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| 8-K - 8-K - HollyFrontier Corp | hfc-form8xkjanuary2018irpr.htm |
HOLLYFRONTIER
INVESTOR PRESENTATION
January 2018
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 risks that
may affect the business prospects and performance of HollyFrontier Corporation and/or Holly Energy Partners, L.P., and actual results may
differ materially from those discussed during the presentation. Such risks and uncertainties include but are not limited to risks and
uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products in
HollyFrontier’s and Holly Energy Partners’ markets, the demand for and supply of crude oil and refined products, the spread between 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. Additional
information on risks and uncertainties that could affect the business prospects and performance of HollyFrontier and Holly Energy Partners is
provided in the most recent reports of HollyFrontier and Holly Energy Partners filed with the Securities and Exchange Commission. All
forward-looking statements included in this presentation are expressly qualified in their entirety by the foregoing cautionary statements. The
forward-looking statements speak only as of the date hereof and, other than as required by law, HollyFrontier and Holly Energy Partners
undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise.
2
Executive Summary
Positioned for Value Creation Across all Segments
REFINING MIDSTREAM SPECIALTY LUBRICANTS
Inland merchant refiner
5 refineries in the Mid Continent,
Southwest and Rockies regions
Flexible refining system with fleet wide
discount to WTI
Premium niche product markets versus
Gulf Coast
Organic initiatives to drive growth and
enhance returns
Disciplined capital structure &
allocation
Operate Crude and Product Pipelines,
loading racks, terminals and tanks in and
around HFC’s refining assets
HFC owns 59% of the LP Interest in
HEP and the non-economic GP interest
IDR simplification transaction lowers
HEP’s cost of capital
Over 80% of revenues tied to long term
contracts and minimum volume
commitments
Integrated specialty lubricants
producer
Sells finished lubricants & specialty
products in over 80 countries under
the Petro-Canada & HF LSP brands
Lubricant production facilities in
Mississauga, Ontario & Tulsa,
Oklahoma
Combined, fourth largest North
American base oil producer with
28,000 barrels per day of lubricants
production
HollyFrontier Lubricants & Specialty
Products is the largest North American
group III base oil producer
3
HollyFrontier Asset Footprint
4
Total Sum-of-the-Parts Valuation
HF Refining & Marketing EBITDA (Mid-Cycle) $1,100
Target Multiple 6x
Enterprise Value $6,600
Share Count1 (millions) 176.6
HF Refining & Marketing (per share) $37
HEP Target Price $35
HEP LP Units Owned 59.6
HFC’s Ownership $2,087
Share Count1 (millions) 176.6
Holly Energy Partners (per share) $12
HF Lubricants EBITDA $190
Target Multiple 10x
Enterprise Value $1,900
Share Count1 (millions) 176.6
HF Lubricants & Specialty Products (per share) $11
HFC Debt2 ($1,000)
HFC Cash & Cash Equivalents (11/30/17) $940
HFC Net Debt ($60)
Share Count1 (millions) 176.6
Net Debt (per share) ($0)
Total HFC Share Price Valuation $60
HFC Consolidated SOTP Valuation
(US$ millions)
Refining
66%
Midstream
18%
Lubricants
16%
5 1. Average shares outstanding for the nine months ending 9/30/17
2. Excludes HEP Debt
15% Increase in Refining Capacity Since 2015
El Dorado
Improved FCC Yield
Naphtha Fractionation Project for
Improved Light Product Yields
Tulsa
Improved Rate & Yield on FCC
Improved Rate & Yield on Reformer
Improved High Value Heavy Oils Production
Capability
Improved Diesel Recovery
Navajo
Improved Diesel Recovery
