8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 21, 2009 (October 21, 2009)

HOLLY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	001-03876 (Commission File Number)	75-1056913 (I.R.S. Employer Identification Number)
100 Crescent Court, Suite 1600 Dallas, Texas (Address of principal executive offices)		75201-6915 (Zip code)

Registrant’s telephone number, including area code: (214) 871-3555

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01 Regulation FD Disclosure.

     Furnished as Exhibit 99.1 and incorporated herein by reference in its entirety is a copy of a press release issued by Holly Corporation (the “Company”) on October 21, 2009 announcing that it intends to commence an offering of an additional $100 million principal amount of its existing 9.875% senior notes due 2017.

     A copy of certain information contained in the preliminary offering memorandum dated October 21, 2009 relating to the proposed private offering of the notes under the captions “Offering memorandum summary—Recent Developments,” “Risk factors” and “The proposed Sinclair Refinery acquisition” is attached as Exhibits 99.2, 99.3 and 99.4, respectively, to this report and is incorporated herein by reference.

     In accordance with General Instruction B.2 of Form 8-K, the information furnished in this report on Form 8-K pursuant to Item 7.01, including Exhibits 99.1, 99.2, 99.3 and 99.4, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically incorporates it by reference in a document filed under the Exchange Act or the Securities Act of 1933 (“Securities Act”). By filing this report on Form 8-K pursuant to Item 7.01 and furnishing this information, the Company makes no admission as to the materiality of any information in this report, including Exhibits 99.1, 99.2, 99.3 and 99.4, or that any such information includes material investor information that is not otherwise publicly available.

     The information furnished in this report on Form 8-K pursuant to Item 7.01, including the information contained in Exhibits 99.1, 99.2, 99.3 and 99.4, is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company disclaims any current intention to revise or update the information furnished in this report on Form 8-K pursuant to Item 7.01, including the information contained in Exhibits 99.1, 99.2, 99.3 and 99.4, although the Company may do so from time to time as its management believes is warranted. Any such updating may be made through the furnishing or filing of other reports or documents with the SEC, through press releases or through other public disclosure.

     The information furnished in this report on Form 8-K pursuant to Item 7.01, including the information contained in Exhibits 99.1, 99.2, 99.3 and 99.4, is neither an offer to sell nor a solicitation of an offer to buy any of the notes. The notes that the Company intends to offer will not be registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.

Item 9.01 Financial Statements and Exhibits.

99.1	—	Press Release of Holly Corporation issued October 21, 2009.*
99.2	—	Information contained under the caption “Offering memorandum summary—Recent Developments” in the preliminary offering memorandum.*
99.3	—	Information contained under the caption “Risk factors” in the preliminary offering memorandum.*
99.4	—	Information contained under the caption “The proposed Sinclair Refinery acquisition” in the preliminary offering memorandum.*

* Furnished pursuant to Regulation FD.

SIGNATURES

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

HOLLY CORPORATION
By:	/s/ Bruce R. Shaw
	Bruce R. Shaw
	Senior Vice President and Chief Financial Officer

Date: October 21, 2009

EXHIBIT INDEX

Exhibit
Number			Exhibit Title
	99.1	—	Press Release of Holly Corporation issued October 21, 2009.*
	99.2	—	Information contained under the caption “Offering memorandum summary—Recent Developments” in the preliminary offering memorandum.*
	99.3	—	Information contained under the caption “Risk factors” in the preliminary offering memorandum.*
	99.4	—	Information contained under the caption “The proposed Sinclair Refinery acquisition” in the preliminary offering memorandum.*

* Furnished pursuant to Regulation FD.

EX-99.1

Exhibit 99.1

Holly Corporation Announces Proposed Offering of Senior Notes

10/21/2009

DALLAS, TX — Holly Corporation (NYSE-HOC) (“Holly” or the “Company”) announced today that it intends to commence an offering of $100 million principal amount of senior unsecured notes. The notes will be an additional issuance of Holly’s 9.875% senior notes due 2017 and will be treated as a single class with such existing notes. Holly intends to use the net proceeds from the offering to fund the cash portion of the purchase price for the pending acquisition from Sinclair Tulsa Refining Company of a refinery located in Tulsa, Oklahoma and a portion of the purchase price for the related inventory. If the acquisition of the Sinclair refinery does not close, Holly will use the proceeds from the offering for general corporate purposes, including working capital, capital expenditures and possible future acquisitions.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any of the securities described herein, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state. The securities to be offered have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The securities will be offered only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S. This notice is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

Holly, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel and high value specialty lubricants. Holly operates through its subsidiaries a 100,000 BPSD refinery located in Artesia, New Mexico, a 31,000 BPSD refinery in Woods Cross, Utah and an 85,000 BPSD refinery located in Tulsa, Oklahoma. Also, a subsidiary of Holly owns an approximate 41% interest (which includes a 2% general partner interest) in Holly Energy Partners, L.P., which through subsidiaries owns or leases approximately 2,700 miles of petroleum product and crude oil pipelines in Texas, New Mexico, Utah and Oklahoma and tankage and refined product terminals in several Southwest and Rocky Mountain states.

