Neale Hickerson – VP, IR Bruce Shaw – SVP and CFO David Lamp – President Matt Clifton – Chairman and CEO Scott Surplus – VP, Risk Management

Jeff Dietert – Simmons & Co. Jacques Rousseau – Back Bay Research Paul Sankey – Deutsche Bank Securities Chi Chow – Tristone Capital Eitan Bernstein – Friedman, Billings, Ramsey Kenneth Pounds – Nutmeg Securities Adam Comora – EnTrust Capital

Good morning everyone. I’m Neale Hickerson, Vice President of Investor Relations at Holly.

I’d like to welcome you this morning to our second quarter 2008 earnings conference call. With me this morning are Matt Clifton, Chairman and CEO of Holly Corporation; David Lamp, President of Holly, Bruce Shaw, Senior Vice President and Chief Financial Officer and Scott Surplus, Vice President and Controller.

We issued a press release this morning with our second quarter 2008 results. This press release can be found in our website at www.hollycorp.com.

For our call this morning, we’ll begin with Bruce, who has prepared remarks and detail around our quarter’s performance. Dave, will then provide an update on the capital projects we have underway at our Navajo and Woods Cross Refineries.

Matt will then have some additional comments on our earnings in our year in general. At the conclusion of these remarks, we’ll take your questions has time permits.

Before we move to our financial results and comments, we are required to make the following Safe Harbor disclosure statement, also please note the Safe Harbor statement in our earnings release. The following is a Safe Harbor statement under the Private Securities Litigation Reform Act of 1995.

The statements in this earnings call related to matters that are not historical facts are forward-looking statements based on management’s belief and assumptions using currently available information and expectations as of this date and are not guarantees of future performance and do involve certain risks and uncertainties, including those contained in our filings from time-to-time with the Securities and Exchange Commission. Although the company believes that these expectations reflected in these forward-looking statements are reasonable.

The company cannot give any assurances that these expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

The company assumes no duty to publicly update or revise such statements whether as a result of new information, future events or otherwise. Lastly, please note that information presented on today’s call speaks only as of today, August 6, and therefore any time-sensitive information provided may no longer be accurate at the time of any replay or any rereading of the transcript of our call, and now I would like to turn things over to Bruce Shaw.

Thanks Neale. My remarks this morning will cover five areas; first a remainder of Holly’s reconsolidation of Holly Energy Partners effective March 1; second, our earnings for the second quarter; third, a few balance sheet highlights; fourth, an update on our stock repurchase activity; and fifth, a summary of our ownership value in Holly Energy Partners.

First to remind you, Holly reconsolidated Holly Energy Partners as of March 1. When HEP acquired the pipeline and tankage assets from Holly on March 1 ‘08, GAAP rules required Holly to reconsider its benefit interest in HEP.

As back ground HEP is a publicly traded MLP and that Holly owns approximately 46% including 100% of the general partner interest. After the asset acquisition by HEP in March we determined that our beneficial ownership exceeds 50%, due primarily to the increase in Holly’s expected general partner incentive distributions after the transaction.

Effective March 1, we will no longer account for Holly’s interest in HEP under the equity accounting method. Instead HEP balance sheet items, including debt and HEP revenue and expenses except for inter-company transactions will be included on Holly’s consolidated financial statements.

Accordingly we have recorded non-Holly interest in HEP as minority interest starting March 1. We will note that we’ve included segment information in our press release that allows you to see the impact of the reconsolidation on key balance sheet and income statement accounts.

In addition we cover more detail on our 10-Q fillings including our filing for first quarter of this year and in our upcoming filing for the second quarter. Now second to our earnings, earnings for the second quarter were $11.5 million or $0.23 per diluted share as compare to $158.6 million or $2.84 per diluted share for the second quarter of 2007.

Our lower net income for the quarter versus the second quarter of ‘07 resulted from lower gross margins and production volumes Navajo and Woods Cross Refineries and our operating expenses. Offset to a smaller expand by lower SG&A expenses.

