ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-0833098
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2828 N. Harwood, Suite 1300
Dallas, Texas
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75201
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(Address of principal executive offices)
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(Zip code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Item 1.
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Consolidated Statement of Equity
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 6.
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•
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risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored or throughput in our terminals;
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•
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the economic viability of HollyFrontier Corporation, Alon USA, Inc. and our other customers;
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•
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the demand for refined petroleum products in markets we serve;
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•
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our ability to purchase and integrate future acquired operations;
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•
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our ability to complete previously announced or contemplated acquisitions;
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•
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the availability and cost of additional debt and equity financing;
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•
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the possibility of reductions in production or shutdowns at refineries utilizing our pipeline and terminal facilities or containing our processing units;
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•
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the effects of current and future government regulations and policies;
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•
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our operational efficiency in carrying out routine operations and capital construction projects;
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•
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the possibility of terrorist attacks and the consequences of any such attacks;
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•
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general economic conditions; and
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•
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other financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.
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Item 1.
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Financial Statements
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September 30, 2017
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December 31, 2016
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(Unaudited)
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ASSETS
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Current assets:
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||||
Cash and cash equivalents
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$
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7,476
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$
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3,657
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Accounts receivable:
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Trade
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7,330
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7,846
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Affiliates
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42,753
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42,562
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50,083
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50,408
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Prepaid and other current assets
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2,295
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2,888
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Total current assets
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59,854
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56,953
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||||
Properties and equipment, net
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1,307,093
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1,328,395
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Transportation agreements, net
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61,644
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66,856
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Goodwill
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256,498
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256,498
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Equity method investments
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163,873
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165,609
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Other assets
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16,880
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9,926
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Total assets
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$
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1,865,842
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$
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1,884,237
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable:
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Trade
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$
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13,584
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$
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10,518
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Affiliates
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9,559
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16,424
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23,143
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26,942
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||||
Accrued interest
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5,527
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18,069
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Deferred revenue
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14,827
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11,102
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Accrued property taxes
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7,487
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5,397
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Other current liabilities
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3,492
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3,225
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Total current liabilities
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54,476
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64,735
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Long-term debt
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1,245,066
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1,243,912
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Other long-term liabilities
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15,477
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16,445
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Deferred revenue
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46,405
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47,035
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Class B unit
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42,412
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40,319
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Equity:
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Partners’ equity:
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Common unitholders (64,318,955 and 62,780,503 units issued and outstanding
at September 30, 2017 and December 31, 2016, respectively)
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520,709
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510,975
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General partner interest (2% interest)
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(149,994
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)
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(132,832
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)
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Accumulated other comprehensive income
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—
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91
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Total partners’ equity
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370,715
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378,234
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Noncontrolling interest
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91,291
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93,557
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Total equity
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462,006
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471,791
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Total liabilities and equity
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$
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1,865,842
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$
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1,884,237
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2017
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2016
(1)
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2017
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2016
(1)
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Revenues:
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Affiliates
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$
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95,138
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$
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77,398
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$
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277,316
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$
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239,423
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Third parties
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15,226
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15,212
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47,826
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50,094
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110,364
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92,610
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325,142
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289,517
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Operating costs and expenses:
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Operations (exclusive of depreciation and amortization)
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35,998
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32,101
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102,584
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89,168
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Depreciation and amortization
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19,007
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18,920
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57,729
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51,183
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General and administrative
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3,623
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2,664
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8,872
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8,618
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58,628
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53,685
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169,185
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148,969
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Operating income
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51,736
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38,925
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155,957
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140,548
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Other income (expense):
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Equity in earnings of equity method investments
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5,072
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3,767
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10,965
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10,155
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||||
Interest expense
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(14,072
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)
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(14,447
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)
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(41,359
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)
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(36,258
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)
|
||||
Interest income
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101
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108
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306
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332
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||||
Loss on early extinguishment of debt
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—
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—
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(12,225
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)
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—
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||||
Gain on sale of assets and other
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155
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112
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317
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104
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(8,744
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)
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(10,460
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)
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(41,996
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)
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(25,667
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)
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Income before income taxes
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42,992
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28,465
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113,961
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114,881
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State income tax benefit (expense)
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69
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(61
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)
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(164
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)
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(210
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)
|
||||
Net income
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43,061
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28,404
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113,797
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114,671
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Allocation of net loss attributable to Predecessor
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—
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7,547
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—
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10,657
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|
||||
Allocation of net income attributable to noncontrolling interests
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(990
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)
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(1,166
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)
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(4,827
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)
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(8,448
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)
|
||||
Net income attributable to the partners
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42,071
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|
34,785
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|
|
108,970
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|
|
116,880
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|
||||
General partner interest in net income attributable to the partners
|
|
419
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(15,222
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)
|
|
(35,047
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)
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(40,001
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)
|
||||
Limited partners’ interest in net income
|
|
$
|
42,490
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|
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$
|
19,563
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$
|
73,923
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|
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$
|
76,879
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Limited partners’ per unit interest in earnings—basic and diluted
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$
|
0.66
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$
|
0.33
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$
|
1.16
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|
|
$
|
1.29
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Weighted average limited partners’ units outstanding
|
|
64,319
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|
|
59,223
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|
|
63,845
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|
|
58,895
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|
|
|
Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2017
|
|
2016
(1)
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|
2017
|
|
2016
(1)
|
||||||||
Net income
|
|
$
|
43,061
|
|
|
$
|
28,404
|
|
|
$
|
113,797
|
|
|
$
|
114,671
|
|
|
|
|
|
|
|
|
|
|
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Other comprehensive income:
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of cash flow hedging instruments
|
|
1
|
|
|
201
|
|
|
88
|
|
|
(737
|
)
|
||||
Reclassification adjustment to net income on partial settlement of cash flow hedge
|
|
(64
|
)
|
|
95
|
|
|
(179
|
)
|
|
438
|
|
||||
Other comprehensive income (loss)
|
|
(63
|
)
|
|
296
|
|
|
(91
|
)
|
|
(299
|
)
|
||||
Comprehensive income before noncontrolling interest
|
|
42,998
|
|
|
28,700
|
|
|
113,706
|
|
|
114,372
|
|
||||
Allocation of net loss attributable to Predecessor
|
|
—
|
|
|
7,547
|
|
|
—
|
|
|
10,657
|
|
||||
Allocation of comprehensive income to noncontrolling interests
|
|
(990
|
)
|
|
(1,166
|
)
|
|
(4,827
|
)
|
|
(8,448
|
)
|
||||
Comprehensive income attributable to Holly Energy Partners
|
|
$
|
42,008
|
|
|
$
|
35,081
|
|
|
$
|
108,879
|
|
|
$
|
116,581
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2017
|
|
2016
(1)
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Net income
|
|
$
|
113,797
|
|
|
$
|
114,671
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
57,729
|
|
|
51,183
|
|
||
(Gain) loss on sale of assets
|
|
(269
|
)
|
|
(121
|
)
|
||
Amortization of deferred charges
|
|
2,317
|
|
|
2,294
|
|
||
Amortization of restricted and performance units
|
|
1,908
|
|
|
1,865
|
|
||
Earnings distributions greater (less) than income from equity investments
|
|
513
|
|
|
(1,370
|
)
|
||
Loss on early extinguishment of debt
|
|
12,225
|
|
|
—
|
|
||
(Increase) decrease in operating assets:
|
|
|
|
|
||||
Accounts receivable—trade
|
|
516
|
|
|
1,521
|
|
||
Accounts receivable—affiliates
|
|
(191
|
)
|
|
2,971
|
|
||
Prepaid and other current assets
|
|
593
|
|
|
814
|
|
||
Increase (decrease) in operating liabilities:
|
|
|
|
|
||||
Accounts payable—trade
|
|
3,393
|
|
|
(5,757
|
)
|
||
Accounts payable—affiliates
|
|
(6,866
|
)
|
|
1,589
|
|
||
Accrued interest
|
|
(12,543
|
)
|
|
441
|
|
||
Deferred revenue
|
|
3,096
|
|
|
6,288
|
|
||
Accrued property taxes
|
|
2,090
|
|
|
3,199
|
|
||
Other current liabilities
|
|
(99
|
)
|
|
(1,020
|
)
|
||
Other, net
|
|
(750
|
)
|
|
(594
|
)
|
||
Net cash provided by operating activities
|
|
177,459
|
|
|
177,974
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
||||
Additions to properties and equipment
|
|
(30,675
|
)
|
|
(48,224
|
)
|
||
Purchase of Woods Cross refinery processing units
|
|
—
|
|
|
(47,891
|
)
|
||
Purchase of interest in Cheyenne Pipeline
|
|
—
|
|
|
(42,550
|
)
|
||
Proceeds from sale of assets
|
|
794
|
|
|
210
|
|
||
Distributions in excess of equity in earnings of equity investments
|
|
1,224
|
|
|
1,685
|
|
||
Other
|
|
—
|
|
|
(351
|
)
|
||
Net cash used for investing activities
|
|
(28,657
|
)
|
|
(137,121
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
||||
Borrowings under credit agreement
|
|
628,000
|
|
|
310,500
|
|
||
Repayments of credit agreement borrowings
|
|
(431,000
|
)
|
|
(642,500
|
)
|
||
Proceeds from issuance of Senior Notes
|
|
101,750
|
|
|
394,000
|
|
||
Redemption of 6.5% Senior Notes
|
|
(309,750
|
)
|
|
—
|
|
||
Proceeds from issuance of common units
|
|
52,285
|
|
|
22,791
|
|
||
Distributions to HEP unitholders
|
|
(171,560
|
)
|
|
(138,798
|
)
|
||
Distributions to noncontrolling interest
|
|
(5,000
|
)
|
|
(3,750
|
)
|
||
Distribution to HFC for Tulsa tank acquisition
|
|
—
|
|
|
(39,500
|
)
|
||
Distribution to HFC for Osage acquisition
|
|
—
|
|
|
(1,245
|
)
|
||
Distribution to HFC for El Dorado tanks
|
|
(103
|
)
|
|
—
|
|
||
Contributions from HFC for acquisitions
|
|
—
|
|
|
55,027
|
|
||
Contributions from general partner
|
|
1,072
|
|
|
470
|
|
||
Purchase of units for incentive grants
|
|
—
|
|
|
(784
|
)
|
||
Deferred financing costs
|
|
(9,453
|
)
|
|
(3,930
|
)
|
||
Other
|
|
(1,224
|
)
|
|
(939
|
)
|
||
Net cash used by financing activities
|
|
(144,983
|
)
|
|
(48,658
|
)
|
||
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
|
|
||||
Increase (decrease) for the period
|
|
3,819
|
|
|
(7,805
|
)
|
||
Beginning of period
|
|
3,657
|
|
|
15,013
|
|
||
End of period
|
|
$
|
7,476
|
|
|
$
|
7,208
|
|
|
|
Common
Units
|
|
General
Partner
Interest
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Noncontrolling Interest
|
|
Total Equity
|
||||||||||
|
|
|
||||||||||||||||||
Balance December 31, 2016
|
|
$
|
510,975
|
|
|
$
|
(132,832
|
)
|
|
$
|
91
|
|
|
$
|
93,557
|
|
|
$
|
471,791
|
|
Issuance of common units
|
|
52,285
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,285
|
|
|||||
Contribution from HFC
|
|
—
|
|
|
1,072
|
|
|
—
|
|
|
—
|
|
|
1,072
|
|
|||||
Distribution to HFC for acquisition
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|||||
Distributions to HEP unitholders
|
|
(118,424
|
)
|
|
(53,136
|
)
|
|
—
|
|
|
—
|
|
|
(171,560
|
)
|
|||||
Distributions to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|
(5,000
|
)
|
|||||
Amortization of restricted and performance units
|
|
1,908
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,908
|
|
|||||
Class B unit accretion
|
|
(2,051
|
)
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
(2,093
|
)
|
|||||
Net income
|
|
76,016
|
|
|
35,047
|
|
|
—
|
|
|
2,734
|
|
|
113,797
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|
(91
|
)
|
|||||
Balance September 30, 2017
|
|
$
|
520,709
|
|
|
$
|
(149,994
|
)
|
|
$
|
—
|
|
|
$
|
91,291
|
|
|
$
|
462,006
|
|
Note 1:
|
Description of Business and Presentation of Financial Statements
|
|
|
Three Months Ended September 30, 2016
|
||||||||||||||
|
|
Holly Energy Partners, L.P.
(Previously reported)
|
|
Tulsa Tanks
|
|
Woods Cross Operating
|
|
Holly Energy Partners, L.P.
(Currently reported)
|
||||||||
|
|
(In Thousands)
|
||||||||||||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Operations (exclusive of depreciation and
amortization)
|
|
$
|
27,954
|
|
|
$
|
—
|
|
|
$
|
4,147
|
|
|
$
|
32,101
|
|
Depreciation and amortization
|
|
15,520
|
|
|
—
|
|
|
3,400
|
|
|
18,920
|
|
||||
Allocation of net loss attributable to predecessor
|
|
—
|
|
|
—
|
|
|
7,547
|
|
|
7,547
|
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||
|
|
Holly Energy Partners, L.P.
(Previously reported)
|
|
Tulsa Tanks
|
|
Woods Cross Operating
|
|
Holly Energy Partners, L.P.
(Currently reported)
|
||||||||
|
|
(In Thousands)
|
||||||||||||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Operations (exclusive of depreciation and
amortization)
|
|
$
|
82,131
|
|
|
$
|
—
|
|
|
$
|
7,037
|
|
|
$
|
89,168
|
|
Depreciation and amortization
|
|
47,780
|
|
|
—
|
|
|
3,403
|
|
|
51,183
|
|
||||
Allocation of net loss attributable to predecessor
|
|
—
|
|
|
217
|
|
|
10,440
|
|
|
10,657
|
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||
|
|
Holly Energy Partners, L.P.
(Previously reported)
|
|
Woods Cross Operating
|
|
Holly Energy Partners, L.P.
(Currently reported)
|
||||||
Cash flows from operating activities
|
|
(In Thousands)
|
||||||||||
Net income
|
|
$
|
125,111
|
|
|
$
|
(10,440
|
)
|
|
$
|
114,671
|
|
Depreciation and amortization
|
|
47,780
|
|
|
3,403
|
|
|
51,183
|
|
|||
Net cash provided (used) by operating activities
|
|
$
|
185,011
|
|
|
$
|
(7,037
|
)
|
|
$
|
177,974
|
|
|
|
|
|
|
|
|
||||||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Purchase of Woods Cross refinery processing units
|
|
$
|
—
|
|
|
$
|
(47,891
|
)
|
|
$
|
(47,891
|
)
|
Net cash used for investing activities
|
|
$
|
(89,230
|
)
|
|
$
|
(47,891
|
)
|
|
$
|
(137,121
|
)
|
|
|
|
|
|
|
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Contributions from HFC for acquisitions
|
|
$
|
99
|
|
|
$
|
54,928
|
|
|
$
|
55,027
|
|
Net cash provided (used) by financing activities
|
|
$
|
(103,586
|
)
|
|
$
|
54,928
|
|
|
$
|
(48,658
|
)
|
Note 2:
|
Financial Instruments
|
•
|
(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.
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
Financial Instrument
|
|
Fair Value Input Level
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
||||||||
|
|
|
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
|
Level 2
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
91
|
|
|
$
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
6.5% Senior notes
|
|
Level 2
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
297,519
|
|
|
$
|
308,250
|
|
6% Senior notes
|
|
Level 2
|
|
495,066
|
|
|
524,390
|
|
|
393,393
|
|
|
415,500
|
|
||||
|
|
|
|
$
|
495,066
|
|
|
$
|
524,390
|
|
|
$
|
690,912
|
|
|
$
|
723,750
|
|
Note 3:
|
Properties and Equipment
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
(In thousands)
|
||||||
Pipelines, terminals and tankage
|
|
$
|
1,250,567
|
|
|
$
|
1,246,746
|
|
Refinery assets
|
|
347,312
|
|
|
346,058
|
|
||
Land and right of way
|
|
65,337
|
|
|
65,331
|
|
||
Construction in progress
|
|
51,297
|
|
|
28,753
|
|
||
Other
|
|
27,708
|
|
|
27,133
|
|
||
|
|
1,742,221
|
|
|
1,714,021
|
|
||
Less accumulated depreciation
|
|
435,128
|
|
|
385,626
|
|
||
|
|
$
|
1,307,093
|
|
|
$
|
1,328,395
|
|
Note 4:
|
Transportation Agreements
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
(In thousands)
|
||||||
Alon transportation agreement
|
|
$
|
59,933
|
|
|
$
|
59,933
|
|
HFC transportation agreement
|
|
74,231
|
|
|
74,231
|
|
||
Other
|
|
50
|
|
|
50
|
|
||
|
|
134,214
|
|
|
134,214
|
|
||
Less accumulated amortization
|
|
72,570
|
|
|
67,358
|
|
||
|
|
$
|
61,644
|
|
|
$
|
66,856
|
|
Note 5:
|
Employees, Retirement and Incentive Plans
|
Restricted Units
|
|
Units
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2017 (nonvested)
|
|
123,988
|
|
|
$
|
32.96
|
|
Granted
|
|
20,348
|
|
|
36.01
|
|
|
Forfeited
|
|
(20,106
|
)
|
|
30.10
|
|
|
Outstanding at September 30, 2017 (nonvested)
|
|
124,230
|
|
|
$
|
33.92
|
|
Performance Units
|
|
Units
|
|
Outstanding at January 1, 2017 (nonvested)
|
|
49,520
|
|
Vesting and transfer of common units to recipients
|
|
(2,262
|
)
|
Forfeited
|
|
(21,228
|
)
|
Outstanding at September 30, 2017 (nonvested)
|
|
26,030
|
|
Note 6:
|
Debt
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
(In thousands)
|
||||||
Credit Agreement
|
|
|
|
|
||||
Amount outstanding
|
|
$
|
750,000
|
|
|
$
|
553,000
|
|
|
|
|
|
|
||||
6% Senior Notes
|
|
|
|
|
||||
Principal
|
|
500,000
|
|
|
400,000
|
|
||
Unamortized premium and debt issuance costs
|
|
(4,934
|
)
|
|
(6,607
|
)
|
||
|
|
495,066
|
|
|
393,393
|
|
||
6.5% Senior Notes
|
|
|
|
|
||||
Principal
|
|
—
|
|
|
300,000
|
|
||
Unamortized discount and debt issuance costs
|
|
—
|
|
|
(2,481
|
)
|
||
|
|
—
|
|
|
297,519
|
|
||
|
|
|
|
|
||||
Total long-term debt
|
|
$
|
1,245,066
|
|
|
$
|
1,243,912
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Interest on outstanding debt:
|
|
|
|
|
||||
Credit Agreement, net of interest on interest rate swaps
|
|
$
|
20,338
|
|
|
$
|
13,600
|
|
6.5% Senior Notes
|
|
163
|
|
|
14,632
|
|
||
6% Senior Notes
|
|
18,150
|
|
|
4,811
|
|
||
Amortization of discount and deferred debt issuance costs
|
|
2,317
|
|
|
2,294
|
|
||
Commitment fees and other
|
|
1,137
|
|
|
1,419
|
|
||
Total interest incurred
|
|
42,105
|
|
|
36,756
|
|
||
Less capitalized interest
|
|
746
|
|
|
498
|
|
||
Net interest expense
|
|
$
|
41,359
|
|
|
$
|
36,258
|
|
Cash paid for interest
|
|
$
|
53,181
|
|
|
$
|
33,896
|
|
Note 7:
|
Significant Customers
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30, |
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
HFC
|
|
86
|
%
|
|
84
|
%
|
|
85
|
%
|
|
83
|
%
|
Alon
|
|
7
|
%
|
|
8
|
%
|
|
7
|
%
|
|
8
|
%
|
Note 8:
|
Related Party Transactions
|
•
|
Revenues received from HFC were
$95.1 million
and
$77.4 million
for the three months ended
September 30, 2017
and
2016
, respectively, and
$277.3 million
and
$239.4 million
for the
nine
months ended
September 30, 2017
and
2016
, respectively.
|
•
|
HFC charged us general and administrative services under the Omnibus Agreement of
$0.6 million
for each of the three months ended
September 30, 2017
and
2016
, and
$1.8 million
for each of the
nine
months ended
September 30, 2017
and
2016
.
|
•
|
We reimbursed HFC for costs of employees supporting our operations of
$11.7 million
and
$10.0 million
for the three months ended
September 30, 2017
and
2016
, respectively, and
$34.5 million
and
$29.4 million
for the
nine
months ended
September 30, 2017
and
2016
, respectively.
|
•
|
HFC reimbursed us
$1.9 million
and
$4.5 million
for the three months ended
September 30, 2017
and
2016
, respectively, and
$4.7 million
and
$11.2 million
for the
nine
months ended
September 30, 2017
and
2016
, respectively, for expense and capital projects.
|
•
|
We distributed
$32.8 million
and
$26.2 million
for the three months ended
September 30, 2017
and
2016
, respectively, and
$94.8 million
and
$76.0 million
for the
nine
months ended
September 30, 2017
and
2016
, respectively, to HFC as regular distributions on its common units and general partner interest, including general partner incentive distributions.
|
•
|
Accounts receivable from HFC were
$42.8 million
and
$42.6 million
at
September 30, 2017
, and
December 31, 2016
, respectively.
|
•
|
Accounts payable to HFC were
$9.6 million
and
$16.4 million
at
September 30, 2017
, and
December 31, 2016
, respectively.
|
•
|
Revenues for the
nine
months ended
September 30, 2017
and
2016
, include
$3.5 million
and
$5.7 million
, respectively, of shortfall payments billed to HFC in 2016 and 2015, respectively. Deferred revenue in the consolidated balance sheets at
September 30, 2017
and
December 31, 2016
, includes
$5.8 million
and
$5.6 million
, respectively, relating to certain shortfall billings to HFC. It is possible that HFC may not exceed its minimum obligations to receive credit for any of the
$5.8 million
deferred at
September 30, 2017
.
|
Note 9:
|
Partners’ Equity
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In thousands)
|
||||||||||||||
General partner interest in net income
|
|
$
|
(419
|
)
|
|
$
|
399
|
|
|
$
|
919
|
|
|
$
|
1,569
|
|
General partner incentive distribution
|
|
—
|
|
|
14,823
|
|
|
34,128
|
|
|
38,432
|
|
||||
Net loss attributable to Predecessor
|
|
—
|
|
|
(7,547
|
)
|
|
—
|
|
|
(10,657
|
)
|
||||
Total general partner interest in net income
|
|
$
|
(419
|
)
|
|
$
|
7,675
|
|
|
$
|
35,047
|
|
|
$
|
29,344
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In thousands, except per unit data)
|
||||||||||||||
General partner interest in distribution
|
|
$
|
—
|
|
|
$
|
1,065
|
|
|
$
|
2,335
|
|
|
$
|
2,992
|
|
General partner incentive distribution
|
|
—
|
|
|
14,823
|
|
|
34,128
|
|
|
38,432
|
|
||||
Total general partner distribution
|
|
—
|
|
|
15,888
|
|
|
36,463
|
|
|
41,424
|
|
||||
Limited partner distribution
|
|
63,012
|
|
|
37,354
|
|
|
143,326
|
|
|
105,657
|
|
||||
Total regular quarterly cash distribution
|
|
$
|
63,012
|
|
|
$
|
53,242
|
|
|
$
|
179,789
|
|
|
$
|
147,081
|
|
Cash distribution per unit applicable to limited partners
|
|
$
|
0.6450
|
|
|
$
|
0.5950
|
|
|
$
|
1.8975
|
|
|
$
|
1.7550
|
|
Note 10:
|
Net Income Per Limited Partner Unit
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income attributable to the partners
|
|
$
|
42,071
|
|
|
$
|
34,785
|
|
|
$
|
108,970
|
|
|
$
|
116,880
|
|
Less: General partner’s distribution declared (including IDRs)
|
|
—
|
|
|
(15,888
|
)
|
|
(36,463
|
)
|
|
(41,424
|
)
|
||||
Limited partner’s distribution declared on common units
|
|
(63,012
|
)
|
|
(37,354
|
)
|
|
(143,326
|
)
|
|
(105,657
|
)
|
||||
Distributions in excess of net income attributable to the partners
|
|
$
|
(20,941
|
)
|
|
$
|
(18,457
|
)
|
|
$
|
(70,819
|
)
|
|
$
|
(30,201
|
)
|
|
|
General Partner (including IDRs)
|
|
Limited Partners’ Common Units
|
|
Total
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Three Months Ended September 30, 2017
|
|
|
|
|
|
|
||||||
Net income attributable to the partners:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
—
|
|
|
$
|
63,012
|
|
|
$
|
63,012
|
|
Distributions in excess of net income attributable to the partners
|
|
(419
|
)
|
|
(20,522
|
)
|
|
(20,941
|
)
|
|||
Net income attributable to the partners
|
|
$
|
(419
|
)
|
|
$
|
42,490
|
|
|
$
|
42,071
|
|
Weighted average limited partners' units outstanding
|
|
|
|
64,319
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
0.66
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Three Months Ended September 30, 2016
|
|
|
|
|
|
|
||||||
Net income attributable to the partners:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
15,888
|
|
|
$
|
37,354
|
|
|
$
|
53,242
|
|
Distributions in excess of net income attributable to the partners
|
|
(369
|
)
|
|
(18,088
|
)
|
|
(18,457
|
)
|
|||
Net income attributable to the partners
|
|
$
|
15,519
|
|
|
$
|
19,266
|
|
|
$
|
34,785
|
|
Weighted average limited partners' units outstanding
|
|
|
|
59,223
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
0.33
|
|
|
|
|
|
General Partner (including IDRs)
|
|
Limited Partners’ Common Units
|
|
Total
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
||||||
Net income attributable to partnership:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
36,463
|
|
|
$
|
143,326
|
|
|
$
|
179,789
|
|
Distributions in excess of net income attributable to partnership
|
|
(1,416
|
)
|
|
(69,403
|
)
|
|
(70,819
|
)
|
|||
Net income attributable to partnership
|
|
$
|
35,047
|
|
|
$
|
73,923
|
|
|
$
|
108,970
|
|
Weighted average limited partners' units outstanding
|
|
|
|
63,845
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
1.16
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Nine Months Ended September 30, 2016
|
|
|
|
|
|
|
||||||
Net income attributable to partnership:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
41,424
|
|
|
$
|
105,657
|
|
|
$
|
147,081
|
|
Distributions in excess of net income attributable to partnership
|
|
(604
|
)
|
|
(29,597
|
)
|
|
(30,201
|
)
|
|||
Net income attributable to partnership
|
|
$
|
40,820
|
|
|
$
|
76,060
|
|
|
$
|
116,880
|
|
Weighted average limited partners' units outstanding
|
|
|
|
58,895
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
1.29
|
|
|
|
Note 11:
|
Environmental
|
Note 12:
|
Contingencies
|
Note 13:
|
Operating Segments
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Pipelines and terminals - affiliate
|
|
$
|
74,547
|
|
|
$
|
73,210
|
|
|
$
|
219,806
|
|
|
$
|
226,553
|
|
Pipelines and terminals - third-party
|
|
15,226
|
|
|
15,212
|
|
|
47,826
|
|
|
50,094
|
|
||||
Refinery processing units - affiliate
|
|
20,591
|
|
|
4,188
|
|
|
57,510
|
|
|
12,870
|
|
||||
Total segment revenues
|
|
$
|
110,364
|
|
|
$
|
92,610
|
|
|
$
|
325,142
|
|
|
$
|
289,517
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income:
|
|
|
|
|
|
|
|
|
||||||||
Pipelines and terminals
|
|
$
|
44,896
|
|
|
$
|
48,928
|
|
|
$
|
140,546
|
|
|
$
|
155,657
|
|
Refinery processing units
|
|
10,463
|
|
|
(7,339
|
)
|
|
24,283
|
|
|
(6,491
|
)
|
||||
Total segment operating income
|
|
55,359
|
|
|
41,589
|
|
|
164,829
|
|
|
149,166
|
|
||||
Unallocated general and administrative expenses
|
|
(3,623
|
)
|
|
(2,664
|
)
|
|
(8,872
|
)
|
|
(8,618
|
)
|
||||
Interest and financing costs, net
|
|
(13,971
|
)
|
|
(14,339
|
)
|
|
(53,278
|
)
|
|
(35,926
|
)
|
||||
Equity in earnings of unconsolidated affiliates
|
|
5,072
|
|
|
3,767
|
|
|
10,965
|
|
|
10,155
|
|
||||
Gain on sale of assets and other
|
|
155
|
|
|
112
|
|
|
317
|
|
|
104
|
|
||||
Income before income taxes
|
|
$
|
42,992
|
|
|
$
|
28,465
|
|
|
$
|
113,961
|
|
|
$
|
114,881
|
|
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures:
|
|
|
|
|
|
|
|
|
||||||||
Pipelines and terminals
|
|
$
|
10,151
|
|
|
$
|
15,557
|
|
|
$
|
30,437
|
|
|
$
|
47,200
|
|
Refinery processing units
|
|
—
|
|
|
5,173
|
|
|
238
|
|
|
48,915
|
|
||||
Total capital expenditures
|
|
$
|
10,151
|
|
|
$
|
20,730
|
|
|
$
|
30,675
|
|
|
$
|
96,115
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
(in thousands)
|
||||||
Identifiable assets:
|
|
|
|
|
||||
Pipelines and terminals
|
|
$
|
1,353,585
|
|
|
$
|
1,369,756
|
|
Refinery processing units
|
|
335,388
|
|
|
342,506
|
|
||
Other
|
|
176,869
|
|
|
171,975
|
|
||
Total identifiable assets
|
|
$
|
1,865,842
|
|
|
$
|
1,884,237
|
|
Note 14:
|
Supplemental Guarantor/Non-Guarantor Financial Information
|
September 30, 2017
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
7,468
|
|
|
$
|
—
|
|
|
$
|
7,476
|
|
Accounts receivable
|
|
—
|
|
|
46,157
|
|
|
4,096
|
|
|
(170
|
)
|
|
50,083
|
|
|||||
Prepaid and other current assets
|
|
52
|
|
|
1,988
|
|
|
255
|
|
|
—
|
|
|
2,295
|
|
|||||
Total current assets
|
|
54
|
|
|
48,151
|
|
|
11,819
|
|
|
(170
|
)
|
|
59,854
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Properties and equipment, net
|
|
—
|
|
|
947,094
|
|
|
359,999
|
|
|
—
|
|
|
1,307,093
|
|
|||||
Investment in subsidiaries
|
|
1,608,736
|
|
|
273,874
|
|
|
—
|
|
|
(1,882,610
|
)
|
|
—
|
|
|||||
Transportation agreements, net
|
|
—
|
|
|
61,644
|
|
|
—
|
|
|
—
|
|
|
61,644
|
|
|||||
Goodwill
|
|
—
|
|
|
256,498
|
|
|
—
|
|
|
—
|
|
|
256,498
|
|
|||||
Equity method investments
|
|
—
|
|
|
163,873
|
|
|
—
|
|
|
—
|
|
|
163,873
|
|
|||||
Other assets
|
|
12,329
|
|
|
4,551
|
|
|
—
|
|
|
—
|
|
|
16,880
|
|
|||||
Total assets
|
|
$
|
1,621,119
|
|
|
$
|
1,755,685
|
|
|
$
|
371,818
|
|
|
$
|
(1,882,780
|
)
|
|
$
|
1,865,842
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
—
|
|
|
$
|
21,770
|
|
|
$
|
1,543
|
|
|
$
|
(170
|
)
|
|
$
|
23,143
|
|
Accrued interest
|
|
5,000
|
|
|
527
|
|
|
—
|
|
|
—
|
|
|
5,527
|
|
|||||
Deferred revenue
|
|
—
|
|
|
13,326
|
|
|
1,501
|
|
|
—
|
|
|
14,827
|
|
|||||
Accrued property taxes
|
|
—
|
|
|
4,073
|
|
|
3,414
|
|
|
—
|
|
|
7,487
|
|
|||||
Other current liabilities
|
|
52
|
|
|
3,440
|
|
|
—
|
|
|
—
|
|
|
3,492
|
|
|||||
Total current liabilities
|
|
5,052
|
|
|
43,136
|
|
|
6,458
|
|
|
(170
|
)
|
|
54,476
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
|
1,245,066
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,245,066
|
|
|||||
Other long-term liabilities
|
|
286
|
|
|
14,996
|
|
|
195
|
|
|
—
|
|
|
15,477
|
|
|||||
Deferred revenue
|
|
—
|
|
|
46,405
|
|
|
—
|
|
|
—
|
|
|
46,405
|
|
|||||
Class B unit
|
|
—
|
|
|
42,412
|
|
|
—
|
|
|
—
|
|
|
42,412
|
|
|||||
Equity - partners
|
|
370,715
|
|
|
1,608,736
|
|
|
273,874
|
|
|
(1,882,610
|
)
|
|
370,715
|
|
|||||
Equity - noncontrolling interest
|
|
—
|
|
|
—
|
|
|
91,291
|
|
|
—
|
|
|
91,291
|
|
|||||
Total liabilities and equity
|
|
$
|
1,621,119
|
|
|
$
|
1,755,685
|
|
|
$
|
371,818
|
|
|
$
|
(1,882,780
|
)
|
|
$
|
1,865,842
|
|
December 31, 2016
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
301
|
|
|
$
|
3,354
|
|
|
$
|
—
|
|
|
$
|
3,657
|
|
Accounts receivable
|
|
—
|
|
|
45,056
|
|
|
5,554
|
|
|
(202
|
)
|
|
50,408
|
|
|||||
Prepaid and other current assets
|
|
11
|
|
|
2,633
|
|
|
244
|
|
|
—
|
|
|
2,888
|
|
|||||
Total current assets
|
|
13
|
|
|
47,990
|
|
|
9,152
|
|
|
(202
|
)
|
|
56,953
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Properties and equipment, net
|
|
—
|
|
|
957,045
|
|
|
371,350
|
|
|
—
|
|
|
1,328,395
|
|
|||||
Investment in subsidiaries
|
|
1,086,008
|
|
|
280,671
|
|
|
—
|
|
|
(1,366,679
|
)
|
|
—
|
|
|||||
Transportation agreements, net
|
|
—
|
|
|
66,856
|
|
|
—
|
|
|
—
|
|
|
66,856
|
|
|||||
Goodwill
|
|
—
|
|
|
256,498
|
|
|
—
|
|
|
—
|
|
|
256,498
|
|
|||||
Equity method investments
|
|
—
|
|
|
165,609
|
|
|
—
|
|
|
—
|
|
|
165,609
|
|
|||||
Other assets
|
|
725
|
|
|
9,201
|
|
|
—
|
|
|
—
|
|
|
9,926
|
|
|||||
Total assets
|
|
$
|
1,086,746
|
|
|
$
|
1,783,870
|
|
|
$
|
380,502
|
|
|
$
|
(1,366,881
|
)
|
|
$
|
1,884,237
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
—
|
|
|
$
|
24,245
|
|
|
$
|
2,899
|
|
|
$
|
(202
|
)
|
|
$
|
26,942
|
|
Accrued interest
|
|
17,300
|
|
|
769
|
|
|
—
|
|
|
—
|
|
|
18,069
|
|
|||||
Deferred revenue
|
|
—
|
|
|
8,797
|
|
|
2,305
|
|
|
—
|
|
|
11,102
|
|
|||||
Accrued property taxes
|
|
—
|
|
|
4,514
|
|
|
883
|
|
|
—
|
|
|
5,397
|
|
|||||
Other current liabilities
|
|
14
|
|
|
3,208
|
|
|
3
|
|
|
—
|
|
|
3,225
|
|
|||||
Total current liabilities
|
|
17,314
|
|
|
41,533
|
|
|
6,090
|
|
|
(202
|
)
|
|
64,735
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
|
690,912
|
|
|
553,000
|
|
|
—
|
|
|
—
|
|
|
1,243,912
|
|
|||||
Other long-term liabilities
|
|
286
|
|
|
15,975
|
|
|
184
|
|
|
—
|
|
|
16,445
|
|
|||||
Deferred revenue
|
|
—
|
|
|
47,035
|
|
|
—
|
|
|
—
|
|
|
47,035
|
|
|||||
Class B unit
|
|
—
|
|
|
40,319
|
|
|
—
|
|
|
—
|
|
|
40,319
|
|
|||||
Equity - partners
|
|
378,234
|
|
|
1,086,008
|
|
|
280,671
|
|
|
(1,366,679
|
)
|
|
378,234
|
|
|||||
Equity - noncontrolling interest
|
|
—
|
|
|
—
|
|
|
93,557
|
|
|
—
|
|
|
93,557
|
|
|||||
Total liabilities and equity
|
|
$
|
1,086,746
|
|
|
$
|
1,783,870
|
|
|
$
|
380,502
|
|
|
$
|
(1,366,881
|
)
|
|
$
|
1,884,237
|
|
Three Months Ended September 30, 2017
|
|
Parent
|
|
Guarantor Restricted
Subsidiaries
|
|
Non-Guarantor Non-restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
89,772
|
|
|
$
|
5,366
|
|
|
$
|
—
|
|
|
$
|
95,138
|
|
Third parties
|
|
—
|
|
|
10,758
|
|
|
4,468
|
|
|
—
|
|
|
15,226
|
|
|||||
|
|
—
|
|
|
100,530
|
|
|
9,834
|
|
|
—
|
|
|
110,364
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
31,360
|
|
|
4,638
|
|
|
—
|
|
|
35,998
|
|
|||||
Depreciation and amortization
|
|
|
|
|
14,854
|
|
|
4,153
|
|
|
—
|
|
|
19,007
|
|
|||||
General and administrative
|
|
1,050
|
|
|
2,573
|
|
|
—
|
|
|
—
|
|
|
3,623
|
|
|||||
|
|
1,050
|
|
|
48,787
|
|
|
8,791
|
|
|
—
|
|
|
58,628
|
|
|||||
Operating income (loss)
|
|
(1,050
|
)
|
|
51,743
|
|
|
1,043
|
|
|
—
|
|
|
51,736
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
|
57,193
|
|
|
783
|
|
|
—
|
|
|
(57,976
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
5,072
|
|
|
—
|
|
|
—
|
|
|
5,072
|
|
|||||
Interest expense
|
|
(14,072
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,072
|
)
|
|||||
Interest income
|
|
—
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|||||
Gain on sale of assets and other
|
|
—
|
|
|
154
|
|
|
1
|
|
|
—
|
|
|
155
|
|
|||||
|
|
43,121
|
|
|
6,110
|
|
|
1
|
|
|
(57,976
|
)
|
|
(8,744
|
)
|
|||||
Income (loss) before income taxes
|
|
42,071
|
|
|
57,853
|
|
|
1,044
|
|
|
(57,976
|
)
|
|
42,992
|
|
|||||
State income tax benefit
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
Net income
|
|
42,071
|
|
|
57,922
|
|
|
1,044
|
|
|
(57,976
|
)
|
|
43,061
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(729
|
)
|
|
(261
|
)
|
|
—
|
|
|
(990
|
)
|
|||||
Net income attributable to Holly Energy Partners
|
|
42,071
|
|
|
57,193
|
|
|
783
|
|
|
(57,976
|
)
|
|
42,071
|
|
|||||
Other comprehensive income
|
|
(63
|
)
|
|
(63
|
)
|
|
—
|
|
|
63
|
|
|
(63
|
)
|
|||||
Comprehensive income attributable to Holly Energy Partners
|
|
$
|
42,008
|
|
|
$
|
57,130
|
|
|
$
|
783
|
|
|
$
|
(57,913
|
)
|
|
$
|
42,008
|
|
Three Months Ended September 30, 2016
(1)
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
72,389
|
|
|
$
|
5,009
|
|
|
$
|
—
|
|
|
$
|
77,398
|
|
Third parties
|
|
—
|
|
|
11,360
|
|
|
3,852
|
|
|
—
|
|
|
15,212
|
|
|||||
|
|
—
|
|
|
83,749
|
|
|
8,861
|
|
|
—
|
|
|
92,610
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
29,023
|
|
|
3,078
|
|
|
—
|
|
|
32,101
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
15,093
|
|
|
3,827
|
|
|
—
|
|
|
18,920
|
|
|||||
General and administrative
|
|
813
|
|
|
1,851
|
|
|
—
|
|
|
—
|
|
|
2,664
|
|
|||||
|
|
813
|
|
|
45,967
|
|
|
6,905
|
|
|
—
|
|
|
53,685
|
|
|||||
Operating income (loss)
|
|
(813
|
)
|
|
37,782
|
|
|
1,956
|
|
|
—
|
|
|
38,925
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
|
44,359
|
|
|
1,451
|
|
|
—
|
|
|
(45,810
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
3,767
|
|
|
—
|
|
|
—
|
|
|
3,767
|
|
|||||
Interest expense
|
|
(10,011
|
)
|
|
(4,436
|
)
|
|
—
|
|
|
—
|
|
|
(14,447
|
)
|
|||||
Interest income
|
|
—
|
|
|
103
|
|
|
5
|
|
|
—
|
|
|
108
|
|
|||||
Gain (loss) on sale of assets and other
|
|
—
|
|
|
138
|
|
|
(26
|
)
|
|
—
|
|
|
112
|
|
|||||
|
|
34,348
|
|
|
1,023
|
|
|
(21
|
)
|
|
(45,810
|
)
|
|
(10,460
|
)
|
|||||
Income before income taxes
|
|
33,535
|
|
|
38,805
|
|
|
1,935
|
|
|
(45,810
|
)
|
|
28,465
|
|
|||||
State income tax expense
|
|
—
|
|
|
(61
|
)
|
|
—
|
|
|
—
|
|
|
(61
|
)
|
|||||
Net income
|
|
33,535
|
|
|
38,744
|
|
|
1,935
|
|
|
(45,810
|
)
|
|
28,404
|
|
|||||
Allocation of net loss to Predecessor
|
|
—
|
|
|
7,547
|
|
|
—
|
|
|
—
|
|
|
7,547
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(682
|
)
|
|
(484
|
)
|
|
—
|
|
|
(1,166
|
)
|
|||||
Net income attributable to Holly Energy Partners
|
|
33,535
|
|
|
45,609
|
|
|
1,451
|
|
|
(45,810
|
)
|
|
34,785
|
|
|||||
Other comprehensive (loss)
|
|
296
|
|
|
296
|
|
|
—
|
|
|
(296
|
)
|
|
296
|
|
|||||
Comprehensive income attributable to Holly Energy Partners
|
|
$
|
33,831
|
|
|
$
|
45,905
|
|
|
$
|
1,451
|
|
|
$
|
(46,106
|
)
|
|
$
|
35,081
|
|
Nine Months Ended September 30, 2017
|
|
Parent
|
|
Guarantor Restricted
Subsidiaries
|
|
Non-Guarantor Non-restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
258,571
|
|
|
$
|
18,745
|
|
|
$
|
—
|
|
|
$
|
277,316
|
|
Third parties
|
|
—
|
|
|
32,146
|
|
|
15,680
|
|
|
—
|
|
|
47,826
|
|
|||||
|
|
—
|
|
|
290,717
|
|
|
34,425
|
|
|
—
|
|
|
325,142
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
91,323
|
|
|
11,261
|
|
|
—
|
|
|
102,584
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
45,498
|
|
|
12,231
|
|
|
—
|
|
|
57,729
|
|
|||||
General and administrative
|
|
3,070
|
|
|
5,802
|
|
|
—
|
|
|
—
|
|
|
8,872
|
|
|||||
|
|
3,070
|
|
|
142,623
|
|
|
23,492
|
|
|
—
|
|
|
169,185
|
|
|||||
Operating income (loss)
|
|
(3,070
|
)
|
|
148,094
|
|
|
10,933
|
|
|
—
|
|
|
155,957
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings (loss) of subsidiaries
|
|
165,624
|
|
|
8,203
|
|
|
—
|
|
|
(173,827
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
10,965
|
|
|
—
|
|
|
—
|
|
|
10,965
|
|
|||||
Interest expense
|
|
(41,359
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,359
|
)
|
|||||
Interest income
|
|
—
|
|
|
306
|
|
|
—
|
|
|
—
|
|
|
306
|
|
|||||
Loss on early extinguishment of debt
|
|
(12,225
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,225
|
)
|
|||||
Gain (loss) on sale of assets and other
|
|
—
|
|
|
313
|
|
|
4
|
|
|
—
|
|
|
317
|
|
|||||
|
|
112,040
|
|
|
19,787
|
|
|
4
|
|
|
(173,827
|
)
|
|
(41,996
|
)
|
|||||
Income (loss) before income taxes
|
|
108,970
|
|
|
167,881
|
|
|
10,937
|
|
|
(173,827
|
)
|
|
113,961
|
|
|||||
State income tax expense
|
|
—
|
|
|
(164
|
)
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|||||
Net income (loss)
|
|
108,970
|
|
|
167,717
|
|
|
10,937
|
|
|
(173,827
|
)
|
|
113,797
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(2,093
|
)
|
|
(2,734
|
)
|
|
—
|
|
|
(4,827
|
)
|
|||||
Net income (loss) attributable to Holly Energy Partners
|
|
108,970
|
|
|
165,624
|
|
|
8,203
|
|
|
(173,827
|
)
|
|
108,970
|
|
|||||
Other comprehensive income (loss)
|
|
(91
|
)
|
|
(91
|
)
|
|
—
|
|
|
91
|
|
|
(91
|
)
|
|||||
Comprehensive income (loss)
|
|
$
|
108,879
|
|
|
$
|
165,533
|
|
|
$
|
8,203
|
|
|
$
|
(173,736
|
)
|
|
$
|
108,879
|
|
Nine Months Ended September 30, 2016
(1)
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
219,428
|
|
|
$
|
19,995
|
|
|
$
|
—
|
|
|
$
|
239,423
|
|
Third parties
|
|
—
|
|
|
33,783
|
|
|
16,311
|
|
|
—
|
|
|
50,094
|
|
|||||
|
|
—
|
|
|
253,211
|
|
|
36,306
|
|
|
—
|
|
|
289,517
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
80,248
|
|
|
8,920
|
|
|
—
|
|
|
89,168
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
39,811
|
|
|
11,372
|
|
|
—
|
|
|
51,183
|
|
|||||
General and administrative
|
|
2,949
|
|
|
5,669
|
|
|
—
|
|
|
—
|
|
|
8,618
|
|
|||||
|
|
2,949
|
|
|
125,728
|
|
|
20,292
|
|
|
—
|
|
|
148,969
|
|
|||||
Operating income (loss)
|
|
(2,949
|
)
|
|
127,483
|
|
|
16,014
|
|
|
—
|
|
|
140,548
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings (loss) of subsidiaries
|
|
138,513
|
|
|
12,004
|
|
|
—
|
|
|
(150,517
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
10,155
|
|
|
—
|
|
|
—
|
|
|
10,155
|
|
|||||
Interest expense
|
|
(20,151
|
)
|
|
(16,107
|
)
|
|
—
|
|
|
—
|
|
|
(36,258
|
)
|
|||||
Interest income
|
|
—
|
|
|
315
|
|
|
17
|
|
|
—
|
|
|
332
|
|
|||||
Gain (loss) on sale of assets and other
|
|
—
|
|
|
129
|
|
|
(25
|
)
|
|
—
|
|
|
104
|
|
|||||
|
|
118,362
|
|
|
6,496
|
|
|
(8
|
)
|
|
(150,517
|
)
|
|
(25,667
|
)
|
|||||
Income (loss) before income taxes
|
|
115,413
|
|
|
133,979
|
|
|
16,006
|
|
|
(150,517
|
)
|
|
114,881
|
|
|||||
State income tax expense
|
|
—
|
|
|
(210
|
)
|
|
—
|
|
|
—
|
|
|
(210
|
)
|
|||||
Net income (loss)
|
|
115,413
|
|
|
133,769
|
|
|
16,006
|
|
|
(150,517
|
)
|
|
114,671
|
|
|||||
Allocation of net loss to Predecessor
|
|
|
|
|
10,657
|
|
|
—
|
|
|
—
|
|
|
10,657
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(4,446
|
)
|
|
(4,002
|
)
|
|
—
|
|
|
(8,448
|
)
|
|||||
Net income (loss) attributable to Holly Energy Partners
|
|
115,413
|
|
|
139,980
|
|
|
12,004
|
|
|
(150,517
|
)
|
|
116,880
|
|
|||||
Other comprehensive income (loss)
|
|
(299
|
)
|
|
(299
|
)
|
|
—
|
|
|
299
|
|
|
(299
|
)
|
|||||
Comprehensive income (loss)
|
|
$
|
115,114
|
|
|
$
|
139,681
|
|
|
$
|
12,004
|
|
|
$
|
(150,218
|
)
|
|
$
|
116,581
|
|
Nine Months Ended September 30, 2017
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Cash flows from operating activities
|
|
$
|
(57,045
|
)
|
|
$
|
215,643
|
|
|
$
|
27,064
|
|
|
$
|
(8,203
|
)
|
|
$
|
177,459
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to properties and equipment
|
|
—
|
|
|
(27,725
|
)
|
|
(2,950
|
)
|
|
—
|
|
|
(30,675
|
)
|
|||||
Distributions from UNEV in excess of earnings
|
|
—
|
|
|
6,797
|
|
|
—
|
|
|
(6,797
|
)
|
|
—
|
|
|||||
Proceeds from sale of assets
|
|
—
|
|
|
794
|
|
|
—
|
|
|
—
|
|
|
794
|
|
|||||
Distributions in excess of equity in earnings of equity investments
|
|
—
|
|
|
1,224
|
|
|
—
|
|
|
—
|
|
|
1,224
|
|
|||||
|
|
—
|
|
|
(18,910
|
)
|
|
(2,950
|
)
|
|
(6,797
|
)
|
|
(28,657
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net borrowings under credit agreement
|
|
750,000
|
|
|
(553,000
|
)
|
|
—
|
|
|
—
|
|
|
197,000
|
|
|||||
Net intercompany financing activities
|
|
(357,196
|
)
|
|
357,196
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Proceeds from issuance of 6% Senior Notes
|
|
103,250
|
|
|
(1,500
|
)
|
|
—
|
|
|
—
|
|
|
101,750
|
|
|||||
Proceeds from issuance of common units
|
|
52,285
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,285
|
|
|||||
Contribution from general partner
|
|
1,072
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,072
|
|
|||||
Redemption of senior notes
|
|
(309,750
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(309,750
|
)
|
|||||
Distributions to HEP unitholders
|
|
(171,560
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(171,560
|
)
|
|||||
Distribution to HFC for El Dorado tanks
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(20,000
|
)
|
|
15,000
|
|
|
(5,000
|
)
|
|||||
Deferred financing cost
|
|
(10,953
|
)
|
|
1,500
|
|
|
—
|
|
|
—
|
|
|
(9,453
|
)
|
|||||
Other
|
|
—
|
|
|
(1,224
|
)
|
|
—
|
|
|
—
|
|
|
(1,224
|
)
|
|||||
|
|
57,045
|
|
|
(197,028
|
)
|
|
(20,000
|
)
|
|
15,000
|
|
|
(144,983
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Increase (decrease) for the period
|
|
—
|
|
|
(295
|
)
|
|
4,114
|
|
|
—
|
|
|
3,819
|
|
|||||
Beginning of period
|
|
2
|
|
|
301
|
|
|
3,354
|
|
|
—
|
|
|
3,657
|
|
|||||
End of period
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
7,468
|
|
|
$
|
—
|
|
|
$
|
7,476
|
|
Nine Months Ended September 30, 2016
(1)
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Cash flows from operating activities
|
|
$
|
(20,467
|
)
|
|
$
|
181,967
|
|
|
$
|
27,724
|
|
|
$
|
(11,250
|
)
|
|
$
|
177,974
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to properties and equipment
|
|
—
|
|
|
(33,147
|
)
|
|
(15,077
|
)
|
|
—
|
|
|
(48,224
|
)
|
|||||
Purchase of Woods Cross refinery processing units
|
|
—
|
|
|
(47,891
|
)
|
|
—
|
|
|
—
|
|
|
(47,891
|
)
|
|||||
Purchase of Cheyenne Pipeline
|
|
—
|
|
|
(42,550
|
)
|
|
—
|
|
|
—
|
|
|
(42,550
|
)
|
|||||
Proceeds from sale of assets
|
|
—
|
|
|
210
|
|
|
—
|
|
|
—
|
|
|
210
|
|
|||||
Distributions in excess of equity in earnings of equity investments
|
|
—
|
|
|
1,685
|
|
|
—
|
|
|
—
|
|
|
1,685
|
|
|||||
Other
|
|
—
|
|
|
(351
|
)
|
|
—
|
|
|
—
|
|
|
(351
|
)
|
|||||
|
|
—
|
|
|
(122,044
|
)
|
|
(15,077
|
)
|
|
—
|
|
|
(137,121
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net repayments under credit agreement
|
|
—
|
|
|
(332,000
|
)
|
|
—
|
|
|
—
|
|
|
(332,000
|
)
|
|||||
Net intercompany financing activities
|
|
(257,172
|
)
|
|
257,172
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Proceeds from issuance of senior notes
|
|
394,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
394,000
|
|
|||||
Proceeds from issuance of common units
|
|
22,591
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
22,791
|
|
|||||
Distributions to HEP unitholders
|
|
(138,798
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(138,798
|
)
|
|||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(15,000
|
)
|
|
11,250
|
|
|
(3,750
|
)
|
|||||
Contributions from general partner for Osage
|
|
31,285
|
|
|
(31,285
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Distributions to HFC for Tulsa Tank acquisition
|
|
(30,378
|
)
|
|
(9,122
|
)
|
|
—
|
|
|
—
|
|
|
(39,500
|
)
|
|||||
Distribution to HFC for Osage
|
|
—
|
|
|
(1,245
|
)
|
|
—
|
|
|
—
|
|
|
(1,245
|
)
|
|||||
Contribution from HFC for acquisitions
|
|
99
|
|
|
54,928
|
|
|
—
|
|
|
—
|
|
|
55,027
|
|
|||||
Contributions from general partner
|
|
470
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
470
|
|
|||||
Purchase of units for incentive grants
|
|
(784
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(784
|
)
|
|||||
Deferred financing costs
|
|
(846
|
)
|
|
(3,084
|
)
|
|
—
|
|
|
—
|
|
|
(3,930
|
)
|
|||||
Other
|
|
—
|
|
|
(939
|
)
|
|
—
|
|
|
—
|
|
|
(939
|
)
|
|||||
|
|
20,467
|
|
|
(65,375
|
)
|
|
(15,000
|
)
|
|
11,250
|
|
|
(48,658
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease for the period
|
|
—
|
|
|
(5,452
|
)
|
|
(2,353
|
)
|
|
—
|
|
|
(7,805
|
)
|
|||||
Beginning of period
|
|
2
|
|
|
5,452
|
|
|
9,559
|
|
|
—
|
|
|
15,013
|
|
|||||
End of period
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
7,206
|
|
|
$
|
—
|
|
|
$
|
7,208
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Three Months Ended September 30,
|
|
Change from
|
||||||||
|
|
2017
|
|
2016
|
|
2016
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
$
|
20,801
|
|
|
$
|
19,227
|
|
|
$
|
1,574
|
|
Affiliates—intermediate pipelines
|
|
7,832
|
|
|
6,628
|
|
|
1,204
|
|
|||
Affiliates—crude pipelines
|
|
14,089
|
|
|
17,034
|
|
|
(2,945
|
)
|
|||
|
|
42,722
|
|
|
42,889
|
|
|
(167
|
)
|
|||
Third parties—refined product pipelines
|
|
11,350
|
|
|
11,176
|
|
|
174
|
|
|||
|
|
54,072
|
|
|
54,065
|
|
|
7
|
|
|||
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
31,825
|
|
|
30,322
|
|
|
1,503
|
|
|||
Third parties
|
|
3,876
|
|
|
4,035
|
|
|
(159
|
)
|
|||
|
|
35,701
|
|
|
34,357
|
|
|
1,344
|
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
20,591
|
|
|
4,188
|
|
|
16,403
|
|
|||
|
|
|
|
|
|
|
||||||
Total revenues
|
|
110,364
|
|
|
92,610
|
|
|
17,754
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Operations (exclusive of depreciation and amortization)
|
|
35,998
|
|
|
32,101
|
|
|
3,897
|
|
|||
Depreciation and amortization
|
|
19,007
|
|
|
18,920
|
|
|
87
|
|
|||
General and administrative
|
|
3,623
|
|
|
2,664
|
|
|
959
|
|
|||
|
|
58,628
|
|
|
53,685
|
|
|
4,943
|
|
|||
Operating income
|
|
51,736
|
|
|
38,925
|
|
|
12,811
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Equity in earnings of equity method investments
|
|
5,072
|
|
|
3,767
|
|
|
1,305
|
|
|||
Interest expense, including amortization
|
|
(14,072
|
)
|
|
(14,447
|
)
|
|
375
|
|
|||
Interest income
|
|
101
|
|
|
108
|
|
|
(7
|
)
|
|||
Gain on sale of assets and other
|
|
155
|
|
|
112
|
|
|
43
|
|
|||
|
|
(8,744
|
)
|
|
(10,460
|
)
|
|
1,716
|
|
|||
Income before income taxes
|
|
42,992
|
|
|
28,465
|
|
|
14,527
|
|
|||
State income tax expense
|
|
69
|
|
|
(61
|
)
|
|
130
|
|
|||
Net income
|
|
43,061
|
|
|
28,404
|
|
|
14,657
|
|
|||
Allocation of net loss to Predecessor
|
|
—
|
|
|
7,547
|
|
|
(7,547
|
)
|
|||
Allocation of net income attributable to noncontrolling interests
|
|
(990
|
)
|
|
(1,166
|
)
|
|
176
|
|
|||
Net income attributable to the partners
|
|
42,071
|
|
|
34,785
|
|
|
7,286
|
|
|||
General partner interest in net income attributable to the partners
(1)
|
|
419
|
|
|
(15,222
|
)
|
|
15,641
|
|
|||
Limited partners’ interest in net income
|
|
$
|
42,490
|
|
|
$
|
19,563
|
|
|
$
|
22,927
|
|
Limited partners’ earnings per unit—basic and diluted
(1)
|
|
$
|
0.66
|
|
|
$
|
0.33
|
|
|
$
|
0.33
|
|
Weighted average limited partners’ units outstanding
|
|
64,319
|
|
|
59,223
|
|
|
5,096
|
|
|||
EBITDA
(2)
|
|
$
|
74,980
|
|
|
$
|
64,705
|
|
|
$
|
10,275
|
|
Distributable cash flow
(3)
|
|
$
|
59,248
|
|
|
$
|
49,257
|
|
|
$
|
9,991
|
|
|
|
|
|
|
|
|
||||||
Volumes (bpd)
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
142,624
|
|
|
128,020
|
|
|
14,604
|
|
|||
Affiliates—intermediate pipelines
|
|
151,622
|
|
|
142,417
|
|
|
9,205
|
|
|||
Affiliates—crude pipelines
|
|
267,911
|
|
|
271,278
|
|
|
(3,367
|
)
|
|||
|
|
562,157
|
|
|
541,715
|
|
|
20,442
|
|
|||
Third parties—refined product pipelines
|
|
74,703
|
|
|
73,517
|
|
|
1,186
|
|
|||
|
|
636,860
|
|
|
615,232
|
|
|
21,628
|
|
|||
Terminals and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
426,122
|
|
|
437,560
|
|
|
(11,438
|
)
|
|||
Third parties
|
|
69,405
|
|
|
68,276
|
|
|
1,129
|
|
|||
|
|
495,527
|
|
|
505,836
|
|
|
(10,309
|
)
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
61,453
|
|
|
46,451
|
|
|
15,002
|
|
|||
|
|
|
|
|
|
|
||||||
Total for pipelines and terminal and refiney processing unit assets (bpd)
|
|
1,193,840
|
|
|
1,167,519
|
|
|
26,321
|
|
|
|
Nine Months Ended September 30,
|
|
Change from
|
||||||||
|
|
2017
|
|
2016
|
|
2016
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
$
|
57,977
|
|
|
$
|
63,801
|
|
|
$
|
(5,824
|
)
|
Affiliates—intermediate pipelines
|
|
20,366
|
|
|
20,821
|
|
|
(455
|
)
|
|||
Affiliates—crude pipelines
|
|
47,890
|
|
|
53,106
|
|
|
(5,216
|
)
|
|||
|
|
126,233
|
|
|
137,728
|
|
|
(11,495
|
)
|
|||
Third parties—refined product pipelines
|
|
35,535
|
|
|
37,376
|
|
|
(1,841
|
)
|
|||
|
|
161,768
|
|
|
175,104
|
|
|
(13,336
|
)
|
|||
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
93,573
|
|
|
88,825
|
|
|
4,748
|
|
|||
Third parties
|
|
12,291
|
|
|
12,718
|
|
|
(427
|
)
|
|||
|
|
105,864
|
|
|
101,543
|
|
|
4,321
|
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
57,510
|
|
|
12,870
|
|
|
44,640
|
|
|||
|
|
|
|
|
|
|
||||||
Total revenues
|
|
325,142
|
|
|
289,517
|
|
|
35,625
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Operations (exclusive of depreciation and amortization)
|
|
102,584
|
|
|
89,168
|
|
|
13,416
|
|
|||
Depreciation and amortization
|
|
57,729
|
|
|
51,183
|
|
|
6,546
|
|
|||
General and administrative
|
|
8,872
|
|
|
8,618
|
|
|
254
|
|
|||
|
|
169,185
|
|
|
148,969
|
|
|
20,216
|
|
|||
Operating income
|
|
155,957
|
|
|
140,548
|
|
|
15,409
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Equity in earnings of equity method investments
|
|
10,965
|
|
|
10,155
|
|
|
810
|
|
|||
Interest expense, including amortization
|
|
(41,359
|
)
|
|
(36,258
|
)
|
|
(5,101
|
)
|
|||
Interest income
|
|
306
|
|
|
332
|
|
|
(26
|
)
|
|||
Loss on early extinguishment of debt
|
|
(12,225
|
)
|
|
—
|
|
|
(12,225
|
)
|
|||
Gain on sale of assets
|
|
317
|
|
|
104
|
|
|
213
|
|
|||
|
|
(41,996
|
)
|
|
(25,667
|
)
|
|
(16,329
|
)
|
|||
Income before income taxes
|
|
113,961
|
|
|
114,881
|
|
|
(920
|
)
|
|||
State income tax expense
|
|
(164
|
)
|
|
(210
|
)
|
|
46
|
|
|||
Net income
|
|
113,797
|
|
|
114,671
|
|
|
(874
|
)
|
|||
Allocation of net loss to Predecessor
|
|
—
|
|
|
10,657
|
|
|
(10,657
|
)
|
|||
Allocation of net income attributable to noncontrolling interests
|
|
(4,827
|
)
|
|
(8,448
|
)
|
|
3,621
|
|
|||
Net income attributable to the partners
|
|
108,970
|
|
|
116,880
|
|
|
(7,910
|
)
|
|||
General partner interest in net income attributable to the partners
(1)
|
|
(35,047
|
)
|
|
(40,001
|
)
|
|
4,954
|
|
|||
Limited partners’ interest in net income
|
|
$
|
73,923
|
|
|
$
|
76,879
|
|
|
$
|
(2,956
|
)
|
Limited partners’ earnings per unit—basic and diluted
(1)
|
|
$
|
1.16
|
|
|
$
|
1.29
|
|
|
$
|
(0.13
|
)
|
Weighted average limited partners’ units outstanding
|
|
63,845
|
|
|
58,895
|
|
|
4,950
|
|
|||
EBITDA
(2)
|
|
$
|
220,141
|
|
|
$
|
200,678
|
|
|
$
|
19,463
|
|
Distributable cash flow
(3)
|
|
$
|
177,436
|
|
|
$
|
160,331
|
|
|
$
|
17,105
|
|
|
|
|
|
|
|
|
||||||
Volumes (bpd)
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
128,212
|
|
|
128,659
|
|
|
(447
|
)
|
|||
Affiliates—intermediate pipelines
|
|
136,055
|
|
|
138,346
|
|
|
(2,291
|
)
|
|||
Affiliates—crude pipelines
|
|
268,736
|
|
|
279,014
|
|
|
(10,278
|
)
|
|||
|
|
533,003
|
|
|
546,019
|
|
|
(13,016
|
)
|
|||
Third parties—refined product pipelines
|
|
77,114
|
|
|
75,405
|
|
|
1,709
|
|
|||
|
|
610,117
|
|
|
621,424
|
|
|
(11,307
|
)
|
|||
Terminals and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
420,979
|
|
|
404,393
|
|
|
16,586
|
|
|||
Third parties
|
|
68,902
|
|
|
73,653
|
|
|
(4,751
|
)
|
|||
|
|
489,881
|
|
|
478,046
|
|
|
11,835
|
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
63,858
|
|
|
46,423
|
|
|
17,435
|
|
|||
|
|
|
|
|
|
|
||||||
Total for pipelines and terminal and refinery processing unit assets (bpd)
|
|
1,163,856
|
|
|
1,145,893
|
|
|
17,963
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
(In thousands)
|
||||||
Balance Sheet Data
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
7,476
|
|
|
$
|
3,657
|
|
Working capital (deficit)
|
|
$
|
5,378
|
|
|
$
|
(7,782
|
)
|
Total assets
|
|
$
|
1,865,842
|
|
|
$
|
1,884,237
|
|
Long-term debt
|
|
$
|
1,245,066
|
|
|
$
|
1,243,912
|
|
Partners’ equity
(5)
|
|
$
|
370,715
|
|
|
$
|
378,234
|
|
(1)
|
Net income attributable to the partners is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner includes incentive distributions that are declared subsequent to quarter end. After the amount of incentive distributions and other priority allocations are allocated to the general partner, the remaining net income attributable to the partners is allocated to the partners based on their weighted average ownership percentage during the period.
|
(2)
|
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to the partners plus (i) interest expense and loss on early extinguishment of debt, net of interest income, (ii) state income tax and (iii) depreciation and amortization, excluding amounts related to the Predecessor. EBITDA is not a calculation based upon generally accepted accounting principles (“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 attributable to the partners 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 compliance with financial covenants. Set forth below is our calculation of EBITDA.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income attributable to the partners
|
|
$
|
42,071
|
|
|
$
|
34,785
|
|
|
$
|
108,970
|
|
|
$
|
116,880
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
13,291
|
|
|
13,529
|
|
|
39,042
|
|
|
33,964
|
|
||||
Interest income
|
|
(101
|
)
|
|
(108
|
)
|
|
(306
|
)
|
|
(332
|
)
|
||||
Amortization of discount and deferred debt issuance costs
|
|
781
|
|
|
918
|
|
|
2,317
|
|
|
2,294
|
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
12,225
|
|
|
—
|
|
||||
State income tax expense
|
|
(69
|
)
|
|
61
|
|
|
164
|
|
|
210
|
|
||||
Depreciation and amortization
|
|
19,007
|
|
|
18,920
|
|
|
57,729
|
|
|
51,183
|
|
||||
Predecessor depreciation and amortization
|
|
—
|
|
|
(3,400
|
)
|
|
—
|
|
|
(3,521
|
)
|
||||
EBITDA
|
|
$
|
74,980
|
|
|
$
|
64,705
|
|
|
$
|
220,141
|
|
|
$
|
200,678
|
|
(3)
|
Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exceptions of maintenance capital expenditures. Distributable cash flow should not be considered in isolation or 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. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance. It is also used by management for internal analysis and for our performance units. We believe
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income attributable to the partners
|
|
$
|
42,071
|
|
|
$
|
34,785
|
|
|
$
|
108,970
|
|
|
$
|
116,880
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
19,007
|
|
|
18,920
|
|
|
57,729
|
|
|
51,183
|
|
||||
Amortization of discount and deferred debt issuance costs
|
|
781
|
|
|
918
|
|
|
2,317
|
|
|
2,294
|
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
12,225
|
|
|
—
|
|
||||
Increase (decrease) in deferred revenue related to minimum revenue commitments
|
|
1,134
|
|
|
1,748
|
|
|
3,835
|
|
|
(179
|
)
|
||||
Maintenance capital expenditures
(4)
|
|
(3,240
|
)
|
|
(3,475
|
)
|
|
(6,308
|
)
|
|
(7,797
|
)
|
||||
Decrease in environmental liability
|
|
(180
|
)
|
|
(277
|
)
|
|
(741
|
)
|
|
(719
|
)
|
||||
Decrease in reimbursable deferred revenue
|
|
(917
|
)
|
|
(750
|
)
|
|
(2,765
|
)
|
|
(1,906
|
)
|
||||
Other non-cash adjustments
|
|
592
|
|
|
788
|
|
|
2,174
|
|
|
4,096
|
|
||||
Predecessor depreciation and amortization
|
|
—
|
|
|
(3,400
|
)
|
|
—
|
|
|
(3,521
|
)
|
||||
Distributable cash flow
|
|
$
|
59,248
|
|
|
$
|
49,257
|
|
|
$
|
177,436
|
|
|
$
|
160,331
|
|
(4)
|
Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations.
|
(5)
|
As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to the partners because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to the partners. Additionally, if the assets contributed and acquired from HFC while we were a consolidated VIE of HFC had been acquired from third parties, our acquisition cost in excess of HFC’s basis in the transferred assets would have been recorded in our financial statements as increases to our properties and equipment and intangible assets at the time of acquisition instead of decreases to partners’ equity.
|
|
Three Months Ended September 30,
|
||||||
Equity Method Investment
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
SLC Pipeline LLC
|
$
|
1,030
|
|
|
$
|
1,283
|
|
Frontier Aspen LLC
|
1,662
|
|
|
586
|
|
||
Osage Pipe Line Company, LLC
|
1,119
|
|
|
975
|
|
||
Cheyenne Pipeline LLC
|
1,261
|
|
|
923
|
|
||
Total
|
$
|
5,072
|
|
|
$
|
3,767
|
|
|
Nine Months Ended September 30,
|
||||||
Equity Method Investments
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
SLC Pipeline LLC
|
$
|
2,053
|
|
|
$
|
3,397
|
|
Frontier Aspen, LLC
|
3,813
|
|
|
3,049
|
|
||
Osage Pipe Line Company, LLC
|
1,889
|
|
|
2,423
|
|
||
Cheyenne Pipeline LLC
|
3,210
|
|
|
1,286
|
|
||
Total
|
$
|
10,965
|
|
|
$
|
10,155
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
(In thousands)
|
||||||
Credit Agreement
|
|
$
|
750,000
|
|
|
$
|
553,000
|
|
|
|
|
|
|
||||
6% Senior Notes
|
|
|
|
|
||||
Principal
|
|
500,000
|
|
|
400,000
|
|
||
Unamortized debt issuance costs
|
|
(4,934
|
)
|
|
(6,607
|
)
|
||
|
|
495,066
|
|
|
393,393
|
|
||
6.5% Senior Notes
|
|
|
|
|
||||
Principal
|
|
—
|
|
|
300,000
|
|
||
Unamortized discount and debt issuance costs
|
|
—
|
|
|
(2,481
|
)
|
||
|
|
—
|
|
|
297,519
|
|
||
|
|
|
|
|
||||
Total long-term debt
|
|
$
|
1,245,066
|
|
|
$
|
1,243,912
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1
|
|
|
2.2
|
|
|
2.3*
|
|
|
2.4
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
3.7
|
|
|
3.8
|
|
|
3.9
|
|
|
3.10
|
|
|
3.11
|
|
|
3.12
|
|
|
4.1
|
|
|
10.1*
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
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31.1*
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31.2*
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32.1**
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32.2**
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101++
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The following financial information from Holly Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statement of Partners’ Equity, and (vi) Notes to Consolidated Financial Statements.
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*
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Filed herewith.
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**
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Furnished herewith.
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++
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Filed electronically herewith.
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HOLLY ENERGY PARTNERS, L.P.
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(Registrant)
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By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
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By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
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Date: November 2, 2017
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/s/ Richard L. Voliva III
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Richard L. Voliva III
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Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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Date: November 2, 2017
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/s/ Kenneth P. Norwood
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Kenneth P. Norwood
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Vice President and Controller
(Principal Accounting Officer)
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1.
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Amendment.
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2.
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No Further Amendment
. Except as specifically provided in this Amendment, the Purchase Agreement shall remain in full force and effect pursuant to the terms and conditions thereof. The Parties hereby ratify and confirm the Purchase Agreement as hereby amended. All references to the Purchase Agreement shall hereafter be deemed to refer to the Purchase Agreement as amended hereby.
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3.
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Counterparts
. This Amendment may be executed in one or more counterparts (including by means of facsimile or .pdf signature pages), all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Party.
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SELLER:
ROCKY MOUNTAIN PIPELINE SYSTEM LLC
By:
/s/ Willie Chiang
Name: Willie Chiang
Title: Executive Vice President and COO (US)
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BUYER:
HEP SLC LLC
By:
/s/ George Damiris
Name: George Damiris
Title: Chief Executive Officer and President
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1.
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The following storage tanks located on the Land described under “Storage Tanks” and “Propane Tank Loading Rack and Tanks 600-621” on
Exhibit F-1
.
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TANK ID NUMBER
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CURRENT SERVICE/PRODUCT
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NOMINAL CAPACITY, BBLS
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1
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N/A
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DEMO
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2
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N/A
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DEMO
|
3
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ULSD
|
40,425
|
15
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ULSD
|
12,422
|
16
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Light Slop
|
28,880
|
17
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Gasoline
|
92,740
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18
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Gasoline
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88,600
|
19
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Gasoline
|
90,733
|
20
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Finish Gasoline
|
17,961
|
21
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ULSD
|
120,639
|
23
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ULSD
|
113,182
|
24
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ULSD
|
119,269
|
25
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Av Jet
|
65,117
|
29
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CRU1 Feed
|
33,723
|
30
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CRU2 Feed
|
39,417
|
31
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ULSD
|
23,792
|
32
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Finish Gasoline
|
74,847
|
64
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Gasoline
|
17,961
|
65
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Gasoline
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17,941
|
66
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Naphtha
|
22,582
|
75
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ULS k
|
24,938
|
78
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ULS k
|
9,226
|
127
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Heavy Slop
|
20,504
|
654
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Sour Distilate
|
77,596
|
642
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HTU2 Chg.
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78,511
|
655
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HTU2 Chg.
|
76,750
|
649
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HTU4 CHg.
|
100,000
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TANK ID NUMBER
|
CURRENT SERVICE/PRODUCT
|
NOMINAL CAPACITY, BBLS
|
137
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Gas Oil/Sour diesel
|
192,000
|
138
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Gas Oil
|
193,742
|
139
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Gas Oil
|
74,792
|
142
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Gas Oil
|
191,563
|
143
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Gas Oil
|
191,570
|
159
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Slurry
|
9,778
|
167
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Slurry
|
8,908
|
650
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ULSD Dock
|
36,000
|
178
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Coke Charge/Swing Tank
|
80,000
|
192
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N/A
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DEMO
|
212
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Coker Chg.
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76,524
|
213
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Asphalt
|
77,675
|
215
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AV Jet
|
67,529
|
216
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Alkylate
|
72,618
|
218
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Gas Oil
|
77,675
|
219
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Reformate
|
71,466
|
220
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Swing Tank
|
71,495
|
221
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Gasoline Swing
|
71,508
|
222
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Gasoline Swing
|
71,509
|
223
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Reformate
|
72,893
|
224
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Jet Fuel
|
71,534
|
225
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HTU1 Chg, kerosene
|
28,882
|
226
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Finish Gasoline
|
27,679
|
227
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Natural Gasoline
|
27,701
|
230
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Diesel (RAM)
|
4,780
|
231
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Light Cycle (RAM)
|
1,923
|
250
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FCCU Gasoline
|
75,354
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TANK ID NUMBER
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CURRENT SERVICE/PRODUCT
|
NOMINAL CAPACITY, BBLS
|
251
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FCCU Gasoline
|
75,968
|
252
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FCCU Gasoline
|
75,968
|
253
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Natural Gasoline
|
74,653
|
254
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Isomerate
|
19,318
|
255
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Isomerate
|
19,318
|
256
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TEL Wash
|
950
|
447
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Finish Gasoline
|
17,730
|
448
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Gasoline
|
16,109
|
453
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Ethanol
|
5,121
|
457
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HTU3 Chg, LSR
|
32,690
|
458
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Isomerate
|
32,690
|
490
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ULSD
|
116,094
|
600
|
Propane
|
625
|
601
|
Propane
|
625
|
602
|
Propane
|
625
|
603
|
Propane
|
625
|
604
|
Propane
|
625
|
605
|
Propane
|
625
|
606
|
Propane
|
625
|
607
|
Propane
|
625
|
608
|
Propane
|
625
|
609
|
Propane
|
625
|
610
|
Propane
|
625
|
611
|
Propane
|
625
|
612
|
Propane
|
625
|
613
|
Propane
|
625
|
614
|
Propane
|
625
|
TANK ID NUMBER
|
CURRENT SERVICE/PRODUCT
|
NOMINAL CAPACITY, BBLS
|
615
|
Propane
|
625
|
616
|
Propane
|
625
|
617
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Propane
|
625
|
618
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Propane
|
625
|
619
|
Propane
|
625
|
620
|
Propane
|
575
|
621
|
Propane
|
100
|
640
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Asphalt
|
66,859
|
641
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Propane
|
6,813
|
647
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Asphalt
|
76,600
|
651
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Heavy Atmospheric Gas Oil (HAGO)
|
32,346
|
653
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HAGO
|
32,344
|
656
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Diesel
|
500
|
657
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Diesel
|
500
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2.
|
The Refined Products Truck Loading Rack located on the Land described under “Refined Products Truck Loading Rack” on
Exhibit F-1
.
|
3.
|
The Propane Truck Loading Rack located on the Land described under “Propane Truck Loading Rack” on
Exhibit F-1
.
|
1.
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I have reviewed this quarterly report on Form 10-Q of Holly Energy Partners, L.P;
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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;
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3.
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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;
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4.
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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 Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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 function):
|
a.
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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
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b.
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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.
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Date: November 2, 2017
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/s/ George J. Damiris
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George J. Damiris
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Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Holly Energy Partners, L.P;
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2.
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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;
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3.
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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;
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4.
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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 Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
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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;
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b.
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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.
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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
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d.
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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
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5.
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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 function):
|
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
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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.
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Date: November 2, 2017
|
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/s/ Richard L. Voliva III
|
|
|
Richard L. Voliva III
|
|
|
Executive Vice President and
Chief Financial Officer
|
Date: November 2, 2017
|
|
/s/ George J. Damiris
|
|
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George J. Damiris
|
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Chief Executive Officer
|
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; 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 2, 2017
|
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/s/ Richard L. Voliva III
|
|
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Richard L. Voliva III
|
|
|
Executive Vice President and
Chief Financial Officer
|