Holly Energy Partners, L.P. Reports Fourth Quarter Results
Dallas, Texas -- Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE:HEP) today reported financial results for the fourth quarter of 2018. Net income attributable to HEP for the fourth quarter was $47.5 million ($0.45 per basic and diluted limited partner unit) compared to $86.1 million ($0.96 per basic and diluted limited partner unit) for the fourth quarter of 2017.
Distributable cash flow was $64.2 million for the quarter, down $1.3 million, or 2.0%, compared to the fourth quarter of 2017. HEP announced its 57th consecutive distribution increase on January 24, 2019, raising the quarterly distribution from $0.665 to $0.6675 per unit, which represents an increase of 3% over the distribution for the fourth quarter of 2017.
Net income attributable to HEP for the fourth quarter of 2017 included a $36.3 million remeasurement gain relating to HEP's acquisition of the remaining interests in the SLC and Frontier pipelines. Excluding this remeasurement gain, net income attributable to HEP for the fourth quarter of 2017 was $49.8 million ($0.56 per basic and diluted limited partner unit). Net income attributable to HEP for the fourth quarter of 2018 decreased $2.3 million compared to the fourth quarter of 2017 excluding this gain. This decrease in earnings is primarily due to higher interest and operating expenses as well as the impact of downtime from an unplanned outage on our fluid catalytic cracking unit at HollyFrontier Corporation's ("HFC" or "HollyFrontier") Woods Cross refinery.
Commenting on fourth quarter results, George Damiris, Chief Executive Officer, stated, “HEP delivered a solid quarter and despite operating issues at HFC's Woods Cross refinery, we were able to maintain our record of consecutive quarterly distribution increases.
“Looking to 2019, we expect to grow HEP's quarterly distribution by $0.0025 per limited partner unit while maintaining an annual distribution coverage ratio of 1.0x.”
Fourth Quarter 2018 Revenue Highlights
Revenues for the quarter were $132.8 million, an increase of $3.6 million compared to the fourth quarter of 2017. The increase was primarily attributable to our acquisition of the remaining interests in the SLC and Frontier pipelines and higher crude oil volumes in the Permian Basin, offset by a decrease in revenue on our Woods Cross refinery processing units due to an operational outage. Compared to the fourth quarter of 2017, our overall pipeline volumes increased for the quarter by 8%.
Revenues from our refined product pipelines were $39.6 million, an increase of $0.1 million, on shipments averaging 209.1 thousand barrels per day ("mbpd") compared to 231.2 mbpd for the fourth quarter of 2017. The volume decrease was mainly due to lower volumes on pipelines servicing HollyFrontier's Woods Cross refinery, which had lower throughput due to operational issues at the refinery during the quarter, lower volumes on pipelines servicing HFC's Navajo refinery and lower volumes from Delek. Revenue remained relatively consistent due to contractual minimum revenue commitments and tariff escalators.
Revenues from our intermediate pipelines were $7.1 million, a decrease of $1.2 million compared to the fourth quarter of 2017, on shipments averaging 151.0 mbpd compared to 158.1 mbpd for the fourth quarter of 2017. The decreases were mainly attributable to lower throughput at HFC's Navajo refinery and a decrease in deferred revenue recognized.
The following information was filed by Holly Energy Partners Lp (HEP) on Tuesday, February 19, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.