UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________
FORM 10-K
_________________________________________________________________
(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from    __________   to   ____________         
Commission File Number 1-3876
 _________________________________________________________________
HOLLYFRONTIER CORPORATION
(Exact name of registrant as specified in its charter)
_________________________________________________________________
Delaware
 
75-1056913
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
2828 N. Harwood, Suite 1300
Dallas, Texas
 
75201-1507
(Address of principal executive offices)
 
(Zip Code)
(214) 871-3555
Registrant’s telephone number, including area code
_________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value registered on the New York Stock Exchange.

Securities registered pursuant to 12(g) of the Act:
None.
_________________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   ý     No   ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes   ¨     No   ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   ý     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   ý     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.        ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ¨     No   ý
On June 30, 2016 , the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the Common Stock, par value $0.01 per share, held by non-affiliates of the registrant was approximately $3.8 billion , based upon the closing price on the New York Stock Exchange on such date. (This is not deemed an admission that any person whose shares were not included in the computation of the amount set forth in the preceding sentence necessarily is an “affiliate” of the registrant.)
177,360,162 shares of Common Stock, par value $.01 per share, were outstanding on February 17, 2017 .
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement for its annual meeting of stockholders to be held on May 11, 2017 , which proxy statement will be filed with the Securities and Exchange Commission within 120 days after December 31, 2016 , are incorporated by reference in Part III.

Table of Content

TABLE OF CONTENTS


Item
Page
 
 
PART I
 
 
 
 
 
 
 
 
 
PART II
 
 
 
 
 
 
 
 
 
PART III
 
 
 
 
 
PART IV
 
 
 
 
 
 
 

2
Table of Content

PART I

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10‑K contains certain “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical fact included in this Form 10-K, including, but not limited to, those under “Business and Properties” in Items 1 and 2, “Risk Factors” in Item 1A, “Legal Proceedings” in Item 3 and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, are forward-looking statements. Forward-looking statements use words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations. These statements are based on management's beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. All statements concerning our expectations for future results of operations are based on forecasts for our existing operations and do not include the potential impact of any future acquisitions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors including, but not limited to:

•
risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in our markets;
•
the demand for and supply of crude oil and refined products;
•
the spread between market prices for refined products and market prices for crude oil;
•
the possibility of constraints on the transportation of refined products;
•
the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines;
•
effects of governmental and environmental regulations and policies;
•
the availability and cost of our financing;
•
the effectiveness of our capital investments and marketing strategies;
•
our efficiency in carrying out construction projects;
•
our ability to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations, including Petro-Canada Lubricants Inc.;
•
the possibility of terrorist attacks and the consequences of any such attacks;
•
general economic conditions; and
•
other financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

Cautionary statements identifying important factors that could cause actual results to differ materially from our expectations are set forth in this Form 10-K, including without limitation the forward-looking statements that are referred to above. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in this Form 10-K under “Risk Factors” in Item 1A and in conjunction with the discussion in this Form 10-K in “Management's Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Liquidity and Capital Resources.” All forward-looking statements included in this Form 10-K and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



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DEFINITIONS

Within this report, the following terms have these specific meanings:
 
“Alkylation” means the reaction of propylene or butylene (olefins) with isobutane to form an iso-paraffinic gasoline (inverse of cracking).

“Aromatic oil” is long chain oil that is highly aromatic in nature and is used to manufacture tires and industrial rubber products and in the production of specialty asphalt.

“ BPD ” means the number of barrels per calendar day of crude oil or petroleum products.
 
“ BPSD ” means the number of barrels per stream day (barrels of capacity in a 24 hour period) of crude oil or petroleum products.

“Biodiesel” means an alternative fuel produced from renewable biological resources.

“ Black wax crude oil ” is a low sulfur, low gravity crude oil produced in the Uintah Basin in Eastern Utah that has certain characteristics that require specific facilities to transport, store and refine into transportation fuels.

“Catalytic reforming” means a refinery process which uses a precious metal (such as platinum) based catalyst to convert low octane naphtha to high octane gasoline blendstock and hydrogen. The hydrogen produced from the reforming process is used to desulfurize other refinery oils and is a primary source of hydrogen for the refinery.
 
“ Cracking ” means the process of breaking down larger, heavier and more complex hydrocarbon molecules into simpler and lighter molecules.

“ Crude oil distillation ” means the process of distilling vapor from liquid crudes, usually by heating, and condensing the vapor slightly above atmospheric pressure turning it back to liquid in order to purify, fractionate or form the desired products.

“ Ethanol ” means a high octane gasoline blend stock that is used to make various grades of gasoline.

“ FCC ,” or fluid catalytic cracking, means a refinery process that breaks down large complex hydrocarbon molecules into smaller more useful ones using a circulating bed of catalyst at relatively high temperatures.

“ Hydrodesulfurization ” means to remove sulfur and nitrogen compounds from oil or gas in the presence of hydrogen and a catalyst at relatively high temperatures.

“ Hydrogen plant ” means a refinery unit that converts natural gas and steam to high purity hydrogen, which is then used in the hydrodesulfurization, hydrocracking and isomerization processes.

“HF alkylation” or hydrofluoric alkylation, means a refinery process which combines isobutane and C3/C4 olefins using HF acid as a catalyst to make high octane gasoline blend stock.
 
“ Isomerization ” means a refinery process for rearranging the structure of C5/C6 molecules without changing their size or chemical composition and is used to improve the octane of C5/C6 gasoline blendstocks.

“ LPG ” means liquid petroleum gases.

“ Lubricant ” or “ lube ” means a solvent neutral paraffinic product used in commercial heavy duty engine oils, passenger car oils and specialty products for industrial applications such as heat transfer, metalworking, rubber and other general process oil.

“MSAT2” means Control of Hazardous Air Pollutants from Mobile Sources, a rule issued by the U.S. Environmental Protection Agency to reduce hazardous emissions from motor vehicles and motor vehicle fuels.

“MEK” means a lube process that separates waxy oil from non-waxy oils using methyl ethyl ketone as a solvent.

“ MMBTU ” means one million British thermal units.


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“Natural gasoline” means a low octane gasoline blend stock that is purchased and used to blend with other high octane stocks produced to make various grades of gasoline.

“Paraffinic oil” is a high paraffinic, high gravity oil produced by extracting aromatic oils and waxes from gas oil and is used in producing high-grade lubricating oils.

“ Refinery gross margin ” means the difference between average net sales price and average product costs per produced barrel of refined products sold. This does not include the associated depreciation and amortization costs.

“Reforming” means the process of converting gasoline type molecules into aromatic, higher octane gasoline blend stocks while producing hydrogen in the process.

“RINs” means renewable identification numbers and refers to serial numbers assigned to credits generated from biodiesel production under the Environmental Protection Agency’s Renewable Fuel Standard 2 (“RFS2”) regulations that mandate increased volumes of renewable fuels blended into the nation’s fuel supply. In lieu of blending, refiners may purchase these transferable credits in order to comply with the regulations.

“Roofing flux” is produced from the bottom cut of crude oil and is the base oil used to make roofing shingles for the housing industry.

“ROSE,” or “Solvent deasphalter / residuum oil supercritical extraction,” means a refinery unit that uses a light hydrocarbon like propane or butane to extract non-asphaltene heavy oils from asphalt or atmospheric reduced crude. These deasphalted oils are then further converted to gasoline and diesel in the FCC process. The remaining asphaltenes are either sold, blended to fuel oil or blended with other asphalt as a hardener.

“Scanfiner” is a refinery unit that removes sulfur from gasoline to produce low sulfur gasoline blendstock.

“ Sour crude oil ” means crude oil containing quantities of sulfur greater than 0.4 percent by weight, while “ sweet crude oil ” means crude oil containing quantities of sulfur equal to or less than 0.4 percent by weight.

“ Vacuum distillation ” means the process of distilling vapor from liquid crudes, usually by heating, and condensing the vapor below atmospheric pressure turning it back to a liquid in order to purify, fractionate or form the desired products.
 
“WTI” means West Texas Intermediate and is a grade of crude oil used as a common benchmark in oil pricing. WTI is a sweet crude oil and has a relatively low density.


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Items 1 and 2. Business and Properties


COMPANY OVERVIEW

References herein to HollyFrontier Corporation (“HollyFrontier”) include HollyFrontier and its consolidated subsidiaries. In accordance with the Securities and Exchange Commission's (“SEC”) “Plain English” guidelines, this Annual Report on Form 10-K has been written in the first person. In this document, the words “we,” “our,” “ours” and “us” refer only to HollyFrontier and its consolidated subsidiaries or to HollyFrontier or an individual subsidiary and not to any other person, with certain exceptions. Generally, the words “we,” “our,” “ours” and “us” include Holly Energy Partners, L.P. (“HEP”) and its subsidiaries as consolidated subsidiaries of HollyFrontier, unless when used in disclosures of transactions or obligations between HEP and HollyFrontier or its other subsidiaries. This document contains certain disclosures of agreements that are specific to HEP and its consolidated subsidiaries and do not necessarily represent obligations of HollyFrontier. When used in descriptions of agreements and transactions, “HEP” refers to HEP and its consolidated subsidiaries.

We are principally an independent petroleum refiner that produces high-value light products such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. We were incorporated in Delaware in 1947 and maintain our principal corporate offices at 2828 N. Harwood, Suite 1300, Dallas, Texas 75201-1507. Our telephone number is 214-871-3555 and our internet website address is www.hollyfrontier.com . The information contained on our website does not constitute part of this Annual Report on Form 10-K. A print copy of this Annual Report on Form 10-K will be provided without charge upon written request to the Vice President, Investor Relations at the above address. A direct link to our SEC filings is available on our website under the Investor Relations tab. Also available on our website are copies of our Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Nominating / Corporate Governance Committee Charter, Environmental, Health, Safety, and Public Policy Committee Charter and Code of Business Conduct and Ethics, all of which will be provided without charge upon written request to the Vice President, Investor Relations at the above address. Our Code of Business Conduct and Ethics applies to all of our officers, employees and directors, including our principal executive officer, principal financial officer and principal accounting officer. Our common stock is traded on the New York Stock Exchange under the trading symbol “HFC.”

As of December 31, 2016 , we:
•
owned and operated a petroleum refinery in El Dorado, Kansas (the "El Dorado Refinery"), two refinery facilities located in Tulsa, Oklahoma (collectively, the "Tulsa Refineries"), a refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the “Navajo Refinery”), a refinery located in Cheyenne, Wyoming (the "Cheyenne Refinery") and a refinery in Woods Cross, Utah (the “Woods Cross Refinery”);
•
owned and operated HollyFrontier Asphalt Company (“HFC Asphalt”) which operates various asphalt terminals in Arizona, New Mexico and Oklahoma;
•
owned a 37% interest in HEP, which includes our 2% general partner interest.

On October 29, 2016, our wholly-owned subsidiary, 9952110 Canada Inc., entered into a share purchase agreement with Suncor Energy Inc. (“Suncor”) to acquire 100% of the outstanding capital stock of Petro-Canada Lubricants Inc. (“PCLI”) that closed on February 1, 2017. Cash consideration paid was $862.1 million, or $1.125 billion in Canadian dollars.

PCLI is located in Mississauga, Ontario and is the largest producer of base oils in Canada with a plant having 15,600 BPD of lubricant production capacity, and is the only North American producer of high margin Group III base oils. The facility is downstream integrated from base oils to finished lubricants and produces a broad spectrum of specialty lubricants and white oils that are distributed to end customers worldwide. The acquisition brings HollyFrontier industry-leading product innovation and research and development capabilities, a global sales and distribution network and a strong brand portfolio recognized globally. With this transaction, we have also acquired a perpetual exclusive license to use the Petro-Canada trademark in association with the lubricant products. With the addition of PCLI, HollyFrontier becomes the fourth largest lubricants producer in North America with a capacity of 28,000 BPD, approximately 10% of North American production.

HEP is a consolidated variable interest entity (“VIE”) as defined under U.S. generally accepted accounting principles (“GAAP”). Information on HEP's assets and acquisitions completed between 2012 and 2016 can be found under the “Holly Energy Partners, L.P.” section provided later in this discussion of Items 1 and 2, “Business and Properties.”


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Our operations are currently organized into two reportable segments, Refining and HEP. The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross Refineries and HFC Asphalt. The HEP segment involves all of the operations of HEP. See Note 20 “Segment Information” in the Notes to Consolidated Financial Statements for additional information on our reportable segments.


REFINERY OPERATIONS

Our refinery operations serve the Mid-Continent, Southwest and Rocky Mountain regions of the United States. We own and operate five complex refineries having a combined crude oil processing capacity of 457,000 barrels per stream day. Each of our refineries has the complexity to convert discounted, heavy and sour crude oils into a high percentage of gasoline, diesel and other high-value refined products. For 2016 , gasoline, diesel fuel, jet fuel and specialty lubricants (excluding volumes purchased for resale) represented 52% , 35% , 4% and 3% , respectively, of our total refinery sales volumes.

The tables presented below and elsewhere in this discussion of our refinery operations set forth information, including non-GAAP performance measures, about our refinery operations. The cost of products and refinery gross and net operating margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Form 10-K.
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Consolidated
 
 
 
 
 
 
Crude charge (BPD) (1)
 
423,910

 
432,560

 
406,180

Refinery throughput (BPD) (2)
 
457,480

 
463,580

 
436,400

Refinery production (BPD) (3)
 
442,110

 
446,560

 
425,010

Sales of produced refined products (BPD)
 
435,420

 
438,000

 
420,990

Sales of refined products (BPD) (4)
 
464,980

 
488,350

 
461,640

Refinery utilization (5)
 
92.8
%
 
97.6
%
 
91.7
%
Average per produced barrel (6)
 
 
 
 
 
 
Net sales
 
$
58.02

 
$
71.32

 
$
110.19

Cost of products (7)
 
49.64

 
55.25

 
96.21

Refinery gross margin (8)
 
8.38

 
16.07

 
13.98

Refinery operating expenses (9)
 
5.57

 
5.71

 
6.38

Net operating margin (8)
 
$
2.81

 
$
10.36

 
$
7.60

 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (10)
 
$
5.30

 
$
5.39

 
$
6.16

 
 
 
 
 
 
 
Feedstocks:
 
 
 
 
 
 
Sweet crude oil
 
48
%
 
51
%
 
53
%
Sour crude oil
 
26
%
 
25
%
 
23
%
Heavy sour crude oil
 
16
%
 
15
%
 
15
%
Black wax crude oil
 
3
%
 
2
%
 
2
%
Other feedstocks and blends
 
7
%
 
7
%
 
7
%
Total
 
100
%
 
100
%
 
100
%

(1)
Crude charge represents the barrels per day of crude oil processed at our refineries.
(2)
Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.
(3)
Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries.
(4)
Includes refined products purchased for resale.
(5)
Represents crude charge divided by total crude capacity (BPSD). Effective July 1, 2016, our consolidated crude capacity increased from 443,000 BPSD to 457,000 BPSD upon completion of our Woods Cross Refinery expansion project.
(6)
Represents average per barrel amount for produced refined products sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Form 10-K.
(7)
Transportation, terminal and refinery storage costs billed from HEP are included in cost of products.

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(8)
Excludes lower of cost or market inventory valuation adjustments that increased refinery gross margin by $291.9 million for the year ended December 31, 2016 and decreased refinery gross margin by $227.0 million and $397.5 million for the years ended December 31, 2015 and 2014, respectively.
(9)
Represents operating expenses of our refineries, exclusive of depreciation and amortization.
(10)
Represents refinery operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.

Principal Products and Customers
Set forth below is information regarding our principal products.
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Consolidated
 
 
 
 
 
 
Sales of produced refined products:
 
 
 
 
 
 
Gasolines
 
52
%
 
52
%
 
50
%
Diesel fuels
 
35
%
 
35
%
 
34
%
Jet fuels
 
4
%
 
4
%
 
4
%
Fuel oil
 
2
%
 
1
%
 
2
%
Asphalt
 
2
%
 
2
%
 
3
%
Lubricants
 
3
%
 
3
%
 
2
%
LPG and other
 
2
%
 
3
%
 
5
%
Total
 
100
%
 
100
%
 
100
%

Light products are shipped to customers via product pipelines or are available for loading at our refinery truck facilities and terminals. Light products are also made available to customers at various other locations via exchange with other parties.

Our principal customers for gasoline include other refiners, convenience store chains, independent marketers and retailers. Diesel fuel is sold to other refiners, truck stop chains, wholesalers and railroads. Jet fuel is sold for commercial airline use. Specialty lubricant products are sold in both commercial and specialty markets. LPG's are sold to LPG wholesalers and LPG retailers. We produce and purchase asphalt products that are sold to governmental entities, paving contractors or manufacturers. Asphalt is also blended into fuel oil and is either sold locally or is shipped to the Gulf Coast. See Note 22 “Significant Customers” in the Notes to Consolidated Financial Statements for additional information on our significant customers.


Mid-Continent Region (El Dorado and Tulsa Refineries)

Facilities
The El Dorado Refinery is a high-complexity coking refinery with a 135,000 barrels per stream day processing capacity and the ability to process significant volumes of heavy and sour crudes. The integrated refining processes at the Tulsa West and East refinery facilities provide us with a highly complex refining operation having a combined crude processing rate of approximately 125,000 barrels per stream day. For 2016 , gasoline, diesel fuel, jet fuel and specialty lubricants (excluding volumes purchased for resale) represented 50% , 33% , 7% and 5% , respectively, of our Mid-Continent sales volumes.


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The following table sets forth information about our Mid-Continent region operations, including non-GAAP performance measures.
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Mid-Continent Region (El Dorado and Tulsa Refineries)
 
 
 
 
 
 
Crude charge (BPD) (1)
 
262,170

 
263,340

 
243,240

Refinery throughput (BPD) (2)
 
280,920

 
277,260

 
255,020

Refinery production (BPD) (3)
 
269,840

 
266,170

 
249,350

Sales of produced refined products (BPD)
 
261,200

 
258,420

 
245,600

Sales of refined products (BPD) (4)
 
285,080

 
295,470

 
273,630

Refinery utilization (5)
 
100.8
%
 
101.3
%
 
93.6
%
 
 
 
 
 
 
 
Average per produced barrel (6)
 
 
 
 
 
 
Net sales
 
$
58.14

 
$
72.33

 
$
110.79

Cost of products (7)
 
50.17

 
56.88

 
98.39

Refinery gross margin (8)
 
7.97

 
15.45

 
12.40

Refinery operating expenses (9)
 
4.69

 
4.95

 
5.73

Net operating margin (8)
 
$
3.28

 
$
10.50

 
$
6.67

 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (10)
 
$
4.36

 
$
4.61

 
$
5.52


 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Mid-Continent Region (El Dorado and Tulsa Refineries)
 
 
 
 
 
 
Feedstocks:
 
 
 
 
 
 
Sweet crude oil
 
58
%
 
59
%
 
71
%
Sour crude oil
 
18
%
 
21
%
 
11
%
Heavy sour crude oil
 
17
%
 
15
%
 
14
%
Other feedstocks and blends
 
7
%
 
5
%
 
4
%
Total
 
100
%
 
100
%
 
100
%

Footnote references are provided under our Consolidated Refinery Operating Data table on page 7.

The El Dorado Refinery is located on 1,100 acres south of El Dorado, Kansas and is a fully integrated refinery. The principal processing units at the El Dorado Refinery consist of crude and vacuum distillation; hydrodesulfurization of naphtha, kerosene, diesel, and gas oil streams; isomerization; catalytic reforming; aromatics recovery; catalytic cracking; alkylation; delayed coking; hydrogen production; and sulfur recovery. Refining operations began at the site in 1917 and the operating units now present include both newly constructed units and older units that have been upgraded over the years.

The Tulsa West facility is located on a 750-acre site in Tulsa, Oklahoma situated along the Arkansas River. The principal processing units at the Tulsa West facility consist of crude and vacuum distillation (with light ends recovery), naphtha hydrodesulfurization, propane de-asphalting, lubes extraction, MEK dewaxing, delayed coker and butane splitter units. Most of the operating units at the facility currently in service were built in the late 1950s and early 1960s. The refinery was reconfigured to emphasize specialty lubricant production in the early 1990s.

The Tulsa East facility is located on a 466-acre site also in Tulsa, Oklahoma situated along the Arkansas River. The principal process units at the Tulsa East facility consist of crude and vacuum distillation, naphtha hydrodesulfurization, FCC, isomerization, catalytic reforming, alkylation, scanfiner, diesel hydrodesulfurization and sulfur units.

Markets and Competition
The primary markets for the El Dorado Refinery's refined products are Colorado and the Plains States, which include the Kansas City metropolitan area. The gasoline, diesel and jet fuel produced by the El Dorado Refinery are primarily shipped via pipeline to terminals for distribution by truck or rail. We ship product via the NuStar Pipeline Operating Partnership L.P. Pipeline to the northern Plains States, via the Magellan Pipeline Company, L.P. (“Magellan”) mountain pipeline to Denver, Colorado, and on the Magellan mid-continent pipeline to the Plains States. Additionally, HEP's on-site truck and rail racks facilitate access to local refined product markets.


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The El Dorado Refinery faces competition from other Plains States and Mid-Continent refiners, but the principal competitors for the El Dorado Refinery are Gulf Coast refiners. Our Gulf Coast competitors typically have lower production costs due to greater economies of scale; however, they incur higher refined product transportation costs, which allows the El Dorado Refinery to compete effectively in the Plains States and Rocky Mountain region with Gulf Coast refineries.

The Tulsa Refineries serve the Mid-Continent region of the United States. Distillates and gasolines are primarily delivered from the Tulsa Refineries to market via pipelines owned and operated by Magellan. These pipelines connect the refinery to distribution channels throughout Colorado, Oklahoma, Kansas, Missouri, Illinois, Iowa, Minnesota, Nebraska and Arkansas. Additionally, HEP's on-site truck and rail racks facilitate access to local refined product markets.

We have an offtake agreement through November 2019 with an affiliate of Sinclair whereby Sinclair purchases 45,000 to 50,000 BPD of gasoline and distillate products at market prices from us to supply its branded and unbranded marketing network throughout the Midwest. Upon expiration, the offtake agreement can be renewed by Sinclair for an additional five-year term. For the year ended December 31, 2016 , sales to Sinclair represented approximately 26% of the Tulsa Refineries' total sales and 9% of our total consolidated sales.

The Tulsa Refineries' principal customers for conventional gasoline include Sinclair, other refiners, convenience store chains, independent marketers and retailers. Sinclair, truck stop operators and railroads are the primary diesel customers. Jet fuel is sold primarily for commercial use. The refinery's asphalt and roofing flux products are sold via truck or railcar directly from the refineries or to customers throughout the Mid-Continent region primarily to paving contractors and manufacturers of roofing products.

For the year ended December 31, 2016 , sales to Shell Oil represented approximately 10% of our Mid-Continent refineries' total sales and 10% of our total consolidated sales. We have a sales agreement with an affiliate of Shell Oil under which Shell Oil purchases gasoline and diesel production of the El Dorado Refinery and Tulsa Refineries at market prices through October 2018 primarily to support its branded marketing network.

Our Tulsa West facility also produces specialty lubricant products sold in both commercial and specialty markets throughout North America and to customers with operations in Central America and South America. The specialty lubricant products are high-value products that provide a significantly higher margin contribution to the refinery. Base oil customers include blender-compounders who prepare the various finished lubricant and grease products sold to end users. Agricultural products are formulated as supplemental carriers for herbicides and as Environmental Protection Agency (“EPA”) registered pesticide oils, are sold to product formulators. Process oil customers include rubber and chemical industry customers. Specialty waxes are sold primarily to packaging customers as coating material for paper and cardboard, and to non-packaging customers in the construction materials, adhesive and candle-making markets. Our production represents approximately 5% of paraffinic oil capacity and 14% of wax production capacity in the United States market and is one of four refineries of specialty aromatic oils in North America.

Principal Products
Set forth below is information regarding the principal products produced at our El Dorado and Tulsa Refineries:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Mid-Continent Region (El Dorado and Tulsa Refineries)
 
 
 
 
 
 
Sales of produced refined products:
 
 
 
 
 
 
Gasolines
 
50
%
 
50
%
 
47
%
Diesel fuels
 
33
%
 
33
%
 
33
%
Jet fuels
 
7
%
 
7
%
 
7
%
Fuel oil
 
1
%
 
1
%
 
1
%
Asphalt
 
2
%
 
2
%
 
3
%
Lubricants
 
5
%
 
4
%
 
4
%
LPG and other
 
2
%
 
3
%
 
5
%
Total
 
100
%
 
100
%
 
100
%


10
Table of Content

Crude Oil and Feedstock Supplies
Both of our Mid-Continent Refineries are connected via pipeline to Cushing, Oklahoma, a significant crude oil pipeline trading and storage hub. The El Dorado Refinery and the Tulsa Refineries are located approximately 125 miles and 50 miles, respectively, from Cushing, Oklahoma. Local pipelines provide direct access to regional Oklahoma crude production as well as access to United States onshore and Canadian crudes. The proximity of the refineries to the Cushing pipeline and storage hub provides the flexibility to optimize their crude slate with a wide variety of crude oil supply options. Additionally, we have transportation service agreements to transport Canadian crude oil on the Spearhead and Keystone Pipelines, enabling us to transport Canadian crude oil to Cushing for subsequent shipment to either of our Mid-Continent Refineries.

We also purchase isobutane, natural gasoline, butane and other feedstocks for processing at our Mid-Continent Refineries. The El Dorado Refinery is connected to Conway, Kansas, a major gas liquids trading and storage hub, via the Oneok Pipeline. From time to time, other feedstocks such gas oil, naphtha and light cycle oil are purchased from other refiners for use at our refineries.


Southwest Region (Navajo Refinery)

Facilities
The Navajo Refinery has a crude oil processing capacity of 100,000 barrels per stream day and has the ability to process sour crude oils into high-value light products such as gasoline, diesel fuel and jet fuel. For 2016 , gasoline and diesel fuel (excluding volumes purchased for resale) represented 54% and 40% , respectively, of our Southwest sales volumes.

The following table sets forth information about our Southwest region operations, including non-GAAP performance measures.
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Southwest Region (Navajo Refinery)
 
 
 
 
 
 
Crude charge (BPD) (1)
 
98,090

 
100,450

 
98,120

Refinery throughput (BPD) (2)
 
107,690

 
111,840

 
110,250

Refinery production (BPD) (3)
 
106,460

 
110,210

 
107,520

Sales of produced refined products (BPD)
 
108,280

 
111,580

 
106,870

Sales of refined products (BPD) (4)
 
110,740

 
119,560

 
115,620

Refinery utilization (5)
 
98.1
%
 
100.5
%
 
98.1
%
 
 
 
 
 
 
 
Average per produced barrel (6)
 
 
 
 
 
 
Net sales
 
$
57.87

 
$
69.76

 
$
110.54

Cost of products (7)
 
48.68

 
53.57

 
94.58

Refinery gross margin (8)
 
9.19

 
16.19

 
15.96

Refinery operating expenses (9)
 
4.72

 
4.92

 
5.43

Net operating margin (8)
 
$
4.47

 
$
11.27

 
$
10.53

 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (10)
 
$
4.75

 
$
4.91

 
$
5.26

Feedstocks:
 
 
 
 
 
 
Sweet crude oil
 
28
%
 
36
%
 
13
%
Sour crude oil
 
63
%
 
54
%
 
74
%
Heavy sour crude oil
 
—
%
 
—
%
 
2
%
Other feedstocks and blends
 
9
%
 
10
%
 
11
%
Total
 
100
%
 
100
%
 
100
%

Footnote references are provided under our Consolidated Refinery Operating Data table on page 7.

The Navajo Refinery's Artesia, New Mexico facility is located on a 561-acre site and is a fully integrated refinery with crude distillation, vacuum distillation, FCC, ROSE (solvent deasphalter), HF alkylation, catalytic reforming, hydrodesulfurization, mild hydrocracking, isomerization, sulfur recovery and product blending units. The operating units at the Artesia facility include newly constructed units, older units that have been relocated from other facilities and upgraded and re-erected in Artesia, and units that have been operating as part of the Artesia facility (with periodic major maintenance) for many years, in some very limited cases since before 1970.


11
Table of Content

The Artesia facility is operated in conjunction with a refining facility located in Lovington, New Mexico, approximately 65 miles east of Artesia. The principal equipment at the Lovington facility consists of a crude distillation unit and associated vacuum distillation units that were constructed after 1970. The Lovington facility processes crude oil into intermediate products that are transported to Artesia by means of three intermediate pipelines owned by HEP. These products are then upgraded into finished products at the Artesia facility. The combined crude oil capacity of the Navajo Refinery facilities is 100,000 BPSD and it typically processes or blends an additional 10,000 BPSD of natural gasoline, butane, gas oil and naphtha.

Markets and Competition
The Navajo Refinery primarily serves the southwestern United States market, including the metropolitan areas of El Paso, Texas; Albuquerque, Moriarty and Bloomfield, New Mexico; Phoenix and Tucson, Arizona; and portions of northern Mexico. Our products are shipped through HEP's pipelines from Artesia, New Mexico to El Paso, Texas and from El Paso to Albuquerque and to Mexico via products pipeline systems owned by Magellan and from El Paso to Tucson and Phoenix via a products pipeline system owned by Kinder Morgan's subsidiary, SFPP, L.P. (“SFPP”). In addition, petroleum products from the Navajo Refinery are transported to markets in northwest New Mexico, to Moriarty, New Mexico, near Albuquerque, via HEP's pipelines running from Artesia to San Juan County, New Mexico, and to Bloomfield, New Mexico. We have refined product storage through our pipelines and terminals agreement with HEP at terminals in El Paso, Texas; Tucson, Arizona; and Artesia and Moriarty, New Mexico.

El Paso Market
The El Paso market for refined products is currently supplied by a number of area and Gulf Coast refiners and pipelines. Area refiners include Navajo, WRB Refining, LLC (“WRB”) (a joint venture between Phillips 66 and Cenovus Energy), Valero, Alon USA, Inc. (“Alon”) and Western Refining. Pipelines serving this market are owned by Magellan, NuStar Energy L.P. and HEP. Refined products from the Gulf Coast are transported via Magellan pipelines.

Arizona Market
The Arizona market for refined products is currently supplied by a number of refiners via pipelines and trucks. Refiners include companies located in west Texas, eastern New Mexico, northern New Mexico, the Gulf Coast and the West Coast. Magellan's pipeline systems deliver refined products from the Texas Gulf Coast to El Paso and, through interconnections with third-party common carrier pipelines, into the Arizona market.

New Mexico Markets
The Artesia, Albuquerque, Moriarty and Bloomfield markets are supplied by a number of refiners via pipelines and trucks. Refiners include Navajo, Valero, Western Refining, Alon and WRB.

We use a common carrier pipeline out of El Paso to serve the Albuquerque market. In addition, HEP leases from Mid-America Pipeline Company, L.L.C., a pipeline between White Lakes, New Mexico and the Albuquerque vicinity and Bloomfield, New Mexico. The lease agreement currently runs through 2026, and HEP has options to renew for one additional ten-year period. HEP owns and operates a 12-inch pipeline from the Navajo Refinery to the leased pipeline as well as terminalling facilities in Moriarty, which is 40 miles east of Albuquerque. This facility permits us to ship light products to the Albuquerque and Santa Fe, New Mexico areas. In addition, we serve southern Colorado and northern Arizona primarily out of a terminal in Bloomfield, New Mexico, which is owned by Western Refining.

Principal Products
Set forth below is information regarding the principal products produced at our Navajo Refinery:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Southwest Region (Navajo Refinery)
 
 
 
 
 
 
Sales of produced refined products:
 
 
 
 
 
 
Gasolines
 
54
%
 
55
%
 
54
%
Diesel fuels
 
40
%
 
39
%
 
38
%
Fuel oil
 
3
%
 
2
%
 
4
%
Asphalt
 
1
%
 
1
%
 
1
%
LPG and other
 
2
%
 
3
%
 
3
%
Total
 
100
%
 
100
%
 
100
%


12
Table of Content

Crude Oil and Feedstock Supplies
The Navajo Refinery is situated near the Permian Basin, an area that has historically, and continues to have, abundant supplies of crude oil available both for regional users and for export to other areas. We purchase crude oil from independent producers in southeastern New Mexico and west Texas as well as from major oil companies. The crude oil is gathered through HEP's pipelines and through third-party tank trucks and crude oil pipeline systems for delivery to the Navajo Refinery.

We also purchase volumes of isobutane, natural gasoline and other feedstocks to supply the Navajo Refinery from sources in Texas and the Mid-Continent area that are delivered to our region on a common carrier pipeline owned by Enterprise Products, L.P. Ultimately all volumes of these products are shipped to the Artesia refining facilities on HEP's intermediate pipelines running from Lovington to Artesia. From time to time, we purchase gas oil, naphtha and light cycle oil from other refiners for use as feedstock.


Rocky Mountain Region (Cheyenne and Woods Cross Refineries)

Facilities
The Cheyenne and the Woods Cross Refineries have crude oil processing capacities of 52,000 and 45,000 barrels per stream day, respectively. The Cheyenne Refinery processes heavy Canadian crudes as well as local sweet crudes such as that produced from the Bakken shale and similar resources. The Woods Cross Refinery processes regional sweet and black wax crude as well as Canadian sour crude oils into high-value light products. For 2016 , gasoline and diesel fuel (excluding volumes purchased for resale) represented 60% and 33% , respectively, of our Rocky Mountain sales volumes.

The following table sets forth information about our Rocky Mountain region operations, including non-GAAP performance measures.
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
 
 
 
 
 
 
Crude charge (BPD) (1)
 
63,650

 
68,770

 
64,820

Refinery throughput (BPD) (2)
 
68,870

 
74,480

 
71,130

Refinery production (BPD) (3)
 
65,810

 
70,180

 
68,140

Sales of produced refined products (BPD)
 
65,940

 
68,000

 
68,520

Sales of refined products (BPD) (4)
 
69,160

 
73,320

 
72,390

Refinery utilization (5)
 
65.6
%
 
82.9
%
 
78.1
%
 
 
 
 
 
 
 
Average per produced barrel (6)
 
 
 
 
 
 
Net sales
 
$
57.80

 
$
70.05

 
$
107.51

Cost of products (7)
 
49.13

 
51.80

 
90.95

Refinery gross margin (8)
 
8.67

 
18.25

 
16.56

Refinery operating expenses (9)
 
10.45

 
9.89

 
10.20

Net operating margin (8)
 
$
(1.78
)
 
$
8.36

 
$
6.36

 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (10)
 
$
10.01

 
$
9.03

 
$
9.83

 
 
 
 
 
 
 
Feedstocks:
 
 
 
 
 
 
Sweet crude oil
 
39
%
 
42
%
 
44
%
Sour crude oil
 
—
%
 
—
%
 
2
%
Heavy sour crude oil
 
35
%
 
37
%
 
30
%
Black wax crude oil
 
18
%
 
13
%
 
15
%
Other feedstocks and blends
 
8
%
 
8
%
 
9
%
Total
 
100
%
 
100
%
 
100
%

Footnote references are provided under our Consolidated Refinery Operating Data table on page 7.

The Cheyenne Refinery facility is located on a 255-acre site and is a fully integrated refinery with crude distillation, vacuum distillation, coking, FCC, HF alkylation, catalytic reforming, hydrodesulfurization of naphtha and distillates, butane isomerization, hydrogen production, sulfur recovery and product blending units. The operating units at the Cheyenne Refinery include both newly constructed units and older units that have been upgraded over the years.


13
Table of Content

The Woods Cross Refinery facility is located on a 200-acre site and is a fully integrated refinery with crude distillation, solvent deasphalter, FCC, HF alkylation, catalytic reforming, hydrodesulfurization, isomerization, sulfur recovery and product blending units. The operating units at the Woods Cross Refinery include newly constructed units, older units that have been relocated from other facilities, upgraded and re-erected in Woods Cross, and units that have been operating as part of the Woods Cross facility (with periodic major maintenance) for many years, in some very limited cases since before 1950. The facility typically processes or blends an additional 2,000 BPSD of natural gasoline, butane and gas oil over its 45,000 BPSD capacity.

We have recently curtailed production at the Woods Cross refinery due to insufficient crude supply provided by the Plains Rocky Mountain Pipeline. We are unable to predict the duration of the supply disruption at this time, but are considering alternative solutions and working with Plains and others to rectify the situation.  

We own and operate 4 miles of hydrogen pipeline that connects the Woods Cross Refinery to a hydrogen plant located on the property of Chevron's Salt Lake City Refinery. Additionally, HEP owns and operates 12 miles of crude oil and refined products pipelines that allows us to connect our Woods Cross Refinery to common carrier pipeline systems.

We have completed construction on our existing Woods Cross expansion project, increasing crude processing capacity to 45,000 BPSD, and providing greater crude slate flexibility, which we believe will increase capacity utilization and improve overall economic returns during periods when wax crudes are in short supply. The project also included construction of new refining facilities and a new rail loading rack for intermediates and finished products associated with refining waxy crude oil.

On November 18, 2013, the Utah Division of Air Quality issued a revised air quality permit (the “Approval Order”) authorizing the expansion. On December 18, 2013, two local environmental groups filed an administrative appeal challenging the issuance of the Approval Order and seeking a stay of the Approval Order. Following an extended appeal process, the Executive Director of the Utah Department of Environmental Quality issued a final order in favor of Woods Cross on all claims on March 31, 2015, and dismissed the project opponents’ arguments with prejudice. On April 27, 2015, the opponents filed a petition for review and notice of appeal with the Utah Court of Appeals challenging the agency’s decision to uphold the permit and dismiss the project opponents’ arguments. On August 4, 2016, the Utah Court of Appeals transferred the case to the Utah Supreme Court. The Utah Supreme Court established a supplemental briefing schedule, which ran through October 2016. Oral argument took place on December 14, 2016 and focused primarily on alleged procedural defects in the Petitioner’s appeal. The Court took the matter under advisement and will issue a written decision. Our continued use of the expansion project facilities is subject to the Woods Cross Refinery successfully defending the Approval Order on appeal at the Utah Court of Appeals.

Markets and Competition
The Cheyenne Refinery primarily markets its products in eastern Colorado, including metropolitan Denver, eastern Wyoming and western Nebraska. Because of the location of the Cheyenne Refinery, we are able to sell a significant portion of its diesel directly from the truck rack at the refinery, therefore, eliminating transportation costs. The Cheyenne Refinery ships refined products via the Magellan pipeline serving Denver and Colorado Springs, Colorado.

Denver Market
The most competitive market for the Cheyenne Refinery is the Denver metropolitan area. Three other refineries supply the Denver market: Wyoming refineries near Rawlins and in Casper owned by Sinclair and a refinery in Denver owned by Suncor. Five product pipelines also supply Denver, including three from outside the region.

Utah Market
The Woods Cross Refinery's primary market is Utah, which is currently supplied by a number of local refiners and the Pioneer Pipeline. In addition to our Woods Cross Refinery, local area refiners include Chevron, Tesoro, Big West and Silver Eagle. Other refiners that ship into the Woods Cross market via the Pioneer Pipeline include Sinclair, ExxonMobil, CHS and Phillips 66. We estimate the four local refineries that compete with our Woods Cross Refinery have a combined capacity to process approximately 165,000 BPD of crude oil. The five Utah refineries collectively supply an estimated 70% of the gasoline and distillate products consumed in the states of Utah and Idaho, with the remainder imported from refineries in Wyoming and Montana via the Pioneer Pipeline owned jointly by Sinclair and Phillips 66. Approximately 40% - 45% of the gasoline and diesel fuel produced by our Woods Cross Refinery is sold through a network of Phillips 66 branded marketers under a long-term supply agreement.


14
Table of Content

Idaho, Wyoming, Eastern Washington and Nevada Markets
We supply a small percentage of the refined products consumed in the combined Idaho, Wyoming, eastern Washington and Nevada markets. Our Woods Cross Refinery ships refined products over a common carrier pipeline system owned by Tesoro Logistics Northwest Pipelines LLC (“Tesoro Logistics”) to numerous terminals, including HEP's terminal at Spokane, Washington and to terminals at Pocatello and Boise, Idaho and Pasco, Washington that are owned by Tesoro Logistics. We sell to branded and unbranded customers in these markets. In 2012, we began shipping refined products to Cedar City, Utah and Las Vegas, Nevada via the UNEV Pipeline. The majority of the Las Vegas, Nevada market for refined products is supplied by various West Coast refiners and suppliers via Kinder Morgan's CalNev common carrier pipeline system.

Principal Products
Set forth below is information regarding the principal products produced at our Cheyenne and Woods Cross Refineries:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
 
 
 
 
 
 
Sales of produced refined products:
 
 
 
 
 
 
Gasolines
 
60
%
 
57
%
 
56
%
Diesel fuels
 
33
%
 
36
%
 
33
%
Fuel oil
 
2
%
 
3
%
 
1
%
Asphalt
 
3
%
 
2
%
 
5
%
LPG and other
 
2
%
 
2
%
 
5
%
Total
 
100
%
 
100
%
 
100
%

Crude Oil and Feedstock Supplies
Crude oil is transported to the Cheyenne Refinery from suppliers in Canada, Colorado, Nebraska, North Dakota and Montana via common carrier pipelines owned by Spectra, Plains and Suncor Energy, as well as by truck. The Woods Cross Refinery currently obtains crude oil from suppliers in Canada, Wyoming, Utah and Colorado as delivered via common carrier pipelines that originate in Canada, Wyoming and Colorado. We also receive crude oil via the SLC Pipeline, a joint venture common carrier pipeline in which HEP owns a 25% interest. Supplies of black wax crude oil are shipped via truck.


HollyFrontier Asphalt Company

We manufacture commodity and modified asphalt products at our manufacturing facilities located in Glendale, Arizona; Albuquerque, New Mexico; Artesia, New Mexico and Catoosa, Oklahoma. Our Albuquerque and Artesia facilities manufacture modified hot asphalt products and commodity emulsions from base asphalt materials provided by our refineries and third-party suppliers. Our Glendale facility manufactures modified hot asphalt products from base asphalt materials provided by our refineries and third-party suppliers. Our Catoosa facility manufactures specialty modified asphalt and commodity asphalt products. We market these asphalt products in Arizona, New Mexico, Oklahoma, Kansas, Missouri, Texas and northern Mexico. Our products are shipped via third-party trucking companies to commercial customers that provide asphalt based materials for commercial and government projects.


HOLLY ENERGY PARTNERS, L.P.

HEP is a Delaware limited partnership that trades on the New York Stock Exchange under the trading symbol “HEP.” HEP owns and operates logistic assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units that principally support our refining and marketing operations in the Mid-Continent, Southwest and Rocky Mountain regions of the United States and Alon's refinery in Big Spring, Texas. Additionally, HEP owns a 75% interest in UNEV Pipeline, LLC (“UNEV”), the owner of a pipeline running from Woods Cross, Utah to Las Vegas, Nevada (the “UNEV Pipeline”) and associated product terminals; a 50% interest in Frontier Aspen LLC, the owner of a pipeline running from Wyoming to Frontier Station, Utah (the “Frontier Pipeline”); a 50% interest in Osage Pipe Line Company, LLC, the owner of a pipeline running from Cushing, Oklahoma to El Dorado, Kansas (the “Osage Pipeline”); a 50% interest in Cheyenne Pipeline, LLC, the owner of a pipeline running from Fort Laramie, Wyoming to Cheyenne, Wyoming (the “Cheyenne Pipeline”); and a 25% interest in SLC Pipeline, LLC, the owner of a pipeline (the “SLC Pipeline”) that serves refineries in the Salt Lake City, Utah area.


15

HEP generates revenues by charging tariffs for transporting petroleum products and crude oil through its pipelines, by leasing certain pipeline capacity to Alon, by charging fees for terminalling and storing refined products and other hydrocarbons and providing other services at its storage tanks, terminals and refinery processing units. HEP does not take ownership of products that it transports, terminals, stores or refines; therefore, it is not directly exposed to changes in commodity prices.

HEP's recent acquisitions (2012 through present) are summarized below:

Woods Cross Assets
On October 3, 2016, HEP acquired from us all the membership interests of Woods Cross Operating LLC, which owns the crude unit, FCCU and polymerization unit of the first phase of our Woods Cross Refinery expansion project that was completed in the second quarter of 2016, for cash consideration of approximately $278.0 million. In connection with this transaction, we entered into 15-year tolling agreements containing minimum quarterly throughput commitments that provide minimum annualized payments to HEP of $56.7 million.

Cheyenne Pipeline
On June 3, 2016, HEP acquired a 50% interest in Cheyenne Pipeline LLC, owner of the Cheyenne Pipeline, in exchange for a contribution of $42.6 million in cash to Cheyenne Pipeline LLC. Cheyenne Pipeline will continue to be operated by an affiliate of Plains All American Pipeline, L.P. (“Plains”), which owns the remaining 50% interest. The 87-mile crude oil pipeline runs from Fort Laramie, Wyoming to Cheyenne, Wyoming and has an 80,000 BPD capacity.

Tulsa Tanks
On March 31, 2016, HEP acquired crude oil tanks located at our Tulsa Refineries from Plains for $39.5 million. Previously in 2009, we sold these tanks to Plains and leased them back, and due to our continuing interest in the tanks, we accounted for the transaction as a financing arrangement. Accordingly, the tanks remained on our balance sheet and were depreciated for accounting purposes, and the proceeds received from Plains were recorded as a financing obligation and presented as a component of outstanding debt.

In accounting for HEP’s March 2016 purchase from Plains, the amount paid was recorded against our outstanding financing obligation balance of $30.8 million, with the excess $8.7 million payment resulting in a loss on early extinguishment of debt.

Magellan Asset Exchange
On February 22, 2016, we obtained a 50% membership interest in Osage Pipe Line Company, LLC (“Osage”) in exchange for a 20-year terminalling services agreement, whereby, a subsidiary of Magellan Midstream Partners (“Magellan Midstream”) will provide terminalling services for all of our products originating in Artesia, New Mexico that require terminalling in or through El Paso, Texas. Under the agreement, we will be charged tariffs based on the volumes of refined product processed. Osage is the owner of the Osage pipeline, a 135-mile pipeline that transports crude oil from Cushing, Oklahoma to our El Dorado Refinery in Kansas and also has a connection to the Jayhawk pipeline that services the CHS refinery in McPherson, Kansas. The Osage pipeline is the primary pipeline that supplies our El Dorado Refinery with crude oil.
Also on February 22, 2016, we contributed the 50% membership interest in Osage to HEP, and in exchange received HEP's El Paso terminal. Pursuant to this exchange, HEP agreed to build two connections to Magellan Midstream's El Paso terminal. In addition, HEP agreed to become operator of the Osage Pipeline.

El Dorado Asset Transaction
On November 1, 2015, HEP acquired from us newly constructed naphtha fractionation and hydrogen generation units at our El Dorado Refinery for cash consideration of $62.0 million. In connection with this transaction, we entered into 15-year tolling agreements containing minimum quarterly throughput commitments that provide minimum annualized payments to HEP of $15.1 million.

Frontier Pipeline Transaction
On August 31, 2015, HEP purchased a 50% interest in Frontier Aspen LLC (previously known as Frontier Pipeline Company), owner of the Frontier Pipeline, from an affiliate of Enbridge, Inc. for $55.0 million . Frontier Pipeline will continue to be operated by an affiliate of Plains, which owns the remaining 50% interest. The 289-mile crude oil pipeline runs from Casper, Wyoming to Frontier Station, Utah and has a 72,000 BPD capacity, and supplies Canadian and Rocky Mountain crudes to Salt Lake City area refiners through a connection to the SLC Pipeline.

Crude Tank Farm Asset Transaction
On March 6, 2015, HEP purchased an existing crude tank farm adjacent to our El Dorado Refinery from an unrelated third-party for $27.5 million in cash. We are the main customer of this crude tank farm.

16


UNEV Interest Transaction
On July 12, 2012, HEP acquired from us our 75% interest in UNEV. We received consideration consisting of $260.0 million in cash and 1.0 million HEP common units. UNEV owns the UNEV Pipeline, a 12-inch refined products pipeline running from Salt Lake City, Utah to Las Vegas, Nevada together with terminal facilities in Cedar City, Utah and North Las Vegas.


Transportation Agreements

Agreements with HEP
HEP serves our refineries under long-term pipeline, terminal and tankage throughput agreements and refinery processing tolling agreements expiring from 2019 through 2036. Under these agreements, we pay HEP fees to transport, store and process throughput volumes of refined products, crude oil and feedstocks on HEP's pipelines, terminals, tankage, loading rack facilities and refinery processing units that result in minimum annual payments to HEP, including UNEV (a consolidated subsidiary of HEP). Under these agreements, the agreed upon tariff rates are subject to annual tariff rate adjustments on July 1 at a rate based upon the percentage change in Producer Price Index (“PPI”) or Federal Energy Regulatory Commission index. As of December 31, 2016 , these agreements result in minimum annualized payments to HEP of $321.0 million .

Our transactions with HEP including the transactions discussed above and fees paid under our transportation agreements with HEP and UNEV are eliminated and have no impact on our consolidated financial statements.

Agreement with Alon
HEP has a 15-year pipelines and terminals agreement with Alon expiring in 2020, under which Alon has agreed to transport on HEP's pipelines and throughput through its terminals, volumes of refined products that results in a minimum level of annual revenue. The agreed upon tariff rates are increased or decreased annually at a rate equal to the percentage change in PPI, but will not decrease below the initial tariff rate. Also, HEP has a capacity lease agreement with Alon under which Alon leases space on HEP's Orla to El Paso pipeline for the shipment of up to 15,000 barrels of refined product per day. The terms under this agreement expire in 2018 through 2022.

As of December 31, 2016 , HEP's assets include:

Pipelines
•
approximately 810 miles of refined product pipelines, including 340 miles of leased pipelines, that transport gasoline, diesel and jet fuel principally from our Navajo Refinery in New Mexico to our customers in the metropolitan and rural areas of Texas, New Mexico, Arizona, Colorado, Utah and northern Mexico;
•
approximately 510 miles of refined product pipelines that transport refined products from Alon's Big Spring refinery in Texas to its customers in Texas and Oklahoma;
•
two 65-mile pipelines that transport intermediate feedstocks and crude oil from our Navajo Refinery crude oil distillation and vacuum facilities in Lovington, New Mexico to our petroleum refinery facilities in Artesia, New Mexico;
•
one 65-mile intermediate pipeline that is used for the shipment of crude oil from the gathering systems in Barnsdall and Beeson, New Mexico to our Navajo Refinery.
•
approximately 940 miles of crude oil trunk, gathering and connection pipelines located in west Texas, New Mexico and Oklahoma that primarily deliver crude oil to our Navajo Refinery;
•
approximately 8 miles of refined product pipelines that support our Woods Cross Refinery located near Salt Lake City, Utah;
•
gasoline and diesel connecting pipelines that support our Tulsa East facility;
•
five intermediate product and gas pipelines between our Tulsa East and Tulsa West facilities;
•
crude receiving assets located at our Cheyenne Refinery;
•
a 75% interest in the UNEV Pipeline, a 427-mile, 12-inch refined products pipeline running from Woods Cross, Utah to Las Vegas, Nevada;
•
a 50% interest in the Osage Pipeline, a 135-mile pipeline that transports crude oil from Cushing, Oklahoma to our El Dorado Refinery and also has a connection to the Jayhawk pipeline that services the CHS refinery in McPherson, Kansas;
•
a 50% interest in the Cheyenne Pipeline, an 87-mile crude oil pipeline running from Fort Laramie, Wyoming to Cheyenne, Wyoming;
•
a 50% interest in the Frontier Pipeline, a 289-mile crude oil pipeline running from Casper, Wyoming to Frontier Station, Utah through a connection to the SLC Pipeline; and
•
a 25% interest in the SLC Pipeline, a 95-mile intrastate crude oil pipeline system that transports crude oil into the Salt Lake City, Utah area from the Utah terminus of the Frontier Pipeline, as well as crude oil flowing from Wyoming and Utah via Plains Rocky Mountain Pipeline.

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Refined Product Terminals and Refinery Tankage
•
three refined product terminals located in Moriarty and Bloomfield, New Mexico; and Tucson, Arizona, with an aggregate capacity of approximately 600,000 barrels, that are integrated with HEP's refined product pipeline system that serves our Navajo Refinery;
•
one refined product terminal located in Spokane, Washington, with a capacity of approximately 400,000 barrels, that serves third-party common carrier pipelines;
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one refined product terminal near Mountain Home, Idaho, with a capacity of 120,000 barrels, that serves a nearby United States Air Force Base;
•
two refined product terminals, located in Wichita Falls and Abilene, Texas, and one tank farm in Orla, Texas with aggregate capacity of approximately 500,000 barrels, that are integrated with HEP's refined product pipelines that serve Alon's Big Spring, Texas refinery;
•
a refined product loading rack facility at each of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross Refineries, heavy product / asphalt loading rack facilities at our Tulsa East facility, Navajo Refinery Lovington facility and Cheyenne Refinery, LPG loading rack facilities at our El Dorado Refinery, Tulsa West facility and Cheyenne Refinery, lube oil loading racks at our Tulsa West facility and crude oil Leased Automatic Custody Transfer units located at our Cheyenne Refinery;
•
on-site crude oil tankage at our Tulsa, El Dorado, Navajo, Cheyenne and Woods Cross Refineries having an aggregate storage capacity of approximately 1,350,000 barrels;
•
on-site refined and intermediate product tankage at our El Dorado, Tulsa and Cheyenne Refineries having an aggregate storage capacity of approximately 8,800,000 barrels;
•
eleven crude oil tanks adjacent to our El Dorado Refinery with a capacity of approximately 1,200,000 barrels that primarily serve our El Dorado Refinery;
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a 75% interest in UNEV Pipeline's product terminals near Cedar City, Utah and Las Vegas, Nevada with an aggregate capacity of approximately 615,000 barrels; and
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a 50% interest in Frontier Pipeline's tankage with an aggregate capacity of approximately 72,000 barrels.

Refinery Processing Units
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a naphtha fractionation tower at our El Dorado Refinery, with a capacity of 50,000 BPD of desulfurized naphtha;
•
a hydrogen generation unit at our El Dorado Refinery, with a capacity of 6.1 million standard cubic feet per day of natural gas.
•
a crude unit, which is primarily an atmospheric distillation tower, a desalter and heat exchangers, at our Woods Cross Refinery, with a feedstock capacity of 15,000 BPD of crude oil;
•
An FCC unit at our Woods Cross Refinery, which converts crude oil to high-value refined products such as gasoline, diesel and liquefied petroleum gases, with a capacity of 8,000 BPD; and
•
a polymerization unit at our Woods Cross Refinery, that uses the output of the fluid cracking unit and converts them into gasoline blendstock, with a capacity of 2,500 BPD.


ADDITIONAL OPERATIONS AND OTHER INFORMATION

Corporate Offices
We lease approximately 60,000 square feet for our principal corporate offices in Dallas, Texas. The lease for our principal corporate offices expires in 2021. Functions performed in the Dallas office include overall corporate management, refinery and HEP management, planning and strategy, corporate finance, crude acquisition, logistics, contract administration, marketing, investor relations, governmental affairs, accounting, tax, treasury, information technology, legal and human resources support functions.

Employees and Labor Relations
As of December 31, 2016 , we had 2,676 employees, of which 908 are currently covered by collective bargaining agreements having various expiration dates between 2017 and 2020. We consider our employee relations to be good.

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Environmental Regulation
Refinery and pipeline operations are subject to numerous federal, state, provincial and local laws regulating the discharge of substances into the environment or otherwise relating to the protection of the environment. Permits or other authorizations are required under these laws for the operation of our refineries, pipelines and related facilities, which can result in the imposition of costly reporting and maintenance obligations, and these permits and authorizations are subject to revocation, modification and renewal. Over the years, there have been ongoing communications, including notices of violations, about environmental matters between us and governmental authorities, some of which have resulted or will result in changes to operating procedures and in capital expenditures. Compliance with applicable environmental laws, regulations and permits will continue to have an impact on our operations, the results of our operations, and our capital requirements.

Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil and criminal penalties; the imposition of investigatory, remedial or corrective action obligations or the incurrence of capital expenditures; the occurrence of delays in the permitting, development or expansion of projects, and the issuance of injunctive relief limiting or prohibiting certain operations. The following is a description of the principal environmental laws applicable to our operations.

Clean Air Act - Our operations and many of the products we manufacture are subject to certain requirements of the Federal Clean Air Act (“CAA”) as well as related state and local laws and regulations. Certain CAA regulatory programs applicable to our refineries require capital expenditures for the installation of certain air pollution control devices. Additionally, the EPA has the authority under the CAA to modify the formulation of the refined transportation fuel products we manufacture in order to limit the emissions associated with their final use. Also, in October 2015, the EPA lowered the National Ambient Air Quality Standard (“NAAQS”) for ozone from 75 to 70 parts per billion for both the 8-hour primary and secondary standards. State implementation of the revised NAAQS could result in stricter permitting requirements, delay or prohibit our ability to obtain such permits, and result in increased expenditures for pollution control equipment, the costs of which could be significant. Also, in February 2016, a new EPA rule became effective that amends three refinery standards already in effect, imposing additional or, in some cases, new emission control requirements on subject refineries. The final rule requires, among other things, benzene monitoring at the refinery fence line and submittal of fence line monitoring data to the EPA on a quarterly basis; upgraded storage tank controls requirements, including new applicability thresholds; enhanced performance requirements for flares, continuous monitoring of flares and pressure release devices and analysis and remedy of flare release events; and compliance with emissions standards for delayed coking units. Refineries have up to three years from the effective date of the final rule to come into compliance with certain requirements of the rule, such as the performance requirements for flares, while other aspects of the rule require compliance to be achieved at a sooner date. In July 2016, the EPA issued a final rule providing refiners an additional 18 months to comply with a small subset of the rules related to air emissions resulting from startup, shutdown and maintenance events. More recently, in December 2016, the EPA granted petitions for reconsideration from industry and environmental organizations on aspects of the rule related to work practice standards for certain process units and equipment, as well as fence line monitoring requirements. To date, EPA has not published revised rules. These new rules, as well as subsequent rulemaking under the CAA or similar laws, or new agency interpretations of existing laws and regulations, may necessitate additional expenditures in future years and result in increased costs on our operations.

Fuel Quality Regulation - Also, we are subject to the EPA's Control of Hazardous Air Pollutants from Mobile Sources (“MSAT2”) regulations that impose reductions in the benzene content of our produced gasoline. Our refineries currently purchase a portion of their benzene credits to meet these requirements. If economically justified or otherwise determined to be beneficial, we could implement additional benzene reduction projects to eliminate the need to purchase benzene credits.

The Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 (“EISA”) prescribe certain percentages of renewable fuels (e.g., ethanol and biofuels) that, where required, must be blended into our produced gasoline and diesel. The Renewable Fuel Standard 2 (“RFS2”) regulations, finalized by the EPA in 2010 to implement the EISA, requires that most refiners blend increasing amounts of biofuels with refined products through 2022. Because the EISA requires specified volumes of biofuels, if the demand for motor fuels decreases in future years, even higher percentages of biofuels may be required. Alternatively, credits called Renewable Identification Numbers (“RINs”) can be used instead of physically blending biofuels. The price of RINS has been subject to extreme volatility over the years and costs to purchase RINs can be significant.


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In November 2016, the EPA issued final volume requirements and associated percentage standards under the RFS2 for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2017 and the biomass-based diesel requirement for 2018. The final rule increases the total renewable fuel volume by 6 percent from 2016 to 2017. While these volume mandates are generally lower than the statutory mandates, they represent a slight increase over the volumes initially proposed by the EPA for this three-year period and such volume mandates could be increased in the future. There continues to be a shortage of advanced biofuel production resulting in increased difficulties meeting RFS2 mandates. It is possible we could find ourselves unable to blend sufficient quantities of ethanol and biodiesel to meet our requirements and would, therefore, have to purchase an increasing number of RINs. It is not possible at this time to predict with certainty what those volumes or costs may be, but given the potential increase in volumes and the volatile price of RINs, increases in renewable volume requirements could have an adverse impact on our results of operations.

Finally, while there is no current regulatory standard that authenticates RINs that may be purchased on the open market from third parties, we believe that the RINs we purchase are from reputable sources, are valid and serve to demonstrate compliance with applicable RFS2 requirements. However, if any of the RINs purchased by us on the open market are subsequently found by EPA to be invalid, we could secure significant costs, penalties, or other liabilities in connection with replacing any invalid RINs.

Additional changes in fuel standards with respect to sulfur content of gasoline, called Tier 3 standards, to reduce vehicle emissions were finalized in 2014. These new requirements, other requirements of the CAA, and other presently existing or future environmental regulations may cause us to make substantial capital expenditures and purchase credits at significant cost to enable our refineries to produce products that meet applicable requirements.

Climate Change - In recent years, various legislative and regulatory measures to address climate change and greenhouse gas (“GHG”) emissions (including carbon dioxide, methane and nitrous oxides) have been discussed or implemented. They include proposed and enacted federal regulation and state actions to develop statewide, regional or nationwide programs designed to control and reduce GHG emissions from fixed sources, such as our refineries, as well as power plants, mobile transportation sources and fuels. Although it is not possible to predict the requirements of any GHG legislation that may be enacted, any laws or regulations that may be adopted to restrict or reduce GHG emissions will likely require us to incur increased operating and capital costs. In August 2015, the EPA finalized the “Clean Power Plan” requiring states to reduce carbon dioxide emissions from coal fired power plants that will likely result in a combination of plant closures, switching to renewable energy and natural gas, and demand reduction. In February 2016, the U.S. Supreme Court stayed implementation of the rule pending judicial challenges to the rule. At this time, we cannot predict the outcome of this litigation. In any event, this rule would not directly affect our operations, but it could result in increased power costs for our refineries in future years.

EPA rules require us to report GHG emissions from our refinery operations and consumer use of fuel products produced at our refineries on an annual basis. While the cost of compliance with the reporting rule is not material, data gathered under the rule may be used in the future to support additional regulation of GHG. Moreover, the EPA directly regulates GHG emissions from refineries and other major sources through the Prevention of Significant Deterioration (“PSD”) and Federal Operating Permit programs and may require Best Available Control Technology (“BACT”) for GHG emissions above a certain threshold if emissions of other pollutants would otherwise require PSD permitting. While this does not impose any limits or controls on GHG emissions from current operations, GHG emission increases from future projects or operational changes, such as capacity increases, may be impacted and required to meet emission limits or technological requirements pertaining to GHG emissions, such as BACT. Severe limitations on GHG emissions could also adversely affect demand for the gasoline that we produce. Finally, it should be noted that some scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods and other climatic events; if any such effects were to occur, they could have an adverse effect on our operations.

Water Discharges - Our operations are also subject to the Federal Clean Water Act (“CWA”), the Federal Safe Drinking Water Act (“SDWA”) and comparable state and local requirements. The CWA, the SDWA and analogous laws prohibit any discharge into surface waters, ground waters, injection wells and publicly-owned treatment works except in conformance with legal authorization, such as pre-treatment permits and National Pollutant Discharge Elimination System (“NPDES”) permits, issued by federal, state and local governmental agencies. NPDES permits and analogous water discharge permits are valid for a maximum of five years and must be renewed. In September 2015, new EPA and U.S. Army Corps of Engineers (“Corps”) rules defining the scope of the EPA’s and the Corps’ jurisdiction became effective. To the extent the rule expands the scope of the CWA’s jurisdiction, we could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas. The rule has been challenged in court on the grounds that it unlawfully expands the reach of CWA programs, and implementation of the rule has been stayed pending resolution of the court challenge. Also, pursuant to the CWA and its implementing regulations, we may be required to obtain and maintain approvals or permits for the discharge of wastewater or storm water and are required to develop and implement spill prevention, control and countermeasure plans, also referred to as “SPCC plans,” in connection with on‑site storage of significant quantities of oil.


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Hazardous Substances and Wastes - We generate wastes that may be subject to the Resource Conservation and Recovery Act and comparable state and local requirements. The EPA and various state agencies have limited the approved methods of disposal for certain hazardous and non-hazardous wastes. The EPA is currently working on several rulemakings that could impact how our refineries manage various waste streams. While these rulemakings are still in development, it does not appear that these rules will significantly impact our refineries.

The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), also known as “Superfund,” imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons, including the current and past owner or operator of the disposal site or sites from which there is a release of a “hazardous substance,” as well as persons that disposed of or arranged for the disposal or treatment of the hazardous substances at the site or sites. Under CERCLA, such persons may be subject to strict joint and several liability for such costs as the cost of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources. In the course of our historical operations, as well as in our current normal operations, we have generated waste, some of which falls within the statutory definition of a “hazardous substance” and some of which may have been disposed of at sites that may be subject to cleanup and cost recovery actions under CERCLA by a government entity or other third party. Similarly, locations now owned or operated by us, where third parties have disposed such hazardous substances in the past, may also be subject to cleanup and cost recovery actions under CERCLA. Under CERCLA, liable parties may seek contribution from other liable parties to share in the costs of cleanup. Some states have enacted laws similar to CERCLA which impose similar responsibilities and liabilities on responsible parties. It is also not uncommon for neighboring landowners and other third parties to file claims under state law for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment.

Oil Pollution Act - The Oil Pollution Act of 1990 (“OPA”) and regulations thereunder impose a variety of requirements on “responsible parties” related to the prevention of oil spills and liability for damages resulting from such spills in United States waters. A “responsible party” includes the owner or operator of an onshore facility. OPA assigns liability to each responsible party for oil cleanup costs and a variety of public and private damages. While liability limits apply in some circumstances, a party cannot take advantage of liability limits if the spill was caused by gross negligence or willful misconduct or resulted from violation of a federal safety, construction or operating regulation. If the party fails to report a spill or to cooperate fully in the cleanup, liability limits likewise do not apply. Few defenses exist to the liability imposed by OPA. OPA imposes ongoing requirements on a responsible party, including the preparation of oil spill response plans and proof of financial responsibility to cover environmental cleanup and restoration costs that could be incurred in connection with an oil spill.

As is the case with all companies engaged in industries similar to ours, we face potential exposure to future claims and lawsuits involving environmental matters. These matters include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances that we manufactured, handled, used, released or disposed of. We currently have environmental remediation projects that relate to recovery, treatment and monitoring activities resulting from past releases of refined product and crude oil into the environment. As of December 31, 2016 , we had an accrual of $96.4 million related to such environmental liabilities.

We are and have been the subject of various state, federal and private proceedings and inquiries relating to compliance with environmental regulations and conditions, including those discussed above. Compliance with current and future environmental regulations is expected to require additional expenditures, including expenditures for investigation and remediation, which may be significant, at our refineries and at pipeline transportation facilities. To the extent that future expenditures for these purposes are material and can be reasonably determined, these costs are disclosed and accrued, if applicable.

Occupational Health and Safety - Our operations are also subject to various laws and regulations relating to occupational health and safety. We maintain a myriad of safety programs, safety-related maintenance programs, implement a regiment of training requirements and otherwise comply with a host of occupational safety and health standards and regulations as part of our ongoing efforts to ensure compliance with all applicable laws and regulations in this area. As part of our compliance efforts, we have established hazard communications programs pursuant to the Occupational Safety and Health Administration’s (“OSHA”) hazard communication standard, and state right-to-know standards where applicable, which require the communication of information regarding chemical hazards in the workplace associated with chemicals manufactured or handled in our facilities. EPA regulations under Title III of the Federal Superfund Amendment and Reauthorization Act and related federal or comparable state statutes also require that information be maintained concerning hazardous materials used in or released from our operations and that this information be provided to state and local government authorities and citizens under certain circumstances. Our operations are also subject to OSHA Process Safety Management (“PSM”) regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals. The EPA has imposed substantially similar requirements under its Risk Management Plan (“RMP”) regulations. In January 2017, the EPA finalized revisions to the RMP, significantly expanding its requirements with respect to enhanced requirements for incident investigation and accident history reporting, emergency preparedness, and the performance process hazard analyses and third party compliance audits.

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Although, to date, OSHA has not proposed any revisions expanding or imposing new PSM requirements, in January 2017, OSHA announced changes to its National Emphasis Program and specifically identified oil refineries as facilities for increased inspections. The changes also instruct inspectors to use data gathered from EPA RMP inspections to identify refiners for additional PSM inspections. Compliance with applicable state and federal occupational health and safety laws and regulations, as well as environmental regulations, has required, and continues to require, substantial expenditures.

Occupational health and environmental legislation, regulations and regulatory programs change frequently. We cannot predict what additional occupational health and environmental legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or interpreted with respect to our operations. Compliance with more stringent laws or regulations or adverse changes in the interpretation of existing laws or regulations by government agencies could have an adverse effect on our financial position and the results of our operations and could require substantial expenditures for the installation and operation of systems and equipment that we do not currently possess.

Insurance
Our operations are subject to hazards of operations, including fire, explosion and weather-related perils. We maintain various insurance coverages, including business interruption insurance, subject to certain deductibles. We are not fully insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures.

We have a risk management oversight committee consisting of members from our senior management. This committee oversees our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.



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Item 1A.
Risk Factors

Investing in us involves a degree of risk, including the risks described below. Our operating results have been, and will continue to be, affected by a wide variety of risk factors, many of which are beyond our control, that could have adverse effects on profitability during any particular period. You should carefully consider the following risk factors together with all of the other information included in this Annual Report on Form 10-K, including the financial statements and related notes, when deciding to invest in us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business operations. If any of the following risks were to actually occur, our business, financial condition or results of operations could be materially and adversely affected.

The headings provided in this Item 1A. are for convenience and reference purposes only and shall not affect or limit the extent or interpretation of the risk factors.

The availability and cost of renewable identification numbers and other required credits could have an adverse effect on our financial condition and results of operations.

Pursuant to the 2007 Energy Independence and Security Act, the EPA promulgated the RFS2 regulations reflecting the increased volume of renewable fuels mandated to be blended into the nation's fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. We currently purchase RINs for some fuel categories on the open market in order to comply with the quantity of renewable fuels we are required to blend under the RFS2 regulations. Recently, due in part to the nation's fuel supply approaching the “blend wall” (the 10% ethanol limit prescribed by most automobile warranties), the price of RINs has been extremely volatile with the price dramatically increasing in recognition of the decrease in RINs availability. While we cannot predict the future prices of RINs, the costs to obtain the necessary number of RINs could be material. If we are unable to pass the costs of compliance with the RFS2 regulations on to our customers, if sufficient RINs are unavailable for purchase, if we have to pay a significantly higher price for RINs or if we are otherwise unable to meet the RFS2 mandates, our financial condition and results of operations could be adversely affected.

In addition, the RFS2 regulations are highly complex and evolving, requiring us to periodically update our compliance systems. The RFS2 regulations require the EPA to determine and publish the applicable annual volume and percentage standards for each compliance year by November 30 for the forthcoming year, and such blending percentages could be higher or lower than amounts estimated and accrued for in our consolidated financial statements. The future cost of RINs is difficult to estimate until such time as the EPA finalizes the applicable standards for the forthcoming compliance year. Moreover, in addition to increased price volatility in the RIN market, there have been multiple instances of RINs fraud occurring in the marketplace over the past several years. The EPA has initiated several enforcement actions against refiners who purchase fraudulent RINs, resulting in substantial costs to the refiner. We cannot predict with certainty our exposure to increased RINs costs in the future, nor can we predict the extent by which costs associated with RFS2 regulations will impact our future results of operations.

The prices of crude oil and refined products materially affect our profitability, and are dependent upon many factors that are beyond our control, including general market demand and economic conditions, seasonal and weather-related factors, regional and grade differentials and governmental regulations and policies.

Among these factors is the demand for crude oil and refined products, which is largely driven by the conditions of local and worldwide economies as well as by weather patterns and the taxation of these products relative to other energy sources. Governmental regulations and policies, particularly in the areas of taxation, energy and the environment, also have a significant impact on our activities. Operating results can be affected by these industry factors, product and crude pipeline capacities, crude oil differentials (including regional and grade differentials), changes in transportation costs, accidents or interruptions in transportation, competition in the particular geographic areas that we serve, and factors that are specific to us, such as the success of particular marketing programs and the efficiency of our refinery operations. The demand for crude oil and refined products can also be reduced due to a local or national recession or other adverse economic condition that results in lower spending by businesses and consumers on gasoline and diesel fuel, higher gasoline prices due to higher crude oil prices, a shift by consumers to more fuel-efficient vehicles or alternative fuel vehicles (such as ethanol or wider adoption of gas/electric hybrid vehicles), or an increase in vehicle fuel economy, whether as a result of technological advances by manufacturers, legislation mandating or encouraging higher fuel economy or the use of alternative fuel.


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We do not produce crude oil and must purchase all our crude oil, the price of which fluctuates based upon worldwide and local market conditions. Our profitability depends largely on the spread between market prices for refined petroleum products and crude oil prices. This margin is continually changing and may fluctuate significantly from time to time. Crude oil and refined products are commodities whose price levels are determined by market forces beyond our control. For example, the reversal of certain existing pipelines or the construction of certain new pipelines transporting additional crude oil or refined products to markets that serve competing refineries could affect the market dynamic that has allowed us to take advantage of favorable pricing. Also, in December 2015, the U.S. Congress lifted the ban on the ability of producers to export domestic crude oil. This could potentially impact crack spreads and price differentials between domestic and foreign crude oils. A deterioration of crack spreads or price differentials between domestic and foreign crude oils could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Additionally, due to the seasonality of refined products markets and refinery maintenance schedules, results of operations for any particular quarter of a fiscal year are not necessarily indicative of results for the full year and can vary year to year in the event of unseasonably cool weather in the summer months and / or unseasonably warm weather in the winter months in the markets in which we sell our petroleum products. In general, prices for refined products are influenced by the price of crude oil. Although an increase or decrease in the price for crude oil may result in a similar increase or decrease in prices for refined products, there may be a time lag in the realization of the similar increase or decrease in prices for refined products. The effect of changes in crude oil prices on operating results, therefore, depends in part on how quickly refined product prices adjust to reflect these changes. A substantial or prolonged increase in crude oil prices without a corresponding increase in refined product prices, a substantial or prolonged decrease in refined product prices without a corresponding decrease in crude oil prices, or a substantial or prolonged decrease in demand for refined products could have a significant negative effect on our earnings and cash flow. Also, crude oil supply contracts are generally short-term contracts with market-responsive pricing provisions. We purchase our refinery feedstocks weeks before manufacturing and selling the refined products. Price level changes during the period between purchasing feedstocks and selling the manufactured refined products from these feedstocks could have a significant effect on our financial condition and results of operations. Also, our crude oil and refined products inventories are valued at the lower of cost or market under the last-in, first-out (“LIFO”) inventory valuation methodology. If the market value of our inventory were to decline to an amount less than our LIFO cost, we would record a write-down of inventory and a non-cash charge to cost of products sold even when there is no underlying economic impact at that point in time. For example, we recorded a non-cash decrease to cost of products sold in the amount of $291.9 million and an increase of $227.0 million for the years ended December 31, 2016 and 2015 , respectively. Continued volatility in crude oil and refined products prices could result in additional lower of cost or market inventory charges in the future, or in reversals reducing cost of products sold in subsequent periods should prices recover.

A material decrease in the supply of crude oil or other raw materials available to our refineries could significantly reduce our production levels and negatively affect our operations.

To maintain or increase production levels at our refineries, we must continually contract for crude oil supplies from third parties. A material decrease in crude oil production from the fields that supply our refineries, as a result of depressed commodity prices, lack of drilling activity, natural production declines or otherwise, could result in a decline in the volume of crude oil available to our refineries. In addition, any prolonged disruption of a significant pipeline that is used in supplying crude oil to our refineries or the potential operation of a new, converted or expanded crude oil pipeline that transports crude oil to other markets could result in a decline in the volume of crude oil available to our refineries. Such an event could result in an overall decline in volumes of refined products processed at our refineries and therefore a corresponding reduction in our cash flow. In addition, the future growth of our operations will depend in part upon whether we can contract for additional supplies of crude oil at a greater rate than the rate of natural decline in our currently connected supplies. If we are unable to secure additional crude oil supplies of sufficient quality or crude pipeline expansion to our refineries, we will be unable to take full advantage of current and future expansion of our refineries' production capacities.

For certain raw materials and utilities used by our refineries, there are a limited number of suppliers and, in some cases, the supplies are specific to the particular geographic region in which a facility is located. It is also common in the refining industry for a facility to have a sole, dedicated source for its utilities, such as steam, electricity, water and gas. Having a sole or limited number of suppliers may limit our negotiating power, particularly in the case of rising raw material costs. Any new supply agreements we enter into may not have terms as favorable as those contained in our current supply agreements.

Additionally, there is growing concern over the reliability of water sources. The decreased availability or less favorable pricing for water as a result of population growth, drought or regulation could negatively impact our operations.

If our raw material, utility or water supplies were disrupted, our businesses may incur increased costs to procure alternative supplies or incur excessive downtime, which would have a direct negative impact on our operations.


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We may not be able to successfully execute our business strategies to grow our business. Further, if we are unable to complete capital projects at their expected costs or in a timely manner, if we are unsuccessful in integrating the operations of assets we acquire, or if the market conditions assumed in our project economics deteriorate, our financial condition, results of operations, or cash flows could be materially and adversely affected.

One of the ways we may grow our business is through the construction of new refinery processing units (or the purchase and refurbishment of used units from another refinery) and the expansion of existing ones. Projects are generally initiated to increase the yields of higher-value products, increase the amount of lower cost crude oils that can be processed, increase refinery production capacity, meet new governmental requirements, or maintain the operations of our existing assets. Additionally, our growth strategy includes projects that permit access to new and/or more profitable markets. The construction process involves numerous regulatory, environmental, political, and legal uncertainties, most of which are not fully within our control, including:

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denial or delay in issuing requisite regulatory approvals and/or obtaining or renewing permits, licenses, registrations and other authorizations;
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societal and political pressures and other forms of opposition;
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compliance with or liability under environmental regulations;
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unplanned increases in the cost of construction materials or labor;
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disruptions in transportation of modular components and/or construction materials;
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severe adverse weather conditions, natural disasters, or other events (such as equipment malfunctions, explosions, fires, spills) affecting our facilities, or those of vendors and suppliers;
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shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;
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market-related increases in a project's debt or equity financing costs; and/or
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nonperformance or force majeure by, or disputes with, vendors, suppliers, contractors, or sub-contractors involved with a project.

If we are unable to complete capital projects at their expected costs or in a timely manner our financial condition, results of operations, or cash flows could be materially and adversely affected. Delays in making required changes or upgrades to our facilities could subject us to fines or penalties as well as affect our ability to supply certain products we make. In addition, our revenues may not increase immediately upon the expenditure of funds on a particular project. For instance, if we build a new refinery processing unit, the construction will occur over an extended period of time and we will not receive any material increases in revenues until after completion of the project. Moreover, we may construct facilities to capture anticipated future growth in demand for refined products in a region in which such growth does not materialize. As a result, new capital investments may not achieve our expected investment return, which could adversely affect our financial condition or results of operations.

Our forecasted internal rates of return are also based upon our projections of future market fundamentals which are not within our control, including changes in general economic conditions, available alternative supply and customer demand.

An additional component of our growth strategy is to selectively acquire complementary assets or businesses for our refining operations in order to increase earnings and cash flow. Our ability to do so will be dependent upon a number of factors, including our ability to identify attractive acquisition candidates, consummate acquisitions on favorable terms, successfully integrate acquired assets and obtain financing to fund acquisitions and to support our growth, and other factors beyond our control. Risks associated with acquisitions include those relating to:

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diversion of management time and attention from our existing business;
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challenges in managing the increased scope, geographic diversity and complexity of operations and inefficiencies that may result therefrom;
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difficulties in integrating the financial, technological and management standards, processes, procedures and controls of an acquired business with those of our existing operations;
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liability for known or unknown environmental conditions or other contingent liabilities not covered by indemnification or insurance;
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greater than anticipated expenditures required for compliance with environmental or other regulatory standards or for investments to improve operating results;
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difficulties or delays in achieving anticipated operational improvements or benefits;
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incurrence of additional indebtedness to finance acquisitions or capital expenditures relating to acquired assets; and
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issuance of additional equity, which could result in further dilution of the ownership interest of existing stockholders.

Any acquisitions that we do consummate may have adverse effects on our business and operating results.


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The anticipated benefits of our PCLI acquisition may not be realized fully or at all or may take longer to realize than expected.

The PCLI acquisition will require management to devote significant attention and resources to integrating the PCLI business with our business, and involves the operation of businesses in other countries. Delays in this process could adversely affect our business, financial results, financial condition and stock price. Even if we are able to integrate our business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that we currently expect from this integration or that these benefits will be achieved within the anticipated time frame.

We may incur significant costs to comply with new or changing environmental, energy, health and safety laws and regulations, and face potential exposure for environmental matters.

Our refinery and pipeline operations are subject to federal, state and local laws regulating, among other things, the generation, storage, handling, use, transportation and distribution of petroleum and hazardous substances by pipeline, truck, rail and barge, the emission and discharge of materials into the environment, waste management, and characteristics and composition of gasoline and diesel fuels, and other matters otherwise relating to the protection of the environment. In addition, as a result of our recent acquisition of PCLI and its subsidiaries, we have manufacturing and distribution operations in Canada that are subject to Canadian national and provincial environmental laws and regulations and similar laws in other foreign countries. Permits or other authorizations are required under these laws for the operation of our refineries, pipelines and related operations, and these permits and authorizations are subject to revocation, modification and renewal or may require operational changes, which may involve significant costs. Furthermore, a violation of permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations, injunctions, and/or refinery shutdowns. In addition, major modifications of our operations due to changes in the law could require changes to our existing permits or expensive upgrades to our existing pollution control equipment, which could have a material adverse effect on our business, financial condition, or results of operations. For example, in October 2015, the EPA lowered the NAAQS for ozone from 75 to 70 parts per billion for both the 8-hour primary and secondary standards. State implementation of the revised NAAQS could result in stricter permitting requirements, delay or prohibit our ability to obtain such permits, and result in increased expenditures for pollution control equipment, the costs of which could be significant. Also, in February 2016, a new EPA rule became effective that amends three refinery standards already in effect, imposing additional or, in some cases, new emission control requirements on subject refineries. The final rule requires, among other things, benzene monitoring at the refinery fence line and submittal of fence line monitoring data to the EPA on a quarterly basis; upgraded storage tank controls requirements, including new applicability thresholds; enhanced performance requirements for flares, continuous monitoring of flares and pressure release devices and analysis and remedy of flare release events; and compliance with emissions standards for delayed coking units. Refineries have up to three years from the effective date of the final rule to come into compliance with certain requirements of the rule, such as the performance requirements for flares, while other aspects of the rule require compliance to be achieved at a sooner date. In July 2016, the EPA issued a finale rule providing refiners an additional 18 months to comply with a small subset of the rules related to air emissions resulting from startup, shutdown and maintenance events. More recently, in December 2016, the EPA granted petitions for reconsideration from industry and environmental organizations on aspects of the rule related to work practice standards for certain process units and equipment, as well as fence line monitoring requirements. To date, EPA has not published revised rules. These new rules, as well as subsequent rulemaking under the CAA or similar laws, or new agency interpretations of existing laws and regulations, may necessitate additional expenditures in future years and result in increased costs on our operations. Compliance with applicable environmental laws, regulations and permits will continue to have an impact on our operations, results of our operations and capital requirements.

As is the case with all companies engaged in industries similar to ours, we face potential exposure to future claims and lawsuits involving environmental matters. The matters include, but are not limited to, soil, groundwater and waterway contamination, air pollution, personal injury and property damage allegedly caused by substances which we manufactured, handled, used, released or disposed.

We are and have been the subject of various local, state, provincial, federal and private proceedings relating to environmental regulations, conditions and inquiries. Current and future environmental regulations are expected to require additional expenditures, including expenditures for investigation and remediation, which may be significant, at our facilities. To the extent that future expenditures for these purposes are material and can be reasonably determined, these costs are disclosed and accrued.

Our operations are also subject to various laws and regulations relating to occupational health and safety. We maintain safety, training and maintenance programs as part of our ongoing efforts to ensure compliance with applicable laws and regulations. Compliance with applicable health and safety laws and regulations has required and continues to require substantial expenditures. Failure to appropriately manage occupational health and safety risks associated with our business could also adversely impact our employees, communities, stakeholders, reputation and results of operations.


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The costs of environmental and safety regulations are already significant and compliance with more stringent laws or regulations or adverse changes in the interpretation of existing regulations by government agencies could have an adverse effect on the financial position and the results of our operations and could require substantial expenditures for the installation and operation of systems and equipment that we do not currently possess.

From time to time, new federal energy policy legislation is enacted by the U.S. Congress or the Government of Canada. For example, in December 2007, the U.S. Congress passed the Energy Independence and Security Act, which, among other provisions, mandates annually increasing levels for the use of renewable fuels such as ethanol, commencing in 2008 and escalating for 15 years, as well as increasing energy efficiency goals, including higher fuel economy standards for motor vehicles, among other steps. In Canada, fuel content legislation also exists at the federal and provincial level. These statutory mandates may have the impact over time of offsetting projected increases in the demand for refined petroleum products in certain markets, particularly gasoline. In the near term, the new renewable fuel standard presents ethanol production and logistics challenges for both the ethanol and refining industries and may require additional capital expenditures or expenses by us to accommodate increased ethanol use. Other legislative changes may similarly alter the expected demand and supply projections for refined petroleum products in ways that cannot be predicted.

For additional information on regulations and related liabilities or potential liabilities affecting our business, see “Regulation” under Items 1 and 2, “Business and Properties,” and Item 3, “Legal Proceedings.”

The adoption of climate change legislation or regulations could result in increased operating costs and reduced demand for the refined products we produce.

The EPA has determined that emissions of carbon dioxide, methane and other greenhouse gas emissions, or “GHGs,” present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth's atmosphere and other climatic changes. Based on these findings, the EPA has begun adopting and implementing regulations to restrict emissions of GHGs under existing provisions of the federal CAA. For example, the EPA adopted rules that require certain large stationary sources to obtain permits to authorize emissions of GHGs. The EPA has also adopted rules requiring the reporting of GHG emissions from specified large GHG emission sources in the United States, including petroleum refineries, on an annual basis. Both the EPA and Environment and Climate Change Canada have adopted regulations that limit GHG emissions from automobiles and light-duty trucks, which may result in a reduction in demand for the refined products that we produce.

In addition, the U.S. Congress has from time to time considered adopting legislation to reduce emissions of GHGs and almost one-half of the states have established cap and trade programs. These cap and trade programs generally work by requiring major sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and gas processing plants, to acquire and on an annual basis surrender emission allowances. The number of allowances available for purchase is reduced over time in an effort to achieve the overall GHG emission reduction goal.

In Canada, the federal and provincial governments have also considered, and in some cases adopted, legislation to reduce GHG emissions. To date, two provinces (Quebec and Ontario) have also adopted cap and trade programs.

The adoption of legislation or regulatory programs to reduce emissions of GHGs could require us to incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances or comply with new regulatory or reporting requirements. Any such legislation or regulatory programs could also increase the cost of consuming, and thereby reduce demand for, the refined products that we produce. Consequently, legislation and regulatory programs to reduce emissions of GHGs could have an adverse effect on our business, financial condition and results of operations.

In addition, some scientists have concluded that increasing concentrations of GHGs in the Earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events. If any such events were to occur, they could have an adverse effect on our financial condition and results of operations. 


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Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions for which we may not be adequately insured.

Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions such as natural disasters, adverse weather, accidents, maritime disasters (including those involving marine vessels/terminals), fires, explosions, hazardous materials releases, cyber-attacks, power failures, mechanical failures and other events beyond our control. These events could result in an injury, loss of life, property damage or destruction, as well as a curtailment or an interruption in our operations and may affect our ability to meet marketing commitments.

We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates and exclusions from coverage may limit our ability to recover the amount of the full loss in all situations. As a result of market conditions, premiums and deductibles for certain of our insurance policies could increase. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. We are not fully insured against all risks incident to our business and therefore, we self-insure certain risks. If any refinery were to experience an interruption in operations, earnings from the refinery could be materially adversely affected (to the extent not recoverable through insurance) because of lost production and repair costs.

The energy industry is highly capital intensive, and the entire or partial loss of individual facilities can result in significant costs to both industry companies, such as us, and their insurance carriers. In recent years, several large energy industry claims have resulted in significant increases in the level of premium costs and deductible periods for participants in the energy industry. As a result of large energy industry claims, insurance companies that have historically participated in underwriting energy-related facilities may discontinue that practice or demand significantly higher premiums or deductible periods to cover these facilities. If significant changes in the number or financial solvency of insurance underwriters for the energy industry occur, or if other adverse conditions over which we have no control prevail in the insurance market, we may be unable to obtain and maintain adequate insurance at reasonable cost. In addition, we cannot assure you that our insurers will renew our insurance coverage on acceptable terms, if at all, or that we will be able to arrange for adequate alternative coverage in the event of non-renewal. Further, our underwriters could have credit issues that affect their ability to pay claims. If a significant accident or event occurs that is self-insured or not fully insured, it could have a material adverse effect on our business, financial condition and results of operations.

An impairment of our long-lived assets or goodwill could reduce our earnings or negatively impact our financial condition and results of operations.
An impairment of our long-lived assets or goodwill could reduce our earnings or negatively impact our results of operations and financial condition. We continually monitor our business, the business environment and the performance of our operations to determine if an event has occurred that indicates that a long-lived asset or goodwill may be impaired. If a triggering event occurs, which is a determination that involves judgment, we may be required to utilize cash flow projections to assess our ability to recover the carrying value based on the ability to generate future cash flows. We may also conduct impairment testing based on both the guideline public company and guideline transaction methods. Our long-lived assets and goodwill impairment analyses are sensitive to changes in key assumptions used in our analysis, estimates of future crack spreads, forecasted production levels, operating costs and capital expenditures. If the assumptions used in our analysis are not realized, it is possible a material impairment charge may need to be recorded in the future. We cannot accurately predict the amount and timing of any additional impairments of long-lived assets or goodwill in the future.

As market prices for refined products and market prices for crude oil continue to fluctuate, we will need to continue to evaluate the carrying value of our refinery reporting units. During the year ended December 31, 2016, we recorded goodwill and long-lived asset impairment charges of $309.3 million and $344.8 million, respectively, on the carrying value of our Cheyenne Refinery. Additionally, the fair value of our El Dorado reporting unit currently exceeds its carrying value by approximately 20%. A reasonable expectation exists that future deterioration in gross margins could result in an impairment of goodwill and the long-lived assets of the El Dorado reporting unit at some point in the future. Any additional impairment charges that we may take in the future could be material to our results of operations and financial condition.

Competition in the refining and marketing industry is intense, and an increase in competition in the markets in which we sell our products could adversely affect our earnings and profitability.

We compete with a broad range of refining and marketing companies, including certain multinational oil companies. Because of their geographic diversity, larger and more complex refineries, integrated operations and greater resources, some of our competitors may be better able to withstand volatile market conditions, to obtain crude oil in times of shortage and to bear the economic risks inherent in all areas of the refining industry.


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We are not engaged in petroleum exploration and production activities and do not produce any of the crude oil feedstocks used at our refineries. We do not have a retail business and therefore are dependent upon others for outlets for our refined products. Certain of our competitors, however, obtain a portion of their feedstocks from company-owned production and have retail outlets. Competitors that have their own production or extensive retail outlets, with brand-name recognition, are at times able to offset losses from refining operations with profits from producing or retailing operations, and may be better positioned to withstand periods of depressed refining margins or feedstock shortages.

In recent years there have been several refining and marketing consolidations or acquisitions between entities competing in our geographic market. These transactions could increase the future competitive pressures on us.

The markets in which we compete may be impacted by competitors' plans for expansion projects and refinery improvements that could increase the production of refined products in our areas of operation and significantly affect our profitability.

Also, the potential operation of new or expanded refined product transportation pipelines, or the conversion of existing pipelines into refined product transportation pipelines, could impact the supply of refined products to our existing markets and negatively affect our profitability.

In addition, we compete with other industries that provide alternative means to satisfy the energy and fuel requirements of our industrial, commercial and individual consumers. The more successful these alternatives become as a result of governmental regulations, technological advances, consumer demand, improved pricing or otherwise, the greater the impact on pricing and demand for our products and our profitability. There are presently significant governmental and consumer pressures to increase the use of alternative fuels in the United States.

A disruption to or proration of the refined product distribution systems we utilize could negatively impact our profitability.

We utilize various common carrier or other third party pipeline systems to deliver our products to market. The key systems utilized by the Cheyenne, El Dorado, Navajo, Woods Cross, and Tulsa Refineries are Rocky Mountain, NuStar Energy, SFPP and Plains, Chevron, and Magellan, respectively. All five refineries also utilize systems owned by HEP. If these key pipelines or their associated tanks and terminals become inoperative or decrease the capacity available to us, we may not be able to sell our product, or we may be required to hold our product in inventory or supply products to our customers through an alternative pipeline or by rail or additional tanker trucks from the refinery, all of which could increase our costs and result in a decline in profitability.

We may be subject to information technology system failures, network disruptions and breaches in data security.

Information technology system failures, network disruptions (whether intentional by a third party or due to natural disaster), breaches of network or data security, or disruption or failure of the network system used to monitor and control pipeline operations could disrupt our operations by impeding our processing of transactions, our ability to protect customer or company information and our financial reporting. Our computer systems, including our back-up systems, could be damaged or interrupted by power outages, computer and telecommunications failures, computer viruses, internal or external security breaches, events such as fires, earthquakes, floods, tornadoes and hurricanes, and/or errors by our employees. There can be no assurance that a system failure or data security breach will not have a material adverse effect on our financial condition and results of operations.


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We may not be able to obtain funding on acceptable terms or at all because of volatility and uncertainty in the credit and capital markets. This may hinder or prevent us from meeting our future capital needs.

The domestic and global financial markets and economic conditions are disrupted and volatile from time to time due to a variety of factors, including low consumer confidence, high unemployment, geoeconomic and geopolitical issues, weak economic conditions and uncertainty in the financial services sector. In addition, the fixed-income markets have experienced periods of extreme volatility, which negatively impacted market liquidity conditions. Recently, the equity and debt markets for many energy industry companies have been adversely affected by low oil prices. As a result, the cost of raising money in the debt and equity capital markets has increased substantially at times while the availability of funds from these markets diminished significantly. In particular, as a result of concerns about the stability of financial markets generally and the solvency of lending counterparties specifically, the cost of obtaining money from the credit markets may increase as many lenders and institutional investors increase interest rates, enact tighter lending standards, refuse to refinance existing debt on similar terms or at all and reduce, or in some cases cease, to provide funding to borrowers. In addition, lending counterparties under any existing revolving credit facility and other debt instruments may be unwilling or unable to meet their funding obligations, or we may experience a decrease in our capacity to issue debt or obtain commercial credit or a deterioration in our credit profile, including a rating agency lowering or withdrawing of our credit ratings if, in its judgment, the circumstances warrant. Due to these factors, we cannot be certain that new debt or equity financing will be available on acceptable terms. If funding is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be required to sell assets. Moreover, without adequate funding, we may be unable to execute our growth strategy, complete future acquisitions or construction projects, take advantage of other business opportunities or respond to competitive pressures, comply with regulatory requirements, or meet our short-term or long-term working capital requirements, any of which could have a material adverse effect on our revenues and results of operations. Failure to comply with regulatory requirements in a timely manner or meet our short-term or long-term working capital requirements could subject us to regulatory action.

We depend upon HEP for a substantial portion of the crude supply and distribution network that serve our refineries, and we own a significant equity interest in HEP.

We currently own a 37% interest in HEP, including the 2% general partner interest. HEP operates a system of crude oil and petroleum product pipelines; distribution terminals and refinery tankage in Arizona, Idaho, Kansas, Nevada, New Mexico, Oklahoma, Texas, Utah, Washington and Wyoming and refinery units in Kansas and Utah. HEP generates revenues by charging tariffs for transporting petroleum products and crude oil through its pipelines, leasing certain pipeline capacity to Alon, charging fees for terminalling refined products and other hydrocarbons and storing and providing other services at its terminals. HEP serves the Cheyenne, El Dorado, Navajo, Woods Cross and Tulsa Refineries under several long-term pipeline and terminal, tankage and throughput agreements expiring in 2019 through 2026, serves the El Dorado Refinery under long-term tolling agreements expiring in 2030 and serves the Woods Cross Refinery under long-term tolling agreements expiring in 2031. Furthermore, our financial statements include the consolidated results of HEP. HEP is subject to its own operating and regulatory risks, including, but not limited to:

•
its reliance on its significant customers, including us;
•
competition from other pipelines;
•
environmental regulations affecting pipeline operations;
•
operational hazards and risks;
•
pipeline tariff regulations affecting the rates HEP can charge;
•
limitations on additional borrowings and other restrictions due to HEP's debt covenants; and
•
other financial, operational and legal risks.

The occurrence of any of these risks could directly or indirectly affect HEP's as well as our financial condition, results of operations and cash flows as HEP is a consolidated VIE. Additionally, these risks could affect HEP's ability to continue operations which could affect their ability to serve our supply and distribution network needs.

For additional information about HEP, see “Holly Energy Partners, L.P.” under Items 1 and 2, “Business and Properties.” For risks related to HEP's business, see Item 1A of HEP's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 .

We are exposed to the credit risks, and certain other risks, of our key customers and vendors.

We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. We derive a significant portion of our revenues from contracts with key customers.


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If any of our key customers default on their obligations to us, our financial results could be adversely affected. Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks. In addition, nonperformance by vendors who have committed to provide us with products or services could result in higher costs or interfere with our ability to successfully conduct our business.

Any substantial increase in the nonpayment and/or nonperformance by our customers or vendors could have a material adverse effect on our results of operations and cash flows.

Terrorist attacks (including cyber-attacks), and the threat of terrorist attacks or domestic vandalism, have resulted in increased costs to our business. Continued global hostilities or other sustained military campaigns may adversely impact our results of operations.

The long-term impacts of terrorist attacks, such as the attacks that occurred on September 11, 2001, and the threat of future terrorist attacks (including cyber-attacks) on the energy transportation industry in general, and on us in particular, are unknown. Increased security measures taken by us as a precaution against possible terrorist attacks or vandalism have resulted in increased costs to our business. Uncertainty surrounding continued global hostilities or other sustained military campaigns, and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act of terror, may affect our operations in unpredictable ways, including disruptions of crude oil supplies and markets for refined products. In addition, disruption or significant increases in energy prices could result in government-imposed price controls. Any one of, or a combination of, these occurrences could have a material adverse effect on our business, financial condition and results of operations.

Changes in the insurance markets attributable to terrorist attacks could make certain types of insurance more difficult for us to obtain. Moreover, the insurance that may be available to us may be significantly more expensive than our existing insurance coverage. Instability in the financial markets as a result of terrorism or war could also affect our ability to raise capital including our ability to repay or refinance debt.

Increases in required fuel economy and regulation of CO 2 emissions from motor vehicles may reduce demand for transportation fuels.

In 2010, the EPA and the National Highway Traffic Safety Administration (“NHTSA”) finalized new standards, raising the required Corporate Average Fuel Economy (“CAFE”) of the nation's passenger fleet by 40% to approximately 35 miles per gallon (“m.p.g.”) by 2016 and imposing the first-ever federal GHG emissions standards on cars and light trucks. In September 2011, the EPA and the Department of Transportation finalized first-time standards for fuel economy of medium and heavy duty trucks. On August 28, 2012, the EPA and NHTSA adopted standards through model year 2025 in two phases. The first phase establishes final standards for 2017-2021 model year vehicles that are projected to require 40.3 - 41.0 m.p.g. in model year 2021 on an average industry fleet-wide basis. The second phase of the CAFE program represents non-final “augural” standards for 2022-2025 model year vehicles that are projected to require 48.7 - 49.7 m.p.g. in model year 2025, on an average industry fleet-wide basis. Such increases in fuel economy standards, along with mandated increases in use of renewable fuels discussed above, could result in decreasing demand for petroleum fuels. Decreasing demand for petroleum fuels could have a material effect on our financial condition and results of operation.

To successfully operate our petroleum refining facilities, we are required to expend significant amounts for capital outlays and operating expenditures.

The refining business is characterized by high fixed costs resulting from the significant capital outlays associated with refineries, terminals, pipelines and related facilities. We are dependent on the production and sale of quantities of refined products at refined product margins sufficient to cover operating costs, including any increases in costs resulting from future inflationary pressures or market conditions and increases in costs of fuel and power necessary in operating our facilities. Furthermore, future major capital investment, various environmental compliance related projects, regulatory requirements or competitive pressures could result in additional capital expenditures, which may not produce a return on investment. Such capital expenditures may require significant financial resources that may be contingent on our access to capital markets and commercial bank loans. Additionally, other matters, such as regulatory requirements or legal actions, may restrict our access to funds for capital expenditures.


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Our refineries consist of many processing units, a number of which have been in operation for many years. One or more of the units may require unscheduled downtime for unanticipated maintenance or repairs that are more frequent than our scheduled turnaround for such units. Scheduled and unscheduled maintenance could reduce our revenues during the period of time that the units are not operating. We have taken significant measures to expand and upgrade units in our refineries by installing new equipment and redesigning older equipment to improve refinery capacity. The installation and redesign of key equipment at our refineries involves significant uncertainties, including the following: our upgraded equipment may not perform at expected throughput levels; operating costs of the upgraded equipment may be higher than expected; the yield and product quality of new equipment may differ from design and/or specifications and redesign, modification or replacement of the equipment may be required to correct equipment that does not perform as expected, which could require facility shutdowns until the equipment has been redesigned or modified. Any of these risks associated with new equipment, redesigned older equipment, or repaired equipment could lead to lower revenues or higher costs or otherwise have a negative impact on our future financial condition and results of operations.

