##### Table of Contents

---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED MAY 31, 2007



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from 
to



|     |  |                                                                            
|---- |  | ---------------------------------------------------------------------------
|LOGO |  | Commission File No. 333-35083  ___________________  UNITED REFINING COMPANY
|     |  | (Exact name of registrant as specified in its charter)                     



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Pennsylvania                                                   |  | 25-1411751                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|15 Bradley Street                                              |  |                                     
|Warren, Pennsylvania                                           |  | 16365                               
|(Address of principal executive office)                        |  | (Zip Code)                          



814-723-1500

(Registrants telephone number, including area code)



---



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 ̈



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



|                         |  |                    |  |                         
|------------------------ |  | ------------------ |  | ------------------------
|Large accelerated filer ̈ |  | Accelerated filer ̈ |  | Non-accelerated filer  x



Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



Number of shares outstanding of Registrants Common Stock as of July 16, 2007: 100.



---



---

##### Table of Contents

TABLE OF ADDITIONAL REGISTRANTS



|                                                   |  |                                            |  |                                  |  |                      
|-------------------------------------------------- |  | ------------------------------------------ |  | -------------------------------- |  | ---------------------
|Name                                               |  | State of OtherJurisdiction ofIncorporation |  | IRS EmployerIdentificationNumber |  | CommissionFile Number
|Kiantone Pipeline Corporation                      |  | New York                                   |  | 25-1211902                       |  | 333-35083-01         
|Kiantone Pipeline Company                          |  | Pennsylvania                               |  | 25-1416278                       |  | 333-35083-03         
|United Refining Company of Pennsylvania            |  | Pennsylvania                               |  | 25-0850960                       |  | 333-35083-02         
|United Jet Center, Inc.                            |  | Delaware                                   |  | 52-1623169                       |  | 333-35083-06         
|Kwik-Fill Corporation                              |  | Pennsylvania                               |  | 25-1525543                       |  | 333-35083-05         
|Independent Gas and Oil Company of Rochester, Inc. |  | New York                                   |  | 06-1217388                       |  | 333-35083-11         
|Bell Oil Corp.                                     |  | Michigan                                   |  | 38-1884781                       |  | 333-35083-07         
|PPC, Inc.                                          |  | Ohio                                       |  | 31-0821706                       |  | 333-35083-08         
|Super Test Petroleum, Inc.                         |  | Michigan                                   |  | 38-1901439                       |  | 333-35083-09         
|Kwik-Fil, Inc.                                     |  | New York                                   |  | 25-1525615                       |  | 333-35083-04         
|Vulcan Asphalt Refining Corporation                |  | Delaware                                   |  | 23-2486891                       |  | 333-35083-10         
|Country Fair, Inc.                                 |  | Pennsylvania                               |  | 25-1149799                       |  | 333-35083-12         



2



---

##### Table of Contents

FORM 10-Q CONTENTS



|            |  |                                                                                                         |  |        
|----------- |  | ------------------------------------------------------------------------------------------------------- |  | -------
|            |  |                                                                                                         |  | PAGE(S)
|PART I.     |  | FINANCIAL INFORMATION                                                                                   |  | 4      
|            |  |                                                                                                        
|Item 1.     |  | Financial Statements.                                                                                   |  | 4      
|            |  |                                                                                                        
|            |  | Consolidated Balance Sheets  May 31, 2007 (unaudited) and August 31, 2006                              |  | 4      
|            |  |                                                                                                        
|            |  | Consolidated Statements of Operations  Quarter and Nine Months Ended May 31, 2007 and 2006 (unaudited) |  | 5      
|            |  |                                                                                                        
|            |  | Consolidated Statements of Cash Flows  Nine Months Ended May 31, 2007 and 2006 (unaudited)             |  | 6      
|            |  |                                                                                                        
|            |  | Notes to Consolidated Financial Statements (unaudited)                                                  |  | 7      
|            |  |                                                                                                        
|Item 2.     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations.                  |  | 15     
|            |  |                                                                                                        
|Item 3.     |  | Quantitative and Qualitative Disclosures About Market Risk.                                             |  | 23     
|            |  |                                                                                                        
|Item 4.     |  | Controls and Procedures.                                                                                |  | 23     
|            |  |                                                                                                        
|PART II.    |  | OTHER INFORMATION                                                                                       |  | 25     
|            |  |                                                                                                        
|Item 1.     |  | Legal Proceedings.                                                                                      |  | 25     
|            |  |                                                                                                        
|Item 1A.    |  | Risk Factors.                                                                                           |  | 25     
|            |  |                                                                                                        
|Item 2.     |  | Unregistered Sales of Equity Securities and Use of Proceeds.                                            |  | 25     
|            |  |                                                                                                        
|Item 3.     |  | Defaults Upon Senior Securities.                                                                        |  | 25     
|            |  |                                                                                                        
|Item 4.     |  | Submission of Matters to a Vote of Security Holders.                                                    |  | 25     
|            |  |                                                                                                        
|Item 5.     |  | Other Information.                                                                                      |  | 25     
|            |  |                                                                                                        
|Item 6.     |  | Exhibits.                                                                                               |  | 26     
|            | 
|Signatures. |  | 27                                                                                                     



3



---

##### Table of Contents

PART I.FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------



UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)



|                                                                                           |  |                        |         |   |                |   |         |  
|------------------------------------------------------------------------------------------ |  | ---------------------- | ------- | - | -------------- | - | ------- | -
|                                                                                           |  | May 31,2007(Unaudited) |         |   | August 31,2006 |  
|Assets                                                                                     |  |                        |         |   |                |   |         |  
|Current:                                                                                   |  |                        |         |   |                |   |         |  
|Cash and cash equivalents                                                                  |  | $                      | 164,655 |   |                | $ | 59,197  |  
|Accounts receivable, net                                                                   |  |                        | 86,564  |   |                |   | 85,036  |  
|Inventories                                                                                |  |                        | 121,160 |   |                |   | 130,633 |  
|Prepaid expenses and other assets                                                          |  |                        | 39,185  |   |                |   | 21,809  |  
|Amounts due from affiliated companies, net                                                 |  |                        |        |   |                |   | 883     |  
|                                                                                           |  |                        |         |   |                |   |         |  
|Total current assets                                                                       |  |                        | 411,564 |   |                |   | 297,558 |  
|Property, plant and equipment, net                                                         |  |                        | 210,350 |   |                |   | 190,080 |  
|Investment in affiliated company                                                           |  |                        | 3,172   |   |                |   | 2,899   |  
|Deferred financing costs, net                                                              |  |                        | 5,520   |   |                |   | 5,643   |  
|Goodwill                                                                                   |  |                        | 1,349   |   |                |   | 1,349   |  
|Tradename                                                                                  |  |                        | 10,500  |   |                |   | 10,500  |  
|Amortizable intangible assets, net                                                         |  |                        | 2,280   |   |                |   | 2,665   |  
|Deferred turnaround costs and other assets, net                                            |  |                        | 8,592   |   |                |   | 6,077   |  
|                                                                                           |  |                        |         |   |                |   |         |  
|                                                                                           |  | $                      | 653,327 |   |                | $ | 516,771 |  
|                                                                                           |  |                        |         |   |                |   |         |  
|Liabilities and Stockholders Equity                                                       |  |                        |         |   |                |   |         |  
|Current:                                                                                   |  |                        |         |   |                |   |         |  
|Current installments of long-term debt                                                     |  | $                      | 1,768   |   |                | $ | 435     |  
|Accounts payable                                                                           |  |                        | 53,194  |   |                |   | 84,269  |  
|Accrued liabilities                                                                        |  |                        | 25,023  |   |                |   | 19,892  |  
|Income tax payable                                                                         |  |                        | 27,525  |   |                |   | 21,432  |  
|Sales, use and fuel taxes payable                                                          |  |                        | 21,787  |   |                |   | 20,144  |  
|Deferred income taxes                                                                      |  |                        | 4,663   |   |                |   | 4,663   |  
|Amounts due to affiliated companies, net                                                   |  |                        | 398     |   |                |   |        |  
|                                                                                           |  |                        |         |   |                |   |         |  
|Total current liabilities                                                                  |  |                        | 134,358 |   |                |   | 150,835 |  
|Long term debt: less current installments                                                  |  |                        | 357,601 |   |                |   | 227,579 |  
|Deferred income taxes                                                                      |  |                        | 6,577   |   |                |   | 8,624   |  
|Deferred gain on settlement of pension plan obligations                                    |  |                        | 323     |   |                |   | 485     |  
|Deferred retirement benefits                                                               |  |                        | 42,974  |   |                |   | 36,794  |  
|Other noncurrent liabilities                                                               |  |                        | 234     |   |                |   | 601     |  
|                                                                                           |  |                        |         |   |                |   |         |  
|Total liabilities                                                                          |  |                        | 542,067 |   |                |   | 424,918 |  
|                                                                                           |  |                        |         |   |                |   |         |  
|Commitments and contingencies                                                              |  |                        |         |   |                |   |         |  
|Stockholders equity:                                                                      |  |                        |         |   |                |   |         |  
|Common stock; $.10 par value per share  shares authorized 100; issued and outstanding 100 |  |                        |        |   |                |   |        |  
|Additional paid-in capital                                                                 |  |                        | 14,244  |   |                |   | 14,244  |  
|Retained earnings                                                                          |  |                        | 98,595  |   |                |   | 79,188  |  
|Accumulated other comprehensive loss                                                       |  |                        | (1,579  | ) |                |   | (1,579  | )
|                                                                                           |  |                        |         |   |                |   |         |  
|Total stockholders equity                                                                 |  |                        | 111,260 |   |                |   | 91,853  |  
|                                                                                           |  |                        |         |   |                |   |         |  
|                                                                                           |  | $                      | 653,327 |   |                | $ | 516,771 |  
|                                                                                           |  |                        |         |   |                |   |         |  



See accompanying notes
to consolidated financial statements.



