What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-09 · 187 added, 186 removed, 644 unchanged (37% of the section changed)

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3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rocky Mountain regions to transport and store crude oil and refined products for our refineries and transport refined products to our retail sites or third-party purchasers.

As of June 30, 2022, we owned a 46.0% equity investment in Laramie Energy.

As of September 30, 2022, we owned a 46.0% equity investment in Laramie Energy.

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

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Recent Events Affecting Comparability of Periods

During the first half of 2022, the global market for energy commodities experienced rising prices and significant volatility.

The price of crude oil continues to rise as the global economy recovers from lows related to the COVID-19 pandemic.

The Organization of the Petroleum Exporting Companies (“OPEC”) and its oil-producing allies are forecasting production increases and increasing global demand throughout 2022.

This rise in demand is driven by a recovery of global travel to pre-pandemic levels as well as a rise in gasoline demand as people return to in-office work and traveling.

Over the last twelve months, increased demand for and reduced supply of refined product has led to increased crude oil prices.

The rise in demand from 2021 to 2022 is driven by a recovery of global travel to pre-pandemic levels as well as a return to in-office work.

In March, the U.S.

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Airline companies, which represent a significant portion of our Hawaii market through jet fuel sales, have forecasted significant increases in air travel volumes for the remainder of 2022 and Hawaii visitor counts for the first half of 2022 are in excess of 90% of pre-pandemic levels.

Over the past 12 months, energy prices increased 41.6% and U.S.

gasoline prices increased 11.2% in June alone.

In 2022, higher national gasoline prices and U.S.

inflation have affected most Americans.

Following high gasoline prices in the summer, prices at the pump fell from June through September.

Even with these third quarter declines, the overall energy index is up 19.8% year over year as of September 2022.

Rising gasoline prices, and rising energy prices overall, are indicators of inflation and the U.S.

Federal Reserve (the “Fed”) has begun taking steps to try to curb inflation.

In summer 2022, the Fed increased its benchmark interest rate by 75 basis points twice, to 1.75% in June and to 2.5% in July, bringing the benchmark rate to its highest level since December 2018.

Following the July increase, the Fed indicated that it was open to further increases in September.

Federal Reserve (the “Fed”) has taken significant steps to curb inflation.

In summer 2022, the Fed increased its benchmark interest rate by 75 basis points twice, to 1.75% in June and to 2.5% in July.

The rate increased again by 75 basis points in September 2022, as expected, because the summer rate changes did not measurably slow inflation.

Following the September meeting, the Fed indicated its intent to raise rates by an additional 1.25% this year.

These actions by the Fed are intended to cool rising U.S.

inflation rates, which have increased 9.1% year over year as of June 2022, by slowing economic growth and nonessential consumer spending (including travel).

inflation rates, which have increased 8.2% year over year as of September 2022, by slowing economic growth and nonessential consumer spending (including travel).

If consumer spending decreases as a result of these actions, it is expected that demand and prices for our products will decrease in kind.

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We have turned to other grades of crude oil to meet fuel production requirements.

In the third quarter, the global market for energy commodities experienced moderately declining prices driven by increased supply expectations after twelve months of rising prices.

In response, the Organization of the Petroleum Exporting Companies (“OPEC”) announced on October 5 that it would cut production by two million barrels a day (representing approximately 2% of global oil production) with the intention of raising global oil prices.

As of the date of this Quarterly Report on Form 10-Q, the Russia-Ukraine conflict is ongoing and continues to impact the global economy.

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Please read Item 1A.

— Risk Factors for more information on the Russia-Ukraine conflict and its potential impacts on our

— Risk Factors for more information on the Russia-Ukraine conflict and its potential impacts on our business.

Additionally, the financial results contained in this Quarterly Report on Form 10-Q reflect rebounding demand driven by decreasing COVID-19 pandemic-related demand suppression experienced in the regions in which we operate.

Although case counts are increasing relative to early in the pandemic, widespread vaccine availability has lessened the severity of COVID-19 cases leading to increased travel and public contact.

The pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

However, the pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

The full magnitude of the impact of these and other events on our financial condition, future results of operations, and future cash flows and liquidity is uncertain and has been and may continue to be material.

Results of Operations

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

Net Income (Loss).

Our financial results for the second quarter of 2022 improved from a net loss of $109.0 million for the three months ended June 30, 2021 to net income of $149.1 million for the three months ended June 30, 2022.

The increase was primarily driven by higher product crack spreads and a favorable change in FIFO benefit at our Hawaii refinery, partially offset by higher purchased product differentials and derivative costs and higher RINs expenses.

Adjusted EBITDA and Adjusted Net Income (Loss).

For the three months ended June 30, 2022, Adjusted EBITDA was $242.1 million compared to $26.7 million for the three months ended June 30, 2021.

The increase was primarily related to improved crack spreads across all of our refineries, partially offset by unfavorable purchased product differentials and realized derivatives at our Hawaii refinery and higher costs related to our inventory financing agreements.

For the three months ended June 30, 2022, Adjusted Net Income was $197.2 million compared to a loss of $14.7 million for the three months ended June 30, 2021.

Three months ended September 30, 2022 compared to the three months ended September 30, 2021

Our financial results for the third quarter of 2022 improved from net income of $81.8 million for the three months ended September 30, 2021 to net income of $267.4 million for the three months ended September 30, 2022.

The increase was primarily driven by higher product crack spreads across all of our refineries and a favorable change in the valuation of the embedded derivatives related to our inventory financing agreements driven by changes in commodity prices.

These factors were partially offset by higher crude oil differentials and a $70.8 million increase in RINs expenses.

Adjusted EBITDA and Adjusted Net Income.

For the three months ended September 30, 2022, Adjusted EBITDA was $214.1 million compared to $58.2 million for the three months ended September 30, 2021.

The increase was primarily related to improved product crack spreads across all of our refineries, favorable realized commodity derivatives, and an 11% increase in refining sales volumes at our Washington refinery, partially offset by unfavorable crude oil and purchased product differentials, a $35.1 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement, and higher fuel burn costs.

For the three months ended September 30, 2022, Adjusted Net Income was $172.0 million compared to $18.6 million for the three months ended September 30, 2021.

The improvement was primarily related to the factors described above for the increase in Adjusted EBITDA.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021

Net Income (Loss).

Our financial results improved from a net loss of $171.2 million for the six months ended June 30, 2021 to net income of $12.1 million for the six months ended June 30, 2022.

The increase in profitability was primarily driven by higher product crack spreads, partially offset by unfavorable purchased product differentials and derivatives costs, higher costs associated with our inventory financing agreements, and a gain of $63.9 million related to the 2021 Hawaii sale-leaseback transactions in the six months ended June 30, 2021 with no such gain in the 2022 comparable period.

Our financial results improved from a net loss of $89.4 million for the nine months ended September 30, 2021 to net income of $279.5 million for the nine months ended September 30, 2022.

The increase in profitability was primarily driven by higher product crack spreads across all of our refineries and a favorable change in the valuation of the embedded derivatives related to our inventory financing agreements driven by changes in commodity prices.

