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Name | Symbol | Market | Type |
---|---|---|---|
Holly Energy Partners LP | NYSE:HEP | NYSE | Trust |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 20.45 | 0 | 01:00:00 |
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 (“HFC”), Delek US Holdings, Inc. (“Delek”) 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;
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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 or cyber attacks and the consequences of any such attacks;
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•
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general economic conditions;
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•
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the impact of recent changes in the tax laws and regulations that affect master limited partnerships; 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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June 30, 2018
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December 31, 2017
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||||
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(Unaudited)
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|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
6,656
|
|
|
$
|
7,776
|
|
Accounts receivable:
|
|
|
|
|
||||
Trade
|
|
13,501
|
|
|
12,803
|
|
||
Affiliates
|
|
36,665
|
|
|
51,501
|
|
||
|
|
50,166
|
|
|
64,304
|
|
||
Prepaid and other current assets
|
|
3,146
|
|
|
2,311
|
|
||
Total current assets
|
|
59,968
|
|
|
74,391
|
|
||
|
|
|
|
|
||||
Properties and equipment, net
|
|
1,551,709
|
|
|
1,569,471
|
|
||
Intangible assets, net
|
|
121,935
|
|
|
129,463
|
|
||
Goodwill
|
|
270,336
|
|
|
266,716
|
|
||
Equity method investments
|
|
84,752
|
|
|
85,279
|
|
||
Other assets
|
|
27,363
|
|
|
28,794
|
|
||
Total assets
|
|
$
|
2,116,063
|
|
|
$
|
2,154,114
|
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable:
|
|
|
|
|
||||
Trade
|
|
$
|
9,148
|
|
|
$
|
14,547
|
|
Affiliates
|
|
11,250
|
|
|
7,725
|
|
||
|
|
20,398
|
|
|
22,272
|
|
||
|
|
|
|
|
||||
Accrued interest
|
|
13,189
|
|
|
13,256
|
|
||
Deferred revenue
|
|
10,845
|
|
|
9,598
|
|
||
Accrued property taxes
|
|
5,540
|
|
|
4,652
|
|
||
Other current liabilities
|
|
3,593
|
|
|
5,707
|
|
||
Total current liabilities
|
|
53,565
|
|
|
55,485
|
|
||
|
|
|
|
|
||||
Long-term debt
|
|
1,395,599
|
|
|
1,507,308
|
|
||
Other long-term liabilities
|
|
15,526
|
|
|
15,843
|
|
||
Deferred revenue
|
|
48,405
|
|
|
47,272
|
|
||
|
|
|
|
|
||||
Class B unit
|
|
44,600
|
|
|
43,141
|
|
||
|
|
|
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|
||||
Equity:
|
|
|
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|
||||
Partners’ equity:
|
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|
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|
||||
Common unitholders (105,440,201 and 101,568,955 units issued and outstanding
at June 30, 2018 and December 31, 2017, respectively)
|
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468,397
|
|
|
393,959
|
|
||
Noncontrolling interest
|
|
89,971
|
|
|
91,106
|
|
||
Total equity
|
|
558,368
|
|
|
485,065
|
|
||
Total liabilities and equity
|
|
$
|
2,116,063
|
|
|
$
|
2,154,114
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Affiliates
|
|
$
|
94,013
|
|
|
$
|
93,152
|
|
|
$
|
195,441
|
|
|
$
|
182,177
|
|
Third parties
|
|
24,747
|
|
|
15,991
|
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|
52,203
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32,600
|
|
||||
|
|
118,760
|
|
|
109,143
|
|
|
247,644
|
|
|
214,777
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
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||||||||
Operations (exclusive of depreciation and amortization)
|
|
34,533
|
|
|
34,097
|
|
|
70,735
|
|
|
66,586
|
|
||||
Depreciation and amortization
|
|
24,608
|
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|
19,945
|
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49,750
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38,722
|
|
||||
General and administrative
|
|
2,673
|
|
|
2,615
|
|
|
5,795
|
|
|
5,249
|
|
||||
|
|
61,814
|
|
|
56,657
|
|
|
126,280
|
|
|
110,557
|
|
||||
Operating income
|
|
56,946
|
|
|
52,486
|
|
|
121,364
|
|
|
104,220
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of equity method investments
|
|
1,734
|
|
|
4,053
|
|
|
3,013
|
|
|
5,893
|
|
||||
Interest expense
|
|
(17,626
|
)
|
|
(13,748
|
)
|
|
(35,207
|
)
|
|
(27,287
|
)
|
||||
Interest income
|
|
526
|
|
|
103
|
|
|
1,041
|
|
|
205
|
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,225
|
)
|
||||
Gain (loss) on sale of assets and other
|
|
(53
|
)
|
|
89
|
|
|
33
|
|
|
162
|
|
||||
|
|
(15,419
|
)
|
|
(9,503
|
)
|
|
(31,120
|
)
|
|
(33,252
|
)
|
||||
Income before income taxes
|
|
41,527
|
|
|
42,983
|
|
|
90,244
|
|
|
70,968
|
|
||||
State income tax benefit (expense)
|
|
(28
|
)
|
|
(127
|
)
|
|
(110
|
)
|
|
(233
|
)
|
||||
Net income
|
|
41,499
|
|
|
42,856
|
|
|
90,134
|
|
|
70,735
|
|
||||
Allocation of net income attributable to noncontrolling interests
|
|
(1,356
|
)
|
|
(1,521
|
)
|
|
(3,823
|
)
|
|
(3,837
|
)
|
||||
Net income attributable to the partners
|
|
40,143
|
|
|
41,335
|
|
|
86,311
|
|
|
66,898
|
|
||||
General partner interest in net income attributable to the Partnership, including incentive distributions
|
|
—
|
|
|
(18,328
|
)
|
|
—
|
|
|
(35,466
|
)
|
||||
Limited partners’ interest in net income
|
|
$
|
40,143
|
|
|
$
|
23,007
|
|
|
$
|
86,311
|
|
|
$
|
31,432
|
|
Limited partners’ per unit interest in earnings—basic and diluted
|
|
$
|
0.38
|
|
|
$
|
0.36
|
|
|
$
|
0.82
|
|
|
$
|
0.49
|
|
Weighted average limited partners’ units outstanding
|
|
105,429
|
|
|
64,086
|
|
|
104,637
|
|
|
63,602
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
41,499
|
|
|
$
|
42,856
|
|
|
$
|
90,134
|
|
|
$
|
70,735
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of cash flow hedging instruments
|
|
—
|
|
|
11
|
|
|
—
|
|
|
87
|
|
||||
Reclassification adjustment to net income on partial settlement of cash flow hedge
|
|
—
|
|
|
(102
|
)
|
|
—
|
|
|
(115
|
)
|
||||
Other comprehensive income
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|
(28
|
)
|
||||
Comprehensive income before noncontrolling interest
|
|
41,499
|
|
|
42,765
|
|
|
90,134
|
|
|
70,707
|
|
||||
Allocation of comprehensive income to noncontrolling interests
|
|
(1,356
|
)
|
|
(1,521
|
)
|
|
(3,823
|
)
|
|
(3,837
|
)
|
||||
Comprehensive income attributable to the partners
|
|
$
|
40,143
|
|
|
$
|
41,244
|
|
|
$
|
86,311
|
|
|
$
|
66,870
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Net income
|
|
$
|
90,134
|
|
|
$
|
70,735
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
49,750
|
|
|
38,722
|
|
||
Gain on sale of assets
|
|
(183
|
)
|
|
(133
|
)
|
||
Amortization of deferred charges
|
|
1,516
|
|
|
1,504
|
|
||
Equity-based compensation expense
|
|
1,550
|
|
|
1,109
|
|
||
Equity in earnings of equity method investments, net of distributions
|
|
228
|
|
|
594
|
|
||
Loss on early extinguishment of debt
|
|
—
|
|
|
12,225
|
|
||
(Increase) decrease in operating assets:
|
|
|
|
|
||||
Accounts receivable—trade
|
|
(698
|
)
|
|
(285
|
)
|
||
Accounts receivable—affiliates
|
|
14,836
|
|
|
6,033
|
|
||
Prepaid and other current assets
|
|
(835
|
)
|
|
(234
|
)
|
||
