What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-02-27 · 357 added, 293 removed, 624 unchanged (51% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a growth-oriented company based in Houston, Texas, that owns and operates market-leading energy and infrastructure businesses.

We are a growing energy company based in Houston, Texas, that provides both renewable and conventional fuels to the western United States.

For more information, please read “Part I –Item 1.

14 unchanged sentences

Recent Events Affecting Comparability of Periods

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

inflation affected most Americans.

Following gasoline price highs of approximately $5 per gallon in summer 2022, prices at the pump fell from June through December, reaching a national average of $3.11 per gallon.

Even with these declines, the overall energy index was up 7.3% year over year as of December 2022.

Rising energy prices are, among other factors, indicators of inflation, and the U.S.

Federal Reserve (the “Fed”) has taken significant steps to curb inflation, increasing its benchmark interest rate six times throughout 2022, from near zero percent at the beginning of 2022 to a range of 4.25% to 4.5% in December 2022.

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

inflation rates, which have increased 6.5% year over year as of the December inflation report released in January 2023, by slowing economic and wage growth.

While inflation has increased relative to prior years, we do not believe that inflation has had a material effect on our business, financial condition or results of operations.

Energy prices are, among other factors, indicators of inflation, and the U.S.

Federal Reserve (the “Fed”) has taken significant steps to curb inflation, and continued to increase interest rates in 2023, from near zero percent at the beginning of 2022 to a range of 5.25% to 5.5% in December 2023.

These actions by the Fed acted to lower U.S.

inflation rates, which have decreased 3.4% year over year as of the December inflation report released in January 2024.

In 2023, the U.S.

retail price for regular-grade gasoline averaged $3.52 per gallon, a decrease from gasoline price highs of approximately $5.01 per gallon in summer 2022.

This decline was due, in part, to lower crude oil prices in 2023 compared to 2022 and higher gasoline inventories in the second half of 2023.

The overall energy index decreased to negative 2.0% year over year as of December 2023.

While inflation has improved relative to prior years, we do not believe that inflation has had a material effect on our business, financial condition or results of operations in 2023.

If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases, or price increases could lead to a decline in demand for our products, which could have a material effect on our business, financial condition, or results of operations.

Please read Item 1A.

— Risk Factors for more information on the general macroeconomic environment and its potential impacts on our business.

COVID-19 Pandemic

The ongoing spread of COVID-19, in conjunction with related government and other preventative measures taken to mitigate the spread of the virus, caused severe disruptions in the worldwide economy in 2020 and 2021, including the global demand for crude oil and refined products, the movement of people and goods in the United States, and the global supply chain for industrial and commercial production, all of which have in turn disrupted our businesses and operations.

As of December 2022, the COVID-19 outlook in regions in which we operate has improved significantly and restrictions have been relaxed.

This, combined with widespread vaccine availability, has lessened the perceived severity of the pandemic, leading to higher risk tolerance for individuals and increased travel and public contact in the regions in which we operate.

However, a resurgence of the virus or another pandemic event could cause a return to severe restrictions, leading to a deterioration of macroeconomic conditions and our industry.

The COVID-19 Pandemic.

Subsequent to the pandemic, and various preventive and mitigating measures taken in response, refined product demand has largely returned to 2019 levels.

Despite global additions to refining capacity, the availability of refining capacity has not kept pace with demand, and global refinery utilization is above normal levels.

Consequently, refining product margins have been consistently above pre-pandemic margins since the spring of 2022.

Another pandemic event could cause a return to severe restrictions, leading to a deterioration of macroeconomic conditions and our industry.

For more information, please read “Item 1.

— Business — Markets” of this Form 10-K.

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

However, even with the eased restrictions and increased risk tolerance of individuals, economic effects of the pandemic are ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

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

Please read Item 1A.

— Risk Factors for more information on the impact of the COVID-19 pandemic and its potential impacts on our business.

Russia-Ukraine conflict

In response to the Russian invasion of Ukraine in February 2022, the international community imposed economic sanctions and other limitations on Russian exports, which further decreased the global supply and drove up the price of crude

On March 3, 2022, we suspended purchases of Russian crude oil for our Hawaii refinery in response to the Russia-Ukraine conflict.

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

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

In response, the Organization of the Petroleum Exporting Companies (“OPEC”) announced on October 5, 2022, that it would cut production by two million barrels a day (representing approximately 2% of global oil production) with the intention of raising global oil prices.

As of December 2022, OPEC and Russia reaffirmed this production cut, and the European Union has enacted an embargo on Russian oil, further tightening supply.

The European Union has also announced that it will implement a limited ban on the purchase of Russian refined and intermediate petroleum products effective February 2023.

The overall effect of the conflict and associated actions taken to limit the purchase of Russian petroleum products has been to raise the operating costs of many European and other refineries.

As a result, global product cracks have risen to high levels, generally benefiting refineries that are not purchasing Russian feedstocks or using natural gas as a heat source.

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

We will continue to monitor the effects the conflict has on the global financial markets and our operations.

Geopolitical Conflicts.

Given the nature of our operations, including sourcing crude oil and feedstocks, geopolitical conflicts may affect our business and results of operations.

The Russia-Ukraine war, the Israel-Palestine conflict, Houthi attacks in the Red Sea, and Iranian activities in the Strait of Hormuz have all disrupted global trade patterns, increased crude oil price volatility, and increased freight costs and delivery times.

We continue to actively monitor the impact of these and other global situations on our people, operations, financial condition, liquidity, suppliers, customers, and industry, and are actively responding to the impacts that these matters have on our business.

Please read “Item 1A.

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

— Risk Factors” for more information on risks and uncertainties, including those related to economic factors, and their potential impacts on our business.

Results of Operations

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Our financial results for the year ended December 31, 2023 improved from a net income of $364.2 million for the year ended December 31, 2022 to $728.6 million for the year ended December 31, 2023.

The increase was driven by a $274.3 million increase in refining segment operating income, an increase of $116.0 million in income tax benefit, and a $15.7 million increase in logistics segment operating income, partially offset by a $29.0 million increase in general and administrative expenses, a $13.8 million increase in acquisitions and integration expenses related to our Billings Acquisition,

and a $2.4 million increase in expenses related to Par West operations and redevelopment.

Please read the discussions of segment and consolidated results below for additional information.

Adjusted EBITDA and Adjusted Net Income.

For the year ended December 31, 2023, Adjusted EBITDA was $696.2 million compared to $643.4 million for the year ended December 31, 2022.

The improvement was primarily related to an increase of $54.7 million in our refining segment, an increase of $22.3 million in our logistics segment, and an increase of $8.0 million in our retail segment, partially of fset by a decrease of $32.3 million in our corporate segment.

Please read the discussion of segment results below for additional information.

For the year ended December 31, 2023, Adjusted Net Income was $501.2 million compared to $474.7 million for the year ended December 31, 2022.

The improvement was primarily related to the same factors described above for the increase in Adjusted EBITDA partially offset by a $20.0 million increase in depreciation and amortization.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net Income (Loss).

1 unchanged sentence

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

These improvements were partially offset by unfavorable purchased product and crude oil differentials, unfavorable first in, first-out (“FIFO”) adjustments, increased intermediation fees of $79.0 million, and a $54.7 million increase in RINs expenses.

These improvements were partially offset by unfavorable purchased product and crude oil differentials, unfavorable FIFO adjustments, increased intermediation fees of $79.0 million, and a $54.7 million increase in RINs expenses.

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

Adjusted EBITDA and Adjusted Net Income.

Adjusted EBITDA and Adjusted Net Income (Loss).

For the year ended December 31, 2022, Adjusted EBITDA was $643.4 million compared to $125.6 million for the year ended December 31, 2021.

2 unchanged sentences

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

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Our financial results for the year ended December 31, 2021 improved from a net loss of $409.1 million for the year ended December 31, 2020 to net loss of $81.3 million for the year ended December 31, 2021.

The improvement was primarily driven by favorable refined product sales pricing and feedstock costs at our Hawaii refinery, partially offset by higher inventory financing costs at our Washington refinery related to rising inventory financing and product costs.

Other factors impacting our results period over period include a 2021 gain on sale of assets of $63.9 million primarily related to the Sale-Leaseback Transactions we closed in the first quarter of 2021, asset impairment charges of $1.8 million in 2021 as compared to our 2020 goodwill impairment of $67.9 million and asset impairment charges of $17.9 million, and an other-than-temporary impairment of $45.3 million related to our equity investment in Laramie Energy in 2020.

Adjusted EBITDA and Adjusted Net Loss.

For the year ended December 31, 2021, Adjusted EBITDA was $125.6 million compared to a loss of $53.1 million for the year ended December 31, 2020.

The improvement was primarily related to favorable realized refined product crack spreads at all our refineries, favorable feedstock, purchased product and derivative costs at our Hawaii refinery, and higher refined product sales volumes at our Wyoming refinery, partially offset by unfavorable inventory financing and environmental compliance costs and higher operating expenses.

For the year ended December 31, 2021, Adjusted Net Loss was $36.1 million compared to $216.2 million for the year ended December 31, 2020.

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

The following table summarizes our consolidated results of operations for the years ended December 31, 2023, 2022, and 2021 (in thousands).

