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•	risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored or throughput in our terminals;

•	the economic viability of HollyFrontier Corporation, Delek US Holdings, Inc. and our other customers;

•	the demand for refined petroleum products in markets we serve;

•	our ability to purchase and integrate future acquired operations;

•	our ability to complete previously announced or contemplated acquisitions;

•	the availability and cost of additional debt and equity financing;

•	the possibility of reductions in production or shutdowns at refineries utilizing our pipeline and terminal facilities;

•	the effects of current and future government regulations and policies;

•	our operational efficiency in carrying out routine operations and capital construction projects;

•	the possibility of terrorist attacks and the consequences of any such attacks;

•	general economic conditions;

•	the impact of recent changes in the tax laws and regulations that affect master limited partnerships; and

•	other financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

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(1)	Includes 15,000 bpd capacity on the Orla to El Paso segment of this pipeline, leased to Delek under capacity lease agreements.

(2)	The White Lakes Junction to Moriarty segment of our Artesia to Moriarty pipeline and the Moriarty to Bloomfield pipeline is leased from Mid-America under a long-term lease agreement.

(3)	Capacity for this pipeline is reflected in the information for the Artesia to Moriarty pipeline.

(4)	Tulsa gasoline and diesel fuel connections to Magellan’s pipeline are less than one mile.

(5)	The capacities of the three gas pipelines are 10 million standard cubic feet per day (“MMSCFD”), 22 MMSCFD and 10 MMSCFD, and the two liquid pipelines are 45,000 bpd and 60,000 bpd.

(6)	The capacity is in MMSCFD per day.

(7)	Pipeline is currently idled.

•	distribution;

•	blending to achieve specified grades of gasoline and diesel, including the blending of butane, ethanol and biodiesel;

•	other ancillary services that include the injection of additives and filtering of jet fuel; and

•	storage and inventory management.

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(1)	Inactive

(2)	The underlying ground at the Tucson terminal is leased.

(3)	Handles only jet fuel.

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Item 1A.	Risk Factors

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•	competition from other refineries and pipelines that may be able to supply the refinery's end-user markets on a more cost-effective basis;

•	operational problems such as catastrophic events at the refinery, labor difficulties, environmental proceedings or other litigation that cause a stoppage of all or a portion of the operations at the refinery;

•	planned maintenance or capital projects;

•

increasingly stringent environmental laws and regulations, such as the U.S. Environmental Protection Agency's gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor gasoline and diesel fuel for both on-road and non-road usage as well as various state and federal emission requirements that may affect the refinery itself and potential future climate change regulations;

•	an inability to obtain crude oil for the refinery at competitive prices; or

•	a general reduction in demand for refined products in the area due to:

◦	a local or national recession or other adverse economic condition that results in lower spending by businesses and consumers on gasoline and diesel fuel;

◦	higher gasoline prices due to higher crude oil costs, higher taxes or stricter environmental laws or regulations; or

◦	a shift by consumers to more fuel-efficient or alternative fuel vehicles or an increase in fuel economy, whether as a result of technological advances by manufacturers, legislation either mandating or encouraging higher fuel economy or the use of alternative fuel or otherwise.

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•	meet our obligations as they come due;

•	execute our growth strategy;

•	complete future acquisitions or construction projects;

•	take advantage of other business opportunities; or

•	respond to competitive pressures.

•	the accuracy of our assumptions about growth in the markets that we currently serve or have plans to serve in the Southwestern, Northwest and Mid-Continent regions of the United States;

•	HFC's willingness and ability to capture a share of additional demand in its existing markets; and

•	HFC's willingness and ability to identify and penetrate new markets in the Southwestern, Northwest and Mid-Continent regions of the United States.

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•	certain pre-closing environmental liabilities discovered within specified time periods after the date of the applicable acquisition;

•	certain matters arising from the pre-closing ownership and operation of assets; and

•	ongoing remediation related to the assets.

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•	denial or delay in issuing requisite regulatory approvals and/or permits;

•	unplanned increases in the cost of construction materials or labor;

•	disruptions in transportation of modular components and/or construction materials;

•	severe adverse weather conditions, natural disasters, or other events (such as equipment malfunctions explosions, fires or spills) affecting our facilities, or those of vendors and suppliers;

•	shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;

•	market-related increases in a project's debt or equity financing costs; and/or

•	nonperformance by, or disputes with, vendors, suppliers, contractors, or sub-contractors involved with a project.

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•	HFC, as a shipper on our pipelines, has an economic incentive not to cause us to seek higher tariff rates or terminalling fees, even if such higher rates or terminalling fees would reflect rates that could be obtained in arm's-length, third-party transactions;

•

neither our partnership agreement nor any other agreement requires HFC to pursue a business strategy that favors us or utilizes our assets, including whether to increase or decrease refinery production, whether to shut down or reconfigure a refinery, or what markets to pursue or grow. HFC's directors and officers have a fiduciary duty to make these decisions in the best interests of the stockholders of HFC;

•	our general partner is allowed to take into account the interests of parties other than us, such as HFC, in resolving conflicts of interest;

•	our partnership agreement provides for modified or reduced fiduciary duties for our general partner, and also restricts the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty;

•	our general partner determines which costs incurred by HFC and its affiliates are reimbursable by us;

•	our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf;

•	our general partner may, in some circumstances, cause us to borrow funds to make cash distributions, even where the purpose or effect of the borrowing benefits our general partner or affiliates;

•	our general partner determines the amount and timing of our asset purchases and sales, capital expenditures and borrowings, each of which can affect the amount of cash available to us; and

•	our general partner controls the enforcement of obligations owed to us by our general partner and its affiliates, including the pipelines and terminals agreement with HFC.

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•	our unitholders' proportionate ownership interest in us will decrease;

•	the amount of cash available for distribution on each unit may decrease;

•	the relative voting strength of each previously outstanding unit may be diminished; and

•	the market price of the common units may decline.

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•	any business operated by HFC or any of its subsidiaries at the closing of our initial public offering;

•	any business or asset that HFC or any of its subsidiaries acquires or constructs that has a fair market value or construction cost of less than $5 million; and

•	any business or asset that HFC or any of its subsidiaries acquires or constructs that has a fair market value or construction cost of $5 million or more if we have been offered the opportunity to purchase the business or asset at fair market value, and we decline to do so.

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Item 1B.	Unresolved Staff Comments

Item 3.	Legal Proceedings

Item 4.	Mine Safety Disclosures

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Item 5.	Market for the Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Common Units

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Item 6.	Selected Financial Data

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(1)

Net income attributable to the partners is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner included incentive distributions that were declared subsequent to quarter end. After the amount of incentive distributions and other priority allocations are allocated to the general partner, the remaining net income attributable to the partners is allocated to the partners based on their weighted average ownership percentage during the period. As a result of the IDR restructuring transaction, no IDR or general partner distributions were made after October 31, 2017. See "Business and Properties - Overview."

