Oil refiner HollyFrontier Corp. (NYSE: HFC) waited until the market closed on Friday to announce that the company expects to take a pretax charge of $350 million to $450 million for the 2014 fiscal year due to the fourth-quarter drop in crude oil prices.

To give a sense of the size of the charge, in the third quarter HollyFrontier posted a gross profit of $410.7 million. In other words, one quarter of profit in 2014 has just evaporated.

The company said the expected charge will be a “lower of cost or market” inventory adjustment. Although the company gives no further explanation, the short version is that the value of HollyFrontier’s crude oil in inventory has very likely declined to well below what the company originally paid for it.

On October 1, the first day of HollyFrontier’s fourth quarter, the spot price of crude oil in the United States was $90.74 a barrel, according to the U.S. Energy Information Administration. On December 29, that same barrel cost just $53.46. Because the company uses a “last in-first out” inventory accounting method, the more expensive barrels are at the bottom of the storage tanks when the price falls. When a refiner finally has to push those barrels through the plant, the higher price of the barrel of the older crude cannot always be made up in the price the refiner can charge for the refined products.

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In HollyFrontier’s case, the refiner also ran into another issue. The turnaround at its Kansas refinery took 10 days longer to complete than the company had planned because the company discovered “significant mechanical repairs needed in the Gas Oil Hydrotreater.” The Kansas refinery’s capacity is 135,000 barrels a day of the company’s total capacity of about 440,000 barrels a day.

In its Friday announcement, HollyFrontier said that the longer turnaround in Kansas “prompted a shift toward lighter and sweeter crude slate post-turnaround and limited the company’s overall crude charge in the quarter to 359,000 [barrels per day].” Running an average of around 80,000 fewer barrels daily is going to cost a refiner something, especially if the price of crude is falling.

HollyFrontier’s shares closed at $38.44 on Friday, up 2.6% and near the low end of its 52-week range of $35.31 to $53.42. According to a report at TheStreet, the shares were down 4.4% after hours.

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