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What changed in PAR PACIFIC HOLDINGS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PAR PACIFIC HOLDINGS, INC.'s 2022 and 2023 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 2023 report.

+392 added−467 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in PAR PACIFIC HOLDINGS, INC.'s 2023 10-K

392 paragraphs added · 467 removed · 272 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

68 edited+43 added−86 removed70 unchanged
Biggest changeWe believe the Pacific Northwest 5-2-2-1 Index is the best market indicator for our operations in Tacoma, Washington. The Pacific Northwest 5-2-2-1 Index is computed by taking two parts gasoline (sub-octane), two parts middle distillates (ULSD and jet fuel), and one part fuel oil as created from five barrels of Alaskan North Slope (“ANS”) crude oil.
Biggest changeThe RVO Adjusted Pacific Northwest 3-1-1-1 Index is computed by taking one part gasoline (PNW sub-octane), one part distillate (PNW ULSD), and one part VGO (USGC VGO) as created from three barrels of WTI Crude, less 100% of the RVO cost for gasoline and distillate. In 2 January 2024, our Washington refinery was awarded the U.S.
Although we and, to our knowledge, our predecessors have used operating and disposal practices that were standard in the industry at the time, “hazardous substances” may have been disposed or released on, under, or from the properties currently or historically owned or leased by us or on, under, or from other locations where these wastes have been taken for disposal.
Although we and, to our knowledge, our predecessors have used operating and disposal practices that were 8 standard in the industry at the time, “hazardous substances” may have been disposed or released on, under, or from the properties currently or historically owned or leased by us or on, under, or from other locations where these wastes have been taken for disposal.
The GHG rules include an alternative for facilities to demonstrate that further GHG reductions are not economically viable and an additional provision that authorized the DOH to issue a waiver if GHGs are being effectively controlled as a consequence of other state initiatives and regulations such as the Renewable 9 Portfolio Standard.
The GHG rules include an alternative for facilities to demonstrate that further GHG reductions are not economically viable and an additional provision that authorized the DOH to issue a waiver if GHGs are being effectively controlled as a consequence of other state initiatives and regulations such as the Renewable Portfolio Standard.
For example, the Colorado Oil and Gas Conservation Commission (“COGCC”) approved rules that require sampling of groundwater for hydrocarbons and other indicator compounds both before and after drilling. 12 Air Emissions Our refining operations are subject to local, state, and federal regulations for the control of emissions from sources of air pollution.
For example, the Colorado Oil and Gas Conservation Commission (“COGCC”) approved rules that require sampling of groundwater for hydrocarbons and other indicator compounds both before and after drilling. Air Emissions Our refining operations are subject to local, state, and federal regulations for the control of emissions from sources of air pollution.
The Washington Department of Ecology (“WDOE”) has issued final rules implementing the LCFS effective on January 1, 2023, implementing requirements that are now in effect and will gradually reduce the carbon intensity of fuels sold in the state over time by annually lowering that limit.
The Washington Department of Ecology (“WDOE”) issued final rules implementing the LCFS effective on January 1, 2023, implementing requirements that are now in effect and will gradually reduce the carbon intensity of fuels sold in the state over time by annually lowering that limit.
All readers are cautioned that the forward-looking statements contained in this Annual Report on Form 10-K are not guarantees of future performance and we cannot assure any reader that such statements will be realized or that the forward-looking events and circumstances will occur.
All readers are cautioned that the forward- 11 looking statements contained in this Annual Report on Form 10-K are not guarantees of future performance and we cannot assure any reader that such statements will be realized or that the forward-looking events and circumstances will occur.
To the extent that refiners will not or cannot blend renewable fuels into the products they produce in the quantities required to satisfy their obligations under the RFS program, those refiners must purchase renewable credits, referred to as Renewable Identification Numbers (“RINs”), to maintain compliance.
To the extent that refiners will not or cannot blend renewable fuels into the products they produce 7 in the quantities required to satisfy their obligations under the RFS program, those refiners must purchase renewable credits, referred to as Renewable Identification Numbers (“RINs”), to maintain compliance.
At this time, we do not believe that we have any liability associated with any Superfund site and we have not been notified of any claim, liability, or damages under CERCLA.
At this time, we do not believe that we have any material liability associated with any Superfund site and we have not been notified of any claim, liability, or damages under CERCLA.
In March 2014, the EPA published a final Tier 3 gasoline standard that requires, among other things, that gasoline contain no more than 10 parts per million (“ppm”) sulfur on an annual average basis and no more than 80 ppm sulfur on a per-gallon basis. The standard also lowers the allowable benzene, aromatics, and olefins content of gasoline.
In March 2014, the EPA published a final Tier 3 gasoline standard that requires, among other things, that gasoline contain no more than 10 parts per million (“ppm”) sulfur on an annual average basis and no more than 80 ppm sulfur on a per-gallon basis. The standard also lowered the allowable benzene, aromatics, and olefins content of gasoline.
The South Dakota economy is anchored by tourism, including visitors to Mount Rushmore and the Black Hills, as well as government and health care spending. According to the South Dakota Department of Tourism, visitor spending has increased in 2022, above pre-pandemic levels.
The South Dakota economy is anchored by tourism, including visitors to Mount Rushmore and the Black Hills, as well as government and health care spending. According to the South Dakota Department of Tourism, visitor spending has increased in 2023, above pre-pandemic levels.
For each of the years ended December 31, 2022, 2021, and 2020, we had one customer in our refining segment that accounted for 17%, 13%, and 13%, respectively, of our consolidated revenue. No other customer accounted for more than 10% of our consolidated revenues during the years ended December 31, 2022, 2021, and 2020.
For each of the years ended December 31, 2023, 2022, and 2021, we had one customer in our refining segment that accounted for 13%, 17%, and 13%, respectively, of our consolidated revenue. No other customer accounted for more than 10% of our consolidated revenues during the years ended December 31, 2023, 2022, and 2021.
We do not intend to update or revise any forward-looking statements as a result of new information, future events, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. 15
We do not intend to update or revise any forward-looking statements as a result of new information, future events, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. 12
We also have an on-shore pipeline manifold which allows for crude oil to be transferred between the Hawaii refinery and the IES Downstream, LLC (“IES”) storage facility located approximately 2 miles away. The manifold also allows for transfer of crude oil between the SPM and the IES facility.
We also have an on-shore pipeline manifold which allows for crude oil to be transferred between the Hawaii refinery and the IES Downstream, LLC (“IES”) storage facility located approximately 2 miles away.
OTHER OPERATIONS Laramie Energy As of December 31, 2022, we owned a 46.0% equity investment in Laramie Energy, an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.
OTHER OPERATIONS Laramie Energy As of December 31, 2023, we owned a 46% equity investment in Laramie Energy, an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.
While these programs are not expected to result in a material impact to earnings in the immediate term, both programs involve gradual tightening of standards over time and will likely require us to take additional actions or credit purchases, some of which may eventually be material.
While these programs are not expected to result in a material impact to earnings in the immediate term, both programs involve gradual tightening of standards over time and will likely require us to take additional actions or credit purchases, some of which may eventually be material. Both programs are likely to reduce transportation fuel demand.
We continue to actively monitor the impact of the global situation on our people, operations, financial condition, liquidity, suppliers, customers, and industry, and are actively responding to the impacts that these matters have on our business.
We continue to actively monitor the impact of these and other global situations on our people, operations, financial condition, liquidity, suppliers, customers, and industry, and are actively responding to the impacts that these matters have on our business.
This network also includes a 40-mile refined products pipeline that transports product from our Wyoming refinery to a common carrier with access to Rapid City, South Dakota. The logistics network in Wyoming includes storage, loading racks, and a rail siding at the refinery site.
This network also includes a refined products pipeline that transports product from our Wyoming refinery to a common carrier with access to Rapid City, South Dakota. The logistics network in Wyoming includes crude oil and refined product storage capacity, loading racks, and a rail siding at the refinery site.
OSHA We are subject to the requirements of the federal Occupational Safety and Health Act (“OSHA”) and comparable state statutes.
Other Government Regulation OSHA We are subject to the requirements of the federal Occupational Safety and Health Act (“OSHA”) and comparable state statutes.
In addition to federal requirements, several states, including Washington, have proposed or enacted low carbon fuel standards applicable to transportation fuels. The Washington LCFS creates a carbon intensity score for transportation fuels and require fuel producers and importers who fall short of increasingly stringent annual carbon intensity goals to purchase credits.
All our refineries are Tier 3 compliant. In addition to federal requirements, several states, including Washington, have proposed or enacted low carbon fuel standards applicable to transportation fuels. The Washington LCFS creates a carbon intensity score for transportation fuels and require fuel producers and importers who fall short of increasingly stringent annual carbon intensity goals to purchase credits.