7 unchanged sentences

Impairment expense — — 1,838

Gain on sale of assets, net (169) (64,697) —

General and administrative expense (excluding depreciation) 91,447 62,396 48,096

Equity earnings from refining and logistics investments (11,844) — —

Acquisition and integration costs 17,482 3,663 87

Par West redevelopment and other costs 11,397 9,003 9,591

Gain on sale of assets, net (59) (169) (64,697)

Total operating expenses 7,551,949 6,883,882 4,717,708

5 unchanged sentences

Other income (expense), net (53) 613 (52)

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

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

Equity earnings from Laramie Energy, LLC 24,985 — —

Total other expense, net (66,700) (73,004) (72,657)

9 unchanged sentences

Depreciation and amortization 81,017 25,122 11,462 2,229 119,830

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

General and administrative expense (excluding depreciation) — — — 91,447 91,447

Equity earnings from refining and logistics investments (7,363) (4,481) — — (11,844)

Acquisition and integration costs — — — 17,482 17,482

Par West redevelopment and other costs — — — 11,397 11,397

Loss (gain) on sale of assets, net 219 — (308) 30 (59)

Operating income (loss) $ 676,161 $ 69,744 $ 56,603 $ (122,502) $ 680,006

4 unchanged sentences

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

Impairment expense 1,838 — — — 1,838

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

General and administrative expense (excluding depreciation) — — — 62,396 62,396

Acquisition and integration costs — — — 3,663 3,663

Par West redevelopment and other costs

9,003 — — — 9,003

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

Operating income (loss) $ 401,901 $ 54,049 $ 49,238 $ (67,285) $ 437,903

7 unchanged sentences

Acquisition and integration costs — — — 87 87

Par West redevelopment and other costs

9,591 — — — 9,591

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

Operating income (loss) $ (88,799) $ 51,159 $ 81,249 $ (51,228) $ (7,619)

7 unchanged sentences

Feedstocks Throughput (Mbpd) (1)

170.3 133.8 135.2

Refined product sales volume (Mbpd) (1)

183.1 140.3 138.8

Hawaii Refinery

7 unchanged sentences

Refined product sales volume (Mbpd) 89.1 84.0 82.6

On-island sales volume 82.9 82.6 83.5

Exports sales volume 1.1 — 0.6

Total refined product sales volume 84.0 82.6 84.1

Adjusted Gross Margin per bbl ($/throughput bbl) (2)

$ 15.25 $ 13.99 $ 4.56

Production costs per bbl ($/throughput bbl) (3)

4.57 4.86 3.98

D&A per bbl ($/throughput bbl) 0.65 0.67 0.66

Washington Refinery

Montana Refinery

Feedstocks Throughput (Mbpd) (1)

7 unchanged sentences

Adjusted Gross Margin per bbl ($/throughput bbl) (2)

$ 21.14 $ — $ —

Production costs per bbl ($/throughput bbl) (3)

D&A per bbl ($/throughput bbl) 1.45 — —

Washington Refinery

Feedstocks Throughput (Mbpd) 40.0 35.5 36.3

Yield (% of total throughput)

Gasoline and gasoline blendstocks 23.5 % 24.0 % 23.7 %

Distillates 34.5 % 34.3 % 34.5 %

Asphalt 19.7 % 20.3 % 20.7 %

Other products 18.7 % 18.2 % 18.3 %

Total yield 96.4 % 96.8 % 97.2 %

Year Ended December 31,

2023 2022 2021

Refined product sales volume (Mbpd) 41.7 39.7 39.6

Adjusted Gross Margin per bbl ($/throughput bbl) (2)

$ 9.41 $ 18.00 $ 2.98

Production costs per bbl ($/throughput bbl) (3)

4.12 4.01 3.86

D&A per bbl ($/throughput bbl) 1.91 2.19 1.57

Wyoming Refinery

8 unchanged sentences

Adjusted Gross Margin per bbl ($/throughput bbl) (2)

$ 25.15 $ 26.50 $ 14.47

Production costs per bbl ($/throughput bbl) (3)

7.50 7.32 6.22

D&A per bbl ($/throughput bbl) 2.69 2.85 2.86

1 unchanged sentence

3-1-2 Singapore Crack Spread (4)

Pacific Northwest 5-2-2-1 Index (4) 32.40 15.95 11.44

Wyoming 3-2-1 Index (5) 41.32 29.00 17.80

$ 19.50 $ 25.43 $ 6.22

RVO Adjusted Pacific Northwest 3-1-1-1 Index (5)

25.82 35.27 13.69

RVO Adjusted USGC 3-2-1 Index (6)

22.87 28.55 10.98

Crude Oil Prices (average $ per barrel)

1 unchanged sentence

WTI 77.60 94.33 68.11

ANS 102.56 71.49 41.77

82.36 98.76 70.56

Bakken Clearbrook (7)

78.58 96.37 67.65

WCS Hardisty (7)

59.34 73.28 53.90

Brent M1-M3 0.81 3.49 1.12

________________________________________________________

(1) Feedstocks throughput and sales volumes per day for the Montana refinery for the year ended December 31, 2023 are calculated based on the 214-day period for which we owned the Montana refinery in 2023.

As such, the amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the year ended December 31, 2023 plus the Montana refinery’s throughput or sales volumes averaged over the period from June 1, 2023 to December 31, 2023.

The 2022 and 2021 amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the year ended December 31, 2022 and 2021.

(2) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput.

1 unchanged sentence

Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method.

The definition of Adjusted Gross Margin was modified beginning with the financial results reported for periods in fiscal year 2022.

The definition of Adjusted Gross Margin was modified beginning with the financial results reported for periods in

fiscal year 2022.

We have recast Adjusted Gross Margin for prior periods when reported to conform to the modified presentation.

6 unchanged sentences

(4) We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator for our operations in Hawaii.

(4) We believe the Pacific Northwest 5-2-2-1 Index is the most representative market indicator for our operations in Tacoma, Washington.

The Pacific Northwest 5-2-2-1 Index is computed by taking two parts gasoline (sub-octane), two parts middle distillates (ultra-low sulfur diesel (“ULSD”) and jet fuel), and one part fuel oil as created from five barrels of Alaskan North Slope (“ANS”) crude oil.

(5) The profitability of our Wyoming refinery is heavily influenced by crack spreads in nearby markets.

We believe the Wyoming 3-2-1 Index is the most representative market indicator for our operations in Wyoming.

The Wyoming 3-2-1 Index is computed by taking two parts gasoline and one part distillates (ULSD) as created from three barrels of West Texas Intermediate Crude Oil (“WTI”).

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

(5) We believe the RVO Adjusted Pacific Northwest 3-1-1-1 (or three barrels of WTI crude oil converted into one barrel of Pacific Northwest gasoline, one barrel of Pacific Northwest ULSD and one barrel of USGC VGO, less 100% of the RVO cost for gasoline and ULSD) is the most representative market indicator for our operations in Washington with improved historical correlations to our reported adjusted gross margin compared to prior reported indices.

(6) We believe the RVO Adjusted USGC 3-2-1 (or three barrels of WTI crude oil converted into two barrels of USGC gasoline and one barrel of USGC ULSD, less 100% of the RVO cost) is the most representative market indicator for our operations in Montana and Wyoming with improved historical correlations to our reported adjusted gross margin compared to prior reported indices.

(7) Crude pricing has been updated to reflect simple averages of outright prices during the relevant period.

Below is a summary of key operating statistics for the retail segment for the years ended December 31, 2023, 2022, and 2021:

10 unchanged sentences

We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure.

Beginning with financial results reported for periods in fiscal year 2022, the inventory valuation adjustment was modified to include the first-in, first-out (“FIFO”) inventory gains (losses) associated with our titled manufactured inventory in Hawaii.

This modification was made to better align Adjusted Net Income (Loss) and Adjusted EBITDA with the cash flow of the Hawaii refining business.

Prior to 2022, the impacts of FIFO inventory gains (losses) associated with Hawaii titled manufactured inventory were eliminated through the inventory valuation adjustment.

Beginning with financial results reported for the second quarter of 2022, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude the mark-to-market losses (gains) associated with our net RINs liability.

This modification was made to better reflect our operating performance and to improve comparability between periods.

We have recast Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA for prior periods when reported to conform to the modified presentation.

Beginning with financial results reported for periods in fiscal year 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude the mark-to-market losses (gains) associated with our net obligation related to the Washington Climate Commitment Act and Clean Fuel Standard, which became effective on January, 1, 2023.

Beginning with financial results reported for periods in fiscal year 2023, Adjusted Net Income (loss) and Adjusted EBITDA also exclude the redevelopment and other costs for our Par West facility, which was shut down in 2020.

This modification improves comparability between periods by excluding expenses incurred in connection with the strategic redevelopment of this non-operating facility.

We have recast Adjusted Net Income (Loss) and Adjusted EBITDA for prior periods when reported to conform to the modified presentation.

Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude our portion of interest, taxes, and depreciation expense from our refining and logistics investments acquired on June 1, 2023, as part of the Billings Acquisition.

Beginning with financial results reported for the fourth quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA excludes all hedge losses (gains) associated with our Washington ending inventory and LIFO layer increment impacts associated with our Washington inventory.

In addition, we have modified our environmental obligation mark-to-market adjustment to include only the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington Climate Commitment Act (“Washington CCA”) and Clean Fuel Standard.

This modification was made as part of our change in how we estimate our environmental obligation liabilities.

Beginning with financial results reported for the fourth quarter of 2023, Adjusted Net Income (loss) excludes unrealized interest rate derivative losses (gains) and all Laramie Energy related impacts with the exception of cash distributions.

Please read Note 2—Summary of Significant Accounting Policies, Environmental Credits and Obligations section, for a discussion of the change in estimate.

