Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 30, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-32225 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0833098 | |
Entity Address, Address Line One | 2828 N. Harwood, | |
Entity Address, Address Line Two | Suite 1300 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75201 | |
City Area Code | 214 | |
Local Phone Number | 871-3555 | |
Title of 12(b) Security | Common Limited Partner Units | |
Trading Symbol | HEP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 105,440,201 | |
Entity Registrant Name | HOLLY ENERGY PARTNERS LP | |
Entity Central Index Key | 0001283140 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents (Cushing Connect VIEs: $14,055 and $18,259, respectively) | $ 19,561 | $ 21,990 |
Accounts receivable: | ||
Trade | 14,749 | 14,543 |
Affiliates | 46,323 | 47,972 |
Total accounts receivable | 61,072 | 62,515 |
Prepaid and other current assets | 9,277 | 9,487 |
Total current assets | 89,910 | 93,992 |
Properties and equipment, net (Cushing Connect VIEs: $84,263 and $47,801, respectively) | 1,430,311 | 1,450,685 |
Operating lease right-of-use assets, net | 2,724 | 2,979 |
Net investment in leases | 211,550 | 166,316 |
Intangible assets, net | 80,311 | 87,315 |
Goodwill | 223,650 | 234,684 |
Equity method investments (Cushing Connect VIEs: $37,988 and $39,456, respectively) | 117,436 | 120,544 |
Other assets | 16,930 | 11,050 |
Total assets | 2,172,822 | 2,167,565 |
Accounts payable: | ||
Trade (Cushing Connect VIEs: $9,994 and $14,076, respectively) | 25,591 | 28,280 |
Affiliates | 14,964 | 18,120 |
Total accounts payable | 40,555 | 46,400 |
Accrued interest | 10,869 | 10,892 |
Deferred revenue | 10,569 | 11,368 |
Accrued property taxes | 5,057 | 3,992 |
Current operating lease liabilities | 795 | 875 |
Current finance lease liabilities | 3,755 | 3,713 |
Other current liabilities | 2,943 | 2,505 |
Total current liabilities | 74,543 | 79,745 |
Long-term debt | 1,362,570 | 1,405,603 |
Noncurrent operating lease liabilities | 2,303 | 2,476 |
Noncurrent finance lease liabilities | 66,434 | 68,047 |
Other long-term liabilities | 11,913 | 12,905 |
Deferred revenue | 32,645 | 40,581 |
Class B unit | 54,637 | 52,850 |
Partners’ equity: | ||
Common unitholders (105,440 units issued and outstanding at June 30, 2021 and December 31, 2020) | 425,218 | 379,292 |
Noncontrolling interests | 142,559 | 126,066 |
Total equity | 567,777 | 505,358 |
Total liabilities and equity | $ 2,172,822 | $ 2,167,565 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Cash and cash equivalents | $ 19,561 | $ 21,990 |
Properties and equipment, net | 1,430,311 | 1,450,685 |
Equity method investments | 117,436 | 120,544 |
Trade payable | $ 25,591 | $ 28,280 |
Common units outstanding (in shares) | 105,440,000 | 105,440,000 |
Common unit issued (in shares) | 105,440,000 | 105,440,000 |
Net investment in leases | $ 211,550 | $ 166,316 |
VIEs | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Cash and cash equivalents | 14,055 | 18,259 |
Properties and equipment, net | 84,263 | 47,801 |
Equity method investments | 37,988 | 39,456 |
Trade payable | $ 9,994 | $ 14,076 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenues: | ||||
Revenues: | $ 126,235 | $ 114,807 | $ 253,418 | $ 242,661 |
Operating costs and expenses: | ||||
Operations (exclusive of depreciation and amortization) | 42,068 | 34,737 | 83,433 | 69,718 |
Depreciation and amortization | 25,003 | 25,034 | 50,068 | 49,012 |
General and administrative | 2,847 | 2,535 | 5,815 | 5,237 |
Goodwill impairment | 0 | 0 | 11,034 | 0 |
Total operating costs and expenses | 69,918 | 62,306 | 150,350 | 123,967 |
Operating income | 56,317 | 52,501 | 103,068 | 118,694 |
Other income (expense): | ||||
Equity in earnings of equity method investments | 3,423 | 2,156 | 5,186 | 3,870 |
Interest expense | (13,938) | (13,779) | (27,178) | (31,546) |
Interest income | 6,614 | 2,813 | 13,162 | 5,031 |
Loss on early extinguishment of debt | 0 | 0 | 0 | (25,915) |
Gain on sales-type leases | 27 | 33,834 | 24,677 | 33,834 |
Gain on sale of assets and other | 5,415 | 468 | 5,917 | 974 |
Total other income (expense) | 1,541 | 25,492 | 21,764 | (13,752) |
Income before income taxes | 57,858 | 77,993 | 124,832 | 104,942 |
State income tax expense | (27) | (39) | (64) | (76) |
Net income | 57,831 | 77,954 | 124,768 | 104,866 |
Allocation of net income attributable to noncontrolling interests | (2,086) | (1,484) | (4,626) | (3,535) |
Net income attributable to the partners | $ 55,745 | $ 76,470 | $ 120,142 | $ 101,331 |
Limited partners’ per unit interest in earnings— basic (in USD per share) | $ 0.53 | $ 0.73 | $ 1.14 | $ 0.96 |
Limited partners’ per unit interest in earnings— diluted (in USD per share) | $ 0.53 | $ 0.73 | $ 1.14 | $ 0.96 |
Weighted average limited partners’ units outstanding, basic (in shares) | 105,440 | 105,440 | 105,440 | 105,440 |
Weighted average limited partners’ units outstanding, diluted (in shares) | 105,440 | 105,440 | 105,440 | 105,440 |
Affiliates | ||||
Revenues: | ||||
Revenues: | $ 99,142 | $ 95,563 | $ 201,068 | $ 196,991 |
Third parties | ||||
Revenues: | ||||
Revenues: | $ 27,093 | $ 19,244 | $ 52,350 | $ 45,670 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities | ||
Net income | $ 124,768 | $ 104,866 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 50,068 | 49,012 |
Gain on sale of assets | (5,586) | (797) |
Loss on early extinguishment of debt | 0 | 25,915 |
Gain on sales-type leases | (24,677) | (33,834) |
Goodwill impairment | 11,034 | 0 |
Amortization of deferred charges | 2,229 | 1,641 |
Equity-based compensation expense | 1,210 | 980 |
Equity in earnings of equity method investments, net of distributions | 0 | (1,298) |
(Increase) decrease in operating assets: | ||
Accounts receivable—trade | 1,726 | 3,803 |
Accounts receivable—affiliates | 1,649 | (131) |
Prepaid and other current assets | 825 | 216 |
Increase (decrease) in operating liabilities: | ||
Accounts payable—trade | 3,068 | (4,959) |
Accounts payable—affiliates | (3,157) | (9,452) |
Accrued interest | (23) | (2,523) |
Deferred revenue | (2,176) | (2,378) |
Accrued property taxes | 1,065 | 1,727 |
Other current liabilities | 438 | 669 |
Other, net | (353) | 1,137 |
Net cash provided by operating activities | 162,108 | 134,594 |
Cash flows from investing activities | ||
Additions to properties and equipment | (59,375) | (30,740) |
Investment in Cushing Connect JV Terminal | 0 | (2,400) |
Proceeds from sale of assets | 7,343 | 816 |
Distributions in excess of equity in earnings of equity investments | 3,107 | 470 |
Net cash used for investing activities | (48,925) | (31,854) |
Cash flows from financing activities | ||
Borrowings under credit agreement | 141,000 | 168,000 |
Repayments of credit agreement borrowings | (184,500) | (138,500) |
Redemption of senior notes | 0 | (522,500) |
Proceeds from issuance of debt | 0 | 500,000 |
Contributions from general partner | 0 | 435 |
Contributions from noncontrolling interests | 17,593 | 13,263 |
Distributions to HEP unitholders | (75,356) | (102,979) |
Distributions to noncontrolling interests | (5,872) | (4,000) |
Payments on finance leases | (1,747) | (1,972) |
Deferred financing costs | (6,661) | (8,714) |
Units withheld for tax withholding obligations | (69) | (147) |
Net cash used by financing activities | (115,612) | (97,114) |
Cash and cash equivalents | ||
Increase (decrease) for the period | (2,429) | 5,626 |
Beginning of period | 21,990 | 13,287 |
End of period | 19,561 | 18,913 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | $ 25,072 | $ 32,118 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Units | Noncontrolling Interests |
Balance, beginning of period at Dec. 31, 2019 | $ 487,758 | $ 381,103 | $ 106,655 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Contributions from noncontrolling interest | 7,304 | 7,304 | |
Distributions to HEP unitholders | (68,519) | (68,519) | |
Distributions to noncontrolling interests | (3,000) | (3,000) | |
Equity-based compensation | 506 | 506 | |
Class B unit accretion | (835) | (835) | |
Other | 208 | 208 | |
Net income | 26,912 | 25,696 | 1,216 |
Balance, end of period at Mar. 31, 2020 | 450,334 | 338,159 | 112,175 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Contributions from noncontrolling interest | 5,959 | 5,959 | |
Distributions to HEP unitholders | (34,460) | (34,460) | |
Distributions to noncontrolling interests | (1,000) | (1,000) | |
Equity-based compensation | 474 | 474 | |
Class B unit accretion | (835) | (835) | |
Other | 80 | 80 | |
Net income | 77,954 | 77,305 | 649 |
Balance, end of period at Jun. 30, 2020 | 498,506 | 380,723 | 117,783 |
Balance, beginning of period at Dec. 31, 2020 | 505,358 | 379,292 | 126,066 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Contributions from noncontrolling interest | 9,746 | 9,746 | |
Distributions to HEP unitholders | (38,328) | (38,328) | |
Distributions to noncontrolling interests | (3,819) | (3,819) | |
Equity-based compensation | 683 | 683 | |
Class B unit accretion | (893) | (893) | |
Other | (68) | (68) | |
Net income | 66,937 | 65,290 | 1,647 |
Balance, end of period at Mar. 31, 2021 | 539,616 | 405,976 | 133,640 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Contributions from noncontrolling interest | 9,780 | 9,780 | |
Distributions to HEP unitholders | (37,028) | (37,028) | |
Distributions to noncontrolling interests | (2,053) | (2,053) | |
Equity-based compensation | 527 | 527 | |
Class B unit accretion | (894) | (894) | |
Other | (2) | (2) | |
Net income | 57,831 | 56,639 | 1,192 |
Balance, end of period at Jun. 30, 2021 | $ 567,777 | $ 425,218 | $ 142,559 |
Description of Business and Pre
Description of Business and Presentation of Financial Statements | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
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. As of June 30, 2021, HollyFrontier Corporation (“HFC”) and its subsidiaries own a 57% limited partner interest and the non-economic general partner interest in HEP. 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. We own and operate petroleum product and crude oil pipelines, terminal, tankage and loading rack facilities and refinery processing units that support refining and marketing operations of HFC and other refineries in the Mid-Continent, Southwest and Northwest regions of the United States. Additionally, we own a 75% interest in UNEV Pipeline, LLC (“UNEV”), a 50% interest in Osage Pipe Line Company, LLC (“Osage”), a 50% interest in Cheyenne Pipeline LLC, and a 50% interest in Cushing Connect Pipeline & Terminal LLC. On June 1, 2020, HFC announced plans to permanently cease petroleum refining operations at its Cheyenne Refinery (the “Cheyenne Refinery”) and to convert certain assets at that refinery to renewable diesel production. HFC subsequently began winding down petroleum refining operations at the Cheyenne Refinery on August 3, 2020. On February 8, 2021, HEP and HFC finalized and executed new agreements for HEP’s Cheyenne assets with the following terms, in each case effective January 1, 2021: (1) a ten-year lease with two five-year renewal option periods for HFC’s use of certain HEP tank and rack assets in the Cheyenne Refinery to facilitate renewable diesel production with an annual lease payment of approximately $5 million, (2) a five-year contango service fee arrangement that will utilize HEP tank assets inside the Cheyenne Refinery where HFC will pay a base tariff to HEP for available crude oil storage and HFC and HEP will split any profits generated on crude oil contango opportunities and (3) a $10 million one-time cash payment from HFC to HEP for the termination of the existing minimum volume commitment. On April 1, 2021, we sold our 156-mile, 6-inch refined product pipeline that connected HFC’s Navajo Refinery to terminals in El Paso for gross proceeds of $7.0 million and recognized a gain on sale of $5.3 million. 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 15. 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, 2020. 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, 2021. Principles of Consolidation and Common Control Transactions The consolidated financial statements include our accounts 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. Goodwill and Long-Lived Assets Goodwill represents the excess of our cost of an acquired business over the fair value of the assets acquired, less liabilities assumed. Goodwill is not amortized. We test goodwill at the reporting unit level for impairment annually and between annual tests if events or changes in circumstances indicate the carrying amount may exceed fair value. Our goodwill impairment testing first entails a comparison of our reporting unit fair values relative to their respective carrying values, including goodwill. If carrying value exceeds the estimated fair value for a reporting unit, we measure goodwill impairment as the excess of the carrying amount of the reporting unit over the estimated fair value of the reporting unit. Indicators of goodwill and long-lived asset impairment The changes in our new agreements with HFC related to our Cheyenne assets resulted in an increase in the net book value of our Cheyenne reporting unit due to sales-type lease accounting, which led us to determine indicators of potential goodwill impairment for our Cheyenne reporting unit were present. The estimated fair value of our Cheyenne reporting unit was derived using a combination of income and market approaches. The income approach reflects expected future cash flows based on anticipated gross margins, operating costs, and capital expenditures. The market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs). See Note 5 for further discussion of Level 3 inputs. Our interim impairment testing of our Cheyenne reporting unit goodwill identified an impairment charge of $11.0 million, which was recorded in the three months ended March 31, 2021. We evaluate long-lived assets, including finite-lived intangible assets, for potential impairment by identifying whether indicators of impairment exist and, if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss, if any, to be recorded is equal to the amount by which a long-lived asset’s carrying value exceeds its fair value. Revenue Recognition Revenues are generally recognized as products are shipped through our pipelines and terminals, feedstocks are processed through our refinery processing units or other services are rendered. The majority of our contracts with customers meet the definition of a lease since (1) performance of the contracts is dependent on specified property, plant, or equipment and (2) it is unlikely that one or more parties other than the customer will take more than a minor amount of the output associated with the specified property, plant, or equipment. Prior to the adoption of the new lease standard (see below), we bifurcated the consideration received between lease and service revenue. The new lease standard allows the election of a practical expedient whereby a lessor does not have to separate non-lease (service) components from lease components under certain conditions. The majority of our contracts meet these conditions, and we have made this election for those contracts. Under this practical expedient, we treat the combined components as a single performance obligation in accordance with Accounting Standards Codification (“ASC”) 606, which largely codified ASU 2014-09, if the non-lease (service) component is the dominant component. If the lease component is the dominant component, we treat the combined components as a lease in accordance with ASC 842, which largely codified ASU 2016-02. Several of our contracts include incentive or reduced tariffs once a certain quarterly volume is met. Revenue from the variable element of these transactions is recognized based on the actual volumes shipped as it relates specifically to rendering the services during the applicable quarter. The majority of our long-term transportation contracts specify minimum volume requirements, whereby, we bill a customer for a minimum level of shipments in the event a customer ships below their contractual requirements. If there are no future performance obligations, we will recognize these deficiency payments in revenue. In certain of these throughput agreements, a customer may later utilize such shortfall billings as credit towards future volume shipments in excess of its minimum levels within its respective contractual shortfall make-up period. Such amounts represent an obligation to perform future services, which may be initially deferred and later recognized as revenue based on estimated future shipping levels, including the likelihood of a customer’s ability to utilize such amounts prior to the end of the contractual shortfall make-up period. We recognize these deficiency payments in revenue when we do not expect we will be required to satisfy these performance obligations in the future based on the pattern of rights projected to be exercised by the customer. During the six months ended June 30, 2021 and 2020, we recognized $6.9 million and $12.6 million, respectively, of these deficiency payments in revenue, of which $0.5 million and $0.7 million, respectively, related to deficiency payments billed in prior periods. We have other cost reimbursement provisions in our throughput / storage agreements providing that customers (including HFC) reimburse us for certain costs. Such reimbursements are recorded as revenue or deferred revenue depending on the nature of the cost. Deferred revenue is recognized over the remaining contractual term of the related throughput agreement. Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined below. Lessee Accounting - At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. Lessor Accounting - Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. Accounting Pronouncements Adopted During the Periods Presented Credit Losses Measurement In June 2016, ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” was issued requiring measurement of all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. We adopted this standard effective January 1, 2020, and adoption of the standard did not have a material impact on our financial condition, results of operations or cash flows. |
