HF Sinclair 8-K Holly Corporation Reports Second Quarter 2009 Results

Exhibit 99.1

Press Release
August 10, 2009

Holly Corporation Reports Second Quarter 2009 Results

Dallas, Texas, August 10, 2009 — Holly Corporation (NYSE-HOC) (“Holly” or the “Company”) today reported second quarter financial results. For the quarter, net income attributable to Holly Corporation stockholders was $14.6 million ($0.29 per basic and diluted share) compared to $11.5 million ($0.23 per basic and diluted share) for the same period of 2008. For the six months ended June 30, 2009, net income was $36.6 million ($0.73 per basic and diluted share) compared to $20.1 million ($0.40 per basic and $0.39 per diluted share) for the first six months of 2008.

For the quarter, net income attributable to our stockholders increased by $3.2 million compared to the second quarter of 2008. This increase was due to the effects of increased refining production, partially offset by an overall decrease in refinery gross margins. Overall refinery gross margins were $7.82 per produced barrel, a 14% decrease compared to $9.09 for the second quarter of 2008. For the three months ended June 30, 2009, our refinery production levels increased 41% over the same period of 2008 due to incremental production attributable to the operations of our newly acquired Tulsa refinery and production gains resulting from our recent Navajo and Woods Cross refinery capacity expansions. Also contributing to the year-over-year increase in second quarter production levels were the effects of reduced production during the second quarter of 2008 as a result of a fluid catalytic cracking unit (“FCC”) outage that resulted in downtime at our Navajo refinery. Furthermore, increased earnings attributable to our asphalt marketing business also contributed to the increased earnings in the current year.

For the six months ended June 30, 2009, net income attributable to our stockholders increased by $16.5 million compared to the same period of 2008. This increase was due to an overall year-over-year increase in refined product margins combined with a slight increase in year-to-date production levels. Overall refinery gross margins were $9.41 per produced barrel, a 13% increase compared to $8.35 for the first six months of 2008. For the six months ended June 30, 2009, our refinery production levels increased 4% over the same period of 2008. This was due to the effects of incremental production attributable to our Tulsa refinery operations, production gains resulting from our recent Navajo and Woods Cross refinery capacity expansions and production downtime during the second quarter of 2008. These factors were largely offset by the effects of production downtime during the first quarter of 2009. During the first quarter of 2009, we timed our scheduled major maintenance turnaround at the Navajo refinery to coincide with completion of our 15,000 BPSD capacity expansion, increasing its refining capacity to 100,000 BPSD.

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“Despite a challenging refining environment, we remained profitable for the quarter,” said Matthew Clifton, Chairman of the Board and Chief Executive Officer of Holly. “Our EBITDA for the quarter was $56.8 million, a 59% increase over the second quarter of 2008. Although overall refining margins were tight in the second quarter, we experienced a small improvement in the markets served by our Navajo refinery averaging $8.39 per barrel, a 4% increase over last year’s second quarter. During the second quarter, we started to see the positive impact from our recent Navajo refinery expansion with refinery production averaging over 96,000 barrels per day. We expect our phase two operation upgrades to be complete in late 2009 that will allow us to run a wider variety of crudes while increasing our flexibility in varying the mix of transportation fuels. At our Woods Cross refinery, margin levels averaged $8.95 per barrel, a 28% decrease from last year’s second quarter. However most of the Woods Cross margin reduction was driven by drawdowns of gasoline inventories during early 2009 and the resulting impact on the second quarter of 2009 in a higher current cost environment. Negatively affecting our overall margin numbers for both refineries were reductions in diesel crack spreads from the very high levels realized during 2008.”

“On June 1, 2009, we completed the acquisition of our 85,000 BPSD Tulsa refinery. Our employees (including our new valued Tulsa employees) did a fantastic job in smoothly transitioning the Tulsa operations into our overall refining business. Although we remain extremely pleased with the facility and its contribution potential, June’s results at Tulsa were well below expectations. However, as we start the third quarter, while facing continued headwinds from low diesel crack spreads, we expect the positive effects of a 15% increase in our crude charge levels in July and improved gross margins on our specialty lubricant products to lead to improved financial performance.”

“We were pleased by the record earnings of Holly Energy Partners, our affiliated MLP, during the second quarter of 2009. Having just completed its fifth year of operation since its initial public offering, it continues to grow and increase its distribution to Holly and its other unitholders. It has increased its quarterly distribution every quarter since inception. On June 1, 2009, Holly sold a newly constructed intermediate pipeline to HEP, and on August 1, 2009, Holly sold certain rail and truck loading facilities at the Tulsa refinery to HEP. These sales resulted in proceeds of approximately $52.0 million to Holly and has provided HEP attractive continued growth opportunities.”

“Looking forward, 2009 will remain a challenging year for the refining industry. We do believe, however, that the markets we serve, the improvements and initiatives that we have recently executed, the quality of our employees and our strong balance sheet, position us to meet these challenges,” Clifton said.

