's principal business (as defined in the respective Indentures). The
Company has 360 days, which ends December 26, 1999, in which to use the net
proceeds for such a purpose under the terms of the Indenture supporting the
9% Notes, and has 270 days, which ends September 27, 1999, under the terms of
the Indenture supporting the 9 3/4% Notes. The Company has used a significant
portion of the net proceeds from the FFCA transaction to invest in capital
assets and to reduce senior indebtedness. To the extent that a sufficient
portion of the net proceeds are not utilized for these purposes before the
applicable periods expire, the Company intends to offer to repurchase the
senior subordinated notes as required by the Indentures.

     Repayment of the Notes is jointly and severally guaranteed on an
unconditional basis by the Company's direct and indirect wholly-owned
subsidiaries, subject to a limitation designed to ensure that such guarantees
do not constitute a fraudulent conveyance. Except as otherwise allowed in the
Indenture pursuant to which the Notes were issued, there are no restrictions
on the ability of such subsidiaries to transfer funds to the Company in the
form of cash dividends, loans or advances. General provisions of applicable
state law, however, may limit the ability of any subsidiary to pay dividends
or make distributions to the Company in certain circumstances.

     No separate financial statements of the subsidiaries are included herein
because the aggregate assets, liabilities, earnings, and equity of the
subsidiaries are substantially equivalent to the assets, liabilities,
earnings, and equity of the Company on a consolidated basis; the subsidiaries
are jointly and severally liable for the repayment of the Notes; and the
separate financial statements and other disclosures concerning the
subsidiaries are not deemed material to investors.

<PAGE>
NOTE 6 - COMMITMENTS AND CONTINGENCIES:

     Various legal actions, claims, assessments and other contingencies
arising in the normal course of the Company's business, including those
matters described below, are pending against the Company and certain of its
subsidiaries. Certain of these matters involve or may involve significant
claims for compensatory, punitive or other damages. These matters are subject
to many uncertainties, and it is possible that some of these matters could be
ultimately decided, resolved or settled adversely. The Company has recorded
accruals for losses related to those matters that it considers to be probable
and that can be reasonably estimated. Although the ultimate amount of
liability at June 30, 1999, which may result from these matters is not
ascertainable, the Company believes that any amounts exceeding the Company's
recorded accruals should not materially affect the Company's financial
condition. It is possible that the ultimate resolution of these matters could
result in a material adverse effect on the Company's results of operations
for a particular reporting period.

     Federal, state and local laws and regulations relating to health and the
environment affect nearly all of the operations of the Company. As is the
case with all companies engaged in similar industries, the Company faces
significant exposure from actual or potential claims and lawsuits involving
environmental matters. These matters include soil and water contamination,
air pollution and personal injuries or property damage allegedly caused by
substances manufactured, handled, used, released or disposed of by the
Company. Future expenditures related to health and environmental matters
cannot be reasonably quantified in many circumstances for various reasons,
including the speculative nature of remediation and clean-up cost estimates
and methods, imprecise and conflicting data regarding the hazardous nature of
various types of substances, the number of other potentially responsible
parties involved, various defenses which may be available to the Company and
changing environmental laws and interpretations of environmental laws.

     The Company, and several other entities, have received a notice of
intent to file suit from the New Mexico Office of the Natural Resources
Trustee (the "ONRT") for the recovery of $260,000,000 in alleged damages to
natural resources, including alleged damages to ground water, surface water
and soil. The ONRT may revise its damage estimate after a damage assessment
is completed. The notice relates to the South Valley Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") Superfund
site in Albuquerque, New Mexico. The site allegedly includes contamination
that originated from a GE Aircraft Engines/U.S. Air Force facility, as well
as contamination that allegedly originated from a petroleum products terminal
that was acquired by the Company in 1995 (the "Albuquerque Terminal").
Potentially responsible party liability is joint and several, such that a
responsible party may be liable for all natural resources damages at a site
even though it was responsible for only a small part of such damages. At the
time of purchase by the Company, Texaco Refining and Marketing Inc.
("Texaco") agreed to defend, indemnify, reimburse and hold the Company
harmless from and against all claims and damages arising from, or caused by,
pre-closing contamination. Texaco has acknowledged its obligation under this
agreement, subject to any evidence that the ONRT intends to assess damages
for any releases resulting from the Company's operations. The Company
believes that any natural resources damages associated with the South Valley
Superfund site relate to releases that predate the Company's acquisition of
the Albuquerque Terminal and, accordingly, does not believe that it needs to
record a liability in connection with this matter.

     In May 1991, the Environmental Protection Agency ("EPA") notified the
Company that it may be a potentially responsible party for the release, or
threatened release, of hazardous substances, pollutants or contaminants at
the Lee Acres Landfill (the "Landfill") CERCLA Superfund site. The Landfill
is adjacent to the Company's inactive Farmington refinery. This refinery was
operated until 1982. Although a final plan of action for the Superfund site
has not yet been adopted by the Bureau of Land Management (the "BLM"), the
owner of the Landfill, BLM developed a proposed plan of action in 1996, which
it projected would cost approximately $3,900,000 to implement. This cost
projection is based on certain assumptions which may or may not prove to be
correct and is contingent on confirmation that the remedial actions, once
implemented, are adequately addressing Landfill contamination. For example,
if assumptions regarding groundwater mobility and contamination levels are
incorrect, BLM is proposing to take additional remedial actions with an
estimated cost of approximately $1,800,000.

     In 1989, a consultant to the Company estimated, based on various
assumptions, that the Company's share of potential liability could be
approximately $1,200,000. This figure was based upon estimated Landfill
remediation costs significantly higher than those being proposed by BLM. The
figure was also based on the consultant's evaluation of such factors as
available clean-up technology, BLM's involvement at the site and the number
of other entities that may have had involvement at the site, but did not
include an analysis of all of the Company's potential legal defenses and
arguments, including possible setoff rights.