Increase (decrease) in operating liabilities:
|
|
|
|
|
||||
Accounts payable—trade
|
|
(1,428
|
)
|
|
104
|
|
||
Accounts payable—affiliates
|
|
3,546
|
|
|
(9,128
|
)
|
||
Accrued interest
|
|
(67
|
)
|
|
(7,519
|
)
|
||
Deferred revenue
|
|
3,700
|
|
|
1,653
|
|
||
Accrued property taxes
|
|
888
|
|
|
(1,001
|
)
|
||
Other current liabilities
|
|
(2,023
|
)
|
|
(442
|
)
|
||
Other, net
|
|
49
|
|
|
(336
|
)
|
||
Net cash provided by operating activities
|
|
160,963
|
|
|
113,601
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
||||
Additions to properties and equipment
|
|
(24,739
|
)
|
|
(20,524
|
)
|
||
Business and asset acquisitions
|
|
(6,831
|
)
|
|
—
|
|
||
Proceeds from sale of assets
|
|
196
|
|
|
635
|
|
||
Distributions in excess of equity in earnings of equity investments
|
|
299
|
|
|
1,654
|
|
||
Net cash used for investing activities
|
|
(31,075
|
)
|
|
(18,235
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
||||
Borrowings under credit agreement
|
|
305,500
|
|
|
479,000
|
|
||
Repayments of credit agreement borrowings
|
|
(417,500
|
)
|
|
(189,000
|
)
|
||
Redemption of 6.5% Senior Notes
|
|
—
|
|
|
(309,750
|
)
|
||
Proceeds from issuance of common units
|
|
114,831
|
|
|
52,634
|
|
||
Distributions to HEP unitholders
|
|
(130,075
|
)
|
|
(112,195
|
)
|
||
Distributions to noncontrolling interest
|
|
(3,500
|
)
|
|
(3,500
|
)
|
||
Distribution to HFC for El Dorado tanks
|
|
—
|
|
|
(103
|
)
|
||
Contributions from general partner
|
|
492
|
|
|
995
|
|
||
Units withheld for tax withholding obligations
|
|
(58
|
)
|
|
(35
|
)
|
||
Other
|
|
(698
|
)
|
|
(730
|
)
|
||
Net cash used by financing activities
|
|
(131,008
|
)
|
|
(82,684
|
)
|
||
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
|
|
||||
Increase (decrease) for the period
|
|
(1,120
|
)
|
|
12,682
|
|
||
Beginning of period
|
|
7,776
|
|
|
3,657
|
|
||
End of period
|
|
$
|
6,656
|
|
|
$
|
16,339
|
|
|
|
Common
Units
|
|
Noncontrolling Interest
|
|
Total Equity
|
||||||
|
|
|
||||||||||
Balance December 31, 2017
|
|
$
|
393,959
|
|
|
$
|
91,106
|
|
|
$
|
485,065
|
|
Issuance of common units
|
|
114,900
|
|
|
—
|
|
|
114,900
|
|
|||
Distributions to HEP unitholders
|
|
(130,075
|
)
|
|
—
|
|
|
(130,075
|
)
|
|||
Distributions to noncontrolling interest
|
|
—
|
|
|
(3,500
|
)
|
|
(3,500
|
)
|
|||
Amortization of restricted and performance units
|
|
1,550
|
|
|
—
|
|
|
1,550
|
|
|||
Class B unit accretion
|
|
(1,459
|
)
|
|
—
|
|
|
(1,459
|
)
|
|||
Cumulative transition adjustment for adoption of revenue recognition standard
|
|
1,320
|
|
|
—
|
|
|
1,320
|
|
|||
Other
|
|
433
|
|
|
—
|
|
|
433
|
|
|||
Net income
|
|
87,769
|
|
|
2,365
|
|
|
90,134
|
|
|||
Balance June 30, 2018
|
|
$
|
468,397
|
|
|
$
|
89,971
|
|
|
$
|
558,368
|
|
Note 1:
|
Description of Business and Presentation of Financial Statements
|
Note 2:
|
Acquisitions
|
Note 3:
|
Revenues
|
|
|
Prior to Adoption
|
|
Increase (Decrease)
|
|
As Adjusted
|
||||||
|
|
(In millions)
|
||||||||||
Deferred revenue
|
|
$
|
9,598
|
|
|
$
|
(1,320
|
)
|
|
$
|
8,278
|
|
Partners’ equity: Common unitholders
|
|
$
|
393,959
|
|
|
$
|
1,320
|
|
|
$
|
395,279
|
|
|
|
June 30,
2018 |
|
January 1,
2018 |
||||
|
|
(In thousands)
|
||||||
Contract asset
|
|
$
|
1,562
|
|
|
$
|
—
|
|
Contract liability
|
|
$
|
(4,441
|
)
|
|
$
|
(2,713
|
)
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
|
|
|
|
||||||||||
Pipelines
|
|
$
|
65,539
|
|
|
$
|
55,248
|
|
|
$
|
137,708
|
|
|
$
|
107,695
|
|
Terminals, tanks and loading racks
|
|
34,386
|
|
|
36,356
|
|
|
72,567
|
|
|
70,163
|
|
||||
Refinery processing units
|
|
18,835
|
|
|
17,539
|
|
|
37,369
|
|
|
36,919
|
|
||||
|
|
$
|
118,760
|
|
|
$
|
109,143
|
|
|
$
|
247,644
|
|
|
$
|
214,777
|
|
Note 4:
|
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.
|
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
Financial Instrument
|
|
Fair Value Input Level
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
||||||||
|
|
|
|
(In thousands)
|
||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
6% Senior notes
|
|
Level 2
|
|
495,599
|
|
|
507,025
|
|
|
495,308
|
|
|
525,120
|
|
||||
|
|
|
|
$
|
495,599
|
|
|
$
|
507,025
|
|
|
$
|
495,308
|
|
|
$
|
525,120
|
|
Note 5:
|
Properties and Equipment
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
(In thousands)
|
||||||
Pipelines, terminals and tankage
|
|
$
|
1,525,033
|
|
|
$
|
1,541,722
|
|
Refinery assets
|
|
347,338
|
|
|
347,338
|
|
||
Land and right of way
|
|
85,960
|
|
|
86,484
|
|
||
Construction in progress
|
|
42,811
|
|
|
12,029
|
|
||
Other
|
|
40,420
|
|
|
35,659
|
|
||
|
|
2,041,562
|
|
|
2,023,232
|
|
||
Less accumulated depreciation
|
|
489,853
|
|
|
453,761
|
|
||
|
|
$
|
1,551,709
|
|
|
$
|
1,569,471
|
|
Note 6:
|
Intangible Assets
|
|
|
Useful Life
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
(In thousands)
|
||||||
Delek transportation agreement
|
|
30 years
|
|
$
|
59,933
|
|
|
$
|
59,933
|
|
HFC transportation agreement
|
|
10-15 years
|
|
75,131
|
|
|
75,131
|
|
||
Customer relationships
|
|
10 years
|
|
69,282
|
|
|
69,282
|
|
||
Other
|
|
|
|
50
|
|
|
50
|
|
||
|
|
|
|
204,396
|
|
|
204,396
|
|
||
Less accumulated amortization
|
|
|
|
82,461
|
|
|
74,933
|
|
||
|
|
|
|
$
|
121,935
|
|
|
$
|
129,463
|
|
Note 7:
|
Employees, Retirement and Incentive Plans
|
Restricted and Phantom Units
|
|
Units
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2018 (nonvested)
|
|
119,009
|
|
|
$
|
34.77
|
|
Granted
|
|
12,890
|
|
|
30.23
|
|
|
Forfeited
|
|
(698
|
)
|
|
34.59
|
|
|
Outstanding at June 30, 2018 (nonvested)
|
|
131,201
|
|
|
$
|
34.33
|
|
Performance Units
|
|
Units
|
|
Outstanding at January 1, 2018 (nonvested)
|
|
36,911
|
|
Granted
|
|
2,764
|
|
Vesting and transfer of common units to recipients
|
|
(4,283
|
)
|
Outstanding at June 30, 2018 (nonvested)
|
|
35,392
|
|
Note 8:
|
Debt
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
(In thousands)
|
||||||
Credit Agreement
|
|
|
|
|
||||
Amount outstanding
|
|
$
|
900,000
|
|
|
$
|
1,012,000
|
|
|
|
|
|
|
||||
6% Senior Notes
|
|
|
|
|
||||
Principal
|
|
500,000
|
|
|
500,000
|
|
||
Unamortized premium and debt issuance costs
|
|
(4,401
|
)
|
|
(4,692
|
)
|
||
|
|
495,599
|
|
|
495,308
|
|
||
|
|
|
|
|
||||
Total long-term debt
|
|
$
|
1,395,599
|
|
|
$
|
1,507,308
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Interest on outstanding debt:
|
|
|
|
|
||||
Credit Agreement, net of interest on interest rate swaps
|
|
$
|
17,850
|
|
|
$
|
13,299
|
|
6.5% Senior Notes
|
|
—
|
|
|
162
|
|
||
6% Senior Notes
|
|
15,000
|
|
|
12,000
|
|
||
Amortization of discount and deferred debt issuance costs
|
|
1,516
|
|
|
1,536
|
|
||
Commitment fees and other
|
|
1,007
|
|
|
720
|
|
||
Total interest incurred
|
|
35,373
|
|
|
27,717
|
|
||
Less capitalized interest
|
|
166
|
|
|
430
|
|
||
Net interest expense
|
|
$
|
35,207
|
|
|
$
|
27,287
|
|
Cash paid for interest
|
|
$
|
33,935
|
|
|
$
|
33,700
|
|
Note 9:
|
Significant Customers
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
HFC
|
|
79
|
%
|
|
85
|
%
|
|
79
|
%
|
|
85
|
%
|
Delek
|
|
7
|
%
|
|
6
|
%
|
|
6
|
%
|
|
7
|
%
|
Note 10:
|
Related Party Transactions
|
•
|
Revenues received from HFC were
$94.0 million
and
$93.2 million
for the three months ended
June 30, 2018
and
2017
, respectively, and
$195.4 million
and
$182.2 million
for the
six months ended June 30, 2018
and
2017
, respectively.
