(Recasts; adds analyst's comments, updates share movement)
By Hezron Selvi
BANGALORE, Feb 19 (Reuters) - Oil refiner Holly Corp HOC.N reported fourth-quarter profit that beat Wall Street's expectations, helped by stronger sales of refined products, higher prices and refining margins at its Woods Cross refinery, and increased usage of lower grade crude oil.
Shares of the company rose more than 12 percent to $53.30 in midday trade on the New York Stock Exchange. They touched an intra-day high of $53.91.
The company posted net income of $49.8 million, or 90 cents a share, well above analysts' average estimate of 63 cents.
Sales and other revenue rose 54 percent to $1.44 billion.
Analysts on average were expecting revenue of $1.08 billion, according to Reuters Estimates.
Volumes of produced refined products sold during the quarter rose 6 percent to an average of 124,120 barrels per day, while the average sales price increased 40 percent to $99.67 per produced barrel sold.
The gross margin at the Woods Cross refinery, Utah, rose to $17.28 per produced barrel from $15.05 in the year-ago quarter.
"Woods Cross benefited by some very strong local supply/demand fundamentals in the Salt Lake area, as well as some very heavily discounted heavy crude feedstocks, both of which, were underestimated by the Street," analyst Jim Byrne of BMO Capital Markets said in an e-mail.
With higher usage of sour crude oil, which is a lower-grade crude, Holly managed to offset record high prices for light, sweet crude oil that is the U.S. benchmark.
During the quarter, 7 percent of the total feedstock used at the Woods Cross refinery was sour crude oil. The company did not use any sour crude at this refinery last year.
Holly increased its sour crude oil usage at the Navajo refinery in New Mexico to 81 percent, up from 76 percent in the prior-year quarter.
U.S. refiner Valero Energy Corp (VLO.N), which reported better-than-expected fourth-quarter profit last month, also managed to squeeze extra profit out of its refineries by processing lower-grade crudes.
However, latest quarter profit was partially offset by lower refinery gross margins at the company's Navajo Refinery, where gross margins fell to $7.95 per produced barrel from $11.30.
Holly's overall refinery gross margins fell to $9.83 per produced barrel, from $12.08 in the same quarter last year.
Gross margins at the Navajo Refinery were hurt by lower West Coast gasoline prices, which indirectly affect gasoline prices in the Phoenix market, one of Navajo's primary markets, the company said in a statement.
"Navajo was lower due to regional demand weakness in the Arizona/New Mexico markets, partially offset by the wide sweet-sour differentials for West Texas Sour vs. WTI (West Texas Intermediate crude)," Byrne said.
Summing up, Byrne said, "Overall, I think the 'Street' was too bearish and maybe didn't realize some of these market specific factors that benefited Holly more than others." (Editing by Amitha Rajan)