10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________________________

FORM 10-Q

______________________________________________________________________________________

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________                    

Commission File Number: 1-32225

______________________________________________________________________________________

HOLLY ENERGY PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

______________________________________________________________________________________

Delaware	20-0833098
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

(Address of principal executive offices), (Zip code)

(214) 871-3555

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ¨   No  ý

The number of the registrant’s outstanding common units at April 26, 2013 was 58,657,048.

Table of Contentsril 19,

HOLLY ENERGY PARTNERS, L.P.

INDEX

	FORWARD-LOOKING STATEMENTS		3
PART I. FINANCIAL INFORMATION			4
	Item 1.	Financial Statements (Unaudited)	4
		Consolidated Balance Sheets	4
		Consolidated Statements of Income	5
		Consolidated Statements of Comprehensive Income	6
		Consolidated Statements of Cash Flows	7
		Consolidated Statements of Partners’ Equity	8
		Notes to Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
	Item 4.	Controls and Procedures	36
PART II. OTHER INFORMATION			37
	Item 1.	Legal Proceedings	37
	Item 1A.	Risk Factors	37
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
	Item 6.	Exhibits	37
		SIGNATURES	38
		Index to Exhibits	39

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Table of Contentsril 19,

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical fact included in this Form 10-Q, including, but not limited to, those under “Results of Operations” and “Liquidity and Capital Resources” in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I are forward-looking statements. Forward looking statements use words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations. These statements are based on our beliefs and assumptions and those of our general partner using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. Although we and our general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither we nor our general partner can give assurance that our expectations will prove to be correct. All statements concerning our expectations for future results of operations are based on forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected. Certain factors could cause actual results to differ materially from results anticipated in the forward-looking statements. These factors include, but are not limited to:

• risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored or throughput in our terminals;

• the economic viability of HollyFrontier Corporation, Alon USA, Inc. and our other customers;

• the demand for refined petroleum products in markets we serve;

• our ability to purchase and integrate additional operations in the future successfully;

• our ability to complete previously announced or contemplated acquisitions;

• the availability and cost of additional debt and equity financing;

• the possibility of reductions in production or shutdowns at refineries utilizing our pipeline and terminal facilities;

• the effects of current and future government regulations and policies;

• our operational efficiency in carrying out routine operations and capital 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 our Securities and Exchange Commission filings.

Cautionary statements identifying important factors that could cause actual results to differ materially from our expectations are set forth in this Form 10-Q, including without limitation, the forward-looking statements that are referred to above. When considering forward-looking statements, you should keep in mind the known material risk factors and other cautionary statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2012 in “Risk Factors” and in this Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All forward-looking statements included in this Form 10-Q and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. 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.

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Table of Contentsril 19,

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HOLLY ENERGY PARTNERS, L.P.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2013			December 31, 2012
	(In thousands, except unit data)
ASSETS
Current assets:
Cash and cash equivalents	$	18,193		$	5,237
Accounts receivable:
Trade	6,073			7,126
Affiliates	31,055			31,594
	37,128			38,720
Prepaid and other current assets	3,475			3,619
Total current assets	58,796			47,576
Properties and equipment, net	955,920			960,535
Transportation agreements, net	92,860			94,596
Goodwill	256,498			256,498
Investment in SLC Pipeline	25,011			25,041
Other assets	9,101			9,864
Total assets	$	1,398,186		$	1,394,110
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable:
Trade	$	7,429		$	7,045
Affiliates	4,917			4,985
	12,346			12,030
Accrued interest	2,366			10,226
Deferred revenue	6,627			8,901
Accrued property taxes	2,721			2,688
Other current liabilities	2,421			1,905
Total current liabilities	26,481			35,750
Long-term debt	811,913			864,674
Other long-term liabilities	14,723			15,433
Deferred revenue	15,469			11,494
Class B unit	15,418			13,903
Equity:
Partners’ equity:
Common unitholders (58,657,048 and 56,782,048 units issued and outstanding     at March 31, 2013 and December 31, 2012, respectively)	560,590			502,809
General partner interest (2% interest)	(145,118		)	(145,877		)
Accumulated other comprehensive loss	(2,868		)	(4,279		)
Total partners’ equity	412,604			352,653
Noncontrolling interest	101,578			100,203
Total equity	514,182			452,856
Total liabilities and equity	$	1,398,186		$	1,394,110

See accompanying notes.

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Table of Contentsril 19,

HOLLY ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended March 31,
	2013			2012 (1)
	(In thousands, except per unit data)
Revenues:
Affiliates	$	61,512		$	56,531
Third parties	12,786			11,884
	74,298			68,415
Operating costs and expenses:
Operations	25,865			20,475
Depreciation and amortization	14,154			14,300
General and administrative	3,232			2,039
	43,251			36,814
Operating income	31,047			31,601
Other income (expense):
Equity in earnings of SLC Pipeline	657			831
Interest expense	(12,484		)	(10,405		)
Interest income	103			—
Loss on early extinguishment of debt	—			(2,596		)
Gain on sale of assets	2,022			—
	(9,702		)	(12,170		)
Income before income taxes	21,345			19,431
State income tax expense	(56		)	(75		)
Net income	21,289			19,356
Allocation of net loss attributable to Predecessors	—			1,861
Allocation of net loss (income) attributable to noncontrolling interests	(2,890		)	557
Net income attributable to Holly Energy Partners	18,399			21,774
General partner interest in net income, including incentive distributions	(6,231		)	(5,503		)
Limited partners’ interest in net income	$	12,168		$	16,271
Limited partners’ per unit interest in earnings—basic and diluted	$	0.21		$	0.30
Weighted average limited partners’ units outstanding	56,990			54,722

⁽¹⁾ Restated as described in Note 1.

See accompanying notes.

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HOLLY ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended March 31,
	2013			2012 (1)
	(In thousands)
Net income	$	21,289		$	19,356
Allocation of net loss attributable to Predecessors	—			1,861
Net income before noncontrolling interests	21,289			21,217
Other comprehensive income (loss):
Change in fair value of cash flow hedge	562			(354		)
Amortization of unrealized loss attributable to discontinued cash flow hedge	849			1,274
Other comprehensive income (loss)	1,411			920
Comprehensive income before noncontrolling interest	22,700			22,137
Allocation of comprehensive (income) loss to noncontrolling interests	(2,890		)	557
Comprehensive income attributable to Holly Energy Partners	$	19,810		$	22,694

⁽¹⁾ Restated as described in Note 1.

See accompanying notes.

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Table of Contentsril 19,

HOLLY ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2013			2012 (1)
	(In thousands)
Cash flows from operating activities
Net income	$	21,289		$	19,356
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,154			14,300
Gain on sale of assets	(2,022		)	—
Amortization of deferred charges	1,379			2,091
Equity in earnings of SLC Pipeline, net of distributions	30			(81		)
Amortization of restricted and performance units	1,123			943
(Increase) decrease in current assets:
Accounts receivable—trade	1,053			(1,897		)
Accounts receivable—affiliates	539			(1,219		)
Prepaid and other current assets	145			328
Increase (decrease) in current liabilities:
Accounts payable—trade	(1,808		)	(5,749		)
Accounts payable—affiliates	253			(14		)
Accrued interest	(7,860		)	(6,473		)
Deferred revenue	1,686			(592		)
Accrued property taxes	33			(395		)
Other current liabilities	531			771
Other, net	354			2,734
Net cash provided by operating activities	30,879			24,103
Cash flows from investing activities
Additions to properties and equipment	(6,645		)	(17,011		)
Proceeds from sale of assets	2,481			—
Net cash used for investing activities	(4,164		)	(17,011		)
Cash flows from financing activities
Borrowings under credit agreement	57,000			36,000
Repayments of credit agreement borrowings	(110,000		)	(81,000		)
Proceeds from issuance of senior notes	—			294,750
Proceeds from issuance of common units	73,444			—
Repayment of notes	—			(232,711		)
Contributions from UNEV joint venture partners	—			14,962
Distributions to HEP unitholders	(32,709		)	(29,716		)
Contribution from general partner	1,499			—
Purchase of units for incentive grants	(2,719		)	(1,283		)
Deferred financing costs	—			(1,123		)
Other	(274		)	(192		)
Net cash used by financing activities	(13,759		)	(313		)
Cash and cash equivalents
Increase for the period	12,956			6,779
Beginning of period	5,237			6,369
End of period	$	18,193		$	13,148

⁽¹⁾ Restated as described in Note 1.

See accompanying notes.

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Table of Contentsril 19,

HOLLY ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY

(Unaudited)

	Common Units			General Partner Interest			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest		Total Equity
	(In thousands)
Balance at December 31, 2012	$	502,809		$	(145,877	)	$	(4,279	)	$	100,203	$	452,856
Issuance of common units	73,444			—			—			—		73,444
Net income	14,310			5,604			—			1,375		21,289
Other comprehensive income	—			—			1,411			—		1,411
Capital contribution	—			1,499			—			—		1,499
Distributions to HEP unitholders	(26,687		)	(6,022		)	—			—		(32,709		)
Purchase of units for restricted grants	(2,924		)	—			—			—		(2,924		)
Amortization of restricted and performance units	1,123			—			—			—		1,123
Class B unit accretion	(1,485		)	(30		)	—			—		(1,515		)
Other	—			(292		)	—			—		(292		)
Balance March 31, 2013	$	560,590		$	(145,118	)	$	(2,868	)	$	101,578	$	514,182

See accompanying notes.

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Table of Contentsril 19,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Description of Business and Presentation of Financial Statements

Holly Energy Partners, L.P. (“HEP”) together with its consolidated subsidiaries, is a publicly held master limited partnership which is 39% owned (including the 2% general partner interest) by HollyFrontier Corporation (“HFC”) and its subsidiaries. In these consolidated financial statements, the words “we,” “our,” “ours” and “us” refer to HEP unless the context otherwise indicates.

We own and operate petroleum product and crude oil pipelines and terminal, tankage and loading rack facilities that support HFC’s refining and marketing operations in the Mid-Continent, Southwest and Rocky Mountain regions of the United States and Alon USA, Inc.’s (“Alon”) refinery in Big Spring, Texas. Additionally, we own a 75% interest in UNEV Pipeline, LLC (“UNEV”), which owns a 400-mile, 12-inch refined products pipeline running from Woods Cross, Utah to Las Vegas Nevada (the “UNEV Pipeline”), product terminals near Cedar City, Utah and Las Vegas, Nevada and related assets, and a 25% interest in SLC Pipeline LLC, which owns a 95-mile intrastate crude oil pipeline system (the “SLC Pipeline”) that serves refineries in the Salt Lake City, Utah area.

We generate revenues by charging tariffs for transporting petroleum products and crude oil through our pipelines, by charging fees for terminalling and storing refined products and other hydrocarbons and providing other services at our storage tanks and terminals. We do not take ownership of products that we transport, terminal or store, and therefore, we are not directly exposed to changes in commodity prices.

The consolidated financial statements included herein have been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The interim financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of our results for the interim periods. Such adjustments are considered to be of a normal recurring nature. Although certain notes and other information required by U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted, we believe that the disclosures in these consolidated financial statements are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with our Form 10-K for the year ended December 31, 2012. Results of operations for interim periods are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2013.

On January 16, 2013, a two-for-one unit split was paid in the form of a common unit distribution for each issued and outstanding common unit to all unitholders of record on January 7, 2013. All references to unit and per unit amounts in this document and related disclosures have been adjusted to reflect the effect of the unit split for all periods presented.

In March 2013, we closed on a public offering of 1,875,000 of our common units. Additionally, an affiliate of HFC, as a selling unitholder, closed on a public sale of 1,875,000 of its HEP common units. We used our net proceeds of $73.4 million to repay indebtedness incurred under our credit facility and for general partnership purposes. Amounts repaid under our credit facility may be reborrowed from time to time, and we intend to reborrow certain amounts to fund capital expenditures.

The financial information for the three months ended March 31, 2012, included in the accompanying financial statements and notes thereto were revised from the amounts previously reported for that period due to accounting rules that require retrospective restatement of previously reported results in cases of business combinations between entities under common control. We have therefore included the results of UNEV prior to our acquisition on July 12, 2012, herein referred to as results attributable to the Predecessor. See Note 2 below for additional information on the UNEV acquisition. Additional revisions were made in order to correct certain immaterial items in previously reported amounts. These revisions reduced net income attributable to Holly Energy Partners for the three months ended March 31, 2012 by $0.2 million, with no impact on the limited partners' per unit interest in net earnings - basic and diluted and were comprised principally of an adjustment of depreciation expense related to certain property and equipment.  For more information about these revisions, see the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2012.

New Accounting Pronouncements

Presentation of Comprehensive Income

Effective January 1, 2013, we adopted the accounting standard update that requires the disclosure of significant amounts reclassified out of accumulated other comprehensive income by component either on the face of the financial statements or in the notes. The adoption of this accounting standard did not have an impact on our financial condition, results of operations or cash flows.

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HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

Note 2: Acquisitions

UNEV Pipeline Interest Acquisition

On July 12, 2012, we acquired HFC's 75% interest in UNEV. We paid consideration consisting of $260.0 million in cash and 2,059,800 of our common units. We paid an additional $0.9 million to HFC for a post-closing working capital adjustment. Also under the terms of the transaction, we issued to HFC a Class B unit comprising a noncontrolling equity interest in a wholly-owned subsidiary subject to redemption to the extent that HFC is entitled to a 50% interest in our share of annual UNEV earnings before interest, income taxes, depreciation, and amortization above $30 million beginning July 1, 2016 and ending in June 2032, subject to certain limitations. Such contingent redemption payments are limited to a maximum payment amount calculated as described below. However, to the extent earnings thresholds are not achieved, no redemption payments are required. Contemporaneously with this transaction, HFC (our general partner) agreed to forego its right to incentive distributions of up to $1.25 million per quarter over twelve consecutive quarterly periods following the closing of the transaction and up to an additional four quarters in certain circumstances. The Class B unit increases with each foregone incentive distribution as described above and by a 7% factor compounded annually on the outstanding unredeemed balance through its expiration date. At our option, we may redeem, in whole or in part, the Class B unit at the current unredeemed value based on the calculation described. The Class B unit had a value of $13.9 million at December 31, 2012 and $15.4 million at March 31, 2013.

Noncontrolling interests reported in the consolidated statements of income include the minority partner's 25% interest in UNEV and income attributable to the Class B unit representing foregone incentive distribution rights and the 7% accretion factor, which collectively amounted to $2.9 million for the three months ended March 31, 2013.

We are a consolidated variable interest entity of HFC. Therefore, this transaction was recorded as a transfer between entities under common control and reflects HFC's carrying basis in UNEV's assets and liabilities. We have retrospectively adjusted our financial position and operating results as if UNEV were a consolidated subsidiary for all periods while we were under common control of HFC. For the three months ended March 31, 2012, our consolidated statement of income includes Predecessor revenues from UNEV of $3.9 million and Predecessor net losses of $1.9 million.

Note 3: Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, debt and interest rate swaps. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Debt consists of outstanding principal under our revolving credit agreement (which approximates fair value as interest rates are reset frequently at current interest rates) and our fixed interest rate senior notes.

Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability) including assumptions about risk. GAAP categorizes inputs used in fair value measurements into three broad levels as follows:

• (Level 1) Quoted prices in active markets for identical assets or liabilities.

• (Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.

• (Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.

The carrying amounts and estimated fair values of our senior notes and interest rate swaps were as follows:

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HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

		March 31, 2013				December 31, 2012
Financial Instrument	Fair Value Input Level	Carrying Value		Fair Value		Carrying Value		Fair Value
		(In thousands)
Liabilities:
Senior notes:
6.5% senior notes	Level 2	$	295,438	$	318,750	$	295,275	$	321,000
8.25% senior notes	Level 2	148,475		161,813		148,399		163,125
		443,913		480,563		443,674		484,125
Interest rate swaps	Level 2	2,868		2,868		3,430		3,430
		$	446,781	$	483,431	$	447,104	$	487,555

Level 2 Financial Instruments

Our senior notes and interest rate swaps are measured and recorded at fair value using Level 2 inputs. The fair value of the senior notes is based on market values provided by a third-party bank, which were derived using market quotes for similar type debt instruments. The fair value of our interest rate swaps is based on the net present value of expected future cash flows related to both variable and fixed rate legs of the swap agreement. This measurement is computed using the forward London Interbank Offered Rate (“LIBOR”) yield curve, a market-based observable input.

See Note 7 for additional information on these instruments.

Note 4: Properties and Equipment

The carrying amounts of our properties and equipment are as follows:

	March 31, 2013		December 31, 2012
	(In thousands)
Pipelines, terminals and tankage	$	1,061,392	$	1,049,531
Land and right of way	63,192		63,248
Construction in progress	27,122		27,150
Other	17,899		24,462
	1,169,605		1,164,391
Less accumulated depreciation	213,685		203,856
	$	955,920	$	960,535

We capitalized $0.1 million and $0.1 million in interest related to construction projects during the three months ended March 31, 2013 and 2012, respectively.

Note 5: Transportation Agreements

Our transportation agreements represent a portion of the total purchase price of certain assets acquired from Alon in 2005 and from HFC in 2008. The Alon agreement is being amortized over 30 years ending 2035 (the initial 15-year term of the agreement plus an expected 15-year extension period) and the HFC agreement is being amortized over 15 years ending 2023 (the term of the HFC agreement).

The carrying amounts of our transportation agreements are as follows:

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HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

	March 31, 2013		December 31, 2012
	(In thousands)
Alon transportation agreement	$	59,933	$	59,933
HFC transportation agreement	74,231		74,231
	134,164		134,164
Less accumulated amortization	41,304		39,568
	$	92,860	$	94,596

We have additional transportation agreements with HFC that relate to assets contributed to us or acquired from HFC consisting of pipeline, terminal and tankage assets. These transactions occurred while we were a consolidated variable interest entity of HFC, therefore, our basis in these agreements is zero and does not reflect a step-up in basis to fair value.

Note 6: Employees, Retirement and Incentive Plans

Employees who provide direct services to us are employed by Holly Logistic Services, L.L.C., an HFC subsidiary. Their costs, including salaries, bonuses, payroll taxes, benefits and other direct costs, are charged to us monthly in accordance with an omnibus agreement that we have with HFC. These employees participate in the retirement and benefit plans of HFC. Our share of retirement and benefit plan costs was $1.9 million and $1.5 million for the three months ended March 31, 2013 and 2012, respectively. Our accounting policy for the recognition of compensation expense for awards with pro-rata vesting (a significant proportion of our awards) is to expense the costs ratably over the vesting periods.

We have an incentive plan (“Long-Term Incentive Plan”) for employees and non-employee directors who perform services for us. The Long-Term Incentive Plan consists of four components: restricted units, performance units, unit options and unit appreciation rights.

As of March 31, 2013, we have two types of incentive-based awards which are described below. The compensation cost charged against income was $1.1 million and $0.9 million for the three months ended March 31, 2013 and 2012, respectively. We currently purchase units in the open market instead of issuing new units for settlement of all unit awards under our Long-Term Incentive Plan. As of March 31, 2013, 2,500,000 units were authorized to be granted under our Long-Term Incentive Plan, of which 1,735,811 have not yet been granted, assuming no forfeitures of the unvested units and full achievement of goals for the performance units already granted.

Restricted Units

Under our Long-Term Incentive Plan, we grant restricted units to selected employees and non-employee directors who perform services for us, with most awards vesting over a period of one to three years. Although full ownership of the units does not transfer to the recipients until the units vest, the recipients have distribution and voting rights on these units from the date of grant. The fair value of each restricted unit award is measured at the market price as of the date of grant and is amortized over the vesting period.

A summary of restricted unit activity and changes during the three months ended March 31, 2013 is presented below:

Restricted Units	Units	Weighted- Average Grant-Date Fair Value
Outstanding at January 1, 2013 (nonvested)	58,472	$	31.21
Granted	37,815	41.18
Vesting and transfer of full ownership to recipients	—	—
Outstanding at March 31, 2013 (nonvested)	96,287	$	35.08

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HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

As of March 31, 2013, there was $1.6 million of total unrecognized compensation expense related to nonvested restricted unit grants which is expected to be recognized over a weighted-average period of 1.2 years.

Performance Units

Under our Long-Term Incentive Plan, we grant performance units to selected executives who perform services for us. Performance units granted are payable based upon the growth in our distributable cash flow per common unit over the performance period, and vest over a period of three years. As of March 31, 2013, estimated unit payouts for outstanding nonvested performance unit awards were at 110% to 125%.

We granted 32,888 target performance units to certain officers in March 2013. These units will vest over a three-year performance period ending December 31, 2015 and are payable in HEP common units. The number of units actually earned will be based on the growth of our distributable cash flow per common unit over the performance period and can range from 0% to 200% of the target number of performance units granted (in the case of our Chief Executive Officer) or from 50% to 150% of the target number of performance units granted (in the case of other officers granted performance units). Although common units are not transferred to the recipients until the performance units vest, the recipients have distribution rights with respect to the common units from the date of grant. The fair value of these performance units is based on the grant date closing unit price of $40.86 and will apply to the number of units ultimately awarded.

A summary of performance unit activity and changes during the three months ended March 31, 2013 is presented below:

Performance Units	Units
Outstanding at January 1, 2013 (nonvested)	54,498
Granted	32,888
Vesting and transfer of common units to recipients	(25,124	)
Outstanding at March 31, 2013 (nonvested)	62,262

The grant-date fair value of performance units vested and transferred to recipients during the three months ended March 31, 2013 was $0.5 million. As of March 31, 2013, there was $1.8 million of total unrecognized compensation expense related to nonvested performance units, which is expected to be recognized over a weighted-average period of 1.3 years.

During the three months ended March 31, 2013, we purchased $2.4 million of our common units in the open market for the issuance and settlement of all unit awards under our Long-Term Incentive Plan.

Note 7: Debt

Credit Agreement

We have a $550 million senior secured revolving credit facility expiring in June 2017 (the “Credit Agreement”) that is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. It is available also to fund letters of credit up to a $50 million sub-limit and to fund distributions to unitholders up to a $60 million sub-limit.

During the three months ended March 31, 2013, we received advances totaling $57.0 million and repaid $110.0 million, resulting in net repayments of $53.0 million under the Credit Agreement and an outstanding balance of $368.0 million at March 31, 2013.

Our obligations under the Credit Agreement are collateralized by substantially all of our assets. Indebtedness under the Credit Agreement is recourse to HEP Logistics Holdings, L.P. (“HEP Logistics”), our general partner, and guaranteed by our material wholly-owned subsidiaries. Any recourse to HEP Logistics would be limited to the extent of its assets, which other than its investment in us, are not significant. We may prepay all loans at any time without penalty, except for payment of certain breakage and related costs.

The Credit Agreement imposes certain requirements on us which we are currently in compliance with, including: a prohibition against distribution to unitholders if, before or after the distribution, a potential default or an event of default as defined in the agreement would occur; limitations on our ability to incur debt, make loans, acquire other companies, change the nature of our business, enter into a merger or consolidation, or sell assets; and covenants that require maintenance of a specified EBITDA to

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HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

interest expense ratio, total debt to EBITDA ratio and senior debt to EBITDA ratio. If an event of default exists under the Credit Agreement, the lenders will be able to accelerate the maturity of the debt and exercise other rights and remedies.

Senior Notes

In March 2012, we issued $300 million in aggregate principal amount outstanding of 6.5% senior notes maturing March 1, 2020 (the “6.5% Senior Notes”). Net proceeds of $294.8 million were used in March and April 2012 to redeem $185.0 million aggregate principal amount of our 6.25% senior notes maturing March 1, 2015 (the “6.25% Senior Notes”) tendered pursuant to a cash tender offer and consent solicitation, to repay HFC $72.9 million in promissory notes related to our November 2011 acquisition of assets located at HFC's El Dorado and Cheyenne refineries, to pay related fees, expenses and accrued interest in connection with these transactions and to repay borrowings under the Credit Agreement.

Also, we have $150 million in aggregate principal amount outstanding of 8.25% senior notes maturing March 15, 2018, (the “8.25% Senior Notes”).

The 6.5% Senior Notes and 8.25% Senior Notes (collectively, the “Senior Notes”) are unsecured and impose certain restrictive covenants, which we are currently in compliance with, including limitations on our ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, we will not be subject to many of the foregoing covenants. Additionally, we have certain redemption rights under the Senior Notes.

Indebtedness under the Senior Notes is recourse to HEP Logistics, our general partner, and guaranteed by our wholly-owned subsidiaries. However, any recourse to HEP Logistics would be limited to the extent of its assets, which other than its investment in us, are not significant.

Long-term Debt

The carrying amounts of our long-term debt are as follows:

	March 31, 2013			December 31, 2012
	(In thousands)
Credit Agreement	$	368,000		$	421,000
6.5% Senior Notes
Principal	300,000			300,000
Unamortized discount	(4,562		)	(4,725		)
	295,438			295,275
8.25% Senior Notes
Principal	150,000			150,000
Unamortized discount	(1,525		)	(1,601		)
	148,475			148,399
Total long-term debt	$	811,913		$	864,674

Interest Rate Risk Management

We use interest rate swaps (derivative instruments) to manage our exposure to interest rate risk.

As of March 31, 2013, we have three interest rate swaps that hedge our exposure to the cash flow risk caused by the effects of LIBOR changes on $305.0 million of Credit Agreement advances. Our first interest rate swap entered into in December 2011, effectively converts $155.0 million of our LIBOR based debt to fixed rate debt having an interest rate of 0.99% plus an applicable margin of 2.50% as of March 31, 2013, which equaled an effective interest rate of 3.49%. This swap contract matures in February 2016. In August 2012, we entered into two similar interest rate swaps with identical terms which effectively convert $150.0 million of our LIBOR based debt to fixed rate debt having an interest rate of 0.74% plus an applicable margin of 2.50% as of March 31, 2013, which equaled an effective interest rate of 3.24%. Both of these swap contracts mature in July 2017.

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HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

We have designated these interest rate swaps as cash flow hedges. Based on our assessment of effectiveness using the change in variable cash flows method, we have determined that these interest rate swaps are effective in offsetting the variability in interest payments on $305.0 million of our variable rate debt resulting from changes in LIBOR. Under hedge accounting, we adjust our cash flow hedges on a quarterly basis to their fair values with the offsetting fair value adjustments to accumulated other comprehensive loss. Also on a quarterly basis, we measure hedge effectiveness by comparing the present value of the cumulative change in the expected future interest to be paid or received on the variable leg of our swaps against the expected future interest payments on $305.0 million of our variable rate debt. Any ineffectiveness is recorded directly to interest expense. As of March 31, 2013, we had no ineffectiveness on our cash flow hedges.

At March 31, 2013, we have an accumulated other comprehensive loss of $2.9 million that relates to our current and previous cash flow hedging instruments. For the three months ended March 31, 2013, $1.4 million other comprehensive loss was reclassified to interest expense due to cash flow hedge settlements. Approximately $1.0 million will be transferred from accumulated other comprehensive loss into interest expense as interest is paid on the underlying swap agreement over the next twelve-month period, assuming interest rates remain unchanged.

Additional information on our interest rate swaps is as follows:

Derivative Instrument	Balance Sheet Location	Fair Value		Location of Offsetting Balance	Offsetting Amount
	(In thousands)
March 31, 2013
Interest rate swaps designated as cash flow hedging instrument:
Variable-to-fixed interest rate swap contracts ($305.0 million of LIBOR based debt interest)	Other long-term     liabilities	$	2,868	Accumulated other     comprehensive loss	$	2,868
December 31, 2012
Interest rate swaps designated as cash flow hedging instrument:
Variable-to-fixed interest rate swap contracts ($305.0 million of LIBOR based debt interest)	Other long-term     liabilities	$	3,430	Accumulated other     comprehensive loss	$	3,430

Interest Expense and Other Debt Information

Interest expense consists of the following components:

	Three Months Ended March 31,
	2013		2012
	(In thousands)
Interest on outstanding debt:
Credit Agreement, net of interest on interest rate swaps	$	3,081	$	1,575
6.5% Senior Notes	4,875		1,083
6.25% Senior Notes	—		2,370
8.25% Senior Notes	3,094		3,094
Promissory Notes	—		543
Amortization of discount and deferred debt issuance costs	530		371
Increase in interest expense - non-cash charges attributable to interest rate swaps	849		1,274
Commitment fees	124		167
Total interest incurred	12,553		10,477
Less capitalized interest	69		72
Net interest expense	$	12,484	$	10,405
Cash paid for interest	$	19,033	$	15,292

- 15 -

HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

We recognized a charge of $2.6 million upon the early extinguishment of debt for the three months ended March 31, 2012. This charge represents the premium paid to our 6.25% Senior Note holders upon their tender of an aggregate principal amount of $185.0 million and related net discount.

Note 8: Significant Customers

All revenues are domestic revenues, of which 92% are generated currently from our two largest customers: HFC and Alon. The vast majority of our revenues are derived from activities conducted in the southwest United States.

The following table presents the percentage of total revenues generated by each of these customers:

	Three Months Ended March 31,
	2013		2012
HFC	83	%	83	%
Alon	9	%	12	%

Note 9: Related Party Transactions

We serve HFC's refineries under long-term pipeline and terminal, tankage and throughput agreements expiring from 2019 to 2026. Under these agreements, HFC agreed to transport, store and throughput volumes of refined product and crude oil on our pipelines and terminal, tankage and loading rack facilities that result in minimum annual payments to us. These minimum annual payments or revenues are subject to annual tariff rate adjustments on July 1, based on the Producer Price Index (“PPI”) or Federal Energy Regulatory Commission (“FERC”) index. Additionally such agreements require HFC to reimburse us for certain costs. As of March 31, 2013, these agreements with HFC will result in minimum annualized payments to us of $220.8 million.

