What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-07 compared with 2020-11-06 · 445 added, 592 removed, 514 unchanged (67% of the section changed)

4 unchanged sentences

(in thousands, except share data)

September 30, 2020

December 31, 2019

March 31, 2021 December 31, 2020

Current assets

2 unchanged sentences

Total cash, cash equivalents, and restricted cash 216,733 70,309

Trade accounts receivable, net of allowances of $1.1 million and $1.2 million at September 30, 2020 and December 31, 2019, respectively

Trade accounts receivable, net of allowances of $ 0.5 million and $ 0.6 million at March 31, 2021 and December 31, 2020, respectively

155,886 111,657

Inventories 579,206 429,855

Prepaid and other current assets 24,913 24,648

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Operating lease right-of-use assets 427,577 357,166

Investment in Laramie Energy, LLC

Intangible assets, net 18,227 18,892

Goodwill 127,997 127,997

Other long-term assets 62,759 60,572

Total assets $ 2,502,470 $ 2,133,861

LIABILITIES AND STOCKHOLDERS’ EQUITY

10 unchanged sentences

Long-term debt, net of current maturities 597,185 648,660

Common stock warrants

Finance lease liabilities 7,350 7,925

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Common stock, $ 0.01 par value;

500,000,000 shares authorized at September 30, 2020 and December 31, 2019, 53,947,364 shares and 53,254,151 shares issued at September 30, 2020 and December 31, 2019, respectively

500,000,000 shares authorized at March 31, 2021 and December 31, 2020, 60,141,841 shares and 54,002,538 shares issued at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 814,467 726,504

Accumulated deficit ( 539,255 ) ( 477,028 )

Accumulated other comprehensive income

Accumulated other comprehensive income (loss) 254 ( 3,742 )

Total stockholders’ equity 276,067 246,274

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Three Months Ended

Nine Months Ended

September 30,

Revenues $ 888,680 $ 1,204,083

Operating expenses

3 unchanged sentences

Impairment expense — 67,922

Gain on sale of assets, net ( 64,912 ) —

General and administrative expense (excluding depreciation) 11,885 11,784

1 unchanged sentence

Total operating expenses 933,342 1,385,256

Operating income (loss)

Operating loss ( 44,662 ) ( 181,173 )

Other income (expense)

1 unchanged sentence

Debt extinguishment and commitment costs ( 1,507 ) —

Gain on curtailment of pension obligation 2,032 —

Other income, net 61 24

3 unchanged sentences

Loss before income taxes ( 62,227 ) ( 240,584 )

Income tax benefit (expense)

Net income (loss)

Income (loss) per share

Income tax benefit — 18,247

Net Loss $ ( 62,227 ) $ ( 222,337 )

Loss per share

Basic $ ( 1.15 ) $ ( 4.18 )

Diluted $ ( 1.15 ) $ ( 4.18 )

Weighted-average number of shares outstanding

Basic 54,280 53,153

Diluted 54,280 53,153

See accompanying notes to the condensed consolidated financial statements.

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended

Net Loss $ ( 62,227 ) $ ( 222,337 )

Other comprehensive income (loss):

Other post-retirement benefits income (loss), net of tax 3,996 —

Total other comprehensive income (loss), net of tax 3,996 —

Comprehensive income (loss) $ ( 58,231 ) $ ( 222,337 )

See accompanying notes to the condensed consolidated financial statements.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net Income (Loss)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Net Loss $ ( 62,227 ) $ ( 222,337 )

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

Depreciation, depletion, and amortization 22,880 21,283

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Non-cash interest expense 1,843 1,634

Non-cash lower of cost or net realizable value adjustment

Non-cash lower of cost and net realizable value adjustment ( 10,595 ) 182,366

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

Deferred taxes — ( 18,373 )

Gain on sale of assets, net ( 64,912 ) —

Stock-based compensation 1,886 1,615

Unrealized (gain) loss on derivative contracts ( 6,922 ) 28,351

Equity losses from Laramie Energy, LLC

Equity (earnings) losses from Laramie Energy, LLC — 45,031

Net changes in operating assets and liabilities:

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Prepaid and other assets 2,867 20,719

Inventories ( 139,143 ) 119,888

Deferred turnaround expenditures ( 5,602 ) ( 1,593 )

1 unchanged sentence

Accounts payable, other accrued liabilities, and operating lease ROU assets and liabilities 148,317 ( 54,351 )

Net cash provided by operating activities

Net cash provided by (used in) operating activities ( 30,737 ) 14,499

Cash flows from investing activities:

Acquisitions of businesses, net of cash acquired

Proceeds from purchase price settlement related to asset acquisition

Capital expenditures ( 8,178 ) ( 14,948 )

Other investing activities

Net cash used in investing activities

Proceeds from sale of assets 102,856 5

Net cash provided by (used in) investing activities 94,678 ( 14,943 )

Cash flows from financing activities:

Proceeds from sale of common stock, net of offering costs 87,401 —

Proceeds from borrowings 39,409 55,000

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Net borrowings (repayments) on deferred payment arrangements and receivable advances 44,542 ( 52,069 )

Payment of deferred loan costs

Purchase of common stock for retirement ( 1,321 ) —

Payments for debt extinguishment and commitment costs ( 887 ) —

Other financing activities, net 58 ( 1,660 )

Net cash provided by financing activities

Net increase in cash, cash equivalents, and restricted cash

Net cash provided by (used in) financing activities 82,483 ( 63,491 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 146,424 ( 63,935 )

Cash, cash equivalents, and restricted cash at beginning of period 70,309 128,428

2 unchanged sentences

Net cash received (paid) for:

Interest $ ( 17,373 ) $ ( 8,552 )

Non-cash investing and financing activities:

4 unchanged sentences

ROU assets terminated in exchange for release from operating lease liabilities — 7,738

Common stock issued for business combination

Common stock issued to repurchase convertible notes

See accompanying notes to the condensed consolidated financial statements.

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(in thousands)

Comprehensive

Additional Other

Common Stock Paid-In Accumulated Comprehensive Total

Shares Amount Capital Deficit Income Equity

Balance, December 31, 2019 53,254 $ 533 $ 715,069 $ ( 67,942 ) $ 582 $ 648,242

Issuance of common stock for business combination

Exercise of common stock warrants 351 3 3,933 — 3,936

Stock-based compensation 296 3 1,612 — — 1,615

Purchase of common stock for retirement ( 64 ) ( 1 ) ( 1,067 ) — — ( 1,068 )

Net loss — — — ( 222,337 ) — ( 222,337 )

Balance, March 31, 2020 53,837 $ 538 $ 719,547 $ ( 290,279 ) $ 582 $ 430,388

Issuance of common stock for convertible notes repurchase, net (1)

Issuance of common stock for employee stock purchase plan

Stock-based compensation

Purchase of common stock for retirement

Exercise of stock options

Balance, June 30, 2019

Stock-based compensation

Purchase of common stock for retirement

Exercise of stock options

Balance, September 30, 2019

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (continued)

(in thousands)

Comprehensive

Additional Other

Common Stock Paid-In Accumulated Comprehensive Total

Shares Amount Capital Deficit Income Equity

Balance, December 31, 2020 54,003 $ 540 $ 726,504 $ ( 477,028 ) $ ( 3,742 ) $ 246,274

Exercise of common stock warrants

Common stock offering, net of issuance costs 5,750 58 87,343 — — 87,401

Stock-based compensation 461 3 1,883 — — 1,886

Purchase of common stock for retirement ( 76 ) — ( 1,321 ) — — ( 1,321 )

Exercise of stock options 4 — 58 — — 58

Other comprehensive income — — — — 3,996 3,996

Net loss — — — ( 62,227 ) — ( 62,227 )

Balance, March 31, 2021 60,142 $ 601 $ 814,467 $ ( 539,255 ) $ 254 $ 276,067

Issuance of common stock for employee stock purchase plan

Stock-based compensation

Purchase of common stock for retirement

Balance, June 30, 2020

Stock-based compensation

Purchase of common stock for retirement

Balance, September 30, 2020

The issuance of common stock for the repurchase of a portion of our 5.00 % Convertible Senior Notes in the three months ended June 30, 2019 is presented net of a $ 12.3 million write-off associated with the equity component of the repurchased notes.

See accompanying notes to the condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

Note 1 — Overview

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Currently, we operate in three primary business segments:

1) Refining - We own and operate four refineries with total throughput capacity of over 200 thousand barrels per day in Hawaii, Wyoming, and Washington.

2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise through Hele, “76”, “ Cenex® ,” and “Zip Trip®” branded sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies that primarily transports and stores our crude oil and refined products for our refineries and transports refined products to our retail sites or third-party purchasers.

As of September 30, 2020 , we owned a 46.0 % equity investment in Laramie Energy, LLC (“ Laramie Energy ”).

1) Refining - We own and operate four refineries, including one idled refinery, with total operating throughput capacity of over 150 Mbpd in Hawaii, Wyoming, and Washington.

2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise through Hele and “76” branded sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

Through March 31, 2021, we completed the rebranding of all company-operated convenience stores in Washington and Idaho to “nomnom,” our proprietary brand.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies regions that primarily transports and stores our crude oil and refined products for our refineries and transports refined products to our retail sites or third-party purchasers.

As of March 31, 2021, we owned a 46.0 % equity investment in Laramie Energy, LLC (“Laramie Energy”).

Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.

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Actual amounts could differ from these estimates.

The worldwide spread and severity of a new coronavirus, referred to as COVID-19, and certain developments in the global crude oil markets have impacted our businesses, people, and operations.

We are actively responding to these ongoing matters and many uncertainties remain.

The worldwide spread and severity of the COVID-19 coronavirus and certain developments in the global crude oil markets have impacted our businesses, people, and operations.

We are continuing to actively respond to these ongoing matters and many uncertainties remain.

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

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We are exposed to credit losses primarily through our sales of refined products.

Credit limits and/or prepayment requirements are set based on such factors as the customer’s financial results, credit rating, payment history, and industry and are reviewed annually for customers with material credit limits.

Credit allowances are reviewed at least quarterly based on changes in the customer’s creditworthiness due to economic conditions, liquidity, and business strategy as publicly reported and through discussions between the customer and the Company.

We establish provisions for losses on trade receivables based on the estimated

Credit limits and/or prepayment requirements are set based on such factors as the customer’s financial results, credit rating, payment history, and industry, and

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

credit loss we expect to incur over the life of the receivable.

We did not have a material change in our allowances on trade receivables during the three and nine months ended September 30, 2020 or 2019 .

For the Interim Periods Ended March 31, 2021 and 2020

are reviewed annually for customers with material credit limits.

We establish provisions for losses on trade receivables based on the estimated credit loss we expect to incur over the life of the receivable.

We did not have a material change in our allowances on trade receivables during the three months ended March 31, 2021 or 2020.

Cost Classifications

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The following table summarizes depreciation and finance lease amortization expense excluded from each line item in our condensed consolidated statements of operations (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Cost of revenues $ 5,219 $ 4,628

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General and administrative expense 880 801

Benefit Plans

We maintain defined benefit pension plans covering eligible Wyoming Refining employees and the employees of U.S.

Oil covered by a collective bargaining agreement.

In March 2021, the Wyoming Refining plan was amended (the “Plan Amendment”) to freeze all future benefit accruals for hourly plan participants.

The Plan Amendment reduced the projected benefit obligation by $ 6.0 million.