     Potentially responsible party liability is joint and several, such that
a responsible party may be liable for all of the clean-up costs at a site
even though the party was responsible for only a small part of such costs.
Although it is possible that the Company may ultimately incur liability for
clean-up costs associated with the Landfill, a reasonable estimate of the
amount of this liability, if any, cannot be made at this time because, among
other reasons, the final site remedy has not been selected, a number of
entities had involvement at the site, allocation of responsibility among
potentially responsible parties has not yet been made, and potentially-
applicable factual and legal issues have not been resolved. Accordingly, the
Company has not accrued a liability in relation to BLM's proposed plan.

     The Company undertook an investigation into potential lead contamination
at a 5.5 acre site that the Company owns in Bloomfield, New Mexico. The
investigation arose out of the removal of a 55,000 barrel crude oil storage
tank by a contractor. The Company completed a survey that indicates that lead
levels in the soil at this site are below Environmental Protection Agency
cleanup levels for industrial and residential sites. The Company submitted
this information to the New Mexico Energy, Minerals and Natural Resources
Department (the "EMNRD"). Subsequent to its receipt of this information, the
EMNRD approved the closure of soil lead remedial actions at the site. This
approval was conditioned upon the submission of a work plan defining the
extent of petroleum contamination in the soil and groundwater at the site
resulting from the Company's activities. The Company is in the process of
preparing the specified work plan.

     The Company has an environmental liability accrual of approximately
$2,600,000. Approximately $800,000 relates to ongoing environmental projects,
including the remediation of a hydrocarbon plume that appears to extend no
more than 1,800 feet south of the inactive Farmington refinery and
hydrocarbon contamination on and adjacent to 5.5 acres the Company owns in
Bloomfield, New Mexico. The remaining $1,800,000 relates to an originally
estimated liability of approximately $2,300,000, recorded in the second
quarter of 1996, for certain environmental obligations assumed in the
acquisition of the Bloomfield refinery. That amount was recorded as an
adjustment to the purchase price and allocated to the assets acquired. The
environmental accrual is recorded in the current and long-term sections of
the Company's Consolidated Balance Sheets.

      The Company is subject to audit on an ongoing basis of the various taxes
that it pays to federal, state, local and tribal governments. These audits
may result in assessments or refunds along with interest and penalties. In
some cases the jurisdictional basis of the taxing authority is in dispute and
is the subject of litigation or administrative appeals. The Company has
received several tax notifications and assessments from the Navajo Tribe
relating to Company operations outside the boundaries of the Navajo Indian
Reservation in an area of disputed jurisdiction, including a $1,800,000
severance tax assessment (including interest and penalties through the date
of the assessment) issued in November 1991, and a $3,400,000 severance tax
assessment (including interest and penalties through the date of the
assessment) issued in May 1999, both of which relate to crude oil removed
from properties located within this area. The Company has invoked its appeal
rights with the Tribe's Tax Commission in connection with the severance tax
assessments and intends to oppose the assessments. Although it is probable
that the Company will incur liability in connection with tax notifications
and assessments from the Navajo Tribe relating to the area of disputed
jurisdiction, it is not possible to reasonably estimate the amount of any
obligation for such taxes at this time because the Navajo Tribe's authority
to impose taxes throughout this area has not been legally established and all
potentially-applicable factual issues have not been resolved. The Company has
accrued a liability for assessments that it has received from the Navajo
Tribe for substantially less than the amount of the assessments. It is
possible that the Company's assessments will have to be litigated by the
Company before final resolution. In addition, the Company may receive further
tax assessments. The Company may potentially be able to request reimbursement
from third party oil lease interest owners in connection with any severance
tax amounts ultimately paid by the Company that relate to purchases from the
interest owners.






<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

EARNINGS (LOSS) BEFORE INCOME TAXES
-----------------------------------
     For the three months ended June 30, 1999, earnings before income taxes
were $12,139,000, an increase of $10,954,000 from earnings before income
taxes of $1,185,000 for the three months ended June 30, 1998. For the six
months ended June 30, 1999, earnings before income taxes were $13,523,000, an
increase of $15,470,000 from a loss before income taxes of $1,947,000 for the
six months ended June 30, 1998. In each period, the increase is primarily due
to (i) an increase in refinery margins (a 53% increase for the three month
period and a 44% increase for the six month period) ; (ii) increased
operating income from Phoenix Fuel; (iii) operating income from thirty-two
service station/convenience stores acquired, and the lease of one other, from
Kaibab Industries, Inc. in June and July 1998 (the "Kaibab Acquisition") ;
(iv)increased merchandise sales from service station/convenience stores that
were open for more than twelve months; and an increase in refinery sourced
finished product sales volumes. These increases were offset in part by
increased operating and administrative expenses related to the Company's
other operations, excluding the Kaibab Acquisition, and the write-off of
$1,950,000 in net book value of assets that were either demolished for new
construction or replaced with new systems.

REVENUES
--------
     Revenues for the three months ended June 30, 1999, increased
approximately $44,168,000 or 28% to $201,182,000 from $157,014,000 in the
comparable 1998 period. The increase is due to, among other things, a 16%
increase in refinery weighted average selling prices; an 8% increase in
refinery sourced finished product sales volumes; the Kaibab Acquisition; an
11% increase in wholesale fuel volumes sold by Phoenix Fuel, along with a 14%
increase in weighted average selling prices; and an 11% increase in
merchandise sales from service station/convenience stores that were open for
more than twelve months.

     The volumes of refined products sold through the Company's retail units
during this period increased approximately 28% from 1998 levels primarily due
to the Kaibab Acquisition. The volume of finished product sold from the
Company's travel center increased 20%, due in large part to improved
marketing programs. Finished product sales volumes from service
station/convenience stores that were open for more than twelve months
declined approximately 10%.

