HOLLY ENERGY PARTNERS LP, 10-Q filed on 11/2/2017
Quarterly Report
Document Entity Information
9 Months Ended
Sep. 30, 2017
Oct. 31, 2017
Entity Information [Line Items]
 
 
Entity Registrant Name
HOLLY ENERGY PARTNERS LP 
 
Entity Central Index Key
0001283140 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
64,318,955 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 7,476 
$ 3,657 
Accounts receivable:
 
 
Trade
7,330 
7,846 
Affiliates
42,753 
42,562 
Total accounts receivable
50,083 
50,408 
Prepaid and other current assets
2,295 
2,888 
Total current assets
59,854 
56,953 
Properties and equipment, net
1,307,093 
1,328,395 1
Transportation agreements, net
61,644 
66,856 
Goodwill
256,498 
256,498 
Equity method investments
163,873 
165,609 
Other assets
16,880 
9,926 
Total assets
1,865,842 
1,884,237 1
Accounts payable:
 
 
Trade
13,584 
10,518 
Affiliates
9,600 
16,424 
Total accounts payable
23,143 
26,942 
Accrued interest
5,527 
18,069 
Deferred revenue
14,827 
11,102 
Accrued property taxes
7,487 
5,397 
Other current liabilities
3,492 
3,225 
Total current liabilities
54,476 
64,735 
Long-term debt
1,245,066 
1,243,912 
Other long-term liabilities
15,477 
16,445 1
Deferred revenue
46,405 
47,035 
Class B unit
42,412 
40,319 
Partners’ equity:
 
 
Common unitholders (64,318,955 and 62,780,503 units issued and outstanding at September 30, 2017 and December 31, 2016, respectively
520,709 
510,975 
General partner interest (2% interest)
(149,994)
(132,832)1
Accumulated other comprehensive income
0 
91 
Total partners’ equity
370,715 
378,234 1
Noncontrolling interest
91,291 
93,557 
Total Equity
462,006 
471,791 1
Total liabilities and equity
$ 1,865,842 
$ 1,884,237 1
Consolidated Balance Sheets (Parenthetical)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Partners' Equity:
 
 
Common units issued
64,318,955 
62,780,503 
Common units outstanding
64,318,955 
62,780,503 
General partner interest
2.00% 
 
Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenues:
 
 
 
 
Affiliates
$ 95,138 
$ 77,398 1
$ 277,316 
$ 239,423 1
Third parties
15,226 
15,212 1
47,826 
50,094 1
Total revenues
110,364 
92,610 1
325,142 
289,517 1
Operating costs and expenses:
 
 
 
 
Operations (exclusive of depreciation and amortization)
35,998 
32,101 1
102,584 
89,168 1
Depreciation and amortization
19,007 
18,920 1
57,729 
51,183 1
General and administrative
3,623 
2,664 1
8,872 
8,618 1
Total operating costs and expenses
58,628 
53,685 1
169,185 
148,969 1
Operating income
51,736 
38,925 1
155,957 
140,548 1
Other income (expense):
 
 
 
 
Equity in earnings of equity method investments
5,072 
3,767 1
10,965 
10,155 1
Interest expense
(14,072)
(14,447)1
(41,359)
(36,258)1
Interest income
101 
108 1
306 
332 1
Loss on early extinguishment of debt
0 
0 
(12,225)
0 
Gain (loss) on sale of assets and other
155 
112 1
317 
104 1
Total other income (expense)
(8,744)
(10,460)1
(41,996)
(25,667)1
Income before income taxes
42,992 
28,465 1
113,961 
114,881 1
State income tax (expense) benefit
69 
(61)1
(164)
(210)1
Net Income
43,061 
28,404 1
113,797 
114,671 1
Allocation of net income attributable to Predecessor
0 
7,547 1
0 
10,657 1
Allocation of net income attributable to noncontrolling interests
(990)
(1,166)1
(4,827)
(8,448)1
Net income attributable to Holly Energy Partners
42,071 
34,785 1
108,970 
116,880 1
General partner interest in net income attributable to the partners
419 
(15,222)1
(35,047)
(40,001)1
Limited partners’ interest in net income
$ 42,490 
$ 19,563 1
$ 73,923 
$ 76,879 1
Limited partners’ per unit interest in earnings—basic and diluted:
$ 0.66 
$ 0.33 1
$ 1.16 
$ 1.29 1
Weighted average limited partners’ units outstanding
64,319 
59,223 1
63,845 
58,895 
Consolidated Statement of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Net income
$ 43,061 
$ 28,404 1
$ 113,797 
$ 114,671 1
Other comprehensive income:
 
 
 
 
Change in fair value of cash flow hedging instruments
1 
201 
88 
(737)
Reclassification adjustment to net income on partial settlement of cash flow hedge
(64)
95 
(179)
438 
Other comprehensive income (loss)
(63)
296 
(91)
(299)
Comprehensive income before noncontrolling interest
42,998 
28,700 1
113,706 
114,372 1
Allocation of net loss attributable to Predecessor
0 
7,547 1
0 
10,657 1
Allocation of net comprehensive income to noncontrolling interests
(990)
(1,166)1
(4,827)
(8,448)1
Comprehensive income attributable to Holly Energy Partners
$ 42,008 
$ 35,081 1
$ 108,879 
$ 116,581 1
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities
 
 
Net income
$ 113,797 
$ 114,671 1
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
57,729 
51,183 1
(Gain) loss on sale of assets
(269)
(121)
Amortization of deferred charges
2,317 
2,294 
Amortization of restricted and performance units
1,908 
1,865 
Distributions greater (less) than income from equity investments
513 
(1,370)
Loss on early extinguishment of debt
12,225 
0 
(Increase) decrease in operating assets:
 
 
Accounts receivable – trade
516 
1,521 
Accounts receivable – affiliates
(191)
2,971 
Prepaid and other current assets
593 
814 
Increase (decrease) in operating liabilities:
 
 
Accounts payable – trade
3,393 
(5,757)
Accounts payable – affiliates
(6,866)
1,589 
Accrued interest
(12,543)
441 
Deferred revenue
3,096 
6,288 
Accrued property taxes
2,090 
3,199 
Other current liabilities
(99)
(1,020)
Other, net
(750)
(594)
Net cash provided by operating activities
177,459 
177,974 
Cash flows from investing activities
 
 
Additions to Properties and Equipment
(30,675)
(48,224)1
Purchase of Woods Cross refinery processing units
0 
(47,891)
Purchase of Interest in Equity Method Investments
0 
(42,550)
Proceeds from sale of assets
794 
210 
Distributions in excess of equity in earnings of equity investments
1,224 
1,685 
Other
0 
351 
Net cash used for investing activities
(28,657)
(137,121)
Cash flows from financing activities
 
 
Borrowings under credit agreement
628,000 
310,500 
Repayments of credit agreement borrowings
(431,000)
(642,500)
Proceeds from Issuance of Senior Notes
101,750 
394,000 
Redemption of 6.5% Senior Notes
(309,750)
0 
Proceeds from Issuance of common units
52,285 
22,791 
Distributions to HEP unitholders
(171,560)
(138,798)
Distributions to noncontrolling interests
(5,000)
(3,750)
Distribution to HFC for Tulsa Tank Acquisition
0 
(39,500)
Distribution to HFC for Osage acquisition
0 
(1,245)
Distribution to HFC for El Dorado tanks
(103)
0 
Contributions from HFC for acquisitions
0 
55,027 1
Contributions from General Partner
1,072 
470 
Purchase of units for incentive grants
0 
(784)
Deferred financing costs
(9,453)
(3,930)
Other
(1,224)
(939)
Net cash used for financing activities
(144,983)
(48,658)
Cash and cash equivalents
 
 
Increase (decrease) for the period
3,819 
(7,805)
Beginning of period
3,657 
15,013 
End of period
$ 7,476 
$ 7,208 
Consolidated Statement of Equity (USD $)
In Thousands, unless otherwise specified
Total
Common Units
General Partner Interest
Accumulated Other Comprehensive Income (Loss)
Noncontrolling Interest
Balance at at Dec. 31, 2016
$ 471,791 
$ 510,975 
$ (132,832)1
$ 91 
$ 93,557 
Increase (Decrease) in Partners' Equity [Roll Forward]
 
 
 
 
 
Issuance of common units
52,285 
52,285 
 
 
 
Contribution from HFC
1,072 
 
1,072 
 
 
Distribution to HFC for acquisition
(103)
 
(103)
 
 
Distributions to HEP unitholders
(171,560)
(118,424)
(53,136)
 
 
Distributions to Noncontrolling Interest
(5,000)
 
 
 
(5,000)
Amortization of restricted and performance units
1,908 
1,908 
 
 
 
Class B unit accretion
(2,093)
(2,051)
(42)
 
 
Net income
113,797 
76,016 
35,047 
 
2,734 
Other comprehensive income
(91)
 
 
(91)
 
Balance at at Sep. 30, 2017
$ 462,006 
$ 520,709 
$ (149,994)
$ 0 
$ 91,291 
Description of Business and Presentation of Financial Statements
Description of Business and Presentation of Financial Statements
Description of Business and Presentation of Financial Statements

Holly Energy Partners, L.P. (“HEP”), together with its consolidated subsidiaries, is a publicly held master limited partnership which is 36% owned (including the 2% general partner interest) by HollyFrontier Corporation (“HFC”) and its subsidiaries as of September 30, 2017. We commenced operations on July 13, 2004, upon the completion of our initial public offering. In these consolidated financial statements, the words “we,” “our,” “ours” and “us” refer to HEP unless the context otherwise indicates.

On October 31, 2017, we closed the restructuring transaction set forth in the definitive agreement with HEP Logistics Holdings, L.P. (“HEP Logistics”), a wholly-owned subsidiary of HFC and the general partner of HEP, pursuant to which the incentive distribution rights held by HEP Logistics are canceled, and HEP Logistics' 2% general partner interest in HEP is converted into a non-economic general partner interest in HEP. In consideration, we issued 37,250,000 of our common units to HEP Logistics. In addition, HFC agreed to waive $2.5 million of limited partner cash distributions for each of twelve consecutive quarters beginning with the first quarter the units issued as consideration are eligible to receive distributions. As of October 31, 2017, HFC held approximately 59.6 million HEP common units, representing approximately 59% of the outstanding common units. As a result of this transaction, no distributions will be made on the general partner interest after October 31, 2017.
 
We own and operate petroleum product and crude oil pipelines, terminal, tankage and loading rack facilities and refinery processing units that support HFC’s refining and marketing operations in the Mid-Continent, Southwest and Northwest regions of the United States and Alon USA, Inc.’s (“Alon”) refinery in Big Spring, Texas. As of September 30, 2017, we owned a 75% interest in UNEV Pipeline, LLC (“UNEV”), a 50% interest in Frontier Aspen LLC (“Frontier Aspen”), a 50% interest in Osage Pipe Line Company, LLC (“Osage”), a 50% interest in Cheyenne Pipeline LLC and a 25% interest in SLC Pipeline LLC (“SLC Pipeline”).

We operate in two reportable segments, a Pipelines and Terminals segment and a Refinery Processing Unit segment. Disclosures around these segments are discussed in Note 13.

We generate revenues by charging tariffs for transporting petroleum products and crude oil through our pipelines, by charging fees for terminalling and storing refined products and other hydrocarbons, providing other services at our storage tanks and terminals and by charging fees for processing hydrocarbon feedstocks through our refinery processing units. We do not take ownership of products that we transport, terminal, store or process, and therefore, we are not exposed directly to changes in commodity prices.

The consolidated financial statements included herein have been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The interim financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of our results for the interim periods. Such adjustments are considered to be of a normal recurring nature. Although certain notes and other information required by U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted, we believe that the disclosures in these consolidated financial statements are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016. Results of operations for interim periods are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2017.

Principles of Consolidation and Common Control Transactions
The consolidated financial statements include our accounts, our Predecessor's (defined below) and those of subsidiaries and joint ventures that we control. All significant intercompany transactions and balances have been eliminated.

Most of our acquisitions from HFC occurred while we were a consolidated variable interest entity (“VIE”) of HFC. Therefore, as an entity under common control with HFC, we recorded these acquisitions on our balance sheets at HFC's historical basis instead of our purchase price or fair value. GAAP requires transfers of a business between entities under common control to be accounted for as though the transfer occurred as of the beginning of the period of transfer, and prior period financial statements and financial information are retrospectively adjusted to include the historical results and assets of the acquisitions from HFC for all periods presented prior to the effective dates of each acquisition. We refer to the historical results of the acquisitions prior to their respective acquisition dates as those of our "Predecessor." Many of these transactions are cash purchases and do not involve the issuance of equity; however, GAAP requires the retrospective adjustment of financial statements. Therefore, in such transactions, the prior year balance sheet includes as equity the amount of cost incurred by HFC to that date. See “Acquisitions” below for further discussion as well as effects of the retrospective adjustments.


Acquisitions

Osage
On February 22, 2016, HFC obtained a 50% membership interest in Osage in a non-monetary exchange for a 20-year terminalling services agreement, whereby a subsidiary of Magellan Midstream Partners (“Magellan”) will provide terminalling services for all HFC products originating in Artesia, New Mexico requiring terminalling in or through El Paso, Texas. Osage is the owner of the Osage Pipeline, a 135-mile pipeline that transports crude oil from Cushing, Oklahoma to HFC’s El Dorado Refinery in Kansas and also connects to the Jayhawk pipeline serving the CHS Inc. refinery in McPherson, Kansas. The Osage Pipeline is the primary pipeline supplying HFC’s El Dorado refinery with crude oil.

Concurrent with this transaction, we entered into a non-monetary exchange with HFC, whereby we received HFC’s interest in Osage in exchange for our El Paso terminal. Under this exchange, we agreed to build two connections on our south products pipeline system that will permit HFC access to Magellan’s El Paso terminal. Effective upon the closing of this exchange, we became the named operator of the Osage Pipeline and transitioned into that role on September 1, 2016. Since we are a consolidated VIE of HFC, this transaction was recorded as a transfer between entities under common control and reflects HFC’s carrying basis of its 50% membership interest in Osage of $44.5 million offset by our net carrying basis in the El Paso terminal of $12.1 million with the difference recorded as a contribution from HFC. However, since these transactions were concurrent, there was no impact on periods prior to February 22, 2016.

Tulsa Tanks
On March 31, 2016, we acquired crude oil tanks (the “Tulsa Tanks”) located at HFC’s Tulsa refinery from an affiliate of Plains All American Pipeline, L.P. (“Plains”) for cash consideration of $39.5 million. In 2009, HFC sold these tanks to Plains and leased them back, and due to HFC’s continuing interest in the tanks, HFC accounted for the transaction as a financing arrangement. Accordingly, the tanks had remained on HFC’s balance sheet and were being depreciated for accounting purposes.

As we are a consolidated VIE of HFC, this transaction was recorded as a transfer between entities under common control and reflects HFC’s carrying basis in the net assets acquired. We have retrospectively adjusted our financial position and operating results as if these units were owned for all periods while we were under common control of HFC.

Cheyenne Pipeline
On June 3, 2016, we acquired a 50% interest in Cheyenne Pipeline LLC, owner of the Cheyenne Pipeline, in exchange for a contribution of $42.6 million in cash to Cheyenne Pipeline LLC. Cheyenne Pipeline LLC will continue to be operated by an affiliate of Plains, which owns the remaining 50% interest. The 87-mile crude oil pipeline runs from Fort Laramie to Cheyenne, Wyoming and has an 80,000 barrel per day (“bpd”) capacity.

Woods Cross Operating
Effective October 1, 2016, we acquired all the membership interests of Woods Cross Operating LLC (“Woods Cross Operating”), a wholly owned subsidiary of HFC, which owns the newly constructed atmospheric distillation tower, fluid catalytic cracking unit, and polymerization unit located at HFC’s Woods Cross Refinery, for cash consideration of $278 million. The consideration was funded with $103 million in proceeds from the private placement of 3,420,000 common units with the balance funded with borrowings under our credit facility. In connection with this transaction, we entered into 15-year tolling agreements containing minimum quarterly throughput commitments from HFC. As of September 30, 2017, these commitments provide minimum annualized revenues of $57 million.

The Utah Division of Air Quality issued an air quality permit to HollyFrontier Woods Cross Refining LLC (“HFC Woods Cross Refining”) authorizing the expansion units at the Woods Cross Refinery. The appeal proceeding challenging the Utah Department of Environmental Quality’s decision to uphold the air quality permit was taken under advisement by the Utah Supreme Court in June 2017, and the court issued a decision in favor of the state of Utah and HFC. As a result, the purchase agreement remedies we had against HFC in the event of an unfavorable ruling in the appeal proceeding are no longer applicable.

As we are a consolidated VIE of HFC, this transaction was recorded as a transfer between entities under common control and reflects HFC’s carrying basis in the net assets acquired. We have retrospectively adjusted our financial position and operating results as if these units were owned for all periods while we were under common control of HFC.

The following tables present lines in our previously reported income statement for the three and nine months ended September 30, 2016, that were impacted by Predecessor transactions, and retrospectively adjusts only the acquisition of Woods Cross Operating as the Tulsa Tanks acquisition included Predecessor transactions in the previously reported income statement for the three and nine months ended September 30, 2016. However, the presentation of the Tulsa Tanks’ Predecessor transactions have been modified as shown in the table below.

 
 
Three Months Ended September 30, 2016
 
 
Holly Energy Partners, L.P.(Previously reported)
 
Tulsa Tanks
 
Woods Cross Operating
 
Holly Energy Partners, L.P. (Currently reported)
 
 
(In Thousands)
Operating costs and expenses:
 
 
 
 
 
 
 
 
       Operations (exclusive of depreciation and
       amortization)
 
$
27,954

 
$
—

 
$
4,147

 
$
32,101

        Depreciation and amortization
 
15,520

 
—

 
3,400

 
18,920

Allocation of net loss attributable to predecessor
 
—

 
—

 
7,547

 
7,547


 
 
Nine Months Ended September 30, 2016
 
 
Holly Energy Partners, L.P.(Previously reported)
 
Tulsa Tanks
 
Woods Cross Operating
 
Holly Energy Partners, L.P. (Currently reported)
 
 
(In Thousands)
Operating costs and expenses:
 
 
 
 
 
 
 
 
       Operations (exclusive of depreciation and
       amortization)
 
$
82,131

 
$
—

 
$
7,037

 
$
89,168

        Depreciation and amortization
 
47,780

 
—

 
3,403

 
51,183

Allocation of net loss attributable to predecessor
 
—

 
217

 
10,440

 
10,657



The following tables present lines in our previously reported cash flows for the nine months ended September 30, 2016, that were impacted by Predecessor transactions, and retrospectively adjusts only the acquisition of Woods Cross Operating as the Tulsa Tanks acquisition included Predecessor transactions in the previously reported cash flows for the nine months ended September 30, 2016.
 
 
Nine Months Ended September 30, 2016
 
 
Holly Energy Partners, L.P.(Previously reported)
 
Woods Cross Operating
 
Holly Energy Partners, L.P.
(Currently reported)
Cash flows from operating activities
 
(In Thousands)
Net income
 
$
125,111

 
$
(10,440
)
 
$
114,671

Depreciation and amortization
 
47,780

 
3,403

 
51,183

Net cash provided (used) by operating activities
 
$
185,011

 
$
(7,037
)
 
$
177,974

 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
Purchase of Woods Cross refinery processing units
 
$
—

 
$
(47,891
)
 
$
(47,891
)
Net cash used for investing activities
 
$
(89,230
)
 
$
(47,891
)
 
$
(137,121
)
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
Contributions from HFC for acquisitions
 
$
99

 
$
54,928

 
$
55,027

Net cash provided (used) by financing activities
 
$
(103,586
)
 
$
54,928

 
$
(48,658
)

SLC Pipeline and Frontier Aspen
On October 31, 2017, we acquired the remaining 75% interest in SLC Pipeline and the remaining 50% interest in Frontier Aspen from subsidiaries of Plains All American Pipeline, L.P. (“Plains”), for total consideration of $250 million. As of September 30, 2017, we held noncontrolling interests of 25% of SLC Pipeline and 50% of Frontier Aspen. As a result of the acquisitions, SLC Pipeline and Frontier Aspen are wholly-owned subsidiaries of HEP.

This acquisition will accounted for as a business combination achieved in stages with the consideration allocated to the acquisition date fair value of assets and liabilities acquired. The preexisting equity interests in SLC Pipeline and Frontier Aspen will be remeasured at acquisition date fair value since we will have a controlling interest, and we expect to recognize a gain on the remeasurement in the fourth quarter of 2017.