These assets provide connectivity to Bakken, Canadian, and Alaskan crude oil, renewable fuels, and the Pacific, West Coast, Pacific Northwest, and Rockies product markets. Wyoming Logistics Our Wyoming logistics network includes 190 Mbbls of crude storage tank capacity and a 50-mile crude oil pipeline that provides us access to crude oil from the Powder River Basin.
These assets provide connectivity to Bakken, Canadian, and Alaskan crude oil, renewable fuels, and the Pacific, West Coast, Pacific Northwest, and Rockies product markets. Wyoming Logistics Our Wyoming logistics network includes crude storage tanks and a crude oil pipeline that provides us access to crude oil from the Powder River Basin.
The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendments and Reauthorization Act, and similar state statutes require us to organize and/or disclose information about hazardous materials used or produced in our operations.
The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendments and Reauthorization Act, and similar state statutes require us to organize and/or disclose information about hazardous materials used or produced in our operations. Certain of this information must be provided to employees, state and local governmental authorities, and local citizens.
As of December 31, 2022, our workforce consisted of 48% minorities, 36% women, 6% protected veterans, and 6% employees with disabilities. Par is committed to maintaining a safe, respectful, and inclusive workplace.
As of December 31, 2023, our workforce consisted of 39% minorities, 32% women, 6% protected veterans, and 4% employees with disabilities. Par is committed to maintaining a safe, respectful, and inclusive workplace.
Please read “Item 1A. — Risk Factors” and “Item 7. — Management’s Discussion and Analysis of Financial Condition and 1 Results of Operations — Overview” for further discussion of the risks, uncertainties, and actions we have taken in response to the global COVID-19 pandemic and resulting economic impact.
Please read “Item 1A. — Risk Factors” and “Item 7. — Management’s Discussion and Analysis of Financial 1 Condition and Results of Operations — Overview” for further discussion of the risks, uncertainties, and actions we have taken in response to the conditions noted above and the resulting economic impacts.
Our 1,397 employees work in the following operating segments throughout the United States: Operating Segment Number of Employees Refining and Logistics 668 Retail 607 Corporate 122 Total 1,397 Diversity and Inclusion Par is focused on recruiting and developing a diverse workforce.
Our 1,814 employees work in the following operating segments throughout the United States: Operating Segment Number of Employees Refining and Logistics 1,064 Retail 574 Corporate 176 Total 1,814 10 Diversity and Inclusion Par is focused on recruiting and developing a diverse workforce.
Climate Change and Regulation of Greenhouse Gases According to many scientific studies, emissions of CO 2 , methane, NO X , and other gases commonly known as greenhouse gases (“GHGs”) may be contributing to global warming of the earth’s atmosphere and to global climate change.
Such estimates may be subject to revision in the future as regulations and other conditions change. Climate Change and Regulation of Greenhouse Gases According to many scientific studies, emissions of CO 2 , methane, NO X , and other gases commonly known as greenhouse gases (“GHGs”) are contributing to global warming of the earth’s atmosphere and to global climate change.
According to the Spokane City Department of Economic Development, the unemployment rate was 4.1% through October 2022, and the average annual wage was $57 thousand in 2021 in positions covered by unemployment insurance. A significant portion of the products produced by our Washington refinery stay within the Puget Sound region.
According to the Spokane City Department of Economic Development, the unemployment rate was 3.4% through September 2023, and the average annual wage was $62 thousand in the first quarter of 2023 in positions covered by unemployment insurance. A significant portion of the products produced by our Washington refinery stay within the Puget Sound region.
South Dakota welcomed 14.4 million visitors for the year, resulting in visitor spending of approximately $4.7 billion in 2022, an increase of 15% over the pre-pandemic spending heights reached in 2019. Additionally, $1.0 billion, or 21% of tourism dollars, were spent on transportation services, representing an increase of 10% over pre-pandemic transportation spending.
South Dakota welcomed 14.7 million visitors for the year, resulting in visitor spending of approximately $5.0 billion in 2023, an increase of 4.9% compared to 2022 and 22% over the pre-pandemic spending heights reached in 2019. Additionally, $1.1 billion, or 22%, of tourism dollars were spent on transportation services, representing an increase of nearly 17% over pre-pandemic transportation spending.
Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply. Over time, higher annual RFS requirements have the potential to reduce demand for our refined transportation fuel products. In the near term, the RFS will be satisfied primarily with fuel ethanol blended into gasoline.
Over time, higher annual RFS requirements have the potential to reduce demand for our refined transportation fuel products. In the near term, the RFS will be satisfied primarily with fuel ethanol blended into gasoline.
Washington Logistics Our Washington logistics network includes 2.8 MMbbls of storage capacity, a proprietary 14-mile jet fuel pipeline that serves Joint Base Lewis McChord, a marine terminal with 15 acres of waterfront property, a unit train-capable rail loading terminal with 107 unloading spots, a manifest rail siding with 32 spots including asphalt, butane, and biodiesel loading and unloading facilities, and a truck rack with six truck lanes and ten loading arms.
Washington Logistics Our Washington logistics network includes storage capacity, a proprietary jet fuel pipeline that serves Joint Base Lewis McChord, a marine terminal with waterfront property, a unit train-capable rail loading terminal, a manifest rail siding, including asphalt, butane, biodiesel loading and unloading facilities, and a truck rack.
Court of Appeals for the District of Columbia Circuit vacated the EPA’s approval of year-round E15 sales. However, on April 29, 2022, in response to supply challenges caused in part by Russia’s invasion of Ukraine, the EPA issued an emergency waiver to permit E15 sales through the summer of 2022.
Court of Appeals for the District of Columbia Circuit vacated the EPA’s approval of year-round E15 sales. However, in response to supply challenges caused in part by Russia’s invasion of Ukraine, the EPA has issued certain emergency waivers to permit additional E15 sales.
The “76” license agreement expires October 31, 2031, unless extended by mutual agreement. An additional 42 of our sites operate under our proprietary Hele fuel brand. Since its launch in 2016, the Hele brand has won several awards for being the preferred fuel choice for Hawaii customers. Our eight cardlock locations on Kauai are branded Kauai Automated Fuels (“KAF”).
The “76” license agreement expires October 31, 2031, unless extended by mutual agreement. Since its launch in 2016, the Hele brand has won several awards for being the preferred fuel choice for Hawaii customers. Our cardlock locations on Kauai are branded Kauai Automated Fuels (“KAF”). We operate convenience stores at all of our retail fuel outlets in Washington and Idaho.
In prior years, we have petitioned the EPA for a small refinery waiver for certain of our refineries. However, in 2022, EPA generally denied all small refinery exemption petitions, including ours. Litigation surrounding the 2022 RFS volumetric requirements and other aspects of those final rules, including the EPA’s denial of small refinery relief, is ongoing in Wynnewood Ref.
However, in 2022, EPA generally denied all small refinery exemption petitions, including ours. Litigation surrounding the 2022 RFS volumetric requirements and other aspects of those final rules, including the EPA’s denial of small refinery relief, is ongoing in Wynnewood Ref. Co., LLC v EPA.
Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described in “Item 1A. — Risk Factors”, “Item 7. — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Annual Report on Form 10-K. Additionally, significant uncertainties remain with respect to COVID-19 and its economic effects.
Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described in “Item 1A. — Risk Factors”, “Item 7. — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Annual Report on Form 10-K. All forward-looking statements speak only as of the date they are made.
Pacific Northwest and Rockies Markets Spokane, Washington, and Northwest Idaho are the primary regions of our Pacific Northwest retail operations and are enjoying significantly higher population growth rates than the country as a whole. The U.S.
Hawaii consumer inflation is expected to decrease to 2.2% by 2026. 4 Mainland Markets Spokane, Washington, and Northwest Idaho are the primary regions of our Pacific Northwest retail operations and are enjoying significantly higher population growth rates than the country as a whole. The U.S.
Coastal Coordination There are various federal and state programs that regulate the conservation and development of coastal resources. The federal Coastal Zone Management Act (“CZMA”) was passed to preserve and, where possible, restore the natural resources of the coastal zone of the U.S.
The federal Coastal Zone Management Act (“CZMA”) was passed to preserve and, where possible, restore the natural resources of the coastal zone of the U.S. The CZMA provides for federal grants for state management programs that regulate land use, water use, and coastal development.
Logistics Our logistics segment generates revenues by charging fees for transporting crude oil to our refineries, delivering refined products to wholesale and bulk customers and to our retail business, and storing crude oil and refined products. Substantially all of our revenues from our logistics segment represent intercompany transactions that are eliminated in consolidation.
Logistics Our logistics segment generates revenues by charging fees for transporting crude oil to our refineries, delivering refined products to wholesale and bulk customers and to our retail business, and storing crude oil and refined products.
