February 8, 2021
Holly Energy Partners Operating, L.P.
2828 N. Harwood Street, Suite 1300
Dallas, Texas 75201
Email address: ***@***
Re: Master Throughput Agreement Cheyenne Assets
Ladies and Gentlemen:
Reference is made to the Sixth Amended and Restated Master Throughput Agreement, dated as of October 1, 2019 (the Master Throughput Agreement), by and between HollyFrontier Refining & Marketing LLC (HFRM) and Holly Energy Partners Operating, L.P. (HEP Operating, and with HFRM, the Parties, and each, a Party). Capitalized terms used but not otherwise defined in this letter agreement (this Letter Agreement) shall have the meanings given such terms in the Master Throughput Agreement.
On May 29, 2020, the board of directors of HollyFrontier approved a plan to permanently cease petroleum refining operations at the Cheyenne Refinery, and public announcement of this decision was made on June 1, 2020. The decision was also shared with the board of directors of Holly Logistics Services, L.L.C. on May 29, 2020. HollyFrontier ceased petroleum refining operations at the Cheyenne Refinery in August 2020 and began conversion of certain units for renewable diesel production (the Cheyenne Shutdown and Reconfiguration). The Cheyenne Shutdown and Reconfiguration is expected to be completed in the first quarter of 2022.
This Letter Agreement is entered into by and between HFRM and HEP Operating to confirm certain rights and obligations as they relate to the Master Throughput Agreement and the Cheyenne Shutdown and Reconfiguration.
The Parties, each intending to be legally bound, hereby agree to the following:
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Master Throughput Agreement. The Parties acknowledge and agree that, effective as of January 1, 2021, the Master Throughput Agreement will be amended and restated in its entirety to, among other things, remove the Cheyenne Assets and all obligations of the Parties with respect to the Cheyenne Assets pursuant to the Master Throughput Agreement (the Termination). Following the Termination, HEP Operating agrees to (i) demolish and remove twelve (12) Tanks with shell capacity of 369,175 barrels at the Cheyenne Refinery as listed on Exhibit A (the Demo Assets) and (ii) drain, clean and thereafter idle or otherwise remove from service twenty-five (25) Tanks with shell capacity of 476,414 at the Cheyenne Refinery as listed on Exhibit B (the Released Assets).
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Termination Fee. In consideration for the Termination, HFRM agrees to pay to HEP Operating a one-time fee equal to $10,000,000 (the Contract Termination Fee). HFRM will pay the Contract Termination Fee to HEP Operating within ten (10) business days of the date hereof by wire transfer of immediately available funds. Notwithstanding the foregoing, HFRM acknowledges that HEP Operating plans to use a portion of the Contract Termination Fee to demolish the Demo Assets. HEP Operating may cause HFRM to redirect a portion of the Contract Termination Fee directly to a third party contracted to demolish the Demo Assets as part of the Cheyenne Shutdown and Reconfiguration; provided, that HEP Operating has the right to approve any contractor used for such purpose.