Holly Energy Partners, L.P. , a Dallas-based company with a refinery in Tulsa and storage in Cushing, reported improved net income for the fourth quarter of 2022 of $68.5 million and 54 cents a basic and diluted limited partner unit. It also saw a gain of $53 million in its full-year revenues reaching $547.5 million.
The quarterly income compared to $45.6 million and 43 cents a unit a year earlier.
Distributable cash flow was $85.8 million for the fourth quarter of 2022, an increase of $22.7 million, or 36.1%, compared to the fourth quarter of 2021. HEP declared a quarterly cash distribution of $0.35 on January 20, 2023.
The increase in net income attributable to HEP was mainly due to net income from Sinclair Transportation Company LLC , which was acquired on March 14, 2022, and pipeline revenues, partially offset by higher interest expense.
“We continue to generate stable earnings and cash flow, and expect to achieve our leverage target of 3.5 times in mid-2023,” said Michael Jennings, Chief Executive Officer and President.
“Once that is reached, we look forward to evaluating incremental cash return to unitholders consistent with our previously announced capital allocation strategy.”
Revenues for the fourth quarter of 2022 were $142.5 million, an increase of $24.0 million compared to the fourth quarter of 2021.
Revenues from the firm’s refined product pipelines were $30.4 million, an increase of $7.7 million, on shipments averaging 184.4 thousand barrels per day (“mbpd”) compared to 135.2 mbpd for the fourth quarter of 2021.
The revenue and volume increases were mainly due to volumes on Holly’s recently acquired Sinclair Transportation product pipelines, higher volumes on its Navajo and Woods Cross product pipelines, and rate increases that went into effect on July 1, 2022.
Revenues from the company’s intermediate pipelines were $8.4 million, an increase of $0.8 million on shipments averaging 137.4 mbpd compared to 105.5 mbpd for the fourth quarter of 2021.
Revenues from its crude pipelines were $36.5 million, an increase of $5.8 million, on shipments averaging 622.2 mbpd compared to 455.0 mbpd for the fourth quarter of 2021. The increase in volumes and revenues was mainly attributable to the recently acquired Sinclair Transportation crude pipelines, its Cushing Connect pipeline, higher volumes on the firm’s crude pipeline systems in New Mexico, Texas, Wyoming and Utah as well as rate increases that went into effect on July 1, 2022.
Revenues from terminal, tankage and loading rack fees saw a $7.9 million gain to reach $41.8 million largely because of increased volumes of refined products and crude oil. Holly’s refinery processing units saw increased revenues reaching $25.5 million.
Revenues for the year ended December 31, 2022, were $547.5 million, an increase of $53.0 million compared to the year ended December 31, 2021. The increase was mainly attributable to revenues on our recently acquired Sinclair Transportation assets, increased revenues from our UNEV assets, higher volumes on our crude pipelines in New Mexico, Texas, Wyoming and Utah as well as rate increases that went into effect on July 1, 2022, partially offset by lower revenues on our Cheyenne assets as a result of the conversion of HF Sinclair’s Cheyenne refinery to renewable diesel production. The year ended December 31, 2021 included the recognition of the $10 million termination fee related to the termination of HF Sinclair’s minimum volume commitment on our Cheyenne assets.
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