These factors were partially offset by unfavorable crude oil and purchased product differentials, higher fuel burn costs and intermediation fees, unfavorable commodity derivatives, and a $22.9 million increase in RINs expenses.

Other factors impacting our results period over period include a gain of $63.9 million related to the 2021 Hawaii sale-leaseback transactions in the nine months ended September 30, 2021 with no such gain in the 2022 comparable period and a 14% increase in operating expenses compared to the comparable period in 2021.

Adjusted EBITDA and Adjusted Net Income (Loss).

For the six months ended June 30, 2022, Adjusted EBITDA was $254.5 million compared to $40.4 million for the six months ended June 30, 2021.

The improvement was primarily related to favorable crack spreads across all of our refineries, partially offset by unfavorable purchased product differentials and realized derivatives at our Hawaii refinery and higher costs related to our inventory financing agreements.

Other factors impacting our results period over period include increased fuel burn costs, a 4% decrease in refining sales volume primarily related to the Washington refinery turnaround in 2022, and higher operating expenses compared to the comparable period in 2021.

For the six months ended June 30, 2022, Adjusted Net Income was $169.9 million compared to a loss of $42.0 million for the six months ended June 30, 2021.

For the nine months ended September 30, 2022, Adjusted EBITDA was $468.5 million compared to $98.6 million for the nine months ended September 30, 2021.

The improvement was primarily related to favorable product crack spreads across all of our refineries partially offset by unfavorable crude oil and purchased product differentials, a $65.3 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement, unfavorable realized commodity derivatives, and higher fuel burn costs.

Other factors impacting our results period over period include a 14% increase in operating expenses in 2022 compared to the comparable period in 2021.

For the nine months ended September 30, 2022, Adjusted Net Income was $341.9 million compared to a loss of $23.4 million for the nine months ended September 30, 2021.

The improvement was primarily related to the same factors described above for the increase in Adjusted EBITDA.

The following tables summarize our consolidated results of operations for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 (in thousands).

The following tables summarize our consolidated results of operations for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 $ Change % Change

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Depreciation and amortization 25,125 23,618 1,507 6%

Loss on sale of assets, net 15 510 (495) (97)%

Loss (gain) on sale of assets, net (185) 2 (187) (9,350)%

General and administrative expense (excluding depreciation) 16,219 12,473 3,746 30%

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Total operating expenses 1,772,114 1,212,575

Operating income (loss) 174,029 (84,501)

Operating income 284,171 97,793

Other income (expense)

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Debt extinguishment and commitment costs 343 (9) 352 3,911%

Other income (expense), net 47 (36) 83 231%

Other expense, net (198) (22) (176) 800%

Total other expense, net (16,707) (15,405)

Income (loss) before income taxes 150,250 (108,351)

Income before income taxes 267,464 82,388

Income tax expense (68) (586) 518 (88)%

Net income (loss) $ 149,125 $ (108,958)

Six Months Ended June 30,

Net income $ 267,396 $ 81,802

Nine Months Ended September 30,

2022 2021 $ Change % Change

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Depreciation and amortization 74,488 70,046 4,442 6%

Loss (gain) on sale of assets, net 15 (64,402) 64,417 (100)%

Gain on sale of assets, net (170) (64,400) 64,230 (100)%

General and administrative expense (excluding depreciation) 47,550 36,559 10,991 30%

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Gain on curtailment of pension obligation — 2,032 (2,032) (100)%

Other income, net 49 25 24 96%

Other income (expense), net (149) 3 (152) (5,067)%

Total other expense, net (56,878) (56,820)

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Net income (loss) $ 279,470 $ (89,383)

The following tables summarize our operating income (loss) by segment for the three and six months ended June 30, 2022 and 2021 (in thousands).

The following tables summarize our operating income (loss) by segment for the three and nine months ended September 30, 2022 and 2021 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Three months ended June 30, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Three months ended September 30, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,974,701 $ 54,635 $ 157,385 $ (130,436) $ 2,056,285

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General and administrative expense (excluding depreciation) — — — 16,219 16,219

Acquisition and integration costs — — — — —

Operating income (loss) $ 266,091 $ 17,625 $ 17,320 $ (16,865) $ 284,171

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

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

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

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

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

Loss on sale of assets, net — 2 — — 2

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

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________________________________________________________

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $136.0 million and $105.5 million for the three months ended June 30, 2022 and 2021, respectively.

Six months ended June 30, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $130.4 million and $105.1 million for the three months ended September 30, 2022 and 2021, respectively.

Nine months ended September 30, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 5,318,379 $ 147,729 $ 424,505 $ (377,703) $ 5,512,910

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Operating income (loss) $ 316,564 $ 43,375 $ 26,890 $ (49,725) $ 337,104

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

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

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

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Depreciation and amortization 43,373 16,176 8,164 2,333 70,046

Loss (gain) from sale of assets, net (19,595) (21) (44,786) — (64,402)

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

General and administrative expense (excluding depreciation) — — — 36,559 36,559

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________________________________________________________

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $247.3 million and $188.0 million for the six months ended June 30, 2022 and 2021, respectively.

Below is a summary of key operating statistics for the refining segment for the three and six months ended June 30, 2022 and 2021:

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

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $377.7 million and $293.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Below is a summary of key operating statistics for the refining segment for the three and nine months ended September 30, 2022 and 2021:

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

2022 2021 2022 2021

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D&A per bbl ($/throughput bbl) 2.02 1.48 2.28 1.56

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

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

2022 2021 2022 2021

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Pricing is based 50% on applicable product pricing in Rapid City, South Dakota, and 50% on applicable product pricing in Denver, Colorado.

Below is a summary of key operating statistics for the retail segment for the three and six months ended June 30, 2022 and 2021:

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

Below is a summary of key operating statistics for the retail segment for the three and nine months ended September 30, 2022 and 2021:

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

2022 2021 2022 2021

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• inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our Washington inventory and intermediation obligation, and purchase price allocation adjustments);

beginning in 2022, this also includes the FIFO inventory (gains) losses associated with our titled manufactured inventory in Hawaii);

• LIFO layer liquidation impacts associated with our Washington inventory;

• Renewable Identification Numbers (“RINs”) mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis;

beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability);

this adjustment also includes the mark-to-market losses (gains) associated with our net RINs liability);

• unrealized loss (gain) on derivatives.

