2 HIGH YIELD RESEARCH

Greg Imbruce (203) 708-5804 gimbruce@jefco.com

REFINING & MARKETING

ENERGY

October 6, 2004

Crown Central Petroleum Corp.

High-Octane
Amt. O/S Seniority Sr. Notes Cpn. 10.875% Mty. 2/1/05 $MM $125.0 Rating Caa3 / NR Date 11/3/04

(ROSEMO, Private) Strong Buy

Next Call Price 100.00 Price 90.0 CY 12.08%

Yield to Worst YTW 46.15% STW 4,435 Yrs. 0.3

Cpn. Freq. Nxt. Cpn. Dt. 2 - 2/1/05

Jefco Rec. Strong Buy

COMPANY OVERVIEW
Crown Central Petroleum Corporation (Crown), based in Baltimore, Maryland, is an independent refiner and marketer of petroleum products in the U.S., privately owned by the Rosenberg family through its parent company, Rosemore, Inc. (Rosemore). The Company has been in liquidation mode since early 2003 and through 2Q04 sold substantially all of its retail sites (gasconvenience stations) and most of its product terminals, with the balance expected to close in 3Q04. We understand the Company is currently in negotiations on its remaining assets - the Pasadena and Tyler refineries. These two medium complexity Gulf Coast refineries have a combined capacity of 152,000 barrels of crude oil per day (BPD): Pasadena (Pasadena, TX) is a 100,000 BPD facility (8.4 Nelson Complexity), and Tyler (Tyler, TX), a 52,000 BPD facility (9.0 Nelson Complexity). During 2003, Pasadena and Tyler averaged production output of 76,075 BPD (76% Utilization) and 52,534 BPD (100%+ Utilization), respectively. Both refineries are operated to generate a product mix of approximately 88% higher margin fuels (gasoline, highway diesel and jet fuel, and home heating oil). When operating to maximize the production of light products, the product mix at both refineries is approximately 55% gasoline, 33% distillates (diesel, home heating oil, jet fuel, and kerosene), 6% petrochemical feedstocks, and 6% slurry oil and petroleum coke. Rosemore Crown is a wholly owned subsidiary of Rosemore Holdings, Inc., which is a wholly owned subsidiary of Rosemore, a privately held Maryland corporation. Rosemore itself is owned by the Rosenberg family and was formed by the restructuring of American Trading and Production Corporation. The Rosenbergs own 1 share or 100% of Rosemore Holdings, Inc. In 2001, the Rosenberg family acquired the 50% of Crown they didnt already own for $10.50 per share or approximately $53 mm after beating out a competing bid for control from rival Apex Oil. Crowns common stock traded on the AMEX under the ticker symbols CNP A and CNP B until the Company was taken private in March 2001.

INDEX
Recommendation Good Times Capital Structure Liquidity Enterprise Valuation Asset Coverage Assets Liabilities Financial Results Credit Statistics Crack Spreads CapEx 2 2 3 4 5 6 7 9 11 12 13 14 APPENDICES: A: Refinery Valuation Assumptions B: Refinery DCF Sensitivity Tables C: Refining & Marketing Comparables D: Refinery Full Descriptions 16 17 18 19

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Energy Refining & Marketing

RECOMMENDATION

We recommend Crown Central Petroleum Corp.s (Crown) 10.875% Sr. Notes 05 (Sr. Notes) as a Strong Buy at 90 due to the tremendous upside (46+% IRR) in the case Crown meets the February 2005 par maturity, which we view as a likely scenario. We envision that if the refineries are not sold by year-end, the Company would attempt to issue $60-$85 mm in New Sr. Secured Notes (New Notes) that we expect would be well received noting current market strength, credit statistics that would be in-line with comparables, and a 1st lien position supported by 2x asset coverage. We, therefore, currently value the Sr. Notes at 97 utilizing a 20% IRR target. In our view, the downside is not so much asset value as it is timing the Sr. Notes provide more than a 20% IRR even if the sales of the refineries are delayed until year-end 2005 and Noteholders agree to extend the maturity absent New Notes. We believe the Rosenbergs, the sole shareholder, will continue to take the necessary actions to avoid default and fund maturity of the Sr. Notes in order to preserve their equity value, which we value at $35 mm (excluding any value for the Companys NOLs). Additionally, we anticipate the Noteholder Group, apparently headed by the Quadrangle Group, will provide the necessary flexibility to avoid a fire sale of the refineries. We expect the Noteholder Group will support a secured refinancing by exchanging their $50 mm in Sr. Notes (40% of the amount outstanding) for a similar amount of New Notes. We antiicipate the New Notes would be secured by the unencumbered refining assets (the Bank Facility is currently secured only by working capital). In positioning the Company for such a transaction, Crown first needs to settle with the Pension Benefit Guaranty Corporation (PBGC) and use $50-$66 mm of its $130 mm in cash at year-end to restore the underfunded pension.
IRR SENSITIVITY Sr. Notes Px 90% Maturity 43.4% 12/31/05 20.1% 91% 39.4% 19.0% 92% 35.5% 18.0% 93% 31.8% 17.0% 94% 28.2% 16.0% 95% 24.7% 15.1% 96% 21.4% 14.1% 97% 18.7% 13.4% 98% 15.7% 12.5% 99% 100% 12.1% 9.2% 11.4% 10.5%

The following supports our recommendation: Multiple Near-Term Catalysts (i) Settlement with the Pension Benefit Guaranty Corporation (PBGC); (ii) Sale of the Companys remaining refining assets, which we understand from industry sources are underway and that Lyondell Chemical Company (NYSE: LYO) may be the buyer of both; and (iii) the Sr. Notes maturity. Noteholder Group Limits Default Risk - The Noteholder Group, represented by Petrie Parkman as their financial advisor, recently entered into a Confidentiality Agreement and an agreement with the Company regarding the reimbursement of fees and expenses, to formulate a transaction that we believe limits default risk. Adequate Asset Coverage We estimate the Sr. Notes asset coverage is 1.3x to 1.5x after incorporating $93 mm of Sr. Obligations (Pension, Environmental, and Severance) with upside in response to the improving refining market; Cash Rich - The $156 mm in completed asset sales exceeded our $126 mm expectation and assisted the Company in eliminating bank debt and building a $105 mm cash balance at the end of 2Q04. Improved Credit Statistics - Crown Central reported excellent 2Q04 results in response to record Crack Spreads for the period as 2Q04 EBITDA (LIFO) jumped to $21.2 mm from $9.8 mm in the prior quarter and $6.4 mm last year. Crowns LTM EBITDA improved to $37.4 mm vs. $22.7 mm in the prior quarter, resulting in dramatically improved credit statistics of 2.8x Net Debt Leverage and 2.4x Cash Interest Coverage. Attractive Valuation - Buying the Sr. Notes at 90 creates the Company at 2.1x 04E EBITDA (59% discount to comparables), and on a per unit basis, at $33 per Complexity Barrel (Bbl) and $285 per Capacity Bbl, both a 90% discount to historical transaction values of $250-$400 and $1,000-$6,000, respectively.

GOOD TIMES
Times are good in the US refining industry - higher nationwide crack spreads are being driven by stronger fundamentals as a result of reduced capacity in response to costs associated with new stringent sulfur content reductions under the Clean Air Act. The NYMEX 3-2-1 Gulf Coast Crack Spread (Crack Spread) averaged $6.25/Bbl in 3Q04, 17% above last years $5.32/Bbl. Additionally, the $7.23/Bbl YTD (through 9/30/04) average is 49% and 62% above the same period for 2003 ($4.86/Bbl) and the 4-Yr. Average ($4.45/Bbl), respectively. The industrys health is evidenced by talk of a new refinery - thats right, there are plans to build a 145,000 BPD refinery in Yuma County, Arizona the first new refinery since 1976. If all permits are approved for the proposed refinery, construction of the $2.5 B facility (includes $0.5 B for a crude oil pipeline from Mexico) is expected to begin in 2005 with commercial operation in 2009. The $2.0 B price tag for the new refinery is over $13,700 per capacity barrel and approximately $1,000 per complexity barrel. In comparison, buying Crowns Sr. Notes at the current level creates the Companys two refineries at 2%-3% of this replacement cost.