     Revenues for the six months ended June 30, 1999, increased approximately
$47,473,000 or 16% to $350,203,000 from $302,730,000 in the comparable 1998
period. The increase is due to, among other things, a 9% increase in
wholesale fuel volumes sold by Phoenix Fuel, along with a 4% increase in
weighted average selling prices; a 5% increase in refinery sourced finished
product sales volumes; the Kaibab Acquisition; a 15% increase in merchandise
sales from service station/convenience stores that were open for more than
twelve months; and a 1% increase in refinery weighted average selling prices.

     The volumes of refined products sold through the Company's retail units
during this period increased approximately 34% from 1998 levels primarily due
to the Kaibab  Acquisition. The volume of finished product sold from the
Company's travel center increased 17%, due in large part to improved
marketing programs. Finished product sales volumes from service
station/convenience stores that were open for more than twelve months
declined approximately 7%.

COST OF PRODUCTS SOLD
---------------------
     For the three months ended June 30, 1999, cost of products sold
increased $24,591,000 or 22% to $137,339,000 from $112,748,000 in the
corresponding 1998 period. The increase is due in part to an 11% increase in
wholesale fuel volumes sold by Phoenix Fuel, along with a 13% increase in the
cost of finished product purchased; an 8% increase in refinery sourced
finished product sales volumes; the Kaibab Acquisition; an 11% increase in
merchandise sales from service station/convenience stores that were open for
more than twelve months; and a 10% increase in average crude oil costs.

     For the six months ended June 30, 1999, cost of products sold increased
$18,526,000 or 8% to $237,026,000 from $218,500,000 in the corresponding 1998
period. The increase is due in part to a 9% increase in wholesale fuel
volumes sold by Phoenix Fuel, along with a 3% increase in the cost of
finished product purchased; a 5% increase in refinery sourced finished
product sales volumes; the Kaibab Acquisition; and a 15% increase in
merchandise sales from service station/convenience stores that were open for
more than twelve months. These increases were offset in part by a 10% decline
in average crude oil costs.

     In the second quarter of 1999 certain higher cost crude oil LIFO
inventory layers were liquidated which resulted in an increase in the cost of
products sold of approximately $1,600,000. These inventory layers are not
expected to be restored by year end. There were no similar liquidations in
the same 1998 period.

OPERATING EXPENSES
------------------
     For the three months ended June 30, 1999, operating expenses increased
approximately $4,751,000 or 20% to $29,012,000 from $24,261,000 for the three
months ended June 30, 1998.

     Forty-six percent of the increase is due to the Kaibab acquisition. The
remaining increase is due to expenses for the estimated costs of 1999
bonuses, increased lease expense related to a sale-leaseback transaction
between the Company and FFCA that was completed in December 1998 and
increased administrative and support costs related to retail expansion that
has occurred over the last two years. These increases were offset in part by
a reduction in refinery maintenance expenses and lower retail advertising and
insurance costs.


     For the six months ended June 30, 1999, operating expenses increased
approximately $6,942,000 or 14% to $56,096,000 from $49,154,000 for the six
months ended June 30, 1998.

     Sixty-two percent of the increase is due to the Kaibab acquisition. The
remaining increase is due to expenses for the estimated costs of 1999
bonuses, increased lease expense related to a sale-leaseback transaction
between the Company and FFCA that was completed in December 1998 and
increased administrative and support costs related to retail expansion that
has occurred over the last two years. These increases were offset in part by
a reduction in refinery maintenance and purchased fuel expenses and lower
retail advertising and insurance costs.

DEPRECIATION AND AMORTIZATION
-----------------------------
     For the three months ended June 30, 1999, depreciation and amortization
increased approximately $1,067,000 or 16% to $7,841,000 from $6,774,000 in
the same 1998 period.

     For the six months ended June 30, 1999, depreciation and amortization
increased approximately $1,616,000 or 12% to $15,179,000 from $13,563,000 in
the same 1998 period.

     For the three and six month periods, approximately 13% and 16%,
respectively, of the increases are due to the Kaibab Acquisition. The
remaining increases are primarily related to construction, remodeling and
upgrades in retail, refining and transportation operations during 1998, the
amortization of 1998 refinery turnaround costs and the reduction in the value
of real estate held for sale. These increases were partially offset by a
reduction in depreciation expense related to the sale-leaseback transaction
between the Company and FFCA.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
     For the three months ended June 30, 1999, selling, general and
administrative expenses ("SG&A") increased approximately $1,151,000 or 18% to
$7,388,000 from $6,237,000 in the corresponding 1998 period.

     For the six months ended June 30, 1999, SG&A increased approximately
$3,274,000 or 27% to $15,326,000 from $12,052,000 in the corresponding 1998
period.

     The increases in each period are primarily due to expensing a
proportionate share of a predetermined 1999 contribution to the Company's
Employee Stock Ownership Plan, expenses for the estimated costs of 1999
bonuses and increased accruals for other employee benefit costs. The increase
in expenses for the six month period were offset in part by insurance
reimbursements received relating to prior worker's compensation claims that
had been paid by the Company.

INTEREST EXPENSE, NET
---------------------
     For the three months ended June 30, 1999, net interest expense (interest
expense less interest income) decreased approximately $296,000 or 5% to
$5,513,000 from $5,809,000 in the corresponding 1998 period.

     For the six months ended June 30, 1999, net interest expense decreased
approximately $305,000 or 3% to $11,103,000 from $11,408,000 in the
corresponding 1998 period.

