What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2021-03-08 compared with 2020-03-02 · 356 added, 310 removed, 707 unchanged (49% of the section changed)

4 unchanged sentences

Recent Events Affecting Comparability of Periods

COVID-19 Pandemic

On March 11, 2020, the World Health Organization (“WHO”) declared that the worldwide spread and severity of a new coronavirus, referred to as COVID-19, was severe enough to be characterized as a pandemic.

The spread of COVID-19, in conjunction with related government and other preventative measures taken to mitigate the spread of the virus, have caused severe disruptions in the worldwide economy, including the global demand for crude oil and refined products, the movement of people and goods in the United States, and the global supply chain for industrial and commercial production, all of which have in turn disrupted our businesses and operations.

We continue to actively respond to the impacts that these matters are having on our business.

We decreased throughput rates at our Hawaii and Wyoming refineries in response to reduced refined product demand, idled one of our Hawaii refineries, completed our turnaround in Hawaii later in 2020 than previously planned, and reduced the scope of our Washington turnaround scheduled in the first quarter of 2021.

In addition, we adjusted production of certain refined products to meet the changing local demand profile.

We continue to maintain an ample supply of refined products to meet the refined product needs in the regions in which we operate.

On May 5, 2020, we announced that 29 employees were furloughed in response to the previously announced decline in throughput rates at our refineries in Kapolei, Hawaii, and our President and Chief Executive Officer and the independent members of the Company’s Board of Directors reduced their cash salaries by 75% through October 2020.

In response to sustained decreased demand for refined products in Hawaii, we significantly reduced discretionary spending company-wide and, in early October 2020, we reduced headcount in our refining segment in Hawaii.

In November 2020, we announced that we were taking additional measures to reduce our operating expenses.

These measures include non-renewal of the leases of certain marine assets to more closely align our logistics capability with reduced demand.

As of December 31, 2020, the Par West refinery had been idle for more than nine months due to the reduction in demand resulting from the COVID-19 global pandemic.

Given the length of idle time and the high cost to restart the refinery and no current plans or timeline to do so, we recorded an impairment charge of $17.9 million to write off the corresponding assets and accumulated depreciation for all assets other than land that are not expected to be used as part of our ongoing refining operations in Hawaii.

We have undertaken additional liquidity-enhancing measures, including deferring or delaying certain capital expenditures originally planned for 2020 and early 2021 related to turnaround activities at three of our refineries and, in early June 2020, accessing the capital markets to issue $105 million aggregate principal amount of senior secured notes due 2026.

Interest rates associated with our inventory financing arrangements and borrowings under those inventory financing arrangements have also declined.

In addition, we closed a sale-leaseback transaction on February 23, 2021, in which we sold twenty-one (21) retail convenience store/fuel station properties located in Hawaii (the “Sale-Leaseback Properties”).

We also entered into a lease on the properties for fifteen (15) years, unless earlier terminated, with up to four 5-year renewal options.

We anticipate that during the first quarter there will be a separate closing for one additional property, as provided under the Purchase Agreement.

In total, the 22 properties are being sold for a gross purchase price of $116.1 million.

We believe the steps we have taken have strengthened our ability to operate through current conditions.

We also utilized some of the tax payment deferral opportunities and federal refund acceleration opportunities provided by the IRS, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and various state-specific provisions.

We continue to maintain existing processes and procedures including, but not limited to, processes and procedures around protection of our technology systems and proprietary data, even though a significant number of our employees are working from home.

During this time of uncertainty, the health and wellbeing of our employees and customers are our top priorities as we continue navigating the challenges presented by the COVID-19 pandemic.

The financial results contained in this Annual Report on Form 10-K reflect the reduced activity experienced in the second, third, and fourth quarters of 2020 in the regions in which we operate.

The COVID-19 pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

In Washington, for example, mandatory self-quarantine orders have been lifted and replaced by recommended self-quarantines for travelers arriving from areas of high COVID-19 activity.

Beginning October 15, 2020, U.S.

travelers to the state of Hawaii have an option to take a rapid COVID-19 test as an alternative to a 14-day quarantine if they test negative.

The State of Hawaii has also begun to allow

visitors from Japan to enter the state with a recent negative COVID-19 test, and certain airlines have resumed scheduled flights between Japan and Hawaii.

We continue to actively monitor the impact of the global situation on our people, operations, financial condition, liquidity, suppliers, customers, and industry.

Due to the rapid development and fluidity of the situation, the full magnitude of the COVID-19 impact on our financial condition, future results of operations, and future cash flows and liquidity is uncertain and has been and may continue to be material.

Washington Acquisition

10 unchanged sentences

The results of operations of the acquired assets are included in our refining segment commencing December 19, 2018.

In the first quarter of 2020, the Par West refinery was idled due to the reduction in demand resulting from the COVID-19 global pandemic’s effect on the economy.

Please read Note 4—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.

5 unchanged sentences

Please read Note 4—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.

A rebranding of those sites to our proprietary “nomnom” brand began in December 2020 and the rebranding of four sites was completed as of December 31, 2020.

As these stores are rebranded, Par will begin self-supplying the fuel with equity barrels and/or unbranded fuels procured in the open market.

Amended and Restated J.

12 unchanged sentences

Under this optional transition method, information presented prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for the period.

Please read Note 2—Summary of Significant Accounting Policies to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Results of Operations

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Net Income (Loss).

Our net income decreased from $40.8 million for the year ended December 31, 2019 to a net loss of $409.1 million for the year ended December 31, 2020.

The decrease in our net income (loss) was primarily driven by lower refining sales volumes and unfavorable crack spreads related to COVID-19 demand destruction, increased RINs expenses and derivative costs, goodwill and asset impairments of $85.8 million, and an unfavorable change in lower of cost and net realizable value adjustments, partially offset by cost reductions across our businesses in response to COVID-19 and higher retail fuel margins.

In addition, we incurred an other-than-temporary impairment of $45.3 million related to our equity investment in Laramie Energy in 2020, as compared to an other-than-temporary impairment of $83.2 million in 2019.

Other factors impacting our results period over period include a $49.0 million reduction in our income tax benefit and lower debt extinguishment and commitment costs.

Adjusted EBITDA and Adjusted Net Income (Loss).

For the year ended December 31, 2020, Adjusted EBITDA was a loss of $86.7 million compared to earnings of $258.8 million for the year ended December 31, 2019.

The change was primarily related to lower refining sales volumes and unfavorable crack spreads related to COVID-19 demand destruction, partially offset by lower operating expense and higher retail fuel margins.

For the year ended December 31, 2020, Adjusted Net Income (Loss) was a loss of $249.8 million compared to income of $90.2 million for the year ended December 31, 2019.

The change was primarily related to the same factors described above for the decrease in Adjusted EBITDA and higher depreciation, depletion, and amortization (“DD&A”) due to recently completed capital projects, including turnaround projects, partially offset by a $4.6 million decrease in interest expense and financing costs and a $5.8 million decrease in our Equity losses from Laramie Energy, excluding our share of unrealized gains or losses on derivatives and excluding impairment changes associated with our investment in Laramie Energy.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Our net income increased from $39.4 million for the year ended December 31, 2018 to $40.8 million for the year ended December 31, 2019.

The increase in our net income was primarily driven by the impact of the Washington Acquisition and a $69.7 million income tax benefit primarily associated with a partial release of our valuation allowance in connection with the Washington Acquisition.

These increases were partially offset by a non-cash impairment charge of $81.5 million related to our equity investment in Laramie Energy and higher interest expense due primarily to increases in our outstanding indebtedness.

These increases were partially offset by non-cash impairment charges of $83.2 million related to our equity investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference and higher interest expense due primarily to increases in our outstanding indebtedness.

Other factors impacting our results period over period include higher debt extinguishment and commitment costs associated with the Washington Acquisition and exchange of a portion of our outstanding 5.00% Convertible Senior Notes, partially offset by a $10.5 million charge related to the Tesoro earn-out settlement in 2018 that did not recur in 2019.

4 unchanged sentences

For the year ended December 31, 2019, Adjusted Net Income was approximately $90.2 million compared to income of $49.3 million for the year ended December 31, 2018.

The change was primarily related to the same factors described above for the increase in Adjusted EBITDA as well as a $19.2 million decrease in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives and excluding impairment changes associated with our investment in Laramie Energy, an increase in DD&A primarily associated with assets acquired in connection with the Washington Acquisition, and increase d interest expense and financing costs primarily related to the new Term Loan B Facility, the Washington Refinery Intermediation Agreement , and the Retail Property Term Loan .

The change was primarily related to the same factors described above for the increase in Adjusted EBITDA as well as a $19.2 million decrease in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives and excluding impairment changes associated with our investment in Laramie Energy, an increase in DD&A primarily associated with assets acquired in connection with the Washington Acquisition, and increased interest expense and financing costs primarily related to the new Term Loan B Facility, the Washington Refinery Intermediation Agreement, and the Retail Property Term Loan.

These increases were partially offset by a decrease in interest expense and financing costs due to the exchange of a portion of our outstanding 5.00% Convertible Senior Notes during 2019.

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Our net income decreased from $72.6 million for the year ended December 31, 2017 to net income of $39.4 million for the year ended December 31, 2018.

The decrease in our net income was primarily driven by lower refining margins, a $10.5 million charge related to the Tesoro earn-out settlement, higher acquisition and integration costs, and a decrease in our Equity earnings (losses) from Laramie Energy, LLC, partially offset by improved margins in our retail segment.

Other factors impacting our results period over period include increased interest expense and financing fees and DD&A.

Adjusted EBITDA and Adjusted Net Income .

For the year ended December 31, 2018, Adjusted EBITDA was $132.1 million compared to $140.8 million for the year ended December 31, 2017.

The change was primarily related to lower refining margins driven by unfavorable crude oil differentials, partially offset by improved margins in our retail segment and an increase in refined product sales volumes and crack spreads.

For the year ended December 31, 2018, Adjusted Net Income was approximately $49.3 million compared to approximately $63.3 million for the year ended December 31, 2017.

The change was primarily related to the same factors described above for the decrease in Adjusted EBITDA and increased interest expense and financing fees and DD&A.

The following table summarizes our consolidated results of operations for the years ended December 31, 2020, 2019, and 2018 (in thousands).

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

Revenues $ 3,124,870 $ 5,401,516 $ 3,410,728

Cost of revenues (excluding depreciation) 2,947,697 4,803,589 3,003,116

1 unchanged sentence

Depreciation, depletion, and amortization 90,036 86,121 52,642

Impairment expense 85,806 — —

General and administrative expense (excluding depreciation) 41,288 46,223 47,426

1 unchanged sentence

Total operating expenses 3,442,868 5,253,536 3,328,787

Operating income

Operating income (loss) (317,998) 147,980 81,941

Other income (expense)

1 unchanged sentence

Debt extinguishment and commitment costs — (11,587) (4,224)

Other expense, net

Other income, net 1,049 2,516 1,046

Change in value of common stock warrants 4,270 (3,199) 1,801

4 unchanged sentences

Income tax benefit (expense) 20,720 69,689 (333)

Net income (loss) $ (409,086) $ 40,809 $ 39,427

The following tables summarize our operating income (loss) by segment for the years ended December 31, 2020, 2019, and 2018 (in thousands).

The following should be read in conjunction with our consolidated financial statements under Item 8 of this Annual Report on Form 10-K.

Year ended December 31, 2019

Logistics (1)

Corporate, Eliminations and Other (2)

Year ended December 31, 2020 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Revenues $ 2,886,701 $ 180,909 $ 363,713 $ (306,453) $ 3,124,870

Cost of revenues (excluding depreciation) 2,908,870 110,385 234,885 (306,443) 2,947,697

1 unchanged sentence

Depreciation, depletion, and amortization 53,930 21,899 10,692 3,515 90,036

Impairment expense 55,989 — 29,817 — 85,806

General and administrative expense (excluding depreciation) — — — 41,288 41,288

1 unchanged sentence

Operating income (loss) $ (331,826) $ 35,044 $ 24,211 $ (45,427) $ (317,998)

Year ended December 31, 2018

Logistics (1)

Corporate, Eliminations and Other (2)

Year ended December 31, 2019 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Revenues $ 5,167,942 $ 199,226 $ 458,889 $ (424,541) $ 5,401,516

Cost of revenues (excluding depreciation) 4,783,747 112,124 332,302 (424,584) 4,803,589

4 unchanged sentences

Operating income (loss) $ 93,781 $ 59,075 $ 49,245 $ (54,121) $ 147,980

Year ended December 31, 2017

Logistics (1)

Corporate, Eliminations and Other (2)

Year ended December 31, 2018 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Revenues $ 3,210,067 $ 125,743 $ 441,040 $ (366,122) $ 3,410,728

Cost of revenues (excluding depreciation) 2,957,995 77,712 333,664 (366,255) 3,003,116

6 unchanged sentences

(1) Our logistics operations consist primarily of intercompany transactions which eliminate on a consolidated basis.

Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $424.5 million , $365.5 million , and $325.2 million for the year s ended December 31, 2019 , 2018 , and 2017 , respectively.

Below is a summary of key operating statistics for the refining segment for the year s ended December 31, 2019 , 2018 , and 2017 :

(2) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $306.5 million, $424.5 million, and $365.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Below is a summary of key operating statistics for the refining segment for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

2020 2019 2018

Total Refining Segment

7 unchanged sentences

Gasoline and gasoline blendstocks 24.6 % 23.0 % 27.1 %

Distillates 42.2 % 44.4 % 47.4 %

Fuel oils 29.5 % 20.3 % 17.8 %

Other products (0.7) % 8.7 % 4.5 %

Total yield 95.6 % 96.4 % 96.8 %

Refined product sales volume (Mbpd)

9 unchanged sentences

Gasoline and gasoline blendstocks 23.4 % 23.6 % — %

Distillates 35.3 % 35.6 % — %

Asphalt 18.8 % 18.9 % — %

Other products 19.8 % 19.4 % — %

Total yield 97.3 % 97.5 % — %

Refined product sales volume (Mbpd) (1) 39.6 41.1 —

3 unchanged sentences

Year Ended December 31,

2020 2019 2018

Wyoming Refinery

2 unchanged sentences

Gasoline and gasoline blendstocks 49.2 % 49.6 % 49.5 %

Distillates 45.2 % 44.5 % 45.8 %

Fuel oil 1.9 % 1.7 % 1.6 %

Other products 1.3 % 1.6 % 0.8 %

Total yield 97.6 % 97.4 % 97.7 %

Refined product sales volume (Mbpd) 13.0 17.0 16.7

4 unchanged sentences

3-1-2 Singapore Crack Spread (5) $ 3.15 $ 10.80 $ 10.90

3-1-2 Singapore Crack Spread (7)

Pacific Northwest 5-2-2-1 Index (6) 11.44 15.02 —

Wyoming 3-2-1 Index (7) 17.80 24.90 22.69

Crude Prices ($ per barrel)

Crude Oil Prices ($ per barrel)

Brent $ 43.21 $ 64.19 $ 71.55

WTI 39.65 57.08 64.90

ANS 41.77 65.72 72.16

Bakken Clearbrook 37.19 56.04 62.36

WCS Hardisty 27.45 43.18 38.33

Brent M1-M3 (0.98) 1.00 0.37

________________________________________________________

Previously-reported logistics pipeline throughput volumes have been removed from the Operating Statistics table post-closing of the Washington Acquisition as we have determined that pipeline throughput is no longer a relevant indicator of logistics segment profitability given the low weighting of pipeline movements at the Washington refinery.

Operating income (loss) per barrel has also been removed from the table because we do not believe it to be an indicative measure of our refineries’ profitability.

(1) Feedstocks throughput and sales volumes per day for the Washington refinery for the year ended December 31, 2019 are calculated based on the 355-day period for which we owned the Washington refinery in 2019.

11 unchanged sentences

Our production costs are included in Operating expense (excluding depreciation) on our consolidated statement of operations, which also includes costs related to our bulk marketing operations.

The profitability of our Hawaii business is heavily influenced by crack spreads in the Singapore market.

This market reflects the closest liquid market alternative to source refined products for Hawaii.

Prior to 2020, the 4-1-2-1 Singapore crack spread (or four barrels of Brent crude oil converted into one barrel of gasoline, two barrels of distillates (diesel and jet fuel), and one barrel of fuel oil) was the most representative market indicator for our Hawaii refineries ’ operations.

See footnote 7 below for a discussion of the 3-1-2 Singapore Crack Spread.

After completing the acquisition of Par West , we began shifting our Hawaii production profile to supply the local utilities with low sulfur fuel oil and significantly reduced our high sulfur fuel oil yield.

(5) After completing the acquisition of Par West in December 2018, we began shifting our Hawaii production profile to supply the local utilities with low sulfur fuel oil and significantly reduced our high sulfur fuel oil yield.

In 2020, following the implementation of IMO 2020, we established the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) as a new benchmark for our Hawaii operations.

By removing the high sulfur fuel oil reference in the index, we believe the 3-1-2 Singapore Crack Spread is the most representative market indicator of our current operations in Hawaii.

By removing the high sulfur fuel oil reference in the index, we believe the 3-1-2 Singapore Crack Spread is the most representative market indicator for our current operations in Hawaii.

(6) We believe the Pacific Northwest 5-2-2-1 Index is the most representative market indicator for our operations in Tacoma, Washington.

5 unchanged sentences

Pricing is based 50% on applicable product pricing in Rapid City, South Dakota, and 50% on applicable product pricing in Denver, Colorado.

Below is a summary of key operating statistics for the retail segment for the year s ended December 31, 2019 , 2018 , and 2017 :

Below is a summary of key operating statistics for the retail segment for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

2020 2019 2018

Retail Segment

2 unchanged sentences

(1) Retail sales volumes for the year ended December 31, 2018, include 284 days of retail sales volumes from Northwest Retail since its acquisition on March 23, 2018.

The 2019 amount represents the sum of the Hawaii and Northwest Retail sales volumes for the year ended December 31, 2019 .

The 2020 and 2019 amounts represents the sum of the Hawaii and Northwest Retail sales volumes for the years ended December 31, 2020 and 2019.

Non-GAAP Performance Measures

2 unchanged sentences

Adjusted Gross Margin.

Adjusted Gross Margin is defined as (i) operating income (loss) plus operating expense (excluding depreciation), impairment expense, inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, and purchase price allocation adjustments), DD&A, RINs loss (gain) in excess of net obligation (which represents the income statement effect of reflecting our RINs liability on a net basis), and unrealized loss (gain) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) plus inventory valuation adjustment, unrealized

loss (gain) on derivatives, and RINs loss (gain) in excess of net obligation.

Renewable Identification Numbers (“RINs”) loss (gain) in excess of net obligation (which represents the income statement effect of reflecting our RINs liability on a net basis), and unrealized loss (gain) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) plus inventory valuation adjustment, unrealized loss (gain) on derivatives, and RINs loss (gain) in excess of net obligation.

We define cost of revenues (excluding depreciation) as the hydrocarbon-related costs of inventory sold, transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our RINs and environmental credit obligations, and certain hydrocarbon fees and taxes.

Cost of revenues (excluding depreciation) also includes the unrealized gain (loss) on derivatives and the inventory valuation adjustment that we exclude from Adjusted Gross Margin.

Management believes Adjusted Gross Margin is an important measure of operating performance and uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks.

Management believes Adjusted Gross Margin provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost or net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation, depletion, and amortization .

Beginning in 2020, Adjusted Gross Margin also includes the contango gains and backwardation losses associated with our Washington inventory and intermediation obligation.

Prior to 2020, contango gains and backwardation (losses) captured by our Washington intermediation agreement were excluded from Adjusted Gross Margin (as part of the inventory valuation adjustment).

This change to our non-GAAP information was made to reflect the favorable or unfavorable impact of the market structure on the profitability of our Washington refinery consistent with the presentation of such impacts on our other refineries.

Also beginning in 2020, Adjusted Gross Margin excludes the LIFO layer liquidation impacts associated with our Washington inventory.

We have recast the non-GAAP information for the year ended December 31, 2019 to conform to the current period presentation.

industry benchmarks.

Management believes Adjusted Gross Margin provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation, depletion, and amortization.

Adjusted Gross Margin should not be considered an alternative to operating income (loss), cash flows from operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.

1 unchanged sentence

The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):

Year ended December 31, 2019

Operating income

Year ended December 31, 2020 Refining Logistics Retail

Operating income (loss) $ (331,826) $ 35,044 $ 24,211

Operating expense (excluding depreciation) 199,738 13,581 64,108

Depreciation, depletion, and amortization 53,930 21,899 10,692

Impairment expense 55,989 — 29,817

Inventory valuation adjustment 14,046 — —

RINs gain in excess of net obligation

Unrealized loss on derivatives

RINs loss in excess of net obligation 44,071 — —

Unrealized gain on derivatives (4,804) — —

Adjusted Gross Margin (1) $ 31,144 $ 70,524 $ 128,828

Year ended December 31, 2018

Year ended December 31, 2019 Refining Logistics Retail

Operating income $ 93,781 $ 59,075 $ 49,245

2 unchanged sentences

Inventory valuation adjustment 11,938 — —

RINs loss in excess of net obligation

Unrealized gain on derivatives

RINs gain in excess of net obligation (3,398) — —

Unrealized loss on derivatives 8,988 — —

Adjusted Gross Margin (1) $ 401,723 $ 87,102 $ 126,587

Year ended December 31, 2017

Year ended December 31, 2018 Refining Logistics Retail

Operating income $ 73,269 $ 33,389 $ 37,232

2 unchanged sentences

Inventory valuation adjustment (16,875) — —

RINs gain in excess of net obligation

RINs loss in excess of net obligation 4,544 — —

Unrealized gain on derivatives (1,497) — —

1 unchanged sentence

________________________________________

For the year ended December 31, 2017, immaterial non-service-cost-related components of the net periodic benefit cost related to our Wyoming Refining defined benefit pension plan were reclassified from Operating expense (excluding depreciation) to Other income (expense), net, due to a required accounting standards update made in 2018.

(1) For the years ended December 31, 2020, 2019, and 2018, there was no LIFO liquidation adjustment.

For the years ended December 31, 2019 and 2018, there was no impairment expense.

Adjusted Net Income (Loss) and Adjusted EBITDA.

Adjusted Net Income (Loss) is defined as Net income (loss) excluding changes in the value of contingent consideration and common stock warrants, acquisition and integration costs, unrealized (gain) loss on derivatives, debt extinguishment and commitment costs , increase in (release of) tax valuation allowance and other deferred tax items, inventory valuation adjustment, severance costs, impairment expense, (gain) loss on sale of assets, Par’s share of Laramie Energy ’s unrealized loss (gain) on derivatives, and RINs loss (gain) in excess of net obligation.

The exclusion of Par’s share of Laramie Energy ’s unrealized loss (gain) on derivatives from Adjusted Net Income (Loss) is consistent with our treatment of Par’s unrealized (gains) losses on derivatives, which are also excluded from Adjusted Net Income (Loss).

Beginning in 2019, Adjusted Net Income (Loss) also excludes impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy ’s asset impairment losses in excess of our basis difference.

Beginning in 2019, equity losses (earnings) from Laramie Energy also excludes impairment of Par’s investment and our share of Laramie Energy ’s asset impairment losses in excess of our basis difference.

Adjusted Net Income (Loss) is defined as Net income (loss) excluding changes in the value of contingent consideration and common stock warrants, acquisition and integration costs, unrealized (gain) loss on derivatives, debt extinguishment and commitment costs, increase in (release of) tax valuation allowance and other deferred tax items, inventory valuation adjustment, severance costs, impairment expense, (gain) loss on sale of assets, Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives, RINs loss (gain) in excess of net obligation, and impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

Beginning in 2020, Adjusted Net Income (Loss) also includes the contango

gains and backwardation losses associated with our Washington inventory and intermediation obligation.

Prior to 2020, contango gains and backwardation (losses) captured by our Washington intermediation agreement were excluded from Adjusted Net Income (Loss) (as part of the inventory valuation adjustment).

Also beginning in 2020, Adjusted Net Income (Loss) excludes the LIFO layer liquidation impacts associated with our Washington inventory.

We have recast the non-GAAP information for the year ended December 31, 2019 to conform to the current period presentation.