Eliminated Naphtha Recycle Streams at
Artesia Crude Unit
Debottlenecked Naphtha
Hydrotreaters/Diesel
Hydrotreater/FCC/Gasoil Hydrocracker
Debottlenecked Finished Product
Pipeline Capacity
Woods Cross
Added 2nd Crude / FCC Units
Added Poly Gasoline Unit
Expanded ULSD capability
Added Gasoil Export Capability
Cheyenne
Increased Heavy Oils Export Capabilities
Invested in New Hydrogen Plant to Increase
Heavy Crude to ~70%
Mid-Con
CRUDE CHARGE CAPACITY
Rockies
CRUDE CHARGE CAPACITY
Southwest
CRUDE CHARGE CAPACITY
260,000
300,000
200,000
250,000
300,000
350,000
2015 Current
100,000
115,000
90,000
100,000
110,000
120,000
2015 Current
83,000
95,000
70,000
80,000
90,000
100,000
2015 Current
Barrels Per Day Barrels Per Day Barrels Per Day
6
375,000
400,000
425,000
450,000
2012 2013 2014 2015 2016 2017E
$5.95
$6.16
$5.39
$5.30
$5.40
$4.75
$5.25
$5.75
$6.25
2013 2014 2015 2016 2017E
Opex/throughput BBL Target from 2015 Analyst Day
Barrels Per Day
Opex Per Throughput Barrel Consolidated Crude Charge
$/throughput BBL
Cost Saving Initiatives
Turnaround Execution
Procurement Opportunities
Maintenance Costs
Organizational Structure
7
Refinery Operations
Annual Crude Charge Rate 450,000 – 470,000 BPD
$5.50 Target
Proximity to North American Crude Production
Laid in Crude Advantage
8
1) Data from quarterly earnings calls
-$6
-$4
-$2
$0
4Q16 1Q17 2Q17 3Q17
Rockies MidCon Southwest Consolidated
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
Approximately 100,000 barrels per day Canadian, primarily Heavy sour crude
Approximately 150,000 barrels per day of Permian crude
Discount to WTI $/bbl
Laid in Crude Advantage under WTI1
8
1) Gulf Coast: CBOB Unleaded 84 Octane Spot Price, Group 3: Unleaded 84 Octane Spot Price, Chicago: Unleaded CBOB 84 Octane Spot Price, Denver: CBOB 81.5 Octane
Rack Price, Phoenix: CBG 84 Octane Rack Price, SLC: CBOB 81.5 Octane Rack Price, Las Vegas: CBOB 84 Octane Rack Price. Source: GlobalView
2) Source: GlobalView
$2.67
$3.38
$7.60
$6.54 $8.17
$11.08
$-
$5
$10
$15
$20
Group 3 vs GC Chicago vs GC Salt Lake vs GC Denver vs GC Phoenix vs GC Las Vegas vs GC
2012
2013
2014
2015
2016
Average
$1.41
$1.72
$3.90 $4.84 $5.06 $7.61
$(5)
$-
$5
$10
$15
Group 3 vs GC Chicago vs GC Denver vs GC Phoenix vs GC Las Vegas vs GC Salt Lake vs GC
2012
2013
2014
2015
2016
Average
High Value Premium Product Markets
Product Pricing vs. Gulf Coast
9
$/bbl
Regional ULSD Pricing vs Gulf Coast2
$/bbl
Regional Gasoline Pricing vs Gulf Coast1
9
Refining Segment Earnings Power
$21.22
$17.93
$20.06
$13.86
$17.89
$10
$15
$20
$25
2013 2014 2015 2016 2017 YTD*
Mid-Cycle Refining EBITDA
$1.0B – $1.2B
Gulf Coast 3-2-1 Crack $10.00
Brent/WTI Spread $4.00
Product Transportation to HFC
Markets
$3.00
HFC Index $17.00
Capture Rate 75%
Realized Gross Margin Per Barrel $12.75
Operating Expense Per Barrel $5.50
Target Throughput 460,000
Refining SG&A (millions) $110
Mid-Cycle Refining EBITDA $1.1B
HFC Consolidated 3-2-1 Index
$/Barrel
10 *YTD for the nine months ending 9/30/17
Operate a system of petroleum product and
crude pipelines, storage tanks, distribution
terminals and loading rack facilities located near
HFC’s refining assets in high growth markets
Revenues are nearly 100% fee-based with
limited commodity risk
Major refiner customers have entered into
long-term contracts
Contracts require minimum payment obligations
for volume and/or revenue commitments
Over 80% of revenues tied to long term contracts
and minimum commitments
Earliest contract up for renewal in 2019 (approx.
17% of total commitments)
52 consecutive quarterly distribution increases
since IPO in 2004
Target 1.0 – 1.2x distribution coverage
*Distribution Per Unit - Distributions are split adjusted reflecting HEP’s January 2013 two-for-one unit split.