As mentioned in the earnings release we estimated our unplanned down-time at the refineries during the quarter that resulted in decrease production volumes and lower yield cost us approximately $40 million of pretax income or about $0.52 per share after-tax. Navajo’s gross margin per barrel average $8.07 for the quarter versus $27.54 per barrel for the same quarter last year, while Woods Cross Refineries our gross margin per barrel averaged $12.49 per barrel in the quarter versus $31.22 per barrel for the same quarter last year.

Woods Cross Refineries about 5,600 barrels a day of black wax crude during the quarter. Had it not been for the refinery downtime during the quarter, we estimate that Navajos and Woods Cross’s gross margins would have increased by approximately $1.50 per barrel and $2.50 per barrel respectively.

Third quarter margins have started out, was better than this second quarter Pro Forma levels given the recent rapid fall in crude prices. The increase in operating expenses of 23.1 million quarter-to-quarter was due to the inclusion of approximately $10 million for HEP operating expenses given the reconsolidation as of March 1, and estimated $5.5 million in higher maintenance expenses related to the refinery downtime and an increase in the cost of purchased fuel and utilities.

Our go forward run rate for OpEx is approximately $70 million to $75 million per quarter including approximately $10 million per quarter for HEP, and please recall that for every dollar increase in natural gas prices our OpEx increases by about $5 million to $6 million per year. The increase in DD&A expense was almost entirely due to inclusion of DD&A expenses for HEP of approximately $6 million.

G&A expenses of $12.8 million which included approximately $1.4 million for HEP were significantly lower than the $21.3 million in the same period last year, due to lower incentive compensation expenses and certain information system implementation expenses incurred in the prior year. We did not sell any sulfur credits during the quarter and we have approximately 84,000 credits available for sale as of June 30, 2008 not accounting credits generated in 2008.

Third, let me cover a few balance sheet highlights. At the end of the first quarter we had $298 million of cash in marketable securities, including $6 million for HEP and no debt at Holly.

HEP had $374 million on its balance sheet of debt, note that this cash balance takes into account capital spending of about $126 million for the quarter of which $9 million was for HEP. We are still on schedule for the capital projects at both Navajo and Woods Cross and David Lamp will update on those projects in a few minutes.

This is a reminder Woods Cross will be down for approximately 26 days during the third quarter for a routine turnaround in completion of tie-ends from new projects. Navajo has its routine turnarounds schedule for early first quarter of 2009 during which we will also complete needed tie-ends for its expansion project.

Now, fourth an update on our stock repurchases activity. As of June 30, we had repurchased approximately $641 million in Holly shares since we begin buying stock in the second quarter of 2005.

Including about 600,000 shares repurchased in the second quarter of ‘08. We continued our stock buyback program in the third quarter of ‘08 purchased an additional half million shares were approximately $14 million.

We have approximately $45 million left on our repurchased authorization as of July 31. We had approximately $49.6 million common shares outstanding as of the end of July.

Last, just a few comments about our HEP ownership. With HEP units trading in the current range, our subordinated and common units are worth about $230 million.

This does not include the value of our general partner interest. On August 14, HEP will pay its recently announced distribution of $74.5 per unit for which Holly expects to receive $5.4 million for it’s common and subordinated units, plus approximately $1.1 million for its GP interest which includes $800,000 of incentive distributions.

With that I’ll turn things over to Dave.

Thanks Bruce. My remarks will provide an update on the progress of our refinery expansion with these stock flexibility project.

Just to remind you these projects will increase Holly’s overall crude capacity by 18% and increase the amount of disadvantage crude’s we can process by 242%. Let me start with Woods Cross projects.

The Woods Cross projects include the construction of mild hydro-cracker as assaulter in the black wax on loading rack and associated off sights. We are currently 85% complete on the projects and expect to be starting up and fully operational in the fourth quarter of 2008.

The Navajo projects are being executed in two Phases; Phase I involves the expansion of the refinery to 100,000 by installing a mile hydro-cracker and new hydrogen plan, a sulfur plan and the revamp of our Lovington crude unit and crude & vacuum unit. These projects are approximately 55% complete and we’ll begin startup in the first quarter of 2009.

