##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
 For the transition period from  to .
 Commission File Number: 1-32225
 HOLLY ENERGY PARTNERS, L.P.
  Delaware
    
    20-0833098(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 (Address of principal executive offices)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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##### 



PART I. FINANCIAL INFORMATION
    
    
    3FORWARD-LOOKING STATEMENTS
    
    
    3Item 1. Financial Statements (Unaudited, except December 31, 2010 Balance Sheet)
    
    
    4Consolidated Balance Sheets
    
    
    4Consolidated Statements of Income
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Consolidated Statement of Partners Equity
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risks
    
    
    34Item 4. Controls and Procedures
    
    
    34PART II. OTHER INFORMATION
    
    
    35Item 1. Legal Proceedings
    
    
    35Item 6. Exhibits
    
    
    35SIGNATURES
    
    
    36Index to Exhibits
    
    
    37Exhibit 12.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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FORWARD-LOOKING STATEMENTS
  
    
    risks and uncertainties with respect to the actual quantities of petroleum products and
crude oil shipped on our pipelines and/or terminalled in our terminals;
 
    
    the economic viability of Holly Corporation, Alon USA, Inc. and our other customers;
 
    
    the demand for refined petroleum products in markets we serve;
 
    
    our ability to successfully purchase and integrate additional operations in the future;
 
    
    our ability to complete previously announced or contemplated acquisitions;
 
    
    the availability and cost of additional debt and equity financing;
 
    
    the possibility of reductions in production or shutdowns at refineries utilizing our
pipeline and terminal facilities;
 
    
    the effects of current and future government regulations and policies;
 
    
    our operational efficiency in carrying out routine operations and capital construction
projects;
 
    
    the possibility of terrorist attacks and the consequences of any such attacks;
 
    
    general economic conditions; and
 
    
    other financial, operational and legal risks and uncertainties detailed from time to
time in our Securities and Exchange Commission filings.
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##### Table of Contents



Item 1.
    
    Financial Statements
 Holly Energy Partners, L.P.
 
 Consolidated Balance Sheets
 March 31, 2011
    
    
    December 31,(Unaudited)
    
    
    2010(In thousands, except unit data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,502
    
    
    $
    403Accounts receivable:Trade
    
    
    3,102
    
    
    
    3,544Affiliates
    
    
    20,373
    
    
    
    18,96423,475
    
    
    
    22,508Prepaid and other current assets
    
    
    546
    
    
    
    775Total current assets
    
    
    25,523
    
    
    
    23,686Properties and equipment, net
    
    
    440,523
    
    
    
    434,950Transportation agreements, net
    
    
    106,753
    
    
    
    108,489Goodwill
    
    
    49,109
    
    
    
    49,109Investment in SLC Pipeline
    
    
    25,802
    
    
    
    25,437Other assets
    
    
    4,440
    
    
    
    1,602Total assets
    
    $
    652,150
    
    
    $
    643,273LIABILITIES AND PARTNERS EQUITYCurrent liabilities:Accounts payable:Trade
    
    $
    5,991
    
    
    $
    6,347Affiliates
    
    
    4,334
    
    
    
    3,89110,325
    
    
    
    10,238Accrued interest
    
    
    1,541
    
    
    
    7,517Deferred revenue
    
    
    9,333
    
    
    
    10,437Accrued property taxes
    
    
    1,738
    
    
    
    1,990Other current liabilities
    
    
    1,079
    
    
    
    1,262Total current liabilities
    
    
    24,016
    
    
    
    31,444Long-term debt
    
    
    514,733
    
    
    
    491,648Other long-term liabilities
    
    
    9,511
    
    
    
    10,809Partners equity:Common unitholders (22,078,509 units issued and outstanding
at March 31, 2011 and December 31, 2010)
    
    
    265,087
    
    
    
    271,649General partner interest (2% interest)
    
    
    (152,454
    )
    
    
    (152,251
    )Accumulated other comprehensive loss
    
    
    (8,743
    )
    
    
    (10,026
    )Total partners equity
    
    
    103,890
    
    
    
    109,372Total liabilities and partners equity
    
    $
    652,150
    
    
    $
    643,273
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Holly Energy Partners, L.P.
 
 Consolidated Statements of Income
 (Unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010(In thousands, except per unit data)Revenues:Affiliates
    
    $
    34,107
    
    
    $
    33,597Third parties
    
    
    10,910
    
    
    
    7,09945,017
    
    
    
    40,696Operating costs and expenses:Operations
    
    
    12,796
    
    
    
    13,060Depreciation and amortization
    
    
    7,640
    
    
    
    7,210General and administrative
    
    
    1,363
    
    
    
    2,56321,799
    
    
    
    22,833Operating income
    
    
    23,218
    
    
    
    17,863Other income (expense):Equity in earnings of SLC Pipeline
    
    
    740
    
    
    
    481Interest income
    
    
    
    
    
    
    3Interest expense
    
    
    (8,549
    )
    
    
    (7,544
    )Other expense
    
    
    (12
    )
    
    
    (7
    )(7,821
    )
    
    
    (7,067
    )Income before income taxes
    
    
    15,397
    
    
    
    10,796State income tax
    
    
    (228
    )
    
    
    (94
    )Net income
    
    
    15,169
    
    
    
    10,702Less general partner interest in net income, including incentive
distributions
    
    
    3,562
    
    
    
    2,646Limited partners interest in net income
    
    $
    11,607
    
    
    $
    8,056Limited partners per unit interest in earnings  basic and diluted:
    
    $
    0.53
    
    
    $
    0.36Weighted average limited partners units outstanding
    
    
    22,079
    
    
    
    22,079
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Holly Energy Partners, L.P.
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010(In thousands)Cash flows from operating activitiesNet income
    
    $
    15,169
    
    
    $
    10,702Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    7,640
    
    
    
    7,210Equity in earnings of SLC Pipeline, net of distributions
    
    
    (365
    )
    