Sales and other revenues for the 2009 second quarter were $1,038.4 million, a 41% decrease compared to the three months ended June 30, 2008. This decrease was due to the effects of a 48% decline in year-over-year second quarter sales prices of produced refined products sold, partially offset by a 25% current quarter increase in volumes of refined products sold over the same period in 2008. Additionally, direct sales of excess crude oil decreased in the current year. Cost of products sold was $879.9 million, a 46% decrease compared to the three months ended June 30, 2008 due mainly to lower crude oil acquisition costs.

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Sales and other revenues for the first six months of 2009 were $1,689.2 million, a 48% decrease compared to the six months ended June 30, 2008. This decrease was due to the effects of an overall 46% decline in year-over-year prices of produced refined products sold for the current year-to-date period combined with a 2% decrease in refined products sold compared to the first six months of 2008. Cost of products sold was $1,391.6 million, a 54% decrease compared to the six months ended June 30, 2008.

Operating costs and expenses for the three and six months ended June 30, 2009 increased due to the inclusion of costs attributable to the operations of our Tulsa refinery beginning June 1, 2009, increased costs attributable to the operations of Holly Energy Partners, L.P. (“HEP”) and increased depreciation and amortization expense. A factor contributing to the overall year-to-date increase in operating costs and expenses was due to the inclusion of HEP’s costs for a full six month period during the six months ended June 30, 2009 compared to four months in 2008 as a result of our reconsolidation of HEP effective March 1, 2008. For the six months ended June 30, 2009, HEP’s operating costs and expenses were $37.1 million, an increase of $13.5 million compared to 2008. Additionally, interest expense for the three and six months ended June 30, 2009 and 2008 primarily relates to interest costs attributable to HEP. This press release includes key segment information that shows the impact of HEP’s consolidation on certain balance sheet and income statement amounts.

We issued $200 million of senior notes at a 9.875% coupon in June due 2017. The proceeds from this offering were primarily used to fund the purchase of the Tulsa refinery and associated inventories from Sunoco in June.

The Company has scheduled a webcast conference call for today, August 10, 2009 at 10:00 AM Eastern Time to discuss financial results. This webcast may be accessed at:http://www.videonewswire.com/event.asp?id=60707.

An audio archive of this webcast will be available using the link above through August 24, 2009.

Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries a 100,000 BPSD refinery located in Artesia, New Mexico, a 31,000 BPSD refinery in Woods Cross, Utah and an 85,000 BPSD refinery located in Tulsa, Oklahoma that was acquired on June, 1 2009. Also, a subsidiary of Holly owns a 41% interest (including the general partner interest) in Holly Energy Partners, L.P., which through subsidiaries owns or leases approximately 2,700 miles of petroleum product and crude oil pipelines in Texas, New Mexico, Utah and Oklahoma and tankage and refined product terminals in several Southwest and Rocky Mountain states.

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings

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with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in the Company’s markets, the demand for and supply of crude oil and refined products, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, effects of governmental regulations and policies, the availability and cost of financing to the Company, the effectiveness of the Company’s capital investments and marketing strategies, the ability of the Company to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any future acquired operations, the Company’s efficiency in carrying out construction projects, the Company’s ability to successfully integrate the operations of the Tulsa refinery into its business, the possibility of terrorist attacks and the consequences of any such attacks, general economic conditions, and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)

	Three Months Ended
	June 30,						Change from 2008
	2009			2008			Change			Percent
	(In thousands, except per share data)
Sales and other revenues	$	1,038,381		$	1,743,822		$	(705,441	)		(40.5	)%
Operating costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)		879,926			1,620,550			(740,624	)		(45.7	)
Operating expenses (exclusive of depreciation and amortization)		78,508			74,175			4,333			5.8
General and administrative expenses (exclusive of depreciation and amortization)		15,108			12,942			2,166			16.7
Depreciation and amortization		25,500			15,929			9,571			60.1
Total operating costs and expenses		999,042			1,723,596			(724,554	)		(42.0	)
Income from operations		39,339			20,226			19,113			94.5
Other income (expense):
Equity in earnings of SLC Pipeline		488			—			488			—
Interest income		134			3,826			(3,692	)		(96.5	)
Interest expense		(7,205	)		(6,251	)		(954	)		15.3
Tulsa Refinery acquisition costs		(1,610	)		—			(1,610	)		—
		(8,193	)		(2,425	)		(5,768	)		237.9
Income before income taxes		31,146			17,801			13,345			75.0
Income tax provision		9,575			5,856			3,719			63.5
Net income(1)		21,571			11,945			9,626			80.6
Less noncontrolling interest in net income(1)		6,966			493			6,473			1,313.0
Net income attributable to Holly Corporation stockholders(1)	$	14,605		$	11,452		$	3,153			27.5	%
Net income per share attributable to Holly Corporation stockholders — basic	$	0.29		$	0.23		$	0.06			26.1	%
Net income per share attributable to Holly Corporation stockholders — diluted	$	0.29		$	0.23		$	0.06			26.1	%
Cash dividends declared per common share	$	0.15		$	0.15		$	—			—	%
Average number of common shares outstanding:
Basic		50,170			50,158			12			—	%
Diluted		50,226			50,515			(289	)		(0.6	)%
EBITDA	$	56,751		$	35,662		$	21,089			59.1	%