|
•
|
HFC charged us general and administrative services under the Omnibus Agreement of
$0.6 million
for each of the three months ended
June 30, 2018
and
2017
, and
$1.2 million
for the
six months ended June 30, 2018
and
2017
.
|
•
|
We reimbursed HFC for costs of employees supporting our operations of
$12.5 million
and
$11.4 million
for the three months ended
June 30, 2018
and
2017
, respectively, and
$25.2 million
and
$22.9 million
for the
six months ended June 30, 2018
and
2017
, respectively.
|
•
|
HFC reimbursed us
$2.9 million
and
$1.5 million
for the three months ended
June 30, 2018
and
2017
, respectively, for expense and capital projects and
$4.2 million
and
$2.8 million
for the
six months ended June 30, 2018
and
2017
, respectively.
|
•
|
We distributed
$36.6 million
and
$72.8 million
in the
three and six
months ended
June 30, 2018
, respectively, to HFC as regular distributions on its common units and
$32.6 million
and
$63.9 million
on its common units and general partner interest, including general partner incentive distributions, in the
three and six
months ended
June 30, 2017
, respectively.
|
•
|
Accounts receivable from HFC were
$36.7 million
and
$51.5 million
at
June 30, 2018
, and
December 31, 2017
, respectively.
|
•
|
Accounts payable to HFC were
$11.3 million
and
$7.7 million
at
June 30, 2018
, and
December 31, 2017
, respectively.
|
•
|
Deferred revenue in the consolidated balance sheets at
June 30, 2018
and
December 31, 2017
, includes
$1.7 million
and
$4.4 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
$1.7 million
deferred at
June 30, 2018
.
|
•
|
We received lease payments from HFC for use of our Artesia and Tulsa railyards of
$0.5 million
and
$0.1 million
for the three months ended
June 30, 2018
and
2017
, respectively, and
$1.0 million
and
$0.2 million
for the
six months ended June 30, 2018
and
2017
, respectively.
|
•
|
On October 31, 2017, we closed on an equity restructuring transaction with HEP Logistics, a wholly-owned subsidiary of HFC and the general partner of HEP, pursuant to which the incentive distribution rights held by HEP Logistics were canceled, and HEP Logistics'
2%
general partner interest in HEP was converted into a non-economic general partner interest in HEP. In consideration, we issued
37,250,000
of our common units to HEP Logistics. In addition, HEP Logistics agreed to waive
$2.5 million
of limited partner cash distributions for each of twelve consecutive quarters beginning with the first quarter the units issued as consideration were eligible to receive distributions.
|
Note 11:
|
Partners’ Equity, Income Allocations and Cash Distributions
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
General partner interest in net income
|
|
$
|
—
|
|
|
$
|
827
|
|
|
$
|
—
|
|
|
$
|
1,338
|
|
General partner incentive distribution
|
|
—
|
|
|
17,501
|
|
|
—
|
|
|
34,128
|
|
||||
Total general partner interest in net income
|
|
$
|
—
|
|
|
$
|
18,328
|
|
|
$
|
—
|
|
|
$
|
35,466
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands, except per unit data)
|
||||||||||||||
General partner interest in distribution
|
|
$
|
—
|
|
|
$
|
1,188
|
|
|
$
|
—
|
|
|
$
|
2,336
|
|
General partner incentive distribution
|
|
—
|
|
|
17,501
|
|
|
—
|
|
|
34,128
|
|
||||
Total general partner distribution
|
|
—
|
|
|
18,689
|
|
|
—
|
|
|
36,464
|
|
||||
Limited partner distribution
|
|
67,091
|
|
|
40,682
|
|
|
133,670
|
|
|
80,314
|
|
||||
Total regular quarterly cash distribution
|
|
$
|
67,091
|
|
|
$
|
59,371
|
|
|
$
|
133,670
|
|
|
$
|
116,778
|
|
Cash distribution per unit applicable to limited partners
|
|
$
|
0.6600
|
|
|
$
|
0.6325
|
|
|
$
|
1.3150
|
|
|
$
|
1.2525
|
|
Note 12:
|
Net Income Per Limited Partner Unit
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income attributable to the partners
|
|
$
|
40,143
|
|
|
$
|
41,335
|
|
|
$
|
86,311
|
|
|
$
|
66,898
|
|
Less: General partner’s distribution declared (including IDRs)
|
|
—
|
|
|
(18,689
|
)
|
|
—
|
|
|
(36,464
|
)
|
||||
Limited partner’s distribution declared on common units
|
|
(67,091
|
)
|
|
(40,682
|
)
|
|
(133,670
|
)
|
|
(80,314
|
)
|
||||
Distributions in excess of net income attributable to the partners
|
|
$
|
(26,948
|
)
|
|
$
|
(18,036
|
)
|
|
$
|
(47,359
|
)
|
|
$
|
(49,880
|
)
|
|
|
General Partner (including IDRs)
|
|
Limited Partners’ Common Units
|
|
Total
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
||||||
Net income attributable to the partners:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
—
|
|
|
$
|
67,091
|
|
|
$
|
67,091
|
|
Distributions in excess of net income attributable to the partners
|
|
—
|
|
|
(26,948
|
)
|
|
(26,948
|
)
|
|||
Net income attributable to the partners
|
|
$
|
—
|
|
|
$
|
40,143
|
|
|
$
|
40,143
|
|
Weighted average limited partners' units outstanding
|
|
|
|
105,429
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
0.38
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2017
|
|
|
|
|
|
|
||||||
Net income attributable to the partners:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
18,689
|
|
|
$
|
40,682
|
|
|
$
|
59,371
|
|
Distributions in excess of net income attributable to the partners
|
|
(361
|
)
|
|
(17,675
|
)
|
|
(18,036
|
)
|
|||
Net income attributable to the partners
|
|
$
|
18,328
|
|
|
$
|
23,007
|
|
|
$
|
41,335
|
|
Weighted average limited partners' units outstanding
|
|
|
|
64,086
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
0.36
|
|
|
|
|
|
General Partner (including IDRs)
|
|
Limited Partners’ Common Units
|
|
Total
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
||||||
Net income attributable to partnership:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
—
|
|
|
$
|
133,670
|
|
|
$
|
133,670
|
|
Distributions in excess of net income attributable to partnership
|
|
—
|
|
|
(47,359
|
)
|
|
(47,359
|
)
|
|||
Net income attributable to partnership
|
|
$
|
—
|
|
|
$
|
86,311
|
|
|
$
|
86,311
|
|
Weighted average limited partners' units outstanding
|
|
|
|
104,637
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
0.82
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
||||||
Net income attributable to partnership:
|
|
|
|
|
|
|
||||||
Distributions declared
|
|
$
|
36,464
|
|
|
$
|
80,314
|
|
|
$
|
116,778
|
|
Distributions in excess of net income attributable to partnership
|
|
(998
|
)
|
|
(48,882
|
)
|
|
(49,880
|
)
|
|||
Net income attributable to partnership
|
|
$
|
35,466
|
|
|
$
|
31,432
|
|
|
$
|
66,898
|
|