In addition, we expect to execute turnarounds at our refineries, which involve numerous risks and uncertainties. These risks include delays and incurrence of additional and unforeseen costs. The turnarounds allow us to perform maintenance, upgrades, overhaul and repair of process equipment and materials, during which time all or a portion of the refinery will be under scheduled downtime.

We may be unable to pay future dividends.

We will only be able to pay dividends from our available cash on hand, cash from operations or borrowings under our credit agreement. The declaration of future dividends on our common stock will be at the discretion of our board of directors and will depend upon many factors, including our results of operations, financial condition, earnings, capital requirements, and restrictions in our debt agreements and legal requirements. We cannot assure you that any dividends will be paid or the frequency or amounts of such payments.

Product liability claims and litigation could adversely affect our business and results of operations.

A significant portion of our operating responsibility on refined product pipelines is to insure the quality and purity of the products loaded at our loading racks. If our quality control measures were to fail, we may have contaminated or off-specification commingled pipelines and storage tanks or off-specification product could be sent to public gasoline stations. These types of incidents could result in product liability claims from our customers.

Product liability is a significant commercial risk. Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of or exposure to various products. There can be no assurance that product liability claims against us would not have a material adverse effect on our business or results of operations or our ability to maintain existing customers or retain new customers.

Our hedging transactions may limit our gains and expose us to other risks.

We periodically enter into derivative transactions as it relates to inventory levels and/or future production to manage the risks from changes in the prices of crude oil, refined products and other feedstocks. These transactions limit our potential gains if commodity prices move above or below the certain price levels established by our hedging instruments. We hedge price risk on inventories above our target levels to minimize the impact these price fluctuations have on our earnings and cash flows. Consequently, our hedging results may fluctuate significantly from one reporting period to the next depending on commodity price fluctuations and our relative physical inventory positions. These transactions may also expose us to risks of financial losses; for example, if our production is less than we anticipated at the time we entered into a hedge agreement or if a counterparty to our hedge agreements fails to perform its obligations under the agreements.

Changes in our credit profile, or a significant increase in the price of crude oil, may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity and limit our ability to purchase sufficient quantities of crude oil to operate our refineries at desired capacity.

An unfavorable credit profile, or a significant increase in the price of crude oil, could affect the way crude oil suppliers view our ability to make payments and induce them to shorten the payment terms of their invoices with us or require credit enhancement. Due to the large dollar amounts and volume of our crude oil and other feedstock purchases, any imposition by our suppliers of more burdensome payment terms or credit enhancement requirements on us may have a material adverse effect on our liquidity and our ability to make payments to our suppliers. This in turn could cause us to be unable to operate our refineries at desired capacity. A failure to operate our refineries at desired capacity could adversely affect our profitability and cash flow.


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Our credit facility contains certain covenants and restrictions that may constrain our business and financing activities.

The operating and financial restrictions and covenants in our credit facility and any future financing agreements could adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities. For example, our revolving credit facility imposes usual and customary requirements for this type of credit facility, including: (i) limitations on liens and indebtedness; (ii) a prohibition on changes in control and (iii) restrictions on engaging in mergers and consolidations. If we fail to satisfy the covenants set forth in the credit facility or another event of default occurs under the credit facility, the maturity of the loan could be accelerated or we could be prohibited from borrowing for our future working capital needs and issuing letters of credit. We might not have, or be able to obtain, sufficient funds to make these immediate payments. If we desire to undertake a transaction that is prohibited by the covenants in our credit facility, we will need to obtain consent under our credit facility. Such refinancing may not be possible or may not be available on commercially acceptable terms.

Our business may suffer due to a departure of any of our key senior executives or other key employees. Furthermore, a shortage of skilled labor or disruptions in our labor force may make it difficult for us to maintain labor productivity.

Our future performance depends to a significant degree upon the continued contributions of our senior management team and key technical personnel. We do not currently maintain key man life insurance, non-compete agreements, or employment agreements with respect to any member of our senior management team. The loss or unavailability to us of any member of our senior management team or a key technical employee could significantly harm us. We face competition for these professionals from our competitors, our customers and other companies operating in our industry. To the extent that the services of members of our senior management team and key technical personnel would be unavailable to us for any reason, we may be required to hire other personnel to manage and operate our company. We may not be able to locate or employ such qualified personnel on acceptable terms, or at all.

Furthermore, our operations require skilled and experienced laborers with proficiency in multiple tasks. A shortage of trained workers due to retirements or otherwise could have an adverse impact on our labor productivity and costs and our ability to expand production in the event there is an increase in the demand for our products and services, which could adversely affect our operations.

As of December 31, 2016 , approximately 34% of our employees were represented by labor unions under collective bargaining agreements with various expiration dates. We may not be able to renegotiate our collective bargaining agreements when they expire on satisfactory terms or at all. A failure to do so may increase our costs. In addition, our existing labor agreements may not prevent a strike or work stoppage at any of our facilities in the future, and any work stoppage could negatively affect our results of operations and financial condition.

The market price of our common stock may fluctuate significantly, and the value of a stockholder’s investment could be impacted.

The market price of our common stock may be influenced by many factors, some of which are beyond our control, including:

•
our quarterly or annual earnings or those of other companies in our industry;
•
changes in accounting standards, policies, guidance, interpretations or principles;
•
general economic, industry and stock market conditions;
•
the failure of securities analysts to cover our common stock or changes in financial estimates by analysts;
•
future sales of our common stock;
•
announcements by us or our competitors of significant contracts or acquisitions;
•
sales of common stock by us, our senior officers or our affiliates; and/or
•
the other factors described in these Risk Factors.

In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our stock price.


Item 1B. Unresolved Staff Comments

We do not have any unresolved staff comments.



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Item 3.      Legal Proceedings

Commitment and Contingency Reserves

We periodically establish reserves for certain legal proceedings. The establishment of a reserve involves an estimation process that includes the advice of legal counsel and subjective judgment of management. While management believes these reserves to be adequate, future changes in the facts and circumstances could result in the actual liability exceeding the estimated ranges of loss and amounts accrued.

While the outcome and impact on us cannot be predicted with certainty, based on advice of counsel, management believes that the resolution of these proceedings through settlement or adverse judgment will not either individually or in the aggregate have a materially adverse effect on our financial condition, results of operations or cash flows.

Environmental Matters

We are reporting the following proceedings to comply with SEC regulations which require us to disclose proceedings arising under federal, state or local provisions regulating the discharge of materials into the environment or protecting the environment if we reasonably believe that such proceedings may result in monetary sanctions of $100,000 or more. Our respective subsidiaries have or will develop corrective action plans regarding these disclosures that will be implemented in consultation with the respective federal and state agencies. It is not possible to predict the ultimate outcome of these proceedings, although none are currently expected to have a material effect on our financial condition, results of operations or cash flows.

Cheyenne
HollyFrontier Cheyenne Refining LLC (“HFCR”), our wholly-owned subsidiary, completed certain environmental audits at the Cheyenne Refinery regarding compliance with federal and state environmental requirements. By letters dated October 5, 2012, November 7, 2012, and January 10, 2013, and pursuant to the EPA's audit policy to the extent applicable, HFCR submitted reports to the EPA voluntarily disclosing non-compliance with certain emission limitations, reporting requirements, and provisions of a 2009 federal consent decree. By letters dated October 31, 2012; February 6, 2013; June 21, 2013; July 9, 2013 and July 25, 2013, and pursuant to applicable Wyoming audit statutes, HFCR submitted environmental audit reports to the Wyoming Department of Environmental Quality (“WDEQ”) voluntarily disclosing non-compliance with certain notification, reporting, and other provisions of the refinery's state air permit and other environmental regulatory requirements. No further action has been taken by either agency at this time.

El Dorado
The El Dorado Refinery has been engaged in discussions with the EPA regarding potential Clean Air Act violations relating to flaring devices at the refinery as well as other equipment. The El Dorado Refinery has responded to two separate information requests covering air emissions for a time frame from January 1, 2009 through May 31, 2014. The EPA also conducted an on-site Clean Air Act - Sec. 112r Risk Management Program (“RMP”) compliance audit at the El Dorado Refinery and notified the El Dorado Refinery of 20 alleged “deficiencies” related to that inspection. Although no Notice or Finding of Violation has been issued by the EPA in connection with either the Clean Air Act inquiry or the 112r inspection, the EPA and the U.S. Department of Justice have indicated that the federal government believes it has claims for civil penalties relating to the information provided in response to the information requests and the RMP inspection. We have had a preliminary discussion with the government parties, are continuing to evaluate the relevant law and facts and will continue to work with the EPA regarding these matters.

Tulsa
HollyFrontier Tulsa Refining LLC (“HFTR”) manufactures paraffin and hydrocarbon waxes at its Tulsa West facility. On March 11, 2014, the EPA issued a notice to HFTR of possible violations of certain provisions of the federal Toxic Substances Control Act in connection with the manufacture of certain of these products. HFTR and the EPA met and are working productively towards a settlement of this matter.

Other

We are a party to various other litigation and proceedings that we believe, based on advice of counsel, will not either individually or in the aggregate have a materially adverse impact on our financial condition, results of operations or cash flows.


Item 4.
Mine Safety Disclosures

Not Applicable.



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PART II

Item 5.
Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the New York Stock Exchange under the trading symbol “HFC.” The following table sets forth the range of the daily high and low sales prices per share of common stock, dividends declared per share and the trading volume of common stock for the periods indicated:

Years Ended December 31,
 
High
 
Low
 
Dividends
 
Trading Volume
2016
 
 
 
 
 
 
 
 
Fourth quarter
 
$
34.13

 
$
22.63

 
$
0.33

 
227,228,500

Third quarter
 
$
27.98

 
$
22.07

 
$
0.33

 
263,014,600

Second quarter
 
$
37.98

 
$
22.53

 
$
0.33

 
201,750,800

First quarter
 
$
41.29

 
$
29.00

 
$
0.33

 
197,404,600

 
 
 
 
 
 
 
 
 
2015
 
 
 
 
 
 
 
 
Fourth quarter
 
$
52.30

 
$
39.00

 
$
0.33

 
153,988,900

Third quarter
 
$
54.73

 
$
42.68

 
$
0.33

 
213,026,200

Second quarter
 
$
43.71

 
$
35.89

 
$
0.33

 
157,763,200

First quarter
 
$
45.05

 
$
30.15

 
$
0.32

 
210,069,400


In May 2015, our Board of Directors approved a $1 billion share repurchase program authorizing us to repurchase common stock in the open market or through privately negotiated transactions based on market conditions, securities law limitations and other relevant considerations. The following table includes repurchases made under this program during the fourth quarter of 2016 .

Period
 
Total Number of
Shares Purchased
 
Average Price
Paid Per Share
 
Total Number of
Shares Purchased
as Part of Publicly Announced Plans or Programs
 
Maximum Dollar
Value of Shares
that May Yet Be
Purchased under the Plans or Programs
October 2016
 
—

 
$
—

 
—

 
$
178,811,213

November 2016
 
—

 
$
—

 
—

 
$
178,811,213

December 2016
 
—

 
$
—

 
—

 
$
178,811,213

Total for October to December 2016
 
—

 
 
 
—

 
 


As of February 13, 2017 , we had approximately 98,039 stockholders, including beneficial owners holding shares in street name.

We intend to consider the declaration of a dividend on a quarterly basis, although there is no assurance as to future dividends since they are dependent upon future earnings, capital requirements, our financial condition and other factors.



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Item 6.
Selected Financial Data

The following table shows our selected financial information as of the dates or for the periods indicated. This table should be read in conjunction with Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.

 
Years Ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
 
(In thousands, except per share data)
FINANCIAL DATA
 
 
 
 
 
 
 
 
 
For the period
 
 
 
 
 
 
 
 
 
Sales and other revenues
$
10,535,700

 
$
13,237,920

 
$
19,764,327

 
$
20,160,560

 
$
20,090,724

Income (loss) before income taxes (1,2)
(171,534
)
 
1,208,568

 
467,500

 
1,159,399

 
2,787,995

Income tax provision
19,411

 
406,060

 
141,172

 
391,576

 
1,027,962

Net income (loss)
(190,945
)
 
802,508

 
326,328

 
767,823

 
1,760,033

Less net income attributable to noncontrolling interest
69,508

 
62,407

 
45,036

 
31,981

 
32,861

Net income (loss) attributable to HollyFrontier stockholders
$
(260,453
)
 
$
740,101

 
$
281,292

 
$
735,842

 
$
1,727,172

Earnings (loss) per share attributable to HollyFrontier stockholders - basic
$
(1.48
)
 
$
3.91

 
$
1.42

 
$
3.66

 
$
8.41

Earnings (loss) per share attributable to HollyFrontier stockholders - diluted
$
(1.48
)
 
$
3.90

 
$
1.42

 
$
3.64

 
$
8.38

Cash dividends declared per common share
$
1.32

 
$
1.31

 
$
3.26

 
$
3.20

 
$
3.10

Average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
176,101

 
188,731

 
197,243

 
200,419

 
204,379

Diluted
176,101

 
188,940

 
197,428

 
201,234

 
205,274

 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
602,271

 
$
979,626

 
$
758,596

 
$
869,174

 
$
1,662,687

Net cash used for investing activities
$
(801,597
)
 
$
(381,748
)
 
$
(292,322
)
 
$
(526,735
)
 
$
(711,104
)
Net cash provided by (used for) financing activities
$
843,372

 
$
(1,099,330
)
 
$
(838,392
)
 
$
(1,160,035
)
 
$
(772,788
)
 
 
 
 
 
 
 
 
 
 
At end of period
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and investments in marketable securities
$
1,134,727

 
$
210,552

 
$
1,042,095

 
$
1,665,263

 
$
2,393,401

Working capital
$
1,767,780

 
$
587,450

 
$
1,549,004

 
$
2,445,953

 
$
2,961,037

Total assets
$
9,435,661

 
$
8,388,299

 
$
9,230,047

 
$
10,055,763

 
$
10,326,628

Total debt  (3)
$
2,235,137

 
$
1,040,040

 
$
1,054,297

 
$
996,543

 
$
1,333,869

Total equity
$
5,301,985

 
$
5,809,773

 
$
6,100,719

 
$
6,609,398

 
$
6,642,658



(1)
Reflects non-cash lower of cost or market inventory valuation adjustments that increased pre-tax earnings by $291.9 million for the year ended December 31, 2016 and decreased pre-tax earnings by $227.0 million and $397.5 million for the years ended December 31, 2015 and 2014, respectively.

(2)
Includes goodwill and long-lived asset impairment charges of $309.3 million and $344.8 million , respectively, that relate to our Cheyenne Refinery, for the year ended December 31, 2016.

(3)
Includes total HEP debt of $1,243.9 million , $1,008.8 million , $867.0 million , $806.7 million and $863.5 million , respectively, which is non-recourse to HollyFrontier.



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Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Item 7 contains “forward-looking” statements. See “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K. In this document, the words “we,” “our,” “ours” and “us” refer only to HollyFrontier and its consolidated subsidiaries or to HollyFrontier or an individual subsidiary and not to any other person with certain exceptions. Generally, the words “we,” “our,” “ours” and “us” include HEP and its subsidiaries as consolidated subsidiaries of HollyFrontier, unless when used in disclosures of transactions or obligations between HEP and HollyFrontier or its other subsidiaries. This document contains certain disclosures of agreements that are specific to HEP and its consolidated subsidiaries and do not necessarily represent obligations of HollyFrontier. When used in descriptions of agreements and transactions, “HEP” refers to HEP and its consolidated subsidiaries.


Overview

We are principally an independent petroleum refiner that produces high-value refined products such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. We own and operate refineries having a combined nameplate crude oil processing capacity of 457,000 barrels per day that serve markets throughout the Mid-Continent, Southwest and Rocky Mountain regions of the United States. Our refineries are located in El Dorado, Kansas (the El Dorado Refinery), Tulsa, Oklahoma (the Tulsa Refineries), which comprise two production facilities, the Tulsa West and East facilities, Artesia, New Mexico, which operates in conjunction with crude, vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the Navajo Refinery), Cheyenne, Wyoming (the Cheyenne Refinery) and Woods Cross, Utah (the Woods Cross Refinery).

On October 29, 2016, our wholly-owned subsidiary, 9952110 Canada Inc. (“Purchaser”), entered into a share purchase agreement with Suncor Energy Inc. (“Suncor”) to acquire 100% of the outstanding capital stock of Petro-Canada Lubricants Inc. (“PCLI”) that closed on February 1, 2017. Cash consideration paid was CAD $1.125 billion, including working capital with an estimated value of CAD $342 million. The PCLI plant, located in Mississauga, Ontario, is the largest producer of base oils in Canada with 15,600 BPD of lubricant production capacity, and is the only North American producer of high margin Group III base oils.

For the year ended December 31, 2016 , net loss attributable to HollyFrontier stockholders was $260.5 million compared to net income of $740.1 million and $281.3 million for the years ended December 31, 2015 , and 2014 , respectively. Overall gross refining margins per produced product sold for 2016 decreased 48% over the year ended December 31, 2015 , which was due principally to lower crack spreads throughout 2016. Included in our financial results for the current year were non-cash items consisting of goodwill and long-lived asset impairment charges, offset by an inventory reserve adjustment.

Pursuant to the 2007 Energy Independence and Security Act, the EPA promulgated the RFS2 regulations, which increased the volume of renewable fuels mandated to be blended into the nation's fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. Compliance with RFS2 regulations significantly increases our cost of products sold, with RINs costs totaling $242.0 million for the year ended December 31, 2016 . Year-over-year increased costs of ethanol blended into our petroleum products, which exceeded the cost of crude oil, also contributed to lower refining margins for the year.


OUTLOOK

Our profitability is affected by the spread, or differential, between the market prices for crude oil on the world market (which is based on the price for Brent, North Sea Crude) and the price for inland U.S. crude oil (which is based on the price for WTI). We expect continued volatility in the pricing relationship between inland and coastal crude, currently averaging in the range of $1.00 to $2.00 per barrel.

We have recently curtailed production at the Woods Cross refinery due to insufficient crude supply provided by the Plains Rocky Mountain Pipeline. We are unable to predict the duration of the supply disruption at this time, but are considering alternative solutions and working with Plains and others to rectify the situation.  

Our RINs costs are material and represent a cost of products sold. The price of RINs may be extremely volatile due to real or perceived future shortages in RINs. As of December 31, 2016 , we are purchasing RINs in order to meet approximately half of our renewable fuel requirements.

A more detailed discussion of our financial and operating results for the years ended December 31, 2016 , 2015 and 2014 is presented in the following sections.

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38

Results Of Operations

Financial Data
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(In thousands, except per share data)
Sales and other revenues
 
$
10,535,700

 
$
13,237,920

 
$
19,764,327

Operating costs and expenses:
 
 
 
 
 
 
Cost of products sold (exclusive of depreciation and amortization):
 
 
 
 
 
 
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)
 
8,765,927

 
10,239,218

 
17,228,385

Lower of cost or market inventory valuation adjustment
 
(291,938
)
 
226,979

 
397,478

 
 
8,473,989

 
10,466,197

 
17,625,863

Operating expenses (exclusive of depreciation and amortization)
 
1,018,839

 
1,060,373

 
1,144,940

General and administrative expenses (exclusive of depreciation and amortization)
 
125,648

 
120,846

 
114,609

Depreciation and amortization
 
363,027

 
346,151

 
363,381

Goodwill and asset impairment
 
654,084

 
—

 
—

Total operating costs and expenses
 
10,635,587

 
11,993,567

 
19,248,793

Income (loss) from operations
 
(99,887
)
 
1,244,353

 
515,534

Other income (expense):
 
 
 
 
 
 
Earnings (loss) of equity method investments
 
14,213

 
(3,738
)
 
(2,007
)
Interest income
 
2,491

 
3,391

 
4,430

Interest expense
 
(72,192
)
 
(43,470
)
 
(43,646
)
Loss on early extinguishment of debt
 
(8,718
)
 
(1,370
)
 
(7,677
)
Other, net
 
(7,441
)
 
9,402

 
866

 
 
(71,647
)
 
(35,785
)
 
(48,034
)
Income (loss) before income taxes
 
(171,534
)
 
1,208,568

 
467,500

Income tax provision
 
19,411

 
406,060

 
141,172

Net income (loss)
 
(190,945
)
 
802,508

 
326,328

Less net income attributable to noncontrolling interest
 
69,508

 
62,407

 
45,036

Net income (loss) attributable to HollyFrontier stockholders
 
$
(260,453
)
 
$
740,101

 
$
281,292

Earnings (loss) per share attributable to HollyFrontier stockholders:
 
 
 
 
 
 
Basic
 
$
(1.48
)
 
$
3.91

 
$
1.42

Diluted
 
$
(1.48
)
 
$
3.90

 
$
1.42

Cash dividends declared per common share
 
$
1.32

 
$
1.31

 
$
3.26

Average number of common shares outstanding:
 
 
 
 
 
 
Basic
 
176,101

 
188,731

 
197,243

Diluted
 
176,101

 
188,940

 
197,428



Other Financial Data
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(In thousands)
Net cash provided by operating activities
 
$
602,271

 
$
979,626

 
$
758,596

Net cash used for investing activities
 
$
(801,597
)
 
$
(381,748
)
 
$
(292,322
)
Net cash provided by (used for) financing activities
 
$
843,372

 
$
(1,099,330
)
 
$
(838,392
)
Capital expenditures
 
$
479,790

 
$
676,155

 
$
564,821

EBITDA (1)
 
$
200,404

 
$
1,533,761

 
$
832,738

Adjusted EBITDA (2)
 
$
575,956

 
$
1,760,740

 
$
1,230,216


(1)
Earnings before interest, taxes, depreciation and amortization, which we refer to as “EBITDA,” is calculated as net income (loss) plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization.


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(2)
"Adjusted EBITDA" is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustment and (ii) goodwill and asset impairment charges. EBITDA and Adjusted EBITDA are not calculations provided for under GAAP; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. They are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for financial covenants. EBITDA and Adjusted EBITDA presented above are reconciled to net income under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Form 10-K.

Our operations are organized into two reportable segments, Refining and HEP. See Note 20 “Segment Information” in the Notes to Consolidated Financial Statements for additional information on our reportable segments.

Refining Operating Data

Our refinery operations include the El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross Refineries. The following tables set forth information, including non-GAAP performance measures about our consolidated refinery operations. The cost of products and refinery gross and net operating margins do not include the non-cash effects of goodwill and asset impairments charges, lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Form 10-K.
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Consolidated
 
 
 
 
 
 
Crude charge (BPD) (1)
 
423,910

 
432,560

 
406,180

Refinery throughput (BPD) (2)
 
457,480

 
463,580

 
436,400

Refinery production (BPD) (3)
 
442,110

 
446,560

 
425,010

Sales of produced refined products (BPD)
 
435,420

 
438,000

 
420,990

Sales of refined products (BPD) (4)
 
464,980

 
488,350

 
461,640

Refinery utilization (5)
 
92.8
%
 
97.6
%
 
91.7
%
 
 
 
 
 
 
 
Average per produced barrel (6)
 
 
 
 
 
 
Net sales
 
$
58.02

 
$
71.32

 
$
110.19

Cost of products (7)
 
49.64

 
55.25

 
96.21

Refinery gross margin (8)
 
8.38

 
16.07

 
13.98

Refinery operating expenses (9)
 
5.57

 
5.71

 
6.38

Net operating margin (8)
 
$
2.81

 
$
10.36

 
$
7.60

 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (10)
 
$
5.30

 
$
5.39

 
$
6.16


(1)
Crude charge represents the barrels per day of crude oil processed at our refineries.
(2)
Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.
(3)
Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries.
(4)
Includes refined products purchased for resale.
(5)
Represents crude charge divided by total crude capacity (BPSD). Effective July 1, 2016, our consolidated crude capacity increased from 443,000 BPSD to 457,000 BPSD upon completion of our Woods Cross Refinery expansion project.
(6)
Represents average per barrel amount for produced refined products sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Form 10-K.
(7)
Transportation, terminal and refinery storage costs billed from HEP are included in cost of products.
(8)
Excludes lower of cost or market inventory valuation adjustments of that increased refinery gross margin by $291.9 million for the year ended December 31, 2016 and decreased refinery gross margin by $227.0 million and $397.5 million for the years ended December 31, 2015 and 2014 , respectively.
(9)
Represents operating expenses of our refineries, exclusive of depreciation and amortization.

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(10)
Represents refinery operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.


41
Table of Content


Results of Operations – Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Summary
Net loss attributable to HollyFrontier stockholders for the year ended December 31, 2016 was $260.5 million ( $1.48 per basic and diluted share), a $1,000.6 million decrease compared to net income attributable to HollyFrontier stockholders of $740.1 million ( $3.91 per basic and $3.90 per diluted share) for the year ended December 31, 2015 . Net income decreased due principally to non-cash goodwill and long-lived asset impairment charges of $309.3 million and $344.8 million , respectively, and a year-over-year decrease in refining margins and sales volumes, net of the effects of a year-over-year change in lower of cost or market inventory reserve adjustments. For the year ended December 31, 2016 , lower of cost or market inventory reserve adjustments increased pre-tax earnings by $291.9 million compared to a pre-tax earnings decrease of $227.0 million for the year ended December 31, 2015 . Collectively, the impairment charges, net of the lower of cost or market valuation benefit, reduced 2016 pre-tax income by $362.1 million. Refinery gross margins for the year ended December 31, 2016 decreased to $8.38 per produced barrel from $16.07 for the year ended December 31, 2015 .

Sales and Other Revenues
Sales and other revenues decreased 20% from $13,237.9 million for the year ended December 31, 2015 to $10,535.7 million for the year ended December 31, 2016 due to a year-over-year decrease in sales prices and lower refined product sales volumes. The average sales price we received per produced barrel sold decreased 19% from $71.32 for the year ended December 31, 2015 to $58.02 for the year ended December 31, 2016 . Sales and other revenues for the years ended December 31, 2016 and 2015 include $68.9 million and $66.7 million , respectively, in HEP revenues attributable to pipeline and transportation services provided to unaffiliated parties.

Cost of Products Sold
Total cost of products sold decreased 19% from $10,466.2 million for the year ended December 31, 2015 to $8,474.0 million for the year ended December 31, 2016 , due principally to lower crude oil costs and lower sales volumes of refined products. Additionally, this decrease reflects a $291.9 million benefit that is attributable to a reduction in the lower of cost or market reserve for the year ended December 31, 2016 , a $518.9 million increase compared to a charge of $227.0 million for the same period of last year. The reserve at December 31, 2016 is based on market conditions and prices at that time. Excluding this non-cash adjustment, the average price we paid per barrel for crude oil and feedstocks and the transportation costs of moving the finished products to the market place decreased 10% from $55.25 for the year ended December 31, 2015 to $49.64 for the year ended December 31, 2016 .

Gross Refinery Margins
Gross refinery margin per produced barrel decreased 48% from $16.07 for the year ended December 31, 2015 to $8.38 for the year ended December 31, 2016 . This was due to the effects of a decrease in the average per barrel sales price for refined products sold, partially offset by decreased crude oil and feedstock prices during the current year. Gross refinery margin does not include the non-cash effects of lower of cost or market inventory valuation adjustments goodwill and asset impairment charges or depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Form 10-K for a reconciliation to the income statement of prices of refined products sold and cost of products purchased.

Operating Expenses
Operating expenses, exclusive of depreciation and amortization, decreased 4% from $1,060.4 million for the year ended December 31, 2015 to $1,018.8 million for the year ended December 31, 2016 due principally to lower natural gas fuel and maintenance costs compared to 2015 . For the years ended December 31, 2016 and 2015 , operating expenses include $90.4 million and $102.3 million , respectively, in costs attributable to HEP operations.

General and Administrative Expenses
General and administrative expenses increased 4% from $120.8 million for the year ended December 31, 2015 to $125.6 million for the year ended December 31, 2016 , due principally to PCLI acquisition costs. For the years ended December 31, 2016 and 2015 , general and administrative expenses include $10.1 million and $10.2 million , respectively, in costs attributable to HEP operations.

Depreciation and Amortization Expenses
Depreciation and amortization increased 5% from $346.2 million for the year ended December 31, 2015 to $363.0 million for the year ended December 31, 2016 . This increase was due principally to depreciation and amortization attributable to capitalized improvement projects and capitalized refinery turnaround costs. For the years ended December 31, 2016 and 2015 , depreciation and amortization expenses include $68.8 million and $61.7 million , respectively, in costs attributable to HEP operations.

42


Goodwill and Asset Impairment
During the year ended December 31, 2016 , we recorded goodwill and long-lived asset impairment charges of $309.3 million and $344.8 million, respectively, that relate to our Cheyenne Refinery. See Note 10 “Goodwill” in the Notes to Consolidated Financial Statements for additional information on the Cheyenne impairment.

Interest Income
Interest income for the year ended December 31, 2016 was $2.5 million compared to $3.4 million for the year ended December 31, 2015 . This decrease was due to lower investment levels in marketable debt securities during 2015.

Interest Expense
Interest expense was $72.2 million for the year ended December 31, 2016 compared to $43.5 million for the year ended December 31, 2015 . This increase was due to interest attributable to higher debt levels during the current year relative to 2015. For the years ended December 31, 2016 and 2015 , interest expense included $52.6 million and $36.9 million , respectively, in interest costs attributable to HEP operations.

Loss on Early Extinguishment of Debt
In March 2016, we recognized an $8.7 million loss on the early retirement of a financing obligation, a component of outstanding debt, upon HEP's purchase of crude oil tanks from an affiliate of Plains. See Note 12 "Debt" in the Notes to Consolidated Financial Statements for additional information on this financing obligation.

In June 2015, we recognized a $1.4 million early extinguishment loss on the redemption of our $150.0 million aggregate principal amount of 6.875% senior notes maturing November 2018.

Income Taxes
For the year ended December 31, 2016 , we recorded income tax expense of $19.4 million compared to $406.1 million for the year ended December 31, 2015 . This decrease was due principally to a pre-tax loss during the year ended December 31, 2016 compared to pre-tax earnings during the year ended 2015 . Our effective tax rates, before consideration of earnings attributable to the noncontrolling interest, were (11.3)% and 33.6% for the years ended December 31, 2016 and 2015 , respectively. Our current year effective tax rate reflects the effects of the $309.3 million goodwill impairment charge, a significant driver of our $171.5 million loss before income taxes for the year ended December 31, 2016 , that is not deductible for income tax purposes.


Results of Operations – Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Summary
Net income attributable to HollyFrontier stockholders for the year ended December 31, 2015 was $740.1 million ($3.91 per basic and $3.90 per diluted share), a $458.8 million increase compared to $281.3 million ($1.42 per basic and diluted share) for the year ended December 31, 2014. Net income increased due principally to a year-over-year increase in refining margins and sales volumes, improved operational reliability and lower operating expenses. Additionally, non-cash lower of cost or market inventory valuation adjustments reduced 2015 pre-tax income by $227.0 million, compared to $397.5 million in 2014. Refinery gross margins for the year ended December 31, 2015 increased to $16.07 per produced barrel from $13.98 for the year ended December 31, 2014.

Sales and Other Revenues
Sales and other revenues decreased 33% from $19,764.3 million for the year ended December 31, 2014 to $13,237.9 million for the year ended December 31, 2015 due to a year-over-year decrease in sales prices, partially offset by higher refined product sales volumes. The average sales price we received per produced barrel sold decreased 35% from $110.19 for the year ended December 31, 2014 to $71.32 for the year ended December 31, 2015. Sales and other revenues for the years ended December 31, 2015 and 2014 include $66.7 million and $57.3 million, respectively, in HEP revenues attributable to pipeline and transportation services provided to unaffiliated parties.


43

Cost of Products Sold
Total cost of products sold decreased 41% from $17,625.9 million for the year ended December 31, 2014 to $10,466.2 million for the year ended December 31, 2015, due principally to lower crude oil costs, partially offset by higher sales volumes of refined products. Additionally, cost of products sold reflects a $227.0 million charge that is attributable to the lower of cost or market reserve for the year ended December 31, 2015, a $170.5 million decrease compared to $397.5 million for the year ended December 31, 2014. The reserve at December 31, 2015 was based on market conditions and prices at that time. Excluding this non-cash adjustment, the average price we paid per barrel for crude oil and feedstocks and the transportation costs of moving the finished products to the market place decreased 43% from $96.21 for the year ended December 31, 2014 to $55.25 for the year ended December 31, 2015.

Gross Refinery Margins
Gross refinery margin per produced barrel increased 15% from $13.98 for the year ended December 31, 2014 to $16.07 for the year ended December 31, 2015. This was due to the effects of decreased crude oil and feedstock prices, partially offset by a decrease in the average per barrel sales price for refined products sold during the current year. Gross refinery margin does not include the non-cash effects of lower of cost or market inventory valuation adjustments or depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Form 10-K for a reconciliation to the income statement of prices of refined products sold and cost of products purchased.

Operating Expenses
Operating expenses, exclusive of depreciation and amortization, decreased 7% from $1,144.9 million for the year ended December 31, 2014 to $1,060.4 million for the year ended December 31, 2015 due principally to a year-over-year decrease in repair and maintenance and natural gas fuel costs and lower environmental accruals compared to 2014. For the years ended December 31, 2015 and 2014, operating expenses include $102.3 million and $104.8 million , respectively, in costs attributable to HEP operations.

General and Administrative Expenses
General and administrative expenses increased 5% from $114.6 million for the year ended December 31, 2014 to $120.8 million for the year ended December 31, 2015. This is attributable to overall higher incentive compensation and legal costs in 2015, net of the effects of state high-wage credits recognized during the second quarter of 2015. For the years ended December 31, 2015 and 2014, general and administrative expenses include $10.2 million and $8.5 million, respectively, in costs attributable to HEP operations.

Depreciation and Amortization Expenses
Depreciation and amortization decreased 5% from $363.4 million for the year ended December 31, 2014 to $346.2 million for the year ended December 31, 2015. This decrease was due principally to the recognition of higher accelerated depreciation levels of assets no longer in operation during 2014, partially offset by depreciation and amortization during 2015 attributable to capitalized improvement projects and capitalized refinery turnaround costs. For the years ended December 31, 2015 and 2014, depreciation and amortization expenses include $61.7 million and $60.9 million , respectively, in costs attributable to HEP operations.

Interest Income
Interest income for the year ended December 31, 2015 was $3.4 million compared to $4.4 million for the year ended December 31, 2014. This decrease was due to lower investment levels in marketable debt securities during 2015.

Interest Expense
Interest expense was $43.5 million for the year ended December 31, 2015 compared to $43.6 million for the year ended December 31, 2014. This slight decrease is due principally to the effects of lower HollyFrontier interest expense as a result of the June 2015 redemption of the $150.0 million HollyFrontier senior notes, net of increased HEP interest expense attributable to higher year-over-year HEP debt levels. For the years ended December 31, 2015 and 2014, interest expense included $36.9 million and $36.1 million, respectively, in interest costs attributable to HEP operations.

Loss on Early Extinguishment of Debt
In June 2015, we redeemed our $150.0 million aggregate principal amount of 6.875% senior notes maturing November 2018 at a redemption cost of $155.2 million, at which time we recognized a $1.4 million early extinguishment loss consisting of a $5.2 million debt redemption premium, net of an unamortized premium of $3.8 million.

In March 2014, HEP redeemed its $150.0 million aggregate principal amount of 8.25% senior notes maturing March 2018 at a redemption cost of $156.2 million, at which time it recognized a $7.7 million early extinguishment loss consisting of a $6.2 million debt redemption premium and unamortized discount and financing costs of $1.5 million.


44

Income Taxes
For the year ended December 31, 2015, we recorded income tax expense of $406.1 million compared to $141.2 million for the year ended December 31, 2014. This increase was due principally to higher pre-tax earnings during the year ended December 31, 2015 compared to 2014. Our effective tax rates, before consideration of earnings attributable to the noncontrolling interest, were 33.6% and 30.2% for the years ended December 31, 2015 and 2014, respectively.
LIQUIDITY AND CAPITAL RESOURCES

HollyFrontier Credit Agreement
We have a $1 billion senior unsecured revolving credit facility maturing in July 2019 (the “HollyFrontier Credit Agreement”) that was amended in February 2017, increasing the size of the credit facility to $1.35 billion and extending the maturity to February 2022. The HollyFrontier Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. During the year ended December 31, 2016 , we received advances totaling $315.0 million and repaid $315.0 million under the HollyFrontier Credit Agreement. At December 31, 2016 , we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $4.4 million under the HollyFrontier Credit Agreement.

HollyFrontier Senior Notes
In March 2016 and November 2016, we issued $250 million and $750 million, respectively, in aggregate principal amount of 5.875% senior notes (the “HollyFrontier Senior Notes”) maturing April 2026. The HollyFrontier Senior Notes are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness.

HollyFrontier Term Loan
In April 2016, we entered into a $350 million senior unsecured term loan (the “HollyFrontier Term Loan”) maturing in April 2019. The HollyFrontier Term Loan was fully repaid with proceeds received upon the November 2016 issuance of the HollyFrontier Senior Notes.

HEP Credit Agreement
HEP has a $1.2 billion senior secured revolving credit facility maturing in November 2018 (the “HEP Credit Agreement”) and is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. It is also available to fund letters of credit up to a $50 million sub-limit. During the year ended December 31, 2016 , HEP received advances totaling $554.0 million and repaid $713.0 million under the HEP Credit Agreement. At December 31, 2016 , HEP was in compliance with all of its covenants, had outstanding borrowings of $553.0 million and no outstanding letters of credit under the HEP Credit Agreement.

HEP Senior Notes
On January 4, 2017, HEP redeemed its $300 million aggregate principal amount of 6.50% senior notes maturing March 2020 at a redemption cost of $316.4 million, at which time HEP recognized a $12.2 million early extinguishment loss. HEP funded the redemption with borrowings under the HEP Credit Agreement.

HEP Debt Offering
In July 2016, HEP issued $400 million in aggregate principal amount of 6.0% HEP unsecured senior notes maturing in 2024 in a private placement. HEP used the net proceeds to repay indebtedness under the HEP Credit Agreement.

See Note 12 "Debt" in the Notes to Consolidated Financial Statements for additional information on our debt instruments.

HEP Common Unit Continuous Offering Program
On May 10, 2016, HEP established a continuous offering program under which HEP may issue and sell common units from time to time, representing limited partner interests, up to an aggregate gross sales amount of $200 million. As of December 31, 2016 , HEP has issued 703,455 units under this program, providing $23.0 million in net proceeds. In connection with this program and to maintain the 2% general partner interest, we made capital contributions totaling $0.5 million as of December 31, 2016 .

HEP intends to use the net proceeds for general partnership purposes, which may include funding working capital, repayment of debt, acquisitions and capital expenditures. Amounts repaid under HEP’s credit facility may be reborrowed from time to time.

45

 
HEP Private Placement Agreement
On September 16, 2016, HEP entered into a common unit purchase agreement in which certain purchasers agreed to purchase in a private placement 3,420,000 HEP common units, representing limited partnership interests, at a price of $30.18 per common unit. The private placement closed on October 3, 2016, at which time HEP received proceeds of $103.0 million , which were used to finance a portion of the Woods Cross assets acquisition. In connection with this private placement and to maintain our 2% general partner interest in HEP, we made capital contributions totaling $2.1 million to HEP in October 2016. After this common unit issuance, our interest in HEP is 37%, including the 2% general partner interest.

Liquidity
We believe our current cash and cash equivalents, along with future internally generated cash flow and funds available under our credit facilities will provide sufficient resources to fund currently planned capital projects and our liquidity needs for the foreseeable future. In addition, components of our growth strategy include construction of new refinery processing units and the expansion of existing units at our facilities and selective acquisition of complementary assets for our refining operations intended to increase earnings and cash flow.

As of December 31, 2016 , our cash, cash equivalents and investments in marketable securities totaled $1.1 billion . We consider all highly-liquid instruments with a maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. These primarily consist of investments in conservative, highly-rated instruments issued by financial institutions, government and corporate entities with strong credit standings and money market funds.

On October 29, 2016, our wholly-owned subsidiary, 9952110 Canada Inc., entered into a share purchase agreement with Suncor to acquire 100% of the outstanding capital stock of PCLI that closed on February 1, 2017. Cash consideration paid was $862.1 million, or $1.125 billion in Canadian dollars.

In May 2015, our Board of Directors approved a $1 billion share repurchase program, which replaced all existing share repurchase programs, authorizing us to repurchase common stock in the open market or through privately negotiated transactions. The timing and amount of stock repurchases will depend on market conditions and corporate, regulatory and other relevant considerations. This program may be discontinued at any time by our Board of Directors. As of December 31, 2016 , we had remaining authorization to repurchase up to $178.8 million under this stock repurchase program. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs.

Cash and cash equivalents increased $644.0 million for the year ended December 31, 2016 . Net cash provided by operating and financing activities of $602.3 million and $843.4 million , respectively, exceeded net cash used for investing activities of $801.6 million . Working capital increased by $1,180.3 million during the year ended December 31, 2016 .

Cash Flows – Operating Activities

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Net cash flows provided by operating activities were $602.3 million for the year ended December 31, 2016 compared to $979.6 million for the year ended December 31, 2015 , a decrease of $377.4 million . Net loss for the year ended December 31, 2016 was $190.9 million , a decrease of $993.5 million compared to net income of $802.5 million for the year ended December 31, 2015 . Non-cash adjustments to net income consisting of depreciation and amortization, goodwill and asset impairment, lower of cost or market inventory valuation adjustment, net loss of equity method investments, inclusive of distributions, gain on sale of assets, gain or loss on extinguishment of debt, deferred income taxes, equity-based compensation expense, fair value changes to derivative instruments and excess tax expense from equity-based compensation totaled $846.8 million for the year ended December 31, 2016 compared to $492.0 million for the same period in 2015 . Changes in working capital items increased cash flows by $74.7 million for the year ended December 31, 2016 compared to a decrease of $195.1 million for the year ended December 31, 2015 . For the year ended December 31, 2016 , turnaround expenditures increased to $125.3 million from $89.4 million for the same period of 2015 .


46

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Net cash flows provided by operating activities were $979.6 million for the year ended December 31, 2015 compared to $758.6 million for the year ended December 31, 2014, an increase of $221.0 million . Net income for the year ended December 31, 2015 was $802.5 million , an increase of $476.2 million compared to $326.3 million for the year ended December 31, 2014. Non-cash adjustments to net income consisting of lower of cost or market inventory valuation adjustment, depreciation and amortization, net loss of equity method investments, inclusive of distributions, gain on sale of assets, unamortized premium / discount on early extinguishment of debt, deferred income taxes, equity-based compensation expense and fair value changes to derivative instruments totaled $492.0 million for the year ended December 31, 2015 compared to $580.0 million for the same period in 2014. Changes in working capital items decreased cash flows by $195.1 million for the year ended December 31, 2015 compared to $64.1 million for the year ended December 31, 2014. For the year ended December 31, 2015, turnaround expenditures decreased to $89.4 million from $96.8 million for the same period of 2014.

Cash Flows – Investing Activities and Planned Capital Expenditures

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Net cash flows used for investing activities were $801.6 million for the year ended December 31, 2016 compared to $381.7 million for the year ended December 31, 2015 , an increase of $419.8 million . Cash expenditures for properties, plants and equipment for 2016 decreased to $479.8 million from $676.2 million for the same period in 2015 . These include HEP capital expenditures of $107.6 million and $193.1 million for the years ended December 31, 2016 and 2015 , respectively. In addition, in 2016, HEP purchased a 50% interest in Cheyenne Pipeline for $42.6 million , and in 2015, a 50% interest in Frontier Pipeline for $55.0 million . We received proceeds of $0.8 million and $19.3 million from the sale of assets during the years ended December 31, 2016 and 2015 , respectively. For the years ended December 31, 2016 and 2015 , we invested $546.6 million and $509.3 million , respectively, in marketable securities and received proceeds of $266.6 million and $839.5 million , respectively, from the sale or maturity of marketable securities.

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Net cash flows used for investing activities were $381.7 million for the year ended December 31, 2015 compared to $292.3 million for the year ended December 31, 2014 , an increase of $89.4 million . Cash expenditures for properties, plants and equipment for 2015 increased to $676.2 million from $564.8 million for the same period in 2014 . These include HEP capital expenditures of $193.1 million and $198.7 million for the years ended December 31, 2015 and 2014 , respectively. We received proceeds of $19.3 million and $16.6 million from the sale of assets during the years ended December 31, 2015 and 2014 , respectively. For the years ended December 31, 2015 and 2014 , we invested $509.3 million and $1,025.6 million , respectively, in marketable securities and received proceeds of $839.5 million and $1,276.4 million , respectively, from the sale or maturity of marketable securities. Additionally, HEP purchased a 50% interest in Frontier Pipeline for $55.0 million .

Planned Capital Expenditures

HollyFrontier Corporation
Each year our Board of Directors approves our annual capital budget which includes specific projects that management is authorized to undertake. Additionally, when conditions warrant or as new opportunities arise, additional projects may be approved. The funds appropriated for a particular capital project may be expended over a period of several years, depending on the time required to complete the project. Therefore, our planned capital expenditures for a given year consist of expenditures appropriated in that year’s capital budget plus expenditures for projects appropriated in prior years which have not yet been completed. During 2017 , we expect to spend approximately $275.0 million to $300.0 million in cash for capital projects appropriated in 2017 and prior years. In addition, we expect to spend approximately $150.0 million to $165.0 million on refinery turnarounds. Refinery turnaround spending is amortized over the useful life of the turnaround. Our expected capital and turnaround cash spending for 2017 is as follows:
 
Expected Cash Spending Range
 
(In millions)
Type:
 
 
 
Sustaining
$
75.0

 
$
85.0

Reliability and Growth
100.0

 
115.0

Compliance and Safety
90.0

 
100.0

Turnarounds
135.0

 
150.0

Total
$
400.0

 
$
450.0



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The refining industry is capital intensive and requires on-going investments to sustain our refining operations. This includes replacement of, or rebuilding, refinery units and components that extend the useful life. We also invest in projects that improve operational reliability and profitability via enhancements that improve refinery processing capabilities as well as production yield and flexibility. Our capital expenditures also include projects related to environmental, health and safety compliance and include initiatives as a result of federal and state mandates.

A significant portion of our current capital spending is associated with compliance-oriented capital improvements. This spending is required due to existing consent decrees (for projects including FCC unit flue gas scrubbers and tail gas treatment units), federal fuels regulations (particularly, Tier 3 which mandates a reduction in the sulfur content of blended gasoline), refinery waste water treatment improvements and other similar initiatives. Our refinery operations and related emissions are highly regulated at both federal and state levels, and we invest in our facilities as needed to remain in compliance with these standards. Additionally, when faced with new emissions or fuels standards, we seek to execute projects that facilitate compliance and also improve the operating costs and / or yields of associated refining processes.

HEP
Each year the Holly Logistic Services, L.L.C. board of directors approves HEP’s annual capital budget, which specifies capital projects that HEP management is authorized to undertake. Additionally, at times when conditions warrant or as new opportunities arise, special projects may be approved. The funds allocated for a particular capital project may be expended over a period in excess of a year, depending on the time required to complete the project. Therefore, HEP’s planned capital expenditures for a given year consist of expenditures approved for capital projects included in its current year capital budget as well as, in certain cases, expenditures approved for capital projects in capital budgets for prior years. The 2017 HEP capital budget is comprised of $9.0 million for maintenance capital expenditures and $30.0 million for expansion capital expenditures. HEP expects the majority of the expansion capital budget to be invested in refined product pipeline expansions, crude system enhancements, new storage tanks, and enhanced blending capabilities at our racks.

Cash Flows – Financing Activities

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Net cash flows provided by financing activities were $843.4 million for the year ended December 31, 2016 compared to cash flows used for financing activities of $1,099.3 million for the year ended December 31, 2015 , an increase of $1,942.7 million . During the year ended December 31, 2016 , we received $992.6 million in net proceeds upon issuance of our 5.875% senior notes, received $350.0 million and repaid $350.0 million under a term loan, received $315.0 million and repaid $315.0 million under the HollyFrontier Credit Agreement, purchased $133.4 million in common stock and paid $234.0 million in dividends. In addition, we extinguished our financing obligation with Plains for $39.5 million . Also during this period, HEP received $869.0 million and repaid $1,028.0 million under the HEP Credit Agreement, received $394.0 million in net proceeds from issuance of HEP 6.0% senior notes, received $125.9 million in net proceeds from the issuance of its common units and paid distributions of $92.6 million to noncontrolling interests. During the year ended December 31, 2015 , we purchased $742.8 million in common stock, paid $246.9 million in dividends and paid $155.2 million upon the redemption of our 6.875% senior notes. Also during this period, HEP received $973.9 million and repaid $832.9 million under the HEP Credit Agreement and paid distributions of $83.3 million to noncontrolling interests.

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Net cash flows used for financing activities were $1,099.3 million for the year ended December 31, 2015 compared to $838.4 million for the year ended December 31, 2014 , an increase of $260.9 million . During the year ended December 31, 2015 , we purchased $742.8 million in common stock, paid $246.9 million in dividends and paid $155.2 million upon the redemption of our 6.875% senior notes. Also during this period, HEP received $973.9 million and repaid $832.9 million under the HEP Credit Agreement and paid distributions of $83.3 million to noncontrolling interests. During the year ended December 31, 2014 , we purchased $158.8 million in common stock, paid $647.2 million in dividends and recognized $2.0 million excess tax benefits on our equity-based compensation. Also during this period, HEP received $642.3 million and repaid $434.3 million under the HEP Credit Agreement, paid $156.2 million upon the redemption of HEP's 8.25% senior notes and paid distributions of $78.2 million to noncontrolling interests.


48

Contractual Obligations and Commitments

The following table presents our long-term contractual obligations as of December 31, 2016 in total and by period due beginning in 2017 . The table below does not include our contractual obligations to HEP under our long-term transportation agreements as these related-party transactions are eliminated in the Consolidated Financial Statements. A description of these agreements is provided under “Holly Energy Partners, L.P.” under Items 1 and 2, “Business and Properties.” Also, the table below does not reflect renewal options on our operating leases that are likely to be exercised.
 
 
 
 
Payments Due by Period
Contractual Obligations and Commitments
 
Total
 
Less than 1 Year
 
1-3 Years
 
3-5 Years
 
Over 5 Years
 
 
(In thousands)
HollyFrontier Corporation
 
 
 
 
 
 
 
 
 
 
Long-term debt - principal
 
$
1,000,000

 
$
—

 
$
—

 
$
—

 
$
1,000,000

Long-term debt - interest (1)
 
548,333

 
58,750

 
117,500

 
117,500

 
254,583

Supply agreements (2)
 
2,931,355

 
462,877

 
786,286

 
638,463

 
1,043,729

Transportation and storage agreements (3)
 
1,498,001

 
136,052

 
258,153

 
209,763

 
894,033

Other long-term obligations
 
27,387

 
11,347

 
11,455

 
2,085

 
2,500

Operating leases
 
426,990

 
68,787

 
116,620

 
103,982

 
137,601

 
 
6,432,066

 
737,813

 
1,290,014

 
1,071,793

 
3,332,446

 
 
 
 
 
 
 
 
 
 
 
Holly Energy Partners
 
 
 
 
 
 
 
 
 
 
Long-term debt - principal (4)
 
1,253,000

 
—

 
553,000

 
300,000

 
400,000

Long-term debt - interest (5)
 
274,978

 
59,988

 
101,740

 
51,250

 
62,000

Pipeline operating leases
 
66,868

 
6,368

 
12,737

 
12,737

 
35,026

Other agreements
 
9,632

 
4,023

 
4,003

 
508

 
1,098

 
 
1,604,478

 
70,379

 
671,480

 
364,495

 
498,124

Total
 
$
8,036,544

 
$
808,192

 
$
1,961,494

 
$
1,436,288

 
$
3,830,570


(1)
Interest payments consist of interest on our 5.875% senior notes.
(2)
We have long-term supply agreements to secure certain quantities of crude oil, feedstock and other resources used in the production process at market prices. We have estimated future payments under these fixed-quantity agreements expiring between 2017 and 2030 using current market rates. Additionally, commitments include purchases of 20,000 BPD of crude oil under a 10-year agreement to supply our Woods Cross Refinery.
(3)
Consists of contractual obligations under agreements with third parties for the transportation of crude oil, natural gas and feedstocks to our refineries and for terminal and storage services under contracts expiring between 2017 and 2030.
(4)
HEP's long-term debt consists of the $400.0 million principal balance on the 6% HEP senior notes, $300.0 million principal balance on the 6.5% HEP senior notes and $553.0 million of outstanding borrowings under the HEP Credit Agreement. The $300 million 6.5% HEP senior notes were redeemed on January 4, 2017. The HEP Credit Agreement expires in 2018.
(5)
Interest payments consist of interest on the 6% HEP senior notes, the 6.5% HEP senior notes and interest on long-term debt under the HEP Credit Agreement. Interest on the HEP Credit Agreement debt is based on the weighted average rate of 2.98% at December 31, 2016 .


CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions. We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows. For additional information, see Note 1 “Description of Business and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements.


49

Inventory Valuation
Inventories are stated at the lower of cost, using the LIFO method for crude oil, unfinished and finished refined products and the average cost method for materials and supplies, or market. In periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs assigned to LIFO layers in prior periods. In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. At December 31, 2016 and 2015 , market values had fallen below historical LIFO inventory costs and, as a result, we recorded lower of cost or market inventory valuation reserves of $332.5 million and $624.5 million , respectively.

At December 31, 2016 , our lower of cost or market inventory valuation reserve was $332.5 million . This amount, or a portion thereof, is subject to reversal as a reduction to cost of products sold in subsequent periods as inventories giving rise to the reserve are sold, and a new reserve is established. Such a reduction to cost of products sold could be significant if inventory values return to historical cost price levels. Additionally, further decreases in overall inventory values could result in additional charges to cost of products sold should the lower of cost or market inventory valuation reserve be increased.

Goodwill and Long-lived Assets
As of December 31, 2016 , our goodwill balance was $2.0 billion , with goodwill assigned to our refining and HEP segments of $1.7 billion and $0.3 billion , respectively.

During the second quarter of 2016, we performed interim goodwill impairment and related long-lived asset impairment testing of our El Dorado and Cheyenne Refinery reporting units after identifying a combination of events and circumstances that are indicators of potential goodwill and long-lived asset impairment. The indicators included lower than typical gross margins during the summer driving season, a decrease in the gross margin outlook and decrease in our market capitalization due to a decline in our common share price.
Our testing first assessed the carrying values of our refining long-lived asset groups for recoverability. This entailed a comparison of our reporting unit fair values relative to their respective carrying values. If carrying value exceeds fair value for a reporting unit, we measure goodwill impairment as the excess of the carrying amount of reporting unit goodwill over the implied fair value of that goodwill based on estimates of the fair value of all assets and liabilities in the reporting unit.
The estimated fair values of our goodwill reporting units and long-lived asset groups were derived using a combination of both income and market approaches. The income approach reflects expected future cash flows based on estimates of future crack spreads, forecasted production levels, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs).
As a result of our impairment testing during the second quarter of 2016, we determined that the carrying value of the long-lived assets of the Cheyenne Refinery had been impaired and recorded long-lived asset impairment charges of $344.8 million . Additionally, the carrying value of the Cheyenne Refinery’s goodwill was fully impaired and a goodwill impairment charge of $309.3 million was also recorded, representing all of the goodwill allocated to our Cheyenne Refinery. Our interim testing did not identify any other impairment.

We performed our annual goodwill impairment testing at July 1, 2016 and determined that the fair value of our El Dorado reporting unit exceeded its carrying value by approximately 4%. Additionally, testing indicated no impairment of goodwill attributable to our HEP reporting unit. The market outlook for future crack spreads has since improved and based on subsequent testing, the fair value of the El Dorado reporting unit exceeded its carrying value by approximately 20% at December 31, 2016. A reasonable expectation exists that future deterioration in gross margins could result in an impairment of goodwill and the long-lived assets of the El Dorado reporting unit at some point in the future and such impairment charges could be material.

Contingencies
We are subject to proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters.



50

RISK MANAGEMENT

We use certain strategies to reduce some commodity price and operational risks. We do not attempt to eliminate all market risk exposures when we believe that the exposure relating to such risk would not be significant to our future earnings, financial position, capital resources or liquidity or that the cost of eliminating the exposure would outweigh the benefit.

Commodity Price Risk Management
Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps and futures contracts to mitigate price exposure with respect to:
•
our inventory positions;
•
natural gas purchases;
•
costs of crude oil and related grade differentials;
•
prices of refined products; and
•
our refining margins.

As of December 31, 2016 , we have the following notional contract volumes related to all outstanding derivative contracts used to mitigate commodity price risk (all maturing in 2017):
 
Contract Description
 
Total Outstanding Notional
 
Unit of Measure
 
 
 
 
 
Natural gas price swaps - long
 
19,200,000

 
MMBTU
Natural gas price swaps - short
 
9,600,000

 
MMBTU
Natural gas price swaps (basis spread) - long
 
10,308,000

 
MMBTU
Crude price swaps (basis spread) - long
 
3,645,000

 
Barrels
WTI crude oil price swaps - long
 
829,000

 
Barrels
WTI crude oil price swaps - short
 
310,000

 
Barrels
Sub-octane gasoline price swaps - short
 
829,000

 
Barrels
Sub-octane gasoline price swaps - long
 
310,000

 
Barrels
NYMEX futures (WTI) - short
 
755,000

 
Barrels
Forward gasoline and diesel contracts - long
 
1,225,000

 
Barrels
Forward gasoline and diesel contracts - short
 
175,000

 
Barrels
Physical crude contracts - short
 
150,000

 
Barrels

At December 31, 2016 , we had Canadian currency swap contracts that effectively fixed the conversion rate on $1.125 billion Canadian dollars (the PCLI purchase price) at a USD / CAD exchange rate of 1.33. These swap contracts were settled on February 1, 2017, in connection with the closing of the PCLI acquisition.

The following sensitivity analysis provides the hypothetical effects of market price fluctuations to the commodity positions hedged under our derivative contracts:
 
 
Estimated Change in Fair Value at December 31,
Commodity-based Derivative Contracts
 
2016
 
2015
 
 
(In thousands)
Hypothetical 10% change in underlying commodity prices
 
$
2,272

 
$
23,130


Interest Rate Risk Management
HEP uses interest rate swaps to manage its exposure to interest rate risk.

As of December 31, 2016 , HEP had two interest rate swap contracts with identical terms that hedge its exposure to the cash flow risk caused by the effects of LIBOR changes on $150.0 million in credit agreement advances. The swaps effectively convert $150.0 million of LIBOR based debt to fixed rate debt having an interest rate of 0.74% plus an applicable margin of 2.25% as of

51

December 31, 2016 , which equaled an effective interest rate of 2.99% . Both of these swap contracts mature in July 2017 and have been designated as cash flow hedges.

The market risk inherent in our fixed-rate debt is the potential change arising from increases or decreases in interest rates as discussed below.

For the fixed rate HollyFrontier Senior Notes and HEP Senior Notes, changes in interest rates will generally affect fair value of the debt, but not earnings or cash flows. The outstanding principal, estimated fair value and estimated change in fair value (assuming a hypothetical 10% change in the yield-to-maturity rates) for this debt as of December 31, 2016 is presented below:
 
 
Outstanding
Principal
 
Estimated
Fair Value
 
Estimated
Change in
Fair Value
 
 
(In thousands)
HollyFrontier Senior Notes
 
$
1,000,000

 
$
1,022,500

 
$
40,022

HEP Senior Notes
 
$
700,000

 
$
723,750

 
$
18,662


For the variable rate HEP Credit Agreement, changes in interest rates would affect cash flows, but not the fair value. At December 31, 2016 , outstanding borrowings under the HEP Credit Agreement were $553.0 million . By means of its cash flow hedges, HEP has effectively converted the variable rate on $150.0 million of outstanding principal to a weighted average fixed rate of 2.99% . For the remaining unhedged Credit Agreement borrowings of $403.0 million , a hypothetical 10% change in interest rates applicable to the HEP Credit Agreement would not materially affect cash flows.

At December 31, 2016 , our marketable securities included investments in investment grade, highly-liquid investments with maturities generally not greater than one year from the date of purchase and hence the interest rate market risk implicit in these investments is low. Due to the short-term nature of our cash and cash equivalents, a hypothetical 10% increase in interest rates would not have a material effect on the fair market value of our portfolio. Since we have the ability to liquidate this portfolio, we do not expect our operating results or cash flows to be materially affected by the effect of a sudden change in market interest rates on our investment portfolio.

Our operations are subject to hazards of petroleum processing operations, including fire, explosion and weather-related perils. We maintain various insurance coverages, including business interruption insurance, subject to certain deductibles. We are not fully insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures.

Financial information is reviewed on the counterparties in order to review and monitor their financial stability and assess their ongoing ability to honor their commitments under the derivative contracts. We have not experienced, nor do we expect to experience, any difficulty in the counterparties honoring their commitments.

We have a risk management oversight committee consisting of members from our senior management. This committee oversees our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.


Item 7A.
Quantitative and Qualitative Disclosures About Market Risk

See “Risk Management” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA excluding “non-cash” lower of cost or market inventory valuation adjustments and goodwill and asset impairment charges (“Adjusted EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income (loss) attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustment and (ii) goodwill and asset impairment charges. EBITDA and Adjusted EBITDA are not calculations provided for under GAAP; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. They are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA and Adjusted EBITDA.
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(In thousands)
Net income attributable to HollyFrontier stockholders
 
$
(260,453
)
 
$
740,101

 
$
281,292

Add income tax provision
 
19,411

 
406,060

 
141,172

Add interest expense (1)
 
80,910

 
44,840

 
51,323

Subtract interest income
 
(2,491
)
 
(3,391
)
 
(4,430
)
Add depreciation and amortization
 
363,027

 
346,151

 
363,381

EBITDA
 
$
200,404

 
$
1,533,761

 
$
832,738

Add (subtract) lower of cost or market inventory adjustment
 
(291,938
)
 
226,979

 
397,478

Add goodwill and asset impairment
 
654,084

 
—

 
—

PCLI pre-acquisition costs
 
13,406

 
—

 
—

Adjusted EBITDA
 
$
575,956

 
$
1,760,740

 
$
1,230,216


(1) Includes loss on early extinguishment of debt of $8.7 million , $1.4 million and $7.7 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis.

Refinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments, goodwill and asset impairment charges or depreciation and amortization. Each of these component performance measures can be reconciled directly to our consolidated statements of income.

Other companies in our industry may not calculate these performance measures in the same manner.


52
Table of Content

Refinery Gross and Net Operating Margins

Below are reconciliations to our consolidated statements of income for (i) net sales, cost of products (exclusive of lower of cost or market inventory valuation adjustment) and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of produced product sales to total sales and other revenues
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
 
 
 
Average sales price per produced barrel sold
 
$
58.02

 
$
71.32

 
$
110.19

Times sales of produced refined products (BPD)
 
435,420

 
438,000

 
420,990

Times number of days in period
 
366

 
365

 
365

Produced refined product sales
 
$
9,246,283

 
$
11,401,928

 
$
16,931,944

 
 
 
 
 
 
 
Total produced refined product sales
 
$
9,246,283

 
$
11,401,928

 
$
16,931,944

Add refined product sales from purchased products and rounding (1)
 
624,233

 
1,214,920

 
1,566,925

Total refined product sales
 
9,870,516

 
12,616,848

 
18,498,869

Add direct sales of excess crude oil (2)
 
436,974

 
352,113

 
1,060,354

Add other refining segment revenue (3)
 
159,700

 
202,222

 
147,002

Total refining segment revenue
 
10,467,190

 
13,171,183

 
19,706,225

Add HEP segment sales and other revenues
 
402,043

 
358,875

 
332,626

Add corporate and other revenues
 
168

 
663

 
2,103

Subtract consolidations and eliminations
 
(333,701
)
 
(292,801
)
 
(276,627
)
Sales and other revenues
 
$
10,535,700

 
$
13,237,920

 
$
19,764,327



Reconciliation of average cost of products per produced barrel sold to cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
 
 
 
Average cost of products per produced barrel sold
 
$
49.64

 
$
55.25

 
$
96.21

Times sales of produced refined products (BPD)
 
435,420

 
438,000

 
420,990

Times number of days in period
 
366

 
365

 
365

Cost of products for produced products sold
 
$
7,910,815

 
$
8,832,818

 
$
14,783,758

 
 
 
 
 
 
 
Total cost of products for produced products sold
 
$
7,910,815

 
$
8,832,818

 
$
14,783,758

Add refined product costs from purchased products and rounding (1)
 
638,540

 
1,245,451

 
1,572,944

Total cost of refined products sold
 
8,549,355

 
10,078,269

 
16,356,702

Add crude oil cost of direct sales of excess crude oil (2)
 
441,180

 
348,362

 
1,030,235

Add other refining segment cost of products sold (4)
 
72,222

 
98,979

 
113,664

Total refining segment cost of products sold
 
9,062,757

 
10,525,610

 
17,500,601

Subtract consolidations and eliminations
 
(296,830
)
 
(286,392
)
 
(272,216
)
Costs of products sold (exclusive of lower of cost or market inventory valuation adjustment and depreciation and amortization)
 
$
8,765,927

 
$
10,239,218

 
$
17,228,385




53
Table of Content

Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses

 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
 
 
 
Average refinery operating expenses per produced barrel sold
 
$
5.57

 
$
5.71

 
$
6.38

Times sales of produced refined products (BPD)
 
435,420

 
438,000

 
420,990

Times number of days in period
 
366

 
365

 
365

Refinery operating expenses for produced products sold
 
$
887,656

 
$
912,858

 
$
980,359

 
 
 
 
 
 
 
Total refinery operating expenses for produced products sold
 
$
887,656

 
$
912,858

 
$
980,359

Add other refining segment operating expenses and rounding (5)
 
35,934

 
41,813

 
41,426

Total refining segment operating expenses
 
923,590

 
954,671

 
1,021,785

Add HEP segment operating expenses
 
123,985

 
105,554

 
106,185

Add corporate and other costs
 
4,893

 
3,433

 
18,402

Subtract consolidations and eliminations
 
(33,629
)
 
(3,285
)
 
(1,432
)
Operating expenses (exclusive of depreciation and amortization)
 
$
1,018,839

 
$
1,060,373

 
$
1,144,940



Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(Dollars in thousands, except per barrel amounts)
Consolidated
 
 
 
 
 
 
Net operating margin per barrel
 
$
2.81

 
$
10.36

 
$
7.60

Add average refinery operating expenses per produced barrel
 
5.57

 
5.71

 
6.38

Refinery gross margin per barrel
 
8.38

 
16.07

 
13.98

Add average cost of products per produced barrel sold
 
49.64

 
55.25

 
96.21

Average sales price per produced barrel sold
 
$
58.02

 
$
71.32

 
$
110.19

Times sales of produced refined products sold (BPD)
 
435,420

 
438,000

 
420,990

Times number of days in period
 
366

 
365

 
365

Produced refined product sales
 
$
9,246,283

 
$
11,401,928

 
$
16,931,944

 
 
 
 
 
 
 
Total produced refined product sales
 
$
9,246,283

 
$
11,401,928

 
$
16,931,944

Add refined product sales from purchased products and rounding (1)
 
624,233

 
1,214,920

 
1,566,925

Total refined product sales
 
9,870,516

 
12,616,848

 
18,498,869

Add direct sales of excess crude oil (2)
 
436,974

 
352,113

 
1,060,354

Add other refining segment revenue (3)
 
159,700

 
202,222

 
147,002

Total refining segment revenue
 
10,467,190

 
13,171,183

 
19,706,225

Add HEP segment sales and other revenues
 
402,043

 
358,875

 
332,626

Add corporate and other revenues
 
168

 
663

 
2,103

Subtract consolidations and eliminations
 
(333,701
)
 
(292,801
)
 
(276,627
)
Sales and other revenues
 
$
10,535,700

 
$
13,237,920

 
$
19,764,327

 
(1)
We purchase finished products to facilitate delivery to certain locations or to meet delivery commitments.
(2)
We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, at times we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at cost.
(3)
Other refining segment revenue includes the incremental revenues associated with HFC Asphalt, product purchased and sold forward for profit as market conditions and available storage capacity allows and miscellaneous revenue.
(4)
Other refining segment cost of products sold includes the incremental cost of products for HFC Asphalt, the incremental cost associated with storing product purchased and sold forward as market conditions and available storage capacity allows and miscellaneous costs.
(5)
Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of HFC Asphalt.


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Table of Content

Item 8.
Financial Statements and Supplementary Data


MANAGEMENT'S REPORT ON ITS ASSESSMENT OF THE COMPANY'S INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of HollyFrontier Corporation (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the Company's internal control over financial reporting as of December 31, 2016 using the criteria for effective control over financial reporting established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, management concludes that, as of December 31, 2016 , the Company maintained effective internal control over financial reporting.

The Company's independent registered public accounting firm has issued an attestation report on the effectiveness of the Company's internal control over financial reporting as of December 31, 2016 . That report appears on page 58.



55

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors
and Stockholders of HollyFrontier Corporation

We have audited HollyFrontier Corporation's internal control over financial reporting as of December 31, 2016 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). HollyFrontier Corporation's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on its Assessment of the Company's Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, HollyFrontier Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016 , based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of HollyFrontier Corporation as of December 31, 2016 and 2015 , and the related consolidated statements of income, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2016 of HollyFrontier Corporation and our report dated February 22, 2017 expressed an unqualified opinion thereon.



/s/    ERNST & YOUNG LLP


Dallas, Texas
February 22, 2017



56

Index to Consolidated Financial Statements

 
Page Reference
 
 
 
 
Consolidated Balance Sheets at December 31, 2016 and 2015
 
 
Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014
 
 
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014
 
 
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014
 
 
Consolidated Statements of Equity for the years ended December 31, 2016, 2015 and 2014
 
 
Notes to Consolidated Financial Statements





57

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors
and Stockholders of HollyFrontier Corporation

We have audited the accompanying consolidated balance sheets of HollyFrontier Corporation (the “Company”) as of December 31, 2016 and 2015 , and the related consolidated statements of income, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2016 . These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of HollyFrontier Corporation at December 31, 2016 and 2015 , and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016 , in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), HollyFrontier Corporation's internal control over financial reporting as of December 31, 2016 , based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2017 expressed an unqualified opinion thereon.




/s/    ERNST & YOUNG LLP


Dallas, Texas
February 22, 2017



58

HOLLYFRONTIER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 
December 31,
 
2016
 
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents (HEP: $3,657 and $15,013, respectively)
$
710,579

 
$
66,533

Marketable securities
424,148

 
144,019

Total cash, cash equivalents and short-term marketable securities
1,134,727

 
210,552

Accounts receivable: Product and transportation (HEP: $7,846 and $8,593, respectively)
449,036

 
323,858

Crude oil resales
30,163

 
28,120

 
479,199

 
351,978

Inventories: Crude oil and refined products
970,361

 
712,865

Materials, supplies and other (HEP: $1,402 and $1,972, respectively)
165,315

 
129,004

 
1,135,676

 
841,869

Income taxes receivable
68,371

 
—

Prepayments and other (HEP: $1,486 and $3,082, respectively)
33,036

 
43,666

Total current assets
2,851,009

 
1,448,065

 
 
 
 
Properties, plants and equipment, at cost (HEP: $1,702,703 and $1,631,845, respectively)
5,546,856

 
5,490,189

Less accumulated depreciation (HEP: $(337,135) and $(298,282), respectively)
(1,538,408
)
 
(1,374,527
)
 
4,008,448

 
4,115,662

Other assets: Turnaround costs
217,340

 
231,873

Goodwill (HEP: $288,991 and $288,991, respectively)
2,022,463

 
2,331,781

Intangibles and other (HEP: $208,975 and $128,583, respectively)
336,401

 
260,918

 
2,576,204

 
2,824,572

Total assets
$
9,435,661

 
$
8,388,299

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable (HEP: $10,518 and $10,948, respectively)
$
935,387

 
$
716,490

Income taxes payable
—

 
8,142

Accrued liabilities (HEP: $37,793 and $26,341, respectively)
147,842

 
135,983

Total current liabilities
1,083,229

 
860,615

 
 
 
 
Long-term debt (HEP: $1,243,912 and $1,008,752, respectively)
2,235,137

 
1,040,040

Deferred income taxes (HEP: $509 and $431, respectively)
620,414

 
497,906

Other long-term liabilities (HEP: $62,971 and $59,376, respectively)
194,896

 
179,965

 
 
 
 
Equity:
 
 
 
HollyFrontier stockholders’ equity:
 
 
 
Preferred stock, $1.00 par value – 5,000,000 shares authorized; none issued
—

 
—

Common stock $.01 par value – 320,000,000 shares authorized; 255,962,866 shares issued as of December 31, 2016 and December 31, 2015
2,560

 
2,560

Additional capital
4,026,805

 
4,011,052

Retained earnings
2,776,728

 
3,271,189

Accumulated other comprehensive income (loss)
10,612

 
(4,155
)
Common stock held in treasury, at cost – 78,617,600 and 75,728,478 shares as of December 31, 2016 and December 31, 2015, respectively
(2,135,311
)
 
(2,027,231
)
Total HollyFrontier stockholders’ equity
4,681,394

 
5,253,415

Noncontrolling interest
620,591

 
556,358

Total equity
5,301,985

 
5,809,773

Total liabilities and equity
$
9,435,661

 
$
8,388,299



Parenthetical amounts represent asset and liability balances attributable to Holly Energy Partners, L.P. (“HEP”) as of December 31, 2016 and December 31, 2015 . HEP is a consolidated variable interest entity.

See accompanying notes.

59
Table of Content

HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
 
 
 
 
 
Sales and other revenues
 
$
10,535,700

 
$
13,237,920

 
$
19,764,327

Operating costs and expenses:
 
 
 
 
 
 
Cost of products sold (exclusive of depreciation and amortization):
 
 
 
 
 
 
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)
 
8,765,927

 
10,239,218

 
17,228,385

Lower of cost or market inventory valuation adjustment
 
(291,938
)
 
226,979

 
397,478

 
 
8,473,989

 
10,466,197

 
17,625,863

Operating expenses (exclusive of depreciation and amortization)
 
1,018,839

 
1,060,373

 
1,144,940

General and administrative expenses (exclusive of depreciation and amortization)
 
125,648

 
120,846

 
114,609

Depreciation and amortization
 
363,027

 
346,151

 
363,381

Goodwill and asset impairment
 
654,084

 
—

 
—

Total operating costs and expenses
 
10,635,587

 
11,993,567

 
19,248,793

Income (loss) from operations
 
(99,887
)
 
1,244,353

 
515,534

Other income (expense):
 
 
 
 
 
 
Earnings (loss) of equity method investments
 
14,213

 
(3,738
)
 
(2,007
)
Interest income
 
2,491

 
3,391

 
4,430

Interest expense
 
(72,192
)
 
(43,470
)
 
(43,646
)
Loss on early extinguishment of debt
 
(8,718
)
 
(1,370
)
 
(7,677
)
Other, net
 
(7,441
)
 
9,402

 
866

 
 
(71,647
)
 
(35,785
)
 
(48,034
)
Income (loss) before income taxes
 
(171,534
)
 
1,208,568

 
467,500

Income tax provision:
 
 
 
 
 
 
Current
 
(79,181
)
 
552,196

 
334,834

Deferred
 
98,592

 
(146,136
)
 
(193,662
)
 
 
19,411

 
406,060

 
141,172

Net income (loss)
 
(190,945
)
 
802,508

 
326,328

Less net income attributable to noncontrolling interest
 
69,508

 
62,407

 
45,036

Net income (loss) attributable to HollyFrontier stockholders
 
$
(260,453
)
 
$
740,101

 
$
281,292

Earnings (loss) per share attributable to HollyFrontier stockholders:
 
 
 
 
 
 
Basic
 
$
(1.48
)
 
$
3.91

 
$
1.42

Diluted
 
$
(1.48
)
 
$
3.90

 
$
1.42

Average number of common shares outstanding:
 
 
 
 
 
 
Basic
 
176,101

 
188,731

 
197,243

Diluted
 
176,101

 
188,940

 
197,428


See accompanying notes.

60
Table of Content

HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
 
 
 
 
 
Net income (loss)
 
$
(190,945
)
 
$
802,508

 
$
326,328

Other comprehensive income (loss):
 
 
 
 
 
 
Securities available-for-sale:
 
 
 
 
 
 
Unrealized gain (loss) on marketable securities
 
81

 
29

 
(153
)
Reclassification adjustments to net income on sale or maturity of marketable securities
 
23

 
9

 
(4
)
Net unrealized gain (loss) on marketable securities
 
104

 
38

 
(157
)
Hedging instruments:
 
 
 
 
 
 
Change in fair value of cash flow hedging instruments
 
(17,625
)
 
(5,847
)
 
105,414

Reclassification adjustments to net income on settlement of cash flow hedging instruments
 
41,585

 
(47,492
)
 
(50,682
)
Amortization of unrealized loss attributable to discontinued cash flow hedges
 
1,080

 
1,080

 
1,080

Net unrealized gain (loss) on hedging instruments
 
25,040

 
(52,259
)
 
55,812

Other post-retirement benefit obligations:
 
 
 
 
 
 
Gain (loss) on post-retirement healthcare plan
 
2,363

 
3,278

 
(7,434
)
Post-retirement healthcare plan gain reclassified to net income
 
(3,482
)
 
(3,299
)
 
(4,296
)
Gain (loss) on retirement restoration plan
 
(9
)
 
80

 
(615
)
Retirement restoration plan loss reclassified to net income
 
15

 
20

 
920

Net change in other post-retirement benefit obligations
 
(1,113
)
 
79

 
(11,425
)
Other comprehensive income (loss) before income taxes
 
24,031

 
(52,142
)
 
44,230

Income tax expense (benefit)
 
9,322

 
(20,237
)
 
17,098

Other comprehensive income (loss)
 
14,709

 
(31,905
)
 
27,132

Total comprehensive income (loss)
 
(176,236
)
 
770,603

 
353,460

Less noncontrolling interest in comprehensive income (loss)
 
69,450

 
62,551

 
45,096

Comprehensive income (loss) attributable to HollyFrontier stockholders
 
$
(245,686
)
 
$
708,052

 
$
308,364


See accompanying notes.



61
Table of Content

HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Cash flows from operating activities:
 
 
 
 
 
 
Net income (loss)
 
$
(190,945
)
 
$
802,508

 
$
326,328

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
363,027

 
346,151

 
363,381

Goodwill and asset impairment
 
654,084

 
—

 
—

Lower of cost or market inventory valuation adjustment
 
(291,938
)
 
226,979

 
397,478

Net loss of equity method investments, inclusive of distributions
 
961

 
8,613

 
5,257

(Gain) loss on early extinguishment of debt
 
8,718

 
(3,788
)
 
1,489

Gain on sale of assets
 
(72
)
 
(8,677
)
 
(866
)
Deferred income taxes
 
98,592

 
(146,136
)
 
(193,662
)
Equity-based compensation expense
 
25,561

 
30,367

 
29,598

Change in fair value – derivative instruments
 
(12,155
)
 
38,525

 
(22,668
)
(Increase) decrease in current assets:
 
 
 
 
 
 
Accounts receivable
 
(127,221
)
 
238,392

 
108,876

Inventories
 
(1,869
)
 
(33,717
)
 
(78,842
)
Income taxes receivable
 
(68,371
)
 
11,719

 
94,237

Prepayments and other
 
16,555

 
13,291

 
1,486

Increase (decrease) in current liabilities:
 
 
 
 
 
 
Accounts payable
 
247,603

 
(406,339
)
 
(217,541
)
Income taxes payable
 
(8,142
)
 
(11,500
)
 
19,642

Accrued liabilities
 
16,142

 
(6,924
)
 
8,047

Turnaround expenditures
 
(125,254
)
 
(89,365
)
 
(96,803
)
Other, net
 
(3,005
)
 
(30,473
)
 
13,159

Net cash provided by operating activities
 
602,271

 
979,626

 
758,596

 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
Additions to properties, plants and equipment
 
(372,195
)
 
(483,034
)
 
(366,135
)
Additions to properties, plants and equipment – HEP
 
(107,595
)
 
(193,121
)
 
(198,686
)
Purchase of equity method investment - HEP
 
(42,627
)
 
(55,032
)
 
—

Proceeds from sale of assets
 
849

 
19,264

 
16,633

Purchases of marketable securities
 
(546,632
)
 
(509,338
)
 
(1,025,602
)
Sales and maturities of marketable securities
 
266,603

 
839,513

 
1,276,447

Other, net
 
—

 
—

 
5,021

Net cash used for investing activities
 
(801,597
)
 
(381,748
)
 
(292,322
)
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
Borrowings under credit agreements
 
869,000

 
973,900

 
642,300

Repayments under credit agreements
 
(1,028,000
)
 
(832,900
)
 
(434,300
)
Net proceeds from issuance of senior notes – HFC
 
992,550

 
—

 
—

Net proceeds from issuance of senior notes – HEP
 
394,000

 
—

 
—

Net proceeds from issuance of term loan
 
350,000

 
—

 
—

Repayment of term loan
 
(350,000
)
 
—

 
—

Redemption of senior notes
 
—

 
(155,156
)
 
—

Redemption of senior notes - HEP
 
—

 
—

 
(156,188
)
Repayment of financing obligation
 
(39,500
)
 
—

 
—

Net proceeds from common unit offerings - HEP
 
125,870

 
—

 
—

Purchase of treasury stock
 
(133,430
)
 
(742,823
)
 
(158,847
)
Dividends
 
(234,004
)
 
(246,908
)
 
(647,197
)
Distributions to noncontrolling interest
 
(92,607
)
 
(83,268
)
 
(78,202
)
Excess tax benefit from equity-based compensation
 
—

 
—

 
2,040

Other, net
 
(10,507
)
 
(12,175
)
 
(7,998
)
Net cash provided by (used for) financing activities
 
843,372

 
(1,099,330
)
 
(838,392
)
 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
Increase (decrease) for the period
 
644,046

 
(501,452
)
 
(372,118
)
Beginning of period
 
66,533

 
567,985

 
940,103

End of period
 
$
710,579

 
$
66,533

 
$
567,985

 
 
 
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
 
Interest
 
$
54,074

 
$
46,442

 
$
55,716

Income taxes
 
$
40,236

 
$
586,447

 
$
237,907

See accompanying notes.

62
Table of Content


HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
 
HollyFrontier Stockholders' Equity
 
 
 
 
 
Common Stock
 
Additional Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Treasury Stock
 
Non-controlling Interest
 
Total Equity
Balance at December 31, 2013
$
2,560

 
$
3,990,630

 
$
3,144,480

 
$
822

 
$
(1,138,872
)
 
$
609,778

 
$
6,609,398

Net income
—

 
—

 
281,292

 
—

 
—

 
45,036

 
326,328

Dividends
—

 
—

 
(647,195
)
 
—

 
—

 
—

 
(647,195
)
Distributions to noncontrolling interest holders
—

 
—

 
—

 
—

 
—

 
(78,202
)
 
(78,202
)
Other comprehensive income, net of tax
—

 
—

 
—

 
27,072

 
—

 
60

 
27,132

Issuance of common stock under incentive compensation plans, net of forfeitures
—

 
(15,101
)
 
—

 
—

 
15,101

 
—

 
—

Equity-based compensation, inclusive of tax benefit
—

 
28,099

 
—

 
—

 
—

 
3,539

 
31,638

Purchase of treasury stock
—

 
—

 
—

 
—

 
(165,304
)
 
—

 
(165,304
)
Purchase of HEP units for restricted grants
—

 
—

 
—

 
—

 
—

 
(3,577
)
 
(3,577
)
Other
—

 
—

 
—

 
—

 
—

 
501

 
501

Balance at December 31, 2014
$
2,560

 
$
4,003,628

 
$
2,778,577

 
$
27,894

 
$
(1,289,075
)
 
$
577,135

 
$
6,100,719

Net income
—

 
—

 
740,101

 
—

 
—

 
62,407

 
802,508

Dividends
—

 
—

 
(247,489
)
 
—

 
—

 
—

 
(247,489
)
Distributions to noncontrolling interest holders
—

 
—

 
—

 
—

 
—

 
(83,268
)
 
(83,268
)
Other comprehensive income (loss), net of tax
—

 
—

 
—

 
(32,049
)
 
—

 
144

 
(31,905
)
Issuance of common stock under incentive compensation plans, net of forfeitures
—

 
(14,958
)
 
—

 
—

 
14,958

 
—

 
—

Equity-based compensation, inclusive of tax benefit
—

 
22,382

 
—

 
—

 
—

 
3,483

 
25,865

Purchase of treasury stock
—

 
—

 
—

 
—

 
(753,114
)
 
—

 
(753,114
)
Purchase of HEP units for restricted grants
—

 
—

 
—

 
—

 
—

 
(3,555
)
 
(3,555
)
Other
—

 
—

 
—

 
—

 
—

 
12

 
12

Balance at December 31, 2015
$
2,560

 
$
4,011,052

 
$
3,271,189

 
$
(4,155
)
 
$
(2,027,231
)
 
$
556,358

 
$
5,809,773

Net income (loss)
—

 
—

 
(260,453
)
 
—

 
—

 
69,508

 
(190,945
)
Dividends
—

 
—

 
(234,008
)
 
—

 
—

 
—

 
(234,008
)
Distributions to noncontrolling interest holders
—

 
—

 
—

 
—

 
—

 
(92,607
)
 
(92,607
)
Other comprehensive income (loss), net of tax
—

 
—

 
—

 
14,767

 
—

 
(58
)
 
14,709

Equity attributable to HEP common unit issuances, net of tax
—

 
23,110

 
—

 
—

 
—

 
88,166

 
111,276

Issuance of common stock under incentive compensation plans, net of forfeitures
—

 
(25,982
)
 
—

 
—

 
25,982

 
—

 
—

Equity-based compensation, inclusive of tax benefit
—

 
18,625

 
—

 
—

 
—

 
2,727

 
21,352

Purchase of treasury stock
—

 
—

 
—

 
—

 
(134,062
)
 
—

 
(134,062
)
Purchase of HEP units for restricted grants
—

 
—

 
—

 
—

 
—

 
(3,521
)
 
(3,521
)
Other
—

 
—

 
—

 
—

 
—

 
18

 
18

Balance at December 31, 2016
$
2,560

 
$
4,026,805

 
$
2,776,728

 
$
10,612

 
$
(2,135,311
)
 
$
620,591

 
$
5,301,985


See accompanying notes.

63
Table of Content

HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1:
Description of Business and Summary of Significant Accounting Policies

Description of Business: References herein to HollyFrontier Corporation (“HollyFrontier”) include HollyFrontier and its consolidated subsidiaries. In accordance with the Securities and Exchange Commission’s (“SEC”) “Plain English” guidelines, this Annual Report on Form 10-K has been written in the first person. In these financial statements, the words “we,” “our,” “ours” and “us” refer only to HollyFrontier and its consolidated subsidiaries or to HollyFrontier or an individual subsidiary and not to any other person, with certain exceptions. Generally, the words “we,” “our,” “ours” and “us” include Holly Energy Partners, L.P. (“HEP”) and its subsidiaries as consolidated subsidiaries of HollyFrontier, unless when used in disclosures of transactions or obligations between HEP and HollyFrontier or its other subsidiaries. These financial statements contain certain disclosures of agreements that are specific to HEP and its consolidated subsidiaries and do not necessarily represent obligations of HollyFrontier. When used in descriptions of agreements and transactions, “HEP” refers to HEP and its consolidated subsidiaries.

We are principally an independent petroleum refiner that produces high-value light products such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. We own and operate petroleum refineries that serve markets throughout the Mid-Continent, Southwest and Rocky Mountain regions of the United States. As of December 31, 2016 , we:

•
owned and operated a petroleum refinery in El Dorado, Kansas (the “El Dorado Refinery”), two refinery facilities located in Tulsa, Oklahoma (collectively, the “Tulsa Refineries”), a refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the “Navajo Refinery”), a refinery located in Cheyenne, Wyoming (the “Cheyenne Refinery”) and a refinery in Woods Cross, Utah (the “Woods Cross Refinery”);
•
owned and operated HollyFrontier Asphalt Company (“HFC Asphalt”) which operates various asphalt terminals in Arizona, New Mexico and Oklahoma; and
•
owned a 37% interest in HEP, a consolidated variable interest entity (“VIE”), which includes our 2% general partner interest.

On October 29, 2016, our wholly-owned subsidiary, 9952110 Canada Inc., entered into a share purchase agreement with Suncor Energy Inc. (“Suncor”) to acquire 100% of the outstanding capital stock of Petro-Canada Lubricants Inc. (“PCLI”) that closed on February 1, 2017. See Note 2 for additional information.

Principles of Consolidation: Our consolidated financial statements include our accounts and the accounts of partnerships and joint ventures that we control through an ownership interest greater than 50% or through a controlling financial interest with respect to variable interest entities. All significant intercompany transactions and balances have been eliminated.

Variable Interest Entities: HEP is a VIE as defined under U.S. generally accepted accounting principles (“GAAP”). A VIE is a legal entity whose equity owners do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the equity holders lack the power, through voting rights, to direct the activities that most significantly impact the entity's financial performance, the obligation to absorb the entity's expected losses or rights to expected residual returns. As the general partner of HEP, we have the sole ability to direct the activities of HEP that most significantly impact HEP's financial performance, and therefore we consolidate HEP.

Use of Estimates : The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents: We consider all highly liquid instruments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost, which approximates market value and are primarily invested in highly-rated instruments issued by government or municipal entities with strong credit standings.


64
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Marketable Securities: We consider all marketable debt securities with maturities greater than three months at the date of purchase to be marketable securities. Our marketable securities consist of certificates of deposit, commercial paper, corporate debt securities and government and municipal debt securities with the maximum maturity or put date of any individual issue generally not more than two years, while the maximum duration of the portfolio of investments is not greater than one year. These instruments are classified as available-for-sale, and as a result, are reported at fair value. Unrealized gains and losses, net of related income taxes, are reported as a component of accumulated other comprehensive income.

Balance Sheet Offsetting : We purchase and sell inventories of crude oil with certain same-parties that are net settled in accordance with contractual net settlement provisions. Our policy is to present such balances on a net basis because it more appropriately presents our economic resources (accounts receivable) and claims against us (accounts payable) and the future cash flows associated with such assets and liabilities.

Accounts Receivable: Our accounts receivable consist of amounts due from customers that are primarily companies in the petroleum industry. Credit is extended based on our evaluation of the customer's financial condition, and in certain circumstances collateral, such as letters of credit or guarantees, is required. We reserve for doubtful accounts based on our historical loss experience as well as specific accounts identified as high risk, which historically have been minimal. Credit losses are charged to the allowance for doubtful accounts when an account is deemed uncollectible. Our allowance for doubtful accounts was $2.3 million at both December 31, 2016 and 2015 .

Accounts receivable attributable to crude oil resales generally represent the sell side of excess crude oil sales to other purchasers and / or users in cases when our crude oil supplies are in excess of our immediate needs as well as certain reciprocal buy / sell exchanges of crude oil. At times we enter into such buy / sell exchanges to facilitate the delivery of quantities to certain locations. In many cases, we enter into net settlement agreements relating to the buy / sell arrangements, which may mitigate credit risk.

Inventories: Inventories are stated at the lower of cost, using the last-in, first-out (“LIFO”) method for crude oil and unfinished and finished refined products, or market. Cost, consisting of raw material, transportation and conversion costs, is determined using the LIFO inventory valuation methodology and market is determined using current replacement costs. Under the LIFO method, the most recently incurred costs are charged to cost of sales and inventories are valued at the earliest acquisition costs. In periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs assigned to LIFO layers in prior periods. In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels at that time. Accordingly, interim LIFO calculations are based on management's estimates of expected year-end inventory levels and are subject to the final year-end LIFO inventory valuation.

Inventories consisting of process chemicals, materials and maintenance supplies and RINs are stated at the lower of weighted-average cost or market.

At December 31, 2016 , and 2015 , market values had fallen below historical LIFO inventory costs and, as a result, we recorded lower of cost or market inventory valuation reserves of $332.5 million and $624.5 million , respectively.

Derivative Instruments: All derivative instruments are recognized as either assets or liabilities in our consolidated balance sheets and are measured at fair value. Changes in the derivative instrument's fair value are recognized in earnings unless specific hedge accounting criteria are met. See Note 13 for additional information.

Properties, plants and equipment: Properties, plants and equipment are stated at cost. Depreciation is provided by the straight-line method over the estimated useful lives of the assets, primarily 15 to 32 years for refining, pipeline and terminal facilities, 10 to 40 years for buildings and improvements, 5 to 30 years for other fixed assets and 5 years for vehicles.


65
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Asset Retirement Obligations: We record legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and / or the normal operation of long-lived assets. The fair value of the estimated cost to retire a tangible long-lived asset is recorded as a liability with the associated retirement costs capitalized as part of the asset's carrying amount in the period in which it is incurred and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability's fair value. Certain of our refining assets have no recorded liability for asset retirement obligations since the timing of any retirement and related costs are currently indeterminable.

Our asset retirement obligations were $22.1 million and $20.7 million at December 31, 2016 and 2015 , respectively, which are included in “Other long-term liabilities” in our consolidated balance sheets. Accretion expense was insignificant for the years ended December 31, 2016 , 2015 and 2014 .

Intangibles, Goodwill and long-lived assets: Intangible assets are assets (other than financial assets) that lack physical substance, and goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired less liabilities assumed. Goodwill acquired in a business combination and intangibles with indefinite useful lives are not amortized while, intangible assets with finite useful lives are amortized on a straight-line basis. Goodwill and intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired. Our analysis entails a comparison of the estimated fair value of these assets that are derived using a combination of both income (discounted future expected net cash flows) and comparable market approaches against their respective carrying values. Estimates of future cash flows and fair value of assets require subjective assumptions with regard to future operating results and actual results could differ from those estimates.

Our long-lived assets principally consist of our refining assets that are organized as refining asset groups. These refinery asset groups also constitute our individual refinery reporting units that are used for testing and measuring goodwill impairments. Our long-lived assets are evaluated for impairment by identifying whether indicators of impairment exist and if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss measured, if any, is equal to the amount by which the asset group’s carrying value exceeds its fair value.

See Note 10 for information regarding goodwill and long-lived asset impairment charges recorded during the year ended December 31, 2016 .

Our consolidated HEP assets include a third-party transportation agreement, an intangible asset, that currently generates minimum annual cash inflows of $26.0 million and has an expected remaining term through 2035. The transportation agreement is being amortized on a straight-line basis through 2035 that results in annual amortization expense of $2.0 million . The balance of this transportation agreement was $36.5 million and $38.5 million at December 31, 2016 , and 2015 , respectively, and is presented net of accumulated amortization of $23.7 million and $21.7 million respectively, in “Intangibles and other” in our consolidated balance sheets.

Investments in Joint Ventures: We consolidate the financial and operating results of joint ventures in which we have an ownership interest of greater than 50% or a controlling interest with respect to VIE's, and use the equity method of accounting for investments in which we have a noncontrolling interest, yet have have significant influence over the entity. Under the equity method of accounting, we record our pro-rata share of earnings, and contributions to and distributions from joint ventures as adjustments to our investment balance.

HEP has a 50% joint venture interest in Frontier Aspen LLC, the owner of a pipeline running from Wyoming to Frontier Station, Utah (the “Frontier Pipeline”); a 50% interest in Osage Pipe Line Company, LLC, the owner of a pipeline running from Cushing, Oklahoma to El Dorado, Kansas (the “Osage Pipeline”); a 50% interest in Cheyenne Pipeline, LLC, the owner of a pipeline running from Fort Laramie, Wyoming to Cheyenne, Wyoming (the “Cheyenne Pipeline”); and a 25% joint venture interest in SLC Pipeline, LLC, the owner of a pipeline (the “SLC Pipeline”) that serves refineries in the Salt Lake City, Utah area, that are accounted for using the equity method of accounting. As of December 31, 2016 , HEP's underlying equity and recorded investment balances in the joint ventures are $109.3 million and $165.6 million , respectively. The differences are being amortized as adjustments to HEP's pro-rata share of earnings in the joint ventures.


66
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Revenue Recognition: Refined product sales and related cost of sales are recognized when products are shipped and title has passed to customers. HEP recognizes pipeline transportation revenues as products are shipped through its pipelines. All revenues are reported inclusive of shipping and handling costs billed and exclusive of any taxes billed to customers. Shipping and handling costs incurred are reported in cost of products sold.

Cost Classifications: Costs of products sold include the cost of crude oil, other feedstocks, blendstocks and purchased finished products, inclusive of transportation costs. We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as cost of products sold. Additionally, we enter into buy / sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at cost. Operating expenses include direct costs of labor, maintenance materials and services, utilities, marketing expense and other direct operating costs. General and administrative expenses include compensation, professional services and other support costs.

Deferred Maintenance Costs: Our refinery units require regular major maintenance and repairs which are commonly referred to as “turnarounds.” Catalysts used in certain refinery processes also require regular “change-outs.” The required frequency of the maintenance varies by unit and by catalyst, but generally is every two to five years. Turnaround costs are deferred and amortized over the period until the next scheduled turnaround. Other repairs and maintenance costs are expensed when incurred. Deferred turnaround and catalyst amortization expense was $110.6 million , $107.8 million and $96.9 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.

Environmental Costs: Environmental costs are charged to operating expenses if they relate to an existing condition caused by past operations. We have ongoing investigations of environmental matters at various locations as part of our assessment process to determine the amount of environmental obligation we may have, if any, with respect to these matters for which we have recorded the estimated cost of the studies. Liabilities are recorded when site restoration and environmental remediation, cleanup and other obligations are either known or considered probable and can be reasonably estimated. Such estimates are undiscounted and require judgment with respect to costs, time frame and extent of required remedial and clean-up activities and are subject to periodic adjustments based on currently available information. Recoveries of environmental costs through insurance, indemnification arrangements or other sources are included in other assets to the extent such recoveries are considered probable.

Contingencies: We are subject to proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters.

Income Taxes: Provisions for income taxes include deferred taxes resulting from temporary differences in income for financial and tax purposes, using the liability method of accounting for income taxes. The liability method requires the effect of tax rate changes on deferred income taxes to be reflected in the period in which the rate change was enacted. The liability method also requires that deferred tax assets be reduced by a valuation allowance unless it is more likely than not that the assets will be realized.

For the year ended December 31, 2016 , we recorded an income tax expense of $19.4 million compared $406.1 million and $141.2 million for the years ended December 31, 2015 and 2014 , respectively. This decrease was due principally to a pre-tax loss during the year ended December 31, 2016 compared to pre-tax earnings in the same periods of 2015 and 2014 . Our effective tax rates, before consideration of earnings attributable to the noncontrolling interest, were (11.3)% , 33.6% and 30.2% for the years ended December 31, 2016 , 2015 and 2014 , respectively. The year-over-year decrease in the effective tax rate in 2016 was due principally to the effects of the second quarter $309.3 million goodwill impairment charge, a significant cause of our $171.5 million loss before income taxes for the year ended December 31, 2016 , that is not deductible for income tax purposes.

Potential interest and penalties related to income tax matters are recognized in income tax expense. We believe we have appropriate support for the income tax positions taken and to be taken on our income tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter.


67
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Inventory Repurchase Obligations: We periodically enter into same-party sell / buy transactions, whereby we sell certain refined product inventory and subsequently repurchase the inventory in order to facilitate delivery to certain locations. Such sell / buy transactions are accounted for as inventory repurchase obligations under which proceeds received under the initial sell is recognized as an inventory repurchase obligation that is subsequently reversed when the inventory is repurchased. For the years ended December 31, 2016 , 2015 and 2014 , we received proceeds of $57.0 million , $115.4 million and $77.3 million and subsequently repaid $58.0 million , $115.3 million and $78.1 million , respectively, under these sell / buy transactions.

New Accounting Pronouncements

Share-Based Compensation
In March 2016, Accounting Standard Update (“ASU”) 2016-09, “Improvements to Employee Share-Based Payment Accounting,” was issued which simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. This standard is effective January 1, 2017. We do not expect this standard to have a material impact on our financial condition, results of operations and cash flows.

Leases
In February 2016, ASU 2016-02, “Leases,” was issued requiring leases to be measured and recognized as a lease liability, with a corresponding right-of-use asset on the balance sheet. This standard has an effective date of January 1, 2019, and we are evaluating the impact of this standard.

Consolidation
In February 2015, ASU 2015-02, “Consolidation,” was issued to improve consolidation guidance for certain legal entities. It modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, affects the consolidation analysis of reporting entities involved with VIEs, particularly those that have fee arrangements and related party provisions and provides a scope exception from consolidation guidance for certain reporting entities that comply with or operate in accordance with requirements that are similar to those included in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. We adopted this standard effective January 1, 2016, which had no affect our financial position or results of operations.

Revenue Recognition
In May 2014, ASU 2014-09, “Revenue from Contracts with Customers” was issued requiring revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the expected consideration for these goods or services. This standard has an effective date of January 1, 2018, and we anticipate to account for the new guidance using the modified retrospective implementation method, whereby a cumulative effect adjustment is recorded to retained earnings as of the date of initial application. Our preparation for adoption of this standard is in progress, and we are currently evaluating terms, conditions and our performance obligations of our existing contracts with customers. We are evaluating the effect of this standard on our revenue recognition policies and whether it will have a material impact on our financial condition, results of operations or cash flows.


NOTE 2:
PCLI Acquisition

On October 29, 2016, our wholly-owned subsidiary, 9952110 Canada Inc., entered into a share purchase agreement with Suncor to acquire 100% of the outstanding capital stock of PCLI that closed on February 1, 2017. Cash consideration paid was $862.1 million , or $1.125 billion in Canadian dollars.

