Investor Presentation: MLPA Conference 2016
Safe Harbor Disclosure Statement Statements made during the course of this presentation that Additional information on risks and uncertainties that are not historical facts are “forward looking statements” could affect the business prospects and performance of within the meaning of the U.S. Private Securities Litigation HollyFrontier and Holly Energy Partners is provided in the Reform Act of 1995. Forward-looking statements are most recent reports of HollyFrontier and Holly Energy inherently uncertain and necessarily involve risks that may Partners filed with the Securities and Exchange affect the business prospects and performance of Commission. All forward-looking statements included in HollyFrontier Corporation and/or Holly Energy Partners, L.P ., this presentation are expressly qualified in their entirety and actual results may differ materially from those discussed by the foregoing cautionary statements. The forward- during the presentation. Such risks and uncertainties include looking statements speak only as of the date hereof and, but are not limited to risks and uncertainties with respect to other than as required by law, HollyFrontier and Holly the actions of actual or potential competitive suppliers and Energy Partners undertake no obligation to publicly transporters of refined petroleum products in HollyFrontier’s update or revise any forward-looking statements, and Holly Energy Partners’ markets, the demand for and whether as a result of new information, future events or supply of crude oil and refined products, the spread between otherwise. market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies or shutdowns in refinery operations or pipelines, effects of governmental regulations and policies, the availability and cost of financing to HollyFrontier and Holly Energy Partners, the effectiveness of HollyFrontier’s and Holly Energy Partners’ capital investments and marketing strategies, HollyFrontier's and Holly Energy Partners’ efficiency in carrying out construction projects, HollyFrontier's ability to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations, the possibility of terrorist attacks and the consequences of any such attacks, and general economic conditions. Holly Energy Partners (NYSE: HEP) 2
Holly Energy Partners Consistent Distribution Growth Despite Crude Price Volatility Operate a system of petroleum product $0.60 $160 and crude pipelines, storage tanks, DPU* distribution terminals, loading racks and WTI $140 processing units located at or near HFC’s $0.50 refining assets in high growth markets $120 $0.40 Revenues are 100% fee-based with limited $100 commodity risk Distribution WTI Price Major refiner customers have entered into $0.30 $80 long-term contracts Contracts require minimum payment $60 obligations for volume and/or revenue $0.20 commitments $40 Over 80% of revenues tied to long term contracts and minimum commitments $0.10 $20 Earliest contract up for renewal in 2019 (approx. 17% of total commitments) $0.00 $0 46 consecutive quarterly distribution Q4 2004 Q2 2005 Q4 2005 Q2 2006 Q4 2006 Q2 2007 Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 increases since IPO in 2004 1 Distributions are split adjusted reflecting HEP’s January 2013 two-for-one unit split. Holly Energy Partners (NYSE: HEP) 3
Footprint of HollyFrontier and Holly Energy Partners About the HollyFrontier Companies 443,000 BPD Refining Capacity 12.2 Nelson Complexity Approximately 3,400 Pipeline miles 75% UNEV ownership 50% Frontier Pipeline ownership 50% Osage Pipeline ownership 25% SLC Pipeline ownership 14 million barrels of crude & product storage 7 Loading Racks and 10 Terminals * The El Paso terminal was transferred from HEP to HFC as part of an asset swap on February 22, 2016 Holly Energy Partners (NYSE: HEP) 4
Strategic Relationship with HollyFrontier IDR: incentive distribution rights Holly Energy Partners (NYSE: HEP) 5
Limited Partner Distributions Since Inception Distribution has been increased every quarter since IPO – 46 consecutive quarters LP Distribution ($/Unit) 1 $2.50 $2.20 $2.08 $1.96 $2.00 $1.84 $1.74 $1.66 $1.58 $1.50 $1.42 $1.50 $1.29 $1.11 $1.00 $0.50 $- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1 Distributions are split adjusted reflecting HEP’s January 2013 two-for-one unit split. Amounts based on distributions earned during the period. Holly Energy Partners (NYSE: HEP) 6
HEP Growth Since Inception EBITDA, 17% CAGR* Revenue, 16% CAGR* DCF, 17% CAGR* $359 $237 $197 $80 $50 $41 2005 2015 2005 2015 2005 2015 *See page 18 for definitions Holly Energy Partners (NYSE: HEP) 7
HEP Growth: Financial Impact Target 8% annual distribution growth rate Estimated EBITDA Contribution vs 2014 ($mm) 2016E 2017E 4 UNEV Growth 1 11 15 Internal Initiatives 2 7 14 WX Expansion Assets 2 15 25 Tulsa Crude Tanks 1 4 6 El Dorado Naphtha Dropdown 1 7 7 Frontier Pipeline Interest 1 6 7 El Dorado Crude Tanks 1 4 4 SE NM Crude Expansion 1 5 5 Contractual TARIFF Increases 3 8 14 TOTAL 67 97 $400 TO $450 MM IN COMPLETED AND FUTURE PLANNED INVESTMENTS PROJECTED TO ADD APPROXIMATELY $90 MILLION IN EBITDA BY 2017 – A 42% INCREASE OVER 2014 1) Investments already made 2) Prospective growth investments that will require board and/or committee approvals 3) Assumes -3% to +3% range in PPI Finished Goods Index 4) Potential upside to 2017 from expected HFC dropdowns Holly Energy Partners (NYSE: HEP) 8
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