Related story: Refinery combo makes good fit.

Tulsa's two oil refineries soon will have the same owner.

Dallas-based Holly Corp. announced Tuesday it has a definitive agreement with Sinclair Oil Corp. to buy its Tulsa refinery for $128.5 million. Holly bought the Sunoco refinery only five months ago.

"It didn't take long when we had the ceremony at the (Sunoco) closing for the Tulsa chamber to suggest we move our headquarters there," Holly CEO Matt Clifton said. "We'll have one of the most competitive refineries in the Midwest with this combination."

Holly's headquarters will stay in Dallas. Once the Sinclair transaction is closed, however, the company could employ more than 600 refinery workers between the two local facilities, although work- force details are still being determined.

Holly plans to operate the two refineries as one, company officials said. Clifton said additional pipeline work will be needed to better connect the two.

"It's a powerful combination," Holly spokesman Neale Hickerson added. "One plus one equals 3."

The deal, subject to regulatory approval, could be completed by the end of the year, he added. The two facilities, once coordinated, would give Holly about 125,000 barrels per day of processing capacity in Tulsa.

What attracted Holly to the Sinclair facility was its ability to produce ultra low-sulfur diesel and further finish gas oil into gasoline and diesel. Holly had planned to spend $150 million on upgrading the old Sunoco refinery so it could produce ultra low- sulfur diesel by 2011.

"It really eliminates the need to do that $150 million project," Hickerson said. "Our choices were to do nothing and spend $150 million (at Sunoco) or spend $125 million plus a little more to get to the same place and an additional 40,000 barrels."

Tuesday was a busy day for Holly, which also announced it was selling part of its Sunoco storage capacity and pipeline-receiving facilities to Plains All American Pipeline LP for $40 million.

Rumors about an impending Sinclair sale surfaced in recent months after the Salt Lake City-based private refiner shelved completion of a planned $1 billion expansion and upgrade project over several years. Holly's Hickerson pointed out that Sinclair already has spent about $300 million in upgrades.

Sinclair estimated the total value of the deal at $300 million, including inventory purchases.

The seller also expects that Holly will keep most of the 298 workers now employed at the Sinclair refinery.

The company has no plans to exit its marketing business, according to a news release.