     In each period there was a reduction in interest expense primarily
related to the purchase of service station/convenience stores that were
subject to capital lease obligations, along with a reduction in other long-
term debt. In addition, there was an increase in each period in interest
income relating to a long-term note receivable from the Company's Chairman
and Chief Executive Officer. These items were partially offset by a decrease
in interest and investment income due to the use of funds, which had been
invested in short-term instruments, for various acquisitions and the purchase
of service station/convenience stores that were subject to capital lease
obligations. The effects of fluctuations in interest rates applicable to
invested funds were nominal.

INCOME TAXES
------------
     The effective tax rate for the three and six month periods ended June
30, 1999, was approximately 39%. The effective tax rate for the three months
ended June 30, 1998 was approximately 36% and the effective benefit rate for
the six months ended June 30, 1998 was approximately 53%. The difference in
the rates is primarily due to deferred tax adjustments.


LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW FROM OPERATIONS
-------------------------
     Operating cash flows increased for the first six months of 1999 compared
to the first six months of 1998, primarily as a result of an increase in cash
flows related to the changes in operating assets and liabilities, as well as
higher net earnings. Net cash provided by operating activities totaled
$38,121,000 for the six months ended June 30, 1999, compared to net cash used
by operating activities of $1,822,000 in the comparable 1998 period.

WORKING CAPITAL
---------------
     Working capital at June 30, 1999 consisted of current assets of
$190,602,000 and current liabilities of $114,777,000, or a current ratio of
1.66:1. At December 31, 1998, the current ratio was 2.13:1 with current
assets of $171,726,000 and current liabilities of $80,622,000.


     Current assets have increased since December 31, 1998, primarily due to
an increase in accounts receivable and inventories. These increases were
offset in part by decreases in cash and cash equivalents and prepaid items.
Accounts receivable have increased primarily due to an increase in finished
product selling prices, along with increased Phoenix Fuel sales volumes and
increased product trading activity. Inventories have increased due to an
increase in crude oil and refined product prices and Phoenix Fuel refined
product volumes. These increases were offset in part by declines in pipeline
and refinery onsite crude oil volumes, along with declines in refinery onsite
and terminal refined product volumes. Prepaid expenses have decreased
primarily as a result of a reduction in margin deposits related to hedging
transactions, offset in part by the prepayment of a 1999 contribution to the
Company's Employee Stock Ownership Plan. Current liabilities have increased
due to an increase in accounts payable and accrued expenses. Accounts payable
have increased primarily as a result of an increase in the cost of raw
materials for the refineries, increased product trading activity and an
increase in the volume and cost of finished product purchased by Phoenix
Fuel. Accrued expenses have increased primarily as a result of increased
accruals for payroll and related costs, accruals for the estimated costs of
1999 bonuses and accrued income taxes payable. These increases were offset in
part by the payment of a contingency related to the acquisition of the
Bloomfield refinery and payment of 1998 accrued 401(k) Company matching
contributions.

CAPITAL EXPENDITURES AND RESOURCES
----------------------------------
     Net cash used in investing activities for the purchase of property,
plant and equipment totaled approximately $19,737,000 for the first six
months of 1999. Expenditures included amounts for, among other things,
construction costs related to the building of five new service
station/convenience stores, three of which have opened, and the rebuilding of
two others; costs for remodeling, re-branding, re-imaging and upgrading
various retail units; construction costs related to the Company's finished
products terminal near Flagstaff, Arizona, which opened in May 1999; the
purchase of the Company's aircraft, which had been leased under a long-term
arrangement; and expenditures for the Ciniza refinery second quarter
turnaround.

     The Ciniza refinery began a minor maintenance turnaround on April 5,
1999 that was completed on April 13, 1999. During this turnaround, the
reformer, naphtha hydrotreater, distillate hydrotreater and isomerization
units were shut down. During the shutdown, the reformer catalyst was
regenerated and a reformer heater modification was completed. The other units
were shut down due to a lack of hydrogen supply from the reformer and some
minor maintenance was performed while they were shut down.

     The Company is in the process of a sealed bid sale of approximately
twenty-two service station/convenience stores, as well as certain other
properties held for resale. These properties are being sold because they no
longer fit into the Company's long-term strategic plans. All bids must be
submitted by August 24, 1999, and successful bidders will be required to
close within forty-five days of the execution of a Purchase and Sale
Agreement. Proceeds from the sale will be used for general corporate purposes
subject to certain debt restrictions.

CAPITAL STRUCTURE
-----------------
     At June 30, 1999 and December 31, 1998, the Company's long-term debt was
65.5% and 68.9% of total capital, respectively, and the Company's net debt
(long-term debt less cash and cash equivalents) to total capitalization
percentages were 60.8% and 64.0%, respectively.

     The Company's capital structure includes $150,000,000 of 9% senior
subordinated notes due 2007 (the "9% Notes")and $100,000,000 of 9 3/4% senior
subordinated notes due 2003 (the "9 3/4% Notes", and collectively with the 9%
Notes, the "Notes"). The Indentures supporting the Notes contain restrictive
covenants that, among other things, restrict the ability of the Company and
its subsidiaries to create liens, to incur or guarantee debt, to pay
dividends, to repurchase shares of the Company's common stock, to sell
certain assets or subsidiary stock, to engage in certain mergers, to engage
in certain transactions with affiliates or to alter the Company's current
line of business. At June 30, 1999, the Company was in compliance with the
covenants relating to these Notes.

The Company had been precluded from making restricted payments since
the third quarter of 1998 because it did not satisfy a financial ratio test
contained in one of the covenants relating to the 9 3/4% Notes. This included
the payment of dividends and the repurchase of shares of the Company's common
stock. The terms of the Indenture also had restricted the amount of money the
Company could otherwise borrow since the third quarter of 1998. The Company
is no longer subject to these restrictions, as the Company satisfied the
covenant's financial ratio test at June 30, 1999.


