PAR PACIFIC HOLDINGS, INC. 10-K

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a growing energy company based in Houston, Texas, that provides both renewable and conventional fuels to the western United States. For more information, please read “Part I –Item 1. — Business—Overview” of this Form 10-K. Known Trends or Uncertainties While the market indices presented below under “Item 7. — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” are representative of the results of our refineries, each refinery’s realized gross margin on a per barrel basis will differ from the benchmark due to a variety of factors that affect the performance of the specific refinery. These factors include, but are not limited to, the actual type and timing of crude oil throughput; product yields; transportation and storage costs; fuel burn; product premiums or discounts; inventory fluctuations; feedstock and product purchases; commodity price risk-management activities; crude oil purchase financing activities; and other factors not reflected in the benchmark refining margin. We operate in logistically complex, niche markets and, as such, each of our refineries has unique cost advantages and disadvantages as compared to their respective relevant market indices. Recent Events Affecting Comparability of Periods Inflation. Energy prices are, among other factors, indicators of inflation, and the U.S. Federal Reserve (the “Fed”) has taken significant steps to curb inflation. After aggressively raising interest rates in 2022 and early 2023 to bring down inflation, the Fed cut interest rates in 2024 in response to positive indicators of economic growth, including easing labor market conditions and lower inflation. Interest rates decreased to a range of 4.25% to 4.50% in December 2024 from 5.25% to 5.50% in December 2023. Crude oil pricing decreased in 2024 compared to 2023. Brent crude oil pricing averaged $79.86 per barrel in 2024 compared to $82.17 per barrel in 2023. The U.S. retail price for regular-grade gasoline averaged $3.30 per gallon in 2024 compared to $3.52 per gallon in 2023. This decline was due, in part, to lower crude oil prices in 2024 compared to 2023, as noted above, as well as lower global demand primarily driven by decreased demand in China. The International Energy Agency (“IEA”) revised its forecast in its February 2025 Oil Market Report, which projected higher global oil demand in 2025 citing China, India, and other emerging Asian economies as the primary sources of growth. The overall energy index increased to 3.6% year over year as of December 2024. While inflation has improved relative to prior years, we do not believe that inflation has had a material effect on our business, financial condition or results of operations in 2024. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases, or price increases could lead to a decline in demand for our products, which could have a material effect on our business, financial condition, or results of operations. Geopolitical Conflicts. Given the nature of our operations, including sourcing crude oil and feedstocks, geopolitical conflicts may affect our business and results of operations. The Russia-Ukraine war, the Israel-Palestine conflict, Houthi attacks in the Red Sea, and Iranian activities in the Strait of Hormuz have all continued to disrupt global trade patterns, increase crude oil price volatility, and increase freight costs and delivery times. The overall effect of these conflicts and actions taken to limit the purchase of Russian petroleum products in response to the Russia-Ukraine war have raised the operating costs of many European and other refineries. We continue to actively monitor the impact of these and other global situations on our people, operations, financial condition, liquidity, suppliers, customers, and industry, and are actively responding to the impacts that these matters have on our business. Please read “Item 1A. — Risk Factors” for more information on risks and uncertainties, including those related to economic factors, and their potential impacts on our business. For purposes of this section, “legacy portfolio” and “legacy refining operations” refer to our Hawaii, Wyoming, and Washington refineries, and exclude our Montana refinery acquired in June 2023. Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net Income (Loss). Our financial results for the year ended December 31, 2024, declined from a Net income of $728.6 million for the year ended December 31, 2023, to a Net loss of $33.3 million for the year ended December 31, 2024. The decrease was driven by a $658.8 million decrease in refining segment Operating income, a $109.6 million decrease in Income tax benefit, a $25.3 million decrease in Equity earnings from Laramie Energy, LLC, and a $17.4 million increase in general and 30 administrative expenses, partially offset by a $19.7 million increase in logistics segment Operating income, a $17.5 million decrease in Debt extinguishment and commitment costs, and a $17.4 million decrease in Acquisition and integration costs related to our Billings Acquisition. Please read the discussions of segment and consolidated results below for additional information. Adjusted EBITDA and Adjusted Net Income. For the year ended December 31, 2024, Adjusted EBITDA was $238.7 million compared to $696.2 million for the year ended December 31, 2023. The decrease was primarily related to a $376.7 million decrease in our refining segment Adjusted Gross Margin and a $98.7 million increase in operating expenses, partially offset by increases of $14.6 million and $9.4 million in our logistics and retail segment Adjusted Gross Margins, respectively. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information. For the year ended December 31, 2024, Adjusted Net Income was $21.2 million compared to $501.2 million for the year ended December 31, 2023. The decline was primarily related to the same factors described above for the decrease in Adjusted EBITDA, as well as a $12.0 million increase in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), an $11.8 million increase in Depreciation and amortization, and a $9.2 million decrease in cash distributions received from Laramie Energy, LLC, partially offset by a decrease in Income tax expense, net of impacts due to changes in the valuation allowance and other deferred tax items of $13.3 million. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net Income. Our financial results for the year ended December 31, 2023, improved from a Net income of $364.2 million for the year ended December 31, 2022, to $728.6 million for the year ended December 31, 2023. The increase was driven by a $274.3 million increase in refining segment Operating income, an increase of $116.0 million in Income tax benefit, and a $15.7 million increase in logistics segment Operating income, partially offset by a $29.0 million increase in general and administrative expenses, a $13.8 million increase in Acquisition and integration costs related to our Billings Acquisition, and a $2.4 million increase in expenses related to Par West redevelopment. Please read the discussions of segment and consolidated results below for additional information. Adjusted EBITDA and Adjusted Net Income. For the year ended December 31, 2023, Adjusted EBITDA was $696.2 million compared to $643.4 million for the year ended December 31, 2022. The improvement was primarily related to an increase of $54.7 million in our refining segment, an increase of $22.3 million in our logistics segment, and an increase of $8.0 million in our retail segment, partially offset by a decrease of $32.3 million in our corporate segment. Please read the discussion of segment results below for additional information. For the year ended December 31, 2023, Adjusted Net Income was $501.2 million compared to an Adjusted Net Income of $474.7 million for the year ended December 31, 2022. The improvement was primarily related to the same factors described above for the increase in Adjusted EBITDA, partially offset by a $20.0 million increase in Depreciation and amortization. 31 The following table summarizes our consolidated results of operations for the years ended December 31, 2024, 2023, and 2022 (in thousands). The following should be read in conjunction with our consolidated financial statements under Item 8 of this Annual Report on Form 10-K. Year Ended December 31, 2024 2023 2022 Revenues $ 7,974,457 $ 8,231,955 $ 7,321,785 Cost of revenues (excluding depreciation) 7,101,148 6,838,109 6,376,014 Operating expense (excluding depreciation) 584,282 485,587 333,206 Depreciation and amortization 131,590 119,830 99,769 General and administrative expense (excluding depreciation) 108,844 91,447 62,396 Equity earnings from refining and logistics investments (11,905) (11,844) — Acquisition and integration costs 100 17,482 3,663 Par West redevelopment and other costs 12,548 11,397 9,003 Loss (gain) on sale of assets, net 222 (59) (169) Total operating expenses 7,926,829 7,551,949 6,883,882 Operating income 47,628 680,006 437,903 Other income (expense) Interest expense and financing costs, net (82,793) (72,450) (68,288) Debt extinguishment and commitment costs (1,688) (19,182) (5,329) Other income (expense), net (1,869) (53) 613 Equity earnings (losses) from Laramie Energy, LLC (296) 24,985 — Total other expense, net (86,646) (66,700) (73,004) Income (loss) before income taxes (39,018) 613,306 364,899 Income tax benefit (expense) 5,696 115,336 (710) Net income (loss) $ (33,322) $ 728,642 $ 364,189 The following tables summarize our Operating income (loss) by segment for the years ended December 31, 2024, 2023, and 2022 (in thousands). The following should be read in conjunction with our consolidated financial statements under Item 8 of this Annual Report on Form 10-K. Year ended December 31, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 7,733,866 $ 299,532 $ 584,760 $ (643,701) $ 7,974,457 Cost of revenues (excluding depreciation) 7,149,264 175,590 420,064 (643,770) 7,101,148 Operating expense (excluding depreciation) 479,737 15,676 88,869 — 584,282 Depreciation and amortization 91,108 27,033 11,037 2,412 131,590 General and administrative expense (excluding depreciation) — — — 108,844 108,844 Equity earnings from refining and logistics investments (3,663) (8,242) — — (11,905) Acquisition and integration costs — — — 100 100 Par West redevelopment and other costs — — — 12,548 12,548 Loss (gain) on sale of assets, net 8 124 (10) 100 222 Operating income (loss) $ 17,412 $ 89,351 $ 64,800 $ (123,935) $ 47,628 32 Year ended December 31, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 7,969,480 $ 260,779 $ 592,480 $ (590,784) $ 8,231,955 Cost of revenues (excluding depreciation) 6,845,834 145,944 437,198 (590,867) 6,838,109 Operating expense (excluding depreciation) 373,612 24,450 87,525 — 485,587 Depreciation and amortization 81,017 25,122 11,462 2,229 119,830 General and administrative expense (excluding depreciation) — — — 91,447 91,447 Equity earnings from refining and logistics investments (7,363) (4,481) — — (11,844) Acquisition and integration costs — — — 17,482 17,482 Par West redevelopment and other costs — — — 11,397 11,397 Loss (gain) on sale of assets, net 219 — (308) 30 (59) Operating income (loss) $ 676,161 $ 69,744 $ 56,603 $ (122,502) $ 680,006 Year ended December 31, 2022 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 7,046,060 $ 198,821 $ 570,206 $ (493,302) $ 7,321,785 Cost of revenues (excluding depreciation) 6,332,694 109,458 428,712 (494,850) 6,376,014 Operating expense (excluding depreciation) 236,989 14,988 81,229 — 333,206 Depreciation and amortization 65,472 20,579 10,971 2,747 99,769 General and administrative expense (excluding depreciation) — — — 62,396 62,396 Acquisition and integration costs — — — 3,663 3,663 Par West redevelopment and other costs 9,003 — — — 9,003 Loss (gain) on sale of assets, net 1 (253) 56 27 (169) Operating income (loss) $ 401,901 $ 54,049 $ 49,238 $ (67,285) $ 437,903 ________________________________________________________ (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 $643.7 million, $590.8 million, and $493.3 million for the years ended December 31, 2024, 2023, and 2022, respectively. 