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Holly Energy Partners, L.P. Reports Fourth Quarter Results

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier operates through its subsidiaries a 135,000 barrels-per-stream-day (“bpsd”) refinery located in El Dorado, Kansas, a 125,000 bpsd refinery in Tulsa, Oklahoma, a 100,000 bpsd refinery located in Artesia, New Mexico, a 52,000 bpsd refinery located in Cheyenne, Wyoming, and a 31,000 bpsd refinery in Woods Cross, Utah. HollyFrontier markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. A subsidiary of HollyFrontier also owns a 44% interest (including the general partner interest) in Holly Energy Partners, L.P.

The statements in this press release relating to matters that are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Forward looking statements use words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations. These statements are based on our beliefs and assumptions and those of our general partner using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. Although we and our general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither we nor our general partner can give assurance that our expectations will prove to be correct. All statements concerning our expectations for future results of operations are based on forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected. Certain factors could cause actual results to differ materially from results anticipated in the forward-looking statements. These factors include, but are not limited to:

  • risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored and throughput in our terminals;
  • the economic viability of HollyFrontier Corporation, Alon USA, Inc. and our other customers;
  • the demand for refined petroleum products in markets we serve;
  • our ability to successfully purchase and integrate additional operations in the future;
  • our ability to complete previously announced or contemplated acquisitions;
  • the availability and cost of additional debt and equity financing;
  • the possibility of reductions in production or shutdowns at refineries utilizing our pipeline and terminal facilities;
  • the effects of current and future government regulations and policies;
  • our operational efficiency in carrying out routine operations and capital construction projects;
  • the possibility of terrorist attacks and the consequences of any such attacks;
  • general economic conditions; and
  • other financial, operations and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

   

RESULTS OF OPERATIONS (Unaudited)

 

Income, Distributable Cash Flow and Volumes  

The following tables present income, distributable cash flow and volume information for the three months and year ended December 31, 2012 and 2011.

 

Three Months Ended December 31,

Change from

2012

2011 (1)

2011
(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates – refined product pipelines $ 20,955 $ 13,280 $ 7,675
Affiliates – intermediate pipelines 7,463 6,310 1,153
Affiliates – crude pipelines 12,044   17,245   (5,201 )  
40,462 36,835 3,627
Third parties – refined product pipelines 9,658   10,628   (970 )  
50,120 47,463 2,657
Terminals, tanks and loading racks:
Affiliates 28,700 19,341 9,359
Third parties 2,612   2,283   329  
31,312   21,624   9,688  
Total revenues 81,432 69,087 12,345
Operating costs and expenses:
Operations 24,129 20,200 3,929
Depreciation and amortization 14,660 10,554 4,106
General and administrative 1,669   1,628   41  
40,458   32,382   8,076  
Operating income 40,974 36,705 4,269
 
Equity in earnings of SLC Pipeline 862 704 158
Interest expense, including amortization (12,914 ) (9,858 ) (3,056 )
Other income 10   9   1  
(12,042 ) (9,145 )   (2,897 )  
Income before income taxes 28,932 27,560 1,372
State income tax expense (83 ) (65 )   (18 )  
Net income 28,849 27,495 1,354
Allocation of net loss attributable to Predecessors (1) - 2,836 (2,836 )
Allocation of net loss (income) attributable to noncontrolling interests (1,810 ) 563   (2,373 )  
Net income attributable to Holly Energy Partners 27,039 30,894 (3,855 )
General partner interest in net income, including incentive distributions (3) 5,777   5,429   348  
Limited partners’ interest in net income $ 21,262   $ 25,465   $ (4,203 )  
Limited partners’ earnings per unit – basic and diluted: (2)(3) $ 0.37   $ 0.51   $ (0.14 )  
Weighted average limited partners’ units outstanding (2) 56,782   50,217   6,565  
EBITDA (4) $ 54,696   $ 49,728   $ 4,968  
Distributable cash flow (5) $ 41,618   $ 32,371   $ 9,247  
 
Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines 116,637 98,528 18,109
Affiliates – intermediate pipelines 115,843 128,437 (12,594 )
Affiliates – crude pipelines 174,368 174,226   142  
406,848 401,191 5,657
Third parties – refined product pipelines 65,688 64,986   702  
472,536 466,177 6,359
Terminals and loading racks:
Affiliates 288,203 249,365 38,838
Third parties 55,057 51,434   3,623  
343,260 300,799   42,461  
Total for pipelines and terminal assets (bpd) 815,796 766,976   48,820  
 
Year Ended December 31,

Change from

2012

2011 (1)

2011
(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates – refined product pipelines $ 67,682 $ 46,649 $ 21,033
Affiliates – intermediate pipelines 28,540 21,948 6,592
Affiliates – crude pipelines 45,888   47,542   (1,654 )  
142,110 116,139 25,971
Third parties – refined product pipelines 37,521   38,216   (695 )  
179,631 154,355 25,276
Terminals, tanks and loading racks:
Affiliates 103,472 52,122 51,350
Third parties 9,457   7,791   1,666  
112,929   59,913   53,016  
Total revenues 292,560 214,268 78,292
Operating costs and expenses:
Operations 89,242 64,521 24,721
Depreciation and amortization 57,461 36,958 20,503
General and administrative 7,594   6,576   1,018  
154,297   108,055   46,242  
Operating income 138,263 106,213 32,050
 
Equity in earnings of SLC Pipeline 3,364 2,552 812
Interest expense, including amortization (47,182 ) (35,959 ) (11,223 )
Loss on early extinguishment of debt (2,979 ) (2,979 )
Other expense 10   17   (7 )  
(46,787 ) (33,390 )   (13,397 )  
Income before income taxes 91,476 72,823 18,653
State income tax expense (371 ) (234 )   (137 )  
Net income 91,105 72,589 18,516
Allocation of net loss attributable to Predecessors (1) 4,200 6,351 (2,151 )
Allocation of net loss attributable to noncontrolling interests (1,153 ) 859   (2,012 )  
Net income attributable to Holly Energy Partners 94,152 79,799 14,353
General partner interest in net income, including incentive distributions (3) (22,450 ) (16,806 )   (5,644 )  
Limited partners’ interest in net income $ 71,702   $ 62,993   $ 8,709  
Limited partners’ earnings per unit – basic and diluted: (2)(3) $ 1.29   $ 1.38   $ (0.09 )  
Weighted average limited partners’ units outstanding (2) 55,696   45,672   10,024  
EBITDA (4) $ 194,242   $ 149,766   $ 44,476  
Distributable cash flow (5) $ 153,125   $ 100,295   $ 52,830  
 
Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines 107,509 90,782 16,727
Affiliates – intermediate pipelines 127,169 93,419 33,750
Affiliates – crude pipelines 171,040   161,789   9,251  
405,718 345,990 59,728
Third parties – refined product pipelines 63,152   52,361   10,791  
468,870 398,351 70,519
Terminals and loading racks:
Affiliates 271,549 193,645 77,904
Third parties 53,456   44,454   9,002  
325,005   238,099   86,906  
Total for pipelines and terminal assets (bpd) 793,875   636,450   157,425  

(1) We are a consolidated variable interest entity and under common control of HollyFrontier. With respect to the July 2012 acquisition of HollyFrontier's 75% interest in UNEV, U.S. generally accepted accounting principles (“GAAP”) require that our financial statements reflect the historical operations of the assets recognized by HollyFrontier, effectively as if the assets were already under our ownership and control. Accordingly, we recognized additional revenues of $8.1 million and a net loss of $4.2 million for the year ended December 31, 2012, respectively, that relate to the operations of UNEV prior to our acquisition date. We recognized net losses of $1.7 million and $2.6 million for the three months and year ended December 31, 2011, respectively, that relate to the operations of UNEV. Results of operations of UNEV prior to the acquisition on July 12, 2012 are herein referred to as the Predecessor's results. Reported volume information does not reflect volumes prior to our acquisition date.

Stock quotes in this article: HEP 

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