(2)	Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus (i) interest expense net of interest income and loss on early extinguishment of debt, (ii) state income tax and (iii) depreciation and amortization excluding amounts related to the Predecessor. EBITDA is not a

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(3)

Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exception of maintenance capital expenditures. Distributable cash flow should not be considered in isolation or as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance. It is also used by management for internal analysis and for our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

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(4)	Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations.

(5)	Includes $1,012 million, $553 million, $712 million, $571 million and $363 million in Credit Agreement advances that were classified as long-term debt at December 31, 2017, 2016, 2015, 2014 and 2013, respectively.

(6)

As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to HEP because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to HEP. Additionally, if the assets contributed and acquired from HFC while we were a consolidated variable interest entity of HFC had been acquired from third parties, our acquisition cost in excess of HFC’s basis in the transferred assets would have been recorded in our financial statements as increases to our properties and equipment and intangible assets at the time of acquisition instead of decreases to partners’ equity.

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Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

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(1)

Net income attributable to the partners is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner included incentive distributions that were declared subsequent to quarter end. After the amount of incentive distributions and other priority allocations are allocated to the general partner, the remaining net income attributable to the partners is allocated to the partners based on their weighted average ownership percentage during the period. As a result of the IDR restructuring transaction, no IDR or general partner distributions were made after October 31, 2017. See "Business and Properties - Overview."

(2)

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to the partners plus (i) interest expense and loss on early extinguishment of debt, net of interest income (ii) state income tax and (iii) depreciation and amortization excluding Predecessor. EBITDA is not a calculation based upon generally accepted accounting principles (“GAAP”). However, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income attributable to Holly Energy Partners or operating income, as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for compliance with financial covenants. See our calculation of EBITDA under Item 6, “Selected Financial Data.”

(3)

Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exception of maintenance capital expenditures. Distributable cash flow should not be considered in isolation or as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance. It is also used by management for internal analysis and for our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating. See our calculation of distributable cash flow under Item 6, “Selected Financial Data.”

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•	the customer receiving the future services provided by these billings,

•	the period in which the customer is contractually allowed to receive the services expires, or

•	our determination that we will not be required to provide services within the allowed period.

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Item 7A.	Quantitative and Qualitative Disclosures about Market Risk

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Item 8.	Financial Statements and Supplementary Data

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Note 1:	Description of Business and Summary of Significant Accounting Policies

•	26 main pipeline segments

•	Crude gathering networks in Texas and New Mexico

•	10 refined product terminals

•	1 crude terminal

•	31,800 track feet of rail storage located at two facilities

•	7 locations with truck and/or rail racks

•	Tankage at all six of HFC's refining facility locations

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•	the customer receiving the future services provided by these billings,

•	the period in which the customer is contractually allowed to receive the services expires, or

•	our determination that we will not be required to provide services within the allowed period.

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Note 2:	Acquisitions

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(1)	To retrospectively reflect depreciation and amortization of intangible assets based on the preliminary fair value of the assets as if that fair value had been reflected January 1, 2016

(2)	To eliminate HEP's equity income previously recorded on its equity method investments in SLC Pipeline and Frontier Aspen

(3)	To eliminate the remeasurement gain on preexisting equity interests in SLC Pipeline and Frontier Aspen

Note 3:	Financial Instruments

•	(Level 1) Quoted prices in active markets for identical assets or liabilities.

•	(Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.

•	(Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.

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Note 4:	Properties and Equipment

Note 5:	Intangible Assets

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Note 6:	Employees, Retirement and Incentive Plans

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Note 7:	Debt

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Note 8:	Commitments and Contingencies

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Note 9:	Significant Customers

Note 10:	Related Party Transactions

•	Revenues received from HFC were $377.1 million, $333.1 million and $292.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.

•	HFC charged us general and administrative services under the Omnibus Agreement of $2.5 million for the year ended December 31, 2017, $2.5 million for the year ended December 31, 2016, and $2.4 million for the year ended December 31, 2015.

•	We reimbursed HFC for costs of employees supporting our operations of $46.6 million, $40.9 million and $34.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

•	HFC reimbursed us $7.2 million, $14.0 million and $13.5 million for the years ended December 31, 2017, 2016 and 2015, respectively, for expense and capital projects.

•	We distributed $130.7 million, $105.2 million and $90.4 million, for the years ended December 31, 2017, 2016 and 2015, respectively, to HFC as regular distributions on its common units and general partner interest, including general partner incentive distributions.

•	Accounts receivable from HFC were $51.5 million and $42.6 million at December 31, 2017 and 2016, respectively.

•	Accounts payable to HFC were $7.7 million and $16.4 million at December 31, 2017 and 2016, respectively.

•

Revenues for the years ended December 31, 2017, 2016 and 2015 include $4.8 million, $6.1 million and $7.3 million, respectively, of shortfall payments billed in 2016, 2015 and 2014, respectively. Deferred revenue in the consolidated balance sheets at December 31, 2017 and 2016, includes $4.4 million and $5.6 million, respectively, relating to certain shortfall billings. It is possible that HFC may not exceed its minimum obligations to receive credit for any of the $4.4 million deferred as of December 31, 2017.

•	We received operating lease payments from HFC for use of our Artesia and Tulsa railyards of $0.5 million for each of the years ended December 31, 2017, 2016 and 2015.

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•	In November 2015, we acquired from HFC all the outstanding membership interests in El Dorado Operating which owns the newly constructed naphtha fractionation and hydrogen generation units at HFC’s El Dorado refinery. See Note 2 for a description of this transaction.

•

On February 22, 2016, HFC obtained a 50% membership interest in Osage in a non-monetary exchange, whereby a subsidiary of Magellan will provide terminalling services for all HFC products originating in Artesia, New Mexico that require terminalling in or through El Paso, Texas. Concurrent with this transaction, we entered into a non-monetary exchange with HFC, whereby we received HFC’s interest in Osage in exchange for our El Paso terminal. See Note 2 for a description of this transaction.

•	On March 31, 2016, we acquired crude oil tanks located at HFC’s Tulsa refinery from an affiliate of Plains for $39.5 million. See Note 2 for a description of this transaction.

•	Effective October 1, 2016, we acquired all the membership interests of Woods Cross Operating, a wholly owned subsidiary of HFC, which owns the newly constructed atmospheric distillation tower, fluid catalytic cracking unit, and polymerization unit located at HFC’s Woods Cross refinery, for cash consideration of $278 million. See Note 2 for a description of this transaction.

•

On October 31, 2017, we closed on an equity restructuring transaction with HEP Logistics, a wholly-owned subsidiary of HFC and the general partner of HEP, pursuant to which the incentive distribution rights held by HEP Logistics were canceled, and HEP Logistics' 2% general partner interest in HEP was converted into a non-economic general partner interest in HEP. In consideration, we issued 37,250,000 of our common units to HEP Logistics. In addition, HEP Logistics agreed to waive $2.5 million of limited partner cash distributions for each of twelve consecutive quarters beginning with the first quarter the units issued as consideration were eligible to receive distributions.

