Oil refiner Holly Corp said it will buy Sinclair Oil Corp's Tulsa refinery in a cash-and-stock deal worth $128.5 million, and said it may offer debt securities to part fund the transaction.

Under the terms of the deal, Holly has offered $54.5 million in cash and $74 million in stock for the 75,000 barrels per day (bpd) refinery with about 2.3 million barrels of storage.

Holly, which will also buy the refinery's inventory of about 500,000 barrels, plans to integrate this facility with its existing 85,000 bpd Tulsa refinery. Holly also bought Sunoco's Tulsa refinery for $65 million in April.

This acquisition effectively increases Holly's overall crude capacity by 40,000 bpd, eliminates a net amount of approximately $125 million of required near term capital expenditures, Chief Executive Matt Clifton said in a statement.

Holly plans to fund a portion of the deal with cash on hand, its existing credit facility and/or proceeds from a possible private sale of debt securities.

Meanwhile, Holly Energy Partners LP, a Holly Corp affiliated mid-stream master limited partnership, said it will buy about 1.4 million barrels of additional storage at the same facility, as well as light products, asphalt and propane loading racks and a product delivery pipeline.

Holly Energy will pay $75 million for the purchase, comprising $21.5 million in cash and $53.5 million in common units.

Shares of Dallas, Texas-based Holly Corp were up 46 cents at $30.13 Tuesday on the New York Stock Exchange. (Reporting by Krishna N. Das in Bangalore; Editing by Maju Samuel)