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. The forward-looking statements speak only as of the date made and, other than as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION, contact

Bruce R. Shaw, Senior Vice President & CFO
M. Neale Hickerson, Vice President, Investor Relations
Holly Corporation
214/871-3555

EX-99.2

Exhibit 99.2

RECENT DEVELOPMENTS

Ø  Pending acquisition of a Refinery from Sinclair.  On October 20, 2009, we announced that we had entered into a definitive agreement to acquire the Sinclair Refinery for approximately $54.5 million in cash, subject to certain adjustments (including post closing payments of approximately $17.0 million for reimbursement of certain capital expenditures), and $74.0 million in Holly common stock plus the market value of the refinery’s inventories. The facility has a current crude capacity of 75,000 BPSD and has approximately 3.750 million barrels of onsite storage, in addition to other attractive logistics assets. A subsidiary of HEP is a party to our definitive purchase agreement with Sinclair and will acquire approximately 1.362 million of the 3.750 million barrels of onsite storage capacity at the refinery, three truck loading racks for light products, asphalt and propane, and light product delivery pipelines. We plan to operate this refinery and our existing Tulsa Refinery as one integrated, highly complex facility at a total crude processing rate of approximately 125,000 BPSD. Although the name-plate capacity of the two refineries is higher than 125,000 BPSD, we believe reducing the overall crude capacity results in the most economical configuration for the integrated facility and results in the best integrated complexity factor. We believe that the synergy of these two plants operated as an integrated facility will result in saving approximately $110.0 million of expected capital expenditures related to ULSD compliance. Also as a result of the integrated facility, we expect to be able to reduce capital expenditures for the forthcoming benzene in gasoline requirements from approximately $30.0 million for the Tulsa Refinery alone to approximately $15.0 million for the integrated complex. Even if we are able to realize the operating synergies of the integrated facility, our Tulsa Refinery will still require sulfur recovery investment but we estimate combining the two refineries will reduce our net near-term capital expenditure requirements by approximately $125.0 million, excluding the cost to construct the pipelines that will integrate the refinery. As we intend to operate our existing Tulsa Refinery with the Sinclair Refinery as an integrated unit, we expect that the acquisition of the Sinclair Refinery will increase our overall crude capacity by 40,000 BPSD and raise the complexity of our Tulsa operation while preserving our high-value specialty products production capabilities. The acquisition will also allow us to upgrade the unfinished gas oil currently produced at our Tulsa Refinery into transportation fuels without incurring the substantial associated capital expenditures that would otherwise be required to do so. For additional information see “The proposed Sinclair Refinery acquisition.”

Ø	Upsizing of the Credit Agreement.  We are currently in negotiations to increase the size of our $300.0 million credit agreement with Bank of America, N.A., as administrative agent and L/C issuer, UBS Loan Finance LLC and U.S. Bank National Association, as co-documentation agents, Union Bank of California, N.A. and Compass Bank, as co-syndication agents, and the other lenders party thereto. We do not expect the other terms of our credit agreement to change in connection with this anticipated increase in size. The credit agreement, including letters of credit issuable thereunder, may be used for working capital requirements, capital expenditures, permitted acquisitions or other general corporate purposes. As of September 30, 2009, we had no outstanding borrowings under the credit agreement.
Ø	Sale of Storage Facilities at Tulsa Refinery.  On October 20, 2009, we sold approximately 400,000 barrels of crude oil tankage at the Tulsa Refinery as well as certain refinery-related crude oil pipeline receiving facilities to Plains All American Pipeline, LLP (“Plains”) for $40.0 million in cash. In connection with the disposition of these assets, one of our subsidiaries entered into an agreement with a subsidiary of Plains pursuant to which we will pay Plains a set amount per month for the exclusive use of the approximate 400,000 barrels of crude oil tankage Plains acquired as well as a fee for crude oil we receive through the crude oil pipeline receiving facilities purchased by Plains. We have maintained ownership of an additional 2.8 million barrels of active tankage that was acquired as part of the Tulsa Refinery acquisition from Sunoco in June 2009. In conjunction with the sale to Plains, we agreed to explore the use of our and Plains’ Tulsa storage facilities to opportunistically capture crude oil contango profit opportunities that may arise given the facilities’ close proximity to Cushing, Oklahoma. Pursuant to a margin sharing agreement, we would equally share contango profits with Plains for crude oil purchased by Plains and delivered to the Tulsa Refinery for storage.
Ø	Conversion of subordinated units of HEP.  On August 18, 2009, 7,000,000 subordinated units of HEP held by one of our subsidiaries converted into an equal number of common units of HEP

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following satisfaction of the conditions in the limited partnership agreement of HEP. Subject to the terms and conditions of the limited partnership agreement of HEP, we have the right to cause HEP to register for resale under the Securities Act of 1933 and applicable state securities laws any limited partner units that we hold. HEP is obligated to pay all expenses incidental to the registration, excluding underwriting discounts and commissions.