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	Six Months Ended
	June 30,						Change from 2008
	2009			2008			Change			Percent
	(In thousands, except per share data)
Sales and other revenues	$	1,689,204		$	3,223,806		$	(1,534,602	)		(47.6	)%
Operating costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)		1,391,580			3,003,987			(1,612,407	)		(53.7	)
Operating expenses (exclusive of depreciation and amortization)		145,710			134,883			10,827			8.0
General and administrative expenses (exclusive of depreciation and amortization)		26,855			25,879			976			3.8
Depreciation and amortization		45,821			29,238			16,583			56.7
Total operating costs and expenses		1,609,966			3,193,987			(1,584,021	)		(49.6	)
Income from operations		79,238			29,819			49,419			165.7
Other income (expense):
Equity in earnings of SLC Pipeline		663			—			663			—
Interest income		2,330			7,381			(5,051	)		(68.4	)
Interest expense		(13,444	)		(8,243	)		(5,201	)		63.1
Tulsa Refinery acquisition costs		(1,610	)		—			(1,610	)		—
Equity in earnings of HEP		—			2,990			(2,990	)		(100.0	)
		(12,061	)		2,128			(14,189	)		(666.8	)
Income before income taxes		67,177			31,947			35,230			110.3
Income tax provision		21,706			10,551			11,155			105.7
Net income(1)		45,471			21,396			24,075			112.5
Less noncontrolling interest in net income(1)		8,921			1,295			7,626			588.9
Net income attributable to Holly Corporation stockholders(1)	$	36,550		$	20,101		$	16,449			81.8	%
Net income per share attributable to Holly Corporation stockholders — basic	$	0.73		$	0.40		$	0.33			82.5	%
Net income per share attributable to Holly Corporation stockholders — diluted	$	0.73		$	0.39		$	0.34			87.2	%
Cash dividends declared per common share	$	0.30		$	0.30		$	—			—	%
Average number of common shares outstanding:
Basic		50,106			50,654			(548	)		(1.1	)%
Diluted		50,189			51,015			(826	)		(1.6	)%
EBITDA	$	115,191		$	60,752		$	54,439			89.6	%

Balance Sheet Data

	June 30,		December 31,
	2009		2008
	(In thousands)
Cash, cash equivalents and investments in marketable securities	$	109,479	$	96,008
Working capital	$	159,367	$	68,465
Total assets	$	2,621,441	$	1,874,225
Long-term debt — Holly Corporation	$	187,964	$	—
Long-term debt — HEP	$	390,056	$	341,914
Total equity(1)	$	1,026,569	$	936,332

(1) During the first quarter of 2009, we adopted SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.” As a result, net income attributable to the noncontrolling interest in our HEP subsidiary is now presented as an adjustment to net income to arrive at “Net income attributable to Holly Corporation stockholders” in our Consolidated Statements of Income. Prior to our adoption of this standard, this amount was presented as “Minority interest in earnings of HEP,” a non-operating expense item before “Income before income taxes.” Additionally, equity attributable to noncontrolling interests is now presented as a separate component of total equity in our consolidated financial statements. We have adopted this standard on a retrospective basis. While

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this presentation differs from previous GAAP requirements, this standard did not affect our net income and equity attributable to Holly Corporation stockholders.

Segment Information

Our operations are currently organized into two reportable segments, Refining and HEP. Our operations that are not included in the Refining and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Consolidations and Eliminations.

The Refining segment includes the operations of our Navajo, Woods Cross and Tulsa Refineries and Holly Asphalt Company. The Refining segment involves the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel, jet fuel and specialty lubricant products. The petroleum products produced by the Refining segment are primarily marketed the southwest, rocky mountain and mid-continent regions of the United States and northern Mexico. Additionally, the Refining segment includes specialty lubricant products produced at our Tulsa Refinery that are marketed throughout North America and to customers with operations in Central and South America. Holly Asphalt Company manufactures and markets asphalt and asphalt products in Arizona, New Mexico, Texas and northern Mexico.

The HEP segment involves all of the operations of HEP effective March 1, 2008 (date of reconsolidation). HEP owns and operates a system of petroleum product and crude gathering pipelines in Texas, New Mexico, Oklahoma and Utah, distribution terminals in Texas, New Mexico, Arizona, Utah, Idaho, and Washington and refinery tankage in New Mexico and Utah. Revenues are generated by charging tariffs for transporting petroleum products and crude oil through its pipelines and by charging fees for terminalling petroleum products and other hydrocarbons, and storing and providing other services at their storage tanks and terminals. The HEP segment also includes a 70% interest in Rio Grande Pipeline Company (“Rio Grande”) which provides petroleum products transportation services. Additionally, HEP owns a 25% interest in SLC Pipeline LLC (“SLC Pipeline”) that services refiners in the Salt Lake City, Utah area. Revenues from the HEP segment are earned through transactions with for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations and from HEP’s interest in Rio Grande.