We recorded a $ 2.0 million Gain on curtailment of pension obligation in our condensed consolidated statements of operations for the three months ended March 31, 2021, and an unrealized actuarial gain of $ 4.0 million as Other post-retirement benefits income (loss), net of tax, in our condensed consolidated statements of other comprehensive income for the three months ended March 31, 2021.

The projected benefit obligation estimate was determined based on the present value of projected future benefit payments similar to the evaluation done for the estimate as of December 31, 2021.

In determining the discount rate, we used pricing and yield information for high-quality corporate bonds that result in payments similar to the estimated distributions of benefits from our plans.

The weighted average discount rate used to determine benefit obligations increased from 2.65 % to 3.25 %, or 23 %, from December 31, 2020 to March 31, 2021.

The estimated rate of compensation increase remained 3.00 %.

Recent Accounting Pronouncements

There have been no developments to recent accounting pronouncements, including the expected dates of adoption and estimated effects on our financial condition, results of operations, and cash flows, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 , except for the following:

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

This ASU provides for optional expedients and allowable exceptions to GAAP to ease the potential burden in recognizing the effects of reference rate reform, especially in regards to the cessation of the London Interbank Offered Rate (“LIBOR”).

ASU 2020-04 is applicable to contract modifications that meet certain requirements and are entered into between March 12, 2020 and December 31, 2022.

We have several contracts that reference LIBOR, some of which terminate after LIBOR is anticipated to cease being reported in 2021.

We are currently reviewing the effect that the election of ASU 2020-04 would have on our financial condition, results of operations, and cash flows.

Accounting Principles Adopted

On January 1, 2020, we adopted ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , as amended by other ASUs issued since June 2016 (“ASU 2016-13”), using the modified retrospective transition method.

Under this optional transition method, information presented prior to January 1, 2020 has not been restated and continues to be reported under the accounting standards in effect for the period.

There was no adjustment to our opening retained earnings as a result of the adoption of this ASU.

ASU 2016-13 requires expected credit losses on financial instruments to be recorded over the estimated life of the financial instrument.

Prior to this ASU, the guidance required recording of credit losses when those losses were incurred.

ASU 2016-13 is applicable to credit losses and allowances on loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and certain other financial assets, but excludes derivative assets under FASB ASC Topic 815 “Derivatives and Hedging.” Our adoption of ASU 2016-13 did not have a material impact on our financial condition, results of operations, cash flows, or related disclosures.

On December 31, 2020, we adopted Accounting Standards Update (“ASU”) No.

2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans ( “ ASU 2018-14”), using the required retrospective transition method.

This ASU amended, added, and removed certain disclosure requirements under FASB ASC Topic 715 “Compensation — Retirement Benefits.” Our adoption of ASU 2018-14 did not have a material impact on our financial condition, results of operations, cash flows, or related disclosures.

On January 1, 2021, we adopted ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminated Step 2 from the current goodwill impairment test.

Under ASU 2017-04, an entity is no longer required to determine a goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination.

Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

This ASU changed the policy under which we perform our goodwill impairment assessments by eliminating Step 2 of the test.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes ( “ ASU 2019-12”).

We adopted this ASU under the prospective method and information that was presented prior to January 1, 2021 has not been restated and continues to be reported under the accounting standards in effect for that period.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

On January 1, 2020, we adopted ASU No.

2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ( “ ASU 2018-13”).

This ASU amended, added, and removed certain disclosure requirements under FASB ASC Topic 820 “Fair Value Measurement.” The adoption of ASU 2018-13 did not have a material impact on our financial condition, results of operations, cash flows, or related disclosures.

On January 1, 2020, we adopted ASU No.

2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract ( “ ASU 2018-15”), using the prospective method and information that was presented prior to January 1, 2020 has not been restated and continues to be reported under the accounting standards in effect for that period.

This ASU required entities to account for implementation costs incurred in a cloud computing agreement that is a service contract under the guidance in FASB ASC Topic 350, “Goodwill and Intangible Assets,” which results in a capitalized and amortizable intangible asset.

The adoption of ASU 2018-15 did not have a material impact on our financial condition, results of operations, or cash flows.

For the Interim Periods Ended March 31, 2021 and 2020

ASU simplified the accounting for income taxes by removing certain exceptions to general principles and clarified and amended guidance to improve consistency under FASB ASC Topic 740 “Income Taxes.” Our adoption of ASU 2019-12 did not have a material impact on our financial condition, results of operations, and cash flows.

On February 11, 2021, we elected to adopt ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) and ASU No.

2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”) following our execution of an amendment to the Washington Refinery Intermediation Agreement which included transition guidance on the interest rate of the Merrill Lynch Commodities, Inc.

(“MLC”) receivable advances (“MLC receivable advances”) to U.S.

Oil & Refining Co.

and certain affiliated entities (collectively, “U.S.

Oil”) to be based on another industry standard benchmark rate that will be effective upon the London Interbank Offered Rate’s (“LIBOR”) scheduled retirement at the end of 2021.

These ASUs provide for optional expedients and allowable exceptions to GAAP to ease the potential burden in recognizing the effects of reference rate reform, especially in regards to the cessation of LIBOR.

ASU 2020-04 and ASU 2021-01 are applicable to contract modifications that meet certain requirements and are entered into between March 12, 2020 and December 31, 2022.

Our adoption of ASUs 2020-04 and 2021-01 did not have a material impact on our financial condition, results of operations, and cash flows.

Note 3— Investment in Laramie Energy, LLC

As of September 30, 2020 , we had a 46.0 % ownership interest in Laramie Energy .

As of March 31, 2021, we had a 46.0 % ownership interest in Laramie Energy.

Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.

Laramie Energy has a $ 400 million revolving credit facility with a borrowing base currently set at $ 130.6 million that is secured by a lien on its natural gas and crude oil properties and related assets.

As of September 30, 2020 , the balance outstanding on the revolving credit facility was approximately $ 200.0 million .

As of March 31, 2021, the balance outstanding on the revolving credit facility was approximately $ 190.6 million.

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.

Under the terms of its credit facility, Laramie Energy is generally prohibited from making future cash distributions to its owners, including us.

On April 23, 2020, Laramie Energy extended the credit facility from its original maturity date of December 15, 2020 to December 15, 2021.

At March 31, 2020, we conducted an impairment evaluation of our investment in Laramie Energy because of (i) the global economic impact of the COVID-19 pandemic, (ii) an increase in the weighted-average cost of capital for energy companies, and (iii) continuing declines in natural gas prices through the first quarter of 2020.

Based on our evaluation, we determined that the estimated fair value of our investment in Laramie Energy was $ 1.9 million , compared to a carrying value of $ 47.2 million at March 31, 2020.

The fair value estimate was determined using a discounted cash flow analysis based on natural gas forward strip prices as of March 31, 2020 for the years 2020 and 2021 of the forecast, and a blend of forward strip pricing and third-party analyst pricing for the years 2022 through 2028.

Other significant inputs used in the discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the applicable discount rate.

As a result, we recorded an other-than temporary impairment charge of $ 45.3 million in Equity earnings (losses) from Laramie Energy, LLC on our condensed consolidated statement of operations for the three months ended March 31, 2020.

The change in our equity investment in Laramie Energy is as follows (in thousands):

Nine Months Ended September 30, 2020

Beginning balance

Equity earnings from Laramie Energy (1)

Impairment of our investment in Laramie Energy

Ending balance

______________________________________________________

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 .

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

Laramie Energy’s credit facility matures on December 15, 2021.

During the year ended December 31, 2020, Laramie Energy incurred losses that reduced the book value of our investment to zero , and as of December 31, 2020, we had discontinued the application of the equity method of accounting for our investment in Laramie Energy.

As such, the balance of our investment in Laramie Energy was zero as of March 31, 2021 and December 31, 2020.

Summarized financial information for Laramie Energy is as follows (in thousands):

September 30, 2020

December 31, 2019

March 31, 2021 December 31, 2020

Current assets $ 88,217 $ 34,573

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Non-current liabilities 44,279 93,193

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Natural gas and oil revenues $ 82,348 $ 34,713

Loss from operations

Laramie Energy ’s net loss for the three and nine months ended September 30, 2020 includes $ 9.0 million and $ 28.3 million of depreciation, depletion, and amortization (“DD&A”) and $ 5.9 million and $ 7.6 million of unrealized losses on derivative instruments, respectively.

Laramie Energy ’s net loss for the three and nine months ended September 30, 2019 includes $ 20.7 million and $ 63.1 million of DD&A and $ 4.3 million of unrealized losses and $ 6.8 million of unrealized gains on derivative instruments, respectively.

Note 4 — Acquisitions

Washington Acquisition

On November 26, 2018 , we entered into a Purchase and Sale Agreement to acquire U.S.

Oil & Refining Co.

and certain affiliated entities (collectively, “ U.S.

Oil ”), a privately-held downstream business (the “ Washington Acquisition ”).

The Washington Acquisition included a 42 Mbpd refinery, a marine terminal, a unit train-capable rail loading terminal, and 2.9 MMbbls of refined product and crude oil storage.

The refinery and associated logistics system are strategically located in Tacoma, Washington, and currently serve the Pacific Northwest market.

On January 11, 2019 , we completed the Washington Acquisition for a total purchase price of $ 326.5 million , including acquired working capital, consisting of cash consideration of $ 289.5 million and approximately 2.4 million shares of Par’s common stock with a fair value of $ 37.0 million issued to the seller of U.S.

The cash consideration was funded in part through cash on hand, proceeds from borrowings under a new term loan facility entered into with Goldman Sachs Bank USA, as administrative agent, of $ 250.0 million (the “ Term Loan B ”), and proceeds from borrowings under a term loan from the Bank of Hawaii of $ 45.0 million (the “ Par Pacific Term Loan ”).

Please read Note 10—Debt for further information on the Term Loan B and Par Pacific Term Loan .

In January 2019, we incurred $ 5.4 million of commitment fees associated with the funding of the Washington Acquisition .

Such commitment fees are presented as Debt extinguishment and commitment costs on our condensed consolidated statements of operations for the nine months ended September 30, 2019.

In connection with the consummation of the Washington Acquisition , we assumed the Washington Refinery Intermediation Agreement with Merrill Lynch Commodities, Inc.

(“MLC”) that provides a structured financing arrangement based on U.S.

Oil ’s crude oil and refined products inventories and associated accounts receivable.

Please read Note 9—Inventory Financing Agreements for further information on the Washington Refinery Intermediation Agreement .

We accounted for the Washington Acquisition as a business combination whereby the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition.

Goodwill recognized in the transaction was attributable to opportunities expected to arise from combining our operations with those of the Washington refinery and the utilization of our net operating loss carryforwards, as well as other intangible assets that do not qualify for separate recognition.

Goodwill recognized as a result of the Washington Acquisition is not expected to be deductible for income tax reporting purposes.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

A summary of the fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Accounts receivable

Prepaid and other assets

Property, plant, and equipment

Operating lease right-of-use assets

Total assets (2)

Obligations under inventory financing agreements

Accounts payable

Current operating lease obligations

Other current liabilities

Long-term operating lease obligations

Deferred tax liability

Other non-current liabilities

Total liabilities

______________________________________________

We allocated $ 24.7 million and $ 17.8 million of goodwill to our refining and logistics segments, respectively.