Ø  Sale of Tulsa Loading Racks.  On August 1, 2009, we sold certain truck and rail loading/unloading equipment located at the Tulsa Refinery (the “Tulsa Loading Racks”) to HEP for a cash purchase price of $17.5 million. In connection with the sale of the Tulsa Loading Racks we entered into a 15-year equipment and throughput agreement with HEP pursuant to which we agreed to load or unload by tanker truck or rail car at the Tulsa Loading Racks an amount of products in the aggregate that at the agreed tariff rates will result in minimum revenues to HEP of approximately $225,000 per month. The base tariff and volume incentive tariff that we pay on products received or shipped from the Tulsa Loading Racks will increase each year on July 1 by an amount equal to the change in the producer price index, provided, however, that such adjustment shall not exceed 3.0% in any year. The base tariff and the volume incentive tariff will not decrease as the result of any decrease in the producer price index. In connection with the sale of the Tulsa Loading Racks, we also entered into a purchase option agreement with HEP pursuant to which, among other things, HEP granted us the option to purchase the Tulsa Loading Racks in certain circumstances, including upon termination of the agreement, and we granted HEP a put right that would require us to purchase the Tulsa Loading Racks upon termination of the agreement.

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EX-99.3

Exhibit 99.3

Risk factors

This offering involves a high degree of risk, including the risks described below and other risks described in the Initial Offering Memorandum, our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2009 and March 31, 2009, our Annual Report on Form 10-K for the year ended December 31, 2008, and the risks described in any other documents incorporated by reference into this offering memorandum. You should carefully consider all of these risk factors together with all of the other information included in this offering memorandum and the documents incorporated by reference herein, including the financial statements and related notes, before deciding to invest in the notes offered hereby. The risks described below or in the Initial Offering Memorandum are not the only risks facing us, our industry or our business. 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 operations. If any of the following risks actually occurs, our business, financial condition or results of operations could be materially and adversely affected. In that event, we may be unable to pay interest on, or the principal of, the notes. In such case, you may lose all or part of your investment.

The risks associated with the proposed acquisition of the Sinclair Refinery and the recently completed acquisition of the Tulsa Refinery and their integration, and other future acquisitions, could have a material adverse effect on our business, financial condition and results of operations. We may not be able to successfully integrate any of these acquisitions into our business.

A substantial portion of our growth is expected to come from acquisitions, including our recent acquisition of the Tulsa Refinery from Sunoco on June 1, 2009 and our planned acquisition of the Sinclair Refinery. A principal component of our strategy going forward is to continue to selectively acquire refining and refining related assets to strengthen our competitive and financial position. Our ability to do so will depend upon a number of factors, including our ability to identify acceptable acquisition candidates, consummate acquisitions on favorable terms, successfully integrate acquired businesses and obtain financing to support our growth and many other factors beyond our control.

In connection with the recent Tulsa Refinery acquisition, the planned Sinclair Refinery acquisition or with future acquisitions, we may experience unforeseen operating difficulties as we integrate the acquired assets into our existing operations. These difficulties may require significant management attention and financial resources that would otherwise be available for the ongoing development or expansion of existing operations.

The recent Tulsa Refinery acquisition, the planned Sinclair Refinery acquisition and any other future acquisitions involve risks, including:

Ø	unexpected losses of key employees, customers and suppliers of the acquired operations;
Ø	difficulties in integrating the financial, technological and management standards, processes, procedures and controls of the acquired business with those of our existing operations, realizing general and administrative savings and achieving meaningful synergies;
Ø	challenges in managing the increased scope, geographic diversity and complexity of our operations; and
Ø	mitigating contingent and/or assumed liabilities.

If we continue to grow and acquire refining and refining related assets, it could place a strain on our administrative, financial and operational resources. To manage growth effectively, we will need to control costs, attract and retain highly skilled employees, improve our operating efficiency and enhance our management, financial and reporting systems and procedures.

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Risk factors

If we are unable to successfully meet the challenges associated with one or more of our acquisitions, this could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to successfully integrate our Tulsa Refinery and the Sinclair Refinery into a single facility.

Our expectations regarding the Sinclair Refinery acquisition depend in large part upon our ability to integrate the Sinclair Refinery with our Tulsa Refinery and operate the two facilities as a single refinery. The acquisition and subsequent operation of a new refinery alone is a challenging, time-consuming and costly process. In this instance a large part of the value we see in the Sinclair Refinery stems from successfully integrating the Sinclair Refinery with our Tulsa Refinery and operating the two facilities as a single facility. There can be no guarantee that we will be able to successfully integrate the two refineries or that this integration will yield the cost savings and synergies that we currently expect.