If HFC fails to meet its minimum volume commitments under the agreements in any quarter, it will be required to pay us in cash the amount of any shortfall by the last day of the month following the end of the quarter. Under certain of these agreements, a shortfall payment may be applied as a credit in the following four quarters after its minimum obligations are met.

- 16 -

HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

Under certain provisions of an omnibus agreement we have with HFC (the “Omnibus Agreement”) we pay HFC an annual administrative fee for the provision by HFC or its affiliates of various general and administrative services to us, currently $2.3 million. This fee does not include the salaries of personnel employed by HLS who perform services for us or the cost of their employee benefits, which are charged to us separately by HFC. Also, we reimburse HFC and its affiliates for direct expenses they incur on our behalf.

Related party transactions with HFC are as follows:

• Revenues received from HFC were $61.5 million and $56.5 million for the three months ended March 31, 2013 and 2012, respectively.

• HFC charged us general and administrative services under the Omnibus Agreement of $0.6 million and $0.6 million, respectively, for the three months ended March 31, 2013 and 2012.

• We reimbursed HFC for costs of employees supporting our operations of $9.8 million and $7.6 million for the three months ended March 31, 2013 and 2012, respectively.

• HFC reimbursed us $4.9 million and $2.5 million for the three months ended March 31, 2013 and 2012, respectively, for certain reimbursable costs and capital projects.

• We distributed $17.4 million and $15.3 million for the three months ended March 31, 2013 and 2012, respectively, to HFC as regular distributions on its common units and general partner interest, including general partner incentive distributions.

• Accounts receivable from HFC were $31.1 million and $31.6 million at March 31, 2013 and December 31, 2012, respectively.

• Accounts payable to HFC were $4.9 million and $5.0 million at March 31, 2013 and December 31, 2012, respectively.

• Revenues for the three months ended March 31, 2013 include $4.0 million of shortfall payments billed in 2012, as HFC did not exceed its minimum volume commitment in any of the subsequent four quarters. Deferred revenue in the consolidated balance sheets at March 31, 2013 and December 31, 2012, includes $3.5 million and $5.1 million, respectively, relating to certain shortfall billings. It is possible that HFC may not exceed its minimum obligations to receive credit for any of the $3.5 million deferred at March 31, 2013.

• We acquired from HFC 75% interest in the UNEV Pipeline in July 2012. See Note 2 for a description of this transaction.

Note 10: Partners’ Equity

As of March 31, 2013, HFC held 22,380,030 of our common units and the 2% general partner interest, which together constituted a 39% ownership interest in us.

On January 16, 2013, a two-for-one unit split was paid in the form of a common unit distribution for each issued and outstanding common unit to all unitholders of record on January 7, 2013. All references to unit and per unit amounts in this document and related disclosures have been adjusted to reflect the effect of the unit split for all periods presented.

In March 2013, we closed on a public offering of 1,875,000 of our common units. Additionally, an affiliate of HFC, as a selling unitholder, closed on a public sale of 1,875,000 of its HEP common units. We used our net proceeds of $73.4 million to repay indebtedness incurred under our credit facility and for general partnership purposes. Amounts repaid under our credit facility may be reborrowed from time to time, and we intend to reborrow certain amounts to fund capital expenditures.

Allocations of Net Income

Net income attributable to HEP is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner includes incentive distributions that are declared subsequent to quarter end. After the amount of incentive distributions is allocated to the general partner, the remaining net income attributable to HEP is allocated to the partners based on their weighted-average ownership percentage during the period.

The following table presents the allocation of the general partner interest in net income for the periods presented below:

- 17 -

HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

	Three Months Ended March 31,
	2013		2012
	(In thousands)
General partner interest in net income	$	248	$	332
General partner incentive distribution	5,983		5,171
Total general partner interest in net income	$	6,231	$	5,503

Cash Distributions

Our general partner, HEP Logistics, is entitled to incentive distributions if the amount we distribute with respect to any quarter exceeds specified target levels.

On April 26, 2013 we announced our cash distribution for the first quarter of 2013 of $0.4775 per unit. The distribution is payable on all common and general partner units and will be paid May 15, 2013 to all unitholders of record on May 6, 2013.

The following table presents the allocation of our regular quarterly cash distributions to the general and limited partners for the periods in which they apply. Our distributions are declared subsequent to quarter end; therefore, the amounts presented do not reflect distributions paid during the periods presented below.

	Three Months Ended March 31,
	2013		2012
	(In thousands, except per unit data)
General partner interest	$	719	$	606
General partner incentive distribution	5,983		5,171
Total general partner distribution	6,702		5,777
Limited partner distribution	28,009		24,488
Total regular quarterly cash distribution	$	34,711	$	30,265
Cash distribution per unit applicable to limited partners	$	0.4775	$	0.4475

As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to HEP because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in our partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to HEP. Additionally, if the asset contributions and acquisitions from HFC had occurred while we were not a consolidated variable interest entity of HFC, our acquisition cost, in excess of HFC’s historical basis in the transferred assets of $305.5 million would have been recorded in our financial statements, as increases to our properties and equipment and intangible assets instead of decreases to our partners’ equity.

Note 11: Supplemental Guarantor/Non-Guarantor Financial Information

Obligations of HEP (“Parent”) under the Senior Notes have been jointly and severally guaranteed by each of its direct and indirect wholly-owned subsidiaries (“Guarantor Subsidiaries”). These guarantees are full and unconditional, subject to certain customary release provisions. These circumstances include (i) when a Guarantor Subsidiary is sold or sells all or substantially all of its assets, (ii) when a Guarantor Subsidiary is declared “unrestricted” for covenant purposes, (iii) when a Guarantor Subsidiary's guarantee of other indebtedness is terminated or released and (iv) when the requirements for legal defeasance or covenant defeasance or to discharge the Senior Notes have been satisfied.

The following financial information presents condensed consolidating balance sheets, statements of comprehensive income, and statements of cash flows of the Parent, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. The information has been presented as if the Parent accounted for its ownership in the Guarantor Subsidiaries using the equity method of accounting.

Prior period amounts have been recast to include UNEV operations acquired July 12, 2012, as if it had been acquired January 1, 2012. This treatment is required as the transactions were between entities under common control.

- 18 -

HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

Condensed Consolidating Balance Sheet

March 31, 2013	Parent		Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2	$	5,634		$	12,557	$	—		$	18,193
Accounts receivable	—		34,129			3,199		(200		)	37,128
Intercompany accounts receivable (payable)	62,994		(62,994		)	—		—			—
Prepaid and other current assets	163		2,194			1,118		—			3,475
Total current assets	63,159		(21,037		)	16,874		(200		)	58,796
Properties and equipment, net	—		562,480			393,440		—			955,920
Investment in subsidiaries	809,900		304,731			—		(1,114,631		)	—
Transportation agreements, net	—		92,860			—		—			92,860
Goodwill	—		256,498			—		—			256,498
Investment in SLC Pipeline	—		25,011			—		—			25,011
Other assets	1,713		7,388			—		—			9,101
Total assets	$	874,772	$	1,227,931		$	410,314	$	(1,114,831	)	$	1,398,186
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	11,257		$	1,289	$	(200	)	$	12,346
Accrued interest	2,229		137			—		—			2,366
Deferred revenue	—		5,513			1,114		—			6,627
Accrued property taxes	—		1,264			1,457		—			2,721
Other current liabilities	541		1,875			5		—			2,421
Total current liabilities	2,770		20,046			3,865		(200		)	26,481
Long-term debt	443,913		368,000			—		—			811,913
Other long-term liabilities	67		14,516			140		—			14,723
Deferred revenue	—		15,469			—		—			15,469
Class B unit	15,418		—			—		—			15,418
Equity - partners	412,604		809,900			406,309		(1,216,209		)	412,604
Equity - noncontrolling interest	—		—			—		101,578			101,578
Total liabilities and partners’ equity	$	874,772	$	1,227,931		$	410,314	$	(1,114,831	)	$	1,398,186

- 19 -

HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

Condensed Consolidating Balance Sheet

December 31, 2012	Parent		Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2	$	823		$	4,412	$	—		$	5,237
Accounts receivable	—		32,319			6,401		—			38,720
Intercompany accounts receivable (payable)	42,194		(42,194		)	—		—			—
Prepaid and other current assets	224		2,395			1,000		—			3,619
Total current assets	42,420		(6,657		)	11,813		—			47,576
Properties and equipment, net	—		563,701			396,834		—			960,535
Investment in subsidiaries	777,472		300,607			—		(1,078,079		)	—
Transportation agreements, net	—		94,596			—		—			94,596
Goodwill	—		256,498			—		—			256,498
Investment in SLC Pipeline	—		25,041			—		—			25,041
Other assets	1,154		8,710			—		—			9,864
Total assets	$	821,046	$	1,242,496		$	408,647	$	(1,078,079	)	$	1,394,110
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	10,745		$	1,285	$	—		$	12,030
Accrued interest	10,198		28			—		—			10,226
Deferred revenue	—		3,319			5,582		—			8,901
Accrued property taxes	—		1,923			765		—			2,688
Other current liabilities	563		1,274			68		—			1,905
Total current liabilities	10,761		17,289			7,700		—			35,750
Long-term debt	443,674		421,000			—		—			864,674
Other long-term liabilities	55		15,241			137		—			15,433
Deferred revenue	—		11,494			—		—			11,494
Class B unit	13,903		—			—		—			13,903
Equity - partners	352,653		777,472			400,810		(1,178,282		)	352,653
Equity - noncontrolling interest	—		—			—		100,203			100,203
Total liabilities and partners’ equity	$	821,046	$	1,242,496		$	408,647	$	(1,078,079	)	$	1,394,110

- 20 -

HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2013	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	54,412		$	7,402	$	(302	)	$	61,512
Third parties	—			8,407			4,379		—			12,786
	—			62,819			11,781		(302		)	74,298
Operating costs and expenses:
Operations	—			23,366			2,801		(302		)	25,865
Depreciation and amortization	—			10,570			3,584		—			14,154
General and administrative	808			2,424			—		—			3,232
	808			36,360			6,385		(302		)	43,251
Operating income (loss)	(808		)	26,459			5,396		—			31,047
Equity in earnings (loss) of subsidiaries	28,974			4,124			—		(33,098		)	—
Equity in earnings of SLC Pipeline	—			657			—		—			657
Interest expense	(8,252		)	(4,232		)			—			(12,484		)
Interest income	—						103		—			103
Other	—			2,022			—		—			2,022
	20,722			2,571			103		(33,098		)	(9,702		)
Income (loss) before income taxes	19,914			29,030			5,499		(33,098		)	21,345
State income tax expense	—			(56		)	—		—			(56		)
Net income (loss)	19,914			28,974			5,499		(33,098		)	21,289
Allocation of net (income) attributable to noncontrolling interests	(1,515		)	—			—		(1,375		)	(2,890		)
Net income (loss) attributable to Holly Energy Partners	18,399			28,974			5,499		(34,473		)	18,399
Other comprehensive (loss)	1,411			1,411			—		(1,411		)	1,411
Comprehensive income (loss)	$	19,810		$	30,385		$	5,499	$	(35,884	)	$	19,810

- 21 -

HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2012	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	54,030		$	2,764		$	(263	)	$	56,531
Third parties	—			10,745			1,139			—			11,884
	—			64,775			3,903			(263		)	68,415
Operating costs and expenses:
Operations	—			18,141			2,597			(263		)	20,475
Depreciation and amortization	—			10,764			3,536			—			14,300
General and administrative	1,442			597			—			—			2,039
	1,442			29,502			6,133			(263		)	36,814
Operating income (loss)	(1,442		)	35,273			(2,230		)	—			31,601
Equity in earnings (loss) of subsidiaries	30,660			(1,673		)	—			(28,987		)	—
Equity in earnings of SLC Pipeline	—			831			—			—			831
Interest (expense) income	(6,709		)	(3,696		)	—			—			(10,405		)
Loss on early extinguishment of debt	(2,596		)	—			—			—			(2,596		)
	21,355			(4,538		)	—			(28,987		)	(12,170		)
Income (loss) before income taxes	19,913			30,735			(2,230		)	(28,987		)	19,431
State income tax expense	—			(75		)	—			—			(75		)
Net income (loss)	19,913			30,660			(2,230		)	(28,987		)	19,356
Allocation of net loss attributable to Predecessors	1,861			—			—			—			1,861
Allocation of net loss attributable to noncontrolling interests	—			—			—			557			557
Net income (loss) attributable to Holly Energy Partners	21,774			30,660			(2,230		)	(28,430		)	21,774
Other comprehensive income	920			920			—			(920		)	920
Comprehensive income (loss)	$	22,694		$	31,580		$	(2,230	)	$	(29,350	)	$	22,694

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HOLLY ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) Continued

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2013	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	(39,241	)	$	61,752		$	8,368		$	—	$	30,879
Cash flows from investing activities
Additions to properties and equipment	—			(6,422		)	(223		)	—		(6,645		)
Proceeds from sale of assets	—			2,481			—			—		2,481
	—			(3,941		)	(223		)	—		(4,164		)
Cash flows from financing activities
Net borrowings under credit agreement	—			(53,000		)	—			—		(53,000		)
Proceeds from issuance of senior notes	—			—			—			—		—
Proceeds from issuance of common units	73,444			—			—			—		73,444
Repayments of notes	—			—			—			—		—
Distributions to HEP unitholders	(32,709		)	—			—			—		(32,709		)
Contribution from general partners	1,499			—			—			—		1,499
Purchase of units for incentive grants	(2,719		)	—			—			—		(2,719		)
Deferred financing costs	—			—			—			—		—
Other	(274		)	—			—			—		(274		)
	39,241			(53,000		)	—			—		(13,759		)
Cash and cash equivalents
Increase for the period	—			4,811			8,145			—		12,956
Beginning of period	2			823			4,412			—		5,237
End of period	$	2		$	5,634		$	12,557		$	—	$	18,193

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2012	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	(106,452	)	$	136,725		$	(6,170	)	$	—	$	24,103
Cash flows from investing activities
Additions to properties and equipment	—			(6,327		)	(10,684		)	—		(17,011		)
Cash flows from financing activities
Net borrowings under credit agreement	—			(45,000		)	—			—		(45,000		)
Proceeds from issuance of senior notes	294,750			—			—			—		294,750
Repayments of notes	(157,761		)	(74,950		)	—			—		(232,711		)
Capital contribution from UNEV joint partners	—			462			14,500			—		14,962
Distributions to HEP unitholders	(29,716		)	—			—			—		(29,716		)
Purchase of units for incentive grants	(1,283		)	—			—			—		(1,283		)
Deferred financing costs	—			(1,123		)	—			—		(1,123		)
Other	462			(654		)	—			—		(192		)
	106,452			(121,265		)	14,500			—		(313		)
Cash and cash equivalents
Increase (decrease) for the period	—			9,133			(2,354		)	—		6,779
Beginning of period	2			3,267			3,100			—		6,369
End of period	$	2		$	12,400		$	746		$	—	$	13,148

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HOLLY ENERGY PARTNERS, L.P.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Item 2, including but not limited to the sections on “Results of Operations” and “Liquidity and Capital Resources,” contains forward-looking statements. See “Forward-Looking Statements” at the beginning of Part I of this Quarterly Report on Form 10-Q. In this document, the words ”we,” “our,” “ours” and “us” refer to Holly Energy Partners, L.P. (“HEP”) and its consolidated subsidiaries or to HEP or an individual subsidiary and not to any other person.

OVERVIEW

HEP is a Delaware limited partnership. We own and operate petroleum product and crude pipelines and terminal, tankage and loading rack facilities that support the refining and marketing operations of HollyFrontier Corporation (“HFC”) in the Mid-Continent, Southwest and Rocky Mountain regions of the United States and Alon USA, Inc’s (“Alon”) refinery in Big Spring, Texas. HFC owns a 39% interest in us including the 2% general partnership interest. Additionally, we own a 75% interest in UNEV Pipeline, LLC (“UNEV”), which owns a 400-mile, 12-inch refined products pipeline running from Woods Cross, Utah to Las Vegas, Nevada (the “UNEV Pipeline”), product terminals near Cedar City, Utah and Las Vegas, Nevada and related assets, and a 25% interest in SLC Pipeline LLC, which owns a 95-mile intrastate crude oil pipeline system (the “SLC Pipeline”), that serves refineries in the Salt Lake City area.

We generate revenues by charging tariffs for transporting petroleum products and crude oil through our pipelines, by charging fees for terminalling and storing refined products and other hydrocarbons and providing other services at our storage tanks and terminals. We do not take ownership of products that we transport, terminal or store, and therefore we are not directly exposed to changes in commodity prices.

In March 2013, we closed on a public offering of 1,875,000 of our common units. Additionally, an affiliate of HFC, as a selling unitholder, closed on a public sale of 1,875,000 of its HEP common units. We used our net proceeds of $73.4 million to repay indebtedness incurred under our credit facility and for general partnership purposes. Amounts repaid under our credit facility may be reborrowed from time to time, and we intend to reborrow certain amounts to fund capital expenditures.

On January 16, 2013, a two-for-one unit split was paid in the form of a common unit distribution for each issued and outstanding common unit to all unitholders of record on January 7, 2013. All references to unit and per unit amounts in this document and related disclosures have been adjusted to reflect the effect of the unit split for all periods presented.

UNEV Pipeline Interest Acquisition

We acquired HFC's 75% interest in UNEV on July 12, 2012. We paid consideration consisting of $260.9 million in cash and 2,059,800 of our common units. Under the terms of the transaction, we also issued to HFC a Class B unit comprising an equity interest in a wholly-owned subsidiary that entitles HFC to an interest in our share of annual UNEV earnings before interest, income taxes, depreciation, and amortization above $30 million beginning July 1, 2016 and ending in June 2032, subject to certain limitations. Contemporaneously with this transaction, HFC (our general partner) agreed to forego its right to incentive distributions of up to $1.25 million per quarter over twelve consecutive quarterly periods following the closing of the transaction and up to an additional four quarters in certain circumstances.

Agreements with HFC and Alon

We serve HFC’s refineries under long-term pipeline and terminal, tankage and throughput agreements expiring from 2019 to 2026. Under these agreements, HFC agreed to transport, store and throughput volumes of refined product and crude oil on our pipelines and terminal, tankage and loading rack facilities that result in minimum annual payments to us. These minimum annual payments or revenues are subject to annual tariff rate adjustments on July 1, based on the Producer Price Index (“PPI”) or Federal Energy Regulatory Commission (“FERC”) index. As of March 31, 2013, these agreements with HFC will result in minimum annualized payments to us of $220.8 million.

If HFC fails to meet its minimum volume commitments under the agreements in any quarter, it will be required to pay us in cash the amount of any shortfall by the last day of the month following the end of the quarter. Under certain of the agreements, a shortfall payment may be applied as a credit in the following four quarters after minimum obligations are met.

We also have a pipelines and terminals agreement with Alon expiring in 2020 under which Alon has agreed to transport on our pipelines and throughput through our terminals volumes of refined products that result in a minimum level of annual revenue that also is subject to annual tariff rate adjustments. The terms under this agreement expire beginning in 2018 through 2022. We also have a capacity lease agreement under which we lease Alon space on our Orla to El Paso pipeline for the shipment of refined product. As of March 31, 2013, these agreements with Alon will result in minimum annualized payments to us of $31.7 million.

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A significant reduction in revenues under these agreements could have a material adverse effect on our results of operations.

Under certain provisions of the Omnibus Agreement (“Omnibus Agreement”) that we have with HFC, we pay HFC an annual administrative fee, currently $2.3 million, for the provision by HFC or its affiliates of various general and administrative services to us. This fee does not include the salaries of personnel employed by HLS who perform services for us or the cost of their employee benefits, which are separately charged to us by HFC. We also reimburse HFC and its affiliates for direct expenses they incur on our behalf.

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RESULTS OF OPERATIONS (Unaudited)

Income, Distributable Cash Flow and Volumes

The following tables present income, distributable cash flow and volume information for the three months ended March 31, 2013 and 2012.

	Three Months Ended March 31,						Change from
	2013			2012 (1)			2012
	(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates—refined product pipelines	$	16,770		$	14,856		$	1,914
Affiliates—intermediate pipelines	6,172			7,045			(873		)
Affiliates—crude pipelines	11,579			10,545			1,034
	34,521			32,446			2,075
Third parties—refined product pipelines	10,343			9,469			874
	44,864			41,915			2,949
Terminals, tanks and loading racks:
Affiliates	26,991			24,085			2,906
Third parties	2,443			2,415			28
	29,434			26,500			2,934
Total revenues	74,298			68,415			5,883
Operating costs and expenses
Operations	25,865			20,475			5,390
Depreciation and amortization	14,154			14,300			(146		)
General and administrative	3,232			2,039			1,193
	43,251			36,814			6,437
Operating income	31,047			31,601			(554		)
Equity in earnings of SLC Pipeline	657			831			(174		)
Interest expense, including amortization	(12,484		)	(10,405		)	(2,079		)
Interest income	103			—			103
Loss on early extinguishment of debt	—			(2,596		)	2,596
Gain on sale of assets	2,022			—			2,022
	(9,702		)	(12,170		)	2,468
Income before income taxes	21,345			19,431			1,914
State income tax expense	(56		)	(75		)	19
Net income	21,289			19,356			1,933
Allocation of net loss attributable to Predecessors	—			1,861			(1,861		)
Allocation of net loss (income) attributable to noncontrolling interests	(2,890		)	557			(3,447		)
Net income attributable to Holly Energy Partners	18,399			21,774			(3,375		)
General partner interest in net income, including incentive distributions (2)	(6,231		)	(5,503		)	(728		)
Limited partners’ interest in net income	$	12,168		$	16,271		$	(4,103	)
Limited partners’ earnings per unit—basic and diluted(2)	$	0.21		$	0.30		$	(0.09	)
Weighted average limited partners’ units outstanding	56,990			54,722			2,268
EBITDA(3)	$	44,990		$	45,426		$	(436	)
Distributable cash flow(4)	$	32,385		$	36,555		$	(4,170	)
Volumes (bpd)
Pipelines:
Affiliates—refined product pipelines	94,148			97,226			(3,078		)
Affiliates—intermediate pipelines	120,777			123,568			(2,791		)
Affiliates—crude pipelines	145,926			153,662			(7,736		)
	360,851			374,456			(13,605		)
Third parties—refined product pipelines	52,986			64,287			(11,301		)
	413,837			438,743			(24,906		)
Terminals and loading racks:
Affiliates	260,242			262,230			(1,988		)
Third parties	55,459			52,383			3,076
	315,701			314,613			1,088
Total for pipelines and terminal assets (bpd)	729,538			753,356			(23,818		)

(1) The amounts presented here have been restated from those we previously reported for this period. See Note 1 in Notes to Consolidated Financial Statements included in Item 1 for a discussion of these revisions.

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(2) Net income is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. Net income allocated to the general partner includes incentive distributions declared subsequent to quarter end. Net income attributable to the limited partners is divided by the weighted average limited partner units outstanding in computing the limited partners’ per unit interest in net income.

(3) EBITDA is calculated as net income plus (i) interest expense, net of interest income, (ii) state income tax and (iii) depreciation and amortization (excluding amounts related to Predecessor operations). EBITDA is not a calculation based upon U.S. generally accepted accounting principles (“GAAP”). 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 also is used by our management for internal analysis and as a basis for compliance with financial covenants. Set forth below is our calculation of EBITDA.

	Three Months Ended March 31,
	2013			2012 (1)
	(In thousands)
Net income attributable to Holly Energy Partners	$	18,399		$	21,774
Add:
Interest expense	11,105			8,760
Interest income	(103		)	—
Amortization of discount and deferred debt issuance costs	530			371
Loss on early extinguishment of debt	—			2,596
Increase in interest expense - non-cash charges attributable to interest rate swaps	849			1,274
State income tax	56			75
Depreciation and amortization	14,154			14,300
Predecessor depreciation and amortization	—			(3,724		)
EBITDA	$	44,990		$	45,426

(4) Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exceptions of a billed crude revenue settlement and maintenance capital expenditures. Distributable cash flow should not be considered in isolation or 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. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance. It is also used by management for internal analysis and for our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating. Set forth below is our calculation of distributable cash flow.

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	Three Months Ended March 31,
	2013			2012 (1)
	(In thousands)
Net income attributable to Holly Energy Partners	$	18,399		$	21,774
Add (subtract):
Depreciation and amortization	14,154			14,300
Predecessor depreciation and amortization	—			(3,724		)
Amortization of discount and deferred debt issuance costs	530			371
Loss on early extinguishment of debt	—			2,596
Increase in interest expense - non-cash charges attributable to interest rate swaps	849			1,274
Increase (decrease) in deferred revenue attributable to shortfall billings	(1,224		)	(592		)
Billed crude revenue settlement	918			918
Maintenance capital expenditures (5)	(2,335		)	(307		)
Other non-cash adjustments	1,094			(55		)
Distributable cash flow	$	32,385		$	36,555

(5) Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations.

	March 31, 2013		December 31, 2012
	(In thousands)
Balance Sheet Data
Cash and cash equivalents	$	18,193	$	5,237
Working capital	$	32,315	$	11,826
Total assets	$	1,398,186	$	1,394,110
Long-term debt	$	811,913	$	864,674
Partners’ equity (6)	$	412,604	$	352,653

(6) As a master limited partnership, we distribute our available cash, which historically has exceeded our net income because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income. Additionally, if the assets contributed and acquired from HFC while under common control of HFC had been acquired from third parties, our acquisition cost in excess of HFC’s basis in the transferred assets of $305.5 million would have been recorded in our financial statements, as increases to our properties and equipment and intangible assets instead of decreases to partners’ equity.

Results of Operations—Three Months Ended March 31, 2013 Compared with Three Months Ended March 31, 2012

Summary

Net income attributable to Holly Energy Partners for the three months ended March 31, 2013 was $18.4 million, a $3.4 million decrease compared to the three months ended March 31, 2012. This decrease in earnings is due principally to increased operating costs and expenses, lower pipeline shipments and income allocations to noncontrolling interests in the current year. Major maintenance turnarounds at both HFC's Navajo refinery and Alon's Big Spring refinery had a significant impact on pipeline and terminal volumes, contributing to the lower 2013 first quarter earnings.

Revenues for the three months ended March 31, 2013 include the recognition of $6.7 million of prior shortfalls billed to shippers in 2012. Deficiency payments of $4.5 million associated with certain guaranteed shipping contracts were deferred during the three months ended March 31, 2013. Such deferred revenue will be recognized in earnings either as payment for shipments in excess of guaranteed levels, if and to the extent the pipeline system will not have the necessary capacity for shipments in excess of guaranteed levels, or when shipping rights expire unused.

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Revenues

Total revenues for the three months ended March 31, 2013 were $74.3 million, a $5.9 million increase compared to the three months ended March 31, 2012. This is due principally to a $5.0 million increase in deferred revenue realized, increased shipments on the UNEV Pipeline and the effect of annual tariff increases. However major maintenance performed at the two refineries significantly impacted revenue and resulted in overall pipeline volumes being down 6% compared to the three months ended March 31, 2012.

Revenues from our refined product pipelines were $27.1 million, an increase of $2.8 million compared to the three months ended March 31, 2012. This includes the effects of a $5.6 million increase in deferred revenue realized, increased revenues of $1.7 million from increased volumes on the UNEV Pipeline and the effect of annual tariff increases. Volumes shipped on our refined product pipelines averaged 147.1 thousand barrels per day (“mbpd”) compared to 161.5 mbpd for the same period last year, with the decrease due principally to major maintenance performed at two refineries.

Revenues from our intermediate pipelines were $6.2 million, a decrease of $0.9 million compared to the three months ended March 31, 2012. This includes the effects of a $0.6 million decrease in deferred revenue realized. Volumes shipped on our intermediate pipelines averaged 120.8 mbpd compared to 123.6 mbpd for the same period last year.

Revenues from our crude pipelines were $11.6 million, an increase of $1.0 million compared to the three months ended March 31, 2012. Volumes shipped on our crude pipelines decreased to an average of 145.9 mbpd compared to 153.7 mbpd for the same period last year. Although crude pipeline shipments were down, revenues from our crude pipelines increased due to annual tariff increases, increased volumes on certain pipeline segments and minimum quarterly revenue billings on segments where volumes decreased.

Revenues from terminal, tankage and loading rack fees were $29.4 million, an increase of $2.9 million compared to the three months ended March 31, 2012. This increase is due principally to increased tankage revenues. Refined products terminalled in our facilities averaged 315.7 mbpd compared to 314.6 mbpd for the same period last year.

Operations Expense

Operations expense for the three months ended March 31, 2013 increased by $5.4 million compared to the three months ended March 31, 2012. This increase is due to higher maintenance costs incurred to coincide with refinery turnaround, environmental accruals and employee costs.

Depreciation and Amortization

Depreciation and amortization for the three months ended March 31, 2013 decreased by $0.1 million compared to the three months ended March 31, 2012.

General and Administrative

General and administrative costs for the three months ended March 31, 2013 increased by $1.2 million compared to the three months ended March 31, 2012 due to increased employee costs and professional fees.

Equity in Earnings of SLC Pipeline

Our equity in earnings of the SLC Pipeline was $0.7 million for the three months ended March 31, 2013 compared to $0.8 million for the three months ended March 31, 2012.

Interest Expense

Interest expense for the three months ended March 31, 2013 totaled $12.5 million, an increase of $2.1 million compared to the three months ended March 31, 2012. This increase reflects interest on a year-over-year increase in debt levels. Our aggregate effective interest rate was 5.9% for the three months ended March 31, 2013 and 2012.