4



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

(in thousands)



|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|-------------------------------------------- |  | -------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                             |  | Three Months Ended May 31, |         |   | Nine Months Ended May 31, |  
|                                             |  | 2007                       |         |   | 2006                      |   |         | 2007 |  |   | 2006      |  
|Net sales                                    |  | $                          | 587,298 |   |                           | $ | 612,966 |      |  | $ | 1,664,675 |   |  | $ | 1,693,443 |  
|Costs of goods sold                          |  |                            | 488,784 |   |                           |   | 498,186 |      |  |   | 1,486,609 |   |  |   | 1,492,820 |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Gross profit                                 |  |                            | 98,514  |   |                           |   | 114,780 |      |  |   | 178,066   |   |  |   | 200,623   |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Expenses:                                    |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Selling, general and administrative expenses |  |                            | 33,601  |   |                           |   | 32,417  |      |  |   | 100,782   |   |  |   | 94,420    |  
|Depreciation and amortization expenses       |  |                            | 3,470   |   |                           |   | 3,296   |      |  |   | 10,447    |   |  |   | 9,878     |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Total operating expenses                     |  |                            | 37,071  |   |                           |   | 35,713  |      |  |   | 111,229   |   |  |   | 104,298   |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Operating income                             |  |                            | 61,443  |   |                           |   | 79,067  |      |  |   | 66,837    |   |  |   | 96,325    |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Other income (expense):                      |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Interest expense, net                        |  |                            | (6,214  | ) |                           |   | (6,202  | )    |  |   | (17,320   | ) |  |   | (18,415   | )
|Other, net                                   |  |                            | (807    | ) |                           |   | (732    | )    |  |   | (2,489    | ) |  |   | (601      | )
|Equity in net earnings of affiliate          |  |                            | 438     |   |                           |   | 507     |      |  |   | 1,273     |   |  |   | 1,412     |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|                                             |  |                            | (6,583  | ) |                           |   | (6,427  | )    |  |   | (18,536   | ) |  |   | (17,604   | )
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Income before income tax expense             |  |                            | 54,860  |   |                           |   | 72,640  |      |  |   | 48,301    |   |  |   | 78,721    |  
|Income tax expense                           |  |                            | 22,494  |   |                           |   | 30,346  |      |  |   | 19,804    |   |  |   | 32,886    |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Net income                                   |  | $                          | 32,366  |   |                           | $ | 42,294  |      |  | $ | 28,497    |   |  | $ | 45,835    |  
|                                             |  |                            |         |   |                           |   |         |      |  |   |           |   |  |   |           |  



See accompanying notes
to consolidated financial statements.



5



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

(in thousands)



|                                                                                  |  |                   |         |   |             |   |         |  
|--------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------- | - | ------- | -
|                                                                                  |  | Nine Months Ended |        
|                                                                                  |  | May 31,2007       |         |   | May 31,2006 |  
|Cash flows from operating activities:                                             |  |                   |         |   |             |   |         |  
|Net income                                                                        |  | $                 | 28,497  |   |             | $ | 45,835  |  
|                                                                                  |  |                   |         |   |             |   |         |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                   |         |   |             |   |         |  
|Depreciation and amortization                                                     |  |                   | 13,154  |   |             |   | 13,215  |  
|Equity in net earnings of affiliate                                               |  |                   | (1,273  | ) |             |   | (1,412  | )
|Deferred income taxes                                                             |  |                   | (2,047  | ) |             |   | 5,185   |  
|Loss on asset dispositions                                                        |  |                   | 1,198   |   |             |   | 27      |  
|Cash used in working capital items                                                |  |                   | (26,358 | ) |             |   | (46,164 | )
|Other, net                                                                        |  |                   | (6      | ) |             |   | 27      |  
|Change in operating assets and liabilities:                                       |  |                   |         |   |             |   |         |  
|Deferred retirement benefits                                                      |  |                   | 6,180   |   |             |   | 4,426   |  
|Other assets                                                                      |  |                   | (34     | ) |             |   | (2      | )
|Other noncurrent liabilities                                                      |  |                   | (367    | ) |             |   | (463    | )
|                                                                                  |  |                   |         |   |             |   |         |  
|Total adjustments                                                                 |  |                   | (9,553  | ) |             |   | (25,161 | )
|                                                                                  |  |                   |         |   |             |   |         |  
|Net cash provided by operating activities                                         |  |                   | 18,944  |   |             |   | 20,674  |  
|                                                                                  |  |                   |         |   |             |   |         |  
|Cash flows from investing activities:                                             |  |                   |         |   |             |   |         |  
|Additions to property, plant and equipment                                        |  |                   | (31,525 | ) |             |   | (13,341 | )
|Additions to deferred turnaround costs                                            |  |                   | (4,339  | ) |             |   | (848    | )
|Distribution received                                                             |  |                   | 1,000   |   |             |   | 1,000   |  
|Proceeds from asset dispositions                                                  |  |                   |        |   |             |   | 1,384   |  
|                                                                                  |  |                   |         |   |             |   |         |  
|Net cash used in investing activities                                             |  |                   | (34,864 | ) |             |   | (11,805 | )
|                                                                                  |  |                   |         |   |             |   |         |  
|Cash flows from financing activities:                                             |  |                   |         |   |             |   |         |  
|Proceeds from issuance of long term debt                                          |  |                   | 131,956 |   |             |   | 1,140   |  
|Dividends to stockholder                                                          |  |                   | (9,090  | ) |             |   | (6,559  | )
|Principal reductions of long term debt                                            |  |                   | (700    | ) |             |   | (472    | )
|Deferred financing costs                                                          |  |                   | (788    | ) |             |   | (72     | )
|                                                                                  |  |                   |         |   |             |   |         |  
|Net cash provided by (used in) financing activities                               |  |                   | 121,378 |   |             |   | (5,963  | )
|                                                                                  |  |                   |         |   |             |   |         |  
|Net increase in cash and cash equivalents                                         |  |                   | 105,458 |   |             |   | 2,906   |  
|Cash and cash equivalents, beginning of year                                      |  |                   | 59,197  |   |             |   | 43,204  |  
|                                                                                  |  |                   |         |   |             |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                 | 164,655 |   |             | $ | 46,110  |  
|                                                                                  |  |                   |         |   |             |   |         |  
|Cash used in working capital items:                                               |  |                   |         |   |             |   |         |  
|Accounts receivable, net                                                          |  | $                 | (1,528  | ) |             | $ | (9,050  | )
|Inventories                                                                       |  |                   | 9,473   |   |             |   | (64,255 | )
|Prepaid expenses and other assets                                                 |  |                   | (17,376 | ) |             |   | (4,540  | )
|Accounts payable                                                                  |  |                   | (31,075 | ) |             |   | 6,846   |  
|Accrued liabilities                                                               |  |                   | 5,131   |   |             |   | 4,331   |  
|Income taxes payable                                                              |  |                   | 6,093   |   |             |   | 23,571  |  
|Sales, use and fuel taxes payable                                                 |  |                   | 1,643   |   |             |   | (1,905  | )
|Amounts due from (to) affiliated companies, net                                   |  |                   | 1,281   |   |             |   | (1,162  | )
|                                                                                  |  |                   |         |   |             |   |         |  
|Total change                                                                      |  | $                 | (26,358 | ) |             | $ | (46,164 | )
|                                                                                  |  |                   |         |   |             |   |         |  
|Cash paid during the period for:                                                  |  |                   |         |   |             |   |         |  
|Interest                                                                          |  | $                 | 12,258  |   |             | $ | 12,633  |  
|Income taxes                                                                      |  | $                 | 15,779  |   |             | $ | 3,822   |  
|                                                                                  |  |                   |         |   |             |   |         |  
|Non-cash investing activities:                                                    |  |                   |         |   |             |   |         |  
|Property additions & capital leases                                               |  | $                 |        |   |             | $ | 167     |  
|                                                                                  |  |                   |         |   |             |   |         |  



See accompanying notes
to consolidated financial statements.



6



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|1. | Description of Business and Basis of Presentation
|-- | -------------------------------------------------



The consolidated financial statements include the accounts of United Refining Company and its subsidiaries, United Refining Company of Pennsylvania and
its subsidiaries, and Kiantone Pipeline Corporation (collectively, the Company). All significant intercompany balances and transactions have been eliminated in consolidation.



The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern
Pennsylvania. Operations are organized into two business segments: wholesale and retail.



The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial
customers. The retail segment sells petroleum products under the Kwik Fill®, Citgo® and
Keystone® brand names through a network of
Company-operated retail units and convenience and grocery items through gasoline stations and convenience stores under the Red Apple Food Mart® and Country Fair® brand names.



The Company is a wholly-owned subsidiary of United Refining, Inc., a wholly-owned subsidiary of United Acquisition Corp., which in turn is a wholly-owned
subsidiary of Red Apple Group, Inc. (the Parent).



The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended May 31, 2007 are not necessarily indicative of the
results that may be expected for the year ending August 31, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in the Companys Form 10-K for the fiscal year ended August 31,
2006.



|2. | Recent Accounting Pronouncements
|-- | --------------------------------



In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement
No. 109 (FIN No. 48). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with Statement No. 109, Accounting for Income
Taxes. FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement classification, accounting for interest and penalties and accounting in interim periods and disclosure.



The provisions of FIN No. 48 are effective for fiscal
years beginning after December 15, 2006. The Company does not expect that the adoption of Interpretation 48 will have a material effect on its financial position or results of operations.



In September 2006, the FASB issued Staff Position No. AUG AIR-1,
Accounting for Planned Major Maintenance Activities (Position No. AUG AIR-1). Position No. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities.



7



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



The provisions of Position No. AUG AIR-1 are effective for fiscal years beginning after
December 15, 2006. The Company does not expect that the adoption of Position No. AUG AIR-1 will have a material effect on its financial position or results of operations.



In September 2006, the FASB issued Statement No. 158, Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans (Statement 158), an amendment of Statements 87, 88, 106, and 132 (R). Statement 158 represents the completion of the FASBs first phase in its postretirement benefit accounting project.
Statement 158 requires an entity to recognize in its statement of financial position an asset for a defined benefit postretirement plans overfunded status or a liability for a plans underfunded status, measure a defined benefit
postretirement plans assets and obligations that determine its funded status as of the end of the employers fiscal year, and recognize changes in the funded status of a defined benefit postretirement plan in comprehensive income in the
year in which the changes occur. Under Statement 158, the Company will be required to recognize the funded status of its defined benefit postretirement plans and to provide the required disclosures. Statement 158 is effective for fiscal years ending
after June 15, 2007. Because the actuarial valuation of the retirement plan obligations at year end has not been completed, and because the fair value of retirement plan assets is subject to change based on market fluctuations through
August 31, 2007, the Company is not yet able to estimate the impact of Statement 158 on its balance sheet.



In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(Statement 159). Statement 159 permits entities to measure many financial instruments and certain other items at fair value and to report unrealized gains and losses on items for which the fair value option has been elected in earnings
for the period. Statement 159 is effective for fiscal years beginning after November 15, 2007. The Company does not expect that the adoption of Statement 159 will have a material effect on its financial position or results of operations.



|3. | Inventories
|-- | -----------



As of May 31, 2007 and August 31, 2006, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately
$34,537,000 and $73,119,000, respectively. The May 31, 2007 LIFO calculation was computed using quantities and prices which are not necessarily indicative of the actual quantities and prices which will exist at fiscal year-end. Due to
anticipated fluctuations in inventory levels and the many factors which enter into the LIFO calculation which are beyond managements control, it is the policy of the Company to record the LIFO inventory adjustment only at fiscal year-end.