									Consolidations
						Corporate			and			Consolidated
	Refining			HEP		and Other			Eliminations			Total
	(In thousands)
Three Months Ended June 30, 2009
Sales and other revenues	$	1,019,919		$	40,602	$	2,979		$	(25,119	)	$	1,038,381
Operating expenses	$	67,640		$	11,086	$	8		$	(226	)	$	78,508
General and administrative expenses	$	—		$	1,817	$	13,193		$	98		$	15,108
Depreciation and amortization	$	17,832		$	6,482	$	1,186		$	—		$	25,500
Income (loss) from operations	$	29,530		$	21,217	$	(11,408	)	$	—		$	39,339
Three Months Ended June 30, 2008
Sales and other revenues	$	1,736,201		$	26,774	$	886		$	(20,039	)	$	1,743,822
Operating expenses	$	64,183		$	9,985	$	7		$	—		$	74,175
General and administrative expenses	$	(6	)	$	1,359	$	11,589		$	—		$	12,942
Depreciation and amortization	$	8,699		$	6,220	$	1,010		$	—		$	15,929
Income (loss) from operations	$	22,736		$	9,210	$	(11,720	)	$	—		$	20,226

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								Consolidations
					Corporate			and			Consolidated
	Refining		HEP		and Other			Eliminations			Total
	(In thousands)
Six Months Ended June 30, 2009
Sales and other revenues	$	1,656,829	$	72,727	$	3,078		$	(43,430	)	$	1,689,204
Operating expenses	$	124,055	$	21,882	$	27		$	(254	)	$	145,710
General and administrative expenses	$	—	$	3,142	$	23,713		$	—		$	26,855
Depreciation and amortization	$	29,783	$	12,300	$	3,738		$	—		$	45,821
Income (loss) from operations	$	68,235	$	35,403	$	(24,400	)	$	—		$	79,238
Six Months Ended June 30, 2008
Sales and other revenues	$	3,213,577	$	36,716	$	1,287		$	(27,774	)	$	3,223,806
Operating expenses	$	121,399	$	13,661	$	7		$	(184	)	$	134,883
General and administrative expenses	$	1	$	1,881	$	23,997		$	—		$	25,879
Depreciation and amortization	$	18,980	$	8,230	$	2,028		$	—		$	29,238
Income (loss) from operations	$	41,620	$	12,944	$	(24,745	)	$	—		$	29,819
June 30, 2009
Cash, cash equivalents and investments in marketable securities	$	—	$	4,195	$	105,284		$	—		$	109,479
Total assets	$	1,807,743	$	524,285	$	302,476		$	(13,063	)	$	2,621,441
December 31, 2008													��
Cash, cash equivalents and investments in marketable securities	$	—	$	5,269	$	90,739		$	—		$	96,008
Total assets	$	1,288,211	$	458,049	$	141,768		$	(13,803	)	$	1,874,225

Refining Operating Data

Our refinery operations include the Navajo, Woods Cross and Tulsa Refineries. The following tables set forth information, including non-GAAP performance measures about our consolidated refinery operations. The cost of products and refinery gross margin do not include the effect of depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Navajo Refinery
Crude charge (BPD)(1)		85,760			72,800			71,800			78,000
Refinery production (BPD)(2)		96,670			76,960			79,960			85,800
Sales of produced refined products (BPD)		95,810			79,910			79,070			86,980
Sales of refined products (BPD)(3)		96,340			88,720			83,810			97,070
Refinery utilization(4)		85.8	%		85.6	%		71.8	%		91.8	%
Average per produced barrel(5)
Net sales	$	67.93		$	133.89		$	63.80		$	117.33
Cost of products(6)		59.54			125.82			53.83			110.15
Refinery gross margin		8.39			8.07			9.97			7.18
Refinery operating expenses(7)		4.56			5.68			5.19			4.98
Net operating margin	$	3.83		$	2.39		$	4.78		$	2.20

