HollyFrontier (HFC) to Sell its El Dorado Processing Units
Independent petroleum refiner HollyFrontier Corporation HFC has entered into an agreement with Holly Energy Partners, L.P. HEP to sell its El Dorado processing units. The newly constructed naphtha fractionation and hydrogen generation units are being sold for a cash consideration of about $62 million.
The transaction is expected to complete in the fourth quarter of this year, subject to customary closing conditions.
Post completion of this deal, HollyFrontier and Holly Energy will ink a 15-year tolling agreement with minimum quarterly throughput commitments. The deal is expected to be immediately accretive to Holly Energy Partners.
HollyFrontier refines and markets petroleum products like gasoline, diesel fuel, jet fuel and other specialty products. The weak crude pricing environment, therefore, has proved to be beneficial for refiners like HollyFrontier. The company surpassed the Zacks Consensus Estimate in the last two quarters. Moreover, with the company’s current quarter and year earnings estimates moving north, we expect further bullishness ahead.
HollyFrontier Corporation holds a 39% stake in Holly Energy Partners, which provides transportation, tankage and terminal services to companies in the petroleum industry.
Currently, HollyFrontier Corporation has a Zacks Rank #2 (Buy) and Holly Energy Partners carries a Zacks Rank #3 (Hold).
Other favorably-placed stocks from the oil refinery and marketing space are Tesoro Corporation TSO and Valero Energy Corporation VLO. Both these stocks have the same Zacks Rank as HollyFrontier Corporation.
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