**Management’sDiscussion and Analysis**

**General**

          The terms “Frontier” and “we” refer toFrontier Oil Corporationand its subsidiaries. On November 16, 1999, we acquired the 110,000 barrel perday crude oil refinery located in El Dorado, Kansas from Equilon Enterprises LLC(“Equilon”). Operating results for this refinery are included in ourfinancial information only from November 17, 1999. Accordingly, absolute changesbetween periods are not and should not be expected to be comparable.

          We experience stronger demand for our refined products, particularly gasoline and asphalt, during the summer months due to seasonalincreases in highway traffic and road construction work. As a result, our operating results for the first and fourth calendarquarters are generally lower than those for the second and third quarters. Demand for diesel is more stable, but reduced roadconstruction and agricultural work during the winter months has an impact on demand for diesel.

**Results of Operations**

          2000 Compared with 1999. We had net income for the year ended December 31, 2000 of $37.2 million, or $1.34 per diluted share,compared to a net loss of $17.1 million, or $.62 per share for 1999.

          Operating income increased $75.9 million in 2000 versus 1999 due to increases in the refined product spread (revenues less material,freight and other costs) of $205.2 million and other income of $5.2 million, offset by increases in refinery operating expenses of$120.6 million, depreciation of $10.0 million and selling and general costs of $3.9 million.

          The refined product spread was $4.79 per barrel for the year ended December 31, 2000 compared to $3.42 per barrel in 1999. TheCheyenne Refinery refined product spread was $5.68 per barrel in 2000 compared to $4.46 per barrel in 1999. The improved productspread was due toimproved light product margins, an increase in the light/heavy spread and increased throughput, offset by the negative impact ofhigher crude oil prices on by-product margins. The El Dorado Refinery refined product spread was $4.42 per barrel in 2000. The ElDorado Refinery experienced extremely poor light product margins in early 2000 with gasoline margins improving during the second andthird quarters. Dieselmargins also improved during that time and remained higher for the fourth quarter. El Dorado also benefitted from improving crude oilspreads throughout the year 2000.

          In June 2000, gasoline prices in the mid-continent increaseddramatically. The gasoline produced from the El Dorado Refinery received thebenefit from the dramatic price increases. We believe that product shortages inthe Chicago-Milwaukee area, higher gasoline demand, problems experienced bycertain other refiners making reformulated gasoline (RFG) and pipelinerestrictions were the reasons for the price increases. The Federal TradeCommission (FTC) is conducting an investigation of the high gasoline prices inthe Chicago-Milwaukee and mid-continent areas. We are being investigated by theFTC and we are cooperating with the investigation. We do not believe we haveengaged in any unfair methods of competition. The majority of our El DoradoRefinery gasoline is sold to Equiva Trading Company, an affiliate of EquilonEnterprises LLC, at market prices. The Chicago-Milwaukee area is not our primarymarketing area and we do not market RFG. Since June 30, 2000, gasoline suppliesin the mid-continent have been able to eliminate the product shortfalls that hadoccurred in June.

          The light/heavy crude spread for the Cheyenne Refinery was $5.09 per barrel for the year ended December 31, 2000, increasing sharplyfrom $2.17 per barrel in 1999. The 1999 light/heavy spread had been the lowest ever experienced by Frontier for such a lengthy periodand was due to low crude oil prices resulting in a reduced supply of heavy crude oil as certain heavy crude oil was uneconomicto produce. The heavy crude oil spread for the Cheyenne Refinery is directly linked to pricing of Canadian heavy crude oil. As crudeoil prices increased dramatically in late 1999 and stayed higher during 2000, the widening light/heavy spread throughout 2000 was theresult of favorably priced Canadian heavy crude oil. Whether the heavy crude oil spread for the Cheyenne Refinery will remain at thehigh levels we are currently experiencing will depend on crude oil prices and Canadian and other worldwide heavy crude oil supplies.

          Refined product revenues increased $1.54 billion or 306% for the year ended December 31, 2000 compared to 1999 due to increased salesprices overall and increased sales volumes from the El Dorado Refinery acquisition. Average gasoline prices increased $11.48 perbarrel, average diesel prices increased $11.27 per barrel and there was a 173% overall increase in sales volumes. Yields of gasolineincreased 208% while yields of diesel and jet fuel increased 194% in 2000 compared to 1999.

          Other income increased $5.2 million to $7.3 million for the year ended December 31, 2000 compared to the same period in 1999 due to$4.6 million realized and unrealized futures trading gains on crude oil purchases, inventory positions and fixing margins on futureproduction, $1.1 million proceeds from the sale of excess catalyst platinum from the El Dorado Refinery and insurance proceeds of$300,000, which was related to a business interruption at the El Dorado Refinery in 2000. Other income in 1999 included $635,000 inlegal settlements and claims.