Phase II, includes the addition of a new (inaudible) and the revamp of our strategic crude & vacuum unit to process in heavy Canadian crude. These projects are approximately 22% complete with field construction solve of gas folder just beginning.

We expect Phase II to be ready for start up in the fourth quarter of 2009. Access to Canadian crude from Cushing, via the reversal for Centurion Pipeline and the construction of the connecting pipeline are also scheduled to be completing in the same timeframe.

Our projects have projected to be close to our original budgeted costs and they are moving long fairly well. With that I’ll turn it over to Matt, our Chairman and CEO.

During the second quarter, our market provides a historically high margins on our diesel sales and improved gasoline cracks compared to the lower first quarter levels. However, our July averages combined with losses on our secondary products to low our second quarter financial results.

Although, secondary products such as Asphalt, fuel oil and LPG’s represented only approximately 10% of our overall production. Steep, rapid increases in crude oil and slow normal increases in secondary product prices during the quarter resulted in large losses on a gross margin basis for these products depressing our overall gross margins.

On a positive note recent declines of crude oil prices and substantial increases in fuel oil and asphalt prices in late July and early August have dramatically improved the secondary products contribution. I’d like to take a few minutes to make a few comments on the strength of our company in our projects, and our strategy in our current evaluation.

At a time when a number of independent refiners are facing liquidity challenges, Holly stands alone as the only independent refiner with no debt outstanding. Moreover after spending $130 million in capital and stock repurchases during the challenging quarter, we finished the second quarter with approximately $300 million in cash.

We not only have nothing drawn on our $175 million credit facility, but we have virtually no letters of credit issue. As Dave has outlined we are approximately three months from beginning to realize the benefits of our Woods Cross refinery upgrades.

These improvements will substantially increase the volume of low price black wax for heavy Canadian crude we can process while increasing amount of high value Ultra Low Sulfur Diesel we can produce. The project we’re also expanding overall capacity or facility by 20%.

Additionally, we are approximately six months away from beginning to realize the benefits of our Phase I Navajo project. These upgrades will again increase our Ultra Low Sulfur Diesel production and expanded refineries capacity from 85,000 to 100,000 barrels a day.

We’re little in the over a year away from contemplating the Phase II upgrade at Navajo as Dave outline. This project will allow us to substitute low price heavy Canadian crude on approximately 40% of our 100,000 barrels a day crude runs with the balance remaining lower price in New Mexico and West Texas to our crude.

Our joint venture project with Sinclair depicts the new products pipeline from Salt Lake City Las Vegas is preceding on schedule. The completion of the pipelines and terminals in Las Vegas and Cedar City, Utah expected at the beginning of 2010.

Holly 75% interest in this project will be offered to HEP providing a great opportunity for affiliated MLP and an opportunity for past or future expansions of Holly’s with cost refinery, these are the new market access this project provides. Our recently announced agreement with Centurion Pipeline for the movement of Canadian crude from Cushing, Oklahoma to Texas, New Mexico border combined with the new pipeline we are building between Centurion terminals and our New Mexico refining facilities provides long-term economic access from this national crude oil hub in our refining facilities in New Mexico.

It also provides another growth opportunity for HEP through a feature sales of these Holly constructed assets. Our strategy developed more than two years ago was clear.

We are prudently deploying capital become the most competitive refiners in the markets we served, by expanding amount of lower prices and stressed crude’s we can process to drive raw material cost down. Additionally, we are improving our profitability by increasing amount of diesel fuel we can produce, while expanding our overall refining capacity.

We are leveraging our relationship with affiliated MLP, to improve our product distribution and fee stock receiving infrastructure access while adding to the value of Holly’s interest in, cash distributions from HEP. We’re leveraging Holly Asphalt Company’s, Tier I market share position in Horizon and New Mexico to increase the amount of heavy Canadian crude that we will process at our Navajo facility.

The Holly Asphalt outlet for higher value PG grade Asphalt substantially reduces the amount of capital we would otherwise have to employ to process our planted having crude levels. Finally, giving the strength of our balance sheet, the intending benefits of our refinery profit improvement projects in our long history of sustained profitability in challenging margin environments, we like our shareholders are clearly disappoints in our third market share.