The State of Washington and its political subdivisions passed several climate-focused laws in 2021 that are relevant to our Tacoma, Washington location. These include a low-carbon fuel standard (“LCFS”) designed to reduce the carbon intensity of transportation fuels by twenty percent by 2038 and a “cap and trade”-style program for GHG emissions covering industrial facilities starting in 2023.
These include a low-carbon fuel standard (“LCFS”) designed to reduce the carbon intensity of transportation fuels by twenty percent by 2038 and a “cap and trade”-style program for GHG emissions covering industrial facilities and transportation fuels starting in 2023.
Certain of this information must be provided to employees, state and local governmental authorities, and local citizens. 13 SIGNIFICANT CUSTOMERS We sell a variety of refined products to a diverse customer base. The majority of our refined products are primarily sold through short-term contracts or on the spot market.
SIGNIFICANT CUSTOMERS We sell a variety of refined products to a diverse customer base. The majority of our refined products are primarily sold through short-term contracts or on the spot market.
We recognize that our responsible stewardship impacts every employee, every contractor, and every member of the community, and we embrace that responsibility. We promote a culture of continuous safety improvement with a keen eye for evaluating and managing risk. We continually monitor and improve the effectiveness of our health and safety programs, policies, and procedures to achieve this objective.
Health and Safety Safety is paramount to every operation and activity we undertake at Par. We recognize that our responsible stewardship impacts every employee, every contractor, and every member of the community, and we embrace that responsibility. We promote a culture of continuous safety improvement with a keen eye for evaluating and managing risk.
Census Bureau, the population in Pennington County, the state’s second largest county, increased by 8.2% from 2010 to 7 2020 compared to 7.4% nationally over the same period.
Census Bureau, the population in Pennington County, the state’s second largest county, increased by 8.2% from 2010 to 2020 compared to 7.4% nationally over the same period. Demand for gasoline is highly seasonal, with a large increase in demand during the summer driving season.
The 3-1-2 Singapore Crack Spread is computed by taking one barrel of gasoline and two barrels of distillates (diesel and jet fuel) from three barrels of Brent crude oil.
The 3-1-2 Singapore Crack Spread is computed by taking one barrel of gasoline and two barrels of distillates (diesel and jet fuel) from three barrels of Brent crude oil. Montana Refinery. Our Montana refinery is located along the Yellowstone River just outside Billings, Montana, and is rated at 63 Mbpd throughput capacity.
Solid and Hazardous Waste Several of our businesses generate wastes, including hazardous wastes, that are subject to regulation under the federal Resource Conservation and Recovery Act (“RCRA”) and state statutes.
Solid and Hazardous Waste Several of our businesses generate wastes, including hazardous wastes, that are subject to regulation under the federal Resource Conservation and Recovery Act (“RCRA”) and state statutes. The EPA has limited the disposal options for certain hazardous wastes and state regulation of the handling and disposal of certain wastes associated with refining operations is becoming more stringent.
On March 31, 2022, the EPA and NHTSA published a final rule containing additional fuel efficiency standards for cars and light trucks that include 8-10% reductions of GHG emissions annually through model year 2026. Higher fuel economy standards have the potential to reduce demand for our refined transportation fuel products.
On March 31, 2022, the EPA and NHTSA published a final rule containing additional fuel efficiency standards for cars and light trucks that include 8-10% reductions of GHG emissions annually through model year 2026. On July 28, 2023, NHTSA issued a notice of proposed rule making for cars and light trucks for model years 2027-2032.
Our current store count includes the acquisition and rebranding in 2022 of three new convenience store locations in Washington acquired in December 2, 2022. Additionally, we broke ground on a new to industry site in a growth area of Spokane, Washington, which is scheduled to open during the second half of 2023.
We use our proprietary “nomnom” brand at both the fueling facilities and stores. Our current store count includes the acquisition and rebranding of three convenience store locations in Washington acquired on December 2, 2022. Additionally, we opened a new to industry site in a growth area of Spokane, Washington, on September 25, 2023.
At December 31, 2022, our workforce consisted of 1,397 employees, including 226 employees, or 16% of our total workforce, at our Hawaii and Washington refineries represented by the United Steelworkers Union (“USW”) with collective bargaining agreements effective through January 31, 2026. We value all our employees, represented and non-represented, and constantly strive to maintain and improve satisfactory relationships with them.
At December 31, 2023, our workforce consisted of 1,814 employees, including 331 employees, or 18% of our total workforce, at our Hawaii, Washington, and Montana refineries represented by the United Steelworkers Union (“USW”) with collective bargaining agreements effective through January 31, 2026.
Washington is one of the fastest growing states in the union and most of this growth is occurring in the Puget Sound area due to large technology and information industry companies. According to the U.S. Bureau of Economic Analysis (the “BEA”), gross domestic product (“GDP”) for the State of Washington grew by 6.7% from 2020 to 2021.
Washington is one of the fastest growing states in the nation, and most of this growth is occurring in the Puget Sound area due to large technology and information industry companies. According to the U.S.
We operate convenience stores at 34 of our Hawaii retail fuel outlets under our proprietary “nomnom” brand that sell merchandise such as soft drinks, prepared foods, and other sundries. Our Hawaii retail network includes Hele and “76” branded fuel retail sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.
We operate convenience stores and fuel retail sites under our “Hele” and “nomnom” brands, “76” branded fuel retail sites and other sites operated by third parties that sell gasoline, diesel, and retail merchandise such as soft drinks, prepared foods, and other sundries.
Those EPA final rules adopted revised deadlines for compliance with RFS standards for prior compliance years, along with new guidelines for compliance in the future. Additionally, the RFS enables the EPA to exempt certain small refineries from the renewable fuels blending requirements in the event such requirements would cause disproportionate economic hardship to that refinery.
Additionally, the RFS enables the EPA to exempt certain small refineries from the renewable fuels blending requirements in the event such requirements would cause disproportionate economic hardship to that refinery. In prior years, we have petitioned the EPA for a small refinery waiver for certain of our refineries.
We also own a 46.0% equity investment in Laramie Energy, LLC (“Laramie Energy”), an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado. Our Corporate and Other reportable segment primarily includes general and administrative costs.
As of December 31, 2023, we owned a 46% equity investment in Laramie Energy, LLC (“Laramie Energy”), an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.
From the Hawaii refinery’s gates, we distribute refined products through our logistics network throughout the islands of Oahu, Maui, Hawaii, Molokai, and Kauai and for export to the U.S. West Coast and Asia. The Oahu logistics network includes a 27-mile wholly owned and operated pipeline network that transports refined products from our Hawaii refinery to delivery locations.
From the Hawaii refinery, we distribute refined products through our logistics network of pipelines, trucks, leased barges, terminals, and storage facilities throughout the islands of Oahu, Maui, Hawaii, Molokai, and Kauai and for export to the U.S. West Coast and Asia.
Please read Note 22—Segment Information to our consolidated financial statements under Item 8 of this Form 10-K for detailed information on our operating results by segment.
Please read Note 23—Segment Information to our consolidated financial statements under Item 8 of this Form 10-K for detailed information on our operating results by segment. Macroeconomic Factors Affecting Our Business U.S. and Global Inflationary Factors. Energy prices are, among other factors, indicators of inflation, and the U.S.
Retail The retail segment includes 90 locations in Hawaii and 31 locations in Washington and Idaho where we set the price to the retail consumer. Of these, 34 of the Hawaii locations and all 31 Washington and Idaho locations are operated by our 5 personnel and include various sizes of convenience stores, snack shops, and kiosks.
Certain of our Hawaii locations and all of the Washington and Idaho locations are operated by our personnel and include various sizes of convenience stores, snack shops, and kiosks. The remaining locations in Hawaii are cardlocks or sites operated by third parties where we retain ownership of the fuel and set retail pricing.
Compliance with this rule has not had a material impact on our financial condition, results of operations, or cash flows to date. However, new operating and other regulatory standards could involve additional costs, and failure to comply with such standards could involve penalties, each of which could be material.
Compliance with this rule has not had a material impact on our financial condition, results of operations, or cash flows to date.
Our benefits include our retirement savings plan with company match, employee stock purchase plan, extensive health and wellness benefits, generous time off allowance, and a tuition reimbursement program. 14 Health and Safety Safety is paramount to every operation and activity we undertake at Par.
Benefits We offer highly competitive compensation, be nefit, and time-off packages to promote employee fulfillment and work-life balance. Our benefits include our retirement savings plan with company match, employee stock purchase plan, extensive health and wellness benefits, generous time off allowance, and a tuition reimbursement program.
Connecting the SPM to the Hawaii refinery are three undersea pipelines: a 30-inch line for crude oil, a 20-inch line, and a 16-inch line, both for the import or export of refined products.
This SPM allows for the safe, reliable, and efficient receipt of crude oil shipments to the Hawaii refinery, as well as both the receipt and export of finished products. Connecting the SPM to the Hawaii refinery are three undersea pipelines, two for the import or export of refined products and one for crude oil.