          Refining operating costs increased $1.45 billion or 299% for the year ended December 31, 2000 compared to 1999 due to the El DoradoRefinery acquisition and increases in material, freight and other costs and refinery operating expenses. Material, freight and othercosts were $30.41 per barrel in 2000 compared to $20.31 per barrel in 1999 primarily due to higher crude oil prices. The CheyenneRefinery material freight and other costs of $28.51 per barrel benefitted from an increased heavy crude oil utilization rate and anincreased light/heavy spread. The heavy crude oil utilization rate at the Cheyenne Refinery expressed as a percentage of the totalcrudeoil charge increased to 94% in the year ended December 31, 2000 from 87% in 1999. The light/heavy spread for the Cheyenne Refineryincreased 135% to average $5.09 per barrel for 2000. Refining operating expense averaged $3.07 per barrel in 2000. The CheyenneRefinery operating expense per barrel increased $.06 per barrel to $2.83 per barrel in 2000 due to increased yields and sales offsetby higher natural gas costs. The El Dorado Refinery operating expense was $3.17 per barrel in 2000. Despite higher natural gas costsin 2000, this is a decrease from the 1999 pro forma operating expense per barrel due to decreases in refinery personnel and our loweroverhead costs.

          Selling and general expenses increased$3.9 million or 41% for the year ended December 31, 2000 because of increased personnel and other costs relating to the El DoradoRefinery acquisition.

          Depreciation increased $10.0 million or 76% for the year ended December 31, 2000 as compared to 1999 because of the El Doradoacquisition and increases in capital investment.

          The interest expense increase of $21.4 million or 215% for the year ended December 31, 2000 was attributable to higher debt levelsincurred to purchase the El Dorado Refinery, higher revolving credit facility debt levels due to higher working capital requirementsas a result of the El Dorado Refinery acquisition and higher crude oil prices. Average debt increased to $295.7 million for the yearended December 31, 2000 from $108.1 million for the year ended December 31, 1999.

          Income tax expense of $2.1 million for the year ended December 31, 2000 included state current and deferred income taxes and federalalternative minimum taxes. Income tax expense of $1.9 million for the year ended December 31, 1999 was for deferred state income taxes.

          1999 Compared with 1998. We had a net loss for the year ended December 31, 1999 of $17.1 million, or $.62 per share, compared to netincome from continuing operations of $18.8 million, or $.65 per diluted share for 1998. Net income for the year ended December 31, 1998was $15.8 million, or $.55 per diluted share. The results for the year ended December 31, 1998 included a $3.0 millionextraordinary loss on early retirement of debt.

          Operating income decreased $30.9 million in 1999 versus 1998 due to a decrease in the refined product spread (revenues less material,freight and other costs) of $17.6 million, increases in refinery operating expenses of $10.2 million, depreciation of $2.3 millionand selling and general costs of $1.2 million, offset by an increase in other income of $456,000.

          The refined product spread was $3.42 perbarrel for the year endedDecember 31, 1999 compared to $5.77 per barrel in 1998. This decrease was due tosignificantly lower light product margins, a significant decrease in thelight/heavy crude spread and lower by-product margins due to higher crude oilprices, offset by inventory profits. High nationwide levels of gasoline anddiesel inventories kept margins at their lowest levels since 1995 during thefirst six months of 1999. Although margins improved during the third quarter of1999, they again turned downward in the fourth quarter. High crude oil pricesand weak weather-related product demand caused extremely low to negative fourthquarter margins.

          The light/heavy crude spread for the Cheyenne Refinery was $2.17 per barrel for the year ended December 31, 1999, the lowest everexperienced by Frontier for such a lengthy period. In comparison, the light/heavy spread for 1998 was $4.15 per barrel. Thetightening spread was caused by low crude oil prices during 1998 and the resulting reduced supply of heavy crude oil as certain heavycrude oil was uneconomic to produce. Although crude oil prices began to increase in the second quarter of 1999, the light/heavyspread was slow to widen. The heavy crude oil spread for the Cheyenne Refinery is directly linked to pricing of Canadian heavy crudeoil. Late in the fourth quarter, the Canadian heavy crude oil price spread began to widen due to seasonal declines in asphalt needs.

          The price of crude oil reached its low point in December 1998, when crude closed at below $10.75 per barrel on the New YorkMercantile Exchange and stayed at or below $13.00 per barrel during January and February 1999. Commencing in March 1999, with theannouncement of OPEC production cuts, the price of crude oil increased and ended December at $25.60 per barrel. Forthe year ended December 31, 1999, we realized a benefit to the refined product spread for the Cheyenne Refinery for inventory profitsof approximately $13.2 million because of increasing crude oil prices. For the year ended December 31, 1998, we realized a reductionto the refined product spread of approximately $5.0 million because of declines in crude oil prices. Inventories are recorded at thelower of cost on a first in, first out (FIFO) basis or market.

          Refined product revenues increased $203.8 million or 68% for the year ended December 31, 1999 compared to 1998 due to increased salesprices and increased salesvolumes from the El Dorado Refinery acquisition. Average gasoline prices increased $5.09 per barrel, average diesel prices increased$6.02 per barrel and there was a 36% overall increase in sales volumes. Yields of gasoline increased 58% while yields of dieselincreased 32% in 1999 compared to 1998.

          Other income increased $456,000 to $2.2 million for the year ended December 31, 1999 compared to the same period in 1998 due to a$516,000 legal settlement received in 1999.

          Refining operating costs increased $231.6 million or 91% for the year ended December 31, 1999 compared to 1998 due to the El DoradoRefinery acquisition and increases in material, freight and other costs and refinery operating expenses. Material, freight and othercosts were $20.31 per barrel in 1999 compared to $13.33 per barrel in 1998 primarily due to higher crude oil prices, the use of alower percentage of less expensive heavy crude oil and a lower light/heavy spread. Expressed as a percentage of the total crude oilcharge, the Cheyenne Refinery heavy crude oil utilization rate decreased to 87% in the year ended December 31, 1999 from 94% in 1998.The light/heavy spread for the Cheyenne Refinery decreased 48% to average $2.17 per barrel for 1999. Refinery operating expensesaveraged $2.71 per barrel consisting of $2.52 per barrel at the El Dorado Refinery (including chemical operations) and $2.77 perbarrel for the Cheyenne Refinery. The Cheyenne Refinery operating expense per barrel decreased $.25 per barrel to $2.77 per barrel in1999 due to higher throughput, lower chemical usage and lower maintenance costs.

          Selling and general expenses increased $1.2 million or 15% for the year ended December 31, 1999 because of increased staffing needsand other costs resulting from the El Dorado Refinery acquisition and increases in salaries and benefits.

          Depreciation increased $2.3 million or 22% for the year ended December 31, 1999 as compared to 1998 because of the El Doradoacquisition and increases in capital investment. The 1998 depreciation provision also included a write-off of certain equipmentreplaced in connection with turnaround work.

          The interest expense increase of $3.2 million or 48% for the year ended December 31, 1999 was attributable to higher debt levels usedto purchase the El Dorado Refinery and the crude oil, intermediate and finished product inventory of the El DoradoRefinery. Average debt increased to $108.1 million for the year ended December 31, 1999 from $79.2 million forthe year ended December 31, 1998.

          Income tax expense of $1.9 million for the year ended December 31, 1999 was for deferred state income taxes. In accordance withStatement of Financial Accounting Standards Board No. 109, “Accounting for Income Taxes”, deferred taxes are provided for the taxeffect of cumulative to date net taxable book-tax differences, offset by available net operating losses. While we have substantialnet operating losses available to offset federal income taxes, the El Dorado Refinery acquisition will result in a significantportion of future taxable income being apportioned to Kansas for state income tax purposes.

**Liquidity and Capital Resources**

          On November 5, 1999, we issued $190 million principal amount of 11-3/4% Senior Notes due 2009. The Notes were issued at a price of98.562%. Net proceeds of the offering were approximately $181.0 million. We used the net proceeds to fund the $170 million purchaseprice of the El Dorado Refinery and for general corporate purposes. During 2000, we purchased and are holding as treasury notes $13million principal amount of the 11-3/4% Senior Notes. During 1999, we also purchased the crude oil, intermediate product and therefined product inventory of the El Dorado refinery at closing for $53.1 million. We borrowed under the credit facility to helpfinance the inventory purchases.

          On February 9, 1998, we issued $70 million of 9-1/8% Senior Notes due 2006 and received net proceeds of approximately $67.9 million.During 2000, we purchased and are holding as treasury notes $5 million principal amount of the 9-1/8% Senior Notes. On February 10,1998, the Company called for redemption the remaining $24.8 million of its 12% Senior Notes and $46 million of its 7-3/4% ConvertibleSubordinated Debentures. This redemption was completed on March 12, 1998 resulting in the payment of $71.4 million, includingredemption premiums and the issuance of 83,535 shares of common stock. Under a stock repurchase plan in effect during early 1998,approved by the Board of Directors to purchase the approximate number of shares issued upon conversion of the Convertible Debentures,83,500 shares of common stock were repurchased by the Company for $651,000.

          On September 1, 1998, we announced that the Board of Directors had approved a new stock repurchase program of up to three millionshares of common stock. In late 2000, the Board of Directors increased this amount to a total of four million shares. In 1998,469,700 shares of common stock were purchased under the new authorization for $2.3 million and in 1999, 627,700 shares of commonstock were purchased for $3.4 million. In 2000, an additional 1,393,696 shares of common stock were purchased for approximately $9.2million, of which 1,248,500 shares were purchased under the program.

          Net cash provided by operating activities was $66.3 million for the year ended December 31, 2000 while $11.3 million cash was usedby operating activities for the year ended December 31, 1999. Working capital changesprovided $3.6 million of cash flows in 2000 while using $9.7 million of cash flows in 1999. The 1999 use reflects the purchase ofcrude oil, intermediate product and finished product inventory of the El Dorado Refinery.

          At December 31, 2000, we had $64.4 million of cash and $53.1 million available under the revolving creditfacility line of credit. We had working capital of $43.6 million at December 31, 2000.

          Capital expenditures for 2000 were $12.7 million which included $.3 million in additional El Dorado Refinery acquisitionexpenditures. Capital expenditures for 1999were $171.6 million for the El Dorado Refinery acquisition and $9.2 million for other capital expenditures. Capital expenditures ofapproximately $20 million are planned for 2001.

          We are highly leveraged. As of December 31, 2000, we have $263 million of total consolidated debt and shareholders’ equity of $81.4million. It is anticipated that cash generated from operating activities will be sufficient to meet our 2001 investment and debtobligations.