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Energy Refining & Marketing

A Sellers Market Crown confirmed its most recent 10Q that it is in negotiations to sell the Pasadena refinery. Subsequent to the recent 10Q filing, we also understand from industry sources that the Company has also entered negotiations to sell the Tyler refinery. Crown couldnt ask for better timing - improved balance sheets, strong crack spreads, a relatively low cost of capital, and open access to the capital markets are attracting buyers of refining assets. Based on our DCF analysis (PV20, 10-Yr.), we value the Companys two refineries in our Expected Case at $91 mm ($48 mm for Pasadena and $43 mm for Tyler), which utilizes a $4.70/Bbl Crack Spread. We also point out that as our High Case indicates, the Companys refineries could be worth as much as $119 mm. The Sellers Market is evidenced by Shells recent announcement that 70 parties inquired or actively solicited bids for the Bakersfield Refinery (California) a refinery that Shell originally planned to be shut down in October 2004 because it was uneconomic when the announcement was made in November 2003. . The Possible Buyer Rumors are that Lyondell Chemical Company (NYSE: LYO) may be the buyer of the Tyler refinery and possibly also the Pasadena refinery, which, if acquired, is thought to be best utilized as a converted Petrochemical Feedstock Refinery. LYO is a leading chemical producer, headquartered in Houston. Such an acquisition(s) seems logical noting Lyondells 58.75% interest in LYONDELL-CITGO Refining LP, which owns a 268,000 BPD refinery in Houston, in addition to its 70.5% interest in Equistar Chemicals, LP, one of the largest producers of ethylene, propylene and polyethylene in North America. Lyondells $4.3 B MarketCap and B1/B+ Unsecured credit rating would allow LYO to efficiently access todays capital markets to finance the $200-$300 mm transaction (including inventory). We also expect that a company such as LYO would be able to enhance throughput at the Pasadena refinery due to elimination of working capital constraints and a relatively low cost of capital (Sr. Notes generally trade at 400 bps over treasuries), thereby further improving that refinerys economics. Asset Sales In January 2003, Park Avenue Equity Management, LLC (Park Avenue) was hired to assist in the marketing for sale the Company and all of its assets. The Company recently sold a substantial portion of its retail (gas stations and convenience stores) and wholesale (product terminals) assets for approximately $141 mm in a divestment program that began in early 2003. Additional asset sales closed in July 2004 and are expected to close late 3Q04, raising an additional $8.5 mm that will bring total net proceeds from asset sales to $150 mm and $156 mm including the $6 mm note receivable provided as consideration for a transaction.

CAPITAL STRUCTURE
At 6/30/04, Crowns total debt was $125 mm, which consisted solely of the 10.875% Sr. Notes 05 as detailed below. Applying the $105 mm cash ($70.7 Unrestricted and $34.4 mm restricted) and $66 mm working capital balances, results in net debt of $20 mm and $59 mm, respectively. The Companys capital structure is greatly improved from the year-end 2003 balance that included an additional $34 mm of secured debt, which consisted of the Bank Facility ($30.4) and Purchase Money Liens ($3.7 mm), repaid during 1H04 using the net proceeds from asset sales completed.
CAPITALIZATION TABLE Description Bank Revolver ($50 mm Cash Borrow, $75 mm Facility) Other Secured Debt Total Secured Debt Sr. Notes 10.875% Sr. Sub. Notes Total Debt Preferred Stock Shareholders' Equity Total Capitalization Cash WorkCap Net Debt (Cash) Net Debt (WorkCap) Maturity 12/1/04 NA 2/1/05 6/30/04 ---$125.0 -$125.0 -($32.4) $92.6 $105.1 $65.7 $19.9 $59.3

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Energy Refining & Marketing

Bank Facility Extended Working Capital secures the Bank Facility and not the hard assets, i.e. the refineries (Pasadena & Tyler). During 2Q04, the Secured Credit Facility (Credit Facility), as amended, was further amended to extend its maturity date to 12/1/04 from 6/30/04. The Credit Facility does not have any financial covenant requirements. The amendment reduced the Bank Facilitys total commitments to $75 mm ($25 mm provided by a bank participant and $50 mm from an affiliate of Rosemore) from $103 mm, primarily in response to asset sales. Cash borrowings under the Credit Facility are limited to $50 mm per the Sr. Notes Indenture, however, there is no sub-limit for the issuance of LCs. The commitments are supported by two blocked accounts, which are collectively reported as Restricted Cash ($34.4 mm at 6/30/04) on the Companys Consolidated Balance Sheet. The two blocked accounts include: (i) a $25 mm investment account; and (ii) a blocked cash receipt account ($9.4 mm at 6/30/04). Rosemore Guarantees The Company has utilized additional financial support from Rosemore that is not committed and is subject to Rosemores discretion. This support is in the form of performance guarantees related to the Companys third-party purchases of crude oil, feedstocks and other petroleum products, unsecured cash borrowings and the supply of a portion of the Companys requirements for crude oil and feedstocks. As of 6/30/04, Rosemore provided $15 mm of guarantees. Rosemore, therefore, effectively guarantees $65 mm on behalf of Crown, which includes the $50 mm provided by Rosemore under the Credit Facility as mentioned above.

LIQUIDITY
Crown Centrals liquidity was boosted by 1H04 asset sales, which consisted primarily of retail gas/convenience stations and terminals utilized in its wholesale business, in addition to the Crude Oil Processing Agreement. At the end of 6/30/04, the Company had issued $72 mm in LCs (primarily for crude oil purchases) against its $75 mm borrowing base (cash borrowings limited to $50 mm), and, therefore, $3 mm was available under the Bank Facility at quarter-end. Proforma for the asset sales closed and expected to close during 3Q04, 2Q04Ps total liquidity was $116 mm. By year-end, we estimate total liquidity will exceed $130 mm after including almost $17 mm in estimated 2H04 free cash flow prior to changes in working capital. We note that any changes in working capital would theoretically have no impact on our asset coverage analysis since the working capital changes would be offset by the change in market value of crude oil inventories, the primary source of working capital changes.
LIQUIDITY 6/30/04 $75.0 -($72.0) $3.0 $70.7 $73.7 $34.4 $108.1 Adj. ----$8.2 $8.2 -$8.2 6/30/04P $75.0 -($72.0) $3.0 $78.9 $81.9 $34.4 $116.2 2H04 Adj. ----$16.7 $16.7 -$16.7 12/31/04 $75.0 -($72.0) $3.0 $95.5 $98.5 $34.4 $132.9

Bank Borrow Base (1) -Bank Debt O/S -Letters of Credit O/S Bank Revolver Available Unrestricted Cash Unrestricted Total Restricted Cash Total

(1) Cash borrowings limited to $50 mm.

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Energy Refining & Marketing

ENTERPRISE VALUE
We valued the two refineries based on DCF analyses (10-year, PV20) in which we determined that the refineries market value is at least $91 mm (nearly $48 mm for Pasadena and almost $43 mm for Tyler) - detailed assumptions for each of the refineries are noted in Appendix A. We ascertained that applying the industrys minimum valuation metrics of $250 per Complexity Barrel and $1,000 per Capacity Barrel produce unrealistic asset values of $327 mm and $152 mm, respectively. The Pasadena and Tyler values are at a significant discount to the industry metrics due to material Regulatory Upgrade CapEx required to meet low sulfur content requirements at both refineries and, in our opinion, the refineries poor condition due to Crowns capital constraints. There is, however, an opportunity to create the refineries through the Sr. Notes at a steep discount to our market valuation. In fact, we calculate that buying the Sr. Notes at the current level creates the refineries at $43 mm or a 53% discount to our $91 mm market value. On an EBITDA basis, the Sr. Notes create the Company at 2.1x and 2.2x 2004E EBITDA based on market and Par, respectively. In either pricing scenario, the Sr. Notes appears attractively priced based on public comparables that trade at 5.2x 2004E EBITDA. Returning to the industry metrics, buying the Sr. Notes at 90 creates the refineries at $33 per Complexity Barrel $285 per Capacity Barrel, which compares favorably to historical transaction values of $200-$450 $1,000-$6,000, respectively.
DEBT MARKET VALUATION Low Probability Sr. Obligations @ Par Sr. Notes Face Value Price Sr. Notes Mkt. Value Debt Market Value Less: Inventory & Other Assets Value Less: Total WorkCap Surplus / (Deficit) Less: 2H04E Free Cash Flow Theoretical Refinery Value thru Debt per Complexity Bbl per Daily Capacity Bbl ENTERPRISE VALUE (EV) Debt Market Value Less: Total WorkCap Surplus / (Deficit) Less: 2H04E Free Cash Flow EV EBITDA 2Q04A LQA LTM 04E 05E MULTIPLES EV/LQA EBITDA EV/LTM EBITDA EV/04E EBITDA EV/05E EBITDA Average Multiple *Balance Sheet items are as of 6/30/04 10% $119.1 $125.0 90% $112.5 $231.6 $77.0 $65.7 $16.7 $72.3 $55 $475 $231.6 $65.7 $16.7 $149.3 $21.2 $84.7 $37.4 $58.3 $61.0 1.8x 4.0x 2.6x 2.4x Base 80% $93.4 $125.0 90% $112.5 $205.9 $80.2 $65.7 $16.7 $43.4 $33 $285 $205.9 $65.7 $16.7 $123.5 $21.2 $84.7 $37.4 $58.3 $61.0 1.5x 3.3x 2.1x 2.0x High 10% $66.9 $125.0 90% $112.5 $179.4 $83.3 $65.7 $16.7 $13.8 $11 $91 $179.4 $65.7 $16.7 $97.1 $21.2 $84.7 $37.4 $58.3 $61.0 1.1x 2.6x 1.7x 1.6x Expected 100% $93.3 $125.0 90% $112.5 $205.8 $80.2 $65.7 $16.7 $43.3 $33 $285 $205.8 $65.7 $16.7 $123.5 $21.2 $84.7 $37.4 $58.3 $61.0 1.5x 3.3x 2.1x 2.0x 2.2x 3.2x 5.6x 5.2x 6.4x 5.1x -54% -41% -59% -68% -56% Comps Discount