We allocated $ 403.9 million and $ 268.5 million of total assets to our refining and logistics segments, respectively.

As of December 31, 2019, we finalized the Washington Acquisition purchase price allocation.

We incurred $ 2.2 million of acquisition costs related to the Washington Acquisition for the nine months ended September 30, 2019.

These costs are included in Acquisition and integration costs on our condensed consolidated statement of operations.

The results of operations of U.S.

Oil were included in our results beginning on January 11, 2019 .

For the three and nine months ended September 30, 2019, our results of operations included revenues of $ 300.0 million and $ 855.6 million and income before income taxes of $ 29.4 million and $ 49.5 million related to U.S.

Oil , respectively.

The following unaudited pro forma financial information presents our consolidated revenues and net income (loss) as if the Washington Acquisition had been completed on January 1, 2018 (in thousands except per share information):

Nine Months Ended September 30, 2019

Loss per share

These pro forma results were based on estimates and assumptions that we believe are reasonable.

They are not necessarily indicative of our consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during the periods presented.

The pro forma results for the nine months ended September 30, 2019 include adjustments to remeasure U.S.

Oil ’s LIFO inventory reserve as if the Washington Acquisition had been completed on January 1, 2018, record interest and other debt extinguishment costs related to issuance of the Term Loan B and Par Pacific Term Loan , and to adjust U.S.

Oil ’s historical depreciation expense as a result of the fair value adjustment to Property, plant, and

Income from operations 47,209 1,369

Net income 40,451 574

Laramie Energy’s net income includes (in thousands):

Three Months Ended March 31,

Depreciation, depletion, and amortization $ 6,984 $ 9,279

Unrealized (gain) loss on derivative instruments ( 549 ) ( 2,414 )

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

equipment, net.

Additionally, the pro forma results include the elimination of the $ 67.0 million tax benefit that was recognized by the Company in connection with the Washington Acquisition .

For the Interim Periods Ended March 31, 2021 and 2020

Note 4— Revenue Recognition

As of September 30, 2020 and December 31, 2019 , receivables from contracts with customers were $ 110.2 million and $ 214.5 million , respectively.

As of March 31, 2021 and December 31, 2020, receivables from contracts with customers were $ 152.0 million and $ 104.9 million, respectively.

Our refining segment recognizes deferred revenues when cash payments are received in advance of delivery of products to the customer.

Deferred revenue was $ 6.0 million and $ 7.9 million as of September 30, 2020 and December 31, 2019 , respectively.

Deferred revenue was $ 7.0 million and $ 4.1 million as of March 31, 2021 and December 31, 2020, respectively.

We have elected to apply a practical expedient not to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected duration of less than one year and (ii) contracts where the variable consideration has been allocated entirely to our unsatisfied performance obligation.

The following table provides information about disaggregated revenue by major product line and includes a reconciliation of the disaggregated revenues to total segment revenues (in thousands):

Three Months Ended September 30, 2020

Product or service:

Distillates (1)

Other refined products (2)

Transportation and terminalling services

Other revenue

Total segment revenues (3)

Three Months Ended September 30, 2019

Product or service:

Distillates (1)

Other refined products (2)

Transportation and terminalling services

Other revenue

Total segment revenues (3)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021 Refining Logistics Retail

Product or service:

Gasoline $ 277,579 $ — $ 63,822

Distillates (1) 350,799 — 5,068

Other refined products (2) 209,780 — —

Merchandise — — 21,286

Transportation and terminalling services — 41,309 —

1 unchanged sentence

Total segment revenues (3) $ 838,755 $ 41,309 $ 91,188

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020 Refining Logistics Retail

Product or service:

Gasoline $ 286,598 $ — $ 72,847

Distillates (1) 583,708 — 8,450

Other refined products (2) 264,167 — —

Merchandise — — 21,029

Transportation and terminalling services — 59,150 —

6 unchanged sentences

Note 5— Inventories

Inventories at September 30, 2020 consisted of the following (in thousands):

Titled Inventory

Supply and Offtake Agreements (1)

Inventories at March 31, 2021 consisted of the following (in thousands):

Titled Inventory Supply and Offtake Agreements (1) Total

Crude oil and feedstocks $ 128,343 $ 119,747 $ 248,090

1 unchanged sentence

Warehouse stock and other (2) 79,914 — 79,914

Total $ 339,642 $ 239,564 $ 579,206

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

Inventories at December 31, 2020 consisted of the following (in thousands):

Titled Inventory

Supply and Offtake Agreements (1)

Titled Inventory Supply and Offtake Agreements (1)

Crude oil and feedstocks $ 88,307 $ 75,340 $ 163,647

1 unchanged sentence

Warehouse stock and other (2) 70,461 — 70,461

Total $ 270,914 $ 158,941 $ 429,855

________________________________________________________

(1) Please read Note 7—Inventory Financing Agreements for further information.

Includes $ 20.8 million and $ 19.1 million of RINs and environmental credits, reported at cost, as of September 30, 2020 and December 31, 2019 , respectively.

RINs and environmental obligations of $ 87.1 million and $ 22.8 million , reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019 , respectively.

As of September 30, 2020 , there was a $ 22.3 million reserve for the lower of cost or net realizable value of inventory.

As of December 31, 2019 , there was no reserve for the lower of cost or net realizable value of inventory.

Our last-in, first-out (“LIFO”) inventories, net of the lower of cost or net realizable reserve, were equal to current cost as of September 30, 2020 .

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

(2) Includes $ 36.3 million and $ 26.7 million of RINs and environmental credits, reported at cost, as of March 31, 2021 and December 31, 2020, respectively.

RINs and environmental obligations of $ 260.0 million and $ 150.5 million, reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021, we had no reserve for the lower of cost or net realizable value of inventory.

As of December 31, 2020, there was a $ 10.6 million reserve for the lower of cost or net realizable value of inventory.

As of March 31, 2021, the excess of current replacement cost over the last-in, first-out (“LIFO”) inventory carrying value at the Washington refinery was approximately $ 10.8 million.

Our LIFO inventories, net of the lower of cost or net realizable reserve, were equal to current cost as of December 31, 2020.

Note 6— Prepaid and Other Current Assets

Prepaid and other current assets at September 30, 2020 and December 31, 2019 consisted of the following (in thousands):

September 30, 2020

December 31, 2019

Advances to suppliers

Prepaid and other current assets at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):

March 31, 2021 December 31, 2020

Collateral posted with broker for derivative instruments (1) $ 2,376 $ 1,489

1 unchanged sentence

Derivative assets 6,403 1,346

Other 6,095 6,881

Total $ 24,913 $ 24,648

_________________________________________________________

1 unchanged sentence

Please read Note 10—Derivatives for further information.

Note 8 — Goodwill

During the nine months ended September 30, 2020 , the change in the carrying amount of goodwill was as follows (in thousands):

Balance at December 31, 2019

Impairment expense

Balance at September 30, 2020

At March 31, 2020, we performed a quantitative goodwill impairment test of all of our reporting units due to (i) the global economic impact of the COVID-19 pandemic and (ii) a steep decline in current and forecasted prices and demand for crude oil and refined products.

As part of our quantitative impairment test, we compared the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit.

In assessing the fair value of the reporting units, we primarily utilized a market approach based on observable multiples for comparable companies within our industry.

Our refining reporting units in Hawaii and Washington were fully impaired and the goodwill associated with our retail reporting unit in Washington and Idaho was partially impaired, resulting in a charge of $ 67.9 million in our condensed consolidated statement of operations for the nine months ended September 30, 2020 .

The goodwill impairment expense was allocated to the Refining segment ( $ 38.1 million ) and to the Retail segment ( $ 29.8 million ).

Note 7— Inventory Financing Agreements

The following table summarizes our outstanding obligations under our inventory financing agreements (in thousands):

March 31, 2021 December 31, 2020

Supply and Offtake Agreements

On June 1, 2015, we entered into several agreements with J.

$ 466,071 $ 312,185

Washington Refinery Intermediation Agreement 126,550 111,501

Obligations under inventory financing agreements $ 592,621 $ 423,686

Supply and Offtake Agreements

We have several agreements with J.

Aron & Company LLC (“J.

Aron”) to support the operations of our Par East Hawaii refinery (the “Supply and Offtake Agreements”).

The Supply and Offtake Agreements mature on May 31, 2021 and have a one -year extension option upon mutual agreement of the parties.

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

Under the Supply and Offtake Agreements, J.

Aron may enter into agreements with third parties whereby J.

Aron will remit payments to these third parties for refinery procurement contracts for which we will become immediately obligated to reimburse J.

As of September 30, 2020 , we had no obligations due to J.

Aron”) to support our Hawaii refining operations (the “Supply and Offtake Agreements”).

On May 4, 2021, we amended the Supply and Offtake Agreements and extended the term expiry date from May 31, 2021, to June 30, 2021.

We expect to finalize a new multi-year agreement during the second quarter of 2021.

As of March 31, 2021, we had no obligations due to J.

Aron under this contractual undertakings agreement.

On December 5, 2018 , we amended the Supply and Offtake Agreements to account for additional processing capacity to be provided by the Par West Hawaii refinery.

The 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 ”), our wholly owned subsidiary, in limited and restricted circumstances.

During the term of the Supply and Offtake Agreements, J.

Aron and we will identify mutually acceptable contracts for the purchase of crude oil from third parties.

Per the Supply and Offtake Agreements, J.

Aron will provide up to 150 Mbpd of crude oil to our Hawaii refineries .

Additionally, we agreed to sell and J.

Aron agreed to buy, at market prices, refined products produced at our Hawaii refineries .

We will then repurchase the refined products from J.

Aron prior to selling the refined products to our retail operations or to third parties.

The agreements also provide for the lease of crude oil and certain refined product storage

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

facilities to J.

Following the expiration or termination of the Supply and Offtake Agreements, we are obligated to purchase the crude oil and refined product inventories then-owned by J.

Aron and located at the leased storage facilities at then-current market prices.

Though title to the crude oil and certain refined product inventories resides with J.

Aron, the Supply and Offtake Agreements are accounted for similar to a product financing arrangement;

therefore, the crude oil and refined products inventories will continue to be included in our condensed consolidated balance sheets until processed and sold to a third party.

Each reporting period, we record a liability in an amount equal to the amount we expect to pay to repurchase the inventory held by J.

Aron based on current market prices.

For the three and nine months ended September 30, 2020 , we incurred approximately $ 2.2 million and $ 8.9 million of inventory intermediation fees related to the Supply and Offtake Agreements, respectively, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2019 , we incurred approximately $ 9.1 million and $ 24.7 million of inventory intermediation fees related to the Supply and Offtake Agreements, respectively.

For the three and nine months ended September 30, 2020 , Interest expense and financing costs, net , on our condensed consolidated statements of operations includes approximately $ 0.4 million and $ 2.5 million of expenses related to the Supply and Offtake Agreements, respectively.

For the three and nine months ended September 30, 2019 , Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $ 1.3 million and $ 4.3 million of expenses related to the Supply and Offtake Agreements, respectively.

The Supply and Offtake Agreements also include a deferred payment arrangement (“Deferred Payment Arrangement”) whereby we can defer payments owed under the agreements up to the lesser of $ 165 million or 85 % of the eligible accounts receivable and inventory.

1 unchanged sentence

Aron a deferral arrangement fee of $ 1.3 million.