Loss on Early Extinguishment of Debt

We recognized a charge of $2.6 million upon the early extinguishment of our 6.25% senior notes for the three months ended March 31, 2012.

Gain on Sale of Assets

Gain on sale of assets for the three months ended March 31, 2013 of $2.0 million is from a gain on the sale of property in El Paso, Texas.

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State Income Tax

We recorded state income tax expense of $56,000 or the three months ended March 31, 2013 which is solely attributable to the Texas margin tax. For the three months ended March 31, 2012, we recorded expense of $75,000.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We have a $550 million senior secured revolving credit facility expiring in June 2017 (the “Credit Agreement”) that is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. It also is available to fund letters of credit up to a $50 million sub-limit and to fund distributions to unitholders up to a $60 million sub-limit.

During the three months ended March 31, 2013, we received advances totaling $57.0 million and repaid $110.0 million under the Credit Agreement, resulting in net repayments of $53.0 million and an outstanding balance of $368.0 million at March 31, 2013.

In March 2013, we closed on a public offering of 1,875,000 of our common units. Additionally, an affiliate of HFC, as a selling unitholder, closed on a public sale of 1,875,000 of its HEP common units. We used our net proceeds of $73.4 million to repay indebtedness incurred under our credit facility and for general partnership purposes. Amounts repaid under our credit facility may be reborrowed from time to time, and we intend to reborrow certain amounts to fund capital expenditures.

Under our registration statement filed with the SEC using a “shelf” registration process, we currently have the ability to raise up to $2.0 billion by offering securities, through one or more prospectus supplements that would describe, among other things, the specific amounts, prices and terms of any securities offered and how the proceeds would be used. Any proceeds from the sale of securities would be used for general business purposes, which may include, among other things, funding acquisitions of assets or businesses, working capital, capital expenditures, investments in subsidiaries, the retirement of existing debt and/or the repurchase of common units or other securities.

We believe our current cash balances, future internally generated funds and funds available under the Credit Agreement will provide sufficient resources to meet our working capital liquidity needs for the foreseeable future.

In February 2013, we paid regular quarterly cash distributions of $0.470, on all units in an aggregate amount of $32.7 million. Included in these distributions were $5.3 million of incentive distribution payments to the general partner.

Contemporaneously with our UNEV Pipeline interest acquisition on July 12, 2012, HFC (our general partner) agreed to forego its right to incentive distributions of $1.25 million per quarter over twelve consecutive quarterly periods following the close of the transaction and up to an additional four quarters in certain circumstances.

Cash and cash equivalents increased by $13.0 million during the three months ended March 31, 2013. The cash flows provided by operating activities of $30.9 million was greater than the cash flows used for financing and investing activities of $13.8 million and $4.2 million, respectively. Working capital increased by $20.5 million to $32.3 million at March 31, 2013 from $11.8 million at December 31, 2012.

Cash Flows—Operating Activities

Cash flows from operating activities increased by $6.8 million from $24.1 million for the three months ended March 31, 2012 to $30.9 million for the three months ended March 31, 2013. This increase is due principally to $8.5 million in additional cash collections from our customers.

Our major shippers are obligated to make deficiency payments to us if they do not meet their minimum volume shipping obligations. Under certain agreements with these shippers, they have the right to recapture these amounts if future volumes exceed minimum levels. We billed $6.7 million during 2012 related to shortfalls that subsequently expired without recapture and were recognized as revenue during the three months ended March 31, 2013. Another $4.5 million is included in our accounts receivable at March 31, 2013 related to shortfalls that occurred during the three months ended March 31, 2013.

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Cash Flows—Investing Activities

Cash flows used for investing activities decreased by $12.8 million from $17.0 million for the three months ended March 31, 2012 to $4.2 million for the three months ended March 31, 2013. During the three months ended March 31, 2013 and 2012, we invested $6.6 million and $17.0 million in additions to properties and equipment, respectively. The decrease is attributable to final capital costs in early 2012 in completion of the UNEV Pipeline. During the three months ended March 31, 2013, we received $2.5 million from the sale of assets.

Cash Flows—Financing Activities

Cash flows used for financing activities were $13.8 million for the three months ended March 31, 2013 compared to cash provided of $0.3 million for the three months ended March 31, 2012, a decrease of $13.4 million. During the three months ended March 31, 2013, we received $57.0 million and repaid $110.0 million in advances under the Credit Agreement, received net proceeds of $73.4 million from the common unit public offering and $1.5 million from the general partner to maintain its 2% interest. Additionally, we paid $32.7 million in regular quarterly cash distributions to our general and limited partners, and paid $2.7 million for the purchase of common units for recipients of our incentive grants. During the three months ended March 31, 2012, we received $36.0 million and repaid $81.0 million in advances under the Credit Agreement, received net proceeds of $294.8 million from the issuance of our 6.5% senior notes and repaid $232.7 million of our notes. Additionally, we paid $29.7 million in regular quarterly cash distributions to our general and limited partners, we received $15.0 million from UNEV's joint venture partners, paid $1.1 million in financing costs to amend our Credit Agreement and paid $1.3 million for the purchase of common units for recipients of our incentive grants.

Capital Requirements

Our pipeline and terminalling operations are capital intensive, requiring investments to maintain, expand, upgrade or enhance existing operations and to meet environmental and operational regulations. Our capital requirements have consisted of, and are expected to continue to consist of, maintenance capital expenditures and expansion capital expenditures. “Maintenance capital expenditures” represent capital expenditures to replace partially or fully depreciated assets to maintain the operating capacity of existing assets. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations. “Expansion capital expenditures” represent capital expenditures to expand the operating capacity of existing or new assets, whether through construction or acquisition. Expansion capital expenditures include expenditures to acquire assets, to grow our business and to expand existing facilities, such as projects that increase throughput capacity on our pipelines and in our terminals. Repair and maintenance expenses associated with existing assets that are minor in nature and do not extend the useful life of existing assets are charged to operating expenses as incurred.

Each year the HLS board of directors approves our annual capital budget, which specifies capital projects that our management is authorized to undertake. Additionally, at times when conditions warrant or as new opportunities arise, additional projects may be approved. The funds allocated for a particular capital project may be expended over a period in excess of a year, depending on the time required to complete the project. Therefore, our planned capital expenditures for a given year consist of expenditures approved for capital projects included in the current year's capital budget as well as, in certain cases, expenditures approved for capital projects in capital budgets for prior years. The 2013 regular capital budget is comprised of $10.1 million for maintenance capital expenditures and $2.0 million for expansion capital expenditures exclusive of the projects discussed below. In addition to our capital budget, we may spend funds periodically to do capital upgrades of our assets where a customer reimburses us for such costs. These reimbursements would be required under contractual agreements and would generally benefit the customer over the remaining life of such agreements.

We are proceeding with the expansion of our crude oil transportation system in southeastern New Mexico in response to increased crude oil production in the area.  The expansion will provide shippers with additional pipeline takeaway capacity to either common carrier pipeline stations for transportation to major crude oil markets or to HFC's New Mexico refining facilities. To complete the project, we will convert an existing refined products pipeline to crude oil service, construct several new pipeline segments, expand an existing pipeline, and build new truck unloading stations and crude storage capacity.  Excluding the value of the existing pipeline to be converted, total capital expenditures are expected to cost between $35 million and $40 million.  We estimate the project will provide increased capacity of up to 100,000 barrels per day across its system and anticipates it will be in service no later than early 2014.  

UNEV is proceeding with a project to add certain enhancements to its product terminal in Las Vegas, Nevada.  The project will cost approximately $13 million with construction scheduled to be completed during the second quarter of 2014.

We also are performing preliminary engineering, routing and cost estimates for two proposed new pipelines.  The first proposed pipeline would be a new intrastate crude oil pipeline between Cushing, Oklahoma and HFC's Tulsa, Oklahoma refinery. The 50-mile line would provide safe and reliable transport of Cushing sourced domestic and Canadian crude oil to HFC's 125,000 BPD Tulsa facility. The pipeline would allow for a significant portion of crude oil transported to be heavy Canadian and sour crude oil.

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Crude oil processed at HFC's Tulsa facility currently is transported on pipelines owned by Sunoco Logistics and Magellan Pipeline Company.  The second proposed pipeline would be a new 100-mile interstate petroleum products pipeline between HFC's Cheyenne, Wyoming refinery and Denver, Colorado. The 52,000 BPD refinery, with its ability to process up to 35,000 BPD of heavy Canadian crude and its close proximity to growing domestic crude production, is a significant supplier of petroleum products to the Denver market. The project also will evaluate the construction of a new petroleum products terminal in North Denver or, alternatively, the routing of the new pipeline to existing third-party product terminals in the Denver area. This infrastructure addition would ensure safe and reliable transport of petroleum products from HFC's location-advantaged refinery to its largest market. Petroleum products produced at HFC's Cheyenne, Wyoming refinery currently are transported to Denver on the Rocky Mountain Pipeline's products line owned by Plains All-American.  We anticipate that we will be in a position to decide whether to proceed with these projects in the second quarter of 2013 when preliminary engineering and detailed project cost estimates are completed and if necessary shipper commitments can be secured.

HFC and we are collaborating to construct a rail facility that will enable crude oil loading and unloading near HFC's Artesia and/or Lovington, New Mexico refining facilities.  The rail project, which will be connected to our crude oil pipeline transportation system in southeastern New Mexico, will have an initial capacity of up to 70,000 barrels per day and will enable access to a variety of crude oil types including West Texas Intermediate (WTI), West Texas Sour (WTS) and Western Canadian Select (WCS).  The project will provide both additional crude oil takeaway options for producers as crude production in the region continues to grow, and an expanded set of crude oil sourcing options for HFC.  Project completion is expected by early 2014.

We expect that our currently planned sustaining and maintenance capital expenditures, as well as expenditures for acquisitions and capital development projects will be funded with existing cash generated by operations, the sale of additional limited partner common units, the issuance of debt securities and advances under our Credit Agreement, or a combination thereof. With volatility and uncertainty at times in the credit and equity markets, there may be limits on our ability to issue new debt or equity financing. Additionally, due to pricing movements in the debt and equity markets, we may not be able to issue new debt and equity securities at acceptable pricing. Without additional capital beyond amounts available under the Credit Agreement, our ability to obtain funds for some of these capital projects may be limited.

Credit Agreement

We have a $550 million senior secured revolving credit facility expiring in June 2017 that is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. It is available also to fund letters of credit up to a $50 million sub-limit and to fund distributions to unitholders up to a $60 million sub-limit.

Our obligations under the Credit Agreement are collateralized by substantially all of our assets. Indebtedness under the Credit Agreement is recourse to HEP Logistics Holdings, L.P. (“HEP Logistics”), our general partner, and guaranteed by our material wholly-owned subsidiaries. Any recourse to HEP Logistics would be limited to the extent of its assets, which other than its investment in us, are not significant. We may prepay all loans at any time without penalty, except for payment of certain breakage and related costs.

The Credit Agreement imposes certain requirements on us which we are in compliance with currently, including: a prohibition against distribution to unitholders if, before or after the distribution, a potential default or an event of default as defined in the agreement would occur; limitations on our ability to incur debt, make loans, acquire other companies, change the nature of our business, enter into a merger or consolidation, or sell assets; and covenants that require maintenance of a specified EBITDA to interest expense ratio, total debt to EBITDA ratio and senior debt to EBITDA ratio. If an event of default exists under the Credit Agreement, the lenders will be able to accelerate the maturity of the debt and exercise other rights and remedies.

Senior Notes

In March 2012, we issued $300 million in aggregate principal amount outstanding of 6.5% senior notes maturing March 1, 2020 (the “6.5% Senior Notes”). Net Proceeds of $294.8 million were used in March and April 2012 to redeem $185.0 million aggregate principal amount of 6.25% senior notes maturing March 1, 2015 (the “6.25 Senior Notes”) tendered pursuant to a cash tender offer and consent solicitation, to repay $72.9 million in promissory notes due to HFC, to pay related fees, expenses and accrued interest in connection with these transactions and to repay borrowings under the Credit Agreement. In April 2012, we redeemed $27.2 million aggregate principal amount of 6.25% Senior Notes that remained outstanding following the cash tender offer and consent solicitation.

Also, we have $150 million in aggregate principal amount outstanding of 8.25% senior notes maturing March 15, 2018 (the "8.25 Senior Notes).

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Our 6.5% Senior Notes and 8.25% Senior Notes (collectively, the “Senior Notes”) are unsecured and impose certain restrictive covenants which we are in compliance with currently, including limitations on our ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, we will not be subject to many of the foregoing covenants. Additionally, we have certain redemption rights under the Senior Notes.

Indebtedness under the Senior Notes is recourse to HEP Logistics, and guaranteed by our wholly-owned subsidiaries. However, any recourse to HEP Logistics would be limited to the extent of its assets, which other than its investment in us, are not significant.

Long-term Debt

The carrying amounts of our long-term debt are as follows:

	March 31, 2013			December 31, 2012
	(In thousands)
Credit Agreement	$	368,000		$	421,000
6.5% Senior Notes
Principal	300,000			300,000
Unamortized discount	(4,562		)	(4,725		)
	295,438			295,275
8.25% Senior Notes
Principal	150,000			150,000
Unamortized discount	(1,525		)	(1,601		)
	148,475			148,399
Total long-term debt	$	811,913		$	864,674

See “Risk Management” for a discussion of our interest rate swaps.

Contractual Obligations

There were no significant changes to our long-term contractual obligations during this period.

Impact of Inflation

Inflation in the United States has been relatively moderate in recent years and did not have a material impact on our results of operations for the three months ended March 31, 2013 and 2012. Historically, the PPI has increased an average of 3.1% annually over the past 5 calendar years.

The substantial majority of our revenues are generated under long-term contracts that provide for increases in our rates and minimum revenue guarantees annually for increases in the PPI. Certain of these contracts have provisions that limit the level of annual PPI percentage rate increases. Although the recent PPI increase may not be indicative of additional increases to be realized in the future, a significant and prolonged period of high inflation could adversely affect our cash flows and results of operations if costs increase at a rate greater than the fees we charge our shippers.

Environmental Matters

Our operation of pipelines, terminals, and associated facilities in connection with the transportation and storage of refined products and crude oil is subject to stringent and complex federal, state, and local laws and regulations governing the discharge of materials into the environment, or otherwise relating to the protection of the environment. As with the industry generally, compliance with existing and anticipated laws and regulations increases our overall cost of business, including our capital costs to construct, maintain, and upgrade equipment and facilities. While these laws and regulations affect our maintenance capital expenditures and net income, we believe that they do not affect our competitive position given that the operations of our competitors are similarly affected. We believe that our operations are in substantial compliance with applicable environmental laws and regulations. However, these laws and regulations, and the interpretation or enforcement thereof, are subject to frequent change by regulatory authorities, and we are unable to predict the ongoing cost to us of complying with these laws and regulations or the future impact of these laws and regulations on our operations. Violation of environmental laws, regulations, and permits can result in the imposition of

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significant administrative, civil and criminal penalties, injunctions, and construction bans or delays. A major discharge of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, subject us to substantial expense, including both the cost to comply with applicable laws and regulations and claims made by employees, neighboring landowners and other third parties for personal injury and property damage.

Under the Omnibus Agreement and certain transportation agreements and purchase agreements with HFC, HFC has agreed to indemnify us, subject to certain monetary and time limitations, for environmental noncompliance and remediation liabilities associated with certain assets transferred to us from HFC and occurring or existing prior to the date of such transfers.

We have an environmental agreement with Alon with respect to pre-closing environmental costs and liabilities relating to the pipelines and terminals acquired from Alon in 2005, under which Alon will indemnify us subject to certain monetary and time limitations.

There are environmental remediation projects that are currently in progress that relate to certain assets acquired from HFC. Certain of these projects were underway prior to our purchase and represent liabilities of HFC as the obligation for future remediation activities was retained by HFC. At March 31, 2013, we have an accrual of $3.4 million that relates to environmental clean-up projects for which we have assumed liability or for which the indemnity provided for by HFC has expired or will expire. The remaining projects, including assessment and monitoring activities, are covered under the HFC environmental indemnification discussed above and represent liabilities of HFC.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2012. Certain critical accounting policies that materially affect the amounts recorded in our consolidated financial statements include revenue recognition, assessing the possible impairment of certain long-lived assets and goodwill, and assessing contingent liabilities for probable losses. There have been no changes to these policies in 2013. We consider these policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows.

New Accounting Pronouncements

Presentation of Comprehensive Income

Effective January 1, 2013, we adopted the accounting standard update that requires the disclosure of significant amounts reclassified out of accumulated other comprehensive income by component either on the face of the financial statements or in the notes. The adoption of this accounting standard did not have an impact on our financial condition, results of operations or cash flows.

RISK MANAGEMENT

We use interest rate swaps (derivative instruments) to manage our exposure to interest rate risk.

As of March 31, 2013, we have three interest rate swaps, designated as a cash flow hedge, that hedge our exposure to the cash flow risk caused by the effects of LIBOR changes on a $305.0 million of Credit Agreement advances. Our first interest rate swap effectively converts $155.0 million of our LIBOR based debt to fixed rate debt having an interest rate of 0.99% plus an applicable margin of 2.50% as of March 31, 2013, which equaled an effective interest rate of 3.49%. This swap contract matures in February 2016. Also we have two similar interest rate swaps with identical terms which effectively convert $150.0 million of our LIBOR based debt to fixed rate debt having an interest rate of 0.74% plus an applicable margin of 2.50% as of March 31, 2013, which equaled an effective interest rate of 3.24%. Both of these swap contracts mature in July 2017.

We review publicly available information on our counterparties in order to review and monitor their financial stability and assess their ongoing ability to honor their commitments under the interest rate swap contracts. These counterparties are large financial institutions. Furthermore, we have not experienced, nor do we expect to experience, any difficulty in the counterparties honoring their respective commitments.

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The market risk inherent in our debt positions is the potential change arising from increases or decreases in interest rates as discussed below.

At March 31, 2013, we had an outstanding principal balance on our 6.5% Senior Notes and 8.25% Senior Notes of $300 million and $150 million, respectively. A change in interest rates generally would affect the fair value of the Senior Notes, but not our earnings or cash flows. At March 31, 2013, the fair values of our 6.5% and 8.25% Senior Notes were $318.8 million and $161.8 million, respectively. We estimate a hypothetical 10% change in the yield-to-maturity applicable to the 6.5% Senior Notes and 8.25% Senior Notes at March 31, 2013 would result in a change of approximately $9.7 million and $4.2 million, respectively, in the fair value of the underlying notes.

For the variable rate Credit Agreement, changes in interest rates would affect cash flows, but not the fair value. At March 31, 2013, borrowings outstanding under the Credit Agreement were $368.0 million. By means of our cash flow hedges, we have effectively converted the variable rate on $305.0 million of outstanding borrowings to a fixed rate. For the remaining unhedged Credit Agreement borrowings of $63.0 million, a hypothetical 10% change in interest rates applicable to the Credit Agreement would not materially affect our cash flows.

Our operations are subject to normal hazards of operations, including fire, explosion and weather-related perils. We maintain various insurance coverages, including business interruption insurance, subject to certain deductibles. We are not fully insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures.

We have a risk management oversight committee that is made up of members from our senior management.  This committee monitors our risk environment and provides direction for activities to mitigate, to an acceptable level, identified risks that may adversely affect the achievement of our goals.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. See “Risk Management” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of market risk exposures that we have with respect to our long-term debt, which disclosure should be read in conjunction with the quantitative and qualitative disclosures about market risk contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. We utilize derivative instruments to hedge our interest rate exposure, as discussed under “Risk Management.”

Since we do not own products shipped on our pipelines or terminalled at our terminal facilities, we do not have direct market risks associated with commodity prices.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Our principal executive officer and principal financial officer have evaluated, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2013 at a reasonable level of assurance.

(b) Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to various legal and regulatory proceedings, which we believe will not have a material adverse impact on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in our risk factors as previously disclosed in Part 1, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. In addition to the other information set forth in this quarterly report, you should carefully consider the factors discussed in our 2012 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in this quarterly report and in our 2012 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Common Unit Repurchases Made in the Quarter

In the first quarter of 2013, we paid $2.4 million for the purchase of 56,782 of our common units in the open market for the recipients of our 2013 restricted grants and to provide for vesting of performance units. The following table shows these purchases.

Period	Total Number of Units Purchased	Average Price Paid Per Unit		Total Number of Units Purchased as Part of Publicly Announced Plan or Program	Maximum Number of Units that May Yet be Purchased Under a Publicly Announced Plan or Program
January 2013	—	$	—	—	$	—
February 2013	—	$	—	—	$	—
March 2013	56,782	$	42.21	—	$	—
Total for January to March 2013	56,782			—

Additionally during the three months ended March 31, 2013, we withheld 14,096 of our common units from certain executives and employees in the amount of $0.5 million. These withholdings were made under the terms of our equity award agreements to provide funds for the payment of payroll and income taxes due at vesting in the case of officers and employees who did not elect to satisfy such taxes by other means.

Item 6. Exhibits

The Exhibit Index on page 39 of this Quarterly Report on Form 10-Q lists the exhibits that are filed or furnished, as applicable, as part of the Quarterly Report on Form 10-Q.

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HOLLY ENERGY PARTNERS, L.P.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HOLLY ENERGY PARTNERS, L.P.
	(Registrant)
	By: HEP LOGISTICS HOLDINGS, L.P. its General Partner
	By: HOLLY LOGISTIC SERVICES, L.L.C. its General Partner
Date: May 1, 2013	/s/    Douglas S. Aron
	Douglas S. Aron
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date: May 1, 2013	/s/     Scott C. Surplus
	Scott C. Surplus
	Vice President and Controller (Principal Accounting Officer)

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Exhibit Index

Exhibit Number	Description
3.1	First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P. (incorporated by reference to Exhibit 3.1 of Registrant's Quarterly Report on Form 10-Q for its quarterly period ended June 30, 2004, File No. 1-32225).
3.2	Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated February 28, 2005 (incorporated by reference to Exhibit 3.1 of Registrant's Form 8-K Current Report dated February 28, 2005, File No. 1-32225).
3.3	Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., as amended, dated July 6, 2005 (incorporated by reference to Exhibit 3.1 of Registrant's Form 8-K Current Report dated July 6, 2005, File No. 1-32225).
3.4	Amendment No. 3 to First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated April 11, 2008 (incorporated by reference to Exhibit 4.1 of Registrant's Current Report on Form 8-K dated April 15, 2008, File No. 1-32225).
3.5	Amendment No. 4 to First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated January 16, 2013 (incorporated by reference to Exhibit 3.1 of Registrant's Current Report on Form 8-K dated January 16, 2013, File No. 1-32225).
3.6	Limited Partial Waiver of Incentive Distribution Rights under the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated as of July 12, 2012 (incorporated by reference to Exhibit 3.1 of Registrant's Current Report on Form 8-K dated July 12, 2012, File No. 1-32225).
3.7	First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners - Operating Company, L.P. (incorporated by reference to Exhibit 3.2 of Registrant's Quarterly Report on Form 10-Q for its quarterly period ended June 30, 2004, File No. 1-32225).
3.8	First Amended and Restated Agreement of Limited Partnership of HEP Logistics Holdings, L.P. (incorporated by reference to Exhibit 3.4 of Registrant's Quarterly Report on Form 10-Q for its quarterly period ended June 30, 2004, File No. 1-32225).
3.9	First Amended and Restated Limited Liability Company Agreement of Holly Logistic Services, L.L.C. (incorporated by reference to Exhibit 3.5 of Registrant's Quarterly Report on Form 10-Q for its quarterly period ended June 30, 2004, File No. 1-32225).
3.10	Amendment No. 1 to the First Amended and Restated limited Liability Company Agreement of Holly Logistic Services, L.L.C., dated April 27, 2011 (incorporated by reference to Exhibit 3.1 of Registrant's Form 8-K Current Report dated May 3, 2011, File No. 1-32225).
3.11	First Amended and Restated Limited Liability Company Agreement of HEP Logistics GP, L.L.C. (incorporated by reference to Exhibit 3.6 of Registrant's Quarterly Report on Form 10-Q for its quarterly period ended June 30, 2004, File No. 1-32225).
10.1+*	Form of Performance Unit Agreement (Chairman).
10.2+*	Form of Performance Unit Agreement (Executive).
10.3+*	Form of Restricted Unit Agreement.
10.4+*	Form of Notice of Grant of Restricted Units.
31.1+	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1++	Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
32.2++	Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
101**	The following financial information from Holly Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statement of Partners’ Equity, and (vi) Notes to Consolidated Financial Statements.

 + Filed herewith.

 ++ Furnished herewith.

 * Constitutes management contracts or compensatory plans or arrangements.

 ** Furnished electronically herewith.

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EX-10.1

HOLLY ENERGY PARTNERS, L.P.

LONG-TERM INCENTIVE PLAN

PERFORMANCE UNIT AGREEMENT
(Chairman Form)

This Performance Unit Agreement (the “Agreement”) is made and entered into by and between Holly Logistic Services, L.L.C., a Delaware limited liability company (the “Company”), and you. This Agreement is entered into as of the __ day of _____, 2013 (the “Date of Grant”).

W I T N E S S E T H:

WHEREAS, the Company has adopted the Holly Energy Partners, L.P. Long-Term Incentive Plan (the “Plan”) to attract, retain and motivate employees, executives, directors and consultants;

WHEREAS, the Company believes that a grant to you of performance units of Holly Energy Partners, L.P. (the “Partnership”) as part of your compensation for services provided to the Company and/or the Partnership is consistent with the stated purposes for which the Plan was adopted; and

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this Agreement (“Agreement”) as if fully set forth herein and the terms capitalized but not defined herein or on Appendix A attached hereto shall have the meanings set forth in the Plan.

NOW, THEREFORE, in consideration of the services rendered by you, it is agreed by and between the Company and you, as follows:

1.Grant. The Company hereby grants to you as of the Date of Grant an Award of ______ performance units (the “Performance Units”), subject to the terms and conditions set forth in this Agreement. Depending on the performance of the Partnership, you may earn from zero to 200% of the Performance Units, based on the terms set forth in Section 3.

2.Distribution Equivalent Rights. As long as you hold the Performance Units granted pursuant to this Agreement, you will be entitled to receive distribution equivalent rights (“DERs’) in accordance with this Section 2. In the event the Partnership makes a distribution in respect of outstanding Units and, on the record date for such distribution, you hold Performance Units that have not yet become earned and payable under this Agreement, the Company shall pay you an amount in cash equal to the distribution amounts you would have received if you were the holder of record, as of such record date, of a number of Units equal to the number of such Performance Units that have not become earned and payable as of such record date, such payment to be made on or promptly following the date that the Partnership makes such distribution (however, in no event shall the DERs be paid later than 30 days following the date on which the Partnership makes such distribution to unitholders generally). Notwithstanding this Section 2, the Performance Units granted pursuant to this Agreement do not and shall not entitle you to any rights of a holder of Units, including

US 1765477v.5

the right to vote, prior to the date Units are delivered to you in settlement of the Performance Units pursuant to Section 5.

3.Terms of Award. The Performance Units represent an Award for the “Performance Period” which begins on January 1, 2013 and ends on December 31, 2015. Following the completion of the Performance Period, you will be entitled to a payment of Units as determined under this Section 3 and/or Section 4, as applicable, and payable in Units at the time indicated in Section 5 or Section 4(b), as applicable.

(a)    Performance Measure. The percentage of Performance Units earned for the Performance Period is determined on the basis of Achieved DCF/Unit relative to Incentive DCF/Unit.

(b)    Units Payable. The number of Units payable is equal to the result of multiplying Performance Units by the “Performance Percentage” set forth below with respect to Achieved DCF/Unit set forth below:

Achieved DCF/Unit Equals	Performance Percentage (%) to be Multiplied by Performance Units
Base DCF/Unit	0%
Incentive DCF/Unit	200%

The percentages above shall be interpolated between points up to a maximum of 200%; the number so derived shall be rounded to the nearest whole percentage, but not to a percentage in excess of 200%. In its sole discretion, the Committee may make a payment to you assuming a Performance Percentage of up to 200% of the Performance Units instead of the Performance Percentage as determined pursuant to this Section 3(b).

4.Early Termination. In the event you cease to provide services to the Partnership and the Company prior to the end of the Performance Period on account of an event described in this Section 4, the number of Performance Units with respect to which payment at the end of the Performance Period is based shall be determined as follows:

(a)    Termination Due to Death, Disability or Retirement. In the event that you cease to provide services to the Partnership and the Company:

(i)    for any reason other than voluntary separation, Cause or a Special Involuntary Separation,

(ii)    due to your death,

(iii)    due to your total and permanent disability as determined by the Compensation Committee of the Company’s Board of Directors (the “Committee”) in its sole discretion, or

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(iv)    due to your retirement on or after attaining normal retirement age of 62 or after attaining an earlier retirement age approved by the Committee in its sole discretion,

then you (or your beneficiary, if applicable) shall, following the end of the Performance Period, forfeit a percentage of the total Performance Units earned (as calculated pursuant to Section 3) determined by dividing (x) the number of full months from the date of such termination until the last day of the Performance Period by (y) 36. The Committee will determine the number of Performance Units earned by you or your beneficiary in accordance with Section 3 for the entire Performance Period as soon as administratively practicable after the end of the Performance Period. In its sole discretion, the Committee may make a payment to you assuming a Performance Percentage of up to 200% of the Performance Units instead of the pro-rata number of Performance Units as determined pursuant to this Section 4(a). Unless the Committee determines otherwise, you will have no right to any other Performance Units and those other Performance Units granted under this Agreement will be forfeited. If you separate from employment prior to the end of the Performance Period due to voluntary separation or on account of Cause, all Performance Units hereunder will be forfeited.

