Item 1.01 Entry into a Material Definitive Agreement
Background
As previously announced, HollyFrontier Cheyenne Refining LLC ("HFCR"), a
wholly-owned subsidiary of HollyFrontier Corporation ("HollyFrontier"), ceased
crude refining operations at its refinery located in Cheyenne, Wyoming
("Cheyenne Refinery") in August 2020 and is undertaking a conversion of the
Cheyenne Refinery assets to renewable diesel production ("Cheyenne Conversion").
In connection with the Cheyenne Conversion, subsidiaries of HollyFrontier have
entered into new commercial agreements with subsidiaries of Holly Energy
Partners, L.P. ("HEP") with respect to the logistics assets of HEP and its
subsidiaries that formerly served HFCR's crude refining operations at the
Cheyenne Refinery ("Cheyenne Assets"), and have amended certain of the
throughput, services and other commercial agreements between HollyFrontier and
its subsidiaries, on the one hand, and HEP and its subsidiaries, on the other
hand, to account for the Cheyenne Conversion, in each case as further described
below. The general partner of HEP is a wholly-owned subsidiary of HollyFrontier.
In addition and as previously announced, HEP Refining L.L.C. ("HEP Refining"), a
wholly-owned subsidiary of HEP, has agreed to construct four new refined product
tanks with a total shell capacity of 200,000 barrels at the Artesia, New Mexico
("Navajo Tanks") refinery, which is owned by HollyFrontier Navajo Refining LLC,
a wholly-owned subsidiary of HollyFrontier.
Seventh Amended and Restated Master Throughput Agreement
On February 8, 2021, Holly Energy Partners - Operating, L.P. ("HEP Operating"),
a wholly-owned subsidiary of HEP, and HollyFrontier Refining & Marketing LLC
("HFRM"), a wholly-owned subsidiary of HollyFrontier, entered into the Seventh
Amended and Restated Master Throughput Agreement, effective as January 1, 2021
(the "Seventh Amended and Restated Master Throughput Agreement"). The Seventh
Amended and Restated Master Throughput Agreement amends and restates in its
entirety the Sixth Amended and Restated Master Throughput Agreement dated
effective October 1, 2019 (the "Sixth Amended and Restated Master Throughput
Agreement"), to, among other things, remove the Cheyenne Assets from the
coverage thereof and add to the coverage thereof the Navajo Tanks, the Crude
Tankage (as defined therein), which were previously covered under the Third
Amended and Restated Crude Pipelines and Tankage Agreement, dated March 12,
2015, by and among the various parties stated therein (the "Third Amended and
Restated Crude Pipelines and Tankage Agreement"), and the Tulsa West Lube Racks
(as defined therein), which were previously covered under the Tulsa Equipment
and Throughput Agreement, dated August 1, 2009, between HollyFrontier Tulsa
Refining LLC and HEP Tulsa LLC, as amended (the "Tulsa Equipment and Throughput
Agreement"). HollyFrontier will guarantee the obligations of HFRM under the
Seventh Amended and Restated Master Throughput Agreement, and HEP will guarantee
the obligations of HEP Operating.
The description of the Seventh Amended and Restated Master Throughput Agreement
herein is qualified by reference to the copy thereof filed as Exhibit 10.1 to
this report, which is incorporated by reference into this report in its
entirety.
Letter Agreement
On February 8, 2021, HFRM and HEP Operating entered into a Letter Agreement,
effective as of January 1, 2021 ("Letter Agreement"), for the purpose of
terminating the minimum throughput commitment by HFRM under the Sixth Amended
and Restated Master Throughput Agreement with respect to the Cheyenne Assets.
Pursuant to the Letter Agreement, HFRM will pay HEP Operating a one-time cash
payment of $10 million for the termination of HFRM's minimum commitments in
respect of the Cheyenne Assets.
The description of the Letter Agreement herein is qualified by reference to the
copy thereof filed as Exhibit 10.2 to this report, which is incorporated into
this report in its entirety.