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The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):

Three months ended June 30, 2022 Refining Logistics Retail

Three months ended September 30, 2022 Refining Logistics Retail

Operating income $ 266,091 $ 17,625 $ 17,320

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RINs mark-to-market adjustments (6,731) — —

Unrealized gain on derivatives (28,607) — —

Unrealized loss on derivatives 3,004 — —

Adjusted Gross Margin (1) $ 250,820 $ 26,153 $ 41,811

Three months ended June 30, 2021 Refining Logistics Retail

Operating income (loss) $ (99,119) $ 14,542 $ 12,651

Three months ended September 30, 2021 Refining Logistics Retail

Operating income $ 86,413 $ 13,357 $ 11,201

Operating expense (excluding depreciation)

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Adjusted Gross Margin (1) $ 93,548 $ 22,658 $ 32,523

Six months ended June 30, 2022 Refining Logistics Retail

Nine months ended September 30, 2022 Refining Logistics Retail

Operating income $ 316,564 $ 43,375 $ 26,890

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Depreciation and amortization 48,854 15,357 8,156

Gain on sale of assets, net — (12) —

Loss (gain) on sale of assets, net — (253) 56

Inventory valuation adjustment (18,039) — —

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Adjusted Gross Margin (1) $ 600,797 $ 69,759 $ 95,447

Six months ended June 30, 2021 Refining Logistics Retail

Nine months ended September 30, 2021 Refining Logistics Retail

Operating income (loss) $ (103,571) $ 37,976 $ 73,207

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Inventory valuation adjustment 55,527 — —

LIFO liquidation adjustment 4,151 — —

RINs mark-to-market adjustments 58,973 — —

Unrealized gain on derivatives (2,608) — —

Unrealized loss on derivatives 7,620 — —

Adjusted Gross Margin (1) $ 199,222 $ 65,277 $ 89,614

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(1) For the three and six months ended June 30, 2022, there was no impairment expense or LIFO liquidation adjustment recorded in Operating income (loss).

(2) For the three and six months ended June 30, 2021, there was no impairment expense recorded in Operating income (loss).

(1) For the three and nine months ended September 30, 2022 and 2021, there was no impairment expense recorded in Operating income (loss).

For the three and nine months ended September 30, 2022 and the nine months ended September 30, 2021, there was no LIFO liquidation adjustment recorded in Operating income (loss).

Adjusted Net Income (Loss) and Adjusted EBITDA

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beginning in 2022, this also includes the FIFO inventory (gains) losses associated with our titled manufactured inventory in Hawaii);

• the LIFO layer liquidation impacts associated with our Washington inventory;

• RINs mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis;

beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability);

this adjustment also includes the mark-to-market losses (gains) associated with our net RINs liability);

• unrealized (gain) loss on derivatives;

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The following table presents a reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss), on a historical basis for the periods indicated (in thousands):

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

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

2022 2021 2022 2021

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________________________________________

(1) For the three and six months ended June 30, 2022 and 2021, there was no change in value of contingent consideration, change in value of common stock warrants, change in valuation allowance or other deferred tax items, impairment expense, or equity losses (earnings) from Laramie Energy, LLC, including impairments associated with our investment in Laramie Energy, our share of Laramie Energy’s asset impairment losses in excess of our basis difference, and our share of Laramie Energy’s unrealized loss (gain) on derivatives.

(1) For the three and nine months ended September 30, 2022 and 2021, there was no change in value of contingent consideration, change in value of common stock warrants, change in valuation allowance or other deferred tax items, impairment expense, or equity losses (earnings) from Laramie Energy, LLC, including impairments associated with our investment in Laramie Energy, our share of Laramie Energy’s asset impairment losses in excess of our basis difference, and our share of Laramie Energy’s unrealized loss (gain) on derivatives.

Factors Impacting Segment Results

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

Operating income for our refining segment was $168.8 million for the three months ended June 30, 2022, an increase of $267.9 million compared to an operating loss of $99.1 million for the three months ended June 30, 2021.

The increase in profitability was primarily driven by an increase in product crack spreads across all of our refineries and a favorable change in FIFO benefit in Hawaii, partially offset by unfavorable purchased product differentials and derivatives costs, including crack spread hedges, at our Hawaii refinery and a $20.1 million increase in RINs expenses.

Operating income for our logistics segment was $15.9 million for the three months ended June 30, 2022, an increase of $1.4 million compared to $14.5 million for the three months ended June 30, 2021.

The increase is due to higher throughput revenues across our Washington and Wyoming assets.

Operating income for our retail segment was $5.5 million for the three months ended June 30, 2022, a decrease of $7.2 million compared to $12.7 million for the three months ended June 30, 2021.

The decrease was primarily due to a 10% decline in fuel volumes and a 5% decrease in fuel margins related to higher crude oil prices and higher operating expenses in the three months ended June 30, 2022 related to higher planned repairs and maintenance expenses, increased employee costs, and higher credit card processing fees due to increased gasoline prices.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

Operating income for our refining segment was $50.5 million for the six months ended June 30, 2022, an increase of $240.5 million compared to an operating loss of $190.0 million for the six months ended June 30, 2021.

The increase in profitability was primarily driven by an increase in product crack spreads across all of our refineries, a $47.8 million decrease in RINs expenses, and a favorable change in FIFO benefit in Hawaii, partially offset by unfavorable purchased product differentials and derivatives costs, including crack spread hedges, and fuel burn costs at our Hawaii refinery, higher costs associated with our inventory financing agreements, and a 4% decrease in refining sales volume primarily related to the Washington refinery turnaround in 2022.

Other factors impacting our results period over period include a gain on sale of assets of $19.6 million in the six months ended June 30, 2021 primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022.

Operating income for our logistics segment was $25.8 million for the six months ended June 30, 2022, which was relatively consistent with $24.6 million for the six months ended June 30, 2021.

Operating income for our retail segment was $9.6 million for the six months ended June 30, 2022, a decrease of $52.4 million compared to $62.0 million for the six months ended June 30, 2021.

The decrease in profitability is primarily due to a gain on sale of assets of $44.8 million in the six months ended June 30, 2021 primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022 and higher operating expenses in the six months ended June 30, 2022 primarily related to higher planned repairs and maintenance expenses, higher rent expense related to the additional leases from our 2021 Hawaii sale-leaseback transactions, and higher credit card processing fees due to increased gasoline prices.

Three months ended September 30, 2022 compared to the three months ended September 30, 2021

Operating income for our refining segment was $266.1 million for the three months ended September 30, 2022, an increase of $179.7 million compared to $86.4 million for the three months ended September 30, 2021.

The increase was primarily driven by improved product crack spreads across all of our refineries and a favorable change in the valuation of the embedded derivatives related to our inventory financing agreements driven by changes in commodity prices, partially offset by unfavorable crude oil differentials, a $70.8 million increase in RINs expenses, and a $35.1 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement.

Operating income for our logistics segment was $17.6 million for the three months ended September 30, 2022, an increase of $4.2 million compared to $13.4 million for the three months ended September 30, 2021.

The increase is primarily due to higher third party revenues.

Operating income for our retail segment was $17.3 million for the three months ended September 30, 2022, an increase of $6.1 million compared to $11.2 million for the three months ended September 30, 2021.

The increase was primarily due to a 42% increase in fuel margins related to declining crude oil prices in the three months ended September 30, 2022 compared to rising prices in the comparative period of 2021, partially offset by a 16% increase in operating expenses in the three months ended September 30, 2022 related to increased employee costs and higher credit card processing fees due to increased gasoline prices.

Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021

Operating income for our refining segment was $316.6 million for the nine months ended September 30, 2022, an improvement of $420.2 million compared to an operating loss of $103.6 million for the nine months ended September 30, 2021.

The increase in profitability was primarily driven by improved product crack spreads across all of our refineries and a favorable change in the valuation of the embedded derivatives related to our inventory financing agreements driven by changes in commodity prices, partially offset by unfavorable crude oil and purchased product differentials, a $65.3 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement, higher fuel burn costs, unfavorable commodity derivatives, and a $22.9 million increase in RINs expenses.

Other factors impacting our results period over period include a gain on sale of assets of $19.6 million in the nine months ended September 30, 2021 primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022 and a 15% increase in operating expenses in the nine months ended September 30, 2021 primarily related to increased utility costs, planned repairs and maintenance, and higher employee costs.

Operating income for our logistics segment was $43.4 million for the nine months ended September 30, 2022, an increase of $5.4 million compared to $38.0 million for the nine months ended September 30, 2021.

The increase was primarily due to increased third party revenues and a 5% increase in throughput across our Washington assets, partially offset by a 9% increase in cost of sales driven primarily by higher marine vessel fees and fuel costs.

Operating income for our retail segment was $26.9 million for the nine months ended September 30, 2022, a decrease of $46.3 million compared to $73.2 million for the nine months ended September 30, 2021.

The decrease in profitability is primarily due to a gain on sale of assets of $44.8 million in the nine months ended September 30, 2021 related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022 and a 14% increase in operating expenses in the nine months ended September 30, 2022 primarily related to higher repair and maintenance expenses, increased employee costs, higher credit card processing fees due to increased gasoline prices, and higher rent expense related to the additional leases from our 2021 Hawaii sale-leaseback transactions, partially offset by a 15% increase in fuel margin.

Adjusted Gross Margin

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

For the three months ended June 30, 2022, our refining Adjusted Gross Margin was $287.3 million, an increase of $234.8 million compared to $52.5 million for the three months ended June 30, 2021.

The increase was primarily driven by improved crack spreads partially offset by unfavorable realized derivatives costs, including crack spread hedges, higher purchased product differentials, and higher inventory financing costs primarily at our Hawaii refinery.

Adjusted Gross Margin for the Hawaii refinery increased from $2.73 per barrel during the three months ended June 30, 2021 to $18.71 per barrel during the three months ended June 30, 2022 primarily due to improved crack spreads, partially offset by unfavorable crude and purchased product differentials, unfavorable realized derivatives, and higher costs associated with our inventory financing agreement.

Adjusted Gross Margin for the Wyoming refinery increased by $28.24 per barrel primarily due to improved crack spreads.

Adjusted Gross Margin for the Washington refinery increased by $18.53 per barrel primarily due to improved crack spreads, partially offset by unfavorable feedstock costs.

For the three months ended June 30, 2022, our logistics Adjusted Gross Margin was $24.9 million, an increase of $1.5 million compared to $23.4 million for the three months ended June 30, 2021.

The increase is primarily due to higher throughput revenues across our Washington and Wyoming assets.

For the three months ended June 30, 2022, our retail Adjusted Gross Margin was $27.6 million, a decrease of $4.2 million compared to $31.8 million for the three months ended June 30, 2021.

The decrease was primarily due to a 10% decline in sales volumes and a 5% decrease in fuel margins related to higher crude oil prices.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

For the six months ended June 30, 2022, our refining Adjusted Gross Margin was $350.0 million, an increase of $244.3 million compared to $105.7 million for the six months ended June 30, 2021.

The increase was primarily due to favorable crack spreads across all our refineries partially offset by unfavorable purchased product differentials and higher realized derivatives costs, including crack spread hedges, inventory financing agreement, fuel burn, and refined product costs.

Adjusted Gross Margin for the Hawaii refinery improved from $3.51 per barrel during the six months ended June 30, 2021 to $11.22 per barrel during the six months ended June 30, 2022 primarily due to improved crack spreads, partially offset by unfavorable crude and purchased product differentials, unfavorable realized derivatives, and higher costs associated with our inventory financing agreement.

Adjusted Gross Margin for the Wyoming refinery increased by $21.59 per barrel primarily due to improved crack spreads and a favorable FIFO change of $12.7 million, partially offset by unfavorable feedstock costs.

Adjusted Gross Margin for the Washington refinery increased by $12.03 per barrel primarily due to favorable crack spreads partially offset by unfavorable feedstock costs and reduced sales volumes related to the 2022 turnaround.

For the six months ended June 30, 2022, our logistics Adjusted Gross Margin was $43.6 million, which was relatively consistent with $42.6 million for the six months ended June 30, 2021.

For the six months ended June 30, 2022, our retail Adjusted Gross Margin was $53.6 million, a decrease of $3.5 million compared to $57.1 million for the six months ended June 30, 2021.

The decrease was primarily due to a a 1% decrease in fuel margins related to higher crude oil prices and a 5% decline in fuel sales volumes.

Three months ended September 30, 2022 compared to the three months ended September 30, 2021

For the three months ended September 30, 2022, our refining Adjusted Gross Margin was $250.8 million, an increase of $157.3 million compared to $93.5 million for the three months ended September 30, 2021.

The increase was primarily driven by improved product crack spreads and favorable realized commodity derivatives, partially offset by higher crude oil and purchased product differentials and higher intermediation fees in Hawaii.

Adjusted Gross Margin for the Hawaii refinery increased from $6.02 per barrel during the three months ended September 30, 2021 to $19.49 per barrel during the three months ended September 30, 2022.

The improvement was primarily due to improved product crack spreads and favorable realized commodity derivatives, partially offset by unfavorable crude oil and purchased product differentials, a $35.1 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement, and higher fuel burn costs.

Adjusted Gross Margin for the Washington refinery increased by $16.45 per barrel primarily due to improved product crack spreads and an 11% increase in sales volumes, partially offset by unfavorable crude oil differentials.

Adjusted Gross Margin for the Wyoming refinery decreased by $2.45 per barrel primarily due to an unfavorable FIFO change of $15.4 million, unfavorable crude differentials, and higher RINs expenses related to current period production, partially offset by improved product crack spreads.

For the three months ended September 30, 2022, our logistics Adjusted Gross Margin was $26.2 million, an increase of $3.5 million compared to $22.7 million for the three months ended September 30, 2021.

The increase is primarily due to higher revenues from third party services.

For the three months ended September 30, 2022, our retail Adjusted Gross Margin was $41.8 million, an increase of $9.3 million compared to $32.5 million for the three months ended September 30, 2021.

The increase was primarily due to a 42% increase in fuel margins related to declining crude oil prices in the three months ended September 30, 2022 compared to rising crude oil prices in the comparable period in 2021.

Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021

For the nine months ended September 30, 2022, our refining Adjusted Gross Margin was $600.8 million, an increase of $401.6 million compared to $199.2 million for the nine months ended September 30, 2021.

