HEP to buy, expand New Mexico pipelines

June 10, 2005
Holly Energy Partners LP (HEP), Dallas, plans to acquire from Holly Corp. 65 miles of 10-in. and 8-in. feedstock pipelines extending from Lovington, NM, to Navajo Refining Co. LP's 60,000 b/d Artesia, NM, refinery.

By OGJ editors

HOUSTON, June 10 -- Holly Energy Partners LP (HEP), Dallas, plans to acquire from Holly Corp. 65 miles of 10-in. and 8-in. feedstock pipelines extending from Lovington, NM, to Navajo Refining Co. LP's 60,000 b/d Artesia, NM, refinery. Navajo and HEP are both subsidiaries of Holly Corp.

Directors of both companies have approved the $81.5 million transaction, which HEP will finance 90% with cash from the sale of 1.2 million HEP common stock units and up to $35 million of debt. HEP will complete the transaction by transferring HEP common units to Holly, which currently owns a 48% interest in HEP.

Following the acquisition, HEP will invest $3.5 million to expand the capacity of the pipelines to meet needs of the Navajo refinery expansion, due for completion in early 2006 (OGJ Online, Feb. 28, 2005). The pipelines, which transport crude oil, raw feedstocks, and partially finished refined products for Holly to the Artesia refinery, have a current aggregate capacity of 84,000 b/d.

Holly has agreed to a 15-year throughput agreement for a minimum annual commitment of 72,000 b/d on the pipelines.