Supplemental Guarantor / Non-Guarantor Financial Information

Obligations of Holly Energy Partners, L.P. (“Parent”) under the Senior Notes have been jointly and severally guaranteed by each of its direct and indirect wholly-owned subsidiaries (“Guarantor Subsidiaries”). These guarantees are full and unconditional.

We sold our 70% interest in Rio Grande on December 1, 2009; therefore, Rio Grande is no longer a subsidiary of HEP. Rio Grande (“Non-Guarantor”) was the only subsidiary that did not guarantee these obligations. Amounts attributable to Rio Grande prior to our sale are presented in discontinued operations.

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

Condensed Consolidating Balance Sheet



December 31, 2011	Parent		Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2	$	3,267		—			$	3,269
Accounts receivable	—		34,071			—			34,071
Intercompany accounts receivable (payable)	17,745		(17,745		)	—			—
Prepaid and other current assets	266		2,378			—			2,644
Total current assets	18,013		21,971			—			39,984
Properties and equipment, net	—		536,425			—			536,425
Investment in subsidiaries	651,217		—			(651,217		)	—
Transportation agreements, net	—		101,543			—			101,543
Goodwill	—		256,498			—			256,498
Investment in SLC Pipeline	—		25,302			—			25,302
Other assets	1,322		5,882			—			7,204
Total assets	$	670,552	$	947,621		$	(651,217	)	$	966,956
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	11,406		$	—		$	11,406
Accrued interest	7,498		782			—			8,280
Deferred revenue	—		4,032			—			4,032
Accrued property taxes	—		2,196			—			2,196
Other current liabilities	689		1,088			—			1,777
Total current liabilities	8,187		19,504			—			27,691
Long-term debt	332,988		272,900			—			605,888
Other long-term liabilities	—		4,000			—			4,000
Partners’ equity	329,377		651,217			(651,217		)	329,377
Total liabilities and partners’ equity	$	670,552	$	947,621		$	(651,217	)	$	966,956

Condensed Consolidating Balance Sheet



December 31, 2010	Parent			Guarantor Subsidiaries		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2		$	401	$	—		$	403
Accounts receivable	—			22,508		—			22,508
Intercompany accounts receivable (payable)	(92,230		)	92,230		—			—
Prepaid and other current assets	235			540		—			775
Total current assets	(91,993		)	115,679		—			23,686
Properties and equipment, net	—			434,950		—			434,950
Investment in subsidiaries	541,262			—		(541,262		)	—
Transportation agreements, net	—			108,489		—			108,489
Goodwill	—			49,109		—			49,109
Investment in SLC Pipeline	—			25,437		—			25,437
Other assets	1,261			341		—			1,602
Total assets	$	450,530		$	734,005	$	(541,262	)	$	643,273
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable	$	—		$	10,238	$	—		$	10,238
Accrued interest	7,498			19		—			7,517
Deferred revenue	—			10,437		—			10,437
Accrued property taxes	—			1,990		—			1,990
Other current liabilities	1,011			251		—			1,262
Total current liabilities	8,509			22,935		—			31,444
Long-term debt	332,649			158,999		—			491,648
Other long-term liabilities	—			10,809		—			10,809
Partners’ equity	109,372			541,262		(541,262		)	109,372
Total liabilities and partners’ equity	$	450,530		$	734,005	$	(541,262	)	$	643,273

Condensed Consolidating Statement of Income



Year Ended December 31, 2011	Parent			Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	167,626		$	—		$	167,626
Third parties	—			45,923			—			45,923
	—			213,549			—			213,549
Operating costs and expenses:
Operations	—			62,202			—			62,202
Depreciation and amortization	—			33,150			—			33,150
General and administrative	3,902			2,674			—			6,576
	3,902			98,026			—			101,928
Operating income (loss)	(3,902		)	115,523			—			111,621
Equity in earnings of subsidiaries	106,393			—			(106,393		)	—
Equity in earnings of SLC Pipeline	—			2,552			—			2,552
Interest expense, net	(24,494		)	(11,465		)	—			(35,959		)
Other income	—			17			—			17
	81,899			(8,896		)	(106,393		)	(33,390		)
Income before income taxes	77,997			106,627			(106,393		)	78,231
State income tax	—			(234		)	—			(234		)
Net income	$	77,997		$	106,393		$	(106,393	)	$	77,997

Condensed Consolidating Statement of Income



Year Ended December 31, 2010	Parent			Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	146,376		$	—		$	146,376
Third parties	—			35,721			—			35,721
	—			182,097			—			182,097
Operating costs and expenses:
Operations	—			52,947			—			52,947
Depreciation and amortization	—			30,682			—			30,682
General and administrative	5,053			2,666			—			7,719
	5,053			86,295			—			91,348
Operating income (loss)	(5,053		)	95,802			—			90,749
Equity in earnings of subsidiaries	87,280			—			(87,280		)	—
Equity in earnings of SLC Pipeline	—			2,393			—			2,393
Interest expense, net	(23,358		)	(10,636		)	—			(33,994		)
Other income	—			17			—			17
	63,922			(8,226		)	(87,280		)	(31,584		)
Income before income taxes	58,869			87,576			(87,280		)	59,165
State income tax	—			(296		)	—			(296		)
Net income	$	58,869		$	87,280		$	(87,280	)	$	58,869