    
    (481
    )Change in fair value  interest rate swaps
    
    
    
    
    
    
    1,464Amortization of restricted and performance units
    
    
    670
    
    
    
    966(Increase) decrease in current assets:Accounts receivable  trade
    
    
    442
    
    
    
    392Accounts receivable  affiliates
    
    
    (1,409
    )
    
    
    (2,081
    )Prepaid and other current assets
    
    
    229
    
    
    
    225Current assets of discontinued operations
    
    
    
    
    
    
    2,195Increase (decrease) in current liabilities:Accounts payable  trade
    
    
    (356
    )
    
    
    (499
    )Accounts payable  affiliates
    
    
    443
    
    
    
    504Accrued interest
    
    
    (5,976
    )
    
    
    (1,157
    )Deferred revenue
    
    
    (1,104
    )
    
    
    1,108Accrued property taxes
    
    
    (252
    )
    
    
    (214
    )Other current liabilities
    
    
    (183
    )
    
    
    (109
    )Other, net
    
    
    274
    
    
    
    (1,502
    )Net cash provided by operating activities
    
    
    15,222
    
    
    
    18,723Cash flows from investing activitiesAdditions to properties and equipment
    
    
    (11,475
    )
    
    
    (1,911
    )Acquisition of assets from Holly Corporation
    
    
    
    
    
    
    (37,234
    )Net cash used for investing activities
    
    
    (11,475
    )
    
    
    (39,145
    )Cash flows from financing activitiesBorrowings under credit agreement
    
    
    30,000
    
    
    
    33,000Repayments of credit agreement borrowings
    
    
    (7,000
    )
    
    
    (68,000
    )Proceeds from issuance of senior notes
    
    
    
    
    
    
    147,540Distributions to HEP unitholders
    
    
    (22,205
    )
    
    
    (20,506
    )Purchase price in excess of transferred basis in assets acquired from
Holly Corporation
    
    
    
    
    
    
    (55,766
    )Purchase of units for restricted grants
    
    
    (399
    )
    
    
    (1,745
    )Deferred financing costs
    
    
    (3,044
    )
    
    
    Net cash provided by (used for) financing activities
    
    
    (2,648
    )
    
    
    34,523Cash and cash equivalentsIncrease for the period
    
    
    1,099
    
    
    
    14,101Beginning of period
    
    
    403
    
    
    
    2,508End of period
    
    $
    1,502
    
    
    $
    16,609
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Holly Energy Partners, L.P.
 
 Consolidated Statement of Partners Equity
 (Unaudited)
 AccumulatedGeneral
    
    
    OtherCommon
    
    
    Partner
    
    
    ComprehensiveUnits
    
    
    Interest
    
    
    Loss
    
    
    TotalBalance December 31, 2010
    
    $
    271,649
    
    
    $
    (152,251
    )
    
    $
    (10,026
    )
    
    $
    109,372Distributions to HEP unitholders
    
    
    (18,648
    )
    
    
    (3,557
    )
    
    
    
    
    
    
    (22,205
    )Purchase of units for restricted grants
    
    
    (399
    )
    
    
    
    
    
    
    
    
    
    
    (399
    )Amortization of restricted and
performance units
    
    
    670
    
    
    
    
    
    
    
    
    
    
    
    670Comprehensive income:Net income
    
    
    11,815
    
    
    
    3,354
    
    
    
    
    
    
    
    15,169Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    1,283
    
    
    
    1,283Comprehensive income
    
    
    11,815
    
    
    
    3,354
    
    
    
    1,283
    
    
    
    16,452Balance March 31, 2011
    
    $
    265,087
    
    
    $
    (152,454
    )
    
    $
    (8,743
    )
    
    $
    103,890
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note 1: Description of Business and Presentation of Financial Statements
       Note 2: Acquisitions
 2010 Acquisitions
 Tulsa East / Lovington Storage Asset Transaction
    - 8 -




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Note 3: Financial Instruments
   Fair Value Measurements
  
    
    (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.
  Note 4: Properties and Equipment
 March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Pipelines and terminals
    
    $
    509,064
    
    
    $
    507,260Land and right of way
    
    
    25,271
    
    
    
    25,264Other
    
    
    15,018
    
    
    
    14,591Construction in progress
    
    
    25,799
    
    
    
    16,601575,152
    
    
    
    563,716Less accumulated depreciation
    
    
    134,629
    
    
    
    128,766$
    440,523
    
    
    $
    434,950
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Note 5: Transportation Agreements
  
    
    The Alon pipelines and terminals agreement (the Alon PTA) represents a portion of the
total purchase price of the Alon assets acquired in 2005 that was allocated based on an
estimated fair value derived under an income approach. This asset is being amortized over
30 years ending 2035, the 15-year initial term of the Alon PTA plus the expected 15-year
extension period.
 
    
    The Holly crude pipelines and tankage agreement (the Holly CPTA) represents a portion
of the total purchase price of certain crude pipelines and tankage assets acquired from
Holly in 2008 (at which time we were not a consolidated variable interest entity of Holly)
that was allocated using a fair value based on the agreements expected contribution to our
future earnings under an income approach. This asset is being amortized over 15 years
ending 2023, the 15-year term of the Holly CPTA.
  March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Alon transportation agreement
    
    $
    59,933
    
    
    $
    59,933Holly crude pipelines and tankage agreement
    
    
    74,231
    
    
    
    74,231134,164
    
    
    
    134,164Less accumulated amortization
    
    
    27,411
    
    
    
    25,675$
    106,753
    
    
    $
    108,489
   Note 6: Employees, Retirement and Incentive Plans
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Restricted Units
   Weighted-Weighted-
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicGrant-Date
    
    
    Contractual
    
    
    ValueRestricted Units
    
    Grants
    
    
    Fair Value
    
    
    Term
    
    
    ($000)Outstanding at January 1, 2011 (nonvested)
    
