Dallas based refining company Holly Corp. has announced its deal of buying Houston based Frontier Oil Corp. The deal is worth $2.8 billion. All money will be paid up in form of shares. Holly Corp. stakeholders will own 51% in the combined company.

The new company named, HollyFrontier Corp. will be aimed to targeting increasing oil production in United States and Canada. The newly formed company will be soon operating a total of five refineries. HollyFrontier will have its headquarters in Dallas.

Five refineries in Wyoming, Kansas, Oklahoma, Utah and New Mexico are using domestic as well as Canadian crude oil. With increase in production of crude in North America, US refineries are purchasing crude from local markets. Crude from North America is relatively cheaper than overseas imports. So this deal will give Holly Corp. access to discounted crude oil. The combined company will have capacity to process 440,000 barrels of oil a day.

Now, the company management expects to see more profits from gasoline and disel business. Frontier executive Mike Jennings recently said in a conference with analysts "I see this as a structural difference that is going to endure for a period of time."

Jennings added that both companies have their own strong fundamentals, so its very much speculative that merger of two will be beneficial in long run. Holly Corp. is also very much optimist about the deal. Company said in a release that the new company will be most profitable independent refining company on per-barrel basis in US.

About the top level executives of new company, Holly revealed that Jennings will be the Chief Executive of the company. The current Holly Chief Executive Matt Clifton will hold the post of chairman in the company. There will be 14 seats in the board, each holding 7.