What changed in this filing

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Item 9A. Controls and Procedures

2023-02-27 compared with 2022-02-25 · 458 added, 597 removed, 1860 unchanged (36% of the section changed)

2 unchanged sentences

Disclosure controls and procedures are designed with the objective of ensuring that all information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (“Exchange Act”), such as this report, is recorded, processed, summarized, and reported within the time periods specified by the SEC.

In connection with the preparation of this Annual Report on Form 10-K, as of December 31, 2021, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

In connection with the preparation of this Annual Report on Form 10-K, as of December 31, 2022, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the

design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of December 31, 2022.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Par Pacific Holdings, Inc.

To the shareholders and the Board of Directors of Par Pacific Holdings, Inc.

Opinion on Internal Control over Financial Reporting

65 unchanged sentences

Incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on January 14, 2019.

2.11 Equity and Asset Purchase Agreement dated as of October 20, 2022, by and among Exxon Mobil Corporation, ExxonMobil Oil Corporation and ExxonMobil Pipeline Company, LLC, as sellers, and Par Montana, LLC and Par Montana Holdings, LLC, as purchaser entities, and solely for the limited purposes set forth therein, Par Pacific Holdings, Inc.

Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on October 21, 2022.

3.1 Restated Certificate of Incorporation of the Company dated October 20, 2015.

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Incorporated by reference to Exhibit 4.21 to the Company’s registration statement on Form S-3 filed on December 21, 2018.

4.8 Stockholders Agreement dated April 10, 2015.

Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 13, 2015.

4.8 Second Supplemental Indenture, dated January 11, 2019, among Par Tacoma, LLC (f/k/a TrailStone NA Asset Finance I, LLC), U.S.

3 unchanged sentences

Incorporated by reference to Exhibit 4.23 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2020.

4.10 Fourth Supplemental Indenture, dated as of November 16, 2022, among Par Montana, LLC, Par Petroleum, LLC, Par Petroleum Finance Corp., Par Pacific Holdings, Inc., the other guarantors party thereto, and Wilmington Trust, National Association.*

4.11 Indenture, dated as of June 5, 2020, among Par Petroleum, LLC, Par Petroleum Finance Corp., the Guarantors (as defined therein) and Wilmington Trust, National Association, as Trustee and Collateral Trustee.

Incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed on June 8, 2020.

4.12 First Supplemental Indenture, dated as of November 16, 2022, among Par Montana, LLC, Par Petroleum, LLC, Par Petroleum Finance Corp., Par Pacific Holdings, Inc., the other guarantors party thereto, and Wilmington Trust, National Association.*

4.13 Description of Registrant’s Securities.*

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3 to Annual Report on Form 10-K/A filed on July 2, 2014.****

10.10 Employment Offer Letter with Joseph Israel dated December 12, 2014.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 17, 2014.****

10.11 Employment Offer Letter with James Matthew Vaughn dated July 3, 2014.

Incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed on May 5, 2016.****

10.10 Employment Offer Letter with Jim Yates dated March 10, 2015.

7 unchanged sentences

10.14 Form of Nonstatutory Stock Option Agreement (Discretionary Long Term Incentive Plan).

Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 2, 2015.****

10.15 Par Petroleum (and subsidiaries) Incentive Compensation Plan.

12 unchanged sentences

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 14, 2015.****

10.22 Amendment to Employment Offer Letter with Joseph Israel dated October 12, 2015.

Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 14, 2015.****

10.20 Employment Assignment Letter with Jim Yates dated August 5, 2022.

Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 3, 2022.

10.21 Employment Offer Letter with Richard Creamer dated March 29, 2022.

Incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2022.

10.22 Employment Offer Letter with Eric Wright dated January 17, 2017.

Incorporated by reference to Exhibit 10.

5 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2022.

10.23 Employment Offer Letter with Shawn Flores dated December 13, 2022.*

10.24 Par Pacific Holdings, Inc.

4 unchanged sentences

Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 6, 2017.

10.26 Par Pacific Holdings, Inc.

Severance Plan for Senior Officers, dated as of March 7, 2017.

10.27 Amendment #2 to the Par Pacific Holdings, Inc.

Severance Plan for Senior Officers, dated as of May 23, 2022.

Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on May 25, 2022.

10.28 Asset Purchase Agreement dated as of January 9, 2018 by and among CHS Inc., Par Hawaii, Inc., and Par Pacific Holdings, Inc.

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Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 4, 2019.

10.31 Eig h teenth Amendment to First Lien ISDA 2002 Master Agreement entered into as of December 17, 2021 by and between U.S.

10.34 Eighteenth Amendment to First Lien ISDA 2002 Master Agreement entered into as of December 17, 2021 by and between U.S.

Oil & Refining Co.

4 unchanged sentences

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K filed on February 25, 2022.

10.36 Topping Unit Purchase Agreement by and among IES Downstream, LLC, Eagle Island, LLC, Par Hawaii Refining, LLC, and Par Pacific Holdings, Inc., dated as of August 29, 2018.

4 unchanged sentences

1 and Assumption Agreement to Pledge and Security Agreement dated as of August 1 5 , 2019, among Par Petroleum, LLC, and the other grantors party thereto and Wilmington Trust, National Association, as collateral trustee.

Incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K filed on February 25, 2022.

10.39 Amendment No.

2 and Assumption Agreement to Pledge and Security Agreement dated as of May 12, 2020, among Par Petroleum, LLC, and the other grantors party thereto and Wilmington Trust, National Association, as collateral trustee.

Incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K filed on February 25, 2022.

10.40 Amendment No.

3 and Assumption Agreement to Pledge and Security Agreement dated as of June 4, 2020, among Par Petroleum, LLC, and the other grantors party thereto and Wilmington Trust, National Association, as collateral trustee.

10.38 Purchase Agreement and Escrow Instructions, dated as of February 11, 2021, by and among Par Hawaii, LLC, Par Pacific Hawaii Property Company, LLC, MDC Coast HI 1, LLC, and Fidelity National Title Ins u r ance Company.

Incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K filed on February 25, 2022.

10.41 Amendment No.

4 and Assumption Agreement to Pledge and Security Agreement dated as of March 23, 2022, among Par Petroleum, LLC, and the other grantors party thereto and Wilmington Trust, National Association, as collateral trustee.*

10.42 Assumption Agreement to Pledge and Security Agreement, dated as of November 16, 2022, made by and among Par Petroleum, LLC, Par Petroleum Finance Corp.

and Par Montana, LLC, in favor of Wilmington Trust, National Association, as collateral trustee.*

10.43 Purchase Agreement and Escrow Instructions, dated as of February 11, 2021, by and among Par Hawaii, LLC, Par Pacific Hawaii Property Company, LLC, MDC Coast HI 1, LLC, and Fidelity National Title Insurance Company.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 16, 2021.

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Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 4, 2022.

10.46 First Amendment to Amended and Restated Loan and Security Agreement dated as of February 14, 2023, among Par Petroleum, LLC, Par Hawaii, LLC, Hermes Consolidated, LLC, Wyoming Pipeline Company LLC, the guarantors party thereto, the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent.*

10.47 Increase Agreement and Amendment dated as of March 30, 2022, among Par Petroleum, LLC, Par Hawaii, LLC, Hermes Consolidated, LLC, Wyoming Pipeline Company LLC, Par Pacific Holdings, Inc., the guarantors party thereto, the incremental lender party thereto, the other lenders party thereto, and Bank of America, N.A., as administrative agent.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 1, 2022.

10.48 Thirteenth Amendment to First Lien ISDA 2002 Master Agreement entered into as of February 11, 2021, by and between U.S.

4 unchanged sentences

Aron & Company LLC by Par Hawaii Refining, LLC.

Incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K filed on February 25, 2022.

10.50 Amendment to Second Amended and Restated Supply and Offtake Agreement dated as of March 24, 2022, between Par Hawaii Refining, LLC and J.

Aron & Company, LLC.

Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2022.

10.51 Amendment to Second Amended and Restated Supply and Offtake Agreement, dated as of April 25, 2022, by and among Par Hawaii Refining LLC, Par Petroleum, LLC, as guarantor, and J.

Aron & Company LLC.

Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on April 28, 2022

10.52 Amendment to Second Amended and Restated Supply and Offtake Agreement, dated as of May 17, 2022, by and among Par Hawaii Refining LLC, Par Petroleum, LLC, as guarantor, and J.

Aron & Company LLC.

Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on May 19, 2022.

10.53 Amendment to Second Amended and Restated Supply and Offtake Agreement, dated as of September 13, 2022, by and among Par Hawaii Refining LLC, Par Petroleum, LLC, as guarantor, and J.

Aron & Company LLC.

Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 3, 2022.

10.54 Amendment to Second Amended and Restated Supply and Offtake Agreement, dated as of February 13, 2023, by and among Par Hawaii Refining LLC, Par Petroleum, LLC, as guarantor, and J.

Aron & Company LLC.*

10.55 Twentieth Amendment to First Lien ISDA 2002 Master Agreement entered into as of March 9 , 202 2 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 11, 2022 .

10.56 Twenty first Amendment to First Lien ISDA 2002 Master Agreement entered into as of March 25, 2022 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2022.

10.57 Twenty second Amendment to First Lien ISDA 2002 Master Agreement entered into as of April 21, 2022 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.

4 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2022.

10.58 Twenty third Amendment to First Lien ISDA 2002 Master Agreement entered into as of May 9, 2022 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.

5 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2022.

10.59 Twenty fourth Amendment to First Lien ISDA 2002 Master Agreement entered into as of May 17, 2022 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2022.

10.60 Twenty fifth Amendment to First Lien ISDA 2002 Master Agreement entered into as of June 28, 2022 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.

7 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2022.

10.61 Twenty sixth Amendment to First Lien ISDA 2002 Master Agreement entered into as of August 11, 2022 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 16, 2022.

10.62 Twenty seventh Amendment to First Lien ISDA 2002 Master Agreement entered into as of November 2, 2022 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 7, 2022.

10.63 Twenty eighth Amendment to First Lien ISDA 2002 Master Agreement entered into as of January 3, 2023 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.*

10.64 Twenty ninth Amendment to First Lien ISDA 2002 Master Agreement entered into as of January 25, 2023 by and between U.S.

Oil & Refining Co.

and Merrill Lynch Commodities, Inc.*

14.1 Par Pacific Holdings, Inc.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Par Pacific Holdings, Inc.

To the shareholders and the Board of Directors of Par Pacific Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Par Pacific Holdings, Inc.

and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows and changes in stakeholder's equity for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

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The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and

we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill – Certain Reporting Units — Refer to Notes 2 and 10 to the financial statements

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The Company determines the fair value of its reporting units using the discounted cash flow model and the market approach.

The determination of the fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to discount rates and long-term growth rates as well as forecasts of future gross margin, capital expenditures, and operating expenses.

The determination of the fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to discount rates and forecasts of future gross margin and operating expenses.

The determination of the fair value using the market approach requires management to make significant assumptions related to valuation multiples.

Changes in these assumptions could have a significant impact on either the fair value, or the amount of any goodwill impairment charge, or both.

The goodwill balance was $127.3 million as of December 31, 2021.

goodwill balance was $129.3 million as of December 31, 2022.

No impairment loss was recorded during the year ended December 31, 2022.

We identified goodwill associated with certain reporting units as a critical audit matter because of the significant judgments made by management to estimate the fair value of the reporting units and, consequently, the difference between their fair value and carrying value.

The audit procedures performed to evaluate the reasonableness of management’s estimates and assumptions related to the selection of discount rates, long-term growth rates, valuation multiples, and forecasts of future gross margin, capital expenditures, and operating expenses required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

The audit procedures performed to evaluate the reasonableness of management’s estimates and assumptions related to the selection of discount rate, valuation multiples, and forecasts of future gross margin and operating expenses required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the discount rates, long-term growth rates, valuation multiples, and forecasts of future gross margin, capital expenditures, and operating expenses used by management to estimate the fair value of certain reporting units included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the underlying assumptions, such as management’s selection of the discount rates, long-term growth rates, and valuation multiples as well as forecasts of future gross margin, capital expenditures, and operating expenses.

• We evaluated management’s ability to accurately forecast future gross margin, capital expenditures, and operating expenses by comparing actual results to management’s historical forecasts.

Our audit procedures related to the discount rate, valuation multiples, and forecasts of future gross margin and operating expenses used by management to estimate the fair value of certain reporting units included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the underlying assumptions, such as management’s selection of the discount rate, selection of valuation multiples, and forecasts of future gross margin and operating expenses.

• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to:

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• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates, long-term growth rates, and valuation multiples by:

• Testing the source information underlying the determination of the discount rates, long-term growth rates, and valuation multiples and the mathematical accuracy of the calculations.

