What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-08 · 244 added, 480 removed, 430 unchanged (63% of the section changed)

1 unchanged sentence

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

Our business is organized into three primary segments:

1) Refining - We own and operate four refineries with total operating throughput capacity of 218 thousand barrels per day (“Mbpd”) in Hawaii, Wyoming, Washington, and Montana.

On June 1, 2023, we purchased a refinery in Billings, Montana that processes Western Canadian and regional Rocky Mountain crude oil and a 65% interest in an adjacent cogeneration facility.

2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise through Hele and “76” branded sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

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

On June 1, 2023, we purchased distribution and logistics assets in the upper Rockies region, including the wholly owned 70-mile, 55 Mbpd Silvertip Pipeline, a 40% interest in the 750-mile, 65 Mbpd Yellowstone refined products pipeline, and four wholly owned and three joint venture refined product terminals.

As of September 30, 2023, we owned a 46.0% equity investment in Laramie Energy.

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

As noted in the Refining and Logistics discussions above, as of September 30, 2023 through the Billings Acquisition, we own a 65% and a 40% equity investment in YELP and YPLC, respectively.

We have four reportable segments:

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

Our Corporate and Other reportable segment primarily includes general and administrative costs, business development expenses associated with renewable fuel projects, and Par West redevelopment and other costs.

Please read Note 19—Segment Information to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for detailed information on our operating results by segment.

For more information, please read Note 1—Overview to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Recent Events Affecting Comparability of Periods

Crude oil pricing decreased in 2023 compared to 2022.

In 2023, Brent crude oil pricing decreased to $84 per barrel compared to $101 per barrel in 2022.

In addition, U.S.

retail gasoline prices decreased to $3.62 per gallon in 2023 compared to $3.97 in 2022.

Refined product crack spreads in the third quarter of 2023 decreased as compared to the third quarter of 2022, largely driven by the conflict between Russia and Ukraine that escalated in February 2022.

Energy Information Administration (“EIA”) in its October 2023 short term energy outlook forecasts average Brent crude oil pricing of $95 per barrel in 2024 due to lower crude oil inventories driven by Saudi Arabia’s continued voluntary crude oil production cuts.

Brent crude oil spot prices increased in the third quarter of 2023 as U.S commercial crude oil inventories fell to the lowest level since early 2022 at the end of September 2023.

In addition, the EIA forecasts that jet fuel consumption will increase by 6% in 2024 and would equal pre-pandemic 2019 consumption driven by strong return of passengers.

On April 3, 2023, the Organization of the Petroleum Exporting Countries (“OPEC”) announced a cut to crude oil production of 1.2 MMbpd through the end of 2023.

The EIA expects the drop in OPEC crude oil production and the seasonal rise in oil consumption to put upward pressure on crude oil prices.

On June 4, 2023, Saudi Arabia, the largest producer in the OPEC cartel, announced an additional 1 MMbpd cut to its production beginning with its July export program.

Saudi Arabia announced during early August that those cuts would be extended through the end of the year.

As a result, crude oil prices have returned to levels closer to 2022 crude oil prices during the third quarter of 2023.

Crude oil pricing was relatively stable in the first quarter of 2024 compared to the first quarter of 2023.

Brent crude oil pricing averaged $81.76 per barrel in the first quarter of 2024 compared to $82.10 per barrel in the first quarter of 2023.

Similarly, average U.S.

retail gasoline prices remained relatively stable from $3.38 per gallon in the first quarter of 2023 to $3.24 in the first quarter of 2024.

Refined product crack spreads in the first quarter of 2024 decreased as compared to the first quarter of 2023.

Energy Information Administration (“EIA”) in its April 2024 short term energy outlook forecasts average Brent crude oil pricing of $89 per barrel in 2024 due to strong global inventory draws in the first quarter of 2024 and ongoing geopolitical risks.

In 2023, OPEC announced several voluntary production cuts.

Russia announced on February 10, 2023, that it would cut its oil production by 500,000 barrels a day (5 percent of its output), as a response to imposed sanctions on the country’s oil trade.

In June 2023, OPEC extended oil output cuts of 3.66 million barrels per day, or about 5% of daily global demand, until the end of 2024, including a Russian cut in oil exports of 300,000 barrels a day until the end of 2023.

In November 2023 OPEC announced additional voluntary production cuts of 1.7 million barrels a day, thus totaling about 2.2 million barrels a day, from January through March 2024.

On March 3, 2024, OPEC announced an extension of its November 2023 voluntary production cut through June 2024, driving down supply, as demand increases due to spring and summer travel seasons in the Northern Hemisphere.

Additionally, geopolitical tensions in the Middle East escalated in the first quarter of 2024 putting upward pressure on prices.

The overall effect of these conflicts 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.

Energy prices are, among other factors, indicators of inflation.

The overall energy price index increased 2.1% year over year as of March 31, 2024.

While inflation has worsened relative to the prior year, we do not believe that inflation has had a material effect on our business, financial condition or results of operations in the first quarter of 2024.

Please read Item 1A.

1 unchanged sentence

Results of Operations

Three months ended September 30, 2023 compared to the three months ended September 30, 2022

Our financial results for the third quarter of 2023 declined from net income of $267.4 million for the three months ended September 30, 2022 to $171.4 million for the three months ended September 30, 2023.

The decrease was primarily driven by a $71.3 million decrease in refining segment operating income, $7.5 million increase in general and administrative expenses, $4.7 million increase in acquisition and integration expenses related to our Billings Acquisition, $4.5 million increase in tax expense and a $4.0 million decrease in retail segment operating income, partially offset by a $3.1 million improvement in our logistics segment operating income.

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

Adjusted EBITDA and Adjusted Net Income.

For the three months ended September 30, 2023, Adjusted EBITDA was $255.7 million compared to $214.1 million for the three months ended September 30, 2022.

The $41.6 million increase was primarily related to an increase of $45.8 million in our refining segment, partially offset by a decrease of $3.5 million in our retail segment.

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

For the three months ended September 30, 2023, Adjusted Net Income was $193.5 million compared to $172.0 million for the three months ended September 30, 2022.

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

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

Our financial results improved from net income of $279.5 million for the nine months ended September 30, 2022 to $439.3 million for the nine months ended September 30, 2023.

The increase was driven by a $185.5 million increase in refining segment operating income and a $15.1 million increase in retail segment operating income, partially offset by an $18.5 million increase in general and administrative expenses and a $17.1 million increase in acquisitions and integration expenses related to our Billings Acquisition.

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

Net Income (Loss).

Our financial results for the first quarter of 2024 declined from net income of $237.9 million for the three months ended March 31, 2023 to a net loss of $3.8 million for the three months ended March 31, 2024.

The decrease was primarily driven by a $240.5 million decrease in refining segment operating income, including a $94.7 million decrease driven by a gain on RINs settlements in the first quarter of 2023, a $22.5 million increase in general and administrative expenses, a $6.1 million decrease in equity earnings from our investment in Laramie, and a $2.5 million decrease in retail segment operating income, partially offset by a $17.7 million loss on termination of financing agreements in 2023 with no similar activity in 2024, a $7.8 million improvement in our logistics segment operating income, a $5.1 million decrease in acquisition and integration expenses related to our Billings Acquisition, and a $2.8 million decrease in income tax expense.

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

Adjusted EBITDA and Adjusted Net Income.

For the nine months ended September 30, 2023, Adjusted EBITDA was $574.2 million compared to $468.5 million for the nine months ended September 30, 2022.

The improvement was primarily related to an increase of $94.6 million in our refining segment, an increase of $16.1 million in our retail segment and an increase of $14.2 million in our logistics segment, offset by a decrease due to an increase of $19.2 million in our corporate segment.

For the three months ended March 31, 2024, Adjusted EBITDA was $94.7 million compared to $167.6 million for the three months ended March 31, 2023.

The $72.9 million decrease was primarily related to a decrease of $71.4 million in our refining segment, a decrease of $9.5 million in our corporate and other segment, and a decrease of $2.5 million in our retail segment, partially offset by an increase of $10.5 million in our logistics segment.

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

For the nine months ended September 30, 2023, Adjusted Net Income was $436.6 million compared to $341.9 million for the nine months ended September 30, 2022.