The increase was primarily due to favorable product crack spreads across all our refineries partially offset by unfavorable crude oil and purchased

product differentials, higher intermediation fees in Hawaii, unfavorable realized commodity derivatives, and higher fuel burn costs.

Adjusted Gross Margin for the Hawaii refinery improved from $4.35 per barrel during the nine months ended September 30, 2021 to $13.92 per barrel during the nine months ended September 30, 2022.

The improvement was primarily due to improved product crack spreads, partially offset by unfavorable crude oil and purchased product differentials, a $65.3 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement, unfavorable realized commodity derivatives, and higher fuel burn costs.

Adjusted Gross Margin for the Washington refinery increased by $13.88 per barrel primarily due to favorable product crack spreads partially offset by unfavorable crude oil differentials.

Adjusted Gross Margin for the Wyoming refinery increased by $12.75 per barrel primarily due to improved product crack spreads partially offset by unfavorable crude oil differentials.

For the nine months ended September 30, 2022, our logistics Adjusted Gross Margin was $69.8 million, an increase of $4.5 million compared to $65.3 million for the nine months ended September 30, 2021.

The increase was primarily due to increased revenues from third party services and a 5% increase in throughput across our Washington assets, partially offset by a 9% increase in cost of sales driven primarily by higher marine vessel fees and fuel costs.

For the nine months ended September 30, 2022, our retail Adjusted Gross Margin was $95.4 million, an increase of $5.8 million compared to $89.6 million for the nine months ended September 30, 2021.

The increase was primarily due to a 15% increase in fuel margins related to declining crude oil prices in the three months ended September 30, 2022 partially offset by a 5% decline in fuel sales volumes.

Discussion of Consolidated Results

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

For the three months ended June 30, 2022, revenues were $2.1 billion, a $0.9 billion increase compared to $1.2 billion for the three months ended June 30, 2021.

The increase was primarily due to an increase of $0.9 billion in third-party refining segment revenue as a result of increases in Brent and WTI crude oil prices and an increase in average product crack spreads, partially offset by a 2% decrease in refining sales volumes.

Average Brent crude oil prices increased to $111.98 per barrel during the second quarter of 2022 compared to $69.08 per barrel during the second quarter of 2021, and average WTI crude oil prices increased to $108.52 per barrel during the second quarter of 2022 compared to $66.17 per barrel during the second quarter of 2021.

Three months ended September 30, 2022 compared to the three months ended September 30, 2021

For the three months ended September 30, 2022, revenues were $2.1 billion, a $0.8 billion increase compared to $1.3 billion for the three months ended September 30, 2021.

The increase was primarily due to an increase of $0.7 billion in third-party refining segment revenue as a result of increases in Brent and WTI crude oil prices, an increase in average product crack spreads, and an 11% increase in refining sales volumes at our Washington refinery.

Average Brent crude oil prices increased to $97.70 per barrel during the third quarter of 2022 compared to $73.23 per barrel during the third quarter of 2021, and average WTI crude oil prices increased to $91.43 per barrel during the third quarter of 2022 compared to $70.52 per barrel during the third quarter of 2021.

Revenues at our retail segment increased $31.5 million primarily due to a 35% increase in fuel prices.

Cost of Revenues (Excluding Depreciation).

For the three months ended June 30, 2022, cost of revenues (excluding depreciation) was $1.8 billion, a $0.6 billion increase compared to $1.2 billion for the three months ended June 30, 2021.

The increase was primarily driven by higher Brent and WTI crude oil prices as discussed above and unfavorable purchased product differentials and derivatives costs at our Hawaii refinery, partially offset by lower refining sales volumes as discussed above and favorable changes in FIFO benefit at our Hawaii refinery.

For the three months ended September 30, 2022, cost of revenues (excluding depreciation) was $1.6 billion, a $0.5 billion increase compared to $1.1 billion for the three months ended September 30, 2021.

The increase was primarily driven by higher Brent and WTI crude oil prices as discussed above and unfavorable crude oil and purchased product differentials, a $70.8 million increase in RINs expenses, a $35.1 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement, an 11% increase in refining sales volumes at our Washington refinery, and higher fuel burn costs, partially offset by a favorable change in the valuation of the embedded derivatives related to our inventory financing agreements driven by changes in commodity prices, and favorable commodity derivatives.

Other factors impacting our results period over period include 33% higher fuel costs at our retail segment.

Operating Expense (Excluding Depreciation).

For the three months ended June 30, 2022, operating expense (excluding depreciation) was $82.3 million, a $13.5 million increase when compared to $68.8 million for the three months ended June 30, 2021.

For the three months ended September 30, 2022, operating expense (excluding depreciation) was $88.3 million, a $10.2 million increase when compared to $78.1 million for the three months ended September 30, 2021.

The increase in operating expenses was primarily driven by higher utility and maintenance costs and increased employee costs.

Depreciation and Amortization .

For the three months ended June 30, 2022, D&A was $25.6 million, an increase of $2.1 million compared to $23.5 million for the three months ended June 30, 2021.

For the three months ended September 30, 2022, D&A was $25.1 million, an increase of $1.5 million compared to $23.6 million for the three months ended September 30, 2021.

The increase was primarily due to the amortization of our Washington refinery turnaround projects completed in the first quarter of 2022.

Loss on Sale of Assets, Net.

During the three months ended June 30, 2022, there was an immaterial loss on sale of assets.

During the three months ended June 30, 2021, we recorded a loss of $0.5 million primarily related to the sale and disposal of certain retail locations.

General and Administrative Expense (Excluding Depreciation).

For the three months ended June 30, 2022, general and administrative expense (excluding depreciation) was $15.4 million, an increase of $3.2 million compared to $12.2 million for the three months ended June 30, 2021.

The increase was primarily due to an increase in employee costs.

For the three months ended September 30, 2022, general and administrative expense (excluding depreciation) was $16.2 million, an increase of $3.7 million compared to $12.5 million for the three months ended September 30, 2021.

The increase was primarily due to an increase in employee costs and outside services related to profit improvement projects.

Interest Expense and Financing Costs, Net .

For the three months ended June 30, 2022, our interest expense and financing costs were $18.2 million, an increase of $1.0 million compared to $17.2 million for the three months ended June 30, 2021.

The increase was primarily due to higher fees related to our inventory financing, partially offset by lower outstanding debt balances driven by the partial redemption of the outstanding 12.875% Senior Secured Notes in June 2021 and the repurchase and cancellation of a portion of such notes in the second quarter of 2022, and the final maturity of the 5.00% Convertible Senior Notes on June 15, 2021.

For the three months ended September 30, 2022, our interest expense and financing costs were $16.9 million, an increase of $1.5 million compared to $15.4 million for the three months ended September 30, 2021.

The increase was primarily due to higher balances on our inventory financing agreements, partially offset

by lower outstanding debt balances driven by early repayments of the outstanding 12.875% Senior Secured Notes in the second quarters of 2021 and 2022 and the final maturity of the 5.00% Convertible Senior Notes on June 15, 2021.

Please read Note 7—Inventory Financing Agreements and Note 9—Debt to our condensed consolidated financial statements for further discussion on our intermediation agreements and indebtedness, respectively.

Debt Extinguishment and Commitment Costs.

For the three months ended June 30, 2021, our debt extinguishment costs were $6.6 million and primarily represented extinguishment costs associated with the redemption of $36.8 million of 12.875% Senior Secured Notes in June 2021.

For the three months ended June 30, 2022, our debt extinguishment and commitment costs were $5.7 million and primarily represented extinguishment costs associated with the repurchase and cancellation of an additional $36.9 million of 12.875% Senior Secured Notes in the second quarter of 2022.

Please read Note 9—Debt to our condensed consolidated financial statements for further discussion on our indebtedness.

Income Taxes.

For the three months ended June 30, 2022, we recorded income tax expense of $1.1 million primarily related to increased taxable income.

For the three months ended June 30, 2021, we recorded an income tax expense of $0.6 million primarily related to foreign taxes.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

For the six months ended June 30, 2022, revenues were $3.5 billion, a $1.4 billion increase compared to $2.1 billion for the six months ended June 30, 2021.

The increase was primarily due to an increase of $1.3 billion in third-party revenues at our refining segment, primarily related to higher crude oil prices and crack spreads across all our refining locations, partially offset by a 4% decrease in refining sales volume, primarily related to the Washington refinery turnaround in 2022.

Average Brent crude oil prices rose to $104.98 in the six months ended June 30, 2022 compared to $65.22 per barrel in the six months ended June 30, 2021, and average WTI crude oil prices rose to $101.8 per barrel during the six months ended June 30, 2022 compared to $62.18 in the six months ended June 30, 2021.

For the three months ended September 30, 2022, we recorded income tax expense of $0.1 million primarily related to increased taxable income.

For the three months ended September 30, 2021, we recorded an income tax expense of $0.6 million primarily related to foreign taxes.

Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021

For the nine months ended September 30, 2022, revenues were $5.5 billion, a $2.1 billion increase compared to $3.4 billion for the nine months ended September 30, 2021.

The increase was primarily due to an increase of $2.0 billion in third-party revenues at our refining segment, primarily related to higher crude oil prices and product crack spreads across all our refining locations.

Average Brent crude oil prices rose to $102.53 in the nine months ended September 30, 2022 compared to $67.92 per barrel in the nine months ended September 30, 2021, and average WTI crude oil prices rose to $98.31 per barrel during the nine months ended September 30, 2022 compared to $64.99 in the nine months ended September 30, 2021.

Revenues at our retail segment increased $89.0 million primarily due to a 41% increase in fuel prices.

Cost of Revenues (Excluding Depreciation).

For the six months ended June 30, 2022, cost of revenues (excluding depreciation) was $3.2 billion, a $1.1 billion increase compared to $2.1 billion for the six months ended June 30, 2021.

The increase was primarily due to increases in Brent and WTI crude oil prices as discussed above, higher purchased product differentials and derivative costs at our Hawaii refinery, and higher costs associated with our inventory financing agreements, partially offset by a 4% decrease in refining sales volume and a favorable change in FIFO benefit at our Hawaii refinery.

For the nine months ended September 30, 2022, cost of revenues (excluding depreciation) was $4.8 billion, a $1.6 billion increase compared to $3.2 billion for the nine months ended September 30, 2021.

The increase was primarily due to increases in Brent and WTI crude oil prices as discussed above, higher crude oil and purchased product differentials, a $65.3 million increase in intermediation fees driven primarily by higher market structure fees under the Supply and Offtake Agreement, higher fuel burn costs, and unfavorable commodity derivatives, partially offset by a favorable change in valuation of the embedded derivatives related to our inventory financing agreements driven by changes in commodity prices.

Other factors impacting our results period over period include 50% higher fuel costs at our retail segment.

Operating Expense (Excluding Depreciation).

For the six months ended June 30, 2022, operating expense (excluding depreciation) was $163.7 million, an increase of $20.7 million when compared to $143.0 million for the six months ended June 30, 2021.

The increase was primarily driven by higher utility and maintenance expenses, increased employee costs, and higher rental expenses primarily related to the leases from our Hawaii sale-leaseback transactions in 2021.

For the nine months ended September 30, 2022, operating expense (excluding depreciation) was $252.1 million, an increase of $31.0 million compared to $221.1 million for the nine months ended September 30, 2021.

The increase was primarily driven by higher utility and maintenance expenses, increased employee costs, and higher retail credit card processing fees related to increased gasoline prices.

Depreciation and Amortization .

For the six months ended June 30, 2022, D&A was $49.4 million, an increase of $3.0 million compared to $46.4 million for the six months ended June 30, 2021.

For the nine months ended September 30, 2022, D&A was $74.5 million, an increase of $4.5 million compared to $70.0 million for the nine months ended September 30, 2021.

The increase was primarily due to the amortization of our Washington refinery turnaround projects completed in the first quarter of 2022.

Loss on Sale of Assets, Net.

For the six months ended June 30, 2022, there was an immaterial loss on sale of assets, net.

For the six months ended June 30, 2021, the gain on sale of assets, net was approximately $64.4 million and primarily related to the Hawaii sale-leaseback transactions we closed in the first quarter of 2021.

Gain on Sale of Assets, Net.

For the nine months ended September 30, 2022, there was a $0.2 million gain on sale of assets, net, which resulted primarily from the sale of equipment.

For the nine months ended September 30, 2021, the gain on sale of assets, net was approximately $64.4 million and primarily related to the Hawaii sale-leaseback transactions we closed in the first quarter of 2021.

General and Administrative Expense (Excluding Depreciation).

For the six months ended June 30, 2022, general and administrative expense (excluding depreciation) was $31.3 million, an increase of $7.2 million compared to $24.1 million for the six months ended June 30, 2021.

For the nine months ended September 30, 2022, general and administrative expense (excluding depreciation) was $47.6 million, an increase of $11.0 million compared to $36.6 million for the nine months ended September 30, 2021.

The increase was primarily due to higher employee costs.

Interest Expense and Financing Costs, Net .

For the six months ended June 30, 2022, our interest expense and financing costs were $34.5 million, a decrease of $0.8 million when compared to $35.3 million for the six months ended June 30, 2021.

The decrease was primarily due to lower outstanding debt balances in 2022 driven by early partial repayments of the outstanding 12.875% Senior Secured Notes in the second quarters of 2021 and 2022 and the full repayment at maturity of the 5.00% Convertible Senior Notes in June 2021, partially offset by higher fees related to our inventory financing.

For the nine months ended September 30, 2022, our interest expense and financing costs were $51.4 million, an increase of $0.7 million when compared to $50.7 million for the nine months ended September 30, 2021.

The increase was primarily due to increased balances on our inventory financing agreements, partially offset by lower outstanding debt balances in 2022 driven by early partial repayments of the outstanding 12.875% Senior Secured Notes in the second quarters of 2021 and 2022 and the full repayment at maturity of the 5.00% Convertible Senior Notes in June 2021.

Debt Extinguishment and Commitment Costs.

For the six months ended June 30, 2021, our debt extinguishment and commitment costs were $8.1 million and primarily represented $6.6 million in extinguishment costs associated with the redemption of $36.8 million of 12.875% Senior Secured Notes in June 2021 and $1.4 million in extinguishment costs associated with the repayment of the Retail Property Term Loan on February 23, 2021.

For the six months ended June 30, 2022, our debt extinguishment and commitment costs were $5.7 million and primarily represented extinguishment costs associated with the repurchase and cancellation of an additional $36.9 million of 12.875% Senior Secured Notes in the second quarter of 2022.

For the nine months ended September 30, 2021, our debt extinguishment and commitment costs were $8.1 million and primarily represented $6.6 million in extinguishment costs associated with the redemption of $36.8 million of 12.875% Senior Secured Notes in June 2021 and $1.4 million in extinguishment costs associated with the repayment of the Retail Property Term Loan on February 23, 2021.

For the nine months ended September 30, 2022, our debt extinguishment and commitment costs were $5.3 million and primarily represented extinguishment costs associated with the repurchase and cancellation of an additional $36.9 million of 12.875% Senior Secured

Notes in the second quarter of 2022.

Please read Note 9—Debt to our condensed consolidated financial statements for further discussion on our indebtedness.

Gain on Curtailment of Pension Obligation.

For the six months ended June 30, 2021, we recorded a $2.0 million gain on curtailment of pension obligation related to the March 2021 Wyoming Refining plan amendment.

No such gain was recorded during the six months ended June 30, 2022.

For the nine months ended September 30, 2021, we recorded a $2.0 million gain on curtailment of pension obligation related to the March 2021 Wyoming Refining plan amendment.

No such gain was recorded during the nine months ended September 30, 2022.

Income Taxes.

For the six months ended June 30, 2022, we recorded an income tax expense of $0.7 million primarily related to increased taxable income.

For the six months ended June 30, 2021, we recorded an income tax expense of $0.6 million primarily driven by foreign taxes.

For the nine months ended September 30, 2022, we recorded an income tax expense of $0.8 million primarily related to increased taxable income.

For the nine months ended September 30, 2021, we recorded an income tax expense of $1.2 million primarily driven by foreign taxes.

Consolidating Condensed Financial Information

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For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands).

As of June 30, 2022

As of September 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

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Long-term debt, net of current maturities — 496,870 — 496,870

Due to related parties — — — —

Finance lease liabilities — 11,202 (4,430) 6,772

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Total liabilities and stockholders’ equity $ 331,909 $ 2,538,699 $ (300,357) $ 2,570,251

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

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Adjusted EBITDA $ (5,221) $ 219,247 $ 34 $ 214,060

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

13 unchanged sentences

Debt extinguishment and commitment costs — (9) — (9)

Gain on curtailment of pension obligation — — — —

Other income (expense), net (14) (8) — (22)

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Adjusted EBITDA $ (3,112) $ 61,326 $ 11 $ 58,225

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

20 unchanged sentences

Adjusted EBITDA $ (13,808) $ 482,250 $ 95 $ 468,537

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

29 unchanged sentences

The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss), on a historical basis for the periods indicated (in thousands):

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

3 unchanged sentences

RINs mark-to-market adjustments — (6,731) — (6,731)

Unrealized loss (gain) on derivatives — (28,607) — (28,607)

Unrealized loss on derivatives — 3,004 — 3,004

Acquisition and integration costs — — — —

7 unchanged sentences

Adjusted EBITDA (1) $ (5,221) $ 219,247 $ 34 $ 214,060

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

7 unchanged sentences

Debt extinguishment and commitment costs — 9 — 9

Severance costs — 59 — 59

Loss (gain) on sale of assets, net — 2 — 2

4 unchanged sentences

Adjusted EBITDA (1) $ (3,112) $ 61,326 $ 11 $ 58,225

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

13 unchanged sentences

Adjusted EBITDA (1) $ (13,808) $ 482,250 $ 95 $ 468,537

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

2 unchanged sentences

Inventory valuation adjustment — 55,527 — 55,527

LIFO liquidation adjustment — 4,151 — 4,151

RINs mark-to-market adjustments — 58,973 — 58,973

Unrealized loss (gain) on derivatives — (2,608) — (2,608)

Unrealized loss on derivatives — 7,620 — 7,620

Acquisition and integration costs 87 — — 87

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________________________________________

(1) For the three and six months ended June 30, 2022 and 2021, there was no change in valuation allowance and other deferred tax items, change in value of common stock warrants, impairment expense, impairment of investment in Laramie Energy, unrealized gain on derivatives included in equity earnings from Laramie Energy, or equity losses from Laramie Energy.

For the three and six months ended June 30, 2022, there was no LIFO liquidation adjustment.

(1) For the three and nine months ended September 30, 2022 and 2021, there was no change in valuation allowance and other deferred tax items, change in value of common stock warrants, impairment expense, impairment of investment in Laramie Energy, unrealized gain on derivatives included in equity earnings from Laramie Energy, or equity losses from Laramie Energy.

For the three and nine months ended September 30, 2022 and the nine months ended September 30, 2021, there was no LIFO liquidation adjustment.

Liquidity and Capital Resources

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Our primary sources of liquidity are cash flows from operations, cash on hand, amounts available under our credit agreements, and access to capital markets.

Our liquidity position as of June 30, 2022 was $285.8 million and consisted of $280.9 million at Par Petroleum, LLC and subsidiaries, $4.8 million at Par Pacific Holdings, and $0.1 million at all our other subsidiaries.

As of June 30, 2022, we had access to the ABL Credit Facility, the J.

Our liquidity position as of September 30, 2022 was $494.7 million and consisted of $488.3 million at Par Petroleum, LLC and subsidiaries, $6.3 million at Par Pacific Holdings, and $0.1 million at all our other subsidiaries.

As of September 30, 2022, we had access to the ABL Credit Facility, the J.

Aron Discretionary Draw Facility, the MLC receivable advances, and cash on hand of $409.1 million.

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We believe our cash flows from operations and available capital resources will be sufficient to meet our current capital expenditures, working capital, and debt service requirements for the next 12 months.

We may seek to raise additional debt or equity capital to fund any other significant changes to our business or to refinance existing debt.

We may seek to raise additional debt or equity capital to fund acquisitions and any other significant changes to our business or to refinance existing debt.

We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost.

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The Term Loan B Facility may also require annual prepayments of principal with a variable percentage of our excess cash flow, 50% or 25% depending on our consolidated year end secured leverage ratio (as defined in the Term Loan B Facility agreement).

The following table summarizes cash activities for the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended June 30,

The following table summarizes cash activities for the nine months ended September 30, 2022 and 2021 (in thousands):

Nine Months Ended September 30,

Net cash provided by operating activities $ 369,053 $ 54,594

Net cash provided by (used in) investing activities (37,661) 82,356

Net cash provided by financing activities 75,252 15,358

Cash flows for the six months ended June 30, 2022

Net cash provided by operating activities for the six months ended June 30, 2022 was driven primarily by non-cash charges to operations of approximately $49.9 million and net income of $12.1 million, partially offset by net cash used for changes in operating assets and liabilities of approximately $34.3 million.

Net cash used in financing activities (34,522) (1,954)

Cash flows for the nine months ended September 30, 2022

Net cash provided by operating activities for the nine months ended September 30, 2022 was driven primarily by net income of $279.5 million, non-cash charges to operations of approximately $80.3 million, and net cash provided by changes in operating assets and liabilities of approximately $9.3 million.

Non-cash charges to operations consisted primarily of the following adjustments:

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• unrealized gain on derivatives contracts of $10.2 million.

Net cash used for changes in operating assets and liabilities resulted primarily from:

• net increases in our inventories and accounts receivable resulting from higher crude oil and refined product prices and higher inventory volumes at our Hawaii refinery;

• increase in prepaid and other primarily driven by $66.1 million increase in collateral posted with broker to support commodity derivative positions;

partially offset by

Net cash provided by changes in operating assets and liabilities resulted primarily from:

• net increases in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations and accounts payable;

• an increase in gross environmental credit obligations primarily related to current period production volumes and increases in RINs prices;

Net cash used in investing activities for the six months ended June 30, 2022 consisted primarily of $29.0 million in additions to property, plant, and equipment driven by profit improvement and turnaround projects including crude recovery and debottlenecking projects at our Tacoma refinery, maintenance and tank replacement projects at our Wyoming refinery, and co-generation engine and combustion and tank projects at our Hawaii refinery.

Net cash provided by financing activities was approximately $75.3 million for the six months ended June 30, 2022 and consisted primarily of the following activities:

• net borrowings under the J.

Aron Discretionary Draw Facility and MLC receivable advances of $142.3 million;

partially offset by

• net repayments of debt of $57.0 million primarily driven by the partial repurchase and cancellation of our 7.75% Senior Secured Notes and 12.875% Senior Secured Notes;

• net increases in our inventories and accounts receivable resulting from higher crude oil and refined product prices and higher inventory volumes at our Hawaii refinery;

• increase in prepaid and other primarily driven by a $71.2 million increase in Advances to suppliers for crude purchases.

Net cash used in investing activities for the nine months ended September 30, 2022 consisted primarily of $38.1 million in additions to property, plant, and equipment driven by profit improvement and turnaround projects including crude

recovery and debottlenecking projects at our Tacoma refinery, maintenance and tank replacement projects at our Wyoming refinery, and co-generation engine and tank conversion projects at our Hawaii refinery.

Net cash used in financing activities was approximately $34.5 million for the nine months ended September 30, 2022 and consisted primarily of the following activities:

• net repayments of debt of $72.3 million primarily driven by the partial repurchase and cancellation of our 7.75% Senior Secured Notes and 12.875% Senior Secured Notes and

• repurchases of common stock of $7.3 million

Cash flows for the six months ended June 30, 2021

Net cash provided by operating activities was approximately $1.8 million for the six months ended June 30, 2021, which resulted from a net loss of approximately $171.2 million, partially offset by net cash provided by changes in operating assets and liabilities of approximately $191.2 million and non-cash earnings from operations of approximately $18.2 million.

The change in our operating assets and liabilities for the six months ended June 30, 2021 was primarily due to an increase in our gross environmental credit obligations of $204.0 million and a net increase in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations of $199.6 million, partially offset by increases in inventories of $184.1 million and accounts receivable of $99.5 million.

partially offset by

• net borrowings under the J.

Aron Discretionary Draw Facility and MLC receivable advances of $48.2 million.

Cash flows for the nine months ended September 30, 2021

Net cash provided by operating activities was approximately $54.6 million for the nine months ended September 30, 2021, which resulted from net cash provided by changes in operating assets and liabilities of approximately $125.3 million and non-cash charges to operations of approximately $18.7 million, partially offset by a net loss of approximately $89.4 million.

The change in our operating assets and liabilities for the nine months ended September 30, 2021 was primarily due to an increase in our gross environmental credit obligations of $147.0 million and a net increase in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations of $178.6 million, partially offset by increases in inventories of $195.1 million and accounts receivable of $83.5 million.

Net cash provided by changes in operating assets and liabilities also includes an increase of $6.3 million in deferred turnaround costs.

Net cash provided by investing activities was approximately $88.8 million for the six months ended June 30, 2021 and primarily related to proceeds received from the 2021 Hawaii sale-leaseback transactions partially offset by $14.0 million of additions to property, plant, and equipment.

Net cash provided by financing activities for the six months ended June 30, 2021 was approximately $15.4 million, which consisted primarily of proceeds of $87.2 million from our March 2021 equity offering of common stock and net borrowings associated with the J.

Net cash provided by investing activities was approximately $82.4 million for the nine months ended September 30, 2021 and primarily related to proceeds received from the 2021 Hawaii sale-leaseback transactions partially offset by $21.0 million of additions to property, plant, and equipment.

Net cash used in financing activities for the nine months ended September 30, 2021 was approximately $2.0 million, which consisted primarily of proceeds of $87.2 million from our March 2021 equity offering of common stock and net borrowings associated with the J.

Aron deferred payment and MLC receivable advances of approximately $66.2 million, partially offset by net debt and insurance premium repayments of approximately $148.7 million and $5.6 million in extinguishment costs related to the repayment of the Retail Property Term Loan and the redemption of a portion of the 12.875% Senior Secured Notes.

2 unchanged sentences

Washington Refinery Intermediation Agreement .

We and MLC entered into amendments to the Washington Refinery Intermediation Agreement on March 9, 2022, and May 9, 2022, which, among other things, increased the MLC receivable advances.

We and MLC entered into amendments to the Washington Refinery Intermediation Agreement on March 9, 2022, May 9, 2022, and August 11, 2022, which, among other things, increased the maximum borrowing capacity under the MLC receivable advances.

Please read Note 7—Inventory Financing Agreements for more information.

7 unchanged sentences

Debt Repayments.

During the six months ended June 30, 2022, we repurchased and cancelled $5.0 million and $36.9 million in aggregate principal amounts of the 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, respectively.

During the nine months ended September 30, 2022, we repurchased and cancelled $15.0 million and $36.9 million in aggregate principal amounts of the 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, respectively.

Please read Note 9—Debt for more information.

16 unchanged sentences

management’s assumptions about future events;

t he effects and timing of the closing of the acquisition of the ExxonMobil Billings refinery and associated marketing and logistics assets (the “Acquisition”), the anticipated cash on hand and other financing for the Acquisition and the acquisition of the hydrocarbon inventory, the anticipated synergies and other benefits of the Acquisition, including renewable growth opportunities, the anticipated financial and operating results of the Acquisition, and the effect on the Company’s cash flows and profitability (including Adjusted EBITDA and Adjusted Net Income);

our ability to raise additional debt or equity capital;

19 unchanged sentences

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 2. Management’s Discussion and Analysis