The integration of the two refineries is dependent upon our being able to send various diesel, gas oil and other streams of heavy oil, hydrogen and naphtha between the two refineries. To do so will require us to utilize either existing third party pipelines and/or build new pipelines to link the two refineries. There is no guarantee that we will be able to obtain sufficient access to the third-party pipelines at a cost that we deem reasonable or that we will be able to construct new pipelines at their anticipated cost and on schedule. Similarly, we currently anticipate the integration of the two refineries will include an expansion of the diesel hydrotreater at the Sinclair Refinery and there is no guarantee that we will be able to complete that capital project at its anticipated cost and on schedule. The integration of the two refineries will take time and will require the dedication of significant management resources. If we are not able to successfully integrate the operations of the two refineries’ units, systems and personnel in a timely and efficient manner, the anticipated benefits of the acquisition of the Sinclair Refinery may not be realized fully or at all or may take longer to realize than expected.

We may not realize the anticipated benefits of the recent Tulsa Refinery acquisition and the planned Sinclair Refinery acquisition.

Our expectations regarding the earnings, operating cash flow, capital expenditures and liabilities resulting from our recent acquisition of the Tulsa Refinery and our planned acquisition of the Sinclair Refinery are based on information currently available to us and may prove to be incorrect. In addition, we may not realize any anticipated benefits of either of these acquisitions and may not be successful in integrating the acquired assets into our existing business.

The consummation of the Sinclair Refinery acquisition is subject to the satisfaction of certain conditions precedent, including the consent of Sinclair’s lenders, the consent of certain governmental authorities to the transfer of certain licenses and permits, the approval of an amended consent decree relating to the Sinclair Refinery by the U.S. District Court for the District of Wyoming, and the consent of certain third parties to the transfer of certain material contracts. Our failure to acquire the Sinclair Refinery would result in our asset base being smaller than as described in this offering memorandum. Accordingly, we would not realize the anticipated benefits, including substantial reductions in our required level of capital expenditures, we discuss in this offering memorandum that are based on our completion of this acquisition.

We have provided limited historical information about the Tulsa Refinery and the Sinclair Refinery in this offering memorandum. We are relying on, and this offering memorandum contains, information provided by Sunoco and Sinclair regarding these refineries.

We have not included in this offering memorandum any audited or unaudited historical financial statements for either the Tulsa Refinery prior to its acquisition or the Sinclair Refinery. Until June 1, 2009, the Tulsa Refinery was historically operated as part of Sunoco’s operations, and the Sinclair

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Risk factors

Refinery has historically been operated as part of Sinclair’s operations. As a result, separate stand-alone financial statements for either of these refineries have not been prepared and are not available.

We have included in the Initial Offering Memorandum certain business, operational and other information about the Tulsa Refinery including, among others, certain information on refinery production. This information is based on information provided to us by Sunoco. Sunoco has not reviewed or approved any of the information contained in this offering memorandum, or the Initial Offering Memorandum, regarding the Tulsa Refinery. There can be no assurances that actual results for the Tulsa Refinery will not differ from our expectations.

We have included in this offering memorandum certain business, operational and other information about the Sinclair Refinery including, among others, certain information on refinery production. This information has been derived largely from information provided to us by Sinclair. Sinclair has not reviewed or approved any of the information contained in this offering memorandum regarding the Sinclair Refinery. There can be no assurances that actual results for the Sinclair Refinery will not differ from our expectations.

We may be liable for significant environmental costs relating to past and/for future acquisitions.

In connection with acquisitions of refineries, we may become responsible for certain environmental clean-up liabilities or costs. Although the sellers of the Tulsa Refinery and the Sinclair Refinery have each agreed to indemnify us for certain environmental cleanup liabilities and costs, they have not agreed to indemnify us for all such liabilities and costs. We have also agreed to indemnify each of these sellers for certain environmental liabilities and costs to the extent these liabilities and costs are not covered by the sellers’ indemnities to us. There can be no assurances that the sellers will satisfy their obligations under their agreements or that the liabilities and costs in excess of those that the sellers have agreed to reimburse us for will not be significant or that significant liabilities will not arise with respect to other matters we have assumed or for which we are indemnifying the sellers. Moreover, if either of the sellers were to become insolvent, that seller would likely be unable to indemnify us for any environmental liabilities. In addition, we may agree to be responsible for these or other types of environmental liabilities in connection with future acquisitions. There can be no assurances that these environmental liabilities and/or costs or expenditures to comply with environmental laws will not have a material adverse effect on our current or future results of operations and financial condition.

Our indebtedness could adversely affect our ability to operate our business and prevent us from fulfilling our obligations under the notes offered hereby.

On June 30, 2009, as adjusted to give effect to this offering and the application of the net proceeds therefrom, we would have had total indebtedness of $300.0 million in aggregate principal amount, not taking into account original issue discount, excluding letters of credit outstanding under our credit agreement aggregating $61.8 million and indebtedness of HEP.

Our indebtedness could have important consequences to you. For example, it could:

Ø	make it more difficult for us to satisfy our obligations with respect to the notes offered hereby;
Ø	limit our ability to obtain additional financing to fund our working capital, expenditures, debt service requirements or for other purposes;
Ø	limit our ability to use operating cash flow in other areas of our business because we must dedicate a portion of these funds to service debt;
Ø	limit our ability to compete with other companies who are not as highly leveraged; and
Ø	limit our ability to react to changing market conditions in our industry and in our customers’ industries and to economic downturns.