$325 $3,500

-90% -92%

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Energy Refining & Marketing

ASSET COVERAGE
Based on the Expected Case (assigns a 10%, 80%, and 10% probability to the Low, Base, and High Cases, respectively), we estimate Crowns Total Asset Value is $249 mm, which provides 1.28x asset coverage to the Sr. Notes and 1.47x including value for the Companys NOLs. Importantly, this implies that the Rosenbergs equity is worth $35 mm-$59 mm. The Low Case, which we dont believe is relevant in todays refining environment, is a scenario that could be avoided by operating the assets long-term and according to our estimates, achieve the Base Case results. Additionally, even though not shown below, utilizing the $60 mm estimated Net PP&E book value for the two refineries reveals 1.28x 1.53x asset coverage and a par recovery on the Sr. Notes.
RECOVERY ANALYSIS Low Probability Total Asset Value Total Senior Liabilities Net Value Available to Sr. Unsec. Noteholders Sr. Notes 10.875% 2/1/05 Equity Value Asset Coverage Future Recovery PV20 thru 2/1/05 (Maturity) PV20 thru 12/31/05 10% $221.9 $119.1 $102.8 $125.0 ($22.2) 0.82x 82% 80% 76% Base 80% $253.2 $93.4 $159.8 $125.0 $34.8 1.28x 100% 97% 90% High 10% $284.5 $66.9 $217.5 $125.0 $92.5 1.74x 100% 97% 90% Expected 100% $253.2 $93.3 $159.9 $125.0 $34.9 1.28x 100% 97% 90%

NOLs At year-end 2003, Crowns NOLs were $210 mm, which expire in the years 2009 through 2023. During 1H04, the Company utilized approximately $83 mm of these NOLs to offset income from operations and the gains on asset disposals of discontinued operations. The NOL was valued at 25% of the resulting $127 mm NOL balance at 6/30/04, adjusted for the theoretical gain/(loss) from the sale of the refineries, utilizing a $60 mm book value.
RECOVERY ANALYSIS INCLUDING NOLs Total Asset Value NOLs (@ 25% of $127 mm Est. NOL Less Gain on Refineries) Total Asset Value Incl. NOLs Total Senior Liabilities Net Value Available to Sr. Unsec. Noteholders Sr. Notes 10.875% 2/1/05 Equity Value Asset Coverage Future Recovery PV20 thru 2/1/05 (Maturity) PV20 thru 12/31/05 $221.9 $31.0 $253.0 $119.1 $133.8 $125.0 $8.8 1.07x 100% 97% 90% $253.2 $24.0 $277.2 $93.4 $183.8 $125.0 $58.8 1.47x 100% 97% 90% $284.5 $17.0 $301.4 $66.9 $234.5 $125.0 $109.5 1.88x 100% 97% 90% $253.2 $24.0 $277.2 $93.3 $183.9 $125.0 $58.9 1.47x 100% 97% 90%

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Energy Refining & Marketing

ASSETS
As of 6/30/04, the Companys assets consisted of two refineries (Pasadena and Tyler), Crude Oil & Product Inventories, 10 operating retail properties (sales of these facilities to be completed early in 3Q04), and several non-operating retail properties, for which negotiations are ongoing. We believe the market doesnt fully value Crowns Crude Oil Inventory due to its book value being stated on a LIFO basis. In the table below, we value inventory at nearly $70 mm using $40 NYMEX oil price, which seems conservative as oil tops $51/Bbl and inflates the inventory value by $13 mm to over $83 mm, representing over 10 points in terms of the Sr. Notes.
TOTAL ASSET VALUE Low Probability Refineries Pasadena Tyler Total Refinery Value Crude Oil & Product Inventory NYMEX Crude Oil Price ($/Bbl) Est. Crude Oil & Product Inventory (MM Bbls) Crude Oil & Product Inventory Other Inventory (Book Value) Total Inventory Other Assets Est. Remaining Retail, Net Proceeds Est. Terminals, Net Proceeds Note Receivable from Retail Asset Sale Total Other Assets Asset Value Working Capital Working Capital of Discontinued Operations (1,2,3) Working Capital - Continuing Operations Total Cash +Accounts Receivable -Accounts Payable -Accrued Liabilities Working Capital - Continuing Operations Total Working Capital 2H04E Free Cash Flow Total WorkCap @ 12/31/04E Total Asset Value 10% $31.1 $31.5 $62.6 $38.00 1.6 $59.6 $3.3 $62.9 $6.7 $1.5 $6.0 $14.2 $139.6 $24.7 Base 80% $47.9 $42.7 $90.7 $40.00 1.6 $62.7 $3.3 $66.0 $6.7 $1.5 $6.0 $14.2 $170.8 $24.7 High 10% $64.8 $54.0 $118.8 $42.00 1.6 $65.9 $3.3 $69.1 $6.7 $1.5 $6.0 $14.2 $202.1 $24.7 Expected 100% $47.9 $42.7 $90.7 $40.00 1.6 $62.7 $3.3 $66.0 $6.7 $1.5 $6.0 $14.2 $170.8 $24.7

$105.1 $106.4 $125.3 $45.2 $41.0 $65.7 $16.7 $82.3 $221.9

$105.1 $106.4 $125.3 $45.2 $41.0 $65.7 $16.7 $82.3 $253.2

$105.1 $106.4 $125.3 $45.2 $41.0 $65.7 $16.7 $82.3 $284.5

$105.1 $106.4 $125.3 $45.2 $41.0 $65.7 $16.7 $82.3 $253.2

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Energy Refining & Marketing

Refineries Our refinery asset values are based on DCF analyses (PV20, 10-Yr.) for which detailed assumptions are outlined in Appendix A. The valuations exclude residual values and include nearly $49 mm in estimated regulatory CapEx ($35 mm at Pasadena and almost $14 mm at Tyler), which is required to upgrade processing facilities in order to comply with the latest low sulfur gasoline/diesel requirements and an amount we straight-line over a two-year period in our valuation models. The timing of these CapEx regulatory items is driven by each deadline as more fully explained in the CapEx section. Each Case utilizes a $4.70/Bbl Crack Spread, which is 35% below the $7.23/Bbl YTD average. Additionally, each Case differs primarily in terms of the Utilization Rate Pasadenas throughput ranges from 78,000 BPD (78%) to 82,000 BPD (82%) and Tyler from 46,000 BPD (88%) to 48,000 BPD (92%). In comparison, during 2003, Pasadena and Tyler operated at 76,075 BPD (76%) and 52,534 BPD (100%+), respectively. Our Tyler utilization assumption, therefore, is conservative noting last years full utilization in addition to 1H04s 49,200 BPD throughput average (95%). Although not immediately apparent, we were also low in terms of Pasadenas utilization noting that capital constraints negatively impacted Pasadenas operating performance due to its limited crude oil purchases. In fact, we expect a well capitalized company as acquirer would increase throughput above the 82,000 BPD used in our High Case and most likely exceed 90,000 BPD with certain capital improvements.
REFINERIES Low Probability Pasadena Refinery Assumed Throughput Capacity BPD Nelson Complexity Complexity Bbls. Value per Complexity Bbl Pasadena DCF Value Tyler Refinery Assumed Throughput Capacity BPD Nelson Complexity Complexity MM Bbls. Value per Complexity Bbl Tyler DCF Value Total Refinery Value Capacity BPD Nelson Complexity Total Complexity MM BPD Value per Complexity Bbl Value per Capacity Bbl 10% 75,500 100,000 8.4 0.840 $37 $31.1 44,000 52,000 9.0 0.468 $67 $31.5 $62.6 152,000 8.6 1.308 $48 $412 Base 80% 77,000 100,000 8.4 0.840 $57 $47.9 45,000 52,000 9.0 0.468 $91 $42.7 $90.7 152,000 8.6 1.308 $69 $597 High 10% 78,500 100,000 8.4 0.840 $77 $64.8 46,000 52,000 9.0 0.468 $115 $54.0 $118.8 152,000 8.6 1.308 $91 $782 Expected 100% 77,000 100,000 8.4 0.840 $57 $47.9 45,000 52,000 9.0 0.468 $91 $42.7 $90.7 152,000 8.6 1.308 $69 $597

