The Liberian-flagged crude oil tanker with a capacity of 300,000 tons named Syfnos is seen at Zhoushan port in East China's Zhejiang Province on Monday. According to Zhoushan Customs, the tanker will unload 248,207 tons of Oman crude oil at the port. China is the largest importer of Oman oil. Photo: VCG

HollyFrontier Corp will pay $2.6 billion for almost all of Sinclair Oil's assets, adding new refining, pipeline and storage facilities in the US Rocky Mountain region, the company's chief executive said.

The deal comes as US fuel demand recovers from last year's COVID 19-led record lows, with states reopened and road travel trending near pre-pandemic levels.

"This is exceptionally transformative for us and differentiates us from other downstream businesses," said HollyFrontier's Chief Executive Mike Jennings in a conference call on Tuesday.

The Sinclair deal follows HollyFrontier's announcement in May that the company plans to buy an Anacortes, Washington refinery from Royal Dutch Shell by the end of 2021 for about $500 million.

As a new company, HF Sinclair Corp, will replace HollyFrontier as the public company trading on the New York Stock Exchange.

HollyFrontier announced that at the closing of the deal, expected in mid-2022, HollyFrontier shares will convert into shares of HF Sinclair on a one-for-one basis.

HF Sinclair will then issue about 60.2 million shares to stockholders of The Sinclair Companies, Sinclair Oil's parent, giving them 26.75 percent of proforma ownership in the new company.

Meanwhile, as part of the deal, HollyFrontier will buy Sinclair's branded marketing unit, renewable diesel unit as well as two Rocky Mountain-based refineries.

Holly Energy Partners, HollyFrontier's transportation business, will also buy Sinclair's pipeline assets and storage terminals.

The pipeline and storage businesses are estimated to be worth around $758 million in cash and stock. Sinclair stockholders will own about 16.6 percent of Holly Energy Partners after the deal closes.

The deal does not include exploration and production assets owned by Sinclair Oil & Gas, the companies said.

Sinclair earlier this year became embroiled in a controversy surrounding three last-minute biofuel waivers granted to it by the US Environmental Protection Agency (EPA) under the Trump administration.

The waivers were vacated by a US appeals court in May after a motion filed by the EPA in April, under President Joe Biden's administration.