Adjusted EBITDA is Adjusted Net Income (Loss) excluding interest expense and financing costs, income taxes, DD&A, and equity losses (earnings) from Laramie Energy, excluding Par’s share of unrealized loss (gain) on derivatives, impairment of Par’s investment, and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

We believe Adjusted Net Income (Loss) and Adjusted EBITDA are useful supplemental financial measures that allow investors to assess:

6 unchanged sentences

Year Ended December 31,

2020 2019 2018

Net income (loss) $ (409,086) $ 40,809 $ 39,427

Inventory valuation adjustment 14,046 11,938 (16,875)

7 unchanged sentences

Severance costs 512 — —

Impairments of Laramie Energy, LLC (2)

Impairment expense 85,806 — —

Impairment of Investment in Laramie Energy, LLC (2) 45,294 83,152 —

Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2) (1,110) (1,969) 1,158

Adjusted Net Income (3)

Adjusted Net Income (Loss) (3) (249,823) 90,218 49,339

Depreciation, depletion, and amortization 90,036 86,121 52,642

8 unchanged sentences

These impairment losses and our share of Laramie Energy’s unrealized loss (gain) on derivatives are included in Equity earnings (losses) from Laramie Energy, LLC on our consolidated statements of operations.

For the years ended December 31, 2019 , 2018 , and 2017 , there was no (gain) loss on sale of assets.

Discussion of Operating Income by Segment

(3) For the years ended December 31, 2020, 2019, and 2018, there was no (gain) loss on sale of assets or LIFO liquidation adjustment.

Discussion of Operating Income (Loss) by Segment

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Operating loss for our refining segment was $331.8 million for the year ended December 31, 2020, a decrease of $425.6 million compared to operating income of $93.8 million for the year ended December 31, 2019.

The decrease in profitability was primarily driven by lower refining sales volumes at our Hawaii and Wyoming refineries related to COVID-19 demand destruction and turnarounds in both locations, unfavorable crude oil differentials and crack spreads, increased RINs expenses and derivative costs, goodwill impairment charges of $38.1 million, asset impairment charges of $17.9 million, and unfavorable lower of cost and net realizable value adjustments of $10.6 million, partially offset by improved energy-related cost of sales and operating expense reductions across our refineries in response to COVID-19.

Operating income for our logistics segment was $35.0 million for the year ended December 31, 2020, a decrease of $24.1 million compared to operating income of $59.1 million for the year ended December 31, 2019.

The decrease is primarily due to a net 30% and 25% lower throughput across our Hawaii and Wyoming logistics assets, respectively, and

lower neighbor island sales in Hawaii related to COVID-19 demand destruction, major turnarounds in both locations, and higher DD&A, partially offset by a net 9% increase in throughput across our Washington logistics assets.

Operating income for our retail segment was $24.2 million for the year ended December 31, 2020, a decrease of $25.0 million compared to operating income of $49.2 million for the year ended December 31, 2019.

The decrease in profitability was primarily due to goodwill impairment charges of $29.8 million and an 18% decline in sales volumes, partially offset by an increase in fuel margins of 25% and operating expense reductions in response to the economic impacts of COVID-19 on our businesses.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Operating income for our refining segment was $93.8 million for the year ended December 31, 2019, an increase of $20.5 million compared to operating income of $73.3 million for the year ended December 31, 2018.

3 unchanged sentences

These contributions were partially offset by unfavorable crude oil differentials, unplanned maintenance, and an increase in feedstock costs at our Hawaii refineries.

The unplanned maintenance in Hawaii resulted in an increase of $2.6 million in operating expenses and approximately 11 lost throughput days within certain units at our Par East refinery.

The unplanned maintenance in Hawaii resulted in an increase of $2.6 million in operating expenses and approximately 11 lost throughput days within certain units at our Par East Hawaii refinery.

Operating income for our logistics segment was $59.1 million for the year ended December 31, 2019, an increase of $25.7 million compared to operating income of $33.4 million for the year ended December 31, 2018.

The increase is

primarily due to a contribution of $18.8 million from the logistics assets acquired in connection with the Washington Acquisition for the period from January 11, 2019 to December 31, 2019 and additional on-island sales through our logistics network.

The increase was primarily due to a contribution of $18.8 million from the logistics assets acquired in connection with the Washington Acquisition for the period from January 11, 2019 to December 31, 2019 and additional on-island sales through our logistics network.

Operating income for our retail segment was $49.2 million for the year ended December 31, 2019, an increase of $12.0 million compared to operating income of $37.2 million for the year ended December 31, 2018.

The increase in profitability was primarily due to an increase in fuel margins of 10% and an increase in sales volumes of 7%.

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Operating income for our refining segment was $73.3 million for the year ended December 31, 2018, a decrease of $12.7 million compared to an operating income of $86.0 million for the year ended December 31, 2017.

The decrease in profitability was primarily due to lower refining margins in Hawaii offset by improved crack spreads.

Feedstock costs at the Hawaii refineries increased approximately 29% due to unfavorable crude oil differentials and increased refined product purchases to meet higher on-island demand and contractual obligations.

The decrease was partially offset by a 12% increase in the Hawaii refineries ’ sales volumes and improved crack spreads in Hawaii and Wyoming.

The Singapore crack spread increased 1% from $7.18 per barrel for the year ended December 31, 2017 to $7.22 per barrel for the year ended December 31, 2018.

The Wyoming Index increased 4% from $21.80 per barrel for the year ended December 31, 2017 to $22.69 per barrel for the year ended December 31, 2018.

Another contributing factor was a decrease in RINs expense of approximately $18.5 million due primarily to our refineries obtaining a small refinery exemption for 2017 during the first quarter of 2018.

Operating income for our logistics segment was $33.4 million for the year ended December 31, 2018, which is relatively consistent with operating income of $34.0 million for the year ended December 31, 2017.

Operating income for our retail segment was $37.2 million for the year ended December 31, 2018, an increase of $12.5 million compared to operating income of $24.7 million for the year ended December 31, 2017.

The increase in profitability was primarily due to an increase in sales prices of 14% and an increase in sales volumes of 26%, primarily due to the acquisition of Northwest Retail.

Discussion of Adjusted Gross Margin by Segment

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

For the year ended December 31, 2020, our refining Adjusted Gross Margin was approximately $31.1 million, a decrease of $370.6 million compared to $401.7 million for the year ended December 31, 2019.

The decrease in profitability was primarily driven by a 23% decline in sales volumes and declines in crack spreads.

Adjusted gross margin for the Hawaii refineries decreased from $3.30 per barrel in 2019 to $(1.63) per barrel in 2020 primarily due to 30% lower sales volumes, an increase in RINs expenses, and unfavorable crude oil differentials.

Adjusted gross margin for the Wyoming refinery decreased $14.88 per barrel primarily due to a 24% decline in sales volumes, an increase in RINs expenses, and a decrease in crack spreads.

The decline in refining sales volumes in Hawaii and Wyoming was driven by COVID-19 demand destruction and turnarounds in both locations.

Adjusted gross margin for the Washington refinery decreased $7.38 per barrel primarily due to unfavorable crack spreads and higher RINs expenses, partially offset by favorable derivative costs.

For the year ended December 31, 2020, our logistics Adjusted Gross Margin was approximately $70.5 million, a decrease of $16.6 million compared to $87.1 million for the year ended December 31, 2019.

The decrease was primarily driven by a net 30% and 25% lower throughput across our Hawaii and Wyoming logistics assets, respectively, and lower neighbor island sales in Hawaii related to COVID-19 demand destruction and major turnarounds at both locations, partially offset by a net 9% increase in throughput across our Washington logistics assets.

For the year ended December 31, 2020, our retail Adjusted Gross Margin was approximately $128.8 million, an increase of $2.2 million compared to $126.6 million for the year ended December 31, 2019.

The increase was primarily due to a 25% increase in fuel margins, partially offset by a decline in sales volumes of 18% due to COVID-19 demand destruction.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

For the year ended December 31, 2019, our refining Adjusted Gross Margin was approximately $401.7 million, an increase of $163.5 million compared to $238.2 million for the year ended December 31, 2018.

The increase in profitability was primarily driven by the Washington refinery, which contributed Adjusted Gross Margin of $157.0 million to the refining segment for the period from January 11, 2019 to December 31, 2019 .

The increase in

profitability was primarily driven by the Washington refinery, which contributed Adjusted Gross Margin of $155.5 million to the refining segment for the period from January 11, 2019 to December 31, 2019.

Other factors included increased sales volumes and favorable crude oil differentials and feedstock costs at our Wyoming refinery.

The Wyoming 3-2-1 Index increased 10% from $22.69 per barrel for the year ended December 31, 2018 to $24.90 per barrel for the year ended December 31, 2019.

These increases were partially offset by higher feedstock costs at our Hawaii refineries and unplanned maintenance at our Par East refinery that resulted in approximately 11 lost throughput days within certain units.

These increases were partially offset by higher feedstock costs at our Hawaii refineries and unplanned maintenance at our Par East Hawaii refinery that resulted in approximately 11 lost throughput days within certain units.

For the year ended December 31, 2019, our logistics Adjusted Gross Margin was approximately $87.1 million, an increase of $39.1 million compared to $48.0 million for the year ended December 31, 2018.

3 unchanged sentences

The increase was primarily due to a 10% increase in fuel margins and higher sales volumes of 7%.

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

For the year ended December 31, 2018, our refining Adjusted Gross Margin was approximately $238.2 million, a decrease of $16.6 million compared to $254.8 million for the year ended December 31, 2017.

The decrease in profitability was primarily due to lower refining margins in Hawaii partially offset by improved crack spreads.

T he decrease was partially offset by a 12% increase in the Hawaii refineries ’ sales volumes and improved crack spreads in Hawaii and Wyoming.

The Singapore crack spread increased 1% from $7.18 per barrel for the year ended December 31, 2017 to $7.22 per barrel for the year ended December 31, 2018.

The Wyoming Index increased 4% from $21.80 per barrel for the year ended December 31, 2017 to $22.69 per barrel for the year ended December 31,

For the year ended December 31, 2018, our logistics Adjusted Gross Margin was approximately $48.0 million, a decrease of $7.2 million compared to $55.2 million for the year ended December 31, 2017.

The decrease was primarily driven by a decrease in barge revenues as a result of lower throughput volume and average prices per throughput barrel, partially offset by an increase in trucking volumes.

For the year ended December 31, 2018, our retail Adjusted Gross Margin was approximately $107.4 million, an increase of $30.4 million compared to $77.0 million for the year ended December 31, 2017.

The increase was primarily due to a 14% increase in sales prices and higher sales volumes of 26%, primarily due to the acquisition of Northwest Retail.

Discussion of Consolidated Results

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

For the year ended December 31, 2020, revenues were $3.1 billion, a $2.3 billion decrease compared to $5.4 billion for the year ended December 31, 2019.

The decrease was primarily the result of a decrease of $2.2 billion in third-party revenues at our refining segment primarily as a result of decreases in Brent and WTI crude oil prices and lower sales volumes related to COVID-19 demand destruction.

Refined product sales volumes decreased 23% from 176.8 Mbpd in the year ended December 31, 2019 to 136.7 Mbpd in the year ended December 31, 2020.

Brent crude oil prices averaged $43.21 per barrel for the year ended December 31, 2020 compared to $64.19 per barrel for the year ended December 31, 2019, with similar decreases experienced for WTI crude oil prices.

Revenues in our retail segment decreased $95.2 million primarily due to 18% declines in both sales volumes and fuel prices.

Cost of Revenues (Excluding Depreciation).

For the year ended December 31, 2020, cost of revenues (excluding depreciation), was $2.9 billion, a $1.9 billion decrease compared to $4.8 billion for the year ended December 31, 2019.

The decrease was primarily due to the decreases in Brent and WTI crude oil prices and lower refining sales volumes discussed above.

These decreases were partially offset by unfavorable crude oil differentials, higher RINs expenses, increased derivative costs, and an unfavorable lower of cost and net realizable value adjustment of $10.6 million.

Cost of revenues at our retail segment decreased $97.4 million primarily due to lower fuel costs and an 18% decline in sales volumes.

Operating Expense (Excluding Depreciation).