• Testing the source information underlying the determination of the discount rate, long-term growth rates, and valuation multiples and the mathematical accuracy of the calculations.

• Developing a range of independent estimates and comparing those to the discount rates, long-term growth rates, and valuation multiples selected by management.

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Property, plant, and equipment 1,224,567 1,180,397

Less accumulated depreciation, depletion, and amortization ( 323,892 ) ( 251,113 )

Less accumulated depreciation and amortization ( 388,733 ) ( 323,892 )

Property, plant, and equipment, net 835,834 856,505

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Operating expense (excluding depreciation) 342,209 299,669 277,427

Depreciation, depletion, and amortization 94,241 90,036 86,121

Depreciation and amortization 99,769 94,241 90,036

Impairment expense — 1,838 85,806

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Total other expense, net ( 73,004 ) ( 72,657 ) ( 111,808 )

Loss before income taxes ( 80,276 ) ( 429,806 ) ( 28,880 )

Income (loss) before income taxes 364,899 ( 80,276 ) ( 429,806 )

Income tax benefit (expense) ( 710 ) ( 1,021 ) 20,720

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

Depreciation, depletion, and amortization 94,241 90,036 86,121

Depreciation and amortization 99,769 94,241 90,036

Impairment expense — 1,838 85,806

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Trade accounts receivable ( 57,391 ) ( 83,955 ) 117,801

Collateral posted with broker for derivative transactions 4,564 7,035 ( 8,797 )

Prepaid and other assets ( 35,356 ) ( 6,321 ) 36,500

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Acquisitions of businesses, net of cash acquired ( 35,546 ) — —

Proceeds related to asset acquisition — — 3,226

Capital expenditures ( 53,025 ) ( 29,533 ) ( 63,522 )

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Net borrowings (repayments) on deferred payment arrangements and receivable advances 80,681 61,098 ( 41,645 )

Payment of deferred loan costs ( 346 ) ( 6,266 ) ( 13,450 )

Exercise of stock options — — 8,171

Purchase of common stock for retirement ( 7,834 ) ( 2,145 ) ( 1,156 )

Payments for debt extinguishment and commitment costs ( 3,483 ) ( 5,618 ) —

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ROU assets terminated in exchange for release from operating lease liabilities 32,902 6,847 7,738

Common stock issued for business combination — — 36,980

Common stock issued to repurchase convertible notes — — 74,290

See accompanying notes to consolidated financial statements.

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Balance, January 1, 2020 53,254 $ 533 $ 715,069 $ ( 67,942 ) $ 582 $ 648,242

Issuance of common stock in connection with acquisition 2,364 23 36,957 — — 36,980

Issuance of common stock for convertible notes repurchase, net (1) 3,243 32 45,585 — — 45,617

Issuance of common stock for employee stock purchase plan 145 2 1,551 — — 1,553

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

Stock-based compensation 322 3 7,106 — — 7,109

Purchase of common stock for retirement ( 69 ) ( 1 ) ( 1,155 ) — — ( 1,156 )

Exercise of stock options 447 4 8,167 — — 8,171

Other comprehensive loss — — — — ( 4,324 ) ( 4,324 )

Net income — — — 40,809 — 40,809

Net loss — — — ( 409,086 ) — ( 409,086 )

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

Common stock offering, net of issuance costs 5,750 58 87,135 — — 87,193

Issuance of common stock for employee stock purchase plan 85 1 1,420 — — 1,421

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

Stock-based compensation 443 4 7,948 — — 7,952

Purchase of common stock for retirement ( 123 ) ( 1 ) ( 1,352 ) ( 792 ) — ( 2,145 )

Other comprehensive loss — — — — ( 4,324 ) ( 4,324 )

Exercise of stock options 4 — 58 — — 58

Other comprehensive income — — — — 6,244 6,244

Net loss — — — ( 81,297 ) — ( 81,297 )

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 87,135 — — 87,193

Issuance of common stock for employee stock purchase plan 67 — 1,244 — — 1,244

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Other comprehensive income — — — — 5,627 5,627

Net loss — — — ( 81,297 ) — ( 81,297 )

Net income — — — 364,189 — 364,189

Balance, December 31, 2022 60,471 $ 604 $ 836,491 $ ( 200,687 ) $ 8,129 $ 644,537

________________________________________

(1) The issuance of common stock for the repurchase of a portion of our 5.00% Convertible Senior Notes during the year ended December 31, 2019, is presented net of a $ 28.7 million write-off associated with the equity component of the repurchased notes.

See accompanying notes to consolidated financial statements.

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Currently, we operate in three primary business segments:

1) Refining - We own and operate three refineries with total operating crude oil throughput capacity of 154 thousand barrels per day (“Mbpd”).

1) Refining - We own and operate three refineries.

Our refinery in Kapolei, Hawaii, produces gasoline, jet fuel, ultra-low sulfur diesel (“ULSD”), marine fuel, low sulfur fuel oil (“LSFO”), and other associated refined products primarily for consumption in Hawaii.

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Our fuel retail outlets in Hawaii sell gasoline and diesel throughout the islands of Oahu, Maui, Hawaii, and Kauai.

We operate convenience stores at 34 of our Hawaii retail fuel outlets under our proprietary “nomnom” brand that sell merchandise such as soft drinks, prepared foods, and other sundries.

Our Hawaii retail network includes Hele and “76” branded retail sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

42 of our sites operate under our proprietary Hele (the Hawaiian word for movement or “let’s go”) fuel brand.

Our eight cardlock locations on Kauai are branded Kauai Automated Fuels (“KAF”).

We operate convenience stores at all 29 of our retail fuel outlets in Washington and Idaho.

We operate convenience stores under our proprietary “nomnom” brand that sell merchandise such as soft drinks, prepared foods, and other sundries.

Our Hawaii retail network includes our proprietary Hele (the Hawaiian word for movement or “let’s go”) fuel brand and “76” branded retail sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

In 2023, we plan to unite all our company operated convenience stores under our Hele brand.

Our cardlock locations on Kauai are branded Kauai Automated Fuels (“KAF”).

We operate convenience stores at our retail fuel outlets in Washington and Idaho.

As part of our 2018 acquisition of these retail outlets, we entered into a multi-year branded petroleum marketing agreement for the continued supply of Cenex®-branded refined products to the acquired Cenex® Zip Trip convenience stores.

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We own and operate logistics assets in Washington, including a marine terminal, a unit train-capable rail loading terminal, storage facilities, a truck rack, and a proprietary pipeline that serves Joint Base Lewis McChord.

As of December 31, 2021, we owned a 46.0 % equity investment in Laramie Energy, LLC (“Laramie Energy”), a joint venture entity operated by Laramie Energy II, LLC (“Laramie”).

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

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

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

Our Corporate and Other reportable segment primarily includes general and administrative costs.

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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.

We are actively responding 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.

Cash and Cash Equivalents

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Aron on our behalf as inventory with a corresponding obligation on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we are obligated to repurchase the inventory.

In connection with the consummation of the Washington Acquisition (as defined in Note 4—Acquisitions), we became a party to an intermediation arrangement (the “Washington Refinery Intermediation Agreement”) with Merrill Lynch Commodities, Inc.

We are party to an intermediation arrangement (the “Washington Refinery Intermediation Agreement”) with Merrill Lynch Commodities, Inc.

(“MLC”) as described in Note 11—Inventory Financing Agreements.

Under this arrangement, U.S.

Oil (as defined in Note 4—Acquisitions) purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain crude oil purchases.

Oil & Refining Co.

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

Oil”) purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain crude oil purchases.

MLC’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third-party issuing bank, or purchasing crude oil directly from third parties on our behalf.

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Exchange receivables or payables are stated at cost and are presented within Trade accounts receivable and Accounts payable on our consolidated balance sheets.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

Environmental Credits and Obligations

2 unchanged sentences

Our sulfur credits and other environmental credits generated as part of our refining process are presented as Inventories on our consolidated balance sheets and stated at the lower of cost and NRV as of the end of the reporting period.

Our renewable volume obligation and other environmental credit obligations to comply with the U.S.

Our renewable volume obligation and other environmental credit obligations to comply with the

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

Environmental Protection Agency (“EPA”) regulations (as discussed in Note 17—Commitments and Contingencies) are presented in Other accrued liabilities on our consolidated balance sheets and measured at fair value as of the end of the reporting period.

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The investment is reviewed for impairment when events or changes in circumstances indicate that there may have been an other-than-temporary decline in the value of the investment.

During the years ended December 31, 2020 and 2019, we recorded impairment charges of $ 45.3 million and $ 81.5 million in our consolidated statement of operations due to the significant decline in natural gas prices during the first quarter of 2020 and during the second and third quarters of 2019, respectively.

During the year ended December 31, 2020, we recorded an impairment charge of $ 45.3 million in our consolidated statement of operations due to the significant decline in natural gas prices during the first quarter of 2020.

Please read Note 3—Investment in Laramie Energy, LLC for further information.

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Software 3 to 5

From time to time, we enter into lease arrangements where we are the lessor in order to utilize a portion of our fixed assets not currently used in our primary operations.

All of these lessor leases are classified as operating leases, whereby we do not derecognize the underlying asset, and the income from our customers is recognized as revenue on a straight-line basis over the lease term.

Please read Note 16—Leases for further disclosures and information on leases.

Impairment of Long-Lived Assets

6 unchanged sentences

When the act of abandonment occurs, we determine if the assets have a shortened useful life or should be considered abandoned and accelerate depreciation or write off the asset balance and any associated accumulated depreciation and record an impairment loss.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

Lease Liabilities and Right-of-Use Assets

2 unchanged sentences

We use our incremental borrowing rate in the calculation of present value unless the implicit rate can be readily determined, however, the lease liability associated with leases calculated through the use of implicit rates is not significant.

Certain leases include provisions for variable payments based upon percentage of sales and/or other operating metrics;

Certain leases include provisions for variable payments based upon

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

percentage of sales and/or other operating metrics;

escalation provisions to adjust rental payments to reflect changes in price indices and fair market rents;

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When the liability is initially recorded, we capitalize the cost by increasing the book value of the related long-lived tangible asset.

The liability is accreted to its estimated settlement value with accretion expense recognized in Depreciation, depletion, and amortization (“DD&A”) on our consolidated statements of operations and the related capitalized cost is depreciated over the asset’s useful life.

The liability is accreted to its estimated settlement value with accretion expense recognized in Depreciation and amortization (“D&A”) on our consolidated statements of operations and the related capitalized cost is depreciated over the asset’s useful life.

The difference between the settlement amount and the recorded liability is recorded as a gain or loss on asset disposals in our consolidated statements of operations.

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These intangible assets are amortized over their estimated useful lives on a straight-line basis.

We evaluate the carrying value of our intangible assets when

We evaluate the carrying value of our intangible assets when impairment indicators are present.

When we believe impairment indicators may exist, projections of the undiscounted future cash flows associated with the use of and eventual disposition of the intangible assets are prepared.

If the projections indicate that their carrying values are not recoverable, we reduce the carrying values to their estimated fair values.

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

impairment indicators are present.

When we believe impairment indicators may exist, projections of the undiscounted future cash flows associated with the use of and eventual disposition of the intangible assets are prepared.

If the projections indicate that their carrying values are not recoverable, we reduce the carrying values to their estimated fair values.

Environmental Matters

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We have determined that any uncertain tax positions outstanding at December 31, 2022 and 2021 would not have a material impact on our financial condition, results of operations, or cash flows as any uncertain tax positions taken would have been fully covered by the Company’s deferred tax assets related to its historical net operating losses and corresponding valuation allowance.

As a general rule, our open years for Internal Revenue Service (“IRS”) examination purposes are 2019, 2020, and 2021.

However, since we have NOL carryforwards, the IRS has the ability to make adjustments to items that originate in a year otherwise barred by the statute of limitations in order to re-determine tax for an open year to which those items are carried.

Therefore, in a year in which a NOL deduction is claimed, the IRS may examine the year in which the NOL was generated and

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

As a general rule, our open years for Internal Revenue Service (“IRS”) examination purposes are 2018, 2019, and 2020.

Therefore, in a year in which a NOL deduction is claimed, the IRS may examine the year in which the NOL was generated and adjust it accordingly for purposes of assessing additional tax in the year the NOL deduction was claimed.

adjust it accordingly for purposes of assessing additional tax in the year the NOL deduction was claimed.

Any penalties or interest as a result of an examination will be recorded in the period assessed.

