What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-05 compared with 2022-11-03 · 300 added, 433 removed, 572 unchanged (56% of the section changed)

4 unchanged sentences

(in thousands, except share data)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets

2 unchanged sentences

Total cash, cash equivalents, and restricted cash 665,318 494,926

Trade accounts receivable, net of allowances of $ 0.3 million and $ 0.4 million at September 30, 2022 and December 31, 2021, respectively

Trade accounts receivable, net of allowances of $ 0.3 million and $ 0.3 million at March 31, 2023 and December 31, 2022, respectively

277,700 252,885

32 unchanged sentences

Common stock, $ 0.01 par value;

500,000,000 shares authorized at September 30, 2022 and December 31, 2021, 60,157,574 shares and 60,161,955 shares issued at September 30, 2022 and December 31, 2021, respectively

500,000,000 shares authorized at March 31, 2023 and December 31, 2022, 61,029,446 shares and 60,470,837 shares issued at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 842,062 836,491

Accumulated deficit ( 285,406 ) ( 559,117 )

Accumulated earnings (deficit) 37,203 ( 200,687 )

Accumulated other comprehensive income 8,118 8,129

6 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Three Months Ended

Revenues $ 1,685,209 $ 1,350,293

3 unchanged sentences

Depreciation and amortization 24,360 23,780

Loss (gain) on sale of assets, net ( 185 ) 2 ( 170 ) ( 64,400 )

General and administrative expense (excluding depreciation) 19,286 15,893

Acquisition and integration costs 5,271 63

Par West redevelopment and other costs 2,750 —

Total operating expenses 1,423,807 1,471,389

3 unchanged sentences

Debt extinguishment and commitment costs ( 17,720 ) —

Gain on curtailment of pension obligation — — — 2,032

Other income (loss), net ( 35 ) 2

Equity earnings from Laramie Energy, LLC 10,706 —

Total other expense, net ( 23,299 ) ( 16,392 )

Income (loss) before income taxes 238,103 ( 137,488 )

Income tax expense ( 68 ) ( 586 ) ( 756 ) ( 1,193 )

Income tax benefit (expense) ( 213 ) 437

Net income (loss) $ 237,890 $ ( 137,051 )

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(in thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Three Months Ended

Net income (loss) $ 237,890 $ ( 137,051 )

Other comprehensive income (loss):

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

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

Other post-retirement benefits loss, net of tax ( 11 ) —

Total other comprehensive income (loss), net of tax ( 11 ) —

Comprehensive income (loss) $ 237,879 $ ( 137,051 )

4 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net Income (Loss) $ 237,890 $ ( 137,051 )

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

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

Depreciation and amortization 24,360 23,780

3 unchanged sentences

Deferred taxes 67 —

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

Stock-based compensation 2,317 3,658

Unrealized (gain) loss on derivative contracts ( 13,670 ) 15,452

Equity earnings from Laramie Energy, LLC ( 10,706 ) —

Net changes in operating assets and liabilities:

5 unchanged sentences

Accounts payable, other accrued liabilities, and operating lease ROU assets and liabilities ( 184,389 ) 215,014

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

Net cash provided by (used in) operating activities 139,095 ( 7,685 )

Cash flows from investing activities:

Capital expenditures ( 13,213 ) ( 16,333 )

Proceeds from sale of assets 397 103,371

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

Proceeds from sale of assets and other 50 60

Return of capital from Laramie Energy, LLC 10,706 —

Net cash used in investing activities ( 2,457 ) ( 16,273 )

Cash flows from financing activities:

Proceeds from sale of common stock, net of offering costs — 87,193

Proceeds from borrowings 541,750 88,163

Repayments of borrowings ( 521,256 ) ( 70,059 )

Net borrowings on deferred payment arrangements, discretionary draw facilities, and receivable advances 48,211 66,175

Net borrowings on deferred payment arrangements and receivable advances 22,407 41,712

Payment of deferred loan costs ( 4,210 ) ( 817 )

Purchase of common stock for retirement ( 2,569 ) ( 6,388 )

Exercise of stock options 6,374 —

Payments for debt extinguishment and commitment costs ( 8,742 ) —

Other financing activities, net 351 333

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

Net cash provided by financing activities 33,754 52,611

Net increase in cash, cash equivalents, and restricted cash 170,392 28,653

9 unchanged sentences

ROU assets obtained in exchange for new operating lease liabilities 8,380 10,678

ROU assets terminated in exchange for release from finance lease liabilities — —

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

8 unchanged sentences

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

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

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

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

Exercise of stock options 4 — 58 — — 58

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

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

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

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

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

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

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

Net loss — — — ( 108,958 ) — ( 108,958 )

Balance, June 30, 2021 60,185 602 817,049 ( 648,213 ) 254 169,692

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

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

Net income — — — 81,802 — 81,802

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

Additional Other

Common Stock Paid-In Accumulated Comprehensive Total

Shares Amount Capital Deficit Income Equity

Additional Accumulated Other

Common Stock Paid-In (Deficit) Comprehensive Total

Shares Amount Capital Earnings Income Equity

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

1 unchanged sentence

Purchase of common stock for retirement ( 81 ) — ( 3,114 ) — — ( 3,114 )

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

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

Issuance of common stock for employee stock purchase plan 41 — 632 — — 632

Purchase of common stock for retirement ( 1 ) — ( 94 ) — — ( 94 )

Stock-based compensation 3 — 2,017 — — 2,017

Exercise of stock options 300 6 6,368 — — 6,374

Net income — — — 149,125 — 149,125

Balance, June 30, 2022 60,220 602 827,623 ( 551,998 ) 2,502 278,729

Stock-based compensation ( 2 ) — 1,613 — — 1,613

Purchase of common stock for retirement ( 60 ) ( 1 ) ( 41 ) ( 804 ) — ( 846 )

Other comprehensive loss — — — — ( 11 ) ( 11 )

Net income — — — 237,890 — 237,890

Balance, September 30, 2022 60,158 $ 601 $ 829,195 $ ( 285,406 ) $ 2,502 $ 546,892

Balance, March 31, 2023 61,030 $ 610 $ 842,062 $ 37,203 $ 8,118 $ 887,993

See accompanying notes to the condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

For the Interim Periods Ended March 31, 2023 and 2022

Note 1 — Overview

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

As of September 30, 2022, we owned a 46.0 % equity investment in Laramie Energy, LLC (“Laramie Energy”).

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

As of March 31, 2023, 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 continued worldwide spread and severity of the COVID-19 coronavirus, along with a number of recent global events including the conflict between Russia and Ukraine and certain developments in the global crude oil markets, have impacted our businesses, people, and operations.