For the year ended December 31, 2020, operating expense (excluding depreciation) was approximately $277.4 million, a decrease of $35.5 million compared to $312.9 million for the year ended December 31, 2019.

The decrease was primarily due to lower utilities and repairs and maintenance expenses and COVID-19-related reductions in travel, employee costs, and the use of outside services.

Depreciation, Depletion, and Amortization .

For the year ended December 31, 2020, DD&A expense was approximately $90.0 million, an increase of $3.9 million compared to $86.1 million for the year ended December 31, 2019.

The increase was primarily due to recently completed capital projects, including three turnarounds during 2019 and 2020 and our Washington renewables logistics project.

Impairment Expense.

During the year ended December 31, 2020, we recorded goodwill and asset impairment charges totaling $85.8 million related to our Refining and Retail segments.

Please read Note 10—Goodwill and Intangible Assets and Note 8—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on the goodwill impairment of $67.9 million and asset impairment of $17.9 million, respectively.

There was no impairment expense for the year ended December 31, 2019.

General and Administrative Expense (Excluding Depreciation).

For the year ended December 31, 2020, general and administrative expense (excluding depreciation) was approximately $41.3 million, a decrease of $4.9 million compared to $46.2 million for the year ended December 31, 2019.

The decrease was primarily due to COVID-19-related reductions in travel and employee costs and a reduction in the use of outside services.

Acquisition and Integration Costs.

For the year ended December 31, 2020, we incurred approximately $0.6 million of expenses primarily related to integration costs for the Washington Acquisition.

For the year ended December 31, 2019, we

incurred approximately $4.7 million of expenses primarily related to acquisition and integration costs for the Washington and Par West Acquisitions.

Please read Note 4—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Interest Expense and Financing Costs, Net .

For the year ended December 31, 2020, our interest expense and financing costs were approximately $70.2 million, a decrease of $4.6 million compared to $74.8 million for the year ended December 31, 2019.

The decrease was primarily due to a $4.0 million decrease in due to the exchange of a portion of our outstanding 5.00% Convertible Senior Notes during 2019, a decrease of $4.7 million due to reduced borrowings under our inventory financing agreements, and a decrease of $4.3 million due to the reduced principal and lower variable interest rates on our Term Loan B Facility.

These decreases were partially offset by interest expense of $8.1 million related to the 12.875% Senior Secured Notes issued in June 2020.

Please read Note 11—Inventory Financing Agreements and Note 13—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and indebtedness, respectively.

Change in Value of Common Stock Warrants .

For the year ended December 31, 2020, the change in value of common stock warrants resulted in a gain of approximately $4.3 million, a change of $7.5 million compared to a loss of $3.2 million for the year ended December 31, 2019.

During January and March 2020, one of our stockholders and its affiliates exercised the remaining 354,350 common stock warrants in exchange for 350,542 shares of common stock.

We estimated the fair value of our outstanding common stock warrants and the income recognized upon exercise using the difference between the strike price of the warrant and the market price of our common stock.

During the year ended December 31, 2019, our stock price increased from $14.18 per share on December 31, 2018 to $23.24 per share on December 31, 2019, which resulted in an increase in the value of the common stock warrants.

Debt extinguishment and commitment costs.

For the year ended December 31, 2019, our debt extinguishment and commitment costs were approximately $11.6 million and represent the commitment and other fees associated with the financing of the Washington Acquisition and the extinguishment costs associated with the exchange of a portion of our outstanding 5.00% Convertible Senior Notes.

There were no debt extinguishment and commitment costs for the year ended December 31, 2020.

Equity Losses from Laramie Energy, LLC .

For the year ended December 31, 2020, equity losses from Laramie Energy were approximately $46.9 million, a difference of $42.9 million compared to equity losses of $89.8 million for the year ended December 31, 2019.

During the years ended December 31, 2020 and 2019, we recorded other-than-temporary impairment charges of $45.3 million and $81.5 million related to our investment in Laramie Energy, respectively.

As of June 30, 2020, we have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero.

Please read Note 3—Investment in Laramie Energy, LLC to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Income Taxes.

For the year ended December 31, 2020, we recorded an income tax benefit of $20.7 million primarily driven by an increase in our net operating loss carryforwards that do not expire and the change in our indefinitely-lived goodwill due to the impairments.

For the year ended December 31, 2019, we recorded an income tax benefit of $69.7 million primarily driven by a $64.2 million benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

For the year ended December 31, 2019, revenues were $5.4 billion, a $2.0 billion increase compared to $3.4 billion for the year ended December 31, 2018.

1 unchanged sentence

The Washington Acquisition contributed third-party revenues of $1.2 billion for the period from January 11, 2019 to December 31, 2019.

Refined product sales volumes in Hawaii increased 43% from 83.6 Mbpd in the year ended December 31, 2018 to 119.8 Mbpd in the year ended December 31, 2019 primarily due to the Par West Acquisition.

These increases were partially offset by a decrease in Brent crude oil prices.

Brent crude oil prices averaged $64.19 per barrel in the year ended December 31, 2019 compared to $71.55 per barrel in the year ended December 31, 2018, with similar decreases experienced for WTI crude oil prices.

Refined product sales volumes in Hawaii increase d 43% from 83.6 Mbpd in the year ended December 31, 2018 to 119.8 Mbpd in the year ended December 31, 2019 primarily due to the Par West Acquisition .

Revenues in our retail segment increase d $17.9 million primarily due to higher sales volumes of 7% .

Revenues in our retail segment increased $17.9 million primarily due to higher sales volumes of 7%.

Cost of Revenues (Excluding Depreciation).

1 unchanged sentence

The increase was primarily due to the Washington Acquisition and a 43% increase in refined product sales volumes in Hawaii primarily due to the Par West Acquisition.

The Washington Acquisition contributed cost of revenues of approximately $1.0 billion for the period from January 11, 2019 to December 31, 2019 .

The Washington Acquisition contributed cost of revenues of approximately

$1.0 billion for the period from January 11, 2019 to December 31, 2019.

These increases were partially offset by the decrease in Brent crude oil prices as discussed above.

5 unchanged sentences

Northwest Retail contributed operating expenses of $20.0 million for the full year ended December 31, 2019, as compared to $15.0 million for the 284-day period of ownership from March 23, 2018 to December 31, 2018.

The increase was also due to $2.6 million expenditures incurred in connection with unplanned maintenance at our Par East refinery.

The increase was also due to $2.6 million expenditures incurred in connection with unplanned maintenance at our Par East Hawaii refinery.

Depreciation, Depletion, and Amortization .

5 unchanged sentences

For the year ended December 31, 2019, we incurred approximately $4.7 million of expenses primarily related to acquisition and integration costs for the Washington Acquisition and the Par West Acquisition.

For the year ended December 31, 2018 , we incurred approximately $10.3 million of expenses primarily related to acquisition and integration costs for the Northwest Retail Acquisition , Par West Acquisition , and Washington Acquisition .

For the year ended December 31, 2018, we incurred approximately $10.3 million of expenses primarily related to acquisition and integration costs for the Northwest Retail Acquisition, the Par West Acquisition, and the Washington Acquisition.

Please read Note 4—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.

1 unchanged sentence

For the year ended December 31, 2019, our interest expense and financing costs were approximately $74.8 million, an increase of $35.0 million compared to $39.8 million for the year ended December 31, 2018.

The increase was primarily due to interest expense and financing costs of $24.4 million related to the new

Term Loan B Facility entered into on January 11, 2019 , interest expense of $6.3 million on the Washington Refinery Intermediation Agreement , a net increase in our loss on interest rate derivatives of $2.8 million, and interest expense and financing costs of $2.5 million related to the Par Pacific Term Loan entered into on January 9, 2019 and replaced by the Retail Property Term Loan entered into on March 29, 2019 .

The increase was primarily due to interest expense and financing costs of $24.4 million related to the new Term Loan B Facility entered into on January 11, 2019, interest expense of $6.3 million on the Washington Refinery Intermediation Agreement, a net increase in our loss on interest rate derivatives of $2.8 million, and interest expense and financing costs of $2.5 million related to the Par Pacific Term Loan entered into on January 9, 2019 and replaced by the Retail Property Term Loan entered into on March 29, 2019.

These increases were partially offset by a decrease in interest expense and financing costs of $1.7 million due to the exchange of a portion of our outstanding 5.00% Convertible Senior Notes during 2019.

5 unchanged sentences

Change in Value of Contingent Consideration .

For the year ended December 31, 2018 , the change in value of our contingent consideration liability resulted in a loss of $10.5 million as a result of the final settlement agreement reached with Tesoro.

For the year ended December 31, 2018, the change in value of our contingent consideration liability resulted in a loss of $10.5 million as a result of the settlement agreement reached with Tesoro.

For the year ended December 31, 2019, there were no such changes.

10 unchanged sentences

For the year ended December 31, 2018 , we recorded an income tax expense of $0.3 million primarily due to deferred tax expense of $0.7 million offset by current federal income tax benefit of $0.3 million.

Deferred tax expense for the year ended December 31, 2018 included a benefit of $0.7 million related to the release of valuation allowance due to the impact of the U.S.

tax reform legislation on the interest deduction limitation.

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

For the year ended December 31, 2018, revenues were $3.4 billion, a $1.0 billion increase compared to $2.4 billion for the year ended December 31, 2017.

The increase was primarily due to an increase of $0.9 billion in third-party revenues at our refining segment, which was primarily the result of higher crude oil prices and volumes.

Brent crude oil prices averaged $71.55 per barrel in the year ended December 31, 2018 compared to $54.82 per barrel in the year ended December 31, 2017, with similar increases experienced for WTI crude oil prices.

Refined product sales volumes increased 11% from 90.7 Mbpd in the year ended December 31, 2017 to 100.3 Mbpd in the year ended December 31, 2018.

Revenues in our retail segment increased $114.9 million primarily driven by the acquisition of Northwest Retail.

Cost of Revenues (Excluding Depreciation).

For the year ended December 31, 2018, cost of revenues (excluding depreciation), was $3.0 billion, a $0.9 billion increase compared to $2.1 billion for the year ended December 31, 2017.

The increase was primarily due to higher crude oil prices and volumes as stated above.

Cost of revenues (excluding depreciation) in our retail segment increased $84.6 million primarily driven by the acquisition of Northwest Retail.

Operating Expense (Excluding Depreciation).

For the year ended December 31, 2018, operating expense (excluding depreciation) was approximately $215.3 million, an increase of $13.3 million compared to $202.0 million for the year ended December 31, 2017.

The increase was primarily due to operating expenses related to the Northwest Retail assets, which we acquired on March 23, 2018.

Depreciation, Depletion, and Amortization .

For the year ended December 31, 2018, DD&A expense was approximately $52.6 million, an increase of $6.6 million compared to $46.0 million for the year ended December 31, 2017.

The increase was primarily due to the acquisition of Northwest Retail on March 23, 2018 and approximately $4.1 million of accelerated depreciation resulting from changes in the estimated useful lives of certain refinery equipment, storage tanks, and leasehold improvements.

Northwest Retail contributed $1.9 million of DD&A for the year ended December 31, 2018.

General and Administrative Expense (Excluding Depreciation).

For the year ended December 31, 2018, general and administrative expense (excluding depreciation) was approximately $47.4 million, which is relatively consistent with expense of $46.1 million for the year ended December 31, 2017.

Acquisition and Integration Costs.

For the year ended December 31, 2018, we incurred approximately $10.3 million of expenses primarily related to acquisition and integration costs for the Northwest Retail Acquisition, the Par West Acquisition , and the Washington Acquisition .

Please read Note 4—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.

For the year ended December 31, 2017, we incurred approximately $0.4 million of integration costs related to the WRC Acquisition completed in July 2016.

Interest Expense and Financing Costs, Net .

For the year ended December 31, 2018, our interest expense and financing costs were approximately $39.8 million, an increase of $8.2 million compared to $31.6 million for the year ended December 31, 2017.

The increase was primarily due to interest expense of $24.4 million related to the 7.75% Senior Secured Notes issued in December 2017 and increased financing costs of $2.4 million associated with J.

Aron deferred payments, partially offset by lower interest expense of $17.4 million related to the debt and credit agreements terminated in December 2017 and a net increase on gains on interest rate derivatives of $0.9 million.

Please read Note 12—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our indebtedness.