Adjusted Gross Margin

2 unchanged sentences

• depreciation and amortization (“D&A”);

• Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments;

• impairment expense;

• loss (gain) on sale of assets, net;

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

• LIFO layer liquidation impacts associated with our Washington inventory;

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

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

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

• Environmental obligation mark-to-market adjustment (which represents the mark-to-market losses (gains) associated with our net RINs liability and our net obligation associated with the Washington Climate Commitment Act and Clean Fuel Standard);

• unrealized loss (gain) on derivatives.

4 unchanged sentences

Depreciation and amortization 81,017 25,122 11,462

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

Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments

1,586 1,857 —

Inventory valuation adjustment 102,710 — —

RINs mark-to-market adjustments 105,760 — —

Unrealized loss on derivatives 9,336 — —

Environmental obligation mark-to-market adjustments (189,783) — —

Unrealized gain on derivatives (50,511) — —

Loss (gain) on sale of assets, net 219 — (308)

Adjusted Gross Margin (1) $ 995,011 $ 121,173 $ 155,282

Year ended December 31, 2022 Refining Logistics Retail

Operating income (loss) $ (88,799) $ 51,159 $ 81,249

Operating income $ 401,901 $ 54,049 $ 49,238

Operating expense (excluding depreciation) 236,989 14,988 81,229

Depreciation and amortization 65,472 20,579 10,971

Impairment expense 1,838 — —

Loss (gain) on sale of assets, net (19,659) (19) (45,034)

Inventory valuation adjustment (15,712) — —

RINs mark-to-market adjustments 66,350 — —

Environmental obligation mark-to-market adjustments 105,760 — —

Unrealized loss on derivatives 9,336 — —

Par West redevelopment and other costs

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

Adjusted Gross Margin (1) $ 812,750 $ 89,363 $ 141,494

5 unchanged sentences

Inventory valuation adjustment 31,841 — —

RINs mark-to-market adjustments 81,709 — —

Unrealized gain on derivatives (4,804) — —

Environmental obligation mark-to-market adjustments 66,350 — —

Unrealized loss on derivatives 1,517 — —

Par West redevelopment and other costs

Gain on sale of assets, net (19,659) (19) (45,034)

Adjusted Gross Margin (1) $ 264,448 $ 87,906 $ 118,940

________________________________________

(1) For the years ended December 31, 2022, 2021 and 2020, there was no LIFO liquidation adjustment.

For the year ended December 31, 2022, there was no impairment expense.

For the year ended December 31, 2020, there was no loss (gain) on sale of assets.

(1) For the years ended December 31, 2023 and 2022, there was no impairment expense.

Adjusted Net Income (Loss) and Adjusted EBITDA

Adjusted Net Income (Loss) is defined as Net income (loss) excluding:

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

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

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

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

• Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our RINs and Washington CCA and Clean Fuel Standard);

• unrealized (gain) loss on derivatives;

• acquisition and integration costs;

• redevelopment and other costs related to Par West;

• debt extinguishment and commitment costs;

4 unchanged sentences

• impairment expense;

• impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference;

• Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives.

• impairment expense associated with our investment in Laramie Energy;

• Par’s share of equity losses from Laramie Energy, LLC, excluding cash distributions .

Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding:

• interest expense and financing costs;

• equity losses (earnings) from Laramie Energy excluding Par’s share of unrealized loss (gain) on derivatives, impairment of Par’s investment, and our share of Laramie Energy’s asset impairment losses in excess of our basis difference;

• interest expense and financing costs, net, excluding interest rate derivative loss (gain);

• cash distributions from Laramie Energy, LLC to Par;

• Par's portion of interest, taxes, and depreciation expense from refining and logistics investments;

• income tax expense (benefit) excluding the increase in (release of) tax valuation allowance.

4 unchanged sentences

Inventory valuation adjustment 102,710 (15,712) 31,841

RINs mark-to-market adjustments 105,760 66,350 81,709

Environmental obligation mark-to-market adjustments (189,783) 105,760 66,350

Unrealized loss (gain) on derivatives

(49,690) 9,336 (1,393)

Par West redevelopment and other costs

Acquisition and integration costs 17,482 3,663 87

1 unchanged sentence

Changes in valuation allowance and other deferred tax items (1) (126,219) — —

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

Severance costs 1,785 2,272 84

Impairment expense — — 1,838

Impairment of Investment in Laramie Energy, LLC (2) — — 45,294

Par’s share of Laramie Energy’s unrealized gain on derivatives (2) — — (1,110)

Gain on sale of assets (169) (64,697) —

Equity losses from Laramie Energy, LLC, excluding cash distributions

Gain on sale of assets, net (59) (169) (64,697)

Adjusted Net Income (Loss) (2) 501,168 474,668 (39,043)

Depreciation and amortization 119,830 99,769 94,241

Interest expense and financing costs, net 68,288 66,493 70,222

Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses — — 2,721

Income tax expense (benefit) 710 1,021 176

Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain)

71,629 68,288 69,403

Laramie Energy, LLC cash distributions to Par (10,706) — —

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 3,443 — —

Income tax expense 10,883 710 1,021

Adjusted EBITDA (2)

$ 696,247 $ 643,435 $ 125,622

(1) Includes releases of our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance.

These tax benefits are included in Income tax expense (benefit) on our consolidated statements of operations.

(2) Includes our share of Laramie Energy’s unrealized loss (gain) on derivatives, impairment losses on our investment in Laramie Energy, and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

These impairment losses and our share of Laramie Energy’s unrealized loss (gain) on derivatives are included in Equity earnings (losses) from Laramie Energy, LLC on our consolidated statements of operations.

(3) For the years ended December 31, 2022, 2021, and 2020, there was no LIFO liquidation adjustment or change in value of contingent consideration.

Discussion of Operating Income (Loss) by Segment

________________________________________________________

(1) For the year ended December 31, 2023, recognized a non-cash deferred tax benefit of $126.2 million related to the release of a majority of the valuation allowance against our federal net deferred tax assets.

This tax benefit is included in Income tax expense (benefit) on our consolidated statements of operations.

(2) For the years ended December 31, 2022 and 2021, there was no change in value of contingent consideration, change in value of common stock warrants, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

Please read the Non-GAAP Performance Measures discussion above for information regarding changes to the components of Adjusted Net Income (Loss) and Adjusted EBITDA made during 2023.

Discussion of Operating Income by Segment

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Operating income for our refining segment was $676.2 million for the year ended December 31, 2023, an improvement of $274.3 million compared to $401.9 million for the year ended December 31, 2022.

The increase in operating income was primarily driven by:

• a decrease of $140.0 million in environmental credit and related obligations costs across our refineries in our legacy portfolio driven by favorable mark-to-market adjustments and a gain on retirement of prior year RINs,

• an increase of $106.0 million driven by a 6% increase in refined product sales volumes at our refineries in our legacy portfolio,

• a favorable change in step-out obligations related to our intermediation agreements of $79.5 million driven by changes in commodity prices,

• a net decrease of $76.4 million in our derivative costs associated with all our refineries,

• a $56.9 million contribution from the Billings Acquisition,

• $37.0 million related to lower fuel burn costs at all our refineries, and

• an increase of $32.8 million related to a favorable change in crude oil differentials at our refineries in our legacy portfolio,

partially offset by:

• a net decrease of $112.9 million related to declining crack spreads at our refineries in our legacy portfolio,

• an increase in purchased product costs of $98.0 million at all our refineries in our legacy portfolio, and

• an increase in logistics and other product delivery costs of $35.6 million at our refineries in our legacy portfolio.

Operating income for our logistics segment was $69.7 million for the year ended December 31, 2023, an increase of $15.7 million compared to $54.0 million for the year ended December 31, 2022.

The increase is primarily due to an $8.5 million contribution from the Billings Acquisition logistics assets acquired in June 2023 and an $10.4 million increase in operating income driven by an increase in throughput volumes throughout our legacy logistics portfolio, partially offset by an increase in variable expenses of $5.5 million.

Operating income for our retail segment was $56.6 million for the year ended December 31, 2023, an increase of $7.4 million compared to operating income of $49.2 million for the year ended December 31, 2022.

The increase in operating income was primarily driven by $10.6 million related to higher fuel sales volum es and $3.4 million associated with increased merchandise sales, partly offset by $6.3 million of higher operating expenses driven by i ncreases in employee costs and credit card fees in the year ended December 31, 2023 compared to the year ended December 31, 2022.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Operating income for our refining segment was $401.9 million for the year ended December 31, 2022, an improvement of $490.7 million compared to an operating loss of $88.8 million for the year ended December 31, 2021.

5 unchanged sentences

The decrease in profitability was primarily due to a gain on sale of assets of $45.0 million primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022 and a 13% increase in operating expenses in the year ended December 31, 2022 primarily related to increased employee costs, higher credit card processing fees due to increased gasoline prices, rebranding fees in Hawaii, and higher rent expense related to the additional leases from our 2021 Hawaii sale-leaseback transactions, partially offset by a 31% increase in fuel margin.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Operating loss for our refining segment was $88.8 million for the year ended December 31, 2021, an improvement of $243.0 million compared to operating loss of $331.8 million for the year ended December 31, 2020.

The increase in profitability was primarily driven by favorable realized product crack spreads across all our refineries, favorable purchased product and feedstock costs at our Hawaii refinery, favorable derivative costs, and a 28% increase in refining sales volume at our Wyoming refinery, partially offset by higher inventory financing costs related to the rising cost of crude oil.

Other factors impacting our results period over period include asset impairment charges of $1.8 million in 2021 from discontinued capital projects as compared to our 2020 goodwill impairment of $38.1 million and asset impairment charges of $17.9 million, and a 2021 gain on sale of assets of $19.7 million primarily related to the Sale-Leaseback Transactions we closed in the first quarter of 2021.

