ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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75-1056913
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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2828 N. Harwood, Suite 1300
Dallas, Texas
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75201
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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June 30, 2018 (Unaudited) and December 31, 2017
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Three and Six Months Ended June 30, 2018 and 2017
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Three and Six Months Ended June 30, 2018 and 2017
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Six Months Ended June 30, 2018 and 2017
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Index to Exhibits
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Signatures
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•
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risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in our markets;
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•
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the demand for and supply of crude oil and refined products;
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•
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the spread between market prices for refined products and market prices for crude oil;
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•
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the possibility of constraints on the transportation of refined products;
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•
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the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines;
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•
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effects of governmental and environmental regulations and policies;
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•
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the availability and cost of our financing;
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•
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the effectiveness of our capital investments and marketing strategies;
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•
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our efficiency in carrying out construction projects;
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•
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our ability to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations;
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•
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the possibility of terrorist or cyber attacks and the consequences of any such attacks;
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•
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general economic conditions; and
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•
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other financial, operational and legal risks and uncertainties detailed from time to time in our SEC filings.
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Item 1.
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Financial Statements
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June 30,
2018 |
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December 31, 2017
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||||
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(Unaudited)
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ASSETS
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||||
Current assets:
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|
||||
Cash and cash equivalents
(HEP: $6,656 and $7,776, respectively)
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$
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979,872
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$
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630,757
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||||
Accounts receivable: Product and transportation
(HEP: $13,501 and $12,803, respectively)
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765,111
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659,530
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Crude oil resales
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60,140
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61,203
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825,251
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720,733
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Inventories: Crude oil and refined products
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1,560,336
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1,409,538
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Materials, supplies and other
(HEP: $860 and $916, respectively)
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256,536
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220,554
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1,816,872
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1,630,092
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||
Income taxes receivable
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|
17,873
|
|
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44,337
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|
||
Prepayments and other
(HEP: $2,286 and $1,395, respectively)
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62,604
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36,909
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Total current assets
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3,702,472
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3,062,828
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||||
Properties, plants and equipment, at cost
(HEP: $2,030,244 and $2,011,915, respectively)
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6,615,853
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6,523,789
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Less accumulated depreciation
(HEP: $(446,355) and $(408,599), respectively)
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(1,955,216
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)
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(1,810,515
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)
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4,660,637
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4,713,274
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Other assets: Turnaround costs
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254,484
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231,319
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Goodwill
(HEP: $314,229 and $310,610, respectively)
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2,241,047
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2,244,744
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Intangibles and other
(HEP: $186,605 and $206,167, respectively)
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422,712
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439,989
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2,918,243
|
|
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2,916,052
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Total assets
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$
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11,281,352
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$
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10,692,154
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||||
LIABILITIES AND EQUITY
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||||
Current liabilities:
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||||
Accounts payable
(HEP: $9,148 and $14,637, respectively)
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$
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1,243,289
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$
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1,220,795
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Income taxes payable
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74,849
|
|
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3,159
|
|
||
Accrued liabilities
(HEP: $33,167 and $33,214, respectively)
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237,709
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198,756
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Total current liabilities
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1,555,847
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1,422,710
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||||
Long-term debt
(HEP: $1,395,599 and $1,507,308, respectively)
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2,387,759
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2,498,993
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Deferred income taxes
(HEP: $558 and $525, respectively)
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705,072
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647,785
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Other long-term liabilities
(HEP: $63,374 and $62,590, respectively)
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229,031
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225,726
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Equity:
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|
||||
HollyFrontier stockholders’ equity:
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|
||||
Preferred stock, $1.00 par value – 5,000,000 shares authorized; none issued
|
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—
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—
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Common stock $.01 par value – 320,000,000 shares authorized; 256,015,579 and 256,015,550 shares issued as of June 30, 2018 and December 31, 2017, respectively
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2,560
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2,560
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Additional capital
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4,192,045
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4,132,696
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Retained earnings
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3,831,696
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3,346,615
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Accumulated other comprehensive income
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11,913
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29,869
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Common stock held in treasury, at cost – 79,694,903 and 78,607,928 shares as of June 30, 2018 and December 31, 2017, respectively
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(2,197,853
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)
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(2,140,911
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)
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Total HollyFrontier stockholders’ equity
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5,840,361
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5,370,829
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Noncontrolling interest
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563,282
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526,111
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Total equity
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6,403,643
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5,896,940
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Total liabilities and equity
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$
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11,281,352
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$
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10,692,154
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2018
|
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2017
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2018
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2017
|
||||||||
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Sales and other revenues
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$
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4,471,236
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$
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3,458,864
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$
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8,599,663
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$
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6,539,347
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Operating costs and expenses:
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||||||||
Cost of products sold (exclusive of depreciation and amortization):
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||||||||
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)
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3,595,916
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2,753,459
|
|
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6,943,041
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|
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5,394,634
|
|
||||
Lower of cost or market inventory valuation adjustment
|
|
(106,926
|
)
|
|
83,982
|
|
|
(210,764
|
)
|
|
95,805
|
|
||||
|
|
3,488,990
|
|
|
2,837,441
|
|
|
6,732,277
|
|
|
5,490,439
|
|
||||
Operating expenses (exclusive of depreciation and amortization)
|
|
296,215
|
|
|
316,261
|
|
|
616,503
|
|
|
623,987
|
|
||||
Selling, general and administrative expenses (exclusive of depreciation and amortization)
|
|
68,675
|
|
|
59,803
|
|
|
133,339
|
|
|
117,051
|
|
||||
Depreciation and amortization
|
|
110,379
|
|
|
105,282
|
|
|
214,720
|
|
|
201,322
|
|
||||
Long-lived asset impairment
|
|
—
|
|
|
19,247
|
|
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—
|
|
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19,247
|
|
||||
Total operating costs and expenses
|
|
3,964,259
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|
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3,338,034
|
|
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7,696,839
|
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6,452,046
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|
||||
Income from operations
|
|
506,977
|
|
|
120,830
|
|
|
902,824
|
|
|
87,301
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
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||||||||
Earnings of equity method investments
|
|
1,734
|
|
|
4,053
|
|
|
3,013
|
|
|
5,893
|
|
||||
Interest income
|
|
2,934
|
|
|
176
|
|
|
5,524
|
|
|
995
|
|
||||
Interest expense
|
|
(32,324
|
)
|
|
(29,645
|
)
|
|
(65,047
|
)
|
|
(56,803
|
)
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,225
|
)
|
||||
Gain (loss) on foreign currency transactions
|
|
(325
|
)
|
|
10,328
|
|
|
5,235
|
|
|
395
|
|
||||
Gain on foreign currency swap contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,545
|
|
||||
Other, net
|
|
1,364
|
|
|
327
|
|
|
2,710
|
|
|
1,397
|
|
||||
|
|
(26,617
|
)
|
|
(14,761
|
)
|
|
(48,565
|
)
|
|
(35,803
|
)
|
||||
Income before income taxes
|
|
480,360
|
|
|
106,069
|
|
|
854,259
|
|
|
51,498
|
|
||||
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
||||||||
Current
|
|
88,283
|
|
|
32,251
|
|
|
145,934
|
|
|
7,935
|
|
||||
Deferred
|
|
29,164
|
|
|
(255
|
)
|
|
56,550
|
|
|
7,272
|
|
||||
|
|
117,447
|
|
|
31,996
|
|
|
202,484
|
|
|
15,207
|
|
||||
Net income
|
|
362,913
|
|
|
74,073
|
|
|
651,775
|
|
|
36,291
|
|
||||
Less net income attributable to noncontrolling interest
|
|
17,406
|
|
|
16,306
|
|
|
38,177
|
|
|
23,992
|
|
||||
Net income attributable to HollyFrontier stockholders
|
|
$
|
345,507
|
|
|
$
|
57,767
|
|
|
$
|
613,598
|
|
|
$
|
12,299
|
|
Earnings per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.96
|
|
|
$
|
0.33
|
|
|
$
|
3.47
|
|
|
$
|
0.07
|
|
Diluted
|
|
$
|
1.94
|
|
|
$
|
0.33
|
|
|
$
|
3.44
|
|
|
$
|
0.07
|
|
Cash dividends declared per common share
|
|
$
|
0.33
|
|
|
$
|
0.33
|
|
|
$
|
0.66
|
|
|
$
|
0.66
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
175,899
|
|
|
176,147
|
|
|
176,256
|
|
|
176,141
|
|
||||
Diluted
|
|
177,586
|
|
|
176,302
|
|
|
177,820
|
|
|
176,490
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
362,913
|
|
|
$
|
74,073
|
|
|
$
|
651,775
|
|
|
$
|
36,291
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
|
(11,503
|
)
|
|
14,298
|
|
|
(23,443
|
)
|
|
7,585
|
|
||||
Unrealized loss on marketable securities available for sale
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of cash flow hedging instruments
|
|
(4,077
|
)
|
|
1,389
|
|
|
(8,456
|
)
|
|
4,802
|
|
||||
Reclassification adjustments to net income on settlement of cash flow hedging instruments
|
|
5,598
|
|
|
(427
|
)
|
|
4,407
|
|
|
(66
|
)
|
||||
Amortization of unrealized loss attributable to discontinued cash flow hedges
|
|
—
|
|
|
270
|
|
|
—
|
|
|
540
|
|
||||
Net unrealized gain (loss) on hedging instruments
|
|
1,521
|
|
|
1,232
|
|
|
(4,049
|
)
|
|
5,276
|
|
||||
Other comprehensive income (loss) before income taxes
|
|
(9,982
|
)
|
|
15,530
|
|
|
(27,492
|
)
|
|
12,857
|
|
||||
Income tax expense (benefit)
|
|
(2,034
|
)
|
|
4,936
|
|
|
(9,536
|
)
|
|
4,701
|
|
||||
Other comprehensive income (loss)
|
|
(7,948
|
)
|
|
10,594
|
|
|
(17,956
|
)
|
|
8,156
|
|
||||
Total comprehensive income
|
|
354,965
|
|
|
84,667
|
|
|
633,819
|
|
|
44,447
|
|
||||
Less noncontrolling interest in comprehensive income
|
|
17,406
|
|
|
16,239
|
|
|
38,177
|
|
|
23,975
|
|
||||
Comprehensive income attributable to HollyFrontier stockholders
|
|
$
|
337,559
|
|
|
$
|
68,428
|
|
|
$
|
595,642
|
|
|
$
|
20,472
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
651,775
|
|
|
$
|
36,291
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
214,720
|
|
|
201,322
|
|
||
Long-lived asset impairment
|
|
—
|
|
|
19,247
|
|
||
Lower of cost or market inventory valuation adjustment
|
|
(210,764
|
)
|
|
95,805
|
|
||
Earnings of equity method investments, inclusive of distributions
|
|
228
|
|
|
594
|
|
||
(Gain) loss on sale of assets
|
|
(107
|
)
|
|
679
|
|
||
Loss on early extinguishment of debt attributable to unamortized discount
|
|
—
|
|
|
2,475
|
|
||
Deferred income taxes
|
|
56,550
|
|
|
7,272
|
|
||
Equity-based compensation expense
|
|
17,306
|
|
|
16,557
|
|
||
Change in fair value – derivative instruments
|
|
(17,807
|
)
|
|
(5,597
|
)
|
||
(Increase) decrease in current assets:
|
|
|
|
|
||||
Accounts receivable
|
|
(121,144
|
)
|
|
(5,545
|
)
|
||
Inventories
|
|
21,255
|
|
|
60,963
|
|
||
Income taxes receivable
|
|
24,512
|
|
|
66,943
|
|
||
Prepayments and other
|
|
(6,053
|
)
|
|
(9,272
|
)
|
||
Increase (decrease) in current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
61,425
|
|
|
495
|
|
||
Income taxes payable
|
|
72,822
|
|
|
22,340
|
|
||
Accrued liabilities
|
|
35,161
|
|
|
40,141
|
|
||
Turnaround expenditures
|
|
(76,384
|
)
|
|
(86,036
|
)
|
||
Other, net
|
|
4,650
|
|
|
8,724
|
|
||
Net cash provided by operating activities
|
|
728,145
|
|
|
473,398
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Additions to properties, plants and equipment
|
|
(117,907
|
)
|
|
(116,526
|
)
|
||
Additions to properties, plants and equipment – HEP
|
|
(31,570
|
)
|
|
(20,524
|
)
|
||
Purchase of PCLI, net of cash acquired
|
|
—
|
|
|
(870,627
|
)
|
||
Purchases of marketable securities
|
|
—
|
|
|
(41,565
|
)
|
||
Sales and maturities of marketable securities
|
|
—
|
|
|
465,716
|
|
||
Other, net
|
|
3,399
|
|
|
3,017
|
|
||
Net cash used for investing activities
|
|
(146,078
|
)
|
|
(580,509
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings under credit agreements
|
|
305,500
|
|
|
505,000
|
|
||
Repayments under credit agreements
|
|
(417,500
|
)
|
|
(215,000
|
)
|
||
Redemption of senior notes - HEP
|
|
—
|
|
|
(309,750
|
)
|
||
Proceeds from issuance of common units - HEP
|
|
114,831
|
|
|
52,634
|
|
||
Purchase of treasury stock
|
|
(53,743
|
)
|
|
—
|
|
||
Dividends
|
|
(117,500
|
)
|
|
(117,754
|
)
|
||
Distributions to noncontrolling interest
|
|
(60,759
|
)
|
|
(53,776
|
)
|
||
Shares withheld for tax withholding obligations
|
|
(544
|
)
|
|
(274
|
)
|
||
Other, net
|
|
—
|
|
|
(4,546
|
)
|
||
Net cash used for financing activities
|
|
(229,715
|
)
|
|
(143,466
|
)
|
||
|
|
|
|
|
||||
Effect of exchange rate on cash flow
|
|
(3,237
|
)
|
|
324
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
|
||||
Increase (decrease) for the period
|
|
349,115
|
|
|
(250,253
|
)
|
||
Beginning of period
|
|
630,757
|
|
|
710,579
|
|
||
End of period
|
|
$
|
979,872
|
|
|
$
|
460,326
|
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash (paid) received during the period for:
|
|
|
|
|
||||
Interest
|
|
$
|
(64,711
|
)
|
|
$
|
(64,205
|
)
|
Income taxes, net
|
|
$
|
(48,561
|
)
|
|
$
|
80,348
|
|
NOTE 1:
|
Description of Business and Presentation of Financial Statements
|
•
|
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 Petro-Canada Lubricants Inc. (“PCLI”) located in Mississauga, Ontario, which produces base oils and other specialized lubricant products;
|
•
|
owned and operated HollyFrontier Asphalt Company LLC (“HFC Asphalt”), which operates various asphalt terminals in Arizona, New Mexico and Oklahoma; and
|
•
|
owned a
57%
limited partner interest and a non-economic general partner interest in HEP, a variable interest entity (“VIE”).
|
|
|
Three Months Ended June 30, 2017
|
||||||||||
Income Statement
|
|
Prior to Adoption
|
|
Increase
|
|
As Adjusted
|
||||||
|
|
(In thousands)
|
||||||||||
Cost of products sold
|
|
$
|
2,753,440
|
|
|
$
|
19
|
|
|
$
|
2,753,459
|
|
Operating expenses
|
|
$
|
315,652
|
|
|
$
|
609
|
|
|
$
|
316,261
|
|
Selling, general and administrative expenses
|
|
$
|
59,576
|
|
|
$
|
227
|
|
|
$
|
59,803
|
|
Other, net
|
|
$
|
(528
|
)
|
|
$
|
855
|
|
|
$
|
327
|
|
|
|
Six Months Ended June 30, 2017
|
||||||||||
Income Statement
|
|
Prior to Adoption
|
|
Increase
|
|
As Adjusted
|
||||||
|
|
(In thousands)
|
||||||||||
Cost of products sold
|
|
$
|
5,394,597
|
|
|
$
|
37
|
|
|
$
|
5,394,634
|
|
Operating expenses
|
|
$
|
622,769
|
|
|
$
|
1,218
|
|
|
$
|
623,987
|
|
Selling, general and administrative expenses
|
|
$
|
116,646
|
|
|
$
|
405
|
|
|
$
|
117,051
|
|
Other, net
|
|
$
|
(263
|
)
|
|
$
|
1,660
|
|
|
$
|
1,397
|
|
|
|
Prior to Adoption
|
|
Increase (Decrease)
|
|
As Adjusted
|
||||||
|
|
(In thousands)
|
||||||||||
Accounts receivable: Product and transportation
|
|
$
|
659,530
|
|
|
$
|
(8,198
|
)
|
|
$
|
651,332
|
|
Inventories: Crude oil and refined products
|
|
$
|
1,409,538
|
|
|
$
|
5,124
|
|
|
$
|
1,414,662
|
|
Accounts payable
|
|
$
|
1,220,795
|
|
|
$
|
7,336
|
|
|
$
|
1,228,131
|
|
Deferred income taxes
|
|
$
|
647,785
|
|
|
$
|
(2,963
|
)
|
|
$
|
644,822
|
|
Retained earnings
|
|
$
|
3,346,615
|
|
|
$
|
(7,447
|
)
|
|
$
|
3,339,168
|
|
NOTE 2:
|
Holly Energy Partners
|
NOTE 3:
|
Revenues from Contracts with Customers
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Revenues by type
|
|
|
|
|
|
|
|
|
||||||||
Refined product revenues
|
|
|
|
|
|
|
|
|
||||||||
Transportation fuels
(1)
|
|
$
|
3,520,014
|
|
|
$
|
2,720,243
|
|
|
$
|
6,594,402
|
|
|
$
|
5,070,747
|
|
Specialty lubricant products
(2)
|
|
417,177
|
|
|
394,485
|
|
|
816,216
|
|
|
684,338
|
|
||||
Asphalt, fuel oil and other products
(3)
|
|
243,396
|
|
|
190,438
|
|
|
451,153
|
|
|
337,930
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total refined product revenues
|
|
4,180,587
|
|
|
3,305,166
|
|
|
7,861,771
|
|
|
6,093,015
|
|
||||
Excess crude oil revenues
(4)
|
|
256,090
|
|
|
121,566
|
|
|
652,806
|
|
|
380,307
|
|
||||
Transportation and logistic services
|
|
24,746
|
|
|
15,990
|
|
|
52,203
|
|
|
32,599
|
|
||||
Other revenues
(5)
|
|
9,813
|
|
|
16,142
|
|
|
32,883
|
|
|
33,426
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total sales and other revenues
|
|
$
|
4,471,236
|
|
|
$
|
3,458,864
|
|
|
$
|
8,599,663
|
|
|
$
|
6,539,347
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Refined product revenues by market
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
|
|
|
|
|
|
|
||||||||
Mid-Continent
|
|
$
|
2,231,700
|
|
|
$
|
1,825,012
|
|
|
$
|
4,121,246
|
|
|
$
|
3,363,257
|
|
Southwest
|
|
1,002,075
|
|
|
694,624
|
|
|
1,848,553
|
|
|
1,258,503
|
|
||||
Rocky Mountains
|
|
610,970
|
|
|
477,038
|
|
|
1,241,872
|
|
|
960,823
|
|
||||
Northeast
|
|
93,179
|
|
|
76,399
|
|
|
176,036
|
|
|
129,116
|
|
||||
Canada
|
|
191,939
|
|
|
182,797
|
|
|
372,361
|
|
|
300,755
|
|
||||
Europe and Asia
|
|
50,724
|
|
|
49,296
|
|
|
101,703
|
|
|
80,561
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total refined product revenues
|
|
$
|
4,180,587
|
|
|
$
|
3,305,166
|
|
|
$
|
7,861,771
|
|
|
$
|
6,093,015
|
|
(1)
|
Transportation fuels consist of gasoline, diesel and jet fuel.
|
(2)
|
Specialty lubricant products consist of base oil, waxes, finished lubricants and other specialty fluids.
|
(3)
|
Asphalt, fuel oil and other products revenue consist of revenues attributable to our Refining and Lubricants and Specialty Products segments of
$192,884
and
$50,512
, respectively, for the
three
months ended
June 30, 2018
,
$140,923
and
$49,515
, respectively, for the
three
months ended
June 30, 2017
,
$354,840
and
$96,313
, respectively, for the
six
months ended
June 30, 2018
, and
$256,999
and
$80,931
, respectively, for the
six
months ended
June 30, 2017
.
|
(4)
|
Excess crude oil revenues represent sales of purchased crude oil inventory that at times exceeds the supply needs of our refineries.
|
(5)
|
Other revenues are principally attributable to our Refining segment.
|
|
|
January 1, 2018
|
|
Increase
|
|
Recognized as Revenue
|
|
June 30, 2018
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Accrued liabilities
|
|
$
|
179
|
|
|
$
|
3,778
|
|
|
$
|
(1,261
|
)
|
|
$
|
2,696
|
|
|
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
|||||
|
|
(In thousands)
|
|||||||||||||
Refined product sales volumes (barrels)
|
|
14,255
|
|
|
19,767
|
|
|
531
|
|
|
—
|
|
|
34,553
|
|
|
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
HEP contractual minimum revenues
|
|
$
|
21,109
|
|
|
$
|
41,608
|
|
|
$
|
17,828
|
|
|
$
|
12,552
|
|
|
$
|
93,097
|
|
NOTE 4:
|
Fair Value Measurements
|
•
|
(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.