Hawaii Refinery Our Hawaii refinery is located in Kapolei, Hawaii, on the island of Oahu, and is rated at 94 Mbpd of Crude unit operating throughput capacity.
Our Hawaii refinery is located in Kapolei, Hawaii, on the island of Oahu, and is rated at 94 Mbpd of Crude unit operating throughput capacity. The Hawaii refinery’s major processing units produce LPG, naphtha, gasoline, jet fuel, ULSD, marine fuel, LSFO, HSFO, asphalt, and other associated refined products.
We have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero. Our investment in Laramie Energy is not material to our consolidated financial statements as of December 31, 2022.
As of June 30, 2020, we discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment had been reduced to zero. Effective February 21, 2023, we resumed the application of the equity method of accounting with respect to our investment in Laramie Energy.
The Washington refinery’s major processing units include crude oil distillation, vacuum, jet treating, diesel hydrotreating, isomerization, and reforming units, which produce ULSD, jet fuel, gasoline, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest.
Our Washington refinery is located in Tacoma, Washington, and is rated a t 42 Mbpd throughput capacity. The Washington refinery’s major processing units produce ULSD, jet fuel, gasoline, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest.
Our nomnom-branded convenience stores in Washington and Idaho sell gasoline, diesel, and retail merchandise. 3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rocky Mountain regions.
We also operate unattended cardlock stations. 3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rocky Mountain regions.
We do not currently anticipate that a more stringent NAAQS will materially impact our Hawaii, Washington, or Wyoming operations, but the risk of impact will increase in Washington if and when the standard is lowered. Fuel Standards In 2007, the U.S.
On February 7, 2024, EPA lowered the fine particulate NAAQS standards. We do not currently anticipate that the NAAQS standards will materially impact our operations, but the new standards could materially impact future projects, particularly at our refineries in Montana and Washington. Fuel Standards In 2007, the U.S.
The remaining 56 Hawaii locations are cardlocks or sites operated by third parties where we retain ownership of the fuel and set retail pricing. We hold exclusive licenses within the state of Hawaii to utilize the “76” brand for retail locations, with 40 of our retail sites branded “76”.
As of December 31, 2023, our company-operated convenience stores with fuel in Hawaii are branded “Hele,” our proprietary brand. Additionally, some of our partner sites operate under our proprietary Hele fuel brand. We also hold exclusive licenses within the state of Hawaii to utilize the “76” brand for retail locations.
Alternatively, you may access these reports at the SEC’s website at www.sec.gov . OPERATING SEGMENTS Refining Our refining segment buys and refines crude oil and other feedstocks into petroleum products (such as gasoline and distillates) at our Hawaii, Wyoming, and Washington refineries.
Alternatively, you may access these reports at the SEC’s website at www.sec.gov . OPERATING SEGMENTS Refining We own and operate refineries in Hawaii, Wyoming, Washington, and Montana, with total operating crude oil throughput capacity of 219 Mbpd. During the year ended December 31, 2023, our refineries processed 170.3 Mbpd of crude oil and sold 183.1 Mbpd of refined products.
The profitability of our Hawaii refining business is heavily influenced by crack spreads in the Singapore market. This market reflects the closest liquid market alternative to source refined products for Hawaii. We believe the 3-1-2 Singapore Crack Spread is the best market indicator for our Hawaii operations.
We believe the configuration of our Hawaii refinery uniquely fits the demands of the Hawaii market. We believe the 3-1-2 Singapore Crack Spread is the most representative market indicator for our Hawaii operations.
Many of these competitors have greater financial and technical resources and staff which may allow them to better withstand and react to changing and adverse market conditions. Our refining business sources and obtains all of our crude oil from third-party sources and competes globally for crude oil and feedstocks. Our Hawaii refinery, through our facility with J.
Many of these competitors have greater financial and technical resources and staff which may allow them to better withstand and react to changing and adverse market conditions. In addition, the energy industry is subject to global economic and political factors and changing governmental regulations.
Hawaii Logistics Our logistics network extends throughout the state of Hawaii. On Oahu, the system begins with our SPM located 1.7 miles offshore of our Hawaii refinery. This SPM allows for the safe, reliable, and efficient receipt of crude oil shipments to the Hawaii refinery, as well as both the receipt and export of finished products.
Substantially all of our revenues from our logistics segment represent intercompany transactions that are eliminated in consolidation. 3 Hawaii Logistics Our logistics network extends throughout the State of Hawaii. On Oahu, the system begins with our SPM located 1.7 miles offshore of our Hawaii refinery.
Effective March 3, 2022, we suspended purchases of Russian crude oil as a response to the Russia-Ukraine conflict. Crude oil is received into the Hawaii refinery’s tank farm, which includes 3.4 MMbbls of total owned crude oil storage and/or third-party crude oil storage.
Effective March 3, 2022, we suspended purchases of Russian crude oil as a response to the Russia-Ukraine conflict. Competition All facets of the energy industry are highly competitive. Our competitors include major integrated, national, and independent energy companies.
We own and operate terminals, pipelines, a single point mooring (“SPM”), and trucking operations to distribute refined products throughout the islands of Oahu, Maui, Hawaii, Molokai, and Kauai. We lease marine vessels for the movement of petroleum, refined products, and ethanol between the U.S. West Coast and Hawaii.
This network includes an SPM in Hawaii, a unit train-capable rail loading terminal in Washington, and other terminals, pipelines, trucking operations, marine vessels, storage facilities, loading and truck racks, and rail facilities for the movement of petroleum, refined products, and ethanol in and among the Hawaiian islands, between the U.S. West Coast, and the Rocky Mountain region.
Our crude oil and refined product tanks at the Wyoming refinery have a total capacity of 593 Mbbls. We also own and operate a jet fuel storage facility and pipeline that serve Ellsworth Air Force Base in South Dakota.
We also own and operate a jet fuel storage facility and pipeline that serve Ellsworth Air Force Base in South Dakota. Markets Hawaii Market Hawaii’s visitor industry is the primary driver of the state’s economy. In August 2023, the Maui wildfires dominated news headlines and the tragic event had a significant impact in Maui County.
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Item 1. BUSINESS OVERVIEW Par Pacific Holdings, Inc., headquartered in Houston, Texas, owns and operates market-leading energy and infrastructure businesses. Our strategy is to acquire and develop energy and infrastructure businesses in logistically complex, niche markets.
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Item 1. BUSINESS OVERVIEW Par Pacific Holdings, Inc., headquartered in Houston, Texas, is a growth-oriented energy company providing both renewable and conventional fuels to the western United States. Our business is organized into three primary segments: 1) Refining - We own and operate four refineries with total operating crude oil throughput capacity of 219 Mbpd.
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Our business is organized into three primary segments: 1) Refining - We own and operate three refineries with total operating crude oil throughput capacity of 155 Mbpd. Our refinery in Kapolei, Hawaii, produces gasoline, jet fuel, ultra-low sulfur diesel (“ULSD”), marine fuel, low sulfur fuel oil (“LSFO”), and other associated refined products primarily for consumption in Hawaii.
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Our refineries in Kapolei, Hawaii, Newcastle, Wyoming, Tacoma, Washington, and Billings, Montana, convert crude oil into gasoline, distillate, asphalt and other products to serve the state of Hawaii and areas ranging from Washington state to the Dakotas and Wyoming. 2) Retail - We operate fuel retail outlets in Hawaii, Washington, and Idaho.
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Our refinery in Newcastle, Wyoming, produces gasoline, jet fuel, ULSD, and other associated refined products that are primarily marketed in Wyoming and South Dakota.
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As of December 31, 2023, through the Billings Acquisition (as defined in Note 5—Acquisitions under Item 8 of this Annual Report on Form 10-K), we own a 65% and a 40% equity investment in Yellowstone Energy Limited Partnership (“YELP”) and Yellowstone Pipeline Company (“YPLC”), respectively. Our Corporate and Other reportable segment primarily includes general and administrative costs.
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Our refinery in Tacoma, Washington, produces gasoline, jet fuel, ULSD, asphalt, and other associated refined products that are primarily marketed in the Pacific Northwest. 2) Retail - We operate 121 fuel retail outlets in Hawaii, Washington, and Idaho. Our fuel retail outlets in Hawaii sell gasoline and diesel throughout the islands of Oahu, Maui, Hawaii, and Kauai.
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Federal Reserve (the “Fed”) has taken significant steps to curb inflation, and continued to increase interest rates in 2023, from near zero percent at the beginning of 2022 to a range of 5.25% to 5.5% in December 2023.
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We own and operate a crude oil pipeline gathering system, a refined products pipeline, storage facilities, and loading racks in Wyoming and a jet fuel storage facility and pipeline that serve Ellsworth Air Force Base in South Dakota.
