The U.S. oil refining industry has undergone significant consolidation in the past ten years. In 1994, the ten largest refiners, by capacity, owned approximately half of the total refining capacity in the United States. By 2004, the top ten U.S. refiners, by capacity, owned approximately 71% of total refining capacity.

The differential in price between a representative barrel of benchmark refined petroleum products, such as gasoline or heating oil, and a barrel of benchmark crude oil is known as a crack spread. The US Gulf Coast 5-3-2 crack spread represents the differential between Platt’s quotations for 3/5 of a barrel of US Gulf Coast Pipeline 87 Octane Conventional Gasoline and 2/5 of a barrel of US Gulf Coast Pipeline No. 2 Heating Oil (high sulfur diesel), on the one hand, and the first month futures price of 5/5 of a barrel of light sweet crude oil on the New York Mercantile Exchange, on the other hand.

According to the Department of Energy’s Energy Information Administration, or EIA, total U.S. demand for refined petroleum products increased 2.4% from 2003 to 2004, due primarily to an improving economy and a continued increase in the number of higher gasoline consumption vehicles driven by U.S. consumers. At the same time, gasoline supplies have tightened due to more stringent fuel specifications. These factors have caused refining margins in 2004 and 2005 to substantially exceed those experienced in 2003.

The Company operates a high conversion, moderate complexity independent refinery with a design crude distillation capacity of 60,000 bpd, along with an associated crude oil pipeline and light products loading facilities. The refinery is located in the city of Tyler in East Texas, and is the only supplier of a full range of refined petroleum products within a radius of approximately 115 miles.

The Tyler refinery is situated on approximately 100 out of a total of approximately 600 contiguous acres of land (excluding pipelines) the Company owns in Tyler and adjacent areas. The Tyler refinery includes a fluidized catalytic cracking unit and a delayed coker, enabling production of over 92% light products and less than 2% heavy oil products. It has the ability to produce and sell a full range of gasoline, diesel, jet fuels, liquefied petroleum gas, or LPG, and natural gas liquids, or NGLs. For the period April 29, 2005 through December 31, 2005, gasoline accounted for approximately 52% and diesel and jet fuels accounted for approximately 40% of the Tyler refinery’s production.

Cost of goods sold was $1,731.6 million for the year ended December 31, 2005, compared to $730.8 million for the year ended December 31, 2004, an increase of $1,000.8 million or 137.0%.

Operating expenses were $133.1 million for the year ended December 31, 2005, compared to $80.1 million for the year ended December 31, 2004, an increase of $53.0 million or 66.2%.

General and administrative expenses were $23.5 million for the year ended December 31, 2005, compared to $15.1 million for the year ended December 31, 2004, an increase of $8.4 million or 55.4%.