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Risk factors

In addition, the indenture governing the notes contains, and our credit agreement also contains financial or other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our debt, including the notes offered hereby. Our ability to satisfy our debt obligations, including the notes offered hereby, will depend upon our future operating performance. Prevailing economic conditions and financial, business and other factors, many of which are beyond our control, will affect our ability to make payments on our debt obligations. If we cannot generate sufficient cash from operations to meet our obligations, we may need to refinance or sell assets. Our business may not generate sufficient cash flow, or we may not be able to obtain sufficient funding, to make the payments required by all of our debt, including the notes offered hereby.

You generally will be required to accrue income before you receive cash attributable to original issue discount on the notes offered hereby. Additionally, in the event we enter into bankruptcy, you may not have a claim for all or a portion of any unamortized amount of the original issue discount on the notes.

The notes offered hereby constitute a “qualified reopening” under the applicable Treasury regulation and therefore will be treated as bearing original issue discount in the same amount as the existing notes. Accordingly, unless the notes are issued in this offering at a premium for United States federal income tax purposes, if you are a United States Holder (as defined below), you generally will be required to accrue OID on a current basis for United States federal income tax purposes, even before you receive cash attributable to such OID income and regardless of your method of accounting. For further discussion of the computation and reporting of OID, see “Certain United States federal tax considerations—United States Holders—Original issue discount.”

Additionally, a bankruptcy court may not allow a claim for all or a portion of any unamortized amount of the OID on the notes.

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EX-99.4

Exhibit 99.4

The proposed Sinclair Refinery acquisition

Substantially all the information presented below regarding the Sinclair Refinery and related assets to be acquired from Sinclair is based on information provided to us by Sinclair in connection with our proposed acquisition. The information presented below regarding the results and the operations of the Sinclair Refinery reflect the current configuration of the Sinclair Refinery and are prior to our proposed integration of the Sinclair Refinery with our existing Tulsa Refinery.

On October 19, 2009, one of our wholly-owned subsidiaries entered into a definitive purchase agreement with Sinclair to acquire the Sinclair Refinery for approximately $54.5 million in cash, subject to certain adjustments (including post closing payments of approximately $17.0 million for reimbursement of certain capital expenditures) and $74.0 million in Holly common stock, plus an amount to be paid at closing for the market value of crude oil, refined product and other inventories. Our current estimate is that the amount to be paid for these inventories will be approximately $45.0 million. A subsidiary of HEP is a party to our definitive purchase agreement with Sinclair and will acquire certain logistics assets that serve the Sinclair Refinery for $21.5 million in cash and $53.5 million in HEP common units. We intend to use the net proceeds from this offering to fund the cash portion of the purchase price for the Sinclair Refinery and a portion of the purchase price for the related inventory. If the acquisition of the Sinclair Refinery does not close, we will use the net proceeds from this offering for general corporate purposes, including working capital, capital expenditures and possible future acquisitions. See “Use of proceeds.”

DESCRIPTION OF THE SINCLAIR REFINERY

Facilities

The Sinclair Refinery is located on a 466-acre site in Tulsa, Oklahoma situated along the Arkansas River. The refinery has a total crude oil throughput capacity of approximately 75,000 BPSD. The refinery currently has a Nelson Complexity Index of 9.8 and has the ability to produce gasoline, diesel, #1 fuel oil, asphalt, heavy fuels and propane. The buildings that make up the Sinclair Refinery contain approximately 200,000 square feet. Additions and improvements to the Sinclair Refinery since late 2004 include a Scanfining unit to meet 2006 gasoline sulfur content requirements, a new Naphtha hydro desulphurizer (“Naphtha HDS”) unit in 2005, a new sulfur plant, modifications to the Distillate HDS unit, a new tall gas unit installed on the new sulfur plant and the conversion of the reformer from a 17 thousand BPD, or Mbpd, semi-regenerative reformer to a 22 Mbpd continuous catalyst regeneration reformer (“CCR Reformer”) (thereby increasing its capacity, octane capability and yield of gasoline). The refinery completed a partial maintenance turnaround in 2007, including the Crude Unit, Fluid Catalytic Cracking (“FCC”) unit and CCR Reformer. The next major maintenance turnaround is scheduled for 2010.