(b)    Special Involuntary Termination. In the event of a Special Involuntary Termination before the end of the Performance Period, no Performance Units shall be forfeited, and payment with respect to 200% of the Performance Units shall be made as soon as administratively practicable following the Special Involuntary Termination, but in no event later than 90 days after the date your employment or service relationship terminates. Payment pursuant to this Section 4(b) is in lieu of payment pursuant to Section 4(a) and if you receive payment pursuant to this Section 4(b) you will not be entitled to any payment pursuant to Section 4(a).

(c)    Effect of Employment Agreement. Notwithstanding any provision herein to the contrary, in the event of any inconsistency between this Section 6 and any employment, change in control, or similar agreement entered into by and between you and the Company, the terms of the employment, change in control or similar agreement shall control.

(d)    Leave of Absence. With respect to the Award, the Company may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company, provided that rights to the Restricted Units during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began.    

5.Payment of Performance Units.

(a)The number of Units payable at the end of the Performance Period (or such earlier time as specified under Section 4(b)) shall be payable as soon as reasonably practicable following the close of the Performance Period, but in no event later than two and one-half months after the end of the calendar year in which the Performance Period closes (or such earlier time as specified under Section 4(b)), in the amount determined in

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accordance with Section 3, as adjusted by Section 4, if applicable. Such payment will be subject to withholding for taxes and other applicable payroll adjustments. The Committee’s determination of the amount payable shall be binding upon you and your beneficiary or estate. The number of Units payable will be rounded down to the nearest Share. No fractional Units will be issued pursuant to this Agreement.

(b)    If you are a “specified employee” within the meaning of Treasury Regulation § 1.409A-1(i) as of the date of your “separation from service” (within the meaning of Treasury Regulation § 1.409A-1(h)), then you will not be entitled to receive Units in settlement of Performance Units until the earlier of (i) the date which is six (6) months after your “separation from service” for any reason other than death, or (ii) the date of your death. The provisions of this Section 5(b) shall only apply if and to the extent required to avoid the imputation of any tax, penalty, or interest pursuant to Section 409A of the Code.

6.Payment of Taxes. The Company may require you to pay to the Company (or an Affiliate of the Company if you are an employee of an Affiliate of the Company), an amount the Company deems necessary to satisfy its (or its Affiliate’s) current or future obligation to withhold federal, state or local income or other taxes that you incur as a result of the Award. With respect to any required tax withholding and to the extent permissible pursuant to Rule 16b-3, you may (a) direct the Company to withhold from the Units to be issued to you under this Agreement the number of Units necessary to satisfy the Company’s obligation to withhold taxes; which determination will be based on the Units’ Fair Market Value at the time such determination is made; (b) deliver to the Company Units sufficient to satisfy the Company’s tax withholding obligations, based on the Units’ Fair Market Value at the time such determination is made; or (c) deliver cash to the Company sufficient to satisfy its tax withholding obligations. If you desire to elect to use the Unit withholding option described in subparagraph (a), you must make the election at the time and in the manner the Company prescribes. The Committee, in its discretion, may deny your request to satisfy its tax withholding obligations using a method described under subparagraph (a) or (b). In the event the Company determines that the aggregate Fair Market Value of the Units withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you must pay to the Company, in cash, the amount of that deficiency immediately upon the Company’s request. In the event that you fail to make arrangements that are acceptable to the Committee for providing to the Company, at the time or times required, the amounts of federal, state and local taxes required to be withheld with respect to the Performance Units granted to you under this Agreement, the Company shall have the right to purchase and/or to sell to one or more third parties in either market or private transactions sufficient Units otherwise paid or payable pursuant to this Award to provide the funds needed for the Company to make the required tax payment or payments.

7.Adjustment in Number of Performance Units. Except as provided below, in the event that the outstanding Units are increased, decreased or exchanged for a different number or kind of units or other securities, or if additional, new or different units or securities are distributed with respect to the Units through merger, consolidation, sale of all or substantially all of the assets of the Partnership, reorganization, recapitalization, unit dividend, unit split, reverse unit split or other distribution with respect to such Units, there shall be substituted for the Units under the

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Performance Units subject to this Agreement the appropriate number and kind of Units or new or replacement securities as determined in the sole discretion of the Committee.

8.Compliance with Securities Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of Units (including Performance Units) will be subject to compliance with all applicable requirements of federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Units may then be listed. No Units will be issued hereunder if such issuance would constitute a violation of any applicable federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Units may then be listed. In addition, Units will not be issued hereunder unless (a) a registration statement under the Securities Act, is at the time of issuance in effect with respect to the Units issued or (b) in the opinion of legal counsel to the Company, the Units issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any Units subject to the Award will relieve the Company of any liability in respect of the failure to issue such Units as to which such requisite authority has not been obtained. As a condition to any issuance hereunder, the Company may require you to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company. From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock exchanges, and other appropriate Persons to make Units available for issuance.

9.Furnish Information. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

10.Remedies. The Company shall be entitled to recover from you reasonable attorneys’ fees incurred in connection with the successful enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

11.Execution of Receipts and Releases. Any payment of cash or any issuance or transfer of Units or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

12.Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any applicable law, then such provision will be deemed to be modified to the minimum extent necessary to render it legal, valid and enforceable; and if such provision cannot be so modified, then this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties will be construed and enforced accordingly.

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13.Administration. This Agreement shall at all times be subject to the terms and conditions of the Plan. The Committee shall have sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the majority of the Committee with respect thereto and this Agreement shall be final and binding upon you and the Company. All determinations with respect to the achievement of the applicable performance goals, including the calculation of and any adjustment to the applicable performance metrics, will be made by the Committee in its discretion which determination will be final and binding. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control.

14.No Right to Continued Employment. This Agreement shall not be construed to confer upon you any right to continue as an employee, officer or service provider of the Company and shall not limit the right of the Company, in its sole discretion, to terminate your service at any time.

15.Governing Law. This Agreement shall be interpreted and administered under the laws of the State of Texas, without giving effect to any conflict of laws provisions.

16.Consent to Texas Jurisdiction and Venue. You hereby consent and agree that state courts located in Dallas, Texas and the United States District Court for the Northern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the Restricted Units or this Agreement. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to any such jurisdiction as an inconvenient forum.

17.Amendments. This Agreement may be amended by the Board or by the Committee at any time (a) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in any federal or state, tax or securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Award; or (b) other than in the circumstances described in clause (a) or provided in the Plan, with your consent.

18.No Liability for Good Faith Determinations. The Company and the members of the Committee and the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Performance Units granted hereunder.

19.No Guarantee of Interests. The Board and the Company do not guarantee the Units from loss or depreciation.

20.Nontransferability of Agreement. This Agreement and all rights under this Agreement shall not be transferable by you during your life other than by will or pursuant to applicable laws of descent and distribution. Any of your rights and privileges in connection herewith shall not be transferred, assigned, pledged or hypothecated by you or by any other person or persons, in any way, whether by operation of law, or otherwise, and shall not be subject to execution, attachment, garnishment or similar process. In the event of any such occurrence, this Agreement shall automatically be terminated and shall thereafter be null and void. Notwithstanding the

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foregoing, all or some of the Units or rights under this Agreement may be transferred to a spouse pursuant to a domestic relations order issued by a court of competent jurisdiction.

24.    Company Records. Records of the Company or its subsidiaries regarding your period of service, termination of service and the reason(s) therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

25.    Information Confidential. As partial consideration for the granting of the Award hereunder, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to the terms and conditions of this Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.

18.    Compliance with Section 409A of the Code. This Agreement is intended to comply and shall be administered in a manner that is intended to comply with section 409A of the Code and shall be construed and interpreted in accordance with such intent. Payment under this Agreement shall be made in a manner that will comply with section 409A of the Code, including regulations or other guidance issued with respect thereto, except as otherwise determined by the Committee. The applicable provisions of section 409A of the Code are hereby incorporated by reference and shall control over any contrary provisions herein that conflict therewith. Termination from employment, separation from service and similar terms used in this Agreement shall mean a “separation from service” within the meaning of Treasury Regulation § 1.409A-1(h).

HOLLY LOGISTIC SERVICES, L.L.C.

Matthew P. Clifton

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Appendix A

Defined Terms

For purposes of the Agreement, the following terms shall have the meanings assigned below:

“2012 DCF/Unit” shall mean $2.75.

“Achieved DCF/Unit” shall mean actual distributable cash flow in 2015 (i) adjusted, on an annualized basis to the extent such adjustment is not reflected in actual distributable cash flow in 2015, to include the effect of the closing of any acquisition to income and/or common units of the Partnership outstanding and/or to eliminate any general partner give-back and any other aberrational event, as determined in the discretion of the Committee, and (ii) divided by Units outstanding as of year-end 2015.

“Adverse Change” shall mean, without your express written consent, (i) a change in your principal office to a location more than 25 miles from your work address as of the Date of Grant, (ii) a material increase (without adequate consideration) or a material reduction in duties of the type previously performed by you, or (iii) a material reduction in your base compensation (other than bonuses and other discretionary items of compensation) that does not apply generally to employees of the Company or its successor. You must provide notice to the Company of the event alleged to constitute an Adverse Change within ninety (90) days of the occurrence of such event and the Company shall be given the opportunity to remedy the alleged Adverse Change and/or to contest your assertion that an Adverse Change event has occurred within thirty (30) days from receipt of such notice.

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under section 12 of the Exchange Act.

“Base DCF/Unit” shall mean 2012 DCF/Unit (i) adjusted, on an annualized basis, to include the effect of the closing of any acquisition to income and/or common units of the Partnership outstanding and/or to eliminate any general partner give-back and any other aberrational event, as determined in the discretion of the Committee and (ii) divided by Units outstanding as of year-end 2012.

“Beneficial Owner” shall have the meaning provided in Rule 13d-3 under the Exchange Act.

“Cause” shall mean:

(i)    An act or acts of dishonesty by you constituting a felony or serious misdemeanor and resulting or intended to result directly in gain or personal enrichment at the expense of the Company;

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(ii)    Gross or willful and wanton negligence in the performance of the material and substantial duties of your employment or service relationship with the Company; or

(iii)    Conviction of a felony involving moral turpitude.

The existence of Cause shall be determined by the Committee, in its sole and absolute discretion.

“Change in Control” shall mean, notwithstanding the definition of such term in the Plan:

(i)    Any Person, other than HFC or any of its wholly-owned subsidiaries, the General Partner, the Partnership, the Company, or any of their subsidiaries, a trustee or other fiduciary holding securities under an employee benefit plan of HFC, the Partnership, the Company or any of their Affiliates, an underwriter temporarily holding securities pursuant to an offering of such securities, or any entity owned, directly or indirectly, by the holders of the voting securities of HFC, the Company, the General Partner or the Partnership in substantially the same proportions as their ownership in HFC, the Company, the General Partner or the Partnership, respectively, is or becomes the Beneficial Owner, directly or indirectly, of securities of HFC, the Company, the General Partner or the Partnership (not including in the securities beneficially owned by such Person any securities acquired directly from HFC, the General Partner, the Partnership, the Company or their Affiliates) representing more than 40% of the combined voting power of HFC’s, the Company’s, the General Partner’s or the Partnership’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (iii)(A) below.

(ii)    The individuals who as of the Date of Grant constitute the HFC Board and any New Director cease for any reason to constitute a majority of the HFC Board.

(iii)    There is consummated a merger or consolidation of HFC, the Company, the General Partner or the Partnership with any other entity, except if:

(A)    the merger or consolidation results in the voting securities of HFC, the Company, the General Partner or the Partnership outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60% of the combined voting power of the voting securities of HFC, the Company, the General Partner or the Partnership, as applicable, or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

(B)    the merger or consolidation is effected to implement a recapitalization of HFC, the Company, the General Partner or the Partnership (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly, or indirectly, of securities of, as applicable, (not including in the securities beneficially owned by such Person any securities acquired directly from HFC, the Company, the General Partner or the Partnership or their Affiliates other than in connection with the acquisition by HFC, the Company, the General Partner or the Partnership or its

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Affiliates of a business) representing more than 40% of the combined voting power of HFC’s, the Company’s the General Partner’s or the Partnership’s, as applicable, then outstanding securities.

(iv)    The holders of the voting securities of HFC, the Company, the General Partner or the Partnership approve a plan of complete liquidation or dissolution of HFC, the Company, the General Partner or the Partnership or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by holders of the voting securities of HFC, the Company, the General Partner or the Partnership of all or substantially all of HFC’s, the Company’s, the General Partner’s or the Partnership’s assets, as applicable, to an entity at least 60% of the combined voting power of the voting securities of which is owned by the direct and indirect holders of the voting securities of HFC, the Company, the General Partner or the Partnership in substantially the same proportions as their ownership of the voting securities of HFC, the Company, the General Partner or the Partnership, as applicable, immediately prior to such sale.

“DCF/Unit” means distributable cash flow per Unit.

“General Partner” means HEP Logistics Holdings, L.P.

“HFC” means HollyFrontier Corporation.

“HFC Board” means Board of Directors of HFC.

“Incentive DCF/Unit” shall mean:

(Base DCF/Unit) x (100% + (WAIA₁ + 5%)) x (100% + (WAIA₂ + 5%)) x (100% + (WAIA₃ + 5%))

“New Director” shall mean an individual whose election by HFC’s Board or nomination for election by holders of the voting securities of HFC was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the Date of Grant or whose election or nomination for election was previously so approved or recommended. However, New Director shall not include a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation relating to the election of directors of the HFC.

“Person” shall have the meaning given in section 3(a)(9) of the Exchange Act as modified and used in sections 13(d) and 14(d) of the 1934 Act.

“Special Involuntary Termination” shall mean the occurrence of (i) or (ii) within 60 days prior to, or at any time after, a Change in Control, where (i) is termination by the Company of your (a) employment with the Company (including subsidiaries of the Company) or (b) provision of executive services to the Partnership and the Company, for any reason other than Cause and (ii) is

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a resignation by you from employment or service with the Company (including subsidiaries of the Company) within 90 days after an Adverse Change in the terms of your employment.

“WAIA” shall mean the weighted after inflation adjustment for each of years 1, 2 and 3 of the Performance Period (identified as WAIA₁, WAIA₂, and WAIA₃, respectively) to the Partnership’s applicable sources of revenue calculated as follows: annual percentage increase of the Producers Price Index – Commodities-Finished Goods published by the U.S. Department of Labor, Bureau of Labor Statistics plus 1.5%. For purposes of calculating Incentive DCF/Unit, the WAIA shall be rounded to the nearest 0.1%.

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EX-10.2

HOLLY ENERGY PARTNERS, L.P.

LONG-TERM INCENTIVE PLAN

PERFORMANCE UNIT AGREEMENT
(Executive Form)

This Performance Unit Agreement (the “Agreement”) is made and entered into by and between Holly Logistic Services, L.L.C., a Delaware limited liability company (the “Company”), and you. This Agreement is entered into as of the __ day of _____, 2013 (the “Date of Grant”).

W I T N E S S E T H:

WHEREAS, the Company has adopted the Holly Energy Partners, L.P. Long-Term Incentive Plan (the “Plan”) to attract, retain and motivate employees, executives, directors and consultants;

WHEREAS, the Company believes that a grant to you of performance units of Holly Energy Partners, L.P. (the “Partnership”) as part of your compensation for services provided to the Company and/or the Partnership is consistent with the stated purposes for which the Plan was adopted; and

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this Agreement (“Agreement”) as if fully set forth herein and the terms capitalized but not defined herein or on Appendix A attached hereto shall have the meanings set forth in the Plan.

NOW, THEREFORE, in consideration of the services rendered by you, it is agreed by and between the Company and you, as follows:

1.Grant. The Company hereby grants to you as of the Date of Grant an Award of ______ performance units (the “Performance Units”), subject to the terms and conditions set forth in this Agreement. Depending on the performance of the Partnership, you may earn from 50% to 150% of the Performance Units, based on the terms set forth in Section 3.

2.Distribution Equivalent Rights. As long as you hold the Performance Units granted pursuant to this Agreement, you will be entitled to receive distribution equivalent rights (“DERs’) in accordance with this Section 2. In the event the Partnership makes a distribution in respect of outstanding Units and, on the record date for such distribution, you hold Performance Units that have not yet become earned and payable under this Agreement, the Company shall pay you an amount in cash equal to the distribution amounts you would have received if you were the holder of record, as of such record date, of a number of Units equal to the number of such Performance Units that have not become earned and payable as of such record date, such payment to be made on or promptly following the date that the Partnership makes such distribution (however, in no event shall the DERs be paid later than 30 days following the date on which the Partnership makes such distribution to unitholders generally). Notwithstanding this Section 2, the Performance Units granted pursuant to this Agreement do not and shall not entitle you to any rights of a holder of Units, including

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the right to vote, prior to the date Units are delivered to you in settlement of the Performance Units pursuant to Section 5.

3.Terms of Award. The Performance Units represent an Award for the “Performance Period” which begins on January 1, 2013 and ends on December 31, 2015. Following the completion of the Performance Period, you will be entitled to a payment of Units as determined under this Section 3 and/or Section 4, as applicable, and payable in Units at the time indicated in Section 5 or Section 4(b), as applicable.

(a)    Performance Measure. The percentage of Performance Units earned for the Performance Period is determined on the basis of Achieved DCF/Unit relative to Target DCF/Unit and Incentive DCF/Unit.

(b)    Units Payable. The number of Units payable is equal to the result of multiplying Performance Units by the “Performance Percentage” set forth below with respect to Achieved DCF/Unit set forth below:

Achieved DCF/Unit Equals	Performance Percentage (%) to be Multiplied by Performance Units
Base DCF/Unit or less	50%
Target DCF/Unit	100%
Incentive DCF/Unit	150%

The percentages above shall be interpolated between points up to a maximum of 150% but no less than 50%; the number so derived shall be rounded to the nearest whole percentage, but not to a number in excess of 150%. In its sole discretion, the Committee may make a payment to you assuming a Performance Percentage of up to 150% of the Performance Units instead of the Performance Percentage as determined pursuant to this Section 3(b).

4.Early Termination. In the event you cease to provide services to the Partnership and the Company prior to the end of the Performance Period on account of an event described in this Section 4, the number of Performance Units with respect to which payment at the end of the Performance Period is based shall be determined as follows:

(a)    Termination Due to Death, Disability or Retirement. In the event that you cease to provide services to the Partnership and the Company:

(i)    for any reason other than voluntary separation, Cause or a Special Involuntary Separation,

(ii)    due to your death,

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(iii)    due to your total and permanent disability as determined by the Compensation Committee of the Company’s Board of Directors (the “Committee”) in its sole discretion, or

(iv)    due to your retirement on or after attaining normal retirement age of 62 or after attaining an earlier retirement age approved by the Committee in its sole discretion,

then you (or your beneficiary, if applicable) shall, following the end of the Performance Period, forfeit a percentage of the total Performance Units earned (as calculated pursuant to Section 3) determined by dividing (x) the number of full months from the date of such termination until the last day of the Performance Period by (y) thirty-six (36); provided, that, notwithstanding the performance actually achieved, you will earn and receive payment with respect to no less than 50% of the Performance Units. The Committee will determine the number of Performance Units earned by you or your beneficiary in accordance with Section 3 for the entire Performance Period as soon as administratively practicable after the end of the Performance Period. In its sole discretion, the Committee may make a payment to you assuming a Performance Percentage of up to 150% of the Performance Units instead of the pro-rata number of Performance Units as determined pursuant to this Section 4(a). Unless the Committee determines otherwise, you will have no right to any other Performance Units and those other Performance Units granted under this Agreement will be forfeited. If you separate from employment prior to the end of the Performance Period due to voluntary separation or on account of Cause, all Performance Units hereunder will be forfeited.

(b)    Special Involuntary Termination. In the event of a Special Involuntary Termination before the end of the Performance Period, no Performance Units shall be forfeited, and payment with respect to 150% of the Performance Units shall be made as soon as administratively practicable following the Special Involuntary Termination, but in no event later than 90 days after the date your employment or service relationship terminates. Payment pursuant to this Section 4(b) is in lieu of payment pursuant to Section 4(a) and if you receive payment pursuant to this Section 4(b) you will not be entitled to any payment pursuant to Section 4(a).

(c)    Effect of Employment Agreement. Notwithstanding any provision herein to the contrary, in the event of any inconsistency between this Section 6 and any employment, change in control, or similar agreement entered into by and between you and the Company, the terms of the employment, change in control or similar agreement shall control.

(d)    Leave of Absence. With respect to the Award, the Company may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company, provided that rights to the Restricted Units during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began.    

5.Payment of Performance Units.

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(a)The number of Units payable at the end of the Performance Period (or such earlier time as specified under Section 4(b)) shall be payable as soon as reasonably practicable following the close of the Performance Period, but in no event later than two and one-half months after the end of the calendar year in which the Performance Period closes (or such earlier time as specified under Section 4(b)), in the amount determined in accordance with Section 3, as adjusted by Section 4, if applicable. Such payment will be subject to withholding for taxes and other applicable payroll adjustments. The Committee’s determination of the amount payable shall be binding upon you and your beneficiary or estate. The number of Units payable will be rounded down to the nearest Share. No fractional Units will be issued pursuant to this Agreement.

(b)    If you are a “specified employee” within the meaning of Treasury Regulation § 1.409A-1(i) as of the date of your “separation from service” (within the meaning of Treasury Regulation § 1.409A-1(h)), then you will not be entitled to receive Units in settlement of Performance Units until the earlier of (i) the date which is six (6) months after your “separation from service” for any reason other than death, or (ii) the date of your death. The provisions of this Section 5(b) shall only apply if and to the extent required to avoid the imputation of any tax, penalty, or interest pursuant to Section 409A of the Code.

6.Payment of Taxes. The Company may require you to pay to the Company (or an Affiliate of the Company if you are an employee of an Affiliate of the Company), an amount the Company deems necessary to satisfy its (or its Affiliate’s) current or future obligation to withhold federal, state or local income or other taxes that you incur as a result of the Award. With respect to any required tax withholding and to the extent permissible pursuant to Rule 16b-3, you may (a) direct the Company to withhold from the Units to be issued to you under this Agreement the number of Units necessary to satisfy the Company’s obligation to withhold taxes; which determination will be based on the Units’ Fair Market Value at the time such determination is made; (b) deliver to the Company Units sufficient to satisfy the Company’s tax withholding obligations, based on the Units’ Fair Market Value at the time such determination is made; or (c) deliver cash to the Company sufficient to satisfy its tax withholding obligations. If you desire to elect to use the Unit withholding option described in subparagraph (a), you must make the election at the time and in the manner the Company prescribes. The Committee, in its discretion, may deny your request to satisfy its tax withholding obligations using a method described under subparagraph (a) or (b). In the event the Company determines that the aggregate Fair Market Value of the Units withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you must pay to the Company, in cash, the amount of that deficiency immediately upon the Company’s request. In the event that you fail to make arrangements that are acceptable to the Committee for providing to the Company, at the time or times required, the amounts of federal, state and local taxes required to be withheld with respect to the Performance Units granted to you under this Agreement, the Company shall have the right to purchase and/or to sell to one or more third parties in either market or private transactions sufficient Units otherwise paid or payable pursuant to this Award to provide the funds needed for the Company to make the required tax payment or payments.

7.Adjustment in Number of Performance Units. Except as provided below, in the event that the outstanding Units are increased, decreased or exchanged for a different number or

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kind of units or other securities, or if additional, new or different units or securities are distributed with respect to the Units through merger, consolidation, sale of all or substantially all of the assets of the Partnership, reorganization, recapitalization, unit dividend, unit split, reverse unit split or other distribution with respect to such Units, there shall be substituted for the Units under the Performance Units subject to this Agreement the appropriate number and kind of Units or new or replacement securities as determined in the sole discretion of the Committee.

8.Compliance with Securities Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of Units (including Performance Units) will be subject to compliance with all applicable requirements of federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Units may then be listed. No Units will be issued hereunder if such issuance would constitute a violation of any applicable federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Units may then be listed. In addition, Units will not be issued hereunder unless (a) a registration statement under the Securities Act, is at the time of issuance in effect with respect to the Units issued or (b) in the opinion of legal counsel to the Company, the Units issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any Units subject to the Award will relieve the Company of any liability in respect of the failure to issue such Units as to which such requisite authority has not been obtained. As a condition to any issuance hereunder, the Company may require you to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company. From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock exchanges, and other appropriate Persons to make Units available for issuance.

9.Furnish Information. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

10.Remedies. The Company shall be entitled to recover from you reasonable attorneys’ fees incurred in connection with the successful enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

11.Execution of Receipts and Releases. Any payment of cash or any issuance or transfer of Units or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

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12.Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any applicable law, then such provision will be deemed to be modified to the minimum extent necessary to render it legal, valid and enforceable; and if such provision cannot be so modified, then this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties will be construed and enforced accordingly.

13.Administration. This Agreement shall at all times be subject to the terms and conditions of the Plan. The Committee shall have sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the majority of the Committee with respect thereto and this Agreement shall be final and binding upon you and the Company. All determinations with respect to the achievement of the applicable performance goals, including the calculation of and any adjustment to the applicable performance metrics, will be made by the Committee in its discretion which determination will be final and binding. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control.

14.No Right to Continued Employment. This Agreement shall not be construed to confer upon you any right to continue as an employee, officer or service provider of the Company and shall not limit the right of the Company, in its sole discretion, to terminate your service at any time.

15.Governing Law. This Agreement shall be interpreted and administered under the laws of the State of Texas, without giving effect to any conflict of laws provisions.

16.Consent to Texas Jurisdiction and Venue. You hereby consent and agree that state courts located in Dallas, Texas and the United States District Court for the Northern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the Restricted Units or this Agreement. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to any such jurisdiction as an inconvenient forum.

17.Amendments. This Agreement may be amended by the Board or by the Committee at any time (a) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in any federal or state, tax or securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Award; or (b) other than in the circumstances described in clause (a) or provided in the Plan, with your consent.

18.No Liability for Good Faith Determinations. The Company and the members of the Committee and the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Performance Units granted hereunder.

19.No Guarantee of Interests. The Board and the Company do not guarantee the Units from loss or depreciation.

20.Nontransferability of Agreement. This Agreement and all rights under this Agreement shall not be transferable by you during your life other than by will or pursuant to

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applicable laws of descent and distribution. Any of your rights and privileges in connection herewith shall not be transferred, assigned, pledged or hypothecated by you or by any other person or persons, in any way, whether by operation of law, or otherwise, and shall not be subject to execution, attachment, garnishment or similar process. In the event of any such occurrence, this Agreement shall automatically be terminated and shall thereafter be null and void. Notwithstanding the foregoing, all or some of the Units or rights under this Agreement may be transferred to a spouse pursuant to a domestic relations order issued by a court of competent jurisdiction.

24.    Company Records. Records of the Company or its subsidiaries regarding your period of service, termination of service and the reason(s) therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

25.    Information Confidential. As partial consideration for the granting of the Award hereunder, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to the terms and conditions of this Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.

18.    Compliance with Section 409A of the Code. This Agreement is intended to comply and shall be administered in a manner that is intended to comply with section 409A of the Code and shall be construed and interpreted in accordance with such intent. Payment under this Agreement shall be made in a manner that will comply with section 409A of the Code, including regulations or other guidance issued with respect thereto, except as otherwise determined by the Committee. The applicable provisions of section 409A of the Code are hereby incorporated by reference and shall control over any contrary provisions herein that conflict therewith. Termination from employment, separation from service and similar terms used in this Agreement shall mean a “separation from service” within the meaning of Treasury Regulation § 1.409A-1(h).

HOLLY LOGISTIC SERVICES, L.L.C.

Matthew P. Clifton

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Appendix A

Defined Terms

For purposes of the Agreement, the following terms shall have the meanings assigned below:

“2012 DCF/Unit” shall mean $2.75.

“Achieved DCF/Unit” shall mean actual distributable cash flow in 2015 (i) adjusted, on an annualized basis to the extent such adjustment is not reflected in actual distributable cash flow in 2015, to include the effect of the closing of any acquisition to income and/or common units of the Partnership outstanding and/or to eliminate any general partner give-back and any other aberrational event, as determined in the discretion of the Committee, and (ii) divided by Units outstanding as of year-end 2015.

“Adverse Change” shall mean, without your express written consent, (i) a change in your principal office to a location more than 25 miles from your work address as of the Date of Grant, (ii) a material increase (without adequate consideration) or a material reduction in duties of the type previously performed by you, or (iii) a material reduction in your base compensation (other than bonuses and other discretionary items of compensation) that does not apply generally to employees of the Company or its successor. You must provide notice to the Company of the event alleged to constitute an Adverse Change within ninety (90) days of the occurrence of such event and the Company shall be given the opportunity to remedy the alleged Adverse Change and/or to contest your assertion that an Adverse Change event has occurred within thirty (30) days from receipt of such notice.

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under section 12 of the Exchange Act.

“Base DCF/Unit” shall mean 2012 DCF/Unit (i) adjusted, on an annualized basis, to include the effect of the closing of any acquisition to income and/or common units of the Partnership outstanding and/or to eliminate any general partner give-back and any other aberrational event, as determined in the discretion of the Committee and (ii) divided by Units outstanding as of year-end 2012.

“Beneficial Owner” shall have the meaning provided in Rule 13d-3 under the Exchange Act.