Weighted average limited partners' units outstanding
|
|
|
|
63,602
|
|
|
|
|||||
Limited partners' per unit interest in earnings - basic and diluted
|
|
|
|
$
|
0.49
|
|
|
|
Note 13:
|
Environmental
|
Note 14:
|
Contingencies
|
Note 15:
|
Operating Segments
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Pipelines and terminals - affiliate
|
|
$
|
75,178
|
|
|
$
|
75,613
|
|
|
$
|
158,072
|
|
|
$
|
145,258
|
|
Pipelines and terminals - third-party
|
|
24,747
|
|
|
15,991
|
|
|
52,203
|
|
|
32,600
|
|
||||
Refinery processing units - affiliate
|
|
18,835
|
|
|
17,539
|
|
|
37,369
|
|
|
36,919
|
|
||||
Total segment revenues
|
|
$
|
118,760
|
|
|
$
|
109,143
|
|
|
$
|
247,644
|
|
|
$
|
214,777
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income:
|
|
|
|
|
|
|
|
|
||||||||
Pipelines and terminals
|
|
$
|
51,004
|
|
|
$
|
49,164
|
|
|
$
|
111,217
|
|
|
$
|
95,649
|
|
Refinery processing units
|
|
8,615
|
|
|
5,937
|
|
|
15,942
|
|
|
13,820
|
|
||||
Total segment operating income
|
|
59,619
|
|
|
55,101
|
|
|
127,159
|
|
|
109,469
|
|
||||
Unallocated general and administrative expenses
|
|
(2,673
|
)
|
|
(2,615
|
)
|
|
(5,795
|
)
|
|
(5,249
|
)
|
||||
Interest and financing costs, net
|
|
(17,100
|
)
|
|
(13,645
|
)
|
|
(34,166
|
)
|
|
(39,307
|
)
|
||||
Equity in earnings of unconsolidated affiliates
|
|
1,734
|
|
|
4,053
|
|
|
3,013
|
|
|
5,893
|
|
||||
Gain (loss) on sale of assets and other
|
|
(53
|
)
|
|
89
|
|
|
33
|
|
|
162
|
|
||||
Income before income taxes
|
|
$
|
41,527
|
|
|
$
|
42,983
|
|
|
$
|
90,244
|
|
|
$
|
70,968
|
|
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures:
|
|
|
|
|
|
|
|
|
||||||||
Pipelines and terminals
|
|
$
|
12,127
|
|
|
$
|
12,157
|
|
|
$
|
24,739
|
|
|
$
|
20,286
|
|
Refinery processing units
|
|
—
|
|
|
102
|
|
|
—
|
|
|
238
|
|
||||
Total capital expenditures
|
|
$
|
12,127
|
|
|
$
|
12,259
|
|
|
$
|
24,739
|
|
|
$
|
20,524
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
(in thousands)
|
||||||
Identifiable assets:
|
|
|
|
|
||||
Pipelines and terminals
(1)
|
|
$
|
1,697,531
|
|
|
$
|
1,728,074
|
|
Refinery processing units
|
|
321,191
|
|
|
328,585
|
|
||
Other
|
|
97,341
|
|
|
97,455
|
|
||
Total identifiable assets
|
|
$
|
2,116,063
|
|
|
$
|
2,154,114
|
|
Note 16:
|
Supplemental Guarantor/Non-Guarantor Financial Information
|
June 30, 2018
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
640
|
|
|
$
|
6,014
|
|
|
$
|
—
|
|
|
$
|
6,656
|
|
Accounts receivable
|
|
—
|
|
|
45,447
|
|
|
5,305
|
|
|
(586
|
)
|
|
50,166
|
|
|||||
Prepaid and other current assets
|
|
156
|
|
|
2,629
|
|
|
361
|
|
|
—
|
|
|
3,146
|
|
|||||
Total current assets
|
|
158
|
|
|
48,716
|
|
|
11,680
|
|
|
(586
|
)
|
|
59,968
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Properties and equipment, net
|
|
—
|
|
|
1,197,968
|
|
|
353,741
|
|
|
—
|
|
|
1,551,709
|
|
|||||
Investment in subsidiaries
|
|
1,866,892
|
|
|
269,911
|
|
|
—
|
|
|
(2,136,803
|
)
|
|
—
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
121,935
|
|
|
—
|
|
|
—
|
|
|
121,935
|
|
|||||
Goodwill
|
|
—
|
|
|
270,336
|
|
|
—
|
|
|
—
|
|
|
270,336
|
|
|||||
Equity method investments
|
|
—
|
|
|
84,752
|
|
|
—
|
|
|
—
|
|
|
84,752
|
|
|||||
Other assets
|
|
10,483
|
|
|
16,880
|
|
|
—
|
|
|
—
|
|
|
27,363
|
|
|||||
Total assets
|
|
$
|
1,877,533
|
|
|
$
|
2,010,498
|
|
|
$
|
365,421
|
|
|
$
|
(2,137,389
|
)
|
|
$
|
2,116,063
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
—
|
|
|
$
|
19,284
|
|
|
$
|
1,700
|
|
|
$
|
(586
|
)
|
|
$
|
20,398
|
|
Accrued interest
|
|
13,189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,189
|
|
|||||
Deferred revenue
|
|
—
|
|
|
9,675
|
|
|
1,170
|
|
|
—
|
|
|
10,845
|
|
|||||
Accrued property taxes
|
|
—
|
|
|
3,077
|
|
|
2,463
|
|
|
—
|
|
|
5,540
|
|
|||||
Other current liabilities
|
|
88
|
|
|
3,505
|
|
|
—
|
|
|
—
|
|
|
3,593
|
|
|||||
Total current liabilities
|
|
13,277
|
|
|
35,541
|
|
|
5,333
|
|
|
(586
|
)
|
|
53,565
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
|
1,395,599
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,395,599
|
|
|||||
Other long-term liabilities
|
|
260
|
|
|
15,060
|
|
|
206
|
|
|
—
|
|
|
15,526
|
|
|||||
Deferred revenue
|
|
—
|
|
|
48,405
|
|
|
—
|
|
|
—
|
|
|
48,405
|
|
|||||
Class B unit
|
|
—
|
|
|
44,600
|
|
|
—
|
|
|
—
|
|
|
44,600
|
|
|||||
Equity - partners
|
|
468,397
|
|
|
1,866,892
|
|
|
269,911
|
|
|
(2,136,803
|
)
|
|
468,397
|
|
|||||
Equity - noncontrolling interest
|
|
—
|
|
|
—
|
|
|
89,971
|
|
|
—
|
|
|
89,971
|
|
|||||
Total liabilities and equity
|
|
$
|
1,877,533
|
|
|
$
|
2,010,498
|
|
|
$
|
365,421
|
|
|
$
|
(2,137,389
|
)
|
|
$
|
2,116,063
|
|
December 31, 2017
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
511
|
|
|
$
|
7,263
|
|
|
$
|
—
|
|
|
$
|
7,776
|
|
Accounts receivable
|
|
—
|
|
|
59,448
|
|
|
5,038
|
|
|
(182
|
)
|
|
64,304
|
|
|||||
Prepaid and other current assets
|
|
13
|
|
|
2,016
|
|
|
282
|
|
|
—
|
|
|
2,311
|
|
|||||
Total current assets
|
|
15
|
|
|
61,975
|
|
|
12,583
|
|
|
(182
|
)
|
|
74,391
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Properties and equipment, net
|
|
—
|
|
|
1,213,626
|
|
|
355,845
|
|
|
—
|
|
|
1,569,471
|
|
|||||
Investment in subsidiaries
|
|
1,902,285
|
|
|
273,319
|
|
|
—
|
|
|
(2,175,604
|
)
|
|
—
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
129,463
|
|
|
—
|
|
|
—
|
|
|
129,463
|
|
|||||
Goodwill
|
|
—
|
|
|
266,716
|
|
|
—
|
|
|
—
|
|
|
266,716
|
|
|||||
Equity method investments
|
|
—
|
|
|
85,279
|
|
|
—
|
|
|
—
|
|
|
85,279
|
|
|||||
Other assets
|
|
11,753
|
|
|
17,041
|
|
|
—
|
|
|
—
|
|
|
28,794
|
|
|||||
Total assets
|
|
$
|
1,914,053
|
|
|
$
|
2,047,419
|
|
|
$
|
368,428
|
|
|
$
|
(2,175,786
|
)
|
|
$
|
2,154,114
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
—
|
|
|
$
|
20,928
|
|
|
$
|
1,526
|
|
|
$
|
(182
|
)
|
|
$
|
22,272
|
|
Accrued interest
|
|
12,500
|
|
|
756
|
|
|
—
|
|
|
—
|
|
|
13,256
|
|
|||||
Deferred revenue
|
|
—
|
|
|
8,540
|
|
|
1,058
|
|
|
—
|
|
|
9,598
|
|
|||||
Accrued property taxes
|
|
—
|
|
|
3,431
|
|
|
1,221
|
|
|
—
|
|
|
4,652
|
|
|||||
Other current liabilities
|
|
—
|
|
|
5,707
|
|
|
—
|
|
|
—
|
|
|
5,707
|
|
|||||
Total current liabilities
|
|
12,500
|
|
|
39,362
|
|
|
3,805
|
|
|
(182
|
)
|
|
55,485
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
|
1,507,308
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,507,308
|
|
|||||
Other long-term liabilities
|
|
286
|
|
|
15,359
|
|
|
198
|
|
|
—
|
|
|
15,843
|
|
|||||