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These actions by the Fed acted to lower U.S. inflation rates, which have decreased 3.4% year over year as of the December inflation report released in January 2024. The U.S. retail price for regular-grade gasoline averaged $3.52 per gallon in 2023, following gasoline price highs of approximately $5.01 per gallon in the summer of 2022.
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We own and operate logistics assets in Washington, including a marine terminal, a unit train-capable rail loading terminal, storage facilities, a truck rack, and a proprietary pipeline that serves Joint Base Lewis McChord. In 2020, we completed a project at our Tacoma, Washington, location to allow for the storage and shipment of ethanol through our unit train and marine terminals.
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This decline was due, in part, to lower crude oil prices in 2023 compared with 2022 and higher gasoline inventories in the second half of 2023. The COVID-19 Pandemic. Subsequent to the pandemic, and various preventive and mitigating measures taken in response, refined product demand has largely returned to 2019 levels.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRegulatory and other requirements concerning the transportation of crude oil and other commodities by rail may cause increases in transportation costs or limit the amount of crude oil that we can transport by rail. We rely on a variety of systems to transport crude oil, including rail. Rail transportation is regulated by federal, state, and local authorities.
Biggest changeWe rely on a variety of systems to transport crude oil, including rail. Rail transportation is regulated by federal, state, and local authorities. New regulations or changes in existing regulations could result in increased compliance expenditures.
On January 20, 2021, President Biden announced that the 20 United States would be reentering the Paris Agreement. This reentry became effective on February 19, 2021.
On January 20, 2021, President Biden announced that the United States would be reentering the Paris Agreement. This reentry became effective on February 19, 2021.
In addition, as technologies evolve, and cyber-attacks become more sophisticated, we may incur significant costs to upgrade or enhance our security measures to protect against such attacks and we may face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm. Finally, federal legislation relating to cyber security threats could impose additional requirements on our operations.
In addition, as technologies evolve, and cyber attacks become more sophisticated, we may incur significant costs to upgrade or enhance our security measures to protect against such attacks and we may face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm. Finally, federal legislation relating to cybersecurity threats could impose additional requirements on our operations.
We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all, which could cause us to default on our obligations and could impair our liquidity. 24 Our substantial level of indebtedness could adversely affect our financial condition. We have a substantial amount of indebtedness, which requires significant interest payments.
We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all, which could cause us to default on our obligations and could impair our liquidity. Our substantial level of indebtedness could adversely affect our financial condition. We have a substantial amount of indebtedness, which requires significant interest payments.
The operation of refineries, pipelines, and refined products terminals is subject to increased risks of spills, discharges, or other inadvertent releases of petroleum or hazardous substances, and we operate in and around environmentally sensitive 17 coastal waters that are closely regulated and monitored. These events could occur in connection with the operation of our refineries, pipelines, or refined products terminals.
The operation of refineries, pipelines, and refined products terminals is subject to increased risks of spills, discharges, or other inadvertent releases of petroleum or hazardous substances, and we operate in and around environmentally sensitive coastal waters that are closely regulated and monitored. These events could occur in connection with the operation of our refineries, pipelines, or refined products terminals.
Any such events may limit or disrupt markets, which could negatively impact our ability to access global crude oil commodity flows or sell our refined products. Geopolitical conflicts, including the conflict between Russia and Ukraine, could increase the cost of our crude oil feedstocks and affect the demand for our products.
Any such events may limit or disrupt markets, which could negatively impact our ability to access global crude oil commodity flows or sell our refined products. 13 Geopolitical conflicts, including the conflict between Russia and Ukraine, could increase the cost of our crude oil feedstocks and affect the demand for our products.
Any future determination as to the declaration and payment of cash 28 dividends will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors that our board of directors considers relevant.
Any future determination as to the declaration and payment of cash dividends will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors that our board of directors considers relevant.
The integrity and protection of our customer, employee, and company data is critical to our business. 18 Our information systems are subject to damage or interruption from a number of potential sources including natural disasters, ransomware, software viruses or other malware, power failures, cyber attacks, and other events.
The integrity and protection of our customer, employee, and company data is critical to our business. Our information systems are subject to damage or interruption from a number of potential sources including natural disasters, ransomware, software viruses or other malware, power failures, cyber attacks, and other events.
In addition, the EPA is considering changes to the existing RFS program regulations and other regulatory initiatives under the RFS program that could impact future standards. Although uncertain, any of these events may cause the price of RINs to rise and result in additional costs in connection with RFS compliance.
In addition, the EPA is considering changes to the existing RFS program regulations and other regulatory 16 initiatives under the RFS program that could impact future standards. Although uncertain, any of these events may cause the price of RINs to rise and result in additional costs in connection with RFS compliance.
We monitor for GHG emissions at our refineries and believe we are in substantial compliance with the applicable GHG reporting requirements. Certain of the third-party drilling and production entities in which we hold a working interest also may be subject to reporting of GHG emissions in the U.S.
We monitor for GHG emissions at our refineries and believe we are in substantial compliance with the applicable GHG reporting requirements. Certain of the third-party drilling and production entities in which we hold a working interest also may be subject 17 to reporting of GHG emissions in the U.S.
If repayment of our indebtedness is accelerated as a result of such default, we cannot assure you that we would have sufficient assets or access to credit to repay such indebtedness. We may incur losses and incur additional costs as a result of our forward-contract activities and derivative transactions.
If repayment of our indebtedness is accelerated as a result of such default, we cannot assure you that we would have sufficient assets or access to credit to repay such indebtedness. 22 We may incur losses and incur additional costs as a result of our forward-contract activities and derivative transactions.
Any adverse outcome of such tax audits or related proceedings could result in unforeseen tax-related liabilities that may, individually or in the aggregate, materially affect our cash tax liabilities, results of operations, and financial 22 condition.
Any adverse outcome of such tax audits or related proceedings could result in unforeseen tax-related liabilities that may, individually or in the aggregate, materially affect our cash tax liabilities, results of operations, and financial condition.
If a default occurs, the requisite lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and 25 proceed against any collateral securing that indebtedness.
If a default occurs, the requisite lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness.
The Wyoming and Washington refineries’ financial and operating results for the first and fourth calendar quarters may be lower than those for the second and third calendar quarters of each year as a result of this seasonality.
The Montana, Wyoming, and Washington refineries’ financial and operating results for the first and fourth calendar quarters may be lower than those for the second and third calendar quarters of each year as a result of this seasonality.
In addition, our board of directors or a committee thereof has the power, without stockholder approval, to designate the terms of one or more series of preferred stock and issue shares of 29 preferred stock.
In addition, our board of directors or a committee thereof has the power, without stockholder approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock.
Because of the locations of our refineries in Hawaii, Washington, and Wyoming, we primarily market our refined products in relatively limited geographic areas.
Because of the locations of our refineries in Hawaii, Montana, Washington, and Wyoming, we primarily market our refined products in relatively limited geographic areas.
In connection with the July 14, 2016 purchase of Hermes Consolidated, LLC (d/b/a Wyoming Refining Company) and, indirectly, Wyoming Refining Company’s wholly owned subsidiary, Wyoming Pipeline Company, LLC (collectively, “Wyoming Refining” or “WRC”) (the “WRC Acquisition”), there are several environmental conditions that will require us to 21 undertake significant remediation efforts and other corrective actions.
For example, in connection with the July 14, 2016 purchase of Hermes Consolidated, LLC (d/b/a Wyoming Refining Company) and, indirectly, Wyoming Refining Company’s wholly owned subsidiary, Wyoming Pipeline Company, LLC (collectively, “Wyoming Refining” or “WRC”) (the “WRC Acquisition”), there are several environmental conditions that will require us to undertake significant remediation efforts and other corrective actions.
Our ability to utilize a significant portion of our NOLs to offset future taxable income is subject to various limitations, including that certain NOLs will expire in various amounts, if not used, between 2029 through 2037.
Our ability to utilize a significant portion of our NOLs to offset future taxable income is subject to various limitations, including that certain NOLs will expire in various amounts, if not used, between 2030 through 2037.
In 2020 and 2021 the State of Washington adopted several statutes that are relevant to our Tacoma, Washington location including a law approving new regulatory requirements regarding zero emission vehicles and a low-carbon fuel standard designed to reduce the carbon intensity of transportation fuels by twenty percent by 2038.
In 2020 and 2021 the State of Washington adopted several statutes that are relevant to our operations in the state of Washington including a law approving new regulatory requirements regarding zero emission vehicles and a low-carbon fuel standard designed to reduce the carbon intensity of transportation fuels by twenty percent by 2038.
Changes in labor markets due to COVID-19 and other factors, including inflationary pressures, have increased the competition for recruiting and retaining talent. As a result of these factors, our business could be adversely impacted by increases in labor, health care, and benefits costs necessary to attract and retain high quality employees with the right skill sets to meet our needs.
