This connection provides Holly’s refining facilities in New Mexico with direct access to a variety of crude oils available at Cushing.
Also included in this acquisition is a newly constructed thirty-five mile 8″ pipeline that connects Holly Energy’s New Mexico crude oil gathering system to Holly’s Lovington, NM refining facility. This pipeline provides flexibility for Holly to move crude oil from Holly Energy’s gathering system to its Lovington, NM facilities as well as its Artesia, NM facility for processing.
The purchase price for these newly constructed pipelines was $46.5m which was paid in cash. Holly Energy expects these pipeline acquisitions will result in approximately $9.2m of incremental annual revenue.
In connection with this transaction, Holly and Holly Energy have entered into a 15-year contract, which provides a minimum revenue commitment on the part of Holly to Holly Energy, similar to other long term contracts already in place between the two entities.
Holly Energy has also revealed that it has sold, in a separate transaction, its partnership interest in Rio Grande Pipeline to Enterprise Products Operating, a subsidiary of Enterprise Products Partners.