Inventory The Companys crude oil and product inventory is a key component to recognizing Crown Centrals value and was $58.1 mm on a FIFO basis at 6/30/04. In attempting to value the Companys inventory, we estimated crude oil and product in inventory totaled 3.6 mm Bbls at year-end 2003 and then applied our 1H04 estimate of sales volumes and production at the Companys two refineries. In doing so, we expect that the Company ended 2Q04 with approximately 2.9 Bbls in inventory as indicated in the below table. We then accounted for the Crude Processing Agreement executed in June 2004 and deducted an estimated 1.3 mm Bbls sold under this agreement to arrive at the 1.6 mm Bbls in inventory. The market value for inventory used in our asset valuation is based on NYMEX oil prices ranging from $38$42/Bbl, well below the $44/Bbl 2-year swap and the $51+/Bbl current spot price.
CRUDE OIL & PRODUCT INVENTORIES (MM Bbls) 3/31/04 6/30/04 Est. Begin Balance 3.6 3.6 Est. (Sales) -9.3 -10.6 Est. Purchases 9.3 9.9 Est. End Balance 3.6 2.9 Crude Processing (Sale) 0.0 -1.3 Est. End Balance 3.6 1.6

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Energy Refining & Marketing

Working Capital The working capital figure excludes the following items at 6/30/04 and instead, accounts for these items separately in our valuation analysis: $6.0 mm Note Receivable Retail Assets Held for Sale in the amount of $3.7 mm (net of $5.0 mm D&A) Environmental Liabilities of Discontinued Operations in the amount of $8.5 mm Crude Oil Processing Liability due 9/30/04, with book value of $55.0 mm (see Liabilities section)
WORKING CAPITAL AT 6/30/04 Existing Discont'd Operations Operations Current Assets Cash & Equiv. Restricted Cash Total Cash Accounts Receivable Current Assets of Discontinued Operations (1,2) Total Current Assets Current Liabilities Accts. Payable - Crude Oil & Refined Products Less: Crude Processing Obligation (Book) Net Accts. Payable - Crude Oil & Refined Products Accts. Payable - Other Accrued liabilities Current Liabilities of discontinued operation (3) Total Current Liabilities Working Capital
$70.7 $34.4 $105.1 $106.4 -$211.5 ----$32.1 $32.1

Total
$70.7 $34.4 $105.1 $106.4 $32.1 $243.7

$159.6 ($55.0) $104.6 $20.7 $45.2 -$170.5 $41.0

-----$7.5 $7.5 $24.7

$159.6 ($55.0) $104.6 $20.7 $45.2 $7.5 $178.0 $65.7

Other Assets The Company sold an additional 6 gasconvenience stations that closed in July 2004 and resulted in $1.5 mm in net proceeds. Crown also expects to sell the Companys remaining stations and two closed terminals (one in Newington, VA and the other in Birmingham, AL) for $7.0 mm we assume this value represents gross proceeds and, therefore, have applied a 5% deduction for fees and other items to arrive at the $6.7 mm in net proceeds to account for this series of asset sales. We have accounted for the collective $8.2 mm in net proceeds from the remaining stations and terminals in our asset valuation under Other Assets.

LIABILITIES
LIABILITIES Low Probability Pension Obligations Underfunded Pension Obligation @ 6/30/04 Add'l Est. Funding Required Expected Return Est. Pension Funding Required by PBGC Other Sr. Liabilities Severance Obligations Environmental Liabilities - Discontinued Operations (Book) Environmental Liabilities - Continued Operations (Est.) Other Sr. Liabilities Total Senior Liabilities 10% $50.4 $33.2 7.0% $83.6 Base 80% $50.4 $15.5 8.0% $65.9 High 10% $50.4 -9.0% $50.4 Expected 100% $50.4 $15.7 8.0% $66.1

$7.0 $8.5 $20.0 $35.5 $119.1

$5.0 $8.5 $14.0 $27.5 $93.4

$3.0 $8.5 $5.0 $16.5 $66.9

$5.0 $8.5 $13.7 $27.2 $93.3

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Energy Refining & Marketing

Pension Liabilities The primary reason that the Sr. Notes are not trading at par is due to the uncertainty surrounding the Companys underfunded pension. In order to remain conservative, however, we assumed the Company contributes $66 mm to the Pension, which is based on an 8% expected return in place of the 9% expected return assumed by the Company. In August 2003, the Pension Benefit Guaranty Corporation (PBGC), a federal corporation which operates the federal insurance program for defined benefit plans, launched an inquiry into the Companys Pension Plan in response to the Companys announced intention to sell all or substantially all of its assets. In January 2004, the PBGC calculated the Companys underfunded portion of the Retirement Plan was $121 mm on a terminated basis and on an ongoing basis, the Companys external actuaries estimated the unfunded status of the Retirement Plan was $51.3 mm at YE 2003. The agency stated that the PBGC is a contingent unsecured creditor of the Company that should have priority over any repayment to Crowns unsecured lenders, including the holders of the Sr. Notes. The Company states that it is unable to determine whether PBGC will seek to exercise its statutory authority to terminate the Retirement Plan or whether additional provisions for funding the Retirement Plan will be needed to avoid an involuntary termination of the Retirement Plan. The Company also stated that it has no present intention of pursuing a voluntary termination since. Contributions: During 1H04, the Company made contributions to its defined benefit pension plan of $2.7 mm ($0.3 mm and $2.4 mm in 1Q04 and 2Q04, respectively), which we accounted for in the below calculation of the Pension Obligation. Total contributions to the Companys pension plan in 2004 are expected to approximate $8.7 mm or an estimated $6.0 mm in 2H04.
PENSION PLAN OBLIGATION Underfunded portion @ 12/31/03 1H04 Amt. Funded Underfunded portion @ 6/30/04 Prior to Items 1H04 Items: Benefits Earned Interest cost on projected benefit obligations Expected return on plan assets Est. Add'l Expected (Gain)/Loss on plan assets Additional (Assets)/Obligations Underfunded portion @ 6/30/04E Est. Funding Gap - EXPECTED CASE Total Requirement $51.3 ($2.7) $48.6

$0.7 $5.4 ($5.3) $1.0 $1.8 $50.4 $15.5 $65.9

The ProblemThe underfunded Pension calculation is based on a 9.0% weighted average expected long-term rate of return on assets, which we believe is aggressive. We, therefore, assume an 8% expected return in our Expected Case. As a result, there is a $16 mm incremental liability on top of the estimated $51 mm in underfunded pension obligations estimated at 6/30/04. We assume, therefore, that the Company contributes $66 mm to fulfill its obligation and satisfy the PBGC. Pension Asset Allocation: At year-end 2003, the Companys Pension assets were 58% in Large Cap. Equity, 36% in Bonds, 5% in International Equity, and 1% in cash.

Pasadena Crude Oil Processing Agreement In June 2004, Crown Central entered into a 3-month 100% crude oil processing agreement at its Pasadena refinery and in doing so, sold its entire inventory in the facility. This sale created a significant decline in the Companys LIFO inventory level at the close of 2Q04. Additionally, the $55.0 mm estimated cost to replace the inventory was recorded in Accounts Payable - Crude Oil and Refined Products on the Companys 6/30/04 balance sheet. We estimate the Company sold approximately 1.3 mm Bbls based on the $55 mm sale and the $42.33/Bbl NYMEX Crude Oil price on 6/1/04. The Companys 10Q explains that the processing agreement obligates the Company to repurchase the inventory in the facility on 9/30/04, the expiration date. We do not, however, view this item as an obligation for two reasons: (i) any crude oil purchase to fulfill this obligation would result in a cash deduction offset by an increase in crude oil inventory as a result of the purchase; and (ii) in the 3Q04, we expect Pasadenas throughput totaled 5.2 mm Bbls (58,000 BPD). This represents over $200 mm in crude oil purchases and well above the estimated 1.3 MM Bbls the Company committed to repurchase, thereby, in our view, fulfilling any obligation that existed under the agreement.