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Feedstocks:
Sour crude oil		83	%		83	%		83	%		81	%
Sweet crude oil		6	%		10	%		7	%		9	%
Other feedstocks and blends		11	%		7	%		10	%		10	%
Total		100	%		100	%		100	%		100	%
Sales of produced refined products:
Gasolines		57	%		55	%		58	%		57	%
Diesel fuels		34	%		34	%		33	%		33	%
Jet fuels		1	%		1	%		1	%		1	%
Fuel oil		3	%		3	%		3	%		3	%
Asphalt		3	%		4	%		3	%		3	%
LPG and other		2	%		3	%		2	%		3	%
Total		100	%		100	%		100	%		100	%
Woods Cross Refinery
Crude charge (BPD)(1)		25,940			23,980			24,630			24,470
Refinery production (BPD)(2)		27,700			23,540			25,510			24,490
Sales of produced refined products (BPD)		27,060			23,790			27,040			24,550
Sales of refined products (BPD)(3)		27,750			24,490			27,710			26,010
Refinery utilization(4)		83.7	%		92.2	%		79.5	%		94.1	%
Average per produced barrel(5)
Net sales	$	69.05		$	133.09		$	59.74		$	117.56
Cost of products(6)		60.10			120.60			49.90			105.05
Refinery gross margin		8.95			12.49			9.84			12.51
Refinery operating expenses(7)		5.98			8.13			6.45			7.17
Net operating margin	$	2.97		$	4.36		$	3.39		$	5.34
Feedstocks:
Sour crude oil		3	%		—	%		3	%		2	%
Sweet crude oil		62	%		76	%		64	%		75	%
Black wax crude oil		27	%		22	%		27	%		19	%
Other feedstocks and blends		8	%		2	%		6	%		4	%
Total		100	%		100	%		100	%		100	%
Sales of produced refined products:
Gasolines		66	%		62	%		67	%		65	%
Diesel fuels		28	%		29	%		26	%		26	%
Jet fuels		—	%		—	%		—	%		—	%
Fuel oil		3	%		6	%		4	%		5	%
Asphalt		2	%		2	%		1	%		1	%
LPG and other		1	%		1	%		2	%		3	%
Total		100	%		100	%		100	%		100	%
Tulsa Refinery(8)
Crude charge (BPD)(1)		17,930			—			9,010			—
Refinery production (BPD)(2)		17,280			—			9,690			—
Sales of produced refined products (BPD)		16,970			—			8,530			—
Sales of refined products (BPD)(3)		17,250			—			8,670			—
Refinery utilization(4)		64.0	%		—	%		64.0	%		—	%
Average per produced barrel(5)
Net sales	$	76.14		$	—		$	76.14		$	—
Cost of products(6)		73.31			—			73.31			—
Refinery gross margin		2.83			—			2.83			—
Refinery operating expenses(7)		5.21			—			5.21			—
Net operating margin	$	(2.38	)	$	—		$	(2.38	)	$	—

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Feedstocks:
Sour crude oil		—	%		—	%		—	%		—	%
Sweet crude oil		100	%		—	%		100	%		—	%
Other feedstocks and blends		—	%		—	%		—	%		—	%
Total		100	%		—	%		100	%		—	%
Sales of produced refined products:
Gasolines		23	%		—	%		23	%		—	%
Diesel fuels		28	%		—	%		28	%		—	%
Jet fuels		9	%		—	%		9	%		—	%
Lubricants		22	%		—	%		22	%		—	%
Gas oil / intermediates		16	%		—	%		16	%		—	%
LPG and other		2	%		—	%		2	%		—	%
Total		100	%		—	%		100	%		—	%
Consolidated
Crude charge (BPD)(1)		129,620			96,780			105,440			102,470
Refinery production (BPD)(2)		141,650			100,500			115,150			110,290
Sales of produced refined products (BPD)		139,840			103,700			114,650			111,530
Sales of refined products (BPD)(3)		141,340			113,210			120,190			123,080
Refinery utilization(4)		81.5	%		87.2	%		77.0	%		92.3	%
Average per produced barrel(5)
Net sales	$	69.14		$	133.71		$	63.76		$	117.38
Cost of products(6)		61.32			124.62			54.35			109.03
Refinery gross margin		7.82			9.09			9.41			8.35
Refinery operating expenses(7)		4.91			6.24			5.49			5.46
Net operating margin	$	2.91		$	2.85		$	3.92		$	2.89
Feedstocks:
Sour crude oil		56	%		63	%		59	%		63	%
Sweet crude oil		29	%		26	%		27	%		24	%
Black wax crude oil		5	%		5	%		6	%		4	%
Other feedstocks and blends		10	%		6	%		8	%		9	%
Total		100	%		100	%		100	%		100	%
Sales of produced refined products:
Gasolines		54	%		56	%		58	%		58	%
Diesel fuels		32	%		32	%		31	%		31	%
Jet fuels		1	%		1	%		1	%		1	%
Fuel oil		3	%		4	%		3	%		4	%
Asphalt		3	%		4	%		2	%		3	%
Lubricants		3	%		—	%		2	%		—	%
Gas oil / intermediates		2	%		—	%		1	%		—	%
LPG and other		2	%		3	%		2	%		3	%
Total		100	%		100	%		100	%		100	%

(1)	Crude charge represents the barrels per day of crude oil processed at the crude units at our refineries.
(2)	Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries.
(3)	Includes refined products purchased for resale.
(4)	Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity was increased by 5,000 BPSD effective January 1, 2009 (our Woods Cross Refinery expansion), 15,000 BPSD effective April 1, 2009 (our Navajo Refinery expansion) and 85,000 BPSD effective June 1, 2009 (our Tulsa Refinery acquisition), increasing our consolidated crude capacity to 216,000 BPSD.
(5)	Represents average per barrel amount for produced refined products sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.
(6)	Transportation costs billed from HEP are included in cost of products.

