☒
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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
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Dallas
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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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☒
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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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PART I. FINANCIAL INFORMATION
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June 30, 2020 (Unaudited) and December 31, 2019
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Three and Six Months Ended June 30, 2020 and 2019
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Three and Six Months Ended June 30, 2020 and 2019
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Six Months Ended June 30, 2020 and 2019
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Three and Six Months Ended June 30, 2020 and 2019
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Index to Exhibits
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Signatures
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•
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the extraordinary market environment and effects of the COVID-19 pandemic, including the continuation of a material decline in demand for refined petroleum products in markets we serve;
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•
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risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in our markets;
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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 or lubricant and specialty products;
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•
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the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand;
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•
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effects of governmental and environmental regulations and policies, including the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic;
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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 and consummating construction projects, including our ability to complete announced capital projects, such as the conversion of the Cheyenne Refinery to a renewable diesel facility and the construction of the Artesia renewable diesel unit and pretreatment unit, on time and within budget;
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•
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our ability to timely obtain or maintain permits, including those necessary for operations or capital projects,
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•
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our ability to acquire refined or lubricant 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 cyberattacks and the consequences of any such attacks;
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•
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general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States;
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•
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further deterioration in gross margins or a prolonged economic slowdown due to the COVID-19 pandemic which could result in an impairment of goodwill and / or additional long-lived asset impairments; 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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June 30,
2020 |
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December 31, 2019
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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: $18,913 and $13,287, respectively)
|
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$
|
902,509
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$
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885,162
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||||
Accounts receivable: Product and transportation (HEP: $14,929 and $18,732, respectively)
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540,818
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834,771
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||
Crude oil resales
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52,567
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44,914
|
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593,385
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879,685
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Inventories: Crude oil and refined products
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977,851
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1,282,789
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Materials, supplies and other (HEP: $935 and $833, respectively)
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195,850
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191,413
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||
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1,173,701
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1,474,202
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Income taxes receivable
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77,729
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5,478
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|
||
Prepayments and other (HEP: $6,970 and $6,795, respectively)
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56,210
|
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61,662
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||
Total current assets
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2,803,534
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3,306,189
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||
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||||
Properties, plants and equipment, at cost (HEP: $2,053,174 and $2,047,674, respectively)
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7,052,866
|
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7,237,297
|
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||
Less accumulated depreciation (HEP: $(584,651) and $(552,786), respectively)
|
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(2,567,686
|
)
|
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(2,414,585
|
)
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||
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4,485,180
|
|
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4,822,712
|
|
||
Operating lease right-of-use assets (HEP: $3,377 and $2,652, respectively)
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390,497
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467,109
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||||
Other assets: Turnaround costs
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359,203
|
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521,278
|
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Goodwill (HEP: $312,873 and $312,873, respectively)
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2,373,912
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2,373,907
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|
||
Intangibles and other (HEP: $350,056 and $319,569, respectively)
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651,494
|
|
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673,646
|
|
||
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3,384,609
|
|
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3,568,831
|
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||
Total assets
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$
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11,063,820
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$
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12,164,841
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||||
LIABILITIES AND EQUITY
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||||
Current liabilities:
|
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||||
Accounts payable (HEP: $14,888 and $18,050, respectively)
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$
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870,695
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$
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1,215,555
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Income taxes payable
|
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18,759
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27,965
|
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Operating lease liabilities (HEP: $3,766 and $3,608, respectively)
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102,336
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104,415
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Accrued liabilities (HEP: $30,886 and $30,418, respectively)
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341,252
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337,993
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||
Total current liabilities
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1,333,042
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1,685,928
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||||
Long-term debt (HEP: $1,486,648 and $1,462,031, respectively)
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2,480,746
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2,455,640
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Noncurrent operating lease liabilities (HEP: $70,167 and $72,000, respectively)
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318,955
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364,420
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Deferred income taxes (HEP: $432 and $424, respectively)
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765,572
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889,270
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Other long-term liabilities (HEP: $58,351 and $59,021, respectively)
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250,994
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260,157
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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; 256,042,554 shares issued as of June 30, 2020 and December 31, 2019
|
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2,560
|
|
|
2,560
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Additional capital
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4,215,894
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4,204,547
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Retained earnings
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4,148,390
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4,744,120
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Accumulated other comprehensive income
|
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2,225
|
|
|
14,774
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|
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Common stock held in treasury, at cost – 94,144,334 and 94,196,029 shares as of June 30, 2020 and December 31, 2019, respectively
|
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(2,986,487
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)
|
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(2,987,808
|
)
|
||
Total HollyFrontier stockholders’ equity
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5,382,582
|
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|
5,978,193
|
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||
Noncontrolling interest
|
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531,929
|
|
|
531,233
|
|
||
Total equity
|
|
5,914,511
|
|
|
6,509,426
|
|
||
Total liabilities and equity
|
|
$
|
11,063,820
|
|
|
$
|
12,164,841
|
|
|
|
Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2020
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2019
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2020
|
|
2019
|
||||||||
|
|
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|
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|
||||||||
Sales and other revenues
|
|
$
|
2,062,930
|
|
|
$
|
4,782,615
|
|
|
$
|
5,463,475
|
|
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$
|
8,679,862
|
|
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)
|
|
1,576,996
|
|
|
3,704,884
|
|
|
4,270,722
|
|
|
6,904,089
|
|
||||
Lower of cost or market inventory valuation adjustment
|
|
(269,904
|
)
|
|
47,801
|
|
|
290,560
|
|
|
(184,545
|
)
|
||||
|
|
1,307,092
|
|
|
3,752,685
|
|
|
4,561,282
|
|
|
6,719,544
|
|
||||
Operating expenses (exclusive of depreciation and amortization)
|
|
303,359
|
|
|
333,252
|
|
|
631,704
|
|
|
664,844
|
|
||||
Selling, general and administrative expenses (exclusive of depreciation and amortization)
|
|
75,369
|
|
|
85,317
|
|
|
163,106
|
|
|
173,351
|
|
||||
Depreciation and amortization
|
|
130,178
|
|
|
126,908
|
|
|
270,753
|
|
|
248,329
|
|
||||
Long-lived asset and goodwill impairments
|
|
436,908
|
|
|
152,712
|
|
|
436,908
|
|
|
152,712
|
|
||||
Total operating costs and expenses
|
|
2,252,906
|
|
|
4,450,874
|
|
|
6,063,753
|
|
|
7,958,780
|
|
||||
Income (loss) from operations
|
|
(189,976
|
)
|
|
331,741
|
|
|
(600,278
|
)
|
|
721,082
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
||||||||
Earnings of equity method investments
|
|
2,156
|
|
|
1,783
|
|
|
3,870
|
|
|
3,883
|
|
||||
Interest income
|
|
1,506
|
|
|
4,588
|
|
|
5,579
|
|
|
10,963
|
|
||||
Interest expense
|
|
(32,695
|
)
|
|
(34,264
|
)
|
|
(55,334
|
)
|
|
(70,911
|
)
|
||||
Gain on sales-type leases
|
|
33,834
|
|
|
—
|
|
|
33,834
|
|
|
—
|
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(25,915
|
)
|
|
—
|
|
||||
Gain (loss) on foreign currency transactions
|
|
2,285
|
|
|
2,213
|
|
|
(1,948
|
)
|
|
4,478
|
|
||||
Other, net
|
|
1,572
|
|
|
92
|
|
|
3,422
|
|
|
649
|
|
||||
|
|
8,658
|
|
|
(25,588
|
)
|
|
(36,492
|
)
|
|
(50,938
|
)
|
||||
Income (loss) before income taxes
|
|
(181,318
|
)
|
|
306,153
|
|
|
(636,770
|
)
|
|
670,144
|
|
||||
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
||||||||
Current
|
|
(65,607
|
)
|
|
63,364
|
|
|
(77,047
|
)
|
|
118,648
|
|
||||
Deferred
|
|
34,696
|
|
|
25,972
|
|
|
(116,030
|
)
|
|
58,193
