PAR PACIFIC HOLDINGS, INC. 10-Q

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a growth-oriented company based in Houston, Texas, that owns and operates market-leading energy and infrastructure businesses. Our business is organized into three primary segments: 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. 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 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. Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado. We have four reportable segments: (i) Refining, (ii) Retail, (iii) Logistics, and (iv) Corporate and Other. Our Corporate and Other reportable segment primarily includes general and administrative costs. Please read Note 17—Segment Information to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for detailed information on our operating results by segment. Recent Events Affecting Comparability of Periods On June 10, 2021, the Centers for Disease Control and Prevention (“CDC”) announced that individuals who have been fully vaccinated against COVID-19 can travel domestically at low risk to themselves from COVID-19, though they should still wear masks and adhere to social distancing guidelines. Beginning July 8, 2021, travelers entering the state of Hawaii who have been fully vaccinated in the U.S. may bypass quarantine without a pre-travel test. Tourism in Hawaii increased during the second quarter of 2021, with 419 thousand visitors from the U.S. West coast in May 2021, an 8% increase compared to the same period in 2019 prior to the pandemic. With easing COVID-19 restrictions and increasing demand, our profitability in the retail and logistics segments has reached over 90% of pre-pandemic levels. In the second quarter of 2021, the U.S. saw continued economic recovery due to increased availability of the COVID-19 vaccine to the public. As of June 30, 2021, 46% of the United States population has been fully vaccinated. In Hawaii, Washington, and Wyoming, 52%, 55%, and 34% of the population have been fully vaccinated, respectively. Though vaccination rates continue to rise, the more contagious Delta variant, now the dominant coronavirus strain in the U.S., could cause a resurgence of COVID-19. In addition to measures we took in 2020 in response to the COVID-19 pandemic, as described in our Annual Report on Form 10-K as of and for the year ended December 31, 2020, we have also undertaken additional liquidity-enhancing measures, including deferring or delaying certain capital expenditures related to turnaround activities at our Washington refinery. We closed sale-leaseback transactions in the first quarter of 2021, in which we sold twenty-two (22) retail convenience store/fuel station properties located in Hawaii (the “Sale-Leaseback Properties”) for $112.8 million, net of fees. We also entered into a lease on the properties for fifteen (15) years, unless earlier terminated, with up to four five-year renewal options. On March 19, 2021, we sold 5.75 million shares of common stock in an underwritten public offering at a public offering price of $16.00 per share resulting in net proceeds to us of approximately $87.2 million, after deducting underwriting discounts and commissions and offering expenses. We believe the steps we have taken throughout 2020 and in the first half of 2021 have strengthened our ability to conduct our operations through current conditions. We are also utilizing some of the non-income tax payment deferral opportunities at various state levels and utilized federal refund acceleration opportunities provided by the Internal Revenue Service (“IRS”), Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). We continue to maintain existing processes and procedures, including but not limited to processes and procedures around protection of our technology systems and proprietary data, even though a significant number of our employees are working from home. The health and well-being of 30 our employees and customers continue to be our top priorities as we continue navigating the challenges presented by the COVID-19 pandemic. The financial results contained in this Quarterly Report on Form 10-Q reflect the continuing pandemic-related demand suppression experienced in the first half of 2021 in the regions in which we operate. Though vaccine availability and vaccination rates are increasing, the COVID-19 pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report. The full magnitude of the impact of COVID-19 on our financial condition, future results of operations, and future cash flows and liquidity is uncertain and has been and may continue to be material. Results of Operations Three months ended June 30, 2021 compared to the three months ended June 30, 2020 Net Loss. Our financial results for the second quarter of 2021 declined from a net loss of $40.6 million for the three months ended June 30, 2020 to a net loss of $109.0 million for the three months ended June 30, 2021. The decrease was primarily driven by a $158.4 million unfavorable change in lower of cost or net realizable value inventory adjustments and increased RINs expenses driven by higher RINs prices, partially offset by a favorable change in inventory valuation adjustments at our Hawaii refinery and improved crack spreads driven by increased refined product demand due to the continuing economic recovery from the COVID-19 pandemic. Adjusted EBITDA and Adjusted Net Loss. For the three months ended June 30, 2021, Adjusted EBITDA was a loss of $6.7 million compared to a loss of $50.3 million for the three months ended June 30, 2020. The increase was primarily related to improved crack spreads driven by increased refined product demand, favorable realized derivatives, and a 23% increase in sales volumes in our Refining segment, partially offset by a higher RINs mark-to-market expense driven by higher RINs prices, unfavorable feedstock costs at our Washington refinery, a 31% decrease in fuel margins at our Retail segment related to rising crude oil prices, and an unfavorable increase in internal fuel consumption at our Refining segment due to higher throughput volumes and rising crude oil prices. For the three months ended June 30, 2021, Adjusted Net Loss was a loss of $48.0 million compared to a loss of $90.8 million for the three months ended June 30, 2020. The improvement was primarily related to the factors described above for the increase in Adjusted EBITDA. Six months ended June 30, 2021 compared to the six months ended June 30, 2020 Net Loss. Our financial results for the second quarter of 2021 improved from a net loss of $262.9 million for the six months ended June 30, 2020 to a net loss of $171.2 million for the six months ended June 30, 2021. The increase was primarily driven by favorable feedstock, purchased product, and derivative costs at our Hawaii refinery, favorable inventory valuation adjustments in our Refining segment, the goodwill impairment of $67.9 million in our Refining and Retail segments and the other-than-temporary impairment of $45.3 million related to our equity investment in Laramie Energy in the six months ended June 30, 2020 with no such impairments in 2021, and a gain of $63.9 million in the six months ended June 30, 2021 related to the Sale-Leaseback Transactions with no such gain in 2020. These benefits were partially offset by increased RINs expenses driven by higher RINs prices, the price lag impact associated with certain product sales contracts at our Hawaii refinery, higher costs associated with our inventory intermediation step-out obligations, and a $21.0 million tax benefit recorded in 2020 with no such benefit recorded in 2021. Adjusted EBITDA and Adjusted Net Loss. For the six months ended June 30, 2021, Adjusted EBITDA was a loss of $50.0 million compared to a loss of $36.7 million for the six months ended June 30, 2020. The decline was primarily related to the price lag impact associated with certain product sales contracts at our Hawaii refinery, increased fees related to our intermediation agreements, and higher RINs mark-to-market expenses related to prior year net obligations due to increasing RINs prices, partially offset by favorable feedstock, purchased product, and realized derivative costs at our Hawaii refinery and favorable inventory valuation adjustments at our Wyoming and Washington refineries. Other factors impacting our results period over period include a 23% decrease in fuel margins at our Retail segment related to rising crude oil prices. For the six months ended June 30, 2021, Adjusted Net Loss was $132.4 million compared to a loss of approximately $118.0 million for the six months ended June 30, 2020. The decline was primarily related to the same factors described above for the decrease in Adjusted EBITDA. 