Today share price, extra market equity value of only a $1.4 billion, when this equity values is reduced by the $300 million in cash on our balance sheet of roughly $300 million of value in our HEP holdings and the $650 million of market value of our inventory our refining assets are effectively being valued at only $150 million or 5% of replacement cost. Our current evaluation appears robust to be extremely lower by all the measures.

We do have however feel, that by continuing to pursue our current strategy we are doing the right things to grow long-term shareholder value and that by doing such the value should ultimately be reflected in our share price. With that I will turn it back to Neale.

During the second quarter, our market provides a historically high margins on our diesel sales and improved gasoline cracks compared to the lower first quarter levels. However, our July averages combined with losses on our secondary products to low our second quarter financial results.

Although, secondary products such as Asphalt, fuel oil and LPG’s represented only approximately 10% of our overall production. Steep, rapid increases in crude oil and slow normal increases in secondary product prices during the quarter resulted in large losses on a gross margin basis for these products depressing our overall gross margins.

On a positive note recent declines of crude oil prices and substantial increases in fuel oil and asphalt prices in late July and early August have dramatically improved the secondary products contribution. I’d like to take a few minutes to make a few comments on the strength of our company in our projects, and our strategy in our current evaluation.

At a time when a number of independent refiners are facing liquidity challenges, Holly stands alone as the only independent refiner with no debt outstanding. Moreover after spending $130 million in capital and stock repurchases during the challenging quarter, we finished the second quarter with approximately $300 million in cash.

We not only have nothing drawn on our $175 million credit facility, but we have virtually no letters of credit issue. As Dave has outlined we are approximately three months from beginning to realize the benefits of our Woods Cross refinery upgrades.

These improvements will substantially increase the volume of low price black wax for heavy Canadian crude we can process while increasing amount of high value Ultra Low Sulfur Diesel we can produce. The project we’re also expanding overall capacity or facility by 20%.

Additionally, we are approximately six months away from beginning to realize the benefits of our Phase I Navajo project. These upgrades will again increase our Ultra Low Sulfur Diesel production and expanded refineries capacity from 85,000 to 100,000 barrels a day.

We’re little in the over a year away from contemplating the Phase II upgrade at Navajo as Dave outline. This project will allow us to substitute low price heavy Canadian crude on approximately 40% of our 100,000 barrels a day crude runs with the balance remaining lower price in New Mexico and West Texas to our crude.

Our joint venture project with Sinclair depicts the new products pipeline from Salt Lake City Las Vegas is preceding on schedule. The completion of the pipelines and terminals in Las Vegas and Cedar City, Utah expected at the beginning of 2010.

Holly 75% interest in this project will be offered to HEP providing a great opportunity for affiliated MLP and an opportunity for past or future expansions of Holly’s with cost refinery, these are the new market access this project provides. Our recently announced agreement with Centurion Pipeline for the movement of Canadian crude from Cushing, Oklahoma to Texas, New Mexico border combined with the new pipeline we are building between Centurion terminals and our New Mexico refining facilities provides long-term economic access from this national crude oil hub in our refining facilities in New Mexico.

It also provides another growth opportunity for HEP through a feature sales of these Holly constructed assets. Our strategy developed more than two years ago was clear.

We are prudently deploying capital become the most competitive refiners in the markets we served, by expanding amount of lower prices and stressed crude’s we can process to drive raw material cost down. Additionally, we are improving our profitability by increasing amount of diesel fuel we can produce, while expanding our overall refining capacity.

We are leveraging our relationship with affiliated MLP, to improve our product distribution and fee stock receiving infrastructure access while adding to the value of Holly’s interest in, cash distributions from HEP. We’re leveraging Holly Asphalt Company’s, Tier I market share position in Horizon and New Mexico to increase the amount of heavy Canadian crude that we will process at our Navajo facility.