Change in Value of Common Stock Warrants .

For the year ended December 31, 2018, the change in value of common stock warrants resulted in a gain of approximately $1.8 million, a change of $3.5 million compared to a loss of $1.7 million for the year ended December 31, 2017.

For the year ended December 31, 2018, our stock price decreased from $19.28 per share as of December 31, 2017 to $14.18 per share as of December 31, 2018, which resulted in a decrease in the fair value of the common stock warrants.

During the year ended December 31, 2017, our stock price increased from $14.54 per share on December 31, 2016 to $19.28 per share on December 31, 2017, which resulted in an increase in the value of the common stock warrants.

Change in Value of Contingent Consideration .

For the year ended December 31, 2018, the change in value of our contingent consideration liability resulted in a loss of $10.5 million as a result of the settlement agreement reached with Tesoro.

For the year ended December 31, 2017, there was no change in the value of our contingent consideration liability.

Please read Note 16—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Debt extinguishment and commitment costs .

For the year ended December 31, 2018, our debt extinguishment and commitment costs were approximately $4.2 million and represent the commitment and other fees associated with the financing of the Washington Acquisition .

For the year ended December 31, 2017, our debt extinguishment and commitment costs were approximately $8.6 million and represent early termination fees and the acceleration of deferred amortization costs in connection with the termination of the Delayed Draw Term Loan and Bridge Loan Credit Agreement (“Term Loan”) during the second quarter of 2017 and the termination and repayment of our outstanding indebtedness under the Hawaii Retail Credit Facilities, the Wyoming Refining Credit Facilities, the Par Wyoming Holdings Credit Agreement, and the J.

Aron Forward Sale in the fourth quarter of 2017.

Equity Earnings (Losses) From Laramie Energy .

For the year ended December 31, 2018, equity earnings from Laramie Energy were approximately $9.5 million, a change of $8.9 million compared to equity earnings of $18.4 million for the year ended December 31, 2017.

The decrease was primarily due to Laramie Energy’s loss on derivative instruments of $13.4 million for the year ended December 31, 2018, compared to a gain on derivative instruments of $35.5 million for the same period in 2017.

The loss on derivative instruments was partially offset by a 42% increase in Laramie Energy’s sales volumes for the year ended December 31, 2018 compared to the same period in 2017.

In addition, our ownership percentage decreased from 42.3% to 39.1% on February 28, 2018 due to an investment made by a third party and increased to 46.0% on October 18, 2018 due to Laramie Energy’s repurchase of units from certain unitholders.

Income Taxes.

For the year ended December 31, 2018, we recorded an income tax expense of $0.3 million primarily due to deferred tax expense of $0.7 million offset by current federal income tax benefit of $0.3 million.

For the year ended December 31, 2018, we recorded an income tax expense of $0.3 million, primarily due to deferred tax expense of $0.7 million, partially offset by current federal income tax benefit of $0.3 million.

Deferred tax expense for the year ended December 31, 2018 included a benefit of $0.7 million related to the release of valuation allowance due to the impact of the U.S.

tax reform legislation on the interest deduction limitation.

For the year ended December 31, 2017, we recorded an income tax benefit of $1.3 million primarily due to the release of $0.8 million of valuation allowance associated with the U.S.

tax reform legislation that converted the Alternative Minimum Tax Credit Carryovers to refundable credits.

Consolidating Condensed Financial Information

1 unchanged sentence

On January 11, 2019, the Issuers (defined below) entered into a term loan and guaranty agreement with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto with respect to a $250.0 million term loan (the “Term Loan B”).

The 7.75% Senior Secured Notes and the Term Loan B were co-issued by Par Petroleum Finance Corp.

On June 5, 2020, the Issuers issued their 12.875% Senior Secured Notes due 2026 in a private offering under Rule 144A and Regulation S of the Securities Act.

The 7.75% Senior Secured Notes, the Term Loan B, and the 12.875% Senior Secured Notes were co-issued by Par Petroleum Finance Corp.

(together with the Issuer, the “Issuers”), which has no independent assets or operations.

The 7.75% Senior Secured Notes and Term Loan B are guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc.

The 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes are guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc.

(the “Parent”) and are guaranteed on a senior secured basis by all of the subsidiaries of Par Petroleum, LLC (other than Par Petroleum Finance Corp.).

The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Petroleum, LLC and its consolidated subsidiaries’ accounts (which are all guarantors of the 7.75% Senior Secured Notes and Term Loan B ), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes or Term Loan B and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated.

The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Petroleum, LLC and its consolidated subsidiaries’ accounts (which are all guarantors of the 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes, Term Loan B, or 12.875% Senior Secured Notes and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated.

For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands).

As of December 31, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

3 unchanged sentences

Trade accounts receivable — 111,654 3 111,657

Inventories — 429,855 — 429,855

Prepaid and other current assets 16,983 7,171 494 24,648

6 unchanged sentences

Long-term assets

Operating lease assets

Operating lease right-of-use (“ROU”) assets 3,714 367,850 (14,398) 357,166

Investment in Laramie Energy, LLC — — — —

1 unchanged sentence

Intangible assets, net — 18,892 — 18,892

Goodwill — 125,399 2,598 127,997

Other long-term assets 723 59,849 — 60,572

Total assets $ 346,344 $ 2,080,147 $ (292,630) $ 2,133,861

LIABILITIES AND STOCKHOLDERS’ EQUITY

19 unchanged sentences

Preferred stock — — — —

Common stock 540 — — 540

Additional paid-in capital 726,504 307,967 (307,967) 726,504

Accumulated earnings (deficit) (477,028) (94,086) 94,086 (477,028)

Accumulated other comprehensive income

Accumulated other comprehensive income (loss) (3,742) (2,912) 2,912 (3,742)

Total stockholders’ equity 246,274 210,969 (210,969) 246,274

1 unchanged sentence

As of December 31, 2019

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

3 unchanged sentences

Trade accounts receivable — 228,707 11 228,718

Inventories — 615,872 — 615,872

Prepaid and other current assets 12,325 46,470 361 59,156

6 unchanged sentences

Long-term assets

Operating lease right-of-use (“ROU”) assets 4,276 434,909 (19,112) 420,073

Investment in Laramie Energy, LLC — — 46,905 46,905

1 unchanged sentence

Intangible assets, net — 21,549 — 21,549

Goodwill — 193,321 2,598 195,919

Other long-term assets 1,128 20,869 — 21,997

Total assets $ 851,053 $ 2,599,802 $ (750,295) $ 2,700,560

LIABILITIES AND STOCKHOLDERS’ EQUITY

5 unchanged sentences

Accrued taxes — 30,745 68 30,813

Operating lease liabilities 698 84,366 (5,065) 79,999

Other accrued liabilities 14,591 72,670 (2,517) 84,744

4 unchanged sentences

Common stock warrants 8,206 — — 8,206

Long-term capital lease obligations

Finance lease liabilities 223 6,004 — 6,227

Operating lease liabilities 5,629 349,327 (14,047) 340,909

Other liabilities 306 120,001 (57,287) 63,020

2 unchanged sentences

Stockholders’ equity

Preferred stock, $0.01 par value:

3,000,000 shares authorized, none issued

Common stock, $0.01 par value;

500,000,000 shares authorized and 46,983,924 shares issued

Preferred stock — — — —

Common stock 533 — — 533

Additional paid-in capital 715,069 293,006 (293,006) 715,069

Accumulated earnings (deficit) (67,942) 194,023 (194,023) (67,942)

Accumulated other comprehensive income

Accumulated other comprehensive income (loss) 582 1,412 (1,412) 582

Total stockholders’ equity 648,242 488,441 (488,441) 648,242

1 unchanged sentence

Year Ended December 31, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Revenues $ — $ 3,124,870 $ — $ 3,124,870

Operating expenses

2 unchanged sentences

Depreciation, depletion, and amortization 2,900 86,622 514 90,036

Loss (gain) on sale of assets, net

Impairment expense — 85,806 — 85,806

General and administrative expense (excluding depreciation) 11,097 30,191 — 41,288

4 unchanged sentences

Interest expense and financing costs, net (4,982) (61,856) (3,384) (70,222)

Debt extinguishment and commitment costs

Other income (expense), net (3) 1,052 — 1,049

1 unchanged sentence

Equity earnings (losses) from subsidiaries (394,197) — 394,197 —

Equity losses from Laramie Energy, LLC

Equity earnings (losses) from Laramie Energy, LLC — — (46,905) (46,905)

Total other income (expense), net (394,912) (60,804) 343,908 (111,808)

7 unchanged sentences

Year Ended December 31, 2019

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Revenues $ — $ 5,401,446 $ 70 $ 5,401,516

Operating expenses

2 unchanged sentences

Depreciation, depletion, and amortization 2,969 82,843 309 86,121

Loss (gain) on sale of assets, net — (37,382) 37,382 —

General and administrative expense (excluding depreciation) 20,017 26,007 199 46,223

7 unchanged sentences

Change in value of common stock warrants (3,199) — — (3,199)

Change in value of contingent consideration

Equity losses from subsidiaries

Equity earnings (losses) from subsidiaries 81,097 — (81,097) —

Equity earnings (losses) from Laramie Energy, LLC — — (89,751) (89,751)

8 unchanged sentences

Year Ended December 31, 2018

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Revenues $ — $ 3,410,155 $ 573 $ 3,410,728

Operating expenses

2 unchanged sentences

Depreciation, depletion, and amortization 4,092 48,513 37 52,642

Impairment expense

General and administrative expense (excluding depreciation) 20,721 26,370 335 47,426

7 unchanged sentences

Change in value of common stock warrants 1,801 — — 1,801

Equity losses from subsidiaries

Change in value of contingent consideration — (10,500) — (10,500)

Equity earnings (losses) from subsidiaries 81,942 — (81,942) —

Equity earnings (losses) from Laramie Energy, LLC — — 9,464 9,464

6 unchanged sentences

(1) The income tax benefit (expense) of the Parent Guarantor and Issuer and Subsidiaries is determined using the separate return method.

The Non-Guarantor Subsidiaries and Eliminations column includes certain tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances.

The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances.

Non-GAAP Financial Measures

4 unchanged sentences

Year Ended December 31, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

1 unchanged sentence

Inventory valuation adjustment — 14,046 — 14,046

RINs gain in excess of net obligation

Unrealized loss on derivatives

RINs loss in excess of net obligation — 44,071 — 44,071

Unrealized loss (gain) on derivatives — (4,804) — (4,804)

Acquisition and integration costs — 614 — 614

Debt extinguishment and commitment costs

Changes in valuation allowance and other deferred tax items (1) — — (20,896) (20,896)

Change in value of common stock warrants (4,270) — — (4,270)

Loss (gain) on sale of assets, net

Severance costs 157 355 — 512

Impairment expense — 85,806 — 85,806

Impairments of Laramie Energy, LLC (2) — — 45,294 45,294

Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)

Par’s share of Laramie Energy’s unrealized gain on derivatives (2) — — (1,110) (1,110)

Depreciation, depletion, and amortization 2,900 86,622 514 90,036

Interest expense and financing costs, net 4,982 61,856 3,384 70,222

Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment losses

Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses — — 2,721 2,721

Equity losses (income) from subsidiaries 394,197 — (394,197) —

1 unchanged sentence

Adjusted EBITDA $ (10,943) $ (80,457) $ 4,732 $ (86,668)

________________________________________________________

(1) Includes increases in (releases of) our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance.

These tax expenses (benefits) are included in Income tax expense (benefit) on our consolidated statements of operations.

(2) Includes impairment losses on our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

Year Ended December 31, 2019

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

1 unchanged sentence

Inventory valuation adjustment — 11,938 — 11,938

RINs loss in excess of net obligation

Unrealized loss (gain) on derivatives

RINs gain in excess of net obligation — (3,398) — (3,398)

Unrealized loss on derivatives — 8,988 — 8,988

Acquisition and integration costs 28 4,676 — 4,704

2 unchanged sentences

Change in value of common stock warrants 3,199 — — 3,199

Change in value of contingent consideration

Par ’ s share of Laramie Energy ’ s unrealized loss (gain) on derivatives (2)

Loss (gain) on sale of assets, net — (37,382) 37,382 —

Impairments of Laramie Energy, LLC (2) — — 83,152 83,152

Par’s share of Laramie Energy’s unrealized gain on derivatives (2) — — (1,969) (1,969)

Depreciation, depletion, and amortization 2,969 82,843 309 86,121

Interest expense and financing costs, net 9,952 62,098 2,789 74,839

Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives

Equity losses from subsidiaries

Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses — — 8,568 8,568

Equity losses (income) from subsidiaries (81,097) — 81,097 —

Income tax expense (benefit) 335 26,507 (27,739) (897)

Adjusted EBITDA $ (17,714) $ 273,932 $ 2,631 $ 258,849

________________________________________________________

These tax expenses (benefits) are included in Income tax expense (benefit) on our consolidated statements of operations.