     Subject to certain conditions, the Company is obligated to offer to
purchase a portion of the Notes at a price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase, with the net cash proceeds of certain sales or other dispositions
of assets. Upon a change of control, the Company would be required to offer
to purchase all of the Notes at 101% of the principal amount thereof, plus
accrued interest, if any, to the date of purchase.

     In accordance with the Indentures supporting the Notes, the Company may
either use the net proceeds of approximately $50,100,000 from a sale-
leaseback transaction between the Company and FFCA Capital Holding
Corporation ("FFCA") completed in December 1998, in which the Company sold
eighty-three service stations/convenience stores to FFCA and leased them
back, to make a permanent reduction in senior indebtedness (as defined in the
respective Indentures), or make an investment in capital assets used in the
Company's principal business (as defined in the respective Indentures). The
Company has 360 days, which ends December 26, 1999, in which to use the net
proceeds for such a purpose under the terms of the Indenture supporting the
9% Notes, and has 270 days, which ends September 27, 1999, under the terms of
the Indenture supporting the 9 3/4% Notes. The Company has used a significant
portion of the net proceeds from the FFCA transaction to invest in capital
assets and to reduce senior indebtedness. To the extent that a sufficient
portion of the net proceeds are not utilized for these purposes before the
applicable periods expire, the Company intends to offer to repurchase the
senior subordinated notes as required by the Indentures.

     Repayment of the Notes is jointly and severally guaranteed on an
unconditional basis by the Company's direct and indirect wholly-owned
subsidiaries, subject to a limitation designed to ensure that such guarantees
do not constitute a fraudulent conveyance. Except as otherwise allowed in the
Indentures pursuant to which the Notes were issued, there are no restrictions
on the ability of such subsidiaries to transfer funds to the Company in the
form of cash dividends, loans or advances. General provisions of applicable
state law, however, may limit the ability of any subsidiary to pay dividends
or make distributions to the Company in certain circumstances.

     No separate financial statements of the subsidiaries are included herein
because the aggregate assets, liabilities, earnings, and equity of the
subsidiaries are substantially equivalent to the assets, liabilities,
earnings, and equity of the Company on a consolidated basis; the subsidiaries
are jointly and severally liable for the repayment of the Notes; and the
separate financial statements and other disclosures concerning the
subsidiaries are not deemed material to investors.

     The Company has a $65,000,000 secured Credit Agreement (the "Credit
Agreement") due December 23, 2001, with a group of banks. This Credit
Agreement, a revolving loan agreement, is primarily a working capital and
letter of credit facility and is secured by eligible accounts receivable and
inventories as defined in the Credit Agreement. In addition, the Company is
able to borrow up to $9,000,000 to exercise its purchase rights in connection
with certain service station/convenience stores that are currently subject to
capital lease obligations, and up to $10,000,000 for other acquisitions as
defined in the Credit Agreement. The availability of funds under this
facility is the lesser of (i) $65,000,000, or (ii) the amount determined
under a borrowing base calculation tied to the eligible accounts receivable
and inventories. At June 30, 1999, the availability of funds under the Credit
Agreement was $65,000,000. There were no direct borrowings outstanding under
this facility at June 30, 1999, and there were approximately $8,887,000 of
irrevocable letters of credit outstanding, primarily to secure purchases of
raw materials.

     The interest rate applicable to the Credit Agreement is tied to various
short-term indices. At June 30, 1999, this rate was approximately 6.5% per
annum. The Company is required to pay a quarterly commitment fee ranging from
0.325% to 0.500% per annum of the unused amount of the facility. The exact
rate depends on meeting certain conditions in the Credit Agreement.


     The Credit Agreement contains certain covenants and restrictions which
require the Company to, among other things, maintain a minimum consolidated
net worth, a minimum interest coverage ratio and a maximum capitalization
ratio. It also places limits on investments, dispositions of assets,
prepayments of senior subordinated debt, guarantees, liens and restricted
payments. At June 30, 1999, the Company was in compliance with the Credit
Agreement's covenants and was not aware of any noncompliance with the other
terms of the Credit Agreement. The Credit Agreement is guaranteed by all of
the Company's direct and indirect wholly-owned subsidiaries.

     The Company's Board of Directors has authorized the repurchase of
2,500,000 shares of the Company's common stock. Purchases may be made from
time to time as conditions permit. Shares may be repurchased through
privately-negotiated transactions, block share purchases and open market
transactions. From the inception of the stock repurchase program, the Company
has repurchased 1,393,600 shares for approximately $14,510,000, resulting in
a weighted average cost of $10.41 per share.

     Repurchased shares are available for a number of corporate purposes. The
number of shares actually repurchased will be dependent upon market
conditions and existing debt covenants, and there is no guarantee as to the
exact number of shares to be repurchased by the Company. The Company may
discontinue the program at any time without notice. The Company is no longer
restricted from acquiring shares of its common stock under this program as
noted above.

     The Company's Board of Directors did not declare a cash dividend on
common stock for the first or second quarters of 1999. The payment of
dividends is subject to the results of the Company's operations, existing
debt covenants and declaration by the Company's Board of Directors. As noted
above, the Company is no longer restricted from declaring and paying
dividends and the Company's Board of Directors will be reviewing the possible
reinstatement of dividend payments.

OTHER
-----
     The Company is exposed to various market risks, including changes in
certain commodity prices and interest rates. To manage the volatility
relating to these normal business exposures, the Company periodically uses
commodity futures and options contracts to reduce price volatility, to fix
margins in its refining and marketing operations and to protect against price
declines associated with its crude oil and finished products inventories.

     During the six months ended June 30, 1999, the Company entered into
several related transactions for the purchase and sale of various put and
call option contracts expiring in August 1999, the purpose of which was to
protect 700,000 barrels of crude oil inventories from the risk associated
with declines in crude oil prices. The Company also entered into several
related transactions for the purchase and sale of various put and call option
contracts expiring in November 1999, the purpose of which was to protect
400,000 barrels of crude oil inventories from the risk associated with
declines in crude oil prices.