“Cause” shall mean:

(i)    An act or acts of dishonesty by you constituting a felony or serious misdemeanor and resulting or intended to result directly in gain or personal enrichment at the expense of the Company;

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(ii)    Gross or willful and wanton negligence in the performance of the material and substantial duties of your employment or service relationship with the Company; or

(iii)    Conviction of a felony involving moral turpitude.

The existence of Cause shall be determined by the Committee, in its sole and absolute discretion.

“Change in Control” shall mean, notwithstanding the definition of such term in the Plan:

(i)    Any Person, other than HFC or any of its wholly-owned subsidiaries, the General Partner, the Partnership, the Company, or any of their subsidiaries, a trustee or other fiduciary holding securities under an employee benefit plan of HFC, the Partnership, the Company or any of their Affiliates, an underwriter temporarily holding securities pursuant to an offering of such securities, or any entity owned, directly or indirectly, by the holders of the voting securities of HFC, the Company, the General Partner or the Partnership in substantially the same proportions as their ownership in HFC, the Company, the General Partner or the Partnership, respectively, is or becomes the Beneficial Owner, directly or indirectly, of securities of HFC, the Company, the General Partner or the Partnership (not including in the securities beneficially owned by such Person any securities acquired directly from HFC, the General Partner, the Partnership, the Company or their Affiliates) representing more than 40% of the combined voting power of HFC’s, the Company’s, the General Partner’s or the Partnership’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (iii)(A) below.

(ii)    The individuals who as of the Date of Grant constitute the HFC Board and any New Director cease for any reason to constitute a majority of the HFC Board.

(iii)    There is consummated a merger or consolidation of HFC, the Company, the General Partner or the Partnership with any other entity, except if:

(A)    the merger or consolidation results in the voting securities of HFC, the Company, the General Partner or the Partnership outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60% of the combined voting power of the voting securities of HFC, the Company, the General Partner or the Partnership, as applicable, or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

(B)    the merger or consolidation is effected to implement a recapitalization of HFC, the Company, the General Partner or the Partnership (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly, or indirectly, of securities of, as applicable, (not including in the securities beneficially owned by such Person any securities acquired directly from HFC, the Company, the General Partner or the Partnership or their Affiliates other than in connection with the acquisition by HFC, the Company, the General Partner or the Partnership or its

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Affiliates of a business) representing more than 40% of the combined voting power of HFC’s, the Company’s the General Partner’s or the Partnership’s, as applicable, then outstanding securities.

(iv)    The holders of the voting securities of HFC, the Company, the General Partner or the Partnership approve a plan of complete liquidation or dissolution of HFC, the Company, the General Partner or the Partnership or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by holders of the voting securities of HFC, the Company, the General Partner or the Partnership of all or substantially all of HFC’s, the Company’s, the General Partner’s or the Partnership’s assets, as applicable, to an entity at least 60% of the combined voting power of the voting securities of which is owned by the direct and indirect holders of the voting securities of HFC, the Company, the General Partner or the Partnership in substantially the same proportions as their ownership of the voting securities of HFC, the Company, the General Partner or the Partnership, as applicable, immediately prior to such sale.

“DCF/Unit” means distributable cash flow per Unit.

“General Partner” means HEP Logistics Holdings, L.P.

“HFC” means HollyFrontier Corporation.

“HFC Board” means Board of Directors of HFC.

“Incentive DCF/Unit” shall mean:

(Base DCF/Unit) x (100% + (WAIA₁ + 4%)) x (100% + (WAIA₂ + 4%)) x (100% + (WAIA₃ + 4%))

“New Director” shall mean an individual whose election by HFC’s Board or nomination for election by holders of the voting securities of HFC was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the Date of Grant or whose election or nomination for election was previously so approved or recommended. However, New Director shall not include a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation relating to the election of directors of the HFC.

“Person” shall have the meaning given in section 3(a)(9) of the Exchange Act as modified and used in sections 13(d) and 14(d) of the 1934 Act.

“Special Involuntary Termination” shall mean the occurrence of (i) or (ii) within 60 days prior to, or at any time after, a Change in Control, where (i) is termination by the Company of your (a) employment with the Company (including subsidiaries of the Company) or (b) provision of executive services to the Partnership and the Company, for any reason other than Cause and (ii) is

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a resignation by you from employment or service with the Company (including subsidiaries of the Company) within 90 days after an Adverse Change in the terms of your employment.

“Target DCF/Unit” shall mean:

(Base DCF/Unit) x (100% + WAIA₁) x (100% + WAIA₂) x (100% + WAIA₃)

“WAIA” shall mean the weighted after inflation adjustment for each of years 1, 2 and 3 of the Performance Period (identified as WAIA₁, WAIA₂, and WAIA₃, respectively) to the Partnership’s applicable sources of revenue calculated as follows: annual percentage increase of the Producers Price Index – Commodities-Finished Goods published by the U.S. Department of Labor, Bureau of Labor Statistics plus 1.5%. For purposes of calculating Target DCF/Unit and Incentive DCF/Unit, the WAIA shall be rounded to the nearest 0.1%.

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EX-10.3

HOLLY ENERGY PARTNERS, L.P.LONG-TERM INCENTIVE PLAN

RESTRICTED UNIT AGREEMENT
(Employee)

This Agreement is made and entered into as of the Date of Grant set forth in the Notice of Grant of Restricted Units (“Notice of Grant”) by and between Holly Logistic Services, L.L.C. (the “Company”), and you.

WHEREAS, the Company in order to induce you to enter into and to continue and dedicate service to the Company and Holly Energy Partners, L.P. (the “Partnership”)and to materially contribute to the success of the Company and the Partnership agrees to grant you this restricted unit award;

WHEREAS, the Company adopted the Holly Energy Partners, L.P. Long-Term Incentive Compensation Plan as it may be amended from time to time (the “Plan”) under which the Company is authorized to grant restricted unit awards to certain employees and service providers of the Company;

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this restricted unit agreement (“Agreement”) as if fully set forth herein and the terms capitalized but not defined herein shall have the meanings set forth in the Plan; and

WHEREAS, you desire to accept the restricted unit award made pursuant to this Agreement.

NOW, THEREFORE, in consideration of and mutual covenants set forth herein and for other valuable consideration hereinafter set forth, the parties agree as follows:

1.Grant. Subject to the conditions set forth below, the Company hereby grants you effective as of the Date of Grant set forth in the Notice of Grant, as a matter of separate inducement but not in lieu of any salary or other compensation for your services for the Company, an award (the “Award”) consisting of the aggregate number of Units set forth in the Notice of Grant in accordance with the terms and conditions set forth herein and in the Plan.

2.Restricted Units. The Company shall obtain the Units subject to this Agreement and cause such Units to be held for you in book entry form by the Partnership’s transfer agent with a notation that the Units are subject to restrictions. You hereby agree that the Restricted Units shall be held subject to restrictions as provided in the Agreement until the restrictions on such Restricted Units expire or the Restricted Units are forfeited as provided in Section 6 of this Agreement. You hereby agree that if part or all of the Restricted Units are forfeited pursuant to this Agreement, the Company shall have the right to direct the Partnership’s transfer agent to cancel such forfeited Restricted Units or, at the Company’s election, transfer such Restricted Units to the Company or to any designee of the Company.

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3.Ownership of Restricted Units. Effective from the Date of Grant, you are a unitholder with respect to all of the Restricted Units granted to you pursuant to Section 1 and have all of the rights of a unitholder with respect to all such Restricted Units, including the right to receive all distributions paid with respect to such Restricted Units and any right to vote with respect to such Restricted Units subject, however, to the restrictions hereinafter described, including, without limitation, those described in Section 4; provided, however, that each dividend payment will be made no later than 30 days following the date the distributions are paid to the holders of Units generally.

4.Restrictions; Forfeiture. The Restricted Units are restricted in that they may not be sold, transferred or otherwise alienated or hypothecated until these restrictions are removed or expire as contemplated in Section 5 of this Agreement and as described in the Notice of Grant. The Restricted Units are also restricted in the sense that they may be forfeited to the Company. You hereby agree that if the Restricted Units are forfeited, as provided in Section 6, the Company shall have the right to deliver the Restricted Units to the Company’s transfer agent for, at the Company’s election, cancellation or transfer to the Company.

5.Expiration of Restrictions and Risk of Forfeiture. The restrictions on the Restricted Units granted pursuant to this Agreement will expire and the Restricted Units will become transferable, except to the extent provided in Section 11 of this Agreement and nonforfeitable as set forth in the Notice of Grant and in Section 6 of this Agreement, provided that you remain in the employ of, or a service provider to, the Company or its subsidiaries until the applicable dates and times set forth therein. The period of time beginning on the Date of Grant specified in the Notice of Grant and ending on the final vesting date specified in the Notice Grant is referred to herein as the “Service Period.” Restricted Units that become vested and non-forfeitable as provided in this Agreement are referred to herein as “Vested Units.”

6.Termination of Services.

(a)Termination Generally. Subject to subsections (b), (c) and (d), if your employment or service relationship with the Company or its subsidiaries is terminated for any reason, then those Restricted Units for which the restrictions have not lapsed as of the date of termination shall become null and void and those Restricted Units shall be forfeited. The Restricted Units for which the restrictions have lapsed as of the date of such termination shall not be forfeited.

(b)Termination Due to Death, Disability or Retirement. In the event of your (i) death, (ii) total and permanent disability, as determined by the Committee in its sole discretion, or (iii) retirement after attaining the normal retirement age of 62 or retirement after attaining an earlier retirement age approved by the Committee, in its sole discretion, before all of the Restricted Units have become Vested Units, you will forfeit a number of Restricted Units equal to the number of Restricted Units specified in Notice of Grant times the percentage that (A) the number of days beginning on the day on which the termination due to death, disability or retirement occurs and ending on the last day of the Service Period, (B) bears to the total number of days in the Service Period, and any remaining Restricted Units that are not vested will become Vested Units; provided, however, that any fractional Units will become null and void and automatically forfeited to the Company. In its sole discretion, the Committee may decide to vest all of the Restricted Units in-

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lieu of the prorated number of Restricted Units as provided in this Section 6(b). Unless the Committee determines otherwise, in its sole discretion, you or your beneficiary or estate will have no right to any Restricted Units that remain subject to restrictions, and those Restricted Units will be forfeited.

(c)Special Involuntary Termination. In the event of a Special Involuntary Termination all of the Restricted Units will become Vested Units.

(d)Effect of Employment Agreement. Notwithstanding any provision herein to the contrary, in the event of any inconsistency between this Section 6 and any employment, change in control, or similar agreement entered into by and between you and the Company, the terms of the employment, change in control or similar agreement shall control.

7.Leave of Absence. With respect to the Award, the Company may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company, provided that rights to the Restricted Units during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began.

8.Delivery of Units. Promptly following the expiration of the restrictions on the Restricted Units as contemplated in Section 5 of this Agreement, the Company shall cause to be issued and delivered to you or your designee a certificate or other evidence of the number of Restricted Units as to which restrictions have lapsed, free of any restrictive legend relating to the lapsed restrictions, upon receipt by the Company of any tax withholding as may be requested pursuant to Section 9. The value of such Restricted Units shall not bear any interest owing to the passage of time.

9.Payment of Taxes. The Company may require you to pay to the Company (or an Affiliate of the Company if you are an employee of an Affiliate of the Company), an amount the Company deems necessary to satisfy its (or its Affiliate’s) current or future obligation to withhold federal, state or local income or other taxes that you incur as a result of the Award. With respect to any required tax withholding and to the extent permissible pursuant to Rule 16b-3, you may (a) direct the Company to withhold from the Units to be issued to you under this Agreement the number of Units necessary to satisfy the Company’s obligation to withhold taxes; which determination will be based on the Units’ Fair Market Value at the time such determination is made; (b) deliver to the Company Units sufficient to satisfy the Company’s tax withholding obligations, based on the Units’ Fair Market Value at the time such determination is made; or (c) deliver cash to the Company sufficient to satisfy its tax withholding obligations. If you desire to elect to use the Unit withholding option described in subparagraph (a), you must make the election at the time and in the manner the Company prescribes and you may not elect to use such Unit withholding option to the extent the Units to be withheld are subject to forfeiture pursuant to the terms of this Agreement (in the event if you made an election pursuant to section 83(b) of the Code). The Committee, in its discretion, may deny your request to satisfy its tax withholding obligations using a method described under subparagraph (a) or (b). In the event the Company determines that the aggregate Fair Market Value of the Units withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you must pay to the Company, in cash, the amount of that deficiency

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immediately upon the Company’s request. In the event that you fail to make arrangements that are acceptable to the Committee for providing to the Company, at the time or times required, the amounts of federal, state and local taxes required to be withheld with respect to the Restricted Units granted to you under this Agreement, the Company shall have the right to purchase and/or to sell to one or more third parties in either market or private transactions sufficient Vested Units to provide the funds needed for the Company to make the required tax payment or payments.

10.Adjustment of Restricted Units. The number of Restricted Units granted to you pursuant to this Agreement shall be adjusted to reflect distributions of the Partnership paid in units, unit splits or other changes in the capital structure of the Partnership, all in accordance with the Plan. All provisions of this Agreement shall be applicable to such new or additional or different units or securities distributed or issued pursuant to the Plan to the same extent that such provisions are applicable to the units with respect to which they were distributed or issued. In the event that the outstanding Units of the Partnership are exchanged for a different number or kind of units or other securities, or if additional, new or different units are distributed with respect to the Units through merger, consolidation, or sale of all or substantially all of the assets of the Partnership, each remaining unit subject to this Agreement shall have substituted for it a like number and kind of units or shares of new or replacement securities as determined in the sole discretion of the Committee, subject to the terms and provisions of the Plan.

11.Compliance with Securities Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of Units (including Restricted Units) will be subject to compliance with all applicable requirements of federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Units may then be listed. No Units will be issued hereunder if such issuance would constitute a violation of any applicable federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Units may then be listed. In addition, Units will not be issued hereunder unless 1.1. a registration statement under the Securities Act, is at the time of issuance in effect with respect to the Units issued or 2.1. in the opinion of legal counsel to the Company, the Units issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any Units subject to the Award will relieve the Company of any liability in respect of the failure to issue such Units as to which such requisite authority has not been obtained. As a condition to any issuance hereunder, the Company may require you to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company. From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock exchanges, and other appropriate Persons to make Units available for issuance.

12.Legends. The Company may at any time place legends referencing any restrictions imposed on the shares pursuant to Sections 4 or 11 of this Agreement on all certificates representing shares issued with respect to this Award.

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13.Furnish Information. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

14.Remedies. The Company shall be entitled to recover from you reasonable attorneys’ fees incurred in connection with the successful enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

15.Execution of Receipts and Releases. Any payment of cash or any issuance or transfer of Units or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

16.Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any applicable law, then such provision will be deemed to be modified to the minimum extent necessary to render it legal, valid and enforceable; and if such provision cannot be so modified, then this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties will be construed and enforced accordingly.

17.Administration. This Agreement shall at all times be subject to the terms and conditions of the Plan. The Committee shall have sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of a majority of the Committee with respect thereto and this Agreement shall be final and binding upon you and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control.

18.No Right to Continued Employment. This Agreement shall not be construed to confer upon you any right to continue as an employee, officer or service provider of the Company and shall not limit the right of the Company, in its sole discretion, to terminate your service at any time.

19.Governing Law. This Agreement shall be interpreted and administered under the laws of the State of Texas, without giving effect to any conflict of laws provisions.

20.Consent to Texas Jurisdiction and Venue. You hereby consent and agree that state courts located in Dallas, Texas and the United States District Court for the Northern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the Restricted Units or this Agreement. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to any such jurisdiction as an inconvenient forum.

21.Amendment. This Agreement may be amended by the Board or by the Committee at any time (a) if the Board or the Committee determines, in its sole discretion, that amendment is

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necessary or advisable in light of any addition to or change in any federal or state, tax or securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Award; or (b) other than in the circumstances described in clause (a) or provided in the Plan, with your consent.

22.No Liability for Good Faith Determinations. The General Partner, the Partnership, the Company, HFC and the members of the Committee, the Board and the HFC Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Units granted hereunder.

23.No Guarantee of Interests. The Board, the HFC Board, the General Partner, the Partnership, HFC and the Company do not guarantee the Units from loss or depreciation.

24.Company Records. Records of the Company or its subsidiaries regarding your period of service, termination of service and the reason(s) therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

25.Information Confidential. As partial consideration for the granting of the Award hereunder, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to the terms and conditions of this Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.

26.Defined Terms.

(a)“Adverse Change” shall mean (i) a change in the city in which you are required to work regularly, (ii) a substantial increase in travel requirements of your employment, (iii) a substantial reduction in duties of the type previously performed by you, or (iv) a significant reduction in your compensation or benefits (other than bonuses and other discretionary items of compensation) that does not apply generally to executives of the Company or its successor.

(b)“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under section 12 of the Exchange Act.

(c)“Beneficial Owner” shall have the meaning provided in Rule 13d-3 under the Exchange Act.

(d)“Cause” shall mean (i) an act or acts of dishonesty on your part constituting a felony or serious misdemeanor and resulting or intended to result directly in gain or personal enrichment at the expense of the Company; (ii) gross or willful and wanton negligence in the performance of the material and substantial duties of your employment with the Company or its

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subsidiaries; or (iii) conviction of a felony involving moral turpitude. The existence of Cause shall be determined by the Committee, in its sole and absolute discretion.

(e)“Change in Control” shall mean, notwithstanding the definition of such term in the Plan:

(i)Any Person, other than HFC or any of its wholly-owned subsidiaries, HEP Logistics Holdings, L.P. (the “General Partner”), the Partnership, the Company, or any of their subsidiaries, a trustee or other fiduciary holding securities under an employee benefit plan of HFC, the Partnership, the Company or any of their Affiliates, an underwriter temporarily holding securities pursuant to an offering of such securities, or an entity owned, directly or indirectly, by the holders of the voting securities of HFC, the Company, the General Partner or the Partnership in substantially the same proportions as their ownership in HFC, the Company, the General Partner or the Partnership, respectively, is or becomes the Beneficial Owner, directly or indirectly, of securities of HFC, the Company, the General Partner or the Partnership (not including in the securities beneficially owned by such Person any securities acquired directly from HFC, the General Partner, the Partnership, the Company or their Affiliates) representing more than 40% of the combined voting power of HFC’s, the Company’s, the General Partner’s or the Partnership’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in Section 26(e)(iii)(1) below.

(ii)The individuals who as of the Date of Grant constitute the HFC and any New Director cease for any reason to constitute a majority of the HFC Board.

(iii)There is consummated a merger or consolidation of HFC, the Company, the General Partner or the Partnership with any other entity, except if:

A.the merger or consolidation results in the voting securities of HFC, the Company, the General Partner or the Partnership outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60% of the combined voting power of the voting securities of HFC, the Company, the General Partner or the Partnership, as applicable, or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

B.the merger or consolidation is effected to implement a recapitalization of HFC, the Company, the General Partner or the Partnership (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly, or indirectly, of securities of HFC, the Company, the General Partner or the Partnership, as applicable, (not including in the securities beneficially owned by such Person any securities acquired directly from HFC, the Company, the General Partner or the Partnership or their Affiliates other than in connection with the acquisition by HFC, the Company, the General Partner or the Partnership or its Affiliates of a business) representing more than 40% of the combined voting power

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of HFC’s, the Company’s, the General Partner’s or the Partnership’s, as applicable, then outstanding securities.

(iv)The holders of the voting securities of HFC, the Company, the General Partner or the Partnership approve a plan of complete liquidation or dissolution of HFC, the Company, the General Partner or the Partnership, as applicable, or an agreement for the sale or disposition by HFC, the Company, the General Partner or the Partnership of all or substantially all of HFC’s, the Company’s, the General Partner’s or the Partnership’s assets, as applicable, other than a sale or disposition by HFC, the Company, the General Partner or the Partnership of all or substantially all of HFC’s, the Company’s, the General Partner’s, or the Partnership’s assets, as applicable, to an entity at least 60% of the combined voting power of the voting securities of which is owned by the direct or indirect holders of the voting securities of HFC, the Company, the General Partner or the Partnership, as applicable, in substantially the same proportions as their ownership of HFC, the Company, the General Partner or the Partnership, as applicable, immediately prior to such sale.

(f)“HFC” means HollyFrontier Corporation.

(g)“HFC Board” means the board of directors of HFC.

(h)“New Director” shall mean an individual whose election by the HFC Board, or nomination for election by holders of the voting securities of HFC, was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the Date of Grant or whose election or nomination for election was previously so approved or recommended. However, “New Director” shall not include a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation relating to the election of directors of HFC.

(i)“Person” shall have the meaning given in section 3(a)(9) of the Exchange Act as modified and used in sections 13(d) and 14(d) of the Exchange Act.

(j)“Special Involuntary Termination” shall mean the occurrence of (i) or (ii) below within 60 days prior to, or at any time after, a Change in Control, where (i) is termination of your employment with the Company or its subsidiaries or termination of your role providing services to the Partnership or the Company (including subsidiaries of the Company) by the Company for any reason other than Cause and (ii) is a resignation by you from employment with the Company or its subsidiaries or resignation from your role providing services to the Partnership or the Company (including subsidiaries of the Company) within 90 days after an Adverse Change in the terms of your employment.

8

US 1726094v.5

EX-10.4

HOLLY ENERGY PARTNERS, L.P.LONG-TERM INCENTIVE PLAN

NOTICE OF GRANT OF RESTRICTED UNITS
(Employee)

Pursuant to the terms and conditions of the Holly Energy Partners, L.P. Long-Term Incentive Plan (the “Plan”), and the associated Restricted Unit Agreement which has been made separately available to you (your “Agreement”), you are hereby issued Units subject to certain restrictions thereon and under the conditions set forth in this Notice of Grant of Restricted Units (the “Notice”), in the Agreement, and in the Plan (the “Restricted Units”). Capitalized terms used but not defined herein shall have the meanings set forth in the Plan or your Agreement. You may obtain a copy of the Plan and a copy of the prospectus related to the Units by following the instructions attached as Appendix A. Additionally, you may request a copy of the Plan or the prospectus by contacting Cara Whitesel at Cara.Whitesel@hollyfrontier.com or 214.871.3883.

Grantee:        ____________

Date of Grant:        ____________ (the “Date of Grant”)

Number of Units:    __________

Vesting Schedule: The restrictions on all of the Restricted Units granted pursuant to the Agreement will expire and the Restricted Units will become transferable and non-forfeitable according to the following schedule; provided, that you remain in the employ of, or a service provider to, the Company or its Subsidiaries continuously from the Date of Grant through such vesting dates.

On or After Each of the Following Vesting Dates	Cumulative Portion of Units as to Which the Restricted Units are Transferable and Nonforfeitable
December 15, 2013	One-third
December 15, 2014	One-third
December 15, 2015	One-third

Except as otherwise provided in Section 6 of your Agreement, all Restricted Units that have not become vested and non-forfeitable pursuant to this Notice will be null and void and forfeited to the Company in the event of your termination by the Company or its Subsidiaries for any reason. Notwithstanding the terms of the Plan to the contrary, the restrictions on the Restricted Units will not vest upon a Change in Control absent a Special Involuntary Termination.

Vesting of the Units will be included in your income in an amount equal to the closing price of the Units on the date of vesting (or if such day is not a business day, the last preceding business

1

day). By accepting the Restricted Units you acknowledge and agree that (a) you are not relying upon any determination by the Company, its affiliates, Holly Energy Partners, L.P. or any of their respective employees, directors, officers, attorneys or agents (collectively, the “Company Parties”) of the Fair Market Value of the Units on the Date of Grant, (b) you are not relying upon any written or oral statement or representation of the Company Parties regarding the tax effects associated with this Notice and the Agreement and your receipt, holding and vesting of the Restricted Units, (c) in accepting the Restricted Units you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted and (d) a copy of the Agreement and the Plan has been made available to you. By accepting the Restricted Units you release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with this Notice and the Agreement and your receipt, holding and vesting of the Restricted Units.

Furthermore, you understand and acknowledge that you should consult with your tax advisor regarding the advisability of filing with the Internal Revenue Service an election under section 83(b) of the Code with respect to the Restricted Units for which the restrictions have not lapsed. This election must be filed no later than 30 days after Date of Grant set forth in this Notice of Grant of Restricted Units. This time period cannot be extended. You acknowledge (a) that you have been advised to consult with a tax advisor regarding the tax consequences of the award of the Restricted Units and (b) that timely filing of a section 83(b) election is your sole responsibility, even if you request the Company or its representative to file such election on your behalf.

Holly Logistic Services, L.L.C.

Matthew P. Clifton, Chief Executive Officer

2

Appendix A

A-1

2

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Matthew P. Clifton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Holly Energy Partners, L.P;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 1, 2013	/s/ Matthew P. Clifton
	Matthew P. Clifton
	Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Douglas S. Aron, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Holly Energy Partners, L.P;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 1, 2013	/s/ Douglas S. Aron
	Douglas S. Aron
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE

OFFICER OF HOLLY ENERGY PARTNERS, L.P.

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the accompanying report on Form 10-Q for the quarterly period ended March 31, 2013 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew P. Clifton, Chief Executive Officer of Holly Logistic Services, L.L.C., the general partner of HEP Logistics Holdings, L.P., the general partner of Holly Energy Partners, L.P (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 1, 2013	/s/ Matthew P. Clifton
	Matthew P. Clifton
	Chairman of the Board and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL

OFFICER OF HOLLYFRONTIER CORPORATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the accompanying report on Form 10-Q for the quarterly period ended March 31, 2013 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas S. Aron, Chief Financial Officer of Holly Logistic Services, L.L.C., the general partner of HEP Logistics Holdings, L.P., the general partner of Holly Energy Partners, L.P (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:    May 1, 2013	/s/ Douglas S. Aron
	Douglas S. Aron
	Executive Vice President and Chief Financial Officer

XML

Debt Interest Expense and Other Debt Information (Details) (USD $)	3 Months Ended			6 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012		Jun. 30, 2012	Dec. 31, 2013
Debt Instrument [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net	$ 1,400,000				$ 1,000,000
Interest expense, debt	12,553,000	10,477,000
Amortization of Unrecognized Loss on Cash Flow Hedge	849,000	1,274,000
Less capitalized interest	69,000	72,000
Net interest expense	12,484,000	10,405,000	[1]
Cash paid for interest	19,033,000	15,292,000
Loss on early extinguishment of debt	0	(2,596,000)	[1]
Repayments of senior notes	0	(232,711,000)		185,000,000
6.5% Senior Notes [Member]
Debt Instrument [Line Items]
Stated interest rate, senior notes	6.50%
8.25% Senior Notes [Member]
Debt Instrument [Line Items]
Stated interest rate, senior notes	8.25%
Senior Notes [Member] | 6.25% Interest Rate [Member]
Debt Instrument [Line Items]
Stated interest rate, senior notes				6.25%
Amortization discount and deferred debt issuance costs [Member]
Debt Instrument [Line Items]
Interest expense, debt	530,000	371,000
Commitment Fees [Member]
Debt Instrument [Line Items]
Interest expense, debt	124,000	167,000
Long-term Debt [Member] | Credit Agreement [Member]
Debt Instrument [Line Items]
Interest expense, debt	3,081,000	1,575,000
Long-term Debt [Member] | Senior Notes [Member] | 6.5% Senior Notes [Member]
Debt Instrument [Line Items]
Interest expense, debt	4,875,000	1,083,000
Long-term Debt [Member] | Senior Notes [Member] | 6.25% Senior Notes [Member]
Debt Instrument [Line Items]
Interest expense, debt	0	2,370,000
Long-term Debt [Member] | Senior Notes [Member] | 8.25% Senior Notes [Member]
Debt Instrument [Line Items]
Interest expense, debt	3,094,000	3,094,000
Long-term Debt [Member] | Promissory Notes [Member]
Debt Instrument [Line Items]
Interest expense, debt	$ 0	$ 543,000

[1] Restated as described in Note 1.

XML

Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidating Statement of Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenues [Abstract]
Affiliates	$ 61,512	$ 56,531	[1]
Third parties	12,786	11,884	[1]
Total revenues	74,298	68,415	[1]
Operating costs and expenses [Abstract]
Operations	25,865	20,475	[1]
Depreciation and amortization	14,154	14,300	[1]
General and administrative	3,232	2,039	[1]
Total operating costs and expenses	43,251	36,814	[1]
Operating income (loss)	31,047	31,601	[1]
Equity in earnings of SLC Pipeline	657	831	[1]
Interest Expense	12,484	10,405	[1]
Interest expense	103	(10,405)
Loss on early extinguishment of debt	0	(2,596)	[1]
Other nonoperating income (expense) and equity earnings	(9,702)	(12,170)	[1]
Income before income taxes	21,345	19,431	[1]
State income tax expense	(56)	(75)
Net Income	21,289	19,356	[1]
Allocation of net loss attributable to Predecessors	0	1,861	[1]
Allocation of Net Income (Loss) Attributable to Noncontrolling Interest	(2,890)	557	[1]
Net Income (Loss) Attributable to Parent	18,399	21,774	[1]
Other comprehensive income (loss)	1,411	920	[1]
Comprehensive income before noncontrolling interest	22,700	22,137	[1]
Comprehensive Income attributable to Holly Energy Partners	19,810	22,694	[1]
Subsidiaries [Member]
Operating costs and expenses [Abstract]
Equity in earnings of subsidiaries	0	0
SLC Pipeline [Member]
Operating costs and expenses [Abstract]
Equity in earnings of SLC Pipeline	657	831
Interest Expense	(12,484)
Other	2,022
Parent [Member]
Revenues [Abstract]
Affiliates	0	0
Third parties	0	0
Total revenues	0	0
Operating costs and expenses [Abstract]
Operations	0	0
Depreciation and amortization	0	0
General and administrative	808	1,442
Total operating costs and expenses	808	1,442
Operating income (loss)	(808)	(1,442)
Interest expense	0	(6,709)
Loss on early extinguishment of debt		(2,596)
Other nonoperating income (expense) and equity earnings	20,722	21,355
Income before income taxes	19,914	19,913
State income tax expense	0	0
Net Income	19,914	19,913
Allocation of net loss attributable to Predecessors		1,861
Allocation of Net Income (Loss) Attributable to Noncontrolling Interest	(1,515)	0
Net Income (Loss) Attributable to Parent	18,399	21,774
Other comprehensive income (loss)	1,411	920
Comprehensive income before noncontrolling interest	19,810	22,694
Parent [Member] | Subsidiaries [Member]
Operating costs and expenses [Abstract]
Equity in earnings of subsidiaries	28,974	30,660
Parent [Member] | SLC Pipeline [Member]
Operating costs and expenses [Abstract]
Equity in earnings of SLC Pipeline	0	0
Interest Expense	(8,252)
Other	0
Guarantor Subsidiaries [Member]
Revenues [Abstract]
Affiliates	54,412	54,030
Third parties	8,407	10,745
Total revenues	62,819	64,775
Operating costs and expenses [Abstract]
Operations	23,366	18,141
Depreciation and amortization	10,570	10,764
General and administrative	2,424	597
Total operating costs and expenses	36,360	29,502
Operating income (loss)	26,459	35,273
Interest expense		(3,696)
Loss on early extinguishment of debt		0
Other nonoperating income (expense) and equity earnings	2,571	(4,538)
Income before income taxes	29,030	30,735
State income tax expense	(56)	(75)
Net Income	28,974	30,660
Allocation of net loss attributable to Predecessors		0
Allocation of Net Income (Loss) Attributable to Noncontrolling Interest	0	0
Net Income (Loss) Attributable to Parent	28,974	30,660
Other comprehensive income (loss)	1,411	920
Comprehensive income before noncontrolling interest	30,385	31,580
Guarantor Subsidiaries [Member] | Subsidiaries [Member]
Operating costs and expenses [Abstract]
Equity in earnings of subsidiaries	4,124	(1,673)
Guarantor Subsidiaries [Member] | SLC Pipeline [Member]
Operating costs and expenses [Abstract]
Equity in earnings of SLC Pipeline	657	831
Interest Expense	(4,232)
Other	2,022
Non-Guarantor Subsidiaries [Member]
Revenues [Abstract]
Affiliates	7,402	2,764
Third parties	4,379	1,139
Total revenues	11,781	3,903
Operating costs and expenses [Abstract]
Operations	2,801	2,597
Depreciation and amortization	3,584	3,536
General and administrative	0	0
Total operating costs and expenses	6,385	6,133
Operating income (loss)	5,396	(2,230)
Interest expense	103	0
Loss on early extinguishment of debt		0
Other nonoperating income (expense) and equity earnings	103	0
Income before income taxes	5,499	(2,230)
State income tax expense	0	0
Net Income	5,499	(2,230)
Allocation of net loss attributable to Predecessors		0
Allocation of Net Income (Loss) Attributable to Noncontrolling Interest	0	0
Net Income (Loss) Attributable to Parent	5,499	(2,230)
Other comprehensive income (loss)	0	0
Comprehensive income before noncontrolling interest	5,499	(2,230)
Non-Guarantor Subsidiaries [Member] | Subsidiaries [Member]
Operating costs and expenses [Abstract]
Equity in earnings of subsidiaries	0	0
Non-Guarantor Subsidiaries [Member] | SLC Pipeline [Member]
Operating costs and expenses [Abstract]
Equity in earnings of SLC Pipeline	0	0
Interest Expense
Other	0
Eliminations [Member]
Revenues [Abstract]
Affiliates	(302)	(263)
Third parties	0	0
Total revenues	(302)	(263)
Operating costs and expenses [Abstract]
Operations	(302)	(263)
Depreciation and amortization	0	0
General and administrative	0	0
Total operating costs and expenses	(302)	(263)
Operating income (loss)	0	0
Interest expense	0	0
Loss on early extinguishment of debt		0
Other nonoperating income (expense) and equity earnings	(33,098)	(28,987)
Income before income taxes	(33,098)	(28,987)
State income tax expense	0	0
Net Income	(33,098)	(28,987)
Allocation of net loss attributable to Predecessors		0
Allocation of Net Income (Loss) Attributable to Noncontrolling Interest	(1,375)	557
Net Income (Loss) Attributable to Parent	(34,473)	(28,430)
Other comprehensive income (loss)	(1,411)	(920)
Comprehensive income before noncontrolling interest	(35,884)	(29,350)
Eliminations [Member] | Subsidiaries [Member]
Operating costs and expenses [Abstract]
Equity in earnings of subsidiaries	(33,098)	(28,987)
Eliminations [Member] | SLC Pipeline [Member]
Operating costs and expenses [Abstract]
Equity in earnings of SLC Pipeline	0	0
Interest Expense	0
Other	$ 0

[1] Restated as described in Note 1.

XML

Employees, Retirement and Incentive Plans Restricted Units (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Outstanding at January 1, 2012 (nonvested)	54,498
Granted	32,888
Vesting and transfer of full ownership to recipients	(25,124)
Outstanding at June 30, 2012 (nonvested)	62,262
Performance Units [Member] | Long-term Incentive Plan [Member]
Weighted Average Grant-Date Fair Value
Weighted average remaining contractual term (years)	1 year 3 months 1 day
Fair value of vested units transferred to recipients	(0.5)
Total unrecognized compensation related to nonvested units	1.8
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Outstanding at January 1, 2012 (nonvested)	58,472
Granted	37,815
Vesting and transfer of full ownership to recipients	0
Outstanding at June 30, 2012 (nonvested)	96,287
Weighted Average Grant-Date Fair Value
Outstanding at January 1, 2012 (nonvested)	31.21
Granted	41.18
Vesting and transfer of full ownership to recipients	0.00
Outstanding at June 30, 2012 (nonvested)	35.08
Restricted Stock Units (RSUs) [Member] | Long-term Incentive Plan [Member]
Weighted Average Grant-Date Fair Value
Weighted average remaining contractual term (years)	1 year 2 months 13 days
Total unrecognized compensation related to nonvested units	1.6
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | Long-term Incentive Plan [Member]
Weighted Average Grant-Date Fair Value
Award vesting period	1 year
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | Long-term Incentive Plan [Member]
Weighted Average Grant-Date Fair Value
Award vesting period	3 years
Restricted Stock [Member] | Minimum [Member]
Weighted Average Grant-Date Fair Value
Award vesting period	1 year
Restricted Stock [Member] | Maximum [Member]
Weighted Average Grant-Date Fair Value
Award vesting period	3 years

XML

Partners' Equity (Tables)

3 Months Ended

Mar. 31, 2013

Partners' Capital [Abstract]

Schedule of Allocation of General Partner Interest in Net Income

The following table presents the allocation of the general partner interest in net income for the periods presented below:

	Three Months Ended March 31,
	2013		2012
	(In thousands)
General partner interest in net income	$	248	$	332
General partner incentive distribution	5,983		5,171
Total general partner interest in net income	$	6,231	$	5,503

Schedule of Distributions Made to Members or Limited Partners, by Distribution

The following table presents the allocation of our regular quarterly cash distributions to the general and limited partners for the periods in which they apply. Our distributions are declared subsequent to quarter end; therefore, the amounts presented do not reflect distributions paid during the periods presented below.

	Three Months Ended March 31,
	2013		2012
	(In thousands, except per unit data)
General partner interest	$	719	$	606
General partner incentive distribution	5,983		5,171
Total general partner distribution	6,702		5,777
Limited partner distribution	28,009		24,488
Total regular quarterly cash distribution	$	34,711	$	30,265
Cash distribution per unit applicable to limited partners	$	0.4775	$	0.4475

XML

Partners' Equity, Issuances (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Schedule of Equity Method Investments [Line Items]
Proceeds from sale of common units	$ 73,444
Partners' capital account, units held by controlling interest	22,380,030
General partner ownership interest	2.00%
Ownership percentage, controlling interest	39.00%
Sale of Stock, Number of Shares Issued in Transaction	1,875,000
UNEV Pipeline [Member]
Schedule of Equity Method Investments [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	2,059,800
Equity Method Investment, Ownership Percentage	75.00%
General Partner HFC [Member]
Schedule of Equity Method Investments [Line Items]
Sale of Stock, Number of Shares Issued in Transaction	1,875,000

XML

Debt Long-Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Total long-term debt	$ 811,913	$ 864,674
Credit Agreement [Member]
Debt Instrument [Line Items]
Credit Agreement	368,000	421,000
Senior Notes [Member] | 6.5% Senior Notes [Member]
Debt Instrument [Line Items]
Principal	300,000	300,000
Unamortized discount	(4,562)	4,725
Senior Notes	295,438	295,275
Senior Notes [Member] | 8.25% Senior Notes [Member]
Debt Instrument [Line Items]
Principal	150,000	150,000
Unamortized discount	(1,525)	(1,601)
Senior Notes	$ 148,475	$ 148,399

XML

Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidating Statement of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012		Jun. 30, 2012
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	$ 30,879	$ 24,103	[1]
Cash flows from investing activities
Additions to properties and equipment	(6,645)	(17,011)	[1]
Proceeds from Sale of assets	2,481	0
Net Cash Provided by (Used in) Investing Activities	(4,164)	(17,011)	[1]
Cash flows from financing activities
Net repayments under credit agreement	(53,000)	45,000
Proceeds from issuance of senior notes	0	294,750	[1]
Proceeds from sale of common units	73,444
Repayments of senior notes	0	232,711		(185,000)
Contribution From UNEV Joint Venture Partner	0	14,962	[1]
Distributions to HEP unitholders	(32,709)	(29,716)	[1]
Contributions from general partner	1,499	0	[1]
Purchase of units for incentive grants	(2,719)	(1,283)	[1]
Deferred financing costs	0	(1,123)	[1]
Other	(274)	(192)	[1]
Net cash used for financing activities	(13,759)	(313)	[1]
Increase for the period	12,956	6,779	[1]
Beginning of period	5,237	6,369	[1]	6,369	[1]
End of period	18,193	13,148	[1]
Parent [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	(39,241)	(106,452)
Cash flows from investing activities
Additions to properties and equipment	0	0
Proceeds from Sale of assets	0
Net Cash Provided by (Used in) Investing Activities	0
Cash flows from financing activities
Net repayments under credit agreement	0	0
Proceeds from issuance of senior notes	0	294,750
Proceeds from sale of common units	(73,444)
Repayments of senior notes	0	157,761
Contribution From UNEV Joint Venture Partner		0
Distributions to HEP unitholders	(32,709)	(29,716)
Contributions from general partner	1,499
Purchase of units for incentive grants	(2,719)	(1,283)
Deferred financing costs	0	0
Other	(274)	462
Net cash used for financing activities	39,241	106,452
Increase for the period	0	0
Beginning of period	2	2		2
End of period	2	2
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	61,752	136,725
Cash flows from investing activities
Additions to properties and equipment	(6,422)	(6,327)
Proceeds from Sale of assets	2,481
Net Cash Provided by (Used in) Investing Activities	(3,941)
Cash flows from financing activities
Net repayments under credit agreement	(53,000)	45,000
Proceeds from issuance of senior notes	0	0
Proceeds from sale of common units	0
Repayments of senior notes	0	74,950
Contribution From UNEV Joint Venture Partner		462
Distributions to HEP unitholders	0	0
Contributions from general partner	0
Purchase of units for incentive grants	0	0
Deferred financing costs	0	(1,123)
Other	0	(654)
Net cash used for financing activities	(53,000)	(121,265)
Increase for the period	4,811	9,133
Beginning of period	823	3,267		3,267
End of period	5,634	12,400
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	8,368	(6,170)
Cash flows from investing activities
Additions to properties and equipment	(223)	(10,684)
Proceeds from Sale of assets	0
Net Cash Provided by (Used in) Investing Activities	(223)
Cash flows from financing activities
Net repayments under credit agreement	0	0
Proceeds from issuance of senior notes	0	0
Proceeds from sale of common units	0
Repayments of senior notes	0	0
Contribution From UNEV Joint Venture Partner		14,500
Distributions to HEP unitholders	0	0
Contributions from general partner	0
Purchase of units for incentive grants	0	0
Deferred financing costs	0	0
Other	0	0
Net cash used for financing activities	0	14,500
Increase for the period	8,145	(2,354)
Beginning of period	4,412	3,100		3,100
End of period	12,557	746
Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	0	0
Cash flows from investing activities
Additions to properties and equipment	0	0
Proceeds from Sale of assets	0
Net Cash Provided by (Used in) Investing Activities	0
Cash flows from financing activities
Net repayments under credit agreement	0	0
Proceeds from issuance of senior notes	0	0
Proceeds from sale of common units	0
Repayments of senior notes	0	0
Contribution From UNEV Joint Venture Partner		0
Distributions to HEP unitholders	0	0
Contributions from general partner	0
Purchase of units for incentive grants	0	0
Deferred financing costs	0	0
Other	0	0
Net cash used for financing activities	0	0
Increase for the period	0	0
Beginning of period	0	0		0
End of period	$ 0	$ 0

[1] Restated as described in Note 1.

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Acquisitions

3 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Acquisitions

Acquisitions

UNEV Pipeline Interest Acquisition

On July 12, 2012, we acquired HFC's 75% interest in UNEV. We paid consideration consisting of $260.0 million in cash and 2,059,800 of our common units. We paid an additional $0.9 million to HFC for a post-closing working capital adjustment. Also under the terms of the transaction, we issued to HFC a Class B unit comprising a noncontrolling equity interest in a wholly-owned subsidiary subject to redemption to the extent that HFC is entitled to a 50% interest in our share of annual UNEV earnings before interest, income taxes, depreciation, and amortization above $30 million beginning July 1, 2016 and ending in June 2032, subject to certain limitations. Such contingent redemption payments are limited to a maximum payment amount calculated as described below. However, to the extent earnings thresholds are not achieved, no redemption payments are required. Contemporaneously with this transaction, HFC (our general partner) agreed to forego its right to incentive distributions of up to $1.25 million per quarter over twelve consecutive quarterly periods following the closing of the transaction and up to an additional four quarters in certain circumstances. The Class B unit increases with each foregone incentive distribution as described above and by a 7% factor compounded annually on the outstanding unredeemed balance through its expiration date. At our option, we may redeem, in whole or in part, the Class B unit at the current unredeemed value based on the calculation described. The Class B unit had a value of $13.9 million at December 31, 2012 and $15.4 million at March 31, 2013.

Noncontrolling interests reported in the consolidated statements of income include the minority partner's 25% interest in UNEV and income attributable to the Class B unit representing foregone incentive distribution rights and the 7% accretion factor, which collectively amounted to $2.9 million for the three months ended March 31, 2013.

We are a consolidated variable interest entity of HFC. Therefore, this transaction was recorded as a transfer between entities under common control and reflects HFC's carrying basis in UNEV's assets and liabilities. We have retrospectively adjusted our financial position and operating results as if UNEV were a consolidated subsidiary for all periods while we were under common control of HFC. For the three months ended March 31, 2012, our consolidated statement of income includes Predecessor revenues from UNEV of $3.9 million and Predecessor net losses of $1.9 million.

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Partners' Equity, Allocations of Net Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Partners' Capital [Abstract]
General partner interest in net income	$ 248	$ 332
General partner incentive distribution	5,983	5,171
General partner interest in net income attributable to HEP	$ 6,231	$ 5,503	[1]

[1] Restated as described in Note 1.

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Financial Instruments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
6.5% Senior Notes [Member]
Debt Instrument [Line Items]
Stated interest rate, senior notes	6.50%
8.25% Senior Notes [Member]
Debt Instrument [Line Items]
Stated interest rate, senior notes	8.25%
Carrying Amount [Member] | Fair value inputs, Level 2 [Member]
Debt Instrument [Line Items]
Senior notes, carrying value	$ 443,913	$ 443,674
Liabilities, Fair Value Disclosure	446,781	447,104
Carrying Amount [Member] | Interest Rate Swap [Member] | Fair value inputs, Level 2 [Member]
Debt Instrument [Line Items]
Interest rate swap		3,430
Carrying Amount [Member] | 6.5% Senior Notes [Member] | Fair value inputs, Level 2 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Fair Value	295,438	295,275
Carrying Amount [Member] | 8.25% Senior Notes [Member] | Fair value inputs, Level 2 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Fair Value	148,475	148,399
Fair Value [Member] | Fair value inputs, Level 2 [Member]
Debt Instrument [Line Items]
Senior notes, carrying value	480,563	484,125
Liabilities, Fair Value Disclosure	483,431	487,555
Fair Value [Member] | Interest Rate Swap [Member] | Fair value inputs, Level 2 [Member]
Debt Instrument [Line Items]
Interest rate swap		(3,430)
Fair Value [Member] | 6.5% Senior Notes [Member] | Fair value inputs, Level 2 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Fair Value	318,750	321,000
Fair Value [Member] | 8.25% Senior Notes [Member] | Fair value inputs, Level 2 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Fair Value	161,813	163,125
Accumulated Other Comprehensive Income (Loss) [Member] | Cash Flow Hedging [Member] | Interest Rate Swap [Member]
Debt Instrument [Line Items]
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)	2,868	(3,430)
Other Liabilities [Member] | Cash Flow Hedging [Member] | Interest Rate Swap [Member]
Debt Instrument [Line Items]
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	$ 2,868	$ 3,430

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Acquisitions (Details) (USD $)	3 Months Ended			12 Months Ended
	Mar. 31, 2013	Sep. 30, 2012	Mar. 31, 2012	Dec. 31, 2012	Jul. 12, 2012 Consecutive_Quarters	Jun. 30, 2012
Business Acquisition [Line Items]
Class B unit	$ 15,418,000			$ 13,903,000
UNEV Pipeline [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage	75.00%
Cash distribution to HFC for UNEV Acquisition	260,000,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	2,059,800
Business Acquisition, Payment of Contingent Consideration	900,000
Business Acquisition, Post Acquisition Incentive Distributions	30,000,000	1,250,000
Number of Consecutive Quarters, Forego Rights to Incentive Distributions					12
Number Of Consecutive Quarters, Forego Rights To Incentive Distributions, Extension					4
Class B unit	15,400,000			13,900,000
Business Acquisition, Contingent Consideration, at Fair Value	2,900,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners						25.00%
Compound Percentage Increase to Class B Equity Units	7.00%			7.00%
Net Income (Loss) for Period Prior to Acquisition			1,900,000
Revenues for period prior to acquisition			$ 3,900,000

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Partners' Equity, Cash Distributions (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Allocations of Quarterly Cash Distributions to General and Limited Partners
Partners' Capital, Distribution Amount Per Share	$ 0.4775
Partner Distributions
General partner interest	$ 719,000	$ 606,000
General partner incentive distribution	5,983,000	5,171,000
Total general partner distribution	6,702,000	5,777,000
Limited partner distribution	28,009,000	24,488,000
Total regular quarterly cash distribution	34,711,000	30,265,000
Cash distribution per unit applicable to limited partners	$ 0.4775	$ 0.4475
Excess Acquisition Costs, Not Recognized due to Common Control	$ 305,500,000

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Properties and Equipment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Properties and equipment, gross	$ 1,169,605		$ 1,164,391
Less accumulated depreciation	213,685		203,856
Properties and equipment, net	955,920		960,535
Interest costs, capitalized during period	(69)	(72)
Pipelines and terminals [Member]
Property, Plant and Equipment [Line Items]
Properties and equipment, gross	1,061,392		1,049,531
Land and right of way [Member]
Property, Plant and Equipment [Line Items]
Properties and equipment, gross	63,192		63,248
Other [Member]
Property, Plant and Equipment [Line Items]
Properties and equipment, gross	27,122		27,150
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Properties and equipment, gross	$ 17,899		$ 24,462

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Transportation Agreements (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Y	Dec. 31, 2012
Finite-Lived Intangible Assets, Net [Abstract]
Transportation agreements, gross	$ 134,164	$ 134,164
Less accumulated amortization	41,304	39,568
Transportation agreements, net	92,860	94,596
Alon transportation agreement
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Useful Life (years)	30 years
Finite-Lived Intangible Assets, Useful Life, Initial Term (years)	15
Finite-Lived Intangible Assets, Useful Life, Extension Period (years)	15
Finite-Lived Intangible Assets, Net [Abstract]
Transportation agreements, gross	59,933	59,933
HFC transportation agreement
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Useful Life (years)	15 years
Finite-Lived Intangible Assets, Net [Abstract]
Transportation agreements, gross	$ 74,231	$ 74,231

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Description of Business and Presentation of Financial Statements

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Description of Business and Presentation of Financial Statements

Description of Business and Presentation of Financial Statements

Holly Energy Partners, L.P. (“HEP”) together with its consolidated subsidiaries, is a publicly held master limited partnership which is 39% owned (including the 2% general partner interest) by HollyFrontier Corporation (“HFC”) and its subsidiaries. In these consolidated financial statements, the words “we,” “our,” “ours” and “us” refer to HEP unless the context otherwise indicates.

We own and operate petroleum product and crude oil pipelines and terminal, tankage and loading rack facilities that support HFC’s refining and marketing operations in the Mid-Continent, Southwest and Rocky Mountain regions of the United States and Alon USA, Inc.’s (“Alon”) refinery in Big Spring, Texas. Additionally, we own a 75% interest in UNEV Pipeline, LLC (“UNEV”), which owns a 400-mile, 12-inch refined products pipeline running from Woods Cross, Utah to Las Vegas Nevada (the “UNEV Pipeline”), product terminals near Cedar City, Utah and Las Vegas, Nevada and related assets, and a 25% interest in SLC Pipeline LLC, which owns a 95-mile intrastate crude oil pipeline system (the “SLC Pipeline”) that serves refineries in the Salt Lake City, Utah area.

We generate revenues by charging tariffs for transporting petroleum products and crude oil through our pipelines, by charging fees for terminalling and storing refined products and other hydrocarbons and providing other services at our storage tanks and terminals. We do not take ownership of products that we transport, terminal or store, and therefore, we are not directly exposed to changes in commodity prices.

The consolidated financial statements included herein have been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The interim financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of our results for the interim periods. Such adjustments are considered to be of a normal recurring nature. Although certain notes and other information required by U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted, we believe that the disclosures in these consolidated financial statements are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with our Form 10-K for the year ended December 31, 2012. Results of operations for interim periods are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2013.

On January 16, 2013, a two-for-one unit split was paid in the form of a common unit distribution for each issued and outstanding common unit to all unitholders of record on January 7, 2013. All references to unit and per unit amounts in this document and related disclosures have been adjusted to reflect the effect of the unit split for all periods presented.

In March 2013, we closed on a public offering of 1,875,000 of our common units. Additionally, an affiliate of HFC, as a selling unitholder, closed on a public sale of 1,875,000 of its HEP common units. We used our net proceeds of $73.4 million to repay indebtedness incurred under our credit facility and for general partnership purposes. Amounts repaid under our credit facility may be reborrowed from time to time, and we intend to reborrow certain amounts to fund capital expenditures.

The financial information for the three months ended March 31, 2012, included in the accompanying financial statements and notes thereto were revised from the amounts previously reported for that period due to accounting rules that require retrospective restatement of previously reported results in cases of business combinations between entities under common control. We have therefore included the results of UNEV prior to our acquisition on July 12, 2012, herein referred to as results attributable to the Predecessor. See Note 2 below for additional information on the UNEV acquisition. Additional revisions were made in order to correct certain immaterial items in previously reported amounts. These revisions reduced net income attributable to Holly Energy Partners for the three months ended March 31, 2012 by $0.2 million, with no impact on the limited partners' per unit interest in net earnings - basic and diluted and were comprised principally of an adjustment of depreciation expense related to certain property and equipment.  For more information about these revisions, see the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2012.

New Accounting Pronouncements

Presentation of Comprehensive Income

Effective January 1, 2013, we adopted the accounting standard update that requires the disclosure of significant amounts reclassified out of accumulated other comprehensive income by component either on the face of the financial statements or in the notes. The adoption of this accounting standard did not have an impact on our financial condition, results of operations or cash flows.

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Employees, Retirement and Incentive Plans Retirement and Benefit Plan Costs (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Components Types	Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long-term incentive plan, components	4
Equity-based compensation, types	2
Units authorized under equity-based compensation plans	$ 1.1	$ 0.9
Long-term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units authorized under equity-based compensation plans (new)	2,500,000
Number of units available for grant	1,735,811
Retirement Costs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee benefits and share-based compensation	$ 1.9	$ 1.5

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Significant Customers (Details) (Total Revenue [Member])	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenue, Major Customer [Line Items]
Concentration risk, percentage	92.00%
Concentration risk, number of significant customers	2
QTD [Member] | HFC [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	83.00%	83.00%
QTD [Member] | Alon [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	9.00%	12.00%

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 18,193	$ 5,237
Accounts receivable:
Trade	6,073	7,126
Affiliates	31,055	31,594
Total accounts receivable	37,128	38,720
Prepaid and other current assets	3,475	3,619
Total current assets	58,796	47,576
Properties and equipment, net	955,920	960,535
Transportation agreements, net	92,860	94,596
Goodwill	256,498	256,498
Investment in SLC Pipeline	25,011	25,041
Other assets	9,101	9,864
Total assets	1,398,186	1,394,110
Accounts payable:
Trade	7,429	7,045
Affiliates	4,917	4,985
Total accounts payable	12,346	12,030
Accrued interest	2,366	10,226
Deferred revenue	6,627	8,901
Accrued property taxes	2,721	2,688
Other current liabilities	2,421	1,905
Total current liabilities	26,481	35,750
Long-term debt	811,913	864,674
Other long-term liabilities	14,723	15,433
Deferred Revenue, Noncurrent	15,469	11,494
Class B unit	15,418	13,903
Partners’ equity:
Common unitholders (58,657,048 and 56,782,048 units issued and outstanding at March 31, 2013 and December 31, 2012, respectively)	560,590	502,809
General partner interest (2% interest)	(145,118)	(145,877)
Accumulated other comprehensive loss	(2,868)	(4,279)
Total partners' equity	412,604	352,653
Noncontrolling interest	101,578	100,203
Total Equity	514,182	452,856
Total liabilities and equity	$ 1,398,186	$ 1,394,110

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Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidated Balance Sheet (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012		Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 18,193	$ 5,237	$ 13,148	[1]	$ 6,369	[1]
Accounts receivable	37,128	38,720
Intercompany accounts receivable (payable)	0	0
Prepaid and other current assets	3,475	3,619
Total current assets	58,796	47,576
Properties and equipment, net	955,920	960,535
Investments in subsidiaries	0	0
Transportation agreements, net	92,860	94,596
Goodwill	256,498	256,498
Investment in SLC Pipeline	25,011	25,041
Other assets	9,101	9,864
Total assets	1,398,186	1,394,110
Current liabilities:
Accounts payable	12,346	12,030
Accrued interest	2,366	10,226
Deferred revenue	6,627	8,901
Accrued property taxes	2,721	2,688
Other current liabilities	2,421	1,905
Total current liabilities	26,481	35,750
Long-term debt	811,913	864,674
Other long-term liabilities	14,723	15,433
Deferred Revenue, Noncurrent	15,469	11,494
Class B unit	15,418	13,903
Total partners' equity	412,604	352,653
Equity - noncontrolling interest	101,578	100,203
Total liabilities and equity	1,398,186	1,394,110
Parent [Member]
Current assets:
Cash and cash equivalents	2	2	2		2
Accounts receivable	0	0
Intercompany accounts receivable (payable)	62,994	42,194
Prepaid and other current assets	163	224
Total current assets	63,159	42,420
Properties and equipment, net	0	0
Investments in subsidiaries	809,900	777,472
Transportation agreements, net	0	0
Goodwill	0	0
Investment in SLC Pipeline	0	0
Other assets	1,713	1,154
Total assets	874,772	821,046
Current liabilities:
Accounts payable	0	0
Accrued interest	2,229	10,198
Deferred revenue	0	0
Accrued property taxes	0	0
Other current liabilities	541	563
Total current liabilities	2,770	10,761
Long-term debt	443,913	443,674
Other long-term liabilities	67	55
Deferred Revenue, Noncurrent	0	0
Class B unit	15,418	13,903
Total partners' equity	412,604	352,653
Equity - noncontrolling interest	0	0
Total liabilities and equity	874,772	821,046
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	5,634	823	12,400		3,267
Accounts receivable	34,129	32,319
Intercompany accounts receivable (payable)	(62,994)	(42,194)
Prepaid and other current assets	2,194	2,395
Total current assets	(21,037)	(6,657)
Properties and equipment, net	562,480	563,701
Investments in subsidiaries	304,731	300,607
Transportation agreements, net	92,860	94,596
Goodwill	256,498	256,498
Investment in SLC Pipeline	25,011	25,041
Other assets	7,388	8,710
Total assets	1,227,931	1,242,496
Current liabilities:
Accounts payable	11,257	10,745
Accrued interest	137	28
Deferred revenue	5,513	3,319
Accrued property taxes	1,264	1,923
Other current liabilities	1,875	1,274
Total current liabilities	20,046	17,289
Long-term debt	368,000	421,000
Other long-term liabilities	14,516	15,241
Deferred Revenue, Noncurrent	15,469	11,494
Class B unit	0	0
Total partners' equity	809,900	777,472
Equity - noncontrolling interest	0	0
Total liabilities and equity	1,227,931	1,242,496
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	12,557	4,412	746		3,100
Accounts receivable	3,199	6,401
Intercompany accounts receivable (payable)	0	0
Prepaid and other current assets	1,118	1,000
Total current assets	16,874	11,813
Properties and equipment, net	393,440	396,834
Investments in subsidiaries	0	0
Transportation agreements, net	0	0
Goodwill	0	0
Investment in SLC Pipeline	0	0
Other assets	0	0
Total assets	410,314	408,647
Current liabilities:
Accounts payable	1,289	1,285
Accrued interest	0	0
Deferred revenue	1,114	5,582
Accrued property taxes	1,457	765
Other current liabilities	5	68
Total current liabilities	3,865	7,700
Long-term debt	0	0
Other long-term liabilities	140	137
Deferred Revenue, Noncurrent	0	0
Class B unit	0	0
Total partners' equity	406,309	400,810
Equity - noncontrolling interest	0	0
Total liabilities and equity	410,314	408,647
Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	0		0
Accounts receivable	(200)	0
Intercompany accounts receivable (payable)	0	0
Prepaid and other current assets	0	0
Total current assets	(200)	0
Properties and equipment, net	0	0
Investments in subsidiaries	(1,114,631)	(1,078,079)
Transportation agreements, net	0	0
Goodwill	0	0
Investment in SLC Pipeline	0	0
Other assets	0	0
Total assets	(1,114,831)	(1,078,079)
Current liabilities:
Accounts payable	(200)	0
Accrued interest	0	0
Deferred revenue	0	0
Accrued property taxes	0	0
Other current liabilities	0	0
Total current liabilities	(200)	0
Long-term debt	0	0
Other long-term liabilities	0	0
Deferred Revenue, Noncurrent	0	0
Class B unit	0	0
Total partners' equity	(1,216,209)	(1,178,282)
Equity - noncontrolling interest	101,578	100,203
Total liabilities and equity	$ (1,114,831)	$ (1,078,079)

[1] Restated as described in Note 1.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities
Net Income	$ 21,289	$ 19,356	[1]
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,154	14,300	[1]
Gain on sale of asset	(2,022)	0
Amortization of Deferred Charges	1,379	2,091	[1]
Equity in earnings of SLC Pipeline, net of distributions	30	(81)	[1]
Amortization of restricted and performance units	1,123	943	[1]
(Increase) decrease in current assets:
Accounts receivable – trade	1,053	(1,897)	[1]
Accounts receivable – affiliates	539	(1,219)	[1]
Prepaid and other current assets	145	328	[1]
Increase (decrease) in current liabilities:
Accounts payable – trade	(1,808)	(5,749)	[1]
Accounts payable – affiliates	253	(14)	[1]
Accrued interest	(7,860)	(6,473)	[1]
Deferred revenue	1,686	(592)	[1]
Accrued property taxes	33	(395)	[1]
Other current liabilities	531	771	[1]
Other, net	354	2,734	[1]
Net cash provided by operating activities	30,879	24,103	[1]
Cash flows from investing activities
Additions to properties and equipment	(6,645)	(17,011)	[1]
Proceeds from Sale of assets	2,481	0
Net cash used for investing activities	(4,164)	(17,011)	[1]
Cash flows from financing activities
Borrowings under credit agreement	57,000	36,000	[1]
Repayments of credit agreement borrowings	(110,000)	(81,000)	[1]
Proceeds from issuance of senior notes	0	294,750	[1]
Proceeds from sale of common units	73,444	0	[1]
Repayments of notes	0	232,711	[1]
Contribution From UNEV Joint Venture Partner	0	14,962	[1]
Distributions to HEP unitholders	(32,709)	(29,716)	[1]
Contributions from general partner	1,499	0	[1]
Purchase of units for incentive grants	(2,719)	(1,283)	[1]
Deferred financing costs	0	(1,123)	[1]
Other	(274)	(192)	[1]
Net cash used for financing activities	(13,759)	(313)	[1]
Cash and cash equivalents
Increase for the period	12,956	6,779	[1]
Beginning of period	5,237	6,369	[1]
End of period	$ 18,193	$ 13,148	[1]

[1] Restated as described in Note 1.