The deferred amounts under the Deferred Payment Arrangement bear interest at a rate equal to three -month LIBOR plus 3.50 % per annum.

We also agreed to pay a deferred payment availability fee equal to 0.75 % of the unused capacity under the Deferred Payment Arrangement.

Amounts outstanding under the Deferred Payment Arrangement are included in Obligations under inventory financing agreements on our condensed consolidated balance sheets.

Changes in the amount outstanding under the Deferred Payment Arrangement are included within Cash flows from financing activities on the condensed consolidated statements of cash flows.

As of September 30, 2020 and December 31, 2019 , the capacity of the Deferred Payment Arrangement was $ 66.5 million and $ 155.5 million , respectively.

As of September 30, 2020 and December 31, 2019 , we had $ 51.9 million and $ 97.5 million outstanding, respectively, under the Deferred Payment Arrangements.

As of March 31, 2021 and December 31, 2020, the capacity of the Deferred Payment Arrangement was

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

$ 102.0 million and $ 80.1 million, respectively.

As of March 31, 2021 and December 31, 2020, we had $ 96.2 million and $ 78.6 million outstanding, respectively, under the Deferred Payment Arrangement.

Under the Supply and Offtake Agreements, we pay or receive certain fees from J.

4 unchanged sentences

Aron was recorded as a reduction to our Obligations under inventory financing agreements as allowed under the Supply and Offtake Agreements.

As of September 30, 2020 and December 31, 2019 , the receivable was $ 0.8 million and $ 0.5 million , respectively.

As of March 31, 2021 and December 31, 2020, the receivable was $ 0.2 million and $ 0.5 million, respectively.

Washington Refinery Intermediation Agreement

In connection with the consummation of the Washington Acquisition , we became a party to the Washington Refinery Intermediation Agreement with MLC that provides a structured financing arrangement based on U.S.

The Washington Refinery Intermediation Agreement with MLC provides a structured financing arrangement based on U.S.

Oil’s crude oil and refined products inventories and associated accounts receivable.

Under this arrangement, U.S.

Oil purchases crude oil supplied from third-party suppliers and MLC provides credit support for such 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 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 the same, exclusively to MLC .

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 .

We are evaluating options to extend or replace the Washington Refinery Intermediation Agreement .

During the remaining term of the Washington Refinery Intermediation Agreement , MLC will make receivable advances to U.S.

Oil based on an advance rate of 95 % of eligible receivables, up to a total receivables advance maximum of $ 90.0 million (the “ MLC receivable advances ”), and additional advances based on crude oil and products inventories.

Changes in the amount outstanding under the MLC receivable advances are included within Cash flows from financing activities on the condensed consolidated statements of cash flows.

The MLC receivable advances bear interest at a rate equal to three -month LIBOR plus 3.25 % per annum.

We also agreed to pay an availability fee equal to 1.50 % of the unused capacity under the MLC receivable advances .

As part of the November 1, 2019 amendment, the availability fee was amended to equal 0.75 % of the unused capacity

On February 11, 2021, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through March 31, 2022.

This amendment also includes transition guidance on the interest rate of the MLC receivable advances to be based on another industry standard benchmark rate that will be effective upon LIBOR’s scheduled retirement at the end of 2021.

As of March 31, 2021 and December 31, 2020, our outstanding balance under the MLC receivable advances was equal to our borrowing base of $ 68.0 million and $ 41.1 million, respectively.

Additionally, as of March 31, 2021 and December 31, 2020, we had approximately $ 95.8 million and $ 93.6 million in letters of credit outstanding through MLC’s credit support, respectively.

The following table summarizes the inventory intermediation fees, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations, and Interest expense and financing costs, net related to the intermediation agreements (in thousands):

Three Months Ended March 31,

Net fees and expenses:

Supply and Offtake Agreements

Inventory intermediation fees $ 3,770 $ 6,870

Interest expense and financing costs, net 846 1,349

Washington Refinery Intermediation Agreement

Inventory intermediation fees $ 971 $ 1,107

Interest expense and financing costs, net 977 997

The Supply and Offtake Agreements and the Washington Refinery Intermediation Agreement also provide us with the ability to economically hedge price risk on our inventories and crude oil purchases.

Please read Note 10—Derivatives for further information.

Note 8— Other Accrued Liabilities

Other accrued liabilities at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):

March 31, 2021 December 31, 2020

Accrued payroll and other employee benefits $ 15,543 $ 14,916

Gross environmental credit obligations (1) 259,973 150,482

Other 32,475 34,230

Total $ 307,991 $ 199,628

___________________________________________________

(1) Gross environmental credit obligations are stated at market as of March 31, 2021 and December 31, 2020.

A portion of these obligations are expected to be settled with our RINs assets and other environmental credits, which are presented as Inventories on our condensed consolidated balance sheet and are stated at the lower of cost and net realizable value.

The carrying costs of these assets were $ 36.3 million and $ 26.7 million as of March 31, 2021 and December 31, 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

under the MLC receivable advances.

As of September 30, 2020 and December 31, 2019 , our outstanding balance under the MLC receivable advances was equal to our borrowing base of $ 48.5 million and $ 63.8 million , respectively.

Additionally, as of September 30, 2020 and December 31, 2019 , we had approximately $ 71.3 million and $ 127.2 million in letters of credit outstanding through MLC ’s credit support, respectively.

For the three and nine months ended September 30, 2020 , we incurred approximately $ 1.0 million and $ 3.1 million of inventory intermediation fees, respectively, related to the Washington Refinery Intermediation Agreement , which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2019 , we incurred approximately $ 0.9 million and $ 2.7 million of inventory intermediation fees related to the Washington Refinery Intermediation Agreement , respectively.

For the three and nine months ended September 30, 2020 , Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $ 0.5 million and $ 2.2 million of expenses related to the Washington Refinery Intermediation Agreement , respectively.

For the three and nine months ended September 30, 2019 , Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $ 2.0 million and $ 4.8 million of expenses related to the Washington Refinery Intermediation Agreement , respectively.

The Supply and Offtake Agreements and the Washington Refinery Intermediation Agreement also provide us with the ability to economically hedge price risk on our inventories and crude oil purchases.

Please read Note 11—Derivatives for further information.

Note 10 — Debt

For the Interim Periods Ended March 31, 2021 and 2020

The following table summarizes our outstanding debt (in thousands):

September 30, 2020

December 31, 2019

March 31, 2021 December 31, 2020

5.00 % Convertible Senior Notes due 2021

$ 48,665 $ 48,665

ABL Credit Facility due 2022 — —

Retail Property Term Loan due 2024 — 42,494

7.75 % Senior Secured Notes due 2025

ABL Credit Facility

Mid Pac Term Loan

Retail Property Term Loan

PHL Term Loan

298,000 300,000

Term Loan B due 2026 225,000 228,125

12.875 % Senior Secured Notes due 2026

105,000 105,000

Mid Pac Term Loan due 2028 — 1,399

PHL Term Loan — 5,840

Principal amount of long-term debt 676,665 731,523

1 unchanged sentence

Total debt, net of unamortized discount and deferred financing costs 656,001 708,593

current maturities

current maturities, net of unamortized discount and deferred financing costs ( 58,816 ) ( 59,933 )

Long-term debt, net of current maturities $ 597,185 $ 648,660

As of September 30, 2020 and December 31, 2019 , we had $ 0.1 million and $ 0.2 million in letters of credit outstanding under the ABL Credit Facility , respectively, and $ 3.6 million in cash-collateralized letters of credit and surety bonds outstanding.

Under the ABL Credit Facility , the indentures governing the 7.75% Senior Secured Notes and 12.875% Senior Secured Notes , and the Term Loan B Facility , our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

7.75% Senior Secured Notes Due 2025

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

(collectively, the “Issuers”), both our wholly owned subsidiaries, completed the issuance and sale of $ 300 million in aggregate principal amount of 7.75% 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 $ 289.2 million (net of financing costs and original issue discount of 1 % ) from the sale were used to repay our previous credit facilities and the forward sale agreement with J.

Aron and for general corporate purposes.

The 7.75% Senior Secured Notes bear interest at a rate of 7.750 % per year (payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2018) and will mature on December 15, 2025 .

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

As of March 31, 2021 and December 31, 2020, we had $ 12.9 million and $ 1.7 million in letters of credit outstanding under the ABL Credit Facility, respectively, and $ 3.6 million in cash-collateralized letters of credit and surety bonds outstanding.

Under the ABL Credit Facility, the indentures governing the 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, and the term loan facility with Goldman Sachs Bank USA (the “Term Loan B Facility”), our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

5.00% Convertible Senior Notes Due 2021

As of March 31, 2021, the outstanding principal amount of the 5.00% Convertible Senior Notes was $ 48.7 million, the unamortized discount and deferred financing cost was $ 0.7 million, and the carrying amount of the liability component was $ 48.0 million.

ABL Credit Facility

On December 21, 2017 , in connection with the issuance of the 7.75% Senior Secured Notes , Par Petroleum, LLC , Par Hawaii, LLC (“PHL,” formerly known as Par Hawaii, Inc.

and includes the assets previously owned by the dissolved entities Mid Pac Petroleum, LLC and HIE Retail, LLC), Hermes Consolidated, LLC, and Wyoming Pipeline Company (collectively, the “ ABL Borrowers ”), entered into a Loan and Security Agreement dated as of December 21, 2017 (the “ ABL Credit Facility ”) 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.

As of September 30, 2020 , the ABL Revolver had no outstanding balance and a borrowing base of approximately $ 48.8 million .

5.00% Convertible Senior Notes Due 2021

As of September 30, 2020 , the outstanding principal amount of the 5.00% Convertible Senior Notes was $ 48.7 million , the unamortized discount and deferred financing cost was $ 2.0 million , and the carrying amount of the liability component was $ 46.6 million .

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 .

We recognized a loss of approximately $ 3.7 million related to the May and June extinguishments of the repurchased 5.00% Convertible Senior Notes in the nine months ended September 30, 2019.

Term Loan B Facility

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

entered into a new term loan facility with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto from time to time (the “ Term Loan B Facility ”), pursuant to which the lenders made the Term Loan B to the borrowers in the principal amount of $ 250.0 million on the closing date.

The net proceeds from Term Loan B totaled $ 232.0 million after deducting the original issue discount, deferred financing costs, and commitment and other fees and were used to finance the Washington Acquisition .

Loans under the Term Loan B bear interest at a rate per annum equal to Adjusted LIBOR (as defined in the Term Loan B Facility ) plus an applicable margin of 6.75 % or at a rate per annum equal to Alternate Base Rate (as defined in the Term Loan B Facility ) plus an applicable margin of 5.75 % .

In addition to the quarterly interest payments, Term Loan B requires quarterly principal payments of $ 3.1 million .

Term Loan B matures on January 11, 2026 .

Par Pacific Term Loan Agreement

On January 9, 2019 , we entered into a loan agreement (the “ Par Pacific Term Loan Agreement ”) with Bank of Hawaii (“BOH”), pursuant to which BOH made a loan to the company in the principal amount of $ 45.0 million , the net proceeds of which were used to finance the Washington Acquisition .

During the term of the Par Pacific Term Loan , the interest payments were due monthly and were based on the outstanding principal balance multiplied by a floating rate equal to 3.50 % above the applicable LIBOR rate (as defined in the Par Pacific Term Loan Agreement ) subject to an increased default interest rate in the event of a default.