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(7)

Represents operating expenses of our refineries, exclusive of depreciation and amortization.

(8)

The amounts reported for the Tulsa Refinery for the three and six months ended June 30, 2009 include crude oil processed and products yielded from the refinery for the period from June 1, 2009 through June 30, 2009 only, and averaged over the number of days in the periods (91 days and 182 days for the three and six months, respectively). Operating data for the period from June 1, 2009 through June 30, 2009 is as follows:

Tulsa Refinery
Crude charge (BPD)	54,390
Refinery production (BPD)	52,400
Sales of produced refined products (BPD)	51,480
Sales of refined products (BPD)	52,310
Refinery utilization	64.0	%

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. EBITDA is not a calculation based upon accounting principles generally accepted in the United States; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(In thousands)
Net income attributable to Holly Corporation stockholders	$	14,605		$	11,452		$	36,550		$	20,101
Add provision for income tax		9,575			5,856			21,706			10,551
Add interest expense		7,205			6,251			13,444			8,243
Subtract interest income		(134	)		(3,826	)		(2,330	)		(7,381	)
Add depreciation and amortization		25,500			15,929			45,821			29,238
EBITDA	$	56,751		$	35,662		$	115,191		$	60,752

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis.

We calculate refinery gross margin and net operating margin using net sales, cost of products and operating expenses, in each case averaged per produced barrel sold. These two margins do not include the effect of depreciation and amortization. Each of these component performance measures can be reconciled directly to our Consolidated Statements of Income.

Other companies in our industry may not calculate these performance measures in the same manner.

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Refinery Gross Margin

Refinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. Refinery gross margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
Average per produced barrel:
Navajo Refinery
Net sales	$	67.93	$	133.89	$	63.80	$	117.33
Less cost of products		59.54		125.82		53.83		110.15
Refinery gross margin	$	8.39	$	8.07	$	9.97	$	7.18
Woods Cross Refinery
Net sales	$	69.05	$	133.09	$	59.74	$	117.56
Less cost of products		60.10		120.60		49.90		105.05
Refinery gross margin	$	8.95	$	12.49	$	9.84	$	12.51
Tulsa Refinery
Net sales	$	76.14	$	—	$	76.14	$	—
Less cost of products		73.31		—		73.31		—
Refinery gross margin	$	2.83	$	—	$	2.83	$	—
Consolidated
Net sales	$	69.14	$	133.71	$	63.76	$	117.38
Less cost of products		61.32		124.62		54.35		109.03
Refinery gross margin	$	7.82	$	9.09	$	9.41	$	8.35

Net Operating Margin

Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. Net operating margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2009			2008		2009			2008
Average per produced barrel:
Navajo Refinery
Refinery gross margin	$	8.39		$	8.07	$	9.97		$	7.18
Less refinery operating expenses		4.56			5.68		5.19			4.98
Net operating margin	$	3.83		$	2.39	$	4.78		$	2.20
Woods Cross Refinery
Refinery gross margin	$	8.95		$	12.49	$	9.84		$	12.51
Less refinery operating expenses		5.98			8.13		6.45			7.17
Net operating margin	$	2.97		$	4.36	$	3.39		$	5.34
Tulsa Refinery
Refinery gross margin	$	2.83		$	—	$	2.83		$	—
Less refinery operating expenses		5.21			—		5.21			—
Net operating margin	$	(2.38	)	$	—	$	(2.38	)	$	—
Consolidated
Refinery gross margin	$	7.82		$	9.09	$	9.41		$	8.35
Less refinery operating expenses		4.91			6.24		5.49			5.46
Net operating margin	$	2.91		$	2.85	$	3.92		$	2.89

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Below are reconciliations to our Consolidated Statements of Income for (i) net sales, cost of products and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliations of refined product sales from produced products sold to total sales and other revenue

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Navajo Refinery
Average sales price per produced barrel sold	$	67.93		$	133.89		$	63.80		$	117.33
Times sales of produced refined products sold (BPD)		95,812			79,910			79,072			86,980
Times number of days in period		91			91			181			182
Refined product sales from produced products sold	$	592,274		$	973,623		$	913,108		$	1,857,376
Woods Cross Refinery
Average sales price per produced barrel sold	$	69.05		$	133.09		$	59.74		$	117.56
Times sales of produced refined products sold (BPD)		27,059			23,790			27,042			24,550
Times number of days in period		91			91			181			182
Refined product sales from produced products sold	$	170,027		$	288,125		$	292,404		$	525,270
Tulsa Refinery
Average sales price per produced barrel sold	$	76.14		$	—		$	76.14		$	—
Times sales of produced refined products sold (BPD)		16,971			—			8,532			—
Times number of days in period		91			—			181			—
Refined product sales from produced products sold	$	117,588		$	—		$	117,582		$	—
Sum of refined products sales from produced products sold from our three refineries(4)	$	879,889		$	1,261,748		$	1,323,094		$	2,382,646
Add refined product sales from purchased products and rounding(1)		8,303			120,310			61,984			255,556
Total refined products sales		888,192			1,382,058			1,385,078			2,638,202
Add direct sales of excess crude oil(2)		100,621			314,486			221,876			517,437
Add other refining segment revenue(3)		31,106			39,657			49,875			57,938
Total refining segment revenue		1,019,919			1,736,201			1,656,829			3,213,577
Add HEP segment sales and other revenue		40,602			26,774			72,727			36,716
Add corporate and other revenues		2,979			886			3,078			1,287
Subtract consolidations and eliminations		(25,119	)		(20,039	)		(43,430	)		(27,774	)
Sales and other revenues	$	1,038,381		$	1,743,822		$	1,689,204		$	3,223,806