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

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

Allowance for Credit Losses

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Credit limits and/or prepayment requirements are set based on such factors as the customer’s financial results, credit rating, payment history, and industry and are reviewed annually for customers with material credit limits.

Credit allowances are reviewed at least quarterly based on changes in the customer’s creditworthiness due to economic conditions, liquidity, and business strategy as publicly reported and

Credit allowances are reviewed at least quarterly based on changes in the customer’s creditworthiness due to economic conditions, liquidity, and business strategy as publicly reported and through discussions between the customer and the Company.

We establish provisions for losses on trade receivables based on the estimated credit loss we expect to incur over the life of the receivable.

We did not have a material change in our allowances on trade receivables during the three months ended March 31, 2023 or 2022.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

through discussions between the customer and the Company.

We establish provisions for losses on trade receivables based on the estimated credit loss we expect to incur over the life of the receivable.

We did not have a material change in our allowances on trade receivables during the three and nine months ended September 30, 2022 or 2021.

For the Interim Periods Ended March 31, 2023 and 2022

Cost Classifications

Cost of revenues (excluding depreciation) includes the hydrocarbon-related costs of inventory sold, transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our Renewable Identification Numbers (“RINs”) obligations, and certain hydrocarbon fees and taxes.

Cost of revenues (excluding depreciation) also includes the unrealized gains (losses) on derivatives and inventory valuation adjustments.

Cost of revenues (excluding depreciation) also includes the unrealized gains and losses on derivatives and inventory valuation adjustments.

Certain direct operating expenses related to our logistics segment are also included in Cost of revenues (excluding depreciation).

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Cost of revenues $ 4,999 $ 5,052

2 unchanged sentences

Recent Accounting Pronouncements

There have been no developments to recent accounting pronouncements, including the expected dates of adoption and estimated effects on our financial condition, results of operations, and cash flows, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, except for the following:

On September 30, 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“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 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.

Note 3— Investment in Laramie Energy, LLC

As of September 30, 2022, we had a 46.0 % ownership interest in Laramie Energy.

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

The balance of our investment in Laramie Energy was zero as of September 30, 2022 and December 31, 2021.

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

As of September 30, 2022, the term loan had an outstanding balance of $ 85.1 million.

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

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

As of March 31, 2023, we had a 46.0 % ownership interest in Laramie Energy.

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

The balance of our investment in Laramie Energy was zero as of March 31, 2023 and December 31, 2022.

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

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

On February 21, 2023, Laramie Energy entered into a new term loan agreement which provides 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 prior 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.

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.

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

As of March 31, 2023, the term loan had an outstanding balance of $ 160.0 million.

On March 1, 2023, pursuant to its new term loan agreement, Laramie Energy made a one-time cash distribution to its owners, including us, based on ownership percentage.

Our share of this distribution was $ 10.7 million, which was reflected as Return of capital from Laramie Energy, LLC on our condensed consolidated statements of cash flows.

We recorded the cash received as Equity earnings from Laramie Energy, LLC on our condensed consolidated statements of operations because the carrying value of our investment in Laramie Energy was zero at the time of such distribution.

Effective February 21, 2023, and concurrent with the new term loan agreement noted above, we resumed the application of equity method accounting with respect to our investment in Laramie Energy.

At March 31, 2023, our equity in the underlying net assets of Laramie Energy exceeded the carrying value of our investment by approximately $ 76.4 million.

This difference arose primarily due to other-than-temporary impairments of our equity investment in Laramie Energy.

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

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

September 30, 2022 December 31, 2021

Current assets $ 61,845 $ 68,779

Non-current assets 336,991 328,571

Current liabilities 76,594 107,976

Non-current liabilities 248,088 177,503

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

2022 2021 2022 2021

Natural gas and oil revenues $ 63,621 $ 46,329 $ 172,355 $ 166,293

Income from operations 32,056 20,807 86,124 73,957

Net loss ( 5,187 ) ( 41,892 ) ( 37,704 ) ( 1,308 )

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

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

2022 2021 2022 2021

Depreciation, depletion, and amortization $ 6,754 $ 6,134 $ 18,018 $ 21,890

Unrealized loss on derivative instruments 17,367 54,857 70,756 55,039

For the Interim Periods Ended March 31, 2023 and 2022

Note 4— Acquisitions

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 occur 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 purchase price upon a successful closing.

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

We incurred $ 5.3 million of acquisition costs related to the Billings Acquisition for the three months ended March 31, 2023.

For the three months ended March 31, 2022, we recognized immaterial costs related to the Billings Acquisition.

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

Note 5— Revenue Recognition

As of September 30, 2022 and December 31, 2021, receivables from contracts with customers were $ 267.1 million and $ 189.9 million, respectively.

As of March 31, 2023 and December 31, 2022, receivables from contracts with customers were $ 271.9 million and $ 242.5 million, respectively.

Our refining segment recognizes deferred revenues when cash payments are received in advance of delivery of products to the customer.

Deferred revenue was $ 26.4 million and $ 10.1 million as of September 30, 2022 and December 31, 2021, respectively.

Deferred revenue was $ 22.8 million and $ 11.5 million as of March 31, 2023 and December 31, 2022, respectively.

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

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

Three Months Ended September 30, 2022 Refining Logistics Retail

Product or service:

Gasoline $ 532,864 $ — $ 118,320

Distillates (1) 861,298 — 13,296

Other refined products (2) 577,665 — —

Merchandise — — 24,800

Transportation and terminalling services — 54,635 —

Other revenue 2,874 — 969

Total segment revenues (3) $ 1,974,701 $ 54,635 $ 157,385

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

Three Months Ended September 30, 2021 Refining Logistics Retail

Product or service:

Gasoline $ 402,654 $ — $ 93,054

Distillates (1) 548,571 — 7,616

Other refined products (2) 291,185 — —

Merchandise — — 24,314

Transportation and terminalling services — 46,735 —

Other revenue 438 — 926

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

Nine Months Ended September 30, 2022 Refining Logistics Retail

Three Months Ended March 31, 2023 Refining Logistics Retail

Product or service:

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Total segment revenues (3) $ 1,615,413 $ 52,388 $ 135,572

Nine Months Ended September 30, 2021 Refining Logistics Retail

Three Months Ended March 31, 2022 Refining Logistics Retail

Product or service:

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(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 18—Segment Information for the reconciliation of segment revenues to total consolidated revenues.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

For the Interim Periods Ended March 31, 2023 and 2022

Note 6— Inventories

Inventories at September 30, 2022 and December 31, 2021 consisted of the following (in thousands):

Inventories at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

Titled Inventory Supply and Offtake Agreement (1) Total

September 30, 2022

March 31, 2023

Crude oil and feedstocks $ 169,144 $ 161,261 $ 330,405

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(1) Please read Note 8—Inventory Financing Agreements for further information.