|
|
|
|
|
Fair Value by Input Level
|
||||||||||||
|
|
Carrying Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
(In thousands)
|
||||||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
|
$
|
21,491
|
|
|
$
|
—
|
|
|
$
|
21,491
|
|
|
$
|
—
|
|
Commodity price swaps
|
|
200
|
|
|
—
|
|
|
200
|
|
|
—
|
|
||||
Commodity forward contracts
|
|
2,275
|
|
|
—
|
|
|
2,275
|
|
|
—
|
|
||||
Total assets
|
|
$
|
23,966
|
|
|
$
|
—
|
|
|
$
|
23,966
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
NYMEX futures contracts
|
|
$
|
7,098
|
|
|
$
|
7,098
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity price swaps
|
|
3,934
|
|
|
—
|
|
|
3,934
|
|
|
—
|
|
||||
Commodity forward contracts
|
|
3,720
|
|
|
—
|
|
|
3,720
|
|
|
—
|
|
||||
RINs credit obligations
(1)
|
|
4,226
|
|
|
—
|
|
|
4,226
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
18,978
|
|
|
$
|
7,098
|
|
|
$
|
11,880
|
|
|
$
|
—
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Commodity forward contracts
|
|
$
|
3,840
|
|
|
$
|
—
|
|
|
$
|
3,840
|
|
|
$
|
—
|
|
Total assets
|
|
$
|
3,840
|
|
|
$
|
—
|
|
|
$
|
3,840
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
NYMEX futures contracts
|
|
$
|
3,360
|
|
|
$
|
3,360
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity price swaps
|
|
2,424
|
|
|
—
|
|
|
2,424
|
|
|
—
|
|
||||
Commodity forward contracts
|
|
1,020
|
|
|
—
|
|
|
1,020
|
|
|
—
|
|
||||
RINs credit obligations
(1)
|
|
8,931
|
|
|
—
|
|
|
8,931
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
15,735
|
|
|
$
|
3,360
|
|
|
$
|
12,375
|
|
|
$
|
—
|
|
(1)
|
Represent obligations for RINs credits for which we do not have sufficient quantities at
June 30, 2018
and
December 31, 2017
to satisfy our Environmental Protection Agency (“EPA”) regulatory blending requirements.
|
NOTE 5:
|
Earnings Per Share
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||
Net income attributable to HollyFrontier stockholders
|
|
$
|
345,507
|
|
|
$
|
57,767
|
|
|
$
|
613,598
|
|
|
$
|
12,299
|
|
Participating securities’ (restricted stock) share in earnings
|
|
1,196
|
|
|
373
|
|
|
2,147
|
|
|
752
|
|
||||
Net income attributable to common shares
|
|
$
|
344,311
|
|
|
$
|
57,394
|
|
|
$
|
611,451
|
|
|
$
|
11,547
|
|
Average number of shares of common stock outstanding
|
|
175,899
|
|
|
176,147
|
|
|
176,256
|
|
|
176,141
|
|
||||
Effect of dilutive variable restricted shares and
performance share units
(1)
|
|
1,687
|
|
|
155
|
|
|
1,564
|
|
|
349
|
|
||||
Average number of shares of common stock outstanding assuming dilution
|
|
177,586
|
|
|
176,302
|
|
|
177,820
|
|
|
176,490
|
|
||||
Basic earnings per share
|
|
$
|
1.96
|
|
|
$
|
0.33
|
|
|
$
|
3.47
|
|
|
$
|
0.07
|
|
Diluted earnings per share
|
|
$
|
1.94
|
|
|
$
|
0.33
|
|
|
$
|
3.44
|
|
|
$
|
0.07
|
|
(1)
Excludes anti-dilutive restricted and performance share units of:
|
|
648
|
|
|
140
|
|
|
753
|
|
|
133
|
|
NOTE 6:
|
Stock-Based Compensation
|
Restricted Stock and Restricted Stock Units
|
|
Grants
|
|
Weighted Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value ($000)
|
|||||
|
|
|
|
|
|
|
|||||
Outstanding at January 1, 2018 (non-vested)
|
|
1,726,188
|
|
|
$
|
33.51
|
|
|
|
||
Granted
|
|
27,384
|
|
|
52.41
|
|
|
|
|||
Vesting (transfer/conversion to common stock)
|
|
(28,445
|
)
|
|
31.20
|
|
|
|
|||
Forfeited
|
|
(94,559
|
)
|
|
34.56
|
|
|
|
|||
Outstanding at June 30, 2018 (non-vested)
|
|
1,630,568
|
|
|
$
|
33.81
|
|
|
$
|
111,466
|
|
Performance Share Units
|
|
Grants
|
|
|
|
|
|
Outstanding at January 1, 2018 (non-vested)
|
|
692,661
|
|
Forfeited
|
|
(44,008
|
)
|
Outstanding at June 30, 2018 (non-vested)
|
|
648,653
|
|
NOTE 7:
|
Inventories
|
|
|
June 30,
2018 |
|
December 31, 2017
|
||||
|
|
(In thousands)
|
||||||
Crude oil
|
|
$
|
551,484
|
|
|
$
|
581,417
|
|
Other raw materials and unfinished products
(1)
|
|
385,242
|
|
|
396,618
|
|
||
Finished products
(2)
|
|
636,679
|
|
|
655,336
|
|
||
Lower of cost or market reserve
|
|
(13,069
|
)
|
|
(223,833
|
)
|
||
Process chemicals
(3)
|
|
28,649
|
|
|
24,792
|
|
||
Repair and maintenance supplies and other
(4)
|
|
227,887
|
|
|
195,762
|
|
||
Total inventory
|
|
$
|
1,816,872
|
|
|
$
|
1,630,092
|
|
(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.
|
NOTE 8:
|
Environmental
|
NOTE 9:
|
Debt
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
(In thousands)
|
||||||
HollyFrontier 5.875% Senior Notes
|
|
|
|
|
||||
Principal
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
Unamortized discount and debt issuance costs
|
|
(7,840
|
)
|
|
(8,315
|
)
|
||
|
|
992,160
|
|
|
991,685
|
|
||
|
|
|
|
|
||||
HEP Credit Agreement
|
|
900,000
|
|
|
1,012,000
|
|
||
|
|
|
|
|
||||
HEP 6% Senior Notes
|
|
|
|
|
||||
Principal
|
|
500,000
|
|
|
500,000
|
|
||
Unamortized discount and debt issuance costs
|
|
(4,401
|
)
|
|
(4,692
|
)
|
||
|
|
495,599
|
|
|
495,308
|
|
||
|
|
|
|
|
||||
Total HEP long-term debt
|
|
1,395,599
|
|
|
1,507,308
|
|
||
|
|
|
|
|
||||
Total long-term debt
|
|
$
|
2,387,759
|
|
|
$
|
2,498,993
|
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
(In thousands)
|
||||||
|
|
|
|
|
||||
HollyFrontier senior notes
|
|
$
|
1,074,390
|
|
|
$
|
1,113,470
|
|
|
|
|
|
|
||||
HEP senior notes
|
|
$
|
507,025
|
|
|
$
|
525,120
|
|
|
|
Unrealized Gain (Loss) Recognized in OCI
|
|
Gain (Loss) Reclassified into Earnings
|
||||||||||||||
Derivatives Designated as Cash Flow Hedging Instruments
|
|
Three Months Ended
June 30, |
|
Income Statement Location
|
|
Three Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||
Commodity contracts
|
|
$
|
1,521
|
|
|
$
|
1,323
|
|
|
Sales and other revenues
|
|
$
|
(5,317
|
)
|
|
$
|
4,476
|
|
|
|
|
|
|
|
Operating expenses
|
|
(281
|
)
|
|
(4,421
|
)
|
||||||
Interest rate contracts
(1)
|
|
—
|
|
|
(91
|
)
|
|
Interest expense
|
|
—
|
|
|
102
|
|
||||
Total
|
|
$
|
1,521
|
|
|
$
|
1,232
|
|
|
|
|
$
|
(5,598
|
)
|
|
$
|
157
|
|
|
|
Unrealized Gain (Loss) Recognized in OCI
|
|
Gain (Loss) Reclassified into Earnings
|
||||||||||||||
Derivatives Designated as Cash Flow Hedging Instruments
|
|
Six Months Ended
June 30, |
|
Income Statement Location
|
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||
Commodity contracts
|
|
$
|
(4,049
|
)
|
|
$
|
5,304
|
|
|
Sales and other revenues
|
|
$
|
(3,671
|
)
|
|
$
|
8,426
|
|
|
|
|
|
|
|
Cost of products sold
|
|
—
|
|
|
(299
|
)
|
||||||
|
|
|
|
|
|
Operating expenses
|
|
(736
|
)
|
|
(8,716
|
)
|
||||||
Interest rate contracts
(1)
|
|
—
|
|
|
(28
|
)
|
|
Interest expense
|
|
—
|
|
|
115
|
|
||||
Total
|
|
$
|
(4,049
|
)
|
|
$
|
5,276
|
|
|
|
|
$
|
(4,407
|
)
|
|
$
|
(474
|
)
|
|
|
Gain (Loss) Recognized in Earnings
|
|
|
|
|
||||||||||||
Derivatives Not Designated as Hedging Instruments
|
|
Income Statement Location
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||||
|
|
|
|
(In thousands)
|
||||||||||||||
Commodity contracts
|
|
Cost of products sold
|
|
$
|
(7,461
|
)
|
|
$
|
6,983
|
|
|
$
|
(12,328
|
)
|
|
$
|
14,035
|
|
|
|
Operating expenses
|
|
—
|
|
|
(1,541
|
)
|
|
—
|
|
|
(5,763
|
)
|
||||
Foreign currency contracts
|
|
Gain on foreign currency transactions
|
|
9,359
|
|
|
—
|
|
|
25,556
|
|
|
—
|
|
||||
|
|
Gain on foreign currency swap contracts
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,545
|
|
||||
|
|
Total
|
|
$
|
1,898
|
|
|
$
|
5,442
|
|
|
$
|
13,228
|
|
|
$
|
32,817
|
|
|
|
|
|
Notional Contract Volumes by Year of Maturity
|
|
|
||||||||||||||
|
|
Total Outstanding Notional
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Unit of Measure
|
||||||||
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Natural gas price swaps - long
|
|
6,300,000
|
|
|
900,000
|
|
|
1,800,000
|
|
|
1,800,000
|
|
|
1,800,000
|
|
|
MMBTU
|
|||
Forward crude oil contracts - short
|
|
180,000
|
|
|
180,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NYMEX futures (WTI) - short
|
|
1,315,000
|
|
|
1,315,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
WTI and sub-octane gasoline crack spread swaps - short
|
|
300,000
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
Forward gasoline and diesel contracts - long
|
|
675,000
|
|
|
675,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
Foreign currency forward contracts
|
|
$
|
451,027,063
|
|
|
$
|
227,169,087
|
|
|
$
|
223,857,976
|
|
|
—
|
|
|
—
|
|
|
U.S. Dollar
|
NOTE 11:
|
Equity
|
|
|
HollyFrontier
Stockholders’
Equity
|
|
Noncontrolling
Interest
|
|
Total
Equity
|
||||||
|
|
(In thousands)
|
||||||||||
Balance at December 31, 2017
|
|
$
|
5,370,829
|
|
|
$
|
526,111
|
|
|
$
|
5,896,940
|
|
Net income
|
|
613,598
|
|
|
38,177
|
|
|
651,775
|
|
|||
Dividends
|
|
(117,500
|
)
|
|
—
|
|
|
(117,500
|
)
|
|||
Distributions to noncontrolling interest holders
|
|
—
|
|
|
(60,759
|
)
|
|
(60,759
|
)
|
|||
Other comprehensive loss, net of tax
|
|
(17,956
|
)
|
|
—
|
|
|
(17,956
|
)
|
|||
Allocated equity on HEP common unit issuances, net of tax
|
|
42,201
|
|
|
58,263
|
|
|
100,464
|
|
|||
Equity-based compensation
|
|
15,758
|
|
|
1,548
|
|
|
17,306
|
|
|||
Purchase of treasury stock
(1)
|
|
(55,550
|
)
|
|
—
|
|
|
(55,550
|
)
|
|||
Purchase of HEP units for restricted grants
|
|
—
|
|
|
(58
|
)
|
|
(58
|
)
|
|||
Adoption of accounting standards
|
|
(11,019
|
)
|
|
—
|
|
|
(11,019
|
)
|
|||
Balance at June 30, 2018
|
|
$
|
5,840,361
|
|
|
$
|
563,282
|
|
|
$
|
6,403,643
|
|
NOTE 12:
|
Other Comprehensive Income
|
|
|
Before-Tax
|
|
Tax Expense
(Benefit)
|
|
After-Tax
|
||||||
|
|
(In thousands)
|
||||||||||
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
(11,503
|
)
|
|
$
|
(2,422
|
)
|
|
$
|
(9,081
|
)
|
Net unrealized gain on hedging instruments
|
|
1,521
|
|
|
388
|
|
|
1,133
|
|
|||
Other comprehensive loss attributable to HollyFrontier stockholders
|
|
$
|
(9,982
|
)
|
|
$
|
(2,034
|
)
|
|
$
|
(7,948
|
)
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2017
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
14,298
|
|
|
$
|
4,433
|
|
|
$
|
9,865
|
|
Net unrealized gain on hedging instruments
|
|
1,232
|
|
|
503
|
|
|
729
|
|
|||
Other comprehensive income
|
|
15,530
|
|
|
4,936
|
|
|
10,594
|
|
|||
Less other comprehensive loss attributable to noncontrolling interest
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
|||
Other comprehensive income attributable to HollyFrontier stockholders
|
|
$
|
15,597
|
|
|
$
|
4,936
|
|
|
$
|
10,661
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
(23,443
|
)
|
|
$
|
(4,950
|
)
|
|
$
|
(18,493
|
)
|
Net unrealized loss on hedging instruments
|
|
(4,049
|
)
|
|
(852
|
)
|
|
(3,197
|
)
|
|||
Net change in pension and other post-retirement benefit obligations
|
|
—
|
|
|
(3,734
|
)
|
|
3,734
|
|
|||
Other comprehensive loss attributable to HollyFrontier stockholders
|
|
$
|
(27,492
|
)
|
|
$
|
(9,536
|
)
|
|
$
|
(17,956
|
)
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
7,585
|
|
|
$
|
2,654
|
|
|
$
|
4,931
|
|
Net unrealized loss on marketable securities
|
|
(4
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|||
Net unrealized gain on hedging instruments
|
|
5,276
|
|
|
2,048
|
|
|
3,228
|
|
|||
Other comprehensive income
|
|
12,857
|
|
|
4,701
|
|
|
8,156
|
|
|||
Less other comprehensive loss attributable to noncontrolling interest
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
|||
Other comprehensive income attributable to HollyFrontier stockholders
|
|
$
|
12,874
|
|
|
$
|
4,701
|
|
|
$
|
8,173
|
|
AOCI Component
|
|
Gain (Loss) Reclassified From AOCI
|
|
Income Statement Line Item
|
||||||
|
|
(In thousands)
|
|
|
||||||
|
|
Three Months Ended
June 30, |
|
|
||||||
|
|
2018
|
|
2017
|
|
|
||||
|
|
|
|
|
|
|
||||
Hedging instruments:
|
|
|
|
|
|
|
||||
Commodity price swaps
|
|
$
|
(5,317
|
)
|
|
$
|
4,476
|
|
|
Sales and other revenues
|
|
|
(281
|
)
|
|
(4,421
|
)
|
|
Operating expenses
|
||
Interest rate swaps
|
|
—
|
|
|
102
|
|
|
Interest expense
|
||
|
|
(5,598
|
)
|
|
157
|
|
|
|
||
|
|
(1,427
|
)
|
|
36
|
|
|
Income tax expense (benefit)
|
||
|
|
(4,171
|
)
|
|
121
|
|
|
Net of tax
|
||
|
|
—
|
|
|
(65
|
)
|
|
Noncontrolling interest
|
||
|
|
(4,171
|
)
|
|
56
|
|
|
Net of tax and noncontrolling interest
|
||
|
|
|
|
|
|
|
||||
Total reclassifications for the period
|
|
$
|
(4,171
|
)
|
|
$
|
56
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Six Months Ended
June 30, |
|
|
||||||
|
|
2018
|
|
2017
|
|
|
||||
|
|
|
|
|
|
|
||||
Hedging instruments:
|
|
|
|
|
|
|
||||
Commodity price swaps
|
|
(3,671
|
)
|
|
8,426
|
|
|
Sales and other revenues
|
||
|
|
—
|
|
|
(299
|
)
|
|
Cost of products sold
|
||
|
|
(736
|
)
|
|
(8,716
|
)
|
|
Operating expenses
|
||
Interest rate swaps
|
|
—
|
|
|
115
|
|
|
Interest expense
|
||
|
|
(4,407
|
)
|
|
(474
|
)
|
|
|
||
|
|
(1,124
|
)
|
|
(212
|
)
|
|
Income tax benefit
|
||
|
|
(3,283
|
)
|
|
(262
|
)
|
|
Net of tax
|
||
|
|
—
|
|
|
(73
|
)
|
|
Noncontrolling interest
|
||
|
|
(3,283
|
)
|
|
(335
|
)
|
|
Net of tax and noncontrolling interest
|
||
|
|
|
|
|
|
|
||||
Total reclassifications for the period
|
|
$
|
(3,283
|
)
|
|
$
|
(335
|
)
|
|
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
(In thousands)
|
||||||
Foreign currency translation adjustment
|
|
$
|
(4,116
|
)
|
|
$
|
14,377
|
|
Unrealized loss on pension obligation
|
|
(692
|
)
|
|
(654
|
)
|
||
Unrealized gain on post-retirement benefit obligations
|
|
20,711
|
|
|
16,939
|
|
||
Unrealized loss on hedging instruments
|
|
(3,990
|
)
|
|
(793
|
)
|
||
Accumulated other comprehensive income
|
|
$
|
11,913
|
|
|
$
|
29,869
|
|
NOTE 13:
|
Post-retirement Plans
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
February 1 to June 30,
|
||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Service cost - benefit earned during the period
|
|
$
|
1,106
|
|
|
$
|
944
|
|
|
$
|
2,235
|
|
|
$
|
1,582
|
|
Interest cost on projected benefit obligations
|
|
563
|
|
|
518
|
|
|
1,138
|
|
|
868
|
|
||||
Expected return on plan assets
|
|
(867
|
)
|
|
(747
|
)
|
|
(1,752
|
)
|
|
(1,252
|
)
|
||||
Net periodic pension expense
|
|
$
|
802
|
|
|
$
|
715
|
|
|
$
|
1,621
|
|
|
$
|
1,198
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Service cost – benefit earned during the period
|
|
$
|
412
|
|
|
$
|
375
|
|
|
$
|
826
|
|
|
$
|
726
|
|
Interest cost on projected benefit obligations
|
|
234
|
|
|
243
|
|
|
471
|
|
|
464
|
|
||||
Amortization of prior service credit
|
|
(870
|
)
|
|
(870
|
)
|
|
(1,741
|
)
|
|
(1,740
|
)
|
||||
Net periodic post-retirement credit
|
|
$
|
(224
|
)
|
|
$
|
(252
|
)
|
|
$
|
(444
|
)
|
|
$
|
(550
|
)
|
NOTE 14:
|
Contingencies
|
NOTE 15:
|
Segment Information
|
|
|
Refining
|
|
Lubricants and Specialty Products
(1)
|
|
HEP
|
|
Corporate, Other
and Eliminations
|
|
Consolidated
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
3,987,115
|
|
|
$
|
459,405
|
|
|
$
|
24,746
|
|
|
$
|
(30
|
)
|
|
$
|
4,471,236
|
|
Intersegment revenues
|
|
91,866
|
|
|
8,284
|
|
|
94,014
|
|
|
(194,164
|
)
|
|
—
|
|
|||||
|
|
$
|
4,078,981
|
|
|
$
|
467,689
|
|
|
$
|
118,760
|
|
|
$
|
(194,194
|
)
|
|
$
|
4,471,236
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
3,394,853
|
|
|
$
|
373,141
|
|
|
$
|
—
|
|
|
$
|
(172,078
|
)
|
|
$
|
3,595,916
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
(106,926
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(106,926
|
)
|
Operating expenses
|
|
$
|
262,558
|
|
|
$
|
19,905
|
|
|
$
|
34,533
|
|
|
$
|
(20,781
|
)
|
|
$
|
296,215
|
|
Selling, general and administrative expenses
|
|
$
|
26,201
|
|
|
$
|
35,257
|
|
|
$
|
2,673
|
|
|
$
|
4,544
|
|
|
$
|
68,675
|
|
Depreciation and amortization
|
|
$
|
72,989
|
|
|
$
|
10,020
|
|
|
$
|
24,609
|
|
|
$
|
2,761
|
|
|
$
|
110,379
|
|
Income (loss) from operations
|
|
$
|
429,306
|
|
|
$
|
29,366
|
|
|
$
|
56,945
|
|
|
$
|
(8,640
|
)
|
|
$
|
506,977
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,734
|
|
|
$
|
—
|
|
|
$
|
1,734
|
|
Capital expenditures
|
|
$
|
42,188
|
|
|
$
|
16,842
|
|
|
$
|
18,957
|
|
|
$
|
1,950
|
|
|
$
|
79,937
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
2,999,054
|
|
|
$
|
444,000
|
|
|
$
|
15,990
|
|
|
$
|
(180
|
)
|
|
$
|
3,458,864
|
|
Intersegment revenues
|
|
$
|
105,545
|
|
|
$
|
—
|
|
|
$
|
93,153
|
|
|
$
|
(198,698
|
)
|
|
$
|
—
|
|
|
|
$
|
3,104,599
|
|
|
$
|
444,000
|
|
|
$
|
109,143
|
|
|
$
|
(198,878
|
)
|
|
$
|
3,458,864
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
2,615,937
|
|
|
$
|
317,921
|
|
|
$
|
—
|
|
|
$
|
(180,399
|
)
|
|
$
|
2,753,459
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
82,794
|
|
|
$
|
1,188
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
83,982
|
|
Operating expenses
|
|
$
|
242,713
|
|
|
$
|
55,750
|
|
|
$
|
34,160
|
|
|
$
|
(16,362
|
)
|
|
$
|
316,261
|
|
Selling, general and administrative expenses
|
|
$
|
22,654
|
|
|
$
|
27,769
|
|
|
$
|
2,618
|
|
|
$
|
6,762
|
|
|
$
|
59,803
|
|
Depreciation and amortization
|
|
$
|
75,426
|
|
|
$
|
7,532
|
|
|
$
|
19,541
|
|
|
$
|
2,783
|
|
|
$
|
105,282
|
|
Asset impairment
|
|
$
|
19,247
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,247
|
|
Income (loss) from operations
|
|
$
|
45,828
|
|
|
$
|
33,840
|
|
|
$
|
52,824
|
|
|
$
|
(11,662
|
)
|
|
$
|
120,830
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,053
|
|
|
$
|
—
|
|
|
$
|
4,053
|
|
Capital expenditures
|
|
$
|
51,825
|
|
|
$
|
9,122
|
|
|
$
|
12,259
|
|
|
$
|
4,087
|
|
|
$
|
77,293
|
|
|
|
Refining
|
|
Lubricants and Specialty Products
|
|
HEP
|
|
Corporate, Other
and Eliminations |
|
Consolidated
Total |
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
7,645,262
|
|
|
$
|
902,271
|
|
|
$
|
52,203
|
|
|
$
|
(73
|
)
|
|
$
|
8,599,663
|
|
Intersegment revenues
|
|
$
|
182,904
|
|
|
$
|
10,258
|
|
|
$
|
195,441
|
|
|
$
|
(388,603
|
)
|
|
$
|
—
|
|
|
|
$
|
7,828,166
|
|
|
$
|
912,529
|
|
|
$
|
247,644
|
|
|
$
|
(388,676
|
)
|
|
$
|
8,599,663
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
6,606,557
|
|
|
$
|
680,672
|
|
|
$
|
—
|
|
|
$
|
(344,188
|
)
|
|
$
|
6,943,041
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
(210,764
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(210,764
|
)
|
Operating expenses
|
|
$
|
502,405
|
|
|
$
|
84,813
|
|
|
$
|
70,736
|
|
|
$
|
(41,451
|
)
|
|
$
|
616,503
|
|
Selling, general and administrative expenses
|
|
$
|
52,572
|
|
|
$
|
65,911
|
|
|
$
|
5,795
|
|
|
$
|
9,061
|
|
|
$
|
133,339
|
|
Depreciation and amortization
|
|
$
|
140,164
|
|
|
$
|
18,884
|
|
|
$
|
49,750
|
|
|
$
|
5,922
|
|
|
$
|
214,720
|
|
Income (loss) from operations
|
|
$
|
737,232
|
|
|
$
|
62,249
|
|
|
$
|
121,363
|
|
|
$
|
(18,020
|
)
|
|
$
|
902,824
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,013
|
|
|
$
|
—
|
|
|
$
|
3,013
|
|
Capital expenditures
|
|
$
|
84,962
|
|
|
$
|
25,380
|
|
|
$
|
31,570
|
|
|
$
|
7,565
|
|
|
$
|
149,477
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
5,741,781
|
|
|
$
|
765,269
|
|
|
$
|
32,599
|
|
|
$
|
(302
|
)
|
|
$
|
6,539,347
|
|
Intersegment revenues
|
|
$
|
185,453
|
|
|
$
|
—
|
|
|
$
|
182,178
|
|
|
$
|
(367,631
|
)
|
|
$
|
—
|
|
|
|
$
|
5,927,234
|
|
|
$
|
765,269
|
|
|
$
|
214,777
|
|
|
$
|
(367,933
|
)
|
|
$
|
6,539,347
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
5,175,091
|
|
|
$
|
548,702
|
|
|
$
|
—
|
|
|
$
|
(329,159
|
)
|
|
$
|
5,394,634
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
94,325
|
|
|
$
|
1,480
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95,805
|
|
Operating expenses
|
|
$
|
497,084
|
|
|
$
|
95,069
|
|
|
$
|
66,712
|
|
|
$
|
(34,878
|
)
|
|
$
|
623,987
|
|
Selling, general and administrative expenses
|
|
$
|
45,019
|
|
|
$
|
41,082
|
|
|
$
|
5,255
|
|
|
$
|
25,695
|
|
|
$
|
117,051
|
|
Depreciation and amortization
|
|
$
|
144,864
|
|
|
$
|
12,836
|
|
|
$
|
37,914
|
|
|
$
|
5,708
|
|
|
$
|
201,322
|
|
Asset impairment
|
|
$
|
19,247
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,247
|
|
Income (loss) from operations
|
|
$
|
(48,396
|
)
|
|
$
|
66,100
|
|
|
$
|
104,896
|
|
|
$
|
(35,299
|
)
|
|
$
|
87,301
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,893
|
|
|
$
|
—
|
|
|
$
|
5,893
|
|
Capital expenditures
|
|
$
|
99,259
|
|
|
$
|
10,957
|
|
|
$
|
20,524
|
|
|
$
|
6,310
|
|
|
$
|
137,050
|
|
|
|
Refining
|
|
Lubricants and Specialty Products
|
|
HEP
|
|
Corporate, Other
and Eliminations
|
|
Consolidated
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
8,223
|
|
|
$
|
92,483
|
|
|
$
|
6,656
|
|
|
$
|
872,510
|
|
|
$
|
979,872
|
|
Total assets
|
|
$
|
7,020,880
|
|
|
$
|
1,402,189
|
|
|
$
|
2,154,741
|
|
|
$
|
703,542
|
|
|
$
|
11,281,352
|
|
Long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,395,599
|
|
|
$
|
992,160
|
|
|
$
|
2,387,759
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
7,488
|
|
|
$
|
41,756
|
|
|
$
|
7,776
|
|
|
$
|
573,737
|
|
|
$
|
630,757
|
|
Total assets
|
|
$
|
6,474,666
|
|
|
$
|
1,610,472
|
|
|
$
|
2,191,984
|
|
|
$
|
415,032
|
|
|
$
|
10,692,154
|
|
Long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,507,308
|
|
|
$
|
991,685
|
|
|
$
|
2,498,993
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Three Months Ended
June 30, |
|
Change from 2017
|
|||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
Percent
|
|||||||
|
|
(In thousands, except per share data)
|
|||||||||||||
Sales and other revenues
|
|
$
|
4,471,236
|
|
|
$
|
3,458,864
|
|
|
$
|
1,012,372
|
|
|
29
|
%
|
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)
|
|
3,595,916
|
|
|
2,753,459
|
|
|
842,457
|
|
|
31
|
|
|||
Lower of cost or market inventory valuation adjustment
|
|
(106,926
|
)
|
|
83,982
|
|
|
(190,908
|
)
|
|
(227
|
)
|
|||
|
|
3,488,990
|
|
|
2,837,441
|
|
|
651,549
|
|
|
23
|
|
|||
Operating expenses (exclusive of depreciation and amortization)
|
|
296,215
|
|
|
316,261
|
|
|
(20,046
|
)
|
|
(6
|
)
|
|||
Selling, general and administrative expenses (exclusive of depreciation and amortization)
|
|
68,675
|
|
|
59,803
|
|
|
8,872
|
|
|
15
|
|
|||
Depreciation and amortization
|
|
110,379
|
|
|
105,282
|
|
|
5,097
|
|
|
5
|
|
|||
Long-lived asset impairment
|
|
—
|
|
|
19,247
|
|
|
(19,247
|
)
|
|
(100
|
)
|
|||
Total operating costs and expenses
|
|
3,964,259
|
|
|
3,338,034
|
|
|
626,225
|
|
|
19
|
|
|||
Income from operations
|
|
506,977
|
|
|
120,830
|
|
|
386,147
|
|
|
320
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||||||
Earnings of equity method investments
|
|
1,734
|
|
|
4,053
|
|
|
(2,319
|
)
|
|
(57
|
)
|
|||
Interest income
|
|
2,934
|
|
|
176
|
|
|
2,758
|
|
|
1,567
|
|
|||
Interest expense
|
|
(32,324
|
)
|
|
(29,645
|
)
|
|
(2,679
|
)
|
|
9
|
|
|||
Gain (loss) on foreign currency transactions
|
|
(325
|
)
|
|
10,328
|
|
|
(10,653
|
)
|
|
(103
|
)
|
|||
Other, net
|
|
1,364
|
|
|
327
|
|
|
1,037
|
|
|
317
|
|
|||
|
|
(26,617
|
)
|
|
(14,761
|
)
|
|
(11,856
|
)
|
|
80
|
|
|||
Income before income taxes
|
|
480,360
|
|
|
106,069
|
|
|
374,291
|
|
|
353
|
|
|||
Income tax expense
|
|
117,447
|
|
|
31,996
|
|
|
85,451
|
|
|
267
|
|
|||
Net income
|
|
362,913
|
|
|
74,073
|
|
|
288,840
|
|
|
390
|
|
|||
Less net income attributable to noncontrolling interest
|
|
17,406
|
|
|
16,306
|
|
|
1,100
|
|
|
7
|
|
|||
Net income attributable to HollyFrontier stockholders
|
|
$
|
345,507
|
|
|
$
|
57,767
|
|
|
$
|
287,740
|
|
|
498
|
%
|
Earnings per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
1.96
|
|
|
$
|
0.33
|
|
|
$
|
1.63
|
|
|
494
|
%
|
Diluted
|
|
$
|
1.94
|
|
|
$
|
0.33
|
|
|
$
|
1.61
|
|
|
488
|
%
|
Cash dividends declared per common share
|
|
$
|
0.33
|
|
|
$
|
0.33
|
|
|
$
|
—
|
|
|
—
|
%
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
175,899
|
|
|
176,147
|
|
|
(248
|
)
|
|
—
|
%
|
|||
Diluted
|
|
177,586
|
|
|
176,302
|
|
|
1,284
|
|
|
1
|
%
|
|
|
Six Months Ended
June 30, |
|
Change from 2017
|
|||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
Percent
|
|||||||
|
|
(In thousands, except per share data)
|
|||||||||||||
Sales and other revenues
|
|
$
|
8,599,663
|
|
|
$
|
6,539,347
|
|
|
$
|
2,060,316
|
|
|
32
|
%
|
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)
|
|
6,943,041
|
|
|
5,394,634
|
|
|
1,548,407
|
|
|
29
|
|
|||
Lower of cost or market inventory valuation adjustment
|
|
(210,764
|
)
|
|
95,805
|
|
|
(306,569
|
)
|
|
(320
|
)
|
|||
|
|
6,732,277
|
|
|
5,490,439
|
|
|
1,241,838
|
|
|
23
|
|
|||
Operating expenses (exclusive of depreciation and amortization)
|
|
616,503
|
|
|
623,987
|
|
|
(7,484
|
)
|
|
(1
|
)
|
|||
Selling, general and administrative expenses (exclusive of depreciation and amortization)
|
|
133,339
|
|
|
117,051
|
|
|
16,288
|
|
|
14
|
|
|||
Depreciation and amortization
|
|
214,720
|
|
|
201,322
|
|
|
13,398
|
|
|
7
|
|
|||
Long-lived asset impairment
|
|
—
|
|
|
19,247
|
|
|
(19,247
|
)
|
|
(100
|
)
|
|||
Total operating costs and expenses
|
|
7,696,839
|
|
|
6,452,046
|
|
|
1,244,793
|
|
|
19
|
|
|||
Income from operations
|
|
902,824
|
|
|
87,301
|
|
|
815,523
|
|
|
934
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||||||
Earnings of equity method investments
|
|
3,013
|
|
|
5,893
|
|
|
(2,880
|
)
|
|
(49
|
)
|
|||
Interest income
|
|
5,524
|
|
|
995
|
|
|
4,529
|
|
|
455
|
|
|||
Interest expense
|
|
(65,047
|
)
|
|
(56,803
|
)
|
|
(8,244
|
)
|
|
15
|
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
(12,225
|
)
|
|
12,225
|
|
|
(100
|
)
|
|||
Gain on foreign currency transactions
|
|
5,235
|
|
|
395
|
|
|
4,840
|
|
|
1,225
|
|
|||
Gain on foreign currency swap contracts
|
|
—
|
|
|
24,545
|
|
|
(24,545
|
)
|
|
(100
|
)
|
|||
Other, net
|
|
2,710
|
|
|
1,397
|
|
|
1,313
|
|
|
94
|
|
|||
|
|
(48,565
|
)
|
|
(35,803
|
)
|
|
(12,762
|
)
|
|
36
|
|
|||
Income before income taxes
|
|
854,259
|
|
|
51,498
|
|
|
802,761
|
|
|
1,559
|
|
|||
Income tax expense
|
|
202,484
|
|
|
15,207
|
|
|
187,277
|
|
|
1,232
|
|
|||
Net income
|
|
651,775
|
|
|
36,291
|
|
|
615,484
|
|
|
1,696
|
|
|||
Less net income attributable to noncontrolling interest
|
|
38,177
|
|
|
23,992
|
|
|
14,185
|
|
|
59
|
|
|||
Net income attributable to HollyFrontier stockholders
|
|
$
|
613,598
|
|
|
$
|
12,299
|
|
|
$
|
601,299
|
|
|
4,889
|
%
|
Earnings per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
3.47
|
|
|
$
|
0.07
|
|
|
$
|
3.40
|
|
|
4,857
|
%
|
Diluted
|
|
$
|
3.44
|
|
|
$
|
0.07
|
|
|
$
|
3.37
|
|
|
4,814
|
%
|
Cash dividends declared per common share
|
|
$
|
0.66
|
|
|
$
|
0.66
|
|
|
$
|
—
|
|
|
—
|
%
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
176,256
|
|
|
176,141
|
|
|
115
|
|
|
—
|
%
|
|||
Diluted
|
|
177,820
|
|
|
176,490
|
|
|
1,330
|
|
|
1
|
%
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
(Unaudited)
|
|
|
||||
|
|
(In thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
979,872
|
|
|
$
|
630,757
|
|
Working capital
|
|
$
|
2,146,625
|
|
|
$
|
1,640,118
|
|
Total assets
|
|
$
|
11,281,352
|
|
|
$
|
10,692,154
|
|
Long-term debt
|
|
$
|
2,387,759
|
|
|
$
|
2,498,993
|
|
Total equity
|
|
$
|
6,403,643
|
|
|
$
|
5,896,940
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net cash provided by operating activities
|
|
$
|
394,361
|
|
|
$
|
512,782
|
|
|
$
|
728,145
|
|
|
$
|
473,398
|
|
Net cash used for investing activities
|
|
$
|
(79,997
|
)
|
|
$
|
(107,493
|
)
|
|
$
|
(146,078
|
)
|
|
$
|
(580,509
|
)
|
Net cash used for financing activities
|
|
$
|
(114,004
|
)
|
|
$
|
(75,103
|
)
|
|
$
|
(229,715
|
)
|
|
$
|
(143,466
|
)
|
Capital expenditures
|
|
$
|
79,938
|
|
|
$
|
77,293
|
|
|
$
|
149,477
|
|
|
$
|
137,050
|
|
EBITDA
(1)
|
|
$
|
602,723
|
|
|
$
|
224,514
|
|
|
$
|
1,090,325
|
|
|
$
|
284,636
|
|
(1)
|
Earnings before interest, taxes, depreciation and amortization, which we refer to as “EBITDA,” is calculated as net income attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative 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 is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants. EBITDA presented above is reconciled to net income under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Form 10-Q.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Mid-Continent Region (El Dorado and Tulsa Refineries)
|
|
|
|
|
|
|
|
|
||||||||
Crude charge (BPD)
(1)
|
|
289,820
|
|
|
290,460
|
|
|
258,930
|
|
|
256,370
|
|
||||
Refinery throughput (BPD)
(2)
|
|
300,030
|
|
|
304,840
|
|
|
273,200
|
|
|
263,730
|
|
||||
Sales of produced refined products (BPD)
(3)
|
|
270,710
|
|
|
282,950
|
|
|
261,950
|
|
|
255,900
|
|
||||
Refinery utilization
(4)
|
|
111.5
|
%
|
|
111.7
|
%
|
|
99.6
|
%
|
|
98.6
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Average per produced barrel
(5)
|
|
|
|
|
|
|
|
|
||||||||
Refinery gross margin
(6)
|
|
$
|
11.90
|
|
|
$
|
9.10
|
|
|
$
|
11.30
|
|
|
$
|
7.73
|
|
Refinery operating expenses
(7)
|
|
4.89
|
|
|
4.51
|
|
|
5.02
|
|
|
5.24
|
|
||||
Net operating margin
|
|
$
|
7.01
|
|
|
$
|
4.59
|
|
|
$
|
6.28
|
|
|
$
|
2.49
|
|
|
|
|
|
|
|
|
|
|
||||||||
Refinery operating expenses per throughput barrel
(8)
|
|
$
|
4.41
|
|
|
$
|
4.18
|
|
|
$
|
4.82
|
|
|
$
|
4.90
|
|
Feedstocks:
|
|
|
|
|
|
|
|
|
||||
Sweet crude oil
|
|
58
|
%
|
|
62
|
%
|
|
51
|
%
|
|
60
|
%
|
Sour crude oil
|
|
23
|
%
|
|
18
|
%
|
|
26
|
%
|
|
19
|
%
|
Heavy sour crude oil
|
|
16
|
%
|
|
15
|
%
|
|
18
|
%
|
|
15
|
%
|
Other feedstocks and blends
|
|
3
|
%
|
|
5
|
%
|
|
5
|
%
|
|
6
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||
Gasolines
|
|
49
|
%
|
|
50
|
%
|
|
51
|
%
|
|
50
|
%
|
Diesel fuels
|
|
35
|
%
|
|
34
|
%
|
|
33
|
%
|
|
32
|
%
|
Jet fuels
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
7
|
%
|
Fuel oil
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Asphalt
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
Base oils
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
5
|
%
|
LPG and other
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Southwest Region (Navajo Refinery)
|
|
|
|
|
|
|
|
|
||||||||
Crude charge (BPD)
(1)
|
|
111,900
|
|
|
102,120
|
|
|
109,020
|
|
|
88,370
|
|
||||
Refinery throughput (BPD)
(2)
|
|
120,340
|
|
|
112,720
|
|
|
118,510
|
|
|
96,200
|
|
||||
Sales of produced refined products (BPD)
(3)
|
|
118,240
|
|
|
113,490
|
|
|
120,240
|
|
|
96,280
|
|
||||
Refinery utilization
(4)
|
|
111.9
|
%
|
|
102.1
|
%
|
|
109.0
|
%
|
|
88.4
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Average per produced barrel
(5)
|
|
|
|
|
|
|
|
|
||||||||
Refinery gross margin
(6)
|
|
$
|
21.04
|
|
|
$
|
11.56
|
|
|
$
|
15.38
|
|
|
$
|
10.53
|
|
Refinery operating expenses
(7)
|
|
5.34
|
|
|
5.20
|
|
|
4.68
|
|
|
6.10
|
|
||||
Net operating margin
|
|
$
|
15.70
|
|
|
$
|
6.36
|
|
|
$
|
10.70
|
|
|
$
|
4.43
|
|
|
|
|
|
|
|
|
|
|
||||||||
Refinery operating expenses per throughput barrel
(8)
|
|
$
|
5.25
|
|
|
$
|
5.24
|
|
|
$
|
4.75
|
|
|
$
|
6.11
|
|
|
|
|
|
|
|
|
|
|
||||||||
Feedstocks:
|
|
|
|
|
|
|
|
|
||||||||
Sweet crude oil
|
|
34
|
%
|
|
25
|
%
|
|
32
|
%
|
|
22
|
%
|
||||
Sour crude oil
|
|
59
|
%
|
|
66
|
%
|
|
60
|
%
|
|
70
|
%
|
||||
Other feedstocks and blends
|
|
7
|
%
|
|
9
|
%
|
|
8
|
%
|
|
8
|
%
|
||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||||||
Gasolines
|
|
47
|
%
|
|
49
|
%
|
|
51
|
%
|
|
50
|
%
|
||||
Diesel fuels
|
|
41
|
%
|
|
41
|
%
|
|
39
|
%
|
|
39
|
%
|
||||
Fuel oil
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
|
3
|
%
|
||||
Asphalt
|
|
5
|
%
|
|
5
|
%
|
|
4
|
%
|
|
5
|
%
|
||||
LPG and other
|
|
4
|
%
|
|
3
|
%
|
|
4
|
%
|
|
3
|
%
|
||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
|
|
|
|
|
|
|
|
|
||||
Crude charge (BPD)
(1)
|
|
61,760
|
|
|
74,510
|
|
|
71,560
|
|
|
74,610
|
|
Refinery throughput (BPD)
(2)
|
|
69,830
|
|
|
80,740
|
|
|
79,570
|
|
|
82,240
|
|
Sales of produced refined products (BPD)
(3)
|
|
64,870
|
|
|
76,420
|
|
|
77,460
|
|
|
78,710
|
|
Refinery utilization
(4)
|
|
63.7
|
%
|
|
76.8
|
%
|
|
73.8
|
%
|
|
76.9
|
%
|
Average per produced barrel
(5)
|
|
|
|
|
|
|
|
|
||||||||
Refinery gross margin
(6)
|
|
$
|
27.89
|
|
|
$
|
19.40
|
|
|
$
|
25.05
|
|
|
$
|
14.79
|
|
Refinery operating expenses
(7)
|
|
14.34
|
|
|
10.41
|
|
|
11.58
|
|
|
10.30
|
|
||||
Net operating margin
|
|
$
|
13.55
|
|
|
$
|
8.99
|
|
|
$
|
13.47
|
|
|
$
|
4.49
|
|
|
|
|
|
|
|
|
|
|
||||||||
Refinery operating expenses per throughput barrel
(8)
|
|
$
|
13.33
|
|
|
$
|
9.85
|
|
|
$
|
11.28
|
|
|
$
|
9.86
|
|
|
|
|
|
|
|
|
|
|
||||||||
Feedstocks:
|
|
|
|
|
|
|
|
|
||||||||
Sweet crude oil
|
|
18
|
%
|
|
32
|
%
|
|
26
|
%
|
|
35
|
%
|
||||
Heavy sour crude oil
|
|
51
|
%
|
|
39
|
%
|
|
43
|
%
|
|
36
|
%
|
||||
Black wax crude oil
|
|
20
|
%
|
|
21
|
%
|
|
21
|
%
|
|
20
|
%
|
||||
Other feedstocks and blends
|
|
11
|
%
|
|
8
|
%
|
|
10
|
%
|
|
9
|
%
|
||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||||||
Gasolines
|
|
57
|
%
|
|
59
|
%
|
|
57
|
%
|
|
58
|
%
|
||||
Diesel fuels
|
|
32
|
%
|
|
33
|
%
|
|
33
|
%
|
|
33
|
%
|
||||
Fuel oil
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
||||
Asphalt
|
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
|
5
|
%
|
||||
LPG and other
|
|
3
|
%
|
|
2
|
%
|
|
4
|
%
|
|
2
|
%
|
||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
Crude charge (BPD)
(1)
|
|
463,480
|
|
|
467,090
|
|
|
439,510
|
|
|
419,350
|
|
||||
Refinery throughput (BPD)
(2)
|
|
490,200
|
|
|
498,300
|
|
|
471,280
|
|
|
442,170
|
|
||||
Sales of produced refined products (BPD)
(3)
|
|
453,830
|
|
|
472,870
|
|
|
459,640
|
|
|
430,890
|
|
||||
Refinery utilization
(4)
|
|
101.4
|
%
|
|
102.2
|
%
|
|
96.2
|
%
|
|
91.8
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Average per produced barrel
(5)
|
|
|
|
|
|
|
|
|
||||||||
Refinery gross margin
(6)
|
|
$
|
16.57
|
|
|
$
|
11.36
|
|
|
$
|
14.68
|
|
|
$
|
9.64
|
|
Refinery operating expenses
(7)
|
|
6.36
|
|
|
5.64
|
|
|
6.04
|
|
|
6.37
|
|
||||
Net operating margin
|
|
$
|
10.21
|
|
|
$
|
5.72
|
|
|
$
|
8.64
|
|
|
$
|
3.27
|
|
|
|
|
|
|
|
|
|
|
||||||||
Refinery operating expenses per throughput barrel
(8)
|
|
$
|
5.89
|
|
|
$
|
5.35
|
|
|
$
|
5.89
|
|
|
$
|
6.07
|
|
|
|
|
|
|
|
|
|
|
||||||||
Feedstocks:
|
|
|
|
|
|
|
|
|
||||||||
Sweet crude oil
|
|
46
|
%
|
|
49
|
%
|
|
42
|
%
|
|
48
|
%
|
||||
Sour crude oil
|
|
29
|
%
|
|
26
|
%
|
|
30
|
%
|
|
26
|
%
|
||||
Heavy sour crude oil
|
|
17
|
%
|
|
16
|
%
|
|
18
|
%
|
|
15
|
%
|
||||
Black wax crude oil
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
4
|
%
|
||||
Other feedstocks and blends
|
|
5
|
%
|
|
6
|
%
|
|
7
|
%
|
|
7
|
%
|
||||
Total
|
|
100
|
%
|
|
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)
|
Represents barrels sold of refined products produced at our refineries (including HFC Asphalt) and does not include volumes
|
(4)
|
Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 457,000 BPSD.
|
(5)
|
Represents average amount per produced barrel 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 3 of Part I of this Form 10-Q.
|
(6)
|
Excludes lower of cost or market inventory valuation adjustments that increased gross margin by
$106.9 million
and decreased gross margin by
$84.0 million
for the
three
months ended
June 30, 2018
and
2017
, respectively, and increased gross margin by
$210.8 million
and decreased gross margin by
$95.8 million
for the
six
months ended
June 30, 2018
and
2017
, respectively.
|
(7)
|
Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes
|
(8)
|
Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Lubricants and Specialty Products
|
|
|
|
|
|
|
|
|
||||
Throughput (BPD)
|
|
18,610
|
|
|
21,470
|
|
|
20,100
|
|
|
21,750
|
|
Sales of produced refined products (BPD)
|
|
31,000
|
|
|
36,300
|
|
|
31,400
|
|
|
36,080
|
|
|
|
|
|
|
|
|
|
|
||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||
Finished products
|
|
48
|
%
|
|
44
|
%
|
|
48
|
%
|
|
43
|
%
|
Base oils
|
|
32
|
%
|
|
32
|
%
|
|
32
|
%
|
|
34
|
%
|
Other
|
|
20
|
%
|
|
24
|
%
|
|
20
|
%
|
|
23
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Rack Back
(1)
|
|
Rack Forward
(2)
|
|
Eliminations
(3)
|
|
Total Lubricants and Specialty Products
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Three months ended June 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
175,642
|
|
|
$
|
425,461
|
|
|
$
|
(133,414
|
)
|
|
$
|
467,689
|
|
Cost of products sold
(4)
|
|
153,040
|
|
|
353,515
|
|
|
(133,414
|
)
|
|
373,141
|
|
||||
Operating expenses
(4)
|
|
27,210
|
|
|
(7,305
|
)
|
|
—
|
|
|
19,905
|
|
||||
Selling, general and administrative expenses
|
|
7,888
|
|
|
27,369
|
|
|
—
|
|
|
35,257
|
|
||||
Depreciation and amortization
|
|
6,013
|
|
|
4,007
|
|
|
—
|
|
|
10,020
|
|
||||
Income (loss) from operations
|
|
$
|
(18,509
|
)
|
|
$
|
47,875
|
|
|
$
|
—
|
|
|
$
|
29,366
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended June 30, 2017
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
160,786
|
|
|
$
|
394,485
|
|
|
$
|
(111,271
|
)
|
|
$
|
444,000
|
|
Cost of products sold
|
|
129,832
|
|
|
299,360
|
|
|
(111,271
|
)
|
|
317,921
|
|
||||
Lower of cost or market inventory valuation adjustment
|
|
—
|
|
|
1,188
|
|
|
—
|
|
|
1,188
|
|
||||
Operating expenses
|
|
22,934
|
|
|
32,816
|
|
|
—
|
|
|
55,750
|
|
||||
Selling, general and administrative expenses
|
|
6,237
|
|
|
21,532
|
|
|
—
|
|
|
27,769
|
|
||||
Depreciation and amortization
|
|
5,288
|
|
|
2,244
|
|
|
—
|
|
|
7,532
|
|
||||
Income (loss) from operations
|
|
$
|
(3,505
|
)
|
|
$
|
37,345
|
|
|
$
|
—
|
|
|
$
|
33,840
|
|
|
|
|
|
|
|
|
|
|
|
|
Rack Back
(1)
|
|
Rack Forward
(2)
|
|
Eliminations
(3)
|
|
Total Lubricants and Specialty Products
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
349,074
|
|
|
$
|
824,500
|
|
|
$
|
(261,045
|
)
|
|
$
|
912,529
|
|
Cost of products sold
|
|
305,094
|
|
|
636,623
|
|
|
(261,045
|
)
|
|
680,672
|
|
||||
Operating expenses
|
|
55,981
|
|
|
28,832
|
|
|
—
|
|
|
84,813
|
|
||||
Selling, general and administrative expenses
|
|
14,707
|
|
|
51,204
|
|
|
—
|
|
|
65,911
|
|
||||
Depreciation and amortization
|
|
11,641
|
|
|
7,243
|
|
|
—
|
|
|
18,884
|
|
||||
Income (loss) from operations
|
|
$
|
(38,349
|
)
|
|
$
|
100,598
|
|
|
$
|
—
|
|
|
$
|
62,249
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2017
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
267,825
|
|
|
$
|
684,338
|
|
|
$
|
(186,894
|
)
|
|
$
|
765,269
|
|
Cost of products sold
|
|
224,270
|
|
|
511,326
|
|
|
(186,894
|
)
|
|
548,702
|
|
||||
Lower of cost or market inventory valuation adjustment
|
|
—
|
|
|
1,480
|
|
|
—
|
|
|
1,480
|
|
||||
Operating expenses
|
|
38,561
|
|
|
56,508
|
|
|
—
|
|
|
95,069
|
|
||||
Selling, general and administrative expenses
|
|
9,058
|
|
|
32,024
|
|
|
—
|
|
|
41,082
|
|
||||
Depreciation and amortization
|
|
9,087
|
|
|
3,749
|
|
|
—
|
|
|
12,836
|
|
||||
Income (loss) from operations
|
|
$
|
(13,151
|
)
|
|
$
|
79,251
|
|
|
$
|
—
|
|
|
$
|
66,100
|
|
|
Expected Cash Spending Range
|
||||||
|
(In millions)
|
||||||
Type:
|
|
|
|
||||
Capital
|
$
|
225.0
|
|
-
|
$
|
280.0
|
|
Turnarounds
|
225.0
|
|
-
|
250.0
|
|
||
Total
|
$
|
450.0
|
|
-
|
$
|
530.0
|
|
|
|
|
|
Notional Contract Volumes by Year of Maturity
|
|
|||||||||||||||
Contract Description
|
|
Total Outstanding Notional
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Unit of Measure
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Natural gas price swaps - long
|
|
6,300,000
|
|
|
900,000
|
|
|
1,800,000
|
|
|
1,800,000
|
|
|
1,800,000
|
|
|
MMBTU
|
|||
NYMEX futures (WTI) - short
|
|
1,315,000
|
|
|
1,315,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
WTI and sub-octane gasoline crack spread swaps - short
|
|
300,000
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
Forward gasoline and diesel contracts - long
|
|
675,000
|
|
|
675,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
Physical crude contracts -short
|
|
180,000
|
|
|
180,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barrels
|
|||
Foreign currency forward contracts
|
|
$
|
451,027,063
|
|
|
$
|
227,169,087
|
|
|
$
|
223,857,976
|
|
|
—
|
|
|
—
|
|
|
U.S. Dollar
|
|
|
Estimated Change in Fair Value at June 30,
|
||||||
Commodity-based Derivative Contracts
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Hypothetical 10% change in underlying commodity prices
|
|
$
|
8,650
|
|
|
$
|
1,069
|
|
|
|
Outstanding
Principal
|
|
Estimated
Fair Value
|
|
Estimated
Change in
Fair Value
|
||||||
|
|
(In thousands)
|
||||||||||
HollyFrontier Senior Notes
|
|
$
|
1,000,000
|
|
|
$
|
1,074,390
|
|
|
$
|
31,699
|
|
HEP Senior Notes
|
|
$
|
500,000
|
|
|
$
|
507,025
|
|
|
$
|
14,702
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income attributable to HollyFrontier stockholders
|
|
$
|
345,507
|
|
|
$
|
57,767
|
|
|
$
|
613,598
|
|
|
$
|
12,299
|
|
Add income tax provision
|
|
117,447
|
|
|
31,996
|
|
|
202,484
|
|
|
15,207
|
|
||||
Add interest expense
|
|
32,324
|
|
|
29,645
|
|
|
65,047
|
|
|
56,803
|
|
||||
Subtract interest income
|
|
(2,934
|
)
|
|
(176
|
)
|
|
(5,524
|
)
|
|
(995
|
)
|
||||
Add depreciation and amortization
|
|
110,379
|
|
|
105,282
|
|
|
214,720
|
|
|
201,322
|
|
||||
EBITDA
|
|
$
|
602,723
|
|
|
$
|
224,514
|
|
|
$
|
1,090,325
|
|
|
$
|
284,636
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(Dollars in thousands, except per barrel amounts)
|
||||||||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
Net operating margin per produced barrel sold
|
|
$
|
10.21
|
|
|
$
|
5.72
|
|
|
$
|
8.64
|
|
|
$
|
3.27
|
|
Add average refinery operating expenses per produced barrel sold
|
|
6.36
|
|
|
5.64
|
|
|
6.04
|
|
|
6.37
|
|
||||
Refinery gross margin per produced barrel sold
|
|
16.57
|
|
|
11.36
|
|
|
14.68
|
|
|
9.64
|
|
||||
Times produced barrels sold (BPD)
|
|
453,830
|
|
|
472,870
|
|
|
459,640
|
|
|
430,890
|
|
||||
Times number of days in period
|
|
91
|
|
|
91
|
|
|
181
|
|
|
181
|
|
||||
Refining segment gross margin
|
|
684,317
|
|
|
488,834
|
|
|
1,221,300
|
|
|
751,834
|
|
||||
Add (subtract) rounding
|
|
(189
|
)
|
|
(172
|
)
|
|
309
|
|
|
309
|
|
||||
Total refining segment gross margin
|
|
684,128
|
|
|
488,662
|
|
|
1,221,609
|
|
|
752,143
|
|
||||
Add refining segment cost of products sold
|
|
3,394,853
|
|
|
2,615,937
|
|
|
6,606,557
|
|
|
5,175,091
|
|
||||
Refining segment sales and other revenues
|
|
4,078,981
|
|
|
3,104,599
|
|
|
7,828,166
|
|
|
5,927,234
|
|
||||
Add lubricants and specialty products segment sales and other revenues
|
|
467,689
|
|
|
444,000
|
|
|
912,529
|
|
|
765,269
|
|
||||
Add HEP segment sales and other revenues
|
|
118,760
|
|
|
109,143
|
|
|
247,644
|
|
|
214,777
|
|
||||
Subtract corporate, other and eliminations
|
|
(194,194
|
)
|
|
(198,878
|
)
|
|
(388,676
|
)
|
|
(367,933
|
)
|
||||
Sales and other revenues
|
|
$
|
4,471,236
|
|
|
$
|
3,458,864
|
|
|
$
|
8,599,663
|
|
|
$
|
6,539,347
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(Dollars in thousands, except per barrel amounts)
|
||||||||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
Average refinery operating expenses per produced barrel sold
|
|
$
|
6.36
|
|
|
$
|
5.64
|
|
|
$
|
6.04
|
|
|
$
|
6.37
|
|
Times produced barrels sold (BPD)
|
|
453,830
|
|
|
472,870
|
|
|
459,640
|
|
|
430,890
|
|
||||
Times number of days in period
|
|
91
|
|
|
91
|
|
|
181
|
|
|
181
|
|
||||
Refinery operating expenses
|
|
262,659
|
|
|
242,696
|
|
|
502,497
|
|
|
496,803
|
|
||||
Add (subtract) rounding
|
|
(101
|
)
|
|
17
|
|
|
(92
|
)
|
|
281
|
|
||||
Total refining segment operating expenses
|
|
262,558
|
|
|
242,713
|
|
|
502,405
|
|
|
497,084
|
|
||||
Add lubricants and specialty products segment operating expenses
|
|
19,905
|
|
|
55,750
|
|
|
84,813
|
|
|
95,069
|
|
||||
Add HEP segment operating expenses
|
|
34,533
|
|
|
34,160
|
|
|
70,736
|
|
|
66,712
|
|
||||
Subtract corporate, other and eliminations
|
|
(20,781
|
)
|
|
(16,362
|
)
|
|
(41,451
|
)
|
|
(34,878
|
)
|
||||
Operating expenses (exclusive of depreciation and amortization)
|
|
$
|
296,215
|
|
|
$
|
316,261
|
|
|
$
|
616,503
|
|
|
$
|
623,987
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
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
|
||||||
April 2018
|
|
236,600
|
|
|
$
|
55.22
|
|
|
236,600
|
|
|
$
|
138,617,762
|
|
May 2018
|
|
100,000
|
|
|
$
|
70.37
|
|
|
100,000
|
|
|
$
|
131,581,041
|
|
June 2018
|
|
110,000
|
|
|
$
|
71.62
|
|
|
110,000
|
|
|
$
|
123,703,248
|
|
Total for April to June 2018
|
|
446,600
|
|
|
|
|
446,600
|
|
|
|
Item 6.
|
Exhibits
|
Exhibit Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
Third Supplemental Indenture, dated as of May 29, 2018, by and among HEP Oklahoma LLC, Holly Energy Partners, L.P., Holly Energy Finance Corp., the other Guarantors party thereto, and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Holly Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018, File No. 1-32225).
|
|
|
|
10.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101+
|
|
The following financial information from HollyFrontier Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, 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, and (v) Notes to the Consolidated Financial Statements.
|
|
|
|
|
|
|
HOLLYFRONTIER CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date: August 2, 2018
|
|
|
/s/ Richard L. Voliva III
|
|
|
|
Richard L.Voliva III
|
|
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
Date: August 2, 2018
|
|
|
/s/ J. W. Gann, Jr.
|
|
|
|
J. W. Gann, Jr.
|
|
|
|
Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
|
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
1
|
40,000 bpd
2
|
$0.5334/bbl
2
|
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
”)
|
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) |
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
3,4
|
154,000 bpd of Products
|
$0.2167/bbl
|
—
|
|
|||||
Loading Rack
|
|
20,000 bpd
|
20,000 bpd
|
$0.2708/bbl
|
—
|
—
|
—
|
|
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
3,5
|
45,100 bpd
|
$0.2167/bbl
|
—
|
|
|||||
Cheyenne Loading Rack
|
|
|
41,000 bpd
|
$0.2708/bbl
|
None
|
—
|
—
|
|
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
|
—
|
—
|
—
|
|
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 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
|
—
|
—
|
—
|
|
||||
|
Tulsa Inter-connecting Pipelines
6
|
|
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)
|
|
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) |
|
|
|
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)
|
|
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) |
|
|
|
Refinery Sour Fuel Gas Interconnecting Pipeline – 22,000 MSCFD of refinery sour fuel gas (maximum)
|
|
|||||||||
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
7
|
$0.7174/bbl
|
Each throughput barrel over the Minimum Throughput Commitment
|
$0.3757/bbl
8
|
—
|
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
|
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) |
El Dorado Crude Tankage
|
Tankage
|
Crude Oil; Intermediate Products
|
140,000 bpd
|
140,000 bpd
|
$0.0958/bbl
|
Each throughput barrel over the Minimum Throughput Commitment
|
$0.0101/bbl
|
—
|
PPI Adjustment
|
Subject to 1% minimum / 3% cap
9
|
July 1, 2016
|
—
|
12:01 a.m. on March 6, 2015 to 12:01 a.m. on March 6, 2025
|
El Dorado Connector Pipeline
10
|
Pipelines
|
Crude Oil: Intermediate Products
|
—
|
—
|
$0.0800/bbl
|
—
|
—
|
—
|
PPI Adjustment
|
Subject to 1% minimum / 3% cap
9
|
July 1, 2019
|
—
|
12:01 a.m. on January 1, 2018 to 12:01 a.m. on March 6, 2025.
|
Tulsa West Tankage
|
Tankage
|
Crude/Lef
|
396,000 bpd
|
80,000 bpd
|
$0.2143/bbl
11
|
—
|
—
|
—
|
PPI Adjustment
|
Subject to 1% minimum / 3% cap
9
|
July 1, 2017
|
$2,751,331
|
12:01 a.m. on March 31, 2016 to 12:01 a.m. on March 31, 2026
|
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.
|
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) Tallgrass Energy Partners, LP (the “
Pony Express Pipeline
”), (b) Osage Pipe Line Company, LLC (the “
Osage Pipeline
”), (c) Rose Rock Midstream, L.P. (the “
Rose Rock Pipeline
”), and (d) 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 Pony Express Pipeline, 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
|
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.
|
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.
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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: August 2, 2018
|
|
/s/ George J. Damiris
|
|
|
George J. Damiris
|
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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: August 2, 2018
|
|
/s/ Richard L. Voliva III
|
|
|
Richard L. Voliva III
|
|
|
Executive Vice President and Chief Financial Officer
|
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: August 2, 2018
|
|
/s/ George J. Damiris
|
|
|
George J. Damiris
|
|
|
Chief Executive Officer and President
|
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: August 2, 2018
|
|
/s/ Richard L. Voliva III
|
|
|
Richard L. Voliva III
|
|
|
Executive Vice President and Chief Financial Officer
|