Note 11:	Partners’ Equity, Income Allocations and Cash Distributions

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Note 12:	Net Income Per Limited Partner Unit

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Note 13:	Environmental

Note 14:	Operating Segments

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(1)	Includes goodwill of $266.7 million and $256.5 million as of December 31, 2017 and December 31, 2016, respectively.

Note 15:	Quarterly Financial Data (Unaudited)

Note 16:	Supplemental Guarantor/Non-Guarantor Financial Information

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Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.	Controls and Procedures

Item 9B.	Other Information

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•	designating and calling meetings of the Board;

•	presiding at all Board meetings;

•	consulting with management on Board and committee meeting agendas;

•	facilitating teamwork and communication between the Board and management; and

•	acting as a liaison between management and the Board.

•	The Compensation Committee oversees the management of risks relating to HLS’s executive compensation plans and arrangements.

•	The Audit Committee oversees management of financial reporting and controls risks.

•	The Conflicts Committee oversees specific matters that the Board or the Conflicts Committee believes may involve conflicts of interest with HFC.

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Principal Occupation:	Chairman of the Board of HLS and Chairman of the Board of HFC

Business Experience:

Mr. Jennings has served as Chairman of the Board of HLS since November 2017 and Chairman of the Board of HFC since January 2017, a position he previously held from January 2013 until January 2016. Mr. Jennings served as Chief Executive Officer of HLS from January 2014 to November 2016 and as President of HLS from October 2015 to February 2016. Mr. Jennings served as Executive Chairman of HFC from January 2016 until January 2017 and as the Chief Executive Officer and President of HFC from the merger of Holly Corporation and Frontier Oil Corporation in July 2011 until January 2016. Mr. Jennings previously served as the President and Chief Executive Officer of Frontier Oil Corporation from 2009 until the merger in July 2011 and as the Executive Vice President and Chief Financial Officer of Frontier Oil Corporation from 2005 until 2009.

Additional Directorships:	Mr. Jennings currently serves as the Chairman and a director of HFC and a director of ION Geophysical Corporation. Mr. Jennings served as a director of Frontier Oil Corporation from 2008 until the merger in July 2011 and as Chairman of the board of directors of Frontier Oil Corporation from 2010 until the merger in July 2011.

Qualifications:	Mr. Jennings provides valuable and extensive industry knowledge and experience. His knowledge of the day-to-day operations of HFC provides a significant resource for the Board and facilitates discussions between the Board and HFC management.

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Principal Occupation:	Chief Executive Officer and President of HFC and Chief Executive Officer and President of HLS

Business Experience:

Mr. Damiris has served as the Chief Executive Officer of HLS since November 2016, as President of HLS since February 2017 and as Chief Executive Officer and President of HFC since January 2016. He previously served as Executive Vice President and Chief Operating Officer of HFC from September 2014 until January 2016 and as Senior Vice President, Supply and Marketing of HFC from January 2008 until September 2014. Mr. Damiris joined HFC in 2007 as Vice President, Corporate Development after an 18-year career with Koch Industries, where he was responsible for managing various refining, chemical, trading, and financial businesses.

Additional Directorships:	Mr. Damiris currently serves as a director of Eagle Materials Inc. and of HFC.

Qualifications:	Mr. Damiris has extensive industry experience and significant insight into issues facing the industry. His knowledge of the day-to-day operations of HFC provides a significant resource for the Board and facilitates discussions between the Board and HFC management.

Business Experience:	Mr. Baldwin was employed for 41 years as an auditor by Deloitte LLP and predecessor firms, including 31 years as a partner, prior to retiring from such position in May 2015. While he was a partner at Deloitte LLP, Mr. Baldwin held a number of practice management positions.

Qualifications:	Mr. Baldwin brings to the Board his audit, accounting and financial reporting expertise, which also qualify him as an audit committee financial expert. Due to his audit and practice management experience with Deloitte LLP, Mr. Baldwin possesses business, industry and management expertise that provide valuable insight to the Board and the management of the Company.

Principal Occupation:	Chief Executive Officer of Turtle Creek Trust Company, Co-founder, President and Portfolio Manager of Turtle Creek Management, LLC and a non-controlling manager and member of TCTC Holdings, LLC

Business Experience:

Mr. Hardage has served as Chief Executive Officer of Turtle Creek Trust Company, a private trust and investment management firm, since 2009 and has served as President and Portfolio Manager of Turtle Creek Management, a registered investment advisory firm, since 2006. In addition, Mr. Hardage serves as a non-controlling manager and member of TCTC Holdings, LLC, a bank holding company that is a banking, securities and investment management firm.

Additional Directorships:	Mr. Hardage currently serves as a director of HFC.

Qualifications:	Mr. Hardage brings to the Board executive and general management experience as well as significant financial expertise.

Principal Occupation:	Managing General Partner and Principal Owner of Lee, Hite & Wisda Ltd.

Business Experience:	Mr. Lee has served as the Managing General Partner of Lee, Hite & Wisda Ltd., a private company with investments in oil and gas working, royalty and mineral interests, since founding the firm in 1984.

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Additional Directorships:	Mr. Lee currently serves as a director of HFC. He served as a director of Frontier Oil Corporation from 2000 until July 2011 and as a director of Forest Oil Corporation from 1991 until December 2014.

Qualifications:	Mr. Lee brings to the Board his extensive experience as a consultant and investor in the oil and gas industry, which provides him with significant insights into relevant industry issues.

Principal Occupation:	Partner at Akin Gump Strauss Hauer & Feld LLP

Business Experience:	Ms. LaFollette has served as a partner at Akin Gump Strauss Hauer & Feld LLP since June 2004. Prior to that, Ms. LaFollette served as a partner at King & Spalding LLP from 1997 to June 2004, as a partner at Andrews & Kurth LLP from 1987 to 1997 and as an associate at Andrews & Kurth LLP from 1980 to 1987.

Qualifications:	Ms. LaFollette’s experience as a transactional and securities attorney provides her with valuable insight into corporate finance, global compliance, and governance matters. In addition, Ms. LaFollette brings to the Board a broad range of experiences and skills as a result of her involvement in numerous charitable, community and civic activities.

Principal Occupation:	Executive Vice President, Finance of Select Energy Services, Inc.

Business Experience:

Mr. Mattson has served as Executive Vice President, Finance of Select Energy Services, Inc., a provider of total water solutions to the U.S. unconventional oil and gas industry, since November 2016 and served as Executive Vice President and Chief Financial Officer of Select Energy Services, Inc. from November 2008 through January 2016. Prior to that, Mr. Mattson served as Senior Vice President and Chief Financial Officer of VeriCenter, Inc., a private provider of managed hosting services, from 2003 until its acquisition in August, 2007. Mr. Mattson worked as an independent consultant from November 2002 to October 2003. Mr. Mattson served as the Chief Financial Officer of Netrail, Inc., a private Internet backbone and broadband service provider, from September 1999 until November 2002. From July 1993 until May 1999, Mr. Mattson served as Senior Vice President and Chief Financial Officer of Baker Hughes Incorporated, a provider of products and services to the oil, gas and process industries. Mr. Mattson joined Baker International, Inc. in 1980, and served in a number of capacities, including Treasurer, prior to the merger of Baker International, Inc. and Hughes Tool Company in 1987, at which time he became Vice President and Treasurer of Baker Hughes, Inc., a position he held until 1993.