(2) Includes $ 194.0 million and $ 120.1 million of RINs and environmental credits, reported at the lower of cost or net realizable value, as of September 30, 2022 and December 31, 2021, respectively.

RINs and environmental credit obligations of $ 489.6 million and $ 311.0 million, reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, we had no reserve for the lower of cost or net realizable value of inventory.

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

As of September 30, 2022 and December 31, 2021, the excess of current replacement cost over the last-in, first-out (“LIFO”) inventory carrying value at the Washington refinery was approximately $ 71.5 million and $ 46.0 million, respectively.

(2) Includes $ 193.2 million and $ 258.2 million of RINs and environmental credits, reported at the lower of cost or net realizable value, as of March 31, 2023 and December 31, 2022, respectively.

RINs and environmental credit obligations of $ 346.7 million and $ 549.8 million, reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

As of March 31, 2023 and December 31, 2022, there was no reserve for the lower of cost or net realizable value of inventory.

As of March 31, 2023 and December 31, 2022, the excess of current replacement cost over the last-in, first-out (“LIFO”) inventory carrying value at the Washington refinery was approximately $ 37.0 million and $ 46.4 million, respectively.

Note 7— Prepaid and Other Current Assets

Prepaid and other current assets at September 30, 2022 and December 31, 2021 consisted of the following (in thousands):

September 30, 2022 December 31, 2021

Advances to suppliers for crude purchases $ 71,227 $ —

Prepaid and other current assets at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

March 31, 2023 December 31, 2022

Collateral posted with broker for derivative instruments (1) $ 18,869 $ 40,788

Billings Acquisition deposit (2) 30,000 30,000

Prepaid insurance 10,528 15,639

Derivative assets 17,064 1,260

Deferred inventory financing charges — 4,073

Other 16,730 5,616

3 unchanged sentences

Please read Note 11—Derivatives for further information.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

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

Note 8— Inventory Financing Agreements

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Supply and Offtake Agreement

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Supply and Offtake Agreement

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

Under the Second Amended and Restated Supply and Offtake Agreement (as amended, the “Supply and Offtake

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2023 and 2022

Agreement”), J.

Aron & Company LLC (“J.

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

As of September 30, 2022, we had no obligations due to J.

Aron under this contractual undertakings agreement.

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

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

As of September 30, 2022 and December 31, 2021, our outstanding balance under the Discretionary Draw Facility was equal to our borrowing base of $ 147.1 million and $ 126.2 million, respectively.

On April 25, 2022, we entered into an amendment (the “S&O 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.

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Aron based on changes in market prices over time.

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

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

The amount due to or from J.

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

In 2021 and 2022, we entered into multiple contracts to fix certain market fees for the period from January 2022 through May 2022 for $ 8.7 million.

In 2023, we did not enter into any contracts to fix market fees related to our Supply and Offtake Agreement.

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

Aron as of September 30, 2022.

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

We did no t recognize any fixed market fees for the three months ended September 30, 2022.

We recognized fixed market fees of $ 8.8 million for the nine months ended September 30, 2022, and $ 6.0 million and $ 7.7 million for the three and nine months ended September 30, 2021, respectively, which were included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

Aron as of March 31, 2023 and December 31, 2022.

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.

We did not recognize any fixed market fees for the three months ended March 31, 2023.

We recognized fixed market fees of $ 7.3 million for the three months ended March 31, 2022, which were included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

Washington Refinery Intermediation Agreement

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

As of September 30, 2022 and December 31, 2021, our outstanding balance under the MLC receivable advances was equal to our borrowing base of $ 81.9 million and $ 54.5 million, respectively.

Additionally, as of September 30, 2022, and December 31, 2021, we had approximately $ 194.2 million and $ 167.0 million in letters of credit outstanding through MLC’s credit support, respectively.

On November 2, 2022, we and MLC amended the Washington Refinery Intermediation Agreement to further extend the term through March 31, 2024 and reduce the maximum borrowing capacity to $ 110 million.

On February 28, 2023, we and MLC amended the Washington Refinery Intermediation Agreement to facilitate entry into the Term Loan Credit Agreement.

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

March 31, 2023 December 31, 2022

Discretionary Draw Facility

Outstanding borrowings (1)

$ 186,965 $ 204,843

Borrowing capacity

186,965 204,843

MLC receivable advances

Outstanding borrowings (1)

96,886 56,601

Borrowing capacity

96,886 56,601

Aron payment undertaking obligations — —

MLC issued letters of credit 94,440 115,001

PAR PACIFIC HOLDINGS, INC.

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

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

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

For the Interim Periods Ended March 31, 2023 and 2022

______________________________________________________

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

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

Three Months Ended March 31,

Net fees and expenses:

6 unchanged sentences

___________________________________________________

(1) Inventory intermediation fees under the Supply and Offtake Agreement include market structure fees of $ 30.2 million and $ 0.8 million for the three months ended September 30, 2022 and 2021, and $ 54.1 million and $ 1.9 million for the nine months ended September 30, 2022 and 2021, respectively.

(1) Inventory intermediation fees under the Supply and Offtake Agreement include market structure fees of $ 2.4 million and $ 4.4 million for the three months ended March 31, 2023 and 2022, respectively.

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.

1 unchanged sentence

Note 9— Other Accrued Liabilities

Other accrued liabilities at September 30, 2022 and December 31, 2021 consisted of the following (in thousands):

September 30, 2022 December 31, 2021

Other accrued liabilities at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

March 31, 2023 December 31, 2022

Accrued payroll and other employee benefits $ 11,519 $ 27,815

3 unchanged sentences

___________________________________________________

(1) Gross environmental credit obligations are stated at market as of September 30, 2022 and December 31, 2021.

(1) Gross environmental credit obligations are stated at market as of March 31, 2023 and December 31, 2022.

Please read Note 12—Fair Value Measurements for further information.

A portion of these obligations are expected to be settled with our RINs assets and other environmental credits, which are presented as Inventories on our condensed consolidated balance sheet and are stated at the lower of cost and net realizable value.

The carrying costs of these assets were $ 194.0 million and $ 120.1 million as of September 30, 2022 and December 31, 2021, respectively.

The carrying costs of these assets were $ 193.2 million and $ 258.2 million as of March 31, 2023 and December 31, 2022, respectively.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2023 and 2022

Note 10— Debt

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

ABL Credit Facility due 2025 $ — $ —

Term Loan Credit Agreement due 2030

7.75 % Senior Secured Notes due 2025

281,000 296,000

Term Loan B due 2026 — 203,125

12.875 % Senior Secured Notes due 2026

31,314 68,250

Principal amount of long-term debt 550,000 515,439

3 unchanged sentences

Long-term debt, net of current maturities $ 530,574 $ 494,576

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

As of September 30, 2022 and December 31, 2021, we had $ 30.9 million and $ 18.5 million, respectively, in letters of credit outstanding under the loan and security agreements with certain lenders and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Credit Facility”).