|
|
||||
|
|
(30,911
|
)
|
|
89,336
|
|
|
(193,077
|
)
|
|
176,841
|
|
||||
Net income (loss)
|
|
(150,407
|
)
|
|
216,817
|
|
|
(443,693
|
)
|
|
493,303
|
|
||||
Less net income attributable to noncontrolling interest
|
|
26,270
|
|
|
19,902
|
|
|
37,607
|
|
|
43,333
|
|
||||
Net income (loss) attributable to HollyFrontier stockholders
|
|
$
|
(176,677
|
)
|
|
$
|
196,915
|
|
|
$
|
(481,300
|
)
|
|
$
|
449,970
|
|
Earnings (loss) per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(1.09
|
)
|
|
$
|
1.16
|
|
|
$
|
(2.97
|
)
|
|
$
|
2.64
|
|
Diluted
|
|
$
|
(1.09
|
)
|
|
$
|
1.15
|
|
|
$
|
(2.97
|
)
|
|
$
|
2.62
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
161,889
|
|
|
169,356
|
|
|
161,882
|
|
|
170,100
|
|
||||
Diluted
|
|
161,889
|
|
|
170,547
|
|
|
161,882
|
|
|
171,264
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(150,407
|
)
|
|
$
|
216,817
|
|
|
$
|
(443,693
|
)
|
|
$
|
493,303
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
|
11,710
|
|
|
9,160
|
|
|
(9,876
|
)
|
|
13,523
|
|
||||
Hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of cash flow hedging instruments
|
|
1,513
|
|
|
(693
|
)
|
|
(5,235
|
)
|
|
14,897
|
|
||||
Reclassification adjustments to net income (loss) on settlement of cash flow hedging instruments
|
|
5,401
|
|
|
(5,321
|
)
|
|
(1,175
|
)
|
|
(6,963
|
)
|
||||
Net unrealized gain (loss) on hedging instruments
|
|
6,914
|
|
|
(6,014
|
)
|
|
(6,410
|
)
|
|
7,934
|
|
||||
Pension and other post-retirement benefit obligations:
|
|
|
|
|
|
|
|
|
||||||||
Actuarial gain (loss) on pension plans
|
|
—
|
|
|
72
|
|
|
(45
|
)
|
|
—
|
|
||||
Actuarial gain on post-retirement healthcare plans
|
|
—
|
|
|
2
|
|
|
3
|
|
|
—
|
|
||||
Net change in pension and other post-retirement benefit obligations
|
|
—
|
|
|
74
|
|
|
(42
|
)
|
|
—
|
|
||||
Other comprehensive income (loss) before income taxes
|
|
18,624
|
|
|
3,220
|
|
|
(16,328
|
)
|
|
21,457
|
|
||||
Income tax expense (benefit)
|
|
4,250
|
|
|
416
|
|
|
(3,779
|
)
|
|
4,878
|
|
||||
Other comprehensive income (loss)
|
|
14,374
|
|
|
2,804
|
|
|
(12,549
|
)
|
|
16,579
|
|
||||
Total comprehensive income (loss)
|
|
(136,033
|
)
|
|
219,621
|
|
|
(456,242
|
)
|
|
509,882
|
|
||||
Less noncontrolling interest in comprehensive income
|
|
26,270
|
|
|
19,902
|
|
|
37,607
|
|
|
43,333
|
|
||||
Comprehensive income (loss) attributable to HollyFrontier stockholders
|
|
$
|
(162,303
|
)
|
|
$
|
199,719
|
|
|
$
|
(493,849
|
)
|
|
$
|
466,549
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(443,693
|
)
|
|
$
|
493,303
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
270,753
|
|
|
248,329
|
|
||
Long-lived asset and goodwill impairments
|
|
436,908
|
|
|
152,712
|
|
||
Lower of cost or market inventory valuation adjustment
|
|
290,560
|
|
|
(184,545
|
)
|
||
Earnings of equity method investments, inclusive of distributions
|
|
(1,298
|
)
|
|
—
|
|
||
Loss on early extinguishment of debt
|
|
25,915
|
|
|
—
|
|
||
Gain on sales-type leases
|
|
(33,834
|
)
|
|
—
|
|
||
(Gain) loss on sale of assets
|
|
(357
|
)
|
|
73
|
|
||
Deferred income taxes
|
|
(116,030
|
)
|
|
58,193
|
|
||
Equity-based compensation expense
|
|
14,289
|
|
|
21,562
|
|
||
Change in fair value – derivative instruments
|
|
(9,377
|
)
|
|
31,454
|
|
||
(Increase) decrease in current assets:
|
|
|
|
|
||||
Accounts receivable
|
|
281,011
|
|
|
(72,300
|
)
|
||
Inventories
|
|
(764
|
)
|
|
(6,708
|
)
|
||
Income taxes receivable
|
|
(72,382
|
)
|
|
(26,835
|
)
|
||
Prepayments and other
|
|
9,704
|
|
|
14,020
|
|
||
Increase (decrease) in current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
(314,892
|
)
|
|
292,893
|
|
||
Income taxes payable
|
|
(9,268
|
)
|
|
7,826
|
|
||
Accrued liabilities
|
|
3,340
|
|
|
38,003
|
|
||
Turnaround expenditures
|
|
(49,248
|
)
|
|
(110,273
|
)
|
||
Other, net
|
|
27,965
|
|
|
11,843
|
|
||
Net cash provided by operating activities
|
|
309,302
|
|
|
969,550
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Additions to properties, plants and equipment
|
|
(98,996
|
)
|
|
(102,717
|
)
|
||
Additions to properties, plants and equipment – HEP
|
|
(30,740
|
)
|
|
(17,752
|
)
|
||
Purchase of Sonneborn, net of cash acquired
|
|
—
|
|
|
(662,665
|
)
|
||
Investment in equity company - HEP
|
|
(2,400
|
)
|
|
—
|
|
||
Other, net
|
|
470
|
|
|
825
|
|
||
Net cash used for investing activities
|
|
(131,666
|
)
|
|
(782,309
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings under credit agreements
|
|
168,000
|
|
|
175,000
|
|
||
Repayments under credit agreements
|
|
(138,500
|
)
|
|
(156,500
|
)
|
||
Proceeds from issuance of senior notes - HEP
|
|
500,000
|
|
|
—
|
|
||
Redemption of senior notes - HEP
|
|
(522,500
|
)
|
|
—
|
|
||
Purchase of treasury stock
|
|
(1,243
|
)
|
|
(266,996
|
)
|
||
Dividends
|
|
(114,430
|
)
|
|
(113,508
|
)
|
||
Distributions to noncontrolling interests
|
|
(51,008
|
)
|
|
(66,703
|
)
|
||
Contributions from noncontrolling interests
|
|
13,263
|
|
|
—
|
|
||
Payments on finance leases
|
|
(843
|
)
|
|
(783
|
)
|
||
Deferred financing costs
|
|
(8,714
|
)
|
|
—
|
|
||
Other, net
|
|
456
|
|
|
(374
|
)
|
||
Net cash used for financing activities
|
|
(155,519
|
)
|
|
(429,864
|
)
|
||
|
|
|
|
|
||||
Effect of exchange rate on cash flow
|
|
(4,770
|
)
|
|
2,515
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
|
||||
Increase (decrease) for the period
|
|
17,347
|
|
|
(240,108
|
)
|
||
Beginning of period
|
|
885,162
|
|
|
1,154,752
|
|
||
End of period
|
|
$
|
902,509
|
|
|
$
|
914,644
|
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
|
||||
Interest
|
|
$
|
(64,003
|
)
|
|
$
|
(67,620
|
)
|
Income taxes, net
|
|
$
|
(4,738
|
)
|
|
$
|
(138,587
|
)
|
|
HollyFrontier Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||
|
Common Stock
|
|
Additional Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Non-controlling Interest
|
|
Total
Equity |
||||||||||||||
|
|
||||||||||||||||||||||||||
Balance at December 31, 2019
|
$
|
2,560
|
|
|
$
|
4,204,547
|
|
|
$
|
4,744,120
|
|
|
$
|
14,774
|
|
|
$
|
(2,987,808
|
)
|
|
$
|
531,233
|
|
|
$
|
6,509,426
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
(304,623
|
)
|
|
—
|
|
|
—
|
|
|
11,337
|
|
|
(293,286
|
)
|
|||||||
Dividends ($0.35 declared per common share)
|
—
|
|
|
—
|
|
|
(57,248
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57,248
|
)
|
|||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,918
|
)
|
|
(33,918
|
)
|
|||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,923
|
)
|
|
—
|
|
|
—
|
|
|
(26,923
|
)
|
|||||||
Issuance of common stock under incentive compensation plans, net of forfeitures
|
—
|
|
|
(2,037
|
)
|
|
—
|
|
|
—
|
|
|
2,037
|
|
|
—
|
|
|
—
|
|
|||||||
Equity-based compensation
|
—
|
|
|
5,824
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
506
|
|
|
6,330
|
|
|||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,062
|
)
|
|
—
|
|
|
(1,062
|
)
|
|||||||
Purchase of HEP units for restricted grants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
(145
|
)
|
|||||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,304
|
|
|
7,304
|
|
|||||||
Balance at March 31, 2020
|
$
|
2,560
|
|
|
$
|
4,208,334
|
|
|
$
|
4,382,249
|
|
|
$
|
(12,149
|
)
|
|
$
|
(2,986,833
|
)
|
|
$
|
516,317
|
|
|
$
|
6,110,478
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
(176,677
|
)
|
|
—
|
|
|
—
|
|
|
26,270
|
|
|
(150,407
|
)
|
|||||||
Dividends ($0.35 declared per common share)
|
—
|
|
|
—
|
|
|
(57,182
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57,182
|
)
|
|||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,090
|
)
|
|
(17,090
|
)
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
14,374
|
|
|
—
|
|
|
—
|
|
|
14,374
|
|
|||||||
Issuance of common stock under incentive compensation plans, net of forfeitures
|
—
|
|
|
(527
|
)
|
|
—
|
|
|
—
|
|
|
527
|
|
|
—
|
|
|
—
|
|
|||||||
Equity-based compensation
|
—
|
|
|
7,484
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475
|
|
|
7,959
|
|
|||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(181
|
)
|
|
—
|
|
|
(181
|
)
|
|||||||
Purchase of HEP units for restricted grants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,959
|
|
|
5,959
|
|
|||||||
Reclamation of stockholder short-swing profit
|
—
|
|
|
603
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
603
|
|
|||||||
Balance at June 30, 2020
|
$
|
2,560
|
|
|
$
|
4,215,894
|
|
|
$
|
4,148,390
|
|
|
$
|
2,225
|
|
|
$
|
(2,986,487
|
)
|
|
$
|
531,929
|
|
|
$
|
5,914,511
|
|
|
HollyFrontier Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||
|
Common Stock
|
|
Additional Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income
|
|
Treasury Stock
|
|
Non-controlling Interest
|
|
Total
Equity |
||||||||||||||
|
|
||||||||||||||||||||||||||
Balance at December 31, 2018
|
$
|
2,560
|
|
|
$
|
4,196,125
|
|
|
$
|
4,196,902
|
|
|
$
|
13,623
|
|
|
$
|
(2,490,639
|
)
|
|
$
|
540,488
|
|
|
$
|
6,459,059
|
|
Net income
|
—
|
|
|
—
|
|
|
253,055
|
|
|
—
|
|
|
—
|
|
|
23,431
|
|
|
276,486
|
|
|||||||
Dividends ($0.33 declared per common share)
|
—
|
|
|
—
|
|
|
(56,849
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56,849
|
)
|
|||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,673
|
)
|
|
(33,673
|
)
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
13,775
|
|
|
—
|
|
|
—
|
|
|
13,775
|
|
|||||||
Issuance of common stock under incentive compensation plans, net of forfeitures
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||||||
Equity-based compensation
|
—
|
|
|
8,713
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
661
|
|
|
9,374
|
|
|||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73,225
|
)
|
|
—
|
|
|
(73,225
|
)
|
|||||||
Purchase of HEP units for restricted grants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(373
|
)
|
|
(373
|
)
|
|||||||
Balance at March 31, 2019
|
$
|
2,560
|
|
|
$
|
4,204,841
|
|
|
$
|
4,393,108
|
|
|
$
|
27,398
|
|
|
$
|
(2,563,867
|
)
|
|
$
|
530,534
|
|
|
$
|
6,594,574
|
|
Net income
|
—
|
|
|
—
|
|
|
196,915
|
|
|
—
|
|
|
—
|
|
|
19,902
|
|
|
216,817
|
|
|||||||
Dividends ($0.33 declared per common share)
|
—
|
|
|
—
|
|
|
(56,659
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56,659
|
)
|
|||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,030
|
)
|
|
(33,030
|
)
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
2,804
|
|
|
—
|
|
|
—
|
|
|
2,804
|
|
|||||||
Equity attributable to HEP common unit issuances, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(140
|
)
|
|
(140
|
)
|
|||||||
Issuance of common stock under incentive compensation plans, net of forfeitures
|
—
|
|
|
(138
|
)
|
|
—
|
|
|
—
|
|
|
138
|
|
|
—
|
|
|
—
|
|
|||||||
Equity-based compensation
|
—
|
|
|
11,602
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
586
|
|
|
12,188
|
|
|||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(205,555
|
)
|
|
—
|
|
|
(205,555
|
)
|
|||||||
Balance at June 30, 2019
|
$
|
2,560
|
|
|
$
|
4,216,305
|
|
|
$
|
4,533,364
|
|
|
$
|
30,202
|
|
|
$
|
(2,769,284
|
)
|
|
$
|
517,852
|
|
|
$
|
6,530,999
|
|
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 Sonneborn (as defined below) with manufacturing facilities in Petrolia, Pennsylvania and the Netherlands, which produce specialty lubricant products, such as white oils, petrolatums and waxes;
|
•
|
owned and operated Red Giant Oil Company LLC (“Red Giant Oil”), which supplies locomotive engine oil and has storage and distribution facilities in Iowa, Kansas, Utah and Wyoming, along with a blending and packaging facility in Texas;
|
•
|
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”). HEP owns and operates logistic assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units that principally support our refining and marketing operations in the Mid-Continent, Southwest and Rocky Mountain regions of the United States.
|
NOTE 2:
|
Holly Energy Partners
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Operating lease revenues
|
|
$
|
5,442
|
|
|
$
|
8,267
|
|
|
$
|
13,732
|
|
|
$
|
16,466
|
|
Gain on sales-type leases
|
|
$
|
33,834
|
|
|
$
|
—
|
|
|
$
|
33,834
|
|
|
$
|
—
|
|
Sales-type lease interest income
|
|
$
|
642
|
|
|
$
|
—
|
|
|
$
|
642
|
|
|
$
|
—
|
|
Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable
|
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
286
|
|
|
$
|
—
|
|
NOTE 3:
|
Revenues
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Revenues by type
|
|
|
|
|
|
|
|
|
||||||||
Refined product revenues
|
|
|
|
|
|
|
|
|
||||||||
Transportation fuels (1)
|
|
$
|
1,385,246
|
|
|
$
|
3,633,966
|
|
|
$
|
3,863,593
|
|
|
$
|
6,441,407
|
|
Specialty lubricant products (2)
|
|
340,284
|
|
|
507,183
|
|
|
811,237
|
|
|
951,525
|
|
||||
Asphalt, fuel oil and other products (3)
|
|
145,298
|
|
|
248,861
|
|
|
346,641
|
|
|
467,718
|
|
||||
Total refined product revenues
|
|
1,870,828
|
|
|
4,390,010
|
|
|
5,021,471
|
|
|
7,860,650
|
|
||||
Excess crude oil revenues (4)
|
|
163,394
|
|
|
350,683
|
|
|
363,173
|
|
|
733,313
|
|
||||
Transportation and logistic services
|
|
19,244
|
|
|
28,382
|
|
|
45,670
|
|
|
59,520
|
|
||||
Other revenues (5)
|
|
9,464
|
|
|
13,540
|
|
|
33,161
|
|
|
26,379
|
|
||||
Total sales and other revenues
|
|
$
|
2,062,930
|
|
|
$
|
4,782,615
|
|
|
$
|
5,463,475
|
|
|
$
|
8,679,862
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Refined product revenues by market
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
|
|
|
|
|
|
|
||||||||
Mid-Continent
|
|
$
|
867,660
|
|
|
$
|
2,361,969
|
|
|
$
|
2,400,584
|
|
|
$
|
4,092,474
|
|
Southwest
|
|
436,073
|
|
|
1,008,806
|
|
|
1,170,248
|
|
|
1,858,955
|
|
||||
Rocky Mountains
|
|
274,973
|
|
|
613,063
|
|
|
743,752
|
|
|
1,128,398
|
|
||||
Northeast
|
|
110,909
|
|
|
148,116
|
|
|
270,733
|
|
|
276,007
|
|
||||
Canada
|
|
120,870
|
|
|
174,772
|
|
|
303,523
|
|
|
352,127
|
|
||||
Europe, Asia and Latin America
|
|
60,343
|
|
|
83,284
|
|
|
132,631
|
|
|
152,689
|
|
||||
Total refined product revenues
|
|
$
|
1,870,828
|
|
|
$
|
4,390,010
|
|
|
$
|
5,021,471
|
|
|
$
|
7,860,650
|
|
(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 include revenues attributable to our Refining and Lubricants and Specialty Products segments of $131.9 million and $13.4 million, respectively, for the three months ended June 30, 2020, $280.7 million and $65.9 million, respectively for the six months ended June 30, 2020, $210.7 million and $38.2 million, respectively, for the three months ended June 30, 2019, and $380.6 million and $87.2 million, respectively, for the six months ended June 30, 2019.
|
(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.
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(In thousands)
|
||||||
Balance at January 1
|
|
$
|
4,652
|
|
|
$
|
132
|
|
Sonneborn acquisition
|
|
—
|
|
|
6,463
|
|
||
Increase
|
|
16,115
|
|
|
10,813
|
|
||
Recognized as revenue
|
|
(14,980
|
)
|
|
(12,906
|
)
|
||
Balance at June 30
|
|
$
|
5,787
|
|
|
$
|
4,502
|
|
|
|
Remainder of 2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
|||||
|
|
(In thousands)
|
|||||||||||||
Refined product sales volumes (barrels)
|
|
10,398
|
|
|
15,958
|
|
|
12,799
|
|
|
24,465
|
|
|
63,620
|
|
|
|
Remainder of 2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
HEP contractual minimum revenues
|
|
$
|
13,164
|
|
|
$
|
21,942
|
|
|
$
|
10,954
|
|
|
$
|
20,293
|
|
|
$
|
66,353
|
|
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, 2020
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Commodity price swaps
|
|
$
|
3,561
|
|
|
$
|
—
|
|
|
$
|
3,561
|
|
|
$
|
—
|
|
Commodity forward contracts
|
|
4,219
|
|
|
—
|
|
|
4,219
|
|
|
—
|
|
||||
Foreign currency forward contracts
|
|
7,361
|
|
|
—
|
|
|
7,361
|
|
|
—
|
|
||||
Total assets
|
|
$
|
15,141
|
|
|
$
|
—
|
|
|
$
|
15,141
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
NYMEX futures contracts
|
|
$
|
6,987
|
|
|
$
|
6,987
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity price swaps
|
|
395
|
|
|
—
|
|
|
395
|
|
|
—
|
|
||||
Commodity forward contracts
|
|
6,156
|
|
|
—
|
|
|
6,156
|
|
|
—
|
|
||||
RINs credit obligations (1)
|
|
5,349
|
|
|
—
|
|
|
5,349
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
18,887
|
|
|
$
|
6,987
|
|
|
$
|
11,900
|
|
|
$
|
—
|
|
|
|
|
|
Fair Value by Input Level
|
||||||||||||
|
|
Carrying Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
|||||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Commodity price swaps
|
|
$
|
13,455
|
|
|
$
|
—
|
|
|
$
|
13,455
|
|
|
$
|
—
|
|
Commodity forward contracts
|
|
4,133
|
|
|
—
|
|
|
4,133
|
|
|
$
|
—
|
|
|||
Total assets
|
|
$
|
17,588
|
|
|
$
|
—
|
|
|
$
|
17,588
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
NYMEX futures contracts
|
|
$
|
2,578
|
|
|
$
|
2,578
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity price swaps
|
|
1,230
|
|
|
—
|
|
|
1,230
|
|
|
—
|
|
||||
Commodity forward contracts
|
|
3,685
|
|
|
—
|
|
|
3,685
|
|
|
—
|
|
||||
Foreign currency forward contracts
|
|
6,722
|
|
|
—
|
|
|
6,722
|
|
|
—
|
|
||||
Total liabilities
|
|
$
|
14,215
|
|
|
$
|
2,578
|
|
|
$
|
11,637
|
|
|
$
|
—
|
|
NOTE 5:
|
Earnings Per Share
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||
Net income (loss) attributable to HollyFrontier stockholders
|
|
$
|
(176,677
|
)
|
|
$
|
196,915
|
|
|
$
|
(481,300
|
)
|
|
$
|
449,970
|
|
Participating securities’ (restricted stock) share in earnings
|
|
—
|
|
|
283
|
|
|
—
|
|
|
647
|
|
||||
Net income (loss) attributable to common shares
|
|
$
|
(176,677
|
)
|
|
$
|
196,632
|
|
|
$
|
(481,300
|
)
|
|
$
|
449,323
|
|
Average number of shares of common stock outstanding
|
|
161,889
|
|
|
169,356
|
|
|
161,882
|
|
|
170,100
|
|
||||
Effect of dilutive variable restricted stock units and performance share units (1)
|
|
—
|
|
|
1,191
|
|
|
—
|
|
|
1,164
|
|
||||
Average number of shares of common stock outstanding assuming dilution
|
|
161,889
|
|
|
170,547
|
|
|
161,882
|
|
|
171,264
|
|
||||
Basic earnings (loss) per share
|
|
$
|
(1.09
|
)
|
|
$
|
1.16
|
|
|
$
|
(2.97
|
)
|
|
$
|
2.64
|
|
Diluted earnings (loss) per share
|
|
$
|
(1.09
|
)
|
|
$
|
1.15
|
|
|
$
|
(2.97
|
)
|
|
$
|
2.62
|
|
(1) Excludes anti-dilutive restricted and performance share units of:
|
|
590
|
|
|
160
|
|
|
585
|
|
|
131
|
|
NOTE 6:
|
Stock-Based Compensation
|
Restricted Stock Units
|
|
Grants
|
|
Weighted Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value ($000)
|
|||||
|
|
|
|
|
|
|
|||||
Outstanding at January 1, 2020
|
|
1,101,781
|
|
|
$
|
53.30
|
|
|
|
||
Granted
|
|
62,776
|
|
|
35.58
|
|
|
|
|||
Vested
|
|
(79,956
|
)
|
|
44.30
|
|
|
|
|||
Forfeited
|
|
(59,494
|
)
|
|
53.41
|
|
|
|
|||
Converted from performance share units
|
|
19,450
|
|
|
38.13
|
|
|
|
|||
Outstanding at June 30, 2020
|
|
1,044,557
|
|
|
52.48
|
|
|
$
|
30,501
|
|
Performance Share Units
|
|
Grants
|
|
|
|
|
|
Outstanding at January 1, 2020
|
|
375,588
|
|
Vested
|
|
(12,129
|
)
|
Forfeited
|
|
(18,766
|
)
|
Converted to restricted stock units
|
|
(19,450
|
)
|
Outstanding at June 30, 2020
|
|
325,243
|
|
NOTE 7:
|
Inventories
|
|
|
June 30,
2020 |
|
December 31, 2019
|
||||
|
|
(In thousands)
|
||||||
Crude oil
|
|
$
|
537,863
|
|
|
$
|
489,169
|
|
Other raw materials and unfinished products(1)
|
|
301,956
|
|
|
394,045
|
|
||
Finished products(2)
|
|
668,955
|
|
|
639,938
|
|
||
Lower of cost or market reserve
|
|
(530,923
|
)
|
|
(240,363
|
)
|
||
Process chemicals(3)
|
|
33,677
|
|
|
36,786
|
|
||
Repair and maintenance supplies and other (4)
|
|
162,173
|
|
|
154,627
|
|
||
Total inventory
|
|
$
|
1,173,701
|
|
|
$
|
1,474,202
|
|
(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,
2020 |
|
December 31,
2019 |
||||
|
|
(In thousands)
|
||||||
HollyFrontier 5.875% Senior Notes
|
|
|
|
|
||||
Principal
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
Unamortized discount and debt issuance costs
|
|
(5,902
|
)
|
|
(6,391
|
)
|
||
|
|
994,098
|
|
|
993,609
|
|
||
|
|
|
|
|
||||
HEP Credit Agreement
|
|
995,000
|
|
|
965,500
|
|
||
|
|
|
|
|
||||
HEP 5.0% Senior Notes
|
|
|
|
|
||||
Principal
|
|
500,000
|
|
|
—
|
|
||
Unamortized discount and debt issuance costs
|
|
(8,352
|
)
|
|
—
|
|
||
|
|
491,648
|
|
|
—
|
|
||
|
|
|
|
|
||||
HEP 6.0% Senior Notes
|
|
|
|
|
||||
Principal
|
|
—
|
|
|
500,000
|
|
||
Unamortized discount and debt issuance costs
|
|
—
|
|
|
(3,469
|
)
|
||
|
|
—
|
|
|
496,531
|
|
||
|
|
|
|
|
||||
Total HEP long-term debt
|
|
1,486,648
|
|
|
1,462,031
|
|
||
|
|
|
|
|
||||
Total long-term debt
|
|
$
|
2,480,746
|
|
|
$
|
2,455,640
|
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
|
(In thousands)
|
||||||
|
|
|
|
|
||||
HollyFrontier senior notes
|
|
$
|
1,105,120
|
|
|
$
|
1,127,610
|
|
|
|
|
|
|
||||
HEP senior notes
|
|
$
|
477,835
|
|
|
$
|
522,045
|
|
|
|
Net 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, |
||||||||||||
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||
Commodity contracts
|
|
$
|
6,914
|
|
|
$
|
(6,014
|
)
|
|
Sales and other revenues
|
|
$
|
(5,403
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
Cost of products sold
|
|
459
|
|
|
5,674
|
|
||||||
|
|
|
|
|
|
Operating expenses
|
|
(457
|
)
|
|
(353
|
)
|
||||||
Total
|
|
$
|
6,914
|
|
|
$
|
(6,014
|
)
|
|
|
|
$
|
(5,401
|
)
|
|
$
|
5,321
|
|
|
|
Net 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, |
||||||||||||
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||
Commodity contracts
|
|
$
|
(6,410
|
)
|
|
$
|
7,934
|
|
|
Sales and other revenues
|
|
$
|
49
|
|
|
$
|
(1,799
|
)
|
|
|
|
|
|
|
Cost of products sold
|
|
2,289
|
|
|
9,295
|
|
||||||
|
|
|
|
|
|
Operating expenses
|
|
(1,163
|
)
|
|
(533
|
)
|
||||||
Total
|
|
$
|
(6,410
|
)
|
|
$
|
7,934
|
|
|
|
|
$
|
1,175
|
|
|
$
|
6,963
|
|
|
|
Gain (Loss) Recognized in Earnings
|
||||||||||||||||
Derivatives Not Designated as Hedging Instruments
|
|
Income Statement Location
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|||||||||||
|
|
|
|
(In thousands)
|
||||||||||||||
Commodity contracts
|
|
Cost of products sold
|
|
$
|
(7,180
|
)
|
|
$
|
338
|
|
|
$
|
17,909
|
|
|
$
|
(7,079
|
)
|
|
|
Interest expense
|
|
(5,100
|
)
|
|
741
|
|
|
4,712
|
|
|
(1,275
|
)
|
||||
Foreign currency contracts
|
|
Gain (loss) on foreign currency transactions
|
|
(14,315
|
)
|
|
(7,090
|
)
|
|
19,160
|
|
|
(14,696
|
)
|
||||
|
|
Total
|
|
$
|
(26,595
|
)
|
|
$
|
(6,011
|
)
|
|
$
|
41,781
|
|
|
$
|
(23,050
|
)
|
|
|
|
|
Notional Contract Volumes by Year of Maturity
|
|
|
|||||
|
|
Total Outstanding Notional
|
|
2020
|
|
2021
|
|
Unit of Measure
|
|||
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|||
Natural gas price swaps - long
|
|
2,700,000
|
|
|
900,000
|
|
|
1,800,000
|
|
|
MMBTU
|
Crude oil price swaps (basis spread) - long
|
|
2,392,000
|
|
|
2,392,000
|
|
|
—
|
|
|
Barrels
|
Forward diesel contracts - short
|
|
200,000
|
|
|
200,000
|
|
|
—
|
|
|
Barrels
|
|
|
|
|
|
|
|
|
|
|||
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|||
NYMEX futures (WTI) - short
|
|
890,000
|
|
|
890,000
|
|
|
—
|
|
|
Barrels
|
Crude oil price swaps (basis spread) - long
|
|
736,000
|
|
|
736,000
|
|
|
—
|
|
|
Barrels
|
Forward gasoline and diesel contracts - long
|
|
464,000
|
|
|
464,000
|
|
|
—
|
|
|
Barrels
|
Foreign currency forward contracts
|
|
422,074,120
|
|
|
214,491,576
|
|
|
207,582,544
|
|
|
U.S. dollar
|
Forward commodity contracts (platinum)
|
|
40,867
|
|
|
—
|
|
|
40,867
|
|
|
Troy ounces
|
|
|
Derivatives in Net Asset Position
|
|
Derivatives in Net Liability Position
|
||||||||||||||||||||
|
|
Gross Assets
|
|
Gross Liabilities Offset in Balance Sheet
|
|
Net Assets Recognized in Balance Sheet
|
|
Gross Liabilities
|
|
Gross Assets Offset in Balance Sheet
|
|
Net Liabilities Recognized in Balance Sheet
|
||||||||||||
|
|
|
|
(In thousands)
|
|
|
||||||||||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives designated as cash flow hedging instruments:
|
|
|
||||||||||||||||||||||
Commodity price swap contracts
|
|
$
|
1,800
|
|
|
$
|
(1,194
|
)
|
|
$
|
606
|
|
|
$
|
395
|
|
|
$
|
—
|
|
|
$
|
395
|
|
Commodity forward contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,134
|
|
|
—
|
|
|
2,134
|
|
||||||
|
|
$
|
1,800
|
|
|
$
|
(1,194
|
)
|
|
$
|
606
|
|
|
$
|
2,529
|
|
|
$
|
—
|
|
|
$
|
2,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives not designated as cash flow hedging instruments:
|
|
|
||||||||||||||||||||||
NYMEX futures contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,987
|
|
|
$
|
—
|
|
|
$
|
6,987
|
|
Commodity price swap contracts
|
|
2,955
|
|
|
—
|
|
|
2,955
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Commodity forward contracts
|
|
4,219
|
|
|
—
|
|
|
4,219
|
|
|
4,022
|
|
|
—
|
|
|
4,022
|
|
||||||
Foreign currency forward contracts
|
|
9,765
|
|
|
(2,404
|
)
|
|
7,361
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
$
|
16,939
|
|
|
$
|
(2,404
|
)
|
|
$
|
14,535
|
|
|
$
|
11,009
|
|
|
$
|
—
|
|
|
$
|
11,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total net balance
|
|
|
|
|
|
$
|
15,141
|
|
|
|
|
|
|
$
|
13,538
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance sheet classification:
|
|
Prepayment and other
|
|
$
|
15,141
|
|
|
Accrued liabilities
|
|
$
|
13,143
|
|
||||||||||||
|
|
|
|
|
|
Other long-term liabilities
|
|
395
|
|
|||||||||||||||
|
|
|
|
$
|
15,141
|
|
|
|
|
|
|
$
|
13,538
|
|
|
|
Derivatives in Net Asset Position
|
|
Derivatives in Net Liability Position
|
||||||||||||||||||||
|
|
Gross Assets
|
|
Gross Liabilities Offset in Balance Sheet
|
|
Net Assets Recognized in Balance Sheet
|
|
Gross Liabilities
|
|
Gross Assets Offset in Balance Sheet
|
|
Net Liabilities Recognized in Balance Sheet
|
||||||||||||
|
|
|
|
(In thousands)
|
|
|
||||||||||||||||||
December 31, 2019
|
|
|
||||||||||||||||||||||
Derivatives designated as cash flow hedging instruments:
|
|
|
||||||||||||||||||||||
Commodity price swap contracts
|
|
$
|
7,526
|
|
|
$
|
(1,784
|
)
|
|
$
|
5,742
|
|
|
$
|
1,230
|
|
|
$
|
—
|
|
|
$
|
1,230
|
|
|
|
$
|
7,526
|
|
|
$
|
(1,784
|
)
|
|
$
|
5,742
|
|
|
$
|
1,230
|
|
|
$
|
—
|
|
|
$
|
1,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives not designated as cash flow hedging instruments:
|
|
|
||||||||||||||||||||||
NYMEX futures contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,578
|
|
|
$
|
—
|
|
|
$
|
2,578
|
|
Commodity price swap contracts
|
|
7,713
|
|
|
—
|
|
|
7,713
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Commodity forward contracts
|
|
4,133
|
|
|
—
|
|
|
4,133
|
|
|
3,685
|
|
|
—
|
|
|
3,685
|
|
||||||
Foreign currency forward contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,722
|
|
|
—
|
|
|
6,722
|
|
||||||
|
|
$
|
11,846
|
|
|
$
|
—
|
|
|
$
|
11,846
|
|
|
$
|
12,985
|
|
|
$
|
—
|
|
|
$
|
12,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total net balance
|
|
|
|
|
|
$
|
17,588
|
|
|
|
|
|
|
$
|
14,215
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance sheet classification:
|
|
Prepayment and other
|
|
$
|
17,588
|
|
|
Accrued liabilities
|
|
$
|
12,985
|
|
||||||||||||
|
|
|
|
|
|
Other long-term liabilities
|
|
1,230
|
|
|||||||||||||||
|
|
|
|
$
|
17,588
|
|
|
|
|
|
|
$
|
14,215
|
|
NOTE 11:
|
Equity
|
NOTE 12:
|
Other Comprehensive Income
|
|
|
Before-Tax
|
|
Tax Expense
(Benefit)
|
|
After-Tax
|
||||||
|
|
(In thousands)
|
||||||||||
Three Months Ended June 30, 2020
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
11,710
|
|
|
$
|
2,488
|
|
|
$
|
9,222
|
|
Net unrealized gain on hedging instruments
|
|
6,914
|
|
|
1,762
|
|
|
5,152
|
|
|||
Other comprehensive income attributable to HollyFrontier stockholders
|
|
$
|
18,624
|
|
|
$
|
4,250
|
|
|
$
|
14,374
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2019
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
9,160
|
|
|
$
|
1,950
|
|
|
$
|
7,210
|
|
Net unrealized loss on hedging instruments
|
|
(6,014
|
)
|
|
(1,534
|
)
|
|
(4,480
|
)
|
|||
Net change in pension and other post-retirement benefit obligations
|
|
74
|
|
|
—
|
|
|
74
|
|
|||
Other comprehensive income attributable to HollyFrontier stockholders
|
|
$
|
3,220
|
|
|
$
|
416
|
|
|
$
|
2,804
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
(9,876
|
)
|
|
$
|
(2,139
|
)
|
|
$
|
(7,737
|
)
|
Net unrealized loss on hedging instruments
|
|
(6,410
|
)
|
|
(1,636
|
)
|
|
(4,774
|
)
|
|||
Net change in pension and other post-retirement benefit obligations
|
|
(42
|
)
|
|
(4
|
)
|
|
(38
|
)
|
|||
Other comprehensive loss attributable to HollyFrontier stockholders
|
|
$
|
(16,328
|
)
|
|
$
|
(3,779
|
)
|
|
$
|
(12,549
|
)
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
||||||
Net change in foreign currency translation adjustment
|
|
$
|
13,523
|
|
|
$
|
2,855
|
|
|
$
|
10,668
|
|
Net unrealized gain on hedging instruments
|
|
7,934
|
|
|
2,023
|
|
|
5,911
|
|
|||
Other comprehensive income attributable to HollyFrontier stockholders
|
|
$
|
21,457
|
|
|
$
|
4,878
|
|
|
$
|
16,579
|
|
AOCI Component
|
|
Gain (Loss) Reclassified From AOCI
|
|
Income Statement Line Item
|
||||||
|
|
Three Months Ended June 30,
|
|
|
||||||
|
|
2020
|
|
2019
|
|
|
||||
|
|
(In thousands)
|
|
|
||||||
Hedging instruments:
|
|
|
|
|
|
|
||||
Commodity price swaps
|
|
$
|
(5,403
|
)
|
|
$
|
—
|
|
|
Sales and other revenues
|
|
|
459
|
|
|
5,674
|
|
|
Cost of products sold
|
||
|
|
(457
|
)
|
|
(353
|
)
|
|
Operating expenses
|
||
|
|
(5,401
|
)
|
|
5,321
|
|
|
|
||
|
|
(1,377
|
)
|
|
1,357
|
|
|
Income tax expense (benefit)
|
||
Total reclassifications for the period
|
|
$
|
(4,024
|
)
|
|
$
|
3,964
|
|
|
Net of tax
|
|
|
|
|
|
|
|
||||
|
|
Six Months Ended June 30,
|
|
|
||||||
|
|
2020
|
|
2019
|
|
|
||||
Hedging instruments:
|
|
|
|
|
|
|
||||
Commodity price swaps
|
|
$
|
49
|
|
|
$
|
(1,799
|
)
|
|
Sales and other revenues
|
|
|
2,289
|
|
|
9,295
|
|
|
Cost of products sold
|
||
|
|
(1,163
|
)
|
|
(533
|
)
|
|
Operating expenses
|
||
|
|
1,175
|
|
|
6,963
|
|
|
|
||
|
|
300
|
|
|
1,776
|
|
|
Income tax expense
|
||
Total reclassifications for the period
|
|
$
|
875
|
|
|
$
|
5,187
|
|
|
Net of tax
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
|
(In thousands)
|
||||||
Foreign currency translation adjustment
|
|
$
|
(9,924
|
)
|
|
$
|
(2,187
|
)
|
Unrealized loss on pension obligation
|
|
(1,798
|
)
|
|
(1,733
|
)
|
||
Unrealized gain on post-retirement benefit obligations
|
|
15,360
|
|
|
15,333
|
|
||
Unrealized gain (loss) on hedging instruments
|
|
(1,413
|
)
|
|
3,361
|
|
||
Accumulated other comprehensive income
|
|
$
|
2,225
|
|
|
$
|
14,774
|
|
NOTE 13:
|
Post-retirement Plans
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Service cost - benefit earned during the period
|
|
$
|
1,072
|
|
|
$
|
1,198
|
|
|
$
|
2,200
|
|
|
$
|
2,397
|
|
Interest cost on projected benefit obligations
|
|
413
|
|
|
440
|
|
|
856
|
|
|
877
|
|
||||
Expected return on plan assets
|
|
(976
|
)
|
|
(811
|
)
|
|
(2,009
|
)
|
|
(1,621
|
)
|
||||
Amortization of loss
|
|
—
|
|
|
830
|
|
|
—
|
|
|
1,660
|
|
||||
Net periodic pension expense
|
|
$
|
509
|
|
|
$
|
1,657
|
|
|
$
|
1,047
|
|
|
$
|
3,313
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Service cost – benefit earned during the period
|
|
$
|
446
|
|
|
$
|
386
|
|
|
$
|
899
|
|
|
$
|
771
|
|
Interest cost on projected benefit obligations
|
|
233
|
|
|
266
|
|
|
471
|
|
|
531
|
|
||||
Amortization of prior service credit
|
|
(870
|
)
|
|
(870
|
)
|
|
(1,741
|
)
|
|
(1,741
|
)
|
||||
Amortization of (gain) loss
|
|
12
|
|
|
(22
|
)
|
|
25
|
|
|
(44
|
)
|
||||
Net periodic post-retirement credit
|
|
$
|
(179
|
)
|
|
$
|
(240
|
)
|
|
$
|
(346
|
)
|
|
$
|
(483
|
)
|
NOTE 14:
|
Contingencies
|
NOTE 15:
|
Segment Information
|
|
|
Refining
|
|
Lubricants and Specialty Products
|
|
HEP
|
|
Corporate, Other
and Eliminations
|
|
Consolidated
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
1,690,042
|
|
|
$
|
353,644
|
|
|
$
|
19,244
|
|
|
$
|
—
|
|
|
$
|
2,062,930
|
|
Intersegment revenues
|
|
37,462
|
|
|
3,643
|
|
|
95,563
|
|
|
(136,668
|
)
|
|
—
|
|
|||||
|
|
$
|
1,727,504
|
|
|
$
|
357,287
|
|
|
$
|
114,807
|
|
|
$
|
(136,668
|
)
|
|
$
|
2,062,930
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
1,433,437
|
|
|
$
|
258,347
|
|
|
$
|
—
|
|
|
$
|
(114,788
|
)
|
|
$
|
1,576,996
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
(269,904
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(269,904
|
)
|
Operating expenses
|
|
$
|
239,359
|
|
|
$
|
47,840
|
|
|
$
|
34,737
|
|
|
$
|
(18,577
|
)
|
|
$
|
303,359
|
|
Selling, general and administrative expenses
|
|
$
|
32,811
|
|
|
$
|
35,919
|
|
|
$
|
2,535
|
|
|
$
|
4,104
|
|
|
$
|
75,369
|
|
Depreciation and amortization
|
|
$
|
81,694
|
|
|
$
|
19,779
|
|
|
$
|
24,008
|
|
|
$
|
4,697
|
|
|
$
|
130,178
|
|
Long-lived asset impairment (1)
|
|
$
|
215,242
|
|
|
$
|
204,708
|
|
|
$
|
16,958
|
|
|
$
|
—
|
|
|
$
|
436,908
|
|
Income (loss) from operations
|
|
$
|
(5,135
|
)
|
|
$
|
(209,306
|
)
|
|
$
|
36,569
|
|
|
$
|
(12,104
|
)
|
|
$
|
(189,976
|
)
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,156
|
|
|
$
|
—
|
|
|
$
|
2,156
|
|
Capital expenditures
|
|
$
|
12,102
|
|
|
$
|
4,311
|
|
|
$
|
11,798
|
|
|
$
|
17,776
|
|
|
$
|
45,987
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
4,208,776
|
|
|
$
|
545,346
|
|
|
$
|
28,382
|
|
