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): May 8, 2006

HOLLY CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	001-03876	75-1056913
(State or other	(Commission File Number)	(I.R.S. Employer
jurisdiction of incorporation)		Identification Number)

100 Crescent Court,	75201-6927
Suite 1600	(Zip code)
Dallas, Texas
(Address of principal
executive offices)

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))

TABLE OF CONTENTS

Press Release

Item 2.02. Results of Operations and Financial Condition.

     The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

     On May 8, 2006, Holly Corporation (the “Company”) issued a press release announcing the Company’s first quarter of 2006 results. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein in its entirety.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

99.1   —   Press Release of the Company issued May 8, 2006.*

* Furnished herewith pursuant to Item 2.02.

-2-

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/ Scott C. Surplus
	Scott C. Surplus
	Vice President, Financial Reporting

Date: May 8, 2006

-3-

EXHIBIT INDEX

Exhibit
Number		Exhibit Title
99.1	—	Press Release of the Company issued May 8, 2006.*

* Furnished herewith pursuant to Item 2.02.

-4-

EX-99.1

Exhibit 99.1

For Immediate Release

HOLLY CORPORATION REPORTS FIRST QUARTER RESULTS

     Dallas, Texas, May 8, 2006 — Holly Corporation (NYSE-HOC) (“Holly” or the “Company”) today reported quarterly net income of $46.8 million ($1.60 per basic and $1.56 per diluted share) for the three months ended March 31, 2006, compared to net income of $13.6 million ($0.43 per basic and $0.42 per diluted share) for the three months ended March 31, 2005.

     On March 31, 2006 we sold our petroleum refinery in Great Falls, Montana (the “Montana Refinery”) to a subsidiary of Connacher Oil and Gas Limited (“Connacher”). Accordingly, the results of operations of the Montana Refinery and a gain on the sale of $14.3 million, net of income taxes of $8.4 million, are shown in discontinued operations. Income from continuing operations for the three months ended March 31, 2006 was $31.2 million ($1.07 per basic and $1.04 per diluted share) as compared to $14.4 million ($0.46 per basic and $0.45 per diluted share) for the three months ended March 31, 2005.

     Income from continuing operations for the first quarter of 2006 as compared to the first quarter of 2005 increased by $16.8 million principally due to improved refined product margins experienced in the current year’s first quarter and the start-up of the new ROSE unit, partially offset by higher operating costs and expenses. Overall refinery production levels from continuing operations showed a small decrease of 3% in the 2006 first quarter as compared to the same period in 2005, as production was reduced due to a power outage at the Navajo Refinery in February 2006. Refinery gross margins from continuing operations were $11.96 per produced barrel for the first quarter of 2006 compared to margins of $7.51 per produced barrel for the first quarter of 2005.

     Sales and other revenues from continuing operations increased 27% for the first quarter of 2006 as compared to the first quarter of 2005, due principally to higher refined product sales prices, partially offset by a small decrease in volumes sold. Additionally, revenues were reduced due to the exclusion of the operations of HEP in the first quarter of 2006 resulting from the deconsolidation of HEP effective July 1, 2005, which reduction was partially offset by higher revenues from NK Asphalt Partners (doing business as Holly Asphalt Company) which were included for only part of the first quarter of 2005, following our February 2005 acquisition of the other partner’s interest. Cost of products sold increased due principally to higher costs of crude oil. Also impacting cost of sales was the small decrease in volumes and the inclusion of NK Asphalt Partners for the full 2006 first quarter. Operating expenses increased in the first quarter, as compared to the prior year’s first quarter, due principally to increased utility costs (natural gas and electricity), partially offset by the exclusion of HEP’s operating costs in the 2006 first quarter due to the deconsolidation of HEP effective July 1, 2005. The Company’s effective tax rate decreased in the first quarter of 2006 as compared to the first quarter of 2005 primarily due to the impact of the American Jobs Creation Act of 2004 that provides tax incentives for small business refiners incurring costs to produce ultra low sulfur diesel fuel.