Investment in Joint Venture
Investment in Joint Venture | 6 Months Ended |
Jun. 30, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Joint Venture | Investment in Joint Venture On October 2, 2019, HEP Cushing LLC (“HEP Cushing”), a wholly-owned subsidiary of HEP, and Plains Marketing, L.P. (“PMLP”), a wholly-owned subsidiary of Plains All American Pipeline, L.P. (“Plains”), formed a 50/50 joint venture, Cushing Connect Pipeline & Terminal LLC (the “Cushing Connect Joint Venture”), for (i) the development and construction of a new 160,000 barrel per day common carrier crude oil pipeline (the “Cushing Connect Pipeline”) that will connect the Cushing, Oklahoma crude oil hub to the Tulsa, Oklahoma refining complex owned by a subsidiary of HFC and (ii) the ownership and operation of 1.5 million barrels of crude oil storage in Cushing, Oklahoma (the “Cushing Connect JV Terminal”). The Cushing Connect JV Terminal went in service during the second quarter of 2020, and the Cushing Connect Pipeline is expected to be placed in service during the third quarter of 2021. Long-term commercial agreements have been entered into to support the Cushing Connect Joint Venture assets. The Cushing Connect Joint Venture contracted with an affiliate of HEP to manage the construction and operation of the Cushing Connect Pipeline and with an affiliate of Plains to manage the operation of the Cushing Connect JV Terminal. The total Cushing Connect Joint Venture investment will generally be shared equally among the partners. However, we are solely responsible for any Cushing Connect Pipeline construction costs that exceed the budget by more than 10%. HEP estimates its share of the cost of the Cushing Connect JV Terminal contributed by Plains and Cushing Connect Pipeline construction costs will be approximately $70 million to $75 million. The Cushing Connect Joint Venture legal entities are variable interest entities ("VIEs") as defined under GAAP. A VIE is a legal entity if it has any one of the following characteristics: (i) the entity does not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support; (ii) the at risk equity holders, as a group, lack the characteristics of a controlling financial interest; or (iii) the entity is structured with non-substantive voting rights. The Cushing Connect Joint Venture legal entities do not have sufficient equity at risk to finance their activities without additional financial support. Since HEP is constructing and will operate the Cushing Connect Pipeline, HEP has more ability to direct the activities that most significantly impact the financial performance of the Cushing Connect Joint Venture and Cushing Connect Pipeline legal entities. Therefore, HEP consolidates those legal entities. We do not have the ability to direct the activities that most significantly impact the Cushing Connect JV Terminal legal entity, and therefore, we account for our interest in the Cushing Connect JV Terminal legal entity using the equity method of accounting. With the exception of the assets of HEP Cushing, creditors of the Cushing Connect Joint Venture legal entities have no recourse to our assets. Any recourse to HEP Cushing would be limited to the extent of HEP Cushing's assets, which other than its investment in Cushing Connect Joint Venture, are not significant. Furthermore, our creditors have no recourse to the assets of the Cushing Connect Joint Venture legal entities. |
Revenues
Revenues | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Revenues are generally recognized as products are shipped through our pipelines and terminals, feedstocks are processed through our refinery processing units or other services are rendered. See Note 1 for further discussion of revenue recognition. Disaggregated revenues were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) (In thousands) Pipelines $ 68,322 $ 58,954 $ 134,827 $ 129,426 Terminals, tanks and loading racks 36,887 36,280 75,069 73,778 Refinery processing units 21,026 19,573 43,522 39,457 $ 126,235 $ 114,807 $ 253,418 $ 242,661 R evenues on our consolidated statem ents of income were composed of the following lease and service revenues: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) (In thousands) Lease revenues $ 86,867 $ 86,346 $ 174,803 $ 179,493 Service revenues 39,368 28,461 78,615 63,168 $ 126,235 $ 114,807 $ 253,418 $ 242,661 A contract liability exists when an entity is obligated to perform future services for a customer for which the entity has received consideration. Since HEP may be required to perform future services for these deficiency payments received, the deferred revenues on our balance sheets were considered contract liabilities. A contract asset exists when an entity has a right to consideration in exchange for goods or services transferred to a customer. Our consolidated balance sheets included the contract assets and liabilities in the table below: June 30, December 31, (In thousands) Contract assets $ 6,545 $ 6,306 Contract liabilities $ (400) $ (500) The contract assets and liabilities include both lease and service components. During the six months ended June 30, 2021, we recognized $0.5 million of revenue that was previously included in contract liability as of December 31, 2020. During the six months ended June 30, 2021, we also recognized $0.2 million of revenue included in contract assets. As of June 30, 2021, we expect to recognize $1.8 billion in revenue related to our unfulfilled performance obligations under the terms of our long-term throughput agreements and leases expiring in 2022 through 2036. These agreements generally provide for changes in the minimum revenue guarantees annually for increases or decreases in the Producer Price Index (“PPI”) or Federal Energy Regulatory Commission (“FERC”) index, with certain contracts having provisions that limit the level of the rate increases or decreases. We expect to recognize revenue for these unfulfilled performance obligations as shown in the table below (amounts shown in table include both service and lease revenues): Years Ending December 31, (In millions) Remainder of 2021 $ 168 2022 311 2023 275 2024 237 2025 171 2026 157 Thereafter 484 Total $ 1,803 Payment terms under our contracts with customers are consistent with industry norms and are typically payable within 10 to 30 days of the date of invoice. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. See Note 1 for further discussion of lease accounting. Lessee Accounting As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Our leases have remaining terms of less than 1 year to 24 years, some of which include options to extend the leases for up to 10 years. Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.0 million and $6.4 million as of June 30, 2021 and December 31, 2020, respectively, with accumulated depreciation of $3.3 million and $3.4 million as of June 30, 2021 and December 31, 2020, respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): June 30, December 31, 2020 Operating leases: Operating lease right-of-use assets, net $ 2,724 $ 2,979 Current operating lease liabilities 795 875 Noncurrent operating lease liabilities 2,303 2,476 Total operating lease liabilities $ 3,098 $ 3,351 Finance leases: Properties and equipment $ 6,019 $ 6,410 Accumulated amortization (3,255) (3,390) Properties and equipment, net $ 2,764 $ 3,020 Current finance lease liabilities $ 3,755 $ 3,713 Noncurrent finance lease liabilities 66,434 68,047 Total finance lease liabilities $ 70,189 $ 71,760 Weighted average remaining lease term (in years) Operating leases 5.8 5.9 Finance leases 15.5 15.9 Weighted average discount rate Operating leases 4.7% 4.8% Finance leases 5.6% 5.6% Supplemental cash flow and other information related to leases were as follows: Six Months Ended 2021 2020 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 576 $ 518 Operating cash flows on finance leases $ 2,105 $ 2,157 Financing cash flows on finance leases $ 1,747 $ 1,972 Maturities of lease liabilities were as follows: June 30, 2021 Operating Finance (In thousands) 2021 $ 507 $ 3,662 2022 690 7,332 2023 603 7,375 2024 497 6,918 2025 429 6,456 2026 and thereafter 787 73,888 Total lease payments 3,513 105,631 Less: Imputed interest (415) (35,442) Total lease obligations 3,098 70,189 Less: Current lease liabilities (795) (3,755) Noncurrent lease liabilities $ 2,303 $ 66,434 The components of lease expense were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Operating lease costs $ 249 $ 230 $ 547 $ 503 Finance lease costs Amortization of assets 200 273 412 515 Interest on lease liabilities 994 1,040 2,001 2,077 Variable lease cost 67 46 133 95 Total net lease cost $ 1,510 $ 1,589 $ 3,093 $ 3,190 Lessor Accounting As discussed in Note 1, the majority of our contracts with customers meet the definition of a lease. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. During the six months ended June 30, 2021, we entered into new agreements and modified other agreements with HFC related to our Cheyenne assets, Tulsa West lube racks, various crude tanks, and new Navajo tanks. These agreements met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease terms to anyone other than HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at contract inception, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the six months ended June 30, 2021 composed of the following: Six Months Ended June 30, 2021 (In thousands) Net investment in leases $ 47,795 Properties and equipment, net (29,677) Deferred revenue 6,559 Gain on sales-type leases $ 24,677 During the six months ended June 30, 2020, one of our throughput agreements with Delek was partially renewed. A component of this agreement met the criteria of sales-type leases since the underlying asset is not expected to have an alternative use at the end of the lease term to anyone other than Delek. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at the commencement date of the lease, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the six months ended June 30, 2020 composed of the following: Six Months Ended June 30, 2020 (In thousands) Net investment in lease $ 35,319 Properties and equipment, net (1,485) Gain on sales-type lease $ 33,834 These sales-type lease transactions, including the related gain, were non-cash transactions. Lease income recognized was as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Operating lease revenues $ 84,426 $ 84,872 $ 170,698 $ 175,671 Direct financing lease interest income 523 524 1,047 1,048 Gain on sales-type leases 27 33,834 24,677 33,834 Sales-type lease interest income 6,091 2,286 12,115 3,940 Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable 2,441 1,474 4,105 3,822 For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. 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. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. Annual minimum undiscounted lease payments under our leases were as follows as of June 30, 2021: Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2021 $ 141,624 $ 1,088 $ 14,481 2022 283,151 2,171 28,962 2023 252,705 2,175 25,056 2024 216,601 2,192 21,827 2025 153,746 2,209 18,399 2026 and thereafter 558,415 38,837 144,721 Total lease receipt payments $ 1,606,242 $ 48,672 $ 253,446 Less: Imputed interest (32,255) (198,123) 16,417 55,323 Unguaranteed residual assets at end of leases — 144,036 Net investment in leases $ 16,417 $ 199,359 Net investments in leases recorded on our balance sheet were composed of the following: June 30, 2021 December 31, 2020 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 126,147 $ 16,417 $ 88,922 $ 16,452 Unguaranteed residual assets 73,212 — 64,551 — Net investment in leases $ 199,359 $ 16,417 $ 153,473 $ 16,452 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. See Note 1 for further discussion of lease accounting. Lessee Accounting As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Our leases have remaining terms of less than 1 year to 24 years, some of which include options to extend the leases for up to 10 years. Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.0 million and $6.4 million as of June 30, 2021 and December 31, 2020, respectively, with accumulated depreciation of $3.3 million and $3.4 million as of June 30, 2021 and December 31, 2020, respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): June 30, December 31, 2020 Operating leases: Operating lease right-of-use assets, net $ 2,724 $ 2,979 Current operating lease liabilities 795 875 Noncurrent operating lease liabilities 2,303 2,476 Total operating lease liabilities $ 3,098 $ 3,351 Finance leases: Properties and equipment $ 6,019 $ 6,410 Accumulated amortization (3,255) (3,390) Properties and equipment, net $ 2,764 $ 3,020 Current finance lease liabilities $ 3,755 $ 3,713 Noncurrent finance lease liabilities 66,434 68,047 Total finance lease liabilities $ 70,189 $ 71,760 Weighted average remaining lease term (in years) Operating leases 5.8 5.9 Finance leases 15.5 15.9 Weighted average discount rate Operating leases 4.7% 4.8% Finance leases 5.6% 5.6% Supplemental cash flow and other information related to leases were as follows: Six Months Ended 2021 2020 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 576 $ 518 Operating cash flows on finance leases $ 2,105 $ 2,157 Financing cash flows on finance leases $ 1,747 $ 1,972 Maturities of lease liabilities were as follows: June 30, 2021 Operating Finance (In thousands) 2021 $ 507 $ 3,662 2022 690 7,332 2023 603 7,375 2024 497 6,918 2025 429 6,456 2026 and thereafter 787 73,888 Total lease payments 3,513 105,631 Less: Imputed interest (415) (35,442) Total lease obligations 3,098 70,189 Less: Current lease liabilities (795) (3,755) Noncurrent lease liabilities $ 2,303 $ 66,434 The components of lease expense were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Operating lease costs $ 249 $ 230 $ 547 $ 503 Finance lease costs Amortization of assets 200 273 412 515 Interest on lease liabilities 994 1,040 2,001 2,077 Variable lease cost 67 46 133 95 Total net lease cost $ 1,510 $ 1,589 $ 3,093 $ 3,190 Lessor Accounting As discussed in Note 1, the majority of our contracts with customers meet the definition of a lease. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. During the six months ended June 30, 2021, we entered into new agreements and modified other agreements with HFC related to our Cheyenne assets, Tulsa West lube racks, various crude tanks, and new Navajo tanks. These agreements met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease terms to anyone other than HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at contract inception, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the six months ended June 30, 2021 composed of the following: Six Months Ended June 30, 2021 (In thousands) Net investment in leases $ 47,795 Properties and equipment, net (29,677) Deferred revenue 6,559 Gain on sales-type leases $ 24,677 During the six months ended June 30, 2020, one of our throughput agreements with Delek was partially renewed. A component of this agreement met the criteria of sales-type leases since the underlying asset is not expected to have an alternative use at the end of the lease term to anyone other than Delek. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at the commencement date of the lease, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the six months ended June 30, 2020 composed of the following: Six Months Ended June 30, 2020 (In thousands) Net investment in lease $ 35,319 Properties and equipment, net (1,485) Gain on sales-type lease $ 33,834 These sales-type lease transactions, including the related gain, were non-cash transactions. Lease income recognized was as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Operating lease revenues $ 84,426 $ 84,872 $ 170,698 $ 175,671 Direct financing lease interest income 523 524 1,047 1,048 Gain on sales-type leases 27 33,834 24,677 33,834 Sales-type lease interest income 6,091 2,286 12,115 3,940 Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable 2,441 1,474 4,105 3,822 For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. 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. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. Annual minimum undiscounted lease payments under our leases were as follows as of June 30, 2021: Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2021 $ 141,624 $ 1,088 $ 14,481 2022 283,151 2,171 28,962 2023 252,705 2,175 25,056 2024 216,601 2,192 21,827 2025 153,746 2,209 18,399 2026 and thereafter 558,415 38,837 144,721 Total lease receipt payments $ 1,606,242 $ 48,672 $ 253,446 Less: Imputed interest (32,255) (198,123) 16,417 55,323 Unguaranteed residual assets at end of leases — 144,036 Net investment in leases $ 16,417 $ 199,359 Net investments in leases recorded on our balance sheet were composed of the following: June 30, 2021 December 31, 2020 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 126,147 $ 16,417 $ 88,922 $ 16,452 Unguaranteed residual assets 73,212 — 64,551 — Net investment in leases $ 199,359 $ 16,417 $ 153,473 $ 16,452 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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. Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and debt. 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. The carrying amounts and estimated fair values of our senior notes were as follows: June 30, 2021 December 31, 2020 Financial Instrument Fair Value Input Level Carrying Fair Value Carrying Fair Value (In thousands) Liabilities: 5% Senior Notes Level 2 492,570 512,245 492,103 506,540 Level 2 Financial Instruments Our senior notes 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. See Note 9 for additional information. Non-Recurring Fair Value Measurements For gains on sales-type leases recognized during the six months ended June 30, 2021, the estimated fair value of the underlying leased assets at contract inception and the present value of the estimated unguaranteed residual asset at the end of the lease term are used in determining the net investment in leases and related gain on sales-type leases recorded. The asset valuation estimates include Level 3 inputs based on a replacement cost valuation method. During the six months ended June 30, 2021, we recognized goodwill impairment based on fair value measurements utilized during our goodwill testing (see Note 1). The fair value measurements were based on a combination of valuation methods including discounted cash flows, the guideline public company and guideline transaction methods and obsolescence adjusted replacement costs, all of which are Level 3 inputs. |
Properties and Equipment
Properties and Equipment | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Properties and Equipment | Properties and Equipment The carrying amounts of our properties and equipment were as follows: June 30, December 31, (In thousands) Pipelines, terminals and tankage 1 $ 1,538,892 $ 1,575,815 Refinery assets 348,882 348,882 Land and right of way 86,781 87,076 Construction in progress 99,420 58,467 Other 1 44,819 46,201 2,118,794 2,116,441 Less accumulated depreciation (688,483) (665,756) $ 1,430,311 $ 1,450,685 (1) Prior period balances have been reclassified to be comparative to current period. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible AssetsIntangible assets include transportation agreements and customer relationships that represent a portion of the total purchase price of certain assets acquired from Delek in 2005, from HFC in 2008 prior to HEP becoming a consolidated VIE of HFC, from Plains in 2017, and from other minor acquisitions in 2018. The carrying amounts of our intangible assets were as follows: Useful Life June 30, December 31, (In thousands) Delek transportation agreement 30 years $ 59,933 $ 59,933 HFC transportation agreement 10-15 years 75,131 75,131 Customer relationships 10 years 69,683 69,683 Other 20 years 50 50 204,797 204,797 Less accumulated amortization (124,486) (117,482) $ 80,311 $ 87,315 Amortization expense was $7.0 million for both the six months ended June 30, 2021 and 2020. We estimate amortization expense to be $14.0 million for 2022, $9.9 million in 2023, and $9.1 million for 2024 through 2026. 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 variable interest entity 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 Incen
Employees, Retirement and Incentive Plans | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
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 (the “Omnibus Agreement”). These employees participate in the retirement and benefit plans of HFC. Our share of retirement and benefit plan costs was $1.9 million and $1.6 million for the three months ended June 30, 2021 and 2020, respectively, and $4.1 million and $3.7 million for the six months ended June 30, 2021 and 2020. 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 June 30, 2021, we had two types of incentive-based awards outstanding, which are described below. The compensation cost charged against income was $0.5 million for both the three months ended June 30, 2021 and 2020, and $1.2 million and $1.0 million for the six months ended June 30, 2021 and 2020, 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 June 30, 2021, 2,500,000 units were authorized to be granted under our Long-Term Incentive Plan, of which 856,171 were available to be granted, assuming no forfeitures of the unvested units and full achievement of goals for the unvested performance units. Phantom Units Under our Long-Term Incentive Plan, we grant phantom units to our non-employee directors and selected employees who perform services for us, with most awards vesting over a period of one The fair value of each phantom 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 phantom unit activity and changes during the six months ended June 30, 2021, is presented below: Phantom Units Units Weighted Average Grant-Date Fair Value Outstanding at January 1, 2021 (nonvested) 295,992 $ 14.48 Vesting and transfer of full ownership to recipients (189) 11.92 Forfeited (3,483) 14.69 Outstanding at June 30, 2021 (nonvested) 292,320 14.48 The grant date fair values of phantom units that were vested and transferred to recipients during the six months ended June 30, 2021 and 2020 were $2 thousand and $0.1 million, respectively. As of June 30, 2021, $2.0 million of total unrecognized compensation expense related to unvested phantom unit grants is expected to be recognized over a weighted-average period of 1.3 years. Performance Units Under our Long-Term Incentive Plan, we grant performance units to selected officers who perform services for us. Performance units granted are payable in common units at the end of a three-year performance period based upon meeting certain criteria over the performance period. Under the terms of our performance unit grants, some awards are subject to the growth in our distributable cash flow per common unit over the performance period while other awards are subject to "financial performance" and "market performance." Financial performance is based on meeting certain earnings before interest, taxes, depreciation and amortization ("EBITDA") targets, while market performance is based on the relative standing of total unitholder return achieved by HEP compared to peer group companies. The number of units ultimately issued under these awards can range from 0% to 200%. We did not grant any performance units during the six months ended June 30, 2021. Although common units are not transferred to the recipients until the performance units vest, the recipients have distribution rights with respect to the target number of performance units subject to the award from the date of grant at the same rate as distributions paid on our common units. A summary of performance unit activity and changes for the six months ended June 30, 2021, is presented below: Performance Units Units Outstanding at January 1, 2021 (nonvested) 77,472 Vesting and transfer of common units to recipients (10,881) Outstanding at June 30, 2021 (nonvested) 66,591 The grant date fair value of performance units vested and transferred to recipients during both of the six months ended June 30, 2021 and 2020 was $0.4 million. Based on the weighted-average fair value of performance units outstanding at June 30, 2021, of $1.2 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 1.7 years. During the six months ended June 30, 2021, we did not purchase any of our common units in the open market for the issuance and settlement of unit awards under our Long-Term Incentive Plan. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt Instruments [Abstract] | |
Debt | Debt Credit Agreement In April 2021, we amended our senior secured revolving credit facility (the “Credit Agreement”) decreasing the size of the facility from $1.4 billion to $1.2 billion and extending the maturity date to July 27, 2025. The Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, 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 continues to provide for an accordion feature that allows us to increase commitments under the Credit Agreement up to a maximum amount of $1.7 billion. 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 maturity 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 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 under the Credit Agreement as of June 30, 2021. Senior Notes On February 4, 2020, we closed a private placement of $500 million in aggregate principal amount of 5% senior unsecured notes due in 2028 (the "5% Senior Notes"). On February 5, 2020, we redeemed the existing $500 million 6% Senior Notes at a redemption cost of $522.5 million, at which time we recognized a $25.9 million early extinguishment loss consisting of a $22.5 million debt redemption premium and unamortized financing costs of $3.4 million. We funded the $522.5 million redemption with net proceeds from the issuance of our 5% Senior Notes and borrowings under our Credit Agreement. The 5% 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 5% Senior Notes as of June 30, 2021. At any time when the 5% Senior Notes are rated investment grade by either Moody’s or 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 5% Senior Notes. Indebtedness under the 5% Senior Notes is guaranteed by all of our existing wholly-owned subsidiaries (other than Holly Energy Finance Corp. and certain immaterial subsidiaries). Long-term Debt The carrying amounts of our long-term debt were as follows: June 30, December 31, (In thousands) Credit Agreement Amount outstanding $ 870,000 913,500 5% Senior Notes Principal 500,000 500,000 Unamortized premium and debt issuance costs (7,430) (7,897) 492,570 492,103 Total long-term debt $ 1,362,570 $ 1,405,603 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
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 2022 to 2036, and revenues from HFC accounted for 79% of our total revenues for both the three and six months ended June 30, 2021. 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 generally based on increases or decreases in PPI or the FERC index. As of June 30, 2021, these agreements with HFC require minimum annualized payments to us of $340 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 the Omnibus Agreement, we pay HFC an annual administrative fee (currently $2.6 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 were as follows: • Revenues received from HFC were $99.1 million and $95.6 million for the three months ended June 30, 2021 and 2020, respectively, and $201.1 million and $197.0 million for the six months ended June 30, 2021 and 2020, respectively. • HFC charged us general and administrative services under the Omnibus Agreement of $0.7 million for both the three months ended June 30, 2021 and 2020, and $1.3 million for both the six months ended June 30, 2021 and 2020. • We reimbursed HFC for costs of employees supporting our operations of $14.3 million and $13.2 million for the three months ended June 30, 2021 and 2020, respectively, and $28.7 million and $27.3 million for the six months ended June 30, 2021 and 2020, respectively. • HFC reimbursed us $1.2 million and $0.9 million for the three months ended June 30, 2021 and 2020, respectively, and $4.3 million and $4.0 million for the six months ended June 30, 2021 and 2020, respectively, for expense and capital projects. • We distributed $20.9 million and $18.4 million in the three months ended June 30, 2021 and 2020, respectively, and $41.7 million and $56.0 million in the six months ended June 30, 2021 and 2020, respectively, to HFC as regular distributions on its common units. • Accounts receivable from HFC were $46.3 million and $48.0 million at June 30, 2021, and December 31, 2020, respectively. • Accounts payable to HFC were $15.0 million and $18.1 million at June 30, 2021, and December 31, 2020, respectively. • Deferred revenue in the consolidated balance sheets included $0.4 million for both June 30, 2021 and December 31, 2020, relating to certain shortfall billings to HFC. • We received direct financing lease payments from HFC for use of our Artesia and Tulsa rail yards of $0.5 million for both of the three months ended June 30, 2021 and 2020, respectively, and $1.0 million for both the six months ended June 30, 2021 and 2020. • We recorded a gain on sales-type leases with HFC of $24.7 million for the six months ended June 30, 2021, and we received sales-type lease payments of $6.3 million and $2.4 million from HFC that were not recorded in revenues for the three months ended June 30, 2021 and 2020, respectively, and $12.5 million and $4.8 million for the six months ended June 30, 2021 and 2020, respectively. • HEP and HFC reached an agreement to terminate the existing minimum volume commitments for HEP’s Cheyenne assets and enter into new agreements, which were finalized and executed on February 8, 2021, with the following terms, in each case effective January 1, 2021: (1) a ten-year lease with two five-year renewal option periods for HFC’s use of certain HEP tank and rack assets in the Cheyenne Refinery to facilitate renewable diesel production with an annual lease payment of approximately $5 million, (2) a five-year contango service fee arrangement that will utilize HEP tank assets inside the Cheyenne Refinery where HFC will pay a base tariff to HEP for available crude oil storage and HFC and HEP will split any profits generated on crude oil contango opportunities and (3) a $10 million one-time cash payment from HFC to HEP for the termination of the existing minimum volume commitment. On August 2, 2021, in connection with the Sinclair Transactions (described in Note 17 below), HEP and HFC entered into a Letter Agreement (“Letter Agreement”) pursuant to which, among other things, HEP and HFC agreed, upon the consummation of the Sinclair Transactions, to enter into amendments to certain of the agreements by and among HEP and HFC, including the master throughput agreement, to include within the scope of such agreements the assets to be acquired by HEP pursuant to the Contribution Agreement (described in Note 17 below). In addition, the Letter Agreement provides that if, as a condition to obtaining antitrust clearance for the Sinclair Transactions, HFC enters into a definitive agreement to divest its refinery in Davis County, Utah (the “Woods Cross Refinery”), then HEP would sell certain assets located at, or relating to, the Woods Cross Refinery to HFC in exchange for cash consideration equal to $232.5 million plus the certain accounts receivable of HEP in respect of such assets, with such sale to be effective immediately prior to the closing of the sale of the Woods Cross Refinery by HFC. The Letter Agreement also provides that HEP’s right to future revenues from HFC in respect of such Woods Cross Refinery assets will terminate at the closing of such sale. |