SLC Pipeline is the owner of a 95-mile crude pipeline that transports crude oil into the Salt Lake City area from the Utah terminal of the Frontier Pipeline and from Wahsatch Station. Frontier Aspen is the owner of a 289-mile crude pipeline from Casper, Wyoming to Frontier Station, Utah that supplies Canadian and Rocky Mountain crudes to Salt Lake City area refiners through a connection to the SLC Pipeline.

Accounting Pronouncements Adopted During the Periods Presented

Earnings Per Unit
In April 2015, an accounting standard update was issued requiring changes to the allocation of the earnings or losses of a transferred business for periods before the date of a dropdown of net assets accounted for as a common control transaction entirely to the general partner for purposes of calculating historical earnings per unit. We adopted this standard as of January 1, 2016. In connection with the dropdown of assets from HFC’s Tulsa refinery on March 31, 2016, and the purchase of HFC’s Woods Cross refinery units on October 1, 2016, we reduced net income by $7.5 million and $10.7 million for the three and nine months ended September 30, 2016. These reductions had no impact on the historical earnings per limited partner unit as they were allocated to the general partner.

Share-Based Compensation
In March 2016, an accounting standard update was issued which simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this standard effective January 1, 2017, with no impact to our financial condition, results of operations and cash flows. As permitted by the standard, we continue to account for forfeitures on an estimated basis.

Accounting Pronouncements Not Yet Adopted

Revenue Recognition
In May 2014, an accounting standard update was issued requiring revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the expected consideration for these goods or services. This standard has an effective date of January 1, 2018, and we intend to account for the new guidance using the modified retrospective implementation method, whereby a cumulative effect adjustment is recorded to retained earnings as of the date of initial application. Our preparation for adoption of this standard is in progress, and we are currently evaluating terms, conditions and our performance obligations of our existing contracts with customers. We are evaluating the effect of this standard on our revenue recognition policies and whether it will have a material impact on our financial condition or results of operations.

Business Combinations
In December 2014, an accounting standard update was issued to provide new guidance on the definition of a business in relation to accounting for identifiable intangible assets in business combinations. This standard has an effective date of January 1, 2018, and we are evaluating its impact.

Financial Assets and Liabilities
In January 2016, an accounting standard update was issued requiring changes in the accounting and disclosures for financial instruments. This standard will become effective beginning with our 2018 reporting year. We are evaluating the impact of this standard.

Leases
In February 2016, an accounting standard update was issued requiring leases to be measured and recognized as a lease liability, with a corresponding right-of-use asset on the balance sheet. This standard has an effective date of January 1, 2019, and we are evaluating the impact of this standard.
Financial Instruments
Financial Instruments
Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, debt and interest rate swaps. The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Debt consists of outstanding principal under our revolving credit agreement (which approximates fair value as interest rates are reset frequently at current interest rates) and our fixed interest rate senior notes.

Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability) including assumptions about risk. GAAP categorizes inputs used in fair value measurements into three broad levels as follows:
•
(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.

The carrying amounts and estimated fair values of our senior notes and interest rate swaps were as follows:
 
 
 
 
September 30, 2017
 
December 31, 2016
Financial Instrument
 
Fair Value Input Level
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
 
 
 
 
(In thousands)
Assets:
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
Level 2
 
$
—

 
$
—

 
$
91

 
$
91

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
6.5% Senior notes
 
Level 2
 
$
—

 
$
—

 
$
297,519

 
$
308,250

6% Senior notes
 
Level 2
 
495,066

 
524,390

 
393,393

 
415,500

 
 
 
 
$
495,066

 
$
524,390

 
$
690,912

 
$
723,750



Level 2 Financial Instruments
Our senior notes and interest rate swaps are measured at fair value using Level 2 inputs. The fair value of the senior notes is based on market values provided by a third-party bank, which were derived using market quotes for similar type debt instruments. The fair value of our interest rate swaps is based on the net present value of expected future cash flows related to both variable and fixed-rate legs of the swap agreement. This measurement is computed using the forward London Interbank Offered Rate (“LIBOR”) yield curve, a market-based observable input.

See Note 6 for additional information on these instruments.
Properties and Equipment
Properties and Equipment
Properties and Equipment 

The carrying amounts of our properties and equipment are as follows:
 
 
September 30,
2017
 
December 31,
2016
 
 
(In thousands)
Pipelines, terminals and tankage
 
$
1,250,567

 
$
1,246,746

Refinery assets
 
347,312

 
346,058

Land and right of way
 
65,337

 
65,331

Construction in progress
 
51,297

 
28,753

Other
 
27,708

 
27,133

 
 
1,742,221

 
1,714,021

Less accumulated depreciation
 
435,128

 
385,626

 
 
$
1,307,093

 
$
1,328,395



We capitalized $0.3 million and $0.2 million during the three months ended September 30, 2017 and 2016, respectively and $0.7 million and $0.5 million during the nine months ended September 30, 2017 and 2016, respectively, in interest attributable to construction projects.

Depreciation expense was $52.1 million and $45.5 million for the nine months ended September 30, 2017 and 2016, respectively, and includes depreciation of assets acquired under capital leases.
Transportation Agreements
Transportation Agreements
Transportation Agreements

Our transportation agreements are intangible assets that represent a portion of the total purchase price of certain assets acquired from Alon in 2005 and from HFC in 2008 prior to HEP becoming a consolidated VIE of HFC. The Alon agreement is being amortized over 30 years ending 2035 (the initial 15-year term of the agreement plus an expected 15-year extension period), and the HFC agreement is being amortized over 15 years ending 2023 (the term of the HFC agreement).

The carrying amounts of our transportation agreements are as follows:
 
 
September 30,
2017
 
December 31,
2016
 
 
(In thousands)
Alon transportation agreement
 
$
59,933

 
$
59,933

HFC transportation agreement
 
74,231

 
74,231

Other
 
50

 
50

 
 
134,214

 
134,214

Less accumulated amortization
 
72,570

 
67,358

 
 
$
61,644

 
$
66,856


Amortization expense was $5.2 million for each of the nine months ended September 30, 2017 and 2016.

We have additional transportation agreements with HFC resulting from historical transactions consisting of pipeline, terminal and tankage assets contributed to us or acquired from HFC. These transactions occurred while we were a consolidated VIE of HFC; therefore, our basis in these agreements is zero and does not reflect a step-up in basis to fair value.
Employees, Retirement and Incentive Plans
Employees, Retirement and Incentive Plans
Employees, Retirement and Incentive Plans

Direct support for our operations is provided by Holly Logistic Services, L.L.C. (“HLS”), an HFC subsidiary, which utilizes personnel employed by HFC who are dedicated to performing services for us. Their costs, including salaries, bonuses, payroll taxes, benefits and other direct costs, are charged to us monthly in accordance with an omnibus agreement that we have with HFC. These employees participate in the retirement and benefit plans of HFC. Our share of retirement and benefit plan costs was $1.5 million and $1.4 million for the three months ended September 30, 2017 and 2016, respectively, and $4.5 million and $4.3 million for the nine months ended September 30, 2017 and 2016.

Under HLS’s secondment agreement with HFC (the “Secondment Agreement”), certain employees of HFC are seconded to HLS to provide operational and maintenance services for certain of our processing, refining, pipeline and tankage assets, and HLS reimburses HFC for its prorated portion of the wages, benefits, and other costs related to these employees.
We have a Long-Term Incentive Plan for employees and non-employee directors who perform services for us. The Long-Term Incentive Plan consists of four components: restricted or phantom units, performance units, unit options and unit appreciation rights. Our accounting policy for the recognition of compensation expense for awards with pro-rata vesting (a significant proportion of our awards) is to expense the costs ratably over the vesting periods.

As of September 30, 2017, we had two types of incentive-based awards outstanding, which are described below. The compensation cost charged against income was $0.7 million for each of the three months ended September 30, 2017 and 2016, and $1.6 million and $1.9 million for the nine months ended September 30, 2017 and 2016, respectively. We currently purchase units in the open market instead of issuing new units for settlement of all unit awards under our Long-Term Incentive Plan. As of September 30, 2017, 2,500,000 units were authorized to be granted under our Long-Term Incentive Plan, of which 1,409,261 have not yet been granted, assuming no forfeitures of the unvested units and full achievement of goals for the unvested performance units.

Restricted Units
Under our Long-Term Incentive Plan, we grant restricted units to non-employee directors and selected employees who perform services for us, with most awards vesting over a period of one to three years. Although full ownership of the units does not transfer to the recipients until the units vest, the recipients have distribution and voting rights on these units from the date of grant.

The fair value of each restricted unit award is measured at the market price as of the date of grant and is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

A summary of restricted unit activity and changes during the nine months ended September 30, 2017, is presented below:
Restricted Units
 
Units
 
Weighted Average Grant-Date Fair Value
Outstanding at January 1, 2017 (nonvested)
 
123,988

 
$
32.96

Granted
 
20,348

 
36.01

Forfeited
 
(20,106
)
 
30.10

Outstanding at September 30, 2017 (nonvested)
 
124,230

 
$
33.92



As of September 30, 2017, there was $1.1 million of total unrecognized compensation expense related to nonvested restricted unit grants, which is expected to be recognized over a weighted-average period of 0.9 year.

Performance Units
Under our Long-Term Incentive Plan, we grant performance units to selected executives who perform services for us. Performance units granted are payable in common units at the end of a three-year performance period based upon the growth in our distributable cash flow per common unit over the performance period. As of September 30, 2017, estimated unit payouts for outstanding nonvested performance unit awards ranged between 100% and 150% of the target number of performance units granted.

We did not grant any performance units during the nine months ended September 30, 2017. Performance units granted in 2016 vest over a three-year performance period ending December 31, 2019, and are payable in HEP common units. The number of units actually earned will be based on the growth of our distributable cash flow per common unit over the performance period, and can range from 50% to 150% of the target number of performance units granted. Although common units are not transferred to the recipients until the performance units vest, the recipients have distribution rights with respect to the common units from the date of grant.

A summary of performance unit activity and changes during the nine months ended September 30, 2017, is presented below:
Performance Units
 
Units
Outstanding at January 1, 2017 (nonvested)
 
49,520

Vesting and transfer of common units to recipients
 
(2,262
)
Forfeited
 
(21,228
)
Outstanding at September 30, 2017 (nonvested)
 
26,030



The grant-date fair value of performance units vested and transferred to recipients during the nine months ended September 30, 2017, was $0.1 million. Based on the weighted average fair value of performance units outstanding at September 30, 2017, of $0.9 million, there was $0.5 million of total unrecognized compensation expense related to nonvested performance units, which is expected to be recognized over a weighted-average period of 1.8 years.
Debt
Debt
Debt

Credit Agreement
We have a $1.4 billion senior secured revolving credit facility (the “Credit Agreement”) expiring in July 2022. The Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. The Credit Agreement is also available to fund letters of credit up to a $50 million sub-limit, and it contains an accordion feature giving us the ability to increase the size of the facility by up to $300 million with additional lender commitments.

Our obligations under the Credit Agreement are collateralized by substantially all of our assets, and indebtedness under the Credit Agreement is guaranteed by our material, wholly-owned subsidiaries.  The Credit Agreement requires us to maintain compliance with certain financial covenants consisting of total leverage, senior secured leverage, and interest coverage.  It also limits or restricts our ability to engage in certain activities.  If, at any time prior to the expiration of the Credit Agreement, HEP obtains two investment grade credit ratings, the Credit Agreement will become unsecured and many of the covenants, limitations, and restrictions will be eliminated.

We may prepay all loans outstanding at any time without penalty, except for tranche breakage costs.  If an event of default exists under the Credit Agreement, the lenders will be able to accelerate the maturity of all loans outstanding and exercise other rights and remedies.  We were in compliance with the covenants as of September 30, 2017.

Senior Notes
On July 19, 2016, we closed a private placement of $400 million in aggregate principal amount of 6% senior unsecured notes due in 2024 (the “ 6% Senior Notes”). On September 22, 2017, we closed a private placement of an additional $100 million in aggregate offering of the 6% Senior Notes for a combined aggregate principal amount outstanding of $500 million maturing in 2024.

The 6% Senior Notes are unsecured and impose certain restrictive covenants, including limitations on our ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates and enter into mergers. We were in compliance with the restrictive covenants for the 6% Senior Notes as of September 30, 2017. At any time when the 6% Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, we will not be subject to many of the foregoing covenants. Additionally, we have certain redemption rights at varying premiums over face value under the 6% Senior Notes.

Indebtedness under the 6% Senior Notes is guaranteed by our wholly-owned subsidiaries.

On January 4, 2017, we redeemed the $300 million aggregate principal amount of 6.5% senior notes (the “6.5% Senior Notes”) at a redemption cost of $309.8 million at which time we recognized a $12.2 million early extinguishment loss consisting of a $9.8 million debt redemption premium and unamortized discount and financing costs of $2.4 million. We funded the redemption with borrowings under our Credit Agreement.

Long-term Debt
The carrying amounts of our long-term debt are as follows:
 
 
September 30,
2017
 
December 31,
2016
 
 
(In thousands)
Credit Agreement
 
 
 
 
Amount outstanding
 
$
750,000

 
$
553,000

 
 
 
 
 
6% Senior Notes
 
 
 
 
Principal
 
500,000

 
400,000

Unamortized premium and debt issuance costs
 
(4,934
)
 
(6,607
)
 
 
495,066

 
393,393

6.5% Senior Notes
 
 
 
 
Principal
 
—

 
300,000

Unamortized discount and debt issuance costs
 
—

 
(2,481
)
 
 
—

 
297,519

 
 
 
 
 
Total long-term debt
 
$
1,245,066

 
$
1,243,912



Interest Rate Risk Management
The two interest rate swaps that hedged our exposure to the cash flow risk caused by the effects of LIBOR changes on $150 million of Credit Agreement advances matured on July 31, 2017, and were not renewed. The swaps had effectively converted $150 million of our LIBOR based debt to fixed rate debt.

Additional information on our interest rate swaps is as follows:
Derivative Instrument
 
Balance Sheet Location
 
Fair Value
 
Location of Offsetting Balance
 
Offsetting
Amount
 
 
(In thousands)
December 31, 2016
 
 
 
 
 
 
 
 
Interest rate swaps designated as cash flow hedging instrument:
 
 
 
 
 
 
Variable-to-fixed interest rate swap contracts ($150 million of LIBOR-based debt interest)
 
Other current  assets
 
$
91

 
Accumulated other
    comprehensive income
 
$
91

 
 
 
 
$
91

 
 
 
$
91


Interest Expense and Other Debt Information
Interest expense consists of the following components:
 
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
 
(In thousands)
Interest on outstanding debt:
 
 
 
 
Credit Agreement, net of interest on interest rate swaps
 
$
20,338

 
$
13,600

6.5% Senior Notes
 
163

 
14,632

6% Senior Notes
 
18,150

 
4,811

Amortization of discount and deferred debt issuance costs
 
2,317

 
2,294

Commitment fees and other
 
1,137

 
1,419

Total interest incurred
 
42,105

 
36,756

Less capitalized interest
 
746

 
498

Net interest expense
 
$
41,359

 
$
36,258

Cash paid for interest
 
$
53,181

 
$
33,896


Capital Lease Obligations
Our capital lease obligations relate to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under capital leases was $5.2 million and $4.9 million as of September 30, 2017 and December 31, 2016, respectively, with accumulated depreciation of $3.2 million and $2.4 million as of September 30, 2017 and December 31, 2016, respectively. We include depreciation of capital leases in depreciation and amortization in our consolidated statements of income.
Significant Customers
Significant Customers
Significant Customers

All revenues are domestic revenues, of which 93% are currently generated from our two largest customers: HFC and Alon.

The following table presents the percentage of total revenues generated by each of these customers:
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
HFC
 
86
%
 
84
%
 
85
%
 
83
%
Alon
 
7
%
 
8
%
 
7
%
 
8
%
Related Party Transactions
Related Party Transactions
Related Party Transactions

We serve HFC’s refineries under long-term pipeline, terminal and tankage throughput agreements, and refinery processing unit tolling agreements expiring from 2019 to 2036. Under these agreements, HFC agrees to transport, store and process throughput volumes of refined product, crude oil and feedstocks on our pipelines, terminals, tankage, loading rack facilities and refinery processing units that result in minimum annual payments to us. These minimum annual payments or revenues are subject to annual rate adjustments on July 1st each year based on the Producer Price Index (“PPI”) or Federal Energy Regulatory Commission (“FERC”) index. As of September 30, 2017, these agreements with HFC require minimum annualized payments to us of $321.3 million.

If HFC fails to meet its minimum volume commitments under the agreements in any quarter, it will be required to pay us the amount of any shortfall in cash by the last day of the month following the end of the quarter. Under certain of these agreements, a shortfall payment may be applied as a credit in the following four quarters after its minimum obligations are met.

Under certain provisions of an omnibus agreement we have with HFC (the “Omnibus Agreement”), we pay HFC an annual administrative fee (currently $2.5 million) for the provision by HFC or its affiliates of various general and administrative services to us. This fee does not include the salaries of personnel employed by HFC who perform services for us on behalf of HLS or the cost of their employee benefits, which are charged to us separately by HFC. Also, we reimburse HFC and its affiliates for direct expenses they incur on our behalf.

Related party transactions with HFC are as follows:
•
Revenues received from HFC were $95.1 million and $77.4 million for the three months ended September 30, 2017 and 2016, respectively, and $277.3 million and $239.4 million for the nine months ended September 30, 2017 and 2016, respectively.
•
HFC charged us general and administrative services under the Omnibus Agreement of $0.6 million for each of the three months ended September 30, 2017 and 2016, and $1.8 million for each of the nine months ended September 30, 2017 and 2016.
•
We reimbursed HFC for costs of employees supporting our operations of $11.7 million and $10.0 million for the three months ended September 30, 2017 and 2016, respectively, and $34.5 million and $29.4 million for the nine months ended September 30, 2017 and 2016, respectively.
•
HFC reimbursed us $1.9 million and $4.5 million for the three months ended September 30, 2017 and 2016, respectively, and $4.7 million and $11.2 million for the nine months ended September 30, 2017 and 2016, respectively, for expense and capital projects.
•
We distributed $32.8 million and $26.2 million for the three months ended September 30, 2017 and 2016, respectively, and $94.8 million and $76.0 million for the nine months ended September 30, 2017 and 2016, respectively, to HFC as regular distributions on its common units and general partner interest, including general partner incentive distributions.
•
Accounts receivable from HFC were $42.8 million and $42.6 million at September 30, 2017, and December 31, 2016, respectively.
•
Accounts payable to HFC were $9.6 million and $16.4 million at September 30, 2017, and December 31, 2016, respectively.
•
Revenues for the nine months ended September 30, 2017 and 2016, include $3.5 million and $5.7 million, respectively, of shortfall payments billed to HFC in 2016 and 2015, respectively. Deferred revenue in the consolidated balance sheets at September 30, 2017 and December 31, 2016, includes $5.8 million and $5.6 million, respectively, relating to certain shortfall billings to HFC. It is possible that HFC may not exceed its minimum obligations to receive credit for any of the $5.8 million deferred at September 30, 2017.
Partners' Equity
Partners' Equity
Partners’ Equity

As of September 30, 2017, HFC held 22,380,030 of our common units and the 2% general partner interest, which together constituted a 36% ownership interest in us. Additionally, HFC owned all incentive distribution rights. See Note 1 for a description of the agreement reached with HEP Logistics, our general partner, subsequent to September 30, 2017, impacting its equity interest in HEP.

Continuous Offering Program
We have a continuous offering program under which we may issue and sell common units from time to time, representing limited partner interests, up to an aggregate gross sales amount of $200 million. For the nine months ended September 30, 2017, HEP issued 1,538,452 units under this program, providing $52.3 million in net proceeds. In connection with this program and to maintain the 2% general partner interest, HFC made capital contributions totaling $1.1 million. As of September 30, 2017, HEP has issued 2,241,907 units under this program, providing $77.1 million in gross proceeds.

We intend to use our net proceeds for general partnership purposes, which may include funding working capital, repayment of debt, acquisitions and capital expenditures. Amounts repaid under our credit facility may be reborrowed from time to time.

Allocations of Net Income
Net income attributable to HEP is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner includes incentive distributions that are declared subsequent to quarter end. After incentive distributions and other priority allocations are allocated to the general partner, the remaining net income attributable to HEP is allocated to the partners based on their weighted-average ownership percentage during the period.

See Note 1 for a description of the financial restructuring of the general partner interest owned by HEP Logistics, our general partner, and its IDRs that occurred subsequent to September 30, 2017. After this restructuring, the general partner interest is no longer entitled to any distributions. Therefore, no distributions were declared for the general partner interest related to the three months ended September 30, 2017.

The following table presents the allocation of the general partner interest in net income for the periods presented below: 
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands)
General partner interest in net income
 
$
(419
)
 
$
399

 
$
919

 
$
1,569

General partner incentive distribution
 
—

 
14,823

 
34,128

 
38,432

Net loss attributable to Predecessor
 
—

 
(7,547
)
 
—

 
(10,657
)
Total general partner interest in net income
 
$
(419
)
 
$
7,675

 
$
35,047

 
$
29,344



Cash Distributions
Prior to the financial restructuring of the general partner interest owned by HEP Logistics, our general partner, and its IDRs that occurred on October 31, 2017, our general partner, HEP Logistics, was entitled to incentive distributions if the amount we distributed with respect to any quarter exceeds specified target levels. After the restructuring of the general partner interest, the general partner interest is no longer entitled to any distributions.

On October 26, 2017, we announced our cash distribution for the third quarter of 2017 of $0.6450 per unit. The distribution is payable on all common units and will be paid November 14, 2017, to all unitholders of record on November 6, 2017. However, Holly Logistics will waive $2.5 million in limited partner cash distributions as discussed in Note 1.

The following table presents the allocation of our regular quarterly cash distributions to the general and limited partners for the periods in which they apply. Our distributions are declared subsequent to quarter end; therefore, the amounts presented do not reflect distributions paid during the periods presented below.
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands, except per unit data)
General partner interest in distribution
 
$
—

 
$
1,065

 
$
2,335

 
$
2,992

General partner incentive distribution
 
—

 
14,823

 
34,128

 
38,432

Total general partner distribution
 
—

 
15,888

 
36,463

 
41,424

Limited partner distribution
 
63,012

 
37,354

 
143,326

 
105,657

Total regular quarterly cash distribution
 
$
63,012

 
$
53,242

 
$
179,789

 
$
147,081

Cash distribution per unit applicable to limited partners
 
$
0.6450

 
$
0.5950

 
$
1.8975

 
$
1.7550



As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to HEP because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in our partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to HEP. Additionally, if the asset contributions and acquisitions from HFC had occurred while we were not a consolidated variable interest entity of HFC, our acquisition cost, in excess of HFC’s historical basis in the transferred assets, would have been recorded in our financial statements at the time of acquisition as increases to our properties and equipment and intangible assets instead of decreases to our partners’ equity.
Net Income per Limited Partner Unit (Notes)
Net Income Per Limited Partner Unit
Net Income Per Limited Partner Unit

Net income per unit applicable to the limited partners is computed using the two-class method because we have more than one class of participating securities.  The classes of participating securities as of September 30, 2017, included common units, general partner units and incentive distribution rights (“IDRs”). To the extent net income attributable to the partners exceeds or is less than cash distributions, this difference is allocated to the partners based on their weighted-average ownership percentage during the period after consideration of any priority allocations of earnings. The dilutive securities are immaterial for all periods presented. See Note 1 for a description of the financial restructuring of the general partner interest owned by HEP Logistics, our general partner, and its IDRs that occurred subsequent to September 30, 2017. After this restructuring, the general partner interest is no longer entitled to any distributions. Therefore, no distributions were declared for the general partner interest related to the three months ended September 30, 2017. In addition, HEP issued 37,250,000 of its common units to HEP Logistics on October 31, 2017 in association with this financial restructuring of the general partner interest.

When our financial statements are retrospectively adjusted after a dropdown transaction, the earnings of the acquired business, prior to the closing of the transaction, are allocated entirely to our general partner and presented as net income (loss) attributable to Predecessors. The earnings per unit of our limited partners prior to the close of the transaction do not change as a result of the dropdown. After the closing of a dropdown transaction, the earnings of the acquired business are allocated in accordance with our partnership agreement as previously described.

For purposes of applying the two-class method including the allocation of cash distributions in excess of earnings, net income per limited partner unit is computed as follows:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands)
Net income attributable to the partners
 
$
42,071

 
$
34,785

 
$
108,970

 
$
116,880

Less: General partner’s distribution declared (including IDRs)
 
—

 
(15,888
)
 
(36,463
)
 
(41,424
)
Limited partner’s distribution declared on common units
 
(63,012
)
 
(37,354
)
 
(143,326
)
 
(105,657
)
Distributions in excess of net income attributable to the partners
 
$
(20,941
)
 
$
(18,457
)
 
$
(70,819
)
 
$
(30,201
)


 
 
General Partner (including IDRs)
 
Limited Partners’ Common Units
 
Total
 
 
(In thousands, except per unit data)
Three Months Ended September 30, 2017
 
 
 
 
 
 
Net income attributable to the partners:
 
 
 
 
 
 
Distributions declared
 
$
—

 
$
63,012

 
$
63,012

Distributions in excess of net income attributable to the partners
 
(419
)
 
(20,522
)
 
(20,941
)
Net income attributable to the partners
 
$
(419
)
 
$
42,490

 
$
42,071

Weighted average limited partners' units outstanding
 
 
 
64,319

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
0.66

 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2016
 
 
 
 
 
 
Net income attributable to the partners:
 
 
 
 
 
 
Distributions declared
 
$
15,888

 
$
37,354

 
$
53,242

Distributions in excess of net income attributable to the partners
 
(369
)
 
(18,088
)
 
(18,457
)
Net income attributable to the partners
 
$
15,519

 
$
19,266

 
$
34,785

Weighted average limited partners' units outstanding
 
 
 
59,223

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
0.33

 
 

 
 
General Partner (including IDRs)
 
Limited Partners’ Common Units
 
Total
 
 
(In thousands, except per unit data)
Nine Months Ended September 30, 2017
 
 
 
 
 
 
Net income attributable to partnership:
 
 
 
 
 
 
Distributions declared
 
$
36,463

 
$
143,326

 
$
179,789

Distributions in excess of net income attributable to partnership
 
(1,416
)
 
(69,403
)
 
(70,819
)
Net income attributable to partnership
 
$
35,047

 
$
73,923

 
$
108,970

Weighted average limited partners' units outstanding
 
 
 
63,845

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
1.16

 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
Net income attributable to partnership:
 
 
 
 
 
 
Distributions declared
 
$
41,424

 
$
105,657

 
$
147,081

Distributions in excess of net income attributable to partnership
 
(604
)
 
(29,597
)
 
(30,201
)
Net income attributable to partnership
 
$
40,820

 
$
76,060

 
$
116,880

Weighted average limited partners' units outstanding
 
 
 
58,895

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
1.29

 
 
Environmental
Environmental
Environmental

We incurred no expenses for environmental remediation obligations for the three and nine months ended September 30, 2017, as well as the three months ended September 30, 2016. For the nine months ended September 30, 2016, we incurred $0.2 million of expense. The accrued environmental liability, net of expected recoveries from indemnifying parties, reflected in our consolidated balance sheets was $6.4 million and $7.1 million at September 30, 2017, and December 31, 2016, respectively, of which $4.7 million and $5.4 million, respectively, were classified as other long-term liabilities. These accruals include remediation and monitoring costs expected to be incurred over an extended period of time.

Under the Omnibus Agreement and certain transportation agreements and purchase agreements with HFC, HFC has agreed to indemnify us, subject to certain monetary and time limitations, for environmental noncompliance and remediation liabilities associated with certain assets transferred to us from HFC and occurring or existing prior to the date of such transfers. As of September 30, 2017, and December 31, 2016, our consolidated balance sheets included additional accrued environmental liabilities of $0.8 million and $0.9 million, respectively, for HFC indemnified liabilities, and other assets included equal and offsetting balances representing amounts due from HFC related to indemnifications for environmental remediation liabilities.
Contingencies
Contingencies
Contingencies

We are a party to various legal and regulatory proceedings, none of which we believe will have a material adverse impact on our financial condition, results of operations or cash flows.
Segments (Notes)
Segment Reporting Disclosure [Text Block]
Operating Segments

Although financial information is reviewed by our chief operating decision makers from a variety of perspectives, they view the business in two operating segments: pipelines and terminals, and refinery processing units. These operating segments adhere to the accounting polices used for our consolidated financial statements.

The pipelines and terminals segment has been aggregated as both pipeline and terminals (1) have similar economic characteristics, (2) similarly provide logistics services of transportation and storage of petroleum products, (3) similarly support the petroleum
refining business, including distribution of its products, (4) have principally the same customers and (5) are subject to similar regulatory requirements.

We evaluate the performance of each segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are excluded from segment operating income as they are not directly attributable to a specific operating segment. Identifiable assets are those used by the segment, whereas other assets are principally equity method investments, cash, deposits and other assets that are not associated with a specific reportable operating segment.
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Pipelines and terminals - affiliate
 
$
74,547

 
$
73,210

 
$
219,806

 
$
226,553

Pipelines and terminals - third-party
 
15,226

 
15,212

 
47,826

 
50,094

Refinery processing units - affiliate
 
20,591

 
4,188

 
57,510

 
12,870

Total segment revenues
 
$
110,364

 
$
92,610

 
$
325,142

 
$
289,517

 
 
 
 
 
 
 
 
 
Segment operating income:
 
 
 
 
 
 
 
 
Pipelines and terminals
 
$
44,896

 
$
48,928

 
$
140,546

 
$
155,657

Refinery processing units
 
10,463

 
(7,339
)
 
24,283

 
(6,491
)
Total segment operating income
 
55,359

 
41,589

 
164,829

 
149,166

Unallocated general and administrative expenses
 
(3,623
)
 
(2,664
)
 
(8,872
)
 
(8,618
)
Interest and financing costs, net
 
(13,971
)
 
(14,339
)
 
(53,278
)
 
(35,926
)
Equity in earnings of unconsolidated affiliates
 
5,072

 
3,767

 
10,965

 
10,155

Gain on sale of assets and other
 
155

 
112

 
317

 
104

Income before income taxes
 
$
42,992

 
$
28,465

 
$
113,961

 
$
114,881

 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
  Pipelines and terminals
 
$
10,151

 
$
15,557

 
$
30,437

 
$
47,200

  Refinery processing units
 
—

 
5,173

 
238

 
48,915

Total capital expenditures
 
$
10,151

 
$
20,730

 
$
30,675

 
$
96,115


 
 
September 30, 2017
 
December 31, 2016
 
 
(in thousands)
Identifiable assets:
 
 
 
 
  Pipelines and terminals
 
$
1,353,585

 
$
1,369,756

  Refinery processing units
 
335,388

 
342,506

Other
 
176,869

 
171,975

Total identifiable assets
 
$
1,865,842

 
$
1,884,237


The refinery processing units operating segment loss for the three and nine months ended September 30, 2016, is due to the net loss attributable to Predecessor.
Supplemental Guarantor / Non-Guarantor Financial Information
Supplemental Guarantor / Non-Guarantor Financial Information
Supplemental Guarantor/Non-Guarantor Financial Information

Obligations of HEP (“Parent”) under the 6% Senior Notes have been jointly and severally guaranteed by each of its direct and indirect 100% owned subsidiaries (“Guarantor Subsidiaries”). These guarantees are full and unconditional, subject to certain customary release provisions. These circumstances include (i) when a Guarantor Subsidiary is sold or sells all or substantially all of its assets, (ii) when a Guarantor Subsidiary is declared “unrestricted” for covenant purposes, (iii) when a Guarantor Subsidiary’s guarantee of other indebtedness is terminated or released and (iv) when the requirements for legal defeasance or covenant defeasance or to discharge the senior notes have been satisfied.

The following financial information presents condensed consolidating balance sheets, statements of comprehensive income, and statements of cash flows of the Parent, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. The information has been presented as if the Parent accounted for its ownership in the Guarantor Subsidiaries, and the Guarantor Restricted Subsidiaries accounted for the ownership of the Non-Guarantor Non-Restricted Subsidiaries, using the equity method of accounting.

In conjunction with the preparation of our Condensed Consolidating Balance Sheet and Statements of Comprehensive Income included below, we identified and corrected the presentation of noncontrolling interests presented in the eliminations column in prior periods to reflect such balances and activity within the respective guarantor and non-guarantor subsidiaries columns.


Condensed Consolidating Balance Sheet
September 30, 2017
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2

 
$
6

 
$
7,468

 
$
—

 
$
7,476

Accounts receivable
 
—

 
46,157

 
4,096

 
(170
)
 
50,083

Prepaid and other current assets
 
52

 
1,988

 
255

 
—

 
2,295

Total current assets
 
54

 
48,151

 
11,819

 
(170
)
 
59,854

 
 
 
 
 
 
 
 
 
 
 
Properties and equipment, net
 
—

 
947,094

 
359,999

 
—

 
1,307,093

Investment in subsidiaries

 
1,608,736

 
273,874

 
—

 
(1,882,610
)
 
—

Transportation agreements, net
 
—

 
61,644

 
—

 
—

 
61,644

Goodwill
 
—

 
256,498

 
—

 
—

 
256,498

Equity method investments
 
—

 
163,873

 
—

 
—

 
163,873

Other assets
 
12,329

 
4,551

 
—

 
—

 
16,880

Total assets
 
$
1,621,119

 
$
1,755,685

 
$
371,818

 
$
(1,882,780
)
 
$
1,865,842

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
—

 
$
21,770

 
$
1,543

 
$
(170
)
 
$
23,143

Accrued interest
 
5,000

 
527

 
—

 
—

 
5,527

Deferred revenue
 
—

 
13,326

 
1,501

 
—

 
14,827

Accrued property taxes
 
—

 
4,073

 
3,414

 
—

 
7,487

Other current liabilities
 
52

 
3,440

 
—

 
—

 
3,492

Total current liabilities
 
5,052

 
43,136

 
6,458

 
(170
)
 
54,476


 
 
 
 
 
 
 
 
 
 
Long-term debt
 
1,245,066

 
—

 
—

 
—

 
1,245,066

Other long-term liabilities
 
286

 
14,996

 
195

 
—

 
15,477

Deferred revenue
 
—

 
46,405

 
—

 
—

 
46,405

Class B unit
 
—

 
42,412

 
—

 
—

 
42,412

Equity - partners
 
370,715

 
1,608,736

 
273,874

 
(1,882,610
)
 
370,715

Equity - noncontrolling interest
 
—

 
—

 
91,291

 
—

 
91,291

Total liabilities and equity
 
$
1,621,119

 
$
1,755,685

 
$
371,818

 
$
(1,882,780
)
 
$
1,865,842



Condensed Consolidating Balance Sheet
December 31, 2016
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2

 
$
301

 
$
3,354

 
$
—

 
$
3,657

Accounts receivable
 
—

 
45,056

 
5,554

 
(202
)
 
50,408

Prepaid and other current assets
 
11

 
2,633

 
244

 
—

 
2,888

Total current assets
 
13

 
47,990

 
9,152

 
(202
)
 
56,953

 
 
 
 
 
 
 
 
 
 
 
Properties and equipment, net
 
—

 
957,045

 
371,350

 
—

 
1,328,395

Investment in subsidiaries
 
1,086,008

 
280,671

 
—

 
(1,366,679
)
 
—

Transportation agreements, net
 
—

 
66,856

 
—

 
—

 
66,856

Goodwill
 
—

 
256,498

 
—

 
—

 
256,498

Equity method investments
 
—

 
165,609

 
—

 
—

 
165,609

Other assets
 
725

 
9,201

 
—

 
—

 
9,926

Total assets
 
$
1,086,746

 
$
1,783,870

 
$
380,502

 
$
(1,366,881
)
 
$
1,884,237

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
—

 
$
24,245

 
$
2,899

 
$
(202
)
 
$
26,942

Accrued interest
 
17,300

 
769

 
—

 
—

 
18,069

Deferred revenue
 
—

 
8,797

 
2,305

 
—

 
11,102

Accrued property taxes
 
—

 
4,514

 
883

 
—

 
5,397

Other current liabilities
 
14

 
3,208

 
3

 
—

 
3,225

Total current liabilities
 
17,314

 
41,533

 
6,090

 
(202
)
 
64,735

 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
690,912

 
553,000

 
—

 
—

 
1,243,912

Other long-term liabilities
 
286

 
15,975

 
184

 
—

 
16,445

Deferred revenue
 
—

 
47,035

 
—

 
—

 
47,035

Class B unit
 
—

 
40,319

 
—

 
—

 
40,319

Equity - partners
 
378,234

 
1,086,008

 
280,671

 
(1,366,679
)
 
378,234

Equity - noncontrolling interest
 
—

 
—

 
93,557

 
—

 
93,557

Total liabilities and equity
 
$
1,086,746

 
$
1,783,870

 
$
380,502

 
$
(1,366,881
)
 
$
1,884,237





Condensed Consolidating Statement of Comprehensive Income
Three Months Ended September 30, 2017
 
Parent
 
Guarantor Restricted
Subsidiaries
 
Non-Guarantor Non-restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
89,772

 
$
5,366

 
$
—

 
$
95,138

Third parties
 
—

 
10,758

 
4,468

 
—

 
15,226

 
 
—

 
100,530

 
9,834

 
—

 
110,364

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
31,360

 
4,638

 
—

 
35,998

Depreciation and amortization
 


 
14,854

 
4,153

 
—

 
19,007

General and administrative
 
1,050

 
2,573

 
—

 
—

 
3,623

 
 
1,050

 
48,787

 
8,791

 
—

 
58,628

Operating income (loss)
 
(1,050
)
 
51,743

 
1,043

 
—

 
51,736

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
57,193

 
783

 
—

 
(57,976
)
 
—

Equity in earnings of equity method investments
 
—

 
5,072

 
—

 
—

 
5,072

Interest expense
 
(14,072
)
 
—

 
—

 
—

 
(14,072
)
Interest income
 
—

 
101

 
—

 
—

 
101

Gain on sale of assets and other
 
—

 
154

 
1

 
—

 
155

 
 
43,121

 
6,110

 
1

 
(57,976
)
 
(8,744
)
Income (loss) before income taxes
 
42,071

 
57,853

 
1,044

 
(57,976
)
 
42,992

State income tax benefit
 
—

 
69

 
—

 
—

 
69

Net income
 
42,071

 
57,922

 
1,044

 
(57,976
)
 
43,061

Allocation of net income attributable to noncontrolling interests
 
—

 
(729
)
 
(261
)
 
—

 
(990
)
Net income attributable to Holly Energy Partners
 
42,071

 
57,193

 
783

 
(57,976
)
 
42,071

Other comprehensive income
 
(63
)
 
(63
)
 
—

 
63

 
(63
)
Comprehensive income attributable to Holly Energy Partners
 
$
42,008

 
$
57,130

 
$
783

 
$
(57,913
)
 
$
42,008



Condensed Consolidating Statement of Comprehensive Income
Three Months Ended September 30, 2016 (1)
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
72,389

 
$
5,009

 
$
—

 
$
77,398

Third parties
 
—

 
11,360

 
3,852

 
—

 
15,212

 
 
—

 
83,749

 
8,861

 
—

 
92,610

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
29,023

 
3,078

 
—

 
32,101

Depreciation and amortization
 
—

 
15,093

 
3,827

 
—

 
18,920

General and administrative
 
813

 
1,851

 
—

 
—

 
2,664

 
 
813

 
45,967

 
6,905

 
—

 
53,685

Operating income (loss)
 
(813
)
 
37,782

 
1,956

 
—

 
38,925

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
44,359

 
1,451

 
—

 
(45,810
)
 
—

Equity in earnings of equity method investments
 
—

 
3,767

 
—

 
—

 
3,767

Interest expense
 
(10,011
)
 
(4,436
)
 
—

 
—

 
(14,447
)
Interest income
 
—

 
103

 
5

 
—

 
108

Gain (loss) on sale of assets and other
 
—

 
138

 
(26
)
 
—

 
112

 
 
34,348

 
1,023

 
(21
)
 
(45,810
)
 
(10,460
)
Income before income taxes
 
33,535

 
38,805

 
1,935

 
(45,810
)
 
28,465

State income tax expense
 
—

 
(61
)
 
—

 
—

 
(61
)
Net income
 
33,535

 
38,744

 
1,935

 
(45,810
)
 
28,404

Allocation of net loss to Predecessor
 
—

 
7,547

 
—

 
—

 
7,547

Allocation of net income attributable to noncontrolling interests
 
—

 
(682
)
 
(484
)
 
—

 
(1,166
)
Net income attributable to Holly Energy Partners
 
33,535

 
45,609

 
1,451

 
(45,810
)
 
34,785

Other comprehensive (loss)
 
296

 
296

 
—

 
(296
)
 
296

Comprehensive income attributable to Holly Energy Partners
 
$
33,831

 
$
45,905

 
$
1,451

 
$
(46,106
)
 
$
35,081


(1) Retrospectively adjusted as described in Note 1.



Condensed Consolidating Statement of Comprehensive Income
Nine Months Ended September 30, 2017
 
Parent
 
Guarantor Restricted
Subsidiaries
 
Non-Guarantor Non-restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
258,571

 
$
18,745

 
$
—

 
$
277,316

Third parties
 
—

 
32,146

 
15,680

 
—

 
47,826

 
 
—

 
290,717

 
34,425

 
—

 
325,142

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
91,323

 
11,261

 
—

 
102,584

Depreciation and amortization
 
—

 
45,498

 
12,231

 
—

 
57,729

General and administrative
 
3,070

 
5,802

 
—

 
—

 
8,872

 
 
3,070

 
142,623

 
23,492

 
—

 
169,185

Operating income (loss)
 
(3,070
)
 
148,094

 
10,933

 
—

 
155,957

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings (loss) of subsidiaries
 
165,624

 
8,203

 
—

 
(173,827
)
 
—

Equity in earnings of equity method investments
 
—

 
10,965

 
—

 
—

 
10,965

Interest expense
 
(41,359
)
 
—

 
—

 
—

 
(41,359
)
Interest income
 
—

 
306

 
—

 
—

 
306

Loss on early extinguishment of debt
 
(12,225
)
 
—

 
—

 
—

 
(12,225
)
Gain (loss) on sale of assets and other
 
—

 
313

 
4

 
—

 
317

 
 
112,040

 
19,787

 
4

 
(173,827
)
 
(41,996
)
Income (loss) before income taxes
 
108,970

 
167,881

 
10,937

 
(173,827
)
 
113,961

State income tax expense
 
—

 
(164
)
 
—

 
—

 
(164
)
Net income (loss)
 
108,970

 
167,717

 
10,937

 
(173,827
)
 
113,797

Allocation of net income attributable to noncontrolling interests
 
—

 
(2,093
)
 
(2,734
)
 
—

 
(4,827
)
Net income (loss) attributable to Holly Energy Partners
 
108,970

 
165,624

 
8,203

 
(173,827
)
 
108,970

Other comprehensive income (loss)
 
(91
)
 
(91
)
 
—

 
91

 
(91
)
Comprehensive income (loss)
 
$
108,879

 
$
165,533

 
$
8,203

 
$
(173,736
)
 
$
108,879






Condensed Consolidating Statement of Comprehensive Income
Nine Months Ended September 30, 2016 (1)
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
219,428

 
$
19,995

 
$
—

 
$
239,423

Third parties
 
—

 
33,783

 
16,311

 
—

 
50,094

 
 
—

 
253,211

 
36,306

 
—

 
289,517

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
80,248

 
8,920

 
—

 
89,168

Depreciation and amortization
 
—

 
39,811

 
11,372

 
—

 
51,183

General and administrative
 
2,949

 
5,669

 
—

 
—

 
8,618

 
 
2,949

 
125,728

 
20,292

 
—

 
148,969

Operating income (loss)
 
(2,949
)
 
127,483

 
16,014

 
—

 
140,548

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings (loss) of subsidiaries
 
138,513

 
12,004

 
—

 
(150,517
)
 
—

Equity in earnings of equity method investments
 
—

 
10,155

 
—

 
—

 
10,155

Interest expense
 
(20,151
)
 
(16,107
)
 
—

 
—

 
(36,258
)
Interest income
 
—

 
315

 
17

 
—

 
332

Gain (loss) on sale of assets and other
 
—

 
129

 
(25
)
 
—

 
104

 
 
118,362

 
6,496

 
(8
)
 
(150,517
)
 
(25,667
)
Income (loss) before income taxes
 
115,413

 
133,979

 
16,006

 
(150,517
)
 
114,881

State income tax expense
 
—

 
(210
)
 
—

 
—

 
(210
)
Net income (loss)
 
115,413

 
133,769

 
16,006

 
(150,517
)
 
114,671

Allocation of net loss to Predecessor
 


 
10,657

 
—

 
—

 
10,657

Allocation of net income attributable to noncontrolling interests
 
—

 
(4,446
)
 
(4,002
)
 
—

 
(8,448
)
Net income (loss) attributable to Holly Energy Partners
 
115,413

 
139,980

 
12,004

 
(150,517
)
 
116,880

Other comprehensive income (loss)
 
(299
)
 
(299
)
 
—

 
299

 
(299
)
Comprehensive income (loss)
 
$
115,114

 
$
139,681

 
$
12,004

 
$
(150,218
)
 
$
116,581



(1) Retrospectively adjusted as described in Note 1.



Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2017
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Cash flows from operating activities
 
$
(57,045
)
 
$
215,643

 
$
27,064

 
$
(8,203
)
 
$
177,459

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
Additions to properties and equipment
 
—

 
(27,725
)
 
(2,950
)
 
—

 
(30,675
)
Distributions from UNEV in excess of earnings
 
—

 
6,797

 
—

 
(6,797
)
 
—

Proceeds from sale of assets
 
—

 
794

 
—

 
—

 
794

Distributions in excess of equity in earnings of equity investments
 
—

 
1,224

 
—

 
—

 
1,224

 
 
—

 
(18,910
)
 
(2,950
)
 
(6,797
)
 
(28,657
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
Net borrowings under credit agreement
 
750,000

 
(553,000
)
 
—

 
—

 
197,000

Net intercompany financing activities
 
(357,196
)
 
357,196

 
—

 
—

 
—

Proceeds from issuance of 6% Senior Notes
 
103,250

 
(1,500
)
 
—

 
—

 
101,750

Proceeds from issuance of common units
 
52,285

 
—

 
—

 
—

 
52,285

Contribution from general partner
 
1,072

 
—

 
—

 
—

 
1,072

Redemption of senior notes
 
(309,750
)
 
—

 
—

 
—

 
(309,750
)
Distributions to HEP unitholders
 
(171,560
)
 
—

 
—

 
—

 
(171,560
)
Distribution to HFC for El Dorado tanks
 
(103
)
 
—

 
—

 
—

 
(103
)
Distributions to noncontrolling interests
 
—

 
—

 
(20,000
)
 
15,000

 
(5,000
)
Deferred financing cost
 
(10,953
)
 
1,500

 
—

 
—

 
(9,453
)
Other
 
—

 
(1,224
)
 
—

 
—

 
(1,224
)
 
 
57,045

 
(197,028
)
 
(20,000
)
 
15,000

 
(144,983
)
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
 
 
 
 
Increase (decrease) for the period
 
—

 
(295
)
 
4,114

 
—

 
3,819

Beginning of period
 
2

 
301

 
3,354

 
—

 
3,657

End of period
 
$
2

 
$
6

 
$
7,468

 
$
—

 
$
7,476



Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2016 (1)
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Cash flows from operating activities
 
$
(20,467
)
 
$
181,967

 
$
27,724

 
$
(11,250
)
 
$
177,974

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
Additions to properties and equipment
 
—

 
(33,147
)
 
(15,077
)
 
—

 
(48,224
)
Purchase of Woods Cross refinery processing units
 
—

 
(47,891
)
 
—

 
—

 
(47,891
)
Purchase of Cheyenne Pipeline
 
—

 
(42,550
)
 
—

 
—

 
(42,550
)
Proceeds from sale of assets
 
—

 
210

 
—

 
—

 
210

Distributions in excess of equity in earnings of equity investments
 
—

 
1,685

 
—

 
—

 
1,685

Other
 
—

 
(351
)
 
—

 
—

 
(351
)
 
 
—

 
(122,044
)
 
(15,077
)
 
—

 
(137,121
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
Net repayments under credit agreement
 
—

 
(332,000
)
 
—

 
—

 
(332,000
)
Net intercompany financing activities
 
(257,172
)
 
257,172

 
—

 
—

 
—

Proceeds from issuance of senior notes
 
394,000

 
—

 
—

 
—

 
394,000

Proceeds from issuance of common units
 
22,591

 
200

 
—

 
—

 
22,791

Distributions to HEP unitholders
 
(138,798
)
 
—

 
—

 
—

 
(138,798
)
Distributions to noncontrolling interests
 
—

 
—

 
(15,000
)
 
11,250

 
(3,750
)
Contributions from general partner for Osage
 
31,285

 
(31,285
)
 
—

 
—

 
—

Distributions to HFC for Tulsa Tank acquisition
 
(30,378
)
 
(9,122
)
 
—

 
—

 
(39,500
)
Distribution to HFC for Osage
 
—

 
(1,245
)
 
—

 
—

 
(1,245
)
Contribution from HFC for acquisitions
 
99

 
54,928

 
—

 
—

 
55,027

Contributions from general partner
 
470

 
—

 
—

 
—

 
470

Purchase of units for incentive grants
 
(784
)
 
—

 
—

 
—

 
(784
)
Deferred financing costs
 
(846
)
 
(3,084
)
 
—

 
—

 
(3,930
)
Other
 
—

 
(939
)
 
—

 
—

 
(939
)
 
 
20,467

 
(65,375
)
 
(15,000
)
 
11,250

 
(48,658
)
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
 
 
 
 
Decrease for the period
 
—

 
(5,452
)
 
(2,353
)
 
—

 
(7,805
)
Beginning of period
 
2

 
5,452

 
9,559

 
—

 
15,013

End of period
 
$
2

 
$
—

 
$
7,206

 
$
—

 
$
7,208



(1) Retrospectively adjusted as described in Note 1.
Description of Business and Presentation of Financial Statements Accounting Policy Descriptions (Policies)
Consolidation, Policy [Policy Text Block] 
Principles of Consolidation and Common Control Transactions
The consolidated financial statements include our accounts, our Predecessor's (defined below) and those of subsidiaries and joint ventures that we control. All significant intercompany transactions and balances have been eliminated.

Most of our acquisitions from HFC occurred while we were a consolidated variable interest entity (“VIE”) of HFC. Therefore, as an entity under common control with HFC, we recorded these acquisitions on our balance sheets at HFC's historical basis instead of our purchase price or fair value. GAAP requires transfers of a business between entities under common control to be accounted for as though the transfer occurred as of the beginning of the period of transfer, and prior period financial statements and financial information are retrospectively adjusted to include the historical results and assets of the acquisitions from HFC for all periods presented prior to the effective dates of each acquisition. We refer to the historical results of the acquisitions prior to their respective acquisition dates as those of our "Predecessor." Many of these transactions are cash purchases and do not involve the issuance of equity; however, GAAP requires the retrospective adjustment of financial statements. Therefore, in such transactions, the prior year balance sheet includes as equity the amount of cost incurred by HFC to that date. See “Acquisitions” below for further discussion as well as effects of the retrospective adjustments.
New Accounting Pronouncements, Policy [Policy Text Block] 
Accounting Pronouncements Adopted During the Periods Presented

Earnings Per Unit
In April 2015, an accounting standard update was issued requiring changes to the allocation of the earnings or losses of a transferred business for periods before the date of a dropdown of net assets accounted for as a common control transaction entirely to the general partner for purposes of calculating historical earnings per unit. We adopted this standard as of January 1, 2016. In connection with the dropdown of assets from HFC’s Tulsa refinery on March 31, 2016, and the purchase of HFC’s Woods Cross refinery units on October 1, 2016, we reduced net income by $7.5 million and $10.7 million for the three and nine months ended September 30, 2016. These reductions had no impact on the historical earnings per limited partner unit as they were allocated to the general partner.

Share-Based Compensation
In March 2016, an accounting standard update was issued which simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this standard effective January 1, 2017, with no impact to our financial condition, results of operations and cash flows. As permitted by the standard, we continue to account for forfeitures on an estimated basis.

Accounting Pronouncements Not Yet Adopted

Revenue Recognition
In May 2014, an accounting standard update was issued requiring revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the expected consideration for these goods or services. This standard has an effective date of January 1, 2018, and we intend to account for the new guidance using the modified retrospective implementation method, whereby a cumulative effect adjustment is recorded to retained earnings as of the date of initial application. Our preparation for adoption of this standard is in progress, and we are currently evaluating terms, conditions and our performance obligations of our existing contracts with customers. We are evaluating the effect of this standard on our revenue recognition policies and whether it will have a material impact on our financial condition or results of operations.

Business Combinations
In December 2014, an accounting standard update was issued to provide new guidance on the definition of a business in relation to accounting for identifiable intangible assets in business combinations. This standard has an effective date of January 1, 2018, and we are evaluating its impact.

Financial Assets and Liabilities
In January 2016, an accounting standard update was issued requiring changes in the accounting and disclosures for financial instruments. This standard will become effective beginning with our 2018 reporting year. We are evaluating the impact of this standard.

Leases
In February 2016, an accounting standard update was issued requiring leases to be measured and recognized as a lease liability, with a corresponding right-of-use asset on the balance sheet. This standard has an effective date of January 1, 2019, and we are evaluating the impact of this standard.
Description of Business and Presentation of Financial Statements Subsequent Event (Tables)
Schedule of Business Acquisitions, by Acquisition [Table Text Block]
The following tables present lines in our previously reported income statement for the three and nine months ended September 30, 2016, that were impacted by Predecessor transactions, and retrospectively adjusts only the acquisition of Woods Cross Operating as the Tulsa Tanks acquisition included Predecessor transactions in the previously reported income statement for the three and nine months ended September 30, 2016. However, the presentation of the Tulsa Tanks’ Predecessor transactions have been modified as shown in the table below.

 
 
Three Months Ended September 30, 2016
 
 
Holly Energy Partners, L.P.(Previously reported)
 
Tulsa Tanks
 
Woods Cross Operating
 
Holly Energy Partners, L.P. (Currently reported)
 
 
(In Thousands)
Operating costs and expenses:
 
 
 
 
 
 
 
 
       Operations (exclusive of depreciation and
       amortization)
 
$
27,954

 
$
—

 
$
4,147

 
$
32,101

        Depreciation and amortization
 
15,520

 
—

 
3,400

 
18,920

Allocation of net loss attributable to predecessor
 
—

 
—

 
7,547

 
7,547


 
 
Nine Months Ended September 30, 2016
 
 
Holly Energy Partners, L.P.(Previously reported)
 
Tulsa Tanks
 
Woods Cross Operating
 
Holly Energy Partners, L.P. (Currently reported)
 
 
(In Thousands)
Operating costs and expenses:
 
 
 
 
 
 
 
 
       Operations (exclusive of depreciation and
       amortization)
 
$
82,131

 
$
—

 
$
7,037

 
$
89,168

        Depreciation and amortization
 
47,780

 
—

 
3,403

 
51,183

Allocation of net loss attributable to predecessor
 
—

 
217

 
10,440

 
10,657



The following tables present lines in our previously reported cash flows for the nine months ended September 30, 2016, that were impacted by Predecessor transactions, and retrospectively adjusts only the acquisition of Woods Cross Operating as the Tulsa Tanks acquisition included Predecessor transactions in the previously reported cash flows for the nine months ended September 30, 2016.
 
 
Nine Months Ended September 30, 2016
 
 
Holly Energy Partners, L.P.(Previously reported)
 
Woods Cross Operating
 
Holly Energy Partners, L.P.
(Currently reported)
Cash flows from operating activities
 
(In Thousands)
Net income
 
$
125,111

 
$
(10,440
)
 
$
114,671

Depreciation and amortization
 
47,780

 
3,403

 
51,183

Net cash provided (used) by operating activities
 
$
185,011

 
$
(7,037
)
 
$
177,974

 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
Purchase of Woods Cross refinery processing units
 
$
—

 
$
(47,891
)
 
$
(47,891
)
Net cash used for investing activities
 
$
(89,230
)
 
$
(47,891
)
 
$
(137,121
)
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
Contributions from HFC for acquisitions
 
$
99

 
$
54,928

 
$
55,027

Net cash provided (used) by financing activities
 
$
(103,586
)
 
$
54,928

 
$
(48,658
)

Financial Instruments (Tables)
Schedule of Fair Value, Financial Instruments Measured on Recurring Basis

The carrying amounts and estimated fair values of our senior notes and interest rate swaps were as follows:
 
 
 
 
September 30, 2017
 
December 31, 2016
Financial Instrument
 
Fair Value Input Level
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
 
 
 
 
(In thousands)
Assets:
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
Level 2
 
$
—

 
$
—

 
$
91

 
$
91

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
6.5% Senior notes
 
Level 2
 
$
—

 
$
—

 
$
297,519

 
$
308,250

6% Senior notes
 
Level 2
 
495,066

 
524,390

 
393,393

 
415,500

 
 
 
 
$
495,066

 
$
524,390

 
$
690,912

 
$
723,750

Properties and Equipment (Tables)
Properties and Equipment
The carrying amounts of our properties and equipment are as follows:
 
 
September 30,
2017
 
December 31,
2016
 
 
(In thousands)
Pipelines, terminals and tankage
 
$
1,250,567

 
$
1,246,746

Refinery assets
 
347,312

 
346,058

Land and right of way
 
65,337

 
65,331

Construction in progress
 
51,297

 
28,753

Other
 
27,708

 
27,133

 
 
1,742,221

 
1,714,021

Less accumulated depreciation
 
435,128

 
385,626

 
 
$
1,307,093

 
$
1,328,395



Transportation Agreements (Tables)
Schedule of Finite-Lived Intangible Assets by Major Class
The carrying amounts of our transportation agreements are as follows:
 
 
September 30,
2017
 
December 31,
2016
 
 
(In thousands)
Alon transportation agreement
 
$
59,933

 
$
59,933

HFC transportation agreement
 
74,231

 
74,231

Other
 
50

 
50

 
 
134,214

 
134,214

Less accumulated amortization
 
72,570

 
67,358

 
 
$
61,644

 
$
66,856


Employees, Retirement and Incentive Plans (Tables)
Schedule of Nonvested Restricted Stock Units Activity 
A summary of restricted unit activity and changes during the nine months ended September 30, 2017, is presented below:
Restricted Units
 
Units
 
Weighted Average Grant-Date Fair Value
Outstanding at January 1, 2017 (nonvested)
 
123,988

 
$
32.96

Granted
 
20,348

 
36.01

Forfeited
 
(20,106
)
 
30.10

Outstanding at September 30, 2017 (nonvested)
 
124,230

 
$
33.92

Schedule of Nonvested Performance-based Units Activity 

A summary of performance unit activity and changes during the nine months ended September 30, 2017, is presented below:
Performance Units
 
Units
Outstanding at January 1, 2017 (nonvested)
 
49,520

Vesting and transfer of common units to recipients
 
(2,262
)
Forfeited
 
(21,228
)
Outstanding at September 30, 2017 (nonvested)
 
26,030

Debt (Tables)
Schedule of Long-term Debt Instruments 
The carrying amounts of our long-term debt are as follows:
 
 
September 30,
2017
 
December 31,
2016
 
 
(In thousands)
Credit Agreement
 
 
 
 
Amount outstanding
 
$
750,000

 
$
553,000

 
 
 
 
 
6% Senior Notes
 
 
 
 
Principal
 
500,000

 
400,000

Unamortized premium and debt issuance costs
 
(4,934
)
 
(6,607
)
 
 
495,066

 
393,393

6.5% Senior Notes
 
 
 
 
Principal
 
—

 
300,000

Unamortized discount and debt issuance costs
 
—

 
(2,481
)
 
 
—

 
297,519

 
 
 
 
 
Total long-term debt
 
$
1,245,066

 
$
1,243,912

Schedule of Derivative Instruments 
Additional information on our interest rate swaps is as follows:
Derivative Instrument
 
Balance Sheet Location
 
Fair Value
 
Location of Offsetting Balance
 
Offsetting
Amount
 
 
(In thousands)
December 31, 2016
 
 
 
 
 
 
 
 
Interest rate swaps designated as cash flow hedging instrument:
 
 
 
 
 
 
Variable-to-fixed interest rate swap contracts ($150 million of LIBOR-based debt interest)
 
Other current  assets
 
$
91

 
Accumulated other
    comprehensive income
 
$
91

 
 
 
 
$
91

 
 
 
$
91


Schedule of Interest Expense and Other Debt Information 
Interest expense consists of the following components:
 
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
 
(In thousands)
Interest on outstanding debt:
 
 
 
 
Credit Agreement, net of interest on interest rate swaps
 
$
20,338

 
$
13,600

6.5% Senior Notes
 
163

 
14,632

6% Senior Notes
 
18,150

 
4,811

Amortization of discount and deferred debt issuance costs
 
2,317

 
2,294

Commitment fees and other
 
1,137

 
1,419

Total interest incurred
 
42,105

 
36,756

Less capitalized interest
 
746

 
498

Net interest expense
 
$
41,359

 
$
36,258

Cash paid for interest
 
$
53,181

 
$
33,896


Significant Customers (Tables)
Schedules of Concentration of Risk, by Risk Factor
The following table presents the percentage of total revenues generated by each of these customers:
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
HFC
 
86
%
 
84
%
 
85
%
 
83
%
Alon
 
7
%
 
8
%
 
7
%
 
8
%
Partners' Equity (Tables)
Schedule of Allocation of General Partner Interest in Net Income 
The following table presents the allocation of the general partner interest in net income for the periods presented below: 
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands)
General partner interest in net income
 
$
(419
)
 
$
399

 
$
919

 
$
1,569

General partner incentive distribution
 
—

 
14,823

 
34,128

 
38,432

Net loss attributable to Predecessor
 
—

 
(7,547
)
 
—

 
(10,657
)
Total general partner interest in net income
 
$
(419
)
 
$
7,675

 
$
35,047

 
$
29,344

For purposes of applying the two-class method including the allocation of cash distributions in excess of earnings, net income per limited partner unit is computed as follows:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands)
Net income attributable to the partners
 
$
42,071

 
$
34,785

 
$
108,970

 
$
116,880

Less: General partner’s distribution declared (including IDRs)
 
—

 
(15,888
)
 
(36,463
)
 
(41,424
)
Limited partner’s distribution declared on common units
 
(63,012
)
 
(37,354
)
 
(143,326
)
 
(105,657
)
Distributions in excess of net income attributable to the partners
 
$
(20,941
)
 
$
(18,457
)
 
$
(70,819
)
 
$
(30,201
)
Schedule of Distributions Made to Members or Limited Partners 
The following table presents the allocation of our regular quarterly cash distributions to the general and limited partners for the periods in which they apply. Our distributions are declared subsequent to quarter end; therefore, the amounts presented do not reflect distributions paid during the periods presented below.
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands, except per unit data)
General partner interest in distribution
 
$
—

 
$
1,065

 
$
2,335

 
$
2,992

General partner incentive distribution
 
—

 
14,823

 
34,128

 
38,432

Total general partner distribution
 
—

 
15,888

 
36,463

 
41,424

Limited partner distribution
 
63,012

 
37,354

 
143,326

 
105,657

Total regular quarterly cash distribution
 
$
63,012

 
$
53,242

 
$
179,789

 
$
147,081

Cash distribution per unit applicable to limited partners
 
$
0.6450

 
$
0.5950

 
$
1.8975

 
$
1.7550

Net Income per Limited Partner Unit (Tables)
Schedule of Allocation of General Partner Interest in Net Income [Table Text Block] 
The following table presents the allocation of the general partner interest in net income for the periods presented below: 
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands)
General partner interest in net income
 
$
(419
)
 
$
399

 
$
919

 
$
1,569

General partner incentive distribution
 
—

 
14,823

 
34,128

 
38,432

Net loss attributable to Predecessor
 
—

 
(7,547
)
 
—

 
(10,657
)
Total general partner interest in net income
 
$
(419
)
 
$
7,675

 
$
35,047

 
$
29,344

For purposes of applying the two-class method including the allocation of cash distributions in excess of earnings, net income per limited partner unit is computed as follows:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands)
Net income attributable to the partners
 
$
42,071

 
$
34,785

 
$
108,970

 
$
116,880

Less: General partner’s distribution declared (including IDRs)
 
—

 
(15,888
)
 
(36,463
)
 
(41,424
)
Limited partner’s distribution declared on common units
 
(63,012
)
 
(37,354
)
 
(143,326
)
 
(105,657
)
Distributions in excess of net income attributable to the partners
 
$
(20,941
)
 
$
(18,457
)
 
$
(70,819
)
 
$
(30,201
)
Earnings per Unit by Type of Partner [Table Text Block] 
 
 
General Partner (including IDRs)
 
Limited Partners’ Common Units
 
Total
 
 
(In thousands, except per unit data)
Three Months Ended September 30, 2017
 
 
 
 
 
 
Net income attributable to the partners:
 
 
 
 
 
 
Distributions declared
 
$
—

 
$
63,012

 
$
63,012

Distributions in excess of net income attributable to the partners
 
(419
)
 
(20,522
)
 
(20,941
)
Net income attributable to the partners
 
$
(419
)
 
$
42,490

 
$
42,071

Weighted average limited partners' units outstanding
 
 
 
64,319

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
0.66

 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2016
 
 
 
 
 
 
Net income attributable to the partners:
 
 
 
 
 
 
Distributions declared
 
$
15,888

 
$
37,354

 
$
53,242

Distributions in excess of net income attributable to the partners
 
(369
)
 
(18,088
)
 
(18,457
)
Net income attributable to the partners
 
$
15,519

 
$
19,266

 
$
34,785

Weighted average limited partners' units outstanding
 
 
 
59,223

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
0.33

 
 

 
 
General Partner (including IDRs)
 
Limited Partners’ Common Units
 
Total
 
 
(In thousands, except per unit data)
Nine Months Ended September 30, 2017
 
 
 
 
 
 
Net income attributable to partnership:
 
 
 
 
 
 
Distributions declared
 
$
36,463

 
$
143,326

 
$
179,789

Distributions in excess of net income attributable to partnership
 
(1,416
)
 
(69,403
)
 
(70,819
)
Net income attributable to partnership
 
$
35,047

 
$
73,923

 
$
108,970

Weighted average limited partners' units outstanding
 
 
 
63,845

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
1.16

 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
Net income attributable to partnership:
 
 
 
 
 
 
Distributions declared
 
$
41,424

 
$
105,657

 
$
147,081

Distributions in excess of net income attributable to partnership
 
(604
)
 
(29,597
)
 
(30,201
)
Net income attributable to partnership
 
$
40,820

 
$
76,060

 
$
116,880

Weighted average limited partners' units outstanding
 
 
 
58,895

 
 
Limited partners' per unit interest in earnings - basic and diluted
 
 
 
$
1.29

 
 
Segments Segment disclosure (Tables)
Segment Reporting Disclosure [Text Block] 
Operating Segments

Although financial information is reviewed by our chief operating decision makers from a variety of perspectives, they view the business in two operating segments: pipelines and terminals, and refinery processing units. These operating segments adhere to the accounting polices used for our consolidated financial statements.

The pipelines and terminals segment has been aggregated as both pipeline and terminals (1) have similar economic characteristics, (2) similarly provide logistics services of transportation and storage of petroleum products, (3) similarly support the petroleum
refining business, including distribution of its products, (4) have principally the same customers and (5) are subject to similar regulatory requirements.

We evaluate the performance of each segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are excluded from segment operating income as they are not directly attributable to a specific operating segment. Identifiable assets are those used by the segment, whereas other assets are principally equity method investments, cash, deposits and other assets that are not associated with a specific reportable operating segment.
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Pipelines and terminals - affiliate
 
$
74,547

 
$
73,210

 
$
219,806

 
$
226,553

Pipelines and terminals - third-party
 
15,226

 
15,212

 
47,826

 
50,094

Refinery processing units - affiliate
 
20,591

 
4,188

 
57,510

 
12,870

Total segment revenues
 
$
110,364

 
$
92,610

 
$
325,142

 
$
289,517

 
 
 
 
 
 
 
 
 
Segment operating income:
 
 
 
 
 
 
 
 
Pipelines and terminals
 
$
44,896

 
$
48,928

 
$
140,546

 
$
155,657

Refinery processing units
 
10,463

 
(7,339
)
 
24,283

 
(6,491
)
Total segment operating income
 
55,359

 
41,589

 
164,829

 
149,166

Unallocated general and administrative expenses
 
(3,623
)
 
(2,664
)
 
(8,872
)
 
(8,618
)
Interest and financing costs, net
 
(13,971
)
 
(14,339
)
 
(53,278
)
 
(35,926
)
Equity in earnings of unconsolidated affiliates
 
5,072

 
3,767

 
10,965

 
10,155

Gain on sale of assets and other
 
155

 
112

 
317

 
104

Income before income taxes
 
$
42,992

 
$
28,465

 
$
113,961

 
$
114,881

 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
  Pipelines and terminals
 
$
10,151

 
$
15,557

 
$
30,437

 
$
47,200

  Refinery processing units
 
—

 
5,173

 
238

 
48,915

Total capital expenditures
 
$
10,151

 
$
20,730

 
$
30,675

 
$
96,115


 
 
September 30, 2017
 
December 31, 2016
 
 
(in thousands)
Identifiable assets:
 
 
 
 
  Pipelines and terminals
 
$
1,353,585

 
$
1,369,756

  Refinery processing units
 
335,388

 
342,506

Other
 
176,869

 
171,975

Total identifiable assets
 
$
1,865,842

 
$
1,884,237


The refinery processing units operating segment loss for the three and nine months ended September 30, 2016, is due to the net loss attributable to Predecessor.
Schedule of Segment Reporting Information, by Segment [Table Text Block] 
We evaluate the performance of each segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are excluded from segment operating income as they are not directly attributable to a specific operating segment. Identifiable assets are those used by the segment, whereas other assets are principally equity method investments, cash, deposits and other assets that are not associated with a specific reportable operating segment.
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Pipelines and terminals - affiliate
 
$
74,547

 
$
73,210

 
$
219,806

 
$
226,553

Pipelines and terminals - third-party
 
15,226

 
15,212

 
47,826

 
50,094

Refinery processing units - affiliate
 
20,591

 
4,188

 
57,510

 
12,870

Total segment revenues
 
$
110,364

 
$
92,610

 
$
325,142

 
$
289,517

 
 
 
 
 
 
 
 
 
Segment operating income:
 
 
 
 
 
 
 
 
Pipelines and terminals
 
$
44,896

 
$
48,928

 
$
140,546

 
$
155,657

Refinery processing units
 
10,463

 
(7,339
)
 
24,283

 
(6,491
)
Total segment operating income
 
55,359

 
41,589

 
164,829

 
149,166

Unallocated general and administrative expenses
 
(3,623
)
 
(2,664
)
 
(8,872
)
 
(8,618
)
Interest and financing costs, net
 
(13,971
)
 
(14,339
)
 
(53,278
)
 
(35,926
)
Equity in earnings of unconsolidated affiliates
 
5,072

 
3,767

 
10,965

 
10,155

Gain on sale of assets and other
 
155

 
112

 
317

 
104

Income before income taxes
 
$
42,992

 
$
28,465

 
$
113,961

 
$
114,881

 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
  Pipelines and terminals
 
$
10,151

 
$
15,557

 
$
30,437

 
$
47,200

  Refinery processing units
 
—

 
5,173

 
238

 
48,915

Total capital expenditures
 
$
10,151

 
$
20,730

 
$
30,675

 
$
96,115


 
 
September 30, 2017
 
December 31, 2016
 
 
(in thousands)
Identifiable assets:
 
 
 
 
  Pipelines and terminals
 
$
1,353,585

 
$
1,369,756

  Refinery processing units
 
335,388

 
342,506

Other
 
176,869

 
171,975

Total identifiable assets
 
$
1,865,842

 
$
1,884,237


The refinery processing units operating segment loss for the three and nine months ended September 30, 2016, is due to the net loss attributable to Predecessor.
Supplemental Guarantor / Non-Guarantor Financial Information (Tables)
Condensed Consolidating Balance Sheet 
Condensed Consolidating Balance Sheet
September 30, 2017
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2

 
$
6

 
$
7,468

 
$
—

 
$
7,476

Accounts receivable
 
—

 
46,157

 
4,096

 
(170
)
 
50,083

Prepaid and other current assets
 
52

 
1,988

 
255

 
—

 
2,295

Total current assets
 
54

 
48,151

 
11,819

 
(170
)
 
59,854

 
 
 
 
 
 
 
 
 
 
 
Properties and equipment, net
 
—

 
947,094

 
359,999

 
—

 
1,307,093

Investment in subsidiaries

 
1,608,736

 
273,874

 
—

 
(1,882,610
)
 
—

Transportation agreements, net
 
—

 
61,644

 
—

 
—

 
61,644

Goodwill
 
—

 
256,498

 
—

 
—

 
256,498

Equity method investments
 
—

 
163,873

 
—

 
—

 
163,873

Other assets
 
12,329

 
4,551

 
—

 
—

 
16,880

Total assets
 
$
1,621,119

 
$
1,755,685

 
$
371,818

 
$
(1,882,780
)
 
$
1,865,842

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
—

 
$
21,770

 
$
1,543

 
$
(170
)
 
$
23,143

Accrued interest
 
5,000

 
527

 
—

 
—

 
5,527

Deferred revenue
 
—

 
13,326

 
1,501

 
—

 
14,827

Accrued property taxes
 
—

 
4,073

 
3,414

 
—

 
7,487

Other current liabilities
 
52

 
3,440

 
—

 
—

 
3,492

Total current liabilities
 
5,052

 
43,136

 
6,458

 
(170
)
 
54,476


 
 
 
 
 
 
 
 
 
 
Long-term debt
 
1,245,066

 
—

 
—

 
—

 
1,245,066

Other long-term liabilities
 
286

 
14,996

 
195

 
—

 
15,477

Deferred revenue
 
—

 
46,405

 
—

 
—

 
46,405

Class B unit
 
—

 
42,412

 
—

 
—

 
42,412

Equity - partners
 
370,715

 
1,608,736

 
273,874

 
(1,882,610
)
 
370,715

Equity - noncontrolling interest
 
—

 
—

 
91,291

 
—

 
91,291

Total liabilities and equity
 
$
1,621,119

 
$
1,755,685

 
$
371,818

 
$
(1,882,780
)
 
$
1,865,842



Condensed Consolidating Balance Sheet
December 31, 2016
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2

 
$
301

 
$
3,354

 
$
—

 
$
3,657

Accounts receivable
 
—

 
45,056

 
5,554

 
(202
)
 
50,408

Prepaid and other current assets
 
11

 
2,633

 
244

 
—

 
2,888

Total current assets
 
13

 
47,990

 
9,152

 
(202
)
 
56,953

 
 
 
 
 
 
 
 
 
 
 
Properties and equipment, net
 
—

 
957,045

 
371,350

 
—

 
1,328,395

Investment in subsidiaries
 
1,086,008

 
280,671

 
—

 
(1,366,679
)
 
—

Transportation agreements, net
 
—

 
66,856

 
—

 
—

 
66,856

Goodwill
 
—

 
256,498

 
—

 
—

 
256,498

Equity method investments
 
—

 
165,609

 
—

 
—

 
165,609

Other assets
 
725

 
9,201

 
—

 
—

 
9,926

Total assets
 
$
1,086,746

 
$
1,783,870

 
$
380,502

 
$
(1,366,881
)
 
$
1,884,237

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
—

 
$
24,245

 
$
2,899

 
$
(202
)
 
$
26,942

Accrued interest
 
17,300

 
769

 
—

 
—

 
18,069

Deferred revenue
 
—

 
8,797

 
2,305

 
—

 
11,102

Accrued property taxes
 
—

 
4,514

 
883

 
—

 
5,397

Other current liabilities
 
14

 
3,208

 
3

 
—

 
3,225

Total current liabilities
 
17,314

 
41,533

 
6,090

 
(202
)
 
64,735

 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
690,912

 
553,000

 
—

 
—

 
1,243,912

Other long-term liabilities
 
286

 
15,975

 
184

 
—

 
16,445

Deferred revenue
 
—

 
47,035

 
—

 
—

 
47,035

Class B unit
 
—

 
40,319

 
—

 
—

 
40,319

Equity - partners
 
378,234

 
1,086,008

 
280,671

 
(1,366,679
)
 
378,234

Equity - noncontrolling interest
 
—

 
—

 
93,557

 
—

 
93,557

Total liabilities and equity
 
$
1,086,746

 
$
1,783,870

 
$
380,502

 
$
(1,366,881
)
 
$
1,884,237



Condensed Consolidating Statement of Comprehensive Income 
Condensed Consolidating Statement of Comprehensive Income
Three Months Ended September 30, 2017
 
Parent
 
Guarantor Restricted
Subsidiaries
 
Non-Guarantor Non-restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
89,772

 
$
5,366

 
$
—

 
$
95,138

Third parties
 
—

 
10,758

 
4,468

 
—

 
15,226

 
 
—

 
100,530

 
9,834

 
—

 
110,364

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
31,360

 
4,638

 
—

 
35,998

Depreciation and amortization
 


 
14,854

 
4,153

 
—

 
19,007

General and administrative
 
1,050

 
2,573

 
—

 
—

 
3,623

 
 
1,050

 
48,787

 
8,791

 
—

 
58,628

Operating income (loss)
 
(1,050
)
 
51,743

 
1,043

 
—

 
51,736

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
57,193

 
783

 
—

 
(57,976
)
 
—

Equity in earnings of equity method investments
 
—

 
5,072

 
—

 
—

 
5,072

Interest expense
 
(14,072
)
 
—

 
—

 
—

 
(14,072
)
Interest income
 
—

 
101

 
—

 
—

 
101

Gain on sale of assets and other
 
—

 
154

 
1

 
—

 
155

 
 
43,121

 
6,110

 
1

 
(57,976
)
 
(8,744
)
Income (loss) before income taxes
 
42,071

 
57,853

 
1,044

 
(57,976
)
 
42,992

State income tax benefit
 
—

 
69

 
—

 
—

 
69

Net income
 
42,071

 
57,922

 
1,044

 
(57,976
)
 
43,061

Allocation of net income attributable to noncontrolling interests
 
—

 
(729
)
 
(261
)
 
—

 
(990
)
Net income attributable to Holly Energy Partners
 
42,071

 
57,193

 
783

 
(57,976
)
 
42,071

Other comprehensive income
 
(63
)
 
(63
)
 
—

 
63

 
(63
)
Comprehensive income attributable to Holly Energy Partners
 
$
42,008

 
$
57,130

 
$
783

 
$
(57,913
)
 
$
42,008



Condensed Consolidating Statement of Comprehensive Income
Three Months Ended September 30, 2016 (1)
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
72,389

 
$
5,009

 
$
—

 
$
77,398

Third parties
 
—

 
11,360

 
3,852

 
—

 
15,212

 
 
—

 
83,749

 
8,861

 
—

 
92,610

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
29,023

 
3,078

 
—

 
32,101

Depreciation and amortization
 
—

 
15,093

 
3,827

 
—

 
18,920

General and administrative
 
813

 
1,851

 
—

 
—

 
2,664

 
 
813

 
45,967

 
6,905

 
—

 
53,685

Operating income (loss)
 
(813
)
 
37,782

 
1,956

 
—

 
38,925

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
44,359

 
1,451

 
—

 
(45,810
)
 
—

Equity in earnings of equity method investments
 
—

 
3,767

 
—

 
—

 
3,767

Interest expense
 
(10,011
)
 
(4,436
)
 
—

 
—

 
(14,447
)
Interest income
 
—

 
103

 
5

 
—

 
108

Gain (loss) on sale of assets and other
 
—

 
138

 
(26
)
 
—

 
112

 
 
34,348

 
1,023

 
(21
)
 
(45,810
)
 
(10,460
)
Income before income taxes
 
33,535

 
38,805

 
1,935

 
(45,810
)
 
28,465

State income tax expense
 
—

 
(61
)
 
—

 
—

 
(61
)
Net income
 
33,535

 
38,744

 
1,935

 
(45,810
)
 
28,404

Allocation of net loss to Predecessor
 
—

 
7,547

 
—

 
—

 
7,547

Allocation of net income attributable to noncontrolling interests
 
—

 
(682
)
 
(484
)
 
—

 
(1,166
)
Net income attributable to Holly Energy Partners
 
33,535

 
45,609

 
1,451

 
(45,810
)
 
34,785

Other comprehensive (loss)
 
296

 
296

 
—

 
(296
)
 
296

Comprehensive income attributable to Holly Energy Partners
 
$
33,831

 
$
45,905

 
$
1,451

 
$
(46,106
)
 
$
35,081


(1) Retrospectively adjusted as described in Note 1.



Condensed Consolidating Statement of Comprehensive Income
Nine Months Ended September 30, 2017
 
Parent
 
Guarantor Restricted
Subsidiaries
 
Non-Guarantor Non-restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
258,571

 
$
18,745

 
$
—

 
$
277,316

Third parties
 
—

 
32,146

 
15,680

 
—

 
47,826

 
 
—

 
290,717

 
34,425

 
—

 
325,142

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
91,323

 
11,261

 
—

 
102,584

Depreciation and amortization
 
—

 
45,498

 
12,231

 
—

 
57,729

General and administrative
 
3,070

 
5,802

 
—

 
—

 
8,872

 
 
3,070

 
142,623

 
23,492

 
—

 
169,185

Operating income (loss)
 
(3,070
)
 
148,094

 
10,933

 
—

 
155,957

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings (loss) of subsidiaries
 
165,624

 
8,203

 
—

 
(173,827
)
 
—

Equity in earnings of equity method investments
 
—

 
10,965

 
—

 
—

 
10,965

Interest expense
 
(41,359
)
 
—

 
—

 
—

 
(41,359
)
Interest income
 
—

 
306

 
—

 
—

 
306

Loss on early extinguishment of debt
 
(12,225
)
 
—

 
—

 
—

 
(12,225
)
Gain (loss) on sale of assets and other
 
—

 
313

 
4

 
—

 
317

 
 
112,040

 
19,787

 
4

 
(173,827
)
 
(41,996
)
Income (loss) before income taxes
 
108,970

 
167,881

 
10,937

 
(173,827
)
 
113,961

State income tax expense
 
—

 
(164
)
 
—

 
—

 
(164
)
Net income (loss)
 
108,970

 
167,717

 
10,937

 
(173,827
)
 
113,797

Allocation of net income attributable to noncontrolling interests
 
—

 
(2,093
)
 
(2,734
)
 
—

 
(4,827
)
Net income (loss) attributable to Holly Energy Partners
 
108,970

 
165,624

 
8,203

 
(173,827
)
 
108,970

Other comprehensive income (loss)
 
(91
)
 
(91
)
 
—

 
91

 
(91
)
Comprehensive income (loss)
 
$
108,879

 
$
165,533

 
$
8,203

 
$
(173,736
)
 
$
108,879






Condensed Consolidating Statement of Comprehensive Income
Nine Months Ended September 30, 2016 (1)
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
Affiliates
 
$
—

 
$
219,428

 
$
19,995

 
$
—

 
$
239,423

Third parties
 
—

 
33,783

 
16,311

 
—

 
50,094

 
 
—

 
253,211

 
36,306

 
—

 
289,517

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operations (exclusive of depreciation and amortization)
 
—

 
80,248

 
8,920

 
—

 
89,168

Depreciation and amortization
 
—

 
39,811

 
11,372

 
—

 
51,183

General and administrative
 
2,949

 
5,669

 
—

 
—

 
8,618

 
 
2,949

 
125,728

 
20,292

 
—

 
148,969

Operating income (loss)
 
(2,949
)
 
127,483

 
16,014

 
—

 
140,548

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Equity in earnings (loss) of subsidiaries
 
138,513

 
12,004

 
—

 
(150,517
)
 
—

Equity in earnings of equity method investments
 
—

 
10,155

 
—

 
—

 
10,155

Interest expense
 
(20,151
)
 
(16,107
)
 
—

 
—

 
(36,258
)
Interest income
 
—

 
315

 
17

 
—

 
332

Gain (loss) on sale of assets and other
 
—

 
129

 
(25
)
 
—

 
104

 
 
118,362

 
6,496

 
(8
)
 
(150,517
)
 
(25,667
)
Income (loss) before income taxes
 
115,413

 
133,979

 
16,006

 
(150,517
)
 
114,881

State income tax expense
 
—

 
(210
)
 
—

 
—

 
(210
)
Net income (loss)
 
115,413

 
133,769

 
16,006

 
(150,517
)
 
114,671

Allocation of net loss to Predecessor
 


 
10,657

 
—

 
—

 
10,657

Allocation of net income attributable to noncontrolling interests
 
—

 
(4,446
)
 
(4,002
)
 
—

 
(8,448
)
Net income (loss) attributable to Holly Energy Partners
 
115,413

 
139,980

 
12,004

 
(150,517
)
 
116,880

Other comprehensive income (loss)
 
(299
)
 
(299
)
 
—

 
299

 
(299
)
Comprehensive income (loss)
 
$
115,114

 
$
139,681

 
$
12,004

 
$
(150,218
)
 
$
116,581



(1) Retrospectively adjusted as described in Note 1.

Condensed Consolidating Statement of Cash Flows 
Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2017
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Cash flows from operating activities
 
$
(57,045
)
 
$
215,643

 
$
27,064

 
$
(8,203
)
 
$
177,459

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
Additions to properties and equipment
 
—

 
(27,725
)
 
(2,950
)
 
—

 
(30,675
)
Distributions from UNEV in excess of earnings
 
—

 
6,797

 
—

 
(6,797
)
 
—

Proceeds from sale of assets
 
—

 
794

 
—

 
—

 
794

Distributions in excess of equity in earnings of equity investments
 
—

 
1,224

 
—

 
—

 
1,224

 
 
—

 
(18,910
)
 
(2,950
)
 
(6,797
)
 
(28,657
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
Net borrowings under credit agreement
 
750,000

 
(553,000
)
 
—

 
—

 
197,000

Net intercompany financing activities
 
(357,196
)
 
357,196

 
—

 
—

 
—

Proceeds from issuance of 6% Senior Notes
 
103,250

 
(1,500
)
 
—

 
—

 
101,750

Proceeds from issuance of common units
 
52,285

 
—

 
—

 
—

 
52,285

Contribution from general partner
 
1,072

 
—

 
—

 
—

 
1,072

Redemption of senior notes
 
(309,750
)
 
—

 
—

 
—

 
(309,750
)
Distributions to HEP unitholders
 
(171,560
)
 
—

 
—

 
—

 
(171,560
)
Distribution to HFC for El Dorado tanks
 
(103
)
 
—

 
—

 
—

 
(103
)
Distributions to noncontrolling interests
 
—

 
—

 
(20,000
)
 
15,000

 
(5,000
)
Deferred financing cost
 
(10,953
)
 
1,500

 
—

 
—

 
(9,453
)
Other
 
—

 
(1,224
)
 
—

 
—

 
(1,224
)
 
 
57,045

 
(197,028
)
 
(20,000
)
 
15,000

 
(144,983
)
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
 
 
 
 
Increase (decrease) for the period
 
—

 
(295
)
 
4,114

 
—

 
3,819

Beginning of period
 
2

 
301

 
3,354

 
—

 
3,657

End of period
 
$
2

 
$
6

 
$
7,468

 
$
—

 
$
7,476



Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2016 (1)
 
Parent
 
Guarantor
Restricted Subsidiaries
 
Non-Guarantor Non-Restricted Subsidiaries
 
Eliminations
 
Consolidated
 
 
(In thousands)
Cash flows from operating activities
 
$
(20,467
)
 
$
181,967

 
$
27,724

 
$
(11,250
)
 
$
177,974

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
Additions to properties and equipment
 
—

 
(33,147
)
 
(15,077
)
 
—

 
(48,224
)
Purchase of Woods Cross refinery processing units
 
—

 
(47,891
)
 
—

 
—

 
(47,891
)
Purchase of Cheyenne Pipeline
 
—

 
(42,550
)
 
—

 
—

 
(42,550
)
Proceeds from sale of assets
 
—

 
210

 
—

 
—

 
210

Distributions in excess of equity in earnings of equity investments
 
—

 
1,685

 
—

 
—

 
1,685

Other
 
—

 
(351
)
 
—

 
—

 
(351
)
 
 
—

 
(122,044
)
 
(15,077
)
 
—

 
(137,121
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
Net repayments under credit agreement
 
—

 
(332,000
)
 
—

 
—

 
(332,000
)
Net intercompany financing activities
 
(257,172
)
 
257,172

 
—

 
—

 
—

Proceeds from issuance of senior notes
 
394,000

 
—

 
—

 
—

 
394,000

Proceeds from issuance of common units
 
22,591

 
200

 
—

 
—

 
22,791

Distributions to HEP unitholders
 
(138,798
)
 
—

 
—

 
—

 
(138,798
)
Distributions to noncontrolling interests
 
—

 
—

 
(15,000
)
 
11,250

 
(3,750
)
Contributions from general partner for Osage
 
31,285

 
(31,285
)
 
—

 
—

 
—

Distributions to HFC for Tulsa Tank acquisition
 
(30,378
)
 
(9,122
)
 
—

 
—

 
(39,500
)
Distribution to HFC for Osage
 
—

 
(1,245
)
 
—

 
—

 
(1,245
)
Contribution from HFC for acquisitions
 
99

 
54,928

 
—

 
—

 
55,027

Contributions from general partner
 
470

 
—

 
—

 
—

 
470

Purchase of units for incentive grants
 
(784
)
 
—

 
—

 
—

 
(784
)
Deferred financing costs
 
(846
)
 
(3,084
)
 
—

 
—

 
(3,930
)
Other
 
—

 
(939
)
 
—

 
—

 
(939
)
 
 
20,467

 
(65,375
)
 
(15,000
)
 
11,250

 
(48,658
)
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
 
 
 
 
Decrease for the period
 
—

 
(5,452
)
 
(2,353
)
 
—

 
(7,805
)
Beginning of period
 
2

 
5,452

 
9,559

 
—

 
15,013

End of period
 
$
2

 
$
—

 
$
7,206

 
$
—

 
$
7,208



(1) Retrospectively adjusted as described in Note 1.
Description of Business and Presentation of Financial Statements (Details) (USD $)
0 Months Ended 3 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended
Oct. 1, 2016
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Oct. 1, 2016
Sep. 30, 2017
SLC Pipeline [Member]
Sep. 30, 2017
UNEV Pipeline [Member]
Sep. 30, 2017
Frontier Pipeline [Member]
Feb. 22, 2016
Osage Pipeline [Member] [Member]
mi
Sep. 30, 2017
Osage Pipeline [Member] [Member]
Feb. 22, 2016
Osage Pipeline [Member] [Member]
Jun. 3, 2016
Cheyenne [Member]
mi
bbl
Sep. 30, 2017
Cheyenne [Member]
Jun. 3, 2016
Cheyenne [Member]
Mar. 31, 2016
Tulsa Tanks [Member]
Sep. 30, 2016
Woods Cross [Member]
Sep. 30, 2016
Woods Cross [Member]
Oct. 31, 2017
Subsequent Event [Member]
Oct. 19, 2017
Subsequent Event [Member]
Other Ownership Interests [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Acquisition Purchase Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 250,000,000 
 
Ownership percentage, controlling interest
 
36.00% 
 
36.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General partner interest
 
 
 
2.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59.00% 
 
Common Unit, Issued
 
1,538,452 
 
1,538,452 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37,250,000 
 
Limited partner distribution
 
63,012,000 
37,354,000 
143,326,000 
105,657,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,500,000 
 
Common Stock, Shares, Issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59,600,000 
Equity Method Investment, Ownership Percentage
 
 
 
 
 
 
25.00% 
75.00% 
50.00% 
 
50.00% 
50.00% 
 
50.00% 
50.00% 
 
 
 
 
 
Business Combination, Consideration Transferred
 
 
 
 
 
 
 
 
 
44,500,000 
 
 
 
 
 
 
 
 
 
 
Equity Method Investment, Underlying Equity in Net Assets
 
 
 
 
 
 
 
 
 
 
 
12,100,000 
 
 
 
 
 
 
 
 
Tulsa tanks, Plains acquisition
 
(10,151,000)
(20,730,000)
(30,675,000)
(96,115,000)
 
 
 
 
 
 
 
 
 
 
(39,500,000)
 
 
 
 
Payments to Acquire Equity Method Investments
 
 
 
0 
(42,550,000)
 
 
 
 
 
 
 
(42,600,000)
 
 
 
 
 
 
 
Length of Pipeline
 
 
 
 
 
 
 
 
 
135 
 
 
87 
 
 
 
 
 
 
 
Production barrel capacity per day
 
 
 
 
 
 
 
 
 
 
 
 
80,000 
 
 
 
 
 
 
 
Additions to Properties and Equipment
278,000,000 
 
 
103,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from Issuance of Private Placement
103,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Unit, Authorized
 
 
 
 
 
3,420,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duration of Sales Commitment - Years
0 
 
 
 
 
 
 
 
 
20 
 
 
 
 
 
 
 
 
 
 
Purchase Obligation Minimum Annualized Payment
 
 
 
57,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Acquisition, Pro Forma Net Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 7,500,000 
$ 10,700,000 
 
 
Description of Business and Presentation of Financial Statements Predecessor Transaction Effect on Operations (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Schedule of Predecessor Effects on Operations [Line Items]
 
 
 
 
Operating Costs and Expenses
$ 35,998 
$ 32,101 1
$ 102,584 
$ 89,168 1
Depreciation and amortization
19,007 
18,920 1
57,729 
51,183 1
Allocation of net income attributable to Predecessor
0 
7,547 1
0 
10,657 1
Scenario, Previously Reported [Member]
 
 
 
 
Schedule of Predecessor Effects on Operations [Line Items]
 
 
 
 
Operating Costs and Expenses
 
27,954 
 
82,131 
Depreciation and amortization
 
15,520 
 
47,780 
Allocation of net income attributable to Predecessor
 
0 
 
0 
Tulsa Tanks [Member]
 
 
 
 
Schedule of Predecessor Effects on Operations [Line Items]
 
 
 
 
Operating Costs and Expenses
 
0 
 
0 
Depreciation and amortization
 
0 
 
0 
Allocation of net income attributable to Predecessor
 
0 
 
217 
Woods Cross [Member]
 
 
 
 
Schedule of Predecessor Effects on Operations [Line Items]
 
 
 
 
Operating Costs and Expenses
 
4,147 
 
7,037 
Depreciation and amortization
 
3,400 
 
3,403 
Allocation of net income attributable to Predecessor
 
$ 7,547 
 
$ 10,440 
Description of Business and Presentation of Financial Statements Predecessor Effects on Cash Flows (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Predecessor Effects on Cash Flows [Line Items]
 
 
Net Income
$ 113,797 
$ 114,671 1
Depreciation and amortization
57,729 
51,183 1
Net cash provided (used) by operating activities
177,459 
177,974 
Purchase of Woods Cross refinery processing units
0 
(47,891)
Net cash used for investing activities
(28,657)
(137,121)
Contributions from HFC for acquisitions
0 
55,027 1
Net cash used for financing activities
(144,983)
(48,658)
Scenario, Previously Reported [Member]
 
 
Predecessor Effects on Cash Flows [Line Items]
 
 
Net Income
 
125,111 
Depreciation and amortization
 
47,780 
Net cash provided (used) by operating activities
 
185,011 
Purchase of Woods Cross refinery processing units
 
0 
Net cash used for investing activities
 
(89,230)
Contributions from HFC for acquisitions
 
99 
Net cash used for financing activities
 
(103,586)
Woods Cross [Member]
 
 
Predecessor Effects on Cash Flows [Line Items]
 
 
Net Income
 
(10,440)
Depreciation and amortization
 
3,403 
Net cash provided (used) by operating activities
 
(7,037)
Purchase of Woods Cross refinery processing units
 
(47,891)
Net cash used for investing activities
 
(47,891)
Contributions from HFC for acquisitions
 
54,928 
Net cash used for financing activities
 
$ 54,928 
Financial Instruments (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Carrying Value [Member]
 
 
Debt Instrument [Line Items]
 
 
Financial Liabilities Fair Value Disclosure
$ 495,066 
$ 690,912 
Carrying Value [Member] |
Interest Rate Swap [Member]
 
 
Debt Instrument [Line Items]
 
 
Assets, Fair Value Disclosure
0 
91 
Carrying Value [Member] |
6.5% Senior Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Financial Liabilities Fair Value Disclosure
0 
297,519 
Carrying Value [Member] |
6% Senior notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Financial Liabilities Fair Value Disclosure
 
393,393 
Fair Value [Member] |
Fair value inputs, Level 2 [Member]
 
 
Debt Instrument [Line Items]
 
 
Financial Liabilities Fair Value Disclosure
524,390 
723,750 
Fair Value [Member] |
Interest Rate Swap [Member] |
Fair value inputs, Level 2 [Member]
 
 
Debt Instrument [Line Items]
 
 
Assets, Fair Value Disclosure
0 
91 
Fair Value [Member] |
6.5% Senior Notes [Member] |
Fair value inputs, Level 2 [Member]
 
 
Debt Instrument [Line Items]
 
 
Financial Liabilities Fair Value Disclosure
0 
308,250 
Fair Value [Member] |
6% Senior notes [Member] |
Fair value inputs, Level 2 [Member]
 
 
Debt Instrument [Line Items]
 
 
Financial Liabilities Fair Value Disclosure
$ 524,390 
$ 415,500 
Properties and Equipment (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Properties and equipment, gross
$ 1,742,221,000 
 
$ 1,742,221,000 
 
$ 1,714,021,000 
Less accumulated depreciation
435,128,000 
 
435,128,000 
 
385,626,000 
Properties and equipment, net
1,307,093,000 
 
1,307,093,000 
 
1,328,395,000 1
Interest costs, capitalized during period
(300,000)
(200,000)
(700,000)
(500,000)
 
Depreciation expense
 
 
52,100,000 
45,500,000 
 
Pipelines, terminals and tankage [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Properties and equipment, gross
1,250,567,000 
 
1,250,567,000 
 
1,246,746,000 
Refinery Assets [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Properties and equipment, gross
347,312,000 
 
347,312,000 
 
346,058,000 
Land and right of way [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Properties and equipment, gross
65,337,000 
 
65,337,000 
 
65,331,000 
Construction in progress [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Properties and equipment, gross
51,297,000 
 
51,297,000 
 
28,753,000 
Other [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Properties and equipment, gross
$ 27,708,000 
 
$ 27,708,000 
 
$ 27,133,000 
Transportation Agreements (Details) (USD $)
9 Months Ended 3 Months Ended 3 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2017
Alon transportation agreement
Y
Dec. 31, 2016
Alon transportation agreement
Sep. 30, 2017
HFC transportation agreement
Dec. 31, 2016
HFC transportation agreement
Sep. 30, 2017
Other [Member]
Dec. 31, 2016
Other [Member]
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
Finite-Lived Intangible Assets, Useful Life (years)
 
 
30 years 
 
15 years 
 
 
 
Finite-Lived Intangible Assets, Useful Life, Initial Term (years)
 
 
15 
 
 
 
 
 
Finite-Lived Intangible Assets, Useful Life, Extension Period (years)
 
 
15 
 
 
 
 
 
Amortization of Transportation Agreements
$ 5,200,000 
 
 
 
 
 
 
 
Finite-Lived Intangible Assets, Net [Abstract]
 
 
 
 
 
 
 
 
Transportation agreements, gross
134,214,000 
134,214,000 
59,933,000 
59,933,000 
74,231,000 
74,231,000 
50,000 
50,000 
Less accumulated amortization
72,570,000 
67,358,000 
 
 
 
 
 
 
Transportation agreements, net
$ 61,644,000 
$ 66,856,000 
 
 
 
 
 
 
Employees, Retirement and Incentive Plans Retirement and Benefit Plan Costs (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Components
Sep. 30, 2016
Share-based Compensation Arrangements
 
 
 
 
Employee benefits and share-based compensation
$ 1.5 
$ 1.4 
$ 4.5 
$ 4.3 
Long-term Incentive Plan, Components
 
 
4 
 
Compensation costs of incentive awards
$ 0.7 
 
$ 1.6 
$ 1.9 
Deferred Bonus [Member]
 
 
 
 
Share-based Compensation Arrangements
 
 
 
 
Units authorized under equity-based compensation plans (new)
2,500,000 
 
2,500,000 
 
Number of units available for grant
1,409,261 
 
1,409,261 
 
Employees, Retirement and Incentive Plans Restricted Units (Details) (USD $)
In Millions, except Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Restricted Stock Units (RSUs) [Member]
 
 
Share-based Compensation Arrangements
 
 
Nonvested restricted units outstanding
124,230 
123,988 
Weighted average grant date fair value
$ 33.92 
$ 32.96 
Granted
20,348 
 
Forfeited
(20,106)
 
Weighted Average Grant Date Fair Value
$ 36.01 
 
Weighted Average Forfeit Date Fair Value
$ 30.10 
 
Total unrecognized compensation related to nonvested units
$ 1.1 
 
Weighted average remaining contractual term (years)
11 months 
 
Performance Shares [Member]
 
 
Share-based Compensation Arrangements
 
 
Nonvested restricted units outstanding
26,030 
49,520 
Forfeited
(21,228)
 
Total unrecognized compensation related to nonvested units
$ 0.5 
 
Weighted average remaining contractual term (years)
1 year 10 months 
 
Minimum [Member] |
Restricted Stock [Member]
 
 
Share-based Compensation Arrangements
 
 
Award Vesting Period
1 year 
 
Maximum [Member] |
Restricted Stock [Member]
 
 
Share-based Compensation Arrangements
 
 
Award Vesting Period
3 years 
 
Employees, Retirement and Incentive Plans Performance Units (Details) (USD $)
In Millions, except Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Share-based Compensation Arrangement Instruments [Roll Forward]
 
Weighted Average Fair Value of Units Outstanding
$ 0.9 
Performance Shares [Member]
 
Share-based Compensation Arrangements
 
Estimated Share Payouts Unit Awards Minimum
100.00% 
Estimated Share Payouts Unit Awards Maximum
150.00% 
Share-based Compensation Arrangement Instruments [Roll Forward]
 
Outstanding at January 1, 2017 (nonvested)
49,520 
Vesting and transfer of common units to recipients
(2,262)
Forfeited
(21,228)
Outstanding at September 30, 2017 (nonvested)
26,030 
Fair value of vested units transferred to recipients
0.1 
Total unrecognized compensation related to nonvested units
0.5 
Weighted average remaining contractual term (years)
1 year 10 months 
Restricted Stock Units (RSUs) [Member]
 
Share-based Compensation Arrangement Instruments [Roll Forward]
 
Outstanding at January 1, 2017 (nonvested)
123,988 
Granted
20,348 
Forfeited
(20,106)
Outstanding at September 30, 2017 (nonvested)
124,230 
Total unrecognized compensation related to nonvested units
$ 1.1 
Weighted average remaining contractual term (years)
11 months 
Executive Officer [Member] |
Performance Shares [Member]
 
Share-based Compensation Arrangements
 
Estimated Share Payouts Unit Awards Minimum
50.00% 
Estimated Share Payouts Unit Awards Maximum
150.00% 
Debt Senior Notes (Details) (USD $)
3 Months Ended 9 Months Ended 3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
6.5% Senior Notes [Member]
Dec. 31, 2016
6.5% Senior Notes [Member]
Sep. 30, 2017
6% Senior notes [Member]
Jun. 30, 2017
6% Senior notes [Member]
Dec. 31, 2016
6% Senior notes [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Maximum Borrowing Capacity
$ 1,400,000,000 
 
$ 1,400,000,000 
 
 
 
 
 
 
Line of Credit Facility, Expiration Date
Jul. 01, 2022 
 
 
 
 
 
 
 
 
Line of Credit Facility, Capacity Available for Trade Purchases
50,000,000 
 
50,000,000 
 
 
 
 
 
 
Line of Credit Facility, Accordion Feature
300,000,000 
 
300,000,000 
 
 
 
 
 
 
Principal
 
 
 
 
0 
300,000,000 
500,000,000 
400,000,000 
400,000,000 
Senior Notes
100,000,000 
 
100,000,000 
 
0 
297,519,000 
495,066,000 
 
393,393,000 
Stated interest rate, senior notes
 
 
 
 
6.50% 
 
6.00% 
 
 
Senior Notes Aggregate Redemption Amount
 
 
 
 
309,800,000 
 
 
 
 
Loss on early extinguishment of debt
0 
0 
(12,225,000)
0 
12,200,000 
 
 
 
 
Debt Instrument, Unamortized Premium
 
 
 
 
9,800,000 
 
 
 
 
Debt Instrument, Unamortized Discount
 
 
 
 
$ 2,400,000 
 
 
 
 
Debt Long-Term Debt (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Jun. 30, 2017
Dec. 31, 2016
Debt Instrument [Line Items]
 
 
 
Credit Agreement
$ 750,000 
 
$ 553,000 
Senior Notes
100,000 
 
 
Total long-term debt
1,245,066 
 
1,243,912 
6% Senior notes [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal
500,000 
400,000 
400,000 
Unamortized discount
(4,934)
 
(6,607)
Senior Notes
495,066 
 
393,393 
6.5% Senior Notes [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal
0 
 
300,000 
Unamortized discount
0 
 
(2,481)
Senior Notes
$ 0 
 
$ 297,519 
Debt Interest Rate Risk Management (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Debt Instrument [Line Items]
 
 
Line of credit facility, amount outstanding
$ 750,000 
$ 553,000 
Accumulated Other Comprehensive Income (Loss), Net of Tax
0 
91 
London Interbank Offered Rate (LIBOR) [Member] |
Interest Rate Swap [Member] |
Cash Flow Hedging [Member]
 
 
Debt Instrument [Line Items]
 
 
Line of credit facility, amount outstanding
 
0 
London Interbank Offered Rate (LIBOR) [Member] |
Interest Rate Swap [Member] |
Cash Flow Hedging, Added 2012 [Member]
 
 
Debt Instrument [Line Items]
 
 
Line of credit facility, amount outstanding
150,000 
 
London Interbank Offered Rate (LIBOR) [Member] |
Accumulated Other Comprehensive Income (Loss) [Member] |
Interest Rate Swap [Member] |
Cash Flow Hedging [Member]
 
 
Debt Instrument [Line Items]
 
 
Derivative Instruments and Hedges, Assets
 
91 
Derivative Asset
 
91 
London Interbank Offered Rate (LIBOR) [Member] |
Other Current Assets [Member] |
Interest Rate Swap [Member] |
Cash Flow Hedging [Member]
 
 
Debt Instrument [Line Items]
 
 
Derivative Instruments and Hedges, Assets
 
91 
Derivative Asset
 
$ 91 
Debt Interest Expense and Other Debt Information (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Debt Instrument [Line Items]
 
 
 
 
Interest expense, debt
 
 
$ 42,105,000 
$ 36,756,000 
Less capitalized interest
300,000 
200,000 
700,000 
500,000 
Interest expense
14,072,000 
14,447,000 1
41,359,000 
36,258,000 1
Cash paid for interest
 
 
53,181,000 
33,896,000 
Revolving Credit Facility [Member]
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
Interest expense, debt
 
 
20,338,000 
13,600,000 
Senior Notes [Member] |
6.5% Senior Notes [Member]
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
Interest expense, debt
 
 
163,000 
14,632,000 
Senior Notes [Member] |
6% Senior notes [Member]
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
Interest expense, debt
 
 
18,150,000 
4,811,000 
Amortization discount and deferred debt issuance costs [Member]
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
Interest expense, debt
 
 
2,317,000 
2,294,000 
Commitment Fees and Other [Member]
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
Interest expense, debt
 
 
$ 1,137,000 
$ 1,419,000 
Debt Debt Capital Leases (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2017
Minimum [Member]
Sep. 30, 2017
Maximum [Member]
Capital Leased Assets [Line Items]
 
 
 
 
Capital Leases, Term of Contract
 
 
33 months 
48 months 
Capital Leased Assets, Gross
$ 5.2 
$ 4.9 
 
 
Capital Leases Accumulated Depreciation
$ 3.2 
$ 2.4 
 
 
Significant Customers (Details) (Sales Revenue, Net [Member])
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenue, Major Customer [Line Items]
 
 
 
 
Concentration risk, percentage of total sales
 
 
93.00% 
 
Concentration risk, number of significant customers
 
 
2 
 
HFC [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Concentration risk, percentage of total sales
86.00% 
84.00% 
85.00% 
83.00% 
Alon [Member]
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Concentration risk, percentage of total sales
7.00% 
8.00% 
7.00% 
8.00% 
Related Party Transactions (Narrative) (Details) (USD $)
3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Sep. 30, 2017
Affiliated Entity [Member]
Sep. 30, 2016
Affiliated Entity [Member]
Sep. 30, 2017
Affiliated Entity [Member]
Sep. 30, 2016
Affiliated Entity [Member]
Dec. 31, 2016
Shortfall Payments [Member]
Sep. 30, 2017
Shortfall Payments [Member]
Sep. 30, 2016
Shortfall Payments [Member]
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Other Commitments, Future Minimum Payments, Remainder of Fiscal Year
 
 
 
 
 
$ 321,300,000 
 
$ 321,300,000 
 
 
 
 
Administrative Fee, Related Party
 
 
2,500,000 
 
 
 
 
 
 
 
 
 
Revenue from related parties
95,138,000 
77,398,000 1
277,316,000 
239,423,000 1
 
 
 
 
 
 
 
 
Omnibus Agreement G & A Expenses, Related Party
600,000 
 
1,800,000 
 
 
 
 
 
 
 
 
 
Employee expenses reimbursed to related party
11,700,000 
10,000,000 
34,500,000 
29,400,000 
 
 
 
 
 
 
 
 
Reimbursements received from related parties
1,900,000 
4,500,000 
4,700,000 
11,200,000 
 
 
 
 
 
 
 
 
Distributions to HEP unitholders
 
 
 
 
 
32,800,000 
26,200,000 
94,800,000 
76,000,000 
 
 
 
Accounts receivable due from HFC
42,800,000 
 
42,800,000 
 
42,600,000 
 
 
 
 
 
 
 
Accounts payable to HFC
9,600,000 
 
9,600,000 
 
16,424,000 
 
 
 
 
 
 
 
Shortfall Payments, Revenue Recognized
 
 
 
 
 
 
 
 
 
 
3,500,000 
5,700,000 
Shortfall Billings Deferred Revenue
 
 
 
 
 
 
 
 
 
$ 5,600,000 
$ 5,800,000 
 
Partners' Equity, Issuances (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended 17 Months Ended
Sep. 30, 2017
Sep. 30, 2017
Sep. 30, 2017
Capital Unit [Line Items]
 
 
 
Common Unit, Issued
1,538,452 
1,538,452 
1,538,452 
General Partners' Contributed Capital
$ 1.1 
$ 1.1 
$ 1.1 
Partners' Capital Account, Units, Sale of Units
 
 
2,241,907 
Common units held by HFC
22,380,030 
22,380,030 
22,380,030 
General partner ownership interest
 
2.00% 
 
Ownership percentage, controlling interest
36.00% 
36.00% 
36.00% 
Common Unit Issuance Program
 
200 
 
Gross Proceeds from Issuance of Common Units
$ 52.3 
 
$ 77.1 
Partners' Equity, Allocations of Net Income (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Partners' Capital [Abstract]
 
 
 
 
General Partner Interest in Net Income
$ (419)
$ (399)
$ (919)
$ (1,569)
General partner incentive distribution
0 
14,823 
34,128 
38,432 
Allocation of net income attributable to Predecessor
0 
(7,547)1
0 
(10,657)1
Net income (Loss) Allocated to Partners After Predecessor Portion
$ (419)
$ 7,675 
$ 35,047 
$ 29,344 
Partners' Equity, Cash Distributions (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended 0 Months Ended 1 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Nov. 14, 2017
Subsequent Event [Member]
Nov. 6, 2017
Subsequent Event [Member]
Nov. 26, 2017
Subsequent Event [Member]
Oct. 31, 2017
Subsequent Event [Member]
Oct. 26, 2017
Subsequent Event [Member]
Distribution Payments [Line Items]
 
 
 
 
 
 
 
 
 
Dividends Payable, Date Declared
 
 
 
 
 
 
Oct. 26, 2017 
 
 
Partners' Capital, Distribution Amount Per Share
 
 
 
 
 
 
 
 
$ 0.6450 
Dividends Payable, Date to be Paid
 
 
 
 
Nov. 14, 2017 
 
 
 
 
Dividends Payable, Date of Record
 
 
 
 
 
Nov. 06, 2017 
 
 
 
Partner Distributions
 
 
 
 
 
 
 
 
 
General partner interest
$ 0 
$ 1,065 
$ 2,335 
$ 2,992 
 
 
 
 
 
General partner incentive distribution
0 
14,823 
34,128 
38,432 
 
 
 
 
 
Total general partner distribution
0 
15,888 
36,463 
41,424 
 
 
 
 
 
Limited partner distribution
63,012 
37,354 
143,326 
105,657 
 
 
 
2,500 
 
Total regular quarterly cash distributions
$ 63,012 
$ 53,242 
$ 179,789 
$ 147,081 
 
 
 
 
 
Cash distribution per unit applicable to limited partners
$ 0.6450 
$ 0.5950 
$ 1.8975 
$ 1.7550 
 
 
 
 
 
Net Income per Limited Partner Unit (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Earnings per Unit by Type of Partner [Line Items]
 
 
 
 
Common Unit, Issued
1,538,452 
 
1,538,452 
 
Net Income Attributable to Parent
$ 42,071 
$ 34,785 1
$ 108,970 
$ 116,880 1
General Partners' Distribution Declared
0 
(15,888)
(36,463)
(41,424)
Limited partner distribution declared
(63,012)
(37,354)
(143,326)
(105,657)
Distributions in Excess of Net Income Attributable to Partnership
(20,941)
(18,457)
(70,819)
(30,201)
Net Income Attributable to Partnership
42,071 
34,785 
108,970 
116,880 
Total Partner Interest in Net Income
63,012 
53,242 
179,789 
147,081 
Weighted average limited partners’ units outstanding
64,319,000 
59,223,000 1
63,845,000 
58,895,000 
Limited partners’ per unit interest in earnings—basic and diluted:
$ 0.66 
$ 0.33 1
$ 1.16 
$ 1.29 1
General Partner [Member]
 
 
 
 
Earnings per Unit by Type of Partner [Line Items]
 
 
 
 
Distributions in Excess of Net Income Attributable to Partnership
(419)
(369)
(1,416)
(604)
Net Income Attributable to Partnership
(419)
15,519 
35,047 
40,820 
Limited Partner [Member]
 
 
 
 
Earnings per Unit by Type of Partner [Line Items]
 
 
 
 
Distributions in Excess of Net Income Attributable to Partnership
(20,522)
(18,088)
(69,403)
(29,597)
Net Income Attributable to Partnership
$ 42,490 
$ 19,266 
$ 73,923 
$ 76,060 
Environmental Environmental (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Loss Contingencies [Line Items]
 
 
 
Environmental Remediation Expense
$ 0 
$ 200,000 
 
Accrued Environmental Expense
6,400,000 
 
7,100,000 
Accrued Environmental Expense, Noncurrent
4,700,000 
 
5,400,000 
Affiliated Entity [Member]
 
 
 
Loss Contingencies [Line Items]
 
 
 
Accrued Environmental Expense
$ 800,000 
 
$ 900,000 
Segments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Segment Reporting Information [Line Items]
 
 
 
 
 
Revenue, Net
$ 110,364 
$ 92,610 1
$ 325,142 
$ 289,517 1
 
Operating Income (Loss)
51,736 
38,925 1
155,957 
140,548 1
 
Segment operating profit
55,359 
41,589 
164,829 
149,166 
 
Unallocated general and administrative
(3,623)
(2,664)1
(8,872)
(8,618)1
 
Interest and financing costs, net
(13,971)
(14,339)
(53,278)
(35,926)
 
Equity in earnings of equity method investments
5,072 
3,767 1
10,965 
10,155 1
 
Gain on sale of assets and other
155 
112 
317 
104 
 
Income before income taxes
42,992 
28,465 1
113,961 
114,881 1
 
Property, Plant and Equipment, Additions
10,151 
20,730 
30,675 
96,115 
 
Assets
1,865,842 
 
1,865,842 
 
1,884,237 1
Pipelines and terminal - affiliate [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Revenue, Net
74,547 
73,210 
219,806 
226,553 
 
Pipelines and terminals - third party [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Revenue, Net
15,226 
15,212 
47,826 
50,094 
 
Operating Income (Loss)
44,896 
48,928 
140,546 
155,657 
 
Property, Plant and Equipment, Additions
10,151 
15,557 
30,437 
47,200 
 
Assets
1,353,585 
 
1,353,585 
 
1,369,756 
Refinery processing units - affiliate [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Revenue, Net
20,591 
4,188 
57,510 
12,870 
 
Operating Income (Loss)
10,463 
(7,339)
24,283 
(6,491)
 
Property, Plant and Equipment, Additions
0 
5,173 
238 
48,915 
 
Assets
335,388 
 
335,388 
 
342,506 
Other [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Assets
$ 176,869 
 
$ 176,869 
 
$ 171,975 
Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidated Balance Sheet (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2016
Dec. 31, 2015
Current assets:
 
 
 
 
Cash and cash equivalents
$ 7,476 
$ 3,657 
$ 7,208 
$ 15,013 
Accounts receivable
50,083 
50,408 
 
 
Prepaid and other current assets
2,295 
2,888 
 
 
Total current assets
59,854 
56,953 
 
 
Properties and equipment, net
1,307,093 
1,328,395 1
 
 
Investment in subsidiaries
0 
0 
 
 
Transportation agreements, net
61,644 
66,856 
 
 
Goodwill
256,498 
256,498 
 
 
Equity method investments
163,873 
165,609 
 
 
Other assets
16,880 
9,926 
 
 
Assets
1,865,842 
1,884,237 1
 
 
Current liabilities:
 
 
 
 
Accounts payable
23,143 
26,942 
 
 
Accrued interest
5,527 
18,069 
 
 
Deferred revenue
14,827 
11,102 
 
 
Accrued property taxes
7,487 
5,397 
 
 
Other current liabilities
3,492 
3,225 
 
 
Total current liabilities
54,476 
64,735 
 
 
Long-term debt
1,245,066 
1,243,912 
 
 
Other long-term liabilities
15,477 
16,445 
 
 
Deferred revenue
46,405 
47,035 
 
 
Class B unit
42,412 
40,319 
 
 
Equity - partners
370,715 
378,234 1
 
 
Equity - noncontrolling interest
91,291 
93,557 
 
 
Total liabilities and equity
1,865,842 
1,884,237 1
 
 
Parent Company [Member]
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
2 
2 
2 
2 
Accounts receivable
0 
0 
 
 
Prepaid and other current assets
52 
11 
 
 
Total current assets
54 
13 
 
 
Properties and equipment, net
0 
0 
 
 
Investment in subsidiaries
1,608,736 
1,086,008 
 
 
Transportation agreements, net
0 
0 
 
 
Goodwill
0 
0 
 
 
Equity method investments
0 
0 
 
 
Other assets
12,329 
725 
 
 
Assets
1,621,119 
1,086,746 
 
 
Current liabilities:
 
 
 
 
Accounts payable
0 
0 
 
 
Accrued interest
5,000 
17,300 
 
 
Deferred revenue
0 
0 
 
 
Accrued property taxes
0 
0 
 
 
Other current liabilities
52 
14 
 
 
Total current liabilities
5,052 
17,314 
 
 
Long-term debt
1,245,066 
690,912 
 
 
Other long-term liabilities
286 
286 
 
 
Deferred revenue
0 
0 
 
 
Class B unit
0 
0 
 
 
Equity - partners
370,715 
378,234 
 
 
Equity - noncontrolling interest
0 
0 
 
 
Total liabilities and equity
1,621,119 
1,086,746 
 
 
Guarantor Subsidiaries [Member]
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
6 
301 
0 
5,452 
Accounts receivable
46,157 
45,056 
 
 
Prepaid and other current assets
1,988 
2,633 
 
 
Total current assets
48,151 
47,990 
 
 
Properties and equipment, net
947,094 
957,045 
 
 
Investment in subsidiaries
273,874 
280,671 
 
 
Transportation agreements, net
61,644 
66,856 
 
 
Goodwill
256,498 
256,498 
 
 
Equity method investments
163,873 
165,609 
 
 
Other assets
4,551 
9,201 
 
 
Assets
1,755,685 
1,783,870 
 
 
Current liabilities:
 
 
 
 
Accounts payable
21,770 
24,245 
 
 
Accrued interest
527 
769 
 
 
Deferred revenue
13,326 
8,797 
 
 
Accrued property taxes
4,073 
4,514 
 
 
Other current liabilities
3,440 
3,208 
 
 
Total current liabilities
43,136 
41,533 
 
 
Long-term debt
0 
553,000 
 
 
Other long-term liabilities
14,996 
15,975 
 
 
Deferred revenue
46,405 
47,035 
 
 
Class B unit
42,412 
40,319 
 
 
Equity - partners
1,608,736 
1,086,008 
 
 
Equity - noncontrolling interest
0 
0 
 
 
Total liabilities and equity
1,755,685 
1,783,870 
 
 
Non-Guarantor Subsidiaries [Member]
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
7,468 
3,354 
7,206 
9,559 
Accounts receivable
4,096 
5,554 
 
 
Prepaid and other current assets
255 
244 
 
 
Total current assets
11,819 
9,152 
 
 
Properties and equipment, net
359,999 
371,350 
 
 
Investment in subsidiaries
0 
0 
 
 
Transportation agreements, net
0 
0 
 
 
Goodwill
0 
0 
 
 
Equity method investments
0 
0 
 
 
Other assets
0 
0 
 
 
Assets
371,818 
380,502 
 
 
Current liabilities:
 
 
 
 
Accounts payable
1,543 
2,899 
 
 
Accrued interest
0 
0 
 
 
Deferred revenue
1,501 
2,305 
 
 
Accrued property taxes
3,414 
883 
 
 
Other current liabilities
0 
3 
 
 
Total current liabilities
6,458 
6,090 
 
 
Long-term debt
0 
0 
 
 
Other long-term liabilities
195 
184 
 
 
Deferred revenue
0 
0 
 
 
Class B unit
0 
0 
 
 
Equity - partners
273,874 
280,671 
 
 
Equity - noncontrolling interest
91,291 
93,557 
 
 
Total liabilities and equity
371,818 
380,502 
 
 
Consolidation, Eliminations [Member]
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
0 
0 
0 
0 
Accounts receivable
(170)
(202)
 
 
Prepaid and other current assets
0 
0 
 
 
Total current assets
(170)
(202)
 
 
Properties and equipment, net
0 
0 
 
 
Investment in subsidiaries
(1,882,610)
(1,366,679)
 
 
Transportation agreements, net
0 
0 
 
 
Goodwill
0 
0 
 
 
Equity method investments
0 
0 
 
 
Other assets
0 
0 
 
 
Assets
(1,882,780)
(1,366,881)
 
 
Current liabilities:
 
 
 
 
Accounts payable
(170)
(202)
 
 
Accrued interest
0 
0 
 
 
Deferred revenue
0 
0 
 
 
Accrued property taxes
0 
0 
 
 
Other current liabilities
0 
0 
 
 
Total current liabilities
(170)
(202)
 
 
Long-term debt
0 
0 
 
 
Other long-term liabilities
0 
0 
 
 
Deferred revenue
0 
0 
 
 
Class B unit
0 
0 
 
 
Equity - partners
(1,882,610)
(1,366,679)
 
 
Equity - noncontrolling interest
0 
0 
 
 
Total liabilities and equity
$ (1,882,780)
$ (1,366,881)
 
 
Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidating Statement of Comprehensive Income (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenues [Abstract]
 
 
 
 
Affiliates
$ 95,138 
$ 77,398 1
$ 277,316 
$ 239,423 1
Third parties
15,226 
15,212 1
47,826 
50,094 1
Total revenues
110,364 
92,610 1
325,142 
289,517 1
Operating costs and expenses [Abstract]
 
 
 
 
Operations (exclusive of depreciation and amortization)
35,998 
32,101 1
102,584 
89,168 1
Depreciation and amortization
19,007 
18,920 1
57,729 
51,183 1
General and administrative
3,623 
2,664 1
8,872 
8,618 1
Total operating costs and expenses
58,628 
53,685 1
169,185 
148,969 1
Operating Income (Loss)
51,736 
38,925 1
155,957 
140,548 1
Equity in Earnings (Loss) of Subsidiaries
0 
0 
0 
0 
Equity in Earnings of Equity Method Investments
5,072 
3,767 1
10,965 
10,155 1
Interest expense
(14,072)
(14,447)1
(41,359)
(36,258)1
Interest income
101 
108 1
306 
332 1
Loss on early extinguishment of debt
0 
0 
(12,225)
0 
Gain (loss) on sale of assets and other
155 
112 1
317 
104 1
Nonoperating Income (Expense)
(8,744)
(10,460)1
(41,996)
(25,667)1
Income (Loss) before Income Taxes
42,992 
28,465 1
113,961 
114,881 1
State income tax (expense) benefit
69 
(61)1
(164)
(210)1
Net income
43,061 
28,404 1
113,797 
114,671 1
Allocation of net income attributable to Predecessor
0 
7,547 1
0 
10,657 1
Allocation of net income attributable to noncontrolling interests
(990)
(1,166)1
(4,827)
(8,448)1
Net income attributable to Holly Energy Partners
42,071 
34,785 1
108,970 
116,880 1
Other comprehensive income (loss)
(63)
296 
(91)
(299)
Comprehensive Income (Loss) Attributable to Holly Energy Partners
42,008 
35,081 1
108,879 
116,581 1
Equity Method Investments [Member]
 
 
 
 
Operating costs and expenses [Abstract]
 
 
 
 
Equity in Earnings of Equity Method Investments
5,072 
3,767 
10,965 
10,155 
Parent Company [Member]
 
 
 
 
Revenues [Abstract]
 
 
 
 
Affiliates
0 
0 
0 
0 
Third parties
0 
0 
0 
0 
Total revenues
0 
0 
0 
0 
Operating costs and expenses [Abstract]
 
 
 
 
Operations (exclusive of depreciation and amortization)
0 
0 
0 
0 
Depreciation and amortization
   
0 
0 
0 
General and administrative
1,050 
813 
3,070 
2,949 
Total operating costs and expenses
1,050 
813 
3,070 
2,949 
Operating Income (Loss)
(1,050)
(813)
(3,070)
(2,949)
Equity in Earnings (Loss) of Subsidiaries
57,193 
44,359 
165,624 
138,513 
Interest expense
(14,072)
(10,011)
(41,359)
(20,151)
Interest income
0 
0 
0 
0 
Loss on early extinguishment of debt
 
 
(12,225)
 
Gain (loss) on sale of assets and other
0 
0 
0 
0 
Nonoperating Income (Expense)
43,121 
34,348 
112,040 
118,362 
Income (Loss) before Income Taxes
42,071 
33,535 
108,970 
115,413 
State income tax (expense) benefit
0 
0 
0 
0 
Net income
42,071 
33,535 
108,970 
115,413 
Allocation of net income attributable to Predecessor
 
0 
 
   
Allocation of net income attributable to noncontrolling interests
0 
0 
0 
0 
Net income attributable to Holly Energy Partners
42,071 
33,535 
108,970 
115,413 
Other comprehensive income (loss)
(63)
296 
(91)
(299)
Comprehensive Income (Loss) Attributable to Holly Energy Partners
42,008 
33,831 
108,879 
115,114 
Parent Company [Member] |
Equity Method Investments [Member]
 
 
 
 
Operating costs and expenses [Abstract]
 
 
 
 
Equity in Earnings of Equity Method Investments
0 
0 
0 
0 
Guarantor Subsidiaries [Member]
 
 
 
 
Revenues [Abstract]
 
 
 
 
Affiliates
89,772 
72,389 
258,571 
219,428 
Third parties
10,758 
11,360 
32,146 
33,783 
Total revenues
100,530 
83,749 
290,717 
253,211 
Operating costs and expenses [Abstract]
 
 
 
 
Operations (exclusive of depreciation and amortization)
31,360 
29,023 
91,323 
80,248 
Depreciation and amortization
14,854 
15,093 
45,498 
39,811 
General and administrative
2,573 
1,851 
5,802 
5,669 
Total operating costs and expenses
48,787 
45,967 
142,623 
125,728 
Operating Income (Loss)
51,743 
37,782 
148,094 
127,483 
Equity in Earnings (Loss) of Subsidiaries
783 
1,451 
8,203 
12,004 
Interest expense
0 
(4,436)
0 
(16,107)
Interest income
101 
103 
306 
315 
Loss on early extinguishment of debt
 
 
0 
 
Gain (loss) on sale of assets and other
154 
138 
313 
129 
Nonoperating Income (Expense)
6,110 
1,023 
19,787 
6,496 
Income (Loss) before Income Taxes
57,853 
38,805 
167,881 
133,979 
State income tax (expense) benefit
69 
(61)
(164)
(210)
Net income
57,922 
38,744 
167,717 
133,769 
Allocation of net income attributable to Predecessor
 
7,547 
 
10,657 
Allocation of net income attributable to noncontrolling interests
(729)
(682)
2,093 
(4,446)
Net income attributable to Holly Energy Partners
57,193 
45,609 
165,624 
139,980 
Other comprehensive income (loss)
(63)
296 
(91)
(299)
Comprehensive Income (Loss) Attributable to Holly Energy Partners
57,130 
45,905 
165,533 
139,681 
Guarantor Subsidiaries [Member] |
Equity Method Investments [Member]
 
 
 
 
Operating costs and expenses [Abstract]
 
 
 
 
Equity in Earnings of Equity Method Investments
5,072 
3,767 
10,965 
10,155 
Non-Guarantor Subsidiaries [Member]
 
 
 
 
Revenues [Abstract]
 
 
 
 
Affiliates
5,366 
5,009 
18,745 
19,995 
Third parties
4,468 
3,852 
15,680 
16,311 
Total revenues
9,834 
8,861 
34,425 
36,306 
Operating costs and expenses [Abstract]
 
 
 
 
Operations (exclusive of depreciation and amortization)
4,638 
3,078 
11,261 
8,920 
Depreciation and amortization
4,153 
3,827 
12,231 
11,372 
General and administrative
0 
0 
0 
0 
Total operating costs and expenses
8,791 
6,905 
23,492 
20,292 
Operating Income (Loss)
1,043 
1,956 
10,933 
16,014 
Equity in Earnings (Loss) of Subsidiaries
0 
0 
0 
0 
Interest expense
0 
0 
0 
0 
Interest income
0 
5 
0 
17 
Loss on early extinguishment of debt
 
 
0 
 
Gain (loss) on sale of assets and other
1 
(26)
4 
(25)
Nonoperating Income (Expense)
1 
(21)
4 
(8)
Income (Loss) before Income Taxes
1,044 
1,935 
10,937 
16,006 
State income tax (expense) benefit
0 
0 
0 
0 
Net income
1,044 
1,935 
10,937 
16,006 
Allocation of net income attributable to Predecessor
 
0 
 
0 
Allocation of net income attributable to noncontrolling interests
(261)
(484)
2,734 
(4,002)
Net income attributable to Holly Energy Partners
783 
1,451 
8,203 
12,004 
Other comprehensive income (loss)
0 
0 
0 
0 
Comprehensive Income (Loss) Attributable to Holly Energy Partners
783 
1,451 
8,203 
12,004 
Non-Guarantor Subsidiaries [Member] |
Equity Method Investments [Member]
 
 
 
 
Operating costs and expenses [Abstract]
 
 
 
 
Equity in Earnings of Equity Method Investments
0 
0 
0 
0 
Consolidation, Eliminations [Member]
 
 
 
 
Revenues [Abstract]
 
 
 
 
Affiliates
0 
0 
0 
0 
Third parties
0 
0 
0 
0 
Total revenues
0 
0 
0 
0 
Operating costs and expenses [Abstract]
 
 
 
 
Operations (exclusive of depreciation and amortization)
0 
0 
0 
0 
Depreciation and amortization
0 
0 
0 
0 
General and administrative
0 
0 
0 
0 
Total operating costs and expenses
0 
0 
0 
0 
Operating Income (Loss)
0 
0 
0 
0 
Equity in Earnings (Loss) of Subsidiaries
(57,976)
(45,810)
(173,827)
(150,517)
Interest expense
0 
0 
0 
0 
Interest income
0 
0 
0 
0 
Loss on early extinguishment of debt
 
 
0 
 
Gain (loss) on sale of assets and other
0 
0 
0 
0 
Nonoperating Income (Expense)
(57,976)
(45,810)
(173,827)
(150,517)
Income (Loss) before Income Taxes
(57,976)
(45,810)
(173,827)
(150,517)
State income tax (expense) benefit
0 
0 
0 
0 
Net income
(57,976)
(45,810)
(173,827)
(150,517)
Allocation of net income attributable to Predecessor
 
0 
 
0 
Allocation of net income attributable to noncontrolling interests
0 
0 
0 
0 
Net income attributable to Holly Energy Partners
(57,976)
(45,810)
173,827 
(150,517)
Other comprehensive income (loss)
63 
(296)
91 
299 
Comprehensive Income (Loss) Attributable to Holly Energy Partners
(57,913)
(46,106)
(173,736)
(150,218)
Consolidation, Eliminations [Member] |
Equity Method Investments [Member]
 
 
 
 
Operating costs and expenses [Abstract]
 
 
 
 
Equity in Earnings of Equity Method Investments
$ 0 
$ 0 
$ 0 
$ 0 
Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidating Statement of Cash Flows (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Condensed Financial Statements, Captions [Line Items]
 
 
Net cash provided (used) by operating activities
$ 177,459 
$ 177,974 
Cash flows from investing activities
 
 
Additions to Properties and Equipment
(30,675)
(48,224)1
Purchase of Woods Cross refinery processing units
0 
(47,891)
Payments to Acquire Equity Method Investments
0 
(42,550)
Proceeds from sale of assets
794 
210 
Distributions in excess of equity in earnings of equity investments
1,224 
1,685 
Other
0 
(351)
Net cash used for investing activities
(28,657)
(137,121)
Cash flows from financing activities
 
 
Net borrowings (repayments) under credit agreement
197,000 
(332,000)
Net intercompany financing activities
0 
0 
Proceeds from Issuance of Senior Notes
101,750 
394,000 
Proceeds from Issuance of common units
52,285 
22,791 
Contributions from General Partner
1,072 
470 
Repayments of Senior Debt
(309,750)
 
Contributions from general partner for Osage
 
0 
Distribution to HFC for Tulsa Tank Acquisition
0 
(39,500)
Distributions to HEP unitholders
(171,560)
(138,798)
Distribution to HFC for El Dorado tanks
(103)
0 
Distribution to HFC for Osage
0 
(1,245)
Contributions from HFC for acquisitions
0 
55,027 1
Distributions to noncontrolling interests
(5,000)
(3,750)
Purchase of units for incentive grants
0 
(784)
Deferred financing costs
(9,453)
(3,930)
Other
(1,224)
(939)
Net cash used for financing activities
(144,983)
(48,658)
Increase (decrease) for the period
3,819 
(7,805)
Beginning of period
3,657 
15,013 
End of period
7,476 
7,208 
Parent Company [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net cash provided (used) by operating activities
(57,045)
(20,467)
Cash flows from investing activities
 
 
Additions to Properties and Equipment
0 
0 
Purchase of Woods Cross refinery processing units
 
0 
Payments to Acquire Equity Method Investments
 
0 
Proceeds from sale of assets
0 
0 
Distributions in excess of equity in earnings of equity investments
0 
0 
Other
 
0 
Net cash used for investing activities
0 
0 
Cash flows from financing activities
 
 
Net borrowings (repayments) under credit agreement
750,000 
0 
Net intercompany financing activities
(357,196)
(257,172)
Proceeds from Issuance of Senior Notes
103,250 
394,000 
Proceeds from Issuance of common units
52,285 
22,591 
Contributions from General Partner
1,072 
470 
Repayments of Senior Debt
(309,750)
 
Contributions from general partner for Osage
 
31,285 
Distribution to HFC for Tulsa Tank Acquisition
 
(30,378)
Distributions to HEP unitholders
(171,560)
(138,798)
Distribution to HFC for El Dorado tanks
(103)
 
Distribution to HFC for Osage
 
0 
Contributions from HFC for acquisitions
 
(99)
Distributions to noncontrolling interests
0 
0 
Purchase of units for incentive grants
 
(784)
Deferred financing costs
(10,953)
(846)
Other
0 
0 
Net cash used for financing activities
57,045 
20,467 
Increase (decrease) for the period
0 
0 
Beginning of period
2 
2 
End of period
2 
2 
Guarantor Subsidiaries [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net cash provided (used) by operating activities
215,643 
181,967 
Cash flows from investing activities
 
 
Additions to Properties and Equipment
(27,725)
(33,147)
Purchase of Woods Cross refinery processing units
 
(47,891)
Payments to Acquire Equity Method Investments
 
(42,550)
Proceeds from sale of assets
794 
210 
Distributions in excess of equity in earnings of equity investments
1,224 
1,685 
Other
 
(351)
Net cash used for investing activities
(18,910)
(122,044)
Cash flows from financing activities
 
 
Net borrowings (repayments) under credit agreement
(553,000)
(332,000)
Net intercompany financing activities
357,196 
257,172 
Proceeds from Issuance of Senior Notes
(1,500)
0 
Proceeds from Issuance of common units
0 
200 
Contributions from General Partner
0 
0 
Repayments of Senior Debt
0 
 
Contributions from general partner for Osage
 
(31,285)
Distribution to HFC for Tulsa Tank Acquisition
 
(9,122)
Distributions to HEP unitholders
0 
0 
Distribution to HFC for El Dorado tanks
0 
 
Distribution to HFC for Osage
 
(1,245)
Contributions from HFC for acquisitions
 
54,928 
Distributions to noncontrolling interests
0 
0 
Purchase of units for incentive grants
 
0 
Deferred financing costs
1,500 
(3,084)
Other
(1,224)
(939)
Net cash used for financing activities
(197,028)
(65,375)
Increase (decrease) for the period
(295)
(5,452)
Beginning of period
301 
5,452 
End of period
6 
0 
Non-Guarantor Subsidiaries [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net cash provided (used) by operating activities
27,064 
27,724 
Cash flows from investing activities
 
 
Additions to Properties and Equipment
(2,950)
(15,077)
Purchase of Woods Cross refinery processing units
 
0 
Payments to Acquire Equity Method Investments
 
0 
Proceeds from sale of assets
0 
0 
Distributions in excess of equity in earnings of equity investments
0 
0 
Other
 
0 
Net cash used for investing activities
(2,950)
(15,077)
Cash flows from financing activities
 
 
Net borrowings (repayments) under credit agreement
0 
0 
Net intercompany financing activities
0 
0 
Proceeds from Issuance of Senior Notes
0 
0 
Proceeds from Issuance of common units
0 
0 
Contributions from General Partner
0 
0 
Repayments of Senior Debt
0 
 
Contributions from general partner for Osage
 
0 
Distribution to HFC for Tulsa Tank Acquisition
 
0 
Distributions to HEP unitholders
0 
0 
Distribution to HFC for El Dorado tanks
0 
 
Distribution to HFC for Osage
 
0 
Contributions from HFC for acquisitions
 
0 
Distributions to noncontrolling interests
(20,000)
(15,000)
Purchase of units for incentive grants
 
0 
Deferred financing costs
0 
0 
Other
0 
0 
Net cash used for financing activities
(20,000)
(15,000)
Increase (decrease) for the period
4,114 
(2,353)
Beginning of period
3,354 
9,559 
End of period
7,468 
7,206 
Consolidation, Eliminations [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net cash provided (used) by operating activities
(8,203)
(11,250)
Cash flows from investing activities
 
 
Additions to Properties and Equipment
0 
0 
Purchase of Woods Cross refinery processing units
 
0 
Payments to Acquire Equity Method Investments
 
0 
Proceeds from sale of assets
0 
0 
Distributions in excess of equity in earnings of equity investments
0 
0 
Other
 
0 
Net cash used for investing activities
(6,797)
0 
Cash flows from financing activities
 
 
Net borrowings (repayments) under credit agreement
0 
0 
Net intercompany financing activities
0 
0 
Proceeds from Issuance of Senior Notes
0 
0 
Proceeds from Issuance of common units
0 
0 
Contributions from General Partner
0 
0 
Repayments of Senior Debt
0 
 
Contributions from general partner for Osage
 
0 
Distribution to HFC for Tulsa Tank Acquisition
 
0 
Distributions to HEP unitholders
0 
0 
Distribution to HFC for El Dorado tanks
0 
 
Distribution to HFC for Osage
 
0 
Contributions from HFC for acquisitions
 
0 
Distributions to noncontrolling interests
15,000 
11,250 
Purchase of units for incentive grants
 
0 
Deferred financing costs
0 
0 
Other
0 
0 
Net cash used for financing activities
15,000 
11,250 
Increase (decrease) for the period
0 
0 
Beginning of period
0 
0 
End of period
0 
0 
UNEV Pipeline [Member]
 
 
Cash flows from investing activities
 
 
Distributions in excess of equity in earnings of equity investments
0 
 
UNEV Pipeline [Member] |
Parent Company [Member]
 
 
Cash flows from investing activities
 
 
Distributions in excess of equity in earnings of equity investments
0 
 
UNEV Pipeline [Member] |
Guarantor Subsidiaries [Member]
 
 
Cash flows from investing activities
 
 
Distributions in excess of equity in earnings of equity investments
(6,797)
 
UNEV Pipeline [Member] |
Non-Guarantor Subsidiaries [Member]
 
 
Cash flows from investing activities
 
 
Distributions in excess of equity in earnings of equity investments
0 
 
UNEV Pipeline [Member] |
Consolidation, Eliminations [Member]
 
 
Cash flows from investing activities
 
 
Distributions in excess of equity in earnings of equity investments
$ (6,797)