Additional Directorships:	Mr. Mattson has served as a director of National Oilwell Varco, Inc. since March 2005 (having served as a director of Varco (and its predecessor, Tuboscope Inc.) from January 1994 until its merger with National Oilwell Varco in March 2005) and as a director of Rex Energy Corporation since April 2010.

Qualifications:	Mr. Mattson brings strong executive leadership skills and financial and risk management experience to the Board. His knowledge of the oil industry as well as the financial and capital markets enables him to provide critical insight to the Board.

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•	an Audit Committee;

•	a Compensation Committee;

•	a Conflicts Committee.

(1)	Effective February 28, 2018, Mr. Hardage will resign from the Board. Effective March 1, 2018, Ms. LaFollette will serve on the Compensation Committee and the Conflicts Committee, and Mr. Mattson will serve on the Conflicts Committee, as Chairman, and the Audit Committee.

•	selecting, compensating, retaining and overseeing our independent registered public accounting firm and conducting an annual review of the independence and performance of that firm;

•	reviewing the scope and the planning of the annual audit performed by the independent registered public accounting firm;

•	overseeing matters related to the internal audit function;

•	reviewing the audit report issued by the independent registered public accounting firm;

•	reviewing HEP’s annual and quarterly financial statements with management and the independent registered public accounting firm;

•	discussing with management HEP’s significant financial risk exposures and the actions management has taken to monitor and control such exposures;

•	reviewing and, if appropriate, approving transactions involving conflicts of interest, including related party transactions, when required by HEP’s Code of Business Conduct and Ethics;

•	reviewing and discussing HEP’s internal controls over financial reporting with management and the independent registered public accounting firm;

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•	establishing procedures for the receipt, retention and treatment of complaints received by HEP regarding accounting, internal accounting controls or accounting matters, potential violations of applicable laws, rules and regulations or of our codes, policies and procedures;

•	reviewing the type and extent of any non-audit work to be performed by the independent registered public accounting firm and its compatibility with their continued objectivity and independence, and to the extent consistent, pre-approving all non-audit services to be performed;

•	reviewing and approving the Audit Committee Report to be included in the Annual Report of Form 10-K; and

•	reviewing the adequacy of the Audit Committee charter on an annual basis.

•	reviewing and approving the goals and objectives of HLS and HEP relevant to the compensation of the officers of HLS for whom the Compensation Committee determines compensation;

•	determining compensation for the officers of HLS for whom the Compensation Committee determines compensation;

•	reviewing director compensation and making recommendations to the Board regarding the same;

•	overseeing the preparation of the Compensation Discussion and Analysis to be included in the Annual Report and preparing the Compensation Committee Report to be included in the Annual Report;

•	reviewing the Company’s executive compensation plans with respect to behavioral, operational and other risks;

•	administering and making recommendations to the Board with respect to HEP’s equity plan and HLS’s annual incentive plan; and

•	reviewing the adequacy of the Compensation Committee charter on an annual basis

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•

reviewed and discussed Holly Energy Partners, L.P.’s quarterly unaudited consolidated financial statements and its audited annual consolidated financial statements for the year ended December 31, 2017 with management and Ernst & Young LLP, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements, including those in management’s discussion and analysis thereof;

•	discussed with Ernst & Young LLP the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board;

•	discussed with Ernst & Young LLP matters relating to its independence and received the written disclosures and letter from Ernst & Young required by applicable requirements of PCAOB regarding the independent accountant’s communications with the Audit Committee concerning the firm’s independence;

•

discussed with Holly Energy Partners, L.P.’s internal auditors and Ernst & Young LLP the overall scope and plans for their respective audits and met with the internal auditors and Ernst & Young LLP, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls and the overall quality of Holly Energy Partners, L.P.’s financial reporting; and

•	considered whether Ernst & Young LLP’s provision of non-audit services to Holly Energy Partners, L.P. is compatible with the auditor’s independence

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(1)

Mr. Damiris is not included in this table because he received no additional compensation for his service on the Board since, during 2017, Mr. Damiris was an executive officer of HFC and HLS. The compensation paid by HFC to Mr. Damiris in 2017 will be shown in HFC’s 2018 Proxy Statement. A portion of the compensation paid to Mr. Damiris by HFC in 2017 is allocated to the services he performed for us in his capacity as an executive officer of HLS and is disclosed in the “Summary Compensation Table” below. Ms. LaFollette and Mr. Mattson are not included in the table because they did not serve as directors in 2017.

(2)

Reflects the aggregate grant date fair value of restricted units granted to non-employee directors, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), determined without regard to forfeitures. See Note 6 to our consolidated financial statements for the fiscal year ended December 31, 2017, for a discussion of the assumptions used in determining the FASB ASC Topic 718 grant date fair value of these awards.

(3)	In accordance with our director retirement policy, Mr. Pinkerton resigned from the Board effective June 30, 2017. On November 9, 2017, Messrs. Clifton, Darling, Stengel and Townsend retired from the Board. Each of them is included in the table since he served as a non-employee director during 2017.

(4)	Represents cash payment made to the director at the time of retirement as compensation for forfeited restricted units as a result of his retirement.

(5)	Mr. Lee was appointed to the Board effective November 10, 2017. Mr. Hardage was appointed to the Board effective November 14, 2017.

(6)	Because Mr. Hardage was appointed to fill a temporary vacancy on the HLS Board, he did not participate in the director compensation program and instead received $18,000 per month for his service on the Board.

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(1)	Mr. Cunningham was appointed Senior Vice President, Operations and Engineering in January 2018.

•	Mr. Cunningham spent all of his professional time managing our business and affairs and did not provide any services to HFC.

•	Messrs. Damiris and Voliva and Ms. McWatters, who we generally refer to as the “HFC Shared Officers,” also served as executive officers of HFC and devoted as much of their professional time as was necessary to oversee the management of our business and affairs. All compensation paid to such executive officers is paid and determined by HFC, without input from the Compensation Committee.

•

Administrative Fee Covers HFC Shared Officers. Under the terms of the Omnibus Agreement we pay an annual administrative fee to HFC (currently $2.5 million) for the provision of general and administrative services for our benefit, which may be increased or decreased as permitted under the Omnibus Agreement. The administrative services covered by the Omnibus Agreement include, without limitation, the costs of corporate services provided to us by HFC such as accounting, tax, information technology, human resources, in-house legal support, and office space, furnishings and equipment. None of the services covered by the administrative fee is assigned any particular value individually. Although the administrative fee covers the services provided to us by the Named Executive Officers who are HFC Shared Officers, no portion of the administrative fee is specifically allocated to services provided by those Named Executive Officers to us. Rather, the administrative fee generally covers services provided to us by HFC and, except as described below, there is no reimbursement by us for the specific costs of such services. See Item 13, “Certain Relationships and Related Transactions, and Director Independence” of this Annual Report on Form 10-K for additional discussion of our relationships and transactions with HFC.

•

Reimbursements for Compensation of Dedicated HLS Officers. Under the Omnibus Agreement, we also reimburse HFC for certain expenses incurred on our behalf, such as for salaries and employee benefits for certain personnel employed by HFC who perform services for us on behalf of HLS, including the dedicated HLS officers, as described in greater detail below. The partnership agreement provides that our general partner will determine the expenses that are allocable to us. In 2017, we reimbursed HFC for 100% of the compensation expenses incurred by HFC for salary, bonus, retirement and other benefits provided to Mr. Cunningham. With respect to equity compensation paid by us to Mr. Cunningham, HLS purchases the units delivered pursuant to awards under our Long-Term Incentive Plan, and we reimburse HLS for the purchase price of the units.

•	Generally. The Compensation Committee generally makes compensation decisions for Mr. Cunningham, other than with respect to pension and retirement benefits as described below. All compensation provided to Mr. Cunningham for 2017 is discussed and reported, in accordance with SEC rules, in the narratives and tables that follow.

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•

Pension and Retirement Benefits. The Compensation Committee does not review or approve pension or retirement benefits for any of the Named Executive Officers. Rather, all pension and retirement benefits provided to the executives are the same pension and retirement benefits that are provided to employees of HFC generally, and such benefits are sponsored and administered entirely by HFC without input from HLS or the Compensation Committee. The pension and retirement benefits provided to Mr. Cunningham in 2017 are described below and were charged to us monthly in accordance with the Omnibus Agreement.

•

Generally. HFC makes all decisions regarding the compensation paid to the HFC Shared Officers, which compensation is covered by the administrative fee under the Omnibus Agreement (and therefore not subject to reimbursement by us); however, in accordance with SEC rules, for purposes of these disclosures, a portion of the compensation paid by HFC to the HFC Shared Officers for 2017 is allocated to the services they performed for us during 2017. The allocation was made based on the assumption that each of Messrs. Damiris and Voliva and Ms. McWatters spent, in the aggregate, the following percentage of his or her professional time on our business and affairs in 2017:

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•	base salary;

•	annual incentive cash bonus compensation;

•	long-term equity incentive compensation;

•	severance and change in control benefits;

•	health and retirement benefits; and

•	perquisites.

(1)	Represents salary effective January 1, 2017.

•	Actual Distributable Cash Flow vs. Budget: Half of the target award may be earned based upon our actual distributable cash flow during the performance period compared to the budgeted distributable cash flow for the performance period, adjusted for differences in estimated and actual Producers Price Index adjustments and differences in the timing of known acquisitions.

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(1)	The percentages are interpolated between percentage points and rounded to the nearest hundredth percent.

•

Individual Performance: The other half of the target award may be earned based on the employee’s individual performance during the performance period, as determined in the discretion of the employee’s immediate supervisor. The employee’s individual performance is evaluated through a performance review by the employee’s immediate supervisor, which includes a written assessment. The assessment reviews several criteria, including how well the employee performed his or her pre-established individual goals during the performance period and the employee’s interpersonal effectiveness, integrity, and business conduct.

•	promoting our interests by providing equity incentive compensation awards to eligible individuals,

•	enhancing our ability to attract and retain the services of individuals who are essential for our growth and profitability,

•	encouraging those individuals to devote their best efforts to advancing our business, and

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•	aligning the interests of those individuals with the interests of our unitholders.

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(1)	The percentages above are interpolated between points up to a maximum of 150% but no less than 50%. The result is rounded to the nearest whole percentage, but not to a number in excess of 150%.

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(1)	Mr. Damiris was appointed President of HLS, effective as of February 1, 2017.

(2)	Represents the discretionary bonus amount, if any, paid pursuant to the individual performance metric under our Annual Incentive Plan and any other bonus paid outside our Annual Incentive Plan. Other payments made under our Annual Incentive Plan are included in the “Non-Equity Incentive Plan Compensation” column.

(3)

Represents the aggregate grant date fair value of awards of restricted units or phantom units and performance units made in the year indicated computed in accordance with FASB ASC Topic 718, determined without regard to forfeitures, and does not reflect the actual value that may be recognized by the executive. See Note 6 to our consolidated financial statements for the fiscal year ended December 31, 2017 for a discussion of the assumptions used in determining the FASB ASC Topic 718 grant date fair value of these awards.

(4)	Represents the bonus amount, if any, paid under our Annual Incentive Plan, other than with respect to the individual performance metric (which amounts are reported in the “Bonus” column). The 2017 bonus amounts under our Annual Incentive Plan are

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(5)	For 2017, includes the compensation as described under “All Other Compensation” below.

(6)

During 2017, each of these officers split his or her professional time between HFC and us, and all compensation paid to him or her for 2017 was determined and paid by HFC. In accordance with SEC rules, for purposes of these disclosures, a portion of the total compensation paid by HFC to these officers for 2017 is allocated to the services he or she performed for us during 2017. The allocation was made based on the assumption that each officer spent, in the aggregate, approximately the following percentage of his or her professional time in 2017 on our business and affairs:

(1)	The value of the perquisites provided by us to our Named Executive Officers in 2017 did not exceed $10,000 in the aggregate, and therefore, in accordance with SEC rules, are not included in the table above or described in this footnote.

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(1)

Represents the potential payouts for the awards under our Annual Incentive Plan, which were subject to the achievement of certain performance metrics. The performance metrics and awards are described under “Compensation Discussion and Analysis - Overview of 2017 Executive Compensation Components and Decisions - Annual Incentive Cash Bonus Compensation.” Although these awards were granted in the fourth quarter of 2016, they represent the 2017 Annual Incentive Plan awards and any payouts with respect to these awards are reported in the Summary Compensation Table for 2017. Amounts reported do not include amounts potentially payable pursuant to the discretionary individual performance portion of the award. The amount actually paid with respect to the individual performance portion of the award is reported in the “Bonus” column of the Summary Compensation Table for 2017, and the amount actually paid with respect to the portion of the award reported in this table is reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for 2017.

(2)

Represents the potential number of performance units payable under the Long-Term Incentive Plan. The number of units paid at the end of the performance period may vary from the target amount, based on our achievement of specified performance measures. The terms of the performance unit awards granted in November 2017 for the 2018 fiscal year are described above under “Compensation Discussion and Analysis - 2018 Compensation Decisions - Long-Term Equity Incentive Compensation - Performance Unit Awards.” See “Compensation Discussion and Analysis - Overview of 2018 Compensation Components and Decisions - Long-Term Equity Incentive Compensation - Performance Unit Awards.”

(3)	Represents awards of phantom units. The terms of the phantom unit awards granted in November 2017 for the 2018 fiscal year are described above under “Compensation Discussion and Analysis - 2018 Compensation Decisions - Long-Term Equity Incentive Compensation - Phantom Unit Awards.”

(4)

Represents the grant date fair value determined pursuant to FASB ASC Topic 718, based on a closing price of our common units of $35.62 on November 1, 2017. The value of performance units granted on November 1, 2017 reflect a probable payout percentage of 100%. See note 3 to the Summary Compensation Table for additional information regarding the aggregate probable settlement percentage calculation.

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(1)	Includes the following restricted unit awards granted by us:

•	in October 2015 to Mr. Voliva (1,341, after giving effect to the forfeiture by Mr. Voliva on June 1, 2016 of 2,679 of the total 4,020 restricted units originally granted) and Mr. Cunningham (4,752), of which one third vested on December 15, 2016, one third vested on December 15, 2017 and the remaining one third vests on December 15, 2018;

•	in October 2016 to Mr. Cunningham (4,128), of which one third vested on December 15, 2017, one third vests on December 15, 2018 and the remaining one third vests on December 15, 2019.

•	in November 2017 to Mr. Cunningham (3,861), of which one third vests on December 15, 2018, one third vests on December 15, 2019 and the remaining one third vests on December 15, 2020.

(2)	Includes the following performance unit awards granted by us (the amounts included in the parentheticals reflect the target number of performance units subject to each award):

•	in October 2015 to Mr. Voliva (1,341, after giving effect to the forfeiture by Mr. Voliva on June 1, 2016 of 2,679 of the total 4,020 performance units originally granted) and Mr. Cunningham (4,752), in each case, with a performance period that ends on December 31, 2018;

•	in October 2016 to Mr. Cunningham (4,128), with a performance period that ends on December 31, 2019; and

•	in November 2017 to Mr. Cunningham (3,861), with a performance period that ends on December 31, 2020.

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(1)

Includes 3,352 units that became payable to Mr. Cunningham on February 7, 2018 upon the determination by the subcommittee of the Compensation Committee that the performance percentage applicable to the target number of 2,235 performance units granted to Mr. Cunningham in October 2014 with a performance period that ended on December 31, 2017 was 150%, which performance units are treated, in accordance with SEC rules, as vesting during 2017. The value realized with respect to such award is calculated based on the closing price of our common units on the date of payment.

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(1)	The amounts reported were deferred at the election of the Named Executive Officer and are also included in the amounts reported in the “Salary,” “Bonus” and/or “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table for 2017.

(2)	These amounts are also included in the “All Other Compensation” column of the Summary Compensation Table for 2017.

(3)

The aggregate balance for Mr. Cunningham reflects the cumulative value, as of December 31, 2017, of his and employer-provided contributions to the NQDC Plan for his account, and any earnings on these amounts, since he began participating in the NQDC Plan in 2012. We reported executive and company contributions for Mr. Cunningham in the Summary Compensation Table in the following aggregate amounts:

•	an amount equal to his accrued and unpaid salary, unreimbursed expenses and accrued vacation pay; and

•	a lump sum amount equal to a designated multiplier times (i) the executive’s annual base salary as of the date of termination or the date immediately prior to the “Change in Control,” whichever is greater, and (ii) the executive’s annual bonus amount, calculated as the average annual bonus paid to him for the prior three years. The severance multiplier is 1.0 for Mr. Cunningham.

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•	a person or group of persons (other than HFC or any of its wholly-owned subsidiaries; HLS, HEP, HEP Logistics or any of their subsidiaries) becomes the beneficial owner of more than 50% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics or more than 50% of the outstanding common stock or membership interests, as applicable or HFC or HLS;

•	the individuals who as of the date of grant constituted a majority of HFC’s Board of Directors and individuals whose election by HFC’s Board of Directors, or nomination for election by the holders of the voting securities of HFC, was approved by a vote of at least two-thirds of the directors, cease for any reason to constitute a majority of HFC’s Board of Directors;

•

the consummation of a merger, consolidation or recapitalization of HFC, HLS, HEP or HEP Logistics resulting in the holders of voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, prior to the merger or consolidation owning less than 50% of the combined voting power of the voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, or a recapitalization of HFC, HLS, HEP or HEP Logistics in which a person or group becomes the beneficial owner of securities of HFC, HLS, HEP or HEP Logistics, as applicable, representing more than 50% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics, as applicable;

•	the holders of voting securities of HFC or HEP approve a plan of complete liquidation or dissolution of HFC or HEP, as applicable; or

•	the holders of voting securities of HFC or HEP approve the sale or disposition of all or substantially all of the assets of HFC or HEP, as applicable, other than to an entity holding at least 60% of the combined voting power of the voting securities immediately prior to such sale or disposition.

•	the engagement in any act of willful gross negligence or willful misconduct on a matter that is not inconsequential; or

•	conviction of a felony.

•	a material reduction in the executive’s (or his supervisor’s) authority, duties or responsibilities;

•	a material reduction in the executive’s base compensation; or

•	the relocation of the executive to an office or location more than 50 miles from the location at which the executive normally performed the executive’s services, except for travel reasonably required in the performance of the executive’s responsibilities.

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•	the executive’s employment is terminated, other than for “Cause,” or

•	the executive resigns within 90 days following an “Adverse Change.”

•	Restricted Units: Upon death or disability, the executive will vest with respect to a pro rata number of units attributable to the period of service completed during the applicable vesting period and will forfeit any unvested units. Upon retirement, the executive will forfeit any unvested units.

•	Phantom Units: Upon death or disability, the executive will vest with respect to a pro rata number of units attributable to the period of service completed during the applicable vesting period and will forfeit any unvested units. Upon “Retirement,” the executive will fully vest in all phantom units.

•

Performance Units: Pursuant to the terms of the November 2017 performance unit award agreement, upon retirement the award will remain outstanding and eligible to vest without proration subject to actual performance. Upon death, disability and retirement, other than with respect to retirement under the terms of the November 2017 performance unit award agreement, the executive will remain eligible to vest with respect to a pro rata number of units attributable to the period of service completed during the applicable performance period (rounded up to include the month of termination) and will forfeit any unvested units. The Compensation Committee will determine the number of remaining performance units earned and the amount to be paid to the executive as soon as administratively possible after the end of the performance period based upon the performance actually attained for the entire performance period (provided that executives will earn and receive payment with respect to no less than 50% of the performance units awarded). The foregoing also applies if the executive separates from employment for any other reason other than a voluntary separation, Special Involuntary Separation or for “Cause.”

•	a person or group of persons (other than HFC or any of its wholly-owned subsidiaries or HLS, HEP, HEP Logistics or any of their subsidiaries) becomes the beneficial owner of more than 40% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics;

•	the individuals who as of the date of grant constituted a majority of HFC’s Board of Directors cease for any reason to constitute a majority of HFC’s Board of Directors;

•

the consummation of a merger, consolidation or recapitalization of HFC, HLS, HEP or HEP Logistics resulting in the holders of voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, prior to the merger or consolidation owning less than 60% of the combined voting power of the voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, or a recapitalization of HFC, HLS, HEP, or HEP Logistics in which a person or group becomes the beneficial owner of securities of HFC, HLS, HEP or HEP Logistics, as applicable, representing more than 40% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics, as applicable;

•	the holders of voting securities of HFC, HLS, HEP or HEP Logistics approve a plan of complete liquidation or dissolution of HFC, HLS, HEP or HEP Logistics, as applicable; or

•	the holders of voting securities of HFC, HLS, HEP or HEP Logistics approve the sale or disposition of all or substantially all of the assets of HFC, HLS, HEP or HEP Logistics, as applicable, other than to an entity holding at least 60% of the combined voting power of the voting securities immediately prior to such sale or disposition.

•	a change in the city in which the executive is required to work;

•	a substantial increase in travel requirements of employment;

•	a substantial reduction in the duties of the type previously performed by the executive; or

•	a significant reduction in compensation or benefits (other than bonuses and other discretionary items of compensation) that does not apply generally to executives.

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•	a change in the executive’s principal office of employment of more than 25 miles from the executive’s work address at the time of grant of the award;

•	a material increase (without adequate consideration) or material reduction in the duties to be performed by the executive; or

•	a material reduction in the executive’s base compensation (other than bonuses and other discretionary items of compensation) that does not apply generally to employees.

•	an act of dishonesty constituting a felony or serious misdemeanor and resulting (or intended to result in) gain or personal enrichment to the executive at the expense of HLS;

•	gross or willful and wanton negligence in the performance of the executive’s material and substantial duties; or

•	conviction of a felony involving moral turpitude.

•	For purposes of determining amounts under the “Cash Payments” column, accrued and unpaid salary and unreimbursed expenses were assumed to equal zero.

•	Accrued vacation for a specific year is not allowed to be carried over to a subsequent year, so we assumed all accrued vacation for the 2017 year was taken prior to December 31, 2017. Because we accrue vacation in any given year for the following year, amounts reported as “Cash Payments” include vacation amounts accrued in 2017 for the 2018 year.

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For amounts payable to the Named Executive Officers with respect to performance units upon a termination due to death, disability, retirement, or other separation (other than a voluntary separation, a for “Cause” separation or a Special Involuntary Termination), we assumed the performance units would settle at 100%. The number of units paid at the end of the performance period may vary from the amounts reflected in the following tables, based on our actual achievement compared to the performance targets. Neither Mr. Voliva nor Mr. Cunningham were eligible for retirement vesting at December 31, 2017.

•	With respect to the treatment of restricted and phantom unit awards upon termination due to death, disability or without Cause, we have reflected accelerated vesting based on the length of employment during the vesting period for each award.

•	The amount shown for “Value of Welfare Benefits” represents amounts equal to the monthly premium payable pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for medical and dental premiums, multiplied by 12 months for Mr. Cunningham.

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In calculating whether any tax reimbursements were owed to the Named Executive Officers, we used the following assumptions: (a)  no amounts will be discounted as attributable to reasonable compensation, (b) all cash severance payments are contingent upon a change in control, and (c) the presumption required under applicable regulations that the equity awards granted in 2017 were contingent upon a change in control could be rebutted. Based on these assumptions, none of the Named Executive Officers would receive any tax reimbursement or “gross-up” payments with respect to any amounts reported in the table below.

•	No amounts potentially payable pursuant to the NQDC Plan are included in the table below since neither the form nor amount of any such benefits would be enhanced nor vesting or other provisions accelerated in connection with any of the triggering events disclosed below. Please refer to the section titled “Nonqualified Deferred Compensation” for additional information regarding these benefits.

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•	each person known to us to be a beneficial owner of 5% or more of the common units;

•	directors of HLS, the general partner of our general partner;

•	each Named Executive Officer of HLS; and

•	all directors and executive officers of HLS as a group.

(1)	HollyFrontier Corporation directly holds 5,006 common units over which it has sole voting and dispositive power and 59,625,024 common units over which it has shared voting and dispositive power. HollyFrontier Corporation is the record

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(2)

Based on information provided to the Company by Tortoise Capital Advisors, L.L.C, pursuant to an investment advisory agreement or an investment management agreement entered into with certain investment companies, Tortoise Capital Advisors, L.L.C holds sole voting and dispositive power with respect to 6,717,745 common units held by such investment companies. The address of Tortoise Capital Advisors, L.L.C. is 1550 Ash Street, Suite 300, Leawood, Kansas 66211.

(3)

Based on the Schedule 13G/A filed with the Securities and Exchange Commission on February 14, 2018 by Energy Income Partners, LLC, James J. Murchie, Eva Pao, Linda A. Longville, Saul Ballesteros and John K. Tysseland. James J. Murchie, Eva Pao, and John K. Tysseland are the Portfolio Managers with respect to the portfolios managed by Energy Income Partners, LLC. Linda A. Longville and Saul Ballesteros are control persons of Energy Income Partners, LLC. Each of the foregoing report shared voting and dispositive power over 6,425,272 common units. The address of each of the foregoing is 10 Wright Street, Westport, Connecticut 06880.

(4)	Based on a Schedule 13G/A filed with the Securities and Exchange Commission on February 7, 2018, Oppenheimer Funds, Inc. has shared voting power and shared dispositive power with respect to 5,551,785 units. The address of Oppenheimer Funds, Inc. is Two World Financial Center, 225 Liberty Street, New York, NY 10281.

(5)

The number reported includes restricted units for which the executive has sole voting power but no dispositive power, as follows: Mr. Voliva (447 units) and Mr. Cunningham (4,336 units). For Mr. Cunningham, also includes 3,861 common units to be issued upon settlement of phantom units, which may vest and be settled within 60 days of February 14, 2018 under certain circumstances. Until settled, Mr. Cunningham has no voting or dispositive power over the phantom units. The number does not include performance units held by the executive.

(6)	For each of Mr. Jennings and Mr. Baldwin, includes 2,557 restricted units for which he has sole voting power but no dispositive power. For Mr. Lee, includes 2,754 restricted units for which he has sole voting power but no dispositive power.

(7)	Messrs. Jennings, Damiris, Voliva, Lee and Hardage and Ms. McWatters each own common stock of HFC. Each of these individuals own common stock of HFC as set forth in the following table:

(a)

The number reported includes shares of HFC restricted stock for which the individual has sole voting power but no dispositive power, as follows: Mr. Damiris (105,149 shares), Ms. McWatters (15,528 shares) and Mr. Voliva (16,444 shares). Also includes shares of HFC common stock to be issued to the individual upon settlement of restricted stock units, which may vest and be settled within 60 days of February 14, 2018 under certain circumstances, as follows: Mr. Damiris (77,961 shares), Mr. Voliva (19,491 shares) and Ms. McWatters (11,813 shares). Until settled, the individual has no voting or dispositive power over the restricted stock units. The number does not include unvested performance share units.

(b)	The number reported includes 3,778 shares of HFC restricted stock and 2,271 restricted stock units held by Mr. Voliva’s wife for which Mr. Voliva disclaims beneficial ownership except to the extent of his pecuniary interest therein.

(c)	The number reported includes 3,190 shares of HFC common stock to be issued to the individual upon settlement of restricted stock units, which may vest and be settled within 60 days of February 14, 2018 under certain circumstances. Until settled, the individual has no voting or dispositive power over the common stock underlying the restricted stock units.

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(8)	Includes 285 common units held by Mr. Lee’s wife. Mr. Lee’s wife has the right to receive distributions from, and the proceeds from the sale of, these common units. Mr. Lee disclaims beneficial ownership of the common units held by his wife except to the extent of his pecuniary interest therein.

(9)

The number reported includes 4,783 restricted units held by executive officers for which they have sole voting power but no dispositive power, 3,861 common units to be issued to Mr. Cunningham upon settlement of phantom units, which may vest and be settled within 60 days of February 14, 2018 under certain circumstances and 7,868 restricted units held by non-employee directors for which they have sole voting power but no dispositive power. The number reported also includes 285 common units as to which Mr. Lee disclaims beneficial ownership, except to the extent of his pecuniary interest therein.

(1)	All stock-based compensation plans are described in Note 6 to our consolidated financial statements for the fiscal year ended December 31, 2017.

(2)

On April 25, 2012, at a Special Meeting of the Unitholders of the Partnership, the unitholders approved the Amended and Restated Long-Term Incentive Plan, which, among other things, provided for an increase in the maximum number of common units reserved for delivery with respect to awards under the Long-Term Incentive Plan to 2,500,000 common units (as adjusted to reflect the two-for-one common unit split that occurred on January 16, 2013). All securities reported as available for future issuances are available from the additional common units approved by unitholders under the Amended and Restated Long-Term Incentive Plan. At the time the Long-Term Incentive Plan was originally adopted in 2004, it was not required to be approved by the Partnership’s unitholders.

(3)

Represents units subject to performance units granted to key individuals under the Long-Term Incentive Plan assuming the maximum payout level. If the performance units are paid at the target payout level, 32,628 units would be issued upon the vesting of such performance units. Performance units granted in October 2014 with a performance period that ended on December 31, 2017 were not settled until certification by the subcommittee of the Compensation Committee in February 2018 that a performance percentage of 150% was attained for performance units granted to Mr. Cunningham; however, such awards are not included in this column as outstanding since they are treated for purposes of the preceding executive compensation tables as vesting during 2017 in accordance with SEC rules.

Item 13.	Certain Relationships and Related Transactions, and Director Independence

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•	our obligation to pay HFC an annual administrative fee, in the amount of $2.5 million for 2017, for the provision by HFC of certain general and administrative services;

•	HFC’s and its affiliates’ agreement not to compete with us under certain circumstances and our right to notice of, and right of first offer to purchase, certain logistics assets constructed by HFC and acquired as part of an acquisition by HFC of refining assets;

•	an indemnity by HFC for certain potential environmental liabilities;

•	our obligation to indemnify HFC for environmental liabilities related to our assets existing on the date of our initial public offering to the extent HFC is not required to indemnify us; and

•	HFC’s right of first refusal to purchase our assets that serve HFC’s refineries.

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•	any business operated by HFC or any of its affiliates at the time of the closing of our initial public offering;

•	any business conducted by HFC with the approval of our general partner;

•	any business or asset that HFC or any of its affiliates acquires or constructs that has a fair market value or construction cost of less than $5 million; and

•	any business or asset that HFC or any of its affiliates acquires or constructs that has a fair market value or construction cost of $5 million or more if we have been offered the opportunity to purchase the business or asset at fair market value, and we decline to do so.

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On February 22, 2016, HFC obtained a 50% membership interest in Osage in a non-monetary exchange for a 20-year terminalling services agreement, whereby a subsidiary of Magellan Midstream Partners (“Magellan”) will provide terminalling services for all HFC products originating in Artesia, New Mexico requiring terminalling in or through El Paso, Texas. Osage is the owner of the Osage Pipeline, the primary pipeline supplying HFC’s El Dorado refinery with crude oil. Concurrent with this transaction, we entered into a non-monetary exchange with HFC, whereby we received HFC’s interest in Osage in exchange for our El Paso terminal. Since we are a consolidated Variable Interest Entity ("VIE") of HFC, this transaction was recorded as a transfer between entities under common control and reflects HFC’s carrying basis of its 50% membership interest in Osage of $44.5 million offset by our net carrying basis in the El Paso terminal of $12.1 million with the difference treated as a contribution from HFC.

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On March 31, 2016, we acquired crude oil tanks located at HFC’s Tulsa refinery from an affiliate of Plains for $39.5 million. In 2009, HFC sold these tanks to Plains and leased them back, and due to HFC’s continuing interest in the tanks, HFC accounted for the transaction as a financing arrangement. Accordingly, the tanks remained on HFC’s balance sheet and were depreciated for accounting purposes.

•	Effective October 1, 2016, we acquired all the membership interests of Woods Cross Operating, a wholly owned subsidiary of HFC, which owns the newly constructed atmospheric distillation tower, fluid catalytic cracking unit, and polymerization unit located at HFC’s Woods Cross refinery, for cash consideration of $278 million.

•	See “Acquisitions” under Item 1, “Business” of this Annual Report on Form 10-K for additional information on the acquisitions of the crude tanks at HFC's Tulsa refinery and Woods Cross Operating from HFC.

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On October 31, 2017, we closed on an equity restructuring transaction with HEP Logistics, a wholly-owned subsidiary of HFC and the general partner of HEP, pursuant to which the incentive distribution rights held by HEP Logistics were canceled, and HEP Logistics' 2% general partner interest in HEP was converted into a non-economic general partner interest in HEP. In consideration, we issued 37,250,000 of our common units to HEP Logistics. In addition, HEP Logistics agreed to waive $2.5 million of limited partner cash distributions for each of twelve consecutive quarters beginning with the first quarter the units issued as consideration were eligible to receive distributions.

•	Revenues received from HFC were $377.1 million, $333.1 million and $292.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.

•	HFC charged us general and administrative services under the Omnibus Agreement of $2.5 million for the year ended December 31, 2017, $2.5 million for the year ended December 31, 2016, and $2.4 million for the year ended December 31, 2015.

•	We reimbursed HFC for costs of employees supporting our operations of $46.6 million, $40.9 million and $34.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

•	HFC reimbursed us $7.2 million, $14.0 million and $13.5 million for the years ended December 31, 2017, 2016 and 2015, respectively, for expense and capital projects.

•	We distributed $130.7 million, $105.2 million and $90.4 million for the years ended December 31, 2017, 2016 and 2015, respectively, to HFC as regular distributions on its common units, subordinated units and general partner interest, including general partner incentive distributions.

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•	We received operating lease payments from HFC for use of our Artesia and Tulsa railyards for $0.5 million for each of the years ended December 31, 2017, 2016 and 2015.

Item 14.	Principal Accounting Fees and Services

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(1)	Represents fees for professional services provided in connection with the audit of our annual financial statements and internal controls over financial reporting, review of our quarterly financial statements, and procedures performed as part of our securities filings.

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Item 15.	Exhibits and Financial Statement Schedules

(a)	Documents filed as part of this report

(1)	Index to Consolidated Financial Statements

(2)	Index to Consolidated Financial Statement Schedules

(3)	Exhibits

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