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Debt Credit Agreement (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012		Mar. 31, 2013 Credit Agreement [Member]	Dec. 31, 2012 Credit Agreement [Member]	Mar. 31, 2013 New Credit Agreement [Member] Credit Agreement [Member]	Mar. 31, 2013 Letters of Credit [Member] Credit Agreement [Member]	Mar. 31, 2013 Unitholder Distributions [Member] Credit Agreement [Member]
Debt Instrument [Line Items]
Loss on early extinguishment of debt	$ 0	$ (2,596,000)	[1]
Credit agreement, maximum borrowing capacity						550,000,000	50,000,000	60,000,000
Proceeds from lines of credit	57,000,000	36,000,000	[1]	57,000,000
Repayments of lines of credit	110,000,000	81,000,000	[1]	(110,000,000)
Proceeds from (repayments of) lines of credit				(53,000,000)
Long-term line of credit				$ 368,000,000	$ 421,000,000

[1] Restated as described in Note 1.

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Employees, Retirement and Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Nonvested Restricted Stock Units Activity

A summary of restricted unit activity and changes during the three months ended March 31, 2013 is presented below:

Restricted Units	Units	Weighted- Average Grant-Date Fair Value
Outstanding at January 1, 2013 (nonvested)	58,472	$	31.21
Granted	37,815	41.18
Vesting and transfer of full ownership to recipients	—	—
Outstanding at March 31, 2013 (nonvested)	96,287	$	35.08

Schedule of Nonvested Performance-based Units Activity

A summary of performance unit activity and changes during the three months ended March 31, 2013 is presented below:

Performance Units	Units
Outstanding at January 1, 2013 (nonvested)	54,498
Granted	32,888
Vesting and transfer of common units to recipients	(25,124	)
Outstanding at March 31, 2013 (nonvested)	62,262

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Debt Senior Notes (Details) (USD $)	3 Months Ended				3 Months Ended		6 Months Ended	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012		Mar. 31, 2013 Senior Notes [Member] 8.25% Interest Rate [Member]	Mar. 31, 2012 Senior Notes [Member] 6.5% Interest Rate [Member]	Mar. 31, 2013 Senior Notes [Member] 6.5% Interest Rate [Member]	Jun. 30, 2012 Senior Notes [Member] 6.25% Interest Rate [Member]	Mar. 31, 2012 Promissory Notes [Member] 6.25% Interest Rate [Member]
Debt Instrument [Line Items]
Principal				$ 150,000,000		$ 300,000,000
Proceeds from senior notes	0	294,750,000	[1]		294,800,000
Repayment of senior notes							185,000,000
Stated interest rate, senior notes				8.25%	6.50%	6.50%	6.25%
Repayment of promissory notes								$ (72,900,000)

[1] Restated as described in Note 1.

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Significant Customers (Tables)

3 Months Ended

Mar. 31, 2013

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk, by Risk Factor

The following table presents the percentage of total revenues generated by each of these customers:

	Three Months Ended March 31,
	2013		2012
HFC	83	%	83	%
Alon	9	%	12	%

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Consolidated Statement of Partners' Equity (USD $) In Thousands, unless otherwise specified	Total	Common Units	General Partner Interest	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interest [Member]
Balance at Dec. 31, 2012	$ 452,856	$ 502,809	$ (145,877)	$ (4,279)	$ 100,203
Increase (Decrease) in Partners' Equity [Roll Forward]
Issuance of common units	73,444	73,444
Net income	21,289	14,310	5,604		1,375
Other comprehensive income (loss)	1,411			1,411
Contributions from general partner	1,499		1,499		0
Distributions to unitholders	(32,709)	(26,687)	(6,022)
Purchase of units for restribted grants	(2,924)	(2,924)
Amortization of restricted and performance units	1,123	1,123
Class B Unit Accretion	(1,515)	(1,485)	(30)
Other	(292)		(292)
Balance at Mar. 31, 2013	$ 514,182	$ 560,590	$ (145,118)	$ (2,868)	$ 101,578

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Consolidated Balance Sheets (Parenthetical)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Partners' Equity:
Common units issued	58,657,048	56,782,048
Common units outstanding	58,657,048	56,782,048
General partner interest	2.00%

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Partners' Equity

3 Months Ended

Mar. 31, 2013

Partners' Capital [Abstract]

Partners' Equity

Partners’ Equity

As of March 31, 2013, HFC held 22,380,030 of our common units and the 2% general partner interest, which together constituted a 39% ownership interest in us.

On January 16, 2013, a two-for-one unit split was paid in the form of a common unit distribution for each issued and outstanding common unit to all unitholders of record on January 7, 2013. All references to unit and per unit amounts in this document and related disclosures have been adjusted to reflect the effect of the unit split for all periods presented.

In March 2013, we closed on a public offering of 1,875,000 of our common units. Additionally, an affiliate of HFC, as a selling unitholder, closed on a public sale of 1,875,000 of its HEP common units. We used our net proceeds of $73.4 million to repay indebtedness incurred under our credit facility and for general partnership purposes. Amounts repaid under our credit facility may be reborrowed from time to time, and we intend to reborrow certain amounts to fund capital expenditures.

Allocations of Net Income

Net income attributable to HEP is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner includes incentive distributions that are declared subsequent to quarter end. After the amount of incentive distributions is allocated to the general partner, the remaining net income attributable to HEP is allocated to the partners based on their weighted-average ownership percentage during the period.

The following table presents the allocation of the general partner interest in net income for the periods presented below:

	Three Months Ended March 31,
	2013		2012
	(In thousands)
General partner interest in net income	$	248	$	332
General partner incentive distribution	5,983		5,171
Total general partner interest in net income	$	6,231	$	5,503

Cash Distributions

Our general partner, HEP Logistics, is entitled to incentive distributions if the amount we distribute with respect to any quarter exceeds specified target levels.

On April 26, 2013 we announced our cash distribution for the first quarter of 2013 of $0.4775 per unit. The distribution is payable on all common and general partner units and will be paid May 15, 2013 to all unitholders of record on May 6, 2013.

The following table presents the allocation of our regular quarterly cash distributions to the general and limited partners for the periods in which they apply. Our distributions are declared subsequent to quarter end; therefore, the amounts presented do not reflect distributions paid during the periods presented below.

	Three Months Ended March 31,
	2013		2012
	(In thousands, except per unit data)
General partner interest	$	719	$	606
General partner incentive distribution	5,983		5,171
Total general partner distribution	6,702		5,777
Limited partner distribution	28,009		24,488
Total regular quarterly cash distribution	$	34,711	$	30,265
Cash distribution per unit applicable to limited partners	$	0.4775	$	0.4475

As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to HEP because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in our partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to HEP. Additionally, if the asset contributions and acquisitions from HFC had occurred while we were not a consolidated variable interest entity of HFC, our acquisition cost, in excess of HFC’s historical basis in the transferred assets of $305.5 million would have been recorded in our financial statements, as increases to our properties and equipment and intangible assets instead of decreases to our partners’ equity.

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Document Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 26, 2013
Entity Information [Line Items]
Entity Registrant Name	HOLLY ENERGY PARTNERS LP
Entity Central Index Key	0001283140
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		58,657,048

XML

Supplemental Guarantor / Non-Guarantor Financial Information

3 Months Ended

Mar. 31, 2013

Supplemental Guarantor / Non-Guarantor Financial Information [Abstract]

Supplemental Guarantor / Non-Guarantor Financial Information

Supplemental Guarantor/Non-Guarantor Financial Information

Obligations of HEP (“Parent”) under the Senior Notes have been jointly and severally guaranteed by each of its direct and indirect wholly-owned subsidiaries (“Guarantor Subsidiaries”). These guarantees are full and unconditional, subject to certain customary release provisions. These circumstances include (i) when a Guarantor Subsidiary is sold or sells all or substantially all of its assets, (ii) when a Guarantor Subsidiary is declared “unrestricted” for covenant purposes, (iii) when a Guarantor Subsidiary's guarantee of other indebtedness is terminated or released and (iv) when the requirements for legal defeasance or covenant defeasance or to discharge the Senior Notes have been satisfied.

The following financial information presents condensed consolidating balance sheets, statements of comprehensive income, and statements of cash flows of the Parent, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. The information has been presented as if the Parent accounted for its ownership in the Guarantor Subsidiaries using the equity method of accounting.

Prior period amounts have been recast to include UNEV operations acquired July 12, 2012, as if it had been acquired January 1, 2012. This treatment is required as the transactions were between entities under common control.

Condensed Consolidating Balance Sheet

March 31, 2013	Parent		Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2	$	5,634		$	12,557	$	—		$	18,193
Accounts receivable	—		34,129			3,199		(200		)	37,128
Intercompany accounts receivable (payable)	62,994		(62,994		)	—		—			—
Prepaid and other current assets	163		2,194			1,118		—			3,475
Total current assets	63,159		(21,037		)	16,874		(200		)	58,796
Properties and equipment, net	—		562,480			393,440		—			955,920
Investment in subsidiaries	809,900		304,731			—		(1,114,631		)	—
Transportation agreements, net	—		92,860			—		—			92,860
Goodwill	—		256,498			—		—			256,498
Investment in SLC Pipeline	—		25,011			—		—			25,011
Other assets	1,713		7,388			—		—			9,101
Total assets	$	874,772	$	1,227,931		$	410,314	$	(1,114,831	)	$	1,398,186
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	11,257		$	1,289	$	(200	)	$	12,346
Accrued interest	2,229		137			—		—			2,366
Deferred revenue	—		5,513			1,114		—			6,627
Accrued property taxes	—		1,264			1,457		—			2,721
Other current liabilities	541		1,875			5		—			2,421
Total current liabilities	2,770		20,046			3,865		(200		)	26,481
Long-term debt	443,913		368,000			—		—			811,913
Other long-term liabilities	67		14,516			140		—			14,723
Deferred revenue	—		15,469			—		—			15,469
Class B unit	15,418		—			—		—			15,418
Equity - partners	412,604		809,900			406,309		(1,216,209		)	412,604
Equity - noncontrolling interest	—		—			—		101,578			101,578
Total liabilities and partners’ equity	$	874,772	$	1,227,931		$	410,314	$	(1,114,831	)	$	1,398,186

Condensed Consolidating Balance Sheet

December 31, 2012	Parent		Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2	$	823		$	4,412	$	—		$	5,237
Accounts receivable	—		32,319			6,401		—			38,720
Intercompany accounts receivable (payable)	42,194		(42,194		)	—		—			—
Prepaid and other current assets	224		2,395			1,000		—			3,619
Total current assets	42,420		(6,657		)	11,813		—			47,576
Properties and equipment, net	—		563,701			396,834		—			960,535
Investment in subsidiaries	777,472		300,607			—		(1,078,079		)	—
Transportation agreements, net	—		94,596			—		—			94,596
Goodwill	—		256,498			—		—			256,498
Investment in SLC Pipeline	—		25,041			—		—			25,041
Other assets	1,154		8,710			—		—			9,864
Total assets	$	821,046	$	1,242,496		$	408,647	$	(1,078,079	)	$	1,394,110
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	10,745		$	1,285	$	—		$	12,030
Accrued interest	10,198		28			—		—			10,226
Deferred revenue	—		3,319			5,582		—			8,901
Accrued property taxes	—		1,923			765		—			2,688
Other current liabilities	563		1,274			68		—			1,905
Total current liabilities	10,761		17,289			7,700		—			35,750
Long-term debt	443,674		421,000			—		—			864,674
Other long-term liabilities	55		15,241			137		—			15,433
Deferred revenue	—		11,494			—		—			11,494
Class B unit	13,903		—			—		—			13,903
Equity - partners	352,653		777,472			400,810		(1,178,282		)	352,653
Equity - noncontrolling interest	—		—			—		100,203			100,203
Total liabilities and partners’ equity	$	821,046	$	1,242,496		$	408,647	$	(1,078,079	)	$	1,394,110

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2013	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	54,412		$	7,402	$	(302	)	$	61,512
Third parties	—			8,407			4,379		—			12,786
	—			62,819			11,781		(302		)	74,298
Operating costs and expenses:
Operations	—			23,366			2,801		(302		)	25,865
Depreciation and amortization	—			10,570			3,584		—			14,154
General and administrative	808			2,424			—		—			3,232
	808			36,360			6,385		(302		)	43,251
Operating income (loss)	(808		)	26,459			5,396		—			31,047
Equity in earnings (loss) of subsidiaries	28,974			4,124			—		(33,098		)	—
Equity in earnings of SLC Pipeline	—			657			—		—			657
Interest expense	(8,252		)	(4,232		)			—			(12,484		)
Interest income	—						103		—			103
Other	—			2,022			—		—			2,022
	20,722			2,571			103		(33,098		)	(9,702		)
Income (loss) before income taxes	19,914			29,030			5,499		(33,098		)	21,345
State income tax expense	—			(56		)	—		—			(56		)
Net income (loss)	19,914			28,974			5,499		(33,098		)	21,289
Allocation of net (income) attributable to noncontrolling interests	(1,515		)	—			—		(1,375		)	(2,890		)
Net income (loss) attributable to Holly Energy Partners	18,399			28,974			5,499		(34,473		)	18,399
Other comprehensive (loss)	1,411			1,411			—		(1,411		)	1,411
Comprehensive income (loss)	$	19,810		$	30,385		$	5,499	$	(35,884	)	$	19,810

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2012	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	54,030		$	2,764		$	(263	)	$	56,531
Third parties	—			10,745			1,139			—			11,884
	—			64,775			3,903			(263		)	68,415
Operating costs and expenses:
Operations	—			18,141			2,597			(263		)	20,475
Depreciation and amortization	—			10,764			3,536			—			14,300
General and administrative	1,442			597			—			—			2,039
	1,442			29,502			6,133			(263		)	36,814
Operating income (loss)	(1,442		)	35,273			(2,230		)	—			31,601
Equity in earnings (loss) of subsidiaries	30,660			(1,673		)	—			(28,987		)	—
Equity in earnings of SLC Pipeline	—			831			—			—			831
Interest (expense) income	(6,709		)	(3,696		)	—			—			(10,405		)
Loss on early extinguishment of debt	(2,596		)	—			—			—			(2,596		)
	21,355			(4,538		)	—			(28,987		)	(12,170		)
Income (loss) before income taxes	19,913			30,735			(2,230		)	(28,987		)	19,431
State income tax expense	—			(75		)	—			—			(75		)
Net income (loss)	19,913			30,660			(2,230		)	(28,987		)	19,356
Allocation of net loss attributable to Predecessors	1,861			—			—			—			1,861
Allocation of net loss attributable to noncontrolling interests	—			—			—			557			557
Net income (loss) attributable to Holly Energy Partners	21,774			30,660			(2,230		)	(28,430		)	21,774
Other comprehensive income	920			920			—			(920		)	920
Comprehensive income (loss)	$	22,694		$	31,580		$	(2,230	)	$	(29,350	)	$	22,694

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2013	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	(39,241	)	$	61,752		$	8,368		$	—	$	30,879
Cash flows from investing activities
Additions to properties and equipment	—			(6,422		)	(223		)	—		(6,645		)
Proceeds from sale of assets	—			2,481			—			—		2,481
	—			(3,941		)	(223		)	—		(4,164		)
Cash flows from financing activities
Net borrowings under credit agreement	—			(53,000		)	—			—		(53,000		)
Proceeds from issuance of senior notes	—			—			—			—		—
Proceeds from issuance of common units	73,444			—			—			—		73,444
Repayments of notes	—			—			—			—		—
Distributions to HEP unitholders	(32,709		)	—			—			—		(32,709		)
Contribution from general partners	1,499			—			—			—		1,499
Purchase of units for incentive grants	(2,719		)	—			—			—		(2,719		)
Deferred financing costs	—			—			—			—		—
Other	(274		)	—			—			—		(274		)
	39,241			(53,000		)	—			—		(13,759		)
Cash and cash equivalents
Increase for the period	—			4,811			8,145			—		12,956
Beginning of period	2			823			4,412			—		5,237
End of period	$	2		$	5,634		$	12,557		$	—	$	18,193

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2012	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	(106,452	)	$	136,725		$	(6,170	)	$	—	$	24,103
Cash flows from investing activities
Additions to properties and equipment	—			(6,327		)	(10,684		)	—		(17,011		)
Cash flows from financing activities
Net borrowings under credit agreement	—			(45,000		)	—			—		(45,000		)
Proceeds from issuance of senior notes	294,750			—			—			—		294,750
Repayments of notes	(157,761		)	(74,950		)	—			—		(232,711		)
Capital contribution from UNEV joint partners	—			462			14,500			—		14,962
Distributions to HEP unitholders	(29,716		)	—			—			—		(29,716		)
Purchase of units for incentive grants	(1,283		)	—			—			—		(1,283		)
Deferred financing costs	—			(1,123		)	—			—		(1,123		)
Other	462			(654		)	—			—		(192		)
	106,452			(121,265		)	14,500			—		(313		)
Cash and cash equivalents
Increase (decrease) for the period	—			9,133			(2,354		)	—		6,779
Beginning of period	2			3,267			3,100			—		6,369
End of period	$	2		$	12,400		$	746		$	—	$	13,148

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenues:
Affiliates	$ 61,512	$ 56,531	[1]
Third parties	12,786	11,884	[1]
Total revenues	74,298	68,415	[1]
Operating costs and expenses:
Operations	25,865	20,475	[1]
Depreciation and amortization	14,154	14,300	[1]
General and administrative	3,232	2,039	[1]
Total operating costs and expenses	43,251	36,814	[1]
Operating income	31,047	31,601	[1]
Other income (expense):
Equity in earnings of SLC Pipeline	657	831	[1]
Interest expense	(12,484)	(10,405)	[1]
Interest income	103	0	[1]
Loss on early extinguishment of debt	0	(2,596)	[1]
Gain on sale of assets	2,022	0	[1]
Other nonoperating income (expense) and equity earnings	(9,702)	(12,170)	[1]
Income before income taxes	21,345	19,431	[1]
State income tax expense	(56)	(75)	[1]
Net Income	21,289	19,356	[1]
Allocation of net loss attributable to Predecessors	0	1,861	[1]
Allocation of Net Income (Loss) Attributable to Noncontrolling Interest	(2,890)	557	[1]
Net income attributable to Holly Energy Partners	18,399	21,774	[1]
General partner interest in net income, including incentive distributions	(6,231)	(5,503)	[1]
Limited partners’ interest in net income	$ 12,168	$ 16,271	[1]
Limited partners’ per unit interest in earnings—basic and diluted:	$ 0.21	$ 0.30	[1]
Weighted average limited partners’ units outstanding	56,990	54,722	[1]

[1] Restated as described in Note 1.

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Transportation Agreements

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Transportation Agreements

Transportation Agreements

Our transportation agreements represent a portion of the total purchase price of certain assets acquired from Alon in 2005 and from HFC in 2008. The Alon agreement is being amortized over 30 years ending 2035 (the initial 15-year term of the agreement plus an expected 15-year extension period) and the HFC agreement is being amortized over 15 years ending 2023 (the term of the HFC agreement).

The carrying amounts of our transportation agreements are as follows:

	March 31, 2013		December 31, 2012
	(In thousands)
Alon transportation agreement	$	59,933	$	59,933
HFC transportation agreement	74,231		74,231
	134,164		134,164
Less accumulated amortization	41,304		39,568
	$	92,860	$	94,596

We have additional transportation agreements with HFC that relate to assets contributed to us or acquired from HFC consisting of pipeline, terminal and tankage assets. These transactions occurred while we were a consolidated variable interest entity of HFC, therefore, our basis in these agreements is zero and does not reflect a step-up in basis to fair value.

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Properties and Equipment

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Properties and Equipment

Properties and Equipment

The carrying amounts of our properties and equipment are as follows:

	March 31, 2013		December 31, 2012
	(In thousands)
Pipelines, terminals and tankage	$	1,061,392	$	1,049,531
Land and right of way	63,192		63,248
Construction in progress	27,122		27,150
Other	17,899		24,462
	1,169,605		1,164,391
Less accumulated depreciation	213,685		203,856
	$	955,920	$	960,535

We capitalized $0.1 million and $0.1 million in interest related to construction projects during the three months ended March 31, 2013 and 2012, respectively.

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Debt (Tables)

3 Months Ended

Mar. 31, 2013

Debt Instruments [Abstract]

Schedule of Long-term Debt Instruments

The carrying amounts of our long-term debt are as follows:

	March 31, 2013			December 31, 2012
	(In thousands)
Credit Agreement	$	368,000		$	421,000
6.5% Senior Notes
Principal	300,000			300,000
Unamortized discount	(4,562		)	(4,725		)
	295,438			295,275
8.25% Senior Notes
Principal	150,000			150,000
Unamortized discount	(1,525		)	(1,601		)
	148,475			148,399
Total long-term debt	$	811,913		$	864,674

Schedule of Derivative Instruments

Additional information on our interest rate swaps is as follows:

Derivative Instrument	Balance Sheet Location	Fair Value		Location of Offsetting Balance	Offsetting Amount
	(In thousands)
March 31, 2013
Interest rate swaps designated as cash flow hedging instrument:
Variable-to-fixed interest rate swap contracts ($305.0 million of LIBOR based debt interest)	Other long-term     liabilities	$	2,868	Accumulated other     comprehensive loss	$	2,868
December 31, 2012
Interest rate swaps designated as cash flow hedging instrument:
Variable-to-fixed interest rate swap contracts ($305.0 million of LIBOR based debt interest)	Other long-term     liabilities	$	3,430	Accumulated other     comprehensive loss	$	3,430

Schedule of Interest Expense and Other Debt Information

Interest expense consists of the following components:

	Three Months Ended March 31,
	2013		2012
	(In thousands)
Interest on outstanding debt:
Credit Agreement, net of interest on interest rate swaps	$	3,081	$	1,575
6.5% Senior Notes	4,875		1,083
6.25% Senior Notes	—		2,370
8.25% Senior Notes	3,094		3,094
Promissory Notes	—		543
Amortization of discount and deferred debt issuance costs	530		371
Increase in interest expense - non-cash charges attributable to interest rate swaps	849		1,274
Commitment fees	124		167
Total interest incurred	12,553		10,477
Less capitalized interest	69		72
Net interest expense	$	12,484	$	10,405
Cash paid for interest	$	19,033	$	15,292

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Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Financial Instruments Measured on Recurring Basis

The carrying amounts and estimated fair values of our senior notes and interest rate swaps were as follows:

		March 31, 2013				December 31, 2012
Financial Instrument	Fair Value Input Level	Carrying Value		Fair Value		Carrying Value		Fair Value
		(In thousands)
Liabilities:
Senior notes:
6.5% senior notes	Level 2	$	295,438	$	318,750	$	295,275	$	321,000
8.25% senior notes	Level 2	148,475		161,813		148,399		163,125
		443,913		480,563		443,674		484,125
Interest rate swaps	Level 2	2,868		2,868		3,430		3,430
		$	446,781	$	483,431	$	447,104	$	487,555

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Significant Customers

3 Months Ended

Mar. 31, 2013

Risks and Uncertainties [Abstract]

Significant Customers

Significant Customers

All revenues are domestic revenues, of which 92% are generated currently from our two largest customers: HFC and Alon. The vast majority of our revenues are derived from activities conducted in the southwest United States.

The following table presents the percentage of total revenues generated by each of these customers:

	Three Months Ended March 31,
	2013		2012
HFC	83	%	83	%
Alon	9	%	12	%

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Employees, Retirement and Incentive Plans

3 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employees, Retirement and Incentive Plans

Employees, Retirement and Incentive Plans

Employees who provide direct services to us are employed by Holly Logistic Services, L.L.C., an HFC subsidiary. Their costs, including salaries, bonuses, payroll taxes, benefits and other direct costs, are charged to us monthly in accordance with an omnibus agreement that we have with HFC. These employees participate in the retirement and benefit plans of HFC. Our share of retirement and benefit plan costs was $1.9 million and $1.5 million for the three months ended March 31, 2013 and 2012, respectively. Our accounting policy for the recognition of compensation expense for awards with pro-rata vesting (a significant proportion of our awards) is to expense the costs ratably over the vesting periods.

We have an incentive plan (“Long-Term Incentive Plan”) for employees and non-employee directors who perform services for us. The Long-Term Incentive Plan consists of four components: restricted units, performance units, unit options and unit appreciation rights.

As of March 31, 2013, we have two types of incentive-based awards which are described below. The compensation cost charged against income was $1.1 million and $0.9 million for the three months ended March 31, 2013 and 2012, respectively. We currently purchase units in the open market instead of issuing new units for settlement of all unit awards under our Long-Term Incentive Plan. As of March 31, 2013, 2,500,000 units were authorized to be granted under our Long-Term Incentive Plan, of which 1,735,811 have not yet been granted, assuming no forfeitures of the unvested units and full achievement of goals for the performance units already granted.

Restricted Units

Under our Long-Term Incentive Plan, we grant restricted units to selected employees and non-employee directors who perform services for us, with most awards vesting over a period of one to three years. Although full ownership of the units does not transfer to the recipients until the units vest, the recipients have distribution and voting rights on these units from the date of grant. The fair value of each restricted unit award is measured at the market price as of the date of grant and is amortized over the vesting period.

A summary of restricted unit activity and changes during the three months ended March 31, 2013 is presented below:

Restricted Units	Units	Weighted- Average Grant-Date Fair Value
Outstanding at January 1, 2013 (nonvested)	58,472	$	31.21
Granted	37,815	41.18
Vesting and transfer of full ownership to recipients	—	—
Outstanding at March 31, 2013 (nonvested)	96,287	$	35.08

As of March 31, 2013, there was $1.6 million of total unrecognized compensation expense related to nonvested restricted unit grants which is expected to be recognized over a weighted-average period of 1.2 years.