We had $ 5.9 million in cash-collateralized letters of credit and surety bonds outstanding as of September 30, 2022 and December 31, 2021 under agreements with MLC and under certain other facilities.

Under the ABL Credit Facility, the indentures governing the 7.75 % Senior Secured Notes and 12.875 % Senior Secured Notes, and the term loan facility with Goldman Sachs Bank USA (the “Term Loan B Facility”), our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

As of March 31, 2023 and December 31, 2022, we had $ 13.9 million and $ 19.5 million, respectively, in letters of credit outstanding under the loan and security agreements with certain lenders and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Credit Facility”).

We had $ 6.0 million in cash-collateralized letters of credit and surety bonds outstanding as of March 31, 2023 and December 31, 2022 under agreements with MLC and under certain other facilities.

Under the ABL Credit Facility and the Term Loan Credit Agreement due 2030, our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

ABL Credit Facility

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

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

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

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

On February 2, 2022, Par Petroleum, LLC, Par Hawaii, 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., which amended and restated the Loan and Security Agreement dated as of December 21, 2017, in its entirety.

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

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 of the ABL Loan Agreement.

On March 30, 2022, the ABL Loan Agreement was amended to exercise the accordion feature of the ABL Loan Agreement.

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

As of September 30, 2022, the ABL Revolver had no outstanding revolving loans, $ 30.9 million in letters of credit outstanding, and a borrowing base of approximately $ 116.4 million.

As of March 31, 2023, the ABL Revolver had no outstanding revolving loans, $ 13.9 million in letters of credit outstanding, and a borrowing base of approximately $ 103.0 million.

On April 26, 2023, we terminated the ABL Revolver and entered into a new ABL Credit Agreement.

Please read Note 19—Subsequent Events for further information about the ABL Credit Agreement.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2023 and 2022

Term Loan Credit Agreement due 2030

On February 28, 2023, we entered into a term loan credit agreement (the “Term Loan Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent (the “Agent”), and the lenders party thereto (“Lenders”).

Pursuant to the Term Loan Credit Agreement, the Lenders made an initial senior secured term loan in the principal amount of $ 550.0 million at a price equal to 98.5 % of its face value.

The initial loan bears interest at SOFR, as defined below.

The net proceeds were used to refinance our existing Term Loan B Facility and repurchase our outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes and any remaining net proceeds are expected to be used for general corporate purposes.

We recognized an aggregate of $ 2.8 million in debt modification costs in connection with the refinancing, which were recorded in Debt extinguishment and commitment costs on our condensed consolidated statement of operations for the three months ended March 31, 2023.

The Term Loan Credit Agreement bears interest at a fluctuating rate per annum equal to either a SOFR rate or base rate “Base Rate”, provided that the Base Rate shall not be below 1.5 %, as defined in the Term Loan Credit Agreement.

The SOFR rate and Base Rate definitions are summarized below:

SOFR Rate loan Secured overnight financing rate plus the applicable margin of 4.250 % per annum with a stepdown in the applicable margin of 0.25 % in the event the Company’s credit rating is upgraded to Ba3/BB-,

Base Rate loan A per annum rate plus the applicable margin of 3.250 %.

The base rate is the greatest of:

• 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 0.5 %;

• a rate equal to adjusted term SOFR for a one month interest period as of such day plus 1.0 %;

• a rate as announced by Wells Fargo (the “Prime Rate”).

The Term Loan Credit Agreement requires quarterly payments of $ 1.4 million on the last business day of each March, June, September and December, commencing on June 30, 2023, with the balance due upon maturity.

The Term Loan Credit Agreement matures on February 28, 2030.

7.75% Senior Secured Notes due 2025

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

On 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 condensed consolidated statement of operations for the nine months ended September 30, 2022.

As of September 30, 2022, the 7.75% Senior Secured Notes had an outstanding principal balance of $ 281.0 million.

On February 28, 2023, we repurchased and cancelled $ 260.6 million in aggregate principal amount of the 7.75% Senior Secured Notes at a repurchase price of 102.120 % of the aggregate principal amount repurchased.

On March 17, 2023, we repurchased and cancelled all remaining outstanding 7.75% Senior Secured Notes at a repurchase price of 101.938 % of the aggregate principal amount repurchased.

In connection with the termination of the 7.75% Senior Secured Notes, we recognized debt extinguishment costs of $ 5.9 million associated with debt repurchase premiums and $ 3.4 million associated with unamortized deferred financing costs, which were recorded in Debt extinguishment and commitment costs on our condensed consolidated statement of operations for the three months ended March 31, 2023.

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

Term Loan B Facility due 2026

On February 28, 2023, we terminated and repaid all amounts outstanding under the Term Loan B Facility.

We recognized debt extinguishment costs of $ 1.7 million associated with unamortized deferred financing costs, which were recorded in Debt extinguishment and commitment costs on our condensed consolidated statement of operations for the three months ended March 31, 2023.

The Term Loan B Facility bore interest at a rate per annum equal to Adjusted LIBOR (as defined in the Term Loan B Facility) plus an applicable margin of 6.75 % or at a rate per annum equal to Alternate Base Rate (as defined in the Term Loan B Facility) plus an applicable margin of 5.75 %.

In addition to the quarterly interest payments, the Term Loan B Facility required quarterly principal payments of $ 3.1 million.

The Term Loan B Facility was due to mature on January 11, 2026.

12.875% Senior Secured Notes due 2026

The 12.875% Senior Secured Notes bear interest at an annual rate of 12.875 % per year (payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2021) and will mature on January 15, 2026.

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 nine months ended September 30, 2022.

We incurred aggregate debt extinguishment costs of $ 1.6 million for these repurchases, which were recorded in Debt extinguishment and commitment costs on our condensed consolidated statement of operations for the nine months ended September 30, 2022.

As of September 30, 2022, $ 31.3 million in aggregate principal amount of the 12.875% Senior Secured Notes remained outstanding.

On February 28, 2023, we repurchased and cancelled $ 29 million in aggregate principal amount of the 12.875% Senior Secured Notes at a repurchase price of 109.044 % of the aggregate principal amount repurchased.

On March 17, 2023, we repurchased and cancelled all remaining outstanding 12.875% Senior Secured Notes at a repurchase price of 108.616 % of the aggregate principal amount repurchased.

