HOC Holly Corp.

Holly Corporation Announces $100 Million Increase in Stock Repurchase Program DALLAS, Aug. 9 /PRNewswire-FirstCall/ -- Holly Corporation (NYSE:HOC) ("Holly" or the "Company") today reported quarterly net income of $158.6 million ($2.89 per basic and $2.84 per diluted share) for the three months ended June 30, 2007, compared to net income of $93.1 million ($1.62 per basic and $1.60 per diluted share) for the three months ended June 30, 2006. Our second quarter 2007 net income was the highest quarterly net income in our Company's history. Income from continuing operations was $158.6 million ($2.89 per basic and $2.84 per diluted share) for the three months ended June 30, 2007, compared to income from continuing operations of $87.7 million ($1.53 per basic and $1.51 per diluted share) for the three months ended June 30, 2006. Net income was $226.2 million ($4.11 per basic and $4.03 per diluted share) for the six months ended June 30, 2007, compared to net income of $139.9 million ($2.42 per basic and $2.37 per diluted share) for the six months ended June 30, 2006. Income from continuing operations was $226.2 million ($4.11 per basic and $4.03 per diluted share) for the six months ended June 30, 2007, compared to income from continuing operations of $118.9 million ($2.06 per basic and $2.01 per diluted share) for the six months ended June 30, 2006. The Board of Directors has authorized a $100.0 million increase in our current common stock repurchase program. Before this increase, we had $50.0 million remaining under the repurchase program announced in November 2005 and increased to $300.0 million in October 2006. Repurchases under the expanded program will be made from time to time in the open market or privately negotiated transactions based on market conditions, securities law limitations and other factors. On March 31, 2006 we sold our petroleum refinery in Great Falls, Montana (the "Montana Refinery") to a subsidiary of Connacher Oil and Gas Limited. Accordingly, the results of operations of the Montana Refinery and a net gain of $14.0 million are shown in discontinued operations for the three and six months ended June 30, 2006. Income from continuing operations increased $70.9 million for the three months ended June 30, 2007, an increase of 81%, as compared to the three months ended June 30, 2006, and increased $107.3 million for the six months ended June 30, 2007, an increase of 90%, as compared to the six months ended June 30, 2006, principally due to improved refined product margins experienced in the current year and an increase in volumes of produced refined products sold. These favorable factors were partially offset by the effects of higher operating and general and administrative expenses for the three months ended June 30, 2007 and higher depreciation, depletion and amortization and general and administrative expenses for the six months ended June 30, 2007. Overall sales of produced refined products from continuing operations increased by 25% for the three months ended June 30, 2007 and 17% for the six months ended June 30, 2007 as compared to the three and six months ended June 30, 2006, respectively. Overall refinery gross margins from continuing operations were $28.36 per produced barrel for the three months ended June 30, 2007, as compared to $22.37 per produced barrel for the three months ended June 30, 2006, and $22.35 per produced barrel for the six months ended June 30, 2007, as compared to $16.95 for the six months ended June 30, 2006. The large increase in volume of produced refined products sold is attributable to increased production levels for the three and six months ended June 30, 2007, as compared to the same periods in 2006. Our production levels were lower for the three and six months ended June 30, 2006 due to planned downtime at our Navajo and Woods Cross Refineries during the second quarter of 2006. Diesel fuel produced at both of our refineries was required to meet certain nationwide ultra low sulfur diesel fuel ("ULSD") requirements as of June 30, 2006. To meet this requirement, we completed certain ULSD projects at both refineries during the second quarter of 2006. In conjunction with these ULSD projects, we timed other refinery maintenance projects and an expansion of our Navajo Refinery. Downtime incurred from these capital projects was the principal factor in our reduced production levels during the three and six months ended June 30, 2006. Also contributing to our production increase for the three and six months ended June 30, 2007 is an increase in production levels following our 8,000 BPSD Navajo