Slide 1: HollyFrontier Investor Presentation October 2018
HOLLYFRONTIER INVESTOR PRESENTATION October 2018
Slide 2: Disclosure Statement
Disclosure Statement Statements made during the course of this presentation that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain and necessarily involve risk
Slide 3: Executive Summary
Executive Summary Positioned for Value Creation Across all Segments REFINING MIDSTREAM SPECIALTY LUBRICANTS Inland merchant refiner Operate Crude and Product Pipelines, Integrated specialty lubricants loading racks, terminals and tanks in and producer 5 refineries in the Mid Continent, aroun
Slide 4: HollyFrontier Asset Footprint
HollyFrontier Asset Footprint 4
Slide 5: 15% Increase in Refining Capacity Since 2015
15% Increase in Refining Capacity Since 2015 Mid-Con Southwest Rockies CRUDE CHARGE CAPACITY CRUDE CHARGE CAPACITY CRUDE CHARGE CAPACITY Barrels Per Day Barrels Per Day Barrels Per Day 350,000 120,000 100,000 115,000 95,000 300,000 300,000 110,000 90,000 260,000 83,000 100,000 250,000 100,000 80,000
Slide 6: Refinery Operations
Refinery Operations Annual Crude Charge Rate 450,000 – 470,000 BPD Consolidated Crude Charge Opex Per Throughput Barrel1 $/throughput BBL Barrels Per Day $6.25 450,000 $5.75 $5.56 $5.43 $5.84 $5.50 Target $5.25 425,000 $4.75 2015 2016 2017 Opex/throughput BBL Mid-Cycle Opex Target 400,000 Cost Sav i
Slide 7: 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 2017 Average Crude Slate 100% of HFC’s purchased crude barrels are “WTI” price based 4% 7% Refinery location and configuration enables a fleet-wide cr
Slide 8: IMO 2020 Benefits
IMO 2020 Benefits Wider Heavy Crude Differentials and Higher Distillate Crack Spreads Effective January 1, 2020, the International 2017 Average Canadian Heavy Crude Exposure1 % of Total Throughput3 Maritime Organization (IMO) will lower the 25% max sulfur content allowed in marine fuel from 3.5% t
Slide 9: High Value Premium Product Markets
High Value Premium Product Markets Product Pricing vs. Gulf Coast Regional Gasoline Pricing vs Gulf Coast1 $/bbl $20 2013 2014 2015 2016 2017 Average $15 $8.17 $11.08 $10 $7.60 $6.54 $3.38 $5 $2.67 $- Group 3 vs GC Chicago vs GC Salt Lake vs GC Denver vs GC Phoenix vs GC Las Vegas vs GC Regional ULS
Slide 10: Refining Segment Earnings Power
Refining Segment Earnings Power HFC Consolidated 3-2-1 Index Mid-Cycle Refining EBITDA $1.0B – $1.2B $/Barrel $25 Gulf Coast 3-2-1 Crack $10.00 Brent/WTI Spread $4.00 $21.22 Product Transportation to HFC $20.06 $3.00 Markets $20 HFC Index $17.00 $18.41 $17.93 Capture Rate 75% Realized Gross Margin P
Slide 11: Holly Energy Partners Business Profile
Holly Energy Partners Business Profile Operate a system of petroleum product and Consistent Distribution Growth Despite crude pipelines, storage tanks, distribution Crude Price Volatility terminals and loading rack facilities located near Distribution $/LP Unit W TI Price HFC’s refining assets in hi
Slide 12: Ownership Structure
Ownership Structure IDR Simplification Provides Lower Cost of Capital for HEP HOLLYFRONTIER CORPORATION (HFC) 100% Interest GENERAL PARTNER (GP) HOLLY LOGISTIC SERVICES, L.L.C. PUBLIC Non-economic GP Interest 59.6mm HEP units1 57% LP Interest $1.9B Value2 45.8mm HEP units1 43% LP Interest $1.5B Valu
Slide 13: HEP Historical Growth
HEP Historical Growth Committed to Continuing Track Record of Increasing Distribution Holly Tulsa 50% JV with Acquired Holly Corporation dropdown of Crude gathering Plains for remaining and Frontier Oil Holly intermediate loading rack system Frontier interests in SLC / Corporation feedstock pipeline
Slide 14: HEP Avenues for Growth
HEP Avenues for Growth ORGANIC ACQUISITIONS DROPDOWNS FROM HFC Leverage HEP’s existing Pursue logistics assets in HEP’s Partnering with HFC to build footprint, specifically in current geographic region and/or acquire new assets / Permian Basin businesses Replace incumbent HFC service Diese
Slide 15: HF Lubricants & Specialty Products
HF Lubricants & Specialty Products The World’s Machinery is Driving Towards Greater Efficiency, Reliability and Longevity Advanced lubricants are a crucial requirement in the drive HF LSP is a to develop more reliable, efficient and environmentally leading producer compliant industrial machinery wor
Slide 16: Value Opportunity: Rack Back vs Rack Forward
HF LSP - Rack Back vs Rack Forward RACK BACK RACK FORWARD Sales Custom er Order Fulfillm ent Marketing Finished Lubricants Value Opportunity R&D & Greases Waxes Distribution Blending White & Packaging Oils Feedstock & Production Specialty Products (Warehousing & Transportation) (Lubeplex) Base PCLI
Slide 17: Rack Forward EBITDA Margin Stability
Rack Forward EBITDA Margin Stability 2018 Rack Forward – EBITDA Margin1 Guidance 2 EBITDA ($ in millions) EBITDA Margin % 80 20% EBITDA $190 – 210MM 17% 16% 16% 16% EBITDA Margin 60 14% 14% 15% 10-15% 13% 13% 12% 12% 10% 9% 9% 40 9% 10% 69 58 58 55 56 53 52 45 48 47 20 38 40 5% 29 30 0 0% 1Q15 2Q15
Slide 18: Acquisition of Red Giant Oil
Acquisition of Red Giant Oil Asset Description • Red Giant Oil (“RGO”) is one of the largest suppliers of locomotive engine oil in North America • Headquartered in Council Bluffs, IA, RGO has a blending and packaging facility in Joshua, TX and storage facilities in Idaho, Utah and Wyoming Deal Highl
Slide 19: HF Lubricants & Specialty Products Mid-Cycle EBITDA
HF Lubricants & Specialty Products Mid-Cycle EBITDA Rack Forward EBITDA ($ in millions) $200 EBITDA Margin 10-15% Annual SG&A $125 - $135MM Target Multiple 10x Annual DD&A $30 - $35MM Upside with Organic Growth and M&A Enterprise Value ($ in millions) $2,000 Opportunities 10x multiple in-lin
Slide 20: Group III Base Oil Opportunity
Group III Base Oil Opportunity Western Hemisphere Group III Base Oil: Production Capacity vs Demand¹ Increasing Demand for Higher ˜3% CAGR Demand Grow th (2016-2026) Performance Finished KBD Lubricants & Specialty 25 Products Higher industry standards driving demand for lubricants formulated 20 fr
Slide 21: Opportunity Across the Value Chain
Opportunity Across the Value Chain Upgrade Existing Base Oils into Finished Products Converting one barrel of Base Oil sales into Finished Product sales results in a margin uplift of ~$50/bbl HF LSP Margin Value $/bbl Product Sales 2017 Finished Lubricants & Greases Coproducts (Distillates, Intermed
Slide 22: New Segment Reporting
New Segment Reporting HF HF REFINING LUBRICANTS & HOLLY CORPORATE, ENERGY & SPECIALTY OTHER & CONSOLIDATED MARKETING PRODUCTS (HEP) ELIMINATIONS (HF R&M) (HF LSP) Rack Back Rack Forward SG&A allocated to each segment Rack Back includes transfer pricing based on Argus spot average for each base o
Slide 23: 2018 Guidance
2018 Guidance Refining & Marketing 2018E Capex - $5.50 Opex/bbl Segment Allocation - Turnaround Schedule - Tulsa – 1Q18 HEP - El Dorado – 4Q18 12% - Capex $380 – $440 million HF LSP HF LSP - $190 – 210 million Rack Forward EBITDA 14% R&M - Mississauga Turnaround - 4Q18 74% - Capex $70 – $90 mill
Slide 24: Appendix
APPENDIX
Slide 25: Strong Track Record of Cash Returns
Strong Track Record of Cash Returns Since the July 2011 merger HFC has returned approximately $4.6 billion, or approximately $25.97 per share 1 to shareholders • Strong track record in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurc
Slide 26: HollyFrontier Capital Structure
HollyFrontier Capital Structure HFC Consolidated Capital Structure HFC Standalone Capital Structure As of June 30, 2018 (US$ millions) As of June 30, 2018 (US$ millions) Cash and Short Term Marketable Securities $980 Cash and Short Term Marketable Securities $973 HOLLYFRONTIER CORPORATION HFC LONG T
Slide 27: HollyFrontier Credit Profile
HollyFrontier Credit Profile Investment Grade Rating Peer Group Debt Metrics − 6/30/18 - S&P BBB- Debt Ratio % - Moody’s Baa3 50% - Fitch BBB- $973 million cash as of 6/30/18 40% $1 billion outstanding debt as of 6/30/18 - excludes non-recourse HEP debt 30% Total debt to capital ratio 15% as
Slide 28: Our Business Plan Update
Our Business Plan Update Business Improvement Plan Progress Annual EBITDA in $ MM’s 2015 Analyst Day Target1 Full Year 2017E Acheived1 Refining Operations $245 $107 Reliability $90 $10 Cost $105 $58 Turnaround $50 $39 Optimization $90 $220 Planning $30 $113 Products $30 $64 Feedstock $30 $43 Capital
Slide 29: Definitions
Definitions BPD: the number of barrels per calendar day of crude oil or petroleum products. Lubricant : A solvent neutral paraffinic product used in commercial heavy duty engine CAGR: The compound annual growth rate is calculated by dividing the ending value by oils, passenger car oils and specialty
Slide 30: HollyFrontier Index
HollyFrontier Index Crude Charge 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18* 444,000 432,000 371,000 467,000 455,000 461,000 415,000 463,000 420-430K *Anticipated crude charge based on guidance given on 8/2/18 earnings call Refining Index WTI Based 321 1Q 2018 2Q 2018 3Q 2018 4Q 2018 Crack Jan Feb
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 q uarter. Product Yield differences – HFC’s
Slide 32: 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