Operating income for our logistics segment was $51.2 million for the year ended December 31, 2021, an increase of $16.2 million compared to operating income of $35.0 million for the year ended December 31, 2020.

The increase is primarily due to net 12% and 32% higher throughput across our Hawaii and Wyoming logistics assets, respectively, related to increased demand as a result of reduced COVID-19-related travel restrictions and lower lease costs on barges in Hawaii.

Operating income for our retail segment was $81.2 million for the year ended December 31, 2021, an increase of $57.0 million compared to operating income of $24.2 million for the year ended December 31, 2020.

The increase in profitability was primarily due to a gain on sale of assets of $45.0 million primarily related to the Sale-Leaseback Transactions we closed in the first quarter of 2021, a 2020 goodwill impairment of $29.8 million with no corresponding impairment in 2021,

and an increase in sales volumes of 6%, partially offset by a decrease in fuel margins of 17% related to rising fuel costs and market-driven margin compression and additional rent expense related to the Sale-Leaseback Transactions that we closed in the first quarter of 2021.

Discussion of Adjusted Gross Margin by Segment

1 unchanged sentence

For the year ended December 31, 2023, our refining Adjusted Gross Margin was approximately $995.0 million, an increase of $182.2 million compared to $812.8 million for the year ended December 31, 2022.

The increase in profitability was primarily due to Adjusted Gross Margin contributed by the Montana refinery o f $246.1 million and 6.0% higher refined product sales margins across our legacy refining portfolio, partially offs et by $155.6 million higher environmental credit obligation costs, excluding the mark-to-market impacts, and lower crack spreads of $107.6 million .

• Adjusted Gross Margin for the Hawaii refinery improved by $1.26 per barrel from $13.99 per barrel during the year ended December 31, 2022, to $15.25 per barrel during the year ended December 31, 2023, primarily due to lower feedstock costs, a 6% increase in refined product sales volumes, a favorable change in realized derivatives, and higher yield, partially offset by $98.0 million higher purchased product costs and lower crack spreads.

The Singapore 3-1-2 index declined from $25.43 in the year ended December 31, 2022 to $19.50 during the year ended December 31, 2023.

• Adjusted Gross Margin for the Wyoming refinery decreased by $1.35 per barrel from $26.50 per barrel during the year ended December 31, 2022 to $25.15 per barrel during the year ended December 31, 2023.

The change is primarily due t o a 8% increase in refined product sales volumes, partially offset by lower crack spreads.

The RVO Adjusted USGC 3-2-1 index declined from $28.55 during the year ended December 31, 2022 to $22.87 in the year ended December 31, 2023.

• Adjusted Gross Margin for the Washington refinery decreased by $8.59 per barrel from $18.00 per barrel during the year ended December 31, 2022 to $9.41 per barrel during the year ended December 31, 2023, primarily due to higher environmental credit obligation expenses, declining crack spreads, and higher refined product delivery costs, partially offset by lower feedstock costs and 5% higher refined product sales volumes .

The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $35.27 in the year ended December 31, 2022 to $25.82 during the year ended December 31, 2023.

For the year ended December 31, 2023, our logistics Adjusted Gross Margin was approximately $121.2 million, an increase of $31.8 million compared to $89.4 million for the year ended December 31, 2022.

The increase was primarily due to Adjusted Gross Ma rgin of $23.8 million contributed from the Billings Acquisition logistics assets acquired in June 2023 and a 3% increase in throughput across our legacy assets, net of associated higher fees and variable expenses, and higher third-party revenue.

For the year ended December 31, 2023, our retail Adjusted Gross Margin was approximately $155.3 million, an increase of $13.8 million compared to $141.5 million for the year ended December 31, 2022.

The increase was primarily related to an 11% increase in sales volumes and a 33% increase in merchandise sales.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

For the year ended December 31, 2022, our refining Adjusted Gross Margin was approximately $812.8 million, an increase of $548.4 million compared to $264.4 million for the year ended December 31, 2021.

The increase in profitability was primarily driven by favorable realized product crack spreads across all our refineries partially offset by unfavorable purchased product costs, unfavorable FIFO adjustments, increased inventory financing costs of $79.0 million in Hawaii, unfavorable derivative costs, and increased costs related to fuel burn related to higher crude oil costs as discussed below.

3 unchanged sentences

For the year ended December 31, 2022, our logistics Adjusted Gross Margin was approximately $89.4 million, an increase of $1.5 million compared to $87.9 million for the year ended December 31, 2021.

The increase was primarily driven by higher third party revenues partially offset by net 2% and 4% decreased throughput across our Hawaii and Wyoming logistics assets, respectively.

The increase was

primarily driven by higher third party revenues partially offset by net 2% and 4% decreased throughput across our Hawaii and Wyoming logistics assets, respectively.

For the year ended December 31, 2022, our retail Adjusted Gross Margin was approximately $141.5 million, an increase of $22.6 million compared to $118.9 million for the year ended December 31, 2021.

The increase was primarily due to a 31% increase in fuel margins partially offset by a 3% decline in sales volumes.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

For the year ended December 31, 2021, our refining Adjusted Gross Margin was approximately $264.4 million, an increase of $199.7 million compared to a loss of $64.7 million for the year ended December 31, 2020.

The increase in profitability was primarily driven by favorable realized product crack spreads across all our refineries and favorable feedstock and purchased product costs in Hawaii, partially offset by unfavorable feedstock and inventory financing costs in Washington.

Adjusted Gross Margin for the Hawaii refinery improved from $(1.31) per barrel in 2020 to $4.56 per barrel in 2021 primarily due to favorable product crack spreads and feedstock, purchased product, and derivative costs.

Adjusted Gross Margin for the Wyoming refinery increased by $7.50 per barrel primarily due to favorable product crack spreads and a 28% increase in sales volumes.

Adjusted Gross Margin for the Washington refinery decreased by $1.69 per barrel primarily due to higher inventory financing and feedstock costs, partially offset by favorable realized product crack spreads and lower logistics costs.

For the year ended December 31, 2021, our logistics Adjusted Gross Margin was approximately $87.9 million, an increase of $17.4 million compared to $70.5 million for the year ended December 31, 2020.

The increase was primarily driven by a net 12% and 32% increase in throughput across our Hawaii and Wyoming logistics assets, respectively, due to increased sales volumes in both regions driven by reduced COVID-19-related travel restrictions, and lower lease costs on barges in Hawaii.

For the year ended December 31, 2021, our retail Adjusted Gross Margin was approximately $118.9 million, a decrease of $9.9 million compared to $128.8 million for the year ended December 31, 2020.

The decrease was primarily due to a 17% decrease in fuel margins due to rising fuel costs and market-driven margin compression, partially offset by a 6% increase in sales volumes.

Discussion of Consolidated Results

1 unchanged sentence

For the year ended December 31, 2023, revenues were $8.2 billion, a $0.9 billion increase compared to $7.3 billion for the year ended December 31, 2022.

The Billings Acquisition contributed revenue s of $1.5 billion in the first seven months under our owne rship, partially offset by a decrease of $0.6 billion across our legacy refinery portfolio.

The decrease in our legacy refining revenue was primarily driven by a $0.8 billion decrease related to lower crude oil prices, partially offset by a 6% increase in sales volumes.

Average Brent crude oil prices declined 17% and average WTI crude oil prices declined 18% as compared to the prior period.

Revenues at our retail segment increased $22.3 million primarily due to an 11% increase in sales volume and a 33% increase in merchandise sales, partially offset by an 8% decrease in fuel sales prices.

Cost of Revenues (Excluding Depreciation).

For the year ended December 31, 2023, cost of revenues (excluding depreciation) was $6.8 billion, a $0.4 billion increase compared to $6.4 billion for the year ended December 31, 2022, inclusive of a $1.5 billion contribution from the Billings Acquisitio n.

There was a decrease of $1.0 billion of cost of revenues (excluding depreciation) across our legacy refining operations primarily due to decreases in crude oil prices as discussed above.

Operating Expense (Excluding Depreciation).

For the year ended December 31, 2023, operating expense (excluding depreciation) was approximately $485.6 million, an increase of $152.4 million compa red to $333.2 million for the year ended December 31, 2022.

$134.1 million of the increase was contributed by the Billings Acquisition.

Other factors that drove the increase include higher repair and maintenance and employee expenses.

Depreciation and Amortization .

For the year ended December 31, 2023, D&A expense was approximately $119.8 million, an increase of $20.0 million compared to $99.8 million for the year ended December 31, 2022.

The increase was primarily driven by the $21.7 million contribution from the Billings Acquisition.

General and Administrative Expense (Excluding Depreciation).

For the year ended December 31, 2023, general and administrative expense (excluding depreciation) was approximately $91.4 million, an increase of $29.0 million compared to $62.4 million for the year ended December 31, 2022.

The increase was prim arily due to a $12.1 million increase in employee costs, a $6.0 million increase in outside services, $5.8 million of expenses related to development of our renewable projects, and $3.9 million higher IT expenses.

Equity earnings from refining and logistics investments .

For the year ended December 31, 2023 , equity earnings from refining and logistics investments were $11.8 million.

As part of the Billings Acquisition, we acquired a 65% limited partnership ownership interest in YELP and a 40% ownership interest in YPLC.

For the year ended December 31, 2023, our proportionate share of YELP’s net income and YPLC’s net income was $8.1 million and $4.4 million, respectively.