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Operating expense (excluding depreciation) includes direct costs of labor, maintenance and services, energy and utility costs, property taxes, and environmental compliance costs, as well as chemicals and catalysts and other direct operating expenses.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

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

4 unchanged sentences

General and administrative expense 2,661 2,972 3,429

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

Benefit Plans

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Accounting Principles Not Yet Adopted

In March 2021, FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):

Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”) .

This ASU clarifies that “modifications or exchanges of

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange” be accounted for “as an exchange of the original instrument for a new instrument.” If the modification or exchange is part of or directly related to a modification or exchange of an existing debt instrument, revolving debt facility, or line-of-credit, the effect is measured as “the difference between the fair value of the written call option immediately before its modified or exchanged.” The effect of all other modifications or exchanges should be measured as the excess of fair value of the modified option over the fair value of the same option immediately before modification or exchange.

In both cases, the effect should be calculated as if cash had been paid in the transaction.

The guidance in ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

This ASU will change the policy under which we account for derivative contracts classified in equity, of which we have none as of December 31, 2021.

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

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

On September 30, 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

This ASU defines supplier finance programs and establishes new disclosure requirements for such programs.

For programs meeting that definition, this ASU requires annual disclosures of key

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

terms, obligations, and certain information related to these programs.

Interim disclosure of the amount of outstanding obligations is also required.

ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

This ASU will expand our disclosures for qualified supplier finance programs.

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, 2022, 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, and cash flows.

On February 11, 2021, we adopted 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 MLC receivable advances to U.S.

Oil (as defined in Note 4—Acquisitions) to be based on another industry standard benchmark rate that will be effective upon the three-month London Interbank Offered Rate’s (“LIBOR”) scheduled retirement in 2023.

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, and cash flows.

Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”) .

This ASU clarifies treatment of modifications or exchanges of call options or warrants classified in equity.

As we do not have any such items classified in equity as of December 31, 2022, our adoption of ASU 2021-04 did not have a material impact on our financial condition, results of operations, and cash flows.

On January 1, 2022, we adopted ASU No.

2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance (“ASU 2021-10”).

This ASU requires certain annual disclosures when receiving government assistance that is accounted for under a grant or contribution model.

As of December 31, 2022, we did not receive any government assistance requiring these new disclosures, therefore our adoption of ASU 2021-10 did not have a material impact on our financial condition, results of operations, and cash flows.

Note 3— Investment in Laramie Energy, LLC

As of December 31, 2021, we owned a 46.0 % ownership interest in Laramie Energy, a joint venture entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.

As of December 31, 2022, we owned a 46.0 % ownership interest in Laramie Energy, an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.

As of December 31, 2020, Laramie Energy had a $ 400.0 million revolving credit facility secured by a lien on its natural gas and crude oil properties and related assets with a borrowing base set at $ 139.7 million.

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In conjunction with the borrowing base deficiency, Laramie entered into a forbearance agreement through June 15, 2021 with its lenders.

As of December 31, 2020, the balance outstanding on the revolving credit facility was approximately $ 139.7 million.

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

1 unchanged sentence

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

Under the terms

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

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.

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 December 31, 2021, the term loan had an outstanding balance of $ 140.1 million.

As of December 31, 2022 and 2021, the term loan had an outstanding balance of $ 77.4 million and $ 140.1 million, respectively.

On February 21, 2023, Laramie Energy entered into a term loan agreement which provided a $ 205 million first lien term loan facility with $ 160.0 million funded at closing and an optional $ 45 million delayed draw commitment, subject to certain terms and conditions.

Laramie Energy used the proceeds from the term loan to repay the then-outstanding balance of $ 76.3 million on its existing term loan, including accrued interest and prepayment penalties, and fully redeem preferred equity of $ 73.5 million.

After deducting transaction costs, net proceeds were $ 4.8 million.

Laramie Energy’s term loan matures on February 21, 2027.

Under the terms of the new term loan, Laramie is permitted to make future cash distributions to its owners, including us, subject to certain restrictions.

At March 31, 2020, we conducted an impairment evaluation of our investment in Laramie Energy because of (i) the global economic impact of the COVID-19 pandemic, (ii) an increase in the weighted-average cost of capital for energy companies, and (iii) continuing declines in natural gas prices through the first quarter of 2020.

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During the quarter ended June 30, 2020, Laramie Energy incurred additional losses that reduced the book value of our investment to zero and, as such, as of June 30, 2020, we discontinued the application of the equity method of accounting for our investment in Laramie Energy.

During the fourth quarter of 2019, Laramie Energy recorded an impairment loss of $ 355.2 million associated with the carrying value of proved reserves.

As a result of Laramie Energy’s impairment loss and the liquidity impact associated with the previous maturity of the revolving credit facility in December 2020, we updated the impairment evaluation of our investment in Laramie Energy as of December 31, 2019.

The fair value estimate was determined using a discounted cash flow analysis based on reserves volumes and natural gas forward strip prices as of December 31, 2019.

Based on our evaluation, we determined that the estimated fair value of our investment in Laramie Energy approximated carrying value as of December 31, 2019.

At September 30, 2019, we conducted an impairment evaluation of our investment in Laramie Energy because of the significant decline in natural gas prices over the second quarter of 2019 and continued deterioration in the third quarter of 2019.

Based on our evaluation, we determined that the estimated fair value of our investment in Laramie Energy was $ 51.8 million, compared to a carrying value of $ 133.3 million at September 30, 2019.

The fair value estimate was determined using a discounted cash flow analysis based on natural gas forward strip prices as of September 30, 2019 for two years through December 31, 2021.

A blend of 2021 forward strip pricing and third-party analyst pricing was used for years after 2021 through December 31, 2028.

Other significant inputs used in the discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the applicable discount rate.

Based on the significant decline in natural gas prices and the reduced likelihood that natural gas prices would recover in the near term, we concluded that the decline in the fair value of our investment in Laramie Energy was other than temporary.

As a result, we recorded an impairment charge of $ 81.5 million in Equity earnings (losses) from Laramie Energy, LLC on our consolidated statement of operations for the year ended December 31, 2019.

Please read Note 15—Fair Value Measurements for further information.

On March 4, 2019, Laramie entered into a binding agreement to divest an insignificant amount of producing property for approximately $ 17.5 million.

This divestiture did not result in a change in our ownership percentage.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

The change in our equity investment in Laramie Energy is as follows (in thousands):

2 unchanged sentences

Equity earnings (losses) from Laramie Energy (1) ( 1,611 )

Accretion of basis difference — 5,018

Adjustment of basis difference (2) — 161,764

Impairment of our investment in Laramie Energy ( 45,294 )

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________________________________________________________

(1) As of June 30, 2020, we have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero .

(2) Represents the reduction in our basis difference resulting from the asset impairment loss recorded by Laramie Energy for the year ended December 31, 2019.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

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

Current assets $ 68,779 $ 34,573

Non-current assets 328,571 355,538

Current liabilities 107,976 217,523

Non-current liabilities 177,503 93,193

Year Ended December 31,

2021 2020 2019

Natural gas and oil revenues $ 221,176 $ 121,893 $ 193,906

Income (loss) from operations 99,133 ( 2,994 ) ( 360,967 )

Net income (loss) 32,476 ( 22,589 ) ( 380,473 )

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

Year Ended December 31,

2021 2020 2019

Asset impairment loss $ — $ — $ 355,220

Depreciation, depletion, and amortization 26,458 34,966 82,632

Unrealized (gain) loss on derivative instruments 32,417 4,245 ( 4,283 )

(1) As of June 30, 2020, we discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero .

Note 4— Acquisitions

Washington Acquisition

On November 26, 2018, we entered into a Purchase and Sale Agreement to acquire U.S.

Oil & Refining Co.

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

Oil”), a privately-held downstream business (the “Washington Acquisition”).

The Washington Acquisition included a 42 Mbpd refinery, a marine terminal, a unit train-capable rail loading terminal, and 2.9 MMbbls of refined product and crude oil storage.

The refinery and associated logistics system are strategically located in Tacoma, Washington, and currently serve the Pacific Northwest market.

On January 11, 2019, we completed the Washington Acquisition for a total purchase price of $ 326.5 million, including acquired working capital, consisting of cash consideration of $ 289.5 million and approximately 2.4 million shares of Par’s common stock with a fair value of $ 37.0 million issued to the seller of U.S.

The cash consideration was funded in part through cash on hand, proceeds from borrowings under a new term loan facility entered into with Goldman Sachs Bank USA, as administrative agent, of $ 250.0 million (the “Term Loan B”), and proceeds from borrowings under a term loan from the Bank of Hawaii of $ 45.0 million (the “Par Pacific Term Loan”).

Please read Note 13—Debt for further information on the Term Loan B and Par Pacific Term Loan.

During December 2018 and January 2019, we incurred $ 4.2 million and $ 5.4 million of commitment fees associated with the funding of the Washington Acquisition, respectively.

Such commitment fees are presented as Debt extinguishment and commitment costs on our consolidated statements of operations for the years ended December 31, 2019 and 2018.

In connection with the consummation of the Washington Acquisition, we assumed the Washington Refinery Intermediation Agreement with MLC that provides a structured financing arrangement based on U.S.

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

Please read Note 11—Inventory Financing Agreements for further information on the Washington Refinery Intermediation Agreement.

We accounted for the Washington Acquisition as a business combination whereby the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition.

Goodwill recognized in the transaction was attributable to opportunities expected to arise from combining our operations with those of the Washington refinery and the utilization of our net operating loss carryforwards, as well as other intangible assets that do not

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

qualify for separate recognition.

Goodwill recognized as a result of the Washington Acquisition is not expected to be deductible for income tax reporting purposes.

A summary of the fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Cash $ 16,146

Accounts receivable 34,954

Inventories 98,367

Prepaid and other assets 5,320

Property, plant, and equipment 412,766

Operating lease right-of-use assets 62,337

Goodwill (1) 42,522

Total assets (2)

Obligations under inventory financing agreements ( 116,873 )

Accounts payable ( 55,357 )

Current operating lease liabilities ( 21,571 )

Other current liabilities ( 18,411 )

Long-term operating lease liabilities ( 40,766 )

Deferred tax liability ( 92,103 )

Other non-current liabilities ( 804 )

Total liabilities

Total $ 326,527

______________________________________________

(1) We allocated $ 24.7 million and $ 17.8 million of goodwill to our refining and logistics segments, respectively.

(2) We allocated $ 403.9 million and $ 268.5 million of total assets to our refining and logistics segments, respectively.

As of December 31, 2019, we finalized the Washington Acquisition purchase price allocation.

We incurred $ 2.2 million and $ 2.6 million of acquisition costs related to the Washington Acquisition for the years ended December 31, 2019 and 2018, respectively.

These costs are included in Acquisition and integration costs on our consolidated statements of operations.

The results of operations of U.S.

Oil were included in our results beginning on January 11, 2019.

For the year ended December 31, 2019, our results of operations included revenues of $ 1.2 billion and income before income taxes of $ 65.8 million related to U.S.

The following unaudited pro forma financial information presents our consolidated revenues and net income (loss) as if the Washington Acquisition had been completed on January 1, 2018 (in thousands except per share information):

Year Ended December 31,

Revenues $ 5,429,530 $ 4,709,850

Net income (loss) ( 4,547 ) 88,174

Income (loss) per share

Basic $ ( 0.09 ) $ 1.81

Diluted $ ( 0.09 ) $ 1.79

These pro forma results were based on estimates and assumptions that we believe are reasonable.

They are not necessarily indicative of our consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during the periods presented.

The pro forma results for the years ended

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

December 31, 2019 and 2018, include adjustments to remeasure U.S.

Oil’s LIFO inventory reserve as if the Washington Acquisition had been completed on January 1, 2018, record interest and other debt extinguishment costs related to issuance of the Term Loan B and Par Pacific Term Loan, and adjust U.S.

Oil’s historical depreciation expense as a result of the fair value adjustment to Property, plant, and equipment, net.

The pro forma results for the year ended December 31, 2019 also include an adjustment to eliminate the $ 64.2 million tax benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition.

Billings Acquisition

On October 20, 2022, we and our subsidiaries Par Montana, LLC (“Par Montana”) and Par Montana Holdings, LLC (“Par Montana Holdings” and, together with Par Montana, the “Purchasers”) entered into an Equity and Asset Purchase Agreement (the “Purchase Agreement”) with Exxon Mobil Corporation, ExxonMobil Oil Corporation, and ExxonMobil Pipeline Company LLC (collectively, the “Sellers”) to purchase (i) the high-conversion, complex refinery located in Billings, Montana and certain associated distribution and logistics assets, and (ii) 100 % of the issued and outstanding equity interests in Exxon Billings Cogeneration, Inc.

and in Yellowstone Logistics Holding Company for a base purchase price of $ 310.0 million plus the value of hydrocarbon inventory and adjusted working capital at closing (collectively, the “Billings Acquisition”).

The closing of the Billings Acquisition is subject to certain customary closing conditions and is expected to close in the second quarter of 2023.

Upon execution of the Purchase Agreement, we made a cash deposit of $ 30.0 million, recorded in Prepaid and other current assets, which will be credited to the sale upon a successful closing.

We guaranteed the payment and performance of the Purchasers’ obligations under the Purchase Agreement.

We incurred $ 3.4 million of acquisition costs related to the Billings Acquisition for the year ended December 31, 2022.

These costs are included in Acquisition and integration costs on our consolidated statement of operations.

Northwest Retail Expansion

On December 2, 2022, we purchased three retail stores in Washington, for total consideration of $ 5.5 million (the “Northwest Retail Expansion”).

We accounted for the Northwest Retail Expansion as a business combination whereby the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition.

Of the total purchase price of $ 5.5 million, $ 2.0 million was allocated to property, plant, and equipment, $ 0.8 million was allocated to lease valuation, and $ 0.5 million was allocated to inventory.

We recognized $ 2.1 million in goodwill attributable to opportunities expected to arise from expanding our operations.

We incurred $ 0.3 million of acquisition costs related to the Northwest Retail Expansion for the year ended December 31, 2022.

These costs are included in Acquisition and integration costs on our consolidated statement of operations.

Note 5— Revenue Recognition

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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.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

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):

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(1) Distillates primarily include diesel and jet fuel.

(2) Other refined products include fuel oil, gas oil, asphalt, and naphtha.

(2) Other refined products include fuel oil, gas oil, and asphalt.

(3) Refer to Note 22—Segment Information for the reconciliation of segment revenues to total consolidated revenues.

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Our renewable volume obligation and other gross environmental credit obligations of $ 549.8 million and $ 311.0 million, reported at market value, are included in Other accrued liabilities on our consolidated balance sheets as of December 31, 2022 and 2021, respectively.

Our reserve for the lower of cost and NRV of inventory was $ 0.5 million and $ 10.6 million as of December 31, 2021 and 2020, respectively.

As of December 31, 2021, the current replacement cost exceeded the LIFO inventory carrying value by approximately $ 46.0 million .

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

Inventories valued on the LIFO method were approximately 20 % of total inventories at both December 31, 2022 and 2021.

As of December 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 December 31, 2022 and December 31, 2021, the current replacement cost exceeded the LIFO inventory carrying value by approximately $ 46.4 million and $ 46.0 million, respectively.

Note 7— Prepaid and Other Current Assets

1 unchanged sentence

Collateral posted with broker for derivative instruments (1) $ 40,788 $ 6,053

Billings acquisition deposit (2) 30,000 —

Prepaid insurance 15,639 14,110

Derivative assets 1,260 1,346

Deferred inventory financing charges — 4,073

4 unchanged sentences

Please read Note 14—Derivatives for further information.

(2) Please read Note 4—Acquisitions for further discussion.

PAR PACIFIC HOLDINGS, INC.

8 unchanged sentences

Total property, plant, and equipment 1,224,567 1,180,397

Less accumulated depreciation, depletion, and amortization ( 323,892 ) ( 251,113 )

Less accumulated depreciation and amortization ( 388,733 ) ( 323,892 )

Property, plant, and equipment, net $ 835,834 $ 856,505

6 unchanged sentences

As a result, in the year ended December 31, 2020, we recorded impairment charges of $ 10.7 million, $ 5.0 million, and $ 2.2 million in Impairment expense on our consolidated statement of operations related to the write-offs of Par West property, plant, and equipment, deferred turnaround costs, and inventory, respectively.

For the year ended December 31, 2021, we recorded additional impairment charges of $ 0.2 million in Impairment expense on our consolidated statement of operations related to the this idling.

For the year ended December 31, 2021, we recorded additional impairment charges of $ 0.2 million in Impairment expense on our consolidated statement of operations related to this idling.

Please read Note 15—Fair Value Measurements for additional information.

For the year ended December 31, 2021, we recorded $ 1.7 million of Impairment expense on our consolidated statement of operations related to the impairment of a separate capital project.

For the year ended December 31, 2022, no such impairment was recorded.

Note 9— Asset Retirement Obligations

The table below summarizes the changes in our recorded asset retirement obligations (in thousands):

Our asset retirement obligations (“AROs”) are primarily related to the removal of underground storage tanks and the removal of brand signage at owned and leased retail sites which are legally required, whether by government action or contractual arrangement.

The table below summarizes the changes in our recorded AROs (in thousands):

Year Ended December 31,

12 unchanged sentences

Balance at January 1, 2020 $ 195,919

Acquisition of U.S.

Oil (1) 42,522

Balance at December 31, 2019 195,919

Impairment expense ( 67,922 )

Balance at December 31, 2020 127,997

Reclassified to assets held for sale ( 735 )

Divestitures ( 735 )

Balance at December 31, 2021 127,262

Acquisitions (1) 2,120

Divestitures ( 57 )

Balance at December 31, 2022 $ 129,325

________________________________________________________

(1) Please read Note 4—Acquisitions for further discussion.

The gross carrying value of goodwill was $ 160.4 million as of January 1, 2019 and $ 202.9 million as of December 31, 2019, 2020, and 2021.

As of January 1 and December 31, 2019, we had accumulated impairment charges of $ 7.0 million, and as of December 31, 2020 and 2021, we had accumulated impairment charges of $ 74.9 million and $ 75.6 million, respectively.

The gross carrying value of goodwill was $ 202.9 million as of January 1, 2020 and December 31, 2020 and 2021, and $ 205.0 million as of December 31, 2022.

As of January 1, 2020, we had accumulated impairment charges of $ 7.0 million, and as of December 31, 2020, 2021, and 2022, we had accumulated impairment charges, including charges related to divestitures, of $ 74.9 million, $ 75.6 million, and $ 75.7 million, respectively.

At March 31, 2020, we performed a quantitative goodwill impairment test of all of our reporting units due to (i) the global economic impact of the COVID-19 pandemic and (ii) a steep decline in current and forecasted prices and demand for crude oil and refined products.

28 unchanged sentences

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

Supply and Offtake Agreements

Supply and Offtake Agreement

$ 732,511 $ 569,158

2 unchanged sentences

Supply and Offtake Agreement

We have an agreement with J.

Aron to support our Hawaii refining operations.

Under the 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 December 31, 2021, we had no obligations due to J.

Aron under this contractual undertakings agreement.

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

On June 1, 2021, we entered into the Second Amended and Restated Supply and Offtake Agreement (“Supply and Offtake Agreement”), which amended and restated the first amended and restated supply and offtake agreement in its entirety.

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.

We have a supply and offtake agreement with J.

Aron to support our Hawaii refining operations (the “Supply and Offtake Agreement").

On June 1, 2021, we entered into the second amended and restated supply and offtake agreement, which amended and restated the first amended and restated supply and offtake agreement in its entirety.

During the term of the Supply and Offtake Agreement, J.

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Aron will provide up to 150 Mbpd of crude oil to our Hawaii refinery.

Additionally, we agreed to sell and J.

Aron agreed to buy, at market prices, refined products produced at our Hawaii refinery.

Additionally, we will sell, and J.

Aron will buy, at market prices, refined products produced at our Hawaii refinery.

We will then repurchase the refined products from J.

Aron prior to selling the refined products to our retail operations or to third parties.

Under the 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.

The agreement also provides for the lease of crude oil and certain refined product storage facilities to J.

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.

Following the expiration or termination of the agreement, we are obligated to purchase the crude oil and refined product inventories then owned by J.

Aron and located at the leased storage facilities at then-current market prices.

Though title to the crude oil and certain refined product inventories resides with J.

3 unchanged sentences

Aron based on current market prices.

Prior to July 1, 2021, the Supply and Offtake Agreement also included a deferred payment arrangement whereby we could defer payments owed under the agreements up to the lesser of $ 165 million or 85 % of the eligible accounts receivable and inventory.

The deferred amounts under the deferred payment arrangement bore interest at a rate equal to three-month LIBOR plus 3.50 % per annum.

We also paid a deferred payment availability fee equal to 0.75 % of the unused capacity under the deferred payment arrangement.

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

Prior to July 1, 2021, the supply and offtake agreements also included a deferred payment arrangement whereby we could defer payments owed under the agreements up to the lesser of $ 165 million or 85 % of the eligible accounts receivable and inventory.

The deferred amounts under the deferred payment arrangement bore interest at a rate equal to three-month LIBOR plus 3.50 % per annum.

We also paid a deferred payment availability fee equal to 0.75 % of the unused capacity under the deferred payment arrangement.

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

Effective July 1, 2021, the Discretionary Draw Facility became available to PHR up to but excluding the Expiration Date (the “Discretionary Draw Commitment Period”).

Effective July 1, 2021, a discretionary draw facility (the “Discretionary Draw Facility”) became available to PHR up to but excluding the Expiration Date.

Under the Discretionary Draw Facility, J.

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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.

We also agreed to pay a discretionary draw availability fee equal to 0.75 % of the unused capacity under the Discretionary Draw Facility.

Amounts outstanding under the Discretionary Draw Facility are included in Obligations under inventory financing agreements on our consolidated balance sheets.

Changes in the amount outstanding under the Obligations under inventory financing agreements are included within Cash flows from financing activities on the consolidated statements of cash flows.

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

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

Prior to June 1, 2022, the advances under the Discretionary Draw Facility bore interest at a rate equal to three-month LIBOR plus 4.00 % per annum.

Beginning on June 1, 2022, the advances 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.

We also pay a discretionary draw availability fee equal to 0.75 % of the unused capacity under the Discretionary Draw Facility.

On April 25, 2022, we entered into an amendment to the Supply and Offtake Agreement which, among other things, amended the maximum commitment amount under the Discretionary Draw Facility from $ 165 million to $ 215 million and increased the limit in the borrowing base for eligible hydrocarbon inventory from $ 82.5 million to $ 107.5 million.

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;

the reserve may be reduced by the posting of cash collateral by PHR in accordance with the terms of 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.

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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 with J.

Aron to fix certain fees for the month of March 2022 for $ 4.5 million.

The amount due to or from J.

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

As of December 31, 2021 and 2020, we had a payable of $ 6.2 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.

We had no fixed market fees due to or from J.

Aron as of December 31, 2022.

As of December 31, 2021, we had a payable of $ 6.2 million.

We recognized fixed market fees of $ 8.8 million, $ 13.5 million, and $ 1.3 million for the years ended December 31, 2022, 2021, and 2020, respectively, which were included in Cost of revenues (excluding depreciation) on our consolidated statements of operations.

Washington Refinery Intermediation Agreement

In connection with the consummation of the Washington Acquisition, we became a party to the Washington Refinery Intermediation Agreement with MLC that provides a structured financing arrangement based on U.S.

We are party to the Washington Refinery Intermediation Agreement with MLC, which provides a structured financing arrangement based on U.S.

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

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Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of the same, exclusively to MLC.

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

This amendment also included 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 the scheduled retirement of three-month LIBOR in 2023.

On December 17, 2021, we and MLC amended the Washington Refinery Intermediation Agreement to further extend the term through December 21, 2022, with an automatic extension to March 31, 2023, upon an ABL extension event, and to revise certain other terms and conditions in the Washington Refinery Intermediation Agreement.

On February 11, 2021, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term from June 30, 2021 to March 31, 2022.

On December 17, 2021, we and MLC amended the Washington Refinery Intermediation Agreement to further extend the term through December 21, 2022 and to revise certain other terms and conditions in the Washington Refinery Intermediation Agreement.

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

On November 2, 2022, we and MLC amended the Washington Refinery Intermediation Agreement to further extend the term through March 31, 2024.

During the remaining term of the Washington Refinery Intermediation Agreement, MLC will make receivable advances to U.S.

Oil based on an advance rate of 95 % of eligible receivables, up to a total receivables advance maximum of $ 90.0 million (the “MLC receivable advances”), and additional advances based on crude oil and products inventories.

Changes in the amount outstanding under the MLC receivable advances are included within Cash flows from financing activities on the consolidated statements of cash flows.

The MLC receivable advances bear interest at a rate equal to three-month LIBOR plus 3.25 % per annum.

We also agreed to pay an availability fee equal to 1.50 % of the unused capacity under the MLC receivable advances.

As part of the November 1, 2019 amendment, the availability fee was amended to equal 0.75 % of the unused capacity under the MLC receivable advances.

As of December 31, 2021 and 2020, our outstanding balance included in our Obligations under inventory financing agreements on our consolidated balance sheets under the MLC receivable advances was equal to our borrowing base of $ 54.5 million and $ 41.1 million, respectively.

