Energy MLPs: How Did 6 Logistics Subsidiaries Perform in 2Q15?
Holly Energy Partners’ EBITDA
Holly Energy Partners’ (HEP) year-to-date total returns are 21%. It’s EBITDA (earnings before interest, tax, depreciation, and amortization) in 2Q15 grew 16% year-over-year. Holly Energy Partners’ EBITDA grew at a CAGR (compound annual growth rate) of 14.2% from 2011 to 2014.
One of the factors contributing to Holly Energy Partners’ steady growth is its minimum direct commodity price exposure. The MLP generates fee-based revenues for transport and storage of oil and other products, mostly through long-term contracts. It doesn’t take ownership of products transported or stored and is thus not directly exposed to commodity price risk.
About Holly Energy Partners
The above graph shows Holly Energy Partners’ (HEP) quarterly EBITDA over the last four years. HEP has generated 55% total returns since the second quarter of 2011 to September 1, 2015. Holly Energy Partners was formed in 2004 by HollyFrontier Corporation (HFC). HFC has 39% ownership in HEP. Holly Energy Partners operates crude oil and petroleum products pipelines, terminals, and loading rack facilities.
HEP operates oil and refined products pipelines and terminals that support HFC’s refining and marketing operations in the Mid-Continent, Rocky Mountain, and Southwest regions. The MLP has assets supporting Alon USA Energy’s (ALJ) refinery in Texas. NGL Energy Partners (NGL) and Magellan Midstream Partners (MMP) are other pipeline MLPs operating in the Rocky Mountain region.
Holly Energy Partners owns 75% interest in UNEV Pipeline, which owns the UNEV pipeline. The pipeline is a 427-mile refined products pipeline from Woods Cross, Utah, to Las Vegas, Nevada. HEP also owns 25% interest in SLC Pipeline, which owns the SLC pipeline, a 95-mile intrastate crude oil pipeline system that serves refineries in the Salt Lake City, Utah, area. Holly Energy Partners forms ~1% of the Multi-Asset Diversified Income ETF (MDIV).
Holly Energy Partners and HFC
Holly Energy Partners (HEP) has a strategic relationship with HollyFrontier Corporation (HFC). Holly Energy Partners intends to continue to purchase logistic assets at HFC’s refining locations in New Mexico, Utah, Wyoming, Oklahoma, and Kansas.
HEP has benefited from HFC’s past refinery expansion projects. It has an agreement with HFC that grants it an opportunity to acquire certain types of transportation and distribution assets that are part of any acquisition HFC makes.
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