Refinery expansion in mid- year 2006. Sales and other revenues from continuing operations increased 9% for the three months ended June 30, 2007 and 12% for the six months ended June 30, 2007, as compared to the three and six months ended June 30, 2006, respectively, due principally to higher refined product sales prices and an increase in volumes of produced refined products sold. For the three months ended June 30, 2007, cost of products sold decreased by 1%, as compared to the three months ended June 30, 2006 due principally to a per unit decrease in the cost of produced refined products sold, partially offset by an increase in volumes of produced refined products sold. For the six months ended June 30, 2007, cost of products sold increased by 4%, as compared to the six months ended June 30, 2006, due principally to an increase in volumes of produced refined products sold, partially offset by a per unit decrease in the cost of produced refined products sold. For the three months ended June 30, 2007, operating expenses, exclusive of depreciation, depletion and amortization, increased principally due to higher utility costs, as compared to the three months ended June 30, 2006. For the three and six months ended June 30, 2007, general and administrative expenses increased principally due to increased equity-based incentive compensation expense and software implementation costs, as compared to the same periods in 2006. The increase in equity-based compensation expense was due to an increase in our stock price. "Strong industry-wide refinery margins coupled with record production levels resulted in our best ever quarterly results. Our Southwest and Rocky Mountain markets provided particularly strong gasoline and diesel fuel crack spreads during the second quarter of 2007. Expanded use of lower priced black wax crudes at our Woods Cross Refinery and a widening of discounts to WTI for the sour crudes processed in our Navajo Refinery also contributed to improved results. For the second quarter of 2007, we generated earnings before interest, taxes and depreciation ("EBITDA") of $252.1 million, a 72% increase over the $146.4 million of EBITDA for the second quarter of 2006." "Strong financial performances during the first six months of 2007 allowed us to expend $72.5 million under our capital expansion programs and $43.0 million for the purchase of common stock under our stock repurchase program while increasing our cash and investments in marketable securities by $155.3 million to $411.3 million. With continued confidence in industry fundamentals and our strong financial position, our Board of Directors has authorized a $100.0 million increase to our current stock repurchase program. We believe the combination of our previously announced feedstock flexibility and capacity expansion capital programs with an expanded stock repurchase program will continue to add shareholder value in a prudent manner" said Matthew Clifton, Chairman of the Board and Chief Executive Officer of Holly. The Company has scheduled a conference call for today, August 9, 2007 at 10:00AM EDT to discuss financial results. Listeners may access this call by dialing (888) 548-4639. The ID# for this call is 10413372. Listeners may access the call via the internet at: http://www.videonewswire.com/event.asp?id=41254. Additionally, listeners may replay this call approximately two hours after the call concludes by dialing (800) 642-1687. This audio archive will be available for two weeks. Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries an 83,000 barrels per stream day ("bpsd") refinery located in New Mexico and a 26,000 bpsd refinery in Utah. Holly also owns a 45% interest (including the general partner interest) in Holly Energy Partners, L.P., which through subsidiaries owns or leases approximately 1,700 miles of petroleum product pipelines in Texas, New Mexico and Oklahoma and refined product terminals in several Southwest and Rocky Mountain states. The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are "forward-looking statements" based on management's beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Such differences could be caused by a number of factors including, but not limited to, risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in the Company's markets, the demand for and supply of crude oil and refined products, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, effects of governmental regulations and policies, the availability and cost of financing to the Company, the effectiveness of the Company's capital investments and marketing strategies, the ability of the Company to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any future acquired operations, the Company's efficiency in carrying out construction projects, the possibility of terrorist attacks and the consequences of any such attacks, general economic conditions, and other financial, operational and legal risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. RESULTS OF OPERATIONS Financial Data (all information in this release is unaudited) Three Months Ended June 30, Change from 2006 2007 2006 Change Percent (In thousands, except per share data) Sales and other revenues $1,216,997 $1,120,840 $96,157 8.6% Operating costs and expenses: Cost of products sold (exclusive of depreciation, depletion and amortization) 897,237 908,009 (10,772) (1.2) Operating expenses (exclusive of depreciation, depletion and amortization) 51,116 49,092 2,024 4.1 General and administrative expenses (exclusive of depreciation, depletion and amortization) 21,348 18,731 2,617 14.0 Depreciation, depletion and amortization 10,641 10,683 (42) (0.4) Exploration expenses, including dry holes 105 100 5 5.0 Total operating costs and expenses 980,447 986,615 (6,168) (0.6) Income from operations 236,550 134,225 102,325 76.2 Other income (expense): Equity in earnings of HEP 4,954 1,516 3,438 226.8 Interest income 3,550 2,408 1,142 47.4 Interest expense (291) (272) (19) 7.0 8,213 3,652 4,561 124.9 Income from continuing operations before income taxes 244,763 137,877 106,886 77.5 Income tax provision 86,136 50,148 35,988 71.8 Income from continuing operations 158,627 87,729 70,898 80.8 Income from discontinued operations, net of taxes -- 5,372 (5,372) (100.0) Net income $158,627 $93,101 $65,526 70.4% Basic earnings per share: Continuing operations $2.89 $1.53 $1.36 88.9% Discontinued operations -- 0.09 (0.09) (100.0) Net income $2.89 $1.62 $1.27 78.4% Diluted earnings per share: Continuing operations $2.84 $1.51 $1.33 88.1% Discontinued operations -- 0.09 (0.09) (100.0) Net income $2.84 $1.60 $1.24 77.5% Cash dividends declared per common share $0.12 $0.08 $0.04 50.0% Average number of common shares outstanding: Basic 54,959 57,186 (2,227) (3.9)% Diluted 55,953 58,363 (2,410) (4.1)% Six Months Ended June 30, Change from 2006 2007 2006 Change Percent (In thousands, except per share data) Sales and other revenues $2,142,864 $1,912,434 $230,430 12.0% Operating costs and expenses: Cost of products sold (exclusive of depreciation, depletion and amortization) 1,648,951 1,583,494 65,457 4.1 Operating expenses (exclusive of depreciation, depletion and amortization) 101,245 101,559 (314) (0.3) General and administrative expenses (exclusive of depreciation, depletion and amortization) 37,195 32,247 4,948 15.3 Depreciation, depletion and amortization 22,092 18,707 3,385 18.1 Exploration expenses, including dry holes 257 227 30 13.2 Total operating costs and expenses 1,809,740 1,736,234 73,506 4.2 Income from operations 333,124 176,200 156,924 89.1 Other income (expense): Equity in earnings of HEP 8,300 4,728 3,572 75.6 Interest income 6,110 4,143 1,967 47.5 Interest expense (543) (547) 4 (0.7) 13,867 8,324 5,543 66.6 Income from continuing operations before income taxes 346,991 184,524 162,467 88.0 Income tax provision 120,822 65,635 55,187 84.1 Income from continuing operations 226,169 118,889 107,280 90.2 Income from discontinued operations, net of taxes -- 21,016 (21,016) (100.0) Net income $226,169 $139,905 $86,264 61.7% Basic earnings per share: Continuing operations $4.11 $2.06 $2.05 99.5% Discontinued operations -- 0.36 (0.36) (100.0) Net income $4.11 $2.42 $1.69 69.8% Diluted earnings per share: Continuing operations $4.03 $2.01 $2.02 100.5% Discontinued operations -- 0.36 (0.36) (100.0) Net income $4.03 $2.37 $1.66 70.0% Cash dividends declared per common share $0.22 $0.13 $0.09 69.2% Average number of common shares outstanding: Basic 55,073 57,819 (2,746) (4.7)% Diluted 56,079 59,072 (2,993) (5.1)% Balance Sheet Data (Unaudited) June 30, December 31, 2007 2006 (In thousands) Cash, cash equivalents and investments in marketable securities $411,286 $255,953 Working capital $321,259 $240,181 Total assets $1,457,477 $1,237,869 Stockholders' equity $640,000 $466,094 Other Financial Data (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 (In thousands) Net cash provided by operating activities $194,283 $98,135 $280,584 $79,795 Net cash provided by (used for) investing activities $(220,646) $(43,760) $(274,421) $76,128 Net cash used for financing activities $(17,679) $(31,130) $(53,143) $(87,131) Capital expenditures $45,781 $35,259 $72,531 $67,494 EBITDA from continuing operations (1) $252,145 $146,424 $363,516 $199,635 (1) Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA as presented above is reconciled to net income under "Reconciliations to Amounts Reported under Generally Accepted Accounting Principles" below. Refining Operating Data Our refinery operations include the Navajo Refinery and the Woods Cross Refinery. The following tables set forth information, including non-GAAP performance measures about our refinery operations. The cost of products and refinery gross margin do not include the effect of depreciation, depletion and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Navajo Refinery Crude charge (BPD) (1) 82,730 60,380 79,790 66,420 Refinery production (BPD) (2) 90,940 65,600 88,540 73,320 Sales of produced refined products (BPD) 90,660 66,320 88,040 73,000 Sales of refined products (BPD) (3) 100,840 83,940 98,610 87,340 Refinery utilization (4) 99.7% 80.5% 96.1% 88.6% Average per produced barrel (5) Net sales $93.17 $90.76 $84.69 $82.49 Cost of products (6) 65.63 67.34 62.45 64.90 Refinery gross margin 27.54 23.42 22.24 17.59 Refinery operating expenses (7) 4.26 5.37 4.22 5.07 Net operating margin $23.28 $18.05 $18.02 $12.52 Feedstocks: Sour crude oil 78% 80% 76% 81% Sweet crude oil 10% 9% 10% 7% Other feedstocks and blends 12% 11% 14% 12% Total 100% 100% 100% 100% Sales of produced refined products: Gasolines 58% 57% 59% 60% Diesel fuels 30% 27% 29% 26% Jet fuels 3% 5% 3% 5% Fuel oil 3% --% 3% --% Asphalt 3% 4% 3% 3% LPG and other 3% 7% 3% 6% Total 100% 100% 100% 100% Woods Cross Refinery Crude charge (BPD) (1) 25,800 25,270 25,230 24,010 Refinery production (BPD) (2) 27,280 27,030 26,920 25,530 Sales of produced refined products (BPD) 26,130 27,500 27,120 25,410 Sales of refined products (BPD) (3) 26,230 28,800 27,390 26,640 Refinery utilization (4) 99.2% 97.2% 97.0% 92.3% Average per produced barrel (5) Net sales $96.51 $89.63 $83.67 $80.52 Cost of products (6) 65.29 69.80 60.95 65.42 Refinery gross margin 31.22 19.83 22.72 15.10 Refinery operating expenses (7) 4.22 4.36 4.50 4.99 Net operating margin $27.00 $15.47 $18.22 $10.11 Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Woods Cross Refinery Feedstocks: Sour crude oil 2 % 3 % 1 % 4 % Sweet crude oil 90 % 89 % 90 % 87 % Other feedstocks and blends 8 % 8 % 9 % 9 % Total 100 % 100 % 100 % 100 % Sales of produced refined products: Gasolines 58 % 64 % 61 % 63 % Diesel fuels 31 % 30 % 28 % 28 % Jet fuels 3 % 1 % 2 % 2 % Fuel oil 7 % 4 % 7 % 5 % LPG and other 1 % 1 % 2 % 2 % Total 100 % 100 % 100 % 100 % Consolidated Crude charge (BPD) (1) 108,530 85,650 105,020 90,430 Refinery production (BPD) (2) 118,220 92,630 115,460 98,850 Sales of produced refined products 116,790 93,820 115,160 98,410 (BPD) Sales of refined products (BPD) (3) 127,070 112,740 126,000 113,980 Refinery utilization (4) 99.6 % 84.8 % 96.3 % 89.5 % Average per produced barrel (5) Net sales $93.92 $90.43 $84.45 $81.98 Cost of products (6) 65.56 68.06 62.10 65.03 Refinery gross margin 28.36 22.37 22.35 16.95 Refinery operating expenses (7) 4.25 5.08 4.29 5.05 Net operating margin $24.11 $17.29 $18.06 $11.90 Feedstocks: Sour crude oil 60 % 58 % 59 % 61 % Sweet crude oil 28 % 32 % 29 % 28 % Other feedstocks and blends 12 % 10 % 12 % 11 % Total 100 % 100 % 100 % 100 % Sales of produced refined products: Gasolines 58 % 59 % 59 % 61 % Diesel fuels 30 % 27 % 29 % 27 % Jet fuels 3 % 4 % 3 % 4 % Fuel oil 4 % 1 % 4 % 1 % Asphalt 2 % 3 % 2 % 2 % LPG and other 3 % 6 % 3 % 5 % Total 100 % 100 % 100 % 100 % (1) Crude charge represents the barrels per day of crude oil processed at the crude units at our refineries. (2) Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries. (3) Includes refined products purchased for resale. (4) Represents crude charge divided by total crude capacity (BPSD). Crude capacity for the Navajo Refinery was increased from 75,000 BPSD to 83,000 BPSD in mid-year 2006, increasing our consolidated crude capacity from 101,000 BPSD to 109,000 BPSD. (5) Represents average per barrel amounts for produced refined products sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are located under "Reconciliations to Amounts Reported under Generally Accepted Accounting Principles" below. (6) Transportation costs billed from HEP are included in cost of products. (7) Represents operating expenses of our refineries, exclusive of depreciation, depletion, and amortization, and excludes refining segment expenses of product pipelines and terminals. Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles Reconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") to amounts reported under generally accepted accounting principles in financial statements. Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income plus (i) interest expense net of interest income, (ii) income tax provision, and (iii) depreciation, depletion and amortization. EBITDA is not a calculation based upon accounting principles generally accepted in the United States; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants. We are reporting EBITDA from continuing operations. Set forth below is our calculation of EBITDA from continuing operations. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 (In thousands) Income from continuing operations $158,627 $87,729 $226,169 $118,889 Add provision for income tax 86,136 50,148 120,822 65,635 Add interest expense 291 272 543 547 Subtract interest income (3,550) (2,408) (6,110) (4,143) Add depreciation and amortization 10,641 10,683 22,092 18,707 EBITDA from continuing operations $252,145 $146,424 $363,516 $199,635 Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements. Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis. We calculate refinery gross margin and net operating margin using net sales, cost of products and operating expenses, in each case averaged per produced barrel sold. These two margins do not include the effect of depreciation, depletion and amortization. Each of these component performance measures can be reconciled directly to our Statements of Income. Other companies in our industry may not calculate these performance measures in the same manner. Refinery Gross Margin Refinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. Refinery gross margin for each of our refineries and for both of our refineries on a consolidated basis is calculated as shown below. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Average per produced barrel: Navajo Refinery Net sales $93.17 $90.76 $84.69 $82.49 Less cost of products 65.63 67.34 62.45 64.90 Refinery gross margin $27.54 $23.42 $22.24 $17.59 Woods Cross Refinery Net sales $96.51 $89.63 $83.67 $80.52 Less cost of products 65.29 69.80 60.95 65.42 Refinery gross margin $31.22 $19.83 $22.72 $15.10 Consolidated Net sales $93.92 $90.43 $84.45 $81.98 Less cost of products 65.56 68.06 62.10 65.03 Refinery gross margin $28.36 $22.37 $22.35 $16.95 Net Operating Margin Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. Net operating margin for each of our refineries and for both of our refineries on a consolidated basis is calculated as shown below. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Average per produced barrel: Navajo Refinery Refinery gross margin $27.54 $23.42 $22.24 $17.59 Less refinery operating expenses 4.26 5.37 4.22 5.07 Net operating margin $23.28 $18.05 $18.02 $12.52 Woods Cross Refinery Refinery gross margin $31.22 $19.83 $22.72 $15.10 Less refinery operating expenses 4.22 4.36 4.50 4.99 Net operating margin $27.00 $15.47 $18.22 $10.11 Consolidated Refinery gross margin $28.36 $22.37 $22.35 $16.95 Less refinery operating expenses 4.25 5.08 4.29 5.05 Net operating margin $24.11 $17.29 $18.06 $11.90 Below are reconciliations to our Consolidated Statements of Income for (i) net sales, cost of products and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin. Due to rounding of reported numbers, some amounts may not calculate exactly. Reconciliations of refined product sales from produced products sold to total sales and other revenue Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Navajo Refinery Average sales price per produced barrel sold $93.17 $90.76 $84.69 $82.49 Times sales of produced refined products sold (BPD) 90,660 66,320 88,040 73,000 Times number of days in period 91 91 181 181 Refined product sales from produced products sold $768,658 $547,747 $1,349,555 $1,089,940 Woods Cross Refinery Average sales price per produced barrel sold $96.51 $89.63 $83.67 $80.52 Times sales of produced refined products sold (BPD) 26,130 27,500 27,120 25,410 Times number of days in period 91 91 181 181 Refined product sales from produced products sold $229,484 $224,299 $410,713 $370,328 Sum of refined products sales from produced products sold from our two refineries (4) $998,142 $772,046 $1,760,268 $1,460,268 Add refined product sales from purchased products and rounding(1) 91,747 168,064 171,093 252,343 Total refined products sales 1,089,889 940,110 1,931,361 1,712,611 Add direct sales of excess crude oil(2) 91,843 131,275 153,523 131,275 Add other refining segment revenue(3) 35,045 49,453 57,475 68,300 Total refining segment revenue 1,216,777 1,120,838 2,142,359 1,912,186 Add corporate and other revenues 114 143 505 524 Subtract consolidations and eliminations 106 (141) -- (276) Sales and other revenues $1,216,997 $1,120,840 $2,142,864 $1,912,434 (1) We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments. (2) We purchase crude oil and enter into buy/sell exchanges in excess of the needs to supply our refineries. Certain direct sales of this excess crude oil are made to purchasers or users of crude oil. Under new accounting guidance, these sales and related purchases starting April 1, 2006 are being measured at fair value and accounted for as revenues with the related acquisition costs included as cost of products sold. Prior to April 1, 2006, sales and cost of sales attributable to such excess crude oil direct sales were netted and presented in cost of products sold. (3) Other refining segment revenue includes the revenues associated with NK Asphalt Partners and revenue derived from sulfur credit sales. (4) The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Average sales price per produced barrel sold $93.92 $90.43 $84.45 $81.98 Times sales of produced refined products sold (BPD) 116,790 93,820 115,160 98,410 Times number of days in period 91 91 181 181 Refined product sales from produced products sold $998,142 $772,046 $1,760,268 $1,460,268 Reconciliation of average cost of products per produced barrel sold to total costs of products sold Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Navajo Refinery Average cost of products per produced barrel sold $65.63 $67.34 $62.45 $64.90 Times sales of produced refined products sold (BPD) 90,660 66,320 88,040 73,000 Times number of days in period 91 91 181 181 Cost of products for produced products sold $541,451 $406,405 $995,156 $857,524 Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Woods Cross Refinery Average cost of products per produced barrel sold $65.29 $69.80 $60.95 $65.42 Times sales of produced refined products sold (BPD) 26,130 27,500 27,120 25,410 Times number of days in period 91 91 181 181 Cost of products for produced products sold $155,249 $174,675 $299,186 $300,880 Sum of cost of products for produced products sold from our two refineries (4) $696,700 $581,080 $1,294,342 $1,158,404 Add refined product costs from purchased products sold and rounding (1) 86,404 172,348 168,556 257,966 Total refined cost of products sold 783,104 753,428 1,462,898 1,416,370 Add crude oil cost of direct sales of excess crude oil(2) 92,054 131,061 153,906 131,061 Add other refining segment costs of products sold(3) 21,973 23,661 32,147 36,339 Total refining segment cost of products sold 897,131 908,150 1,648,951 1,583,770 Subtract consolidations and eliminations 106 (141) -- (276) Costs of products sold (exclusive of depreciation, depletion and amortization) $897,237 $908,009 $1,648,951 $1,583,494 (1) We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments. (2) We purchase crude oil and enter into buy/sell exchanges in excess of the needs to supply our refineries. Certain direct sales of this excess crude oil are made to purchasers or users of crude oil. Under new accounting guidance, these sales and related purchases starting April 1, 2006 are being measured at fair value and accounted for as revenues with the related acquisition costs included as cost of products sold. Prior to April 1, 2006, sales and cost of sales attributable to such excess crude oil direct sales were netted and presented in cost of products sold. (3) Other refining segment costs of products sold includes the costs of products for NK Asphalt Partners and costs attributable to sulfur credit sales. (4) The above calculations of costs of products from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Average cost of products per produced barrel sold $65.56 $68.06 $62.10 $65.03 Times sales of produced refined products sold (BPD) 116,790 93,820 115,160 98,410 Times number of days in period 91 91 181 181 Cost of products for produced products sold $696,700 $581,080 $1,294,342 $1,158,404 Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Navajo Refinery Average refinery operating expenses per produced barrel sold $4.26 $5.37 $4.22 $5.07 Times sales of produced refined products sold (BPD) 90,660 66,320 88,040 73,000 Times number of days in period 91 91 181 181 Refinery operating expenses for produced products sold $35,145 $32,409 $67,247 $66,990 Woods Cross Refinery Average refinery operating expenses per produced barrel sold $4.22 $4.36 $4.50 $4.99 Times sales of produced refined products sold (BPD) 26,130 27,500 27,120 25,410 Times number of days in period 91 91 181 181 Refinery operating expenses for produced products sold $10,034 $10,911 $22,089 $22,950 Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Sum of refinery operating expenses per produced products sold from our two refineries (2) $45,179 $43,320 $89,336 $89,940 Add other refining segment operating expenses and rounding (1) 5,934 5,790 11,895 11,603 Total refining segment operating expenses 51,113 49,110 101,231 101,543 Add corporate and other costs 3 (18) 14 16 Operating expenses (exclusive of depreciation, depletion and amortization) $51,116 $49,092 $101,245 $101,559 (1) Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of NK Asphalt Partners. (2) The above calculations of refinery operating expenses from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Average refinery operating expenses per produced barrel sold $4.25 $5.08 $4.29 $5.05 Times sales of produced refined products sold (BPD) 116,790 93,820 115,160 98,410 Times number of days in period 91 91 181 181 Refinery operating expenses for produced products sold $45,179 $43,320 $89,336 $89,940 Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Navajo Refinery Net operating margin per barrel $23.28 $18.05 $18.02 $12.52 Add average refinery operating expenses per produced barrel 4.26 5.37 4.22 5.07 Refinery gross margin per barrel 27.54 23.42 22.24 17.59 Add average cost of products per produced barrel sold 65.63 67.34 62.45 64.90 Average net sales per produced barrel sold $93.17 $90.76 $84.69 $82.49 Times sales of produced refined products sold (BPD) 90,660 66,320 88,040 73,000 Times number of days in period 91 91 181 181 Refined products sales from $768,658 $547,747 $1,349,555 $1,089,940 produced products sold Woods Cross Refinery Net operating margin per barrel $27.00 $15.47 $18.22 $10.11 Add average refinery operating expenses per produced barrel 4.22 4.36 4.50 4.99 Refinery gross margin per barrel 31.22 19.83 22.72 15.10 Add average cost of products per produced barrel sold 65.29 69.80 60.95 65.42 Average net sales per produced barrel sold $96.51 $89.63 $83.67 $80.52 Times sales of produced refined products sold (BPD) 26,130 27,500 27,120 25,410 Times number of days in period 91 91 181 181 Refined products sales from produced products sold $229,484 $224,299 $410,713 $370,328 Sum of refined products sales from produced products sold from our two refineries (4) $998,142 $772,046 $1,760,268 $1,460,268 Add refined product sales from purchased products and rounding (1) 91,747 168,064 171,093 252,343 Total refined products sales 1,089,889 940,110 1,931,361 1,712,611 Add direct sales of excess crude oil(2) 91,843 131,275 153,523 131,275 Add other refining segment revenue (3) 35,045 49,453 57,475 68,300 Total refining segment revenue 1,216,777 1,120,838 2,142,359 1,912,186 Add corporate and other revenues 114 143 505 524 Subtract consolidations and eliminations 106 (141) -- (276) Sales and other revenues $1,216,997 $1,120,840 $2,142,864 $1,912,434 (1) We purchase finished products when opportunities arise that provide a profit on the sale of such products or to meet delivery commitments. (2) We purchase crude oil and enter into buy/sell exchanges in excess of the needs to supply our refineries. Certain direct sales of this excess crude oil are made to purchasers or users of crude oil. Under new accounting guidance, these sales and related purchases starting April 1, 2006 are being measured at fair value and accounted for as revenues with the related acquisition costs included as cost of products sold. Prior to April 1, 2006, sales and cost of sales attributable to such excess crude oil direct sales were netted and presented in cost of products sold. (3) Other refining segment revenue includes the revenues associated with NK Asphalt Partners and revenue derived from sulfur credit sales. (4) The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net operating margin per barrel $24.11 $17.29 $18.06 $11.90 Add average refinery operating expenses per produced barrel 4.25 5.08 4.29 5.05 Refinery gross margin per barrel 28.36 22.37 22.35 16.95 Add average cost of products per produced barrel sold 65.56 68.06 62.10 65.03 Average sales price per produced barrel sold $93.92 $90.43 $84.45 $81.98 Times sales of produced refined products sold (BPD) 116,790 93,820 115,160 98,410 Times number of days in period 91 91 181 181 Refined product sales from produced products sold $998,142 $772,046 $1,760,268 $1,460,268 DATASOURCE: Holly Corporation CONTACT: Stephen J. McDonnell, Vice President and Chief Financial Officer, or M. Neale Hickerson, Vice President, Investor Relations, both of Holly Corporation, +1-214-871-3555 Web site: http://www.hollycorp.com/

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