The Holly Asphalt outlet for higher value PG grade Asphalt substantially reduces the amount of capital we would otherwise have to employ to process our planted having crude levels. Finally, giving the strength of our balance sheet, the intending benefits of our refinery profit improvement projects in our long history of sustained profitability in challenging margin environments, we like our shareholders are clearly disappoints in our third market share.

Today share price, extra market equity value of only a $1.4 billion, when this equity values is reduced by the $300 million in cash on our balance sheet of roughly $300 million of value in our HEP holdings and the $650 million of market value of our inventory our refining assets are effectively being valued at only $150 million or 5% of replacement cost. Our current evaluation appears robust to be extremely lower by all the measures.

We do have however feel, that by continuing to pursue our current strategy we are doing the right things to grow long-term shareholder value and that by doing such the value should ultimately be reflected in our share price. With that I will turn it back to Neale.

Good could you, on a separate topic talk about some of the heavier products you mentioned in you opening remarks that margins were weakened 2Q and that those have improved. Is there are way you can help us appreciate the level of weakness that was experienced in 2Q and what the decline in all prices where July margins are for the heavier products?

And Jeff to your, I think one of your overall question was kind of margin levels, so far in the third quarter I made some comments in my prepared remarks our pro forma gross margins for the refineries would have been close to $10 slightly below that for Navajo and in the $15 range for Woods Cross. We’re are seeing so far we haven’t closed July book share, but we are seeing the Navajo right around the same number and Woods Cross in that same range perhaps slightly better.

And now in the total Asphalt revenue in the margin, according to Asphalt you have a $10 million contribution in 2Q. How do you expect those margins to be impacted what the decline in oil prices so far in 3Q?

Right.

So after operating expenses that EBITDA is down in kind of the $4 million range for the quarter, but I think starting now its kind of too early to tell, we’ve got to see where these process are going to land, but I think starting out its kind of similar run rate.

Thank you for your comment.

Good morning gentlemen, two question for you, of the increases in capacity of both refineries what is that going to lead to in incremental diesel production.

Well, I’ll let Dave try to answer that question.

Well Jack as you know the mild hydro-cracker is the primary yield out of the mild hydro-cracker is incrementally is diesel and it has some naphtha that comes with it but those conversion barrels are selective towards diesel. So if you take Woods Cross, we go from roughly a 30% yield the diesel is somewhere around 40%, 39% and with that Navajo it’s a little less impact and it depends on the crude’s slate, when you add a 100,000 barrel of WTS mostly those similar type numbers however, when we switch over to the heavier type crude we actually show a much smaller increase in diesel just driven the nature of the raw material.

When the Phase II is done, so what would you expect of the diesel change to be?

Phase II would be, it will probably be about the, today we runabout 32% at Navajo we probably be in that 34%, 35%.

Okay great.

Just so that you understand it. I mean Dave’s just saying on the long-haul where we see WCS and relationship together crude’s, but obviously each of months we will be running an LP to decide weather incrementally you bringing more WCS or less and maximize diesel yield or as slight decline in diesel yield and have more WCS.

I think we will have a lot more flexibility in ramping up and turning down diesel production that we have currently.

Second question, overall with the reconsolidation of Holly Energy Partners what would be the impact on earnings from the higher cost that have brought in. Have you guys done that analysis?

Jack you mean kind of bottom line that income, the expect overtime is really negligible to the minimum effect on Holly’s net income. Before we were deconsolidated we had to account for the earnings we got from HEP and now we are just accounting for the earnings we send out to the minority interest folks its just on a net income line the difference between those two methods is effectively minimal.

I think for this quarter it’s less then a penny effect on earnings per share.

Okay. Great thank you.

Hi, good morning gentlemen. You’ve made some comments about your CapEx, but could you just remind us what you expect gross CapEx and maintenance CapEx to be for the rest of the year in the context to the overall cash flows.

I guess what I was driving towards who we should model buyback for the rest of the year, you’ve obviously had a significant step up here in the first part of 3Q, could you just help us a bit work through that and I guess the final part of this whole question is what you’ll be prepared to do with your balance sheet in terms of debt how much leverage you want to carryout this days? Thanks.

I can take the first part of that question Paul and turn it over to Matt. As far as the rest of the year, we are looking another say $200 million to $220 million of capital expenditures for the rest of 2008 and then in terms of how that place in the future stock repurchases I’ll turn that one over to Matt.

As for as the stock repurchases I think it was in Bruce’s comments we have about $45 millions authorized. We obviously have a fair amount of capital going out and we are about to turn the corner and starting to realize some of the benefits of that and obviously the industry has a challenging margin environment in the last few months.

I think we’re going to be conservative as we usually are in are by nature, and I think how we start seeing cash flows come in substantially to improve margin improvement or the benefits of the projects I would see us unlikely to really ramp up the stock repurchase but I having said that, it’s something that we evaluate on a continuing basis. Clearly the authorization is still outstanding for the $45 million and we see us doing that and I think we’ve never commented on the timing of when expect to do that, but all indications are that we will finished out that program.

And then on the long-term, on the debt question Paul. We’ve got a $175 million credit facility as Matt mentioned that’s not used, we’ve got a $125 million according on that facility and in terms of borrowing at this point I think we don’t a need to do that, it just kind of depends on what operating kind of cash flows is over the next 18 months.

So we’ll kind of evaluators it as we go, certainly if we need we do have a diversion to taking on debt for high payout projects like this but at this point don’t see a need for us to do that.

Maybe a little bit aggressive I think right now as Matt said we are just going to kind of hold that option and decide as we go. I wouldn’t try to develop any pattern off in the third quarter, but …

That’s kind of what I was driving at. I understand that’s its difficult to make forward-looking statement on that.

Just on the market there is a couple of interesting things, one if I guess that this margins have come back a bit here and cracks, I’m thinking of the cracks there and a month of that, you thin that’s about demand or weather there is somebody else in their that we should worry about. I guess just they are still high at least down from where they were, secondly the heavy lighting spread has narrowed a lot.

I wondered if you had any though on that the sweet, sourer has narrowed a lot. So once you‘ve seen margins widen and I think it’s very encouraging in the Asphalt front with crude falling back.

There has being a couple of other, I guess slightly negative elements to the falling crude, it’s seem to be going on and I’ll be just be very interested in any observations you have on the shape of the market right now and how you see playing out for the rest of the year. I’ll leave it there, thanks a lot?

I do appreciate your comment about putting the sweet sourer have narrowed quite a bit I really kind of at a loss but maybe David understand it better that what I do, but I don’t know what’s really driving that. We had some tick up in the heavier products values that could be effecting that somewhat.

I think like you said the heavy Canadian crude WCS on a percentage basis of crude prices have narrowed in last six months I guess compared to particularly the wide differentials, versus WTI that we’re experienced at the beginning of the calendar year, and just my impression of that overall Canadian heavy market right now, is that it’s a pretty thinly traded market. A lot of the people have contracts with formula based and the incremental crude, the swing in the market quite a bit and I guess demand on the margin is a little bit stronger than it was at the beginning with the year with some of the Toker even though they are relatively small Sinyx and Sinclair [ph] had come on and some others have come on.

I think its a just matter of relatively small increases in demands swinging it shrinking differentials and as production comes up, we incline to think that we would go the other way until there is a great deal more that could be processed or accessed all the way to the Gulf Coast is implemented.

And anything on distillate and demand, that’s the final part it is guess?

We haven’t seen much change in our distillate demand as far as our particular markets. It’s going strong, like I said we had, doing great cracks obviously as a lot of the industry did, but we have particularly great cracks in Woods Cross markets throughout the second quarter and we’re still seeing a pretty high levels there and you do make good point that it recently has shrunk down at least on the NYMEX basis, but I don’t know that we’ve seen radical changes in our markets in the last couple of days.

Gotcha and then finally I guess gasoline will keep more healthy in newer markets as well as this is what I understand.

Yes, I think that’s right.

Okay, thanks guys I will leave with that.

Thanks, back on CapEx do you have an update on your ‘09 expectations?

Yes Chi, if you add the numbers together. I think in our last one of the webcast presentations or conference presentations slides we have on the website, if you look at ’08 and ’09 together that still a good number.

What’s left out of that total number for on Matt slide show the additional expenditures that I think Matt and or Dave talked about on these interconnecting lines to get expressed order into the refineries, which is up to say that about $90 million added, so, if you take the 200 or 220 we think we’ll see there for the rest of 2008. The rest of 2009 looks like 300, let me see here about, yes about $310million to $320 million addition to that and that includes capital that were spending for these interconnecting lines and for UNEV, which we expect HEP to have an interest in?

Okay, just to clarify I think you laid out a $173 million in last presentation for ’09 CapEx, so your saying we are going have some spill over from ’08, was it $90 million, is that’s right?.

That’s right, Chi. The difference in what you see on the website slide, I think last quarter call we talked about it as we had a slide, a slip in capital based on the Navajo turn around taking place now in early first quarter ’09 instead of December of ’08.

We are also going to do some tie-end work for the projects and we also given the permitting delay for UNEV shifted a good bit of that capital to ’09. So, roughly shifted $90 to $100 million of capital from last slide from ’08 to ’09 and then we’re adding up to $90 million for the interconnecting outline.

That’s helpful. Another question on Woods Cross, was there any shift in crude place during of the second quarter?

We ran a little bit more black wax.

The currently differential Chi, which is the sweet crude that we buy up there, the market for the sweet crude, is kind of $7 or $8 under, closer to $8 under WTI in the first quarter and tightened into a $6 range in the second quarter. Now, we’re seeing that go back out here in the beginning of the third quarter, and we run more black wax as David said but we didn’t run any back river in the second quarter Woods Cross just given that LP economic, so then I think that the Wyoming sweet kind of draw in as explaining that.

Okay and that’s widen back out again here, so far..

Okay and then has that Plains pipeline started up in the Salt Lake yet?

It hasn’t started up yeah Chi, what they are telling us beginning of November, is probably the lightly startup now.

And again any sort of changes in crude once that pipelines starts up?

Well, I think we’ll have a lot more flexibility, about that time we’ll have the hydrocracker. We’re hoping to finish mechanical completion early October and start ramping that up in October.

So in November we’ll have the capabilities to be running more Black wax and/or more heavy Canadian and I think we’ve said historically that currently I think we’ve got up to 7000 barrels per day of Black wax and we should be able to go out of the process capabilities and with the Plains line we’ll have the capabilities to move that up to a combined 15 a day of Black wax, Canadian. So, incrementally the L.P.

launched Black wax over the Canadian over the last several months due to the higher yield of the crude and the contract terms that we’ve got on those versus the differentials with WCS has been trading it.

Okay great, thanks a lot.

Can you hear me? Following-up on the question about, light having differentials, seems like you’ve got the pipelines coming in place and obviously the refinery upgrades.

What are your thoughts in terms of timing and desired to lock in some of those differentials, when that we might be able to see something on that?

Okay great. Thank you.

I was a little confused about Holly Partners, it seems like it was a little more, and you said it was basically $0.01 in the quarter. Look like a little more just from interest expense regarding HEP debt, maybe I read it wrong.

Right not, the I guess what I’m referring to Kenneth that the difference in what Holly’s net income would have been before reconsolidation, we were accounting for a share of Holly’s income in our income statement. The difference between that accounting and the accounting we currently have really has in affect of the income statement, must the interest expense you see is our share, is the HEP.

Okay, Yes because that’s $8.2 million right.

Right.

And interest income went up slightly, but then there is also minority interest in HEP earnings of minus $1.3 million,

Right .

I am little confused about that number too.

I’m going to let Scott Surplus our control answer the question, if I don’t get it right here, but what you’re saying there are subtractions below the line that are affecting that income. We are bringing revenues and expenses about the line.

Okay.

Scott will correct me if I’m wrong, but I think basically the bottom line is this HEP net income on a 100% basis isn’t that significant although their EBITDA is streaming at distributed cash flow. It’s fairly significant, just the depreciation level.

So, bottom line is weather you’re consolidating or your deconsolidating effect on Holly is just basically 70% of whatever the net income is I think.