(2) Includes impairment losses on our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

Year Ended December 31, 2018

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

5 unchanged sentences

Debt extinguishment and commitment costs — 4,224 — 4,224

Increase in (release of) tax valuation allowance (1) — — (660) (660)

Change in value of common stock warrants (1,801) — — (1,801)

Severance costs

Par ’ s share of Laramie Energy ’ s unrealized loss (gain) on derivatives (2)

Change in value of contingent consideration — 10,500 — 10,500

Par’s share of Laramie Energy’s unrealized loss on derivatives (2) — — 1,158 1,158

Depreciation, depletion, and amortization 4,092 48,513 37 52,642

Interest expense and financing costs, net 10,867 28,897 4 39,768

Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives

Equity losses from subsidiaries

Equity earnings from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — (10,622) (10,622)

Equity losses (income) from subsidiaries (81,942) — 81,942 —

Income tax expense (benefit) (327) 15,567 (14,247) 993

18 unchanged sentences

We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost.

We may from time to time seek to retire or purchase our outstanding 5.00% Convertible Senior Notes, our 7.75% Senior Secured Notes, or our common stock through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise.

On February 23, 2021, we closed on the sale and leaseback of twenty-one (21) of our retail properties in Hawaii for an aggregate cash purchase price of approximately $109.4 million (the “Sale-Leaseback Transaction”).

We used approximately $51.7 million of the net cash proceeds to repay the certain financing arrangements which were related to certain of the retail properties and expect to use the remainder for general corporate purposes.

Please read Note 24—Subsequent Events to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the Sale-Leaseback Transaction.

We may from time to time seek to retire or purchase our outstanding 5.00% Convertible Senior Notes, our 7.75% Senior Secured Notes, our 12.875% Senior Secured Notes, or our common stock through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise.

Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

2 unchanged sentences

We had the following significant debt issuances and amendments during the years ended December 31, 2020, 2019, and 2018:

On November 1, 2019 , we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021 , with an option for us to terminate as early as March 31, 2021 .

• On June 5, 2020, Par Petroleum, LLC and Par Petroleum Finance Corp., both our wholly owned subsidiaries, completed the issuance and sale of $105 million in aggregate principal amount of 12.875% Senior Secured Notes in a private placement under Rule 144A and Regulation S of the Securities Act of 1933, as amended.

The net proceeds of $98.8 million from the sale were used for general corporate purposes.

• On April 13, 2020, Par Hawaii, LLC (“PHL”), our wholly owned subsidiary, entered into a Term Loan Agreement (“PHL Term Loan”) with American Savings Bank F.S.B., which provided a term loan in the principal amount of approximately $6.0 million.

The proceeds from the PHL Term Loan were used to finance PHL’s equity in certain real property.

On February 23, 2021, we terminated and repaid all amounts outstanding under the PHL Term Loan.

Please read Note 24—Subsequent Events to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the repayment.

• On November 1, 2019, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021.

We further amended the Washington Refinery Intermediation Agreement on February 11, 2021 and extended the term through March 31, 2022.

Please read Note 24—Subsequent Events to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the February 11, 2021 amendment.

• During May, June, and December 2019, we entered into privately negotiated exchange agreements with a limited number of holders (the “Noteholders”) to repurchase $66.3 million in aggregate principal amount of the 5.00% Convertible Senior Notes held by the Noteholders for an aggregate of $18.6 million in cash and approximately 3.2 million shares of our common stock with a fair value of $74.3 million.

3 unchanged sentences

As of December 31, 2020, the outstanding principal on the Retail Property Term Loan was $42.5 million.

On January 11, 2019 , Par Petroleum, LLC and Par Petroleum Finance Corp.

, both our wholly owned subsidiaries, entered into the Term Loan B Facility with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto from time to time.

On February 23, 2021, we terminated and repaid all amounts outstanding under the Retail Property Term Loan.

Please read Note 24—Subsequent Events to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the repayment.

• On January 11, 2019, Par Petroleum, LLC and Par Petroleum Finance Corp., entered into the Term Loan B Facility with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto from time to time.

Pursuant to the Term Loan B Facility, the lenders made a term loan to the borrowers in the amount of $250.0 million (“Term Loan B”).

We are required to pay principal of $3.1 million quarterly.

We are required to make quarterly principal payments of $3.1 million.

The proceeds from the Term Loan B were used to fund the Washington Acquisition.

3 unchanged sentences

The proceeds from the Par Pacific Term Loan Agreement were used to fund the Washington Acquisition.

On March 29, 2019 , we terminated and repaid all amounts outstanding under the Par Pacific Term Loan Agreement using the proceeds of the Retail Property Term Loan .

March 29, 2019, we terminated and repaid all amounts outstanding under the Par Pacific Term Loan Agreement using the proceeds of the Retail Property Term Loan.

• On December 5, 2018, we amended the Supply and Offtake Agreements to account for additional processing capacity expected to be provided through the Par West Acquisition.

The December 5, 2018 amendment to the Supply and Offtake Agreements also (i) required us to increase our margin requirements by an aggregate $2.5 million by making certain additional margin payments on December 19, 2018 , March 1, 2019 , and June 3, 2019 , and (ii) only allows dividends, payments, or other distributions with respect to any equity interests in Par Hawaii Refining, LLC (“PHR”) in limited and restricted circumstances.

On September 27, 2018 , PHL (which includes the assets of the dissolved entity formerly known as Mid Pac Petroleum, LLC ), our wholly owned subsidiary, entered into the Mid Pac Term Loan with American Savings Bank, FSB, which provided a term loan of up to approximately $1.5 million .

The December 5, 2018 amendment to the Supply and Offtake Agreements also (i) required us to increase our margin requirements by an aggregate $2.5 million by making certain additional margin payments on December 19, 2018, March 1, 2019, and June 3, 2019, and (ii) only allows dividends, payments, or other distributions with respect to any equity interests in PHR in limited and restricted circumstances.

• On September 27, 2018, PHL (which includes the assets of the dissolved entity formerly known as Mid Pac Petroleum, LLC), entered into the Mid Pac Term Loan with American Savings Bank, F.S.B., which provided a term loan of up to approximately $1.5 million.

We received the proceeds on October 18, 2018, which we used to purchase certain retail property.

On December 21, 2017 , Par Petroleum, LLC and Par Petroleum Finance Corp.

, both our wholly owned subsidiaries, completed the issuance and sale of $300 million in aggregate principal amount of 7.75% Senior Secured Notes due 2025 in a private placement under Rule 144A and Regulation S of the Securities Act of 1933.

The net proceeds of $289.2 million (net of financing costs and original issue discount of 1% ) from the sale were used to repay our outstanding indebtedness under the Hawaii Retail Credit Facilities , the Wyoming Refining Credit Facilities , the Par Wyoming Holdings Credit Agreement , and the J.

Aron Forward Sale and for general corporate purposes.

On December 21, 2017 , in connection with the issuance of the 7.75% Senior Secured Notes , the ABL Borrowers entered into the ABL Credit Facility dated as of December 21, 2017 , with certain lenders and Bank of America, N.A., as administrative agent and collateral agent.

The ABL Credit Facility provides for a revolving credit facility that provides for revolving loans and for the issuance of letters of credit (the “ ABL Revolver ”).

On July 24, 2018 , we amended the ABL Credit Facility to increase the maximum principal amount at any time outstanding of the ABL Revolver by $10 million to $85 million , subject to a borrowing base.

• On July 24, 2018, we amended the ABL Credit Facility dated as of December 21, 2017 to increase the maximum principal amount at any time outstanding of the ABL Revolver by $10 million to $85 million, subject to a borrowing base.

The ABL Revolver had no outstanding balance and a borrowing base of approximately $39.8 million at December 31, 2020.

On June 30, 2017, we fully repaid and terminated the Term Loan.

We recorded debt extinguishment costs of approximately $1.8 million related to unamortized deferred financing costs associated with the Term Loan in the year ended December 31, 2017.

On July 14, 2016 , in connection with the WRC Acquisition , Par Wyoming Holdings, LLC, our indirect wholly owned subsidiary, entered into the Par Wyoming Holdings Credit Agreement with certain lenders and Chambers Energy Management, LP, as agent, which provided for a single advance secured term loan to our subsidiary in the amount of $65.0 million (the “ Par Wyoming Holdings Term Loan ”) at the closing of the WRC Acquisition .

The proceeds of the Par Wyoming Holdings Term Loan were used to pay a portion of the consideration for the WRC Acquisition , to pay certain fees and closing costs, and for general corporate purposes.

Upon issuance of the 7.75% Senior Secured Notes on December 21, 2017 , we repaid in full and terminated the Par Wyoming Holdings Credit Agreement .

On July 14, 2016 , in connection with the WRC Acquisition , we assumed debt consisting of term loans of $58.0 million and revolving loans of $10.1 million under a Third Amended and Restated Loan Agreement dated as of April 30, 2015 (as amended, the “ Wyoming Refining Credit Facilities ”), with Bank of America, N.A.

The Wyoming Refining Credit Facilities also provided for a revolving credit facility in the maximum principal amount at any time outstanding of $30.0 million , subject to a borrowing base, which provided for revolving loans and for the issuance of letters of credit.

Upon issuance of the 7.75% Senior Secured Notes on December 21, 2017 , we repaid in full and terminated the Wyoming Refining Credit Facilities .

On December 17, 2015 , PHL , which includes assets previously owned by the dissolved entities Mid Pac Petroleum, LLC and HIE Retail, LLC , entered into the Hawaii Retail Credit Facilities consisting of a revolving credit facility up to $5.0 million (“ Hawaii Retail Revolving Credit Facilities ”), which provided for revolving loans and for the issuance of letters of credit and term loans (“ Hawaii Retail Term Loans ”) in the aggregate principal amount of $110 million .

The proceeds of the Hawaii Retail Term Loans were used to repay existing indebtedness under PHL ’s then existing credit agreements, to pay transaction fees and expenses, and to facilitate a cash distribution to us.

Upon issuance of the 7.75% Senior Secured Notes on December 21, 2017 , we repaid in full and terminated the Hawaii Retail Revolving Credit Facilities .

As part of the May 8, 2017 amendment to the Supply and Offtake Agreements , we also entered into a $30 million forward sale of certain monthly volumes of jet fuel to be delivered to J.

Aron over the remaining amended term (“ J.

Aron Forward Sale ”).

The proceeds from the J.

Aron Forward Sale were used to pay a portion of the outstanding balance on the Term Loan.

Upon issuance of the 7.75% Senior Secured Notes on December 21, 2017 , we repaid in full and terminated the J.

Aron Forward Sale .

Please read Note 12—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our debt agreements.

Please read Note 11—Inventory Financing Agreements, Note 13—Debt, and Note 24—Subsequent Events to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and debt agreements, respectively.

The following table summarizes cash activities for the years ended December 31, 2020, 2019, and 2018 (in thousands):

Years Ended December 31,

2020 2019 2018

Net cash provided by (used in) operating activities $ (37,214) $ 105,630 $ 90,620

Net cash used in investing activities (63,464) (353,229) (175,821)

Net cash provided by (used in) financing activities

Net cash provided by operating activities was approximately $105.6 million for the year ended December 31, 2019 , which resulted from net income of approximately $40.8 million and non-cash charges to operations of approximately $148.7 million , offset by net cash used for changes in operating assets and liabilities of approximately $83.9 million .

The change in our operating assets and liabilities for the year ended December 31, 2019 was primarily due to increased inventories at our Hawaii and Washington refineries driven by higher inventory volumes and prices, partially offset by an increase in our obligations under inventory financing agreements.