Performance Units

Under our Long-Term Incentive Plan, we grant performance units to selected executives who perform services for us. Performance units granted are payable based upon the growth in our distributable cash flow per common unit over the performance period, and vest over a period of three years. As of March 31, 2013, estimated unit payouts for outstanding nonvested performance unit awards were at 110% to 125%.

We granted 32,888 target performance units to certain officers in March 2013. These units will vest over a three-year performance period ending December 31, 2015 and are payable in HEP common units. The number of units actually earned will be based on the growth of our distributable cash flow per common unit over the performance period and can range from 0% to 200% of the target number of performance units granted (in the case of our Chief Executive Officer) or from 50% to 150% of the target number of performance units granted (in the case of other officers granted performance units). Although common units are not transferred to the recipients until the performance units vest, the recipients have distribution rights with respect to the common units from the date of grant. The fair value of these performance units is based on the grant date closing unit price of $40.86 and will apply to the number of units ultimately awarded.

A summary of performance unit activity and changes during the three months ended March 31, 2013 is presented below:

Performance Units	Units
Outstanding at January 1, 2013 (nonvested)	54,498
Granted	32,888
Vesting and transfer of common units to recipients	(25,124	)
Outstanding at March 31, 2013 (nonvested)	62,262

The grant-date fair value of performance units vested and transferred to recipients during the three months ended March 31, 2013 was $0.5 million. As of March 31, 2013, there was $1.8 million of total unrecognized compensation expense related to nonvested performance units, which is expected to be recognized over a weighted-average period of 1.3 years.

During the three months ended March 31, 2013, we purchased $2.4 million of our common units in the open market for the issuance and settlement of all unit awards under our Long-Term Incentive Plan.

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Debt

3 Months Ended

Mar. 31, 2013

Debt Instruments [Abstract]

Debt

Debt

Credit Agreement

We have a $550 million senior secured revolving credit facility expiring in June 2017 (the “Credit Agreement”) that is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. It is available also to fund letters of credit up to a $50 million sub-limit and to fund distributions to unitholders up to a $60 million sub-limit.

During the three months ended March 31, 2013, we received advances totaling $57.0 million and repaid $110.0 million, resulting in net repayments of $53.0 million under the Credit Agreement and an outstanding balance of $368.0 million at March 31, 2013.

Our obligations under the Credit Agreement are collateralized by substantially all of our assets. Indebtedness under the Credit Agreement is recourse to HEP Logistics Holdings, L.P. (“HEP Logistics”), our general partner, and guaranteed by our material wholly-owned subsidiaries. Any recourse to HEP Logistics would be limited to the extent of its assets, which other than its investment in us, are not significant. We may prepay all loans at any time without penalty, except for payment of certain breakage and related costs.

The Credit Agreement imposes certain requirements on us which we are currently in compliance with, including: a prohibition against distribution to unitholders if, before or after the distribution, a potential default or an event of default as defined in the agreement would occur; limitations on our ability to incur debt, make loans, acquire other companies, change the nature of our business, enter into a merger or consolidation, or sell assets; and covenants that require maintenance of a specified EBITDA to interest expense ratio, total debt to EBITDA ratio and senior debt to EBITDA ratio. If an event of default exists under the Credit Agreement, the lenders will be able to accelerate the maturity of the debt and exercise other rights and remedies.

Senior Notes

In March 2012, we issued $300 million in aggregate principal amount outstanding of 6.5% senior notes maturing March 1, 2020 (the “6.5% Senior Notes”). Net proceeds of $294.8 million were used in March and April 2012 to redeem $185.0 million aggregate principal amount of our 6.25% senior notes maturing March 1, 2015 (the “6.25% Senior Notes”) tendered pursuant to a cash tender offer and consent solicitation, to repay HFC $72.9 million in promissory notes related to our November 2011 acquisition of assets located at HFC's El Dorado and Cheyenne refineries, to pay related fees, expenses and accrued interest in connection with these transactions and to repay borrowings under the Credit Agreement.

Also, we have $150 million in aggregate principal amount outstanding of 8.25% senior notes maturing March 15, 2018, (the “8.25% Senior Notes”).

The 6.5% Senior Notes and 8.25% Senior Notes (collectively, the “Senior Notes”) are unsecured and impose certain restrictive covenants, which we are currently in compliance with, including limitations on our ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, we will not be subject to many of the foregoing covenants. Additionally, we have certain redemption rights under the Senior Notes.

Indebtedness under the Senior Notes is recourse to HEP Logistics, our general partner, and guaranteed by our wholly-owned subsidiaries. However, any recourse to HEP Logistics would be limited to the extent of its assets, which other than its investment in us, are not significant.

Long-term Debt

The carrying amounts of our long-term debt are as follows:

	March 31, 2013			December 31, 2012
	(In thousands)
Credit Agreement	$	368,000		$	421,000
6.5% Senior Notes
Principal	300,000			300,000
Unamortized discount	(4,562		)	(4,725		)
	295,438			295,275
8.25% Senior Notes
Principal	150,000			150,000
Unamortized discount	(1,525		)	(1,601		)
	148,475			148,399
Total long-term debt	$	811,913		$	864,674

Interest Rate Risk Management

We use interest rate swaps (derivative instruments) to manage our exposure to interest rate risk.

As of March 31, 2013, we have three interest rate swaps that hedge our exposure to the cash flow risk caused by the effects of LIBOR changes on $305.0 million of Credit Agreement advances. Our first interest rate swap entered into in December 2011, effectively converts $155.0 million of our LIBOR based debt to fixed rate debt having an interest rate of 0.99% plus an applicable margin of 2.50% as of March 31, 2013, which equaled an effective interest rate of 3.49%. This swap contract matures in February 2016. In August 2012, we entered into two similar interest rate swaps with identical terms which effectively convert $150.0 million of our LIBOR based debt to fixed rate debt having an interest rate of 0.74% plus an applicable margin of 2.50% as of March 31, 2013, which equaled an effective interest rate of 3.24%. Both of these swap contracts mature in July 2017.

We have designated these interest rate swaps as cash flow hedges. Based on our assessment of effectiveness using the change in variable cash flows method, we have determined that these interest rate swaps are effective in offsetting the variability in interest payments on $305.0 million of our variable rate debt resulting from changes in LIBOR. Under hedge accounting, we adjust our cash flow hedges on a quarterly basis to their fair values with the offsetting fair value adjustments to accumulated other comprehensive loss. Also on a quarterly basis, we measure hedge effectiveness by comparing the present value of the cumulative change in the expected future interest to be paid or received on the variable leg of our swaps against the expected future interest payments on $305.0 million of our variable rate debt. Any ineffectiveness is recorded directly to interest expense. As of March 31, 2013, we had no ineffectiveness on our cash flow hedges.

At March 31, 2013, we have an accumulated other comprehensive loss of $2.9 million that relates to our current and previous cash flow hedging instruments. For the three months ended March 31, 2013, $1.4 million other comprehensive loss was reclassified to interest expense due to cash flow hedge settlements. Approximately $1.0 million will be transferred from accumulated other comprehensive loss into interest expense as interest is paid on the underlying swap agreement over the next twelve-month period, assuming interest rates remain unchanged.

Additional information on our interest rate swaps is as follows:

Derivative Instrument	Balance Sheet Location	Fair Value		Location of Offsetting Balance	Offsetting Amount
	(In thousands)
March 31, 2013
Interest rate swaps designated as cash flow hedging instrument:
Variable-to-fixed interest rate swap contracts ($305.0 million of LIBOR based debt interest)	Other long-term     liabilities	$	2,868	Accumulated other     comprehensive loss	$	2,868
December 31, 2012
Interest rate swaps designated as cash flow hedging instrument:
Variable-to-fixed interest rate swap contracts ($305.0 million of LIBOR based debt interest)	Other long-term     liabilities	$	3,430	Accumulated other     comprehensive loss	$	3,430

Interest Expense and Other Debt Information

Interest expense consists of the following components:

	Three Months Ended March 31,
	2013		2012
	(In thousands)
Interest on outstanding debt:
Credit Agreement, net of interest on interest rate swaps	$	3,081	$	1,575
6.5% Senior Notes	4,875		1,083
6.25% Senior Notes	—		2,370
8.25% Senior Notes	3,094		3,094
Promissory Notes	—		543
Amortization of discount and deferred debt issuance costs	530		371
Increase in interest expense - non-cash charges attributable to interest rate swaps	849		1,274
Commitment fees	124		167
Total interest incurred	12,553		10,477
Less capitalized interest	69		72
Net interest expense	$	12,484	$	10,405
Cash paid for interest	$	19,033	$	15,292

We recognized a charge of $2.6 million upon the early extinguishment of debt for the three months ended March 31, 2012. This charge represents the premium paid to our 6.25% Senior Note holders upon their tender of an aggregate principal amount of $185.0 million and related net discount.

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Related Party Transactions

3 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

We serve HFC's refineries under long-term pipeline and terminal, tankage and throughput agreements expiring from 2019 to 2026. Under these agreements, HFC agreed to transport, store and throughput volumes of refined product and crude oil on our pipelines and terminal, tankage and loading rack facilities that result in minimum annual payments to us. These minimum annual payments or revenues are subject to annual tariff rate adjustments on July 1, based on the Producer Price Index (“PPI”) or Federal Energy Regulatory Commission (“FERC”) index. Additionally such agreements require HFC to reimburse us for certain costs. As of March 31, 2013, these agreements with HFC will result in minimum annualized payments to us of $220.8 million.

If HFC fails to meet its minimum volume commitments under the agreements in any quarter, it will be required to pay us in cash the amount of any shortfall by the last day of the month following the end of the quarter. Under certain of these agreements, a shortfall payment may be applied as a credit in the following four quarters after its minimum obligations are met.

Under certain provisions of an omnibus agreement we have with HFC (the “Omnibus Agreement”) we pay HFC an annual administrative fee for the provision by HFC or its affiliates of various general and administrative services to us, currently $2.3 million. This fee does not include the salaries of personnel employed by HLS who perform services for us or the cost of their employee benefits, which are charged to us separately by HFC. Also, we reimburse HFC and its affiliates for direct expenses they incur on our behalf.

Related party transactions with HFC are as follows:

• Revenues received from HFC were $61.5 million and $56.5 million for the three months ended March 31, 2013 and 2012, respectively.

• HFC charged us general and administrative services under the Omnibus Agreement of $0.6 million and $0.6 million, respectively, for the three months ended March 31, 2013 and 2012.

• We reimbursed HFC for costs of employees supporting our operations of $9.8 million and $7.6 million for the three months ended March 31, 2013 and 2012, respectively.

• HFC reimbursed us $4.9 million and $2.5 million for the three months ended March 31, 2013 and 2012, respectively, for certain reimbursable costs and capital projects.

• We distributed $17.4 million and $15.3 million for the three months ended March 31, 2013 and 2012, respectively, to HFC as regular distributions on its common units and general partner interest, including general partner incentive distributions.

• Accounts receivable from HFC were $31.1 million and $31.6 million at March 31, 2013 and December 31, 2012, respectively.

• Accounts payable to HFC were $4.9 million and $5.0 million at March 31, 2013 and December 31, 2012, respectively.

• Revenues for the three months ended March 31, 2013 include $4.0 million of shortfall payments billed in 2012, as HFC did not exceed its minimum volume commitment in any of the subsequent four quarters. Deferred revenue in the consolidated balance sheets at March 31, 2013 and December 31, 2012, includes $3.5 million and $5.1 million, respectively, relating to certain shortfall billings. It is possible that HFC may not exceed its minimum obligations to receive credit for any of the $3.5 million deferred at March 31, 2013.

• We acquired from HFC 75% interest in the UNEV Pipeline in July 2012. See Note 2 for a description of this transaction.

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Employees, Retirement and Incentive Plans Performance Units (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Outstanding at January 1, 2012 (nonvested)	54,498
Granted	32,888
Vesting and transfer of full ownership to recipients	(25,124)
Outstanding at June 30, 2012 (nonvested)	62,262
Purchase of units for incentive grants	$ (2,719,000)	$ (1,283,000)	[1]
Selected Executives [Member] | Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated Share Payouts, Outstanding Nonvested Performance Unit Awards Maximum	125.00%
Award vesting period	3 years
Estimated Share Payouts, Outstanding Nonvested Performance Unit Awards Minimum	110.00%
Certain Officers [Member] | Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Long-term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Purchase of units for incentive grants	2,400,000
Long-term Incentive Plan [Member] | Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Fair value of vested units transferred to recipients	(500,000)
Total unrecognized compensation related to nonvested units	$ 1,800,000
Weighted average remaining contractual term (years)	1 year 3 months 1 day
Long-term Incentive Plan [Member] | Certain Officers [Member] | Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period	32,888
Range of performance units earned, based on performance units granted, minimum (percent)	0.00%
Range of Performance Units Earned, Based on Performance Units Granted, Maximum	200.00%
Grants in period, weighted average grant date fair value	$ 40.86
Long-term Incentive Plan [Member] | Executive Officer [Member] | Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of performance units earned, based on performance units granted, minimum (percent)	50.00%
Range of Performance Units Earned, Based on Performance Units Granted, Maximum	150.00%
Maximum [Member] | Performance Share Units Member
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years

[1] Restated as described in Note 1.

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Transportation Agreements (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets by Major Class

The carrying amounts of our transportation agreements are as follows:

	March 31, 2013		December 31, 2012
	(In thousands)
Alon transportation agreement	$	59,933	$	59,933
HFC transportation agreement	74,231		74,231
	134,164		134,164
Less accumulated amortization	41,304		39,568
	$	92,860	$	94,596

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Supplemental Guarantor / Non-Guarantor Financial Information (Tables)

3 Months Ended

Mar. 31, 2013

Supplemental Guarantor / Non-Guarantor Financial Information [Abstract]

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet

March 31, 2013	Parent		Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2	$	5,634		$	12,557	$	—		$	18,193
Accounts receivable	—		34,129			3,199		(200		)	37,128
Intercompany accounts receivable (payable)	62,994		(62,994		)	—		—			—
Prepaid and other current assets	163		2,194			1,118		—			3,475
Total current assets	63,159		(21,037		)	16,874		(200		)	58,796
Properties and equipment, net	—		562,480			393,440		—			955,920
Investment in subsidiaries	809,900		304,731			—		(1,114,631		)	—
Transportation agreements, net	—		92,860			—		—			92,860
Goodwill	—		256,498			—		—			256,498
Investment in SLC Pipeline	—		25,011			—		—			25,011
Other assets	1,713		7,388			—		—			9,101
Total assets	$	874,772	$	1,227,931		$	410,314	$	(1,114,831	)	$	1,398,186
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	11,257		$	1,289	$	(200	)	$	12,346
Accrued interest	2,229		137			—		—			2,366
Deferred revenue	—		5,513			1,114		—			6,627
Accrued property taxes	—		1,264			1,457		—			2,721
Other current liabilities	541		1,875			5		—			2,421
Total current liabilities	2,770		20,046			3,865		(200		)	26,481
Long-term debt	443,913		368,000			—		—			811,913
Other long-term liabilities	67		14,516			140		—			14,723
Deferred revenue	—		15,469			—		—			15,469
Class B unit	15,418		—			—		—			15,418
Equity - partners	412,604		809,900			406,309		(1,216,209		)	412,604
Equity - noncontrolling interest	—		—			—		101,578			101,578
Total liabilities and partners’ equity	$	874,772	$	1,227,931		$	410,314	$	(1,114,831	)	$	1,398,186

Condensed Consolidating Balance Sheet

December 31, 2012	Parent		Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2	$	823		$	4,412	$	—		$	5,237
Accounts receivable	—		32,319			6,401		—			38,720
Intercompany accounts receivable (payable)	42,194		(42,194		)	—		—			—
Prepaid and other current assets	224		2,395			1,000		—			3,619
Total current assets	42,420		(6,657		)	11,813		—			47,576
Properties and equipment, net	—		563,701			396,834		—			960,535
Investment in subsidiaries	777,472		300,607			—		(1,078,079		)	—
Transportation agreements, net	—		94,596			—		—			94,596
Goodwill	—		256,498			—		—			256,498
Investment in SLC Pipeline	—		25,041			—		—			25,041
Other assets	1,154		8,710			—		—			9,864
Total assets	$	821,046	$	1,242,496		$	408,647	$	(1,078,079	)	$	1,394,110
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	10,745		$	1,285	$	—		$	12,030
Accrued interest	10,198		28			—		—			10,226
Deferred revenue	—		3,319			5,582		—			8,901
Accrued property taxes	—		1,923			765		—			2,688
Other current liabilities	563		1,274			68		—			1,905
Total current liabilities	10,761		17,289			7,700		—			35,750
Long-term debt	443,674		421,000			—		—			864,674
Other long-term liabilities	55		15,241			137		—			15,433
Deferred revenue	—		11,494			—		—			11,494
Class B unit	13,903		—			—		—			13,903
Equity - partners	352,653		777,472			400,810		(1,178,282		)	352,653
Equity - noncontrolling interest	—		—			—		100,203			100,203
Total liabilities and partners’ equity	$	821,046	$	1,242,496		$	408,647	$	(1,078,079	)	$	1,394,110

Condensed Consolidating Statement of Comprehensive Income

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2013	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-restricted Subsidiaries		Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	54,412		$	7,402	$	(302	)	$	61,512
Third parties	—			8,407			4,379		—			12,786
	—			62,819			11,781		(302		)	74,298
Operating costs and expenses:
Operations	—			23,366			2,801		(302		)	25,865
Depreciation and amortization	—			10,570			3,584		—			14,154
General and administrative	808			2,424			—		—			3,232
	808			36,360			6,385		(302		)	43,251
Operating income (loss)	(808		)	26,459			5,396		—			31,047
Equity in earnings (loss) of subsidiaries	28,974			4,124			—		(33,098		)	—
Equity in earnings of SLC Pipeline	—			657			—		—			657
Interest expense	(8,252		)	(4,232		)			—			(12,484		)
Interest income	—						103		—			103
Other	—			2,022			—		—			2,022
	20,722			2,571			103		(33,098		)	(9,702		)
Income (loss) before income taxes	19,914			29,030			5,499		(33,098		)	21,345
State income tax expense	—			(56		)	—		—			(56		)
Net income (loss)	19,914			28,974			5,499		(33,098		)	21,289
Allocation of net (income) attributable to noncontrolling interests	(1,515		)	—			—		(1,375		)	(2,890		)
Net income (loss) attributable to Holly Energy Partners	18,399			28,974			5,499		(34,473		)	18,399
Other comprehensive (loss)	1,411			1,411			—		(1,411		)	1,411
Comprehensive income (loss)	$	19,810		$	30,385		$	5,499	$	(35,884	)	$	19,810

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2012	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	54,030		$	2,764		$	(263	)	$	56,531
Third parties	—			10,745			1,139			—			11,884
	—			64,775			3,903			(263		)	68,415
Operating costs and expenses:
Operations	—			18,141			2,597			(263		)	20,475
Depreciation and amortization	—			10,764			3,536			—			14,300
General and administrative	1,442			597			—			—			2,039
	1,442			29,502			6,133			(263		)	36,814
Operating income (loss)	(1,442		)	35,273			(2,230		)	—			31,601
Equity in earnings (loss) of subsidiaries	30,660			(1,673		)	—			(28,987		)	—
Equity in earnings of SLC Pipeline	—			831			—			—			831
Interest (expense) income	(6,709		)	(3,696		)	—			—			(10,405		)
Loss on early extinguishment of debt	(2,596		)	—			—			—			(2,596		)
	21,355			(4,538		)	—			(28,987		)	(12,170		)
Income (loss) before income taxes	19,913			30,735			(2,230		)	(28,987		)	19,431
State income tax expense	—			(75		)	—			—			(75		)
Net income (loss)	19,913			30,660			(2,230		)	(28,987		)	19,356
Allocation of net loss attributable to Predecessors	1,861			—			—			—			1,861
Allocation of net loss attributable to noncontrolling interests	—			—			—			557			557
Net income (loss) attributable to Holly Energy Partners	21,774			30,660			(2,230		)	(28,430		)	21,774
Other comprehensive income	920			920			—			(920		)	920
Comprehensive income (loss)	$	22,694		$	31,580		$	(2,230	)	$	(29,350	)	$	22,694

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2013	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	(39,241	)	$	61,752		$	8,368		$	—	$	30,879
Cash flows from investing activities
Additions to properties and equipment	—			(6,422		)	(223		)	—		(6,645		)
Proceeds from sale of assets	—			2,481			—			—		2,481
	—			(3,941		)	(223		)	—		(4,164		)
Cash flows from financing activities
Net borrowings under credit agreement	—			(53,000		)	—			—		(53,000		)
Proceeds from issuance of senior notes	—			—			—			—		—
Proceeds from issuance of common units	73,444			—			—			—		73,444
Repayments of notes	—			—			—			—		—
Distributions to HEP unitholders	(32,709		)	—			—			—		(32,709		)
Contribution from general partners	1,499			—			—			—		1,499
Purchase of units for incentive grants	(2,719		)	—			—			—		(2,719		)
Deferred financing costs	—			—			—			—		—
Other	(274		)	—			—			—		(274		)
	39,241			(53,000		)	—			—		(13,759		)
Cash and cash equivalents
Increase for the period	—			4,811			8,145			—		12,956
Beginning of period	2			823			4,412			—		5,237
End of period	$	2		$	5,634		$	12,557		$	—	$	18,193

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2012	Parent			Guarantor Restricted Subsidiaries			Non-Guarantor Non-Restricted Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	(106,452	)	$	136,725		$	(6,170	)	$	—	$	24,103
Cash flows from investing activities
Additions to properties and equipment	—			(6,327		)	(10,684		)	—		(17,011		)
Cash flows from financing activities
Net borrowings under credit agreement	—			(45,000		)	—			—		(45,000		)
Proceeds from issuance of senior notes	294,750			—			—			—		294,750
Repayments of notes	(157,761		)	(74,950		)	—			—		(232,711		)
Capital contribution from UNEV joint partners	—			462			14,500			—		14,962
Distributions to HEP unitholders	(29,716		)	—			—			—		(29,716		)
Purchase of units for incentive grants	(1,283		)	—			—			—		(1,283		)
Deferred financing costs	—			(1,123		)	—			—		(1,123		)
Other	462			(654		)	—			—		(192		)
	106,452			(121,265		)	14,500			—		(313		)
Cash and cash equivalents
Increase (decrease) for the period	—			9,133			(2,354		)	—		6,779
Beginning of period	2			3,267			3,100			—		6,369
End of period	$	2		$	12,400		$	746		$	—	$	13,148

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Related Party Transactions (Narrative) (Details) (USD $)	3 Months Ended			12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012		Dec. 31, 2012
Related Party Transaction [Line Items]
Revenue from related parties	$ 61,512,000	$ 56,531,000	[1]
Distributions to unitholders	32,709,000	29,716,000	[1]
Due from Affiliates	31,055,000			31,594,000
Due to Affiliate, Current	4,917,000			4,985,000
Affiliated Entity [Member]
Related Party Transaction [Line Items]
Minimum annualized payments receivable from affiliate	220,800,000
Revenue from related parties	61,500,000
Distributions to unitholders	17,400,000	15,300,000
Due from Affiliates	31,100,000			31,600,000
Due to Affiliate, Current	4,900,000			5,000,000
Annual Administrative Fee [Member] | Affiliated Entity [Member]
Related Party Transaction [Line Items]
Expenses resulting from agreement with related party				2,300,000
Costs and Expenses, Related Party	600,000	600,000
Reimbursements Paid [Member] | Affiliated Entity [Member]
Related Party Transaction [Line Items]
Reimbursements paid to related parties	9,800,000	7,600,000
Proceeds From Reimbursements Received [Member] | Affiliated Entity [Member]
Related Party Transaction [Line Items]
Reimbursements paid to related parties	4,900,000	2,500,000
Shortfall Payments [Member] | Affiliated Entity [Member]
Related Party Transaction [Line Items]
Revenue from related parties	4,000,000
Deferred revenue, related parties	$ 3,500,000	$ 5,100,000
UNEV Pipeline [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage	75.00%

[1] Restated as described in Note 1.

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Consolidated Statement of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net Income	$ 21,289	$ 19,356	[1]
Allocation of net loss attributable to Predecessors	0	1,861	[1]
Net income before noncontrolling interest	21,289	21,217	[1]
Other comprehensive income (loss):
Change in fair value of cash flow hedge	562	(354)	[1]
Amortization of unrealized loss attributable to discontinued cash flow hedge	849	1,274	[1]
Other comprehensive income (loss)	1,411	920	[1]
Comprehensive income before noncontrolling interest	22,700	22,137	[1]
Allocation of Net Income (Loss) Attributable to Noncontrolling Interest	(2,890)	557	[1]
Comprehensive Income attributable to Holly Energy Partners	$ 19,810	$ 22,694	[1]

[1] Restated as described in Note 1.

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Financial Instruments

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Financial Instruments

Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, debt and interest rate swaps. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Debt consists of outstanding principal under our revolving credit agreement (which approximates fair value as interest rates are reset frequently at current interest rates) and our fixed interest rate senior notes.

Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability) including assumptions about risk. GAAP categorizes inputs used in fair value measurements into three broad levels as follows:

• (Level 1) Quoted prices in active markets for identical assets or liabilities.

• (Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.

• (Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.

The carrying amounts and estimated fair values of our senior notes and interest rate swaps were as follows:

		March 31, 2013				December 31, 2012
Financial Instrument	Fair Value Input Level	Carrying Value		Fair Value		Carrying Value		Fair Value
		(In thousands)
Liabilities:
Senior notes:
6.5% senior notes	Level 2	$	295,438	$	318,750	$	295,275	$	321,000
8.25% senior notes	Level 2	148,475		161,813		148,399		163,125
		443,913		480,563		443,674		484,125
Interest rate swaps	Level 2	2,868		2,868		3,430		3,430
		$	446,781	$	483,431	$	447,104	$	487,555

Level 2 Financial Instruments

Our senior notes and interest rate swaps are measured and recorded at fair value using Level 2 inputs. The fair value of the senior notes is based on market values provided by a third-party bank, which were derived using market quotes for similar type debt instruments. The fair value of our interest rate swaps is based on the net present value of expected future cash flows related to both variable and fixed rate legs of the swap agreement. This measurement is computed using the forward London Interbank Offered Rate (“LIBOR”) yield curve, a market-based observable input.

See Note 7 for additional information on these instruments.

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Description of Business and Presentation of Financial Statements (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Other Ownership Interests [Line Items]
Ownership percentage, controlling interest	39.00%
General partner interest	2.00%
Sale of Stock, Number of Shares Issued in Transaction	1,875,000
Business Acquisitions, Limited partners interest in net income	$ 12,168,000	$ 16,271,000	[1]
Limited partners’ per unit interest in earnings—basic and diluted:	$ 0.21	$ 0.30	[1]
Proceeds from sale of common units	73,444,000
Correction of error - net income		$ 200,000
SLC Pipeline [Member]
Other Ownership Interests [Line Items]
Equity Method Investment, Ownership Percentage	25.00%
Crude Oil Pipeline, Length	95
UNEV Pipeline [Member]
Other Ownership Interests [Line Items]
Equity Method Investment, Ownership Percentage	75.00%
Crude Oil Pipeline, Length	400
Description Of Pipeline Acquired	12
General Partner HFC [Member]
Other Ownership Interests [Line Items]
Sale of Stock, Number of Shares Issued in Transaction	1,875,000

[1] Restated as described in Note 1.

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Debt Interest Rate Risk Management (Details) (USD $)	3 Months Ended	12 Months Ended							3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Interest Rate Swap [Member] Cash Flow Hedging [Member]	Mar. 31, 2013 Interest Rate Swap [Member] Cash Fow Hedging - added in 2011 [Member]	Mar. 31, 2013 Interest Rate Swap [Member] Cash Flow Hedging, Added 2012 [Member]	Mar. 31, 2013 Other Liabilities [Member] Interest Rate Swap [Member] Cash Flow Hedging [Member]	Dec. 31, 2012 Other Liabilities [Member] Interest Rate Swap [Member] Cash Flow Hedging [Member]	Mar. 31, 2013 Accumulated Other Comprehensive Income (Loss) [Member] Interest Rate Swap [Member] Cash Flow Hedging [Member]	Dec. 31, 2012 Accumulated Other Comprehensive Income (Loss) [Member] Interest Rate Swap [Member] Cash Flow Hedging [Member]
Debt Instrument [Line Items]
Line of credit facility, amount outstanding				$ 305,000,000	$ 155,000,000	$ 150,000,000
Long-term debt, fixed interest rate				0.99%		0.74%
Debt instrument, basis spread on variable rate				2.50%		2.50%
Debt instrument, effective interest rate				3.49%		3.24%
Accumulated other comprehensive loss	(2,868,000)		(4,279,000)	2,900,000
Unrecognized loss on cash flow hedges									(2,868,000)	3,430,000
Derivative liabilities, fair value							2,868,000	3,430,000
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net	$ 1,400,000	$ 1,000,000

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Properties and Equipment (Tables)

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Properties and Equipment

The carrying amounts of our properties and equipment are as follows:

	March 31, 2013		December 31, 2012
	(In thousands)
Pipelines, terminals and tankage	$	1,061,392	$	1,049,531
Land and right of way	63,192		63,248
Construction in progress	27,122		27,150
Other	17,899		24,462
	1,169,605		1,164,391
Less accumulated depreciation	213,685		203,856
	$	955,920	$	960,535