Partners' Equity, Income Alloca
Partners' Equity, Income Allocations and Cash Distributions | 6 Months Ended |
Jun. 30, 2021 | |
Partners' Capital [Abstract] | |
Partners' Equity, Income Allocations and Cash Distributions | Partners’ Equity, Income Allocations and Cash Distributions As of June 30, 2021, HFC held 59,630,030 of our common units, constituting a 57% limited partner interest in us, and held the non-economic general partner interest. 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. As of June 30, 2021, HEP has issued 2,413,153 units under this program, providing $82.3 million in gross proceeds. Allocations of Net Income Net income attributable to HEP is allocated to the partners based on their weighted-average ownership percentage during the period. Cash Distributions On July 22, 2021, we announced our cash distribution for the second quarter of 2021 of $0.35 per unit. The distribution is payable on all common units and will be paid August 13, 2021, to all unitholders of record on August 2, 2021. Our regular quarterly cash distribution to the limited partners will be $37.0 million for the three months ended June 30, 2021 and was $34.5 million for the three months ended June 30, 2020. For the six months ended June 30, 2021, the regular quarterly distribution to the limited partners will be $74.1 million and was $68.9 million for the six months ended June 30, 2020. Our distributions are declared subsequent to quarter end; therefore, these amounts do not reflect distributions paid during the respective period. |
Net Income Per Limited Partner
Net Income Per Limited Partner Unit | 6 Months Ended |
Jun. 30, 2021 | |
Net Income per Limited Partner Unit [Abstract] | |
Net Income Per Limited Partner Unit | Net Income Per Limited Partner Unit Basic net income per unit applicable to the limited partners is calculated as net income attributable to the partners divided by the weighted average limited partners’ units outstanding. Diluted net income per unit assumes, when dilutive, the issuance of the net incremental units from phantom units and performance units. 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. Our dilutive securities are immaterial for all periods presented. Net income per limited partner unit is computed as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands, except per unit data) Net income attributable to the partners $ 55,745 $ 76,470 $ 120,142 $ 101,331 Less: Participating securities’ share in earnings (190) — (411) — Net income attributable to common units 55,555 76,470 119,731 101,331 Weighted average limited partners' units outstanding 105,440 105,440 105,440 105,440 Limited partners' per unit interest in earnings - basic and diluted $ 0.53 $ 0.73 $ 1.14 $ 0.96 |
Environmental
Environmental | 6 Months Ended |
Jun. 30, 2021 | |
Accrual for Environmental Loss Contingencies [Abstract] | |
Environmental | Environmental We expensed $0.5 million for the three and six months ended June 30, 2021 for environmental remediation obligations, and we expensed $0.5 million and $0.7 million for the three and six months ended June 30, 2020, respectively. The accrued environmental liability, net of expected recoveries from indemnifying parties, reflected in our consolidated balance sheets was $4.3 million and $4.5 million at June 30, 2021 and December 31, 2020, respectively, of which $2.2 million and $2.5 million, was classified as other long-term liabilities at June 30, 2021 and December 31, 2020. 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. Our consolidated balance sheets included additional accrued environmental liabilities of $0.4 million and $0.5 million for HFC indemnified liabilities as of June 30, 2021 and December 31, 2020, respectively, and other assets included equal and offsetting balances representing amounts due from HFC related to indemnifications for environmental remediation liabilities. |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | ContingenciesWe 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. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Although financial information is reviewed by our chief operating decision makers from a variety of perspectives, they view the business in two reportable operating segments: pipelines and terminals, and refinery processing units. These operating segments adhere to the accounting polices used for our consolidated financial statements. Pipelines and terminals have been aggregated as one reportable segment 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 reportable 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 segment. Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Revenues: Pipelines and terminals - affiliate $ 78,116 $ 75,990 $ 157,546 $ 157,534 Pipelines and terminals - third-party 27,093 19,244 52,350 45,670 Refinery processing units - affiliate 21,026 19,573 43,522 39,457 Total segment revenues $ 126,235 $ 114,807 $ 253,418 $ 242,661 Segment operating income: Pipelines and terminals (1) $ 49,391 $ 45,630 $ 90,875 $ 104,533 Refinery processing units 9,773 9,406 18,008 19,398 Total segment operating income 59,164 55,036 108,883 123,931 Unallocated general and administrative expenses (2,847) (2,535) (5,815) (5,237) Interest and financing costs, net (7,324) (10,966) (14,016) (26,515) Loss on early extinguishment of debt — — — (25,915) Equity in earnings of equity method investments 3,423 2,156 5,186 3,870 Gain on sales-type leases 27 33,834 24,677 33,834 Gain (loss) on sale of assets and other 5,415 468 5,917 974 Income before income taxes $ 57,858 $ 77,993 $ 124,832 $ 104,942 Capital Expenditures: Pipelines and terminals $ 25,559 $ 11,798 $ 58,777 $ 30,416 Refinery processing units 598 — 598 324 Total capital expenditures $ 26,157 $ 11,798 $ 59,375 $ 30,740 June 30, 2021 December 31, 2020 (In thousands) Identifiable assets: Pipelines and terminals (2) $ 1,743,374 $ 1,729,547 Refinery processing units 295,098 305,090 Other 134,350 132,928 Total identifiable assets $ 2,172,822 $ 2,167,565 (1) Pipelines and terminals segment operating income includes goodwill impairment charg e of $11.0 million for the six months ended June 30, 2021. (2) Includes goodwill of $223.7 million as of June 30, 2021 and $234.7 million as of December 31, 2020. |
Supplemental Guarantor _ Non-Gu
Supplemental Guarantor / Non-Guarantor Financial Information | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Guarantor / Non-Guarantor Financial Information [Abstract] | |
Supplemental Guarantor / Non-Guarantor Financial Information | Supplemental Guarantor/Non-Guarantor Financial Information Obligations of HEP (“Parent”) under the 5% Senior Notes have been jointly and severally guaranteed by each of its direct and indirect 100% owned subsidiaries, other than Holly Energy Finance Corp. and certain immaterial 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 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. Condensed Consolidating Balance Sheet June 30, 2021 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 871 $ (423) $ 19,113 $ — $ 19,561 Accounts receivable — 53,348 7,931 (207) 61,072 Prepaid and other current assets 368 8,156 753 — 9,277 Total current assets 1,239 61,081 27,797 (207) 89,910 Properties and equipment, net — 1,037,480 392,831 — 1,430,311 Operating lease right-of-use assets — 2,603 121 — 2,724 Net investment in leases — 211,550 — — 211,550 Investment in subsidiaries 1,788,648 299,779 — (2,088,427) — Intangible assets, net — 80,311 — — 80,311 Goodwill — 223,650 — — 223,650 Equity method investments — 79,448 37,988 — 117,436 Other assets 9,167 7,763 — — 16,930 Total assets $ 1,799,054 $ 2,003,665 $ 458,737 $ (2,088,634) $ 2,172,822 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 28,247 $ 12,515 $ (207) $ 40,555 Accrued interest 10,869 — — — 10,869 Deferred revenue — 10,169 400 — 10,569 Accrued property taxes — 2,391 2,666 — 5,057 Current operating lease liabilities — 722 73 — 795 Current finance lease liabilities — 3,755 — — 3,755 Other current liabilities 137 2,499 307 — 2,943 Total current liabilities 11,006 47,783 15,961 (207) 74,543 Long-term debt 1,362,570 — — — 1,362,570 Noncurrent operating lease liabilities — 2,303 — — 2,303 Noncurrent finance lease liabilities — 66,434 — — 66,434 Other long-term liabilities 260 11,215 438 — 11,913 Deferred revenue — 32,645 — — 32,645 Class B unit — 54,637 — — 54,637 Equity - partners 425,218 1,788,648 299,779 (2,088,427) 425,218 Equity - noncontrolling interests — — 142,559 — 142,559 Total liabilities and equity $ 1,799,054 $ 2,003,665 $ 458,737 $ (2,088,634) $ 2,172,822 Condensed Consolidating Balance Sheet December 31, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 1,627 $ (987) $ 21,350 $ — $ 21,990 Accounts receivable — 56,522 6,308 (315) 62,515 Prepaid and other current assets 349 8,366 772 — 9,487 Total current assets 1,976 63,901 28,430 (315) 93,992 Properties and equipment, net — 1,087,184 363,501 — 1,450,685 Operating lease right-of-use assets — 2,822 157 — 2,979 Net investment in leases — 166,316 — — 166,316 Investment in subsidiaries 1,789,808 286,883 — (2,076,691) — Intangible assets, net — 87,315 — — 87,315 Goodwill — 234,684 — — 234,684 Equity method investments — 81,089 39,455 — 120,544 Other assets 4,268 6,782 — — 11,050 Total assets $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 30,252 $ 16,463 $ (315) $ 46,400 Accrued interest 10,892 — — — 10,892 Deferred revenue — 10,868 500 — 11,368 Accrued property taxes — 2,915 1,077 — 3,992 Current operating lease liabilities — 804 71 — 875 Current finance lease liabilities — 3,713 — — 3,713 Other current liabilities 5 2,491 9 — 2,505 Total current liabilities 10,897 51,043 18,120 (315) 79,745 Long-term debt 1,405,603 — — — 1,405,603 Noncurrent operating lease liabilities — 2,476 — — 2,476 Noncurrent finance lease liabilities — 68,047 — — 68,047 Other long-term liabilities 260 12,171 474 — 12,905 Deferred revenue — 40,581 — — 40,581 Class B unit — 52,850 — — 52,850 Equity - partners 379,292 1,789,808 286,883 (2,076,691) 379,292 Equity - noncontrolling interests — — 126,066 — 126,066 Total liabilities and equity $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 Condensed Consolidating Statement of Income Three Months Ended June 30, 2021 Parent Guarantor Restricted Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 92,911 $ 6,231 $ — $ 99,142 Third parties — 20,479 6,614 — 27,093 — 113,390 12,845 — 126,235 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 37,742 4,326 — 42,068 Depreciation and amortization — 20,651 4,352 — 25,003 General and administrative 907 1,940 — — 2,847 907 60,333 8,678 — 69,918 Operating income (loss) (907) 53,057 4,167 — 56,317 Other income (expense): Equity in earnings of subsidiaries 69,596 3,605 — (73,201) — Equity in earnings of equity method investments 2,793 630 — 3,423 Interest expense (12,944) (994) — — (13,938) Interest income 6,614 — — 6,614 Gain on sales-type lease — 27 — — 27 Gain on sale of assets and other — 5,414 1 — 5,415 56,652 17,459 631 (73,201) 1,541 Income before income taxes 55,745 70,516 4,798 (73,201) 57,858 State income tax expense — (27) — — (27) Net income 55,745 70,489 4,798 (73,201) 57,831 Allocation of net income attributable to noncontrolling interests — (894) (1,192) — (2,086) Net income attributable to the partners $ 55,745 $ 69,595 $ 3,606 $ (73,201) $ 55,745 Condensed Consolidating Statement of Income Three Months Ended June 30, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 89,417 $ 6,146 $ — $ 95,563 Third parties — 15,887 3,357 — 19,244 — 105,304 9,503 — 114,807 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 30,980 3,757 — 34,737 Depreciation and amortization — 20,739 4,295 — 25,034 General and administrative 780 1,755 — — 2,535 780 53,474 8,052 — 62,306 Operating income (loss) (780) 51,830 1,451 — 52,501 Other income (expense): Equity in earnings of subsidiaries 89,893 1,510 — (91,403) — Equity in earnings of equity method investments — 1,449 707 — 2,156 Interest expense (12,740) (1,039) — — (13,779) Interest income 26 2,787 — — 2,813 Gain on sales-type lease — 33,834 — — 33,834 Gain on sale of assets and other 71 396 1 — 468 77,250 38,937 708 (91,403) 25,492 Income before income taxes 76,470 90,767 2,159 (91,403) 77,993 State income tax expense — (39) — — (39) Net income 76,470 90,728 2,159 (91,403) 77,954 Allocation of net income attributable to noncontrolling interests — (835) (649) — (1,484) Net income attributable to the partners $ 76,470 $ 89,893 $ 1,510 $ (91,403) $ 76,470 Condensed Consolidating Statement of Income Six Months Ended June 30, 2021 Parent Guarantor Restricted Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 188,612 $ 12,456 $ — $ 201,068 Third parties — 39,530 12,820 — 52,350 — 228,142 25,276 — 253,418 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 75,541 7,892 — 83,433 Depreciation and amortization — 41,487 8,581 — 50,068 General and administrative 2,085 3,730 — — 5,815 Goodwill impairment — 11,034 — — 11,034 2,085 131,792 16,473 — 150,350 Operating income (loss) (2,085) 96,350 8,803 — 103,068 Other income (expense): Equity in earnings of subsidiaries 147,405 7,741 — (155,146) — Equity in earnings of equity method investments — 3,411 1,775 — 5,186 Interest expense (25,178) (2,000) — — (27,178) Interest income — 13,162 — — 13,162 Gain on sales-type lease — 24,677 — — 24,677 Gain on sale of assets and other — 5,915 2 — 5,917 122,227 52,906 1,777 (155,146) 21,764 Income before income taxes 120,142 149,256 10,580 (155,146) 124,832 State income tax expense — (64) — — (64) Net income 120,142 149,192 10,580 (155,146) 124,768 Allocation of net income attributable to noncontrolling interests — (1,787) (2,839) — (4,626) Net income attributable to the partners $ 120,142 $ 147,405 $ 7,741 $ (155,146) $ 120,142 Condensed Consolidating Statement of Income Six Months Ended June 30, 2020 Parent Guarantor Restricted Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 184,172 $ 12,819 $ — $ 196,991 Third parties — 35,042 10,628 — 45,670 — 219,214 23,447 — 242,661 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 62,111 7,607 — 69,718 Depreciation and amortization — 40,492 8,520 — 49,012 General and administrative 1,879 3,358 — — 5,237 1,879 105,961 16,127 — 123,967 Operating income (loss) (1,879) 113,253 7,320 — 118,694 Other income (expense): Equity in earnings of subsidiaries 158,428 5,805 — (164,233) — Equity in earnings of equity method investments — 3,537 333 — 3,870 Interest expense (29,470) (2,076) — — (31,546) Interest income 26 5,005 — — 5,031 Loss on early extinguishment of debt (25,915) — — — (25,915) Gain on sales-type lease — 33,834 — — 33,834 Gain on sale of assets and other 141 816 17 — 974 103,210 46,921 350 (164,233) (13,752) Income before income taxes 101,331 160,174 7,670 (164,233) 104,942 State income tax expense — (76) — — (76) Net income 101,331 160,098 7,670 (164,233) 104,866 Allocation of net income attributable to noncontrolling interests — (1,670) (1,865) — (3,535) Net income attributable to the partners $ 101,331 $ 158,428 $ 5,805 $ (164,233) $ 101,331 |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event HEP Transactions On August 2, 2021, HEP, The Sinclair Companies (“Sinclair”), and Sinclair Transportation Company, a wholly owned subsidiary of Sinclair (“STC”), entered into a Contribution Agreement (the “Contribution Agreement”) pursuant to which HEP will acquire all of the outstanding shares of STC in exchange for 21 million newly issued common units of HEP and cash consideration equal to $325 million (the “HEP Transactions”). On the same date, HFC, Sinclair and certain other parties entered into a Business Combination Agreement pursuant to which Sinclair will contribute all of the equity interests of Hippo Holding LLC, which owns Sinclair Oil Corporation, to a new HFC parent holding company that will be named “HF Sinclair Corporation” in exchange for 60,230,036 shares of common stock in HF Sinclair Corporation (the “HFC Transactions”, and together with the HEP Transactions, the “Sinclair Transactions”). The cash consideration for the HEP Transactions is subject to customary adjustments at closing for working capital of STC. The number of HEP common units to be issued to Sinclair at closing is subject to downward adjustment if, as a condition to obtaining antitrust clearance for the Sinclair Transactions, HEP agrees to divest a portion of its equity interest in UNEV Pipeline LLC and the sales price for such interests does not exceed the threshold provided in the Contribution Agreement. The Contribution Agreement contains customary representations, warranties and covenants of HEP, Sinclair, and STC. The HEP Transactions are expected to close in mid-2022, subject to the satisfaction or waiver of certain customary conditions, including, among others, the receipt of certain required regulatory consents and clearance, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and the consummation of the HFC Transactions. The Contribution Agreement automatically terminates if the HFC Transactions are terminated, and contains other customary termination rights, including a termination right for each of HEP and Sinclair if, under certain circumstances, the closing does not occur by May 2, 2022 (the “Outside Date”), except that the Outside Date can be extended by either party by up to two 90 day periods to obtain any required antitrust clearance. Upon closing of the HEP Transactions, HEP’s existing senior management team will continue to operate HEP. Under the definitive agreements, Sinclair will be granted the right to nominate one director to the HEP board of directors at the closing. The Sinclair stockholders have also agreed to certain customary lock-up restrictions and registration rights for the HEP common units to be issued to the stockholders of Sinclair. HEP will continue to operate under the name Holly Energy Partners, L.P. |