Net cash provided by operating activities was approximately $90.6 million for the year ended December 31, 2018 , which resulted from net income of approximately $39.4 million and non-cash charges to operations of approximately $61.7 million , offset by net cash used for changes in operating assets and liabilities of approximately $10.5 million .

Net cash provided by operating activities was approximately $106.5 million for the year ended December 31, 2017 , which resulted from net income of approximately $72.6 million and non-cash charges to operations of approximately $50.1 million , offset by net cash used for changes in operating assets and liabilities of approximately $16.2 million .

For the year ended December 31, 2019 , net cash used in investing activities was approximately $353.2 million and primarily related to $273.4 million for the Washington Acquisition and additions to property, plant, and equipment totaling approximately $83.9 million .

Net cash used in investing activities was approximately $175.8 million for the year ended December 31, 2018 and was primarily related to $74.3 million for the Northwest Retail Acquisition , $53.9 million for the Par West Acquisition , and additions to property, plant, and equipment totaling approximately $48.4 million .

Net cash used in investing activities was approximately $31.7 million for the year ended December 31, 2017 and was primarily related to additions to property, plant, and equipment totaling approximately $31.7 million .

Net cash provided by financing activities 42,559 300,208 41,943

Net cash used in operating activities was approximately $37.2 million for the year ended December 31, 2020, which resulted from a net loss of approximately $409.1 million, partially offset by non-cash charges to operations of approximately $219.1 million and net cash provided by changes in operating assets and liabilities of approximately $152.8 million.

The change in our operating assets and liabilities for the year ended December 31, 2020 was primarily due to a decrease in our trade receivables of $117.8 million, a decrease in inventories of $171.9 million, and an increase in our environmental credit obligations of $127.7 million, partially offset by a net decrease in our Supply and Offtake Agreements and Washington Refinery Intermediation Agreement obligations of $190.8 million.

Net cash provided by changes in operating assets and liabilities also includes an increase of $49.8 million in deferred turnaround costs associated with the Hawaii and Wyoming turnarounds.

These decreases in accounts receivable, inventory, and Supply and Offtake Agreements were primarily driven by the decline in crude oil prices in 2020 and overall decline in sales and inventory volumes resulting from COVID-19 demand destruction.

The increase in our environmental credit obligations was primarily driven by the increase in the market prices of RINs.

Net cash provided by operating activities was approximately $105.6 million for the year ended December 31, 2019, which resulted from net income of approximately $40.8 million and non-cash charges to operations of approximately $144.9 million, partially offset by net cash used for changes in operating assets and liabilities of approximately $80.1 million.

Net cash provided by operating activities was approximately $90.6 million for the year ended December 31, 2018, which resulted from net income of approximately $39.4 million and non-cash charges to operations of approximately $65.5 million, partially offset by net cash used for changes in operating assets and liabilities of approximately $14.3 million.

For the year ended December 31, 2020, net cash used in investing activities was approximately $63.5 million and primarily related to additions to property, plant, and equipment totaling approximately $63.5 million.

Net cash used in investing activities was approximately $353.2 million for the year ended December 31, 2019 and was primarily related to $273.4 million for the Washington Acquisition and additions to property, plant, and equipment totaling approximately $83.9 million.

Net cash used in investing activities was approximately $175.8 million for the year ended December 31, 2018 and was primarily related

to $74.3 million for the Northwest Retail Acquisition, $53.9 million for the Par West Acquisition, and additions to property, plant, and equipment totaling approximately $48.4 million.

Net cash provided by financing activities for the year ended December 31, 2020 was approximately $42.6 million and consisted primarily of proceeds from net borrowings on our debt agreements, J.

Aron deferred payment arrangement, and MLC receivable advances of $313.0 million , and the exercise of employee stock options of $8.2 million , offset by deferred loan costs of $13.5 million and payments of $8.1 million in commitment and other fees related to the funding for the Washington Acquisition and the financing costs related to the repurchase and cancellation of a portion of our 5.00% Convertible Senior Notes .

Net cash provided by financing activities for the year ended December 31, 2018 of approximately $41.9 million consisted primarily of proceeds from net repayments of borrowings and net borrowings on our deferred payment arrangement of $27.3 million and the issuance of common stock totaling approximately $19.3 million , offset by the payment of $3.4 million in commitment and other fees related to the funding for the Washington Acquisition .

Net cash used in financing activities for the year ended December 31, 2017 of approximately $4.8 million consisted primarily of proceeds from net borrowings and net payments on our deferred payment arrangement of $10.7 million , offset by deferred loan costs of $10.1 million and payments for early termination of financing agreements of $4.4 million .

Aron deferred payment arrangement, and MLC receivable advances of $49.3 million, partially offset by deferred loan costs of $6.3 million related to the issuance of the 12.875% Senior Secured Notes.

Net cash provided by financing activities for the year ended December 31, 2019 of approximately $300.2 million consisted primarily of proceeds from net borrowings on our debt agreements, J.

Aron deferred payment arrangement, and MLC receivable advances of $313.0 million and the exercise of employee stock options of $8.2 million, partially offset by deferred loan costs of $13.5 million and payments of $8.1 million in commitment and other fees related to the funding for the Washington Acquisition and the financing costs related to the repurchase and cancellation of a portion of our 5.00% Convertible Senior Notes.

Net cash provided by financing activities for the year ended December 31, 2018 of approximately $41.9 million consisted primarily of proceeds from net repayments of borrowings and net borrowings on our deferred payment arrangement of $27.3 million and the issuance of common stock totaling approximately $19.3 million, partially offset by the payment of $3.4 million in commitment and other fees related to the funding for the Washington Acquisition.

Capital Expenditures and Turnaround Costs

Our deferred turnaround costs and capital expenditures, excluding acquisitions, for the year ended December 31, 2019 , totaled approximately $93.7 million and were primarily related to the second phase of our diesel hydrotreater construction at our Par East refinery, the first phase of a project to allow for storage and throughput of renewable fuels at our Washington refinery, equipment purchases and pre-engineering work in preparation for the 2020 turnarounds at our refineries, a 2019 turnaround at the newly acquired Par West refinery, construction of the tie-in connecting our SPM to the IES crude oil pipeline for Hawaii logistics,

and other capital projects and scheduled maintenance across our operating segments.

Our capital expenditures and deferred turnaround costs budget for 2020 ranges from $120 to $135 million and primarily relates to the second phase of a Washington renewables project, equipment purchases and engineering work related to the execution of the 2020 turnarounds at our Par East and Wyoming refineries and in preparation for the 2021 turnaround at our Washington refinery, tank compliance construction and repairs within our Wyoming logistics network, and scheduled maintenance and other capital projects.

Our deferred turnaround costs and capital expenditures, excluding acquisitions, for the year ended December 31, 2020, totaled approximately $113.3 million and were primarily related to equipment purchases and engineering work for the 2020 turnarounds at our Par East Hawaii and Wyoming refineries, the second phase of a Washington renewables logistics project, tank compliance construction and repairs within our Wyoming logistics network, and scheduled maintenance.

Our capital expenditures and deferred turnaround costs budget for 2021 ranges from $35 to $45 million and primarily relates to a partial turnaround at our Washington refinery, scheduled maintenance, and other capital projects related to regulatory and safety compliance.

We also continue to seek strategic investments in business opportunities, but the amount and timing of those investments are not predictable.

5 unchanged sentences

Cash obligations reflected in the table below are not discounted.

Less than 1 Year

More than 5 Years

Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years

(in thousands)

5 unchanged sentences

_________________________________________________________

Additionally, we have $9.0 million and $1.2 million in future undiscounted cash flows for three operating leases and three finance leases, respectively, that have not yet commenced.

(1) Additionally, we have $6.6 million and $4.9 million in future undiscounted cash flows for operating leases and finance leases, respectively, that have not yet commenced.

These leases are expected to commence when the lessor has made the equipment or location available to the Company to operate or begin construction, respectively.

12 unchanged sentences

Purchase Commitments.

Purchase commitments primarily consist of contracts executed as of December 31, 2019 for the purchase of crude oil for use at our refineries that are scheduled for delivery in 2020 .

Purchase commitments primarily consist of contracts executed as of December 31, 2020 for the purchase of crude oil for use at our refineries that are scheduled for delivery in 2021 and 2022.

Commitments and Contingencies

4 unchanged sentences

Aron amended the Supply and Offtake Agreements and extended the term through May 31, 2021 with a one-year extension option upon mutual agreement of the parties.

The Supply and Offtake Agreements were amended and restated on December 21, 2017 in connection with the issuance of the 7.75% Senior Secured Notes and the entry into the ABL Credit Facility .

On June 27, 2018, we and J.

1 unchanged sentence

On December 5, 2018, we amended the Supply and Offtake Agreements to account for additional processing capacity expected to be provided through the Par West Acquisition.

We are evaluating options to extend or replace the Supply and Offtake Agreements.

Please read Note 11—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for more information.

1 unchanged sentence

In connection with the consummation of the Washington Acquisition on January 11, 2019, we assumed the Washington Refinery Intermediation Agreement with MLC to support the operations of our Washington refinery.

On November 1, 2019 , we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021 , with an option for us to early terminate as early as March 31, 2021 .

Please read Note 11—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for more information.

On November 1, 2019, we amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021.

We further amended the Washington Refinery Intermediation Agreement on February 11, 2021 and extended the term through March 31, 2022.

Please read Note 11—Inventory Financing Agreements and Note 24—Subsequent Events to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Environmental Matters.

16 unchanged sentences

In 2007, the State of Hawaii passed Act 234, which required that GHG emissions be rolled back on a statewide basis to 1990 levels by the year 2020.

In June of 2014, the Hawaii Department of Health (“DOH”) adopted regulations that require each major facility to reduce CO 2 emissions by 16% by 2020 relative to a calendar year 2010 baseline (the first year in which GHG emissions were reported to the EPA under 40 CFR Part 98).

In June of 2014, the DOH adopted regulations that require each major facility to reduce CO 2 emissions by 16% by 2020 relative to a calendar year 2010 baseline (the first year in which GHG emissions were reported to the EPA under 40 CFR Part 98).

The Hawaii refineries’ capacity to materially reduce fuel use and GHG emissions is limited because most energy conservation measures have already been implemented over the past 20 years.

Hawaii's regulation allows for “partnering” with other facilities (principally power plants) that have already dramatically reduced GHG emissions or are on schedule to reduce CO 2 emissions in order to comply with the state’s Renewable Portfolio Standards.

The DOH’s GHG regulation allows, and the Hawaii refineries submitted, a GHG reduction plan, which establishes a combined GHG limit between the Par East and Par West refineries and includes an assessment of alternatives which demonstrates that additional reductions are not cost-effective or necessary because the State of Hawaii has already reached the 1990 levels according to a report prepared by the DOH in January 2019.

Accordingly, our Hawaii refineries submitted a GHG reduction plan that incorporates the partnering provisions and demonstrates that additional reductions are not cost-effective or necessary because the State of Hawaii has already reached the 1990 levels according to a report prepared by the DOH in January 2019.

Fuel Standards

In 2007, the U.S.

Congress passed the Energy Independence and Security Act of 2007 (the “EISA”) which, among other things, set a target fuel economy standard of 35 miles per gallon for the combined fleet of cars and light trucks in the U.S.

by model year 2020 and contained an expanded Renewable Fuel Standard (the “RFS”).

In August 2012, the EPA and National Highway Traffic Safety Administration (“NHTSA”) jointly adopted regulations that establish an average industry fuel economy of 54.5 miles per gallon by model year 2025.

Congress passed the EISA which, among other things, set a target fuel economy standard of 35 miles per gallon for the combined fleet of cars and light trucks in the U.S.

by model year 2020 and contained an expanded RFS.

In August 2012, the EPA and NHTSA jointly adopted regulations that establish vehicle carbon dioxide emissions standards and an average industry fuel economy of 54.5 miles per gallon by model year 2025.

On August 8, 2018, the EPA and NHTSA jointly proposed to revise existing fuel economy standards for model years 2021-2025 and to set standards for 2026 for the first time.

The agencies have not yet issued a final rule revising the fuel economy standards.

Although the revised fuel economy standards are expected to be less stringent than the initial standards for model years 2021-2025, it is uncertain whether the revised standards will increase year over year.