Deferred revenue
|
|
—
|
|
|
47,272
|
|
|
—
|
|
|
—
|
|
|
47,272
|
|
|||||
Class B unit
|
|
—
|
|
|
43,141
|
|
|
—
|
|
|
—
|
|
|
43,141
|
|
|||||
Equity - partners
|
|
393,959
|
|
|
1,902,285
|
|
|
273,319
|
|
|
(2,175,604
|
)
|
|
393,959
|
|
|||||
Equity - noncontrolling interest
|
|
—
|
|
|
—
|
|
|
91,106
|
|
|
—
|
|
|
91,106
|
|
|||||
Total liabilities and equity
|
|
$
|
1,914,053
|
|
|
$
|
2,047,419
|
|
|
$
|
368,428
|
|
|
$
|
(2,175,786
|
)
|
|
$
|
2,154,114
|
|
Three Months Ended June 30, 2018
|
|
Parent
|
|
Guarantor Restricted
Subsidiaries
|
|
Non-Guarantor Non-restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
89,522
|
|
|
$
|
4,491
|
|
|
$
|
—
|
|
|
$
|
94,013
|
|
Third parties
|
|
—
|
|
|
19,540
|
|
|
5,207
|
|
|
—
|
|
|
24,747
|
|
|||||
|
|
—
|
|
|
109,062
|
|
|
9,698
|
|
|
—
|
|
|
118,760
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
31,494
|
|
|
3,039
|
|
|
—
|
|
|
34,533
|
|
|||||
Depreciation and amortization
|
|
|
|
|
20,431
|
|
|
4,177
|
|
|
—
|
|
|
24,608
|
|
|||||
General and administrative
|
|
761
|
|
|
1,912
|
|
|
—
|
|
|
—
|
|
|
2,673
|
|
|||||
|
|
761
|
|
|
53,837
|
|
|
7,216
|
|
|
—
|
|
|
61,814
|
|
|||||
Operating income (loss)
|
|
(761
|
)
|
|
55,225
|
|
|
2,482
|
|
|
—
|
|
|
56,946
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
|
58,566
|
|
|
1,881
|
|
|
—
|
|
|
(60,447
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
1,734
|
|
|
—
|
|
|
—
|
|
|
1,734
|
|
|||||
Interest expense
|
|
(17,662
|
)
|
|
36
|
|
|
—
|
|
|
—
|
|
|
(17,626
|
)
|
|||||
Interest income
|
|
—
|
|
|
526
|
|
|
—
|
|
|
—
|
|
|
526
|
|
|||||
Gain on sale of assets and other
|
|
—
|
|
|
(79
|
)
|
|
26
|
|
|
—
|
|
|
(53
|
)
|
|||||
|
|
40,904
|
|
|
4,098
|
|
|
26
|
|
|
(60,447
|
)
|
|
(15,419
|
)
|
|||||
Income before income taxes
|
|
40,143
|
|
|
59,323
|
|
|
2,508
|
|
|
(60,447
|
)
|
|
41,527
|
|
|||||
State income tax expense
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|||||
Net income
|
|
40,143
|
|
|
59,295
|
|
|
2,508
|
|
|
(60,447
|
)
|
|
41,499
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(729
|
)
|
|
(627
|
)
|
|
—
|
|
|
(1,356
|
)
|
|||||
Net income attributable to the partners
|
|
40,143
|
|
|
58,566
|
|
|
1,881
|
|
|
(60,447
|
)
|
|
40,143
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Comprehensive income attributable to the partners
|
|
$
|
40,143
|
|
|
$
|
58,566
|
|
|
$
|
1,881
|
|
|
$
|
(60,447
|
)
|
|
$
|
40,143
|
|
Three Months Ended June 30, 2017
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
88,022
|
|
|
$
|
5,130
|
|
|
$
|
—
|
|
|
$
|
93,152
|
|
Third parties
|
|
—
|
|
|
10,385
|
|
|
5,606
|
|
|
—
|
|
|
15,991
|
|
|||||
|
|
—
|
|
|
98,407
|
|
|
10,736
|
|
|
—
|
|
|
109,143
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
30,871
|
|
|
3,226
|
|
|
—
|
|
|
34,097
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
15,791
|
|
|
4,154
|
|
|
—
|
|
|
19,945
|
|
|||||
General and administrative
|
|
865
|
|
|
1,750
|
|
|
—
|
|
|
—
|
|
|
2,615
|
|
|||||
|
|
865
|
|
|
48,412
|
|
|
7,380
|
|
|
—
|
|
|
56,657
|
|
|||||
Operating income (loss)
|
|
(865
|
)
|
|
49,995
|
|
|
3,356
|
|
|
—
|
|
|
52,486
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
|
48,375
|
|
|
2,519
|
|
|
—
|
|
|
(50,894
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
4,053
|
|
|
—
|
|
|
—
|
|
|
4,053
|
|
|||||
Interest expense
|
|
(6,175
|
)
|
|
(7,573
|
)
|
|
—
|
|
|
—
|
|
|
(13,748
|
)
|
|||||
Interest income
|
|
—
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
103
|
|
|||||
Gain on sale of assets and other
|
|
—
|
|
|
87
|
|
|
2
|
|
|
—
|
|
|
89
|
|
|||||
|
|
42,200
|
|
|
(811
|
)
|
|
2
|
|
|
(50,894
|
)
|
|
(9,503
|
)
|
|||||
Income before income taxes
|
|
41,335
|
|
|
49,184
|
|
|
3,358
|
|
|
(50,894
|
)
|
|
42,983
|
|
|||||
State income tax expense
|
|
—
|
|
|
(127
|
)
|
|
—
|
|
|
—
|
|
|
(127
|
)
|
|||||
Net income
|
|
41,335
|
|
|
49,057
|
|
|
3,358
|
|
|
(50,894
|
)
|
|
42,856
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(682
|
)
|
|
(839
|
)
|
|
—
|
|
|
(1,521
|
)
|
|||||
Net income attributable to the partners
|
|
41,335
|
|
|
48,375
|
|
|
2,519
|
|
|
(50,894
|
)
|
|
41,335
|
|
|||||
Other comprehensive income
|
|
(91
|
)
|
|
(91
|
)
|
|
—
|
|
|
91
|
|
|
(91
|
)
|
|||||
Comprehensive income attributable to the partners
|
|
$
|
41,244
|
|
|
$
|
48,284
|
|
|
$
|
2,519
|
|
|
$
|
(50,803
|
)
|
|
$
|
41,244
|
|
Six Months Ended June 30, 2018
|
|
Parent
|
|
Guarantor Restricted
Subsidiaries
|
|
Non-Guarantor Non-restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
183,813
|
|
|
$
|
11,628
|
|
|
$
|
—
|
|
|
$
|
195,441
|
|
Third parties
|
|
—
|
|
|
39,518
|
|
|
12,685
|
|
|
—
|
|
|
52,203
|
|
|||||
|
|
—
|
|
|
223,331
|
|
|
24,313
|
|
|
—
|
|
|
247,644
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
64,158
|
|
|
6,577
|
|
|
—
|
|
|
70,735
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
41,432
|
|
|
8,318
|
|
|
—
|
|
|
49,750
|
|
|||||
General and administrative
|
|
2,041
|
|
|
3,754
|
|
|
—
|
|
|
—
|
|
|
5,795
|
|
|||||
|
|
2,041
|
|
|
109,344
|
|
|
14,895
|
|
|
—
|
|
|
126,280
|
|
|||||
Operating income (loss)
|
|
(2,041
|
)
|
|
113,987
|
|
|
9,418
|
|
|
—
|
|
|
121,364
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings (loss) of subsidiaries
|
|
123,618
|
|
|
7,093
|
|
|
—
|
|
|
(130,711
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
3,013
|
|
|
—
|
|
|
—
|
|
|
3,013
|
|
|||||
Interest expense
|
|
(35,311
|
)
|
|
104
|
|
|
—
|
|
|
—
|
|
|
(35,207
|
)
|
|||||
Interest income
|
|
—
|
|
|
1,041
|
|
|
—
|
|
|
—
|
|
|
1,041
|
|
|||||
Gain (loss) on sale of assets and other
|
|
45
|
|
|
(51
|
)
|
|
39
|
|
|
—
|
|
|
33
|
|
|||||
|
|
88,352
|
|
|
11,200
|
|
|
39
|
|
|
(130,711
|
)
|
|
(31,120
|
)
|
|||||
Income (loss) before income taxes
|
|
86,311
|
|
|
125,187
|
|
|
9,457
|
|
|
(130,711
|
)
|
|
90,244
|
|
|||||
State income tax expense
|
|
—
|
|
|
(110
|
)
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
|||||
Net income (loss)
|
|
86,311
|
|
|
125,077
|
|
|
9,457
|
|
|
(130,711
|
)
|
|
90,134
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(1,459
|
)
|
|
(2,364
|
)
|
|
—
|
|
|
(3,823
|
)
|
|||||
Net income (loss) attributable to Holly Energy Partners
|
|
86,311
|
|
|
123,618
|
|
|
7,093
|
|
|
(130,711
|
)
|
|
86,311
|
|
|||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Comprehensive income (loss)
|
|
$
|
86,311
|
|
|
$
|
123,618
|
|
|
$
|
7,093
|
|
|
$
|
(130,711
|
)
|
|
$
|
86,311
|
|
Six Months Ended June 30, 2017
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Affiliates
