“As we look forward we believe HEP is well positioned due to the quality and geographic location of our assets, our superior employee base, and our financially strong and supportive general partner, HollyFrontier. HEP’s future growth is underpinned by strong industry fundamentals, planned capital projects and our existing long-term fee-based contracts with built-in annual escalators.”
Third Quarter 2013 Revenue Highlights
Revenues for the quarter were $77.7 million, a $3.7 million increase compared to the third quarter of 2012 due to the effect of annual tariff increases combined with higher cost reimbursement receipts from HFC. Overall pipeline volumes were down 3% compared to the three months ended September 30, 2012.
- Revenues from our refined product pipelines were $26.4 million, an increase of $0.6 million primarily due to the effect of annual tariff increases. Shipments averaged 175.1 thousand barrels per day (“mbpd”) compared to 180.4 mbpd for the third quarter of 2012 .
- Revenues from our intermediate pipelines were $6.6 million, a decrease of $0.8 million, on shipments averaging 136.3 mbpd compared to 132.2 mbpd for the third quarter of 2012. Although overall intermediate pipeline shipments were up, revenues decreased due to the effects of a $0.5 million decrease in deferred revenue realized and decreased volumes on certain pipeline segments.
- Revenues from our crude pipelines were $13.0 million, an increase of $0.7 million, on shipments averaging 172.6 mbpd compared to 187.9 mbpd for the third quarter of 2012. Although crude oil pipeline shipments were down, revenues increased due to the annual tariff increases and minimum quarterly revenue billings on segments where volumes decreased.
- Revenues from terminal, tankage and loading rack fees were $31.7 million, an increase of $3.2 million compared to the third quarter of 2012. The increase in revenues is due to annual fee increases and higher tank cost reimbursement receipts from HFC. Refined products terminalled in our facilities averaged 326.0 mbpd compared to 325.1 mbpd for the third quarter of 2012.
Revenues for the three months ended September 30, 2013 include the recognition of $0.2 million of prior shortfalls billed to shippers in 2012, as they did not meet their minimum volume commitments within the contractual make-up period. As of September 30, 2013, shortfall deferred revenue in our consolidated balance sheet was $11.2 million. Such deferred revenue will be recognized in earnings either as payment for shipments in excess of guaranteed levels, if and to the extent the pipeline system will not have the necessary capacity for shipments in excess of guaranteed levels, or when shipping rights expire unused over the contractual make-up period.