In connection with the termination of the 12.875% Senior Secured Notes, we recognized debt extinguishment costs of $ 2.8 million associated with debt repurchase premiums and $ 1.1 million associated

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

For the Interim Periods Ended March 31, 2023 and 2022

with unamortized deferred financing costs, which were recorded in Debt extinguishment and commitment costs on our condensed consolidated statement of operations for the three months ended March 31, 2023.

The 12.875% Senior Secured Notes bore interest at an annual rate of 12.875 % per year (payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2021) and were due to mature on January 15, 2026.

Cross Default Provisions

Included within each of our debt agreements are affirmative and negative covenants, and customary cross default provisions, that require the repayment of amounts outstanding on demand unless the triggering payment default or acceleration is remedied, rescinded, or waived.

As of September 30, 2022, we were in compliance with all of our debt instruments.

As of March 31, 2023, we were in compliance with all of our debt instruments.

In connection with our shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission (“SEC”) and became automatically effective on February 14, 2022 (“Registration Statement”), we may sell non-convertible debt securities and other securities in one or more offerings with an aggregate initial offering price of up to $ 750.0 million.

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

We have no “independent assets or operations” within the meaning of Rule 3-10 of Regulation S-X and certain of the Guarantor Subsidiaries may be subject to restrictions on their ability to distribute funds to us, whether by cash dividends, loans, or advances.

We have excluded the summarized financial information for the Guarantor Subsidiaries as the assets and results of operations of the Company and the Guarantor Subsidiaries are not materially different than the corresponding amounts presented on our consolidated financial statements.

Note 11— Derivatives

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Our cash margin that is required as collateral deposits cannot be offset against the fair value of open contracts except in the event of default.

Our open futures and over-the-counter (“OTC”) swaps at September 30, 2022, will settle by October 2023.

At September 30, 2022, our open commodity derivative contracts represented (in thousands of barrels):

Our open futures and over-the-counter (“OTC”) swaps at March 31, 2023, will settle by June 2024.

At March 31, 2023, our open commodity derivative contracts represented (in thousands of barrels):

Contract Type Purchases Sales Net

2 unchanged sentences

Total 52,411 ( 54,901 ) ( 2,490 )

At September 30, 2022, we also had option collars that economically hedge a portion of our internally consumed fuel at our refineries.

The following table provides information on these option collars at our refineries as of September 30, 2022:

At March 31, 2023, we also had option collars that economically hedge a portion of our internally consumed fuel at our refineries.

The following table provides information on these option collars at our refineries as of March 31, 2023:

Average barrels per month 125,000

1 unchanged sentence

Weighted-average strike price - ceiling (in dollars) $ 91.20

Earliest commencement date October 2022 January 2023

Furthest expiry date December 2022 June 2023

Earliest commencement date April 2023

Furthest expiry date December 2023

Interest Rate Derivatives

We are exposed to interest rate volatility in our ABL Revolver, Term Loan B Facility, Supply and Offtake Agreement, and Washington Refinery Intermediation Agreement.

We are exposed to interest rate volatility in our ABL Revolver, Term Loan Credit Agreement, Supply and Offtake Agreement, and Washington Refinery Intermediation Agreement.

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

In May 2019, we entered into an interest rate swap at an average fixed rate of 3.91 % in exchange for the floating interest rate on the notional amounts due under the term loan agreement entered into by Par Pacific Hawaii Property Company, LLC, our wholly owned subsidiary, and Bank of Hawaii on March 29, 2019 (the “Retail Property Term Loan”).

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

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

At September 30, 2022, and December 31, 2021, we did not hold any interest rate derivative instruments.

As of March 31, 2023 and December 31, 2022, we did not hold any interest rate derivative instruments.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

The following table provides information on the fair value amounts (in thousands) of these derivatives as of September 30, 2022, and December 31, 2021, and their placement within our condensed consolidated balance sheets.

Balance Sheet Location September 30, 2022 December 31, 2021

For the Interim Periods Ended March 31, 2023 and 2022

The following table provides information on the fair value amounts (in thousands) of these derivatives as of March 31, 2023 and December 31, 2022, and their placement within our condensed consolidated balance sheets.

Balance Sheet Location March 31, 2023 December 31, 2022

Asset (Liability)

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_________________________________________________________

(1) Does not include cash collateral of $ 23.3 million and $ 6.1 million recorded in Prepaid and other current assets as of September 30, 2022, and December 31, 2021, respectively, and $ 9.5 million in Other long-term assets as of both September 30, 2022, and December 31, 2021.

(1) Does not include cash collateral of $ 18.9 million and $ 40.8 million recorded in Prepaid and other current assets as of March 31, 2023 and December 31, 2022, respectively, and $ 9.5 million in Other long-term assets as of both March 31, 2023 and December 31, 2022.

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

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

Three Months Ended March 31,

Statement of Operations Location 2023 2022

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MLC terminal obligation derivative Cost of revenues (excluding depreciation) ( 17,023 ) ( 64,396 )

Interest rate derivatives Interest expense and financing costs, net — — — 104

Note 12— Fair Value Measurements

14 unchanged sentences

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

Such contractual differentials vary by location and by the type of product, have a weighted average premium of $ 14.75 , and range from a discount of $ 17.55 per barrel to a premium of $ 55.31 per barrel as of September 30, 2022.

Such contractual differentials vary by location and by the type of product, have a weighted average premium of $ 11.67 , and range from a discount of $ 8.99 per barrel to a premium of $ 53.79 per barrel as of March 31, 2023.

Contractual price differentials are considered unobservable inputs;

therefore, these embedded derivatives are classified as Level 3 instruments.

We did not have

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

other commodity derivatives classified as Level 3 at September 30, 2022, or December 31, 2021.

We did not have other commodity derivatives classified as Level 3 at March 31, 2023, or December 31, 2022.

Please read Note 11—Derivatives for further information on derivatives.

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Estimates of our gross environmental credit obligations are based on the amount of RINs or other environmental credits required to comply with U.S.

Environmental Protection Agency (“EPA”) regulations and the market prices of those RINs or other environmental credits as of the end of the reporting period.

Environmental Protection Agency (“EPA”) and the State of Washington’s regulations and

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2023 and 2022

the market prices of those RINs or other environmental credits as of the end of the reporting period.

The gross environmental credit obligations are classified as Level 2 instruments as we obtain the pricing inputs for our RINs and other environmental credits from brokers based on market quotes on similar instruments.

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

Please read Note 14—Commitments and Contingencies for further information on the EPA and the State of Washington’s regulations related to greenhouse gases.