     For the three months ended June 30, 1999, the Company recorded a loss of
approximately $975,000 related to the option contracts associated with the
700,000 barrels of crude oil inventories as a result of crude oil price
increases and for the six months ended June 30, 1999, a loss of $2,419,000
was recorded. These losses were offset by reductions in lower of cost or
market inventory reserves. Subsequent to March 31, 1999, the Company
undertook actions to reduce its exposure to further losses associated with
the outstanding options in the event that crude oil prices would continue to
rise.

     At June 30, 1999, the Company had deferred costs and losses of
approximately $300,000 related to the option contracts associated with the
400,000 barrels of crude oil inventories.

     In relation to open call option contracts at June 30, 1999, every
increase of $1.00 in crude oil prices will result in a loss of approximately
$725,000 in the value of the options. The potential loss from a hypothetical
10% adverse change in commodity prices on other open commodity futures and
options contracts held by the Company at June 30, 1999, would not materially
affect the Company's consolidated financial condition and results of
operations.

     Additionally, the Company's $65,000,000 Credit Agreement is floating-
rate debt tied to various short-term indices. As a result, the Company's
annual interest costs associated with this debt will fluctuate. At June 30,
1999, there were no direct borrowings outstanding under this Credit
Agreement.


     Federal, state and local laws and regulations relating to health and the
environment affect nearly all of the operations of the Company. As is the
case with other companies engaged in similar industries, the Company faces
significant exposure from actual or potential claims and lawsuits involving
environmental matters. These matters include soil and water contamination,
air pollution and personal injuries or property damage allegedly caused by
substances manufactured, handled, used, released or disposed of by the
Company. Future expenditures related to health and environmental matters
cannot be reasonably quantified in many circumstances for various reasons,
including the speculative nature of remediation and cleanup cost estimates
and methods, imprecise and conflicting data regarding the hazardous nature of
various types of substances, the number of other potentially responsible
parties involved, various defenses which may be available to the Company and
changing environmental laws and interpretations of environmental laws.

     Rules and regulations implementing federal, state and local laws
relating to health and the environment will continue to affect the operations
of the Company. The Company cannot predict what health or environmental
legislation or regulations will be enacted or become effective in the future
or how existing or future laws or regulations will be administered or
enforced with respect to products or activities of the Company. Compliance
with more stringent laws or regulations, as well as more vigorous enforcement
policies of the regulatory agencies, could have an adverse effect on the
financial position and the results of operations of the Company and could
require substantial expenditures by the Company for the installation and
operation of refinery equipment, pollution control systems and other
equipment not currently possessed by the Company.

     The Company undertook an investigation into potential lead contamination
at a 5.5 acre site that the Company owns in Bloomfield, New Mexico. The
investigation arose out of the removal of a 55,000 barrel crude oil storage
tank by a contractor. The Company completed a survey that indicates that lead
levels in the soil at this site are below Environmental Protection Agency
cleanup levels for industrial and residential sites. The Company submitted
this information to the New Mexico Energy, Minerals and Natural Resources
Department (the "EMNRD"). Subsequent to its receipt of this information, the
EMNRD approved the closure of soil lead remedial actions at the site. This
approval was conditioned upon the submission of a work plan defining the
extent of petroleum contamination in the soil and groundwater at the site
resulting from the Company's activities. The Company is in the process of
preparing the specified work plan.

     The Company has an environmental liability accrual of approximately
$2,600,000. Approximately $800,000 relates to ongoing environmental projects,
including the remediation of a hydrocarbon plume that appears to extend no
more than 1,800 feet south of the inactive Farmington refinery and
hydrocarbon contamination on and adjacent to 5.5 acres the Company owns in
Bloomfield, New Mexico. The remaining $1,800,000 relates to an originally
estimated liability of approximately $2,300,000, recorded in the second
quarter of 1996, for certain environmental obligations assumed in the
acquisition of the Bloomfield refinery. That amount was recorded as an
adjustment to the purchase price and allocated to the assets acquired. This
environmental accrual is recorded in the current and long-term sections of
the Company's Consolidated Balance Sheets.


     The Company is subject to audit on an ongoing basis of the various taxes
that it pays to federal, state, local and tribal governments. These audits
may result in assessments or refunds along with interest and penalties. In
some cases the jurisdictional basis of the taxing authority is in dispute and
is the subject of litigation or administrative appeals. The Company has
received several tax notifications and assessments from the Navajo Tribe
relating to Company operations outside the boundaries of the Navajo Indian
Reservation in an area of disputed jurisdiction, including a $1,800,000
severance tax assessment (including interest and penalties through the date
of the assessment) issued in November 1991, and a $3,400,000 severance tax
assessment (including interest and penalties through the date of the
assessment) issued in May 1999, both of which relate to crude oil removed
from properties located within this area. The Company has invoked its appeal
rights with the Tribe's Tax Commission in connection with the severance tax
assessments and intends to oppose the assessments. Although it is probable
that the Company will incur liability in connection with tax notifications
and assessments from the Navajo Tribe relating to the area of disputed
jurisdiction, it is not possible to reasonably estimate the amount of any
obligation for such taxes at this time because the Navajo Tribe's authority
to impose taxes throughout this area has not been legally established and all
potentially-applicable factual issues have not been resolved. The Company has
accrued a liability for assessments that it has received from the Navajo
Tribe for substantially less than the amount of the assessments. It is
possible that the Company's assessments will have to be litigated by the
Company before final resolution. In addition, the Company may receive further
tax assessments. The Company may potentially be able to request reimbursement
from third party oil lease interest owners in connection with any severance
tax amounts ultimately paid by the Company that relate to purchases from the
interest owners.

     The Company's current receipts and projections of Four Corners crude oil
production indicate that the Company's crude oil demand will periodically
exceed the supply of crude oil that is available from local sources. The
Company has, and may from time to time, decrease production runs at its
refineries from levels it would otherwise schedule as a result of shortfalls
in Four Corners crude oil production. It is anticipated that a temporary
shortfall, as currently projected, will not have a material effect on the
Company's financial position or results of operations.

     The Four Corners basin is a mature production area and, accordingly, is
subject to a natural decline in production over time. In the past several
years this natural decline has been offset by field workovers and secondary
recovery projects which resulted in additional production from existing
reserves. Many of these projects were cut back, however, when crude oil
prices declined dramatically. Based upon history and discussions with local
producers, the Company anticipates that additional projects will again be
undertaken and that production will increase from the field as a result of
the recent recovery in crude oil prices.

     The Company supplements the Four Corners crude oil used at its
refineries with other feedstocks. These feedstocks currently include locally
produced natural gas liquids and crude oil produced outside of the Four
Corners area. The Company has initiated a project to increase its production
of gasoline from abundantly available natural gas liquids. The Company
continues to evaluate supplemental feedstock alternatives for its refineries
on both a short-term and long-term basis. Whether or not supplemental
feedstocks are used at the Company's refineries depends on a number of
factors. These factors include, but are not limited to, the availability of
supplemental feedstocks, the cost involved, the quantities required, the
quality of the feedstocks, the demand for finished products, and the selling
prices of finished products.

     There is no assurance that current or projected levels of Four Corners
crude oil supply for the Company's refineries will be maintained. Any
significant long-term interruption or decline in Four Corners crude oil
supply, due to prices or other factors, or any significant long-term
interruption of crude oil transportation systems, would have an adverse
effect on the Company's operations.

     The Company is aware of a number of actions, proposals or industry
discussions regarding product pipeline projects that could impact portions of
its marketing areas. One of these projects is the potential conversion and
extension of the existing Texas-New Mexico crude oil pipeline to transport
refined products from West Texas to New Mexico, including Albuquerque and
Bloomfield, and ultimately to Salt Lake City, Utah. Separately, an existing
natural gas liquids pipeline is in the process of being converted to a
refined products pipeline that will be capable of delivering finished product
from Southeastern New Mexico to the Albuquerque and Four Corners areas. This
conversion is reportedly scheduled for completion in 1999. In addition,
various actions have been undertaken to increase the supply of refined
products to El Paso, Texas, which is connected by pipeline to the Albuquerque
area to the north and the Phoenix and Tucson, Arizona markets to the west.
The completion of some or all of these projects would result in increased
competition by increasing the amount of refined products available in these
markets, as well as improving competitor access to these areas, and may
result in new opportunities for the Company as the Company is a net purchaser
of refined products in some of these areas.

     In 1997, the Company outlined a program for Year 2000 ("Y2K")
compliance. The Y2K issue is the result of certain computer systems using a
two-digit format rather than four digits to define the applicable year. Such
computer systems may be unable to properly interpret dates beyond the year
1999, which could lead to system failure or miscalculations causing
disruptions of operations. The Company has identified three major areas
determined to be critical for successful Y2K compliance: (1) financial and
information system applications, (2) manufacturing and process applications,
including embedded chips, and (3) business relationships.

     The Company has utilized an outside consultant to act as its Year 2000
project manager, although the project is now at the stage where it is
internally managed. This consultant directed the Company's efforts in
identifying and resolving Y2K issues pursuant to a five-phase program for
Year 2000 compliance. The five phases are as follows:

     (1)  AWARENESS PHASE. This phase included the development of a Project
Management Plan to make the Company aware of the Y2K problem, identify
potential Y2K issues in all areas of the Company and develop a plan of action
to resolve these issues. This phase was completed in July 1998.

     (2)  ASSESSMENT PHASE. Completed in October 1998, this phase included
generating a complete inventory of all software, hardware, processing
equipment and embedded chips throughout the entire organization and
identifying those items that were Y2K compliant and those that were not.

     (3)  RENOVATION (REMEDY) PHASE. In this phase, strategies were developed
for each item inventoried during the assessment phase to determine whether
remedial action was required and, if so, whether the item should be
eliminated, replaced, or updated. This phase also included the determination
of priorities and scheduling, including contingency plans for all critical
items. This phase was substantially completed in February 1999 except for
Phoenix Fuel and the Company's retail operations, which were completed in
June 1999.

     (4)  VALIDATION (TESTING) PHASE. In this phase, a test plan is developed
and implemented to validate the remedies selected in the previous phase.
Although originally scheduled for completion by March 1999, the Company now
believes that this phase will be completed by the end of August 1999.

     (5)  IMPLEMENTATION PHASE. This phase involves the use of the Y2K
compliant inventory, development and implementation of additional plans to
avoid Y2K problems and the development and finalizing of contingency plans.
Although originally scheduled for completion by March 1999, the Company now
believes that this phase will be completed by the end of September 1999.


     At the present time, approximately 1,500 items have been inventoried
consisting of software, hardware, processing equipment and embedded chips. Of
these inventoried items, 93% are Y2K compliant and 7% are nearing completion.
All software, hardware, processing equipment and embedded chips were
prioritized based on critical business functions, with the most critical
scheduled for validation testing and implementation first.

      Utilizing both internal staff and outside consultants, the remediation
and replacement program for the core financial and information systems was
substantially completed in April 1999. To date, 100% of the targeted core
financial and information systems and other related applications have been
renovated, and are in the process of being tested. Depending on the results
of the testing, some additional modifications may be required. The Company
believes that all critical issues have been identified in the financial and
information systems area, and that resources are available to bring these
systems into compliance by the scheduled completion date. The Company expects
to start running the Y2K compliant financial systems in September 1999.