Description of Business and P_2
Description of Business and Presentation of Financial Statements (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Common Control Transactions | Principles of Consolidation and Common Control Transactions The consolidated financial statements include our accounts and those of subsidiaries and joint ventures that we control. All significant intercompany transactions and balances have been eliminated. |
Goodwill and Long-Lived Assets | Goodwill and Long-Lived Assets Goodwill represents the excess of our cost of an acquired business over the fair value of the assets acquired, less liabilities assumed. Goodwill is not amortized. We test goodwill at the reporting unit level for impairment annually and between annual tests if events or changes in circumstances indicate the carrying amount may exceed fair value. Our goodwill impairment testing first entails a comparison of our reporting unit fair values relative to their respective carrying values, including goodwill. If carrying value exceeds the estimated fair value for a reporting unit, we measure goodwill impairment as the excess of the carrying amount of the reporting unit over the estimated fair value of the reporting unit. Indicators of goodwill and long-lived asset impairment The changes in our new agreements with HFC related to our Cheyenne assets resulted in an increase in the net book value of our Cheyenne reporting unit due to sales-type lease accounting, which led us to determine indicators of potential goodwill impairment for our Cheyenne reporting unit were present. The estimated fair value of our Cheyenne reporting unit was derived using a combination of income and market approaches. The income approach reflects expected future cash flows based on anticipated gross margins, operating costs, and capital expenditures. The market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs). See Note 5 for further discussion of Level 3 inputs. Our interim impairment testing of our Cheyenne reporting unit goodwill identified an impairment charge of $11.0 million, which was recorded in the three months ended March 31, 2021. We evaluate long-lived assets, including finite-lived intangible assets, for potential impairment by identifying whether indicators of impairment exist and, if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss, if any, to be recorded is equal to the amount by which a long-lived asset’s carrying value exceeds its fair value. |
Revenue Recognition | Revenue Recognition Revenues are generally recognized as products are shipped through our pipelines and terminals, feedstocks are processed through our refinery processing units or other services are rendered. The majority of our contracts with customers meet the definition of a lease since (1) performance of the contracts is dependent on specified property, plant, or equipment and (2) it is unlikely that one or more parties other than the customer will take more than a minor amount of the output associated with the specified property, plant, or equipment. Prior to the adoption of the new lease standard (see below), we bifurcated the consideration received between lease and service revenue. The new lease standard allows the election of a practical expedient whereby a lessor does not have to separate non-lease (service) components from lease components under certain conditions. The majority of our contracts meet these conditions, and we have made this election for those contracts. Under this practical expedient, we treat the combined components as a single performance obligation in accordance with Accounting Standards Codification (“ASC”) 606, which largely codified ASU 2014-09, if the non-lease (service) component is the dominant component. If the lease component is the dominant component, we treat the combined components as a lease in accordance with ASC 842, which largely codified ASU 2016-02. Several of our contracts include incentive or reduced tariffs once a certain quarterly volume is met. Revenue from the variable element of these transactions is recognized based on the actual volumes shipped as it relates specifically to rendering the services during the applicable quarter. The majority of our long-term transportation contracts specify minimum volume requirements, whereby, we bill a customer for a minimum level of shipments in the event a customer ships below their contractual requirements. If there are no future performance obligations, we will recognize these deficiency payments in revenue. In certain of these throughput agreements, a customer may later utilize such shortfall billings as credit towards future volume shipments in excess of its minimum levels within its respective contractual shortfall make-up period. Such amounts represent an obligation to perform future services, which may be initially deferred and later recognized as revenue based on estimated future shipping levels, including the likelihood of a customer’s ability to utilize such amounts prior to the end of the contractual shortfall make-up period. We recognize these deficiency payments in revenue when we do not expect we will be required to satisfy these performance obligations in the future based on the pattern of rights projected to be exercised by the customer. During the six months ended June 30, 2021 and 2020, we recognized $6.9 million and $12.6 million, respectively, of these deficiency payments in revenue, of which $0.5 million and $0.7 million, respectively, related to deficiency payments billed in prior periods. We have other cost reimbursement provisions in our throughput / storage agreements providing that customers (including HFC) reimburse us for certain costs. Such reimbursements are recorded as revenue or deferred revenue depending on the nature of the cost. Deferred revenue is recognized over the remaining contractual term of the related throughput agreement. |
Lessee Accounting | Lessee Accounting - At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. |
Lessor Accounting | Lessor Accounting - Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. |
Accounting Pronouncements Adopted During the Periods Presented | Accounting Pronouncements Adopted During the Periods Presented Credit Losses Measurement In June 2016, ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” was issued requiring measurement of all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. We adopted this standard effective January 1, 2020, and adoption of the standard did not have a material impact on our financial condition, results of operations or cash flows. |
Fair Value Measurements | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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. |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | Disaggregated revenues were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) (In thousands) Pipelines $ 68,322 $ 58,954 $ 134,827 $ 129,426 Terminals, tanks and loading racks 36,887 36,280 75,069 73,778 Refinery processing units 21,026 19,573 43,522 39,457 $ 126,235 $ 114,807 $ 253,418 $ 242,661 |
Schedule of Revenues | R evenues on our consolidated statem ents of income were composed of the following lease and service revenues: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) (In thousands) Lease revenues $ 86,867 $ 86,346 $ 174,803 $ 179,493 Service revenues 39,368 28,461 78,615 63,168 $ 126,235 $ 114,807 $ 253,418 $ 242,661 |
Schedule of Contract Asset and Contract Liability Balances | Our consolidated balance sheets included the contract assets and liabilities in the table below: June 30, December 31, (In thousands) Contract assets $ 6,545 $ 6,306 Contract liabilities $ (400) $ (500) |
Schedule of Future Performance Obligations | We expect to recognize revenue for these unfulfilled performance obligations as shown in the table below (amounts shown in table include both service and lease revenues): Years Ending December 31, (In millions) Remainder of 2021 $ 168 2022 311 2023 275 2024 237 2025 171 2026 157 Thereafter 484 Total $ 1,803 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): June 30, December 31, 2020 Operating leases: Operating lease right-of-use assets, net $ 2,724 $ 2,979 Current operating lease liabilities 795 875 Noncurrent operating lease liabilities 2,303 2,476 Total operating lease liabilities $ 3,098 $ 3,351 Finance leases: Properties and equipment $ 6,019 $ 6,410 Accumulated amortization (3,255) (3,390) Properties and equipment, net $ 2,764 $ 3,020 Current finance lease liabilities $ 3,755 $ 3,713 Noncurrent finance lease liabilities 66,434 68,047 Total finance lease liabilities $ 70,189 $ 71,760 Weighted average remaining lease term (in years) Operating leases 5.8 5.9 Finance leases 15.5 15.9 Weighted average discount rate Operating leases 4.7% 4.8% Finance leases 5.6% 5.6% |
Schedule of Supplemental Cash Flow Information and Components of Lease Expense | Supplemental cash flow and other information related to leases were as follows: Six Months Ended 2021 2020 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 576 $ 518 Operating cash flows on finance leases $ 2,105 $ 2,157 Financing cash flows on finance leases $ 1,747 $ 1,972 The components of lease expense were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Operating lease costs $ 249 $ 230 $ 547 $ 503 Finance lease costs Amortization of assets 200 273 412 515 Interest on lease liabilities 994 1,040 2,001 2,077 Variable lease cost 67 46 133 95 Total net lease cost $ 1,510 $ 1,589 $ 3,093 $ 3,190 |
Schedule of Operating and Finance Lease Maturities | Maturities of lease liabilities were as follows: June 30, 2021 Operating Finance (In thousands) 2021 $ 507 $ 3,662 2022 690 7,332 2023 603 7,375 2024 497 6,918 2025 429 6,456 2026 and thereafter 787 73,888 Total lease payments 3,513 105,631 Less: Imputed interest (415) (35,442) Total lease obligations 3,098 70,189 Less: Current lease liabilities (795) (3,755) Noncurrent lease liabilities $ 2,303 $ 66,434 |
Sales-Type Lease, Gain Recognized | Therefore, we recognized a gain on sales-type leases during the six months ended June 30, 2021 composed of the following: Six Months Ended June 30, 2021 (In thousands) Net investment in leases $ 47,795 Properties and equipment, net (29,677) Deferred revenue 6,559 Gain on sales-type leases $ 24,677 Six Months Ended June 30, 2020 (In thousands) Net investment in lease $ 35,319 Properties and equipment, net (1,485) Gain on sales-type lease $ 33,834 |
Schedule of Lease Income | Lease income recognized was as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Operating lease revenues $ 84,426 $ 84,872 $ 170,698 $ 175,671 Direct financing lease interest income 523 524 1,047 1,048 Gain on sales-type leases 27 33,834 24,677 33,834 Sales-type lease interest income 6,091 2,286 12,115 3,940 Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable 2,441 1,474 4,105 3,822 |
Schedule of Minimum Undiscounted Lease Payments | Annual minimum undiscounted lease payments under our leases were as follows as of June 30, 2021: Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2021 $ 141,624 $ 1,088 $ 14,481 2022 283,151 2,171 28,962 2023 252,705 2,175 25,056 2024 216,601 2,192 21,827 2025 153,746 2,209 18,399 2026 and thereafter 558,415 38,837 144,721 Total lease receipt payments $ 1,606,242 $ 48,672 $ 253,446 Less: Imputed interest (32,255) (198,123) 16,417 55,323 Unguaranteed residual assets at end of leases — 144,036 Net investment in leases $ 16,417 $ 199,359 |
Schedule of Net Investment in Leases | Net investments in leases recorded on our balance sheet were composed of the following: June 30, 2021 December 31, 2020 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 126,147 $ 16,417 $ 88,922 $ 16,452 Unguaranteed residual assets 73,212 — 64,551 — Net investment in leases $ 199,359 $ 16,417 $ 153,473 $ 16,452 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Amounts of Estimated Fair Values of Senior Notes | The carrying amounts and estimated fair values of our senior notes were as follows: June 30, 2021 December 31, 2020 Financial Instrument Fair Value Input Level Carrying Fair Value Carrying Fair Value (In thousands) Liabilities: 5% Senior Notes Level 2 492,570 512,245 492,103 506,540 |
Properties and Equipment (Table
Properties and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Properties and Equipment | The carrying amounts of our properties and equipment were as follows: June 30, December 31, (In thousands) Pipelines, terminals and tankage 1 $ 1,538,892 $ 1,575,815 Refinery assets 348,882 348,882 Land and right of way 86,781 87,076 Construction in progress 99,420 58,467 Other 1 44,819 46,201 2,118,794 2,116,441 Less accumulated depreciation (688,483) (665,756) $ 1,430,311 $ 1,450,685 (1) Prior period balances have been reclassified to be comparative to current period. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets by Major Class | The carrying amounts of our intangible assets were as follows: Useful Life June 30, December 31, (In thousands) Delek transportation agreement 30 years $ 59,933 $ 59,933 HFC transportation agreement 10-15 years 75,131 75,131 Customer relationships 10 years 69,683 69,683 Other 20 years 50 50 204,797 204,797 Less accumulated amortization (124,486) (117,482) $ 80,311 $ 87,315 |
Employees, Retirement and Inc_2
Employees, Retirement and Incentive Plans (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Phantom Units | A summary of phantom unit activity and changes during the six months ended June 30, 2021, is presented below: Phantom Units Units Weighted Average Grant-Date Fair Value Outstanding at January 1, 2021 (nonvested) 295,992 $ 14.48 Vesting and transfer of full ownership to recipients (189) 11.92 Forfeited (3,483) 14.69 Outstanding at June 30, 2021 (nonvested) 292,320 14.48 |
Schedule of Performance Units | A summary of performance unit activity and changes for the six months ended June 30, 2021, is presented below: Performance Units Units Outstanding at January 1, 2021 (nonvested) 77,472 Vesting and transfer of common units to recipients (10,881) Outstanding at June 30, 2021 (nonvested) 66,591 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Instruments [Abstract] | |
Schedule of Long-term Debt Instruments | The carrying amounts of our long-term debt were as follows: June 30, December 31, (In thousands) Credit Agreement Amount outstanding $ 870,000 913,500 5% Senior Notes Principal 500,000 500,000 Unamortized premium and debt issuance costs (7,430) (7,897) 492,570 492,103 Total long-term debt $ 1,362,570 $ 1,405,603 |
Net Income Per Limited Partne_2
Net Income Per Limited Partner Unit (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Net Income per Limited Partner Unit [Abstract] | |