The Par Pacific Term Loan Agreement was originally scheduled to mature on July 9, 2019 .

We terminated and repaid all amounts outstanding under the Par Pacific Term Loan Agreement on March 29, 2019 using the proceeds of the Retail Property Term Loan (as defined below).

We recognized approximately $ 0.1 million of debt extinguishment costs related to the unamortized deferred financing costs associated with the Par Pacific Term Loan Agreement in the nine months ended September 30, 2019.

As of March 31, 2021, the ABL Revolver had no outstanding revolving loans, $ 12.9 million in letters of credit outstanding, and a borrowing base of approximately $ 70.5 million.

Retail Property Term Loan

On March 29, 2019 , Par Pacific Hawaii Property Company, LLC (“ Par Property LLC ”), our wholly owned subsidiary, entered into a term loan agreement (the “ Retail Property Term Loan ”) with BOH, which provided a term loan in the principal amount of $ 45.0 million .

The proceeds from the Retail Property Term Loan were used to repay and terminate the Par Pacific Term Loan Agreement .

The Retail Property Term Loan bears interest based on a floating rate equal to the applicable LIBOR for a one-month interest period plus 1.5 % .

Principal and interest payments are payable monthly based on a 20 -year amortization schedule, principal prepayments are allowed subject to applicable prepayment penalties, and the remaining unpaid principal, plus any unpaid interest or other charges, is due on April 1, 2024 , the maturity date of the Retail Property Term Loan .

On March 29, 2019, Par Pacific Hawaii Property Company, LLC (“Par Property LLC”), our wholly owned subsidiary, entered into a term loan agreement (the “Retail Property Term Loan”) with Bank of Hawaii (“BOH”), which provided a term loan in the principal amount of $ 45.0 million.

The proceeds from the Retail Property Term Loan were used to repay and terminate the loan agreement previously entered into on January 9, 2019 with BOH (the “Par Pacific Term Loan Agreement”).

The Retail Property Term Loan bore interest based on a floating rate equal to the applicable LIBOR for a one-month interest period plus 1.5 %.

Principal and interest payments were payable monthly based on a 20 -year amortization schedule, principal prepayments were allowed subject to applicable prepayment penalties, and the remaining unpaid principal, plus any unpaid interest or other charges, was due on April 1, 2024, the maturity date of the Retail Property Term Loan.

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

We recognized approximately $ 1.4 million of debt extinguishment costs in the three months ended March 31, 2021 related to our prepayment of the loan principal.

7.75% Senior Secured Notes Due 2025

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

(collectively, the “Issuers”), both our wholly owned subsidiaries, completed the issuance and sale of $ 300 million in aggregate principal amount of 7.75% Senior

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

Secured Notes in a private placement under Rule 144A and Regulation S of the Securities Act of 1933, as amended (the “Securities Act”).

The net proceeds of $ 289.2 million (net of financing costs and original issue discount of 1 %) from the sale were used to repay certain previous credit facilities and a forward sale agreement with J.

Aron and for general corporate purposes.

On March 23, 2021, we repurchased and cancelled $ 2 million in aggregate principal amount of the 7.75% Senior Secured Notes .

As of March 31, 2021, the 7.75% Senior Secured Notes had an outstanding principal balance of $ 298.0 million.

Mid Pac Term Loan

On September 27, 2018, Par Hawaii, LLC (“PHL”, formerly known as Par Hawaii, Inc.

and 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, F.S.B., which provided a term loan of up to $ 1.5 million.

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

The Mid Pac Term Loan was scheduled to mature on October 18, 2028.

The Mid Pac Term Loan was payable monthly, bore interest at an annual rate of 4.375 %, was secured by a first-priority lien on the real property purchased with the funds, including leases and rents on the property and the property’s fixed assets and fixtures, and was guaranteed by Par Petroleum, LLC.

On March 12, 2021, we terminated and repaid all amounts outstanding under the Mid Pac Term Loan.

PHL Term Loan

1 unchanged sentence

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

The PHL Term Loan bears interest at a fixed rate of 2.750 % per annum.

Principal and interest payments are payable monthly based on a 25 -year amortization schedule, principal prepayments are allowed with no prepayment charge, and the remaining principal, plus any unpaid interest or other charges, is due on April 15, 2030 , the maturity date of the PHL Term Loan .

The PHL Term Loan is guaranteed by Par Petroleum, LLC.

12.875% Senior Secured Notes Due 2026

On June 5, 2020 , the Issuers 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.

The 12.875% Senior Secured Notes bear interest at an annual rate of 12.875 % per year (payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2021) and will mature on January 15, 2026 .

The indenture for the 12.875% Senior Secured Notes also allows for optional early redemptions, some of which require the Issuers to pay a premium and some of which have certain other restrictions related to timing and the maximum redeemable principal amount.

The obligations of the borrowers under the 12.875% Senior Secured Notes are guaranteed by the Issuers’ existing and future direct or indirect domestic subsidiaries (other than Par Petroleum Finance Corp.) and by Par Pacific Holdings, Inc.

, with respect to principal and interest only.

The 12.875% Senior Secured Notes are secured on a pari passu basis by first priority liens (subject to the relative priority of permitted liens) on substantially all of the property and assets of the Issuers and the subsidiary guarantors, but excluding certain assets which are collateral under the ABL Credit Facility , the Supply and Offtake Agreements, and the Washington Refinery Intermediation Agreement .

The PHL Term Loan bore interest at a fixed rate of 2.750 % per annum.

Principal and interest payments were payable monthly based on a 25 -year amortization schedule, principal prepayments were allowed with no prepayment charge, and the remaining principal, plus any unpaid interest or other charges, was due on April 15, 2030, the maturity date of the PHL Term Loan.

The PHL Term Loan was guaranteed by Par Petroleum, LLC.

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

Cross Default Provisions

Included within each of our debt agreements are affirmative and negative covenants, and customary cross default provisions, that require the repayment of amounts outstanding on demand unless the triggering payment default or acceleration is remedied, rescinded, or waived.

As of September 30, 2020 , we were in compliance with all of our debt instruments.

As of March 31, 2021, we were in compliance with all of our debt instruments.

In connection with our shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission (“SEC”) on February 6, 2019 and declared effective on February 15, 2019 (“Registration Statement”), we may sell non-convertible debt securities and other securities in one or more offerings with an aggregate initial offering price of up to $ 750.0 million.

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Commodity Derivatives

We utilize commodity derivative contracts to manage our price exposure in our inventory positions, future purchases of crude oil, future purchases and sales of refined products, and crude oil consumption in our refining process.

The derivative contracts that we execute to manage our price risk include exchange traded futures, options, and over-the-counter (“OTC”) swaps.

Our futures, options, and OTC swaps are marked-to-market and changes in the fair value of these contracts are recognized within Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

We are obligated to repurchase the crude oil and refined products from J.

Aron at the termination of the Supply and Offtake Agreements.

Our Washington Refinery Intermediation Agreement contains forward purchase obligations for certain volumes of crude oil and refined products that are required to be settled at market prices on a monthly basis.

We have determined that these obligations under the Supply and Offtake Agreements and Washington Refinery Intermediation Agreement contain embedded derivatives.

As such, we have accounted for these embedded derivatives at fair value with changes in the fair value recorded in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

We have entered into forward purchase contracts for crude oil and forward purchases and sales contracts of refined products.

We elect the normal purchases normal sales (“NPNS”) exception for all forward contracts that meet the definition of a derivative and are not expected to net settle.

Any gains and losses with respect to these forward contracts designated as NPNS are not reflected in earnings until the delivery occurs.

Our condensed consolidated balance sheets present derivative assets and liabilities on a net basis.

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Our cash margin that is required as collateral deposits cannot be offset against the fair value of open contracts except in the event of default.

Our open futures and OTC swaps expire at various dates through December 2020 .

At September 30, 2020 , our open commodity derivative contracts represented (in thousands of barrels):

Contract type

At September 30, 2020 , we also had option collars of 75 thousand barrels of crude oil per month that expire in December 2020 and 25 thousand barrels of crude oil per month that commence in January 2021 and expire in December 2021 to economically hedge our internally consumed fuel at our Hawaii refineries .

These option collars have a weighted-average strike price ranging from a floor of $ 48.77 per barrel to a ceiling of $ 65.00 per barrel and from a floor of $ 36.50 per barrel to a ceiling of $ 60.00 per barrel, respectively.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

Our open futures and over-the-counter (“OTC”) swaps at March 31, 2021 will settle by October 2021.

At March 31, 2021, our open commodity derivative contracts represented (in thousands of barrels):

Contract type Purchases Sales Net

Futures 500 ( 250 ) 250

Swaps 2,525 ( 3,025 ) ( 500 )

Total 3,025 ( 3,275 ) ( 250 )

At March 31, 2021, we also had option collars of 25 thousand barrels of crude oil per month that economically hedge our internally consumed fuel at our Hawaii refineries.

These option collars have a weighted-average strike price ranging from a floor of $ 36.50 per barrel to a ceiling of $ 60.00 per barrel and expire in December 2021.

Interest Rate Derivatives

We are exposed to interest rate volatility in our ABL Revolver , Term Loan B Facility, Retail Property Term Loan , Supply and Offtake Agreements, and Washington Refinery Intermediation Agreement .

We are exposed to interest rate volatility in our ABL Revolver, Term Loan B Facility, Supply and Offtake Agreements, and Washington Refinery Intermediation Agreement.

We may utilize interest rate swaps to manage our interest rate risk.

As of September 30, 2020 , we had entered into an interest rate swap at an average fixed rate of 3.91 % in exchange for the floating interest rate and on the notional amounts due under the Retail Property Term Loan .

This swap expires on April 1, 2024 , the maturity date of the Retail Property Term Loan .

As of December 31, 2020, we had entered into an interest rate swap at an average fixed rate of 3.91 % in exchange for the floating interest rate on the notional amounts due under the Retail Property Term Loan.

This swap was set to expire on April 1, 2024, the maturity date of the Retail Property Term Loan.

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

Our 5.00% Convertible Senior Notes include a redemption option and a related make-whole premium which represent an embedded derivative that is not clearly and closely related to the 5.00% Convertible Senior Notes.

As such, we have accounted for this embedded derivative at fair value with changes in the fair value recorded in Interest expense and financing costs, net, on our condensed consolidated statements of operations.

As of September 30, 2020 , this embedded derivative was deemed to have a de minimis fair value.

The following table provides information on the fair value amounts (in thousands) of these derivatives as of September 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets.

Balance Sheet Location

September 30, 2020

December 31, 2019

As of March 31, 2021, this embedded derivative was deemed to have a de minimis fair value.

The following table provides information on the fair value amounts (in thousands) of these derivatives as of March 31, 2021 and December 31, 2020 and their placement within our condensed consolidated balance sheets.

Balance Sheet Location March 31, 2021 December 31, 2020

Asset (Liability)

Commodity derivatives (1)

Prepaid and other current assets

Commodity derivatives

Other accrued liabilities

Aron repurchase obligation derivative

Obligations under inventory financing agreements

MLC terminal obligation derivative

Obligations under inventory financing agreements

Interest rate derivatives

Other accrued liabilities

Interest rate derivatives

Other liabilities

Commodity derivatives (1) Prepaid and other current assets $ 6,403 $ 1,346

Commodity derivatives Other accrued liabilities ( 1,045 ) —

Aron repurchase obligation derivative Obligations under inventory financing agreements ( 21,572 ) ( 20,797 )

MLC terminal obligation derivative Obligations under inventory financing agreements 410 ( 10,161 )

Interest rate derivatives Other accrued liabilities — ( 966 )

Interest rate derivatives Other liabilities — ( 2,027 )

_________________________________________________________

Does not include cash collateral of $ 3.0 million and $ 10.3 million recorded in Prepaid and other current assets and $ 9.5 million and $ 9.5 million in Other long-term assets as of September 30, 2020 and December 31, 2019 , respectively.