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Energy Refining & Marketing

Severance Plan The Companys employees and officers participate in several severance and retention incentive plans in connection with Crowns asset divestment plan. Amounts earned under these plans for 1H04 totaled $1.8 mm ($1.0 mm in 1Q04 and $0.8 mm in 2Q04). The Company estimates that future amounts to be paid under all of the severance and incentive plans could be approximately $7.0 mm. Turning to our asset coverage calculation, we assume that this Severance Plan obligation is $3 mm to $7 mm and utilize $5 mm in our Expected Case as a guesstimate since there is no further information relating to the bonuses that would trigger under the various asset sales values assumed. Environmental Liabilities We estimate the Companys environmental liabilities total $22 mm. This estimated liability consists of $8.5 in booked environmental liabilities for the retail stations sold plus an estimated $14 mm in refinery related liabilities. In addition, our DCF analyses used to determine asset values for the refineries include $2 mm in annual environmental costs on an ongoing basis ($1 mm for Pasadena and $1 mm for Tyler). Remaining Leases The Company remains secondarily liable for the leases that were assumed by the buyers in connection with the sale of the gasconvenience stations. The future minimum lease payments under these leases are estimated to be approximately $30 mm with minimum lease payments in the next year estimated to be $7 mm. The average remaining lease term for the gasconvenience stations is approximately 9-years and is excluded from our recovery analysis as we believe it is highly unlikely that the Company will have to perform under this secondary guarantee. Even in the case where there did exist a lease for which the Company was liable, Crown would most likely be positioned to assume the lease, operate the station(s), and, thereby eliminate the associated lease liability from operations of that station or collection of stations. As such, we have not accounted for any related lease obligation in our Asset Coverage Calculation.

FINANCIAL RESULTS
Second Quarter 2004 and Outlook Like all Refining & Marketing Companies, Crown reported excellent 2Q04 results in response to record Crack Spreads for the period EBITDA (LIFO) jumped to $21.2 mm from $9.8 mm in the prior quarter and $6.4 mm last year. Crowns LTM improved in-line with the excellent 2Q04 results to $37.4 mm vs. $22.7 mm in the prior quarter. Additionally, todays crack spread remains strong and, as such, we estimate the Companys 3Q04 and 4Q04 EBITDA will be $11.4 mm and $15.9 mm, respectively, or $27.3 mm for 2H04 - over a fourfold increase over last year. Our 2005 EBITDA estimate is $61 mm a slight increase (+7%) from 2004. Of note, our 2005 cash flow estimates assume the Company issues $85 of 14.0% Sr. Secured Notes in order to, in part, refinance the Sr. Notes - the New Note financing amount declines to $60 mm in the event the Companys Pension contribution declines to $50 mm from the $66 mm used in our model.
FINANCIAL SNAPSHOT
1Q04A Crude Oil Throughput Pasadena Tyler Total Utilization NYMEX 3-2-1 Crack Spread ($/Bbl) CASH FLOW ANALYSIS Adj. EBITDA LTM EBITDA -Cash Interest Exp. Funds from Operations (FFO) -CapEx & Deferred Turnaround Costs Free Cash Flow (FCF) BALANCE SHEET: Total Debt Net Debt (WorkCap) Preferred Stock (Liq.) Cash (Incl. Restricted) Working Capital Excl. Inventory $153.4 $190.8 -$6.4 ($37.4) $125.0 $103.2 -$105.1 $21.8 $125.0 $140.7 -$100.3 ($15.7) $125.0 $196.2 -$50.6 ($71.2) $125.0 $196.2 -$50.6 ($71.2) $85.0 $194.8 -$5.3 ($109.8) $85.0 $178.0 -$20.6 ($93.0) $85.0 $169.4 -$26.9 ($84.4) $85.0 $166.0 -$36.6 ($81.0) $85.0 $166.0 -$36.6 ($81.0) $9.8 $22.7 $4.1 $5.7 $3.5 $2.2 $21.2 $37.4 $3.9 $17.2 $0.4 $16.8 $11.4 $27.3 $3.4 $8.0 $1.9 $6.1 $15.9 $58.3 $3.4 $12.5 $1.9 $10.6 $58.3 $58.3 $14.8 $43.4 $7.8 $35.7 $9.4 $57.8 $4.2 $5.2 $1.3 $4.0 $25.0 $61.7 $3.0 $22.1 $5.2 $16.8 $15.8 $66.1 $3.0 $12.8 $4.3 $8.5 $10.7 $61.0 $3.0 $7.7 $4.3 $3.4 $61.0 $61.0 $13.1 $47.9 $15.1 $32.8 52,800 49,900 102,700 68% $6.34 67,800 48,500 116,300 77% $9.04 58,000 47,000 105,000 69% $6.25 65,000 49,000 114,000 75% $6.34 60,903 48,597 109,500 72% $6.99 58,000 49,000 107,000 70% $5.99 65,000 49,000 114,000 75% $7.66 55,000 47,000 102,000 67% $6.87 65,000 49,000 114,000 75% $5.85 60,753 48,496 109,249 72% $6.59 2Q04A 3Q04E 4Q04E 2004E 1Q05E 2Q05E 3Q05E 4Q05E 2005E

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Energy Refining & Marketing

Discontinued Operations Crown began reporting its refining operations on a stand-alone basis by breaking out discontinued operations (retail and wholesale) beginning with the Companys 2003 10K. Although the Companys most recent 10K does provide continuing operations main line items, non-cash items are not detailed and as such, the reported 3Q03 and 4Q03 EBITDA are not applicable. We do, however, know 1H03 and 2003 EBITDA from continuing operations were negative $3.6 mm and $2.8 mm, respectively, implying $6.4 mm in 2H03 EBITDA - LTM EBITDA, therefore, is $37.4 mm together with the $31.0 mm in 1H04 EBITDA. While we guesstimate that 3Q04 LTM EBITDA will increase to approximately $40-$45 mm, it is important to note that this figure may decline according to the 4Q03 results, which as stated, we are not able to determine at this time. Throughput Operationally, the Pasadena refinerys 2Q04 throughput was 67,800 BPD (68% utilization), which was 18% below last years 83,051 BPD (83% utilization) throughput rate the quarter was negatively impacted as a result of less than optimal crude oil processing levels due to the Companys working capital constraints. In 2Q04, the Tyler refinery operated at 48,500 BPD (93% utilization), down 8% from last years 52,778 BPD (101% utilization) throughput rate. Free Cash Flow In 2Q04, the Companys FCF (excluding working capital changes) was $16.8 mm and, therefore, $19.0 mm for 1H04 after including $2.2 mm in 1Q04 FCF. We estimate 2H04 FCF will total $16.7 mm based our $27.3 mm 2H04E EBITDA after deducting an estimated $6.8 mm in cash interest expense and $3.8 mm in CapEx (including deferred turnaround costs) for the period. Our CapEx is higher than the Companys implied $1.4 mm in 2H04 CapEx, which is based on the Companys $5.4 mm t2004 CapEx and deferred turnaround budget net of the $4.0 mm in 1H04 CapEx ($1.5 mm for refining and $2.5 mm in deferred turnaround costs).

Credit Statistics
2Q04 LTM EBITDA covered Cash Interest Expense 2.4x (5.4x LQA), while Total Debt Leverage was 3.3x (1.5x LQA). As a result of the Companys $105 mm total cash balance ($34 mm Restricted) at quarter end, net debt leverage was 0.5x LTM (0.2x LQA). We prefer to calculate net debt utilizing working capital in place of cash and based on this measure, calculate Net Debt Leverage was 2.8x LTM (1.2x LQA). Please note that we define Working Capital as [Cash + Accounts Receivable - Accounts Payable] and account for Inventory separately. The Companys credit statistics are greatly improved compared to 2003s 0.2x Cash Interest Coverage and 56x Total Debt Leverage due to improved financial results combined with asset sales that allowed the Company to repay its secured debt. We estimate 2004s credit statistics will improve further to 3.9x Cash Interest Coverage, 2.1x Total Debt leverage, and 3.4x Net Debt Leverage (utilizing Working Capital) primarily as a result of the Companys improved liquidity and continued Gulf Coast Crack Spread strength. The Companys improved credit statistics also make it obvious that the Sr. Notes are an excellent relative value at a 46%+ YTW based on comparable unsecured issues (Frontier Oil, Giant, Premcor, and Tesoro) that trade at +200 to +550 STW and have similar LTM credit statistics of 2.7x-5.5x Interest Coverage and 1.8x-2.7x Total Debt Leverage.
CREDIT STATISTICS
1Q04A CREDIT STATISTICS Adj. EBITDA(X)/Cash Interest Exp. Total Debt/Adj. EBITDA(X) Net Debt*/Adj. EBITDA(X) FFO/Total Debt Total Debt/BookCap Total Debt/MarketCap *Net Debt is based on Total Debt less Working Capital Qtr. LTM Qtr. LTM Qtr. LTM Qtr. LTM 2.4x 1.4x 3.9x 6.8x 4.9x 8.4x 10% 10% NM NA 5.4x 2.4x 1.5x 3.3x 1.2x 2.8x 27% 25% NM NA 3.3x 2.0x 2.7x 4.6x 3.1x 5.2x 26% 17% NM NA 4.7x 4.3x 2.0x 2.1x 3.1x 3.4x 40% 26% NM NA 3.9x 3.9x 2.1x 2.1x 3.4x 3.4x 26% 26% NM NA 2.2x 3.5x 2.3x 1.5x 5.2x 3.4x 25% 40% NM NA 8.4x 5.2x 0.8x 1.4x 1.8x 2.9x 104% 56% 100% NA 5.3x 5.6x 1.3x 1.3x 2.7x 2.6x 60% 62% 90% NA 3.6x 5.1x 2.0x 1.4x 3.9x 2.7x 36% 56% 86% NA 4.7x 4.7x 1.4x 1.4x 2.7x 2.7x 56% 56% 86% NA 2Q04A 3Q04E 4Q04E 2004E 1Q05E 2Q05E 3Q05E 4Q05E 2005E