     “We are very pleased with our 2006 first quarter results, as we realized solid refined product margins, which were especially strong late in the first quarter and continuing into the second quarter,” said Matthew Clifton, Chief Executive Officer of Holly. “Our income from continuing operations was at a record first quarter level, and we generated $53.2 million of earnings before interest, taxes and depreciation (“EBITDA”) for the quarter, which compares very favorably to the 2005 first quarter. In the 2006 first quarter, we started realizing substantial benefits from our recently competed ROSE unit, which converts a significant portion of lower value asphalt into higher value transportation fuels. Operationally, our refineries ran well during the first quarter except that production was reduced from expected levels due to a power outage at the Navajo Refinery in February 2006.”

     “During the 2006 first quarter, we continued with our $200 million share repurchase program, purchasing 999,700 shares during the quarter at an average cost of $63.90. In addition to the stock repurchase program, in this era of high profitability, we are reinvesting our earnings in capital projects. Together with our recently completed Rose Unit, we are completing projects

which should allow us to meet required clean diesel fuel standards at both of our refineries while also expanding our Navajo refinery. These initiatives are all aimed at maximizing shareholder return. The clean fuels projects at the Navajo and Woods Cross refineries are now in the final stages of construction and will enable us to produce 100% ultra low sulfur diesel fuel at both facilities. The projects in New Mexico will also provide a phased-in 10,000 barrels-per-day expansion of the Navajo facility. Additionally, as was discussed in our recent Capital Projects web cast, our Board of Directors will be evaluating proposed projects to significantly enhance our feedstock flexibility at the Navajo and Woods Cross refineries and to expand the capacity of both refineries. If approved as presently proposed, we expect these new projects to cost approximately $300 million over three years and to bring our total crude capacity to 130,000 barrels-per-day, while increasing our ability to run lower priced heavy/sour crude oils.”

     “Looking forward, we remain convinced that the strong industry fundamentals will remain in our favor, as demand for refined products should continue to press the country’s refining supply capabilities. This, combined with our sour crude oil processing capabilities and our continued execution of value-added refining projects, should favorably impact our future earnings levels. With respect to Holly Energy Partners, we continue to be extremely pleased with its operations to date and look forward to its continued success,” said Clifton.

     The Company has scheduled a conference call for today, May 8, 2006 at 10:00AM EDT to discuss financial results. Listeners may access this call by dialing (800) 858-5936. The ID# for this call is #8166179. Listeners may access the call via the internet at: http://audioevent.mshow.com/296683. Additionally, listeners may replay this call approximately two hours after the call concludes by dialing (800) 642-1687. This audio archive will be available for two weeks.

     Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries a 75,000 barrels per stream day (“bpsd”) refinery located in Artesia, New Mexico and a 26,000 bpsd refinery in Woods Cross, Utah. Holly also owns a 45% interest (including the general partner interest) in Holly Energy Partners, L.P., which through subsidiaries owns or leases approximately 1,600 miles of petroleum product pipelines in Texas,

New Mexico and Oklahoma and refined product terminals in several Southwest and Rocky Mountain states.

     The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Such differences could be caused by a number of factors including, but not limited to, risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in the Company’s markets, the demand for and supply of crude oil and refined products, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, effects of governmental regulations and policies, the availability and cost of financing to the Company, the effectiveness of the Company’s capital investments and marketing strategies, the ability of the Company to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any future acquired operations, the Company’s efficiency in carrying out construction projects, the possibility of terrorist attacks and the consequences of any such attacks, general economic conditions, and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)