(1) Does not include cash collateral of $ 2.4 million and $ 1.5 million recorded in Prepaid and other current assets as of March 31, 2021 and December 31, 2020, respectively, and $ 9.5 million in Other long-term assets as of both March 31, 2021 and December 31, 2020.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

The following table summarizes the pre-tax gains (losses) recognized in Net income (loss) on our condensed consolidated statements of operations resulting from changes in fair value of derivative instruments not designated as hedges charged directly to earnings (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Statement of Operations Location 2021 2020

Commodity derivatives

Cost of revenues (excluding depreciation)

Aron repurchase obligation derivative

Cost of revenues (excluding depreciation)

MLC terminal obligation derivative

Cost of revenues (excluding depreciation)

Interest rate derivatives

Interest expense and financing costs, net

Commodity derivatives Cost of revenues (excluding depreciation) $ 631 $ ( 57,159 )

Aron repurchase obligation derivative Cost of revenues (excluding depreciation) ( 775 ) ( 46,645 )

MLC terminal obligation derivative Cost of revenues (excluding depreciation) ( 24,372 ) 82,958

Interest rate derivatives Interest expense and financing costs, net 104 ( 2,020 )

Note 11— Fair Value Measurements

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Common Stock Warrants

As of December 31, 2019 , we had 354,350 common stock warrants outstanding.

We estimated the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock, which is a Level 3 fair value measurement.

As of December 31, 2019 , the warrants had a weighted-average exercise price of $ 0.09 and a remaining term of 2.67 years .

The estimated fair value of the common stock warrants was $ 23.16 per share as of December 31, 2019 .

During January and March 2020, one of our stockholders and its affiliates exercised 354,350 common stock warrants with a fair value of $ 3.9 million.

As a result of this cashless transaction, 350,542 shares of common stock were issued.

As of September 30, 2020 , we had no common stock warrants outstanding.

As of March 31, 2021, we had no common stock warrants outstanding.

Derivative Instruments

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Our Level 2 instruments include OTC swaps and options.

These derivatives are valued using market quotations published by commodity exchanges.

Level 3 instruments are valued using significant unobservable inputs that are not readily observable in the market.

These derivatives are valued using market quotations from independent price reporting agencies and commodity exchange price curves that are corroborated with market data.

Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity.

The valuation of the embedded derivatives related to our J.

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Estimates of the J.

Aron and MLC settlement prices are based on observable inputs, such as Brent/WTI indices, and contractual price differentials as defined in the Supply and Offtake Agreements and Washington Refinery Intermediation Agreement .

Such contractual differentials vary by location and by the type of product and range from a discount of $ 6.05 per barrel to a premium of $ 15.43 per barrel as of September 30, 2020 .

Aron and MLC settlement prices are based on observable inputs, such as Brent and West Texas Intermediate Crude Oil (“WTI”) indices, and unobservable inputs, such as contractual price differentials as defined in the Supply and Offtake Agreements and Washington Refinery Intermediation Agreement.

Such contractual differentials vary by location and by the type of product and range from a discount of $ 15.49 per barrel to a premium of $ 14.05 per barrel as of March 31, 2021.

Contractual price differentials are considered unobservable inputs;

therefore, these embedded derivatives are classified as Level 3 instruments.

We do not have other commodity derivatives classified as Level 3 at September 30, 2020 or December 31, 2019 .

We did not have other commodity derivatives classified as Level 3 at March 31, 2021 or December 31, 2020.

Please read Note 10—Derivatives for further information on derivatives.

Gross Environmental credit obligations

Estimates of our gross environmental credit obligations are based on the amount of RINs or other environmental credits required to comply with U.S.

Environmental Protection Agency (“EPA”) regulations and the market prices of those RINs or other environmental credits as of the end of the reporting period.

The gross environmental credit obligations are classified as Level 2 instruments as we obtain the pricing inputs for our RINs and other environmental credits from brokers based on market quotes on similar instruments.

Please read Note 13—Commitments and Contingencies for further information on the EPA regulations related to greenhouse gases.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

Financial Statement Impact

Fair value amounts by hierarchy level as of September 30, 2020 and December 31, 2019 are presented gross in the tables below (in thousands):

September 30, 2020

Gross Fair Value

Effect of Counter-Party Netting

Net Carrying Value on Balance Sheet (1)

Fair value amounts by hierarchy level as of March 31, 2021 and December 31, 2020 are presented gross in the tables below (in thousands):

March 31, 2021

Level 1 Level 2 Level 3 Gross Fair Value Effect of Counter-Party Netting Net Carrying Value on Balance Sheet (1)

Commodity derivatives $ 380 $ 11,955 $ — $ 12,335 $ ( 5,932 ) $ 6,403

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Interest rate derivatives — — — — — —

Gross environmental credit obligations (2) — ( 259,973 ) — ( 259,973 ) — ( 259,973 )

Total $ ( 1,382 ) $ ( 265,568 ) $ ( 21,162 ) $ ( 288,112 ) $ 5,932 $ ( 282,180 )

December 31, 2020

Gross Fair Value

Effect of Counter-Party Netting

Net Carrying Value on Balance Sheet (1)

Level 1 Level 2 Level 3 Gross Fair Value Effect of Counter-Party Netting Net Carrying Value on Balance Sheet (1)

Commodity derivatives $ 616 $ 1,573 $ — $ 2,189 $ ( 843 ) $ 1,346

Common stock warrants

Commodity derivatives $ ( 3 ) $ ( 840 ) $ — $ ( 843 ) $ 843 $ —

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Interest rate derivatives — ( 2,993 ) — ( 2,993 ) — ( 2,993 )

Gross environmental credit obligations (2) — ( 150,482 ) — ( 150,482 ) — ( 150,482 )

Total $ ( 3 ) $ ( 154,315 ) $ ( 30,958 ) $ ( 185,276 ) $ 843 $ ( 184,433 )

_________________________________________________________

Does not include cash collateral of $ 12.5 million and $ 19.8 million as of September 30, 2020 and December 31, 2019 , respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.

(1) Does not include cash collateral of $ 11.9 million and $ 11.0 million as of March 31, 2021 and December 31, 2020, respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.

(2) Does not include RINs assets and other environmental credits of $ 36.3 million and $ 26.7 million presented as Inventories on our condensed consolidated balance sheet and stated at the lower of cost and net realizable value as of March 31, 2021 and December 31, 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

A roll forward of Level 3 derivative instruments measured at fair value on a recurring basis is as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Balance, at beginning of period $ ( 30,958 ) $ ( 22,750 )

Settlements 34,943 ( 13,299 )

Total gains (losses) included in earnings ( 25,147 ) 40,583

Balance, at end of period $ ( 21,162 ) $ 4,534

The carrying value and fair value of long-term debt and other financial instruments as of September 30, 2020 and December 31, 2019 are as follows (in thousands):

September 30, 2020

Carrying Value

The carrying value and fair value of long-term debt and other financial instruments as of March 31, 2021 and December 31, 2020 are as follows (in thousands):

March 31, 2021

Carrying Value Fair Value

5.00 % Convertible Senior Notes due 2021 (1) (3)

$ 47,974 $ 50,128

ABL Credit Facility due 2022 (2) — —

7.75 % Senior Secured Notes due 2025 (1)

Mid Pac Term Loan (2)

Term Loan B Facility (1)

Retail Property Term Loan (2)

PHL Term Loan (2)

291,611 301,725

Term Loan B Facility due 2026 (1) 217,004 223,605

12.875 % Senior Secured Notes due 2026 (1)

99,412 121,013

December 31, 2020

Carrying Value

Carrying Value Fair Value

5.00 % Convertible Senior Notes due 2021 (1) (3)

$ 47,301 $ 50,311

ABL Credit Facility due 2022 (2) — —

Retail Property Term Loan due 2024 (2) 41,891 41,891

7.75 % Senior Secured Notes due 2025 (1)

Mid Pac Term Loan (2)

Term Loan B Facility (1)

Retail Property Term Loan (2)

Common stock warrants (2)

293,289 289,521

Term Loan B Facility due 2026 (1) 219,708 215,578

12.875 % Senior Secured Notes due 2026 (1)

99,213 112,901

Mid Pac Term Loan due 2028 (2) 1,399 1,399

PHL Term Loan due 2030 (2) 5,792 5,792

_________________________________________________________

(1) The fair value measurements of the 5.00% Convertible Senior Notes, 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes are considered Level 2 measurements in the fair value hierarchy as discussed below.

The fair value measurements of the common stock warrants, Mid Pac Term Loan , Retail Property Term Loan , and PHL Term Loan are considered Level 3 measurements in the fair value hierarchy.

(2) The fair value measurements of the ABL Credit Facility, Mid Pac Term Loan, Retail Property Term Loan, and PHL Term Loan are considered Level 3 measurements in the fair value hierarchy.

(3) The carrying value of the 5.00% Convertible Senior Notes excludes the fair value of the equity component, which was classified as equity upon issuance.

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The fair value of the liability component of the 5.00% Convertible Senior Notes was determined using a discounted cash flow analysis in which the projected interest and principal payments were discounted at an estimated market yield for a similar debt instrument without the conversion feature.

The equity component was estimated based on the Black-Scholes model for a call option with strike price equal to the conversion price, a term matching the remaining life of the 5.00% Convertible Senior Notes , and an implied volatility based on market values of options outstanding as of September 30, 2020 .

The equity component was estimated based on the Black-Scholes model for a call option with strike price equal to the conversion price, a term matching the remaining life of the 5.00% Convertible Senior Notes, and an implied volatility based on market values of options outstanding as of March 31, 2021.

The fair value of the 5.00% Convertible Senior Notes is considered a Level 2 measurement in the fair value hierarchy.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

inputs within the fair value hierarchy because the 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes may not be actively traded.

The Retail Property Term Loan is subject to a market-based floating interest rate.

The Mid Pac Term Loan and PHL Term Loan are subject to fixed interest rates of 4.375 % and 2.750 % , respectively.

The carrying values of our Retail Property, Mid Pac, and PHL Term Loans were determined to approximate fair value as of September 30, 2020 and December 31, 2019 .

The carrying values of our Retail Property, Mid Pac, and PHL Term Loans were determined to approximate fair value as of December 31, 2020.

The Retail Property and PHL Term Loans were repaid in full on February 23, 2021 and the Mid Pac Term Loan was repaid in full on March 12, 2021.

The fair value of all non-derivative financial instruments recorded in current assets, including cash and cash equivalents, restricted cash, and trade accounts receivable, and current liabilities, including accounts payable, approximate their carrying value due to their short-term nature.

Note 12— Leases

We have cancelable and non-cancelable finance and operating lease obligations for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products.

We have cancelable and non-cancelable finance and operating lease liabilities for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products.

Most of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 30 years or more.

There are no material lease arrangements where we are the lessor and no material residual value guarantees associated with any of our leases.

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our right-of-use assets (“ROU assets”) and liabilities as of September 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets:

Balance Sheet Location

September 30, 2020

December 31, 2019

Property, plant, and equipment

Accumulated amortization

Property, plant, and equipment, net

Operating lease right-of-use assets

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our right-of-use assets (“ROU assets”) and liabilities as of March 31, 2021 and December 31, 2020 and their placement within our condensed consolidated balance sheets:

Lease type Balance Sheet Location March 31, 2021 December 31, 2020

Finance Property, plant, and equipment $ 19,684 $ 14,998

Finance Accumulated amortization ( 6,977 ) ( 6,486 )

Finance Property, plant, and equipment, net $ 12,707 $ 8,512

Operating Operating lease right-of-use assets 427,577 357,166

Total right-of-use assets $ 440,284 $ 365,678

Other accrued liabilities

Operating lease liabilities

Finance lease liabilities

Operating lease liabilities

Finance Other accrued liabilities $ 1,391 $ 1,491

Operating Operating lease liabilities 57,889 56,965

Finance Finance lease liabilities 7,350 7,925

Operating Operating lease liabilities 375,384 304,355

Total lease liabilities $ 442,014 $ 370,736

Weighted-average remaining lease term (in years)

Finance 6.69 6.97

Operating 11.42 10.52

Weighted-average discount rate

Finance 7.89 % 7.93 %

Operating 6.84 % 7.59 %

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

The following table summarizes the lease costs recognized in our condensed consolidated statements of operations (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Lease cost type 2021 2020

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The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Lease type 2021 2020

Cash paid for amounts included in the measurement of liabilities

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ROU assets terminated in exchange for release from operating lease liabilities — 7,738

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of September 30, 2020 (in thousands):

For the year ending December 31,

Finance leases

Operating leases

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of March 31, 2021 (in thousands):

For the year ending December 31, Finance leases Operating leases Total

2021 (1) $ 1,500 $ 67,265 $ 68,765

2022 1,913 75,600 77,513

2023 1,906 61,733 63,639

2024 1,595 52,070 53,665

2025 1,355 50,728 52,083

2026 890 46,341 47,231

Thereafter 2,284 236,434 238,718

Total lease payments 11,443 590,171 601,614

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_________________________________________________________

Represents period from October 1, 2020 to December 31, 2020 .

Additionally, the Company has $ 8.9 million and $ 1.1 million in future undiscounted cash flows for operating leases and finance leases that have not yet commenced, respectively.

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.

(1) Represents the period from April 1, 2021 to December 31, 2021.

Additionally, we have $ 6.6 million in future undiscounted cash flows for operating leases that have not yet commenced.

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

Sale-Leaseback Transaction

On February 11, 2021, PHL and Par Hawaii Property Company, LLC (collectively, the “Sellers”), both our wholly owned subsidiaries, entered into a Purchase Agreement and Escrow Instructions with MDC Coast HI 1, LLC, a subsidiary of

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

For the Interim Periods Ended March 31, 2021 and 2020

Realty Income Corporation (the “Buyer”), and Fidelity National Title Insurance Company, pursuant to which the Sellers and Buyer agreed to consummate a sale-leaseback transaction (the “Sale-Leaseback Transaction”).

Under the terms of the Purchase Agreement, the Sellers agreed to sell to the Buyer a total of twenty-two ( 22 ) retail convenience store/fuel station properties located in Hawaii (the “Sale-Leaseback Properties”) for an aggregate cash purchase price of $ 112.8 million, net of transaction fees.

On February 23, 2021, the Sellers and Buyer closed the Sale-Leaseback Transaction with respect to twenty-one ( 21 ) Sale-Leaseback Properties for an aggregate cash purchase price of approximately $ 107.0 million, net of transaction fees.

On March 12, 2021, the Sellers and Buyer closed the sale of one additional property for an aggregate cash purchase price of approximately $ 5.8 million, net of transaction fees.

We recognized a gain of $ 63.9 million as a result of these transactions, which is included in Gain on sale of assets, net on our condensed consolidated statements of operations for the three months ended March 31, 2021.

Upon the closings of the sales of the Sale-Leaseback Properties, PHL entered into a Master Land and Building Lease Agreement (the “Lease Agreement”) with the Buyer, pursuant to which, among other things, PHL leased the Sale-Leaseback Properties from the Buyer, on a commercial triple-net basis, for 15 years, unless earlier terminated.

The initial lease term may be extended for up to four five-year renewal terms in accordance with the terms of the Lease Agreement.

Under the terms of the Lease Agreement, PHL is responsible for monthly rent and all expenses related to the leased facilities, including, but not limited to, insurance premiums, taxes, and other expenses, such as utilities.

As a result of the Sale-Leaseback Transaction, we recorded operating ROU assets and lease liabilities of $ 81.3 million.

Certain of the Sale-Leaseback Properties were treated as failed sale-leaseback transactions based on the terms of the lease.

As such, we retained the book value of the assets and recognized a finance liability of $ 12.4 million included in Other accrued liabilities and Other liabilities on our condensed consolidated balance sheet.

In connection with PHL’s entry into the Lease Agreement, Par Petroleum, LLC, our wholly owned subsidiary, entered into a guaranty agreement in favor of the Buyer, pursuant to which, among other things, Par Petroleum, LLC guaranteed the payment when due of the monthly rent, and all other additional rent, interest, and charges payable by PHL to the Buyer under the Lease Agreement, and the performance by PHL of all the material terms, conditions, covenants, and agreements of the Lease Agreement.

Note 13— Commitments and Contingencies

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These governmental entities may also propose or assess fines or require corrective actions for these asserted violations.

For example, on September 30, 2020, we entered into a consent agreement with the U.S.

Environmental Protection Agency (“EPA”) stemming from the EPA’s claim that we failed to comply with certain statutorily required operating procedures and management system and process safety requirements at our Par West refinery.

As a result of that consent agreement, we agreed to pay the EPA a penalty of $ 123,461 .

We intend to respond in a timely manner to all such communications and to take appropriate corrective action.

Except as disclosed below, we do not anticipate that any such matters currently asserted will have a material impact on our financial condition, results of operations, or cash flows.

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Investigative work by Hermes Consolidated LLC, and its wholly owned subsidiary, Wyoming Pipeline Company (collectively, “WRC” or “Wyoming Refining”) and negotiations with the relevant agencies as to remedial approaches remain ongoing on a number of aspects of the contamination, meaning that investigation, monitoring, and remediation costs are not reasonably estimable for some elements of these efforts.

As of September 30, 2020 , we have accrued $ 15.8 million for the well-understood components of these efforts based on current information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 30 years .

As of March 31, 2021, we have accrued $ 16.3 million for the well-understood components of these efforts based on current information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 30 years.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

Additionally, we believe the Wyoming refinery will need to modify or close a series of wastewater impoundments in the next several years and replace those impoundments with a new wastewater treatment system.

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Any such controls could result in material increased compliance costs, additional operating restrictions for our business, and an increase in the cost of the products we produce, which could have a material adverse effect on our financial condition, results of operations, or cash flows.

Additionally, the EPA ’s final rule updating standards that control toxic air emissions from petroleum refineries imposed additional controls and monitoring requirements on flaring operations, storage tanks, sulfur recovery units, delayed coking units,

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

and required fenceline monitoring.

Additionally, the EPA’s final rule updating standards that control toxic air emissions from petroleum refineries imposed additional controls and monitoring requirements on flaring operations, storage tanks, sulfur recovery units, delayed coking units, and required fenceline monitoring.

Compliance with this rule has not had a material impact on our financial condition, results of operations, or cash flows to date.

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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.

In August 2012, the EPA and National Highway Traffic Safety Administration (“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.

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Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply, up to 36 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.

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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 RINs, to maintain compliance.

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.

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

compliance or selling those RINs on the open market.

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

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.

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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.

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

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.

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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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

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.

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Environmental Agreement

On September 25, 2013 , Par Petroleum, LLC (formerly Hawaii Pacific Energy, a wholly owned subsidiary of Par created for purposes of the PHR acquisition), Tesoro Corporation (“Tesoro,” which changed its name to Andeavor Corporation before being purchased by Marathon Petroleum Company in October 2018), and PHR entered into an Environmental Agreement (“Environmental Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR , including the Consent Decree as described below.

Consent Decree

On July 18, 2016, PHR and subsidiaries of Tesoro entered into a consent decree with the EPA, the U.S.

Department of Justice (“DOJ”), and other state governmental authorities concerning alleged violations of the federal CAA related to the ownership and operation of multiple facilities owned or formerly owned by Tesoro and its affiliates (“Consent Decree”), including the Par East Hawaii refinery.

As a result of the Consent Decree, PHR expanded its previously-announced 2016 Par East Hawaii refinery turnaround to undertake additional capital improvements to reduce emissions of air pollutants and to provide for certain nitrogen oxide and sulfur dioxide emission controls and monitoring required by the Consent Decree.

Tesoro is responsible under the Environmental Agreement for directly paying, or reimbursing PHR, for all reasonable third-party capital expenditures incurred pursuant to the Consent Decree to the extent related to acts or omissions prior to the date of the closing of the PHR acquisition.

Tesoro is obligated to pay all applicable fines and penalties related to the Consent Decree.

On September 25, 2013, Par Petroleum, LLC (formerly Hawaii Pacific Energy, a wholly owned subsidiary of Par created for purposes of the acquisition of Par Hawaii Refining, LLC (“PHR”)), Tesoro Corporation (“Tesoro”), and PHR entered into an Environmental Agreement (“Environmental Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR, including a consent decree.

Indemnification

In addition to its obligation to reimburse us for capital expenditures incurred pursuant to the Consent Decree, Tesoro agreed to indemnify us for claims and losses arising out of related breaches of Tesoro’s representations, warranties, and covenants in the Environmental Agreement, certain defined “corrective actions” relating to pre-existing environmental conditions, third-party claims arising under environmental laws for personal injury or property damage arising out of or relating to releases of hazardous materials that occurred prior to the date of the closing of the PHR acquisition, any fine, penalty, or other cost assessed by a governmental authority in connection with violations of environmental laws by PHR prior to the date of the closing of the PHR acquisition, certain groundwater remediation work, fines, or penalties imposed on PHR by the Consent Decree related to acts or omissions of Tesoro prior to the date of the closing of the PHR acquisition, and claims and losses related to the Pearl City Superfund Site.

In addition to its obligation to reimburse us for capital expenditures incurred pursuant to a consent decree, Tesoro agreed to indemnify us for claims and losses arising out of related breaches of Tesoro’s representations, warranties, and covenants in the Environmental Agreement, certain defined “corrective actions” relating to pre-existing environmental conditions, third-party claims arising under environmental laws for personal injury or property damage arising out of or relating to releases of hazardous materials that occurred prior to the date of the closing of the PHR acquisition, any fine, penalty, or other cost assessed by a governmental authority in connection with violations of environmental laws by PHR prior to the date of the closing of the PHR acquisition, certain groundwater remediation work, fines, or penalties imposed on PHR by a consent

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

decree related to acts or omissions of Tesoro prior to the date of the closing of the PHR acquisition, and claims and losses related to the Pearl City Superfund Site.

Tesoro’s indemnification obligations are subject to certain limitations as set forth in the Environmental Agreement.

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On February 27, 2018, the Bankruptcy Court entered its final decree closing the Chapter 11 bankruptcy cases of Delta and the other Debtors, discharging the trustee for the General Trust, and finding that all assets of the General Trust were resolved, abandoned, or liquidated and have been distributed in accordance with the requirements of the Plan.

In addition, the final decree

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

required the Company or the General Trust, as applicable, to maintain the current accruals owed on account of the remaining claims of the U.S.

In addition, the final decree required the Company or the General Trust, as applicable, to maintain the current accruals owed on account of the remaining claims of the U.S.

Government and Noble Energy, Inc.

As of September 30, 2020 , two related claims totaling approximately $ 22.4 million remained to be resolved and we have accrued approximately $ 0.5 million representing the estimated value of claims remaining to be settled which are deemed probable and estimable at period end.

As of March 31, 2021, two related claims totaling approximately $ 22.4 million remained to be resolved and we have accrued approximately $ 0.5 million representing the estimated value of claims remaining to be settled which are deemed probable and estimable at period end.

One of the two remaining claims was filed by the U.S.

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Note 14— Stockholders’ Equity

Issuance of Common Stock

On March 16, 2021, we entered into an underwriting agreement with J.P.

Morgan Securities LLC and Goldman Sachs & Co.

LLC, as representatives of the several underwriters named therein, in connection with an underwritten public offering (the “Equity Offering”) of 5.75 million shares of common stock, par value $ 0.01 per share, at a public offering price of $ 16.00 per share.

We completed the issuance of these shares on March 19, 2021.

The net proceeds from the Equity Offering were approximately $ 87.4 million, after deducting underwriting discounts and commissions and offering expenses.

We intend to use the net proceeds from the Equity Offering for general corporate purposes, including repaying indebtedness, capital expenditures, and funding working capital.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

Incentive Plans

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2012 Long-term Incentive Plan and Stock Purchase Plan (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Restricted Stock Awards $ 1,112 $ 915

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Stock Option Awards $ 447 $ 380

During the three and nine months ended September 30, 2020 , we granted 22 thousand and 310 thousand shares of restricted stock and restricted stock units with a fair value of approximately $ 0.2 million and $ 5.5 million , respectively.

As of September 30, 2020 , there were approximately $ 8.3 million of total unrecognized compensation costs related to restricted stock awards and restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.8 years .

During the nine months ended September 30, 2020 , we granted 279 thousand stock option awards with a weighted-average exercise price of $ 19.73 per share and no grants were made for the three months ended September 30, 2020 .

As of September 30, 2020 , there were approximately $ 3.2 million of total unrecognized compensation costs related to stock option awards, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.7 years .

During the nine months ended September 30, 2020 , we granted 47 thousand performance restricted stock units to executive officers and no grants were made for the three months ended September 30, 2020 .

During the three months ended March 31, 2021, we granted 426 thousand shares of restricted stock and restricted stock units with a fair value of approximately $ 7.0 million.

As of March 31, 2021, there were approximately $ 12.9 million of total unrecognized compensation costs related to restricted stock awards and restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 2.0 years.

During the three months ended March 31, 2021, we granted 382 thousand stock option awards with a weighted-average exercise price of $ 16.52 per share.

As of March 31, 2021, there were approximately $ 5.3 million of total unrecognized compensation costs related to stock option awards, which are expected to be recognized on a straight-line basis over a weighted-average period of 2.1 years.

During the three months ended March 31, 2021, we granted 64 thousand performance restricted stock units to executive officers.

These performance restricted stock units had a fair value of approximately $ 1.1 million and are subject to certain annual performance targets based on three-year -performance periods as defined by our Board of Directors.

As of September 30, 2020 , there were approximately $ 1.2 million of total unrecognized compensation costs related to the performance restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.9 years .

As of March 31, 2021, there were approximately $ 1.8 million of total unrecognized compensation costs related to the performance restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 2.3 years.

Note 15— Income (Loss) per Share

Basic income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average number of shares issuable under the common stock warrants, representing 249 thousand shares during the three months ended March 31, 2020.

The common stock warrants are included in the calculation of basic income (loss) per share for the three months ended March 31, 2020 because they were issuable for minimal consideration.

As of March 31, 2020, the previously outstanding common stock warrants had been exercised for common stock and no warrants were outstanding.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

Note 16 — Income (Loss) per Share

Basic income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average number of shares issuable under the common stock warrants, representing 82 thousand shares during the nine months ended September 30, 2020 and 354 thousand shares during the three and nine months ended September 30, 2019 , respectively.

The common stock warrants are included in the calculation of basic income (loss) per share because they were issuable for minimal consideration.

As of March 31, 2020, the previously outstanding common stock warrants had been exercised for common stock and no warrants were outstanding.

For the Interim Periods Ended March 31, 2021 and 2020

The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except per share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Net income (loss)

Three Months Ended March 31,

Net Loss $ ( 62,227 ) $ ( 222,337 )

Undistributed income allocated to participating securities — —

Net income (loss) attributable to common stockholders

Net loss attributable to common stockholders ( 62,227 ) ( 222,337 )

Net income effect of convertible securities — —

Numerator for diluted income (loss) per common share

Numerator for diluted loss per common share $ ( 62,227 ) $ ( 222,337 )

Basic weighted-average common stock shares outstanding 54,280 53,153

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Diluted weighted-average common stock shares outstanding 54,280 53,153

Basic income (loss) per common share

Diluted income (loss) per common share

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Participating securities include restricted stock that had been issued but had not yet vested during the three and nine months ended September 30, 2019 .

These participating securities were fully vested as of December 31, 2019 .

Entities with a net loss from continuing operations are prohibited from including potential common shares in the computation of diluted per share amounts.

We have utilized the basic shares outstanding to calculate both basic and diluted loss per common share for the three and nine months ended September 30, 2020 and the three months September 30, 2019.

For the nine months ended September 30, 2019 , our calculation of diluted shares outstanding excluded 160 thousand shares of unvested restricted stock and 1.8 million stock options.

As discussed in Note 10—Debt , we have the option of settling the 5.00% Convertible Senior Notes in cash or shares of common stock, or any combination thereof, upon conversion.

For the nine months ended September 30, 2019 , diluted income per share was determined using the if-converted method.

Our calculation of diluted shares outstanding for the nine months ended September 30, 2019 excluded 5.5 million common stock equivalents, respectively, as the effect would be anti-dilutive.

Basic loss per common share $ ( 1.15 ) $ ( 4.18 )

Diluted loss per common share $ ( 1.15 ) $ ( 4.18 )

Diluted income (loss) per common share excludes the following equity instruments because their effect would be anti-dilutive:

Shares of unvested restricted stock 674 437

Shares of stock options 2,086 1,939

Common stock equivalents using the if-converted method of settling the 5.00% Convertible Senior Notes

Note 16— Income Taxes

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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.

Management continues to conclude that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets on the remaining amounts and a valuation allowance has been recorded for substantially all of our net deferred tax assets at September 30, 2020 and December 31, 2019 .

We believe that any adjustment to our uncertain tax positions would no t have a material impact on our financial statements given the Company’s deferred tax and corresponding valuation allowance position as of September 30, 2020 and December 31, 2019 .

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

As of December 31, 2020, we had approximately $ 1.7 billion in net operating loss carryforwards (“NOL carryforwards”);

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(i) Refining, (ii) Retail, (iii) Logistics, and (iv) Corporate and Other.

Summarized financial information concerning reportable segments consists of the following (in thousands):

Three Months Ended September 30, 2020

Corporate, Eliminations and Other (1)

Cost of revenues (excluding depreciation)

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

General and administrative expense (excluding depreciation)

Acquisition and integration costs

Operating income (loss)

Interest expense and financing costs, net

Other income, net

Equity losses from Laramie Energy, LLC

Loss before income taxes

Income tax expense

Capital expenditures

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

Three Months Ended September 30, 2019

Corporate, Eliminations and Other (1)

For the Interim Periods Ended March 31, 2021 and 2020

Summarized financial information concerning reportable segments consists of the following (in thousands):

Three Months Ended March 31, 2021 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 838,755 $ 41,309 $ 91,188 $ ( 82,572 ) $ 888,680

Cost of revenues (excluding depreciation)

883,477 22,082 65,872 ( 82,568 ) 888,863

Operating expense (excluding depreciation)

53,338 3,896 16,954 — 74,188

Depreciation, depletion, and amortization 14,064 5,254 2,660 902 22,880

Impairment expense — — — — —

Loss (gain) on sale of assets, net ( 21,259 ) — ( 43,653 ) — ( 64,912 )

General and administrative expense (excluding depreciation) — — — 11,885 11,885

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Interest expense and financing costs, net ( 18,151 )

Debt extinguishment and commitment costs ( 1,507 )

Gain on curtailment of pension obligation 2,032

Other income, net 61

Change in value of common stock warrants

Equity losses from Laramie Energy, LLC —

Loss before income taxes ( 62,227 )

Income tax benefit

Income tax expense —

Net loss $ ( 62,227 )

Capital expenditures $ 4,575 $ 2,851 $ 592 $ 160 $ 8,178

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Includes eliminations of intersegment revenues and cost of revenues of $ 69.9 million and $ 107.2 million for the three months ended September 30, 2020 and 2019 , respectively.

Nine Months Ended September 30, 2020

Corporate, Eliminations and Other (1)

Three Months Ended March 31, 2020 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,148,126 $ 59,150 $ 102,813 $ ( 106,006 ) $ 1,204,083

Cost of revenues (excluding depreciation)

1,213,353 31,436 71,430 ( 106,008 ) 1,210,211

Operating expense (excluding depreciation)

52,244 4,271 16,876 — 73,391

Depreciation, depletion, and amortization 12,994 4,667 2,799 823 21,283

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Income tax benefit 18,247

Net loss $ ( 222,337 )

Capital expenditures $ 6,083 $ 7,218 $ 1,334 $ 313 $ 14,948

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(1) Includes eliminations of intersegment revenues and cost of revenues of $ 82.6 million and $ 106.0 million for the three months ended March 31, 2021 and 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2020 and 2019

Nine Months Ended September 30, 2019

Corporate, Eliminations and Other (1)

Cost of revenues (excluding depreciation)

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

General and administrative expense (excluding depreciation)

Acquisition and integration costs

Operating income (loss)

Interest expense and financing costs, net

Debt extinguishment and commitment costs

Other income, net

Change in value of common stock warrants

Equity losses from Laramie Energy, LLC

Loss before income taxes

Income tax benefit

Capital expenditures

________________________________________________________

Includes eliminations of intersegment revenues and cost of revenues of $ 237.7 million and $ 316.0 million for the nine months ended September 30, 2020 and 2019 , respectively.

For the Interim Periods Ended March 31, 2021 and 2020

Note 18— Related Party Transactions

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The Services Agreement has a term of one year and will be automatically extended for successive one-year periods unless terminated by either party at least 60 days prior to any extension date.

There were no costs incurred related to this agreement during the three and nine months ended September 30, 2020 or 2019 .

There were no costs incurred related to this agreement during the three months ended March 31, 2021 or 2020.

Note 19— Subsequent Events

On May 4, 2021, we amended the Supply and Offtake Agreements and extended the term expiry date from May 31, 2021, to June 30, 2021.

We expect to finalize a new multi-year agreement during the second quarter of 2021.

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-Q

Item 1. Financial Statements