33 Below is a summary of key operating statistics for the refining segment for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 Total Refining Segment Feedstocks Throughput (Mbpd) (1) 186.7 170.3 133.8 Refined product sales volume (Mbpd) (1) 199.9 183.1 140.3 Hawaii Refinery Feedstocks Throughput (Mbpd) 81.1 80.8 81.8 Yield (% of total throughput) Gasoline and gasoline blendstocks 26.2 % 26.3 % 25.6 % Distillates 38.9 % 40.4 % 38.8 % Fuel oils 31.3 % 28.9 % 31.4 % Other products 0.2 % 1.1 % 0.7 % Total yield 96.6 % 96.7 % 96.5 % Refined product sales volume (Mbpd) 89.3 89.1 84.0 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 9.34 $ 15.25 $ 13.99 Production costs per bbl ($/throughput bbl) (3) 4.58 4.57 4.86 D&A per bbl ($/throughput bbl) 0.43 0.65 0.67 Montana Refinery Feedstocks Throughput (Mbpd) (1) 49.9 54.4 — Yield (% of total throughput) Gasoline and gasoline blendstocks 48.0 % 48.1 % — % Distillates 31.9 % 32.0 % — % Asphalt 10.9 % 12.1 % — % Other products 3.9 % 3.2 % — % Total yield 94.7 % 95.4 % — % Refined product sales volume (Mbpd) (1) 53.2 58.6 — Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 11.37 $ 21.14 $ — Production costs per bbl ($/throughput bbl) (3) 12.42 10.78 — D&A per bbl ($/throughput bbl) 1.83 1.45 — Washington Refinery Feedstocks Throughput (Mbpd) 38.2 40.0 35.5 Yield (% of total throughput) Gasoline and gasoline blendstocks 23.9 % 23.5 % 24.0 % Distillates 34.5 % 34.5 % 34.3 % Asphalt 18.8 % 19.7 % 20.3 % Other products 19.3 % 18.7 % 18.2 % Total yield 96.5 % 96.4 % 96.8 % 34 Year Ended December 31, 2024 2023 2022 Refined product sales volume (Mbpd) 39.2 41.7 39.7 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 3.25 $ 9.41 $ 18.00 Production costs per bbl ($/throughput bbl) (3) 4.28 4.12 4.01 D&A per bbl ($/throughput bbl) 1.97 1.91 2.19 Wyoming Refinery Feedstocks Throughput (Mbpd) 17.5 17.6 16.5 Yield (% of total throughput) Gasoline and gasoline blendstocks 46.9 % 47.1 % 49.7 % Distillates 47.1 % 46.7 % 43.1 % Fuel oil 2.4 % 2.5 % 2.4 % Other products 2.1 % 1.5 % 2.1 % Total yield 98.5 % 97.8 % 97.3 % Refined product sales volume (Mbpd) 18.2 17.9 16.6 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 13.73 $ 25.15 $ 26.50 Production costs per bbl ($/throughput bbl) (3) 8.10 7.50 7.32 D&A per bbl ($/throughput bbl) 2.71 2.69 2.85 Par Pacific Indices ($ per barrel) Hawaii Index (4) $ 7.21 $ 13.06 $ 19.21 Montana Index (5) 14.39 23.71 26.84 Washington Index (6) 4.13 9.81 19.85 Wyoming Index (7) 16.47 24.48 26.33 Market Cracks (average $ per barrel) Singapore 3.1.2 Product Crack (4) $ 13.36 $ 19.50 $ 25.43 Montana 6.3.2.1 Product Crack (5) 21.59 30.15 35.93 Washington 3.1.1.1 Product Crack (6) 12.11 17.91 29.58 Wyoming 2.1.1 Product Crack (7) 18.48 27.52 32.35 Crude Oil Prices (average $ per barrel) (8) Brent $ 79.86 $ 82.17 $ 99.04 WTI 75.76 77.60 94.33 ANS (-) Brent 1.55 0.95 3.27 Bakken Guernsey (-) WTI (1.26) (0.65) 2.34 Bakken Williston (-) WTI (2.45) (0.09) 2.70 WCS Hardisty (-) WTI (13.90) (17.92) (19.14) MSW (-) WTI (4.03) (3.70) (1.56) Brent M1-M3 1.10 0.81 3.49 35 ________________________________________________________ (1) The 2024 amounts for the total refining segment represent the sum of the Hawaii, Montana, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the year ended December 31, 2024. Feedstocks throughput and sales volumes per day for the Montana refinery for the year ended December 31, 2023, are calculated based on the 214-day period for which we owned the Montana refinery in 2023. As such, the amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the year ended December 31, 2023, plus the Montana refinery’s throughput or sales volumes averaged over the period from June 1, 2023, to December 31, 2023. The 2022 amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the year ended December 31, 2022. (2) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method. The definition of Adjusted Gross Margin was modified beginning with the financial results reported for periods in fiscal year 2022. 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. (3) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. 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 statements of operations, which also includes costs related to our bulk marketing operations and severance costs. (4) Beginning in 2025, we established the Hawaii Index as a new benchmark for our Hawaii operations. We believe the Hawaii Index, which incorporates market cracks and landed crude differentials, better reflects the key drivers impacting our Hawaii refinery’s financial performance compared to prior reported market indices. The Hawaii Index is calculated as the Singapore 3.1.2 Product Crack, or one part gasoline (RON 92) and two parts distillates (Sing Jet & Sing gasoil) as created from a barrel of Brent crude oil, less the Par Hawaii Refining, LLC (“PHR”) crude differential. (5) Beginning in 2025, we established the Montana Index as a new benchmark for our Montana refinery. We believe the Montana Index, which incorporates local market cracks, regional crude oil prices, and management’s estimates for other costs of sales, better reflects the key drivers impacting our Montana refinery’s financial performance compared to prior reported market indices. Beginning in 2025, market cracks have been updated to reflect local market product pricing, which better reflects our Montana refinery’s refined product sales price compared to prior reported market indices. The Montana Index is calculated as the Montana 6.3.2.1 Product Crack less Montana crude costs, less other costs of sales, including inflation-adjusted product delivery costs, yield loss expense, taxes and tariffs, and product discounts. The Montana 6.3.2.1 Product Crack is calculated by taking three parts gasoline (Billings E10 and Spokane E10), two parts distillate (Billings ULSD and Spokane ULSD), and one part asphalt (Rocky Mountain Rail Asphalt) as created from a barrel of WTI crude oil, less 100% of the RVO cost for gasoline and ULSD. Asphalt pricing is lagged by one month. The Montana crude cost is calculated as 60% WCS differential to WTI, 20% MSW differential to WTI, and 20% Syncrude differential to WTI. The Montana crude cost is lagged by three months and includes an inflation-adjusted crude delivery cost. Other costs of sales and crude delivery costs are based on historical averages and management’s estimates. (6) Beginning in 2025, we established the Washington Index as a new benchmark for our Washington refinery. We believe the Washington Index, which incorporates local market cracks, regional crude oil prices, and management’s estimates for other costs of sales, better reflects the key drivers impacting our Washington refinery’s financial performance compared to prior reported market indices. Beginning in 2025, market cracks have been updated to reflect local market product pricing, which better reflects our Washington refinery’s refined product sales price compared to prior reported market indices. The Washington Index is calculated as the Washington 3.1.1.1 Product Crack, less Washington crude costs, less other costs of sales, including inflation-adjusted product delivery costs, yield loss expense and state and local taxes. The Washington 3.1.1.1 Product Crack is calculated by taking one part gasoline (Tacoma E10), one part distillate (Tacoma ULSD) and one part secondary products (USGC VGO and Rocky Mountain Rail Asphalt) as created from a barrel of WTI crude oil, less 100% of the RVO cost for gasoline and ULSD. Asphalt pricing is lagged by one month. The Washington crude cost is calculated as 67% Bakken Williston differential to WTI and 33% WCS Hardisty differential to WTI. The Washington crude cost is lagged by one month and includes an inflation-adjusted crude delivery cost. Other costs of sales and crude delivery costs are based on historical averages and management’s estimates. (7) Beginning in 2025, we established the Wyoming Index as a new benchmark for our Wyoming refinery. We believe the Wyoming Index, which incorporates local market cracks, regional crude oil prices, and management’s estimates for other costs of sales, better reflects the key drivers impacting our Wyoming refinery’s financial performance compared to prior 36 reported market indices. Beginning in 2025, market cracks have also been updated to reflect local market product pricing, which better reflects our Wyoming refinery’s refined product sales price compared to prior reported market indices. The Wyoming Index is calculated as the Wyoming 2.1.1 Product Crack, less Wyoming crude costs, less other cost of sales, including inflation adjusted product delivery costs and yield loss expense, based on historical averages and management’s estimates. The Wyoming 2.1.1 Product Crack is calculated by taking one part gasoline (Rockies gasoline) and one part distillate (USGC ULSD and USGC Jet) as created from a barrel of WTI crude oil, less 100% of the RVO cost for gasoline and ULSD. The Wyoming crude cost is calculated as the Bakken Guernsey differential to WTI on a one-month lag. (8) Beginning in 2025, crude oil prices have been updated and expanded to reflect regional differentials to Brent and WTI, which better reflect our refineries’ feedstock costs compared to prior crude oil pricing. Below is a summary of key operating statistics for the retail segment for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 Retail Segment Retail sales volumes (thousands of gallons) 121,473 117,550 105,456 Non-GAAP Performance Measures Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. The chief operating decision-maker (“CODM”) is the Chief Executive Officer (“CEO”), who uses certain non-GAAP financial measures and forecasts to allocate resources and evaluate our operating performance. These measures should not be considered in isolation or as substitutes or alternatives to their most directly comparable GAAP financial measures or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently. We believe Adjusted Gross Margin (as defined below) provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation and amortization. Operating expense includes certain shared costs such as finance, accounting, tax, human resources, information technology, and legal costs that are not directly attributable to specific operating segments. The criteria used to determine the allocation of these expenses generally reflect the time and resources required to provide the applicable service to other internal stakeholders. Remaining expenses are included in the reconciliation of reportable segment Adjusted EBITDA to consolidated pre-tax income (loss) as unallocated corporate general and administrative expenses. Management, including the CODM, uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow management and investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. Beginning with financial results reported for periods in fiscal year 2022, the inventory valuation adjustment was modified to include the first-in, first-out (“FIFO”) inventory gains (losses) associated with our titled manufactured inventory in Hawaii. This modification was made to better align Adjusted Net Income (Loss) and Adjusted EBITDA with the cash flow of the Hawaii refining business. Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA 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 also exclude 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 37 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. Please read Note 2—Summary of Significant Accounting Policies, Environmental Credits and Obligations section, for a discussion of the change in estimate. 