CHANNEL INFRASTRUCTURE NZ LIMITED 
By R E F I N I N G C O M P A N Y L T D
Announcement to NZXNZRC Throughput and Margins Report for May-June 2011The Processing Fee for May-June 2011 of NZD 43 million was generated from a throughput of 7.1 million barrels for the two-month period.
The average Gross Refinery Margin (GRM) generated for the two month period was USD 7.07 per barrel with the average exchange rate for the two month period reported at USD/NZD 0.81. The weakening US dollar has continued to weigh heavily on the processing fee revenues earned by the Company since June 2011.
In the second week of August we will be completing a planned "pitstop" (short shutdown) to de- coke furnace tubes and replace some of the hydro-cracker catalyst. A seven day outtage of the hydro-cracker (residue upgrading process unit) will limit the Company’s ability to upgrade lower cost feedstock to high value products and result in a reduced Refiners Margin earned during July/August. Refinery customers have been notified with the shutdown scheduled into product supply plans to ensure that product availability isn’t affected.
Year to dateThe Gross Refining Margin 1), on a year to date basis, averages USD 6.56 per barrel and the exchange rate USD/NZD 0.78.
Historic AnalysisFive years history of Throughput, Margins and Processing Fees is attached as Appendix II and can also be found on the company’s website www.nzrc.co.nz.
1) Gross Refining Margin is defined as the typical market value of the products produced minus the typical market value of the feedstock used, expressed per barrel of feedstock used. The margin incorporates the cost of the hydrocarbon used for fuel and incurred as process losses. This may not be compatible with margins expressed by some parties in which the fuel and loss is excluded.
Appendix ITHE NEW ZEALAND REFINING COMPANY LIMITED STOCK EXCHANGE RELEASE
Throughput, Margin and Refining Income
Totals /bbl
Jan/Feb Throughput Barrels (mln) 6.7
Gross Refining Margin USD (mln) 43.8 6.59
Interim Cap/Floor adjustment USD/bbl 0.0 - USD Gross Refining Margin after Cap USD (mln) 43.8 6.59
USD Processing Fee USD (mln) 30.7 4.61
NZD Processing Fee billed to customers NZD (mln) 40.2
YTD Gross Refining Margin above Cap USD (mln) 0.0
Mar/Apr Throughput Barrels (mln) 7.3
Gross Refining Margin USD (mln) 43.8 6.04
Interim Cap/Floor adjustment USD/bbl 0.0 - USD Gross Refining Margin after Cap USD (mln) 43.8 6.04
USD Processing Fee USD (mln) 30.7 4.23
NZD Processing Fee billed to customers NZD (mln) 40.1
YTD Gross Refining Margin above Cap USD (mln) 0.0
May/Jun Throughput Barrels (mln) 7.1
Gross Refining Margin USD (mln) 49.9 7.07
Interim Cap/Floor adjustment USD/bbl 0.0 - USD Gross Refining Margin after Cap USD (mln) 49.9 7.07
USD Processing Fee USD (mln) 34.9 4.95
NZD Processing Fee billed to customers NZD (mln) 43.3
YTD Gross Refining Margin above Cap USD (mln) 0.0
Explanatory NoteThroughput Throughput is the amount of intake comprising of crude oil, residues, natural gas and blend stocks.
Throughput is measured in barrels. One barrel equates to approximately 159 litres.
Gross Refining Margin
The Gross Refining Margin is calculated in USD and is the difference between the value of finished products and the cost of feedstocks for each customer.
The values assigned to the products use Singapore pricing adjusted for NZRC quality and the cost of getting those products to New Zealand
The values assigned to the feedstocks use notional market values adjusted for the cost of getting these feedstocks to
New Zealand
The margin incorporates the cost of the hydrocarbon used for fuel and incurred as process losses.
Interim cap/floor adjustment
The Processing Agreements with our customers contain both Floor and Cap clauses. Both are calculated on a full calendar year basis.
The Floor is operative if the total Processing Fee billed to our customers falls below ~NZD118 million.
There is a Cap on the processing fee calculation when the USD Gross Refining Margin generated by any customer is in excess of USD9.00 per barrel on a year to date basis.
USD Gross Refining Margin After Cap
Is the Gross Refining Margin plus/minus any impacts of the Cap
USD Processing Fee
Is a calculation based on 70% of the USD Gross Refining Margin after adjustments for the Cap.
NZD Processing Fee billed to customers
The USD Processing Fee is converted into NZD and billed to customers as a NZD Processing Fee.
YTD Gross Refining Margin above Cap
NZRC can utilize this amount if the USD Gross Refinery Margin generated during the balance of the year falls below
USD9.00 on a customer by customer basis.
The balance can not be carried over from one year to the next.
Because NZRC's processing fee is calculated on 70% of the Gross Refining Margin, only 70% of this amount can be considered a contingent asset.
Note
The above information relates to refinery operations only. Revenue from Pipeline and other activities is not included.
Appendix IIThe New Zealand Refining Company LimitedStock Exchange ReleaseIntake/Production, Gross Refining Margin and Processing Fee2007 2008 2009 2010 2011Jan/Feb Barrels 000,s 6,067 6,400 5,900 7,009 6,652
USD GRM per barrel 7.90 9.00 8.88 6.85 6.59 NZD Processing Fee Billed 46,842 51,800 69,009 47,213 40,158 Mar/Apr Barrels 000,s 5,750 6,600 6,100 6,764 7,251 USD GRM per barrel 4.96 9.00 6.34 5.57 6.04 NZD Processing Fee Billed 29,277 52,100 49,290 37,255 40,058 May/Jun Barrels 000,s 6,199 6,500 6,500 6,387 7,057 USD GRM per barrel 10.39 9.00 4.66 3.73 7.07 NZD Processing Fee Billed 58,948 53,600 34,336 24,051 43,339 Jul/Aug Barrels 000,s 5,978 6,300 6,800 6,824 USD GRM per barrel 11.43 9.00 2.94 7.16 - NZD Processing Fee Billed 56,506 54,100 21,315 47,882 0 Sept/Oct Barrels 000,s 6,510 6,500 5,400 5,305 USD GRM per barrel 8.26 9.00 1.25 6.94 - NZD Processing Fee Billed 47,794 62,300 6,505 34,841 0 Nov/Dec Barrels 000,s 6,363 6,800 7,200 6,663 USD GRM per barrel 7.43 9.00 1.18 6.75 - NZD Processing Fee Billed 46,922 72,100 8,235 41,327 0Total Barrels 000,s 36,867 39,100 37,900 38,952 20,960USD GRM per barrel 8.14 9.00 4.16 6.17 6.56NZD Processing Fee Billed 286,289 346,000 188,690 232,569 123,554