Financial Statement Impact

Fair value amounts by hierarchy level as of September 30, 2022, and December 31, 2021, are presented gross in the tables below (in thousands):

September 30, 2022

Fair value amounts by hierarchy level as of March 31, 2023 and December 31, 2022, are presented gross in the tables below (in thousands):

March 31, 2023

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

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(1) Does not include cash collateral of $ 23.3 million and $ 6.1 million as of September 30, 2022, and December 31, 2021, respectively, included within Prepaid and other current assets and $ 9.5 million included within Other long-term assets as of September 30, 2022, and December 31, 2021, on our condensed consolidated balance sheets.

(1) Does not include cash collateral of $ 28.4 million and $ 50.3 million as of March 31, 2023 and December 31, 2022, respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.

(2) Does not include RINs assets and other environmental credits of $ 193.2 million and $ 258.2 million presented as Inventories on our condensed consolidated balance sheet and stated at the lower of cost and net realizable value as of March 31, 2023 and December 31, 2022, respectively.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

(2) Does not include RINs assets and other environmental credits of $ 194.0 million and $ 120.1 million presented as Inventories on our condensed consolidated balance sheet and stated at the lower of cost and net realizable value as of September 30, 2022, and December 31, 2021, respectively.

For the Interim Periods Ended March 31, 2023 and 2022

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Balance, at beginning of period $ 2,279 $ ( 37,321 )

Settlements ( 4,615 ) 92,308

Total gains (losses) included in earnings (1) 77,274 ( 14,641 ) ( 42,958 ) ( 75,559 )

Total losses included in earnings (1) ( 3,643 ) ( 107,665 )

Balance, at end of period $ ( 5,979 ) $ ( 52,678 )

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(1) Included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

The carrying value and fair value of long-term debt and other financial instruments as of September 30, 2022 and December 31, 2021 are as follows (in thousands):

September 30, 2022

The carrying value and fair value of long-term debt and other financial instruments as of March 31, 2023 and December 31, 2022 are as follows (in thousands):

March 31, 2023

Carrying Value Fair Value

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

7.75 % Senior Secured Notes due 2025 (1)

276,824 268,074

Term Loan B Facility due 2026 (1) 200,913 202,641

12.875 % Senior Secured Notes due 2026 (1)

Term Loan Credit Agreement due 2030 (1)

534,321 539,715

8 unchanged sentences

_________________________________________________________

(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.

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

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

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

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

The carrying value of our ABL Credit Facility was determined to approximate fair value as of September 30, 2022.

The fair value of the Term Loan Credit Agreement, 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 Term Loan Credit Agreement, 7.75 % Senior Secured Notes, Term Loan B Facility, and 12.875 % Senior Secured Notes may not be actively traded.

The carrying value of our ABL Credit Facility was determined to approximate fair value as of March 31, 2023.

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.

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

The following table provides information on the amounts (in thousands) of our right-of-use assets (“ROU assets”) and liabilities as of September 30, 2022 and December 31, 2021 and their placement within our condensed consolidated balance sheets:

Lease type Balance Sheet Location September 30, 2022 December 31, 2021

For the Interim Periods Ended March 31, 2023 and 2022

The following table provides information on the amounts (in thousands) of our right-of-use assets (“ROU assets”) and liabilities as of March 31, 2023 and December 31, 2022 and their placement within our condensed consolidated balance sheets:

Lease type Balance Sheet Location March 31, 2023 December 31, 2022

Finance Property, plant, and equipment $ 21,881 $ 21,150

8 unchanged sentences

Total lease liabilities $ 356,387 $ 366,875

The following table summarizes the weighted-average lease terms and discount rates of our leases as of September 30, 2022 and December 31, 2021:

September 30, 2022 December 31, 2021

The following table summarizes the weighted-average lease terms and discount rates of our leases as of March 31, 2023 and December 31, 2022:

March 31, 2023 December 31, 2022

Weighted-average remaining lease term (in years)

5 unchanged sentences

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

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

Three Months Ended March 31,

Lease cost (income) type 2023 2022

8 unchanged sentences

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(1) 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.

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

(1) 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.

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.

For the Interim Periods Ended March 31, 2023 and 2022

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

Nine Months Ended September 30,

Three Months Ended March 31,

Lease type 2023 2022

7 unchanged sentences

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

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of September 30, 2022 (in thousands):

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of March 31, 2023 (in thousands):

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

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

(1) Represents the period from April 1, 2023 to December 31, 2023.

Additionally, we have $ 3.8 million and $ 12.4 million in future undiscounted cash flows for finance and operating leases that have not yet commenced, respectively.

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

Sale-Leaseback Transactions

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

We recognized a gain of $ 63.9 million as a result of these transactions, which is included in Loss (gain) on sale of assets, net on our condensed consolidated statements of operations for the nine months ended September 30, 2021.

Note 14— Commitments and Contingencies

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

Tax and Related Matters

1 unchanged sentence

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

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

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

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 the Hawaii foreign trade zone from certain state taxes.

We and other similarly situated state taxpayers who had previously claimed such exemptions 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.

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

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

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2023 and 2022

vigorously defend ourselves in such proceeding.

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

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The largest cost component arising from these various decrees relates to the investigation, monitoring, and remediation of soil, groundwater, surface water, and sediment contamination associated with the facility’s historic operations.

Investigative work by Wyoming Refining and negotiations with the relevant agencies as to remedial approaches remain ongoing on a number of aspects of the contamination, meaning that investigation, monitoring, and remediation costs are not reasonably estimable for some elements of these efforts.

As of September 30, 2022, we have accrued $ 15.0 million for the well-understood components of these efforts based on current information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 30 years.

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 March 31, 2023, 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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Although the frequency of these exceedances has declined over time, Wyoming Refining may become subject to new penalty enforcement action in the next several years, which could involve penalties in excess of $ 300,000 .

Washington Climate Commitment Act and Clean Fuel Standard

In 2021, the Washington legislature passed the Climate Commitment Act (“Washington CCA”), which established a cap and invest program designed to significantly reduce greenhouse gas emissions.

Rules implementing the Washington CCA by the Washington Department of Ecology set a cap on greenhouse gas emissions, provide mechanisms for the sale and tracking of tradable emissions allowances, and establish additional compliance and accountability measures.

The Washington CCA became effective in January 2023 and the first auction for emissions allowances took place in February 2023.

Additionally, a low carbon fuel standard (the “Clean Fuel Standard”) that limits carbon in transportation fuels and enables certain producers to buy or sell credits was also signed into law and became effective in 2023.

We will be required to purchase compliance credits or allowances if we are unable to reduce emissions at our Tacoma refinery or reduce the amount of carbon in the transportation fuels we sell in Washington, which could have a material impact on our financial condition, results of operations, or cash flows.

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.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

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.