31 The following tables summarize our consolidated results of operations for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Three Months Ended June 30, 2021 2020 $ Change % Change (1) Revenues $ 1,217,525 $ 515,301 $ 702,224 136 % Cost of revenues (excluding depreciation) 1,197,298 441,278 756,020 171 % Operating expense (excluding depreciation) 68,821 67,027 1,794 3 % Depreciation, depletion, and amortization 23,548 22,128 1,420 6 % Loss (gain) on sale of assets, net 510 — 510 NM General and administrative expense (excluding depreciation) 12,201 10,221 1,980 19 % Acquisition and integration costs (352) 90 (442) (491) % Total operating expenses 1,302,026 540,744 Operating loss (84,501) (25,443) Other income (expense) Interest expense and financing costs, net (17,186) (16,414) (772) (5) % Debt extinguishment and commitment costs (6,628) — (6,628) NM Other income (expense), net (36) 455 (491) (108) % Equity losses from Laramie Energy, LLC — (1,874) 1,874 100 % Total other income (expense), net (23,850) (17,833) Loss before income taxes (108,351) (43,276) Income tax benefit (expense) (607) 2,716 (3,323) (122) % Net loss $ (108,958) $ (40,560) ________________________________________________________ (1) NM - Not meaningful 32 Six Months Ended June 30, 2021 2020 $ Change % Change (1) Revenues $ 2,106,205 $ 1,719,384 $ 386,821 22 % Cost of revenues (excluding depreciation) 2,086,161 1,651,489 434,672 26 % Operating expense (excluding depreciation) 143,009 140,418 2,591 2 % Depreciation, depletion, and amortization 46,428 43,411 3,017 7 % Impairment expense — 67,922 (67,922) (100) % Loss (gain) on sale of assets, net (64,402) — (64,402) NM General and administrative expense (excluding depreciation) 24,086 22,005 2,081 9 % Acquisition and integration costs 86 755 (669) (89) % Total operating expenses 2,235,368 1,926,000 Operating loss (129,163) (206,616) Other income (expense) Interest expense and financing costs, net (35,337) (35,088) (249) (1) % Debt extinguishment and commitment costs (8,135) — (8,135) NM Gain on curtailment of pension obligation 2,032 — 2,032 NM Other income, net 25 479 (454) (95) % Change in value of common stock warrants — 4,270 (4,270) (100) % Equity losses from Laramie Energy, LLC — (46,905) 46,905 100 % Total other income (expense), net (41,415) (77,244) Loss before income taxes (170,578) (283,860) Income tax benefit (expense) (607) 20,963 (21,570) (103) % Net loss $ (171,185) $ (262,897) ________________________________________________________ (1) NM - Not meaningful The following tables summarize our operating income (loss) by segment for the three and six months ended June 30, 2021 and 2020 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. 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 Cost of revenues (excluding depreciation) 1,190,797 25,314 86,671 (105,484) 1,197,298 Operating expense (excluding depreciation) 47,944 3,494 17,383 — 68,821 Depreciation, depletion, and amortization 14,561 5,377 2,874 736 23,548 Loss (gain) on sale of assets, net 1,664 (21) (1,133) — 510 General and administrative expense (excluding depreciation) — — — 12,201 12,201 Acquisition and integration costs — — — (352) (352) Operating income (loss) $ (99,119) $ 14,542 $ 12,651 $ (12,575) $ (84,501) 33 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) ________________________________________________________ (1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $105.5 million and $61.8 million for the three months ended June 30, 2021 and 2020, respectively. 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) 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 Cost of revenues (excluding depreciation) 1,643,320 59,116 116,812 (167,759) 1,651,489 Operating expense (excluding depreciation) 101,629 6,518 32,271 — 140,418 Depreciation, depletion, and amortization 25,700 10,569 5,463 1,679 43,411 Impairment expense 38,105 — 29,817 — 67,922 General and administrative expense (excluding depreciation) — — — 22,005 22,005 Acquisition and integration costs — — — 755 755 Operating income (loss) $ (205,327) $ 25,079 $ (1,929) $ (24,439) $ (206,616) ________________________________________________________ (1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $188.0 million and $167.8 million for the six months ended June 30, 2021 and 2020, respectively. 34 Below is a summary of key operating statistics for the refining segment for the three and six months ended June 30, 2021 and 2020: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Total Refining Segment Feedstocks Throughput (Mbpd) 140.7 115.5 134.1 133.5 Refined product sales volume (Mbpd) 146.6 119.3 138.5 149.5 Hawaii Refineries Combined Feedstocks Throughput (Mbpd) 84.0 66.5 82.6 80.7 Par East Throughput (Mbpd) 84.0 66.5 82.6 68.1 Par West Throughput (Mbpd) — — — 12.6 Yield (% of total throughput) Gasoline and gasoline blendstocks 24.7 % 23.6 % 24.7 % 24.3 % Distillates 46.8 % 40.8 % 44.9 % 45.1 % Fuel oils 25.6 % 29.0 % 26.5 % 26.4 % Other products (0.4) % 2.9 % 0.5 % 0.2 % Total yield 96.7 % 96.3 % 96.6 % 96.0 % Refined product sales volume (Mbpd) On-island sales volume 87.3 69.1 82.6 94.3 Exports sales volume — — — — Total refined product sales volume 87.3 69.1 82.6 94.3 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 0.34 $ (6.96) $ (0.05) $ (2.73) Production costs per bbl ($/throughput bbl) (2) 3.40 4.45 3.69 3.81 DD&A per bbl ($/throughput bbl) 0.65 0.48 0.66 0.39 Washington Refinery Feedstocks Throughput (Mbpd) 38.7 35.9 35.2 38.4 Yield (% of total throughput) Gasoline and gasoline blendstocks 23.6 % 23.4 % 24.0 % 23.7 % Distillates 34.1 % 34.9 % 35.0 % 35.7 % Asphalt 21.5 % 19.2 % 19.9 % 18.8 % Other products 17.8 % 18.3 % 18.2 % 19.2 % Total yield 97.0 % 95.8 % 97.1 % 97.4 % Refined product sales volume (Mbpd) 40.9 36.9 40.1 40.3 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ (0.04) $ 3.78 $ (0.62) $ 7.06 Production costs per bbl ($/throughput bbl) (2) 3.28 3.76 3.76 3.57 DD&A per bbl ($/throughput bbl) 1.49 1.49 1.62 1.46 35 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Wyoming Refinery Feedstocks Throughput (Mbpd) 18.0 13.1 16.3 14.4 Yield (% of total throughput) Gasoline and gasoline blendstocks 45.6 % 45.7 % 47.1 % 48.6 % Distillates 46.6 % 47.8 % 45.9 % 46.1 % Fuel oils 2.4 % 2.1 % 2.0 % 1.8 % Other products 2.5 % 2.0 % 1.9 % 1.2 % Total yield 97.1 % 97.6 % 96.9 % 97.7 % Refined product sales volume (Mbpd) 18.4 13.3 15.8 14.9 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 10.25 $ 6.22 $ 6.74 $ 2.39 Production costs per bbl ($/throughput bbl) (2) 5.71 7.72 6.78 7.06 DD&A per bbl ($/throughput bbl) 2.63 4.13 2.85 3.73 Market Indices (average $ per barrel) 3-1-2 Singapore Crack Spread (3) $ 4.38 $ (0.14) $ 4.09 $ 3.99 Pacific Northwest 5-2-2-1 Index (4) 16.05 11.92 13.77 12.58 Wyoming 3-2-1 Index (5) 30.04 17.39 25.53 16.62 Crude Oil Prices ($ per barrel) Brent $ 69.08 $ 33.39 $ 65.22 $ 42.10 WTI 66.17 28.00 62.18 36.99 ANS 69.44 28.17 65.57 40.22 Bakken Clearbrook 65.99 24.63 61.82 33.65 WCS Hardisty 53.33 18.40 49.77 23.18 Brent M1-M3 0.96 (2.19) 0.89 (1.37) ________________________________________________________ (1) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method. Please see discussion of Adjusted Gross Margin below. (2) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our condensed consolidated statement of operations, which also includes costs related to our bulk marketing operations. (3) We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator of our current operations in Hawaii. (4) We believe the Pacific Northwest 5-2-2-1 Index is the most representative market indicator for our operations in Tacoma, Washington. The Pacific Northwest 5-2-2-1 Index is computed by taking two parts gasoline (sub-octane), two parts middle distillates (ULSD and jet fuel), and one part fuel oil as created from five barrels of Alaskan North Slope (“ANS”) crude oil. (5) The profitability of our Wyoming refinery is heavily influenced by crack spreads in nearby markets. We believe the Wyoming 3-2-1 Index is the most representative market indicator for our operations in Wyoming. The Wyoming 3-2-1 36 Index is computed by taking two parts gasoline and one part distillates (ULSD) as created from three barrels of West Texas Intermediate Crude Oil (“WTI”). Pricing is based 50% on applicable product pricing in Rapid City, South Dakota, and 50% on applicable product pricing in Denver, Colorado. Below is a summary of key operating statistics for the retail segment for the three and six months ended June 30, 2021 and 2020: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Retail Segment Retail sales volumes (thousands of gallons) 28,871 22,586 53,672 51,027 Non-GAAP Performance Measures Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP and our calculations thereof may not be comparable to similarly titled measures reported by other companies. Adjusted Gross Margin Adjusted Gross Margin is defined as (i) operating income (loss) plus operating expense (excluding depreciation), impairment expense, inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our Washington inventory and intermediation obligation, and purchase price allocation adjustments), depreciation, depletion, and amortization (“DD&A”); Renewable Identification Numbers (“RINs”) loss (gain) in excess of net obligation (which represents the income statement effect of reflecting our RINs liability on a net basis), loss (gain) on sale of assets, and unrealized loss (gain) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) plus inventory valuation adjustment, unrealized loss (gain) on derivatives, and RINs loss (gain) in excess of net obligation. We define cost of revenues (excluding depreciation) as the hydrocarbon-related costs of inventory sold, transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our RINs and environmental credit obligations, and certain hydrocarbon fees and taxes. Cost of revenues (excluding depreciation) also includes the unrealized gain (loss) on derivatives and the inventory valuation adjustment that we exclude from Adjusted Gross Margin. Beginning in the third quarter of 2020, Adjusted Gross Margin excludes the LIFO layer liquidation impacts associated with our Washington inventory. There was no LIFO liquidation adjustment for the three and six months ended June 30, 2020. Management believes Adjusted Gross Margin is an important measure of operating performance and uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. Management believes Adjusted Gross Margin provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation, depletion, and amortization. Adjusted Gross Margin should not be considered an alternative to operating income (loss), cash flows from operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted Gross Margin presented by other companies may not be comparable to our presentation since each company may define this term differently as they may include other manufacturing costs and depreciation expense in cost of revenues. 37 The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands): Three months ended June 30, 2021 Refining Logistics Retail Operating income (loss) $ (99,119) $ 14,542 $ 12,651 Operating expense (excluding depreciation) 47,944 3,494 17,383 Depreciation, depletion, and amortization 14,561 5,377 2,874 Loss (gain) on sale of assets, net 1,664 (21) (1,133) Inventory valuation adjustment 25,284 — — LIFO liquidation adjustment 2,263 — — RINs loss in excess of net obligation 25,207 — — Unrealized loss on derivatives 1,404 — — Adjusted Gross Margin (1) $ 19,208 $ 23,392 $ 31,775 Three months ended June 30, 2020 Refining Logistics Retail Operating income (loss) $ (36,757) $ 6,303 $ 16,180 Operating expense (excluding depreciation) 49,385 2,247 15,395 Depreciation, depletion, and amortization 12,706 5,902 2,664 Inventory valuation adjustment (35,979) — — RINs loss in excess of net obligation 10,738 — — Unrealized gain on derivatives (22,431) — — Adjusted Gross Margin (1) (2) $ (22,338) $ 14,452 $ 34,239 Six months ended June 30, 2021 Refining Logistics Retail Operating income (loss) $ (189,984) $ 24,619 $ 62,006 Operating expense (excluding depreciation) 101,282 7,390 34,337 Depreciation, depletion, and amortization 28,625 10,631 5,534 Loss (gain) on sale of assets, net (19,595) (21) (44,786) Inventory valuation adjustment 39,459 — — LIFO liquidation adjustment 4,151 — — RINs loss in excess of net obligation 53,977 — — Unrealized gain on derivatives (2,608) — — Adjusted Gross Margin (1) $ 15,307 $ 42,619 $ 57,091 Six months ended June 30, 2020 Refining Logistics Retail Operating income (loss) $ (205,327) $ 25,079 $ (1,929) Operating expense (excluding depreciation) 101,629 6,518 32,271 Depreciation, depletion, and amortization 25,700 10,569 5,463 Impairment expense 38,105 — 29,817 Inventory valuation adjustment 39,345 — — RINs loss in excess of net obligation 17,340 — — Unrealized loss on derivatives 445 — — Adjusted Gross Margin (2) $ 17,237 $ 42,166 $ 65,622 ____________________________________________________________________________ (1) For the three and six months ended June 30, 2021, and the three months ended June 30, 2020, there was no impairment expense recorded in Operating income (loss). (2) For the three and six months ended June 30, 2020, there was no loss (gain) on sale of assets or LIFO liquidation adjustment recorded in Operating income (loss). 38 Adjusted Net Income (Loss) and Adjusted EBITDA Adjusted Net Income (Loss) is defined as Net income (loss) excluding changes in the value of contingent consideration and common stock warrants, acquisition and integration costs, unrealized (gain) loss on derivatives, debt extinguishment and commitment costs, increase in (release of) tax valuation allowance and other deferred tax items, inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our Washington inventory and intermediation obligation, and purchase price allocation adjustments), severance costs, impairment expense, (gain) loss on sale of assets, Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives, RINs loss (gain) in excess of net obligation, and impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference. Beginning in the third quarter of 2020, Adjusted Net Income (Loss) excludes the LIFO layer liquidation impacts associated with our Washington inventory. There was no LIFO liquidation adjustment for the three and six months ended June 30, 2020. Adjusted EBITDA is Adjusted Net Income (Loss) excluding interest expense and financing costs, income taxes, DD&A, and equity losses (earnings) from Laramie Energy, excluding Par’s share of unrealized loss (gain) on derivatives, impairment of Par’s investment, and our share of Laramie Energy’s asset impairment losses in excess of our basis difference. We believe Adjusted Net Income (Loss) and Adjusted EBITDA are useful supplemental financial measures that allow investors to assess: • The financial performance of our assets without regard to financing methods, capital structure, or historical cost basis; • The ability of our assets to generate cash to pay interest on our indebtedness; and • Our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. Adjusted Net Income (Loss) and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted Net Income (Loss) and Adjusted EBITDA presented by other companies may not be comparable to our presentation as other companies may define these terms differently. 39 The following table presents a reconciliation of Adjusted Net Loss and Adjusted EBITDA to the most directly comparable GAAP financial measure, Net Loss, on a historical basis for the periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net Income (Loss) $ (108,958) $ (40,560) $ (171,185) $ (262,897) Inventory valuation adjustment 25,284 (35,979) 39,459 39,345 LIFO liquidation adjustment 2,263 — 4,151 — RINs loss in excess of net obligation 25,207 10,738 53,977 17,340 Unrealized loss (gain) on derivatives 1,404 (22,431) (2,608) 445 Acquisition and integration costs (352) 90 86 755 Debt extinguishment and commitment costs 6,628 — 8,135 — Changes in valuation allowance and other deferred tax items (1) — (2,714) — (21,087) Change in value of common stock warrants — — — (4,270) Severance costs — 96 16 245 Loss (gain) on sale of assets, net 510 — (64,402) — Impairment expense — — — 67,922 Impairment of Investment in Laramie Energy, LLC (2) — — — 45,294 Par's share of Laramie Energy's unrealized loss (gain) on derivatives (2) — — — (1,110) Adjusted Net Loss (3) (48,014) (90,760) (132,371) (118,018) Depreciation, depletion, and amortization 23,548 22,128 46,428 43,411 Interest expense and financing costs, net 17,186 16,414 35,337 35,088 Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment losses — 1,874 — 2,721 Income tax expense (benefit) 607 (2) 607 124 Adjusted EBITDA $ (6,673) $ (50,346) $ (49,999) $ (36,674) ________________________________________ (1) Includes increases in (releases of) our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance. These tax expenses (benefits) are included in Income tax benefit (expense) on our condensed consolidated statements of operations. (2) Included in Equity losses from Laramie Energy, LLC on our condensed consolidated statements of operations. (3) For the three and six months ended June 30, 2021 and 2020, there was no change in value of contingent consideration. Factors Impacting Segment Results Three months ended June 30, 2021 compared to the three months ended June 30, 2020 Refining. Operating loss for our refining segment was $99.1 million for the three months ended June 30, 2021, a decline of $62.3 million compared to operating loss of $36.8 million for the three months ended June 30, 2020. The decrease in profitability was primarily driven by a $50.3 million increase in RINs expenses driven by higher RINs prices, a $158.4 million unfavorable change in lower of cost or net realizable value inventory adjustments, and an unfavorable change in feedstock costs at our Washington refinery, partially offset by a 23% increase in sales volume and favorable crack spreads as demand increases due to the continued economic recovery from the COVID-19 pandemic. Other factors impacting our results period over period include higher internal fuel consumption, higher derivative costs, higher inventory financing costs, and higher depreciation expenses due to recently-completed capital projects. Logistics. Operating income for our logistics segment was $14.5 million for the three months ended June 30, 2021, an increase of $8.2 million compared to operating income of $6.3 million for the three months ended June 30, 2020. The increase is due to net 34% higher throughput across our Wyoming logistics assets and 55% higher throughput across our Hawaii assets related to increased sales volumes, especially across the neighbor islands in Hawaii, primarily due to increased demand as COVID-19 restrictions ease. 40 Retail. Operating income for our retail segment was $12.7 million for the three months ended June 30, 2021, a decrease of $3.5 million compared to operating income of $16.2 million for the three months ended June 30, 2020. The decrease was primarily due to a 31% decrease in fuel margins related to rising crude oil prices and $1.4 million of rent expense in the second quarter of 2021 related to the Sale-Leaseback Transactions we closed on February 23 and March 12, 2021, partially offset by a 28% increase in fuel sales volumes. Six months ended June 30, 2021 compared to the six months ended June 30, 2020 Refining. Operating loss for our refining segment was $190.0 million for the six months ended June 30, 2021, an improvement of $15.3 million compared to an operating loss of $205.3 million for the six months ended June 30, 2020. The decrease in the reported loss was primarily driven by favorable feedstock and derivative costs and a favorable change in lower of cost or net realizable value inventory adjustments, partially offset by a $128.3 million increase in RINs expenses driven by higher RINs prices, higher costs associated with our inventory intermediation step-out obligations, and the price lag impact associated with certain sales contracts at our Hawaii refinery. Other factors impacting our results period over period include a favorable FIFO impact in 2021 at our Wyoming refinery, no impairment in 2021 as compared to our 2020 goodwill impairment of $38.1 million, and a 2021 gain of $19.6 million primarily related to the Sale-Leaseback Transactions we closed on February 23 and March 12, 2021. Logistics. Operating income for our logistics segment was $24.6 million for the six months ended June 30, 2021, which was relatively consistent with $25.1 million for the six months ended June 30, 2020. Retail. Operating income for our retail segment was $62.0 million for the six months ended June 30, 2021, an increase of $63.9 million compared to an operating loss of $1.9 million for the six months ended June 30, 2020. The increase in profitability is primarily due to a gain of $44.8 million primarily related to the Sale-Leaseback Transactions we closed on February 23 and March 12, 2021, no impairment in 2021 as compared to our 2020 goodwill impairment of $29.8 million, and an increase in sales volumes of 5%, partially offset by a decrease in fuel margins of 23% related to rising crude oil prices. Adjusted Gross Margin Three months ended June 30, 2021 compared to the three months ended June 30, 2020 Refining. For the three months ended June 30, 2021, our refining Adjusted Gross Margin was $19.2 million, an increase of $41.5 million compared to a loss of $22.3 million for the three months ended June 30, 2020. The increase was primarily driven by improved crack spreads and a 23% increase in refining sales volumes, partially offset by higher RINs mark-to-market expenses driven by increasing RINs prices and rising feedstock costs at the Washington refinery. Adjusted Gross Margin for the Hawaii refineries increased from a loss of $6.96 per barrel during the three months ended June 30, 2020 to income of $0.34 per barrel during the three months ended June 30, 2021 primarily due to improved contract terms and crack spreads, a 26% increase in sales volume, and favorable feedstock and purchased product costs, partially offset by increased RINs costs driven by a $12.7 million higher RINs mark-to-market expense and an unfavorable increase in logistics costs. Adjusted Gross Margin for the Wyoming refinery increased $4.03 per barrel primarily due to improved crack spreads, a FIFO benefit related to increasing crude oil prices, and a 38% increase in sales volumes, partially offset by increased RINs costs driven by a $4.8 million higher RINs mark-to-market expense. Adjusted Gross Margin for the Washington refinery decreased $3.82 per barrel primarily due to a $4.1 million higher RINs mark-to-market expense, compressed heavy product spreads, and unfavorable feedstock costs, partially offset by improved crack spreads and an 11% increase in sales volume. Logistics. For the three months ended June 30, 2021, our logistics Adjusted Gross Margin was $23.4 million, an increase of $8.9 million compared to $14.5 million for the three months ended June 30, 2020. The increase is primarily due to net 34% higher throughput across our Wyoming logistics assets and 55% higher throughput across our Hawaii logistics assets due to increased sales volumes in Hawaii, especially across the neighboring islands, driven by easing travel restrictions related to the continued recovery from the COVID-19 pandemic. Retail. For the three months ended June 30, 2021, our retail Adjusted Gross Margin was $31.8 million, a decrease of $2.4 million when compared to $34.2 million for the three months ended June 30, 2020. The decrease was primarily due to a 31% decrease in fuel margins related to rising crude oil prices, partially offset by a 28% increase in sales volumes from the ongoing recovery. Six months ended June 30, 2021 compared to the six months ended June 30, 2020 Refining. For the six months ended June 30, 2021, our refining Adjusted Gross Margin was $15.3 million, a decrease of $1.9 million compared to $17.2 million for the six months ended June 30, 2020. The decrease was primarily due to higher 41 RINs expense driven by increasing RINs prices and higher inventory financing costs, partially offset by lower feedstock costs in Hawaii. Adjusted Gross Margin for the Hawaii refineries improved from a loss of $2.73 per barrel during the six months ended June 30, 2020 to a loss of $0.05 per barrel during the six months ended June 30, 2021 primarily due to favorable feedstock and purchased product costs and realized derivative favorability, partially offset by a 12% decrease in sales volumes, the price lag impact associated with certain sales contracts, and increased RINs costs driven by a $39.8 million higher RINs mark-to-market expense. Adjusted Gross Margin for the Wyoming refinery increased $4.35 per barrel primarily due to an $11.9 million favorable FIFO impact in 2021 compared to a $10.5 million unfavorable FIFO impact in the same period in 2020 and favorable crack spreads, partially offset by increased RINs costs driven by a $14.0 million higher RINs mark-to-market expense and higher feedstock costs. Adjusted Gross Margin for the Washington refinery decreased $7.68 per barrel primarily due to higher feedstock costs, compressed heavy product spreads, and a $12.1 million increase in RINs mark-to-market expense, partially offset by lower logistics costs. Logistics. For the six months ended June 30, 2021, our logistics Adjusted Gross Margin was $42.6 million, which was relatively consistent with our logistics Adjusted Gross Margin of $42.2 million for the six months ended June 30, 2020. Retail. For the six months ended June 30, 2021, our retail Adjusted Gross Margin was $57.1 million, a decrease of $8.5 million compared to $65.6 million for the six months ended June 30, 2020. The decrease was primarily due to a 23% decrease in fuel margins related to rising crude oil prices, partially offset by a 5% increase in sales volumes from the ongoing recovery. Discussion of Consolidated Results Three months ended June 30, 2021 compared to the three months ended June 30, 2020 Revenues. For the three months ended June 30, 2021, revenues were $1.2 billion, a $0.7 billion increase compared to $0.5 billion for the three months ended June 30, 2020. The increase was primarily due to an increase of $0.7 billion in third-party refining segment revenue as a result of increases in Brent and WTI crude oil prices, a 23% increase in refining sales volumes, and an increase in average product cracks. Brent crude oil prices recovered to $69.08 per barrel during the second quarter of 2021 compared to $33.39 per barrel during the second quarter of 2020, and WTI crude oil prices recovered to $66.17 per barrel during the second quarter of 2021 compared to $28.00 per barrel during the second quarter of 2020. Cost of Revenues (Excluding Depreciation). For the three months ended June 30, 2021, cost of revenues (excluding depreciation) was $1.2 billion, a $0.8 billion increase compared to $0.4 billion for the three months ended June 30, 2020. The increase was primarily driven by higher Brent and WTI crude oil prices and higher refining volumes as discussed above, a $158.4 million unfavorable change in lower of cost or net realizable value adjustments, higher feedstock costs at our Washington refinery, and a $50.3 million increase in the RINs expense driven by higher RINs prices. Operating Expense (Excluding Depreciation). For the three months ended June 30, 2021, operating expense (excluding depreciation) was $68.8 million, which was relatively consistent with $67.0 million for the three months ended June 30, 2020. Depreciation, Depletion, and Amortization . For the three months ended June 30, 2021, DD&A was $23.5 million, which was relatively consistent with $22.1 million for the three months ended June 30, 2020. Loss on Sale of Assets, Net. During the three months ended June 30, 2021, we recorded a loss of $0.5 million primarily related to the sale and disposal of certain retail locations. No such gain or loss was recorded during the three months ended June 30, 2020. General and Administrative Expense (Excluding Depreciation). For the three months ended June 30, 2021, general and administrative expense (excluding depreciation) was $12.2 million, an increase of $2.0 million compared to $10.2 million for the three months ended June 30, 2020. The increase was primarily due to an increase in employee costs and the use of outside services. Acquisition and Integration Costs. For the three months ended June 30, 2021, we recorded an acquisition and integration gain of $0.4 million, which was relatively consistent with $0.1 million of costs incurred during the three months ended June 30, 2020. Interest Expense and Financing Costs, Net . For the three months ended June 30, 2021, our interest expense and financing costs were $17.2 million, an increase of $0.8 million compared to $16.4 million for the three months ended June 30, 2020. The change was driven by a $2.3 million increase in interest expense and financing costs related to the 12.875% Senior 42 Secured Notes issued in June 2020. This increase was partially offset by a decrease of $0.8 million due to the reduced principal and lower variable interest rates on our Term Loan B Facility, a $0.4 million decrease related to debt fully repaid during the six months ended June 30, 2021, and a net $0.2 million decrease in interest expense related to our inventory financing agreements. Debt Extinguishment and Commitment Costs. For the three months ended June 30, 2021, our debt extinguishment and commitment costs were $6.6 million and primarily represent extinguishment costs associated with the repayment of a portion of our 12.875% Senior Secured Notes on June 14, 2021. Please read Note 9—Debt to our condensed consolidated financial statements for further discussion. No such costs were incurred for the three months ended June 30, 2020. Equity Earnings (Losses) from Laramie Energy, LLC . For the three months ended June 30, 2021, there were no equity earnings (losses) from Laramie Energy, compared to equity losses of $1.9 million for the three months ended June 30, 2020. As of June 30, 2020, we discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero. Please read Note 3—Investment in Laramie Energy, LLC for further information. Income Taxes. For the three months ended June 30, 2021, we recorded income tax expense of $0.6 million primarily related to foreign taxes. For the three months ended June 30, 2020, we recorded an income tax benefit of $2.7 million primarily related to an increase in our net operating loss carryforwards. Six months ended June 30, 2021 compared to the six months ended June 30, 2020 Revenues. For the six months ended June 30, 2021, revenues were $2.1 billion, a $0.4 billion increase compared to $1.7 billion for the six months ended June 30, 2020. The increase was primarily due to an increase of $0.4 billion in third-party revenues at our refining segment primarily as a result of higher crude oil prices, partially offset by a 7% decrease in refining sales volumes. Average Brent crude oil prices recovered to $65.22 in the six months ended June 30, 2021 compared to $42.10 per barrel in the six months ended June 30, 2020, and WTI crude oil prices recovered to $62.18 per barrel during the six months ended June 30, 2021 compared to $36.99 in the six months ended June 30, 2020. Revenues at our retail segment increased $27.2 million primarily due to a 5% increase in sales volumes and a 9% increase in fuel prices. Cost of Revenues (Excluding Depreciation). For the six months ended June 30, 2021, cost of revenues (excluding depreciation) was $2.1 billion, a $0.4 billion increase compared to $1.7 billion for the six months ended June 30, 2020. The increase was primarily due to increases in Brent and WTI crude oil prices as discussed above, a $128.3 million increase in the RINs expense driven by higher RINs prices, and higher inventory financing costs, partially offset by lower refining sales volumes and favorable purchased product and feedstock costs at our Hawaii refinery. Other factors impacting our results period over period are a $34.6 million favorable change in lower of cost or net realizable value adjustments and lower crude oil sales. Operating Expense (Excluding Depreciation). For the six months ended June 30, 2021, operating expense (excluding depreciation) was $143.0 million, which was relatively consistent with $140.4 million for the six months ended June 30, 2020. Depreciation, Depletion, and Amortization . For the six months ended June 30, 2021, DD&A was $46.4 million, an increase of $3.0 million compared to $43.4 million for the six months ended June 30, 2020. The increase was primarily due to Hawaii refinery turnaround amortization. Impairment Expense. For the six months ended June 30, 2020, we recorded goodwill impairment charges of $67.9 million related to our Refining and Retail segments as a result of the global economic impact of the COVID-19 pandemic and a steep decline in current and forecasted prices and demand for crude oil and refined products. No such expense was recorded during the six months ended June 30, 2021. Gain on Sale of Assets, Net. For the six months ended June 30, 2021, the gain on sale of assets, net was approximately $64.4 million and primarily related to the Sale-Leaseback Transactions we closed on February 23 and March 12, 2021. No such gain was recorded during the six months ended June 30, 2020. General and Administrative Expense (Excluding Depreciation). For the six months ended June 30, 2021, general and administrative expense (excluding depreciation) was $24.1 million, an increase of $2.1 million compared to $22.0 million for the six months ended June 30, 2020. The increase was primarily due to increased employee costs and an increase in the use of outside services. Acquisition and Integration Costs. For the six months ended June 30, 2021, acquisition and integration costs were not significant. For the six months ended June 30, 2020, we incurred $0.8 million of integration costs primarily related to the Washington Acquisition. 43 Interest Expense and Financing Costs, Net . For the six months ended June 30, 2021, our interest expense and financing costs were $35.3 million, an increase of $0.2 million when compared to $35.1 million for the six months ended June 30, 2020. The increase was primarily due to a $5.9 million increase in interest expense and financing costs related to the 12.875% Senior Secured Notes issued in June 2020 and increased interest expense of $0.1 million related to the ABL Credit Facility. These increases were partially offset by a decrease of $2.4 million due to the interest rate derivatives terminated as of March 31, 2021 primarily related to the Retail Property Term Loan and $2.1 million due to the reduced principal and lower variable interest rates on our Term Loan B Facility. Other factors contributing to the decrease included a $0.8 million decrease in interest expense related to our inventory financing agreements and a $0.5 million decrease related to debt fully repaid during the six months ended June 30, 2021. Please read Note 7—Inventory Financing Agreements and Note 9—Debt to our condensed consolidated financial statements for further discussion on our inventory financing and indebtedness, respectively. Debt Extinguishment and Commitment Costs. For the six months ended June 30, 2021, our debt extinguishment and commitment costs were $8.1 million and primarily represent $6.6 million in extinguishment costs associated with the redemption of $36.8 million of 12.875% Senior Secured Notes on June 14, 2021 and $1.4 million in extinguishment costs associated with the repayment of the Retail Property Term Loan on February 23, 2021. Please read Note 9—Debt to our condensed consolidated financial statements for further discussion. No such costs were incurred for the six months ended June 30, 2020. Gain on Curtailment of Pension Obligation. For the six months ended June 30, 2021, we recorded a $2.0 million gain on curtailment of pension obligation related to the March 2021 Wyoming Refining plan amendment. Please read Note 2—Summary of Significant Accounting Policies to our condensed consolidated financial statements for further discussion. No such gain was recorded during the six months ended June 30, 2020. Change in Value of Common Stock Warrants . For the six months ended June 30, 2020, the change in value of common stock warrants resulted in a gain of $4.3 million. During January and March 2020, one of our stockholders and its affiliates exercised the remaining 354,350 common stock warrants in exchange for 350,542 shares of common stock. We estimated the fair value of our outstanding common stock warrants and the income recognized upon exercise using the difference between the strike price of the warrant and the market price of our common stock. For the three months ended March 31, 2020, our stock price decreased from $23.24 per share as of December 31, 2019 to $7.10 per share as of March 31, 2020. During the six months ended June 30, 2021, there were no common stock warrants outstanding. Equity Earnings (Losses) from Laramie Energy, LLC . For the six months ended June 30, 2021, there were no equity earnings (losses) from Laramie Energy compared to equity losses of $46.9 million for the six months ended June 30, 2020. The losses recorded in 2020 were primarily a result of an impairment of our investment in Laramie. As of June 30, 2020, we discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment had been reduced to zero. Please read Note 3—Investment in Laramie Energy, LLC for further information. Income Taxes. For the six months ended June 30, 2021, we recorded an income tax expense of $0.6 million primarily driven by foreign taxes. For the six months ended June 30, 2020, we recorded an income tax benefit of $21.0 million primarily driven by an increase in our net operating loss carryforwards and the change in our indefinitely-lived goodwill due to the impairments. 44 Consolidating Condensed Financial Information On December 21, 2017, Par Petroleum, LLC (the “Issuer”) issued its 7.75% Senior Secured Notes due 2025 in a private offering under Rule 144A and Regulation S of the Securities Act. On January 11, 2019, the Issuers (defined below) entered into a term loan and guaranty agreement with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto with respect to a $250.0 million term loan (the “Term Loan B”). On June 5, 2020, the Issuers issued their 12.875% Senior Secured Notes due 2026 in a private offering under Rule 144A and Regulation S of the Securities Act. The 7.75% Senior Secured Notes, the Term Loan B, and the 12.875% Senior Secured Notes were co-issued by Par Petroleum Finance Corp. (together with the Issuer, the “Issuers”), which has no independent assets or operations. The 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes are guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc. (the “Parent”) and are guaranteed on a senior secured basis by all of the subsidiaries of Par Petroleum, LLC. The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Petroleum, LLC and its consolidated subsidiaries’ accounts (which are all guarantors of the 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes, Term Loan B, or 12.875% Senior Secured Notes and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands). 45 As of June 30, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 2,823 $ 171,475 $ 31 $ 174,329 Restricted cash 330 1,670 — 2,000 Trade accounts receivable — 210,386 3 210,389 Inventories — 624,153 — 624,153 Prepaid and other current assets 7,610 12,401 (203) 19,808 Due from related parties 88,797 — (88,797) — Total current assets 99,560 1,020,085 (88,966) 1,030,679 Property, plant, and equipment Property, plant, and equipment 21,501 1,138,314 3,957 1,163,772 Less accumulated depreciation, depletion, and amortization (15,271) (269,725) (2,837) (287,833) Property, plant, and equipment, net 6,230 868,589 1,120 875,939 Long-term assets Operating lease right-of-use assets 3,418 409,874 — 413,292 Investment in subsidiaries 107,803 — (107,803) — Intangible assets, net — 17,561 — 17,561 Goodwill — 124,664 2,598 127,262 Other long-term assets 723 68,488 (9,564) 59,647 Total assets $ 217,734 $ 2,509,261 $ (202,615) $ 2,524,380 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 10,840 $ — $ 10,840 Obligations under inventory financing agreements — 699,362 — 699,362 Accounts payable 1,237 156,977 1,478 159,692 Accrued taxes 23 40,499 — 40,522 Operating lease liabilities 682 54,825 — 55,507 Other accrued liabilities 2,649 400,911 207 403,767 Due to related parties 39,005 19,601 (58,606) — Total current liabilities 43,596 1,383,015 (56,921) 1,369,690 Long-term liabilities Long-term debt, net of current maturities — 560,141 — 560,141 Finance lease liabilities 32 11,586 (4,569) 7,049 Operating lease liabilities 4,360 358,134 — 362,494 Other liabilities 54 41,738 13,522 55,314 Total liabilities 48,042 2,354,614 (47,968) 2,354,688 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 602 — — 602 Additional paid-in capital 817,049 409,686 (409,686) 817,049 Accumulated earnings (deficit) (648,213) (256,123) 256,123 (648,213) Accumulated other comprehensive income (loss) 254 1,084 (1,084) 254 Total stockholders’ equity 169,692 154,647 (154,647) 169,692 Total liabilities and stockholders’ equity $ 217,734 $ 2,509,261 $ (202,615) $ 2,524,380 46 As of December 31, 2020 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 480 $ 67,147 $ 682 $ 68,309 Restricted cash 330 1,670 — 2,000 Trade accounts receivable — 111,654 3 111,657 Inventories — 429,855 — 429,855 Prepaid and other current assets 16,983 7,171 494 24,648 Due from related parties 107,995 — (107,995) — Total current assets 125,788 617,497 (106,816) 636,469 Property, plant, and equipment Property, plant, and equipment 21,477 1,124,587 37,814 1,183,878 Less accumulated depreciation, depletion, and amortization (14,368) (233,927) (2,818) (251,113) Property, plant, and equipment, net 7,109 890,660 34,996 932,765 Long-term assets Operating lease right-of-use assets 3,714 367,850 (14,398) 357,166 Investment in subsidiaries 209,010 — (209,010) — Intangible assets, net — 18,892 — 18,892 Goodwill — 125,399 2,598 127,997 Other long-term assets 723 59,849 — 60,572 Total assets $ 346,344 $ 2,080,147 $ (292,630) $ 2,133,861 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ 47,301 $ 11,048 $ 1,584 $ 59,933 Obligations under inventory financing agreements — 423,686 — 423,686 Accounts payable 2,401 103,067 1,477 106,945 Accrued taxes 49 27,371 20 27,440 Operating lease liabilities 750 60,449 (4,234) 56,965 Other accrued liabilities 10,907 194,114 (1,310) 203,711 Due to related parties 33,757 36,124 (69,881) — Total current liabilities 95,165 855,859 (72,344) 878,680 Long-term liabilities Long-term debt, net of current maturities — 608,353 40,307 648,660 Common stock warrants — — — — Finance lease liabilities 77 7,848 — 7,925 Operating lease liabilities 4,783 309,736 (10,164) 304,355 Other liabilities 45 87,382 (39,460) 47,967 Total liabilities 100,070 1,869,178 (81,661) 1,887,587 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 540 — — 540 Additional paid-in capital 726,504 307,967 (307,967) 726,504 Accumulated earnings (deficit) (477,028) (94,086) 94,086 (477,028) Accumulated other comprehensive income (loss) (3,742) (2,912) 2,912 (3,742) Total stockholders’ equity 246,274 210,969 (210,969) 246,274 Total liabilities and stockholders’ equity $ 346,344 $ 2,080,147 $ (292,630) $ 2,133,861 47 Three Months Ended June 30, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 1,217,501 $ 24 $ 1,217,525 Operating expenses Cost of revenues (excluding depreciation) — 1,197,298 — 1,197,298 Operating expense (excluding depreciation) — 68,821 — 68,821 Depreciation, depletion, and amortization 618 22,882 48 23,548 Loss (gain) on sale of assets, net — 569 (59) 510 General and administrative expense (excluding depreciation) 3,104 9,097 — 12,201 Acquisition and integration costs (352) — — (352) Total operating expenses 3,370 1,298,667 (11) 1,302,026 Operating income (loss) (3,370) (81,166) 35 (84,501) Other income (expense) Interest expense and financing costs, net (1,204) (16,074) 92 (17,186) Debt extinguishment and commitment costs — (6,628) — (6,628) Other income (expense), net (6) (31) 1 (36) Equity earnings (losses) from subsidiaries (104,361) — 104,361 — Total other income (expense), net (105,571) (22,733) 104,454 (23,850) Income (loss) before income taxes (108,941) (103,899) 104,489 (108,351) Income tax benefit (expense) (1) (17) 28,655 (29,245) (607) Net income (loss) $ (108,958) $ (75,244) $ 75,244 $ (108,958) Adjusted EBITDA $ (3,110) $ (3,588) $ 25 $ (6,673) 48 Three Months Ended June 30, 2020 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 515,301 $ — $ 515,301 Operating expenses Cost of revenues (excluding depreciation) — 441,278 — 441,278 Operating expense (excluding depreciation) — 68,210 (1,183) 67,027 Depreciation, depletion, and amortization 769 21,229 130 22,128 General and administrative expense (excluding depreciation) 2,628 7,593 — 10,221 Acquisition and integration costs — 90 — 90 Total operating expenses 3,397 538,400 (1,053) 540,744 Operating loss (3,397) (23,099) 1,053 (25,443) Other income (expense) Interest expense and financing costs, net (1,245) (14,610) (559) (16,414) Other income (expense), net 2 453 — 455 Equity earnings (losses) from subsidiaries (35,920) — 35,920 — Equity losses from Laramie Energy, LLC — — (1,874) (1,874) Total other income (expense), net (37,163) (14,157) 33,487 (17,833) Income (loss) before income taxes (40,560) (37,256) 34,540 (43,276) Income tax benefit (expense) (1) — 7,814 (5,098) 2,716 Net income (loss) $ (40,560) $ (29,442) $ 29,442 $ (40,560) Adjusted EBITDA $ (2,530) $ (48,999) $ 1,183 $ (50,346) 49 Six Months Ended June 30, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 2,106,181 $ 24 $ 2,106,205 Operating expenses Cost of revenues (excluding depreciation) — 2,086,161 — 2,086,161 Operating expense (excluding depreciation) — 143,726 (717) 143,009 Depreciation, depletion, and amortization 1,284 45,001 143 46,428 Loss (gain) on sale of assets, net — (10,639) (53,763) (64,402) General and administrative expense (excluding depreciation) 6,209 17,877 — 24,086 Acquisition and integration costs 86 — — 86 Total operating expenses 7,579 2,282,126 (54,337) 2,235,368 Operating income (loss) (7,579) (175,945) 54,361 (129,163) Other income (expense) Interest expense and financing costs, net (2,494) (32,971) 128 (35,337) Debt extinguishment and commitment costs — (6,719) (1,416) (8,135) Gain on curtailment of pension obligation — 2,032 — 2,032 Other income (expense), net (13) 38 — 25 Equity earnings (losses) from subsidiaries (161,082) — 161,082 — Total other income (expense), net (163,589) (37,620) 159,794 (41,415) Income (loss) before income taxes (171,168) (213,565) 214,155 (170,578) Income tax benefit (expense) (1) (17) 51,528 (52,118) (607) Net income (loss) $ (171,185) $ (162,037) $ 162,037 $ (171,185) Adjusted EBITDA $ (6,222) $ (44,518) $ 741 $ (49,999) 50 Six Months Ended June 30, 2020 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 1,719,382 $ 2 $ 1,719,384 Operating expenses Cost of revenues (excluding depreciation) — 1,651,489 — 1,651,489 Operating expense (excluding depreciation) — 142,784 (2,366) 140,418 Depreciation, depletion, and amortization 1,505 41,646 260 43,411 Impairment expense — 67,922 — 67,922 General and administrative expense (excluding depreciation) 5,629 16,376 — 22,005 Acquisition and integration costs — 755 — 755 Total operating expenses 7,134 1,920,972 (2,106) 1,926,000 Operating loss (7,134) (201,590) 2,108 (206,616) Other income (expense) Interest expense and financing costs, net (2,473) (29,640) (2,975) (35,088) Other income (expense), net 12 467 — 479 Change in value of common stock warrants 4,270 — — 4,270 Equity earnings (losses) from subsidiaries (257,572) — 257,572 — Equity losses from Laramie Energy, LLC — — (46,905) (46,905) Total other income (expense), net (255,763) (29,173) 207,692 (77,244) Income (loss) before income taxes (262,897) (230,763) 209,800 (283,860) Income tax benefit (expense) (1) — 39,309 (18,346) 20,963 Net income (loss) $ (262,897) $ (191,454) $ 191,454 $ (262,897) Adjusted EBITDA $ (5,460) $ (33,582) $ 2,368 $ (36,674) ________________________________________ (1) The income tax benefit (expense) of the Parent Guarantor and Issuer and Subsidiaries is determined using the separate return method. The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances. 51 Non-GAAP Financial Measures Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Issuer and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc. Adjusted EBITDA calculations. See “Results of Operations — Non-GAAP Performance Measures — Adjusted Net Income (Loss) and Adjusted EBITDA” above. The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, Net Loss, on a historical basis for the periods indicated (in thousands): Three Months Ended June 30, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (108,958) $ (75,244) $ 75,244 $ (108,958) Inventory valuation adjustment — 25,284 — 25,284 LIFO liquidation adjustment — 2,263 — 2,263 RINs loss (gain) in excess of net obligation — 25,207 — 25,207 Unrealized loss on derivatives — 1,404 — 1,404 Acquisition and integration costs (352) — — (352) Debt extinguishment and commitment costs — 6,628 — 6,628 Loss (gain) on sale of assets, net — 569 (59) 510 Depreciation, depletion, and amortization 618 22,882 48 23,548 Interest expense and financing costs, net 1,204 16,074 (92) 17,186 Equity losses (income) from subsidiaries 104,361 — (104,361) — Income tax expense (benefit) 17 (28,655) 29,245 607 Adjusted EBITDA (3) $ (3,110) $ (3,588) $ 25 $ (6,673) Three Months Ended June 30, 2020 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (40,560) $ (29,442) $ 29,442 $ (40,560) Inventory valuation adjustment — (35,979) — (35,979) RINs loss (gain) in excess of net obligation — 10,738 — 10,738 Unrealized loss (gain) on derivatives — (22,431) — (22,431) Acquisition and integration costs — 90 — 90 Changes in valuation allowance and other deferred tax items (1) — — (2,714) (2,714) Severance costs 96 — — 96 Depreciation, depletion, and amortization 769 21,229 130 22,128 Interest expense and financing costs, net 1,245 14,610 559 16,414 Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — 1,874 1,874 Equity losses (income) from subsidiaries 35,920 — (35,920) — Income tax expense (benefit) — (7,814) 7,812 (2) Adjusted EBITDA (3) $ (2,530) $ (48,999) $ 1,183 $ (50,346) 52 Six Months Ended June 30, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (171,185) $ (162,037) $ 162,037 $ (171,185) Inventory valuation adjustment — 39,459 — 39,459 LIFO liquidation adjustment — 4,151 — 4,151 RINs loss (gain) in excess of net obligation — 53,977 — 53,977 Unrealized loss (gain) on derivatives — (2,608) — (2,608) Acquisition and integration costs 86 — — 86 Debt extinguishment and commitment costs — 6,719 1,416 8,135 Severance costs — 16 — 16 Loss (gain) on sale of assets, net — (10,639) (53,763) (64,402) Depreciation, depletion, and amortization 1,284 45,001 143 46,428 Interest expense and financing costs, net 2,494 32,971 (128) 35,337 Equity losses (income) from subsidiaries 161,082 — (161,082) — Income tax expense (benefit) 17 (51,528) 52,118 607 Adjusted EBITDA (3) $ (6,222) $ (44,518) $ 741 $ (49,999) Six Months Ended June 30, 2020 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (262,897) $ (191,454) $ 191,454 $ (262,897) Inventory valuation adjustment — 39,345 — 39,345 RINs loss (gain) in excess of net obligation — 17,340 — 17,340 Unrealized loss on derivatives — 445 — 445 Acquisition and integration costs — 755 — 755 Changes in valuation allowance and other deferred tax items (1) — — (21,087) (21,087) Change in value of common stock warrants (4,270) — — (4,270) Severance costs 157 88 — 245 Impairment of Investment in Laramie Energy, LLC (2) — — 45,294 45,294 Par’s share of Laramie Energy’s unrealized gain on derivatives (2) — — (1,110) (1,110) Impairment expense — 67,922 — 67,922 Depreciation, depletion, and amortization 1,505 41,646 260 43,411 Interest expense and financing costs, net 2,473 29,640 2,975 35,088 Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses — — 2,721 2,721 Equity losses (income) from subsidiaries 257,572 — (257,572) — Income tax expense (benefit) — (39,309) 39,433 124 Adjusted EBITDA (3) $ (5,460) $ (33,582) $ 2,368 $ (36,674) ________________________________________ (1) Includes increases in (releases of) our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance. These tax expenses (benefits) are included in Income tax expense (benefit) on our condensed consolidated statements of operations. (2) Includes impairment losses on our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference. These impairment losses and our share of Laramie Energy’s unrealized loss (gain) 53 on derivatives are included in Equity earnings (losses) from Laramie Energy, LLC on our condensed consolidated statements of operations. (3) For the three and six months ended June 30, 2021, there was no change in valuation allowance and other deferred tax items, change in value of common stock warrants, impairment expense, impairment of investment in Laramie Energy, unrealized gain on derivatives included in equity earnings from Laramie Energy, or equity losses from Laramie Energy. For the three and six months ended June 30, 2020, there were no debt extinguishment costs, LIFO liquidation adjustment, or loss (gain) on sale of assets. Liquidity and Capital Resources Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements and contractual obligations, capital expenditures, turnaround outlays, and working capital needs. Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll. Our primary sources of liquidity are cash flows from operations, cash on hand, amounts available under our credit agreements, and access to capital markets. Our liquidity position as of June 30, 2021 was $243.5 million and consisted of $240.6 million at Par Petroleum, LLC and subsidiaries, $2.8 million at Par Pacific Holdings, and $0.1 million at all our other subsidiaries. As of June 30, 2021, we had access to the ABL Credit Facility, the MLC receivable advances, and cash on hand of $174.3 million. Beginning on July 1, 2021, we also had access to the J. Aron Discretionary Draw Facility. In addition, we have the Supply and Offtake Agreement with J. Aron and the Washington Refinery Intermediation Agreement, which are used to finance the majority of the inventory at our Hawaii and Washington refineries, respectively. Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, payments related to acquisitions, and to repay or refinance indebtedness. In the first quarter of 2021, we closed on the sale and leaseback of twenty-two (22) of our retail properties in Hawaii for an aggregate cash purchase price of approximately $112.8 million net of transaction fees (the “Sale-Leaseback Transactions”). We used approximately $53.1 million of the net cash proceeds to repay the certain financing arrangements which were related to certain of the retail properties and the remainder for general corporate purposes. On March 19, 2021, we sold 5.75 million shares of common stock in an underwritten public offering at a public offering price of $16.00 per share, resulting in net proceeds of approximately $87.2 million, after deducting underwriting discounts and commissions and offering expenses. We used the net proceeds from the offering of common stock to repay the $48.7 million in remaining aggregate principal amount of 5.00% Convertible Senior Notes and $36.8 million in aggregate principal amount of 12.875% Senior Secured Notes, and the remainder for other general corporate purposes, including capital expenditures and funding working capital. We believe our cash flows from operations and available capital resources will be sufficient to meet our current capital and turnaround expenditures, working capital, and debt service requirements for the next 12 months. We may seek to raise additional debt or equity capital to fund any other significant changes to our business or to refinance existing debt. We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost. We may from time to time seek to retire or repurchase our 7.75% Senior Secured Notes, our 12.875% Senior Secured Notes, or our common stock through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. Cash Flows The following table summarizes cash activities for the six months ended June 30, 2021 and 2020 (in thousands): Six Months Ended June 30, 2021 2020 Net cash provided by operating activities $ 1,815 $ 33,767 Net cash provided by (used in) investing activities 88,847 (30,160) Net cash provided by financing activities 15,358 13,247 54 Net cash provided by operating activities was approximately $1.8 million for the six months ended June 30, 2021, which resulted from a net loss of $171.2 million, offset by net cash provided by changes in operating assets and liabilities of approximately $191.2 million and non-cash earnings from operations of approximately $18.2 million. The change in our operating assets and liabilities for the six months ended June 30, 2021 was primarily due to an increase in our gross environmental credit obligations of $204.0 million and a net increase in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations of $199.6 million, partially offset by increases in inventories of $184.1 million and accounts receivable of $99.5 million. Net cash provided by changes in operating assets and liabilities also includes an increase of $5.7 million in deferred turnaround costs. Net cash provided by operating activities was approximately $33.8 million for the six months ended June 30, 2020, which resulted from a net loss of approximately $262.9 million, partially offset by net cash provided by changes in operating assets and liabilities of approximately $130.9 million and non-cash charges to operations of approximately $165.7 million. For the six months ended June 30, 2021, net cash provided by investing activities was approximately $88.8 million and primarily related to proceeds received from the Sale-Leaseback Transactions partially offset by $14.0 million of additions to property, plant, and equipment. Net cash used in investing activities was approximately $30.2 million for the six months ended June 30, 2020 and primarily related to additions to property, plant, and equipment totaling approximately $30.2 million. Net cash provided by financing activities for the six months ended June 30, 2021 was approximately $15.4 million, which consisted primarily of proceeds of $87.2 million from our March 2021 equity offering of common stock and net borrowings associated with the J. Aron deferred payment and MLC receivable advances of approximately $76.0 million, partially offset by net debt and insurance premium repayments of approximately $141.3 million and $5.6 million in extinguishment costs related to the repayment of the Retail Property Term Loan and a portion of the 12.875% Senior Secured Notes. Net cash provided by financing activities for the six months ended June 30, 2020 was approximately $13.2 million, which consisted primarily of net debt and insurance premium borrowings of approximately $92.7 million, partially offset by net repayments associated with the J. Aron deferred payment and MLC receivable advances of approximately $72.5 million and payments of $6.1 million in deferred loan costs primarily related to the issuance of the 12.875% Senior Secured Notes. Capital Expenditures and Turnaround Costs Our deferred turnaround costs and capital expenditures, excluding acquisitions, for the six months ended June 30, 2021 totaled approximately $19.7 million and were primarily related to the 2021 turnaround and related scheduled maintenance work at our Washington refinery, capital projects at our Hawaii refinery, and underground tank replacements, rebranding, and point of sale and other equipment upgrades at our Retail segment. Our capital expenditure and deferred turnaround cost budget for 2021 ranges from $35 to $45 million and primarily relates to a partial turnaround at our Washington refinery and scheduled sustaining maintenance, regulatory, and safety compliance projects across all businesses. We also continue to seek strategic investments in business opportunities, but the amount and timing of those investments are not predictable. Commitments and Contingencies Supply and Offtake Agreements. On June 1, 2021, we and J. Aron entered into a Second Amended and Restated Supply and Offtake Agreement to support our Hawaii refining operations which expires on May 31, 2024 with a one-year extension option. Please read Note 7—Inventory Financing Agreements for more information. Washington Refinery Intermediation Agreement . In connection with the consummation of the Washington Acquisition on January 11, 2019, we assumed the Washington Refinery Intermediation Agreement with MLC to support the operations of our Washington refinery. We amended the Washington Refinery Intermediation Agreement on February 11, 2021 to extend the term through March 31, 2022. Please read Note 7—Inventory Financing Agreements for more information. From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of our business. Please read Note 13—Commitments and Contingencies to our condensed consolidated financial statements for more information. Critical Accounting Policies and Estimates There have been no material changes to critical accounting policies disclosed in our Annual Report on Form 10-K. 55 Forward-Looking Statements Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (“PSLRA”), or in releases made by the SEC, all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors including, without limitation, our expectations regarding the impact of COVID-19 on our business, our customers, and the markets where we operate; our beliefs with regard to available capital resources, our beliefs regarding the likelihood or impact of any potential fines or penalties and of the fair value of certain assets, and our expectations with respect to laws and regulations, including environmental regulations and related compliance costs and any fines or penalties related thereto; our expectations regarding the sufficiency of our cash flows and liquidity; our expectations regarding anticipated capital expenditures, including the timing and cost of compliance with consent decrees and other enforcement actions; our expectations regarding the impact of the adoption of certain accounting standards; our estimates regarding the fair value of certain indebtedness; estimated costs to settle claims from the Delta bankruptcy; the estimated value of, and our ability to settle, legal claims remaining to be settled against third parties; our expectations regarding the synergies or other benefits of our acquisitions; our expectations regarding certain tax liabilities and debt obligations; management’s assumptions about future events; our ability to raise additional debt or equity capital; our ability to make strategic investments in business opportunities; and the estimates, assumptions, and projections regarding future financial condition, results of operations, liquidity, and cash flows. These and other forward-looking statements could cause the actual results, performance, or achievements of Par and its subsidiaries to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act, and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control, including those set out in our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q under “Risk Factors.” In addition, management’s assumptions about future events may prove to be inaccurate. All readers are cautioned that the forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance; and we cannot assure any reader that such statements will be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described above and under Critical Accounting Policies and Risk Factors included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q. All forward-looking statements speak only as of the date they are made. Additionally, significant uncertainties remain with respect to COVID-19 and its economic effects. Due to the unpredictable and unprecedented nature of the COVID-19 pandemic, we cannot identify all potential risks to, and impacts on, our business, including the ultimate adverse economic impact to the Company’s business, results of operations, financial condition, and liquidity. However, the adverse impact of COVID-19 on the Company has been and will likely continue to be material. There can be no guarantee that the operational and financial measures the Company has taken, and may take in the future, will be fully effective. We do not intend to update or revise any forward-looking statements as a result of new information, future events, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.