Segment Information

Effective fourth quarter of 2017, we revised our reportable segments to align with certain changes in how our chief operating decision maker manages and allocates resources to our business. Accordingly, our Tulsa Refineries’ lubricants operations, previously reported in the Refining segment, are now combined with the operations of our Petro-Canada Lubricants business (acquired February 1, 2017) and reported in the Lubricants and Specialty Products segment. Our prior period segment information has been retrospectively adjusted to reflect our current segment presentation.

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under Corporate, Other and Eliminations column.

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. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma.

The Lubricants and Specialty Products segment involves PCLI’s production operations, located in Mississauga, Ontario, that includes lubricant products such as base oils, white oils, specialty products and finished lubricants, and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa Refineries that are marketed throughout North America and are distributed in Central and South America.

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) and 50% ownership interest in each of the Osage Pipeline and the Cheyenne 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 (see Note 1).



	Refining			Lubricants and Specialty Products			HEP		Corporate, Other and Eliminations			Consolidated Total
	(In thousands)
Year Ended December 31, 2017
Sales and other revenues:
Revenues from external customers	$	12,579,672		$	1,594,036		$	77,225	$	366		$	14,251,299
Intersegment revenues	338,390			—			377,137		(715,527		)	—
	$	12,918,062		$	1,594,036		$	454,362	$	(715,161	)	$	14,251,299
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)	$	11,009,345		$	1,093,984		$	—	$	(635,530	)	$	11,467,799
Lower of cost or market inventory valuation adjustment	(107,479		)	(1,206		)	—		—			(108,685		)
Operating expenses	$	1,006,675		$	222,461		$	137,605	$	(72,507	)	$	1,294,234
Selling, general and administrative expenses	$	103,067		$	105,112		$	14,323	$	42,372		$	264,874
Depreciation and amortization	$	289,434		$	31,894		$	77,660	$	10,949		$	409,937
Asset impairment	$	19,247		$	—		$	—	$	—		$	19,247
Income (loss) from operations	$	597,773		$	141,791		$	224,774	$	(60,445	)	$	903,893
Earnings of equity method investments	$	—		$	—		$	12,510	$	—		$	12,510
Capital expenditures	$	176,533		$	31,464		$	44,810	$	19,452		$	272,259
Total assets	$	6,474,666		$	1,610,472		$	2,191,984	$	415,032		$	10,692,154



	Refining			Lubricants and Specialty Products			HEP		Corporate, Other and Eliminations			Consolidated Total
	(In thousands)
Year Ended December 31, 2016
Sales and other revenues:
Revenues from external customers	$	10,002,831		$	464,359		$	68,927	$	(417	)	$	10,535,700
Intersegment revenues	317,884			—			333,116		(651,000		)	—
	$	10,320,715		$	464,359		$	402,043	$	(651,417	)	$	10,535,700
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)	$	9,003,505		$	377,136		$	—	$	(614,714	)	$	8,765,927
Lower of cost or market inventory valuation adjustment	$	(287,848	)	$	(4,090	)	$	—	$	—		$	(291,938	)
Operating expenses	$	909,724		$	13,867		$	123,984	$	(28,736	)	$	1,018,839
Selling, general and administrative expenses	$	92,297		$	2,899		$	12,532	$	17,920		$	125,648
Depreciation and amortization	$	281,701		$	620		$	68,811	$	11,895		$	363,027
Goodwill and asset impairment	$	654,084		$	—		$	—	$	—		$	654,084
Income (loss) from operations	$	(332,748	)	$	73,927		$	196,716	$	(37,782	)	$	(99,887	)
Earnings of equity method investments	$	—		$	—		$	14,213	$	—		$	14,213
Capital expenditures	$	357,407		$	5,708		$	107,595	$	9,080		$	479,790
Total assets	$	6,048,091		$	465,715		$	1,920,487	$	1,001,368		$	9,435,661

Year Ended December 31, 2015
Sales and other revenues:
Revenues from external customers	$	12,677,901		$	493,282		$	66,654	$	83		$	13,237,920
Intersegment revenues	361,211			—			292,221		(653,432		)	—
	$	13,039,112		$	493,282		$	358,875	$	(653,349	)	$	13,237,920
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)	$	10,472,268		$	414,553		$	—	$	(647,603	)	$	10,239,218
Lower of cost or market inventory valuation adjustment	$	225,736		$	1,243		$	—	$	—		$	226,979
Operating expenses	$	940,629		$	14,042		$	105,554	$	148		$	1,060,373
Selling, general and administrative expenses	$	91,279		$	2,615		$	12,556	$	14,396		$	120,846
Depreciation and amortization	$	273,091		$	254		$	61,690	$	11,116		$	346,151
Income (loss) from operations	$	1,036,109		$	60,575		$	179,075	$	(31,406	)	$	1,244,353
Earnings (loss) of equity method investments	$	—		$	—		$	4,803	$	(8,541	)	$	(3,738	)
Capital expenditures	$	461,326		$	7,685		$	193,121	$	14,023		$	676,155
Total assets	$	6,286,154		$	320,510		$	1,802,970	$	(21,335	)	$	8,388,299