PCLI is located in Mississauga, Ontario and is a producer of base oils in Canada with a plant having 15,600 BPD of lubricant production capacity. The facility is downstream integrated from base oils to finished lubricants and produces a broad spectrum of specialty lubricants and white oils that are distributed to end customers worldwide.

68
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued



This acquisition will be accounted for as business combination, with the $862.1 million cash purchase price plus the fair value of additional consideration allocated to the the acquisition date fair value of assets and liabilities acquired. Due to the short timeframe between the closing of this acquisition and filing of this Annual Report on Form 10-K, we have not completed the detailed valuation studies necessary to arrive at the required fair value estimates of the acquired PCLI assets, liabilities assumed and related purchase price allocations.

NOTE 3:
Holly Energy Partners

HEP, a consolidated VIE, is a publicly held master limited partnership that owns and operates logistic assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units that principally support our refining and marketing operations in the Mid-Continent, Southwest and Rocky Mountain regions of the United States and Alon USA, Inc.'s (“Alon”) refinery in Big Spring, Texas. Additionally, HEP owns a 75% interest in UNEV Pipeline, LLC (“UNEV”), the owner of pipeline running from Woods Cross, Utah to Las Vegas, Nevada (the “UNEV Pipeline”) and associated product terminals; a 50% ownership interest in each of the Frontier Pipeline, the Osage Pipeline and the Cheyenne Pipeline; and a 25% interest in the SLC Pipeline.

As of December 31, 2016 , we owned a 37% interest in HEP, including the 2% general partner interest. As the general partner of HEP, we have the sole ability to direct the activities that most significantly impact HEP's financial performance, and therefore we consolidate HEP.

HEP has two primary customers (including us) and generates revenues by charging tariffs for transporting petroleum products and crude oil though its pipelines, by charging fees for terminalling refined products and other hydrocarbons, and storing and providing other services at its storage tanks and terminals. Under our long-term transportation agreements with HEP (discussed further below), we accounted for 83% of HEP’s total revenues for the year ended December 31, 2016 . We do not provide financial or equity support through any liquidity arrangements and / or debt guarantees to HEP.

HEP has outstanding debt under a senior secured revolving credit agreement and its senior notes. HEP’s creditors have no recourse to our assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries. See Note 12 for a description of HEP’s debt obligations.

HEP has risk associated with its operations. If a major customer of HEP were to terminate its contracts or fail to meet desired shipping or throughput levels for an extended period of time, revenue would be reduced and HEP could suffer substantial losses to the extent that a new customer is not found. In the event that HEP incurs a loss, our operating results will reflect HEP’s loss, net of intercompany eliminations, to the extent of our ownership interest in HEP at that point in time.

Woods Cross Assets
On October 3, 2016, HEP acquired from us all the membership interests of Woods Cross Operating LLC, which owns the crude unit, FCCU and polymerization unit of the first phase of our Woods Cross Refinery expansion project that was completed in the second quarter of 2016, for cash consideration of approximately $278.0 million .

In connection with this transaction, we entered into 15-year tolling agreements containing minimum quarterly throughput commitments that provide minimum annualized payments to HEP of $56.7 million .

Cheyenne Pipeline
On June 3, 2016, HEP acquired a 50% interest in Cheyenne Pipeline LLC, owner of the Cheyenne Pipeline, in exchange for a contribution of $42.6 million in cash to Cheyenne Pipeline LLC. Cheyenne Pipeline will continue to be operated by an affiliate of Plains All American Pipeline, L.P. (“Plains”), which owns the remaining 50% interest. The 87 -mile crude oil pipeline runs from Fort Laramie, Wyoming to Cheyenne, Wyoming and has an 80,000 BPD capacity.

Tulsa Tanks
On March 31, 2016, HEP acquired crude oil tanks located at our Tulsa Refineries from Plains for $39.5 million . Previously in 2009, we sold these tanks to Plains and leased them back, and due to our continuing interest in the tanks, we accounted for the transaction as a financing arrangement. Accordingly, the tanks remained on our balance sheet and were depreciated for accounting purposes, and the proceeds received from Plains were recorded as a financing obligation and presented as a component of outstanding debt.

In accounting for HEP’s March 2016 purchase from Plains, the amount paid was recorded against our outstanding financing obligation balance of $30.8 million , with the excess $8.7 million payment resulting in a loss on early extinguishment of debt.

69
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued



Magellan Asset Exchange
On February 22, 2016, we obtained a 50% membership interest in Osage Pipe Line Company, LLC (“Osage”) in exchange for a 20-year terminalling services agreement, whereby, a subsidiary of Magellan Midstream Partners (“Magellan Midstream”) will provide terminalling services for all of our products originating in Artesia, New Mexico that require terminalling in or through El Paso, Texas. Under the agreement, we will be charged tariffs based on the volumes of refined product processed. Osage is the owner of the Osage Pipeline, a 135 -mile pipeline that transports crude oil from Cushing, Oklahoma to our El Dorado Refinery in Kansas and also has a connection to the Jayhawk pipeline that services the CHS refinery in McPherson, Kansas. This exchange was accounted for at fair value, whereby the 50% membership interest in the Osage Pipeline was recorded at appraised fair value and an offsetting residual deferred credit in the amount of $38.9 million was recorded, which will be amortized to cost of products sold over the 20-year service period. No gain or loss was recorded for this exchange.

Also on February 22, 2016, we contributed the 50% membership interest in Osage to HEP, and in exchange received HEP's El Paso terminal. Pursuant to this exchange, HEP agreed to build two connections to Magellan Midstream's El Paso terminal. In addition, HEP agreed to become the operator of the Osage Pipeline. This exchange was accounted for at carry-over basis with no resulting gain or loss.

El Dorado Asset Transaction
On November 1, 2015, HEP acquired from us newly constructed naphtha fractionation and hydrogen generation units at our El Dorado Refinery for cash consideration of $62.0 million . In connection with this transaction, we entered into 15-year tolling agreements containing minimum quarterly throughput commitments that provide minimum annualized payments to HEP of $15.1 million .

Frontier Pipeline Transaction
On August 31, 2015, HEP purchased a 50% interest in Frontier Aspen LLC (previously known as Frontier Pipeline Company), owner of the Frontier Pipeline, from an affiliate of Enbridge, Inc. for $55.0 million . Frontier Pipeline will continue to be operated by an affiliate of Plains, which owns the remaining 50% interest. The 289 -mile crude oil pipeline runs from Casper, Wyoming to Frontier Station, Utah, has a 72,000 BPD capacity and supplies Canadian and Rocky Mountain crudes to Salt Lake City area refiners through a connection to the SLC Pipeline.

Transportation Agreements
HEP serves our refineries under long-term pipeline, terminal and tankage throughput agreements and refinery processing tolling agreements expiring from 2019 through 2036. Under these agreements, we pay HEP fees to transport, store and process throughput volumes of refined products, crude oil and feedstocks on HEP's pipelines, terminals, tankage, loading rack facilities and refinery processing units that result in minimum annual payments to HEP including UNEV (a consolidated subsidiary of HEP). Under these agreements, the agreed upon tariff rates are subject to annual tariff rate adjustments on July 1 at a rate based upon the percentage change in Producer Price Index or Federal Energy Regulatory Commission index. As of December 31, 2016 , these agreements result in minimum annualized payments to HEP of $321.0 million .

Our transactions with HEP including the acquisitions discussed above and fees paid under our transportation agreements with HEP and UNEV are eliminated and have no impact on our consolidated financial statements.

HEP's recent common unit issuances (2014 through present) are summarized below:

HEP Private Placement Agreement
On September 16, 2016, HEP entered into a common unit purchase agreement in which certain purchasers agreed to purchase in a private placement 3,420,000 HEP common units, representing limited partnership interests, at a price of $30.18 per common unit. The private placement closed on October 3, 2016, at which time HEP received proceeds of approximately $103 million , which were used to finance a portion of the Woods Cross assets acquisition. In connection with this private placement and to maintain our 2% general partner interest in HEP, we made capital contributions totaling $2.1 million to HEP in October 2016. After this common unit issuance, our interest in HEP is 37% , including the 2% general partner interest.


70
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


HEP Common Unit Continuous Offering Program
On May 10, 2016, HEP established a continuous offering program under which HEP may issue and sell common units from time to time, representing limited partner interests, up to an aggregate gross sales amount of $200 million . As of December 31, 2016 , HEP has issued 703,455 units under this program, providing $23.0 million in net proceeds. In connection with this program and to maintain our 2% general partner interest in HEP, we made capital contributions totaling $0.5 million as of December 31, 2016 .

HEP intends to use the net proceeds for general partnership purposes, which may include funding working capital, repayment of debt, acquisitions and capital expenditures. Amounts repaid under HEP’s credit facility may be reborrowed from time to time.

As a result of this transaction and resulting HEP ownership changes, we adjusted additional capital and equity attributable to HEP's noncontrolling interest holders to reallocate HEP's equity among its unitholders.


NOTE 4:
Fair Value Measurements

Our financial instruments measured at fair value on a recurring basis consist of investments in marketable securities and derivative instruments.

Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability, including assumptions about risk). GAAP categorizes inputs used in fair value measurements into three broad levels as follows:

•
(Level 1) Quoted prices in active markets for identical assets or liabilities.
•
(Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.
•
(Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.

The carrying values of marketable securities and derivative instruments at December 31, 2016 and December 31, 2015 were as follows:
 
 
 
 
Fair Value by Input Level
Financial Instrument
 
Carrying Amount
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
(In thousands)
December 31, 2016
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Marketable securities
 
$
424,148

 
$
—

 
$
424,148

 
$
—

Commodity price swaps
 
14,563

 
—

 
14,358

 
205

Commodity forward contracts
 
5,905

 
—

 
5,905

 
—

HEP interest rate swaps
 
91

 
—

 
91

 
—

Total assets
 
$
444,707

 
$
—

 
$
444,502

 
$
205

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
NYMEX futures contracts
 
$
1,975

 
$
1,975

 
$
—

 
$
—

Commodity price swaps
 
26,845

 
—

 
24,086

 
2,759

Commodity forward contracts
 
8,316

 
—

 
8,316

 
—

Foreign currency forward contracts
 
6,519

 
—

 
6,519

 
—

Total liabilities
 
$
43,655

 
$
1,975

 
$
38,921

 
$
2,759


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HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


 
 
 
 
Fair Value by Input Level
Financial Instrument
 
Carrying Amount
 
Level 1
 
Level 2
 
Level 3
 
 
(In thousands)
December 31, 2015
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Marketable securities
 
$
144,019

 
$
—

 
$
144,019

 
$
—

NYMEX futures contract
 
3,469

 
3,469

 
—

 
—

Commodity price swaps
 
37,097

 
—

 
37,097

 
—

HEP interest rate swaps
 
304

 
—

 
304

 
—

Total assets
 
$
184,889

 
$
3,469

 
$
181,420

 
$
—

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
Commodity price swaps
 
$
98,930

 
$
—

 
$
98,930

 
$
—

HEP interest rate swaps
 
114

 
—

 
114

 
—

Total liabilities
 
$
99,044

 
$
—

 
$
99,044

 
$
—


Level 1 Financial Instruments
Our NYMEX futures contracts are exchange traded and are measured and recorded at fair value using quoted market prices, a Level 1 input.

Level 2 Financial Instruments
Investments in marketable securities, derivative instruments consisting of commodity price swaps and forward sales and purchase contracts and HEP's interest rate swaps are measured and recorded at fair value using Level 2 inputs. The fair values of the commodity price and interest rate swap contracts are based on the net present value of expected future cash flows related to both variable and fixed rate legs of the respective swap agreements. The measurements are computed using market-based observable inputs, quoted forward commodity prices with respect to our commodity price swaps and the forward London Interbank Offered Rate (“LIBOR”) yield curve with respect to HEP's interest rate swaps. The fair value of the marketable securities is based on values provided by a third party, which were derived using market quotes for similar type instruments, a Level 2 input.

Level 3 Financial Instruments
We have commodity price swap contracts that relate to forecasted sales of unleaded gasoline, and at times have forward commodity sales and purchase contracts, for which quoted forward market prices are not readily available. The forward rate used to value these price swaps and forward sales and purchase contracts are derived using a projected forward rate using quoted market rates for similar products, adjusted for regional pricing and grade differentials, a Level 3 input.

The following table presents the changes in fair value of our Level 3 assets and liabilities (all related to derivative instruments) for the years ended December 31, 2016 and 2015 :
 
 
Years Ended December 31,
Level 3 Financial Instruments
 
2016
 
2015
 
(In thousands)
Liability balance at beginning of period
 
$
—

 
$
—

Change in fair value:
 
 
 
 
Recognized in other comprehensive income
 
(1,460
)
 
3,852

Recognized in cost of products sold
 
(1,094
)
 
—

Settlement date fair value of contractual maturities:
 
 
 
 
Recognized in sales and other revenues
 
—

 
(3,852
)
Liability balance at end of period
 
$
(2,554
)
 
$
—


A hypothetical change of 10% to the estimated future cash flows attributable to our Level 3 commodity price swaps would result in an estimated fair value change of $0.3 million .


72
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


During the year ended December 31, 2016 , we recognized goodwill and long-lived asset impairment charges based on fair value measurements (see Note 10). Also, we recognized a non-recurring fair value measurement of $44.4 million that relates to HEP’s equity interest in Osage in February 2016. The fair value measurements were based on a combination of valuation methods including discounted cash flows, and the guideline public company and guideline transaction methods, Level 3 inputs.


NOTE 5:
Earnings Per Share

Basic earnings per share is calculated as net income (loss) attributable to HollyFrontier stockholders divided by the average number of shares of common stock outstanding. Diluted earnings per share assumes, when dilutive, the issuance of the net incremental shares from restricted shares and performance share units. The following is a reconciliation of the denominators of the basic and diluted per share computations for net income (loss) attributable to HollyFrontier stockholders:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(In thousands, except per share data)
Net income (loss) attributable to HollyFrontier stockholders
 
$
(260,453
)
 
$
740,101

 
$
281,292

Participating securities’ (restricted stock) share in earnings
 
1,003

 
2,306

 
820

Net income (loss) attributable to common shares
 
$
(261,456
)
 
$
737,795

 
$
280,472

Average number of shares of common stock outstanding
 
176,101

 
188,731

 
197,243

Effect of dilutive variable restricted shares and   performance share units  (1)
 
—

 
209

 
185

Average number of shares of common stock outstanding assuming dilution
 
176,101

 
188,940

 
197,428

Basic earnings (loss) per share
 
$
(1.48
)
 
$
3.91

 
$
1.42

Diluted earnings (loss) per share
 
$
(1.48
)
 
$
3.90

 
$
1.42

 
 
 
 
 
 
 
(1) Excludes anti-dilutive restricted and performance share units of:
 
469

 
89

 
356



NOTE 6:
Stock-Based Compensation

As of December 31, 2016 , we have two principal share-based compensation plans (collectively, the “Long-Term Incentive Compensation Plan”).

The compensation cost charged against income for these plans was $22.8 million , $26.9 million and $26.1 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. Our accounting policy for the recognition of compensation expense for awards with pro-rata vesting is to expense the costs ratably over the vesting periods.

Additionally, HEP maintains a share-based compensation plan for Holly Logistic Services, L.L.C.'s non-employee directors and certain executives and employees. Compensation cost attributable to HEP’s share-based compensation plan was $2.7 million , $3.5 million and $3.5 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.

Restricted Stock and Restricted Stock Units
Under our Long-Term Incentive Compensation Plan, we grant certain officers and other key employees restricted stock and restricted stock unit awards with awards generally vesting over a period of one to three years. Restricted stock award recipients are generally entitled to all the rights of absolute ownership of the restricted shares from the date of grant including the right to vote the shares and to receive dividends. Upon vesting, restrictions on the restricted shares lapse at which time they convert to common shares. In addition, we grant non-employee directors restricted stock unit awards, which typically vest over a period of one year and are payable in stock. The fair value of each restricted stock and restricted stock unit award is measured based on the grant date market price of our common shares and is amortized over the respective vesting period.


73
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


A summary of restricted stock and restricted stock unit activity and changes during the year ended December 31, 2016 is presented below:
Restricted Stock and Restricted Stock Units
 
Grants
 
Weighted Average Grant Date Fair Value
 
Aggregate Intrinsic Value ($000)
 
 
 
 
 
 
 
Outstanding at January 1, 2016 (non-vested)
 
722,525

 
$
47.50

 
 
Granted
 
894,879

 
21.66

 
 
Vesting (transfer/conversion to common stock)
 
(409,016
)
 
45.09

 
 
Forfeited
 
(19,614
)
 
48.02

 
 
Outstanding at December 31, 2016 (non-vested)
 
1,188,774

 
$
28.87

 
$
37,426


For the years ended December 31, 2016 , 2015 and 2014 , restricted stock and restricted stock units vested having a grant date fair value of $18.4 million , $14.2 million and $18.2 million , respectively. For the years ended December 31, 2015 and 2014 , we granted restricted stock and restricted stock units having a weighted average grant date fair value of $49.92 and $42.03 , respectively. As of December 31, 2016 , there was $24.2 million of total unrecognized compensation cost related to non-vested restricted stock and restricted stock unit grants. That cost is expected to be recognized over a weighted-average period of 2.5 years.

Performance Share Units
Under our Long-Term Incentive Compensation Plan, we grant certain officers and other key employees performance share units, which are payable in stock upon meeting certain criteria over the service period, and generally vest over a period of three years. Under the terms of our performance share unit grants, awards are subject to “financial performance” and “market performance” criteria. Financial performance is based on our financial performance compared to a peer group of independent refining companies, while market performance is based on the relative standing of total shareholder return achieved by HollyFrontier compared to peer group companies. The number of shares ultimately issued under these awards can range from zero to 200% of target award amounts. As of December 31, 2016 , estimated share payouts for outstanding non-vested performance share unit awards averaged approximately 67% of target amounts.

A summary of performance share unit activity and changes during the year ended December 31, 2016 is presented below:
Performance Share Units
 
Grants
 
 
 
Outstanding at January 1, 2016 (non-vested)
 
637,938

Granted
 
376,275

Vesting and transfer of ownership to recipients
 
(161,610
)
Forfeited
 
(148,664
)
Outstanding at December 31, 2016 (non-vested)
 
703,939


For the year ended December 31, 2016 , we issued 76,404 shares of common stock, representing a 47% payout on vested performance share units having a grant date fair value of $7.4 million . For the years ended December 31, 2015 and 2014 , we issued common stock upon the vesting of the performance share units having a grant date fair value of $10.4 million and $14.3 million , respectively. As of December 31, 2016 , there was $14.5 million of total unrecognized compensation cost related to non-vested performance share units having a grant date fair value of $33.79 per unit. That cost is expected to be recognized over a weighted-average period of 2.3 years.


NOTE 7:
Cash and Cash Equivalents and Investments in Marketable Securities

Our investment portfolio at December 31, 2016 consisted of cash, cash equivalents and investments in marketable securities.

74
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued



We currently invest in marketable debt securities with the maximum maturity or put date of any individual issue generally not greater than one year from the date of purchase, which are usually held until maturity. All of these instruments are classified as available-for-sale and are reported at fair value. Interest income is recorded as earned. Unrealized gains and losses, net of related income taxes, are reported as a component of accumulated other comprehensive income. Upon sale or maturity, realized gains on our marketable debt securities are recognized as interest income. These gains are computed based on the specific identification of the underlying cost of the securities, net of unrealized gains and losses previously reported in other comprehensive income. Unrealized gains and losses on our available-for-sale securities are due to changes in market prices and are considered temporary.

The following is a summary of our marketable securities as of December 31, 2016 and 2015 , respectively:
 
 
Amortized Cost
 
Gross Unrealized Gain
 
Gross Unrealized Loss
 
Fair Value
(Net Carrying Amount)
 
 
(In thousands)
December 31, 2016
 
 
 
 
 
 
 
 
Commercial paper
 
$
7,687

 
$
1

 
$
(1
)
 
$
7,687

Corporate debt securities
 
4,001

 
—

 
—

 
4,001

State and political subdivisions debt securities
 
412,462

 
1

 
(3
)
 
412,460

Total marketable securities
 
$
424,150

 
$
2

 
$
(4
)
 
$
424,148

December 31, 2015
 
 
 
 
 
 
 
 
Commercial paper
 
$
22,876

 
$
1

 
$
(2
)
 
$
22,875

Corporate debt securities
 
32,311

 
—

 
(41
)
 
32,270

State and political subdivisions debt securities
 
88,935

 
6

 
(67
)
 
88,874

Total marketable securities
 
$
144,122

 
$
7

 
$
(110
)
 
$
144,019


Interest income recognized on our marketable securities was $0.8 million , $1.9 million and $2.2 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.


NOTE 8:
Inventories

Inventory consists of the following components:
 
 
December 31,
 
 
2016
 
2015
 
 
(In thousands)
Crude oil
 
$
549,886

 
$
518,922

Other raw materials and unfinished products (1)
 
287,561

 
214,832

Finished products (2)
 
465,432

 
603,568

Lower of cost or market reserve
 
(332,518
)
 
(624,457
)
Process chemicals (3)
 
2,767

 
4,477

Repairs and maintenance supplies and other (4)
 
162,548

 
124,527

Total inventory
 
$
1,135,676

 
$
841,869


(1)
Other raw materials and unfinished products include feedstocks and blendstocks, other than crude.
(2)
Finished products include gasolines, jet fuels, diesels, lubricants, asphalts, LPG’s and residual fuels.
(3)
Process chemicals include additives and other chemicals.
(4)
Includes RINs

Inventories which are valued at the lower of LIFO cost or market reflect a valuation reserve of $332.5 million and $624.5 million at December 31, 2016 and 2015 , respectively. The December 31, 2015 market reserve of $624.5 million was reversed due to the sale of inventory quantities that gave rise to the 2015 reserve. A new market reserve of $332.5 million was established as of December 31, 2016 based on market conditions and prices at that time. The effect of the change in the lower of cost or market reserve was a decrease to cost of goods sold of $291.9 million for the year ended December 31, 2016 and an increase of $227.0 million and $397.5 million for the years ended December 31, 2015 and 2014 , respectively.

At December 31, 2016 , 2015 and 2014 , the LIFO value of inventory, net of the lower of cost or market reserve, was equal to current costs.


NOTE 9:
Properties, Plants and Equipment

The components of properties, plants and equipment are as follows:
 
 
December 31,
 
 
2016
 
2015
 
 
(In thousands)
Land, buildings and improvements
 
$
326,097

 
$
305,712

Refining facilities
 
3,382,369

 
2,833,125

Pipelines and terminals
 
1,392,898

 
1,321,398

Transportation vehicles
 
18,841

 
21,289

Other fixed assets
 
153,463

 
158,401

Construction in progress
 
273,188

 
850,264

 
 
5,546,856

 
5,490,189

Accumulated depreciation
 
(1,538,408
)
 
(1,374,527
)
 
 
$
4,008,448

 
$
4,115,662


During the year ended December 31, 2016, we recorded impairment charges of $308.3 million that are attributable to properties, plant and equipment of our Cheyenne reporting unit. See Note 10 for additional information.

We capitalized interest attributable to construction projects of $8.0 million , $5.5 million and $11.8 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.

Depreciation expense was $247.9 million , $233.3 million and $261.8 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. For the years ended December 31, 2016 , 2015 and 2014 , depreciation expense included $62.7 million , $58.7 million and $58.1 million , respectively, attributable to HEP operations.


NOTE 10:
Goodwill and Long-lived Asset Impairment

As of December 31, 2016 , our goodwill balance was $2.0 billion , with goodwill assigned to our refining and HEP segments of $1.7 billion and $0.3 billion , respectively.

During the second quarter of 2016, we performed interim goodwill impairment and related long-lived asset impairment testing of our El Dorado and Cheyenne Refinery reporting units after identifying a combination of events and circumstances that are indicators of potential goodwill and long-lived asset impairment. The indicators included lower than typical gross margins during the summer driving season, a decrease in the gross margin outlook and decrease in our market capitalization due to a decline in our common share price.
Our testing first assessed the carrying values of our refining long-lived asset groups for recoverability. This entailed a comparison of our reporting unit fair values relative to their respective carrying values. If carrying value exceeds fair value for a reporting unit, we measure goodwill impairment as the excess of the carrying amount of reporting unit goodwill over the implied fair value of that goodwill based on estimates of the fair value of all assets and liabilities in the reporting unit.
The estimated fair values of our goodwill reporting units and long-lived asset groups were derived using a combination of both income and market approaches. The income approach reflects expected future cash flows based on estimates of future crack spreads, forecasted production levels, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs).
As a result of our impairment testing during the second quarter of 2016, we determined that the carrying value of the long-lived assets of the Cheyenne Refinery had been impaired and recorded long-lived asset impairment charges of $344.8 million that principally related to properties, plant and equipment. Additionally, the carrying value of the Cheyenne Refinery’s goodwill was fully impaired and a goodwill impairment charge of $309.3 million was also recorded, representing all of the goodwill allocated to our Cheyenne Refinery. Our interim testing did not identify any impairment related to our El Dorado reporting unit.

We performed our annual goodwill impairment testing at July 1, 2016 and determined that the fair value of our El Dorado reporting unit exceeded its carrying value by approximately 4% . Additionally, testing indicated no impairment of goodwill attributable to our HEP reporting unit. The market outlook for future crack spreads has since improved and based on subsequent testing, the fair value of the El Dorado reporting unit exceeded its carrying value by approximately 20% at December 31, 2016. A reasonable expectation exists that future deterioration in gross margins could result in an impairment of goodwill and the long-lived assets of the El Dorado reporting unit at some point in the future and such impairment charges could be material.

As of December 31, 2016 , accumulated goodwill losses recognized totaled $309.3 million , all of which relates to our Refining segment. There were no impairments of goodwill or long-lived assets during the years ended December 31, 2015 and 2014 .

NOTE 11:
Environmental

We expensed $6.6 million , $14.7 million and $28.5 million for the years ended December 31, 2016 , 2015 and 2014 , respectively, for environmental remediation obligations. The accrued environmental liability reflected in our consolidated balance sheets was $96.4 million and $98.1 million at December 31, 2016 and 2015 , respectively, of which $82.9 million and $83.5 million , respectively, were classified as other long-term liabilities. These accruals include remediation and monitoring costs expected to be incurred over an extended period of time (up to 30 years for certain projects). The amount of our accrued liability could increase in the future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.


NOTE 12:
Debt

HollyFrontier Credit Agreement
We have a $1 billion senior unsecured revolving credit facility maturing in July 2019 (the “HollyFrontier Credit Agreement”) that was amended in February 2017, increasing the size of the credit facility to $1.35 billion and extending the maturity to February 2022. The HollyFrontier Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. During the year ended December 31, 2016 , we received advances totaling $315.0 million and repaid $315.0 million under the HollyFrontier Credit Agreement. At December 31, 2016 , we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $4.4 million under the HollyFrontier Credit Agreement.

Indebtedness under the HollyFrontier Credit Agreement bears interest, at our option at either a) an alternate base rate (as defined in the credit agreement) plus an applicable margin of (ranging from 0.125% - 1.000%), b) LIBOR plus an applicable margin (ranging from 1.125% to 2.000%), or c) Canadian Dealer Offered Rate plus an applicable margin (ranging from 1.125% to 2.000%) for Canadian dollar denominated borrowings.

HEP Credit Agreement
HEP has a $1.2 billion senior secured revolving credit facility maturing in November 2018 (the “HEP Credit Agreement”) and is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. It is also available to fund letters of credit up to a $50 million sub-limit. During the year ended December 31, 2016 , HEP received advances totaling $554.0 million and repaid $713.0 million under the HEP Credit Agreement. At December 31, 2016 , HEP was in compliance with all of its covenants, had outstanding borrowings of $553.0 million and no outstanding letters of credit under the HEP Credit Agreement.

Indebtedness under the HEP Credit Agreement bears interest, at HEP's option, at either a reference rate announced by the administrative agent plus an applicable margin or at a rate equal to LIBOR plus an applicable margin. In each case, the applicable margin is based upon the ratio of HEP’s funded debt to earnings before interest, taxes, depreciation and amortization (as defined in the HEP Credit Agreement). The weighted average interest rates in effect on HEP’s Credit Agreement borrowings were 2.98% and 2.572% at December 31, 2016 and 2015 , respectively.

HEP’s obligations under the HEP Credit Agreement are collateralized by substantially all of HEP’s assets. Indebtedness under the HEP Credit Agreement involves recourse to HEP Logistics Holdings, L.P., its general partner, and is guaranteed by HEP’s wholly-owned subsidiaries. Any recourse to the general partner would be limited to the extent of HEP Logistics Holdings, L.P.’s assets, which other than its investment in HEP, are not significant. HEP’s creditors have no recourse to our other assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries.

HollyFrontier Senior Notes
In March 2016 and November 2016, we issued $250 million and $750 million , respectively, in aggregate principal amount of 5.875% senior notes (the “HollyFrontier Senior Notes”) maturing April 2026 . The HollyFrontier Senior Notes are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness.

In June 2015, we redeemed our $150.0 million aggregate principal amount of 6.875% senior notes maturing November 2018 at a redemption cost of $155.2 million at which time we recognized a $1.4 million early extinguishment loss consisting of a $5.2 million debt redemption premium, net of an unamortized premium of $3.8 million .


75
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


HollyFrontier Financing Obligation
In March 2016, we extinguished a financing obligation at a cost of $39.5 million and recognized an $8.7 million loss on the early termination. The financing obligation related to a sale and lease-back of certain crude oil tankage that we sold to an affiliate of Plains in October 2009 for $40.0 million .

HollyFrontier Term Loan
In April 2016, we entered into a $350 million senior unsecured term loan (the “HollyFrontier Term Loan”) maturing in April 2019 . The HollyFrontier Term Loan was fully repaid with proceeds received upon the November 2016 issuance of the HollyFrontier Senior Notes.

HEP Senior Notes
On January 4, 2017, HEP redeemed its $300 million aggregate principal amount of 6.50% senior notes maturing March 2020 at a redemption cost of $316.4 million , at which time HEP recognized a $12.2 million early extinguishment loss. HEP funded the redemption with borrowings under the HEP Credit Agreement.

In July 2016, HEP issued $400 million in aggregate principal amount of 6.0% HEP senior notes maturing in 2024 in a private placement. HEP used the net proceeds to repay indebtedness under the HEP Credit Agreement.

The 6.0% HEP senior notes (the “HEP Senior Notes”) are unsecured and impose certain restrictive covenants, including limitations on HEP’s ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the HEP Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, HEP will not be subject to many of the foregoing covenants. Additionally, HEP has certain redemption rights under the HEP Senior Notes.

In March 2014, HEP redeemed its $150.0 million aggregate principal amount of 8.25% senior notes maturing March 2018 at a redemption cost of $156.2 million , at which time HEP recognized a $7.7 million early extinguishment loss consisting of a $6.2 million debt redemption premium and unamortized discount and financing cost of $1.5 million . HEP funded the redemption with borrowings under the HEP Credit Agreement.

Indebtedness under the HEP Senior Notes is guaranteed by HEP’s wholly-owned subsidiaries. HEP’s creditors have no recourse to our other assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries.


76
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


The carrying amounts of long-term debt are as follows:
 
 
December 31,
 
 
2016
 
2015
 
 
(In thousands)
HollyFrontier 5.875% Senior Notes
 
 
 
 
Principal
 
$
1,000,000

 
$
—

Unamortized discount and debt issuance costs
 
(8,775
)
 
—

 
 
991,225

 
—

 
 
 
 
 
Financing Obligation
 
—

 
31,288

 
 
 
 
 
Total HollyFrontier long-term debt
 
991,225

 
31,288

 
 
 
 
 
HEP Credit Agreement
 
553,000

 
712,000

 
 
 
 
 
HEP 6% Senior Notes
 
 
 
 
Principal
 
400,000

 
—

Unamortized discount and debt issuance costs
 
(6,607
)
 
—

 
 
393,393

 
—

 
 
 
 
 
HEP 6.5% Senior Notes
 
 
 
 
Principal
 
300,000

 
300,000

Unamortized discount and debt issuance costs
 
(2,481
)
 
(3,248
)
 
 
297,519

 
296,752

 
 
 
 
 
Total HEP long-term debt
 
1,243,912

 
1,008,752

 
 
 
 
 
Total long-term debt
 
$
2,235,137

 
$
1,040,040


The fair values of the senior notes are as follows:
 
 
December 31,
 
 
2016
 
2015
 
 
(In thousands)
 
 
 
 
 
HollyFrontier 5.875% Senior Notes
 
$
1,022,500

 
$
—

 
 
 
 
 
HEP Senior Notes
 
$
723,750

 
$
295,500


These fair values are based on estimates provided by a third party using market quotes for similar type instruments, a Level 2 input. See Note 4 for additional information on Level 2 inputs.
Principal maturities of long-term debt are as follows:
        
Years Ending December 31,
(In thousands)
2017
$
—

2018
553,000

2019
—

2020
300,000

2021
—

Thereafter
1,400,000

Total
$
2,253,000




77
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


NOTE 13:
Derivative Instruments and Hedging Activities

Commodity Price Risk Management

Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, forward purchase and sales and futures contracts to mitigate price exposure with respect to:
•
our inventory positions;
•
natural gas purchases;
•
costs of crude oil and related grade differentials;
•
prices of refined products; and
•
our refining margins.

Accounting Hedges
We have swap contracts serving as cash flow hedges against price risk on forecasted purchases of natural gas. We also periodically have forward sales contracts that lock in the prices of future sales of crude oil and refined product and swap contracts serving as cash flow hedges against price risk on forecasted purchases of WTI crude oil and forecasted sales of refined product. These contracts have been designated as accounting hedges and are measured at fair value with offsetting adjustments (gains/losses) recorded directly to other comprehensive income. These fair value adjustments are later reclassified to earnings as the hedging instruments mature. On a quarterly basis, hedge ineffectiveness is measured by comparing the change in fair value of the swap contracts against the expected future cash inflows/outflows on the respective transaction being hedged. Any hedge ineffectiveness is also recognized in earnings.

The following table presents the pre-tax effect on other comprehensive income (“OCI”) and earnings due to fair value adjustments and maturities of commodity price swaps and forward sales under hedge accounting:
 
 
Unrealized Gain (Loss) Recognized in OCI
 
Gain (Loss) Recognized in Earnings Due to Settlements
 
Gain (Loss) Attributable to Hedge Ineffectiveness Recognized in Earnings
 
 
 
Location
 
Amount
 
Location
 
Amount
 
 
 
 
(In thousands)
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
Commodity price swaps
 
 
 
 
 
 
 
 
 
 
Change in fair value
 
$
(17,018
)
 
 
 
 
 
 
 
 
Loss reclassified to earnings due to settlements
 
41,077

 
Sales and other revenues
 
$
(20,293
)
 
 
 
 
Amortization of discontinued hedges reclassified to earnings
 
1,080

 
Operating expenses
 
(21,864
)
 
Operating expenses
 
$
—

Total
 
$
25,139

 
 
 
$
(42,157
)
 
 
 
$
—

 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
Commodity price swaps
 
 
 
 
 
 
 
 
 
 
Change in fair value
 
$
(3,983
)
 
Sales and other revenues
 
$
245,819

 
Sales and other revenues
 
$
(274
)
Gain reclassified to earnings due to settlements
 
(49,592
)
 
Cost of products sold
 
(179,700
)
 
Cost of products sold
 
4,376

Amortization of discontinued hedges reclassified to earnings
 
1,080

 
Operating expenses
 
(17,607
)
 
Operating expenses
 
547

Total
 
$
(52,495
)
 
 
 
$
48,512

 
 
 
$
4,649

 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2014
 
 
 
 
 
 
 
 
 
 
Commodity price swaps
 
 
 
 
 
 
 
 
 
 
Change in fair value
 
$
107,518

 
Sales and other revenues
 
$
88,326

 
Sales and other revenues
 
$
274

Gain reclassified to earnings due to settlements
 
(52,884
)
 
Cost of products sold
 
(37,313
)
 
Cost of products sold
 
(4,377
)
Amortization of discontinued hedges reclassified to earnings
 
1,080

 
Operating expenses
 
791

 
Operating expenses
 
(547
)
Total
 
$
55,714

 
 
 
$
51,804

 
 
 
$
(4,650
)


78
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


As of December 31, 2016 , we have the following notional contract volumes related to outstanding derivative instruments serving as cash flow hedges against price risk on forecasted transactions (all maturing in 2017):
Derivative instruments
 
Total Outstanding Notional
 
Unit of Measure
 
 
 
 
 
Natural gas price swaps - long
 
9,600,000

 
MMBTU
WTI crude oil price swaps - long
 
519,000

 
Barrels
Sub-octane gasoline price swaps - short
 
519,000

 
Barrels
Forward gasoline and diesel contracts - short
 
175,000

 
Barrels
Physical crude contracts - short
 
150,000

 
Barrels

In 2013, we dedesignated certain commodity price swaps (long positions) that previously received hedge accounting treatment. These contracts now serve as economic hedges against price risk on forecasted natural gas purchases totaling 9,600,000 MMBTU's to be purchased ratably through 2017. As of December 31, 2016 , we have an unrealized loss of $1.1 million classified in accumulated other comprehensive income that relates to the application of hedge accounting prior to dedesignation that is amortized as a charge to operating expenses as the contracts mature.

Economic Hedges
We also have swap contracts that serve as economic hedges (derivatives used for risk management, but not designated as accounting hedges) to fix our purchase price on forecasted purchases of WTI crude oil and forecasted sales of refined product, and to lock in the basis spread differentials on forecasted purchases of crude oil and natural gas. Also, we have NYMEX futures contracts to lock in prices on forecasted purchases of inventory. These contracts are measured at fair value with offsetting adjustments (gains/losses) recorded directly to income.

The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:
 
 
Years Ended December 31,
Location of Gain (Loss) Recognized in Income
 
2016
 
2015
 
2014
 
 
(In thousands)
Cost of products sold
 
$
(6,889
)
 
$
48,082

 
$
68,509

Operating expenses
 
7,276

 
(12,003
)
 
(185
)
Other, net
 
(6,520
)
 
—

 
—

Total
 
$
(6,133
)
 
$
36,079

 
$
68,324


As of December 31, 2016 , we have the following notional contract volumes related to our outstanding derivative contracts serving as economic hedges (all maturing in 2017):
Derivative Instrument
 
Total Outstanding Notional
 
Unit of Measure
 
 
 
 
 
Crude price swaps (basis spread) - long
 
3,645,000

 
Barrels
Natural gas price swaps (basis spread) - long
 
10,308,000

 
MMBTU
Natural gas price swaps - long
 
9,600,000

 
MMBTU
Natural gas price swaps - short
 
9,600,000

 
MMBTU
WTI crude oil price swaps - long
 
310,000

 
Barrels
WTI crude oil price swaps - short
 
310,000

 
Barrels
Sub-octane gasoline price swaps - short
 
310,000

 
Barrels
Sub-octane gasoline price swaps - long
 
310,000

 
Barrels
NYMEX futures (WTI) - short
 
755,000

 
Barrels
Forward gasoline and diesel contracts - long
 
1,225,000

 
Barrels


79
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


At December 31, 2016 , we had Canadian currency swap contracts that effectively fixed the conversion rate on $1.125 billion Canadian dollars (the PCLI purchase price) at a USD / CAD exchange rate of 1.33 . These swap contracts were settled on February 1, 2017, in connection with the closing of the PCLI acquisition.

Interest Rate Risk Management
HEP uses interest rate swaps to manage its exposure to interest rate risk.

As of December 31, 2016 , HEP had two interest rate swap contracts with identical terms that hedge its exposure to the cash flow risk caused by the effects of LIBOR changes on $150.0 million in credit agreement advances. The swaps effectively convert $150.0 million of LIBOR based debt to fixed rate debt having an interest rate of 0.74% plus an applicable margin of 2.25% as of December 31, 2016 , which equaled an effective interest rate of 2.99% . Both of these swap contracts mature in July 2017 and have been designated as cash flow hedges. To date, there has been no ineffectiveness on these cash flow hedges.

The following table presents the pre-tax effect on other comprehensive income and earnings due to fair value adjustments and maturities of HEP's interest rate swaps under hedge accounting:
 
 
Unrealized Gain (Loss) Recognized in OCI
 
Loss Recognized in Earnings Due to Settlements
 
 
 
Location
 
Amount
 
 
(In thousands)
Year Ended December 31, 2016
 
 
 
 
 
 
Interest rate swaps
 
 
 
 
 
 
Change in fair value
 
$
(607
)
 
 
 
 
Loss reclassified to earnings due to settlements
 
508

 
Interest expense
 
$
(508
)
Total
 
$
(99
)
 
 
 
$
(508
)
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
Interest rate swaps
 
 
 
 
 
 
Change in fair value
 
$
(1,864
)
 
 
 
 
Loss reclassified to earnings due to settlements
 
2,100

 
Interest expense
 
$
(2,100
)
Total
 
$
236

 
 
 
$
(2,100
)
 
 
 
 
 
 
 
Year Ended December 31, 2014
 
 
 
 
 
 
Interest rate swaps
 
 
 
 
 
 
Change in fair value
 
$
(2,104
)
 
 
 
 
Loss reclassified to earnings due to settlements
 
2,202

 
Interest expense
 
$
(2,202
)
Total
 
$
98

 
 
 
$
(2,202
)


80
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


The following table presents the fair value and balance sheet locations of our outstanding derivative instruments. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.
 
 
Derivatives in Net Asset Position
 
Derivatives in Net Liability Position
 
 
Gross Assets
 
Gross Liabilities Offset in Balance Sheet
 
Net Assets Recognized in Balance Sheet
 
Gross Liabilities
 
Gross Assets Offset in Balance Sheet
 
Net Liabilities Recognized in Balance Sheet
 
 
 
 
(In thousands)
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives designated as cash flow hedging instruments:
 
 
Commodity price swap contracts
 
$
—

 
$
—

 
$
—

 
$
13,185

 
$
(431
)
 
$
12,754

Commodity forward contracts
 
—

 
—

 
—

 
2,978

 
—

 
2,978

Interest rate swap contracts
 
91

 
—

 
91

 
—

 
—

 
—

 
 
$
91

 
$
—

 
$
91

 
$
16,163

 
$
(431
)
 
$
15,732

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as cash flow hedging instruments:
 
 
Commodity price swap contracts
 
$
4,244

 
$
(756
)
 
$
3,488

 
$
12,903

 
$
(9,887
)
 
$
3,016

NYMEX futures contracts
 
—

 
—

 
—

 
1,975

 
—

 
1,975

Commodity forward contracts
 
5,905

 
—

 
5,905

 
5,338

 
—

 
5,338

Foreign currency forward contracts
 
—

 
—

 
—

 
6,519

 
—

 
6,519

 
 
$
10,149

 
$
(756
)
 
$
9,393

 
$
26,735

 
$
(9,887
)
 
$
16,848

 
 
 
 
 
 
 
 
 
 
 
 
 
Total net balance
 
 
 
 
 
$
9,484

 
 
 
 
 
$
32,580

 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet classification:
 
Prepayment and other
 
$
9,484

 
Accrued liabilities
 
$
32,580




 
 
Derivatives in Net Asset Position
 
Derivatives in Net Liability Position
 
 
Gross Assets
 
Gross Liabilities Offset in Balance Sheet
 
Net Assets Recognized in Balance Sheet
 
Gross Liabilities
 
Gross Assets Offset in Balance Sheet
 
Net Liabilities Recognized in Balance Sheet
 
 
 
 
(In thousands)
 
 
December 31, 2015
 
 
Derivatives designated as cash flow hedging instruments:
 
 
Commodity price swap contracts
 
$
—

 
$
—

 
$
—

 
$
38,755

 
$
—

 
$
38,755

Interest rate swap contracts
 
304

 
—

 
304

 
114

 
—

 
114

 
 
$
304

 
$
—

 
$
304

 
$
38,869

 
$
—

 
$
38,869

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as cash flow hedging instruments:
 
 
Commodity price swap contracts
 
$
—

 
$
—

 
$
—

 
$
60,196

 
$
(37,118
)
 
$
23,078

NYMEX futures contracts
 
3,469

 
—

 
3,469

 
—

 
—

 
—

 
 
$
3,469

 
$
—

 
$
3,469

 
$
60,196

 
$
(37,118
)
 
$
23,078

 
 
 
 
 
 
 
 
 
 
 
 
 
Total net balance
 
 
 
 
 
$
3,773

 
 
 
 
 
$
61,947

 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet classification:
 
Prepayment and other
 
$
3,469

 
Accrued liabilities
 
$
36,976

 
 
Intangibles and other
 
304

 
Other long-term liabilities
 
$
24,971

 
 
 
 
 
 
$
3,773

 
 
 
 
 
$
61,947



81
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


At December 31, 2016 , we had a pre-tax net unrealized loss of $15.8 million classified in accumulated other comprehensive income that relates to all accounting hedges having contractual maturities through 2017. Assuming commodity prices and interest rates remain unchanged, this unrealized loss will be effectively transferred from accumulated other comprehensive income into the statement of income as the hedging instruments contractually mature over the next twelve-month period.


NOTE 14:
Income Taxes

The provision for income taxes is comprised of the following:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(In thousands)
Current
 
 
 
 
 
 
Federal
 
$
(71,878
)
 
$
480,446

 
$
294,509

State
 
(7,304
)
 
71,750

 
40,325

Deferred
 
 
 
 
 
 
Federal
 
100,208

 
(127,714
)
 
(168,756
)
State
 
(1,615
)
 
(18,422
)
 
(24,906
)
 
 
$
19,411

 
$
406,060

 
$
141,172


The statutory federal income tax rate applied to pre-tax book income reconciles to income tax expense as follows:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(In thousands)
Tax computed at statutory rate
 
$
(60,037
)
 
$
422,999

 
$
163,625

State income taxes, net of federal tax benefit
 
(14,056
)
 
40,385

 
13,641

Domestic production activities deduction
 
4,170

 
(35,200
)
 
(20,998
)
Noncontrolling interest in net income
 
(26,903
)
 
(24,155
)
 
(17,431
)
Goodwill
 
119,722

 
—

 
—

Other
 
(3,485
)
 
2,031

 
2,335

 
 
$
19,411

 
$
406,060

 
$
141,172



82
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Our deferred income tax assets and liabilities as of December 31, 2016 and 2015 are as follows:
 
 
December 31, 2016
 
 
Assets
 
Liabilities
 
Total
 
 
(In thousands)
Deferred income taxes
 
 
 
 
 
 
Properties, plants and equipment (due primarily to tax in excess of book depreciation)
 
$
—

 
$
(618,053
)
 
$
(618,053
)
Accrued employee benefits
 
21,355

 
—

 
21,355

Accrued post-retirement benefits
 
10,024

 
—

 
10,024

Accrued environmental costs
 
41,152

 
—

 
41,152

Hedging instruments
 
7,396

 
—

 
7,396

Inventory differences
 
—

 
(8,341
)
 
(8,341
)
Deferred turnaround costs
 
—

 
(83,993
)
 
(83,993
)
Net operating loss and tax credit carryforwards
 
23,203

 
—

 
23,203

Investment in HEP
 
—

 
(27,276
)
 
(27,276
)
Other
 
14,119

 
—

 
14,119

Total
 
$
117,249

 
$
(737,663
)
 
$
(620,414
)

 
 
December 31, 2015
 
 
Assets
 
Liabilities
 
Total
 
 
(In thousands)
Deferred income taxes
 
 
 
 
 
 
Properties, plants and equipment (due primarily to tax in excess of book depreciation)
 
$
—

 
$
(648,542
)
 
$
(648,542
)
Accrued employee benefits
 
22,355

 
—

 
22,355

Accrued post-retirement benefits
 
11,518

 
—

 
11,518

Accrued environmental costs
 
42,517

 
—

 
42,517

Hedging instruments
 
21,815

 
—

 
21,815

Inventory differences
 
175,614

 
—

 
175,614

Deferred turnaround costs
 
—

 
(104,944
)
 
(104,944
)
Net operating loss and tax credit carryforwards
 
8,033

 
—

 
8,033

Investment in HEP
 
—

 
(23,429
)
 
(23,429
)
Other
 
—

 
(2,843
)
 
(2,843
)
Total
 
$
281,852

 
$
(779,758
)
 
$
(497,906
)

At December 31, 2016 , we had a U.S. federal income tax net operating loss of $199.0 million that is scheduled to be carried back to 2014. As a result of this net operating loss, we expect to pay alternative minimum tax for 2016 and to generate a deferred credit. We generated a $11.0 million state operating loss, which can be carried back in some states, but is generally carried forward for 5 to 20 years. We also generated an Oklahoma income tax credit of $3.0 million that can be carried forward indefinitely, and a Kansas income tax credit that can be carried forward for 16 tax years.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


83
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
 
 
(In thousands)
 
 
Balance at January 1
 
$
—

 
$
—

 
$
9,006

Additions based on tax positions related to the current year
 
22,137

 
—

 
—

Settlements
 
—

 
—

 
(9,006
)
Balance at December 31
 
$
22,137

 
$
—

 
$
—


At December 31, 2016 there were $22.1 million of unrecognized tax benefits that, if recognized, would affect our effective tax rate. We had no unrecognized benefits at December 31, 2015 or 2014. Unrecognized tax benefits are adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.

The 2016 addition to unrecognized tax benefits relates to claims filed with the IRS on the federal income tax treatment of refundable biodiesel/ethanol blending tax credits for certain prior years. The issues related to the claims are complex and uncertain, and we cannot conclude that it is more likely than not that we will sustain the claims. Therefore, no tax benefit has been recognized for the filed claims. The Company believes it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase within 12 months of the reporting date based on additional filings.

We recognize interest and penalties relating to liabilities for unrecognized tax benefits as an element of tax expense. We have not recorded any penalties related to our uncertain tax positions as we believe that it is more likely than not that there will not be any assessment of penalties.

We are subject to U.S. federal income tax, Oklahoma, Kansas, New Mexico, Iowa, Arizona, Utah, Colorado and Nebraska income tax and to income tax of multiple other state jurisdictions. We have substantially concluded all state and local income tax matters for tax years through 2011 . Other than the federal claim noted above, we have materially concluded all U.S. federal income tax matters for tax years through December 31, 2013 .


NOTE 15:
Stockholders' Equity

Shares of our common stock outstanding and activity for the years ended December 31, 2016 , 2015 and 2014 are presented below:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
 
Common shares outstanding at January 1
 
180,234,388

 
196,086,090

 
198,830,351

Issuance of restricted stock, excluding restricted stock with performance feature
 
870,378

 
447,534

 
376,622

Vesting of performance units
 
76,404

 
136,896

 
416,111

Vesting of restricted stock with performance feature
 
40,294

 
43,774

 
77,430

Forfeitures of restricted stock
 
(16,795
)
 
(51,332
)
 
(76,107
)
Purchase of treasury stock (1)
 
(3,859,403
)
 
(16,428,574
)
 
(3,538,317
)
Common shares outstanding at December 31
 
177,345,266

 
180,234,388

 
196,086,090

 
(1)
Includes 147,922 , 151,967 and 279,680 shares, respectively, withheld under the terms of stock-based compensation agreements to provide funds for the payment of payroll and income taxes due at the vesting of share-based awards, as well as other stock repurchases under separate authority from our Board of Directors.

In May 2015, our Board of Directors approved a $1 billion share repurchase program, which replaced all existing share repurchase programs, authorizing us to repurchase common stock in the open market or through privately negotiated transactions. The timing and amount of stock repurchases will depend on market conditions and corporate, regulatory and other relevant considerations. This program may be discontinued at any time by the Board of Directors. As of December 31, 2016 , we had remaining authorization to repurchase up to $178.8 million under this stock repurchase program. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs.

During the years ended December 31, 2016 , 2015 and 2014 , we withheld shares of our common stock from certain employees in the amounts of $4.7 million , $6.2 million and $11.4 million , respectively. These withholdings were made under the terms of restricted stock and performance share unit agreements upon vesting, at which time, we concurrently made cash payments to fund payroll and income taxes on behalf of officers and employees who elected to have shares withheld from vested amounts to pay such taxes.


NOTE 16:
Other Comprehensive Income (Loss)

The components and allocated tax effects of other comprehensive income (loss) are as follows:
 
 
Before-Tax
 
Tax Expense
(Benefit)
 
After-Tax
 
 
(In thousands)
Year Ended December 31, 2016
 
 
 
 
 
 
Net unrealized gain on marketable securities
 
$
104

 
$
40

 
$
64

Net unrealized gain on hedging instruments
 
25,040

 
9,713

 
15,327

Net change in other post-retirement benefit obligations
 
(1,113
)
 
(431
)
 
(682
)
Other comprehensive income
 
24,031

 
9,322

 
14,709

Less other comprehensive loss attributable to noncontrolling interest
 
(58
)
 
—

 
(58
)
Other comprehensive gain attributable to HollyFrontier stockholders
 
$
24,089

 
$
9,322

 
$
14,767

 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
Net unrealized gain on marketable securities
 
$
38

 
$
14

 
$
24

Net unrealized loss on hedging instruments
 
(52,259
)
 
(20,282
)
 
(31,977
)
Net change in other post-retirement benefit obligations
 
79

 
31

 
48

Other comprehensive loss
 
(52,142
)
 
(20,237
)
 
(31,905
)
Less other comprehensive income attributable to noncontrolling interest
 
144

 
—

 
144

Other comprehensive loss attributable to HollyFrontier stockholders
 
$
(52,286
)
 
$
(20,237
)
 
$
(32,049
)
 
 
 
 
 
 
 
Year Ended December 31, 2014
 
 
 
 
 
 
Net unrealized loss on marketable securities
 
$
(157
)
 
$
(62
)
 
$
(95
)
Net unrealized gain on hedging instruments
 
55,812

 
21,583

 
34,229

Net change in other post-retirement benefit obligations
 
(11,425
)
 
(4,423
)
 
(7,002
)
Other comprehensive income
 
44,230

 
17,098

 
27,132

Less other comprehensive income attributable to noncontrolling interest
 
60

 
—

 
60

Other comprehensive income attributable to HollyFrontier stockholders
 
$
44,170

 
$
17,098

 
$
27,072




84
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


The following table presents the income statement line item effects for reclassifications out of accumulated other comprehensive income (“AOCI”):
AOCI Component
 
Gain (Loss) Reclassified From AOCI
 
Income Statement Line Item
 
 
Years Ended December 31,
 
 
 
 
2016
 
2015
 
2014
 
 
 
 
(In thousands)
 
 
Marketable securities
 
$
(23
)
 
$
(51
)
 
$
4

 
Interest income
 
 
—

 
42

 
—

 
Gain on sale of assets
 
 
(23
)
 
(9
)
 
4

 
 
 
 
(9
)
 
(3
)
 
2

 
Income tax expense (benefit)
 
 
(14
)
 
(6
)
 
2

 
Net of tax
 
 
 
 
 
 
 
 
 
Hedging instruments:
 
 
 
 
 
 
 
 
Commodity price swaps
 
(20,293
)
 
245,819

 
88,326

 
Sales and other revenues
 
 
—

 
(179,700
)
 
(37,313
)
 
Cost of products sold
 
 
(21,864
)
 
(17,607
)
 
791

 
Operating expenses
Interest rate swaps
 
(508
)
 
(2,100
)
 
(2,202
)
 
Interest expense
 
 
(42,665
)
 
46,412

 
49,602

 
 
 
 
(16,387
)
 
18,454

 
19,712

 
Income tax expense (benefit)
 
 
(26,278
)
 
27,958

 
29,890

 
Net of tax
 
 
320

 
1,273

 
1,335

 
Noncontrolling interest
 
 
(25,958
)
 
29,231

 
31,225

 
Net of tax and noncontrolling interest
 
 
 
 
 
 
 
 
 
Other post-retirement benefit obligations:
 
 
 
 
 
 
 
 
Post-retirement healthcare obligation
 
130

 
271

 
482

 
Cost of products sold
 
 
2,989

 
2,681

 
3,366

 
Operating expenses
 
 
363

 
347

 
448

 
General and administrative expenses
 
 
3,482

 
3,299

 
4,296

 
 
 
 
1,348

 
1,277

 
1,663

 
Income tax expense
 
 
2,134

 
2,022

 
2,633

 
Net of tax
 
 
 
 
 
 
 
 
 
Retirement restoration plan
 
(15
)
 
(20
)
 
(920
)
 
General and administrative expenses
 
 
(6
)
 
(8
)
 
(356
)
 
Income tax benefit
 
 
(9
)
 
(12
)
 
(564
)
 
Net of tax
 
 
 
 
 
 
 
 
 
Total reclassifications for the period
 
$
(23,847
)
 
$
31,235

 
$
33,296

 
 

Accumulated other comprehensive income (loss) in the equity section of our consolidated balance sheets includes:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
 
(In thousands)
Unrealized gain on post-retirement benefit obligations
 
$
20,055

 
$
20,737

Unrealized gain (loss) on marketable securities
 
3

 
(61
)
Unrealized loss on hedging instruments, net of noncontrolling interest
 
(9,446
)
 
(24,831
)
Accumulated other comprehensive income (loss)
 
$
10,612

 
$
(4,155
)


NOTE 17:
Retirement Plans

Post-retirement Healthcare Plans
We provide post-retirement medical benefits to certain eligible employees. These plans are unfunded and provide differing levels of healthcare benefits dependent upon hire date and work location. Not all of our employees are covered by these plans at December 31, 2016 .


85
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


The following table sets forth the changes in the benefit obligation and plan assets of our post-retirement healthcare plans for the years ended December 31, 2016 and 2015 :
 
 
Years Ended December 31,
 
 
2016
 
2015
 
 
(In thousands)
Change in plans' benefit obligation
 
 
 


Post-retirement plans' benefit obligation - beginning of year
 
$
21,201

 
$
23,633

Service cost
 
1,294

 
1,694

Interest cost
 
787

 
819

Participant contributions
 
244

 
593

Amendments
 
21

 
—

Benefits paid
 
(2,171
)
 
(2,260
)
Actuarial loss (gain)
 
(2,384
)
 
(3,278
)
Post-retirement plans' benefit obligation - end of year
 
$
18,992

 
$
21,201

 
 
 
 
 
Change in plan assets
 
 
 
 
Fair value of plan assets - beginning of year
 
$
—

 
$
—

Employer contributions
 
1,927

 
1,667

Participant contributions
 
244

 
593

Benefits paid
 
(2,171
)
 
(2,260
)
Fair value of plan assets - end of year
 
$
—

 
$
—

 
 
 
 
 
Funded status
 
 
 
 
Under-funded balance
 
$
(18,992
)
 
$
(21,201
)
 
 
 
 
 
Amounts recognized in consolidated balance sheets
 
 
 
 
Accrued post-retirement liability
 
$
(18,992
)
 
$
(21,201
)
 
 
 
 
 
Amounts recognized in accumulated other comprehensive income (loss)
 
 
 
 
Cumulative actuarial loss
 
$
771

 
$
(1,613
)
Prior service credit
 
32,434

 
35,937

Total
 
$
33,205

 
$
34,324


Benefit payments, which reflect expected future service, are expected to be paid as follows: $1.8 million in 2017 ; $1.7 million in 2018 ; $1.6 million in 2019 ; $1.6 million in 2020 ; $1.7 million in 2021 ; and $8.3 million in 2022 through 2026 .

The weighted average assumptions used to determine end of period benefit obligations:
 
 
December 31,
 
 
2016
 
2015
 
 
 
 
 
Discount rate
 
3.75
%
 
3.90
%
Current health care trend rate
 
7.00
%
 
8.00
%
Ultimate health care trend rate
 
5.00
%
 
5.00
%
Year rate reaches ultimate trend rate
 
2030

 
2041



86
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Net periodic post-retirement credit consisted of the following components:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
(In thousands)
Service cost – benefit earned during the year
 
$
1,294

 
$
1,694

 
$
895

Interest cost on projected benefit obligations
 
787

 
819

 
638

Amortization of prior service credit
 
(3,482
)
 
(3,482
)
 
(4,296
)
Amortization of net loss
 
—

 
183

 
—

Net periodic post-retirement credit
 
$
(1,401
)
 
$
(786
)
 
$
(2,763
)

Prior service credits are amortized over the average remaining effective period to obtain full benefit eligibility for participants.

Assumed health care cost trend rates have an effect on the amounts reported for the post-retirement health care benefit plans. The weighted average assumptions used to determine net periodic benefit expense follow:
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
 
 
 
 
 
 
 
Discount rate
 
3.90
%
 
3.60
%
 
4.25
%
Current health care trend rate
 
8.00
%
 
8.00
%
 
8.00
%
Ultimate health care trend rate
 
5.00
%
 
5.00
%
 
5.00
%
Year rate reaches ultimate trend rate
 
2041

 
2042

 
2045


The effect of a 1% change in health care cost trend rates is as follows:
 
 
1% Point Increase
 
1% Point Decrease
 
 
(In thousands)
Service cost
 
$
187

 
$
(156
)
Interest cost
 
$
56

 
$
(49
)
Year-end accumulated post-retirement benefit obligation
 
$
1,286

 
$
(1,118
)

Pension Plan
We had a program that provided transition benefit payments to certain employees that participated in a previously terminated defined benefit plan. The program extended through 2014 and provided payments subsequent to year-end provided the employee was employed by us on the last day of each year. The payments were based on each employee's years of service and eligible salary. Transition benefit costs under this program were $10.8 million for the year ended December 31, 2014 . In March 2015, we paid all remaining amounts owed to plan participants of $11.0 million .

Retirement Restoration Plan
We have an unfunded retirement restoration plan that provides for additional payments from us so that total retirement plan benefits for certain executives will be maintained at the levels provided in the retirement plan before the application of Internal Revenue Code limitations. We expensed $0.1 million , $0.1 million and $1.2 million for the years ended December 31, 2016 , 2015 and 2014 , respectively, in connection with this plan. The accrued liability reflected in the consolidated balance sheets was $2.7 million and $2.8 million at December 31, 2016 and 2015 , respectively. As of December 31, 2016 , the projected benefit obligation under this plan was $2.7 million . Annual benefit payments of $0.2 million are expected to be paid through 2026 , which reflect expected future service.

Defined Contribution Plan
We have a defined contribution “401(k)” plan that covers substantially all employees. Our contributions are based on an employee's eligible compensation and years of service. We also partially match the employee's contributions. We expensed $17.5 million , $17.2 million and $16.1 million for the years ended December 31, 2016 , 2015 and 2014 , respectively, in connection with this plan.



87
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


NOTE 18:
Lease Commitments

We lease certain office and storage facilities, rail cars and other equipment under long-term operating leases, most of which contain renewal options. At December 31, 2016 , the minimum future rental commitments under operating leases having non-cancellable lease terms in excess of one year are as follows:
 
 
(In thousands)
2017
 
$
75,156

2018
 
67,463

2019
 
61,893

2020
 
60,035

2021
 
56,684

Thereafter
 
172,627

Total
 
$
493,858


Rental expense charged to operations was $93.2 million , $107.3 million and $89.8 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. For the years ended December 31, 2016 , 2015 and 2014 , rental expense included $8.5 million , $8.9 million and $8.0 million , respectively, in costs attributable to the HEP operations.


NOTE 19:
Contingencies and Contractual Commitments

We are a party to various litigation and legal proceedings which we believe, based on advice of counsel, will not either individually or in the aggregate have a materially adverse effect on our financial condition, results of operations or cash flows.

Contractual Commitments
We have various long-term agreements (entered in the normal course of business) to purchase crude oil, natural gas, feedstocks and other resources to ensure we have adequate supplies to operate our refineries. The substantial majority of our purchase obligations are based on market prices or rates. These contracts expire in 2017 through 2030.

We also have long-term agreements with third parties for the transportation and storage of crude oil, natural gas and feedstocks to our refineries and for terminal and storage services that expire in 2017 through 2033. At December 31, 2016 , the minimum future transportation and storage fees under transportation agreements having terms in excess of one year are as follows:
 
 
(In thousands)
2017
 
$
136,052

2018
 
135,048

2019
 
123,105

2020
 
110,929

2021
 
98,834

Thereafter
 
894,033

Total
 
$
1,498,001


Transportation and storage costs incurred under these agreements totaled $135.1 million , $137.7 million and $118.0 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. These amounts do not include contractual commitments under our long-term transportation agreements with HEP, as all transactions with HEP are eliminated in these consolidated financial statements.


NOTE 20:
Segment Information

Our operations are organized into two reportable segments, Refining and HEP. Our operations that are not included in the Refining and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Consolidations and Eliminations.

The Refining segment represents the operations of the El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross Refineries and HFC Asphalt (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. Additionally, the Refining segment includes specialty lubricant products produced at our Tulsa Refineries that are marketed throughout North America and are distributed in Central and South America. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma.

The HEP segment includes all of the operations of HEP, which owns and operates logistics and refinery assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and processing units in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The HEP segment also includes a 75% ownership interest in UNEV (a consolidated subsidiary of HEP), a 50% ownership interest in each of the Frontier Pipeline, Osage Pipeline and the Cheyenne Pipeline and a 25% ownership interest in the SLC Pipeline. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP’s periodic public filings.

The accounting policies for our segments are the same as those described in the summary of significant accounting policies (see Note 1).
 
 
Refining (1,2)
 
HEP (2)
 
Corporate
and Other
 
Consolidations
and Eliminations
 
Consolidated
Total
 
 
(In thousands)
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
10,467,190

 
$
402,043

 
$
168

 
$
(333,701
)
 
$
10,535,700

Depreciation and amortization
 
$
282,321

 
$
68,811

 
$
12,723

 
$
(828
)
 
$
363,027

Income (loss) from operations
 
$
(163,624
)
 
$
196,716

 
$
(130,565
)
 
$
(2,414
)
 
$
(99,887
)
Earnings of equity method investments
 
$
—

 
$
14,213

 
$
—

 
$
—

 
$
14,213

Capital expenditures
 
$
363,115

 
$
107,595

 
$
9,080

 
$
—

 
$
479,790

Total assets
 
$
6,513,806

 
$
1,920,487

 
$
1,306,169

 
$
(304,801
)
 
$
9,435,661

 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
13,171,183

 
$
358,875

 
$
663

 
$
(292,801
)
 
$
13,237,920

Depreciation and amortization
 
$
273,345

 
$
61,690

 
$
11,944

 
$
(828
)
 
$
346,151

Income (loss) from operations
 
$
1,190,578

 
$
179,075

 
$
(123,004
)
 
$
(2,296
)
 
$
1,244,353

Earnings (loss) of equity method investments
 
$
—

 
$
4,803

 
$
(8,541
)
 
$
—

 
$
(3,738
)
Capital expenditures
 
$
469,011

 
$
193,121

 
$
14,023

 
$
—

 
$
676,155

Total assets
 
$
6,597,355

 
$
1,812,279

 
$
289,225

 
$
(310,560
)
 
$
8,388,299

 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2014
 
 
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
19,706,225

 
$
332,626

 
$
2,103

 
$
(276,627
)
 
$
19,764,327

Depreciation and amortization
 
$
293,508

 
$
60,911

 
$
9,790

 
$
(828
)
 
$
363,381

Income (loss) from operations
 
$
492,853

 
$
154,706

 
$
(129,874
)
 
$
(2,151
)
 
$
515,534

Earnings of equity method investments
 
$
—

 
$
2,987

 
$
(4,994
)
 
$
—

 
$
(2,007
)
Capital expenditures
 
$
346,605

 
$
198,686

 
$
19,530

 
$
—

 
$
564,821

Total assets
 
$
6,782,091

 
$
1,617,133

 
$
1,150,865

 
$
(320,042
)
 
$
9,230,047


(1) For the year ended December 31, 2016 , we recorded goodwill and long-lived asset impairment charges of $309.3 million and $344.8 million , respectively, that relate to our Cheyenne Refinery, which is included in our Refining segment.


88
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


(2) HEP acquired the crude oil tanks at our Tulsa Refineries in March 2016 and acquired a newly constructed crude unit, FCCU and polymerization unit at our Woods Cross Refinery in October 2016. As a result, we have recast our 2015 and 2014 HEP segment information to include these assets and related capital expenditures and certain operating expenses that were previously presented under the Refining segment. Additionally, prior year capital expenditures related to these assets have been recast as if they were incurred by HEP versus HFC in the statement of cash flows.

HEP segment revenues from external customers were $68.9 million , $66.7 million and $57.3 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.


NOTE 21:
Additional Financial Information

Borrowings pursuant to the HollyFrontier Credit Agreement are recourse to HollyFrontier, but not HEP. Furthermore, borrowings under the HEP Credit Agreement are recourse to HEP, but not to the assets of HFC with the exception of HEP Logistics Holdings, L.P., HEP’s general partner. Other than its investment in HEP, the assets of the general partner are insignificant.
The following condensed financial information is provided for HollyFrontier Corporation (on a standalone basis, before consolidation of HEP), and for HEP and its consolidated subsidiaries (on a standalone basis, exclusive of HFC). Due to certain basis differences, our reported amounts for HEP may not agree to amounts reported in HEP’s periodic public filings.

Condensed Consolidating Balance Sheet
 
 
 
 
 
 
 
December 31, 2016
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
706,922

 
$
3,657

 
$
—

 
$
710,579

Marketable securities
 
424,148

 
—

 
—

 
424,148

Accounts receivable, net
 
487,693

 
50,408

 
(58,902
)
 
479,199

Inventories
 
1,134,274

 
1,402

 
—

 
1,135,676

Income taxes receivable
 
68,371

 
—

 
—

 
68,371

Prepayments and other
 
37,379

 
1,486

 
(5,829
)
 
33,036

Total current assets
 
2,858,787

 
56,953

 
(64,731
)
 
2,851,009

 
 
 
 
 
 
 
 
 
Properties, plants and equipment, net
 
2,874,041

 
1,365,568

 
(231,161
)
 
4,008,448

Intangibles and other assets
 
2,077,683

 
497,966

 
555

 
2,576,204

Total assets
 
$
7,810,511

 
$
1,920,487

 
$
(295,337
)
 
$
9,435,661

 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable
 
$
967,347

 
$
26,942

 
$
(58,902
)
 
$
935,387

Accrued liabilities
 
115,878

 
37,793

 
(5,829
)
 
147,842

Total current liabilities
 
1,083,225

 
64,735

 
(64,731
)
 
1,083,229

 
 
 
 
 
 
 
 
 
Long-term debt
 
991,225

 
1,243,912

 
—

 
2,235,137

Liability to HEP
 
208,603

 
—

 
(208,603
)
 
—

Deferred income tax liabilities
 
619,905

 
509

 
—

 
620,414

Other long-term liabilities
 
132,515

 
62,971

 
(590
)
 
194,896

 
 
 
 
 
 
 
 
 
Investment in HEP
 
136,435

 
—

 
(136,435
)
 
—

Equity – HollyFrontier
 
4,638,603

 
454,803

 
(412,012
)
 
4,681,394

Equity – noncontrolling interest
 
—

 
93,557

 
527,034

 
620,591

Total liabilities and equity
 
$
7,810,511

 
$
1,920,487

 
$
(295,337
)
 
$
9,435,661


89
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Condensed Consolidating Balance Sheet
 
 
 
 
 
 
 
December 31, 2015
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
51,520

 
$
15,013

 
$
—

 
$
66,533

Marketable securities
 
144,019

 
—

 
—

 
144,019

Accounts receivable, net
 
355,020

 
41,075

 
(44,117
)
 
351,978

Inventories
 
839,897

 
1,972

 
—

 
841,869

Prepayments and other
 
48,288

 
3,082

 
(7,704
)
 
43,666

Total current assets
 
1,438,744

 
61,142

 
(51,821
)
 
1,448,065

 
 
 
 
 
 
 
 
 
Properties, plants and equipment, net
 
3,027,614

 
1,333,563

 
(245,515
)
 
4,115,662

Intangibles and other assets
 
2,410,879

 
417,574

 
(3,881
)
 
2,824,572

Total assets
 
$
6,877,237

 
$
1,812,279

 
$
(301,217
)
 
$
8,388,299

 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable
 
$
738,024

 
$
22,583

 
$
(44,117
)
 
$
716,490

Income tax payable
 
8,142

 
—

 
—

 
8,142

Accrued liabilities
 
117,346

 
26,341

 
(7,704
)
 
135,983

Total current liabilities
 
863,512

 
48,924

 
(51,821
)
 
860,615

 
 
 
 
 
 
 
 
 
Long-term debt
 
31,288

 
1,008,752

 
—

 
1,040,040

Liability to HEP
 
220,998

 
—

 
(220,998
)
 
—

Deferred income tax liabilities
 
497,475

 
431

 
—

 
497,906

Other long-term liabilities
 
125,614

 
59,376

 
(5,025
)
 
179,965

 
 
 
 
 
 
 
 
 
Investment in HEP
 
129,961

 
—

 
(129,961
)
 
—

Equity – HollyFrontier
 
5,008,389

 
600,367

 
(355,341
)
 
5,253,415

Equity – noncontrolling interest
 
—

 
94,429

 
461,929

 
556,358

Total liabilities and equity
 
$
6,877,237

 
$
1,812,279

 
$
(301,217
)
 
$
8,388,299



90
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued



Condensed Consolidating Statement of Income and Comprehensive Income
 
 
 
 
 
 
 
Year Ended December 31, 2016
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
 
(In thousands)
Sales and other revenues
 
$
10,467,358

 
$
402,043

 
$
(333,701
)
 
$
10,535,700

Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of products sold
 
9,062,757

 
—

 
(296,830
)
 
8,765,927

Lower of cost or market valuation inventory adjustment
 
(291,938
)
 
—

 
—

 
(291,938
)
Operating expenses
 
928,483

 
123,985

 
(33,629
)
 
1,018,839

General and administrative
 
113,117

 
12,531

 


 
125,648

Depreciation and amortization
 
308,569

 
68,811

 
(14,353
)
 
363,027

Goodwill and asset impairment
 
654,084

 
—

 
—

 
654,084

Total operating costs and expenses
 
10,775,072

 
205,327

 
(344,812
)
 
10,635,587

Income (loss) from operations
 
(307,714
)
 
196,716

 
11,111

 
(99,887
)
Other income (expense):
 

 
 
 
 
 
 
Earnings of equity method investments
 
100,322

 
14,213

 
(100,322
)
 
14,213

Interest income (expense)
 
(8,355
)
 
(52,112
)
 
(9,234
)
 
(69,701
)
Loss on early extinguishment of debt
 
(8,718
)
 
—

 
—

 
(8,718
)
Other, net
 
(8,118
)
 
677

 
—

 
(7,441
)
 
 
75,131

 
(37,222
)
 
(109,556
)
 
(71,647
)
Income (loss) before income taxes
 
(232,583
)
 
159,494

 
(98,445
)
 
(171,534
)
Income tax provision
 
19,126

 
285

 
—

 
19,411

Net income (loss)
 
(251,709
)
 
159,209

 
(98,445
)
 
(190,945
)
Less net income attributable to noncontrolling interest
 
(34
)
 
10,006

 
59,536

 
69,508

Net income (loss) attributable to HollyFrontier stockholders
 
$
(251,675
)
 
$
149,203

 
$
(157,981
)
 
$
(260,453
)
Comprehensive income (loss) attributable to HollyFrontier stockholders
 
$
(236,908
)
 
$
149,161

 
$
(157,939
)
 
$
(245,686
)


91
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Condensed Consolidating Statement of Income and Comprehensive Income
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
 
(In thousands)
Sales and other revenues
 
$
13,171,846

 
$
358,875

 
$
(292,801
)
 
$
13,237,920

Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of products sold
 
10,525,610

 
—

 
(286,392
)
 
10,239,218

Lower of cost or market inventory valuation adjustment
 
226,979

 
—

 
—

 
226,979

Operating expenses
 
958,103

 
105,554

 
(3,284
)
 
1,060,373

General and administrative
 
108,290

 
12,556

 
—

 
120,846

Depreciation and amortization
 
298,779

 
61,690

 
(14,318
)
 
346,151

Total operating costs and expenses
 
12,117,761

 
179,800

 
(303,994
)
 
11,993,567

Income from operations
 
1,054,085

 
179,075

 
11,193

 
1,244,353

Other income (expense):
 
 
 
 
 
 
 
 
Earnings of equity method investments
 
78,969

 
4,803

 
(87,510
)
 
(3,738
)
Interest income (expense)
 
6,098

 
(36,892
)
 
(9,285
)
 
(40,079
)
Loss on early extinguishment of debt
 
(1,370
)
 
—

 
—

 
(1,370
)
Other, net
 
8,916

 
486

 
—

 
9,402

 
 
92,613

 
(31,603
)
 
(96,795
)
 
(35,785
)
Income before income taxes
 
1,146,698

 
147,472

 
(85,602
)
 
1,208,568

Income tax provision
 
405,832

 
228

 
—

 
406,060

Net income
 
740,866

 
147,244

 
(85,602
)
 
802,508

Less net income attributable to noncontrolling interest
 
(30
)
 
11,120

 
51,317

 
62,407

Net income attributable to HollyFrontier stockholders
 
$
740,896

 
$
136,124

 
$
(136,919
)
 
$
740,101

Comprehensive income attributable to HollyFrontier stockholders
 
$
708,847

 
$
136,217

 
$
(137,012
)
 
$
708,052




92
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Condensed Consolidating Statement of Income and Comprehensive Income
 
 
 
 
 
 
 
Year Ended December 31, 2014
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
 
(In thousands)
Sales and other revenues
 
$
19,708,328

 
$
332,626

 
$
(276,627
)
 
$
19,764,327

Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of products sold
 
17,500,601

 
—

 
(272,216
)
 
17,228,385

Lower of cost or market inventory valuation adjustment
 
397,478

 
—

 
—

 
397,478

Operating expenses
 
1,040,187

 
106,185

 
(1,432
)
 
1,144,940

General and administrative
 
103,785

 
10,824

 
—

 
114,609

Depreciation and amortization
 
316,786

 
60,911

 
(14,316
)
 
363,381

Total operating costs and expenses
 
19,358,837

 
177,920

 
(287,964
)
 
19,248,793

Income from operations
 
349,491

 
154,706

 
11,337

 
515,534

Other income (expense):
 
 
 
 
 
 
 
 
Earnings of equity method investments
 
65,375

 
2,987

 
(70,369
)
 
(2,007
)
Interest expense
 
6,221

 
(36,098
)
 
(9,339
)
 
(39,216
)
Loss on early extinguishment of debt
 
—

 
(7,677
)
 
—

 
(7,677
)
Other, net
 
866

 
—

 
—

 
866

 
 
72,462

 
(40,788
)
 
(79,708
)
 
(48,034
)
Income before income taxes
 
421,953

 
113,918

 
(68,371
)
 
467,500

Income tax provision
 
140,937

 
235

 
—

 
141,172

Net income
 
281,016

 
113,683

 
(68,371
)
 
326,328

Less net income attributable to noncontrolling interest
 
(25
)
 
8,288

 
36,773

 
45,036

Net income attributable to HollyFrontier stockholders
 
$
281,041

 
$
105,395

 
$
(105,144
)
 
$
281,292

Comprehensive income attributable to HollyFrontier stockholders
 
$
308,113

 
$
105,434

 
$
(105,183
)
 
$
308,364




93
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Condensed Consolidating Statement of Cash Flows
 
 
 
 
 
 
 
 
Year Ended December 31, 2016
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
(In thousands)
Cash flows from operating activities
 
$
460,918

 
$
242,761

 
$
(101,408
)
 
$
602,271

 
 
 
 
 
 
 
 
 
Cash flow from investing activities
 
 
 
 
 
 
 
 
Additions to properties, plants and equipment
 
(372,195
)
 
—

 
—

 
(372,195
)
Additions to properties, plants and equipment – HEP
 
—

 
(103,823
)
 
(3,772
)
 
(107,595
)
Purchase of equity method investment
 
—

 
(42,627
)
 
—

 
(42,627
)
Proceeds from sale of assets
 
422

 
427

 
—

 
849

Purchases of marketable securities
 
(546,632
)
 
—

 
—

 
(546,632
)
Sales and maturities of marketable securities
 
266,603

 
—

 
—

 
266,603

 
 
(651,802
)
 
(146,023
)
 
(3,772
)
 
(801,597
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
Net repayments under credit agreement – HEP
 
—

 
(159,000
)
 
—

 
(159,000
)
Net proceeds from issuance of senior notes - HFC
 
992,550

 
—

 
—

 
992,550

Net proceeds from issuance of senior notes - HEP
 
—

 
394,000

 
—

 
394,000

Net proceeds from issuance of term loan
 
350,000

 
—

 
—

 
350,000

Repayment of term loan
 
(350,000
)
 
—

 
—

 
(350,000
)
Proceeds from issuance of common units
 
—

 
125,870

 
—

 
125,870

Purchase of treasury stock
 
(133,430
)
 
—

 
—

 
(133,430
)
Dividends
 
(234,004
)
 
—

 
—

 
(234,004
)
Distributions to noncontrolling interest
 
—

 
(197,787
)
 
105,180

 
(92,607
)
Repayment of financing obligation
 
—

 
(39,500
)
 
—

 
(39,500
)
Distribution from HEP
 
278,000

 
(278,000
)
 
—

 
—

Contribution from general partner
 
(53,839
)
 
53,839

 
—

 
—

Other, net
 
(2,991
)
 
(7,516
)
 
—

 
(10,507
)
 
 
846,286

 
(108,094
)
 
105,180

 
843,372

Cash and cash equivalents
 
 
 
 
 
 
 
 
Increase (decrease) for the period
 
655,402

 
(11,356
)
 
—

 
644,046

Beginning of period
 
51,520

 
15,013

 
—

 
66,533

End of period
 
$
706,922

 
$
3,657

 
$
—

 
$
710,579




94
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Condensed Consolidating Statement of Cash Flows
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
 
(In thousands)
Cash flows from operating activities
 
$
839,106

 
$
230,940

 
$
(90,420
)
 
$
979,626

 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
Additions to properties, plants and equipment
 
(483,034
)
 
—

 
—

 
(483,034
)
Additions to properties, plants and equipment – HEP
 
—

 
(193,121
)
 
—

 
(193,121
)
Purchase of equity method investment
 
—

 
(55,032
)
 
—

 
(55,032
)
Proceeds from sale of assets
 
17,985

 
1,279

 
—

 
19,264

Purchases of marketable securities
 
(509,338
)
 
—

 
—

 
(509,338
)
Sales and maturities of marketable securities
 
839,513

 
—

 
—

 
839,513

 
 
(134,874
)
 
(246,874
)
 
—

 
(381,748
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Net borrowings under credit agreement – HEP
 
—

 
141,000

 
—

 
141,000

Redemption of senior notes - HFC
 
(155,156
)
 
—

 
—

 
(155,156
)
Purchase of treasury stock
 
(742,823
)
 
—

 
—

 
(742,823
)
Dividends
 
(246,908
)
 
—

 
—

 
(246,908
)
Distributions to noncontrolling interest
 
—

 
(173,688
)
 
90,420

 
(83,268
)
Distribution from HEP
 
62,000

 
(62,000
)
 
—

 
—

Contribution from general partner
 
(128,476
)
 
128,476

 
—

 
—

Other, net
 
(6,504
)
 
(5,671
)
 
—

 
(12,175
)
 
 
(1,217,867
)
 
28,117

 
90,420

 
(1,099,330
)
Cash and cash equivalents
 
 
 
 
 
 
 
 
Increase (decrease) for the period:
 
(513,635
)
 
12,183

 
—

 
(501,452
)
Beginning of period
 
565,155

 
2,830

 
—

 
567,985

End of period
 
$
51,520

 
$
15,013

 
$
—

 
$
66,533




95
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


Condensed Consolidating Statement of Cash Flows
 
 
 
 
 
 
 
Year Ended December 31, 2014
 
HollyFrontier
Corp. Before
Consolidation
of HEP
 
HEP Segment
 
Consolidations and Eliminations
 
Consolidated
 
 
(In thousands)
Cash flows from operating activities
 
$
653,570

 
$
185,519

 
$
(80,493
)
 
$
758,596

 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
Additions to properties, plants and equipment
 
(366,135
)
 
—

 
—

 
(366,135
)
Additions to properties, plants and equipment – HEP
 
—

 
(198,686
)
 
—

 
(198,686
)
Proceeds from sale of assets
 
16,633

 
—

 
—

 
16,633

Purchases of marketable securities
 
(1,025,602
)
 
—

 
—

 
(1,025,602
)
Sales and maturities of marketable securities
 
1,276,447

 
—

 
—

 
1,276,447

Other, net
 
5,021

 
—

 
—

 
5,021

 
 
(93,636
)
 
(198,686
)
 
—

 
(292,322
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Net borrowings under credit agreement – HEP
 
—

 
208,000

 
—

 
208,000

Redemptions of senior notes
 
—

 
(156,188
)
 
—

 
(156,188
)
Purchase of treasury stock
 
(158,847
)
 
—

 
—

 
(158,847
)
Contribution from general partner
 
(120,111
)
 
120,111

 
—

 
—

Dividends
 
(647,197
)
 
—

 
—

 
(647,197
)
Distributions to noncontrolling interest
 
—

 
(158,695
)
 
80,493

 
(78,202
)
Excess tax benefit from equity-based compensation
 
2,040

 
—

 
—

 
2,040

Other, net
 
(4,415
)
 
(3,583
)
 
—

 
(7,998
)
 
 
(928,530
)
 
9,645

 
80,493

 
(838,392
)
Cash and cash equivalents
 
 
 
 
 
 
 
 
Decrease for the period:
 
(368,596
)
 
(3,522
)
 
—

 
(372,118
)
Beginning of period
 
933,751

 
6,352

 
—

 
940,103

End of period
 
$
565,155

 
$
2,830

 
$
—

 
$
567,985



96
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued


NOTE 22:
Significant Customers

All revenues are domestic revenues, except for sales of refined products for export into Mexico. We have two significant customers (Shell Oil and Sinclair), each of which has historically accounted for 10% or more of our annual Refining segment revenues. Shell Oil accounted for $1,048.2 million ( 10% ), $1,252.6 million ( 9% ) and $2,097.4 million ( 11% ) for the years ended December 31, 2016 , 2015 and 2014 , respectively, and Sinclair accounted for $927.0 million ( 9% ), $1,104.9 million ( 8% ) and $2,018.8 million ( 10% ) of our revenues for the years ended December 31, 2016 , 2015 and 2014 , respectively. Our export sales were less than 3% of our revenues for the years ended December 31, 2016 , 2015 and 2014 .


NOTE 23:
Quarterly Information (Unaudited)

 
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
 
Year
 
 
(In thousands, except per share data)
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
2,018,724

 
$
2,714,638

 
$
2,847,270

 
$
2,955,068

 
$
10,535,700

Operating costs and expenses
 
$
1,935,126

 
$
3,135,180

 
$
2,722,505

 
$
2,842,776

 
$
10,635,587

Income (loss) from operations (1,2)
 
$
83,598

 
$
(420,542
)
 
$
124,765

 
$
112,292

 
$
(99,887
)
Income (loss) before income taxes
 
$
65,698

 
$
(430,515
)
 
$
109,867

 
$
83,416

 
$
(171,534
)
Net income (loss) attributable to HollyFrontier stockholders
 
$
21,253

 
$
(409,368
)
 
$
74,497

 
$
53,165

 
$
(260,453
)
Net income (loss) per share attributable to HollyFrontier stockholders - basic
 
$
0.12

 
$
(2.33
)
 
$
0.42

 
$
0.30

 
$
(1.48
)
Net income (loss) per share attributable to HollyFrontier stockholders - diluted
 
$
0.12

 
$
(2.33
)
 
$
0.42

 
$
0.30

 
$
(1.48
)
Dividends per common share
 
$
0.33

 
$
0.33

 
$
0.33

 
$
0.33

 
$
1.32

Average number of shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
176,737

 
175,865

 
175,871

 
175,936

 
176,101

Diluted
 
176,784

 
175,865

 
175,993

 
176,137

 
176,101

 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
3,006,626

 
$
3,701,912

 
$
3,585,823

 
$
2,943,559

 
$
13,237,920

Operating costs and expenses
 
$
2,618,004

 
$
3,112,080

 
$
3,263,218

 
$
3,000,265

 
$
11,993,567

Income (loss) from operations (3)
 
$
388,622

 
$
589,832

 
$
322,605

 
$
(56,706
)
 
$
1,244,353

Income (loss) before income taxes
 
$
372,389

 
$
580,177

 
$
320,673

 
$
(64,671
)
 
$
1,208,568

Net income (loss) attributable to HollyFrontier stockholders
 
$
226,876

 
$
360,824

 
$
196,322

 
$
(43,921
)
 
$
740,101

Net income (loss) per share attributable to HollyFrontier stockholders - basic
 
$
1.16

 
$
1.88

 
$
1.05

 
$
(0.24
)
 
$
3.91

Net income (loss) per share attributable to HollyFrontier stockholders - diluted
 
$
1.16

 
$
1.88

 
$
1.04

 
$
(0.24
)
 
$
3.90

Dividends per common share
 
$
0.32

 
$
0.33

 
$
0.33

 
$
0.33

 
$
1.31

Average number of shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
195,069

 
191,355

 
187,208

 
181,460

 
188,731

Diluted
 
195,121

 
191,454

 
187,344

 
181,460

 
188,940


(1) For 2016, income from operations reflects non-cash lower of cost or market inventory valuation reductions of $56.1 million and $138.5 million for the first and second quarters, respectively, and a charge of $0.3 million for the third quarter and a reduction of $97.7 million for the fourth quarter.
 
(2) For 2016, income from operations reflects non-cash goodwill and long-lived asset impairment charges of $654.1 million in the second quarter.

(3) For 2015, income from operations reflects non-cash lower of cost or market inventory valuation reductions of $6.5 million and $135.5 million for the first and second quarters, respectively, and increases of $225.5 million and $143.6 million for the third and fourth quarters, respectively.

97

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

We have had no change in, or disagreement with, our independent registered public accountants on matters involving accounting and financial disclosure.


Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures. Our principal executive officer and principal financial officer have evaluated, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this annual report on Form 10-K. Our disclosure controls and procedures are designed to provide reasonable assurance that the information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2016 .

Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

See Item 8 for “Management's Report on its Assessment of the Company's Internal Control Over Financial Reporting” and “Report of the Independent Registered Public Accounting Firm.”


Item 9B. Other Information

There have been no events that occurred in the fourth quarter of 2016 that would need to be reported on Form 8-K that have not previously been reported.


PART III


Item 10. Directors, Executive Officers and Corporate Governance

The information required by Items 401, 405, 406 and 407(c)(3), (d)(4) and (d)(5) of Regulation S-K in response to this item will be set forth in our definitive proxy statement for the annual meeting of stockholders to be held on May 11, 2017 and is incorporated herein by reference.


Item 11. Executive Compensation

The information required by Items 402 and 407(e)(4) and (e)(5) of Regulation S-K in response to this item will be set forth in our definitive proxy statement for the annual meeting of stockholders to be held on May 11, 2017 and is incorporated herein by reference.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The equity compensation plan information required by Item 201(d) and the information required by Item 403 of Regulation S-K in response to this item will be set forth in our definitive proxy statement for the annual meeting of stockholders to be held on May 11, 2017 and is incorporated herein by reference.



98
Table of Content

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Items 404 and 407(a) of Regulation S-K in response to this item will be set forth in our definitive proxy statement for the annual meeting of stockholders to be held on May 11, 2017 and is incorporated herein by reference.


Item 14. Principal Accounting Fees and Services

The information required by Item 9(e) of Schedule 14A in response to this item will be set forth in our definitive proxy statement for the annual meeting of stockholders to be held on May 11, 2017 and is incorporated herein by reference.


PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)    Documents filed as part of this report

(1)    Index to Consolidated Financial Statements
 
Page in Form 10-K
 
 
Report of Independent Registered Public Accounting Firm
 
 
Consolidated Balance Sheets at December 31, 2016 and 2015
 
 
Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014
 
 
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014
 
 
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014
 
 
Consolidated Statements of Equity for the years ended December 31, 2016, 2015 and 2014
 
 
Notes to Consolidated Financial Statements

(2)    Index to Consolidated Financial Statement Schedules

All schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto.

(3)    Exhibits

The Exhibit Index on pages 107 to 111 of this Annual Report on Form 10-K lists the exhibits that are filed or furnished, as applicable, as part of this Annual Report on Form 10-K.




99
Table of Content


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
HOLLYFRONTIER CORPORATION
 
 
(Registrant)
 
 
 
 
Date: February 22, 2017
 
 
/s/ George J. Damiris
 
 
 
George J. Damiris
 
 
 
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and as of the date indicated.
Signature
 
Capacity
 
Date
 
 
 
 
 
/s/ Michael C. Jennings
 
Chairman
 
February 22, 2017
Michael C. Jennings
 
 
 
 
 
 
 
 
 
/s/ George J. Damiris
 
Chief Executive Officer, President
 
February 22, 2017
George J. Damiris
 
and Director
 
 
 
 
 
 
 
/s/ Douglas S. Aron
 
Executive Vice President and
 
February 22, 2017
Douglas S. Aron
 
Chief Financial Officer
 
 
 
 
(Principal Financial Officer)
 
 
 
 
 
 
 
/s/ J.W. Gann, Jr.
 
Vice President, Controller and
 
February 22, 2017
J.W. Gann, Jr.
 
Chief Accounting Officer
 
 
 
 
(Principal Accounting Officer)
 
 
 
 
 
 
 
/s/ Douglas Y. Bech
 
Director
 
February 22, 2017
Douglas Y. Bech
 
 
 
 
 
 
 
 
 
/s/ Leldon Echols
 
Director
 
February 22, 2017
Leldon Echols
 
 
 
 
 
 
 
 
 
/s/ R. Kevin Hardage
 
Director
 
February 22, 2017
R. Kevin Hardage
 
 
 
 
 
 
 
 
 
/s/ Robert J. Kostelnik
 
Director
 
February 22, 2017
Robert J. Kostelnik
 
 
 
 
 
 
 
 
 
/s/ James H. Lee
 
Director
 
February 22, 2017
James H. Lee
 
 
 
 
 
 
 
 
 
/s/ Franklin Myers
 
Director
 
February 22, 2017
Franklin Myers
 
 
 
 
 
 
 
 
 
/s/ Michael E. Rose
 
Director
 
February 22, 2017
Michael E. Rose
 
 
 
 
 
 
 
 
 

100
Table of Content

HOLLYFRONTIER CORPORATION
INDEX TO EXHIBITS

Exhibits are numbered to correspond to the exhibit table
in Item 601 of Regulation S-K
Exhibit Number
  
Description
 
 
 
2.1
 
Asset Sale and Purchase Agreement, dated October 19, 2009, between Holly Refining & Marketing-Tulsa LLC, HEP Tulsa LLC and Sinclair Tulsa Refining Company (incorporated by reference to Exhibit 2.1 of Registrant's Current Report on Form 8-K filed October 21, 2009, File No. 1-03876).
 
 
 
2.2
 
Amendment No. 1 to Asset Sale and Purchase Agreement, dated December 1, 2009, between Holly Refining & Marketing-Tulsa LLC, HEP Tulsa LLC and Sinclair Tulsa Refining Company (incorporated by reference to Exhibit 2.1 of Registrant's Current Report on Form 8-K filed December 7, 2009, File No. 1-03876).
 
 
 
2.3
 
Asset Sale and Purchase Agreement, dated April 15, 2009, between Holly Refining & Marketing-Midcon, L.L.C. and Sunoco, Inc. (incorporated by reference to Exhibit 2.1 of Registrant's Current Report on Form 8-K filed April 16, 2009, File No. 1-03876).
 
 
 
2.4
 
Share Purchase Agreement, dated October 29, 2016, by and between Suncor Energy Inc. and 9952110 Canada Inc. (incorporated by reference to Exhibit 2.1 of Registrant's Current Report on Form 8-K filed October 31, 2016, File No. 1-03876).
 
 
 
3.1
 
Amended and Restated Certificate of Incorporation of HollyFrontier Corporation (incorporated by reference to Exhibit 3.1 of Registrant's Current Report on Form 8-K filed July  8, 2011, File No. 1-03876).
 
 
 
3.2
 
Amended and Restated Bylaws of HollyFrontier Corporation (incorporated by reference to Exhibit 3.1 of Registrant's Current Report on Form 8-K filed February 20, 2014, File No. 1-03876).
 
 
 
4.1
 
Indenture, dated July 19, 2016, among Holly Energy Partners, L.P., Holly Energy Finance Corp., and each of the Guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Holly Energy Partners, L.P.'s Current Report on Form 8-K filed July 19, 2016, File Number 1-32225).
 
 
 
4.2
 
First Supplemental Indenture, dated November 2, 2016, among Woods Cross Operating LLC, Holly Energy Partners, L.P., and Holly Energy Finance Corp., the other Guarantors and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 of Holly Energy Partners, L.P.'s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016, File Number 1-32225).
 
 
 
4.3
 
Indenture, dated March 22, 2016, between HollyFrontier Corporation and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.1 of Registrant's Current Report on Form 8-K filed March 22, 2016, File No. 1-03876).
 
 
 
4.4
 
Supplemental Indenture, dated March 22, 2016, between HollyFrontier Corporation and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.2 of Registrant's Current Report on Form 8-K filed March 22, 2016, File No. 1-03876).
 
 
 
10.1
 
Amended and Restated Intermediate Pipelines Agreement, dated June 1, 2009, among Holly Corporation, Navajo Refining Company, L.L.C, Holly Energy Partners, L.P., Holly Energy Partners – Operating, L.P., HEP Pipeline, L.L.C., Lovington-Artesia, L.L.C., HEP Logistics Holdings, L.P., Holly Logistics Services, L.L.C. and HEP Logistics GP, L.L.C. (incorporated by reference to Exhibit 10.2 of Holly Energy Partners, L.P.'s Current Report on Form 8-K filed June 5, 2009, File No. 1-32225).
 
 
 
10.2
 
Amendment to Amended and Restated Intermediate Pipelines Agreement, dated December 9, 2010, among Navajo Refining Company, L.L.C, Holly Energy Partners, L.P., Holly Energy Partners – Operating, L.P., HEP Pipeline, L.L.C., Lovington-Artesia, L.L.C., HEP Logistics Holdings, L.P., Holly Logistics Services, L.L.C. and HEP Logistics GP, L.L.C. (incorporated by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2010, File No. 1-03876).
 
 
 
10.3
 
Assignment and Assumption Agreement (Amended and Restated Intermediate Pipelines Agreement), effective January 1, 2011, between Navajo Refining Company, L.L.C. and Holly Refining & Marketing Company LLC (incorporated by reference to Exhibit 10.5 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2010, File No. 1-03876).
 
 
 
10.4
 
Tulsa Equipment and Throughput Agreement, dated August 1, 2009, between Holly Refining & Marketing - Tulsa LLC and HEP Tulsa LLC (incorporated by reference to Exhibit 10.3 of Holly Energy Partners L.P.'s Current Report on Form 8-K filed August 6, 2009, File No. 1-32225).


101
Table of Content


Exhibit Number
  
Description
 
 
 
10.5
 
Amendment to Tulsa Equipment and Throughput Agreement, dated December 9, 2010, among Holly Refining & Marketing - Tulsa LLC and HEP Tulsa LLC (incorporated by reference to Exhibit 10.7 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2010, File No. 1-03876).
 
 
 
10.6
 
Assignment and Assumption Agreement (Tulsa Equipment and Throughput Agreement), effective January 1, 2011, between Holly Refining & Marketing - Tulsa, LLC and Holly Refining & Marketing Company LLC (incorporated by reference to Exhibit 10.8 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2010, File No. 1-03876).
 
 
 
10.7
 
Tulsa Purchase Option Agreement, dated August 1, 2009, between Holly Refining & Marketing - Tulsa LLC and HEP Tulsa LLC (incorporated by reference to Exhibit 10.4 of Holly Energy Partners L.P.'s Current Report on Form 8-K filed August 6, 2009, File No. 1-32225).
 
 
 
10.8
 
Third Amended and Restated Crude Pipelines and Tankage Agreement, dated March 12, 2015, by and among Navajo Refining Company, L.L.C., Holly Refining & Marketing Company - Woods Cross LLC, HollyFrontier Refining & Marketing LLC, Holly Energy Partners-Operating, L.P., HEP Pipeline, L.L.C. and HEP Woods Cross L.L.C. (incorporated by reference to Exhibit 10.2 of Registrant's Current Report on Form 8-K filed March 16, 2015, File No. 1-03876).
 
 
 
10.9
 
Second Amended and Restated Refined Products Pipelines and Terminals Agreement, dated February 22, 2016, by and among HollyFrontier Refining & Marketing LLC, HollyFrontier Corporation, Holly Energy Partners - Operating, L.P. and Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.3 of Registrant's Current Report on Form 8-K filed February 22, 2016, File No. 1-03876).
 
 
 
10.1
 
Second Amended and Restated Throughput Agreement (Tucson Terminal), dated September 19, 2013, effective June 1, 2013, among HollyFrontier Refining & Marketing LLC, HEP Refining, L.L.C. and Holly Energy Partners - Operating, L.P. (incorporated by reference to Exhibit 10.5 of Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, File No. 1-03876).
 
 
 
10.11*
 
Seventeenth Amended and Restated Omnibus Agreement, dated January 18, 2017, effective January 1, 2017, by and among HollyFrontier Corporation, Holly Energy Partners, L.P. and certain of their respective subsidiaries.
 
 
 
10.12
 
Senior Unsecured 5-Year Revolving Credit Agreement, dated July 1, 2014, among HollyFrontier Corporation, as borrower, Union Bank, N. A. as administrative agent, and each of the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed July 8, 2014, File No. 1-03876).
 
 
 
10.13
 
First Amendment to Senior Unsecured 5-Year Revolving Credit Agreement, dated as of February 16, 2017, among HollyFrontier Corporation, as borrower, The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed February 21, 2017, File No. 1-03876).
 
 
 
10.14
 
Release of Subsidiary Guarantee, dated December 29, 2015, by and among HollyFrontier Corporation and Union Bank, N.A. (incorporated by reference to Exhibit 10.40 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, File No. 1-03876).
 