|
|
$
|
—
|
|
|
$
|
168,798
|
|
|
$
|
13,379
|
|
|
$
|
—
|
|
|
$
|
182,177
|
|
Third parties
|
|
—
|
|
|
21,388
|
|
|
11,212
|
|
|
—
|
|
|
32,600
|
|
|||||
|
|
—
|
|
|
190,186
|
|
|
24,591
|
|
|
—
|
|
|
214,777
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operations (exclusive of depreciation and amortization)
|
|
—
|
|
|
59,963
|
|
|
6,623
|
|
|
—
|
|
|
66,586
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
30,644
|
|
|
8,078
|
|
|
—
|
|
|
38,722
|
|
|||||
General and administrative
|
|
2,020
|
|
|
3,229
|
|
|
—
|
|
|
—
|
|
|
5,249
|
|
|||||
|
|
2,020
|
|
|
93,836
|
|
|
14,701
|
|
|
—
|
|
|
110,557
|
|
|||||
Operating income (loss)
|
|
(2,020
|
)
|
|
96,350
|
|
|
9,890
|
|
|
—
|
|
|
104,220
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings (loss) of subsidiaries
|
|
93,658
|
|
|
7,420
|
|
|
—
|
|
|
(101,078
|
)
|
|
—
|
|
|||||
Equity in earnings of equity method investments
|
|
—
|
|
|
5,893
|
|
|
—
|
|
|
—
|
|
|
5,893
|
|
|||||
Interest expense
|
|
(12,515
|
)
|
|
(14,772
|
)
|
|
—
|
|
|
—
|
|
|
(27,287
|
)
|
|||||
Interest income
|
|
—
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|||||
Loss on early extinguishment of debt
|
|
(12,225
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,225
|
)
|
|||||
Gain (loss) on sale of assets and other
|
|
—
|
|
|
159
|
|
|
3
|
|
|
—
|
|
|
162
|
|
|||||
|
|
68,918
|
|
|
(1,095
|
)
|
|
3
|
|
|
(101,078
|
)
|
|
(33,252
|
)
|
|||||
Income (loss) before income taxes
|
|
66,898
|
|
|
95,255
|
|
|
9,893
|
|
|
(101,078
|
)
|
|
70,968
|
|
|||||
State income tax expense
|
|
—
|
|
|
(233
|
)
|
|
—
|
|
|
—
|
|
|
(233
|
)
|
|||||
Net income (loss)
|
|
66,898
|
|
|
95,022
|
|
|
9,893
|
|
|
(101,078
|
)
|
|
70,735
|
|
|||||
Allocation of net income attributable to noncontrolling interests
|
|
—
|
|
|
(1,364
|
)
|
|
(2,473
|
)
|
|
—
|
|
|
(3,837
|
)
|
|||||
Net income (loss) attributable to Holly Energy Partners
|
|
66,898
|
|
|
93,658
|
|
|
7,420
|
|
|
(101,078
|
)
|
|
66,898
|
|
|||||
Other comprehensive income (loss)
|
|
(28
|
)
|
|
(28
|
)
|
|
—
|
|
|
28
|
|
|
(28
|
)
|
|||||
Comprehensive income (loss)
|
|
$
|
66,870
|
|
|
$
|
93,630
|
|
|
$
|
7,420
|
|
|
$
|
(101,050
|
)
|
|
$
|
66,870
|
|
Six Months Ended June 30, 2018
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Cash flows from operating activities
|
|
$
|
(33,588
|
)
|
|
$
|
182,983
|
|
|
$
|
18,661
|
|
|
$
|
(7,093
|
)
|
|
$
|
160,963
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to properties and equipment
|
|
—
|
|
|
(18,829
|
)
|
|
(5,910
|
)
|
|
—
|
|
|
(24,739
|
)
|
|||||
Business and asset acquisitions
|
|
—
|
|
|
(6,831
|
)
|
|
—
|
|
|
—
|
|
|
(6,831
|
)
|
|||||
Distributions from UNEV in excess of earnings
|
|
—
|
|
|
3,407
|
|
|
—
|
|
|
(3,407
|
)
|
|
—
|
|
|||||
Proceeds from sale of assets
|
|
—
|
|
|
196
|
|
|
—
|
|
|
—
|
|
|
196
|
|
|||||
Distributions in excess of equity in earnings of equity investments
|
|
—
|
|
|
299
|
|
|
—
|
|
|
—
|
|
|
299
|
|
|||||
|
|
—
|
|
|
(21,758
|
)
|
|
(5,910
|
)
|
|
(3,407
|
)
|
|
(31,075
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net repayments under credit agreement
|
|
(112,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,000
|
)
|
|||||
Net intercompany financing activities
|
|
160,330
|
|
|
(160,330
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Proceeds from issuance of common units
|
|
114,899
|
|
|
(68
|
)
|
|
—
|
|
|
—
|
|
|
114,831
|
|
|||||
Contribution from general partner
|
|
492
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
492
|
|
|||||
Distributions to HEP unitholders
|
|
(130,075
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(130,075
|
)
|
|||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(14,000
|
)
|
|
10,500
|
|
|
(3,500
|
)
|
|||||
Units withheld for tax withholding obligations
|
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|||||
Other
|
|
—
|
|
|
(698
|
)
|
|
—
|
|
|
—
|
|
|
(698
|
)
|
|||||
|
|
33,588
|
|
|
(161,096
|
)
|
|
(14,000
|
)
|
|
10,500
|
|
|
(131,008
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Increase (decrease) for the period
|
|
—
|
|
|
129
|
|
|
(1,249
|
)
|
|
—
|
|
|
(1,120
|
)
|
|||||
Beginning of period
|
|
2
|
|
|
511
|
|
|
7,263
|
|
|
—
|
|
|
7,776
|
|
|||||
End of period
|
|
$
|
2
|
|
|
$
|
640
|
|
|
$
|
6,014
|
|
|
$
|
—
|
|
|
$
|
6,656
|
|
Six Months Ended June 30, 2017
|
|
Parent
|
|
Guarantor
Restricted Subsidiaries
|
|
Non-Guarantor Non-Restricted Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Cash flows from operating activities
|
|
$
|
(20,377
|
)
|
|
$
|
122,025
|
|
|
$
|
19,373
|
|
|
$
|
(7,420
|
)
|
|
$
|
113,601
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to properties and equipment
|
|
—
|
|
|
(17,670
|
)
|
|
(2,854
|
)
|
|
—
|
|
|
(20,524
|
)
|
|||||
Proceeds from sale of assets
|
|
—
|
|
|
635
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|||||
Distributions from UNEV in excess of earnings
|
|
—
|
|
|
3,080
|
|
|
—
|
|
|
(3,080
|
)
|
|
—
|
|
|||||
Distributions in excess of equity in earnings of equity investments
|
|
—
|
|
|
1,654
|
|
|
—
|
|
|
—
|
|
|
1,654
|
|
|||||
|
|
—
|
|
|
(12,301
|
)
|
|
(2,854
|
)
|
|
(3,080
|
)
|
|
(18,235
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net borrowings under credit agreement
|
|
—
|
|
|
290,000
|
|
|
—
|
|
|
—
|
|
|
290,000
|
|
|||||
Net intercompany financing activities
|
|
389,005
|
|
|
(389,005
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Redemption of senior notes
|
|
(309,750
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(309,750
|
)
|
|||||
Proceeds from issuance of common units
|
|
52,383
|
|
|
251
|
|
|
—
|
|
|
—
|
|
|
52,634
|
|
|||||
Distributions to HEP unitholders
|
|
(112,195
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,195
|
)
|
|||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(14,000
|
)
|
|
10,500
|
|
|
(3,500
|
)
|
|||||
Distribution to HFC for El Dorado tanks
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|||||
Contributions from general partner
|
|
1,072
|
|
|
(77
|
)
|
|
—
|
|
|
—
|
|
|
995
|
|
|||||
Units withheld for tax withholding obligations
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|||||
Other
|
|
—
|
|
|
(730
|
)
|
|
—
|
|
|
—
|
|
|
(730
|
)
|
|||||
|
|
20,377
|
|
|
(99,561
|
)
|
|
(14,000
|
)
|
|
10,500
|
|
|
(82,684
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease for the period
|
|
—
|
|
|
10,163
|
|
|
2,519
|
|
|
—
|
|
|
12,682
|
|
|||||
Beginning of period
|
|
2
|
|
|
301
|
|
|
3,354
|
|
|
—
