What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-07 · 295 added, 198 removed, 761 unchanged (39% of the section changed)

4 unchanged sentences

(in thousands, except share data)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets

2 unchanged sentences

Total cash, cash equivalents, and restricted cash 176,329 70,309

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

Trade accounts receivable, net of allowances of $ 0.5 million and $ 0.6 million at June 30, 2021 and December 31, 2020, respectively

210,389 111,657

17 unchanged sentences

Accounts payable 159,692 106,945

Deferred revenue 6,980 4,083

Accrued taxes 40,522 27,440

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Common stock, $ 0.01 par value;

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

500,000,000 shares authorized at June 30, 2021 and December 31, 2020, 60,184,679 shares and 54,002,538 shares issued at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 817,049 726,504

8 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues $ 1,217,525 $ 515,301 $ 2,106,205 $ 1,719,384

4 unchanged sentences

Impairment expense — — — 67,922

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

Loss (gain) on sale of assets, net 510 — ( 64,402 ) —

General and administrative expense (excluding depreciation) 12,201 10,221 24,086 22,005

6 unchanged sentences

Gain on curtailment of pension obligation — — 2,032 —

Other income, net 61 24

Other income (expense), net ( 36 ) 455 25 479

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

Equity losses from Laramie Energy, LLC — ( 1,874 ) — ( 46,905 )

Total other income (expense), net ( 17,565 ) ( 59,411 )

Total other expense, net ( 23,850 ) ( 17,833 ) ( 41,415 ) ( 77,244 )

Loss before income taxes ( 108,351 ) ( 43,276 ) ( 170,578 ) ( 283,860 )

Income tax benefit — 18,247

Income tax benefit (expense) ( 607 ) 2,716 ( 607 ) 20,963

Net Loss $ ( 108,958 ) $ ( 40,560 ) $ ( 171,185 ) $ ( 262,897 )

10 unchanged sentences

(in thousands)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net Loss $ ( 108,958 ) $ ( 40,560 ) $ ( 171,185 ) $ ( 262,897 )

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(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net Loss $ ( 171,185 ) $ ( 262,897 )

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

Adjustments to reconcile net loss to cash provided by operating activities:

Depreciation, depletion, and amortization 46,428 43,411

5 unchanged sentences

Deferred taxes — ( 21,088 )

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

Loss (gain) on sale of assets, net ( 64,402 ) —

Stock-based compensation 4,072 3,537

8 unchanged sentences

Accounts payable, other accrued liabilities, and operating lease ROU assets and liabilities 275,415 ( 18,958 )

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

Net cash provided by operating activities 1,815 33,767

Cash flows from investing activities:

7 unchanged sentences

Net borrowings (repayments) on deferred payment arrangements and receivable advances 76,032 ( 72,506 )

Payment of deferred loan costs ( 331 ) ( 6,055 )

Purchase of common stock for retirement ( 1,323 ) ( 1,068 )

1 unchanged sentence

Other financing activities, net 665 134

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 )

Net cash provided by financing activities 15,358 13,247

Net increase in cash, cash equivalents, and restricted cash 106,020 16,854

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

23 unchanged sentences

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

Issuance of common stock for employee stock purchase plan 95 1 854 — — 855

Stock-based compensation 10 — 1,794 — — 1,794

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

Net loss — — — ( 40,560 ) — ( 40,560 )

Balance, June 30, 2020 53,942 $ 539 $ 722,194 $ ( 330,839 ) $ 582 $ 392,476

Additional Other

9 unchanged sentences

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

Common stock offering, net of issuance costs — — ( 208 ) — — ( 208 )

Issuance of common stock for employee stock purchase plan 42 1 713 — — 714

Stock-based compensation 1 — 2,079 — — 2,079

Purchase of common stock for retirement — — ( 2 ) — — ( 2 )

Exercise of stock options — — — — — —

Net loss — — — ( 108,958 ) — ( 108,958 )

Balance, June 30, 2021 60,185 $ 602 $ 817,049 $ ( 648,213 ) $ 254 $ 169,692

See accompanying notes to the condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 2021 and 2020

Note 1 — Overview

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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”).

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 Rocky Mountain 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 June 30, 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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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

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

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

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.

For the Interim Periods Ended June 30, 2021 and 2020

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 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.

We did not have a material change in our allowances on trade receivables during the three and six months ended June 30, 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Cost of revenues $ 5,341 $ 5,867 $ 10,560 $ 10,495

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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.

We maintain defined benefit pension plans covering eligible employees of Hermes Consolidated, LLC, and its wholly owned subsidiary, Wyoming Pipeline Company, LLC, (collectively, “WRC” or “Wyoming Refining”) and the employees of U.S.

Oil & Refining Co.

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

Oil”) covered by collective bargaining agreements.

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.

We recorded a $ 2.0 million Gain on curtailment of pension obligation in our condensed consolidated statements of operations for the six months ended June 30, 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 six months ended June 30, 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.

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Notes to Condensed Consolidated Financial Statements

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.

For the Interim Periods Ended June 30, 2021 and 2020

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

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(“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.

1 unchanged sentence

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.

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

Note 3— Investment in Laramie Energy, LLC

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

As of June 30, 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 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.

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

Laramie Energy had a $ 400 million revolving credit facility with a borrowing base set at $ 147.4 million that was secured by a lien on its natural gas and crude oil properties and related assets.

As of June 30, 2021, the balance outstanding on the revolving credit facility was approximately $ 147.4 million.

On July 1, 2021, Laramie Energy entered into a term loan agreement which provided a term loan in the principal amount of $ 160 million.

Laramie Energy used the proceeds from the term loan to repay the outstanding balance on the revolving credit facility.

The term loan is secured by a lien on its natural gas and crude oil properties and related assets.

Under the terms of the term loan, Laramie Energy is generally prohibited from making future cash distributions to its owners, including us, except for certain permitted tax distributions.

Laramie Energy’s term loan matures on July 1, 2025.

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.

As such, the balance of our investment in Laramie Energy was zero as of June 30, 2021 and December 31, 2020.

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets $ 48,982 $ 34,573

2 unchanged sentences

Non-current liabilities 40,491 93,193

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Natural gas and oil revenues $ 37,616 $ 23,545 $ 119,964 $ 58,258

Income from operations 47,209 1,369

Net income 40,451 574

Income (loss) from operations 5,941 ( 8,699 ) 53,150 ( 7,330 )

Net income (loss) 133 ( 14,349 ) 40,584 ( 13,775 )

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Depreciation, depletion, and amortization $ 8,772 $ 10,042 $ 15,756 $ 19,321

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 2021 and 2020

Note 4— Revenue Recognition

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

As of June 30, 2021 and December 31, 2020, receivables from contracts with customers were $ 205.1 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 $ 7.0 million and $ 4.1 million as of March 31, 2021 and December 31, 2020, respectively.

Deferred revenue was $ 11.9 million and $ 4.1 million as of June 30, 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 March 31, 2021 Refining Logistics Retail

Three Months Ended June 30, 2021 Refining Logistics Retail

Product or service:

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Total segment revenues (3) $ 1,155,847 $ 48,706 $ 118,446

Three Months Ended March 31, 2020 Refining Logistics Retail

Three Months Ended June 30, 2020 Refining Logistics Retail

Product or service:

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Total segment revenues (3) $ 455,301 $ 42,132 $ 79,621

Six Months Ended June 30, 2021 Refining Logistics Retail

Product or service:

Gasoline $ 670,862 $ — $ 150,004

Distillates (1) 842,425 — 12,010

Other refined products (2) 480,537 — —

Merchandise — — 45,432

Transportation and terminalling services — 90,015 —

Other revenue 778 — 2,188

Total segment revenues (3) $ 1,994,602 $ 90,015 $ 209,634

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

Six Months Ended June 30, 2020 Refining Logistics Retail

Product or service:

Gasoline $ 421,968 $ — $ 120,004

Distillates (1) 773,468 — 17,092

Other refined products (2) 393,253 — —

Merchandise — — 44,411

Transportation and terminalling services — 101,282 —

Other revenue 14,738 — 927

Total segment revenues (3) $ 1,603,427 $ 101,282 $ 182,434

_______________________________________________________

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Note 5— Inventories

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

Inventories at June 30, 2021 and December 31, 2020 consisted of the following (in thousands):

Titled Inventory Supply and Offtake Agreements (1) Total

June 30, 2021

Crude oil and feedstocks $ 73,378 $ 201,847 $ 275,225

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Total $ 301,749 $ 322,404 $ 624,153

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)

December 31, 2020

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

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

(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.

(2) Includes $ 60.6 million and $ 26.7 million of RINs and environmental credits, reported at cost, as of June 30, 2021 and December 31, 2020, respectively.

RINs and environmental obligations of $ 354.5 million and $ 150.5 million, reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 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.

As of June 30, 2021, the excess of current replacement cost over the last-in, first-out (“LIFO”) inventory carrying value at the Washington refinery was approximately $ 35.4 million.

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

Note 6— Prepaid and Other Current Assets

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

Prepaid and other current assets at June 30, 2021 and December 31, 2020 consisted of the following (in thousands):

June 30, 2021 December 31, 2020

Advances to suppliers $ 3,966 $ —

Collateral posted with broker for derivative instruments (1) 410 1,489

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Supply and Offtake Agreements

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Obligations under inventory financing agreements $ 699,362 $ 423,686

Supply and Offtake Agreements

We have several agreements with J.

Supply and Offtake Agreement

We have an agreement with J.

Aron & Company LLC (“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.

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.

Upon execution of the Supply and Offtake Agreements, we paid J.

Aron a deferral arrangement fee of $ 1.3 million.

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.

Aron”) to support our Hawaii refining operations.

On May 4, 2021, we amended the first amended and restated supply and offtake agreement and extended the term expiry date from May 31, 2021, to June 30, 2021.

A deferred payment arrangement under the agreement allowed for us to defer payments owed under the agreements up to the lesser of $ 165 million or 85 % of eligible accounts receivable and inventory.

As of June 30, 2021 and December 31, 2020, the capacity of the deferred payment arrangement was $ 118.7 million and $ 80.1 million, respectively.

As of June 30, 2021 and December 31, 2020, we had $ 114.9 million and $ 78.6 million outstanding, respectively, under the deferred payment arrangement.

Under the first amended and restated supply and offtake agreement, we paid or received certain fees from J.

Aron based on changes in market prices over time.

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In 2020, we fixed the market fee for the period from February 1, 2020 through April 1, 2021 for an additional $ 0.8 million to be settled in fifteen payments.

The receivable from J.

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

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

The amount due to or from J.

Aron was recorded as an adjustment to our Obligations under inventory financing agreements as allowed under the first amended and restated supply and offtake agreement.

As of June 30, 2021 and December 31, 2020, we had a payable of $ 3.1 million and a receivable of $ 0.5 million, respectively.

On June 1, 2021, we entered into the Second Amended and Restated Supply and Offtake Agreement (as amended, the “Supply and Offtake Agreement”).

The Supply and Offtake Agreement expires May 31, 2024 (as extended, the “Expiration Date”), subject to a one-year extension at the mutual agreement of the parties at least 120 days prior to the Expiration Date.

Under the Supply and Offtake Agreement, we are subject to an early termination fee if we terminate the Supply and Offtake Agreement on or prior to May 31, 2023.

Under the Supply and Offtake Agreement, Par Hawaii Refining, LLC (“PHR”) is required to maintain minimum liquidity of not less than $ 15 million for any three consecutive business days, with at least $ 7.5 million of such liquidity consisting of cash and cash equivalents.

Commencing on July 1, 2021 (the “Adjustment Date”), the Supply and Offtake Agreement makes available a discretionary draw facility (the “Discretionary Draw Facility”) to PHR.

The Discretionary Draw Facility is available to PHR from the Adjustment Date up to but excluding the Expiration Date.

Under the Discretionary Draw Facility, J.

Aron agreed to make advances to PHR from time to time at the request of PHR, subject to the satisfaction of certain conditions precedent, in an aggregate principal amount at any one time outstanding not to exceed the lesser of $ 165 million or the borrowing base, which is calculated as (x) 85 % of the eligible accounts receivables, plus (y) the lesser of $ 82.5 million and 85 % of eligible hydrocarbon inventory, minus (z) such reserves as established by J.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

Aron in respect of eligible receivables and eligible hydrocarbon inventory.

The deferred amounts under the Discretionary Draw Facility bear interest at a rate equal to three-month LIBOR plus 4.00 % per annum until May 31, 2022.

Beginning on June 1, 2022, the deferred amounts will bear interest at a rate equal to LIBOR (or LIBOR equivalent) plus an applicable spread between 3.50 % and 4.00 % to be determined annually based on certain financial ratios.

Washington Refinery Intermediation Agreement

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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.

As of June 30, 2021, our outstanding balance under the MLC receivable advances was $ 80.8 million and our borrowing base was $ 84.5 million.

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

Additionally, as of June 30, 2021 and December 31, 2020, we had approximately $ 125.4 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,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net fees and expenses:

Supply and Offtake Agreements

Inventory intermediation fees $ 3,770 $ 6,870

Supply and Offtake Agreement

Inventory intermediation fees (benefits) $ 5,280 $ ( 204 ) $ 9,050 $ 6,666

Interest expense and financing costs, net 478 713 1,324 2,062

Washington Refinery Intermediation Agreement

Inventory intermediation fees $ 971 $ 1,107

Inventory intermediation fees (benefits) $ 765 $ 1,012 $ 1,736 $ 2,119

Interest expense and financing costs, net 1,134 727 2,111 1,724

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.

The Supply and Offtake Agreement 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

Other accrued liabilities at June 30, 2021 and December 31, 2020 consisted of the following (in thousands):

June 30, 2021 December 31, 2020

Accrued payroll and other employee benefits $ 16,603 $ 14,916

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___________________________________________________

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

(1) Gross environmental credit obligations are stated at market as of June 30, 2021 and December 31, 2020.

Please read Note 11—Fair Value Measurements for further information.

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.

The carrying costs of these assets were $ 60.6 million and $ 26.7 million as of June 30, 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 March 31, 2021 and 2020

For the Interim Periods Ended June 30, 2021 and 2020

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

5.00 % Convertible Senior Notes due 2021

$ 48,665 $ 48,665

ABL Credit Facility due 2022 — —

12 unchanged sentences

Long-term debt, net of current maturities $ 560,141 $ 648,660

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.

As of June 30, 2021 and December 31, 2020, we had $ 19.5 million and $ 1.7 million in letters of credit outstanding under the Loan and Security Agreement dated as of December 21, 2017 with certain lenders and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Credit Facility”), 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.

On June 15, 2021, the remaining $ 48.7 million aggregate principal amount of the 5.00% Convertible Senior Notes matured and were paid in full.

ABL Credit Facility

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”).

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.

As of June 30, 2021, the ABL Revolver had no outstanding revolving loans, $ 19.5 million in letters of credit outstanding, and a borrowing base of approximately $ 85.0 million.

Retail Property Term Loan

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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.

We recognized approximately $ 1.4 million of debt extinguishment costs in the six months ended June 30, 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

(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

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

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”).

For the Interim Periods Ended June 30, 2021 and 2020

“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.

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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.

As of June 30, 2021, the 7.75% Senior Secured Notes had an outstanding principal balance of $ 298.0 million.

Mid Pac Term Loan

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

12.875% Senior Secured Notes Due 2026

On June 14, 2021, we redeemed $ 36.8 million aggregate principal amount of 12.875% Senior Secured Notes at a redemption price of 112.875 % of the aggregate principal amount of the notes redeemed, plus the accrued and unpaid interest as of the redemption date.

Upon redemption, we paid a premium of approximately $ 4.7 million and incurred additional debt extinguishment costs of $ 1.9 million, which were recorded in Debt extinguishment and commitment costs on our condensed consolidated statement of operations for the three and six months ended June 30, 2021.

As of June 30, 2021, the 12.875% Senior Secured Notes had an outstanding principal balance of $ 68.3 million.

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

As of June 30, 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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We have no “independent assets or operations” within the meaning of Rule 3-10 of Regulation S-X and certain of the Guarantor Subsidiaries may be subject to restrictions on their ability to distribute funds to us, whether by cash dividends, loans, or advances.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

Note 10— Derivatives

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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.

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):

Our open futures and over-the-counter (“OTC”) swaps at June 30, 2021 will settle by October 2021.

At June 30, 2021, our open commodity derivative contracts represented (in thousands of barrels):

Contract type Purchases Sales Net

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Total 24,200 ( 23,900 ) 300

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.

At June 30, 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, 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 Agreement, and Washington Refinery Intermediation Agreement.

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

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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 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

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

As such, we 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.

On June 15, 2021, the 5.00% Convertible Senior Notes matured and were paid in full, and the related embedded derivative was settled.

The following table provides information on the fair value amounts (in thousands) of these derivatives as of June 30, 2021 and December 31, 2020 and their placement within our condensed consolidated balance sheets.

Balance Sheet Location June 30, 2021 December 31, 2020

Asset (Liability)

Commodity derivatives (1) Prepaid and other current assets $ 3,953 $ 1,346

Commodity derivatives Other accrued liabilities ( 1,045 ) —

Aron repurchase obligation derivative Obligations under inventory financing agreements ( 26,114 ) ( 20,797 )

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_________________________________________________________

(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.

(1) Does not include cash collateral of $ 0.4 million and $ 1.5 million recorded in Prepaid and other current assets as of June 30, 2021 and December 31, 2020, respectively, and $ 9.5 million in Other long-term assets as of both June 30, 2021 and December 31, 2020.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

Statement of Operations Location 2021 2020 2021 2020

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

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

As of June 30, 2021, we had no common stock warrants outstanding.

Derivative Instruments

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Estimates of the J.

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.

Such contractual differentials vary by location and by the type of product and range from a discount of $ 14.45 per barrel to a premium of $ 20.63 per barrel as of June 30, 2021.

Contractual price differentials are considered unobservable inputs;

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

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

We did not have other commodity derivatives classified as Level 3 at June 30, 2021 or December 31, 2020.

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

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 2021 and 2020

Financial Statement Impact

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

Fair value amounts by hierarchy level as of June 30, 2021 and December 31, 2020 are presented gross in the tables below (in thousands):

June 30, 2021

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

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Gross environmental credit obligations (2) — ( 354,486 ) — ( 354,486 ) — ( 354,486 )

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

Total Liabilities $ — $ ( 361,866 ) $ ( 36,364 ) $ ( 398,230 ) $ 7,380 $ ( 390,850 )

December 31, 2020

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

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

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

_________________________________________________________

(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.

(1) Does not include cash collateral of $ 9.9 million and $ 11.0 million as of June 30, 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 $ 60.6 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 June 30, 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 March 31, 2021 and 2020

For the Interim Periods Ended June 30, 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Balance, at beginning of period $ ( 21,162 ) $ 4,534 $ ( 30,958 ) $ ( 22,750 )

Settlements 20,569 ( 33,380 ) 55,512 ( 46,679 )

Acquired — — — —

Total gains (losses) included in earnings ( 35,771 ) ( 37,252 ) ( 60,918 ) 3,331

Balance, at end of period $ ( 36,364 ) $ ( 66,098 ) $ ( 36,364 ) $ ( 66,098 )

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

The carrying value and fair value of long-term debt and other financial instruments as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

June 30, 2021

Carrying Value Fair Value

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

$ 47,974 $ 50,128

ABL Credit Facility due 2022 (2) $ — $ —

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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 March 31, 2021.

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

The remaining aggregate principal amount of the 5.00% Convertible Senior Notes matured and were paid in full on June 15, 2021.

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

The fair value of the 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes were determined using a market approach based on quoted prices.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 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.

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Note 12— Leases

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.

We have cancellable and non-cancellable 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 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

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 June 30, 2021 and December 31, 2020 and their placement within our condensed consolidated balance sheets:

Lease type Balance Sheet Location June 30, 2021 December 31, 2020

Finance Property, plant, and equipment $ 19,722 $ 14,998

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 2021 and 2020

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Lease cost type 2021 2020 2021 2020

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

Three Months Ended March 31,

Six Months Ended June 30,

Lease type 2021 2020

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ROU assets terminated in exchange for release from operating lease liabilities 113 7,738

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

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of June 30, 2021 (in thousands):

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

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_________________________________________________________

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

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

Additionally, we have $ 6.3 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

Sale-Leaseback Transactions

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

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Notes to Condensed Consolidated Financial Statements

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”).

For the Interim Periods Ended June 30, 2021 and 2020

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

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 February 23, 2021, the Sellers and Buyer closed the Sale-Leaseback Transactions 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.

We recognized a gain of $ 63.9 million as a result of these transactions, which is included in Loss (gain) on sale of assets, net on our condensed consolidated statements of operations for the six months ended June 30, 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.

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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.

As a result of the Sale-Leaseback Transactions, 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.

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The largest cost component arising from these various decrees relates to the investigation, monitoring, and remediation of soil, groundwater, surface water, and sediment contamination associated with the facility’s historic operations.

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 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.

Investigative work by 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 June 30, 2021, we have accrued $ 16.0 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.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 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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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 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.

As of June 30, 2021, our estimate of the renewable volume obligation (“RVO”) liability for the 2021 compliance year is based on the RFS volumetric requirements for the 2020 compliance year.

Additionally, the RFS enables the EPA to exempt certain small refineries from the renewable fuels blending requirements in the event such requirements would cause disproportionate economic hardship to that refinery.

We petitioned the EPA for a small refinery waiver for certain of our refineries for 2019-2020, but in January 2021, the EPA announced it would cease granting hardship exemptions to small refineries that had not received continuous exemptions since 2011.

In HollyFrontier Cheyenne Refining, LLC v.

Renewable Fuels Association, the United States Supreme Court recently held that the CAA authorizes the EPA to exempt a small refinery from compliance with the renewable fuel standards program even if the small refinery had not received an exemption in each year since the program began in 2011.

It is uncertain whether the EPA will begin granting hardship exemptions again in light of the Court’s decision or withhold approval of pending hardship exemption requests on other grounds.

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

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

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

We may experience a decrease in demand for refined petroleum products due to an increase in combined fleet mileage or due to refined petroleum products being replaced by renewable fuels.

Environmental Agreement

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.

On September 25, 2013, Par Petroleum, LLC (formerly Hawaii Pacific Energy, a wholly owned subsidiary of Par created for purposes of the acquisition of 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 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.

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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.

For the Interim Periods Ended June 30, 2021 and 2020

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 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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Government and Noble Energy, Inc.

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.

As of June 30, 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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The net proceeds from the Equity Offering were approximately $ 87.2 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.

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

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 2021 and 2020

Incentive Plans

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Restricted Stock Awards $ 1,252 $ 1,036 $ 2,364 $ 1,951

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Stock Option Awards 499 434 945 814

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.

During the three and six months ended June 30, 2021, we granted 13 thousand and 439 thousand shares of restricted stock and restricted stock units with a fair value of approximately $ 0.2 million and $ 7.2 million, respectively.

As of June 30, 2021, there were approximately $ 11.7 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 1.9 years.

During the six months ended June 30, 2021, we granted 382 thousand stock option awards with a weighted-average exercise price of $ 16.52 per share and no grants were made for the three months ended June 30, 2021.

As of June 30, 2021, there were approximately $ 4.8 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 1.9 years.

During the six months ended June 30, 2021, we granted 64 thousand performance restricted stock units to executive officers and no grants were made for the three months ended June 30, 2021.

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 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.

As of June 30, 2021, there were approximately $ 1.6 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 2.1 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.

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 161 thousand shares during the six months ended June 30, 2020.

The common stock warrants are included in the calculation of basic income (loss) per share for the six months ended June 30, 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.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net Loss $ ( 108,958 ) $ ( 40,560 ) $ ( 171,185 ) $ ( 262,897 )

12 unchanged sentences

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

2,258 2,704 2,480 2,704

Note 16— Income Taxes

1 unchanged sentence

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 March 31, 2021 and December 31, 2020.

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 March 31, 2021 and December 31, 2020.

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

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 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

Three Months Ended June 30, 2021 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,155,847 $ 48,706 $ 118,446 $ ( 105,474 ) $ 1,217,525

4 unchanged sentences

Depreciation, depletion, and amortization 14,561 5,377 2,874 736 23,548

Impairment expense — — — — —

Loss (gain) on sale of assets, net 1,664 ( 21 ) ( 1,133 ) — 510

4 unchanged sentences

Debt extinguishment and commitment costs ( 6,628 )

Gain on curtailment of pension obligation 2,032

Other expense, net ( 36 )

Loss before income taxes ( 108,351 )

Income tax expense ( 607 )

Net loss $ ( 108,958 )

Capital expenditures $ 2,432 $ 1,112 $ 1,983 $ 302 $ 5,829

Three Months Ended June 30, 2020 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 455,301 $ 42,132 $ 79,621 $ ( 61,753 ) $ 515,301

Cost of revenues (excluding depreciation)

429,967 27,680 45,382 ( 61,751 ) 441,278

Operating expense (excluding depreciation)

49,385 2,247 15,395 — 67,027

Depreciation, depletion, and amortization 12,706 5,902 2,664 856 22,128

General and administrative expense (excluding depreciation) — — — 10,221 10,221

Acquisition and integration costs — — — 90 90

Operating income (loss) $ ( 36,757 ) $ 6,303 $ 16,180 $ ( 11,169 ) $ ( 25,443 )

Interest expense and financing costs, net ( 16,414 )

Other income, net 455

1 unchanged sentence

Loss before income taxes ( 43,276 )

Income tax benefit 2,716

Net loss $ ( 40,560 )

Capital expenditures $ 11,165 $ 2,972 $ 527 $ 553 $ 15,217

________________________________________________________

(1) Includes eliminations of intersegment revenues and cost of revenues of $ 105.5 million and $ 61.8 million for the three months ended June 30, 2021 and 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

Six Months Ended June 30, 2021 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,994,602 $ 90,015 $ 209,634 $ ( 188,046 ) $ 2,106,205

Cost of revenues (excluding depreciation)

2,074,274 47,396 152,543 ( 188,052 ) 2,086,161

Operating expense (excluding depreciation)

101,282 7,390 34,337 — 143,009

Depreciation, depletion, and amortization 28,625 10,631 5,534 1,638 46,428

Gain on sale of assets, net ( 19,595 ) ( 21 ) ( 44,786 ) — ( 64,402 )

General and administrative expense (excluding depreciation) — — — 24,086 24,086

Acquisition and integration costs — — — 86 86

Operating income (loss) $ ( 189,984 ) $ 24,619 $ 62,006 $ ( 25,804 ) $ ( 129,163 )

Interest expense and financing costs, net ( 35,337 )

Debt extinguishment and commitment costs ( 8,135 )

Gain on curtailment of pension obligation 2,032

Other income, net 25

Loss before income taxes ( 170,578 )

Income tax expense ( 607 )

1 unchanged sentence

Capital expenditures $ 7,007 $ 3,963 $ 2,575 $ 462 $ 14,007

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

Six Months Ended June 30, 2020 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,603,427 $ 101,282 $ 182,434 $ ( 167,759 ) $ 1,719,384

17 unchanged sentences

________________________________________________________

(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.

(1) Includes eliminations of intersegment revenues and cost of revenues of $ 188.0 million and $ 167.8 million for the six months ended June 30, 2021 and 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2021 and 2020

For the Interim Periods Ended June 30, 2021 and 2020

Note 18— Related Party Transactions

5 unchanged sentences

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 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.

There were no costs incurred related to this agreement during the three and six months ended June 30, 2021 or 2020.

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