          Under certain conditions, the revolving credit facility restricts the transfer of cash in the form of dividends, loans or advances tothe Company from its subsidiaries. We do not believe these restrictions limit our current operating plans.

**Market Risks**

          Impact of Changing Prices. Our revenues and cash flows, as well as estimates of future cash flows are very sensitive to changes inenergy prices. Major shifts in the cost of crude oil and the price of refined products can result in large changes in the operatingmargin from refining operations. Energy prices also determine thecarrying value of inventory.

          Price Risk Management Activities. At times, we enter into commodity derivative contracts to manage our price exposure to ourinventory positions, our purchases offoreign crude oil and consumption of natural gas in the refining process as well as fix margins on certain future production. Thecommodity derivative contracts we use may take the form of futures contracts, collars or price swaps and are entered into withreputable counterparties. Since the El Dorado Refinery acquisition we use futures transactions to price foreign crude oil at theprice when the crude oil is processed by the El Dorado Refinery instead of whenpurchased. Foreign crude oil delivery times can exceed one month from when the purchase is made. In addition, we, at times, engage infutures transactions for the purchase of natural gas at fixed prices. The Refineries consume natural gas for energy purposes. Gainsand losses on futures contracts designated as hedges are recognized in refinery operating costs when the associated hedge transactionis consummated. We have increased our use of commodity derivativecontracts since the acquisition of the El Dorado Refinery to mitigate price risk on a portion of the higher combined inventory levelsof both the Cheyenne and El Dorado Refineries and on the foreign crude utilized by the El Dorado Refinery.

          Trading Activities. During 2000, we had the following commodity derivative contracts which were not being treated as accountinghedges for accounting purposes:

-          Swap contracts to fix margins on approximately 19,100 bpd of diesel to be sold in January 2001, 19,800 bpd of diesel to besold in February 2001 and 14,500 bpd of diesel to be sold in March 2001. As of December 31, 2000, we had recorded a $2.1 millionunrealized loss on these openpositions. During 2000, we recognized income of $2.1 million related to closed swap contracts to fix margins on unleaded gasoline.
        Derivative contract on approximately 223,000 barrels of unleaded gasoline to hedge butylene inventory builds at the ElDorado Refinery which will be drawn down in April and May 2001. As of December 31, 2000, we had recorded a $564,000 unrealized gainon these open positions.
        Derivative contracts on 500,000 barrels of crude oil to hedge excess inventory against price declines in January 2001. As ofDecember 31, 2000, we recorded a $737,000 unrealized gain on these open positions after realizing a $622,000 loss on similarpositions closed in December 2000.
        Derivative contracts on 864,000 barrels of crude oil for February 2001 to protect against price declines on foreign crudeoil purchases. As of December 31, 2000, we had recorded a $4.0 million unrealized gain on these open positions.
 

     Hedging Activities.

-          Natural Gas Collars. During September 2000, we purchased two costless collars for the purpose of hedging against natural gasprice increases by buying calls and selling puts for the November 2000 through March 2001 period. The first collar covers anaggregate of 38 MMBTU with a ceiling and floor prices of $6.50 and $4.29, respectively. The second collar covers an aggregate of 9MMBTU with a ceiling and floor price of $6.50 and $4.00, respectively. Through December 31, 2000 no gains or losses had beenrecorded related to the collars. At December 31, 2000, these collars had a fair value of $4.1 million. In the first quarter of 2001,we closed these natural gas positions and realized $2.4 million. Beginning January 1, 2001, we began accounting for these contractsas cash flow hedges as required by SFAS No. 133.
        Crude Purchases. At December 31, 2000, we had no open crude oil contracts being accounted for as hedges. During 2000, werecognized crude hedging losses of $6.0 million on derivative contracts.
        Natural Gas Purchases. During 2000, we recognized natural gas hedging gains of $195,000 during January through March.
 

          Interest Rate Risk. Borrowings under our revolving credit facility bear a current market rate of interest. Our approximately $65million of outstanding 9-1/8% Senior Notes, due 2006, have a fixed interest rate, and we have no current plans to redeem these notes.Our approximately $177 million principal of 11-3/4% Senior Notes outstanding, due 2009, also have a fixed interest rate.Accordingly, our long-term debt is not exposed to cash flow risk from interest rate changes. The estimated fair value ofthe 9-1/8% Senior Notes at December 31, 2000 was $57.8 million and the estimated fair value of the 11-3/4% Senior Notes was $175.2million.