	Three Months Ended
	March 31,						Change from 2005
	2006			2005			Change			Percent
				(In thousands, except per share data)
Sales and other revenues	$	791,594		$	624,719		$	166,875			26.7	%
Operating costs and expenses:
Cost of products sold (exclusive of depreciation, depletion, and amortization)		675,485			533,414			142,071			26.6
Operating expenses (exclusive of depreciation, depletion, and amortization)		52,467			41,476			10,991			26.5
General and administrative expenses (exclusive of depreciation, depletion and amortization)		13,516			10,580			2,936			27.8
Depreciation, depletion and amortization		8,024			11,028			(3,004	)		(27.2	)
Exploration expenses, including dry holes		127			102			25			24.5
Total operating costs and expenses		749,619			596,600			153,019			25.6
Income from operations		41,975			28,119			13,856			49.3
Other income (expense):
Equity in loss of joint ventures		—			(685	)		685			(100.0	)
Equity in earnings of HEP		3,212			—			3,212			—
Minority interests in income of partnerships		—			(3,602	)		3,602			(100.0	)
Interest income		1,735			1,168			567			48.5
Interest expense		(275	)		(1,544	)		1,269			(82.2	)
		4,672			(4,663	)		9,335			(200.2	)
Income from continuing operations before income taxes		46,647			23,456			23,191			98.9
Income tax provision		15,487			9,040			6,447			71.3
Income from continuing operations		31,160			14,416			16,744			116.2
Income (loss) from discontinued operations, net of taxes		15,644			(782	)		16,426			—
Net income	$	46,804		$	13,634		$	33,170			243.3	%
Basic earnings (loss) per share:
Continuing operations	$	1.07		$	0.46		$	0.61			132.6	%
Discontinued operations		0.53			(0.03	)		0.56			—
Net income	$	1.60		$	0.43		$	1.17			272.1	%
Diluted earnings (loss) per share:
Continuing operations	$	1.04		$	0.45		$	0.59			131.1	%
Discontinued operations		0.52			(0.03	)		0.55			—
Net income	$	1.56		$	0.42		$	1.14			271.4	%
Cash dividends declared per common share	$	0.10		$	0.08		$	0.02			25.0	%
Average number of common shares outstanding:
Basic		29,229			31,514			(2,285	)		(7.3	)%
Diluted		30,014			32,195			(2,181	)		(6.7	)%

Balance Sheet Data

	March 31,		December 31,
	2006		2005
	(In thousands)
Cash, cash equivalents and investments in marketable securities	$	201,675	$	254,842
Working capital	$	181,502	$	210,103
Total assets	$	1,109,509	$	1,142,900
Stockholders’ equity	$	366,341	$	377,351

Other Financial Data

	Three Months Ended
	March 31,
	2006			2005
	(In thousands)
Net cash provided by (used for) operating activities	$	(18,340	)	$	6,807
Net cash provided by (used for) investing activities	$	119,888		$	(131,753	)
Net cash provided by (used for) financing activities	$	(56,001	)	$	120,925
Capital expenditures	$	32,235		$	13,448
EBITDA from continuing operations (1)	$	53,211		$	34,860
EBITDA including discontinued operations (1).	$	78,601		$	34,371

(1) Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA as presented above is reconciled to net income under “Reconciliations to Amounts Reported under Generally Accepted Accounting Principles” below.

     Our sole reportable business segment is Refining after the deconsolidation of HEP effective July 1, 2005. From the closing of the initial public offering of HEP on July 13, 2004 through June 30, 2005, our segments reflected two business divisions, Refining and HEP. The HEP segment did not have any activity subsequent to the deconsolidation effective July 1, 2005.

	Three Months Ended
	March 31,
	2006			2005
	(In thousands)
Sales and other revenues (1)
Refining	$	791,348		$	617,271
HEP		—			16,513
Corporate and Other		381			365
Consolidations and Eliminations		(135	)		(9,430	)
Consolidated	$	791,594		$	624,719
Income (loss) from operations (1)
Refining	$	55,588		$	30,075
HEP		—			7,785
Corporate and Other		(13,613	)		(9,741	)
Consolidated	$	41,975		$	28,119

