Corral Petroleum Holdings AB (publ) Business Update ... - Preem

the availability and worldwide inventory levels of crude oil and refined products;increased trading by financial institutions in the commodity markets;the availability, price and suitability of competitive fuels;evolution of worldwide capacity and, in particular, refining capacity that relates to the petroleum products werefine;the extent of government regulation, in particular, as it relates to environmental policy;changes in the mandatory product specifications of the European Union and governmental authorities forrefined petroleum products such as the EU Fuel Quality Directive;market imperfections caused by regional price differentials;local market conditions and the level of operations of other refineries in Europe;the cost and availability of transportation for feedstocks and for refined petroleum products and the ability ofsuppliers, transporters and purchasers to perform on a timely basis or at all under their agreements (includingrisks associated with physical delivery);seasonal demand fluctuations;expected and actual weather conditions and natural disasters;changes in technology; andthe impact of environmental regulations.These external factors and the volatile nature of the energy markets make oil-refining margins volatile. We estimatethat a change of $1.00 per barrel in our refining margins would result in a corresponding change in our EBITDA ofapproximately SEK 800 million. During periods of rising crude oil prices, the cost of replenishing our crude oil inventoriesincreases and, thus, our working capital requirements similarly increase. Generally, an increase or decrease in the price ofcrude oil results in a corresponding increase or decrease in the price of refined products, although the timing and magnitudeof these increases and decreases may not correspond. During periods of excess inventories of refined products, crude oilprices can increase significantly without corresponding increases in refined products prices and, in such a case, refiningmargins will be adversely affected. Differentials in the timing and magnitude of movements in crude oil and refined productprices could have a significant short-term impact on our refining margins and our business, financial condition and results ofoperations.In addition, the volatility in costs of fuel and other utility services, principally electricity, used by our refineriesaffects operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our control,such as supply and demand for fuel and utility services in both local and regional markets. Future increases in fuel and utilityprices may have a negative effect on our results of operations.Increases in global refining and conversion capacity could increase the competition we face and harm our business.Positive trends in the market for petroleum products in recent years have encouraged companies to increase theirrefining and conversion capacity. Although the implementation of any such capacity increases requires some time, furtherincreases in global refining and conversion capacity that are not matched by increased demand can be expected to result inheightened competition, which could have a material adverse effect on our business, financial condition or results ofoperations.Unfavorable general economic conditions have had and may continue to have a negative effect on our business, results ofoperations, financial condition, and future growth prospects.The economies of Europe and elsewhere have experienced extreme pressure and disruption since August 2007, duelargely to the stresses affecting the global financial system, which accelerated significantly in the second half of 2008 andinto the first quarter of 2009. Most major European countries, the United States and Japan suffered severe recessions thathave had (and may continue to have) an adverse effect on consumer and business confidence and expenditure. Lower levelsof economic activity during periods of recession often result in declines in energy consumption, including declines in thedemand for and consumption of our refined products. This has caused and could continue to cause our revenues and marginsto decline and could negatively affect our refining margins and our business, financial condition and results of operations.6