The improvement was primarily related to the same factors described above for the increase in Adjusted EBITDA as well as our receipt of a $10.7 million distribution from Laramie Energy, partially offset by a $5.9 million higher income tax expense.

The following tables summarize our consolidated results of operations for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022 (in thousands).

For the three months ended March 31, 2024, Adjusted Net Income was $41.7 million compared to $137.5 million for the three months ended March 31, 2023.

The decline was primarily related to the factors described above for the decrease in Adjusted EBITDA, an increase of $8.3 million in D&A and an increase of $2.5 million in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), partially offset by a $2.6 million income tax benefit in 2024 compared to $0.2 million income tax expense in 2023.

The following tables summarize our consolidated results of operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 (in thousands).

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

Three Months Ended September 30,

2023 2022 $ Change % Change

Revenues $ 2,579,308 $ 2,056,285 $ 523,023 25%

Cost of revenues (excluding depreciation) 2,174,385 1,642,626 531,759 32%

Operating expense (excluding depreciation) 145,183 85,513 59,670 70%

Depreciation and amortization 35,311 25,125 10,186 41%

General and administrative expense (excluding depreciation) 23,694 16,219 7,475 46%

Equity earnings from refining and logistics investments

(3,934) — (3,934) NM (1)

Acquisition and integration costs 4,669 — 4,669 NM (1)

Par West redevelopment and other costs 3,127 2,816 311 11%

Gain on sale of assets, net — (185) 185 100%

Total operating expenses 2,382,435 1,772,114

Operating income 196,873 284,171

Other income (expense)

Interest expense and financing costs, net (20,815) (16,852) (3,963) 24%

Debt extinguishment and commitment costs — 343 (343) (100)%

Other expense, net (43) (198) 155 (78)%

Total other expense, net (20,858) (16,707)

Income before income taxes 176,015 267,464

Income tax expense (4,600) (68) (4,532) 6,665%

Net income $ 171,415 $ 267,396

Nine Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

8 unchanged sentences

Par West redevelopment and other costs 1,971 2,750 (779) (28)%

Gain on sale of assets, net — (170) 170 (100)%

Loss on sale of assets, net 51 — 51 NM (1)

Total operating expenses 1,971,320 1,423,807

3 unchanged sentences

Debt extinguishment and commitment costs — (17,720) 17,720 (100)%

Other income (expense), net 301 (149) 450 302%

Equity earnings (losses) from Laramie Energy, LLC 10,706 — 10,706 NM (1)

Other expense, net (2,576) (35) (2,541) 7,260%

Equity earnings from Laramie Energy, LLC 4,563 10,706 (6,143) (57)%

Total other expense, net (15,897) (23,299)

Income before income taxes 446,059 280,226

Income tax expense (6,741) (756) (5,985) 792%

Net income $ 439,318 $ 279,470

Income (loss) before income taxes (6,382) 238,103

Income tax benefit (expense) 2,631 (213) 2,844 1,335%

Net income (loss) $ (3,751) $ 237,890

________________________________________________________

(1) NM - Not meaningful

The following tables summarize our operating income (loss) by segment for the three and nine months ended September 30, 2023 and 2022 (in thousands).

The following tables summarize our operating income (loss) by segment for the three months ended March 31, 2024 and 2023 (in thousands).

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

Three months ended September 30, 2023 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Three months ended March 31, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Revenues $ 1,926,616 $ 71,842 $ 140,134 $ (157,757) $ 1,980,835

6 unchanged sentences

Par West redevelopment and other costs — — — 1,971 1,971

Operating income (loss) $ 194,847 $ 20,736 $ 13,315 $ (32,025) $ 196,873

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

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

Cost of revenues (excluding depreciation) 1,629,019 28,482 115,574 (130,449) 1,642,626

Operating expense (excluding depreciation) 60,233 3,710 21,570 — 85,513

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

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

Acquisition and integration costs — — — — —

Par West redevelopment and other costs 2,816 — — — 2,816

Loss (gain) on sale of assets, net — 61 (10) — 51

Operating income (loss) $ 22,600 $ 20,374 $ 10,996 $ (44,455) $ 9,515

________________________________________________________

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $176.2 million and $130.4 million for the three months ended September 30, 2023 and 2022, respectively.

Nine months ended September 30, 2023 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 5,848,108 $ 189,936 $ 442,480 $ (432,080) $ 6,048,444

Cost of revenues (excluding depreciation) 5,035,749 106,888 327,728 (432,154) 5,038,211

Operating expense (excluding depreciation) 252,802 13,178 64,166 — 330,146

Depreciation and amortization 59,827 17,801 8,577 1,682 87,887

General and administrative expense (excluding depreciation) — — — 66,148 66,148

Equity earnings from refining and logistics investments (2,393) (1,966) — — (4,359)

Acquisition and integration costs — — — 17,213 17,213

Par West redevelopment and other costs — — — 8,490 8,490

Operating income (loss) $ 502,123 $ 54,035 $ 42,009 $ (93,459) $ 504,708

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

Three months ended March 31, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

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

5 unchanged sentences

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

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

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

________________________________________________________

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $432.1 million and $377.7 million for the nine months ended September 30, 2023 and 2022, respectively.

Below is a summary of key operating statistics for the refining segment for the three and nine months ended September 30, 2023 and 2022:

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

2023 2022 2023 2022

(1) Our logistics operations consist primarily of intercompany transactions which eliminate on a consolidated basis.

(2) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $157.8 million and $118.2 million for the three months ended March 31, 2024 and 2023, respectively.

Below is a summary of key operating statistics for the refining segment for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Total Refining Segment

11 unchanged sentences

Adjusted Gross Margin per bbl ($/throughput bbl) (1)

$ 14.00 $ 19.11

Production costs per bbl ($/throughput bbl) (2)

12 unchanged sentences

D&A per bbl ($/throughput bbl) 1.40 —

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

2023 2022 2023 2022

Three Months Ended March 31,

Washington Refinery

8 unchanged sentences

Adjusted Gross Margin per bbl ($/throughput bbl) (1)

$ 6.13 $ 11.07

Production costs per bbl ($/throughput bbl) (2)

10 unchanged sentences

Adjusted Gross Margin per bbl ($/throughput bbl) (1)

$ 14.84 $ 27.54

Production costs per bbl ($/throughput bbl) (2)

2 unchanged sentences

3-1-2 Singapore Crack Spread (3)

$ 18.67 $ 21.22

RVO Adjusted Pacific Northwest 3-1-1-1 (4)

3 unchanged sentences

WTI 76.91 75.99

ANS (7) 87.95 98.84 81.77 102.39

Bakken Clearbrook

WCS Hardisty (7) 65.42 69.02 60.75 79.68

Brent M1-M3 1.06 0.52

________________________________________________________

(1) Feedstocks throughput and sales volumes per day for the Montana refinery for the three and nine months ended September 30, 2023 are calculated based on the 92-day and 122-day periods for which we owned the Montana refinery in

2023, respectively.

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 three and nine months ended September 30, 2023 plus the Montana refinery’s throughput or sales volumes averaged over the periods from July 1, 2023 to September 30, 2023 and June 1, 2023 to September 30, 2023, respectively.

The 2022 amounts for the total refining segment represent the sum of the Hawaii, Washington and Wyoming refineries’ throughput or sales volumes averaged over the three and nine months ended September 30, 2022.

(1) 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 the second quarter in fiscal year 2022.

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

Please see discussion of Adjusted Gross Margin below.

(2) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry.

2 unchanged sentences

We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput.

Our production costs are included in Operating expense (excluding depreciation) on our consolidated statement of operations, which also includes costs related to our bulk marketing operations.

Our production costs are included in Operating expense (excluding depreciation) on our consolidated statement of operations, which also includes costs related to our bulk marketing operations and severance costs.

(3) 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.

1 unchanged sentence

(5) 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 three and nine months ended September 30, 2023 and 2022:

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

2023 2022 2023 2022

Below is a summary of key operating statistics for the retail segment for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Retail Segment

7 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 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 effective beginning in 2023.

These modifications were made to better reflect our operating performance and to improve comparability between periods.

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

Beginning with financial results report 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.

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.

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

Beginning with financial results reported for the first quarter of 2024, Adjusted Net Income (loss) also excludes other non-operating income and expenses.