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Energy Refining & Marketing

CRACK SPREADS
The spot NYMEX 3-2-1 Gulf Coast Crack Spread (Crack Spread) closed the quarter at $6.10/Bbl on 9/30/04, averaging $6.25 in 3Q04 [Bloomberg Symbol: CRKS321C CMDTY] or 17% above the prior years $5.32/Bbl and 53% ahead of the $4.08/Bbl 4-year average. The 3-2-1 Crack Spread represents the margin a light-sweet-crude oil refinery would earn assuming it purchased 3 barrels of WTI crude oil, and produced and sold the benchmark production of 2 barrels of conventional gasoline and 1 barrel of heating oil. For modeling purposes, we use a $6.34/Bbl 4Q04E Crack Spread [90% of the $7.05/Bbl forward curve. For 2005E, our average Crack Spread estimate is $6.59/Bbl, which is based on 83% of next years average $7.94/Bbl forward curve. The below chart highlights the dramatic Crack Spread improvement during 2004, which we expect to average almost $7.00/Bbl in 2004 and project 2005 to be 6% lower in 2005 at almost $6.60/Bbl, but still well above the $4.15/Bbl 4-year average.
NYMEX Crack Spread (Gulf Coast 1-2-3)
$10.00

$9.00
Model Estimate

$8.00
2001 2004

Forward Curve

$7.00

$6.00 $/Bbl
2003

$5.85
Model Estimate

$5.00
'00-'03 Avg. $4.63 2000

$4.00

$4.52

$4.04

$3.00

2002

$2.00

$1.00 1Q 2Q 3Q 4Q

Crack Spread Projections To calculate the Companys realized Crack Spread we apply a $1.35 transportation cost to the NYMEX price and, as discussed above, have discounted the forward NYMEX curve by 17% to account for low margins on the Companys non-transportation fuels, unfavorable crude oil purchases, and the impact of processing arrangements with third parties. The lower curve in the below chart highlights our quarterly estimates for the next 12-months.
12-Month Forward NYMEX 3-2-1 Crack Spread
$11
12 Mth Fwd Curve Qtr Fwd Curve

$10

Avg 12 Mth Fwd Curve Estimates

$9.23 2Q05 $9 $8.28 3Q05

$/Bbl

$8 $7.94 Avg. $7.05 4Q04 $7 $7.22 1Q05

$7.66 2Q05E $6.87 3Q05E

$6

$6.34 4Q04E

$5.99 1Q05E

$5 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05

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Energy Refining & Marketing

CAPEX
In 2003, the Companys CapEx totaled $8.3 mm, which included $2.6 mm in deferred turnaround costs primarily related to the Tyler refinery. The Company estimates its total 2004 CapEx and deferred turnaround (Total CapEx) will total $5.4 mm for planned improvements to the Companys refineries and environmental requirements - 1H04 CapEx totaled $4.0 mm ($1.5 mm for refining and $2.5 mm in deferred turnaround costs), implying 2H04s CapEx and deferred turnarounds costs will total $1.4 mm and well below our $3.8 mm Total CapEx estimate for the same period.
CAPEX SUMMARY 3Q04E Refining Maintenance CapEx Pasadena Tyler Total Maintenance Refining Regulatory Upgrades Pasadena Tyler Total Upgrades Deferred Turnaround Costs Reg. & Turnaround CapEx Other Environmental Other Total Other TOTAL CAPEX Excl. Regulatory Items $0.8 $0.5 $1.3 4Q04E $0.8 $0.5 $1.3 2H04E $1.5 $1.0 $2.5 1Q05E $0.8 $0.5 $1.3 2Q05E $0.8 $0.5 $1.3 3Q05E $0.8 $0.5 $1.3 4Q05E $0.8 $0.5 $1.3 2005E $3.0 $2.0 $5.0

---$0.4 $0.4 $0.3 -$0.3 $1.9 $1.9

---$0.4 $0.4 $0.3 -$0.3 $1.9 $1.9

---$0.8 $0.8 $0.5 -$0.5 $3.8 $3.8

--------$1.3 $1.3

-$2.2 $2.2 $0.8 $3.0 $1.0 -$1.0 $5.2 $3.1

-$2.2 $2.2 $0.4 $2.6 $0.5 -$0.5 $4.3 $2.2

-$2.2 $2.2 $0.4 $2.6 $0.5 -$0.5 $4.3 $2.2

-$6.5 $6.5 $1.6 $8.1 $2.0 -$2.0 $15.1 $8.6

Regulatory CapEx Items The EPA, and in some cases the related state environmental agencies, have passed legislation that will require refiners to reduce the sulfur content of motor fuels. For most refiners, the ultra low sulfur gasoline regulations will be phased in by 2006 (over a 2-year period that began in 2004). In November 2003, the EPA granted gasoline sulfur hardship relief to both refineries owned by the Company, allowing the Company to delay ultra low sulfur gasoline regulations. These low sulfur gasoline waivers are valid until December 2007 for the Pasadena refinery and December 2009 for the Tyler refinery. Ultra low sulfur diesel fuel is subject to additional regulation by the EPA. The Company estimates the low sulfur content requirements for both gasoline and diesel will total almost $49 mm through 2009 as detailed in the nearby Regulatory CapEx table.

REGULATORY CAPEX Pasadena Gasoline $35.0 Yr. Req'd 2007 Diesel Yr. Req'd Total -NA $35.0

Tyler $7.0 2009 $6.5 2005 $13.5

Total $42.0

$6.5 $48.5

Pasadena: At the Pasadena refinery, the Company estimated that it would cost $35 mm to upgrade processing facilities to comply with the latest low sulfur gasoline requirements by 2009. The Company has no plans to begin refining ultra low diesel fuel at this refinery, however, and anticipates that it can continue to sell distillates (diesel, home heating oil, jet fuel, and kerosene). Our Pasadena asset valuation, therefore, assumes the Company meets the low sulfur gasoline requirements and incurs the $35 mm upgrade over a 2-year period beginning in 2006 in order to meet the year-end 2007 deadline. Tyler: The Company indicates Tyler will cost almost $14 mm to meet the low sulfur requirements for both gasoline and diesel. The estimated cost to comply with the low sulfur gasoline regulation at the Tyler refinery is approximately $7 mm, and we assume this work begins the start of 2008 and is completed in time to meet the December 2009 deadline. The Company also appears to have plans for the Tyler refinery to meet the requirements for producing ultra low sulfur diesel by 2005 - Crown determined that it can meet this low sulfur diesel requirement utilizing the existing distillate hydrotreating process unit by using proven catalysts and making modifications to the unit at a cost of $6.5 mm, which we assume begins in 2Q05 and completed by the December 2005 deadline.

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Energy Refining & Marketing

Historical CapEx The Companys CapEx has been limited by its capital constraints in recent years due primarily to low Crack Spreads. As the historical table below indicates, Refining CapEx has averaged $3.0 mm annually. Excluding the one-time deferred turnaround costs in 2001, Deferred Turnaround Costs averaged $2.4 mm annually and, therefore, $5.4 mm including Refining CapEx and in-line with the Companys 2004 budget. Our $7.7 mm 2004E Total CapEx figure for modeling purposes is $2.3 mm higher than the Companys budget simply to remain conservative in every aspect.
CAPEX SUMMARY 2001 Refining Refining CapEx Insurance Reimbursements Net Refining CapEx Deferred Turnaround Costs Total Refining Other Retail Corp. & Other Total CapEx $6.2 -$6.2 $30.8 $37.0 $6.8 $0.8 $44.6 2002 $10.6 ($9.4) $1.2 $2.1 $3.3 $9.8 $1.0 $14.1 2003 $1.5 -$1.5 $2.6 $4.1 $2.3 $1.9 $8.3 Avg. $6.1 ($3.1) $3.0 $11.8 $14.8 $6.3 $1.2 $22.3

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Energy Refining & Marketing

APPENDIX A: REFINERY VALUATION ASSUMPTIONS

REFINERY ASSET VALUE ASSUMPTIONS - BASE CASE Pasadena NYMEX Crack Spread Transportation & Differential Realized Crack Spread Realized/NYMEX % Operating Items Annual G&A OpEx per Bbl Capacity Annual OpEx OpEx per Bbl Capacity Annual Mtnc. CapEx Turnaround Items Total Turnaround Costs (over 2-Yrs) Annual Turnaround Costs Turnaround Term (Yrs) Regulatory Items Annual Environmental Costs Total Reg. Upgrade Costs (over 2-yrs) Utilization Throughput (BPD) Capacity (BPD) Utilization PV20 (10-Year) Complexity $ per Complexity Bbl 77,000 100,000 77% $47.9 8.4 $57 45,000 52,000 87% $42.7 9.0 $91 122,000 152,000 80% $90.7 8.6 $69 $2.0 $35.0 $1.0 $13.5 $3.0 $48.5 $2.0 $0.8 2.5 $2.0 $0.8 2.5 $4.0 $1.6 2.5 $4.0 $0.11 $76.7 $2.10 $2.0 $3.0 $0.16 $42.7 $2.25 $1.5 $7.0 $0.13 $119.4 $2.15 $0.8 $4.70 -$1.35 $3.35 71% Tyler $4.70 -$1.35 $3.35 71% Total $4.70 -$1.35 $3.35 71%

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Energy Refining & Marketing

APPENDIX B: REFINERY DCF SENSITIVITY TABLES

PASADENA ENSITIVITY PV20 $MM Util. Thruput % BPD $3.50 $4.00 74% 74,000 ($284) ($160) 76% 75,500 ($273) ($146) 77% 77,000 ($262) ($133) 79% 78,500 ($252) ($120) 80% 80,000 ($241) ($106) 82% 81,500 ($230) ($93) 83% 83,000 ($219) ($80) 85% 84,500 ($208) ($66)

$4.50 ($36) ($20) ($4) $12 $28 $44 $60 $76

NYMEX Crack Spread ($/Bbl) $4.70 $5.00 $5.50 $6.00 $14 $89 $213 $337 $31 $107 $234 $361 $48 $126 $255 $384 $65 $144 $276 $408 $82 $162 $297 $431 $99 $181 $318 $454 $115 $199 $339 $478 $132 $217 $359 $501

$6.50 $462 $488 $514 $539 $565 $591 $617 $643

$7.00 $586 $614 $643 $671 $700 $728 $757 $785

$7.50 $710 $741 $772 $803 $834 $865 $896 $927

TYLER ENSITIVITY PV20 $MM Util. Thruput % BPD $3.50 83% 43,000 ($153) 85% 44,000 ($146) 87% 45,000 ($139) 88% 46,000 ($131) 90% 47,000 ($124) 92% 48,000 ($117) 94% 49,000 ($110) 96% 50,000 ($103)

$4.00 ($81) ($72) ($63) ($54) ($45) ($36) ($27) ($19)

$4.50 ($9) $2 $13 $23 $34 $44 $55 $65

NYMEX Crack Spread ($/Bbl) $4.70 $5.00 $5.50 $6.00 $20 $64 $136 $208 $31 $76 $150 $224 $43 $88 $164 $239 $54 $100 $178 $255 $65 $113 $192 $270 $76 $125 $205 $286 $88 $137 $219 $302 $99 $149 $233 $317

$6.50 $280 $298 $315 $332 $349 $367 $384 $401

$7.00 $352 $371 $390 $409 $428 $447 $466 $485

$7.50 $425 $445 $466 $487 $507 $528 $549 $569

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Energy Refining & Marketing

APPENDIX C: REFINING & MARKETING COMPARABLES

COMPANY INFORMATION MARKET CAPITALIZATION BALANCE SHEET EnterStock Price 9/21/04 $22.41 $23.00 $23.13 $40.13 $37.75 $70.44 $29.85 $76.32 Shares O/S (MM) 27 12 32 346 89 75 66 128 Market Cap. $603 $280 $735 $13,887 $3,367 $5,307 $1,973 $9,757 $35,910 EBITDA Company Frontier Oil Corp Giant Industries Inc Holly Corp Marathon Oil Corp Premcor Inc Sunoco Inc Tesoro Petroleum Corp Valero Energy Corp Total / Wtd. Avg.
Simple Avg. Median

6/30/04
Recent Equity Company Frontier Oil Corp Giant Industries Inc Holly Corp Marathon Oil Corp Premcor Inc Sunoco Inc Tesoro Petroleum Corp Valero Energy Corp Total Symbol FTO GI HOC MRO PCO SUN TSO VLO 52 Week Hi/Lo
$22.22/$13.91 $27.25/$6.70 $23.10/$12.09 $39.44/$27.75 $40.83/$21.85 $70.09/$39.17 $31.70/$8.10 $78.84/$36.67

Pref. Total Debt $276 $367 $71 $7,265 $2,146 $3,155 $2,122 $7,535 $22,938 Stock (Liq.) ... ... ... ... ... ... ... $204 $204

Work Cap./ (Deficit) $70 $102 ($5) $1,691 $440 $367 $392 $472 $3,530

prise Value (EV) $810 $545 $812 $19,461 $5,073 $8,095 $3,703 $17,024 $55,522 Price/ Net PP&E $330 $391 $309 $11,061 $2,598 $4,680 $2,240 $9,663 $31,272 Asset Cov. (5) 1.4x 1.3x 4.3x 1.8x 1.4x 1.6x 1.2x 1.3x 1.5x
1.8x 1.4x

Qtr. End 6/04 6/04 6/04 6/04 6/04 6/04 6/04 6/04

Book Equity $217 $208 $347 $9,881 $1,831 $2,349 $1,242 $6,737 $22,812 Div. Yld. % 1.1% NA 1.4% 2.5% NA 1.7% NA 0.8% 1.5%
1% 1%

EV/EBITDA 04E $189 NA $200 $3,210 $837 $1,256 $832 $3,012 $9,536 05E $132 NA $119 $3,313 $822 $1,095 $588 $2,631 $8,699 LQA 2.1x 3.2x 2.2x 4.6x 4.2x 4.1x 2.1x 3.6x 3.7x
3.3x 3.4x

Notes

LQA $381 $172 $365 $4,236 $1,202 $1,976 $1,748 $4,772 $14,852

LTM $176 $127 NA $3,222 $685 $1,226 $880 $2,634 $8,950

LTM 4.6x 4.3x NA 6.0x 7.4x 6.6x 4.2x 6.5x 6.2x

5.7x 6.0x

04E 4.3x NA 4.1x 6.1x 6.1x 6.4x 4.4x 5.7x 5.8x

5.3x 5.7x

05E 6.1x NA 6.8x 5.9x 6.2x 7.4x 6.3x 6.5x 6.4x

6.5x 6.3x

Book 2.8x 1.4x 2.1x 1.4x 1.8x 2.3x 1.6x 1.4x 1.6x
1.8x 1.7x

Corp. Rating/ Company Frontier Oil Corp Giant Industries Inc Holly Corp Marathon Oil Corp Premcor Inc Sunoco Inc Tesoro Petroleum Corp Valero Energy Corp Total / Wtd. Avg.
Simple Avg. Median All dollars are in millions.

TOTAL DEBT / EBITDA LQA 0.7x 2.1x 0.2x 1.7x 1.8x 1.6x 1.2x 1.6x 1.5x
1.4x 1.6x

EBITDA / CASH INTEREST EXPENSE 05E 2.1x NA 0.6x 2.2x 2.6x 2.9x 3.6x 2.9x 2.6x
2.4x 2.6x

Debt/Capitalization Book 56% 64% 17% 42% 54% 57% 63% 52% 50%
51% 55%

Outlook
B2 POS/BB- STABLE B2 STABLE/B+ POS -- --/-- --- STABLE/BBB+ STABLE B1 POS/-- -Baa2 STABLE/BBB STABLE B2 POS/BB+ STABLE -- STABLE/BBB NEG

LTM 1.6x 2.9x NA 2.3x 3.1x 2.6x 2.4x 2.9x 2.6x

2.5x 2.6x

04E 1.5x NA 0.4x 2.3x 2.6x 2.5x 2.5x 2.5x 2.4x

2.0x 2.5x

LQA 14.4x 4.7x 147.2x 20.9x 8.2x 17.3x 10.3x 16.4x 15.0x
29.9x 15.4x

LTM 7.4x 3.7x NA 13.9x 4.2x 10.9x 5.5x 8.5x 8.6x

7.7x 7.4x

04E 8.0x NA 66.6x 13.8x 5.2x 11.2x 5.2x 9.7x 9.2x

17.1x 9.7x

05E 5.5x NA 39.6x 14.3x 5.1x 9.8x 3.7x 8.5x 8.4x

12.3x 8.5x

Mkt. 31% 57% 9% 34% 39% 37% 52% 43% 39%

38% 38%

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[ page 18 of 22 ]

J E F F E R I E S H I G H Y I E L D R E S E AR C H

Energy Refining & Marketing

APPENDIX D: REFINERY FULL DESCRIPTIONS Pasadena Refinery

The Pasadena refinery is located on approximately 174 acres in Pasadena, Texas and was the first refinery built on the Houston Ship Channel. The refinery has a rated crude capacity of 100,000 BPD. During the past five years, the Company has invested approximately $14 mm on capital projects at Pasadena of a non-environmental nature. Liquidity and capital constraints experienced by the Company over the past several years has necessitated that the Company limit capital projects at the Pasadena Refinery to only those necessary to continue operations and comply with existing environmental regulations.

Pasaden

The Pasadena refinery has an extensive plant-wide distributed control system that is designed to improve product yields, make more efficient us of personnel and optimize process operations. The distributed control system uses technology that is fast, accurate and provides increased information to both operators and supervisors. This equipment also allows the use of modern advanced control techniques for optimizing unit operations. The Pasadena refinery has a crude unit with a 100,000 BPD atmospheric column and a 42,000 BPD vacuum tower. Major downstream units consist of a 56,000 BPD fluid catalytic cracking unit, a 12,000 BPD delayed coking unit, two alkylation units with a combined capacity of 14,000 BPD of alkylate production, and a continuous regeneration reformer with a capacity of 26,000 BPD. Other units include two depropanizers that can produce 5,500 BPD of refinery grade propylene, a liquefied petroleum gas recovery unit (LPG) that removes approximately 700 BPD of liquids from the refinery fuel system, a reformate splitter, and a compression facility capable of transporting up to 14 million standard cubic feet per day of process gas to a neighboring petrochemical plant. Crude oils processed at the Pasadena refinery in 2003 were comparable to those processed in 2002. In 2003, the Pasadena refinery operated at an average charge of 76,075 BPD, yielding approximately 60% gasoline and 27% distillates. Of the total gasoline production, approximately 26% was premium octane grades. The 13% of other products the Pasadena refinery produced and sold include propylene, propane, slurry oil, petroleum coke and sulfur. Due to the current high cost of crude oil and other feedstocks and the Companys working capital constraints, it is not anticipated that the Company will be able to operate the Pasadena refinery over the next twelve months at full capacity. The Company owns and operates storage facilities located on approximately 130 acres near its Pasadena refinery that, together with tanks on the refinery site, provide the Company with a storage capacity of approximately 5.8 million barrels (2.8 million barrels for crude oil and 3.0 million barrels for refined petroleum products and intermediate stocks). The Pasadena refinerys petroleum products are delivered to both wholesale and retail markets. In 2003, approximately one-half of the gasoline and distillate production was sold at wholesale into the Gulf Coast spot market and one-half was shipped by the Company on the Colonial and Plantation pipelines for sale in East Coast wholesale and retail markets.

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[ page 19 of 22 ]

J E F F E R I E S H I G H Y I E L D R E S E AR C H

Energy Refining & Marketing

Tyler Refinery
The Tyler refinery is located on approximately 100 of the 529 acres owned by the Company in Tyler, Texas and has a rated crude capacity of 52,000 BPD. The Tyler refinerys location provides access to nearby high quality East Texas crude oil that accounts for approximately 70% of its crude supply. This crude oil is transported to the refinery via the McMurrey Pipeline and another pipeline system owned and operated by Plains Marketing, LP. The Company also has the ability to ship crude oil to the Tyler refinery by pipeline from the Gulf Coast and does so when market conditions are favorable. Storage capacity at the Tyler refinery exceeds 2.7 millions barrels (1.2 million barrels for crude oil and 1.5 million barrels for refined petroleum products and intermediate stocks), including tankage along the Companys pipeline system. During the past five years, the Company has invested approximately $13 mm in capital projects of a non-environmental nature at the Tyler refinery. Liquidity and capital constraints experienced by the Company over the past several years has necessitated that the Company limit capital projects at the Tyler Refinery to only those necessary to continue operation and comply with existing environmental regulations.

Tyler

The Tyler refinery has a crude unit with a 52,000 BPD atmospheric column and a 15,000 BPD vacuum tower. The other major process units at the Tyler refinery include a 20,000 BPD Fluid catalytic cracking unit, a 6,000 BPD delayed coking unit, a 20,000 BPD naphtha hydro treating unit, a 12,000 BPD distillate hydro treating unit, two reforming units with a combined capacity of 21,500 BPD, a 5,000 BPD isomerization unit, and an alkylation unit with a capacity of 4,700 BPD. In 2003, the Tyler refinery operated at approximately 100% of rated crude unit capacity, with production yielding approximately 57% gasoline and approximately 34% distillates, which includes the production of 5,400 BPD of aviation fuels. Of the total gasoline production, approximately 10% was premium octane grades. In addition, the refinery produced and sold by-products including propylene, propane, slurry oil, petroleum coke and sulfur. The Tyler refinery is the principal supplier of refined petroleum products in the East Texas market with approximately 70% of production distributed at the refinery's tuck terminal. The remaining production is shipped via pipeline for sale either from the Company' terminals or from other terminal along the pipeline. Deliveries under term exchange agreements account for a significant portion of the refinerys truck terminal activity.

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[ page 20 of 22 ]

J E F F E R I E S H I G H Y I E L D R E S E AR C H

Energy Refining & Marketing

2004 Jefferies & Company, Inc. All rights reserved. I, Greg Imbruce, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. This material has been prepared by Jefferies & Company, Inc. ("Jefferies") a U.S.-registered broker-dealer, employing appropriate expertise, and in the belief that it is fair and not misleading. It is approved for distribution in the United Kingdom by Jefferies International Limited ("JIL") regulated by the Financial Services Authority ("FSA"). The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore except for any obligations under the rules of the FSA, we do not guarantee its accuracy. Additional and supporting information is available upon request. This is not an offer or solicitation of an offer to buy or sell any security or investment. Any opinion or estimates constitute our best judgment as of this date, and are subject to change without notice. Jefferies and JIL and their affiliates and their respective directors, officers and employees may buy or sell securities mentioned herein as agent or principal for their own account. This material is intended for use only by professional or institutional investors falling within articles 19 or 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001and not the general investing public. None of the investments or investment services mentioned or described herein are available to other persons in the U.K. and in particular are not available to "private customers" as defined by the rules of the FSA or to anyone in Canada who is not a "Designated Institution" as defined by the Securities Act (Ontario)."
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[ page 21 of 22 ]

HIGH YIELD RESEARCH

HIGH YIELD AND SPECIAL SITUATIONS GROUP RESEARCH

Brett M. Levy, Co-Director Bob Welch, Co-Director blevy@jefco.com bwelch@jefco.com (203) 708-5806 (203) 708-5800

TRADING
David W. Schwartz, Executive Vice President John Budish Michael Satzberg (203) 708-5800 (973) 912-2790 (310) 575-5100

Restaurant, food and Consumer Products Kenneth Bann kbann@jefco.com Michael Schwartz maschwartz@jefco.com

(973) 912-2790 (973) 912-2790 Steve Baker Harrison Bubrosky Laury Carr Don Dizon Howard Fife Drew Hall Mark Neuner Steve Sander Michael Shapiro Tony Ulehla Paul Voigt

SALES
(203) 708-5800 (203) 708-5800 (203) 708-5800 (203) 708-5800 (203) 708-5800 (203) 708-5800 (310) 575-5128 (203) 708-5800 (203) 708-5800 (203) 708-5800 (203) 708-5800

Aerospace & Defense, Packaging, Paper and Forest Products Bradley K. Bryan bbryan@jefco.com (310) 575-5113

Gaming, Lodging and Leisure Raymond S. Cheesman rcheesman@jefco.com (970) 926-5309

Maritime, Financial Services and Movie Theatres Oliver Corlett Energy, Power and Utilities Greg Imbruce Metals and Mining Brett M. Levy Raymond Wu Communications and Media Romeo A. Reyes rreyes@jefco.com Chak K. Gude cgude@jefco.com Steve Sweeney, CFA ssweeney@jefco.com Healthcare Kyle Smith ksmith@jefco.com (973) 912-2790 (203) 708-5800 (203) 708-5803 (203) 708-5805 blevy@jefco.com rwu@jefco.com (203) 708-5806 (203) 708-5807 gimbruce@jefco.com (203) 708-5804 ocorlett@jefco.com (310) 575-5100

CAPITAL MARKETS
Eric Macy, Executive Vice President Travis Black Timothy Lepore (973) 912-2888 (973) 912-2888 (973) 912-2888

PRIVATE PLACEMENTS
Andrew Woolford Neil Wessan Frederick Buffone Daniel Polner Tom Tuchscher (203) 708-5878 (203) 708-5874 (203) 708-5877 (203) 708-5875 (203) 708-5810

Industrials, Automotive Supply, Chemicals and Special Situations Joseph P. Von Meister, CFA jvm@jefco.com (973) 912-9706