Reported net income attributable to HEP of $57.5 million or $0.45 per unit

Announced quarterly distribution of $0.35 per unit

Reported EBITDA of $87.8 million and Adjusted EBITDA of $108.4 million

Revenues from our refined product pipelines were $25.2 million, a decrease of $0.9 million compared to the first quarter of 2022. Shipments averaged 183.4 thousand barrels per day (“mbpd”) compared to 156.2 mbpd for the first quarter of 2022. The volume increase was mainly due to higher volumes on the acquired Sinclair Transportation product pipelines. The decrease in revenues was mainly due to lower volumes on our product pipelines serving HF Sinclair’s Navajo refinery. Revenues were lower in proportion to volumes due to our recognition of a significant portion of the Sinclair Transportation refined product pipeline tariffs as interest income under sales-type lease accounting.

Revenues from our intermediate pipelines were $8.3 million, an increase of $0.8 million compared to the first quarter of 2022. Shipments averaged 114.3 mbpd for the first quarter of 2023 compared to 117.8 mbpd for the first quarter of 2022. The increase in revenue was mainly due to rate increases that went into effect on July 1, 2022.

Revenues from our crude pipelines were $37.1 million, an increase of $5.9 million compared to the first quarter of 2022. Shipments averaged 649.7 mbpd compared to 527.2 mbpd for the first quarter of 2022. The increase in volumes was mainly attributable to the acquired Sinclair Transportation crude pipelines and higher volumes on our crude pipeline systems in New Mexico and Texas. The increase in revenues was mainly due to the acquired Sinclair Transportation crude pipelines, higher volumes on our crude pipeline systems in New Mexico and Texas and rate increases that went into effect on July 1, 2022.

Revenues from terminal, tankage and loading rack fees were $46.2 million, an increase of $9.2 million compared to the first quarter of 2022. Refined products and crude oil terminalled in the facilities averaged 729.3 mbpd compared to 494.4 mbpd for the first quarter of 2022. The increase in volumes was mainly due to the acquired Sinclair Transportation assets. Revenues increased mainly due to revenues on the acquired Sinclair Transportation assets and rate increases that went into effect on July 1, 2022.

Revenues from refinery processing units were $26.5 million, an increase of $8.1 million compared to the first quarter of 2022, and throughputs averaged 53.3 mbpd compared to 65.2 mbpd for the first quarter of 2022. Revenues increased mainly due to higher revenues from our Woods Cross refinery processing units, which were down for a scheduled turnaround in March 2022, as well as rate increases that went into effect on July 1, 2022. The decrease in volumes was due to maintenance at the El Dorado refinery.

the negotiation and execution, and the terms and conditions, of a definitive agreement relating to the non-binding proposal we received from HF Sinclair to acquire all of the outstanding common units of HEP not beneficially owned by HF Sinclair or its affiliates in exchange for shares of common stock, par value $0.01 per share of HF Sinclair (the “Proposed HF Sinclair Transaction”) and the ability of HF Sinclair or HEP to enter into or consummate such agreement;

the risk that the Proposed HF Sinclair Transaction does not occur;

negative effects from the pendency of the Proposed HF Sinclair Transaction;

failure to obtain the required approvals for the Proposed HF Sinclair Transaction;

the time required to consummate the Proposed HF Sinclair Transaction;

the focus of management time and attention on the Proposed HF Sinclair Transaction and other disruptions arising from the Proposed HF Sinclair Transaction;

the demand for and supply of crude oil and refined products, including uncertainty regarding the effects of the continuing COVID-19 pandemic on future demand and increasing societal expectations that companies address climate change;

risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored or throughput in our terminals and refinery processing units;

the economic viability of HF Sinclair, our other customers and our joint ventures’ other customers, including any refusal or inability of our or our joint ventures’ customers or counterparties to perform their obligations under their contracts;

the demand for refined petroleum products in the markets we serve;

our ability to purchase operations and integrate the operations we have acquired or may acquire, including the acquired Sinclair Transportation business;

our ability to complete previously announced or contemplated acquisitions;

the availability and cost of additional debt and equity financing;

the possibility of temporary or permanent reductions in production or shutdowns at refineries utilizing our pipelines, terminal facilities and refinery processing units, due to reductions in demand, accidents, unexpected leaks or spills, unscheduled shutdowns, infection in the workforce, weather events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, or political events or developments, terrorism, cyberattacks, or other catastrophes or disruptions affecting our operations, terminal facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of our suppliers, customers, or third-party providers or lower gross margins due to the economic impact of the COVID-19 pandemic, inflation and labor costs, and any potential asset impairments resulting from, or the failure to have adequate insurance coverage for or receive insurance recoveries from, such actions;

the effects of current and future government regulations and policies, including the effects of current and future restrictions on various commercial and economic activities in response to the COVID-19 pandemic and increases in interest rates;

delay by government authorities in issuing permits necessary for our business or our capital projects;

our and our joint venture partners’ ability to complete and maintain operational efficiency in carrying out routine operations and capital construction projects;

the possibility of terrorist or cyberattacks and the consequences of any such attacks;

uncertainty regarding the effects and duration of global hostilities, including the Russia-Ukraine war, and any associated military campaigns which may disrupt crude oil supplies and markets for refined products and create instability in the financial markets that could restrict our ability to raise capital;

general economic conditions, including economic slowdowns caused by a local or national recession or other adverse economic condition, such as periods of increased or prolonged inflation;

the impact of recent or proposed changes in the tax laws and regulations that affect master limited partnerships; and

other financial, operational and legal risks and uncertainties detailed from time to time in our SEC filings.

Revenues

Pipelines:

Affiliates – refined product pipelines

Affiliates – intermediate pipelines

Affiliates – crude pipelines

Third parties – refined product pipelines

Third parties – crude pipelines

Terminals, tanks and loading racks:

Affiliates

Third parties

Refinery processing units - Affiliates

Total revenues

Operating costs and expenses

Operations

Depreciation and amortization

General and administrative

Operating income

Equity in earnings of equity method investments

Interest expense, including amortization

Interest income

Gain on sale of assets and other

Income before income taxes

State income tax expense

Net income

Allocation of net income attributable to noncontrolling interests

Net income attributable to Holly Energy Partners

Limited partners’ earnings per unit – basic and diluted

Weighted average limited partners’ units outstanding

EBITDA⁽¹⁾

Adjusted EBITDA⁽¹⁾

Distributable cash flow⁽²⁾

Volumes (bpd)

Pipelines:

Affiliates – refined product pipelines

Affiliates – intermediate pipelines

Affiliates – crude pipelines

Third parties – refined product pipelines

Third parties – crude pipelines

Terminals and loading racks:

Affiliates

Third parties

Refinery processing units - Affiliates

Total for pipelines and terminal assets (bpd)

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus or minus (i) interest expense, (ii) interest income, (iii) state income tax expense and (iv) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) our share of Osage environmental remediation costs included in equity in earnings of equity method investments, (ii) acquisition integration and regulatory costs, (iii) tariffs and fees not included in revenues due to impacts from lease accounting for certain tariffs and fees and (iv) pipeline lease payments not included in operating costs and expenses. Portions of our minimum guaranteed tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. Similarly, certain pipeline lease payments were previously recorded as operating costs and expenses, but the underlying lease was reclassified from an operating lease to a financing lease, and these payments are now recorded as interest expense and reductions in the lease liability. EBITDA and Adjusted EBITDA are not calculations based upon generally accepted accounting principles (“GAAP”). However, the amounts included in the EBITDA and Adjusted EBITDA calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income attributable to Holly Energy Partners or operating income, as indications of our operating performance or as alternatives to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. EBITDA and Adjusted EBITDA are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for compliance with financial covenants.

Net income attributable to Holly Energy Partners

Add (subtract):

Interest expense

Interest income

State income tax expense

Depreciation and amortization

EBITDA

Share of Osage environmental remediation costs

Acquisition integration and regulatory costs

Tariffs and fees not included in revenues

Lease payments not included in operating costs

Adjusted EBITDA

Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exception of maintenance capital expenditures. Distributable cash flow should not be considered in isolation or as an alternative to net income attributable to Holly Energy Partners or operating income, as an indication of our operating performance, or as an alternative to operating cash flow as a measure of liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance. It is also used by management for internal analysis and our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

Net income attributable to Holly Energy Partners

Add (subtract):

Depreciation and amortization

Amortization of discount and deferred debt charges

Customer billings greater than net income recognized

Maintenance capital expenditures⁽³⁾

Increase (decrease) in environmental liability

Share of Osage insurance coverage

Decrease in reimbursable deferred revenue

Other

Distributable cash flow

Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations.

Balance Sheet Data

Cash and cash equivalents

Working capital

Total assets

Long-term debt

Partners’ equity