(1) The Refining segment involves the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel, and includes our Navajo Refinery and Woods Cross Refinery. Although we previously included the Montana Refinery in the Refining segment, the results from the Montana Refinery are now reported in discontinued operations and are not included in the above tables. The petroleum products produced by the Refining segment are marketed in Texas, New Mexico, Arizona, Utah, Wyoming, Idaho, Washington and northern Mexico. The Refining segment also includes certain crude oil pipelines that we own and operate in conjunction with our refining operations as part of the supply networks of the refineries. The Refining segment also includes the equity in earnings from our 49% interest in NK Asphalt partners prior to February 2005. In February 2005, we acquired the other 51% interest in the joint venture from our other partner; subsequent to the purchase, we include the operations of NK Asphalt Partners in our consolidated financial statements. NK Asphalt Partners, doing business as Holly Asphalt Company, manufactures and markets asphalt and asphalt products in Arizona, New Mexico, Texas and California. The cost of pipeline transportation and terminal services provided by HEP is included in the Refining segment. The HEP segment involves all of the operations of HEP, including approximately 1,300 miles (780 miles prior to the Alon asset acquisition) of pipeline assets principally in Texas, New Mexico and Oklahoma and refined product terminals in several Southwest and Rocky Mountain states. The HEP segment also includes a 70% interest in Rio Grande Pipeline Company (“Rio Grande”) which provides petroleum products transportation. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations and from its interest in Rio Grande. Our operations not included in the reportable segment or segments are included in Corporate and Other, which includes costs of Holly Corporation, the parent company, consisting primarily of general and administrative expenses and interest charges as well as a small-scale oil and gas exploration and production program. The consolidations and eliminations amount includes the elimination of the revenue associated with pipeline transportation services between us and HEP prior to July 1, 2005.

Refining Operating Data

     Our refinery operations include the Navajo Refinery and the Woods Cross Refinery. The following tables set forth information, including non-GAAP performance measures about our refinery operations. The cost of products and refinery gross margin do not include the effect of depreciation, depletion and amortization. Reconciliations to amounts reported under GAAP are presented under “Reconciliations to Amounts Reported under Generally Accepted Accounting Principles.”

	Three Months Ended
	March 31,
	2006			2005
Navajo Refinery
Crude charge (BPD) (1)		72,520			74,300
Refinery production (BPD) (2)		81,110			84,030
Sales of produced refined products (BPD)		79,760			82,890
Sales of refined products (BPD) (3)		90,780			93,690
Refinery utilization (4)		96.7	%		99.1	%
Average per produced barrel (5)
Net sales	$	75.54		$	57.50
Cost of products (6)		62.85			48.68
Refinery gross margin		12.69			8.82
Refinery operating expenses (7)		4.39			3.01
Net operating margin	$	8.30		$	5.81
Feedstocks:
Sour crude oil		82	%		86	%
Sweet crude oil		5	%		0	%
Other feedstocks and blends		13	%		14	%
Total		100	%		100	%
Sales of produced refined products:
Gasolines		62	%		62	%
Diesel fuels		26	%		25	%
Jet fuels		5	%		4	%
Asphalt		1	%		6	%
LPG and other		6	%		3	%
Total		100	%		100	%
Woods Cross Refinery
Crude charge (BPD) (1)		22,730			21,730
Refinery production (BPD) (2)		24,010			23,890
Sales of produced refined products (BPD)		23,290			25,060
Sales of refined products (BPD) (3)		24,490			25,830
Refinery utilization (4)		87.4	%		83.6	%
Average per produced barrel (5)
Net sales	$	69.64		$	54.23
Cost of products (6)		60.19			51.06
Refinery gross margin		9.45			3.17
Refinery operating expenses (7)		5.73			4.49
Net operating margin	$	3.72		$	(1.32	)

	Three Months Ended
	March 31,
	2006			2005
Woods Cross Refinery
Feedstocks:
Sour crude oil		6	%		9	%
Sweet crude oil		86	%		78	%
Other feedstocks and blends		8	%		13	%
Total		100	%		100	%
Sales of produced refined products:
Gasolines		61	%		61	%
Diesel fuels		26	%		25	%
Jet fuels		3	%		2	%
Fuel oil		6	%		7	%
LPG and other		4	%		5	%
Total		100	%		100	%
Consolidated(8)
Crude charge (BPD) (1)		95,250			96,030
Refinery production (BPD) (2)		105,120			107,920
Sales of produced refined products (BPD)		103,050			107,950
Sales of refined products (BPD) (3)		115,270			119,520
Refinery utilization (4)		94.3	%		95.1	%
Average per produced barrel (5)
Net sales	$	74.21		$	56.74
Cost of products (6)		62.25			49.23
Refinery gross margin		11.96			7.51
Refinery operating expenses (7)		4.70			3.36
Net operating margin	$	7.26		$	4.15
Feedstocks:
Sour crude oil		64	%		69	%
Sweet crude oil		24	%		18	%
Other feedstocks and blends		12	%		13	%
Total		100	%		100	%
Sales of produced refined products:
Gasolines		62	%		62	%
Diesel fuels		26	%		25	%
Jet fuels		4	%		3	%
Asphalt		1	%		5	%
LPG and other		7	%		5	%
Total		100	%		100	%

(1)	Crude charge represents the barrels per day of crude oil processed at the crude units at our refineries.
(2)	Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries.
(3)	Includes refined products purchased for resale.
(4)	Represents crude charge divided by total crude capacity (BPSD).
(5)	Represents average per barrel amounts for produced refined products sold, which are non-GAAP. Reconciliations to amounts reported under GAAP are located under “Reconciliations to Amounts Reported under Generally Accepted Accounting Principles” following Item 3 of Part I of this Form 10-Q.
(6)	Transportation costs billed from HEP are included in cost of products.
(7)	Represents operating expenses of our refinery, exclusive of depreciation, depletion, and amortization, and excludes refining segment expenses of product pipelines and terminals.
(8)	The Montana Refinery was sold on March 31, 2006. Amounts reported are for the Navajo and Woods Cross Refineries.

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

     Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income plus (i) interest expense net of interest income, (ii) income tax provision, and (iii) depreciation, depletion and amortization. EBITDA is not a calculation based upon accounting principles generally accepted in the United States; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.

     Set forth below is our calculation of EBITDA.

	Three Months Ended
	March 31,
	2006			2005
	(In thousands)
Income from continuing operations	$	31,160		$	14,416
Add provision for income tax		15,487			9,040
Add interest expense		275			1,544
Subtract interest income		(1,735	)		(1,168	)
Add depreciation and amortization		8,024			11,028
EBITDA from continuing operations		53,211			34,860
Income (loss) from discontinued operations before income tax expense		2,202			(1,280	)
Gain on sale of discontinued operations before income taxes		22,638			—
Add depreciation and amortization of discontinued operations		550			791
EBITDA including discontinued operations	$	78,601		$	34,371

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

     Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis. The refinery operation information for the Montana Refinery is not included in the following tables since it is a discontinued operation.

     We calculate refinery gross margin and net operating margin using net sales, cost of products and operating expenses, in each case averaged per produced barrel sold. These two margins do not include the effect of depreciation, depletion and amortization. Each of these component performance measures can be reconciled directly to our Consolidated Statement of

Income. Other companies in our industry may not calculate these performance measures in the same manner.

Refinery Gross Margin

Refinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. Refinery gross margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.

	Three Months Ended
	March 31,
	2006		2005
Average per produced barrel:
Navajo Refinery
Net sales	$	75.54	$	57.50
Less cost of products		62.85		48.68
Refinery gross margin	$	12.69	$	8.82
Woods Cross Refinery
Net sales	$	69.64	$	54.23
Less cost of products		60.19		51.06
Refinery gross margin	$	9.45	$	3.17
Consolidated
Net sales	$	74.21	$	56.74
Less cost of products		62.25		49.23
Refinery gross margin	$	11.96	$	7.51

Net Operating Margin

Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. Net operating margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.

	Three Months Ended
	March 31,
	2006		2005
Average per produced barrel:
Navajo Refinery
Refinery gross margin	$	12.69	$	8.82
Less refinery operating expenses		4.39		3.01
Net operating margin	$	8.30	$	5.81
Woods Cross Refinery
Refinery gross margin	$	9.45	$	3.17
Less refinery operating expenses		5.73		4.49
Net operating margin	$	3.72	$	(1.32	)
Consolidated
Refinery gross margin	$	11.96	$	7.51
Less refinery operating expenses		4.70		3.36
Net operating margin	$	7.26	$	4.15

Below are reconciliations to our Consolidated Statement of Income for (i) net sales, cost of products and operating expenses, in each case averaged per produced barrel sold, and (ii) net

operating margin and refinery gross margin. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliations of refined product sales from produced products sold to total sales and other revenue

	Three Months Ended
	March 31,
	2006			2005
Navajo Refinery
Average sales price per produced barrel sold	$	75.54		$	57.50
Times sales of produced refined products sold (BPD)		79,760			82,890
Times number of days in period		90			90
Refined product sales from produced products sold	$	542,256		$	428,956
Woods Cross Refinery
Average sales price per produced barrel sold	$	69.64		$	54.23
Times sales of produced refined products sold (BPD)		23,290			25,060
Times number of days in period		90			90
Refined product sales from produced products sold	$	145,972		$	122,310
Sum of refined products sales from produced products sold from our two refineries (3)	$	688,228		$	551,266
Add refined product sales from purchased products and rounding (1)		84,542			61,969
Total refined products sales		772,770			613,235
Add other refining segment revenue(2)		18,578			4,036
Total refining segment revenue		791,348			617,271
Add HEP sales and other revenue		—			16,513
Add corporate and other revenues		381			365
Subtract consolidations and eliminations		(135	)		(9,430	)
Sales and other revenues	$	791,594		$	624,719

(1)	We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet deliver commitments.
(2)	Other refining segment revenue includes the revenues associated with NK Asphalt Partners subsequent to their consolidation in February 2005.
(3)	The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

	Three Months Ended
	March 31,
	2006		2005
Average sales price per produced barrel sold	$	74.21	$	56.74
Times sales of produced refined products sold (BPD)		103,050		107,950
Times number of days in period		90		90
Refined product sales from produced products sold	$	688,228	$	551,266

Reconciliation of average cost of products per produced barrel sold to total cost of products sold

	Three Months Ended
	March 31,
	2006		2005
Navajo Refinery
Average cost of products per produced barrel sold	$	62.85	$	48.68
Times sales of produced refined products sold (BPD)		79,760		82,890
Times number of days in period		90		90
Cost of products for produced products sold	$	451,162	$	363,158

	Three Months Ended
	March 31,
	2006			2005
Woods Cross Refinery
Average cost of products per produced barrel sold	$	60.19		$	51.06
Times sales of produced refined products sold (BPD)		23,290			25,060
Times number of days in period		90			90
Cost of products for produced products sold	$	126,164		$	115,161
Sum of cost of products for produced products sold from our two refineries (3)	$	577,326		$	478,319
Add refined product costs from purchased products sold and rounding (1)		85,582			63,636
Total refined cost of products sold		662,908			541,955
Add other refining segment costs of products sold(2)		12,712			889
Total refining segment cost of products sold		675,620			542,844
Subtract consolidations and eliminations		(135	)		(9,430	)
Costs of products sold (exclusive of depreciation, depletion and amortization)	$	675,485		$	533,414

(1)	We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments.
(2)	Other refining segment costs of products sold includes the cost of products for NK Asphalt Partners subsequent to their consolidation in February 2005.
(3)	The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

	Three Months Ended
	March 31,
	2006		2005
Average cost of products per produced barrel sold	$	62.25	$	49.23
Times sales of produced refined products sold (BPD)		103,050		107,950
Times number of days in period		90		90
Cost of products for produced products sold	$	577,326	$	478,319

Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses

	Three Months Ended
	March 31,
	2006		2005
Navajo Refinery
Average refinery operating expenses per produced barrel sold	$	4.39	$	3.01
Times sales of produced refined products sold (BPD)		79,760		82,890
Times number of days in period		90		90
Refinery operating expenses for produced products sold	$	31,513	$	22,455
Woods Cross Refinery
Average refinery operating expenses per produced barrel sold	$	5.73	$	4.49
Times sales of produced refined products sold (BPD)		23,290		25,060
Times number of days in period		90		90
Refinery operating expenses for produced products sold	$	12,011	$	10,127
Sum of refinery operating expenses per produced products sold from our two refineries (2)	$	43,524	$	32,582
Add other refining segment operating expenses and rounding (1)		8,909		3,506
Total refining segment operating expenses		52,433		36,088
Add HEP operating expenses		—		5,388
Add (subtract) corporate and other costs		34		—
Operating expenses (exclusive of depreciation, depletion and amortization)	$	52,467	$	41,476

(1)	Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of NK Asphalt Partners subsequent to their consolidation in February 2005.
(2)	The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

	Three Months Ended
	March 31,
	2006		2005
Average refinery operating expenses per produced barrel sold	$	4.70	$	3.36
Times sales of produced refined products sold (BPD)		103,050		107,950
Times number of days in period		90		90
Refinery operating expenses for produced products sold	$	43,524	$	32,582

Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues

	Three Months Ended
	March 31,
	2006			2005
Navajo Refinery
Net operating margin per barrel	$	8.30		$	5.81
Add average refinery operating expenses per produced barrel		4.39			3.01
Refinery gross margin per barrel		12.69			8.82
Add average cost of products per produced barrel sold		62.85			48.68
Average net sales per produced barrel sold	$	75.54		$	57.50
Times sales of produced refined products sold (BPD)		79,760			82,890
Times number of days in period		90			90
Refined products sales from produced products sold	$	542,256		$	428,956
Woods Cross Refinery
Net operating margin per barrel	$	3.72		$	(1.32	)
Add average refinery operating expenses per produced barrel		5.73			4.49
Refinery gross margin per barrel		9.45			3.17
Add average cost of products per produced barrel sold		60.19			51.06
Average net sales per produced barrel sold	$	69.64		$	54.23
Times sales of produced refined products sold (BPD)		23,290			25,060
Times number of days in period		90			90
Refined products sales from produced products sold	$	145,972		$	122,310
Sum of refined products sales from produced products sold from our two refineries (3)	$	688,228		$	551,266
Add refined product sales from purchased products and rounding (1)		84,542			61,969
Total refined products sales		772,770			613,235
Add other refining segment revenue (2)		18,578			4,036
Total refining segment revenue		791,348			617,271
Add HEP sales and other revenue		—			16,513
Add corporate and other revenues		381			365
Subtract consolidations and eliminations		(135	)		(9,430	)
Sales and other revenues	$	791,594		$	624,719

(1)	We purchase finished products when opportunities arise that provide a profit on the sale of such products or to meet delivery commitments.
(2)	Other refining segment revenue includes the revenues associated with NK Asphalt Partners subsequent to their consolidation in February 2005.
(3)	The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis. These amounts may not calculate exactly due to rounding of reported numbers.

	Three Months Ended
	March 31,
	2006		2005
Net operating margin per barrel	$	7.26	$	4.15
Add average refinery operating expenses per produced barrel		4.70		3.36
Refinery gross margin per barrel		11.96		7.51
Add average cost of products per produced barrel sold		62.25		49.23
Average sales price per produced barrel sold	$	74.21	$	56.74
Times sales of produced refined products sold (BPD)		103,050		107,950
Times number of days in period		90		90
Refined product sales from produced products sold	$	688,228	$	551,266

FOR FURTHER INFORMATION, Contact:

Stephen J. McDonnell, Vice President and
     Chief Financial Officer
M. Neale Hickerson, Vice President,
     Investor Relations
Holly Corporation
214/871-3555