Condensed Consolidating Statement of Income



Year Ended December 31, 2009	Parent			Guarantor Subsidiaries			Non- Guarantor		Eliminations			Consolidated
	(In thousands)
Revenues:
Affiliates	$	—		$	101,395		$	—	$	—		$	101,395
Third parties	—			45,166			—		—			45,166
	—			146,561			—		—			146,561
Operating costs and expenses:
Operations	—			44,003			—		—			44,003
Depreciation and amortization	—			26,714			—		—			26,714
General and administrative	4,697			2,889			—		—			7,586
	4,697			73,606			—		—			78,303
Operating income (loss)	(4,697		)	72,955			—		—			68,258
Equity in earnings of subsidiaries	81,773			3,686			—		(85,459		)	—
Equity in earnings of SLC Pipeline	—			1,919			—		—			1,919
SLC Pipeline acquisition costs	—			(2,500		)	—		—			(2,500		)
Interest expense, net	(11,062		)	(10,428		)	—		—			(21,490		)
Other income	—			67			—		—			67
	70,711			(7,256		)	—		(85,459		)	(22,004		)
Income from continuing operations before income taxes	66,014			65,699			—		(85,459		)	46,254
State income tax	—			(20		)	—		—			(20		)
Income from continuing operations	66,014			65,679			—		(85,459		)	46,234
Income from discontinued operations	—			16,094			5,265		(1,579		)	19,780
Net income	$	66,014		$	81,773		$	5,265	$	(87,038	)	$	66,014

Condensed Consolidating Statement of Cash Flows



Year Ended December 31, 2011	Parent			Guarantor Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	11,666		$	81,453		$	—	$	93,119
Cash flows from investing activities
Additions to properties and equipment	—			(39,337		)	—		(39,337		)
Cash flows from financing activities
Net borrowings under credit agreement	—			41,000			—		41,000
Repayments on promissory notes	—			(77,100		)	—		(77,100		)
Proceeds from issuance of common units	75,815			—			—		75,815
Capital contribution from general partner	5,887			—			—		5,887
Distributions to unitholders	(91,506		)	—			—		(91,506		)
Purchase of units for incentive grants	(1,641		)	—			—		(1,641		)
Deferred financing costs	—			(3,150		)	—		(3,150		)
Other	(221		)	—			—		(221		)
	(11,666		)	(39,250		)	—		(50,916		)
Cash and cash equivalents
Increase (decrease) for the year	—			2,866			—		2,866
Beginning of year	2			401			—		403
End of year	$	2		$	3,267		$	—	$	3,269

Condensed Consolidating Statement of Cash Flows



Year Ended December 31, 2010	Parent			Guarantor Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash flows from operating activities	$	(59,916	)	$	163,084		$	—	$	103,168
Cash flows from investing activities
Additions to properties and equipment	—			(25,103		)	—		(25,103		)
Acquisition of assets from HFC	—			(35,526		)	—		(35,526		)
	—			(60,629		)	—		(60,629		)
Cash flows from financing activities
Net repayments under credit agreement	—			(47,000		)	—		(47,000		)
Net proceeds from issuance of senior notes	147,540			—			—		147,540
Distributions to unitholders	(84,426		)	—			—		(84,426		)
Purchase price in excess of transferred basis in assets acquired from HFC	—			(57,560		)	—		(57,560		)
Purchase of units for incentive grants	(2,704		)	—			—		(2,704		)
Deferred financing costs	(494		)	—			—		(494		)
	59,916			(104,560		)	—		(44,644		)
Cash and cash equivalents
Decrease for the year	—			(2,105		)	—		(2,105		)
Beginning of year	2			2,506			—		2,508
End of year	$	2		$	401		$	—	$	403

Condensed Consolidating Statement of Cash Flows



Year Ended December 31, 2009	Parent			Guarantor Subsidiaries			Non- Guarantor			Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities	$	(131,123	)	$	196,205		$	6,613		$	(3,500	)	$	68,195
Cash flows from investing activities
Additions to properties and equipment	—			(32,999		)	—			—			(32,999		)
Acquisitions of assets from HFC	—			(95,080		)	—			—			(95,080		)
Acquisition of assets from Sinclair	—			(25,665		)	—			—			(25,665		)
Investment in SLC Pipeline	—			(25,500		)	—			—			(25,500		)
Proceeds from sale of interest in Rio Grande, net of transferred cash	—			31,865			—			—			31,865
Other	—			3,174			(3,174		)	—			—
	—			(144,205		)	(3,174		)	—			(147,379		)
Cash flows from financing activities
Net borrowings under credit agreement	—			6,000			—			—			6,000
Proceeds from issuance of common units	186,801			(53,500		)	—			—			133,301
Capital contribution from general partner	3,812			—			—			—			3,812
Distributions to unitholders	(61,188		)	—			(5,000		)	5,000			(61,188		)
Distributions to noncontrolling interest	—			—			—			(1,500		)	(1,500		)
Net purchase price in excess of transferred basis in assets acquired from HFC	2,580			(5,700		)	—			—			(3,120		)
Purchase of units for incentive grants	(616		)	—			—			—			(616		)
Other	(266		)	—			—			—			(266		)
	131,123			(53,200		)	(5,000		)	3,500			76,423
Cash and cash equivalents
Decrease for the year	—			(1,200		)	(1,561		)	—			(2,761		)
Beginning of year	2			3,706			1,561			—			5,269
End of year	$	2		$	2,506		$	—		$	—		$	2,508