This modification improves comparability between periods by excluding income and expenses resulting from non-operating activities.

Adjusted Gross Margin

5 unchanged sentences

• 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;

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

• 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.

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

Three months ended September 30, 2023 Refining Logistics Retail

Operating income $ 194,847 $ 20,736 $ 13,315

Operating expense (excluding depreciation)

116,949 6,135 22,099

Depreciation and amortization 24,278 7,708 2,766

Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 821 698 —

Inventory valuation adjustment 72,823 — —

Environmental obligation mark-to-market adjustments (50,153) — —

Unrealized gain on derivatives (8,995) — —

Adjusted Gross Margin (1) $ 350,570 $ 35,277 $ 38,180

Three months ended September 30, 2022 Refining Logistics Retail

Three months ended March 31, 2024 Refining Logistics Retail

Operating income $ 22,600 $ 20,374 $ 10,996

6 unchanged sentences

Unrealized loss on derivatives 44,692 — —

Par West redevelopment and other costs 2,816 — —

Loss (gain) on sale of assets, net — 61 (10)

Adjusted Gross Margin (1) $ 207,110 $ 31,950 $ 37,082

Nine months ended September 30, 2023 Refining Logistics Retail

Operating income $ 502,123 $ 54,035 $ 42,009

Operating expense (excluding depreciation)

252,802 13,178 64,166

Depreciation and amortization 59,827 17,801 8,577

Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 821 905 —

Inventory valuation adjustment 126,799 — —

Environmental obligation mark-to-market adjustments (174,111) — —

Unrealized gain on derivatives (487) — —

Adjusted Gross Margin (1) $ 767,774 $ 85,919 $ 114,752

Nine months ended September 30, 2022 Refining Logistics Retail

Three months ended March 31, 2023 Refining Logistics Retail

Operating income $ 263,137 $ 12,608 $ 13,474

2 unchanged sentences

Depreciation and amortization 15,723 5,034 3,079

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

Inventory valuation adjustment 20,858 — —

1 unchanged sentence

Unrealized gain on derivatives (13,670) — —

Par West redevelopment and other costs 5,681 — —

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

Adjusted Gross Margin (1) $ 211,629 $ 21,089 $ 37,344

____________________________________________________________________________

(1) For the three and nine months ended September 30, 2023 and 2022, there was no impairment expense and LIFO liquidation adjustment recorded in Operating income (loss).

For the three and nine months ended September 30, 2023, there was no (gain) loss on sale of assets recorded in Operating income (loss).

(1) For the three months ended March 31, 2024 and 2023, there was no impairment expense and LIFO liquidation adjustment recorded in Operating income (loss).

For the three months ended March 31, 2023, there was no (gain) loss on sale of assets recorded in Operating income (loss).

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;

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

• 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;

4 unchanged sentences

• changes in the value of contingent consideration and common stock warrants;

• severance costs;

• severance costs and other non-operating expense (income);

• (gain) loss on sale of assets;

• 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.

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

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

2023 2022 2023 2022

Net Income $ 171,415 $ 267,396 $ 439,318 $ 279,470

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

Three Months Ended March 31,

Net Income (Loss) $ (3,751) $ 237,890

Inventory valuation adjustment 625 20,858

1 unchanged sentence

Unrealized loss (gain) on derivatives 43,848 (13,670)

Acquisition and integration costs 4,669 — 17,213 63

Par West redevelopment and other costs 1,971 2,750

Acquisition and integration costs 243 5,271

Debt extinguishment and commitment costs — 17,720

Severance costs 615 9 1,685 2,272

Gain on sale of assets, net — (185) — (170)

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

Severance costs and other non-operating expense (2)

Loss on sale of assets, net 51 —

Equity earnings from Laramie Energy, LLC, excluding cash distributions (4,563) —

Adjusted Net Income (3) 41,668 137,518

Depreciation and amortization 32,656 24,360

Interest expense and financing costs, net 20,815 16,852 51,974 51,400

Equity earnings from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — (10,706) —

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

18,728 16,250

Laramie Energy, LLC cash distributions to Par

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 1,646 —

2 unchanged sentences

$ 94,698 $ 167,635

(1) For the three and nine months ended September 30, 2023 and 2022, there was no LIFO liquidation adjustment, change in value of contingent consideration, change in value of common stock warrants, change in valuation allowance or other deferred tax items, impairment expense, impairments associated with our investment in Laramie Energy, our share of Laramie Energy’s asset impairment losses in excess of our basis difference, or our share of Laramie Energy’s unrealized loss (gain) on derivatives.

________________________________________

(1) For the three months ended March 31, 2024, we recognized a non-cash deferred tax benefit of $2.6 million related to deferred state and federal tax liabilities.

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

For the three months ended March 31, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items.

(2) For t he three months ended March 31, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition and $2.3 million for an estimated legal settlement unrelated to current operating activities.

(3) For the three months ended March 31, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, 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 the reporting periods.

Factors Impacting Segment Results

Operating Income

Three months ended September 30, 2023 compared to the three months ended September 30, 2022

Operating income for our refining segment was $194.8 million for the three months ended September 30, 2023, a decrease of $71.3 million compared to operating income of $266.1 million for the three months ended September 30, 2022.

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

Operating income for our refining segment was $22.6 million for the three months ended March 31, 2024, a decrease of $240.5 million compared to operating income of $263.1 million for the three months ended March 31, 2023.

The decrease was primarily driven by:

• $131.8 million related to decreased crack spreads at our refineries in our legacy portfolio,

• an increase in consolidated environmental costs across all our refineries of $125.9 million, primarily associated with a gain of $102.1 million related to settlements in 2023 with no similar gain in 2024,

• $41.0 million related to higher inventory financing costs driven by changes in commodity prices,

• $131.0 million related to decreased crack spreads at our refineries in our legacy portfolio, and

• a decrease of $52.6 million related to our derivative costs associated with our refineries in our legacy portfolio,

• a decrease of $17.7 million driven by a 5.2% decrease in refined product sales across our legacy refineries, and

• an increase in operating expenses of $9.5 million, excluding the impact of the Billings Acquisition,

partially offset by:

• an increase of $230.0 million related to a favorable change in crude oil differentials at our refineries in our legacy portfolio,

• a $69.6 million contribution from the Billings Acquisition, and

• a decrease in purchased product costs of $42.0 million at our Hawaii refinery,

• a $16.0 million favorable change in inventory valuation adjustments,

• a $10.9 million contribution from the Billings Acquisition,

• $7.0 million related to a favorable change in crude oil differentials at our refineries in our legacy portfolio, and

• a $5.0 million favorable FIFO change at our Wyoming refinery.

Operating income for our logistics segment was $20.7 million for the three months ended September 30, 2023, an increase of $3.1 million compared to $17.6 million for the three months ended September 30, 2022.

The increase is primarily due to a $3.1 million contribution from the Billings Acquisition logistics assets acquired in June 2023.

Operating income for our retail segment was $13.3 million for the three months ended September 30, 2023, a decrease of $4.0 million compared to $17.3 million for the three months ended September 30, 2022.

The decrease was primarily due to a $7.1 million decrease in operating income related to a decrease in fuel margins and a $0.5 million increase in operating expenses, partially offset by a $2.7 million increase related to higher fuel sales volumes, and increased merchandise sales of $1.0 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

Operating income for our refining segment was $502.1 million for the nine months ended September 30, 2023, an improvement of $185.5 million compared to operating income of $316.6 million for the nine months ended September 30, 2022.

The increase in operating income was primarily driven by:

• a decrease in consolidated environmental costs across all our refineries in our legacy portfolio of $136.9 million, driven by favorable mark to market adjustments and a gain on retirement of prior year RINs,

• an increase of $113.3 million driven by a 29.0% increase in refined product sales volumes at our refineries in our legacy portfolio,

• an increase of $98.9 million related to a favorable change in crude oil differentials at our refineries in our legacy portfolio,

• a $53.1 million contribution from the Billings Acquisition, and

• a favorable change in step-out obligation related to our intermediation agreements of $52.6 million driven by changes in commodity prices,

partially offset by:

• an increase in purchased product costs of $201.0 million at all our refineries in our legacy portfolio,

• a decrease of $46.0 million related to declining crack spreads at our refineries in our legacy portfolio, and

• an increase in logistics and other product delivery costs of $34.9 million at our refineries in our legacy portfolio.