(1)	We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments.
(2)	We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost.
(3)	Other refining segment revenue includes the revenues associated with Holly Asphalt Company and revenue derived from feedstock and sulfur credit sales.
(4)	The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
Average sales price per produced barrel sold	$	69.14	$	133.71	$	63.76	$	117.38
Times sales of produced refined products sold (BPD)		139,842		103,700		114,646		111,530
Times number of days in period		91		91		181		182
Refined product sales from produced products sold	$	879,889	$	1,261,748	$	1,323,094	$	2,382,646

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Reconciliation of average cost of products per produced barrel sold to total cost of products sold

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Navajo Refinery
Average cost of products per produced barrel sold	$	59.54		$	125.82		$	53.83		$	110.15
Times sales of produced refined products sold (BPD)		95,812			79,910			79,072			86,980
Times number of days in period		91			91			181			182
Cost of products for produced products sold	$	519,123		$	914,939		$	770,417		$	1,743,714
Woods Cross Refinery
Average cost of products per produced barrel sold	$	60.10		$	120.60		$	49.90		$	105.05
Times sales of produced refined products sold (BPD)		27,059			23,790			27,042			24,550
Times number of days in period		91			91			181			182
Cost of products for produced products sold	$	147,988		$	261,086		$	244,241		$	469,374
Tulsa Refinery
Average cost of products per produced barrel sold	$	73.31		$	—		$	73.31		$	—
Times sales of produced refined products sold (BPD)		16,971			—			8,532			—
Times number of days in period		91			—			181			—
Cost of products for produced products sold	$	113,217		$	—		$	113,212		$	—
Sum of cost of products for produced products sold from our three refineries(4)	$	780,328		$	1,176,025		$	1,127,870		$	2,213,088
Add refined product costs from purchased products sold and rounding(1)		9,180			123,226			66,859			258,415
Total refined cost of products sold		789,508			1,299,251			1,194,729			2,471,503
Add crude oil cost of direct sales of excess crude oil(2)		99,872			311,963			220,554			514,176
Add other refining segment costs of products sold(3)		15,537			29,375			19,473			45,898
Total refining segment cost of products sold		904,917			1,640,589			1,434,756			3,031,577
Subtract consolidations and eliminations		(24,991	)		(20,039	)		(43,176	)		(27,590	)
Costs of products sold (exclusive of depreciation and amortization)	$	879,926		$	1,620,550		$	1,391,580		$	3,003,987

(1)	We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments.
(2)	We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost.
(3)	Other refining segment cost of products sold includes the cost of products for Holly Asphalt Company and costs attributable to feedstock and sulfur credit sales.
(4)	The above calculations of cost of products from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
Average cost of products per produced barrel sold	$	61.32	$	124.62	$	54.35	$	109.03
Times sales of produced refined products sold (BPD)		139,842		103,700		114,646		111,530
Times number of days in period		91		91		181		182
Cost of products for produced products sold	$	780,328	$	1,176,025	$	1,127,870	$	2,213,088

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Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2009			2008		2009			2008
Navajo Refinery
Average refinery operating expenses per produced barrel sold	$	4.56		$	5.68	$	5.19		$	4.98
Times sales of produced refined products sold (BPD)		95,812			79,910		79,072			86,980
Times number of days in period		91			91		181			182
Refinery operating expenses for produced products sold	$	39,758		$	41,304	$	74,279		$	78,835
Woods Cross Refinery
Average refinery operating expenses per produced barrel sold	$	5.98		$	8.13	$	6.45		$	7.17
Times sales of produced refined products sold (BPD)		27,059			23,790		27,042			24,550
Times number of days in period		91			91		181			182
Refinery operating expenses for produced products sold	$	14,725		$	17,601	$	31,570		$	32,036
Tulsa Refinery
Average refinery operating expenses per produced barrel sold	$	5.21		$	—	$	5.21		$	—
Times sales of produced refined products sold (BPD)		16,971			—		8,532			—
Times number of days in period		91			—		181			—
Refinery operating expenses for produced products sold	$	8,046		$	—	$	8,046		$	—
Sum of refinery operating expenses per produced products sold from our three refineries(2)	$	62,529		$	58,905	$	113,895		$	110,871
Add other refining segment operating expenses and rounding(1)		5,111			5,278		10,160			10,528
Total refining segment operating expenses		67,640			64,183		124,055			121,399
Add HEP segment operating expenses		11,086			9,985		21,882			13,661
Add corporate and other costs		(226	)		—		(254	)		(184	)
Subtract consolidations and eliminations		8			7		27			7
Operating expenses (exclusive of depreciation and amortization)	$	78,508		$	74,175	$	145,710		$	134,883