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The proposed Sinclair Refinery acquisition

The following table provides information about the main process units of the Sinclair Refinery:

Sinclair Refinery process units

	Current design
Unit	capacity (Mbpd)
Crude Unit	75.5
Naphtha HDS	22.0
FCC	24.0
Penex	9.0
CCR Reformer	19.0
Alkylation Unit	4.5
Scanfiner	16.0
Diesel HDS	24.0
Sulfur Unit	40.0 long tons per day

The refinery’s supporting infrastructure includes approximately 3.750 million barrels of tankage capacity on the refinery’s premises, approximately 1.362 million barrels of which is being acquired by HEP. Crude can be received by three pipelines that originate in Cushing, Oklahoma. The first pipeline is a 10” pipeline operated by Enbridge. This is a common carrier pipeline operated under an intrastate tariff that is dedicated to serving the refinery. The Enbridge pipeline has a capacity of 59,000 BPD of WTI-equivalent crude. The capacity falls to 35,000 BPD when transporting heavy/sour crude. The MidContinent pipeline is a 10” pipeline operated by Sun Pipeline Company that has historically provided up to 15,000 BPD of capacity to the refinery. The Magellan crude pipeline is operated by Magellan Midstream Partners, L.P. Under a ten year agreement expiring November 3, 2017, Magellan Midstream Partners, L.P. provides the refinery with 23,000 BPD of capacity, of which the first 22,000 BPD are on a take or pay basis. Product shipping is done primarily by pipeline, rail and truck rack. There are also three truck racks and a rail rack that support product distribution at the Sinclair Refinery. In addition, there is a separate rack for butane. HEP is acquiring the three truck loading racks for light products, asphalt and propane. HEP is also acquiring light product delivery pipelines. Approximately 80% of gasoline, 70% of diesel and 50% of #1 fuel oil is distributed through a refined products pipeline also owned by Magellan.

Operations

The following table provides information about the Sinclair Refinery’s operations:

	Year ended									Six months
	December 31,									ended June 30,
	(unaudited)									(unaudited)
	2008			2007			2006			2009			2008
Sinclair Refinery
Crude charge (BPD)(1)		60,300			58,000			65,500			69,200			59,400
Refinery production (BPD)(2)		61,300			56,200			64,900			67,800			61,200
Refinery utilization(3)		79.8	%		76.8	%		86.8	%		91.6	%		78.7	%

(1)	Crude charge represents the barrels per day of crude oil processed at the crude units at the Sinclair Refinery.
(2)	Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at the refinery.
(3)	Represents crude charge divided by total crude capacity measured in BPSD.

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The proposed Sinclair Refinery acquisition

Markets and competition

Sinclair currently distributes the gasoline and distillates produced at the Sinclair Refinery primarily through its Mid-Continent retail and wholesale network. After the acquisition, an affiliate of Sinclair will continue to distribute gasoline and distillates to its network under an offtake agreement with us. Under the offtake agreement, Sinclair would purchase 45,000 to 50,000 BPD of product. The offtake agreement would have an initial term of five years and could be renewed by Sinclair for an additional five-year term. The product would be delivered to Sinclair at the product pipeline owned and operated by Magellan Midstream Partners, L.P. and at the refinery’s truck rack.

The refinery’s asphalt and roofing flux production is sold via truck or railcar directly from the refinery or from leased terminals in Phillipsburg, Kansas and Catoosa, Oklahoma to customers throughout the Mid-Continent.

Refined product demand in the Mid-Continent region has generally historically resulted in higher refined product margins for its regional refineries as compared to some other regions in the United States as a result of a shortage of refining capacity in the Mid-Continent region. This shortage of refining capacity in the region is compensated by imports of petroleum products into the region from the Gulf Coast and other regions via pipeline, which generally supports the margins of local refineries such as the Sinclair Refinery due to the increased cost to import petroleum products. Additionally, Mid-Continent refining margins may benefit from increasing Canadian crude oil production and supply into the region.

In support of the growth of the Canadian crude market in the region, Enbridge and TransCanada have completed or announced plans to expand their respective systems to the refining hub at Cushing, Oklahoma, which will significantly improve access to the region by Canadian crude producers. Enbridge completed the expansion of its Spearhead Pipeline from the Chicago area to Cushing in May 2009. TransCanada’s Keystone pipeline runs from Hardisty, Alberta to the Nebraska/Kansas border, and TransCanada has announced plans to extend the pipeline to Cushing by late 2010 or early 2011.

Crude oil and feedstock supplies

The Sinclair Refinery is located approximately 50 miles from Cushing, Oklahoma, a significant crude oil pipeline crossroad and storage hub. Local pipelines provide access to regional crude production as well as many United States onshore, Gulf of Mexico, Canadian and other foreign crudes. The proximity of the refinery to this pipeline and storage hub allows the refinery the flexibility to optimize its crude slate and maintain lower crude inventories than a typical refinery.

Principal products and customers

The Sinclair Refinery primarily processes light sweet crudes into high value light products, such as gasoline and diesel fuels. It also produces asphalt and roofing flux.

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The proposed Sinclair Refinery acquisition

The table below provides information regarding the principal products produced at the Sinclair Refinery:

										Six months
	Year ended December 31,									ended June 30,
	(unaudited)									(unaudited)
	2008			2007			2006			2009			2008
Sinclair Refinery
Production of refined products:
Gasolines		53	%		53	%		52	%		54	%		54	%
Distillates		30	%		29	%		31	%		30	%		30	%
Asphalt		3	%		5	%		5	%		1	%		3	%
Roofing Flux		9	%		5	%		7	%		8	%		7	%
Other		5	%		8	%		5	%		7	%		6	%
Total		100	%		100	%		100	%		100	%		100	%

Light products are shipped primarily by product pipelines and are also made available to customers through truck and rail loading facilities.