Please read Note 3—Refining and Logistics Equity Investments to our consolidated financial statements under Item 8 of this Form 10-K for additional information.

Acquisition and Integration costs.

For the year ended December 31, 2023 , we incurred $17.5 million of acquisition and integration costs related to the Billings Acquisition, compared to $3.7 million of acquisition and integration costs for the year ended December 31, 2022.

Please read Note 5—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Par West redevelopment and other costs.

For the year ended December 31, 2023, Par West redevelopment and other costs were $11.4 million, an increase of $2.4 million compared to $9.0 million for the year ended December 31, 2022, associated with the operation and decommissioning of our Par West facility.

Interest Expense and Financing Costs, Net .

For the year ended December 31, 2023, our interest expense and financing costs were approximately $72.5 million, an increase of $4.2 million compared to $68.3 million for the year ended December 31, 2022.

The increase was primarily due to higher outstanding debt balances and increased borrowings under our inventory financing agreements.

Please read Note 14—Debt and Note 12—Inventory Financing Agreements to our

consolidated financial statements under Item 8 of this Form 10-K for further discussion on our indebtedness and inventory financing, respectively.

Debt extinguishment and commitment costs.

For the year ended December 31, 2023, our debt extinguishment and commitment costs wer e approximately $19.2 million in connection with the refinancing of our long-term debt in the first quarter of 2023 and the termination of the Washington Refinery Intermediation Agreement in the fourth quarter of 2023.

For the year ended December 31, 2022, our debt extinguishment and commitment costs were approximately $5.3 million and prim arily represented extinguishment costs associated with the repurchase and cancellation of an additional $36.9 million of 12.875% Senior Secured Notes in the second quarter of 2022.

Please read Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion.

Equity Earnings from Laramie Energy, LLC.

For the year ended December 31, 2023, equity earnings from Laramie Energy, LLC were $25.0 million .

On March 1, 2023, following a refinancing of certain debt, Laramie Energy, LLC was permitted to make a one-time cash distribution to its owners based on ownership percentage.

Our share of this distribution was $10.7 million.

Effective February 21, 2023, we resumed the application of equity method accounting with respect to our investment in Laramie Energy.

In the fourth quarter of 2023 and due to Laramie Energy, LLC’s positive financial results, our share of net income from our investment in Laramie Energy exceeded our share of net losses recorded during the period that equity method accounting was suspended and we recorded equity earnings of $14.3 million.

There were no equity earnings from our investment in Laramie Energy, LLC, for the year ended December 31, 2022.

Please read Note 4—Investment in Laramie Energy to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Income Taxes.

For the year ended December 31, 2023, we recorded an income tax benefit of $115.3 million primarily related to the release of the federal tax valuation allowance in the fourth quarter of 2024, partially offset by deferred tax expense from net operating loss utilization and state tax expense.

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

Please read Note 22—Income Taxes to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

For the year ended December 31, 2022, revenues were $7.3 billion, a $2.6 billion increase compared to $4.7 billion for the year ended December 31, 2021.

The increase was primarily the result of an increase of $2.5 billion in third-party revenues at our refining segment primarily as a result of increases in Brent and WTI crude oil prices.

25 unchanged sentences

Acquisition and Integration Costs.

For the year ended December 31, 2022, we incurred approximately $3.7 million of expenses primarily related to costs incurred for the pending Billings Acquisition.

For the year ended December 31, 2022, we incurred approximately $3.7 million of acquisition and integration costs primarily related to costs incurred for the pending Billings Acquisition.

For the year ended December 31, 2021, we incurred an immaterial amount of acquisition and integration costs.

16 unchanged sentences

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

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

For the year ended December 31, 2021, revenues were $4.7 billion, a $1.6 billion increase compared to $3.1 billion for the year ended December 31, 2020.

The increase was primarily the result of an increase of $1.5 billion in third-party revenues at our refining segment primarily as a result of increases in Brent and WTI crude oil prices.

Brent crude oil prices recovered from COVID-19-related lows, averaging $70.95 per barrel for the year ended December 31, 2021 compared to $43.21 per barrel for the year ended December 31, 2020, and WTI crude oil prices averaged $68.11 per barrel during the year ended December 31, 2021 compared to $39.65 in the year ended December 31, 2020.

Other factors contributing to the increase in revenues at our refining segment include a 28% increase in refining sales volume at our Wyoming refinery and improved realized product crack spreads across all our refineries.

Revenues in our retail segment increased $92.7 million primarily due to a 23% increase in fuel prices and a 6% increase in sales volume.

Cost of Revenues (Excluding Depreciation).

For the year ended December 31, 2021, cost of revenues (excluding depreciation) was $4.3 billion, a $1.4 billion increase compared to $2.9 billion for the year ended December 31, 2020.

The increase was primarily due to increases in Brent and WTI crude oil prices and refining sales volumes at our Wyoming refinery as discussed above, higher inventory financing costs, and 6% higher sales volumes at our Retail segment, partially offset by favorable purchased product and feedstock costs at our Hawaii refinery and favorable derivative costs.

Operating Expense (Excluding Depreciation).

For the year ended December 31, 2021, operating expense (excluding depreciation) was approximately $299.7 million, an increase of $22.3 million compared to $277.4 million for the year ended December 31, 2020.

The increase was primarily due to higher utilities and maintenance expenses at our Hawaii refinery and increased rent expenses driven by new leases from the Sale-Leaseback Transactions we completed in the first quarter of 2021.

Depreciation and Amortization .

For the year ended December 31, 2021, D&A expense was approximately $94.2 million, an increase of $4.2 million compared to $90.0 million for the year ended December 31, 2020.

The increase was primarily due to amortization of our Hawaii refinery turnaround completed in 2020.

Impairment Expense.

During the year ended December 31, 2021, we recorded asset impairment charges of $1.8 million primarily related to discontinued capital projects.

During the year ended December 31, 2020, we recorded goodwill and asset impairment charges totaling $85.8 million related to our Refining and Retail segments.

Please read Note 10—Goodwill and Intangible Assets and Note 8—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our 2020 goodwill impairment and our 2021 and 2020 asset impairment charges, respectively.

Gain on Sale of Assets, Net.

For the year ended December 31, 2021, the gain on sale of assets, net was approximately $64.7 million and primarily related to the gain recognized as a result of the Sale-Leaseback Transactions we closed on February 23 and March 12, 2021.

Please read Note 16—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on the Sale-Leaseback Transactions.

No such transaction occurred during the year ended December 31, 2020.

General and Administrative Expense (Excluding Depreciation).

For the year ended December 31, 2021, general and administrative expense (excluding depreciation) was approximately $48.1 million, an increase of $6.8 million compared to $41.3 million for the year ended December 31, 2020.

The increase was primarily due to higher employee costs, an increase in the use of outside services, and higher information technology infrastructure costs.

Interest Expense and Financing Costs, Net .

For the year ended December 31, 2021, our interest expense and financing costs were approximately $66.5 million, a decrease of $3.7 million compared to $70.2 million for the year ended December 31, 2020.

The decrease was primarily due to lower outstanding debt balances driven by the maturity of our outstanding 5.00% Convertible Senior Notes in June 2021, the repayment of the PHL, Mid Pac, and Retail Property Term Loans and interest rate swap related to the Retail Property Term Loan in the first quarter of 2021, and quarterly principal payments on our Term Loan B Facility.

These decreases were partially offset by higher interest expense related to the 12.875% Senior Secured Notes issued in June 2020 and an increase of $1.1 million related to increased borrowings under our inventory financing agreements.

Please read Note 11—Inventory Financing Agreements and Note 13—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and indebtedness, respectively.

Change in Value of Common Stock Warrants .

For the year ended December 31, 2020, the change in value of common stock warrants resulted in a gain of $4.3 million.

During January and March 2020, one of our stockholders and its affiliates exercised the remaining 354,350 common stock warrants in exchange for 350,542 shares of common stock.

We estimated the fair value of our outstanding common stock warrants and the income recognized upon exercise using the difference between the strike price of the warrant and the market price of our common stock.

During the three months ended March 31, 2020, our stock price decreased from $23.24 per share on December 31, 2019 to $7.10 per share on March 31, 2020.

During the year ended December 31, 2021, there were no common stock warrants outstanding.

Debt extinguishment and commitment costs.

For the year ended December 31, 2021, our debt extinguishment and commitment costs were approximately $8.1 million and primarily represent $6.6 million in extinguishment costs associated with the early repayment of a portion of the outstanding 12.875% Senior Secured Notes on June 14, 2021 and $1.4 million in extinguishment costs associated with the early repayment of the Retail Property Term Loan on February 23, 2021.

Please read Note 13—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion.

There were no debt extinguishment and commitment costs for the year ended December 31, 2020.

Gain on curtailment of pension obligation.

During the year ended December 31, 2021, we recorded a gain on curtailment of pension obligation of $2.0 million related to the amendment to the Wyoming Refining defined benefit plan.

Please read Note 19—Benefit Plans to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on the gain on curtailment of pension obligation.

There was no gain on curtailment of pension obligation for the year ended December 31, 2020.

Equity Earnings (Losses) from Laramie Energy, LLC .

For the year ended December 31, 2020, equity losses from Laramie Energy were approximately $46.9 million.

During the year ended December 31, 2020, we recorded an other-than-temporary impairment charge of $45.3 million related to our investment in Laramie Energy.

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

As such, there were no earnings or losses from Laramie Energy recorded during the year ended December 31, 2021.

Please read Note 3—Investment in Laramie Energy, LLC to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Income Taxes.

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

For the year ended December 31, 2020, we recorded an income tax benefit of $20.7 million primarily driven by an increase in our net operating loss carryforwards that do not expire and the change in our indefinitely-lived goodwill due to the impairments.

Condensed Consolidating Financial Information

On December 21, 2017, Par Petroleum, LLC (the “Issuer”) issued its 7.75% Senior Secured Notes due 2025 in a private offering under Rule 144A and Regulation S of the Securities Act.

On January 11, 2019, the Issuers (defined below) entered into a term loan and guaranty agreement with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto with respect to a $250.0 million term loan (the “Term Loan B”).

On June 5, 2020, the Issuers issued their 12.875% Senior Secured Notes due 2026 in a private offering under Rule 144A and Regulation S of the Securities Act.

The 7.75% Senior Secured Notes, the Term Loan B, and the 12.875% Senior Secured Notes were co-issued by Par Petroleum Finance Corp.

(together with the Issuer, the “Issuers”), which has no independent assets or operations.

The 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes are guaranteed on a senior unsecured basis only as to payment of principal and

interest by Par Pacific Holdings, Inc.

(the “Parent”) and are guaranteed on a senior secured basis by all of the subsidiaries of Par Petroleum, LLC (other than Par Petroleum Finance Corp.).

The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Petroleum, LLC and its consolidated subsidiaries’ accounts (which are all guarantors of the 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes, Term Loan B, or 12.875% Senior Secured Notes and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated.

On February 28, 2023, Par Petroleum, LLC (“Par Borrower”) entered into the Term Loan Credit Agreement (the “Term Loan Credit Agreement”) due 2030 with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto.

The Term Loan Credit Agreement was co-issued by Par Petroleum Finance Corp.

(together with the Par Borrower, the “Term Loan Borrowers”), which has no independent assets or operations.

The Term Loan Credit Agreement is guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc.

(the “Parent”) and is guaranteed on a senior secured basis by all of the subsidiaries of Par Borrower.

The Term Loan Credit Agreement proceeds were used to refinance our existing Term Loan B and repurchase our outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, all three of which had similar guarantees that were replaced by those on the Term Loan Credit Agreement.

The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Borrower and its consolidated subsidiaries’ accounts (which are all guarantors of the Term Loan Credit Agreement), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the Term Loan Credit Agreement and consolidating

adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated.

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

As of December 31, 2023

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

Parent Guarantor Par Borrower and Subsidiaries

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

and Subsidiaries

13 unchanged sentences

Operating lease right-of-use (“ROU”) assets 7,005 339,449 — 346,454

Refining and logistics equity investments — — 87,486 87,486

Investment in Laramie Energy, LLC — — 14,279 14,279

Investment in subsidiaries 1,070,518 — (1,070,518) —

29 unchanged sentences

As of December 31, 2022

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

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

and Subsidiaries

44 unchanged sentences

Year Ended December 31, 2023

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

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

and Subsidiaries

4 unchanged sentences

Depreciation and amortization 1,618 118,024 188 119,830

Loss (gain) on sale of assets, net 27 (196) — (169)

General and administrative expense (excluding depreciation) 29,258 62,189 — 91,447

Equity earnings from refining and logistics investments — — (11,844) (11,844)

Acquisition and integration costs — 17,482 — 17,482

Par West redevelopment and other costs — 11,397 — 11,397

Loss (gain) on sale of assets, net 30 (89) — (59)

Total operating expenses 30,906 7,532,699 (11,656) 7,551,949

5 unchanged sentences

Equity earnings (losses) from subsidiaries 759,528 — (759,528) —

Equity earnings from Laramie Energy, LLC — — 24,985 24,985

Total other income (expense), net 759,548 (92,068) (734,180) (66,700)

4 unchanged sentences

Year Ended December 31, 2022

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

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

and Subsidiaries

4 unchanged sentences

Depreciation and amortization 2,131 97,448 190 99,769

Impairment expense — 1,838 — 1,838

Loss (gain) on sale of assets, net 15 (10,949) (53,763) (64,697)

General and administrative expense (excluding depreciation) 17,882 44,514 — 62,396

Acquisition and integration costs 3,396 267 — 3,663

Par West redevelopment and other costs

— 9,003 — 9,003

Loss (gain) on sale of assets, net 27 (196) — (169)

Total operating expenses 23,436 6,861,736 (1,290) 6,883,882

3 unchanged sentences

Debt extinguishment and commitment costs — (5,329) — (5,329)

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

Other income (expense), net (20) 634 (1) 613

6 unchanged sentences

Year Ended December 31, 2021

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

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

and Subsidiaries

7 unchanged sentences

Acquisition and integration costs 87 — — 87

Par West redevelopment and other costs

— 9,591 — 9,591

Loss (gain) on sale of assets, net 15 (10,949) (53,763) (64,697)

Total operating expenses 14,989 4,756,960 (54,241) 4,717,708

2 unchanged sentences

Interest expense and financing costs, net (2,600) (64,209) 316 (66,493)

Debt extinguishment and commitment costs — (6,728) (1,416) (8,144)

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

Other income (expense), net (33) (19) — (52)

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

Equity earnings (losses) from subsidiaries (63,649) — 63,649 —

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

Total other income (expense), net (66,282) (68,924) 62,549 (72,657)

4 unchanged sentences

________________________________________________________

(1) The income tax benefit (expense) of the Parent Guarantor and Issuer and Subsidiaries is determined using the separate return method.

(1) The income tax benefit (expense) of the Parent Guarantor and Par Borrower and Subsidiaries is determined using the separate return method.

The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances.

Non-GAAP Financial Measures

Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Issuer and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc.

Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Par Borrower and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc.

Adjusted EBITDA calculations.

2 unchanged sentences

Year Ended December 31, 2023

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

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

and Subsidiaries

1 unchanged sentence

Inventory valuation adjustment — 102,710 — 102,710

RINs mark-to-market adjustments — 105,760 — 105,760

Unrealized loss on derivatives — 9,336 — 9,336

Environmental obligation mark-to-market adjustments — (189,783) — (189,783)

Unrealized loss (gain) on derivatives — (49,690) — (49,690)

Par West redevelopment and other costs — 11,397 — 11,397

Acquisition and integration costs — 17,482 — 17,482

Debt extinguishment and commitment costs — 19,182 — 19,182

Changes in valuation allowance and other deferred tax items (1) — — — —

Change in value of common stock warrants — — — —

Severance costs 492 1,293 — 1,785

Impairment expense — — — —

Impairments of Investments in Laramie Energy, LLC (2) — — — —

Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2) — — — —

Equity losses from Laramie Energy, LLC, excluding cash distributions — — (14,279) (14,279)

Loss (gain) on sale of assets, net 30 (89) — (59)

Depreciation and amortization 1,618 118,024 188 119,830

Interest expense and financing costs, net 1 68,655 (368) 68,288

Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — — —

Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain)

24 71,968 (363) 71,629

Laramie Energy, LLC cash distributions to Par — — (10,706) (10,706)

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 3,443 3,443

Equity losses (income) from subsidiaries (759,528) — 759,528 —

1 unchanged sentence

Adjusted EBITDA (1)

$ (28,722) $ 709,613 $ 15,356 $ 696,247

Year Ended December 31, 2022

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

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

and Subsidiaries

1 unchanged sentence

Inventory valuation adjustment — (15,712) — (15,712)

RINs mark-to-market adjustments — 66,350 — 66,350

Environmental obligation mark-to-market adjustments — 105,760 — 105,760

Unrealized loss on derivatives — 9,336 — 9,336

1 unchanged sentence

Debt extinguishment and commitment costs — 5,329 — 5,329

Changes in valuation allowance and other deferred tax items (1) — — — —

Change in value of common stock warrants — — — —

Severance costs 351 1,921 — 2,272

Impairment expense — 1,838 — 1,838

Impairments of Investment in Laramie Energy, LLC (2) — — — —

Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2) — — — —

Loss (gain) on sale of assets, net 27 (196) — (169)

Depreciation and amortization 2,131 97,448 190 99,769

Interest expense and financing costs, net 2,600 64,209 (316) 66,493

Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — — —

Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain)

1 68,655 (368) 68,288

Equity losses (income) from subsidiaries (388,008) — 388,008 —

1 unchanged sentence

Adjusted EBITDA (1)

$ (17,551) $ 659,378 $ 1,608 $ 643,435

Year Ended December 31, 2021

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

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

and Subsidiaries

1 unchanged sentence

Inventory valuation adjustment — 31,841 — 31,841

RINs mark-to-market adjustments — 81,709 — 81,709

Environmental obligation mark-to-market adjustments — 66,350 — 66,350

Unrealized gain on derivatives — (1,393) — (1,393)

1 unchanged sentence

Debt extinguishment and commitment costs — 6,728 1,416 8,144

Changes in valuation allowance and other deferred tax items (1) — — (20,896) (20,896)

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

Severance costs — 84 — 84

Impairment expense — 1,838 — 1,838

Impairment of Investment in Laramie Energy, LLC (2) — — 45,294 45,294

Par’s share of Laramie Energy’s unrealized gain on derivatives (2) — — (1,110) (1,110)

Loss (gain) on sale of assets, net 15 (10,949) (53,763) (64,697)

Depreciation and amortization 2,452 91,550 239 94,241

Interest expense and financing costs, net 4,982 61,856 3,384 70,222

Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses — — 2,721 2,721

Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain)

2,600 67,119 (316) 69,403

Equity losses (income) from subsidiaries 63,649 — (63,649) —

2 unchanged sentences

$ (12,468) $ 137,323 $ 767 $ 125,622

(1) Includes increases in (releases of) our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance.

These tax expenses (benefits) are included in Income tax expense (benefit) on our consolidated statements of operations.

(2) Includes impairment losses on our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

(3) There was no LIFO liquidation adjustment or change in value of contingent consideration for the years ended December 31, 2022, 2021, and 2020.

________________________________________________________

(1) Please read the Non-GAAP Performance Measures and Adjusted Net Income (Loss) and Adjusted EBITDA discussions above for information regarding the components of Adjusted Net Income (Loss) and Adjusted EBITDA.

Liquidity and Capital Resources

Capital Resources and Available Liquidity

Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements and contractual obligations, capital expenditures, turnaround outlays, and working capital needs.

1 unchanged sentence

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

Our liquidity position as of December 31, 2022 was $577.2 million and consisted of $574.6 million at Par Petroleum, LLC and subsidiaries, $2.5 million at Par Pacific Holdings, and $0.1 million at all our other subsidiaries.

As of December 31, 2022, we had access to the J.

Aron Discretionary Draw Facility, the ABL Credit Facility, the MLC receivable advances, and cash on hand of $490.9 million.

In addition, we have the Supply and Offtake Agreement with J.

Aron and the Washington Refinery Intermediation Agreement, which are used to finance the majority of the inventory at our Hawaii and Washington refineries, respectively.

Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, payments related to acquisitions, and to repay or refinance indebtedness.

Our liquidity position as of December 31, 2023 was $644.5 million that consisted of $279.1 million of cash and cash equivalents, $355.0 million of availability under the ABL Credit Facility, and $10.4 million of availability under the J.

Aron Discretionary Draw Facility.

In addition, we had the ability to issue letters of credit of up to $107 million under our LC Facility.

As of December 31, 2023, we had access to the ABL Credit Facility, the LC Facility, the J.

Aron Discretionary Draw Facility, and cash on hand of $279.1 million.

In addition, we have the Supply and Offtake Agreement, which is used to finance the majority of the inventory at our Hawaii refinery.

Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, for payments related to acquisitions, and to repay or refinance indebtedness.

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

1 unchanged sentence

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

Significant Developments

In the first quarter of 2021, we closed on the sale and leaseback of twenty-two (22) of our retail properties in Hawaii for an aggregate cash purchase price of approximately $112.8 million net of transaction fees (the “Sale-Leaseback Transactions”).

4 unchanged sentences

Please read Note 19—Stockholders’ Equity to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the Equity Offering.

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

On June 1, 2023 we closed the Billings Acquisition;

please read Note 5—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for further information.

On July 26, 2023, we entered into the July 2023 S&O Amendment in connection with a new LC Facility.

On October 4, 2023, we entered into the Second Amendment to the ABL Credit Facility and terminated the Washington Refinery Intermediation Agreement.

During the years ended December 31, 2023, 2022, and 2021, we had significant activity related to our inventory financing and debt agreements.

Please read Note 12—Inventory Financing Agreements and Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion of significant activity related to our inventory financing and debt agreements, respectively.

We may from time to time seek to retire or purchase our 7.75% Senior Secured Notes, our 12.875% Senior Secured Notes, or our common stock through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise.

Other Sources of Liquidity

We may from time to time seek to retire or purchase our common stock through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise.

Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

1 unchanged sentence

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

On August 2, 2023, the Board approved expanding the Company’s share repurchase authorization from $50 million to $250 million.

Please read Note 19—Stockholders’ Equity to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the share repurchase program.

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

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

The following table summarizes cash activities for the years ended December 31, 2023, 2022, and 2021 (in thousands):

5 unchanged sentences

Cash flows for the year ended December 31, 2023

Net cash provided by operating activities for the year ended December 31, 2022 was driven primarily by net income of $364.2 million, non-cash charges to operations of approximately $127.6 million, and net cash used for changes in operating assets and liabilities of approximately $39.2 million.

Net cash provided by operating activities for the year ended December 31, 2023 was driven primarily by net income of $728.6 million, non-cash earnings from operations of approximately $53.2 million, and net cash used for changes in operating assets and liabilities of approximately $96.3 million.

Non-cash earnings from operations consisted primarily of the following adjustments:

• depreciation and amortization expenses of $119.8 million,

• debt commitment and extinguishment costs of $19.2 million, and

• stock based compensation costs of $11.6 million,

partially offset by

• a benefit from deferred taxes of $126.3 million,

• unrealized gain on derivatives contracts of $49.7 million,

• a gain of $25.0 million from our equity investment in Laramie Energy, and

• $11.8 million of non-cash equity earnings from our refining and logistics investments.

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

• a decrease in gross environmental credit obligations primarily related to the settlement of our 2020, 2021, and 2022 RINs obligations, and

• increase in prepaid and other primarily driven by a $65.5 million increase in Advances to suppliers for crude purchases.

Net cash used in investing activities for the year ended December 31, 2023 consisted primarily of:

• $595.4 million used for the Billings Acquisition, and

• $82.3 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects, including construction of a flagship retail store in Washington, improved crude processing equipment at our Hawaii refinery, a co-processing unit at our Tacoma refinery, and various IT infrastructure improvements,

partially offset by

• a $10.7 million cash distribution received from Laramie Energy in the first quarter of 2023.

Net cash used in financing activities was approximately $135.6 million for the year ended December 31, 2023 and consisted primarily of the following activities:

• net repayments under the Discretionary Draw Facility and MLC receivable advances of $96.0 million,

• aggregate payments of $23.1 million of deferred loan costs and debt extinguishment costs, related to our debt refinancing, and

• repurchases of common stock of $67.8 million,

partially offset by

• net borrowings of debt of $145.1 million primarily driven by the refinancing and consolidation of our debt.

Cash flows for the year ended December 31, 2022

Net cash provided by operating activities for the year ended December 31, 2022, was primarily driven by net income of approximately $364.2 million, non-cash charges to operations of approximately $127.6 million, and net cash used for changes in operating assets and liabilities of approximately $39.2 million.

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

1 unchanged sentence

• stock based compensation costs of $9.4 million,

• unrealized loss on derivatives contracts of $9.3 million;

• unrealized loss on derivatives contracts of $9.3 million, and

• debt commitment and extinguishment costs of $5.3 million.

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

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

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

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

partially offset by

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

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

• increase in prepaid and other primarily driven by a $34.7 million increase in Collateral posted with broker for derivative instruments.

Net cash used in investing activities for the year ended December 31, 2022 consisted primarily of:

• $53.0 million in additions to property, plant, and equipment driven by profit improvement and turnaround projects including crude recovery and debottlenecking projects at our Tacoma refinery, maintenance and tank replacement projects at our Wyoming refinery, and co-generation engine and tank conversion projects at our Hawaii refinery;

• $35.5 million related to acquisitions, primarily comprised of a $30.0 million deposit on the Billings Acquisition and $5.5 million for a three-store expansion of our Washington retail footprint.

Net cash provided by financing activities was approximately $13.4 million for the year ended December 31, 2022 and consisted primarily of the following activities:

Net cash provided by financing activities for the year ended December 31, 2022 was approximately $13.4 million and and consisted primarily of the following activities:

• net borrowings under the J.

1 unchanged sentence

partially offset by

• net repayments of debt of $62.0 million primarily driven by the partial repurchase and cancellation of our 7.75% Senior Secured Notes and 12.875% Senior Secured Notes;

• net repayments of debt of $62.0 million primarily driven by the partial repurchase and cancellation of our 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, and

• repurchases of common stock of $7.8 million.

1 unchanged sentence

Net cash used in operating activities was approximately $27.6 million for the year ended December 31, 2021, which resulted from a net loss of approximately $81.3 million, partially offset by non-cash charges to operations of approximately $41.6 million and net cash provided by changes in operating assets and liabilities of approximately $12.1 million.

Net cash provided by investing activities was approximately $74.6 million for the year ended December 31, 2021 and primarily related to proceeds received from the Sale-Leaseback Transactions partially offset by additions to property, plant, and equipment totaling approximately $29.5 million.

Net cash provided by investing activities was approximately $74.6 million for the year ended December 31, 2021 and was primarily related to proceeds received from the Sale-Leaseback Transactions partially offset by additions to property, plant, and equipment totaling approximately $29.5 million.

Net cash used in financing activities for the year ended December 31, 2021 was approximately $1.1 million and consisted primarily of proceeds of $87.2 million from our March 2021 equity offering of common stock partially offset by net repayments on our debt agreements, J.

Aron deferred payment arrangement, and MLC receivable advances of $81.4 million and $5.6 million in extinguishment costs related to the repayment of the Retail Property Term Loan and a portion of the 12.875% Senior Secured Notes.

Cash flows for the year ended December 31, 2020

Net cash used in operating activities was approximately $37.2 million for the year ended December 31, 2020, which resulted from a net loss of approximately $409.1 million, partially offset by non-cash charges to operations of approximately $219.1 million and net cash provided by changes in operating assets and liabilities of approximately $152.8 million.

Net cash used in investing activities was approximately $63.5 million for the year ended December 31, 2020 and was primarily related to additions to property, plant, and equipment totaling approximately $63.5 million.

Net cash provided by financing activities for the year ended December 31, 2020 of approximately $42.6 million consisted primarily of proceeds from net borrowings on our debt agreements, J.

Aron deferred payment arrangement, and MLC receivable advances of $49.3 million, partially offset by deferred loan costs of $6.3 million related to the issuance of the 12.875% Senior Secured Notes.

Cash Requirements

5 unchanged sentences

Debt and Interest Payments.

Current and long-term debt includes the scheduled principal payments related to our outstanding debt obligations and letters of credit.

Current and long-term debt includes the scheduled principal payments related to our outstanding debt obligations and ABL Credit Facility.

Our estimated interest payments due for 2024 are $51.2 million and our total estimated undiscounted future interest payments will be $312.4 million on the debt obligations held as of December 31, 2023 and using interest rates in effect as of December 31, 2023.

Please read Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion.

Debt Refinancing.

On February 28, 2023, we entered into the Term Loan Credit Agreement.

The proceeds were used to repurchase and cancel the then-outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes and terminate and repay all amounts outstanding under the Term Loan B Facility .

As a result of this refinancing, our debt maturity was extended from 2026 to 2030 and, using interest rates that were in effect at December 31, 2023, our estimated undiscounted future interest payments increased to $310 million.

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

On October 4, 2023, we terminated the Washington Refinery Intermediation Agreement in connection with the Second Amendment to the ABL Credit Facility that increased the borrowing base.

Please read Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion.

Capital Expenditures and Turnaround Costs.

Our deferred turnaround costs and capital expenditures, excluding acquisitions, for the year ended December 31, 2022, totaled approximately $82.6 million and were primarily related to the 2021 turnaround and related scheduled maintenance work at our Washington refinery, capital projects at our Hawaii refinery, and underground tank replacements, rebranding, and point of sale and other equipment upgrades at our Retail segment.

Our capital expenditures and deferred turnaround costs budget for 2023 ranges from $85 to $95 million and primarily relates to scheduled maintenance and other capital projects related to regulatory compliance, information technology, and growth.

We expect to spend approximately $35 to $45 million annually on maintenance and sustaining capital projects over the next five years.

Our deferred turnaround costs and capital expenditures, including land and building purchases but excluding acquisitions, for the year ended December 31, 2023, totaled approximately $88.1 million and were primarily related to the 2023 turnaround and related scheduled maintenance work at our Montana refinery, capital projects at our Hawaii and Tacoma refineries, land purchases and new sites at our Retail and Hawaii Logistics businesses, and sustaining maintenance at each of our refineries.

Our capital expenditures and deferred turnaround costs budget for 2024 is approximately $220 to $250 million and primarily relates to scheduled maintenance, capital projects, and turnaround projects related to regulatory compliance, information technology, and growth across each of our businesses.

Operating Lease Liabilities.

9 unchanged sentences

On June 1, 2021, we and J.

Aron entered into the second amended and restated supply and offtake agreement which expires on May 31, 2024, with a one-year extension option.

Aron entered into the second amended and restated supply and offtake agreement which expires on May 31, 2024.

Aron entered into amendments to the Supply and Offtake Agreement on April 25, 2022, and May 17, 2022, which, among other things, increased the capacity under the Discretionary Draw Facility.

On July 26, 2023, we entered into the July 2023 S&O Amendment to the Supply and Offtake Agreement which, among other things, allowed PHR to enter into a crude oil procurement contract supported by a letter of credit under the LC Facility and have its purchases funded by J.

Aron, subject to certain conditions.

Please read Note 12—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Washington Refinery Intermediation Agreement .

We and MLC entered into amendments to the Washington Refinery Intermediation Agreement on February 11, 2021, December 17, 2021, March 9, 2022, May 9, 2022, August 11, 2022, and November 2, 2022, which, among other things, increased the maximum borrowing capacity under the MLC receivable advances.

On July 26, 2023, we entered into an LC Facility intended to finance and provide credit support for certain of PHR’s purchases of crude oil.

In addition, revolving credit loans may be used to pay suppliers.

The amount available is $120.0 million with the right to request an increase up to $350.0 million in the aggregate, subject to certain conditions.

Please read Note 12—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Billings Acquisition.

On October 20, 2022, we entered into a purchase agreement with Exxon Mobil Corporation, ExxonMobil Oil Corporation and ExxonMobil Pipeline Company LLC (collectively, the “Sellers”) to acquire (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.

Upon a successful closing of the transactions contemplated by the purchase agreement, we would pay a purchase price of $310 million plus the value of hydrocarbon inventory and adjusted working capital to the Sellers.

The purchase price is also subject to other purchase price adjustments.

We have not recorded a related contingency during the fiscal year ended December 31, 2022, as this transaction is subject to customary closing conditions and is expected to close in the second quarter

Please read Note 4—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Environmental Matters.

9 unchanged sentences

Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Inventory and Obligations Under Inventory Financing Agreements

1 unchanged sentence

Commodity inventories at the Washington refinery are stated at the lower of cost and net realizable value using the LIFO inventory accounting method.

We value merchandise along with spare parts, materials, and supplies at average cost.

We value merchandise along with spare parts, materials, and supplies at weighted average cost.

Estimating the net realizable value of our inventory requires management to make assumptions about the timing of sales and the expected proceeds that will be realized for these sales.

Please read Note 7—Inventories to our consolidated financial statements under Item 8 of this Form 10-K for additional information.

All of the crude oil utilized at the Hawaii refinery is financed by J.

A portion of the crude oil utilized at the Hawaii refinery is financed by J.

Aron under procurement contracts.

7 unchanged sentences

The valuation of our repurchase obligation requires that we make estimates of the prices and differentials assuming settlement occurs at the end of the reporting period.

We are a party to the Washington Refinery Intermediation Agreement with MLC.

Under this arrangement, U.S.

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

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

The valuation of our terminal obligation requires that we make estimates of the prices and differentials for our then monthly forward purchase obligations.

Please read Note 11—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for additional information regarding both our Hawaii and Washington inventory financing agreements.

On July 26, 2023, we entered into an LC Facility, intended to finance and provide credit support for certain of PHR’s purchases of crude oil.

In addition, revolving credit loans may be used to pay suppliers.

The amount available is $120.0 million with the right to request an increase up to $350.0 million in the aggregate, subject to certain conditions.

Please read Note 12—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for additional information regarding our Hawaii inventory financing agreement and LC Facility.

Fair Value Measurements

3 unchanged sentences

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

In estimating fair value, we use discounted cash flow projections, recent comparable market transactions, if available, or quoted

In estimating fair value, we use discounted cash flow projections, recent comparable market transactions, if available, or quoted prices.

We consider assumptions that third parties would make in estimating fair value, including the highest and best use of the asset.

24 unchanged sentences

These valuation methods require us to make significant estimates and assumptions regarding future cash flows, capital projects, commodity prices, long-term growth rates, and discount rates.

Please read Note 10—Goodwill and Intangible Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information, including the goodwill impairment we recorded in the first quarter of 2020.

Please read Note 11—Goodwill and Intangible Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information.

We review property, plant, and equipment, operating leases, and other long-lived assets whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable.

We use a cash flows model to estimate value because there is usually a lack of quoted market prices for long-lived assets.

Future cash flows estimates used for impairment reviews are based on assessments requiring judgment, including future production volumes, commodity prices, operating costs, margins, discount rates, expected capital expenditures, and other factors based on all available information available as of the date of the review.

Impairment is indicated when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying value.

We use a cash flows model to estimate value because there is usually a lack of quoted market prices available for long-lived assets.

Future cash flow estimates used for impairment reviews are based on assessments requiring judgment, including future production volumes, commodity prices, operating costs, margins, discount rates, expected capital expenditures, and other factors based on all available information

available as of the date of the review.

Impairment is required when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying value.

If this occurs, an impairment loss is recognized for the difference between the fair value and carrying value.

The fair value of long-lived assets is determined using the income approach.

Please read Note 8—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information, including the asset impairment we recorded in the first quarter of 2020.

Please read Note 9—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information.

Environmental Matters and Asset Retirement Obligations

2 unchanged sentences

Usually, the timing of these accruals coincides with the completion of a feasibility study or our commitment to a formal plan of action.

Please read Note 17—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K

for further information about our environmental liabilities and assessments.

Please read Note 18—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for further information about our environmental liabilities and assessments.

We record asset retirement obligations (“AROs”) at fair value in the period in which we have a legal obligation, whether by government action or contractual arrangement, to incur these costs and can make a reasonable estimate of the fair value of the liability.

Estimating the cost and timing of future remedial efforts is difficult and related technologies, costs, regulatory and other compliance considerations, timing, discount rates, and other inputs into the valuations are subject to change.

Please read Note 2—Summary of Significant Accounting Policies, “Asset Retirement Obligations,” to our consolidated financial statements under Item 8 of this Form 10-K for further information.

8 unchanged sentences

Please read Note 2—Summary of Significant Accounting Policies, “Income Taxes,” to our consolidated financial statements under Item 8 of this Form 10-K for further information.

Based upon the level of historical taxable income and projections for future results of operations over the periods in which the deferred tax assets are deductible, among other factors, management concluded that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets and therefore, a valuation allowance has been recorded for substantially all of our net deferred tax assets at December 31, 2022 and 2021.

In the fourth quarter of 2023, we analyzed projections for our future taxable income and the absence of objective negative evidence, such as a cumulative loss in recent years.

As a result of this analysis, we determined that we have sufficient positive evidence to release a majority of the valuation allowance against our federal net deferred tax assets and recognized a non-cash deferred tax benefit of $277.7 million for the year ended December 31, 2023.

We retain a partial valuation allowance on certain state deferred tax assets primarily as a result of apportionment factors from minimal activity in certain states impacting assessed likelihood of future realizability.

We will continue to reassess whether the balance of the valuation allowance is appropriate on a quarterly basis and, given the totality of the facts and circumstances, both positive and negative, will adjust the remaining valuation allowance in future periods if the evidence supports doing so.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis