000004803912/312021Q3falseP3MP1YP1YP3MP1YP1YP1Y00000480392021-01-012021-09-30xbrli:shares00000480392021-10-29iso4217:USD0000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-12-3100000480392021-09-3000000480392020-12-31iso4217:USDxbrli:shares00000480392021-07-012021-09-3000000480392020-07-012020-09-3000000480392020-01-012020-09-300000048039us-gaap:PensionPlansDefinedBenefitMember2021-07-012021-09-300000048039us-gaap:PensionPlansDefinedBenefitMember2020-07-012020-09-300000048039us-gaap:PensionPlansDefinedBenefitMember2021-01-012021-09-300000048039us-gaap:PensionPlansDefinedBenefitMember2020-01-012020-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-07-012021-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-07-012020-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-012021-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-01-012020-09-300000048039us-gaap:PostemploymentRetirementBenefitsMember2021-07-012021-09-300000048039us-gaap:PostemploymentRetirementBenefitsMember2020-07-012020-09-300000048039us-gaap:PostemploymentRetirementBenefitsMember2021-01-012021-09-300000048039us-gaap:PostemploymentRetirementBenefitsMember2020-01-012020-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-01-012021-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-01-012020-09-3000000480392019-12-3100000480392020-09-300000048039us-gaap:CommonStockMember2020-12-310000048039us-gaap:AdditionalPaidInCapitalMember2020-12-310000048039us-gaap:RetainedEarningsMember2020-12-310000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000048039us-gaap:TreasuryStockMember2020-12-310000048039us-gaap:NoncontrollingInterestMember2020-12-310000048039us-gaap:RetainedEarningsMember2021-01-012021-03-310000048039us-gaap:NoncontrollingInterestMember2021-01-012021-03-3100000480392021-01-012021-03-310000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000048039us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000048039us-gaap:TreasuryStockMember2021-01-012021-03-310000048039us-gaap:CommonStockMember2021-03-310000048039us-gaap:AdditionalPaidInCapitalMember2021-03-310000048039us-gaap:RetainedEarningsMember2021-03-310000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000048039us-gaap:TreasuryStockMember2021-03-310000048039us-gaap:NoncontrollingInterestMember2021-03-3100000480392021-03-310000048039us-gaap:RetainedEarningsMember2021-04-012021-06-300000048039us-gaap:NoncontrollingInterestMember2021-04-012021-06-3000000480392021-04-012021-06-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000048039us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000048039us-gaap:TreasuryStockMember2021-04-012021-06-300000048039us-gaap:CommonStockMember2021-06-300000048039us-gaap:AdditionalPaidInCapitalMember2021-06-300000048039us-gaap:RetainedEarningsMember2021-06-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000048039us-gaap:TreasuryStockMember2021-06-300000048039us-gaap:NoncontrollingInterestMember2021-06-3000000480392021-06-300000048039us-gaap:RetainedEarningsMember2021-07-012021-09-300000048039us-gaap:NoncontrollingInterestMember2021-07-012021-09-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000048039us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000048039us-gaap:TreasuryStockMember2021-07-012021-09-300000048039us-gaap:ErrorCorrectionOtherMemberus-gaap:RetainedEarningsMember2021-07-012021-09-300000048039us-gaap:ErrorCorrectionOtherMember2021-07-012021-09-300000048039us-gaap:CommonStockMember2021-09-300000048039us-gaap:AdditionalPaidInCapitalMember2021-09-300000048039us-gaap:RetainedEarningsMember2021-09-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000048039us-gaap:TreasuryStockMember2021-09-300000048039us-gaap:NoncontrollingInterestMember2021-09-300000048039us-gaap:CommonStockMember2019-12-310000048039us-gaap:AdditionalPaidInCapitalMember2019-12-310000048039us-gaap:RetainedEarningsMember2019-12-310000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000048039us-gaap:TreasuryStockMember2019-12-310000048039us-gaap:NoncontrollingInterestMember2019-12-310000048039us-gaap:RetainedEarningsMember2020-01-012020-03-310000048039us-gaap:NoncontrollingInterestMember2020-01-012020-03-3100000480392020-01-012020-03-310000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000048039us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000048039us-gaap:TreasuryStockMember2020-01-012020-03-310000048039us-gaap:CommonStockMember2020-03-310000048039us-gaap:AdditionalPaidInCapitalMember2020-03-310000048039us-gaap:RetainedEarningsMember2020-03-310000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000048039us-gaap:TreasuryStockMember2020-03-310000048039us-gaap:NoncontrollingInterestMember2020-03-3100000480392020-03-310000048039us-gaap:RetainedEarningsMember2020-04-012020-06-300000048039us-gaap:NoncontrollingInterestMember2020-04-012020-06-3000000480392020-04-012020-06-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000048039us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000048039us-gaap:TreasuryStockMember2020-04-012020-06-300000048039us-gaap:CommonStockMember2020-06-300000048039us-gaap:AdditionalPaidInCapitalMember2020-06-300000048039us-gaap:RetainedEarningsMember2020-06-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000048039us-gaap:TreasuryStockMember2020-06-300000048039us-gaap:NoncontrollingInterestMember2020-06-3000000480392020-06-300000048039us-gaap:RetainedEarningsMember2020-07-012020-09-300000048039us-gaap:NoncontrollingInterestMember2020-07-012020-09-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000048039us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000048039us-gaap:TreasuryStockMember2020-07-012020-09-300000048039us-gaap:CommonStockMember2020-09-300000048039us-gaap:AdditionalPaidInCapitalMember2020-09-300000048039us-gaap:RetainedEarningsMember2020-09-300000048039us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000048039us-gaap:TreasuryStockMember2020-09-300000048039us-gaap:NoncontrollingInterestMember2020-09-30hfc:petroleumRefinery0000048039hfc:TulsaOKMember2021-01-012021-09-30xbrli:pure0000048039us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberhfc:A7037619CanadaIncMemberhfc:MississaugaCanadaPropertyMember2021-04-272021-04-27iso4217:CAD0000048039us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberhfc:MississaugaCanadaPropertyMember2021-07-012021-09-300000048039hfc:LubricantsAndSpecialtyProductsMember2021-01-012021-09-300000048039hfc:CheyenneRefineryMember2021-07-012021-09-300000048039hfc:CheyenneRefineryMember2021-01-012021-09-300000048039hfc:RefiningMember2020-07-012020-09-300000048039hfc:RefiningMember2020-01-012020-09-300000048039hfc:CheyenneRefineryMember2020-04-012020-06-300000048039hfc:RefiningMember2021-09-300000048039hfc:LubricantsAndSpecialtyProductsMember2021-09-300000048039hfc:HEPMember2021-09-3000000480392021-07-012021-07-010000048039hfc:PetroCanadaLubricantsIncMember2020-04-012020-06-300000048039us-gaap:SubsequentEventMemberhfc:PugetSoundRefineryMember2021-11-012021-11-010000048039us-gaap:SubsequentEventMemberhfc:PugetSoundRefineryMember2021-11-01utr:acre0000048039hfc:PugetSoundRefineryMember2021-05-04utr:bbl0000048039hfc:PugetSoundRefineryMember2021-05-042021-05-0400000480392021-08-020000048039hfc:HippoParentCorporationMemberus-gaap:CommonStockMember2021-08-022021-08-020000048039hfc:HippoParentCorporationMember2021-08-020000048039hfc:HippoParentCorporationMemberhfc:TheSinclairCompaniesMemberhfc:HippoParentCorporationMemberus-gaap:CommonStockMember2021-08-022021-08-020000048039hfc:HippoParentCorporationMemberhfc:TheSinclairCompaniesMemberhfc:HippoParentCorporationMember2021-08-020000048039hfc:HippoParentCorporationMemberhfc:HippoParentCorporationMember2021-08-020000048039hfc:HippoParentCorporationMemberus-gaap:ScenarioPlanMemberhfc:TheSinclairCompaniesMember2021-08-020000048039hfc:HEPMemberhfc:SinclairTransportationCompanyMember2021-08-022021-08-02hfc:extensionOptionhfc:nomination0000048039hfc:HEPMemberhfc:SinclairTransportationCompanyMember2021-08-020000048039hfc:WoodsCrossRefineryAcquisitionMember2021-08-022021-08-020000048039hfc:UnevPipelineMember2021-09-300000048039hfc:OsagePipelineMemberMember2021-09-300000048039us-gaap:CustomerConcentrationRiskMemberhfc:HEPMemberhfc:HollyFrontierMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:SalesRevenueNetMember2021-01-012021-09-300000048039hfc:CrushingConnectJointVentureMember2019-10-012019-10-310000048039hfc:CrushingConnectJointVentureMembersrt:MinimumMember2019-10-310000048039hfc:CrushingConnectJointVentureMembersrt:MaximumMember2019-10-310000048039hfc:TransportationFuelsMember2021-07-012021-09-300000048039hfc:TransportationFuelsMember2020-07-012020-09-300000048039hfc:TransportationFuelsMember2021-01-012021-09-300000048039hfc:TransportationFuelsMember2020-01-012020-09-300000048039hfc:SpecialtyLubricantProductsMember2021-07-012021-09-300000048039hfc:SpecialtyLubricantProductsMember2020-07-012020-09-300000048039hfc:SpecialtyLubricantProductsMember2021-01-012021-09-300000048039hfc:SpecialtyLubricantProductsMember2020-01-012020-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMember2021-07-012021-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMember2020-07-012020-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMember2021-01-012021-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMember2020-01-012020-09-300000048039hfc:RefinedProductMember2021-07-012021-09-300000048039hfc:RefinedProductMember2020-07-012020-09-300000048039hfc:RefinedProductMember2021-01-012021-09-300000048039hfc:RefinedProductMember2020-01-012020-09-300000048039srt:CrudeOilMember2021-07-012021-09-300000048039srt:CrudeOilMember2020-07-012020-09-300000048039srt:CrudeOilMember2021-01-012021-09-300000048039srt:CrudeOilMember2020-01-012020-09-300000048039hfc:TransportationAndLogisticServicesMember2021-07-012021-09-300000048039hfc:TransportationAndLogisticServicesMember2020-07-012020-09-300000048039hfc:TransportationAndLogisticServicesMember2021-01-012021-09-300000048039hfc:TransportationAndLogisticServicesMember2020-01-012020-09-300000048039hfc:OtherRevenuesProductsOfPetroleumAndCoalMember2021-07-012021-09-300000048039hfc:OtherRevenuesProductsOfPetroleumAndCoalMember2020-07-012020-09-300000048039hfc:OtherRevenuesProductsOfPetroleumAndCoalMember2021-01-012021-09-300000048039hfc:OtherRevenuesProductsOfPetroleumAndCoalMember2020-01-012020-09-300000048039hfc:NorthAmericaMidContinentMarketMember2021-07-012021-09-300000048039hfc:NorthAmericaMidContinentMarketMember2020-07-012020-09-300000048039hfc:NorthAmericaMidContinentMarketMember2021-01-012021-09-300000048039hfc:NorthAmericaMidContinentMarketMember2020-01-012020-09-300000048039hfc:NorthAmericaSouthwestMember2021-07-012021-09-300000048039hfc:NorthAmericaSouthwestMember2020-07-012020-09-300000048039hfc:NorthAmericaSouthwestMember2021-01-012021-09-300000048039hfc:NorthAmericaSouthwestMember2020-01-012020-09-300000048039hfc:NorthAmericaRockyMountainsMember2021-07-012021-09-300000048039hfc:NorthAmericaRockyMountainsMember2020-07-012020-09-300000048039hfc:NorthAmericaRockyMountainsMember2021-01-012021-09-300000048039hfc:NorthAmericaRockyMountainsMember2020-01-012020-09-300000048039hfc:NortheastMember2021-07-012021-09-300000048039hfc:NortheastMember2020-07-012020-09-300000048039hfc:NortheastMember2021-01-012021-09-300000048039hfc:NortheastMember2020-01-012020-09-300000048039country:CA2021-07-012021-09-300000048039country:CA2020-07-012020-09-300000048039country:CA2021-01-012021-09-300000048039country:CA2020-01-012020-09-300000048039hfc:EuropeandAsiaMember2021-07-012021-09-300000048039hfc:EuropeandAsiaMember2020-07-012020-09-300000048039hfc:EuropeandAsiaMember2021-01-012021-09-300000048039hfc:EuropeandAsiaMember2020-01-012020-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:RefiningMember2021-07-012021-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:LubricantsAndSpecialtyProductsMember2021-07-012021-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:RefiningMember2021-01-012021-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:LubricantsAndSpecialtyProductsMember2021-01-012021-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:RefiningMember2020-07-012020-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:LubricantsAndSpecialtyProductsMember2020-07-012020-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:RefiningMember2020-01-012020-09-300000048039hfc:AsphaltFuelOilAndOtherProductsMemberhfc:LubricantsAndSpecialtyProductsMember2020-01-012020-09-3000000480392021-10-01hfc:RefinedProductMember2021-09-300000048039hfc:RefinedProductMember2022-01-012021-09-3000000480392023-01-01hfc:RefinedProductMember2021-09-300000048039hfc:RefinedProductMember2024-01-012021-09-300000048039hfc:RefinedProductMember2021-09-3000000480392021-10-01hfc:ThirdPartyCustomerMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-09-300000048039hfc:ThirdPartyCustomerMember2022-01-01us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-09-300000048039hfc:ThirdPartyCustomerMember2023-01-01us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-09-300000048039hfc:ThirdPartyCustomerMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-01-012021-09-300000048039hfc:ThirdPartyCustomerMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-09-300000048039us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:CommodityContractMember2021-09-300000048039us-gaap:FairValueInputsLevel1Memberus-gaap:CommodityContractMember2021-09-300000048039us-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel2Member2021-09-300000048039us-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2021-09-300000048039us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:ForwardContractsMember2021-09-300000048039us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel1Member2021-09-300000048039us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel2Member2021-09-300000048039us-gaap:FairValueInputsLevel3Memberus-gaap:ForwardContractsMember2021-09-300000048039us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-09-300000048039us-gaap:FairValueInputsLevel1Member2021-09-300000048039us-gaap:FairValueInputsLevel2Member2021-09-300000048039us-gaap:FairValueInputsLevel3Member2021-09-300000048039us-gaap:CarryingReportedAmountFairValueDisclosureMemberhfc:NymexFuturesContractsMember2021-09-300000048039hfc:NymexFuturesContractsMemberus-gaap:FairValueInputsLevel1Member2021-09-300000048039hfc:NymexFuturesContractsMemberus-gaap:FairValueInputsLevel2Member2021-09-300000048039us-gaap:FairValueInputsLevel3Memberhfc:NymexFuturesContractsMember2021-09-300000048039us-gaap:ForeignExchangeForwardMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-09-300000048039us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel1Member2021-09-300000048039us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Member2021-09-300000048039us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2021-09-300000048039us-gaap:RenewableEnergyProgramMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-09-300000048039us-gaap:RenewableEnergyProgramMemberus-gaap:FairValueInputsLevel1Member2021-09-300000048039us-gaap:RenewableEnergyProgramMemberus-gaap:FairValueInputsLevel2Member2021-09-300000048039us-gaap:RenewableEnergyProgramMemberus-gaap:FairValueInputsLevel3Member2021-09-300000048039us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:ForwardContractsMember2020-12-310000048039us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000048039us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000048039us-gaap:FairValueInputsLevel3Memberus-gaap:ForwardContractsMember2020-12-310000048039us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000048039us-gaap:FairValueInputsLevel1Member2020-12-310000048039us-gaap:FairValueInputsLevel2Member2020-12-310000048039us-gaap:FairValueInputsLevel3Member2020-12-310000048039us-gaap:CarryingReportedAmountFairValueDisclosureMemberhfc:NymexFuturesContractsMember2020-12-310000048039hfc:NymexFuturesContractsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000048039hfc:NymexFuturesContractsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000048039us-gaap:FairValueInputsLevel3Memberhfc:NymexFuturesContractsMember2020-12-310000048039us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:CommodityContractMember2020-12-310000048039us-gaap:FairValueInputsLevel1Memberus-gaap:CommodityContractMember2020-12-310000048039us-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel2Member2020-12-310000048039us-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2020-12-310000048039us-gaap:ForeignExchangeForwardMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000048039us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel1Member2020-12-310000048039us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Member2020-12-310000048039us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2020-12-310000048039srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300000048039srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300000048039us-gaap:PerformanceSharesMember2021-01-012021-09-300000048039srt:MinimumMemberus-gaap:PerformanceSharesMember2021-01-012021-09-300000048039us-gaap:PerformanceSharesMembersrt:MaximumMember2021-01-012021-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-07-012021-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-07-012020-09-300000048039us-gaap:RestrictedStockUnitsRSUMember2020-12-310000048039us-gaap:PerformanceSharesMember2020-12-310000048039us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300000048039us-gaap:RestrictedStockUnitsRSUMember2021-09-300000048039us-gaap:PerformanceSharesMember2021-09-300000048039us-gaap:OtherNoncurrentLiabilitiesMember2021-09-300000048039us-gaap:OtherNoncurrentLiabilitiesMember2020-12-3100000480392021-04-300000048039srt:MinimumMemberus-gaap:BaseRateMember2021-01-012021-09-300000048039srt:MaximumMemberus-gaap:BaseRateMember2021-01-012021-09-300000048039us-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMember2021-01-012021-09-300000048039us-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMember2021-01-012021-09-300000048039srt:MinimumMemberhfc:CDORRateMember2021-01-012021-09-300000048039srt:MaximumMemberhfc:CDORRateMember2021-01-012021-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-03-310000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-04-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:LetterOfCreditMember2021-04-300000048039hfc:A2625SeniorNotesDueOctober2023Member2021-09-300000048039hfc:FivePointEightSevenFivePercentageSeniorNotesDueTwoThousandTwentySixMemberMember2021-09-300000048039hfc:A4500SeniorNotesDueOctober2030Member2021-09-300000048039hfc:FivePercentSeniorNotesDueTwoThousandTwentyEightMember2020-02-290000048039hfc:SixPercentSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-02-290000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-02-292020-02-290000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-01-012020-03-310000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-03-310000048039hfc:A2625SeniorNotesDueOctober2023Member2020-12-310000048039hfc:FivePointEightSevenFivePercentageSeniorNotesDueTwoThousandTwentySixMemberMember2020-12-310000048039hfc:A4500SeniorNotesDueOctober2030Member2020-12-310000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberhfc:FivePercentSeniorNotesDueTwoThousandTwentyEightMember2021-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberhfc:FivePercentSeniorNotesDueTwoThousandTwentyEightMember2020-12-310000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:FairValueInputsLevel2Member2021-09-300000048039us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:FairValueInputsLevel2Member2020-12-310000048039us-gaap:CommodityContractMember2021-07-012021-09-300000048039us-gaap:CommodityContractMember2020-07-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:SalesMember2021-07-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:SalesMember2020-07-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:CostOfSalesMember2021-07-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:CostOfSalesMember2020-07-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:OperatingExpenseMember2021-07-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:OperatingExpenseMember2020-07-012020-09-300000048039us-gaap:CommodityContractMember2021-01-012021-09-300000048039us-gaap:CommodityContractMember2020-01-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:SalesMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:SalesMember2020-01-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:CostOfSalesMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:CostOfSalesMember2020-01-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:OperatingExpenseMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:OperatingExpenseMember2020-01-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:InterestExpenseMember2021-07-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:InterestExpenseMember2020-07-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:InterestExpenseMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:InterestExpenseMember2020-01-012020-09-300000048039us-gaap:ForeignCurrencyGainLossMemberus-gaap:ForeignExchangeContractMember2021-07-012021-09-300000048039us-gaap:ForeignCurrencyGainLossMemberus-gaap:ForeignExchangeContractMember2020-07-012020-09-300000048039us-gaap:ForeignCurrencyGainLossMemberus-gaap:ForeignExchangeContractMember2021-01-012021-09-300000048039us-gaap:ForeignCurrencyGainLossMemberus-gaap:ForeignExchangeContractMember2020-01-012020-09-30utr:MMBTU0000048039us-gaap:DesignatedAsHedgingInstrumentMembersrt:NaturalGasReservesMember2021-01-012021-09-300000048039us-gaap:DesignatedAsHedgingInstrumentMemberhfc:MaturingInRemainderOfFiscalYearMembersrt:NaturalGasReservesMember2021-01-012021-09-300000048039us-gaap:DesignatedAsHedgingInstrumentMemberhfc:MaturingInYearTwoMembersrt:NaturalGasReservesMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberhfc:NymexWtiShortMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberhfc:MaturingInRemainderOfFiscalYearMemberhfc:NymexWtiShortMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberhfc:NymexWtiShortMemberhfc:MaturingInYearTwoMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberhfc:WTIAndGasolineCrackSpreadSwapsShortMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberhfc:MaturingInRemainderOfFiscalYearMemberhfc:WTIAndGasolineCrackSpreadSwapsShortMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberhfc:WTIAndGasolineCrackSpreadSwapsShortMemberhfc:MaturingInYearTwoMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberus-gaap:ForwardContractsMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberus-gaap:ForwardContractsMemberhfc:MaturingInRemainderOfFiscalYearMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberus-gaap:ForwardContractsMemberhfc:MaturingInYearTwoMember2021-01-012021-09-300000048039us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2021-09-300000048039us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberhfc:MaturingInRemainderOfFiscalYearMember2021-09-300000048039us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberhfc:MaturingInYearTwoMember2021-09-30utr:ozt0000048039us-gaap:CommodityContractMemberus-gaap:NondesignatedMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:NondesignatedMemberhfc:MaturingInRemainderOfFiscalYearMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:NondesignatedMemberhfc:MaturingInYearTwoMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-09-300000048039us-gaap:DesignatedAsHedgingInstrumentMember2021-09-300000048039us-gaap:NondesignatedMemberhfc:NymexFuturesContractsMember2021-09-300000048039us-gaap:CommodityContractMemberus-gaap:NondesignatedMember2021-09-300000048039us-gaap:NondesignatedMemberus-gaap:ForwardContractsMember2021-09-300000048039us-gaap:NondesignatedMember2021-09-300000048039us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-09-300000048039us-gaap:AccruedLiabilitiesMember2021-09-300000048039us-gaap:CommodityContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-310000048039us-gaap:DesignatedAsHedgingInstrumentMember2020-12-310000048039us-gaap:NondesignatedMemberhfc:NymexFuturesContractsMember2020-12-310000048039us-gaap:NondesignatedMemberus-gaap:ForwardContractsMember2020-12-310000048039us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2020-12-310000048039us-gaap:NondesignatedMember2020-12-310000048039us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2020-12-310000048039us-gaap:AccruedLiabilitiesMember2020-12-310000048039us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-09-3000000480392019-11-300000048039us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-07-012021-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2021-07-012021-09-300000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-07-012021-09-300000048039us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-07-012020-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2020-07-012020-09-300000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-07-012020-09-300000048039us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-01-012021-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2021-01-012021-09-300000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-01-012021-09-300000048039us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2020-01-012020-09-300000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000048039us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000048039us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000048039us-gaap:PostemploymentRetirementBenefitsMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000048039us-gaap:PostemploymentRetirementBenefitsMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000048039us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000048039us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000048039us-gaap:CommodityContractMemberus-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000048039us-gaap:CommodityContractMemberus-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000048039us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300000048039us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000048039us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000048039us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300000048039us-gaap:PostemploymentRetirementBenefitsMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000048039us-gaap:PostemploymentRetirementBenefitsMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300000048039us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000048039us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300000048039us-gaap:AccumulatedTranslationAdjustmentMember2021-09-300000048039us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:PensionPlansDefinedBenefitMember2021-09-300000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-09-300000048039us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-12-310000048039us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-3100000480392021-02-102021-02-10hfc:segment0000048039hfc:OsagePipelineMemberMember2021-09-300000048039us-gaap:OperatingSegmentsMemberhfc:RefiningMember2021-07-012021-09-300000048039hfc:LubricantsAndSpecialtyProductsMemberus-gaap:OperatingSegmentsMember2021-07-012021-09-300000048039hfc:HEPMemberus-gaap:OperatingSegmentsMember2021-07-012021-09-300000048039hfc:CorporateReconcilingItemsAndEliminationsMember2021-07-012021-09-300000048039us-gaap:OperatingSegmentsMemberhfc:RefiningMember2020-07-012020-09-300000048039hfc:LubricantsAndSpecialtyProductsMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300000048039hfc:HEPMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300000048039hfc:CorporateReconcilingItemsAndEliminationsMember2020-07-012020-09-300000048039us-gaap:OperatingSegmentsMemberhfc:RefiningMember2021-01-012021-09-300000048039hfc:LubricantsAndSpecialtyProductsMemberus-gaap:OperatingSegmentsMember2021-01-012021-09-300000048039hfc:HEPMemberus-gaap:OperatingSegmentsMember2021-01-012021-09-300000048039hfc:CorporateReconcilingItemsAndEliminationsMember2021-01-012021-09-300000048039us-gaap:OperatingSegmentsMemberhfc:RefiningMember2020-01-012020-09-300000048039hfc:LubricantsAndSpecialtyProductsMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300000048039hfc:HEPMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300000048039hfc:CorporateReconcilingItemsAndEliminationsMember2020-01-012020-09-300000048039us-gaap:CorporateAndOtherMemberhfc:RenewableDieselUnitsMember2021-07-012021-09-300000048039us-gaap:CorporateAndOtherMemberhfc:RenewableDieselUnitsMember2021-01-012021-09-300000048039us-gaap:CorporateAndOtherMemberhfc:RenewableDieselUnitsMember2020-07-012020-09-300000048039us-gaap:CorporateAndOtherMemberhfc:RenewableDieselUnitsMember2020-01-012020-09-300000048039us-gaap:OperatingSegmentsMemberhfc:RefiningMember2021-09-300000048039hfc:LubricantsAndSpecialtyProductsMemberus-gaap:OperatingSegmentsMember2021-09-300000048039hfc:HEPMemberus-gaap:OperatingSegmentsMember2021-09-300000048039hfc:CorporateReconcilingItemsAndEliminationsMember2021-09-300000048039us-gaap:OperatingSegmentsMemberhfc:RefiningMember2020-12-310000048039hfc:LubricantsAndSpecialtyProductsMemberus-gaap:OperatingSegmentsMember2020-12-310000048039hfc:HEPMemberus-gaap:OperatingSegmentsMember2020-12-310000048039hfc:CorporateReconcilingItemsAndEliminationsMember2020-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________
FORM 10-Q
_________________________________________________________________
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from    __________   to   ____________         
Commission File Number 1-3876
_________________________________________________________________
HOLLYFRONTIER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1056913
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer Identification No.)
2828 N. Harwood, Suite 1300
Dallas, Texas
75201
(Address of principal executive offices) (Zip Code)
(214) 871-3555
(Registrant’s telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock $0.01 par value HFC New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒
162,496,235 shares of Common Stock, par value $.01 per share, were outstanding on October 29, 2021.

Table of Content
HOLLYFRONTIER CORPORATION
INDEX
 
  Page
3
5
PART I. FINANCIAL INFORMATION
September 30, 2021 (Unaudited) and December 31, 2020
6
Three and Nine Months Ended September 30, 2021 and 2020
7
Three and Nine Months Ended September 30, 2021 and 2020
8
Nine Months Ended September 30, 2021 and 2020
9
Three and Nine Months Ended September 30, 2021 and 2020
10
12
39
58
58
61
62
64
67
68
Signatures
69
2
Table of Content
FORWARD-LOOKING STATEMENTS

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

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

•our ability to successfully integrate the operation of the Puget Sound refinery with our existing operations;
•(i) our ability to successfully close the Sinclair acquisition, which requires receipt of approval from our stockholders and certain regulatory approvals (including clearance by antitrust authorities necessary to complete the Sinclair acquisition on the terms and timeline desired); (ii) disruption the Sinclair acquisition may cause to customers, vendors, business partners and our ongoing business; (iii) once closed, our ability to integrate the operations of Sinclair with our existing operations and fully realize the expected synergies of the Sinclair acquisition on the expected timeline; and (iv) the cost and potential for a delay in closing as a result of litigation challenging the Sinclair transactions;
•the demand for and supply of crude oil and refined products, including uncertainty regarding the effects of the continuing COVID-19 pandemic on future demand;
•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;
•the spread between market prices for refined products and market prices for crude oil;
•the possibility of constraints on the transportation of refined products or lubricant and specialty products;
•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;
•the effects of current and/or future governmental and environmental regulations and policies, including the effects of current and/or future restrictions on various commercial and economic activities in response to the COVID-19 pandemic;
•the availability and cost of our financing;
•the effectiveness of our capital investments and marketing strategies;
•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 capital guidance;
•our ability to timely obtain or maintain permits, including those necessary for operations or capital projects;
•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;
•the possibility of terrorist or cyberattacks and the consequences of any such attacks;
•general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States;
3
Table of Content
•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
•other financial, operational and legal risks and uncertainties detailed from time to time in our SEC filings.

Cautionary statements identifying important factors that could cause actual results to differ materially from our expectations are set forth in this Form 10-Q, including without limitation the forward-looking statements that are referred to above. You should not put any undue reliance on any forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth under the heading “Risk Factors” included in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and in this Quarterly Report on Form 10-Q, and in conjunction with the discussion in this Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Outlook” and “Liquidity and Capital Resources.” All forward-looking statements included in this Form 10-Q and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
4
Table of Content
DEFINITIONS

Within this report, the following terms have these specific meanings:

“BPD” means the number of barrels per calendar day of crude oil or petroleum products.

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

“Base oil” is a lubricant grade oil initially produced from refining crude oil or through chemical synthesis that is used in producing lubricant products such as lubricating greases, motor oil and metal processing fluids.

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

“Cracking” means the process of breaking down larger, heavier and more complex hydrocarbon molecules into simpler and lighter molecules.

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

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

“LPG” means liquid petroleum gases.

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

“MMBTU” means one million British thermal units.

“Rack back” represents the portion of our Lubricants and Specialty Products business operations that entails the processing of feedstocks into base oils.

“Rack forward” represents the portion of our Lubricants and Specialty Products business operations that entails the processing of base oils into finished lubricants and the packaging, distribution and sale to customers.

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

“Renewable diesel” means a diesel fuel derived from vegetable oils or animal fats that is produced through various processes, most commonly through hydrotreating, reacting the feedstock with hydrogen under temperatures and pressure in the presence of a catalyst.

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

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

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

“White oil” is an extremely pure, highly-refined petroleum product that has a wide variety of applications ranging from pharmaceutical to cosmetic products.

“WTI” means West Texas Intermediate and is a grade of crude oil used as a common benchmark in oil pricing. WTI is a sweet crude oil and has a relatively low density.


5
Table of Content
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
HOLLYFRONTIER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30,
2021 		December 31, 2020
  (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (HEP:$12,816 and $21,990, respectively)
$ 1,481,562  $ 1,368,318 
Accounts receivable: Product and transportation (HEP: $12,121 and $14,543, respectively)
772,769  590,526 
Crude oil resales
76,392  39,510 
849,161  630,036 
Inventories: Crude oil and refined products 1,698,706  989,296 
Materials, supplies and other (HEP: $1,054 and $895, respectively)
188,374  184,180 
1,887,080  1,173,476 
Income taxes receivable 98,404  91,348 
Prepayments and other (HEP: $2,571 and $8,591, respectively)
38,816  47,583 
Total current assets 4,355,023  3,310,761 
Properties, plants and equipment, at cost (HEP: $2,194,659 and $2,119,295, respectively)
7,812,670  7,299,517 
Less accumulated depreciation (HEP: $(695,124) and $(644,149), respectively)
(2,946,119) (2,726,378)
4,866,551  4,573,139 
Operating lease right-of-use assets (HEP: $70,034 and $72,480, respectively)
395,947  350,548 
Other assets: Turnaround costs
345,314  314,816 
Goodwill (HEP: $312,873 and $312,873, respectively)
2,293,305  2,293,935 
Intangibles and other (HEP: $218,012 and $224,430, respectively)
641,041  663,665 
3,279,660  3,272,416 
Total assets $ 12,897,181  $ 11,506,864 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable (HEP: $26,008 and $28,565, respectively)
$ 1,460,769  $ 1,000,959 
Income taxes payable 19,887  1,801 
Operating lease liabilities (HEP: $3,761 and $3,827, respectively)
106,686  97,937 
Accrued liabilities (HEP: $16,931 and $29,518, respectively)
456,866  274,459 
Total current liabilities 2,044,208  1,375,156 
Long-term debt (HEP: $1,333,309 and $1,405,603, respectively)
3,072,352  3,142,718 
Noncurrent operating lease liabilities (HEP: $66,648 and $68,454, respectively)
314,650  285,785 
Deferred income taxes (HEP: $397 and $449, respectively)
870,610  713,703 
Other long-term liabilities (HEP: $44,277 and $55,105, respectively)
265,822  267,299 
Equity:
HollyFrontier stockholders’ equity:
Preferred stock, $1.00 par value – 5,000,000 shares authorized; none issued
—  — 
Common stock $.01 par value – 320,000,000 shares authorized; 256,046,051 shares issued as of September 30, 2021 and December 31, 2020
2,560  2,560 
Additional capital 4,232,504  4,207,672 
Retained earnings 4,453,366  3,913,179 
Accumulated other comprehensive income 4,460  13,462 
Common stock held in treasury, at cost – 93,553,647 and 93,632,391 shares as of September 30, 2021 and December 31, 2020, respectively
(2,966,150) (2,968,512)
Total HollyFrontier stockholders’ equity 5,726,740  5,168,361 
Noncontrolling interest 602,799  553,842 
Total equity 6,329,539  5,722,203 
Total liabilities and equity $ 12,897,181  $ 11,506,864 

Parenthetical amounts represent asset and liability balances attributable to Holly Energy Partners, L.P. (“HEP”) as of September 30, 2021 and December 31, 2020. HEP is a variable interest entity.

See accompanying notes.
6
Table of Content
HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)

  Three Months Ended
September 30, 		Nine Months Ended
September 30,
  2021 2020 2021 2020
Sales and other revenues $ 4,685,059  $ 2,819,400  $ 12,766,475  $ 8,282,875 
Operating costs and expenses:
Cost of products sold (exclusive of depreciation and amortization):
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)
3,822,858  2,377,238  10,608,892  6,647,960 
Lower of cost or market inventory valuation adjustment
—  (62,849) (318,862) 227,711 
3,822,858  2,314,389  10,290,030  6,875,671 
Operating expenses (exclusive of depreciation and amortization)
352,520  332,496  1,086,620  964,200 
Selling, general and administrative expenses (exclusive of depreciation and amortization)
91,056  74,453  250,785  237,559 
Depreciation and amortization 121,220  125,280  369,341  396,033 
Long-lived asset impairment —  —  —  436,908 
Total operating costs and expenses 4,387,654  2,846,618  11,996,776  8,910,371 
Income (loss) from operations 297,405  (27,218) 769,699  (627,496)
Other income (expense):
Earnings of equity method investments 3,689  1,316  8,875  5,186 
Interest income 1,018  1,011  3,078  6,590 
Interest expense (26,892) (30,589) (94,220) (85,923)
Gain on business interruption insurance settlement —  81,000  —  81,000 
Gain on tariff settlement —  —  51,500  — 
Gain on sales-type leases —  —  —  33,834 
Loss on early extinguishment of debt —  —  —  (25,915)
Gain (loss) on foreign currency transactions (3,492) 1,030  (4,226) (918)
Gain on sale of assets and other 85,779  1,368  95,596  4,790 
60,102  55,136  60,603  18,644 
Income (loss) before income taxes 357,507  27,918  830,302  (608,852)
Income tax expense (benefit):
Current (12,784) 35,826  (10,794) (41,221)
Deferred 67,550  (31,253) 160,738  (147,283)
54,766  4,573  149,944  (188,504)
Net income (loss) 302,741  23,345  680,358  (420,348)
Less net income attributable to noncontrolling interest 21,954  25,746  82,504  63,353 
Net income (loss) attributable to HollyFrontier stockholders
$ 280,787  $ (2,401) $ 597,854  $ (483,701)
Earnings (loss) per share:
Basic $ 1.71  $ (0.01) $ 3.63  $ (2.99)
Diluted $ 1.71  $ (0.01) $ 3.63  $ (2.99)
Average number of common shares outstanding:
Basic 162,551  162,015  162,518  161,927 
Diluted 162,551  162,015  162,518  161,927 

See accompanying notes.
7
Table of Content
HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 
  Three Months Ended
September 30, 		Nine Months Ended
September 30,
  2021 2020 2021 2020
Net income (loss) $ 302,741  $ 23,345  $ 680,358  $ (420,348)
Other comprehensive income (loss):
Foreign currency translation adjustment (6,636) 7,727  (10,411) (2,149)
Hedging instruments:
Change in fair value of cash flow hedging instruments
1,012  (2,094) (17,030) (7,329)
Reclassification adjustments to net income (loss) on settlement of cash flow hedging instruments
(52) 4,586  18,772  3,411 
Net unrealized gain (loss) on hedging instruments 960  2,492  1,742  (3,918)
Pension and other post-retirement benefit obligations:
Actuarial loss on pension plans —  —  —  (45)
Pension plans gain reclassified to net income (101) —  (306) — 
Actuarial gain on post-retirement healthcare plans —  —  —  3 
Post-retirement healthcare plans gain reclassified to net income (838) —  (2,513) — 
Retirement restoration plan loss reclassified to net income 9  —  27  — 
Net change in pension and other post-retirement benefit obligations (930) —  (2,792) (42)
Other comprehensive income (loss) before income taxes (6,606) 10,219  (11,461) (6,109)
Income tax expense (benefit) (1,413) 2,342  (2,459) (1,437)
Other comprehensive income (loss) (5,193) 7,877  (9,002) (4,672)
Total comprehensive income (loss) 297,548  31,222  671,356  (425,020)
Less noncontrolling interest in comprehensive income 21,954  25,746  82,504  63,353 
Comprehensive income (loss) attributable to HollyFrontier stockholders
$ 275,594  $ 5,476  $ 588,852  $ (488,373)

See accompanying notes.

8
Table of Content
HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
  Nine Months Ended September 30,
  2021 2020
Cash flows from operating activities:
Net income (loss) $ 680,358  $ (420,348)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 369,341  396,033 
Long-lived asset impairment —  436,908 
Lower of cost or market inventory valuation adjustment (318,862) 227,711 
Earnings of equity method investments, inclusive of distributions —  (238)
Loss on early extinguishment of debt —  25,915 
Gain on sales-type leases —  (33,834)
Gain on sale of assets (89,831) (257)
Deferred income taxes 160,738  (147,283)
Equity-based compensation expense 29,663  22,221 
Change in fair value – derivative instruments (19,483) (3,727)
(Increase) decrease in current assets:
Accounts receivable (220,645) 325,796 
Inventories (399,630) 104,640 
Income taxes receivable (7,336) (64,162)
Prepayments and other 10,369  14,403 
Increase (decrease) in current liabilities:
Accounts payable 438,541  (387,259)
Income taxes payable 18,164  (21,379)
Accrued liabilities 215,817  (22,037)
Turnaround expenditures (116,646) (73,822)
Other, net (11,064) 11,769 
Net cash provided by operating activities 739,494  391,050 
Cash flows from investing activities:
Additions to properties, plants and equipment (471,412) (174,366)
Additions to properties, plants and equipment – HEP (76,933) (38,642)
Proceeds from sale of assets 106,352  1,094 
Investment in equity company - HEP —  (2,438)
Distributions from equity method investments in excess of equity earnings 3,517  701 
Net cash used for investing activities (438,476) (213,651)
Cash flows from financing activities:
Borrowings under credit agreements 210,500  219,500 
Repayments under credit agreements (283,500) (237,000)
Proceeds from issuance of senior notes - HFC —  748,925 
Proceeds from issuance of senior notes - HEP —  500,000 
Redemption of senior notes - HEP —  (522,500)
Purchase of treasury stock (613) (3,350)
Dividends (57,663) (171,603)
Distributions to noncontrolling interests (57,217) (70,941)
Contributions from noncontrolling interests 21,285  15,382 
Payments on finance leases (2,047) (2,149)
Deferred financing costs (14,500) (13,511)
Other, net (414) 454 
Net cash provided by (used for) financing activities (184,169) 463,207 
Effect of exchange rate on cash flow (3,605) (880)
Cash and cash equivalents:
Increase for the period 113,244  639,726 
Beginning of period 1,368,318  885,162 
End of period $ 1,481,562  $ 1,524,888 
Supplemental disclosure of cash flow information:
Cash (paid) received during the period for:
Interest $ (87,229) $ (83,325)
Income taxes, net $ 20,959  $ (52,270)
Increase in accrued and unpaid capital expenditures $ 4,339  $ 19,533 

See accompanying notes.
9

HOLLYFRONTIER CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands except per share data)

HollyFrontier Stockholders' Equity
Common Stock  Additional Capital Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Non-controlling Interest Total
Equity
 
Balance at December 31, 2020 $ 2,560  $ 4,207,672  $ 3,913,179  $ 13,462  $ (2,968,512) $ 553,842  $ 5,722,203 
Net income —  —  148,217  —  —  34,633  182,850 
Dividends ($0.35 declared per common share)
—  —  (57,663) —  —  —  (57,663)
Distributions to noncontrolling interest holders
—  —  —  —  —  (19,977) (19,977)
Other comprehensive loss, net of tax
—  —  —  (8,804) —  —  (8,804)
Issuance of common stock under incentive compensation plans —  56  —  —  (56) —  — 
Equity-based compensation —  9,088  —  —  —  682  9,770 
Purchase of treasury stock
—  —  —  —  (12) —  (12)
Purchase of HEP units for restricted grants
—  —  —  —  —  (68) (68)
Contributions from noncontrolling interests
—  —  —  —  —  9,747  9,747 
Balance at March 31, 2021 $ 2,560  $ 4,216,816  $ 4,003,733  $ 4,658  $ (2,968,580) $ 578,859  $ 5,838,046 
Net income —  —  168,850  —  —  25,917  194,767 
Distributions to noncontrolling interest holders
—  —  —  —  —  (18,211) (18,211)
Other comprehensive income, net of tax
—  —  —  4,995  —  —  4,995 
Issuance of common stock under incentive compensation plans —  (2,629) —  —  2,629  —  — 
Equity-based compensation —  10,845  —  —  —  527  11,372 
Purchase of treasury stock
—  —  —  —  (479) —  (479)
Purchase of HEP units for restricted grants
—  —  —  —  —  (2) (2)
Contributions from noncontrolling interests
—  —  —  —  —  9,779  9,779 
Other —  —  (23) —  —  —  (23)
Balance at June 30, 2021 $ 2,560  $ 4,225,032  $ 4,172,560  $ 9,653  $ (2,966,430) $ 596,869  $ 6,040,244 
Net income —  —  280,787  —  —  21,954  302,741 
Distributions to noncontrolling interest holders
—  —  —  —  —  (19,029) (19,029)
Other comprehensive loss, net of tax
—  —  —  (5,193) —  —  (5,193)
Issuance of common stock under incentive compensation plans —  (402) —  —  402  —  — 
Equity-based compensation —  7,874  —  —  —  647  8,521 
Purchase of treasury stock
—  —  —  —  (122) —  (122)
Contributions from noncontrolling interests —  —  —  —  —  2,358  2,358 
Other —  —  19  —  —  —  19 
Balance at September 30, 2021 $ 2,560  $ 4,232,504  $ 4,453,366  $ 4,460  $ (2,966,150) $ 602,799  $ 6,329,539 

10

HollyFrontier Stockholders' Equity
Common Stock  Additional Capital Retained Earnings Accumulated Other Comprehensive Income 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 —  (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 —  (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
Other — 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 
Net income (loss) —  —  (2,401) —  —  25,746  23,345 
Dividends ($0.35 declared per common share)
—  —  (57,173) —  —  —  (57,173)
Distributions to noncontrolling interest holders
—  —  —  —  —  (19,933) (19,933)
Other comprehensive income, net of tax —  —  —  7,877  —  —  7,877 
Issuance of common stock under incentive compensation plans —  (6,131) —  —  6,131  —  — 
Equity-based compensation —  7,365  —  —  —  567  7,932 
Purchase of treasury stock —  —  —  —  (2,107) —  (2,107)
Purchase of HEP units for restricted grants —  —  —  —  —  (2) (2)
Contributions from noncontrolling interests —  —  —  —  —  2,119  2,119 
Balance at September 30, 2020 $ 2,560  $ 4,217,128  $ 4,088,816  $ 10,102  $ (2,982,463) $ 540,426  $ 5,876,569 

See accompanying notes.
11
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1:Description of Business and Presentation of Financial Statements

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

We are an independent petroleum refiner and marketer that produces high-value light products such as gasoline, diesel fuel, jet fuel, specialty lubricant products and specialty and modified asphalt. We own and operate petroleum refineries that serve markets throughout the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, we produce base oils and other specialized lubricants in the United States, Canada and the Netherlands, with retail and wholesale marketing of our products through a global sales network with locations in Canada, the United States, Europe, China and Latin America.

As of September 30, 2021, we:
•owned and operated a petroleum refinery in El Dorado, Kansas (the “El Dorado Refinery”), two refinery facilities located in Tulsa, Oklahoma (collectively, the “Tulsa Refineries”), a refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the “Navajo Refinery”) and a refinery in Woods Cross, Utah (the “Woods Cross Refinery”);
•owned a facility in Cheyenne, Wyoming, which operated as a petroleum refinery until early August 2020, at which time its assets began to be converted to renewable diesel production (the “Cheyenne 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 manufacturing facilities in Petrolia, Pennsylvania and the Netherlands, which produce specialty lubricant products for our Sonneborn business, 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 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 geographic regions of the United States.

On August 2, 2021, HollyFrontier, Hippo Parent Corporation, a wholly owned subsidiary of HollyFrontier (“New Parent”), Hippo Merger Sub, Inc., a wholly owned subsidiary of New Parent, The Sinclair Companies (“Sinclair”), and Hippo Holding LLC, a wholly owned subsidiary of Sinclair (the “Target Company”), entered into a business combination agreement, pursuant to which HollyFrontier will acquire the Target Company.

On May 4, 2021, HollyFrontier Puget Sound Refining LLC, a wholly owned subsidiary of HollyFrontier Corporation, entered into a sale and purchase agreement with Equilon Enterprises LLC d/b/a Shell Oil Products US (“Shell”) to acquire Shell’s Puget Sound refinery and related assets, including the on-site cogeneration facility and related logistics assets (the “Puget Sound Refinery”). The acquisition closed on November 1, 2021.

See Note 2 for additional information on these acquisitions.

12
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
On April 27, 2021, our wholly owned subsidiary, 7037619 Canada Inc., entered into a contract for sale of real property in Mississauga, Ontario for base consideration of $98.8 million, or CAD 125 million. The transaction closed on September 15, 2021, and we recorded a gain on sale of assets totaling $86.0 million for the three months ended September 30, 2021, which was recognized in “Gain on sale of assets and other” in our consolidated statements of operations.

During the first quarter of 2021, we initiated a restructuring within our Lubricants and Specialty Products segment. As a result of this restructuring, we recorded $7.8 million in employee severance costs for the nine months ended September 30, 2021, which were recognized primarily as selling, general and administrative expenses in our Lubricants and Specialty Products segment.

In the third quarter of 2020, we permanently ceased petroleum refining operations at our Cheyenne Refinery and subsequently began converting certain assets at our Cheyenne Refinery to renewable diesel production. In connection with the cessation of petroleum refining operations at our Cheyenne Refinery, we recognized $6.7 million and $23.1 million, in decommissioning expense and $0.2 million and $0.9 million, in employee severance costs for the three and nine months ended September 30, 2021, respectively, which were recognized in operating expenses in our Corporate and Other segment.

We recognized $12.3 million in decommissioning expense during the three and nine months ended September 30, 2020. In addition, during the three and nine months ended September 30, 2020, we recorded $2.4 million and $3.5 million, respectively, in employee severance costs. These decommissioning and severance costs were recognized in operating expenses and were reported in our Refining segment. Also, during the second quarter of 2020, we recorded a long-lived asset impairment charge of $232.2 million related to our Cheyenne Refinery asset group.

During the second quarter of 2020, we initiated and completed a corporate restructuring. As a result of this restructuring, we recorded $3.7 million in employee severance costs, which were recognized primarily as operating expenses in our Refining segment and selling, general and administrative expenses in our Corporate and Other segment.

We have prepared these consolidated financial statements without audit. In management’s opinion, these consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our consolidated financial position as of September 30, 2021, the consolidated results of operations, comprehensive income and statements of equity for the three and nine months ended September 30, 2021 and 2020 and consolidated cash flows for the nine months ended September 30, 2021 and 2020 in accordance with the rules and regulations of the SEC. Although certain notes and other information required by generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted, we believe that the disclosures in these consolidated financial statements are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 that has been filed with the SEC.

Our results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results of operations to be realized for the year ending December 31, 2021.

Accounts Receivable: Our accounts receivable consist of amounts due from customers that are primarily companies in the petroleum industry. Credit is extended based on our evaluation of the customer’s financial condition, and in certain circumstances collateral, such as letters of credit or guarantees, is required. We reserve for expected credit losses based on our historical loss experience as well as expected credit losses from current economic conditions and management’s expectations of future economic conditions. Credit losses are charged to the allowance for expected credit losses when an account is deemed uncollectible. Our allowance for expected credit losses was $5.1 million at September 30, 2021 and $3.4 million at December 31, 2020.

Inventories: Inventories related to our refining operations are stated at the lower of cost, using the last-in, first-out (“LIFO”) method for crude oil and unfinished and finished refined products, or market. In periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs assigned to LIFO layers in prior periods. In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and are subject to the final year-end LIFO inventory valuation.

13
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Inventories of our Petro-Canada Lubricants and Sonneborn businesses are stated at the lower of cost, using the first-in, first-out (“FIFO”) method, or net realizable value.

Inventories consisting of process chemicals, materials and maintenance supplies and renewable identification numbers (“RINs”) are stated at the lower of weighted-average cost or net realizable value.

Leases: At inception, we determine if an arrangement is or contains a lease. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our payment obligation under the leasing arrangement. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable.

Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties, plants and equipment and accrued liabilities and other long-term liabilities on our consolidated balance sheet.

Our lease term includes an option to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet. For certain equipment leases, we apply a portfolio approach for the operating lease ROU assets and liabilities. Also, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. In addition, HEP, as a lessor, does not separate the non-lease (service) component in contracts in which the lease component is the dominant component. HEP treats these combined components as a lease.

Goodwill and Long-lived Assets: As of September 30, 2021, our goodwill balance was $2.3 billion, with goodwill assigned to our Refining, Lubricants and Specialty Products and HEP segments of $1,733.5 million, $247.0 million and $312.9 million, respectively. See Note 15 for additional information on our segments. The carrying amount of our goodwill may fluctuate from period to period due to the effects of foreign currency translation adjustments on goodwill assigned to our Lubricants and Specialty Products segment. Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired and liabilities assumed. Goodwill is not subject to amortization and is tested annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our goodwill impairment testing first entails either a quantitative assessment or an optional qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that based on the qualitative factors that it is more likely than not that the carrying amount of the reporting unit is greater than its fair value, a quantitative test is performed in which we estimate the fair value of the related reporting unit. If the carrying amount of a reporting unit exceeds its fair value, the goodwill of that reporting unit is impaired, and we measure goodwill impairment as the excess of the carrying amount of the reporting unit over the related fair value.

For purposes of long-lived asset impairment evaluation, we have grouped our long-lived assets as follows: (i) our refinery asset groups, which include certain HEP logistics assets, (ii) our Lubricants and Specialty Products asset groups and (iii) our HEP asset groups, which comprises HEP assets not included in our refinery asset groups. These asset groups represent the lowest level for which independent cash flows can be identified. Our long-lived assets are evaluated for impairment by identifying whether indicators of impairment exist and if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss measured, if any, is equal to the amount by which the asset group’s carrying value exceeds its fair value.

We performed our annual goodwill impairment testing quantitatively as of July 1, 2021 and determined there was no impairment of goodwill attributable to our reporting units.

During the second quarter of 2020, we recorded long-lived asset impairment charges of $232.2 million and $204.7 million related to our Cheyenne Refinery and PCLI asset groups, respectively.

14
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Revenue Recognition: Revenue on refined product and excess crude oil sales are recognized when delivered (via pipeline, in-tank or rack) and the customer obtains control of such inventory, which is typically when title passes and the customer is billed. All revenues are reported inclusive of shipping and handling costs billed and exclusive of any taxes billed to customers. Shipping and handling costs incurred are reported as cost of products sold.

Our lubricants and specialty products business has sales agreements with marketers and distributors that provide certain rights of return or provisions for the repurchase of products previously sold to them. Under these agreements, revenues and cost of revenues are deferred until the products have been sold to end customers. Our lubricants and specialty products business also has agreements that create an obligation to deliver products at a future date for which consideration has already been received and recorded as deferred revenue. This revenue is recognized when the products are delivered to the customer.

HEP recognizes revenues as products are shipped through its pipelines and terminals and as other services are rendered. Additionally, HEP has certain throughput agreements that specify minimum volume requirements, whereby HEP bills a customer for a minimum level of shipments in the event a customer ships below their contractual requirements. If there are no future performance obligations, HEP recognizes these deficiency payments as revenue. In certain of these throughput agreements, a customer may later utilize such shortfall billings as credit towards future volume shipments in excess of its minimum levels within its respective contractual shortfall make-up period. Such amounts represent an obligation to perform future services, which may be initially deferred and later recognized as revenue based on estimated future shipping levels, including the likelihood of a customer’s ability to utilize such amounts prior to the end of the contractual shortfall make-up period. HEP recognizes the service portion of these deficiency payments as revenue when HEP does not expect it will be required to satisfy these performance obligations in the future based on the pattern of rights exercised by the customer. Payment terms under our contracts with customers are consistent with industry norms and are typically payable within 30 days of the date of invoice.

Foreign Currency Translation: Assets and liabilities recorded in foreign currencies are translated into U.S. dollars using exchange rates in effect as of the balance sheet date. Revenue and expense accounts are translated using the weighted-average exchange rates during the period presented. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income.

We have intercompany notes that were issued to fund certain of our foreign businesses. Remeasurement adjustments resulting from the conversion of intercompany financing amounts to functional currencies are recorded as gains and losses as a component of other income (expense) in the consolidated statements of operations. Such adjustments are not recorded to the Lubricants and Specialty Products segment operations, but to Corporate and Other. See Note 15 for additional information on our segments.

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

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

For the nine months ended September 30, 2021, we recorded income tax expense of $149.9 million compared to an income tax benefit of $188.5 million for the nine months ended September 30, 2020. This increase was due principally to pre-tax income during the nine months ended September 30, 2021 compared to a pre-tax loss in the same period of 2020. Our effective tax rates were 18.1% and 31.0% for the nine months ended September 30, 2021 and 2020, respectively. The year-over-year decrease in the effective tax rate is due principally to the relationship between the pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes. The difference in the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2021 was primarily due to the net operating loss carryback provisions of the Coronavirus Aid, Relief, and Economic Security Act and federal tax credits.

15
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Inventory Repurchase Obligations: We periodically enter into same-party sell / buy transactions, whereby we sell certain refined product inventory and subsequently repurchase the inventory in order to facilitate delivery to certain locations. Such sell / buy transactions are accounted for as inventory repurchase obligations under which proceeds received under the initial sell is recognized as an inventory repurchase obligation that is subsequently reversed when the inventory is repurchased. For the nine months ended September 30, 2021 and 2020, we received proceeds of $32.7 million and $32.7 million, respectively, and subsequently repaid $34.1 million and $34.4 million, respectively, under these sell / buy transactions.


NOTE 2:Acquisitions

Puget Sound Refinery
On May 4, 2021, our wholly owned subsidiary, HollyFrontier Puget Sound Refining LLC, entered into a sale and purchase agreement with Shell to acquire the Puget Sound Refinery. The acquisition closed on November 1, 2021 for aggregate cash consideration of $613.6 million, which consists of a base cash purchase price of $350 million, hydrocarbon inventory with an estimated closing value of $266.2 million and other closing adjustments and accrued liabilities of $2.6 million (the “Puget Sound Acquisition”). The Puget Sound Refinery is strategically located on approximately 850 acres in Anacortes, Washington, approximately 80 miles north of Seattle and 90 miles south of Vancouver. The 149,000 barrel per day facility is a large, high quality and complex refinery with catalytic cracking and delayed coking units and is well positioned geographically and logistically to source advantaged Canadian and Alaskan North Slope crudes. In addition to refining assets and an on-site cogeneration facility, the transaction includes a deep-water marine dock, a light product loading rack, a rail terminal and storage tanks with approximately 5.8 million barrels of crude, product and other hydrocarbon storage capacity.

The Puget Sound Acquisition will be accounted for as a business combination, with the cash purchase price allocated to the acquisition date fair value of assets and liabilities acquired.

Sinclair
HFC Transactions: On August 2, 2021, HollyFrontier, Hippo Parent Corporation, a wholly owned subsidiary of HollyFrontier (“New Parent”), Hippo Merger Sub, Inc., a wholly owned subsidiary of New Parent (“Parent Merger Sub”), The Sinclair Companies (“Sinclair”), and Hippo Holding LLC, a wholly owned subsidiary of Sinclair (the “Target Company”), entered into a business combination agreement (the “Business Combination Agreement”). Pursuant to the Business Combination Agreement, HollyFrontier will acquire the Target Company by effecting (a) a holding company merger in accordance with Section 251(g) of the Delaware General Corporation Law whereby HollyFrontier will merge with and into Parent Merger Sub, with HollyFrontier surviving such merger as a direct wholly owned subsidiary of New Parent (the “HFC Merger”) and (b) immediately following the HFC Merger, a contribution whereby Sinclair will contribute all of the equity interests of the Target Company to New Parent in exchange for shares of New Parent, resulting in the Target Company becoming a direct wholly owned subsidiary of New Parent (the “Sinclair Oil Acquisition” and together with the HFC Merger, the “HFC Transactions”).

Under the terms of the Business Combination Agreement, at the effective time of the HFC Merger, (a) each share of common stock of HollyFrontier, par value $0.01 per share, will be automatically converted into one share of common stock of New Parent, par value $0.01 per share (“New Parent Common Stock”) and (b) immediately thereafter, Sinclair will contribute the equity interests in the Target Company to New Parent in exchange for 60,230,036 shares of New Parent Common Stock, subject to adjustment if, as a condition to obtaining antitrust clearance for the Sinclair Transactions (as defined below), HollyFrontier agrees to divest certain Woods Cross Refinery assets and the sales price for such assets does not exceed a threshold provided in the Business Combination Agreement.

On a pro forma basis following the closing, Sinclair is expected to own 26.75% of the outstanding common stock of New Parent, and HollyFrontier’s current stockholders are expected to hold in the aggregate 73.25% of the outstanding common stock of New Parent, based on HollyFrontier’s outstanding shares of common stock as of July 30, 2021.

16
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Consummation of the HFC Transactions is subject to satisfaction or waiver of certain customary conditions, including, among others, receipt of approval for the issuance of New Parent common stock from HollyFrontier’s stockholders; the satisfaction of certain required regulatory consents and approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”); and the consummation of the HEP Transactions (as defined below), which will occur immediately prior to the HFC Transactions (the HEP Transactions, together with the HFC Transactions, the “Sinclair Transactions”). On August 23, 2021, each of HollyFrontier and Sinclair filed its respective premerger notification and report regarding the Sinclair Transactions with the U.S. Department of Justice and the U.S. Federal Trade Commission (the “FTC”) under the HSR Act. On September 22, 2021, HollyFrontier and Sinclair each received a request for additional information and documentary material (“Second Request”) from the FTC in connection with the FTC’s review of the Sinclair Transactions. Issuance of the Second Request extends the waiting period under the HSR Act until 30 days after both HollyFrontier and Sinclair have substantially complied with the Second Request, unless the waiting period is terminated earlier by the FTC or the parties otherwise commit not to close the Sinclair Transactions for some additional period of time. HollyFrontier and Sinclair are cooperating with the FTC staff in its review.

The Business Combination Agreement automatically terminates if the HEP Transactions are terminated and contains other customary termination rights. In the event that certain events occur under specified circumstances outlined in the Business Combination Agreement, HollyFrontier could be required to pay Sinclair a termination fee equal to $200 million or $35 million as reimbursement for expenses.

Upon closing of the Sinclair Transactions, HollyFrontier’s existing senior management team will operate the combined company. Under the definitive agreements, Sinclair will be granted the right to nominate two directors to the New Parent Board of Directors at the closing. The Sinclair stockholders have also agreed to certain customary lock up, voting and standstill restrictions, as well as customary registration rights, for the New Parent Common Stock to be issued to the stockholders of Sinclair. The new company will be headquartered in Dallas, Texas, with combined business offices in Salt Lake City, Utah. Following the consummation of the HFC Merger, New Parent will assume HollyFrontier’s listing on the New York Stock Exchange and will be renamed “HF Sinclair Corporation”.

HEP Transactions: On August 2, 2021, HEP, Sinclair, and Sinclair Transportation Company, a wholly owned subsidiary of Sinclair (“STC”), entered into a contribution agreement (the “Contribution Agreement”) pursuant to which the Partnership will acquire all of the outstanding shares of STC in exchange for 21 million newly issued common limited partner units of HEP and cash consideration equal to $325 million (the “HEP Transactions”).

The cash consideration for the HEP Transactions is subject to customary adjustments at closing for working capital of STC. The number of HEP common limited partner units to be issued to Sinclair at closing is subject to downward adjustment if, as a condition to obtaining antitrust clearance for the Sinclair Transactions, HEP agrees to divest a portion of its equity interest in UNEV Pipeline, LLC and the sales price for such interests does not exceed the threshold provided in the Contribution Agreement.

The Contribution Agreement contains customary representations, warranties and covenants of HEP, Sinclair and STC. The HEP Transactions are expected to close in mid-2022, subject to the satisfaction or waiver of certain customary conditions, including, among others, the receipt of certain required regulatory consents and approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and the consummation of the HFC Transactions.

The Contribution Agreement automatically terminates if the HFC Transactions are terminated and contains other customary termination rights, including a termination right for each of the Partnership and Sinclair if, under certain circumstances, the closing does not occur by May 2, 2022 (the “Outside Date”), except that the Outside Date can be extended by either party by up to two 90 day periods to obtain any required antitrust clearance.

Upon closing of the HEP Transactions, HEP’s existing senior management team will continue to operate HEP. Under the definitive agreements, Sinclair will be granted the right to nominate one director to the HEP Board of Directors at the closing. The Sinclair stockholders have also agreed to certain customary lock up restrictions and registration rights for the HEP common limited partner units to be issued to the stockholders of Sinclair. HEP will continue to operate under the name Holly Energy Partners, L.P.

17
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
On August 2, 2021, in connection with the Sinclair Transactions, HEP and HollyFrontier entered into a Letter Agreement (“Letter Agreement”) pursuant to which, among other things, HEP and HollyFrontier agreed, upon the consummation of the Sinclair Transactions, to enter into amendments to certain of the agreements by and among HEP and HollyFrontier, including the master throughput agreement, to include within the scope of such agreements the assets to be acquired by HEP pursuant to the Contribution Agreement.

In addition, the Letter Agreement provides that if, as a condition to obtaining antitrust clearance for the Sinclair Transactions, HollyFrontier enters into a definitive agreement to divest its Woods Cross Refinery, then HEP would sell certain assets located at, or relating to, the Woods Cross Refinery to HollyFrontier in exchange for cash consideration equal to $232.5 million plus the certain accounts receivable of HEP in respect of such assets, with such sale to be effective immediately prior to the closing of the sale of the Woods Cross Refinery by HollyFrontier. The Letter Agreement also provides that HEP’s right to future revenues from HollyFrontier in respect of such Woods Cross Refinery assets will terminate at the closing of such sale.


NOTE 3:Holly Energy Partners

HEP is a publicly held master limited partnership that owns and operates logistic assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units that principally support our refining and marketing operations, as well as other third-party refineries, in the Mid-Continent, Southwest and Rocky Mountain geographic regions of the United States. Additionally, as of September 30, 2021, HEP owned a 75% interest in UNEV Pipeline, LLC (“UNEV”), the owner of a pipeline running from Woods Cross, Utah to Las Vegas, Nevada (the “UNEV Pipeline”) and associated product terminals, and a 50% ownership interest in each of Osage Pipe Line Company, LLC, the owner of a pipeline running from Cushing, Oklahoma to El Dorado, Kansas (the “Osage Pipeline”); Cheyenne Pipeline, LLC, the owner of a pipeline running from Fort Laramie, Wyoming to Cheyenne, Wyoming (the “Cheyenne Pipeline”) and Cushing Connect Pipeline & Terminal LLC (“Cushing Connect”), the owner of a crude oil storage terminal in Cushing, Oklahoma and a pipeline that runs from Cushing, Oklahoma to our Tulsa Refineries.

At September 30, 2021, we owned a 57% limited partner interest and a non-economic general partner interest in HEP. As the general partner of HEP, we have the sole ability to direct the activities that most significantly impact HEP’s financial performance, and therefore as HEP's primary beneficiary, we consolidate HEP.

HEP generates revenues by charging tariffs for transporting petroleum products and crude oil through its pipelines, by charging fees for terminalling refined products and other hydrocarbons, and by storing and providing other services at its storage tanks and terminals. Under our long-term transportation agreements with HEP (discussed further below), we accounted for 79% of HEP’s total revenues for the nine months ended September 30, 2021. We do not provide financial or equity support through any liquidity arrangements and / or debt guarantees to HEP.

HEP has outstanding debt under a senior secured revolving credit agreement and its senior notes. HEP’s creditors have no recourse to our assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries. See Note 10 for a description of HEP’s debt obligations.

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

Cushing Connect Joint Venture
In October 2019, HEP Cushing LLC (“HEP Cushing”), a wholly-owned subsidiary of HEP, and Plains Marketing, L.P. (“PMLP”), a wholly owned subsidiary of Plains All American Pipeline, L.P. (“Plains”), formed a 50/50 joint venture, Cushing Connect, for (i) the development, construction, ownership and operation of a new 160,000 barrel per day common carrier crude oil pipeline (the “Cushing Connect Pipeline”) that will connect the Cushing, Oklahoma crude oil hub to our Tulsa Refineries and (ii) the ownership and operation of 1.5 million barrels of crude oil storage in Cushing, Oklahoma (the “Cushing Connect Terminal”). The Cushing Connect Terminal was fully in service beginning in April 2020, and the Cushing Connect Pipeline was placed in service at the end of the third quarter of 2021. Long-term commercial agreements have been entered into to support the Cushing Connect assets.

18
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Cushing Connect entered into a contract with an affiliate of HEP to manage the operation of the Cushing Connect Pipeline and with an affiliate of Plains to manage the operation of the Cushing Connect Terminal. The total investment in Cushing Connect will be shared equally among the partners. However, HEP is solely responsible for any Cushing Connect Pipeline construction costs that exceed the budget by more than 10%. HEP estimates its share of the cost of the Cushing Connect Terminal contributed by Plains and Cushing Connect Pipeline construction costs are approximately $70 million to $75 million.

Cushing Connect and its two subsidiaries, Cushing Connect Pipeline and Cushing Connect Terminal, are each VIE’s because they do not have sufficient equity at risk to finance their activities without additional financial support. HEP is the primary beneficiary of two of these entities as HEP is constructing and will operate the Cushing Connect Pipeline, and HEP has more ability to direct the activities that most significantly impact the financial performance of Cushing Connect and Cushing Connect Pipeline. Therefore, HEP consolidates these two entities. HEP is not the primary beneficiary of Cushing Connect Terminal, which HEP accounts for using the equity method of accounting.

Transportation Agreements
HEP serves our refineries under long-term pipeline, terminal and tankage throughput agreements and refinery processing tolling agreements expiring from 2022 through 2036. Under these agreements, we pay HEP fees to transport, store and process throughput volumes of refined products, crude oil and feedstocks on HEP’s pipeline, terminals, tankage, loading rack facilities and refinery processing units that result in minimum annual payments to HEP including UNEV (a consolidated subsidiary of HEP). Under these agreements, the agreed upon tariff rates are subject to annual tariff rate adjustments on July 1 at a rate based upon the percentage change in Producer Price Index or Federal Energy Regulatory Commission index. As of September 30, 2021, these agreements require minimum annualized payments to HEP of $352.9 million.

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

Lessor Accounting
Our consolidated statements of operations reflect lease revenue recognized by HEP for contracts with third parties in which HEP is the lessor.

Lease income recognized was as follows:
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
(In thousands)
Operating lease revenues $ 3,539  $ 5,080  $ 11,717  $ 18,812 
Gain on sales-type leases $ —  $ —  $ —  $ 33,834 
Sales-type lease interest income $ 636  $ 645  $ 1,912  $ 1,287 
Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable $ 648  $ 335  $ 1,505  $ 621 
One of HEP’s throughput agreements with Delek US Holdings, Inc. (“Delek”) was partially renewed during the nine months ended September 30, 2020. Certain components of this agreement met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease term to anyone other than Delek. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at contract inception, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, HEP recognized a gain on sales-type leases totaling $33.8 million during the nine months ended September 30, 2020. This sales-type lease transaction, including the related gain, was a non-cash transaction.


19
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
NOTE 4:Revenues

Substantially all revenue-generating activities relate to sales of refined product and excess crude oil inventories sold at market prices (variable consideration) under contracts with customers. Additionally, we have revenues attributable to HEP logistics services provided under petroleum product and crude oil pipeline transportation, processing, storage and terminalling agreements with third parties.

Disaggregated revenues were as follows:                        
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
(In thousands)
Revenues by type
Refined product revenues
Transportation fuels (1)
$ 3,428,501  $ 1,949,381  $ 9,224,169  $ 5,812,974 
Specialty lubricant products (2)
618,310  421,254  1,704,930  1,232,491 
Asphalt, fuel oil and other products (3)
260,788  171,844  641,117  518,485 
Total refined product revenues 4,307,599  2,542,479  11,570,216  7,563,950 
Excess crude oil revenues (4)
343,500  243,742  1,089,075  606,915 
Transportation and logistic services 25,459  26,740  77,809  72,410 
Other revenues (5)
8,501  6,439  29,375  39,600 
Total sales and other revenues $ 4,685,059  $ 2,819,400  $ 12,766,475  $ 8,282,875 
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
(In thousands)
Refined product revenues by market
United States
Mid-Continent $ 2,467,792  $ 1,254,828  $ 6,470,231  $ 3,655,412 
Southwest 923,319  580,818  2,632,833  1,751,066 
Rocky Mountains 414,334  343,905  1,025,389  1,087,657 
Northeast 221,488  149,855  593,741  420,588 
Canada 199,924  150,618  595,208  454,141 
Europe, Asia and Latin America 80,742  62,455  252,814  195,086 
Total refined product revenues $ 4,307,599  $ 2,542,479  $ 11,570,216  $ 7,563,950 

(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 $213.7 million and $47.1 million, respectively, for the three months ended September 30, 2021, $496.9 million and $144.2 million, respectively, for the nine months ended September 30, 2021, $140.2 million and $31.6 million, respectively, for the three months ended September 30, 2020, $421.0 million and $97.5 million respectively, for the nine months ended September 30, 2020.
(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.

20
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Our consolidated balance sheet reflects contract liabilities related to unearned revenues attributable to future service obligations under HEP’s third-party transportation agreements and production agreements from our Sonneborn operations. The following table presents changes to our contract liabilities during the nine months ended September 30, 2021 and 2020.

Nine Months Ended September 30,
2021 2020
(In thousands)
Balance at January 1 $ 6,738  $ 4,652 
Increase 24,745  21,583 
Recognized as revenue (22,224) (18,224)
Balance at September 30 $ 9,259  $ 8,011 

As of September 30, 2021, we have long-term contracts with customers that specify minimum volumes of gasoline, diesel, lubricants and specialty products to be sold ratably at market prices through 2025. Such volumes are typically nominated in the month preceding delivery and delivered ratably throughout the following month. Future prices are subject to market fluctuations and therefore, we have elected the exemption to exclude variable consideration under these contracts under Accounting Standards Codification 606-10-50-14A. Aggregate minimum volumes expected to be sold (future performance obligations) under our long-term product sales contracts with customers are as follows:

Remainder of 2021 2022 2023 Thereafter Total
(In thousands)
Refined product sales volumes (barrels)
4,654  14,543  12,795  11,698  43,690 

Additionally, HEP has long-term contracts with third-party customers that specify minimum volumes of product to be transported through its pipelines and terminals that result in fixed-minimum annual revenues through 2025. Annual minimum revenues attributable to HEP’s third-party contracts as of September 30, 2021 are presented below:

Remainder of 2021 2022 2023 Thereafter Total
(In thousands)
HEP contractual minimum revenues
$ 5,400  $ 11,770  $ 9,676  $ 12,357  $ 39,203 


NOTE 5:Fair Value Measurements

Our financial instruments measured at fair value on a recurring basis consist of derivative instruments and RINs credit obligations.

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

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

21
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
The carrying amounts of derivative instruments and RINs credit obligations at September 30, 2021 and December 31, 2020 were as follows:
Fair Value by Input Level
Carrying Amount Level 1 Level 2 Level 3
(In thousands)
September 30, 2021
Assets:
Commodity price swaps $ 1,451  $ —  $ 1,451  $ — 
Commodity forward contracts 516  —  516  — 
Total assets $ 1,967  $ —  $ 1,967  $ — 
Liabilities:
NYMEX futures contracts $ 8,781  $ 8,781  $ —  $ — 
Commodity forward contracts 537  —  537  — 
Foreign currency forward contracts 1,113  —  1,113  — 
RINs credit obligations (1)
119,583  —  119,583  — 
Total liabilities $ 130,014  $ 8,781  $ 121,233  $ — 
December 31, 2020
Assets:
Commodity forward contracts $ 275  $ —  $ 275  $ — 
Total assets $ 275  $ —  $ 275  $ — 
Liabilities:
NYMEX futures contracts $ 418  $ 418  $ —  $ — 
Commodity price swaps 359  —  359  — 
Commodity forward contracts 196  —  196  — 
Foreign currency forward contracts 23,005  —  23,005  — 
Total liabilities $ 23,978  $ 418  $ 23,560  $ — 

(1) Represent obligations for RINs credits for which we did not have sufficient quantities at September 30, 2021 to satisfy our Environmental Protection Agency (“EPA”) regulatory blending requirements.

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

Level 2 Instruments
Derivative instruments consisting of foreign currency forward contracts, commodity price swaps and forward sales and purchase contracts are measured and recorded at fair value using Level 2 inputs. The fair value of the commodity price swap contracts is based on the net present value of expected future cash flows related to both variable and fixed rate legs of the respective swap agreements. The measurements are computed using market-based observable input and quoted forward commodity prices with respect to our commodity price swaps. The fair value of the forward sales and purchase contracts are computed using quoted forward commodity prices. RINs credit obligations are valued based on current market RINs prices. The fair value of foreign currency forward contracts are based on values provided by a third party, which were derived using market quotes for similar type instruments, a Level 2 input.


22
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
NOTE 6:Earnings Per Share

Basic earnings per share is calculated as net income (loss) attributable to HollyFrontier stockholders, adjusted for participating securities’ share in earnings divided by the average number of shares of common stock outstanding. Diluted earnings per share includes the incremental shares resulting from certain share-based awards. The following is a reconciliation of the denominators of the basic and diluted per share computations for net income (loss) attributable to HollyFrontier stockholders:
  Three Months Ended
September 30, 		Nine Months Ended
September 30,
  2021 2020 2021 2020
  (In thousands, except per share data)
Net income (loss) attributable to HollyFrontier stockholders
$ 280,787  $ (2,401) $ 597,854  $ (483,701)
Participating securities’ share in earnings (1)
3,553  —  7,888  — 
Net income (loss) attributable to common shares $ 277,234  $ (2,401) $ 589,966  $ (483,701)
Average number of shares of common stock outstanding
162,551  162,015  162,518  161,927 
Average number of shares of common stock outstanding assuming dilution
162,551  162,015  162,518  161,927 
Basic earnings (loss) per share $ 1.71  $ (0.01) $ 3.63  $ (2.99)
Diluted earnings (loss) per share $ 1.71  $ (0.01) $ 3.63  $ (2.99)

(1) Unvested restricted stock unit awards and unvested performance share units represent participating securities because they participate in nonforfeitable dividends or distributions with the common stockholders of HollyFrontier. Participating earnings represent the distributed and undistributed earnings of HollyFrontier attributable to the participating securities. Unvested restricted stock unit awards and performance share units do not participate in undistributed net losses as they are not contractually obligated to do so.


NOTE 7:Stock-Based Compensation

We have a principal share-based compensation plan (the “2020 Long-Term Incentive Plan”), which allows us to grant new equity awards to certain officers, non-employee directors and other key employees of HollyFrontier. The restricted stock unit awards generally vest over a period of one to three years. Upon vesting, restrictions on the restricted stock units lapse at which time they convert to common shares or cash. The performance share units generally vest over a period of three years and are payable in stock or cash upon meeting certain financial and performance criteria. The number of shares ultimately issued or cash paid for the performance share units can range from zero to 200% of target award amounts. The holders of unvested restricted stock units and performance share units have the right to receive dividends.

The compensation cost for these plans was $9.2 million and $6.9 million for the three months ended September 30, 2021 and 2020, respectively, and $32.0 million and $19.8 million, for the nine months ended September 30, 2021 and 2020, respectively.

Additionally, HEP maintains a share-based compensation plan for Holly Logistic Services, L.L.C.’s non-employee directors and certain executives and employees. Compensation cost attributable to HEP’s share-based compensation plan was $0.6 million and $0.6 million for the three months ended September 30, 2021 and 2020, respectively, and $1.9 million and $1.5 million, for the nine months ended September 30, 2021 and 2020, respectively.

In July 2021, we adopted a stock compensation deferral plan which allows non-employee directors to defer settlement of vested stock granted under our share-based compensation plan. This plan was effective October 1, 2021.

23
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
A summary of restricted stock unit and performance share unit activity during the nine months ended September 30, 2021 is presented below:
Restricted Stock Units Performance Share Units
Outstanding at January 1, 2021 2,057,045  635,204 
Granted (1)
9,983  — 
Vested (95,476) (5,894)
Forfeited (153,453) (29,204)
Outstanding at September 30, 2021 1,818,099  600,106 
(1) Weighted average grant date fair value per unit $ 34.98  $ — 


NOTE 8:Inventories

Inventories consist of the following components:
September 30,
2021 		December 31, 2020
(In thousands)
Crude oil $ 506,545  $ 451,967 
Other raw materials and unfinished products (1)
396,745  260,495 
Finished products (2)
795,416  595,696 
Lower of cost or market reserve —  (318,862)
Process chemicals (3)
44,904  35,006 
Repair and maintenance supplies and other (4)
143,470  149,174 
Total inventory $ 1,887,080  $ 1,173,476 

(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.

Our inventories that are valued at the lower of LIFO cost or market reflected a valuation reserve of $318.9 million at December 31, 2020. The December 31, 2020 market reserve of $318.9 million was reversed during the six months ended June 30, 2021 due to the sale of inventory quantities that gave rise to the 2020 reserve. The effect of the change in lower of cost or market reserve was a decrease to cost of products sold totaling $318.9 million for the nine months ended September 30, 2021, a decrease to cost of products sold totaling $62.8 million for the three months ended September 30, 2020, and an increase to cost of products sold of $227.7 million for the nine months ended September 30, 2020.

At September 30, 2021, the LIFO value of inventory was equal to cost.


24
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
NOTE 9:Environmental

Environmental costs are charged to operating expenses if they relate to an existing condition caused by past operations and do not contribute to current or future revenue generation. We have ongoing investigations of environmental matters at various locations and routinely assess our recorded environmental obligations, if any, with respect to such matters. Liabilities are recorded when site restoration and environmental remediation, cleanup and other obligations are either known or considered probable and can be reasonably estimated. Such estimates are undiscounted and require judgment with respect to costs, time frame and extent of required remedial and cleanup activities and are subject to periodic adjustments based on currently available information. Recoveries of environmental costs through insurance, indemnification arrangements or other sources are included in other assets to the extent such recoveries are considered probable.

We incurred expense of $0.5 million and $2.2 million for the three months ended September 30, 2021 and 2020, respectively, and $2.5 million and $4.2 million for the nine months ended September 30, 2021 and 2020, for environmental remediation obligations. The accrued environmental liability reflected in our consolidated balance sheets was $111.9 million and $115.0 million at September 30, 2021 and December 31, 2020, respectively, of which $93.2 million and $94.0 million, respectively, were classified as other long-term liabilities. These accruals include remediation and monitoring costs expected to be incurred over an extended period of time (up to 30 years for certain projects). Estimated liabilities could increase in the future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.


NOTE 10:Debt

HollyFrontier Credit Agreement
On April 30, 2021, we amended our $1.35 billion senior unsecured revolving credit facility to extend the maturity date to April 30, 2026 (the “HollyFrontier Credit Agreement”). The HollyFrontier Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. At September 30, 2021, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $2.3 million under the HollyFrontier Credit Agreement.

Indebtedness under the HollyFrontier Credit Agreement bears interest, at our option, at either (a) the alternate base rate (as defined in the HollyFrontier Credit Agreement) plus an applicable margin (ranging from 0.25% to 1.125%), (b) the LIBO Rate (as defined in the HollyFrontier Credit Agreement) plus an applicable margin (ranging from 1.25% to 2.125%) or (c) the CDOR Rate (as defined in the HollyFrontier Credit Agreement) plus an applicable margin (ranging from 1.25% to 2.125%) for Canadian dollar denominated borrowings.

HEP Credit Agreement
On April 30, 2021, HEP amended its $1.4 billion senior secured revolving credit facility decreasing the commitments under the facility to $1.2 billion and extending the maturity to July 27, 2025 (the “HEP Credit Agreement”). The HEP Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general partnership purposes. It is also available to fund letters of credit up to a $50 million sub-limit and continues to provide for an accordion feature that allows HEP to increase the commitments under the HEP Credit Agreement up to a maximum amount of $1.7 billion. During the nine months ended September 30, 2021, HEP received advances totaling $210.5 million and repaid $283.5 million under the HEP Credit Agreement. At September 30, 2021, HEP was in compliance with all of its covenants, had outstanding borrowings of $840.5 million and no outstanding letters of credit under the HEP Credit Agreement.

Prior to the Investment Grade Date (as defined in the HEP Credit Agreement), indebtedness under the HEP Credit Agreement bears interest, at HEP’s option, at either (a) the alternate base rate (as defined in the HEP Credit Agreement) plus an applicable margin or (b) the Eurodollar Rate (as defined in the HEP Credit Agreement) plus an applicable margin. In each case, the applicable margin is based upon HEP’s Total Leverage Ratio (as defined in the HEP Credit Agreement). The weighted average interest rate in effect under the HEP Credit Agreement on HEP’s borrowings was 2.32% as of September 30, 2021.

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

25
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
HollyFrontier Senior Notes
At September 30, 2021, our senior notes consisted of the following:

•$350.0 million in aggregate principal amount of 2.625% senior notes maturing October 2023 (the “2.625% Senior Notes”);
•$1.0 billion in aggregate principal amount of 5.875% senior notes maturing April 2026 (the “5.875% Senior Notes”); and
•$400.0 million in aggregate principal amount of 4.500% senior notes maturing October 2030 (the “4.500% Senior Notes”).

These senior notes (collectively, the “HollyFrontier Senior Notes”) are unsecured and unsubordinated obligations and rank equally with all our other existing and future unsecured and unsubordinated indebtedness.

HollyFrontier Financing Arrangements
Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution and then leased back the precious metals catalyst in exchange for cash. The volume of the precious metals catalyst and the lease rate are fixed over the term of each lease, and the lease payments are recorded as interest expense. The current leases mature on February 1, 2022. Upon maturity, we must either satisfy the obligation at fair market value or refinance to extend the maturity. These financing arrangements are recorded at a Level 2 fair value totaling $37.3 million and $43.9 million at September 30, 2021 and December 31, 2020, respectively, and are included in “Accrued liabilities” in our consolidated balance sheets. See Note 5 for additional information on Level 2 inputs.

HEP Senior Notes
In February 2020, HEP closed a private placement of $500.0 million in aggregate principal amount of 5.0% HEP senior unsecured notes maturing February 2028 (the “HEP Senior Notes”). Subsequently, in February 2020, HEP redeemed its existing $500.0 million aggregate principal amount of 6.0% senior notes maturing August 2024 at a redemption cost of $522.5 million. HEP recognized a $25.9 million early extinguishment loss consisting of a $22.5 million debt redemption premium and unamortized discount and financing costs of $3.4 million during the three months ended March 31, 2020.

The HEP Senior Notes are unsecured and impose certain restrictive covenants, including limitations on HEP’s ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. HEP was in compliance with the restrictive covenants for the HEP Senior Notes as of September 30, 2021. At any time when the HEP Senior Notes are rated investment grade by either Moody’s or Standard & Poor’s and no default or event of default exists, HEP will not be subject to many of the foregoing covenants. Additionally, HEP has certain redemption rights at varying premiums over face value under the HEP Senior Notes.

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

26
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
The carrying amounts of long-term debt are as follows:
September 30,
2021 		December 31,
2020
  (In thousands)
HollyFrontier
2.625% Senior Notes
$ 350,000  $ 350,000 
5.875% Senior Notes
1,000,000  1,000,000 
4.500% Senior Notes
400,000  400,000 
1,750,000  1,750,000 
Unamortized discount and debt issuance costs (10,957) (12,885)
Total HollyFrontier long-term debt 1,739,043  1,737,115 
HEP Credit Agreement 840,500  913,500 
HEP 5.000% Senior Notes
Principal 500,000  500,000 
Unamortized discount and debt issuance costs (7,191) (7,897)
Total HEP long-term debt 1,333,309  1,405,603 
Total long-term debt $ 3,072,352  $ 3,142,718 

The fair values of the senior notes are as follows:
September 30,
2021 		December 31,
2020
(In thousands)
HollyFrontier Senior Notes $ 1,946,420  $ 1,903,867 
HEP Senior Notes $ 506,770  $ 506,540 

These fair values are based on a Level 2 input. See Note 5 for additional information on Level 2 inputs.

We capitalized interest attributable to construction projects of $4.8 million and $1.1 million for the three months ended September 30, 2021 and 2020, respectively, and $9.5 million and $2.4 million, for the nine months ended September 30, 2021 and 2020, respectively.


NOTE 11: Derivative Instruments and Hedging Activities

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

Foreign Currency Risk Management
We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward and foreign exchange swap contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.

27
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Accounting Hedges
We have swap contracts serving as cash flow hedges against price risk on forecasted purchases of natural gas. We also periodically have swap contracts to lock in basis spread differentials on forecasted purchases of crude oil and forward sales contracts that lock in the prices of future sales of crude oil and refined product. These contracts have been designated as accounting hedges and are measured at fair value with offsetting adjustments (gains/losses) recorded directly to other comprehensive income. These fair value adjustments are later reclassified to earnings as the hedging instruments mature.

The following table presents the pre-tax effect on other comprehensive income (“OCI”) and earnings due to fair value adjustments and maturities of hedging instruments under hedge accounting:
Net Unrealized Gain (Loss) Recognized in OCI Gain (Loss) Reclassified into Earnings
Derivatives Designated as Cash Flow Hedging Instruments Three Months Ended
September 30, 		Income Statement Location Three Months Ended
September 30,
2021 2020 2021 2020
(In thousands)
Commodity contracts $ 960  $ 2,492  Sales and other revenues $ (468) $ (5,217)
Cost of products sold —  983 
Operating expenses 520  (352)
Total $ 960  $ 2,492  $ 52  $ (4,586)

Derivatives Designated as Cash Flow Hedging Instruments Nine Months Ended
September 30, 		Income Statement Location Nine Months Ended
September 30,
2021 2020 2021 2020
(In thousands)
Commodity contracts $ 1,742  $ (3,918) Sales and other revenues $ (19,239) $ (5,168)
Cost of products sold —  3,272 
Operating expenses 467  (1,515)
Total $ 1,742  $ (3,918) $ (18,772) $ (3,411)

Economic Hedges
We have commodity contracts including NYMEX futures contracts to lock in prices on forecasted purchases and sales of inventory, swap contracts to lock in the crack spread of WTI and gasoline and forward purchase and sell contracts, as well as periodically have contracts to lock in basis spread differentials on forecasted purchases of crude oil, that serve as economic hedges (derivatives used for risk management, but not designated as accounting hedges). We also have forward currency contracts to fix the rate of foreign currency. In addition, our catalyst financing arrangements discussed in Note 10 could require repayment under certain conditions based on the future pricing of platinum, which is an embedded derivative. These contracts are measured at fair value with offsetting adjustments (gains/losses) recorded directly to earnings.

The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:
Gain (Loss) Recognized in Earnings
Derivatives Not Designated as Hedging Instruments Income Statement Location Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
(In thousands)
Commodity contracts Cost of products sold $ (7,035) $ 2,880  $ (19,114) $ 20,789 
Interest expense 4,411  (2,170) 11,917  2,542 
Foreign currency contracts Gain (loss) on foreign currency transactions 9,678  (8,177) (3,151) 10,983 
Total $ 7,054  $ (7,467) $ (10,348) $ 34,314 

28
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
As of September 30, 2021, we have the following notional contract volumes related to outstanding derivative instruments:
Notional Contract Volumes by Year of Maturity
Total Outstanding Notional 2021 2022 Unit of Measure
Derivatives Designated as Hedging Instruments
Natural gas price swaps - long 450,000  450,000  —  MMBTU
Derivatives Not Designated as Hedging Instruments
NYMEX futures (WTI) - short 1,880,000  1,440,000  440,000  Barrels
WTI and gasoline crack spread swaps - short 150,000  150,000  —  Barrels
Forward gasoline and diesel contracts - long 165,000  165,000  —  Barrels
Foreign currency forward contracts 443,112,746  105,825,135  337,287,611  U.S. dollar
Forward commodity contracts (platinum) 38,723  —  38,723  Troy ounces

The following table presents the fair value and balance sheet locations of our outstanding derivative instruments. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.
Derivatives in Net Asset Position Derivatives in Net Liability Position
Gross Assets Gross Liabilities Offset in Balance Sheet Net Assets Recognized in Balance Sheet Gross Liabilities Gross Assets Offset in Balance Sheet Net Liabilities Recognized in Balance Sheet
  (In thousands)
September 30, 2021
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts
$ 1,384  $ —  $ 1,384  $ —  $ —  $ — 
$ 1,384  $ —  $ 1,384  $ —  $ —  $ — 
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts
$ —  $ —  $ —  $ 8,781  $ —  $ 8,781 
Commodity price swap contracts
67  —  67  —  —  — 
Commodity forward contracts
516  —  516  537  —  537 
Foreign currency forward contracts
—  —  —  6,439  (5,326) 1,113 
$ 583  $ —  $ 583  $ 15,757  $ (5,326) $ 10,431 
Total net balance $ 1,967  $ 10,431 
Balance sheet classification: Prepayment and other $ 1,967  Accrued liabilities $ 10,431 

29
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
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, 2020
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts
$ —  $ —  $ —  $ 359  $ —  $ 359 
$ —  $ —  $ —  $ 359  $ —  $ 359 
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts
$ —  $ —  $ —  $ 418  $ —  $ 418 
Commodity forward contracts
275  —  275  196  —  196 
Foreign currency forward contracts
—  —  —  23,005  —  23,005 
$ 275  $ —  $ 275  $ 23,619  $ —  $ 23,619 
Total net balance $ 275  $ 23,978 
Balance sheet classification: Prepayment and other $ 275  Accrued liabilities $ 23,978 

At September 30, 2021, we had a pre-tax net unrealized gain of $1.4 million classified in accumulated other comprehensive income that relates to all accounting hedges having contractual maturities through 2021, which, assuming commodity prices remain unchanged, will be effectively transferred from accumulated other comprehensive income into the statement of operations as the hedging instruments contractually mature over the next three-month period.


NOTE 12:Equity

In November 2019, our Board of Directors approved a $1.0 billion share repurchase program, which replaced all existing share repurchase programs, authorizing us to repurchase common stock in the open market or through privately negotiated transactions. The timing and amount of stock repurchases will depend on market conditions and corporate, regulatory and other relevant considerations. This program may be discontinued at any time by the Board of Directors. As of September 30, 2021, we had not repurchased common stock under this stock repurchase program. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs.

During the nine months ended September 30, 2021 and 2020, we withheld 18,581 and 105,787, respectively, shares of our common stock from certain employees. These withholdings were made under the terms of restricted stock unit and performance share unit agreements upon vesting, at which time, we concurrently made cash payments to fund payroll and income taxes on behalf of officers and employees who elected to have shares withheld from vested amounts to pay such taxes.


30
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
NOTE 13:Other Comprehensive Income

The components and allocated tax effects of other comprehensive income are as follows:
Before-Tax Tax Expense
(Benefit) 		After-Tax
  (In thousands)
Three Months Ended September 30, 2021
Net change in foreign currency translation adjustment $ (6,636) $ (1,417) $ (5,219)
Net unrealized gain on hedging instruments 960  237  723 
Net change in pension and other post-retirement benefit obligations (930) (233) (697)
Other comprehensive loss attributable to HollyFrontier stockholders $ (6,606) $ (1,413) $ (5,193)
Three Months Ended September 30, 2020
Net change in foreign currency translation adjustment $ 7,727  $ 1,705  $ 6,022 
Net unrealized gain on hedging instruments 2,492  636  1,856 
Net change in pension and other post-retirement benefit obligations —  1  (1)
Other comprehensive income attributable to HollyFrontier stockholders $ 10,219  $ 2,342  $ 7,877 
Nine Months Ended September 30, 2021
Net change in foreign currency translation adjustment
$ (10,411) $ (2,192) $ (8,219)
Net unrealized gain on hedging instruments 1,742  431  1,311 
Net change in pension and other post-retirement benefit obligations (2,792) (698) (2,094)
Other comprehensive loss attributable to HollyFrontier stockholders $ (11,461) $ (2,459) $ (9,002)
Nine Months Ended September 30, 2020
Net change in foreign currency translation adjustment $ (2,149) $ (434) $ (1,715)
Net unrealized loss on hedging instruments (3,918) (1,000) (2,918)
Net change in pension and other post-retirement benefit obligations (42) (3) (39)
Other comprehensive loss attributable to HollyFrontier stockholders $ (6,109) $ (1,437) $ (4,672)
31
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued

The following table presents the statements of operations line item effects for reclassifications out of accumulated other comprehensive income (“AOCI”):
AOCI Component Gain (Loss) Reclassified From AOCI Statement of Operations Line Item
Three Months Ended September 30,
2021 2020
(In thousands)
Hedging instruments:
Commodity price swaps $ (468) $ (5,217) Sales and other revenues
—  983  Cost of products sold
520  (352) Operating expenses
52  (4,586)
13  (1,169) Income tax expense (benefit)
39  (3,417) Net of tax
Other post-retirement benefit obligations:
Pension obligations 101  —  Other, net
25  —  Income tax expense
76  —  Net of tax
Post-retirement healthcare obligations 838  — 
Other, net
211  —  Income tax expense
627  —  Net of tax
Retirement restoration plan (9) — 
Other, net
(2) —  Income tax benefit
(7) —  Net of tax
Total reclassifications for the period $ 735  $ (3,417)

32
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
AOCI Component Gain (Loss) Reclassified From AOCI Statement of Operations Line Item
Nine Months Ended September 30,
2021 2020
(In thousands)
Hedging instruments:
Commodity price swaps $ (19,239) $ (5,168) Sales and other revenues
—  3,272  Cost of products sold
467  (1,515) Operating expenses
(18,772) (3,411)
(4,731) (870) Income tax benefit
(14,041) (2,541) Net of tax
Other post-retirement benefit obligations:
Pension obligations 306  —  Other, net
77  —  Income tax expense
229  —  Net of tax
Post-retirement healthcare obligations 2,513  — 
Other, net
633  —  Income tax expense
1,880  —  Net of tax
Retirement restoration plan (27) — 
Other, net
(7) —  Income tax benefit
(20) —  Net of tax
Total reclassifications for the period $ (11,952) $ (2,541)

Accumulated other comprehensive income in the equity section of our consolidated balance sheets includes:
September 30,
2021 		December 31,
2020
  (In thousands)
Foreign currency translation adjustment $ (5,537) $ 2,682 
Unrealized loss on pension obligation (554) (248)
Unrealized gain on post-retirement benefit obligations 9,522  11,310 
Unrealized gain (loss) on hedging instruments 1,029  (282)
Accumulated other comprehensive income $ 4,460  $ 13,462 


NOTE 14:Contingencies

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

During 2017, 2018 and 2019, the EPA granted the Cheyenne Refinery and Woods Cross Refinery each a one-year small refinery exemption from the Renewable Fuel Standard (“RFS”) program requirements for the 2016, 2017 and 2018, respectively, calendar years. As a result, the Cheyenne Refinery’s and Woods Cross Refinery’s gasoline and diesel production are not subject to the Renewable Volume Obligation for the respective years. Upon each exemption granted, we increased our inventory of RINs and reduced our cost of products sold.

33
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Various subsidiaries of HollyFrontier are currently intervenors in two lawsuits brought by renewable fuel interest groups against the EPA in federal courts alleging violations of the RFS under the Clean Air Act and challenging the EPA’s handling of small refinery exemptions. We intervened to vigorously defend the EPA’s position on small refinery exemptions because we believe the EPA correctly applied applicable law to the matters at issue. The first lawsuit is before the U.S. Court of Appeals for the Tenth Circuit and challenges the relief the EPA afforded to the Cheyenne and Woods Cross refineries following the grant of small refinery exemptions. The matter is fully briefed and remains pending before that court. The second lawsuit is currently pending before the U.S. Court of Appeals for the DC Circuit. However, on August 25, 2021, the EPA filed a motion to voluntarily remand the matter to the EPA. We did not oppose this motion. A decision on this motion by the DC Circuit is expected in the near future. HollyFrontier was also recently an intervenor in another lawsuit filed in the Tenth Circuit challenging the grant of small refinery exemptions to the Cheyenne and Woods Cross refineries for the 2016 compliance year. On January 24, 2020, the U.S. Court of Appeals for the Tenth Circuit vacated the small refinery exemptions granted to the Cheyenne and Woods Cross refineries for 2016 and remanded the case to the EPA for further proceedings. On April 15, 2020, the Tenth Circuit issued its mandate, remanding the matter back to the EPA. On September 4, 2020, various subsidiaries of HollyFrontier filed a Petition for a Writ of Certiorari with the U.S. Supreme Court seeking review of the Tenth Circuit decision. On January 8, 2021, the U.S. Supreme Court granted HollyFrontier’s petition. The oral argument occurred on April 27, 2021. The U.S. Supreme Court issued its opinion in this matter on June 25, 2021 and reversed the Tenth Circuit. On July 27, 2021, the Tenth Circuit recalled the mandate it issued to the EPA on April 15, 2020, and vacated its January 24, 2020 judgment. On July 29, 2021, the Tenth Circuit issued an order and judgment confirming that it recalled its mandate and vacated its previous judgment in this case, and returned jurisdiction to the EPA without vacating the exemption decisions. On August 19, 2021, the EPA filed a motion for clarification of the Tenth Circuit’s mandate. The Tenth Circuit denied the EPA’s motion on August 26, 2021, and therefore the matter is now solely before the EPA. We are unable to estimate the costs we may incur, if any, at this time. It is too early to assess how the U.S. Supreme Court decision will impact future small refinery exemptions or whether the remaining cases are expected to have any impact on us.

We have been party to multiple proceedings before the Federal Energy Regulatory Commission (“FERC”) challenging the rates charged by SFPP, L.P. (“SFPP”) on its East Line pipeline facilities from El Paso, Texas to Phoenix, Arizona. In March 2018, FERC ruled that SFPP, as a master limited partnership, was prohibited from including an allowance for investor income taxes in the cost of service underlying its East Line rates. We reached a negotiated settlement with SFPP that provides for a payment to us of $51.5 million. FERC approved the settlement on December 31, 2020 subject to a rehearing period that resulted in a settlement effective date of February 2, 2021. Under the terms of the settlement agreement, SFPP made the $51.5 million payment to us on February 10, 2021. As of December 31, 2020, we had no enforceable right to collect any of the settlement. Accordingly, recognition of a gain occurred when the uncertainties were resolved on February 2, 2021, and we recorded as “Gain on tariff settlement” in our consolidated statements of operations for the nine months ended September 30, 2021.


34
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
NOTE 15:Segment Information

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

As of September 30, 2021, the Refining segment represents the operations of the El Dorado, Tulsa, Navajo and Woods Cross Refineries and HFC Asphalt (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain geographic regions of the United States. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma. The Refining segment also included the operations of the Cheyenne Refinery through the third quarter of 2020, at which time it permanently ceased petroleum refining operations.

The Lubricants and Specialty Products segment involves PCLI’s production operations, located in Mississauga, Ontario, that includes lubricant products such as base oils, white oils, specialty products and finished lubricants, and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa Refineries that are marketed throughout North America and are distributed in Central and South America and Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America. Also, the Lubricants and Specialty Products segment includes Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

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

The accounting policies for our segments are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2020, except that our Refining segment excludes intercompany ROU assets and liabilities for operating leases.

35
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Refining Lubricants and Specialty Products HEP
Corporate, Other
and Eliminations (1)
Consolidated
Total
(In thousands)
Three Months Ended September 30, 2021
Sales and other revenues:
Revenues from external customers $ 3,993,570  $ 666,033  $ 25,459  $ (3) $ 4,685,059 
Intersegment revenues 189,441  501  97,125  (287,067) — 
$ 4,183,011  $ 666,534  $ 122,584  $ (287,070) $ 4,685,059 
Cost of products sold (exclusive of lower of cost or market inventory) $ 3,605,600  $ 482,533  $ —  $ (265,275) $ 3,822,858 
Operating expenses $ 248,316  $ 60,940  $ 42,793  $ 471  $ 352,520 
Selling, general and administrative expenses $ 32,345  $ 41,476  $ 3,849  $ 13,386  $ 91,056 
Depreciation and amortization $ 77,890  $ 19,226  $ 21,627  $ 2,477  $ 121,220 
Income (loss) from operations $ 218,860  $ 62,359  $ 54,315  $ (38,129) $ 297,405 
Earnings of equity method investments $ —  $ —  $ 3,689  $ —  $ 3,689 
Capital expenditures $ 40,814  $ 7,833  $ 19,217  $ 147,640  $ 215,504 
Three Months Ended September 30, 2020
Sales and other revenues:
Revenues from external customers $ 2,339,782  $ 452,878  $ 26,740  $ —  $ 2,819,400 
Intersegment revenues 56,331  2,164  100,991  (159,486) — 
$ 2,396,113  $ 455,042  $ 127,731  $ (159,486) $ 2,819,400 
Cost of products sold (exclusive of lower of cost or market inventory) $ 2,211,342  $ 302,703  $ —  $ (136,807) $ 2,377,238 
Lower of cost or market inventory valuation adjustment $ (62,849) $ —  $ —  $ —  $ (62,849)
Operating expenses $ 256,079  $ 54,488  $ 40,003  $ (18,074) $ 332,496 
Selling, general and administrative expenses $ 30,866  $ 36,773  $ 2,332  $ 4,482  $ 74,453 
Depreciation and amortization $ 79,146  $ 17,432  $ 24,109  $ 4,593  $ 125,280 
Income (loss) from operations $ (118,471) $ 43,646  $ 61,287  $ (13,680) $ (27,218)
Earnings of equity method investments $ —  $ —  $ 1,316  $ —  $ 1,316 
Capital expenditures $ 41,740  $ 6,995  $ 7,902  $ 26,635  $ 83,272 

36
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Refining Lubricants and Specialty Products HEP
Corporate, Other
and Eliminations (1)
Consolidated
Total
(In thousands)
Nine Months Ended September 30, 2021
Sales and other revenues:
Revenues from external customers $ 10,837,876  $ 1,850,786  $ 77,809  $ 4  $ 12,766,475 
Intersegment revenues 455,089  9,500  298,193  (762,782) — 
$ 11,292,965  $ 1,860,286  $ 376,002  $ (762,778) $ 12,766,475 
Cost of products sold (exclusive of lower of cost or market inventory) $ 9,986,862  $ 1,305,274  $ —  $ (683,244) $ 10,608,892 
Lower of cost or market inventory valuation adjustment $ (318,353) $ —  $ —  $ (509) $ (318,862)
Operating expenses $ 772,593  $ 183,003  $ 126,226  $ 4,798  $ 1,086,620 
Selling, general and administrative expenses $ 90,977  $ 124,612  $ 9,664  $ 25,532  $ 250,785 
Depreciation and amortization $ 245,910  $ 58,499  $ 66,908  $ (1,976) $ 369,341 
Income (loss) from operations $ 514,976  $ 188,898  $ 173,204  $ (107,379) $ 769,699 
Earnings of equity method investments $ —  $ —  $ 8,875  $ —  $ 8,875 
Capital expenditures $ 114,325  $ 17,534  $ 76,933  $ 339,553  $ 548,345 
Nine Months Ended September 30, 2020
Sales and other revenues:
Revenues from external customers $ 6,880,444  $ 1,330,021  $ 72,410  $ —  $ 8,282,875 
Intersegment revenues 178,039  8,911  297,982  (484,932) — 
$ 7,058,483  $ 1,338,932  $ 370,392  $ (484,932) $ 8,282,875 
Cost of products sold (exclusive of lower of cost or market inventory) $ 6,113,530  $ 952,430  $ —  $ (418,000) $ 6,647,960 
Lower of cost or market inventory valuation adjustment $ 227,711  $ —  $ —  $ —  $ 227,711 
Operating expenses $ 754,612  $ 156,459  $ 109,721  $ (56,592) $ 964,200 
Selling, general and administrative expenses $ 94,677  $ 121,654  $ 7,569  $ 13,659  $ 237,559 
Depreciation and amortization $ 251,019  $ 59,260  $ 72,095  $ 13,659  $ 396,033 
Long-lived asset impairment (2)
$ 215,242  $ 204,708  $ 16,958  $ —  $ 436,908 
Income (loss) from operations $ (598,308) $ (155,579) $ 164,049  $ (37,658) $ (627,496)
Earnings of equity method investments $ —  $ —  $ 5,186  $ —  $ 5,186 
Capital expenditures $ 106,856  $ 20,387  $ 38,642  $ 47,123  $ 213,008 

(1) For the three and the nine months ended September 30, 2021, Corporate and Other includes $13.1 million and $37.2 million, respectively, of operating expenses and $141.3 million and $325.3 million, respectively, of capital expenditures related to the construction of our renewable diesel units. For the three and nine months ended September 30, 2020, Corporate and Other includes $1.8 million and $2.7 million, respectively, of operating expenses and $20.5 million and $33.1 million, respectively, of capital expenditures related to the construction of our renewable diesel units.
(2) The results of our HEP reportable segment for the nine months ended September 30, 2020 include a long-lived asset impairment charge attributed to HEP’s logistics assets at our Cheyenne Refinery.

37
HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Continued
Refining Lubricants and Specialty Products HEP Corporate, Other
and Eliminations 		Consolidated
Total
(In thousands)
September 30, 2021
Cash and cash equivalents
$ 18,056  $ 218,970  $ 12,816  $ 1,231,720  $ 1,481,562 
Total assets $ 7,266,496  $ 2,119,076  $ 2,236,091  $ 1,275,518  $ 12,897,181 
Long-term debt $ —  $ —  $ 1,333,309  $ 1,739,043  $ 3,072,352 
December 31, 2020
Cash and cash equivalents
$ 3,106  $ 163,729  $ 21,990  $ 1,179,493  $ 1,368,318 
Total assets $ 6,203,847  $ 1,864,313  $ 2,198,478  $ 1,240,226  $ 11,506,864 
Long-term debt $ —  $ —  $ 1,405,603  $ 1,737,115  $ 3,142,718 
38

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Item 2 contains “forward-looking” statements. See “Forward-Looking Statements” at the beginning of Part I of this Quarterly Report on Form 10-Q. In this document, the words “we,” “our,” “ours” and “us” refer only to HollyFrontier Corporation (“HollyFrontier”) and its consolidated subsidiaries or to HollyFrontier or an individual subsidiary and not to any other person with certain exceptions. Generally, the words “we,” “our,” “ours” and “us” include Holly Energy Partners, L.P. (“HEP”) and its subsidiaries as consolidated subsidiaries of HollyFrontier, unless when used in disclosures of transactions or obligations between HEP and HollyFrontier or its other subsidiaries. This document contains certain disclosures of agreements that are specific to HEP and its consolidated subsidiaries and do not necessarily represent obligations of HollyFrontier. When used in descriptions of agreements and transactions, “HEP” refers to HEP and its consolidated subsidiaries.


OVERVIEW

We are an independent petroleum refiner and marketer that produces high-value light products such as gasoline, diesel fuel, jet fuel, specialty lubricant products and specialty and modified asphalt. As of September 30, 2021, we owned and operated refineries located in El Dorado, Kansas (the “El Dorado Refinery”), Tulsa, Oklahoma (the “Tulsa Refineries”), which comprise two production facilities, the Tulsa West and East facilities, Artesia, New Mexico, which operates in conjunction with crude, vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the “Navajo Refinery”) and Woods Cross, Utah (the “Woods Cross Refinery”). We market our refined products principally in the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, we produce base oils and other specialized lubricants in the United States, Canada and the Netherlands, and export products to more than 80 countries. We also own a 57% limited partner interest and a non-economic general partner interest in HEP, a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries.

On August 2, 2021, HollyFrontier, Hippo Parent Corporation, a wholly owned subsidiary of HollyFrontier (“New Parent”), Hippo Merger Sub, Inc., a wholly owned subsidiary of New Parent (“Parent Merger Sub”), The Sinclair Companies (“Sinclair”), and Hippo Holding LLC, a wholly owned subsidiary of Sinclair (the “Target Company”), entered into a business combination agreement (the “Business Combination Agreement”). Pursuant to the Business Combination Agreement, HollyFrontier will acquire the Target Company by effecting (a) a holding company merger in accordance with Section 251(g) of the Delaware General Corporation Law whereby HollyFrontier will merge with and into Parent Merger Sub, with HollyFrontier surviving such merger as a direct wholly owned subsidiary of New Parent (the “HFC Merger”) and (b) immediately following the HFC Merger, a contribution whereby Sinclair will contribute all of the equity interests of the Target Company to New Parent in exchange for shares of New Parent, resulting in the Target Company becoming a direct wholly owned subsidiary of New Parent (the “Sinclair Oil Acquisition” and together with the HFC Merger, the “HFC Transactions”).

Under the terms of the Business Combination Agreement, (a) each share of common stock of HollyFrontier, par value $0.01 per share, will be automatically converted into one share of common stock of New Parent, par value $0.01 per share (“New Parent Common Stock”) and (b) Sinclair will contribute the equity interests in the Target Company to New Parent in exchange for 60,230,036 shares of New Parent Common Stock, subject to adjustment if, as a condition to obtaining antitrust clearance for the Sinclair Transactions (as defined below), HollyFrontier agrees to divest certain Woods Cross Refinery assets and the sales price for such assets does not exceed a threshold provided in the Business Combination Agreement.

Additionally, on August 2, 2021, HEP, Sinclair and Sinclair Transportation Company, a wholly owned subsidiary of Sinclair (“STC”), entered into a contribution agreement (the “Contribution Agreement”) pursuant to which HEP will acquire all of the outstanding shares of STC in exchange for 21 million newly issued common limited partner units of HEP and cash consideration equal to $325 million (the “HEP Transactions”, and together with the HFC Transactions, the “Sinclair Transactions”), subject to downward adjustment if, as a condition to obtaining antitrust clearance for the Sinclair Transactions, HEP agrees to divest a portion of its equity interest in UNEV Pipeline, LLC and the sales price for such interests does not exceed the threshold provided in the Contribution Agreement.

39
Table of Content
The Sinclair Transactions are expected to close in mid-2022, subject to customary closing conditions and regulatory clearance, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”) and the receipt of required approvals of HFC’s stockholders. On August 23, 2021, each of HollyFrontier and Sinclair filed its respective premerger notification and report regarding the Sinclair Transactions with the U.S. Department of Justice and the U.S. Federal Trade Commission (the “FTC”) under the HSR Act. On September 22, 2021, HollyFrontier and Sinclair each received a request for additional information and documentary material (“Second Request”) from the FTC in connection with the FTC’s review of the Sinclair Transactions. Issuance of the Second Request extends the waiting period under the HSR Act until 30 days after both HollyFrontier and Sinclair have substantially complied with the Second Request, unless the waiting period is terminated earlier by the FTC or the parties otherwise commit not to close the Sinclair Transactions for some additional period of time. HollyFrontier and Sinclair are cooperating with the FTC staff in its review. In addition, the HFC Transactions and the HEP Transactions are cross-conditioned on each other. See Note 2 “Acquisitions” in the Notes to Consolidated Financial Statements for additional information.

On May 4, 2021, our wholly owned subsidiary, HollyFrontier Puget Sound Refining LLC, entered into a sale and purchase agreement with Equilon Enterprises LLC d/b/a Shell Oil Products US (“Shell”) to acquire Shell’s refinery and related assets, including the on-site cogeneration facility and related logistics assets (the “Puget Sound Refinery”). The acquisition closed on November 1, 2021 for aggregate cash consideration of $613.6 million, which consists of a base cash purchase price of $350 million, hydrocarbon inventory with an estimated closing value of $266.2 million and other closing adjustments and accrued liabilities of $2.6 million (the “Puget Sound Acquisition”). The Puget Sound Refinery is strategically located on approximately 850 acres in Anacortes, Washington, approximately 80 miles north of Seattle and 90 miles south of Vancouver. The 149,000 barrel per day facility is a large, high quality and complex refinery with catalytic cracking and delayed coking units and is well positioned geographically and logistically to source advantaged Canadian and Alaskan North Slope crudes. In addition to refining assets and an on-site cogeneration facility, the transaction includes a deep-water marine dock, a light product loading rack, a rail terminal, and storage tanks with approximately 5.8 million barrels of crude, product and other hydrocarbon storage capacity.

On April 27, 2021, our wholly owned subsidiary, 7037619 Canada Inc., entered into a contract for sale of real property in Mississauga, Ontario for base consideration of $98.8 million, or CAD 125 million. The transaction closed on September 15, 2021, and we recorded a gain on sale of assets totaling $86.0 million for the three months ended September 30, 2021, which was recognized in “Gain on sale of assets and other” in our consolidated statements of operations.

In the third quarter of 2020, we permanently ceased petroleum refining operations at our facility in Cheyenne, Wyoming (the “Cheyenne Refinery”) and subsequently began converting certain assets at our Cheyenne Refinery to renewable diesel production. In connection with the cessation of petroleum refining operations at our Cheyenne Refinery, we recognized $6.7 million and $23.1 million, respectively, in decommissioning expense and $0.2 million and $0.9 million, respectively, in employee severance costs for the three and nine months ended September 30, 2021 which were recognized in operating expenses in our Corporate and Other segment.

During the first quarter of 2021, we initiated a restructuring within our Lubricants and Specialty Products segment, which is expected to save approximately $15 million per year of ongoing cash expenses. We recorded $7.8 million in employee severance costs for the nine months ended September 30, 2021, which were recognized primarily as selling, general and administrative expenses in our Lubricants and Specialty Products segment.

For the three months ended September 30, 2021, net income attributable to HollyFrontier stockholders was $280.8 million compared to net loss of $2.4 million for the three months ended September 30, 2020. For the nine months ended September 30, 2021, net income attributable to HollyFrontier stockholders was $597.9 million compared to net loss of $483.7 million for the nine months ended September 30, 2020. Included in our financial results for the third quarter of 2021 was a gain on sale of assets totaling $86.0 million related to sale of real property in Mississauga, Ontario. Gross refining margin per produced barrel sold in our Refining segment increased 140% for the three months ended September 30, 2021 over the same period of 2020. Included in the three months ended September 30, 2020 was an $81.0 million gain recognized upon settlement of a business interruption insurance claim.

40
Table of Content
Pursuant to the 2007 Energy Independence and Security Act, the Environmental Protection Agency (“EPA”) promulgated the Renewable Fuel Standard (“RFS”) regulations, which increased the volume of renewable fuels mandated to be blended into the nation’s fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as renewable identification numbers (“RINs”), in lieu of such blending. Compliance with RFS regulations significantly increases our cost of products sold, with RINs costs totaling $143.5 million for the three months ended September 30, 2021. At September 30, 2021, our open RINs credit obligations were $119.6 million. We will continue to monitor and adjust our RINs position commensurate with our production levels, market conditions and RFS regulations.

Impact of COVID-19 on Our Business
The COVID-19 pandemic caused a decline in U.S. and global economic activity starting in the first quarter of 2020. This decrease reduced both volumes and unit margins across our businesses, resulting in lower gross margins and earnings. Global demand for transportation fuels began to improve beginning late in the second quarter of 2020, but remains below pre-pandemic levels as of the third quarter of 2021. In response to this demand and margin environment, as well as both planned and unplanned maintenance, we operated our Refining segment refineries at an average crude charge of 416,430 BPD during the third quarter of 2021.

In our Lubricants and Specialty Products segment, the Rack Back portion continues to see a combination of strong demand as well as limited supply due to a number of factors, which are driving strong margins and earnings. In the Rack Forward portion, despite strong sales volumes and price increases, the continued rise in base oil prices through the quarter compressed margins in the third quarter of 2021.

Our standalone (excluding HEP) liquidity was approximately $2.8 billion at September 30, 2021, consisting of cash and cash equivalents of $1.5 billion and an undrawn $1.35 billion credit facility maturing in 2026. Our standalone (excluding HEP) principal amount of long-term debt was $1.75 billion as of September 30, 2021, which consists of $350.0 million in aggregate principal amount of 2.625% senior notes due in 2023, $1.0 billion in aggregate principal amount of 5.875% senior notes due in 2026 and $400.0 million in aggregate principal amount of 4.500% senior notes due in 2030.


OUTLOOK

The impact of the COVID-19 pandemic on the global macroeconomy created an unprecedented reduction in demand, as well as a lack of forward visibility, for many of the transportation fuels, lubricants and specialty products and the associated transportation and terminal services we provide. Since the declines in demand at the beginning of the COVID-19 pandemic, we began to see improvement in demand for these products and services beginning late in the second quarter of 2020 and demand has largely recovered in the markets we serve but remains below pre-pandemic levels.

With increasing vaccination rates, most of our employees have returned to work at our locations, and we continue to follow Centers for Disease Control and local government guidance. We will continue to monitor developments in the COVID-19 pandemic and the dynamic environment it has created to properly address these policies going forward.

Within our Refining segment, for the fourth quarter of 2021, we expect to run between 450,000-470,000 barrels per day of crude oil, which includes expected volumes from the Puget Sound Refinery in November and December. We expect to adjust refinery production levels commensurate with market demand and planned turnarounds at our Tulsa and Navajo refineries.

Within our Lubricants and Specialty Products segment, for the full year 2021, we expect to earn between $65 million to $85 million in income from operations and $115 million to $135 million of EBITDA, which excludes estimated annual depreciation of $50 million, in the Rack Forward portion of the segment. Within the Rack Back portion, for the fourth quarter of 2021, we expect base oil margins to remain relatively stable compared to the second and third quarters due to record strength in base oil prices, which is driving strong margins and earnings. Similar to our Refining segment, we expect to adjust production levels commensurate with market demand.

In the fourth quarter of 2021, HEP expects to hold the quarterly distribution constant at $0.35 per unit, or $1.40 on an annualized basis. HEP remains committed to its distribution strategy focused on funding all capital expenditures and distributions within operating cash flow and improving distributable cash flow coverage to 1.3x or greater with the goal of reducing leverage to 3.0-3.5x.

41
Table of Content
During the third quarter of 2020, we increased our liquidity by $750.0 million with the issuance of $350.0 million in aggregate principal amount of 2.625% senior notes due in 2023 and $400.0 million in aggregate principal amount of 4.500% senior notes due in 2030. This additional liquidity may be used for general corporate purposes and is expected to support the planned growth of our renewables business and the unexpected economic impact of COVID-19, as needed. We do not intend to repurchase common stock under our $1.0 billion share repurchase program until completion of our ongoing renewables capital projects at the earliest. In addition, we announced the Puget Sound Acquisition, which closed on November 1, 2021. We funded the Puget Sound Acquisition with a one-year suspension of our regular quarterly dividend and cash on hand. Our Board of Directors approved the one-year suspension of the regular quarterly dividend effective with the dividend to be declared for the first quarter of 2021 and is expected to resume the dividend after such time.

On March 27, 2020, the U.S. government passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), an approximately $2 trillion stimulus package that included various provisions intended to provide relief to individuals and businesses in the form of tax changes, loans and grants, among others. At this time, we have not sought relief in the form of loans or grants from the CARES Act; however, we have benefited from certain tax deferrals in the CARES Act and may benefit from other tax provisions if we meet the requirements to do so.

The extent to which our future results are affected by the COVID-19 pandemic will depend on various factors and consequences beyond our control, such as the duration and scope of the pandemic, the effects of any new variant strains of the underlying virus, additional actions by businesses and governments in response to the pandemic and the speed and effectiveness of responses to combat the virus. The COVID-19 pandemic, and the volatile regional and global economic conditions stemming from it, could also exacerbate the risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and in this Form 10-Q. The COVID-19 pandemic may also materially adversely affect our results in a manner that is either not currently known or that we do not currently consider to be a significant risk to our business.

A more detailed discussion of our financial and operating results for the three and nine months ended September 30, 2021 and 2020 is presented in the following sections.

42
Table of Content

RESULTS OF OPERATIONS

Financial Data
  Three Months Ended
September 30, 		Change from 2020
  2021 2020 Change Percent
  (In thousands, except per share data)
Sales and other revenues $ 4,685,059  $ 2,819,400  $ 1,865,659  66  %
Operating costs and expenses:
Cost of products sold (exclusive of depreciation and amortization):
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)
3,822,858  2,377,238  1,445,620  61 
Lower of cost or market inventory valuation adjustment —  (62,849) 62,849  (100)
3,822,858  2,314,389  1,508,469  65 
Operating expenses (exclusive of depreciation and amortization) 352,520  332,496  20,024  6 
Selling, general and administrative expenses (exclusive of depreciation and amortization)
91,056  74,453  16,603  22 
Depreciation and amortization 121,220  125,280  (4,060) (3)
Total operating costs and expenses 4,387,654  2,846,618  1,541,036  54 
Income (loss) from operations 297,405  (27,218) 324,623  (1,193)
Other income (expense):
Earnings of equity method investments 3,689  1,316  2,373  180 
Interest income 1,018  1,011  7  1 
Interest expense (26,892) (30,589) 3,697  (12)
Gain on business interruption insurance settlement —  81,000  (81,000) (100)
Gain (loss) on foreign currency transactions (3,492) 1,030  (4,522) (439)
Gain on sale of assets and other 85,779  1,368  84,411  6,170 
60,102  55,136  4,966  9 
Income before income taxes 357,507  27,918  329,589  1,181 
Income tax expense 54,766  4,573  50,193  1,098 
Net income 302,741  23,345  279,396  1,197 
Less net income attributable to noncontrolling interest 21,954  25,746  (3,792) (15)
Net income (loss) attributable to HollyFrontier stockholders $ 280,787  $ (2,401) $ 283,188  (11,795) %
Earnings (loss) per share attributable to HollyFrontier stockholders:
Basic $ 1.71  $ (0.01) $ 1.72  (17,200) %
Diluted $ 1.71  $ (0.01) $ 1.72  (17,200) %
Cash dividends declared per common share $ —  $ 0.35  $ (0.35) (100) %
Average number of common shares outstanding:
Basic 162,551  162,015  536  —  %
Diluted 162,551  162,015  536  —  %


43
Table of Content


  Nine Months Ended
September 30, 		Change from 2020
  2021 2020 Change Percent
  (In thousands, except per share data)
Sales and other revenues $ 12,766,475  $ 8,282,875  4,483,600  54  %
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)
10,608,892  6,647,960  3,960,932  60 
Lower of cost or market inventory valuation adjustment (318,862) 227,711  (546,573) (240)
10,290,030  6,875,671  3,414,359  50 
Operating expenses (exclusive of depreciation and amortization) 1,086,620  964,200  122,420  13 
Selling, general and administrative expenses (exclusive of depreciation and amortization)
250,785  237,559  13,226  6 
Depreciation and amortization 369,341  396,033  (26,692) (7)
Long-lived asset impairment —  436,908  (436,908) (100)
Total operating costs and expenses 11,996,776  8,910,371  3,086,405  35 
Income (loss) from operations 769,699  (627,496) 1,397,195  (223)
Other income (expense):
Earnings of equity method investments 8,875  5,186  3,689  71 
Interest income 3,078  6,590  (3,512) (53)
Interest expense (94,220) (85,923) (8,297) 10 
Gain on business interruption insurance settlement —  81,000  (81,000) (100)
Gain on tariff settlement 51,500  —  51,500  — 
Gain on sales-type leases —  33,834  (33,834) (100)
Loss on early extinguishment of debt —  (25,915) 25,915  (100)
Loss on foreign currency transactions (4,226) (918) (3,308) 360 
Gain on sale of assets and other 95,596  4,790  90,806  1,896 
60,603  18,644  41,959  225 
Income (loss) before income taxes 830,302  (608,852) 1,439,154  (236)
Income tax expense (benefit) 149,944  (188,504) 338,448  (180)
Net income (loss) 680,358  (420,348) 1,100,706  (262)
Less net income attributable to noncontrolling interest 82,504  63,353  19,151  30 
Net income (loss) attributable to HollyFrontier stockholders $ 597,854  $ (483,701) $ 1,081,555  (224) %
Earnings (loss) per share attributable to HollyFrontier stockholders:
Basic $ 3.63  $ (2.99) $ 6.62  (221) %
Diluted $ 3.63  $ (2.99) $ 6.62  (221) %
Cash dividends declared per common share $ 0.35  $ 1.05  $ (0.70) (67) %
Average number of common shares outstanding:
Basic 162,518  161,927  591  —  %
Diluted 162,518  161,927  591  —  %


Balance Sheet Data
September 30, 2021 December 31, 2020
(Unaudited)
  (In thousands)
Cash and cash equivalents $ 1,481,562  $ 1,368,318 
Working capital $ 2,310,815  $ 1,935,605 
Total assets $ 12,897,181  $ 11,506,864 
Long-term debt $ 3,072,352  $ 3,142,718 
Total equity $ 6,329,539  $ 5,722,203 

44
Other Financial Data 
  Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
  (In thousands)
Net cash provided by operating activities $ 249,413  $ 81,748  $ 739,494  $ 391,050 
Net cash used for investing activities $ (116,164) $ (81,985) $ (438,476) $ (213,651)
Net cash provided by (used for) financing activities $ (45,691) $ 618,726  $ (184,169) $ 463,207 
Capital expenditures $ 215,504  $ 83,272  $ 548,345  $ 213,008 
EBITDA (1)
$ 482,647  $ 157,030  $ 1,208,281  $ (196,839)

(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.

Segment Operating Data

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. See Note 15 “Segment Information” in the Notes to Consolidated Financial Statements for additional information on our reportable segments.

Refining Segment Operating Data

As of September 30, 2021, our refinery operations include the El Dorado, Tulsa, Navajo and Woods Cross Refineries. The following tables set forth information, including non-GAAP performance measures, about our consolidated refinery operations. The cost of products and refinery gross and net operating margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments, depreciation and amortization and long-lived asset impairments. 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. 

In the third quarter of 2020, we permanently ceased petroleum refining operations at our Cheyenne Refinery and subsequently began converting certain assets at our Cheyenne Refinery to renewable diesel production. The disaggregation of our refining geographic operating data is presented in two regions, Mid-Continent and West, to best reflect the economic drivers of our refining operations. The Mid-Continent region continues to be comprised of the El Dorado and Tulsa Refineries, and the new West region is comprised of the Navajo and Woods Cross Refineries. Refining segment operating data for the three and nine months ended September 30, 2020 have been retrospectively adjusted to reflect the revised regional groupings.

45
Table of Content
Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
Mid-Continent Region (El Dorado and Tulsa Refineries)
Crude charge (BPD) (1)
280,220  244,200  258,530  234,550 
Refinery throughput (BPD) (2)
294,970  257,280  272,770  249,430 
Sales of produced refined products (BPD) (3)
277,310  243,830  258,800  239,800 
Refinery utilization (4)
107.8  % 93.9  % 99.4  % 90.2  %
Average per produced barrel (5)
Refinery gross margin $ 13.59  $ 3.21  $ 10.65  $ 6.41 
Refinery operating expenses (6)
5.72  5.47  6.68  5.47 
Net operating margin $ 7.87  $ (2.26) $ 3.97  $ 0.94 
Refinery operating expenses per throughput barrel (7)
$ 5.37  $ 5.19  $ 6.33  $ 5.26 
Feedstocks:
Sweet crude oil 66  % 62  % 63  % 58  %
Sour crude oil 13  % 18  % 14  % 19  %
Heavy sour crude oil 16  % 15  % 18  % 17  %
Other feedstocks and blends 5  % 5  % 5  % 6  %
Total 100  % 100  % 100  % 100  %
Sales of produced refined products:
Gasolines 52  % 53  % 51  % 52  %
Diesel fuels 32  % 35  % 33  % 34  %
Jet fuels 5  % 3  % 5  % 4  %
Fuel oil 1  % 1  % 1  % 1  %
Asphalt 4  % 2  % 3  % 3  %
Base oils 4  % 4  % 4  % 4  %
LPG and other 2  % 2  % 3  % 2  %
Total 100  % 100  % 100  % 100  %
West Region (Navajo and Woods Cross Refineries)
Crude charge (BPD) (1)
136,210  131,680  135,370  125,710 
Refinery throughput (BPD) (2)
149,760  146,860  148,700  139,710 
Sales of produced refined products (BPD) (3)
144,710  144,970  148,410  142,740 
Refinery utilization (4)
93.9  % 90.8  % 93.4  % 86.7  %
Average per produced barrel (5)
Refinery gross margin $ 17.33  $ 11.24  $ 13.67  $ 12.01 
Refinery operating expenses (6)
7.70  6.88  7.43  7.01 
Net operating margin $ 9.63  $ 4.36  $ 6.24  $ 5.00 
Refinery operating expenses per throughput barrel (7)
$ 7.44  $ 6.79  $ 7.41  $ 7.16 
Feedstocks:
Sweet crude oil 22  % 30  % 22  % 30  %
Sour crude oil 58  % 48  % 59  % 49  %
Black wax crude oil 11  % 12  % 10  % 11  %
Other feedstocks and blends 9  % 10  % 9  % 10  %
Total 100  % 100  % 100  % 100  %
Sales of produced refined products:
Gasolines 51  % 57  % 52  % 56  %
Diesel fuels 39  % 34  % 38  % 35  %
Fuel oil 3  % 2  % 3  % 2  %
Asphalt 5  % 6  % 4  % 5  %
LPG and other 2  % 1  % 3  % 2  %
Total 100  % 100  % 100  % 100  %
46
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Consolidated
Crude charge (BPD) (1)
416,430  375,880  393,900  360,260 
Refinery throughput (BPD) (2)
444,730  404,140  421,470  389,140 
Sales of produced refined products (BPD) (3)
422,020  388,800  407,210  382,540 
Refinery utilization (4)
102.8  % 92.8  % 97.3  % 89.0  %
Average per produced barrel (5)
Refinery gross margin $ 14.87  $ 6.20  $ 11.75  $ 8.50 
Refinery operating expenses (6)
6.40  6.00  6.95  6.04 
Net operating margin $ 8.47  $ 0.20  $ 4.80  $ 2.46 
Refinery operating expenses per throughput barrel (7)
$ 6.07  $ 5.77  $ 6.71  $ 5.94 
Feedstocks:
Sweet crude oil 51  % 51  % 49  % 48  %
Sour crude oil 28  % 28  % 29  % 30  %
Heavy sour crude oil 11  % 10  % 12  % 11  %
Black wax crude oil 4  % 4  % 4  % 4  %
Other feedstocks and blends 6  % 7  % 6  % 7  %
Total 100  % 100  % 100  % 100  %
Sales of produced refined products:
Gasolines 51  % 54  % 52  % 54  %
Diesel fuels 35  % 35  % 35  % 34  %
Jet fuels 3  % 2  % 3  % 2  %
Fuel oil 2  % 1  % 1  % 1  %
Asphalt 4  % 4  % 4  % 4  %
Base oils 3  % 2  % 2  % 3  %
LPG and other 2  % 2  % 3  % 2  %
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 of refined products purchased for resale or volumes of excess crude oil sold.
(4)Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 405,000 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 and Cheyenne Refinery operating expenses, divided by sales volumes of refined products produced at our refineries.
(7)Represents total refining segment operating expenses, exclusive of depreciation and amortization and Cheyenne Refinery operating expenses, divided by refinery throughput.


47
Table of Content
Lubricants and Specialty Products Operating Data

The following table sets forth information about our lubricants and specialty products operations.
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Lubricants and Specialty Products
Throughput (BPD) 18,260  19,020  29,140  19,050 
Sales of produced refined products (BPD) 31,700  33,560  33,640  32,460 
Sales of produced refined products:
Finished products 53  % 50  % 52  % 51  %
Base oils 28  % 27  % 28  % 24  %
Other 19  % 23  % 20  % 25  %
Total 100  % 100  % 100  % 100  %

Supplemental financial data attributable to our Lubricants and Specialty Products segment is presented below.
Rack Back (1)
Rack Forward (2)
Eliminations (3)
Total Lubricants and Specialty Products
(In thousands)
Three months ended September 30, 2021
Sales and other revenues $ 270,207  $ 634,654  $ (238,327) $ 666,534 
Cost of products sold $ 148,171  $ 572,689  $ (238,327) $ 482,533 
Operating expenses $ 29,046  $ 31,894  $ —  $ 60,940 
Selling, general and administrative expenses $ 7,058  $ 34,418  $ —  $ 41,476 
Depreciation and amortization $ 6,375  $ 12,851  $ —  $ 19,226 
Income (loss) from operations $ 79,557  $ (17,198) $ —  $ 62,359 
Three months ended September 30, 2020
Sales and other revenues $ 110,952  $ 423,418  $ (79,328) $ 455,042 
Cost of products sold $ 98,033  $ 283,998  $ (79,328) $ 302,703 
Operating expenses $ 25,400  $ 29,088  $ —  $ 54,488 
Selling, general and administrative expenses $ 5,616  $ 31,157  $ —  $ 36,773 
Depreciation and amortization $ 5,419  $ 12,013  $ —  $ 17,432 
Income (loss) from operations $ (23,516) $ 67,162  $ —  $ 43,646 
Nine months ended September 30, 2021
Sales and other revenues $ 698,134  $ 1,747,111  $ (584,959) $ 1,860,286 
Cost of products sold $ 443,983  $ 1,446,250  $ (584,959) $ 1,305,274 
Operating expenses $ 86,773  $ 96,230  $ —  $ 183,003 
Selling, general and administrative expenses $ 19,711  $ 104,901  $ —  $ 124,612 
Depreciation and amortization $ 19,910  $ 38,589  $ —  $ 58,499 
Income from operations $ 127,757  $ 61,141  $ —  $ 188,898 
Nine months ended September 30, 2020
Sales and other revenues $ 361,638  $ 1,241,402  $ (264,108) $ 1,338,932 
Cost of products sold $ 345,843  $ 870,695  $ (264,108) $ 952,430 
Operating expenses $ 69,703  $ 86,756  $ —  $ 156,459 
Selling, general and administrative expenses $ 16,596  $ 105,058  $ —  $ 121,654 
Depreciation and amortization $ 22,163  $ 37,097  $ —  $ 59,260 
Long-lived asset impairment $ 167,017  $ 37,691  $ —  $ 204,708 
Income (loss) from operations $ (259,684) $ 104,105  $ —  $ (155,579)
(1) Rack Back consists of our PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to Rack Forward.
(2) Rack Forward activities include the purchase of base oils from Rack Back and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.
(3) Intra-segment sales of Rack Back produced base oils to Rack Forward are eliminated under the “Eliminations” column.

48
Table of Content

Results of Operations – Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Summary
Net income attributable to HollyFrontier stockholders for the three months ended September 30, 2021 was $280.8 million ($1.71 per basic and diluted share), a $283.2 million increase from a net loss of $2.4 million ($(0.01) per basic and diluted share) for the three months ended September 30, 2020. The increase in net income was principally driven by stronger product demand, which resulted in an increase in refinery gross margins and higher refined product sales volumes. Refinery gross margins for the three months ended September 30, 2021 increased to $14.87 per produced barrel sold from $6.20 for the three months ended September 30, 2020. This increase was partially offset by the lower of cost or market inventory reserve adjustment that increased pre-tax earnings by $62.8 million for the three months ended September 30, 2020.

Sales and Other Revenues
Sales and other revenues increased 66% from $2,819.4 million for the three months ended September 30, 2020 to $4,685.1 million for the three months ended September 30, 2021 principally due to the increase in sales prices and higher refined product sales volumes. Sales and other revenues for the three months ended September 30, 2021 and 2020 included $25.5 million and $26.7 million, respectively, of HEP revenues attributable to pipeline and transportation services provided to unaffiliated parties. Additionally, sales and other revenues included $666.0 million and $452.9 million in unaffiliated revenues related to our Lubricants and Specialty Products segment for the three months ended September 30, 2021 and 2020, respectively.

Cost of Products Sold
Total cost of products sold increased 65% from $2,314.4 million for the three months ended September 30, 2020 to $3,822.9 million for the three months ended September 30, 2021 principally due to higher crude oil costs and higher refined product sales volumes. During the third quarter of 2020, we recognized a lower of cost or market inventory valuation adjustment benefit of $62.8 million.

Gross Refinery Margins
Gross refinery margin per produced barrel sold increased 140% from $6.20 for the three months ended September 30, 2020 to $14.87 for the three months ended September 30, 2021. The increase was due to the effects of an increase in the average per barrel sold sales price during the current year quarter, partially offset by increased crude oil and feedstock prices. Gross refinery margin per barrel does not include the non-cash effects of lower of cost or market inventory valuation adjustments or depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Form 10-Q for a reconciliation to the income statement of sale prices of products sold and cost of products purchased.

Operating Expenses
Operating expenses, exclusive of depreciation and amortization, increased 6% from $332.5 million for the three months ended September 30, 2020 to $352.5 million for the three months ended September 30, 2021 primarily due to an increase in natural gas prices.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 22% from $74.5 million for the three months ended September 30, 2020 to $91.1 million for the three months ended September 30, 2021 primarily due to higher professional services and legal costs incurred in connection with the recently announced acquisitions, including $4.3 million in pre-close acquisition integration costs related to the Puget Sound Acquisition during the three months ended September 30, 2021. See Note 2 “Acquisitions” in the Notes to Consolidated Financial Statements for additional information on these acquisitions.

Depreciation and Amortization Expenses
Depreciation and amortization decreased 3% from $125.3 million for the three months ended September 30, 2020 to $121.2 million for the three months ended September 30, 2021. This decrease was primarily due to lower capitalized refinery turnaround costs during 2020.

49
Table of Content
Interest Expense
Interest expense was $26.9 million for the three months ended September 30, 2021 compared to $30.6 million for the three months ended September 30, 2020. This decrease was primarily due to net gains related to our catalyst financing arrangement during the three months ended September 30, 2021 as compared to net losses during the same period in the prior year and higher capitalized interest during the three months ended September 30, 2021 due to the capital expenditures related to the construction of our renewable diesel units. This decrease was partially offset by interest expense on our senior notes issued in September 2020.

For the three months ended September 30, 2021 and 2020, interest expense attributable to our HEP segment was $13.4 million and $12.5 million, respectively.

Gain on Business Interruption Insurance Settlement
During the third quarter of 2020, we recorded a gain of $81.0 million upon the settlement of our business interruption claim with our insurance carrier related to a loss at our Woods Cross Refinery that occurred in the first quarter of 2018.

Gain (Loss) on Foreign Currency Transactions
Remeasurement adjustments resulting from the foreign currency conversion of the intercompany financing notes payable by PCLI net of mark-to-market valuations on foreign exchange forward contracts with banks which hedge the foreign currency exposure on these intercompany notes was a net loss of $3.5 million and a net gain of $1.0 million for the three months ended September 30, 2021 and 2020, respectively. For the three months ended September 30, 2021 and 2020, gain (loss) on foreign currency transactions included a gain of $9.7 million and a loss of $8.2 million, respectively, on foreign exchange forward contracts (utilized as an economic hedge).

Gain on Sale of Assets and Other
For the three months ended September 30, 2021, we recorded an $86.0 million gain related to the sale of real property in Mississauga, Ontario. See Note 1 “Description of Business and Presentation of Financial Statements” in the Notes to Consolidated Financial Statements for additional information.

Income Taxes
For the three months ended September 30, 2021, we recorded an income tax expense of $54.8 million compared to $4.6 million for the three months ended September 30, 2020. This increase was principally due to higher pre-tax income during the three months ended September 30, 2021 compared to the same period of 2020. Our effective tax rates were 15.3% and 16.4% for the three months ended September 30, 2021 and 2020, respectively. The decrease in the effective tax rate is principally due to the relationship between the pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes. The difference in the U.S. federal statutory rate and the effective tax rate for the three months ended September 30, 2021 was primarily due to the net operating loss carryback provisions of the CARES Act and federal tax credits.


Results of Operations – Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Summary
Net income attributable to HollyFrontier stockholders for the nine months ended September 30, 2021 was $597.9 million ($3.63 per basic and diluted share), a $1,081.6 million increase compared to a net loss of $483.7 million ($(2.99) per basic and diluted share) for the nine months ended September 30, 2020. The increase in net income was principally driven by stronger product demand, which resulted in an increase in refinery gross margins and higher refined product sales volumes. Net income also increased due to lower of cost or market inventory reserve adjustments that increased pre-tax earnings by $318.9 million for the nine months ended September 30, 2021 and decreased pre-tax earnings by $227.7 million for the nine months ended September 30, 2020. In addition, we recorded long-lived asset impairment charges of $436.9 million for the nine months ended September 30, 2020. The increase in net income for the nine months ended September 30, 2021 was partially offset by the impact of winter storm Uri, which increased natural gas costs by approximately $65 million across our refining system. Refinery gross margins for the nine months ended September 30, 2021 increased to $11.75 per barrel sold from $8.50 for the nine months ended September 30, 2020.

50
Table of Content
Sales and Other Revenues
Sales and other revenues increased 54% from $8,282.9 million for the nine months ended September 30, 2020 to $12,766.5 million for the nine months ended September 30, 2021 due to a year-over-year increase in sales prices and higher refined product sales volumes. Sales and other revenues for the nine months ended September 30, 2021 and 2020 include $77.8 million and $72.4 million, respectively, in HEP revenues attributable to pipeline and transportation services provided to unaffiliated parties. Additionally, sales and other revenues included $1,850.8 million and $1,330.0 million in unaffiliated revenues related to our Lubricants and Specialty Products segment for the nine months ended September 30, 2021 and 2020, respectively.

Cost of Products Sold
Total cost of products sold increased 50% from $6,875.7 million for the nine months ended September 30, 2020 to $10,290.0 million for the nine months ended September 30, 2021 principally due to the increase in crude oil and feedstock prices and refined product sales volumes. We recognized a lower of cost or market inventory valuation benefit of $318.9 million for the nine months ended September 30, 2021 compared to a charge of $227.7 million for the same period of 2020, resulting in no lower of cost or market reserve at September 30, 2021.

Gross Refinery Margins
Gross refinery margin per barrel sold increased 38% from $8.50 for the nine months ended September 30, 2020 to $11.75 for the nine months ended September 30, 2021 principally due to the increase in the average per barrel sold sales prices, partially offset by the increase in crude oil and feedstock prices. Gross refinery margin per barrel does not include the non-cash effects of lower of cost or market inventory valuation adjustments or depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Form 10-Q for a reconciliation to the income statement of sales prices of products sold and cost of products purchased.

Operating Expenses
Operating expenses, exclusive of depreciation and amortization, increased 13% from $964.2 million for the nine months ended September 30, 2020 to $1,086.6 million for the nine months ended September 30, 2021 primarily due to the increase in natural gas prices and higher planned and unplanned repair and maintenance costs. The increase in natural gas prices was due in part to winter storm Uri during the first quarter of 2021.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 6% from $237.6 million for the nine months ended September 30, 2020 to $250.8 million for the nine months ended September 30, 2021 primarily due to higher professional services and legal costs incurred in connection with the recently announced acquisitions, including $5.0 million in pre-close acquisition integration costs related to the Puget Sound Acquisition during the nine months ended September 30, 2021. See Note 2 “Acquisitions” in the Notes to Consolidated Financial Statements for additional information on these acquisitions.

Depreciation and Amortization Expenses
Depreciation and amortization decreased 7% from $396.0 million for the nine months ended September 30, 2020 to $369.3 million for the nine months ended September 30, 2021. This decrease was principally due to lower capitalized refinery turnaround costs during 2020 and lower depreciation expense resulting from the assets impaired in the second quarter of 2020.

Long-lived Asset Impairment
During the nine months ended September 30, 2020, we recorded long-lived asset impairment charges of $232.2 million that related to our Cheyenne Refinery and $204.7 million related to PCLI. See Note 1 “Description of Business and Presentation of Financial Statements” in the Notes to Consolidated Financial Statements for additional information on these impairments.

Interest Expense
Interest expense was $94.2 million for the nine months ended September 30, 2021 compared to $85.9 million for the nine months ended September 30, 2020. This increase was primarily due to interest expense on our senior notes issued in September 2020. This increase was partially offset by higher capitalized interest during the nine months ended September 30, 2020 due to the capital expenditures related to the construction of our renewable diesel units and lower weighted average balance on HEP’s credit facility during the nine months ended September 30, 2021.

For the nine months ended September 30, 2021 and 2020, interest expense attributable to our HEP Segment was $40.6 million and $40.7 million, respectively.

Gain on Business Interruption Insurance Settlement
During the third quarter of 2020, we recorded a gain of $81.0 million upon the settlement of our business interruption claim with our insurance carrier related to a loss at our Woods Cross Refinery that occurred in the first quarter of 2018.
51
Table of Content

Gain on Tariff Settlement
For the nine months ended September 30, 2021, we recorded a gain of $51.5 million upon the settlement of a tariff rate case. See Note 14 “Contingencies” in the Notes to Consolidated Financial Statements for additional information on this case and settlement.

Gain on Sales-type Leases
During the second quarter of 2020, HEP and Delek US Holdings, Inc. renewed the original throughput agreement on specific HEP assets. Portions of the new throughput agreement met the definition of sales-type leases, which resulted in an accounting gain of $33.8 million upon the initial recognition of the sales-type lease during the nine months ended September 30, 2020.

Loss on Early Extinguishment of Debt
For the nine months ended September 30, 2020, HEP recorded a $25.9 million loss on the redemption of its $500 million aggregate principal amount of 6.0% senior notes maturing August 2024 for $522.5 million.

Loss on Foreign Currency Transactions
Remeasurement adjustments resulting from the foreign currency conversion of the intercompany financing notes payable by PCLI net of mark-to-market valuations on foreign exchange forward contracts with banks which hedge the foreign currency exposure on these intercompany notes were net losses of $4.2 million and $0.9 million for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, loss on foreign currency transactions included a net loss of $3.2 million and a gain of $11.0 million, respectively, on foreign exchange forward contracts (utilized as an economic hedge).

Gain on Sale of Assets and Other
For the nine months ended September 30, 2021, we recorded an $86.0 million gain related to the sale of real property in Mississauga, Ontario, and HEP recorded a $5.3 million gain related to the sale of certain pipeline assets. See Note 1 “Description of Business and Presentation of Financial Statements” in the Notes to Consolidated Financial Statements for additional information.

Income Taxes
For the nine months ended September 30, 2021, we recorded an income tax expense of $149.9 million compared to a benefit of $188.5 million for the nine months ended September 30, 2020. This change to income tax expense in 2021 from income tax benefit in 2020 was principally due to pre-tax income during the nine months ended September 30, 2021 as compared to a pre-tax loss in the same period of 2020. Our effective tax rates were 18.1% and 31.0% for the nine months ended September 30, 2021 and 2020, respectively. The year-over-year decrease in the effective tax rate is principally due to the relationship between the pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes. The difference in the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2021 was primarily due to the net operating loss carryback provisions of the CARES Act and federal tax credits.


LIQUIDITY AND CAPITAL RESOURCES

HollyFrontier Credit Agreement
On April 30, 2021, we amended our $1.35 billion senior unsecured revolving credit facility to extend the maturity date to April 30, 2026 (the “HollyFrontier Credit Agreement”). The HollyFrontier Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. At September 30, 2021, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $2.3 million under the HollyFrontier Credit Agreement.

HollyFrontier Financing Arrangements
Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution and then leased back the precious metals catalyst in exchange for cash. The volume of the precious metals catalyst and the lease rate are fixed over the term of each lease, and the lease payments are recorded as interest expense. The current leases mature on February 1, 2022. Upon maturity, we must either satisfy the obligation at fair market value or refinance to extend the maturity.

52
Table of Content
HEP Credit Agreement
On April 30, 2021, HEP amended its $1.4 billion senior secured revolving credit facility decreasing the commitments under the facility to $1.2 billion and extending the maturity to July 27, 2025 (the “HEP Credit Agreement”). The HEP Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general partnership purposes. It is also available to fund letters of credit up to a $50 million sub-limit and continues to provide for an accordion feature that allows HEP to increase the commitments under the HEP Credit Agreement up to a maximum amount of $1.7 billion. During the nine months ended September 30, 2021, HEP received advances totaling $210.5 million and repaid $283.5 million under the HEP Credit Agreement. At September 30, 2021, HEP was in compliance with all of its covenants, had outstanding borrowings of $840.5 million and no outstanding letters of credit under the HEP Credit Agreement.

See Note 10 “Debt” in the Notes to Consolidated Financial Statements for additional information on our debt instruments.

Liquidity
We believe our current cash and cash equivalents, along with future internally generated cash flow and funds available under our credit facilities, will provide sufficient resources to fund currently planned capital projects and our liquidity needs for the foreseeable future. We expect that, to the extent necessary, we can raise additional funds from time to time through equity or debt financings in the public and private capital markets. In addition, components of our long-term growth strategy include the expansion of existing units at our facilities and selective acquisition of complementary assets for our refining operations intended to increase earnings and cash flow. In connection with the Puget Sound Acquisition, our Board of Directors approved a one-year suspension of the regular quarterly dividend effective with the dividend to be declared for the first quarter of 2021 and is expected to resume the dividend after such time.

Our standalone (excluding HEP) liquidity was approximately $2.8 billion at September 30, 2021, consisting of cash and cash equivalents of $1.5 billion and an undrawn $1.35 billion credit facility.

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

In November 2019, our Board of Directors approved a $1.0 billion share repurchase program, which replaced all existing share repurchase programs, authorizing us to repurchase common stock in the open market or through privately negotiated transactions. The timing and amount of stock repurchases will depend on market conditions and corporate, regulatory and other relevant considerations. This program may be discontinued at any time by the Board of Directors. As of September 30, 2021, we had not repurchased common stock under this stock repurchase program. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. We do not intend to repurchase common stock under our $1.0 billion share repurchase program until completion of our ongoing renewables capital projects at the earliest.
Cash Flows – Operating Activities

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
Net cash flows provided by operating activities were $739.5 million for the nine months ended September 30, 2021 compared to $391.1 million for the nine months ended September 30, 2020, an increase of $348.4 million. The increase in operating cash flows was primarily due to the increase in gross refinery margins and $51.5 million received upon settlement of a tariff rate case, partially offset by higher operating expenses.

Changes in working capital increased operating cash flows by $55.3 million and decreased operating cash flows by $50.0 million, for the nine months ended September 30, 2021 and 2020, respectively. Changes in working capital items adjust for the timing of receipts and payments of actual cash.

53
Table of Content
Cash Flows – Investing Activities and Planned Capital Expenditures

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
Net cash flows used for investing activities were $438.5 million for the nine months ended September 30, 2021 compared to $213.7 million for the nine months ended September 30, 2020, an increase of $224.8 million. Cash expenditures for properties, plants and equipment for the nine months of 2021 increased to $548.3 million from $213.0 million for the same period in 2020, primarily due to expenditures related to our renewable diesel units that are expected to be completed in the first half of 2022. Cash expenditures for properties, plants and equipment include HEP capital expenditures of $76.9 million and $38.6 million for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2020, HEP also invested $2.4 million in the Cushing Connect Pipeline & Terminal LLC joint venture.

HollyFrontier Corporation
Each year our Board of Directors approves our annual capital budget which includes specific projects that management is authorized to undertake. Additionally, when conditions warrant or as new opportunities arise, additional projects may be approved. The funds appropriated for a particular capital project may be expended over a period of several years, depending on the time required to complete the project. Therefore, our planned capital expenditures for a given year consist of expenditures appropriated in that year’s capital budget plus expenditures for projects appropriated in prior years which have not yet been completed. Refinery turnaround spending is amortized over the useful life of the turnaround.

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

Our refinery operations and related emissions are highly regulated at both federal and state levels, and we invest in our facilities as needed to remain in compliance with these standards. Additionally, when faced with new emissions or fuels standards, we seek to execute projects that facilitate compliance and also improve the operating costs and / or yields of associated refining processes.

HEP
Each year the Holly Logistic Services, L.L.C. board of directors approves HEP’s annual capital budget, which specifies capital projects that HEP management is authorized to undertake. Additionally, at times when conditions warrant or as new opportunities arise, special projects may be approved. The funds allocated for a particular capital project may be expended over a period in excess of a year, depending on the time required to complete the project. Therefore, HEP’s planned capital expenditures for a given year consist of expenditures approved for capital projects included in its current year capital budget as well as, in certain cases, expenditures approved for capital projects in capital budgets for prior years. In addition, HEP may spend funds periodically to perform capital upgrades or additions to its assets where a customer reimburses HEP for such costs. The upgrades or additions would generally benefit the customer over the remaining life of the related service agreements.

Expected capital and turnaround cash spending for 2021 is as follows and primarily reflects a change in the timing of spend between 2021 and 2022 on the renewable diesel units.    
Expected Cash Spending Range
(In millions)
HollyFrontier Capital Expenditures
Refining $ 190.0  $ 220.0 
Renewables 550.0  600.0 
Lubricants and Specialty Products
40.0  50.0 
Turnarounds and catalyst
290.0  320.0 
Total HollyFrontier
1,070.0  1,190.0 
HEP
Maintenance
15.0  20.0 
Expansion and joint venture investment
40.0  45.0 
Refining unit turnarounds
2.0  4.0 
Total HEP
57.0  69.0 
Total $ 1,127.0  $ 1,259.0 

54
Table of Content
Cash Flows – Financing Activities

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
For the nine months ended September 30, 2021, our net cash flows used for financing activities were $184.2 million. During the nine months ended September 30, 2021, we paid $57.7 million in dividends and $7.9 million of deferred financing costs in connection with the amendment of the HollyFrontier Credit Agreement in April 2021. During the nine months ended September 30, 2021, HEP had net repayments of $73.0 million under the HEP Credit Agreement and paid $6.6 million of deferred financing costs in connection with the amendment of the HEP Credit Agreement in April 2021. In addition, HEP paid distributions of $57.2 million to noncontrolling interests and received contributions from noncontrolling interests of $21.3 million.

For the nine months ended September 30, 2020, our net cash flows provided by financing activities were $463.2 million. During the nine months ended September 30, 2020, we received $744.1 million in net proceeds from the issuance of HFC’s 2.625% and 4.500% senior notes, purchased $3.4 million of treasury stock and paid $171.6 million in dividends. Also during the period, HEP received $219.5 million and repaid $237.0 million under the HEP Credit Agreement, paid $522.5 million upon the redemption of HEP’s 6.0% senior notes and received $491.3 million in net proceeds from the issuance of HEP 5.0% senior notes, paid distributions of $70.9 million to noncontrolling interests and received contributions from noncontrolling interests of $15.4 million.

Contractual Obligations and Commitments

HollyFrontier Corporation

In April 2021, we renewed a contract for terminal and storage services with a third party for an additional 15-year term. The agreement provides for storage capacity of 200,000 barrels per month for a total commitment of $9.4 million over the 15 year term. In addition, the agreement provides a throughput volume commitment of 225,000 barrels per day of crude oil for a total commitment of $92.4 million over the 15-year term. We also had certain lease renewals that increased our lease liabilities on our consolidated balance sheets during the nine months ended September 30, 2021. There were no other significant changes to our long-term contractual obligations during the nine months ended September 30, 2021.

HEP

During the nine months ended September 30, 2021, HEP had net repayments of $73.0 million resulting in $840.5 million of outstanding borrowings under the HEP Credit Agreement at September 30, 2021.

There were no other significant changes to HEP’s long-term contractual obligations during this period.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2020. Certain critical accounting policies that materially affect the amounts recorded in our consolidated financial statements include the use of the last-in, first-out (“LIFO”) method of valuing certain inventories, assessing the possible impairment of certain long-lived assets and goodwill, and assessing contingent liabilities for probable losses.

Inventory Valuation: Inventories related to our refining operations are stated at the lower of cost, using the LIFO method for crude oil and unfinished and finished refined products, or market. In periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs assigned to LIFO layers in prior periods. In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and are subject to the final year-end LIFO inventory valuation.

55
Table of Content
At September 30, 2021, the LIFO value of inventory was equal to cost. Future decreases in overall inventory values could result in an establishment of a lower of cost or market inventory valuation reserve and additional charges to cost of products sold.

Inventories consisting of process chemicals, materials and maintenance supplies and RINs are stated at the lower of weighted-average cost or net realizable value. Inventories of our Petro-Canada Lubricants and Sonneborn businesses are stated at the lower of cost, using the FIFO method, or net realizable value.

Goodwill and Long-lived Assets: As of September 30, 2021, our goodwill balance was $2.3 billion, with goodwill assigned to our Refining, Lubricants and Specialty Products and HEP segments of $1,733.5 million, $247.0 million and $312.9 million, respectively. Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired and liabilities assumed. Goodwill is not subject to amortization and is tested annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our goodwill impairment testing first entails either a quantitative assessment or an optional qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that based on the qualitative factors that it is more likely than not that the carrying value of the reporting unit is greater than its fair value, a quantitative test is performed in which we estimate the fair value of the related reporting unit. If the carrying amount of a reporting unit exceeds its fair value, the goodwill of that reporting unit is impaired, and we measure goodwill impairment as the excess of the carrying amount of reporting unit over the related fair value.

For purposes of long-lived asset impairment evaluation, we group our long-lived assets as follows: (i) our refinery asset groups, which include certain HEP logistics assets, (ii) our Lubricants and Specialty Products asset groups and (iii) our HEP asset groups, which comprises HEP assets not included in our refinery asset groups. These asset groups represent the lowest level for which independent cash flows can be identified. Our long-lived assets are evaluated for impairment by identifying whether indicators of impairment exist and if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss measured, if any, is equal to the amount by which the asset group’s carrying value exceeds its fair value.

We performed our annual goodwill impairment testing quantitatively as of July 1, 2021 and determined there was no impairment of goodwill attributable to our reporting units. The estimated fair values of our reporting units were derived using a combination of income and market approaches. The income approach reflects expected future cash flows based on estimated forecasted production levels, selling prices, gross margins, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like kind assets. The excess of the fair values of the reporting units over their respective carrying values ranged from 12% to 162%. Increasing the discount rate by 1.0% or reducing the terminal cash flow growth rate by 1.0% would not have changed the results of our annual goodwill testing.

In performing our impairment test of goodwill, we developed cash flow forecasts for each of our reporting units. Significant judgment is involved in performing these fair value estimates since the results are based on forecasted financial information. The cash flow forecasts include significant assumptions such as planned utilization, end-user demand, selling prices, gross margins, operating costs and capital expenditures. Another key assumption applied to these forecasts to determine the fair value of a reporting unit is the discount rate. The discount rate is intended to reflect the weighted average cost of capital for a market participant and the risks associated with the realization of the estimated future cash flows. Our fair value estimates are based on projected cash flows, which we believe to be reasonable.

We continually monitor and evaluate various factors for potential indicators of goodwill and long-lived asset impairment. A reasonable expectation exists that further deterioration in our operating results or overall economic conditions could result in an impairment of goodwill and / or long-lived asset impairments at some point in the future. Future impairment charges could be material to our results of operations and financial condition.

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


56
Table of Content
RISK MANAGEMENT

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

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

Foreign Currency Risk Management
We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward and foreign exchange swap contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.

As of September 30, 2021, we have the following notional contract volumes related to all outstanding derivative instruments used to mitigate commodity price and foreign currency risk:
Notional Contract Volumes by Year of Maturity
Derivative Instrument Total Outstanding Notional 2021 2022 Unit of Measure
Natural gas price swaps - long 450,000  450,000  —  MMBTU
WTI and gasoline crack spread swaps - short 150,000  150,000  —  Barrels
NYMEX futures (WTI) - short 1,880,000  1,440,000  440,000  Barrels
Forward gasoline and diesel contracts - long
165,000  165,000  —  Barrels
Foreign currency forward contracts 443,112,746  105,825,135  337,287,611  U.S. dollar
Forward commodity contracts (platinum) (1)
38,723  —  38,723  Troy ounces

(1) Represents an embedded derivative within our catalyst financing arrangements, which may be refinanced or require repayment under certain conditions. See Note 10 “Debt” in the Notes to Consolidated Financial Statements for additional information on these financing arrangements.

The following sensitivity analysis provides the hypothetical effects of market price fluctuations to the commodity hedged under our derivative contracts:
Estimated Change in Fair Value at September 30,
Commodity-based Derivative Contracts 2021 2020
(In thousands)
Hypothetical 10% change in underlying commodity prices $ 13,569  $ 3,659 

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

57
Table of Content
For the fixed rate HollyFrontier Senior Notes and HEP Senior Notes, changes in interest rates will generally affect fair value of the debt, but not earnings or cash flows. The outstanding principal, estimated fair value and estimated change in fair value (assuming a hypothetical 10% change in the yield-to-maturity rates) for this debt as of September 30, 2021 is presented below:
Outstanding
Principal 		Estimated
Fair Value 		Estimated
Change in
Fair Value
  (In thousands)
HollyFrontier Senior Notes $ 1,750,000  $ 1,946,420  $ 22,243 
HEP Senior Notes $ 500,000  $ 506,770  $ 13,123 

For the variable rate HEP Credit Agreement, changes in interest rates would affect cash flows, but not the fair value. At September 30, 2021, outstanding borrowings under the HEP Credit Agreement were $840.5 million. A hypothetical 10% change in interest rates applicable to the HEP Credit Agreement would not materially affect cash flows.

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

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

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


Item 3.Quantitative and Qualitative Disclosures About Market Risk

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


Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

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

Set forth below is our calculation of EBITDA.
58
  Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
  (In thousands)
Net income (loss) attributable to HollyFrontier stockholders
$ 280,787  $ (2,401) $ 597,854  $ (483,701)
Add interest expense 26,892  30,589  94,220  85,923 
Subtract interest income (1,018) (1,011) (3,078) (6,590)
Add (subtract) income tax expense (benefit) 54,766  4,573  149,944  (188,504)
Add depreciation and amortization 121,220  125,280  369,341  396,033 
EBITDA $ 482,647  $ 157,030  $ 1,208,281  $ (196,839)

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

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis. Refinery gross margin per produced barrel sold is total refining segment revenues less total refining segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced refined products sold. Net operating margin per barrel sold is the difference between refinery gross margin and refinery operating expenses per produced barrel sold. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments, depreciation and amortization or long-lived asset impairment charges. Each of these component performance measures can be reconciled directly to our consolidated statements of operations. Other companies in our industry may not calculate these performance measures in the same manner.

Below are reconciliations to our consolidated statements of operations for refinery net operating and gross margin and operating expenses, in each case averaged per produced barrel sold. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of average refining segment net operating margin per produced barrel sold to refinery gross margin to total sales
and other revenues
  Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
  (Dollars in thousands, except per barrel amounts)
Consolidated
Net operating margin per produced barrel sold $ 8.47  $ 0.20  $ 4.80  $ 2.46 
Add average refinery operating expenses per produced barrel sold
6.40  6.00  6.95  6.04 
Refinery gross margin per produced barrel sold 14.87  6.20  11.75  8.50 
Times produced barrels sold (BPD) 422,020  388,800  407,210  382,540 
Times number of days in period 92  92  273  274 
Refining gross margin 577,340  221,772  1,306,228  890,936 
Add (subtract) rounding 71  164  (125) 61 
West and Mid-Continent regions gross margin 577,411  221,936  1,306,103  890,997 
Add West and Mid-Continent regions cost of products sold 3,605,600  2,043,361  9,986,862  5,665,897 
Add Cheyenne Refinery sales and other revenues —  130,816  —  501,589 
Refining segment sales and other revenues 4,183,011  2,396,113  11,292,965  7,058,483 
Add Lubricants and Specialty Products segment sales and other revenues 666,534  455,042  1,860,286  1,338,932 
Add HEP segment sales and other revenues 122,584  127,731  376,002  370,392 
Subtract corporate, other and eliminations (287,070) (159,486) (762,778) (484,932)
Sales and other revenues $ 4,685,059  $ 2,819,400  $ 12,766,475  $ 8,282,875 

59
Table of Content

Reconciliation of average refining segment operating expenses per produced barrel sold to total operating expenses
  Three Months Ended September 30, Nine Months Ended September 30,
  2021 2020 2021 2020
  (Dollars in thousands, except per barrel amounts)
Consolidated
Average refinery operating expenses per produced barrel sold
$ 6.40  $ 6.00  $ 6.95  $ 6.04 
Times produced barrels sold (BPD) 422,020  388,800  407,210  382,540 
Times number of days in period 92  92  273  274 
Refinery operating expenses 248,485  214,618  772,620  633,088 
Add (subtract) rounding (169) (97) (27) 373 
West and Mid-Continent regions operating expenses 248,316  214,521  772,593  633,461 
Add Cheyenne Refinery operating expenses —  41,558  —  121,151 
Refining segment operating expenses 248,316  256,079  772,593  754,612 
Add Lubricants and Specialty Products segment operating expenses 60,940  54,488  183,003  156,459 
Add HEP segment operating expenses 42,793  40,003  126,226  109,721 
Add (subtract) corporate, other and eliminations 471  (18,074) 4,798  (56,592)
Operating expenses (exclusive of depreciation and amortization)
$ 352,520  $ 332,496  $ 1,086,620  $ 964,200 


60
Table of Content
Item 4.Controls and Procedures

Evaluation of disclosure controls and procedures. Our principal executive officer and principal financial officer have evaluated, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2021.

Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

61
Table of Content
PART II. OTHER INFORMATION
 
Item 1.Legal Proceedings

In the ordinary course of business, we may become party to legal, regulatory or administrative proceedings or governmental investigations, including environmental and other matters. Damages or penalties may be sought from us in some matters and certain matters may require years to resolve. While the outcome and impact of these proceedings and investigations on us cannot be predicted with certainty, based on advice of counsel and information currently available to us, management believes that the resolution of these proceedings and investigations through settlement or adverse judgment will not either individually or in the aggregate have a material adverse effect on our financial condition, results of operations or cash flows.

The environmental proceedings are reported to comply with SEC regulations which require us to disclose proceedings arising under provisions regulating the discharge of materials into the environment or protecting the environment when a governmental authority is party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe could exceed $300,000 or more. Certain disclosures made under the SEC’s prior $100,000 threshold will remain until their resolution.

Environmental Matters

El Dorado
HollyFrontier El Dorado Refining LLC (“HFEDR”) has been engaged in discussions with, and has responded to document requests from, the EPA, the U.S. Department of Justice (“DOJ”) and the State of Kansas regarding alleged Clean Air Act civil violations relating to flaring devices and other equipment at the refinery. Topics of the discussions included: (a) three information requests for activities beginning in January 2009, (b) compliance issues with respect to the Clean Air Act’s Risk Management Program (“RMP”) relating to a November 2014 inspection and subsequent events, (c) a Notice of Violation issued by the EPA in August 2017, and (d) possible late reporting under the Emergency Planning and Community Right-to-Know Act for the release of sulfur dioxide and visible emissions from October 2018.

Some of the foregoing civil investigations resulted from fires that occurred at the El Dorado Refinery in September 2017, October 2018 and March 2019. An employee fatality occurred during the September 2017 event. On May 28, 2020, HFEDR reached a settlement in the form of a proposed consent decree with the EPA, the DOJ, and the State of Kansas regarding the alleged Clean Air Act civil violations relating to flaring devices and other equipment at the refinery, as well as compliance with the RMP.

The proposed consent decree was lodged with the U.S. District Court for the District of Kansas, and the 30-day public comment period ended on July 18, 2020. On July 27, 2020, the EPA, the DOJ and the State of Kansas filed their Unopposed Motion to enter the Consent Decree with the U.S. District Court for the District of Kansas, and on August 27, 2020, the consent decree was entered by the district judge and became effective. Pursuant to the consent decree, among other terms and conditions, HFEDR is required to complete certain projects, implement protocols regarding the examination of its fired heaters and conduct a third party RMP audit of certain of its processes. In addition, HFEDR was required to pay a civil penalty of $2 million to the United States and $2 million to the State of Kansas in two installments, the first half within 30 days of entry of the consent decree and the second within six months of entry of the consent decree. All payments have been timely made, and HFEDR has undertaken several of the required projects. The consent decree resolves the alleged federal and state civil Clean Air Act liability for penalties and injunctive relief, other than potential civil penalties for RMP violations. Finally, as part of the settlement, a 2009 consent decree applicable to the refinery was terminated. In March 2021, the EPA contacted HFEDR to begin discussions on potential civil penalties for the RMP violations noted above.

62
Table of Content
Tulsa
HollyFrontier Tulsa Refining LLC (“HFTR”) operates under two Consent Decrees with the EPA and the Oklahoma Department of Environmental Quality (“ODEQ”) for the East and West Refineries. On April 3, 2019, the EPA notified HFTR of potential violations of the Consent Decrees. On December 1, 2020, ODEQ, on behalf of ODEQ and the EPA, issued two demand letters alleging violations under the Consent Decrees, which stemmed from inspections conducted by the EPA at the refineries from May 1 through 5, 2017, as well as from a review of the refineries’ records. The alleged violations included the failure to comply with applicable continuous emissions monitoring system (CEMS) requirements and exceedances of the hydrogen sulfide (H2S) emission limits. During a follow-up conference call with ODEQ, on January 6, 2021, ODEQ shared its stipulated penalty amounts for alleged violations pursuant to the two Consent Decrees. HFTR submitted timely responses to the ODEQ demand letters on February 8, 2021. Based on HFTR’s responses, during a follow-up conference call on April 9, 2021, ODEQ confirmed both ODEQ and EPA had reduced the stipulated penalties for the alleged violations of the two Consent Decrees and was seeking total stipulated penalties of $93,500. On April 9, 2021, HFTR confirmed acceptance of the above-referenced penalties. This matter will be resolved once HFTR pays the penalty following its receipt of the revised demand letter from ODEQ. HFTR has not yet received a demand letter.

Navajo
HollyFrontier Navajo Refining LLC (“HFNR”) has been engaged in discussions with, and has responded to document requests from, the EPA, the DOJ and the New Mexico Environment Department (“NMED”) (collectively, the “Agencies”) regarding HFNR’s compliance with the Clean Air Act (“CAA”) and related regulations, and similar New Mexico laws and regulations, at its Artesia and Lovington, New Mexico refineries. The discussions have included the following topics: (a) alleged noncompliance with CAA’s National Emission Standards for Hazardous Air Pollutants (“NESHAP”) and New Source Performance Standards (“NSPS”) at the Artesia refinery, which were set forth in a Notice of Violation (“May 2020 NOV”) issued by the EPA in May 2020; (b) a Post Inspection Notice issued in June 2020 by the NMED, alleging noncompliance issues similar to those alleged by the EPA in its May 2020 NOV; (c) an information request issued in September 2020 by the EPA, pursuant to CAA Section 114, related to benzene fenceline monitoring, flare fuel gas, storage vessels and tanks, and other information regarding the Artesia refinery; and (d) an information request issued by the EPA in May 2021, pursuant to CAA Section 114, requesting additional information and testing related to certain tanks at the Artesia refinery.

Beginning in the spring of 2021, HFNR and the Agencies began monthly meetings to discuss potential injunctive relief measures to address the alleged noncompliance at the Artesia refinery. In September 2021, the EPA presented to HFNR potential claims for stipulated penalties for alleged noncompliance with a 2002 consent decree.

HFNR continues to work with the Agencies to resolve these issues. At this time, no penalties have been demanded, and it is too early to predict the outcome of this matter.

Renewable Fuel Standard

Various subsidiaries of HollyFrontier are currently intervenors in two lawsuits brought by renewable fuel interest groups against the EPA in federal courts alleging violations of the Renewable Fuel Standard under the Clean Air Act and challenging the EPA’s handling of small refinery exemptions. We intervened to vigorously defend the EPA’s position on small refinery exemptions because we believe the EPA correctly applied applicable law to the matters at issue.

The first lawsuit is before the Tenth Circuit and challenges the relief the EPA afforded to the Cheyenne and Woods Cross refineries following the grant of small refinery exemptions. The matter is fully briefed and remains pending before that court.

The second lawsuit is currently pending before the DC Circuit. However, on August 25, 2021, the EPA filed a motion to voluntarily remand the matter to the EPA. We did not oppose this motion. A decision on this motion by the DC Circuit is expected in the near future.

HollyFrontier was also recently an intervenor in another lawsuit filed in the Tenth Circuit challenging the grant of small refinery exemptions to the Cheyenne and Woods Cross refineries for the 2016 compliance year. On January 24, 2020, the U.S. Court of Appeals for the Tenth Circuit vacated the small refinery exemptions granted to the Cheyenne and Woods Cross refineries for 2016 and remanded the case to the EPA for further proceedings. On April 15, 2020, the Tenth Circuit issued its mandate, remanding the matter back to the EPA. On September 4, 2020, various subsidiaries of HollyFrontier filed a Petition for a Writ of Certiorari with the U.S. Supreme Court seeking review of the Tenth Circuit decision. On January 8, 2021, the U.S. Supreme Court granted HollyFrontier’s petition. The oral argument occurred on April 27, 2021. The U.S. Supreme Court issued its opinion in this matter on June 25, 2021 and reversed the Tenth Circuit. On July 27, 2021, the Tenth Circuit recalled the mandate it issued to the EPA on April 15, 2020, and vacated its January 24, 2020 judgment. On July 29, 2021, the Tenth Circuit issued an order and judgment confirming that it recalled its mandate and vacated its previous judgment in this case, and
63
Table of Content
returned jurisdiction to the EPA without vacating the exemption decisions. On August 19, 2021, the EPA filed a motion for clarification of the Tenth Circuit’s mandate. The Tenth Circuit denied the EPA’s motion on August 26, 2021, and therefore the matter is now solely before the EPA.

Shareholder Litigation Related to Acquisition of Sinclair Oil Corporation

A shareholder action has been filed in the District Court of Harris County, Texas captioned: Garfield v. Myers, Franklin (filed October 11, 2021) by an alleged shareholder of HollyFrontier challenging our proposed acquisition of certain refining, marketing and other businesses of Sinclair Oil Corporation (the “Acquisition”) and naming as defendants HollyFrontier and its board of directors. The complaint alleges, among other things, that the Acquisition involves unfair dilution of existing HollyFrontier stockholders, overpayment for Sinclair’s downstream business, and improper diversion of Sinclair’s midstream business to HEP; that certain conflicts of interest exist between HollyFrontier, its insiders, and its financial advisor; and that the proxy statement is materially misleading and incomplete. The complaint asserts claims against the director defendants for alleged breach of fiduciary duties, failure to disclose under Delaware law, and diversion of corporate opportunity under Delaware law.

An additional shareholder action has been filed in the United States District Court for the Southern District of New York captioned: Lovoi v. HollyFrontier Corporation et. al. (filed October 28, 2021) by an alleged shareholder of HollyFrontier asserting claims under Section 14(a) of the Exchange Act and SEC Rule 14a-9 and claims under Section 20(a) of the Exchange Act against HollyFrontier and members of HollyFrontier’s board of directors, based on the allegation that the preliminary proxy statement for the Acquisition omitted material information about HollyFrontier’s financial projections and the analyses conducted by its financial advisor.

The shareholder actions seek various remedies, including enjoining and/or rescinding the Acquisition agreement and requiring defendants to amend the proxy statement, declaring a breach of fiduciary duties, correcting and completing disclosures or enjoining or unwinding the Acquisition and share issuance if they do not, rescissory and compensatory damages, and interest, attorney’s fees and other costs.

The defendants intend to vigorously defend these and any future lawsuits, as they believe that they have valid defenses to all claims and that the lawsuits are entirely without merit.

Other

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


Item 1A.Risk Factors

Except for the risk factors below, there have been no material changes in our risk factors as previously disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and in Part II, “Item 1A. Risk Factors” of our Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021. You should carefully consider the risk factors discussed below and in our 2020 Form 10-K, March 31, 2021 Form 10-Q and June 30, 2021 Form 10-Q, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

The pending Sinclair Transactions may not be consummated on a timely basis or at all. Failure to complete the acquisition within the expected timeframe or at all could adversely affect our stock price and our future business and financial results.

On August 2, 2021, we entered into the Business Combination Agreement with Sinclair and certain other parties thereto in connection with the Sinclair Transactions and HEP entered into the Contribution Agreement with Sinclair and certain other parties thereto in connection with the Sinclair Transactions. The transactions under the Contribution Agreement will be consummated immediately prior to the transactions contemplated under the Business Combination Agreement. We expect the Sinclair Transactions to close in mid-2022. The Sinclair Transactions are subject to closing conditions. If these conditions are not satisfied or waived, the Sinclair Transactions will not be consummated. If the closing of the Sinclair Transactions is substantially delayed or does not occur at all, or if the terms of the Sinclair Transactions are required to be modified substantially, we may not realize the anticipated benefits of the transactions fully or at all or they may take longer to realize than expected. The closing conditions include, among others, the affirmative vote of the majority of the votes cast and entitled to be
64
Table of Content
voted on the issuance of New Parent Common Stock to Sinclair in the Sinclair Transactions, the absence of a law or order prohibiting the transactions contemplated by the Business Combination Agreement and the termination or expiration of any waiting periods under the Hart-Scott Rodino Act, as amended (the “HSR Act”), with respect to the Sinclair Transactions. On August 23, 2021, each of HollyFrontier and Sinclair filed its respective premerger notification and report regarding the Sinclair Transactions with the U.S. Department of Justice and the U.S. Federal Trade Commission (the “FTC”) under the HSR Act. On September 22, 2021, we and Sinclair each received a request for additional information and documentary material (“Second Request”) from the FTC in connection with the FTC’s review of the Sinclair Transactions. Issuance of the Second Request extends the waiting period under the HSR Act until 30 days after both we and Sinclair have substantially complied with the Second Request, unless the waiting period is terminated earlier by the FTC or the parties otherwise commit not to close the Sinclair Transactions for some additional period of time. HollyFrontier and Sinclair are cooperating with the FTC staff in its review. We have incurred and will continue to incur substantial transaction costs whether or not the Sinclair Transactions are completed. Any failure to complete the Sinclair Transactions could have a material adverse effect on our stock price, our competitiveness and reputation in the marketplace, and our future business and financial results, including our ability to execute on our strategy to return capital to our stockholders.

The actual value of the consideration we will pay to Sinclair at closing may exceed the value allocated to such consideration at the time we entered into the Business Combination Agreement.

Under the Business Combination Agreement, the number of shares of common stock we will issue to Sinclair at the closing of the Sinclair Transactions is fixed at 60,230,036, which represents approximately 26.75% of HollyFrontier’s outstanding common stock as of July 30, 2021, and there will be no adjustment for changes in the market price of our common stock. Neither we nor the Sinclair stockholders are permitted to “walk away” from the transaction solely because of changes in the market price of our common stock between the signing of the Business Combination Agreement and the closing. Our common stock has historically experienced volatility. Stock price changes may result from a variety of factors that are beyond our control, including changes in our business, operations and prospects, regulatory considerations and general market and economic conditions. The closing price of our common stock on the New York Stock Exchange on July 30, 2021, was $29.40; and on October 20, 2021, the closing price of our common stock was $37.39. The value of the common stock we issue in connection with the closing of the Sinclair Transactions may be significantly higher at the closing than when we entered into the Business Combination Agreement.

The Sinclair Transactions will require management to devote significant attention and resources to integrating the acquired Sinclair businesses with our business. Potential difficulties that may be encountered in the integration process include, among others:

•the inability to successfully integrate the acquired Sinclair business into the HollyFrontier business in a manner that permits us to achieve the revenue and cost savings that we announced as anticipated from the Sinclair Transactions, including approximately $100 million in run-rate synergies that we have communicated we expect the combined company to realize, as well as another $100 to $200 million in estimated one-time savings from working capital benefits during the first two years after closing of the Sinclair Transactions, as previously announced;
•the inability to successfully close and integrate multiple acquisitions simultaneously or within a short timeframe of each other, including the Sinclair Transactions and the Puget Sound Acquisition;
•complexities associated with managing the larger, integrated business;
•potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Sinclair Transactions;
•integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services;
•loss of key employees;
•integrating relationships with customers, vendors and business partners;
•performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the Sinclair Transactions and integrating acquired Sinclair operations into HollyFrontier; or
•the disruption of, or loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.

Delays or difficulties in the integration process could adversely affect our business, financial results, financial condition and stock price. Even if we are able to integrate our business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that we currently expect or have communicated from this integration or that these benefits will be achieved within the anticipated time frame.
65
Table of Content

The Sinclair Transactions will expand our branded marketing and licensing business, and we could face a variety of risks as a result of this business expansion.

The Sinclair Transactions will expand our business into branded marketing and licensing business with the addition of over 300 distributors and 1,300 branded retail sites. Risks of our expanding this business line include, among others: (i) potential diversion of management’s attention and other resources from our existing businesses; (ii) unanticipated liabilities or contingencies; (iii) the need for additional capital and other resources to integrate and expand this line of business; and (iv) inefficient combination or integration of operational and management systems and controls. Expanding this line of business may also lead to increased litigation and regulatory risk and could have an impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the expansion and integration of the branded marketing and licensing business could have a material adverse effect on our business, results of operations and financial condition.

Litigation relating to the Sinclair Transactions could result in substantial costs to HollyFrontier or an injunction preventing the completion of the Sinclair Transactions.

Securities class action lawsuits, derivative and related lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert the time and resources of management. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition.

Lawsuits that have been or may be brought against us and/or our directors could also seek, among other things, injunctive relief or other equitable relief, including a request to rescind parts of the acquisition agreement already implemented, issue additional disclosures and to otherwise enjoin the parties from consummating the Sinclair Transactions. We and the members of our Board of Directors were named as defendants in a lawsuit filed in Harris County, Texas, brought by an alleged HollyFrontier shareholder challenging the Sinclair Transactions and seeking, among other things, injunctive relief to enjoin and/or rescind the acquisition agreement and require defendants to amend the related proxy statement, declare a breach of fiduciary duties, provide correct and complete disclosures or enjoin or unwind the acquisition and share issuance if they do not, rescissory and compensatory damages, and interest, attorney’s fees and other costs. An additional lawsuit filed by an alleged HollyFrontier shareholder in the United States District Court for the Southern District of New York asserts claims under Section 14(a) of the Exchange Act and SEC Rule 14a-9 and claims under Section 20(a) of the Exchange Act against HollyFrontier and members of HollyFrontier’s board of directors, and seeks, among other things, to enjoin and/or rescind the acquisition agreement and require defendants to amend the related proxy statement, and, if they do not, to recover damages. Additional lawsuits in connection with the Sinclair Transactions may be filed in the future in federal or state courts.

The outcome of these lawsuits or any other lawsuit that may be filed challenging the Sinclair Transactions is uncertain. One of the conditions to the closing of the Sinclair Transactions is that no injunction by any court or other tribunal of competent jurisdiction has been entered and continues to be in effect and no law has been adopted or is effective, in either case, that prohibits or makes illegal the closing of the Sinclair Transactions. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Sinclair Transactions or delaying the shareholder vote, that injunction may delay or prevent the Sinclair Transactions from being completed within the expected timeframe or at all, which could result in substantial costs to us and may adversely affect our business, financial position, results of operation and cash flows. Relatedly, the defense or settlement of any lawsuit or claim that remains unresolved at the time the Sinclair Transactions are completed may adversely affect our business, financial condition, results of operations and cash flows and result in substantial costs to us. See Item 1, “Legal Proceedings” for more information about litigation related to the Sinclair Transactions.



66
Table of Content
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(c) Common Stock Repurchases Made in the Quarter

Under our common stock repurchase programs, repurchases are being made from time to time in the open market or privately negotiated transactions based on market conditions, securities law limitations and other factors. The following table includes repurchases made under these programs during the third quarter of 2021.
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
July 2021 —  $ —  —  $ 1,000,000,000 
August 2021 —  $ —  —  $ 1,000,000,000 
September 2021 —  $ —  —  $ 1,000,000,000 
Total for July to September 2021 —  — 


67
Table of Content
Item 6.Exhibits

Exhibit Number Description
2.1†
2.2*†
3.1
3.2*
10.1+
HollyFrontier Corporation Director’s Stock Compensation Deferral Plan (incorporated by reference to Exhibit 10.3 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, File No. 1-03876).
10.2
10.3†
10.4
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 September 30, 2021, formatted as inline XBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (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).

* Filed herewith.
** Furnished herewith.
+ Constitutes management contracts or compensatory plans or arrangements.
++ Filed electronically herewith.
† Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon request.

68
Table of Content
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
HOLLYFRONTIER CORPORATION
(Registrant)
Date: November 3, 2021 /s/ Richard L. Voliva III
Richard L.Voliva III
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: November 3, 2021 /s/ Indira Agarwal
Indira Agarwal
Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
69

Exhibit 2.2


WAIVER AND AMENDMENT TO SALE AND PURCHASE AGREEMENT
This WAIVER AND AMENDMENT TO SALE AND PURCHASE AGREEMENT (this “Amendment”) is made as of October 31, 2021 by and among HollyFrontier Puget Sound Refining LLC, a Delaware limited liability company (the “Buyer”) and Equilon Enterprises LLC d/b/a Shell Oil Products US, a Delaware limited liability company (the “Seller”). Capitalized terms used in this Amendment without definition have the respective meanings given to them in the Purchase Agreement (as defined below).
WHEREAS, the Buyer and Seller (each a “Party”, and collectively, the “Parties”) entered into that certain Sale and Purchase Agreement, dated as of May 4, 2021 (the “Purchase Agreement”);
WHEREAS, pursuant to Section 17.07, the Purchase Agreement may not be amended, modified, superseded or cancelled, or any of the terms, covenants, representations, warranties or conditions therein be waived, except in a written instrument executed by the Parties, or, in the case of a waiver, by or on behalf of the Party waiving compliance; and
WHEREAS, the Parties desire to amend the Purchase Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree to amend the Purchase Agreement as follows:
Section 1.Definition of Terminal Services Agreement (Seattle). The Parties hereby agree to amend the definition of “Terminal Services Agreement (Seattle)” in Section 1.01 of the Purchase Agreement to read as follows: “Terminal Services Agreement (Seattle)” means, collectively, (i) the terminalling services agreement to be entered into by and between HFRM and Seller in the form attached hereto as Exhibit J-2 and (ii) the short-term terminalling services agreement to be entered into by and between HFRM and Seller with respect to transmix.
Section 2.Definition of Product Supply Agreements. The Parties hereby agree to amend the definition of “Product Supply Agreements” in Section 1.01 of the Purchase Agreement to read as follows: “Product Supply Agreements” means, collectively, (i) the Clearing Period Road Fuels Agreement, to be entered into by and between HFRM and certain Affiliates of Seller, in the form attached hereto as Exhibit H-1, (ii) the Bulk and Rack Road Fuels Agreement, to be entered into by and between HFRM and certain Affiliates of Seller, in the form attached hereto as Exhibit H-2, (iii) the Jet Fuels (SOPUS) Agreement, to be entered into by and between HFRM and certain Affiliates of Seller, in the form attached hereto as Exhibit H-3, (iv) the Jet Fuels (STUSCO) Agreement, to be entered into by and between HFRM and certain Affiliates of Seller, in the form attached hereto as Exhibit H-4, (v) the Petroleum Coke Product Supply Agreement, to be entered into by and between HFRM and Shell Oil Products (US), in the form attached hereto as Exhibit H-5, (vi) the Sulphur Product Supply Agreement, to be entered into by and between HFRM and Shell Oil Products (US), which agreement shall be consistent with the term sheet attached hereto as Exhibit H-6, (vii) the Propane Product Supply Agreement, to be entered into by and between HFRM and Shell Oil Products (US), in the form attached



hereto as Exhibit H-7, (viii) the Isobutane Product Supply Agreement, to be entered into by and between HFRM and Shell Oil Products (US), in the form attached hereto as Exhibit H-8, (ix) the Butane Buy-Sell Agreement, to be entered into by and between HFRM and Seller, in the form attached hereto as Exhibit H-9, (x) the Oligomers Supply Agreement, to be entered into by and between HFRM and Shell Oil Products (US), in the form attached hereto as Exhibit H-10, (xi) the RINS Purchase Agreement, to be entered into by and between HFRM and Seller, in the form attached hereto as Exhibit H-11, (xii) an Ethanol Supply Agreement, to be entered into by and between HFRM and Shell Trading (US) Company, (xiii) a Fuel & Cutter Stock Supply and Offtake Agreement (Heavy Oils), to be entered into between HFRM and Shell Trading (US) Company and (xiv) a Mogas Agreement, to be entered into by and between HFRM and Shell Trading (US) Company.
Section 3.Waiver of Closing Deliverables.
(a)Buyer hereby waives the requirement in Section 3.02(a)(iv) of the Purchase Agreement that Seller provide evidence reasonably satisfactory to Buyer that Kinder Morgan Pipeline has agreed to transfer or assign 100% of Seller Companies’ line space history and rights as a shipper to Buyer.
(b)Buyer hereby waives the requirement in Section 3.02(a)(x) of the Purchase Agreement that Seller deliver an estoppel certificate in respect of any of the Refinery Leases.
(c)Buyer hereby waives the requirement in Section 12.07 of the Purchase Agreement that Seller deliver consents to the assignment of the following Refinery Contracts:
a.Crude Oil Sale Agreement dated July 27, 2020 by and between Equilon Enterprises LLC d/b/a Shell Oil Products US and ConocoPhillips ANS Marketing Company, expiring May 31, 2021.
b.Cap Sante Marina Commercial Business and Charter Moorage Agreement dated March 24, 2020 by and between Equilon Enterprises LLC d/b/a Shell Oil Products US (as lessee) and the Port of Anacortes (as lessor), evergreen.
Section 4.Schedule 1.01F Specified Pre-Closing Matters. In accordance with Section 6.05 of the Purchase Agreement, the Parties hereby agree to replace Schedule 1.01F to the Purchase Agreement with the version attached as Exhibit A hereto. The Parties further agree that the Capex Cap shall not apply to the following New Matters:
•Ammonia Feed to Cogen NOx Emissions Event, April 9, 2021
•SRU Tail Gas Incinerator exceedance, May 9, 2021
•SRU Fire and Tail Gas Incinerator exceedance, May 12, 2021
•Open Ended Lines, August 25, 2021
•DOSH Notice of Alleged Hazard, dated October 19, 2021

Section 5.Schedule 1.01G Disclosed Environmental Conditions. The Parties hereby agree to the amend item 1 on Schedule 1.01G to the Purchase Agreement to read as follows: “Corrective Action Orders: None”.



Section 6.Schedule 2.01(g) Refinery Contracts. The Parties hereby agree that Schedule 2.01(g) of the Purchase Agreement shall be replaced with the version attached hereto as Exhibit B.
Section 7.Excluded Asset. The Parties hereby agree to supplement Schedule 2.02(a)(iv) to the Purchase Agreement by adding the following contract, which, for the avoidance of doubt, shall be deemed an Excluded Asset for all purposes under the Purchase Agreement: “2021 Contract for Shell Puget Sound Refinery Hourly, Group Number: 60021599, Regence BlueShield Medical Benefits, between Seller and Regence BlueShield, and all associated ancillary agreements thereunder (including the Retrospective Refunding Endorsement - Cumulative, dated January 1, 2021).”
Section 8.Closing Adjustments.
(a)Pursuant to Section 2.08(f) of the Purchase Agreement, the Parties hereby agree to adjust the Base Amount in the manner and by the amounts set forth on Exhibit C attached hereto (the “Additional Closing Adjustments”). The Parties agree to determine the net amount of the Additional Closing Adjustments in connection with the determination of the Inventory Value pursuant to Section 2.07(c) of the Purchase Agreement. If the net amount of the Additional Closing Adjustments is positive, Buyer shall pay to Seller such amount by wire transfer of immediately available funds to such account or accounts of Seller as may be designated by Seller. If the net amount of the Additional Closing Adjustments is negative, Seller shall pay to Buyer such amount by wire transfer of immediately available funds to such account or accounts of Buyer as may be designated by Buyer.

(b)The Parties hereby agree to include the amount of any Transfer Taxes or other amounts due in respect of the Refinery Hydrocarbon Inventory in the Inventory Value determined pursuant to Section 2.07(c) of the Purchase Agreement.

Section 9.Disclosure Letter.
(a)The Parties hereby agree that the following contracts shall be added to Section 4.10(a)(1) of the Disclosure Letter:
i.CW513422: Purchase Contract for Purchase of Goods and Services—Electrical Services dated July 15, 2021 by and between Equilon Enterprises LLC d/b/a Shell Oil Products US and PowerTek Electric Inc., expiring July 15, 2024.
ii.Under the “CP Contracts” heading: CW571430: Purchase Contract for Purchase of Services dated September 15, 2021 by and between Equilon Enterprises LLC d/b/a Shell Oil Products US and Becht Engineering Co., Inc., expiring September 14, 2024.
iii.Under the “CP Contracts” heading: CW364790: Purchase Contract for Purchase of Goods and Services – Industrial electrical services dated February 14, 2020 by and between Equilon Enterprises LLC d/b/a Shell Oil Products US and Burke Electric LLC, expiring February 28, 2025.



iv.Crude Oil Sales Agreements, dated September 3, 2021, September 9, 2021 and October 7, 2021 between Equilon Enterprises LLC d/b/a Shell Oil Products US and ConocoPhillips ANS Marketing Company.
v.Wet Gas Scrubbing Process License Agreement dated October 29, 2004 between Equilon Enterprises LLC d/b/a Shell Oil Products US and Hamon Research-Cottrell.
(b)The Parties hereby agree that Section 4.13 of the Disclosure Letter shall be replaced with the version attached as Exhibit D hereto.
Section 10.Schedule 11.06(b) Existing Corrective Action Orders. The Parties hereby agree that item 4 on Schedule 11.06(b) shall be deleted and item 5 on Schedule 11.06(b) shall be replaced with a new item 4 as follows: “4. Agreed Order for Interim Action—Oily Water Sewer (SWMU 1) (No. DE16298) with the State of Washington Department of Ecology, effective November 1, 2021.”
Section 11.Schedule 12.07 Required Consents. The Parties hereby agree that item 11 on Schedule 12.07 shall be amended to read as follows: “11. Connection Agreement dated August 30, 2021 by and between Equilon Enterprises LLC d/b/a Shell Oil Products US and Trans Mountain Pipeline (Puget Sound) LLC, evergreen.”
Section 12.No Other Changes. Except as set forth in this Amendment, the terms and conditions of the Purchase Agreement shall remain in full force and effect.
Section 13.Governing Law. This Amendment will, and all claims or causes of action (whether in contract, in tort, at law or otherwise) that may be based upon, arise out of or relate to this Amendment or the registration, execution or performance of this Amendment be deemed to be made in and in all respects will be interpreted, construed and governed by and enforced in accordance with the law of the State of Texas, without regard to the conflicts of law principles thereof including its statutes of limitations.
Section 14.Interpretation. In the event of any discrepancy between the provisions of this Amendment and any provision of the Purchase Agreement, the provisions of this Amendment shall control.
Section 15.Entire Agreement. This Amendment, together with the Purchase Agreement, constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements or representations by or between the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.
Section 16.Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be an original, and all of which together shall constitute one and the same instrument.
[Signature page follows]




IN WITNESS WHEREOF, the Parties have executed and delivered this Waiver and Amendment to Sale and Purchase Agreement as of the date first written above.


SELLER:
EQUILON ENTERPRISES LLC
d/b/a Shell Oil Products US

By:    /s/ Patrick Southwick            
Name: Patrick Southwick
Title: VP, Americas Downstream Acquisitions and Divestments

BUYER:
HOLLYFRONTIER PUGET SOUND REFINING LLC


By:     /s/ Michael C. Jennings        
Name: Michael C. Jennings
Title: Chief Executive Officer and President


[Signature Page to Waiver and Amendment to Sale and Purchase Agreement]



Exhibit A

Amended Schedule 1.01F (Specified Pre-Closing Matters)

Omitted pursuant to Item 601(a)(5) of Regulation S-K



Exhibit B
Amended Schedule 2.01(g) Refinery Contracts

Omitted pursuant to Item 601(a)(5) of Regulation S-K




Exhibit C

Additional Closing Adjustments

Omitted pursuant to Item 601(a)(5) of Regulation S-K



Exhibit D

Amended Section 4.13 of the Disclosure Letter

Omitted pursuant to Item 601(a)(5) of Regulation S-K






Exhibit 3.2
AMENDED AND RESTATED BY-LAWS OF
HOLLYFRONTIER CORPORATION
EFFECTIVE AS OF SEPTEMBER 14, 2021

ARTICLE I
OFFICES
The principal office of HollyFrontier Corporation (the “Corporation”) in the State of Delaware shall be in the City of Wilmington, County of New Castle, and the name of the resident agent in charge thereof is The Corporation Trust Company.

The Corporation may, in addition to its principal office in the State of Delaware, establish and maintain an office or offices at such other places as the Board of Directors of the Corporation (the “Board”) may from time to time deem necessary or desirable.

ARTICLE II
STOCKHOLDERS MEETINGS
Section 1.    Place of Meetings. The annual meeting of the stockholders for the election of directors and any special meetings of stockholders shall be held at such time and place as shall be stated in the notice of such meeting.

Section 2.    Annual Meetings.

(a)The annual meeting of the stockholders for the election of directors and for the transaction of any other business properly presented for action at such meeting shall be held on the second Thursday in May of each year or on such other day as may be fixed by resolution of the Board; provided, however, that if the Board deems it impracticable to hold the meeting on the date originally determined, such annual meeting of the stockholders shall be held as soon as practicable after such date on a date to be specified in a resolution of the Board.

(b)An annual meeting of the stockholders may be adjourned by the Chairman (or other presiding officer at an annual meeting of the stockholders) for any reason (including, if the Chairman or other presiding officer determines that it would be in the best interests of the Corporation to extend the period of time for the solicitation of proxies) from time to time and place to place until the Chairman or other presiding officer shall determine that the business to be conducted at the meeting is completed, which determination shall be conclusive.

(c)At an annual meeting of the stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been brought before the annual meeting of the stockholders (i) by, or at the direction of, the Board or (ii) by any stockholder of the Corporation who complies with the notice procedures set forth in this Section 2 or, with respect to the election of directors, Article III, Section 12 of these By-Laws (and, as applicable with respect to a Proxy Access Notice, Section 2(d) of these By-Laws). For a proposal to be properly brought before an annual meeting of the stockholders by a
- 1 -


stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice for a stockholder proposal (other than a director nomination) must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders of the Corporation; provided, however, if no annual meeting of the stockholders was held in the previous year, or if the date of the applicable annual meeting of the stockholders has been changed by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, a stockholder’s notice for a stockholder proposal (other than a director nomination) must be received by the Secretary not less than 90 days nor more than 120 days prior to such annual meeting of the stockholders date or, if the public disclosure of such annual meeting is less than 100 days prior to the date of such annual meeting of the stockholders, a stockholder’s notice for a stockholder proposal (other than a director nomination) must be received by the Secretary no later than the seventh day following the day on which the public disclosure of the date of such meeting was made. In no event shall any adjournment or postponement of an annual meeting of the stockholders, or the public announcement thereof, commence a new time period for the giving of a stockholder’s notice as described above. For purposes of these By-Laws, “public disclosure” means the disclosure in a press release reported by the Business Wire, Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934 (such act, as amended, or any successor provision thereto, and the rules and regulations promulgated thereunder, the “Exchange Act”). In addition, in order to be considered timely, any information required by this Section 2(c) to be provided to the Corporation must be supplemented (by delivery to the Secretary): (1) no later than ten (10) days following the record date for the applicable meeting or any adjournment or postponement thereof, to disclose the foregoing information as of such record date; and (2) no later than eight (8) days before the meeting or any adjournment or postponement thereof, to disclose the foregoing information as of the date that is no earlier than ten (10) days prior to such meeting. For the avoidance of doubt, the requirement to update and supplement such information shall not permit any stockholder or other person to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business and or resolutions proposed or be deemed to cure any defects or limit the remedies (including, without limitation, under these By-Laws) available to the Corporation relating to any defect. The obligation to update and supplement as set forth in this paragraph or any other Section of these By-Laws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder or extend any applicable deadlines hereunder or under any other provision of these By-Laws. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting of the stockholders:

(i)a brief description of the proposal desired to be brought before the annual meeting of the stockholders, including the complete text of any resolutions intended to be submitted at the annual meeting of the stockholders and the reasons for conducting such business at the annual meeting of the stockholders;

(ii)the name and address, as they appear on the Corporation’s books, of the stockholder proposing such matter and any Stockholder Associated Person;

(iii)the class and number of shares of the Corporation’s stock which are, directly or indirectly, held of record or beneficially owned by the stockholder on the date of such stockholder’s notice and by any Stockholder Associated Person on the date of such stockholder’s notice,
- 2 -


the dates on which such stockholder or Stockholder Associated Person acquired such securities and documentary evidence of such record or beneficial ownership;

(iv)any interest of the stockholder or any Stockholder Associated Person in such proposal;

(v)a list of all of the derivative securities (as defined under Rule 16a-1 under the Exchange Act) and other derivatives or similar agreements or arrangements with an exercise or conversion privilege or a periodic or settlement payment or payments or mechanism at a price or in an amount or amounts related to any security of the Corporation or with a value derived or calculated in whole or in part from the value of the Corporation or any security of the Corporation, in each case, directly or indirectly held of record or beneficially owned by such stockholder or any Stockholder Associated Person and each other direct or indirect opportunity of such stockholder or any Stockholder Associated Person to profit or share in any profit derived from any increase or decrease in the value of any security of the Corporation, in each case, regardless of whether (a) such interest conveys any voting rights in such security to such stockholder or Stockholder Associated Person, (b) such interest is required to be, or is capable of being, settled through delivery of such security or (c) such person may have entered into other transactions that hedge the economic effect of such interest (any such interest described in this clause (v) being a “Derivative Interest”);

(vi)the name of each person with whom such stockholder or Stockholder Associated Person has any agreement, arrangement or understanding (whether written or oral) (a) for the purposes of acquiring, holding, voting (except pursuant to a revocable proxy given to such person in response to a public proxy or consent solicitation made generally by such person to all holders of shares of the Corporation) or disposing of any shares of capital stock of the Corporation, (b) to cooperate in obtaining, changing or influencing the control of the Corporation (except independent financial, legal and other advisors acting in the ordinary course of their respective businesses), (c) with the effect or intent of increasing or decreasing the voting power of, or that contemplates any person voting together with, any such stockholder or Stockholder Associated Person with respect to any shares of the capital stock of the Corporation or any business proposed by the stockholder or (d) otherwise in connection with any business proposed by a stockholder and a description of each such agreement, arrangement or understanding (any agreement, arrangement or understanding described in this clause (vi) being a “Voting Agreement”);

(vii)any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, involving such stockholder or Stockholder Associated Person, directly or indirectly, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares of the Corporation (any of the foregoing, a “Short Interest”);

- 3 -


(viii)any equity interests, Derivative Interests, Short Interests and in any principal competitor of the Corporation held by such stockholder or Stockholder Associated Person and any direct or indirect interest of such stockholder or Stockholder Associated Person in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement);

(ix)details of all other material interests of each stockholder or any Stockholder Associated Person in such proposal or any security of the Corporation (including, without limitation, any rights to dividends or performance related fees based on any increase or decrease in the value of such security or Derivative Interests) (collectively, “Other Interests”);

(x)a description of all economic terms of all such Derivative Interests, Voting Agreements, Short Interests or Other Interests and copies of all agreements and other documents (including, without limitation, master agreements, confirmations and all ancillary documents and the names and details of counterparties to, and brokers involved in, all such transactions) relating to each such Derivative Interest, Voting Agreement, Short Interest or Other Interest;

(xi)a list of all transactions by such stockholder and any Stockholder Associated Person involving any securities of the Corporation or any Derivative Interests, Voting Agreements or Other Interests within the six month period prior to the date of the notice;

(xii)all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by such stockholder or Stockholder Associated Person;

(xiii)any other information relating to such stockholder and any Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the proposal pursuant to Regulation 14A of the Exchange Act; and

(xiv)a representation that the stockholder is a holder of record of capital stock of the Corporation entitled to vote at such annual meeting of the stockholders and intends to appear in person or by proxy at the annual meeting of the stockholders to propose such business.

In addition, a stockholder seeking to submit such proposal at the meeting shall promptly provide any other information reasonably requested by the Corporation.

“Stockholder Associated Person” of any stockholder means:

(i)any beneficial owner of shares of stock of the Corporation on whose behalf any proposal or nomination is made by such stockholder;

- 4 -


(ii)any affiliates or associates of such stockholder or any beneficial owner described in clause (i); and

(iii)each other person with whom any of the persons described in the foregoing clauses (i) and (ii) either is acting in concert with respect to the Corporation or has any agreement, arrangement or understanding (whether written or oral) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy given to such person in response to a public proxy solicitation made generally by such person to all stockholders entitled to vote at any meeting) or disposing of any capital stock of the Corporation or to cooperate in obtaining, changing or influencing the control of the Corporation (except independent financial, legal and other advisors acting in the ordinary course of their respective businesses).

(d)

(i)Subject to the terms and conditions set forth in these By-Laws, the Corporation shall include in its proxy statement for an annual meeting of the stockholders held after the 2021 annual meeting of the stockholders the name, together with the Required Information (as defined below), of qualifying person(s) nominated for election (the “Stockholder Nominee”) to the Board by an eligible stockholder or eligible group of stockholders that satisfy the requirements of this Section 2(d), including qualifying as an Eligible Stockholder (as defined in subsection (v) below) and that expressly elects at the time of providing the written notice required by this Section 2(d) (a “Proxy Access Notice”) to have its nominee included in the Corporation’s proxy materials pursuant to this Section 2(d). For the purposes of this Section 2(d):
(A)“Constituent Holder” shall mean any stockholder, fund included within a Qualifying Fund (as defined in subsection (v) below) or beneficial holder whose stock ownership is counted for the purpose of qualifying as holding the Proxy Access Request Required Shares (as defined in subsection (v) below) or qualifying as an Eligible Stockholder (as defined in subsection (v) below); and
(B)a stockholder (including any Constituent Holder) shall be deemed to “own” only those outstanding shares of voting stock as to which the stockholder (or such Constituent Holder) itself possesses both (a) the full voting and investment rights pertaining to the shares and (b) the full economic interest in (including the opportunity for profit and risk of loss on) such shares. The number of shares calculated in accordance with the foregoing clauses (a) and (b) shall be deemed not to include (and to the extent any of the following arrangements have been entered into by affiliates of the stockholder (or of any Constituent Holder), shall be reduced by) any shares (x) sold by such stockholder or Constituent Holder (or any of either’s affiliates) in any transaction that has not been settled or closed, including any short sale, (y) borrowed by such stockholder or Constituent Holder (or any of either’s affiliates) for any purposes or purchased by such stockholder or Constituent Holder (or any of either’s affiliates) pursuant to an agreement to resell, or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such stockholder or Constituent Holder (or any of either’s affiliates), whether any such instrument or agreement is to be settled with shares,
- 5 -


cash or other consideration, in any such case which instrument or agreement has, or is intended to have, or if exercised by either party thereto would have, the purpose or effect of (i) reducing in any manner, to any extent or at any time in the future, such stockholder’s or Constituent Holder’s (or either’s affiliates’) full right to vote or direct the voting of any such shares, and/or (ii) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such stockholder or Constituent Holder (or either’s affiliates). For purposes of this Section 2(d), a stockholder (including any Constituent Holder) shall “own” shares held in the name of a nominee or other intermediary so long as the stockholder itself (or such Constituent Holder itself) retains the right to instruct how the shares are voted with respect to the election of directors and the right to direct the disposition thereof and possesses the full economic interest in the shares. For purposes of this Section 2(d), a stockholder’s (including any Constituent Holder’s) ownership of shares shall be deemed to continue during any period in which the stockholder has loaned such shares so long as such stockholder retains the power to recall such shares on no greater than five (5) business days’ notice or has delegated any voting power over such shares by means of a proxy, power of attorney or other instrument or arrangement so long as such delegation is revocable at any time by the stockholder; provided that in the case of loaned shares, such shares are recalled either (i) no later than the final date when a Proxy Access Notice pursuant to this Section 2(d) may be timely delivered to the Secretary or (ii) upon the request of the Corporation following the Corporation’s indication to the Eligible Stockholder that its nominee(s) will be included in the Corporation’s proxy statement subject to the terms herein; provided that, in either such case where the shares are recalled in accordance with the foregoing, such shares remain recalled (and otherwise “owned” as defined herein) through the annual meeting of the stockholders. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings.
(ii)For purposes of this Section 2, the “Required Information” that the Corporation will include in its proxy statement is: (i) the information concerning the Stockholder Nominee and the Eligible Stockholder that the Corporation determines is required to be disclosed in the Corporation’s proxy statement by the regulations promulgated under Regulation 14A under the Exchange Act; and (ii) if the Eligible Stockholder so elects, a Statement (as defined in Section 2(d)(vii) below). The Corporation shall also include the name of the Stockholder Nominee in its proxy card. For the avoidance of doubt, and any other provision of these By-Laws notwithstanding, the Corporation may in its sole discretion solicit against, and include in the proxy statement (and other proxy materials) its own statements or other information relating to, any Eligible Stockholder and/or Stockholder Nominee, including any information provided to the Corporation with respect to the foregoing.
(iii)To be timely, a stockholder’s Proxy Access Notice must be delivered to the Secretary at the principal executive offices of the Corporation not less than one hundred twenty (120) calendar days in advance of the first anniversary of the date the Corporation’s proxy statement was released to stockholders for the preceding year’s annual meeting of the stockholders. In no event shall the public announcement of an adjournment or postponement of a stockholders’ meeting (or such adjournment or postponement) commence a new time period for the giving of a Proxy Access Notice.
- 6 -


(iv)The number of Stockholder Nominees (including Stockholder Nominees that were submitted by an Eligible Stockholder for inclusion in the Corporation’s proxy materials pursuant to this Section 2(d) but either are subsequently withdrawn or that the board of directors decides to nominate as board of directors’ nominees) appearing in the Corporation’s proxy materials with respect to an annual meeting of the stockholders shall not exceed the greater of (x) two (2) and (y) the largest whole number that does not exceed twenty percent (20%) of the number of directors in office as of the last day on which a Proxy Access Notice may be delivered in accordance with the procedures set forth in this Section 2(d) (such greater number, the “Permitted Number”); provided, however, that the Permitted Number available for proxy access candidates shall be reduced by:
(A)the number of such director candidates for which the Corporation shall have received one or more valid stockholder notices nominating director candidates pursuant to Article III, Section 12 of these By-Laws;
(B)the number of directors in office or director candidates that in either case will be included in the Corporation’s proxy materials with respect to such annual meeting of the stockholders as an unopposed (by the Corporation) nominee pursuant to an agreement, arrangement or other understanding with a stockholder or group of stockholders (other than any such agreement, arrangement or understanding entered into in connection with an acquisition of voting stock, by such stockholder or group of stockholders, from the Corporation), other than any such director referred to in this clause (B) who at the time of such annual meeting of the stockholders will have served as a director continuously, as a nominee of the Board, for at least two (2) terms; and
(C)the number of directors in office that will be included in the Corporation’s proxy materials with respect to such annual meeting of the stockholders for whom access to the Corporation’s proxy materials was previously provided pursuant to this Section 2(d), other than any such director referred to in this clause (C) who at the time of such annual meeting of the stockholders will have served as a director continuously, as a nominee of the Board, for at least two (2) terms;
provided, further, that in no circumstance shall the Permitted Number exceed the number of directors to be elected at the applicable annual meeting of the stockholders as noticed by the Corporation and in the event the Board resolves to reduce the size of the Board effective on or prior to the date of the annual meeting of the stockholders, the Permitted Number shall be calculated based on the number of directors in office as so reduced. An Eligible Stockholder submitting more than one Stockholder Nominee for inclusion in the Corporation’s proxy statement pursuant to this Section 2(d) shall rank such Stockholder Nominees based on the order that the Eligible Stockholder desires such Stockholder Nominees to be selected for inclusion in the Corporation’s proxy statement and include such specified rank in its Proxy Access Notice. If the number of Stockholder Nominees pursuant to this Section 2(d) for an annual meeting of the stockholders exceeds the Permitted Number, then the highest ranking qualifying Stockholder Nominee from each Eligible Stockholder will be selected by the Corporation for inclusion in the proxy statement until the Permitted Number is reached, going in order of the amount (largest to smallest) of the ownership position as disclosed in each Eligible Stockholder’s Proxy Access Notice. If the Permitted Number is not reached after the highest ranking
- 7 -


Stockholder Nominee from each Eligible Stockholder has been selected, this selection process will continue as many times as necessary, following the same order each time, until the Permitted Number is reached.

(v)An “Eligible Stockholder” is one or more stockholders of record who own and have owned, or are acting on behalf of one or more beneficial owners who own and have owned (in each case as defined above), in each case continuously for at least three (3) years as of both the date that the Proxy Access Notice is received by the Corporation pursuant to this Section 2(d), and as of the record date for determining stockholders eligible to vote at the annual meeting of the stockholders, at least three percent (3%) of the aggregate voting power of the voting stock (the “Proxy Access Request Required Shares”), and who continue to own the Proxy Access Request Required Shares at all times between the date such Proxy Access Notice is received by the Corporation and the date of the applicable annual meeting of the stockholders; provided that the aggregate number of stockholders, and, if and to the extent that a stockholder is acting on behalf of one or more beneficial owners, of such beneficial owners, whose stock ownership is counted for the purpose of satisfying the foregoing ownership requirement shall not exceed twenty (20). Two or more collective investment funds that are part of the same family of funds by virtue of being under common management and investment control, under common management and sponsored primarily by the same employer or a “group of investment companies” (as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended) (a “Qualifying Fund”) shall be treated as one stockholder for the purpose of determining the aggregate number of stockholders in this Section 2(d); provided that each fund included within a Qualifying Fund otherwise meets the requirements set forth in this Section 2(d). No shares may be attributed to more than one group constituting an Eligible Stockholder under this Section 2(d)(v) (and, for the avoidance of doubt, no stockholder may be a member of more than one group constituting an Eligible Stockholder). A record holder acting on behalf of one or more beneficial owners will not be counted separately as a stockholder with respect to the shares owned by beneficial owners on whose behalf such record holder has been directed in writing to act, but each such beneficial owner will be counted separately, subject to the other provisions of this Section 2(d)(v), for purposes of determining the number of stockholders whose holdings may be considered as part of an Eligible Stockholder’s holdings. For the avoidance of doubt, Proxy Access Request Required Shares will qualify as such if, and only if, the beneficial owner of such shares as of the date of the Proxy Access Notice has itself individually beneficially owned such shares continuously for the three-year (3-year) period ending on that date and through the other applicable dates referred to above (in addition to the other applicable requirements being met).
(vi)No later than the final date when a Proxy Access Notice pursuant to this Section 2(d) may be timely delivered to the Secretary, an Eligible Stockholder (including each Constituent Holder) must provide the following information in writing to the Secretary:
(A)with respect to each Constituent Holder, the name and address of, and number of shares of voting stock owned by, such person;
(B)one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite
- 8 -


three-year (3-year) holding period) verifying that, as of a date within seven (7) days prior to the date the Proxy Access Notice is delivered to the Corporation, such person owns, and has owned continuously for the preceding three (3) years, the Proxy Access Request Required Shares, and such person’s agreement to provide:
(1)within ten (10) days after the record date for the annual meeting of the stockholders, written statements from the record holder and intermediaries verifying such person’s continuous ownership of the Proxy Access Request Required Shares through the record date, together with any additional information reasonably requested to verify such person’s ownership of the Proxy Access Request Required Shares; and
(2)immediate notice if the Eligible Stockholder ceases to own any of the Proxy Access Request Required Shares prior to the date of the applicable annual meeting of the stockholders;
(C)the information contemplated by Article III, Section 12 of these By-Laws (with references to a “stockholder” therein to include such Eligible Stockholder (including each Constituent Holder));
(D)a representation that such person:
(1)acquired the Proxy Access Request Required Shares in the ordinary course of business and not with the intent to change or influence control of the Corporation, and does not have any such intent;
(2)has not nominated and will not nominate for election to the Board at the annual meeting of the stockholders any person other than the Stockholder Nominee(s) being nominated pursuant to this Section 2(d);
(3)has not engaged and will not engage in, and has not been and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the annual meeting of the stockholders other than its Stockholder Nominee(s) or a nominee of the Board;
(4)will not distribute to any stockholder any form of proxy for the annual meeting of the stockholders other than the form distributed by the Corporation; and
(5)will provide facts, statements and other information in all communications with the Corporation and its stockholders that are and will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and will otherwise comply with all applicable laws, rules and regulations in connection with any actions taken pursuant to this Section 2(d);
(E)in the case of a nomination by a group of stockholders that together is such an Eligible Stockholder, the designation by all group members of one group member
- 9 -


that is authorized to act on behalf of all members of the nominating stockholder group with respect to the nomination and matters related thereto, including withdrawal of the nomination; and
(F)an undertaking that such person agrees to:
(1)assume all liability stemming from, and indemnify and hold harmless the Corporation and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of any legal or regulatory violation arising out of the Eligible Stockholder’s communications with the stockholders of the Corporation or out of the information that the Eligible Stockholder (including such person) provided to the Corporation;
(2)promptly provide to the Corporation such other information as the Corporation may reasonably request; and
(3)file with the Securities and Exchange Commission any solicitation by the Eligible Stockholder of stockholders of the Corporation relating to the annual meeting of the stockholders at which the Stockholder Nominee will be nominated.
In addition, no later than the final date when a nomination pursuant to this Section 2(d) may be delivered to the Corporation, a Qualifying Fund whose share ownership is counted for purposes of qualifying as an Eligible Stockholder must provide to the Secretary documentation reasonably satisfactory to the Board that demonstrates that the funds included within the Qualifying Fund satisfy the definition thereof. In order to be considered timely, any information required by this Section 2(d) to be provided to the Corporation must be supplemented (by delivery to the Secretary): (1) no later than ten (10) days following the record date for the applicable annual meeting of the stockholders or any adjournment or postponement thereof, to disclose the foregoing information as of such record date; and (2) no later than eight (8) days before the annual meeting of the stockholders or any adjournment or postponement thereof, to disclose the foregoing information as of the date that is no earlier than ten (10) days prior to such annual meeting of the stockholders. For the avoidance of doubt, the requirement to update and supplement such information shall not permit any Eligible Stockholder or other person to change or add any proposed Stockholder Nominee or be deemed to cure any defects or limit the remedies (including, without limitation, under these By-Laws) available to the Corporation relating to any defect. The obligation to update and supplement as set forth in this paragraph or any other Section of these By-Laws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder or extend any applicable deadlines hereunder or under any other provision of these By-Laws.

(vii)The Eligible Stockholder may provide to the Secretary, at the time the information required by this Section 2(d) is originally provided, a written statement for inclusion in the Corporation’s proxy statement for the annual meeting of the stockholders, not to exceed five hundred (500) words, in support of the candidacy of such Eligible Stockholder’s
- 10 -


Stockholder Nominee (the “Statement”). Notwithstanding anything to the contrary contained in this Section 2(d), the Corporation may omit from its proxy materials any information or Statement that it, in good faith, believes is materially false or misleading, omits to state any material fact, directly or indirectly without factual foundation impugns the character, integrity or personal reputation of or makes charges concerning improper, illegal or immoral conduct or associations with respect to any person or would violate any applicable law or regulation.
(viii)No later than the final date when a nomination pursuant to this Section 2(d) may be delivered to the Corporation, each Stockholder Nominee must:
(A)provide the completed and signed questionnaire, representation and agreement required by Article III, Section 12 of these By-Laws;
(B)provide an executed agreement, in a form deemed satisfactory by the board of directors or its designee (which form shall be provided by the Corporation reasonably promptly upon written request of a stockholder), that such Stockholder Nominee consents to being named in the Corporation’s proxy statement and form of proxy card (and will not agree to be named in any other person’s proxy statement or form of proxy card with respect to the Corporation) as a nominee and intends to serve as a director of the Corporation for the entire term if elected;
(C)complete, sign and submit all questionnaires, representations and agreements required by these By-Laws or of the Corporation’s directors generally; and
(D)provide such additional information as necessary to permit the Board to determine: (a) if any of the matters referred to in Section 2(d)(x) below apply; (b) if such Stockholder Nominee has any direct or indirect relationship with the Corporation other than those relationships that have been deemed categorically immaterial pursuant to any publicly disclosed corporate governance guideline or committee charter of the Corporation; or (c) if such Stockholder Nominee is or has been subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933, as amended (the “Securities Act”) or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of such Stockholder Nominee.
In the event that any information or communications provided by the Eligible Stockholder (or any Constituent Holder) or the Stockholder Nominee to the Corporation or its stockholders ceases to be true and correct in all material respects or omits a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, each Eligible Stockholder or Stockholder Nominee, as the case may be, shall promptly notify the Secretary of any defect in such previously provided information and of the information that is required to correct any such defect; it being understood for the avoidance of doubt that providing any such notification shall not be deemed to cure any such defect or limit the remedies (including, without limitation, under these By-Laws) available to the Corporation relating to any such defect.

- 11 -


(ix)Any Stockholder Nominee who is included in the Corporation’s proxy materials for a particular annual meeting of the stockholders but either (1) withdraws from or becomes ineligible or unavailable for election at that annual meeting of the stockholders or (2) does not receive votes cast in favor of the Stockholder Nominee’s election of at least twenty (20) percent of the shares represented in person or by proxy at the annual meeting of the stockholders will be ineligible to be a Stockholder Nominee pursuant to this Section 2(d) for the next two (2) annual meetings of the stockholders. Any Stockholder Nominee who is included in the Corporation’s proxy statement for a particular annual meeting of the stockholders, but subsequently is determined not to satisfy the eligibility requirements of this Section 2(d) or any other provision of these By-Laws, the Certificate of Incorporation or any applicable regulation any time before the annual meeting of the stockholders, will not be eligible for election at the relevant annual meeting of the stockholders.
(x)The Corporation shall not be required to include, pursuant to this Section 2(d), a Stockholder Nominee in its proxy materials for any annual meeting of the stockholders, or, if the proxy statement already has been filed, to allow the nomination of (or vote with respect to) a Stockholder Nominee (and may declare such nomination ineligible), notwithstanding that proxies in respect of such vote may have been received by the Corporation:
(A)who is not independent under the listing standards of the principal U.S. exchange upon which the common stock of the Corporation is listed, any applicable rules of the Securities and Exchange Commission and any publicly disclosed standards or policies used or adopted by the Board in determining and disclosing independence of the Corporation’s directors;
(B)whose service as a member of the Board would violate or cause the Corporation to be in violation of these By-Laws, the Certificate of Incorporation, the rules and listing standards of the principal U.S. exchange upon which the common stock of the Corporation is traded, or any applicable law, rule or regulation;
(C)who is or has been, within the past three (3) years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, as amended, or who is a subject of a pending criminal proceeding, has been convicted in a criminal proceeding within the past ten (10) years or is subject to an order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act;
(D)if the Eligible Stockholder (or any Constituent Holder) or applicable Stockholder Nominee otherwise breaches or fails to comply in any material respect with its obligations pursuant to this Section 2(d) or any agreement, representation or undertaking required by this Section 2(d) or Article III, Section 12 of these By-Laws; or
(E)if the Eligible Stockholder ceases to be an Eligible Stockholder for any reason, including, but not limited to, not owning the Proxy Access Request Required Shares through the date of the applicable annual meeting of the stockholders.
Clauses (A), (B), and (C) and, to the extent related to a breach or failure by the Stockholder Nominee, clause (D), will result in the exclusion from the proxy materials pursuant to this
- 12 -


Section 2(d) of the specific Stockholder Nominee to whom the ineligibility applies, or, if the proxy statement already has been filed, the ineligibility of such Stockholder Nominee to be nominated; provided, however, that clause (E) and, to the extent related to a breach or failure by an Eligible Stockholder (or any Constituent Holder), clause (D) will result in the voting stock owned by such Eligible Stockholder (or Constituent Holder) being excluded from the Proxy Access Request Required Shares (and, if as a result the Proxy Access Notice shall no longer have been filed by an Eligible Stockholder, the exclusion from the proxy materials pursuant to this Section 2(d) of all of the applicable stockholder’s Stockholder Nominees from the applicable annual meeting of the stockholders or, if the proxy statement has already been filed, the ineligibility of all of such stockholder’s Stockholder Nominees to be nominated).

(e)Except as otherwise provided by law, at any time following the Corporation’s receipt of a proposal, the Chairman (or other presiding officer at an annual meeting of the stockholders) shall have the power to determine whether any matter proposed to be brought before the annual meeting of the stockholders was proposed in accordance with the notice procedures set forth in this Section 2 and if any proposal is not in compliance with this Section 2, the Chairman (or such other presiding officer) may exclude such proposal from the annual meeting of the stockholders.

(f)Notwithstanding the foregoing provisions of this Section 2, a stockholder who seeks to have any proposal included in the Corporation’s proxy materials shall comply with the requirements of Rule l4a-8 of Regulation 14A under the Exchange Act.

(g)In the event a proposal is presented for action at such annual meeting of the stockholders which, in the opinion of the ranking executive officer of the Corporation attending such meeting, requires the giving of prior notice of such business to stockholders, no action shall be taken on such proposal at such meeting unless and until proof of timely and adequate notice of such proposal shall have been filed with and accepted by the ranking executive officer of the Corporation attending such meeting.

Section 3.    Special Meetings. Special meetings of the stockholders may be called by the Chief Executive Officer, and shall be called by the Chairman, the Chief Executive Officer, the President, a Vice President, the Secretary or an Assistant Secretary, at the request in writing of a majority of the Board, or of a majority of the Executive Committee, or of stockholders owning a majority of the outstanding shares having voting power. Such request shall state the purpose or purposes of the proposed meeting. At any special meeting of the stockholders, only such nominations or business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting.

Section 4.    Notice.     Notice of all stockholders’ meetings stating the time and place, and, in the case of special meetings, the purpose or purposes for which the meeting is called, shall be delivered to each stockholder entitled to vote at such meeting not less than 30 nor more than 60 days before the meeting of stockholders is to be held, unless the stockholder’s meeting is called by the Chairman, the Chief Executive Officer, the President, a Vice President, the Secretary or an Assistant Secretary of the Corporation, at the request in writing of a majority of the Board, in which case such notice shall be delivered not less than 10 nor more than 60 days before the meeting of stockholders is to be held. If mailed, notice shall be directed to the stockholder at his last known post office address as the same appears on the stock records of the Corporation.

- 13 -


Section 5.    Proxies. At any meeting of the stockholders, each stockholder entitled to vote may vote either in person or by proxy, but no proxy shall be voted on after three years from its date, unless such proxy shall, on its face, name a longer period for which it is to remain in force. Each proxy either (a) shall be authorized in writing, subscribed by the stockholder or his duly authorized attorney, but need not be sealed, witnessed or acknowledged, and shall be filed with the Secretary at or before the meeting, or (b) shall be authorized by means of an electronic transmission as permitted by law and shall be filed in accordance with the procedure established for the meeting.

Section 6.    Quorum. At any annual or special meeting of stockholders a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall constitute a quorum, except as otherwise provided by law, but if at any meeting of the stockholders there be less than a quorum present, the stockholders present at such meeting may, without further notice, adjourn the same from time to time until a quorum shall attend, but no business shall be transacted at any such adjourned meeting except such as might have been lawfully transacted had the meeting not been adjourned.

Section 7.    Voting. Except as otherwise expressly required by statute, the Certificate of Incorporation or these By-Laws, each stockholder shall at each meeting of the stockholders be entitled to one vote in person or by proxy for each share of stock of the Corporation entitled to be voted thereat held by him and registered in his name on the books of the Corporation

(a)on such date as may be fixed pursuant to Article VIII of these By-Laws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting; or

(b)in the event that no record date shall have been so fixed, on the date of such meeting; provided, however, that, except where a record date shall have been so fixed, no share of stock of the Corporation shall be voted at any election of directors which shall have been transferred on the books of the Corporation within 20 days prior to such election of directors.

The vote for directors and, upon the demand of any stockholder, the vote upon any question before the meeting shall be by ballot. Except as otherwise provided by law or the Certificate of Incorporation or these By-Laws, and except for the election of directors (which shall be governed by Article III, Section 7 of these By-Laws), each question properly presented to any meeting of stockholders shall be decided by a majority of the votes cast on the question entitled to vote thereon. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at any meeting of stockholders shall be announced at the meeting by the Chairman (or other presiding officer of the Corporation).

Section 8.    List of Stockholders. A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the residence of each, and the number of voting shares held by each, shall be prepared and filed in the office where the election is to be held at least 10 days before every election, and shall at all times during the usual hours for business during the said 10 days and during the whole time of said election be open to the examination of any stockholder.

Section 9.    Judges of Election. Whenever a vote at a meeting of stockholders shall be by ballot, the polls shall be opened and closed, the proxies and ballots shall be received, and all questions pertaining to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by one or more Judges of Election. Such Judge(s) of Election shall be appointed
- 14 -


by the Board before or at the meeting, or in default thereof, by the officer presiding at the meeting, and shall be sworn to the faithful performance of their duties. If any Judge of Election previously appointed shall fail to attend or refuse or be unable to serve, a substitute shall be appointed by the presiding officer.

Section 10.    Consent Notice. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board, and which date shall not be more than 10 days after the date on which the resolution fixing the record date is adopted by the Board. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary of the Corporation, request the Board to fix a record date. Such notice shall include the items required to be included in a stockholder notice delivered pursuant to the Article II, Section 2(c) or Article III, Section 12, as applicable (including, in the case of a proposed action by written consent to elect directors, the written questionnaire and representation and agreement required pursuant to Article III, Section 12). The Board shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the Corporation having custody of the book in which proceedings for stockholder meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board and prior action by the Board is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board adopts a resolution taking such prior action.

ARTICLE III
DIRECTORS
Section 1.    Powers. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, the property, business and affairs of the Corporation shall be managed by the Board.

Section 2.    Number and Tenure. The Board shall consist of no less than 3 nor more than 14 members as the Board may determine from time to time by Resolution of the Board. Directors shall hold office until the next annual election and until their successors shall be duly elected and qualified. The Board shall keep full and fair records and accounts of its proceedings and transactions. Directors need not be stockholders.

Section 3.    Regular Meetings. The Board shall meet for the election of officers and for the transaction of any other business as soon as practicable after the annual meeting of stockholders. Other regular meetings of the Board may be held at such times and places as the Board may from time to time determine. No notice of any such annual or regular meeting of the Board need be given.

Section 4.    Special Meetings. Special meetings of the Board shall be called by the Secretary or any Assistant Secretary at the request of the Chairman, the Chief Executive Officer, the President or of any two directors. Notice of the time and place of any special meeting of the Board shall be mailed,
- 15 -


postage prepaid, to each director at least 48 hours before the time at which the meeting is to be held, or shall be sent by confirmed facsimile transmission or other form of electronic communication, or be delivered personally or by telephone, at least 24 hours before the time at which such meeting is to be held. Notice of any special meeting need not be given to any director who shall waive notice thereof. Any meeting of the Board shall be a legal meeting without notice thereof having been given, if all the directors of the Corporation then holding office shall be present thereat.

Section 5.    Place of Meetings. Meetings of the Board may be held at such places in or out of the State of Delaware as may be fixed by the Board or designated in the notice of the meeting, except that the annual meeting of the Board, if held without notice, shall be held at the principal executive office of the Corporation.

Section 6.    Quorum. A majority of the Board, but not less than two directors, shall constitute a quorum for the transaction of business, but if, at any meeting of the Board, there be less than a quorum present, a majority of the directors present may, without further notice, adjourn the same from time to time until a quorum shall attend. A majority of such quorum shall decide any questions that may come before the meeting.

Section 7.    Required Vote for Directors. (a) Each director to be elected by stockholders shall be elected as such by the vote of the majority of the votes cast by stockholders at a meeting for the election of directors at which a quorum is present, except that if the number of nominees exceeds the number of directors to be elected, the directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at any such meeting. For purposes of this Article III, Section 7 a majority of votes cast shall mean that the number of shares voted “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. “Votes cast” includes votes “for” that director’s election plus votes to withhold authority with respect to that director’s election and excludes abstentions and broker non-votes with respect to that director’s election.

(b) If a nominee for director who is an incumbent director is not reelected and no successor has been elected at such meeting, the director must promptly tender his or her resignation to the Chairman of the Board or the Secretary following the certification of the stockholder vote. The Nominating and Governance Committee shall consider the tendered resignation and recommend to the Board of Directors whether to accept or reject it. The Board of Directors shall act on the tendered resignation, taking into account the Nominating and Governance Committee’s recommendation, within 90 days following the certification of the stockholder vote. The Nominating and Governance Committee in making its recommendation, and the Board in making its decision, may consider any factors or other information that it considers appropriate and relevant. The director who failed to be elected as such by the vote of the majority of the votes cast by stockholders at a meeting for the election of directors at which a quorum is present shall not vote with respect to the recommendation of the Nominating and Governance Committee or the decision of the Board with respect to whether or not to accept his or her resignation.

Section 8.    Resignations. A director may resign at any time from the Board. A resignation from the Board must be delivered in writing to the Secretary and shall be deemed to take effect only upon its receipt by the Secretary of the Corporation unless otherwise specified therein.

Section 9.    Vacancies. Vacancies in the Board created on account of death, resignation, removal, disqualification or other causes, or resulting from an increase in the authorized number of directors, shall be filled by a majority of the directors then in office, although less than a quorum, and the
- 16 -


directors so chosen shall hold office until the next annual election and until their successors shall be duly elected and qualified or until their earlier death, resignation or removal; provided, however, that if the remaining directors shall constitute less than a majority of the whole Board, the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of shares of the capital stock of the Corporation at the time outstanding having the right to vote for directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by Section 211 of the General Corporation Law of the State of Delaware (the “DGCL”).

Section 10.    Removal. At any meeting of the stockholders called for the purpose any director may, by vote of stockholders entitled to cast a majority of the votes then entitled to vote in the election of directors, be removed from office with or without cause.

Section 11.    Compensation. Directors shall receive such compensation for their services as shall be fixed from time to time by resolution of the Board. Nothing in this Section shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefore.

Section 12.    Nominees for Director. Nominations by stockholders of persons to be elected to the Board shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice for a director nomination (other than with respect to a Proxy Access Notice, which nomination must comply with Article II, Section 2(d) of these By-Laws) must be delivered to, or mailed and received at, the principal executive offices of the Corporation (a) with respect to an election to be held at the annual meeting of the stockholders of the Corporation, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of the stockholders of the Corporation; provided, however, if no annual meeting of the stockholders was held in the previous year, or if the date of the applicable annual meeting of the stockholders has been changed by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, a stockholder’s notice for a director nomination (other than with respect to a Proxy Access Notice) must be received by the Secretary not less than 90 days nor more than 120 days prior to such annual meeting of the stockholders date or, if the public disclosure of such annual meeting of the stockholders is less than 100 days prior to the date of such annual meeting of the stockholders, a stockholder’s notice for a director nomination (other than with respect to a Proxy Access Notice) must be received by the Secretary no later than the seventh day following the day on which the public disclosure of the date of such meeting was made and (b) with respect to an election to be held at a special meeting of stockholders of the Corporation for the election of directors, not later than the close of business on the seventh day following the date on which notice of the date of the special meeting was mailed to stockholders of the Corporation or public disclosure of the date of the special meeting was made, whichever first occurs. In no event shall any adjournment or postponement of an annual meeting of the stockholders, or the public announcement thereof, commence a new time period for the giving of a stockholder’s notice for a director nomination as described above. A stockholder’s notice for a director nomination (including with respect to a Proxy Access Notice) to the Secretary of the Corporation shall set forth:

(i)as to each person whom the stockholder proposes to nominate for election or re- election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serve as a director if elected), and
- 17 -



(ii)as to the stockholder giving the notice and, where referred to in subsections (i)-(xiv) of Article II, Section 2(c) or noted below, each Stockholder Associated Person:

(A)the information that would have been required by subsections (i)-(xiv) of Article II, Section 2(c) if Article II, Section 2(c) were applicable to nominations of persons for election to the Board;

(B)a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and Stockholder Associated Person, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K if the stockholder making the nomination and any Stockholder Associated Person were the “registrant” for purposes of such rule, and the nominee were a director or executive officer of such registrant;

(C)any other information relating to such stockholder and any Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election (even if a contested election is not involved) pursuant to Regulation 14A of the Exchange Act;

(D)a representation that the stockholder is a holder of record of capital stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination; and

(E)a representation as to whether the stockholder or any Stockholder Associated Person intends, or is part of a group that intends, to (1) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the outstanding capital stock of the Corporation required to elect the nominee or (2) otherwise solicit proxies or votes from stockholders in support of such nomination.

To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under this Section 12) to the Secretary at the principal executive offices of the Corporation a written questionnaire (in the form provided by the Secretary upon written request) with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (x) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation, (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law or (iii) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity other than the Corporation
- 18 -


with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (y) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation. The Corporation may also require any proposed nominee to furnish such other information as may reasonably be required by the Corporation (i) to determine the eligibility of such proposed nominee to serve as a director of the Corporation, including with respect to qualifications established by any committee of the Board, (ii) to determine whether such nominee qualifies as an “independent director” or “audit committee financial expert” under applicable law, securities exchange rule or regulation, or any publicly-disclosed corporate governance guideline or committee charter of the Corporation, and (iii) that could be material to a reasonable stockholder’s understanding of the independence and qualifications of such nominee.

In the event that a person is validly designated as a nominee to be elected to the Board in accordance with the procedures set forth in this Section 12 and thereafter becomes unable or unwilling to stand for election to the Board, the stockholder who proposed such nominee may designate a substitute nominee, if such substitute nominee is designated within and in accordance with the time limitations set forth in this Section 12 (or, as applicable with respect to a Proxy Access Notice, Article II, Section 2(d) of these By-Laws), upon providing the information specified in clause (a) above with respect to such substitute nominee (and, as applicable with respect to a Proxy Access Notice, Article II, Section 2(d) of these By-Laws). Except as otherwise provided by law, at any time following the Corporation’s receipt of a nomination for director of the Corporation by a stockholder, the Chairman (or other presiding officer at an annual meeting of the stockholders) shall have the power to determine whether the proposed nomination was made in accordance with the notice procedures set forth in this Section 12 (and, as applicable with respect to a Proxy Access Notice, Article II, Section 2(d) of these By-Laws), and if any nomination is not in compliance with this Section 12 (and, as applicable with respect to a Proxy Access Notice, Article II, Section 2(d) of these By-Laws), the Chairman (or such other presiding officer) may refuse to acknowledge the nomination of any such person at the annual meeting of the stockholders. Notwithstanding the foregoing provisions of this Section 12, a stockholder shall also comply with all applicable requirements of the Exchange Act, with respect to the matters set forth in this Section 12.

In addition to the foregoing, in order to be considered timely, any information required by this Section 12 to be provided to the Corporation must be supplemented (by delivery to the Secretary): (1) no later than ten (10) days following the record date for the applicable annual meeting of the stockholders or any adjournment or postponement thereof, to disclose the foregoing information as of such record date; and (2) no later than eight (8) days before the annual meeting of the stockholders or any adjournment or postponement thereof, to disclose the foregoing information as of the date that is no earlier than ten (10) days prior to such annual meeting of the stockholders. For the avoidance of doubt, the requirement to update and supplement such information shall not permit any stockholder or other person to amend or update any proposal or to submit any new proposal, including by changing or adding nominees or resolutions proposed or be deemed to cure any defects or limit the remedies (including, without limitation, under these By-Laws) available to the Corporation relating to any defect. The obligation to update and supplement as set forth in this paragraph or any other Section of these By-Laws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder or extend any applicable deadlines hereunder or under any other provision of these By-Laws.

- 19 -


Only persons who are nominated in accordance with the procedures set forth in this Section 12 (and, as applicable with respect to a Proxy Access Notice, Article II, Section 2(d) of these By-Laws) shall be eligible for election as directors. Subject to Rule 14a-8 under the Exchange Act and Article II, Section 2(d) of these By-Laws, nothing in these By-Laws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of a director or directors or any other business proposal, statement or communication.

Section 13.    Board Action By Written Consent In Lieu of Meeting. Action required or permitted by applicable law, the Certificate of Incorporation or these By-Laws to be taken at a meeting of the Board may be taken without a meeting if the action is taken by all members of the Board. The action shall be evidenced by one or more written consents describing the action taken, signed, either manually, in facsimile or electronically, by each director, and included in the minutes or filed with the corporate records reflecting the action taken. Action taken under this Section 13 is effective when the last director signs the consent, unless the consent specifies a different effective date.

Section 14.    Chairman; Vice Chairman. The Board may designate from among its members a Chairman, which person may be an Executive Chairman (as described in Article V, Section 2 of these By-Laws), and may also designate a Vice Chairman. The Chairman shall preside at all meetings of stockholders and of the Board, and shall advise and counsel the officers of the Corporation and shall have and perform such duties as usually devolve upon his role and such other duties as are prescribed by these By-Laws and by the Board. The Vice Chairman shall, in the absence of the Chairman, preside at all meetings of stockholders and of the Board, and exercise and discharge the responsibilities and duties of the Chairman. He or she shall have and perform such other duties as may be prescribed or assigned by the Board or the Chairman.

ARTICLE IV
COMMITTEES
Section 1.    Committees. The Board, by resolution passed by a majority of the Board, may designate one or more committees. Each such committee will consist of one or more directors and will have such lawfully delegable powers and duties as the Board may confer, except (1) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval or (2) adopting, amending or repealing any provision in these By- Laws or (3) such powers or duties the exercise of which, pursuant to the Certificate of Incorporation or these By-Laws, requires action by a majority of the Board. Any such committee designated by the Board will have such name as may be determined from time to time by resolution adopted by the Board.

Section 2.    Appointments of Committee Members. The members of each committee of the Board will serve in such capacity at the pleasure of the Board or as may be specified in any resolution from time to time adopted by the Board.

Section 3.    Quorum. Unless otherwise prescribed by the Board, a majority of the members of any committee of the Board will constitute a quorum for the transaction of business, and the act of a majority of the members present at a meeting at which there is a quorum will be the act of such committee.

- 20 -


Section 4.    Committee Meetings. Regular meetings of any committee may be held at such times and places as such committee may from time to time determine. No notice of any such regular meeting need be given. Special meetings of a committee shall be called by the Secretary or any Assistant Secretary at the request of the Chairman, the Chief Executive Officer, the chairman of the committee or of any two members of the committee. Notice of the time and place of any special meeting of a committee shall be mailed, postage prepaid, to each director at least 48 hours before the time at which the meeting is to be held, or shall be sent by confirmed facsimile transmission or other form of electronic communication, or be delivered personally or by telephone, at least 24 hours before the time at which such meeting is to be held. Notice of any special meeting need not be given to any committee member who shall waive notice thereof. Any meeting of a committee shall be a legal meeting without notice thereof having been given, if all committee members shall be present thereat. Each committee of the Board may prescribe such other rules and its method of procedure, subject to these By-Laws and any rules prescribed by the Board, and will keep a written record of all actions taken by the committee.

Section 5.    Compensation. The Board may establish the compensation for, and reimbursement of the expenses of, directors for membership on the board and on committees of the Board, attendance at meetings of the Board or committees of the Board, and for other services by directors to the Corporation or any of its subsidiaries.

ARTICLE V
OFFICERS
Section 1.    General. The officers of the Corporation may consist of an Executive Chairman, a Chief Executive Officer, a President, a Chief Operating Officer, a Chief Financial Officer, one or more Executive Vice Presidents, Senior Vice Presidents and/or Vice Presidents (some of whom may have particular authority and responsibilities as designated in their titles by the Board), a Secretary, a Controller, a Treasurer and such Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers or other subordinate officers as may from time to time be designated by the Board. One person may hold more than one office, and no officer (other than an Executive Chairman) need be a director. These said officers shall have all the usual powers and shall perform all of the usual duties incident to their respective offices and shall, in addition, perform such other duties as shall be assigned to them from time to time by the Board. In its discretion, the Board may leave unfilled any office, except that there shall always be either a Chief Executive Officer or a President of the Corporation.

Section 2.    Executive Chairman. If the Board designates the Chairman as the Executive Chairman, he or she shall be an officer of the Corporation. The Executive Chairman: (i) shall provide advice and counsel to the Chief Executive Officer, the President and other members of senior management in areas such as corporate and strategic planning and policy, acquisitions, major capital expenditures and other areas requested by the Board; (ii) may sign and execute any document, deed, paper, mortgage, bond, stock certificate, contract or other instrument or obligation in the name and on behalf of the Corporation, except in cases where the execution thereof shall be expressly delegated by the Board or by these By-Laws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and (iii) shall, in general, perform all duties as may be prescribed by these By-Laws or assigned to him or her by the Board from time to time.

Section 3. Chief Executive Officer. Subject to the control of the Board, the Chief Executive Officer shall be responsible for the general management of the business of the Corporation and shall have
- 21 -


supervisory authority over the general policies and business of the Corporation, and may sign and execute any document, deed, paper, mortgage, bond, stock certificate, contract or other instrument or obligation in the name and on behalf of the Corporation, except in cases where the execution thereof shall be expressly delegated by the Board or by these By-Laws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed, and shall exercise such other powers as the Board may from time to time direct. In the event that the positions of Chairman and Vice Chairman are unfilled, the Chief Executive Officer shall in addition have the authority and responsibilities of the Chairman.

Section 4.    President. The President shall, subject to the powers of supervision and control conferred upon the Chief Executive Officer, have all necessary powers to discharge such responsibility including the powers to sign and execute any document, deed, paper, mortgage, bond, stock certificate, contract or other instrument or obligation in the name and on behalf of the Corporation, except in cases where the execution thereof shall be expressly delegated by the Board or by these By-Laws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed, and such other powers as the Board may from time to time direct. In the event that the office of Chief Executive Officer is unfilled, the President shall in addition have the authority and responsibilities of the Chief Executive Officer as specified in Section 3 of this Article.

Section 5.    Chief Operating Officer. The Chief Operating Officer shall perform such duties as are customary for a chief operating officer to perform, including the powers to sign and execute any document, deed, paper, mortgage, bond, stock certificate, contract or other instrument or obligation in the name and on behalf of the Corporation, except in cases where the execution thereof shall be expressly delegated by the Board or by these By-Laws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed, and shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors, the Chief Executive Officer or the President.

Section 6.    Chief Financial Officer. The Chief Financial Officer shall perform such duties as are customary for a chief financial officer to perform, including the powers to sign and execute any document, deed, paper, mortgage, bond, stock certificate, contract or other instrument or obligation in the name and on behalf of the Corporation, except in cases where the execution thereof shall be expressly delegated by the Board or by these By-Laws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed, and shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors, the Chief Executive Officer or the President.

Section 7.    Executive and Senior Vice Presidents and Vice Presidents. Each Executive Vice President, Senior Vice President and Vice President shall exercise general supervision and have executive control of such departments of the Corporation’s business, or perform such other executive duties as shall from time to time be assigned to him or her by the Board, the Chief Executive Officer or by the President. The Board shall have the power to designate particular areas of authority and responsibility of an Executive Vice President, Senior Vice President or Vice President and to indicate such designation in such officer’s title. In case of the absence or disability of the Chief Executive Officer and the President, each Executive Vice President and Senior Vice President (without regard to whether his or her title specifies particular areas of authority and responsibility) and each Vice President whose title does not designate specific areas of authority and responsibility shall be vested with all the powers of the Chief Executive Officer and the President in respect of the powers to sign and execute any document, deed, paper, mortgage, bond, stock certificate, contract or other instrument or obligation in the name and on behalf of the Corporation, except in cases where the execution thereof shall be expressly delegated by the Board or by these By-Laws to some other officer or agent of the Corporation or shall be required by law to be
- 22 -


otherwise executed. In the case of each Vice President whose title indicates one or more specific areas of authority and responsibility, such Vice President’s authority and responsibilities shall be limited to the area or areas designated in such Vice President’s title as specified by the Board.

Section 8.    Secretary. The Secretary shall keep the minutes of the meetings of the stockholders and of the Board and of the Executive Committee, in books provided for the purpose; he or she shall see that all notices are duly given in accordance with the provisions of these By-Laws, or as required by law; he or she shall be custodian of the records and of the corporate seals of the Corporation; he or she shall see that the corporate seal is affixed to all documents, the execution of which, on behalf of the Corporation, under its seal, is duly authorized, and when so affixed may attest the same; and, in general, he or she shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned by the Board. The Secretary may sign, with the Chief Executive Officer, the President, the Chief Financial Officer or a Vice President, certificates of the stock of the Corporation. The Secretary shall be sworn to the faithful discharge of his duties.

Section 9.    Controller. The Controller shall report directly to the Chief Financial Officer, and shall have charge of the supervision of the accounting system of the Corporation, including the preparation and filing of all reports required by law to be made to any public authorities and officials. He or she shall perform such other duties as are usually associated with his office or as shall be assigned to him by the Board, the President or the Chief Financial Officer.

Section 10.    Treasurer. The Treasurer shall report directly to the Chief Financial Officer, and shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board; he shall render to the Chief Executive Officer, the Chief Financial Officer and to the Board, whenever requested, an account of the financial condition of the Corporation; he or she may sign, with the Chief Executive Officer, the President, the Chief Financial Officer or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as may be assigned by the Board.

Section 11.    Assistant Officers. Each assistant officer shall perform such duties and have such responsibilities as may be delegated to him or her by the superior officer to whom he is made responsible, by designation of the Chief Executive Officer, or as the Board may prescribe. The Board may, from time to time, authorize any executive officer to appoint and remove assistant officers and prescribe the powers and duties thereof.

Section 12.    Officers Holding Two or More Offices. Any person may hold two or more offices except that the person holding the office of Secretary may not also hold the office of Chairman, Vice Chairman, Chief Executive Officer or President and no officer shall execute, acknowledge or verify any instrument in more than one capacity, if such instrument be required by law, by the Certificate of Incorporation, or by these By-Laws, to be executed, acknowledged or verified by any two or more officers.

Section 13.    Voting of Other Stock. Unless specifically directed otherwise by resolution of the Board, each of the Chief Executive Officer and the President shall have full power and authority on behalf of the Corporation to vote the stock of any other corporation owned or held by the Corporation at any meeting of the stockholders of such other corporation, or to execute the written consent of this
- 23 -


Corporation to any action that may be taken by the stockholders of such other corporation without a meeting.

Section 14.    Compensation. The Board shall have power to fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers.

Section 15.    Removal. Any officer of the Corporation may be removed, with or without cause, by the Board at a meeting called for that purpose, or (except in case of an officer elected by the Board) by an officer upon whom such power of removal may have been conferred.

Section 16.    Indemnification. The Corporation shall indemnify any person (including the heirs, executors or administrators of such a person) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in accordance with and to the fullest extent permitted by the DGCL as same may be amended from time to time, including the advancement of expenses incurred by the indemnified person in defending any such threatened, pending or completed action, suit or proceeding. To the extent the present or former spouse(s) of any party indemnified hereunder is made a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding solely by virtue of his or her marital relationship to such indemnified party, such spouse shall be indemnified hereunder to the fullest extent permitted by the DGCL as same may be amended from time to time. Except as the Board of the Corporation in its discretion (but subject to applicable law) may otherwise determine, such indemnification shall be afforded only if such person within 5 business days after his becoming aware of the institution of such action, suit or proceeding, shall have notified in writing by registered or certified mail, the Chief Executive Officer, President or Secretary of the Corporation of the institution of such action, suit or proceeding, and shall have furnished such Chief Executive Officer, President or Secretary with true copies of all papers served upon or otherwise received by such person relating to such action, suit or proceeding, and shall make available to officers or counsel of the Corporation all information necessary to keep the Corporation currently advised as to the status of such action, suit, or proceeding, and permit the Corporation, at its option and expense, at any time during the course of such action, suit or proceeding, through counsel of the Corporation’s choosing, to participate in or direct the defense thereof in good faith, and in case of any proposed settlement of any action, suit or proceeding the defense of which is not directed by the Corporation, to submit the proposed terms and conditions thereof to the Board of the Corporation for their approval, failing which no indemnification hereunder shall be afforded for any such settlement. Such indemnification as hereinabove provided shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any agreement, vote of stockholders or disinterested directors, or otherwise.

ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall end on the thirty-first day of December in each
year, or on such other day as may be fixed from time to time by the Board.

- 24 -


ARTICLE VII
SEAL
The Board shall provide a suitable seal, having inscribed thereon the name of the Corporation; the year of its incorporation and such other appropriate legend as may from time to time be determined by the Board. If deemed advisable by the Board, a duplicate seal or duplicate seals may be provided and kept for the necessary purposes of the Corporation.

ARTICLE VIII
STOCK
Section 1.    Certificates. Certificates of stock shall be issued in such form as may be approved by the Board and shall be signed by the Chief Executive Officer, the President, the Chief Financial Officer or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, and sealed with the seal of the Corporation; provided, however, that where any such certificate is signed by a Transfer Agent and by a Registrar, the signature of any such Chief Executive Officer, President, Chief Financial Officer, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary and the seal of the Corporation upon such certificates may be facsimiles engraved or printed thereon. The shares of the Corporation’s capital stock may be certificated or uncertificated in accordance with the laws of the State of Delaware.

Section 2.    Transfer Agents and Registrars. The Board shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, registration, and transfer of certificates of stock, and may appoint Transfer Agents and Registrars thereof.

Section 3.    Closing of Books. The Board shall have power to close the stock transfer books of the Corporation for a period not exceeding 60 days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board may fix in advance a date, not exceeding 60 days preceding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.

Section 4.    Lost, Mutilated, or Destroyed Certificates. In case any certificate of stock is lost, mutilated or destroyed, the Board may authorize the issue of a new certificate in place thereof upon such terms and conditions, as it may deem advisable.

ARTICLE IX
SIGNATURES
- 25 -


Section 1.    Checks. All checks, drafts, notes or other obligations of the Corporation shall be signed by the Chief Executive Officer, the President, the Chief Financial Officer and/or a Vice President, and/or the Treasurer, Assistant Treasurer, Controller or by any person or persons thereunto authorized by the Board or the Executive Committee.

Section 2.    Endorsements. All endorsements, assignments, transfers, stock powers or other instruments of transfer of securities standing in the name of the Corporation shall be executed for and in the name of the Corporation by the Chief Executive Officer, the President or a Vice President, and the Secretary or an Assistant Secretary, or by any person or persons thereunto authorized by the Board or the Executive Committee.

Section 3.    Proxies. Except as otherwise authorized or directed from time to time by the Board or the Executive Committee, the Chief Executive Officer of the Corporation, or in his absence or disability, the President or an Executive or Senior Vice President of the Corporation, may authorize from time to time the signature and issuance of proxies to vote upon, and/or of consents or waivers in respect of, shares of stock of other corporations standing in the name of the Corporation. All such proxies, consents or waivers shall be signed in the name of the Corporation by the Chief Executive Officer, the President or an Executive or Senior Vice President and the Secretary or an Assistant Secretary.

ARTICLE X
NOTICE OF MEETINGS
Whenever by law or by the Certificate of Incorporation or by these By-Laws notice is required to be given to any stockholder, such notice shall be delivered by first-class mail, postage prepaid, and the time when the same shall be mailed shall be deemed to be the time of the giving of such notice.

ARTICLE XI
AMENDMENTS
These By-Laws may be amended or repealed or new By-Laws may be adopted only by
the affirmative vote of the holders of not less than a majority of the stock issued and outstanding and entitled to vote thereon at any regular or special meeting of the stockholders, if notice of the proposed alteration or amendment be contained in the notice of meeting, or by the affirmative vote of a majority of the Board.
- 26 -

Exhibit 31.1

CERTIFICATION
I, Michael C. Jennings, certify that:

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

November 3, 2021   /s/ Michael C. Jennings
  Michael C. Jennings
  Chief Executive Officer and President





Exhibit 31.2

CERTIFICATION
I, Richard L. Voliva III, certify that:

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: November 3, 2021 /s/ Richard L. Voliva III
  Richard L. Voliva III
  Executive Vice President and Chief Financial Officer 


Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE
OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350


In connection with the accompanying report on Form 10-Q for the quarterly period ended September 30, 2021 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael C. Jennings, Chief Executive Officer of HollyFrontier Corporation (the “Company”) hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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: November 3, 2021 /s/ Michael C. Jennings
  Michael C. Jennings
  Chief Executive Officer and President


Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL
OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350


In connection with the accompanying report on Form 10-Q for the quarterly period ended September 30, 2021 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard L. Voliva III, Chief Financial Officer of HollyFrontier Corporation (the “Company”) hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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: November 3, 2021 /s/ Richard L. Voliva III
  Richard L. Voliva III
  Executive Vice President and Chief Financial Officer