Operating income for our logistics segment was $54.0 million for the nine months ended September 30, 2023, an increase of $10.6 million compared to $43.4 million for the nine months ended September 30, 2022.

The increase was primarily due to a $6.2 million contribution from the Billings Acquisition logistics assets acquired in June 2023 and a $17.4 million increase in operating income driven by an increase in throughput volumes throughout our legacy logistics portfolio, an increase in third-party contracts of $3.9 million, partially offset by an increase in variable expenses of $10.3 million, an increase in vessel and fuel costs of $4.5 million and an increase in depreciation and amortization expenses of $2.4 million.

Operating income for our retail segment was $42.0 million for the nine months ended September 30, 2023, an increase of $15.1 million compared to $26.9 million for the nine months ended September 30, 2022.

The increase in operating income was primarily due to a $9.1 million increase in fuel margins, $8.2 million related to higher fuel sales volumes, and increased merchandise sales of $2.2 million, partly offset by higher operating expenses of $3.8 million driven by an increase in employee costs and credit card fees in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Operating income for our logistics segment was $20.4 million for the three months ended March 31, 2024, an increase of $7.8 million compared to $12.6 million for the three months ended March 31, 2023.

The increase was primarily due to a $7.7 million contribution from the Billings Acquisition logistics assets acquired in June 2023.

Operating income for our retail segment was $11.0 million for the three months ended March 31, 2024, a decrease of $2.5 million compared to $13.5 million for the three months ended March 31, 2023.

The decrease was primarily due to a $2.2 million increase in operating expenses driven by higher employee costs.

Gross margin remained relatively consistent in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Adjusted Gross Margin

Three months ended September 30, 2023 compared to the three months ended September 30, 2022

For the three months ended September 30, 2023, our refining Adjusted Gross Margin was $350.6 million, an increase of $99.8 million compared to $250.8 million for the three months ended September 30, 2022.

The increase was primarily driven by an increase of $197.6 million primarily related to lower feedstock costs across our legacy refining portfolio, Adjusted Gross Margin of $135.0 million contributed by the Montana refinery, partially offset by decreased crack spreads across our legacy refining portfolio, and higher intermediation fees.

Other factors impacting refining results are described below.

• Adjusted Gross Margin for the Hawaii refinery decreased by $6.02 per barrel from $19.49 per barrel during the three months ended September 30, 2022 to $13.47 per barrel during the three months ended September 30, 2023, primarily due to lower feedstock costs and declining crack spreads.

The Singapore 3-1-2 index declined from $26.43 in the third quarter of 2022 to $23.39 in the third quarter of 2023.

• Adjusted Gross Margin for the Washington refinery decreased by $7.67 per barrel from $19.97 per barrel during the three months ended September 30, 2022 to $12.30 per barrel during the three months ended September 30, 2023,

primarily due to unfavorable environmental costs and declining crack spreads.

The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $40.58 in the third quarter of 2022 to $35.00 in the third quarter of 2023.

• Adjusted Gross Margin for the Wyoming refinery increased by $17.62 per barrel from $19.39 per barrel during the three months ended September 30, 2022 to $37.01 per barrel during the three months ended September 30, 2023, primarily due to a favorable FIFO change of $24.0 million and 13% higher sales volumes.

The RVO Adjusted USGC 3-2-1 index improved from $29.01 in the third quarter of 2022 to $29.65 in the third quarter of 2023.

For the three months ended September 30, 2023, our logistics Adjusted Gross Margin was $35.3 million, an increase of $9.1 million compared to $26.2 million for the three months ended September 30, 2022.

The increase is primarily due to Adjusted Gross Margin of $9.0 million contributed by the Billings Acquisition logistics assets acquired in June 2023.

For the three months ended September 30, 2023, our retail Adjusted Gross Margin was $38.2 million, a decrease of $3.6 million compared to $41.8 million for the three months ended September 30, 2022.

The decrease was primarily due to a 22% decrease in fuel margins, partially offset by 12% higher fuel sales volumes and 13% higher merchandise sales margins in the three months ended September 30, 2023 compared to the comparable period in 2022.

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

For the nine months ended September 30, 2023, our refining Adjusted Gross Margin was $767.8 million, an increase of $167.0 million compared to $600.8 million for the nine months ended September 30, 2022.

The increase was primarily due to Adjusted Gross Margin contributed by the Montana refinery of $193.2 million and 9% higher refined product sales margins across our legacy refining portfolio, partially offset by $201.0 million higher purchased product expenses, and $112.8 million higher environmental expenses.

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

For the three months ended March 31, 2024, our refining Adjusted Gross Margin was $207.1 million, a decrease of $4.5 million compared to $211.6 million for the three months ended March 31, 2023.

The decrease was primarily driven by a decrease of $131.8 million related to decreased crack spreads across our legacy refining portfolio, a decrease of $17.7 million related to lower refined product sales volumes across our legacy portfolio, a decrease of $17.3 million primarily related to higher feedstock costs across our legacy refining portfolio, and a decrease of $15.6 million related to higher inventory financing costs, partially offset by $66.8 million contributed by the Montana refinery acquired in June 2023, an improvement of $52.4 million related to lower purchased product costs across our legacy refining portfolio, favorable derivative changes of $25.8 million, and favorable FIFO adjustments of $21.0 million driven by a decrease in feedstock costs.

Other factors impacting refining results are described below.

• Adjusted Gross Margin for the Hawaii refinery improved by $0.82 per barrel from $13.92 per barrel during the nine months ended September 30, 2022 to $14.74 per barrel during the nine months ended September 30, 2023, primarily due to lower feedstock costs and a 9% increase in refined product sales volumes, partially offset by $198.0 million higher purchased product costs and lower crack spreads.

The Singapore 3-2-1 index declined from $26.52 in the nine months ended September 30, 2022 to $19.45 in the nine months ended September 30, 2023.

• Adjusted Gross Margin for the Washington refinery decreased by $6.60 per barrel from $16.51 per barrel during the nine months ended September 30, 2022 to $9.91 per barrel during the nine months ended September 30, 2023, primarily due to $115.5 million higher environmental expenses and declining crack spreads.

The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $36.89 in the nine months ended September 30, 2022 to $28.51 in the nine months ended September 30, 2023.

• Adjusted Gross Margin for the Wyoming refinery remained relatively consistent, from $29.20 per barrel during the nine months ended September 30, 2022 to $28.88 per barrel during the nine months ended September 30, 2023.

The RVO Adjusted USGS 3-2-1 index declined from $29.87 in the nine months ended September 30, 2022 to $25.96 in the nine months ended September 30, 2023.

For the nine months ended September 30, 2023, our logistics Adjusted Gross Margin was $85.9 million, an increase of $16.1 million compared to $69.8 million for the nine months ended September 30, 2022.

The increase was primarily due to Adjusted Gross Margin of $12.4 million contributed from the Billings Acquisition logistics assets acquired in June 2023 and a 2% increase in throughput across our legacy assets, partially offset by an increase in cost of sales driven by $14.8 million higher fees and variable expenses.

For the nine months ended September 30, 2023, our retail Adjusted Gross Margin was $114.8 million, an increase of $19.4 million compared to $95.4 million for the nine months ended September 30, 2022.

The increase was primarily related to an 11% increase in fuel margins, 12% higher fuel sales volumes, and an 11% increase in merchandise sales.

• Adjusted Gross Margin for the Hawaii refinery decreased by $5.11 per barrel from $19.11 per barrel during the three months ended March 31, 2023 to $14.00 per barrel during the three months ended March 31, 2024, including 10 days of reduced production for required maintenance in March 2024.

The decrease in Adjusted Gross Margin was primarily due to declining crack spreads, partially offset by lower purchased product and feedstock costs.

The Singapore 3-1-2 index declined from $21.22 in the first quarter of 2023 to $18.67 in the first quarter of 2024.

• Adjusted Gross Margin for the Washington refinery decreased by $4.94 per barrel from $11.07 per barrel during the three months ended March 31, 2023 to $6.13 per barrel during the three months ended March 31, 2024, inclusive of a 15-day planned maintenance in March 2024.

The decrease was primarily due to declining crack spreads, higher inventory financing expenses, and an 11% decrease in refined product sales, partially offset by a favorable change in derivative activities, favorable environmental costs, and lower purchased product costs.

The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $25.30 in the first quarter of 2023 to $20.48 in the first quarter of 2024.

• Adjusted Gross Margin for the Wyoming refinery decreased by $12.70 per barrel from $27.54 per barrel during the three months ended March 31, 2023 to $14.84 per barrel during the three months ended March 31, 2024, primarily due to lower regional crack spreads, partially offset by lower feedstock costs and a favorable FIFO change of $5.0 million.

The RVO Adjusted USGC 3-2-1 index decreased from $26.55 in the first quarter of 2023 to $21.34 in the first quarter of 2024.

For the three months ended March 31, 2024, our logistics Adjusted Gross Margin was $32.0 million, an increase of $10.9 million compared to $21.1 million for the three months ended March 31, 2023.

The increase is primarily due to $10.9 million contributed by the Billings Acquisition logistics assets acquired in June 2023.

For the three months ended March 31, 2024, our retail Adjusted Gross Margin was $37.1 million, a decrease of $0.2 million compared to $37.3 million for the three months ended March 31, 2023.

The decrease was primarily due to a 12% decrease in fuel margins, partially offset by 9% higher fuel sales volumes and 11% higher merchandise sales margins in the three months ended March 31, 2024 compared to the comparable period in 2023.

Discussion of Consolidated Results

Three months ended September 30, 2023 compared to the three months ended September 30, 2022

For the three months ended September 30, 2023, revenues were $2.6 billion, a $0.5 billion increase compared to $2.1 billion for the three months ended September 30, 2022.

The increase was primarily due to a $0.8 billion contribution from the Billings Acquisition and a 3% increase in refining sales volumes across our legacy refinery portfolio during the quarter, partially offset by the decrease in crude prices and average product crack spreads discussed below.

Average Brent crude oil prices declined 12% and average WTI crude oil prices declined 10% during the third quarter of 2023 compared to the third quarter of 2022.

The 3-1-2 Singapore Crack Spread, RVO Adjusted Pacific Northwest 3-1-1-1, and RVO Adjusted

USGC 3-2-1 declined 12%, 14%, and 2%, respectively, compared to the third quarter of 2022.

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

For the three months ended March 31, 2024, revenues were $2.0 billion, a $0.3 billion increase compared to $1.7 billion for the three months ended March 31, 2023.

The increase was primarily due to a $0.5 billion contribution from the Billings Acquisition, partially offset by a 5% decrease in refining sales volumes across our legacy refinery portfolio during the quarter and a decrease in average product crack spreads discussed below.

The 3-1-2 Singapore Crack Spread, RVO Adjusted Pacific Northwest 3-1-1-1, and RVO Adjusted USGC 3-2-1 declined 12%, 19%, and 20%, respectively, compared to the first quarter of 2023.

Please read our key operating statistics for further information.

Revenues at our retail segment increased $1.1 million primarily due to a 12% increase in volumes and a 10% increase in merchandise sales, partially offset by an 11% decline in fuel prices.

Revenues at our retail segment increased $4.5 million primarily due to a 9% increase in volumes.

Cost of Revenues (Excluding Depreciation).

For the three months ended September 30, 2023, cost of revenues (excluding depreciation) was $2.2 billion, an increase of $0.6 billion when compared to $1.6 billion for the three months ended September 30, 2022.

The increase was primarily driven by a $0.7 billion contribution from the Billings Acquisition and higher inventory financing expenses, partially offset by decreased crude oil prices as described above and a favorable FIFO change of $0.2 billion.

Cost of sales at our retail segment increased $4.7 million primarily driven by an increase in fuel sales volumes.

For the three months ended March 31, 2024, cost of revenues (excluding depreciation) was $1.7 billion, an increase of $0.4 billion when compared to $1.3 billion for the three months ended March 31, 2023.

The increase was primarily driven by a $0.4 billion contribution from the Billings Acquisition.

Operating Expense (Excluding Depreciation).

For the three months ended September 30, 2023, operating expense (excluding depreciation) was $145.2 million, a $59.7 million increase when compared to $85.5 million for the three months ended September 30, 2022.

The increase was primarily driven by the $57.7 million contribution from the Billings Acquisition.

For the three months ended March 31, 2024, operating expense (excluding depreciation) was $153.3 million, a $70.2 million increase when compared to $83.1 million for the three months ended March 31, 2023.

The increase was driven by a $60.7 million contribution from the Billings Acquisition, a $4.3 million increase in consulting services, and a $2.5 million increase in repairs and maintenance expenses.

Depreciation and Amortization .

For the three months ended September 30, 2023, D&A was $35.3 million, an increase of $10.2 million compared to $25.1 million for the three months ended September 30, 2022.

For the three months ended March 31, 2024, D&A was $32.7 million, an increase of $8.3 million compared to $24.4 million for the three months ended March 31, 2023.

The increase was primarily driven by the $8.5 million of D&A attributable to the Billings Acquisition.

General and Administrative Expense (Excluding Depreciation).

For the three months ended September 30, 2023, general and administrative expense (excluding depreciation) was $23.7 million, an increase of $7.5 million compared to $16.2 million for the three months ended September 30, 2022.

The increase was primarily due to a $4.7 million increase in employee costs, a $1.3 million increase in consulting services, and $1.0 million related to the Billings Acquisition.

For the three months ended March 31, 2024, general and administrative expense (excluding depreciation) was $41.8 million, an increase of $22.5 million compared to $19.3 million for the three months ended March 31, 2023.

The increase was primarily due to a $15.9 million increase in employee costs driven by $13.1 million of stock based compensation expenses related to CEO transition costs in the first quarter of 2024 and an increase of $2.6 million in payroll expenses due primarily to an increase in employee headcount, a $4.2 million increase in renewable development expense, and $1.6 million related to the Billings Acquisition.

Equity earnings from refining and logistics investments.

During the three months ended September 30, 2023, Equity earnings from refining and logistics investments were $3.9 million related to YELP and YPLC.

For the three months ended ended September 30, 2023, our proportionate share of YELP’s net income and YPLC’s net income was $2.7 million and $1.5 million, respectively.

During the three months ended March 31, 2024, Equity earnings from refining and logistics investments were $6.1 million related to YELP and YPLC.

For the three months ended March 31, 2024, our proportionate share of YELP’s net income and YPLC’s net income was $4.5 million and $1.9 million, respectively.

Please read Note 3—Refining and Logistics Equity Investments for further information.

Acquisition and Integration Expense.

During the three months ended September 30, 2023, we incurred $4.7 million of acquisition and integration costs related to the Billings Acquisition, compared to immaterial acquisition and integration costs for the three months ended September 30, 2022.

Please read Note 5—Acquisitions for further information.

Par West redevelopment and other costs.

For the three months ended September 30, 2023, Par West redevelopment and other costs were $3.1 million, an increase of $0.3 million compared to $2.8 million for the three months ended September 30, 2022, primarily due to higher redevelopment costs.

Interest Expense and Financing Costs, Net .

For the three months ended September 30, 2023, our interest expense and financing costs were $20.8 million, an increase of $3.9 million compared to $16.9 million for the three months ended September 30, 2022.

The increase was primarily due to an increase in interest expense due to higher outstanding debt balances and higher inventory financing fees.

Please read Note 11—Debt and Note 9—Inventory Financing Agreements for further information.

Income Taxes.

For the three months ended September 30, 2023, we recorded income tax expense of $4.6 million primarily related to increased taxable income and higher apportionment factors in the states in which we pay taxes.

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

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

For the nine months ended September 30, 2023, revenues were $6.0 billion, a $0.5 billion increase compared to $5.5 billion for the nine months ended September 30, 2022.

The Billings Acquisition contributed revenues of $1.0 billion in the first four months under our ownership.

When comparing our legacy refining operations, there was a decrease of $0.5 billion in third-party revenues at our refining segment, $0.7 billion of which was related to lower crude oil prices, partially offset by a 9% increase in refining sales volumes.

Average Brent crude oil prices declined 20% and average WTI crude oil prices declined 21% as compared to the prior period.

Revenues at our retail segment increased $18.0 million primarily due to a 12% increase in volumes, partially offset by a 8% decrease in fuel prices.

Cost of Revenues (Excluding Depreciation).

For the nine months ended September 30, 2023, cost of revenues (excluding depreciation) was $5.0 billion, a $0.2 billion increase compared to $4.8 billion for the nine months ended September 30, 2022, inclusive of a $0.9 billion contribution from the Billings Acquisition.

When comparing our legacy refining

operations, there was a decrease of $0.7 billion in cost of revenues (excluding depreciation), $0.8 billion of which was primarily due to decreases in crude oil prices as discussed above, $0.1 billion lower environmental costs, and $0.1 billion lower feedstock costs, partially offset by $0.3 billion related to higher refining sales volumes, and $0.2 billion related to higher purchased product costs.

Operating Expense (Excluding Depreciation).

For the nine months ended September 30, 2023, operating expense (excluding depreciation) was $330.1 million, an increase of $83.7 million compared to $246.4 million for the nine months ended September 30, 2022.

The increase was primarily driven by $73.0 million attributable to the Billings Acquisition, coupled with $3.6 million higher employee costs and $2.8 million higher utility and maintenance expenses.

Depreciation and Amortization .

For the nine months ended September 30, 2023, D&A was $87.9 million, an increase of $13.4 million compared to $74.5 million for the nine months ended September 30, 2022.

The increase was primarily driven by the $14.5 million contribution from the Billings Acquisition.

General and Administrative Expense (Excluding Depreciation).

For the nine months ended September 30, 2023, general and administrative expense (excluding depreciation) was $66.1 million, an increase of $18.5 million compared to $47.6 million for the nine months ended September 30, 2022.

The increase was primarily due to an $8.9 million increase in employee costs, $4.5 million increase in outside services, and $3.1 million of expenses related to development of our renewable projects.

Equity earnings from refining and logistics investments.

For the nine months ended September 30, 2023, equity earnings from refining and logistics investments were $4.4 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 nine months ended September 30, 2023, our proportionate share of YELP’s net income and YPLC’s net income was $2.7 million and $1.9 million, respectively.

Please read Note 3—Refining and Logistics Equity Investments for additional information.

Acquisition and Integration Expense.

During the nine months ended September 30, 2023, we incurred $17.2 million of acquisition and integration costs related to the Billings Acquisition, compared to $0.1 million of acquisition and integration costs for the nine months ended September 30, 2022.

During the three months ended March 31, 2024, we incurred an immaterial amount of acquisition and integration costs.

For the three months ended March 31, 2023, we incurred $5.3 million of acquisition and integration costs related to the Billings Acquisition.

Please read Note 5—Acquisitions for further information.

Par West redevelopment and other costs.

For the nine months ended September 30, 2023, Par West redevelopment and other costs were $8.5 million, an increase of $2.8 million compared to $5.7 million for the nine months ended September 30, 2022, associated with the operation and decommissioning of our Par West facility.

The increase was primarily due to additional redevelopment costs of $3.0 million.

For the three months ended March 31, 2024, Par West redevelopment and other costs were $2.0 million, a decrease of $0.8 million compared to $2.8 million for the three months ended March 31, 2023, primarily due to a decrease in redevelopment activities.

Interest Expense and Financing Costs, Net .

For the nine months ended September 30, 2023, our interest expense and financing costs were $52.0 million, relatively consistent with $51.4 million for the nine months ended September 30, 2022.

For the three months ended March 31, 2024, our interest expense and financing costs were $17.9 million, an increase of $1.6 million compared to $16.3 million for the three months ended March 31, 2023.

The increase was primarily due to a $2.9 million increase in interest expense due to higher outstanding debt balances, partly offset by an increase of $1.2 million in interest income from our investment accounts opened in the first quarter of 2023.

Please read Note 11—Debt to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further information.

Debt Extinguishment and Commitment Costs.

For the nine months ended September 30, 2023, we incurred debt extinguishment and commitment costs of $17.7 million in connection with the refinancing of our long-term debt in the first quarter of 2023.

Please read Note 11—Debt for further information.

For the nine months ended September 30, 2022, our debt extinguishment and commitment costs were $5.3 million and primarily represented extinguishment costs associated with the redemption of $36.9 million of 12.875% Senior Secured Notes in the second quarter of 2022.

Equity Earnings from Laramie Energy, LLC.

For the nine months ended September 30, 2023, equity earnings from Laramie Energy, LLC were $10.7 million.

On March 1, 2023, following a refinancing of certain debt, Laramie Energy 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.

There were no equity earnings from our investment in Laramie Energy, LLC, for the nine months ended September 30, 2022.

Please read Note 4 — Investment in Laramie Energy for further discussion.

During the three months ended March 31, 2024, we incurred no debt extinguishment and commitment costs.

For the three months ended March 31, 2023 we incurred $17.7 million of debt extinguishment and commitment costs in connection with the refinancing of our long-term debt in the first quarter of 2023.

Please read Note 11—Debt to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further information.

Income Taxes.

For the nine months ended September 30, 2023, we recorded an income tax expense of $6.7 million primarily related to increased taxable income and higher apportionment factors in the states in which we pay taxes.

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

For the three months ended March 31, 2024, we recorded income tax benefit of $2.6 million primarily related our first quarter of 2024 pre-tax net loss.

For the three months ended March 31, 2023, we recorded income tax expense of $0.2 million primarily related to increased taxable income.

Consolidating Condensed Financial Information

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

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

(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 Petroleum, LLC.

(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 Facility 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 Petroleum, LLC 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.

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 September 30, 2023

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

As of March 31, 2024

Parent Guarantor Par Borrower and Subsidiaries

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

and Subsidiaries

12 unchanged sentences

Long-term assets

Operating lease right-of-use assets 2,172 327,256 — 329,428

Operating lease right-of-use (“ROU”) assets

6,895 334,510 — 341,405

Refining and logistics equity investments — — 88,315 88,315

Investment in Laramie Energy, LLC — — 18,842 18,842

Investment in subsidiaries 1,084,824 — (1,084,824) —

29 unchanged sentences

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

12 unchanged sentences

Long-term assets

Operating lease right-of-use assets 2,649 348,112 — 350,761

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) —

28 unchanged sentences

Total liabilities and stockholders’ equity $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950

Three Months Ended September 30, 2023

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

Three Months Ended March 31, 2024

Parent Guarantor Par Borrower and Subsidiaries

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

and Subsidiaries

9 unchanged sentences

Par West redevelopment and other costs — 1,971 — 1,971

Gain on sale of assets, net — — — —

Loss on sale of assets, net — 51 — 51

Total operating expenses 18,134 1,959,246 (6,060) 1,971,320

2 unchanged sentences

Interest expense and financing costs, net 30 (18,004) 90 (17,884)

Debt extinguishment and commitment costs — — — —

Other income (expense), net (8) (2,567) (1) (2,576)

6 unchanged sentences

Adjusted EBITDA $ (9,487) $ 96,429 $ 7,756 $ 94,698

Three Months Ended September 30, 2022

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

Three Months Ended March 31, 2023

Parent Guarantor Par Borrower and Subsidiaries

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

and Subsidiaries

7 unchanged sentences

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

Gain on sale of assets, net — (185) — (185)

Total operating expenses 11,494 1,412,265 48 1,423,807

5 unchanged sentences

Equity earnings (losses) from subsidiaries 249,544 — (249,544) —

Total other income (expense), net 273,126 (16,806) (273,027) (16,707)

Income (loss) before income taxes 267,396 273,109 (273,041) 267,464

Income tax benefit (expense) (1) — (66,917) 66,849 (68)

Net income (loss) $ 267,396 $ 206,192 $ (206,192) $ 267,396

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

Nine Months Ended September 30, 2023

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

and Subsidiaries

Revenues $ — $ 6,048,378 $ 66 $ 6,048,444

Operating expenses

Cost of revenues (excluding depreciation) — 5,038,211 — 5,038,211

Operating expense (excluding depreciation) — 330,146 — 330,146

Depreciation and amortization 1,220 86,527 140 87,887

General and administrative expense (excluding depreciation) 21,467 44,682 (1) 66,148

Equity earnings from refining and logistics investments

— — (4,359) (4,359)

Acquisition and integration costs — 17,213 — 17,213

Par West redevelopment and other costs — 8,490 — 8,490

Gain on sale of assets, net — — — —

Total operating expenses 22,687 5,525,269 (4,220) 5,543,736

Operating income (loss) (22,687) 523,109 4,286 504,708

Other income (expense)

Interest expense and financing costs, net (37) (52,210) 273 (51,974)

Debt extinguishment and commitment costs — (17,682) — (17,682)

Other income (expense), net 53 248 — 301

Equity earnings (losses) from subsidiaries 465,053 — (465,053) —

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

4 unchanged sentences

Adjusted EBITDA $ (5,857) $ 173,481 $ 11 $ 167,635

Nine Months Ended September 30, 2022

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

and Subsidiaries

Revenues $ — $ 5,512,816 $ 94 $ 5,512,910

Operating expenses

Cost of revenues (excluding depreciation) — 4,801,800 — 4,801,800

Operating expense (excluding depreciation) — 246,394 — 246,394

Depreciation and amortization 1,721 72,624 143 74,488

General and administrative expense (excluding depreciation) 14,147 33,403 — 47,550

Acquisition and integration costs 63 — — 63

Par West redevelopment and other costs — 5,681 — 5,681

Gain on sale of assets, net 27 (197) — (170)

Total operating expenses 15,958 5,159,705 143 5,175,806

Operating income (15,958) 353,111 (49) 337,104

Other income (expense)

Interest expense and financing costs, net 6 (51,683) 277 (51,400)

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

Other income (expense), net (12) (138) 1 (149)

Equity earnings (losses) from subsidiaries 295,434 — (295,434) —

Total other income (expense), net 295,428 (57,150) (295,156) (56,878)

Income (loss) before income taxes 279,470 295,961 (295,205) 280,226

Income tax benefit (expense) (1) — (72,616) 71,860 (756)

Net income (loss) $ 279,470 $ 223,345 $ (223,345) $ 279,470

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

_______________________________________

(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.

(2) The acquisition and integration expense related to the Billings Acquisition was pushed down from the Parent Guarantor to the Issuer and Subsidiaries upon consummation of the transaction.

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.

See “Results of Operations — Non-GAAP Performance Measures — Adjusted Net Income (Loss) and Adjusted EBITDA” above.

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

Three Months Ended September 30, 2023

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

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

Three Months Ended March 31, 2024

Parent Guarantor Par Borrower and Subsidiaries

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

and Subsidiaries

2 unchanged sentences

Environmental obligation mark-to-market adjustments — (10,263) — (10,263)

Unrealized loss (gain) on derivatives — (8,995) — (8,995)

Unrealized loss on derivatives — 43,848 — 43,848

Acquisition and integration costs — 243 — 243

Par West redevelopment and other costs — 1,971 — 1,971

Debt extinguishment and commitment costs — — — —

Severance costs 16 598 1 615

Severance costs and other non-operating expense (2)

8,306 7,832 — 16,138

Loss (gain) on sale of assets, net

Equity earnings from Laramie Energy, LLC, excluding cash distributions — — (4,563) (4,563)

Depreciation and amortization 349 32,260 47 32,656

Interest expense and financing costs, net 11 20,895 (91) 20,815

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)

(30) 18,848 (90) 18,728

Equity losses (income) from subsidiaries (14,360) — 14,360 —

2 unchanged sentences

Adjusted EBITDA (1) $ (9,487) $ 96,429 $ 7,756 $ 94,698

Three Months Ended September 30, 2022

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

and Subsidiaries

Net income (loss) $ 267,396 $ 206,192 $ (206,192) $ 267,396

Inventory valuation adjustment — (91,135) — (91,135)

Environmental obligation mark-to-market adjustments — (6,731) — (6,731)

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

Acquisition and integration costs — — — —

Debt extinguishment and commitment costs — (343) — (343)

Severance costs — 9 — 9

Depreciation and amortization 517 24,561 47 25,125

Interest expense and financing costs, net (15) 16,958 (91) 16,852

Equity losses (income) from subsidiaries (273,119) — 273,119 —

Income tax expense (benefit) — 66,917 (66,849) 68

Gain on sale of assets, net — (185) — (185)

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

Nine Months Ended September 30, 2023

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

Three Months Ended March 31, 2023

Parent Guarantor Par Borrower and Subsidiaries

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

and Subsidiaries

6 unchanged sentences

Debt extinguishment and commitment costs — 17,720 — 17,720

Severance costs 492 1,192 1 1,685

Depreciation and amortization 373 23,939 48 24,360

Interest expense and financing costs, net 37 52,210 (273) 51,974

Equity earnings from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — (10,706) (10,706)

Equity losses (income) from subsidiaries (465,053) — 465,053 —

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 1,726 1,726

Income tax expense 3,064 111,068 (107,391) 6,741

Adjusted EBITDA (1) $ (20,922) $ 588,980 $ 6,153 $ 574,211

Nine Months Ended September 30, 2022

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

and Subsidiaries

Net income (loss) $ 279,470 $ 223,345 $ (223,345) $ 279,470

Inventory valuation adjustment — (18,039) — (18,039)

Environmental obligation mark-to-market adjustments — 83,119 — 83,119

Unrealized loss (gain) on derivatives — (10,151) — (10,151)

Acquisition and integration costs 63 — — 63

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

Severance costs 351 1,921 — 2,272

Depreciation and amortization 1,721 72,624 143 74,488

Interest expense and financing costs, net (6) 51,683 (277) 51,400

Interest expense and financing costs, net, excluding unrealized

interest rate derivative loss (gain)

8 16,333 (91) 16,250

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

Equity losses (income) from subsidiaries (249,544) — 249,544 —

Income tax expense (benefit) 145 58,540 (58,472) 213

Gain on sale of assets, net 27 (197) — (170)

Adjusted EBITDA (1) $ (5,857) $ 173,481 $ 11 $ 167,635

_______________________________________

For the three and nine months ended September 30, 2022, there was no Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments.

(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.

(2) For the three months ended March 31, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition an d $2.3 million for an estimated legal settlement unrelated to current operating activities.

Liquidity and Capital Resources

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.

Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance

costs, and other costs such as payroll.

Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll.

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 September 30, 2023 was $778.2 million and consisted of $769.7 million at Par Petroleum, LLC and subsidiaries, $8.5 million at Par Pacific Holdings, Inc., and an immaterial amount at all our other subsidiaries.

As of September 30, 2023, we had access to the ABL Credit Facility, the LC Facility, the J.

Aron Discretionary Draw Facility, the MLC receivable advances, and cash on hand of $347.1 million.

Our liquidity position as of March 31, 2024 was $575.0 million, consisting of $228.3 million of cash and cash equivalents, $344.8 million of availability under the ABL Credit Facility, and $1.9 million of availability under the J.Aron Discretionary Draw Facility.

In addition, we had the ability to issue letters of credit up to $120.0 million under our LC Facility.

As of March 31, 2024, we had access to the ABL Credit Facility, the LC Facility, the J.

Aron Discretionary Draw Facility, and cash on hand of $228.3 million.

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

1 unchanged sentence

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.

On June 1, 2023 we closed the Billings Acquisition;

please read Note 5—Acquisitions for further information.

On April 26, 2023, we terminated the Prior ABL Credit Facility with certain lenders and Bank of America and entered into a new ABL Credit Facility.

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

Please read Note 11—Debt for further information about the ABL Credit Facility and Note 9—Inventory Financing Agreements for further information about the July 2023 S&O Amendment and LC Facility.

On October 4, 2023, we entered into the Second Amendment to the ABL Credit Facility and USOR entered into a Wind-Down and Termination Agreement;

please read Note 20—Subsequent Events for further information.

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

Our Supply and Offtake Agreement with J.Aron expires on May 31, 2024, and our LC Facility will mature on July 25, 2024.

In the first quarter of 2024 we amended our asset-based loan to permit expanding its capacity from $900 million to $1.4 billion as we plan the refinancing of our existing Hawaii intermediation facility.

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.

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

3 unchanged sentences

The amounts involved may be material.

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 net leverage ratio (as defined in the Term Loan Credit Agreement).

The following table summarizes cash activities for the nine months ended September 30, 2023 and 2022 (in thousands):

Nine Months Ended September 30,

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 three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

Net cash provided by operating activities $ 25,431 $ 139,095

Net cash used in investing activities (22,632) (2,457)

Net cash used in financing activities (79,039) (34,522)

Cash flows for the nine months ended September 30, 2023

Net cash provided by operating activities for the nine months ended September 30, 2023 was driven primarily by net income of $439.3 million, non-cash charges to operations and non-operating items of approximately $106.4 million, and net cash provided by changes in operating assets and liabilities of approximately $35.7 million.

Net cash provided by (used in) financing activities (53,606) 33,754

Cash flows for the three months ended March 31, 2024

Net cash provided by operating activities for the three months ended March 31, 2024 was driven primarily b y a net loss of $3.8 million, non-cash charges to operations and non-operating items of approximately $86.4 million, and net cash used for changes in operating assets and liabilities of approximately $57.2 million.

Non-cash charges to operations and non-operating items consisted primarily of the following adjustments:

• unrealized loss on derivatives contracts of $43.8 million,

• depreciation and amortization expenses of $32.7 million,

• debt commitment and extinguishment costs of $17.7 million,

• stock based compensation costs of $9.0 million,

partially offset by:

• a gain of $10.7 million from our equity investment in Laramie Energy.

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

• an increase in our accounts payable primarily driven by the contribution of our Billings business, and

• a decrease in inventory driven by lower crude oil and refined product prices, lower inventory volumes, and a decrease in RINs assets at our Hawaii and Wyoming refineries,

• stock based compensation costs of $16.4 million, and

• non-cash interest and financing costs of $1.4 million,

partially offset by:

• an increase in our accounts receivable primarily driven by the contribution from our Billings Acquisition and higher accounts receivable balances across our legacy refining portfolio, and

• a decrease in gross environmental credit obligations primarily related to retirements of a portion of our prior year obligations, partially offset by increased current period obligation.

Net cash used in investing activities for the nine months ended September 30, 2023 consisted primarily of:

• $595.4 million used for the Billings Acquisition, and

• $53.7 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,

• a $2.6 million change in deferred tax assets driven by our net loss during the period and

• equity earnings of $6.1 million from our YELP and YPLC investments partially offset by $5.3 million of dividends received from YELP.

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

• an $81.6 million increase in crude and refined products inventory driven by higher ending volumes, and

• an $81.2 million increase in accounts receivable primarily driven by timing of collections and sales volumes,

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 $79.0 million for the nine months ended September 30, 2023 and consisted primarily of the following activities:

• net repayments under the J.

Aron Discretionary Draw Facility and MLC receivable advances of $52.4 million, and

• decreases in prepaid and other expenses primarily driven by prepayments for crude and

• net increases in our Supply and Offtake Agreement obligations and accounts payable.

Net cash used in investing activities for the three months ended March 31, 2024 consisted primarily of:

• $22.6 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects.

Net cash used in financing activities was approximately $53.6 million for the three months ended March 31, 2024 and consisted primarily of the following activities:

• repurchases of common stock of $34.1 million,

• net repayments of debt of $18.6 million primarily driven by ABL Credit Facility activity, and

• payments of $3.4 million of deferred loan costs,

partially offset by:

• net borrowings of debt of $12.7 million primarily driven by the refinancing and consolidation of our debt.

Cash flows for the nine months ended September 30, 2022

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

• net repayment under the J.

Aron Discretionary Draw Facility of $2.4 million.

Cash flows for the three months ended March 31, 2023

Net cash provided by operating activities for the three months ended March 31, 2023, was driven primarily by net income of $237.9 million, non-cash charges to operations of approximately $21.0 million, and net cash used for changes in operating assets and liabilities of approximately $119.8 million.

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

• depreciation and amortization expenses of $74.5 million,

• stock based compensation costs of $7.4 million, and

• depreciation and amortization expenses of $24.4 million, and

• debt commitment and extinguishment costs of $17.7 million,

partially offset by:

• unrealized gain on derivatives contracts of $10.2 million.

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

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

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

Net cash used in investing activities for the nine months ended September 30, 2022 consisted primarily of:

• $38.1 million in additions to property, plant, and equipment driven by profit improvement and turnaround projects including crude recovery and debottlenecking projects at our Tacoma refinery, maintenance and tank replacement projects at our Wyoming refinery, and co-generation engine and tank conversion projects at our Hawaii refinery.

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

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

• repurchases of common stock of $7.3 million,

• unrealized gain on derivatives contracts of $13.7 million, and

• a gain of $10.7 million from our equity investment in Laramie Energy, LLC.

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

• a decrease in gross environmental credit obligations primarily related to retirements of a portion of our 2020 and all our 2021 RVO liabilities across all our refineries, partially offset by increased obligations related to the Washington CCA and increased gross RVO primarily related to current period production volumes, and

• net decreases in our inventories and accounts receivable resulting from retirements of RINs across all our refineries, lower crude oil and refined product prices and lower inventory volumes at our Hawaii refinery,

partially offset by:

• net borrowings under the J.

• net increases in our inventory financing agreement obligations and accounts payable, and

• decreases in prepaid and other expenses primarily driven by decreases in our derivative collateral.

Net cash used in investing activities for the three months ended March 31, 2023 consisted primarily of $13.2 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects, including improved crude processing equipment at our Hawaii refinery.

This was partially offset by a $10.7 million cash distribution received from Laramie Energy, LLC.

Net cash provided by financing activities was approximately $33.8 million for the three months ended March 31, 2023 and consisted primarily of the following activities:

• net repayments of debt of $20.5 million primarily driven by the refinancing and consolidation of our debt, and

• net repayments under the J.

Aron Discretionary Draw Facility and MLC receivable advances of $22.4 million,

partially offset by:

• aggregate payments of $13 million of deferred loan costs and debt extinguishment costs related to our debt refinancing.

Cash Requirements.

There have been no material changes to the cash requirements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, outside the ordinary course of business except as follows:

There have b een no m aterial changes to the cash requirements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, outside the ordinary course of business except as follows:

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 March 31, 2023, our estimated undiscounted future interest payments increased to $344 million.

On October 4, 2023, we entered into the Second Amendment to the ABL Credit Facility and the Wind-Down Agreement.

Please read Note 11—Debt and Note 20—Subsequent Events for more information.

On March 22, 2024, we entered into the Third Amendment to the ABL Credit Facility, conditional upon the termination of the Company’s existing intermediation agreement with J.

Aron, to among other things, increase our total revolver commitment to $1.4 billion, Please read Note 9—Inventory Financing Agreements and Note 11—Debt to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

Critical Accounting Estimates

There have been no material changes to critical accounting estimates disclosed in our Annual Report on Form 10-K for the nine months ended September 30, 2023.

There have been no m aterial changes to critical accounting estimates disclosed in our Annual Report on Form 10-K for the three months ended March 31, 2024.

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (“PSLRA”), or in releases made by the SEC, all of which may be amended from time to time.

Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors including, without limitation, the conflict between Russia and Ukraine and certain developments in the global crude oil markets, on our business, our customers, and the markets where we operate;

Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors including, without limitation, the Russia-Ukraine war, Israel-Palestine conflict, Houthi attacks in the Red Sea, Iranian activities in the Strait of Hormuz and certain developments in the global crude oil markets, on our business, our customers, and the markets where we operate;

our beliefs regarding available capital resources;

8 unchanged sentences

our expectations regarding the synergies or other benefits of our acquisitions;

our expectations regarding certain tax liabilities and debt obligations;

management’s assumptions about future events;

our ability to integrate the recently acquired ExxonMobil Billings refinery and associated marketing and logistics assets (the “Acquisition”) into our existing business, the anticipated synergies and other benefits of the Acquisition, including

renewable growth opportunities;

anticipated liabilities and costs associated with the Acquisition;

our expectations regarding certain

tax liabilities and debt obligations;

management’s assumptions about future events into our existing business, the anticipated synergies and other benefits of the recently acquired ExxonMobil Billings refinery and associated marketing and logistics assets (the “Acquisition”), including renewable growth opportunities;

the anticipated financial and operating results of the Acquisition, and the effect on the Company’s cash flows and profitability (including Adjusted EBITDA and Adjusted Net Income);

18 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis