Holly Energy Partners, L.P. Reports Fourth Quarter Results

February 19, 2020
  • Reported net income attributable to HEP of $45.7 million or $0.43 per unit
  • Announced quarterly distribution of $0.6725 per unit
  • Reported EBITDA of $87.8 million and Adjusted EBITDA of $86.9 million

DALLAS--(BUSINESS WIRE)-- Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE:HEP) today reported financial results for the fourth quarter of 2019. Net income attributable to HEP for the fourth quarter was $45.7 million ($0.43 per basic and diluted limited partner unit) compared to $47.5 million ($0.45 per basic and diluted limited partner unit) for the fourth quarter of 2018.

Distributable cash flow was $64.5 million for the quarter, an increase of $0.3 million, or 0.5%, compared to the fourth quarter of 2018. HEP declared a quarterly cash distribution of $0.6725 on January 23, 2020.

The decrease in net income attributable to HEP was mainly due to lower volumes on product pipelines servicing HollyFrontier Corporation's ("HFC" or "HollyFrontier") Navajo refinery, lower recognition of deferred revenues and lower equity in earnings of Osage Pipe Line Company, LLC partially offset by higher volumes on our crude pipeline systems in Wyoming and Utah.

Commenting on our 2019 fourth quarter results, Michael Jennings, Chief Executive Officer, stated, “HEP delivered solid fourth quarter results despite heavy maintenance across HFC’s refining system. HEP’s business model continues to provide stable cash flows supported by long term contracts with minimum volume commitments.

“Looking forward, we are making progress on our Cushing Connect project and expect completion on schedule. HEP expects to hold quarterly cash distribution constant at $0.6725, while maintaining a coverage of 1.0x for the full year 2020.”

Fourth Quarter 2019 Revenue Highlights

Revenues for the quarter were $131.6 million, a decrease of $1.2 million compared to the fourth quarter of 2018. The decrease was mainly attributable to lower volumes on product pipelines servicing HFC's Navajo refinery and lower recognition of deferred revenues partially offset by higher volumes on our crude pipeline systems in Wyoming and Utah. Compared to the fourth quarter of 2018, our overall pipeline volumes decreased for the quarter by 7%.

  • Revenues from our refined product pipelines were $30.8 million, a decrease of $8.8 million, on shipments averaging 175.7 thousand barrels per day ("mbpd") compared to 209.1 mbpd for the fourth quarter of 2018. The revenue decrease was mainly due to lower volumes on pipelines servicing HollyFrontier's Navajo refinery, which had lower throughputs during the quarter, and lower recognition of deferred revenue on our contract with Delek US Holdings, Inc. Revenue also decreased due to a reclassification of certain pipeline income from revenue to interest income under sales-type lease accounting.
  • Revenues from our intermediate pipelines were $7.5 million, an increase of $0.3 million, on shipments averaging 136.4 mbpd compared to 151.0 mbpd for the fourth quarter of 2018. The volume decrease was mainly attributable to lower throughput at HFC's Navajo refinery. Revenue remained relatively constant due to contractual minimum revenue commitments and tariff escalators.
  • Revenues from our crude pipelines were $33.8 million, an increase of $4.4 million, on shipments averaging 479.2 mbpd compared to 495.4 mbpd for the fourth quarter of 2018. Revenue increased mainly due to higher volumes on our crude pipeline systems in Wyoming and Utah. Overall volumes decreased due to lower volumes on our crude pipeline systems in New Mexico.
  • Revenues from terminal, tankage and loading rack fees were $41.3 million, an increase of $2.9 million compared to the fourth quarter of 2018. Refined products and crude oil terminalled in the facilities averaged 456.7 mbpd compared to 451.9 mbpd for the fourth quarter of 2018. The revenue increase was mainly due to our new Orla diesel rack, higher butane blending margins at our Las Vegas terminal and higher reimbursable project revenues.
  • Revenues from refinery processing units were $18.2 million for both of the fourth quarters of 2019 and 2018, on throughputs averaging 55.7 mbpd compared to 47.7 mbpd for the fourth quarter of 2018. The volume increase was primarily due to higher volumes on our naphtha fractionation unit in El Dorado. Revenue remained relatively consistent due to contractual minimum volume commitments.

Year Ended December 31, 2019 Revenue Highlights

Revenues for the year ended December 31, 2019, were $532.8 million, an increase of $26.6 million compared to the year ended December 31, 2018. The increase was mainly attributable to higher crude oil pipeline volumes around the Permian Basin, Wyoming and Utah, higher revenues on our refinery processing units and contractual tariff escalators.

  • Revenues from our refined product pipelines were $132.4 million, a decrease of $5.2 million, on shipments averaging 195.5 mbpd compared to 199.6 mbpd for the year ended December 31, 2018. The revenue decrease was mainly due to a reclassification of certain of our pipeline tariffs from revenue to interest income under sales-type lease accounting principles as well as lower volumes on pipelines servicing HollyFrontier's Navajo refinery. These decreases were partially offset by higher volumes on pipelines servicing HFC's Woods Cross refinery, which had lower throughput in 2018 due to operational issues, and contractual tariff escalators.
  • Revenues from our intermediate pipelines were $29.6 million, a decrease of $0.1 million, on shipments averaging 140.6 mbpd compared to 144.5 mbpd for the year ended December 31, 2018. The decrease in revenue was primarily attributable to a decrease in deferred revenue realized.
  • Revenues from our crude pipelines were $130.7 million, an increase of $14.4 million, on shipments averaging 501.2 mbpd compared to 465.6 mbpd for the year ended December 31, 2018. The increases were mainly attributable to increased volumes on our crude pipeline systems in the Permian Basin, Wyoming and Utah as well as contractual tariff escalators.
  • Revenues from terminal, tankage and loading rack fees were $160.5 million, an increase of $12.9 million compared to the year ended December 31, 2018. Refined products and crude oil terminalled in the facilities averaged 483.2 mbpd compared to 474.9 mbpd for the year ended December 31, 2018. The revenue and volume increases were mainly due to volumes at our new Orla diesel rack, higher volumes at the Spokane and Catoosa terminals and contractual tariff escalators, partially offset by lower volumes at HFC's Tulsa refinery as a result of the planned turnaround in the first quarter and flooding in the second quarter.
  • Revenues from refinery processing units were $79.7 million, an increase of $4.5 million on throughputs averaging 68.8 mbpd compared to 62.8 mbpd for the year ended December 31, 2018. The increase in revenue was mainly due to an adjustment in revenue recognition and contractual rate increases.

Operating Costs and Expenses Highlights

Operating costs and expenses were $66.4 million and $269.0 million for the three months and year ended December 31, 2019, respectively, representing a decrease of $0.4 million and an increase of $13.0 million from the three months and year ended December 31, 2018, respectively. The increase for the year ended December 31, 2019 was mainly due to higher maintenance costs and employee compensation expenses.

Interest expense was $19.8 million and $76.8 million for the three months and year ended December 31, 2019, respectively, representing increases of $1.1 million and $4.9 million over the same periods of 2018. These increases were mainly due to higher average balances outstanding under our senior secured revolving credit facility and higher finance lease liabilities outstanding.

We have scheduled a webcast conference call today at 4:00 PM Eastern Time to discuss financial results. This webcast may be accessed at:

https://event.on24.com/wcc/r/2151018/2DE41EE4930CFDC2AFD3D4940F25F42F.

An audio archive of this webcast will be available using the above noted link through March 4, 2020.

About Holly Energy Partners, L.P.

Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries. The Partnership, through its subsidiaries and joint ventures, owns and/or operates petroleum product and crude pipelines, tankage and terminals in Texas, New Mexico, Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming and Kansas, as well as refinery processing units in Utah and Kansas.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico, Wyoming and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P.

The statements in this press release relating to matters that are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. These statements are based on our beliefs and assumptions and those of our general partner using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. Although we and our general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither we nor our general partner can give any assurances that our expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors including, but not limited to:

  • risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored and throughput in our terminals and refinery processing units;
  • the economic viability of HollyFrontier Corporation and our other customers;
  • the demand for refined petroleum products in markets we serve;
  • our ability to purchase and integrate future acquired operations;
  • our ability to complete previously announced or contemplated acquisitions;
  • the availability and cost of additional debt and equity financing;
  • the possibility of reductions in production or shutdowns at refineries utilizing our pipelines, terminal facilities and refinery processing units;
  • the effects of current and future government regulations and policies;
  • our operational efficiency in carrying out routine operations and capital construction projects;
  • the possibility of terrorist or cyber attacks and the consequences of any such attacks;
  • general economic conditions;
  • the impact of recent or proposed changes in 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 Securities and Exchange Commission filings.

The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

RESULTS OF OPERATIONS (Unaudited)

Income, Distributable Cash Flow and Volumes

The following tables present income, distributable cash flow and volume information for the three months and the years ended December 31, 2019 and 2018.

 

 

Three Months Ended December 31,

 

Change from

 

2019

 

2018

 

2018

 

(In thousands, except per unit data)

Revenues

 

 

 

 

 

Pipelines:

 

 

 

 

 

Affiliates – refined product pipelines

$

16,550

 

 

$

22,189

 

 

$

(5,639

)

Affiliates – intermediate pipelines

 

7,490

 

 

 

7,144

 

 

 

346

 

Affiliates – crude pipelines

 

21,969

 

 

 

21,004

 

 

 

965

 

 

 

46,009

 

 

 

50,337

 

 

 

(4,328

)

Third parties – refined product pipelines

 

14,262

 

 

 

17,401

 

 

 

(3,139

)

Third parties – crude pipelines

 

11,834

 

 

 

8,359

 

 

 

3,475

 

 

 

72,105

 

 

 

76,097

 

 

 

(3,992

)

Terminals, tanks and loading racks:

 

 

 

 

 

Affiliates

 

35,802

 

 

 

33,612

 

 

 

2,190

 

Third parties

 

5,543

 

 

 

4,853

 

 

 

690

 

 

 

41,345

 

 

 

38,465

 

 

 

2,880

 

 

 

 

 

 

 

Affiliates - refinery processing units

 

18,184

 

 

 

18,230

 

 

 

(46

)

 

 

 

 

 

 

Total revenues

 

131,634

 

 

 

132,792

 

 

 

(1,158

)

Operating costs and expenses

 

 

 

 

 

Operations

 

38,952

 

 

 

39,699

 

 

 

(747

)

Depreciation and amortization

 

24,513

 

 

 

24,375

 

 

 

138

 

General and administrative

 

2,929

 

 

 

2,747

 

 

 

182

 

 

 

66,394

 

 

 

66,821

 

 

 

(427

)

Operating income

 

65,240

 

 

 

65,971

 

 

 

(731

)

 

 

 

 

 

 

Equity in earnings of equity method investments

 

(37

)

 

 

1,698

 

 

 

(1,735

)

Interest expense, including amortization

 

(19,764

)

 

 

(18,650

)

 

 

(1,114

)

Interest income

 

2,195

 

 

 

526

 

 

 

1,669

 

Gain on sale of assets and other

 

329

 

 

 

51

 

 

 

278

 

 

 

(17,277

)

 

 

(16,375

)

 

 

(902

)

Income before income taxes

 

47,963

 

 

 

49,596

 

 

 

(1,633

)

State income tax benefit (expense)

 

(4

)

 

 

123

 

 

 

(127

)

Net income

 

47,959

 

 

 

49,719

 

 

 

(1,760

)

Allocation of net income attributable to noncontrolling interests

 

(2,292

)

 

 

(2,186

)

 

 

(106

)

Net income attributable to Holly Energy Partners

$

45,667

 

 

$

47,533

 

 

$

(1,866

)

Limited partners’ earnings per unit – basic and diluted (1)

$

0.43

 

 

$

0.45

 

 

$

(0.02

)

Weighted average limited partners’ units outstanding

 

105,440

 

 

 

105,440

 

 

 

EBITDA (2)

$

87,753

 

 

$

89,909

 

 

$

(2,156

)

Adjusted EBITDA (2)

$

86,916

 

 

$

89,909

 

 

$

(2,993

)

Distributable cash flow (3)

$

64,508

 

 

$

64,210

 

 

$

298

 

 

Volumes (bpd)

 

 

 

 

 

Pipelines:

 

 

 

 

 

Affiliates – refined product pipelines

 

104,875

 

 

 

134,459

 

 

 

(29,584

)

Affiliates – intermediate pipelines

 

136,416

 

 

 

150,964

 

 

 

(14,548

)

Affiliates – crude pipelines

 

345,497

 

 

 

389,631

 

 

 

(44,134

)

 

 

586,788

 

 

 

675,054

 

 

 

(88,266

)

Third parties – refined product pipelines

 

70,871

 

 

 

74,616

 

 

 

(3,745

)

Third parties – crude pipelines

 

133,713

 

 

 

105,810

 

 

 

27,903

 

 

 

791,372

 

 

 

855,480

 

 

 

(64,108

)

Terminals and loading racks:

 

 

 

 

 

Affiliates

 

399,739

 

 

 

385,772

 

 

 

13,967

 

Third parties

 

56,952

 

 

 

66,087

 

 

 

(9,135

)

 

 

456,691

 

 

 

451,859

 

 

 

4,832

 

 

 

 

 

 

 

Affiliates – refinery processing units

 

55,728

 

 

 

47,696

 

 

 

8,032

 

 

 

 

 

 

 

Total for pipelines, terminals and refinery processing unit assets (bpd)

 

1,303,791

 

 

 

1,355,035

 

 

 

(51,244

)

 

Years Ended December 31,

 

Change from

 

2019

 

2018

 

2018

 

(In thousands, except per unit data)

Revenues

 

 

 

 

 

Pipelines:

 

 

 

 

 

Affiliates – refined product pipelines

$

77,443

 

 

$

82,998

 

 

$

(5,555

)

Affiliates – intermediate pipelines

29,558

 

 

29,639

 

 

(81

)

Affiliates – crude pipelines

85,415

 

 

79,741

 

 

5,674

 

 

192,416

 

 

192,378

 

 

38

 

Third parties – refined product pipelines

54,914

 

 

54,524

 

 

390

 

Third parties – crude pipelines

45,301

 

 

36,605

 

 

8,696

 

 

292,631

 

 

283,507

 

 

9,124

 

Terminals, tanks and loading racks:

 

 

 

 

 

Affiliates

139,655

 

 

130,251

 

 

9,404

 

Third parties

20,812

 

 

17,283

 

 

3,529

 

 

160,467

 

 

147,534

 

 

12,933

 

 

 

 

 

 

 

Affiliates - refinery processing units

79,679

 

 

75,179

 

 

4,500

 

 

 

 

 

 

 

Total revenues

532,777

 

 

506,220

 

 

26,557

 

Operating costs and expenses

 

 

 

 

 

Operations

161,996

 

 

146,430

 

 

15,566

 

Depreciation and amortization

96,705

 

 

98,492

 

 

(1,787

)

General and administrative

10,251

 

 

11,040

 

 

(789

)

 

268,952

 

 

255,962

 

 

12,990

 

Operating income

263,825

 

 

250,258

 

 

13,567

 

 

 

 

 

 

 

Equity in earnings of equity method investments

5,180

 

 

5,825

 

 

(645

)

Interest expense, including amortization

(76,823

)

 

(71,899

)

 

(4,924

)

Interest income

5,517

 

 

2,108

 

 

3,409

 

Gain on sales-type leases

35,166

 

 

 

 

35,166

 

Gain on sale of assets and other

272

 

 

121

 

 

151

 

 

(30,688

)

 

(63,845

)

 

33,157

 

Income before income taxes

233,137

 

 

186,413

 

 

46,724

 

State income tax expense

(41

)

 

(26

)

 

(15

)

Net income

233,096

 

 

186,387

 

 

46,709

 

Allocation of net income attributable to noncontrolling interests

(8,212

)

 

(7,540

)

 

(672

)

Net income attributable to Holly Energy Partners

$

224,884

 

 

$

178,847

 

 

$

46,037

 

Limited partners’ earnings per unit—basic and diluted(1)

$

2.13

 

 

$

1.70

 

 

$

0.43

 

Weighted average limited partners’ units outstanding

105,440

 

 

105,042

 

 

398

 

EBITDA(2)

$

392,936

 

 

$

347,156

 

 

$

45,780

 

Adjusted EBITDA (2)

$

359,308

 

 

$

347,156

 

 

$

12,152

 

Distributable cash flow(3)

$

271,431

 

 

$

265,087

 

 

$

6,344

 

 

 

 

 

 

 

Volumes (bpd)

 

 

 

 

 

Pipelines:

 

 

 

 

 

Affiliates – refined product pipelines

123,986

 

 

127,865

 

 

(3,879

)

Affiliates – intermediate pipelines

140,585

 

 

144,537

 

 

(3,952

)

Affiliates – crude pipelines

368,699

 

 

349,686

 

 

19,013

 

 

633,270

 

 

622,088

 

 

11,182

 

Third parties – refined product pipelines

71,545

 

 

71,784

 

 

(239

)

Third parties – crude pipelines

132,507

 

 

115,933

 

 

16,574

 

 

837,322

 

 

809,805

 

 

27,517

 

Terminals and loading racks:

 

 

 

 

 

Affiliates

422,119

 

 

413,525

 

 

8,594

 

Third parties

61,054

 

 

61,367

 

 

(313

)

 

483,173

 

 

474,892

 

 

8,281

 

 

 

 

 

 

 

Affiliates – refinery processing units

68,780

 

 

62,787

 

 

5,993

 

 

 

 

 

 

 

Total for pipelines, terminals and refinery processing unit assets (bpd)

1,389,275

 

 

1,347,484

 

 

41,791

 

(1) 

Prior to the equity restructuring transaction on October 31, 2017, net income attributable to Holly Energy Partners was 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 included incentive distributions that were declared subsequent to quarter end.  There were no distributions made on the general partner interest after October 31, 2017. No general partner distributions were declared for the three months ended December 31, 2018, and general partner distributions of $36.5 million were declared for the year ended December 31, 2018.

 
(2) 

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus (i) interest expense, net of interest income, (ii) state income tax and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA minus (i) gain on sales-type leases and (ii) pipeline lease payments not included in operating costs and expenses plus (iii) pipeline tariffs not included in revenues due to impacts from lease accounting.  Portions of our minimum guaranteed pipeline 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. These pipeline tariffs were previously recorded as revenues prior to the renewal of the throughput agreement, which triggered sales-type lease accounting.  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 recoded 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.

 

Set forth below is our calculation of EBITDA and Adjusted EBITDA.

 

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

(In thousands)

Net income attributable to Holly Energy Partners

 

$

45,667

 

 

$

47,533

 

 

$

224,884

 

 

$

178,847

 

Add (subtract):

 

 

 

 

 

 

 

 

Interest expense

 

19,764

 

 

18,650

 

 

76,823

 

 

71,899

 

Interest Income

 

(2,195

)

 

(526

)

 

(5,517

)

 

(2,108

)

State income tax (benefit) expense

 

4

 

 

(123

)

 

41

 

 

26

 

Depreciation and amortization

 

24,513

 

 

24,375

 

 

96,705

 

 

98,492

 

Predecessor depreciation and amortization

 

 

 

 

 

 

 

 

EBITDA

 

$

87,753

 

 

$

89,909

 

 

$

392,936

 

 

$

347,156

 

Gain on sales-type leases

 

 

 

 

 

(35,166

)

 

 

Pipeline tariffs not included in revenues

 

2,375

 

 

 

 

4,750

 

 

 

Pipeline lease payments not included in operating costs and expenses

 

(3,212

)

 

 

 

(3,212

)

 

 

Adjusted EBITDA

 

$

86,916

 

 

$

89,909

 

 

$

359,308

 

 

$

347,156

 

(3) 

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.     

Set forth below is our calculation of distributable cash flow.

 

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

(In thousands)

Net income attributable to Holly Energy Partners

 

$

45,667

 

 

$

47,533

 

 

$

224,884

 

 

$

178,847

 

Add (subtract):

 

 

 

 

 

 

 

 

Depreciation and amortization

 

24,513

 

 

24,375

 

 

96,705

 

 

98,492

 

Amortization of discount and deferred debt charges

 

773

 

 

764

 

 

3,080

 

 

3,041

 

Revenue recognized (greater) less than customer billings

 

394

 

 

(3,925

)

 

(2,433

)

 

(2,604

)

Maintenance capital expenditures (4)

 

(2,994

)

 

(3,678

)

 

(6,471

)

 

(8,182

)

Increase (decrease) in environmental liability

 

(277

)

 

131

 

 

(741

)

 

(237

)

Decrease in reimbursable deferred revenue

 

(2,432

)

 

(1,242

)

 

(8,036

)

 

(5,179

)

Gain on sales-type lease

 

 

 

 

 

(35,166

)

 

 

Other

 

(1,136

)

 

252

 

 

(391

)

 

909

 

Distributable cash flow

 

$

64,508

 

 

$

64,210

 

 

$

271,431

 

 

$

265,087

 

(4) 

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.

Set forth below is certain balance sheet data.

 

 

December 31,

 

 

2019

 

2018

 

 

(In thousands)

Balance Sheet Data

 

 

 

 

Cash and cash equivalents

 

$

13,287

 

 

$

3,045

 

Working capital

 

$

20,758

 

 

$

8,577

 

Total assets

 

$

2,199,232

 

 

$

2,102,540

 

Long-term debt

 

$

1,462,031

 

 

$

1,418,900

 

Partners' equity (5)

 

$

381,103

 

 

$

427,435

 

(5) 

As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to Holly Energy Partners because depreciation and amortization expense represents a non-cash charge against income.  The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to Holly Energy Partners.  Additionally, if the assets contributed and acquired from HollyFrontier while we were a consolidated variable interest entity of HollyFrontier had been acquired from third parties, our acquisition cost in excess of HollyFrontier’s basis in the transferred assets would have been recorded in our financial statements as increases to our properties and equipment and intangible assets at the time of acquisition instead of decreases to partners’ equity.

 

John Harrison, Senior Vice President, Chief Financial Officer and Treasurer
Craig Biery, Director, Investor Relations
Holly Energy Partners, L.P.
214-954-6511

Source: Holly Energy Partners, L.P.