NOTE 2:

Holly-Frontier Merger

On February 21, 2011, we entered into a merger agreement providing for a "merger of equals" business combination between us and Frontier. On July 1, 2011, North Acquisition, Inc., a direct wholly-owned subsidiary of Holly, merged with and into Frontier, with Frontier surviving as a wholly-owned subsidiary of Holly. Concurrent with the merger, we changed our name to HollyFrontier Corporation and changed the trading symbol for our common stock traded on the New York Stock Exchange to "HFC." Subsequent to the merger and following approval by the post-closing board of directors of HollyFrontier, Frontier merged with and into HollyFrontier, with HollyFrontier continuing as the surviving corporation.

In accordance with the merger agreement, we issued approximately 51.4 million shares of HollyFrontier common stock in exchange for outstanding shares of Frontier common stock to former Frontier stockholders. Each outstanding share of Frontier common stock was converted into 0.4811 shares of HollyFrontier common stock with any fractional shares paid in cash. Based on the July 1, 2011 market closing price of $71.86, the aggregate equity consideration paid in connection with the merger was approximately $3.7 billion.

The merger will be accounted for using the acquisition method of accounting with Holly being considered the acquirer of Frontier for accounting purposes. Therefore, the purchase price shall be allocated to the fair value of the acquired Frontier tangible and intangible assets and liabilities at the acquisition date, with the excess purchase price being recorded as goodwill. Due to the short timeframe between the consummation of the merger and filing this Quarterly Report on Form 10-Q, we have not completed the detailed valuation studies necessary to arrive at the required fair value estimates of the acquired Frontier assets, the liabilities assumed and the related purchase price allocations.

Beginning July 1, 2011, HollyFrontier's consolidated financial and operating results will reflect the operations of the merged Frontier businesses. This includes a refinery located in El Dorado, Kansas (the "El Dorado Refinery") and a refinery located in Cheyenne, Wyoming (the "Cheyenne Refinery") that serve markets in the Rocky Mountain and Plains States regions of the United States. Assuming the merger had been consummated on January 1, 2010, the beginning of the earliest period presented, pro forma revenues, net income and basic earnings per share are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands, except per share amounts)

Sales and other revenues	$	5,037,660	$	3,694,740	$	9,272,899	$	6,841,174
Net income attributable to HollyFrontier stockholders	$	368,375	$	140,351	$	601,791	$	80,494
Basic earnings per share	$	3.52	$	1.34	$	5.74	$	0.77
Diluted earnings per share	$	3.50	$	1.34	$	5.72	$	0.77

The pro forma financial information above reflects adjustments that primarily relate to depreciation and amortization expense and are based on management's preliminary fair value estimates including useful life assumptions on the Frontier property, plant and equipment and intangible assets. These estimates are preliminary in nature and are expected to change following the completion of our valuation of the Frontier assets and liabilities. Such changes could be material.

As of June 30, 2011, we have recognized $6 million in merger transaction costs that are presented separately in our income statements and primarily relate to legal, advisory and other professional fees incurred since the announcement of our merger agreement in 2011. This does not include post-merger transaction costs including fees contingent upon the merger closing as well as costs to integrate the operations of the combined company.