8



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|4. | Subsidiary Guarantors
|-- | ---------------------



Certain of United Refining Companys (the issuer) subsidiaries function as guarantors under the terms of the $350,000,000 Senior
Unsecured Note Indenture due August 15, 2012. Financial information for the issuer and its wholly owned subsidiary guarantors is as follows:



CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)



|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------ | ------- | - | --------------- | - | ------- | ------------ |  | - | ------------ | - |  | ------ | ------- | - | ---------- | - | ------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                          |  | May 31, 2007 |         |   | August 31, 2006 |  
|                                                                                          |  | Issuer       |         |   | Guarantors      |   |         | Eliminations |  |   | Consolidated |   |  | Issuer |         |   | Guarantors |   |         | Eliminations |  |   | Consolidated |  
|Assets                                                                                    |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Current:                                                                                  |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Cash and cash equivalents                                                                 |  | $            | 152,399 |   |                 | $ | 12,256  |              |  | $ |             |   |  | $      | 164,655 |   |            | $ | 52,375  |              |  | $ | 6,822        |   |  | $ |         |   |  | $ | 59,197  |  
|Accounts receivable, net                                                                  |  |              | 55,797  |   |                 |   | 30,767  |              |  |   |             |   |  |        | 86,564  |   |            |   | 55,230  |              |  |   | 29,806       |   |  |   |         |   |  |   | 85,036  |  
|Inventories                                                                               |  |              | 96,305  |   |                 |   | 24,855  |              |  |   |             |   |  |        | 121,160 |   |            |   | 103,996 |              |  |   | 26,637       |   |  |   |         |   |  |   | 130,633 |  
|Prepaid expenses and other assets                                                         |  |              | 34,335  |   |                 |   | 4,850   |              |  |   |             |   |  |        | 39,185  |   |            |   | 17,418  |              |  |   | 4,391        |   |  |   |         |   |  |   | 21,809  |  
|Amounts due from affiliated companies, net                                                |  |              |        |   |                 |   |        |              |  |   |             |   |  |        |        |   |            |   | 1,744   |              |  |   | (861         | ) |  |   |         |   |  |   | 883     |  
|Intercompany                                                                              |  |              | 141,100 |   |                 |   | 19,048  |              |  |   | (160,148     | ) |  |        |        |   |            |   | 119,481 |              |  |   | 20,655       |   |  |   | (140,136 | ) |  |   |        |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total current assets                                                                      |  |              | 479,936 |   |                 |   | 91,776  |              |  |   | (160,148     | ) |  |        | 411,564 |   |            |   | 350,244 |              |  |   | 87,450       |   |  |   | (140,136 | ) |  |   | 297,558 |  
|Property, plant and equipment, net                                                        |  |              | 136,634 |   |                 |   | 73,716  |              |  |   |             |   |  |        | 210,350 |   |            |   | 119,728 |              |  |   | 70,352       |   |  |   |         |   |  |   | 190,080 |  
|Investment in affiliated company                                                          |  |              | 3,172   |   |                 |   |        |              |  |   |             |   |  |        | 3,172   |   |            |   | 2,899   |              |  |   |             |   |  |   |         |   |  |   | 2,899   |  
|Deferred financing costs, net                                                             |  |              | 5,520   |   |                 |   |        |              |  |   |             |   |  |        | 5,520   |   |            |   | 5,643   |              |  |   |             |   |  |   |         |   |  |   | 5,643   |  
|Goodwill and other non-amortizable assets                                                 |  |              |        |   |                 |   | 11,849  |              |  |   |             |   |  |        | 11,849  |   |            |   |        |              |  |   | 11,849       |   |  |   |         |   |  |   | 11,849  |  
|Amortizable intangible assets, net                                                        |  |              |        |   |                 |   | 2,280   |              |  |   |             |   |  |        | 2,280   |   |            |   |        |              |  |   | 2,665        |   |  |   |         |   |  |   | 2,665   |  
|Deferred turnaround costs & other assets                                                  |  |              | 8,338   |   |                 |   | 1,425   |              |  |   | (1,171       | ) |  |        | 8,592   |   |            |   | 5,735   |              |  |   | 1,513        |   |  |   | (1,171   | ) |  |   | 6,077   |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                                                          |  | $            | 633,600 |   |                 | $ | 181,046 |              |  | $ | (161,319     | ) |  | $      | 653,327 |   |            | $ | 484,249 |              |  | $ | 173,829      |   |  | $ | (141,307 | ) |  | $ | 516,771 |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Liabilities and Stockholders Equity                                                      |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Current:                                                                                  |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Current installments of long-term debt                                                    |  | $            | 991     |   |                 | $ | 777     |              |  | $ |             |   |  | $      | 1,768   |   |            | $ | (84     | )            |  | $ | 519          |   |  | $ |         |   |  | $ | 435     |  
|Accounts payable                                                                          |  |              | 38,200  |   |                 |   | 14,994  |              |  |   |             |   |  |        | 53,194  |   |            |   | 65,801  |              |  |   | 18,468       |   |  |   |         |   |  |   | 84,269  |  
|Accrued liabilities                                                                       |  |              | 19,035  |   |                 |   | 5,988   |              |  |   |             |   |  |        | 25,023  |   |            |   | 14,022  |              |  |   | 5,870        |   |  |   |         |   |  |   | 19,892  |  
|Income taxes payable                                                                      |  |              | 31,731  |   |                 |   | (4,206  | )            |  |   |             |   |  |        | 27,525  |   |            |   | 23,223  |              |  |   | (1,791       | ) |  |   |         |   |  |   | 21,432  |  
|Sales, use and fuel taxes payable                                                         |  |              | 17,820  |   |                 |   | 3,967   |              |  |   |             |   |  |        | 21,787  |   |            |   | 16,833  |              |  |   | 3,311        |   |  |   |         |   |  |   | 20,144  |  
|Deferred income taxes                                                                     |  |              | 5,644   |   |                 |   | (981    | )            |  |   |             |   |  |        | 4,663   |   |            |   | 5,644   |              |  |   | (981         | ) |  |   |         |   |  |   | 4,663   |  
|Intercompany                                                                              |  |              |        |   |                 |   | 160,148 |              |  |   | (160,148     | ) |  |        |        |   |            |   |        |              |  |   | 140,136      |   |  |   | (140,136 | ) |  |   |        |  
|Amounts due affiliated companies, net                                                     |  |              | (393    | ) |                 |   | 791     |              |  |   |             |   |  |        | 398     |   |            |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total current liabilities                                                                 |  |              | 113,028 |   |                 |   | 181,478 |              |  |   | (160,148     | ) |  |        | 134,358 |   |            |   | 125,439 |              |  |   | 165,532      |   |  |   | (140,136 | ) |  |   | 150,835 |  
|Long term debt: less current installments                                                 |  |              | 353,646 |   |                 |   | 3,955   |              |  |   |             |   |  |        | 357,601 |   |            |   | 224,065 |              |  |   | 3,514        |   |  |   |         |   |  |   | 227,579 |  
|Deferred income taxes                                                                     |  |              | 2,381   |   |                 |   | 4,196   |              |  |   |             |   |  |        | 6,577   |   |            |   | 3,650   |              |  |   | 4,974        |   |  |   |         |   |  |   | 8,624   |  
|Deferred gain on settlement of pension plan obligations                                   |  |              | 323     |   |                 |   |        |              |  |   |             |   |  |        | 323     |   |            |   | 485     |              |  |   |             |   |  |   |         |   |  |   | 485     |  
|Deferred retirement benefits                                                              |  |              | 42,840  |   |                 |   | 134     |              |  |   |             |   |  |        | 42,974  |   |            |   | 36,826  |              |  |   | (32          | ) |  |   |         |   |  |   | 36,794  |  
|Other noncurrent liabilities                                                              |  |              |        |   |                 |   | 234     |              |  |   |             |   |  |        | 234     |   |            |   |        |              |  |   | 601          |   |  |   |         |   |  |   | 601     |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total liabilities                                                                         |  |              | 512,218 |   |                 |   | 189,997 |              |  |   | (160,148     | ) |  |        | 542,067 |   |            |   | 390,465 |              |  |   | 174,589      |   |  |   | (140,136 | ) |  |   | 424,918 |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Commitment and contingencies                                                              |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Stockholders equity                                                                      |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Common stock, $.10 par value per share shares authorized 100; issued and outstanding 100 |  |              |        |   |                 |   | 18      |              |  |   | (18          | ) |  |        |        |   |            |   |        |              |  |   | 18           |   |  |   | (18      | ) |  |   |        |  
|Additional paid-in capital                                                                |  |              | 4,746   |   |                 |   | 10,651  |              |  |   | (1,153       | ) |  |        | 14,244  |   |            |   | 4,746   |              |  |   | 10,651       |   |  |   | (1,153   | ) |  |   | 14,244  |  
|Retained earnings                                                                         |  |              | 118,215 |   |                 |   | (19,620 | )            |  |   |             |   |  |        | 98,595  |   |            |   | 90,617  |              |  |   | (11,429      | ) |  |   |         |   |  |   | 79,188  |  
|Accumulated other comprehensive loss                                                      |  |              | (1,579  | ) |                 |   |        |              |  |   |             |   |  |        | (1,579  | ) |            |   | (1,579  | )            |  |   |             |   |  |   |         |   |  |   | (1,579  | )
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total stockholders equity                                                                |  |              | 121,382 |   |                 |   | (8,951  | )            |  |   | (1,171       | ) |  |        | 111,260 |   |            |   | 93,784  |              |  |   | (760         | ) |  |   | (1,171   | ) |  |   | 91,853  |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                                                          |  | $            | 633,600 |   |                 | $ | 181,046 |              |  | $ | (161,319     | ) |  | $      | 653,327 |   |            | $ | 484,249 |              |  | $ | 173,829      |   |  | $ | (141,307 | ) |  | $ | 516,771 |  
|                                                                                          |  |              |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  



9



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)



|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | ------- | ------------ |  | - | ------------ | - |  | ------ | ------- | - | ---------- | - | ------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | ------- | -
|                                                  |  | Three Months Ended May 31, 2007 |         |   | Three Months Ended May 31, 2006 |  
|                                                  |  | Issuer                          |         |   | Guarantors                      |   |         | Eliminations |  |   | Consolidated |   |  | Issuer |         |   | Guarantors |   |         | Eliminations |  |   | Consolidated |  
|Net sales                                         |  | $                               | 425,770 |   |                                 | $ | 321,557 |              |  | $ | (160,029     | ) |  | $      | 587,298 |   |            | $ | 454,969 |              |  | $ | 293,517      |   |  | $ | (135,520 | ) |  | $ | 612,966 |  
|Costs of goods sold                               |  |                                 | 353,912 |   |                                 |   | 294,901 |              |  |   | (160,029     | ) |  |        | 488,784 |   |            |   | 366,613 |              |  |   | 267,093      |   |  |   | (135,520 | ) |  |   | 498,186 |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Gross profit                                      |  |                                 | 71,858  |   |                                 |   | 26,656  |              |  |   |             |   |  |        | 98,514  |   |            |   | 88,356  |              |  |   | 26,424       |   |  |   |         |   |  |   | 114,780 |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Expenses:                                         |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Selling, general and administrative expenses      |  |                                 | 5,816   |   |                                 |   | 27,785  |              |  |   |             |   |  |        | 33,601  |   |            |   | 5,940   |              |  |   | 26,477       |   |  |   |         |   |  |   | 32,417  |  
|Depreciation and amortization expenses            |  |                                 | 2,291   |   |                                 |   | 1,179   |              |  |   |             |   |  |        | 3,470   |   |            |   | 2,134   |              |  |   | 1,162        |   |  |   |         |   |  |   | 3,296   |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total operating expenses                          |  |                                 | 8,107   |   |                                 |   | 28,964  |              |  |   |             |   |  |        | 37,071  |   |            |   | 8,074   |              |  |   | 27,639       |   |  |   |         |   |  |   | 35,713  |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Operating income (loss)                           |  |                                 | 63,751  |   |                                 |   | (2,308  | )            |  |   |             |   |  |        | 61,443  |   |            |   | 80,282  |              |  |   | (1,215       | ) |  |   |         |   |  |   | 79,067  |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Other income (expense):                           |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Interest expense, net                             |  |                                 | (3,129  | ) |                                 |   | (3,085  | )            |  |   |             |   |  |        | (6,214  | ) |            |   | (3,681  | )            |  |   | (2,521       | ) |  |   |         |   |  |   | (6,202  | )
|Other, net                                        |  |                                 | (614    | ) |                                 |   | (193    | )            |  |   |             |   |  |        | (807    | ) |            |   | (551    | )            |  |   | (181         | ) |  |   |         |   |  |   | (732    | )
|Equity in net earnings affiliate                  |  |                                 | 438     |   |                                 |   |        |              |  |   |             |   |  |        | 438     |   |            |   | 507     |              |  |   |             |   |  |   |         |   |  |   | 507     |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                  |  |                                 | (3,305  | ) |                                 |   | (3,278  | )            |  |   |             |   |  |        | (6,583  | ) |            |   | (3,725  | )            |  |   | (2,702       | ) |  |   |         |   |  |   | (6,427  | )
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Income (loss) before income tax expense (benefit) |  |                                 | 60,446  |   |                                 |   | (5,586  | )            |  |   |             |   |  |        | 54,860  |   |            |   | 76,557  |              |  |   | (3,917       | ) |  |   |         |   |  |   | 72,640  |  
|Income tax expense (benefit)                      |  |                                 | 24,317  |   |                                 |   | (1,823  | )            |  |   |             |   |  |        | 22,494  |   |            |   | 31,869  |              |  |   | (1,523       | ) |  |   |         |   |  |   | 30,346  |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Net income (loss)                                 |  | $                               | 36,129  |   |                                 | $ | (3,763  | )            |  | $ |             |   |  | $      | 32,366  |   |            | $ | 44,688  |              |  | $ | (2,394       | ) |  | $ |         |   |  | $ | 42,294  |  
|                                                  |  |                                 |         |   |                                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  



10



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)



|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|------------------------------------------------- |  | ------------------------------ | --------- | - | ------------------------------ | - | ------- | ------------ |  | - | ------------ | - |  | ------ | --------- | - | ---------- | - | --------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | --------- | -
|                                                  |  | Nine Months Ended May 31, 2007 |           |   | Nine Months Ended May 31, 2006 |  
|                                                  |  | Issuer                         |           |   | Guarantors                     |   |         | Eliminations |  |   | Consolidated |   |  | Issuer |           |   | Guarantors |   |           | Eliminations |  |   | Consolidated |  
|Net sales                                         |  | $                              | 1,202,400 |   |                                | $ | 845,905 |              |  | $ | (383,630     | ) |  | $      | 1,664,675 |   |            | $ | 1,240,609 |              |  | $ | 807,692      |   |  | $ | (354,858 | ) |  | $ | 1,693,443 |  
|Costs of goods sold                               |  |                                | 1,107,571 |   |                                |   | 762,668 |              |  |   | (383,630     | ) |  |        | 1,486,609 |   |            |   | 1,119,244 |              |  |   | 728,434      |   |  |   | (354,858 | ) |  |   | 1,492,820 |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Gross profit                                      |  |                                | 94,829    |   |                                |   | 83,237  |              |  |   |             |   |  |        | 178,066   |   |            |   | 121,365   |              |  |   | 79,258       |   |  |   |         |   |  |   | 200,623   |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Expenses:                                         |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Selling, general and administrative expenses      |  |                                | 17,170    |   |                                |   | 83,612  |              |  |   |             |   |  |        | 100,782   |   |            |   | 17,170    |              |  |   | 77,250       |   |  |   |         |   |  |   | 94,420    |  
|Depreciation and amortization expenses            |  |                                | 6,873     |   |                                |   | 3,574   |              |  |   |             |   |  |        | 10,447    |   |            |   | 6,402     |              |  |   | 3,476        |   |  |   |         |   |  |   | 9,878     |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Total operating expenses                          |  |                                | 24,043    |   |                                |   | 87,186  |              |  |   |             |   |  |        | 111,229   |   |            |   | 23,572    |              |  |   | 80,726       |   |  |   |         |   |  |   | 104,298   |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Operating income (loss)                           |  |                                | 70,786    |   |                                |   | (3,949  | )            |  |   |             |   |  |        | 66,837    |   |            |   | 97,793    |              |  |   | (1,468       | ) |  |   |         |   |  |   | 96,325    |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Other income (expense):                           |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Interest expense, net                             |  |                                | (8,707    | ) |                                |   | (8,613  | )            |  |   |             |   |  |        | (17,320   | ) |            |   | (11,616   | )            |  |   | (6,799       | ) |  |   |         |   |  |   | (18,415   | )
|Other, net                                        |  |                                | (1,959    | ) |                                |   | (530    | )            |  |   |             |   |  |        | (2,489    | ) |            |   | (1,549    | )            |  |   | 948          |   |  |   |         |   |  |   | (601      | )
|Equity in net earnings affiliate                  |  |                                | 1,273     |   |                                |   |        |              |  |   |             |   |  |        | 1,273     |   |            |   | 1,412     |              |  |   |             |   |  |   |         |   |  |   | 1,412     |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|                                                  |  |                                | (9,393    | ) |                                |   | (9,143  | )            |  |   |             |   |  |        | (18,536   | ) |            |   | (11,753   | )            |  |   | (5,851       | ) |  |   |         |   |  |   | (17,604   | )
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Income (loss) before income tax expense (benefit) |  |                                | 61,393    |   |                                |   | (13,092 | )            |  |   |             |   |  |        | 48,301    |   |            |   | 86,040    |              |  |   | (7,319       | ) |  |   |         |   |  |   | 78,721    |  
|Income tax expense (benefit)                      |  |                                | 24,705    |   |                                |   | (4,901  | )            |  |   |             |   |  |        | 19,804    |   |            |   | 35,591    |              |  |   | (2,705       | ) |  |   |         |   |  |   | 32,886    |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  
|Net income (loss)                                 |  | $                              | 36,688    |   |                                | $ | (8,191  | )            |  | $ |             |   |  | $      | 28,497    |   |            | $ | 50,449    |              |  | $ | (4,614       | ) |  | $ |         |   |  | $ | 45,835    |  
|                                                  |  |                                |           |   |                                |   |         |              |  |   |              |   |  |        |           |   |            |   |           |              |  |   |              |   |  |   |          |   |  |   |           |  



11



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)



|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|---------------------------------------------------- |  | ------------------------------ | ------- | - | ------------------------------ | - | ------ | ------------ |  | ------------ | - |  | ------ | ------- | - | ---------- | - | ------- | ------------ |  | ------------ | ------ | - |  | - | - |  | - | ------- | -
|                                                     |  | Nine Months Ended May 31, 2007 |         |   | Nine Months Ended May 31, 2006 |  
|                                                     |  | Issuer                         |         |   | Guarantors                     |   |        | Eliminations |  | Consolidated |   |  | Issuer |         |   | Guarantors |   |         | Eliminations |  | Consolidated |       
|Net cash provided by (used in) operating activities  |  | $                              | 6,431   |   |                                | $ | 12,513 |              |  | $            |  |  | $      | 18,944  |   |            | $ | 21,031  |              |  | $            | (357   | ) |  | $ |  |  | $ | 20,674  |  
|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Cash flows from investing activities:                |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Additions to property, plant and equipment           |  |                                | (23,843 | ) |                                |   | (7,682 | )            |  |              |  |  |        | (31,525 | ) |            |   | (10,368 | )            |  |              | (2,973 | ) |  |   |  |  |   | (13,341 | )
|Additions to deferred turnaround costs               |  |                                | (4,244  | ) |                                |   | (95    | )            |  |              |  |  |        | (4,339  | ) |            |   | (845    | )            |  |              | (3     | ) |  |   |  |  |   | (848    | )
|Distributions received                               |  |                                | 1,000   |   |                                |   |       |              |  |              |  |  |        | 1,000   |   |            |   | 1,000   |              |  |              |       |   |  |   |  |  |   | 1,000   |  
|Proceeds from asset dispositions                     |  |                                |        |   |                                |   |       |              |  |              |  |  |        |        |   |            |   | 206     |              |  |              | 1,178  |   |  |   |  |  |   | 1,384   |  
|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Net cash used in investing activities                |  |                                | (27,087 | ) |                                |   | (7,777 | )            |  |              |  |  |        | (34,864 | ) |            |   | (10,007 | )            |  |              | (1,798 | ) |  |   |  |  |   | (11,805 | )
|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Cash flows from financing activities:                |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Proceeds from issuance of long-term debt             |  |                                | 130,711 |   |                                |   | 1,245  |              |  |              |  |  |        | 131,956 |   |            |   |        |              |  |              | 1,140  |   |  |   |  |  |   | 1,140   |  
|Dividends to stockholder                             |  |                                | (9,090  | ) |                                |   |       |              |  |              |  |  |        | (9,090  | ) |            |   | (6,559  | )            |  |              |       |   |  |   |  |  |   | (6,559  | )
|Principal reductions of long-term debt               |  |                                | (153    | ) |                                |   | (547   | )            |  |              |  |  |        | (700    | ) |            |   | (147    | )            |  |              | (325   | ) |  |   |  |  |   | (472    | )
|Deferred financing costs                             |  |                                | (788    | ) |                                |   |       |              |  |              |  |  |        | (788    | ) |            |   | (72     | )            |  |              |       |   |  |   |  |  |   | (72     | )
|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Net cash provided by (used in) financing activities  |  |                                | 120,680 |   |                                |   | 698    |              |  |              |  |  |        | 121,378 |   |            |   | (6,778  | )            |  |              | 815    |   |  |   |  |  |   | (5,963  | )
|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents |  |                                | 100,024 |   |                                |   | 5,434  |              |  |              |  |  |        | 105,458 |   |            |   | 4,246   |              |  |              | (1,340 | ) |  |   |  |  |   | 2,906   |  
|Cash and cash equivalents, beginning of year         |  |                                | 52,375  |   |                                |   | 6,822  |              |  |              |  |  |        | 59,197  |   |            |   | 31,195  |              |  |              | 12,009 |   |  |   |  |  |   | 43,204  |  
|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  
|Cash and cash equivalents, end of period             |  | $                              | 152,399 |   |                                | $ | 12,256 |              |  | $            |  |  | $      | 164,655 |   |            | $ | 35,441  |              |  | $            | 10,669 |   |  | $ |  |  | $ | 46,110  |  
|                                                     |  |                                |         |   |                                |   |        |              |  |              |   |  |        |         |   |            |   |         |              |  |              |        |   |  |   |   |  |   |         |  



12



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|5. | Segments of Business
|-- | --------------------



Intersegment revenues are calculated using estimated market prices and are eliminated upon consolidation. Summarized financial information regarding the
Companys reportable segments is presented in the following tables (in thousands):



|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|----------------------------- |  | ------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | --------- | - |  | - | --------- | -
|                              |  | Three Months EndedMay 31, |         |   | Nine Months Ended May 31, |  
|                              |  | 2007                      |         |   | 2006                      |   |         | 2007 |  |   | 2006      |  
|Net Sales                     |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Retail                        |  | $                         | 320,706 |   |                           | $ | 292,336 |      |  | $ | 842,533   |   |  | $ | 804,006   |  
|Wholesale                     |  |                           | 266,592 |   |                           |   | 320,630 |      |  |   | 822,142   |   |  |   | 889,437   |  
|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|                              |  | $                         | 587,298 |   |                           | $ | 612,966 |      |  | $ | 1,664,675 |   |  | $ | 1,693,443 |  
|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Intersegment Sales            |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Wholesale                     |  | $                         | 159,178 |   |                           | $ | 134,419 |      |  | $ | 380,258   |   |  | $ | 351,252   |  
|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Operating Income (loss)       |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Retail                        |  | $                         | (2,245  | ) |                           | $ | (2,004  | )    |  | $ | (2,889    | ) |  | $ | (2,349    | )
|Wholesale                     |  |                           | 63,688  |   |                           |   | 81,071  |      |  |   | 69,726    |   |  |   | 98,674    |  
|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|                              |  | $                         | 61,443  |   |                           | $ | 79,067  |      |  | $ | 66,837    |   |  | $ | 96,325    |  
|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Depreciation and Amortization |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|Retail                        |  | $                         | 1,128   |   |                           | $ | 1,112   |      |  | $ | 3,422     |   |  | $ | 3,326     |  
|Wholesale                     |  |                           | 2,342   |   |                           |   | 2,184   |      |  |   | 7,025     |   |  |   | 6,552     |  
|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  
|                              |  | $                         | 3,470   |   |                           | $ | 3,296   |      |  | $ | 10,447    |   |  | $ | 9,878     |  
|                              |  |                           |         |   |                           |   |         |      |  |   |           |   |  |   |           |  



|                                          |  |             |         |                |   |        
|----------------------------------------- |  | ----------- | ------- | -------------- | - | -------
|                                          |  | May 31,2007 |         | August 31,2006
|Total Assets                              |  |             |         |                |   |        
|Retail                                    |  | $           | 151,264 |                | $ | 143,881
|Wholesale                                 |  |             | 502,063 |                |   | 372,890
|                                          |  |             |         |                |   |        
|                                          |  | $           | 653,327 |                | $ | 516,771
|                                          |  |             |         |                |   |        
|Capital Expenditures (including non-cash) |  |             |         |                |   |        
|Retail                                    |  | $           | 5,642   |                | $ | 5,161  
|Wholesale                                 |  |             | 25,883  |                |   | 16,725 
|                                          |  |             |         |                |   |        
|                                          |  | $           | 31,525  |                | $ | 21,886 
|                                          |  |             |         |                |   |        



13



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|6. | Employee Benefit Plans
|-- | ----------------------



For the periods ended May 31, 2007 and 2006, net pension and other postretirement benefit costs were comprised of the following:



|                                      |  |                           |        |   |                                |   |        |      |  |      |       |  |   |      
|------------------------------------- |  | ------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | ---- | ----- |  | - | -----
|                                      |  | Pension Benefits          |        |   | Other Post-Retirement Benefits
|                                      |  | Nine Months Ended May 31, |        |   | Nine Months Ended May 31,     
|                                      |  | 2007                      |        |   | 2006                           |   |        | 2007 |  | 2006
|                                      |  | (in thousands)           
|Service cost                          |  | $                         | 1,971  |   |                                | $ | 2,325  |      |  | $    | 1,696 |  | $ | 1,835
|Interest cost on benefit obligation   |  |                           | 3,159  |   |                                |   | 3,121  |      |  |      | 2,544 |  |   | 2,118
|Expected return on plan assets        |  |                           | (3,198 | ) |                                |   | (2,875 | )    |  |      |      |  |   |     
|Amortization of transition obligation |  |                           | 105    |   |                                |   | 105    |      |  |      | 448   |  |   | 448  
|Amortization and deferral of net loss |  |                           | 558    |   |                                |   | 1,156  |      |  |      | 748   |  |   | 603  
|                                      |  |                           |        |   |                                |   |        |      |  |      |       |  |   |      
|Net periodic benefit cost             |  | $                         | 2,595  |   |                                | $ | 3,832  |      |  | $    | 5,436 |  | $ | 5,004
|                                      |  |                           |        |   |                                |   |        |      |  |      |       |  |   |      



As of May 31,
2007, $6,160,000 of contributions have been made to the Company pension plans for the fiscal year ending August 31, 2007.



|7. | Derivative Financial Instruments
|-- | --------------------------------



At August 31, 2006, the Company had net open future positions of 1,400,000 barrels of crude oil, all of which were sold during the first quarter of
2007. The resulting gain on the sale of the future positions amounted to $4,114,000, which was recorded in cost of sales. The Company has no open future positions at May 31, 2007.



|8. | Long-Term Debt
|-- | --------------



During May 2007, the Company sold an additional $125,000,000 of 101/2% Senior Unsecured Notes due 2012 for $130,312,500, resulting in a debt premium of $5,312,500 which will be
amortized over the life of the note using the interest method. These additional notes were issued under an indenture, dated as of August 6, 2004, pursuant to which $200,000,000 of notes of the same series were issued in August 2004. The net
proceeds of the offering were used for capital expenditures and general corporate purposes.



14



---

##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------



Forward Looking Statements



This Quarterly Report on Form 10-Q contains certain statements that constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward looking statements may include, among other things, United Refining Company and its subsidiaries current expectations with respect to future operating results, future performance of its
refinery and retail operations, capital expenditures and other financial items. Words such as expects, intends, plans, projects, believes, estimates, may,
will, should, shall, anticipates, predicts, and similar expressions typically identify such forward looking statements in this Quarterly Report on Form 10-Q.



By their nature, all forward looking statements involve risk and
uncertainties. All phases of the Companys operations involve risks and uncertainties, many of which are outside of the Companys control, and any one of which, or a combination of which, could materially affect the Companys results
of operations and whether the forward looking statements ultimately prove to be correct. Actual results may differ materially from those contemplated by the forward looking statements for a number of reasons.



Although we believe our expectations are based on reasonable assumptions
within the bounds of its knowledge, investors and prospective investors are cautioned that such statements are only projections and that actual events or results may differ materially depending on a variety of factors described in greater detail in
the Companys filings with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, reports on Form 8-K, etc. In addition to the factors discussed elsewhere in this Quarterly Report on Form 10-Q, the Companys actual
consolidated quarterly or annual operating results have been affected in the past, or could be affected in the future, by additional factors, including, without limitation:



| |  |  | the demand for and supply of crude oil and refined products;
| | - |  | ------------------------------------------------------------



| |  |  | the spread between market prices for refined products and market prices for crude oil;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | repayment of debt;
| | - |  | ------------------



| |  |  | general economic, business and market conditions;
| | - |  | -------------------------------------------------



| |  |  | risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in our markets;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the possibility of inefficiencies or shutdowns in refinery operations or pipelines;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | the availability and cost of financing to us;
| | - |  | ---------------------------------------------



| |  |  | environmental, tax and tobacco legislation or regulation;
| | - |  | ---------------------------------------------------------



| |  |  | volatility of gasoline prices, margins and supplies;
| | - |  | ----------------------------------------------------



| |  |  | merchandising margins;
| | - |  | ----------------------



| |  |  | labor costs;
| | - |  | ------------



| |  |  | level of capital expenditures;
| | - |  | ------------------------------



| |  |  | customer traffic;
| | - |  | -----------------



| |  |  | weather conditions;
| | - |  | -------------------



| |  |  | acts of terrorism and war;
| | - |  | --------------------------



| |  |  | business strategies;
| | - |  | --------------------



| |  |  | expansion and growth of operations;
| | - |  | -----------------------------------



| |  |  | future projects and investments;
| | - |  | --------------------------------



15



---

##### Table of Contents

| |  |  | future exposure to currency devaluations or exchange rate fluctuations;
| | - |  | -----------------------------------------------------------------------



| |  |  | expected outcomes of legal and administrative proceedings and their expected effects on our financial position, results of operations and cash flows;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | future operating results and financial condition; and
| | - |  | -----------------------------------------------------



| |  |  | the effectiveness of our disclosure controls and procedures and internal control over financial reporting.
| | - |  | ----------------------------------------------------------------------------------------------------------



All subsequent written and oral forward looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any such forward
looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date of this Quarterly Report on Form 10-Q.



Recent Developments



The Company successfully completed its comprehensive turnaround of the Crude unit and other related units, such as the desalter and vacuum tower. In
addition to normal maintenance work, the Company upgraded the units to allow them to meet the 30 ppm low sulfur gasoline requirement of the federal Clean Air Act which is effective January 1, 2008. The Company now has the ability to process
70,000/bpd of crude instead of the previous 65,000/bpd capacity. The upgrade also allows the Company to run up to 80% of its crude slate as heavy, sour crude. The Company will continue to utilize its proprietary linear program model to determine the
optimal crude slate and run rate for the facility.



The Company
continues to be impacted by the world crude market as it continues to remain volatile with prices on the New York mercantile Exchange (NYMEX) ranging from a low of $57.43/bbl in December to a high of $70.68/bbl in June. Average crude oil prices for
delivery in the fourth fiscal quarter of 2007 as of June 30, 2007 were averaging $67.96/bbl as compared to an average of $61.39/bbl for the third fiscal quarter of 2007, a $6.57 increase.



Industry-wide wholesale margins of gasoline have decreased in the fourth
fiscal quarter of 2007 as compared to the third fiscal quarter of 2007 while heating oil margins have increased slightly. As of June 30, 2007, margins, as indicated by the difference between prices of crude oil contracts traded on the NYMEX and
prices of NYMEX gasoline and heating oil contracts, were averaging $27.10 and $18.81 respectively for the fourth fiscal quarter of 2007. This represents a $1.46 decrease in wholesale margins for gasoline and a $3.43 increase in wholesale margins for
heating oil. The widely monitored 3-2-1 crackspread, consisting of two thirds gasoline margin and one third heating oil margin, increased $0.18 to $24.34.



Results of Operations



The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized
into two business segments: wholesale and retail.



The
wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment sells
petroleum products under the Kwik Fill®, Citgo® and Keystone® brand names through a network of Company-operated retail units and convenience and
grocery items through gasoline stations and convenience stores under the Red Apple Food Mart® and Country Fair® brand names.



A discussion and
analysis of the factors contributing to the Companys results of operations are presented below. The accompanying Consolidated Financial Statements and related Notes, together with the following information, are intended to supply investors
with a reasonable basis for evaluating the Companys operations, but should not serve as the only criteria for predicting the Companys future performance.



16



---

##### Table of Contents

Retail Operations:



|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------- |  | -------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                       |  | Three Months Ended May 31, |         |   | Nine Months Ended May 31, |  
|                                       |  | 2007                       |         |   | 2006                      |   |         | 2007 |  |   | 2006    |  
|                                       |  | (dollars in thousands)     |        
|Net Sales                              |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Petroleum                              |  | $                          | 268,572 |   |                           | $ | 242,438 |      |  | $ | 692,426 |   |  | $ | 660,943 |  
|Merchandise and other                  |  |                            | 52,134  |   |                           |   | 49,898  |      |  |   | 150,107 |   |  |   | 143,063 |  
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total Net Sales                        |  |                            | 320,706 |   |                           |   | 292,336 |      |  |   | 842,533 |   |  |   | 804,006 |  
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Costs of Goods Sold                    |  |                            | 294,179 |   |                           |   | 266,885 |      |  |   | 758,795 |   |  |   | 726,161 |  
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Gross Profit                           |  |                            | 26,527  |   |                           |   | 25,451  |      |  |   | 83,738  |   |  |   | 77,845  |  
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Operating Expenses                     |  |                            | 28,772  |   |                           |   | 27,455  |      |  |   | 86,627  |   |  |   | 80,194  |  
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Segment Operating Income / (Loss)      |  | $                          | (2,245  | ) |                           | $ | (2,004  | )    |  | $ | (2,889  | ) |  | $ | (2,349  | )
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Petroleum Sales (thousands of gallons) |  |                            | 95,504  |   |                           |   | 88,735  |      |  |   | 271,679 |   |  |   | 255,897 |  
|Gross Profit                           |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Petroleum (a)                          |  | $                          | 12,283  |   |                           | $ | 11,677  |      |  | $ | 43,020  |   |  | $ | 38,610  |  
|Merchandise and other                  |  |                            | 14,244  |   |                           |   | 13,774  |      |  |   | 40,718  |   |  |   | 39,235  |  
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|                                       |  | $                          | 26,527  |   |                           | $ | 25,451  |      |  | $ | 83,738  |   |  | $ | 77,845  |  
|                                       |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Petroleum margin ($/gallon) (b)        |  |                            | .1286   |   |                           |   | .1316   |      |  |   | .1583   |   |  |   | .1509   |  
|Merchandise margin (percent of sales)  |  |                            | 27.3    | % |                           |   | 27.6    | %    |  |   | 27.1    | % |  |   | 27.4    | %

---

|(a) | Includes the effect of intersegment purchases from the Companys wholesale segment at prices which approximate market.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(b) | Company management calculates petroleum margin per gallon by dividing petroleum gross margin by petroleum sales volumes. Management uses fuel margin per gallon calculations to
compare profitability to other companies in the industry. Petroleum margin per gallon may not be comparable to similarly titled measures used by other companies in the industry.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Comparison of Fiscal Quarters Ended May 31, 2007 and May 31, 2006



Net Sales



Retail sales increased during the fiscal quarter ended May 31, 2007 by
$28.4 million or 9.7% from $292.3 million to $320.7 million for the comparable period in fiscal 2006. The increase is due to the following: $26.1 million in petroleum sales and $2.3 million in merchandise sales. The petroleum sales increase
resulted from a 2.9% increase in retail selling prices per gallon, and a 6.8 million gallon or 7.6% increase in retail petroleum volume. Merchandise sales increase is primarily due to increased prepared food, beverages and cigarette sales due
to promotional campaigns and increased selling prices.



Costs of Goods Sold



Retail costs of goods sold increased during the fiscal
quarter ended May 31, 2007 by $27.3 million or 10.2% for the comparable period in fiscal 2006 from $266.9 million to $294.2 million. The increase is due to the following: petroleum purchases of $21.4 million due to an increase in prices and
volume, fuel tax of $3.5 million, merchandise cost of $1.8 million, and an inventory adjustment of $.6 million due mainly to price variances.



17



---

##### Table of Contents

Gross Profit



Retail gross profit increased during the fiscal quarter ended May 31, 2007 by $1.1 million or 4.2% for the comparable period in fiscal 2006. The
Company increased its petroleum margins by $.6 million or 5.2% and merchandise margin increased by $.5 million or 3.4%.



Operating Expenses



Retail operating expenses increased during the fiscal quarter ended May 31, 2007 by $1.3 million or 4.8% for the comparable period in fiscal 2006.
The increase is due to the following: payroll and related payroll costs of $.1 million; maintenance costs of $.3 million, environmental costs of $.1 million, credit/customer service costs of $.3 million, supplies of $.1 million,
insurance/utilities/tax cost of $.2 million and other miscellaneous costs of $.2 million.



Comparison of Nine Months Ended May 31, 2007 and May 31, 2006



Net Sales



Retail sales increased during the nine months ended May 31, 2007 by $38.5 million or 4.8% from $804.0 million to $842.5 million for the
comparable period in fiscal 2006. The increase was primarily due to $31.5 million in petroleum sales, and $7.0 million in merchandise sales. This merchandise sales increase is primarily due to increased prepared food, beverages and cigarette
sales due to promotional campaigns and increased selling prices. The petroleum sales increase resulted from a 15.8 million gallon or 6.2% increase in retail petroleum volume, offset by a 1.3% decrease in retail selling prices per gallon.



Costs of Goods Sold



Retail costs of goods sold increased during the nine months ended
May 31, 2007 by $32.6 million or 4.5% from $726.2 million to $758.8 million for the comparable period in fiscal 2006. The increase was primarily due to the following: fuel taxes of $9.1 million, freight costs of $.6 million, merchandise costs
of $5.6 million directly related to the increase in sales, petroleum purchases of $16.9 million due to an increase in volume and an inventory change of $.4 million due mainly to a 2% decrease in petroleum product costs.



Gross Profit



Retail gross profit increased during the nine months ended May 31, 2007 by $5.9 million or 7.6% for the comparable
period in fiscal 2006. The Company increased its petroleum margins by $4.4 million or 11.4% and merchandise margin increased by $1.5 million or 3.8%.



Operating Expenses



Retail operating expenses increased during the nine months ended May 31, 2007 by $6.4 million or 8.0% for the comparable period in fiscal 2006. The
primary contributing factors were (i) environmental costs of $1.8 million, due primarily to environmental remediation liability issues and (ii) increased payroll and related payroll costs of $1.6 million due to a minimum wage increase
effective January 1, 2006 from $6.00 to $6.75 per hour and another increase effective January 1, 2007 from $6.75 to $7.15 per hour for New York State and effective January 1, 2007 an increase of $5.15 to $6.25 per hour for
Pennsylvania. Combined these January 1, 2007 increases affected approximately 1,100 retail employees. Other increases were related to maintenance costs of $.7 million, credit/customer service costs of $.8 million, supplies of $.2 million,
legal/professional fees of $.1 million, equipment rental of $.1 million, insurance/utilities/taxes of $.5 million, advertising/promotion costs of $.3 million and other miscellaneous costs of $.3 million.



18



---

##### Table of Contents

Wholesale Operations:



|                                            |  |                            |         |                           |   |          |  |      |         |  |   |        
|------------------------------------------- |  | -------------------------- | ------- | ------------------------- | - | -------- |  | ---- | ------- |  | - | -------
|                                            |  | Three Months Ended May 31, |         | Nine Months Ended May 31,
|                                            |  | 2007 (a)                   |         | 2006                      |   | 2007 (a) |  | 2006
|                                            |  | (dollars in thousands)    
|Net Sales (b)                               |  | $                          | 266,592 |                           | $ | 320,630  |  | $    | 822,142 |  | $ | 889,437
|Costs of Goods Sold                         |  |                            | 194,605 |                           |   | 231,301  |  |      | 727,814 |  |   | 766,659
|                                            |  |                            |         |                           |   |          |  |      |         |  |   |        
|Gross Profit                                |  | $                          | 71,987  |                           | $ | 89,329   |  | $    | 94,328  |  | $ | 122,778
|                                            |  |                            |         |                           |   |          |  |      |         |  |   |        
|Operating Expenses                          |  |                            | 8,299   |                           |   | 8,258    |  |      | 24,602  |  |   | 24,104 
|                                            |  |                            |         |                           |   |          |  |      |         |  |   |        
|Segment Operating Income                    |  | $                          | 63,688  |                           | $ | 81,071   |  | $    | 69,726  |  | $ | 98,674 
|                                            |  |                            |         |                           |   |          |  |      |         |  |   |        
|Crude throughput (thousand barrels per day) |  |                            | 44.4    |                           |   | 61.8     |  |      | 59.3    |  |   | 65.1   
|                                            |  |                            |         |                           |   |          |  |      |         |  |   |        



Refinery Product
Yield

(thousands of barrels)



|                                                                                 |  |                            |   |  |                           |   |  |          |   |  |        |  
|-------------------------------------------------------------------------------- |  | -------------------------- | - |  | ------------------------- | - |  | -------- | - |  | ------ | -
|                                                                                 |  | Three Months Ended May 31, |   |  | Nine Months Ended May 31, |  
|                                                                                 |  | 2007 (a)                   |   |  | 2006                      |   |  | 2007 (a) |   |  | 2006   |  
|Gasoline and gasoline blendstock                                                 |  | 2,059                      |   |  | 2,448                     |   |  | 7,486    |   |  | 7,795  |  
|Distillates                                                                      |  | 987                        |   |  | 1,511                     |   |  | 4,019    |   |  | 4,986  |  
|Asphalt                                                                          |  | 1,142                      |   |  | 1,537                     |   |  | 4,592    |   |  | 4,881  |  
|Butane, propane, residual products, internally produced fuel and other (Other) |  | 534                        |   |  | 420                       |   |  | 1,720    |   |  | 715    |  
|                                                                                 |  |                            |   |  |                           |   |  |          |   |  |        |  
|Total Product Yield                                                              |  | 4,722                      |   |  | 5,916                     |   |  | 17,817   |   |  | 18,377 |  
|                                                                                 |  |                            |   |  |                           |   |  |          |   |  |        |  
|% Heavy Crude Oil of Total Refinery Throughput (c)                               |  | 58                         | % |  | 55                        | % |  | 57       | % |  | 53     | %
|                                                                                 |  |                            |   |  |                           |   |  |          |   |  |        |  



Product Sales

(dollars in thousands) (a)



|                                 |  |                            |         |                           |   |          |  |      |         |  |   |        
|-------------------------------- |  | -------------------------- | ------- | ------------------------- | - | -------- |  | ---- | ------- |  | - | -------
|                                 |  | Three Months Ended May 31, |         | Nine Months Ended May 31,
|                                 |  | 2007 (a)                   |         | 2006                      |   | 2007 (a) |  | 2006
|Gasoline and gasoline blendstock |  | $                          | 123,911 |                           | $ | 132,290  |  | $    | 333,838 |  | $ | 362,174
|Distillates                      |  |                            | 74,983  |                           |   | 106,962  |  |      | 264,051 |  |   | 324,626
|Asphalt                          |  |                            | 62,514  |                           |   | 76,855   |  |      | 210,932 |  |   | 189,539
|Other                            |  |                            | 5,184   |                           |   | 4,523    |  |      | 13,321  |  |   | 13,098 
|                                 |  |                            |         |                           |   |          |  |      |         |  |   |        
|                                 |  | $                          | 266,592 |                           | $ | 320,630  |  | $    | 822,142 |  | $ | 889,437
|                                 |  |                            |         |                           |   |          |  |      |         |  |   |        



Product Sales

(thousand of barrels) (a)



|                                 |  |                            |  |                           |  |          |  |       
|-------------------------------- |  | -------------------------- |  | ------------------------- |  | -------- |  | ------
|                                 |  | Three Months Ended May 31, |  | Nine Months Ended May 31,
|                                 |  | 2007 (a)                   |  | 2006                      |  | 2007 (a) |  | 2006  
|Gasoline and gasoline blendstock |  | 1,375                      |  | 1,553                     |  | 4,469    |  | 4,736 
|Distillates                      |  | 888                        |  | 1,245                     |  | 3,399    |  | 4,007 
|Asphalt                          |  | 1,463                      |  | 2,072                     |  | 4,849    |  | 5,645 
|Other                            |  | 128                        |  | 120                       |  | 353      |  | 339   
|                                 |  |                            |  |                           |  |          |  |       
|                                 |  | 3,854                      |  | 4,990                     |  | 13,070   |  | 14,727
|                                 |  |                            |  |                           |  |          |  |       



19



---

##### Table of Contents

---

|(a) | Scheduled refinery maintenance turnaround (March 18ththrough April17th).
|--- | ------------------------------------------------------------------------

|(b) | Sources of total product sales include products manufactured at the refinery located in Warren, Pennsylvania and products purchased from third parties.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | The Company defines heavy crude oil as crude oil with an American Petroleum Institute specific gravity of 26 or less.
|--- | -----------------------------------------------------------------------------------------------------------------------



Comparison of Fiscal Quarters Ended May 31, 2007 and May 31, 2006



Net Sales



Wholesale sales decreased during the three months ended May 31, 2007 by
$54.0 million or 16.9% for the comparable period in fiscal 2006 from $320.6 million to $266.6 million. The wholesale sales decrease was due to a 22.8% decrease in wholesale volume. This decrease was primarily a result of our scheduled refinery
maintenance turnaround.



Costs of Goods Sold



Wholesale costs of goods sold decreased during the three months ended
May 31, 2007 by $36.7 million or 15.9% for the comparable period in fiscal 2006 from $231.3 million to $194.6 million. The decrease in wholesale costs of goods sold during this period was primarily a result of our scheduled refinery turnaround.



Gross Profit



Wholesale gross profit decreased $17.3 million or 19.4% from $89.3 million
for the fiscal quarter ended May 31, 2006 to $72.0 million for the fiscal quarter ended May 31, 2007. This decrease was primarily the result of our scheduled refinery turnaround.



Operating Expenses



Operating expenses increased during the three months ended May 31, 2007 by $.04 million or .5% over such expenses for
the comparable period in fiscal 2006.



Comparison of Nine Months Ended
May 31, 2007 and May 31, 2006



Net Sales



Wholesale sales decreased during the nine months ended May 31, 2007 by
$67.3 million or 7.6% from $889.4 million to $822.1 million. The wholesale sales decrease was due to an 11.3% decrease in volume. This decrease was primarily a result of our scheduled refinery turnaround.



Costs of Goods Sold



Wholesale costs of goods sold decreased during 2007 by $38.8 million or 5.1% from $766.6 million to $727.8 million for the
comparable period in fiscal 2006. The decrease in wholesale costs of goods was primarily due to an 11.3% decrease in wholesale volume as a result of our scheduled refinery turnaround. Also contributing to the decrease was the sale of Motor Vehicle
Fuel Credits of $2.4 million and a gain on hedging activity of $4.1 million.



Gross Profit



Wholesale gross profit decreased
$28.5 million or 23.2% from $122.8 million for the nine months ended May 31, 2006 to $94.3 million for the nine months ended May 31, 2007. This decrease was primarily due to narrowing margins and our scheduled refinery turnaround.



20



---

##### Table of Contents

Operating Expenses



Operating expenses increased during the nine months ended May 31, 2007 by $.5 million or 2.1% over such expenses for the comparable period in fiscal
2006. This was due to increased professional services of $.4 million, and credit costs of $.3 million offset by decreases of other miscellaneous costs of $.2 million. For fiscal 2007 operating expenses were $24.6 million, or 3.0% of net wholesale
sales, compared to $24.1 million, or 2.7% of net wholesale sales for the comparable period in fiscal 2006.



Consolidated Expenses:



Interest
Expense, net



Net interest expense (interest expense less
interest income) for the three months ended May 31, 2007 remained relatively constant at $6.2 million for the comparable period in fiscal 2006.



Net interest expense (interest expense less interest income) for the nine months ended May 31, 2007 decreased $1.1 million or 5.9% to $17.3 million
from $18.4 million for the comparable period in fiscal 2006, primarily due to an increase in interest income.



Income Tax Expense / (Benefit)



The Companys effective tax rate for the three months ended May 31, 2007 was relatively constant at approximately 41.0% compared to a rate of 41.8% for the three months ended May 31, 2006.



The Companys effective tax rate for the nine months ended May 31,
2007 also remained relatively constant at approximately 41% compared to a rate of 41.8% for the nine months ended May 31, 2006.



Liquidity and Capital Resources



We operate in an environment where our liquidity and capital resources are impacted by changes in the price of crude oil and refined petroleum products,
availability of credit, market uncertainty and a variety of additional factors beyond our control. Included in such factors are, among others, the level of customer product demand, weather conditions, governmental regulations, worldwide political
conditions and overall market and economic conditions.



The
following table summarizes selected measures of liquidity and capital sources (in thousands):



|                          |  |              |         |                 |   |        
|------------------------- |  | ------------ | ------- | --------------- | - | -------
|                          |  | May 31, 2007 |         | August 31, 2006
|Cash and cash equivalents |  | $            | 164,655 |                 | $ | 59,197 
|Working capital           |  | $            | 277,206 |                 | $ | 146,723
|Current ratio             |  |              | 3.1     |                 |   | 2.0    
|Debt                      |  | $            | 359,369 |                 | $ | 228,014



Primary sources of
liquidity have been cash and cash equivalents, cash flows from operations and borrowing availability under a revolving line of credit. We believe available capital resources will be adequate to meet our working capital, debt service, and capital
expenditure requirements for existing operations.



Our cash and
cash equivalents consist of bank balances and investments in money market funds. These investments have staggered maturity dates, none of which exceed three months. They have a high degree of liquidity since the securities are traded in public
markets.



Net cash used in operating activities for the nine
months ended May 31, 2007 was $18.9 million compared to $20.7 million for the comparable nine months ended May 31, 2006. The primary use of cash was for working capital items, which were approximately $26.4 million for the nine months
ended May 31, 2007.



21



---

##### Table of Contents

Of the $26.4 million net cash used in working capital items $31.1 million was used to reduce accounts
payable, $17.4 million increased prepaid expenses (both related to crude costs and feedstocks) and $1.5 million was used to increase accounts receivable. This use of cash in working capital items was offset by providing cash through inventory
liquidation of $9.5 million, increasing income taxes payable by $6.1 million, increasing accrued liabilities by $5.1 million, increasing sales use and fuel taxes by $1.6 million and increasing amounts due affiliated companies by $1.3 million.



Changes in cash provided by or used for working capital during
the nine month period ended May 31, 2007 and May 31, 2006 are shown in the Consolidated Statements of Cash Flows to the Financial Statements, Part 1, Item 1.



Net cash used in investing activities of $34.8 million was used primarily for additions to property plant and equipment of
$31.5 million and an increase to deferred turnaround costs of $4.3 million offset by a $1.0 million distribution from investment in an affiliated company.



Net cash from financing activities of $121.4 million was primarily from proceeds of issuance of additional long term debt of $132.0 million offset by a
$9.1 million payment of a dividend to the stockholder, $.7 million principal reduction of long term debt and $.8 million increase in deferred financing related to issuance of additional long term debt.



We require a substantial investment in working capital which is susceptible
to large variations during the year resulting from purchases of inventory and seasonal demands. Inventory purchasing activity is a function of sales activity and turnaround cycles for the different refinery units.



Maintenance and non-discretionary capital expenditures have averaged
approximately $4 million annually over the last three years for the refining and marketing operations. Management does not foresee any increase in these maintenance and non-discretionary capital expenditures during fiscal year 2007.



Future liquidity, both short and long-term, will continue to be primarily
dependent on realizing a refinery margin sufficient to cover fixed and variable expenses, including planned capital expenditures. We expect to be able to meet our working capital, capital expenditure, contractual obligations, letter of credit and
debt service requirements out of cash flow from operations, cash on hand and borrowings under our Revolving Credit Facility with PNC Bank, N.A. as Agent Bank. In November 2006, we extended the term of our $100,000,000 Revolving Credit Facility
from May 9, 2007 to November 27, 2011, and amended certain terms and provisions thereof, including a reduction in the interest rate and a modification of certain covenants. Under the amended Revolving Credit Facility, interest is
calculated as follows: (a) for base rate borrowings, at the greater of the Agent Banks prime rate less an applicable margin of .5% to 0% or federal funds rate plus 1%; (b) for euro-rate borrowings, at the LIBOR rate plus an
applicable margin of 1.25% to 1.75%. The applicable margin will vary depending on a formula calculating our average unused availability under the facility. Under the Revolving Credit Facility in effect prior to the extension
and amendment, interest was calculated as follows: (a) for base rate borrowings, at the greater of the Agent Banks prime rate plus an applicable margin of .25% to .75% (8.50% at August 31, 2006) or federal funds rate plus
1%; (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 1.75% to 3.00%. The applicable margin varied with our facility leverage ratio calculation.



The Revolving Credit Facility is secured primarily by certain cash accounts,
accounts receivable and inventory. Until maturity, we may borrow on a borrowing base formula as set forth in the facility. We had outstanding letters of credit of $433,000 as of May 31, 2007. As of May 31, 2007, there were no outstanding
borrowings under the Revolving Credit Facility resulting in net availability of $99,567,000 and was secured by eligible collateral in excess of $164.7 million. The Companys working capital ratio exceeded 3.1 as of May 31, 2007.



Although we are not aware of any pending circumstances which
would change our expectation, changes in the tax laws, the imposition of and changes in federal and state clean air and clean fuel requirements and other



22



---

##### Table of Contents

changes in environmental laws and regulations may also increase future capital expenditure levels. Future capital expenditures are also subject to business
conditions affecting the industry. We continue to investigate strategic acquisitions and capital improvements to our existing facilities.



During May 2007, the Company sold an additional $125,000,000 of 101/2% Senior Unsecured Notes due 2012 for $130,312,500 resulting in a debt premium of $5,312,500 which will be
amortized over the life of the note using the interest method. These additional notes were issued under an indenture, dated as of August 6, 2004, pursuant to which $200,000,000 of notes of the same series were issued in August 2004. The net
proceeds of the offerings were used and will continue to be used for capital expenditures and general corporate purposes.



Federal, state and local laws and regulations relating to the environment affect nearly all of our operations. As is the case with all the companies
engaged in similar industries, we face significant exposure from actual or potential claims and lawsuits involving environmental matters. Future expenditures related to environmental matters cannot be reasonably quantified in many circumstances due
to the uncertainties as to required remediation methods and related clean-up cost estimates. We cannot predict what additional 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 interpreted with respect to products or activities to which they have not been previously applied.



Seasonal Factors



Seasonal factors affecting the Companys business may cause variation in the prices and margins of some of the Companys products. For example,
demand for gasoline tends to be highest in spring and summer months, while demand for home heating oil and kerosene tends to be highest in winter months.



As a result, the margin on gasoline prices versus crude oil costs generally tends to increase in the spring and summer, while margins on home heating oil
and kerosene tend to increase in winter.



Inflation



The effect of inflation on the Company has not been significant during the
last five fiscal years.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------



The Company uses its revolving credit facility to finance a portion of its operations. These on-balance sheet financial instruments, to the extent they
provide for variable rates, expose the Company to interest rate risk resulting from changes in the PNC Prime rate, the Federal Funds or LIBOR rate.



The Company has exposure to price fluctuations of crude oil and refined products. The Company does not manage the price risk related to all of its
inventories of crude oil and refined products with a permanent formal hedging program, but does manage its risk exposures by managing inventory levels.At August 31, 2006, the Company had net open future positions of 1,400,000 barrels of
crude oil, all of which were sold during the first quarter of 2007. The resulting gain on the sale of the future positions amounted to $4,114,000, which was recorded in cost of sales. The Company has no open future positions at May 31, 2007.



See also Recent Developments section of
Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations.



|ITEM 4. | CONTROLS AND PROCEDURES.
|------- | ------------------------



|(a) | Based on an evaluation by management of the Companys disclosure controls and procedures (as defined in Rules 13(a)  15(e) and 15(d)  15(e) of the
Securities Exchange Act of 1934, as amended), as of the end of
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



23



---

##### Table of Contents

| | the Companys fiscal quarter ended May 31, 2007, (the Evaluation Date) the Companys Chief Executive Officer and Chief Financial
Officer (its principal executive officer and principal financial officer, respectively) have concluded that the Companys disclosure controls and procedures were effective as of the Evaluation Date.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | There have not been any changes in the Companys internal controls over financial reporting that occurred during the Companys fiscal quarter ended May 31, 2007 that
has materially affected, or is reasonably likely to materially affect, the Companys internal controls over financial reporting.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



24



---

##### Table of Contents

PART IIOTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS.
|------- | ------------------



| | None.
| | -----



|ITEM 1A. | RISK FACTORS.
|-------- | -------------



| | There have been no material changes in our Risk Factors disclosed in the Form 10-K for the year ended August 31, 2006.
| | ----------------------------------------------------------------------------------------------------------------------



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|------- | ------------------------------------------------------------



| | None.
| | -----



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------



| | None.
| | -----



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- | ----------------------------------------------------



| | None.
| | -----



|ITEM 5. | OTHER INFORMATION.
|------- | ------------------



| | On May 1, 2007, the Company, its subsidiaries (collectively the Guarantors) and Morgan
Stanley & Co. Incorporated (Morgan Stanley) entered into a purchase agreement (the Purchase Agreement) pursuant to which, among other things, the Company sold to Morgan Stanley $125,000,000 aggregate principal amount
of its 101/2% Senior Notes due 2012. Morgan Stanley purchased the Senior Notes for a purchase price of 104.25%
of the principal amount thereof and the Company delivered the Senior Notes on May 4, 2007. The Senior Notes were issued pursuant to an indenture, dated August 6, 2004, pursuant to which $225,000,000 of notes of the same series were
previously issued. The Companys obligations under the Senior Notes will be severally and jointly guaranteed on a senior unsecured basis by each of the Guarantors. Morgan Stanley sold the Senior Notes pursuant to Rule 144A promulgated under the
Securities Act to qualified institutional buyers as defined thereunder.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | In connection with the Purchase Agreement, the Company, the Guarantors and Morgan Stanley entered into a registration rights agreement (the Registration Rights
Agreement), dated as of May 4, 2007, pursuant to which the Company shall offer the holders of the Senior Notes issued pursuant to the Purchase Agreement the opportunity to exchange (the Exchange Offer) all such notes for new
notes in an aggregate principal amount equal to the aggregate principal amount of and with terms substantially identical to the notes issued pursuant to the Purchase Agreement. The Company further agreed to file a registration within 135 days of the
sale of the Senior Notes relating to the new notes and to use its best efforts to cause such registration statement to be declared effective by the Securities and Exchange Commission on or prior to 225 days of the sale of the Senior Notes. The
Company shall use its best efforts to consummate the Exchange Offer within 45 days after the date on which the registration statement is declared effective. In certain circumstances, the Company may be obligated to file a shelf registration
statement pursuant to Rule 415 of the Securities Act within the timelines described above. In the event the Company fails to file a registration statement within these timelines, the Company shall be obligated to pay increasing liquidated damages up
to a maximum of $.20 per week per $1,000 principal amount of notes that remain unregistered.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



25



---

##### Table of Contents

|ITEM 6. | EXHIBITS.
|------- | ---------



|             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|             | 
|Exhibit 4.1  |  | Form of Note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|             | 
|Exhibit 4.2  |  | Form of Note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|             | 
|Exhibit 10.1 |  | Purchase Agreement, dated May 1, 2007, between United Refining Company (URC), Country Fair, Inc. (CFI), Kiantone Pipeline Corporation (KPC), Kiantone
Pipeline Company (KPCY), United Jet Center, Inc. (UJCI), United Refining Company of Pennsylvania (URCP), Kwik Fill Corporation (K-FC), Independent Gasoline and Oil Company of Rochester, Inc.
(IGOCRI), Bell Oil Corporation (BOC), PPC, Inc. (PPCI), Super Test Petroleum, Inc. (STPI), Kwik-Fil, Inc. (K-FI), Vulcan Asphalt Refining Corporation (VARC), collectively
the Companies and Morgan Stanley
|             | 
|Exhibit 10.2 |  | Registration Rights Agreement, dated May 4, 2007, between the Companies and Morgan Stanley                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|             | 
|Exhibit 31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|             | 
|Exhibit 31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|             | 
|Exhibit 32.1 |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                               



26



---

##### Table of Contents

SIGNATURES



Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date: July 16, 2007



UNITED REFINING COMPANY(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




27



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



KIANTONE PIPELINE CORPORATION(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




28



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



UNITED REFINING COMPANY OF PENNSYLVANIA(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




29



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



KIANTONE PIPELINE COMPANY(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




30



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



UNITED JET CENTER, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




31



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



KWIK-FILL CORPORATION(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




32



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




33



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



BELL OIL CORP.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




34



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



PPC, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




35



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



SUPER TEST PETROLEUM, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




36



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



KWIK-FIL, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




37



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



VULCAN ASPHALT REFINING CORPORATION(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




38



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:
July 16, 2007



COUNTRY FAIR, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident and Chief Operating Officer/s/  James E. MurphyJames E. MurphyVice President  Finance




39