The gasoline and distillates produced at the Sinclair Refinery have primarily been distributed through Sinclair’s retail and wholesale network, which will continue after the acquisition through the offtake agreement.

Asphalt and roofing flux are sold primarily to paving contractors and manufacturers of roofing products.

INTEGRATION OF THE TWO REFINERIES

We plan to operate the Sinclair Refinery and our existing Tulsa Refinery as one integrated, highly complex facility at a total crude processing rate of approximately 125,000 BPSD, primarily by sending intermediate streams from one facility to the other for further processing. Pursuant to this plan, high sulfur diesel and various gas oil streams would be sent from the Tulsa Refinery to be processed in the diesel hydrotreater and FCC units, respectively, of the Sinclair Refinery. Various heavy oil streams would be sent from the Sinclair Refinery to be processed in our coker unit at our Tulsa Refinery. Various other streams such as naphtha, hydrogen, and fuel gas would be shared between the two refineries.

Capital improvement projects

The integration of the two refineries will require us to utilize either existing third party pipelines and/or build interconnecting pipelines. We anticipate that the construction of the pipelines would take approximately six months. We will use these pipelines to upgrade the gas oil produced at the Tulsa Refinery into gasoline and diesel by processing the gas oil through the Sinclair Refinery’s FCC unit, as an alternative to selling the gas oil at a discount to WTI crude under our five-year gas oil offtake agreement with Sunoco. Additionally we expect that we will utilize the full capacity of the Sinclair Refinery’s diesel hydrotreater to reduce the volume of high sulfur diesel that we produce and sell. We also plan to expand the diesel hydrotreater located at the Sinclair Refinery to allow all the diesel produced at the integrated refinery to be sold as ULSD. We estimate that this DHT expansion project and a planned flare gas recovery expansion at our existing Tulsa Refinery will cost approximately $20.0 million. We also plan to spend approximately $20.0 million on a related project to expand our sulfur recovery capacity at our existing Tulsa Refinery.

We believe that the synergy of these two plants operated as an integrated facility will result in saving approximately $110.0 million of expected capital expenditures related to ULSD compliance. Also as a result of the integrated facility, we expect to be able to reduce capital expenditures for the forthcoming benzene in

27

The proposed Sinclair Refinery acquisition

gasoline requirements from approximately $30.0 million for the Tulsa Refinery alone to approximately $15.0 million for the integrated complex. Even if we are able to realize the operating synergies of the integrated facility, our Tulsa Refinery will still require sulfur recovery investment, but we estimate combining the two refineries will reduce our net near-term capital expenditure requirements by approximately $125.0 million, excluding the cost to construct the pipelines that will integrate the refinery.

Additionally, although we have not done the engineering or cost estimating for a future gas oil conversion project that would have been needed at the expiration of our gas oil offtake agreement with Sunoco, we believe that the cost of such a project would have been in excess of $100.0 million.

Employees

As of September 30, 2009, the Sinclair Refinery employed approximately 300 workers. The Sinclair Refinery is not unionized. Holly’s existing senior management, marketing, and business development personnel will perform the same functions with respect to the Sinclair Refinery as they do at our other refineries.

REGULATORY AND ENVIRONMENTAL MATTERS

In June 2008, Sinclair entered into a consent decree with the EPA and environmental agencies in Oklahoma and Wyoming. This consent decree addresses various alleged air compliance issues at the Sinclair Refinery and other refineries owned by Sinclair. In connection with our acquisition of the Sinclair Refinery, we will assume, pursuant to an amended consent decree, all of the liabilities and obligations of the consent decree that apply to the assets we are acquiring at the Sinclair Refinery. These obligations include requirements for NOx reductions from the refinery’s heaters and boilers, reduced emission levels in the refinery’s FCC unit, and installing a flare gas recovery system. We estimate the capital expenditures to address the remaining consent decree requirements to be approximately $16.0 million, which is expected to be expended through 2010.