|
$
|
111
|
|
|
$
|
4,782,615
|
|
Intersegment revenues
|
|
88,484
|
|
|
—
|
|
|
102,369
|
|
|
(190,853
|
)
|
|
—
|
|
|||||
|
|
$
|
4,297,260
|
|
|
$
|
545,346
|
|
|
$
|
130,751
|
|
|
$
|
(190,742
|
)
|
|
$
|
4,782,615
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
3,458,832
|
|
|
$
|
415,353
|
|
|
$
|
—
|
|
|
$
|
(169,301
|
)
|
|
$
|
3,704,884
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
47,801
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47,801
|
|
Operating expenses
|
|
$
|
252,715
|
|
|
$
|
59,122
|
|
|
$
|
40,608
|
|
|
$
|
(19,193
|
)
|
|
$
|
333,252
|
|
Selling, general and administrative expenses
|
|
$
|
29,638
|
|
|
$
|
42,087
|
|
|
$
|
1,988
|
|
|
$
|
11,604
|
|
|
$
|
85,317
|
|
Depreciation and amortization
|
|
$
|
76,225
|
|
|
$
|
23,020
|
|
|
$
|
24,241
|
|
|
$
|
3,422
|
|
|
$
|
126,908
|
|
Goodwill impairment
|
|
$
|
—
|
|
|
$
|
152,712
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
152,712
|
|
Income (loss) from operations
|
|
$
|
432,049
|
|
|
$
|
(146,948
|
)
|
|
$
|
63,914
|
|
|
$
|
(17,274
|
)
|
|
$
|
331,741
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,783
|
|
|
$
|
—
|
|
|
$
|
1,783
|
|
Capital expenditures
|
|
$
|
33,899
|
|
|
$
|
9,331
|
|
|
$
|
7,034
|
|
|
$
|
6,470
|
|
|
$
|
56,734
|
|
|
|
Refining
|
|
Lubricants and Specialty Products
|
|
HEP
|
|
Corporate, Other
and Eliminations |
|
Consolidated
Total |
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
4,540,662
|
|
|
$
|
877,143
|
|
|
$
|
45,670
|
|
|
$
|
—
|
|
|
$
|
5,463,475
|
|
Intersegment revenues
|
|
121,708
|
|
|
6,747
|
|
|
196,991
|
|
|
(325,446
|
)
|
|
—
|
|
|||||
|
|
$
|
4,662,370
|
|
|
$
|
883,890
|
|
|
$
|
242,661
|
|
|
$
|
(325,446
|
)
|
|
$
|
5,463,475
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
3,902,188
|
|
|
$
|
649,727
|
|
|
$
|
—
|
|
|
$
|
(281,193
|
)
|
|
$
|
4,270,722
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
290,560
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
290,560
|
|
Operating expenses
|
|
$
|
498,533
|
|
|
$
|
101,971
|
|
|
$
|
69,718
|
|
|
$
|
(38,518
|
)
|
|
$
|
631,704
|
|
Selling, general and administrative expenses
|
|
$
|
63,811
|
|
|
$
|
84,881
|
|
|
$
|
5,237
|
|
|
$
|
9,177
|
|
|
$
|
163,106
|
|
Depreciation and amortization
|
|
$
|
171,873
|
|
|
$
|
41,828
|
|
|
$
|
47,986
|
|
|
$
|
9,066
|
|
|
$
|
270,753
|
|
Long-lived asset impairment (1)
|
|
$
|
215,242
|
|
|
$
|
204,708
|
|
|
$
|
16,958
|
|
|
$
|
—
|
|
|
$
|
436,908
|
|
Income (loss) from operations
|
|
$
|
(479,837
|
)
|
|
$
|
(199,225
|
)
|
|
$
|
102,762
|
|
|
$
|
(23,978
|
)
|
|
$
|
(600,278
|
)
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,870
|
|
|
$
|
—
|
|
|
$
|
3,870
|
|
Capital expenditures
|
|
$
|
65,116
|
|
|
$
|
13,392
|
|
|
$
|
30,740
|
|
|
$
|
20,488
|
|
|
$
|
129,736
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues from external customers
|
|
$
|
7,581,442
|
|
|
$
|
1,038,680
|
|
|
$
|
59,520
|
|
|
$
|
220
|
|
|
$
|
8,679,862
|
|
Intersegment revenues
|
|
163,228
|
|
|
—
|
|
|
205,728
|
|
|
(368,956
|
)
|
|
—
|
|
|||||
|
|
$
|
7,744,670
|
|
|
$
|
1,038,680
|
|
|
$
|
265,248
|
|
|
$
|
(368,736
|
)
|
|
$
|
8,679,862
|
|
Cost of products sold (exclusive of lower of cost or market inventory)
|
|
$
|
6,421,372
|
|
|
$
|
804,370
|
|
|
$
|
—
|
|
|
$
|
(321,653
|
)
|
|
$
|
6,904,089
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
(184,545
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(184,545
|
)
|
Operating expenses
|
|
$
|
517,212
|
|
|
$
|
112,681
|
|
|
$
|
78,121
|
|
|
$
|
(43,170
|
)
|
|
$
|
664,844
|
|
Selling, general and administrative expenses
|
|
$
|
56,615
|
|
|
$
|
81,806
|
|
|
$
|
4,608
|
|
|
$
|
30,322
|
|
|
$
|
173,351
|
|
Depreciation and amortization
|
|
$
|
150,640
|
|
|
$
|
43,191
|
|
|
$
|
48,071
|
|
|
$
|
6,427
|
|
|
$
|
248,329
|
|
Goodwill impairment
|
|
$
|
—
|
|
|
$
|
152,712
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
152,712
|
|
Income (loss) from operations
|
|
$
|
783,376
|
|
|
$
|
(156,080
|
)
|
|
$
|
134,448
|
|
|
$
|
(40,662
|
)
|
|
$
|
721,082
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,883
|
|
|
$
|
—
|
|
|
$
|
3,883
|
|
Capital expenditures
|
|
$
|
75,662
|
|
|
$
|
17,190
|
|
|
$
|
17,752
|
|
|
$
|
9,865
|
|
|
$
|
120,469
|
|
|
|
Refining
|
|
Lubricants and Specialty Products
|
|
HEP
|
|
Corporate, Other
and Eliminations
|
|
Consolidated
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
15,652
|
|
|
$
|
189,571
|
|
|
$
|
18,913
|
|
|
$
|
678,373
|
|
|
$
|
902,509
|
|
Total assets
|
|
$
|
6,327,809
|
|
|
$
|
1,910,431
|
|
|
$
|
2,215,053
|
|
|
$
|
610,527
|
|
|
$
|
11,063,820
|
|
Long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,486,648
|
|
|
$
|
994,098
|
|
|
$
|
2,480,746
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
9,755
|
|
|
$
|
169,277
|
|
|
$
|
13,287
|
|
|
$
|
692,843
|
|
|
$
|
885,162
|
|
Total assets
|
|
$
|
7,189,094
|
|
|
$
|
2,223,418
|
|
|
$
|
2,205,437
|
|
|
$
|
546,892
|
|
|
$
|
12,164,841
|
|
Long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,462,031
|
|
|
$
|
993,609
|
|
|
$
|
2,455,640
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Three Months Ended June 30,
|
|
Change from 2019
|
|||||||||||
|
|
2020
|
|
2019
|
|
Change
|
|
Percent
|
|||||||
|
|
(In thousands, except per share data)
|
|||||||||||||
Sales and other revenues
|
|
$
|
2,062,930
|
|
|
$
|
4,782,615
|
|
|
$
|
(2,719,685
|
)
|
|
(57
|
)%
|
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)
|
|
1,576,996
|
|
|
3,704,884
|
|
|
(2,127,888
|
)
|
|
(57
|
)
|
|||
Lower of cost or market inventory valuation adjustment
|
|
(269,904
|
)
|
|
47,801
|
|
|
(317,705
|
)
|
|
(665
|
)
|
|||
|
|
1,307,092
|
|
|
3,752,685
|
|
|
(2,445,593
|
)
|
|
(65
|
)
|
|||
Operating expenses (exclusive of depreciation and amortization)
|
|
303,359
|
|
|
333,252
|
|
|
(29,893
|
)
|
|
(9
|
)
|
|||
Selling, general and administrative expenses (exclusive of depreciation and amortization)
|
|
75,369
|
|
|
85,317
|
|
|
(9,948
|
)
|
|
(12
|
)
|
|||
Depreciation and amortization
|
|
130,178
|
|
|
126,908
|
|
|
3,270
|
|
|
3
|
|
|||
Long-lived asset and goodwill impairments
|
|
436,908
|
|
|
152,712
|
|
|
284,196
|
|
|
186
|
|
|||
Total operating costs and expenses
|
|
2,252,906
|
|
|
4,450,874
|
|
|
(2,197,968
|
)
|
|
(49
|
)
|
|||
Income (loss) from operations
|
|
(189,976
|
)
|
|
331,741
|
|
|
(521,717
|
)
|
|
(157
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||||||
Earnings of equity method investments
|
|
2,156
|
|
|
1,783
|
|
|
373
|
|
|
21
|
|
|||
Interest income
|
|
1,506
|
|
|
4,588
|
|
|
(3,082
|
)
|
|
(67
|
)
|
|||
Interest expense
|
|
(32,695
|
)
|
|
(34,264
|
)
|
|
1,569
|
|
|
(5
|
)
|
|||
Gain on sales-type leases
|
|
33,834
|
|
|
—
|
|
|
33,834
|
|
|
—
|
|
|||
Gain on foreign currency transactions
|
|
2,285
|
|
|
2,213
|
|
|
72
|
|
|
3
|
|
|||
Other, net
|
|
1,572
|
|
|
92
|
|
|
1,480
|
|
|
1,609
|
|
|||
|
|
8,658
|
|
|
(25,588
|
)
|
|
34,246
|
|
|
(134
|
)
|
|||
Income (loss) before income taxes
|
|
(181,318
|
)
|
|
306,153
|
|
|
(487,471
|
)
|
|
(159
|
)
|
|||
Income tax expense (benefit)
|
|
(30,911
|
)
|
|
89,336
|
|
|
(120,247
|
)
|
|
(135
|
)
|
|||
Net income (loss)
|
|
(150,407
|
)
|
|
216,817
|
|
|
(367,224
|
)
|
|
(169
|
)
|
|||
Less net income attributable to noncontrolling interest
|
|
26,270
|
|
|
19,902
|
|
|
6,368
|
|
|
32
|
|
|||
Net income (loss) attributable to HollyFrontier stockholders
|
|
$
|
(176,677
|
)
|
|
$
|
196,915
|
|
|
$
|
(373,592
|
)
|
|
(190
|
)%
|
Earnings (loss) per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
(1.09
|
)
|
|
$
|
1.16
|
|
|
$
|
(2.25
|
)
|
|
(194
|
)%
|
Diluted
|
|
$
|
(1.09
|
)
|
|
$
|
1.15
|
|
|
$
|
(2.24
|
)
|
|
(195
|
)%
|
Cash dividends declared per common share
|
|
$
|
0.35
|
|
|
$
|
0.33
|
|
|
$
|
0.02
|
|
|
6
|
%
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
161,889
|
|
|
169,356
|
|
|
(7,467
|
)
|
|
(4
|
)%
|
|||
Diluted
|
|
161,889
|
|
|
170,547
|
|
|
(8,658
|
)
|
|
(5
|
)%
|
|
|
Six Months Ended June 30,
|
|
Change from 2019
|
|||||||||||
|
|
2020
|
|
2019
|
|
Change
|
|
Percent
|
|||||||
|
|
(In thousands, except per share data)
|
|||||||||||||
Sales and other revenues
|
|
$
|
5,463,475
|
|
|
$
|
8,679,862
|
|
|
$
|
(3,216,387
|
)
|
|
(37
|
)%
|
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)
|
|
4,270,722
|
|
|
6,904,089
|
|
|
(2,633,367
|
)
|
|
(38
|
)
|
|||
Lower of cost or market inventory valuation adjustment
|
|
290,560
|
|
|
(184,545
|
)
|
|
475,105
|
|
|
(257
|
)
|
|||
|
|
4,561,282
|
|
|
6,719,544
|
|
|
(2,158,262
|
)
|
|
(32
|
)
|
|||
Operating expenses (exclusive of depreciation and amortization)
|
|
631,704
|
|
|
664,844
|
|
|
(33,140
|
)
|
|
(5
|
)
|
|||
Selling, general and administrative expenses (exclusive of depreciation and amortization)
|
|
163,106
|
|
|
173,351
|
|
|
(10,245
|
)
|
|
(6
|
)
|
|||
Depreciation and amortization
|
|
270,753
|
|
|
248,329
|
|
|
22,424
|
|
|
9
|
|
|||
Long-lived asset and goodwill impairments
|
|
436,908
|
|
|
152,712
|
|
|
284,196
|
|
|
186
|
|
|||
Total operating costs and expenses
|
|
6,063,753
|
|
|
7,958,780
|
|
|
(1,895,027
|
)
|
|
(24
|
)
|
|||
Income (loss) from operations
|
|
(600,278
|
)
|
|
721,082
|
|
|
(1,321,360
|
)
|
|
(183
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||||||
Earnings of equity method investments
|
|
3,870
|
|
|
3,883
|
|
|
(13
|
)
|
|
—
|
|
|||
Interest income
|
|
5,579
|
|
|
10,963
|
|
|
(5,384
|
)
|
|
(49
|
)
|
|||
Interest expense
|
|
(55,334
|
)
|
|
(70,911
|
)
|
|
15,577
|
|
|
(22
|
)
|
|||
Gain on sales-type leases
|
|
33,834
|
|
|
—
|
|
|
33,834
|
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
|
(25,915
|
)
|
|
—
|
|
|
(25,915
|
)
|
|
—
|
|
|||
Gain (loss) on foreign currency transactions
|
|
(1,948
|
)
|
|
4,478
|
|
|
(6,426
|
)
|
|
(144
|
)
|
|||
Other, net
|
|
3,422
|
|
|
649
|
|
|
2,773
|
|
|
427
|
|
|||
|
|
(36,492
|
)
|
|
(50,938
|
)
|
|
14,446
|
|
|
(28
|
)
|
|||
Income (loss) before income taxes
|
|
(636,770
|
)
|
|
670,144
|
|
|
(1,306,914
|
)
|
|
(195
|
)
|
|||
Income tax expense (benefit)
|
|
(193,077
|
)
|
|
176,841
|
|
|
(369,918
|
)
|
|
(209
|
)
|
|||
Net income (loss)
|
|
(443,693
|
)
|
|
493,303
|
|
|
(936,996
|
)
|
|
(190
|
)
|
|||
Less net income attributable to noncontrolling interest
|
|
37,607
|
|
|
43,333
|
|
|
(5,726
|
)
|
|
(13
|
)
|
|||
Net income (loss) attributable to HollyFrontier stockholders
|
|
$
|
(481,300
|
)
|
|
$
|
449,970
|
|
|
$
|
(931,270
|
)
|
|
(207
|
)%
|
Earnings (loss) per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
(2.97
|
)
|
|
$
|
2.64
|
|
|
$
|
(5.61
|
)
|
|
(213
|
)%
|
Diluted
|
|
$
|
(2.97
|
)
|
|
$
|
2.62
|
|
|
$
|
(5.59
|
)
|
|
(213
|
)%
|
Cash dividends declared per common share
|
|
$
|
0.70
|
|
|
$
|
0.66
|
|
|
$
|
0.04
|
|
|
6
|
%
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
161,882
|
|
|
170,100
|
|
|
(8,218
|
)
|
|
(5
|
)%
|
|||
Diluted
|
|
161,882
|
|
|
171,264
|
|
|
(9,382
|
)
|
|
(5
|
)%
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
(Unaudited)
|
|
|
||||
|
|
(In thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
902,509
|
|
|
$
|
885,162
|
|
Working capital
|
|
$
|
1,470,492
|
|
|
$
|
1,620,261
|
|
Total assets
|
|
$
|
11,063,820
|
|
|
$
|
12,164,841
|
|
Long-term debt
|
|
$
|
2,480,746
|
|
|
$
|
2,455,640
|
|
Total equity
|
|
$
|
5,914,511
|
|
|
$
|
6,509,426
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net cash provided by operating activities
|
|
$
|
119,204
|
|
|
$
|
752,734
|
|
|
$
|
309,302
|
|
|
$
|
969,550
|
|
Net cash used for investing activities
|
|
$
|
(45,572
|
)
|
|
$
|
(55,584
|
)
|
|
$
|
(131,666
|
)
|
|
$
|
(782,309
|
)
|
Net cash used for financing activities
|
|
$
|
(84,062
|
)
|
|
$
|
(279,736
|
)
|
|
$
|
(155,519
|
)
|
|
$
|
(429,864
|
)
|
Capital expenditures
|
|
$
|
45,987
|
|
|
$
|
56,734
|
|
|
$
|
129,736
|
|
|
$
|
120,469
|
|
EBITDA (1)
|
|
$
|
(46,221
|
)
|
|
$
|
442,835
|
|
|
$
|
(353,869
|
)
|
|
$
|
935,088
|
|
(1)
|
Earnings before interest, taxes, depreciation and amortization, which we refer to as “EBITDA,” is calculated as net income (loss) attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. 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,
|
||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Mid-Continent Region (El Dorado and Tulsa Refineries)
|
|
|
|
|
|
|
|
|
||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||
Gasolines
|
|
54
|
%
|
|
51
|
%
|
|
53
|
%
|
|
52
|
%
|
Diesel fuels
|
|
36
|
%
|
|
34
|
%
|
|
33
|
%
|
|
31
|
%
|
Jet fuels
|
|
1
|
%
|
|
6
|
%
|
|
4
|
%
|
|
7
|
%
|
Fuel oil
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Asphalt
|
|
3
|
%
|
|
2
|
%
|
|
3
|
%
|
|
3
|
%
|
Base oils
|
|
3
|
%
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
LPG and other
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Southwest Region (Navajo Refinery)
|
|
|
|
|
|
|
|
|
||||||||
Crude charge (BPD) (1)
|
|
79,460
|
|
|
109,080
|
|
|
93,130
|
|
|
107,560
|
|
||||
Refinery throughput (BPD) (2)
|
|
89,470
|
|
|
119,480
|
|
|
103,460
|
|
|
117,860
|
|
||||
Sales of produced refined products (BPD) (3)
|
|
101,880
|
|
|
122,090
|
|
|
107,740
|
|
|
122,730
|
|
||||
Refinery utilization (4)
|
|
79.5
|
%
|
|
109.1
|
%
|
|
93.1
|
%
|
|
107.6
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Average per produced barrel (5)
|
|
|
|
|
|
|
|
|
||||||||
Refinery gross margin
|
|
$
|
11.08
|
|
|
$
|
23.45
|
|
|
$
|
11.89
|
|
|
$
|
19.70
|
|
Refinery operating expenses (6)
|
|
5.12
|
|
|
4.53
|
|
|
5.20
|
|
|
4.73
|
|
||||
Net operating margin
|
|
$
|
5.96
|
|
|
$
|
18.92
|
|
|
$
|
6.69
|
|
|
$
|
14.97
|
|
|
|
|
|
|
|
|
|
|
||||||||
Refinery operating expenses per throughput barrel (7)
|
|
$
|
5.83
|
|
|
$
|
4.63
|
|
|
$
|
5.42
|
|
|
$
|
4.93
|
|
|
|
|
|
|
|
|
|
|
||||||||
Feedstocks:
|
|
|
|
|
|
|
|
|
||||||||
Sweet crude oil
|
|
25
|
%
|
|
24
|
%
|
|
24
|
%
|
|
20
|
%
|
||||
Sour crude oil
|
|
64
|
%
|
|
67
|
%
|
|
66
|
%
|
|
71
|
%
|
||||
Other feedstocks and blends
|
|
11
|
%
|
|
9
|
%
|
|
10
|
%
|
|
9
|
%
|
||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||||||
Gasolines
|
|
53
|
%
|
|
48
|
%
|
|
54
|
%
|
|
51
|
%
|
||||
Diesel fuels
|
|
34
|
%
|
|
40
|
%
|
|
36
|
%
|
|
38
|
%
|
||||
Fuel oil
|
|
2
|
%
|
|
4
|
%
|
|
2
|
%
|
|
3
|
%
|
||||
Asphalt
|
|
8
|
%
|
|
6
|
%
|
|
5
|
%
|
|
5
|
%
|
||||
LPG and other
|
|
3
|
%
|
|
2
|
%
|
|
3
|
%
|
|
3
|
%
|
||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
|
|
|
|
|
|
|
||||||
Feedstocks:
|
|
|
|
|
|
|
|
|
||||
Sweet crude oil
|
|
37
|
%
|
|
34
|
%
|
|
36
|
%
|
|
35
|
%
|
Heavy sour crude oil
|
|
41
|
%
|
|
35
|
%
|
|
38
|
%
|
|
35
|
%
|
Black wax crude oil
|
|
15
|
%
|
|
23
|
%
|
|
19
|
%
|
|
22
|
%
|
Other feedstocks and blends
|
|
7
|
%
|
|
8
|
%
|
|
7
|
%
|
|
8
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||
Gasolines
|
|
54
|
%
|
|
50
|
%
|
|
55
|
%
|
|
52
|
%
|
Diesel fuels
|
|
35
|
%
|
|
37
|
%
|
|
33
|
%
|
|
35
|
%
|
Fuel oil
|
|
2
|
%
|
|
4
|
%
|
|
3
|
%
|
|
4
|
%
|
Asphalt
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
LPG and other
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
Crude charge (BPD) (1)
|
|
349,580
|
|
|
453,030
|
|
|
392,970
|
|
|
426,890
|
|
||||
Refinery throughput (BPD) (2)
|
|
377,500
|
|
|
484,890
|
|
|
424,540
|
|
|
459,460
|
|
||||
Sales of produced refined products (BPD) (3)
|
|
382,910
|
|
|
469,100
|
|
|
417,600
|
|
|
446,190
|
|
||||
Refinery utilization (4)
|
|
76.5
|
%
|
|
99.1
|
%
|
|
86.0
|
%
|
|
93.4
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Average per produced barrel (5)
|
|
|
|
|
|
|
|
|
||||||||
Refinery gross margin
|
|
$
|
8.44
|
|
|
$
|
19.64
|
|
|
$
|
10.00
|
|
|
$
|
16.39
|
|
Refinery operating expenses (6)
|
|
6.87
|
|
|
5.92
|
|
|
6.56
|
|
|
6.40
|
|
||||
Net operating margin
|
|
$
|
1.57
|
|
|
$
|
13.72
|
|
|
$
|
3.44
|
|
|
$
|
9.99
|
|
|
|
|
|
|
|
|
|
|
||||||||
Refinery operating expenses per throughput barrel (7)
|
|
$
|
6.97
|
|
|
$
|
5.73
|
|
|
$
|
6.45
|
|
|
$
|
6.22
|
|
|
|
|
|
|
|
|
|
|
||||||||
Feedstocks:
|
|
|
|
|
|
|
|
|
||||||||
Sweet crude oil
|
|
48
|
%
|
|
44
|
%
|
|
45
|
%
|
|
42
|
%
|
||||
Sour crude oil
|
|
25
|
%
|
|
29
|
%
|
|
27
|
%
|
|
31
|
%
|
||||
Heavy sour crude oil
|
|
17
|
%
|
|
16
|
%
|
|
17
|
%
|
|
16
|
%
|
||||
Black wax crude oil
|
|
3
|
%
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
||||
Other feedstocks and blends
|
|
7
|
%
|
|
7
|
%
|
|
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)
|
Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes
|
(7)
|
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,
|
||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Lubricants and Specialty Products
|
|
|
|
|
|
|
|
|
||||
Throughput (BPD)
|
|
16,370
|
|
|
16,990
|
|
|
19,060
|
|
|
18,390
|
|
Sales of produced refined products (BPD)
|
|
26,990
|
|
|
34,660
|
|
|
31,900
|
|
|
34,050
|
|
|
|
|
|
|
|
|
|
|
||||
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
||||
Finished products
|
|
56
|
%
|
|
52
|
%
|
|
51
|
%
|
|
50
|
%
|
Base oils
|
|
19
|
%
|
|
32
|
%
|
|
23
|
%
|
|
29
|
%
|
Other
|
|
25
|
%
|
|
16
|
%
|
|
26
|
%
|
|
21
|
%
|
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, 2020
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
85,857
|
|
|
$
|
343,927
|
|
|
$
|
(72,497
|
)
|
|
$
|
357,287
|
|
Cost of products sold
|
|
$
|
67,210
|
|
|
$
|
263,634
|
|
|
$
|
(72,497
|
)
|
|
$
|
258,347
|
|
Operating expenses
|
|
$
|
21,034
|
|
|
$
|
26,806
|
|
|
$
|
—
|
|
|
$
|
47,840
|
|
Selling, general and administrative expenses
|
|
$
|
5,617
|
|
|
$
|
30,302
|
|
|
$
|
—
|
|
|
$
|
35,919
|
|
Depreciation and amortization
|
|
$
|
5,877
|
|
|
$
|
13,902
|
|
|
$
|
—
|
|
|
$
|
19,779
|
|
Long-lived asset impairment
|
|
$
|
167,017
|
|
|
$
|
37,691
|
|
|
$
|
—
|
|
|
$
|
204,708
|
|
Income (loss) from operations
|
|
$
|
(180,898
|
)
|
|
$
|
(28,408
|
)
|
|
$
|
—
|
|
|
$
|
(209,306
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
133,225
|
|
|
$
|
507,183
|
|
|
$
|
(95,062
|
)
|
|
$
|
545,346
|
|
Cost of products sold
|
|
$
|
131,725
|
|
|
$
|
378,690
|
|
|
$
|
(95,062
|
)
|
|
$
|
415,353
|
|
Operating expenses
|
|
$
|
30,585
|
|
|
$
|
28,537
|
|
|
$
|
—
|
|
|
$
|
59,122
|
|
Selling, general and administrative expenses
|
|
$
|
6,366
|
|
|
$
|
35,721
|
|
|
$
|
—
|
|
|
$
|
42,087
|
|
Depreciation and amortization
|
|
$
|
11,075
|
|
|
$
|
11,945
|
|
|
$
|
—
|
|
|
$
|
23,020
|
|
Goodwill impairment (4)
|
|
$
|
152,712
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
152,712
|
|
Income (loss) from operations
|
|
$
|
(199,238
|
)
|
|
$
|
52,290
|
|
|
$
|
—
|
|
|
$
|
(146,948
|
)
|
|
|
Rack Back (1)
|
|
Rack Forward (2)
|
|
Eliminations (3)
|
|
Total Lubricants and Specialty Products
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Six months ended June 30, 2020
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
250,686
|
|
|
$
|
817,984
|
|
|
$
|
(184,780
|
)
|
|
$
|
883,890
|
|
Cost of products sold
|
|
$
|
247,810
|
|
|
$
|
586,697
|
|
|
$
|
(184,780
|
)
|
|
$
|
649,727
|
|
Operating expenses
|
|
$
|
44,303
|
|
|
$
|
57,668
|
|
|
$
|
—
|
|
|
$
|
101,971
|
|
Selling, general and administrative expenses
|
|
$
|
10,980
|
|
|
$
|
73,901
|
|
|
$
|
—
|
|
|
$
|
84,881
|
|
Depreciation and amortization
|
|
$
|
16,744
|
|
|
$
|
25,084
|
|
|
$
|
—
|
|
|
$
|
41,828
|
|
Long-lived asset impairment
|
|
$
|
167,017
|
|
|
$
|
37,691
|
|
|
$
|
—
|
|
|
$
|
204,708
|
|
Income (loss) from operations
|
|
$
|
(236,168
|
)
|
|
$
|
36,943
|
|
|
$
|
—
|
|
|
$
|
(199,225
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Sales and other revenues
|
|
$
|
289,680
|
|
|
$
|
951,525
|
|
|
$
|
(202,525
|
)
|
|
$
|
1,038,680
|
|
Cost of products sold
|
|
$
|
277,543
|
|
|
$
|
729,352
|
|
|
$
|
(202,525
|
)
|
|
$
|
804,370
|
|
Operating expenses
|
|
$
|
60,145
|
|
|
$
|
52,536
|
|
|
$
|
—
|
|
|
$
|
112,681
|
|
Selling, general and administrative expenses
|
|
$
|
19,845
|
|
|
$
|
61,961
|
|
|
$
|
—
|
|
|
$
|
81,806
|
|
Depreciation and amortization
|
|
$
|
21,601
|
|
|
$
|
21,590
|
|
|
$
|
—
|
|
|
$
|
43,191
|
|
Goodwill impairment (4)
|
|
$
|
152,712
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
152,712
|
|
Income (loss) from operations
|
|
$
|
(242,166
|
)
|
|
$
|
86,086
|
|
|
$
|
—
|
|
|
$
|
(156,080
|
)
|
|
Expected Cash Spending Range
|
||||||
|
(In millions)
|
||||||
HollyFrontier Capital Expenditures
|
|
|
|
||||
Refining
|
$
|
202.0
|
|
|
$
|
221.0
|
|
Renewable Diesel Unit
|
150.0
|
|
|
180.0
|
|
||
Lubricants and Specialty Products
|
30.0
|
|
|
45.0
|
|
||
Turnarounds and catalyst
|
85.0
|
|
|
110.0
|
|
||
Total HollyFrontier
|
467.0
|
|
|
556.0
|
|
||
|
|
|
|
||||
HEP
|
|
|
|
||||
Maintenance
|
8.0
|
|
|
12.0
|
|
||
Expansion and joint venture investment
|
45.0
|
|
|
50.0
|
|
||
Refining unit turnarounds
|
5.0
|
|
|
7.0
|
|
||
Total HEP
|
58.0
|
|
|
69.0
|
|
||
Total
|
$
|
525.0
|
|
|
$
|
625.0
|
|
|
|
|
|
Notional Contract Volumes by Year of Maturity
|
|
|
|||||
Derivative Instrument
|
|
Total Outstanding Notional
|
|
2020
|
|
2021
|
|
Unit of Measure
|
|||
|
|
|
|
|
|
|
|
|
|||
Natural gas price swaps - long
|
|
2,700,000
|
|
|
900,000
|
|
|
1,800,000
|
|
|
MMBTU
|
Crude oil price swaps (basis spread) - long
|
|
3,128,000
|
|
|
3,128,000
|
|
|
—
|
|
|
Barrels
|
NYMEX futures (WTI) - short
|
|
890,000
|
|
|
890,000
|
|
|
—
|
|
|
Barrels
|
Forward gasoline and diesel contracts - long
|
|
464,000
|
|
|
464,000
|
|
|
—
|
|
|
Barrels
|
Forward diesel contracts - short
|
|
200,000
|
|
|
200,000
|
|
|
—
|
|
|
Barrels
|
Foreign currency forward contracts
|
|
422,074,120
|
|
|
214,491,576
|
|
|
207,582,544
|
|
|
U.S. dollar
|
Forward commodity contracts (platinum) (1)
|
|
40,867
|
|
|
—
|
|
|
40,867
|
|
|
Troy ounces
|
|
|
Estimated Change in Fair Value at June 30
|
||||||
Commodity-based Derivative Contracts
|
|
2020
|
|
2019
|
||||
|
|
(In thousands)
|
||||||
Hypothetical 10% change in underlying commodity prices
|
|
$
|
2,826
|
|
|
$
|
2,902
|
|
|
|
Outstanding
Principal
|
|
Estimated
Fair Value
|
|
Estimated
Change in
Fair Value
|
||||||
|
|
(In thousands)
|
||||||||||
HollyFrontier Senior Notes
|
|
$
|
1,000,000
|
|
|
$
|
1,105,120
|
|
|
$
|
20,828
|
|
HEP Senior Notes
|
|
$
|
500,000
|
|
|
$
|
477,835
|
|
|
$
|
17,322
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income (loss) attributable to HollyFrontier stockholders
|
|
$
|
(176,677
|
)
|
|
$
|
196,915
|
|
|
$
|
(481,300
|
)
|
|
$
|
449,970
|
|
Add interest expense
|
|
32,695
|
|
|
34,264
|
|
|
55,334
|
|
|
70,911
|
|
||||
Subtract interest income
|
|
(1,506
|
)
|
|
(4,588
|
)
|
|
(5,579
|
)
|
|
(10,963
|
)
|
||||
Add income tax expense (benefit)
|
|
(30,911
|
)
|
|
89,336
|
|
|
(193,077
|
)
|
|
176,841
|
|
||||
Add depreciation and amortization
|
|
130,178
|
|
|
126,908
|
|
|
270,753
|
|
|
248,329
|
|
||||
EBITDA
|
|
$
|
(46,221
|
)
|
|
$
|
442,835
|
|
|
$
|
(353,869
|
)
|
|
$
|
935,088
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(Dollars in thousands, except per barrel amounts)
|
||||||||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
Net operating margin per produced barrel sold
|
|
$
|
1.57
|
|
|
$
|
13.72
|
|
|
$
|
3.44
|
|
|
$
|
9.99
|
|
Add average refinery operating expenses per produced barrel sold
|
|
6.87
|
|
|
5.92
|
|
|
6.56
|
|
|
6.40
|
|
||||
Refinery gross margin per produced barrel sold
|
|
8.44
|
|
|
19.64
|
|
|
10.00
|
|
|
16.39
|
|
||||
Times produced barrels sold (BPD)
|
|
382,910
|
|
|
469,100
|
|
|
417,600
|
|
|
446,190
|
|
||||
Times number of days in period
|
|
91
|
|
|
91
|
|
|
182
|
|
|
181
|
|
||||
Refining segment gross margin
|
|
294,090
|
|
|
838,394
|
|
|
760,032
|
|
|
1,323,663
|
|
||||
Add (subtract) rounding
|
|
(23
|
)
|
|
34
|
|
|
150
|
|
|
(365
|
)
|
||||
Total refining segment gross margin
|
|
294,067
|
|
|
838,428
|
|
|
760,182
|
|
|
1,323,298
|
|
||||
Add refining segment cost of products sold
|
|
1,433,437
|
|
|
3,458,832
|
|
|
3,902,188
|
|
|
6,421,372
|
|
||||
Refining segment sales and other revenues
|
|
1,727,504
|
|
|
4,297,260
|
|
|
4,662,370
|
|
|
7,744,670
|
|
||||
Add lubricants and specialty products segment sales and other revenues
|
|
357,287
|
|
|
545,346
|
|
|
883,890
|
|
|
1,038,680
|
|
||||
Add HEP segment sales and other revenues
|
|
114,807
|
|
|
130,751
|
|
|
242,661
|
|
|
265,248
|
|
||||
Subtract corporate, other and eliminations
|
|
(136,668
|
)
|
|
(190,742
|
)
|
|
(325,446
|
)
|
|
(368,736
|
)
|
||||
Sales and other revenues
|
|
$
|
2,062,930
|
|
|
$
|
4,782,615
|
|
|
$
|
5,463,475
|
|
|
$
|
8,679,862
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(Dollars in thousands, except per barrel amounts)
|
||||||||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
Average refinery operating expenses per produced barrel sold
|
|
$
|
6.87
|
|
|
$
|
5.92
|
|
|
$
|
6.56
|
|
|
$
|
6.40
|
|
Times produced barrels sold (BPD)
|
|
382,910
|
|
|
469,100
|
|
|
417,600
|
|
|
446,190
|
|
||||
Times number of days in period
|
|
91
|
|
|
91
|
|
|
182
|
|
|
181
|
|
||||
Refinery operating expenses
|
|
239,384
|
|
|
252,714
|
|
|
498,581
|
|
|
516,866
|
|
||||
Add (subtract) rounding
|
|
(25
|
)
|
|
1
|
|
|
(48
|
)
|
|
346
|
|
||||
Total refining segment operating expenses
|
|
239,359
|
|
|
252,715
|
|
|
498,533
|
|
|
517,212
|
|
||||
Add lubricants and specialty products segment operating expenses
|
|
47,840
|
|
|
59,122
|
|
|
101,971
|
|
|
112,681
|
|
||||
Add HEP segment operating expenses
|
|
34,737
|
|
|
40,608
|
|
|
69,718
|
|
|
78,121
|
|
||||
Subtract corporate, other and eliminations
|
|
(18,577
|
)
|
|
(19,193
|
)
|
|
(38,518
|
)
|
|
(43,170
|
)
|
||||
Operating expenses (exclusive of depreciation and amortization)
|
|
$
|
303,359
|
|
|
$
|
333,252
|
|
|
$
|
631,704
|
|
|
$
|
664,844
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
changes in domestic and international demand for, and the marketability of, our refined and finished lubricant products due to governmental actions, including travel bans and restrictions, quarantines, shelter in place orders, and shutdowns, which could result in a full or partial shutdown of our facilities;
|
•
|
increased price volatility, including the price we receive for refined and finished lubricant products;
|
•
|
the health of our workforce, including contractors and subcontractors, and their access to our facilities, which could result in a full or partial shutdown of our facilities if a significant portion of the workforce at a facility is impacted;
|
•
|
the ability or willingness of our vendors and suppliers to provide the equipment, parts, crude oil or other raw materials for our operations or otherwise fulfill their contractual obligations, which could reduce our production levels or otherwise cause our delay or failure to deliver refined or other finished lubricant products timely or at all or cause delay or failure to complete projects at our facilities;
|
•
|
the ability or willingness of our customers to fulfill their contractual obligations or any material reduction in, or loss of, revenue from our customers;
|
•
|
increased potential for the occurrence of operational hazards, including terrorism, cyberattacks or domestic vandalism, as well as information system failures or communication network disruptions;
|
•
|
increased cost and reduced availability of capital for growth or capital expenditures;
|
•
|
availability and operability of terminals, tankage and pipelines that store and transport crude oil and refined and finished lubricant products;
|
•
|
delay by government authorities in issuing or maintaining permits necessary for our business or our capital projects;
|
•
|
shareholder activism and activities by non-governmental organizations to limit sources of funding for the energy sector;
|
•
|
increased costs of operation in relation to the COVID-19 outbreak, which costs may not be fully recoverable or adequately covered by insurance; and
|
•
|
the impact of any economic downturn, recession or other disruption of the U.S. and global economies and financial and commodity markets.
|
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 2020
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,000,000,000
|
|
May 2020
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,000,000,000
|
|
June 2020
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,000,000,000
|
|
Total for April to June 2020
|
|
—
|
|
|
|
|
—
|
|
|
|
Item 6.
|
Exhibits
|
Exhibit Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
10.1*+
|
|
|
|
|
|
10.2+
|
|
HollyFrontier Corporation 2020 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed May 15, 2020, File No. 1-03876).
|
|
|
|
10.3+
|
|
HollyFrontier Corporation 2020 Long Term Incentive Plan Sub-Plan for U.K. Employees (incorporated by reference to Exhibit 4.4 of Registrant’s Registration Statement on Form S-8 filed June 1, 2020, File No. 333-238835)
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6+
|
|
Form of Restricted Stock Unit Agreement (for employees) (incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, File No. 1-03876).
|
|
|
|
10.7+
|
|
Form of Performance Share Unit Agreement (incorporated by reference to Exhibit 10.3 of Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, File No. 1-03876).
|
|
|
|
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, 2020, formatted as inline XBRL (Inline 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. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
|
|
|
|
104
|
|
Cover page Interactive Data File (formatted as inline XBRL and contained in exhibit 101).
|
|
|
|
|
|
|
HOLLYFRONTIER CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date: August 6, 2020
|
|
|
/s/ Richard L. Voliva III
|
|
|
|
Richard L.Voliva III
|
|
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
Date: August 6, 2020
|
|
|
/s/ Indira Agarwal
|
|
|
|
Indira Agarwal
|
|
|
|
Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
|
12.
|
Consulting.
|
a.
|
For the period beginning July 1, 2020 and continuing until the earlier of (a) the mechanical completion of the Company’s renewable diesel facility in Cheyenne (as determined by the Company), and (b) the termination of this Agreement (the “Consulting Period”), the Company will pay me a retainer of $49,000 per month (pro-rated for partial months) to provide services (the “Services”) that the Company may reasonably request from time to time in the capacity of an independent contractor, which Services shall include providing consultation and assistance with respect to the transition of duties and overseeing the conversion of the Cheyenne refinery to a renewable diesel facility. I will submit an invoice to the Company within five (5) business days following the end of each month in which the Consulting Period existed that contains a description of the Services provided during the calendar month to which the invoice relates, and the Company will pay the retainer for the applicable calendar month within thirty (30) days of its receipt of such invoice. At the request of the Company, I will also submit reasonable documentation evidencing the work performed during a prior calendar month. Subject to reasonable prior approval of the Company, the Company shall pay or reimburse me for all reasonable (in type and amount) and necessary business expenses incurred by me in the course of providing Services for the Company. I will furnish the Company with the documentation required by the Internal Revenue Code of 1986, as amended (or by any successor revenue statute) and the regulations thereunder in connection with all such expenses, including, without limitation, all approved business travel and entertainment expenses.
|
b.
|
If the Consulting Period is not terminated prior to the mechanical completion of the Company’s Cheyenne renewable diesel facility, I am eligible for a completion bonus (the “Completion Bonus”) as follows:
|
Minimum
|
Target
|
Maximum
|
$50,000
|
$300,000
|
$600,000
|
c.
|
Notwithstanding the foregoing, the retainer arrangements set forth in this Paragraph 12 (and the Consulting Period) may be terminated at any time by the Company or me, with or without cause, upon written notice to the other party; provided, however, that if the Company terminates the retainer arrangements set forth in this Paragraph 12 without “cause” (as defined below) or I terminate this Agreement due to an act of cause by the Company, in each case on or prior to March 31, 2021, the Company shall pay me the unpaid retainer payment, at $49,000 per month (pro-rated for partial months), for each month until March 31, 2021, with monthly payments being made within thirty (30) days after the end of each applicable calendar month (; provided, however, any retainer that remains unpaid as of March 1 of any year will be paid no later than March 15 of such year; provided, further, that if I terminate this Agreement other than due to an act of cause by the Company or the Company terminates this Agreement for cause, I will forfeit any unpaid and unearned payments and any unvested equity awards held at such time. For purposes of this Paragraph 12, “cause” is defined as: (x) a party’s material breach of this Agreement to the extent such breach remains uncured (if capable of cure) after the other party has given such party notice in writing thereof and such party has failed to cure such breach within ten (10) business days; or (y) a party’s fraud, forgery, misrepresentation, dishonesty, errors or omissions that materially and adversely affects the other party. For purposes of section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) each installment payment payable pursuant to this Paragraph 12.c. will be treated as a separate payment.
|
d.
|
In performing and providing the Services, I will comply with all applicable laws and with all applicable orders, rules and regulations of all duly constituted authorities.
|
e.
|
For purposes of providing the Services to the Company and its subsidiaries, I shall at all times be an independent contractor during the Consulting Period. Nothing in this Agreement shall be construed as creating the relationship of principal and agent, or employer and employee, between the Company and me during the Consulting Period. During the Consulting Period, I shall have no authority to hire any persons on behalf of the Company, and any person whom I may employ shall be deemed to be solely my employee. I shall have control and management of the work under Paragraph 12 of this Agreement, and no right is reserved to the Company to direct or control the manner in which the work is performed, as distinguished from the result to be accomplished. Nothing herein contained shall be construed to authorize me to incur any debt, liability or obligation of any nature for or on behalf of the Company. I agree that any Services I perform shall be completed and delivered reasonably in accordance with requests provided to me by the Company from time to time and consistent with the policies and practices of the Company with respect to work performed on or with respect to its projects, property, or premises. Neither I nor my agents or employees, if any, shall be eligible to participate in any benefits or privileges given or extended by the Company to its employees (other than any benefits to which I may be entitled by virtue of my status as a former employee of the Company, prior to the beginning of the Consulting Period), including, but not limited to, pension, profit sharing, workers’ compensation insurance, unemployment insurance, other insurance, health, medical, life or disability benefits or coverage, or paid time off. I am responsible for paying any and all taxes owed on payments received by me pursuant to this Paragraph 12, and I shall indemnify and hold harmless the Company and its affiliates, and the foregoing entities’ respective representatives, for all claims, damages, costs and liabilities arising from my failure to do so. I agree to be solely responsible for (and to indemnify and hold harmless the Company and its affiliates for) my acts or omissions and the acts and omissions of my employees, if any, including acts or omissions during the performance of Services pursuant to this Agreement.
|
f.
|
All proprietary technology and all financial, operating, and training ideas, processes, and materials, including works of expression and all copyrights in such works, relating to the Company’s current or potential business, that are developed, written, conceived of, or improved upon by me, singly or jointly, in connection with, as a result of, or otherwise incident to the performance of this Agreement (including in performing or providing the Services), shall be the sole property of the Company. Accordingly, I will disclose, deliver, and assign, and I do hereby assign, to the Company all of my right, title and interest in and to such patentable inventions, discoveries, and improvements, trade secrets, and all works subject to copyright. I agree to execute all documents and patent applications, to make all arrangements necessary to further document such ownership and/or assignment, and to take whatever other steps may be needed to give the Company the full benefit of them, both during the term of this Agreement and thereafter. I specifically agree that all copyrighted materials generated or developed as a result of my services under this Agreement, including, but not limited to, computer programs and documentation, shall be considered works made for hire under the copyright laws of the United States and that they shall, upon creation, be owned exclusively by the Company.
|
g.
|
Unless approved by the Company in writing, all Services under this Agreement shall be provided by me and by no other person.
|
a.
|
I agree that, following my Retirement Date and prior to and including the last date of the Consulting Period, I will not, without the prior written approval of the Chief Executive Officer of the Company, directly or indirectly, for me or on behalf of or in conjunction with any other person or entity of any nature:
|
i.
|
Directly or indirectly own, manage, operate, join, become an officer, director, employee or consultant of, or otherwise be affiliated with any Competitor; or
|
ii.
|
Appropriate any Business Opportunity of, or relating to, the Company located in the Market Area.
|
b.
|
The covenants in this Paragraph 13, and each provision and portion hereof, are severable and separate, and the unenforceability of any specific covenant (or portion thereof) shall not affect the provisions of any other covenant (or portion thereof). Moreover, in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which such arbitrator or court deems reasonable, and this Agreement shall thereby be reformed.
|
c.
|
For purposes of this Paragraph 13, the following terms shall have the following meanings:
|
i.
|
“Business Opportunity” shall mean any commercial, investment or other business opportunity relating to a Competitor.
|
ii.
|
“Competitor” shall mean any direct competitor to the Company’s refinery business, which shall include the refining of petroleum regardless of the end product (whether gasoline, diesel fuel, jet fuel, specialty lubricant products, specialty and modified asphalt or other refined products) or the manufacturing of renewable hydrocarbon biofuels (whether renewable diesel, renewable gasoline or other product), as of the Retirement Date.
|
iii.
|
“Market Area” shall mean the United States.
|
Retirement Date:
|
June 30, 2020
|
Local HR Contact:
|
Dale Kunneman
|
Term
|
Section
|
“Hobbs Pump-Over Fee”
|
Section 2(w)(i)
|
Location
|
Applicable Term
|
Applicable Assets
|
El Dorado Refinery Complex
|
||
For El Dorado Logistics
|
Commencement Date: November 1, 2011
End Date: November 1, 2061 (midnight)
|
See Exhibit E-1
|
For El Dorado Operating
|
Commencement Date: November 1, 2015
End Date: November 1, 2065 (midnight)
|
See Exhibit E-8
|
Cheyenne Refinery Complex
|
||
For Cheyenne Logistics
|
Commencement Date: November 1, 2011
End Date: November 1, 2061 (midnight)
|
See Exhibit E-2
|
Tulsa Refinery Complex
|
||
Group 1 Assets and Group 2 Assets
|
Commencement Date: March 31, 2010
End Date: March 31, 2060 (midnight)
|
See Exhibit E-3
|
Tulsa West Tankage Assets and Receiving Pipelines
|
Commencement Date: March 31, 2016
End Date: March 31, 2066 (midnight)
|
See Exhibit E-3
|
Woods Cross Refinery Complex
|
||
For HEP Woods Cross
|
Commencement Date: February 29, 2008
End Date: February 28, 2058 (midnight)
|
Applicable Assets at Woods Cross Refinery Complex (excluding the Woods Cross Pipeline Pad)
See Exhibit E-4
|
Commencement Date: September 10, 2010
End Date: February 28, 2058 (midnight)
|
Woods Cross Pipeline Pad
See Exhibit E-5
|
|
For Woods Cross Operating
|
Commencement Date: October 1, 2016
End Date: October 1, 2066 (midnight)
|
See Exhibit E-9
|
Navajo Refinery Complex
|
||
|
Commencement Date: February 29, 2008
End Date: February 28, 2058 (midnight)
|
Applicable Assets at Navajo Refinery Complex (excluding the Truck Rack, the Artesia Blending Station and the Artesia Pump and Receiving Stations)
See Exhibit E-6
|
Commencement Date: September 10, 2010
End Date: February 28, 2058 (midnight)
|
Artesia Pump and Receiving Stations
See Exhibit E-7
|
|
Commencement Date: January 23, 2020
End Date: February 28, 2058 (midnight)
|
LACT Units #6007102, #6007103, and the easternmost LACT Unit located in Lane 3 on the land described on Exhibit F-8 and all related equipment
See Exhibit E-8
|
1.
|
LACT Units #6007102, #6007103, and the easternmost LACT Unit located in Lane 3 on the land described on Exhibit F-8 and all related equipment
|
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
|
August 6, 2020
|
|
/s/ Michael C. Jennings
|
|
|
Michael C. Jennings
|
|
|
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 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 6, 2020
|
|
/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) 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 6, 2020
|
|
/s/ Michael C. Jennings
|
|
|
Michael C. Jennings
|
|
|
Chief Executive Officer and President
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) 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 6, 2020
|
|
/s/ Richard L. Voliva III
|
|
|
Richard L. Voliva III
|
|
|
Executive Vice President and Chief Financial Officer
|