Okay.

For the less than 70% we have a 46% surplus, its kind of distribution rights of the general partner, and then we have a few little basis differential due to the fair value that we had to do when we did to reconsolidation of HEP. This not various significant..

Okay I might be wrong on my second point too, but I’m going to try. Its seems like Alon is a refinery which has been down the whole here what is a big contributed to HEP do you guys have any update on that on when they can get back to I guess paying you guys?

One clarification; if HE has a contract with minimum, I guess throughput guarantees to HEP though they haven’t been running since their explosion and I guess back in March?

Happened in about mid February when they had that explosion in big spring.

So haven’t been moving volume, they’ve been required to pay those minimum amounts. From the accounting standpoint HEP hasn’t recognize both minimum payments amounts because they basically have the right, but it’s unlikely that during the next 12 months if they exceed their minimum volume shipments then they could basically utilize the excess payments on the volume guarantees, but as far as an update I don’t think we know more than what Allan has said in their last webcast which was basically they’re growing at about a 50% rate from what I remember and they’re hoping to get the whole plant backed up by the end of July and I guess we’ll probably be getting an update as the rest of the world does when they have their earnings conference call.

Okay because they’re fairly significant contributor to HEP earnings, no.

Yes, they were a fairly significant customers, yes.

Well HEP, as Matt said was receiving that cash on the minimums but just kind of record the cash received under revenue until Allan drives to claw those credits back that expired.

Okay, but that could be a positive coming for HEP in the next few quarters assuming that they can get their plant back rolling, right.

That’s correct.

That’s right.

Okay, great. Thank you.

Yes, I just have a couple of quick ones; the first is the pipeline that Holly Energy Partners may have an interest in. I think Matt you’d said it was about $300 million.

I know the big Las Vegas one, what are the other two smaller ones, what’s the timing of that cash maybe potentially coming back to Holly corporate?

Okay, substantially $90 million coming in, ’09 and then I guess it’s the big one. What phenomena is going to come in from the unit line?

Holly’s estimated costs for the 75% share, I think it’s $225 million.

Okay and then you get the cost to carry, whatever it is?

That’s right. So, currently that number is probably close to the $240 million, once you get out there to 2010.

It kind of depends on the timing of when Holly spends the money and how that interest kind of adds up.

Okay and when is the down time suppose to be at Woods Cross, when do you start the project?

Next week.

Okay and I’m sorry, how long is it going to be down for?

26 days, all the oil.

All right, terrific. Thanks a lot guys.

Sure.

Could you comment on the operating cost for the second quarter both at Woods Cross and at Alon. It looked like there was a bigger increase than what is just supplied by gas and power prices?

Sure, Jeff, and Dave can correct me if I don’t mention a significant item, but the biggest part I think mentioned in my prepared remarks in addition to the natural gas cost increase which between the plants natural gas increased from ’07 to ’08, looks like it cost us around $4 million to $5 million extra operating expense. We also talked about increased maintenance expenditures because of the end plan downtime and that was about $5.5 million.

Jeff, if you underlying the operating expenses from HEP, kind of look at that segment information, the Holly specific operating expenses were in the $60 million, $61 million range and that compares to about $57 million before HEP operating expenses in the first quarter of this year.

Okay and your guidance for $70 million to $75 million OpEx is flattish with what you experienced in 2Q?

That’s right and we’re trying to balance that estimate. A few folks were adding as we bring on new units at the plant, we bring our new operators to operator those, so we’re trying to hedge our best a little bit here as we ramp up the manpower to do that and we’ll have a better view of that after planning the next call.

$70 million, $75 million would be the total and you take the $10 million off for HEP, that’s right.

Good and on the inventories, are you running pretty close to minimum inventory levels or would you anticipate reducing inventories going forward?

We always just try to run minimum Jeff and as we’ve had a slight built of Woods Cross preparing for this turnaround, other than that we’re flat pretty much to the year, beginning of the year.

Very good, that’s all I had. Thanks.

We certainly appreciate everyone tuning in and listening today and we look forward to visiting with you again next quarter. Thanks a lot.