Additionally, as of December 31, 2021 and 2020, we had approximately $ 167.0 million and $ 93.6 million in letters of credit outstanding through MLC’s credit support, respectively.

Oil based on an advance rate of 95 % of eligible receivables (the “MLC receivable advances”) and additional advances based on crude oil and products inventories.

Prior to May 9, 2022, the maximum borrowing capacity under the MLC receivable advances was $ 90.0 million.

On May 9, 2022, we and MLC amended the Washington Refinery Intermediation Agreement to increase the maximum borrowing capacity under the MLC receivable advances to $ 115 million.

The maximum borrowing capacity was reduced to $ 110 million under the amendment to the Washington Refinery Intermediation Agreement dated November 2, 2022.

The MLC receivable advances bore interest at a rate equal to three-month LIBOR plus 3.25 % per annum prior to August 11, 2022.

On August 11, 2022, we and MLC entered into an amendment to the Washington Refinery Intermediation Agreement to establish adjusted three-month term Secured Overnight Financing Rate ("SOFR") as the benchmark rate in replacement of LIBOR and revise certain other terms and conditions.

We also pay an availability fee equal to 0.75 % of the unused capacity under the MLC receivable advances.

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

The following table summarizes our outstanding borrowings, letters of credit, and contractual undertaking obligations under the intermediation agreements (in thousands):

Discretionary Draw Facility

Outstanding borrowings (1)

$ 204,843 $ 126,225

Borrowing capacity

204,843 126,225

MLC receivable advances

Outstanding borrowings (1)

56,601 54,538

Borrowing capacity

56,601 54,538

Aron payment undertaking obligations — —

MLC issued letters of credit

115,001 166,950

______________________________________________________

(1) Amounts outstanding under the Discretionary Draw Facility and MLC receivable advances are included in Obligations under inventory financing agreements on our consolidated balance sheets.

Changes in the amount outstanding under these arrangements are included within Cash flows from financing activities on the consolidated statements of cash flows.

The following table summarizes the inventory intermediation fees, which are included in Cost of revenues (excluding depreciation) on our consolidated statements of operations, and Interest expense and financing costs, net related to the intermediation agreements (in thousands):

8 unchanged sentences

Interest expense and financing costs, net 10,111 4,900 2,791

___________________________________________________

(1) Inventory intermediation fees under the Supply and Offtake Agreement include market structure fees of $ 63.3 million and $ 4.0 million for the years ended December 31, 2022, and 2021, respectively, and a market structure benefit of $ 3.0 million for the year ended December 31, 2020.

The Supply and Offtake Agreement and the Washington Refinery Intermediation Agreement also provide us with the ability to economically hedge price risk on our inventories and crude oil purchases.

6 unchanged sentences

Total $ 640,494 $ 370,424

______________________________________________________

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

Please read Note 15—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 consolidated balance sheet and are stated at the lower of cost and net realizable value.

The carrying costs of these assets were $ 120.1 million and $ 26.7 million as of December 31, 2021 and 2020, respectively.

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

______________________________________________________

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

Please read Note 15—Fair Value Measurements for further information.

The carrying costs of these assets were $ 258.2 million and $ 120.1 million as of December 31, 2022 and 2021, respectively.

Note 13— Debt

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

5.00 % Convertible Senior Notes due 2021

ABL Credit Facility due 2025 $ — $ —

Retail Property Term Loan due 2024 — 42,494

7.75 % Senior Secured Notes due 2025

3 unchanged sentences

31,314 68,250

Mid Pac Term Loan due 2028 — 1,399

PHL Term Loan due 2030 — 5,840

Principal amount of long-term debt 515,439 579,875

8 unchanged sentences

Additionally, as of December 31, 2022 and 2021, we had approximately $ 19.5 million and $ 18.5 million in letters of credit outstanding, respectively, 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”).

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

We had $ 5.9 million in cash-collateralized letters of credit and surety bonds outstanding as of both December 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 B Facility, our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

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The 5.00% Convertible Senior Notes bore interest at a rate of 5.00 % per year (payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2016) and matured on June 15, 2021.

During May, June, and December 2019, we entered into privately negotiated exchange agreements with a limited number of holders (the “Noteholders”) to repurchase $ 66.3 million in aggregate principal amount of the 5.00% Convertible Senior Notes held by the Noteholders for an aggregate of $ 18.6 million in cash and approximately 3.2 million shares of Par’s common stock with a fair

During May, June, and December 2019, we entered into privately negotiated exchange agreements with a limited number of holders (the

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

value of $ 74.3 million.

“Noteholders”) to repurchase $ 66.3 million in aggregate principal amount of the 5.00% Convertible Senior Notes held by the Noteholders for an aggregate of $ 18.6 million in cash and approximately 3.2 million shares of Par’s common stock with a fair value of $ 74.3 million.

We recognized a loss of approximately $ 6.1 million related to the extinguishment of the repurchased 5.00% Convertible Senior Notes in the year ended December 31, 2019.

On June 15, 2021, the remaining $ 48.7 million aggregate principal amount of the 5.00% Convertible Senior Notes was paid in full at maturity.

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, which provided a term loan in the principal amount of $ 45.0 million.

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 year ended December 31 2021 related to our prepayment of the loan principal.

ABL Credit Facility

1 unchanged sentence

As of December 31, 2022, the ABL Revolver had no outstanding balance and a borrowing base of approximately $ 85.1 million.

The revolving loans under the ABL Revolver bear interest at a fluctuating rate per annum equal to (i) during the periods such revolving loan is a base rate loan, the base rate plus the applicable margin in effect from time to time, and (ii) during the periods such revolving loan is a LIBOR Loan, at LIBOR for the applicable interest period plus the applicable margin in effect from time to time.

The base rate is equal to (i) daily LIBOR (“LIBOR Daily Floating Rate”) or (ii) if the LIBOR Daily Floating Rate is unavailable for any reason, a rate as calculated per the agreement (the “Prime Rate”) for such day.

The maturity date of the ABL Revolver is February 2, 2025, on which date all revolving loans will be due and payable in full.

On February 2, 2022, Par Petroleum, LLC, PHL, 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.

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, and extended the maturity date of the ABL Revolver from December 21, 2022 to February 2, 2025.

The ABL Loan Agreement also included 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 to increase the aggregate revolving commitments under the ABL Loan Agreement from $ 105 million to $ 142.5 million and decrease the available increase under the accordion feature from $ 50 million to $ 12.5 million, subject to certain limitations and conditions.

Prior to February 2, 2022, the revolving loans under the ABL Revolver bore interest at a fluctuating rate per annum equal to (i) during the periods such revolving loan was a base rate loan, the base rate plus the applicable margin in effect from time to time, and (ii) during the periods such revolving loan was a LIBOR Loan, at LIBOR for the applicable interest period plus the applicable margin in effect from time to time.

The base rate was equal to (i) daily LIBOR (“LIBOR Daily Floating Rate”) or (ii) if the LIBOR Daily Floating Rate was unavailable for any reason, a rate as calculated per the agreement for such day.

Under the ABL Loan Agreement entered into on February 2, 2022, the outstanding principal amount of each revolving loan bears interest at a fluctuating rate per annum equal to (i) during the periods such revolving loan is a base rate loan, the base rate plus the applicable margin in effect from time to time, and (ii) during the periods such revolving loan is a Term SOFR Loan, at Term SOFR (as defined in the ABL Loan Agreement) for the applicable interest period plus the applicable margin in effect from time to time.

The base rate for any day is a per annum rate equal to the greater of (a) a rate as calculated per the agreement (the “Prime Rate”) for such day;

(b) a rate as calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (“Federal Funds Rate”) for such day, plus 0.50 %;

or (c) Term SOFR for a one month interest period as of such day plus 1.0 %, subject to the interest rate floor set forth therein;

provided, that in no event shall the base rate be less than zero.

We also pay a de minimis fee for any undrawn amounts available under the ABL Revolver.

The maturity date of the ABL Revolver is December 21, 2022, on which date all revolving loans will be due and payable in full.

The average effective interest rate for 2022 and 2021 on the ABL Revolver loan was 2.7 % and 2.6 %, respectively.

The applicable margins for the ABL Credit Facility and advances under the ABL Revolver are as specified below:

Level Arithmetic Mean of Daily Availability (as a percentage of the borrowing base) Applicable Margin for

LIBOR Loans and Base Rate Loans Subject to LIBOR Daily Floating Rate Applicable Margin for

Base Rate Loans Subject to the Prime Rate

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

Under the ABL Loan Agreement, the applicable margins for the ABL Credit Facility and advances under the ABL Revolver are as specified below:

Level Arithmetic Mean of Daily Availability (as a percentage of the borrowing base) Term SOFR Loans Base Rate Loans

1 >50% 1.25 % 0.25 %

2 unchanged sentences

1.75 % 0.75 %

The ABL Loan Agreement requires the ABL Borrowers to comply with certain customary affirmative, as well as certain negative covenants that, among other things, will restrict, subject to certain exceptions, the ability of the ABL Borrowers and their guarantors to incur indebtedness, grant liens, make investments, engage in acquisitions, mergers or consolidations and pay dividends and other restricted payments.

Upon the occurrence of a triggering event whereby availability is less than the greater of (i) $ 7.5 million and (ii) 12.5 % of the borrowing base, the ABL Borrowers are required to comply for at least 30 days with a minimum fixed charge coverage ratio of 1.00 to 1.00 measured monthly, with respect to (a) Par Petroleum, LLC and its consolidated subsidiaries, and (b) Par Petroleum, LLC and its consolidated subsidiaries, other than PHR, U.S.

Oil, and any other Future Intermediation Subsidiary (as defined in the ABL Loan Agreement).

The obligations of the ABL Borrowers are guaranteed by Par and Par Petroleum, LLC’s existing and future direct or indirect domestic subsidiaries that are not borrowers under the ABL Credit Facility.

The loans and letters of credit issued under the ABL Credit Facility are secured by a first-priority security interest in and lien on certain assets of the borrowers and the guarantors, including, among other items, cash and cash equivalents, accounts receivables, and inventory, and excluding the assets of PHR and U.S.

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

and includes the assets previously owned by the dissolved entities Mid Pac Petroleum, LLC and HIE Retail, 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.

The ABL Loan Agreement increased the maximum principal amount at any time outstanding under the ABL Revolver to $ 105 million, 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.

Please read Note 24—Subsequent Events for additional information.

Par Pacific Term Loan Agreement

On January 9, 2019, we entered into a loan agreement (the “Par Pacific Term Loan Agreement”) with Bank of Hawaii (“BOH”), pursuant to which BOH made a loan to the Company in the principal amount of $ 45.0 million, the net proceeds of which were used to finance the Washington Acquisition (the “Par Pacific Term Loan”).

We terminated and repaid all amounts outstanding under the Par Pacific Term Loan Agreement on March 29, 2019 using the proceeds from the Retail Property Term Loan (as defined below).

We recognized approximately $ 0.1 million of debt extinguishment costs related to the unamortized deferred financing costs associated with the Par Pacific Term Loan Agreement in the year ended December 31, 2019.

Retail Property Term Loan

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

amount of $ 45.0 million.

The proceeds from the Retail Property Term Loan were used to repay and terminate 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 %.

The average effective interest rate for 2021 on the Retail Property Term Loan was 1.6 %.

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 year ended December 31, 2021 related to our prepayment of the loan principal.

7.75% Senior Secured Notes Due 2025

1 unchanged sentence

During the year ended December 31, 2021, we repurchased and cancelled $ 4 million in aggregate principal amount of the 7.75% Senior Secured Notes through two repurchases .

On May 24, 2022, and July 14, 2022, we repurchased and cancelled $ 5.0 million and $ 10.0 million in aggregate principal amounts of the 7.75% Senior Secured Notes at repurchase prices of 97.500 % and 95.000 %, respectively, of the aggregate principal amount of notes repurchased .

We recognized aggregate discounts of $ 0.6 million and incurred aggregate debt extinguishment costs of $ 0.2 million for these repurchases, which were recorded in Debt extinguishment and commitment costs on our consolidated statement of operations for the year ended December 31, 2022.

As of December 31, 2022, the 7.75% Senior Secured Notes had an outstanding principal balance of $ 281.0 million.

5 unchanged sentences

On January 11, 2019, Par Petroleum, LLC and Par Petroleum Finance Corp.

(collectively, the “Issuers”) entered into a new term loan facility with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto from time to time (the “Term Loan B Facility”).

(collectively, the “Issuers”) entered into a new term loan facility with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto from time to time

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

(the “Term Loan B Facility”).