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. Effective as of the fourth quarter of 2024, we have modified our definition of Adjusted Gross Margin, Adjusted Net Income (Loss) and Adjusted EBITDA to align the accounting treatment for deferred turnaround costs from our refining and logistics investments with our accounting policy. Under this approach, we exclude our share of their turnaround expenses, which are recorded as period costs in their financial statements, and instead defer and amortize these costs on a straight-line basis over the period estimated until the next planned turnaround. This modification enhances consistency and comparability across reporting periods. Adjusted Gross Margin Adjusted Gross Margin is defined as Operating income (loss) excluding: • operating expense (excluding depreciation); • depreciation and amortization (“D&A”); • Par’s portion of interest, taxes, and D&A expense from refining and logistics investments; • impairment expense; • loss (gain) on sale of assets, net; • Par's portion of accounting policy differences from refining and logistics investments; • 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); and • 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): Year ended December 31, 2024 Refining Logistics Retail Operating income $ 17,412 $ 89,351 $ 64,800 Operating expense (excluding depreciation) 479,737 15,676 88,869 Depreciation and amortization 91,108 27,033 11,037 Par’s portion of interest, taxes, and depreciation and amortization expense from refining and logistics investments 2,493 3,651 — Inventory valuation adjustment (490) — — Environmental obligation mark-to-market adjustments (19,136) — — Unrealized loss on derivatives 43,281 — — Par's portion of accounting policy differences from refining and logistics investments 3,856 — — Loss (gain) on sale of assets, net 8 124 (10) Adjusted Gross Margin (1) $ 618,269 $ 135,835 $ 164,696 38 Year ended December 31, 2023 Refining Logistics Retail Operating income $ 676,161 $ 69,744 $ 56,603 Operating expense (excluding depreciation) 373,612 24,450 87,525 Depreciation and amortization 81,017 25,122 11,462 Par’s portion of interest, taxes, and depreciation and amortization expense from refining and logistics investments 1,586 1,857 — Inventory valuation adjustment 102,710 — — Environmental obligation mark-to-market adjustments (189,783) — — Unrealized gain on derivatives (50,511) — — Loss (gain) on sale of assets, net 219 — (308) Adjusted Gross Margin (1) (2) $ 995,011 $ 121,173 $ 155,282 Year ended December 31, 2022 Refining Logistics Retail Operating income $ 401,901 $ 54,049 $ 49,238 Operating expense (excluding depreciation) 236,989 14,988 81,229 Depreciation and amortization 65,472 20,579 10,971 Inventory valuation adjustment (15,712) — — Environmental obligation mark-to-market adjustments 105,760 — — Unrealized loss on derivatives 9,336 — — Par West redevelopment and other costs 9,003 — — Loss (gain) on sale of assets, net 1 (253) 56 Adjusted Gross Margin (1) (2) $ 812,750 $ 89,363 $ 141,494 ________________________________________ (1) For the years ended December 31, 2024, 2023, and 2022, there was no impairment expense. (2) For the years ended December 31, 2023 and 2022, there was no impact in Operating Income from accounting policy differences at our refining and logistics investments. Adjusted Net Income (Loss) and Adjusted EBITDA Adjusted Net Income (Loss) is defined as Net income (loss) excluding: • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory); • Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our RINs and Washington CCA and Clean Fuel Standard); • unrealized (gain) loss on derivatives; • acquisition and integration costs; • redevelopment and other costs related to Par West; • debt extinguishment and commitment costs; • increase in (release of) tax valuation allowance and other deferred tax items; • changes in the value of contingent consideration and common stock warrants; • 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; • Par’s share of equity (earnings) losses from Laramie Energy, LLC, excluding cash distributions; and • Par’s portion of accounting policy differences from refining and logistics investments. 39 Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding: • D&A; • 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 D&A expense from refining and logistics investments; and • income tax expense (benefit) excluding the increase in (release of) tax valuation allowance. The following table presents a reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss), on a historical basis for the periods indicated (in thousands): Year Ended December 31, 2024 2023 2022 Net income (loss) $ (33,322) $ 728,642 $ 364,189 Inventory valuation adjustment (490) 102,710 (15,712) Environmental obligation mark-to-market adjustments (19,136) (189,783) 105,760 Unrealized loss (gain) on derivatives 42,485 (49,690) 9,336 Par West redevelopment and other costs 12,548 11,397 — Acquisition and integration costs 100 17,482 3,663 Debt extinguishment and commitment costs 1,688 19,182 5,329 Changes in valuation allowance and other deferred tax items (1) (3,315) (126,219) — Severance costs and other non-operating expenses (2) 14,802 1,785 2,272 Equity losses (earnings) from Laramie Energy, LLC, excluding cash distributions 1,781 (14,279) — Par's portion of accounting policy differences from refining and logistics investments 3,856 — — Loss (gain) on sale of assets, net 222 (59) (169) Adjusted Net Income (2)(4) 21,219 501,168 474,668 Depreciation and amortization 131,590 119,830 99,769 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 83,589 71,629 68,288 Laramie Energy, LLC cash distributions to Par (1,485) (10,706) — Par's portion of interest, taxes, depreciation and amortization expense from refining and logistics investments 6,144 3,443 — Income tax expense (benefit) (2,381) 10,883 710 Adjusted EBITDA (3) $ 238,676 $ 696,247 $ 643,435 ________________________________________________________ (1) For the years ended December 31, 2024 and 2023, we recognized a non-cash deferred tax benefit of $3.3 million and $126.2 million, respectively. This tax benefit is included in Income tax benefit (expense) on our consolidated statements of operations. (2) For the year ended December 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 $0.8 million f or a legal settlement unrelated to current operating activities. (3) For the years ended December 31, 2024, 2023 and 2022, 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 2024. (4) For the years ended December 31, 2023 and 2022, there was no impact in Net Income from accounting policy differences at our refining and logistics investments. 40 Adjusted EBITDA by Segment Adjusted EBITDA by segment is defined as Operating income (loss) excluding: • D&A; • 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 net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard); • unrealized (gain) loss on derivatives; • acquisition and integration costs; • redevelopment and other costs related to Par West; • severance costs and other non-operating expense (income); • (gain) loss on sale of assets; • impairment expense; • Par's portion of interest, taxes, and D&A expense from refining and logistics investments; and • Par's portion of accounting policy differences from refining and logistics investments. Adjusted EBITDA by segment also includes Gain on curtailment of pension obligation and Other income (loss), net, which are presented below Operating income (loss) on our condensed consolidated statements of operations. The following table presents a reconciliation of Adjusted EBITDA by segment to the most direct comparable GAAP financial measure, Operating income (loss) by segment, on a historical basis, for our operating segments, for the periods indicated (in thousands): Year ended December 31, 2024 Refining Logistics Retail Corporate and Other Operating income (loss) by segment $ 17,412 $ 89,351 $ 64,800 $ (123,935) Depreciation and amortization 91,108 27,033 11,037 2,412 Inventory valuation adjustment (490) — — — Environmental obligation mark-to-market adjustments (19,136) — — — Unrealized loss on commodity derivatives 43,281 — — — Acquisition and integration costs — — — 100 Severance costs and other non-operating expenses 642 — 154 14,006 Par West redevelopment and other costs — — — 12,548 Par's portion of accounting policy differences from refining and logistics investments 3,856 — — — Loss (gain) on sale of assets, net 8 124 (10) 100 Par's portion of interest, taxes, depreciation and amortization expense from refining and logistics investments 2,493 3,651 — — Other loss, net — — — (1,869) Adjusted EBITDA (1) $ 139,174 $ 120,159 $ 75,981 $ (96,638) 41 Year ended December 31, 2023 Refining Logistics Retail Corporate and Other Operating income (loss) by segment $ 676,161 $ 69,744 $ 56,603 $ (122,502) Depreciation and amortization 81,017 25,122 11,462 2,229 Inventory valuation adjustment 102,710 — — — Environmental obligation mark-to-market adjustments (189,783) — — — Unrealized gain on commodity derivatives (50,511) — — — Acquisition and integration costs — — — 17,482 Severance costs and other non-operating expenses 100 — 580 1,105 Par West redevelopment and other costs — — — 11,397 Loss (gain) on sale of assets, net 219 — (308) 30 Par's portion of interest, taxes, depreciation and amortization expense from refining and logistics investments 1,586 1,857 — — Other loss, net — — — (53) Adjusted EBITDA (1) (2) $ 621,499 $ 96,723 $ 68,337 $ (90,312) Year ended December 31, 2022 Refining Logistics Retail Corporate and Other Operating income (loss) by segment $ 401,901 $ 54,049 $ 49,238 $ (67,285) Depreciation and amortization 65,472 20,579 10,971 2,747 Inventory valuation adjustment (15,712) — — — Environmental obligation mark-to-market adjustments 105,760 — — — Unrealized loss on commodity derivatives 9,336 — — — Acquisition and integration costs — — — 3,663 Severance costs and other non-operating expenses 40 13 22 2,197 Loss (gain) on sale of assets, net 1 (253) 56 27 Other income, net — — — 613 Adjusted EBITDA (1) (2) $ 566,798 $ 74,388 $ 60,287 $ (58,038) ________________________________________________________ (1) For the years ended December 31, 2024, 2023, and 2022, 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 EBITDA made during 2024. (2) For the years ended December 31, 2023 and 2022, there was no impact in Operating Income from accounting policy differences at our refining and logistics investments. 42 Discussion of Operating Income by Segment Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Refining. Operating income for our refining segment was $17.4 million for the year ended December 31, 2024, a decrease of $658.8 million compared to $676.2 million for the year ended December 31, 2023. The decrease in Operating income was primarily driven by: • a decrease of $532.5 million related to declining crack spreads at refineries in our legacy portfolio, • a decrease of $134.7 million in environmental credit and related obligations income across refineries in our legacy portfolio, primarily associated with RIN settlement gains recorded in 2023 with no similar gains in 2024, and • a decrease of $38.8 million driven by a 1% decrease in refined product sales volumes at our refineries in our legacy portfolio, partially offset by: • an increase of $58.3 million related to a favorable change in crude oil differentials at refineries in our legacy portfolio, and • a favorable impact of $20.8 million related to our derivatives in Hawaii and Washington. Logistics. Operating income for our logistics segment was $89.4 million for the year ended December 31, 2024, an increase of $19.7 million compared to $69.7 million for the year ended December 31, 2023. The increase was primarily due to a $16.2 million contribution from the Billings Acquisition logistics assets acquired in June 2023. Excluding the contribution from the Billings Acquisition, the increase in operating income was driven by lower repair and maintenance costs of $3.4 million in our legacy portfolio . Retail. Operating income for our retail segment was $64.8 million for the year ended December 31, 2024, an increase of $8.2 million compared to $56.6 million for the year ended December 31, 2023. The increase in Operating income was primarily driven by an increase of $4.6 million related to higher fuel margins, $3.4 million related to higher merchandise sales, and $1.1 million reflecting higher fuel sales volumes, partially offset by $1.3 million of higher operating expenses driven by increases in employee costs during the year ended December 31, 2024, compared to the year ended December 31, 2023. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Refining. Operating income for our refining segment was $676.2 million for the year ended December 31, 2023, an improvement of $274.3 million compared to $401.9 million for the year ended December 31, 2022. The increase in operating income was primarily driven by: • a decrease of $140.0 million in environmental credit and related obligations costs across our refineries in our legacy portfolio driven by favorable mark-to-market adjustments and a gain on retirement of prior year RINs, • an increase of $106.0 million driven by a 6% increase in refined product sales volumes at refineries in our legacy portfolio, • a favorable change in step-out obligations related to our intermediation agreements of $79.5 million driven by changes in commodity prices, • a net decrease of $76.4 million in our derivative costs associated with all our refineries, • a $56.9 million contribution from the Billings Acquisition, • $37.0 million related to lower fuel burn costs at all our refineries, and • an increase of $32.8 million related to a favorable change in crude oil differentials at refineries in our legacy portfolio, partially offset by: • a net decrease of $112.9 million related to declining crack spreads at our refineries in our legacy portfolio, • an increase in purchased product costs of $98.0 million at all our refineries in our legacy portfolio, and • an increase in logistics and other product delivery costs of $35.6 million at our refineries in our legacy portfolio. Logistics. Operating income for our logistics segment was $69.7 million for the year ended December 31, 2023, an increase of $15.7 million compared to $54.0 million for the year ended December 31, 2022. The increase is primarily due to an 43 $8.5 million contribution from the Billings Acquisition logistics assets acquired in June 2023 and a $10.4 million increase in Operating income driven by an increase in throughput volumes throughout our legacy logistics portfolio, partially offset by an increase in variable expenses of $5.5 million. Retail. Operating income for our retail segment was $56.6 million for the year ended December 31, 2023, an increase of $7.4 million compared to Operating income of $49.2 million for the year ended December 31, 2022. The increase in Operating income was primarily driven by $10.6 million related to higher fuel sales volumes and $3.4 million associated with increased merchandise sales, partly offset by $6.3 million of higher operating expenses driven by increases in employee costs and credit card fees in the year ended December 31, 2023 compared to the year ended December 31, 2022. Discussion of Adjusted Gross Margin by Segment Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Refining . For the year ended December 31, 2024, our refining Adjusted Gross Margin was approximately $618.3 million, a decrease of $376.7 million compared to $995.0 million for the year ended December 31, 2023. The decrease in profitability was primarily due to a decrease in Adjusted Gross Margin contributed by our legacy refining portfolio of $358.6 million reflecting lower crack spreads and a 1.3% decrease in refined product sales volumes, partially offset by favorable impacts from realized derivatives of $114.6 million, favorable changes in crude oil differentials at the refineries in our legacy portfolio, lower intermediation fees of $19.1 million and other factors as described below. • Adjusted Gross Margin for the Hawaii refinery declined by $5.91 per barrel from $15.25 per barrel during the year ended December 31, 2023, to $9.34 per barrel during the year ended December 31, 2024. The decrease was primarily due to lower crack spreads, partially offset by favorable changes in realized derivatives. The Hawaii Index declined $5.85 per barrel, or 45%. • Adjusted Gross Margin for the Washington refinery decreased by $6.16 per barrel from $9.41 per barrel during the year ended December 31, 2023, to $3.25 per barrel during the year ended December 31, 2024. The decrease was primarily due to lower crack spreads and a 6% decrease in refined product sales volumes, partially offset by lower environmental costs, and favorable changes in crude oil differentials and realized derivatives. The Washington Index declined $5.68 per barrel, or 58%. • Adjusted Gross Margin for the Wyoming re finery decreased by $11.42 per barrel from $25.15 per barrel during the year ended December 31, 2023, to $13.73 per barrel during the year ende d December 31, 2024. The decrease was primarily due t o lower crack spreads, partially offset by favorable changes in crude oil differentials. The Wyoming Index declined $8.01 per barrel, or 33%. • Adjusted Gross Margin for the Montana refinery decreased by $9.77 per barrel from $21.14 per barrel during December 31, 2023, to $11.37 per barrel during the year ende d December 31, 2024. The decrease was primarily due t o lower crack spreads, partially offset by higher refined product sale volumes. The Montana Index declined $9.32 per barrel, or 39%. Logistics. For the year ended December 31, 2024, our logistics Adjusted Gross Margin was approximately $135.8 million, an increase of $14.6 million compared to $121.2 million for the year ended December 31, 2023. The increase was primarily due to a $14.7 million increased contribution from the Billings Acquisition logistics assets acquired in June 2023. Retail. For the year ended December 31, 2024, our retail Adjusted Gross Margin was approximately $164.7 million, an increase of $9.4 million compared to $155.3 million for the year ended December 31, 2023. The increase was primarily related to a $4.1 million increase in fuel volumes and $3.5 million of increased merchandise margins. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Refining . For the year ended December 31, 2023, our refining Adjusted Gross Margin was approximately $995.0 million, an increase of $182.2 million compared to $812.8 million for the year ended December 31, 2022. The increase in profitability was primarily due to Adjusted Gross Margin contributed by the Montana refinery of $246.1 million and 6.0% higher refined product sales margins across our legacy refining portfolio, partially offset by $155.6 million higher environmental credit obligation costs, excluding the mark-to-market impacts, and lower crack spreads of $107.6 million. • Adjusted Gross Margin for the Hawaii refinery improved by $1.26 per barrel from $13.99 per barrel during the year ended December 31, 2022, to $15.25 per barrel during the year ended December 31, 2023, primarily due to lower feedstock costs, a 6% increase in refined product sales volumes, a favorable change in realized derivatives, and higher 44 yield, partially offset by $98.0 million higher purchased product costs and lower crack spreads. The Hawaii Index declined from $19.21 in the year ended December 31, 2022, to $13.06 during the year ended December 31, 2023. • Adjusted Gross Margin for the Wyoming refinery decreased by $1.35 per barrel from $26.50 per barrel during the year ended December 31, 2022, to $25.15 per barrel during the year ended December 31, 2023. The change is primarily due to an 8% increase in refined product sales volumes, partially offset by lower crack spreads. The Wyoming Index declined from $26.33 in the year ended December 31, 2022, to $24.48 during the year ended December 31, 2023. • Adjusted Gross Margin for the Washington refinery decreased by $8.59 per barrel from $18.00 per barrel during the year ended December 31, 2022, to $9.41 per barrel during the year ended December 31, 2023, primarily due to higher environmental credit obligation expenses, declining crack spreads, and higher refined product delivery costs, partially offset by lower feedstock costs and 5% higher refined product sales volumes. The Washington Index declined from $19.85 in the year ended December 31, 2022, to $9.81 during the year ended December 31, 2023. Logistics. For the year ended December 31, 2023, our logistics Adjusted Gross Margin was approximately $121.2 million, an increase of $31.8 million compared to $89.4 million for the year ended December 31, 2022. The increase was primarily due to Adjusted Gross Margin of $23.8 million contributed from the Billings Acquisition logistics assets acquired in June 2023 and a 3% increase in throughput across our legacy assets, net of associated higher fees and variable expenses, and higher third-party revenue. Retail. For the year ended December 31, 2023, our retail Adjusted Gross Margin was approximately $155.3 million, an increase of $13.8 million compared to $141.5 million for the year ended December 31, 2022. The increase was primarily related to an 11% increase in sales volumes and a 33% increase in merchandise sales. Discussion of Consolidated Results Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenues. For the year ended December 31, 2024, revenues were $8.0 billion, a $0.2 billion decrease compared to $8.2 billion for the year ended December 31, 2023. The decrease was primarily due to a $0.7 billion decrease in third-party revenues when comparing our legacy refining operations, of which $0.5 billion was related to lower average crack spreads, $0.1 billion was related to lower crude oil prices, and $0.1 billion was related to a 1% decrease in sales volumes. This decrease was partially offset by an increase of $0.5 billion in contributions from the Billings Acquisition, which closed on June 1, 2023. The Washington Index, Hawaii Index, Montana Index, and Wyoming Index declined 58%, 45%, 39%, and 33% respectively, compared to 2023. Average Brent crude oil prices declined 3% and average WTI crude oil prices declined 2% as compared to the prior period. Revenues at our retail segment decreased $7.7 million primarily due to a 6% decrease in fuel sales prices, partially offset by a 3% increase in sales volumes and a 5% increase in merchandise sales. Cost of Revenues (Excluding Depreciation). For the year ended December 31, 2024, cost of revenues (excluding depreciation) was $7.1 billion, a $0.3 billion increase compared to $6.8 billion for the year ended December 31, 2023, primarily driven by an additional $0.5 billion in contributions related to a full year of results from our Billings assets, partially offset by decreases in crude oil prices at our legacy refining locations as discussed above. Operating Expense (Excluding Depreciation). For the year ended December 31, 2024, operating expense (excluding depreciation) was approximately $584.3 million, an increase of $98.7 million compared to $485.6 million for the year ended December 31, 2023. The increase was primarily driven by a $96.2 million increase in expense from the Billings Acquisition. Depreciation and Amortization . For the year ended December 31, 2024, D&A expense was approximately $131.6 million, an increase of $11.8 million compared to $119.8 million for the year ended December 31, 2023. The increase was primarily driven by $18.4 million of additional D&A attributable to the Billings Acquisition, partially offset by a $6.3 million decrease in D&A from our Hawaii Refinery reflecting fully depreciated assets in the second half of 2023 and the second quarter of 2024. General and Administrative Expense (Excluding Depreciation). For the year ended December 31, 2024, General and administrative expense (excluding depreciation) was approximately $108.8 million, an increase of $17.4 million compared to $91.4 million for the year ended December 31, 2023. The increase was primarily due to $13.1 million of stock-based compensation expenses related to CEO transition costs in the first quarter of 2024, $3.1 million higher Information Technology (“IT”) expenses, and a $2.1 million increase in employee costs. Equity earnings from refining and logistics investments . For the year ended December 31, 2024, Equity earnings from refining and logistics investments were $11.9 million, which was relatively consistent with $11.8 million for the year 45 ended December 31, 2023. Please read Note 3—Refining and Logistics Equity Investments to our consolidated financial statements under Item 8 of this Form 10-K for additional information. Acquisition and integration costs. For the year ended December 31, 2024, we incurred an immaterial amount of Acquisition and integration costs. For the year ended December 31, 2023, we incurred $17.5 million of Acquisition and integration costs related to the Billings Acquisition, which closed on June 1, 2023. Please read Note 5—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information. Par West redevelopment and other costs. For the year ended December 31, 2024, Par West redevelopment and other costs were $12.5 million, an increase of $1.1 million compared to $11.4 million for the year ended December 31, 2023, associated with the operation and decommissioning of our Par West facility. Increased redevelopment activity was the primary driver of the increase in costs. Interest Expense and Financing Costs, Net . For the year ended December 31, 2024, our Interest expense and financing costs, net were approximately $82.8 million, an increase of $10.3 million compared to $72.5 million for the year ended December 31, 2023. $15.8 million of the increase in interest expense and financing costs, primarily related to higher ABL Credit Facility and Term Loan B Facility balances in 2024, and a $7.1 million decrease in interest income from our investment accounts. This activity was offset by a $12.8 million net decrease in inventory financing costs related to the refinancing of our inventory financing agreements in 2023 and 2024. Please read Note 14—Debt and Note 12—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our indebtedness and inventory financing, respectively. Debt extinguishment and commitment costs. For the year ended December 31, 2024, our Debt extinguishment and commitment costs wer e approximately $1.7 million in connection to the repricing of our Term Loan Credit Agreement, the termination of our LC Facility and the expiration of our Supply and Offtake Agreement in the second quarter of 2024. For the year ended December 31, 2023, our Debt extinguishment and commitment costs were approximately $19.2 million in connection with the refinancing of our long-term debt in the first quarter of 2023 and the termination of the Washington Refinery Intermediation Agreement in the fourth quarter of 2023. Please read Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Other expense, net . For the year ended December 31, 2024, Other expense, net was $1.9 million, an increase of $1.8 million compared to $0.1 million for the year ended December 31, 2023. 2024 activity was primarily due to $0.8 million of 2024 legal expenses unrelated to operating activities with no similar 2023 activity. Equity earnings (losses) from Laramie Energy, LLC. For the year ended December 31, 2024, equity losses from Laramie Energy, LLC were $0.3 million, a decrease of $25.3 million compared to $25.0 million of equity earnings for the year ended December 31, 2023. For the year ended December 31, 2024, our proportionate share of Laramie Energy’s net loss was $6.8 million, partially offset by $6.5 million of accretion of the basis difference. On April 29, 2024, Laramie Energy made a cash distribution to its owners, including us, based on ownership percentage. Our share of this distribution was $1.5 million. For the year ended December 31, 2023, our proportionate share of Laramie Energy’s net income was $19.5 million, and the accretion of basis was $5.5 million. On March 1, 2023, following a refinancing of certain debt, Laramie Energy, LLC was permitted to make a one-time cash distribution to its owners based on ownership percentage. Our share of this distribution was $10.7 million. Please read Note 4—Investment in Laramie Energy to our consolidated financial statements under Item 8 of this Form 10-K for more information. Income Taxes. For the year ended December 31, 2024, we recorded an income tax benefit of $5.7 million primarily due to a $5.5 million non-cash deferred tax benefit driven by our 2024 pre-tax losses. For the year ended December 31, 2023, we recorded an income tax benefit of $115.3 million primarily related to the release of the federal tax valuation allowance in the fourth quarter of 2023, partially offset by state taxes. Please read Note 22—Income Taxes to our consolidated financial statements under Item 8 of this Form 10-K for more information. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues. For the year ended December 31, 2023, Revenues were $8.2 billion, a $0.9 billion increase compared to $7.3 billion for the year ended December 31, 2022. The Billings Acquisition contributed revenues of $1.5 billion in the first seven months under our ownership, partially offset by a decrease of $0.6 billion across our legacy refinery portfolio. The decrease in our legacy refining revenue was primarily driven by a $0.8 billion decrease related to lower crude oil prices, partially offset by a 6% increase in sales volumes. Average Brent crude oil prices declined 17% and average WTI crude oil 46 prices declined 18% as compared to the prior period. Revenues at our retail segment increased $22.3 million primarily due to an 11% increase in sales volume and a 33% increase in merchandise sales, partially offset by an 8% decrease in fuel sales prices. Cost of Revenues (Excluding Depreciation). For the year ended December 31, 2023, Cost of revenues (excluding depreciation) was $6.8 billion, a $0.4 billion increase compared to $6.4 billion for the year ended December 31, 2022, inclusive of a $1.5 billion contribution from the Billings Acquisition. There was a decrease of $1.0 billion of Cost of revenues (excluding depreciation) across our legacy refining operations primarily due to decreases in crude oil prices as discussed above. Operating Expense (Excluding Depreciation). For the year ended December 31, 2023, Operating expense (excluding depreciation) was approximately $485.6 million, an increase of $152.4 million compared to $333.2 million for the year ended December 31, 2022. $134.1 million of the increase was contributed by the Billings Acquisition. Other factors that drove the increase include higher repair and maintenance and employee expenses. Depreciation and Amortization . For the year ended December 31, 2023, D&A expense was approximately $119.8 million, an increase of $20.0 million compared to $99.8 million for the year ended December 31, 2022. The increase was primarily driven by the $21.7 million contribution from the Billings Acquisition. General and Administrative Expense (Excluding Depreciation). For the year ended December 31, 2023, General and administrative expense (excluding depreciation) was approximately $91.4 million, an increase of $29.0 million compared to $62.4 million for the year ended December 31, 2022. The increase was primarily due to a $12.1 million increase in employee costs, a $6.0 million increase in outside services, $5.8 million of expenses related to development of our renewable projects, and $3.9 million higher IT expenses. Equity earnings from refining and logistics investments. For the year ended December 31, 2023, Equity earnings from refining and logistics investments were $11.8 million. As part of the Billings Acquisition, we acquired a 65% limited partnership ownership interest in YELP and a 40% ownership interest in YPLC. For the year ended December 31, 2023, our proportionate share of YELP’s net income and YPLC’s net income was $8.1 million and $4.4 million, respectively. Please read Note 3—Refining and Logistics Equity Investments to our consolidated financial statements under Item 8 of this Form 10-K for additional information. Acquisition and Integration Costs. For the year ended December 31, 2023, we incurred approximately $17.5 million of Acquisition and integration costs primarily related to the Billings Acquisition, compared to $3.7 million of Acquisition and integration costs for the year ended December 31, 2022. Please read Note 5—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information. Par West redevelopment and other costs. For the year ended December 31, 2023, Par West redevelopment and other costs were $11.4 million, an increase of $2.4 million compared to $9.0 million for the year ended December 31, 2022, associated with the operation and decommissioning of our Par West facility. Interest Expense and Financing Costs, Net . For the year ended December 31, 2023, our Interest expense and financing costs, net were approximately $72.5 million, an increase of $4.2 million compared to $68.3 million for the year ended December 31, 2022. The increase was primarily due to higher outstanding debt balances and increased borrowings under our inventory financing agreements. Please read Note 12—Inventory Financing Agreements and Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and indebtedness, respectively. Debt extinguishment and commitment costs. For the year ended December 31, 2023, our Debt extinguishment and commitment costs were approximately $19.2 million in connection with the refinancing of our long-term debt in the first quarter of 2023 and the termination of the Washington Refinery Intermediation Agreement in the fourth quarter of 2023. For the year ended December 31, 2022, our Debt extinguishment and commitment costs were approximately $5.3 million and primarily represented extinguishment costs associated with the repurchase and cancellation of an additional $36.9 million of 12.875% Senior Secured Notes in the second quarter of 2022. Please read Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Equity Earnings from Laramie Energy, LLC. For the year ended December 31, 2023, Equity earnings from Laramie Energy, LLC were $25.0 million. On March 1, 2023, following a refinancing of certain debt, Laramie Energy, LLC was permitted to make a one-time cash distribution to its owners based on ownership percentage. Our share of this distribution was $10.7 million. Effective February 21, 2023, we resumed the application of equity method accounting with respect to our investment in Laramie Energy. In the fourth quarter of 2023 and due to Laramie Energy, LLC’s positive financial results, our share of net income from our investment in Laramie Energy exceeded our share of net losses recorded during the period that 47 equity method accounting was suspended, and we recorded equity earnings of $14.3 million. There were no equity earnings from our investment in Laramie Energy, LLC, for the year ended December 31, 2022. Please read Note 4—Investment in Laramie Energy to our consolidated financial statements under Item 8 of this Form 10-K for more information. Income Taxes. For the year ended December 31, 2023, we recorded an Income tax benefit of $115.3 million primarily related to the release of the federal tax valuation allowance in the fourth quarter of 2023, partially offset by state taxes. For the year ended December 31, 2022, we recorded an Income tax expense of $0.7 million primarily driven by an increase in state taxable income and recording a valuation allowance against our net deferred tax assets. Condensed Consolidating Financial Information On February 28, 2023, Par Petroleum, LLC (“Par Borrower”) entered into the Term Loan Credit Agreement (the “Term Loan Credit Agreement”) due 2030 with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The Term Loan Credit Agreement was co-issued by Par Petroleum Finance Corp. (together with the Par Borrower, the “Term Loan Borrowers”), which has no independent assets or operations. The Term Loan Credit Agreement is guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc. (the “Parent”) and is guaranteed on a senior secured basis by all of the subsidiaries of Par Borrower. The Term Loan Credit Agreement proceeds were used to refinance our existing Term Loan B and repurchase our outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, all three of which had similar guarantees that were replaced by those on the Term Loan Credit Agreement. The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Borrower and its consolidated subsidiaries’ accounts (which are all guarantors of the Term Loan Credit Agreement), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the Term Loan Credit Agreement and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands). 48 As of December 31, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 7,095 $ 184,826 $ — $ 191,921 Restricted cash 346 — — 346 Trade accounts receivable — 398,131 — 398,131 Inventories — 1,089,318 — 1,089,318 Prepaid and other current assets 12,355 80,172 — 92,527 Due from related parties 368,222 — (368,222) — Total current assets 388,018 1,752,447 (368,222) 1,772,243 Property, plant, and equipment Property, plant, and equipment 24,536 1,702,474 3,956 1,730,966 Less accumulated depreciation and amortization (17,240) (553,918) (3,499) (574,657) Property, plant, and equipment, net 7,296 1,148,556 457 1,156,309 Long-term assets Operating lease right-of-use (“ROU”) assets 7,369 420,751 — 428,120 Refining and logistics equity investments — — 86,311 86,311 Investment in Laramie Energy, LLC — — 12,498 12,498 Investment in subsidiaries 993,901 — (993,901) — Intangible assets, net — 9,520 — 9,520 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 111,206 123,163 235,095 Total assets $ 1,397,310 $ 3,569,158 $ (1,137,097) $ 3,829,371 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,885 $ — $ 4,885 Obligations under inventory financing agreements — 194,198 — 194,198 Accounts payable 4,257 432,538 — 436,795 Accrued taxes — 36,027 — 36,027 Operating lease liabilities 4 80,170 — 80,174 Other accrued liabilities 1,796 342,062 330 344,188 Due to related parties 189,232 156,619 (345,851) — Total current liabilities 195,289 1,246,499 (345,521) 1,096,267 Long-term liabilities Long-term debt, net of current maturities — 1,108,082 — 1,108,082 Finance lease liabilities 464 15,313 (4,087) 11,690 Operating lease liabilities 10,255 351,837 — 362,092 Other liabilities — 131,813 (71,875) 59,938 Total liabilities 206,008 2,853,544 (421,483) 2,638,069 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 552 — — 552 Additional paid-in capital 884,548 161,642 (161,642) 884,548 Accumulated earnings (deficit) 295,846 545,720 (545,720) 295,846 Accumulated other comprehensive income (loss) 10,356 8,252 (8,252) 10,356 Total stockholders’ equity 1,191,302 715,614 (715,614) 1,191,302 Total liabilities and stockholders’ equity $ 1,397,310 $ 3,569,158 $ (1,137,097) $ 3,829,371 49 As of December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 10,369 $ 268,711 $ 27 $ 279,107 Restricted cash 339 — — 339 Trade accounts receivable — 367,249 — 367,249 Inventories — 1,160,395 — 1,160,395 Prepaid and other current assets 4,767 177,638 — 182,405 Due from related parties 380,159 — (380,159) — Total current assets 395,634 1,973,993 (380,132) 1,989,495 Property, plant, and equipment Property, plant, and equipment 21,350 1,552,496 3,955 1,577,801 Less accumulated depreciation and amortization (16,487) (458,616) (3,310) (478,413) Property, plant, and equipment, net 4,863 1,093,880 645 1,099,388 Long-term assets 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) — Intangible assets, net — 10,918 — 10,918 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 65,323 120,606 186,655 Total assets $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,255 $ — $ 4,255 Obligations under inventory financing agreements — 594,362 — 594,362 Accounts payable 4,991 386,334 — 391,325 Accrued taxes — 40,064 — 40,064 Operating lease liabilities — 72,833 — 72,833 Other accrued liabilities 947 415,468 5,347 421,762 Due to related parties 128,922 232,803 (361,725) — Total current liabilities 134,860 1,746,119 (356,378) 1,524,601 Long-term liabilities Long-term debt, net of current maturities — 646,603 — 646,603 Finance lease liabilities — 16,693 (4,255) 12,438 Operating lease liabilities 8,462 274,055 — 282,517 Other liabilities — 119,618 (57,251) 62,367 Total liabilities 143,322 2,803,088 (417,884) 2,528,526 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 597 — — 597 Additional paid-in capital 860,797 242,505 (242,505) 860,797 Accumulated earnings (deficit) 465,856 558,581 (558,581) 465,856 Accumulated other comprehensive income (loss) 8,174 6,067 (6,067) 8,174 Total stockholders’ equity 1,335,424 807,153 (807,153) 1,335,424 Total liabilities and stockholders’ equity $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 50 Year Ended December 31, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 7,974,432 $ 25 $ 7,974,457 Operating expenses Cost of revenues (excluding depreciation) — 7,101,148 — 7,101,148 Operating expense (excluding depreciation) — 584,282 — 584,282 Depreciation and amortization 1,636 129,766 188 131,590 General and administrative expense (excluding depreciation) 33,490 75,354 — 108,844 Equity earnings from refining and logistics investments — — (11,905) (11,905) Acquisition and integration costs (2) — 100 — 100 Par West redevelopment and other costs — 12,548 — 12,548 Loss (gain) on sale of assets, net 100 122 — 222 Total operating expenses 35,226 7,903,320 (11,717) 7,926,829 Operating income (loss) (35,226) 71,112 11,742 47,628 Other income (expense) Interest expense and financing costs, net (40) (83,106) 353 (82,793) Debt extinguishment and commitment costs — (1,688) — (1,688) Other income (expense), net (31) (1,838) — (1,869) Equity earnings (losses) from subsidiaries 1,975 — (1,975) — Equity earnings (losses) from Laramie Energy, LLC — — (296) (296) Total other income (expense), net 1,904 (86,632) (1,918) (86,646) Income (loss) before income taxes (33,322) (15,520) 9,824 (39,018) Income tax benefit (expense) (1) — 2,659 3,037 5,696 Net income (loss) $ (33,322) $ (12,861) $ 12,861 $ (33,322) Adjusted EBITDA $ (26,167) $ 242,913 $ 21,930 $ 238,676 51 Year Ended December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 8,231,886 $ 69 $ 8,231,955 Operating expenses Cost of revenues (excluding depreciation) — 6,838,109 — 6,838,109 Operating expense (excluding depreciation) — 485,587 — 485,587 Depreciation and amortization 1,618 118,024 188 119,830 General and administrative expense (excluding depreciation) 29,258 62,189 — 91,447 Equity earnings from refining and logistics investments — — (11,844) (11,844) Acquisition and integration costs (2) — 17,482 — 17,482 Par West redevelopment and other costs — 11,397 — 11,397 Loss (gain) on sale of assets, net 30 (89) — (59) Total operating expenses 30,906 7,532,699 (11,656) 7,551,949 Operating income (loss) (30,906) 699,187 11,725 680,006 Other income (expense) Interest expense and financing costs, net (24) (72,789) 363 (72,450) Debt extinguishment and commitment costs — (19,182) — (19,182) Other income (expense), net 44 (97) — (53) Equity earnings (losses) from subsidiaries 759,528 — (759,528) — Equity earnings (losses) from Laramie Energy, LLC — — 24,985 24,985 Total other income (expense), net 759,548 (92,068) (734,180) (66,700) Income (loss) before income taxes 728,642 607,119 (722,455) 613,306 Income tax benefit (expense) (1) — (153,017) 268,353 115,336 Net income (loss) $ 728,642 $ 454,102 $ (454,102) $ 728,642 Adjusted EBITDA $ (28,722) $ 709,613 $ 15,356 $ 696,247 52 Year Ended December 31, 2022 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 7,321,656 $ 129 $ 7,321,785 Operating expenses Cost of revenues (excluding depreciation) — 6,377,494 (1,480) 6,376,014 Operating expense (excluding depreciation) — 333,206 — 333,206 Depreciation and amortization 2,131 97,448 190 99,769 General and administrative expense (excluding depreciation) 17,882 44,514 — 62,396 Acquisition and integration costs 3,396 267 — 3,663 Par West redevelopment and other costs — 9,003 — 9,003 Loss (gain) on sale of assets, net 27 (196) — (169) Total operating expenses 23,436 6,861,736 (1,290) 6,883,882 Operating income (loss) (23,436) 459,920 1,419 437,903 Other income (expense) Interest expense and financing costs, net (1) (68,655) 368 (68,288) Debt extinguishment and commitment costs — (5,329) — (5,329) Other income (expense), net (20) 634 (1) 613 Equity earnings (losses) from subsidiaries 388,008 — (388,008) — Total other income (expense), net 387,987 (73,350) (387,641) (73,004) Income (loss) before income taxes 364,551 386,570 (386,222) 364,899 Income tax benefit (expense) (1) (362) (96,995) 96,647 (710) Net income (loss) $ 364,189 $ 289,575 $ (289,575) $ 364,189 Adjusted EBITDA $ (17,551) $ 659,378 $ 1,608 $ 643,435 ________________________________________________________ (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. 53 Non-GAAP Financial Measures 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 (loss), on a historical basis for the periods indicated (in thousands): Year Ended December 31, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (33,322) $ (12,861) $ 12,861 $ (33,322) Inventory valuation adjustment — (490) — (490) Environmental obligation mark-to-market adjustments — (19,136) — (19,136) Unrealized loss on derivatives — 42,485 — 42,485 Par West redevelopment and other costs — 12,548 — 12,548 Acquisition and integration costs — 100 — 100 Debt extinguishment and commitment costs — 1,688 — 1,688 Severance costs and other non-operating expense (2) 7,354 7,448 — 14,802 Equity losses from Laramie Energy, LLC, excluding cash distributions — — 1,781 1,781 Par's portion of accounting policy differences from refining and logistics investments 3,856 3,856 Loss (gain) on sale of assets, net 100 122 — 222 Depreciation and amortization 1,636 129,766 188 131,590 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 40 83,902 (353) 83,589 Laramie Energy, LLC cash distributions to Par — — (1,485) (1,485) Par's portion of interest, taxes, depreciation and amortization expense from refining and logistics investments — — 6,144 6,144 Equity losses (income) from subsidiaries (1,975) — 1,975 — Income tax expense (benefit) — (2,659) (3,037) (5,696) Adjusted EBITDA (1) $ (26,167) $ 242,913 $ 21,930 $ 238,676 54 Year Ended December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 728,642 $ 454,102 $ (454,102) $ 728,642 Inventory valuation adjustment — 102,710 — 102,710 Environmental obligation mark-to-market adjustments — (189,783) — (189,783) Unrealized gain on derivatives — (49,690) — (49,690) Par West redevelopment and other costs — 11,397 — 11,397 Acquisition and integration costs — 17,482 — 17,482 Debt extinguishment and commitment costs — 19,182 — 19,182 Severance costs and other non-operating expense 492 1,293 — 1,785 Equity earnings from Laramie Energy, LLC, excluding cash distributions — — (14,279) (14,279) Loss (gain) on sale of assets, net 30 (89) — (59) Depreciation and amortization 1,618 118,024 188 119,830 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 24 71,968 (363) 71,629 Laramie Energy, LLC cash distributions to Par — — (10,706) (10,706) Par's portion of interest, taxes, depreciation and amortization expense from refining and logistics investments — — 3,443 3,443 Equity losses (income) from subsidiaries (759,528) — 759,528 — Income tax expense (benefit) — 153,017 (268,353) (115,336) Adjusted EBITDA (1) $ (28,722) $ 709,613 $ 15,356 $ 696,247 Year Ended December 31, 2022 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 364,189 $ 289,575 $ (289,575) $ 364,189 Inventory valuation adjustment — (15,712) — (15,712) Environmental obligation mark-to-market adjustments — 105,760 — 105,760 Unrealized loss on derivatives — 9,336 — 9,336 Acquisition and integration costs 3,396 267 — 3,663 Debt extinguishment and commitment costs — 5,329 — 5,329 Severance costs and other non-operating expense 351 1,921 — 2,272 Loss (gain) on sale of assets, net 27 (196) — (169) Depreciation and amortization 2,131 97,448 190 99,769 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 1 68,655 (368) 68,288 Equity losses (income) from subsidiaries (388,008) — 388,008 — Income tax expense (benefit) 362 96,995 (96,647) 710 Adjusted EBITDA (1) $ (17,551) $ 659,378 $ 1,608 $ 643,435 ________________________________________________________ (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 year ended December 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 $0.8 million f or a legal settlement unrelated to current operating activities. 55 Liquidity and Capital Resources Capital Resources and Available Liquidity Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements and contractual obligations, capital expenditures, turnaround outlays, and working capital needs. 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 December 31, 2024, was $613.7 million that consisted of $191.9 million of cash and cash equivalents and $421.8 million of availability under the ABL Credit Facility. Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, for payments related to acquisitions, and to repay or refinance indebtedness. We believe our cash flows from operations and available capital resources will be sufficient to meet our current capital and turnaround expenditures, working capital, and debt service requirements for the next 12 months. We may seek to raise additional debt or equity capital to fund acquisitions and any other significant changes to our business or to refinance existing debt. We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost. Significant Developments On April 26, 2023, we terminated the prior ABL Credit Facility and entered into a new ABL Credit Facility. On June 1, 2023, we closed the Billings Acquisition; please read Note 5—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for further information. On July 26, 2023, we entered into the July 2023 S&O Amendment in connection with a new LC Facility. On October 4, 2023, we entered into the Second Amendment to the ABL Credit Facility and terminated the Washington Refinery Intermediation Agreement. On March 22, 2024, we amended our asset-based loan to permit expanding its capacity from $900 million to $1.4 billion as we planned for the refinancing of our Supply and Offtake Agreement. On May 31, 2024, our Supply and Offtake Agreement with J.Aron expired and we entered into an Inventory Intermediation Agreement with Citi and a Joinder Agreement as a borrower to the ABL Credit Facility. We also early terminated our LC Facility. On November 25, 2024, we amended the Term Loan Credit Agreement to increase the size of the term loan from $550.0 million to $650.0 million. During the years ended December 31, 2024, 2023, and 2022, we had significant activity related to our inventory financing and debt agreements. Please read Note 12—Inventory Financing Agreements and Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion of significant activity related to our inventory financing and debt agreements, respectively. Other Sources of Liquidity We may from time to time seek to retire or purchase our common stock through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. On November 10, 2021, the Board authorized and approved a share repurchase program for up to $50 million of the currently outstanding shares of our common stock, with no specified end date. On August 2, 2023, the Board approved expanding the Company’s share repurchase authorization from $50 million to $250 million. On February 21, 2025, the Board authorized and approved a share repurchase program authorizing the repurchase of up to $250 million of common stock, with no specified end date. This repurchase program terminated and replaced the prior share repurchase authorization. Please read Note 19—Stockholders’ Equity to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the share repurchase program. The Term Loan Credit Agreement may also require annual prepayments of principal with a variable percentage of our excess cash flow, 50%, 25%, or 0% depending on our consolidated year end secured leverage ratio (as defined in the Term Loan Credit Agreement). 56 Cash Flows The following table summarizes cash activities for the years ended December 31, 2024, 2023, and 2022 (in thousands): Years Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 83,776 $ 579,156 $ 452,606 Net cash used in investing activities (133,994) (659,039) (87,308) Net cash provided by (used in) financing activities (36,961) (135,597) 13,407 Cash flows for the year ended December 31, 2024 Net cash provided by operating activities for the year ended December 31, 2024, was driven primarily by non-cash charges to operations of approximately $208.6 million, net cash used for changes in operating assets and liabilities of approximately $91.5 million, and a net loss of $33.3 million. Non-cash charges to operations consisted primarily of the following adjustments: • depreciation and amortization expenses of $131.6 million; • unrealized loss on derivatives contracts of $42.5 million; • stock based compensation costs of $25.7 million, including $13.1 million related to the accelerated vesting of equity awards and modification of vested equity awards related to our CEO; and • dividends received from our refining and logistics investments of $13.1 million partially offset by • $11.9 million of non-cash equity earnings from our refining and logistics investments. Net cash used for changes in operating assets and liabilities resulted primarily from: • an increase in deferred turnaround assets of $73.5 million driven by the 2024 Montana refinery turnarounds, • a $53.5 million decrease in Obligations under inventory financing agreements primarily related to the refinancing of our inventory financing agreements and a decrease in crude oil prices, and • a decrease in our gross environmental credit obligations primarily related to the settlement of our 2023 RINs and CCA obligations combined with lower environmental credit values, partially offset by • a $62.9 million decrease in inventories, primarily related to the retirement of environmental credits and lower refined product and warehouse inventories. Net cash used in investing activities for the year ended December 31, 2024, consisted primarily of: • $135.5 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects. 57 Net cash used in financing activities was approximately $37.0 million for the year ended December 31, 2024, and consisted primarily of the following activities: • payments of $547.6 million related to the expiration of our Supply and Offtake Agreement and related deferred payment arrangement in the second quarter of 2024, • repurchases of common stock of $142.0 million, and • aggregate payments of $9.6 million of deferred loan costs, partially offset by • net debt borrowings of $456.6 million primarily driven by activity in our ABL Credit Facility and the increase to the size of our Term Loan Credit Agreement , and • proceeds of $203.1 million related to the step-in of the Inventory Intermediation Agreement in the second quarter of 2024. Cash flows for the year ended December 31, 2023 Net cash provided by operating activities for the year ended December 31, 2023, was driven primarily by Net income of $728.6 million, non-cash earnings from operations of approximately $53.2 million, and net cash used for changes in operating assets and liabilities of approximately $96.3 million. Non-cash earnings from operations consisted primarily of the following adjustments: • depreciation and amortization expenses of $119.8 million, • debt commitment and extinguishment costs of $19.2 million, and • stock based compensation costs of $11.6 million, partially offset by • a benefit from deferred taxes of $126.3 million, • unrealized gain on derivatives contracts of $49.7 million, • a gain of $25.0 million from our equity investment in Laramie Energy, and • $11.8 million of non-cash equity earnings from our refining and logistics investments. Net cash used for changes in operating assets and liabilities resulted primarily from: • a decrease in gross environmental credit obligations primarily related to the settlement of our 2020, 2021, and 2022 RINs obligations, and • an increase in prepaid and other primarily driven by a $65.5 million increase in Advances to suppliers for crude purchases. Net cash used in investing activities for the year ended December 31, 2023, consisted primarily of: • $595.4 million used for the Billings Acquisition, and • $82.3 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects, including construction of a flagship retail store in Washington, improved crude processing equipment at our Hawaii refinery, a co-processing unit at our Tacoma refinery, and various IT infrastructure improvements, partially offset by • a $10.7 million cash distribution received from Laramie Energy in the first quarter of 2023. Net cash used in financing activities for the year ended December 31, 2023, was approximately $135.6 million and consisted primarily of the following activities: 58 • net repayments under the Discretionary Draw Facility and Merrill Lynch Commodities, Inc. (“MLC”) receivable advances of $96.0 million, • aggregate payments of $23.1 million of deferred loan costs and debt extinguishment costs, related to our debt refinancing, and • repurchases of common stock of $67.8 million, partially offset by • net borrowings of debt of $145.1 million primarily driven by the refinancing and consolidation of our debt. Cash flows for the year ended December 31, 2022 Net cash provided by operating activities for the year ended December 31, 2022, was primarily driven by Net income of approximately $364.2 million, non-cash charges to operations of approximately $127.6 million, and net cash used for changes in operating assets and liabilities of approximately $39.2 million. Non-cash charges to operations consisted primarily of the following adjustments: • deprecation and amortization expenses of $99.8 million, • stock based compensation costs of $9.4 million, • unrealized loss on derivatives contracts of $9.3 million, and • debt commitment and extinguishment costs of $5.3 million. Net cash used for changes in operating assets and liabilities resulted primarily from: • net increases in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations and accounts payable, 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, and • an increase in prepaid and other primarily driven by a $34.7 million increase in Collateral posted with broker for derivative instruments. Net cash used in investing activities for the year ended December 31, 2022, consisted primarily of: • $53.0 million in additions to property, plant, and equipment driven by profit improvement and turnaround projects including crude recovery and debottlenecking projects at our Tacoma refinery, maintenance and tank replacements projects at our Wyoming refinery, and co-generation engine and tank conversion projects at our Hawaii refinery, and • $35.5 million related to acquisitions, primarily comprised of a $30.0 million deposit on the Billings Acquisition and $5.5 million for a three-store expansion of our Washington retail footprint. Net cash provided by financing activities for the year ended December 31, 2022, was approximately $13.4 million and consisted primarily of the following activities: • net borrowings under the J. Aron Discretionary Draw Facility and MLC receivable advances of $80.7 million, partially offset by • net repayments of debt of $62.0 million primarily driven by the partial repurchase and cancellation of our 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, and • repurchases of common stock of $7.8 million. 59 Cash Requirements We have various cash requirements stemming from investment strategies, contractual obligations, and financial commitments in the normal course of our operations and financing activities. Contractual obligations include future cash payments required under existing contractual arrangements, such as debt and lease agreements. These cash requirements and obligations may result from both general financing activities and from commercial arrangements that are directly related to our operating activities. We also continue to seek strategic investments in business opportunities, however the amount and timing of those investments are not predictable. Our material cash requirements as of December 31, 2024 include: Debt and Interest Payments. Current and long-term debt includes the scheduled principal payments related to our outstanding debt obligations and ABL Credit Facility. Our estimated interest payments due for 2025 are $51.2 million and our total estimated undiscounted future interest payments will be $260.3 million on the debt obligations held as of December 31, 2024, and using interest rates in effect as of December 31, 2024. Please read Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Debt Refinancing. On February 28, 2023, we entered into the Term Loan Credit Agreement. The proceeds were used to repurchase and cancel the then-outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes and terminate and repay all amounts outstanding under the Term Loan B Facility. As a result of this refinancing, our debt maturity was extended from 2026 to 2030 and, using interest rates that were in effect at December 31, 2023, our estimated undiscounted future interest payments increased to $310 million. On April 26, 2023, we terminated the prior ABL Credit Facility and entered into a new ABL Credit Facility. On October 4, 2023, we terminated the Washington Refinery Intermediation Agreement in connection with the Second Amendment to the ABL Credit Facility that increased the borrowing base. 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. On May 31, 2024, we entered into the Inventory Intermediation Agreement with Citi. Pursuant to the Inventory Intermediation Agreement, Citi will purchase and deliver crude oil to PHR for use at its refinery located in Kapolei, Hawaii. The Inventory Intermediation Agreement replaces the Supply and Offtake Agreement between PHR and J. Aron that was terminated on May 31, 2024. On November 25, 2024, we amended the Term Loan Credit Agreement to increase the size of the term loan from $550.0 million to $650.0 million. Please read Note 12—Inventory Financing Agreements and Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Capital Expenditures and Turnaround Costs. Our deferred turnaround costs and capital expenditures, including land and building purchases but excluding acquisitions, for the year ended December 31, 2024, totaled approximately $209.0 million and were primarily related to the 2024 turnaround and related scheduled maintenance work at our Montana refinery, capital projects at our Hawaii and Tacoma refineries, our Retail businesses, and sustaining maintenance at each of our refineries. Our capital expenditures and deferred turnaround costs budget for 2025 is approximately $210 to $240 million and primarily relates to scheduled maintenance, capital projects, and turnaround projects related to regulatory compliance, information technology, and growth across each of our businesses. Operating Lease Liabilities. Operating lease liabilities primarily include obligations associated with the lease of land, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Please read Note 17—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Finance Lease Liabilities. Finance lease liabilities primarily include obligations associated with the lease of retail facilities and vehicles. Please read Note 17—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Purchase Commitments. Purchase commitments primarily consist of contracts executed as of December 31, 2024, for the purchase of crude oil for use at our refineries that are scheduled for delivery in 2025. As of December 31, 2024, we have material purchase commitments of $3.4 billion, with required cash outlays primarily expected in the next twelve months. Environmental Matters. Our operations are subject to extensive and periodically-changing federal, state, and local environmental laws and regulations including but not limited to air emissions, wastewater discharges, and solid and hazardous waste management activities. Additionally, we have asset retirement obligations in the period in which we have a legal obligation, whether by government or regulatory action or contractual arrangement, to incur these costs and can make a reasonable estimate of the fair value of the liability. Please read Note 11—Asset Retirement Obligations and Note 18—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for more information. 60 Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations were based on the consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. Our significant accounting policies are described in our audited consolidated financial statements under Item 8 of this Form 10-K. We have identified certain estimates as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management. We analyze our estimates on a periodic basis, including those related to fair value, impairments, natural gas and crude oil reserves, bad debts, natural gas and oil properties, income taxes, derivatives, contingencies, and litigation and base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Inventory and Obligations Under Inventory Financing Agreements Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost and net realizable value using the FIFO accounting method. Commodity inventories at the Washington refinery are stated at the lower of cost and net realizable value using the LIFO inventory accounting method. We value merchandise along with spare parts, materials, and supplies at weighted average cost. Estimating the net realizable value of our inventory requires management to make assumptions about the timing of sales and the expected proceeds that will be realized for these sales. Please read Note 7—Inventories to our consolidated financial statements under Item 8 of this Form 10-K for additional information. Crude oil held in storage tanks at, and certain crude oil in transit to, the Hawaii refinery are financed by Citi under procurement contracts. The crude oil remains in the legal title of Citi and is stored in our storage tanks governed by a storage facilities agreement. Legal title to the stored crude oil passes to us at the tank outlet. After processing, Citi takes title to the refined products stored in our storage tanks until they are sold to third parties. Citi takes legal title of crude oil in transit at the specified purchase location with the third party supplier. We purchase the crude oil shipment from Citi at the SPM delivery point and we sell an equal quantity and quality of crude oil to Citi at the crude intake point. Legal title to crude oil in transit passes to us at the SPM delivery point for the upstream leg, and legal title passes to Citi at the crude intake point for the downstream leg. We record the inventory owned by Citi on our behalf as inventory with a corresponding obligation on our balance sheet in the amount we expect to pay to satisfy the repurchase obligation for the crude oil inventory then-owned by Citi following the expiration or termination of the Inventory Intermediation Agreement. The valuation of our repurchase obligation requires that we make estimates of the prices and differentials assuming settlement occurs at the end of the reporting period. Please read Note 12—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for additional information regarding our Hawaii inventory financing agreement. Fair Value Measurements We measure certain assets and liabilities at their fair market value. Assets and liabilities measured at fair value on a recurring basis include derivative instruments and environmental credit obligations. We also measure certain assets and liabilities at fair value on a nonrecurring basis when specific triggering events occur, such as business combinations and events which indicate that a reporting unit’s carrying value exceeds its estimated fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In estimating fair value, we use discounted cash flow projections, recent comparable market transactions, if available, or quoted prices. We consider assumptions that third parties would make in estimating fair value, including the highest and best use of the asset. The assumptions used by another party could differ significantly from our assumptions. We classify fair value balances based on the classification of the inputs used to calculate the fair value of a transaction. The inputs used to measure fair value have been placed in a hierarchy based on priority. The hierarchy gives the highest priority to unadjusted, readily observable quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Please read Note 16—Fair Value Measurements to our consolidated financial statements under Item 8 of this Form 10-K for additional information. Business Combinations We recognize assets acquired and liabilities assumed in business combinations separately from goodwill at their estimated fair values as of the date of acquisition. Significant judgment is required in estimating the fair value of assets acquired. We obtain the assistance of third-party valuation specialists in estimating fair values of tangible and intangible assets 61 based on available historical information and on expectations and assumptions about the future, considering the perspectives of marketplace participants. These valuation methods require management to make estimates and assumptions regarding characteristics of the acquired property and future revenues and expenses. Changes in these estimates and assumptions would result in different amounts allocated to the related assets and liabilities. The measurement period may be up to one year from the acquisition date; we may record adjustments to the preliminary purchase price allocation during this time, concluding at the end of the one year period or final determination of the values of consideration transferred and assets and liabilities assumed, whichever comes first. Subsequent adjustments, if any, are recorded to the consolidated statement of operations. Please read Note 5—Acquisitions and Note 16—Fair Value Measurements to our consolidated financial statements under Item 8 of this Form 10-K for further information. Impairment of Goodwill and Long-lived Assets We assess the recoverability of the carrying value of goodwill during the fourth quarter of each year or whenever events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required. Under the quantitative test, we compare the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. If the carrying value exceeds the estimated fair value of the reporting unit, an impairment loss is recorded. The fair value of a reporting unit is determined using the income approach and the market approach. Under the income approach, we estimate the present value of expected future cash flows using a market participant discount rate. Under the market approach, we estimate fair value using observable multiples for comparable companies within our industry. These valuation methods require us to make significant estimates and assumptions regarding future cash flows, capital projects, commodity prices, long-term growth rates, and discount rates. Please read Note 10—Goodwill and Intangible Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information. We review property, plant, and equipment, operating leases, deferred turnaround costs, and other long-lived assets whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. We use a cash flows model to estimate value because there is usually a lack of quoted market prices available for long-lived assets. Future cash flow estimates used for impairment reviews are based on assessments requiring judgment, including future production volumes, commodity prices, operating costs, margins, discount rates, expected capital expenditures, and other factors based on all available information available as of the date of the review. Impairment is required when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying value. If this occurs, an impairment loss is recognized for the difference between the fair value and carrying value. The fair value of long-lived assets is determined using the income approach. Please read Note 9—Property, Plant, and Equipment to our consolidated financial statements under Item 8 of this Form 10-K for further information. Environmental Matters and Asset Retirement Obligations We record liabilities when environmental assessments and/or remedial efforts are probable and can be reasonably estimated. Cost estimates are based on the expected timing and extent of remedial actions required by governing agencies, experience gained from similar sites for which environmental assessments or remediation have been completed, and the amount of our anticipated liability considering the proportional liability and financial abilities of other responsible parties. Usually, the timing of these accruals coincides with the completion of a feasibility study or our commitment to a formal plan of action. Please read Note 18—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for further information about our environmental liabilities and assessments. We record asset retirement obligations (“AROs”) at fair value in the period in which we have a legal obligation, whether by government action or contractual arrangement, to incur these costs and can make a reasonable estimate of the fair value of the liability. Estimating the cost and timing of future remedial efforts is difficult and related technologies, costs, regulatory and other compliance considerations, timing, discount rates, and other inputs considered in the valuations are subject to change. Please read Note 2—Summary of Significant Accounting Policies, “Asset Retirement Obligations,” to our consolidated financial statements under Item 8 of this Form 10-K for further information. Income Taxes We use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and NOL and tax credit carry 62 forwards. The realizability of deferred tax assets is evaluated quarterly based on a “more likely than not” standard and, to the extent this threshold is not met, a valuation allowance is recorded. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. These liabilities are recorded based on our assessment of existing tax laws and regulations. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible and may vary from our estimates for a number of reasons, including different interpretations of tax laws and regulations. New tax laws and regulations, and changes to existing tax laws and regulations, are proposed and promulgated continuously. The implementation of future tax laws and regulatory initiatives, as well as future interpretations on historical tax laws and regulations, could result in increased tax liabilities that cannot be predicted at this time. Please read Note 2—Summary of Significant Accounting Policies, “Income Taxes,” to our consolidated financial statements under Item 8 of this Form 10-K for further information. In the fourth quarter of 2023, we analyzed projections for our future taxable income and the absence of objective negative evidence, such as a cumulative loss in recent years. As a result of this analysis, we determined that we have sufficient positive evidence to release a majority of the valuation allowance against our federal net deferred tax assets and recognized a non-cash deferred tax benefit of $277.7 million for the year ended December 31, 2023. We retain a partial valuation allowance on certain state deferred tax assets primarily as a result of apportionment factors from minimal activity in certain states impacting assessed likelihood of future realizability. We will continue to reassess whether the balance of the valuation allowance is appropriate on a yearly basis and, given the totality of the facts and circumstances, both positive and negative, will adjust the remaining valuation allowance in future periods if the evidence supports doing so.