(1)	Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of Holly Asphalt Company.
(2)	The above calculations of refinery operating expenses from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
Average refinery operating expenses per produced barrel sold	$	4.91	$	6.24	$	5.49	$	5.46
Times sales of produced refined products sold (BPD)		139,842		103,700		114,646		111,530
Times number of days in period		91		91		181		182
Refinery operating expenses for produced products sold	$	62,529	$	58,905	$	113,895	$	110,871

-19-

Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Navajo Refinery
Net operating margin per barrel	$	3.83		$	2.39		$	4.78		$	2.20
Add average refinery operating expenses per produced barrel		4.56			5.68			5.19			4.98
Refinery gross margin per barrel		8.39			8.07			9.97			7.18
Add average cost of products per produced barrel sold		59.54			125.82			53.83			110.15
Average sales price per produced barrel sold	$	67.93		$	133.89		$	63.80		$	117.33
Times sales of produced refined products sold (BPD)		95,812			79,910			79,072			86,980
Times number of days in period		91			91			181			182
Refined products sales from produced products sold	$	592,274		$	973,623		$	913,108		$	1,857,376
Woods Cross Refinery
Net operating margin per barrel	$	2.97		$	4.36		$	3.39		$	5.34
Add average refinery operating expenses per produced barrel		5.98			8.13			6.45			7.17
Refinery gross margin per barrel		8.95			12.49			9.84			12.51
Add average cost of products per produced barrel sold		60.10			120.60			49.90			105.05
Average net sales per produced barrel sold	$	69.05		$	133.09		$	59.74		$	117.56
Times sales of produced refined products sold (BPD)		27,059			23,790			27,042			24,550
Times number of days in period		91			91			181			182
Refined products sales from produced products sold	$	170,027		$	288,125		$	292,404		$	525,270
Tulsa Refinery
Net operating margin per barrel	$	(2.38	)	$	—		$	(2.38	)	$	—
Add average refinery operating expenses per produced barrel		5.21			—			5.21			—
Refinery gross margin per barrel		2.83			—			2.83			—
Add average cost of products per produced barrel sold		73.31			—			73.31			—
Average net sales per produced barrel sold	$	76.14		$	—		$	76.14		$	—
Times sales of produced refined products sold (BPD)		16,971			—			8,532			—
Times number of days in period		91			—			181			—
Refined products sales from produced products sold	$	117,588		$	—		$	117,582		$	—
Sum of refined products sales from produced products sold from our three refineries(4)	$	879,889		$	1,261,748		$	1,323,094		$	2,382,646
Add refined product sales from purchased products and rounding(1)		8,303			120,310			61,984			255,556
Total refined products sales		888,192			1,382,058			1,385,078			2,638,202
Add direct sales of excess crude oil(2)		100,621			314,486			221,876			517,437
Add other refining segment revenue(3)		31,106			39,657			49,875			57,938
Total refining segment revenue		1,019,919			1,736,201			1,656,829			3,213,577
Add HEP segment sales and other revenues		40,602			26,774			72,727			36,716
Add corporate and other revenues		2,979			886			3,078			1,287
Subtract consolidations and eliminations		(25,119	)		(20,039	)		(43,430	)		(27,774	)
Sales and other revenues	$	1,038,381		$	1,743,822		$	1,689,204		$	3,223,806

(1)	We purchase finished products when opportunities arise that provide a profit on the sale of such products or to meet delivery commitments.
(2)	We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost.
(3)	Other refining segment revenue includes the revenues associated with Holly Asphalt Company and revenue derived from feedstock and sulfur credit sales.
(4)	The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
Net operating margin per barrel	$	2.91	$	2.85	$	3.92	$	2.89
Add average refinery operating expenses per produced barrel		4.91		6.24		5.49		5.46
Refinery gross margin per barrel		7.82		9.09		9.41		8.35
Add average cost of products per produced barrel sold		61.32		124.62		54.35		109.03
Average sales price per produced barrel sold	$	69.14	$	133.71	$	63.76	$	117.38
Times sales of produced refined products sold (BPD)		139,842		103,700		114,646		111,530
Times number of days in period		91		91		181		182
Refined product sales from produced products sold	$	879,889	$	1,261,748	$	1,323,094	$	2,382,646

FOR FURTHER INFORMATION, Contact:

Bruce R, Shaw, Senior Vice President and
     Chief Financial Officer
M. Neale Hickerson, Vice President,
     Investor Relations
Holly Corporation
214/871-3555

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