Pursuant to the Term Loan B Facility, the lenders made a term loan to the borrowers in the amount of $ 250.0 million (“Term Loan B”) on the closing date.

6 unchanged sentences

The Term Loan B Facility is secured on a pari passu basis by first priority liens (subject to the relative priority of permitted liens) on substantially all of the property and assets of Par Petroleum, LLC, Par Petroleum Finance Corp., and their subsidiary guarantors, but excluding certain property which is collateral under the ABL Credit Facility, the Supply and Offtake Agreement, and the Washington Refinery Intermediation Agreement.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

12.875% Senior Secured Notes due 2026

5 unchanged sentences

On the redemption date, 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 consolidated statement of operations for the year ended December 31, 2021.

We repurchased and cancelled $ 13.9 million and $ 21.7 million in aggregate principal amount of 12.875% Senior Secured Notes on May 16, 2022 and May 27, 2022, respectively, at a repurchase price of 111.125 % of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest as of the repurchase date.

On June 13, 2022, we repurchased an additional $ 1.3 million in aggregate principal amount of the notes at a repurchase price of 111.000 % of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest as of the repurchase date.

We paid premiums of approximately $ 4.1 million upon repurchases of the 12.875% Senior Secured Notes during the year ended December 31, 2022 and incurred aggregate debt extinguishment costs of $ 1.6 million for these repurchases, which were recorded in Debt extinguishment and commitment costs on our consolidated statement of operations for the year ended December 31, 2022.

As of December 31, 2022, $ 31.3 million in aggregate principal amount of the 12.875% Senior Secured Notes remained outstanding.

6 unchanged sentences

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

PHL Term Loan

10 unchanged sentences

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

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.

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.

Note 14— Derivatives

15 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.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

Our open futures and OTC swaps expire in April 2024.

5 unchanged sentences

At December 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 each of our refineries as of December 31, 2021:

December 31, 2021

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

Average barrels per month 67,500

9 unchanged sentences

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

Upon redemption of our 5.00% Convertible Senior Notes on or after June 20, 2019 at our election, we were obligated to pay a make-whole premium equal to the present value of the remaining scheduled payments of interest on the 5.00% Convertible Senior Notes to be redeemed from the relevant redemption date to the maturity date of June 15, 2021.

9 unchanged sentences

MLC terminal obligation derivative Obligations under inventory financing agreements 14,435 ( 22,170 )

Interest rate derivatives Other accrued liabilities — ( 966 )

Interest rate derivatives Other liabilities — ( 2,027 )

_________________________________________________________

(1) Does not include cash collateral of $ 6.1 million and $ 1.5 million recorded in Prepaid and other current assets and $ 9.5 million and $ 9.5 million in Other long-term assets as of December 31, 2021 and 2020, respectively.

(1) Does not include cash collateral of $ 40.8 million and $ 6.1 million recorded in Prepaid and other current assets as of December 31, 2022, and December 31, 2021, respectively, and $ 9.5 million in Other long-term assets as of both December 31, 2022 and December 31, 2021.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

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

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Interest rate derivatives Interest expense and financing costs, net — 104 ( 2,265 )

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

Note 15— Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Purchase Price Allocation of U.S.

The fair values of the assets acquired and liabilities assumed as a result of the Washington Acquisition were estimated as of January 11, 2019, the date of the acquisition, using valuation techniques described in notes (1) through (6) below.

Fair Value Technique

(in thousands)

Net working capital excluding operating leases $ ( 35,854 ) (1)

Property, plant, and equipment 412,766 (2)

Operating lease right-of-use assets 62,337 (3)

Goodwill 42,522 (4)

Current operating lease liabilities ( 21,571 ) (3)

Long-term operating lease liabilities ( 40,766 ) (3)

Deferred tax liability ( 92,103 ) (5)

Other non-current liabilities ( 804 ) (6)

Total $ 326,527

(1) Current assets acquired and liabilities assumed were recorded at their net realizable value.

(2) The fair value of personal property was estimated using the cost approach.

Key assumptions in the cost approach include determining the replacement cost by evaluating recent purchases of comparable assets or published data, and adjusting replacement cost for economic and functional obsolescence, location, normal useful lives, and capacity (if applicable).

The fair value of real property was estimated using the market approach.

Key assumptions in the market approach include determining the asset value by evaluating recent purchases of comparable assets under similar circumstances.

(3) Operating lease right-of-use assets and liabilities were recognized based on the present value of lease payments over the lease term using the incremental borrowing rate at acquisition of 9.6 %.

(4) The excess of the purchase price paid over the fair value of the identifiable assets acquired and liabilities assumed is allocated to goodwill.

(5) The deferred tax liability was determined based on the differences between the tax bases of the assets acquired and the values of those assets recorded on our consolidated balance sheets as of the date of acquisition.

(6) Other non-current liabilities are related to pension plan obligations.

The underfunded status of the defined benefit plan represents the difference between the fair value of the plan’s assets and the projected benefit obligations.

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We evaluate equity method investments for impairment when factors indicate that a decrease in the value of our investment has occurred and the carrying amount of our investment may not be recoverable.

An impairment loss, based on the

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

difference between the carrying value and the estimated fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary.

An impairment loss, based on the difference between the carrying value and the estimated fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary.

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Other significant inputs used in the discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the applicable discount rate.

As part of our evaluation, we considered the likelihood that NYMEX Henry Hub prices, which declined from an average spot price of $ 2.29 ($/MMBtu) at December 31, 2019 to $ 2.03 ($/MMBtu) in the first quarter of 2020, will recover in the near term.

As part of our evaluation, we considered the likelihood that New York Mercantile Exchange (“NYMEX”) Henry Hub prices, which declined from an average spot price of $ 2.29 ($/MMBtu) at December 31, 2019 to $ 2.03 ($/MMBtu) in the first quarter of 2020, will recover in the near term.

A discount rate of 10 % was used to reflect the higher cost of capital under the economic conditions as of March 31, 2020.

As a result, we recorded an other-than temporary impairment charge of $ 45.3 million in Equity losses from Laramie Energy, LLC on our consolidated statement of operations for the year ended December 31, 2020.

At September 30, 2019, we determined that the estimated fair value of our investment in Laramie Energy was $ 51.8 million, compared to a carrying value of $ 133.3 million.

The fair value estimate was determined using a discounted cash flow analysis based on natural gas forward strip prices as of September 30, 2019 for two years through December 31, 2021.

A blend of 2021 forward strip pricing and third-party analyst pricing was used for years after 2021 through December 31, 2028.

Other significant inputs used in the discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the applicable discount rate.

As part of our evaluation, we considered the likelihood that Colorado Interstate Gas (“CIG”) prices, which declined from an average spot price of $ 2.48 ($/MMBtu) in the first quarter of 2019, to $ 1.84 ($/MMBtu) in the second quarter of 2019 and $ 1.77 ($/MMBtu) in the third quarter of 2019, will recover in the near term.

A discount rate of 8 % was used to reflect the cost of capital under the economic conditions as of September 30, 2019.

As a result, we recorded an impairment charge of $ 81.5 million on our statement of operations for the year ended December 31, 2019.

We consider the impairments of our investment in Laramie Energy to be Level 3 fair value measurements.

Par West Refinery

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the idling of the assets for more than an insignificant amount of time, the significant cost to restart the refinery, and a lack of a current plan or timeline to restart the refinery.

Given the lack of alternative uses of the Par West refinery assets, we impaired all assets that are not expected to be used as part of our ongoing refining operations in Hawaii down to their salvage value, which is immaterial.

Given the lack of alternative uses of the Par West

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

refinery assets, we impaired all assets that are not expected to be used as part of our ongoing refining operations in Hawaii down to their salvage value, which is immaterial.

As a result of this evaluation, we recorded an impairment charge of $ 17.9 million on our statement of operations for the year ended December 31, 2020.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

Common stock warrants

As of December 31, 2019, we had 354,350 common stock warrants outstanding.

We estimated the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock, which was a Level 3 fair value measurement.

As of December 31, 2019, the warrants had a weighted-average exercise price of $ 0.09 and a remaining term of 2.67 years.

The estimated fair value of the common stock warrants was $ 23.16 per share as of December 31, 2019.

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 December 31, 2021 and 2020, we had no common stock warrants outstanding.

Derivative instruments

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These include our exchange traded futures.

Level 2 instruments are valued using quoted prices for similar assets and liabilities in

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

active markets and inputs other than quoted prices that are observable for the asset or liability.

Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability.

Our Level 2 instruments include OTC swaps and options.

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Aron and MLC settlement prices are based on observable inputs, such as Brent and 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 $ 56.77 per barrel as of December 31, 2021.

Such contractual differentials vary by location and by the type of product, have a weighted average of $ 14.07 per barrel, and range from a discount of $ 17.90 per barrel to a premium of $ 85.04 per barrel as of December 31, 2022.

Contractual price differentials are considered unobservable inputs;

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Commodity derivatives $ ( 3,964 ) $ ( 5,003 ) $ — $ ( 8,967 ) $ 7,536 $ ( 1,431 )

J.Aron repurchase obligation derivative — — ( 20,797 ) ( 20,797 ) — ( 20,797 )

Aron repurchase obligation derivative — — ( 15,151 ) ( 15,151 ) — ( 15,151 )

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 )

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(2) Does not include RINs assets and other environmental credits of $ 258.2 million and $ 120.1 million presented as Inventories on our consolidated balance sheet and stated at the lower of cost and net realizable value as of December 31, 2022 and 2021, respectively.

(3) The interest rate derivative was settled in February 2021, therefore, there is no asset or liability related to the interest rate derivative at December 31, 2021.

(3) The interest rate derivative was settled in February 2021, therefore, there is no asset or liability related to the interest rate derivative on December 31, 2022 or 2021.

Please read Note 14—Derivatives for further information.

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Settlements 86,242 61,247 ( 31,328 )

Acquired — — ( 8,654 )

Total gains (losses) included in earnings ( 46,642 ) ( 67,610 ) 23,120

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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 were paid in full at maturity on June 15, 2021.

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

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

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

(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 measurements of the ABL Credit Facility is considered Level 3 measurements in the fair value hierarchy.

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, approximated their carrying value due to their short-term nature.

Note 16— Leases

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Most of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 30 years or more.

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

There are no material residual value guarantees associated with any of our leases.

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our ROU assets and liabilities as of December 31, 2022 and 2021 and their placement within our consolidated balance sheets:

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Operating 7.10 % 6.70 %

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

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

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Net lease cost $ 106,180 $ 102,179 $ 120,645

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

Operating lease income (1) $ ( 11,030 ) $ ( 3,149 ) $ ( 3,201 )

_________________________________________________________

(1) At December 31, 2022 and 2021, Property, plant, and equipment, net associated with leased assets was approximately $ 9.2 million and $ 10.8 million, respectively.

The majority of our lessor income comes from leases with lease terms of one year or less and the estimated future undiscounted cash flows from lessor income are not expected to be material.

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

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These leases are expected to commence when the lessor has made the equipment or location available to us to operate or begin construction, respectively.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

Sale-Leaseback Transaction

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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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

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.

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.

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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.

On January 4, 2022, U.S.

Oil & Refining Co.

received a letter of determination from the Washington Department of Revenue related to a tax audit of certain sales of raw vacuum gas oil (“RVGO”) between January 13, 2014 and September 30, 2016.

The audit determined that U.S.

Oil & Refining Co.

did not pay certain taxes on certain sales of RVGO.

We dispute the results of the audit and 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.

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

From time to time, Par Hawaii Refining, LLC has appealed various tax assessments related to its land, buildings, and fuel storage tanks, and is currently appealing the City of Honolulu’s property tax assessment for tax year 2023.

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 between 2014 and 2016.

We believe the Department of Revenue’s interpretation is in conflict with its prior guidance and we appealed in November 2022.

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

We and other similarly situated state taxpayers who had previously claimed such exemptions, certain of which we are contractually obligated to indemnify, are currently being audited for such prior tax periods.

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

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

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

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

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2022, 2021, and 2020

Environmental Matters

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These governmental entities may also propose or assess fines or require corrective actions for these asserted violations.

We intend to respond in a timely manner to all such communications and to take appropriate corrective action.

Except as disclosed below, we do not anticipate that any such matters currently asserted will have a material impact on our financial condition, results of operations, or cash flows.

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Investigative work by Hermes Consolidated LLC, and its wholly owned subsidiary, Wyoming Pipeline Company (collectively, “WRC” or “Wyoming Refining”) and negotiations with the relevant agencies as to remedial approaches remain ongoing on a number of aspects of the contamination, meaning that investigation, monitoring, and remediation costs are not reasonably estimable for some elements of these efforts.

As of December 31, 2021, we have accrued $ 15.6 million for the well-understood components of these efforts based on current

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 30 years.

As of December 31, 2022, we have accrued $ 14.8 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.

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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Regulation of Greenhouse Gases

The EPA regulates greenhouse gases (“GHG”) under the federal Clean Air Act (“CAA”).

New construction or material expansions that meet certain GHG emissions thresholds will likely require that, among other things, a GHG permit be issued in accordance with the federal CAA regulations and we will be required, in connection with such permitting, to undertake a technology review to determine appropriate controls to be implemented with the project in order to reduce GHG emissions.

Furthermore, the EPA is currently developing refinery-specific GHG regulations and performance standards that are expected to impose GHG emission limits and/or technology requirements.

These control requirements may affect a wide range of refinery operations.

Any such controls could result in material increased compliance costs, additional operating restrictions for our business, and an increase in the cost of the products we produce, which could have a material adverse effect on our financial condition, results of operations, or cash flows.

Additionally, the EPA’s final rule updating standards that control toxic air emissions from petroleum refineries imposed additional controls and monitoring requirements on flaring operations, storage tanks, sulfur recovery units, delayed coking units and required fenceline monitoring.

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

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 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.

In addition to the Hawaii GHG legislation, the State of Washington and its political subdivisions have passed several climate-focused laws in 2021 that are relevant to our Tacoma, Washington location.

These include a low-carbon fuel standard designed to reduce the carbon intensity of transportation fuels by twenty percent by 2038 and a “cap and trade”-style program for GHG emissions covering industrial facilities starting in 2023.

As both legislative programs are presently undergoing rulemaking processes at the Washington Department of Ecology, the contours of both sets of requirements are not yet clear.

In addition to action by the State, on November 16, 2021, the Tacoma City Council adopted its Tideflats and Industrial Land Use Regulations, which prohibits new petroleum storage and allows for only limited additions of clean fuel infrastructure.

In 2007, the U.S.

Congress passed the Energy Independence and Security Act (the “EISA”) which, among other things, set a target fuel economy standard of 35 miles per gallon for the combined fleet of cars and light trucks in the U.S.

by model year 2020 and contained an expanded Renewable Fuel Standard (the “RFS”).

In August 2012, the EPA and National Highway Traffic Safety Administration (“NHTSA”) jointly adopted regulations that establish vehicle carbon dioxide emissions standards and an average industry fuel economy of 54.5 miles per gallon by model year 2025.

On August 8, 2018, the EPA and NHTSA jointly proposed to revise existing fuel economy standards for model years 2021-2025 and to set standards for 2026 for the first time.

On March 31, 2020, the agencies released updated fuel economy and vehicle emissions standards, which provide for an increase in stringency by 1.5% each year through model year 2026, as compared with the standards issued in 2012 that required 5% annual increases.

Higher fuel economy standards have the potential to reduce demand for our refined transportation fuel products.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021, 2020, and 2019

Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply, up to 36 billion gallons by 2022.

Under the Energy Independence and Security Act (the “EISA”), the Renewable Fuel Standard (the “RFS”) requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply.

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

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

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

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

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

On December 21, 2021, EPA published proposed RFS that include retroactive cuts to earlier 2020 quotas, set 2021 targets at levels of renewable fuels that were actually used, and would establish significantly higher volume requirements for 2022.

Whether that rule will be finalized as proposed and how the final rule will fare in the courts may significantly alter our obligations to blend renewable fuels or purchase RINs.

In the near term, the RFS will be satisfied primarily with fuel ethanol blended into gasoline or by purchasing renewable credits, referred to as RINs, to maintain compliance.

For additional information, please read Item 1.

— Business — Environmental Regulations.

As of December 31, 2022, our estimate of the renewable volume obligation (“RVO”) liability for the 2021 and 2022 compliance years is based on the RFS volumetric requirements which the EPA finalized on June 3, 2022.

The RFS may present production and logistics challenges for both the renewable fuels and petroleum refining and marketing industries in that we may have to enter into arrangements with other parties or purchase D3 waivers from the EPA to meet our obligations to use advanced biofuels, including biomass-based diesel and cellulosic biofuel, with potentially uncertain supplies of these new fuels.

In October 2010, the EPA issued a partial waiver decision under the federal CAA to allow for an increase in the amount of ethanol permitted to be blended into gasoline from 10% (“E10”) to 15% (“E15”) for 2007 and newer light duty motor vehicles.

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

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

however, increased renewable fuel in the nation’s transportation fuel supply could reduce demand for our refined products.

In March 2014, the EPA published a final Tier 3 gasoline standard that requires, among other things, that gasoline contain no more than 10 parts per million (“ppm”) sulfur on an annual average basis and no more than 80 ppm sulfur on a per-gallon basis.

The standard also lowers the allowable benzene, aromatics, and olefins content of gasoline.

The effective date for the new standard was January 1, 2017, however, approved small volume refineries had until January 1, 2020 to meet the standard.

The Hawaii refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date it was disqualified from small volume refinery status.

On March 19, 2015, the EPA confirmed the small refinery status of our Wyoming refinery.

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

Owing to the receipt of these small refinery exemptions, our net income for the year ended December 31, 2019 includes $ 5.3 million of net RINs benefit.

All of our refineries were compliant with the final 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 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.

and foreign-flagged ships.

Although the marine fuel regulations provided vessel operators with a few compliance options such as installation of on-board pollution controls and demonstration unavailability, many vessel operators will be forced to switch to a distillate fuel while operating within the Emission Control Area (“ECA”).

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

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.

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

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

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

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

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

Environmental Agreement

On September 25, 2013, Par Petroleum, LLC (formerly Hawaii Pacific Energy, a wholly owned subsidiary of Par created for purposes of the PHR acquisition), Tesoro, and PHR entered into an Environmental Agreement (“Environmental

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

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR, including a consent decree.

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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We sell a variety of refined products to a diverse customer base.

For each of the years ended December 31, 2021 and 2020, we had one customer in our refining segment that accounted for 13 % of our consolidated revenue.

For each of the years ended December 31, 2022, 2021, and 2020, we had one customer in our refining segment that accounted for 17 %, 13 %, and, 13 %, respectively, of our consolidated revenue.

No other customer accounted for more than 10% of our consolidated revenues during the years ended December 31, 2022, 2021, and 2020.

Note 18— Stockholders’ Equity

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

well as any “net unrealized built-in loss” within the meaning of Section 382 of the Internal Revenue Service Code, of us or any direct or indirect subsidiary thereof.

Note 18— Stockholders’ Equity

Our certificate of incorporation contains restrictions on the transfer of certain of our securities in order to preserve the net operating loss carryovers, capital loss carryovers, general business credit carryovers, and foreign tax credit carryovers, as well as any “net unrealized built-in loss” within the meaning of Section 382 of the Internal Revenue Service Code, of us or any direct or indirect subsidiary thereof.

These restrictions include provisions regarding approval by our Board of Directors of transfers of common stock by holders of five percent or more of the outstanding common stock.

19 unchanged sentences

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 to repay the remaining $ 48.7 million in aggregate 5.00% Convertible Senior Notes due at maturity in June 2021 and $ 36.8 million in aggregate principal amount of 12.875% Senior Secured Notes, and the remainder for general corporate purposes, including capital expenditures and funding working capital.

The net proceeds from the Equity Offering were

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

approximately $ 87.2 million, after deducting underwriting discounts and commissions and offering expenses.

Share Repurchase Program

2 unchanged sentences

The share repurchase program does not have a specified end date and may be limited or terminated at any time without prior notice.

During the year ended December 31, 2021, we repurchased 59 thousand shares for a total of $ 0.8 million.

During the years ended December 31, 2022 and 2021, 420 thousand and 59 thousand shares were repurchased under this share repurchase program for a total of $ 5.8 million and $ 0.8 million, respectively.

Incentive Plans

78 unchanged sentences

Weighted-average grant-date fair value per share of performance restricted stock units granted (in dollars) $ 14.91 $ 16.52 $ 19.73

Fair value of performance restricted stock units granted $ 1,053 $ 919 $ 811

Fair value of performance restricted stock units vested $ 1,343 $ 940 $ 783

Performance restricted stock units a re subject to certain annual performance targets based on three-year performance periods as defined by our Board.

63 unchanged sentences

Plan amendment

Actuarial loss (gain) (1) ( 2,508 ) 7,038

Actuarial gain (1) ( 15,178 ) ( 2,508 )

Benefits paid

5 unchanged sentences

Actual return (loss) on plan assets

( 6,957 ) 5,420

Employer contributions

3 unchanged sentences

____________________________________________________

(1) For the year ended December 31, 2022, the change in the actuarial gain was due to an increase in the discount rate.

For the year ended December 31, 2021, the change in the actuarial gain was due to an increase in the discount rate and strong asset performance.

For the year ended December 31, 2020, the change in the actuarial loss was due to a decrease in the discount rate, new entrants to the plan, and salary changes, partially offset by demographic assumption changes.

The underfunded status of our Benefit Plans is recorded within Other liabilities on our consolidated balance sheets.

The underfunded status of our Benefit Plans is recorded within Other liabilities on our consolidated balance sheets and the funded status of our Benefit Plans is recorded within Other long-term assets on our consolidated balance sheets.

The reconciliation of the underfunded status of our Benefit Plans of December 31, 2022 and 2021 was as follows:

WY Refining U.S.

Oil WY Refining U.S.

Projected benefit obligation 24,730 16,637 34,333 22,078

Fair value of plan assets 21,940 18,699 28,076 21,745

Underfunded status $ 6,590 $ 14,318

Underfunded/(overfunded) status $ 2,790 $ ( 2,062 ) $ 6,257 $ 333

Amounts recognized in consolidated balance sheet:

Non-current assets — 2,062 — —

Non-current liabilities ( 2,790 ) — ( 6,257 ) ( 333 )

Net amount recorded $ ( 2,790 ) $ 2,062 $ ( 6,257 ) $ ( 333 )

Gross amounts recognized in accumulated other comprehensive income (loss):

Net actuarial gain $ ( 704 ) $ ( 6,946 )

Total accumulated other comprehensive income $ ( 704 ) $ ( 6,946 )

Net actuarial gain (loss) 5,243 ( 318 ) 2,188 ( 2,892 )

Total accumulated other comprehensive income (loss) $ 5,243 $ ( 318 ) $ 2,188 $ ( 2,892 )

____________________________________________________

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(2) The expected long-term rate of return is based on the target asset allocation of each plan and capital market assumptions developed using forward-looking models and historical market data and trends.

The net periodic benefit cost (credit) for the years ended December 31, 2021, 2020, and 2019 includes the following components:

The net periodic benefit credit for the years ended December 31, 2022, 2021, and 2020 includes the following components:

2022 2021 2020

Components of net periodic benefit cost (credit):

Components of net periodic benefit (credit):

Service cost $ 821 $ 1,140 $ 1,347

4 unchanged sentences

Effect of curtailment — ( 2,032 ) —

Net periodic benefit cost (credit) $ ( 1,484 ) $ 843 $ 830

Net periodic benefit credit $ ( 234 ) $ ( 1,484 ) $ 843

The Service cost component of net periodic benefit cost is included in Operating expense (excluding depreciation) on our consolidated statement of operations for the years ended December 31, 2022, 2021, and 2020.

28 unchanged sentences

Note 20— 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 61 thousand shares during the year ended December 31, 2020 and 354 thousand shares during the year ended December 31, 2019.

The common stock warrants are included in the calculation of basic income (loss) per share for the years ended December 31, 2020 and 2019 because they were issuable for minimal consideration.

The common stock warrants are included in the calculation of basic income (loss) per share for the year ended December 31, 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.

7 unchanged sentences

Net income (loss) $ 364,189 $ ( 81,297 ) $ ( 409,086 )

Undistributed income allocated to participating securities (1) — — 438

Net income (loss) attributable to common stockholders ( 81,297 ) ( 409,086 ) 40,371

Net income effect of convertible securities — — —

11 unchanged sentences

________________________________________________________

(1) Participating securities include restricted stock that has been issued but had not yet vested.

These participating securities were fully vested as of December 31, 2019.

(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 loss per common share for the years ended December 31, 2021 and 2020.

(2) We had no 5.00 % Convertible Senior Notes outstanding for the year ended December 31, 2022 .

Note 21— Income Taxes

3 unchanged sentences

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.

For the year ended December 31, 2022, we recorded an income tax expense of $ 0.7 million primarily driven by an increase in state taxable income.

For the year ended December 31, 2021, we recorded an income tax expense of $ 1.0 million primarily driven by foreign withholding taxes.

For the year ended December 31, 2020, we recorded an income tax benefit of $ 20.7 million primarily driven by an increase in our net operating loss carryforwards and the change in our indefinitely-lived goodwill due to the impairments.

For the year ended December 31, 2019, we recorded an income tax benefit of $ 69.7 million primarily driven by a $ 64.2 million benefit associated with the partial release of our valuation allowance in connection with the recognition of deferred tax liabilities acquired as part of the Washington Acquisition.

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 December 31, 2022 and 2021.

3 unchanged sentences

Our amended and restated certificate of incorporation places restrictions upon the ability of certain equity interest holders to transfer their ownership interest in us.

These restrictions are

These restrictions are designed to provide us with the maximum assurance that another ownership change does not occur that could adversely impact our NOL carryforwards.

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 December 31, 2022.

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

designed to provide us with the maximum assurance that another ownership change does not occur that could adversely impact our NOL carryforwards.

Our net taxable income must be apportioned to various states based upon the income tax laws of the states in which we derive our revenue.

22 unchanged sentences

Permanent items 0.4 % ( 0.6 ) % ( 2.3 ) %

Provision to return adjustments and other — % — % ( 1.4 ) %

Actual income tax rate 0.2 % ( 1.3 ) % 4.8 %

15 unchanged sentences

Property and equipment 54,124 56,436

Investment in Laramie Energy — 4,522

Total deferred tax liabilities 60,015 66,256

1 unchanged sentence

We have NOL carryforwards as of December 31, 2022 of $ 1.2 billion for federal income tax purposes.

If not utilized, the NOL carryforwards will expire during 2028 through 2036.

If not utilized, approximately $ 1.0 billion of our NOL carryforwards will expire during 2029 through 2037.

Approximately $ 0.2 billion of our NOL carryforwards do not expire.

PAR PACIFIC HOLDINGS, INC.

5 unchanged sentences

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

Commencing January 11, 2019, the results of operations of the Washington Acquisition are included in our refining and logistics segments.

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

3 unchanged sentences

Operating expense (excluding depreciation) 245,992 14,988 81,229 — 342,209

Depreciation, depletion, and amortization 58,258 22,044 10,880 3,059 94,241

Impairment expense 1,838 — — — 1,838

Depreciation and amortization 65,472 20,579 10,971 2,747 99,769

Loss (gain) on sale of assets, net 1 ( 253 ) 56 27 ( 169 )

5 unchanged sentences

Gain on curtailment of pension obligation —

Other expense, net ( 52 )

Loss before income taxes ( 80,276 )

Other income, net 613

Income before income taxes 364,899

Income tax expense ( 710 )

Net loss $ ( 81,297 )

Net income $ 364,189

Total assets $ 2,580,298 $ 412,336 $ 244,233 $ 43,780 $ 3,280,647

11 unchanged sentences

Operating expense (excluding depreciation) 213,102 14,722 71,845 — 299,669

Depreciation, depletion, and amortization 53,930 21,899 10,692 3,515 90,036

Depreciation and amortization 58,258 22,044 10,880 3,059 94,241

Impairment expense 1,838 — — — 1,838

Loss on sale of assets, net ( 19,659 ) ( 19 ) ( 45,034 ) 15 ( 64,697 )

General and administrative expense (excluding depreciation) — — — 48,096 48,096

3 unchanged sentences

Debt extinguishment and commitment costs ( 8,144 )

Other income, net 1,049

Change in value of common stock warrants 4,270

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

Gain on curtailment of pension obligation 2,032

Other expense, net ( 52 )

Loss before income taxes ( 80,276 )

Income tax benefit 20,720

Income tax expense ( 1,021 )

Net loss $ ( 81,297 )

12 unchanged sentences

Operating expense (excluding depreciation) 199,738 13,581 64,108 — 277,427

Depreciation, depletion, and amortization 55,832 17,017 10,035 3,237 86,121

Depreciation and amortization 53,930 21,899 10,692 3,515 90,036

Impairment expense 55,989 — 29,817 — 85,806

General and administrative expense (excluding depreciation) — — — 41,288 41,288

2 unchanged sentences

Interest expense and financing costs, net ( 70,222 )

Debt extinguishment and commitment costs ( 11,587 )

Other income, net 1,049

Change in value of common stock warrants 4,270

Change in value of contingent consideration —

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

1 unchanged sentence

Income tax benefit 20,720

Net income $ 40,809

Net loss $ ( 409,086 )

Total assets $ 1,478,603 $ 444,800 $ 193,365 $ 17,093 $ 2,133,861

13 unchanged sentences

EGI does not receive a fee for the provision of the strategic, advisory, or consulting services set forth in the Services Agreement, but may be periodically reimbursed by us, upon request, for (i) travel and out-of-pocket expenses, provided that, in the event that such expenses exceed $ 50 thousand in the aggregate with respect to any single proposed matter, EGI will obtain our consent prior to incurring additional costs, and (ii) provided that we provide prior consent to their engagement with respect to any particular proposed matter, all reasonable fees and disbursements of counsel, accountants, and other professionals incurred in connection with EGI’s services under the Services Agreement.

In consideration of the services provided by EGI

In consideration of the services provided by EGI under the Services Agreement, we agreed to indemnify EGI for certain losses relating to or arising out of the Services Agreement or the services provided thereunder.

PAR PACIFIC HOLDINGS, INC.

2 unchanged sentences

For the Years Ended December 31, 2022, 2021, and 2020

under the Services Agreement, we agreed to indemnify EGI for certain losses relating to or arising out of the Services Agreement or the services provided thereunder.

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.

1 unchanged sentence

Note 24— Subsequent Events

The ABL Loan Agreement increases the maximum principal amount of the ABL Revolver at any time outstanding 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, and extends the maturity date of the ABL Revolver to February 2, 2025.

The ABL Loan Agreement also includes 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.

Under the ABL Loan Agreement, the outstanding principal amount of each revolving loan bears interest at a fluctuating rate per annum equal to (i) during the periods such revolving loan is a base rate loan, the base rate plus the applicable margin in effect from time to time, and (ii) during the periods such revolving loan is a Term SOFR Loan, at Term SOFR (as defined in the ABL Loan Agreement) for the applicable interest period plus the applicable margin in effect from time to time.

The base rate for any day is a per annum rate equal to the greater of (a) a rate as calculated per the agreement (the “Prime Rate”) for such day;

(b) a rate as calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (“Federal Funds Rate”) for such day, plus 0.50 %;

or (c) Term SOFR for a one month interest period as of such day plus 1.0 %, subject to the interest rate floor set forth therein;

provided, that in no event shall the base rate be less than zero.

We also pay a de minimis fee for any undrawn amounts available under the ABL Revolver.

Under the ABL Loan Agreement, the applicable margins for the ABL Credit Facility and advances under the ABL Revolver are as specified below:

Level Arithmetic Mean of Daily Availability (as a percentage of the borrowing base) Term SOFR Loans Base Rate Loans

1 >50% 1.25 % 0.25 %

2 >30% but ≤ 50%

1.50 % 0.50 %

1.75 % 0.75 %

Oil, and any other Future Intermediation Subsidiary (as defined in the ABL Loan Agreement).

Refinancing of Term Loan B

On February 14, 2023, we priced the proposed private $ 550 million aggregate principal amount senior secured term loan B due 2030.

We intend to use the proceeds from the proposed term loan to refinance the Company’s existing Term Loan B Facility and its outstanding Notes (as described below) and for general corporate purposes.

Tender Offers

On February 15, 2023, we announced the commencement of cash tender offers (the “Tender Offers”) for the purchase by PPL of any and all of the (i) 7.75% Senior Secured Notes and (ii) 12.875% Senior Secured Notes (together, the “Notes”).

The Tender Offers were for cash consideration of $ 1,021.20 per $1,000 principal amount of 7.75% Senior Secured Notes and $ 1,090.44 per $1,000 principal amount of 12.875% Senior Secured Notes, plus an amount equal to any accrued and unpaid interest.

The Tender Offers expired on February 23, 2023, and $ 260.6 million, or approximately 92.74 %, of the 7.75% Senior Secured Notes and $ 29.0 million, or approximately 92.73 %, of the 12.875% Senior Secured Notes were validly tendered and not validly withdrawn, In addition, $ 270 thousand aggregate principal amount of the 7.75% Senior Secured Notes were tendered subject to guaranteed delivery procedures.

Subject to raising at least $ 550 million in gross proceeds under the proposed term loan, we expect to accept for payment all notes validly tendered during the offering period and all notes properly delivered under guaranteed delivery procedures and expects to make payment on all such notes on February 28, 2023.

As described below, we have exercised optional redemption rights with respect to any outstanding Notes and intend to satisfy and discharge each indenture governing the Notes, as applicable, on the settlement date.

Redemption of Notes

On February 15, 2023, we issued notices of conditional redemption (collectively, the “Redemption”) for each series of the Notes pursuant to the applicable agreements, in each case subject to the successful refinancing of Term Loan B.

In connection with the above, (i) the ABL Borrowers and the lenders, and Bank of America, N.A., as administrative agent, entered into the First Amendment, dated as of February 14, 2023, to Amended and Restated Loan and Security Agreement, dated as of February 2, 2022, (ii) Par Hawaii Refining, LLC, PPL and J.

Aron & Company, LLC entered into the Amendment, dated as of February 13, 2023, to Second Amended and Restated Supply and Offtake Agreement, dated as of June 1, 2021, and (iii) U.S.

Oil & Refining Co., PPL and Merrill Lynch Commodities, Inc.

entered into a letter agreement dated February 15, 2023, in each case, to facilitate the refinancing and tender offers noted.

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

13 unchanged sentences

Property, plant, and equipment 19,865 19,535

Less accumulated depreciation, depletion, and amortization ( 13,869 ) ( 14,368 )

Less accumulated depreciation and amortization ( 14,967 ) ( 13,869 )

Property, plant, and equipment, net 4,898 5,666

6 unchanged sentences

Current liabilities

Current maturities of long-term debt $ — $ 47,301

Accounts payable $ 4,176 $ 1,386

5 unchanged sentences

Long-term liabilities

Long-term debt, net of current maturities — —

Finance lease liabilities — 17

Operating lease liabilities 3,273 4,150

Other liabilities — 45

Total liabilities 86,214 66,209

26 unchanged sentences

Interest expense and financing costs, net ( 1 ) ( 2,600 ) ( 4,982 )

Debt extinguishment and commitment costs — — ( 6,091 )

Other income (expense), net ( 33 ) ( 3 ) 2,303

Other expense, net ( 20 ) ( 33 ) ( 3 )

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

31 unchanged sentences

Depreciation and amortization 2,131 2,452 2,900

Debt extinguishment and commitment costs — — 6,091

Non-cash interest expense — 1,364 2,518

4 unchanged sentences

Net changes in operating assets and liabilities:

Trade accounts receivable — — —

Prepaid and other assets 13,436 1,318 ( 4,253 )

Accounts payable, other accrued liabilities, and operating lease ROU assets and liabilities 2,651 ( 1,380 ) ( 187 )

Net cash used in operating activities ( 5,714 ) ( 10,839 ) ( 23,841 )

Net cash provided by (used in) operating activities 3,779 ( 5,714 ) ( 10,839 )

Cash flows from investing activities:

9 unchanged sentences

Repayments of borrowings ( 9,319 ) ( 62,111 ) ( 18,603 )

Payment of deferred loan costs — — ( 252 )

Exercise of stock options — — 8,171

Payment for debt extinguishment and commitment costs — — ( 1,899 )

Other financing activities, net ( 332 ) ( 879 ) 164

11 unchanged sentences

ROU assets obtained in exchange for new operating lease liabilities — 165 —

Common stock issued for business combination — — 36,980

Non-cash contribution to subsidiary for business combination — — ( 36,980 )

Common stock issued to repurchase convertible notes — — 74,290

This statement should be read in conjunction with the notes to consolidated financial statements.

3 unchanged sentences

/s/ William Pate

President and Chief Executive Officer

/s/ William Monteleone

William Monteleone

Chief Financial Officer

Chief Executive Officer

/s/ Shawn Flores

Senior Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed below by the following persons on our behalf and in the capacities indicated and on February 27, 2023.

Signature Title

/s/ WILLIAM PATE President and Chief Executive Officer

/s/ WILLIAM PATE Chief Executive Officer and Director

(Principal Executive Officer)

/s/ WILLIAM MONTELEONE Chief Financial Officer

(Principal Financial Officer)

/s/ WILLIAM MONTELEONE President and Director

William Monteleone

/s/ SHAWN FLORES Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

/s/ IVAN GUERRA Chief Accounting Officer

18 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-K

Item 9A. Controls and Procedures