Beginning in 2006, the Clean Air Act phased in limits on the sulfur content of diesel fuel. Effective in June 2006, diesel fuel for on-road uses was required to contain no more than 15 PPM of sulfur. Effective in June 2012, the same requirement will apply to diesel for locomotive and marine operations. We refer to these requirements as the ULSD requirements. Sunoco operated the Tulsa Refinery under a hardship waiver from the EPA that excepted the refinery from these requirements until April 1, 2010, but required Sunoco to generate or purchase diesel sulfur credits to offset non-ULSD production at the Tulsa Refinery. In connection with our acquisition of the Tulsa Refinery, we requested from the EPA, and received, a hardship waiver that waives the ULSD requirements with respect to our operation of the Tulsa Refinery until November 1, 2011, subject to an obligation to offset production of non-ULSD diesel with diesel sulfur credits. We originally planned to construct a new diesel hydrotreater and to expand sulfur recovery capacity at the Tulsa Refinery at a cost of approximately $150 million with expected completion in mid-2011. This project would have allowed all diesel produced at the Tulsa Refinery to be produced as ULSD. We believe that the Sinclair Refinery will simplify the project needed to upgrade the diesel desulfurization capabilities at the Tulsa Refinery. We expect that the addition of this asset will allow us to forego approximately $150.0 million of expenditures related to a diesel hydrotreater at our existing Tulsa Refinery, as the Sinclair Refinery already has a hydrotreater onsite. We currently plan to expand the diesel hydrotreater located at the Sinclair Refinery to allow all the diesel produced at the integrated refinery to be sold as ULSD. We estimate that this DHT expansion project and a planned flare gas recovery expansion at our existing Tulsa Refinery will cost approximately $20.0 million. We also plan to spend approximately $20.0 million on a related project to expand our sulfur recovery capacity at our existing Tulsa Refinery.

Due to soil and groundwater contamination at the Sinclair Refinery, the refinery has been studying and remediating areas of the Sinclair Refinery under a Resource Conservation and Recovery Act (“RCRA”) permit issued by the Oklahoma Department of Environmental Quality, or ODEQ. The remediation

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The proposed Sinclair Refinery acquisition

includes, among other things, the removal of light non-aqueous phase liquids. In connection with our acquisition of the Sinclair Refinery, we will become the permittee under the RCRA permit and will assume all obligations under the final RCRA corrective action permit relating to the Sinclair Refinery. Pursuant to our purchase agreement with Sinclair, Sinclair will, however, be obligated to pay for certain remedial activities associated with the RCRA permit. Following our planned acquisition of the Sinclair Refinery, we plan to continue to work with the ODEQ to obtain a site-wide RCRA post-closure permit. Prior to entering into our agreement to acquire the refinery, Sinclair reportedly spent between approximately $1.0 million and $5.0 million on remediation projects relating to soil and groundwater contamination. In order to obtain a RCRA post-closure permit, we expect to spend approximately $10.0 to $20.0 million on soil and groundwater projects over the next several years.

The Sinclair Refinery is currently subject to a bar from federal contracts or benefits resulting from Sinclair’s 2007 Clean Water Act conviction. Pursuant to our purchase agreement with Sinclair, Sinclair has advised EPA debarment counsel that we are purchasing the refinery and Sinclair will cooperate with us in seeking reinstatement by the EPA of the Sinclair Refinery.

OTHER AGREEMENTS

In connection with the closing of the acquisition of the Sinclair Refinery, we intend to enter into a number of other ancillary agreements with Sinclair or affiliates of Sinclair and HEP or its subsidiaries, including a refined products purchase agreement, or offtake agreement, with an affiliate of Sinclair. Pursuant to this offtake agreement, an affiliate of Sinclair would continue to distribute gasoline and distillates to its network following our acquisition of the Sinclair Refinery. Under the offtake agreement, Sinclair would purchase 45,000 to 50,000 BPD of product. The offtake agreement would have an initial term of five years and could be renewed by Sinclair for an additional five-year term. The product would be delivered to Sinclair at the product pipeline owned and operated by Magellan Midstream Partners, L.P. and at the Sinclair Refinery’s truck and rail racks.

We also expect to enter into a 15-year pipelines, tankage and loading rack throughput and storage agreement with a subsidiary of HEP providing for throughput and storage services to be provided by HEP with the logistics assets being purchased by HEP from Sinclair. Under this agreement we will agree to pay a subsidiary of HEP, subject to various adjustments:

Ø	a pipeline tariff of $0.10 for each barrel of refined products moved on the pipelines acquired by HEP from Sinclair, with a guaranteed minimum throughput of 60,000 bpd of refined products moved;
Ø	a tankage base tariff of $0.30 for each barrel of refined products stored using tankage acquired by HEP from Sinclair, with a guaranteed minimum throughput of 80,000 bpd of refined products, $0.10 per barrel for volumes in excess of 80,000 bpd but less than 120,000 bpd, and $0.22 per barrel for volumes in excess of 120,000 bpd; and
Ø	a loading racks tariff of $0.30 for each barrel of refined products, LPG, and heavy products loaded over the loading racks acquired by HEP from Sinclair, with a guaranteed minimum throughput of 26,000 bpd.

The contractual minimum annual revenue under this agreement will initially be $13.8 million and will increase July 1 of each contract year, commencing on July 1, 2011, based on the percentage change, if any, in the producers price index, up to a maximum increase of 3.0% annually. However, if in any given year the percentage change in the producers price index is a negative number, then the minimum annual revenue will remain at the same level and will not be decreased. With respect to our minimum revenue commitments under this agreement for the pipeline, tankage and loading rack assets, any deficiency owed to HEP due to our failure to meet any minimum revenue commitment for a given quarter will be offset by amounts owed to HEP in excess of any minimum revenue commitment during the same quarter.

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