What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 257 added, 222 removed, 834 unchanged (36% of the section changed)

4 unchanged sentences

(in thousands, except share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets

2 unchanged sentences

Total cash, cash equivalents, and restricted cash 205,305 70,309

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

Trade accounts receivable, net of allowances of $ 0.4 million and $ 0.6 million at September 30, 2021 and December 31, 2020, respectively

195,157 111,657

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Common stock, $ 0.01 par value;

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

500,000,000 shares authorized at September 30, 2021 and December 31, 2020, 60,192,507 shares and 54,002,538 shares issued at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 819,057 726,504

8 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

9 unchanged sentences

Total operating expenses 1,212,575 687,231 3,447,943 2,613,231

Operating loss ( 84,501 ) ( 25,443 ) ( 129,163 ) ( 206,616 )

Operating income (loss) 97,793 2,750 ( 31,370 ) ( 203,866 )

Other income (expense)

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

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

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

Total other income (expense), net ( 15,405 ) ( 16,913 ) ( 56,820 ) ( 94,157 )

Income (loss) before income taxes 82,388 ( 14,163 ) ( 88,190 ) ( 298,023 )

Income tax benefit (expense) ( 586 ) ( 108 ) ( 1,193 ) 20,855

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

Loss per share

Net income (loss) $ 81,802 $ ( 14,271 ) $ ( 89,383 ) $ ( 277,168 )

Income (loss) per share

Basic $ 1.38 $ ( 0.27 ) $ ( 1.55 ) $ ( 5.20 )

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(in thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

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

Net income (loss) $ 81,802 $ ( 14,271 ) $ ( 89,383 ) $ ( 277,168 )

Other comprehensive income (loss):

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

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

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

Total other comprehensive income, net of tax — — 3,996 —

Comprehensive income (loss) $ 81,802 $ ( 14,271 ) $ ( 85,387 ) $ ( 277,168 )

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(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

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Deferred taxes 9 ( 21,087 )

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

Gain on sale of assets, net ( 64,400 ) —

Stock-based compensation 6,095 5,314

Unrealized (gain) loss on derivative contracts 4,710 ( 2,733 )

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

Equity losses from Laramie Energy, LLC — 46,905

Net changes in operating assets and liabilities:

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Repayments of borrowings ( 275,108 ) ( 120,489 )

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

Net borrowings (repayments) on deferred payment arrangements, discretionary draw facilities, and receivable advances 66,175 ( 60,839 )

Payment of deferred loan costs ( 332 ) ( 6,266 )

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

Payments for debt extinguishment and commitment costs ( 5,618 ) —

Other financing activities, net ( 673 ) ( 976 )

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

Net cash provided by (used in) financing activities ( 1,954 ) 17,380

Net increase in cash, cash equivalents, and restricted cash 134,996 905

4 unchanged sentences

Interest $ ( 47,653 ) $ ( 35,697 )

Taxes ( 760 ) 124

Non-cash investing and financing activities:

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

Stock-based compensation 10 — 1,777 — — 1,777

Purchase of common stock for retirement ( 5 ) — ( 42 ) — — ( 42 )

Net loss — — — ( 14,271 ) — ( 14,271 )

Balance, September 30, 2020 53,947 $ 539 $ 723,929 $ ( 345,110 ) $ 582 $ 379,940

Additional Other

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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

Stock-based compensation ( 5 ) — 2,023 — — 2,023

Purchase of common stock for retirement 13 — ( 15 ) — — ( 15 )

Net income — — — 81,802 — 81,802

Balance, September 30, 2021 60,193 $ 602 $ 819,057 $ ( 566,411 ) $ 254 $ 253,502

See accompanying notes to the condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 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.

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”).

This year, 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 to transport and store our crude oil and refined products for our refineries and transport refined products to our retail sites or third-party purchasers.

As of September 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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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 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 and six months ended June 30, 2021 or 2020.

We did not have a material change in our allowances on trade receivables during the three and nine months ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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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 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.

For the nine months ended September 30, 2021, we recorded a $ 2.0 million Gain on curtailment of pension obligation in our condensed consolidated statements of operations and an unrealized actuarial gain of $ 4.0 million as Other post-retirement benefits income, net of tax, in our condensed consolidated statements of other comprehensive income.

Similar to the evaluation done for the estimate as of December 31, 2020, the projected benefit obligation estimate was determined based on the present value of projected future benefit payments.

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

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Recent Accounting Pronouncements

There have been no developments to recent accounting pronouncements, including the expected dates of adoption and estimated effects on our financial condition, results of operations, and cash flows, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).

ASU 2021-08 updates the current guidance to require that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” as if the acquiring entity had originated the contracts.

This ASU improves comparability by providing consistent guidance between revenue contracts with customers acquired in a business combination and those not acquired in a business combination.

The guidance in ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

This ASU will change the policy under which we account for future business combinations.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

Accounting Principles Adopted

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

On December 31, 2020, we adopted ASU No.

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

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 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, or cash flows.

This 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, or cash flows.

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

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Note 3— Investment in Laramie Energy, LLC

As of June 30, 2021, we had a 46.0 % ownership interest in Laramie Energy.

As of September 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 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.

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

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

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

As of September 30, 2021, the term loan had an outstanding balance of $ 152.2 million.

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 June 30, 2021 and December 31, 2020.

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

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets $ 55,518 $ 34,573

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Non-current liabilities 193,893 93,193

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Income (loss) from operations 20,807 ( 3,443 ) 73,957 ( 10,773 )

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

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

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

Unrealized (gain) loss on derivative instruments 731 4,139 182 1,725

Net loss ( 41,892 ) ( 12,643 ) ( 1,308 ) ( 26,418 )

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 30, 2021 and 2020

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Depreciation, depletion, and amortization $ 6,134 $ 9,013 $ 21,890 $ 28,334

Unrealized loss on derivative instruments 54,857 5,918 55,039 7,643

Note 4— Revenue Recognition

As of June 30, 2021 and December 31, 2020, receivables from contracts with customers were $ 205.1 million and $ 104.9 million, respectively.

As of September 30, 2021 and December 31, 2020, receivables from contracts with customers were $ 190.8 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 $ 11.9 million and $ 4.1 million as of June 30, 2021 and December 31, 2020, respectively.

Deferred revenue was $ 16.4 million and $ 4.1 million as of September 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 June 30, 2021 Refining Logistics Retail

Three Months Ended September 30, 2021 Refining Logistics Retail

Product or service:

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Total segment revenues (3) $ 1,242,848 $ 46,735 $ 125,910

Three Months Ended June 30, 2020 Refining Logistics Retail

Three Months Ended September 30, 2020 Refining Logistics Retail

Product or service:

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Total segment revenues (3) $ 626,426 $ 41,722 $ 91,736

Six Months Ended June 30, 2021 Refining Logistics Retail

Nine Months Ended September 30, 2021 Refining Logistics Retail

Product or service:

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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

For the Interim Periods Ended September 30, 2021 and 2020

Nine Months Ended September 30, 2020 Refining Logistics Retail

Product or service:

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Note 5— Inventories

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

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

Titled Inventory Supply and Offtake Agreement (1) Total

September 30, 2021

Crude oil and feedstocks $ 64,322 $ 185,473 $ 249,795

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

(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.

(2) Includes $ 82.7 million and $ 26.7 million of RINs and environmental credits, reported at cost, as of September 30, 2021 and December 31, 2020, respectively.

RINs and environmental obligations of $ 297.5 million and $ 150.5 million, reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020, respectively.

As of September 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 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.

As of September 30, 2021, the excess of current replacement cost over the last-in, first-out (“LIFO”) inventory carrying value at the Washington refinery was approximately $ 36.5 million.

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

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 30, 2021 and 2020

Note 6— Prepaid and Other Current Assets

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

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

September 30, 2021 December 31, 2020

Advances to suppliers $ 2,545 $ —

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Prepaid insurance — 14,932

Prepaid taxes 1,516 1

Derivative assets 34 1,346

Deferred inventory financing charges 4,743 —

Other 3,566 6,880

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Supply and Offtake Agreements

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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.

In 2017, we fixed the market fee for the period from June 1, 2018 through May 2021 for $ 2.2 million.

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 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.

As of December 31, 2020, 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 December 31, 2020, the capacity of the deferred payment arrangement was $ 80.1 million and we had $ 78.6 million outstanding.

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

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

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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.

Aron in respect of eligible receivables and eligible hydrocarbon inventory.

The advances 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 advances 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.

As of September 30, 2021, our outstanding balance under the Discretionary Draw Facility was $ 125.2 million and its capacity was $ 142.4 million.

PAR PACIFIC HOLDINGS, INC.

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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.

For the Interim Periods Ended September 30, 2021 and 2020

Under the supply and offtake agreements, we pay or receive certain fees from J.

Aron based on changes in market prices over time.

In 2017, we fixed the market fee for the period from June 1, 2018 through May 2021 for $ 2.2 million.

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.

In the third quarter of 2021, we entered into multiple contracts to fix certain market fees for the period from September 2021 through May 2022 for $ 6.6 million.

The amount due to or from J.

Aron is recorded as an adjustment to our Obligations under inventory financing agreements as allowed under the supply and offtake agreements.

As of September 30, 2021, and December 31, 2020, we had a payable of $ 6.6 million and a receivable of $ 0.5 million, respectively.

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 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 September 30, 2021, our outstanding balance under the MLC receivable advances was equal to our borrowing base of $ 60.6 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.

Additionally, as of September 30, 2021, and December 31, 2020, we had approximately $ 135.9 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Supply and Offtake Agreement

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

Inventory intermediation fees $ 4,988 $ 2,216 $ 14,038 $ 8,882

Interest expense and financing costs, net 754 411 2,078 2,473

Washington Refinery Intermediation Agreement

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

Inventory intermediation fees $ 750 $ 1,019 $ 2,486 $ 3,138

Interest expense and financing costs, net 1,276 472 3,387 2,196

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Note 8— Other Accrued Liabilities

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Accrued payroll and other employee benefits $ 19,568 $ 14,916

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___________________________________________________

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

(1) Gross environmental credit obligations are stated at market as of September 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 $ 60.6 million and $ 26.7 million as of June 30, 2021 and December 31, 2020, respectively.

The carrying costs of these assets were $ 82.7 million and $ 26.7 million as of September 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 June 30, 2021 and 2020

For the Interim Periods Ended September 30, 2021 and 2020

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

5.00 % Convertible Senior Notes due 2021

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Long-term debt, net of current maturities $ 555,945 $ 648,660

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.

As of September 30, 2021 and December 31, 2020, we had $ 26.6 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.

We had $ 5.9 million and $ 3.6 million in cash-collateralized letters of credit and surety bonds outstanding as of September 30, 2021 and December 31, 2020, respectively, under agreements with MLC and under certain other facilities.

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.

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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 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.

As of September 30, 2021, the ABL Revolver had no outstanding revolving loans, $ 26.6 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 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 Secured Notes in a private placement under Rule 144A and Regulation S of the Securities Act of 1933, as amended (the

We recognized approximately $ 1.4 million of debt extinguishment costs in the nine months ended September 30, 2021 related to our prepayment of the loan principal.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

“Securities Act”).

For the Interim Periods Ended September 30, 2021 and 2020

7.75% Senior Secured Notes Due 2025

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

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.

1 unchanged sentence

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

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

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

During the nine months ended September 30, 2021, we repurchased and cancelled $ 4 million in aggregate principal amount of the 7.75% Senior Secured Notes through two repurchases .

As of September 30, 2021, the 7.75% Senior Secured Notes had an outstanding principal balance of $ 296.0 million.

Mid Pac Term Loan

14 unchanged sentences

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.

As of September 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 June 30, 2021, we were in compliance with all of our debt instruments.

As of September 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.

Any non-convertible debt securities issued under the Registration Statement may be fully and unconditionally guaranteed (except for customary release provisions), on a joint and several basis, by some or all of our subsidiaries, other than subsidiaries that are “minor” within the meaning of Rule 3-10 of Regulation S-X (the “Guarantor Subsidiaries”).

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.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 30, 2021 and 2020

subsidiaries that are “minor” within the meaning of Rule 3-10 of Regulation S-X (the “Guarantor Subsidiaries”).

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.

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):

Our open futures and over-the-counter (“OTC”) swaps at September 30, 2021, will settle by February 2022.

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

Contract type Purchases Sales Net

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Total 2,917 ( 4,067 ) ( 1,150 )

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.

At September 30, 2021, we also had option collars of 25 thousand barrels of crude oil per month that expire in December 2021 and 35 thousand barrels of crude oil per month that expire in December 2022 to economically hedge our internally consumed fuel at our Hawaii refineries.

These option collars have a weighted-average strike price ranging from a floor of $ 36.50 per barrel to a ceiling of $ 60.00 per barrel and from a floor of $ 56.29 per barrel to a ceiling of $ 72.86 per barrel, respectively.

Interest Rate Derivatives

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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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

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

Balance Sheet Location September 30, 2021 December 31, 2020

Asset (Liability)

Commodity derivatives (1) Prepaid and other current assets $ 34 $ 1,346

Commodity derivatives Other accrued liabilities ( 6,308 ) —

Aron repurchase obligation derivative Obligations under inventory financing agreements ( 29,584 ) ( 20,797 )

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_________________________________________________________

(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.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

(1) Does not include cash collateral of $ 3.4 million and $ 1.5 million recorded in Prepaid and other current assets as of September 30, 2021, and December 31, 2020, respectively, and $ 9.5 million in Other long-term assets as of both September 30, 2021, and December 31, 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 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 June 30, 2021, we had no common stock warrants outstanding.

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

Derivative Instruments

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Our Level 2 instruments include OTC swaps and options.

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

These derivatives are valued using market quotations from independent price reporting agencies and

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

commodity exchange price curves that are corroborated with market data.

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

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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 Agreement and Washington Refinery Intermediation Agreement.

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.

Such contractual differentials vary by location and by the type of product and range from a discount of $ 5.64 per barrel to a premium of $ 38.02 per barrel as of September 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 June 30, 2021 or December 31, 2020.

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

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

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

Financial Statement Impact

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

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

September 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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MLC terminal obligation derivative — — ( 15,739 ) ( 15,739 ) — ( 15,739 )

Interest rate derivatives — — — — — —

Gross environmental credit obligations (2) — ( 297,495 ) — ( 297,495 ) — ( 297,495 )

Total Liabilities $ ( 2,670 ) $ ( 329,873 ) $ ( 45,323 ) $ ( 377,866 ) $ 28,740 $ ( 349,126 )

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

December 31, 2020

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_________________________________________________________

(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.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

(1) Does not include cash collateral of $ 12.9 million and $ 11.0 million as of September 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 $ 82.7 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 September 30, 2021, and December 31, 2020, respectively.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Balance, at end of period $ ( 45,323 ) $ ( 5,295 ) $ ( 45,323 ) $ ( 5,295 )

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

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

September 30, 2021

Carrying Value Fair Value

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64,889 78,658

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

December 31, 2020

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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 the measurement date.

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

The outstanding aggregate principal amount of the 5.00% Convertible Senior Notes matured and was 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.

The inputs used to measure the fair value are classified as Level 2

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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.

The inputs used to measure the fair value are classified as Level 2 inputs within the fair value hierarchy because the 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes may not be actively traded.

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

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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 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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 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 September 30, 2021 and December 31, 2020 and their placement within our condensed consolidated balance sheets:

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

Finance Property, plant, and equipment $ 20,556 $ 14,998

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Operating 6.79 % 7.59 %

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Lease cost type 2021 2020 2021 2020

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Net lease cost $ 25,645 $ 30,193 $ 76,270 $ 92,167

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

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

Six Months Ended June 30,

Nine Months Ended September 30,

Lease type 2021 2020

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ROU assets terminated in exchange for release from operating lease liabilities 800 7,738

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

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

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

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_________________________________________________________

(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.

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

Additionally, we have $ 2.8 million and $ 15.2 million in future undiscounted cash flows for finance and operating leases that have not yet commenced, respectively.

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 Transactions

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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”).

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 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.

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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 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.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

Properties from the Buyer, on a commercial triple-net basis, for 15 years, unless earlier terminated.

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

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It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on our financial condition, results of operations, or cash flows.

Tax and Related Matters

We are also party to various other legal proceedings, claims, and regulatory, tax or government audits, inquiries and investigations that arise in the ordinary course of business.

By opinion dated September 22, 2021, the Hawaii Attorney General reversed a prior 1964 opinion exempting various business transactions conducted in Hawaii free trade zones from certain state taxes.

We understand that we and other similarly situated state taxpayers who had previously claimed such exemptions may anticipate an audit of their state tax returns filed for such prior tax periods.

Similarly, on September 30, 2021, we received notice of a complaint filed on May 17, 2021, on camera and under seal in the first circuit court of the state of Hawaii alleging that Par Hawaii Refining, LLC, Par Pacific Holdings, Inc.

and certain unnamed defendants made false claims and statements in connection with various state tax returns related to our business conducted within the Hawaii free trade zones, and seeking unspecified damages, penalties, interest and injunctive relief.

We dispute the allegations in the complaint and intend to vigorously defend ourselves in such proceeding.

We believe the likelihood of an unfavorable outcome in this matter to be neither probable nor reasonably estimable.

Environmental Matters

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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.

As of September 30, 2021, we have accrued $ 15.8 million for the well-understood components of these efforts based on current information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 30 years.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

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

Several states have also passed legislation related to GHGs.

For example, in 2021, State of Washington passed climate legislation requiring fuel suppliers to gradually reduce the carbon intensity of transportation fuels to 20 percent below 2017 levels by 2038 and subjecting entities that emit significant amounts of carbon dioxide, such as fuel suppliers, to a cap-and-trade system for reducing GHG emissions beginning January 1, 2023.

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

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

Compliance with federal and state GHG regulations could result in material increased compliance costs and an increase in the cost of our products.

In 2007, the U.S.

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

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

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

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

To the extent that we exceed the minimum volumetric requirements for blending of renewable fuels, we have the option of retaining these RINs for current or future RFS

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

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

compliance or selling those RINs on the open market.

For the Interim Periods Ended September 30, 2021 and 2020

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

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

The 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.

As of September 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.

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In 2019, the EPA approved year-round sales of E15.

However, on July 2, 2021, a three-judge panel of the U.S.

Court of Appeals for the District of Columbia Circuit vacated the EPA’s approval of year-round E15 sales.

There are numerous issues, including state and federal regulatory issues, that need to be addressed before E15 can be marketed on a large scale for use in traditional gasoline engines;

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Environmental Agreement

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

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

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.

For the Interim Periods Ended September 30, 2021 and 2020

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 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 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.

As of September 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.

15 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 30, 2021 and 2020

Incentive Plans

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

2 unchanged sentences

Stock Option Awards 493 439 1,438 1,253

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.

During the three and nine months ended September 30, 2021, we granted 33 thousand and 472 thousand shares of restricted stock and restricted stock units with a fair value of approximately $ 0.5 million and $ 7.7 million, respectively.

As of September 30, 2021, there were approximately $ 10.4 million of total unrecognized compensation costs related to restricted stock awards and restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.8 years.

During the nine months ended September 30, 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 September 30, 2021.

As of September 30, 2021, there were approximately $ 4.3 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 1.8 years.

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

As of September 30, 2021, there were approximately $ 1.4 million of total unrecognized compensation costs related to the performance restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.9 years.

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 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.

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

The common stock warrants are included in the calculation of basic income (loss) per share for the nine months ended September 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.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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

Net income (loss) $ 81,802 $ ( 14,271 ) $ ( 89,383 ) $ ( 277,168 )

Undistributed income allocated to participating securities — — — —

Net loss attributable to common stockholders ( 108,958 ) ( 40,560 ) ( 171,185 ) ( 262,897 )

Net income (loss) attributable to common stockholders 81,802 ( 14,271 ) ( 89,383 ) ( 277,168 )

Net income effect of convertible securities — — — —

Numerator for diluted loss per common share $ ( 108,958 ) $ ( 40,560 ) $ ( 171,185 ) $ ( 262,897 )

Numerator for diluted income (loss) per common share $ 81,802 $ ( 14,271 ) $ ( 89,383 ) $ ( 277,168 )

Basic weighted-average common stock shares outstanding 59,437 53,374 57,713 53,265

1 unchanged sentence

Diluted weighted-average common stock shares outstanding 59,761 53,374 57,713 53,265

Basic loss per common share $ ( 1.84 ) $ ( 0.76 ) $ ( 3.01 ) $ ( 4.94 )

Diluted loss per common share $ ( 1.84 ) $ ( 0.76 ) $ ( 3.01 ) $ ( 4.94 )

Basic income (loss) per common share $ 1.38 $ ( 0.27 ) $ ( 1.55 ) $ ( 5.20 )

Diluted income (loss) per common share $ 1.37 $ ( 0.27 ) $ ( 1.55 ) $ ( 5.20 )

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

3 unchanged sentences

— 2,704 1,644 2,704

_________________________________________________________

(1) We had no 5.00% Convertible Senior Notes outstanding for the three months ended September 30, 2021.

Please read Note 9—Debt for further information.

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 June 30, 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 June 30, 2021 and December 31, 2020.

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

4 unchanged sentences

therefore, we expect to incur state tax liabilities in connection with our refining, retail, and logistics operations.

Note 17— Segment Information

We report the results for the following four reportable segments:

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

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 30, 2021 and 2020

Note 17— Segment Information

We report the results for the following four reportable segments:

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

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

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

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

Revenues $ 1,242,848 $ 46,735 $ 125,910 $ ( 105,125 ) $ 1,310,368

4 unchanged sentences

Depreciation, depletion, and amortization 14,748 5,545 2,630 695 23,618

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

Loss on sale of assets, net — 2 — — 2

General and administrative expense (excluding depreciation) — — — 12,473 12,473

4 unchanged sentences

Other expense, net ( 22 )

Loss before income taxes ( 108,351 )

Income before income taxes 82,388

Income tax expense ( 586 )

Net loss $ ( 108,958 )

Net income $ 81,802

Capital expenditures $ 3,164 $ 1,353 $ 2,255 $ 236 $ 7,008

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

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

Revenues $ 626,426 $ 41,722 $ 91,736 $ ( 69,903 ) $ 689,981

9 unchanged sentences

Other income, net 610

Equity losses from Laramie Energy, LLC ( 1,874 )

Loss before income taxes ( 14,163 )

Income tax benefit 2,716

Income tax expense ( 108 )

Net loss $ ( 14,271 )

1 unchanged sentence

________________________________________________________

(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.

(1) Includes eliminations of intersegment revenues and cost of revenues of $ 105.1 million and $ 69.9 million for the three months ended September 30, 2021 and 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

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

For the Interim Periods Ended September 30, 2021 and 2020

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

Revenues $ 3,237,450 $ 136,750 $ 335,544 $ ( 293,171 ) $ 3,416,573

16 unchanged sentences

Capital expenditures $ 10,171 $ 5,316 $ 4,830 $ 698 $ 21,015

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

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

Revenues $ 2,229,853 $ 143,004 $ 274,170 $ ( 237,662 ) $ 2,409,365

17 unchanged sentences

________________________________________________________

(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.

(1) Includes eliminations of intersegment revenues and cost of revenues of $ 293.2 million and $ 237.7 million for the nine months ended September 30, 2021 and 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2021 and 2020

For the Interim Periods Ended September 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 and six months ended June 30, 2021 or 2020.

There were no costs incurred related to this agreement during the three and nine months ended September 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