Several states have also passed legislation related to GHGs.

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

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

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

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

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

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

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

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.

Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply.

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.

As of September 30, 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.

Additionally, the RFS enables the EPA to exempt certain small refineries from the renewable fuels blending requirements in the event such requirements would cause disproportionate economic hardship to that refinery.

We petitioned the EPA for a small refinery waiver for certain of our refineries for 2019-2020, but in January 2021, the EPA announced it would cease granting hardship exemptions to small refineries that had not received continuous exemptions since 2011.

In HollyFrontier Cheyenne Refining, LLC v.

Renewable Fuels Association, the United States Supreme Court recently held that the CAA authorizes the EPA to exempt a small refinery from compliance with the renewable fuel standards program even if the small refinery had not received an exemption in each year since the program began in 2011.

On June 3, 2022, the EPA denied our pending small refinery exemption applications for 2019-2020.

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 on our Annual Report on Form 10-K for the year ended December 31, 2022.

As of March 31, 2023, our estimate of the renewable volume obligation

PAR PACIFIC HOLDINGS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

For the Interim Periods Ended March 31, 2023 and 2022

(“RVO”) liability for the 2020 and 2022 compliance years is based on the RFS volumetric requirements which the EPA finalized on June 3, 2022.

Our RVO liability for the 2023 compliance year is based on the RFS volumetric requirements that were proposed on December 1, 2022.

During the three months ended March 31, 2023, we settled a portion of our 2020 and all of our 2021 RVO liabilities, which resulted in a gain of $ 94.7 million associated with the difference between the carrying value of the RINs retired and the market value of the RVO settled.

This gain is included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

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.

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

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

However, on April 29, 2022, in response to supply challenges caused in part by Russia’s invasion of Ukraine, the EPA issued an emergency waiver to permit E15 sales during the summer of 2022.

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 Par East Hawaii refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016.

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

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

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

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”).

Environmental Agreement

On September 25, 2013, Par Petroleum, LLC (formerly Hawaii Pacific Energy, a wholly owned subsidiary of Par created for purposes of the acquisition of PHR), Tesoro Corporation (“Tesoro”), and PHR entered into an Environmental Agreement (“Environmental Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR, including a consent decree.

Indemnification

In addition to its obligation to reimburse us for capital expenditures incurred pursuant to a consent decree, Tesoro agreed to indemnify us for claims and losses arising out of related breaches of Tesoro’s representations, warranties, and covenants in the Environmental Agreement, certain defined “corrective actions” relating to pre-existing environmental conditions, third-party claims arising under environmental laws for personal injury or property damage arising out of or relating to releases of hazardous materials that occurred prior to the date of the closing of the PHR acquisition, any fine, penalty, or other cost assessed by a governmental authority in connection with violations of environmental laws by PHR prior to the date of the closing of the PHR acquisition, certain groundwater remediation work, fines, or penalties imposed on PHR by a consent decree related to acts or omissions of Tesoro prior to the date of the closing of the PHR acquisition, and claims and losses related to the Pearl City Superfund Site.

Tesoro’s indemnification obligations are subject to certain limitations as set forth in the Environmental Agreement.

These limitations include a deductible of $ 1 million and a cap of $ 15 million for certain of Tesoro’s indemnification obligations related to certain pre-existing conditions, as well as certain restrictions regarding the time limits for submitting notice and supporting documentation for remediation actions.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

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.

Recovery Trusts

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Government and Noble Energy, Inc.

As of September 30, 2022, two related claims totaling approximately $ 22.4 million remained to be resolved and we have accrued approximately $ 0.5 million representing the estimated value of claims remaining to be settled which are deemed probable and estimable at period end.

As of March 31, 2023, two related claims totaling approximately $ 22.4 million remained to be resolved and we have accrued approximately $ 0.5 million representing the estimated value of claims remaining to be settled which are deemed probable and estimable at period end.

One of the two remaining claims was filed by the U.S.

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

During the three and nine months ended September 30, 2022, 58 thousand and 420 thousand shares were repurchased under this share repurchase program for $ 0.8 million and $ 5.8 million, respectively.

During the three months ended March 31, 2022, 362 thousand shares were repurchased under this share repurchase program for $ 5 million.

During the three months ended March 31, 2023, no shares were repurchased under this share repurchase program.

As of March 31, 2023, there was $ 43.5 million of authorization remaining under this share repurchase program.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2023 and 2022

Incentive Plans

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Restricted Stock Awards $ 1,395 $ 1,749

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Stock Option Awards 414 1,236

During the three and nine months ended September 30, 2022, we granted 40 thousand and 437 thousand shares of restricted stock and restricted stock units with a fair value of approximately $ 0.6 million and $ 6.5 million, respectively.

As of September 30, 2022, there were approximately $ 9.8 million of total unrecognized compensation costs related to restricted stock awards and restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.8 years.

During the nine months ended September 30, 2022, we granted 449 thousand stock option awards with a weighted-average exercise price of $ 14.91 per share.

No grants were made for the three months ended September 30, 2022.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

September 30, 2022, there were approximately $ 4.2 million of total unrecognized compensation costs related to stock option awards, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.9 years.

During the nine months ended September 30, 2022, we granted 50 thousand performance restricted stock units to executive officers.

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

No grants were made for the three months ended September 30, 2022.

As of September 30, 2022, there were approximately $ 0.9 million of total unrecognized compensation costs related to the performance restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.9 years.

The following table summarizes our grant activity related to our stock based incentive plan during the period, including the number of granted shares, options, awards, or units;

the fair value as of the grant date;

total unrecognized compensation costs as of the period end;

and the weighted-average period in years over which the compensation costs are expected to be recognized (in thousands except weighted average period):

Three Months Ended March 31, 2023

Awards granted Fair value Unrecognized compensation costs Weighted average period

Restricted Stock Awards and Restricted Stock Units 303 $ 8,269 $ 15,432 1.8 years

Stock Option Awards (1) — — 3,297 1.7 years

Performance Restricted Stock Units (2) 90 2,476 2,968 2.6 years

_________________________________________________________

(1) There were no stock option awards granted for the period.

(2) Performance restricted stock units are subject to certain annual performance targets based on three-year-performance periods as defined by our Board of Directors.

Note 16— Income (Loss) per Share

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Net income (loss) $ 237,890 $ ( 137,051 )

Undistributed income allocated to participating securities — — — —

Net income (loss) attributable to common stockholders 267,396 81,802 279,470 ( 89,383 )

Net income effect of convertible securities — —

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Shares of stock options — 2,405

Common stock equivalents using the if-converted method of settling the 5.00 % Convertible Senior Notes (2)

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended March 31, 2023 and 2022

_________________________________________________________

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

We have utilized the basic shares outstanding to calculate both basic and diluted Net Loss per common share for the nine months ended September 30, 2021.

