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What changed in HF Sinclair Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HF Sinclair Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+415 added−387 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-21)

Top changes in HF Sinclair Corp's 2024 10-K

415 paragraphs added · 387 removed · 275 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

141 edited+38 added−64 removed228 unchanged
Biggest changeRisks Related to Cybersecurity, Data Security and Privacy, Information Technology and Intellectual Property • Our information technology systems, operational systems, security systems, infrastructure, communications networks, software integrated in our manufacturing and administrative processes, and customer data processed by us, third-party vendors or suppliers are subject to risks presented by cyber events, including incidents or breaches of security, any of which could prevent us or third parties we rely on from effectively operating our business, and could harm our reputation or materially adversely affect our company's assets, growth efforts, operations, facilities, business reputation or financial condition. • We may be subject to information technology system failures, communications network disruptions and data breaches that are generally beyond our control. • Our business is subject to complex and evolving global laws, regulations and security standards regarding data privacy, cybersecurity and data protection, which could result in claims or increased cost of operations, or other harm to our business. • We may be unable to adequately maintain, enforce and protect our intellectual property and may not be able to prevent third parties from unauthorized access or use of our intellectual property, which may increase our cost of doing business or otherwise hurt our ability to compete in the market. • If we fail to comply with our obligations under license or technology agreements with third parties or are unable to license rights to use technologies on reasonable terms or at all, we may be required to pay damages or could potentially lose license rights that are critical to our business.
Biggest changeRisks Related to Cybersecurity, Data Security and Privacy, Information Technology and Intellectual Property • Our information technology systems, operational systems, security systems, infrastructure, communications networks, software integrated in our manufacturing and administrative processes, and customer data processed by us, third-party vendors or suppliers are subject to risks presented by cyber events, including incidents or breaches of security. • We may be subject to information technology system failures, communications network disruptions and data breaches that are generally beyond our control. • Our business is subject to complex and evolving global laws, regulations and security standards regarding data privacy, cybersecurity and data protection, which could result in claims or increased cost of operations, or other harm to our business. • We may be unable to adequately maintain, enforce and protect our intellectual property and may not be able to prevent third parties from unauthorized access or use of our intellectual property, which may increase our cost of doing business or otherwise hurt our ability to compete in the market. • If we fail to comply with our obligations under license or technology agreements with third parties or are unable to license rights to use technologies on reasonable terms or at all, we may be required to pay damages or could potentially lose license rights that are critical to our business. 28 Table of Content s Risks Related to Liquidity, Financial Instruments and Credit • Changes in our credit profile, or a significant increase in the price of crude oil, may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity and limit our ability to purchase sufficient quantities of crude oil to operate our refineries at desired capacity. • We may not be able to obtain funding on acceptable terms or at all because of volatility and uncertainty in the credit and capital markets.
Furthermore, public statements with respect to ESG matters, such as emissions reduction goals or progress, other environmental targets or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits.
Furthermore, certain public statements with respect to ESG matters, such as emissions reduction goals or progress, other environmental targets or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits.
These risks and uncertainties include, but are not limited to, the following: Risks Related to our Business/Industry: • The prices of crude oil, renewable feedstocks and refined, finished lubricant and renewable diesel products materially affect our profitability, and are dependent upon many factors that are beyond our control. • Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions and other disruptive risks for which we may not be adequately insured. • A disruption to or proration of the product distribution systems or manufacturing facilities we utilize could negatively impact our profitability. • A material decrease in the supply, or a material increase in the price, of crude oil, renewable feedstocks or other raw materials or equipment available to our refineries and other facilities could significantly reduce our production levels and negatively affect our operations. • To successfully operate our facilities, we are required to expend significant amounts for capital outlays and operating expenditures.
These risks and uncertainties include, but are not limited to, the following: Risks Related to our Business/Industry • The prices of crude oil, renewable feedstocks and refined, finished lubricant and renewable diesel products materially affect our operating results, and are dependent upon many factors that are beyond our control. • Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions and other disruptive risks for which we may not be adequately insured. • A disruption to or proration of the product distribution systems or manufacturing facilities we utilize could negatively impact our profitability. • A material decrease in the supply, or a material increase in the price, of crude oil, renewable feedstocks or other raw materials or equipment available to our refineries and other facilities could significantly reduce our production levels and negatively affect our operations. • To successfully operate our facilities, we are required to expend significant amounts for capital outlays and operating expenditures.
Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing, misappropriating, diluting, or otherwise violating the licensor’s or another party’s rights. 51 Table of Content In the future, we may identify additional third-party intellectual property that we believe is useful or necessary to engage in our business.
Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing, misappropriating, diluting, or otherwise violating the licensor’s or another party’s rights. 51 Table of Content s In the future, we may identify additional third-party intellectual property that we believe is useful or necessary to engage in our business.
Risks associated with acquisitions include those relating to: • diversion of significant management time and attention from our existing business; • challenges in managing the increased scope, geographic diversity and complexity of operations and inefficiencies that may result therefrom; • difficulties in integrating the financial, technological and management standards, processes, procedures and controls of an acquired business with those of our existing operations; • the inability to integrate multiple acquisitions simultaneously or within a short timeframe of each other; • difficulties integrating personnel from the acquired business while maintaining focus on providing consistent, high-quality products and services or the loss of key employees; • difficulties integrating relationships with customers, vendors and business partners; • liability for known or unknown environmental conditions or other contingent liabilities not covered by indemnification or insurance or potential unknown and unforeseen expenses, delays or regulatory conditions associated with such acquisitions; • greater than anticipated expenditures required for compliance with environmental or other regulatory standards or for investments to improve operating results; • difficulties or delays in achieving anticipated operational improvements or benefits or inaccurate assumptions about future synergies or revenues; • incurrence of additional indebtedness to finance acquisitions or capital expenditures relating to acquired assets; • issuance of additional equity, which could result in further dilution of the ownership interest of existing stockholders; 37 Table of Content • disruption of, or the loss of momentum in, ongoing business or inconsistencies in standards, controls, procedures and policies; • incurrence of substantial, nonrecurring transaction-related expenses; and • potential securities class action and derivative lawsuits, which could result in substantial costs.
Risks associated with acquisitions include those relating to: • diversion of significant management time and attention from our existing business; • challenges in managing the increased scope, geographic diversity and complexity of operations and inefficiencies that may result therefrom; • difficulties in integrating the financial, technological and management standards, processes, procedures and controls of an acquired business with those of our existing operations; • the inability to integrate multiple acquisitions simultaneously or within a short timeframe of each other; • difficulties integrating personnel from the acquired business while maintaining focus on providing consistent, high-quality products and services or the loss of key employees; • difficulties integrating relationships with customers, vendors and business partners; • liability for known or unknown environmental conditions or other contingent liabilities not covered by indemnification or insurance or potential unknown and unforeseen expenses, delays or regulatory conditions associated with such acquisitions; • greater than anticipated expenditures required for compliance with environmental or other regulatory standards or for investments to improve operating results; • difficulties or delays in achieving anticipated operational improvements or benefits or inaccurate assumptions about future synergies or revenues; • incurrence of additional indebtedness to finance acquisitions or capital expenditures relating to acquired assets; • issuance of additional equity, which could result in further dilution of the ownership interest of existing stockholders; • disruption of, or the loss of momentum in, ongoing business or inconsistencies in standards, controls, procedures and policies; • incurrence of substantial, nonrecurring transaction-related expenses; and • potential securities class action and derivative lawsuits, which could result in substantial costs.
For example, the Washington legislature recently introduced HB 2232, which although it was not ultimately adopted, proposed to establish extensive petroleum industry reporting requirements (including the reporting of supply, pricing and profit information) and create a new division within the Washington Utilities and Transportation Commission charged with providing independent oversight and analysis of petroleum fuel markets.
For example, the Washington legislature introduced HB 2232, which although it was not ultimately adopted, proposed to establish extensive petroleum industry reporting requirements (including the reporting of supply, pricing and profit information) and create a new division within the Washington Utilities and Transportation Commission charged with providing independent oversight and analysis of petroleum fuel markets.
For certain raw materials and utilities used by our refineries and other facilities, there are a limited number of suppliers and, in some cases, we source from a single supplier and/or suppliers in economies that have experienced instability or the supplies are specific to the particular geographic region in which a facility is located.
For certain raw materials used by our refineries and other facilities, there are a limited number of suppliers and, in some cases, we source from a single supplier and/or suppliers in economies that have experienced instability or the supplies are specific to the particular geographic region in which a facility is located.
Developments in the global oil markets, such as actual or potential hostilities or other conflicts in oil producing areas, including shipping disruptions in the Red Sea, the Israel-Gaza conflict and the Russia-Ukraine war, and worldwide demand for crude oil, particularly in developing countries, can affect the prices of crude oil and result in inflated energy prices.
Developments in the global oil markets, such as actual or potential hostilities or other conflicts in oil producing areas, including shipping disruptions in the Red Sea, the Israel-Gaza and Hezbollah conflict and the Russia-Ukraine war, and worldwide demand for crude oil, particularly in developing countries, can affect the prices of crude oil and result in inflated energy prices.
In addition, we cannot assure you that our insurers will renew our insurance coverage on acceptable terms, if at all, or that we will be able to arrange for adequate alternative coverage in the event of non-renewal. Further, our underwriters could have credit issues that affect their ability to pay claims.
We cannot assure you that our insurers will renew our insurance coverage on acceptable terms, if at all, or that we will be able to arrange for adequate alternative coverage in the event of non-renewal. Further, our underwriters could have credit issues that affect their ability to pay claims.
Canada’s 2030 Emissions Reduction Plan issued pursuant to the Canadian Net-Zero Emissions Accountability Act, includes a projected contribution from the oil and gas sector of emissions reductions to 31% below 2005 levels in 2030 (or to 42% below 2019 levels) with an ultimate goal of achieving net zero emissions by 2050.
Canada’s 2030 Emissions Reduction Plan (“ERP”) issued pursuant to the Canadian Net-Zero Emissions Accountability Act, includes a projected contribution from the oil and gas sector of emissions reductions to 31% below 2005 levels in 2030 (or to 42% below 2019 levels) with an ultimate goal of achieving net zero emissions by 2050.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, restriction of emissions, electric vehicle mandates and combustion engine phaseouts.
Various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, restriction of emissions, electric vehicle mandates and combustion engine phaseouts.
Furthermore, the Climate Act has come into effect with the goal of significantly reducing GHG emissions by 55% (compared to 1990) by 2030 and to be climate neutral by 2050. The Climate Act also establishes that the government must prepare a Climate Plan.
Furthermore, the Climate Act has come into effect with the goal of reducing GHG emissions by 55% (compared to 1990) by 2030 and to be climate neutral by 2050. The Climate Act also establishes that the government must prepare a Climate Plan.
The effect of changes in crude oil or renewable feedstock prices on operating results, therefore, depends in part on how quickly refined product or renewable diesel prices adjust to reflect these changes.
The effect of changes in crude oil or renewable feedstock prices on operating results, depends in part on how quickly refined product or renewable diesel prices adjust to reflect these changes.
Furthermore, our stock price could be adversely impacted if existing shareholders, including institutional investors, elect in the future to shift some or all of their investments into renewable energy or non-energy related sectors. Additionally, there is the possibility that financial institutions may be pressured or required to adopt policies that limit funding for fossil fuel energy companies.
Furthermore, our stock price could be adversely impacted if existing stockholders, including institutional investors, elect in the future to shift some or all of their investments into renewable energy or non-energy related sectors. Additionally, there is the possibility that financial institutions may be pressured or required to adopt policies that limit funding for fossil fuel energy companies.
Risks Related to Government Regulation • We are subject to significant regulation and oversight by governmental agencies. • We incur significant costs and liabilities, and expect to incur additional costs and liabilities in the future, resulting from compliance with existing, new and changing environmental, health and safety laws and regulations, and face potential exposure for environmental matters. • We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs. 28 Table of Content • There are various risks associated with GHGs and climate change that could result in increased operating costs and litigation and reduced demand for the refined products we produce and investment in our industry. • Increasing attention to ESG matters may adversely impact our business, financial results, stock price or price of debt securities. • Compliance with, or developments with respect to, renewable and low carbon fuel blending programs, and other regulations, policies, and standards impacting the demand for low-carbon fuels could have an adverse effect on our financial condition and results of operations. • Increases in required fuel economy and regulation of GHG emissions from motor vehicles may reduce demand for petroleum-based transportation fuels. • State regulation of petroleum product markets and reporting requirements could adversely impact our business, costs of operation and financial results. • Physical impacts of climate change could have an adverse effect on our financial condition and results of operations. • Compliance with and changes in tax laws could materially and adversely impact our financial condition, results of operations and cash flows.
Risks Related to Government Regulation • We are subject to significant regulation and oversight by governmental agencies. • We incur significant costs and liabilities, and expect to incur additional costs and liabilities in the future, resulting from compliance with existing, new and changing environmental, health and safety laws and regulations, and face potential exposure for environmental matters. • We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs. • There are various risks associated with GHGs and climate change that could result in increased operating costs, compliance costs and litigation and reduced demand for the refined products we produce and investment in our industry. • Increasing attention to ESG matters may adversely impact our business, financial results, stock price or price of debt securities. • Compliance with, or developments with respect to, renewable and low carbon fuel blending programs, and other regulations, policies, and standards impacting the demand for low-carbon fuels could have an adverse effect on our financial condition and results of operations. • Increases in required fuel economy and regulation of GHG emissions from motor vehicles may reduce demand for petroleum-based transportation fuels. • State regulation of petroleum product markets and reporting requirements could adversely impact our business, costs of operation and financial results. • Physical or transitional risks of climate change could have an adverse effect on our financial condition and results of operations. • Compliance with and changes in tax laws could materially and adversely impact our financial condition, results of operations and cash flows.
If we are unable to meet the ESG standards or investment, lending, ratings, or voting criteria and policies set by these parties, we may lose investors, investors may allocate a portion of their capital away from us, we may become a target for ESG- 45 Table of Content focused activism, we may face increased costs of or limitations on access to capital or insurance necessary to sustain or grow our business, the price of our common stock or debt securities may be adversely impacted, demand for our services and refined petroleum products may be adversely impacted, and our reputation may be adversely affected, all of which could adversely impact our future financial results.
If we are unable to meet the ESG standards or investment, lending, ratings, or voting criteria and policies set by these parties, we may lose investors, investors may allocate a portion of their capital away from us, we may become a target for ESG-focused activism, we may face increased costs of or limitations on access to capital or insurance necessary to sustain or grow our business, the price of our common stock or debt securities may be adversely impacted, demand for our services and refined petroleum products may be adversely impacted, and our reputation may be adversely affected, all of which could adversely impact our future financial results.
Such laws and similar regulations could also increase our litigation risks or may increase risks related to our reputation or goodwill as we cannot predict how additional reporting under these laws may be perceived or interpreted by our customers and stakeholders. 46 Table of Content Compliance with, or developments with respect to, renewable and low carbon fuel blending programs, and other regulations, policies, and standards impacting the demand for low-carbon fuels could have an adverse effect on our financial condition and results of operations.
Such laws and similar regulations could also increase our litigation risks or may increase risks related to our reputation or goodwill as we cannot predict how additional reporting under these laws may be perceived or interpreted by our customers and stakeholders. 45 Table of Content s Compliance with, or developments with respect to, renewable and low carbon fuel blending programs, and other regulations, policies, and standards impacting the demand for low-carbon fuels could have an adverse effect on our financial condition and results of operations.
Most recently, at the 28th Conference of the Parties (COP28), participants agreed to transition “away from fossil fuels in energy systems in a just, orderly, and equitable manner” and increase renewable energy capacity so as to achieve net zero by 2050, although no timeline for doing so was set.
At the 28th Conference of the Parties (COP28), participants agreed to transition “away from fossil fuels in energy systems in a just, orderly, and equitable manner” and increase renewable energy capacity so as to achieve net zero by 2050, although no timeline for doing so was set.
These events, including, but not limited to, drought, winter storms, wildfire, tornados, extreme temperatures, extreme precipitation or flooding, may become more intense or more frequent as a result of climate change and could have an adverse effect on our continued operations as well as the operations of our suppliers and customers.
These events, including, but not limited to, drought, winter storms, wildfire, tornados, extreme temperatures, extreme precipitation or flooding, may be more intense or more frequent as a result of climate change and could have an adverse effect on our continued operations as well as the operations of our suppliers and customers.
This in turn could cause us to be unable to operate our refineries at desired capacity. A failure to operate our refineries at desired capacity could adversely affect our profitability and cash flow. We may not be able to obtain funding on acceptable terms or at all because of volatility and uncertainty in the credit and capital markets.
This in turn could cause us to be unable to operate our refineries at desired capacity and could adversely affect our profitability and cash flow. We may not be able to obtain funding on acceptable terms or at all because of volatility and uncertainty in the credit and capital markets.
Additionally, new laws and regulations governing cybersecurity, data privacy and unauthorized disclosure of confidential information, including international comprehensive data privacy regulations and recent U.S. state legislation in Texas and Utah, among others, pose increasingly complex compliance challenges and could potentially elevate our costs over time.
Additionally, new laws and regulations governing cybersecurity, data privacy and unauthorized disclosure of confidential information, including international comprehensive data privacy regulations and recent U.S. state legislation in Iowa and Utah, among others, pose increasingly complex compliance challenges and could potentially elevate our costs over time.
As a result, our Renewables segment could be materially and adversely affected if (i) these regulations, policies, and standards are adversely 47 Table of Content changed, not enforced, or discontinued, (ii) the benefits therefrom are reduced (such as the blender’s tax credit and other incentives), (iii) any of the products we produce are deemed not to qualify for compliance therewith, or (iv) we are unable to satisfy or maintain any approved pathways.
As a result, our Renewables segment could be materially and adversely affected if (i) these regulations, policies, and standards are adversely changed, not enforced, or discontinued, (ii) the benefits therefrom are reduced (such as the blender’s tax credit and other incentives), (iii) any of the products we produce are deemed not to qualify for compliance therewith, or (iv) we are unable to satisfy or maintain any approved pathways.
In 2021, President Biden issued several executive orders that committed to substantial action on climate change, released “The Long-Term Strategy of the United States: Pathways to Net-Zero Greenhouse Gas Emissions by 2050”, which established a roadmap to net zero emissions in the United States by 2050 and called for, among other things, improving energy efficiency, decarbonizing energy sources, the increased use of zero-emission vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risks across governmental agencies and economic sectors.
In 2021, the previous administration issued several executive orders that committed to substantial action on climate change, released “The Long-Term Strategy of the United States: Pathways to Net-Zero Greenhouse Gas Emissions by 2050”, which established a roadmap to net zero emissions in the United States by 2050 and called for, among other things, improving energy efficiency, decarbonizing energy sources, the increased use of zero-emission vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risks across governmental agencies and economic sectors.
For example, implementation of the revised NAAQS for ozone could result in stricter permitting requirements, a delay in or inability to obtain required permits, and increased expenditures for pollution control equipment, the costs of which could be significant.
For example, implementation of revised NAAQS for ozone and particulate matter, could result in stricter permitting requirements, a delay in or inability to obtain required permits, and increased expenditures for pollution control equipment, the costs of which could be significant.
These regulations expand PHMSA’s regulation of the safety of hazardous liquid pipelines by establishing certain new procedural and notification requirements for managing rupture events and requiring the installation of rupture-mitigation valves on new or certain replaced pipelines. This final rule may result in additional capital and operations and maintenance costs in the coming years.
These regulations expand PHMSA’s regulation of the safety of hazardous liquid pipelines by establishing certain new procedural and notification requirements for managing rupture events and requiring the installation of rupture-mitigation valves on new or certain replaced pipelines. This final rule has and may continue to result in additional capital and operations and maintenance costs in the coming years.
In addition, several states have also taken steps to incentivize the production of electric vehicles or otherwise limit the sale of gasoline or diesel-powered vehicles. These and any future legislation or regulatory programs could increase the cost of consuming or otherwise reduce demand for, the refined petroleum 44 Table of Content products that we produce and transport.
In addition, several states have also taken steps to incentivize the production of electric vehicles or otherwise limit the sale of gasoline or diesel-powered vehicles. These and any future legislation or regulatory programs could increase the cost of consuming or otherwise reduce demand for, the refined petroleum products that we produce and transport.
Additionally, our Refining, Lubricants & Specialties and Renewables segments depend on rail and marine transportation for the delivery of feedstocks used in the production of our products and to deliver products to market, the availability of which is 31 Table of Content subject to various risks, including those associated with rail or marine strikes, equipment shortages, operating hazards and transportation regulations.
Additionally, our Refining, Lubricants & Specialties and Renewables segments depend on rail and marine transportation for the delivery of feedstocks used in the production of our products and to deliver products to market, the availability of which is subject to various risks, including those associated with rail or marine strikes, equipment shortages, operating hazards and transportation regulations.
The decreased availability or less favorable pricing for water as a result of population growth, drought or regulation could negatively impact our operations. 32 Table of Content Our Artesia RDU and Sinclair RDU are co-located with the Navajo Refinery and Parco Refinery, respectively, and their operations are dependent upon certain shared infrastructure at the co-located facilities.
The decreased availability or less favorable pricing for water as a result of population growth, drought or regulation could negatively impact our operations. Our Artesia RDU and Sinclair RDU are co-located with the Navajo Refinery and Parco Refinery, respectively, and their operations are dependent upon certain shared infrastructure at the co-located facilities.
Also, our crude oil and refined and renewable diesel product inventories are valued at the lower of cost or market under the last-in, first-out (“LIFO”) inventory valuation methodology.
Finally, our crude oil and refined and renewable diesel product inventories are valued at the lower of cost or market under the last-in, first-out (“LIFO”) inventory valuation methodology.
Our operations are subject to potentially disruptive activity by those concerned with our industry. • General economic conditions may adversely affect our business, operating results and financial condition. • An impairment of our goodwill or long-lived assets could reduce our earnings or negatively impact our financial condition and results of operations. • We sell many of our lubricants and specialties products through distributors, which presents risks that could adversely affect our operating results. • The market price of our common stock may fluctuate significantly, and the value of a stockholder's investment could be impacted. • REH Company became a significant holder of our common stock following the completion of the Sinclair Transactions.
Our operations are subject to potentially disruptive activity by those concerned with our industry. 27 Table of Content s • General economic conditions may adversely affect our business, operating results and financial condition. • An impairment of our goodwill or assets could reduce our earnings or negatively impact our financial condition and results of operations. • We sell many of our lubricants and specialties products through distributors, which presents risks that could adversely affect our operating results. • The market price of our common stock may fluctuate significantly, and the value of a stockholder’s investment could be impacted. • REH Company became a significant holder of our common stock following the completion of the Sinclair Transactions.
The development and commercialization of new products require significant expenditures over an extended period of time, and some products that we seek to develop may never become profitable, and we could be required to write-off our investments related to a new product that does not reach commercial viability. Our business is subject to the risks of international operations.
The development and commercialization of new products require significant expenditures over an extended period of time, and some products that we seek to develop may never become profitable, and we could be required to write-off our investments related to a new product that does not reach commercial viability. 33 Table of Content s Our business is subject to the risks of international operations.
Our operations and those of our suppliers could also be impacted by new or revised federal restrictions or laws pertaining to oil and gas operations on federal lands, which could include pauses on leasing, enhanced 41 Table of Content environmental reviews, and emissions regulations.
Our operations and those of our suppliers could also be impacted by new or revised federal restrictions or laws pertaining to oil and gas operations on federal lands, which could include pauses on leasing, enhanced environmental reviews, and emissions regulations.
If a significant accident or event occurs that is self-insured or not fully insured, it could have a material adverse effect on our business, financial condition and results of operations. A disruption to or proration of the product distribution systems or manufacturing facilities we utilize could negatively impact our profitability.
If a significant accident or event occurs that is self-insured or not fully insured, it could have a material adverse effect on our business, financial condition and results of operations. 30 Table of Content s A disruption to or proration of the product distribution systems or manufacturing facilities we utilize could negatively impact our profitability.
We utilize various third party pipeline systems to deliver our products from our refineries to market. The key third party pipeline systems utilized by the Casper, El Dorado, Navajo, Parco, Puget Sound, Woods Cross, and Tulsa Refineries are Magellan (RMPS), NuStar Energy Magellan (Mid-Con), SFPP, Pioneer, Olympic, MPLX, and Magellan (Mid-Con), respectively.
We utilize various third party pipeline systems to deliver our products from our refineries and renewables facilities to market. The key third party pipeline systems utilized by the Casper, El Dorado, Navajo, Parco, Puget Sound, Woods Cross, and Tulsa Refineries and Cheyenne renewables facility are Magellan (RMPS), NuStar Energy Magellan (Mid-Con), SFPP, Pioneer, Olympic, MPLX, Magellan (Mid-Con) and Pioneer, respectively.
Our facilities, pipelines, and other operations are subject to regulation and oversight by international, federal, state, provincial and local regulatory authorities, including the FERC, Commodities Futures Trading Commission, EPA, PHMSA, OSHA, the SEC and the United States Department of Justice, and similar authorities in Canada and the Netherlands, each of which may impose significant civil and criminal penalties to enforce compliance with its requirements.
Our facilities, pipelines, and other operations are subject to regulation and oversight by international, federal, state, provincial and local regulatory authorities, including the FERC, Commodities Futures Trading Commission, EPA, PHMSA, OSHA, the SEC and the United States Department of Justice, and similar authorities in Canada and the Netherlands, each of which may impose significant civil and criminal penalties or other enforcement actions to ensure compliance with its requirements.
Our goodwill and long-lived assets impairment analyses are sensitive to changes in key assumptions used in our analysis, estimates of future crack spreads, forecasted production levels, operating costs and capital expenditures. If the assumptions used in our analysis are not realized, it is possible a material impairment charge may need to be recorded in the future.
Our goodwill and asset impairment analyses are sensitive to changes in key assumptions used in our analysis, estimates of future crack spreads, forecasted production levels, operating costs and capital expenditures. If the assumptions used in our analysis are not realized, it is possible a material impairment charge may need to be recorded in the future.
Should amendments be introduced and later become law, this could affect our operations and 42 Table of Content result in additional compliance, maintenance and other obligations. Additionally, PHMSA adopted new regulations related to Valve Installation and Minimum Rupture Detection Standards, which became effective on October 5, 2022.
Should amendments be introduced and later become law, this could affect our operations and result in additional compliance, maintenance and other obligations. Additionally, PHMSA adopted new regulations related to Valve Installation and Minimum Rupture Detection Standards, which became effective on October 5, 2022.
An impairment of our goodwill or long-lived assets could reduce our earnings or negatively impact our results of operations and financial condition. We continually monitor our business, the business environment and the performance of our operations to determine if an event has occurred that indicates that a goodwill or long-lived asset may be impaired.
An impairment of our goodwill or asset impairments could reduce our earnings or negatively impact our results of operations and financial condition. We continually monitor our business, the business environment and the performance of our operations to determine if an event has occurred that indicates that our goodwill or assets may be impaired.
We cannot accurately predict the amount and timing of any additional impairments of goodwill or long-lived assets in the future. As market prices for refined products and market prices for crude oil continue to fluctuate, we will need to continue to evaluate the carrying value of our refinery reporting units.
We cannot accurately predict the amount and timing of any additional impairments of goodwill or asset impairments in the future. As market prices for refined products and market prices for crude oil continue to fluctuate, we will need to continue to evaluate the carrying value of our refinery reporting units.
These laws also are not uniform, as certain laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information, and such laws may differ 50 Table of Content from each other, which may complicate compliance efforts.
These laws also are not uniform, as certain laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information, and such laws may differ from each other, which may complicate compliance efforts.
We are subject to extensive tax liabilities, including federal and state income taxes and transactional taxes such as excise, sales and use, payroll, franchise, withholding and property taxes. In addition, many tax liabilities are subject to periodic audits by 48 Table of Content taxing authorities, and such audits could subject us to interest and penalties.
We are subject to extensive tax liabilities, including federal and state income taxes and transactional taxes such as excise, sales and use, payroll, franchise, withholding and property taxes. In addition, many tax liabilities are subject to periodic audits by taxing authorities, and such audits could subject us to interest and penalties.
The demand for crude oil and refined and finished lubricant products can also be reduced due to a local or national recession or other adverse economic condition, which results in lower spending by businesses and consumers on gasoline and diesel fuel, higher gasoline prices due to higher crude oil prices, a shift by consumers to more fuel-efficient vehicles or alternative fuel vehicles (such as ethanol or wider adoption of electric, gas/electric hybrid or hydrogen-powered vehicles), or an increase in vehicle fuel economy, whether as a result of technological advances by manufacturers, legislation mandating or encouraging higher fuel economy or the use of alternative fuel.
The demand for crude oil and refined and finished lubricant products can also be reduced due to a local or national recession or other adverse economic condition, higher gasoline prices, a shift by consumers to more fuel-efficient vehicles or alternative fuel vehicles (such as ethanol or wider adoption of electric, gas/electric hybrid or hydrogen-powered vehicles), or an increase in vehicle fuel economy, whether as a result of technological advances by manufacturers, legislation mandating or encouraging higher fuel economy or the use of alternative fuel.
Additionally, political, litigation and financial risks may result in curtailed refinery activity, increased liability, or other adverse effects on our business, financial condition and results of operations. There are also increasing risks of litigation related to climate change effects.
Additionally, political, litigation and financial risks may result in curtailed refinery activity, increased liability, or other adverse effects on our business, financial condition and results of operations. 43 Table of Content s There are also increasing risks of litigation related to climate change effects.
Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost inflation is incurred. An impairment of our goodwill or long-lived assets could reduce our earnings or negatively impact our financial condition and results of operations.
Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost inflation is incurred. An impairment of our goodwill or asset impairments could reduce our earnings or negatively impact our financial condition and results of operations.
Continued volatility in crude oil and refined product or renewable diesel prices could result in lower of cost or market inventory charges in the future, or in reversals reducing cost of products sold in subsequent periods should prices recover.
Continued volatility in crude oil and refined product or renewable diesel prices could result in lower of cost or market inventory charges in the future, or in reversals reducing Cost of materials and other in subsequent periods should prices recover.
Such cases could also adversely impact public perception and the demand for fossil fuels and petroleum products, which could subsequently result in decreased demand for our services and refined products and a drop in our stock price.
Such cases could also adversely impact public perception and the demand for fossil fuels and petroleum products, or result in additional regulatory requirements, which could subsequently result in decreased demand for our services and refined products and a drop in our stock price.
These rules, as well as subsequent rulemaking under the CAA or similar laws, or new agency interpretations of existing laws and regulations, may necessitate additional expenditures in future years and result in increased costs on our operations.
These rules, which are currently challenged in court, as well as subsequent rulemaking under the CAA or similar laws, or new agency interpretations of existing laws and regulations, may necessitate additional expenditures in future years and result in increased costs on our operations.
If the market value of our inventory were to decline to an amount less than our LIFO cost, we would record a write-down of inventory and a non-cash charge to cost of products sold even when there is no underlying economic impact at 30 Table of Content that point in time.
If the market value of our inventory were to decline to an amount less than our LIFO cost, we would record a write-down of inventory and a non-cash charge to Cost of materials and other even when there is no underlying economic impact at that point in time.
In addition, each Native American tribe is a sovereign nation having the right to enforce laws and regulations (including various taxes, fees, and other requirements and conditions) and to grant approvals independent from federal, state and local statutes and regulations. In 2020, the Supreme Court ruled in McGirt v.
In addition, each Native American tribe is a sovereign nation having the right to enforce laws and regulations (including various taxes, fees, and other requirements and conditions) and to grant approvals independent from federal, state and local statutes and regulations.
Furthermore, we could incur additional costs to comply with such statutes, rules, regulations and orders. Should we fail to comply with any applicable statutes, rules, regulations, and orders of regulatory authorities, we could be subject to substantial penalties and fines and withdrawal or denial of permits to operate.
Should we fail to comply with any applicable statutes, rules, regulations, and orders of regulatory authorities, we could be subject to substantial penalties and fines and withdrawal or denial of permits to operate.
Despite our efforts to protect such intellectual property, it is possible that competitors or other unauthorized third parties may illegally obtain, copy, use or disclose our trademarks (or other marks likely to cause confusion among our consumers), technologies, products and processes or seek court declarations that they do not infringe, misappropriate, dilute, or otherwise violate our intellectual property.
Despite our efforts to protect such intellectual property, unauthorized third parties from time to time have, and may continue to, illegally obtain, copy, use or disclose our trademarks (or other marks likely to cause confusion among our consumers), technologies, products and processes or seek court declarations that they do not infringe, misappropriate, dilute, or otherwise violate our intellectual property.
Our credit facilities contain certain covenants and restrictions that may constrain our business and financing activities. The operating and financial restrictions and covenants in our credit facility, HEP’s credit facility and any future financing agreements could adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities.
The operating and financial restrictions and covenants in our credit facility, HEP’s credit facility and any future financing agreements could adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities.
Operating results can be affected by these industry factors, product and crude pipeline capacities, crude oil differentials (including regional and grade differentials), the price and availability of renewable feedstocks, changes in transportation costs, accidents or interruptions in transportation, competition in the particular geographic areas that we serve, global market conditions, actions by foreign nations and factors that are specific to us, such as the success of particular marketing programs and the efficiency of our refinery and facility operations.
Other factors affecting pricing and demand, and ultimately our operating results, include changes in product and crude pipeline capacities, crude oil differentials (including regional and grade differentials), the price and availability of renewable feedstocks, changes in transportation costs, accidents or interruptions in transportation, competition in the particular geographic areas that we serve, global market conditions, actions by foreign nations and factors that are specific to us, such as the success of particular marketing programs and the efficiency of our refinery and facility operations.
At this time, the applicability to, and impact on, if any, our Canadian operations is not clear. The Netherlands also participates in European legal initiatives, including GHG cap and trade programs.
At this time, the applicability of the ERP, and any regulations adopted in furtherance of it, to, and impact on, if any, our Canadian operations is not clear. The Netherlands also participates in European legal initiatives, including GHG cap and trade programs.
As a result, any disruption due to weather events, mechanical failure or other interruption that negatively impacts, or causes a shut down of, shared infrastructure at the co-located facilities could result in lost production and have a material adverse effect on earnings for both refinery and renewable diesel operations at the co-located facility.
As a result, any disruption that negatively impacts, or causes a shut down of, shared infrastructure at the co-located facilities could result in lost production and have a material adverse effect on earnings for both refinery and renewable diesel operations at the co-located facility.
Regulation affects almost every part of our business. For instance, we are subject to laws and regulations related to working conditions, health and safety, equal employment opportunity, employee benefit and other labor and employment matters, and competition and antitrust matters.
RISKS RELATED TO GOVERNMENT REGULATION We are subject to significant regulation and oversight by governmental agencies. Regulation affects almost every part of our business. For instance, we are subject to laws and regulations related to working conditions, health and safety, equal employment opportunity, employee benefit and other labor and employment matters, and competition and antitrust matters.
Several states, including, for example, New Mexico and Colorado, are seeking to adopt the California standards and promote zero emission vehicles and mandate the transition away from internal combustion engines.
Several states, including, for example, New Mexico and Colorado, have adopted or are seeking to adopt the California standards, in whole or in part, and promote zero emission vehicles and mandate the transition away from internal combustion engines.
The market price of our common stock may be influenced by many factors, some of which are beyond our control, including: • our quarterly or annual earnings or those of other companies in our industry; • changes in accounting standards, policies, guidance, interpretations or principles; • general economic, industry global and stock market conditions; • the failure of securities analysts to cover our common stock or changes in financial estimates by analysts; • future sales of our common stock; • announcements by us or our competitors of significant contracts or acquisitions; • sales of common stock by us, our senior officers, our affiliates or REH Company; and/or • the other factors described in these Risk Factors, specifically, the Risk Factor titled “REH Company became a significant holder of our common stock following the completion of the Sinclair Transactions.” In recent years, the stock market has experienced extreme price and volume fluctuations.
The market price of our common stock may be influenced by many factors, some of which are beyond our control, including: • our quarterly or annual earnings or those of other companies in our industry; • changes in accounting standards, policies, guidance, interpretations or principles; • general economic, industry global and stock market conditions; • the failure of securities analysts to cover our common stock or changes in financial estimates by analysts; • future sales of our common stock; • announcements by us or our competitors of significant contracts or acquisitions; • sales of common stock by us, our senior officers, our affiliates or REH Company; and/or • the other factors described in these Risk Factors. 38 Table of Content s In recent years, the stock market has experienced extreme price and volume fluctuations.
Furthermore, there has recently been backlash from certain governments and investors against ESG funds and investment practices, which has resulted in increased scrutiny and withdrawals from such funds. Such backlash has also resulted in “anti-ESG” focused activism and investment funds.
Furthermore, there has recently been backlash from certain governments and investors against ESG funds and investment practices, which has resulted in increased scrutiny and withdrawals from such funds. Such backlash has also resulted in “anti-ESG” focused activism and investment funds as well as social media and public relations campaigns.
Reporting under both laws would begin in 2026. Non-compliance with these new laws may result in the imposition of substantial fines or penalties. Additionally, other states are considering similar laws.
Although both laws are subject to litigation, reporting under both laws is expected to begin in 2026. Non-compliance with these new laws may result in the imposition of substantial fines or penalties. Additionally, other states are considering similar laws.
As a result, some investors, funds, financial institutions and other capital markets participants may screen companies such as ours for ESG performance before investing in our common stock or debt securities, or lending to us or have imposed restrictions upon or otherwise limited lending to, investing in, or providing insurance coverage for, companies that operate in industries with higher perceived environmental exposure, such as the energy industry.
Certain investors, funds, financial institutions and other capital markets participants may screen companies such as ours for ESG performance based on various factors like ESG ratings or proxy advisor recommendations, before investing in our common stock or debt securities, or lending to us or have imposed restrictions upon or otherwise limited lending to, investing in, or providing insurance coverage for, companies that operate in industries with higher perceived environmental exposure, such as the energy industry.
For financial years beginning on or after January 1, 2024, certain undertakings that are incorporated in the EU (including EU-incorporated subsidiaries of non-EU incorporated parent entities) will be subject to ESG reporting requirements under the EU’s CSRD, which requires in-scope companies to disclose extensive sustainability information, including disclosing risks and opportunities arising from environmental and social matters, and the impact of their business on people and the environment.
Certain undertakings that are incorporated in the EU (including EU-incorporated subsidiaries of non-EU incorporated parent entities) will be subject to ESG reporting requirements under the EU’s CSRD, which requires in-scope companies to report extensive audited sustainability information, including disclosing risks and opportunities arising from environmental and social matters, and the impact of their business on people and the environment.
Furthermore, our operations may be disrupted by restrictions on our access to railways and waterways on or adjacent to tribal lands, including, for example, through restrictions on the number of trains permitted to cross certain reservations. These factors may increase our cost of doing business on Native American tribal lands.
Furthermore, our operations may be disrupted by restrictions on our access to railways and waterways on or adjacent to tribal lands, including, for example, through restrictions on the number of trains permitted to cross certain reservations.
Accordingly, limitation of investments in and financings for fossil fuel energy companies or subsidies or other governmental support for competitive technologies or industries could result in the direct or indirect restriction, delay or cancellation of drilling programs or development or production activities, could result in a reduction of available capital funding for potential development projects and could also adversely affect demand for our services and refined petroleum products, all of which could adversely impact our future financial results.
Accordingly, limitation of investments in and financings for fossil fuel energy companies or subsidies or other governmental support for competitive technologies or industries could result in the direct or indirect restriction, delay or cancellation of drilling programs or development or production activities, could result in a reduction of available capital funding for potential development projects and could also adversely affect demand for our services and refined petroleum products, all of which could adversely impact our future financial results. 44 Table of Content s Increasing attention to ESG matters may adversely impact our business, financial results, stock price or price of debt securities.
Our compliance with current laws such as the General Data Protection Regulation and other similar current and upcoming data privacy/security laws, as well as any associated inquiries or investigations or any other government actions related to these laws, may increase our operating costs or subject us to legal and reputational risks, including significant fines, civil or criminal penalties or judgments, proceedings or litigation by governmental agencies or customers, class action privacy litigation in certain jurisdictions and negative publicity.
Our compliance with current laws such as the General Data Protection Regulation and other similar current and upcoming data privacy/security laws, as well as any associated inquiries or investigations or any other government actions related to these laws, may increase our operating costs or subject us to legal and reputational risks, including significant fines, civil or criminal penalties or judgments, proceedings or litigation by governmental agencies or customers, class action privacy litigation in certain jurisdictions and negative publicity. 50 Table of Content s Our pipeline operations are subject to the Department of Homeland Security’s (“DHS”) Transportation Security Administration (“TSA”) security directives.
Governmental regulations and policies, particularly in the areas of taxation, energy and the environment, also have a significant impact on our activities.
Governmental regulations and policies, particularly in the areas of taxation, trade, energy and the environment, also have a significant impact on demand and pricing.
A shortage of trained workers due to retirements, an increase in labor costs as a result of inflation or otherwise could have an adverse impact on productivity and costs and our ability to expand production in the event there is an increase in the demand for our products and services, which could adversely affect our operations. 36 Table of Content A portion of our workforce is unionized, and any disruptions in our labor force or adverse employee relations could adversely affect our business.
A shortage of trained workers due to retirements, an increase in labor costs as a result of inflation or otherwise could have an adverse impact on productivity and costs and our ability to expand production in the event there is an increase in the demand for our products and services, which could adversely affect our operations.
A shortage of skilled labor may make it difficult for us to maintain labor productivity. • A portion of our workforce is unionized, and any disruptions in our labor force or adverse employee relations could adversely affect our business. • The widespread outbreak of an illness or pandemic or other public health crisis, and actions taken in response thereto, may have a material adverse effect on our business. • Acquisitions involve numerous risks, any of which could adversely affect us. • Certain of our facilities, pipelines and assets are located on or adjacent to Native American tribal lands or on other lands which we do not own.
A shortage of skilled labor may make it difficult for us to maintain labor productivity. • A portion of our workforce is unionized, and any disruptions in our labor force or adverse employee relations could adversely affect our business. • Acquisitions involve numerous risks, any of which could adversely affect us. • Certain of our facilities, pipelines and assets are located on or adjacent to Native American tribal lands or on other lands which we do not own.
For example, in 2022, the EPA proposed an amendment to the risk management program rules that would, among other provisions, require refineries with HF Alkylation process (including three of our refineries) to perform a “safer technology and alternatives analysis” as part of the process hazard analysis to consider and document the practicality of inherently safer technologies and other risk management measures.
In March 2024, the EPA finalized an amendment to the RMP rules that, among other provisions, requires refineries with HF Alkylation process (including three of our refineries) to perform a “safer technology and alternatives analysis” as part of the process hazard analysis to consider and document the practicality of inherently safer technologies and other risk management measures.
Emerging artificial intelligence technologies may improve or expand the capabilities of malicious third parties in a way we cannot predict at this time, including being used to develop new hacking tools, exploit vulnerabilities, obscure malicious activities, and increase the difficulty of detecting threats.
Emerging artificial intelligence (“AI”) technologies may improve or expand the capabilities of malicious third parties in a way we cannot predict at this time, including being used to develop new hacking tools, exploit vulnerabilities, using phishing to trick employees into making payments or granting access to internal systems, obscure malicious activities, and increase the difficulty of detecting threats.
In addition, our existing labor agreements may not prevent a strike or work stoppage or other adverse employee relations event at any of our facilities in the future, and any work stoppage could negatively affect our results of operations and financial condition.
In addition, our existing labor agreements may not prevent a strike or work stoppage or other adverse employee relations event at any of our facilities in the future, and any work stoppage could negatively affect our results of operations and financial condition. 35 Table of Content s Acquisitions involve numerous risks, any of which could adversely affect us.
In 2022, the EPA announced an ongoing enforcement initiative targeting GHG compliance. In the Netherlands, The Hague District Court has ordered Royal Dutch Shell (“RDS”) to reduce the CO2 emissions of the RDS group by net 45% by 2030, compared to 2019 levels, through the RDS group’s corporate policy.
In the Netherlands, The Hague District Court has ordered Royal Dutch Shell (“RDS”) to reduce the CO2 emissions of the RDS group by net 45% by 2030, compared to 2019 levels, through the RDS group’s corporate policy.
We are at risk for interruptions, outages and breaches of operational systems, including business, financial, accounting, product development, data processing or manufacturing processes, owned by us or our third-party vendors or suppliers; or third-party data that we process or our third-party partners process on our behalf.
We are at risk for interruptions, outages and breaches of operational systems, owned by us or our third-party vendors or suppliers; or third-party data that we process or our third-party partners process on our behalf.
Any further increases in fuel economy standards, along with mandated increases in use of renewable fuels discussed above, as well as electric vehicle mandates or internal combustion engine bans, could result in decreasing demand for petroleum-based transportation fuels. Decreasing demand for petroleum-based transportation fuels could have a material adverse effect on our financial condition and results of operation.
Any further increases in fuel economy standards, along with mandated increases in use of renewable fuels discussed above, as well as electric vehicle mandates or internal combustion engine bans, could result in decreasing demand for petroleum-based transportation fuels.
The costs of environmental, health and safety regulations are already significant and compliance with more stringent laws or regulations or adverse changes in the interpretation of existing regulations by government agencies or courts could have an adverse effect on the financial position and the results of our operations and could require substantial expenditures for the installation and operation of systems and equipment that we do not currently possess.
Failure to appropriately manage health and safety risks associated with our business could also adversely impact our employees, communities, stakeholders, reputation and results of operations. 40 Table of Content s The costs of environmental, health and safety regulations are already significant and compliance with more stringent laws or regulations or adverse changes in the interpretation of existing regulations by government agencies or courts could have an adverse effect on the financial position and the results of our operations and could require substantial expenditures for the installation and operation of systems and equipment that we do not currently possess.
Although we maintain product and other general liability insurance, there can be no assurance that the types or levels of coverage maintained are adequate to cover these potential risks, or that we will be able to continue to maintain existing insurance or obtain comparable insurance at a reasonable cost, if at all.
Although we maintain product and other general liability insurance, there can be no assurance that the types or levels of coverage maintained are adequate to cover these potential risks, or that we will be able to continue to maintain existing insurance or obtain comparable insurance at a reasonable cost, if at all. 34 Table of Content s Terrorist attacks, and the threat of terrorist attacks or vandalism, have resulted in increased costs to our business.
The occurrence of one of these events could cause a substantial decrease in revenues, increased costs to respond or other financial loss, damage to reputation, increased regulation or litigation and or inaccurate information reported from our operations.
The occurrence of one of these events could cause a substantial decrease in revenues, increased costs to respond or other financial loss, damage to reputation, increased regulation or litigation and or inaccurate information reported from our operations, and, depending on their ultimate magnitude, could have a material adverse effect on our business, financial condition and results of operations.
As a result, we are dependent on these distributors to promote and create demand for our products. We cannot assure you that we will be successful in maintaining and strengthening our relationships with our distributors or establishing relationships with new distributors who have the ability to market, sell and support our products effectively.
We cannot assure you that we will be successful in maintaining and strengthening our relationships with our distributors or establishing relationships with new distributors who have the ability to market, sell and support our products effectively.
We are not engaged in petroleum exploration and production activities and do not produce any of the crude oil feedstocks used at our refineries. We do not have a retail business and therefore are dependent upon others for outlets for our refined products.
We are not engaged in petroleum exploration and production activities and do not produce any of the crude oil feedstocks used at our refineries. Though we license our brand, we do not currently own or operate retail outlets at this time and therefore are dependent upon others for outlets for our refined products.
Our products could also be subject to false advertising claims, product recalls, workplace exposure, product seizures and related adverse publicity. Any of these incidents is a significant commercial risk. Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of or exposure to various products.
Any of these incidents is a significant commercial risk. Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of or exposure to various products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement’s Role in Assessing and Managing Cybersecurity Risks The CIO, in collaboration with our Corporate Instruments and Control Systems Lead, and General Manager, Control Center Operations, are primarily responsible for assessing and managing our material risks from cybersecurity threats, monitoring the effectiveness of our cybersecurity detection and response processes in countering current threats and providing updates to our executive team.
Biggest changeBased on the information provided through these various processes, our Board of Directors evaluates the risks facing us and provides guidance to management on our risk management strategy. 54 Table of Content s Management’s Role in Assessing and Managing Cybersecurity Risks The CIO, in collaboration with our CISO, and other key leaders across HF Sinclair operations, are primarily responsible for assessing and managing our material risks from cybersecurity threats, monitoring the effectiveness of our cybersecurity detection and response processes in countering current threats and providing updates to our executive team.
“Risk Factors – Risks Related to Cybersecurity, Data Security, and Privacy, Information Technology and Intellectual Property,” the Department of Homeland Security’s Transportation Safety Administration has issued a series of security directives that require us to take a number of actions, including among other things, to appoint personnel, report confirmed and potential cybersecurity incidents to the DHS Cybersecurity and Infrastructure Security Agency and provide vulnerability assessments.
“Risk Factors – Risks Related to Cybersecurity, Data Security, and Privacy, Information Technology and Intellectual Property,” the Department of Homeland Security’s (“DHS”) Transportation Safety Administration has issued a series of security directives that require us to take a number of actions, including among other things, to appoint personnel, report confirmed and potential cybersecurity incidents to the DHS Cybersecurity and Infrastructure Security Agency and provide vulnerability assessments.
At these meetings, our Chief Information Officer (“CIO”), who oversees the Company’s cybersecurity program, along with key subject matter experts, as necessary, review current and emerging cybersecurity-related threats as well as key performance indicators for cybersecurity process maturity, operational performance, and enterprise performance in countering 54 Table of Content these threats.
At these meetings, our Chief Information Officer (“CIO”), who oversees the Company’s cybersecurity program, along with the Chief Information Security Officer (“CISO”) and key subject matter experts, as necessary, review current and emerging cybersecurity-related threats as well as key performance indicators for cybersecurity process maturity, operational performance, and enterprise performance in countering these threats.
The Chair of the Cyber Risk Committee reports to the Company’s management level Risk Management Oversight Committee and the Board of Directors on a regular basis.
The Chair of the Cyber Risk Committee reports to the Company’s management level Risk Management Oversight Committee on a regular basis and both the Chair of the Cyber Risk Committee and the CISO report to the Board of Directors on a regular basis.
Our cybersecurity program includes a process for overseeing and identifying cybersecurity risks associated with our third-party service providers. Each employee’s and contractor’s ability to recognize and report cybersecurity threats is an important component of our cybersecurity program. On an annual basis, all Company employees are required to complete cybersecurity training.
In addition, we use third-party tools for vulnerability scans to identify external and internal risks. Each employee’s and contractor’s ability to recognize and report cybersecurity threats is an important component of our cybersecurity program. On an annual basis, all Company employees are required to complete cybersecurity training.
As of the date of this Report, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect our Company. However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains. See Item 1A.
As of the date of this Annual Report on Form 10-K, though the Company and our service providers have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect our Company.
We regularly engage independent third-party security consultants to help assess and monitor our IT and OT environments for vulnerabilities, to conduct penetration testing and to recommend mitigation strategies. In addition, we use third-party tools for vulnerability scans to identify external and internal risks.
We seek to follow federal and state statutory and regulatory guidance and have adopted internal policies and standards designed to align with these requirements. We regularly engage independent third-party security consultants to help assess and monitor our IT and OT environments for vulnerabilities, to conduct penetration testing and to recommend mitigation strategies.
We have made efforts to implement the National Institute of Standards and Technology (NIST) Cybersecurity Framework as well as supplemental guidance for information and operational technologies. We seek to follow federal and state statutory and regulatory guidance and have adopted internal policies and standards designed to align with these requirements.
Our cybersecurity program includes a process for overseeing and identifying cybersecurity risks associated with our third-party service providers. We have made efforts to implement the National Institute of Standards and Technology (NIST) Cybersecurity Framework as well as supplemental guidance for information and operational technologies.
Removed
Based on the information provided through these various processes, our Board of Directors evaluates the risks facing us and provides guidance to management on our risk management strategy.
Added
The CIO has over 25 years of Information Technology experience, 20 of those years leading large programs within the Oil & Gas industry, including mergers and acquisitions, cybersecurity, digital transformation. The CISO also brings over 30 years of Information Technology experience, with almost 20 years of Oil & Gas experience which includes IT & OT Cybersecurity and technology infrastructure.
Removed
The CIO has over 30 years of combined accounting, financial consulting, IT and Committee of Sponsoring Organizations (referred to as COSO) risk-based operational, financial and IT auditing experience, and has had oversight over the Company’s cybersecurity activities as CIO for more than five years.
Added
However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains. Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cybersecurity attack will not occur. While we devote resources to our security measures designed to protect our systems and information, no security measure is infallible. See Item 1A.
Removed
The Corporate Control Systems, Advanced Process Controls and Cybersecurity Lead has over 30 years of experience overseeing the Company’s refining operational technology systems and serves as the Company’s refining operational technology cybersecurity leader. The General Manager, Control Center Operations, has over 10 years of pipeline control systems experience and serves as the Company’s midstream operational technology cybersecurity leader.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCourt of Appeals for the DC Circuit, seeks to have the EPA’s reversal of our 2018 small refinery exemption petitions overturned. The second lawsuit, filed against the EPA on August 5, 2022 and currently pending before the U.S.
Biggest changeThe second lawsuit, filed against the EPA on August 5, 2022 before the DC Circuit, sought to have the EPA’s reversal of our 2016 small refinery exemption petitions overturned and to have the EPA’s denial of our 2019 and 2020 small refinery exemption petitions reversed.
In each of April 2022, June 2023 and August 2023, the EPA alleged additional CAA noncompliance at the Artesia refinery beyond the allegations in the May 2020 NOV, including alleged noncompliance with NESHAP, NSPS, SIP, Title V and other requirements.
In April 2022, June 2023 and August 2023, the EPA alleged additional CAA noncompliance at the Artesia refinery beyond the allegations in the May 2020 NOV, including alleged noncompliance with NESHAP, NSPS, SIP, Title V and other requirements.
Beginning in the spring of 2021, HFS Navajo and the Agencies began monthly meetings to discuss potential injunctive relief measures to address the alleged noncompliance at the Artesia refinery. In September 2021 and August 2023, the EPA presented to HFS Navajo potential claims for stipulated penalties for alleged noncompliance with a 2002 consent decree.
Beginning in the spring of 2021, HFS Navajo and the Navajo Matter Government Agencies began monthly meetings to discuss potential injunctive relief measures to address the alleged noncompliance at the Artesia refinery. In September 2021 and August 2023, the EPA presented to HFS Navajo potential claims for alleged noncompliance with a 2002 consent decree.
The environmental proceedings are reported to comply with SEC regulations which require us to disclose proceedings arising under provisions regulating the discharge of materials into the environment or protecting the environment when a governmental authority is party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe could exceed $300,000 or more. 55 Table of Content Environmental Matters Navajo HF Sinclair Navajo Refining LLC (“HFS Navajo”) has been engaged in discussions with, and has responded to document requests from, the EPA, the United States Department of Justice (the “DOJ”) and the New Mexico Environment Department (the “NMED”) (collectively, the “Agencies”) regarding HFS Navajo’s compliance with the Clean Air Act (“CAA”) and underlying regulations, and similar New Mexico laws and regulations, at its Artesia and Lovington, New Mexico refineries.
The environmental proceedings are reported to comply with SEC regulations which require us to disclose proceedings arising under provisions regulating the discharge of materials into the environment or protecting the environment when a governmental authority is party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe could exceed $1 million or more. 55 Table of Content s Environmental Matters Navajo HF Sinclair Navajo Refining LLC (“HFS Navajo”) has been engaged in discussions with, and has responded to document requests from, the EPA, the DOJ and the New Mexico Environment Department (“NMED”) (collectively, the “Navajo Matter Government Agencies”) regarding HFS Navajo’s compliance with the Clean Air Act (“CAA”) and underlying regulations, and similar New Mexico laws and regulations, at its Artesia and Lovington, New Mexico refineries.
Other We are a party to various other litigation and proceedings that we believe, based on advice of counsel, will not either individually or in the aggregate have a materially adverse impact on our financial condition, results of operations or cash flows.
It is too early to determine the final impact of the DC Circuit’s decisions. Other We are a party to various other litigation and proceedings that we believe, based on the advice of counsel, will not either individually or in the aggregate have a materially adverse impact on our financial condition, results of operations or cash flows.
In addition, for both the 2016 and 2018 compliance years, pursuant to the June 2022 and April 2022 decisions, respectively, the EPA established an alternative compliance demonstration for small refineries pursuant to which the EPA is not imposing any obligations for the small refineries whose exemptions were reversed. On June 24, 2022, Growth Energy filed two lawsuits in the U.S.
In addition, for both the 2016 and 2018 compliance years, pursuant to the June 2022 and April 2022 decisions, the EPA established an alternative compliance demonstration for small refineries pursuant to which the EPA is not imposing any obligations for the small refineries whose exemptions were reversed.
Various subsidiaries of HollyFrontier are currently pursuing legal challenges to the EPA’s decisions to reverse its grant of small refinery exemptions for the 2016 and 2018 compliance years. The first lawsuit, filed against the EPA on May 6, 2022 and currently pending before the U.S.
Various subsidiaries of HollyFrontier pursued legal challenges to the EPA’s decisions to deny small refinery exemptions for the 2016, 2018, 2019 and 2020 compliance years. The first lawsuit, filed against the EPA on May 6, 2022, before the U.S.
Renewable Fuel Standard On April 7, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross and Cheyenne refineries for the 2018 compliance year.
At this time, no penalties have been demanded, and it is too early to predict the outcome of this matter. Renewable Fuel Standard On April 7, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross and Cheyenne refineries for the 2018 compliance year.
Court of Appeals for the DC Circuit against the EPA challenging the alternative compliance demonstration for the 2016 and 2018 compliance years. On July 25, 2022, various subsidiaries of HollyFrontier intervened on behalf of the EPA to aid the defense of the EPA’s alternative compliance demonstration decision. It is too early to predict the outcome of these matters.
On June 24, 2022, Growth Energy filed two lawsuits in the DC Circuit against the EPA challenging the alternative compliance demonstration for the 2016 and 2018 compliance years. On July 25, 2022, various subsidiaries of HollyFrontier intervened on behalf of the EPA to aid the defense of the EPA’s alternative compliance demonstration decision.
Court of Appeals for the DC Circuit, seeks to have the EPA’s reversal of our 2016 small refinery exemption petitions overturned and to have the EPA’s denial of our 2019 and 2020 small refinery exemption petitions reversed.
Court of Appeals for the DC Circuit (the “DC Circuit”), sought to have the EPA’s reversal of our 2018 small refinery exemption petitions overturned.
Removed
HFS Navajo continues to work with the Agencies to resolve these issues. At this time, no penalties have been demanded, and it is too early to predict the outcome of this matter.
Added
In September 2024, the Navajo Matter Government Agencies presented to HFS Navajo a proposed penalty demand for the alleged noncompliance at the Artesia refinery. On January 17, 2025, HFS Navajo reached a settlement agreement with the EPA, DOJ, and the NMED, and a new consent decree was lodged with the U.S.
Removed
Osage Pipeline On July 8, 2022, the Osage Pipeline, which is owned by Osage Pipe Line Company, LLC (“Osage”), a joint venture between El Dorado Osage Company LLC and CHS McPherson Refinery Inc., experienced a release of crude oil at a location approximately 5 miles north of Cushing, Oklahoma. 56 Table of Content Osage and Holly Energy Partners – Operating, L.P.
Added
District Court for the District of New Mexico (the “2025 Consent Decree”) to resolve alleged CAA and New Mexico Air Quality Control Act violations as well as alleged violations of the 2002 consent decree at the Artesia refinery.
Removed
(“HEP Operating”), the operator of the Osage Pipeline, are working with federal, state, tribal, and local governmental agencies, as well as the affected landowners. Discussions with the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration, the EPA and the DOJ regarding resolution of their potential claims relating to the incident are ongoing.
Added
The 2025 Consent Decree is subject to a 30-day public comment period and will not become effective until it is approved by the U.S. District Court.
Removed
On September 13, 2023, Osage and HEP Operating received an offer for settlement from the EPA and the DOJ.
Added
Under the 2025 Consent Decree, HFS Navajo must pay the sum of $34 million as a civil penalty to the United States and the State of New Mexico according to the following schedule: (1) $10 million to the United States, and $10 million to the State of New Mexico within 30 days after the effective date of the 2025 Consent Decree; and (2) $7 million to the United States and $7 million to the State of New Mexico by January 31, 2026.
Removed
After several months of negotiations, the EPA, the DOJ, Osage, and HEP Operating reached an agreement that resolves the civil claims of the United States under the CWA, subject to certain reservations of rights by the United States, in exchange for the payment of a $7.4 million civil penalty and performance of certain items of injunctive relief by Osage and HEP Operating.
Added
Separately, under the 2002 consent decree, HFS Navajo must pay stipulated penalties in the amount of $1 million, divided equally between the United States and the State of New Mexico, by March 22, 2025. On January 29, 2025, HFS Navajo submitted these stipulated penalty payments to the United States and the State of New Mexico under the 2002 consent decree.
Removed
The agreement is set forth in a Consent Decree lodged in federal court on January 30, 2024. The Consent Decree is subject to a review and comment period of 30 days.
Added
Finally, HFS Navajo must implement injunctive relief and mitigation measures at an estimated cost of $137 million, including capital investments, at the Artesia refinery, certain of which measures have already been implemented as of the date of filing this Annual Report on Form 10-K and the remainder of which must be completed by various deadlines, ending in 2031. 56 Table of Content s Puget Sound HF Sinclair Puget Sound Refining LLC (“HFS Puget Sound”) has been engaged in discussions with, and has responded to document requests from, the Northwest Clean Air Agency (“NWCAA”), the EPA and the DOJ (collectively, the “PSR Matter Government Agencies”) regarding HFS Puget Sound’s compliance with the CAA, Emergency Planning and Community Right-to-Know Act (“EPCRA”) and related regulations, and similar Washington laws and regulations, at its Puget Sound Refinery.
Added
HFS Puget Sound acquired the Puget Sound Refinery from Equilon Enterprises LLC dba Shell Oil Products US (“SOPUS”) on November 1, 2021.
Added
The discussions with the PSR Matter Government Agencies have included the following topics: (a) an information request issued in March 2022 by the EPA, pursuant to CAA Section 114, covering periods of ownership of the Puget Sound Refinery by both HFS Puget Sound and SOPUS; (b) a Notice of Violation issued by the EPA to SOPUS and HFS Puget Sound on September 29, 2023, alleging violations of the CAA, EPCRA and the Pollution Prevention Act; and (c) the PSR Matter Government Agencies’ proposed injunctive relief terms presented to SOPUS and HFS Puget Sound on June 28 and July 15, 2024, covering various process units at Puget Sound Refinery to address the alleged noncompliance.
Added
On October 31, 2024, HFS Puget Sound presented its counteroffer to the PSR Matter Government Agencies’ proposed injunctive relief terms. HFS Puget Sound believes that it is entitled to indemnification for certain of the matters described above. HFS Puget Sound continues to work with the PSR Matter Government Agencies to resolve these issues.
Added
On July 26, 2024, the DC Circuit issued a favorable decision vacating the EPA’s denial of all of our small refinery exemption petitions, finding the denial to be unlawful. The DC Circuit remanded the small refinery exemption petitions to the EPA for new determination. The DC Circuit also upheld the alternative compliance demonstration and denied Growth Energy’s challenge.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−5 removed1 unchanged
Biggest changeIn addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The following table includes repurchases made under this program during the fourth quarter of 2023.
Biggest changeIn addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. During the fourth quarter of 2024, we made no common stock purchases under the May 2024 Share Repurchase Program.
This share repurchase program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH Company (formerly known as The Sinclair Companies) are also authorized under this share repurchase program, subject to REH Company’s interest in selling its shares and other limitations.
This share repurchase program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH Company, LLC (formerly known as The Sinclair Companies) (and together with its affiliate REH Advisors Inc., “REH”) are also authorized under this share repurchase program, subject to REH’s interest in selling its shares and other limitations.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the trading symbol “DINO.” In August 2023, our Board of Directors approved a $1.0 billion share repurchase program, which replaced all existing share repurchase programs.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the trading symbol “DINO.” On May 7, 2024, our Board of Directors approved a $1.0 billion share repurchase program, which replaced all existing share repurchase programs (the “May 2024 Share Repurchase Program”).
As of February 15, 2024, we had approximately 1,594 registered holders of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers and other financial institutions.
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers and other financial institutions.
Removed
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs October 2023 1,376,652 $ 54.48 1,376,652 $ 750,000,036 November 2023 — $ — — $ 750,000,036 December 2023 1,334,454 $ 55.14 1,334,454 $ 676,422,860 Total for October to December 2023 2,711,106 2,711,106 On January 3, 2024, we repurchased 454,380 shares of our outstanding common stock from REH Company in a privately negotiated transaction under our share repurchase program and pursuant to the Stock Purchase Agreement, dated January 3, 2024 (the “January Stock Purchase Agreement”), between us and REH Company.
Added
As of December 31, 2024, $799 million remained available for share repurchases under the May 2024 Share Repurchase Program. As of February 14, 2025, we had approximately 1,529 registered holders of our common stock.
Removed
The price paid by us under the January Stock Purchase Agreement was $55.02 per share resulting in an aggregate purchase price of $25.0 million. The purchase price was funded with cash on hand.
Added
The declaration and payment of dividends remains at the full discretion of the Board of Directors and will depend on our financial results, cash requirements, future prospects and other factors deemed relevant by the Board of Directors. Item 6. [ Reserved]
Removed
On February 8, 2024, we repurchased 1,061,946 shares of our outstanding common stock from REH Company in a privately negotiated transaction under our new share repurchase program and pursuant to the Stock Purchase Agreement, dated February 8, 2024 (the “February Stock Purchase Agreement”), between us and REH Company.
Removed
The price paid by us under the February Stock Purchase Agreement was $56.50 per share resulting in an aggregate purchase price of $60.0 million. The purchase price was funded with cash on hand. As of February 15, 2024, we had remaining authorization to repurchase up to $591.4 million under our share repurchase program.
Removed
We intend to consider the declaration of a dividend on a quarterly basis, although there is no assurance as to future dividends since they are dependent upon future earnings, capital requirements, our financial condition and other factors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

112 edited+88 added−34 removed26 unchanged
Biggest changeYears Ended December 31, 2023 2022 (8) 2021 (9) Mid-Continent Region Crude charge (BPD) (1) 237,510 283,160 260,350 Refinery throughput (BPD) (2) 256,810 299,380 276,430 Sales of produced refined products (BPD) (3) 248,330 280,800 265,470 Refinery utilization (4) 91.4 % 108.9 % 100.1 % Average per produced barrel sold (5) Refinery gross margin $ 17.49 $ 22.01 $ 9.44 Refinery operating expenses (6) 7.02 6.19 6.42 Net operating margin $ 10.47 $ 15.82 $ 3.02 Refinery operating expenses per throughput barrel (7) $ 6.79 $ 5.81 $ 6.17 Feedstocks: Sweet crude oil 56 % 58 % 61 % Sour crude oil 20 % 20 % 15 % Heavy sour crude oil 16 % 16 % 18 % Other feedstocks and blends 8 % 6 % 6 % Total 100 % 100 % 100 % 63 Table of Content Years Ended December 31, 2023 2022 (8) 2021 (9) Mid-Continent Region Sales of refined products: Gasolines 51 % 51 % 52 % Diesel fuels 30 % 33 % 33 % Jet fuels 6 % 6 % 5 % Fuel oil 1 % 1 % 1 % Asphalt 4 % 3 % 3 % Base oils 4 % 4 % 4 % LPG and other 4 % 2 % 2 % Total 100 % 100 % 100 % West Region Crude charge (BPD) (1) 330,030 323,820 140,370 Refinery throughput (BPD) (2) 360,200 347,590 155,440 Sales of produced refined products (BPD) (3) 353,950 347,540 158,630 Refinery utilization (4) 79.0 % 81.4 % 82.7 % Average per produced barrel sold (5) Refinery gross margin $ 24.13 $ 30.64 $ 13.32 Refinery operating expenses (6) 10.14 9.31 8.09 Net operating margin $ 13.99 $ 21.33 $ 5.23 Refinery operating expenses per throughput barrel (7) $ 9.97 $ 9.31 $ 9.27 Feedstocks: Sweet crude oil 30 % 28 % 22 % Sour crude oil 45 % 50 % 58 % Heavy sour crude oil 11 % 10 % 1 % Black wax crude oil 6 % 5 % 10 % Other feedstocks and blends 8 % 7 % 9 % Total 100 % 100 % 100 % Sales of refined products: Gasolines 54 % 53 % 54 % Diesel fuels 31 % 32 % 35 % Jet fuels 6 % 5 % 1 % Fuel oil 2 % 3 % 3 % Asphalt 2 % 3 % 4 % LPG and other 5 % 4 % 3 % Total 100 % 100 % 100 % Consolidated Crude charge (BPD) (1) 567,540 606,980 400,720 Refinery throughput (BPD) (2) 617,010 646,970 431,870 Sales of produced refined products (BPD) (3) 602,280 628,340 424,100 Refinery utilization (4) 83.7 % 92.3 % 93.1 % Average per produced barrel (5) Refinery gross margin $ 21.39 $ 26.78 $ 10.89 Refinery operating expenses (6) 8.86 7.92 7.04 Net operating margin $ 12.53 $ 18.86 $ 3.85 Refinery operating expenses per throughput barrel (7) $ 8.65 $ 7.69 $ 6.92 64 Table of Content Years Ended December 31, 2023 2022 (8) 2021 (9) Consolidated Feedstocks: Sweet crude oil 42 % 42 % 47 % Sour crude oil 34 % 36 % 31 % Heavy sour crude oil 13 % 13 % 12 % Black wax crude oil 3 % 3 % 4 % Other feedstocks and blends 8 % 6 % 6 % Total 100 % 100 % 100 % Sales of refined products: Gasolines 53 % 52 % 53 % Diesel fuels 30 % 32 % 34 % Jet fuels 6 % 6 % 4 % Fuel oil 1 % 2 % 1 % Asphalt 3 % 3 % 3 % Base oils 2 % 2 % 2 % LPG and other 5 % 3 % 3 % Total 100 % 100 % 100 % (1) Crude charge represents the barrels per day of crude oil processed at our refineries.
Biggest changeYears Ended December 31, 2024 2023 2022 Mid-Continent Region Crude charge (BPD) (1) 251,650 237,510 283,160 Refinery throughput (BPD) (2) 267,200 256,810 299,380 Sales of produced refined products (BPD) (3) 267,130 248,330 280,800 Refinery utilization (4) 96.8 % 91.4 % 108.9 % Average per produced barrel sold (5) Gross margin (6) $ (0.27) $ 6.65 $ 13.92 Operating expenses (7) 6.65 6.92 6.10 Adjusted refinery gross margin (8) $ 8.21 $ 17.31 $ 21.82 Less: adjusted refinery operating expenses (9) 6.65 6.92 6.10 Adjusted refinery gross margin, less adjusted refinery operating expenses $ 1.56 $ 10.39 $ 15.72 Operating expenses per throughput barrel (10) $ 6.65 $ 6.69 $ 5.72 Adjusted refinery operating expenses per throughput barrel (9) (11) $ 6.65 $ 6.69 $ 5.72 62 Table of Content s Years Ended December 31, 2024 2023 2022 Mid-Continent Region Feedstocks: Sweet crude oil 54 % 56 % 58 % Sour crude oil 23 % 20 % 20 % Heavy sour crude oil 17 % 16 % 16 % Other feedstocks and blends 6 % 8 % 6 % Total 100 % 100 % 100 % Sales of refined products: Gasolines 52 % 51 % 51 % Diesel fuels 31 % 30 % 33 % Jet fuels 6 % 6 % 6 % Fuel oil 1 % 1 % 1 % Asphalt 4 % 4 % 3 % Base oils 4 % 4 % 4 % LPG and other 2 % 4 % 2 % Total 100 % 100 % 100 % West Region Crude charge (BPD) (1) 350,430 330,030 323,820 Refinery throughput (BPD) (2) 376,050 360,200 347,590 Sales of produced refined products (BPD) (3) 370,040 353,950 347,540 Refinery utilization (4) 83.8 % 79.0 % 81.4 % Average per produced barrel sold (5) Gross margin (6) $ 0.61 $ 11.34 $ 19.52 Operating expenses (7) 9.32 9.69 8.96 Adjusted refinery gross margin (8) $ 12.04 $ 23.69 $ 30.16 Less: adjusted refinery operating expenses (9) 9.06 9.69 8.96 Adjusted refinery gross margin, less adjusted refinery operating expenses $ 2.98 $ 14.00 $ 21.20 Operating expenses per throughput barrel (10) $ 9.17 $ 9.53 $ 8.96 Adjusted refinery operating expenses per throughput barrel (9) (11) $ 8.92 $ 9.53 $ 8.96 Feedstocks: Sweet crude oil 34 % 30 % 28 % Sour crude oil 43 % 45 % 50 % Heavy sour crude oil 10 % 11 % 10 % Wax crude oil 6 % 6 % 5 % Other feedstocks and blends 7 % 8 % 7 % Total 100 % 100 % 100 % Sales of refined products: Gasolines 52 % 54 % 53 % Diesel fuels 32 % 31 % 32 % Jet fuels 6 % 6 % 5 % Fuel oil 2 % 2 % 3 % Asphalt 2 % 2 % 3 % LPG and other 6 % 5 % 4 % Total 100 % 100 % 100 % 63 Table of Content s Years Ended December 31, 2024 2023 2022 Consolidated Crude charge (BPD) (1) 602,080 567,540 606,980 Refinery throughput (BPD) (2) 643,250 617,010 646,970 Sales of produced refined products (BPD) (3) 637,170 602,280 628,340 Refinery utilization (4) 88.8 % 83.7 % 92.3 % Average per produced barrel sold (5) Gross margin (6) $ 0.24 $ 9.41 $ 17.02 Operating expenses (7) 8.20 8.55 7.68 Adjusted refinery gross margin (8) $ 10.43 $ 21.06 $ 26.43 Less: adjusted refinery operating expenses (9) 8.05 8.55 7.68 Adjusted refinery gross margin, less adjusted refinery operating expenses $ 2.38 $ 12.51 $ 18.75 Operating expenses per throughput barrel (10) $ 8.12 $ 8.35 $ 7.46 Adjusted refinery operating expenses per throughput barrel (9) (11) $ 7.98 $ 8.35 $ 7.46 Feedstocks: Sweet crude oil 42 % 42 % 42 % Sour crude oil 35 % 34 % 36 % Heavy sour crude oil 13 % 13 % 13 % Wax crude oil 4 % 3 % 3 % Other feedstocks and blends 6 % 8 % 6 % Total 100 % 100 % 100 % Sales of refined products: Gasolines 53 % 53 % 52 % Diesel fuels 31 % 30 % 32 % Jet fuels 6 % 6 % 6 % Fuel oil 1 % 1 % 2 % Asphalt 3 % 3 % 3 % Base oils 2 % 2 % 2 % LPG and other 4 % 5 % 3 % Total 100 % 100 % 100 % (1) Crude charge represents the barrels per day of crude oil processed at our refineries.
EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.
EBITDA is presented here because it is a financial indicator widely used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.
Further, we may from time to time seek to retire some or all of our outstanding debt or debt agreements through cash purchases, and/or exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, may be material and will depend on prevailing market conditions, our liquidity requirements and other factors.
Further, we may from time to time seek to retire some or all of our outstanding debt agreements through cash purchases, and/or exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, may be material and will depend on prevailing market conditions, our liquidity requirements and other factors.
The income approach reflects expected future cash flows based on estimated forecasted production levels, selling prices, gross margins, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets.
The income approach reflects expected future cash flows based on estimated forecasted production levels, selling prices, gross margins, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions and other market data of other like-kind assets.
In connection with the exchange offers, HEP amended the indenture governing the HEP Senior Notes to eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default,” (iii) the SEC reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Senior Notes upon a change of control.
In connection with the exchange offers, we amended the indenture governing the HEP Senior Notes to eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default,” (iii) the SEC reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Senior Notes upon a change of control.
The timing and amount of share repurchases, including those from REH Company, will depend on market conditions and corporate, tax, regulatory and other relevant considerations. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs.
The timing and amount of share repurchases, including those from REH, will depend on market conditions and corporate, tax, regulatory and other relevant considerations. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs.
As a result of the final rule released by the EPA on June 3, 2022 as noted above, we recognized a benefit of $72.0 million in the year ended December 31, 2022 related to the modification of the 2020 and 2021 volume targets.
As a result of the final rule released by the EPA on June 3, 2022 as noted above, we recognized a benefit of $72 million in the year ended December 31, 2022 related to the modification of the 2020 and 2021 volume targets.
HEP Merger Transaction On December 1, 2023, pursuant to the Agreement and Plan of Merger, dated as of August 15, 2023 (the “Merger Agreement”), by and among HEP, HF Sinclair, Navajo Pipeline Co., L.P., a Delaware limited partnership and an indirect wholly owned subsidiary of HF Sinclair (“HoldCo”), Holly Apple Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of HoldCo (“Merger Sub”), HEP Logistics Holdings, L.P., a Delaware limited partnership and the general partner of HEP (“HLH”), and Holly Logistic Services, L.L.C., a Delaware limited liability company and the general partner of HLH, Merger Sub merged with and into HEP, with HEP surviving as an indirect, wholly owned subsidiary of HF Sinclair (the “HEP Merger Transaction”).
HEP Merger Transaction On December 1, 2023, pursuant to that certain Agreement and Plan of Merger, dated as of August 15, 2023 (the “Merger Agreement”), by and among HEP, HF Sinclair, Navajo Pipeline Co., L.P., a Delaware limited partnership and an indirect wholly owned subsidiary of HF Sinclair (“HoldCo”), Holly Apple Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of HoldCo (“Merger Sub”), HEP Logistics Holdings, L.P., a Delaware limited partnership and the general partner of HEP (“HLH”), and Holly Logistic Services, L.L.C., a Delaware limited liability company and the general partner of HLH, Merger Sub merged with and into HEP, with HEP surviving as an indirect, wholly owned subsidiary of HF Sinclair (the “HEP Merger Transaction”).
We performed our annual goodwill impairment testing quantitatively as of July 1, 2023 and determined there was no impairment of goodwill attributable to our reporting units. The estimated fair values of our reporting units were derived using a combination of income and market approaches.
We performed our annual goodwill impairment testing quantitatively as of July 1, 2024 and determined there was no impairment of goodwill attributable to our reporting units. The estimated fair values of our reporting units were derived using a combination of income and market approaches.
Renewable Fuel Standard Regulations Pursuant to the 2007 Energy Independence and Security Act, the EPA promulgated the RFS regulations, which increased the volume of renewable fuels mandated to be blended into the nation’s fuel supply.
Renewable Fuel Standard Regulations Pursuant to the 2007 Energy Independence and Security Act, the EPA promulgated the Renewable Fuel Standard (“RFS”) regulations, which increased the volume of renewable fuels mandated to be blended into the nation’s fuel supply.
(2) Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries. (3) Represents barrels sold of refined products produced at our refineries (including Asphalt and inter-segment sales) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.
(2) Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries. (3) Represents barrels sold of refined products produced at our refineries (including Asphalt and intersegment sales) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.
Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Annual Report on Form 10-K.
Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7 of Part II of this Annual Report on Form 10-K.
For the fixed rate HF Sinclair Senior Notes, HollyFrontier Senior Notes and HEP Senior Notes (each as defined in Note 13 “Debt” in the Notes to Consolidated Financial Statements), changes in interest rates will generally affect fair value of the debt, but not earnings or cash flows.
For the fixed rate HollyFrontier Corporation, HF Sinclair and HEP Senior Notes (each as defined in Note 14 “Debt” in the Notes to Consolidated Financial Statements), changes in interest rates will generally affect fair value of the debt, but not earnings or cash flows.
In addition, HEP acquired STC’s interests in three pipeline joint ventures for crude gathering and product offtake including: Saddle Butte Pipeline III, LLC (at the time of closing, 25.06% and currently, a 25.12% non-operated interest); Pioneer Investments Corp.
In addition, HEP acquired STC’s interests in three pipeline joint ventures for crude gathering and product offtake including: Saddle Butte Pipeline III, LLC (at the time of closing, 25.06% and currently, a 26.08% non-operated interest); Pioneer Investments Corp.
Under the terms of that certain Contribution Agreement as amended on March 14, 2022 (the “Contribution Agreement”), HEP acquired STC, REH Company’s integrated crude and refined products pipelines and terminal assets, including approximately 1,200 miles of integrated crude and refined product pipeline supporting the Sinclair refineries and third parties, eight product terminals and two crude terminals with approximately 4.5 million barrels of operated storage.
Under the terms of the Contribution Agreement as amended on March 14, 2022, HEP acquired STC, REH Company’s integrated crude and refined products pipelines and terminal assets, including approximately 1,200 miles of integrated crude and refined product pipeline supporting the Sinclair refineries and third parties, eight product terminals and two crude terminals with approximately 4.5 million barrels of operated storage.
EBITDA presented above is reconciled to net income under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Annual Report on Form 10-K. Supplemental Segment Operating Data Our operations are organized into five reportable segments, Refining, Renewables, Marketing, Lubricants & Specialties and Midstream.
EBITDA presented above is reconciled to net income under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” within Item 7 of Part II of this Annual Report on Form 10-K. Supplemental Segment Operating Data Our operations are organized into five reportable segments, Refining, Renewables, Marketing, Lubricants & Specialties and Midstream.
(5) Operating and finance lease obligations include options to extend terms that are reasonably certain of being exercised. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
(5) Operating and finance lease obligations include options to extend terms that are reasonably certain of being exercised. 74 Table of Content s CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Contractual Obligations and Commitments The following table presents our long-term contractual obligations as of December 31, 2023 in total and by period due beginning in 2024.
Contractual Obligations and Commitments The following table presents our long-term contractual obligations as of December 31, 2024 in total and by period due beginning in 2025.
HF Sinclair may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities with its lenders. At December 31, 2023, there were no letters of credit outstanding under such facilities. See Note 13 “Debt” in the Notes to Consolidated Financial Statements for additional information on our debt instruments.
HF Sinclair may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities with its lenders. At December 31, 2024, there were no letters of credit outstanding under such facilities. See Note 14 “Debt” in the Notes to Consolidated Financial Statements for additional information on our debt instruments.
We have estimated future payments under these fixed-quantity agreements expiring between 2024 and 2028 using current market rates. (4) Consists of contractual obligations under agreements with third parties for the transportation of crude oil, natural gas and feedstocks to our refineries and for terminal and storage services under contracts expiring between 2024 and 2038.
We have estimated future payments under these fixed-quantity agreements expiring between 2025 and 2031 using current market rates. (4) Consists of contractual obligations under agreements with third parties for the transportation of crude oil, natural gas and feedstocks to our refineries and for terminal and storage services under contracts expiring between 2025 and 2038.
On December 4, 2023, we completed our offers to exchange any and all outstanding HEP 5.000% senior notes maturing February 2028 (the “HEP 5.000% Senior Notes”) and HEP 6.375% senior notes maturing April 2027 (the “HEP 6.375% Senior Notes”) (and, collectively, the “HEP Senior Notes”) for HF Sinclair 5.000% senior notes maturing February 2028 (the “HF Sinclair 5.000% Senior Notes”) and HF Sinclair 6.375% senior notes maturing April 2027 (the “HF Sinclair 6.375% Senior Notes”) (and, collectively, the “New HF Sinclair Senior Notes”) to be issued by HF Sinclair with registration rights and cash.
HF Sinclair Senior Notes Exchange On December 4, 2023, we completed our offers to exchange any and all outstanding HEP 5.000% senior notes maturing February 2028 (the “HEP 5.000% Senior Notes”) and HEP 6.375% senior notes maturing April 2027 (the “HEP 6.375% Senior Notes” and, together with the HEP 5.000% Senior Notes, the “HEP Senior Notes”) for HF Sinclair 5.000% senior notes maturing February 2028 (the “HF Sinclair 5.000% Senior Notes”) and HF Sinclair 6.375% senior notes maturing April 2027 (the “HF Sinclair 6.375% Senior Notes” and, together with the HF Sinclair 5.000% Senior Notes, the “Restricted HF Sinclair Senior Notes”) to be issued by HF Sinclair with registration rights and cash.
Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Annual Report on Form 10-K. 66 Table of Content Lubricants & Specialties Segment Operating Data The following table sets forth information about our lubricants and specialties operations.
Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7 of Part II of this Annual Report on Form 10-K. Lubricants & Specialties Segment Operating Data The following table sets forth information about our lubricants and specialties operations.
This increase was primarily due to the April 2022 issuance of $400 million in aggregate principal amount of 6.375% senior notes maturing in April 2027 and higher market interest rates on HEP's revolving credit facility during the year ended December 31, 2023.
This increase was primarily due to the April 2022 issuance of $400 million in aggregate principal amount of 6.375% senior notes maturing in April 2027 and higher market interest rates on HEP ’ s revolving credit facility during the year ended December 31, 2023.
LIQUIDITY AND CAPITAL RESOURCES HF Sinclair Credit Agreement We have a $1.65 billion senior unsecured revolving credit facility maturing in April 2026 (the “HF Sinclair Credit Agreement”). The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes.
Credit Agreements We have a $1.65 billion senior unsecured revolving credit facility maturing in April 2026 (the “HF Sinclair Credit Agreement”). The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes.
See Note 13 “Debt” in the Notes to Consolidated Financial Statements for additional information on these financing arrangements.
See Note 14 “Debt” in the Notes to Consolidated Financial Statements for additional information on these financing arrangements.
On August 15, 2023, our Board of Directors approved a new $1.0 billion share repurchase program (the “ August 2023 Share Repurchase Program”), which replaced all existing share repurchase programs, including the $5.0 million remaining authorization under the September 2022 Share Repurchase Program.
On August 15, 2023, our Board of Directors approved a $1.0 billion share repurchase program (the “ August 2023 Share Repurchase Program”), which replaced all existing share repurchase programs, including the $5 million remaining authorization under our preexisting share repurchase program dating from September 2022.
Sales and other revenues included $4,146.3 million, $2,762.8 million and $781.3 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties and Renewables segments, respectively, for the year ended December 31, 2023.
Sales and other revenues included $781 million, $4,146 million, $2,762 million, and $118 million in unaffiliated revenues related to our Renewables, Marketing, Lubricants & Specialties, and Midstream segments, respectively, for the year ended December 31, 2023.
Sales and Other Revenues Sales and other revenues decreased 16% from $38,204.8 million for the year ended December 31, 2022 to $31,964.4 million for the year ended December 31, 2023, principally due to decreased refined product sales prices and lower refined product sales volumes.
Sales and Other Revenues Sales and other revenues decreased 16% from $38,205 million for the year ended December 31, 2022 to $31,964 million for the year ended December 31, 2023, principally due to decreased refined product sales prices and lower refined product sales volumes.
The following sensitivity analysis provides the hypothetical effects of market price fluctuations in commodity prices for our open commodity derivative contracts at December 31, 2023 and 2022: Derivative Fair Value Gain (Loss) at December 31, 2023 2022 (In thousands) 10% increase in underlying commodity prices $ (4,682) $ (3,502) 10% decrease in underlying commodity prices $ 4,682 $ 3,298 Interest Rate Risk Management The market risk inherent in our fixed-rate debt is the potential change arising from increases or decreases in interest rates as discussed below.
The following sensitivity analysis provides the hypothetical effects of market price fluctuations in commodity prices for our open commodity derivative contracts at December 31, 2024 and 2023: December 31, Derivative Fair Value Gain (Loss) 2024 2023 (In millions) 10% increase in underlying commodity prices $ (4) $ (5) 10% decrease in underlying commodity prices $ 4 $ 5 Interest Rate Risk Management The market risk inherent in our fixed-rate debt is the potential change arising from increases or decreases in interest rates as discussed below.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased 17% from $426.5 million for the year ended December 31, 2022 to $498.2 million for the year ended December 31, 2023, primarily due to higher costs related to information technology, other professional services and employee costs as compared to the prior period and our acquisition of the Acquired Sinclair Businesses, partially offset by a decrease in acquisition integration and regulatory costs.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased 16% from $427 million for the year ended December 31, 2022 to $497 million for the year ended December 31, 2023, primarily due to higher costs related to information technology, other professional services and employee costs as compared to the prior period and our acquisition of the Acquired Sinclair Businesses, partially offset by a decrease in acquisition integration and regulatory costs.
We market our refined products principally in the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states, and we supply high-quality fuels to more than 1,500 branded stations and license the use of the Sinclair brand at more than 300 additional locations throughout the country.
We market our refined products principally in the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states, and we supply high-quality fuels to more than 1,600 brand ed stations and license the use of the Sinclair brand at more than 300 a d ditional locations throughout the country.
Operating Expenses Operating expenses, exclusive of depreciation and amortization, increased 4% from $2,334.9 million for the year ended December 31, 2022 to $2,438.1 million for the year ended December 31, 2023, primarily due to increased maintenance activities and our acquisition of the Acquired Sinclair Businesses, partially offset by lower natural gas costs.
Operating Expenses Operating expenses increased 4% from $2,335 million for the year ended December 31, 2022 to $2,438 million for the year ended December 31, 2023, primarily due to increased maintenance activities and our acquisition of the Acquired Sinclair Businesses, partially offset by lower natural gas costs.
Commodity Price Risk Management Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations.
We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations.
The August 2023 Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH Company are also authorized under the August 2023 Share Repurchase Program, subject to REH Company’s interest in selling its shares and other limitations.
The May 2024 Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH are also authorized under the May 2024 Share Repurchase Program, subject to REH’s interest in selling its shares and other limitations.
Income Taxes For the year ended December 31, 2023, we recorded an income tax expense of $441.6 million compared to $894.9 million for the year ended December 31, 2022. This decrease was principally due to lower pre-tax income during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Income Taxes For the year ended December 31, 2023, we recorded an income tax expense of $442 million compared to $895 million for the year ended December 31, 2022. This decrease was principally due to lower pre-tax income during the year ended December 31, 2023 compared to the year ended December 31, 2022.
(5) Represents average amount per produced barrel sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Annual Report on Form 10-K.
(2) Represents the average amount per gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7 of Part II of this Annual Report on Form 10-K.
Another key assumption applied to these forecasts to determine the fair value of a reporting unit is the discount rate. The discount rate is intended to reflect the weighted average cost of capital for a market participant and the risks associated with the realization of the estimated future cash flows.
Other key assumptions applied to these forecasts to determine the fair value of a reporting unit are the discount rate and terminal cash flow growth rate. The discount rate is intended to reflect the weighted average cost of capital for a market participant and the risks associated with the realization of the estimated future cash flows.
Refinery gross margins for the year ended December 31, 2023 decreased to $21.39 per produced barrel sold from $26.78 for the year ended December 31, 2022.
Adjusted refinery gross margins for the year ended December 31, 2023 decreased to $21.06 per produced barrel sold from $26.43 for the year ended December 31, 2022.
Within our Lubricants & Specialties segment, FIFO impact was a charge of $13.4 million for the year ended December 31, 2023 and a benefit of $77.6 million f or the year ended December 31, 2022.
Within our Lubricants & Specialties segment, FIFO impact was a charge of $13 million for the year ended December 31, 2023 and a benefit of $78 million for the year ended December 31, 2022.
Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired and liabilities assumed. Goodwill is not subject to amortization and is tested annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Goodwill is not subject to amortization and is tested annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
RISK MANAGEMENT We use certain strategies to reduce some commodity price and operational risks. We do not attempt to eliminate all market risk exposures when we believe that the exposure relating to such risk would not be significant to our future earnings, financial position, capital resources or liquidity or that the cost of eliminating the exposure would outweigh the benefit.
We do not attempt to eliminate all market risk exposures when we believe that the exposure relating to such risk would not be significant to our future earnings, financial position, capital resources or liquidity or that the cost of eliminating the exposure would outweigh the benefit. Commodity Price Risk Management Our primary market risk is commodity price risk.
In performing our impairment test of goodwill, we developed cash flow forecasts for each of our reporting units. Significant judgment is involved in performing these fair value estimates since the results are based on forecasted financial information. The cash flow forecasts include significant assumptions such as planned utilization, end-user demand, selling prices, gross margins, operating costs and capital expenditures.
Significant judgment is involved in performing these fair value estimates since the results are based on forecasted financial information. The cash flow forecasts include significant assumptions such as planned utilization, end-user demand, selling prices, gross margins, operating costs and capital expenditures.
The New HF Sinclair Senior Notes were issued in exchange for the HEP Senior Notes pursuant to a private exchange offer exempt from registration under the Securities Act of 1933, as amended. This exchange was part of a broader corporate strategy, including the HEP Merger Transaction, which closed on December 1, 2023.
The Restricted HF Sinclair Senior Notes were issued in exchange for the HEP Senior Notes pursuant to a private exchange offer exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). This exchange was part of a broader corporate strategy, including the HEP Merger Transaction.
The decrease in net income was principally driven by lower refinery gross margins and lower refined product sales volumes. Lower of cost or market inventory reserve adjustments decreased pre-tax earnings by $270.4 million and $52.4 million for the years ended December 31, 2023 and 2022, respectively.
The decrease in Net income attributable to HF Sinclair stockholders was principally driven by lower adjusted refinery gross margins and lower refined product sales volumes. Lower of cost or market inventory valuation adjustments decreased pre-tax earnings by $271 million and $52 million for the years ended December 31, 2023 and 2022, respectively.
Gain on Business Interruption Insurance Settlement During the year ended December 31, 2022, we recorded a gain of $15.2 million from a settlement of our business interruption claim related to winter storm Uri that occurred in the first quarter of 2021.
For the year ended December 31, 2023, we recorded a $15 million gain from the settlement of a preservation of property claim and during the year ended December 31, 2022, we recorded a gain of $15 million from a settlement of our business interruption claim, both related to winter storm Uri that occurred in the first quarter of 2021.
HF Sinclair Financing Arrangements Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution and then leased back the precious metals catalyst in exchange for cash.
HF Sinclair Financing Arrangements Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution in exchange for cash and then financed the use of the precious metals catalyst for a term not to exceed one year.
Sales and other revenues included $ 3,911.9 million, $3,149.1 million and $ 654.9 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties and Renewables segments, respectively, for the year ended December 31, 2022.
Sales and other revenues included $654 million, $3,912 million, $3,150 million and $109 million in unaffiliated revenues related to our Renewables, Marketing, Lubricants & Specialties and Midstream segments, respectively, for the year ended December 31, 2022.
The volume of the precious metals catalyst and the lease rate are fixed over the term of each lease, and the lease payments are recorded as interest expense. The current leases mature in one year or less. Upon maturity, we must either satisfy the obligation at fair market value or refinance to extend the maturity.
The volume of the precious metals catalyst and the interest rate are fixed over the term of each agreement, and the payments are recorded as Interest expense . Upon maturity of the financing arrangement, we must either satisfy the obligation at fair market value or refinance to extend the maturity.
The outstanding principal, estimated fair value and estimated change in fair value (assuming a hypothetical 10% change in the yield-to-maturity rates) for this debt as of December 31, 2023 is presented below: Outstanding Principal Estimated Fair Value Estimated Change in Fair Value (In thousands) HF Sinclair, HollyFrontier and HEP Senior Notes $ 2,300,000 $2,271,856 $ 41,358 For the variable rate HEP Credit Agreement, changes in interest rates would affect cash flows, but not the fair value.
The outstanding principal, estimated fair value and estimated change in fair value (assuming a hypothetical 10% change in the yield-to-maturity rates) for this debt as of December 31, 2024 is presented below: Outstanding Principal Estimated Fair Value Estimated Change in Fair Value (In millions) HollyFrontier Corporation, HF Sinclair and HEP Senior Notes $ 2,300 $ 2,284 $ 29 76 Table of Content s For the variable rate HEP Credit Agreement, changes in interest rates would affect cash flows, but not the fair value.
Contingencies We are subject to proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses.
Future impairment charges could be material to our results of operations and financial condition. Contingencies We are subject to proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses.
At December 31, 2023, outstanding borrowings under the HEP Credit Agreement wer e $455.5 million . A hypothetical 10% change in interest rates applicable to the HEP Credit Agreement would not materially affect cash flows.
At December 31, 2024, outstanding borrowings under the HEP Credit Agreement we re $350 million. A hypothetical 10% change in interest rates applicable to the HEP Credit Agreement would not materially affect cash flows.
This committee oversees our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.
We have a risk management oversight committee consisting of members from our senior management. This committee oversees our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.
We incurred $39.4 million and $52.9 million in acquisition integration and regulatory costs during the years ended December 31, 2023 and 2022, respectively. Depreciation and Amortization Expenses Depreciation and amortization increased 17% from $656.8 million for the year ended December 31, 2022 to $770.6 million for the year ended December 31, 2023.
We incurred $39 million and $53 million in acquisition integration and regulatory costs during the years ended December 31, 2023 and 2022, respectively. Depreciation and Amortization Expenses Depreciation and amortization increased 17% from $657 million for the year ended December 31, 2022 to $771 million for the year ended December 31, 2023.
Years Ended December 31, 2023 2022 Renewables Sales volumes (in thousand gallons) 215,510 136,204 Average per produced gallon (1) Renewables gross margin $ 0.50 $ 0.30 Renewables operating expenses (2) 0.51 0.82 Net operating margin $ (0.01) $ (0.52) (1) Represents average amount per produced gallon sold, which is a non-GAAP measure.
Years Ended December 31, 2024 2023 2022 Renewables Sales of produced renewables products (in thousand gallons) 255,639 215,510 136,204 Average per produced gallon sold: (1) Gross margin (2) $ (0.33) $ (0.59) $ (1.29) Adjusted renewables gross margin (3) $ 0.33 $ 0.50 $ 0.30 Less: operating expenses (4) 0.39 0.51 0.82 Adjusted renewables gross margin, less operating expenses $ (0.06) $ (0.01) $ (0.52) (1) Represents the average amount per produced gallon sold, which is a non-GAAP measure.
During the year ended December 31, 2023, we purchased $999.3 million of treasury stock, paid $340.7 million in dividends, paid $307.8 million upon the maturity of our HF Sinclair 2.625% Senior Notes and HollyFrontier 2.625% Senior Notes, paid $267.6 million as cash consideration in connection with the HEP Merger Transaction and had net repayments of $212.5 million under the HEP Credit Agreement.
During the year ended December 31, 2023, we repurchased $999 million of our Common Stock , paid $341 million in Dividends , paid $308 million upon the maturity of the HF Sinclair 2.625% Senior Notes and HollyFrontier 2.625% Senior Notes, paid $268 million as cash consideration in connection with the HEP Merger Transaction and had net repayments of $213 million under the HEP Credit Agreement.
As of December 31, 2023, we had remaining authorization to repurchase up to $676.4 million under the August 2023 Share Repurchase Program .
As of December 31, 2024, we had remaining authorization to repurchase up to $799 million under the May 2024 Share Repurchase Program.
On February 14, 2024, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share, an increase of $0.05 over our previous dividend of $0.45 per share. The dividend is payable on March 5, 2024 to holders of record of common stock on February 26, 2024.
On February 20, 2025, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share. The dividend is payable on March 20, 2025 to holders of record of common stock on March 6, 2025.
Financial information is reviewed on the counterparties in order to review and monitor their financial stability and assess their ongoing ability to honor their commitments under the derivative contracts.
Financial information is reviewed on the counterparties in order to review and monitor their financial stability and assess their ongoing ability to honor their commitments under the derivative contracts. We have not experienced, nor do we expect to experience, any difficulty in the counterparties honoring their commitments.
Cash expenditures for properties, plants and equipment for the year ended December 31, 2022 were $524.0 mill ion, which included HEP capital expenditures of $39.0 million for the year ended December 31, 2022. Each year our Board of Directors approves our annual capital budget which includes specific projects that management is authorized to undertake.
For the year ended December 31, 2023, our Net cash flows used for investing activities were $371 million. Cash expenditures for Properties, plants and equipment for the year ended December 31, 2023 were $385 million. Each year our Board of Directors approves our annual capital budget which includes specific projects that management is authorized to undertake.
Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Annual Report on Form 10-K. (2) Represents total Renewables segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.
Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” in Item 7 of Part II of this Annual Report on Form 10-K. (10) Represents total Refining segment operating expenses, exclusive of Depreciation and amortization , divided by Refinery throughput.
(49.995% non-operated interest); and UNEV Pipeline, LLC (“UNEV”) (the 25% non-operated interest not already owned by HEP, resulting in UNEV becoming a wholly owned subsidiary of HEP). See Note 2 “Acquisitions” in the Notes to Consolidated Financial Statements for additional information.
(49.995% non-operated interest) ; and UNEV Pipeline, LLC (“UNEV”) (the 25% non-operated interest not already owned by HEP, resulting in UNEV becoming a wholly owned subsidiary of HEP).
Cash Flows – Operating Activities Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net cash flows provided by operating activities were $2,297.2 million for the year ended December 31, 2023 compared to $3,777.2 million for the year ended December 31, 2022, a decrease of $1,479.9 million primarily driven by lower income from operations combined with higher turnaround spend during the year ended December 31, 2023.
Cash Flows – Operating Activities Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net cash flows provided by operating activities w ere $1,110 million for the year ended December 31, 2024 compared to $2,297 million for the year ended December 31, 2023, a decrease of $1,187 million primarily driven by lower income from operations during the year ended December 31, 2024.
The August 2023 Share Repurchase Program may be discontinued at any time by our Board of Directors. During the year ended December 31, 2023, we made open market and privately negotiated purchases of 18,779,880 shares for $974.5 million under our share repurchase programs, of which 15,515,302 shares were repurchased for $810.6 million pursuant to privately negotiated repurchases from REH Company.
The May 2024 Share Repurchase Program may be discontinued at any time by our Board of Directors. During the year ended December 31, 2024, we made open market and privately negotiated purchases of 11,944,177 shares for $664 million under our share repurchase programs, of which 7,864,761 shares were repurchased for $456 million pursuant to privately negotiated repurchases from REH.
These volume requirements are used to determine an obligated party’s renewable volume obligation (“RVO”). The EPA released a final rule on June 3, 2022 that, among other things, reduced the volume targets for 2020 and established targets for 2021 and 2022.
The EPA released a final rule on June 3, 2022 that, among other things, reduced the volume targets for 2020 and established targets for 2021 and 2022.
The excess of the fair values of the reporting units over their respective carrying values ranged from 23% to 91%. Increasing the discount rate by 1.0% or reducing the terminal cash flow growth rate by 1.0% would not have changed the results of our annual goodwill testing.
The fair values of the reporting units over their respective carrying values exceeded 10%. Increasing the discount rate by 1.0% or reducing the terminal cash flow growth rate by 1.0% would not have changed the results of our annual goodwill testing. In performing our impairment test of goodwill, we developed cash flow forecasts for each of our reporting units.
We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows.
We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows. For additional information, see Note 1 “Description of Business and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements.
The Mid-Continent region is comprised of the El Dorado and Tulsa Refineries. The West region is comprised of the Puget Sound, Navajo, Woods Cross, Parco and Casper Refineries. The Puget Sound Refinery was acquired November 1, 2021, and thus is included for the period November 1, 2021 through December 31, 2023.
The Mid-Continent region is comprised of the El Dorado and Tulsa Refineries. The West region is comprised of the Puget Sound, Navajo, Woods Cross, Parco and Casper Refineries. In addition, the refinery operations of the Parco and Casper Refineries are included for the period March 14, 2022 (date of acquisition) through December 31, 2024.
We own and operate refineries located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah. We provide petroleum product and crude oil transportation, terminalling, storage and throughput services to our refineries and the petroleum industry.
We provide petroleum product and crude oil transportation, terminalling, storage and throughput services to our refineries and the petroleum industry.
Gross refinery margin per barrel does not include the non-cash effects of lower of cost or market inventory valuation adjustments or depreciation and amortization.
The decrease was due to lower average per barrel sold sales prices, partially offset by lower crude oil and feedstock prices. Adjusted refinery gross margin per barrel does not include the non-cash effects of Lower of cost or market inventory valuation adjustments or Depreciation and amortization .
In the Marketing segment, we continued to see strong value in the Sinclair brand during 2023 as the marketing business continued to provide a consistent sales channel with margin uplift for our produced fuels. We continue to target 5% or more annual growth in the number of sites.
In the Marketing segment, we saw strong value in the Sinclair branded sites during 2024 as the marketing business continued to provide a consistent sales channel with margin uplift for our produced fuels. We expect to grow the number of branded sites by approximately 10% annually.
We periodically enter into derivative contracts in the form of foreign exchange forward contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar. 74 Table of Content As of December 31, 2023, we have the following notional contract volumes related to all outstanding derivative contracts used to mitigate commodity price and foreign currency risk (all maturing in 2024): Contract Description Total Outstanding Notional Unit of Measure NYMEX futures (WTI) - short 640,000 Barrels Forward gasoline contracts - long 800,000 Barrels Foreign currency forward contracts 387,613,367 U.S. dollar Forward commodity contracts (platinum) (1) 36,969 Troy ounces Natural gas price swaps (basis spread) - long 6,667,000 MMBTU (1) Represents an embedded derivative within our catalyst financing arrangements, which may be refinanced or require repayment under certain conditions.
As of December 31, 2024, we have the following notional contract volumes related to all outstanding derivative contracts used to mitigate commodity price and foreign currency risk (all maturing in 2025): Contract Description Total Outstanding Notional Unit of Measure NYMEX futures (WTI) - short 570,000 Barrels Forward gasoline and diesel contracts - long 450,000 Barrels Foreign currency forward contracts 383,222,096 U.S. dollar Forward commodity contracts (platinum) (1) 34,628 Troy ounces (1) Represents an embedded derivative within our catalyst financing arrangements, which may be refinanced or require repayment under certain conditions.
The increase in interest income was primarily due to the increase in the average cash balance and higher interest rates on cash investments. Interest Expense Interest expense was $190.8 million for the year ended December 31, 2023 compared to $175.6 million for the year ended December 31, 2022.
The pipeline resumed operations during the third quarter of 2022. Interest Income Interest income wa s $94 million f or the year ended December 31, 2023 compared to $30 million for the year ended December 31, 2022. The increase in interest income was primarily due to the increase in the average cash balance and higher interest rates on cash investments.
Years Ended December 31, 2023 2022 Marketing Number of branded sites at period end (1) 1,540 1,513 Sales volumes (in thousand gallons) 1,441,607 1,118,444 Margin per gallon of sales (2) $ 0.07 $ 0.06 (1) Includes non-Sinclair branded sites from legacy HollyFrontier agreements. (2) Represents average amount per gallon sold, which is a non-GAAP measure.
Years Ended December 31, 2024 2023 2022 Marketing Number of branded sites at period end (1) 1,627 1,540 1,513 Sales of refined products (in thousand gallons) 1,376,291 1,441,607 1,118,444 Average per gallon sold: (2) Gross margin (3) $ 0.06 $ 0.05 $ 0.04 Adjusted marketing gross margin (4) $ 0.08 $ 0.07 $ 0.06 (1) Includes certain non-Sinclair branded sites.
Cost of Products Sold Total cost of products sold decreased 15% from $30,732.4 million for the year ended December 31, 2022 to $26,054.9 million for the year ended December 31, 2023, principally due to lower crude oil costs and lower refined product sales volumes.
Cost of Materials and Other Cost of materials and other , exclusive of Lower of cost or market inventory valuation adjustments , decreased 15% from $30,680 million for the year ended December 31, 2022 to $25,784 million for the year ended December 31, 2023, principally due to lower crude oil costs and lower refined product sales volumes.
The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending.
The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. Compliance with RFS regulations significantly increases our Cost of materials and other , with RINs costs totaling $446 million for the year ended December 31, 2024.
Our effective tax rates were 20.5% and 22.7% for the years ended December 31, 2023 and 2022, respectively. The year-over-year decrease in the effective tax rate is principally due to the relationship between the pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes and other non-taxable permanent differences.
The difference between the U.S. federal statutory rate and the effective tax rate for the twelve months ended December 31, 2023, is primarily due to the relationship between pre-tax results, benefits attributable to non-taxable permanent differences and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.
Sinclair Acquisition On March 14, 2022, HollyFrontier and HEP announced the establishment of HF Sinclair as the new parent holding company of HollyFrontier and HEP and their subsidiaries, and the completion of their respective acquisitions (the “Sinclair Transactions”) of Sinclair Oil Corporation (now known as Sinclair Oil LLC, “Sinclair Oil”) and Sinclair Transportation Company LLC (“STC”) from The Sinclair Companies (now known as REH Company and referred to herein as “REH Company”).
For a description of our existing indebtedness, as well as the changes thereto associated with the HEP Merger Transaction, see Note 14 “Debt” in the Notes to Consolidated Financial Statements. 59 Table of Content s Sinclair Acquisition On March 14, 2022, HollyFrontier Corporation (“HollyFrontier”) and HEP announced the establishment of HF Sinclair as the new parent holding company of HollyFrontier and HEP and their subsidiaries, and the completion of their respective acquisitions (the “Sinclair Transactions”) of Sinclair Oil Corporation (now known as Sinclair Oil LLC, “Sinclair Oil”) and Sinclair Transportation Company LLC (“STC”) from The Sinclair Companies (now known as REH Company).
The refinery gross and net operating margins do not include lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7A of Part II of this Annual Report on Form 10-K.
Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 7 of Part II of this Annual Report on Form 10-K.
Our fair value estimates are based on projected cash flows, which we believe to be reasonable. We continually monitor and evaluate various factors for potential indicators of goodwill and long-lived asset impairment.
Our fair value estimates are based on projected cash flows, which we believe to be reasonable. We continually monitor and evaluate various factors for potential indicators of goodwill and asset impairments. A reasonable expectation exists that sustained deterioration in our operating results or overall economic conditions could lead to goodwill and/or asset impairments at some point in the future.
Additionally, for the year ended December 31, 2023 , turnaround expenditures were $555.7 million compared to $144.8 million for the year ended December 31, 2022 . 71 Table of Content Cash Flows – Investing Activities and Planned Capital Expenditures Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 For the year ended December 31, 2023, our net cash flows used for investing activities were $371.3 million.
Cash Flows – Investing Activities and Planned Capital Expenditures Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 For the year ended December 31, 2024, our Net cash flows used for investing activities were $468 million. Cash expenditures for Properties, plants and equipment for the year ended December 31, 2024 were $470 million.

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