|
|
|
3,657
|
|
|||||
End of period
|
|
$
|
2
|
|
|
$
|
10,464
|
|
|
$
|
5,873
|
|
|
$
|
—
|
|
|
$
|
16,339
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Three Months Ended June 30,
|
|
Change from
|
||||||||
|
|
2018
|
|
2017
|
|
2017
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
$
|
18,744
|
|
|
$
|
19,432
|
|
|
$
|
(688
|
)
|
Affiliates—intermediate pipelines
|
|
7,255
|
|
|
7,250
|
|
|
5
|
|
|||
Affiliates—crude pipelines
|
|
18,479
|
|
|
16,919
|
|
|
1,560
|
|
|||
|
|
44,478
|
|
|
43,601
|
|
|
877
|
|
|||
Third parties—refined product pipelines
|
|
12,348
|
|
|
11,647
|
|
|
701
|
|
|||
Third parties—crude pipelines
|
|
8,713
|
|
|
—
|
|
|
8,713
|
|
|||
|
|
65,539
|
|
|
55,248
|
|
|
10,291
|
|
|||
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
30,700
|
|
|
32,012
|
|
|
(1,312
|
)
|
|||
Third parties
|
|
3,686
|
|
|
4,344
|
|
|
(658
|
)
|
|||
|
|
34,386
|
|
|
36,356
|
|
|
(1,970
|
)
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
18,835
|
|
|
17,539
|
|
|
1,296
|
|
|||
|
|
|
|
|
|
|
||||||
Total revenues
|
|
118,760
|
|
|
109,143
|
|
|
9,617
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Operations (exclusive of depreciation and amortization)
|
|
34,533
|
|
|
34,097
|
|
|
436
|
|
|||
Depreciation and amortization
|
|
24,608
|
|
|
19,945
|
|
|
4,663
|
|
|||
General and administrative
|
|
2,673
|
|
|
2,615
|
|
|
58
|
|
|||
|
|
61,814
|
|
|
56,657
|
|
|
5,157
|
|
|||
Operating income
|
|
56,946
|
|
|
52,486
|
|
|
4,460
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Equity in earnings of equity method investments
|
|
1,734
|
|
|
4,053
|
|
|
(2,319
|
)
|
|||
Interest expense, including amortization
|
|
(17,626
|
)
|
|
(13,748
|
)
|
|
(3,878
|
)
|
|||
Interest income
|
|
526
|
|
|
103
|
|
|
423
|
|
|||
Gain (loss) on sale of assets and other
|
|
(53
|
)
|
|
89
|
|
|
(142
|
)
|
|||
|
|
(15,419
|
)
|
|
(9,503
|
)
|
|
(5,916
|
)
|
|||
Income before income taxes
|
|
41,527
|
|
|
42,983
|
|
|
(1,456
|
)
|
|||
State income tax expense
|
|
(28
|
)
|
|
(127
|
)
|
|
99
|
|
|||
Net income
|
|
41,499
|
|
|
42,856
|
|
|
(1,357
|
)
|
|||
Allocation of net income attributable to noncontrolling interests
|
|
(1,356
|
)
|
|
(1,521
|
)
|
|
165
|
|
|||
Net income attributable to the partners
|
|
40,143
|
|
|
41,335
|
|
|
(1,192
|
)
|
|||
General partner interest in net income attributable to the partners
(1)
|
|
—
|
|
|
(18,328
|
)
|
|
18,328
|
|
|||
Limited partners’ interest in net income
|
|
$
|
40,143
|
|
|
$
|
23,007
|
|
|
$
|
17,136
|
|
Limited partners’ earnings per unit—basic and diluted
(1)
|
|
$
|
0.38
|
|
|
$
|
0.36
|
|
|
$
|
0.36
|
|
Weighted average limited partners’ units outstanding
|
|
105,429
|
|
|
64,086
|
|
|
64,086
|
|
|||
EBITDA
(2)
|
|
$
|
81,879
|
|
|
$
|
75,052
|
|
|
$
|
6,827
|
|
Distributable cash flow
(3)
|
|
$
|
65,180
|
|
|
$
|
60,908
|
|
|
$
|
4,272
|
|
|
|
|
|
|
|
|
||||||
Volumes (bpd)
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
112,371
|
|
|
134,357
|
|
|
(21,986
|
)
|
|||
Affiliates—intermediate pipelines
|
|
151,537
|
|
|
151,683
|
|
|
(146
|
)
|
|||
Affiliates—crude pipelines
|
|
322,850
|
|
|
269,418
|
|
|
53,432
|
|
|||
|
|
586,758
|
|
|
555,458
|
|
|
31,300
|
|
|||
Third parties—refined product pipelines
|
|
73,196
|
|
|
71,612
|
|
|
1,584
|
|
|||
Third parties – crude pipelines
|
|
115,011
|
|
|
—
|
|
|
115,011
|
|
|||
|
|
774,965
|
|
|
627,070
|
|
|
147,895
|
|
|||
Terminals and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
446,089
|
|
|
461,329
|
|
|
(15,240
|
)
|
|||
Third parties
|
|
59,035
|
|
|
67,657
|
|
|
(8,622
|
)
|
|||
|
|
505,124
|
|
|
528,986
|
|
|
(23,862
|
)
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
71,117
|
|
|
67,310
|
|
|
3,807
|
|
|||
|
|
|
|
|
|
|
||||||
Total for pipelines and terminal and refinery processing unit assets (bpd)
|
|
1,351,206
|
|
|
1,223,366
|
|
|
127,840
|
|
|
|
Six Months Ended June 30,
|
|
Change from
|
||||||||
|
|
2018
|
|
2017
|
|
2017
|
||||||
|
|
(In thousands, except per unit data)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
$
|
40,038
|
|
|
$
|
37,176
|
|
|
$
|
2,862
|
|
Affiliates—intermediate pipelines
|
|
15,724
|
|
|
12,534
|
|
|
3,190
|
|
|||
Affiliates—crude pipelines
|
|
38,276
|
|
|
33,800
|
|
|
4,476
|
|
|||
|
|
94,038
|
|
|
83,510
|
|
|
10,528
|
|
|||
Third parties—refined product pipelines
|
|
25,930
|
|
|
24,185
|
|
|
1,745
|
|
|||
Third parties—crude pipelines
|
|
17,740
|
|
|
—
|
|
|
17,740
|
|
|||
|
|
137,708
|
|
|
107,695
|
|
|
30,013
|
|
|||
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
64,034
|
|
|
61,748
|
|
|
2,286
|
|
|||
Third parties
|
|
8,533
|
|
|
8,415
|
|
|
118
|
|
|||
|
|
72,567
|
|
|
70,163
|
|
|
2,404
|
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
37,369
|
|
|
36,919
|
|
|
450
|
|
|||
|
|
|
|
|
|
|
||||||
Total revenues
|
|
247,644
|
|
|
214,777
|
|
|
32,867
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Operations (exclusive of depreciation and amortization)
|
|
70,735
|
|
|
66,586
|
|
|
4,149
|
|
|||
Depreciation and amortization
|
|
49,750
|
|
|
38,722
|
|
|
11,028
|
|
|||
General and administrative
|
|
5,795
|
|
|
5,249
|
|
|
546
|
|
|||
|
|
126,280
|
|
|
110,557
|
|
|
15,723
|
|
|||
Operating income
|
|
121,364
|
|
|
104,220
|
|
|
17,144
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Equity in earnings of equity method investments
|
|
3,013
|
|
|
5,893
|
|
|
(2,880
|
)
|
|||
Interest expense, including amortization
|
|
(35,207
|
)
|
|
(27,287
|
)
|
|
(7,920
|
)
|
|||
Interest income
|
|
1,041
|
|
|
205
|
|
|
836
|
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
(12,225
|
)
|
|
12,225
|
|
|||
Gain on sale of assets and other
|
|
33
|
|
|
162
|
|
|
(129
|
)
|
|||
|
|
(31,120
|
)
|
|
(33,252
|
)
|
|
2,132
|
|
|||
Income before income taxes
|
|
90,244
|
|
|
70,968
|
|
|
19,276
|
|
|||
State income tax expense
|
|
(110
|
)
|
|
(233
|
)
|
|
123
|
|
|||
Net income
|
|
90,134
|
|
|
70,735
|
|
|
19,399
|
|
|||
Allocation of net income attributable to noncontrolling interests
|
|
(3,823
|
)
|
|
(3,837
|
)
|
|
14
|
|
|||
Net income attributable to the partners
|
|
86,311
|
|
|
66,898
|
|
|
19,413
|
|
|||
General partner interest in net income attributable to the partners
(1)
|
|
—
|
|
|
(35,466
|
)
|
|
35,466
|
|
|||
Limited partners’ interest in net income
|
|
$
|
86,311
|
|
|
$
|
31,432
|
|
|
$
|
54,879
|
|
Limited partners’ earnings per unit—basic and diluted
(1)
|
|
$
|
0.82
|
|
|
$
|
0.49
|
|
|
$
|
0.33
|
|
Weighted average limited partners’ units outstanding
