Holly Energy Partners LP — Investor Presentation (August 2022)
24 slides from Holly Energy Partners LP's investor presentation, Aug 16, 2022
Slide 1: Investor Presentation August 2022
INVESTOR PRESENTATION AUGUST 2022
Slide 2: Safe Harbor Disclosure Statement
Holly Energy Partners (NYSE: HEP) 2 Safe Harbor Disclosure Statement Statements made during the course of this presentation that are not historical facts are “forward-looking statements” within the meaning of United States federal securities laws. Forward-looking statements are statements that are n
Slide 3: Company Profile
Holly Energy Partners (NYSE: HEP) Holly Energy Partners Company Profile STABLE EARNINGS FINANCIAL TARGETS & GUIDANCE BALANCE SHEET HIGHLIGHTS Revenues are nearly 100% fee-based with de minimis commodity risk Customer base consisting of refining companies (contracts not with E&Ps) Minimum Volum
Slide 4: Minimum Volume Commitments
Holly Energy Partners (NYSE: HEP) 4 Minimum Volume Commitments MVC Contract Renewal Schedule2 10-15 years = typical contract lengths with HF Sinclair 5 years = weighted-average remaining contract duration MVCs accounted for ~70% of Total Tariffs and Fees3 Inflation Escalators as % of FY 2021 T
Slide 5: Historical Leverage and Coverage Ratios
Holly Energy Partners (NYSE: HEP) 5 Historical Leverage and Coverage Ratios Long-term coverage target of at least 1.3x Majority of contracts tied to MVCs provides coverage cushion Free cash flow after distributions2 to fund maintenance and growth capex while deleveraging Averaged 4.0x levera
Slide 6: HEP Financial Strength
Holly Energy Partners (NYSE: HEP) HEP Financial Strength Reimbursable $15-20mm Maintenance $10-15mm Expansion $40-50mm HEP Capital Structure ($ millions) 6/30/2022 Revolver Capacity (matures 7/2025) $1,200 Revolver Borrowings $(721) Revolver Availability $479 $15Cash Total Liquidity $494 5.000% Seni
Slide 7: Distributable Cash Flow / LP Unit Since Inception
Holly Energy Partners (NYSE: HEP) 7 Distributable Cash Flow / LP Unit Since Inception $1.35 $1.47 $1.58 $1.85 $1.98 $2.06 $2.20 $2.75 $2.52 $2.94 $3.36 $3.65 $3.46 $2.52 $2.57 $2.68 $2.56 $- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 8: HEP Capital Budget
Holly Energy Partners (NYSE: HEP) HEP Capital Budget 2022 Capex Budget1 $50-75mm Turnarounds $25-35mm Maintenance $20-30mm Expansion $5-10mm 81) Per HEP Q2 2022 10-Q filing. *Turnaround occurs approximately every 5 years for refinery processing units
Slide 9: HEP Avenues for Growth
Holly Energy Partners (NYSE: HEP) 9 HEP Avenues for Growth ORGANIC EXTERNAL TRANSACTIONS OPPORTUNITIES WITH HF SINCLAIR Leverage HEP’s existing footprint to capitalize on commercial opportunities Contractual PPI/FERC escalators Pursue logistics assets in HEP’s current geographic region Repla
Slide 10: Sinclair Acquisition Highlights
Holly Energy Partners (NYSE: HEP) Pipelines 1,200 miles of pipelines Regional crude gathering system for Sinclair’s refineries and 3rd parties Refined product outlets for Sinclair’s refineries Terminals 8 product terminals and 2 crude terminals with 4.5 million barrels of operated storage
Slide 11: Structure & Purchase Price
Holly Energy Partners (NYSE: HEP) Structure & Purchase Price Sinclair contributed all of the outstanding equity interests in Sinclair Transportation Company, which owns logistics assets, to HEP in exchange for cash and HEP common units, representing a transaction value of approximately $670 millio
Slide 12: HEP Pro Forma Earnings Profile
Holly Energy Partners (NYSE: HEP) $359 $346 $339 $339 $75 2019A 2020A 2021A Pro Forma HEP Adjusted EBITDA Incremental Sinclair Further Adjusted EBITDA 12 HEP Pro Forma Earnings Profile1 Expected $70-80 million of Adjusted EBITDA uplift from Sinclair’s logistics assets Amount differs from histori
Slide 13: Cushing Connect Joint Venture
Holly Energy Partners (NYSE: HEP) 13 Cushing Connect Joint Venture Deal Highlights JV estimated total capital of $130 million with expected initial EBITDA1 multiple of 8x-9x. HEP built and operates pipeline, PAA to build terminal connections and operate terminal HF Sinclair entered into 15-yea
Slide 14: HEP Capital Allocation Strategy
Holly Energy Partners (NYSE: HEP) Visible Deleveraging Pathway Increased unitholder returns Sustainable Free Cash Flow Transaction Delivers: Near-term Continue to reduce leverage Pay sustainable quarterly distribution of $0.35/unit 14 HEP Capital Allocation Strategy1 Mid to Long-term Strategy
Slide 15: HEP Ownership Structure
Holly Energy Partners (NYSE: HEP) 99.999% interest 66.8mm HEP units1 53% LP interest $1,171M Value2 59.6mm HEP units1 47% LP interest $1,039M Value2 HF SINCLAIR CORPORATION (DINO) GENERAL PARTNER (GP) HOLLY LOGISTIC SERVICES, L.L.C. HOLLY ENERGY PARTNERS, L.P. (HEP) PUBLIC Non-economic GP Interest H
Slide 16: HF Sinclair Business Segment Highlights
Holly Energy Partners (NYSE: HEP) 16Note: Cheyenne Renewable Diesel facility mechanically complete in Q4 2021 and fully operational in Q1 2022. Artesia Renewable Diesel facility completed and fully operational in Q2 2022. HF Sinclair Business Segment Highlights
Slide 17: HF Sinclair Business Segment Highlights
Holly Energy Partners (NYSE: HEP) 17 HF Sinclair Business Segment Highlights Financially Strong Investment Grade Parent Positioned for Value Creation Across all Segments REFINING MARKETING RENEWABLES SPECIALTY LUBRICANTS MIDSTREAM 7 refineries in the Mid- Continent, West and Pacific Northwest regi
Slide 18: HEP Historical Growth
Holly Energy Partners (NYSE: HEP) 18 HEP Historical Growth Committed to Continuing Successful Track Record of Growth 2004 2005 2006 2007 2008 2009 MLP IPO (July 2004) Holly intermediate feedstock pipeline dropdown (July 2005) 25% JV with Plains for SLC pipeline (Mar 2009) Holly Tulsa dropdown of loa
Slide 19: HF Sinclair Environmental, Social and Governance
Holly Energy Partners (NYSE: HEP) 19 HF Sinclair Environmental, Social and Governance1 Board leadership provides significant industry expertise, alongside diverse business, financial and environmental, health and safety expertise Board level committees with specific oversight over ESG matters incl
Slide 20: Appendix
Holly Energy Partners (NYSE: HEP) 20 Appendix
Slide 21: HEP Assets
Holly Energy Partners (NYSE: HEP) 21 HEP Assets Holly Energy Partners owns and operates substantially all of the refined product pipeline and terminaling assets that support HF Sinclair’s refining and marketing operations in the Mid-Continent, Southwest and Northwest regions of the United States A
Slide 22: Adjusted EBITDA Reconciliation
Holly Energy Partners (NYSE: HEP) 22 Adjusted EBITDA Reconciliation 1) Expected Sinclair EBITDA uplift reflects (1) the expected pricing uplift from new minimum volume commitments (“MVCs”) entered into between HEP and HF Sinclair for the acquired Sinclair midstream assets, (2) expected growth in equ
Slide 23: Total Tariffs and Fees Reconciliation
Holly Energy Partners (NYSE: HEP) 23 Total Tariffs and Fees Reconciliation Total Tariffs and Fees are calculated as revenues plus tariffs and fees not included in revenues due to impacts from lease accounting for certain tariffs and fees. Portions of our minimum guaranteed pipeline and terminal tari
Slide 24: Definitions
Holly Energy Partners (NYSE: HEP) 24 Definitions CAGR: The compound annual growth rate is calculated by dividing the ending value by the beginning value, raise the result to the power of one divided by the period length, and subtract one from the subsequent result. CAGR is the mean annual growth rat
Holly Energy Partners — Investor Presentation (August 2022) on 6ix