Holly Energy Partners Business Profile
$0
$40
$80
$120
$160
$0.00
$0.20
$0.40
$0.60
$0.80
Q
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7
DPU* WTI
Consistent Distribution Growth Despite
Crude Price Volatility
WTI Price Distribution $/LP Unit
11
1. Unit Count as of 12/1/17
2. Based on HEP unit closing price on December 26, 2017
12
100%
Interest
41.9mm HEP units1
41% LP Interest
$1.4B Value2
59.6mm HEP units1
59% LP Interest
$1.9B Value2
HOLLYFRONTIER
CORPORATION (HFC)
GENERAL PARTNER (GP)
HOLLY LOGISTIC
SERVICES, L.L.C
HOLLY ENERGY
PARTNERS, L.P. (HEP)
PUBLIC
Non-economic
GP Interest
Ownership Structure
IDR Simplification Provides Lower Cost of Capital for HEP
12
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
loading rack
(Tulsa West)
(Aug 2009)
Holly crude oil
and tankage
assets
dropdown
(Feb 2008)
Alon pipeline
and terminal
asset
acquisition
(Feb 2005)
Holly 16”
intermediate
pipeline
facilities
acquisition
(June 2009)
Tulsa East
acquisition &
Roadrunner /
Beeson
dropdown
(Dec 2009)
Sale of 70%
interest in Rio
Grande to
Enterprise
(Dec 2009)
2010
Purchase of
additional
Tulsa tanks
& racks and
Lovington rack
(Mar 2010)
2011
HFC
dropdown of
El Dorado &
Cheyenne
assets
(Nov 2011)
Holly South
Line expansion
project
(2007-2008)
Holly Corporation
and Frontier Oil
Corporation
complete merger
(July 2011)
2012
HEP purchases
75% interest in
UNEV from HFC
(July 2012)
Tulsa
interconnect
pipelines
(Aug 2011)
2013
Crude gathering
system
expansion
(2014)
2014 2015 2016 2017
Acquired
remaining
interests in SLC /
Frontier pipelines
(Oct 2017)
IDR
Simplification
(Oct 2017)
Purchase of
Tulsa West
Tanks
(March 2016)
HFC dropdown
of El Dorado
processing
units
(Nov 2015)
50% JV with
Plains for
Frontier
pipeline
(Aug 2015)
50% JV with
Plains for
Cheyenne
pipeline
(June 2016)
HFC
dropdown of
Woods Cross
processing
units
(Oct 2016)
Acquisition of
El Dorado
tank farm
(Mar 2015)
HEP Historical Growth
Committed to Continuing Track Record of Increasing Distribution
HEP purchases
50% interest in
Osage from HFC
(Feb 2016)
13
HEP Avenues for Growth
ORGANIC ACQUISITIONS DROPDOWNS FROM HFC
Leverage HEP’s existing
footprint, specifically in
Permian Basin
Contractual PPI/FERC
Escalators
SLC / Frontier Expansion
Pursue logistics assets in HEP’s
current geographic region
Replace incumbent HFC service
providers with HEP
Leverage HFC refining and
commercial footprint
Participate in expected MLP
sector consolidation
Partnering with HFC to build
and/or acquire new assets /
businesses
Target high tax basis assets with
durable cash flow characteristics
that also add to HFC EBITDA
14
Advanced lubricants are a crucial requirement in the drive
to develop more reliable, efficient and environmentally
compliant industrial machinery worldwide.
These lubricants command higher margins by:
HF Lubricants & Specialty Products
The World’s Machinery is Driving Towards Greater Efficiency, Reliability and Longevity
Meeting more
exacting standards
of purity and
viscosity
Providing exceptional
wear protection over a
wider range of
temperatures and harsh
environments
Allowing for
extended
drain
intervals
HF LSP is a
leading producer
of high-margin
premium lubricants,
specialty products and
top-quality base oils.
15
V
a
lu
e
O
p
p
ortu
n
it
y
PCLI & Tulsa Refineries
(Lubeplex)
(Warehousing
& Transportation)
Feedstock
& Production
Blending
& Packaging
RACK BACK
Marketing
Distribution
R&D
RACK FORWARD
VGO/HCB Cash
HF LSP - Rack Back vs Rack Forward
Base
Fluids
White
Oils
Specialty
Products
Waxes
Finished
Lubricants
& Greases
• Rack Back captures the value between feedstock cost and base oil market prices
• Rack Forward captures the value between base oil market prices and product sales
revenues from customers
Customer Order Fulfillment
Sales
16
Rack Forward EBITDA Margin Stability
69
38
45
29 30
58 58 55 53
40
48
17%
9%
12%
9%
9%
16% 16%
16%
14%
10%
13%
0%
5%
10%
15%
20%
0
20
40
60
80
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
EBITDA EBITDA Margin
Rack Forward – EBITDA Margin1 2018
Guidance2
EBITDA
$175 – 200MM
EBITDA Margin
10-15%
1. EBITDA Margin calculated by dividing EBITDA by Revenue for the period
2. 2018 Guidance includes planned turnarounds at the Tulsa and Mississauga plants
HF LSP’s Rack Forward business has consistently generated EBITDA margins of 10-15%
EBITDA Margin % EBITDA ($ in millions)
17
HF Lubricants & Specialty Products
18
Rack Forward EBITDA
($ in millions)
$190
Target Multiple 10x
Enterprise Value
($ in millions)
$1,900
Mid-Cycle EBITDA
EBITDA Margin 10-15%
Annual SG&A $125 - $135MM
Annual DD&A $30 - $35MM
Upside with Organic Growth and M&A
Opportunities
10x multiple in-line with peer group
Mid-Cycle Capex: $50 – $60MM
Group III Base Oil Opportunity
Increasing Demand for Higher
Performance Finished
Lubricants & Specialty
Products
Higher industry standards driving
demand for lubricants formulated
from Group III and III+ Base Oils
Western Hemisphere Group III
demand projected to be 3%
CAGR from 2016-2026
The U.S. is a large importer of
Group III/III+ Base Oils
Asian and Middle Eastern imports
fill North American supply deficit
at transportation cost of ˜$5-10/bbl
HF LSP is the largest North
American producer of Group III
Base Oils
Western Hemisphere Group III Base Oil: Production Capacity vs
Demand¹
˜3% CAGR Demand Growth (2016-2026)
1. Source: Kline 2017 Data
0
13
25
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Americas Demand
Americas Production Capacity
19
KBD
Base Oils
45%
Specialty
Products
25%
White Oils
9%
Waxes
7%
Finished
Lubricants &
Greases
14%
HF LSP
Product Sales 2016
Finished Lubricants
& Greases
Waxes
White Oils
Specialty Products
Base Oils
Margin Value $/bbl
Converting one barrel of Base Oil sales into Finished Product sales
results in a margin uplift of ~$50/bbl
20
Opportunity Across the Value Chain
Upgrade Existing Base Oils into Finished Products
New Segment Reporting
Rack Back Rack Forward
HF REFINING
&
MARKETING
(HF R&M)
HOLLY
ENERGY
(HEP)
HF
LUBRICANTS
& SPECIALTY
PRODUCTS
(HF LSP)
CORPORATE,
OTHER &
ELIMINATIONS
CONSOLIDATED
SG&A allocated to each segment
Rack Back includes transfer pricing based on Argus spot average for each
base oil category
21
2018 Guidance
Refining & Marketing
- $5.50 Opex/bbl
- Turnaround Schedule
- Tulsa – 1Q18
- El Dorado – 4Q18
- Capex $375 – $425 million
HF LSP
- $175 – 200 mm Rack Forward EBITDA
- Mississauga Turnaround - 4Q18
- Capex $60 – $80 million
HEP
- Target Distribution Coverage of 1.0x - 1.1x
- Capex - $40 – $50 million
R&M
77%
HF LSP
14%
HEP
9%
22
2018E Capex
Segment Allocation
A P P E N D I X
Strong Track Record of Cash Returns
24
• Strong track record in returning excess cash to shareholders
• Committed to maintaining competitive cash yield versus peers
• Share repurchase program funded by Free Cash Flow generation and HEP drop down
proceeds
1) Dividends are split adjusted reflecting HFC’s two-for-one stock split announced August 3, 2011.
2) Total Cash yield calculated using year end share count- includes regular dividends, special dividends and stock buybacks.
Data from public filings and press releases. As of 12/26/17 NYSE closing prices.
0%
5%
10%
15%
2011 2012 2013 2014 2015 2016
5.5%
9.2% 8.8%
11.0%
13.8%
6.3%
0%
2%
4%
PBF VLO PSX HFC MPC ANDV DK
3.4%
3.0%
2.8%
2.6%
2.4%
2.1%
1.7%
Since the July 2011 merger HFC has returned approximately $4.3 billion,
or approximately $24.50 per share to shareholders
Total Cash Yield2 Regular Cash Yield1
% Yield % Yield
24
HollyFrontier Capital Structure
25
25
Maintain Investment Grade Rating from S&P (BBB-),
Moody’s (Baa3), and Fitch (BBB-)
Cash and Short Term Marketable Securities $631
HOLLYFRONTIER CORPORATION
HFC Credit Agreement $-
HFC 5.875% Senior Notes due 2026 $1,000
HFC Long Term Debt $1,000
HOLLY ENERGY PARTNERS
HEP 6.50% Senior Notes due 2020 $-
HEP 6.00% Senior Notes due 2024 $500
HEP Credit Agreement $750
HEP Long Term Debt $1,250
Consolidated Debt (excludes unamortized discount) $2,250
Stockholders Equity $4,850
Noncontrolling Interest $617
Total Capitalization $7,717
Consolidated Debt / Capitalization 29%
Consolidated Net Debt / Capitalization 23%
Consolidated Total Liquidity1 $2,631
HFC Consolidated Capital Structure
As of September 30, 2017 (US$ millions)
Cash and Short Term Marketable Securities $624
HFC LONG TERM DEBT
HFC 5.875% Senior Notes due 2026 $1,000
Total Debt $1,000
Stockholders Equity $4,786
Total Capitalization $5,786
HFC Standalone Debt / Capitalization 17%
HFC Standalone Net Debt / Capitalization 7%
HFC Standalone Liquidity $1,974
HFC Standalone Capital Structure
As of September 30, 2017 (US$ millions)
1. Includes Availability from $1.35B HFC Revolver & $1.4B HEP Revolver.
Investment Grade Rating
- S&P BBB-
- Moody’s Baa3
- Fitch BBB-
$624 million cash as of 9/30/17
$1 billion outstanding debt as of
9/30/17
- excludes non-recourse HEP debt
Total debt to capital ratio 17% as
of 9/30/17
Target 1x Net Debt/EBITDA (ex
HEP)
* Debt to Capital is calculated by taking total debt (excluding MLP debt) divided by total debt (excluding MLP debt) plus total equity
(excluding non-controlling interest). Net Debt to Capital is calculated by taking total net debt (excluding MLP debt) divided by total debt
(excluding MLP debt) plus total equity (excluding non-controlling interest).
0%
10%
20%
30%
40%
50%
HFC PSX VLO ANDV MPC DK PBF
Debt/Cap Net Debt/Cap
Debt Ratio %
Peer Group Debt Metrics − 9/30/17
HollyFrontier Credit Profile
26
Our Business Plan Update
27 1. Target EBITDA using a 2014 baseline pricing
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 Investment $365 $202
Large Capital $165 $83
Opportunity Investments $200 $119
Total $700 MM $529 MM
Definitions
28
Lubricant : A solvent neutral paraffinic product used in commercial heavy duty engine
oils, passenger car oils and specialty products for industrial applications such as heat
transfer, metalworking, rubber and other general process oil.
Non GAAP measurements: We report certain financial measures that are not prescribed
or authorized by U. S. generally accepted accounting principles ("GAAP"). We discuss
management's reasons for reporting these non-GAAP measures below. Although
management evaluates and presents these non-GAAP measures for the reasons
described below, please be aware that these non-GAAP measures are not alternatives to
revenue, operating income, income from continuing operations, net income, or any other
comparable operating measure prescribed by GAAP. In addition, these non-GAAP
financial measures may be calculated and/or presented differently than measures with the
same or similar names that are reported by other companies, and as a result, the non-
GAAP measures we report may not be comparable to those reported by others.
Rack Backward: business segment of HF LSP that captures the value between feedstock
cost and base oil market prices (transfer prices to rack forward).
Rack Forward: business segment of HF LSP that captures the value between bas oil
market prices and product sales revenue from customers.
RBOB: Reformulated Gasoline Blendstock for Oxygen Blending
Sour Crude: Crude oil containing quantities of sulfur greater than 0.4 percent by weight,
while “sweet crude oil” means crude oil containing quantities of sulfur equal to or less than
0.4 percent by weight.
WCS: Western Canada Select crude oil, made up of Canadian heavy conventional and
bitumen crude oils blended with sweet synthetic and condensate diluents.
WTI: West Texas Intermediate, a grade of crude oil used as a common benchmark in oil
pricing. WTI is a sweet crude oil and has a relatively low density.
WTS: West Texas Sour, a medium sour crude oil.
BPD: the number of barrels per calendar day of crude oil or petroleum products.
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 rate of an
investment over a specified period of time longer than one year.
Debt-To-Capital: A measurement of a company's financial leverage, calculated as the
company's long term debt divided by its total capital. Debt includes all long-term
obligations. Total capital includes the company's debt and shareholders' equity.
Distributable Cash Flow: Distributable cash flow (DCF) is not a calculation based upon
GAAP. However, the amounts included in the calculation are derived from amounts
separately presented in HEP’s consolidated financial statements, with the exception of
excess cash flows over earnings of SLC Pipeline, maintenance capital expenditures and
distributable cash flow from discontinued operations. Distributable cash flow should not
be considered in isolation or as an alternative to net income or operating income as an
indication of HEP’s 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. We believe that this measure provides investors an enhanced perspective
of the operating performance of HEP’s assets and the cash HEP is generating. HEP’s
historical net income is reconciled to distributable cash flow in "Item 6. Selected
Financial Data" of HEP's 2016 10-K filed February 22, 2017.
EBITDA: Earnings before interest, taxes, depreciation and amortization, which we refer
to as EBITDA, is calculated as net income plus (i) interest expense net of interest
income, (ii) income tax provision, and (iii) depreciation, depletion and amortization.
EBITDA is not a calculation provided for under 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 is also used by our management for internal analysis and as a basis for financial
covenants. Our historical EBITDA is reconciled to net income under the section entitled
“Reconciliation to Amounts Reported Under Generally Accepted Accounting Principles”
in HollyFrontier Corporation’s 2016 10-K filed February 22, 2017.
Free Cash Flow: Calculated by taking operating cash flow and subtracting capital
expenditures.
IDR: Incentive Distribution Rights
Please see p. 30 for disclaimer and www.HollyFrontier.com/investor-relations for most current version.
HollyFrontier Index
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4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17*
407,310 391,100 429,000 444,000 432,000 371,000 467,000 455,000 450-460K
*Anticipated crude charge based on guidance given on 11/1/17 earnings call
HollyFrontier Index
Jan Feb Mar 1Q17 Apr May Jun 2Q17 Jul Aug Sep 3Q17 Oct Nov Dec 4Q17
MidCon $13.30 $11.75 $14.12 $13.06 $14.86 $14.56 $13.40 $14.27 $16.94 $20.25 $23.06 $20.08 $22.28 $19.29
Rockies $14.12 $15.48 $20.36 $16.65 $21.49 $21.91 $23.99 $22.46 $22.17 $27.86 $28.38 $26.14 $26.29 $22.58
Southwest $15.97 $15.03 $20.36 $17.12 $21.54 $21.30 $21.76 $21.53 $19.83 $22.03 $27.50 $23.12 $25.11 $23.59
Jan Feb Mar 1Q17 Apr May Jun 2Q17 Jul Aug Sep 3Q17 Oct Nov Dec 4Q17
Group I $6.26 $10.15 $20.12 $12.18 $24.91 $35.14 $41.34 $33.80 $41.27 $37.76 $31.94 $36.99 $34.65 $33.85
Group II $14.79 $18.74 $27.37 $20.30 $28.96 $35.91 $39.24 $34.70 $38.57 $34.69 $30.14 $34.47 $33.76 $32.14
Group III $52.76 $55.48 $68.61 $58.95 $70.54 $71.37 $66.33 $69.41 $63.00 $58.88 $54.80 $58.89 $53.60 $52.89
Jan Feb Mar 1Q16 Apr May Jun 2Q16 Jul Aug Sep 3Q16 Oct Nov Dec 4Q16
MidCon $8.62 $8.23 $13.66 $10.17 $12.48 $13.19 $13.25 $12.97 $12.12 $16.52 $14.91 $14.52 $11.55 $9.03 $11.79 $10.79
Rockies $13.90 $10.34 $16.21 $13.48 $18.74 $20.13 $18.39 $19.09 $19.70 $18.73 $19.91 $19.45 $17.88 $12.18 $11.57 $13.88
Southwest $17.94 $9.21 $12.90 $13.35 $19.72 $17.61 $18.75 $18.69 $20.19 $16.77 $18.00 $18.32 $16.08 $19.34 $15.92 $17.11
Crude Charge
WTI Based 321
Crack
1Q 2017 2Q 2017 3Q 2017
The preceding data is for informational purposes only and is not reflective or intended to be an indicator of HollyFrontier's past or future financial results. This data is general
industry information and does not reflect prices paid or received by HFC. The data was compiled from publicly available information, various industry publications, other
published industry sources, including OPIS and Argus, and our own internal data and estimates. Although this data is believed to be reliable, HFC has not had this information
verified by independent sources. HFC does not make any representation as to the accuracy of the data and does not undertake any obligation to update, revise or continue to
provide the data.
4Q 2017
WTI Based 321
Crack
1Q 2016 2Q 2016 3Q 2016 4Q 2016
VGO Based
Base Oil Crack
1Q 2017 2Q 2017 3Q 2017 4Q 2017
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HFC Index Disclosure
30
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 product yield differs from indicator and can vary quarter to quarter as a result of changes in economics, crude slate, and operational downtime.
Other differences including but not limited to secondary costs such as product and feedstock transportation costs, purchases of environmental credits, quality differences, location of
purchase or sale, and hedging gains/losses. Moreover, the presented indicators are generally based on spot sales, which may differ from realized contract prices.
Market prices are available from a variety of sources, each of which may vary slightly. Please note that this data may differ from other sources due to adjustments made by data providers and
due to differing data definitions. Below are indicator definitions used for purposes of this data.
MidCon Indicator: (100% Group 3: Sub octane and ULSD) – WTI
Rockies Indicator as of July 1, 2016: 50% Cheyenne: ((100% Denver Regular Gasoline; 100% Denver ULSD) – WTI)
50% Woods Cross: ((60% Salt Lake City Regular Gasoline, 40% Las Vegas Regular Gasoline; 80% Salt Lake City ULSD,
20% Las Vegas ULSD) – WTI)
Rockies Indicator 2011- July-2016: 60% Cheyenne: ((100% Denver Regular Gasoline; 100% Denver ULSD) – WTI)
40% Woods Cross: ((60% Salt Lake City Regular Gasoline, 40% Las Vegas Regular Gasoline; 80% Salt Lake City ULSD,
20% Las Vegas ULSD) – WTI)
Southwest Indicator 2013-Current: (50% El Paso Subgrade, 50% Phoenix CBG; 50% El Paso ULSD, 50% Phoenix ULSD) – WTI
Southwest Indicator 2011-2012: (50% El Paso Regular, 50% Phoenix CBG; 50% El Paso ULSD, 50% Phoenix ULSD) – WTI
Lubricants Index Appendix
HFC's actual pricing and margins differ from benchmark indicators due to many factors. For example:
- Retail/Distribution- HFC and PCLI use commodity base oils to produce finished lubricants, specialty products and white oils that are sold into the retail market worldwide and have a wide
variety of price ranges.
- Feedstock differences – HFC runs a variety of vacuum gas oil streams and hydrocracker bottms across its refining system and feedstock slate may vary quarter to quarter.
- Product Yield differences – HFC’s product yield differs from indicator and can vary quarter to quarter as a result of changes in economics and feedstocks.
- Other differences including, but not limited to secondary costs such as product and feedstock transportation costs, quality differences and location of purchase or sale. Moreover, the
presented indicators are generally based on spot commodity base oil sales, which may differ from realized contract prices.
Market prices are available from a variety of sources, each of which may vary slightly. Please note that this data may differ from other sources due to adjustments made by data providers and
due to differing data definitions. Below are indicator definitions used for purposes of this data.
Group I Base Oil Indicator (50% Group I SN150, 50% Group I SN500)-VGO
Group II Base Oil Indicator (33.3% Group II N100, 33.3% Group II N220, 33.3% Group II N600)-VGO
Group III Base Oil Indicator (33.3% Group III 4cst, 33.3% Group III 6cst, 33.3% Group III 8cst)-VGO
VGO (US Gulf Coast Low Sulfur Vacuum Gas Oil)
30
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