    
    47,295
    
    
    $
    37.47Granted
    
    
    20,924
    
    
    
    59.65Vesting and transfer of full ownership to recipients
    
    
    (24,055
    )
    
    
    41.48Forfeited
    
    
    (7,802
    )
    
    
    43.71Outstanding at March 31, 2011 (nonvested)
    
    
    36,362
    
    
    $
    46.24
    
    
    1.2 years
    
    $
    2,109
   Performance Units
    PayablePerformance Units
    
    In UnitsOutstanding at January 1, 2011 (nonvested)
    
    
    59,415Granted
    
    
    12,113Vesting and transfer of common units to recipients
    
    
    (14,337
    )Forfeited
    
    
    Outstanding at March 31, 2011 (nonvested)
    
    
    57,191
  - 11 -




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Note 7: Debt
 Credit Agreement
       Senior Notes
   - 12 -




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March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Credit Agreement
    
    $
    182,000
    
    
    $
    159,0006.25% Senior NotesPrincipal
    
    
    185,000
    
    
    
    185,000Unamortized discount
    
    
    (1,489
    )
    
    
    (1,584
    )Unamortized premium  dedesignated fair value hedge
    
    
    1,357
    
    
    
    1,444184,868
    
    
    
    184,8608.25% Senior NotesPrincipal
    
    
    150,000
    
    
    
    150,000Unamortized discount
    
    
    (2,135
    )
    
    
    (2,212
    )147,865
    
    
    
    147,788Total long-term debt
    
    $
    514,733
    
    
    $
    491,648
 Interest Rate Risk Management
     - 13 -




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Balance Sheet
    
    
    
    
    
    Location of Offsetting
    
    OffsettingDerivative Instrument
    
    Location
    
    Fair Value
    
    
    Balance
    
    Amount(In thousands)March 31, 2011Interest rate swap designated as cash flow hedging instrument:Variable-to-fixed interest rate swap contract
($155 million of LIBOR based debt interest)
    
    Other long-term
liabilities
    
    $
    8,743
    
    
    Accumulated other
comprehensive loss
    
    $
    8,743December 31, 2010Interest rate swap designated as cash flow hedging instrument:Variable-to-fixed interest rate swap contract
($155 million of LIBOR based debt interest)
    
    Other long-term
liabilities
    
    $
    10,026
    
    
    Accumulated other
comprehensive loss
    
    $
    10,026
 Interest Expense and Other Debt Information
  March 31,
    
    
    March 31,2011
    
    
    2010(In thousands)Interest on outstanding debt:Credit Agreement, net of interest on interest rate swap
    
    $
    2,365
    
    
    $
    2,4726.25% Senior Notes, net of interest on interest rate swaps
    
    
    2,891
    
    
    
    2,7328.25% Senior Notes
    
    
    3,094
    
    
    
    722Net fair value adjustments to interest rate swaps (1)
    
    
    
    
    
    
    1,464Net amortization of discount and deferred debt issuance costs
    
    
    290
    
    
    
    194Commitment fees
    
    
    113
    
    
    
    77Total interest incurred
    
    
    8,753
    
    
    
    7,661Less capitalized interest
    
    
    204
    
    
    
    117Net interest expense
    
    $
    8,549
    
    
    $
    7,544Cash paid for interest (2)
    
    $
    14,439
    
    
    $
    10,587
 (1)
    
    Represents fair value adjustments to interest rate swap agreements settled during the
first quarter of 2010.(2)
    
    Net of cash received under previous interest rate swap agreements of $1.9 million
for the three months ended March 31, 2010.
 Note 8: Significant Customers
   Three Months EndedMarch 31,2011
    
    
    2010Holly
    
    
    76
    %
    
    
    83
    %Alon
    
    
    20
    %
    
    
    13
    %
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Note 9: Related Party Transactions
 Holly Agreements
  
    
    Holly PTA (pipelines and terminals throughput agreement expiring in 2019 that relates to
assets contributed to us by Holly upon our initial public offering in 2004);
 
    
    Holly IPA (intermediate pipelines throughput agreement expiring in 2024 that relates to
assets acquired from Holly in 2005 and 2009);
 
    
    Holly CPTA (crude pipelines and tankage throughput agreement expiring in 2023 that
relates to assets acquired from Holly in 2008);
 
    
    Holly PTTA (pipeline, tankage and loading rack throughput agreement expiring in 2024
that relates to the Tulsa east facilities acquired from Sinclair in 2009 and from Holly in
March 2010);
 
    
    Holly RPA (pipeline throughput agreement expiring in 2024 that relates to the Roadrunner
Pipeline acquired from Holly in 2009);
 
    
    Holly ETA (equipment and throughput agreement expiring in 2024 that relates to the Tulsa
west facilities acquired from Holly in 2009);
 
    
    Holly NPA (natural gas pipeline throughput agreement expiring in 2024); and
 
    
    Holly ATA (asphalt loading rack throughput agreement expiring in 2025 that relates to
the Lovington rack facility acquired from Holly in March 2010).
     
    
    Revenues received from Holly were $34.1 million and $33.6 million for the three months
ended March 31, 2011 and 2010, respectively.
 
    
    Holly charged general and administrative services under the Omnibus Agreement of $0.6
million for the three months ended March 31, 2011 and 2010.
 
    
    We reimbursed Holly for costs of employees supporting our operations of $5 million and $4.2
million for the three months ended March 31, 2011 and 2010, respectively.
 
    
    We distributed $9.7 million and $8.5 million for the three months ended March 31, 2011 and
2010, respectively, to Holly as regular distributions on its common units, and general partner
interest, including general partner incentive distributions.
 
    
    Accounts receivable from Holly were $20.4 million and $19 million at March 31, 2011 and
December 31, 2010, respectively.
  - 15 -




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
    
    Accounts payable to Holly were $4.3 million and $3.9 million at March 31, 2011 and December
31, 2010, respectively.
 
    
    Revenues for the three months ended March 31, 2011 include $1.1 million of shortfalls
billed under the Holly IPA in 2010, as Holly did not exceed its minimum volume commitment in
any of the subsequent four quarters. Deferred revenue in the consolidated balance sheets at
March 31, 2011 and December 31, 2010, includes $3.8 million and $3.3 million, respectively,
relating to the Holly IPA. It is possible that Holly may not exceed its minimum obligations
under the Holly IPA to allow Holly to receive credit for any of the $3.8 million deferred at
March 31, 2011.
 
    
    We acquired certain storage assets and an asphalt loading rack facility from Holly in March
2010. See Note 2 for a description of this transaction.
 Note 10: Partners Equity
    Allocations of Net Income
   Three Months EndedMarch 31,2011
    
    
    2010(In thousands)General partner interest in net income
    
    $
    237
    
    
    $
    169General partner incentive distribution
    
    
    3,325
    
    
    
    2,477Total general partner interest in net income attributable to HEP
    
    $
    3,562
    
    
    $
    2,646
 Cash Distributions
   - 16 -




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##### Table of Contents



Three Months EndedMarch 31,2011
    
    
    2010(In thousands, except per unit data)General partner interest
    
    $
    453
    
    
    $
    418General partner incentive distribution
    
    
    3,325
    
    
    
    2,477Total general partner distribution
    
    
    3,778
    
    
    
    2,895Limited partner distribution
    
    
    18,877
    
    
    
    17,994Total regular quarterly cash distribution
    
    $
    22,655
    
    
    $
    20,889Cash distribution per unit applicable to
limited partners
    
    $
    0.855
    
    
    $
    0.815
  Comprehensive Income
  Three Months EndedMarch 31,2011
    
    
    2010(In thousands)Net income
    
    $
    15,169
    
    
    $
    10,702Other comprehensive income (loss):Change in fair value of cash flow hedge
    
    
    1,283
    
    
    
    (1,361
    )Comprehensive income attributable to HEP unitholders
    
    $
    16,452
    
    
    $
    9,341
 Note 11: Supplemental Guarantor/Non-Guarantor Financial Information
    - 17 -




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Condensed Consolidating Balance Sheet
 GuarantorMarch 31, 2011
    
    Parent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2
    
    
    $
    1,500
    
    
    $
    
    
    
    $
    1,502Accounts receivable
    
    
    
    
    
    
    23,475
    
    
    
    
    
    
    
    23,475Intercompany accounts receivable (payable)
    
    
    (127,271
    )
    
    
    127,271
    
    
    
    
    
    
    
    Prepaid and other current assets
    
    
    211
    
    
    
    335
    
    
    
    
    
    
    
    546Total current assets
    
    
    (127,058
    )
    
    
    152,581
    
    
    
    
    
    
    
    25,523Properties and equipment, net
    
    
    
    
    
    
    440,523
    
    
    
    
    
    
    
    440,523Investment in subsidiaries
    
    
    564,586
    
    
    
    
    
    
    
    (564,586
    )
    
    
    Transportation agreements, net
    
    
    
    
    
    
    106,753
    
    
    
    
    
    
    
    106,753Goodwill
    
    
    
    
    
    
    49,109
    
    
    
    
    
    
    
    49,109Investment in SLC Pipeline
    
    
    
    
    
    
    25,802
    
    
    
    
    
    
    
    25,802Other assets
    
    
    1,209
    
    
    
    3,231
    
    
    
    
    
    
    
    4,440Total assets
    
    $
    438,737
    
    
    $
    777,999
    
    
    $
    (564,586
    )
    
    $
    652,150LIABILITIES AND PARTNERS EQUITYCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    10,325
    
    
    $
    
    
    
    $
    10,325Accrued interest
    
    
    1,514
    
    
    
    27
    
    
    
    
    
    
    
    1,541Deferred revenue
    
    
    
    
    
    
    9,333
    
    
    
    
    
    
    
    9,333Accrued property taxes
    
    
    
    
    
    
    1,738
    
    
    
    
    
    
    
    1,738Other current liabilities
    
    
    600
    
    
    
    479
    
    
    
    
    
    
    
    1,079Total current liabilities
    
    
    2,114
    
    
    
    21,902
    
    
    
    
    
    
    
    24,016Long-term debt
    
    
    332,733
    
    
    
    182,000
    
    
    
    
    
    
    
    514,733Other long-term liabilities
    
    
    
    
    
    
    9,511
    
    
    
    
    
    
    
    9,511Partners equity
    
    
    103,890
    
    
    
    564,586
    
    
    
    (564,586
    )
    
    
    103,890Total liabilities and partners equity
    
    $
    438,737
    
    
    $
    777,999
    
    
    $
    (564,586
    )
    
    $
    652,150
 Condensed Consolidating Balance Sheet
 GuarantorDecember 31, 2010
    
    Parent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2
    
    
    $
    401
    
    
    $
    
    
    
    $
    403Accounts receivable
    
    
    
    
    
    
    22,508
    
    
    
    
    
    
    
    22,508Intercompany accounts receivable (payable)
    
    
    (92,230
    )
    
    
    92,230
    
    
    
    
    
    
    
    Prepaid and other current assets
    
    
    235
    
    
    
    540
    
    
    
    
    
    
    
    775Total current assets
    
    
    (91,993
    )
    
    
    115,679
    
    
    
    
    
    
    
    23,686Properties and equipment, net
    
    
    
    
    
    
    434,950
    
    
    
    
    
    
    
    434,950Investment in subsidiaries
    
    
    541,262
    
    
    
    
    
    
    
    (541,262
    )
    
    
    Transportation agreements, net
    
    
    
    
    
    
    108,489
    
    
    
    
    
    
    
    108,489Goodwill
    
    
    
    
    
    
    49,109
    
    
    
    
    
    
    
    49,109Investment in SLC Pipeline
    
    
    
    
    
    
    25,437
    
    
    
    
    
    
    
    25,437Other assets
    
    
    1,261
    
    
    
    341
    
    
    
    
    
    
    
    1,602Total assets
    
    $
    450,530
    
    
    $
    734,005
    
    
    $
    (541,262
    )
    
    $
    643,273LIABILITIES AND PARTNERS EQUITYCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    10,238
    
    
    $
    
    
    
    $
    10,238Accrued interest
    
    
    7,498
    
    
    
    19
    
    
    
    
    
    
    
    7,517Deferred revenue
    
    
    
    
    
    
    10,437
    
    
    
    
    
    
    
    10,437Accrued property taxes
    
    
    
    
    
    
    1,990
    
    
    
    
    
    
    
    1,990Other current liabilities
    
    
    1,011
    
    
    
    251
    
    
    
    
    
    
    
    1,262Total current liabilities
    
    
    8,509
    
    
    
    22,935
    
    
    
    
    
    
    
    31,444Long-term debt
    
    
    332,649
    
    
    
    158,999
    
    
    
    
    
    
    
    491,648Other long-term liabilities
    
    
    
    
    
    
    10,809
    
    
    
    
    
    
    
    10,809Partners equity
    
    
    109,372
    
    
    
    541,262
    
    
    
    (541,262
    )
    
    
    109,372Total liabilities and partners equity
    
    $
    450,530
    
    
    $
    734,005
    
    
    $
    (541,262
    )
    
    $
    643,273
  - 18 -




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##### Table of Contents



Condensed Consolidating Statement of Income
 GuarantorThree months ended March 31, 2011
    
    Parent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues:Affiliates
    
    $
    
    
    
    $
    34,107
    
    
    $
    
    
    
    $
    34,107Third parties
    
    
    
    
    
    
    10,910
    
    
    
    
    
    
    
    10,910
    
    
    
    45,017
    
    
    
    
    
    
    
    45,017Operating costs and expenses:Operations
    
    
    
    
    
    
    12,796
    
    
    
    
    
    
    
    12,796Depreciation and amortization
    
    
    
    
    
    
    7,640
    
    
    
    
    
    
    
    7,640General and administrative
    
    
    751
    
    
    
    612
    
    
    
    
    
    
    
    1,363751
    
    
    
    21,048
    
    
    
    
    
    
    
    21,799Operating income (loss)
    
    
    (751
    )
    
    
    23,969
    
    
    
    
    
    
    
    23,218Equity in earnings of subsidiaries
    
    
    22,042
    
    
    
    
    
    
    
    (22,042
    )
    
    
    Equity in earnings of SLC Pipeline
    
    
    
    
    
    
    740
    
    
    
    
    
    
    
    740Interest income (expense)
    
    
    (6,122
    )
    
    
    (2,427
    )
    
    
    
    
    
    
    (8,549
    )Other
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )15,920
    
    
    
    (1,699
    )
    
    
    (22,042
    )
    
    
    (7,821
    )Income
(loss) before income taxes
    
    
    15,169
    
    
    
    22,270
    
    
    
    (22,042
    )
    
    
    15,397State income tax
    
    
    
    
    
    
    (228
    )
    
    
    
    
    
    
    (228
    )Net income
    
    $
    15,169
    
    
    $
    22,042
    
    
    $
    (22,042
    )
    
    $
    15,169
 Condensed Consolidating Statement of Income
 GuarantorThree months ended March 31, 2010
    
    Parent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Revenues:Affiliates
    
    $
    
    
    
    $
    33,597
    
    
    $
    
    
    
    $
    33,597Third parties
    
    
    
    
    
    
    7,099
    
    
    
    
    
    
    
    7,099
    
    
    
    40,696
    
    
    
    
    
    
    
    40,696Operating costs and expenses:Operations
    
    
    
    
    
    
    13,060
    
    
    
    
    
    
    
    13,060Depreciation and amortization
    
    
    
    
    
    
    7,210
    
    
    
    
    
    
    
    7,210General and administrative
    
    
    1,801
    
    
    
    762
    
    
    
    
    
    
    
    2,5631,801
    
    
    
    21,032
    
    
    
    
    
    
    
    22,833Operating income (loss)
    
    
    (1,801
    )
    
    
    19,664
    
    
    
    
    
    
    
    17,863Equity in earnings of subsidiaries
    
    
    17,485
    
    
    
    
    
    
    
    (17,485
    )
    
    
    Equity in earnings of SLC Pipeline
    
    
    
    
    
    
    481
    
    
    
    
    
    
    
    481Interest income (expense)
    
    
    (4,982
    )
    
    
    (2,559
    )
    
    
    
    
    
    
    (7,541
    )Other
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )12,503
    
    
    
    (2,085
    )
    
    
    (17,485
    )
    
    
    (7,067
    )Income
(loss) before income taxes
    
    
    10,702
    
    
    
    17,579
    
    
    
    (17,485
    )
    
    
    10,796State income tax
    
    
    
    
    
    
    (94
    )
    
    
    
    
    
    
    (94
    )Net income
    
    $
    10,702
    
    
    $
    17,485
    
    
    $
    (17,485
    )
    
    $
    10,702
  - 19 -




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##### Table of Contents



Condensed Consolidating Statement of
Cash Flows
 GuarantorThree months ended March 31, 2011
    
    Parent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(In thousands)Cash flows from operating activities
    
    $
    22,604
    
    
    $
    (7,382
    )
    
    $
    
    
    
    $
    15,222Cash flows from investing activitiesAdditions to properties and equipment
    
    
    
    
    
    
    (11,475
    )
    
    
    
    
    
    
    (11,475
    )Cash flows from financing activitiesNet borrowings under credit agreement
    
    
    
    
    
    
    23,000
    
    
    
    
    
    
    
    23,000Distributions to HEP unitholders
    
    
    (22,205
    )
    
    
    
    
    
    
    
    
    
    
    (22,205
    )Purchase of units for restricted grants
    
    
    (399
    )
    
    
    
    
    
    
    
    
    
    
    (399
    )Deferred financing costs
    
    
    
    
    
    
    (3,044
    )
    
    
    
    
    
    
    (3,044
    )(22,604
    )
    
    
    19,956
    
    
    
    
    
    
    
    (2,648
    )Cash and cash equivalentsIncrease (decrease) for the period
    
    
    
    
    
    
    1,099
    
    
    
    
    
    
    
    1,099Beginning of period
    
    
    2
    
    
    
    401
    
    
    
    
    
    
    
    403End of period
    
    $
    2
    
    
    $
    1,500
    
    
    $
    
    
    
    $
    1,502
 Condensed Consolidating Statement of Cash Flows
 GuarantorThree months ended March 31, 2010
    
    Parent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Consolidated(in thousands)Cash flows from operating activities
    
    $
    (69,523
    )
    
    $
    88,246
    
    
    $
    
    
    
    $
    18,723Cash flows from investing activitiesAdditions to properties and equipment
    
    
    
    
    
    
    (1,911
    )
    
    
    
    
    
    
    (1,911
    )Acquisition of assets from Holly Corporation
    
    
    
    
    
    
    (37,234
    )
    
    
    
    
    
    
    (37,234
    )
    
    
    
    (39,145
    )
    
    
    
    
    
    
    (39,145
    )Cash flows from financing activitiesNet repayments under credit agreement
    
    
    
    
    
    
    (35,000
    )
    
    
    
    
    
    
    (35,000
    )Net proceeds from issuance of senior notes
    
    
    147,540
    
    
    
    
    
    
    
    
    
    
    
    147,540Distributions to HEP unitholders
    
    
    (20,506
    )
    
    
    
    
    
    
    
    
    
    
    (20,506
    )Purchase price in excess of transferred basis
in assets
acquired from Holly Corporation
    
    
    (55,766
    )
    
    
    
    
    
    
    
    
    
    
    (55,766
    )Purchase of units for restricted grants
    
    
    (1,745
    )
    
    
    
    
    
    
    
    
    
    
    (1,745
    )69,523
    
    
    
    (35,000
    )
    
    
    
    
    
    
    34,523Cash and cash equivalentsIncrease (decrease) for the period
    
    
    
    
    
    
    14,101
    
    
    
    
    
    
    
    14,101Beginning of period
    
    
    2
    
    
    
    2,506
    
    
    
    
    
    
    
    2,508End of period
    
    $
    2
    
    
    $
    16,607
    
    
    $
    
    
    
    $
    16,609
  - 20 -




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##### Table of Contents



HOLLY ENERGY PARTNERS, L.P.
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
  OVERVIEW
   2010 Acquisitions
 Tulsa East / Lovington Storage Asset Transaction
  Agreements with Holly Corporation and Alon
  
    
    Holly PTA (pipelines and terminals throughput agreement expiring in 2019 that relates to
assets contributed to us by Holly upon our initial public offering in 2004);
 
    
    Holly IPA (intermediate pipelines throughput agreement expiring in 2024 that relates to
assets acquired from Holly in 2005 and 2009);
 
    
    Holly CPTA (crude pipelines and tankage throughput agreement expiring in 2023 that
relates to assets acquired from Holly in 2008);
 
    
    Holly PTTA (pipeline, tankage and loading rack throughput agreement expiring in 2024
that relates to the Tulsa east facilities acquired from Sinclair in 2009 and from Holly in
March 2010);
 
    
    Holly RPA (pipeline throughput agreement expiring in 2024 that relates to the Roadrunner
Pipeline acquired from Holly in 2009);
 
    
    Holly ETA (equipment and throughput agreement expiring in 2024 that relates to the Tulsa
west facilities acquired from Holly in 2009);
 
    
    Holly NPA (natural gas pipeline throughput agreement expiring in 2024); and
 
    
    Holly ATA (asphalt loading rack throughput agreement expiring in 2025 that relates to
the Lovington rack facility acquired from Holly in March 2010).
  - 21 -




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##### Table of Contents



Minimum AnnualizedCommitmentAgreement
    
    (In millions)
    
    
    Year of Maturity
    
    Contract TypeHolly PTA
    
    $
    43.7
    
    
    2019
    
    Minimum revenue commitmentHolly IPA
    
    
    20.7
    
    
    2024
    
    Minimum revenue commitmentHolly CPTA
    
    
    28.4
    
    
    2023
    
    Minimum revenue commitmentHolly PTTA
    
    
    27.2
    
    
    2024
    
    Minimum revenue commitmentHolly RPA
    
    
    9.2
    
    
    2024
    
    Minimum revenue commitmentHolly ETA
    
    
    2.7
    
    
    2024
    
    Minimum revenue commitmentHolly ATA
    
    
    0.5
    
    
    2025
    
    Minimum revenue commitmentHolly NPA
    
    
    0.6
    
    
    2024
    
    Minimum revenue commitmentAlon PTA
    
    
    23.4
    
    
    2020
    
    Minimum volume commitmentAlon capacity lease
    
    
    6.4
    
    
    Various
    
    Capacity leaseTotal
    
    $
    162.8
    - 22 -




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##### Table of Contents



RESULTS OF OPERATIONS (Unaudited)
 Income, Distributable Cash Flow and Volumes
  Three Months Ended
    
    
    ChangeMarch 31,
    
    
    from2011
    
    
    2010
    
    
    2010(In thousands, except per unit data)RevenuesPipelines:Affiliates  refined product pipelines
    
    $
    9,858
    
    
    $
    11,480
    
    
    $
    (1,622
    )Affiliates  intermediate pipelines
    
    
    4,633
    
    
    
    5,792
    
    
    
    (1,159
    )Affiliates  crude pipelines
    
    
    9,321
    
    
    
    9,405
    
    
    
    (84
    )23,812
    
    
    
    26,677
    
    
    
    (2,865
    )Third parties  refined product pipelines
    
    
    9,155
    
    
    
    5,404
    
    
    
    3,75132,967
    
    
    
    32,081
    
    
    
    886Terminals and loading racks:Affiliates
    
    
    10,295
    
    
    
    6,920
    
    
    
    3,375Third parties
    
    
    1,755
    
    
    
    1,695
    
    
    
    6012,050
    
    
    
    8,615
    
    
    
    3,435Total revenues
    
    
    45,017
    
    
    
    40,696
    
    
    
    4,321Operating costs and expensesOperations
    
    
    12,796
    
    
    
    13,060
    
    
    
    (264
    )Depreciation and amortization
    
    
    7,640
    
    
    
    7,210
    
    
    
    430General and administrative
    
    
    1,363
    
    
    
    2,563
    
    
    
    (1,200
    )21,799
    
    
    
    22,833
    
    
    
    (1,034
    )Operating income
    
    
    23,218
    
    
    
    17,863
    
    
    
    5,355Equity in earnings of SLC Pipeline
    
    
    740
    
    
    
    481
    
    
    
    259Interest income
    
    
    
    
    
    
    3
    
    
    
    (3
    )Interest expense, including amortization
    
    
    (8,549
    )
    
    
    (7,544
    )
    
    
    (1,005
    )Other
    
    
    (12
    )
    
    
    (7
    )
    
    
    (5
    )(7,821
    )
    
    
    (7,067
    )
    
    
    (754
    )Income before income taxes
    
    
    15,397
    
    
    
    10,796
    
    
    
    4,601State income tax
    
    
    (228
    )
    
    
    (94
    )
    
    
    (134
    )Net income
    
    
    15,169
    
    
    
    10,702
    
    
    
    4,467Less general partner interest in net income, including incentive distributions (1)
    
    
    3,562
    
    
    
    2,646
    
    
    
    916Limited partners interest in net income
    
    $
    11,607
    
    
    $
    8,056
    
    
    $
    3,551Limited partners earnings per unit  basic and diluted(1)
    
    $
    0.53
    
    
    $
    0.36
    
    
    $
    0.17Weighted average limited partners units outstanding
    
    
    22,079
    
    
    
    22,079
    
    
    
    EBITDA(2)
    
    $
    31,586
    
    
    $
    25,547
    
    
    $
    6,039Distributable cash flow(3)
    
    $
    20,772
    
    
    $
    20,159
    
    
    $
    613Volumes (bpd)Pipelines:Affiliates  refined product pipelines
    
    
    77,218
    
    
    
    93,382
    
    
    
    (16,164
    )Affiliates  intermediate pipelines
    
    
    68,617
    
    
    
    79,118
    
    
    
    (10,501
    )Affiliates  crude pipelines
    
    
    136,257
    
    
    
    134,889
    
    
    
    1,368282,092
    
    
    
    307,389
    
    
    
    (25,297
    )Third parties  refined product pipelines
    
    
    48,528
    
    
    
    30,835
    
    
    
    17,693330,620
    
    
    
    338,224
    
    
    
    (7,604
    )Terminals and loading racks:Affiliates
    
    
    157,932
    
    
    
    163,796
    
    
    
    (5,864
    )Third parties
    
    
    40,356
    
    
    
    34,843
    
    
    
    5,513198,288
    
    
    
    198,639
    
    
    
    (351
    )Total for pipelines and terminal assets (bpd)
    
    
    528,908
    
    
    
    536,863
    
    
    
    (7,955
    )
  - 23 -




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##### Table of Contents



(1)
    
    Net income is allocated between limited partners and the general partner interest in
accordance with the provisions of the partnership agreement. Net income allocated to the
general partner includes incentive distributions declared subsequent to quarter end. Net
income attributable to the limited partners is divided by the weighted average limited
partner units outstanding in computing the limited partners per unit interest in net
income.(2)
    
    EBITDA is calculated as net income plus (i) interest expense, net of interest income,
(ii) state income tax and (iii) depreciation and amortization. EBITDA is not a calculation
based upon U.S. 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 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 also is used by our management for internal analysis and as a basis for compliance
with financial covenants.
  Three Months EndedMarch 31,2011
    
    
    2010(In thousands)Net income
    
    $
    15,169
    
    
    $
    10,702Add (subtract):Interest expense
    
    
    8,259
    
    
    
    5,886Amortization of discount and deferred debt issuance costs
    
    
    290
    
    
    
    194Increase in interest expense  change in fair value of
interest rate swaps and swap settlement costs
    
    
    
    
    
    
    1,464Interest income
    
    
    
    
    
    
    (3
    )State income tax
    
    
    228
    
    
    
    94Depreciation and amortization
    
    
    7,640
    
    
    
    7,210EBITDA
    
    $
    31,586
    
    
    $
    25,547
 (3)
    
    Distributable cash flow is not a calculation based upon GAAP. However, the
amounts included in the calculation are derived from amounts separately presented in our
consolidated financial statements, with the exception of equity in excess cash flows over
earnings of SLC Pipeline, and 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.
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Three Months EndedMarch 31,2011
    
    
    2010(In thousands)Net income
    
    $
    15,169
    
    
    $
    10,702Add (subtract):Depreciation and amortization
    
    
    7,640
    
    
    
    7,210Amortization of discount and deferred debt issuance costs
    
    
    290
    
    
    
    194Increase in interest expense  change in fair value of
interest rate swaps and swap settlement costs
    
    
    
    
    
    
    1,464Equity in excess cash flows over earnings of SLC Pipeline
    
    
    6
    
    
    
    178Increase (decrease) in deferred revenue
    
    
    (1,104
    )
    
    
    1,108Maintenance capital expenditures*
    
    
    (1,229
    )
    
