Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

Our operations are organized into three reportable segments, Refining, PCLI and HEP. Our operations that are not included in the Refining, PCLI and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Consolidations and Eliminations.

The Refining segment represents the operations of the El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross Refineries and HFC Asphalt (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. Additionally, the Refining segment includes specialty lubricant products produced at our Tulsa Refineries that are marketed throughout North America and are distributed in Central and South America. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma.

On February 1, 2017, we acquired PCLI, a Canadian-based producer of lubricant products such as base oils, white oils, specialty products and finished lubricants. The PCLI segment involves production operations, located in Mississauga, Ontario, and marketing of its products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China.

The HEP segment includes all of the operations of HEP, which owns and operates logistics and refinery assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and processing units in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The HEP segment also includes a 75% ownership interest in UNEV (a consolidated subsidiary of HEP); a 50% ownership interest in each of the Frontier Pipeline, Osage Pipeline and the Cheyenne Pipeline and a 25% ownership interest in the SLC Pipeline. 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. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP’s periodic public filings.

The accounting policies for our segments are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2016.

	Refining			PCLI		HEP (1)		Corporate and Other			Consolidations and Eliminations			Consolidated Total
	(In thousands)
Three Months Ended March 31, 2017
Sales and other revenues	$	2,862,076		$	201,940	$	105,634	$	27		$	(89,194	)	$	3,080,483
Operating expenses	$	257,115		$	36,029	$	32,489	$	1,013		$	(19,529	)	$	307,117
Depreciation and amortization	$	69,668		$	5,074	$	18,373	$	3,132		$	(207	)	$	96,040
Income (loss) from operations	$	(50,255	)	$	12,394	$	52,138	$	(46,435	)	$	(566	)	$	(32,724	)
Earnings of equity method investments	$	—		$	—	$	1,840	$	—		$	—		$	1,840
Capital expenditures	$	47,674		$	1,595	$	8,265	$	2,223		$	—		$	59,757
Three Months Ended March 31, 2016
Sales and other revenues	$	1,999,587		$	—	$	102,010	$	110		$	(82,983	)	$	2,018,724
Operating expenses	$	228,762		$	—	$	26,823	$	1,255		$	(4,257	)	$	252,583
Depreciation and amortization	$	68,878		$	—	$	16,029	$	3,180		$	(207	)	$	87,880
Income (loss) from operations	$	55,000		$	—	$	56,067	$	(26,855	)	$	(614	)	$	83,598
Earnings of equity method investments	$	—		$	—	$	2,765	$	—		$	—		$	2,765
Capital expenditures	$	104,707		$	—	$	42,184	$	2,682		$	—		$	149,573

	Refining		PCLI		HEP		Corporate and Other		Consolidations and Eliminations			Consolidated Total
	(In thousands)
March 31, 2017
Cash, cash equivalents and investments in marketable securities	$	90	$	56,799	$	7,007	$	65,616	$	—		$	129,512
Total assets	$	6,514,854	$	1,152,870	$	1,906,791	$	252,549	$	(284,712	)	$	9,542,352
Long-term debt	$	—	$	—	$	1,240,565	$	990,977	$	—		$	2,231,542
December 31, 2016
Cash, cash equivalents and investments in marketable securities	$	49	$	—	$	3,657	$	1,131,021	$	—		$	1,134,727
Total assets	$	6,513,806	$	—	$	1,920,487	$	1,306,169	$	(304,801	)	$	9,435,661
Long-term debt	$	—	$	—	$	1,243,912	$	991,225	$	—		$	2,235,137

(1) HEP acquired a newly constructed crude unit, FCCU and polymerization unit at our Woods Cross Refinery in October 2016. As a result, we have recast our 2016 HEP segment information to include these asset-related capital expenditures and certain operating expenses that were previously presented under the Refining segment.

HEP segment revenues from external customers were $16.6 million and $19.2 million for the three months ended March 31, 2017 and 2016, respectively.