Changes in labor markets due to various factors, including inflationary pressures, have increased the competition for recruiting and retaining talent. As a result of these factors, our business could be adversely impacted by increases in labor, health care, and benefits costs necessary to attract and retain high quality employees with the right skill sets to meet our needs.
We rely upon certain critical information systems for the operation of our business and the failure of any critical information system, including a cyber security breach, may result in harm to our business. We are heavily dependent on our technology infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business.
We rely upon certain critical information systems for the operation of our business and the failure of any critical information system, including a cybersecurity breach, may result in harm to our business. We are heavily dependent on our technology infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business.
Such increased exposure could negatively impact our liquidity position due to the increase in working capital used to acquire crude oil inventory for our refineries. The Intermediation Agreements expose us to counterparty credit and performance risk. We have the Supply and Offtake Agreement with J. Aron, pursuant to which J.
Such increased exposure could negatively impact our liquidity position due to the increase in working capital used to acquire crude oil inventory for our refineries. The Supply and Offtake Agreement and LC Facility expose us to counterparty credit and performance risk. We have the Supply and Offtake Agreement with J. Aron, pursuant to which J.
To a certain extent, this is subject to general economic, financial, competitive, legislative, and regulatory conditions and other factors that are beyond our control, including the crack spread.
To a certain extent, this is subject to general economic, financial, competitive, legislative, and regulatory conditions and other factors that are beyond our control, including crack spreads.
Federal, regional, and state climate change and air emissions goals and regulatory programs are complex, subject to change, and create uncertainty due to a number of factors including technological feasibility, legal challenges, and potential changes in federal policy.
Federal, regional, and state climate change and air emissions goals and regulatory programs under the Clean Air Act are complex, subject to change, and create uncertainty due to a number of factors including technological feasibility, legal challenges, and potential changes in federal policy.
As of December 31, 2022, we have accrued $14.8 million for the well-understood components of these efforts based on current information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 30 years.
As of December 31, 2023, we have accrued $14.0 million for the well-understood components of these efforts based on current 18 information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 30 years.
An adverse change in the business, results of operations, liquidity, or financial condition of our intermediation counterparties could adversely affect the ability of such counterparties to perform their obligations, which could consequently have a material adverse effect on our business, results of operations, or liquidity and, as a result, our business and operating results.
An adverse change in the business, results of operations, liquidity, or financial condition of one of our counterparties could adversely affect the ability of such counterparty to perform its obligations, which could consequently have a material adverse effect on our business, results of operations, or liquidity and, as a result, our business and operating results.
However, such reviews will not reveal all existing or potential problems. In addition, our reviews may not permit us to become sufficiently familiar with potential environmental problems or other contingent and unknown liabilities that may exist or arise. As a result, there may be unknown and contingent liabilities related to acquired businesses and assets of which we are unaware.
In addition, our reviews may not permit us to become sufficiently familiar with potential environmental problems or other contingent and unknown liabilities that may exist or arise. As a result, there may be unknown and contingent liabilities related to acquired businesses and assets of which we are unaware.
We cannot be certain that our net operating loss tax carryforwards will continue to be available to offset our tax liability. As of December 31, 2022, we estimated that we had approximately $1.2 billion of net operating loss (“NOL”) tax carryforwards. In order to utilize the NOLs, we must generate taxable income that can offset such carryforwards.
We cannot be certain that our net operating loss tax carryforwards will continue to be available to offset our tax liability. As of December 31, 2023, we estimated that we had approximately $0.9 billion of net operating loss (“NOL”) tax carryforwards. In order to utilize the NOLs, we must generate taxable income that can offset such carryforwards.
Such an action, or any similar actions, could result in an increase in the price we pay for crude oil, which may result in a decrease in the expected earnings and cash flows generated by our refining business. In addition, we purchase our refinery feedstocks before manufacturing and selling the refined products.
These actions could result in an increase in the price we pay for crude oil, which may result in a decrease in the expected earnings and cash flows generated by our refining business. In addition, we purchase our refinery feedstocks before manufacturing and selling the refined products.
We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all. Our liquidity is constrained by our need to satisfy our obligations under our debt agreements and the Intermediation Agreements.
We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all. Our liquidity is constrained by our need to satisfy our obligations under our debt agreements, the Supply and Offtake Agreement, and the LC Facility.
Our substantial level of indebtedness could have important consequences, including the following: • we must use a substantial portion of our cash flow from operations to pay interest and principal on our indebtedness and obligations under the Intermediation Agreements, which reduces funds available to us for other purposes, such as working capital, capital expenditures, other general corporate purposes, and potential acquisitions; • our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes may be impaired; • our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; • we may be more vulnerable to economic downturns and adverse developments in our business; and • we may be unable to comply with financial and other restrictive covenants in our debt agreements, some of which require us to maintain specified financial ratios and limit our ability to incur additional debt and sell assets, which could result in an event of default that, if not cured or waived, would have an adverse effect on our business and prospects and could result in bankruptcy.
As of December 31, 2023, we had $650.9 million of indebtedness and Interest expense and financing costs, net for the year ended December 31, 2023 was $72.5 million. 21 Our substantial level of indebtedness could have important consequences, including the following: • we must use a substantial portion of our cash flow from operations to pay interest and principal on our indebtedness and obligations under the Supply and Offtake Agreement and LC Facility, which reduces funds available to us for other purposes, such as working capital, capital expenditures, other general corporate purposes, and potential acquisitions; • our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes may be impaired; • our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; • we may be more vulnerable to economic downturns and adverse developments in our business; and • we may be unable to comply with financial and other restrictive covenants in our debt agreements, some of which require us to maintain specified financial ratios and limit our ability to incur additional debt and sell assets, which could result in an event of default that, if not cured or waived, would have an adverse effect on our business and prospects and could result in bankruptcy.
Any of these outcomes could have a material adverse effect on our business, results of operations, and financial condition. In connection with the WRC Acquisition, we will be required to undertake significant remediation and other corrective actions with respect to certain environmental matters.
Any of these outcomes could have a material adverse effect on our business, results of operations, and financial condition. We will be required to undertake significant environmental remediation and other corrective actions in connection with certain prior acquisitions.
Nevertheless, stricter regulation can be expected in the future and any of these or similar changes may have a material adverse impact on our business, results of operations, and financial condition.
Nevertheless, stricter regulation can be expected in the future and any of these or similar changes, or regulatory enforcement in connection with such requirements, may have a material adverse impact on our business, results of operations, and financial condition.
New regulations or changes in existing regulations could result in increased compliance expenditures. For example, in 2019 Washington enacted a law that limits crude oil by rail deliveries through a cap on off-loadings from existing facilities and new specifications regarding the vapor pressure of crude oils permitted to be shipped through the state.
For example, in 2019 Washington enacted a law that limits crude oil by rail deliveries through a cap on off-loadings from existing facilities and new specifications regarding the vapor pressure of crude oils permitted to be shipped through the state.
These restrictions, among other things, may limit our ability to: • pay dividends or distributions, repurchase equity, prepay junior debt, and make certain investments; • incur additional debt or issue certain disqualified stock and preferred stock; • sell or otherwise dispose of assets, including capital stock of subsidiaries; • incur liens on assets; • merge or consolidate with another company or sell all or substantially all assets; • enter into certain transactions with affiliates; and • enter into agreements that would restrict the ability of our subsidiaries to pay dividends or make other payments to the Issuers.
These restrictions, among other things, may limit our ability to: • pay dividends or distributions, repurchase equity, prepay junior debt, and make certain investments, loans, or acquisitions; • incur additional debt, make guarantees of debt, or issue certain disqualified stock and preferred stock; • sell or otherwise dispose of assets, including capital stock of subsidiaries; • incur liens; • enter into certain hedging transactions; • consummate fundamental changes, merge or consolidate with another company, sell all or substantially all assets, or alter the business; • enter into certain transactions with affiliates; and • enter into agreements that would restrict the ability of our subsidiaries to pay dividends or distributions.
As of December 31, 2022, we employed 1,397 people, 226 of whom are covered by collective bargaining agreements. At our Hawaii and Washington refineries, all 226 employees covered by collective bargaining agreements are represented by the USW with collective bargaining agreements effective through January 31, 2026.
As of December 31, 2023, we employed 1,814 people, 331 of whom are covered by collective bargaining agreements. At our Hawaii, Washington, and Montana refineries, all 331 employees covered by collective bargaining agreements are represented by the USW with collective bargaining agreements effective through January 31, 2026.
Upon termination of the Supply and Offtake Agreement, which terminates on May 31, 2024 unless extended by mutual agreement for an additional one year term, we are obligated to repurchase all crude oil and refined product inventories then owned by J. Aron and located at the specified storage facilities at then current market prices.
Upon termination of the Supply and Offtake Agreement, which terminates on May 31, 2024, we are obligated to repurchase all crude oil and refined product inventories then owned by J. Aron and located at the specified storage facilities at then current market prices.
A significant increase in prevailing interest rates that results in a substantial increase in the interest rates applicable to our indebtedness could substantially increase our interest expense and have a material adverse effect on our financial condition, results of operations, and cash flows.
Since 2022, interest rates have been significantly higher than in recent years and a significant increase in prevailing interest rates that results in a substantial increase in the interest rates applicable to our indebtedness could substantially increase our interest expense and have a material adverse effect on our financial condition, results of operations, and cash flows.
While it is difficult to predict the impact these sanctions will ultimately have on Par Pacific, any further sanctions imposed or actions taken by the U.S. or other countries, and any retaliatory measures by Russia in response, such as restrictions on energy supplies from Russia, may increase our costs, reduce our sales and earnings, or otherwise have an adverse effect on our operations.
Any further sanctions imposed or actions taken by the U.S. or other countries, and any retaliatory measures by Russia in response, such as restrictions on energy supplies from Russia, may increase our costs, reduce our sales and earnings, or otherwise have an adverse effect on our operations.
If we determine that an other-than-temporary impairment is indicated, we would be required to recognize a non-cash charge to earnings with a correlative effect on equity and balance sheet leverage as measured by debt to total capitalization.
If we determine that an other-than-temporary impairment is indicated, we would be required to recognize a non-cash charge to earnings with a correlative effect on equity and balance sheet leverage as measured by debt to total capitalization. Any impairment charges could have a negative impact on the price of our common stock.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock, or if our operating results do not meet their expectations, our stock price could decline.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock, or if our operating results do not meet their expectations, our stock price could decline. 24 The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business.
This repurchase obligation could have a material adverse effect on our business, results of operations, or financial condition. Our agreement with J. Aron also requires us to pay substantial interest expense associated with the facility. Given recent increases in crude oil prices and interest rates, the cost of this facility has significantly increased.
This repurchase obligation could have a material adverse effect on our business, results of operations, or financial condition. Our agreement with J. Aron also requires us to pay substantial interest expense associated with the facility, which will increase in a rising crude oil price and interest rate environment.
Additionally, Russia’s invasion of Ukraine and the international response to the conflict may exacerbate inflationary pressures, including with respect to commodity prices and energy costs. Rapid and significant changes in commodity costs may increase the cost of our crude oil feedstocks and affect the demand for our products.
Additionally, conflicts like Russia’s invasion of Ukraine and recent attacks on shipping in the Red Sea may exacerbate inflationary pressures, including with respect to commodity prices and energy costs, and disrupt global supply chains. Rapid and significant changes in commodity costs may increase the cost of our crude oil feedstocks and affect the demand for our products.
Our inability to successfully identify, execute, or effectively integrate future acquisitions may negatively affect our results of operations. 26 Acquisitions may prove to be worth less than we paid because of uncertainties in evaluating potential liabilities.
Our inability to successfully identify, execute, or effectively integrate future acquisitions may negatively affect our results of operations. 23 Acquisitions may prove to be worth less than we paid because of uncertainties in evaluating potential liabilities. Our recent growth is due in large part to acquisitions, such as the acquisitions of our Montana refining business.
The market price for our common stock has varied between a high of $24.96 on November 22, 2022, and a low of $11.82 on March 16, 2022, during the year ended December 31, 2022. This volatility may affect the price at which you could sell your common stock.
The market price for our common stock has varied between a high of $37.02 on August 11, 2023, and a low of $20.66 on May 5, 2023 , during the year ended December 31, 2023. This volatility may affect the price at which you could sell your common stock.
To the extent that these information systems are under our control, we have implemented measures, such as virus protection software and intrusion detection systems, to address the outlined risks. However, security measures for information systems cannot be guaranteed to be failsafe.
To the extent that these information systems are under our control, we have implemented cybersecurity policies designed to address these risks. However, security measures for information systems cannot be guaranteed to be failsafe.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly and otherwise impact our ability to incur indebtedness for acquisitions and working capital needs. We are subject to interest rate risk in connection with borrowings under certain of our debt agreements as well as our J.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly and otherwise impact our ability to incur indebtedness for acquisitions and working capital needs.
We may issue preferred stock with terms that could adversely affect the voting power or value of our common stock and any future issuances of our common stock may reduce our stock price.
This level of ownership of shares of our common stock could have the effect of discouraging or impeding an unsolicited acquisition proposal. 25 We may issue preferred stock with terms that could adversely affect the voting power or value of our common stock and any future issuances of our common stock may reduce our stock price.
The occurrence of an event that is not fully covered by insurance or failure by one or more insurers to honor its coverage commitments for an insured event could have a material adverse effect on our business, financial condition, and results of operations.
The occurrence of an event that is not fully covered by insurance or failure by one or more insurers to honor its coverage commitments for an insured event could have a material adverse effect on our business, financial condition, and results of operations. 14 We are subject to interruptions of supply and increased costs as a result of our reliance on third-party transportation of crude oil and refined products to and from our refineries.
The financial and operating results of our refineries, including the products they refine and sell, can be seasonal. Demand for gasoline in the Rockies and Northwest United States is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic.
Demand for gasoline in the Rockies and Northwest United States is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic.
Compliance with and changes in tax laws could materially and adversely affect our financial condition, results of operations and cash flows. We are subject to extensive tax liabilities imposed by multiple jurisdictions including, without limitation, income taxes, indirect taxes (excise/duty, sales/use, gross receipts, GHG emissions), payroll taxes, franchise taxes, withholding taxes, and ad valorem taxes.
We are subject to extensive tax liabilities imposed by multiple jurisdictions including, without limitation, income taxes, indirect taxes (excise/duty, sales/use, gross receipts, GHG emissions), payroll taxes, franchise taxes, withholding taxes, and ad valorem taxes.
We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs.
We expect to incur these costs over a 20 to 30 year period. We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs.
Through our investment in Laramie Energy, we are subject to all of the risks of natural gas and oil exploration and production, but we lack the ability to control Laramie Energy’s operations and our ability to extract value is limited.
Additionally, if we are named in litigation related to climate change, costs or other impacts resulting from such litigation could be material. 15 Through our investment in Laramie Energy, we are subject to all of the risks of natural gas and oil exploration and production, but we lack the ability to control Laramie Energy’s operations and our ability to extract value is limited.
In addition to environmental risks, we could experience an interruption of supply or an increased cost to deliver refined products to market if such transportation is disrupted because of adverse weather, accidents, governmental regulation or sanctions, or third-party action. A prolonged disruption could have a material adverse effect on our business, financial condition, and results of operations.
Our refineries receive and transport crude oil and refined products via tankers, barges, pipelines, and railcars. In addition to environmental risks, we could experience an interruption of supply or an increased cost to deliver refined products to market if such transportation is disrupted because of adverse weather, accidents, governmental regulation or sanctions, or third-party action.
Additionally, tax rates or tax interpretations in the various jurisdictions in which we operate may change significantly as a result of political or economic factors beyond our control. BUSINESS RISKS The locations of our refineries and related assets in certain limited geographic areas create an exposure to localized economic risks.
Additionally, tax rates or tax interpretations in the various jurisdictions in which we operate may change significantly as a result of political or economic factors beyond our control.
Aron Supply and Offtake Agreement and MLC Washington Refinery Intermediation Agreement, which bear interest at variable rates. Interest rate changes will not affect the market value of indebtedness incurred under such debt agreements, but could affect the amount of our interest payments and, accordingly, our future earnings and cash flows, assuming other factors are held constant.
Interest rate changes will not affect the market value of indebtedness incurred under such debt agreements, but could affect the amount of our interest payments and, accordingly, our future earnings and cash flows, assuming other factors are held constant. Increases in interest rates could also impact our ability to incur indebtedness to fund acquisitions and working capital needs.
Successful acquisitions require an assessment of a number of factors, including estimates of potential unknown and contingent liabilities. Such assessments are inexact and their accuracy is inherently uncertain. In connection with our assessments, we perform due diligence reviews of acquired businesses and assets that we believe are generally consistent with industry practices.
We expect acquisitions to be instrumental to our future growth. Successful acquisitions require an assessment of a number of factors, including estimates of potential unknown and contingent liabilities. Such assessments are inexact and their accuracy is inherently uncertain.
Increased competition from these alternatives as a result of 23 governmental regulations, technological advances, and consumer demand could have an impact on pricing and demand for our products and our profitability.
Increased competition from these alternatives as a result of governmental regulations, technological advances, and consumer demand could have an impact on pricing and demand for our products and our profitability. 20 If we are unable to obtain crude oil supplies for our refineries without the benefit of our Supply and Offtake Agreement, LC Facility, and ABL Credit Facility, the capital required to finance our crude oil supply could negatively impact our liquidity.