On March 31, 2020, the agencies released updated fuel economy and vehicle emissions standards, which provide for an increase in stringency by 1.5% each year through model year 2026, as compared with the standards issued in 2012 that required 5% annual increases.

Higher fuel economy standards have the potential to reduce demand for our refined transportation fuel products.

Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply, up to 36.0 billion gallons by 2022.

Over time, higher annual RFS requirements have the potential to reduce demand for our refined transportation fuel products.

In the near term, the RFS will be satisfied primarily with fuel ethanol blended into gasoline.

We, and other refiners subject to the RFS, may meet the RFS requirements by blending the necessary volumes of renewable fuels produced by us or purchased from third parties.

To the extent that refiners will not or cannot blend renewable fuels into the products they produce in the quantities required to satisfy their obligations under the RFS program, those refiners must purchase renewable credits, referred to as Renewable Identification Numbers (“RINs”), to maintain compliance.

The EPA has not yet set volumetric requirements for 2021, which makes it difficult to estimate our obligations.

To the extent that we exceed the minimum volumetric requirements for blending of renewable fuels, we have the option of retaining these RINs for current or future RFS compliance or selling those RINs on the open market.

The RFS may present production and logistics challenges for both the renewable fuels and petroleum refining and marketing industries in that we may have to enter into arrangements with other parties or purchase D3 waivers from the EPA to meet our obligations to use advanced biofuels, including biomass-based diesel and cellulosic biofuel, with potentially uncertain supplies of these new fuels.

In October 2010, the EPA issued a partial waiver decision under the federal CAA to allow for an increase in the amount of ethanol permitted to be blended into gasoline from 10% (“E10”) to 15% (“E15”) for 2007 and newer light duty motor vehicles.

In October 2010, the EPA issued a partial waiver decision under the federal CAA to allow for an increase in the amount of ethanol permitted to be blended into gasoline from 10% to 15% for 2007 and newer light duty motor vehicles.

In January 2011, the EPA issued a second waiver for the use of E15 in vehicles model years 2001-2006.

2 unchanged sentences

however, increased renewable fuel in the nation’s transportation fuel supply could reduce demand for our refined products.

In March 2014, the EPA published a final Tier 3 gasoline standard that requires, among other things, that gasoline contain no more than 10 parts per million (“ppm”) sulfur on an annual average basis and no more than 80 ppm sulfur on a per-gallon basis.

In March 2014, the EPA published a final Tier 3 gasoline standard that requires, among other things, that gasoline contain no more than 10 ppm sulfur on an annual average basis and no more than 80 ppm sulfur on a per-gallon basis.

The standard also lowers the allowable benzene, aromatics, and olefins content of gasoline.

The effective date for the new standard was January 1, 2017, however, approved small volume refineries had until January 1, 2020 to meet the standard.

The Par East refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date it was disqualified from small volume refinery status.

The Par East Hawaii refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date it was disqualified from small volume refinery status.

On March 19, 2015, the EPA confirmed the small refinery status of our Wyoming refinery.

The Par East refinery, our Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted small refinery status by the EPA for 2018.

As of January 1, 2020, all four of our refineries were compliant with the final Tier 3 gasoline standard.

The Par East Hawaii refinery, our Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted small refinery status by the EPA for 2018.

All of our refineries are compliant with the final Tier 3 gasoline standard.

Beginning on June 30, 2014, new sulfur standards for fuel oil used by marine vessels operating within 200 miles of the U.S.

coastline (which includes the entire Hawaiian Island chain) was lowered from 10,000 ppm (1%) to 1,000 ppm (0.1%).

The sulfur standards began at the Hawaii refineries and were phased in so that by January 1, 2015, they were to be fully aligned with the International Marine Organization (“IMO”) standards and deadline.

The sulfur standards began at the Hawaii refineries and were phased in so that by January 1, 2015, they were to be fully aligned with IMO standards and deadline.

The more stringent standards apply universally to both U.S.

and foreign-flagged ships.

Although the marine fuel regulations provided vessel operators with a few compliance options such as installation of on-board pollution controls and demonstration unavailability, many vessel operators will be forced to switch to a distillate fuel while operating within the Emission Control Area (“ECA”).

Beyond the 200 mile ECA, large ocean vessels are still allowed to burn marine fuel with up to 3.5% sulfur.

2 unchanged sentences

In addition to U.S.

fuels requirements, the IMO has also adopted newer standards that further reduce the global limit on sulfur content in maritime fuels to 0.5% beginning in 2020 (“IMO 2020”).

Like the rest of the refining industry, we have been focused on meeting these standards and may incur costs in producing lower-sulfur fuels.

fuels requirements, the IMO has also adopted newer standards that further reduce the global limit on sulfur content in maritime fuels to 0.5% beginning in 2020.

There will be compliance costs and uncertainties regarding how we will comply with the various requirements contained in the EISA, RFS, IMO 2020, and other fuel-related regulations.

2 unchanged sentences

Our Wyoming refinery is subject to a number of consent decrees, orders, and settlement agreements involving the EPA and/or the Wyoming Department of Environmental Quality, some of which date back to the late 1970s and several of which remain in effect, requiring further actions at the Wyoming refinery.

Our recent acquisition of the Par West refinery in Hawaii and the Washington Acquisition also subject us to additional environmental compliance costs.

Our recent acquisition of the Par West Hawaii refinery and the Washington Acquisition also subject us to additional environmental compliance costs.

Please read Note 17—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Environmental Agreement

On September 25, 2013, Par Petroleum, LLC, Tesoro, and PHR entered into an Environmental Agreement (“Environmental Agreement”), which allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR , including the Consent Decree.

Please read Note 17—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Bankruptcy Matters.

We emerged from the reorganization of Delta Petroleum Corporation (“Delta”) on August 31, 2012 (“Emergence Date”) when the plan of reorganization (“Plan”) was consummated.

Please read “Item 1.

— Business — Bankruptcy and Plan of Reorganization” of this Form 10-K for more information.

Off-Balance Sheet Arrangements

We are guarantors of Laramie Energy’s credit facility, with recourse limited to the pledge of our equity interest in our wholly owned subsidiary, Par Piceance Energy Equity, LLC.

As of June 30, 2020, we have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero.

Please read Note 3—Investment in Laramie Energy, LLC to our consolidated financial statements under Item 8 of this Form 10-K for further information.

Other than this guarantee, we have no material off-balance sheet arrangements as of December 31, 2019 that are reasonably likely to have a current or future material effect on our financial condition, results of operations, or cash flows.

Other than this guarantee and the purchase commitments described in the Contractual Obligations section above, we have no material off-balance sheet arrangements as of December 31, 2020 that are reasonably likely to have a current or future material effect on our financial condition, results of operations, or cash flows.

Critical Accounting Policies and Estimates

2 unchanged sentences

Our significant accounting policies are described in Note 2—Summary of Significant Accounting Policies to our audited consolidated financial statements under Item 8 of this Form 10-K.

We have identified certain of these policies as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management.

We have identified certain policies as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management.

We analyze our estimates on a periodic basis, including those related to fair value, impairments, natural gas and crude oil reserves, bad debts, natural gas and oil properties, income taxes, derivatives, contingencies, and litigation and base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances.

1 unchanged sentence

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost or net realizable value using the first-in, first-out accounting method (“FIFO”).

Commodity inventories at the Washington refinery are stated at the lower of cost or net realizable value using the last-in, first-out (“LIFO”) inventory accounting method.

Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost and net realizable value using the FIFO accounting method.

Commodity inventories at the Washington refinery are stated at the lower of cost and net realizable value using the LIFO inventory accounting method.

We value merchandise along with spare parts, materials, and supplies at average cost.

As of December 31, 2019 , the excess of current replacement cost over LIFO inventory carrying value was approximately $6.4 million .

Estimating the net realizable value of our inventory requires management to make assumptions about the timing of sales and the expected proceeds that will be realized for the sales.

Estimating the net realizable value of our inventory requires management to make assumptions about the timing of sales and the expected proceeds that will be realized for these sales.

Please read Note 6—Inventories to our consolidated financial statements under Item 8 of this Form 10-K for additional information.

All of the crude oil utilized at the Hawaii refineries is financed by J.

7 unchanged sentences

Aron on our behalf as inventory with a corresponding accrued liability on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we have an obligation to repurchase it.

The valuation of our repurchase obligation requires that we make estimates of the prices and differentials assuming settlement at the end of the reporting period.

The valuation of our repurchase obligation requires that we make estimates of the prices and differentials assuming settlement occurs at the end of the reporting period.

Please read Note 11—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for additional information.

1 unchanged sentence

Under this arrangement, U.S.

Oil purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain crude oil purchases.

MLC ’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third party issuing bank, or purchasing crude oil directly from third parties on our behalf.

Oil purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain of these purchases.

MLC’s credit support can consist of providing a payment guaranty, procuring the issuance of a letter of credit from a third party issuing bank, or purchasing crude oil directly from third parties on our behalf.

Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of same, exclusively to MLC.

12 unchanged sentences

Significant judgment is required in estimating the fair value of assets acquired.

We obtain the assistance of third-party valuation specialists in estimating fair values of tangible and intangible assets based on available historical information and on expectations and assumptions about the future, considering the perspective of marketplace participants.

These valuation methods require management to make estimates and assumptions regarding characteristics of the acquired property and future revenues and expenses.

4 unchanged sentences

If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required.

Under the quantitative test, we compare the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit.

Under the quantitative test, we compare the

carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit.

If the carrying value exceeds the estimated fair value of the reporting unit, an impairment loss is recorded.

19 unchanged sentences

These instruments include exchange traded futures and over-the-counter swaps, forwards, and options.

For our forward contracts that are derivatives, we have elected the normal purchase normal sale exclusion, as it is our policy to fulfill or accept the physical delivery of the product and we will not net settle.

Therefore, we did not recognize the unrealized gains or losses related to these contracts in our consolidated financial statements.

1 unchanged sentence

All derivative instruments not designated as normal purchases or sales are recorded in the balance sheet as either assets or liabilities measured at their fair values.

Changes in the fair value of these derivative instruments are recognized currently in

Changes in the fair value of these derivative instruments are recognized currently in earnings.

We have not designated any derivative instruments as cash flow or fair value hedges and, therefore, do not apply hedge accounting treatment.

5 unchanged sentences

We record asset retirement obligations (“AROs”) at fair value in the period in which we have a legal obligation, whether by government action or contractual arrangement, to incur these costs and can make a reasonable estimate of the fair value of the liability.

Our AROs arise from our refining, retail, and logistics operations.

Our AROs arise from our refining, logistics, and retail operations.

AROs are calculated based on the present value of the estimated removal and other closure costs using our credit-adjusted risk-free rate.

1 unchanged sentence

The liability is accreted to its estimated settlement value and the related capitalized cost is depreciated over the asset’s useful life.

Both expenses are recorded in Depreciation, depletion, and amortization in the consolidated statements of operations.

expenses are recorded in Depreciation, depletion, and amortization in the consolidated statements of operations.

The difference between the settlement amount and the recorded liability is recorded as a gain or loss on asset disposals in our consolidated statements of operations.

1 unchanged sentence

We cannot currently estimate the fair value for certain AROs primarily because we cannot estimate settlement dates (or ranges of dates) associated with these assets.

These AROs include hazardous materials disposal (such as petroleum manufacturing by-products, chemical catalysts, and sealed insulation material containing asbestos) and removal or dismantlement requirements associated with the closure of our refining facilities, terminal facilities, or pipelines, including the demolition or removal of certain major processing units, buildings, tanks, pipelines, or other equipment.

These AROs include disposal of hazardous materials (such as petroleum manufacturing by-products, chemical catalysts, and sealed insulation material containing asbestos) and removal or dismantlement requirements associated with the closure of our refining facilities, terminal facilities, or pipelines, including the demolition or removal of certain major processing units, buildings, tanks, pipelines, or other equipment.

We use the asset and liability method of accounting for income taxes.

2 unchanged sentences

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible.

Based upon the level of historical taxable income and projections for future results of operations over the periods in which the deferred tax assets are deductible, among other factors, management concluded that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets and therefore, a valuation allowance has been recorded for substantially all of our net deferred tax assets at December 31, 2020 and 2019.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis