What changed in this filing

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Item 1. Financial Statements

2022-05-06 compared with 2021-11-04 · 251 added, 469 removed, 622 unchanged (54% of the section changed)

4 unchanged sentences

(in thousands, except share data)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current assets

2 unchanged sentences

Total cash, cash equivalents, and restricted cash 144,874 116,221

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

Trade accounts receivable, net of allowances of $ 0.3 million and $ 0.4 million at March 31, 2022 and December 31, 2021, respectively

235,286 195,108

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Common stock, $ 0.01 par value;

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

500,000,000 shares authorized at March 31, 2022 and December 31, 2021, 60,111,642 shares and 60,161,955 shares issued at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital 823,937 821,713

Accumulated deficit ( 701,123 ) ( 559,117 )

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

Accumulated other comprehensive income 2,502 2,502

Total stockholders’ equity 125,917 265,700

5 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Revenues $ 1,350,293 $ 888,680

3 unchanged sentences

Depreciation, depletion, and amortization 23,780 22,880

Impairment expense — — — 67,922

Loss (gain) on sale of assets, net — ( 64,912 )

2 unchanged sentences

Total operating expenses 1,471,389 933,342

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

Operating loss ( 121,096 ) ( 44,662 )

Other income (expense)

2 unchanged sentences

Gain on curtailment of pension obligation — 2,032

Other income (expense), net ( 22 ) 610 3 1,089

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

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

Other income, net 2 61

Total other income (expense), net ( 16,392 ) ( 17,565 )

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

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

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

Income (loss) per share

Loss before income taxes ( 137,488 ) ( 62,227 )

Income tax benefit 437 —

Net loss $ ( 137,051 ) $ ( 62,227 )

Loss per share

Basic $ ( 2.31 ) $ ( 1.15 )

6 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

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

Three Months Ended

Net loss $ ( 137,051 ) $ ( 62,227 )

Other comprehensive income (loss):

1 unchanged sentence

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

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

Comprehensive loss $ ( 137,051 ) $ ( 58,231 )

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net Loss $ ( 137,051 ) $ ( 62,227 )

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

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation, depletion, and amortization 23,780 22,880

Impairment expense — 67,922

Debt extinguishment and commitment costs — 1,507

1 unchanged sentence

Non-cash lower of cost and net realizable value adjustment ( 463 ) ( 10,595 )

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

Deferred taxes 9 ( 21,087 )

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

1 unchanged sentence

Unrealized (gain) loss on derivative contracts 15,452 ( 6,922 )

Equity losses from Laramie Energy, LLC — 46,905

Net changes in operating assets and liabilities:

5 unchanged sentences

Accounts payable, other accrued liabilities, and operating lease ROU assets and liabilities 215,014 148,317

Net cash provided by operating activities 54,594 25,953

Net cash used in operating activities ( 7,685 ) ( 30,737 )

Cash flows from investing activities:

6 unchanged sentences

Repayments of borrowings ( 70,059 ) ( 86,719 )

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 )

Net borrowings on deferred payment arrangements, discretionary draw facilities, and receivable advances 41,712 44,542

Purchase of common stock for retirement ( 6,388 ) ( 1,321 )

Payments for debt extinguishment and commitment costs — ( 887 )

Other financing activities, net ( 817 ) 58

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

Net cash provided by financing activities 52,611 82,483

Net increase in cash, cash equivalents, and restricted cash 28,653 146,424

4 unchanged sentences

Interest $ ( 11,085 ) $ ( 17,373 )

Taxes ( 760 ) 124

Non-cash investing and financing activities:

Accrued capital expenditures $ 6,169 $ 2,295

Value of warrants reclassified to equity — 3,936

ROU assets obtained in exchange for new finance lease liabilities 594 1,072

10 unchanged sentences

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

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

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

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

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

Exercise of stock options 4 — 58 — — 58

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

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

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

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

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

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

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

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

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

2 unchanged sentences

Balance, December 31, 2021 60,162 $ 602 $ 821,713 $ ( 559,117 ) $ 2,502 $ 265,700

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

Stock-based compensation 412 3 3,655 — — 3,658

Purchase of common stock for retirement ( 462 ) ( 4 ) ( 1,431 ) ( 4,955 ) — ( 6,390 )

Exercise of stock options 4 — 58 — — 58

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

Net loss — — — ( 137,051 ) — ( 137,051 )

Balance, March 31, 2022 60,112 $ 601 $ 823,937 $ ( 701,123 ) $ 2,502 $ 125,917

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

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

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

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

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 September 30, 2021 and 2020

For the Interim Periods Ended March 31, 2022 and 2021

Note 1 — Overview

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and its wholly owned subsidiaries (“Par” or the “Company”) own and operate market-leading energy and infrastructure businesses.

Our strategy is to acquire and develop businesses in logistically-complex markets.

Our strategy is to acquire and develop businesses in logistically complex, niche markets.

Currently, we operate in three primary business 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.

1) Refining - We own and operate three refineries with total operating throughput capacity of 154 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.

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”).

As of March 31, 2022, we owned a 46.0 % equity investment in Laramie Energy, LLC (“Laramie Energy”).

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

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Actual amounts could differ from these estimates.

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

The continued worldwide spread and severity of the COVID-19 coronavirus, along with a number of recent global events including the conflict between Russia and Ukraine and certain developments in the global crude oil markets, have impacted our businesses, people, and operations.

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

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

Due to the rapid development and fluidity of these ongoing matters, the full magnitude of these events’ impacts on our estimates and assumptions, financial condition, future results of operations, and future cash flows and liquidity is uncertain and has been and may continue to be material.

Allowance for Credit Losses

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

For the Interim Periods Ended March 31, 2022 and 2021

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 nine months ended September 30, 2021 or 2020.

We did not have a material change in our allowances on trade receivables during the three months ended March 31, 2022 or 2021.

Cost Classifications

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Cost of revenues $ 5,052 $ 5,219

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General and administrative expense 648 880

Benefit Plans

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

Oil & Refining Co.

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

Oil”) covered by collective bargaining agreements.

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

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

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.

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

The estimated rate of compensation increase remained 3.00 %.

Recent Accounting Pronouncements

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

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 ASU No.

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

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

On January 1, 2021, we adopted ASU No.

2019-12, Income Taxes (Topic 740):

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

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

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.

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

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

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

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

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

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

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

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

Note 3— Investment in Laramie Energy, LLC

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

As of March 31, 2022, 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.

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 its revolving credit facility.

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

The balance of our investment in Laramie Energy was zero as of March 31, 2022 and December 31, 2021.

Laramie Energy has a term loan agreement which provides a term loan secured by a lien on its natural gas and crude oil properties and related assets.

As of March 31, 2022, the term loan had an outstanding balance of $ 126.4 million.

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

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

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 September 30, 2021 and December 31, 2020.

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current assets $ 75,414 $ 68,779

2 unchanged sentences

Non-current liabilities 252,490 177,503

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

2021 2020 2021 2020

Three Months Ended March 31,

Natural gas and oil revenues $ 50,849 $ 82,348

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

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

Income from operations 24,114 47,209

Net income (loss) ( 32,900 ) 40,451

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

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

For the Interim Periods Ended March 31, 2022 and 2021

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

Three Months Ended March 31,

Depreciation, depletion, and amortization $ 5,709 $ 6,984

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

Unrealized (gain) loss on derivative instruments 42,655 ( 549 )

Note 4— Revenue Recognition

As of September 30, 2021 and December 31, 2020, receivables from contracts with customers were $ 190.8 million and $ 104.9 million, respectively.

As of March 31, 2022 and December 31, 2021, receivables from contracts with customers were $ 222.4 million and $ 189.9 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 $ 16.4 million and $ 4.1 million as of September 30, 2021 and December 31, 2020, respectively.

Deferred revenue was $ 18.2 million and $ 10.1 million as of March 31, 2022 and December 31, 2021, respectively.

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

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

Three Months Ended September 30, 2021 Refining Logistics Retail

Product or service:

Gasoline $ 402,654 $ — $ 93,054

Distillates (1) 548,571 — 7,616

Other refined products (2) 291,185 — —

Merchandise — — 24,314

Transportation and terminalling services — 46,735 —

Other revenue 438 — 926

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

Three Months Ended September 30, 2020 Refining Logistics Retail

Product or service:

Gasoline $ 219,849 $ — $ 59,344

Distillates (1) 213,448 — 7,847

Other refined products (2) 188,586 — —

Merchandise — — 24,010

Transportation and terminalling services — 41,722 —

Other revenue 4,543 — 535

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

Nine Months Ended September 30, 2021 Refining Logistics Retail

Three Months Ended March 31, 2022 Refining Logistics Retail

Product or service:

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Total segment revenues (3) $ 1,299,223 $ 42,461 $ 119,909

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

Nine Months Ended September 30, 2020 Refining Logistics Retail

Three Months Ended March 31, 2021 Refining Logistics Retail

Product or service:

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(3) Refer to Note 17—Segment Information for the reconciliation of segment revenues to total consolidated revenues.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

Note 5— Inventories

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

Inventories at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

Titled Inventory Supply and Offtake Agreement (1) Total

September 30, 2021

March 31, 2022

Crude oil and feedstocks $ 291,932 $ 196,035 $ 487,967

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

(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.

(2) Includes $ 134.8 million and $ 120.1 million of RINs and environmental credits, reported at the lower of cost or net realizable value, as of March 31, 2022 and December 31, 2021, respectively.

RINs and environmental obligations of $ 346.0 million and $ 311.0 million, reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, we had no reserve for the lower of cost or net realizable value of inventory.

As of December 31, 2021, there was a $ 0.5 million reserve for the lower of cost or net realizable value of inventory.

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.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

As of March 31, 2022 and December 31, 2021, the excess of current replacement cost over the last-in, first-out (“LIFO”) inventory carrying value at the Washington refinery was approximately $ 77.9 million and $ 46.0 million, respectively.

Note 6— Prepaid and Other Current Assets

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 $ —

Prepaid and other current assets at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

March 31, 2022 December 31, 2021

Collateral posted with broker for derivative instruments (1) $ 32,413 $ 6,053

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

September 30, 2021 December 31, 2020

Supply and Offtake Agreements

March 31, 2022 December 31, 2021

Supply and Offtake Agreement

$ 750,474 $ 569,158

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Obligations under inventory financing agreements $ 981,412 $ 737,704

Supply and Offtake Agreement

We have an agreement with J.

Aron & Company LLC (“J.

Aron”) to support our Hawaii refining operations.

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”).

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

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

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

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

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

Under the Discretionary Draw Facility, J.

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

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 September 30, 2021 and 2020

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

For the Interim Periods Ended March 31, 2022 and 2021

Supply and Offtake Agreement

Under the Second Amended and Restated Supply and Offtake Agreement (as amended, the “Supply and Offtake Agreement”), J.

Aron & Company LLC (“J.

Aron”) finances the majority of the crude oil utilized at the Hawaii refinery, holds legal title to the crude oil stored in our storage tanks before processing until title passes to us at the tank outlet, and buys refined products produced at our Hawaii refinery, after which we repurchase the refined products prior to selling them to our retail locations or third parties.

Under the Supply and Offtake Agreement, J.

Aron may enter into agreements with third parties whereby J.

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

As of March 31, 2022, we had no obligations due to J.

Aron under this contractual undertakings agreement.

The Supply and Offtake Agreement also makes available a discretionary draw facility (the “Discretionary Draw Facility”) to Par Hawaii Refining, LLC (“PHR”).

As of March 31, 2022, and December 31, 2021, our outstanding balance under the Discretionary Draw Facility was equal to our borrowing base of $ 165.0 million and $ 126.2 million, respectively.

On April 25, 2022, we entered into an amendment to the Supply and Offtake Agreement pursuant to which, among other things, the capacity under the Discretionary Draw Facility was increased from $ 165 million to $ 215 million.

Please read Note 19—Subsequent Events for further information about the amendment.

Under the Supply and Offtake Agreement, 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.

In 2021, we entered into multiple contracts to fix certain market fees for the period from May 2021 through May 2022 for $ 18.2 million.

In 2022, we entered into additional contracts to fix certain fees for the month of March 2022 for $ 4.5 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.

Aron is recorded as an adjustment to our Obligations under inventory financing agreements as allowed under the Supply and Offtake Agreement.

As of March 31, 2022, and December 31, 2021, we had payables of $ 7.0 million and $ 6.2 million, respectively.

Washington Refinery Intermediation Agreement

1 unchanged sentence

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

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

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

As of 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 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.

On March 9, 2022, we and MLC amended the Washington Refinery Intermediation Agreement to advance the term expiry date from December 21, 2022 to March 31, 2023.

As of March 31, 2022, and December 31, 2021, our outstanding balance under the MLC receivable advances was equal to our borrowing base of $ 57.5 million and $ 54.5 million, respectively.

Additionally, as of March 31, 2022, and December 31, 2021, we had approximately $ 211.2 million and $ 167.0 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net fees and expenses:

7 unchanged sentences

Please read Note 10—Derivatives for further information.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

Note 8— Other Accrued Liabilities

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

September 30, 2021 December 31, 2020

Other accrued liabilities at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

March 31, 2022 December 31, 2021

Accrued payroll and other employee benefits $ 13,168 $ 19,710

Derivative liabilities 28,311 1,431

Gross environmental credit obligations (1) 346,034 311,014

2 unchanged sentences

___________________________________________________

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

(1) Gross environmental credit obligations are stated at market as of March 31, 2022 and December 31, 2021.

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 $ 82.7 million and $ 26.7 million as of September 30, 2021 and December 31, 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

The carrying costs of these assets were $ 134.8 million and $ 120.1 million as of March 31, 2022 and December 31, 2021, respectively.

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

September 30, 2021 December 31, 2020

5.00 % Convertible Senior Notes due 2021

March 31, 2022 December 31, 2021

ABL Credit Facility due 2025 $ 24,995 $ —

Retail Property Term Loan due 2024 — 42,494

7.75 % Senior Secured Notes due 2025

3 unchanged sentences

68,250 68,250

Mid Pac Term Loan due 2028 — 1,399

PHL Term Loan — 5,840

Principal amount of long-term debt 601,745 579,875

3 unchanged sentences

Long-term debt, net of current maturities $ 576,482 $ 553,717

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.

As of March 31, 2022 and December 31, 2021, we had $ 31.6 million and $ 18.5 million, respectively, in letters of credit outstanding under the loan and security agreements with certain lenders and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Credit Facility”).

We had $ 5.9 million in cash-collateralized letters of credit and surety bonds outstanding as of March 31, 2022 and December 31, 2021 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.

5.00% Convertible Senior Notes Due 2021

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

ABL Credit Facility

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

As of 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

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

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

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

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

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

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

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

On February 2, 2022, Par Petroleum, LLC, Par Hawaii, LLC (“PHL”, formerly known as Par Hawaii, Inc.

and includes the assets of the dissolved entity formerly known as Mid Pac Petroleum, LLC), Hermes Consolidated, LLC, and Wyoming Pipeline Company, LLC (collectively, the “ABL Borrowers”), entered into the Amended and Restated Loan and Security Agreement (as amended from time to time, the “ABL Loan Agreement”) dated as of February 2, 2022, with certain lenders and Bank of America, N.A., as administrative agent and collateral agent, which amended and restated the Loan and Security Agreement dated as of December 21, 2017, in its entirety.

The ABL Loan Agreement increased the maximum principal amount of the ABL Revolver at any time outstanding from $ 85 million to $ 105 million, subject to a borrowing base, including a sublimit of $ 15 million for swingline loans and a sublimit of $ 65 million for the issuance of standby or commercial letters of credit, extended the maturity date of the ABL Revolver to February 2, 2025, and modified the ABL Revolver interest rate definitions to be based on the secured overnight financing rate (“SOFR”) as administered by the Federal Reserve Bank of New York, among other modifications.

The ABL Loan Agreement also included

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

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.

(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 “Securities Act”).

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

Aron and for general corporate purposes.

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.

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

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

and includes the assets of the dissolved entity formerly known as Mid Pac Petroleum, LLC), our wholly owned subsidiary, entered into the Mid Pac Term Loan with American Savings Bank, F.S.B., which provided a term loan of up to $ 1.5 million.

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

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

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

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

PHL Term Loan

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

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

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

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

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

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

12.875% Senior Secured Notes Due 2026

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

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

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

For the Interim Periods Ended March 31, 2022 and 2021

an accordion feature that would allow the ABL Borrowers to increase the size of the facility by up to $ 50 million in the aggregate, subject to certain limitations and conditions.

On March 30, 2022, the parties to the ABL Loan Agreement and the incremental lender party thereto amended the ABL Loan Agreement to exercise the accordion feature of the ABL Loan Agreement.

Under the amendment, the aggregate revolving commitments under the ABL Loan Agreement increased from $ 105 million to $ 142.5 million and the available increase under the accordion feature decreased to $ 12.5 million, subject to certain limitations and conditions.

As of March 31, 2022, the ABL Revolver had $ 25.0 million in outstanding revolving loans, $ 31.6 million in letters of credit outstanding, and a borrowing base of approximately $ 127.8 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 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.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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”).

As of March 31, 2022, 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”) and became automatically effective on February 14, 2022 (“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.

4 unchanged sentences

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 September 30, 2021, will settle by February 2022.

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

Our open futures and over-the-counter (“OTC”) swaps at March 31, 2022, will settle by March 2023.

At March 31, 2022, our open commodity derivative contracts represented (in thousands of barrels):

Contract type Purchases Sales Net

2 unchanged sentences

Total 9,525 ( 13,013 ) ( 3,488 )

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.

At March 31, 2022, we also had option collars that economically hedge a portion of our internally consumed fuel at our refineries.

The following table provides information on these option collars at our refineries as of March 31, 2022:

March 31, 2022

Average barrels per month 75,000

Weighted-average strike price - floor (in dollars) $ 59.36

Weighted-average strike price - ceiling (in dollars) $ 75.21

Earliest commencement date April 2022

Furthest expiry date December 2022

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

Interest Rate Derivatives

1 unchanged sentence

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

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

In May 2019, we entered into an interest rate swap at an average fixed rate of 3.91 % in exchange for the floating interest rate on the notional amounts due under the Retail Property Term Loan.

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

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

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

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

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

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

At March 31, 2022, and December 31, 2021, we did not hold any interest rate derivative instruments.

The following table provides information on the fair value amounts (in thousands) of these derivatives as of March 31, 2022, and December 31, 2021, and their placement within our condensed consolidated balance sheets.

Balance Sheet Location March 31, 2022 December 31, 2021

Asset (Liability)

3 unchanged sentences

MLC terminal obligation derivative Obligations under inventory financing agreements 5,742 ( 22,170 )

Interest rate derivatives Other accrued liabilities — ( 966 )

Interest rate derivatives Other liabilities — ( 2,027 )

_________________________________________________________

(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.

(1) Does not include cash collateral of $ 32.4 million and $ 6.1 million recorded in Prepaid and other current assets as of March 31, 2022, and December 31, 2021, respectively, and $ 9.5 million in Other long-term assets as of both March 31, 2022, and December 31, 2021.

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

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

Three Months Ended March 31,

Statement of Operations Location 2022 2021

5 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Common Stock Warrants

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

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

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

Derivative Instruments

6 unchanged sentences

Our Level 2 instruments include OTC swaps and options.

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.

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

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

2 unchanged sentences

Estimates of the J.

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

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.

Aron and MLC settlement prices are based on observable inputs, such as

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

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 $ 16.40 per barrel to a premium of $ 57.86 per barrel as of March 31, 2022.

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 September 30, 2021, or December 31, 2020.

We did not have other commodity derivatives classified as Level 3 at March 31, 2022, or December 31, 2021.

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

5 unchanged sentences

Financial Statement Impact

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

Fair value amounts by hierarchy level as of March 31, 2022, and December 31, 2021, are presented gross in the tables below (in thousands):

March 31, 2022

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

8 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

For the Interim Periods Ended March 31, 2022 and 2021

December 31, 2021

4 unchanged sentences

MLC terminal obligation derivative — — ( 22,170 ) ( 22,170 ) — ( 22,170 )

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

Gross environmental credit obligations (2) — ( 311,014 ) — ( 311,014 ) — ( 311,014 )

1 unchanged sentence

_________________________________________________________

(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.

(1) Does not include cash collateral of $ 41.9 million and $ 15.6 million as of March 31, 2022, and December 31, 2021, 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 $ 134.8 million and $ 120.1 million presented as Inventories on our condensed consolidated balance sheet and stated at the lower of cost and net realizable value as of March 31, 2022, and December 31, 2021, 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Balance, at beginning of period $ ( 37,321 ) $ ( 30,958 )

Settlements 92,308 34,943

Acquired — — — —

Total gains (losses) included in earnings ( 107,665 ) ( 25,147 )

Balance, at end of period $ ( 52,678 ) $ ( 21,162 )

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

The carrying value and fair value of long-term debt and other financial instruments as of March 31, 2022 and December 31, 2021 are as follows (in thousands):

March 31, 2022

Carrying Value Fair Value

8 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

For the Interim Periods Ended March 31, 2022 and 2021

December 31, 2021

Carrying Value Fair Value

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

$ 47,301 $ 50,311

ABL Credit Facility due 2025 (2) $ — $ —

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

7.75 % Senior Secured Notes due 2025 (1)

3 unchanged sentences

65,034 75,758

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

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

_________________________________________________________

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

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

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

The fair value of the 5.00% Convertible Senior Notes was determined by aggregating the fair value of the liability and equity components of the notes.

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

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

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.

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

(2) The fair value measurement of the ABL Credit Facility is considered a Level 3 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 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.

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

The carrying value of our ABL Credit Facility was determined to approximate fair value as of March 31, 2022.

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

3 unchanged sentences

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

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

The following table provides information on the amounts (in thousands) of our right-of-use assets (“ROU assets”) and liabilities as of March 31, 2022 and December 31, 2021 and their placement within our condensed consolidated balance sheets:

Lease type Balance Sheet Location March 31, 2022 December 31, 2021

Finance Property, plant, and equipment $ 21,150 $ 20,556

8 unchanged sentences

Total lease liabilities $ 394,809 $ 397,965

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

The following table summarizes the weighted-average lease terms and discount rates of our leases as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

Weighted-average remaining lease term (in years)

5 unchanged sentences

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

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

Three Months Ended March 31,

Lease cost type 2022 2021

6 unchanged sentences

Net lease cost $ 25,131 $ 24,842

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):

Nine Months Ended September 30,

Three Months Ended March 31,

Lease type 2022 2021

7 unchanged sentences

ROU assets terminated in exchange for release from operating lease liabilities 1,029 —

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of March 31, 2022 (in thousands):

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

10 unchanged sentences

_________________________________________________________

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

(1) Represents the period from April 1, 2022 to December 31, 2022.

Additionally, we have $ 3.8 million and $ 6.1 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

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.

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

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

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

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.

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

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

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

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

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

Sale-Leaseback Transaction

In February and March 2021, PHL and Par Hawaii Property Company, LLC (collectively, the “Sellers”), both our wholly owned subsidiaries, and MDC Coast HI 1, LLC, a subsidiary of Realty Income Corporation (the “Buyer”), entered into sale-leaseback transactions with respect to twenty-two ( 22 ) retail convenience store/fuel station properties located in Hawaii.

Note 13— Commitments and Contingencies

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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.

For example, during the first quarter of 2022 we received a tax assessment in the amount of $ 1.4 million from the Washington Department of Revenue related to its audit of certain taxes allegedly payable on certain sales of raw vacuum gas oil that occurred between 2014 and 2016.

We believe the Department of Revenue’s interpretation is in conflict with its prior guidance and we intend to appeal.

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.

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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.

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

Environmental Matters

Like other petroleum refiners, our operations are subject to extensive and periodically-changing federal, state, and local environmental laws and regulations governing air emissions, wastewater discharges, and solid and hazardous waste management activities.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

management activities.

Many of these regulations are becoming increasingly stringent and the cost of compliance can be expected to increase over time.

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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 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.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

As of March 31, 2022, we have accrued $ 15.4 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.

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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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.

For example, in 2021, the 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.

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

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

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

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

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.

Accordingly, our Hawaii

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

refinery 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 refinery’s 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.

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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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

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.

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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 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.

As of March 31, 2022, our estimate of the renewable volume obligation (“RVO”) liability for the 2021 and 2022 compliance years is based on the RFS proposed volumetric requirements released by the EPA on December 7, 2021.

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

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

All of our refineries are compliant with the final

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

Tier 3 gasoline standard.

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

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

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

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

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

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

Our Hawaii refineries are capable of producing the 1% sulfur residual fuel oil that was previously required within the ECA.

Although our Hawaii refineries remain in a position to supply vessels traveling to and through Hawaii, the market for 0.1% sulfur distillate fuel and 3.5% sulfur residual fuel is much more competitive.

Our Hawaii refinery is capable of producing the 1% sulfur residual fuel oil that was previously required within the ECA.

Although our Hawaii refinery remains in a position to supply vessels traveling to and through Hawaii, the market for 0.1% sulfur distillate fuel and 3.5% sulfur residual fuel is much more competitive.

In addition to U.S.

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Environmental Agreement

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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.

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

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Government and Noble Energy, Inc.

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.

As of March 31, 2022, 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.

Government for approximately $ 22.4 million relating to ongoing litigation concerning a plugging and abandonment obligation in Pacific Outer Continental Shelf Lease OCS-P 0320, comprising part of the Sword Unit in the Santa Barbara Channel, California.

The second unliquidated claim, which is related to the same plugging and abandonment obligation, was filed by Noble Energy Inc., the operator and majority interest owner of the Sword Unit.

The second unliquidated claim, which is related to the same plugging and abandonment obligation, was filed by Noble Energy Inc., the operator and majority interest owner of the

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2022 and 2021

We believe the probability of issuing stock to satisfy the full claim amount is remote, as the obligations upon which such proof of claim is asserted are joint and several among all working interest owners and Delta, our predecessor, only owned an approximate 3.4 % aggregate working interest in the unit.

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Note 14— Stockholders’ Equity

Issuance of Common Stock

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

Morgan Securities LLC and Goldman Sachs & Co.

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

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

The net proceeds from the Equity Offering were approximately $ 87.2 million, after deducting underwriting discounts and commissions and offering expenses.

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

Share Repurchase Program

On November 10, 2021, the Board authorized and approved a share repurchase program for up to $ 50 million of the outstanding shares of the Company’s common stock, with no specified end date.

During the three months ended March 31, 2022, we repurchased 362,130 shares under this share repurchase program for a total of $ 5.0 million.

Incentive Plans

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Restricted Stock Awards $ 1,749 $ 1,112

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Stock Option Awards 1,236 447

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.

During the three months ended March 31, 2022, we granted 361 thousand shares of restricted stock and restricted stock units with a fair value of approximately $ 5.4 million.

As of March 31, 2022, there were approximately $ 12.2 million of total unrecognized compensation costs related to restricted stock awards and restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 2.0 years.

During the three months ended March 31, 2022, we granted 449 thousand stock option awards with a weighted-average exercise price of $ 14.91 per share.

As of March 31, 2022, there were approximately $ 5.9 million of total unrecognized compensation costs related to stock option awards, which are expected to be recognized on a straight-line basis over a weighted-average period of 2.1 years.

During the three months ended March 31, 2022, we granted 50 thousand performance restricted stock units to executive officers.

These performance restricted stock units had a fair value of approximately $ 0.7 million and are subject to certain annual performance targets based on three-year -performance periods as defined by our Board of Directors.

As of September 30, 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 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.

As of March 31, 2022, there were approximately $ 1.5 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 2.2 years.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

For the Interim Periods Ended March 31, 2022 and 2021

Note 15— Income (Loss) per Share

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

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

2021 2020 2021 2020

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

Three Months Ended March 31,

Net loss $ ( 137,051 ) $ ( 62,227 )

Undistributed income allocated to participating securities — —

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

Net loss attributable to common stockholders ( 137,051 ) ( 62,227 )

Net income effect of convertible securities — —

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

Numerator for diluted loss per common share $ ( 137,051 ) $ ( 62,227 )

Basic weighted-average common stock shares outstanding 59,413 54,280

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Diluted weighted-average common stock shares outstanding 59,413 54,280

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 )

Basic loss per common share $ ( 2.31 ) $ ( 1.15 )

Diluted loss per common share $ ( 2.31 ) $ ( 1.15 )

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

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_________________________________________________________

(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.

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

We have utilized the basic shares outstanding to calculate both basic and diluted Net Loss per common share for the three months ended March 31, 2022 and 2021.

(2) We had no 5.00 % Convertible Senior Notes outstanding for the three months ended March 31, 2022.

Note 16— Income Taxes

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

Management continues to conclude that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets on the remaining amounts and a valuation allowance has been recorded for substantially all of our net deferred tax assets at September 30, 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 September 30, 2021 and December 31, 2020.

As of December 31, 2021, we had approximately $ 1.6 billion in net operating loss carryforwards (“NOL carryforwards”);

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

For the Interim Periods Ended March 31, 2022 and 2021

Note 17— Segment Information

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

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

Cost of revenues (excluding depreciation)

1,086,074 24,077 93,387 ( 105,116 ) 1,098,422

Operating expense (excluding depreciation)

55,613 3,754 18,692 — 78,059

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

Loss on sale of assets, net — 2 — — 2

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

Acquisition and integration costs — — — 1 1

Operating income (loss) $ 86,413 $ 13,357 $ 11,201 $ ( 13,178 ) $ 97,793

Interest expense and financing costs, net ( 15,374 )

Debt extinguishment and commitment costs ( 9 )

Other expense, net ( 22 )

Income before income taxes 82,388

Income tax expense ( 586 )

Net income $ 81,802

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

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

Three Months Ended March 31, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,299,223 $ 42,461 $ 119,909 $ ( 111,300 ) $ 1,350,293

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Loss before income taxes ( 137,488 )

Income tax expense ( 108 )

Income tax benefit 437

Net loss $ ( 137,051 )

Capital expenditures $ 12,829 $ 1,733 $ 1,581 $ 190 $ 16,333

________________________________________________________

(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.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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

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

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

Gain on sale of assets, net ( 19,595 ) ( 19 ) ( 44,786 ) — ( 64,400 )

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

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

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

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

Cost of revenues (excluding depreciation)

________________________________________________________

Operating expense (excluding depreciation)

151,601 9,882 48,393 — 209,876

Depreciation, depletion, and amortization 39,209 16,082 8,292 2,649 66,232

Impairment expense 38,105 — 29,817 — 67,922

General and administrative expense (excluding depreciation) — — — 31,823 31,823

Acquisition and integration costs — — — 600 600

Operating income (loss) $ ( 210,433 ) $ 31,513 $ 10,131 $ ( 35,077 ) $ ( 203,866 )

Interest expense and financing costs, net ( 52,611 )

Other income, net 1,089

Change in value of common stock warrants 4,270

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

Loss before income taxes ( 298,023 )

Income tax benefit 20,855

Net loss $ ( 277,168 )

Capital expenditures $ 26,529 $ 12,406 $ 2,253 $ 1,263 $ 42,451

________________________________________________________

(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.

(1) Includes eliminations of intersegment revenues and cost of revenues of $ 111.3 million and $ 82.6 million for the three months ended March 31, 2022 and 2021, respectively.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2021 and 2020

For the Interim Periods Ended March 31, 2022 and 2021

Note 18— Related Party Transactions

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

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

There were no costs incurred related to this agreement during the three months ended March 31, 2022 or 2021.

Note 19— Subsequent Events

On April 25, 2022, PHR and Par Petroleum, LLC, entered into an Amendment (the “Amendment”) to the Second Amended and Restated Supply and Offtake Agreement with J.

Aron & Company, LLC (“J.

The Amendment, among other things, amended the maximum commitment amount under the discretionary draw facility available to PHR (the “Discretionary Draw Facility”), from $ 165 million to $ 215 million.

The Amendment further increased the limit in the borrowing base for eligible hydrocarbon inventory from $ 82.5 million to $ 107.5 million.

Under the Discretionary Draw Facility as amended by the Amendment, J.

Aron agrees 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 (i) $ 215 million;

and (ii) the borrowing base, which is calculated as (x) 85 % of eligible receivables, plus (y) the lesser of $ 107.5 million and 85 % of the value of eligible hydrocarbon inventory, minus (z) such reserves as established by J.

Aron in respect of eligible receivables and eligible hydrocarbon inventory.

The Amendment further requires a $ 5.0 million reserve against the borrowing base at any time more than $ 165 million is outstanding in discretionary draw advances made to PHR, which reserve may be reduced by the posting of cash collateral by PHR in accordance with the terms of the Amendment.

In addition, the Amendment modified the calculation “DD Make-Whole” by increasing the assumed aggregate principal amount outstanding used in such calculation from $ 41.3 million to $ 53.8 million.

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