 
 
10.15
 
Frontier Products Offtake Agreement El Dorado Refinery, dated October 19, 1999, between Frontier Oil and Refining Company and Equiva Trading Company (now Shell Oil Products US, assignee of Equiva Trading Company) (“the Agreement”) and First Amendment to the Agreement dated September 18, 2000, Second Amendment to the Agreement dated September 21, 2000, Third Amendment to the Agreement dated December 19, 2000, Fourth Amendment to the Agreement dated February 22, 2001, Fifth Amendment to the Agreement dated August 14, 2001, Sixth Amendment to the Agreement dated November 5, 2001, Seventh Amendment to the Agreement dated April 22, 2002, Eighth Amendment to the Agreement date d May 30, 2003, Ninth Amendment to the Agreement dated May 25, 2004, Tenth Amendment to the Agreement dated May 3, 2005, Eleventh Amendment to the Agreement dated March 31, 2006, Twelfth Amendment to the Agreement dated May 11, 2006, Thirteenth Amendment to the Agreement dated September 30, 2007, Fourteenth Amendment to the Agreement dated May 1, 2008 and Fifteenth Amendment to the Agreement dated May 28, 2008 (incorporated by reference to Exhibit 10.1 to Frontier Oil Corporation's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, File No. 1-07627).
 
 
 
10.16
 
Seventeenth Amendment, dated August 27, 2013, to the Frontier Products Offtake Agreement El Dorado Refinery, dated October 19, 1999, between Frontier Oil and Refining Company (now HollyFrontier Refining & Marketing LLC, as successor-by-merger to Frontier Oil and Refining Company) and Equiva Trading Company (now Shell Oil Products US, assignee of Equiva Trading Company) (incorporated by reference to Exhibit 10.5 of Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, File No. 1-03876).


102
Table of Content

Exhibit Number
  
Description
 
 
 
10.17
 
Master Crude Oil Purchase and Sale Contract, dated November 1, 2010, among BNP Paribas Energy Trading GP, BNP Paribas Energy Trading Canada Corp., Frontier Oil and Refining Company and Frontier Oil Corporation (incorporated by reference to Exhibit 10.1 to Frontier Oil Corporation's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010, File No. 1-07627).
 
 
 
10.18
 
Guaranty, dated November 1, 2010, by Frontier Oil Corporation in favor of BNP Paribas Energy Trading GP and BNP Paribas Energy Trading Canada Corp. (incorporated by reference to Exhibit 10.1 to Frontier Oil Corporation's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010, File No. 1-07627).
 
 
 
10.19
 
Amended and Restated Limited Liability Company Agreement of HEP UNEV Holdings LLC, dated July 12, 2012, among HEP UNEV Holdings LLC, HollyFrontier Holdings LLC and Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, File No. 1-03876).
 
 
 
10.20
 
Refined Products Purchase Agreement, dated December 1, 2009, between Holly Refining & Marketing - Tulsa LLC and Sinclair Tulsa Refining Company (incorporated by reference to Exhibit 10.4 of Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, File No. 1-03876).
 
 
 
10.21
 
First Amendment to Refined Products Purchase Agreement, dated May 17, 2010, between Holly Refining & Marketing - Tulsa LLC and Sinclair Tulsa Refining Company (incorporated by reference to Exhibit 10.5 of Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, File No. 1-03876).
 
 
 
10.22
 
Second Amendment to Refined Products Purchase Agreement, dated December 19, 2011, between HollyFrontier Refining & Marketing LLC and Sinclair Oil Corporation (incorporated by reference to Exhibit 10.6 of Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, File No 1-03876).
 
 
 
10.23
 
Third Amendment to Refined Products Purchase Agreement, dated June 1, 2012, between HollyFrontier Refining & Marketing LLC and Sinclair Oil Corporation (incorporated by reference to Exhibit 10.7 of Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, File No. 1-03876).
 
 
 
10.24
 
Fourth Amendment to Refined Products Purchase Agreement, dated February 27, 2014, between HollyFrontier Refining & Marketing LLC and Sinclair Oil Corporation (incorporated by reference to Exhibit 10.55 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2014, File No. 1-03876).
 
 
 
10.25
 
Fifth Amendment to Refined Products Purchase Agreement dated June 23, 2014, between HollyFrontier Refining & Marketing LLC and Sinclair Oil Corporation (incorporated by reference to Exhibit 10.56 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2014, File No. 1-03876).
 
 
 
10.26*
 
Amended and Restated Unloading and Blending Services Agreement, dated January 18, 2017, effective September 16, 2016, by and between HollyFrontier Refining & Marketing LLC, Holly Energy Partners - Operating, L.P. and HEP Refining L.L.C.
 
 
 
10.27*
 
Third Amended and Restated Master Throughput Agreement, dated January 18, 2017, effective January 1, 2017, by and between HollyFrontier Refining & Marketing LLC and Holly Energy Partners - Operating, L.P.
 
 
 
10.28
 
Construction Payment Agreement, dated as of October 16, 2015, by and between HEP Refining, L.L.C. and HollyFrontier Refining & Marketing LLC (incorporated by reference to Exhibit 10.3 of Registrant's Current Report on Form 8-K filed October 21, 2015, File No. 1-03876).
 
 
 
10.29
 
Third Amended and Restated Services and Secondment Agreement, dated October 3, 2016, by and among Holly Logistic Services, L.L.C., certain subsidiaries of Holly Energy Partners, L.P. and certain subsidiaries of HollyFrontier Corporation (incorporated by reference to Exhibit 10.4 to Registrant's Current Report on Form 8-K filed October 4, 2016, File No. 1-03876).
 
 
 
10.30*
 
Fourth Amended and Restated Master Lease and Access Agreement, dated January 18, 2017, effective January 1, 2017, by and among certain subsidiaries of Holly Energy Partners, L.P. and certain subsidiaries of HollyFrontier Corporation.
 
 
 
10.31
 
Master Tolling Agreement (Refinery Assets), dated as of November 2, 2015, by and between Frontier El Dorado Refining LLC and Holly Energy Partners-Operating L.P. (incorporated by reference to Exhibit 10.2 of Registrant's Current Report on Form 8-K filed November 3, 2015, File No. 1-03876).
 
 
 
10.32
 
Amended and Restated Master Tolling Agreement (Operating Assets), dated October 3, 2016, by and between HollyFrontier El Dorado Refining LLC, HollyFrontier Woods Cross Refining LLC, Holly Energy Partners - Operating L.P., HollyFrontier Corporation and Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.2 to Registrant's Current Report on Form 8-K filed October 4, 2016, File No. 1-03876).
 
 
 

103
Table of Content

Exhibit Number
  
Description
 
 
 
10.33
 
LLC Interest Purchase Agreement, dated February 22, 2016, by and among HollyFrontier Refining & Marketing LLC, HollyFrontier Corporation, Holly Energy Partners - Operating, L.P. and Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.67 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2015, File No. 1-03876).
 
 
 
10.34
 
Refined Products Terminal Transfer Agreement, dated February 22, 2016, by and among HEP Refining Assets, L.P., Holly Energy Partners, L.P., El Paso Logistics LLC, HollyFrontier Corporation and Holly Energy Partners - Operating, L.P. (incorporated by reference to Exhibit 10.68 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2015, File No. 1-03876).
 
 
 
10.35
 
Second Amended and Restated Pipelines and Terminals Agreement, dated February 22, 2016, by and among HollyFrontier Refining & Marketing LLC, HollyFrontier Corporation, Holly Energy Partners - Operating, L.P. and Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.3 of Registrant's Current Report on Form 8-K filed February 22, 2016, File No. 1-03876).
 
 
 
10.36
 
Pipeline Deficiency Agreement, dated August 8, 2016, by and between HollyFrontier Refining & Marketing LLC and Holly Energy Partners - Operating, L.P. (incorporated by reference to Exhibit 10.5 to Registrant's Current Report on Form 8-K filed August 10, 2016, File No. 1-03876).
 
 
 
10.37
 
LLC Interest Purchase Agreement, dated October 3, 2016, by and between HollyFrontier Corporation, HollyFrontier Woods Cross Refining LLC, Holly Energy Partners - Operating, L.P. and Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed October 4, 2016, File No. 1-03876).
 
 
 
10.38+
 
HollyFrontier Corporation Long-Term Incentive Compensation Plan (formerly the Holly Corporation Long-Term Incentive Compensation Plan), as amended and restated on May 24, 2007 as approved at the Annual Meeting of Stockholders of Holly Corporation on May 24, 2007 (incorporated by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2008, File No. 1-03876).
 
 
 
10.39+
 
First Amendment to the HollyFrontier Corporation Long-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.5 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2008, File No. 1-03876).
 
 
 
10.40+
 
Second Amendment to the HollyFrontier Corporation Long-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed May 18, 2011, File No. 1-03876).
 
 
 
10.41+
 
Third Amendment to the HollyFrontier Corporation Long-Term Incentive Compensation Plan (incorporated by reference to Exhibit 4.6 of the Registrant's Registration Statement on Form S-8 filed November 9, 2012, File No. 333-184877).
 
 
 
10.42+
 
Fourth Amendment to the HollyFrontier Corporation Long-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 of Registrant's Current Report on Form 8-K filed May 15, 2015, File No. 1-03876).
 
 
 
10.43+
 
Fifth Amendment to the HollyFrontier Corporation Long-Term Incentive Plan, effective May 11, 2016 (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed May 16, 2016, File No. 1-03876).
 
 
 
10.44+*
 
HollyFrontier Corporation Long-Term Incentive Plan UK Sub-Plan, effective February 14, 2017.
 
 
 
10.45+
 
Holly Corporation Amended and Restated Change in Control Agreement Policy (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed March 1, 2011, File No. 1-03876).
 
 
 
10.46+*
 
Holly Corporation Employee Form of Change in Control Agreement.
 
 
 
10.47+
 
Form of Performance Share Unit Agreement (for 162(m) covered employees) (incorporated by reference to Exhibit 4.11 of the Registrant's Registration Statement on Form S-8 filed November 9, 2012, File No. 333-184877).
 
 
 
10.48+
 
Form of Performance Share Unit Agreement (for non-162(m) covered employees) (incorporated by reference to Exhibit 4.12 of the Registrant's Registration Statement on Form S-8 filed November 9, 2012, File No. 333-184877).
 
 
 
10.49+*
 
Form of Restricted Stock Agreement (time-based vesting).
 
 
 
10.50+*
 
Form of Notice of Grant of Restricted Stock.
 
 
 
10.51+
 
Form of Restricted Stock Unit Agreement (for non-employee directors) (incorporated by reference to Exhibit 10.63 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2012, File No. 1-03876).


104
Table of Content

Exhibit Number
  
Description
 
 
 
10.52+
 
Form of Notice of Grant of Restricted Stock Units (for non-employee directors) (incorporated by reference to Exhibit 10.64 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2012, File No. 1-03876).
 
 
 
10.53+
 
Form of Indemnification Agreement entered into with directors and officers of Holly Corporation (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed December 13, 2006, File No. 1-03876).
 
 
 
10.54+
 
HollyFrontier Corporation Omnibus Incentive Compensation Plan (formerly the Frontier Oil Corporation Omnibus Incentive Compensation Plan) (incorporated by reference to Exhibit 10.5 of Registrant's Current Report on Form 8-K filed July 8, 2011, File No. 1-03876).
 
 
 
10.55+
 
First Amendment to the HollyFrontier Corporation Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed May 15, 2015, File No. 1-03876).
 
 
 
10.56+*
 
Second Amendment to the HollyFrontier Corporation Omnibus Incentive Compensation Plan, dated November 9, 2016.
 
 
 
10.57+
 
HollyFrontier Corporation Executive Nonqualified Deferred Compensation Plan (formerly the Frontier Deferred Compensation Plan) (incorporated by reference to Exhibit 10.73 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2012, File No. 1-03876).
 
 
 
10.58+
 
Form of Indemnification Agreement between Frontier and each of its officers and directors (incorporated by reference to Exhibit 10.41 to Frontier Oil Corporation's Annual Report on Form 10-K for its fiscal year ended December 31, 2006, File No. 1-07627).
 
 
 
10.59+
 
Form of Indemnification Agreement between HollyFrontier Corporation and each of its officers and directors (incorporated by reference to Exhibit 10.79 of Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2011, File No. 1-03876).
 
 
 
10.60+
 
Retirement Agreement, dated January 13, 2017, between HollyFrontier Corporation and Douglas S. Aron (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed January 13, 2017, File No. 1-03876).
 
 
 
21.1*
 
Subsidiaries of Registrant
 
 
 
23.1*
 
Consent of Independent of Registered Public Accounting Firm
 
 
 
31.1*
 
Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
31.2*
 
Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.1**
 
Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.2**
 
Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
101++
 
The following financial information from Registrant's Annual Report on Form 10-K for its fiscal year ended December 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to the Consolidated Financial Statements.


* Filed herewith.
** Furnished herewith.
+ Constitutes management contracts or compensatory plans or arrangements.
++ Filed electronically herewith.

105


Exhibit 10.11



                                        




SEVENTEENTH AMENDED AND RESTATED OMNIBUS AGREEMENT
among
HOLLYFRONTIER CORPORATION,
HOLLY ENERGY PARTNERS, L.P.
and
CERTAIN OF THEIR RESPECTIVE SUBSIDIARIES

January 1, 2017






Exhibit 10.11


TABLE OF CONTENTS
Page

ARTICLE I DEFINITIONS AND INTERPRETATIONS    2
1.1    DEFINITIONS    2
1.2    INTERPRETATION    2
ARTICLE II BUSINESS OPPORTUNITIES    3
2.1    RESTRICTED BUSINESSES    3
2.2    PERMITTED EXCEPTIONS    3
2.3    RIGHT OF OFFER    3
2.4    PROCEDURE FOR OFFERING ACQUIRED OR CONSTRUCTED ASSETS TO HEP    4
2.5    SCOPE OF PROHIBITION    6
2.6    ENFORCEMENT    6
2.7    LIMITATION ON ACQUISITIONS OF PERMITTED ASSETS BY HEP GROUP MEMBERS    6
2.8    TERMINATION OF ARTICLE II    6
ARTICLE III INDEMNIFICATION    6
3.1    CONDITIONS OF INDEMNIFICATION BY THE HFC ENTITIES    6
3.2    INDEMNIFICATION BY THE HFC ENTITIES    6
3.3    CONDITIONS OF INDEMNIFICATION BY HEP ENTITIES    8
3.4    INDEMNIFICATION BY HEP ENTITIES    9
3.5    MUTUAL GENERAL INDEMNITY    9
3.6    EXCLUSIONS FROM INDEMNITY FOR POST-CLOSING DATE CLAIMS    9
3.7    INDEMNIFICATION PROCEDURES    10
3.8    LIMITATION ON INDEMNIFICATION OBLIGATIONS    11
3.9    WAIVER OF SUBROGATION    12
ARTICLE IV GENERAL AND ADMINISTRATIVE EXPENSES    13
4.1    GENERAL    13
ARTICLE V RIGHT OF FIRST REFUSAL    14
5.1    HFC RIGHT OF FIRST REFUSAL: PROHIBITION ON FURTHER TRANSFER OF TRANSFERRED ASSETS    14
5.2    PROCEDURES    14
ARTICLE VI HFC PURCHASE OPTION    17
6.1    OPTION TO PURCHASE TULSA TRANSFERRED ASSETS    17
ARTICLE VII API INSPECTIONS    17
7.1    API INSPECTIONS    17
ARTICLE VIII DISPUTE RESOLUTION    18
8.1    DISPUTE RESOLUTION    18
8.2    ARBITRATION    18
8.3    CONFLICT    19
ARTICLE IX FORCE MAJEURE    19



Exhibit 10.11

9.1    FORCE MAJEURE    19
ARTICLE X MISCELLANEOUS    20
10.1    CHOICE OF LAW    20
10.2    NOTICES    20
10.3    ENTIRE AGREEMENT    21
10.4    AMENDMENT OR MODIFICATION    21
10.5    ASSIGNMENT    21
10.6    COUNTERPARTS    21
10.7    SEVERABILITY    21
10.8    FURTHER ASSURANCES    21
10.9    RIGHTS OF LIMITED PARTNERS    21
10.10    HEADINGS    22
10.11    LIMITATION OF DAMAGES    22
10.12    NATURE OF THE RELATIONSHIP    22



EXHIBITS

Exhibit A - Omnibus Agreement Amendments
Exhibit B - Definitions
Exhibit C - Interpretation
Exhibit D - Asset Indemnification Summary
Exhibit E - Administrative Fee








Exhibit 10.11


SEVENTEENTH AMENDED AND RESTATED
OMNIBUS AGREEMENT
THIS SEVENTEENTH AMENDED AND RESTATED OMNIBUS AGREEMENT (this “ Agreement ”) is being entered into on January 18, 2017 and effective as of January 1, 2017 (the “ Effective Date ”), by and among the following entities (all Delaware limited liability companies unless otherwise noted):



Exhibit 10.11

HollyFrontier Corporation, a Delaware corporation (“ HFC ”), and its Affiliates listed below (singularly, “ HFC Entity ”; and with HFC collectively, the “ HFC Entities ”):
 
El Paso Logistics LLC (“ El Paso Logistics ”)
 
HollyFrontier El Dorado Refining LLC (“ HollyFrontier El Dorado ”)
 
HollyFrontier Cheyenne Refining LLC (“ HollyFrontier Cheyenne ”)
 
HollyFrontier Tulsa Refining LLC (“ HollyFrontier Tulsa ”)
 
HollyFrontier Woods Cross Refining LLC (“ HollyFrontier Woods Cross ”)
 
Navajo Pipeline Co., L.P., a Delaware limited partnership (“ Navajo Pipeline ”)
 
HollyFrontier Navajo Refining LLC (“ HollyFrontier Navajo ”)
 
HollyFrontier Refining & Marketing LLC (“ HFRM ”)
AND
Holly Energy Partners, L.P., a Delaware limited partnership (“ HEP ”), and its Affiliates listed below (singularly, “ HEP Entity ”; and with HEP collectively, the “ HEP Entities ”):
 
Cheyenne Logistics LLC (“ Cheyenne Logistics ”)
 
El Dorado Logistics LLC (“ El Dorado Logistics ”)
 
El Dorado Operating LLC (“ El Dorado Operating ”)
 
El Dorado Osage LLC (“ El Dorado Osage ”)
 
HEP El Dorado LLC (“ HEP El Dorado ”)
 
HEP Logistics GP, L.L.C. (the “ OLP GP ”)
 
HEP Logistics Holdings, L.P., a Delaware limited partnership (the “ General Partner ”)
 
HEP Mountain Home, L.L.C.
 
HEP Navajo Southern, L.P., a Delaware limited partnership
 
HEP Pipeline Assets, Limited Partnership, a Delaware limited partnership
 
HEP Pipeline GP, L.L.C.
 
HEP Pipeline, L.L.C. (“ HEP Pipeline ”)
 
HEP Refining Assets, L.P., a Delaware limited partnership (“ HEP Refining Assets ”)
 
HEP Refining GP, L.L.C.
 
HEP Refining, L.L.C. (“ HEP Refining ”)
 
HEP Tulsa LLC (“ HEP Tulsa ”)
 
HEP UNEV Holdings LLC (“ HEP UNEV ”)
 
HEP UNEV Pipeline LLC (“ HEP UNEV Pipeline ”)
 
HEP Woods Cross, L.L.C.
 
Holly Energy Partners – Operating, L.P., a Delaware limited partnership (the “ Operating Partnership ”)
 
Holly Energy Storage – Lovington LLC
 
Holly Logistic Services, L.L.C. (“ Holly GP ”),
 
Lovington-Artesia, L.L.C.
 
Roadrunner Pipeline, L.L.C. (“ Roadrunner ”)
 
Woods Cross Operating LLC (“ Woods Cross Operating ”)




Exhibit 10.11

This Agreement amends and restates in its entirety the Sixteenth Amended and Restated Omnibus Agreement, effective as of October 1, 2016, among certain of the HFC Entities and certain of the HEP Entities which were signatories thereto (the “ Previous Amended and Restated Omnibus Agreement ”).
RECITALS:
WHEREAS, the Parties entered into an Omnibus Agreement on July 13, 2004 (as amended, the “ Original Omnibus Agreement ”) to evidence their agreement with respect to various administrative, indemnity and other obligations, which agreement has been further amended and restated as set forth on Exhibit A , resulting in the Previous Amended and Restated Omnibus Agreement.
WHEREAS, the Parties desire to amend and restate the Previous Amended and Restated Omnibus Agreement as provided herein in order to, among other things, consolidate terms from various other agreements between the parties and to clarify terms as more particularly set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the covenants, conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1      Definitions . Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth on Exhibit B .
1.2      Interpretation . Matters relating to the interpretation of this Agreement are set forth on Exhibit C .

ARTICLE II     
BUSINESS OPPORTUNITIES

2.1      Restricted Businesses . For so long as a HFC Group Member owns a controlling interest in the general partner of HEP, and except as permitted by Section 2.2 , Holly GP and each HFC Group Member shall be prohibited from engaging in or acquiring a controlling interest in or operating any business having assets or operations engaged in the Restricted Businesses.
2.2      Permitted Exceptions . Notwithstanding any provision of Section 2.1 to the contrary, Holly GP and the HFC Group Members may engage in the following activities under the following circumstances:
(a)
the ownership and/or operation of any of the Retained Assets (including replacements of the Retained Assets);
(b)
any Restricted Businesses conducted by a HFC Group Member and Holly GP with the approval of the General Partner;
(c)
the ownership and/or operation of Restricted Businesses by an HFC Entity or Holly GP in its capacity as general partner of HEP or its general partner;



Exhibit 10.11

(d)
the ownership and/or operation of any asset or group of related assets used in the Restricted Business that are acquired or constructed by a HFC Group Member or Holly GP after the Closing Date (the “ Permitted Assets ”), the fair market value of which (as determined in good faith by the Board of Directors of HFC) is as follows:
(i)
less than $5 million at the time of such acquisition or good faith estimate of construction costs, as the case may be; or
(ii)
equal to or greater than $5 million at the time of the acquisition or good faith estimate of construction costs; provided, HEP has been offered the opportunity to purchase the Permitted Assets in accordance with Section 2.3 and HEP has elected not to purchase the Permitted Assets;
(e)
the ownership of the UNEV Profits Interest;
(f)
the ownership of limited or any general partnership interests in HEP; and
(g)
the ownership and/or operation of the El Paso Hawkins Terminal.
2.3      Right of Offer .
(a)
If Holly GP or a HFC Group Member becomes aware of an opportunity to acquire Permitted Assets with a fair market value (as determined in good faith by the Board of Directors of HFC) equal to or greater than $5 million, then, subject to Section 2.3(c) , as soon as practicable, Holly GP or such HFC Group Member shall notify HEP of such opportunity and deliver to HEP, or provide HEP access to all information prepared by or on behalf of, or material information submitted or delivered to, Holly GP or such HFC Group Member relating to such potential transaction. As soon as practicable, but in any event within 30 days after receipt of such notification and information, HEP shall notify Holly GP or the HFC Group Member that it has either elected:
(i)
not to cause a HEP Group Member to pursue the opportunity to purchase the Permitted Assets, or
(ii)
to cause a HEP Group Member to pursue the opportunity to purchase the Permitted Assets, in which case the applicable Parties shall follow the procedures in Section 2.4 .
(b)
If, at any time, HEP abandons such opportunity (as evidenced in writing by HEP to the HFC Group Member), Holly GP or the HFC Group Member may pursue such opportunity. Any Permitted Assets which are permitted to be acquired by Holly GP or a HFC Group Member must be so acquired:
(i)
within 12 months of the later to occur of (i) the date that Holly GP or the HFC Group Member becomes able to pursue such acquisition in accordance with the provisions of this Section 2.3 , and (ii) the date upon which all required governmental approvals to consummate such acquisition have been obtained, and



Exhibit 10.11

(ii)
on terms not materially more favorable to Holly GP or the HFC Group Member than were offered to HEP.
If either of these conditions are not satisfied, the opportunity must be reoffered to HEP in accordance with Section 2.3(a) .
(c)
Section 2.3(a) shall not apply if Holly GP or a HFC Group Member:
(i)
becomes aware of an opportunity to make an acquisition that includes Permitted Assets and assets that are not Permitted Assets, and the Permitted Assets have a fair market value (as determined in good faith by the Board of Directors of HFC) equal to or greater than $5 million but comprise less than half of the fair market value (as determined in good faith by the Board of Directors of HFC) of the total assets being considered for acquisition, or
(ii)
desires to construct Permitted Assets with an estimated construction cost (as determined in good faith by the Board of Directors of HFC) equal to or greater than $5 million;
provided, however, that in each case Holly GP or a HFC Group Member, as the case may be, shall comply with Section 2.4 .
2.4      Procedure for Offering Acquired or Constructed Assets to HEP     .
(a)
Within 180 days after the consummation of the acquisition or the completion of construction by Holly GP or a HFC Group Member of the Permitted Assets, as the case may be, Holly GP or the HFC Group Member shall notify HEP in writing of such acquisition or construction and offer HEP the opportunity to purchase such Permitted Assets (the “ Offer ”). The Offer shall set forth the terms relating to the purchase of the Permitted Assets, and, if Holly GP or any HFC Group Member desires to utilize the Permitted Assets, the Offer will also include (i) the commercially reasonable terms on which the HEP Group will provide services to Holly GP or the HFC Group Member to enable Holly GP or the HFC Group Member to utilize the Permitted Assets and (ii) the terms of any service agreements, leases or access agreements to be provided to HEP by Holly GP or the HFC Group relating to such assets. As soon as practicable, but in any event within 30 days after receipt of such written notification, HEP shall notify Holly GP or the HFC Group Member in writing that HEP has elected (i) not to cause a HEP Group Member to purchase the Permitted Assets, in which event Holly GP or the HFC Group Member shall be forever free to continue to own or operate such Permitted Assets, or (ii) to cause a HEP Group Member to purchase the Permitted Assets, in which event Section 2.4(b) and Section 2.4(c) shall apply.
(b)
If within 60 days after receipt by HEP of the Offer, Holly GP or the HFC Group Member and HEP are able to agree on the fair market value of the subject Permitted Assets and the other terms of the Offer including, the terms, if any, on which the HEP Group will provide services to Holly GP or the HFC Group Member to enable it to utilize the Permitted Assets, a HEP Group Member shall purchase the Permitted Assets for the agreed upon fair market value as soon as commercially practicable



Exhibit 10.11

after such agreement has been reached and, if required by the Offer or otherwise agreed, enter into an agreement with Holly GP or the HFC Group Member to provide services in a manner consistent with the Offer.
(c)
If Holly GP or the HFC Group Member and HEP are unable to agree within 60 days after receipt by HEP of the Offer on the fair market value of the subject Permitted Assets and/or the other terms of the Offer, Holly GP or the HFC Entity, on the one hand, and HEP, on the other hand, will engage a mutually agreed upon investment banking firm to determine the disputed terms. Such investment banking firm will determine the disputed terms within 30 days of its engagement and furnish Holly GP or the HFC Group Member, on the one hand, and HEP, on the other hand, its determination. The fees of the investment banking firm will be split equally between Holly GP or the HFC Group Member, on the one hand, and HEP, on the other hand. Once the investment banking firm has submitted its determination of the disputed terms, HEP will have the right, but not the obligation, to cause a HEP Group Member to purchase the Permitted Assets pursuant to the Offer as modified by the determination of the investment banking firm. HEP will provide written notice of its decision to Holly GP or the HFC Group Member within 30 days after the investment banking firm has submitted its determination. Failure to provide such notice within such 30-day period shall be deemed to constitute a decision not to purchase the Permitted Assets. If HEP elects to cause a HEP Group Member to purchase the Permitted Assets, then the HEP Group Member shall purchase the Permitted Assets pursuant to the Offer as modified by the determination of the investment banking firm as soon as commercially practicable after such determination and, if applicable, enter into an agreement with Holly GP or the HFC Group Member to provide services in a manner consistent with the Offer, as modified by the determination of the investment banking firm, if applicable.
2.5      Scope of Prohibition . Except as provided in this Article II and the Partnership Agreement, Holly GP and each HFC Group Member shall be free to engage in any business activity, including those that may be in direct competition with any HEP Group Member.
2.6      Enforcement . Holly GP and the HFC Group Members agree and acknowledge that the HEP Group does not have an adequate remedy at law for the breach by Holly GP and the HFC Group of the covenants and agreements set forth in this Article II , and that any breach by Holly GP and the HFC Group of the covenants and agreements set forth in this Article II would result in irreparable injury to the HEP Group. Holly GP and the HFC Group Members further agree and acknowledge that any HEP Group Member may, in addition to the other remedies that may be available to the HEP Group, file a suit in equity to enjoin Holly GP and the HFC Group from such breach and hereby consent to the issuance of injunctive relief under this Agreement.
2.7      Limitation on Acquisitions of Permitted Assets by HEP Group Members . Notwithstanding anything in this Agreement to the contrary, a HEP Group Member who is not a party to this Agreement is prohibited from acquiring Permitted Assets. In the event HEP desires a HEP Group Member who is not a party to this Agreement to acquire any Permitted Assets, then the General Partner shall first cause such HEP Group Member to become a party to this Agreement.
2.8      Termination of Article II . The provisions of this Article II may be terminated by HFC upon a Change of Control of HFC.



Exhibit 10.11

ARTICLE III     
INDEMNIFICATION
3.1      Conditions of Indemnification by the HFC Entities . All indemnities set forth in Section 3.2 are subject to the following conditions:
(a)
Except for the indemnity in Sections 3.2(a)(ii) , (vii) and (viii) , indemnities apply only to the Transferred Assets and only until the applicable expiration date, if any, related to each such Transferred Asset shown on Exhibit D .
(b)
The aggregate liability of the HFC Entities for all Covered Environmental Losses under Section 3.2(a) shall not exceed the amounts shown in column (b) on Exhibit D . The liability limits listed in column (b) represent separate individual limits for each location.
(c)
Indemnities in Section 3.2(a)(i) apply only to the extent that such events or conditions occurred before the applicable Closing Date.
3.2      Indemnification by the HFC Entities .
(a)
Subject to Section 3.1 , the HFC Entities shall indemnify, defend and hold harmless the HEP Entities from and against any Liability or Claim incurred by the HEP Entities or any Third Party to the extent arising out of:
(i)
the Covered Environmental Losses relating to the Transferred Assets to the extent caused by the acts or omissions of an HFC Entity;
(ii)
the ownership or operation by HFC and its Affiliates of any asset not constituting part of the Transferred Assets, except to the extent arising out of the negligent acts or omissions or willful misconduct of HEP or any of its Affiliates;
(iii)
the failure of the applicable HEP Entity to be the owner of valid and indefeasible easement rights or fee ownership for interests in and to the lands on which any pipeline or related pump station, tank farm or equipment conveyed or contributed or otherwise Transferred (including by way of a Transfer of the ownership interest of a Person or by operation of law) to the applicable HEP Entity on the applicable Closing Date;
(iv)
the failure of the applicable HEP Entity to have the consents, licenses and permits necessary to allow any such Transferred Assets referred to in Section 3.2(a)(iii) to cross the roads, waterways, railroads and other areas upon which any such Transferred Assets are located as of the Closing Date;
(v)
the cost of curing any condition set forth in clauses (iii) or (iv) above to the extent such conditions do not allow any Transferred Asset to be operated in accordance with Prudent Industry Practice;
(vi)
the following:



Exhibit 10.11

(A)
events and conditions associated with the operation of the Transferred Assets before the Closing Date (other than Covered Environmental Losses which are provided for under Section 3.2(a)(i) and events and conditions covered by Section 3.4 );
(B)
all legal actions pending against the HFC Entities on July 13, 2004;
(C)
the completion of remediation projects at the respective HEP Entity’s El Paso Hawkins Terminal, Albuquerque terminal and Mountain Home terminal that were ongoing or scheduled as of July 13, 2004;
(D)
events and conditions associated with the Retained Assets and whether occurring before or after the Closing Date;
(E)
all federal, state and local tax liabilities attributable to the operation or ownership of the Transferred Assets prior to the applicable Closing Date, including any such tax liabilities of the HFC Entities that may result from the consummation of the formation transactions for the HEP Entities and the General Partner; and
(F)
any breach by HollyFrontier Tulsa of the representations and warranties set forth in Section 3.9 of the Master Lease and Access Agreement.
(vii)
the operation by HEP and its Affiliates of any assets owned by HFC or any of its Affiliates, except to the extent arising out of the gross negligence or willful misconduct of HEP or any of its Affiliates;
(viii)
any failure to perform any covenant or agreement made or undertaken by HFC or its Affiliates in the (A) Master Lease and Access Agreement, or the exercise by HFC or its Affiliates of any rights and obligations under Section 2.2 thereof; or (B) Services and Secondment Agreement; except in either case to the extent arising out of the willful misconduct or negligence (standard negligence or gross negligence) of HEP or any of its Affiliates; and
(ix)
any failure of HEP or any of its Affiliates to perform its obligations pursuant to the Storage and Handling Agreement to the extent arising after February 22, 2016, except to the extent arising out of gross negligence and willful misconduct of HEP or any of its Affiliates.
(b)
The indemnities provided for in Section 3.2(a)(i) through (v) shall only apply if the HFC Entities are notified in writing of any of the foregoing prior to the applicable expiration date listed in column (b) on Exhibit D .
(c)
The indemnities provided for in Section 3.2(a)(vi) shall only apply if to the extent that the HFC Entities are notified in writing of any of the following events and conditions within five years after the applicable Closing Date.



Exhibit 10.11

(d)
Notwithstanding anything in this Agreement to the contrary, because HEP has been involved since the inception with the following Transferred Assets, as used in this Section 3.2 , the definition of “Transferred Assets” shall not include the 16” Lovington/Artesia Intermediate Pipeline, the Beeson Pipeline, the Roadrunner Pipeline, the Tulsa Interconnecting Pipelines, and the UNEV Pipeline.
(e)
To the extent that a good faith Claim by the HEP Entities for indemnification under Section 3.2(a) arises from events or conditions at the Transferred Tanks or the soil immediately underneath the Transferred Tanks or the Transferred Tanks’ secondary containment, and the HFC Entities refuse to provide such indemnification, then the burden of proof shall be on the HFC Entities to demonstrate that the events or conditions giving rise to the Claim arose after the Closing Date.
(f)
As used in this Section 3.2 , “Affiliates” of the Indemnifying Party shall not include the HEP Group Members when a HFC Entity is the Indemnifying Party and shall not include the HFC Group Members when the Indemnifying Party is a HEP Entity.
3.3      Conditions of Indemnification by the HEP Entities . The indemnities set forth in Section 3.4 apply only to the extent that such events or conditions occurred on or after the applicable Closing Date, if any.
3.4      Indemnification by the HEP Entities .
(a)
Subject to Section 3.3 , the HEP Entities shall indemnify, defend and hold harmless the HFC Entities from and against any Liability or Claim suffered or incurred by the HFC Entities or any Third Party to the extent arising from:
(i)
the Covered Environmental Losses associated with operation of (A) the Other Assets, and (B) the Transferred Assets by a Person (other than a HFC Entity or ownership and operation of the Transferred Assets by a Person other than a HFC Entity);
(ii)
operation by HEP and HEP’s Affiliates of any asset owned by HFC or any of HFC’s Affiliates but only to the extent caused by the gross negligence or willful misconduct of any of the HEP Entities; and
(iii)
any failure to perform any covenant or agreement made or undertaken by any HEP or its Affiliates in the (A) Master Lease and Access Agreement, or the exercise by HEP or its Affiliates of any rights and obligations under Section 2.2 thereof; or (B) Services and Secondment Agreement; except in either case to the extent arising out of the willful misconduct or negligence (standard negligence or gross negligence) of HFC or any of its Affiliates.
(b)
Nothing set forth in Section 3.4(a) shall make the HEP Entities responsible for any post-Closing Date negligent actions or omissions or willful misconduct by the HFC Entities.
(c)
Notwithstanding Section 3.4(a)(i), the indemnity provided for in Section 3.4(a)(i) shall only apply to the El Dorado Repurchased Tanks to the extent the Environmental



Exhibit 10.11

Losses arise from a violation, correction, event or condition occurring during the period that El Dorado Logistics owned such Repurchased Tanks.
3.5      Mutual General Indemnity . Following the applicable Closing Dates, the HFC Entities and the HEP Entities, respectively, agree to indemnify, protect, defend and hold harmless each other from and against any and all Liabilities and Claims based upon, in connection with, relating to or arising out of their respective actions or inactions in connection with the operation of the Indemnifying Party’s respective assets or any failure to comply with any Applicable Laws; in any case of or by any Indemnifying Party or its subcontractors, suppliers, materialmen, employees, agents, successors and assigns, or other persons directly or indirectly employed by them, including the following:
(a)
any injury to or death of any Person or the damage to or theft, destruction, loss or loss of use of, any property; or
(b)
the failure to perform any covenant or agreement made or undertaken by the applicable Party in agreements with any of the other Parties.
3.6      Exclusions from Indemnity for Post-Closing Date Claims . NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, FOR ANY LIABILITIES OR CLAIMS ARISING OUT OF EVENTS OCCURRING AFTER AN APPLICABLE CLOSING DATE:
(a)
EXCEPT AS EXPRESSLY PROVIDED IN SECTION 3.2(a)(vii) , THE INDEMNIFICATION OBLIGATIONS HEREIN SHALL NOT EXTEND TO THE PROPORTIONATE AMOUNT OF ANY SUCH LIABILITY OR CLAIM CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNITEE OR ITS AGENTS OR EMPLOYEES.
(b)
No statute, rule or regulation that precludes an injured party from bringing an action against a fellow employee or employer shall preclude a Party from seeking and obtaining a judicial determination of the fault or negligence of such Persons.
(c)
Each Party shall be responsible for any insurance deductibles or self-insured retention arising out of any Liability or Claim to the extent such Liability or Claim arises out of the negligence or willful misconduct of such Party, except to the extent the subrogation waiver provided for in Section 3.9 applies to such Liability or Claim.
3.7      Indemnification Procedures .
(a)
The Indemnified Party agrees that promptly after it becomes aware of facts giving rise to a Claim for indemnification under this Article III , it will provide notice thereof in writing to the Indemnifying Party, specifying the nature of and specific basis for such Claim.
(b)
The Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Indemnified Party that are covered by the indemnification under this Article III , including, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent of the Indemnified



Exhibit 10.11

Party unless it includes a full release of the Indemnified Party from such matter or issues, as the case may be.
(c)
The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with respect to all aspects of the defense of any Claims covered by the indemnification under this Article III , including, the prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and making available to the Indemnifying Party any employees of the Indemnified Party.
(d)
In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in Section 3.7(c) be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any Claims covered by the indemnification set forth in this Article III ; provided, however, that the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party informed as to the status of any such defense, but the Indemnifying Party shall have the right to retain sole control over such defense.
(e)
In connection with the indemnities in this Article III , Indemnifying Party:
(i)
agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party;
(ii)
agrees to enter into a joint defense agreement with Indemnifying Party in order to allow communication by counsel if Indemnified Party elects to involve separate counsel; and
(iii)
agrees to maintain the confidentiality of all files, records, and other information furnished by the Indemnified Party pursuant to this Section 3.7 .
(f)
The amounts for which an Indemnified Party is entitled to indemnification under this Article III shall be reduced by the net amounts recovered by the Indemnified Party pursuant to contractual indemnities from any Third Party (other than pursuant to insurance policies that are not required to include a waiver of subrogation pursuant to Section 3.9 ) after deducting the reasonable unreimbursed out-of-pocket fees and expenses incurred by the Indemnified Party in recovering such amounts (the “ Net Recovery ”).  If the Indemnified Party receives a Net Recovery subsequent to an indemnification payment by the Indemnifying Party under this Article III , then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to Net Recovery.  An Indemnified Party shall be obligated to pursue all contractual indemnities (including insurance claims) that such Indemnified Party has with any Third Party, provided, however, if the Indemnified Party’s right to such indemnification is assignable, the Indemnified



Exhibit 10.11

Party may, in its sole discretion and in lieu of pursuing such claim, elect to assign such indemnification claim to the Indemnifying Party to pursue and shall reasonably cooperate with the Indemnifying Party (including, making its relevant books, records, officers, information and testimony reasonably available to the Indemnifying Party) in the Indemnifying Party’s pursuit of such claim.
(g)
For avoidance of doubt, no Claim may be asserted pursuant to Section 3.2 or Section 3.4 following the applicable expiration of the indemnity related to such Claim; provided that any Claim asserted in writing prior to the expiration date of such indemnity that is the basis for such Claim shall survive until such Claim is finally resolved and satisfied. The date on which notification of a Claim for indemnification is received by the Indemnifying Party shall determine whether such Claim is timely made.
3.8      Limitation on Indemnification Obligations .
(a)
Notwithstanding anything in this Agreement to the contrary, when referring to the indemnification obligations of the HFC Entities in Article III , the definition of HFC Entities shall be deemed to mean solely (b) the HFC Entity or HFC Entities that own or operate, or owned or operated immediately prior to the transfer to the HEP Entities, the Retained Asset, Transferred Asset or other property in question with respect to which indemnification is sought by reason of such HFC Entity’s or HFC Entities’ ownership or operation of the Retained Asset, Transferred Asset or other property in question or that is responsible for causing such loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred by the HEP Entities for which it is entitled to indemnification under Article III and (c) HFC.
(b)
Notwithstanding anything in this Agreement to the contrary, when referring to the indemnification obligations of the HEP Entities in Article III , the definition of HEP Entities shall be deemed to mean solely (d) the HEP Entity or HEP Entities that own or operate, or previously owned or operated, the Transferred Asset or other property in question or that is responsible for causing such loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred by the HFC Entities for which they are entitled to indemnification under Article III , (e) HEP and (f) Operating Partnership.
(c)
For the avoidance of doubt, any indemnification obligations of the HFC Entities in Article III with respect to any indemnifiable losses incurred by or attributable to the UNEV Pipeline shall be (i) limited to an amount that is the product of (x) the amount of such losses, multiplied by (y) HEP UNEV’s direct or indirect percentage ownership interest in the UNEV Pipeline at the time such losses were incurred and (ii) payable to, for the benefit of and recoverable solely by HEP UNEV or any HEP Entity designated by HEP UNEV (and not by UNEV Pipeline, LLC).
3.9      Subrogation; Waiver of Subrogation . To the extent that any of the HFC Entities or HEP Entities in fact receive full indemnification payments pursuant to Section 3.2(a)(viii) or Section 3.4(a)(iii) hereof, as the case may be, the HFC Entity or HEP Entity paying such Claim shall be subrogated to the receiving party’s rights with respect to the transaction or event requiring or giving rise to such indemnity. Notwithstanding the foregoing, each of the HFC Entities and the HEP Entities, hereby waives and releases,



Exhibit 10.11

and shall cause their respective insurers, to waive and release, all rights against each other and any of their respective contractors, subsidiaries, consultants, agents and employees for loss or damages to any of the Transferred Assets to the extent of fire and other hazards covered by property insurance applicable to the property to which such loss or damage occurs, except such rights as they have to proceeds of such insurance. For the purposes of this Section 3.9 , all deductibles shall be considered insured losses. Without limiting the foregoing, all of the Parties’ policies of property insurance for the Transferred Assets shall be endorsed to provide a complete waiver for the benefit of the other Parties and their Affiliates of (i) any right of recovery which the insurer may have or acquire against the other Parties or any of its Affiliates, or its or their employees, officers or directors for payments made or to be made under such policies and (ii) any lien or right of subrogation which the insurer may have or acquire for payments made or to be made to any person or entity who asserts a Claim against such other Parties or any of its Affiliates, or its or their employees, officers or directors. The releases and waivers of subrogation set forth above in this paragraph shall apply notwithstanding any obligation of a Party to indemnify the other Party for the Claim(s) at issue.
ARTICLE IV     
GENERAL AND ADMINISTRATIVE EXPENSES
4.1      General .
(a)
The Operating Partnership will pay HFC an administrative fee (the “ Administrative Fee ”) in the amount set forth on Exhibit E , payable in equal quarterly installments, for the provision by HFC and its Affiliates for the HEP Group’s benefit of all the general and administrative services that HFC and its Affiliates provide, including, the general and administrative services listed on Exhibit E .
(b)
HEP and HFC shall also periodically assess and increase the Administrative Fee in connection with expansions of the operations of the HEP Group through the acquisition or construction of new assets or businesses.
(c)
At the end of each year, HEP will have the right to submit to HFC a proposal to reduce the amount of the Administrative Fee for that year if HEP believes in good faith that the general and administrative services performed by HFC and its Affiliates for the benefit of the HEP Group for the year in question do not justify payment of the full Administrative Fee for that year. If HEP submits such a proposal to HFC, HFC agrees that it will negotiate in good faith with HEP to determine if the Administrative Fee for that year should be reduced and, if so, the amount of such reduction.
(d)
The Administrative Fee shall not include and the HEP Group shall reimburse HFC and its Affiliates for:
(i)
salaries of employees of HFC or its Affiliates, to the extent, but only to the extent, such employees perform services for the HEP Group;
(ii)
the cost of employee benefits relating to employees of HFC or its Affiliates, such as 401(k), pension, and health insurance benefits, to the extent, but only to the extent, such employees perform services for the HEP Group and have not been paid by HEP pursuant to the Master Site Services Agreement and the Services and Secondment Agreement;



Exhibit 10.11

(iii)
any amounts payable under the Master Site Services Agreement and the Services and Secondment Agreement;
(iv)
all sales, use, excise, value added or similar taxes, if any, that may be applicable from time to time in respect of the services provided by the HFC and its Affiliates to HEP pursuant to Section 4.1(a) ; and
(v)
all premiums for insurance policies carried for and on behalf of HEP.
(e)
Either HFC, on the one hand, or HEP, on the other hand, may terminate this Article IV , by providing the other with written notice of its election to do so at least six months prior to the proposed date of termination.
ARTICLE V     
RIGHT OF FIRST REFUSAL
5.1      HFC Right of First Refusal: Prohibition on Transfer .
(a)
The HEP Entities hereby grant to HFC a right of first refusal on any proposed Transfer (other than a grant of a security interest to a bona fide third-party lender or a Transfer to another HEP Group Member) of any of the Assets.
(b)
The HEP Entities are prohibited from Transferring any of the Assets to a HEP Group Member that is not a party to this Agreement. In the event the HEP Entities desire to Transfer any of the Assets to a HEP Group Member that is not a Party to this Agreement, they shall first cause the proposed transferee HEP Group Member to become a Party to this Agreement.
(c)
The Parties acknowledge that all potential Transfers of Sale Assets pursuant to this Article V are subject to obtaining any and all required written consents of governmental authorities and other third parties and to the terms of all existing agreements in respect of the Sale Assets.
(d)
Notwithstanding anything in this Agreement to the contrary, as used in Article V the definition of “Assets” shall not include the Tulsa Transferred Assets or the UNEV Pipeline, but shall expressly include the equity interests of UNEV Pipeline, LLC, HEP UNEV Pipeline, HEP UNEV, El Dorado Osage and Osage then owned directly or indirectly by the HEP Entities.
5.2      Procedures .
(a)
If a HEP Entity proposes to Transfer any of the Assets to any Person pursuant to a bona fide third-party offer (an “ Acquisition Proposal ”), then HEP shall promptly give written notice (a “ Disposition Notice ”) thereof to HFC. The Disposition Notice shall set forth the following information in respect of the proposed Transfer:
(i)
the name and address of the prospective acquiror (the “ Proposed Transferee ”);
(ii)
the Assets subject to the Acquisition Proposal (the “ Sale Assets ”);



Exhibit 10.11

(iii)
the purchase price offered by such Proposed Transferee (the “ Offer Price ”);
(iv)
reasonable detail concerning any non-cash portion of the proposed consideration, if any, to allow HFC to reasonably determine the fair market value of such non-cash consideration;
(v)
the HEP Entities’ estimate of the fair market value of any non-cash consideration; and
(vi)
all other material terms and conditions of the Acquisition Proposal that are then known to the HEP Entities.
(b)
To the extent the Acquisition Proposal consists of consideration other than cash (or in addition to cash) the Offer Price shall be deemed equal to the amount of any such cash plus the fair market value of such non-cash consideration. In the event HFC and the HEP Entities agree as to the fair market value of any non-cash consideration, HFC will provide written notice of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets within 30 days of its receipt of the Disposition Notice (the “ First ROFR Acceptance Deadline ”). Failure to provide such notice within such 30-day period shall be deemed to constitute a decision not to purchase the Sale Assets.
(c)
In the event (i) HFC’s determination of the fair market value of any non-cash consideration described in the Disposition Notice (to be determined by HFC within 30 days of receipt of such Disposition Notice) is less than the fair market value of such consideration as determined by the HEP Entities in the Disposition Notice and (ii) HFC and the HEP Entities are unable to mutually agree upon the fair market value of such non-cash consideration within 30 days after HFC notifies the HEP Entities of its determination thereof, the HEP Entities and HFC shall engage a mutually-agreed-upon investment banking firm to determine the fair market value of the non-cash consideration. Such investment banking firm shall be instructed to return its decision within 30 days after all material information is submitted thereto, which decision shall be final. The fees of the investment banking firm will be split equally between HFC and the HEP Entities. HFC will provide written notice of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets to the HEP Entities within 30 days after the investment banking firm has submitted its determination (the “ Second ROFR Acceptance Deadline ”). Failure to provide such notice within such 30-day period shall be deemed to constitute a decision by HFC not to purchase the Sale Assets.
(d)
If HFC fails to exercise a right during any applicable period set forth in this Section 5.2 , HFC shall be deemed to have waived its rights with respect to such proposed disposition of the Sale Assets, but not with respect to any future offer of such Sale Assets.
(e)
If HFC chooses to exercise its right of first refusal to purchase the Sale Assets under Sections 5.1(a) and 5.2(c) , HFC and the HEP Entities shall enter into a purchase and sale agreement for the Sale Assets which shall include the following terms:



Exhibit 10.11

(i)
HFC will agree to deliver cash for the Offer Price (or any other consideration agreed to by HFC and the HEP Entities (each in their sole discretion));
(ii)
the HEP Entities will represent that they have good, indefeasible and unencumbered title to the Sale Assets, subject to all recorded and unrecorded matters and all physical conditions and other matters in existence on the closing date for the Sale Assets, plus any other reasonable and customary matters and such matters as HFC may approve, which approval will not be unreasonably withheld. If HFC desires to obtain any title insurance with respect to the Sale Assets, the full cost and expense of obtaining the same (including the cost of title examination, document duplication and policy premium) shall be borne by HFC;
(iii)
the HEP Entities will grant to HFC the right, exercisable at HFC’s risk and expense, to conduct such surveys, tests and inspections of the Sale Assets as HFC may deem desirable, so long as such surveys, tests or inspections do not damage the Sale Assets or interfere with the activities of the HEP Entities thereon and so long as HFC has furnished the HEP Entities with evidence that adequate liability insurance is in full force and effect;
(iv)
HFC will have the right to terminate its obligation to purchase the Sale Assets under this Article V if the results of any searches, surveys, tests or inspections conducted pursuant to Section 5.2(e)(ii) or Section 5.2(e)(iii) above are, in the reasonable opinion of HFC, unsatisfactory;
(v)
the closing date for the purchase of the Sale Assets shall, unless otherwise agreed to by HFC and the HEP Entities, occur no later than 90 days following receipt by the HEP Entities of written notice by HFC of its intention to exercise its option to purchase the Sale Assets pursuant to Section 5.2(b) or (c) ;
(vi)
the HEP Entities shall execute, have acknowledged and deliver to HFC a special warranty deed, assignment of easement, or comparable document, as appropriate, in the applicable jurisdiction, on the closing date for the purchase of the Sale Assets constituting real property interests conveying the Sale Assets unto HFC free and clear of all encumbrances created by the HEP Entities other than those set forth in Section 5.2(e)(ii) above;
(vii)
the sale of any Sale Assets shall be made on an “as is,” “where is” and “with all faults” basis, and the instruments conveying such Sale Assets shall contain appropriate disclaimers; and
(viii)
neither the HEP Entities nor HFC shall have any obligation to sell or buy the Sale Assets if any of the material consents referred to in Section 5.1(c) have not been obtained or such sale or purchase is prohibited by Applicable Law.
(f)
HFC and the HEP Entities shall cooperate in good faith in obtaining all necessary governmental and other Third Party approvals, waivers and consents required for the closing. Any such closing shall be delayed, to the extent required, until the third



Exhibit 10.11

Business Day following the expiration of any required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; provided, however, that such delay shall not exceed 120 days and, if governmental approvals and waiting periods shall not have been obtained or expired, as the case may be, by such 120th day, then HFC shall be deemed to have waived its right of first refusal with respect to the Sale Assets described in the Disposition Notice and thereafter neither HFC nor HEP shall have any further obligation under this Article V with respect to such Sale Assets unless such Sale Assets again become subject to this Article V pursuant to Section 5.2(g) .
(g)
If the Transfer to the Proposed Transferee is not consummated in accordance with the terms of the Acquisition Proposal within the later of (i) 180 days after the later of the applicable ROFR Acceptance Deadline, and (ii) 10 days after the satisfaction of all governmental approval or filing requirements, if any, the Acquisition Proposal shall be deemed to lapse, and the HEP Entities may not Transfer any of the Sale Assets described in the Disposition Notice without complying again with the provisions of this Article V if and to the extent then applicable.
ARTICLE VI     
HFC PURCHASE OPTION
6.1      Option to Purchase Tulsa Transferred Assets . The Parties acknowledge the purchase options and right of first refusal granted to an Affiliate of HFC with respect to the Tulsa Transferred Assets in the Purchase Option Agreement.
ARTICLE VII     
API INSPECTIONS
7.1      API Inspections . With respect only to the 2008 Tanks, the applicable HFC Entity that sold the particular tank(s) to the applicable HEP Entity shall, during the period that commences on the applicable Closing Date and ends five (5) years thereafter (the “ Initial Tank Inspection Period ”) reimburse the applicable HEP Entity for the actual costs associated with the first regularly scheduled API 653 inspection (the “ Initial Tank Inspections ”) and the costs associated with the replacement of the tank mixers on each of the Transferred Tanks after the Closing Date and any repairs required to be made to the 2008 Tanks as a result of any discovery made during the Initial Tank Inspections; provided, however, that
(a)
such HFC Entity shall not reimburse such HEP Entity with respect to the relocated crude oil Tank 437 in the Artesia refinery complex or the new crude oil tank to replace crude oil Tank 439 in the Artesia refinery complex more particularly described in the Purchase and Sale Agreement referenced in the definition of 2008 Crude Pipelines, Tanks and Related Assets, and
(b)
upon expiration of the Initial Tank Inspection Period, all of the obligations of the applicable HFC Entity pursuant to this Article VII shall terminate, except that the Initial Tank Inspection Period shall be extended if, and only to the extent that
(i)
inaccessibility of the 2008 Tanks during the Initial Tank Inspection Period caused the delay of an Initial Tank Inspection originally scheduled to be performed during the Initial Tank Inspection Period, and



Exhibit 10.11

(ii)
the applicable HFC Entity received notice from the applicable HEP Entity regarding such delay at the time it occurred.
ARTICLE VIII     
DISPUTE RESOLUTION
8.1      Dispute Resolution .
(a)
Any Arbitrable Dispute arising out of or in connection with this Agreement, including any question regarding the existence, validity or termination of this Agreement, shall be exclusively resolved in accordance with this Article VIII .
(b)
In the event of a Arbitrable Dispute between an HFC Entity and an HEP Entity, the HFC Entity and the HEP Entity shall, within ten (10) days of a written request by either of them to the other, meet in good faith to resolve such Arbitrable Dispute in a meeting that includes individuals with authority to resolve the Arbitrable Dispute at such meeting.
(c)
If the HFC Entity and the HEP Entity are unable to resolve the Arbitrable Dispute within ten (10) days after submission of such Arbitrable Dispute as provided in Section 8.1(b), either the HFC Entity or the HEP Entity may submit the matter to arbitration in accordance with the terms of Section 8.2 below.
(d)
Pending resolution of any Arbitrable Dispute between the HFC Entity and the HEP Entity, the HFC Entity and the HEP Entity shall continue to perform in good faith their respective obligations under this Agreement based upon the last agreed performance demonstrated prior to the Arbitrable Dispute.
(e)
Resolution of any Arbitrable Dispute between the HFC Entity and the HEP Entity involving payment of money by either the HFC Entity and the HEP Entity to the other shall include payment of interest at the Prime Rate from the original due date of such amount.
(f)
Each of the HFC Entity and the HEP Entity shall, in addition to all rights provided herein or provided by Law, be entitled to the remedies of specific performance and injunction to enforce its rights hereunder.
8.2      Arbitration . Any and all Arbitrable Disputes must be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code, as amended from time to time).
(a)
Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within the time period allowed by the applicable statute of limitations. Arbitration may be initiated by either party (“ Claimant ”) by delivering written notice to the other (“ Respondent ”) that the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the



Exhibit 10.11

Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed.
(b)
The hearing will be conducted in Dallas, Texas and commence within thirty (30) days after the selection of the third arbitrator. The parties and the arbitrators shall proceed diligently and in good faith in order that the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the arbitrators will be binding on, and non-appealable by, the Claimant and Respondent.
(c)
The Claimant will pay the compensation and expenses of the arbitrator named by it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator.
(d)
All arbitrators must (i) be neutral parties who have never been officers, directors or employees of any of the Parties or any of their Affiliates and who have not provided consulting services (directly or indirectly) for at least three (3) years prior to their appointment and (ii) have at least seven (7) years’ experience in the petroleum transportation industry.
(e)
The arbitrators shall have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind.
(f)
The Arbitrable Disputes may be arbitrated in a common proceeding along with disputes under other agreements between the Claimant and Respondent to the extent that the issues raised in such disputes are related. Without the written consent of the Claimant and Respondent, no unrelated disputes (including those with Affiliates of either Claimant or Respondent) or Third Party disputes may be joined to an arbitration pursuant to this Agreement.
8.3      Conflict . If there is any inconsistency between this Article VIII and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Article VIII will control the rights and obligations of the parties seeking arbitration.



Exhibit 10.11

ARTICLE IX     
FORCE MAJEURE
9.1     Force Majeure . In the event of any Party being rendered unable, wholly or in part, by a Force Majeure event from performing its obligations under any of the Master Agreements, Services and Secondment Agreement or this Agreement for a period of more than thirty (30) consecutive days, then, upon the delivery of notice and full particulars of the Force Majeure event relied on (“ Force Majeure Notice ”) to the other affected Party(ies), the obligations of the Parties, so far are they are affected by the Force Majeure event, shall be suspended during the continuance of any inability so caused. The cause of the Force Majeure event shall, as far as possible, be remedied with all reasonable dispatch, except that no Party shall be compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall determine to be in its best interests.
ARTICLE X     
MISCELLANEOUS
10.1      Choice of Law . This Agreement shall be subject to and governed by the laws of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.
10.2      Notices .
(a)
Any notice or other communication given under this Agreement shall be in writing and shall be (1) delivered personally, (2) sent by documented overnight delivery service, (3) sent by email transmission, or (4) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (x) if received, on the date of the delivery, with a receipt for delivery, (y) if refused, on the date of the refused delivery, with a receipt for refusal, or (z) with respect to email transmissions, on the date the recipient confirms receipt. Notices or other communications shall be directed to the following addresses:
Notices to the HFC Entities:
HollyFrontier Corporation
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention: President
Email address: president@hollyfrontier.com
with a copy, which shall not constitute notice, but is required in order to give proper notice, to:
HollyFrontier Corporation
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Email address: general.counsel@hollyfrontier.com



Exhibit 10.11

Notices to the HEP Entities:
Holly Energy Partners, L.P.
c/o Holly Logistic Services, L.L.C.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention: President
Email address: president-HEP@hollyenergy.com
with a copy, which shall not constitute notice, but is required in order to give proper notice, to:
Holly Energy Partners, L.P.
c/o Holly Logistic Services, L.L.C.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Email address: general.counsel@hollyenergy.com
(b)
Any Party may at any time change its address for service from time to time by giving notice to the other Parties in accordance with this Section 10.2 .
10.3      Entire Agreement . This Agreement, together with the other agreements and instruments referred to herein, constitutes the entire agreement of the Parties relating to the matters contained herein, superseding as of the Effective Date all prior contracts or agreements (including the Original Omnibus Agreement), whether oral or written, relating to the matters contained herein. For avoidance of doubt the Eleventh Amended and Restated Omnibus Agreement, effective as of January 1, 2015, shall remain in full force and effect with respect to any event, act or omission occurring before January 1, 2015.

10.4      Amendment or Modification . No amendment or modification of this Agreement shall be valid unless it is in writing and signed by the parties hereto . No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced. Any of the exhibits to this Agreement may be amended, modified, revised or updated by the Parties hereto if each of HFC (on behalf of the HFC Entities) and HEP (on behalf of the HEP Entities) execute an amended, modified, revised or updated exhibit or schedule, as applicable, and attach it to this Agreement. Such amended, modified, revised or updated exhibits shall be sequentially numbered (e.g. Exhibit A‑1 , Exhibit A‑2 , etc.), dated and appended as an additional exhibit or schedule to this Agreement and shall replace the prior exhibit or schedule, as applicable, in its entirety, except as specified therein. No failure or delay in exercising any right hereunder, and no course of conduct, shall operate as a waiver of any provision of this Agreement. No single or partial exercise of a right hereunder shall preclude further or complete exercise of that right or any other right hereunder.

10.5      Assignment . No Party shall have the right to assign any of its rights or obligations under this Agreement without the consent of the other Parties hereto.
10.6      Counterparts . This Agreement may be executed in any number of paper or electronic counterparts with the same effect as if all signatory parties had signed the same document. All such counterparts shall be construed together and shall constitute one and the same agreement.



Exhibit 10.11

10.7      Severability . If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.
10.8      Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.
10.9      Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties to this Agreement, and no Limited Partner (as defined in the Partnership Agreement) of HEP shall have the right, separate and apart from HEP, to enforce any provision of this Agreement or to compel any Party to this Agreement to comply with the terms of this Agreement. There are no Third Party beneficiaries to this Agreement.
10.10      Headings . Headings of the Sections of this Agreement are for convenience of the parties only and shall be given no substantive or interpretative effect whatsoever.
10.11      Limitation of Damages . NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THIS AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS SECTION, THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY, INCLUDING, PURSUANT TO ARTICLE III , OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER EXPENSES (i) AS A RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT OR (ii) BY REASON OF OR ARISING OUT OF ANY OF THE EVENTS, CONDITIONS OR OTHER MATTERS LISTED IN SECTIONS 3.2 OR 3.4 WHICH THE PARTIES HAVE AGREED TO INDEMNIFY THE OTHER PARTY AGAINST, SHALL BE LIMITED TO ACTUAL DAMAGES AND SHALL NOT INCLUDE OR APPLY TO, NOR SHALL ANY PARTY BE ENTITLED TO RECOVER, ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR INCURRED BY ANY PARTY; PROVIDED, HOWEVER, THAT SUCH RESTRICTION AND LIMITATION SHALL NOT APPLY TO A PARTY’S OBLIGATION TO INDEMNIFY THE OTHER PARTY:

(X) AS A RESULT OF A THIRD PARTY CLAIM FOR SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES,

(Y) FOR CLAIMS THAT ARE COVERED BY INSURANCE AND ANY RELATED DEDUCTIBLES, OR

(Z) FOR INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING LIABILITIES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) THAT ARE A RESULT OF SUCH INDEMNIFYING PARTY’S OR ITS AFFILIATES’ GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.




Exhibit 10.11

As used in this Section 10.11 , “Affiliates” of the Indemnifying Party shall not include the HEP Group Members when a HFC Entity is the Indemnifying Party and shall not include the HFC Group Members when the Indemnifying Party is a HEP Entity.

10.12      Nature of the Relationship . Notwithstanding the foregoing, nothing in this Agreement and no actions taken by the Parties shall constitute a partnership, joint venture, association or other co-operative entity among the Parties or authorize either Party to represent or contract on behalf of the other Party.


[Remainder of Page Intentionally Left Blank]



Exhibit 10.11


IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Date.
HFC ENTITIES:
HOLLYFRONTIER CORPORATION
HOLLYFRONTIER EL DORADO REFINING LLC
HOLLYFRONTIER CHEYENNE REFINING LLC
HOLLYFRONTIER WOODS CROSS REFINING LLC
HOLLYFRONTIER TULSA REFINING LLC
NAVAJO PIPELINE CO., L.P.
HOLLYFRONTIER NAVAJO REFINING LLC



By: /s/ George J. Damiris        
Name:    George J. Damiris
Title: Chief Executive Officer and President

    
HEP ENTITIES:
HOLLY ENERGY PARTNERS, L.P.

By:    HEP Logistics Holdings, L.P.
Its General Partner

By: Holly Logistic Services, L.L.C.
Its General Partner


By:     /s/ Mark A. Plake    
Name:     Mark A. Plake
Title:     President
    




Exhibit 10.11

CHEYENNE LOGISTICS LLC
HEP LOGISTICS GP, L.L.C.
HEP TULSA LLC
EL DORADO LOGISTICS LLC
EL DORADO OPERATING LLC
HEP UNEV HOLDINGS LLC
HEP UNEV PIPELINE LLC
HOLLY ENERGY STORAGE – LOVINGTON LLC
HOLLY ENERGY PARTNERS – OPERATING, L.P.
HOLLY LOGISTIC SERVICES, L.L.C.
ROADRUNNER PIPELINE, L.L.C.
HEP EL DORADO LLC
EL DORADO OSAGE LLC
WOODS CROSS OPERATING LLC


By:     /s/ Mark A. Plake    
Name:     Mark A. Plake
Title:
President

HEP LOGISTICS HOLDINGS, L.P.

By:    Holly Logistic Services, L.L.C,
Its General Partner

    
By:     /s/ Mark A. Plake         Name:     Mark A. Plake
Title:     President
    
HEP MOUNTAIN HOME, L.L.C.
HEP PIPELINE GP, L.L.C.
HEP PIPELINE, L.L.C.
HEP REFINING GP, L.L.C.
HEP REFINING, L.L.C.
HEP WOODS CROSS, L.L.C.
LOVINGTON-ARTESIA, L.L.C.


By:    HOLLY ENERGY PARTNERS –
OPERATING, L.P.
Sole Member
    

By:     /s/ Mark A. Plake    
Name:     Mark A. Plake
Title:     President




Exhibit 10.11

HEP NAVAJO SOUTHERN, L.P.
HEP PIPELINE ASSETS, LIMITED PARTNERSHIP


By:    HEP Pipeline GP, L.L.C.
Its General Partner


By:     /s/ Mark A. Plake    
Name:     Mark A. Plake
Title:     President


HEP REFINING ASSETS, L.P.

By:    HEP Refining GP, L.L.C.
Its General Partner


By: /s/ Mark A. Plake    
Name:     Mark A. Plake
Title:     President

    





Exhibit 10.11

Exhibit A
to
Seventeenth Amended and Restated Omnibus Agreement
Omnibus Agreement Amendments

Agreement
Effective Date
Reason for Amendment
Original Omnibus Agreement
July 13, 2004
n/a
First Amended and Restated Omnibus Agreement
June 1, 2009
16” Lovington/Artesia Intermediate Pipeline Purchase Agreement
Second Amended and Restated Omnibus Agreement
August 1, 2009
Tulsa West (Sunoco) Asset Purchase Agreement
Third Amended and Restated Omnibus Agreement
October 19, 2009
(i) Tulsa East (Sinclair) Purchase Agreement
(ii) Beeson Pipeline Purchase Agreement, and
(iii) Roadrunner Pipeline Purchase Agreement
Fourth Amended and Restated Omnibus Agreement
March 31, 2010
LLC Interest Purchase Agreement for certain Tulsa East Assets
Fifth Amended and Restated Omnibus Agreement
August 31, 2011
Tulsa Throughput Agreement
Sixth Amended and Restated Omnibus Agreement
November 1, 2011
LLC Interest Purchase Agreement for Cheyenne Assets and El Dorado Assets
Seventh Amended and Restated Omnibus Agreement
July 12, 2012
UNEV LLC Interest Purchase Agreement
Eighth Amended and Restated Omnibus Agreement
June 1, 2013
Malaga Throughput Agreement
Ninth Amended and Restated Omnibus Agreement
January 7, 2014
Amended and Restated El Dorado Throughput Agreement for the El Dorado New Tank No. 647
Tenth Amended and Restated Omnibus Agreement
September 26, 2014
Amended and Restated Malaga Throughput Agreement
Eleventh Amended and Restated Omnibus Agreement
January 1, 2015
Unloading and Blending Services Agreement (Artesia) and Third Amended and Restated Crude Pipelines and Tankage Agreement (Beeson to Lovington System Expansion)
Twelfth Amended and Restated Omnibus Agreement
January 1, 2015
Artesia Railyard Facility, El Dorado Terminal and Cheyenne New Tank No. 117
Thirteenth Amended and Restated Omnibus Agreement
November 2, 2015
LLC Interest Purchase Agreement for the membership interest of El Dorado Operating
Fourteenth Amended and Restated Omnibus Agreement
February 22, 2016
LLC Interest Purchase Agreement for the Osage Membership Interest
Fifteenth Amended and Restated Omnibus Agreement
March 31, 2016
Tulsa West Crude Tank Assets and Tulsa New Tanks
Sixteenth Amended and Restated Omnibus Agreement
October 1, 2016
LLC Interest Purchase Agreement for the membership interest of Woods Cross Operating

B-1



Exhibit 10.11


Exhibit B
to
Seventeenth Amended and Restated Omnibus Agreement


Definitions

“ 8” and 10” Lovington/Artesia Intermediate Pipelines ” means the 8-inch pipeline and the 10-inch pipeline, each running from Lovington, New Mexico to Artesia, New Mexico and owned by HEP Pipeline .
“ 16” Lovington/Artesia Intermediate Pipeline ” means the 16-inch pipeline running from Lovington, New Mexico to Artesia, New Mexico, owned by Lovington-Artesia, L.L.C.
“ 16” Lovington/Artesia Intermediate Pipeline Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of June 1, 2009, by and among HFC, Navajo Pipeline and the Operating Partnership, pursuant to which Navajo Pipeline transferred and conveyed to the Operating Partnership, and the Operating Partnership acquired, all of the limited liability company interests of Lovington-Artesia, L.L.C., the entity that owns the 16” Lovington/Artesia Intermediate Pipeline.
“ 2004 Product Pipelines, Terminal and Related Assets ” means the assets transferred under the July 13, 2004 Contribution, Conveyance and Assumption Agreement at the time of HEP’s initial public offering.
“ 2008 Crude Pipelines, Tanks and Related Assets ” means the Drop-Down Assets as defined in the Purchase and Sale Agreement, dated February 25, 2008, by and among HFC, Navajo Pipeline, Woods Cross Refining Company, L.L.C., a Delaware limited liability company, and HollyFrontier Navajo, as the seller parties, and HEP, the Operating Partnership, HEP Woods Cross, L.L.C., a Delaware limited liability company, and HEP Pipeline, as the buyer parties.
“ 2008 Tanks ” means the Transferred Tanks included in the 2008 Crude Pipelines, Tanks and Related Assets.
“ Acquisition Proposal ” is defined in Section 5.2(a) .
“ Additional Lovington Assets ” means the Transferred Lovington Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.
“ Additional Tulsa East Assets ” means the Transferred Tulsa East Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.
“ Administrative Fee ” is defined in Section 4.1(a) .
“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause

B-2



Exhibit 10.11

the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“ Agreement ” is defined in the introduction to this Agreement.
“ Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
“ Arbitrable Dispute ” means any and all disputes, Claims, controversies and other matters in question between any of the HEP Entities, on the one hand, and any of the HFC Entities, on the other hand, arising out of or relating to this Agreement, the Master Agreements, or the Services and Secondment Agreement, or the alleged breach hereof and thereof, or in any way relating to the subject matter of this Agreement, the Master Agreements, or the Services and Secondment Agreement, regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking damages or any other relief, whether at law, in equity or otherwise.
“ Artesia Blending Facility ” means the two tanks and related equipment for the unloading and blending of ethanol and biodiesel at the refined product truck rack located at the refinery owned by HollyFrontier Navajo in Artesia, New Mexico.
“ Artesia Rail Yard Facility ” means (a) the railroad track siding consisting of approximately 8,300 track feet of siding (rail storage) and two mainline switches and three industry switches located on certain land leased by HFRM from the Operating Partnership pursuant to that certain Track Lease Agreement effective as of November 1, 2014 by and between HEP Refining and HFRM, pursuant to which HEP Refining agreed to lease to HFRM, and HFRM agreed to lease from HEP Refining, the Artesia Rail Yard Facility, and (b) HEP Refining’s leasehold interest, as tenant, under the BNSF Lease, and (c) HEP Refining’s leasehold interest, as landlord, under that certain Sublease Agreement effective as of November 1, 2014 by and between HEP Refining and HFRM, pursuant to which HEP Refining agreed to sublease to HFRM, and HFRM agreed to sublease from HEP Refining, the BNSF Land.

“ Assets ” means the Transferred Assets and the Other Assets, collectively.

“ Beeson Pipeline ” means the 8” crude oil pipeline extending from Beeson station to Lovington, New Mexico, owned by HEP Pipeline.
“ Beeson Pipeline Purchase Agreement ” means that certain Asset Purchase Agreement dated as of December 1, 2009, by and among HFC, Navajo Pipeline and HEP Pipeline, pursuant to which Navajo Pipeline agreed to transfer and convey to HEP Pipeline, and HEP Pipeline agreed to acquire, the Beeson Pipeline.
“ Beeson to Lovington System Expansion ” means the following project undertaken by HEP Pipeline: the installation of a larger pump at the Beeson station and the replacement of five miles of existing 8-inch pipeline with 10-inch pipeline beginning at the Beeson station end of the Beeson Pipeline.
“ BNSF Land ” means the land located in Eddy County, New Mexico leased to HEP Refining pursuant to the BNSF Lease.

B-3



Exhibit 10.11

“ BNSF Lease ” means that certain Lease of Land Including New Track Construction dated to be effective as of February 14, 2014, pursuant to which HEP Reining agreed to lease from BNSF Railway Company the BNSF Land.
“ Business Day ” means any day other than Saturday, Sunday or other day upon which commercial banks in Dallas, Texas are authorized by law to close.
“ Change of Control ” means, with respect to any Person (the “ Applicable Person ”), any of the following events:
(a)     any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person unless immediately following such sale, lease, exchange, or other transfer such assets are owned, directly or indirectly, by the Applicable Person;
(b)     the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the Applicable Person are changed into or exchanged for cash, securities, or other property, other than any such transaction where
(i)     the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of a surviving Person or its parent and
(ii)     the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Securities of the surviving Person or its parent immediately after such transaction; and
(c)     a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (in the case of HFC, other than a group consisting of some of all of the current control persons of HFC), being or becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) of more than 50% of all of the then outstanding Voting Securities of the Applicable Person, except in a merger or consolidation that would not constitute a Change of Control under clause (b) above.
“ Cheyenne Assets ” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase Agreement.
“ Cheyenne Logistics ” is defined in the introduction to this Agreement.
“ Cheyenne New Tank ” means petroleum storage tank no. 117 located at the Cheyenne Refinery Complex.

“ Claim ” means any existing or threatened future claim, demand, suit, judgment, settlement, action, investigation, proceeding, governmental action, cause of action, claims, demands, causes of action, suits, judgments, settlements, fines, penalties, costs, and expenses (including court costs and reasonable attorneys’ and experts’ fees) of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice of any and every kind or character, known or unknown, fixed, contingent or suffered.


B-4



Exhibit 10.11

“ Claimant ” is defined in Section 8.2(a).
“ Closing Date ” means
(a)     for all sections other than Articles III and VII , July 13, 2004, the date of the closing of HEP’s initial public offering, and
(b)     for purposes of Articles III and VII , Closing Date means, with respect to a group of assets, the effective date of the purchase of such assets or the stock, partnership interests or membership interests of the entity that directly or indirectly owns such assets, by a HEP Entity (such Closing Date being shown in Exhibit D , column (a)).
“ Contribution Agreement ” means that certain Contribution, Conveyance and Assumption Agreement, dated as of July 13, 2004, among HFC, Navajo Pipeline, the General Partner, HEP, the OLP GP, the Operating Partnership and certain other parties, together with the additional conveyance documents and instruments contemplated or referenced thereunder.
“ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.
“ Covered Environmental Losses ” means Environmental Claims to the extent arising from:
(a)
any violation or correction of violation of Environmental Laws associated with the ownership or operation of the Assets, or
(b)
any event or condition associated with ownership or operation of the Assets (including, the presence of Hazardous Substances on, under, about or migrating from the Assets or the disposal or release of Hazardous Substances generated by operation of the Assets at any non-Asset locations), including:
(i)
the cost and expense of any investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration, remediation, or other corrective action required or necessary under Environmental Laws;
(ii)
the cost or expense of the preparation and implementation of any closure, remedial, corrective action, or other plans required or necessary under Environmental Laws; and
(iii)
the cost and expense for any environmental or Toxic Tort pre-trial, trial, or appellate legal or litigation support work.
“ Disposition Notice ” is defined in Section 5.2(a) .
“ Effective Date ” is defined in the introduction to this Agreement.
“ El Dorado Assets ” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase Agreement.
“ El Dorado Logistics ” is defined in the introduction to this Agreement.

B-5



Exhibit 10.11

“ El Dorado New Tank ” means petroleum products storage tanks no. 647 and no. 651 located at the El Dorado Refinery Complex.
“ El Dorado Operating ” is defined in the introduction to this Agreement.
“ El Dorado Osage ” is defined in the introduction to this Agreement.
“ El Dorado Refinery Assets ” means “Assets” as defined in that certain LLC Interest Purchase Agreement dated as of October 30, 2015 and effective as of November 1, 2015 by and among HollyFrontier El Dorado, HFC and the Operating Partnership, pursuant to which HollyFrontier El Dorado agreed sell to the Operating Partnership all of the issued and outstanding limited liability company interests in El Dorado Operating.
“ El Dorado Repurchased Tanks ” means tank 243 and tank 244 located at the El Dorado Terminal that were repurchased by HollyFrontier El Dorado from El Dorado Logistics effective January 1, 2017.
“ El Dorado Terminal ” means that certain petroleum products tank farm located in El Dorado Kansas, and more particularly described in that certain Membership Interest Purchase Agreement dated as of March 6, 2015 by and between El Dorado Logistics and Rimrock Midstream, LLC, as such terminal may be modified, expanded or upgraded from time to time.
“ El Paso Logistics ” is defined in the introduction to this Agreement.
“ El Paso Hawkins Terminal ” means the El Paso Hawkins Terminal as defined in that certain Refined Products Terminal Transfer Agreement effective as of February 22, 2016 between HEP Refining Assets and El Paso Logistics, pursuant to which El Paso Logistics acquired the El Paso Hawkins Terminal.
“ Environmental Claims ” means environmental and Toxic Tort Liabilities and Claims of any and every kind or character, known or unknown, fixed or contingent.
“ Environmental Costs ” means (i) the cost and expense of any investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration, remediation, or other corrective action required or necessary under Environmental Laws, (ii) the cost or expense of the preparation and implementation of any closure, remedial, corrective action, or other plans required or necessary under Environmental Laws, and (iii) the cost and expense for any Environmental Claim, including pre-trial, trial, or appellate legal or litigation support work.
“ Environmental Laws ” means all federal, state and local laws, statutes, rules, regulations, orders and ordinances, now or hereafter in effect, relating to protection of the environment, including the federal Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, and other environmental conservation and protection laws, each as amended from time to time.
“ First ROFR Acceptance Deadline ” is defined in Section 5.2(b) .
“ Force Majeure ” means acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars (whether or not an official declaration is made thereof), terrorist attacks, blockades, insurrections, riots, epidemics, landslides, lightening, earthquakes, fires, hurricanes, storms, floods,

B-6



Exhibit 10.11

washouts, freezeoffs, arrests, the order of any Governmental Authority having jurisdiction while the same is in force and effect, civil disturbances, explosions, breakage, accident to machinery, equipment, storage tanks or lines of pipe, repairs, maintenance, inability to obtain or unavoidable delay in obtaining permits, material or equipment, and any other causes whether of the kind herein enumerated or otherwise not reasonably within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome. Notwithstanding anything in this Agreement to the contrary, inability of a Party to make payments when due, be profitable or to secure funds, arrange bank loans or other financing, obtain credit or have adequate capacity or production (other than for reasons of Force Majeure) shall not be regarded as events of Force Majeure.
“ General Partner ” is defined in the introduction to this Agreement.
“ Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.
“ Hazardous Substance ” means (a) any substance that is designated, defined or classified as a hazardous waste, hazardous material, pollutant, contaminant, or toxic or hazardous substance, or that is otherwise regulated under any Environmental Law, including, any hazardous substance as defined under the Comprehensive Environmental Response, Compensation, and Liability Act, and (b) petroleum, crude oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel and other refined petroleum hydrocarbons.
“ HEP ” is defined in the introduction to this Agreement.
“ HEP El Dorado ” is defined in the introduction to this Agreement.
“ HEP Entities ” is defined in the introduction to this Agreement.
“ HEP Entity ” means any of the HEP Entities.
“ HEP Group ” means the HEP Entities and any Subsidiary of any such Person, all of which are treated as a single consolidated entity for purposes of this Agreement.
“ HEP Group Member ” means any member of the HEP Group.
“ HEP Pipeline ” is defined in the introduction to this Agreement.
“ HEP Refining ” is defined in the introduction to this Agreement.
“ HEP Refinery Assets ” is defined in the introduction to this Agreement.
“ HEP Tulsa ” is defined in the introduction to this Agreement.
“ HEP UNEV ” is defined in the introduction to this Agreement.
“ HEP UNEV Pipeline ” is defined in the introduction to this Agreement.
“ HFC ” is defined in the introduction to this Agreement.

B-7



Exhibit 10.11

“ HFC Group ” means the HFC Entities and any Person controlled, directly or indirectly, by HFC other than the HEP Entities.
“ HFC Group Member ” means any member of the HFC Group.
“ HFRM ” is defined in the introduction to this Agreement.
“ HollyFrontier Cheyenne ” is defined in the introduction to this Agreement.
“ HollyFrontier El Dorado ” is defined in the introduction to this Agreement.
“ HollyFrontier Navajo ” is defined in the introduction to this Agreement.
“ HollyFrontier Tulsa ” is defined in the introduction to this Agreement.
“ HollyFrontier Woods Cross ” is defined in the introduction to this Agreement.
“ Holly GP ” is defined in the introduction to this Agreement.
“ Indemnified Claims ” means losses, damages, liabilities, Claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, court costs and reasonable attorney's and expert's fees) of any and every kind or character.
“ Indemnified Party ” means all or part of either the HEP Entities or the HFC Entities, as the case may be, in their capacity as the parties entitled to indemnification in accordance with Article III .
“ Indemnifying Party ” means all or part of either the HEP Entities or the HFC Entities, as the case may be, in their capacity as the parties from whom indemnification may be required in accordance with Article III .
“ Initial Tank Inspections ” is defined in Section 7.1.
“ Initial Tank Inspection Period ” is defined in Section 7.1
“ Liability ” means with respect to any Person, any economic losses (including, diminution in value and lost profits suffered by third parties to the extent an Indemnified Party is required to pay for such damages), damages, injuries (including, personal injury and death), liabilities, of any and every kind or character, known or unknown, fixed, contingent or suffered.
“ Limited Partner ” is defined in the Partnership Agreement.
“ Malaga Pipeline System ” means the Pipeline System, as such term is defined in the Malaga TSA.
“ Malaga TSA ” means that certain Amended and Restated Transportation Services Agreement (Malaga) dated as of September 26, 2014 by and between HFRM and Operating Partnership, pursuant to which Operating Partnership provides certain transportation services for HFRM on the Malaga Pipeline System, as such agreement may be amended, modified or replaced from time to time.
“ March 2010 Drop Down LLC Interest Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of March 31, 2010, by and among HFC, Lea Refining Company, HollyFrontier Tulsa, HEP Refining and HEP Tulsa, pursuant to which HFC, Lea Refining Company and HollyFrontier

B-8



Exhibit 10.11

Tulsa agreed to transfer and convey to HEP Refining and HEP Tulsa the Additional Tulsa East Assets and the Additional Lovington Assets.
“ Master Agreements ” means the Master Lease and Access Agreement, Master Site Services Agreement, Master Systems Operating Agreement, Master Throughput Agreement and Master Tolling Agreements.
“ Master Lease and Access Agreement ” means that certain Fourth Amended and Restated Master Lease and Access Agreement dated effective as of the Effective Date among certain of the HEP Entities and the Refinery Owners.
“ Master Site Services Agreement ” means that certain Third Amended and Restated Master Site Services Agreement dated effective as of October 1, 2016, as amended, among certain of the HEP Entities and the Refinery Owners.
“ Master Systems Operating Agreement ” means that certain Amended and Restated Master Systems Operating Agreement dated as of February 22, 2016 among certain of the HEP Entities and the Refinery Owners.
“ Master Throughput Agreement ” means that certain Fourth Amended and Restated Master Throughput Agreement effective as of the Effective Date between the Operating Partnership and HFRM.
“ Master Tolling Agreements ” means that certain Master Tolling Agreement (Refinery Assets) dated effective as of November 1, 2015 between HollyFrontier El Dorado and the Operating Partnership, and that certain Amended and Restated Master Tolling Agreement (Operating Assets) dated effective as of October 1, 2016 between HollyFrontier El Dorado, HollyFrontier Woods Cross and the Operating Partnership.
“ Navajo Pipeline ” is defined in the introduction to this Agreement.
“ Net Recovery ” is defined in Section 3.7(f) .
“ November 2011 Frontier Drop Down LLC Interest Purchase Agreement ” means that certain LLC Interest Purchase Agreement effective as of November 1, 2011, by and among HFC, HollyFrontier Cheyenne, HollyFrontier El Dorado, the Operating Partnership and HEP, pursuant to which HollyFrontier Cheyenne and HollyFrontier El Dorado agreed sell to the Operating Partnership the entities that own the Cheyenne Assets and the El Dorado Assets.
“ Offer ” is defined in Section 2.4(a)
“ Offer Price ” is defined in Section 5.2(a)(iii) .
“ OLP GP ” is defined in the introduction to this Agreement.
“ Operating Partnership ” is defined in the introduction to this Agreement.
“ Original Omnibus Agreement ” is defined in the recitals to this Agreement.
“ Osage ” means Osage Pipe Line Company, LLC, a Delaware limited liability company.

B-9



Exhibit 10.11

“ Osage Membership Interest ” means a fifty percent (50%) limited liability company membership interest in Osage.
“ Other Assets ” means those assets owned by a HEP Entity that serve the Refineries and were not conveyed, contributed, or otherwise transferred, directly or indirectly by the HFC Entities to the HEP Entities, as indicated in column (a) of Exhibit D , Part 2 ; provided, that for the purposes of Section 3.2 , Other Assets shall not include that certain 8” pipeline extending 50 miles from the White City Station that was formerly used as a refined products pipeline and that was conveyed to the HEP Entities as part of the 2004 Product Pipelines, Terminal and Related Assets.
“ Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P. dated as of July 13, 2004 as amended or supplemented by the following:
Agreement
Effective Date
Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.
February 28, 2005
Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.
July 6, 2005
Amendment No. 3 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.
April 11, 2008
Limited Partial Waiver of Incentive Distribution Rights
July 12, 2012
Amendment No. 4 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.
January 16, 2013
Amendment No. 5 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.
June 13, 2016

No amendment or modification to the Partnership Agreement subsequent to the date of this Agreement shall be given effect for the purposes of this Agreement unless consented to by each of the Parties.

“ Party ” means any one of the entities listed on the signature page to this Agreement, collectively the “ Parties ”.
“ Permitted Assets ” is defined in Section 2.2(d).
“ Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization association, government agency or political subdivision thereof or other entity.
“ Post-Closing Covered Environmental Losses ” means, to the extent such violation, event or condition occurred after the Closing Date:

B-10



Exhibit 10.11

(a)
any violation or correction of violation of Environmental Laws associated with the operation of the Transferred Assets by a Person other than a HFC Entity or ownership and operation of the Transferred Assets by a Person other than a HFC Entity, or
(b)
any event or condition associated with the ownership and/or operation of the Transferred Assets by a Person other than a HFC Entity (including the presence of Hazardous Substances on, under, about or migrating to or from the Transferred Assets or the disposal or release of Hazardous Substances generated by operation of the Transferred Assets) including, the Environmental Costs;
provided, however, that nothing stated above shall make the HEP Entities responsible for any post-Closing Date negligent actions or omissions or willful misconduct by any of the HFC Entities.
“ Pre-Closing Covered Environmental Losses ” means, to the extent such violation, event or condition occurred before the Closing Date:
(a)
any violation or correction of violation of Environmental Laws associated with the ownership or operation of the Transferred Assets by a Person other than a HEP Entity or ownership and operation of the Transferred Assets by a Person other than a HEP Entity, or
(b)
any event or condition associated with ownership and/or operation of the Transferred Assets by a Person other than a HEP Entity (including, the presence of Hazardous Substances on, under, about or migrating to or from the Transferred Assets or the disposal or release of Hazardous Substances generated by operation of the Transferred Assets), including, the Environmental Costs.
provided, however, that nothing stated above shall make the HFC Entities responsible for any pre-Closing Date negligent actions omissions or willful misconduct by any of the HEP Entities.
“ Previous Amended and Restated Omnibus Agreement ” is defined in the introduction to this Agreement.
“ Proposed Transferee ” is defined in Section 5.2(a)(i) .
“ Prudent Industry Practice ” means such practices, methods, acts, techniques, and standards as are in effect at the time in question that are consistent with (a) the standards generally followed by the United States pipeline and terminalling industries or (b) such higher standards as may be applied or followed by the HFC Entities in the performance of similar tasks or projects, or by the HEP Entities in the performance of similar tasks or projects.
“ Purchase Option Agreement ” has the meaning set forth in the Asset Purchase Agreement, dated August 1, 2009, between HollyFrontier Tulsa, as the seller, and HEP Tulsa, as the buyer.
“ Refinery ” or “ Refineries ” means each of the Refinery Complexes identified in the Master Lease and Access Agreement.
“ Refinery Owners ” means each of the HFC Entities that own one or more of the Refineries.
“ Respondent ” is defined in Section 8.2(a).

B-11



Exhibit 10.11

“ Restricted Business ” or “ Restricted Businesses ” means the ownership or operation of crude oil pipelines or terminals, intermediate petroleum product pipelines or terminals, refined petroleum products pipelines, terminals, truck racks or crude oil gathering systems in the continental United States.
“ Retained Assets ” means the pipelines, terminals and other assets and investments owned by any HFC Group Member on the date of the Contribution Agreement that were not conveyed, contributed or otherwise transferred to the HEP Entities pursuant to the Contribution Agreement or otherwise.
“ Roadrunner ” is defined in the introduction to this Agreement.
“ Roadrunner Pipeline ” means 16” crude oil pipeline extending from Slaughter station in Texas to Lovington, New Mexico owned by Roadrunner.
“ Roadrunner Pipeline Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of December 1, 2009 by and among Navajo Pipeline and the Operating Partnership, pursuant to which the Operating Partnership acquired, all of the outstanding limited liability company interests of Roadrunner, the entity that owns the Roadrunner Pipeline.
“ ROFR Acceptance Deadline ” means the First ROFR Acceptance Deadline or the Second ROFR Acceptance Deadline, as applicable, both as defined in Section 5.2(b) and (c) .
“ Sale Assets ” is defined in Section 5.2(a)(ii) .
“ Second ROFR Acceptance Deadline ” is defined in Section 5.2(c).
“ Services and Secondment Agreement ” means that certain Third Amended and Restated Services and Secondment Agreement dated effective as of October 1, 2016, by and among Holly GP, the Operating Partnership, Cheyenne Logistics, El Dorado Logistics, El Dorado Operating, HEP Tulsa, Woods Cross Operating, HollyFrontier Payroll Services, Inc., a Delaware corporation, HollyFrontier Cheyenne, HollyFrontier El Dorado, HollyFrontier Tulsa and HollyFrontier Woods Cross.
“ Sinclair ” means Sinclair Tulsa Refining Company.
“ Sinclair Purchase Agreement ” means that certain Asset Sale and Purchase Agreement dated as of October 19, 2009, by and among HollyFrontier Tulsa, HEP Tulsa and Sinclair, pursuant to which HEP Tulsa acquired the Sinclair Transferred Assets.
“ Sinclair Transferred Assets ” means the HEP Tulsa Assets as defined in the Sinclair Purchase Agreement.
“ Storage and Handling Agreement ” means that certain Storage and Handling Agreement dated February 21, 1997, between the Operating Partnership and Alon U.S.A., L.P., as amended effective January 1, 2004, September 1, 2008 and March 1, 2011.
“ Third Party ” means a Person which is not (a) HEP or an Affiliate of HEP, (b) HFC or an affiliate of HFC, (c) a Person that, after the signing of this Agreement becomes a successor entity of HEP, HFC or any of their respective Affiliates. An employee of HFC or HEP shall not be deemed an Affiliate.
“ Toxic Tort ” means a Claim or cause of action arising from personal injury or property damage incurred by the plaintiff that is alleged to have been caused by exposure to, or contamination by, Hazardous

B-12



Exhibit 10.11

Substances that have been released into the environment by or as a result of the actions or omissions of the defendant.
“ Transfer ” including the correlative terms “ Transferring ” or “ Transferred ” means any direct or indirect transfer, assignment, sale, gift, pledge, hypothecation or other encumbrance, or any other disposition (whether voluntary, involuntary or by operation of law) of the Assets.
“ Transferred Assets ” means all of the assets conveyed, contributed, or otherwise transferred, directly or indirectly (including by transfer or sale of the entity that owns such assets or the entity that owns the interests in the entity that owns such assets) that serve the Refineries, by the HFC Entities to the HEP Entities, as indicated in column (a) of Exhibit D , Part 1 ; provided that for the purposes of Section 3.2 , the term “Transferred Assets” shall include (a) that certain 8” pipeline extending 50 miles from the White City Station that was formerly used as a refined products pipeline and that was conveyed to the HEP Entities as part of the 2004 Product Pipelines, Terminal and Related Assets, and (b) the Tulsa West Crude Tank Assets.
“ Transferred Tanks ” means the tanks included in the Assets, as indicated in column (h) of Exhibit D , provided however that from and after January 1 2017, such tanks shall not include the El Dorado Repurchased Tanks.
“ Tulsa Interconnecting Pipelines” means the Interconnecting Pipelines as defined in the Tulsa Throughput Agreement.
“ Tulsa New Tanks ” means petroleum products storage tank nos. 45 and 444A located at the Tulsa Refinery Complex.
“ Tulsa Purchase Agreement ” means that certain Asset Purchase Agreement dated as of August 1, 2009, by and between HollyFrontier Tulsa and HEP Tulsa, pursuant to which HollyFrontier Tulsa transferred and conveyed to HEP Tulsa, and HEP Tulsa acquired, the Tulsa Transferred Assets.
“ Tulsa Throughput Agreement ” means that certain Second Amended and Restated Pipelines, Tankage and Loading Rack Throughput Agreement (Tulsa East), dated as of August 31, 2011, pursuant to which HEP Tulsa agreed to provide transportation services to HollyFrontier Tulsa with respect to the Tulsa Interconnecting Pipelines.
“ Tulsa Transferred Assets ” means the Transferred Assets as defined in the Tulsa Purchase Agreement.
“ Tulsa West Crude Tank Assets ” means the Leased Property as defined in the Bill of Sale, Assignment and Assumption Agreement dated as of March 31, 2016 between Plains Marketing, L.P. and HEP Tulsa.
“ UNEV LLC Interest Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of July 12, 2012, by and among HFC, HEP UNEV and HEP, pursuant to which HFC agreed to sell to HEP UNEV the entity that owns 75% of all of the issued and outstanding membership interests of UNEV Pipeline, LLC, the entity that owns the UNEV Pipeline.
“ UNEV Pipeline ” means, collectively, an approximately 400 mile, 12-inch refined products pipeline currently running from Woods Cross, Utah to Las Vegas, Nevada, related products terminals in or near Cedar City, Utah and Las Vegas, Nevada and other related assets owned by UNEV Pipeline, LLC.

B-13



Exhibit 10.11

“ UNEV Profits Interest ” means the membership interest in HEP UNEV held directly or indirectly by HFC.
“ Voting Securities ” means securities of any class of a Person entitling the holders thereof to vote on a regular basis in the election of members of the board of directors or other governing body of such Person.

“ Wood Cross Operating ” is defined in the introduction to this Agreement.

“ Woods Cross Refinery Assets ” has the meaning ascribed to the term “Assets” in that certain LLC Interest Purchase Agreement dated as of October 3, 2016 and effective as of October 1, 2016 by and among HollyFrontier Woods Cross, HFC and the Operating Partnership, pursuant to which HollyFrontier Woods Cross agreed to sell to the Operating Partnership all of the issued and outstanding limited liability company interests in Woods Cross Operating.

    




B-14



Exhibit 10.11

Exhibit C
to
Seventeenth Amended and Restated Omnibus Agreement


Interpretation

As used in this Agreement, unless a clear contrary intention appears:

(a)      any reference to the singular includes the plural and vice versa, any reference to natural persons includes legal persons and vice versa, and any reference to a gender includes the other gender;
(b)      the words “hereof”, “hereby”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;
(c)      any reference to Articles, Sections and Exhibits are, unless otherwise stated, references to Articles, Sections and Exhibits of or to this Agreement and references in any Section or definition to any clause means such clause of such Section or definition. The headings in this Agreement have been inserted for convenience only and shall not be taken into account in its interpretation;
(d)      reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended, modified or supplemented and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement;
(e)      the Exhibits hereto form an integral part of this Agreement and are equally binding therewith. Any reference to “this Agreement” shall include such Exhibits;
(f)      references to a Person shall include any permitted assignee or successor to such Party in accordance with this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity;
(g)      if any period is referred to in this Agreement by way of reference to a number of days, the days shall be calculated exclusively of the first and inclusively of the last day unless the last day falls on a day that is not a Business Day in which case the last day shall be the next succeeding Business Day;
(h)      the use of “or” is not intended to be exclusive unless explicitly indicated otherwise;
(i)      references to “$” or to “dollars” shall mean the lawful currency of the United States of America; and
(j)      the words “includes,” “including,” or any derivation thereof shall mean “including without limitation” or “including, but not limited to.”


E-1


Exhibit 10.11

Exhibit D
to
Seventeenth Amended and Restated Omnibus Agreement


Asset Indemnification Summary

Part 1: Transferred Assets:

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
TRANSFERRED ASSET AND CLOSING DATE
HFC ENVIRONMENTAL
(Expiration Date)
HEP ENVIRONMENTAL
RIGHT-OF-WAY
ADDITIONAL INDEMNITIES
OPERATIONAL
INDEMNITY
RIGHT OF
FIRST REFUSAL
INCLUDES TRANSFERRED TANKS
 
Indemnity from HFC to HEP for Pre-Closing Covered Environmental Losses under Section 3.2(a) / Aggregate cap on HFC environmental indemnity in Section 3.1(b)
(expiration date of indemnity)
Indemnity from HEP to HFC for Post-Closing Covered Environmental Losses under Section 3.4(a)
Right-of-Way Indemnity under Sections 3.2(a)(iii) and 3.2(a)(iv)
(expiration date of indemnity)
Additional Indemnities under Section 3.2(a)(vi)
(expiration date of indemnity)
Additional Indemnities under Section 3.5
Right of First Refusal under Article V
 
2004 Product Pipelines, Terminal and Related Assets
(July 13, 2004)

$15,000,000
(July 13, 2014)
ü
ü
(July 13, 2014)
ü
(July 13, 2009)
ü
ü
No
8” and 10” Lovington/Artesia Intermediate Pipelines
(June 1, 2009)

$2,500,000
(June 1, 2019)
ü
ü
(June 1, 2019)
ü
(June 1, 2014)
ü
ü
No

E-1


Exhibit 10.11


(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
TRANSFERRED ASSET AND CLOSING DATE
HFC ENVIRONMENTAL
(Expiration Date)
HEP ENVIRONMENTAL
RIGHT-OF-WAY
ADDITIONAL INDEMNITIES
OPERATIONAL
INDEMNITY
RIGHT OF
FIRST REFUSAL
INCLUDES TRANSFERRED TANKS
2008 Crude Pipelines, Tanks and Related Assets
(March 1, 2008)

$7,500,000
(March 1, 2023)
ü
ü
(March 1, 2023)
ü
(March 1, 2013)
ü
ü
Yes
16” Lovington/Artesia Intermediate Pipeline
(June 1, 2009)

None
ü
ü
(June 1, 2019)

ü
(June 1, 2014)
ü
ü
No
Tulsa Transferred Assets
(August 1, 2009)

None
None
None
None
None
None
No
Beeson Pipeline
(December 1, 2009)

None
ü
ü
(December 1, 2019)

ü
(December 1, 2014)
ü
ü
No
Roadrunner Pipeline
(December 1, 2009)
None
ü
ü
(December 1, 2019)

ü
(December 1, 2014)
ü
ü
No
Additional Lovington Assets
(March 31, 2010)

$15,000,000
(March 31, 2020)

ü
ü
(March 31, 2020)

ü
(March 31, 2015)
ü
ü
No
Additional Tulsa East Assets
(March 31, 2010)

unlimited
(no expiration)
None
None
None
None
ü
No
Sinclair Transferred Assets
(October 19, 2009)

None
None
None
None
None
ü
Yes
Tulsa Interconnecting Pipelines
(August 31, 2011)
None
ü
(August 31, 2021)
(August 31, 2016)
ü
ü
No

E-1


Exhibit 10.11


(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
TRANSFERRED ASSET AND CLOSING DATE
HFC ENVIRONMENTAL
(Expiration Date)
HEP ENVIRONMENTAL
RIGHT-OF-WAY
ADDITIONAL INDEMNITIES
OPERATIONAL
INDEMNITY
RIGHT OF
FIRST REFUSAL
INCLUDES TRANSFERRED TANKS
Cheyenne Assets
(November 1, 2011)

$15,000,000
(November 1, 2021)

ü
ü
(November 1, 2021)
ü
(November 1, 2016)
ü
ü
Yes
El Dorado Assets
(November 1, 2011)
$15,000,000
(November 1, 2021)

ü
ü
(November 1, 2021)

ü
(November 1, 2016)
ü
ü
Yes
UNEV Pipeline
(July 12, 2012)
None
ü
ü
(July 12, 2022)

ü
(July 12, 2017)
ü
None
No
El Dorado Refinery Assets
(November 1, 2015)

$15,000,000
(November 1, 2025)
ü

ü
(November 1, 2025)
ü
(November 1, 2020)
ü
ü
No
Osage
(February 22, 2016)

None
None
None
None
None

None
No
Tulsa West Crude Tank Assets
(11:59 p.m., March 31, 2016)
$5,000,000
(11:59 p.m., March 31, 2026)
ü

None
ü
(11:59 p.m., March 31, 2021)
ü

ü
No
Woods Cross Refinery Assets
October 1, 2016
$15,000,000
October 1, 2026
ü
ü
October 1, 2026
ü
October 1, 2026
ü

ü

No

E-1


Exhibit 10.11

Part 2: Other Assets:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
OTHER ASSET AND CLOSING DATE
HFC ENVIRONMENTAL
(Expiration Date)
HEP ENVIRONMENTAL
RIGHT-OF-WAY
ADDITIONAL INDEMNITIES
OPERATIONAL
INDEMNITY
RIGHT OF
FIRST REFUSAL
INCLUDES TRANSFERRED TANKS
 
Indemnity from HFC to HEP for Pre-Closing Covered Environmental Losses under Section 3.2(a) / Aggregate cap on HFC environmental indemnity in Section 3.1(b)
(expiration date of indemnity)
Indemnity from HEP to HFC for Post-Closing Covered Environmental Losses under Section 3.4(a)
Right-of-Way Indemnity under Sections 3.2(a)(iii) and 3.2(a)(iv)
(expiration date of indemnity)
Additional Indemnities under Section 3.2(a)(vi)(A)
(expiration date of indemnity) 1
Additional Indemnities under Section 3.5
Right of First Refusal under Article V
 
Malaga Pipeline System
(July 16, 2013, as amended by that certain Amended and Restated Transportation Services Agreement dated September 26, 2014)

None
ü
None
None
ü
ü
No
El Dorado New Tank (Tank 647)
(January 7, 2014)
None
ü
ü
(January 7, 2024)

None
ü
ü
No
Artesia Railyard Facility
(November 1, 2014)
None
ü
None
None
ü
ü
No
El Dorado Terminal
(March 6, 2015)
None
ü
None
None
ü
ü
No

E-1


Exhibit 10.11


(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
OTHER ASSET AND CLOSING DATE
HFC ENVIRONMENTAL
(Expiration Date)
HEP ENVIRONMENTAL
RIGHT-OF-WAY
ADDITIONAL INDEMNITIES
OPERATIONAL
INDEMNITY
RIGHT OF
FIRST REFUSAL
INCLUDES TRANSFERRED TANKS
Beeson to Lovington System Expansion (March 12, 2015)
None
ü
None
None
ü
ü
No
Artesia Blending Facility
(March 12, 2015)
None
ü
ü
(March 12, 2025)
None
ü
ü
No
Cheyenne New Tank (Tank 117)
(December 4, 2014)
None
ü
ü
(December 4, 2029)

None
ü
ü
No
Tulsa New Tanks
(Tanks 45 and 444A)
(May 1, 2016)
None
ü
ü
(May 1, 2026)
None
ü
ü
No
El Dorado New Tank (Tank 651)
(September 12, 2016)
None
ü
ü
(September 12, 2026)

None
ü
ü
No
Exhibit E
to
Seventeenth Amended and Restated Omnibus Agreement

Administrative Fee
 
Amount of Annual Administrative Fee
Years beginning July 13, 2004 through June 30, 2007
$2,000,000
Years beginning July 1, 2007 through February 29, 2008
$2,100,000
Years beginning from and after March 1, 2008 through December 31, 2014
$2,300,000
Years beginning January 1, 2015 through December 31, 2015
$2,380,500
Years beginning January 1, 2016
$2,464,000

General and Administrative Services

E-1


Exhibit 10.11

(1) executive services
(2)      finance, including treasury, and administration services
(3)      information technology services
(4)      legal services
(5)      corporate health, safety and environmental services
(6)      human resources services
(7)      procurement
(8)      corporate operations team services
 






E-1

Exhibit 10.26

                                            
AMENDED AND RESTATED
UNLOADING AND BLENDING SERVICES AGREEMENT
(Artesia)

This Amended and Restated Unloading and Blending Services Agreement (this “ Agreement ”) is dated as of January 18, 2017, to be effective as of the Effective Time, by and among HollyFrontier Refining & Marketing LLC (“ HFRM ”), Holly Energy Partners-Operating, L.P. (“ HEP Operating ”) and HEP Refining, L.L.C. (“ HEP Refining ”). Each of HFRM, HEP Operating and HEP Refining is individually referred to herein as a “ Party ” and collectively as the “ Parties .”

RECITALS:
WHEREAS, on or about March 12, 2015, the Parties entered into a certain Unloading and Blending Services Agreement (the “ Original Agreement ”) pursuant to which HEP Refining undertook certain construction projects, as more specifically set forth in Section 2 of the Original Agreement, related to constructing two tanks and related equipment for the unloading and blending of Ethanol and Biodiesel at the refined product truck rack located at the refinery owned by Navajo Refining Company, L.L.C. in Artesia, New Mexico (the “ Facility ”), with the volume capacities as set forth therein; and
WHEREAS, in connection with the construction of the Facility, the Parties entered into the Original Agreement to, among other things, set forth the terms and conditions under which HEP Operating would provide certain unloading and blending services for HFRM at the Facility; and
WHEREAS, the Parties desire to amend and restate in its entirety the Original Agreement to reflect certain agreed upon changes in the scope of the construction project.
NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the Parties hereby agree as follows:
Section 1. Definitions
Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth on Appendix A .
Section 1.      Construction of the Facility and Related Assets .
In consideration of and in reliance upon HFRM’s execution and delivery of this Agreement, including the Minimum Revenue Commitment, HEP Refining agrees to use commercially reasonable efforts to complete the construction projects set forth on Exhibit B (the “ Construction Projects ”). HEP Refining shall bear the costs of constructing the Construction Projects listed on Exhibit B .
Section 2.      Agreement to Use Services Relating to the Facility .

[Page 1 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

The Parties intend to be strictly bound by the terms set forth in this Agreement, which sets forth revenues to HEP Operating to be paid by HFRM, and requires HEP Operating to provide certain unloading and blending services to HFRM. The principal objective of HEP Operating is for HFRM to meet or exceed its obligations with respect to the Minimum Revenue Commitment. The principal objective of HFRM is for HEP Operating to provide services to HFRM in a manner that enables HFRM to have the Products unloaded and blended at the Facility.
(a)      Minimum Revenue Commitment . During the Term, following the Commencement Date, and subject to the terms and conditions of this Agreement, HFRM agrees as follows:
(i)      Capacity and Revenue Commitment . Subject to Section 5 , HFRM shall pay HEP Operating service tariffs set forth in this Agreement for use of the Facility that result in the payment of an amount that will satisfy the Minimum Revenue Commitment in exchange for HEP Operating providing HFRM a minimum aggregate capacity for unloading and blending services at the Facility equal to the Minimum Capacity Commitment. The “ Minimum Revenue Commitment ” shall be an amount of revenue to HEP Operating for each Contract Quarter determined by multiplying the Minimum Throughput for such Contract Quarter, by the Base Tariff in effect for such Contract Quarter, as such Base Tariff may be revised pursuant to Section 3(a)(iii) . The “ Minimum Capacity Commitment ” means an amount equal to 450 bpd.
(ii)      Applicable Tariffs . HFRM will pay the Base Tariff for all quantities of Products unloaded at the Facility in each Contract Quarter during the Term up to and including the Incentive Tariff Threshold, and shall pay the Incentive Tariff for all quantities in excess of the Incentive Tariff Threshold at the Facility during such Contract Quarter.
(iii)      Adjustment of Tariffs .
(A)    The Base Tariff and Incentive Tariff shall be adjusted upward on July 1 of each year during the Term commencing on July 1, 2015, by an amount equal to three percent (3%).
(B)    In the event that the actual, reasonable and necessary costs, or as otherwise approved in writing by HFRM (the “ Actual Construction Costs ”) incurred by HEP Refining to construct the Construction Projects are more or less than $5,300,000 (the “ Construction Cost Estimate ”), then the Base Tariff in effect shall automatically be increased or decreased, as applicable, by the same percentage by which the Actual Construction Costs exceeded or were less than the Construction Cost Estimate; provided, however , that in no event shall the amount of such overage or savings used to calculate the increase or decrease in the Base Tariff exceed 25% of the original Base Tariff. For example:
(1)     if the Actual Construction Cost is $5,830,000 (10% above the Construction Cost Estimate), the Base Tariff would be increased to be $0.1133 per gallon (a 10% increase);

[Page 2 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

(2)     if the Actual Construction Cost is $4,770,000 (10% below the Construction Cost Estimate), the Base Tariff would be decreased to be $0.0927 per gallon (a 10% decrease);
(1)      if the Actual Construction Cost is $6,890,000 (30% above the Construction Cost Estimate), the Base Tariff would be increased to be $0.12875 per gallon (a 25% increase); or
(2)      if the Actual Construction Cost is $3,710,000 (30% below the Construction Cost Estimate), the Base Tariff would be decreased to be $0.07725 per gallon (a 25% decrease).
(iv)      Reduction for Non-Force Majeure Operational Difficulties . If HFRM is unable to unload at the Facility the volumes of Products required to meet the Minimum Revenue Commitment for a particular Contract Quarter as a result of HEP Operating’s operational difficulties, prorationing, or the inability to provide sufficient capacity for the Minimum Throughput, then the Minimum Revenue Commitment applicable to the Contract Quarter during which HFRM is unable to unload such volumes of Products will be reduced by an amount equal to: (A) the volume of Products that HFRM was unable to unload at the Facility (but not to exceed the Minimum Throughput), as a result of HEP Operating’s operational difficulties, prorationing or inability to provide sufficient capacity at the Facility to achieve the Minimum Throughput, multiplied by (B) the Base Tariff. This Section 3(a)(iv) shall not apply in the event HEP Operating gives notice of a Force Majeure event in accordance with Section 5 , in which case the Minimum Revenue Commitment shall be suspended in accordance with and as provided in Section 5 .
(v)      Pro-Rationing for Partial Periods . Notwithstanding the other portions of this Section 3(a) , in the event that the Commencement Date is any date other than the first day of a Contract Quarter, then the Minimum Revenue Commitment, Minimum Throughput, and Incentive Tariff Threshold for the initial partial Contract Quarter shall be prorated based upon the number of days actually in such partial Contract Quarter. Similarly, notwithstanding the other portions of this Section 3(a) , if the end of the Term is on a day other than the last day of a Contract Quarter, then the Minimum Revenue Commitment, Minimum Throughput, and Incentive Tariff Threshold for the final partial Contract Quarter shall be prorated based upon the number of days actually in such partial Contract Quarter.
(b)      Measurement of Unloaded Volumes . Quantities unloaded at the Facility and subject to the tariffs, charges and other fees provided for in this Agreement shall be determined by measuring volumes of Products as the Products are offloaded as follows: (i) if the Product is Ethanol delivered by truck, then the Parties shall use the same measurement method(s) used to determine the volume of Product to be loaded into outbound trucks, and (ii) if the Product is from tanks at the Facility (into which HFRM has delivered Biodiesel by rail) and is offloaded into trucks at the Facility, then the Parties shall use the meter at the point such tanks are offloaded to such trucks. During the Term, HFRM shall absorb all volumetric gains and be responsible for all volumetric losses for all Biodiesel Product delivered to the Facility by rail or in storage in tanks at the Facility.

[Page 3 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

(c)      Obligations of HEP Operating and HEP Refining . During the Term and subject to the terms and conditions of this Agreement, including Section 13(b) , HEP Operating and HEP Refining agree to:
(i)      own or lease, operate and maintain the Facility and all related assets necessary to handle the Products from HFRM;
(ii)      make available to HFRM’s use the capacity of the Facility equal to at least the Minimum Capacity Commitment;
(iii)      provide the services required under this Agreement and perform all operations relating to the Facility;
(iv)      maintain adequate property and liability insurance covering the Facility and any related assets owned by HEP Operating and necessary for the operation of the Facility; and
(v)      provide blending services for the Products at the Facility to the specifications of HFRM, as such specifications may be adjusted by HFRM in writing from time to time.
Notwithstanding the first sentence of this Section 3(c) , subject to Section 13(b) of this Agreement and Article V of the Omnibus Agreement, HEP Operating and HEP Refining are free to sell any of their respective assets, including assets that provide services under this Agreement, and HFRM is free to merge with another entity and to sell all of its assets or equity to another entity at any time.
(d)      Notification of Utilization . Upon request by HEP Operating, HFRM will provide to HEP Operating written notification of HFRM’s reasonable good faith estimate of its anticipated future utilization of the Facility as soon as reasonably practicable after receiving such request.
(e)      Scheduling . HEP Operating will use its reasonable commercial efforts to schedule unloading and blending the Products in a manner that is consistent with the historical dealings between the Parties and their Affiliates to support HFRM’s gasoline and diesel rack sales, as such dealings may change from time to time.
(f)      Taxes . HFRM will pay all taxes, import duties, license fees and other charges by any Governmental Authority levied on or with respect to the Products delivered by HFRM for unloading and blending by HEP Operating; provided that HFRM shall not be responsible for any income taxes payable by HEP Operating relating to such services. Should any Party be required to pay or collect any taxes, duties, charges and or assessments pursuant to any Applicable Law or authority now in effect or hereafter to become effective which are payable by the any other Party pursuant to this Section 3(f) the proper Party shall promptly reimburse the other Party therefor.
(g)      Timing of Payments . HFRM will make payments to HEP Operating by electronic payment with immediately available funds on a quarterly basis during the Term with respect to services rendered or reimbursable costs or expenses incurred by HEP Operating under this

[Page 4 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

Agreement in the prior quarter. Payments not received by HEP Operating on or prior to the applicable payment date will accrue interest at the Prime Rate from the applicable payment date until paid.
(h)      Increases in Tariff Rates . If new Applicable Laws are enacted that require HEP Operating to make capital expenditures with respect to the Facility, HEP Operating may amend the Base Tariff and the Incentive Tariff in order to recover HEP Operating’s cost of complying with such new Applicable Laws (as determined in good faith and including a reasonable return). HFRM and HEP Operating shall use their reasonable commercial efforts to comply with such new Applicable Laws, and shall negotiate in good faith to mitigate the impact of such new Applicable Laws and to determine the amount of the new tariff rates. If HFRM and HEP Operating are unable to agree on the amount of the new tariff rates that HEP Operating will charge, such tariff rates will be determined by binding arbitration in accordance with Section 13(e) . Schedule I or any other applicable exhibit or schedule to this Agreement will be updated, amended or revised, as applicable, in accordance with this Agreement to reflect any changes in tariff rates agreed to in accordance with this Section 3(h) .
(i)      No Guaranteed Minimum Shipments . Notwithstanding anything to the contrary set forth in this Agreement, there is no requirement that HFRM deliver any minimum quantity of Products at the Facility, it being understood that HFRM’s obligation for failing to unload sufficient quantities of Products to satisfy the Minimum Revenue Commitment is to make Deficiency Payments as provided in Section 10 .
Section 3.      Agreement to Remain Shipper
With respect to any Products that are transported to and from the Facility by HFRM, HFRM agrees that it will act in the capacity of the shipper of record for any such Products for its own account at all times that such Products are being transported to and from the Facility.
Section 4.      Force Majeure
In the event that any Party is rendered unable, wholly or in part, by a Force Majeure event from performing its obligations under this Agreement, then, upon the delivery of notice and full particulars of the Force Majeure event in writing within a reasonable time after the occurrence of the Force Majeure event relied on (“ Force Majeure Notice ”), the obligations of the Parties, so far as they are affected by the Force Majeure event, shall be suspended for the duration of any inability so caused. Any suspension of the obligations of the Parties as a result of this Section 5 for a period of more than thirty (30) consecutive days shall extend the Term (to the extent so affected) for a period equivalent to the duration of the inability set forth in the Force Majeure Notice. HFRM will be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall determine to be in its best interests. In the event a Force Majeure event prevents a Party from performing substantially all of their respective obligations under this Agreement for a period of more than one (1) year, this Agreement may be terminated by HEP Operating and HEP Refining, on the one hand, or HFRM, on the other hand, by providing written notice thereof to the other Parties.

[Page 5 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

Section 5.      [Reserved]
Section 6.      Effectiveness and Term
This Agreement shall be effective as of the Effective Time, and shall terminate at 12:01 a.m. Dallas, Texas, time on the day that is twenty (20) years from the Commencement Date, unless extended pursuant to Section 5 or by written mutual agreement of the Parties or as set forth in Section 8 (the “ Term ”). The Party desiring to extend this Agreement pursuant to this Section 7 shall provide prior written notice to the other Parties of its desire to so extend this Agreement; such written notice shall be provided not more than twenty-four (24) months and not less than the later of twelve (12) months prior to the date of termination or ten (10) days after receipt of a written request from the other Party (which request may be delivered no earlier than twelve (12) months prior to the date of termination) to provide any such notice or lose such right.
Section 7.      Right to Enter into a New Agreement
(a)      In the event that HFRM provides prior written notice to HEP Operating of the desire of HFRM to extend this Agreement by written mutual agreement of the Parties pursuant to Section 7 , the Parties shall negotiate in good faith to extend this Agreement by written mutual agreement, but, if such negotiations fail to produce a written mutual agreement for extension by a date six (6) months prior to the termination date, then HEP Operating shall have the right to negotiate to enter into one or more services agreements for HFRM’s Minimum Capacity Commitment for the Facility with one or more third parties to begin after the date of termination, provided , however , that until the end of one year following termination without renewal of this Agreement, HFRM will have the right to enter into a new services agreement with HEP Operating with respect to its Minimum Capacity Commitment on the date of termination on commercial terms that substantially match the terms upon which HEP Operating propose to enter into an agreement with a third party for similar services with respect to all or a material portion of such capacity of the Facility. In such circumstances, HEP Operating shall give HFRM forty-five (45) days prior written notice of any proposed new services agreement with a third party, and such notice shall inform HFRM of the fee schedules, tariffs, duration and any other material terms of the proposed third party agreement and HFRM shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or HFRM shall lose the rights specified by this Section 8(a) with respect to the capacity that is the subject of such notice.
(b)      In the event that HFRM fails to provide prior written notice to HEP Operating of the desire of HFRM to extend this Agreement by written mutual agreement of the Parties pursuant to Section 7 , HEP Operating shall have the right, during the period from the date of HFRM’s failure to provide written notice pursuant to Section 7 to the date of termination of this Agreement, to negotiate to enter into one or more services agreements for HFRM’s Minimum Capacity Commitment for the Facility with one or more third parties to begin after the date of termination; provided, however , that at any time during the twelve (12) months prior to the expiration of the Term, HFRM will have the right to enter into a new services agreement with HEP Operating with respect to its existing Minimum Capacity Commitment at such time on commercial terms that substantially match the terms upon which HEP Operating proposes to enter into an agreement with a third party for similar services with respect to all or a material portion of such capacity at the

[Page 6 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

Facility. In such circumstances, HEP Operating shall give HFRM forty-five (45) days prior written notice of any proposed new services agreement with a third party, and such notice shall inform HFRM of the fee schedules, tariffs, duration and any other material terms of the proposed third party agreement and HFRM shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or HFRM shall lose the rights specified by this Section 8(b) with respect to the capacity that is the subject of such notice.
Section 8.      Notices
(a)      Any notice or other communication given under this Agreement shall be in writing and shall be (i) delivered personally, (ii) sent by documented overnight delivery service, (iii) sent by email transmission, or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (x) if received, on the date of the delivery, with a receipt for delivery, (y) if refused, on the date of the refused delivery, with a receipt for refusal, or (z) with respect to email transmissions, on the date the recipient confirms receipt. Notices or other communications shall be directed to the following addresses:
Notices to HFRM:

HollyFrontier Refining & Marketing LLC
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: President
Email address: president@hollyfrontier.com

with a copy, which shall not constitute notice, but is required in order to give proper notice, to:

HollyFrontier Refining & Marketing LLC
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: General Counsel
Email address: generalcounsel@hollyfrontier.com

Notices to HEP Operating or HEP Refining:

c/o Holly Energy Partners, L.P.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: President
Email address: president-HEP@hollyenergy.com

with a copy, which shall not constitute notice, but is required in order to give proper notice, to:


[Page 7 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

c/o Holly Energy Partners, L.P.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: General Counsel
Email address: general.counsel@hollyenergy.com

(b)      Any Party may at any time change its address for service from time to time by giving notice to the other Parties in accordance with this Section 9 .
Section 9.      Deficiency Payments
(a)      Following the Commencement Date, as soon as practicable following the end of each Contract Quarter under this Agreement, HEP Operating shall deliver to HFRM a written notice (the “ Deficiency Notice ”) detailing any failure of HFRM to meet its Minimum Revenue Commitment obligations under Section 3(a)(i) ; provided, however , that HFRM’s obligations pursuant to the Minimum Revenue Commitment shall be assessed on a quarterly basis for the purposes of this Section 10 . The Deficiency Notice shall (i) specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar amount that HEP Operating believes would have been paid by HFRM to HEP Operating if HFRM had complied with its Minimum Revenue Commitment obligations pursuant to Section 3(a)(i) (the “ Deficiency Payment ”). HFRM shall pay the Deficiency Payment to HEP Operating upon the later of: (A) ten (10) days after its receipt of the Deficiency Notice and (B) thirty (30) days following the end of the related Contract Quarter.
(b)      If HFRM disagrees with the Deficiency Notice, then, following the payment of the undisputed portion of the Deficiency Payment to HEP Operating, if any, HFRM shall send written notice thereof regarding the disputed portion of the Deficiency Payment to HEP Operating and a senior officer of HFRM and a senior officer of HEP Operating shall meet or communicate by telephone at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences that they may have with respect to matters specified in the Deficiency Notice. During the 30-day period following the payment of the Deficiency Payment, HFRM shall have access to the working papers of HEP Operating relating to the Deficiency Notice. If such differences are not resolved within thirty (30) days following HFRM’s receipt of the Deficiency Notice, HFRM and HEP Operating shall, within forty-five (45) days following HFRM’s receipt of the Deficiency Notice, submit any and all matters which remain in dispute and which were properly included in the Deficiency Notice to arbitration in accordance with Section 13(e) .
(c)      If it is finally determined pursuant to this Section 10 that HFRM is required to pay any or all of the disputed portion of the Deficiency Payment, HFRM shall promptly pay such amount to HEP Operating, together with interest thereon at the Prime Rate, in immediately available funds.
(d)      The fact that HFRM has exceeded or fallen short of the Minimum Revenue Commitment with respect to any Contract Quarter shall not be considered in determining whether HFRM meets, exceeds or falls short of the Minimum Revenue Commitment with respect to any other Contract Quarter, and the amount of any such excess or shortfall shall not be counted towards or against the Minimum Revenue Commitment with respect to any other Contract Quarter.

[Page 8 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

Section 10.      Right of First Refusal. The Parties acknowledge the right of first refusal of HollyFrontier with respect to the Facility as provided in the Omnibus Agreement.
Section 11.      Limitation of Damages.
(a)      NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS PARAGRAPH, THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER EXPENSES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT, OR IN CONNECTION WITH A CLAIM FOR INDEMNIFICATION UNDER THIS SECTION 12 SHALL BE LIMITED TO ACTUAL DAMAGES AND SHALL NOT INCLUDE OR APPLY TO, NOR SHALL ANY PARTY BE ENTITLED TO RECOVER, ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR INCURRED BY ANY PARTY; PROVIDED , HOWEVER , THAT SUCH RESTRICTION AND LIMITATION SHALL NOT APPLY (x) AS A RESULT OF A THIRD PARTY CLAIM FOR SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR (y) TO INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) THAT ARE A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE BREACHING OR NONFULFILLING PARTY OR ITS AFFILIATES.
(b)      HFRM shall indemnify, defend, and hold harmless HEP Operating, HEP Refining and their Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by HEP Operating, HEP Refining and their Affiliates to the extent resulting or arising from, or attributable to, acts or omissions of HFRM and its Affiliates in connection with the performance of HFRM’s obligations under this Agreement that constitute negligence.
(c)      HEP Operating shall indemnify, defend, and hold harmless HFRM and its Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by HFRM and its Affiliates, including loss of Products from the Facility, to the extent resulting or arising from, or attributable, to (i) events and conditions associated with the operation of the Facility, or (ii) acts or omissions of HEP Operating and its Affiliates in connection with the performance of HEP Operating’s obligations under this Agreement that constitute negligence; provided, however , that, with respect to loss of Products from the Facility,

[Page 9 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

HEP Operating will only be liable for losses in excess of 0.25% of the total throughput of Products with respect to each individual incident of loss of Products.
(d)      HEP Refining shall indemnify, defend, and hold harmless HFRM and its Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by HFRM and its Affiliates, to the extent resulting or arising from, or attributable, to acts or omissions of HEP Refining and its Affiliates in connection with the performance of HEP Refining’s obligations under this Agreement that constitute negligence.
Section 12.      Miscellaneous
(a)      Amendments and Waivers . No amendment or modification of this Agreement shall be valid unless it is in writing and signed by the Parties. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced. Any of the exhibits or schedules to this Agreement may be amended, modified, revised or updated by the Parties if each of the Parties executes an amended, modified, revised or updated exhibit or schedule, as applicable, and attaches it to this Agreement. Such amended, modified, revised or updated exhibits or schedules shall be sequentially numbered ( e.g. Schedule I-1, Schedule I-2, etc .), dated and appended as an additional exhibit or schedule to this Agreement and shall replace the prior exhibit or schedule, as applicable, in its entirety, after its date of effectiveness, except as specified therein. No failure or delay in exercising any right hereunder, and no course of conduct, shall operate as a waiver of any provision of this Agreement. No single or partial exercise of a right hereunder shall preclude further or complete exercise of that right or any other right hereunder.
(b)      Successors and Assigns . This Agreement shall inure to the benefit of, and shall be binding upon, HFRM, HEP Operating, HEP Refining and their respective successors and permitted assigns. Neither this Agreement nor any of the rights or obligations hereunder shall be assigned without the prior written consent of HFRM (in the case of any assignment by HEP Operating or HEP Refining) or HEP Operating and HEP Refining (in the case of any assignment by HFRM), in each case, such consent is not to be unreasonably withheld or delayed; provided , however , that (i) HEP Operating and HEP Refining may make such an assignment (including a partial pro rata assignment) to an Affiliate of HEP Operating or HEP Refining without HFRM’s consent, (ii) HFRM may make such an assignment (including a pro rata partial assignment) to an Affiliate of HFRM without HEP Operating’s or HEP Refining’s consent, (iii) HFRM may make a collateral assignment of its rights and obligations hereunder and/or grant a security interest in its rights and obligations hereunder, and HEP Operating and HEP Refining shall execute an acknowledgement of such collateral assignment in such form as may from time-to-time be reasonably requested, and (iv) HEP Operating and HEP Refining may make a collateral assignment of its rights hereunder and/or grant a security interest in its rights and obligations hereunder to a bona fide third party lender or debt holder, or trustee or representative for any of them, without HFRM’s consent, if such third party lender, debt holder or trustee shall have executed and delivered to HFRM a non-disturbance agreement in such form as is reasonably satisfactory to HFRM and such third party lender, debt holder or trustee, and HFRM executes an acknowledgement of such collateral assignment in such

[Page 10 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

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form as may from time to time be reasonably requested. Any attempt to make an assignment otherwise than as permitted by the foregoing shall be null and void. The Parties agree to require their respective successors, if any, to expressly assume, in a form of agreement reasonably acceptable to the other Parties, their obligations under this Agreement.
(c)      Severability . If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.
(d)      Choice of Law . This Agreement shall be subject to and governed by the laws of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.
(e)      Arbitration Provision . Any and all Arbitrable Disputes must be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If there is any inconsistency between this Section 13(e) and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Section 13(e) will control the rights and obligations of the Parties. Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or the time period allowed by the applicable statute of limitations. Arbitration may be initiated by a Party (“ Claimant ”) serving written notice on the other Party (“ Respondent ”) that the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (i) be neutral parties who have never been officers, directors or employees of any of HFRM, HEP Operating, HEP Refining or any of their Affiliates and (ii) have not less than seven (7) years’ experience in the petroleum transportation industry. The hearing will be conducted in Dallas, Texas and commence within thirty (30) days after the selection of the third arbitrator. HFRM, HEP Operating, HEP Refining and the arbitrators shall proceed diligently and in good faith in order that the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the arbitrators will be binding on and non-appealable by the Parties hereto. The arbitrators shall have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind. The Arbitrable Disputes may be arbitrated in a common proceeding along with disputes under other agreements between HFRM, HEP Operating, HEP Refining or their Affiliates to the extent that the issues raised in such disputes are related. Without

[Page 11 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

the written consent of the Parties, no unrelated disputes or third party disputes may be joined to an arbitration pursuant to this Agreement.
(f)      Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties, and no limited partner of the Partnership shall have the right, separate and apart from the Partnership, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.
(g)      Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.
(h)      Headings . Headings of the Sections of this Agreement are for convenience of the Parties only and shall be given no substantive or interpretative effect whatsoever. All references in this Agreement to Sections are to Sections of this Agreement unless otherwise stated.
Section 13.      Guarantee by HollyFrontier
(a)      Payment Guaranty . HollyFrontier unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HEP Operating and HEP Refining the punctual and complete payment in full when due of all amounts due from HFRM under this Agreement (collectively, the “ HFRM Payment Obligations ”). HollyFrontier agrees that HEP Operating and HEP Refining shall be entitled to enforce directly against HollyFrontier any of the HFRM Payment Obligations.
(b)      Guaranty Absolute . HollyFrontier hereby guarantees that the HFRM Payment Obligations will be paid strictly in accordance with the terms of the Agreement. The obligations of HollyFrontier under this Agreement constitute a present and continuing guaranty of payment, and not of collection or collectability. The liability of HollyFrontier under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:
(i)      any assignment or other transfer of this Agreement or any of the rights thereunder of HEP Operating or HEP Refining;
(ii)      any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;
(iii)      any acceptance by HEP Operating or HEP Refining of partial payment or performance from HFRM;
(iv)      any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HFRM or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;

[Page 12 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

(v)      any absence of any notice to, or knowledge of, HollyFrontier, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or
(vi)      any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.
The obligations of HollyFrontier hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the HFRM Payment Obligations or otherwise.
(c)      Waiver . HollyFrontier hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HFRM Payment Obligations and any requirement for HEP Operating or HEP Refining to protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against HFRM, any other entity or any collateral.
(d)      Subrogation Waiver . HollyFrontier agrees that for so long as there is a current or ongoing default or breach of this Agreement by HFRM, HollyFrontier shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from HFRM for any payments made by HollyFrontier under this Section 14 , and HollyFrontier hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery it may now have or hereafter acquire against HFRM during any period of default or breach of this Agreement by HFRM until such time as there is no current or ongoing default or breach of this Agreement by HFRM.
(e)      Reinstatement . The obligations of HollyFrontier under this Section 14 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HFRM Payment Obligations is rescinded or must otherwise be returned to HFRM or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of HFRM or such other entity, or for any other reason, all as though such payment had not been made.
(f)      Continuing Guaranty . This Section 14 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment in full of all of the HFRM Payment Obligations, (ii) be binding upon HollyFrontier, its successors and assigns and (iii) inure to the benefit of and be enforceable by HEP Operating, HEP Refining and their respective successors, transferees and assigns.
(g)      No Duty to Pursue Others . It shall not be necessary for HEP Operating or HEP Refining (and HollyFrontier hereby waives any rights which HollyFrontier may have to require HEP Operating or HEP Refining), in order to enforce such payment by HollyFrontier, first to (i) institute suit or exhaust its remedies against HFRM or others liable on the HFRM Payment

[Page 13 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

Obligations or any other person, (ii) enforce HEP Operating’s and HEP Refining’s rights against any other guarantors of the HFRM Payment Obligations, (iii) join HFRM or any others liable on the HFRM Payment Obligations in any action seeking to enforce this Section 14 , (iv) exhaust any remedies available to HEP Operating or HEP Refining against any security which shall ever have been given to secure the HFRM Payment Obligations, or (v) resort to any other means of obtaining payment of the HFRM Payment Obligations.
Section 14.      Guarantee by the Partnership .
(a)      Payment and Performance Guaranty . The Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HFRM the punctual and complete payment in full when due of all amounts due from HEP Operating or HEP Refining under this Agreement (collectively, the “ HEP Payment Obligations ”) and the punctual and complete performance of all other obligations of HEP Operating and HEP Refining under this Agreement (collectively, the “ HEP Performance Obligations ”, together with the HEP Payment Obligations, the “ HEP Obligations ”). The Partnership agrees that HFRM shall be entitled to enforce directly against the Partnership any of the HEP Obligations.
(b)      Guaranty Absolute . The Partnership hereby guarantees that the HEP Payment Obligations will be paid, and the HEP Performance Obligations will be performed, strictly in accordance with the terms of this Agreement. The obligations of the Partnership under this Agreement constitute a present and continuing guaranty of payment and performance, and not of collection or collectability. The liability of the Partnership under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:
(i)      any assignment or other transfer of this Agreement or any of the rights thereunder of HFRM;
(ii)      any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;
(iii)      any acceptance by HFRM of partial payment or performance from HEP Operating or HEP Refining;
(iv)      any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HEP Operating or HEP Refining or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;
(v)      any absence of any notice to, or knowledge of, the Partnership, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or
(vi)      any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.

[Page 14 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

The obligations of the Partnership hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the HEP Obligations or otherwise.
(c)      Waiver . The Partnership hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HEP Payment Obligations and any requirement for HFRM to protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against HEP Operating, HEP Refining, any other entity or any collateral.
(d)      Subrogation Waiver . The Partnership agrees that for so long as there is a current or ongoing default or breach of this Agreement by HEP Operating or HEP Refining, the Partnership shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from HEP Operating or HEP Refining for any payments made by the Partnership under this Section 15 , and the Partnership hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery it may now have or hereafter acquire against HEP Operating or HEP Refining during any period of default or breach of this Agreement by HEP Operating or HEP Refining until such time as there is no current or ongoing default or breach of this Agreement by HEP Operating or HEP Refining.
(e)      Reinstatement . The obligations of the Partnership under this Section 15 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HEP Payment Obligations is rescinded or must otherwise be returned to HEP Operating, HEP Refining or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of HEP Operating, HEP Refining or such other entity, or for any other reason, all as though such payment had not been made.
(f)      Continuing Guaranty . This Section 15 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment and/or performance in full of all of the HEP Obligations, (ii) be binding upon the Partnership and each of its respective successors and assigns and (iii) inure to the benefit of and be enforceable by HFRM and their respective successors, transferees and assigns.
(g)      No Duty to Pursue Others . It shall not be necessary for HFRM (and the Partnership hereby waives any rights which the Partnership may have to require HFRM), in order to enforce such payment by the Partnership, first to (i) institute suit or exhaust its remedies against HEP Operating, HEP Refining or others liable on the HEP Obligations or any other person, (ii) enforce HFRM’s rights against any other guarantors of the HEP Obligations, (iii) join HEP Operating, HEP Refining or any others liable on the HEP Obligations in any action seeking to enforce this Section 15 , (iv) exhaust any remedies available to HFRM against any security which shall ever have been given to secure the HEP Obligations, or (v) resort to any other means of obtaining payment of the HEP Obligations.

[Page 15 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

[Remainder of page intentionally left blank. Signature pages follow.] IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first written above to be effective as of the Effective Time.
HEP OPERATING:

Holly Energy Partners-Operating, L.P.


By:      /s/ Mark A. Plake    
Mark A. Plake
President


HEP REFINING:

HEP Refining, L.L.C.


By:     /s/ Mark A. Plake    
Mark A. Plake
President



HFRM:

HollyFrontier Refining & Marketing LLC



By: /s/ George J. Damiris    
George J. Damiris
Chief Executive Officer and President


[Page 16 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 10(b)
AND Section 14 :

HOLLYFRONTIER CORPORATION


By: /s/ George J. Damiris    
George J. Damiris
Chief Executive Officer and President




ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 10(b)
AND Section 15 :

HOLLY ENERGY PARTNERS, L.P.

By:    HEP Logistics Holdings, L.P.,
its General Partner

By:    Holly Logistic Services, L.L.C.,
its General Partner


By: /s/ Mark A. Plake    
Mark A. Plake
President






[Page 17 to the Amended and Restated Unloading and Blending Services Agreement (Artesia)]

Exhibit 10.26

Appendix A
Definitions
“ Affiliate ” means, with to respect to a specified person, any other person controlling, controlled by or under common control with that first person. As used in this definition, the term “control” includes %4. with respect to any person having voting securities or the equivalent and elected directors, managers or persons performing similar functions, the ownership of or power to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions, %4.ownership of 50% or more of the equity or equivalent interest in any person and %4. the ability to direct the business and affairs of any person by acting as a general partner, manager or otherwise. Notwithstanding the foregoing, for purposes of this Agreement, HFRM, on the one hand, and HEP Operating and HEP Refining, on the other hand, shall not be considered affiliates of each other.
“ Agreement ” has the meaning set forth in the preamble to this Agreement.
“ Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination of, any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
“ Arbitrable Dispute ” means any and all disputes, Claims, controversies and other matters in question between the Parties, arising out of or relating to this Agreement or the alleged breach hereof, or in any way relating to the subject matter of this Agreement regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking damages or any other relief, whether at law, in equity or otherwise.
“ Base Tariff ” means the amount set forth as such on Schedule I attached hereto, as the same may be adjusted by the terms of this Agreement, including Section 3(a)(iii) .
“ Biodiesel ” means diesel fuel that qualifies for the generation of Renewable identification Numbers (RINs) under the Renewable Fuel Standard Regulations, 40 CFR § 80.1400 et seq ., as amended from time to time.
“ bpd ” means barrels per day.
“ Claim ” means any existing or threatened future claim, demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.

Appendix A-1

Exhibit 10.26

“ Commencement Date ” means the date on which the Facility is available for service and operating as expected in unloading and blending the Products, which date has been specified in written notice from HEP Operating to HFRM at least 60 days prior to such Commencement Date; provided, however , that if the Facility is, in the discretion of HEP Operating, substantially complete, then the parties may agree in writing to a commencement date prior to the Facility being fully completed. The Commencement Date was September 16, 2016.
“ Contract Quarter ” means a three-month period that commences on January 1, April 1, July 1 or October 1 and ends on March 31, June 30, September 30, or December 31, respectively.
“ Effective Time ” means 12:01 a.m., Dallas, Texas time, on September 16, 2016.
“ Ethanol ” means ethyl alcohol fuel or fuel additive.
“ Facility ” has the meaning set forth in the recitals to this Agreement.
“ Force Majeure ” means acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests, the order of any Governmental Authority having jurisdiction while the same is in force and effect, civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe, inability to obtain or unavoidable delay in obtaining material or equipment, and any other causes whether of the kind herein enumerated or otherwise not reasonably within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome. Notwithstanding anything in this Agreement to the contrary, inability of a Party to make payments when due, be profitable or to secure funds, arrange bank loans or other financing, obtain credit or have adequate capacity or production (other than for reasons of Force Majeure) shall not be regarded as events of Force Majeure.
“ Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.
“ HEP Operating ” has the meaning set forth in the preamble to this Agreement.
“ HEP Refining ” has the meaning set forth in the preamble to this Agreement.
“ HFRM ” has the meaning set forth in the preamble to this Agreement.
“ HollyFrontier ” means HollyFrontier Corporation, a Delaware corporation.
“ Incentive Tariff ” means the amount set forth as such on Schedule I attached hereto, as the same may be adjusted by the terms of this Agreement, including Section 3(a)(iii) .
“ Incentive Tariff Threshold ” means 550 bpd of Products, in the aggregate, on average, for each Contract Quarter, as the same may be adjusted by the terms of this Agreement.

Appendix A-2

Exhibit 10.26

“ Minimum Throughput ” means 450 bpd of Products, in the aggregate, on average, for each Contract Quarter, as such amount may be adjusted by the terms of this Agreement.
“ Omnibus Agreement ” means the Seventeenth Amended and Restated Omnibus Agreement, dated effective as of January 1, 2017, by and among HollyFrontier, the Partnership and certain of their respective subsidiaries.
“ Parties ” or “ Party ” has the meaning set forth in the preamble to this Agreement.
“ Partnership ” means Holly Energy Partners, L.P., a Delaware limited partnership.
“ Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
“ Prime Rate ” means the prime rate per annum announced by Union Bank, N.A. or its successor, or if Union Bank, N.A. or its successor no longer announces a prime rate for any reason, the prime rate per annum announced by the largest U.S. bank measured by deposits from time to time as its base rate on corporate loans, automatically fluctuating upward or downward with each announcement of such prime rate.
“ Products ” means Ethanol and Biodiesel.
In addition, the following terms have the meanings given to them in the Sections indicated in the following table:
Term
 
Section
Actual Construction Costs
Claimant
Construction Cost Estimate
 
Section 3(a)(iii)(B)
Section 13(e)
Section 3(a)(iii)(B)
Construction Projects
 
Section 2
Deficiency Notice
 
Section 10(a)
Deficiency Payment
 
Section 10(a)
Facility
 
Recitals
Force Majeure Notice
 
Section 5
HEP Obligations
 
Section 15(a)
HEP Payment Obligations
 
Section 15(a)
HEP Performance Obligations
 
Section 15(a)
HFRM Payment Obligations
 
Section 14(a)
Minimum Capacity Commitment
 
Section 3(a)(i)
Minimum Revenue Commitment
 
Section 3(a)(i)
Respondent
 
Section 13(e)
Term
 
Section 7


Appendix A-3

Exhibit 10.26




Appendix A-4

Exhibit 10.26

EXHIBIT A
Volume Capacities

•
Two (2) 5,000 barrel tanks for unloading and blending Ethanol and Biodiesel at the Facility with a maximum capacity of approximately 1,200 bpd of unloading for Ethanol and Biodiesel combined




Exhibit A-1

Exhibit 10.26

EXHIBIT B


Construction Projects
2.
Tankage (nominal 5,000 bbls) for storing B99 Biodiesel
3.
Pump, metering and blending equipment for loading B5 to B20 Biodiesel at three load arms (one arm on Lane 1 and two arms on Lane 2
4.
Included in the B99 facilities are heating and heat tracing of B99 tank and piping
5.
Facilities for offloading Ethanol into tankage
6.
Tankage (nominal 5,000 bbls) for storing Ethanol
7.
Pump, metering and blending equipment for loading Ethanol blended gasoline (10% Ethanol). The blended gasoline can be loaded on three gasoline load arms (two arms on Lane 1 and one arm on Lane 2)
8.
All control, metering, and automation equipment required to operate facilities listed above


SCHEDULE I
TARIFFS

Base Tariff
$0.1093 per gallon

Incentive Tariff
$0.0053 per gallon





Schedule I

Exhibit 10.27








    
THIRD AMENDED AND RESTATED
MASTER THROUGHPUT AGREEMENT
(including Tankage and Loading Racks)

by and between

HOLLYFRONTIER REFINING & MARKETING LLC

and

HOLLY ENERGY PARTNERS-OPERATING, L.P.
    



Effective as of January 1, 2017




TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS AND INTERPRETATIONS     2
1.1      DEFINITIONS     2
1.2      INTERPRETATION     2
ARTICLE 2 AGREEMENT TO USE SERVICES     2
2.1      INTENT     2
2.2      MINIMUM REVENUE COMMITMENTS     2
2.3      MEASUREMENT OF SHIPPED VOLUMES     3
2.4      VOLUMETRIC GAINS AND LOSSES; LINE FILL; HIGH-API OIL SURCHARGE     3
2.5      OBLIGATIONS OF HEP OPERATING     4
2.6      DRAG REDUCING AGENTS AND ADDITIVES     4
2.7
CHANGE IN THE DIRECTION; PRODUCT SERVICE OR ORIGINATION AND DESTINATION OF THE PIPELINE SYSTEM     4
2.8      NOTIFICATION OF UTILIZATION     5
2.9      SCHEDULING AND ACCEPTING MOVEMENT     5
2.10      TAXES     5
2.11      TIMING OF PAYMENTS     5


[Page 1 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

2.12      INCREASES IN TARIFF RATES     5
2.13      REMOVAL OF TANK FROM SERVICE     5
2.14      NO GUARANTEED MINIMUM     6
ARTICLE 3 AGREEMENT TO REMAIN SHIPPER     6
ARTICLE 4 NOTIFICATION OF REFINERY SHUT-DOWN OR RECONFIGURATION     6
ARTICLE 5 FORCE MAJEURE     6
ARTICLE 6 AGREEMENT NOT TO CHALLENGE PIPELINE TARIFFS     7
ARTICLE 7 EFFECTIVENESS AND TERM     7
ARTICLE 8 RIGHT TO ENTER INTO A NEW AGREEMENT     7
8.1      NEGOTIATION PURSUANT TO WRITTEN NOTICE     7
8.2      NEGOTIATION IN THE ABSENCE OF WRITTEN NOTICE     8
ARTICLE 9 NOTICES     8
ARTICLE 10 DEFICIENCY PAYMENTS     8
10.1      DEFICIENCY NOTICE; DEFICIENCY PAYMENTS     8
10.2      DISPUTED DEFICIENCY NOTICES     9
10.3      PAYMENT OF AMOUNTS NO LONGER DISPUTED     9
10.4      CONTRACT QUARTERS INDEPENDENT     9

ARTICLE 11 RIGHT OF FIRST REFUSAL     9
ARTICLE 12 INDEMNITY; LIMITATION OF DAMAGES     9
12.1      INDEMNITY; LIMITATION OF LIABILITY     9
12.2      SURVIVAL     10
ARTICLE 13 MISCELLANEOUS     10
13.1      AMENDMENTS AND WAIVERS     10
13.2      SUCCESSORS AND ASSIGNS     10
13.3      SEVERABILITY     10
13.4      CHOICE OF LAW     10
13.5      RIGHTS OF LIMITED PARTNERS     10
13.6      FURTHER ASSURANCES     11
13.7      HEADINGS     11
ARTICLE 14 GUARANTEE BY HOLLYFRONTIER     11
14.1      PAYMENT GUARANTY     11
14.2      GUARANTY ABSOLUTE     11
14.3      WAIVER     12
14.4      SUBROGATION WAIVER     12
14.5      REINSTATEMENT     12
14.6      CONTINUING GUARANTY     12
14.7      NO DUTY TO PURSUE OTHERS     12
ARTICLE 15 GUARANTEE BY THE PARTNERSHIP     12
15.1      PAYMENT AND PERFORMANCE GUARANTY     12
15.2      GUARANTY ABSOLUTE     13


[Page 2 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

15.3      WAIVER     13
15.4      SUBROGATION WAIVER     13
15.5      REINSTATEMENT     14
15.6      CONTINUING GUARANTY     14
15.7      NO DUTY TO PURSUE OTHERS     14


EXHIBITS

Exhibit A – Definitions
Exhibit B – Interpretation
Exhibit C – Applicable Assets, Product, Minimum Capacity Commitment, Tariffs, Tariff
Adjustments and Applicable Terms
Exhibit D – Measurement of Shipped Volumes
Exhibit E - Volumetric Gains and Losses; Line Fill; High-API Oil Surcharge
Exhibit F - Increases in Tariff Rates as a Result of Changes in Applicable Law
Exhibit G - Special Provisions: Malaga Pipeline System
Exhibit G-1 - Map of Pipeline System and Pipeline System Capacity by Segment
Exhibit G-2 – Construction Projects
Exhibit G-3 – Devon Lease Connections
Exhibit H – Special Provisions: El Dorado Assets
Exhibit H-1 - El Dorado Loading Rack
Exhibit H-2 – El Dorado Tankage
Exhibit H-3 – Specifications for New Tank
Exhibit I - Special Provisions: Cheyenne Assets
Exhibit I-1 - Cheyenne Loading Rack
Exhibit I-2 - Cheyenne Receiving Assets
Exhibit I-3 – Cheyenne Tankage
Exhibit J – Special Provisions: Tulsa East Assets
Exhibit J-1 - Tulsa Group 1 Loading Rack
Exhibit J-2 - Tulsa Group 1 Pipeline
Exhibit J-3 – Tulsa Group 1 Tankage
Exhibit J-4 – Tulsa Group 2 Loading Rack
Exhibit J-5 – Tulsa Group 2 Tankage
Exhibit K – Special Provisions: El Dorado Crude Tank Farm Assets
Exhibit K-1 – El Dorado Crude Tankage and Jayhawk Tankage
Exhibit K-2 – El Dorado Terminal Quality Specifications
Exhibit L-1 – Tulsa West Tankage
Exhibit L-2 – Special Provisions: Tulsa West Tankage





[Page 3 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27




THIRD AMENDED AND RESTATED
MASTER THROUGHPUT AGREEMENT
This Third Amended and Restated Master Throughput Agreement (this “ Agreement ”) is dated as of January 18, 2017, to be effective as of the Effective Time (as defined below) by and between HOLLYFRONTIER REFINING & MARKETING LLC (“ HFRM ”) and HOLLY ENERGY PARTNERS-OPERATING, L.P. (“ HEP Operating ”). Each of HFRM and HEP Operating are collectively referred to herein as the “ Parties .”

RECITALS:

A.     In connection with that certain Pipeline Throughput Agreement (Roadrunner), dated as of December 1, 2009, between HFRM (as successor in interest to HollyFrontier Navajo) and HEP Operating, HEP Operating agreed to provide certain transportation services for HFRM on the Roadrunner Pipeline, as defined below.

B.     In connection with that certain Loading Rack Throughput Agreement (Lovington), dated as of March 31, 2010, between HFRM (as successor in interest to HollyFrontier Navajo) and HEP Operating (as successor in interest to Holly Energy Storage-Lovington LLC), HEP Operating agreed to provide certain loading services for HFRM with respect to the Lovington Loading Rack, as defined below.

C.     In connection with that Second Amended and Restated Pipelines, Tankage and Loading Rack Throughput Agreement (Tulsa East), dated as of August 31, 2011, between HFRM (as successor in interest to Holly Refining and Marketing-Tulsa LLC) and HEP Operating (as successor in interest to HEP Tulsa LLC and Holly Energy Storage - Tulsa LLC), HEP Operating agreed to provide certain transportation, storage and loading services to HFRM with respect to the Tulsa Interconnecting Pipelines, as defined below.

D.     In connection with that certain First Amended and Restated Tankage, Loading Rack and Crude Oil Receiving Throughput Agreement (Cheyenne), dated as of January 11, 2012 between HFRM (as successor in interest to Frontier Refining LLC) and HEP Operating (as successor in interest to Cheyenne Logistics LLC), HEP Operating agreed to provide certain storage and loading services to HFRM with respect to the Cheyenne Assets, as defined below.

E.     In connection with that certain Second Amended and Restated Pipeline Delivery, Tankage and Loading Rack Throughput Agreement (El Dorado), dated as of January 7, 2014 between HFRM (as successor in interest to Frontier El Dorado Refining LLC) and HEP Operating (as successor in interest to El Dorado Logistics LLC), HEP Operating agreed to provide certain transportation, storage and loading services to HFRM with respect to the El Dorado Assets, as defined below.

F.     In connection with that certain Amended and Restated Transportation Services Agreement (Malaga), dated September 26, 2014, between HFRM and HEP Operating, HEP Operating agreed to provide certain transportation services to HFRM with respect to the Malaga Pipeline System, as defined below.

G.     HEP Operating owns certain other pipelines, tankage and other assets which it desires to utilize to provide transportation, storage and loading services for HFRM.


[Page 4 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27


H.     The Parties entered into that certain Master Throughput Agreement, effective January 1, 2015 (the “ Original Master Throughput Agreement ”) pursuant to which HEP Operating agreed to provide certain transportation, storage and loading services with respect to the Applicable Assets, as defined below, and pursuant to which the Parties agreed that such services would no longer be provided pursuant to the Prior Agreements.

I.     The Original Master Throughput Agreement has been further amended and restated, resulting in that certain Second Amended and Restated Master Throughput Agreement, effective March 31, 2016 (the “ Previous Amended and Restated Master Throughput Agreement ”).

J.     The Parties now desire to amend and restate the Previous Amended and Restated Master Throughput Agreement in its entirety as follows.

NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the Parties hereby agree as follows:

ARTICLE 1
DEFINITIONS AND INTERPRETATIONS

1.1     Definitions . Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth on Exhibit A .

1.2     Interpretation . Matters relating to the interpretation of this Agreement are set forth on Exhibit B .

ARTICLE 2
AGREEMENT TO USE SERVICES

2.1     Intent . The Parties intend to be strictly bound by the terms set forth in this Agreement, which sets forth revenues to HEP Operating to be paid by HFRM, and requires HEP Operating to provide certain transportation, storage and loading services to HFRM. The principal objective of HEP Operating is for HFRM to meet or exceed its obligations with respect to the Minimum Revenue Commitment. The principal objective of HFRM is for HEP Operating to provide services to HFRM in a manner that enables HFRM to transport, store and/or load Products on, in or at the Applicable Assets. It is the Parties’ further intent that the terms and provisions of this Agreement shall be effective and govern from and after the Effective Time. Any matter first arising prior to the Effective Time shall be governed by the respective agreement relating thereto referenced in the Recitals.

2.2     Minimum Revenue Commitments . During the Applicable Term and subject to the terms and conditions of this Agreement, and as further set forth in Exhibit C , HFRM agrees as follows:

(a)     Capacity and Revenue Commitment . Subject to Article 4 , HFRM shall pay HEP Operating Applicable Tariffs for use of the Applicable Assets and associated services as provided herein that result in the payment of an amount that will satisfy the Minimum Revenue Commitment in exchange for HEP Operating providing HFRM a minimum capacity in each of the Applicable Assets equal to the Minimum Capacity Commitment. The “ Minimum Revenue Commitment ” shall be the aggregate sum of the revenue to HEP Operating for each Contract Quarter determined by multiplying the Minimum Throughput Commitment for each Applicable Asset for such Contract Quarter, by the Base Tariff for such Applicable


[Page 5 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

Asset in effect for such Contract Quarter. The “ Minimum Capacity Commitment ” means the amount set forth on Exhibit C for each Applicable Asset.

(b)     Applicable Tariffs . HFRM shall pay (i) the applicable Base Tariffs for all quantities of Product transported, stored or loaded at, on or through the Applicable Assets in each Contract Quarter during the Applicable Term up to and including the applicable Incentive Tariff Threshold for such Applicable Asset set forth on Exhibit C , (ii) the applicable Incentive Tariff for quantities in excess of the Incentive Tariff Threshold and, (iii) if applicable, the Excess Tariff for the Applicable Asset for quantities in excess of the Excess Tariff Threshold.

(c)     Adjustment of Applicable Tariffs . The Applicable Tariffs shall be adjusted in the manner set forth on Exhibit C . To evidence the Parties’ agreement to each adjusted Applicable Tariff, the Parties may, but shall not be required to, execute an amended, modified, revised or updated Exhibit C and attach it to this Agreement. If executed, such amended, modified, revised or updated Exhibit C shall be sequentially numbered ( e.g . Exhibit C-1 , Exhibit C-2 , etc .), dated and appended as an additional exhibit to this Agreement and shall replace the prior version of Exhibit C in its entirety, after its date of effectiveness.

(d)     Reduction for Non-Force Majeure Operational Difficulties . If HFRM is unable to transport, store and/or load on, in or at any Applicable Asset the volumes of Products required to meet the Minimum Revenue Commitment for such Applicable Asset for a particular Contract Quarter as a result of HEP Operating’s operational difficulties, prorationing, or the inability to provide sufficient capacity for the Minimum Throughput Commitment, then the Minimum Revenue Commitment applicable to the Contract Quarter during which HFRM is unable to transport, store and/or load such volumes of Products will be reduced by an amount equal to: (A) the volume of Products that HFRM was unable to transport, store and/or load on, in or at such Applicable Assets (but not to exceed the Minimum Throughput Commitment), as a result of HEP Operating’s operational difficulties, prorationing or inability to provide sufficient capacity on the Applicable Assets to achieve the Minimum Throughput Commitment, multiplied by (B) the applicable Base Tariff. This Section 2.2(d) shall not apply in the event HEP Operating gives notice of a Force Majeure event in accordance with the terms of the Omnibus Agreement, in which case the Minimum Revenue Commitment shall be suspended to the extent contemplated in Article IX of the Omnibus Agreement.

(e)     Pro-Rationing for Partial Periods . Notwithstanding the other portions of this Section 2.2 , in the event that the commencement date of the Applicable Term for any group of Applicable Assets is any date other than the first day of a Contract Quarter, then the Minimum Revenue Commitment, Minimum Throughput Commitment, and any applicable Incentive Tariffs for the initial partial Contract Quarter with respect to such group of Applicable Assets shall be prorated based upon the number of days actually in such partial Contract Quarter. Similarly, notwithstanding the other portions of this Section 2.2 if the last day of the Applicable Term for any group of Applicable Assets is on a day other than the last day of a Contract Quarter, then the Minimum Revenue Commitment, Minimum Throughput Commitment, and any applicable Incentive Tariff for the final partial Contract Quarter with respect to such group of Applicable Assets shall be prorated based upon the number of days actually in such partial Contract Quarter and the initial Contract Quarter.

2.3     Measurement of Shipped Volumes . Matters with respect to the measurement of shipped volumes are set forth on Exhibit D .

2.4     Volumetric Gains and Losses; Line Fill; High-API Oil Surcharge . Matters with respect to volumetric gains and losses, line fill and high-API oil surcharges are set forth on Exhibit E .



[Page 6 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

2.5     Obligations of HEP Operating . During the Applicable Term and subject to the terms and conditions of this Agreement, HEP Operating agrees to:

(a)    own or lease, operate and maintain (directly or through a Subsidiary) the Applicable Assets and all related assets necessary to handle the applicable Products from HFRM;

(b)    make available for HFRM’s use the capacity of the Applicable Assets of at least the Minimum Capacity Commitment;

(c)    provide the services required under this Agreement and perform all operations relating to the Applicable Assets, including tank gauging, tank maintenance, loading trucks, interaction with third party pipelines and customer interface for access agreements (as applicable) and performance of all operations and maintenance for the Applicable Assets;

(d)    maintain adequate property and liability insurance covering the Applicable Assets and any related assets owned by HEP Operating or its affiliates and necessary for the operation of the Applicable Assets; and

(e)    at the request of HFRM, and subject in any case to any applicable common carrier proration duties and commitments to other third-party shippers, use commercially reasonable efforts to transport, store and/or load on the Applicable Assets for HFRM each month during the Applicable Term the quantity of Products that HFRM designates from time to time, but in no event less than the Minimum Capacity Commitment.

Notwithstanding the first sentence of this Section 2.5 , subject to the dispute resolution provisions of the Omnibus Agreement and with respect to the Tulsa Assets, the Tulsa Purchase Agreements, HEP Operating or its Affiliate is free to sell any of its assets, including any Applicable Assets, and HFRM is free to merge with another entity and to sell all of its assets or equity to another entity at any time.
2.6     Drag Reducing Agents and Additives . If HEP Operating determines that adding drag reducing agents (“ DRA ”) to the Products is reasonably required to move the Products in the quantities necessary to meet HFRM’s schedule or as may be otherwise be required to safely move such quantities of Products or that additives should be used in the operation of the Applicable Assets, HEP Operating shall provide HFRM with an analysis of the proposed cost and benefits thereof. In the event that HFRM agrees to use such additives as proposed by HEP Operating, HFRM shall reimburse HEP Operating for the costs of adding any DRA or additives. If HEP Operating reasonably determines that additives or chemicals must be added to any of the pipelines included in the Applicable Assets to prevent or control internal corrosion of the pipe, then HFRM shall reimburse HEP Operating for the direct cost of the chemical and associated injection equipment.

2.7     Change in the Direction; Product Service or Origination and Destination of the Pipeline System . Without HFRM’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), HEP Operating shall not (i) reverse the direction of flow of any Pipeline; (ii) change, alter or modify the Product service of any Pipeline; or (iii) change, alter or modify the origination or destination of any Pipeline; provided , however , that HEP Operating may take any necessary emergency action to prevent or remedy a release of Products from a Pipeline without obtaining the consent required by this Section 2.7 . HFRM shall have the right to reverse the direction of flow of any segment of a Pipeline where it is the sole shipper of Products if, in each case, HFRM agrees to (1) reimburse HEP Operating for the additional costs and expenses incurred by HEP Operating as a result of such change in direction (both to reverse and re-


[Page 7 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

reverse); (2) reimburse HEP Operating for all costs arising out of HEP Operating’s inability to perform under any transportation service contract due to the reversal of the direction of flow of the Pipeline; and (3) pay the Applicable Tariffs in accordance with this Agreement, for any such flow reversal. With respect to the Malaga Pipeline System, the foregoing shall apply regardless of whether the Product shipped in such manner reaches an injection point for the Centurion Pipeline or Plains Pipeline. HEP Operating shall not acquire any right, title or interest in the Products, and all title to and ownership of the Products while the same is in the possession of HEP Operating shall be and shall remain exclusively in HFRM. HEP Operating shall not represent itself to any third party as the owner of any of the Products and shall hold the same in trust for HFRM. HFRM shall advise HEP Operating in writing of any change in Product ownership while in the Applicable Assets. If any of HFRM’s Product is sold, exchanged, or otherwise changes ownership while in the Applicable Assets, HFRM shall nonetheless be responsible for the terms and conditions of this Agreement the same as if Products had been owned by HFRM.

2.8     Notification of Utilization . Upon request by HEP Operating, HFRM will provide to HEP Operating written notification of HFRM’s reasonable good faith estimate of its anticipated future utilization of the Applicable Assets as soon as reasonably practicable after receiving such request.

2.9     Scheduling and Accepting Movement . HEP Operating will use its reasonable commercial efforts to schedule and accept movements of Products in a manner that is consistent with the historical dealings between the Parties and their Affiliates, as such dealings may change from time to time.

2.10     Taxes . HFRM will pay all taxes, import duties, license fees and other charges by any Governmental Authority levied on or with respect to the Products handled by HFRM for transportation, storage and/or loading by HEP Operating. Should either Party be required to pay or collect any taxes, duties, charges and or assessments pursuant to any Applicable Law or authority now in effect or hereafter to become effective which are payable by the any other Party pursuant to this Section 2.10 the proper Party shall promptly reimburse the other Party therefor.

2.11     Timing of Payments . HFRM will make payments to HEP Operating by electronic payment with immediately available funds on a monthly basis during the Applicable Term with respect to services rendered or reimbursable costs or expenses incurred by HEP Operating under this Agreement in the prior month. Payments not received by HEP Operating on or prior to the tenth day following the invoice date will accrue interest at the Prime Rate from the applicable payment date until paid.

2.12     Increases in Tariff Rates . If new Applicable Laws are enacted that require HEP Operating to make capital expenditures with respect to the Applicable Assets, HEP Operating may amend the Applicable Tariffs in the manner set forth in Exhibit F , in order to recover HEP Operating’s cost of complying with such new Applicable Laws (as determined in good faith and including a reasonable return). HFRM and HEP Operating shall use their reasonable commercial efforts to comply with such new Applicable Laws, and shall negotiate in good faith to mitigate the impact of such new Applicable Laws and to determine the amount of the new Applicable Tariff rates. If HFRM and HEP Operating are unable to agree on the amount of the new Applicable Tariff rates that HEP Operating will charge, such Applicable Tariff rates will be resolved in the manner provided for in the Omnibus Agreement. Any other applicable exhibit to this Agreement will be updated, amended or revised, as applicable, in accordance with this Agreement to reflect any changes in Applicable Tariff rates established in accordance with this Section 2.12 .

2.13     Removal of Tank from Service     . The Parties agree that if a tank included in the Applicable Assets is removed from service, then HEP Operating will not be required to utilize, operate or maintain such tank or provide the services required under this Agreement with respect to such tank (and there will be no


[Page 8 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

adjustment to the applicable Minimum Revenue Commitment). The Parties acknowledge that provisions relating to the inspection, repair and maintenance of tanks included in the Applicable Assets are set forth in the Master Lease and Access Agreement, and such provisions are in addition to, and not in substitution of, the terms set forth in this Section 2.13 .

2.14     No Guaranteed Minimum . Notwithstanding anything to the contrary set forth in this Agreement, there is no requirement that HFRM deliver any minimum quantity of Product for transport, storage, handling or loading on, over or in the Applicable Assets, it being understood that HFRM’s obligation for failing to ship, store or load sufficient quantities of Product to satisfy the Minimum Revenue Commitment is to make Deficiency Payments as provided in Article 10 .

ARTICLE 3
AGREEMENT TO REMAIN SHIPPER

With respect to any Product that is transported, stored or loaded in connection with any of the Applicable Assets by HFRM, HFRM agrees that it will continue acting in the capacity of the shipper of any such Product for its own account at all times that such Product is being transported, stored, handled or loaded in the Applicable Assets.

ARTICLE 4
NOTIFICATION OF REFINERY SHUT-DOWN OR RECONFIGURATION

If a Refinery shuts down or the Refinery owner reconfigures the Refinery or any portion of the Refinery (excluding planned maintenance turnarounds) and HFRM reasonably believes in good faith that such shut down or reconfiguration will jeopardize its ability to satisfy its applicable Minimum Revenue Commitments under this Agreement, then within 90 days of the delivery of the written notice of the planned shut down or reconfiguration, HFRM shall (A) propose a new Minimum Revenue Commitment under this Agreement, as applicable, such that the ratio of the new applicable Minimum Revenue Commitment under this Agreement over the anticipated production level following the shut down or reconfiguration will be approximately equal to the ratio of the original applicable Minimum Revenue Commitment under this Agreement over the original production level and (B) propose the date on which the new Minimum Revenue Commitment under this Agreement shall take effect. Unless objected to by HEP Operating within 60 days of receipt by HEP Operating of such proposal, such new Minimum Revenue Commitment under this Agreement shall become effective as of the date proposed by HFRM. To the extent that HEP Operating does not agree with HFRM’s proposal, any changes in HFRM’s obligations under this Agreement, or the date on which such changes will take effect, will be determined pursuant to the dispute resolution provisions of the Omnibus Agreement. Any applicable exhibit to this Agreement will be updated, amended or revised, as applicable, in accordance with this Agreement to reflect any change in the applicable Minimum Revenue Commitment under this Agreement agreed to in accordance with this Section 4.1 .

ARTICLE 5
FORCE MAJEURE

The rights and obligations of the Parties upon the occurrence of an event of Force Majeure will be determined in the manner set forth in the Omnibus Agreement; provided that (a) any suspension of the obligations of the Parties under this Agreement as a result of an event of Force Majeure shall extend the Applicable Term (to the extent so affected) for a period equivalent to the duration of the inability set forth in the Force Majeure Notice, (b) HFRM will be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event, and (c) if a Force Majeure event prevents either Party


[Page 9 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

from performing substantially all of their respective obligations under this Agreement relating to a group of Applicable Assets for a period of more than one (1) year, this Agreement may be terminated as to such Applicable Assets (but not as to unaffected Applicable Assets) by either Party providing written notice thereof to the other Party.

ARTICLE 6
AGREEMENT NOT TO CHALLENGE PIPELINE TARIFFS

HFRM agrees to any tariff rate changes for Pipelines in accordance with this Agreement. HFRM agrees (a) not to challenge, nor to cause their Affiliates to challenge, nor to encourage or recommend to any other Person that it challenge, or voluntarily assist in any way any other Person in challenging, in any forum, tariffs (including joint tariffs) of HEP Operating (or its Affiliates) that HEP Operating (or its Affiliate) has filed or may file containing rates, rules or regulations that are in effect at any time during the Applicable Term and regulate the transportation of the Products on any Pipelines, and (b) not to protest or file a complaint, nor cause their Affiliates to protest or file a complaint, nor encourage or recommend to any other Person that it protest or file a complaint, or voluntarily assist in any way any other Person in protesting or filing a complaint, with respect to regulatory filings that HEP Operating or its Affiliate has made or may make at any time during the Applicable Term to change tariffs (including joint tariffs) for transportation of Products on any Pipelines, in each case so long as such tariffs, regulatory filings or rates changed do not conflict with the terms of this Agreement.

ARTICLE 7
EFFECTIVENESS AND APPLICABLE TERM

This Agreement shall be effective as to each group of Applicable Assets as of the date and time set forth on Exhibit C and shall terminate with respect to each group of Applicable Assets as of the date and time set forth on Exhibit C , unless extended by written mutual agreement of the Parties or as set forth in Article 8 (each, the “ Applicable Term ”). The Party desiring to extend this Agreement with respect to any group of Applicable Assets pursuant to this Article 7 shall provide prior written notice to the other Party of its desire to so extend this Agreement; such written notice shall be provided not more than twenty-four (24) months and not less than the later of twelve (12) months prior to the date of termination of the Applicable Term or ten (10) days after receipt of a written request from the other Party (which request may be delivered no earlier than twelve (12) months prior to the date of termination of the Applicable Term) to provide any such notice or lose such right.

ARTICLE 8
RIGHT TO ENTER INTO A NEW AGREEMENT

8.1.     Negotiation Pursuant to Written Notice . In the event that HFRM provides prior written notice to HEP Operating of the desire of HFRM to extend this Agreement for a specific group of Applicable Assets by written mutual agreement of the Parties pursuant to Article 7 , the Parties shall negotiate in good faith to extend this Agreement by written mutual agreement with respect to such specific group of Applicable Assets, but, if such negotiations fail to produce a written mutual agreement for extension by a date six months prior to the termination date for such group of Applicable Assets, then HEP Operating shall have the right to negotiate to enter into one or more throughput, tankage or transportation services agreements for HFRM’s Minimum Capacity Commitment for such Applicable Assets with one or more third parties to begin after the date of termination, provided , however , that until the end of one year following termination without renewal of this Agreement for such group of Applicable Assets, HFRM will have the right to enter into a new throughput, tankage or transportation services or transportation services agreement with HEP Operating


[Page 10 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

with respect to its Minimum Capacity Commitment on the date of termination on commercial terms that substantially match the terms upon which HEP Operating proposes to enter into an agreement with a third party for similar services with respect to all or a material portion of such capacity of such group of Applicable Assets. In such circumstances, HEP Operating shall give HFRM at least forty-five (45) days prior written notice of any proposed new throughput agreement with a third party, and such notice shall inform HFRM of the fee schedules, tariffs, duration and any other material terms of the proposed third party agreement. HFRM shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or HFRM shall lose the rights specified by this Section 8.1 with respect to the capacity that is the subject of such notice.

8.2.     Negotiation in the Absence of Written Notice . In the event that HFRM fails to provide prior written notice to HEP Operating of the desire of HFRM to extend this Agreement for a specific group of Applicable Assets by written mutual agreement of the Parties pursuant to Article 7 , HEP Operating shall have the right, during the period from the date of HFRM’s failure to provide written notice pursuant to Article 7 to the date of termination of this Agreement, to negotiate to enter into one or more throughput, tankage or transportation services agreements for HFRM’s Minimum Capacity Commitment for the such group of Applicable Assets with one or more third parties to begin after the date of termination; provided, however , that at any time during the twelve (12) months prior to the expiration of the Applicable Term, HFRM will have the right to enter into a new throughput, tankage agreement with HEP Operating with respect to its existing Minimum Capacity Commitment at such time on commercial terms that substantially match the terms upon which HEP Operating proposes to enter into an agreement with a third party for similar services with respect to all or a material portion of such capacity on such group of Applicable Assets. In such circumstances, HEP Operating shall give HFRM forty-five (45) days prior written notice of any proposed new agreement with a third party, and such notice shall inform HFRM of the fee schedules, tariffs, duration and any other material terms of the proposed third party agreement and HFRM shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or HFRM shall lose the rights specified by this Section 8.2 with respect to the capacity that is the subject of such notice.

ARTICLE 9
NOTICES
Any notice or other communication given under this Agreement shall be in writing and shall be provided in the manner set forth in the Omnibus Agreement.

ARTICLE 10
DEFICIENCY PAYMENTS

10.1     Deficiency Notice; Deficiency Payments . As soon as practicable following the end of each Contract Quarter under this Agreement, HEP Operating shall deliver to HFRM a written notice (the “ Deficiency Notice ”) detailing any failure of HFRM to meet any of the Minimum Revenue Commitments set forth on Exhibit C ; provided, however , that HFRM’s obligations pursuant to the Minimum Revenue Commitment shall be assessed on a quarterly basis for the purposes of this Article 10 . Notwithstanding the previous sentence, any deficiency owed by HFRM due to its failure to satisfy any Minimum Revenue Commitment, if any, set forth on Exhibit C , as to any Applicable Asset for a Contract Quarter shall be offset by any revenue owed to HEP Operating in excess of any Minimum Revenue Commitment for such Contract Quarter set forth on Exhibit C from any other Applicable Asset at the same location. The Deficiency Notice shall (i) specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar amount that HEP Operating believes would have been paid by HFRM to HEP Operating if HFRM had complied with its Minimum Revenue Commitment obligations pursuant to this Agreement (the “ Deficiency Payment ”). HFRM shall pay the Deficiency Payment to HEP Operating upon the later of: (A) ten (10) days


[Page 11 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

after their receipt of the Deficiency Notice and (B) thirty (30) days following the end of the related Contract Quarter.

10.2     Disputed Deficiency Notices . If HFRM disagrees with the Deficiency Notice, then, following the payment of the undisputed portion of the Deficiency Payment to HEP Operating, if any, HFRM shall send written notice thereof regarding the disputed portion of the Deficiency Payment to HEP Operating. Thereafter, a senior officer of HollyFrontier (on behalf of HFRM) and a senior officer of the Partnership (on behalf of HEP Operating) shall meet or communicate by telephone at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences that they may have with respect to matters specified in the Deficiency Notice. During the 30-day period following the payment of the Deficiency Payment, HFRM shall have access to the working papers of HEP Operating relating to the Deficiency Notice. If such differences are not resolved within thirty (30) days following HFRM’s receipt of the Deficiency Notice, HFRM and HEP Operating shall, within forty-five (45) days following HFRM’s receipt of the Deficiency Notice, submit any and all matters which remain in dispute and which were properly included in the Deficiency Notice to dispute resolution in accordance with the Omnibus Agreement.

10.3     Payment of Amounts No Longer Disputed . If it is finally determined pursuant to this Article 10 that HFRM is required to pay any or all of the disputed portion of the Deficiency Payment, HFRM shall promptly pay such amount to HEP Operating, together with interest thereon at the Prime Rate, in immediately available funds.

10.4     Contract Quarters Independent . The fact that HFRM has exceeded or fallen short of the Minimum Revenue Commitment with respect to any Contract Quarter shall not be considered in determining whether HFRM meets, exceeds or falls short of the Minimum Revenue Commitment with respect to any other Contract Quarter, and the amount of any such excess or shortfall shall not be counted towards or against the Minimum Revenue Commitment with respect to any other Contract Quarter.



[Page 12 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

ARTICLE 11
RIGHT OF FIRST REFUSAL

The Parties acknowledge the right of first refusal of HollyFrontier with respect to the Applicable Assets other than the Tulsa Assets as provided in the Omnibus Agreement, and the right of first refusal of HollyFrontier with respect to the Tulsa Assets as provided in the Tulsa Purchase Agreements.

    
ARTICLE 12
INDEMNITY; LIMITATION OF DAMAGES

12.1     Indemnity; Limitation of Liability     . The Parties acknowledge and agree that the provisions relating to indemnity and limitation of liability are set forth in the Omnibus Agreement. Notwithstanding anything in this Agreement or the Omnibus Agreement to the contrary and solely for the purpose of determining which of HFRM or HEP Operating shall be liable in a particular circumstance, neither HFRM or HEP Operating shall be liable to the other Party for any loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred (collectively, “ Damages ”) by such Party except to the extent set forth in the Omnibus Agreement and to the extent that HFRM or HEP Operating causes such Damages or owns or operates the assets or other property in question responsible for causing such Damages.
12.2     Survival . The provisions of this Article 12 shall survive the termination of this Agreement.
ARTICLE 13
MISCELLANEOUS

13.1     Amendments and Waivers . No amendment or modification of this Agreement shall be valid unless it is in writing and signed by the Parties. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced. Any of the exhibits to this Agreement may be amended, modified, revised or updated by the Parties if each of the Parties executes an amended, modified, revised or updated exhibit, and attaches it to this Agreement. Such amended, modified, revised or updated exhibits shall be sequentially numbered ( e.g. Exhibit A-1 , Exhibit A-2 , etc .), dated and appended as an additional exhibit to this Agreement and shall replace the prior exhibit, in its entirety, after its date of effectiveness, except as specified therein. No failure or delay in exercising any right hereunder, and no course of conduct, shall operate as a waiver of any provision of this Agreement. No single or partial exercise of a right hereunder shall preclude further or complete exercise of that right or any other right hereunder.

13.2     Successors and Assigns . This Agreement shall inure to the benefit of, and shall be binding upon, the Parties and their respective successors and permitted assigns. Neither this Agreement nor any of the rights or obligations hereunder shall be assigned without the prior written consent of HFRM (in the case of any assignment by HEP Operating) or HEP Operating (in the case of any assignment by HFRM), in each case, such consent is not to be unreasonably withheld or delayed; provided , however , that (i) HEP Operating may make such an assignment (including a partial pro rata assignment) to an Affiliate of HEP Operating without HFRM’s consent, (ii) HFRM may make such an assignment (including a pro rata partial assignment) to an Affiliate of HFRM without HEP Operating’s consent, (iii) HFRM may make a collateral assignment of its rights and obligations hereunder and/or grant a security interest in its rights and obligations hereunder, and HEP Operating shall execute an acknowledgement of such collateral assignment in such form as may


[Page 13 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

from time-to-time be reasonably requested, and (iv) HEP Operating may make a collateral assignment of its rights hereunder and/or grant a security interest in its rights and obligations hereunder to a bona fide third party lender or debt holder, or trustee or representative for any of them, without HFRM’s consent, if such third party lender, debt holder or trustee shall have executed and delivered to HFRM a non-disturbance agreement in such form as is reasonably satisfactory to HFRM and such third party lender, debt holder or trustee, and HFRM executes an acknowledgement of such collateral assignment in such form as may from time to time be reasonably requested. Any attempt to make an assignment otherwise than as permitted by the foregoing shall be null and void. The Parties agree to require their respective successors, if any, to expressly assume, in a form of agreement reasonably acceptable to the other Parties, their obligations under this Agreement.

13.3     Severability . If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.

13.4     Choice of Law . This Agreement shall be subject to and governed by the laws of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.

13.5     Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties, and no limited partner of the Partnership shall have the right, separate and apart from the Partnership, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.

13.6     Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

13.7     Headings . Headings of the Sections of this Agreement are for convenience of the Parties only and shall be given no substantive or interpretative effect whatsoever. All references in this Agreement to Sections are to Sections of this Agreement unless otherwise stated.

ARTICLE 14
GUARANTEE BY HOLLYFRONTIER

14.1     Payment Guaranty . HollyFrontier unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HEP Operating the punctual and complete payment in full when due of all amounts due from HFRM under this Agreement (collectively, the “ HFRM Payment Obligations ”). HollyFrontier agrees that HEP Operating shall be entitled to enforce directly against HollyFrontier any of the HFRM Payment Obligations.

14.2     Guaranty Absolute . HollyFrontier hereby guarantees that the HFRM Payment Obligations will be paid strictly in accordance with the terms of the Agreement. The obligations of HollyFrontier under this Agreement constitute a present and continuing guaranty of payment, and not of collection or collectability. The liability of HollyFrontier under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:

(a)    any assignment or other transfer of this Agreement or any of the rights thereunder of HEP Operating;


[Page 14 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27


(b)    any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;

(c)    any acceptance by HEP Operating of partial payment or performance from HFRM;

(d)    any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HFRM or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;

(e)    any absence of any notice to, or knowledge of, HollyFrontier, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or

(f)    any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.

The obligations of HollyFrontier hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the HFRM Payment Obligations or otherwise.

14.3     Waiver . HollyFrontier hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HFRM Payment Obligations and any requirement for HEP Operating to protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against HFRM, any other entity or any collateral.

14.4     Subrogation Waiver . HollyFrontier agrees that for so long as there is a current or ongoing default or breach of this Agreement by HFRM, HollyFrontier shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from HFRM for any payments made by HollyFrontier under this Article 14 , and HollyFrontier hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery it may now have or hereafter acquire against HFRM during any period of default or breach of this Agreement by HFRM until such time as there is no current or ongoing default or breach of this Agreement by HFRM.

14.5     Reinstatement . The obligations of HollyFrontier under this Article 14 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HFRM Payment Obligations is rescinded or must otherwise be returned to HFRM or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of HFRM or such other entity, or for any other reason, all as though such payment had not been made.

14.6     Continuing Guaranty . This Article 14 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment in full of all of the HFRM Payment Obligations, (ii) be binding upon HollyFrontier, its successors and assigns and (iii) inure to the benefit of and be enforceable by HEP Operating and its respective successors, transferees and assigns.



[Page 15 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

14.7     No Duty to Pursue Others . It shall not be necessary for HEP Operating (and HollyFrontier hereby waives any rights which HollyFrontier may have to require HEP Operating), in order to enforce such payment by HollyFrontier, first to (i) institute suit or exhaust its remedies against HFRM or others liable on the HFRM Payment Obligations or any other person, (ii) enforce HEP Operating’s rights against any other guarantors of the HFRM Payment Obligations, (iii) join HFRM or any others liable on the HFRM Payment Obligations in any action seeking to enforce this Article 14 , (iv) exhaust any remedies available to HEP Operating against any security which shall ever have been given to secure the HFRM Payment Obligations, or (v) resort to any other means of obtaining payment of the HFRM Payment Obligations.

ARTICLE 15
GUARANTEE BY THE PARTNERSHIP

15.1     Payment and Performance Guaranty . The Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HFRM the punctual and complete payment in full when due of all amounts due from HEP Operating under this Agreement (collectively, the “ HEP Operating Payment Obligations ”) and the punctual and complete performance of all other obligations of HEP Operating under this Agreement (collectively, the “ HEP Operating Performance Obligations ”, together with the HEP Operating Payment Obligations, the “ HEP Operating Obligations ”). The Partnership agrees that HFRM shall be entitled to enforce directly against the Partnership any of the HEP Operating Obligations.

15.2     Guaranty Absolute . The Partnership hereby guarantees that the HEP Operating Payment Obligations will be paid, and the HEP Performance Obligations will be performed, strictly in accordance with the terms of this Agreement. The obligations of the Partnership under this Agreement constitute a present and continuing guaranty of payment and performance, and not of collection or collectability. The liability of the Partnership under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:

(a)    any assignment or other transfer of this Agreement or any of the rights thereunder of HFRM;

(b)    any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;

(c)    any acceptance by HFRM of partial payment or performance from HEP Operating;

(d)    any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HEP Operating or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;

(e)    any absence of any notice to, or knowledge of, the Partnership, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or

(f)    any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.

The obligations of the Partnership hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination


[Page 16 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

whatsoever by reason of the invalidity, illegality or unenforceability of the HEP Operating Obligations or otherwise.

15.3     Waiver . The Partnership hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HEP Operating Payment Obligations and any requirement for HFRM to protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against HEP Operating, any other entity or any collateral.

15.4     Subrogation Waiver . The Partnership agrees that for so long as there is a current or ongoing default or breach of this Agreement by HEP Operating, the Partnership shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from HEP Operating for any payments made by the Partnership under this Article 15 , and each of the Partnership hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery it may now have or hereafter acquire against HEP Operating during any period of default or breach of this Agreement by HEP Operating until such time as there is no current or ongoing default or breach of this Agreement by HEP Operating.

15.5     Reinstatement . The obligations of the Partnership under this Article 15 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HEP Operating Payment Obligations is rescinded or must otherwise be returned to HEP Operating or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of HEP Operating or such other entity, or for any other reason, all as though such payment had not been made.

15.6     Continuing Guaranty . This Article 15 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment and/or performance in full of all of the HEP Operating Payment Obligations, (ii) be binding upon the Partnership and each of its respective successors and assigns and (iii) inure to the benefit of and be enforceable by HFRM and their respective successors, transferees and assigns.

15.7     No Duty to Pursue Others . It shall not be necessary for HFRM (and the Partnership hereby waives any rights which the Partnership may have to require HFRM), in order to enforce such payment by the Partnership, first to (i) institute suit or exhaust its remedies against HEP Operating or others liable on the HEP Operating Obligations or any other person, (ii) enforce HFRM’s rights against any other guarantors of the HEP Operating Obligations, (iii) join HEP Operating or any others liable on the HEP Operating Obligations in any action seeking to enforce this Article 15 , (iv) exhaust any remedies available to HFRM against any security which shall ever have been given to secure the HEP Operating Obligations, or (v) resort to any other means of obtaining payment of the HEP Operating Obligations.

[Remainder of page intentionally left blank. Signature pages follow.]


[Page 17 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first written above to be effective as of the Effective Time.

HEP OPERATING:

Holly Energy Partners-Operating, L.P.


By:      /s/ Mark A. Plake    
Mark A. Plake
President


HFRM:

HollyFrontier Refining & Marketing LLC



By:      /s/ George J. Damiris    
George J. Damiris
Chief Executive Officer and President



[Page 18 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 10.2
AND Article 14 :

HOLLYFRONTIER CORPORATION


By: /s/ George J. Damiris    
George J. Damiris
Chief Executive Officer and President




ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 10.2
AND Article 15 :

HOLLY ENERGY PARTNERS, L.P.

By:    HEP Logistics Holdings, L.P.,
its General Partner

By:    Holly Logistic Services, L.L.C.,
its General Partner


By: /s/ Mark A. Plake    
Mark A. Plake
President





[Page 19 to the Third Amended and Restated Master Throughput Agreement]

Exhibit 10.27

Exhibit A
to
Third Amended and Restated
Master Throughput Agreement


Definitions

“ Actual Construction Costs ” has the meaning set forth in Exhibit C .
“ Affiliate ” means, with to respect to a specified person, any other person controlling, controlled by or under common control with that first person. As used in this definition, the term “control” includes (i) with respect to any person having voting securities or the equivalent and elected directors, managers or persons performing similar functions, the ownership of or power to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions, (ii) ownership of 50% or more of the equity or equivalent interest in any person and (iii) the ability to direct the business and affairs of any person by acting as a general partner, manager or otherwise. Notwithstanding the foregoing, for purposes of this Agreement, HFRM, on the one hand, and HEP Operating, on the other hand, shall not be considered affiliates of each other.
“ Agreement ” has the meaning set forth in the preamble to this Agreement.
“ API ” means the American Petroleum Institute.
“ API 653 ” means the Above Ground Storage Tank Inspector Program issued by the API as API Standard 653, as amended and supplemented from time to time.
“ API Gravity ” means the API index of specific gravity of a liquid petroleum expressed as degrees, as such index would be calculated on the date hereof.
“ Applicable Asset ” means each of the Cheyenne Assets, El Dorado Assets, Lovington Loading Rack, Malaga Pipeline System, Roadrunner Pipeline, Tulsa Assets, El Dorado Crude Tank Farm Assets and the Tulsa West Tankage, individually; and “ Applicable Assets ” means all of the foregoing assets, collectively.
“ Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination of, any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
“ Applicable Tariff ” means the Base Tariff and, to the extent applicable, the Incentive Tariff.
“ Applicable Term ” has the meaning set forth in Article 7 .
“ ASTM ” means ASTM International.

Exhibit A-1

Exhibit 10.27

“ Assumed OPEX ” means, with respect to any Applicable Asset, the amount set forth on Exhibit C with respect to such Applicable Asset.
“ Barrel ” means 42 Gallons.
“ Base Tariff ” means the Base Tariff applicable to the quantity of Product transported, stored or loaded in connection with an Applicable Asset as set forth on Exhibit C , as such Base Tariff may be adjusted pursuant to the terms of this Agreement.
“ bpd ” means Barrels per day.
“ Business Day ” means any day other than Saturday, Sunday or other day upon which commercial banks in Dallas, Texas are authorized by law to close.
“ Centurion Pipeline ” means that certain 10” pipeline system operated by Centurion Pipeline L.P. and originating from Centurion’s Artesia Station located within Township 18S and Range 27E, approximately 1 mile south of HEP Operating’s Abo Station.
“ Cheyenne Assets ” means the Cheyenne Receiving Assets, Cheyenne Loading Rack and the Cheyenne Tankage.
“ Cheyenne Loading Rack ” means the refined products truck loading rack and the two (2) propane loading spots located at the Cheyenne Refinery and more specifically described in Exhibit I-1 .
“ Cheyenne Receiving Assets ” means the pipelines set forth on Exhibit I-2 .
“ Cheyenne Refinery ” means the refinery owned by HollyFrontier Cheyenne Refining LLC and located in Cheyenne, Wyoming.
“ Cheyenne RCRA Order ” means the administrative order set forth in Exhibit I .
“ Cheyenne Tankage ” means the tanks set forth on Exhibit I-3 .
“ Claim ” means any existing or threatened future claim, demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.
“ Closing Date ” has the meaning for each Applicable Asset set forth in the Omnibus Agreement.
“ Construction Projects ” has the meaning set forth in Article 2 .
“ Contract Quarter ” means a three-month period that commences on January 1, April 1, July 1 or October 1 and ends on March 31, June 30, September 30, or December 31, respectively.
“ Control ” (including with correlative meaning, the term “controlled by”) means, as used with respect to any Person, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

Exhibit A-2

Exhibit 10.27

“ Crude Agreement ” means the Third Amended and Restated Crude Pipelines and Tankage Agreement, dated as of March 12, 2015, by and among HFRM, HEP Operating and certain other Affiliates of HFRM and HEP Operating.
“ Crude Oil ” means the direct liquid product of oil wells, oil processing plants, the indirect liquid petroleum products of oil or gas wells, oil sands or a mixture of such products, but does not include natural gas liquids, Refined Products, naphtha, gas oil, LEF (lube extraction feedstocks) or any other refined products.
“ Deficiency Notice ” has the meaning set forth in Section 10.1 .
“ Deficiency Payment ” has the meaning set forth in Section 10.1 .
“ Devon ” means Devon Energy Production Company, L.P., and its Affiliates .
“ Devon Lease Connections ” has the meaning set forth in Exhibit G-3 .
“ DRA ” has the meaning set forth in Section 2.6 .
“ Effective Time ” means 12:01 a.m., Dallas, Texas time, on January 1, 2017.
“ El Dorado Assets ” means the El Dorado Loading Rack and the El Dorado Tankage.
“ El Dorado Crude Tank Farm Assets ” means the El Dorado Delivery Lines and the El Dorado Crude Tankage.
“ El Dorado Crude Tank Farm Consideration Period ” has the meaning set forth in Exhibit K .
“ El Dorado Crude Tank Farm Quality Specifications ” has the meaning set forth in Exhibit K .
“ El Dorado Crude Tankage ” means the tankage identified on Exhibit K-1 .
“ El Dorado Delivery Lines ” has the meaning set forth in Exhibit K .
“ El Dorado Loading Rack ” means the Refined Products truck loading rack and the propane loading rack located at the El Dorado Refinery and more specifically described on Exhibit H-1 .
“ El Dorado Minimum Working Capacity ” has the meaning set forth in Exhibit K .
“ El Dorado Quality Specifications ” means those specifications set forth in Exhibit K-2 .
“ El Dorado Refinery ” means the refinery owned by HollyFrontier El Dorado Refining LLC and located in El Dorado, Kansas.
“ El Dorado Tankage ” means the tanks set forth on Exhibit H-2 .
“ El Dorado Terminal ” means the tank farm owned by HEP Operating and located in El Dorado, Kansas.
“ Environmental Law ” has the meaning set forth in the Omnibus Agreement.
“ Excess Tariff Threshold ” has the meaning set forth in Exhibit C .

Exhibit A-3

Exhibit 10.27

“ Exercise Notice ” has the meaning set forth in Exhibit F .
“ FERC Oil Pipeline Index ” has the meaning set forth in Section 3(a)(iii)(B) .
“ Final Construction Cost ” means the final aggregate construction cost of a New Tank, as contemplated by Exhibit H , Exhibit I and Exhibit J .
“ Force Majeure ” has the meaning set forth in the Omnibus Agreement.
“ Force Majeure Notice ” has the meaning set forth in the Omnibus Agreement.
“ Gallon ” means a United States gallon of two hundred thirty-one (231) cubic inches of liquid at sixty degrees (60°) Fahrenheit, and at the equivalent vapor pressure of the liquid.
“ Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.
“ Heavy Products ” means fuel oil, asphalt, coker feed, vacuum tower bottoms, atmospheric tower bottoms, pitch or roofing flux.
“ HEP Operating ” has the meaning set forth in the Preamble.
“ HEP Operating Payment Obligations ” has the meaning set forth in Section 15.1 .
“ HFRM ” has the meaning set forth in the Preamble.
“ HFRM Payment Obligations ” has the meaning set forth in Section 14.1 .
“ High-API Surcharge ” has the meaning set forth in Section 2.4 .
“ HollyFrontier ” means HollyFrontier Corporation, a Delaware corporation.
“ HollyFrontier Navajo ” means HollyFrontier Navajo Refining LLC.
“ HollyFrontier Tulsa ” means HollyFrontier Tulsa Refining LLC.
“ Incentive Tariff ” means the Incentive Tariff applicable to the quantity of Product transported, stored or loaded in connection with an Applicable Asset as set forth on Exhibit C , as such Incentive Tariff may be adjusted pursuant to the terms of this Agreement.
“ Initial OPEX ” has the meaning set forth in Exhibit L-2 .
“ Intermediate Products ” means non-finished intermediate products, including high sulfur diesel fuel for DHT feed, jet fuel, naphtha for reformer feed, gas oil or LEF for FCC feed, reformate, light straight run, hydrogen, fuel gas and sour fuel gas.
“ Jayhawk ” means Jayhawk Pipeline, L.L.C. (or its successors to the Jayhawk Tankage).

Exhibit A-4

Exhibit 10.27

“ Jayhawk Lease ” means the lease between HEP-Operating and Jayhawk for the Jayhawk Tankage in existence as of the commencement of the Applicable Term.
“ Jayhawk Tankage ” means the tankage identified in Exhibit K-1 .
“ Lovington Loading Rack ” means that certain asphalt loading rack located at the Navajo Refinery.
“ LPG Products ” means propane, refinery grade propylene, normal butane and isobutane.
“ Malaga Capacity Estimate ” has the meaning set forth in Exhibit G .
“ Malaga Commencement Date ” means the date on which, in the reasonable opinion of HEP Operating, the Malaga Pipeline System is available for service and operating as expected in delivering Crude Oil, which date has been specified in written notice from HEP Operating to HFRM at least 60 days prior to the Malaga Commencement Date; provided, however , that if the Malaga Pipeline System is, in the discretion of HEP Operating, substantially complete, then the parties may agree in writing to a commencement date prior to the Malaga Pipeline System being fully completed.
“ Malaga Construction Projects ” has the meaning set forth in Exhibit G .
“ Malaga Exercise Notice ” has the meaning set forth in Exhibit G .
“ Malaga Initial Period ” means the period beginning on the Malaga Commencement Date through and including final day of the 20 th full Contract Quarter following the Malaga Commencement Date.
“ Malaga Pipeline System ” means the pipeline systems (a) extending from the (i) Whites City Road Station to the HEP Operating Artesia Station, from (ii) Devon Parkway field to the Millman Station and the HEP Operating Artesia Station, (iii) HEP Operating Artesia Station to the Beeson Station, (iv) the Beeson Station to the Anderson Ranch Pipeline, (v) Devon Hackberry field to the Beeson Station, and (v) Beeson Station to the Plains Pipeline, including in each case all related lease connection pipelines, storage facilities, crude oil gathering tanks, and truck off-loading facilities, as depicted on Exhibit G-1 (Map of Pipeline System and Pipeline System Capacity by Segment), and (b) with the volume capacities as set forth on Exhibit G-1 , described on Exhibit G-2 (Construction Projects) and described on Exhibit G-3 (Devon Lease Connections).
“ Master Lease and Access Agreement ” means that certain Master Lease and Access Agreement dated as of the date hereof among certain of the Affiliates of HEP Operating and the owners of the Refineries.
“ Minimum Capacity Commitment ” has the meaning set forth in Section 2.2(a) .
“ Minimum Revenue Commitment ” has the meaning set forth in Section 2.2(a) .
“ Minimum Throughput Commitment ” means the quantity of Product to be transported, stored or loaded in connection with an Applicable Asset, as set forth on Exhibit C , as such amount may be adjusted pursuant to the terms of this Agreement.
“ MSCFD ” means thousands of cubic feet per day.
“ MVP Pipeline ” has the meaning set forth in Exhibit K .

Exhibit A-5

Exhibit 10.27

“ Navajo Refinery ” means the refinery owned by HollyFrontier Navajo and located in Lovington, New Mexico.
“ New Tank ” means the new petroleum products storage tankage to be added to the Applicable Assets as identified on Exhibits H and J .
“ New Tank Commencement Date ” means, with respect to each New Tank, the first day of the calendar month after the date on which, in the reasonable opinion of HEP Operating, such New Tank is mechanically complete, available for service and operating as expected in storing the Product for which such New Tank was designed, which date has been specified in written notice from HEP Operating to HFRM at least 30 days prior to such date.
“ Omnibus Agreement ” means the Seventeenth Amended and Restated Omnibus Agreement, dated as of the date hereof.
“ OPEX Reimbursement Amount ” has the meaning set forth in Exhibit L-2 .
“ Original Master Throughput Agreement ” has the meaning set forth in the Recitals.
“ Osage Pipeline ” has the meaning set forth in Exhibit K .
“ Parties ” has the meaning set forth in the Preamble.
“ Partnership ” means Holly Energy Partners, L.P., a Delaware limited partnership.
“ Party ” has the meaning set forth in the Preamble.
“ Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
“ Pipelines ” means the Malaga Pipeline System, Roadrunner Pipeline, the Tulsa Pipelines, the Tulsa Interconnecting Pipelines, and the El Dorado Delivery Lines, and any other pipeline included in the Applicable Assets.
“ Plains Pipeline ” means that certain 16” diameter pipeline operated by Plains All American Pipeline, L. P. and located in Lea County, New Mexico and which crosses the HEP Anderson Ranch gathering system in Township 18 South, Range 32 East.
“ Previous Amended and Restated Master Throughput Agreement ” has the meaning set forth in the Recitals.
“ Prime Rate ” means the prime rate per annum announced by Union Bank, N.A., or if Union Bank, N.A. no longer announces a prime rate for any reason, the prime rate per annum announced by the largest U.S. bank measured by deposits from time to time as its base rate on corporate loans, automatically fluctuating upward or downward with each announcement of such prime rate.
“ Prior Agreements ” means those agreements set forth in Recitals A through F. For the avoidance of doubt, “Prior Agreements” do not include the following agreements (as amended, modified or supplemented and in effect from time to time): (a) Amended and Restated Intermediate Pipelines Agreement

Exhibit A-6

Exhibit 10.27

dated June 1, 2009, (b) Tulsa Equipment and Throughput Agreement     dated August 1, 2009, (c) Amended and Restated Refined Product Pipelines and Terminals Agreement     effective February 1, 2009, (d) Second Amended and Restated Throughput Agreement     effective June 1, 2013, (e) Third Amended and Restated Crude Pipelines and Tankage Agreement dated March 12, 2015, and (f) Unloading and Blending Services Agreement (Artesia) dated March 12, 2015.
“ Products ” has the meaning set forth in Exhibit C .
“ Qualified Third-Party Throughput ” has the meaning set forth in Exhibit C .
“ Red Rock Pipeline ” has the meaning set forth in Exhibit K .
“ Refined Products ” means gasoline, kerosene, ethanol and diesel fuel.
“ Refineries ” means the Navajo Refinery; the El Dorado Refinery; the Cheyenne Refinery; the Tulsa East Refinery and the Tulsa West Refinery.
“ Roadrunner Pipeline ” means that certain 16” crude oil pipeline extending approximately 65 miles from the Slaughter station to Lovington, New Mexico.
“ Subsequent Year ” has the meaning set forth in Exhibit G .
“ Subsidiary ” means with respect to any Person (the “ Owner ”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interest having such power only upon the happening of a contingency that has not occurred), are held by the Owner or one or more of its Subsidiaries.
“ Surcharge Tariff ” has the meaning set forth in Exhibit C .
“ SUS ” means Saybolt Universal Seconds as specified by ASTM Standard D2161-10, as amended, supplemented or replaced from time to time.
“ Tulsa Assets ” means the Tulsa Group 1 Tankage, Tulsa Group 1 Loading Rack, Tulsa Group 1 Pipeline, Tulsa Group 2 Tankage, Tulsa Group 2 Loading Rack and the Tulsa Interconnecting Pipelines.
“ Tulsa East Refinery ” means the refinery owned by HollyFrontier Tulsa and located at 905 West 25 th Street, Tulsa, Oklahoma 74107.
“ Tulsa Group 1 Purchase Agreement ” means that certain Asset Sale and Purchase Agreement dated as of October 1, 2009 by and among HollyFrontier Tulsa, HEP Tulsa LLC and Holly Energy Storage – Tulsa.
“ Tulsa Group 1 Loading Rack ” means the gas oil, asphalt and propane truck loading racks located at the Tulsa West Refinery and more specifically described in Exhibit J-1 attached hereto.
“ Tulsa Group 1 Tankage ” means the tankage identified in Exhibit J-3 attached hereto.
“ Tulsa Group 2 Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of March 31, 2010 by and between HEP Tulsa LLC, Lea Refining Company, and HollyFrontier Tulsa.

Exhibit A-7

Exhibit 10.27

“ Tulsa Group 2 Tankage ” means the tankage identified in Exhibit J-5 .
“ Tulsa Group 2 Loading Rack ” means the rail loading rack located at the Tulsa West Refinery and more specifically described in Exhibit J-4 .
“ Tulsa Interconnecting Pipelines ” means the following pipelines between the Tulsa East Refinery and the Tulsa West Refinery: 1) the 12 inch raw gas oil/diesel line (the “ Distillate Interconnecting Pipeline ”), 2) the 12 inch naphtha/gasoline component line (the “ Gasoline Interconnecting Pipeline ”), 3) the 12 inch refinery fuel gas line (the “ Refinery Fuel Gas Interconnecting Pipeline ”), 4) the 8 inch hydrogen line (the “ Hydrogen Interconnecting Pipeline ”), and 5) the 10 inch refinery sour fuel gas line (the “ Refinery Sour Fuel Gas Interconnecting Pipeline ”) including delivery facilities from the Tulsa West Refinery and receipt facilities at the Tulsa East Refinery for the Distillate and Gasoline Interconnecting Pipelines, but not for the Refinery Fuel Gas, Hydrogen, and Refinery Sour Fuel Gas Interconnecting Pipelines.
“ Tulsa Group 1 Pipeline ” means those two (2) product delivery lines extending from the Group 1 Tankage to interconnection points with the Magellan pipeline as more specifically described in Exhibit J-2 attached hereto.
“ Tulsa Purchase Agreements ” means the Tulsa Group 1 Purchase Agreement and the Tulsa Group 2 Purchase Agreement.
“ Tulsa West Refinery ” means the refinery owned by HollyFrontier Tulsa located at 1700 S. Union, Tulsa, Oklahoma.
“ Tulsa West Tankage ” means the tankage identified in Exhibit L-1 .
“ Working Capacity ” has the meaning set forth in Exhibit K .


Exhibit A-8

Exhibit 10.27

Exhibit B
to
Third Amended and Restated
Master Throughput Agreement


Interpretation

As used in this Agreement, unless a clear contrary intention appears:

(a)    any reference to the singular includes the plural and vice versa, any reference to natural persons includes legal persons and vice versa, and any reference to a gender includes the other gender;
(b)    the words “hereof”, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;
(c)    any reference to Articles, Sections and Exhibits are, unless otherwise stated, references to Articles, Sections and Exhibits of or to this Agreement and references in any Section or definition to any clause means such clause of such Section or definition. The headings in this Agreement have been inserted for convenience only and shall not be taken into account in its interpretation;
(d)    reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended, modified or supplemented and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement;
(e)    the Exhibits hereto form an integral part of this Agreement and are equally binding therewith. Any reference to “this Agreement” shall include such Exhibits;
(f)    references to a Person shall include any permitted assignee or successor to such Party in accordance with this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity;
(g)    if any period is referred to in this Agreement by way of reference to a number of days, the days shall be calculated exclusively of the first and inclusively of the last day unless the last day falls on a day that is not a Business Day in which case the last day shall be the next succeeding Business Day;
(h)    the use of “or” is not intended to be exclusive unless explicitly indicated otherwise;
(i)    references to “$” or to “dollars” shall mean the lawful currency of the United States of America; and
(j)    the words “includes,” “including,” or any derivation thereof shall mean “including without limitation” or “including, but not limited to.”


Exhibit B-1
Exhibit 10.27

Exhibit C
to
Third Amended and Restated
Master Throughput Agreement


Applicable Assets, Product, Minimum Capacity Commitment, Tariffs, Tariff Adjustments and Applicable Terms*

Applicable Assets
Type of Applicable Asset










Product
Minimum Capacity Commitment (aggregate capacity unless otherwise noted)
Minimum Throughput Commitment
(in the aggregate, on average, for each Contract Quarter)
Base Tariff
(applicable to all movements below the Incentive Tariff Threshold)
Incentive Tariff Threshold (in the aggregate, on average, for each Contract Quarter)
Incentive Tariff
(applicable to all movements at or above the Incentive Tariff Threshold)
Excess Tariff (applicable to all movements above the Excess Tariff Thresholds set forth below, if any)
Tariff Adjustment
Tariff Adjustment Minimum/Cap
Tariff Adjustment Commencement Date
Assumed OPEX
Applicable Term
(all times are Dallas, TX time)
Malaga Pipeline System
Pipelines
Crude Oil
40,000 bpd
40,000 bpd 2
 $0.5334/bbl

40,000 bpd 2
$0.3137/bbl
—
FERC Adjustment
—
July 1, 2015
—
12:01 a.m. on June 1, 2013 to Sept. 1, 2024 (the “ Malaga Commencement Date ”)
El Dorado Assets
Pipelines
Refined Products

LPG Products,

Intermediate Products

Heavy Products
120,000 bpd of aggregate delivery capacity from the Tankage
120,000 bpd of Intermediate and Refined Product
$0.1625/bbl
125,000 bpd of Intermediate and Refined Product
$0.01/bbl
—
PPI Adjustment

3% in any calendar year (applicable to each individual tariff)
July 1, 2012
—
12:01 a.m. on Nov. 1, 2011 to 12:01 a.m. on Oct. 31, 2026; provided that with respect to the New Tank at the El Dorado Refinery, the Applicable Term shall be from 12:01 a.m. on the New Tank Commencement Date for such New Tank to the date occurring fifteen (15) years thereafter.
Tankage
 
140,000 bpd of aggregate capacity in the Tankage

140,000 bpd of Products
$0.4784 /bbl ,
154,000 bpd of Products
$0.2167/bbl
—
 
Loading Rack
 
20,000 bpd
20,000 bpd
$0.2708/bbl
—
—
—
 



Exhibit C-8
Exhibit 10.27

Applicable Assets
Type of Applicable Asset










Product
Minimum Capacity Commitment (aggregate capacity unless otherwise noted)
Minimum Throughput Commitment
(in the aggregate, on average, for each Contract Quarter)
Base Tariff
(applicable to all movements below the Incentive Tariff Threshold)
Incentive Tariff Threshold (in the aggregate, on average, for each Contract Quarter)
Incentive Tariff
(applicable to all movements at or above the Incentive Tariff Threshold)
Excess Tariff (applicable to all movements above the Excess Tariff Thresholds set forth below, if any)
Tariff Adjustment
Tariff Adjustment Minimum/Cap
Tariff Adjustment Commencement Date
Assumed OPEX
Applicable Term
(all times are Dallas, TX time)
Cheyenne Assets
Cheyenne Receiving Assets
Crude Oil
41,000 bpd
46,000 bpd
$0.3251/bbl
50,600 bpd
$0.1517/bbl
—
PPI Adjustment

3% in any calendar year (applicable to each individual tariff) 4
July 1, 2012
—
12:01 a.m. on Nov. 1, 2011 to 12:01 a.m. on Oct. 31, 2026; provided that with respect to (a) Cheyenne New Tank No. 117, the Applicable Term shall be from 12:01 a.m. on December 4, 2014 to 12:01 a.m. on December 4, 2029, and (b) any New Tanks at the Cheyenne Refinery, the Applicable Term is 12:01 a.m. on the New Tank Commencement Date for each such New Tank to the date occurring fifteen (15) years thereafter.
Cheyenne Tankage

 
46,000 bpd
41,000 bpd
$0.4673/bbl 3,
45,100 bpd
$0.2167/bbl
—
 
Cheyenne Loading Rack
 
 
41,000 bpd
$0.2708/bbl
None
—
—
 



Exhibit C-8
Exhibit 10.27

Applicable Assets
Type of Applicable Asset










Product
Minimum Capacity Commitment (aggregate capacity unless otherwise noted)
Minimum Throughput Commitment
(in the aggregate, on average, for each Contract Quarter)
Base Tariff
(applicable to all movements below the Incentive Tariff Threshold)
Incentive Tariff Threshold (in the aggregate, on average, for each Contract Quarter)
Incentive Tariff
(applicable to all movements at or above the Incentive Tariff Threshold)
Excess Tariff (applicable to all movements above the Excess Tariff Thresholds set forth below, if any)
Tariff Adjustment
Tariff Adjustment Minimum/Cap
Tariff Adjustment Commencement Date
Assumed OPEX
Applicable Term
(all times are Dallas, TX time)
Tulsa East Assets
Tulsa Pipelines
Refined Products
60,000 bpd
60,000 bpd
$0.1116/bbl
 
—
—
PPI Adjustment

3% in any calendar year (applicable to each individual tariff)
July 1, 2011
—
11:59 p.m. on Mar. 31, 2010 to 12:01 a.m. on Dec. 1, 2024
Tulsa Group 1
Tankage
Various
1,362,550 bbls
80,000 bpd
$0.3960/bbl
Each throughput barrel over the Minimum Throughput Commitment but less than or equal to the Excess Tariff Threshold
$0.1116/bbl
$0.2455/bbl (over 120,000 bpd of Refined Products, in the aggregate on average for each Contract Quarter)
 
Tulsa Group 1
Loading Rack
Various
26,000 bpd
26,000 bpd
$0.3348/bbl
—
—
—
 
Tulsa Group 2
Tankage
Various
2,122,644 bbl
90,000 bpd
$0.4605/bbl
Each throughput barrel over the Minimum Throughput Commitment but less than or equal to the Excess Tariff Threshold
$0.1116/bbl
$0.2455/bbl (over 120,000 bpd of Refined Products, in the aggregate on average for each Contract Quarter)
 
Tulsa Group 2
Loading Rack
 
1,800 bpd
1,800 bpd
$0.3906/bbl
—
—
—
 



Exhibit C-8
Exhibit 10.27

Applicable Assets
Type of Applicable Asset










Product
Minimum Capacity Commitment (aggregate capacity unless otherwise noted)
Minimum Throughput Commitment
(in the aggregate, on average, for each Contract Quarter)
Base Tariff
(applicable to all movements below the Incentive Tariff Threshold)
Incentive Tariff Threshold (in the aggregate, on average, for each Contract Quarter)
Incentive Tariff
(applicable to all movements at or above the Incentive Tariff Threshold)
Excess Tariff (applicable to all movements above the Excess Tariff Thresholds set forth below, if any)
Tariff Adjustment
Tariff Adjustment Minimum/Cap
Tariff Adjustment Commencement Date
Assumed OPEX
Applicable Term
(all times are Dallas, TX time)
Tulsa Interconnect-ing Pipelines
 
Distillate Interconnect-ing Pipeline – 45,000 bpd (maximum)
45,000 bpd
$0.2267/bbl (to 45,000 bpd in the aggregate, on average for each Contract Quarter)
Over 45,000 bpd and less than or equal to 65,000 bpd
$0.0758/bbl
$0.0541/bbl (over 65,000 bpd of Refined Products, in the aggregate on average for each Contract Quarter)
 
 
Gasoline Interconnect-ing Pipeline – 45,000 bpd (maximum)
45,000 bpd of Intermediate Products shipped between the Tulsa East Refinery and the Tulsa West Refinery via the Interconnecting Pipelines (excluding the Distillate Interconnecting Pipeline and the Tulsa Pipelines



 
 
Hydrogen Interconnect-ing Pipeline –10,000 MSCFD of
hydrogen (maximum)
64,000 MSCFD
$0.0693/
MSCF/day
—
—
—
 
 
Refinery Fuel Gas
Interconnect-ing Pipeline – 32,000 MSCFD of refinery fuel gas (maximum)
 
 
Refinery Sour Fuel Gas Interconnecting Pipeline – 22,000 MSCFD of refinery sour fuel gas (maximum)
 



Exhibit C-8
Exhibit 10.27

Applicable Assets
Type of Applicable Asset










Product
Minimum Capacity Commitment (aggregate capacity unless otherwise noted)
Minimum Throughput Commitment
(in the aggregate, on average, for each Contract Quarter)
Base Tariff
(applicable to all movements below the Incentive Tariff Threshold)
Incentive Tariff Threshold (in the aggregate, on average, for each Contract Quarter)
Incentive Tariff
(applicable to all movements at or above the Incentive Tariff Threshold)
Excess Tariff (applicable to all movements above the Excess Tariff Thresholds set forth below, if any)
Tariff Adjustment
Tariff Adjustment Minimum/Cap
Tariff Adjustment Commencement Date
Assumed OPEX
Applicable Term
(all times are Dallas, TX time)
Lovington Assets
Lovington Loading Rack
Asphalt and any other petroleum or petroleum based or derived products
4,000 bpd
4,000 bpd
$0.3906/bbl
 
—
—
PPI Adjustment 4
3% in any calendar year
July 1, 2011
—
11:59 p.m. on Mar. 31, 2010 to 12:01 a.m. on Mar. 31, 2025
Roadrunner Assets
Pipelines
Crude Oil
40,000 bpd
40,000 bpd
$0.7174/bbl

Each throughput barrel over the Minimum Throughput Commitment
$0.3757/bbl
—
PPI Adjustment
3% plus ½ of the PPI increase in excess of 3% for such calendar year.
July 1, 2011
—
12:01 a.m. on Dec. 1, 2009 to 12:01 a.m. on Dec. 1, 2024
El Dorado Crude Tankage
Tankage
Crude Oil; Intermediate Products
140,000 bpd
140,000 bpd
$0.0919/bbl
Each throughput barrel over the Minimum Throughput Commitment
$0.0101/bbl
—
PPI Adjustment
Subject to 1% minimum / 3% cap
July 1, 2016
—
12:01 a.m. on March 6, 2015 to 12:01 a.m. on March 6, 2025
Tulsa West Tankage

Tankage
Crude/Lef
396,000 bpd
80,000 bpd
$0.218/bbl
—
—
—
PPI Adjustment
Subject to 1% minimum / 3% cap 9
July 1, 2017
$649,896
12:01 a.m. on March 31, 2016 to 12:01 a.m. on March 31, 2026

* Tariffs listed on this Exhibit are effective as of July 1, 2016, other than the Base Tariff with respect to the El Dorado Assets - Tankage, which is effective as of January 1, 2017.

1. As may be adjusted pursuant to Exhibit G .

2 During the first five years of the Applicable Term, following the Malaga Commencement Date, HFRM shall pay HEP Operating an extra surcharge per barrel (the “ Surcharge Tariff ”). The Surcharge Tariff for each Contract Quarter is equal to:

Actual Construction Costs - $38,500,000
Minimum Pipeline Throughput x 365 x 5



Exhibit C-8
Exhibit 10.27


where “Actual Construction Costs” means the actual, reasonable and necessary costs, or as otherwise approved in writing by HFRM, incurred by HEP Operating to construct the Malaga Construction Projects and the Devon Lease Connections; provided, however, that the numerator of the formula for calculating the Surcharge Tariff (Actual Construction Costs - $38,500,000) shall not exceed $13,500,000 such that the maximum value for such numerator shall be $13,500,000. At the end of each Contract Quarter during the first five years of the Applicable Term, following the Malaga Commencement Date, HFRM shall pay HEP Operating an amount for each Contract Quarter determined by multiplying the Minimum Throughput Commitment for the Malaga Pipeline System for such Contract Quarter, by the Surcharge Tariff. The Surcharge Tariff is in addition to the Applicable Tariff to be paid by HFRM.

3 From and after the New Tank Commencement Date established pursuant to Exhibit H , if any, the Tankage Base Tariff shall be increased by an amount per barrel equal to:

Final Construction Cost         
0.9 x 8.1928 x Minimum Tankage Throughput x 365

For example, if the Final Construction Costs = $1,500,000, the per barrel increase in the Tankage Base Tariff would be calculated as follows:
$1,500,000/(0.9 x 8.1928 x 140,000 x 365) = $0.0040.

4 Reflects reduction in throughput fee effective January 1, 2015 as a result of the secondment arrangement at the El Dorado refinery. Also reflects reduction in throughput fee effective January 1, 2017 as a result of the sale of tanks 243 and 244 from El Dorado Logistics LLC to HollyFrontier El Dorado Refining LLC.
5 Reflects reduction in throughput fee effective January 1, 2015 as a result of the secondment arrangement at the Cheyenne refinery.
6 The Minimum Interconnecting Pipeline Revenue Commitment shall be an amount of revenue to HEP Operating for each Contract Quarter determined by adding: 1) the Minimum Interconnecting Pipeline Liquid Throughput multiplied by the Interconnecting Pipeline Liquid Tariff, and 2) the Minimum Interconnecting Pipeline Gas Throughput multiplied by the Interconnecting Pipeline Gas Tariff.
7 In the event that any third party transports Crude Oil on the Roadrunner Pipeline for ultimate delivery to HollyFrontier or any of its Subsidiaries and such third party pays throughput fees equal to or greater than the then-current base tariff for each such barrel of Crude Oil transported on the Roadrunner Pipeline for ultimate delivery to HollyFrontier or any of its Subsidiaries (“ Qualified Third-Party Throughput ”), then revenues paid to HEP Operating by such third party for such Qualified Third-Party Throughput shall be credited towards the Minimum Revenue Commitment hereunder for the Roadrunner Pipeline.
8 If the average throughput for any Contract Quarter (including Qualified Third-Party Throughput) exceeds the Minimum Pipeline Throughput attributable to such Contract Quarter, then for each throughput barrel in excess of the Minimum Pipeline Throughput, HFRM shall pay HEP Operating throughput fees in the amount of the Pipeline Incentive Tariff.
9 For the avoidance of doubt, if the change in PPI in any year is less than one percent (1%) it will be rounded up to one percent (1%) and if the change in PPI in any year is greater than three percent (3%) it will be rounded down to three percent (3%).

Applicable Tariff Adjustments
FERC Adjustment :
Each Applicable Tariff shall be adjusted on July 1 of each index year during the Applicable Term by an amount equal to the percentage change, if any, between the two (2) immediately preceding index years, in the Federal Energy Regulation Commission Oil Pipeline Index (the “ FERC Oil Pipeline Index ”); provided , however , that if the percentage change, if any, between the two (2) immediately preceding index years in the FERC Oil Pipeline Index is negative, then there will be no change to the Applicable Tariffs.
PPI Adjustment :
Each Applicable Tariff shall be adjusted on July 1 of each calendar year by an amount equal to the upper change in the annual change rounded to four decimal places of the Producers Price Index-Commodities-Finished Goods, (PPI),



Exhibit C-8
Exhibit 10.27

et al. (“ PPI ”), produced by the U.S. Department of Labor, Bureaus of Labor Statistics. The series ID is WPUFD49207 as of June 1, 2016 – located at http://www.bls.gov/data/ . The change factor shall be calculated as follows: annual PPI index (most current year) less annual PPI index (most current year minus 1) divided by annual PPI index (most current year minus 1). An example for year 2014 change is: [PPI (2013) – PPI (2012)] / PPI (2012) or (197.3 – 193.3) / 193.3 or .021 or 2.1%. If the PPI index change is negative in a given year then there will be no change in the tariff unless the tariff is subject to a minimum increase as defined elsewhere in Exhibit C .
Index no longer Published
If the either index is no longer published, the Parties shall negotiate in good faith to agree on a new index (as applicable) that gives comparable protection against inflation or deflation, and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the tariffs. If the Parties are unable to agree, a new index will be determined in accordance with the dispute resolution provisions set forth in the Omnibus Agreement, and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the tariffs.




Exhibit C-8
Exhibit 10.27

Exhibit D
to
Third Amended and Restated
Master Throughput Agreement

Measurement of Shipped Volumes

Applicable Asset
Type of Applicable Asset
Measurement of Volumes
Malaga Pipeline System
Pipelines
Quantities shipped on the Malaga Pipeline System shall be determined by measuring unique barrels of Crude Oil (either by counting barrels or calculating barrels based on available meter data) shipped on the following origin and destination pairings:
Whites City Road Station to HEP Artesia Station
Whites City Road Station to Beeson Station
Whites City Road Station to Plains Pipeline Bisti Connection
HEP Artesia Station to Beeson Station
HEP Artesia Station to Plains Pipeline Bisti Connection
Beeson Station to Plains Pipeline Bisti Connection

The origin and destination pairings listed above utilize the following segments of the Pipeline System:
Whites City Road Station to HEP Artesia Station (8-inch)
HEP Artesia Station to Beeson Station (8-inch)
Beeson Station to Plains Pipeline Bisti Connection (12-inch)

Shipments on any other segments of the Malaga Pipeline System will be charged the then-current tariff and fees under the Crude Agreement.

For the avoidance of doubt, a barrel shipped on multiple segments of the Malaga Pipeline System shall only be counted as one barrel in satisfaction of the Minimum Throughput Commitment and shall not count as a separate barrel on each such segment. For example, a barrel shipped from Whites City Road Station to the Plains Pipeline Bisti Connection shall count as one barrel in satisfaction of the Minimum Throughput Commitment, and not as three barrels since it flows on three segments of the Malaga Pipeline System.
El Dorado
Assets
Pipelines
Pipeline delivery throughput shall be determined by the shipments of Products by pipeline (and not over the Loading Racks) from the El Dorado Refinery.
Tankage
Tankage throughput shall be determined by the sum of Products shipped from the El Dorado Refinery but not including shipments of coke and sulfur. For the avoidance of doubt, no Tankage throughput fees shall be paid for movements of Products within the El Dorado Refinery.
Loading Rack
The Loading Rack Tariff will be paid for all quantities of Products or other materials loaded at the Loading Racks or the asphalt loading rack and any Products or other materials shipped using the weight scales.
Cheyenne Assets
Cheyenne Receiving Assets
Crude Oil throughput shall be determined by the total shipments of Crude Oil by pipeline, truck and rail received at the Cheyenne Refinery.
Cheyenne Tankage
Tankage throughput shall be determined by the sum of Products shipped by the Refinery but not including shipments of coke and sulfur. For the avoidance of doubt, no Tankage throughput fees shall be paid for movements of Products within the Cheyenne Refinery.
Cheyenne Loading Rack
The Applicable Tariff for the Loading Rack will be paid for (A) all quantities of Products shipped out of the Cheyenne Refinery by pipeline or asphalt loading racks, and (B) all quantities of Products, Crude Oil and any other materials (such as coke and sulfur) loaded at the Loading Racks or the weight scales.
Tulsa East Assets
Pipelines
Pipeline throughput will be determined by the quantities of Refined Product shipped on the Tulsa Pipelines.




Exhibit D-1
Exhibit 10.27

 
Group 1 Tankage
Group 1 Tankage throughput shall be determined by the sum of Refined Products shipped on the Pipelines and loaded at the Group 1 Loading Rack. Any streams moved internally within the Tulsa East Refinery will not be included in determining the volumes for any Minimum Revenue Commitment for the Group 1 Tankage.
Group 1 Loading Rack
The Group 1 Loading Rack Tariff will be paid for all quantities of Products loaded at the Group 1 Loading Rack.
Group 2 Tankage
Group 2 Tankage throughput shall be determined by the sum of pipeline quantities of Crude Oil and Intermediate Products received at the Tulsa East Refinery, including Crude Oil and Intermediate Products received at the Tulsa East Refinery from the Tulsa West Refinery. Any streams moved internally within the Tulsa East Refinery will not be included in determining the volumes for any Minimum Revenue Commitment for the Group 2 Tankage. Any Refined Products received from the Tulsa West Refinery or moved out of the Tulsa East Refinery will not be included in determining the volumes for the Minimum Revenue Commitment for the Group 2 Tankage. 1
Group 2 Loading Rack
The Group 2 Loading Rack Tariff will be paid for all quantities of Products loaded at the Group 2 Loading Rack.
Interconnecting Pipelines
The Interconnecting Pipeline Gas Throughput shall be determined by the sum of pipeline quantities of Intermediate Products shipped between the Tulsa East Refinery and the Tulsa West Refinery via the Hydrogen Interconnecting Pipeline, Refinery Fuel Gas Interconnecting Pipeline, and Refinery Sour Fuel Gas Interconnecting Pipeline.

The Interconnecting Pipeline Liquid Throughput shall be determined by the sum of pipeline quantities of Intermediate Products shipped between the Tulsa East Refinery and the Tulsa West Refinery via the Gasoline Interconnecting Pipeline and Distillate Interconnecting Pipeline.
Lovington Assets
Loading Rack
The Loading Rack Tariff will be paid for all quantities of Products loaded at the Lovington Loading Rack.
Roadrunner Assets
N/A
N/A
El Dorado Crude Tank Farm Assets
El Dorado Crude Tankage
El Dorado Tankage throughput shall be determined by the sum of the pipeline quantities of Product received at the El Dorado Crude Tankage, based on custody transfer meters. For avoidance of doubt, no throughput fees shall be paid for movements of Products among the El Dorado Crude Tankage.
Tulsa West Tankage
Tankage
Tulsa West Tankage throughput shall be determined by barrels of crude/lef deliveries at the following meters at the Tulsa West Refinery: #1387, #175, #176, #177, #178, #179, #180, #334, #1373 and #809.




1 For the avoidance of doubt, any high sulfur diesel fuel that HFRM may transport from the Tulsa West Refinery through the Group 1 Tankage or Group 2 Tankage for processing in the Tulsa East Refinery’s distillate hydrotreater shall be subject to the Group 2 Tankage Applicable Tariffs, and the resulting ultra low sulfur diesel fuel produced from the high sulfur diesel fuel and then shipped from the Tulsa East Refinery via either the Tulsa Pipelines or the loading rack located at the Tulsa East Refinery shall be subject to the applicable Group 1 Tankage Applicable Tariffs.


Exhibit D-2
Exhibit 10.27

Exhibit E
to
Third Amended and Restated
Master Throughput Agreement
Volumetric Gains; Losses; Line Fill; High-API Oil Surcharge


Exhibit E-1
Exhibit 10.27

Applicable Assets
Volumetric Gains and Losses
Line Fill
High-API Oil Surcharge
Malaga Pipeline System
HFRM shall, during the Applicable Term, (i) absorb all volumetric gains in the Malaga Pipeline System, and (ii) be responsible for all volumetric losses in the Malaga Pipeline System up to a maximum of 0.5%. HEP Operating shall be responsible for all volumetric losses in excess of 0.5% in the Malaga Pipeline System during the Applicable Term. Volumetric gains and losses shall be calculated and measured in a manner consistent with how and when gains and losses are calculated in the Crude Agreement.
HFRM shall be responsible for line fill by pipeline segment in accordance with HEP Operating’s policies for each segment as published on the Partnership’s website from time to time.
In the event HFRM desires to ship Crude Oil on the Malaga Pipeline System with an API Gravity in excess of 50 degrees, HEP Operating may, in its sole discretion, (i) refuse to ship such Crude Oil, or (ii) ship such Crude Oil and charge HFRM a surcharge (the “ High-API Surcharge ”) equal to the increased expenses (or lower revenues) or capital costs, as a direct result thereof, as agreed upon by the Parties. If the Parties are unable to agree upon the High-API Surcharge, the High-API Surcharge will be determined pursuant to the dispute resolution provisions of the Omnibus Agreement. Any amounts paid by HFRM as a High-API Surcharge shall not count toward satisfaction of any Minimum Revenue Commitment.
El Dorado Assets
—
—
—
Cheyenne Assets
HFRM shall, during the Applicable Term, (i) absorb all volumetric gains in the Cheyenne Receiving Assets, and (ii) be responsible for all volumetric losses in the Cheyenne Receiving Assets up to a maximum of 0.5%. HEP Operating shall, during the Applicable Term, be responsible for all volumetric losses in excess of 0.5% in the Cheyenne Receiving Assets. Gains and losses will be calculated for each Contract Quarter and offset against each other.
—
—
Tulsa East Assets
HFRM shall, during the Applicable Term, (i) absorb all volumetric gains in the Tulsa Pipelines, and (ii) be responsible for all volumetric losses in the Tulsa Pipelines up to a maximum of 0.5%. HEP Tulsa shall, during the Applicable Term, be responsible for all volumetric losses in excess of 0.5% in the Tulsa Pipelines. Gains and losses will be calculated for each Contract Quarter and offset against each other.
—
—
Lovington Assets
—
—
—
Roadrunner Assets
HFRM shall, during the Applicable Term, (i) absorb all volumetric gains in the Roadrunner Pipeline, and (ii) be responsible for all volumetric losses in the Roadrunner Pipeline up to a maximum of 0.5%. HEP Operating shall, during the Applicable Term, be responsible for all volumetric losses in excess of 0.5% in the Roadrunner Pipeline. Gains and losses will be calculated for each Contract Quarter and offset against each other.
—
—
El Dorado Crude Tank Farm Assets
—
—
—
Tulsa West Tankage
—
—
—



Exhibit E-2
Exhibit 10.27

Exhibit F
to
Third Amended and Restated
Master Throughput Agreement


Increases in Tariff Rates as a Result of Changes in Applicable Law

Applicable Assets
 
 
Types of Tariffs that may be increased (as applicable)
Threshold
Malaga Pipeline System
Pipeline Base Tariff
Pipeline Incentive Tariff
None
El Dorado Assets
Pipeline Base Tariff
Tankage Base Tariff
Loading Rack Base Tariff
No Base Tariff may be amended until HEP Operating has made capital expenditures of $1,000,000 in the aggregate with respect to the El Dorado Assets in order to comply with new Applicable Laws.

Thereafter, HEP Operating may amend the applicable Base Tariff to recover its full cost of complying with the new Applicable Laws and such recovery shall not be limited to amounts in excess of $1,000,000.
Cheyenne Assets
Cheyenne Receiving Assets Base Tariff
Cheyenne Tankage Base Tariff
Cheyenne Loading Rack Base Tariff
No Base Tariff may be amended until HEP Operating has made capital expenditures of $1,000,000 in the aggregate with respect to the Cheyenne Assets in order to comply with new Applicable Laws.

Thereafter, HEP Operating may amend the applicable Base Tariff to recover its full cost of complying with such new Applicable Laws and such recovery shall not be limited to amounts in excess of $1,000,000.
Tulsa East Assets
Tulsa Pipelines Base Tariff
Tulsa Group 1 Tankage Base Tariff
Tulsa Group 1 Loading Rack Tariff
Tulsa Group 2 Tankage Base Tariff
Tulsa Group 2 Loading Rack Tariff

Base Tariff may not be amended until HEP Operating has made capital expenditures of $2,000,000 in the aggregate with respect to the Applicable Assets (excluding the Interconnecting Pipelines) in order to comply with new Applicable Laws.


Tulsa Interconnecting Pipeline Base Tariff

Base Tariff may not be amended until HEP Operating has made capital expenditures of $1,000,000 in the aggregate with respect to the Interconnecting Pipelines in order to comply with new Applicable Laws.


Lovington Assets
Base Tariff
Base Tariff may not be amended until HEP Operating has made capital expenditures of $500,000 in the aggregate with respect to the Lovington Loading Rack in order to comply with new Applicable Laws.




Exhibit F-1
Exhibit 10.27

Applicable Assets
 
Roadrunner Assets
Pipeline Base Tariff
Base Tariff may not be amended until HEP Operating has made capital expenditures of $1,000,000 in the aggregate with respect to the Roadrunner Pipeline in order to comply with new Applicable Laws.



El Dorado Crude Tank Farm Assets
Base Tariff

No Base Tariff may be amended until HEP Operating has made capital expenditures of $1,000,000 in the aggregate with respect to the El Dorado Crude Tank Farm Assets in order to comply with new Applicable Laws.

Thereafter, HEP Operating may amend the applicable Base Tariff to recover its full cost of complying with the new Applicable Laws and such recovery shall not be limited to amounts in excess of $1,000,000.
Tulsa West Tankage
Base Tariff
No Base Tariff may be amended until HEP Operating has made capital expenditures of $2,000,000 in the aggregate with respect to the Tulsa West Tankage in order to comply with new Applicable Laws.

Thereafter, HEP Operating may amend the Base Tariff to recover its full cost of complying with the new Applicable Laws and such recovery shall not be limited to amounts in excess of $2,000,000.




Exhibit F-2
Exhibit 10.27

Exhibit G
to
Third Amended and Restated
Master Throughput Agreement

Special Provisions: Malaga Pipeline System
1.     Construction Projects . HEP Operating agrees to use commercially reasonable efforts to (i) complete the construction projects set forth on Exhibit G- 2 and (ii) build the 25 lease connections listed on Exhibit G-3 (the “ Devon Lease Connections ” and, together with the construction projects set forth on Exhibit G-2 , the “ Malaga Construction Projects ”). With respect to Item 4 listed on Exhibit G-2 , HFRM shall reimburse HEP Operating 100% of the actual costs and expenses of those Malaga Construction Projects. HEP Operating shall bear the costs of constructing all of the other Malaga Construction Projects listed on Exhibit G-2 and Exhibit G-3 , other than Item 4 on Exhibit G-3 .
2.     Option to Increase Minimum Capacity Commitment Following the Malaga Initial Period . At the end of the Malaga Initial Period and once-a-year thereafter during the Applicable Term, HFRM shall have the option to increase (but not decrease) the Minimum Capacity Commitment for the Malaga Pipeline System applicable to the remainder of the Applicable Term, which option may be exercised as follows:
2.1     Malaga Capacity Estimate . HFRM may initiate the process by which it will exercise its option by delivering to HEP Operating a written request for a statement of HEP Operating’s good faith estimate of the total uncommitted pipeline capacity for the Malaga Pipeline System that will be available for the remaining Applicable Term (a “ Malaga Capacity Estimate ”), which request must be made, (i) in the case of the election available at the end of the Malaga Initial Applicable Period, no later than the one hundred twentieth (120 th ) day before the end of the Malaga Initial Period, and (ii) in the case of the election available at the end of each twelve (12) month period following the end of the Malaga Initial Period (each a “ Subsequent Year ”), the one-hundred twentieth (120) day before the end of such Subsequent Year.
2.2     Response to Request for Malaga Capacity Estimate . HEP Operating must respond to each request with a written Malaga Capacity Estimate within ten (10) days of HEP Operating’s receipt of such request.
2.3     Malaga Exercise Notice . To exercise its option, HFRM must provide HEP Operating a written notice of exercise (an “ Malaga Exercise Notice ”) no later than ninety (90) days prior to the end of the Malaga Initial Period or Subsequent Year (as applicable), which Malaga Exercise Notice must contain the amount (stated in bpd) by which HFRM desires to increase the Minimum Capacity Commitment for the Malaga Pipeline System for the next occurring Subsequent Year and the remainder of the Applicable Term. The amount of increase for which HFRM may exercise this option may not exceed the available uncommitted pipeline capacity for the Malaga Pipeline System as stated in the Malaga Capacity Estimate. If no written Malaga Exercise Notice is received by such ninetieth (90 th ) day, then HFRM will be deemed to have waived its option, though such waiver shall not preclude HFRM from exercising its option in Subsequent Years according the process set forth in this Section 2 .
2.4     Increase in Minimum Capacity Commitment and Minimum Throughput Commitment . If HFRM timely exercises its option at the end of the Malaga Initial Period or a


Exhibit G-3
Exhibit 10.27

Subsequent Year in accordance with this Section 2 , then, with respect to the next Subsequent Year and the remainder of the Applicable Term thereafter:
(a)    the Minimum Capacity Commitment for the Malaga Pipeline System shall be increased by the amount specified in the Malaga Exercise Notice; and
(b)    the Minimum Throughput Commitment shall be increased by an amount equal to the increase in the Minimum Capacity Commitment for the Malaga Pipeline System.
For example, if HFRM exercises its option at the end of the Malaga Initial Period to increase the Minimum Capacity Commitment for the Malaga Pipeline System from 40,000 bpd to 50,000 bpd (a 25% increase), then the Minimum Throughput Commitment shall be increased to equal 50,000 bpd (a 25% increase). This will have the effect of increasing the Minimum Pipeline Revenue Commitment by the operation of Section 2.2(a) of the Agreement.
3.     Third Party Shipping . During the Malaga Initial Period, HFRM shall have the exclusive right to utilize the entire capacity of the Malaga Pipeline System. After the end of the Malaga Initial Period, if HEP Operating contracts with third parties to ship Crude Oil on the Malaga Pipeline System thereafter during the Applicable Term, subject to the terms of this Agreement, then HEP Operating may not charge any such third party transportation services fees, throughput fees, or other fees that are equal to or less on a per barrel basis (taking into account all applicable incentive tariffs and surcharges) than those charged to HFRM under this Agreement unless such third party agrees to minimum volume and revenue commitments equal to or in excess of those to which HFRM is subject hereunder. In the event that a third party with whom HEP has contracted agrees to minimum volume and revenue commitments that are equal to those to which HFRM is subject hereunder, and the transportation services fees, throughput fees, or other fees are less on a per barrel basis (taking into account all applicable incentive tariffs and surcharges) than those charged to HFRM under this Agreement, then the tariff rates charged to HFRM under this Agreement shall be automatically reduced to be equal to such third party tariff rates.
4.     Storage . In addition, following the Malaga Commencement Date, HEP Operating agrees, for no additional fees, to provide storage services of up to 70,000 barrels with regard to Crude Oil shipped using the Malaga Pipeline System (30,000 barrels at the Whites City Road Station and 40,000 barrels at the Beeson Station) and provide limited in-tank Crude Oil blending services when operationally feasible at the HEP Operating Artesia Station to the specifications of HFRM, as such specifications may be adjusted from time to time.
5.     Additional Applicable Tariff . The Parties hereby acknowledge that the Applicable Tariffs are in addition to tariffs applicable to volumes shipped on the Devon Lease Connections pursuant to the Crude Agreement.



Exhibit G-3
Exhibit 10.27

Exhibit G-1
to
Third Amended and Restated
Master Throughput Agreement


Map of Pipeline System and Pipeline System Capacity by Segment

See attached

























Exhibit G-3
Exhibit 10.27

     EXHIBIT1027THIRDAMENDIMAGE1.JPG



Exhibit G-3
Exhibit 10.27


Exhibit G-2
to
Third Amended and Restated
Master Throughput Agreement

Construction Projects
1.    Whites City Road Station
a.
Build station at the intersection of the idle 8” pipe and Whites City County Road (coordinates _32.064421 Lat _104.135759_ Long). This station should include 30,000 barrels of tankage for crude to be injected into the 8” headed north. The amount of property to be leased or purchased will be sufficient to install up to 5 crude truck off-loading LACTS and their associated tanks.
2.    HEP Artesia Station
a.
Reactivate 8” Malaga Pipeline from the Whites City Road Station to the existing 30,000 barrel tank at HEP Artesia Station.
b.
Build connecting 8” line between the reactivated 8” Malaga Pipeline and HEP Artesia Station for receipts of sweet crude originating from the Whites City Road Station.
c.
Tie-in Millman Station and Devon Parkway sweet crude deliveries into the HEP Artesia Station 30,000 barrel tank, i.e., Devon Parkway barrels will be connected into and delivered to the Artesia Station tank.
d.
Sweet crude oil deliveries out of HEP Artesia Station tank will be connected for delivery to Abo station.
e.
Build 6” connecting pipeline approximately 6 miles to receive sweet barrels from the Devon Parkway into existing Millman System.
f.
Build additional truck off loading facility at HEP Artesia Station.
g.
Build 8” 11-mile pipeline from HEP Artesia Station to Beeson Station.
3.    HEP Beeson Station and Bisti Delivery
a.
Build approximately 40,000 barrels of tankage at Beeson Station to receive sweet crude.
b.
Build 6” pipeline (approximately 12 miles) to receive sweet barrels from the Devon Hackberry field.
c.
Build connection from Anderson Ranch gathering system to the Devon Hackberry to Beeson Station connecting pipeline. This connection will be made to deliver sweet barrels through the Anderson Ranch pipe and deliver into the tank at the Beeson Station.


Exhibit G-3
Exhibit 10.27

d.
Install pumping capacity necessary for delivery into Plains Pipeline at Bisti (to deliver at a rate of up to 80,000 bpd).
e.
Build 12” 12-mile pipeline from Beeson Station to Plains Pipeline System connection at Bisti.
4.    Build NM sweet truck off-loading station at Whites City Road Station.*
* HEP Operating will manage and construct (4) above and be reimbursed by HFRM for the costs of managing and constructing (4). HEP Operating will at all times be the owner of (4), including during the period of construction.


Exhibit G-3
Exhibit 10.27


Exhibit G-3
to
Third Amended and Restated
Master Throughput Agreement


Devon Lease Connections

Battery Name
Field Name
Location
Status
Diamond
Parkway
32.6519528 N 104.0701295 W
Producing
Emerald
Parkway
32.6525348 N 104.1045269 W
Producing
Beryl
Parkway
32.6109502 N 104.0829194 W
Producing
Onyx
Parkway
32.638176 N 104.093915 W
Producing
Coral
Parkway
32.6253952 N 104.0745216 W
Producing
Turquoise
Parkway
32.6365513 N 104.0701851 W
Producing
Agate
Parkway
32.6520074 N 104.0873003 W
Producing
Jasper
Parkway
32.623619 N 104.090791 W
Producing
Beetle Juice 19 Fed #1H
Hackberry
32° 39' 7.41" N 103° 54' 4.05" W
Producing
Beetle Juice 19 Fed #3H
Hackberry
32° 39' 9.054" N 103° 54' 43.471" W
Producing
Capella 14 Fed #1H
Hackberry
32° 40' 0.638" N 103° 50' 4.152" W
Producing
Strawberry 7 Fed #2
Hackberry
32° 40' 43" N 103° 54' 20.8" W
Producing
Strawberry 7 Fed #4
Hackberry
32° 40' 6.93" N 103° 54' 4.28" W
Producing
Sirius 17 Fed #1H
Hackberry
32° 39' 59.165" N 103° 54' 2.605" W
Producing
Sirius 17 Fed #2H
Hackberry
32° 39' 47.98" N 103° 53' 2.44" W
Producing
Sirius 17 Fed #3H
Hackberry
32° 39' 30.98" N 103° 53' 56.18" W
Producing
Arcturus 18 Fed #1H
Hackberry
32° 39' 59.66"N 103° 54' 2.607" W
Producing
Arcturus 18 Fed #3H
Hackberry
32° 39' 23.058" 103° 54' 57.028" W
Producing
Rigel 20 Fed Com #1H
Hackberry
32° 39' 7.185" N 103° 53' 56.214" W
Producing
Rigel 20 Fed Com #3H
Hackberry
32° 38' 36.881" N 103° 53' 56.099" W
Producing
Regulus 26 Fed #1
Hackberry
32° 63' 76.832" N 103° 83' 24.245" W
Producing
Spica 25 Fed #1
Hackberry
32° 63' 76.834" N 103° 83' 22.620" W
Producing
Vega 29 Fed Com #1
Hackberry
32° 63' 77.726" N 103° 88' 57.377" W
Producing
Serene Sisters 25 Fed #1H
Hackberry
32° 43' 31.099" N 103° 49' 3.506" W
Producing
Serene Sisters 25 Fed #3H
Hackberry
32° 42' 42.721" N 103° 49' 32.488" W
Producing








Exhibit G-3
Exhibit 10.27

Exhibit H
to
Third Amended and Restated
Master Throughput Agreement

Special Provisions: El Dorado Assets
1.     Change of Service . Subject to (i) any Applicable Law and (ii) technical specifications of the El Dorado Tankage, HFRM may request that HEP Operating change the service of any of the El Dorado Tankage from storage of one Product to storage of a different Product. If HEP Operating agrees to such request, HFRM shall indemnify and hold HEP Operating harmless from and against all costs and expenses associated with any such changing of service including costs of complying with any Applicable Law affecting such change of service.
2.     Construction of New Tank . HEP Operating shall, or shall cause its Affiliate to, use its commercially reasonable efforts to construct a New Tank at the El Dorado Refinery in accordance with the specifications set forth on Exhibit H-3 . If HEP Operating or its Affiliate should fail to complete the New Tank or if the New Tank Commencement Date does not occur for the New Tank for a reason related to the fault of HEP Operating or its Affiliate or a matter that is within or under the control of HEP Operating or its Affiliate, HEP Operating shall bear all costs, liabilities and expenses with respect to such incomplete New Tank, and if HEP Operating or its Affiliate should fail to complete the New Tank or if the New Tank Commencement Date does not occur for the New Tank for any other reason, HFRM shall reimburse HEP Operating or its Affiliate for all costs, liabilities and expenses incurred by HEP Operating or its Affiliate with respect to such incomplete New Tank. Promptly following the New Tank Commencement Date, HEP Operating will deliver a written certification to HFRM certifying the Final Construction Cost for the New Tank. Additionally, promptly following the New Tank Commencement Date, the Parties shall execute an amended Exhibit H-2 reflecting the addition of the New Tank and attach it to this Agreement. Such amended Exhibit H-2 shall be numbered Exhibit H-2.1 , dated and appended as an additional schedule to this Agreement and shall replace the prior version of Exhibit H-2 in its entirety after its date of effectiveness.










Exhibit H-2


Exhibit 10.27

Exhibit H-1
to
Third Amended and Restated
Master Throughput Agreement

El Dorado Loading Rack
The Refined Products Truck Loading Rack and the Propane Truck Loading Rack transferred to El Dorado Logistics pursuant to that certain Conveyance, Assignment and Bill of Sale (El Dorado), dated effective as of October 25, 2011, by and between Frontier El Dorado and El Dorado Logistics.

Exhibit H-2
to
Third Amended and Restated
Master Throughput Agreement


El Dorado Tankage

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
1
Naptha
2,885
2
Naptha
2,885
3
ULSD
40,425
15
ULSD
12,422
16
Light Slop
28,880
17
Gasoline
92,740
18
Gasoline
88,600
19
Gasoline
90,733
20
Finish Gasoline
17,961
21
ULSD
120,639
23
ULSD
113,182
24
ULSD
119,269
25
Av Jet
65,117
29
CRU1 Feed
33,723
30
CRU2 Feed
39,417
31
ULSD
23,792
32
Finish Gasoline
74,847
64
Gasoline
17,961
65
Gasoline
17,941
66
Naptha
22,582
75
ULS k
24,938

Exhibit H-2


Exhibit 10.27

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
78
ULS k
9,226
127
Heavy Slop
20,504
652
Sour Distilate
90,000
642
HTU2 Chg.
78,511
134
HTU2 Chg.
76,492
649
HTU4 CHg.
100,000
137
Gas Oil/Sour diesel
191,899
138
Gas Oil
194,091
139
Gas Oil
74,792
142
Gas Oil
191,563
143
Gas Oil
191,570
159
Slurry
9,778
167
Slurry
8,908
650
ULSD Dock
36,000
178
Coke Charge/Swing Tank
80,000
192
Idled
8,908
212
Coker Chg.
76,524
213
Asphalt
77,675
215
AV Jet
67,529
216
Alkylate
72,618
218
Gas Oil
77,675
219
Reformate
71,466
220
Swing Tank
71,495
221
Gasoline Swing
71,508
222
Gasoline Swing
71,509
223
Reformate
72,893
224
Jet Fuel
71,534
225
HTU1 Chg, kerosene
28,882
226
Finish Gasoline
27,679
227
Natural Gasoline
27,701
230
Diesel (RAM)
4,780
231
Light Cycle (RAM)
1,923
250
FCCU Gasoline
75,354
251
FCCU Gasoline
75,968
252
FCCU Gasoline
75,968
253
Natural Gasoline
74,653
254
Isomerate
19,318
255
Isomerate
19,318
256
TEL Wash
950
447
Finish Gasoline
17,730
448
Gasoline
16,109
453
Ethanol
5,121

Exhibit H-2


Exhibit 10.27

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
457
HTU3 Chg, LSR
32,690
458
Isomerate
32,690
490
ULSD
116,094
600
Propane
625
601
Propane
625
602
Propane
625
603
Propane
625
604
Propane
625
605
Propane
625
606
Propane
625
607
Propane
625
608
Propane
625
609
Propane
625
610
Propane
625
611
Propane
625
612
Propane
625
613
Propane
625
614
Propane
625
615
Propane
625
616
Propane
625
617
Propane
625
618
Propane
625
619
Propane
625
620
Propane
575
621
Propane
100
640
Asphalt
66,859
641
Biodiesel
6,813
647
Asphalt
76,600
651
Heavy Atmospheric Gas Oil (GASO)
32,000






Exhibit H-2


Exhibit 10.27

Exhibit H-3
to
Third Amended and Restated
Master Throughput Agreement


Specifications for New Tank




TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS



Exhibit I
to
Third Amended and Restated
Master Throughput Agreement

Special Provisions: Cheyenne Assets
1.     Change of Service . Subject to (i) any Applicable Law and (ii) technical specifications of the Cheyenne Tankage, HFRM may request that HEP Operating change the service of any of the Cheyenne Tankage from storage of one Product to storage of a different Product. If HEP Operating agrees to such request, HFRM shall indemnify and hold HEP Operating harmless from and against all costs and expenses associated with any such changing of service including costs of complying with any Applicable Law affecting such change of service.
Exhibit I-1
to
Third Amended and Restated
Master Throughput Agreement

Cheyenne Loading Rack
The Refined Products Truck Loading Rack, including the Vapor Recovery Unit and the two (2) Propane Loading Spots transferred to Cheyenne Logistics pursuant to that certain Conveyance, Assignment and Bill of Sale (Cheyenne), dated effective as of October 25, 2011, by and between Frontier Cheyenne and Cheyenne Logistics.




Exhibit I-3


Exhibit 10.27


Exhibit I-2
to
Third Amended and Restated
Master Throughput Agreement

Cheyenne Receiving Assets
The four (4) Crude Oil LACTS Units, the Crude Oil Receiving Pipeline, and the petroleum storage tanks listed below under “Petroleum Storage Tanks” transferred to Cheyenne Logistics pursuant to that certain Conveyance, Assignment and Bill of Sale (Cheyenne), dated effective as of October 25, 2011, by and between Frontier Cheyenne and Cheyenne Logistics.
Petroleum Storage Tanks:
TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
2-036
Recovered Oil / Crude slop
5,056
2-063
Crude HSR
10,096
2-067
Crude LSR
10,093
2-072
Crude
80,581
2-073
Crude
80,551
2-074
Crude
79,766



Exhibit I-3


Exhibit 10.27


Exhibit I-3
to
Third Amended and Restated
Master Throughput Agreement



Cheyenne Tankage

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
1-107
Intermediate Distillate
69,942
1-013
Coker Distillate
1,914
1-014
Low Sul. Diesel
24,677
1-015
No Lead Gas
24,677
1-016
Ethanol
2,564
1-017
Prem. No Lead Gas
5,034
1-020
FCC Slurry Oil
5,018
1-021
Sweet Naphtha / VRU
9,867
1-027
Slop Oil
4,000
1-028
BioDiesel
5,179
1-029
Coker Gas Oil
10,709
1-032
Diesel
10,124
1-033
Coker Distillate
10,342
1-040
FCC Slurry Oil
10,121
1-048
Coker Distillate
1,341
1-049
Coker Distillate
1,341
1-050
Vacuum Bottoms
67,428
1-051
Slurry
24,938
1-052
PG 58-28 (Asphalt)
72,017
1-053
FCCU Slurry
13,506
1-054
FCCU Slurry
24,938
1-055
PG 58-28 (Asphalt)
54,499
1-056
Coker feed tank
61,709
1-058
Coker Gas Oil
10,493
1-090
PG 64-22 (Asphalt)
55,954
1-091
PG 58-28 (Asphalt)
55,954
1-093
PG 64-22 (Asphalt)
2,602
1-094
PG 64-22 (Asphalt)
2,602
1-095
PG 64-22 (Asphalt)
2,602
1-106
Naptha
120,000

Exhibit I-3


Exhibit 10.27

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
1-108
Distillate
107,000
1-117
Vacuum Bottoms
69,942
2-015
Diesel
28,870
2-016
Diesel
28,046
2-017
UC Crack (LCO / Coker Distillate)
28,562
2-020
Gas Oil
10,746
2-021
Gas Oil
10,746
2-022
UC Crack (LCO / Coker Distillate)
9,731
2-023
Coker Gas Oil
10,583
2-028
Cat Gas Oil
80,153
2-034
Reformate
23,234
2-035
Alkylate
24,190
2-060
Burner/Distillate
9,846
2-061
Sweet Naphtha
10,096
2-062
Naptha
9,970
2-070
Sub Grade No Lead Gas
32,608
2-071
Premium No Lead Gas
32,612
2-075
Finished NL gasoline
80,278
2-100
LSR/LSG
41,978
2-101
Diesel
42,051
2-102
No Lead Gas
80,278
2-104
Reformate
54,749
2-105
Cat Gas Oil
54,954
2-118
Light Straight Run
40,609
2-119
FCCU Cat Gas
40,609
2-161
Finished Diesel
40,485



Exhibit I-3


Exhibit 10.27

Exhibit J
to
Third Amended and Restated
Master Throughput Agreement

Special Provisions: Tulsa East Assets
1.     Change of Tankage Service . Subject to (i) any Applicable Law and (ii) technical specifications of the Tulsa Group 1 Tankage or the Tulsa Group 2 Tankage, HFRM may request that HEP Operating change the service of any of the Tulsa Group 1 Tankage or the Tulsa Group 2 Tankage from storage of one Product to storage of a different Product; provided, however , that HFRM shall indemnify and hold HEP Operating harmless from and against all costs and expenses associated with any such changing of service including costs of complying with any Applicable Law affecting such change of service.
2.     Change of Interconnecting Pipeline Service . Subject to (i) any Applicable Law, (ii) technical specifications of the Tulsa Interconnecting Pipelines, and (iii) right-of-way and license agreements, HFRM may request that HEP Operating change the service of any of the Interconnecting Pipelines; provided, however, that HFRM shall indemnify and hold HEP Operating harmless from and against all costs and expenses associated with any such changing of service including costs of complying with any Applicable Law affecting such change of service.
3.     Construction of New Tank . HEP Operating shall, or shall cause its Affiliate to, use its commercially reasonable efforts to construct a New Tank at the Tulsa Refinery in accordance with the specifications set forth on Exhibit J-6 . If HEP Operating or its Affiliate should fail to complete the New Tank or if the New Tank Commencement Date does not occur for the New Tank for a reason related to the fault of HEP Operating or its Affiliate or a matter that is within or under the control of HEP Operating or its Affiliate, HEP Operating shall bear all costs, liabilities and expenses with respect to such incomplete New Tank, and if HEP Operating or its Affiliate should fail to complete the New Tank or if the New Tank Commencement Date does not occur for the New Tank for any other reason, HFRM shall reimburse HEP Operating or its Affiliate for all costs, liabilities and expenses incurred by HEP Operating or its Affiliate with respect to such incomplete New Tank. Promptly following the New Tank Commencement Date, HEP Operating will deliver a written certification to HFRM certifying the Final Construction Cost for the New Tank. Additionally, promptly following the New Tank Commencement Date, the Parties shall execute an amended Exhibit J-3 reflecting the addition of the New Tank and attach it to this Agreement. Such amended Exhibit J-3 shall be numbered Exhibit J-3.1 , dated and appended as an additional schedule to this Agreement and shall replace the prior version of Exhibit J-3 in its entirety after its date of effectiveness.

Exhibit J-1
to
Third Amended and Restated
Master Throughput Agreement


Tulsa Group 1 Loading Rack

Exhibit J-6


Exhibit 10.27

The Propane Truck Loading Rack, Asphalt Truck Loading Rack and Gas Oil Truck Loading Rack transferred to HEP Tulsa LLC pursuant to that certain Bill of Sale, Assignment and Assumption Agreement, dated December 1, 2009, by and between Sinclair Tulsa Refining Company and HEP Tulsa LLC.
Exhibit J-2
to
Third Amended and Restated
Master Throughput Agreement


Tulsa Group 1 Pipeline
The two Product Delivery Pipelines transferred to HEP Tulsa LLC pursuant to that certain Bill of Sale, Assignment and Assumption Agreement, dated December 1, 2009, by and between Sinclair Tulsa Refining Company and HEP Tulsa LLC.

Exhibit J-3
to
Third Amended and Restated
Master Throughput Agreement


Tulsa Group 1 Tankage

Exhibit J-6


Exhibit 10.27

TANK ID
REFINED PRODUCT
CAPACITY (BBLS)
 
 
 
10
ULSD #2 (XT)
37,500
11
ULSD #2 (XT)
37,500
45
Decant
5,700
102
Kerosene
37,500
103
Kerosene
37,500
104A
ULSD #2 (XT)
37,500
110
ULSD #1
37,500
111
Kerosene
37,500
115
ULSD #2 (XT)
150,421
215
ULSD #2 (XT)
150,421
116
Kerosene
37,500
117
ULSD #2 (XT)
63,300
444A
Naptha
32,000
450A
Premium Unleaded
12,574
451
USLD #2 (XT)
11,700
452A
USLD #2 (XT)
12,000
464A
Unleaded Regular
73,000
465
Unleaded Regular
79,320
466
Unleaded Regular
79,320
467A
Unleaded Regular
73,000
470A
Unleaded Regular
151,020
472
Unleaded Regular
151,000
473A
Premium Unleaded (ST)
151,020
601
Unleaded Regular
18,634
602
Premium Unleaded (ST)
10,743
603
USLD #2 (XT)
2,000
605
Ethanol
3,528
606
Empty
500

Exhibit J-4
to
Third Amended and Restated
Master Throughput Agreement


Tulsa Group 2 Loading Rack

The Rail Loading Rack transferred to HEP Tulsa LLC pursuant to that certain Conveyance, Assignment and Bill of Sale, dated March 31, 2010, by and between Holly Refining & Marketing – Tulsa LLC and HEP Tulsa LLC.


Exhibit J-6


Exhibit 10.27


Exhibit J-5
to
Third Amended and Restated
Master Throughput Agreement


Tulsa Group 2 Tankage

TANK ID
CURRENT SERVICE
CAPACITY (BBLS)
 
 
 
1
Crude
130,450
2
Crude
130,000
3
Crude
116,579
8
Crude
130,233
123
CSO
37,500
471
Unleaded Gasoline
71,371
107A
Flux/Asphalt
55,954
108A
Flux/Asphalt
37,500
109
Flux/Asphalt
37,500
125
Flux/Asphalt
37,500
131
Flux/Asphalt
37,500
442
Gasoline blendstock
11,700
445A
Gasoline blendstock
32,787
446
Gasoline blendstock
11,700
460
LSR
80,000
461A
LSR
80,000
17
FCCU LCO
37,500
114
Raw Diesel
131,000
9
Raw gas oil
150,260
15
Raw gas oil
130,000
16
Raw gas oil-Sour
151,078
6A
Raw naphtha
69,082
4
Scanfiner feed
120,566
40
Raw gas oil
5,734
41
CSO
4,032
34
Truck loading-64/22 asphalt
11,798
36A
Truck loading-58/28 asphalt
11,500
124A
Flux/Asphalt
37,500
18A
Slop
37,500
31
Slop
15,000
7A
Naptha
69,082
14
Naptha
55,000

Exhibit J-6


Exhibit 10.27

Exhibit J-6
to
Third Amended and Restated
Master Throughput Agreement


Specifications for New Tank




TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
12
Naphtha
32,000























    

Exhibit J-6


Exhibit 10.27

Exhibit K
to
Third Amended and Restated
Master Throughput Agreement


Special Provisions: El Dorado Crude Tank Farm Assets

1.
El Dorado Terminal Operation . HEP Operating will use commercially reasonable efforts to maintain the El Dorado Terminal’s current connections to the pipelines owned and operated by (a) Osage Pipe Line Company, LLC (the “ Osage Pipeline ”), (b) Rose Rock Midstream, L.P. (the “ Rose Rock Pipeline ”), and (c) MV Purchasing, LLC (the “ MVP Pipeline ”), but shall not be required to expend additional monies in connection therewith unless agreed separately in writing with HFRM. HFRM may request HEP Operating to connect the El Dorado Crude Tankage to new pipelines, whether owned by third parties or by HFRM, subject to HEP Operating’s approval of such connections and the engineering standards related to such; HEP Operating will not unreasonably withhold such approval. If HEP Operating approves any new connection requested by HFRM, HFRM will reimburse HEP Operating the actual expenses incurred by HEP Operating that are associated with such connection, plus an administrative charge of fifteen percent (15%). In addition, the Minimum Throughput Commitment will be increased to account for any additional expense HEP Operating bears in connection with ongoing operating expenses associated with such requested pipeline connection. Any HEP Operating expenditures requested by HFRM beyond pipeline connections will be negotiated separately.

2.
Tank Use . HEP Operating shall make available to HFRM on an exclusive basis the shell capacity, minimum and maximum capacities, and working capacity for the El Dorado Crude Tankage. HEP Operating will make at least two (2) of such tanks available for blending services at all times during the Applicable Term. HEP Operating and HFRM will work together to assign minimum and maximum capacities of each tank within sixty (60) days following the commencement of the Applicable Term. These minimum and maximum capacities will be set to allow the most working capacity available to HFRM within reasonable industry practices. The minimum and maximum capacity for each tank will be used to determine the working capacity of each tank (calculated by subtracting the minimum capacity from the maximum capacity for each Tank) (the “ Working Capacity ”). Once the Working Capacity is agreed upon, HEP may assign, in its sole discretion, new maximum and minimum capacities to each tank if required to allow for safe operation. If HEP determines it is necessary to reduce the aggregate Working Capacity to less than 650,000 Barrels (as such volume may be adjusted pursuant to Section 4 of this Exhibit K (the “ El Dorado Minimum Working Capacity ”), the Minimum Throughput Commitment will be reduced proportionately. HFRM may deliver or have delivered Product into the El Dorado Crude Tankage from the El Dorado Refinery, the Osage Pipeline, the Rose Rock Pipeline or the MVP Pipeline. HFRM agrees not to deliver to the Terminal any Products which fail to meet the El Dorado Quality Specifications, or which would in any way be injurious to the El Dorado Crude Tankage, or that may not lawfully be handled in the Tankage. HFRM shall be responsible for and pay for all damages resulting from handling of any Products by HFRM, its designee, or its consignee; provided, however, so long as the Products meet the El Dorado Quality Specifications, HFRM shall not be responsible for damages arising from the negligence or willful misconduct of HEP, its agents, employees or contractors or from ordinary wear and tear.


Exhibit L-2


Exhibit 10.27

3.
Terminal Maintenance, Changes, or Installations . HEP Operating shall make the El Dorado Crude Tankage available for HFRM’s exclusive use except for times at which a tank must be taken out of service for routine maintenance, in which event HEP Operating will use commercially reasonable efforts to minimize the duration of the outage. HEP Operating may take more than one tank out of service due to unplanned maintenance, environmental, or operational occurrences and may schedule more than one tank out of service if the duration is minimal (i.e. less than 1 week for seal inspection or mixer repair on top of an API 653 of another tank), but HEP Operating will not schedule more than one tank out of service for extended overlapping periods (e.g., two API 653s at the same time overlapping 1+ weeks). HEP Operating will provide HFRM written notice at least forty-five (45) days prior to any scheduled maintenance, changes or installations affecting the El Dorado Crude Tankage. In the event HEP Operating cannot provide any or all of the services during any maintenance, changes or installations within the El Dorado Terminal, or if such maintenance, changes or installations causes HEP Operating to take any tank out of service and HEP Operating does not provide a substitute tank in the place of such tank, the Minimum Throughput Commitment shall be reduced by the Working Capacity of such out-of-service tank for the duration of such outage.

4.
Right of First Refusal . HEP Operating may not lease or pledge or commit to provide any storage services with respect to the El Dorado Crude Tankage or the Jayhawk Tankage (after the expiration of the Jayhawk Lease) at the El Dorado Terminal to a third party unless HEP Operating first offers to HFRM the exclusive right to use the Working Capacity of such tanks on substantially the same terms as HEP Operating has previously negotiated with a third party in arms-length negotiations. HFRM will have thirty (30) days (the “ El Dorado Crude Tank Farm Consideration Period ”) to consider the option to utilize such Working Capacity and to provide notice to HEP Operating of its election to accept or decline such Working Capacity. If HFRM has not notified HEP Operating within 30 days, then HEP Operating may proceed to enter into an agreement with the third party for such Working Capacity; provided, however, that if HEP Operating does not enter into an agreement with the third party within sixty (60) days following HFRM’s notice to decline or the expiration of the El Dorado Crude Tank Farm Consideration Period, then HFRM’s rights under this Section 4 will apply to any subsequent bona fide third party offer to HEP Operating regarding such Working Capacity.

5.
Jayhawk Tankage. In the event that the Jayhawk Lease expires or is otherwise terminated or cancelled for any reason and the Jayhawk Tankage are not leased within a reasonable time (not to exceed sixty 60) days) to a third party as contemplated by Section 4 of this Exhibit K , HEP Operating agrees to make the Working Capacity of the Jayhawk Tankage available for HFRM’s exclusive use, and HFRM agrees to increase the Minimum Throughput Commitment by an amount equal to (a) the monthly storage fee that Jayhawk paid to HEP Operating during the last 12 months of the Jayhawk Lease, divided b y the Working Capacity of the Jayhawk Tankage, and the El Dorado Minimum Working Capacity shall be increased by an amount equal to two-thirds (2/3) of the Working Capacity of such Jayhawk Tankage. HFRM’s use of the Jayhawk Tankage will be added to this Agreement as an amendment with all terms and conditions being consistent with this Agreement, and thereafter the term “El Dorado Crude Tankage” as used herein shall include the Jayhawk Tankage.
 
6.
Right to Refuse. HEP Operating reserves the right to refuse receipt of any Product into the El Dorado Terminal, alternatively route such Product to another location, or take other appropriate action in regards to such Product if Product does not meet the El Dorado Quality Specifications. HFRM, if requested in writing, will provide HEP Operating with notice setting forth the quantity, quality, and specifications of Product to be delivered a minimum of four (4) hours prior to any delivery to the El Dorado Terminal. Any reasonable costs incurred by HEP Operating in connection

Exhibit L-3


Exhibit 10.27

with addressing or handling HFRM’s Product that does not meet the El Dorado Quality Specifications shall be borne by HFRM.

7.
Terminal Damage or Destruction. If any part of the El Dorado Terminal or the El Dorado Crude Tankage are damaged or destroyed by fire or other casualty, HEP Operating shall have the discretion to reduce receipts into and deliveries out of the El Dorado Terminal and to allocate any remaining El Dorado Terminal capacity and throughput fairly and reasonably among various customers utilizing terminalling services at the El Dorado Terminal. HEP Operating may, but shall not be obligated to, repair or replace such damaged or destroyed terminal facilities or Tanks.

8.
Delivery Lines . The El Dorado Crude Tankage is connected to the El Dorado Refinery by two 16” delivery lines, together with associated piping necessary for Product movements into and out of the El Dorado Crude Tankage (the “ El Dorado Delivery Lines ”). HEP Operating will operate the El Dorado Delivery Lines for HFRM’s exclusive use. HEP Operating will operate one of the 16” El Dorado Delivery Lines for Product movements from the El Dorado Crude Tankage to the El Dorado Refinery with a capacity to deliver (a) 130,000 bpd based on a maximum viscosity of 350 SUS at 60 degrees Fahrenheit when operating only one El Dorado Delivery Line, and (b) 165,000 bpd based on a maximum viscosity of 350 SUS at 60 degrees Fahrenheit when operating both El Dorado Delivery Lines. HEP Operating will operate the other 16” El Dorado Delivery Line for bidirectional use. HEP Operating will maintain the El Dorado Delivery Lines to gravity feed Product to the El Dorado Refinery or, upon request of HFRM, to pump Product to the El Dorado Refinery at a pressure of at least 25 psig (when operating one El Dorado Delivery Line) and 50 psig (when operating both El Dorado Delivery Lines), as measured at the El Dorado Refinery receipt point. HEP Operating will maintain at least two (2) full-sized pumps for this service and will operate the pumps at HFRM’s request.

9.
Products Testing . At HFRM’s request and upon HEP Operating’s approval, such approval not to be unreasonably withheld, delayed or conditioned, HEP Operating shall provide sampling and testing services for HFRM’s Products at the El Dorado Terminal. All fees for Product testing shall be billed to HFRM at HEP Operating’s actual cost.

Exhibit K-1
to
Third Amended and Restated
Master Throughput Agreement


El Dorado Crude Tankage and Jayhawk Tankage

1.     El Dorado Crude Tankage :


Exhibit L-4


Exhibit 10.27

Tank ID Number
Current Service/Product
Nominal Capacity, BBLs
4150
Crude
80,000
4153
Crude
80,000
4154
Crude
80,000
4155
Crude
125,000
4156
Crude
125,000
4157
Crude
125,000
4158
Crude
125,000
4159
Crude
125,000
4160
Crude
125,000

2.     Jayhawk Tankage :

Tank ID Number
Current Service/Product
Nominal Capacity, BBLs
4151
Crude
80,000
4152
Crude
80,000



Exhibit K-2
to
Third Amended and Restated
Master Throughput Agreement


El Dorado Terminal Quality Specifications

Petroleum liquid that has a true vapor pressure equal to or greater than 1.5 psia but not greater than 11.1 psia.

Exhibit L-1
to
Third Amended and Restated
Master Throughput Agreement


Tulsa West Tankage



Exhibit L-5


Exhibit 10.27

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
13
Crude/Lef
55,000
186
Crude/Lef
55,000
187
Crude/Lef
55,000
188
Crude/Lef
55,000
244
Crude/Lef
55,000
874
Crude/Lef
121,000

Exhibit L-2
to
Third Amended and Restated
Master Throughput Agreement


Special Provisions:
Tulsa West Tankage

1.     Operating Expense Adjustment. At the end of the first four (4) Contract Quarters during the Applicable Term, HEP Operating shall calculate the aggregate operating expenses incurred in the operation of the Tulsa West Tankage (but such calculation shall not include extraordinary and non-recurring items of expense that are not reasonably expected to recur in future periods during the Applicable Term) (“ Initial OPEX ”). In the event that the Initial OPEX exceeds the Assumed OPEX for the Tulsa West Tankage set forth on Exhibit C , (A) HFRM shall, within ten (10) days of receiving an invoice from HEP Operating, reimburse HEP Operating an amount equal to (i) the Initial OPEX minus (ii) the Assumed OPEX (the “ OPEX Reimbursement Amount ”), and (B) from and after the first four (4) Contract Quarters during the Applicable Term, HEP Operating shall, increase the Base Tariff for the Tulsa West Tankage by the amount necessary to allow HEP Operating to recover the OPEX Reimbursement Amount during each subsequent four (4) Contract Quarter period for the remainder of the Applicable Term, and the Parties shall execute an amended, modified, revised or updated Exhibit C reflecting such aggregate OPEX as the new Assumed OPEX for the Tulsa West Tankage. In the event that the Initial OPEX is less than the Assumed OPEX for the Tulsa West Tankage, HEP Operating shall decrease the Base Tariff for the Tulsa West Tankage by the amount necessary to account for the difference between the Assumed OPEX for the Tulsa West Tankage and the Initial OPEX for each subsequent four (4) Contract Quarter Period for the remainder of the Applicable Term, and the Parties shall execute an amended, modified, revised or updated Exhibit C reflecting the Initial OPEX as the new Assumed OPEX for the Tulsa West Tankage.

2.     Tank Inspections . Except with respect to Tanks 186 and 187, HFRM will reimburse HEP Operating for the cost of performing the first API 653 inspection on each of the tanks included in the Tulsa West Tankage and any repairs or tests or consequential remediation that may be required to be made to such assets as a result of any discovery made during such inspection.



Exhibit L-6



Exhibit 10.30


    
FOURTH AMENDED AND RESTATED MASTER LEASE AND ACCESS AGREEMENT




Effective as of January 1, 2017

TABLE OF CONTENTS


ARTICLE 1 DEFINITIONS AND INTERPRETATIONS 1
1.1 Definitions     1
1.2 Interpretation     1
1.3 Independent Obligations     1
1.4 Prior Leases     2
ARTICLE 2 DEMISE OF APPLICABLE PREMISES AND TERM 2
2.1 Demise of Applicable Premises and Applicable Term     2
2.2 Access     2
2.3 Rent     3
2.4 Place of Payment     3
2.5 Net Lease     3
ARTICLE 3 CONDUCT OF BUSINESS 3
3.1 Use of Applicable Premises     3
3.2 Waste     3
3.3 Governmental Regulations     4
3.4 Permits     4
3.5 Utilities     6


Exhibit 10.30

3.6 Tank Inspection and Repairs     6
3.7 Tank Inspection and Maintenance Plan     6
3.8 Notice of Planned Shutdown     6
3.9 Tulsa West Crude Tank Assets     6
ARTICLE 4 ALTERATIONS, ADDITIONS AND IMPROVEMENTS 7
4.1 Additional Improvements     7
4.2 Quality; Compliance with Applicable Laws     8
4.3 Ownership     8
4.4 No Liens     8
ARTICLE 5 MAINTENANCE OF APPLICABLE PREMISES 8
5.1 Maintenance by Relevant Asset Owner     8
5.2 Operation     8
5.3 Surrender of Applicable Premises     8
5.4 Release of Hazardous Substances     9
ARTICLE 6 TAXES, ASSESSMENTS 9
6.1 Relevant Asset Owner’s Obligation to Pay     9
6.2 Manner of Payment     9
ARTICLE 7 EMINENT DOMAIN; CASUALTY; INSURANCE 10
7.1 Total Condemnation of Applicable Premises     10
7.2 Partial Condemnation     10
7.3 Damages and Right to Additional Property     10
7.4 Insurance     11


Exhibit 10.30

ARTICLE 8 ASSIGNMENT AND SUBLETTING 11
8.1 Assignment and Subletting     11
8.2 Release of Assigning Party     11
ARTICLE 9 DEFAULTS; REMEDIES; TERMINATION 12
9.1 Default     12
9.2 Related Refinery Owner’s Remedies     12
9.3 Relevant Asset Owner’s Remedies     13
ARTICLE 10 LIABILITY AND INDEMNIFICATION 13
10.1 Limitation of Liability; Indemnity     13
10.2 Survival     13
ARTICLE 11 OPTION 14
11.1 Applicability of Option     14
11.2 Grant of Option     14
11.3 Determination of Fair Market Value     14
11.4 Cooperation     14
11.5 Survival     14
ARTICLE 12 GENERAL PROVISIONS 14
12.1 Estoppel Certificates     14
12.2 Notices     15
12.3 Severability     15
12.4 Time of Essence     15
12.5 Captions     15
12.6 Entire Agreement     15


Exhibit 10.30

12.7 Waivers     15
12.8 Incorporation by Reference     15
12.9 Binding Effect     15
12.10 Amendment     15
12.11 No Partnership     16
12.12 No Third Party Beneficiaries     16
12.13 Governing Law     16
12.14 Cooperation     16
12.15 Further Assurances     16
12.16 Waiver of the Related Refinery Owner’s Lien     16
12.17 Recording     16
12.18 Warranty of Peaceful Possession     17
12.19 Survival     17
12.20 AS IS, WHERE IS     17
12.21 Relocation of Pipelines; Amendment     17
12.22 Counterparts     17
12.23 Joinder by Affiliates of Parties     17

EXHIBITS

Exhibit A – Parties
Exhibit B – Master Lease and Access Agreement Amendments
Exhibit C - Definitions
Exhibit D – Interpretation

Applicable Assets:

Exhibit E –     Applicable Term and Applicable Assets
Exhibit E-1 –     Applicable Assets: El Dorado Refinery Complex (for El Dorado Logistics)


Exhibit 10.30

Exhibit E-2 –     Applicable Assets: Cheyenne Refinery Complex
Exhibit E-3 –     Applicable Assets: Tulsa Refinery Complex
Exhibit E-4 –
Applicable Assets: Woods Cross Refinery Complex (excluding Woods Cross Pipeline Pad)
Exhibit E-5 –     Applicable Assets: Woods Cross Pipeline Pad
Exhibit E-6 –
Applicable Assets: Navajo Refinery Complex (excluding the Truck Rack, the Artesia Blending Station and the Artesia Pump and Receiving Stations)
Exhibit E-7 –     Applicable Assets: Artesia Pump and Receiving Stations
Exhibit E-8 –     Applicable Assets: El Dorado Refinery Complex (for El Dorado Operating)
Exhibit E-9 –     Applicable Assets: Woods Cross Refinery Complex (for Woods Cross Operating)

Legal Descriptions:

Exhibit F –     Description of Applicable Premises
Exhibit F-1 –     Legal Description for El Dorado Refinery Complex (for El Dorado Logistics)
Exhibit F-2 –     Legal Description for Cheyenne Refinery Complex
Exhibit F-3 –     Legal Description for Tulsa Refinery Complex
Exhibit F-4 –
Legal Description for Woods Cross Refinery Complex (excluding Woods Cross Pipeline Pad)
Exhibit F-5 –     Legal Description for Woods Cross Pipeline Pad
Exhibit F-6 –
Legal Description for Navajo Refinery Complex (excluding the Truck Rack, the Artesia Blending Station and the Artesia Pump and Receiving Stations)
Exhibit F-7 –     Legal Description for Artesia Pump and Receiving Stations
Exhibit F-8 –     [Reserved]
Exhibit F-9 –
Legal Description for Woods Cross Refinery Complex (for Woods Cross Operating)


FOURTH AMENDED AND RESTATED MASTER LEASE AND ACCESS AGREEMENT

This Fourth Amended and Restated Master Lease and Access Agreement (this “ Lease ”) is entered into on January 18, 2017 and effective as of 12:01 a.m. Central Time (the “ Effective Time ”) on January 1, 2017 (the “ Effective Date ”) by and between the Parties set forth on Exhibit A .
RECITALS:
A. Pursuant to certain transactions, each Relevant Asset Owner acquired its Applicable Assets located at the Refinery Complex from the Related Refinery Owner.
B. In connection with each such acquisition, each Related Refinery Owner and Relevant Asset Owner (except El Dorado Operating) entered into a Prior Lease pursuant to which the Related Refinery Owner leased to the Relevant Asset Owner real property at the Related Refinery Owner’s Refinery Complex on which all or a part of the Applicable Assets are located.
C. The Parties concurrently entered into an amended Master Site Services Agreement pursuant to which each Related Refinery Owner has agreed to provide certain services to the Relevant Asset Owner in connection with the Applicable Assets located at each Refinery Complex.
D. Each Related Refinery Owner and each Relevant Asset Owner (except El Dorado Operating) entered into the Original Master Lease and Access Agreement which amended and restated in its entirety


Exhibit 10.30

their respective Prior Leases, if any, from and after January 1, 2015, all in accordance with the terms and conditions set forth in the Original Master Lease and Access Agreement.
E. The Original Master Lease and Access Agreement has been further amended and restated as set forth on Exhibit B , resulting in the Third Amended and Restated Master Lease and Access Agreement identified on Exhibit B .
F. The Parties now desire to amend and restate the Third Amended and Restated Master Lease and Access Agreement in its entirety in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the Applicable Premises and the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby amend and restate the Third Amended and Restated Master Lease and Access Agreement in its entirety as follows:


Exhibit 10.30

ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
1.1      Definitions . Capitalized terms used throughout this Lease and not otherwise defined herein has the meanings set forth on Exhibit C .
1.2      Interpretation . Matters relating to the interpretation of this Agreement are set forth on Exhibit D .
1.3      Independent Obligations .  The Parties hereby acknowledge and agree that (a) the obligations of each Relevant Asset Owner and each Related Refinery Owner are independent of any obligation of any other Relevant Asset Owner and Related Refinery Owner, respectively, (b) the Parties shall look solely to their counterparty (as identified on Exhibit A) for fulfillment of their respective obligations under this Agreement; and (c) no Relevant Asset Owner or Related Refinery Owner shall be obligated to fulfill any of the obligations of any other Relevant Asset Owner or Related Refinery Owner, respectively, and shall have no liability for such obligations.
1.4      Prior Leases . The Original Master Lease and Access Agreement, and each subsequent amendment identified on Exhibit B , amended and restated each Prior Lease in its entirety from and after January 1, 2015 through the Effective Time. It is the Parties’ intent that the terms and provisions of this Lease shall be effective and govern from and after the Effective Time. Any matter first arising prior to January 1, 2015 shall be governed by the respective Prior Lease related thereto, if any.

ARTICLE 2
DEMISE OF APPLICABLE PREMISES AND TERM
2.1      Demise of Applicable Premises and Applicable Term .
2.1.1      Demise of Applicable Premises . In consideration of the rents, covenants, and agreements set forth herein and subject to the terms and conditions hereof, each Related Refinery Owner hereby leases to the Relevant Asset Owner and each Relevant Asset Owner hereby leases from the Related Refinery Owner, the Applicable Premises for the Applicable Term; provided, however, the Relevant Asset Owner may terminate this Lease (with respect to itself only) at the end of the Applicable Term or by delivering written notice to the Related Refinery Owner, on or before 180 days prior to the end of the Applicable Term, that the Relevant Asset Owner has elected to terminate this Lease (with respect to itself only).
2.1.2      Early Termination by the Relevant Asset Owner . At the Relevant Asset Owner’s option, such Relevant Asset Owner may terminate this Lease (with respect to itself only), by providing written notice to the Related Refinery Owner on or before 180 days prior to the desired termination date if the Relevant Asset Owner ceases to operate the Applicable Assets at the Applicable Premises or ceases its business operations. In the event of such termination pursuant to this Section 2.1.2 , such Related Refinery Owner shall retain the remaining Rent for the then current 12-month rental period as set forth in Section 2.3 as its sole and exclusive remedy for such early termination and shall refund to the Relevant Asset Owner any Rent relating to any period after such 12-month period.


Exhibit 10.30

2.2      Access .
2.2.1      Access . Each Related Refinery Owner hereby grants to the Relevant Asset Owner and its Affiliates, agents, employees and contractors (collectively, the “ Relevant Asset Owner Parties ”) free of charge, non-exclusive right of access to and use of those portions of such Related Refinery Owner’s Refinery Complex that are reasonably necessary for access to and/or the operation of the Applicable Assets by the Relevant Asset Owner as a stand-alone enterprise (the “ Shared Access Facilities ”), all so long as such access and use by any of the Relevant Asset Owner Parties does not unreasonably interfere in any material respect with the Related Refinery Owner’s operations at the Refinery Complex and complies with the Related Refinery Owner’s rules, norms and procedures governing safety and security at the Refinery Complex. The provisions of this Section 2.2.1 relate only to access and use of the Shared Access Facilities, and the Master Site Services Agreement shall cover all services that are to be provided by the Related Refinery Owner under the terms of the Master Site Services Agreement.
2.2.2      Retained Rights . Each Related Refinery Owner hereby retains for itself and its Affiliates, agents, employees and contractors (collectively, the “ Related Refinery Owner’s Parties ”), the right of access to the Applicable Premises and the Applicable Assets located at the Refinery Complex of such Related Refinery Owner:
(a)      to determine whether the conditions and covenants contained in this Lease are being kept and performed,
(b)      to comply with Environmental Laws, and
(c)      to inspect, maintain, repair, improve and operate the Service Assets and the Shared Access Facilities and any assets of such Related Refinery Owner located on such Applicable Premises or to install or construct any structures or equipment necessary for the maintenance, operation or improvement of any such assets or the installation, construction or maintenance of any Connection Facilities,
in each case, so long as such access by the Related Refinery Owner’s Parties does not unreasonably interfere in any material respect with the Relevant Asset Owner’s operations on the Applicable Premises and complies with such Relevant Asset Owner’s rules, norms and procedures governing safety and security at the Applicable Premises.
2.3      Rent . As rental for the Applicable Premises during the Applicable Term, each Relevant Asset Owner agrees to pay to the applicable Related Refinery Owner for each 12-month period of the Applicable Term One Hundred and 00/100 Dollars ($100.00) (the “ Rent ”) on or before the 1st day of each 12-month period, the first such payment being due within 30 days of the Commencement Date of the Applicable Term.
2.4      Place of Payment . All Rent and other fees due and payable to the Related Refinery Owner hereunder shall be payable at the Related Refinery Owner’s address set forth the Omnibus Agreement.
2.5      Net Lease . Except as otherwise expressly provided herein and in the Ancillary Agreements, this is a net lease and the Related Refinery Owner shall not at any time be required to pay any costs associated with the maintenance, repair, alteration or improvement of the Applicable Premises or to provide any services or do any act or thing with respect to the Applicable Premises or any part thereof or any appurtenances thereto. The Rent reserved herein shall be paid without any claim on the part of the Relevant Asset Owner


Exhibit 10.30

for diminution, setoff or abatement and nothing shall suspend, abate or reduce any Rent to be paid hereunder, except as expressly provided herein.

ARTICLE 3
CONDUCT OF BUSINESS
3.1 Use of Applicable Premises . Each Relevant Asset Owner shall have the right to use the Applicable Premises:
(a)      for the purpose of owning, operating, maintaining, repairing, replacing, improving, and expanding the Applicable Assets and the Additional Improvements as permitted herein, and
(b)      for any other lawful purpose associated with the operation and ownership of the Applicable Assets and the Additional Improvements.
3.2      Waste . Subject to the obligations of the Related Refinery Owner under the Ancillary Agreements, the Relevant Asset Owner shall not commit, or suffer to be committed, any waste to the Applicable Premises, ordinary wear and tear or casualty excepted.
3.3      Governmental Regulations .
3.3.1      Compliance with Governmental Requirements . Subject to the obligations of the Related Refinery Owner to the Relevant Asset Owner under this Lease and the Ancillary Agreements including the indemnity provisions contained in the Omnibus Agreement, the Relevant Asset Owner shall, at the Relevant Asset Owner’s sole cost and expense, at all times:
(a)      comply with all applicable requirements (including requirements under Environmental Laws) of all Governmental Authorities now in force, or which may hereafter be in force, pertaining to the Applicable Premises, and
(b)      faithfully observe all Applicable Laws now in force or which may hereafter be in force pertaining to the Applicable Premises or the use, maintenance or operation thereof.
3.3.2      Notices . Each Relevant Asset Owner shall give prompt written notice to the Related Refinery Owner of such Relevant Asset Owner’s receipt from time to time of any notice of non-compliance, order or other directive from any court or other Governmental Authority under Applicable Laws, including Environmental Laws, relating to the Applicable Premises.
3.3.3      Right to Remedy . If a Related Refinery Owner reasonably believes at any time that a Relevant Asset Owner is not complying with all Applicable Laws (including requirements under Environmental Laws) with respect to the Applicable Assets and Additional Improvements, it will provide reasonable notice to the Relevant Asset Owner of such condition. If such Relevant Asset Owner fails to take appropriate action to cause such assets to comply with Applicable Laws or take other actions required under Applicable Laws within 30 days of the Related Refinery Owner’s reasonable notice, the Related Refinery Owner may, without further notice to such Relevant Asset Owner, take such actions for such Relevant Asset Owner’s account. Within 30 days following the date the Related Refinery Owner delivers to such Relevant Asset Owner evidence of payment for those actions by the Related Refinery Owner reasonably necessary to cause the Applicable Assets and Additional Improvements to achieve compliance with Applicable Laws


Exhibit 10.30

because of such Relevant Asset Owner’s failure to do so, the Relevant Asset Owner shall reimburse the Related Refinery Owner all amounts paid by the Related Refinery Owner on such Relevant Asset Owner’s behalf.
3.4      Permits .
3.4.1      Environmental Permits . Notwithstanding the Relevant Asset Owner’s obligation to maintain and operate the Applicable Assets and Additional Improvements and comply with Applicable Laws, the Related Refinery Owner and the Relevant Asset Owner acknowledge that the Related Refinery Owner may, as required by any applicable Governmental Authorities, maintain Environmental Permits under the federal Clean Air Act or similar state statutes in its name. Consequently and also for the ease of administration, the Related Refinery Owner may maintain in its name such air quality Environmental Permits and other authorizations applicable to all, or part of, the Applicable Assets and Additional Improvements and may be responsible for making any reports or other notifications to Governmental Authorities pursuant to such Permits or Applicable Laws; provided that upon the Related Refinery Owner’s written request the Relevant Asset Owner shall apply for, use commercially reasonable efforts to obtain and, if obtained, maintain any such Environmental Permits in its name, at such Relevant Asset Owner’s sole cost and expense. Except as provided in the preceding sentence, nothing in this Lease shall reduce the Relevant Asset Owner’s obligations under Applicable Laws with respect to the Applicable Assets and Additional Improvements.
3.4.2      Violation of Environmental Permits . If the Related Refinery Owner or one of such Related Refinery Owner’s Affiliates receives a notice of violation or enforcement action from a Governmental Agency, including the U.S. Environmental Protection Agency or a similar state agency alleging non-compliance with such Environmental Permits, and such non-compliance relates to the Applicable Assets, then the Relevant Asset Owner (and not the Related Refinery Owner or its Affiliates), will be responsible for promptly responding to any such notice of violation or enforcement action. The Related Refinery Owner shall have the right, but not the duty, to be fully informed and to participate in the prosecution and/or settlement of any notice of violation or enforcement action relating to such Applicable Assets.
3.4.3      Cheyenne RCRA Order . HollyFrontier Cheyenne will retain responsibility for complying with the terms of the Cheyenne RCRA Order, including all obligations that apply or relate to the Applicable Assets located at the Cheyenne Refinery Complex. Cheyenne Logistics will and will cause its Affiliates to cooperate with and support HollyFrontier Cheyenne and its Affiliates in satisfying any applicable compliance and reporting obligations under the Cheyenne RCRA Order or Environmental Permits as they relate to the Cheyenne Assets and does hereby authorize HollyFrontier Cheyenne to submit all reports, certifications and other compliance related submissions on its behalf in satisfaction of such compliance and reporting obligations. Cheyenne Logistics confirms that it has received a copy of the Cheyenne RCRA Order. If, as a result of future circumstances or construction, it becomes necessary for HollyFrontier Cheyenne or Cheyenne Logistics (or their Affiliates) to obtain additional Environmental Permit(s) that relate to assets that will be located at the Cheyenne Refinery Complex but owned by Cheyenne Logistics or its Affiliates, such Environmental Permit(s) shall be held by or in the name of HollyFrontier Cheyenne or its Affiliates and shall be subject to the provisions of this Section 3.4.3 to the same extent as if the assets to which such Environmental Permit(s) relate were originally included in the Applicable Assets at the Cheyenne Refinery Complex.
3.4.4      El Dorado RCRA Order . HollyFrontier El Dorado will retain responsibility for complying with the terms of the El Dorado RCRA Order, including all obligations that apply or relate to the El Dorado Assets. El Dorado Logistics will and will cause its Affiliates to cooperate with and support HollyFrontier El Dorado and its Affiliates in satisfying any applicable compliance and reporting obligations


Exhibit 10.30

under the El Dorado RCRA Order or Environmental Permits as they relate to the Applicable Assets located at the El Dorado Refinery Complex and does hereby authorize HollyFrontier El Dorado to submit all reports, certifications and other compliance related submissions on its behalf in satisfaction of such compliance and reporting obligations. El Dorado Logistics confirms that it has received a copy of the El Dorado RCRA Order. If, as a result of future circumstances or construction, it becomes necessary for HollyFrontier El Dorado or El Dorado Logistics (or their Affiliates) to obtain additional Environmental Permit(s) that relate to assets that will be located at the El Dorado Refinery Complex but owned by El Dorado Logistics or its Affiliates, such Environmental Permit(s) shall be held by or in the name of HollyFrontier El Dorado or its Affiliates and shall be subject to the provisions of this Section 3.4.4 to the same extent as if the assets to which such Environmental Permit(s) relate were originally included in the Applicable Assets at the El Dorado Refinery Complex.
3.4.5      Indemnification . The Parties acknowledge that any costs, penalties, fines or losses associated with responses to any notices of violation from the Environmental Protection Agency or a state agency under any such Environmental Permits (including the Cheyenne RCRA Order or the El Dorado RCRA Order) may be the subject of indemnification under the Omnibus Agreement, and nothing in this Section 3.4.5 shall be deemed to change, amend or expand the Parties’ obligations under such Omnibus Agreement provisions (other than with regard to the obligation to respond to such notice of violation or enforcement).
3.5      Utilities . The Related Refinery Owner may, at its election, provide any utilities (electricity, natural gas, water, steam, etc.) necessary for the Relevant Asset Owner’s operation of the Applicable Assets in accordance with the provisions of the Master Site Services Agreement. Any other necessary utilities shall be provided by and at the sole expense of the Relevant Asset Owner
3.6      Tank Inspection and Repairs . Each Related Refinery Owner will reimburse the Relevant Asset Owner for the cost of performing the first API 653 inspection on each of the tanks included in the Applicable Assets (other than the tanks included in the Malaga Pipeline System) and any repairs or tests or consequential remediation that may be required to be made to such tanks as a result of any discovery made during such inspection; provided, however , that if a tank is two (2) years old or less or has been inspected and repaired during the last twelve months prior to the applicable Commencement Date, then the Relevant Asset Owner will bear the cost of any API 653 inspection and any required repair, testing or consequential remediation of such tank. In addition, the Relevant Asset Owner will be responsible for the costs of painting any tanks included in the Applicable Assets that require it.
3.7      Tank Inspection and Maintenance Plan . At least annually, the Relevant Asset Owner shall prepare and submit to the Related Refinery Owner a tank inspection and maintenance plan (which shall include an inspection plan, a cleaning plan, a waste disposal plan, details regarding scheduling and a budget) for the tankage included in the Applicable Assets. If the Related Refinery Owner consents to the submitted plan (which consent shall not be unreasonably withheld, conditioned or delayed), then the Relevant Asset Owner shall conduct tank maintenance in conformity with such approved tank maintenance plan (other than any deviations or changes from such plan to which the Related Refinery Owner consents (which consent shall not be unreasonably withheld, conditioned or delayed)). Each Relevant Asset Owner will use its commercially reasonable efforts to schedule the activities under such maintenance plan to minimize disruptions to the operations of the Related Refinery Owner at the Refinery Complex.
3.8      Notice of Planned Shutdown . Each Related Refinery Owner shall deliver to the Relevant Asset Owner at least six months advance written notice of any planned shut down or reconfiguration (excluding planned maintenance turnarounds) of the Refinery Complex or any portion of the Refinery


Exhibit 10.30

Complex of which the Related Refinery Owner has advance notice that would reduce the output of the Refinery Complex. Each Related Refinery Owner will use its commercially reasonable efforts to mitigate any reduction in revenues or throughput obligations under the Master Throughput Agreement or Master Tolling Agreements, as applicable, that would result from such a shut down or reconfiguration.
3.9      Tulsa West Crude Tank Assets .
(a)      HollyFrontier Tulsa hereby represents and warrants to HEP Tulsa that as of March 31, 2016, to HollyFrontier Tulsa’s knowledge, the Tulsa West Crude Tank Assets are in good operating condition and repair (normal wear and tear excepted), are free from material defects (patent and latent), are suitable for the purposes for which they are currently used, and are not in need of material maintenance or repair except for ordinary routine maintenance and repair. For the purposes of this Section 3.9(a) , the phrase “to HollyFrontier Tulsa’s knowledge” means actual knowledge after reasonable inquiry of James M. Stump.
(b)      HEP Tulsa acknowledges and agrees that HEP Tulsa’s sole and exclusive remedy with respect to any breach of the representation and warranty set forth in Section 3.9(a) shall be the indemnity provided for in Section 3.2(a)(vi)(F) of the Omnibus Agreement.
(c)      EXCEPT FOR THE REPRESENTATION AND WARRANTY SET FORTH IN SECTION 3.9(a) , HOLLYFRONTIER TULSA AND HEP TULSA ACKNOWLEDGE AND AGREE THAT NEITHER OF THEM HAS MADE, DOES MAKE, AND THEY SPECIFICALLY NEGATE AND DISCLAIM, ANY REPRESENTATION, WARRANTY, PROMISE, COVENANT, AGREEMENT OR GUARANTY OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (I) THE VALUE, NATURE, QUALITY OR CONDITION OF THE TULSA WEST CRUDE TANK ASSETS, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION OF THE TULSA WEST CRUDE TANK ASSETS GENERALLY, INCLUDING THE PRESENCE OF LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS IN THE TULSA WEST CRUDE TANK ASSETS AND THE LAND ON WHICH THE TULSA WEST CRUDE TANK ASSETS ARE SITUATED, (II) THE INCOME TO BE DERIVED FROM THE TULSA WEST CRUDE TANK ASSETS, (III) THE SUITABILITY OF THE TULSA WEST CRUDE TANK ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON, (IV) THE COMPLIANCE OF OR BY THE ASSETS OR THEIR OPERATION WITH ANY APPLICABLE LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (V) THE MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE TULSA WEST CRUDE TANK ASSETS. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT OR THE OMNIBUS AGREEMENT, NEITHER HOLLYFRONTIER TULSA NOR HEP TULSA IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE TULSA WEST CRUDE TANK ASSETS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. THE PROVISIONS OF THIS SECTION 3.9 HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE TULSA WEST CRUDE TANK ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT OR THE OMNIBUS AGREEMENT.



Exhibit 10.30

ARTICLE 4
ALTERATIONS, ADDITIONS AND IMPROVEMENTS
4.1 Additional Improvements . Subject to the provisions of this Article 4 , each Relevant Asset Owner may make any alterations, additions, improvements or other changes to the Applicable Premises, and the Applicable Assets, and may request that the Related Refinery Owner make any alterations, additions, improvements or other changes to the Shared Access Facilities, as may be necessary or useful in connection with the operation of the Applicable Assets (collectively, the “ Additional Improvements ”). If such Additional Improvements require alterations, additions or improvements to the Applicable Premises or any of the Shared Access Facilities, the Relevant Asset Owner shall notify the Related Refinery Owner in writing in advance and the parties shall:
(a)      negotiate in good faith any increase to the fees paid by the Relevant Asset Owner under the Master Site Services Agreement;
(b)      provide for reimbursement of any material increase in cost (if any) to the Related Refinery Owner under the Master Site Services Agreement that results from any modifications to the Applicable Premises or the Shared Access Facilities necessary to accommodate the Additional Improvements; or
(c)      proceed in such manner as otherwise mutually agreed by the Parties.
4.2      Quality; Compliance with Applicable Laws . Any alteration, addition, improvement or other change to the Applicable Assets or Additional Improvements (and, if agreed by the Relevant Asset Owner and the Related Refinery Owner, to the Applicable Premises and Shared Access Facilities) by the Relevant Asset Owner shall be made in a good and workmanlike manner and in accordance with all Applicable Laws.
4.3      Ownership . The Applicable Assets and all Additional Improvements shall remain the property of the Relevant Asset Owner and shall be removed by the Relevant Asset Owner within one year after termination of this Lease as to the Applicable Premises (provided that such can be removed by the Relevant Asset Owner without unreasonable damage or harm to the Applicable Premises or Refinery Complex) or, at the Relevant Asset Owner’s option exercisable by notice to the Related Refinery Owner, surrendered to the Related Refinery Owner upon the termination of this Lease.
4.4      No Liens . No Relevant Asset Owner shall have the right or power to create or permit any lien of any kind or character on the Applicable Premises or Refinery Complex by reason of repair or construction or other work. Unless otherwise agreed in writing by the Relevant Asset Owner and the Related Refinery Owner, in the event any such lien is filed against the Applicable Premises or Refinery Complex, the Relevant Asset Owner shall cause such lien to be discharged or bonded within 30 days of the date of filing thereof.

ARTICLE 5
MAINTENANCE OF APPLICABLE PREMISES
5.1      Maintenance by the Relevant Asset Owner . Except as otherwise expressly provided in this Article 5 and in Article 7 or elsewhere in this Lease and subject to the obligations of the Related Refinery Owner and the Relevant Asset Owner under the Ancillary Agreements, including any indemnity provisions contained in the Omnibus Agreement, the Relevant Asset Owner shall at its sole cost, risk and expense at


Exhibit 10.30

all times keep the Applicable Premises and the Applicable Assets and Additional Improvements in good order and repair and in compliance with all Applicable Laws and make all necessary repairs thereto, structural and nonstructural, ordinary and extraordinary, and unforeseen and foreseen. For the avoidance of doubt, the Related Refinery Owner shall maintain, at its sole cost, risk and expense, any dikes, including those dikes surrounding tanks owned by the Relevant Asset Owner and whether or not the entire dike is located on the Applicable Premises, and any roads located on the Applicable Premises. As used in this Article 5 , the term “repairs” shall include all necessary replacements, renewal, alterations and additions. All repairs made by the Relevant Asset Owner shall be made in accordance with normal and customary practices in the industry, in a good and workmanlike manner, and in accordance with all Applicable Laws. The Relevant Asset Owner shall be responsible at its sole cost and expense for the proper handling, removal and disposal of all materials, debris, waste and Hazardous Substances generated or resulting from such repair and maintenance activities, all in accordance with Applicable Laws.
5.2      Operation . Subject to the obligations of the Related Refinery Owner and the Relevant Asset Owner in this Lease and under the Ancillary Agreements, including any indemnity provisions contained in the Omnibus Agreement, the Relevant Asset Owner covenants and agrees to operate the Applicable Assets and Additional Improvements in accordance with normal and customary practices in the industry and all Applicable Laws now in force, or which may hereafter be in force.
5.3      Surrender of Applicable Premises . The Relevant Asset Owner shall at the expiration of the Applicable Term or at any earlier termination of this Lease as to the Applicable Assets, surrender the Applicable Premises to the Related Refinery Owner in as good condition as it received the same, ordinary wear and tear and limitations permitted by Article 7 excepted and in accordance with the provisions of Article 4 .
5.4      Release of Hazardous Substances . The Relevant Asset Owner shall give prompt notice to the Related Refinery Owner of any release of any Hazardous Substances on or at the Applicable Premises or Shared Access Facilities that occur during the Applicable Term. The Relevant Asset Owner shall immediately take all steps necessary to contain or remediate (or both) any such release and provide any governmental notifications required by Applicable Law. If the Related Refinery Owner believes at any time that the Relevant Asset Owner is failing to contain or remediate in compliance with all Applicable Laws (including Environmental Laws) any release arising from the Relevant Asset Owner’s operation of the Applicable Assets or Additional Improvements or the Relevant Asset Owner’s failure to comply with its obligations pursuant to this Lease, the Related Refinery Owner will provide reasonable notice to the Relevant Asset Owner of such failure. If the Relevant Asset Owner fails to take appropriate action to contain or remediate such a release or take other actions required under Applicable Laws or this Lease within 30 days of the Related Refinery Owner’s reasonable notice, the Related Refinery Owner may, without further notice to the Relevant Asset Owner, take such actions for the Relevant Asset Owner’s account. Within 30 days following the date the Related Refinery Owner delivers to the Relevant Asset Owner evidence of payment for those actions by the Related Refinery Owner reasonably necessary to contain or remediate a release or otherwise achieve compliance with Applicable Laws or this Lease because of the Relevant Asset Owner’s failure to do so, the Relevant Asset Owner shall reimburse the Related Refinery Owner all amounts paid by the Related Refinery Owner on the Relevant Asset Owner’s behalf.




Exhibit 10.30

ARTICLE 6
TAXES, ASSESSMENTS
6.1      Relevant Asset Owner’s Obligation to Pay . The Relevant Asset Owner shall pay during the Applicable Term all Taxes assessed against the Applicable Premises, or improvements situated thereon, including the Applicable Assets and all Additional Improvements (including those Additional Improvements situated on the Shared Access Facilities but excluding any Shared Access Facilities and any Service Assets) (for purposes of this Article 6 , collectively, the “ Taxable Assets ”) during the Applicable Term that are payable to any Governmental Authority assessed against or with respect to the Applicable Premises or the use or operation thereof during the Applicable Term. In the event that the Relevant Asset Owner fails to pay its share of such Taxes in accordance with the provisions of this Article 6 prior to the time the same become delinquent, the Related Refinery Owner may pay the same and the Relevant Asset Owner shall reimburse the Related Refinery Owner all amounts paid by the Related Refinery Owner on the Relevant Asset Owner’s behalf within 30 days following the date the Related Refinery Owner delivers to the Relevant Asset Owner evidence of such payment.
6.2      Manner of Payment . Upon notice by the Relevant Asset Owner to the Related Refinery Owner, the Related Refinery Owner and the Relevant Asset Owner shall use commercially reasonable efforts to cause the Taxable Assets to be separately assessed for purposes of Taxes as soon as reasonably practicable following the Commencement Date (to the extent allowed by Applicable Law). During the Applicable Term but subject to the provisions of this Section 6.2 , the Relevant Asset Owner shall pay all Taxes assessed directly against the Taxable Assets directly to the applicable taxing authority prior to delinquency and shall promptly thereafter provide the Related Refinery Owner with evidence of such payment. Until such time as the Related Refinery Owner and the Relevant Asset Owner can cause the Taxable Assets to be separately assessed as provided above, the Relevant Asset Owner shall reimburse the Related Refinery Owner, upon request, for any such Taxes paid by the Related Refinery Owner to the applicable taxing authorities (such reimbursement to be based upon the mutual agreement of the Related Refinery Owner and the Relevant Asset Owner as to the portion of such Taxes attributable to the Taxable Assets), subject to the terms of this Section 6.2 . The certificate issued or given by the appropriate officials authorized or designated by law to issue or give the same or to receive payment of such Taxes shall be prima facie evidence of the existence, payment, nonpayment and amount of such Taxes. The Relevant Asset Owner may contest the validity or amount of any such Taxes or the valuation of the Taxable Assets (to the extent any of them may be separately issued), at the Relevant Asset Owner’s sole cost and expense, by appropriate proceedings, diligently conducted in good faith in accordance with Applicable Law. If the Relevant Asset Owner contests such items then the Related Refinery Owner shall cooperate with the Relevant Asset Owner in any such contesting of the validity or amount of any such Taxes or the valuation of the Taxable Assets. Taxes for the first and last years of the Applicable Term shall be prorated between the Related Refinery Owner and the Relevant Asset Owner based on the portions of such years that are coincident with the applicable tax years and for which each of them is responsible.






Exhibit 10.30

ARTICLE 7
EMINENT DOMAIN; CASUALTY; INSURANCE
7.1      Total Condemnation of Applicable Premises . If the whole of the Applicable Premises is acquired or condemned by eminent domain for any public or quasi-public use or purpose, then this Lease shall terminate with respect to such Applicable Premises as of the date title vests in any public agency. All rentals and other charges owing hereunder shall be prorated as of such date.
7.2      Partial Condemnation . If only a portion of the Applicable Premises is acquired or condemned by eminent domain for any public or quasi-public use or purpose, and if in the Relevant Asset Owner’s reasonable opinion such partial taking or condemnation renders the Applicable Premises unsuitable for the business of the Relevant Asset Owner, then this Lease shall terminate with respect to such Applicable Premises at the Relevant Asset Owner’s election as of the date title vests in any public agency, provided the Relevant Asset Owner delivers to the Related Refinery Owner written notice of such election to terminate within 60 days following the date title vests in such public agency. In the event of such termination, all rentals and other charges owing hereunder with respect to such Applicable Premises shall be prorated as of such effective date of termination.
7.3      Condemnation Award and Damages . The Related Refinery Owner shall be entitled to any award and all damages payable as a result of any condemnation or taking of the fee title of the Applicable Premises. The Relevant Asset Owner shall have the right to claim and recover from the condemning authority, but not from the Related Refinery Owner, such compensation as may be separately awarded or recoverable by the Relevant Asset Owner in the Relevant Asset Owner’s own right on account of any and all damage to the Applicable Assets, the Additional Improvements and/or the Relevant Asset Owner’s business by reason of the condemnation, including loss of value of any unexpired portion of the Applicable Term, and for or on account of any cost or loss to which the Relevant Asset Owner might be put in removing the Relevant Asset Owner’s personal property, fixtures, leasehold improvements and equipment, including the Applicable Assets and the Additional Improvements, from the Applicable Premises use good faith efforts to resolve such infeasibility.
7.4      Restoration of Applicable Premises . If the Applicable Assets and/or Additional Improvements are partially damaged by any casualty insured against under any insurance policy maintained by the Related Refinery Owner (a “ Casualty Event ”) or damaged by reason of a condemnation proceeding, the net amount that may be awarded or tendered to the Related Refinery Owner in such condemnation proceedings or realized from any applicable insurance policy in the event of a Casualty Event (less all legal and other expenses incurred by the Related Refinery Owner in connection therewith) shall (as long as the Relevant Asset Owner is not then in default hereunder) be used to pay for any repair, replacement or restoration by the Relevant Asset Owner of the Applicable Assets, the Additional Improvements and/or the remainder of the Applicable Premises hereof to the extent the Relevant Asset Owner desires any of the same to be repaired, replaced or restored and such repair, replacement or restoration is commercially practicable, as determined by the Related Refinery Owner in the exercise of its reasonable discretion. If it is so determined that such repair, replacement or restoration is not commercially practicable, the Relevant Asset Owner and the Related Refinery Owner shall use good faith efforts to resolve such infeasibility.
7.5      Rent Abatement . During any periods of time during which the Applicable Assets and/or Additional Improvements are destroyed, damaged by a Casualty Event or are being restored or reconstructed under the terms of Section 7.4 , Rent hereunder shall be abated in the proportion that the Relevant Asset Owner’s use thereof is impacted, on the condition that the Relevant Asset Owner uses commercially reasonable efforts to mitigate the disruption to its business caused by such event.


Exhibit 10.30

7.6      Insurance . Except as otherwise agreed by the Related Refinery Owner and the Relevant Asset Owner, the Relevant Asset Owner shall, during the Applicable Term, maintain or cause to be maintained property and casualty insurance (including pollution insurance coverage) on the Applicable Premises and the Applicable Assets and Additional Improvements in accordance with customary industry practices and with a licensed, reputable carrier.

ARTICLE 8
ASSIGNMENT AND SUBLETTING
8.1      Assignment and Subletting . Neither this Lease nor any of the rights or obligations hereunder shall be assigned by a the Related Refinery Owner without the prior written consent of the Relevant Asset Owner, or by a Related Asset Owner without the prior written consent of the Related Refinery Owner, in each case, such consent is not to be unreasonably withheld or delayed; provided, however, that:
(a)      The Related Refinery Owner or the Relevant Asset Owner may make such an assignment (including a partial pro rata assignment) to its Affiliate without the other’s consent,
(b)      The Related Refinery Owner may make a collateral assignment of its rights and obligations hereunder, and
(c)      The Relevant Asset Owner may make a collateral assignment of its rights hereunder and/or grant a security interest in all or a portion of the Applicable Assets and/or Additional Improvements to a bona fide third party lender or debt holder, or trustee or representative for any of them, without the Related Refinery Owner’s consent, if such third party lender, debt holder or trustee shall have executed and delivered to the Related Refinery Owner a non-disturbance agreement in such form as is reasonably satisfactory to the Related Refinery Owner and such third party lender, debt holder or trustee and the Related Refinery Owner executes an acknowledgement of such collateral assignment in such form as may from time to time be reasonably requested.
Any attempt to make an assignment otherwise than as permitted by the foregoing shall be null and void. The assigning Party agrees to require its respective successors, if any, to expressly assume, in a form of agreement reasonably acceptable to the other Party, its obligations under this Lease.
8.2      Release of Assigning Party . Any assignment of this Lease by a Party in accordance with this Article 8 shall operate to terminate the liability of the assigning Party for all obligations under this Lease accruing after the date of any such assignment.

ARTICLE 9
DEFAULTS; REMEDIES; TERMINATION
9.1      Default . The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by the Party for whom such event occurred:
(a)      The failure by the Relevant Asset Owner to make when due any payment of Rent or any other payment required to be made by the Relevant Asset Owner hereunder, if such failure continues for a period of 90 days following written notice from the Related Refinery Owner;


Exhibit 10.30

(b)      The failure by a Party to observe or perform any of the other covenants, conditions or provisions of this Lease to be observed or performed by such Party, if such failure continues for a period of 90 days (in the case of the Relevant Asset Owner) or 30 days (in the case of the Related Refinery Owner) following written notice from the non-defaulting the Relevant Asset Owner or the Related Refinery Owner; provided, however, if a reasonable time to cure such default would exceed 90 days (in the case of the Relevant Asset Owner) or 30 days (in the case of the Related Refinery Owner), such Party shall not be in default so long as it begins to cure such default within 90 days (in the case of the Relevant Asset Owner) or 30 days (in the case of the Related Refinery Owner) of receiving written notice from the non-defaulting Relevant Asset Owner or the Related Refinery Owner and thereafter completes the curing of such default within reasonable period of time (under the circumstances) following the receipt of such written notice; or
(c)      The occurrence of any Bankruptcy Event.
9.2      Related Refinery Owner’s Remedies .
9.2.1      Termination Remedies . In the event of any such material default under or material breach of the terms of this Lease by the Relevant Asset Owner, the Related Refinery Owner may, at the Related Refinery Owner’s option, at any time thereafter that such default or breach remains uncured, without further notice or demand:
(a)      terminate this Lease with respect to the Relevant Asset Owner and the Relevant Asset Owner’s right to possession of the Applicable Premises, and
(b)      thereafter repossess the Applicable Premises by any lawful means in which event the Relevant Asset Owner shall immediately surrender possession of the Applicable Premises to the Related Refinery Owner.
9.2.2      Right to Perform . If, by the terms of this Lease, the Relevant Asset Owner is required to do or perform any act or to pay any sum to a Third Party, and fails or refuses to do so, the Related Refinery Owner, after 30 days written notice to the Relevant Asset Owner, without waiving any other right or remedy hereunder for such default, may do or perform such act, at the Relevant Asset Owner’s expense, or pay such sum for and on behalf of the Relevant Asset Owner, and the amounts so expended by the Related Refinery Owner shall be repayable on demand, and bear interest from the date expended by the Related Refinery Owner until paid at the Post-Maturity Rate. Past due Rent and any other past due payments required hereunder shall bear interest from maturity until paid at the Post-Maturity Rate.
9.2.3      Cumulative Remedies . The Related Refinery Owner may, at the Related Refinery Owner’s option, deduct any such amounts so expended by the Related Refinery Owner from any amounts owed hereunder or under any Ancillary Agreement. Any such action on the part of the Related Refinery Owner shall be in addition to any other remedy that may be available to the Related Refinery Owner for arrears of Rent or breach of contract, or otherwise, including the right of setoff.
9.3      Relevant Asset Owner’s Remedies .
9.3.1      Remedies . In the event of any such default under or breach of the terms of this Lease by the Related Refinery Owner, the Relevant Asset Owner may, at the Relevant Asset Owner’s option, at any time thereafter that such default or breach remains uncured, after ten days prior written notice to the Related Refinery Owner:


Exhibit 10.30

(a)      perform any act that the Related Refinery Owner is required to do, or
(b)      perform any act for or to pay any sum to a Third Party, at the Related Refinery Owner’s expense (to the extent the terms of this Lease require such performance at the Related Refinery Owner’s expense) or pay such sum for and on behalf of the Related Refinery Owner, and the amounts so expended by the Relevant Asset Owner shall be repayable on demand, and bear interest from the date expended by the Relevant Asset Owner until paid at the Post-Maturity Rate.
9.3.2      Cumulative Remedies . The Relevant Asset Owner may, at the Relevant Asset Owner’s option, deduct any such amounts so expended by the Relevant Asset Owner from the Rent and any other amounts owed hereunder or under any Ancillary Agreement. Any such action on the part of the Related Refinery Owner shall be in addition to any other remedy that may be available to the Related Refinery Owner for arrears of Rent or breach of contract, or otherwise, including the right of setoff.

ARTICLE 10
LIABILITY AND INDEMNIFICATION
10.1     Limitation of Liability; Indemnity . The Parties acknowledge and agree that the provisions relating to force majeure, indemnity and the limitation of liability are set forth in the Omnibus Agreement. Notwithstanding anything in this Lease or the Omnibus Agreement to the contrary and solely for the purpose of determining which of the Related Refinery Owners or the Relevant Asset Owners shall be liable in a particular circumstance, neither a the Related Refinery Owner nor the Relevant Asset Owner shall be liable to another Party for any default, loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred (collectively, “ Damages ”) by such Party except to the extent set forth in the Omnibus Agreement and to the extent that the Related Refinery Owner or the Relevant Asset Owner causes such Damages or owns or operates the assets or other property in question responsible for causing such Damages. In no event shall any Related Refinery Owner have any liability to another Related Refinery Owner, or shall any Relevant Asset Owner have any liability to another Relevant Asset Owner, for Damages, regardless of how caused or under any theory of recovery.
10.2     Survival . The provisions of this Article 10 shall survive the termination of this Agreement.

ARTICLE 11
OPTION
11.1      Applicability of Option . The provisions of this Article 11 shall apply to all Applicable Assets except those that are located at the Refinery Complexes of HollyFrontier Navajo or HollyFrontier Woods Cross (other than the Applicable Assets owned by Woods Cross Operating).
11.2      Grant of Option . Following the termination or expiration of the Master Throughput Agreement or Master Tolling Agreements, as applicable, as it relates to a Refinery Complex, including any renewal, extension, or replacement agreement thereof pursuant thereto, the affected Related Refinery Owner shall have an option, and the affected Relevant Asset Owner hereby grants such option, to purchase the Applicable Assets and the Additional Improvements at such Refinery Complex at a cost equal to the fair market value thereof, as reasonably determined by the Related Refinery Owner and the Relevant Asset Owner.


Exhibit 10.30

11.3      Determination of Fair Market Value . In the event that the Related Refinery Owner and the Relevant Asset Owner cannot agree as to the fair market value of such Applicable Assets and the Additional Improvements, the Related Refinery Owner and the Relevant Asset Owner shall each select a qualified appraiser. The two appraisers shall give their opinion of the fair market value of such Applicable Assets and Additional Improvements within 20 days after their retention. In the event the opinions of the two appraisers differ and, after good faith efforts over the succeeding 20-day period, they cannot mutually agree, the appraisers shall immediately and jointly appoint a third qualified appraiser. The third appraiser shall immediately (within five days) choose the determination of either appraiser and such choice of this third appraiser shall be final and binding on the Related Refinery Owner or the Relevant Asset Owner. Each of the Related Refinery Owner and the Relevant Asset Owner shall pay its own costs for its appraiser. Following the determination of the fair market value of the Applicable Assets and the Additional Improvements by the appraisers, the Related Refinery Owner and the Relevant Asset Owner shall equally share the costs of any third appraiser.
11.4      Cooperation . Upon the Related Refinery Owner’s exercise of the option granted pursuant to this Article 11 , the Related Refinery Owner and the Relevant Asset Owner shall cooperate to convey the Applicable Assets and the Additional Improvements from the Relevant Asset Owner to the Related Refinery Owner. If the Related Refinery Owner chooses to exercise its option granted pursuant to this Article 11 , the sale of the Applicable Assets and the Additional Improvements shall be subject to the receipt of any consents or waivers required pursuant to the Relevant Asset Owner’s credit facility or indentures then in effect.
11.5      Survival . The terms and conditions of this Article 11 shall survive the termination or expiration of this Lease or the Master Throughput Agreement or the Master Tolling Agreements, as applicable, with respect to the Related Refinery Owner and the Relevant Asset Owner.

ARTICLE 12
GENERAL PROVISIONS
12.1      Estoppel Certificates . The Related Refinery Owner and the Relevant Asset Owner shall, at any time and from time to time upon not less than 20 days prior written request from the other, execute, acknowledge and deliver to the other a statement in writing 1.%2.%3. certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which Rent and other charges are paid, and 2.%2.%3. acknowledging that there are not, to the executing party’s knowledge, any uncured defaults on the part of the other Party hereunder (or specifying such defaults, if any are claimed). Any such statement may be conclusively relied upon by any prospective purchaser of the Applicable Premises or the leasehold evidenced by this Lease or any lender with respect to the Applicable Premises or the leasehold evidenced by this Lease. Nothing in this Section 12.1 shall be construed to waive the conditions elsewhere contained in this Lease applicable to assignment or subletting of the Applicable Premises by the Relevant Asset Owner.
12.2      Notices . Any notice or other communication given under this Lease shall be in writing and shall be delivered in accordance with the requirements for notices set forth in the Omnibus Agreement.
12.3      Severability . If any term or other provision of this Lease is invalid, illegal or incapable of being enforced by any Applicable Law or public policy, all other terms and provisions of this Lease shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party hereto. Upon such


Exhibit 10.30

determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Lease so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
12.4      Time of Essence . Time is of the essence in the performance of all obligations falling due hereunder.
12.5      Captions . The headings to Articles and Sections of this Lease are inserted for convenience of reference only and will not affect the meaning or interpretation of this Lease.
12.6      Entire Agreement This Lease constitutes the entire agreement of the Parties hereto with respect to the subject matter hereof as applicable to such Party and supersedes all prior agreements and undertakings, both written and oral, between the Related Refinery Owner and the Relevant Asset Owner with respect to the subject matter hereof.
12.7      Waivers . To be effective, any waiver of any right under this Lease must be in writing and signed by a duly authorized officer or representative of the Party bound thereby. No waiver or waivers of any breach or default or any breaches or defaults by any Party of any term, condition or liability of or performance by any other Party of any duty or obligation hereunder shall be deemed or construed to be a waiver or waivers of any subsequent breaches or defaults of any kind, character or description under any circumstance. The acceptance of Rent hereunder by the Related Refinery Owner shall not be a waiver of any preceding breach by the Relevant Asset Owner of any provision hereof, other than the failure of the Relevant Asset Owner to pay the particular Rent so accepted, regardless of the Related Refinery Owner’s knowledge of such preceding breach at the time of acceptance of such Rent.
12.8      Incorporation by Reference . Any reference herein to any Appendix or Exhibit to this Lease will incorporate such Appendix or Exhibit herein as if it were set out in full in the text of this Lease.
12.9      Binding Effect . This Lease will be binding upon, and will inure to the benefit of, the Parties and their respective successors, permitted assigns and legal representatives. Nothing in this Section 12.9 shall be construed to waive the conditions elsewhere contained in this Lease applicable to assignment or subletting of the Applicable Premises by the Relevant Asset Owner.
12.10      Amendment . This Lease may not be amended or modified except by an instrument in writing signed by, or on behalf of, each of the Parties hereto. If and to the extent the Relevant Asset Owner may have occupied any portion of the Applicable Premises prior to the date of a Prior Lease without the benefit of any written lease, license or other instrument, the Relevant Asset Owner and the Related Refinery Owner release and waive any claims that such Party may have against the other Party with respect to such prior occupancy.
12.11      No Partnership . The relationship between the Related Refinery Owner and the Relevant Asset Owner at all times shall remain solely that of the landlord and tenant and shall not be deemed a partnership or joint venture.
12.12      No Third Party Beneficiaries . Subject to the provisions Article 10 and Section 12.9 . Any Person not a Party to this Lease shall have no rights under this Lease as a third party beneficiary or otherwise.
12.13      Governing Law . THIS LEASE AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS


Exhibit 10.30

OF THE STATE WHERE THE APPLICABLE PREMISES ARE LOCATED WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW RULES THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
12.14      Cooperation . The Parties acknowledge that they are entering into a long-term arrangement in which the cooperation of the Related Refinery Owner and the Relevant Asset Owner will be required. If, during the Applicable Term of this Lease, changes in the operations, facilities or methods of either the Related Refinery Owner or the Relevant Asset Owner will materially benefit one of them without detriment to the other, the Related Refinery Owner or the Relevant Asset Owner commit to each other to make reasonable efforts to cooperate and assist each other.
12.15      Further Assurances . The Parties shall execute such additional documents and shall cause such additional actions to be taken as may be required or, in the judgment of any Party, be necessary or desirable, to carry out the purposes of this Lease and to more fully assure the Parties’ rights and interests provided for hereunder. The Parties each agree to reasonably cooperate with the other Parties on all matters relating to the required Permits and regulatory compliance by any Party in respect of the Applicable Premises so as to ensure continued full operation of the Relevant Assets by the Relevant Asset Owner pursuant to the terms of this Lease.
12.16      Waiver of the Related Refinery Owner’s Lien . To the extent permitted by Applicable Law, the Related Refinery Owner hereby expressly waives any and all liens (constitutional, statutory, contractual or otherwise) upon the Relevant Asset Owner’s personal property now or hereafter installed or placed in or on the Applicable Premises, which otherwise might exist to secure payment of the sums herein provided to be paid by the Relevant Asset Owner to the Related Refinery Owner.
12.17      Recording . Upon the request of the Related Refinery Owner or the Relevant Asset Owner, the Related Refinery Owner and the Relevant Asset Owner shall execute, acknowledge, deliver and record a “short form” memorandum of this Lease in a form mutually acceptable to the Related Refinery Owner and the Relevant Asset Owner. Promptly upon request by the Related Refinery Owner at any time following the expiration or earlier termination of this Lease with respect to such Related Refinery Owner and the Relevant Asset Owner, however such termination may be brought about, the Relevant Asset Owner shall execute and deliver to the Related Refinery Owner an instrument, in recordable form, evidencing the termination of this Lease with respect to the Related Refinery Owner and the Relevant Asset Owner and the release by the Relevant Asset Owner of all of the Relevant Asset Owner’s right, title and interest in and to the Applicable Premises existing under and by virtue of this Lease (the “ Relevant Asset Owner Release ”) and the Relevant Asset Owner grants the Related Refinery Owner an irrevocable power of attorney coupled with an interest for the purpose of executing the Relevant Asset Owner Release in the name of the Relevant Asset Owner. This Section 12.17 shall survive the termination of this Lease.
12.18      Warranty of Peaceful Possession . The Related Refinery Owner covenants and warrants that the Relevant Asset Owner, upon paying the Rent reserved hereunder and observing and performing all of the covenants, conditions and provisions on the Relevant Asset Owner’s part to be observed and performed hereunder, may peaceably and quietly have, hold, occupy, use and enjoy, and, subject to the terms of this Lease, shall have the full, exclusive, and unrestricted use and enjoyment of, all the Applicable Premises during the Applicable Term for the purposes permitted herein, and the Related Refinery Owner agrees to warrant and forever defend title to the Applicable Premises against the claims of any and all persons whomsoever lawfully claiming the same or any part thereof.


Exhibit 10.30

12.19      Survival . All obligations of the Related Refinery Owner and the Relevant Asset Owner that shall have accrued under this Lease prior to the expiration or earlier termination hereof shall survive such expiration or termination to the extent the same remain unsatisfied as of the expiration or earlier termination of this Lease. The Related Refinery Owner and the Relevant Asset Owner further expressly agree that all provisions of this Lease which contemplate performance after the expiration or earlier termination hereof shall survive such expiration or earlier termination of this Lease.
12.20      AS IS, WHERE IS . SUBJECT TO ALL OF THE OBLIGATIONS OF RELATED REFINERY OWNER UNDER THIS LEASE INCLUDING THOSE SET FORTH IN ARTICLE 5 , ARTICLE 10 AND SECTION 12.18 , RELEVANT ASSET OWNER HEREBY ACCEPTS THE APPLICABLE PREMISES “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS”, AND RELATED REFINERY OWNER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, UNDER THIS LEASE AS TO THE PHYSICAL CONDITION OF THE APPLICABLE PREMISES, INCLUDING THE APPLICABLE PREMISES’ MERCHANTABILITY, HABITABILITY, CONDITION, FITNESS, OR SUITABILITY FOR ANY PARTICULAR USE OR PURPOSE.
12.21      Relocation of Pipelines; Amendment . If the Related Refinery Owner elects to move certain pipelines within the Refinery Complex, and such relocation of the pipelines requires relocation of any of the Applicable Assets, then this Lease shall continue in full force and effect; provided, however, the Parties shall execute an amendment hereto reflecting the new location(s) of the Applicable Assets.
12.22      Counterparts . This Lease may be executed in one or more counterparts, and by the Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
12.23      Joinder by Affiliates of Parties . From time to time, an Affiliate of the Relevant Asset Owner who own assets at a refinery (whether now or in the future owned by the Related Refinery Owner or its Affiliate), may desire to become a party to this Lease, upon such terms and conditions that such Relevant Asset Owner (or its Affiliate) and the applicable Related Refinery Owner may agree. The joinder of such Relevant Asset Owner’s Affiliate and/or the Related Refinery Owner’s Affiliate to this Agreement shall be effective upon the execution of a joinder agreement (a “ Joinder ”), in form and substance acceptable to such parties. The Joinder shall specify such Affiliate’s “Applicable Assets,” the “Applicable Term” and the applicable “Rent,” and shall include any provisions unique to such Affiliate’s assets. In executing the Joinder, such parties thereby acknowledge, represent and warrant that they have read and are familiar with the terms and conditions of this Lease and upon execution of the Joinder, and that this Lease is the binding and enforceable obligation of them, modified only as expressly set forth in such Joinder. The Joinder shall be for the sole purpose of joining such Affiliate(s) to this Lease and, except as expressly set forth in the Joinder only with respect to such Affiliate(s), shall not alter, modify or affect any of the terms or conditions of this Lease as they relate to such Affiliate(s), the Relevant Asset Owners or the Related Refinery Owners, all of which remain in full force and effect.
[Remainder of Page Intentionally Left Blank]






Exhibit 10.30





The parties hereto have executed this Fourth Amended and Restated Master Lease and Access Agreement to be effective as of the Effective Date.
Related Refinery Owners:
HOLLYFRONTIER EL DORADO REFINING LLC
HOLLYFRONTIER CHEYENNE REFINING LLC
HOLLYFRONTIER TULSA REFINING LLC
HOLLYFRONTIER WOODS CROSS REFINING LLC
HOLLYFRONTIER NAVAJO REFINING LLC

By:     /s/ George J. Damiris            
Name: George J. Damiris
Title: Chief Executive Officer and President
Relevant Asset Owners:
EL DORADO LOGISTICS LLC
EL DORADO OPERATING LLC
CHEYENNE LOGISTICS LLC
HEP TULSA LLC
WOODS CROSS OPERATING LLC


By:     /s/ Mark A. Plake            
Name: Mark A. Plake
Title:    President


HEP WOODS CROSS, L.L.C.
HEP PIPELINE, L.L.C.
By: Holly Energy Partners – Operating, L.P., its sole member


By: /s/ Mark A. Plake            
Name: Mark A. Plake
Title: President





Exhibit 10.30

Exhibit A
to
Fourth Amended and Restated Master Lease and Access Agreement


Parties

1.
HollyFrontier El Dorado and El Dorado Logistics with respect to the Applicable Premises at the El Dorado Refinery Complex

2.
HollyFrontier Cheyenne and Cheyenne Logistics with respect to the Applicable Premises at the Cheyenne Refinery Complex

3.
HollyFrontier Tulsa and HEP Tulsa with respect to the Applicable Premises at the Tulsa Refinery Complex

4.
HollyFrontier Woods Cross and HEP Woods Cross with respect to the Applicable Premises at the Woods Cross Refinery Complex

5.
HollyFrontier Navajo and HEP Pipeline with respect to the Applicable Premises at the Navajo Refinery Complex

6.
HollyFrontier El Dorado and El Dorado Operating with respect to the Applicable Premises at the El Dorado Refinery Complex

7.
HollyFrontier Woods Cross and Woods Cross Operating with respect to the Applicable Premises at the Woods Cross Refinery Complex




Exhibit B
to
Fourth Amended and Restated Master Lease and Access Agreement


Master Lease and Access Agreement Amendments



Exhibit B-1

Exhibit 10.30

Agreement
Effective Date
Reason for Amendment
Original Master Lease and Access Agreement
January 1, 2015
n/a
Amended and Restated Master Lease and Access Agreement
November 1, 2015
LLC Interest Purchase Agreement for certain El Dorado Refinery Assets
Second Amended and Restated Master Lease and Access Agreement
March 31, 2016
Purchase of certain Tulsa Refinery Assets by HEP Tulsa from a third party and construction of new tanks at the Tulsa Refinery Complex by HEP Tulsa
Third Amended and Restated Master Lease and Access Agreement
October 1, 2016
LLC Interest Purchase Agreement for the membership interests of Woods Cross Operating





Exhibit B-2

Exhibit 10.30

Exhibit C
to
Fourth Amended and Restated Master Lease and Access Agreement


Definitions

“ Additional Improvements ” is defined in Section 4.1 .
“ Affiliates ” means, with to respect to a specified person, any other person controlling, controlled by or under common control with that first person. As used in this definition, the term “control” includes (A) with respect to any person having voting securities or the equivalent and elected directors, managers or persons performing similar functions, the ownership of or power to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions, (A) ownership of 50% or more of the equity or equivalent interest in any person and (A) the ability to direct the business and affairs of any person by acting as a general partner, manager or otherwise. Notwithstanding the foregoing, for purposes of this Agreement, the Related Refinery Owners, on the one hand, and the Relevant Asset Owners, on the other hand, shall not be considered Affiliates of each other.
“ Ancillary Agreements ” means, collectively, any other agreement executed by the Related Refinery Owner and the Relevant Asset Owner in connection with the Relevant Asset Owner’s ownership of the Applicable Assets or the Relevant Asset Owner’s acquisition of the Applicable Assets, as the case may be, each as amended, supplemented or otherwise modified from time to time, and specifically includes the Omnibus Agreement.
“ Applicable Assets ” means the assets located at a Refinery Complex owned by the Relevant Asset Owner, identified on Exhibit E and any Additional Improvements.
“ Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination of, any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
“ Applicable Premises ” means those certain tracts or parcels of land on which the Applicable Assets are situated at a Refinery Complex, such land as to each of the Applicable Assets more particularly described or identified on Exhibit F together with all right, title and interest, if any, of the Related Refinery Owner in and to all accretion attaching to the land and any rights to submerged lands or interests in riparian rights or riparian grants owned by the Related Asset Owner and adjoining the land shown on said Exhibit F , but excluding 1.%2.%3.%4. the Applicable Assets, and 2.%2.%3.%4. the Additional Improvements.
“ Applicable Term ” means the Applicable Term set forth on Exhibit E for the Applicable Assets as such Applicable Term may be extended from time to time pursuant to Exhibit E .
“ Bankruptcy Event ” means, in relation to any Party,

Exhibit F-1

Exhibit 10.30

(a)
the making of a general assignment for the benefit of creditors by such Party;
(b)
the entering into of any arrangement or composition with creditors as a result of insolvency (other than for the purposes of a solvent reconstruction or amalgamation);
(c)
the institution by such Party of proceedings:
(i)      seeking to adjudicate such Party as bankrupt or insolvent or seeking protection or relief from creditors,
(ii)      seeking liquidation, winding up, or rearrangement, reorganization or adjustment of such Party or its debts (other than for purposes of a solvent reconstruction or amalgamation), or
(iii)      seeking the entry of an order for the appointment of a receiver, trustee or other similar official for such Party or for all or a substantial part of such Party’s assets; or
(d)    the institution of any proceeding of the type described in the third bullet above against such Party, which proceeding shall not have been dismissed within ninety (90) days following its institution.
“ Business Day ” means any day other than Saturday, Sunday or other day upon which commercial banks in Dallas, Texas are authorized by law to close.
“ Casualty Event ” is defined in Section 7.4 .
“ Cheyenne Logistics ” means Cheyenne Logistics LLC, a Delaware limited liability company.
“ Cheyenne RCRA Order ” means that certain administrative order dated September 24, 1990, as transferred to the Wyoming Department of Environmental Quality on March 22, 1995, to which the Cheyenne Refinery Complex is subject.

“ Commencement Date ” is defined in Exhibit E .
“ Connection Facilities ” is defined in the Master Site Services Agreement.
“ El Dorado Logistics ” means El Dorado Logistics LLC, a Delaware limited liability company.
“ El Dorado Operating ” means El Dorado Operating LLC, a Delaware limited liability company.
“ El Dorado RCRA Order ” means that certain administrative order to which the El Dorado Refinery Complex is or soon will be subject issued by the U.S. Environmental Protection Agency under Section 3008(h) of the Resource Conservation and Recovery Act.
“ Environmental Law ” or “ Environmental Laws ” means all federal, state, and local laws, statutes, rules, regulations, orders, and ordinances, now or hereafter in effect, relating to protection of the environment, including the federal Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air

Exhibit F-1

Exhibit 10.30

Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, and other environmental conservation and protection laws, each as amended from time to time.
“ Environmental Permit ” means a Permit issued under any Environmental Law.
“ Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.
“ Hazardous Substances ” means (a) any substance that is designated, defined, or classified as a hazardous waste, hazardous material, pollutant, contaminant, or toxic or hazardous substance, or that is otherwise regulated under any Environmental Law, including any hazardous substance as defined under the Comprehensive Environmental Response, Compensation, and Liability Act, and (b) petroleum, crude oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel, and other refined petroleum hydrocarbons.
“ HEP Operating ” means Holly Energy Partners-Operating, L.P., a Delaware limited partnership.
“ HEP Pipeline ” means HEP Pipeline, L.L.C., a Delaware limited liability company.
“ HEP Tulsa ” means HEP Tulsa LLC, a Delaware limited liability company.
“ HEP Woods Cross ” means HEP Woods Cross, L.L.C., a Delaware limited liability company.
“ HollyFrontier Cheyenne ” means HollyFrontier Cheyenne Refining LLC, a Delaware limited liability company.
“ HollyFrontier El Dorado ” means HollyFrontier El Dorado Refining LLC, a Delaware limited liability company.
“ HollyFrontier Navajo ” means HollyFrontier Navajo Refining LLC, a Delaware limited liability company.
“ HollyFrontier Tulsa ” means HollyFrontier Tulsa Refining LLC, a Delaware limited liability company.
“ HollyFrontier Woods Cross ” means HollyFrontier Woods Cross Refining LLC, a Delaware limited liability company.
“ Lease ” is defined in the preamble to this Lease.
“ Master Site Services Agreement ” shall mean the Third Amended and Restated Master Site Services Agreement among the Related Refinery Owners and the Relevant Asset Owners, dated effective as of October 1, 2016, as amended.
“ Master Throughput Agreement ” means the Third Amended and Restated Master Throughput Agreement between HollyFrontier Refining & Marketing LLC and HEP Operating, dated effective as of the Effective Date hereof.

Exhibit F-1

Exhibit 10.30

“ Master Tolling Agreement ” means the Master Tolling Agreement (Refinery Assets) dated effective as of November 1, 2015 between HollyFrontier El Dorado and HEP Operating and the Amended and Restated Master Tolling Agreement (Operating Assets) dated effective as of October 1, 2016 between HollyFrontier El Dorado, HollyFrontier Woods Cross and HEP Operating.
“ Omnibus Agreement ” means the Seventeenth Amended and Restated Omnibus Agreement, effective as of the Effective Date hereof.
“ Original Master Lease and Access Agreement ” means that certain Master Lease and Access Agreement effective as of January 1, 2015 among the Related Refinery Owners and the Relevant Asset Owners (except El Dorado Operating).
“ Party ” and “ Parties ” has the meanings ascribed to such term in the preamble to this Lease.
“ Permits ” means all permits, licenses, franchises, authorities, consents, and approvals, as necessary under applicable Laws, including Environmental Laws, for operating the Assets and/or the Applicable Premises.
“ Person ” means any individual or entity, including any partnership, corporation, association, joint stock company, trust, joint venture, limited liability company, unincorporated organization or Governmental Authority (or any department, agency or political subdivision thereof).
“ Post-Maturity Rate ” means a rate equal to the lesser of 3.%2.%3.%4. an interest rate equal to the “Prime Rate” as published in The Wall Street Journal , Southwest Edition, in its listing of “Money Rates” plus two percent or 4.%2.%3.%4. the maximum non-usurious rate of interest permitted to be charged the Relevant Asset Owner under applicable Law.
“ Prior Lease ” means:
with respect to:
 
HollyFrontier El Dorado and El Dorado Logistics
Lease and Access Agreement (El Dorado), dated as of November 9, 2011, as amended by the First Amendment to Lease and Access Agreement (El Dorado), dated as of September 13, 2012, as further amended by the Second Amendment to Lease and Access Agreement (El Dorado), dated as of January 8, 2013, as further amended by the Third Amendment to Lease and Access Agreement (El Dorado), dated as of January 7, 2014

HollyFrontier Cheyenne and Cheyenne Logistics
Lease and Access Agreement (Cheyenne), dated as of November 9, 2011, as amended by the First Amendment to Lease and Access Agreement (Cheyenne), dated as of September 13, 2012
HollyFrontier Tulsa and HEP Tulsa
First Amended and Restated Lease and Access Agreement (Tulsa East), dated as of March 31, 2010
HollyFrontier Woods Cross and HEP Woods Cross
Lease and Access Agreement (Woods Cross), dated as of February 29, 2008 and Lease and Access Agreement (Woods Cross Pipeline Pad), dated as of September 10, 2010
HollyFrontier Navajo and HEP Pipeline
Lease and Access Agreement (Artesia), dated as of February 29, 2008 and Lease and Access Agreement (Artesia Pump and Receiving Station), dated as of September 10, 2010


Exhibit F-1

Exhibit 10.30


For the avoidance of doubt, “Prior Lease” does not include: (a) Lease and Access Agreement (Lovington) dated as of February 29, 2008, (b) Lease and Access Agreement (Lovington Asphalt Loading Rack and Terminal Building) dated as of March 31, 2010, (c) Lease and Access Agreement (Lovington Pump and Receiving Stations) dated as of September 10, 2010, (d) Amended and Restated Lease and Access Agreement (Artesia Truck Rack and Blending Facility) dated as of March 12, 2015, (e) Equipment Sites, Access and Rail Line License Agreement (Tulsa Truck and Rail Equipment – Tulsa County, Oklahoma) dated as of August 1, 2009, and (f) Equipment Sites, Access and License Agreement (Tulsa Interconnecting Pipelines) dated as of August 31, 2011.
“ Refinery Complex ” means:
with respect to:
 
HollyFrontier El Dorado, El Dorado Logistics and El Dorado Operating
the refinery complex owned by HollyFrontier El Dorado, commonly known as the El Dorado Refinery, and located in the City of El Dorado, Butler County, Kansas
HollyFrontier Cheyenne and Cheyenne Logistics
the refinery complex owned by HollyFrontier Cheyenne, commonly known as the Cheyenne Refinery, and located in the City of Cheyenne, Laramie County, Wyoming
HollyFrontier Tulsa and HEP Tulsa
collectively, the refinery complex owned by HollyFrontier Tulsa commonly known as the East Tulsa Refinery, and located in the City of Tulsa, Tulsa County, Oklahoma, and the refinery complex owned by HollyFrontier Tulsa commonly known as the West Tulsa Refinery, and located in the City of Tulsa, Tulsa County, Oklahoma
HollyFrontier Woods Cross, HEP Woods Cross and Woods Cross Operating
the refinery complex owned by HollyFrontier Woods Cross, commonly known as the Woods Cross Refinery, and located near the City of Woods Cross, Davis County, Utah
HollyFrontier Navajo and HEP Pipeline
the refinery complex owned by HollyFrontier Navajo, commonly known as the Navajo Refinery, and located near the City of Artesia, Eddy County, New Mexico
 
“ Related Refinery Owner ” means:
with respect to:
Related Refinery Owner
El Dorado Logistics or El Dorado Operating
HollyFrontier El Dorado
Cheyenne Logistics
HollyFrontier Cheyenne
HEP Tulsa
HollyFrontier Tulsa
HEP Woods Cross or Woods Cross Operating
HollyFrontier Woods Cross
HEP Pipeline
HollyFrontier Navajo

“ Related Refinery Owner’s Parties ” is defined in Section 2.2.2 .
“ Relevant Asset Owner ” means:

Exhibit F-1

Exhibit 10.30

with respect to:
Relevant Asset Owner
HollyFrontier El Dorado
El Dorado Logistics or El Dorado Operating, as determined by the Applicable Asset
HollyFrontier Cheyenne
Cheyenne Logistics
HollyFrontier Tulsa
HEP Tulsa
HollyFrontier Woods Cross
HEP Woods Cross or Woods Cross Operating, as determined by the Applicable Asset
HollyFrontier Navajo
HEP Pipeline

“ Relevant Asset Owner Release ” is defined in Section 12.17 .
“ Relevant Asset Owner’s Parties ” is defined in Section 2.2.1 .
“ Rent ” is defined in Section 2.3 .
“ Service Assets ” is defined in the Master Site Services Agreement as it relates to the Relevant Asset Owner and the Related Refinery Owner.
“ Shared Access Facilities ” is defined in Section 2.2(a) .
“ Tankage ” means the storage tanks that are included in the Applicable Assets.
“ Taxable Assets ” is defined in Section 6.1 .
“ Taxes ” means all federal, state and local real and personal property ad valorem taxes, assessments, and other governmental charges, general and special, ordinary and extraordinary, including assessments for public improvements or benefits, any federal, state or local income, gross receipts, withholding, franchise, excise, sales, use, value added, recording, transfer or stamp tax, levy, duty, charge or withholding of any kind, in each case, imposed or assessed by any federal, state or local government, agency or authority, together with any addition to tax, penalty, fine or interest thereon, other than state or U.S. federal income tax imposed upon the taxable income of the Related Refinery Owner and any franchise taxes imposed upon the Related Refinery Owner.
“ Third Party ” shall mean a Person which is not 3.%2.%3. the Related Refinery Owner or an Affiliate of the Related Refinery Owner, 4.%2.%3. the Relevant Asset Owner or an Affiliate of the Relevant Asset Owner or 5.%2.%3. a Person that, after the signing of this Lease becomes a successor entity of the Related Refinery Owner, the Relevant Asset Owner or any of their respective Affiliates. An employee of the Related Refinery Owner or the Relevant Asset Owner shall not be deemed an Affiliate.
“ Tulsa West Crude Tanks ” means the Tankage identified in Subpart C of Exhibit E-3 .
“ Woods Cross Operating ” means Woods Cross Operating LLC, a Delaware limited liability company.


Exhibit F-1

Exhibit 10.30


Exhibit D
to
Fourth Amended and Restated Master Lease and Access Agreement


Interpretation

As used in this Lease, unless a clear contrary intention appears

(a)      any reference to the singular includes the plural and vice versa, any reference to natural persons includes legal persons and vice versa, and any reference to a gender includes the other gender;
(b)      the words “hereof”, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;
(c)      any reference to Articles, Sections and Exhibits are, unless otherwise stated, references to Articles, Sections and Exhibits of or to this Agreement. The headings in this Agreement have been inserted for convenience only and shall not be taken into account in its interpretation;
(d)      reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended, modified or supplemented and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement;
(e)      the Exhibits hereto form an integral part of this Agreement and are equally binding therewith. Any reference to “this Agreement” shall include such Exhibits;
(f)      references to a Person shall include any permitted assignee or successor to such Party in accordance with this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity;
(g)      if any period is referred to in this Agreement by way of reference to a number of days, the days shall be calculated exclusively of the first and inclusively of the last day unless the last day falls on a day that is not a Business Day in which case the last day shall be the next succeeding Business Day;
(h)      the use of “or” is not intended to be exclusive unless explicitly indicated otherwise;
(i)      references to “$” or to “dollars” shall mean the lawful currency of the United States of America; and
(j)      The words “includes,” “including,” or any derivation thereof shall mean “including without limitation” or “including, but not limited to.”
Exhibit E
to

Exhibit F-1

Exhibit 10.30

Fourth Amended and Restated Master Lease and Access Agreement


Applicable Term and Applicable Assets

Location

Applicable Term

Applicable Assets
El Dorado Refinery Complex
For El Dorado Logistics
Commencement Date: November 1, 2011
End Date: November 1, 2061 (midnight)
See Exhibit E-1
For El Dorado Operating
Commencement Date: November 1, 2015
End Date: November 1, 2065 (midnight)
See Exhibit E-8
Cheyenne Refinery Complex
For Cheyenne Logistics
Commencement Date: November 1, 2011
End Date: November 1, 2061 (midnight)
See Exhibit E-2
Tulsa Refinery Complex
Group 1 Assets and Group 2 Assets
Commencement Date: March 31, 2010
End Date: March 31, 2060 (midnight)

See Exhibit E-3
Tulsa West Tankage Assets and Receiving Pipelines

Commencement Date: March 31, 2016
End Date: March 31, 2066 (midnight)

See Exhibit E-3
Woods Cross Refinery Complex
For HEP Woods Cross
Commencement Date: February 29, 2008
End Date: February 28, 2058 (midnight)
Applicable Assets at Woods Cross Refinery Complex (excluding the Woods Cross Pipeline Pad)

See Exhibit E-4

Commencement Date: September 10, 2010
End Date: February 28, 2058 (midnight)
Woods Cross Pipeline Pad

See Exhibit E-5
For Woods Cross Operating
Commencement Date: October 1, 2016
End Date: October 1, 2066 (midnight)
See Exhibit E-9
Navajo Refinery Complex
 
Commencement Date: February 29, 2008
End Date: February 28, 2058 (midnight)
Applicable Assets at Navajo Refinery Complex (excluding the Truck Rack, the Artesia Blending Station and the Artesia Pump and Receiving Stations)

See Exhibit E-6
Commencement Date: September 10, 2010
End Date: February 28, 2058 (midnight)

Artesia Pump and Receiving Stations

See Exhibit E-7
Exhibit E-1
to

Exhibit F-1

Exhibit 10.30

Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: El Dorado Refinery Complex (for El Dorado Logistics)

1.
The following storage tanks located on the Land described under “Storage Tanks” and “Propane Tank Loading Rack and Tanks 600-621” on Exhibit F-1 .
TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
 
1
Naphtha
2,885
 
2
Naphtha
2,885
 
3
ULSD
40,425
 
15
ULSD
12,422
 
16
Light Slop
28,880
 
17
Gasoline
92,740
 
18
Gasoline
88,600
 
19
Gasoline
90,733
 
20
Finish Gasoline
17,961
 
21
ULSD
120,639
 
23
ULSD
113,182
 
24
ULSD
119,269
 
25
Av Jet
65,117
 
29
CRU1 Feed
33,723
 
30
CRU2 Feed
39,417
 
31
ULSD
23,792
 
32
Finish Gasoline
74,847
 
64
Gasoline
17,961
 
65
Gasoline
17,941
 
66
Naphtha
22,582
 
75
ULS k
24,938
 
78
ULS k
9,226
 

Exhibit F-1

Exhibit 10.30

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
 
127
Heavy Slop
20,504
 
652
Sour Distilate
90,000
 
642
HTU2 Chg.
78,511
 
134
HTU2 Chg.
76,492
 
649
HTU4 CHg.
100,000
 
137
Gas Oil/Sour diesel
191,899
 
138
Gas Oil
194,091
 
139
Gas Oil
74,792
 
142
Gas Oil
191,563
 
143
Gas Oil
191,570
 
159
Slurry
9,778
 
167
Slurry
8,908
 
650
ULSD Dock
36,000
 
178
Coke Charge/Swing Tank
80,000
 
192 **
Idled
8,908
 
212
Coker Chg.
76,524
 
213
Asphalt
77,675
 
215
AV Jet
67,529
 
216
Alkylate
72,618
 
218
Gas Oil
77,675
 
219
Reformate
71,466
 
220
Swing Tank
71,495
 
221
Gasoline Swing
71,508
 
222
Gasoline Swing
71,509
 
223
Reformate
72,893
 
224
Jet Fuel
71,534
 
225
HTU1 Chg, kerosene
28,882
 

Exhibit F-1

Exhibit 10.30

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
 
226
Finish Gasoline
27,679
 
227
Natural Gasoline
27,701
 
230
Diesel (RAM)
4,780
 
231
Light Cycle (RAM)
1,923
 
250
FCCU Gasoline
75,354
 
251
FCCU Gasoline
75,968
 
252
FCCU Gasoline
75,968
 
253
Natural Gasoline
74,653
 
254
Isomerate
19,318
 
255
Isomerate
19,318
 
256
TEL Wash
950
 
447
Finish Gasoline
17,730
 
448
Gasoline
16,109
 
453
Ethanol
5,121
 
457
HTU3 Chg, LSR
32,690
 
458
Isomerate
32,690
 
490
ULSD
116,094
 
600
Propane
625
 
601
Propane
625
 
602
Propane
625
 
603
Propane
625
 
604
Propane
625
 
605
Propane
625
 
606
Propane
625
 
607
Propane
625
 
608
Propane
625
 
609
Propane
625
 

Exhibit F-1

Exhibit 10.30

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
 
610
Propane
625
 
611
Propane
625
 
612
Propane
625
 
613
Propane
625
 
614
Propane
625
 
615
Propane
625
 
616
Propane
625
 
617
Propane
625
 
618
Propane
625
 
619
Propane
625
 
620
Propane
575
 
621
Propane
100
 
640
Asphalt
66,859
 
641
Propane
6,813
 
647
Asphalt
76,600
 
651
Heavy Atmospheric Gas Oil (GASO)
32,000
 

2.
The Refined Products Truck Loading Rack located on the Land described under “Refined Products Truck Loading Rack” on Exhibit F-1 .
3.
The Propane Truck Loading Rack located on the Land described under “Propane Truck Loading Rack” on Exhibit F-1 .


Exhibit E-2
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: Cheyenne Refinery Complex

1.
The following storage tanks located on the Land described under “Storage Tanks” on Exhibit F-2 .

Exhibit F-1

Exhibit 10.30

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
 
1-107
Intermediate Distillate
69,942
 
1-013
Coker Distillate
1,914
 
1-014
Low Sul. Diesel
24,677
 
1-015
No Lead Gas
24,677
 
1-016
Ethanol
2,564
 
1-017
Prem. No Lead Gas
5,034
 
1-020
FCC Slurry Oil
5,018
 
1-021
Sweet Naphtha / VRU
9,867
 
1-027
Slop Oil
4,000
 
1-028
Biodiesel
5,179
 
1-029
Coker Gas Oil
10,709
 
1-032
Diesel
10,124
 
1-033
Coker Distillate
10,342
 
1-040
FCC Slurry Oil
10,121
 
1-048
Coker Distillate
1,341
 
1-049
Coker Distillate
1,341
 
1-050
Vacuum Bottoms
67,428
 
1-051
Slurry
24,938
 
1-052
PG 58-28 (Asphalt)
72,017
 
1-053
FCCU Slurry
13,506
 
1-054
FCCU Slurry
24,938
 
1-055
PG 58-28 (Asphalt)
54,499
 
1-056
Coker feed tank
61,709
 
1-058
Coker Gas Oil
10,493
 
1-090
PG 64-22 (Asphalt)
55,954
 
1-091
PG 58-28 (Asphalt)
55,954
 
1-093
PG 64-22 (Asphalt)
2,602
 

Exhibit F-1

Exhibit 10.30

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
 
1-094
PG 64-22 (Asphalt)
2,602
 
1-095
PG 64-22 (Asphalt)
2,602
 
1-106
Naphtha
120,000
 
1-108
Distillate
107,000
 
1-117
Vacuum Bottoms
69,942
 
2-015
Diesel
28,870
 
2-016
Diesel
28,046
 
2-017
UC Crack (LCO / Coker Distillate)
28,562
 
2-020
Gas Oil
10,746
 
2-021
Gas Oil
10,746
 
2-022
UC Crack (LCO / Coker Distillate)
9,731
 
2-023
Coker Gas Oil
10,583
 
2-028
Cat Gas Oil
80,153
 
2-034
Reformate
23,234
 
2-035
Alkylate
24,190
 
2-036
Recovered Oil / Crude slop
5,056
 
2-060
Burner / Distillate
9,846
 
2-061
Sweet Naphtha
10,096
 
2-062
Naphtha
9,970
 
2-063
Crude HSR
10,096
 
2-067
Crude LSR
10,093
 
2-070
Sub Grade No Lead Gas
32,608
 
2-071
Premium No Lead Gas
32,612
 
2-072
Crude
80,581
 
2-073
Crude
80,551
 
2-074
Crude
79,766
 

Exhibit F-1

Exhibit 10.30

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
 
2-075
Finished NL gasoline
80,278
 
2-100
LSR/LSG
41,978
 
2-101
Diesel
42,051
 
2-102
No Lead Gas
80,278
 
2-104
Reformate
54,749
 
2-105
Cat Gas Oil
54,954
 
2-118
Light Straight Run
40,609
 
2-119
FCCU Cat Gas
40,609
 
2-161
Finished Diesel
40,485
 

2.
The Refined Products Truck Loading Rack, including the Vapor Recovery Unit, located on the Land described under “Refined Products Truck Loading Rack” on Exhibit F-2 .
3.
The two Propane Loading Spots located on the Land described under “Propane Loading Spots” on Exhibit F-2 .
4.
The four Crude Oil LACTS Units located on the Land described under “Crude Oil LACTS Units” on Exhibit F-2 .
5.
The Crude Receiving Pipeline located on the Land described under “Crude Receiving Pipeline” on Exhibit F-2 .



Exhibit E-3
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: Tulsa Refinery Complex

A.
Group 1 Assets located on the land described on Exhibit F-3

1. The following storage tanks located at the Tulsa East Refinery:


Exhibit F-1

Exhibit 10.30

TANK ID
REFINED PRODUCT
CAPACITY (BBLS)
 
 
 
10
ULSD #2 (XT)
37,500
11
ULSD #2 (XT)
37,500
12
Naphtha
32,000
45
Decant
5,700
102
Kerosene
37,500
103
Kerosene
37,500
104A
ULSD #2 (XT)
37,500
110
ULSD #1
37,500
111
Kerosene
37,500
115
ULSD #2 (XT)
150,421
215
ULSD #2 (XT)
150,421
116
Kerosene
37,500
117
ULSD #2 (XT)
63,300
444A
Naphtha
32,000
450A
Premium Unleaded
12,574
451
USLD #2 (XT)
11,700
452A
USLD #2 (XT)
12,000
464A
Unleaded Regular
73,000
465
Unleaded Regular
79,320
466
Unleaded Regular
79,320
467A
Unleaded Regular
73,000
470A
Unleaded Regular
151,020
472
Unleaded Regular
151,000
473A
Premium Unleaded (ST)
151,020
601
Unleaded Regular
18,634
602
Premium Unleaded (ST)
10,743
603
Out of Service
2,000
605
Ethanol
3,528
606
Empty
500

2. The Asphalt Truck Loading Rack

3. The Propane Truck Loading Rack

4. The Gasoline/Diesel/Jet Fuel Truck Loading Rack

5. Two Product Delivery Pipelines

B.
Group 2 Assets located on the land described on Exhibit F-3

1.
The following storage tanks located at the Tulsa East Refinery:

Exhibit F-1

Exhibit 10.30

TANK ID
CURRENT SERVICE
CAPACITY (BBLS)
 
 
 
1
Crude
130,450
2
Crude
130,000
3
Crude
116,579
8
Crude
130,233
123
CSO
37,500
471
Unleaded Gasoline
71,371
107A
Flux/Asphalt
55,954
108A
Flux/Asphalt
37,500
109
Flux/Asphalt
37,500
125
Flux/Asphalt
37,500
131
Flux/Asphalt
37,500
442
Gasoline blendstock
11,700
445A
Gasoline blendstock
32,787
446
Gasoline blendstock
11,700
460
LSR
80,000
461A
LSR
80,000
17
FCCU LCO
37,500
114
Raw Diesel
131,000
9
Raw gas oil
150,260
15
Raw gas oil
130,000
16
Raw gas oil-Sour
151,078
6A
Raw naphtha
69,082
4
Scanfiner feed
120,566
40
Raw gas oil
5,734
41
CSO
4,032
34
Truck loading-64/22 asphalt
11,798
36A
Truck loading-58/28 asphalt
11,500
124A
Flux/Asphalt
37,500
18A
Slop
37,500
31
Slop
15,000
7A
Naphtha
69,082
14
Naphtha
55,000
2.
The Rail Loading Rack
3.
The Truck Unloading Rack
C.
Tulsa West Crude Tanks located on the land described on Exhibit F-3

The following storage tanks located at the Tulsa West Refinery:


Exhibit F-1

Exhibit 10.30

TANK ID NUMBER
CURRENT SERVICE/PRODUCT
NOMINAL CAPACITY, BBLS
13
Crude/Lef
55,000
186
Crude/Lef
55,000
187
Crude/Lef
55,000
188
Crude/Lef
55,000
244
Crude/Lef
55,000
874
Crude/Lef
121,000
    



Exhibit E-4
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: Woods Cross Refinery Complex
(excluding the Woods Cross Pipeline Pad)


1.
Crude oil tanks identified as numbers 103, 121 and 126 located on the land described on Exhibit F-4


Exhibit E-5
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: Woods Cross Pipeline Pad



1.
12” HEP to UNEV refined products pipeline origin trap and piping, associated SCADA Control building and satellite dish.

2.
8” HEP to Chevron refined products pipeline origin trap and piping.

3.
10" HEP to Pioneer refined products pipeline origin trap and piping.


Exhibit F-1

Exhibit 10.30

4.
All equipment, machinery, fixtures and other tangible personal property and improvements used or held for use exclusively in connection with the assets described above, to the extent currently owned by the Relevant Asset Owner.

5.
All other assets used or held for use exclusively in connection with or constituting the assets described above, to the extent owned by the Relevant Asset Owner.



Exhibit E-6
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: Navajo Refinery Complex
(excluding the Truck Rack, the Artesia Blending Station and the Artesia Pump and Receiving Stations)


1.
Crude oil tanks identified as numbers 437 and 1225 (replacement tank for tank 439) located on the land described on Exhibit F-6


Exhibit E-7
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: Artesia Pump and Receiving Stations


1.
El Paso 8”/12” Products Pipeline Originating Pump Station

2.
Four Corners 12” Products Pipeline Originating Pump Station

3.
Lovington 8” Pipeline Receiving Station

4.
Lovington 10” Pipeline Receiving Station

5.
Lovington 16” Pipeline Receiving Station

6.
Natural Gas 8” Pipeline Receiving Station

7.
El Paso 6” Pipeline Pump Station

8.
Roswell 4” Pipeline Pump Station


Exhibit F-1

Exhibit 10.30

9.
All equipment, machinery, fixtures and other tangible personal property and improvements used or held for use exclusively in connection with the assets described above, to the extent currently owned by the Relevant Asset Owner.

10.
All other assets used or held for use exclusively in connection with or constituting the assets described above, to the extent owned by the Relevant Asset Owner.


Exhibit E-8
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: El Dorado Refinery Complex (for El Dorado Operating)

1.
Hydrogen Generation Unit within the El Dorado Refinery Complex. The unit has nameplate capacity to produce 17mm standard cubic feet of hydrogen per day, using a feedstock primarily composed of natural gas (methane).

2.
Naphtha Fractionation Unit within the El Dorado Refinery Complex. The unit has a nameplate capacity of 48,000 barrels per day of naphtha feedstock input and produces assorted intermediate and final petroleum products.


Exhibit E-9
to
Fourth Amended and Restated Master Lease and Access Agreement


Applicable Assets: Woods Cross Refinery Complex (for Woods Cross Operating)

The following located on the land described on Exhibit F-9 :

1.
“Crude Unit 2” is an atmospheric distillation tower within the Woods Cross Refinery Complex, with a nameplate capacity of 15,000 barrels per day.
2.
“FCC Unit 2” is a fluid catalytic cracking unit within the Woods Cross Refinery Complex, with a nameplate capacity of 8,000 barrels per day.
3.
“Polymerization Unit” is a polymerization unit within the Woods Cross Refinery Complex, a nameplate capacity of up to 2,500 barrels per day.



    

Exhibit F

Exhibit F-1

Exhibit 10.30

to
Fourth Amended and Restated Master Lease and Access Agreement


Description of Applicable Premises

1.
El Dorado Refinery Complex (for El Dorado Logistics)

[See Exhibit F-1]

2.
Cheyenne Refinery Complex

[See Exhibit F-2]

3.
Tulsa Refinery Complex

[See Exhibit F-3]

4.
Woods Cross Refinery Complex (excluding the Woods Cross Pipeline Pad)

[See Exhibit F-4]

5.
Woods Cross Pipeline Pad

[See Exhibit F-5]

6.
Navajo Refinery Complex (excluding the Truck Rack, the Artesia Blending Station and the Artesia Pump and Receiving Stations)

[See Exhibit F-6]

7.
Artesia Pump and Receiving Stations

[See Exhibit F-7]

8.
[Reserved]

[Exhibit F-8][Reserved]

9.      Woods Cross Refinery Complex (for Woods Cross Operating)

[See Exhibit F-9]

For the avoidance of doubt, the Applicable Premises as to Tankage includes only that portion of the land described above upon which the Applicable Assets are situated and does not extend beyond the circular footprint of such Applicable Assets, the legal descriptions set forth herein notwithstanding.
Exhibit F-1

Exhibit F-1

Exhibit 10.30

to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for El Dorado Refinery Complex]


Storage Tanks

Tract 1
(Tanks 1, 2, 3, 15, and 448)
A tract of land lying in the Southeast Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Southeast Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 32°39'24" East a distance of 1,674.34 feet to the POINT OF BEGINNING;
THENCE North 90°00’00” East a distance of 76.12 feet;
THENCE South 01°41'08" East a distance of 193.10 feet;
THENCE South 87°48'56" East a distance of 148.93 feet;
THENCE South 00°58'18" East a distance of 135.27 feet;
THENCE North 87°33'48" West a distance of 160.50 feet;
THENCE North 89°06'29" West a distance of 122.95 feet;
THENCE South 00°20'29" East a distance of 129.20 feet;
THENCE South 89°32'57" West a distance of 97.73 feet;
THENCE North 01°15'33" West a distance of 274.71 feet;
THENCE North 47°02'18" East a distance of 68.31 feet;
THENCE North 90°00’00” East a distance of 102.25 feet;
THENCE North 00°29'09" East a distance of 133.98 feet to the POINT OF BEGINNING.
Said tract of land containing 87,220 square feet or 2.0023 acres more or less.



Exhibit F-1

Exhibit 10.30

Tract 2
(Tank 16)
A tract of land lying in the Southeast Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Southeast Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 20°04'17" East a distance of 2,155.66 feet to the POINT OF BEGINNING;
THENCE North 88°49'54" East a distance of 111.73 feet;
THENCE South 00°00’00” West a distance of 104.04 feet;
THENCE North 73°01'07" West a distance of 114.41 feet;
THENCE North 01°54'37" West a distance of 68.39 feet to the POINT OF BEGINNING.
Said tract of land containing 9,512 square feet or 0.2184 acres more or less.

Tract 3
(Tanks 17, 133, 168 and 447)
A tract of land lying in the South Half of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the Southeast Quarter of said Section 10, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 11°35'46" West a distance of 1,415.56 feet to the POINT OF BEGINNING;
THENCE North 88°54'16" East a distance of 969.62 feet;
THENCE South 00°10'29" West a distance of 173.43 feet;
THENCE North 89°52'18" West a distance of 296.67 feet;
THENCE South 00°18'30" East a distance of 135.24 feet;
THENCE South 89°39'45" West a distance of 664.39 feet;
THENCE North 01°40'43" West a distance of 293.51 feet to the POINT OF BEGINNING.
Said tract of land containing 249,588 square feet or 5.7298 acres more or less.


Exhibit F-1

Exhibit 10.30

Tract 4
(Tanks 18, 19, 20, 32, 64, 65, 75, 78 and 192)
A tract of land lying in the Southeast Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Southeast Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 21°40'09" East a distance of 271.04 feet to the POINT OF BEGINNING;
THENCE North 90°00’00” East a distance of 393.08 feet;
THENCE North 68°12'37" East a distance of 124.83 feet;
THENCE South 89°29'19" East a distance of 112.89 feet;
THENCE South 00°03'51" East a distance of 753.65 feet;
THENCE North 89°22'39" West a distance of 164.23 feet;
THENCE South 00°37'23" West a distance of 164.14 feet;
THENCE South 88°59'44" West a distance of 101.76 feet;
THENCE North 01°01'21" West a distance of 80.96 feet;
THENCE North 89°41'01" West a distance of 111.36 feet;
THENCE South 00°00'43" East a distance of 221.61 feet;
THENCE North 88°49'10" West a distance of 214.01 feet;
THENCE North 05°15'42" West a distance of 444.99 feet;
THENCE North 01°16'34" East a distance of 565.11 feet to the POINT OF BEGINNING.
Said tract of land containing 547,812 square feet or 12.5760 acres more or less.

Tract 5
(Tanks 21, 23, 24, 25, 31, 132, 225, 226, 227, 490 and 641)
A tract of land lying in the Southwest Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northeast corner of the said Southwest Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 88°24'26" West, along the north line of said Southwest Quarter, a distance of 1,325.13 feet;

Exhibit F-1

Exhibit 10.30

THENCE South 01°03'34" East a distance of 367.57 feet to the POINT OF BEGINNING;
THENCE North 87°36'17" East a distance of 205.95 feet;
THENCE North 01°21'23" West a distance of 295.87 feet;
THENCE South 89°31'50" East a distance of 254.89 feet;
THENCE South 03°51'33" East a distance of 186.25 feet;
THENCE South 44°13'56" West a distance of 107.82 feet;
THENCE South 00°03'30" West a distance of 349.66 feet;
THENCE North 87°40'25" East a distance of 332.81 feet;
THENCE North 44°22'24" East a distance of 131.44 feet;
THENCE North 02°12'14" West a distance of 271.63 feet;
THENCE South 90°00’00” West a distance of 104.46 feet;
THENCE North 00°57'20" West a distance of 250.58 feet;
THENCE North 88°25'31" East a distance of 383.91 feet;
THENCE South 02°28'23" East a distance of 305.23 feet;
THENCE South 73°43'44" East a distance of 150.78 feet;
THENCE South 07°50'03" East a distance of 396.39 feet;
THENCE South 87°40'29" West a distance of 586.33 feet;
THENCE South 03°00'15" East a distance of 378.52 feet;
THENCE South 88°37'24" West a distance of 660.09 feet;
THENCE North 03°22'06" West a distance of 360.11 feet;
THENCE North 00°47'50" East a distance of 117.28 feet;
THENCE North 34°42'44" West a distance of 71.74 feet;
THENCE North 01°03'34" West a distance of 292.29 feet to the POINT OF BEGINNING.
Said tract of land containing 861,557 square feet or 19.7786 acres more or less.



Exhibit F-1

Exhibit 10.30

Tract 6
(Tanks 215, 216 and 220)
A tract of land lying in the Southwest Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northeast corner of the said Southwest Quarter, from whence the northwest corner of said Southwest Quarter bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 88°24'26" West, along the north line of said Southwest Quarter, a distance of 1,325.13 feet;
THENCE South 01°03'34" East a distance of 659.86 feet;
THENCE South 88°22'51" West a distance of 69.13 feet to the POINT OF BEGINNING;
THENCE South 00°23'41" East a distance of 649.43 feet;
THENCE South 51°54'01" West a distance of 129.14 feet;
THENCE South 01°57'31" East a distance of 116.60 feet;
THENCE South 42°49'35" East a distance of 148.03 feet;
THENCE South 00°18'42" West a distance of 187.73 feet;
THENCE South 88°14'37" West a distance of 301.63 feet;
THENCE North 02°28'43" West a distance of 1,142.50 feet;
THENCE North 88°22'51" East a distance of 344.60 feet to the POINT OF BEGINNING.
Said tract of land containing 348,642 square feet or 8.0037 acres more or less.

Tract 7
(Tanks 219, 221, 222, 223, 224, 250, 251, and 252)
A tract of land lying in the Southwest Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northeast corner of the said Southwest Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 88°24'26" West, along the north line of said Southwest Quarter, a distance of 1,325.13 feet;
THENCE South 01°03'34" East a distance of 659.86 feet;
THENCE South 88°22'51" West a distance of 543.81 feet to the POINT OF BEGINNING;
THENCE South 00°13'26" West a distance of 212.34 feet;

Exhibit F-1

Exhibit 10.30

THENCE South 50°35'42" West a distance of 96.96 feet;
THENCE South 00°19'06" West a distance of 133.48 feet;
THENCE South 61°15'16" East a distance of 95.60 feet;
THENCE South 02°58'18" East a distance of 1,328.34 feet;
THENCE South 45°00'29" West a distance of 167.07 feet;
THENCE North 82°34'14" West a distance of 168.65 feet;
THENCE North 29°08'28" West a distance of 126.92 feet;
THENCE North 02°25'20" West a distance of 642.84 feet;
THENCE North 89°47'54" West a distance of 350.79 feet;
THENCE North 01°55'16" West a distance of 1,103.08 feet;
THENCE North 88°22'51" East a distance of 686.21 feet to the POINT OF BEGINNING.
Said tract of land containing 998,424 square feet or 22.9207 acres more or less.

Tract 8
(Tank 218)
A tract of land lying in the Southwest Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northeast corner of the said Southwest Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 34°03'37" West a distance of 2,849.63 feet to the POINT OF BEGINNING;
THENCE South 88°56'22" East a distance of 86.29 feet;
THENCE South 52°23'25" East a distance of 114.29 feet;
THENCE South 04°00'10" East a distance of 129.69 feet;
THENCE South 87°47'37" West a distance of 262.75 feet;
THENCE North 04°11'10" West a distance of 131.33 feet;
THENCE North 47°12'38" East a distance of 117.57 feet to the POINT OF BEGINNING.
Said tract of land containing 47,374 square feet or 1.0876 acres more or less.

Exhibit F-1

Exhibit 10.30


Tract 9
(Tanks 134, 649, 137, 138 and 139)
A tract of land lying in the Southwest Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northeast corner of the said Southwest Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 40°38'07" West a distance of 1,838.56 feet to the POINT OF BEGINNING;
THENCE North 89°52'55" East a distance of 626.05 feet;
THENCE South 38°45'27" East a distance of 142.27 feet;
THENCE South 00°34'29" West a distance of 514.76 feet;
THENCE South 37°41'51" West a distance of 200.54 feet;
THENCE South 88°37'07" West a distance of 324.57 feet;
THENCE South 01°24'13" East a distance of 445.50 feet;
THENCE South 87°42'39" West a distance of 227.55 feet;
THENCE North 41°39'02" West a distance of 131.37 feet;
THENCE North 01°20'52" West a distance of 1,059.76 feet;
THENCE North 36°53'11" East a distance of 109.68 feet to the POINT OF BEGINNING.
Said tract of land containing 727,128 square feet or 16.6926 acres more or less.

Tract 10
(Tanks 142 and 143)
A tract of land lying in the Northwest Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Northwest Quarter of Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;
THENCE South 09°57'01" East a distance of 492.35 feet to the POINT OF BEGINNING;
THENCE North 88°29'25" East a distance of 502.80 feet;

Exhibit F-1

Exhibit 10.30

THENCE South 62°40'57" East a distance of 63.92 feet;
THENCE South 02°58'50" East a distance of 345.87 feet;
THENCE South 86°20'48" West a distance of 564.35 feet;
THENCE North 02°02'46" West a distance of 397.70 feet to the POINT OF BEGINNING.
Said tract of land containing 216,393 square feet or 4.9677 acres more or less.

Tract 11
(Tanks 254, 255 and 256)
A tract of land lying in the Northwest Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Northwest Quarter of Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;
THENCE South 79°15'07" East a distance of 773.84 feet to the POINT OF BEGINNING;
THENCE North 86°28'46" East a distance of 53.25 feet;
THENCE South 02°46'48" East a distance of 84.29 feet;
THENCE South 00°25'57" East a distance of 216.62 feet;
THENCE South 90°00’00” West a distance of 101.39 feet;
THENCE North 02°37'59" West a distance of 213.57 feet;
THENCE North 85°32'03" East a distance of 52.49 feet;
THENCE North 00°00’00” East a distance of 80.11 feet to the POINT OF BEGINNING.
Said tract of land containing 27,360 square feet or 0.6281 acres more or less.

Tract 12
(Tanks 178, 212, 213, 230, and 231)
A tract of land lying in the Northeast Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the Northwest Quarter of said Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;

Exhibit F-1

Exhibit 10.30

THENCE South 85°06'15" East a distance of 2,940.18 feet to the POINT OF BEGINNING;
THENCE North 86°03'54" East a distance of 311.95 feet;
THENCE North 01°23'53" West a distance of 20.44 feet;
THENCE North 89°55'17" East a distance of 90.83 feet;
THENCE South 05°33'23" East a distance of 56.08 feet;
THENCE South 56°05'10" West a distance of 250.51 feet;
THENCE South 02°24'10" East a distance of 390.70 feet;
THENCE South 88°55'11" West a distance of 200.37 feet;
THENCE North 01°34'52" West a distance of 547.97 feet to the POINT OF BEGINNING.
Said tract of land containing 132,389 square feet or 3.0392 acres more or less.

Tract 13
(Tanks 159 and 167)
A tract of land lying in the Northeast Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the Northwest Quarter of said Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;
THENCE North 88°43'03" East a distance of 3,230.68 feet to the POINT OF BEGINNING;
THENCE North 84°50'40" East a distance of 88.48 feet;
THENCE South 01°50'55" East a distance of 151.75 feet;
THENCE South 87°42'39" West a distance of 91.86 feet;
THENCE North 00°28'33" West a distance of 147.39 feet to the POINT OF BEGINNING.
Said tract of land containing 13,468 square feet or 0.3092 acres more or less.
Tract 15
(Tank 127)
A tract of land lying in the Southeast Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:

Exhibit F-1

Exhibit 10.30

COMMENCING at the northwest corner of the said Southeast Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 06°28'34" East a distance of 2,059.89 feet to the POINT OF BEGINNING;
THENCE North 88°10'23" East a distance of 71.34 feet;
THENCE South 00°00’00” West a distance of 75.05 feet;
THENCE South 88°06'47" West a distance of 69.07 feet;
THENCE North 01°44'12" West a distance of 75.09 feet to the POINT OF BEGINNING.
Said tract of land containing 5,269 square feet or 0.1210 acres more or less.

Tract 16
(Tanks 29, 30 and 66)
A tract of land lying in the Southeast Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Southeast Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 03°42'00" East a distance of 1,759.51 feet to the POINT OF BEGINNING;
THENCE North 90°00’00” East a distance of 403.67 feet;
THENCE South 00°22'16" East a distance of 330.67 feet;
THENCE North 89°28'46" West a distance of 117.79 feet;
THENCE North 33°56'44" West a distance of 141.90 feet;
THENCE West a distance of 200.23 feet;
THENCE North 02°18'54" West a distance of 212.06 feet to the POINT OF BEGINNING.
Said tract of land containing 103,314 square feet or 2.3718 acres more or less.

Tract 17
(Tank 453)
A tract of land lying in the Southeast Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:

Exhibit F-1

Exhibit 10.30

COMMENCING at the northwest corner of the said Southeast Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;
THENCE South 23°15'01" East a distance of 2,282.23 feet to the POINT OF BEGINNING;
THENCE North 80°38'00" East a distance of 79.33 feet;
THENCE South 02°43'41" East a distance of 79.83 feet;
THENCE South 87°44'00" West a distance of 76.81 feet;
THENCE North 04°21'13" West a distance of 70.07 feet to the POINT OF BEGINNING.
Said tract of land containing 5,834 square feet or 0.1339 acres more or less.

Tract 18
(Tanks 253)
A tract of land lying in the Northwest Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Northwest Quarter of Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;
THENCE South 86°51'28" East a distance of 958.25 feet to the POINT OF BEGINNING;
THENCE North 87°00'38" East a distance of 220.65 feet;
THENCE South 03°00'49" East a distance of 218.94 feet;
THENCE South 90°00’00” West a distance of 223.64 feet;
THENCE North 02°16'23" West a distance of 207.30 feet to the POINT OF BEGINNING.
Said tract of land containing 47,316 square feet or 1.0862 acres more or less.

Tract 19
(Tanks 457 and 458)
A tract of land lying in the Northwest Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the northwest corner of the said Northwest Quarter of Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;

Exhibit F-1

Exhibit 10.30

THENCE South 55°24'56" East a distance of 937.55 feet to the POINT OF BEGINNING;
THENCE North 88°27'38" East a distance of 153.75 feet;
THENCE South 02°19'34" East a distance of 325.75 feet;
THENCE South 89°03'40" West a distance of 151.24 feet;
THENCE North 02°46'32" West a distance of 324.21 feet to the POINT OF BEGINNING.
Said tract of land containing 49,544 square feet or 1.1374 acres more or less.

Tract 20
(Tank 640)
A tract of land lying in the Northeast Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:

COMMENCING at the northwest corner of the Northwest Quarter of said Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;

THENCE North 88°28'37" East a distance of 2,901.96 feet to the POINT OF BEGINNING;

THENCE continuing North 88°28'37" East a distance of 161.88 feet;

THENCE South 01°09'07" East a distance of 166.25 feet;

THENCE South 89°49'48" West a distance of 161.29 feet;

THENCE North 01°21'57" West a distance of 162.44 feet to the POINT OF BEGINNING.

Said tract of land containing 26,553 square feet or 0.6096 acres more or less.

Tract 21
(Tank 647)
A tract of land lying in the Southwest Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:

COMMENCING at the northeast corner of the said Southwest Quarter, from whence the northwest corner of the Southwest Quarter of said Section 10 bears South 88°24’26” West a distance of 2650.26 feet;

THENCE South 88°24'26" West, along the north line of said Southwest Quarter, a distance of 869.29 feet;

THENCE South 03°51'33" East a distance of 264.28 feet;

Exhibit F-1

Exhibit 10.30


THENCE South 44°13'56" West a distance of 107.82 feet to the POINT OF BEGINNING;

THENCE North 90°00’00” East a distance of 414.78 feet;

THENCE South 02°12'14" East a distance of 242.38 feet;

THENCE South 44°22'24" West a distance of 131.44 feet;

THENCE South 87°40'25" West a distance of 332.81 feet;

THENCE North 00°03'30" East a distance of 349.66 feet to the POINT OF BEGINNING.

Said tract of land containing 139,420 square feet or 3.2006 acres, more or less.

Refined Products Truck Loading Rack
Tract 22
A tract of land lying in the Southwest Quarter of Section 10, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the southwest corner of the said Southwest Quarter of Section 10, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;
THENCE North 33°26'24" East a distance of 92.46 feet to the POINT OF BEGINNING;
THENCE North 00°54'02" West a distance of 138.96 feet;
THENCE North 06°15'19" West a distance of 148.36 feet;
THENCE North 01°00'00" West a distance of 339.22 feet;
THENCE North 01°59'23" West a distance of 106.61 feet;
THENCE North 89°03'14" East a distance of 359.11 feet;
THENCE South 00°54'13" East a distance of 376.13 feet;
THENCE South 86°14'59" West a distance of 11.84 feet;
THENCE South 00°57'00" East a distance of 387.49 feet;
THENCE South 89°26'08" West a distance of 309.78 feet;
THENCE North 36°44'24" West a distance of 36.56 feet to the POINT OF BEGINNING.

Exhibit F-1

Exhibit 10.30

Said tract of land containing 264,128 square feet or 6.0635 acres more or less.

Propane Tank Loading Rack and Tanks 600-621
Tract 23
A tract of land lying in the Southeast Quarter of Section 9, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:
COMMENCING at the southeast corner of the said Southeast Quarter of Section 9, from whence the northeast corner of the Southeast Quarter of Section 9, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;
THENCE North 08°04'04" West a distance of 963.22 feet to the POINT OF BEGINNING;
THENCE South 88°56'02" West a distance of 354.67 feet;
THENCE North 01°31'06" West a distance of 361.38 feet;
THENCE North 45°34'52" West a distance of 273.12 feet;
THENCE North 00°53'06" West a distance of 297.39 feet;
THENCE North 88°50'01" East a distance of 548.73 feet;
THENCE South 01°01'16" East a distance of 854.46 feet to the POINT OF BEGINNING.
Said tract of land containing 380,628 square feet or 8.7380 acres more or less.


Tract 24
Tank #651

A tract of land lying in the Northeast Quarter of Section 15, Township 26 South, Range 5 East of the Sixth Principal Meridian, Butler County, Kansas, and being more particularly described as follows:

COMMENCING at the northwest corner of the Northwest Quarter of said Section 15, from whence the northwest corner of the Southwest Quarter of Section 10, T26S, R5E, Sixth Principal Meridian bears North 00°55’11” West a distance of 2644.19 feet;

THENCE North 88°28'37" East a distance of 3,063.84 feet to the POINT OF BEGINNING;

THENCE continuing North 88°28'37" East a distance of 167.06 feet;

THENCE South 00°28'33" East a distance of 160.96 feet;

THENCE South 86°38’13” West a distance of 165.28 feet;


Exhibit F-1

Exhibit 10.30

THENCE North 01°09'07" West a distance of 166.25 feet to the POINT OF BEGINNING.

Said tract of land containing 27,171 square feet or 0.6238 acres more or less.


Tract 25

[Intentionally Omitted]

Tract 26
Refinery Units

Hydrogen Generation Unit
Beginning at the Northwest corner of the HGU-3 Unit Refinery Station S2439’-6”, W2572’-11”; thence S01°35’05”W a distance of 193 feet; thence S88°29’25”E, a distance of 134 feet; thence N01°35’05”E, a distance of 22 feet; thence N88°28’00”W, a distance of 24 feet; thence N01°35’05”E, a distance of 171 feet; thence N88°24’55”W, a distance of 110 feet to the Point of Beginning. Contains 21,749 square feet. See next page.


Exhibit F-1

Exhibit 10.30

IMAGE0.JPG

Exhibit F-1

Exhibit 10.30

Naphtha Fractionation Unit

Beginning at the Northeast corner of the Fractionator Unit Refinery Station S1259’-4”, W1448’-4”; thence N88°01’22”W, a distance of 56.8’; thence S88°16’33”W, a distance of 125.5 feet; thence S43°02’36”W, a distance of 14.1’; thence S01°43’45”E, a distance of 94.6 feet; thence N88°16’33”E, a distance of 171.3 feet; thence N78°17’00”E, a distance of 21 feet; thence N01°43’27”W, a distance of 97.3 feet to the Point of Beginning. Contains 19,882 square feet. See next page.





Exhibit F-1

Exhibit 10.30

IMAGE1.JPG

Exhibit F-1

Exhibit 10.30

    
Exhibit F-2
to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for Cheyenne Refinery Complex]

Refined Products Truck Loading Rack

Parcel 1
(Refined Products Truck Loading Rack)

A parcel situate in the NE1/4 of Section 5, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel defined at the “Refined Products Loading Rack”. The boundary of said parcel being more particularly described as follows:

Beginning at the northeast corner of said parcel, said corner being 2618.15 feet S42°52’48”W of the NE corner of Section 5; thence S77°12’49”E a distance of 263.13 feet (80.201 meters) to a point; thence S26°12’16”E a distance of 367.85 feet (112.122meters) to a point; thence S 63°47’44”W a distance of 250.00 feet (76.200 meters) to a point; thence N26°12’16”W a distance of 533.41 feet (162.584 meters) to a point; thence N63°47’44”E a distance of 45.49 feet (13.864 meters) to the Point of Beginning.

The above parcel of land containing 2.7 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Storage Tanks

Parcel 2
(Tanks 1-013, 1-014, 1-015, 1-016, 1-017, 1-021, 1-027, 1-028,
1-032, 1-033, 1-040, 1-048, 1-049, 1-106, 1-107 and 1-108)

A parcel situate in the NE1/4 of Section 5, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel encompassing the following tanks: 106, 107, 13, 14, 15, 16, 17, 21, 27, 28, 32, 33, 40, 48, 49 and 108. The boundary of said parcel being more particularly described as follows:Beginning at the northwest corner, said corner being 2401.59 feet S48°27’49”W of the NE corner of Section 5; thence N63°49’26”E a distance of 220.00 feet (67.056 meters) to a point; thence N26°12' 16"W a distance of 100.00 feet (30.48 meters) to a point; thence N63°49'26"E a distance of 245.00 feet (74.676 meters) to a point; thence S26°12’16”E a distance of 634.22 feet (193.311 meters) to a point; thence N63°47’44”E a distance of 85.00 feet (25.908 meters) to a point; thence S26°12’16”E a distance of 90.00 feet (27.432 meters) to a point; thence S63°47’44”W a distance of 90.00 feet (27.432 meters) to a point; thence S26°12’16”E a distance of 195.55 feet (59.603 meters) to a point; thence S63°56’07”W a distance of 50.00 feet (15.240 meters) to a point; thence N26°12’16”W a distance of 195.42 feet (59.566 meters) to a point; thence S63°47’44”W a distance of 75.00 feet (22.860 meters) to a point; thence S26°12’16”E a distance of 85.00 feet (25.908 meters) to a point; thence S63°47’44”W a distance of 189.94 feet (57.893 meters) to a point; thence N26°12’16”W a distance of 85.00 feet (25.908 meters) to a point; thence N63°47’44”E a distance of 100.03 feet (30.490 meters) to a point; thence N26°10’34”W a distance of 90.00

Exhibit F-2

Exhibit 10.30

feet (27.432 meters) to a point; thence S63°47’44”W a distance of 100.00 feet (30.480 meters) to a point; thence N26°10’34”W a distance of 279.49 feet (85.189 meters) to a point; thence S63°47’44”W a distance of 145.28 feet (44.281 meters) to a point; thence N26°12’16”W a distance of 254.96 feet (77.713 meters) to a point, said point being the Point of Beginning. The above parcel of land containing 6.0 acres more or less and subject to all easements and or rights of way that may have been legally acquired.

Parcel 3
(Tank Nos. 1-020, 1-029, 1-050, 1-051, 1-052, 1-053,
1-054, 1-055, 1-056, 1-058, 1-090 and 1-091)

A parcel situate in the NE1/4 of Section 5, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel encompassing the following tanks: 90, 91, 56, 50, 51, 54, 52, 55, 53, 58, 20, and 29. The boundary of said parcel being more particularly described as follows:

Beginning at the northwest corner, said corner being 1892.53 feet S46°24’53”W of the NE corner of Section 5; to a point; thence N63°44’44”E a distance of 313.33 feet (95.502 meters) to a point; thence S26°03’53”E a distance of 142.48 feet (43.429 meters) to a point; thence N 63°56’07”E a distance of 140.00 feet (42.672 meters) to a point; thence S26°03’53”E a distance of 367.00 feet (111.862 meters) to a point; thence S 26°03’53”E a distance of 184.57 feet (56.257 meters) to a point; thence S 63°47’44”W a distance of 321.63 feet (98.034 meters) to a point; thence N26°12’16”W a distance of 90.00 feet (27.432 meters) to a point; thence N 63°47’44”E a distance of 35.00 feet (10.668 meters) to a point; thence N26°12’16”W a distance of 129.27 feet (39.400 meters) to a point; thence N63°44’44”E a distance of 80.00 feet (24.384 meters) to a point; thence N26°12’16”W a distance of 165.00 feet (50.292 meters) to a point; thence S63°44’44”W a distance of 245.00 feet (74.676 meters) to a point; thence N26°12’16”W a distance of 310.00 feet (94.488 meters) to the Point of Beginning.

The above parcel of land containing 5.1 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Parcel 4
(Tank Nos. 1-093, 1-094, & 1-095)

A parcel situate in the NE1/4 of Section 5, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel encompassing the following Tanks: 93, 94, and 95. The boundary of said parcel being more particularly described as follows:

Beginning at the northwest corner, said corner being 2051.54 feet S18°10’49”W of the NE corner of Section 5; to a point; thence N63°56’07”E a distance of 80.00 feet (24.384 meters) to a point; thence S26°03’53”E a distance of 70.26 feet (21.415 meters) to a point; thence southeast a distance of 9.74 feet (2.969 meters) along a tangential curve concave northeast having a radius of 3065.00 feet (934.214 meters) and a central angle of 00°10’56”; to a point; thence S63°56’07”W a distance of 80.02 feet (24.389 meters) to a point; thence N26°03’53”W a distance of 80.00 feet (24.384 meters) to the Point of Beginning.

The above parcel of land containing 0.1 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Exhibit F-2

Exhibit 10.30

Parcel 6
(Tank Nos. 2-015, 2-016, 2-017, 2-020, 2-021, 2-022, 2-023, 2-028,
2-034, 2-035, 2-036, 2-070, 2-071, 2-100, 2-101, 2-102, 2-104 and 2-105)

A parcel situate in the NE1/4 of Section 5 and the NW1/4 of Section 4, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel encompassing the following tanks: 15, 16, 17, 20, 21, 22, 23, 28, 34, 35, 36, 70, 71, 100, 101, 102, 104, and 105. The boundary of said parcel being more particularly described as follows:

Beginning at the northwest corner, said corner being 1047.11 feet S39°14’59”W of the NE corner of Section 5; to a point; thence N63°47’10”E a distance of 736.38 feet (224.450 meters) to a point; thence N63°47’10”E a distance of 89.79 feet (27.368 meters) to a point; thence east a distance of 155.88 feet (47.513 meters) along a non-tangential curve concave north having a radius of 6010.00 feet (1831.852 meters) and a central angle of 1°29’10”; to a point; thence S00°00’00”E a distance of 191.71 feet (58.435 meters) to a point; thence S90°00’00”E a distance of 80.00 feet (24.384 meters) to a point; thence S00°00’00”W a distance of 95.00 feet (28.956 meters) to a point; thence N90°00’00”W a distance of 180.00 feet (54.864 meters) to a point; thence S00°00’00”W a distance of 195.00 feet (59.436 meters) to a point; thence N90°00’00”W a distance of 135.00 feet (41.148 meters) to a point; thence S00°00’00”W a distance of 90.00 feet (27.432 meters) to a point; thence N89°41’14”W a distance of 303.77 feet (92.589 meters) to a point; thence S00°18’46”W a distance of 155.00 feet (47.244meters) to a point; thence N82°04’49”W a distance of 169.19 feet (51.570 meters) to a point; thence N26°03’53”W a distance of 419.99 feet (128.014 meters) to the Point of Beginning.

The above parcel of land containing 8.9 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Parcel 7
(Tank Nos. 2-060, 2-061, 2-062, 2-063 and 2-067)

A parcel situate in the NW1/4 of Section 4, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel encompassing the following tanks: 60, 61, 62, 63, 67. The boundary of said parcel being more particularly described as follows:

Beginning at the northwest corner, said corner being 991.00 feet S09°14’44”E of the NE corner of Section 5; to a point; thence N00°00’00”E a distance of 130.00 feet (39.624 meters) to a point; thence S90°00’00”E a distance of 175.00 feet (53.340 meters) to a point; thence S00°00’00”W a distance of 75.00 feet (22.860 meters) to a point; thence N90°00’00”W a distance of 65.00 feet (19.812 meters) to a point; thence S00°00’00”W a distance of 55.00 feet (16.764 meters) to a point; thence N90°00’00”W a distance of 110.00 feet (33.528 meters) to the Point of Beginning.

The above parcel of land containing 0.4 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Parcel 8
(Tank Nos. 2-072, 2-073, 2-074 and 2-075)


Exhibit F-2

Exhibit 10.30

A parcel situate in the NE1/4 of Section 5 and the NW1/4 of Section 4, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel encompassing the following tanks: 72, 73, 74, and 75. The boundary of said parcel being more particularly described as follows:

Beginning at the northeast corner, said corner being 1448.28 feet S15°00’04”W of the NE corner of Section 5; said corner monumented by a ¾” x 24” rebar with a 1 ½” aluminum cap stamped PE PLS 9283; thence N63°56’07”E a distance of 147.49 feet (44.956 meters) to a point; thence S26°03’53”E a distance of 245.00 feet (74.676 meters) to a point; thence N63°56’07”E a distance of 220.00 feet (67.056 meters) to a point; thence S26°03’53”E a distance of 400.00 feet (121.920 meters) to a point; thence S63°56’07”W a distance of 160.00 feet (48.768 meters) to a point; thence N26°03’53”W a distance of 310.00 feet (94.488 meters) to a point; thence S63°56’07”W a distance of 207.49 feet (63.244 meters) to a point; thence N26°03’53”W a distance of 269.50 feet (82.144 meters) to a point; thence N26°03’53”W a distance of 65.50 feet (19.964 meters) to the Point of Beginning.

The above parcel of land containing 2.7 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Crude Oil LACTS Units

Parcel 5
(Four Crude Oil LACTS Units)

A parcel situate in the NE1/4 of Section 5, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel encompassing the “Crude LACTS Unit”. The boundary of said parcel being more particularly described as follows:

Beginning at the northwest corner, said corner being 1435.52 feet S27°15’55”W of the NE corner of Section 5; to a point; thence N63°56’07”E a distance of 160.00 feet (48.768 meters) to a point; thence S67°32’22”E a distance of 135.21 feet (41.212 meters) to a point; thence S47°28’57”W a distance of 260.20 feet (79.310 meters) to a point; thence N26°03’53”W a distance of 175.00 feet (53.340 meters) to the Point of Beginning.

The above parcel of land containing 0.7 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Propane Loading Spots

Parcel 9
(Two Propane Loading Spots)

A parcel situate in the NW1/4 of Section 4, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel defined as the “LPG Loading & Unloading Dock”. The boundary of said parcel being more particularly described as follows:

Beginning at the northeast corner, said corner being 3728.67 feet S74°53’31”W of the NE corner of Section 4; thence S02°52'25"W a distance of 200.00 feet (60.960 meters); thence N87°07'35"W a distance of 50.00 feet (15.240 meters); thence N02°52'25"E a distance of 200.00 feet (60.960 meters); thence S87°07'35"E a distance of 50.00 feet (15.240 meters) to the Point of Beginning.

Exhibit F-2

Exhibit 10.30


The above parcel of land containing 0.2 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Crude Receiving Pipeline

Parcel 10
(Pipeline Easement)

A parcel situate in the NW1/4 of Section 4 and the NE1/4 of Section 5, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. Said parcel defined at the “Pipeline Easement”. The boundary of said parcel being more particularly described as follows:

Beginning at the northeast corner of said parcel, said corner being 527.07 feet S04°36’50”W of the NE corner of Section 5; thence S85°00'51"E a distance of 57.02 feet (17.379 meters) to a point; thence S00°38'13"W a distance of 598.12 feet (182.309 meters) to a point; thence S88°54'22"W a distance of 41.07 feet (12.519 meters) to a point; thence S02°20'56"W a distance of 70.33 feet (21.436 meters) to a point; thence N87°39'04"W a distance of 9.17 feet (2.796 meters) to a point; thence S23°42'20"W a distance of 70.42 feet (21.464 meters) to a point; thence S60°19'01"E a distance of 44.53 feet (13.572 meters) to a point; thence S09°52'15"E a distance of 134.30 feet (40.935 meters) to a point; thence S04°08'32"E a distance of 86.91 feet (26.490 meters) to a point; thence S65°23'34"W a distance of 93.43 feet (28.477 meters) to a point; thence S24°36'26"E a distance of 13.79 feet (4.203 meters) to a point; thence S78°18'41"E a distance of 58.03 feet (17.686 meters) to a point; thence S11°41'19"W a distance of 20.00 feet (6.096 meters) to a point; thence N78°18'41"W a distance of 43.34 feet (13.209 meters) to a point; thence S24°36'26"E a distance of 62.13 feet (18.938 meters) to a point; thence S61°54'06"W a distance of 56.80 feet (17.314 meters) to a point; thence N27°08'41"W a distance of 32.02 feet (9.760 meters) to a point; thence S63°29'56"W a distance of 47.36 feet (14.436 meters) to a point; thence N50°44'04"W a distance of 22.69 feet (6.916 meters) to a point; thence N39°15'56"E a distance of 20.00 feet (6.096 meters) to a point; thence S50°44'04"E a distance of 9.76 feet (2.975 meters) to a point; thence N63°29'55"E a distance of 71.65 feet (21.838 meters) to a point; thence N25°02'54"W a distance of 53.17 feet (16.205 meters) to a point; thence N77°38'15"W a distance of 110.08 feet (33.552 meters) to a point; thence N29°58'48"W a distance of 25.55 feet (7.786 meters) to a point; thence N56°07'26"E a distance of 17.11 feet (5.214 meters) to a point; thence N11°55'04"W a distance of 25.72 feet (7.838 meters) to a point; thence N56°55'04"W a distance of 7.69 feet (2.344 meters) to a point; thence N33°04'56"E a distance of 20.00 feet (6.096 meters) to a point; thence S56°55'04"E a distance of 15.98 feet (4.869 meters) to a point; thence S11°55'04"E a distance of 55.35 feet (16.870 meters) to a point; thence S77°38'15"E a distance of 85.38 feet (26.025 meters) to a point; thence N65°23'34"E a distance of 91.95 feet (28.028 meters) to a point; thence N04°08'32"W a distance of 72.03 feet (21.953 meters) to a point; thence N09°52'15"W a distance of 123.88 feet (37.759 meters) to a point; thence N60°19'01"W a distance of 53.12 feet (16.192 meters) to a point; thence N23°42'20"E a distance of 109.85 feet (33.483 meters) to a point; thence N02°20'56"E a distance of 61.93 feet (18.876 meters) to a point; thence N88°54'22"E a distance of 40.50 feet (12.345 meters) to a point; thence N00°38'13"E a distance of 560.18 feet (170.744 meters) to a point; thence N85°00'51"W a distance of 38.48 feet (11.729 meters) to a point; thence N04°59'07"E a distance of 20.00 feet (6.096 meters) to the Point of Beginning.

The above parcel of land containing 0.8 acres more or less and subject to all easements and or rights of way that may have been legally acquired.



Exhibit F-2

Exhibit 10.30



Parcel 11
(Tank No. 1-117)

A parcel situate in the NE1/4 of Section 5, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. The boundary of said parcel being more particularly described as follows:

Beginning at the northeast corner of said parcel, said corner being 1466.20 feet S41°06’46”W of the NE corner of Section 5; thence S26°03’53”E a distance of 142.48 feet to a point; thence S63°56’07”E a distance of 140.00 feet to a point; thence N26°03’53”W a distance of 142.48 feet to a point; thence N63°56’07”E a distance of 140.00 feet to the Point of Beginning.

The above parcel of land containing 0.46 acres more or less and subject to all easements and or rights of way that may have been legally acquired.

Parcel 12
(Tank #2-118)

A parcel situate in the NW1/4 of Section 4, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. The boundary of said parcel being more particularly described as follows:

Beginning at the northwest corner of said parcel, said corner being 783.85 feet S09°29’20”E of the NW corner of Section 4; thence N90°00’00”E a distance of 102.50 feet to a point; thence S00°00’00”E a distance of 102.50 feet to a point; thence N90°00’00”W a distance of 102.50 feet to a point; thence N00°00’00”E a distance of 102.50 feet to the Point of Beginning.

The above parcel of land containing 0.24 acres more or less and subject to all easements and or rights of way that may have been legally acquired.

Parcel 13
(Tank #2-119)

A parcel situate in the NW1/4 of Section 4, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. The boundary of said parcel being more particularly described as follows:

Beginning at the northeast corner of said parcel, said corner being 976.71 feet S07°36’10”E of the NW corner of Section 4; thence S00°00’00”E a distance of 10.00 feet to a point; thence N90°00’00”E a distance of 30.00 feet to a point; thence S00°00’00”E a distance of 130.00 feet to a point; thence N90°00’00”W a distance of 165.27 feet to a point; thence N0°06’42”E a distance of 140.00 feet to a point; thence N90°00’00”E a distance of 135.00 feet to the Point of Beginning.

The above parcel of land containing 0.52 acres more or less and subject to all easements and or rights of way that may have been legally acquired.


Exhibit F-2

Exhibit 10.30

PARCEL 14
Tank #2-161

A parcel situate in the NW1/4 of Section 4, Township 13 North, Range 66 West, of the Sixth Principle Meridian, Laramie County, Wyoming. The boundary of said parcel being more particularly described as follows:

Beginning at the northwest corner of said parcel, said corner being 905.77 feet S14°49’22”E of the NW corner of Section 4; thence N90°00’00”E a distance of 102.50 feet to a point; thence S00°00’00”E a distance of 102.50 feet to a point; thence N90°00’00”W a distance of 102.5 feet to a point; thence N00°00’00”E a distance of 102.50 feet to the Point of Beginning.