Schedule of Net Income per Limited Partner Unit | Net income per limited partner unit is computed as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands, except per unit data) Net income attributable to the partners $ 55,745 $ 76,470 $ 120,142 $ 101,331 Less: Participating securities’ share in earnings (190) — (411) — Net income attributable to common units 55,555 76,470 119,731 101,331 Weighted average limited partners' units outstanding 105,440 105,440 105,440 105,440 Limited partners' per unit interest in earnings - basic and diluted $ 0.53 $ 0.73 $ 1.14 $ 0.96 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Three Months Ended Six Months Ended 2021 2020 2021 2020 (In thousands) Revenues: Pipelines and terminals - affiliate $ 78,116 $ 75,990 $ 157,546 $ 157,534 Pipelines and terminals - third-party 27,093 19,244 52,350 45,670 Refinery processing units - affiliate 21,026 19,573 43,522 39,457 Total segment revenues $ 126,235 $ 114,807 $ 253,418 $ 242,661 Segment operating income: Pipelines and terminals (1) $ 49,391 $ 45,630 $ 90,875 $ 104,533 Refinery processing units 9,773 9,406 18,008 19,398 Total segment operating income 59,164 55,036 108,883 123,931 Unallocated general and administrative expenses (2,847) (2,535) (5,815) (5,237) Interest and financing costs, net (7,324) (10,966) (14,016) (26,515) Loss on early extinguishment of debt — — — (25,915) Equity in earnings of equity method investments 3,423 2,156 5,186 3,870 Gain on sales-type leases 27 33,834 24,677 33,834 Gain (loss) on sale of assets and other 5,415 468 5,917 974 Income before income taxes $ 57,858 $ 77,993 $ 124,832 $ 104,942 Capital Expenditures: Pipelines and terminals $ 25,559 $ 11,798 $ 58,777 $ 30,416 Refinery processing units 598 — 598 324 Total capital expenditures $ 26,157 $ 11,798 $ 59,375 $ 30,740 June 30, 2021 December 31, 2020 (In thousands) Identifiable assets: Pipelines and terminals (2) $ 1,743,374 $ 1,729,547 Refinery processing units 295,098 305,090 Other 134,350 132,928 Total identifiable assets $ 2,172,822 $ 2,167,565 (1) Pipelines and terminals segment operating income includes goodwill impairment charg e of $11.0 million for the six months ended June 30, 2021. (2) Includes goodwill of $223.7 million as of June 30, 2021 and $234.7 million as of December 31, 2020. |
Supplemental Guarantor _ Non-_2
Supplemental Guarantor / Non-Guarantor Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Guarantor / Non-Guarantor Financial Information [Abstract] | |
Schedule of Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet June 30, 2021 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 871 $ (423) $ 19,113 $ — $ 19,561 Accounts receivable — 53,348 7,931 (207) 61,072 Prepaid and other current assets 368 8,156 753 — 9,277 Total current assets 1,239 61,081 27,797 (207) 89,910 Properties and equipment, net — 1,037,480 392,831 — 1,430,311 Operating lease right-of-use assets — 2,603 121 — 2,724 Net investment in leases — 211,550 — — 211,550 Investment in subsidiaries 1,788,648 299,779 — (2,088,427) — Intangible assets, net — 80,311 — — 80,311 Goodwill — 223,650 — — 223,650 Equity method investments — 79,448 37,988 — 117,436 Other assets 9,167 7,763 — — 16,930 Total assets $ 1,799,054 $ 2,003,665 $ 458,737 $ (2,088,634) $ 2,172,822 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 28,247 $ 12,515 $ (207) $ 40,555 Accrued interest 10,869 — — — 10,869 Deferred revenue — 10,169 400 — 10,569 Accrued property taxes — 2,391 2,666 — 5,057 Current operating lease liabilities — 722 73 — 795 Current finance lease liabilities — 3,755 — — 3,755 Other current liabilities 137 2,499 307 — 2,943 Total current liabilities 11,006 47,783 15,961 (207) 74,543 Long-term debt 1,362,570 — — — 1,362,570 Noncurrent operating lease liabilities — 2,303 — — 2,303 Noncurrent finance lease liabilities — 66,434 — — 66,434 Other long-term liabilities 260 11,215 438 — 11,913 Deferred revenue — 32,645 — — 32,645 Class B unit — 54,637 — — 54,637 Equity - partners 425,218 1,788,648 299,779 (2,088,427) 425,218 Equity - noncontrolling interests — — 142,559 — 142,559 Total liabilities and equity $ 1,799,054 $ 2,003,665 $ 458,737 $ (2,088,634) $ 2,172,822 Condensed Consolidating Balance Sheet December 31, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 1,627 $ (987) $ 21,350 $ — $ 21,990 Accounts receivable — 56,522 6,308 (315) 62,515 Prepaid and other current assets 349 8,366 772 — 9,487 Total current assets 1,976 63,901 28,430 (315) 93,992 Properties and equipment, net — 1,087,184 363,501 — 1,450,685 Operating lease right-of-use assets — 2,822 157 — 2,979 Net investment in leases — 166,316 — — 166,316 Investment in subsidiaries 1,789,808 286,883 — (2,076,691) — Intangible assets, net — 87,315 — — 87,315 Goodwill — 234,684 — — 234,684 Equity method investments — 81,089 39,455 — 120,544 Other assets 4,268 6,782 — — 11,050 Total assets $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 30,252 $ 16,463 $ (315) $ 46,400 Accrued interest 10,892 — — — 10,892 Deferred revenue — 10,868 500 — 11,368 Accrued property taxes — 2,915 1,077 — 3,992 Current operating lease liabilities — 804 71 — 875 Current finance lease liabilities — 3,713 — — 3,713 Other current liabilities 5 2,491 9 — 2,505 Total current liabilities 10,897 51,043 18,120 (315) 79,745 Long-term debt 1,405,603 — — — 1,405,603 Noncurrent operating lease liabilities — 2,476 — — 2,476 Noncurrent finance lease liabilities — 68,047 — — 68,047 Other long-term liabilities 260 12,171 474 — 12,905 Deferred revenue — 40,581 — — 40,581 Class B unit — 52,850 — — 52,850 Equity - partners 379,292 1,789,808 286,883 (2,076,691) 379,292 Equity - noncontrolling interests — — 126,066 — 126,066 Total liabilities and equity $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 |
Schedule of Condensed Consolidating Statement of Income | Condensed Consolidating Statement of Income Three Months Ended June 30, 2021 Parent Guarantor Restricted Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 92,911 $ 6,231 $ — $ 99,142 Third parties — 20,479 6,614 — 27,093 — 113,390 12,845 — 126,235 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 37,742 4,326 — 42,068 Depreciation and amortization — 20,651 4,352 — 25,003 General and administrative 907 1,940 — — 2,847 907 60,333 8,678 — 69,918 Operating income (loss) (907) 53,057 4,167 — 56,317 Other income (expense): Equity in earnings of subsidiaries 69,596 3,605 — (73,201) — Equity in earnings of equity method investments 2,793 630 — 3,423 Interest expense (12,944) (994) — — (13,938) Interest income 6,614 — — 6,614 Gain on sales-type lease — 27 — — 27 Gain on sale of assets and other — 5,414 1 — 5,415 56,652 17,459 631 (73,201) 1,541 Income before income taxes 55,745 70,516 4,798 (73,201) 57,858 State income tax expense — (27) — — (27) Net income 55,745 70,489 4,798 (73,201) 57,831 Allocation of net income attributable to noncontrolling interests — (894) (1,192) — (2,086) Net income attributable to the partners $ 55,745 $ 69,595 $ 3,606 $ (73,201) $ 55,745 Condensed Consolidating Statement of Income Three Months Ended June 30, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 89,417 $ 6,146 $ — $ 95,563 Third parties — 15,887 3,357 — 19,244 — 105,304 9,503 — 114,807 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 30,980 3,757 — 34,737 Depreciation and amortization — 20,739 4,295 — 25,034 General and administrative 780 1,755 — — 2,535 780 53,474 8,052 — 62,306 Operating income (loss) (780) 51,830 1,451 — 52,501 Other income (expense): Equity in earnings of subsidiaries 89,893 1,510 — (91,403) — Equity in earnings of equity method investments — 1,449 707 — 2,156 Interest expense (12,740) (1,039) — — (13,779) Interest income 26 2,787 — — 2,813 Gain on sales-type lease — 33,834 — — 33,834 Gain on sale of assets and other 71 396 1 — 468 77,250 38,937 708 (91,403) 25,492 Income before income taxes 76,470 90,767 2,159 (91,403) 77,993 State income tax expense — (39) — — (39) Net income 76,470 90,728 2,159 (91,403) 77,954 Allocation of net income attributable to noncontrolling interests — (835) (649) — (1,484) Net income attributable to the partners $ 76,470 $ 89,893 $ 1,510 $ (91,403) $ 76,470 Condensed Consolidating Statement of Income Six Months Ended June 30, 2021 Parent Guarantor Restricted Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 188,612 $ 12,456 $ — $ 201,068 Third parties — 39,530 12,820 — 52,350 — 228,142 25,276 — 253,418 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 75,541 7,892 — 83,433 Depreciation and amortization — 41,487 8,581 — 50,068 General and administrative 2,085 3,730 — — 5,815 Goodwill impairment — 11,034 — — 11,034 2,085 131,792 16,473 — 150,350 Operating income (loss) (2,085) 96,350 8,803 — 103,068 Other income (expense): Equity in earnings of subsidiaries 147,405 7,741 — (155,146) — Equity in earnings of equity method investments — 3,411 1,775 — 5,186 Interest expense (25,178) (2,000) — — (27,178) Interest income — 13,162 — — 13,162 Gain on sales-type lease — 24,677 — — 24,677 Gain on sale of assets and other — 5,915 2 — 5,917 122,227 52,906 1,777 (155,146) 21,764 Income before income taxes 120,142 149,256 10,580 (155,146) 124,832 State income tax expense — (64) — — (64) Net income 120,142 149,192 10,580 (155,146) 124,768 Allocation of net income attributable to noncontrolling interests — (1,787) (2,839) — (4,626) Net income attributable to the partners $ 120,142 $ 147,405 $ 7,741 $ (155,146) $ 120,142 Condensed Consolidating Statement of Income Six Months Ended June 30, 2020 Parent Guarantor Restricted Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 184,172 $ 12,819 $ — $ 196,991 Third parties — 35,042 10,628 — 45,670 — 219,214 23,447 — 242,661 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 62,111 7,607 — 69,718 Depreciation and amortization — 40,492 8,520 — 49,012 General and administrative 1,879 3,358 — — 5,237 1,879 105,961 16,127 — 123,967 Operating income (loss) (1,879) 113,253 7,320 — 118,694 Other income (expense): Equity in earnings of subsidiaries 158,428 5,805 — (164,233) — Equity in earnings of equity method investments — 3,537 333 — 3,870 Interest expense (29,470) (2,076) — — (31,546) Interest income 26 5,005 — — 5,031 Loss on early extinguishment of debt (25,915) — — — (25,915) Gain on sales-type lease — 33,834 — — 33,834 Gain on sale of assets and other 141 816 17 — 974 103,210 46,921 350 (164,233) (13,752) Income before income taxes 101,331 160,174 7,670 (164,233) 104,942 State income tax expense — (76) — — (76) Net income 101,331 160,098 7,670 (164,233) 104,866 Allocation of net income attributable to noncontrolling interests — (1,670) (1,865) — (3,535) Net income attributable to the partners $ 101,331 $ 158,428 $ 5,805 $ (164,233) $ 101,331 |
Description of Business and P_3
Description of Business and Presentation of Financial Statements (Details) $ in Thousands | Apr. 01, 2021USD ($) | Jan. 01, 2021USD ($)renewalOption | Jun. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) |
Other Ownership Interests [Line Items] | |||||||
Ownership percentage, controlling interest | 57.00% | 57.00% | |||||
Lease term (in years) | 10 years | ||||||
Lease renewal period options | renewalOption | 2 | ||||||
Lease renewal option period (in years) | 5 years | ||||||
Annual lease payment due | $ 5,000 | ||||||
Service fee arrangement period (in years) | 5 years | ||||||
Payment due for termination of commitment | $ 10,000 | ||||||
Proceeds from sale of assets | $ 7,343 | $ 816 | |||||
Gain on sale of assets | $ 5,586 | 797 | |||||
Number of reportable segments | segment | 2 | ||||||
Goodwill impairment | $ 0 | $ 0 | $ 11,034 | 0 | |||
Deferred revenue recognized | 6,900 | 12,600 | |||||
Deferred revenue recognized. billed prior period | $ 500 | $ 700 | |||||
156 Mile, 6 Inch Refined Product Pipeline | |||||||
Other Ownership Interests [Line Items] | |||||||
Proceeds from sale of assets | $ 7,000 | ||||||
Gain on sale of assets | $ 5,300 | ||||||
Cheyenne | |||||||
Other Ownership Interests [Line Items] | |||||||
Goodwill impairment | $ 11,000 | ||||||
UNEV Pipeline | |||||||
Other Ownership Interests [Line Items] | |||||||
Ownership percentage in equity method investment | 75.00% | 75.00% | |||||
Osage Pipeline | |||||||
Other Ownership Interests [Line Items] | |||||||
Ownership percentage in equity method investment | 50.00% | 50.00% | |||||
Cheyenne | |||||||
Other Ownership Interests [Line Items] | |||||||
Ownership percentage in equity method investment | 50.00% | 50.00% | |||||
Cushing Connect Pipeline & Terminal | |||||||
Other Ownership Interests [Line Items] | |||||||
Ownership percentage in equity method investment | 50.00% | 50.00% |
Investment in Joint Venture (De
Investment in Joint Venture (Details) bbl in Thousands, $ in Millions | Oct. 02, 2019USD ($)bbl | Jun. 30, 2021 |
Schedule of Equity Method Investments [Line Items] | ||
Pipeline volume (in barrels per day) | bbl | 160 | |
Cushing Connect Joint Venture | ||
Schedule of Equity Method Investments [Line Items] | ||
Terminal storage (in barrels) | bbl | 1,500 | |
Percent of budget which construction costs are payable by HEP | 10.00% | |
Cushing Connect Joint Venture | Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Payment to acquire joint venture | $ | $ 70 | |
Cushing Connect Joint Venture | Maximum | ||
Schedule of Equity Method Investments [Line Items] | ||
Payment to acquire joint venture | $ | $ 75 |
Revenues - Schedule of Disaggre
Revenues - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | $ 126,235 | $ 114,807 | $ 253,418 | $ 242,661 |
Pipelines | ||||
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | 68,322 | 58,954 | 134,827 | 129,426 |
Terminals, tanks and loading racks | ||||
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | 36,887 | 36,280 | 75,069 | 73,778 |
Refinery processing units | ||||
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | $ 21,026 | $ 19,573 | $ 43,522 | $ 39,457 |
Revenues - Schedule of Affiliat
Revenues - Schedule of Affiliate and Third Party Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue from External Customer [Line Items] | ||||
Lease revenues | $ 86,867 | $ 86,346 | $ 174,803 | $ 179,493 |
Revenues: | 126,235 | 114,807 | 253,418 | 242,661 |
Service revenues | ||||
Revenue from External Customer [Line Items] | ||||
Revenues: | $ 39,368 | $ 28,461 | $ 78,615 | $ 63,168 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue recognized. billed prior period | $ 0.5 | $ 0.7 |
Revenue included in contract assets | 0.2 | |
Performance obligation revenue | $ 1,803 |
Revenues - Schedule of Contract
Revenues - Schedule of Contract Asset and Liability Balances (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 6,545 | $ 6,306 |
Contract liabilities | $ (400) | $ (500) |
Revenues - Schedule of Future P
Revenues - Schedule of Future Performance Obligations (Details) $ in Millions | Jun. 30, 2021USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 1,803 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 168 |
Satisfaction period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 311 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 275 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 237 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 171 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 157 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 484 |
Satisfaction period |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | Jun. 30, 2021USD ($)renewalOption | Dec. 31, 2020USD ($) |
Lessee, Lease, Description [Line Items] | ||
Finance lease term | 10 years | |
Cost of asset under finance leases | $ 6,019 | $ 6,410 |
Accumulated depreciation of assets under finance leases | $ 3,255 | $ 3,390 |
Number of renewal options | renewalOption | 1 | |
Finance lease extension option (in years) | 10 years | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 24 years | |
Operating lease renewal term | 10 years | |
Vehicles | Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Finance lease term | 33 months | |
Vehicles | Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Finance lease term | 48 months |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Operating leases: | ||
Operating lease right-of-use assets, net | $ 2,724 | $ 2,979 |
Current operating lease liabilities | 795 | 875 |
Noncurrent operating lease liabilities | 2,303 | 2,476 |
Total operating lease liabilities | 3,098 | 3,351 |
Finance leases: | ||
Properties and equipment | 6,019 | 6,410 |
Accumulated amortization | (3,255) | (3,390) |
Properties and equipment, net | $ 2,764 | $ 3,020 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Properties and equipment, net (Cushing Connect VIEs: $84,263 and $47,801, respectively) | Properties and equipment, net (Cushing Connect VIEs: $84,263 and $47,801, respectively) |
Current finance lease liabilities | $ 3,755 | $ 3,713 |
Noncurrent finance lease liabilities | 66,434 | 68,047 |
Total finance lease liabilities | $ 70,189 | $ 71,760 |
Weighted average remaining lease term (in years) | ||
Operating leases | 5 years 9 months 18 days | 5 years 10 months 24 days |