(2) We had no 5.00 % Convertible Senior Notes outstanding for the three and nine months ended September 30, 2022, and the three months ended September 30, 2021.

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

Note 17— Income Taxes

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

Management continues to conclude that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets on the remaining amounts and a valuation allowance has been recorded for substantially all of our net deferred tax assets at September 30, 2022 and December 31, 2021.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

We believe that any adjustment to our uncertain tax positions would no t have a material impact on our financial statements given the Company’s deferred tax and corresponding valuation allowance position as of September 30, 2022 and December 31, 2021.

As of December 31, 2022, we had approximately $ 1.2 billion in net operating loss carryforwards (“NOL carryforwards”);

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

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

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

Cost of revenues (excluding depreciation)

1,629,019 28,482 115,574 ( 130,449 ) 1,642,626

Operating expense (excluding depreciation)

63,049 3,710 21,570 — 88,329

Depreciation and amortization 16,542 5,059 2,865 659 25,125

Loss (gain) on sale of assets, net — ( 241 ) 56 — ( 185 )

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

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

Interest expense and financing costs, net ( 16,852 )

Debt extinguishment and commitment costs 343

Other expense, net ( 198 )

Income before income taxes 267,464

Income tax expense ( 68 )

Net income $ 267,396

Capital expenditures $ 3,754 $ 2,967 $ 2,135 $ 182 $ 9,038

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

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

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

Cost of revenues (excluding depreciation)

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

Operating expense (excluding depreciation)

55,613 3,754 18,692 — 78,059

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

Loss on sale of assets, net — 2 — — 2

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

Acquisition and integration costs — — — 1 1

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

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

Debt extinguishment and commitment costs ( 9 )

Other expense, net ( 22 )

Income before income taxes 82,388

Income tax expense ( 586 )

Net income $ 81,802

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

________________________________________________________

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

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

Three Months Ended March 31, 2023 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,615,412 $ 52,388 $ 135,572 $ ( 118,163 ) $ 1,685,209

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Depreciation and amortization 15,723 5,034 3,079 524 24,360

Loss (gain) on sale of assets, net — ( 253 ) 56 27 ( 170 )

General and administrative expense (excluding depreciation) — — — 19,286 19,286

Acquisition and integration costs — — — 5,271 5,271

Par West redevelopment and other costs — — — 2,750 2,750

Operating income (loss) $ 263,137 $ 12,608 $ 13,474 $ ( 27,817 ) $ 261,402

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Other expense, net ( 35 )

Equity earnings from Laramie Energy, LLC 10,706

Income before income taxes 238,103

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Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

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

For the Interim Periods Ended March 31, 2023 and 2022

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

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

4 unchanged sentences

Depreciation and amortization 15,333 5,087 2,691 669 23,780

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

General and administrative expense (excluding depreciation) — — — 15,893 15,893

2 unchanged sentences

Interest expense and financing costs, net ( 16,394 )

Debt extinguishment and commitment costs ( 8,144 )

Gain on curtailment of pension obligation 2,032

Other income, net 2

Loss before income taxes ( 137,488 )

Income tax expense ( 1,193 )

Income tax benefit 437

Net loss $ ( 137,051 )

1 unchanged sentence

________________________________________________________

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

Note 18— Related Party Transactions

Equity Group Investments (“EGI”) - Service Agreement

On September 17, 2013, we entered into a letter agreement (“Services Agreement”) with Equity Group Investments (“EGI”), an affiliate of Zell Credit Opportunities Fund, LP (“ZCOF”), which owned 5 % or more of our common stock directly or through affiliates during the third quarter of 2022.

Pursuant to the Services Agreement, EGI agreed to provide us with ongoing strategic, advisory, and consulting services that may include (i) advice on financing structures and our relationship with lenders and bankers, (ii) advice regarding public and private offerings of debt and equity securities, (iii) advice regarding asset dispositions, acquisitions, or other asset management strategies, (iv) advice regarding potential business acquisitions, dispositions, or combinations involving us or our affiliates, or (v) such other advice directly related or ancillary to the above strategic, advisory, and consulting services as may be reasonably requested by us.

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 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.

There were no costs incurred related to this agreement during the three and nine months ended September 30, 2022 or 2021.

PAR PACIFIC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2022 and 2021

(1) Includes eliminations of intersegment revenues and cost of revenues of $ 118.2 million and $ 111.3 million for the three months ended March 31, 2023 and 2022, respectively.

Note 19— Subsequent Events

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 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.

The Company will guarantee the payment and performance of the Purchasers’ obligations under the Purchase Agreement.

Asset-Based Revolving Credit Agreement

On April 26, 2023, we entered into an Asset-Based Revolving Credit Agreement (as amended from time to time, the “ABL Credit Agreement”) with certain lenders, and Wells Fargo Bank, National Association, as administrative agent and collateral agent, providing for a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $ 150 million.

and allows for an increase up to $ 450 million in conjunction with the planned Billings Acquisition (together, the “Facilities”).

Initially the ABL Credit Agreement permits the issuance of letters of credit of up to $ 65 million, with an increase to $ 250 million in conjunction with the Billings Acquisition.

The ABL Credit Agreement allows us to request an increase in the commitment under the Facilities of up to $ 250 million.

The Facilities will mature and the commitments thereunder will terminate five years after the Closing Date and are secured by a first priority lien over certain of our assets and other personal property, subject to certain customary exceptions.

The interest rates applicable to borrowings under the Facilities are based on a fluctuating rate of interest measured by reference to either, at the our option, (i) a base rate, plus an applicable margin, or (ii) a Adjusted Term Secured Overnight Financing Rate (“SOFR”), plus an applicable margin.

The initial applicable margin for borrowings under the Facilities is 0.50 % per annum with respect to base rate borrowings and 1.50 % per annum with respect to SOFR borrowings, and the applicable margin for such borrowings after June 30, 2023 will be based on the our quarterly average excess availability as determined by reference to a borrowing base, ranging from 0.25 % per annum to 0.75 % per annum with respect to base rate borrowings and from 1.25 % per annum to 1.75 % per annum with respect to SOFR borrowings.

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

The ABL Credit Agreement includes certain customary affirmative and negative covenants, including a minimum financial coverage fixed charge coverage ratio and a minimum Borrower Group Fixed Charge Coverage Ratio.

In addition, the covenants limit the our ability and the ability of our restricted subsidiaries to incur indebtedness, grant liens, make investments, engage in acquisitions, mergers, or consolidations, engage in certain hedging transactions, and pay dividends and other restricted payments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements