Slide 1: Investor Presentation
Investor Presentation September 2017
Slide 2: HollyFrontier Disclosure Statement
HOLLYFRONTIER DISCLOSURE STATEMENT The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements made during the course of this presentation relating to matters that are not historical facts are “forward-looking statements” based on management’
Slide 3: Executive Summary
EXECUTIVE SUMMARY REFINING SPECIALTY LUBRICANTS MIDSTREAM •Inland Merchant Refiner •Integrated Specialty Lubricants •Operate Crude and Product Pipelines, Producer loading racks, terminals and tanks in •5 Refineries in the Mid Continent, and around HFC’s refining assets Southwest and Rockies •PCLI Lu
Slide 4: HollyFrontier Investment Highlights
HOLLYFRONTIER INVESTMENT HIGHLIGHTS • Flexible refining system and fleet wide crude discount to WTI REFINING • Premium niche product markets versus Gulf Coast • Internal investment to drive growth and enhance returns • Petro-Canada Lubricants Inc. acquisition • HFC is the fourth largest North Americ
Slide 5: HollyFrontier Footprint
HOLLYFRONTIER FOOTPRINT | PCLI Expands Domestic and International Reach About Petro-Canada Lubricants Inc. • 15,600 BPD Lubricant Production Capacity • 6 sales offices • 4 warehouses • 21 third party-operated Global Lubricants terminals worldwide Distribution • Export over 60% of PCLI • Canada produ
Slide 6: Proximity to North American Crude Production
PROXIMITY TO NORTH AMERICAN CRUDE PRODUCTION | Laid in Crude Advantage • Beneficiary of inland coastal crude discount across entire refining system • 100% of HFC’s purchased crude barrels are “WTI” price based • Refinery location and configuration enables a fleet-wide crude slate discounted to WTI •
Slide 7: High Value Premium Product Markets
HIGH VALUE PREMIUM PRODUCT MARKETS | Premium Product Pricing vs. Gulf Coast $20.00 Regional Gasoline Pricing vs Gulf Coast1 2012 2013 $15.00 2014 2015 2016 Average $11.08 $/barrel $6.54 $8.17 $10.00 $7.60 $3.38 $5.00 $2.67 $- Group 3 vs GC Chicago vs GC Salt Lake vs GC Denver vs GC Phoenix vs GC Las
Slide 8: Business Improvement Plan
BUSINESS IMPROVEMENT PLAN | Increasing Value from Existing Refinery Assets EBITDA ($MM) Refinery Operations: 2015-2018 Reliability: Target first quartile operational Target 2014 Target 2016 Full Year 2016 reliability Baseline Baseline Achieved Turnaround: Completing on time and on 2014 Refining
Slide 9: Petro-Canada Lubricants | Transaction Overview
PETRO-CANADA LUBRICANTS | Transaction Overview Financial Details: • CAD$1,125MM purchase price (approximately US$845 MM) for Petro-Canada Lubricants Inc. • CAD$783MM (US$587MM) purchase price net of CAD$342MM (approximately US$257MM) working capital • Purchase funded with a combination of cash and d
Slide 10: Petro-Canada Lubricants | Strategic Rational
PETRO-CANADA LUBRICANTS | Strategic Rational High Value Products and Stable Cash Flows North American 2015 Base Oil Production Represents ˜90% of North American Production • Specialty Lubricants margins are significantly higher 60,000 and more stable than fuels margins Group III • Differentiated lub
Slide 11: Premium Margins and Global Product Markets
PETRO-CANADA LUBRICANTS | Premium Margins and Global Product Markets, Exclusive and Perpetual License for Petro-Canada Lubricants Brand Product Category Average WTI PCLI Lubricant Volume Based Gross Margin: 2016A Breakdown: 2016A $150 Finished Lubricants Product • High margin finished lubricants pro
Slide 12: Integrated Lubricants Producer
PETRO-CANADA LUBRICANTS | Integrated Lubricants Producer PCLI is fully integrated across the lubricants value chain • High quality Base Oils are upgraded to high value Finished Lubricants • Quality of Base Oils allow for unique product formulations • Industry leading product innovation and R&D capab
Slide 13: Specialty Lubricants margins are significantly higher and more stable than fuels
HOLLYFRONTIER SPECIALTY LUBRICANTS | Specialty Lubricants margins are significantly higher and more stable than fuels Tulsa: Market emphasis evolved from commodity engine oils to higher value specialty applications • Paraffinic - specialty process oils, industrial, marine oils, greases, bright stock
Slide 14: Synergy and Optimization Opportunity
PETRO-CANADA LUBRICANTS | Synergy and Optimization Opportunity Expect US$20MM+ EBITDA in potential synergies by 2018¹ • Tulsa product integration and product upgrade opportunity • Sales and distribution synergy opportunity for Tulsa Products • Transportation cost savings Additional Optimization Oppo
Slide 15: PCLI Historical Financials
PETRO-CANADA LUBRICANTS | Historical Financials PCLI Historical EBITDA (US$MM)1 $300 $250 $200 $150 $100 $50 $0 2011 2012 2013 2014 2015 2016 Average Annual Sustaining Capex 1) Unaudited, non-GAAP financials, as provided by seller 15
Slide 16: Production Capacity versus Demand
PETRO-CANADA LUBRICANTS | Production Capacity versus Demand Fundamentals Positive Western Hemisphere Group III Base Oil Supply / Demand Balance • Shift to premium-grade engine motor oils driving Group III global base oil demand growth • Western Hemisphere Group III demand projected to be 4% CAGR fro
Slide 17: Lubricants Diversification and Scale
HOLLYFRONTIER PRO FORMA SPECIALTY LUBRICANTS | Lubricants Diversification and Scale Sales Volume by Product (BPD ‘000) Normalized Refining EBITDA Split (US $MM)¹ 32 26 13 28 ˜$250 $100 171 172 Other Lubricants Lubricants Distillate Fuels Gasoline $900 $900 228 228 HFC Standalone Pro Forma HFC Standa
Slide 18: Holly Energy Partners Business Profile
HOLLY ENERGY PARTNERS | Business Profile Operate a system of petroleum product Consistent Distribution Growth Despite Crude and crude pipelines, storage tanks, Price Volatility $0.70 $160 distribution terminals and loading rack DPU* facilities located near HFC’s refining WTI $140 assets in high grow
Slide 19: Holly Energy Partners Ownership Structure
HOLLY ENERGY PARTNERS | Ownership Structure HOLLYFRONTIER CORPORATION (HFC) 100% Interest 22.4mm HEP units, GENERAL PARTNER (GP) 34% LP Interest PUBLIC HOLLY LOGISTIC SERVICES, L.L.C 2% GP Interest + IDRs 41.9mm HEP units, 64% LP Interest HOLLY ENERGY PARTNERS, L.P. (HEP) 1) Data as of 6/30/17 IDR:
Slide 20: Cash Distribution Growth Since Inception
HOLLY ENERGY PARTNERS | Cash Distribution Growth Since Inception Total HEP Distributions (GP and LP) Total GP Distribution $225 $60.0 $58.0 $202 $200 $50.0 $173 $175 $44.0 $158 $150 $144 $40.0 $36.5 $126 $125 $29.4 $30.0 $99 $100 $86 $23.6 $75 $68 $20.0 $17.5 $54 $49 $12.9 $50 $44 $35 $10.0 $8.1 $25
Slide 21: Holly Energy Partners Growth Drivers
HOLLY ENERGY PARTNERS GROWTH DRIVERS | Target 8% Annual Distribution Growth Rate Organic Dropdown Context • Southeastern New Mexico Gathering • HEP generally has right of first refusal on all logistics assets HFC builds or • Internal Initiatives acquires • Contractual PPI/FERC Increases • As HFC gro
Slide 22: Acquisition of Interests in Frontier and SLC Pipelines
HOLLY ENERGY PARTNERS | Acquisition of Interests in Frontier and SLC Pipelines Asset Description: • Announced pending acquisition of remaining 50% interest in Frontier pipeline, and remaining 75% interest in SLC pipeline in August 2017 • Frontier: 289-mile, 72,000 BPD capacity crude pipeline from Ca
Slide 23: Disciplined Approach to Capital Allocation
HFC DISCIPLINED APPROACH TO CAPITAL ALLOCATION 2017 Estimated Capex: HFC Standalone: $375-$425mm PCLI: $30mm HEP: $40mm • Maintenance capex: $100 - $125 million in average annual maintenance • Environmental and Sustaining: $75 - $100 million average annual spending currently focused on Tier 3 gasoli
Slide 24: Capital Structure and Credit Profile
HOLLYFRONTIER CAPITAL STRUCTURE AND CREDIT PROFILE | As of June 30, 2017 (US$ millions) HFC Consolidated Capital Structure 6/30/2017 Cash and Short Term M arketable Securities $ 460 HollyFrontier Corporation HFC 5.875% Senior Notes due 2026 $ 1,000 HFC Long Term Debt $ 1,000 HFC Standalone Capital S
Slide 25: Strong Track Record of Cash Returns
STRONG TRACK RECORD OF CASH RETURNS Since the July 2011 merger HFC has returned approximately $4.3 billion, or approximately $24.17 per share to shareholders • Strong track record in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurcha
Slide 26: HollyFrontier Outlook
HOLLYFRONTIER OUTLOOK | Potential Upside versus 2016¹ • Petro Canada Lubricants Inc. Contribution o Expected to generate US$100-200MM of annual EBITDA o Expect US$20MM+ EBITDA in potential synergies by 2018 o Expect to achieve additional optimization opportunities from product yield upgrade o Group
Slide 27: HollyFrontier Corporation
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Craig Biery | Director, Investor Relations investors@hollyfrontier.com 214-954-6510 Jared Harding | Investor Relations investors@hollyfrontier.com 214-954-6510
Slide 28: Appendix
APPENDIX Cash Current July 31, 2017 Yield dividend NYSE Close PBF 5.3% $1.20 $22.77 HFC 4.6% $1.32 $28.84 VLO 3.8% $2.60 $68.97 PSX 3.1% $2.59 $83.75 MPC 2.6% $1.44 $55.99 ANDV 2.2% $2.15 $99.53 DK 2.3% $0.60 $26.11 HFC ($MM) 2012 2013 2014 2015 2016 Buyback $ 209.6 $ 225.0 $ 158.8 $ 742.8 $ 133.4 D
Slide 29: Definitions
DEFINITIONS Non GAAP measurements: We report certain financial EBITDA: Earnings before interest, taxes, depreciation and CAGR: The compound annual growth rate is calculated by measures that are not prescribed or authorized by U. S. amortization, which we refer to as EBITDA, is calculated as net divi
Slide 30: HollyFrontier Index
HOLLYFRONTIER INDEX Please see p. 31 for disclaimer and www.HollyFrontier.com/investor-relations for most current version. 30
Slide 31: HFC Index Disclosure
HFC INDEX DISCLOSURE HFC's actual pricing and margins may differ from benchmark indicators due to many factors. For example: Crude Slate differences – HFC runs a wide variety of crude oils across its refining system and crude slate may vary quarter to quarter. Product Yield differences – HFC’s p
Slide 32: HollyFrontier
HOLLYFRONTIER.