    
    (697
    )Distributable cash flow
    
    $
    20,772
    
    
    $
    20,159
 *
    
    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.
 March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Balance Sheet DataCash and cash equivalents
    
    $
    1,502
    
    
    $
    403Working capital
    
    $
    1,507
    
    
    $
    (7,758
    )Total assets
    
    $
    652,150
    
    
    $
    643,273Long-term debt
    
    $
    514,733
    
    
    $
    491,648Partners equity (4)
    
    $
    103,890
    
    
    $
    109,372
 (4)
    
    As a master limited partnership, we distribute our available cash, which historically
has exceeded our net income 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. Additionally, if
the assets contributed and acquired from Holly had occurred while we were not a
consolidated variable interest entity of Holly, our acquisition cost in excess of Hollys
historical basis in the transferred assets of $218 million would have been recorded in our
financial statements as increases to our properties and equipment and intangible assets
instead of decreases to our partners equity.
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Results of Operations  Three Months Ended March 31, 2011 Compared with Three Months Ended March
31, 2010
 Summary
   Revenues
       Operations Expense
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Depreciation and Amortization
  General and Administrative
  Equity in Earnings of SLC Pipeline
  Interest Expense
  State Income Tax
  LIQUIDITY AND CAPITAL RESOURCES
 Overview
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Cash Flows  Operating Activities
   Cash Flows  Investing Activities
  Cash Flows  Financing Activities
  Capital Requirements
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Credit Agreement
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##### Table of Contents



Senior Notes
    March 31,
    
    
    December 31,2011
    
    
    2010(In thousands)Credit Agreement
    
    $
    182,000
    
    
    $
    159,0006.25% Senior NotesPrincipal
    
    
    185,000
    
    
    
    185,000Unamortized discount
    
    
    (1,489
    )
    
    
    (1,584
    )Unamortized premium  dedesignated fair value hedge
    
    
    1,357
    
    
    
    1,444184,868
    
    
    
    184,8608.25% Senior NotesPrincipal
    
    
    150,000
    
    
    
    150,000Unamortized discount
    
    
    (2,135
    )
    
    
    (2,212
    )147,865
    
    
    
    147,788Total long-term debt
    
    $
    514,733
    
    
    $
    491,648
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Contractual Obligations
   Impact of Inflation
   Environmental Matters
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CRITICAL ACCOUNTING POLICIES
   RISK MANAGEMENT
     - 32 -




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##### Table of Contents



Balance Sheet
    
    
    
    
    
    Location of Offsetting
    
    OffsettingDerivative Instrument
    
    Location
    
    Fair Value
    
    
    Balance
    
    Amount(In thousands)March 31, 2011Interest rate swap designated as cash flow hedging instrument:Variable-to-fixed interest rate swap contract
($155 million of LIBOR based debt interest)
    
    Other long-term
liabilities
    
    $
    8,743
    
    
    Accumulated other
comprehensive loss
    
    $
    8,743December 31, 2010Interest rate swap designated as cash flow hedging instrument:Variable-to-fixed interest rate swap contract
($155 million of LIBOR based debt interest)
    
    Other long-term
liabilities
    
    $
    10,026
    
    
    Accumulated other
comprehensive loss
    
    $
    10,026
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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risks
   
 Item 4.
    
    Controls and Procedures
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
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##### Table of Contents



Item 1.
    
    Legal Proceedings
  
 Item 6.
    
    Exhibits
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##### Table of Contents



SIGNATURES
  HOLLY ENERGY PARTNERS, L.P.

(Registrant)By:
    
    HEP LOGISTICS HOLDINGS, L.P.its General PartnerBy:
    
    HOLLY LOGISTIC SERVICES, L.L.C.its General PartnerDate: April 29, 2011
    
    
    
    /s/ Bruce R. Shaw

Bruce R. ShawSenior Vice President andChief Financial Officer(Principal Financial Officer)/s/ Scott C. Surplus

Scott C. SurplusVice President and Controller(Principal Accounting Officer)
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##### Table of Contents



Exhibit Index
 ExhibitNumber

    
    Description10.1
    
    
    Second Amended and Restated Credit Agreement dated February 14, 2011, among Holly
Energy Partners  Operating, L.P., Wells Fargo Bank, N.A., as administrative agent and
an issuing bank, Union Bank, N.A., as syndication agent, BBVA Compass Bank and U.S. Bank
N.A., as co-documentation agents, and certain other lenders (incorporated by reference to
Exhibit 10.1 of Registrants Form 8-K Current Report dated February 18, 2011, File No.
1-32225).10.2
    *
    
    Form of Holly Energy Partners, L.P. Indemnification Agreement to be entered into
with officers and directors of Holly Logistic Services, L.L.C. (incorporated by reference
to Exhibit 10.2 of Registrants Form 8-K Current Report dated February 18, 2011, File No.
1-32225).10.3
    *
    
    Holly Energy Partners, L.P. Change in Control Agreement Policy (incorporated by
reference to Exhibit 10.3 of Registrants Form 8-K Current Report dated February 18,
2011, File No. 1-32225).10.4
    *
    
    Form of Change in Control Agreement (incorporated by reference to Exhibit 10.4 of
Registrants Form 8-K Current Report dated February 18, 2011, File No. 1-32225).10.5
    
    
    Second Amendment to Tulsa Refinery Interconnects Term Sheet dated March 31, 2011
(incorporated by reference to Exhibit 10.1 of Registrants Form 8-K Current Report dated
March 31, 2011, File No. 1-32225).12.1
    +
    
    Computation of Ratio of Earnings to Fixed Charges.31.1
    +
    
    Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    +
    
    Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    ++
    
    Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of
2002.32.2
    ++
    
    Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of
2002.
 +
    
    Filed herewith.++
    
    Furnished herewith.*
    
    Constitutes management contracts or compensatory plans or arrangements.
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