Profile: Holly Corporation (HOC)

Holly Corporation, incorporated in 1947, is an independent petroleum refiner that produces light products, such as gasoline, diesel fuel and jet fuel. During the year ended December 31, 2008, the Company owned and operated two refineries consisting of a petroleum refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (Navajo Refinery), and a refinery in Woods Cross, Utah (Woods Cross Refinery). In 2008, the Company owned and operated Holly Asphalt Company, which manufactures and markets asphalt products from various terminals in Arizona and New Mexico. In 2008, the Company also owned a 46% interest in Holly Energy Partners, L.P. (HEP). On February 29, 2008, the Company completed the selling of certain crude pipelines and tankage assets to HEP. The Company operates in two business segments: refining and HEP.

Refining operations

The refinery operations of the Company include the Navajo Refinery and the Woods Cross Refinery. In 2008, the Navajo Refinery has a crude oil capacity of 85,000 barrels per stream day (BPSD) and has the ability to process sour crude oils into light products, such as gasoline, diesel fuel and jet fuel. The Navajo Refinery converts approximately 91% of its raw materials throughput into light products. In 2008, gasoline, diesel fuel and jet fuel represented 57%, 33% and 1%, respectively, of the Navajo Refinery’s sales volumes. The Navajo Refinery’s Artesia, New Mexico facility is located on a 561 acre site and is an integrated refinery with crude distillation, vacuum distillation, FCC, ROSE (solvent deasphalter), HF alkylation, catalytic reforming, hydrodesulfurization, isomerization, sulfur recovery and product blending units. Other supporting infrastructure includes approximately 2.0 million barrels of feedstock and product tankage at the site of which 0.2 million is owned by HEP, maintenance shops, warehouses and office buildings. The operating units at the Artesia facility include newly constructed units, older units that have been relocated from other facilities and upgraded and re-erected in Artesia. The combined crude oil capacity of the Navajo facilities is 85,000 BPSD and it typically processes or blends an additional 10,000 BPSD of natural gasoline, butane, gas oil and naphtha in 2008.

In 2008, the Company also owns 67 crude oil trucks and 67 trailers that support operations at the Navajo Refinery facilities. The Company distribute refined products from the Navajo Refinery to markets in Arizona, New Mexico and west Texas primarily through two of HEP’s-owned pipelines that extend from Artesia, New Mexico to El Paso, Texas. In addition, the Company use pipelines owned and leased by HEP to transport petroleum products to markets in central northwest New Mexico. The Company also have refined product storage through the pipelines and terminals agreement with HEP at terminals in El Paso, Texas; Tucson, Arizona; and Artesia, Moriarty and Bloomfield, New Mexico.

The Company manufactures and markets commodity and modified asphalt products in Arizona, New Mexico, Texas and northern Mexico under Holly Asphalt Company (Holly Asphalt). The Company have three manufacturing facilities located in Glendale, Arizona, Albuquerque, New Mexico and Artesia, New Mexico. The Albuquerque and Artesia facilities manufacture modified hot asphalt products and commodity emulsions from base asphalt materials provided by the Navajo Refinery and third-party suppliers. The Glendale facility manufactures modified hot asphalt products from base asphalt materials provided by the Navajo and Woods Cross Refineries and third-party suppliers. The products are shipped through third-party trucking companies to commercial customers that provide asphalt based materials for commercial and government projects.

The principal customers for gasoline include other refiners, convenience store chains, independent marketers, and retailers. The gasoline produced at the Navajo Refinery is marketed in the south-western United States, including the metropolitan areas of El Paso, Phoenix, Albuquerque, Bloomfield, and Tucson, and in portions of northern Mexico. The composition of gasoline differs, because of local regulatory requirements, depending on the area in which gasoline is to be sold. Diesel fuel is sold to other refiners, truck stop chains, wholesalers, and railroads. Jet fuel is sold for military use. All asphalt produced at the Navajo Refinery and third-party purchased asphalt is marketed through Holly Asphalt to governmental entities or contractors. Liquefied petroleum gases (LPG’s) are sold to LPG wholesalers and LPG retailers and carbon black oil is sold for further processing.

The Woods Cross Refinery has a crude oil capacity of 31,000 BPSD and is operated by Holly Refining and Marketing Company. The Woods Cross Refinery is located in the Woods Cross, Utah and processes regional sweet and black wax crude as well as Canadian sour crude oils into high value light products. For 2008, gasoline and diesel fuel (excluding volumes purchased for resale) represented 63% and 29%, respectively, of the Woods Cross Refinery’s sales volumes.

The Woods Cross Refinery facility is located on a 200 acre site and is a fully integrated refinery with crude distillation, solvent deasphalter, FCC, HF alkylation, catalytic reforming, hydrodesulfurization, isomerization, sulfur recovery and product blending units. Other supporting infrastructure includes approximately 1.5 million barrels of feedstock and product tankage of which 0.2 million is owned by HEP, maintenance shops, warehouses and office buildings. The crude oil capacity of the Woods Cross Refinery is 31,000 BPSD and the facility typically processes or blends an additional 2,000 BPSD of natural gasoline, butane, and gas oil The Woods Cross Refinery obtains its supply of crude oil primarily from suppliers in Canada, Wyoming, Utah and Colorado via common carrier pipelines that originate in Canada, Wyoming and Colorado. Supplies of black wax crude oil are shipped through the truck.

Holly Energy Partners, L.P.

HEP owns and operates a system of petroleum product and crude oil pipelines in Texas, New Mexico, Oklahoma and Utah and distribution terminals and refinery tankage in Texas, New Mexico, Arizona, Utah, Idaho and Washington. HEP serves the refineries in New Mexico and Utah under a 15-year pipelines and terminals agreement (the HEP PTA). In 2008, HEP’s assets include approximately 820 miles of refined product pipelines, including 340 miles of leased pipelines, that transport gasoline, diesel and jet fuel principally from the Navajo Refinery in New Mexico to our customers in the metropolitan and rural areas of Texas, New Mexico, Arizona, Colorado, Utah and northern Mexico. It includes approximately 510 miles of refined product pipelines that transport refined products from Alon’s Big Spring refinery in Texas to its customers in Texas and Oklahoma. It includes two parallel 65-mile pipelines that transport intermediate feedstocks and crude oil from the Lovington, New Mexico refinery facilities to the Artesia, New Mexico refining facilities. It includes approximately 860 miles of crude oil trunk, gathering and connection pipelines located in west Texas and New Mexico that deliver crude oil to the Navajo Refinery. The Company has approximately 10 miles of crude oil and refined product pipelines that support the Woods Cross Refinery near Salt Lake City, Utah.

The Company has four refined product terminals located in El Paso, Texas; Moriarty and Bloomfield, New Mexico; and Tucson, Arizona, with an aggregate capacity of approximately one million barrels, that are integrated with HEP’s refined product pipeline system that serves the Navajo Refinery. The Company has three refined product terminals (two of which are 50% owned), located in Burley and Boise, Idaho and Spokane, Washington, with an aggregate capacity of approximately 500,000 barrels, that serve third-party common carrier pipelines. It has one refined product terminal near Mountain Home, Idaho with a capacity of 120,000 barrels that serves a nearby United States Air Force Base.

The Company have two refined product terminals, located in Wichita Falls and Abilene, Texas, and one tank farm in Orla, Texas with aggregate capacity of 480,000 barrels, that are integrated with HEP’s refined product pipelines that serve Alon’s Big Spring, Texas refinery. The Company has two refined product truck loading racks, one located within the Navajo Refinery that is permitted to load over 40,000 barrels per calendar day (BPD) of light refined products, and one located within the Woods Cross Refinery near Salt Lake City, Utah, that is permitted to load over 25,000 BPD of light refined products. It has an on-site crude oil tankage at the Navajo and Woods Cross Refineries having an aggregate storage capacity of approximately 600,000 barrels.