HF Sinclair posts highest profit since 2022, plans lubricants unit spin-off

HF Sinclair announced on Tuesday that the lubricants and specialty unit will operate a capital light business model. It plans to retire its base oil refining assets in Mississauga, Ontario, over the course of 2027.

This comes after the lubricants and specialties segment reported strong quarterly results, with its adjusted core profit surging to $207 million from $55 million a year earlier, driven by higher sales volumes and product prices.

The company expects to complete the unit's separation within 12 to 18 months in a tax-efficient manner. The separation would allow the remaining HF Sinclair to focus on its core refining and marketing operations, it said.

"(We) are surprised DINO is shutting down a base oil production facility in the current strong environment, which could indicate its belief the strength will not last," Jason Gabelman, analyst at TD Cowen, said in a note.