     In the manufacturing and process area, the remediation and replacement
program is substantially complete. The Company is currently finalizing
testing and implementation in this area and expects to be completed in August
1999. The Company believes that all critical issues have been identified in
the manufacturing and process area and that resources are available to bring
these systems into compliance.

     In the business relationship area, the Company continues to correspond
with its business partners in order to identify and resolve Y2K issues that
may have an impact on operations. The Company has sent compliance
questionnaires to over 1,400 business partners, 250 of which have been
determined to be critical. The Company continues to follow up with those who
have not responded. The critical business partners identified by the Company
include, among others, certain utilities, pipeline companies, terminals,
crude oil and other raw material suppliers, key customers, financial
institutions, insurance companies and employee benefit plan administrators.
To date, the Company has received 600 responses to its compliance
questionnaires representing approximately 43% of all questionnaires sent. The
Company has received responses from 77% of those business partners identified
as being critical. The Company has not identified any significant problems
relating to the responses it has received and analyzed to date.

     Remediation of the Y2K items identified by the Company is being
accomplished using both internal and external manpower. The Company estimates
that the total cost of the Y2K project will be between $700,000 and $800,000.
Through June 30, 1999, the Company had expended approximately $570,000. The
Company expects to fund its Y2K expenditures from operating cash flows and
short-term borrowings if necessary. The total cost associated with required
modifications to become Year 2000 compliant is not expected to be significant
to the Company's financial position or results of operations.


     Contingency plans are in the process of being prepared for all of the
Company's critical business processes in order to minimize any disruptions in
these operations, allowing the Company to continue to function on January 1,
2000 and beyond. These plans are being developed to mitigate both internal
risks as well as potential risks in the chain of the Company's suppliers and
customers. The Company believes that the contingency planning process will be
an ongoing one which will require modifications as the Company obtains
additional information from its remediation and testing phases and about the
status of third party Y2K readiness. Contingency plans are in various stages
of completion and include such items as increasing certain of the Company's
inventories, placing certain processing equipment in manual override mode if
needed, establishing Y2K emergency response teams, and developing other
emergency procedures in the event problems do arise. The Company continues to
develop these plans for all of its business units as it completes the
renovation, validation and implementation phases of its Y2K compliance
project and will review and revise them throughout the year.

     The Company continues to assess its most reasonably likely worst case
Y2K scenario. It is the Company's belief that the greatest potential risk
from the Y2K issue could be the inability of principal suppliers to be Y2K
ready. This could result in delays in product deliveries from such suppliers
and disruption of the distribution channel for, among other things, refinery
feedstocks and finished products, including product pipelines, transportation
vendors and the Company's own petroleum product distribution centers. Another
significant potential risk is the general failure of systems and necessary
infrastructure such as electricity supply. Contingency plans will be
developed to address these scenarios.

     The Company believes that completed and planned modifications and
replacements of its internal systems and equipment will allow it to be Y2K
compliant in a timely manner. Due to the widespread nature of potential Y2K
issues, however, there can be no assurance that all of the Company's Y2K
issues will be identified and resolved in a timely manner, or that
contingency plans will mitigate the effects of any noncompliance. In
addition, there can be no assurance that third parties upon which the Company
relies will be Y2K compliant in a timely manner or that the third parties'
contingency plans will mitigate the effects of any noncompliance. Any
significant long-term disruptions to the Company's business caused by
noncompliance could have a material adverse effect on the Company's financial
position and results of operations.

     "Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: This report contains forward-looking statements that involve
risks and uncertainties, including but not limited to economic, competitive
and governmental factors affecting the Company's operations, markets,
products, services and prices; risks associated with non-compliance with
certain debt covenants or the satisfaction of financial ratios contained in
such covenants; the ability of the Company to use the net proceeds from the
FFCA transaction to invest in capital assets or to reduce senior indebtedness
within prescribed time periods; the adequacy of the Company's environmental
and tax reserves; the availability of indemnification from third parties; the
Company's ability to recover tax payments from third parties; the expansion
of the Company's refining and retail operations through acquisition and
construction; the successful sale of retail and other assets through a sealed
bid sale; the reinstatement of cash dividends on common stock; potential
losses, if any, from open August and November 1999 crude oil call option
contracts; the adequacy and cost of raw material supplies; the potential
effects of various pipeline projects as they relate to the Company's market
area and future profitability; the estimated cost and ability of the Company
or third parties on which it relies to become Y2K compliant; the impact of
the mandated use of gasolines satisfying governmentally mandated
specifications on the Company's operations; and other risks detailed from
time to time in the Company's filings with the Securities and Exchange
Commission.




<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information required by this item is incorporated by reference to
the section entitled "Other" in the Company's Management's Discussion and
Analysis of Financial Condition and Results of Operations in Part I, Item 2

<PAGE>
                             PART II

                        OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

     There are no material pending legal proceedings required to be
reported pursuant to Item 103 of Regulation S-K. The Company is a party
to ordinary routine litigation incidental to its business. In addition,
there is hereby incorporated by reference the information  regarding
contingencies in Note 6 to the Unaudited Condensed Consolidated Financial
Statements set forth in Item 1, Part I hereof and the discussion of
certain contingencies contained in Item 2, Part I hereof, under the
heading "Liquidity and Capital Resources - Other."

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit:

     27 - Financial Data Schedule.

(b) Reports on Form 8-K. There were no reports filed on Form 8-K for the
quarter ended June 30, 1999.


<PAGE>
                                 SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q for the quarter ended
June 30, 1999 to be signed on its behalf by the undersigned thereunto duly
authorized.

                         GIANT INDUSTRIES, INC.


                         /s/ GARY R. DALKE
                         ------------------------------------------
                         Gary R. Dalke, Vice President,
                         Controller, Accounting Officer
                         and Assistant Secretary


Date: August 10, 1999