Services Agreement
On February 8, 2021, HFRM and HEP Operating entered into a Services Agreement,
effective as of January 1, 2021 ("Services Agreement"), pursuant to which, among
other things, HEP Operating will provide crude oil storage services for HFRM at
the Cheyenne Refinery utilizing certain of the Cheyenne Assets. HFRM will pay
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HEP Operating a base service fee equal to $8,125 per quarter and an additional
quarterly service fee equal to 50% of HFRM Gross Profit (as defined therein) on
sales of crude oil stored pursuant to the Services Agreement. The Services
Agreement contains no minimum requirement for HFRM, nor is HFRM obligated to pay
an additional service fee in any quarter in which it does not generate HFRM
Gross Profit. The Services Agreement has an initial term of five years, with
HFRM having the right to renew for up to two additional five year terms.
The description of the Services Agreement herein is qualified by reference to
the copy thereof filed as Exhibit 10.3 to this report, which is incorporated
into this report in its entirety.
RDU Asset Lease
On February 8, 2021, Cheyenne Logistics LLC ("Cheyenne Logistics"), a subsidiary
of HEP, and Cheyenne Renewable Diesel Company LLC ("CRDC"), a subsidiary of
HollyFrontier, entered into an Asset Lease Agreement, effective as of January 1,
2021 ("Asset Lease Agreement"), pursuant to which Cheyenne Logistics leased to
CRDC certain of the Cheyenne Assets for use in connection with the renewable
diesel operations at the Cheyenne Refinery. As payment for the RDU assets, CRDC
will pay to Cheyenne Logistics an annual lease payment of $4,848,485, payable in
quarterly installments. The Asset Lease Agreement has a ten year initial term,
with CRDC having the right to renew for up to two additional five year terms.
The description of the Asset Lease Agreement herein is qualified by reference to
the copy thereof filed as Exhibit 10.4 to this report, which is incorporated
into this report in its entirety.
Twenty-First Amended and Restated Omnibus Agreement
On February 8, 2021, HollyFrontier, HEP and certain of their respective
subsidiaries entered into the Twenty-First Amended and Restated Omnibus
Agreement, effective as of January 1, 2021 (the "Twenty-First Amended and
Restated Omnibus Agreement"). The Twenty-First Amended and Restated Omnibus
Agreement amends and restates in its entirety the Twentieth Amended and Restated
Omnibus Agreement effective as of October 1, 2019, to, among other things,
subject the Navajo Tanks to HollyFrontier's right of first refusal to purchase
HEP's assets that serve HollyFrontier's refineries, subject to the limitations
provided therein, and to amend the indemnification obligations of HollyFrontier
and HEP with respect to the Cheyenne Assets, as further described therein.
The description of the Twenty-First Amended and Restated Omnibus Agreement
herein is qualified by reference to the copy thereof filed as Exhibit 10.5 to
this report, which is incorporated by reference into this report in its
entirety.
Sixth Amended and Restated Master Lease and Access Agreement
On February 8, 2021, certain subsidiaries of HEP and HollyFrontier entered into
the Sixth Amended and Restated Master Lease and Access Agreement (the "Sixth
Amended and Restated Master Lease and Access Agreement"), effective as of
January 1, 2021. The Sixth Amended and Restated Master Lease and Access
Agreement amends and restates in its entirety the Fifth Amended and Restated
Master Lease and Access Agreement, dated effective as of October 29, 2018, to,
among other things, include the Navajo Tanks and the Tulsa West Lubes Racks in
the list of assets comprising the Applicable Assets (as defined therein) and to
otherwise update the tanks comprising the Applicable Assets (as defined
therein).
The description of the Sixth Amended and Restated Master Lease and Access
Agreement herein is qualified by reference to the copy thereof filed as Exhibit
10.6 to this report, which is incorporated by reference into this report in its
entirety.
