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Holly Energy Partners announces distribution updates

Published by , Editorial Assistant
World Pipelines,

The Board of Directors of Holly Energy Partners, L.P. (HEP) has declared a cash distribution of US$0.35 per unit, which represents a 48% reduction from its last quarterly distribution. The 1Q20 distribution will be paid on 14 May 2020 to unitholders of record on 4 May 2020.

HEP’s current distribution strategy is intended to:

  • Fund all capital expenditures and distributions within free cash flow.
  • Improve distributable cash flow coverage to 1.3x or greater.
  • Reduce leverage to 3.0 - 3.5x.

HEP expects to maintain the quarterly distribution constant at US$0.35 per unit, or US$1.40 on an annualised basis for the balance of 2020.

“This announcement reflects a significant shift in HEP’s distribution strategy based on both the current environment and our expectations for the future,” commented Mike Jennings, Chief Executive Officer. “We believe a strategy of funding growth and distributions with cash flow, while deleveraging the balance sheet and enhancing liquidity best positions HEP to create long-term value for its unitholders.

Additionally, we are committed to maintaining safe and reliable operations. The health and safety of our employees, communities, and contractors remains our top priority.”

HEP’s business model remains supported by its long-term minimum volume commitments which contributed over 70% of 2019 annual revenue. Additionally, approximately 87% of 2019 annual revenue was generated from investment grade refining customers.

As of 31 March 2020, HEP had approximately US$400 million in liquidity, including cash and availability under its US$1.4 billion credit facility which matures in July 2022. HEP’s projected capital expenditures for 2020 remain unchanged at US$58 - US$69 million.

Statements previously made by HEP regarding HEP’s distribution strategy, distribution guidance or potential future financial or operating results should not be considered to be updated or reaffirmed as of any later date except to the extent specifically updated or reaffirmed in this release or in subsequent public disclosures.

About Holly Energy Partners, L.P.:

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

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