|
|
104,637
|
|
|
63,602
|
|
|
41,035
|
|
|||
EBITDA
(2)
|
|
$
|
170,337
|
|
|
$
|
132,935
|
|
|
$
|
37,402
|
|
Distributable cash flow
(3)
|
|
$
|
134,279
|
|
|
$
|
118,197
|
|
|
$
|
16,082
|
|
|
|
|
|
|
|
|
||||||
Volumes (bpd)
|
|
|
|
|
|
|
||||||
Pipelines:
|
|
|
|
|
|
|
||||||
Affiliates—refined product pipelines
|
|
128,498
|
|
|
120,886
|
|
|
7,612
|
|
|||
Affiliates—intermediate pipelines
|
|
139,333
|
|
|
128,143
|
|
|
11,190
|
|
|||
Affiliates—crude pipelines
|
|
341,922
|
|
|
269,155
|
|
|
72,767
|
|
|||
|
|
609,753
|
|
|
518,184
|
|
|
91,569
|
|
|||
Third parties—refined product pipelines
|
|
72,720
|
|
|
78,339
|
|
|
(5,619
|
)
|
|||
Third parties – crude pipelines
|
|
120,568
|
|
|
—
|
|
|
120,568
|
|
|||
|
|
803,041
|
|
|
596,523
|
|
|
206,518
|
|
|||
Terminals and loading racks:
|
|
|
|
|
|
|
||||||
Affiliates
|
|
418,439
|
|
|
418,365
|
|
|
74
|
|
|||
Third parties
|
|
60,684
|
|
|
68,646
|
|
|
(7,962
|
)
|
|||
|
|
479,123
|
|
|
487,011
|
|
|
(7,888
|
)
|
|||
|
|
|
|
|
|
|
||||||
Affiliates—refinery processing units
|
|
69,008
|
|
|
65,082
|
|
|
3,926
|
|
|||
|
|
|
|
|
|
|
||||||
Total for pipelines and terminal and refinery processing unit assets (bpd)
|
|
1,351,172
|
|
|
1,148,616
|
|
|
202,556
|
|
(1)
|
Prior to the equity restructuring transaction on October 31, 2017, net income attributable to Holly Energy Partners was 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 included incentive distributions that were declared subsequent to quarter end. There were no distributions made on the general partner interest after October 31, 2017, and general partner distributions were
$18.7 million
and
$36.5 million
for the three and six months ended
June 30, 2017
, respectively.
|
(2)
|
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to the partners plus (i) interest expense, net of interest income, (ii) state income tax and (iii) depreciation and amortization. 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
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income attributable to the partners
|
|
$
|
40,143
|
|
|
$
|
41,335
|
|
|
$
|
86,311
|
|
|
$
|
66,898
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
16,867
|
|
|
12,982
|
|
|
33,691
|
|
|
25,751
|
|
||||
Interest income
|
|
(526
|
)
|
|
(103
|
)
|
|
(1,041
|
)
|
|
(205
|
)
|
||||
Amortization of discount and deferred debt issuance costs
|
|
759
|
|
|
766
|
|
|
1,516
|
|
|
1,536
|
|
||||
State income tax expense
|
|
28
|
|
|
127
|
|
|
110
|
|
|
233
|
|
||||
Depreciation and amortization
|
|
24,608
|
|
|
19,945
|
|
|
49,750
|
|
|
38,722
|
|
||||
EBITDA
|
|
$
|
81,879
|
|
|
$
|
75,052
|
|
|
$
|
170,337
|
|
|
$
|
132,935
|
|
(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 that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating. Set forth below is our calculation of distributable cash flow.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income attributable to the partners
|
|
$
|
40,143
|
|
|
$
|
41,335
|
|
|
$
|
86,311
|
|
|
$
|
66,898
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
24,608
|
|
|
19,945
|
|
|
49,750
|
|
|
38,722
|
|
||||
Amortization of discount and deferred debt issuance costs
|
|
759
|
|
|
766
|
|
|
1,516
|
|
|
1,536
|
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,225
|
|
||||
Customer billings greater than revenue recognized
|
|
1,819
|
|
|
1,524
|
|
|
138
|
|
|
2,701
|
|
||||
Maintenance capital expenditures
(4)
|
|
(987
|
)
|
|
(2,242
|
)
|
|
(1,305
|
)
|
|
(3,067
|
)
|
||||
Decrease in environmental liability
|
|
(78
|
)
|
|
(313
|
)
|
|
(218
|
)
|
|
(559
|
)
|
||||
Decrease in reimbursable deferred revenue
|
|
(1,243
|
)
|
|
(923
|
)
|
|
(2,420
|
)
|
|
(1,848
|
)
|
||||
Other non-cash adjustments
|
|
159
|
|
|
816
|
|
|
507
|
|
|
1,589
|
|
||||
Distributable cash flow
|
|
$
|
65,180
|
|
|
$
|
60,908
|
|
|
$
|
134,279
|
|
|
$
|
118,197
|
|
(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.
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
(In thousands)
|
||||||
Balance Sheet Data
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
6,656
|
|
|
$
|
7,776
|
|
Working capital
|
|
$
|
6,403
|
|
|
$
|
18,906
|
|
Total assets
|
|
$
|
2,116,063
|
|
|
$
|
2,154,114
|
|
Long-term debt
|
|
$
|
1,395,599
|
|
|
$
|
1,507,308
|
|
Partners’ equity
(5)
|
|
$
|
468,397
|
|
|
$
|
393,959
|
|
(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 June 30,
|
||||||
Equity Method Investment
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
SLC Pipeline LLC
|
$
|
—
|
|
|
$
|
906
|
|
Frontier Aspen LLC
|
—
|
|
|
1,587
|
|
||
Osage Pipe Line Company, LLC
|
959
|
|
|
568
|
|
||
Cheyenne Pipeline LLC
|
775
|
|
|
992
|
|
||
Total
|
$
|
1,734
|
|
|
$
|
4,053
|
|
|
Six Months Ended June 30,
|
||||||
Equity Method Investments
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
SLC Pipeline LLC
|
$
|
—
|
|
|
$
|
1,024
|
|
Frontier Aspen LLC
|
—
|
|
|
2,151
|
|
||
Osage Pipe Line Company, LLC
|
1,601
|
|
|
770
|
|
||
Cheyenne Pipeline LLC
|
1,412
|
|
|
1,948
|
|
||
Total
|
$
|
3,013
|
|
|
$
|
5,893
|
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
(In thousands)
|
||||||
Credit Agreement
|
|
$
|
900,000
|
|
|
$
|
1,012,000
|
|
|
|
|
|
|
||||
6% Senior Notes
|
|
|
|
|
||||
Principal
|
|
500,000
|
|
|
500,000
|
|
||
Unamortized debt issuance costs
|
|
(4,401
|
)
|
|
(4,692
|
)
|
||
|
|
495,599
|
|
|
495,308
|
|
||
|
|
|
|
|
||||
Total long-term debt
|
|
$
|
1,395,599
|
|
|
$
|
1,507,308
|
|
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
|
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
4.1*
|
|
|
10.1*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1**
|
|
|
32.2**
|
|
101++
|
|
The following financial information from Holly Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, 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.
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
++
|
Filed electronically herewith.
|
|
HOLLY ENERGY PARTNERS, L.P.
|
|
|
(Registrant)
|
|
|
|
|
|
|
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
|
|
|
|
|
|
By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
|
|
|
|
Date: August 2, 2018
|
|
/s/ Richard L. Voliva III
|
|
|
Richard L. Voliva III
|
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
Date: August 2, 2018
|
|
/s/ Kenneth P. Norwood
|
|
|
Kenneth P. Norwood
|
|
|
Vice President and Controller
(Principal Accounting Officer)
|
1 Year Holly Energy Partners Chart |
1 Month Holly Energy Partners Chart |
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