Fourth Amended and Restated Services and Secondment Agreement
On February 8, 2021, certain subsidiaries of HEP and HollyFrontier entered into
the Fourth Amended and Restated Services and Secondment Agreement (the "Fourth
Amended and Restated Services and Secondment Agreement"), effective as of
January 1, 2021. The Fourth Amended and Restated Services and Secondment
Agreement amends and restates in its entirety the Third Amended and Restated
Services and Secondment Agreement, dated effective as of October 1, 2016, to,
among other things, update the Services (as defined therein) to be provided by
HollyFrontier personnel in respect of the HEP assets located at the Cheyenne
Refinery and HollyFrontier's refineries in Tulsa, Oklahoma, West Bountiful, Utah
(Woods Cross) and Artesia and Lovington, New Mexico (Navajo).
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The description of the Fourth Amended and Restated Services and Secondment
Agreement herein is qualified by reference to the copy thereof filed as Exhibit
10.7 to this report, which is incorporated by reference into this report in its
entirety.
Third Amendment to Third Amended and Restated Crude Pipelines and Tankage
Agreement
On February 8, 2021, contemporaneously with HFRM and HEP Operating entering into
the Seventh Amended and Restated Master Throughput Agreement and thereby
subjecting the Crude Tankage thereto, HFRM, HEP Operating and certain of their
affiliates entered into the Third Amendment to Third Amended and Restated Crude
Pipelines and Tankage Agreement ("Third Amendment to Third Amended and Restated
. . .
Item 1.02 Termination of a Material Definitive Agreement.
On February 8, 2021, contemporaneously with HFRM and HEP Operating entering to
the Seventh Amended and Restated Master Throughput Agreement and thereby
subjecting the Tulsa West Lubes Racks thereto, the Tulsa Equipment and
Throughput Agreement was effectively terminated and its terms, as amended,
incorporated into the Seventh Amended and Restated Master Throughput Agreement,
in each case, effective as of January 1, 2021. Notwithstanding the foregoing,
the indemnities with respect to the Tulsa West Lubes Racks, which are contained
in the Tulsa Equipment and Throughput Agreement, continue to apply
notwithstanding the termination of the agreement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
10.1 Seventh Amended and Restated Master Throughput Agreement entered
into on February 8, 2021, effective as of January 1, 2021, by and
between HollyFrontier Refining & Marketing LLC and Holly Energy
Partners - Operating, L.P.
10.2 Letter Agreement entered into on February 8, 2021, effective as of
January 1, 2021, by and between HollyFrontier Refining & Marketing LLC
and Holly Energy Partners - Operating, L.P.
10.3 Services Agreement entered into on February 8, 2021, effective as of
January 1, 2021, by and between HollyFrontier Refining & Marketing LLC
and Holly Energy Partners - Operating, L.P.
10.4 Asset Lease Agreement entered into on February 8, 2021, effective as
of January 1, 2021, by and between Cheyenne Logistics LLC and Cheyenne
Renewable Diesel Company LLC.
10.5 Twenty-First Amended and Restated Omnibus Agreement entered into on
February 8, 2021, effective as of January 1, 2021, by and among
HollyFrontier Corporation, Holly Energy Partners, L.P. and certain of
their respective subsidiaries.
10.6 Sixth Amended and Restated Master Lease and Access Agreement entered
into on February 8, 2021, effective as of January 1, 2021, by and
among certain subsidiaries of Holly Energy Partners, L.P. and
HollyFrontier Corporation.
10.7 Fourth Amended and Restated Services and Secondment Agreement
entered into February 8, 2021, effective as of January 1, 2021, by and
among certain subsidiaries of Holly Energy Partners, L.P. and
HollyFrontier Corporation.
10.8 Third Amendment to Third Amended and Restated Crude Pipelines and
Tankage Agreement entered into February 8, 2021, effective as of
January 1, 2021, by and between HollyFrontier Refining & Marketing
LLC, Holly Energy Partners - Operating, L.P. and certain of their
affiliates.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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