Finance leases | 15 years 6 months | 15 years 10 months 24 days |
Weighted average discount rate | ||
Operating leases | 4.70% | 4.80% |
Finance leases | 5.60% | 5.60% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows on operating leases | $ 576 | $ 518 |
Operating cash flows on finance leases | 2,105 | 2,157 |
Financing cash flows on finance leases | $ 1,747 | $ 1,972 |
Leases - Operating and Finance
Leases - Operating and Finance Lease Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Operating | ||
2021 | $ 507 | |
2022 | 690 | |
2023 | 603 | |
2024 | 497 | |
2025 | 429 | |
2026 and thereafter | 787 | |
Total lease payments | 3,513 | |
Less: Imputed interest | (415) | |
Total operating lease liabilities | 3,098 | $ 3,351 |
Less: Current lease liabilities | (795) | (875) |
Noncurrent operating lease liabilities | 2,303 | 2,476 |
Finance | ||
2021 | 3,662 | |
2022 | 7,332 | |
2023 | 7,375 | |
2024 | 6,918 | |
2025 | 6,456 | |
2026 and thereafter | 73,888 | |
Total lease payments | 105,631 | |
Less: Imputed interest | (35,442) | |
Total finance lease liabilities | 70,189 | 71,760 |
Less: Current lease liabilities | (3,755) | (3,713) |
Noncurrent lease liabilities | $ 66,434 | $ 68,047 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||||
Operating lease costs | $ 249 | $ 230 | $ 547 | $ 503 |
Amortization of assets | 200 | 273 | 412 | 515 |
Interest on lease liabilities | 994 | 1,040 | 2,001 | 2,077 |
Variable lease cost | 67 | 46 | 133 | 95 |
Total net lease cost | $ 1,510 | $ 1,589 | $ 3,093 | $ 3,190 |
Leases - Gain on Sales-Type Lea
Leases - Gain on Sales-Type Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||||
Net investment in leases | $ 47,795 | $ 35,319 | ||
Properties and equipment, net | (29,677) | (1,485) | ||
Deferred revenue | 6,559 | |||
Gain on sales-type leases | $ 27 | $ 33,834 | $ 24,677 | $ 33,834 |
Leases - Schedule of Lease Inco
Leases - Schedule of Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||||
Operating lease revenues | $ 84,426 | $ 84,872 | $ 170,698 | $ 175,671 |
Direct financing lease interest income | 523 | 524 | 1,047 | 1,048 |
Gain on sales-type leases | 27 | 33,834 | 24,677 | 33,834 |
Sales-type lease interest income | 6,091 | 2,286 | 12,115 | 3,940 |
Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable | $ 2,441 | $ 1,474 | $ 4,105 | $ 3,822 |
Leases - Schedule of Minimum Un
Leases - Schedule of Minimum Undiscounted Lease Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Operating | ||
Remainder of 2021 | $ 141,624 | |
2022 | 283,151 | |
2023 | 252,705 | |
2024 | 216,601 | |
2025 | 153,746 | |
2026 and thereafter | 558,415 | |
Total lease receipt payments | 1,606,242 | |
Finance | ||
Finance and Sales-type | ||
Remainder of 2021 | 1,088 | |
2022 | 2,171 | |
2023 | 2,175 | |
2024 | 2,192 | |
2025 | 2,209 | |
2026 and thereafter | 38,837 | |
Total lease receipt payments | 48,672 | |
Less: Imputed interest | (32,255) | |
Lease receivables | 16,417 | |
Unguaranteed residual assets at end of leases | 0 | |
Net investment in leases | 16,417 | $ 16,452 |
Sales-type | ||
Finance and Sales-type | ||
Remainder of 2021 | 14,481 | |
2022 | 28,962 | |
2023 | 25,056 | |
2024 | 21,827 | |
2025 | 18,399 | |
2026 and thereafter | 144,721 | |
Total lease receipt payments | 253,446 | |
Less: Imputed interest | (198,123) | |
Lease receivables | 55,323 | |
Unguaranteed residual assets at end of leases | 144,036 | |
Net investment in leases | $ 199,359 | $ 153,473 |
Leases - Net Investments in Lea
Leases - Net Investments in Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Sales-type Leases | ||
Lessor, Lease, Description [Line Items] | ||
Lease receivable | $ 126,147 | $ 88,922 |
Unguaranteed residual assets | 73,212 | 64,551 |
Net investment in leases | 199,359 | 153,473 |
Direct Financing Leases | ||
Lessor, Lease, Description [Line Items] | ||
Lease receivable | 16,417 | 16,452 |
Unguaranteed residual assets | 0 | 0 |
Net investment in leases | $ 16,417 | $ 16,452 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - 0.05 - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Stated interest rate, senior notes | 5.00% | |
Carrying Value | Level 2 | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 492,570 | $ 492,103 |
Fair Value | Level 2 | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 512,245 | $ 506,540 |
Properties and Equipment (Detai
Properties and Equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Properties and equipment | $ 2,118,794 | $ 2,116,441 | |
Less accumulated depreciation | (688,483) | (665,756) | |
Properties and equipment, net | 1,430,311 | 1,450,685 | |
Depreciation expense | 42,700 | $ 41,700 | |
Pipelines, terminals and tankage | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment | 1,538,892 | 1,575,815 | |
Refinery assets | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment | 348,882 | 348,882 | |
Land and right of way | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment | 86,781 | 87,076 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment | 99,420 | 58,467 | |
Other | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment | $ 44,819 | $ 46,201 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||
Intangible assets, gross | $ 204,797,000 | $ 204,797,000 | |
Less accumulated amortization | (124,486,000) | (117,482,000) | |
Intangible assets, net | 80,311,000 | 87,315,000 | |
Amortization expense | 7,000,000 | $ 7,000,000 | |
Estimated amortization expense for 2022 | 14,000,000 | ||
Estimated amortization expense for 2023 | 9,900,000 | ||
Estimated amortization expense for 2024 | 9,100,000 | ||
Estimated amortization expense for 2025 | 9,100,000 | ||
Estimated amortization expense for 2026 | 9,100,000 | ||
Basis in transportation agreements | $ 0 | ||
Delek transportation agreement | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Useful Life | 30 years | ||
Intangible assets, gross | $ 59,933,000 | 59,933,000 | |
HFC transportation agreement | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Intangible assets, gross | $ 75,131,000 | 75,131,000 | |
Customer relationships | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Useful Life | 10 years | ||
Intangible assets, gross | $ 69,683,000 | 69,683,000 | |
Other | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Useful Life | 20 years | ||
Intangible assets, gross | $ 50,000 | $ 50,000 | |
Minimum | HFC transportation agreement | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Useful Life | 10 years | ||
Maximum | HFC transportation agreement | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Useful Life | 15 years |
Employees, Retirement and Inc_3
Employees, Retirement and Incentive Plans - Retirement and Benefit Plan Costs (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($)planshares | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)componentplanshares | Jun. 30, 2020USD ($) | |
Share-based Compensation Arrangements | ||||
Retirement and benefit costs | $ | $ 1.9 | $ 1.6 | $ 4.1 | $ 3.7 |
Number of long-term incentive plan components | component | 4 | |||
Number of incentive-based award plans | plan | 2 | 2 | ||
Compensation costs | $ | $ 0.5 | $ 0.5 | $ 1.2 | $ 1 |
Long-term Incentive Plan | ||||
Share-based Compensation Arrangements | ||||
Units authorized to be granted (in shares) | shares | 2,500,000 | 2,500,000 | ||
Units not yet granted (in shares) | shares | 856,171 | 856,171 |
Employees, Retirement and Inc_4
Employees, Retirement and Incentive Plans - Phantom Units (Details) - Phantom Units - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement Instruments [Roll Forward] | ||
Units outstanding at beginning of period (in shares) | 295,992 | |
Vesting and transfer of full ownership to recipients (in shares) | (189) | |
Forfeited (in shares) | (3,483) | |
Units outstanding at end of period (in shares) | 292,320 | |
Weighted Average Grant-Date Fair Value | ||
Weighted-average grant-date fair value of units outstanding at beginning of period (in USD per share) | $ 14.48 | |
Weighted-average grant-date fair value of units vesting and transfer of full ownership to recipients (in USD per share) | 11.92 | |
Weighted-average grant-date fair value of units forfeited (in USD per share) | 14.69 | |
Weighted-average grant-date fair value of units outstanding at end of period (in USD per share) | $ 14.48 | |
Grant date fair value of vested units transferred to recipients | $ 2 | $ 100 |
Unrecognized compensation related to nonvested units | $ 2,000 | |
Weighted average recognition period (years) | 1 year 3 months 18 days | |
Minimum | ||
Weighted Average Grant-Date Fair Value | ||
Award vesting period | 1 year | |
Maximum | ||
Weighted Average Grant-Date Fair Value | ||
Award vesting period | 3 years |
Employees, Retirement and Inc_5
Employees, Retirement and Incentive Plans - Performance Units (Details) - Performance Shares - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement, Nonvested [Roll Forward] | ||
Units outstanding at beginning of period (in shares) | 77,472 | |
Vesting and transfer of full ownership to recipients (in shares) | (10,881) | |
Units outstanding at end of period (in shares) | 66,591 | |
Grant date fair value of vested units transferred to recipients | $ 0.4 | $ 0.4 |
Value of performance units vested and expected to vest | 1.2 | |
Unrecognized compensation related to nonvested units | $ 0.5 | |
Weighted average recognition period (years) | 1 year 8 months 12 days | |
Long-term Incentive Plan | ||
Share-based Compensation Arrangements | ||
Performance period | 3 years | |
Long-term Incentive Plan | Certain Officers | Market Performance | ||
Share-based Compensation Arrangements | ||
Range of performance units earned, minimum (as a percent) | 0.00% | |
Range of performance units earned, maximum (as a percent) | 200.00% |
Debt - Credit Agreement (Detail
Debt - Credit Agreement (Details) - USD ($) | Apr. 30, 2021 | Mar. 31, 2021 |
Debt Instrument [Line Items] | ||
Maximum borrowing capacity under revolving credit agreement | $ 1,200,000,000 | $ 1,400,000,000 |
Line of credit maximum accordion feature | 1,700,000,000 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity under revolving credit agreement | $ 50,000,000 |
Debt - Senior Notes (Details)
Debt - Senior Notes (Details) - USD ($) | Feb. 05, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Feb. 04, 2020 |
Debt Instrument [Line Items] | |||||||
Loss on early extinguishment of debt | $ 0 | $ 0 | $ 0 | $ 25,915,000 | |||
6% Senior notes | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate, senior notes | 6.00% | 6.00% | |||||
Principal | $ 500,000,000 | ||||||
Redemption cost | $ 522,500,000 | ||||||
Loss on early extinguishment of debt | 25,900,000 | ||||||
Debt redemption premium | $ 22,500,000 | ||||||
Unamortized discount | 3,400,000 | ||||||
0.05 | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount of senior note | $ 500,000,000 | ||||||
Stated interest rate, senior notes | 5.00% | 5.00% | |||||
Principal | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | ||||
Unamortized discount | $ 7,430,000 | $ 7,430,000 | $ 7,897,000 |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Amount outstanding | $ 870,000 | $ 913,500 |
Total long-term debt | 1,362,570 | 1,405,603 |
0.05 | ||
Debt Instrument [Line Items] | ||
Principal | 500,000 | 500,000 |
Unamortized premium and debt issuance costs | (7,430) | (7,897) |
Senior Notes | $ 492,570 | $ 492,103 |
Stated interest rate, senior notes | 5.00% |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | Aug. 02, 2021USD ($) | Jan. 01, 2021USD ($)renewalOption | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Related Party Transaction [Line Items] | |||||||
Revenues: | $ 126,235 | $ 114,807 | $ 253,418 | $ 242,661 | |||
Accounts receivables due | 46,323 | 46,323 | $ 47,972 | ||||
Accounts payable due | 14,964 | 14,964 | 18,120 | ||||
Lease income | 500 | 500 | 1,000 | 1,000 | |||
Gain on sales-type leases | 27 | 33,834 | 24,677 | 33,834 | |||
Sales-type lease payments received | 6,300 | 2,400 | 12,500 | 4,800 | |||
Lease term (in years) | 10 years | ||||||
Lease renewal period options | renewalOption | 2 | ||||||
Lease renewal option period (in years) | 5 years | ||||||
Annual lease payment due | $ 5,000 | ||||||
Service fee arrangement period (in years) | 5 years | ||||||
Payment due for termination of commitment | $ 10,000 | ||||||
HFC | |||||||
Related Party Transaction [Line Items] | |||||||
Minimum annualized payments received | 340,000 | 340,000 | |||||
Administrative fee | 700 | 700 | 1,300 | 1,300 | |||
Revenues: | 99,100 | 95,600 | 201,100 | 197,000 | |||
Reimbursements for expense and capital projects | 1,200 | 900 | 4,300 | 4,000 | |||
Distributions on common units | 20,900 | 18,400 | 41,700 | 56,000 | |||
Accounts receivables due | 46,300 | 46,300 | 48,000 | ||||
Accounts payable due | 15,000 | 15,000 | 18,100 | ||||
Deferred revenue | $ 400 | $ 400 | $ 400 | ||||
HFC | Subsequent Event | Woods Cross Refinery | |||||||
Related Party Transaction [Line Items] | |||||||
Cash considerations receivable under agreement | $ 232,500 | ||||||
HFC | Revenue Benchmark | Revenue from Rights Concentration Risk | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of total revenue | 79.00% | 79.00% | |||||
Annual Administrative Fee | HFC | |||||||
Related Party Transaction [Line Items] | |||||||
Administrative fee | $ 2,600 | ||||||
Reimbursements Paid | HFC | |||||||
Related Party Transaction [Line Items] | |||||||
Expense of employees supporting operations | $ 14,300 | $ 13,200 | $ 28,700 | $ 27,300 |
Partners' Equity Income Allocat
Partners' Equity Income Allocations and Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 22, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Class of Stock [Line Items] | |||||
Partners' capital units held by controlling interest (in shares) | 59,630,030 | 59,630,030 | |||
Ownership percentage, controlling interest | 57.00% | 57.00% | |||
Value of common units available to issue and sell under offering program | $ 200 | ||||
Units issued under offering program (in shares) | 2,413,153 | ||||
Proceeds from issuance of equity | $ 82.3 | ||||
Cash distributions | $ 37 | $ 34.5 | $ 74.1 | $ 68.9 | |
Subsequent Event | |||||
Class of Stock [Line Items] | |||||
Cash distribution declared (in USD per share) | $ 0.35 |
Net Income Per Limited Partne_3
Net Income Per Limited Partner Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Net Income per Limited Partner Unit [Abstract] | ||||
Net income attributable to the partners | $ 55,745 | $ 76,470 | $ 120,142 | $ 101,331 |
Less: Participating securities’ share in earnings | (190) | 0 | (411) | 0 |
Net income attributable to common units | $ 55,555 | $ 76,470 | $ 119,731 | $ 101,331 |
Weighted average limited partners’ units outstanding, basic (in shares) | 105,440 | 105,440 | 105,440 | 105,440 |
Weighted average limited partners’ units outstanding, diluted (in shares) | 105,440 | 105,440 | 105,440 | 105,440 |
Limited partners’ per unit interest in earnings— basic (in USD per share) | $ 0.53 | $ 0.73 | $ 1.14 | $ 0.96 |
Limited partners’ per unit interest in earnings— diluted (in USD per share) | $ 0.53 | $ 0.73 | $ 1.14 | $ 0.96 |
Environmental (Details)
Environmental (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Loss Contingencies [Line Items] | |||||
Environmental remediation expense | $ 0.5 | $ 0.5 | $ 0.5 | $ 0.7 | |
Accrued environmental liabilities | 4.3 | 4.3 | $ 4.5 | ||
Other Noncurrent Liabilities | |||||
Loss Contingencies [Line Items] | |||||
Accrued environmental liabilities | 2.2 | 2.2 | 2.5 | ||
Affiliates | |||||
Loss Contingencies [Line Items] | |||||
Accrued environmental liabilities | $ 0.4 | $ 0.4 | $ 0.5 |
Segments Information (Details)
Segments Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Revenues: | $ 126,235 | $ 114,807 | $ 253,418 | $ 242,661 | |
Operating income | 56,317 | 52,501 | 103,068 | 118,694 | |
Unallocated general and administrative expenses | (2,847) | (2,535) | (5,815) | (5,237) | |
Interest and financing costs, net | (7,324) | (10,966) | (14,016) | (26,515) | |
Loss on early extinguishment of debt | 0 | 0 | 0 | (25,915) | |
Equity in earnings of equity method investments | 3,423 | 2,156 | 5,186 | 3,870 | |
Gain on sales-type leases | 27 | 33,834 | 24,677 | 33,834 | |
Gain (loss) on sale of assets and other | 5,415 | 468 | 5,917 | 974 | |
Income before income taxes | 57,858 | 77,993 | 124,832 | 104,942 | |
Capital Expenditures: | 26,157 | 11,798 | 59,375 | 30,740 | |
Capital Expenditures: | 2,172,822 | 2,172,822 | $ 2,167,565 | ||
Goodwill impairment | 0 | 0 | 11,034 | 0 | |
Goodwill | 223,650 | 223,650 | 234,684 | ||
Affiliates | |||||
Segment Reporting Information [Line Items] | |||||
Revenues: | 99,142 | 95,563 | 201,068 | 196,991 | |
Third parties | |||||
Segment Reporting Information [Line Items] | |||||
Revenues: | 27,093 | 19,244 | 52,350 | 45,670 | |
Pipelines and terminals | |||||
Segment Reporting Information [Line Items] | |||||
Capital Expenditures: | 25,559 | 11,798 | 58,777 | 30,416 | |
Refinery processing units | |||||
Segment Reporting Information [Line Items] | |||||
Revenues: | 21,026 | 19,573 | 43,522 | 39,457 | |
Capital Expenditures: | 598 | 0 | 598 | 324 | |
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Revenues: | 126,235 | 114,807 | 253,418 | 242,661 | |
Operating income | 59,164 | 55,036 | 108,883 | 123,931 | |
Operating Segments | Pipelines and terminals | |||||
Segment Reporting Information [Line Items] | |||||
Operating income | 49,391 | 45,630 | 90,875 | 104,533 | |
Capital Expenditures: | 1,743,374 | 1,743,374 | 1,729,547 | ||
Goodwill impairment | 11,000 | ||||
Goodwill | 223,700 | 223,700 | 234,700 | ||
Operating Segments | Pipelines and terminals | Affiliates | |||||
Segment Reporting Information [Line Items] | |||||
Revenues: | 78,116 | 75,990 | 157,546 | 157,534 | |
Operating Segments | Pipelines and terminals | Third parties | |||||
Segment Reporting Information [Line Items] | |||||
Revenues: | 27,093 | 19,244 | 52,350 | 45,670 | |
Operating Segments | Refinery processing units | |||||
Segment Reporting Information [Line Items] | |||||
Revenues: | 21,026 | 19,573 | 43,522 | 39,457 | |
Operating income | 9,773 | $ 9,406 | 18,008 | $ 19,398 | |
Capital Expenditures: | 295,098 | 295,098 | 305,090 | ||
Other | |||||
Segment Reporting Information [Line Items] | |||||
Capital Expenditures: | $ 134,350 | $ 134,350 | $ 132,928 |
Supplemental Guarantor _ Non-_3
Supplemental Guarantor / Non-Guarantor Financial Information - Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 19,561 | $ 21,990 |
Accounts receivable | 61,072 | 62,515 |
Prepaid and other current assets | 9,277 | 9,487 |
Total current assets | 89,910 | 93,992 |
Properties and equipment, net | 1,430,311 | 1,450,685 |
Operating lease right-of-use assets, net | 2,724 | 2,979 |
Net investment in leases | 211,550 | 166,316 |
Investment in subsidiaries | 0 | 0 |
Intangible assets, net | 80,311 | 87,315 |
Goodwill | 223,650 | 234,684 |
Equity method investments | 117,436 | 120,544 |
Other assets | 16,930 | 11,050 |
Total assets | 2,172,822 | 2,167,565 |
Current liabilities: | ||
Accounts payable | 40,555 | 46,400 |
Accrued interest | 10,869 | 10,892 |
Deferred revenue | 10,569 | 11,368 |
Accrued property taxes | 5,057 | 3,992 |
Current operating lease liabilities | 795 | 875 |
Current finance lease liabilities | 3,755 | 3,713 |
Other current liabilities | 2,943 | 2,505 |
Total current liabilities | 74,543 | 79,745 |
Long-term debt | 1,362,570 | 1,405,603 |
Noncurrent operating lease liabilities | 2,303 | 2,476 |
Noncurrent finance lease liabilities | 66,434 | 68,047 |
Other long-term liabilities | 11,913 | 12,905 |
Deferred revenue | 32,645 | 40,581 |
Class B unit | 54,637 | 52,850 |
Equity - partners | 425,218 | 379,292 |
Equity - noncontrolling interests | 142,559 | 126,066 |
Total liabilities and equity | 2,172,822 | 2,167,565 |
Eliminations | ||
Current assets: | ||
Cash and cash equivalents | 0 | 0 |
Accounts receivable | (207) | (315) |
Prepaid and other current assets | 0 | 0 |
Total current assets | (207) | (315) |
Properties and equipment, net | 0 | 0 |
Operating lease right-of-use assets, net | 0 | 0 |
Net investment in leases | 0 | 0 |
Investment in subsidiaries | (2,088,427) | (2,076,691) |
Intangible assets, net | 0 | 0 |
Goodwill | 0 | 0 |
Equity method investments | 0 | 0 |
Other assets | 0 | 0 |
Total assets | (2,088,634) | (2,077,006) |
Current liabilities: | ||
Accounts payable | (207) | (315) |
Accrued interest | 0 | 0 |
Deferred revenue | 0 | 0 |
Accrued property taxes | 0 | 0 |
Current operating lease liabilities | 0 | 0 |
Current finance lease liabilities | 0 | 0 |
Other current liabilities | 0 | 0 |
Total current liabilities | (207) | (315) |
Long-term debt | 0 | 0 |
Noncurrent operating lease liabilities | 0 | 0 |
Noncurrent finance lease liabilities | 0 | 0 |
Other long-term liabilities | 0 | 0 |
Deferred revenue | 0 | 0 |
Class B unit | 0 | 0 |
Equity - partners | (2,088,427) | (2,076,691) |
Equity - noncontrolling interests | 0 | 0 |
Total liabilities and equity | (2,088,634) | (2,077,006) |
Parent | ||
Current assets: | ||
Cash and cash equivalents | 871 | 1,627 |
Accounts receivable | 0 | 0 |
Prepaid and other current assets | 368 | 349 |
Total current assets | 1,239 | 1,976 |
Properties and equipment, net | 0 | 0 |
Operating lease right-of-use assets, net | 0 | 0 |
Net investment in leases | 0 | 0 |
Investment in subsidiaries | 1,788,648 | 1,789,808 |
Intangible assets, net | 0 | 0 |
Goodwill | 0 | 0 |
Equity method investments | 0 | 0 |
Other assets | 9,167 | 4,268 |
Total assets | 1,799,054 | 1,796,052 |
Current liabilities: | ||
Accounts payable | 0 | 0 |
Accrued interest | 10,869 | 10,892 |
Deferred revenue | 0 | 0 |
Accrued property taxes | 0 | 0 |
Current operating lease liabilities | 0 | 0 |
Current finance lease liabilities | 0 | 0 |
Other current liabilities | 137 | 5 |
Total current liabilities | 11,006 | 10,897 |
Long-term debt | 1,362,570 | 1,405,603 |
Noncurrent operating lease liabilities | 0 | 0 |
Noncurrent finance lease liabilities | 0 | 0 |
Other long-term liabilities | 260 | 260 |
Deferred revenue | 0 | 0 |
Class B unit | 0 | 0 |
Equity - partners | 425,218 | 379,292 |
Equity - noncontrolling interests | 0 | 0 |
Total liabilities and equity | 1,799,054 | 1,796,052 |
Guarantor Restricted Subsidiaries | ||
Current assets: | ||
Cash and cash equivalents | (423) | (987) |
Accounts receivable | 53,348 | 56,522 |
Prepaid and other current assets | 8,156 | 8,366 |
Total current assets | 61,081 | 63,901 |
Properties and equipment, net | 1,037,480 | 1,087,184 |
Operating lease right-of-use assets, net | 2,603 | 2,822 |
Net investment in leases | 211,550 | 166,316 |
Investment in subsidiaries | 299,779 | 286,883 |
Intangible assets, net | 80,311 | 87,315 |
Goodwill | 223,650 | 234,684 |
Equity method investments | 79,448 | 81,089 |
Other assets | 7,763 | 6,782 |
Total assets | 2,003,665 | 2,016,976 |
Current liabilities: | ||
Accounts payable | 28,247 | 30,252 |
Accrued interest | 0 | 0 |
Deferred revenue | 10,169 | 10,868 |
Accrued property taxes | 2,391 | 2,915 |
Current operating lease liabilities | 722 | 804 |
Current finance lease liabilities | 3,755 | 3,713 |
Other current liabilities | 2,499 | 2,491 |
Total current liabilities | 47,783 | 51,043 |
Long-term debt | 0 | 0 |
Noncurrent operating lease liabilities | 2,303 | 2,476 |
Noncurrent finance lease liabilities | 66,434 | 68,047 |
Other long-term liabilities | 11,215 | 12,171 |
Deferred revenue | 32,645 | 40,581 |
Class B unit | 54,637 | 52,850 |
Equity - partners | 1,788,648 | 1,789,808 |
Equity - noncontrolling interests | 0 | 0 |
Total liabilities and equity | 2,003,665 | 2,016,976 |
Non-Guarantor Non-Restricted Subsidiaries | ||
Current assets: | ||
Cash and cash equivalents | 19,113 | 21,350 |
Accounts receivable | 7,931 | 6,308 |
Prepaid and other current assets | 753 | 772 |
Total current assets | 27,797 | 28,430 |
Properties and equipment, net | 392,831 | 363,501 |
Operating lease right-of-use assets, net | 121 | 157 |
Net investment in leases | 0 | 0 |
Investment in subsidiaries | 0 | 0 |
Intangible assets, net | 0 | 0 |
Goodwill | 0 | 0 |
Equity method investments | 37,988 | 39,455 |
Other assets | 0 | 0 |
Total assets | 458,737 | 431,543 |
Current liabilities: | ||
Accounts payable | 12,515 | 16,463 |
Accrued interest | 0 | 0 |
Deferred revenue | 400 | 500 |
Accrued property taxes | 2,666 | 1,077 |
Current operating lease liabilities | 73 | 71 |
Current finance lease liabilities | 0 | 0 |
Other current liabilities | 307 | 9 |
Total current liabilities | 15,961 | 18,120 |
Long-term debt | 0 | 0 |
Noncurrent operating lease liabilities | 0 | 0 |
Noncurrent finance lease liabilities | 0 | 0 |
Other long-term liabilities | 438 | 474 |
Deferred revenue | 0 | 0 |
Class B unit | 0 | 0 |
Equity - partners | 299,779 | 286,883 |
Equity - noncontrolling interests | 142,559 | 126,066 |
Total liabilities and equity | $ 458,737 | $ 431,543 |
0.05 | ||
Condensed Financial Statements, Captions [Line Items] | ||
Stated interest rate, senior notes | 5.00% |
Supplemental Guarantor _ Non-_4
Supplemental Guarantor / Non-Guarantor Financial Information - Condensed Consolidating Statement Of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenues: | ||||
Revenues: | $ 126,235 | $ 114,807 | $ 253,418 | $ 242,661 |
Operating costs and expenses: | ||||
Operations (exclusive of depreciation and amortization) | 42,068 | 34,737 | 83,433 | 69,718 |
Depreciation and amortization | 25,003 | 25,034 | 50,068 | 49,012 |
General and administrative | 2,847 | 2,535 | 5,815 | 5,237 |
Goodwill impairment | 0 | 0 | 11,034 | 0 |
Total operating costs and expenses | 69,918 | 62,306 | 150,350 | 123,967 |
Operating income | 56,317 | 52,501 | 103,068 | 118,694 |
Equity in earnings of subsidiaries | 0 | 0 | 0 | 0 |
Equity in earnings of equity method investments | 3,423 | 2,156 | 5,186 | 3,870 |
Interest expense | (13,938) | (13,779) | (27,178) | (31,546) |
Interest income | 6,614 | 2,813 | 13,162 | 5,031 |
Loss on early extinguishment of debt | 0 | 0 | 0 | (25,915) |
Gain on sales-type leases | 27 | 33,834 | 24,677 | 33,834 |
Gain on sale of assets and other | 5,415 | 468 | 5,917 | 974 |
Total other income (expense) | 1,541 | 25,492 | 21,764 | (13,752) |
Income before income taxes | 57,858 | 77,993 | 124,832 | 104,942 |
State income tax expense | (27) | (39) | (64) | (76) |
Net income | 57,831 | 77,954 | 124,768 | 104,866 |
Allocation of net income attributable to noncontrolling interests | (2,086) | (1,484) | (4,626) | (3,535) |
Net income attributable to the partners | 55,745 | 76,470 | 120,142 | 101,331 |
Parent | ||||
Revenues: | ||||
Revenues: | 0 | 0 | 0 | 0 |
Operating costs and expenses: | ||||
Operations (exclusive of depreciation and amortization) | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
General and administrative | 907 | 780 | 2,085 | 1,879 |
Goodwill impairment | 0 | |||
Total operating costs and expenses | 907 | 780 | 2,085 | 1,879 |
Operating income | (907) | (780) | (2,085) | (1,879) |
Equity in earnings of subsidiaries | 69,596 | 89,893 | 147,405 | 158,428 |
Equity in earnings of equity method investments | 0 | 0 | 0 | |
Interest expense | (12,944) | (12,740) | (25,178) | (29,470) |
Interest income | 26 | 0 | 26 | |
Loss on early extinguishment of debt | (25,915) | |||
Gain on sales-type leases | 0 | 0 | 0 | 0 |
Gain on sale of assets and other | 0 | 71 | 0 | 141 |
Total other income (expense) | 56,652 | 77,250 | 122,227 | 103,210 |
Income before income taxes | 55,745 | 76,470 | 120,142 | 101,331 |
State income tax expense | 0 | 0 | 0 | 0 |
Net income | 55,745 | 76,470 | 120,142 | 101,331 |
Allocation of net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income attributable to the partners | 55,745 | 76,470 | 120,142 | 101,331 |
Guarantor Restricted Subsidiaries | ||||
Revenues: | ||||
Revenues: | 113,390 | 105,304 | 228,142 | 219,214 |
Operating costs and expenses: | ||||
Operations (exclusive of depreciation and amortization) | 37,742 | 30,980 | 75,541 | 62,111 |
Depreciation and amortization | 20,651 | 20,739 | 41,487 | 40,492 |
General and administrative | 1,940 | 1,755 | 3,730 | 3,358 |
Goodwill impairment | 11,034 | |||
Total operating costs and expenses | 60,333 | 53,474 | 131,792 | 105,961 |
Operating income | 53,057 | 51,830 | 96,350 | 113,253 |
Equity in earnings of subsidiaries | 3,605 | 1,510 | 7,741 | 5,805 |
Equity in earnings of equity method investments | 2,793 | 1,449 | 3,411 | 3,537 |
Interest expense | (994) | (1,039) | (2,000) | (2,076) |
Interest income | 6,614 | 2,787 | 13,162 | 5,005 |
Loss on early extinguishment of debt | 0 | |||
Gain on sales-type leases | 27 | 33,834 | 24,677 | 33,834 |
Gain on sale of assets and other | 5,414 | 396 | 5,915 | 816 |
Total other income (expense) | 17,459 | 38,937 | 52,906 | 46,921 |
Income before income taxes | 70,516 | 90,767 | 149,256 | 160,174 |
State income tax expense | (27) | (39) | (64) | (76) |
Net income | 70,489 | 90,728 | 149,192 | 160,098 |
Allocation of net income attributable to noncontrolling interests | (894) | (835) | (1,787) | (1,670) |
Net income attributable to the partners | 69,595 | 89,893 | 147,405 | 158,428 |
Non-Guarantor Non-Restricted Subsidiaries | ||||
Revenues: | ||||
Revenues: | 12,845 | 9,503 | 25,276 | 23,447 |
Operating costs and expenses: | ||||
Operations (exclusive of depreciation and amortization) | 4,326 | 3,757 | 7,892 | 7,607 |
Depreciation and amortization | 4,352 | 4,295 | 8,581 | 8,520 |
General and administrative | 0 | 0 | 0 | 0 |
Goodwill impairment | 0 | |||
Total operating costs and expenses | 8,678 | 8,052 | 16,473 | 16,127 |
Operating income | 4,167 | 1,451 | 8,803 | 7,320 |
Equity in earnings of subsidiaries | 0 | 0 | 0 | 0 |
Equity in earnings of equity method investments | 630 | 707 | 1,775 | 333 |
Interest expense | 0 | 0 | 0 | 0 |
Interest income | 0 | 0 | 0 | 0 |
Loss on early extinguishment of debt | 0 | |||
Gain on sales-type leases | 0 | 0 | 0 | 0 |
Gain on sale of assets and other | 1 | 1 | 2 | 17 |
Total other income (expense) | 631 | 708 | 1,777 | 350 |
Income before income taxes | 4,798 | 2,159 | 10,580 | 7,670 |
State income tax expense | 0 | 0 | 0 | 0 |
Net income | 4,798 | 2,159 | 10,580 | 7,670 |
Allocation of net income attributable to noncontrolling interests | (1,192) | (649) | (2,839) | (1,865) |
Net income attributable to the partners | 3,606 | 1,510 | 7,741 | 5,805 |
Eliminations | ||||
Revenues: | ||||
Revenues: | 0 | 0 | 0 | 0 |
Operating costs and expenses: | ||||
Operations (exclusive of depreciation and amortization) | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
General and administrative | 0 | 0 | 0 | 0 |
Goodwill impairment | 0 | |||
Total operating costs and expenses | 0 | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 | 0 |
Equity in earnings of subsidiaries | (73,201) | (91,403) | (155,146) | (164,233) |
Equity in earnings of equity method investments | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Interest income | 0 | 0 | 0 | 0 |
Loss on early extinguishment of debt | 0 | |||
Gain on sales-type leases | 0 | 0 | 0 | 0 |
Gain on sale of assets and other | 0 | 0 | 0 | 0 |
Total other income (expense) | (73,201) | (91,403) | (155,146) | (164,233) |
Income before income taxes | (73,201) | (91,403) | (155,146) | (164,233) |
State income tax expense | 0 | 0 | 0 | 0 |
Net income | (73,201) | (91,403) | (155,146) | (164,233) |
Allocation of net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income attributable to the partners | (73,201) | (91,403) | (155,146) | (164,233) |
Affiliates | ||||
Revenues: | ||||
Revenues: | 99,142 | 95,563 | 201,068 | 196,991 |
Affiliates | Parent | ||||
Revenues: | ||||
Revenues: | 0 | 0 | 0 | 0 |
Affiliates | Guarantor Restricted Subsidiaries | ||||
Revenues: | ||||
Revenues: | 92,911 | 89,417 | 188,612 | 184,172 |
Affiliates | Non-Guarantor Non-Restricted Subsidiaries | ||||
Revenues: | ||||
Revenues: | 6,231 | 6,146 | 12,456 | 12,819 |
Affiliates | Eliminations | ||||
Revenues: | ||||
Revenues: | 0 | 0 | 0 | 0 |
Third parties | ||||
Revenues: | ||||
Revenues: | 27,093 | 19,244 | 52,350 | 45,670 |
Third parties | Parent | ||||
Revenues: | ||||
Revenues: | 0 | 0 | 0 | 0 |
Third parties | Guarantor Restricted Subsidiaries | ||||
Revenues: | ||||
Revenues: | 20,479 | 15,887 | 39,530 | 35,042 |
Third parties | Non-Guarantor Non-Restricted Subsidiaries | ||||
Revenues: | ||||
Revenues: | 6,614 | 3,357 | 12,820 | 10,628 |
Third parties | Eliminations | ||||
Revenues: | ||||
Revenues: | $ 0 | $ 0 | $ 0 | $ 0 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event $ in Millions | Aug. 02, 2021USD ($)nominationextensionOptionshares |
STC | |
Subsequent Event [Line Items] | |
Newly issued common units transferred in transaction (in shares) | 21,000,000 |
Transaction cash considerations transferred | $ | $ 325 |
Number of termination date extension periods in transaction | extensionOption | 2 |
Transaction termination date extension period | 90 days |
Number of director nominations granted in transaction | nomination | 1 |
Hippo Holding LLC | HF Sinclair Corporation | The Sinclair Companies | Common Stock | |
Subsequent Event [Line Items] | |
Newly issued common units transferred in transaction (in shares) | 60,230,036 |