**Environmental**

          Numerous local, state and federal laws, rules and regulations relating to the environment are applicable to our operations. As aresult, we fall under the jurisdiction of numerous state and federal agencies for administration and are exposed to the possibilityof judicial or administrative actions for remediation and/or penalties brought by those agencies. The Cheyenne Refinery is party toone consent decree requiring the investigation and, in certain instances, mitigation of environmental impacts resulting from pastoperational activities. The El Dorado Refinery is party to a consent decree regarding the implementation of a groundwater managementprogram. Equilon will be responsible for the cost of continued compliance with this order.We have obtained a ten-yearinsurance policy with $25 million coverage for environmental liabilities, with a$500,000 deductible. This insurance will reimburse us for losses related to someknown and some unknown pre-existing conditions at the El Dorado Refinery.Equilon and Frontier shared the premium costs of this policy. In addition,Equilon will be responsible for up to $5 million in costs (including insurancepremiums) relating to safety, health and environmental conditions that are notcovered under the ten-year insurance policy. There are currently no identifiedenvironmental remediation projects of which the costs can be reasonablyestimated. However, the continuation of the present investigative process, othermore extensive investigations over time or changes in regulatory requirementscould result in future liabilities. The effects to the future consolidatedfinancial position, results of operations or capital expenditures are unknown.

**Canadian Tax Assessment**

          Prior to the sale of our Canadian oil and gas operations in June 1997, we conducted business in Canada. As a result of an audit in1999 of our Canadian tax returns for the years 1995, 1996 and 1997 conducted by the Canada Customs and Revenue Agency (formerlyRevenue Canada), we were reassessed for approximately C$27 million of additional taxes. More than C$20 million of this reassessmentrelates to certain foreign exploration and development expenditure deductions. The Department of Finance in Canada has drafted andreleased proposed legislation that would eliminate this portion of the assessment. Approximately C$5 million of the assessmentrelates to the deductibility of certain interest costs in 1995, which were not challenged by the Canada Customs and Revenue Agencyin its audits of previous periods. Other deductions of approximately C$2 million comprise the balance of the assessment, which wassettled by us in 2000 through a cash payment of C$1.1 (US$751,000) and the application of some available tax pools. We have filed aNotice of Objection to portions of the assessment totaling approximately C$25 million and additionally, are awaiting, as is theCanada Custom and Revenue Agency, the passing of legislation that will resolve the foreign exploration and development expenditurededuction portion of the assessment, before arguing the remaining assessment. Thelegislation was included in a Bill read in the House of Commons in Canada in September 2000. However, Parliament closed its sessionbefore further action could take place as anelection was called. Parliament will reconvenein February 2001. We intend to vigorously contest the tax assessment and believe that we will be successful in its appeal, either atthe regulatory level or before the Courts. While we acknowledge the uncertainties associated with tax disputes, we currently believethat this matter will be resolved without a material effect on our financial position or results of operations.

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**Selected Quarterly Financial and Operating Data**(1)
                                          *(dollars in thousands except per share)**unaudited*
                                                      2000                                          1999
                                  -------------------------------------------    -----------------------------------------
                                   Fourth       Third      Second      First      Fourth     Third      Second      First
                                  ---------   ---------   --------   --------    --------   --------   --------   --------
Revenues .......................   $532,576   $536,179    $526,703   $449,699    $240,673   $116,444   $ 90,266   $ 56,217
Operating income (loss) ........      7,826     18,535      42,483      1,811     (18,028)    10,247      5,674     (3,142)
Net income (loss) ..............      1,274     10,111      31,903     (6,082)    (24,487)     8,358      3,914     (4,846)
Basic earnings (loss)
    per share ..................        .05        .37        1.16       (.22)       (.90)       .31        .14       (.18)
Diluted earnings (loss)
    per share ..................        .05        .36        1.13       (.22)       (.90)       .30        .14       (.18)
EBITDA(2) ......................     13,720     24,290      48,172      7,480     (13,686)    13,218      8,568       (301)
Net cash provided
    by (used in)
    operating activities .......     43,685    (10,596)     34,121       (864)    (19,335)    12,729      7,915    (12,641)
Refining operations
    Total charges (bpd) ........    149,824    162,771     155,221    156,245     100,785     45,773     45,100     36,378
    Gasoline yields (bpd) ......     75,972     77,237      74,074     79,901      49,002     17,437     17,600     15,366
    Diesel and jet fuel
             yields (bpd) ......     51,658     50,441      51,049     50,544      31,964     13,115     13,212     10,886
    Total product sales (bpd) ..    155,010    157,772     164,229    155,662      97,494     48,984     45,976     38,565
    Average light/heavy spread
        based on delivered crude
        costs for the Cheyenne
        Refinery (per bbl) .....   $   8.89   $   4.16    $   3.44   $   3.88    $   2.63   $   1.89   $   2.21   $   1.94

(1) Includes El Dorado Refinery financial and operating data from November 17, 1999.

(2) EBITDA represents income from continuing operations before interest expense, income tax and depreciation. EBITDA is not a
    calculation based upon generally accepted accounting principles; however, the amounts included in the EBITDA calculation are
    derived from amounts included in the consolidated financial statements of the Company. In addition, EBITDA should not be
    considered as an alternative to net income or operating income, as an indication of operating performance or as an alternative
    to operating cash flow as a measure of liquidity.
```

```
**Five-Year Financial Data**(1)
                                   *(dollars in thousands except per share)*

                                                 2000         1999        1998        1997        1996
                                              ----------   ---------   ---------   ---------   ---------
Revenues ..................................   $2,045,157   $ 503,600   $ 299,368   $ 376,418   $ 383,373
Operating income (loss) ...................       70,655      (5,249)     25,700      21,703       5,585
Income (loss) from continuing operations ..       37,206     (17,061)     18,818       7,812     (11,644)
Income (loss) from discontinued operations,
    net of taxes(2) .......................            -           -           -      15,160       4,752
Income (loss) before extraordinary item ...       37,206     (17,061)     18,818      22,972      (6,892)
Extraordinary loss, net of taxes ..........            -           -       3,013       3,917           -
Net income (loss) .........................       37,206     (17,061)     15,805      19,055      (6,892)
Basic earnings (loss) per share:
    Continuing operations .................         1.36        (.62)        .67         .28        (.43)
    Net income (loss) .....................         1.36        (.62)        .56         .69        (.25)
Diluted earnings (loss) per share:
    Continuing operations .................         1.34        (.62)        .65         .28        (.43)
    Net income (loss) .....................         1.34        (.62)        .55         .69        (.25)
EBITDA(3) .................................       93,662       7,799      36,410      30,873      14,603
Net cash (used by) provided by
    operating activities ..................       66,346     (11,332)     31,263      12,498       8,465
Working capital (deficit) .................       43,610      24,832      30,125      20,928      (3,752)
Total assets ..............................      588,213     521,493     182,026     177,915     239,865
Long-term debt ............................      239,583     257,286      70,000      70,572     145,928
Shareholders’ equity ......................       81,424      50,681      70,353      55,934      25,269
Capital expenditures from
    continuing operations .................       12,688     181,703      16,763       5,675       4,760

(1) Includes El Dorado Refinery financial data from November 17, 1999.

(2) Discontinued operations reflected in the above periods represent the Company’s Canadian oil and gas operating segment. On
    June 16, 1997, the Company completed the Canadian disposition.

(3) EBITDA represents income from continuing operations before interest expense, income tax and depreciation. EBITDA is not a
    calculation based upon generally accepted accounting principles; however, the amounts included in the EBITDA calculation are
    derived from amounts included in the consolidated financial statements of the Company. In addition, EBITDA should not be
    considered as an alternative to net income or operating income, as an indication of operating performance or as an alternative
    to operating cash flow as a measure of liquidity.
```

```
**Five-Year Operating Data**(1)

                                                        2000     1999     1998     1997     1996
                                                      -------   ------   ------   ------   ------
Charges (bpd)
    Light crude ...................................    35,605   10,250    2,174    3,162    4,322
    Heavy crude(2) ................................   105,529   39,315   32,303   31,967   31,677
    Other feed and blend stocks ...................    14,884    7,589    5,909    6,154    5,192
          Total charges ...........................   156,018   57,154   40,386   41,283   41,191
Manufactured product yields (bpd)
    Gasoline ......................................    76,795   24,923   15,738   17,060   16,825
    Diesel and jet fuel ...........................    50,924   17,340   13,097   12,856   13,712
    Chemicals .....................................     1,804      232        -        -        -
    Asphalt and other .............................    23,363   12,982   10,236   10,200    9,215
          Total manufactured product yields .......   152,886   55,477   39,071   40,116   39,752
Product sales (bpd)
    Gasoline ......................................    83,070   29,728   21,421   20,499   20,311
    Diesel and jet fuel ...........................    51,568   17,156   12,484   12,110   12,561
    Chemicals .....................................     1,964       44        -        -        -
    Asphalt and other .............................    21,556   10,965    8,797    7,949    7,306
          Total product sales .....................   158,158   57,893   42,702   40,558   40,178
Average sales price (per bbl)
    Gasoline ......................................   $ 38.09   $26.61   $21.52   $28.83   $28.78
    Diesel and jet fuel ...........................     37.19    25.92    19.90    27.22    28.89
    Chemicals .....................................     70.52    57.50        -        -        -
    Asphalt and other .............................     16.14    12.36    12.07    13.13    13.21
Operating margin information (per sales bbl)
    Average sales price ...........................   $ 35.20   $23.73   $19.10   $25.27   $25.98
    Material, freight and other costs .............     30.41    20.31    13.33    19.74    21.79
    Product spread ................................      4.79     3.42     5.77     5.53     4.19
    Operating expenses excluding depreciation .....      3.07     2.71     3.02     3.05     2.86
    Depreciation ..................................       .39      .61      .68      .61      .59
    Operating margin ..............................      1.33      .10     2.07     1.87      .74
Average light/heavy spread based on delivered
    crude costs for the Cheyenne Refinery (per bbl)   $  5.09   $ 2.17   $ 4.15   $ 3.54   $ 2.56

(1) Includes El Dorado Refinery operating data from November 17, 1999.

(2) Includes intermediate varieties of crude oil used by the El Dorado Refinery.
```

```
**Consolidated
                                    Statements of Operations***(in thousands except per share amounts)*

December 31,                                                2000          1999           1998
                                                         -----------   -----------    -----------
Revenues
    Refined products .................................   $ 2,037,840   $   501,438    $   297,662
    Other ............................................         7,317         2,162          1,706
                                                         -----------   -----------    -----------
                                                           2,045,157       503,600        299,368
                                                         -----------   -----------    -----------
Costs and expenses

    Refining operating costs .........................     1,938,162       486,329        254,733
    Selling and general expenses .....................        13,333         9,472          8,225
    Depreciation .....................................        23,007        13,048         10,710
                                                         -----------   -----------    -----------
                                                           1,974,502       508,849        273,668
                                                         -----------   -----------    -----------
Operating income (loss) ..............................        70,655        (5,249)        25,700
Interest expense, net ................................        31,374         9,947          6,732
                                                         -----------   -----------    -----------
Income (loss) before income taxes ....................        39,281       (15,196)        18,968
Provision for income taxes ...........................         2,075         1,865            150
                                                         -----------   -----------    -----------
Income (loss) before extraordinary item ..............        37,206       (17,061)        18,818
Extraordinary loss on retirement of debt, net of taxes             -             -          3,013
                                                         -----------   -----------    -----------
Net income (loss) ....................................   $    37,206   $   (17,061)   $    15,805
                                                         -----------   -----------    -----------
Basic earnings (loss) per share of common stock
    Before extraordinary item ........................   $      1.36   $      (.62)   $       .67
    Extraordinary loss ...............................             -             -           (.11)
                                                         -----------   -----------    -----------
    Net income (loss)  ...............................   $      1.36   $      (.62)   $       .56
                                                         -----------   -----------    -----------
Diluted earnings (loss) per share of common stock
    Before extraordinary item ........................   $      1.34   $      (.62)   $       .65
    Extraordinary loss ...............................             -             -           (.10)
                                                         -----------   -----------    -----------
    Net income (loss) ................................   $      1.34   $      (.62)   $       .55
                                                         -----------   -----------    -----------

The accompanying notes are an integral part of these financial statements.
```

```
**Consolidated
                                         Balance Sheets***(in thousands except share data)*

December 31,                                                             2000         1999
                                                                      ----------   ----------
Assets
Current assets:
    Cash, including cash equivalents of $62,593 and $35,771
             at December 31, 2000 and 1999, respectively ..........   $  64,446    $  38,345
    Trade receivables, less allowance for doubtful accounts of $500
             at December 31, 2000 and 1999 ........................      69,220       38,563
    Other receivables .............................................       8,905       14,512
    Inventory of crude oil, products and other ....................     125,481      100,359
    Other current assets ..........................................       4,467        1,211
                                                                      ----------   ----------
             Total current assets .................................     272,519      192,990
                                                                      ----------   ----------
Property, plant and equipment, at cost:
    Refineries and pipeline .......................................     389,874      377,613
    Furniture, fixtures and other equipment .......................       5,364        4,956
                                                                      ----------   ----------
                                                                        395,238      382,569
    Less - accumulated depreciation ...............................      92,245       69,261
                                                                      ----------   ----------
                                                                        302,993      313,308
Other assets ......................................................      12,701       15,195
                                                                      ----------   ----------
Total assets ......................................................   $ 588,213    $ 521,493
                                                                      ----------   ----------
Liabilities and Shareholders’ Equity

Current liabilities:
    Accounts payable ..............................................   $ 171,563    $ 121,385
    Revolving credit facility .....................................      23,000       26,000
    Accrued turnaround cost .......................................      17,531        8,763
    Accrued liabilities and other .................................      11,972        6,554
    Accrued interest ..............................................       4,843        5,456
                                                                      ----------   ----------
             Total current liabilities ............................     228,909      168,158
                                                                      ----------   ----------
Long-term debt ....................................................     239,583      257,286
Long-term accrued turnaround cost .................................      13,525       20,685
Post-retirement employee liabilities ..............................      17,847       17,287
Deferred credits and other ........................................       3,072        4,002
Deferred income taxes .............................................       3,853        3,394

Commitments and contingencies (Note 8)

Shareholders’ equity:
    Preferred stock, $100 par value, 500,000 shares authorized,
             no shares issued .....................................           -            -
    Common stock, no par, 50,000,000 shares authorized,
             29,190,004 shares and 28,542,330 shares issued in
             2000 and 1999, respectively ..........................      57,359       57,294
    Paid-in capital ...............................................      89,706       87,028
    Retained earnings (deficit) ...................................     (49,916)     (87,122)
    Treasury stock, 2,622,596 shares and 1,230,900 shares
             at December 31, 2000 and 1999, respectively ..........     (15,725)      (6,519)
                                                                      ----------   ----------
             Total shareholders’ equity ...........................      81,424       50,681
                                                                      ----------   ----------
Total liabilities and shareholders’ equity ........................   $ 588,213    $ 521,493
                                                                      ----------   ----------

The accompanying notes are an integral part of these financial statements.
```

```
**Consolidated
                                    Statements of Cash Flows***(in thousands)*

For the years ended December 31,                              2000        1999        1998
                                                            --------    --------    --------
Operating activities:
Net income (loss) .......................................   $ 37,206    $(17,061)   $ 15,805
Extraordinary loss on retirement of debt ................          -           -       3,013
Depreciation ............................................     23,007      13,048      10,710
Deferred finance cost and bond discount amortization ....      2,190         667         449
Allowance for doubtful accounts receivable ..............        533           -           -
Deferred income taxes ...................................        130       1,915        (419)
Other ...................................................       (285)       (156)        (10)

Changes in components of working capital from operations:
    (Increase) decrease in receivables ..................    (25,583)    (42,054)      6,183
    (Increase) decrease in inventory ....................    (25,122)    (73,233)      7,397
    (Increase) decrease in other current assets .........     (2,927)       (293)        831
    Increase (decrease) in accounts payable .............     49,551      97,382      (9,196)
    Increase (decrease) in accrued liabilities and other       7,646       8,453      (3,500)
                                                            --------    --------    --------
    Net cash provided by (used in) operating activities .     66,346     (11,332)     31,263
                                                            --------    --------    --------
Investing activities:
Acquisition of El Dorado Refinery .......................          -     171,627)          -
Additions to property, plant and equipment ..............    (12,688)     (9,215)    (16,763)
Other ...................................................          -        (861)          -
                                                            --------    --------    --------
    Net cash provided by (used in) investing activities .    (12,688)    181,703)    (16,763)
                                                            --------    --------    --------
Financing activities:
Borrowings:
    11-3/4% Senior Notes ................................          -     187,268           -
    9-1/8% Senior Notes .................................          -           -      70,000
    Revolving credit facility ...........................          -      22,200       3,800
Payments of debt:
    12% Senior Notes, including redemption premium ......          -           -     (25,423)
    7-3/4% Convertible Subordinated Debentures,
             including redemption premium ...............          -           -     (45,971)
    11-3/4% Senior Notes ................................    (13,010)          -           -
    9-1/8% Senior Notes .................................     (5,025)          -           -
    Revolving credit facility ...........................     (3,000)          -           -
Debt issuance costs .....................................          -      (8,953)     (2,575)
Issuance of common stock ................................      2,743         739         816
Purchase of treasury stock ..............................     (9,215)     (3,361)     (2,933)
Other ...................................................        (50)       (102)       (360)
                                                            --------    --------    --------
Net cash provided by (used in) financing activities .....    (27,557)    197,791      (2,646)
                                                            --------    --------    --------
Increase in cash and cash equivalents ...................     26,101       4,756      11,854
Cash and cash equivalents, beginning of period ..........     38,345      33,589      21,735
                                                            --------    --------    --------
Cash and cash equivalents, end of period ................   $ 64,446    $ 38,345    $ 33,589
                                                            --------    --------    --------

The accompanying notes are an integral part of these financial statements.
```

```
**Consolidated Statements of
                                                Changes in Shareholders’ Equity***(in thousands except share data)*

                                   Common Stock            Treasury Stock                 Accumulated
                              ----------------------    ---------------------                Other       Retained
                                Number of                 Number                Paid-In  Comprehensive   Earnings
                              Shares Issued   Amount     of Shares    Amount    Capital      Income      (Deficit)    Total
                              -------------  -------    -----------  --------   --------    ---------    ---------   --------
December 31, 1997 ...........   28,111,289   $57,251       (52,500)  $   (236)  $ 84,785    $       -    $(85,866)   $ 55,934
Net income ..................            -         -             -          -          -            -      15,805      15,805
Shares issued under:
    Stock option plan .......      190,760        19             -          -        797            -           -         816
    Debentures converted ....       83,535         8             -          -        723            -           -         731
Shares purchased under
    stock repurchase plans(1)            -         -      (553,200)    (2,933)         -            -           -      (2,933)
                              -------------  -------    -----------   -------   --------    ---------    ---------   --------
December 31, 1998 ...........   28,385,584    57,278        (3,169)    (3,169)    86,305            -     (70,061)     70,353
                              -------------  -------    -----------   -------   --------    ---------    ---------   --------
Net loss ....................            -         -             -          -          -            -     (17,061)    (17,061)
Shares issued under:
    Stock option plan .......      131,746        13             -          -        565            -           -         578
    Directors’ stock plan ...            -         -         2,500         11          -            -           -          11
    Other stock issuances ...       25,000         3             -          -        158            -           -         161
Shares purchased under
    stock repurchase plans(1)            -         -      (627,700)    (3,361)         -            -           -      (3,361)
                              -------------  -------    -----------   -------   --------    ---------    ---------   --------
December 31, 1999 ...........   28,542,330    57,294    (1,230,900)    (6,519)    87,028            -     (87,122)     50,681
                              -------------  -------    -----------   -------   --------    ---------    ---------   --------
Net income ..................            -         -             -          -          -            -      37,206      37,206
Shares issued under:
    Stock option plan .......      647,674        65      (145,196)    (1,013)     2,678            -           -       1,730
    Directors’ stock plan ...            -         -         2,000          9          -            -           -           9
Shares purchased under
    stock repurchase plans               -         -    (1,248,500)    (8,202)         -            -           -      (8,202)
                              -------------  -------    -----------   -------   --------    ---------    ---------   --------
December 31, 2000 ...........   29,190,004   $57,359    (2,622,596)  $(15,725)  $ 89,706    $       -    $(49,916)   $ 81,424
                              -------------  -------    -----------   -------   --------    ---------    ---------   --------

The accompanying notes are an integral part of these financial statements.
```

**Notes to Consolidated Financial Statements**

**1**