The above parcel of land containing 0.24 acres more or less and subject to all easements and or rights of way that may have been legally acquired.







Exhibit F-2

Exhibit 10.30

Exhibit F-3
to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for Tulsa Refinery Complex]

HEP AREA 1
A tract of land lying in the East Half of the Northwest Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, according to the United States government survey thereof, and being more particularly described as follows:
COMMENCING at southwest corner of the East Half of the Northwest Quarter of said Section 23;
THENCE North 00°54’11” West, along the west line of the East Half of the Northwest Quarter of said Section 23, a distance of 50.00 feet to the POINT OF BEGINNING;
THENCE continuing North 00°54’11” West, along said west line, a distance of 568.06 feet;
THENCE North 89°30’18” East a distance of 209.09 feet;
THENCE North 46°07’38” East a distance of 26.81 feet;
THENCE North 00°05’25” West a distance of 70.74 feet;
THENCE North 89°24’48” East a distance of 133.17 feet;
THENCE South 00°05’25” East a distance of 87.50 feet;
THENCE North 89°24’48” East a distance of 138.57 feet;
THENCE South 39°08’10” East a distance of 13.47 feet;
THENCE South 01°06’24” East a distance of 559.60 feet to a point on the northerly right-of-way line of West 35 th Place as established by that certain QUIT CLAIM DEED in favor of Tulsa County recorded in Book 240, Page 133, Tulsa County records;
THENCE South 89°29’57” West, along said northerly right-of-way line, a distance of 510.53 feet to the POINT OF BEGINNING.
Said tract containing 301,738 square feet or 6.9270 acres more or less.

HEP AREA 2


Exhibit F-3

Exhibit 10.30

A tract of land lying in the Northeast Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, according to the United States government survey thereof, and being more particularly described as follows:
COMMENCING at southwest corner of the East Half of the Northwest Quarter of said Section 23;
THENCE North 89°29’57” East, along the south line of the Northwest Quarter of said Section 23, a distance of 1,329.11 feet to the southwest corner of the Northeast Quarter of said Section 23;
THENCE North 00°58’58” West, along the west line of the said Northeast Quarter, a distance of 2,650.41 feet to the northwest corner of the said Northeast Quarter;
THENCE North 89°15’56” East, along the north line of said Northeast Quarter, a distance of 142.62 feet;
THENCE South 00°42’27” East a distance of 15.00 feet to the POINT OF BEGINNING;
THENCE North 89°17’33” East a distance of 100.00 feet;
THENCE South 00°42’27” East a distance of 63.39 feet;
THENCE South 89°17'33" West a distance of 100.00 feet;
THENCE North 00°42’27” West a distance of 63.39 feet to the POINT OF BEGINNING.
Said tract containing 6,339 square feet or 0.1455 acres more or less.
HEP AREA 2A (Tank 36A)
A tract of land lying in the Northeast Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, and being more particularly described as follows:

COMMENCING at the northwest corner of said Northeast Quarter;

THENCE North 89°17'34" East, along the north line of said Northeast Quarter, a distance of 54.77 feet;

THENCE South 00°58'59" East a distance of 194.44 feet to the POINT OF BEGINNING;

THENCE North 89°01'01" East a distance of 100.00 feet;

THENCE South 00°58'59" East a distance of 110.00 feet;

THENCE South 89°01'01" West a distance of 100.00 feet;

THENCE North 00°58'59" West a distance of 110.00 feet to the POINT OF BEGINNING.

Said tract of land containing 11,000 square feet or 0.2525 acres more or less.

HEP AREA 3

Exhibit F-3

Exhibit 10.30

A tract of land lying in the East Half of the Northwest Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, according to the United States government survey thereof, and being more particularly described as follows:
COMMENCING at southwest corner of the East Half of the Northwest Quarter of said Section 23;
THENCE North 00°54’11” West, along the west line of the East Half of the Northwest Quarter of said Section 23, a distance of 1,626.70 feet;
THENCE North 89°05’49” East a distance of 506.89 feet to the POINT OF BEGINNING;
THENCE North 00°44’21” West a distance of 801.29 feet;
THENCE North 85°18’00” East a distance of 84.27 feet;
THENCE South 83°31’38” East a distance of 117.32 feet;
THENCE South 77°40’15” East a distance of 167.89 feet;
THENCE South 82°22’57” East a distance of 82.28 feet;
THENCE South 00°09’34” West a distance of 740.74 feet;
THENCE South 89°01’16” West a distance of 433.79 feet to the POINT OF BEGINNING.
Said tract containing 343,387 square feet or 7.8831 acres more or less.

HEP AREA 4

A tract of land lying in the East Half of the Southwest Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, according to the United States government survey thereof, and being more particularly described as follows:
COMMENCING at northwest corner of the East Half of the Southwest Quarter of said Section 14;
THENCE South 01°13’44” East, along the west line of the East Half of the Southwest Quarter of said Section 14, a distance of 737.49 feet to the POINT OF BEGINNING;
THENCE North 89°55’05” East a distance of 264.65 feet;
THENCE North 01°21’11” West a distance of 401.49 feet;
THENCE North 88°59’11” East a distance of 401.89 feet;
THENCE South 01°15’38” East a distance of 401.87 feet;
THENCE North 89°05’13” East a distance of 387.71 feet;
THENCE South 01°05’'02” East a distance of 1,179.39 feet;

Exhibit F-3

Exhibit 10.30

THENCE South 89°05’59” West a distance of 387.07 feet;
THENCE North 01°30’14” West a distance of 795.92 feet;
THENCE South 88°04’21” West a distance of 395.99 feet;
THENCE South 01°21’23” East a distance of 787.85 feet;
THENCE South 89°19’45” West a distance of 265.47 feet to a point on the west line of the East Half of the Southwest Quarter of said Section 14;
THENCE North 01°13’44” West, along said west line, a distance of 1,180.67 feet to the POINT OF BEGINNING.
Said tract containing 1,087,366 square feet or 24.9625 acres more or less.
HEP AREA 5

A tract of land lying in the Southeast Quarter of Section 14, and Government Lots 5 and 6 of Section 13, all in Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, according to the United States government survey thereof, and being more particularly described as follows:
COMMENCING at the northeast corner of the Southeast Quarter of said Section 14;
THENCE South 01°17’59” East, along the common line between said Sections 14 and 13, a distance of 712.02 feet to the POINT OF BEGINNING;
THENCE North 89°41’22” East a distance of 298.19 feet;
THENCE South 16°36’34” East a distance of 394.53 feet;
THENCE South 11°29’12” East a distance of 374.39 feet;
THENCE South 88°37’53” West a distance of 538.01 feet;
THENCE South 00°10’17” East a distance of 375.72 feet;
THENCE North 88°36’24” East a distance of 409.94 feet;
THENCE South 00°36’51” East a distance of 253.54 feet;
THENCE South 69°21’44” West a distance of 246.03 feet;
THENCE North 86°19’14” West a distance of 98.24 feet;
THENCE South 63°37’26” West a distance of 218.69 feet;
THENCE South 58°35’58” West a distance of 258.38 feet;
THENCE North 22°01’14” West a distance of 130.35 feet;

Exhibit F-3

Exhibit 10.30

THENCE North 02°27’32” West a distance of 421.71 feet;
THENCE North 00°55’39” West a distance of 1,127.66 feet;
THENCE North 85°45’23” East a distance of 225.17 feet;
THENCE North 89°41’22” East a distance of 244.09 feet to the POINT OF BEGINNING.
Said tract containing 1,108,516 square feet or 25.4480 acres more or less.

HEP AREA 6

A tract of land lying in the Southeast Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, according to the United States government survey thereof, and being more particularly described as follows:
COMMENCING at the northeast corner of the Southeast Quarter of said Section 14;
THENCE South 01°17’59” East, along the east line of the Southeast Quarter of said Sections 14, a distance of 1,300.40 feet;
THENCE South 88°42’01” West a distance of 878.08 feet to the POINT OF BEGINNING;
THENCE South 89°17’16” West a distance of 128.55 feet;
THENCE North 00°08’03” East a distance of 318.24 feet;
THENCE East a distance of 122.24 feet;
THENCE South 01°00’16” East a distance of 316.69 feet to the POINT OF BEGINNING.
Said tract containing 39,805 square feet or 0.9138 acres more or less.
HEP AREA 7

A tract of land lying in the Northeast Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, and being more particularly described as follows:

COMMENCING at the northwest corner of said Northeast Quarter;

THENCE North 89°17'34" East, along the north line of said Northeast Quarter, a distance of 366.03 feet;

THENCE South 00°42'26" East a distance of 212.66 feet;

THENCE North 89°01'01" East a distance of 60.00 feet to the POINT OF BEGINNING;

THENCE North 89°01'01" East a distance of 100.00 feet;

THENCE South 00°58'59" East a distance of 55.00 feet;

Exhibit F-3

Exhibit 10.30


THENCE South 89°01'01" West a distance of 100.00 feet;

THENCE North 00°58'59" West a distance of 55.00 feet to the POINT OF BEGINNING.

Said tract of land containing 5,500 square feet or 0.1263 acres more or less.

HEP OTHER ASSETS

A tract of land lying in the East Half of the Northwest Quarter and the Northeast Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, and being more particularly described as follows:

COMMENCING at the northeast corner of the said Northwest Quarter, said point also being the northwest corner of the said Northeast Quarter;

THENCE South 00°58'59" East, along the common line between the Northwest Quarter and the Northeast Quarter, a distance of 564.68 feet to the POINT OF BEGINNING;

THENCE North 88°53'33" East a distance of 13.95 feet;

THENCE South 00°50'02" East a distance of 1,507.22 feet;

THENCE South 89°42'24" West a distance of 188.15 feet;

THENCE North 00°38'14" West a distance of 291.81 feet;

THENCE South 88°54'13" West a distance of 209.06 feet;

THENCE South 01°49'49" East a distance of 268.80 feet;

THENCE South 87°29'45" West a distance of 115.41 feet;

THENCE South 00°12'20" West a distance of 266.41 feet;

THENCE South 89°05'12" West a distance of 316.77 feet;

THENCE North 01°06'24" West a distance of 282.09 feet;

THENCE continuing North 01°06'24" West a distance of 271.57 feet;

THENCE North 86°34'04" West a distance of 80.75 feet;

THENCE South 89°03'38" West a distance of 427.05 feet to a point on the west line of the East Half of the said Northwest Quarter;

THENCE North 00°54'11" West, along said west line, a distance of 1,550.38 feet;

THENCE South 89°26'14" East a distance of 367.80 feet;

Exhibit F-3

Exhibit 10.30


THENCE North 87°38'43" East a distance of 141.55 feet;

THENCE South 00°44'21" East a distance of 801.29 feet;

THENCE North 89°01'16" East a distance of 433.79 feet;

THENCE North 00°09'34" East a distance of 447.85 feet;

THENCE North 88°53'33" East a distance of 377.19 feet to the POINT OF BEGINNING.

Said tract containing 1,856,282 square feet or 42.6144 acres more or less.

A tract of land lying in the East Half of the Southwest Quarter and the Southeast Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, according to the United States government survey thereof, and being more particularly described as follows:

COMMENCING at the southeast corner of the said East Half of the Southwest Quarter, said point also being the southwest corner of the said Southeast Quarter;

THENCE North 01°14'16" West, along the common line between the said Southeast and Southwest Quarter a distance of 1,127.81 feet to the POINT OF BEGINNING;

THENCE South 88°43'23" West a distance of 273.63 feet;

THENCE North 01°05'02" West a distance of 787.59 feet;

THENCE North 01°30'42" West a distance of 402.41 feet;

THENCE North 87°22'40" East a distance of 209.33 feet;

THENCE South 86°32'11" East a distance of 50.14 feet;

THENCE South 57°19'41" East, passing at 17.12 feet the common line between the said Southwest Quarter and the Southeast Quarter, and continuing for a total distance of 41.07 feet;

THENCE South 00°55'38" East a distance of 1,167.85 feet;

THENCE South 88°43'23" West a distance of 13.55 feet to the POINT OF BEGINNING.

Said tract containing 344,581 square feet or 7.9105 acres more or less.

A tract of land lying in Government Lot 6 of Section 13 and the Southeast Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

Exhibit F-3

Exhibit 10.30


COMMENCING at the northeast corner of the Southeast Quarter of said Section 14;

THENCE South 01°17'58" East, along the common line between said Sections 13 and 14, a distance of 1,466.75 feet to the POINT OF BEGINNING;

THENCE North 88°37'53" East a distance of 337.54 feet;

THENCE South 00°36'51" East a distance of 375.50 feet;

THENCE South 88°36'24" West a distance of 409.94 feet;

THENCE North 00°10'17" West a distance of 375.72 feet;

THENCE North 88°37'53" East a distance of 69.49 feet to the POINT OF BEGINNING.

Said tract of land containing 153,409 square feet or 3.5218 acres more or less.

A tract of land lying in the East Half of the Southwest Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

COMMENCING at southeast corner of the Southwest Quarter of said Section 14;

THENCE South 89°17'34" West, along the south line of the said Southwest Quarter, a distance of 273.89 feet;

THENCE North 00°42'26" West a distance of 319.04 feet to the POINT OF BEGINNING;

THENCE South 88°42'44" West a distance of 394.78 feet;

THENCE South 88°24'34" West a distance of 382.43 feet;

THENCE North 02°48'56" West a distance of 422.64 feet;

THENCE North 01°21'23" West a distance of 787.85 feet;

THENCE North 88°04'21" East a distance of 395.99 feet;

THENCE South 01°30'14" East a distance of 795.92 feet;

THENCE North 89°05'59" East a distance of 387.07 feet;

THENCE South 01°45'27" East a distance of 414.21 feet to the POINT OF BEGINNING.

Said tract containing 640,567 square feet or 14.7054 acres more or less.

Exhibit F-3

Exhibit 10.30


A tract of land lying in the Southeast Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

COMMENCING at southwest corner of the Southeast Quarter of said Section 14;

THENCE North 01°14'16" West, along the west line of the said Southeast Quarter, a distance of 737.88 feet;

THENCE North 88°45'44" East a distance of 118.42 feet to the POINT OF BEGINNING;

THENCE North 00°59'42" West a distance of 366.36 feet;

THENCE North 88°29'12" East a distance of 120.43 feet;

THENCE South 80°02'26" East a distance of 119.54 feet;

THENCE South 73°20'45" East a distance of 75.84 feet;

THENCE South 01°58'57" East a distance of 306.59 feet;

THENCE South 83°09'10" West a distance of 151.16 feet;

THENCE South 89°04'44" West a distance of 164.96 feet to the POINT OF BEGINNING.

Said tract containing 109,842 square feet or 2.5216 acres more or less.

A tract of land lying in the Southeast Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

COMMENCING at the northeast corner of the said Southeast Quarter;

THENCE South 01°17'57" East, along the east line of said Southeast Quarter, a distance of 712.02 feet;

THENCE South 89°41'22" West a distance of 244.09 feet;

THENCE South 85°45'23" West a distance of 225.17 feet;

THENCE South 00°55'39" East a distance of 750.57 feet;

THENCE South 88°36'18" West a distance of 405.16 feet;

THENCE South 03°01'49" East a distance of 172.35 feet;

THENCE South 01°12'31" East a distance of 149.87 feet;

THENCE South 88°25'52" West a distance of 134.78 feet;

Exhibit F-3

Exhibit 10.30


THENCE South 01°55'23" East a distance of 206.29 feet to the POINT OF BEGINNING;

THENCE North 89°02'26" East a distance of 111.41 feet;

THENCE South 07°07'38" West a distance of 40.12 feet;

THENCE South 02°41'42" East a distance of 52.93 feet;

THENCE South 89°19'36" West a distance of 105.80 feet;

THENCE North 01°56'12" West a distance of 92.11 feet to the POINT OF BEGINNING.

Said tract of land containing 9,850 square feet or 0.2261 acres more or less.

A tract of land lying in the Southeast Quarter of Section 14, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

COMMENCING at the northeast corner of the said Southeast Quarter;

THENCE South 01°17'57" East, along the east line of said Southeast Quarter, a distance of 712.02 feet;

THENCE South 89°41'22" West a distance of 244.09 feet;

THENCE South 85°45'23" West a distance of 225.17 feet to the POINT OF BEGINNING;

THENCE South 00°55'39" East a distance of 750.57 feet;

THENCE South 88°36'18" West a distance of 405.16 feet;

THENCE South 03°01'49" East a distance of 172.35 feet;

THENCE South 01°12'31" East a distance of 149.87 feet;

THENCE South 88°25'52" West a distance of 134.78 feet;

THENCE North 01°03'05" West a distance of 494.30 feet;

THENCE North 89°17'16" East a distance of 128.55 feet;

THENCE North 01°00'16" West a distance of 316.69 feet;

THENCE continuing North 01°00'16" West a distance of 273.01 feet;

THENCE North 88°59'37" East a distance of 392.66 feet;

THENCE South 64°59'40" East a distance of 15.02 feet to the POINT OF BEGINNING.

Exhibit F-3

Exhibit 10.30


Said tract of land containing 372,460 square feet or 8.5505 acres more or less.

A tract of land lying in the Northeast Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, and being more particularly described as follows:

COMMENCING at the northwest corner of said Northeast Quarter;

THENCE North 89°17'34" East, along the north line of said Northeast Quarter, a distance of 366.03 feet;

THENCE South 00°42'26" East a distance of 212.66 feet to the POINT OF BEGINNING;

THENCE North 89°01'01" East a distance of 60.00 feet;

THENCE South 00°58'59" East a distance of 110.00 feet;

THENCE South 89°01'01" West a distance of 60.00 feet;

THENCE North 00°58'59" West a distance of 110.00 feet to the POINT OF BEGINNING.

Said tract containing 6,600 square feet or 0.1515 acres more or less.

A tract of land lying in the Northeast Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, State of Oklahoma, and being more particularly described as follows:

COMMENCING at the northwest corner of said Northeast Quarter;

THENCE North 89°17'34" East, along the north line of said Northeast Quarter, a distance of 260.93 feet;

THENCE South 00°42'26" East a distance of 193.45 feet to the POINT OF BEGINNING;

THENCE North 89°01'01" East a distance of 70.00 feet;

THENCE South 00°58'59" East a distance of 340.00 feet;

THENCE South 89°01'01" West a distance of 70.00 feet;

THENCE North 00°58'59" West a distance of 340.00 feet to the POINT OF BEGINNING.

Said tract containing 23,800 square feet or 0.5464 acres more or less.


Exhibit F-3

Exhibit 10.30

A tract of land lying in the Southeast Quarter of Section 14 and the Northeast Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

COMMENCING at southwest corner of the Southeast Quarter of said Section 14, said point also being the the northwest corner of the Northeast Quarter of said Section 23;

THENCE North 89°17'34" East, along the common line between said Sections 14 and 23, a distance of 883.82 feet to the POINT OF BEGINNING;

THENCE North 01°24'27" West a distance of 1,388.91 feet;

THENCE North 08°33'08" East a distance of 170.84 feet;

THENCE South 81°26'52" East a distance of 20.00 feet;

THENCE South 08°33'08" West a distance of 10.00 feet;

THENCE North 81°26'52" West a distance of 10.00 feet;

THENCE South 08°33'08" West a distance of 38.55 feet;

THENCE South 01°24'27" East a distance of 596.53 feet;

THENCE North 88°35'33" East a distance of 25.00 feet;

THENCE South 01°24'27" East a distance of 25.00 feet;

THENCE South 88°35'33" West a distance of 25.00 feet;

THENCE South 01°24'27" East a distance of 334.27 feet;

THENCE North 88°35'33" East a distance of 61.00 feet;

THENCE South 01°24'27" East a distance of 15.00 feet;

THENCE South 88°35'33" West a distance of 61.00 feet;

THENCE South 01°24'27" East, passing at 537.21 feet the common line between said Sections 14 and 23, and continuing for a total distance of 610.32 feet;

THENCE South 05°22'04" West a distance of 183.62 feet;

THENCE South 01°15'33" East a distance of 475.90 feet;

THENCE North 88°44'27" East a distance of 5.00 feet;

THENCE South 01°15'33" East a distance of 20.00 feet;


Exhibit F-3

Exhibit 10.30

THENCE South 88°44'27" West a distance of 15.00 feet;

THENCE North 01°15'33" West a distance of 751.70 feet to the POINT OF BEGINNING.

Said tract containing 58,733 square feet or 1.3483 acres more or less.

A tract of land lying in the East Half of the Northwest Quarter of Section 23, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

COMMENCING at the northeast corner of the said Northwest Quarter

THENCE South 89°17'34" West, along the north line of the said Northwest Quarter, a distance of 316.92 feet;

THENCE South 00°42'26" East a distance of 12.00 feet to the POINT OF BEGINNING;

THENCE South 00°42'26" East a distance of 30.00 feet;

THENCE South 89°17'34" West a distance of 140.00 feet;

THENCE North 00°42'26" West a distance of 30.00 feet;

THENCE North 89°17'34" East a distance of 140.00 feet to the POINT OF BEGINNING.

Said tract containing 4,200 square feet or 0.0964 acres more or less.

TULSA WEST CRUDE TANKS

A tract of land lying in Government Lot 3 and the Southeast Quarter of the Northwest Quarter of Section 10, Township 19 North, Range 12 East of the Indian Base and Meridian, Tulsa County, Oklahoma, and being more particularly described as follows:

COMMENCING at southwest comer of said Section 10 ;

THENCE North 00°56'21" West, along the west line of said Section 10, passing at a distance of 2639.64 feet the southwest corner of said Government Lot 3, and continuing for a total distance of 3,114.79 feet;

THENCE North 89°03'39" East a distance of 883.07 feet to the POINT OF BEGINNING;

THENCE North 01°36'45" West a distance of 400 . 65 feet;

THENCE North 88°42'12" East a distance of 675.09 feet;

THENCE South 87°37'46" East a distance of 615.59 feet;

THENCE South 00°27' 14" East a distance of 238.27 feet;

Exhibit F-3

Exhibit 10.30


THENCE South 08°03'33" West a distance of 160.30 feet;

THENCE North 71°42'21" West a distance of 73.92 feet;

THENCE North 85°43'28" West a distance of 118.59 feet;

THENCE South 89°46'36" West a distance of 85.65 feet;

THENCE South 41°20'58" West a distance of 92.00 feet;

THENCE South 01°20'24" East a distance of 294.01 feet;

THENCE South 88°39'36" West a distance of 926.88 feet;

THENCE North 00°33'26" West a distance of 359.66 feet to the POINT OF BEGINNING.

Said tract of land containing 838,080 square feet or 19.2397 acres.





Exhibit F-3

Exhibit 10.30


Exhibit F-4
to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for Woods Cross Refinery Complex (excluding the Woods Cross Pipeline Pad)]

LEGAL DESCRIPTION FOR TANK 103 :

BEGINNING AT A POINT NORTH 89°47’37” EAST 1214.48 FEET ALONG THE SECTION LINE AND NORTH 17.43 FEET FROM THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE WEST 127.59 FEET; THENCE NORTH 114.20 FEET; THENCE EAST 127.59 FEET; THENCE SOUTH 114.20 FEET TO THE POINT OF BEGINNING.

CONTAINS 0.33 ACRES

THE BASIS OF BEARING FOR THE ABOVE DESCRIPTION IS NORTH 89°26’13” EAST BETWEEN THE FOUND MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 1100 WEST AND THE FOUND MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 800 WEST.


LEGAL DESCRIPTION FOR TANK 121 :

BEGINNING AT A POINT NORTH 89°47’37” EAST 1245.39 FEET ALONG THE SECTION LINE AND NORTH 530.12 FEET FROM THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE WEST 243.16 FEET; THENCE NORTH 181.87 FEET; THENCE EAST 243.16 FEET; THENCE SOUTH 181.87 FEET TO THE POINT OF BEGINNING.

CONTAINS 1.02 ACRES

THE BASIS OF BEARING FOR THE ABOVE DESCRIPTION IS NORTH 89°26’13” EAST BETWEEN THE FOUND MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 1100 WEST AND THE FOUND MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 800 WEST.


LEGAL DESCRIPTION FOR TANK 126 :

BEGINNING AT A POINT NORTH 89°47’37” EAST 1160.50 FEET ALONG THE SECTION LINE AND NORTH 364.64 FEET FROM THE SOUTHWEST CORNER SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE WEST 200.60 FEET; THENCE NORTH 15°16’07” EAST 148.03 FEET; THENCE EAST 161.62 FEET; THENCE SOUTH 142.81 FEET TO THE POINT OF BEGINNING.

CONTAINS 0.59 ACRES


Exhibit F-4

Exhibit 10.30

THE BASIS OF BEARING FOR THE ABOVE DESCRIPTION IS NORTH 89°26’13” EAST BETWEEN THE FOUND MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 1100 WEST AND THE FOUND MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 800 WEST.


Exhibit F-4

Exhibit 10.30


Exhibit F-5
to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for Woods Cross Pipeline Pad]


12” HEP to UNEV Refined Products Pipeline Origin Trap and Piping,
Associated SCADA Control Building,
and Satellite Dish

A PART OF THE SOUTHWEST QUARTER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, DAVIS COUNTY, STATE OF UTAH, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT WHICH LIES NORTH A DISTANCE OF 385.36 FEET AND EAST A DISTANCE OF 496.23 FEET FROM THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, SAID SOUTHWEST CORNER OF SECTION 24 LIES SOUTH 89°26’58” WEST 2462.29 FEET AND NORTH 544.10 FEET FROM THE MONUMENT LOCATED AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET (BASIS OF BEARING BEING SOUTH 89°49’33” WEST 2708.26 FEET ALONG MONUMENT LINE BETWEEN THE MONUMENT LOCATED AT THE INTERSECTION OF 500 WEST STREET AND 500 SOUTH STREET AND THE MONUMENT LOCATED AT INTERSECTION OF 800 WEST STREET AND 500 SOUTH STREET) AND RUNNING THENCE SOUTH 80°44”25” EAST 195.16 FEET; THENCE SOUTH 09°13”37” WEST 175.44 FEET; THENCE NORTH 80°55”06” WEST 193.45 FEET; THENCE NORTH 08°40”05” EAST 176.05 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.

CONTAINS: 34,147 SQ. FT., OR 0.784 ACRES, MORE OR LESS, AS DESCRIBED.

8” HEP to Chevron Refined Products Pipeline Origin Trap and Piping

A PART OF THE SOUTHWEST QUARTER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE I WEST, SALT LAKE BASE AND MERIDIAN, DAVIS COUNTY, STATE OF UTAH, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT WHICH LIES NORTH A DISTANCE OF 83.09 FEET AND EAST A DISTANCE OF 860.40 FEET FROM THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, SAID SOUTHWEST CORNER OF SECTION 24 LIES SOUTH 89°26’58” WEST 2462.37 FEET AND NORTH 562.11 FEET FROM THE MONUMENT LOCATED AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET (BASIS OF BEARING BEING SOUTH 89°49’33” WEST 2708.26 FEET ALONG MONUMENT LINE BETWEEN THE MONUMENT LOCATED AT THE INTERSECTION OF 500 WEST STREET AND 500 SOUTH STREET AND THE MONUMENT LOCATED AT THE INTERSECTION OF 800 WEST STREET AND 500 SOUTH STREET) AND RUNNING THENCE NORTH 09°00’09” WEST 22.50 FEET; THENCE NORTH 80°59’51” WEST 10.00 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.


Exhibit F-5

Exhibit 10.30

CONTAINS: 225 SQ. FT., OR 0.005 ACRES, MORE OR LESS, AS DESCRIBED.

A PART OF THE SOUTHWEST QUARTER OF SECTION 24 AND THE SOUTHEAST QUARTER OF SECTION 23, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, DAVIS COUNTY, STATE OF UTAH, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

A 15 FOOT WIDE PIPELINE EASEMENT, BEING 7.5 FEET ON EACH SIDE OF THE FOLLOWING DESCRIBED CENTERLINE:

BEGINNING AT A POINT WHICH LIES NORTH A DISTANCE OF 83.09 FEET AND EAST A DISTANCE OF 860.40 FEET AND SOUTH 80°59’51” EAST A DISTANCE OF 1.61 FEET FROM THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, SAID SOUTHWEST CORNER OF SECTION 24 LIES SOUTH 89°26’58” WEST 2462.37 FEET AND NORTH 562.11 FEET FROM THE MONUMENT LOCATED AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET (BASIS OF BEARING BEING SOUTH 89°49’33” WEST 2708.26 FEET ALONG MONUMENT LINE BETWEEN THE MONUMENT LOCATED AT THE INTERSECTION OF 500 WEST STREET AND 500 SOUTH STREET AND THE MONUMENT LOCATED AT THE INTERSECTION OF 800 WEST STREET AND 500 SOUTH STREET) AND RUNNING
THENCE SOUTH 10°15’42” WEST 11.42 FEET;
THENCE SOUTH 38°28’34” WEST 2.43 FEET;
THENCE NORTH 77°53’59” WEST 9.48 FEET;
THENCE NORTH 81°09’17” WEST 9.21 FEET;
THENCE SOUTH 08°54’28” WEST 585.03 FEET, MORE OR LESS, TO THE NORTHERLY
RIGHT OF WAY LINE OF 500 SOUTH STREET ON THE SOUTHERLY LINE OF
GRANTOR'S LAND AND TERMINATING.

CONTAINS: 9,284 SQ. FT., OR 0.213 ACRES, MORE OR LESS, AS DESCRIBED.

10” HEP to Pioneer Refined Products Pipeline Origin Trap and Piping

A PART OF THE SOUTHWEST QUARTER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, DAVIS COUNTY, STATE OF UTAH, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT WHICH LIES NORTH A DISTANCE OF 2.01 FEET AND EAST A DISTANCE OF 1471.29 FEET FROM THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, SAID SOUTHWEST CORNER OF SECTION 24 LIES SOUTH 89°26’58” WEST 2462.37 FEET AND NORTH 562.11 FEET FROM THE MONUMENT LOCATED AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET (BASIS OF BEARING BEING SOUTH 89°49’33” WEST 2708.26 FEET ALONG MONUMENT LINE BETWEEN THE MONUMENT LOCATED AT THE INTERSECTION OF 500 WEST STREET AND 500 SOUTH STREET AND THE MONUMENT LOCATED AT THE INTERSECTION OF 800 WEST STREET AND 500 SOUTH STREET) AND RUNNING THENCE SOUTH 20.00 FEET; THENCE WEST 20.00 FEET; THENCE NORTH 20.00 FEET; THENCE EAST 20.00 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.

CONTAINS: 400 SQ. FT., OR 0.009 ACRES, MORE OR LESS, AS DESCRIBED.


Exhibit F-5

Exhibit 10.30

A PART OF THE SOUTHWEST QUARTER OF SECTION 24 AND THE SOUTHEAST
QUARTER OF SECTION 23, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE
AND MERIDIAN, DAVIS COUNTY, STATE OF UTAH, BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

A 15 FOOT WIDE PIPELINE EASEMENT, BEING 7.5 FEET ON EACH SIDE OF THE
FOLLOWING DESCRIBED CENTERLINE:

BEGINNING AT A POINT WHICH LIES NORTH A DISTANCE OF 2.01 FEET AND EAST A DISTANCE OF 1471.29 FEET AND SOUTH A DISTANCE OF 15.00 FEET FROM THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, SAID SOUTHWEST CORNER OF SECTION 24 LIES SOUTH 89°26’58” WEST 2462.37 FEET AND NORTH 562.11 FEET FROM THE MONUMENT LOCATED AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET (BASIS OF BEARING BEING SOUTH 89°49’33” WEST 2708.26 FEET ALONG MONUMENT LINE BETWEEN THE MONUMENT LOCATED AT THE INTERSECTION OF 500 WEST STREET AND 500 SOUTH STREET AND THE MONUMENT LOCATED AT THE INTERSECTION OF 800 WEST STREET AND 500 SOUTH STREET) AND RUNNING
THENCE SOUTH 89°42’44” EAST 8.43 FEET;
THENCE SOUTH 88°37’20” EAST 5.98 FEET;
THENCE SOUTH 87°53’57” EAST 12.65 FEET;
THENCE SOUTH 44°38’30” EAST 19.46 FEET;
THENCE SOUTH 01°52’26” WEST 16.78 FEET;
THENCE SOUTH 00°13’11” EAST 78.46 FEET;
THENCE SOUTH 00°16’47” WEST 90.70 FEET;
THENCE SOUTH 00°12’31” WEST 75.84 FEET;
THENCE SOUTH 00°06’34” EAST 48.54 FEET;
THENCE SOUTH 00°00’05” EAST 83.16 FEET;
THENCE SOUTH 00°10’32” EAST 76.59 FEET, MORE OR LESS, TO THE NORTHERLY RIGHT OF WAY LINE OF 500 SOUTH STREET ON THE SOUTHERLY LINE OF GRANTOR'S LAND AND TERMINATING.

CONTAINS: 7,749 SQ. FT., OR 0.178 ACRES, MORE OR LESS, AS DESCRIBED.


Exhibit F-5

Exhibit 10.30


Exhibit F-6
to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for Navajo Refinery Complex (excluding the Truck Rack, the Artesia Blending Station and the Artesia Pump and Receiving Stations)]

Exhibit F-6

Exhibit 10.30

IMAGE2.JPG

Exhibit F-6

Exhibit 10.30

Exhibit F-7
to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for Artesia Pump and Receiving Stations]


El Paso 8”/12” Products Pipeline Originating Pump Station;
Four Corners 12” Products Pipeline Originating Station;
Lovington 8” Pipeline Receiving Station;
Lovington 10” Pipeline Receiving Station;
Lovington 16” Pipeline Receiving Station; and
Natural Gas 8” Pipeline Receiving Station

A TRACT OF LAND LOCATED IN SECTION 9, TOWNSHIP 17 SOUTH, RANGE 26 EAST, N.M.P.M., EDDY COUNTY, NEW MEXICO AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT WHICH LIES N.00°03’12”E., 1,550.98 FEET AND S.89°56’39”E., 1,357.30 FEET FROM THE SOUTHWEST CORNER OF SAID SECTION 9; THENCE N.00°37’05”W., 273.20 FEET; THENCE S.89°41’31”E., 30.10 FEET; THENCE S.00°22’11”W., 57.00 FEET; THENCE S.89°54’09”E., 110.00 FEET; THENCE N.01°28’56”W., 71.10 FEET; THENCE N.89°59’36”E., 159.90 FEET; THENCE N.00°04’44”W., 117.00 FEET; THENCE S.88°15’46”E., 159.20 FEET; THENCE S.01°15’48”W., 399.70 FEET; THENCE N.89°56’19”W., 445.00 FEET TO THE POINT OF BEGINNING. SAID TRACT OF LAND CONTAINING 3.1906 ACRES, MORE OR LESS.

El Paso 6” Pipeline Pump Station

A TRACT OF LAND LOCATED IN SECTION 9, TOWNSHIP 17 SOUTH, RANGE 26 EAST, N.M.P.M., EDDY COUNTY, NEW MEXICO AND BEING MORE PARTICULARLY DESCRIBED HEREIN AS FOLLOWS:

BEGINNING AT A POINT WHICH LIES IN N.00°03’12”E., 2,000.73 FEET AND S.89°55’55”E., 209.55 FEET FROM THE SOUTHWEST CORNER OF SAID SECTION 9; THENCE N.89°48’19”E., 128.13 FEET; THENCE S.00°02’29”E., 307.18 FEET; THENCE S.88°50’31”W., 102.17 FEET; THENCE N.04°34’06”W., 74.10 FEET; THENCE N.89°31’37”W., 12.60 FEET; THENCE N.0l°52’38”W., 235.00 FEET TO THE POINT OF BEGINNING. SAID TRACT OF LAND CONTAINING 0.8467 ACRES, MORE OR LESS.

Roswell 4” Pipeline Pump Station

A TRACT OF LAND LOCATED IN SECTION 9, TOWNSHIP 17 SOUTH, RANGE 26 EAST, N.M.P.M., EDDY COUNTY, NEW MEXICO AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT WHICH LIES S.00°03’12”W., 1,705.65 FEET AND S.89°56’48”E., 110.28 FEET FROM THE NORTHWEST CORNER OF SAID SECTION 9; THENCE S.89°45’19”E., 64.10 FEET; THENCE S.00°00’10”W., 36.00 FEET; THENCE N.89°45’19”W., 64.10 FEET; THENCE N.00°00’10”E.,

Exhibit F-7

Exhibit 10.30

36.00 FEET TO THE POINT OF BEGINNING. SAID TRACT OF LAND CONTAINING 0.0530 ACRES, MORE OR LESS.



Exhibit F-7

Exhibit 10.30

Exhibit F-8
to
Fourth Amended and Restated Master Lease and Access Agreement


[Reserved]



Exhibit F-8

Exhibit 10.30

Exhibit F-9
to
Fourth Amended and Restated Master Lease and Access Agreement


[Legal Description for Woods Cross Refinery Complex (for Woods Cross Operating)]


THE “PREMISES” SHALL BE THE FOOTPRINT OF THE UNITS LOCATED WHOLLY WITHIN THE FOLLOWING DESCRIBED TRACTS OF LAND:
THE BASIS OF BEARING FOR THESE DESCRIPTIONS IS SOUTH 89°16’59” WEST ALONG THE CENTERLINE OF 500 SOUTH STREET FROM THE PI MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 800 WEST STREETS TO THE PI MONUMENT AT THE INTERSECTION OF 500 SOUTH AND 1100 WEST STREETS.
THREE PARCELS OF LAND SITUATE IN THE SOUTHWEST QUARTER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN, DAVIS COUNTY, UTAH, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL 1:
BEGINNING SOUTH 89°16’59” WEST, ALONG THE CENTERLINE OF 500 SOUTH STREET, 371.31 FEET AND NORTH 00°43’01” WEST 1322.16 FEET FROM THE PI MONUMENT AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET, SAID PI MONUMENT BEING SOUTH 89°36’45” WEST 195.44 FEET, TO THE CENTERLINE OF 800 WEST STREET, AND SOUTH 00°23’15” EAST, ALONG THE CENTERLINE OF 800 WEST STREET, 546.68 FEET FROM THE SOUTH QUARTER CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE NORTH 00°35’47” WEST 3.84 FEET; THENCE NORTH 89°55’31” WEST 247.45 FEET; THENCE 18.35 FEET ALONG THE ARC OF A 15.82 FOOT RADIUS NON-TANGENT CURVE TO THE LEFT (CHORD BEARS SOUTH 58°43’45” WEST 17.34 FEET) AND THE CENTER BEARS NORTH 64°29’46” WEST; THENCE SOUTH 89°53’50” WEST 37.39 FEET; THENCE NORTH 00°01’31” WEST 188.15 FEET; THENCE 17.84 FEET ALONG THE ARC OF A 15.93 FOOT RADIUS NON-TANGENT CURVE TO THE RIGHT (CHORD BEARS NORTH 37°43’26” WEST 16.92 FEET) AND THE CENTER BEARS NORTH 20°12’00” EAST; THENCE SOUTH 89°58’26” WEST 98.93 FEET; THENCE NORTH 00°05’13” WEST 71.75 FEET; THENCE NORTH 89°47’33” EAST 26.50 FEET; THENCE SOUTH 00°19’55” EAST 1.81 FEET; THENCE NORTH 89°40’11” EAST 101.14 FEET; THENCE SOUTH 89°59’27” EAST 279.13 FEET; THENCE 35.27 FEET ALONG THE ARC OF A 18.06 FOOT RADIUS NON-TANGENT CURVE TO THE RIGHT (CHORD BEARS SOUTH 42°03’00” EAST 29.92 FEET) AND THE CENTER BEARS SOUTH 08°00’50” EAST; THENCE SOUTH 00°06’22” WEST 19.97 FEET; THENCE NORTH 89°05’53” WEST 80.12 FEET; THENCE SOUTH 00°08’07” EAST 69.10 FEET; THENCE NORTH 89°59’12” EAST 60.02 FEET; THENCE 30.13 FEET ALONG THE ARC OF A 16.88 FOOT RADIUS NON-TANGENT CURVE TO THE RIGHT (CHORD BEARS SOUTH 49°39’22” EAST 26.29 FEET) AND THE CENTER BEARS SOUTH 10°47’14” EAST; THENCE SOUTH 00°00’25” WEST 123.60 FEET; THENCE 27.92 FEET ALONG THE ARC OF A 15.33 FOOT RADIUS NON-TANGENT CURVE TO THE RIGHT (CHORD BEARS SOUTH 46°57’09” WEST 24.22 FEET) AND THE CENTER BEARS SOUTH 84°47’04” WEST, TO THE POINT OF BEGINNING.
CONTAINS 1.979 ACRES, MORE OR LESS




Exhibit F-9

Exhibit 10.30

PARCEL 2:
BEGINNING SOUTH 89°16’59” WEST, ALONG THE CENTERLINE OF 500 SOUTH STREET, 683.88 FEET AND NORTH 00°43’01” WEST 1458.35 FEET FROM THE PI MONUMENT AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET, SAID PI MONUMENT BEING SOUTH 89°36’45” WEST 195.44 FEET, TO THE CENTERLINE OF 800 WEST STREET, AND SOUTH 00°23’15” EAST, ALONG THE CENTERLINE OF 800 WEST STREET, 546.68 FEET FROM THE SOUTH QUARTER CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE NORTH 89°52’16” WEST 23.10 FEET; THENCE NORTH 00°06’55” EAST 24.85 FEET; THENCE SOUTH 89°51’57” EAST 23.07 FEET; THENCE SOUTH 00°02’29” WEST 24.85 FEET TO THE POINT OF BEGINNING.
CONTAINS 574 SF, MORE OR LESS

PARCEL 3:
BEGINNING SOUTH 89°16’59” WEST, ALONG THE CENTERLINE OF 500 SOUTH STREET, 709.85 FEET AND NORTH 00°43’01” WEST 1352.39 FEET FROM THE PI MONUMENT AT THE INTERSECTION OF 500 SOUTH STREET AND 800 WEST STREET, SAID PI MONUMENT BEING SOUTH 89°36’45” WEST 195.44 FEET, TO THE CENTERLINE OF 800 WEST STREET, AND SOUTH 00°23’15” EAST, ALONG THE CENTERLINE OF 800 WEST STREET, 546.68 FEET FROM THE SOUTH QUARTER CORNER OF SECTION 24, TOWNSHIP 2 NORTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE NORTH 00°13’04” WEST 38.94 FEET; THENCE NORTH 89°44’23” EAST 24.87 FEET; THENCE SOUTH 00°04’33” EAST 39.35 FEET; THENCE NORTH 89°19’03” WEST 24.77 FEET TO THE POINT OF BEGINNING.
CONTAINS 971 SF, MORE OR LESS





4845-5920-0571 v. 2

4845-5920-0571, v. 4

Exhibit F-9

Exhibit 10.44
HOLLYFRONTIER CORPORATION
LOI-7445704v1
LONG-TERM INCENTIVE COMPENSATION PLAN
UK SUB-PLAN
This Sub-Plan, adopted under The HollyFrontier Corporation Long-Term Incentive Compensation Plan (the " Plan "), is adopted effective February 14, 2017 to apply to grants made to service providers in the United Kingdom.
1.     Purpose . The purpose of this Sub-Plan is to amend those provisions of
the Plan which are required to be amended in order for Awards granted under the Plan, and communications concerning those Awards, to be exempt from provisions of the United Kingdom Financial Services and Markets Act 2000. All Awards to service providers resident in the United Kingdom (as limited below) shall be made under this Sub-Plan.

2.     Restricted Availability of Awards . Any Awards granted pursuant to this Sub-Plan shall be made only to officers and key employees of the Company or one of its Subsidiaries who are residents of the United Kingdom.
3.     Incorporation of Remaining Plan Provisions. With the exception of the
provisions noted above, the provisions of the Plan will apply or be available to all Awards granted pursuant to this Sub-Plan.
 



Exhibit 10.46


CHANGE IN CONTROL AGREEMENT
This CHANGE IN CONTROL AGREEMENT (the “ Agreement ”) is entered into effective as of _____________, 2012 (the “ Effective Date ”), by and between HOLLYFRONTIER CORPORATION, a Delaware corporation (the “ Company ”) and ____________ (the “ Employee ”).
W I T N E S S E T H:
WHEREAS , the Employee is currently employed by the Company and is an integral part of its management;
WHEREAS , the Company considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel such as Employee;
WHEREAS , the Company recognizes that the possibility of a change in control of the Company will cause uncertainty and distract the Employee from his assigned duties to the detriment of the Company and its shareholders; and
WHEREAS , the Board of Directors of the Company (the “ Board ”) has determined that appropriate steps should be taken to reinforce and encourage the Employee’s continued attention and dedication to the Employee’s assigned duties in the event of a change in control of the Company.
NOW, THEREFORE , in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration, the Employee and the Company hereby agree as follows:
Section 1: Definitions
The following terms shall have the meanings set forth below whenever used herein:
(a)      “ Affiliate ” shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified person.
(b)      “ Base Salary ” shall mean the amount Employee was entitled to receive as salary on an annualized basis immediately prior to termination of Employee’s employment (or, if greater, immediately prior to a Change in Control), including any amounts deferred pursuant to any deferred compensation program, but excluding all bonus, overtime, welfare benefit premium reimbursement and incentive compensation, payable by the Company as consideration for the Employee’s services.
(c)      “ Beneficial Owner ” shall mean the beneficial owner of a security as determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.
(d)      “ Bonus ” shall mean an amount equal to the average of the annual bonus amount actually paid to the Employee for the three (3) most recent years (or if employed for less than 3 years, the average bonus amount actually paid to the Employee for the years employed).
(e)      “ Cause ” shall mean the Employee’s (i) engagement in any act of willful gross negligence or willful misconduct on a matter that is not inconsequential, as reasonably determined by the Board in good faith, or (ii) conviction of a felony provided the conviction is damaging to the Company or to the

A - 1


Exhibit 10.46

public’s perception of the Company, as determined by the Board in good faith. For purposes hereof, no act or failure to act, on the Employee’s part, shall be deemed “willful” if the Employee reasonably believed such acts or omissions were in the best interests of the Company.
(f)      “ Change in Control ” shall mean the occurrence of one of the following:
(i)      Any Person, or more than one Person acting as a group (as defined in Treasury regulation 1.409A-3(g)(5)(v)(B)), other than (1) the Company or any of its Subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, or (4) a corporation (or other entity) owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing (A) more than forty percent (40%) of the combined voting power of the Company’s then outstanding securities, or (B) more than forty percent (40%) of the then outstanding common stock of the Company, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in Section 1(f)(iii)(A) below.
(ii)      A majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.
(iii)      There is consummated a merger or consolidation of the Company or any direct or indirect Subsidiary of the Company with any other corporation or entity, except if:
(A)      the merger or consolidation results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least sixty percent (60%) of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation;
(B)      the merger or consolidation is effected to implement a recapitalization of the Company (or similar transaction) in which no Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing more than sixty percent (60%) of the combined voting power of the Company’s then outstanding securities; or
(iv)      The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least sixty percent (60%) of the combined voting power of the voting securities of which is owned by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
(g)      “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
(h)      “ Good Reason ” shall mean, without the express written consent of the Employee, the occurrence of any of the following:

A - 2


Exhibit 10.46

(i)    the material reduction in the Employee’s authority, duties or responsibilities from those in effect immediately prior to the Change in Control, or a material reduction in the authority, duties or responsibilities of the supervisor to whom Employee is required to report;

(ii)    a material diminution in the budget or other spending over which the Employee has authority;

(iii)    a reduction in the Employee’s base compensation in effect immediately before the Change in Control;

(iv)    if applicable, a failure of the Employee to be re-elected or appointed as an officer or to the board of directors or similar governing board of the successor;

(v)    the relocation of the Employee to an office or location more than fifty (50) miles from the location at which the Employee normally performed Employee’s services immediately prior to the occurrence of a Change in Control, except for travel reasonably required in the performance of the Employee’s responsibilities; or

(vi)    a material breach of the terms of this Agreement.

Notwithstanding the foregoing, in the case of the Employee’s allegation of Good Reason: (A) Employee shall provide notice to the Company of the event alleged to constitute Good Reason within ninety (90) days of the occurrence of such event, and (B) the Company shall be given the opportunity to remedy the alleged Good Reason event within thirty (30) days from receipt of notice of such allegation. In the event the alleged Good Reason event is not so remedied, Employee’s Termination of Employment will be effective immediately following the thirty (30) day cure period.

(i)      “ Nonqualified Deferred Compensation Rules ” shall mean the limitations and requirements set forth in section 409A of the Code, the regulations promulgated thereunder, and any additional guidance issued by the Internal Revenue Service related thereto.
(j)      “ Person ” shall mean any individual, group, partnership, corporation, association, trust, or other entity or organization.
(k)      “ Protection Period ” shall mean the six (6) month period preceding a Change in Control and the twenty-four (24) month period beginning on the date of the Change in Control.
(l)      “ Subsidiary ” shall mean, as to any Person, a corporation or other entity of which a majority of the combined voting power of the outstanding voting securities is owned, directly or indirectly, by that Person.
(m)      “ Termination Event ” shall mean the Employee’s Termination of Employment either:
(i)    by the Company or its successor without Cause;

(ii)    by the Company or its successor as a condition to the consummation of (or entry into, provided the transaction is consummated) the Change in Control transaction; or

(iii)    by the Employee for Good Reason.

A - 3


Exhibit 10.46


(n)      “ Termination of Employment ” shall mean a termination of Employee’s employment within the meaning of Treas. Reg. § 1.409A-1(h)(1)(ii).    
Section 2:      Term of Agreement
(a)      Term . The term of this Agreement (the “ Term ”) shall be for the period which commences on the Effective Date and which terminates on the day prior to the initial three (3) year anniversary of the Effective Date; provided, however, that the Term of this Agreement will be automatically extended for an additional two (2) year period as of the second anniversary of the Effective Date and any anniversary of the Effective Date occurring thereafter, unless the Board cancels further extension of this Agreement by giving notice to the Employee at least sixty (60) days prior to the initial two (2) year anniversary of the Effective Date and any anniversary of the Effective Date occurring thereafter.
(b)      Modification of Term Upon a Change in Control . Upon a Change in Control during the Term, the Term will be extended (or reduced, as the case may be) through the end of the Protection Period, immediately following which time this Agreement will terminate. If, prior to a Change in Control, the Employee ceases to be an employee of the Company pursuant to a Termination Event, thereupon the Term will continue for a period of six (6) months following the date of the Employee’s Termination of Employment and, in the event a Change in Control does not occur during such six (6) month period, the Term shall be deemed to have expired immediately following the end of the six (6) month period and this Agreement shall immediately terminate and be of no further effect. If the Employee ceases, prior to a Change in Control, to be an employee of the Company for any other reason, the Term will be deemed to have expired as of the date of such cessation of service and this Agreement shall immediately terminate and be of no further effect.
(c)      Survival of Certain Provisions . Notwithstanding the expiration of the Term or other termination of this Agreement , %3. Sections 4(a), 5(e) and 5(l) of this Agreement shall survive any expiration or termination of this Agreement, and %3. if a Change in Control shall occur prior to the expiration of the Term or other termination of this Agreement, the terms of this Agreement shall survive to the extent necessary to enable Employee to enforce his rights under Section 3 of this Agreement.
Section 3:      Severance Benefits
(a)      Termination due to a Termination Event . In the event that the Employee’s employment with the Company or its successor is terminated due to the occurrence of a Termination Event during the Protection Period, the Employee shall be entitled to the following payments and other benefits:
(i)      The Company shall pay to the Employee a lump sum cash amount equal to the sum of (A) the Employee’s accrued and unpaid salary as of his date of termination plus (B) reimbursement for all expenses reasonably and necessarily incurred by the Employee (in accordance with Company policy) prior to termination in connection with the business of the Company plus (C) any accrued vacation pay, to the extent not theretofore paid. This amount shall be paid within ten (10) days after the Employee’s Termination of Employment.
(ii)      Company shall pay to the Employee an additional lump sum cash amount equal to the severance multiple set forth in the table below (the “ Severance Multiple ”) times the sum of Employee’s Base Salary plus Employee’s Bonus. Subject to the requirements of Section 3(c), this amount shall be paid within fifteen (15) days after the later of (A) Employee’s Termination of Employment, or (B) the Change in Control. The Severance Multiple will be determined based on the Employee’s designated

A - 4


Exhibit 10.46

pay grade in effect immediately prior to the Termination Event (or, if higher, prior to any Good Reason occurrence triggering a Termination Event).
Pay Grade
Severance Multiple
E3
3x
E2 & SVP
2x
E1
1.75x
M5
1.5x
M4
1.25x
M3
1x

(iii)      The Company shall provide the Employee (and the Employee’s dependents, if applicable), beginning upon and continuing for a period of one year following the later of (A) his Termination of Employment, or (B) the Change in Control, with a similar level of medical and dental insurance benefits upon substantially the same terms and conditions as existed immediately prior to the Employee’s Termination of Employment subject to the following:
(A)      To the extent that any such medical or dental benefits are self-funded and during the period Employee would, but for the continued coverage provided pursuant to this Section 3(a)(iii), be entitled to continuation coverage with respect to such benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”), if Employee elected such coverage and paid the applicable premiums (the “ COBRA Continuation Period ”), the costs of the continued benefit coverage provided under this Section 3(a)(iii) will be imputed as income to the Employee and reported on Form W-2. Following the COBRA Continuation Period, to the extent Employee is still entitled to continued coverage pursuant to this Section 3(a)(iii), the medical and dental coverage to be continued under such self-funded arrangement shall be provided in accordance with the provisions of Treas. Reg. § 1.409A-3(i)(1)(iv)(A) as it applies to the provision of in-kind benefits.
(B)      Notwithstanding the foregoing provisions of this Section 3(a)(iii), in the event the Company is unable to provide any of the promised medical or dental benefits under its benefit plans, or in the event the Company will be subject to additional taxes to the extent such promised medical or dental benefits are provided, the Company will reimburse Employee for amounts necessary to enable the Employee to obtain medical and dental benefits substantially equal to what was provided to the Employee immediately prior to the Employee’s termination; provided, that any such reimbursement will be made in accordance with the provisions of Treas. Reg. § 1.409A-3(i)(1)(iv), including but not limited to the requirements that (I) the expenses eligible for reimbursement will be determined by reference to the objective and nondiscretionary criteria set forth in the Company’s medical and dental benefit plans, (II) the expenses eligible for reimbursement during one taxable year of the Employee will not affect the expenses eligible for reimbursement in any other taxable year (provided, that a limit imposed on the amount of expenses that may be reimbursed over some or all of the continuation period described in this Section 3(a)(iii) shall not in and of itself cause the reimbursement arrangement described herein to fail to satisfy the requirements of Treas. Reg. § 1.409A-3(i)(1)(iv)), (III) the reimbursement of an eligible expense will be made on or before the last day of the Employee’s taxable year following the taxable year in which the expense was incurred, and (IV) the right to reimbursement will not be subject to liquidation or exchange for another benefit.

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Exhibit 10.46

(C)      Notwithstanding the foregoing provisions of this Section 3(a)(iii), in the event the Employee becomes reemployed with another employer and becomes eligible to receive medical and dental benefits similar to the benefits described herein from such employer, the medical and dental benefit coverage provided for herein shall terminate. Benefit continuation provided pursuant to this Section 3(a)(iii) will be applied towards any continuation coverage to which the Employee is entitled pursuant to COBRA.
(iv)      Except to the extent an award agreement provides to the contrary, all outstanding equity-based compensation awards of the Company or its Affiliates (other than awards intended to constitute “performance based compensation,” within the meaning of section 162(m) of the Code, granted to an individual who was determined to be reasonably likely to be a “covered employee,” within the meaning of section 162(m) of the Code when the award was granted (a “ 162(m) Award ”)) shall become immediately vested (and in the case of performance awards that are not 162(m) Awards, the target ( i.e. , 100%) performance level shall be deemed to have been achieved at such time), nonforfeitable, settleable (to the extent such settlement would not result in additional taxes under section 409A of the Code) and, if applicable, exercisable. Any 162(m) Award will not be forfeited, but will continue to remain outstanding for the remainder of the performance period to which such 162(m) Award is subject and will, following the completion of the performance period, become vested and nonforfeitable, if at all, upon and in accordance with the achievement of the performance criteria established with respect to the 162(m) Award. Such 162(m) Award will not be pro-rated for the period of time during the performance period preceding the Termination Event.
(b)      Other Severance Pay . The Employee shall not be entitled to receive payment under any severance plan, policy or arrangement maintained by the Company (other than this Agreement). If the Employee is entitled to any notice or payment in lieu of any notice of termination of employment required by Federal, state or local law, including but not limited to the Worker Adjustment and Retraining Notification Act, the amounts to which the Employee would otherwise be entitled under this Agreement shall be reduced by the amount of any such payment in lieu of notice. If the Employee is entitled to any severance or termination payments under any employment or other agreement (other than award agreements issued pursuant to the HollyFrontier Corporation Long-Term Incentive Compensation Plan) with, or any plan or arrangement of, the Company, the payments to which the Employee would otherwise be entitled under this Agreement shall be reduced by the amount of such payment. Except as set forth above, the foregoing payments and benefits shall be in addition to and not in lieu of any payments or benefits to which the Employee and his dependents may otherwise be entitled to under the Company’s compensation and employee benefit plans. Nothing herein shall be deemed to restrict the right of the Company to amend or terminate any such plan in a manner generally applicable to similarly situated active employees of the Company, in which event the Employee shall be entitled to participate on the same basis (including payment of applicable contributions) as similarly situated active employees of the Company.
(c)      Release . Payments under Sections 3(a)(ii) and (iii) shall be conditioned upon the execution and delivery of a Release Agreement in the form attached hereto as Exhibit A (the “ Release ”) by Employee within forty-five (45) days of the date of Employee’s Termination of Employment, provided such Release is not revoked. Notwithstanding the times of payment otherwise set forth in Section 3(a), the payments due under Sections 3(a)(ii) and (iii) shall be made (or commenced, in the case of the payments due under Section 3(a)(iii)) to the Employee within fifteen (15) days following receipt by the Company of the Release properly executed (and not revoked) by the Employee, or, if later, the Change in Control. If the Employee fails to properly execute and deliver the Release (or revokes the Release), the Employee agrees that he shall not be entitled to receive the benefits described in Sections 3(a)(ii) and (iii).

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Exhibit 10.46

(d)      Insurance Policies . In the event of the Employee’s Termination of Employment or in the event the Company intends to discontinue maintaining certain life insurance policies, the Company shall, at the request of the Employee, assign and transfer to the Employee (or his nominee) each insurance policy insuring the life of the Employee and owned by the Company which has no cash surrender value, to the extent that the Company is permitted to do so by the terms of such insurance policy.
Section 4:      Certain Covenants by the Employee
(a)      Protection of Confidential Information . The Employee acknowledges that in the course of his employment with the Company, the Employee has obtained confidential, proprietary and/or trade secret information of the Company, relating to, among other things, (i) programs, strategies, information or materials related to the business, services, manner of operation and activities of the Company, (ii) customers, clients or prospects of the Company, (iii) computer hardware or software used in the course of the Company business, and (iv) marketing strategies or other activities of the Company from or on behalf of any of its clients, (hereinafter collectively referred to as “ Confidential Information ”); provided, however, that, for purposes of this Agreement, the term Confidential Information shall not include any information that is known generally to the public or accessible to a third party on an unrestricted basis. The Employee recognizes that such Confidential Information has been developed by the Company at great expense; is a valuable, special and unique asset of the Company which it uses in its business to obtain competitive advantage over its competitors; is and shall be proprietary to the Company; is and shall remain the exclusive property of the Company; and, is not to be transmitted to any other person, entity or thing. Accordingly, as a material inducement to the Company to enter into this Agreement with the Employee and in partial consideration for the compensation payable hereunder to the Employee, the Employee hereby:
(i)      warrants and represents that he has not disclosed, copied, disseminated, shared or transmitted any Confidential Information to any person, firm, corporation or entity for any reason or purpose whatsoever, except in the course of carrying out the Employee’s duties and responsibilities of employment with the Company;
(ii)      agrees not to so disclose, copy, disseminate, share or transmit any Confidential Information in the future;
(iii)      agrees not to make use of any Confidential Information for his own purposes or for the benefit of any person, firm, corporation or other entity, except that, in the course of carrying out the Employee’s duties and responsibilities of employment, the Employee may use Confidential Information for the benefit of any Affiliate of the Company;
(iv)      warrants and represents that all Confidential Information in his possession, custody or control that is or was a property of the Company has been or shall be returned to the Company by or on the date of the Employee’s termination; and
(v)      agrees that he will not reveal, or cause to be revealed, this Agreement or its terms to any third party (other than the Employee’s attorney, tax advisor, or spouse), except as required by law.
The Employee’s covenants in this Section 4(a) are in addition to, and do not supercede, the Employee’s obligations under any confidentiality, invention or trade secret agreements executed by the Employee, or any laws protecting the Confidential Information.

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Exhibit 10.46

(b)      Non-Disparagement . The Employee agrees to refrain from engaging in any conduct, or from making any comments or statements, which have the purpose or effect of harming the reputation or goodwill of the Company or any of its Affiliates, employees, directors or stockholders.
(c)      Non-Solicitation . The Employee agrees that during the Term and for a period of one (1) year following Termination of Employment that the Employee will not, directly or indirectly, for the benefit of the Employee or for others, recruit, solicit or induce any employee or service provider of the Company or its Affiliates to terminate his or her employment or service relationship with the Company or its Affiliates, or hire or assist in the hiring of any such employee or service provider by a Person not affiliated with the Company or its Affiliates.
(d)      Extent of Restrictions . The Employee acknowledges that the restrictions contained in this Section 4 correctly set forth the understanding of the parties at the time this Agreement is entered into, are reasonable and necessary to protect the legitimate interests of the Company, and that any violation will cause substantial injury to the Company. In the event of any such violation, the Company shall be entitled, in addition to any other remedy, to preliminary or permanent injunctive relief. If any court having jurisdiction shall find that any part of the restrictions set forth in this Agreement are unreasonable in any respect, it is the intent of the parties that the restrictions set forth herein shall not be terminated, but that this Agreement shall remain in full force and effect to the extent (as to time periods and other relevant factors) that the court shall find reasonable.
Section 5:      Miscellaneous
(a)      Clawback . Notwithstanding any provisions in this Agreement to the contrary, to the extent required by (i) applicable law, including, without limitation, the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and/or (ii) any policy that may be adopted by the Board, amounts paid or payable pursuant to this Agreement shall be subject to clawback to the extent necessary to comply with such law(s) and/or policy, which clawback may include forfeiture and/or repayment of amounts paid or payable pursuant to this Agreement.
(b)      Tax Withholding . All payments required to be made to the Employee under this Agreement shall be subject to withholding of amounts relating to income tax, excise tax, employment tax and other payroll taxes to the extent required to be withheld pursuant to applicable law or regulation.
(c)      No Mitigation; Offset . The Employee shall be under no obligation to minimize or mitigate damages by seeking other employment, and the obtaining of any such other employment shall in no event effect any reduction of obligations hereunder for the payments or benefits required to be provided to the Employee, except as specifically provided in Section 3(a)(iii) above with respect to medical and dental benefits coverage. The obligations of the Company hereunder shall not be affected by any set-off or counterclaim rights which any party may have against the Employee; provided, however, that the Company may offset any amounts owed to the Company by the Employee against any amounts owed to the Employee by the Company hereunder.
(d)      Overpayment . If, due to mistake or any other reason, the Employee receives benefits under this Agreement in excess of what this Agreement provides, the Employee shall repay the overpayment to the Company in a lump sum within thirty (30) days of notice of the amount of overpayment. If the Employee fails to so repay the overpayment, then without limiting any other remedies available to the Company, the Company may deduct the amount of the overpayment from any other benefits which become payable to the Employee under this Agreement or otherwise.

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Exhibit 10.46

(e)      Severability . In the event that any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable, then such provision shall be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be modified or restricted, then such provision shall be deemed to be excised from this Agreement, provided that the binding effect and enforceability of the remaining provisions of this Agreement shall not be affected or impaired in any manner. No waiver by a party of any provisions or conditions of this Agreement shall be deemed a waiver of similar or dissimilar provisions and conditions at the same time or any prior or subsequent time.
(f)      Successors and Assigns . This Agreement and all rights hereunder are personal to the Employee and shall not be assignable by the Employee; provided, however, that any amounts that shall have become payable under this Agreement prior to the Employee’s death shall inure to the benefit of the Employee’s heirs or other legal representatives, as the case may be. This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company. The Company shall require any successor to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place. Upon such assumption by the successor, the Company automatically shall be released from all liability hereunder (and all references to the Company herein shall be deemed to refer to such successor). In the event a successor does not assume this Agreement, the benefits payable pursuant to Section 3(a) will be paid immediately prior to the Change in Control.
(g)      Entire Agreement . Except as otherwise specifically provided herein, this Agreement constitutes the entire agreement between the parties respecting the subject matter hereof and supersedes any prior agreements respecting severance benefits prior to or following a Change in Control. No amendment to this Agreement shall be deemed valid unless in writing and signed by the parties. A waiver of any term, covenant, agreement or condition contained in this Agreement shall not be deemed a waiver of any other term, covenant, agreement or condition, and any waiver of any default in any such term, covenant, agreement or condition shall not be deemed a waiver of any later default thereof or of any other term, covenant, agreement or condition.
(h)      Notices . Any notice required or permitted to be given by this Agreement shall be effective only if in writing, delivered personally or by courier or by facsimile transmission or sent by express, registered or certified mail, postage prepaid, to the parties at the addresses hereinafter set forth, or at such other places that either party may designate by notice to the other.
Notice to the Employee shall be addressed to the employee’s then current work address.
Notice to the Company shall be addressed to:
HollyFrontier Corporation
2828 N. Harwood St., Suite 1300
Dallas, Texas 75201
Attn: General Counsel
(i)      Governing Law . Notwithstanding any conflicts of law or choice of law provision to the contrary, this Agreement shall be construed and interpreted according to the laws of the State of Texas.
(j)      No Right to Continued Employment . Nothing in this Agreement shall confer on the Employee any right to continue in the employ of the Company or interfere in any way (other than by

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Exhibit 10.46

virtue of requiring payments or benefits as expressly provided herein) with the right of the Company to terminate the Employee’s employment at any time.
(k)      Unfunded Obligation . Any payments hereunder shall be made out of the general assets of the Company. The Employee shall have the status of general unsecured creditor of the Company, and the Agreement constitutes a mere promise by the Company to make payments under this Agreement in the future as and to the extent provided herein.
(l)      Arbitration . All claims, demands, causes of action, disputes, controversies or other matters in question (“ Claims ”), whether or not arising out of this Agreement or the Employee’s service (or termination from service) with the Company, whether arising in contract, tort or otherwise and whether provided by statute, equity or common law, that the Company may have against the Employee or that the Employee may have against the Company or its parents, Subsidiaries or Affiliates, or against each of the foregoing entities' respective officers, directors, employees or agents in their capacity as such or otherwise, shall be submitted to binding arbitration, if such Claim is not resolved by the mutual written agreement of the Employee and the Company, or otherwise, within thirty (30) days after notice of the dispute is first given. Claims covered by this Section 5(l) include, without limitation, claims by the Employee for breach of this Agreement, wrongful termination, discrimination (based on age, race, sex, disability, national origin, sexual orientation, or any other factor), harassment and retaliation. Any arbitration shall be conducted in accordance with the Federal Arbitration Act (“ FAA ”) and, to the extent an issue is not addressed by the FAA, with the then-current National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“ AAA ”) or such other rules of the AAA as are applicable to the claims asserted. If a party refuses to honor its obligations under this Section 5(l), the other party may compel arbitration in either federal or state court. The arbitrator shall apply the substantive law of Texas (excluding choice-of-law principles that might call for the application of some other jurisdiction's law) or federal law, or both as applicable to the claims asserted. The arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability or enforceability or formation of this Agreement (including this Section 5(l)), including any claim that all or part of the Agreement is void or voidable and any claim that an issue is not subject to arbitration. The results of arbitration will be binding and conclusive on the parties hereto. Any arbitrator's award or finding or any judgment or verdict thereon will be final and unappealable. All parties agree that venue for arbitration will be in Dallas, Texas, and that any arbitration commenced in any other venue will be transferred to Dallas, Texas, upon the written request of any party to this Agreement. In the event that an arbitration is actually conducted pursuant to this Section 5(l), the party in whose favor the arbitrator renders the award shall be entitled to have and recover from the other party all costs and expenses incurred, including reasonable attorneys' fees, reasonable costs and other reasonable expenses pertaining to the arbitration and the enforcement thereof and such attorneys fees, costs and other expenses shall become a part of any award, judgment or verdict. Any and all of the arbitrator's orders, decisions and awards may be enforceable in, and judgment upon any award rendered by the arbitrator may be confirmed and entered by any federal or state court having jurisdiction. All privileges under state and federal law, including attorney-client, work product and party communication privileges, shall be preserved and protected. The decision of the arbitrator will be binding on all parties. Arbitrations will be conducted in such a manner that the final decision of the arbitrator will be made and provided to the Employee and the Company no later than 120 days after a matter is submitted to arbitration. All proceedings conducted pursuant to this agreement to arbitrate, including any order, decision or award of the arbitrators, shall be kept confidential by all parties. EMPLOYEE ACKNOWLEDGES THAT, BY SIGNING THIS AGREEMENT, EMPLOYEE IS WAIVING ANY RIGHT THAT EMPLOYEE MAY HAVE TO A JURY TRIAL OR A COURT TRIAL OF ANY SERVICE RELATED CLAIM ALLEGED BY EMPLOYEE.

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Exhibit 10.46

(m)      Injunctive Relief . The Employee recognizes and acknowledges that, in the event of a breach or threatened breach by the Employee of the provisions of this Agreement, the Company shall be entitled to an injunction to enforce the provisions hereof, without any requirement for the securing or posting of any bond in connection with such remedy, in addition to pursuing its other legal remedies.
(n)      Captions and Headings . Captions and paragraph headings are for convenience only, are not a part of this Agreement and shall not be used to construe any provision of this Agreement.
(o)      Counterparts . This Agreement may be executed in counterparts, each of which shall constitute an original, but both of which when taken together shall constitute one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
HOLLYFRONTIER CORPORATION


By:    ____________________________________
Name: Michael Jennings
Its:    Chief Executive Officer


EMPLOYEE

        
Name:         


EXHIBIT A
AGREEMENT AND RELEASE
This Agreement and Release (“ Release ”) is entered into between you, the undersigned employee, and HollyFrontier Corporation, a Delaware corporation (the “ Company ”), in connection with the Change in Control Agreement between you and the Company dated ___________, 201_ (the “ Change in Control Agreement ”). You have ___ days to consider this Release, which you agree is a reasonable amount of time. While you may sign this Release prior to the expiration of this ___-day period, you are not to sign it prior to ______________________ .
1.     Definitions .
(a)    “ Released Parties ” means the Company and its past, present and future parents, subsidiaries, divisions, successors, predecessors, employee benefit plans and affiliated or related companies, and also each of the foregoing entities’ past, present and future owners, officers, directors, stockholders, investors, partners, managers, principals, members, committees, administrators, sponsors, executors, trustees, fiduciaries, employees, agents, assigns, representatives and attorneys, in their personal and representative capacities. Each of the Released Parties is an intended beneficiary of this Release.

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Exhibit 10.46

    (b)    “ Claims ” means all theories of recovery of whatever nature, whether known or unknown, recognized by the law or equity of any jurisdiction. It includes but is not limited to any and all actions, causes of action, lawsuits, claims, complaints, petitions, charges, demands, liabilities, indebtedness, losses, damages, rights and judgments in which you have had or may have an interest. It also includes but is not limited to any claim for wages, benefits or other compensation; provided, however that nothing in this Release will affect your entitlement to benefits pursuant to the terms of any employee benefit plan (as defined in the Employee Retirement Income Security Act of 1974, as amended) sponsored by the Company in which you are a participant. The term Claims also includes but is not limited to claims asserted by you or on your behalf by some other person, entity or government agency.
2.     Consideration . The Company agrees to pay you the consideration set forth in Section 3(a) of the Change in Control Agreement. The Company will make this payment to you within fifteen (15) business days of the date you sign this Release (and return it to the Company), unless Section 3(a) of the Change in Control Agreement provides a longer time before payment must be made. You acknowledge that the payment that the Company will make to you under this Release is in addition to anything else of value to which you are entitled and that the Company is not otherwise obligated to make this payment to you.
3.     Release of Claims .
    (a)    You, on behalf of yourself and your heirs, executors, administrators, legal representatives, successors, beneficiaries, and assigns, unconditionally release and forever discharge the Released Parties from, and waive, any and all Claims that you have or may have against any of the Released Parties arising from your employment with the Company, the termination thereof, and any other acts or omissions occurring on or before the date you sign this Release.
    (b)    The release set forth in Paragraph 3(a) includes, but is not limited to, any and all Claims under (i) the common law (tort, contract or other) of any jurisdiction; (ii) the Rehabilitation Act of 1973, the Age Discrimination in Employment Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, and any other federal, state and local statutes, ordinances, employee orders and regulations prohibiting discrimination or retaliation upon the basis of age, race, sex, national original, religion, disability, or other unlawful factor; (iii) the National Labor Relations Act; (iv) the Employee Retirement Income Security Act; (v) the Family and Medical Leave Act; (vi) the Fair Labor Standards Act; (vii) the Equal Pay Act; (viii) the Worker Adjustment and Retraining Notification Act; and (ix) any other federal, state or local law.
    (c)    In furtherance of this Release, you promise not to bring any Claims against any of the Released Parties in or before any court or arbitral authority.
5.     Acknowledgment . You acknowledge that, by entering into this Release, the Company does not admit to any wrongdoing in connection with your employment or termination, and that this Release is intended as a compromise of any Claims you have or may have against the Released Parties. You further acknowledge that you have carefully read this Release and understand its final and binding effect, have had a reasonable amount of time to consider it, have had the opportunity to seek the advice of legal counsel of your choosing, and are entering this Release voluntarily. In addition, you hereby certify your understanding that you may revoke the Release by providing written notice thereof to the Company within seven (7) days following execution of the Release and that, upon such revocation, this Release will not have any further legal effect.

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Exhibit 10.46

6.     Applicable Law . This Release shall be construed and interpreted pursuant to the laws of the State of Texas without regard to its choice of law rules and shall be subject to the arbitration clause set forth in Section 5(l) of the Change in Control Agreement.
7.     Severability . Each part, term, or provision of this Release is severable from the others. Notwithstanding any possible future finding by a duly constituted authority that a particular part, term, or provision is invalid, void, or unenforceable, this Release has been made with the clear intention that the validity and enforceability of the remaining parts, terms and provisions shall not be affected thereby. If any part, term, or provision is so found invalid, void or unenforceable, the applicability of any such part, term, or provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable.
IN WITNESS WHEREOF , the parties have executed this Agreement as of the day and year set forth below.
HOLLYFRONTIER CORPORATION EMPLOYEE

By:        By:     
Name: Michael Jennings                Name:                         
Title: Chief Executive Officer    
Date:        Date:     
US 4898644v.2

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Exhibit 10.49

                                        
HOLLYFRONTIER CORPORATION
RESTRICTED STOCK AGREEMENT
(Time Vesting)

This Agreement is made and entered into as of the Date of Grant set forth in the Notice of Grant of Restricted Stock (“ Notice of Grant ”) by and between HollyFrontier Corporation, a Delaware corporation (the “ Company ”), and you;
WHEREAS , the Company in order to induce you to enter into and to continue and dedicate service to the Company and to materially contribute to the success of the Company agrees to grant you this restricted stock award;
WHEREAS , the Company adopted the Plan (as defined in the Notice of Grant) under which the Company is authorized to grant restricted stock awards to certain employees and service providers of the Company;
WHEREAS , a copy of the Plan has been furnished to you and shall be deemed a part of this restricted stock award agreement (“ Agreement ”) as if fully set forth herein and the terms capitalized but not defined herein shall have the meanings set forth in the Plan; and
WHEREAS , you desire to accept the restricted stock award made pursuant to this Agreement.
NOW, THEREFORE, in consideration of and mutual covenants set forth herein and for other valuable consideration hereinafter set forth, the parties agree as follows:
1. The Grant . Subject to the conditions set forth below, the Company hereby grants you effective as of the Date of Grant set forth in the Notice of Grant, as a matter of separate inducement but not in lieu of any salary or other compensation for your services for the Company, an award (the “ Award ”) consisting of the aggregate number of Shares set forth in the Notice of Grant in accordance with the terms and conditions set forth herein, in the Notice of Grant, and in the Plan.
2.      Escrow of Restricted Shares . The Company shall evidence the Restricted Shares in the manner that it deems appropriate. The Company may issue in your name a certificate or certificates representing the Restricted Shares and retain that certificate or those certificates until the restrictions on such Restricted Shares expire as contemplated in Section 5 of this Agreement and described in the Notice of Grant or the Restricted Shares are forfeited as described in Sections 4 and 6 of this Agreement. If the Company certificates the Restricted Shares, you shall execute one or more stock powers in blank for those certificates and deliver those stock powers to the Company. The Company shall hold the Restricted Shares and the related stock powers pursuant to the terms of this Agreement, if applicable, until such time as (a) a certificate or certificates for the Restricted Shares are delivered to you, (b) the Restricted Shares are otherwise transferred to you free of restrictions, or (c) the Restricted Shares are canceled and forfeited pursuant to this Agreement.

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Exhibit 10.49

3.      Ownership of Restricted Shares . From and after the time the Restricted Shares are issued in your name, you will be entitled to all the rights of absolute ownership of the Restricted Shares, including the right to vote those Shares and to receive dividends thereon if, as, and when declared by the Board, subject, however, to the terms, conditions and restrictions set forth in this Agreement; provided, however, that each dividend payment will be made no later than thirty (30) days following the date the dividends are paid to the holders of Shares generally.
4.      Restrictions; Forfeiture . The Restricted Shares are restricted in that they may not be sold, transferred or otherwise alienated or hypothecated until these restrictions are removed or expire as contemplated in Section 5 of this Agreement and as described in the Notice of Grant. The Restricted Shares are also restricted in the sense that they may be forfeited to the Company. You hereby agree that if the Restricted Shares are forfeited, as provided in Section 6, the Company shall have the right to deliver the Restricted Shares to the Company’s transfer agent for, at the Company’s election, cancellation or transfer to the Company.
5.      Expiration of Restrictions and Risk of Forfeiture . The restrictions on the Restricted Shares granted pursuant to this Agreement will expire and the Restricted Shares will become transferable, except to the extent provided in Section 10 of this Agreement, and nonforfeitable as set forth in the Notice of Grant and in Section 6 of this Agreement, provided that you remain in the employ of, or a service provider to, the Company or its Subsidiaries until the applicable dates and times set forth therein. The period of time beginning on the Date of Grant specified in the Notice of Grant and ending on the final vesting date specified in the Notice Grant is referred to herein as the “ Service Period .” Restricted Shares that become vested and non-forfeitable as provided in this Agreement are referred to herein as “ Vested Shares .”
6.      Termination of Services .
(a)      Termination Generally . Subject to subsections (b), (c) and (d), if your employment relationship with the Company or any of its Subsidiaries is terminated for any reason, then those Restricted Shares for which the restrictions have not lapsed as of the date of termination shall become null and void and those Restricted Shares shall be forfeited to the Company. The Restricted Shares for which the restrictions have lapsed as of the date of such termination shall not be forfeited to the Company.
(b)      Death or Disability . In the event of termination of your employment due to your (i) death or (ii) total and permanent disability, as determined by the Committee in its sole discretion, in either case, before all of the Restricted Shares have become Vested Shares, you will forfeit a number of Restricted Shares equal to the number of Restricted Shares specified in Notice of Grant times the percentage that (A) the number of days beginning on the day on which the termination due to death or disability occurs and ending on the last day of the Service Period, (B) bears to the total number of days in the Service Period, and any remaining Restricted Shares that are not vested will become Vested Shares; provided, however, that any fractional Shares will become null and void and automatically forfeited to the Company.
(c)      Special Involuntary Termination . In the event of a Special Involuntary Termination, all of the Restricted Shares will become Vested Shares.

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Exhibit 10.49

(d)      Effect of Employment Agreement . Notwithstanding any provision herein to the contrary, in the event of any inconsistency between this Section 6 and any employment, change in control, or similar agreement entered into by and between you and the Company, the terms of the employment, change in control or similar agreement shall control.
7.      Leave of Absence . With respect to the Award, the Company may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company, provided that rights to the Restricted Shares during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began.
8.      Delivery of Shares . Promptly following the expiration of the restrictions on the Restricted Shares as contemplated in Section 5 of this Agreement, the Company shall cause to be issued and delivered to you or your designee a certificate or other evidence of the number of Restricted Shares as to which restrictions have lapsed, free of any restrictive legend relating to the lapsed restrictions, upon receipt by the Company of any tax withholding as may be requested pursuant to Section 9. The value of such Restricted Shares shall not bear any interest owing to the passage of time.
9.      Payment of Taxes . The Company may require you to pay to the Company (or the Company’s Subsidiary if you are an employee of a Subsidiary of the Company), an amount the Company deems necessary to satisfy its (or its Subsidiary’s) current or future withholding with respect to federal, state or local income or other taxes that you incur as a result of the Award. With respect to any tax withholding and to the extent permissible pursuant to Rule 16b-3 under the Exchange Act, you may (a) direct the Company to withhold from the Shares to be issued to you under this Agreement the number of Shares necessary to satisfy the Company’s withholding of such taxes, which determination will be based on the Shares’ Fair Market Value at the time such determination is made; (b) deliver to the Company Shares sufficient to satisfy the Company’s tax withholding, based on the Shares’ Fair Market Value at the time such determination is made; or (c) deliver cash to the Company sufficient to satisfy its tax withholding obligations. If you desire to elect to use the stock withholding option described in subparagraph (a), you must make the election at the time and in the manner the Company prescribes and the maximum number of Shares that may be so withheld or surrendered shall be the number of Shares that have an aggregate Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, foreign and/or local tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment with respect to the Award. The Company, in its discretion, may deny your request to satisfy its tax withholding obligations using a method described under subparagraph (a) or (b). In the event the Company determines that the aggregate Fair Market Value of the Shares withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you must pay to the Company, in cash, the amount of that deficiency immediately upon the Company’s request.
10.      Compliance with Securities Law . Notwithstanding any provision of this Agreement to the contrary, the issuance of Shares (including Restricted Shares) will be subject to compliance

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Exhibit 10.49

with all applicable requirements of federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Shares may then be listed. No Shares will be issued hereunder if such issuance would constitute a violation of any applicable federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed. In addition, Shares will not be issued hereunder unless 1.%2. a registration statement under the Securities Act is at the time of issuance in effect with respect to the Shares issued or 2.%2. in the opinion of legal counsel to the Company, the Shares issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any Shares subject to the Award will relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority has not been obtained. As a condition to any issuance hereunder, the Company may require you to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company. From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock exchanges, and other appropriate Persons to make Shares available for issuance.
11.      Legends . The Company may at any time place legends referencing any restrictions imposed on the Shares pursuant to Sections 4 or 10 of this Agreement on all certificates representing Shares issued with respect to this Award.
12.      Right of the Company and Subsidiaries to Terminate Services . Nothing in this Agreement confers upon you the right to continue in the employ of or performing services for the Company or any Subsidiary, or interfere in any way with the rights of the Company or any Subsidiary to terminate your employment or service relationship at any time.
13.      Furnish Information . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.
14.      Remedies . The Company shall be entitled to recover from you reasonable attorneys’ fees incurred in connection with the successful enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.
15.      No Liability for Good Faith Determinations . The Company and the members of the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Shares granted hereunder.
16.      Execution of Receipts and Releases . Any payment of cash or any issuance or transfer of Shares or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, will, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. In addition, the Company may require you or your legal representative,

4

US 4550646v.2

Exhibit 10.49

heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a general release of all claims in favor of the Company, any Affiliate and the employees, officers, stockholders or board members of the foregoing in such form as the Company may determine.
17.      Clawback . This Agreement is subject to any written clawback policies that the Company, with the approval of the Board or the Committee, may adopt. Any such policy may subject your Restricted Shares and amounts paid or realized with respect to the Restricted Shares under this Agreement to reduction, cancelation, forfeiture or recoupment if certain specified events or wrongful conduct occur, including but not limited to an accounting restatement due to the Company’s material noncompliance with financial reporting regulations or other events or wrongful conduct specified in any such clawback policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission and that the Company determines should apply to this Agreement.
18.      No Guarantee of Interests . The Board and the Company do not guarantee the Shares from loss or depreciation.
19.      Company Records . Records of the Company or its Subsidiaries regarding your period of service, termination of service and the reason(s) therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
20.      Notice . All notices required or permitted under this Agreement must be in writing and personally delivered or sent by mail and shall be deemed to be delivered on the date on which it is actually received by the person to whom it is properly addressed or if earlier the date it is sent via certified United States mail.
21.      Waiver of Notice . Any person entitled to notice hereunder may waive such notice in writing.
22.      Information Confidential . As partial consideration for the granting of the Award hereunder, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to the terms and conditions of this Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you. Nothing in this Agreement will prevent you from: (a) making a good faith report of possible violations of applicable law to any governmental agency or entity or (b) making disclosures that are protected under the whistleblower provisions of applicable law. For the avoidance of doubt, nothing herein shall prevent you from making a disclosure that: (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Further, an individual who files a lawsuit for retaliation by an employer of reporting a suspected violation of law may make

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Exhibit 10.49

disclosures without violating this Section 22 to the attorney of the individual and use such information in the court proceeding.
23.      Successors . This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.
24.      Severability . If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.
25.      Company Action . Any action required of the Company shall be by resolution of the Board or by a person or entity authorized to act by resolution of the Board.
26.      Headings . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.
27.      Governing Law . All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of Texas, without giving any effect to any conflict of law provisions thereof, except to the extent Texas state law is preempted by federal law. The obligation of the Company to sell and deliver Shares hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Shares.
28.      Consent to Texas Jurisdiction and Venue . You hereby consent and agree that state courts located in Dallas, Texas and the United States District Court for the Northern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the Restricted Shares or this Agreement. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to any such jurisdiction as an inconvenient forum.
29.      Amendment . This Agreement may be amended the Board or by the Committee at any time (a) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in any federal or state, tax or securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Award; or (b) other than in the circumstances described in clause (a) or provided in the Plan, with your consent.
30.      The Plan . This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan.
31.      Defined Terms .
(a)      “ Adverse Change ” means (i) a change in the city in which you are required to work regularly, (ii) a substantial increase in travel requirements of employment, (iii) a substantial reduction in duties of the type previously performed by you, or (iv) a significant reduction in your

6

US 4550646v.2

Exhibit 10.49

compensation or benefits (other than bonuses and other discretionary items of compensation) that does not apply generally to employees of the Company or its successor.
(b)      “ Affiliate ” has the meaning provided in Rule 12b-2 under the Exchange Act.
(c)      “ Beneficial Owner ” has the meaning provided in Rule 13d-3 under the Exchange Act.
(d)      “ Cause ” means:
(i)      An act or acts of dishonesty on your part constituting a felony or serious misdemeanor and resulting or intended to result directly in gain or personal enrichment at the expense of the Company;
(ii)      Gross or willful and wanton negligence in the performance of your material and substantial duties of employment with the Company; or
(iii)      Your conviction of a felony involving moral turpitude.
The existence of Cause shall be determined by the Committee, in its sole and absolute discretion.
(e)      “ Change in Control ” means the occurrence of any of the following after the Date of Grant:
(i)      Any Person, other than (A) the Company or any of its Subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing more than 40% of the combined voting power of the Company’s then outstanding securities, or more than 40% of the then outstanding common stock of the Company, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (iii)(A) below.
(ii)      The individuals who as of the Date of Grant constitute the Board and any New Director cease for any reason to constitute a majority of the Board.
(iii)      There is consummated a merger or consolidation of the Company or any direct or indirect Subsidiary of the Company with any other corporation, except if:
(A)    the merger or consolidation results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60% of the combined voting power of the voting

7

US 4550646v.2

Exhibit 10.49

securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or
(B)    the merger or consolidation is effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly, or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing more than 40% of the combined voting power of the Company’s then outstanding securities.
(iv)      The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least 60% of the combined voting power of the voting securities of which is owned by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
(f)      “ New Director ” means an individual whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the Date of Grant or whose election or nomination for election was previously so approved or recommended. However, “New Director” shall not include a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation relating to the election of directors of the Company.
(g)      “ Person ” has the meaning given in section 3(a)(9) of the Exchange Act as modified and used in sections 13(d) and 14(d) of the Exchange Act.
(h)      “ Special Involuntary Termination ” means the occurrence of (1) or (2) below within 60 days prior to, or at any time after, a Change in Control, where (1) is termination of your employment with the Company (including Subsidiaries of the Company) by the Company for any reason other than Cause and (2) is your resignation from employment with the Company (including Subsidiaries of the Company) within 90 days after an Adverse Change by the Company (including Subsidiaries of the Company) in the terms of your employment.
[Remainder of page intentionally left blank]



8

US 4550646v.2


Exhibit 10.50

HOLLYFRONTIER CORPORATION
NOTICE OF GRANT OF RESTRICTED STOCK
(Time Vesting)
Pursuant to the terms and conditions of the Plan (as defined below), and the associated Restricted Stock Agreement which has been made separately available to you (your “ Agreement ”), you are hereby issued Shares subject to certain restrictions thereon and under the conditions set forth in this Notice of Grant of Restricted Stock (the “ Notice ”), in the Agreement, and in the Plan (the “ Restricted Shares ”). Capitalized terms used but not defined herein shall have the meanings set forth in the Plan or your Agreement. You may obtain a copy of the Plan and a copy of the prospectus related to the Shares by following the instructions attached as Appendix A . Additionally, you may request a copy of the Plan or the prospectus by contacting Cara Whitesel at Cara.Whitesel@hollyfrontier.com or 214.954.6530.
Grantee :        ____________
Date of Grant :        _________, 2016 (the “ Date of Grant ”)
Number of Shares :    __________
Plan:
The HollyFrontier Corporation Long-Term Incentive Compensation Plan (the “ Plan ”):
Vesting Schedule :
The restrictions on all of the Restricted Shares granted pursuant to the Agreement will expire and the Restricted Shares will become transferable and non-forfeitable according to the following schedule (or on the first business day thereafter if the date below falls on a weekend); provided, that (except as otherwise provided in Section 6 of your Agreement) you remain in the employ of, or a service provider to, the Company or its Subsidiaries continuously from the Date of Grant through such vesting dates.
On or After Each of the Following Vesting Dates
Cumulative Portion of Shares as to Which the Restricted Shares are Transferable and Nonforfeitable
December 15, 2017
One-third
December 15, 2018
One-third
December 15, 2019
One-third

Except as otherwise provided in Section 6 of your Agreement, all Restricted Shares that have not become vested and non-forfeitable pursuant to this Notice will be null and void and forfeited to the Company in the event of your termination by the Company or its Subsidiaries for any reason.
Unless you make an election under section 83(b) of the Code (described in the following paragraph), vesting of the Shares will be included in your income in an amount equal to the closing price of the Shares on the date of vesting (or if such day is not a business day, the next business day

A-1
US 4550641v.2


Exhibit 10.50

after such date). By accepting the Restricted Shares you acknowledge and agree that (a) you are not relying upon any determination by the Company, its affiliates, or any of their respective employees, directors, officers, attorneys or agents (collectively, the “ Company Parties ”) of the Fair Market Value of the Shares on the Date of Grant, (b) you are not relying upon any written or oral statement or representation of the Company Parties regarding the tax effects associated with this Notice and the Agreement and your receipt, holding and vesting of the Restricted Shares, (c) in accepting the Restricted Shares you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted and (d) a copy of the Agreement and the Plan has been made available to you. By accepting the Restricted Shares you release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with this Notice and the Agreement and your receipt, holding and vesting of the Restricted Shares.
Furthermore, you understand and acknowledge that you should consult with your tax advisor regarding the advisability of filing with the Internal Revenue Service an election under section 83(b) of the Code with respect to the Restricted Shares for which the restrictions have not lapsed. This election must be filed no later than thirty (30) days after Date of Grant set forth in this Notice of Grant of Restricted Stock. This time period cannot be extended. You acknowledge (a) that you have been advised to consult with a tax advisor regarding the tax consequences of the award of the Restricted Shares and (b) that timely filing of a section 83(b) election is your sole responsibility, even if you request the Company or its representative to file such election on your behalf.
HollyFrontier Corporation

    
George J. Damiris, Chief Executive Officer and President

Appendix A


A-2
US 4550641v.2

Exhibit 10.56

SECOND AMENDMENT TO THE
HOLLYFRONTIER CORPORATION
OMNIBUS INCENTIVE COMPENSATION PLAN

THIS SECOND AMENDMENT (the “ Second Amendment ”) to the HollyFrontier Corporation Omnibus Incentive Compensation Plan, as amended from time to time (the “ Plan ”), is made by HollyFrontier Corporation (the “ Company ”).

W I T N E S S E T H :

WHEREAS , the Company previously adopted the Plan, under which the Company is authorized to grant equity-based incentive awards to certain employees and other service providers of the Company and its subsidiaries;

WHEREAS , Section 7(a) of the Plan provides that the Company’s board of directors (the “ Board ”) or the Committee (as defined in the Plan) may amend the Plan from time to time without approval of the stockholders of the Company, except that any amendment to the Plan of which approval of the stockholders is required by any federal or state law or regulation or the rules of any stock exchange on which the shares of the Company are listed or quoted must be approved by the stockholders of the Company; and

WHEREAS , the Board has determined that it is desirable to modify the tax withholding provisions of the Plan to reflect changes allowed under Financial Accounting Standards Board Accounting Standards Codification Topic 718 to withhold taxes in amounts not to exceed the maximum statutory tax rate in each employee’s relevant tax jurisdiction.

NOW, THEREFORE, the Plan shall be amended effective as of January 1, 2017 as set forth below:

1.     Section 10(b) of the Plan is hereby deleted in its entirety and replaced by the following:

(b) Taxes . Each of the Company and any Subsidiary is authorized to withhold from any Award granted, or any payment relating to an Award under the Plan, including from a distribution of Shares, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include the authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of the federal, state, foreign and/or local tax withholding obligations, including payroll tax withholding, with respect to a Participant in amounts up to the maximum statutory rate in the Participant’s relevant tax jurisdiction, as determined in the discretion of the Committee and pursuant to procedures established by the Company.



Exhibit 10.56

RESOLVED FURTHER , that except as provided above, the Plan shall continue to read in the current state.

[Remainder of Page Intentionally Left Blank]




Exhibit 10.56


IN WITNESS WHEREOF , the Company has caused the execution of this Second Amendment by its duly authorized officer.
HOLLYFRONTIER CORPORATION
                

        
By:      /s/ George J. Damiris                 
Name:      George J. Damiris
Title: Chief Executive Officer and President

Date: November 9, 2016





EXHIBIT 21.1

HOLLYFRONTIER CORPORATION
SUBSIDIARIES OF REGISTRANT

State or Country of Incorporation
Name of Entity          or Organization
7037619 Canada Inc.        Canada
9952110 Canada Inc.        Canada
Black Eagle LLC        Delaware
Cheyenne Logistics LLC (3)     Delaware
Cheyenne Pipeline LLC (joint venture) (3)     Texas
El Dorado Logistics LLC (3)     Delaware
El Dorado Operating LLC     (3)     Delaware
El Dorado Osage LLC        Delaware
El Paso Operating LLC        Delaware
Eagle Consolidation LLC        Delaware
Ethanol Management Company LLC    Delaware
Frontier Aspen LLC (joint venture) (3)     Delaware
Frontier Pipeline LLC        Delaware
Frontier Refining & Marketing LLC    Delaware
HEP Casper SLC LLC (3)         Delaware
HEP Cheyenne LLC (3)         Delaware     
HEP El Dorado LLC (3)         Delaware
HEP Fin-Tex/Trust-River, L.P. (3)     Texas
HEP Logistics GP, L.L.C (3)     Delaware
HEP Logistics Holdings, L.P.    Delaware
HEP Mountain Home, L.L.C. (3)     Delaware
HEP Navajo Southern, L.P. (3)     Delaware
HEP Pipeline Assets, Limited Partnership (3)     Delaware
HEP Pipeline GP, L.L.C. (3)     Delaware
HEP Pipeline, L.L.C. (3)         Delaware
HEP Refining Assets, L.P. (3)     Delaware
HEP Refining GP, L.L.C. (3)     Delaware
HEP Refining, L.L.C. (3)         Delaware
HEP SLC, LLC (3)         Delaware
HEP Tulsa LLC (3)         Delaware
HEP UNEV Holdings LLC (3)     Delaware
HEP UNEV Pipeline LLC     (3)     Delaware
HEP Woods Cross, L.L.C. (3)     Delaware
Holly Biofuels LLC        Delaware
Holly Energy Finance Corp. (3)     Delaware
Holly Energy Partners, L.P. (2), (3)     Delaware
Holly Energy Partners – Operating, L.P. (2), (3)     Delaware
Holly Energy Storage – Lovington LLC (3)     Delaware
Holly Logistics Limited LLC    Delaware
Holly Logistic Services, L.L.C.    Delaware
Holly Petroleum, Inc.        Delaware
Holly Realty, LLC        Delaware
Holly Refining Communications, Inc.    Delaware
HollyFrontier Asphalt Company LLC    Delaware
HollyFrontier Cheyenne Refining LLC    Delaware
HollyFrontier Cyprus Limited    Cyprus
HollyFrontier El Dorado Refining LLC    Delaware
HollyFrontier Holdings LLC    Delaware
HollyFrontier Luxembourg Holding Company    Luxembourg
HollyFrontier Navajo Refining LLC    Delaware
HollyFrontier Netherlands B.V.    Netherlands
HollyFrontier Payroll Services, Inc.    Delaware
HollyFrontier Refining & Marketing LLC    Delaware
HollyFrontier Services LLC    Delaware
HollyFrontier Transportation LLC    Delaware
HollyFrontier Tulsa Refining LLC    Delaware
HollyFrontier Woods Cross Refining LLC    Delaware
Hollymarks, LLC        Delaware
HRM Realty, LLC        Delaware
Jia Shi Lubricants Trading (Shanghai) Co. Ltd.    China
Lea Refining Company        Delaware
Lovington-Artesia, L.L.C. (3)     Delaware
Navajo Holdings, Inc.        New Mexico
Navajo Pipeline Co., L.P. (1)     Delaware
Navajo Pipeline GP, L.L.C.    Delaware
Navajo Pipeline LP, L.L.C.    Delaware
Osage Pipe Line Company, LLC (joint venture) (3)     Delaware
Petro-Canada America Lubricants Inc.    Delaware
Petro-Canada Asia Pacific Holding Co. Ltd.    Canada
Petro-Canada Europe Lubricants Limited    U.K.




    
Petro-Canada Lubricants Inc.    Canada
Roadrunner Pipeline, L.L.C. (3)     Delaware     
Sabine Biofuels II, LLC (joint venture) (3)     Delaware
SLC Pipeline LLC (joint venture) (3)     Delaware
UNEV Pipeline, LLC (joint venture) (3)     Delaware
Wainoco Oil and Gas Company    Delaware
Wainoco Resources, Inc.        Delaware
Whispering Eagle LLC (joint venture)    Delaware
Whispering Eagle Holdings LLC    Delaware
Woods Cross Operating LLC (3)     Delaware
    
    
(1)
Navajo Pipeline Co., L.P. also does business as Navajo Pipeline Co.
(2)
Holly Energy Partners, L.P. and Holly Energy Partners – Operating, L.P. also do business as Holly Energy Partners.
(3)
Represents a subsidiary of Holly Energy Partners, L.P. We have presented these entities in our list of subsidiaries as a result of our reconsolidation of Holly Energy Partners, L.P. on March 1, 2008.


Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
(1)
Registration Statement (Form S-8 No. 333-211557) of HollyFrontier Corporation, and
(2)
Registration Statement (Form S-3 ASR No. 333-208155) pertaining to the sale of common stock on behalf of a selling stockholder of HollyFrontier Corporation;
of our reports dated February 22, 2017, with respect to the consolidated financial statements of HollyFrontier Corporation and the effectiveness of internal control over financial reporting of HollyFrontier Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 2016.

/s/ Ernst & Young LLP
                                
Dallas, Texas
February 22, 2017





Exhibit 31.1

CERTIFICATION
I, George J. Damiris, certify that:

1.
I have reviewed this annual report on Form 10-K of HollyFrontier Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a.
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting


Date: February 22, 2017
 
/s/ George J. Damiris  
 
 
George J. Damiris
 
 
Chief Executive Officer and President





Exhibit 31.2

CERTIFICATION
I, Douglas S. Aron, certify that:

1.
I have reviewed this annual report on Form 10-K of HollyFrontier Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's most recent fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a.
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: February 22, 2017
 
/s/ Douglas S. Aron
 
 
Douglas S. Aron
 
 
Executive Vice President and Chief Financial Officer 




Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE
OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350


In connection with the accompanying report on Form 10-K for the period ending December 31, 2016 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George J. Damaris, Chief Executive Officer of HollyFrontier Corporation (the “Company”) hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: February 22, 2017
 
/s/ George J. Damiris
 
 
George J. Damiris
 
 
Chief Executive Officer and President




Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL
OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350


In connection with the accompanying report on Form 10-K for the period ending December 31, 2016 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas S. Aron, Chief Financial Officer of HollyFrontier Corporation (the “Company”) hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: February 22, 2017
 
/s/ Douglas S. Aron  
 
 
Douglas S. Aron 
 
 
Executive Vice President and Chief Financial Officer