A RIN is assigned to each gallon of renewable fuel produced in or imported into the U.S. As a producer of petroleum-based transportation fuels, we are obligated to blend renewable fuels into the petroleum fuels we produce and sell 19 in the U.S.
As a producer of petroleum-based transportation fuels, we are obligated to blend renewable fuels into the petroleum fuels we produce and sell in the U.S. To the extent we do not, we are required to purchase RINs in the market to satisfy our obligations under the RFS program.
Renewable fuels mandates and other mandates may reduce demand for the petroleum fuels we produce, which could have a material adverse effect on our business results of operations and financial condition. The RFS program sets annual quotas for the quantity of renewable fuels that must be blended into transportation fuels consumed in the U.S.
Finally, federal and state regulations requiring additional GHG-related disclosures could significantly increase our regulatory compliance costs. Renewable fuels mandates and other mandates may reduce demand for the petroleum fuels we produce, which could have a material adverse effect on our business results of operations and financial condition.
If we are unable to obtain crude oil supplies for our refineries without the benefit of certain intermediation agreements, the capital required to finance our crude oil supply could negatively impact our liquidity. All of the crude oil delivered at our Hawaii refinery is subject to our Supply and Offtake Agreement with J.
All of the crude oil delivered at our Hawaii refinery is subject to our Supply and Offtake Agreement with J. Aron and certain crude deliveries at our Hawaii refinery are subject to the LC Facility. Deliveries of crude oil at our other refineries are subject to the ABL Credit Facility.
Blackrock, Inc., together with its affiliates, owned or had the right to acquire as of December 31, 2022 approximately 13.4% of our outstanding common stock. This level of ownership of shares of our common stock could have the effect of discouraging or impeding an unsolicited acquisition proposal.
As of January 23, 2024, Blackrock, Inc., together with its affiliates, owned or had the right to acquire approximately 14.3% of our outstanding common stock.
Removed
For example, the COVID-19 pandemic resulted in significant demand reduction for crude oil and refined products, particularly in the Hawaii market, and abnormal volatility in oil commodity prices. Additionally, the Alberta government has mandated crude oil production cuts in a region where our Washington refinery sources crude oil.
Added
The U.S. and other countries have imposed additional sanctions as the conflict has escalated.
Removed
Our business, financial condition, results of operations, and liquidity have been adversely affected by the ongoing COVID-19 pandemic that has caused, and is expected to continue to cause, the global slowdown of economic activity (including the decrease in demand for crude oil and the refined products that we produce and sell), disruptions in global 16 supply chains, and significant volatility and disruption of financial markets and that also has adversely affected workforces, customers, and regional and local economies.
Added
A prolonged disruption could have a material adverse effect on our business, financial condition, and results of operations. The financial and operating results of our refineries, including the products they refine and sell, can be seasonal.
Removed
Because the severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing, and difficult to predict, the impact on our business, results of operations, financial condition, and liquidity remains uncertain and difficult to predict.
Added
Climate change may increase the frequency and severity of weather events that could result in severe personal injury, property damage, and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flows.
Removed
The ultimate impact of the COVID-19 pandemic on our results of operations and financial condition continues to be uncertain and depends on numerous factors that continue to evolve, many of which are not within our control, and which we may not be able to effectively respond to, including, but not limited to: governmental, business, and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transport, workforce pressures and social distancing, and stay-at-home orders); the effect of the pandemic on economic activity and actions taken in response; the effect on our customers and their demand for our products; the effect of the pandemic on the creditworthiness of our customers; national or global supply chain challenges or disruption; workforce availability; facility closures; commodity cost volatility; general economic uncertainty in key global markets and financial market volatility and ability to access capital markets; global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides, as well as response to a potential reoccurrence.
Added
Some scientists have concluded that increasing concentrations of GHG in Earth’s atmosphere may produce climate changes that have significant weather-related effects, such as increased frequency and severity of storms, droughts, floods, and other climatic events.
Removed
Further, the COVID-19 pandemic, and the volatile regional and global economic conditions stemming from the pandemic, could also precipitate or aggravate the other risk factors that we identify in this Annual Report on Form 10-K, which could materially adversely affect our business, financial condition, results of operations (including revenues and profitability), and liquidity and/or stock price.
Added
If any of those effects were to occur, they could have an adverse effect on our operations, including damages to our refineries, retail locations, logistics assets or other properties from powerful wind or rising waters. We may experience increased insurance costs, or difficulty obtaining adequate insurance coverage, for our assets in areas subject to more frequent severe weather.
Removed
Additionally, COVID-19 may also continue to affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations.
Added
We may not be able to recoup these increased costs through the cash generated by our business. Extreme weather events could cause damage to property or facilities that could exceed our insurance coverage and our business, financial condition, and results of operations could be adversely affected.
Removed
The U.S. and other countries may impose wider sanctions and take stronger actions should the conflict further escalate.
Added
The RFS program sets annual quotas for the quantity of renewable fuels that must be blended into transportation fuels consumed in the U.S. A RIN is assigned to each gallon of renewable fuel produced in or imported into the U.S.
Removed
We are subject to interruptions of supply and increased costs as a result of our reliance on third-party transportation of crude oil and refined products to and from our refineries. Our refineries receive and transport crude oil and refined products via tankers, barges, pipelines, and railcars.
Added
For more information, please read Note 18—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K . Regulatory and other requirements concerning the transportation of crude oil and other commodities by rail may cause increases in transportation costs or limit the amount of crude oil that we can transport by rail.
Removed
Additionally, the ability of Laramie Energy to make distributions to its owners, including us, is currently prohibited by the terms of Laramie Energy’s credit facility and the terms of its limited liability company agreement.
Added
We also assumed certain environmental liabilities associated with the Billings Acquisition, including costs related to hazardous waste corrective measures, and ground and surface water sampling and monitoring. Based on current information, reasonable estimates we have received suggest the aggregate amount of these liabilities to be approximately $18.9 million.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDuring the year ended December 31, 2020, we discontinued the application of the equity method of accounting for our investment in Laramie Energy. As of December 31, 2022, the balance of our investment in Laramie Energy on our consolidated balance sheets was zero. Other We also own certain immaterial minority interests in wells located in Colorado.
Biggest changeDuring the year ended December 31, 2023, we resumed the application of the equity method of accounting for our investment in Laramie Energy. As of December 31, 2023, the balance of our investment in Laramie Energy on our consolidated balance sheets was $14.3 million. Other We also own certain immaterial minority interests in wells located in Colorado.
We believe that these properties and facilities are adequate for our operations and are maintained in a good state of repair. 30 Natural Gas and Oil Properties Laramie Energy All of the assets held by Laramie Energy are located in Garfield, Mesa, and Rio Blanco counties, Colorado.
We believe that these properties and facilities are adequate for our operations and are maintained in a good state of repair. Natural Gas and Oil Properties Laramie Energy All of the assets held by Laramie Energy are located in Garfield, Mesa, and Rio Blanco counties, Colorado.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of the date of this Annual Report on Form 10-K, no legal proceedings are pending against us that we believe individually or collectively could have a materially adverse effect upon our financial condition, results of operations, or cash flows.
Biggest changeExcept as described in Note 18—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K, as of the date of this Annual Report on Form 10-K, no legal proceedings are pending against us that we believe individually or collectively could have a materially adverse effect upon our financial condition, results of operations, or cash flows.
MINE SAFETY DISCLOSURES Not applicable. 31 PART II
Item 4. MINE SAFETY DISCLOSURES Not applicable. 27 PART II
Removed
Any litigation pending at the time we emerged from Chapter 11 was transferred to the General Trust for resolution and settlement. For more information, please read “Item 1. — Business—Bankruptcy and Plan of Reorganization – General Recovery Trust” and Note 17—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K . Item 4.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. MINE SAFETY DISCLOSURES 31 PART II Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 32 Item 6. [RESERVED] 34 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 35 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 63 Item 8.
Biggest changeItem 4. MINE SAFETY DISCLOSURES 27 PART II Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 28 Item 6. [RESERVED] 29 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 30 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 58 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−3 removed2 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended December 31, 2022: Period Total number of shares (or units) purchased (1) Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs (1) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (1) October 1 - October 31, 2022 35 $ 14.91 — $ 43,454,006 November 1 - November 30, 2022 — — — 43,454,006 December 1 - December 31, 2022 122 22.26 — 43,454,006 Total 157 $ 20.62 — $ 43,454,006 ________________________________________________ (1) Shares repurchased not associated with the share repurchase program were surrendered by employees to pay taxes withheld upon the vesting of restricted stock awards.
Biggest changeCompany Purchases of Equity Securities The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended December 31, 2023: Period Total number of shares (or units) purchased (1) Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs (1) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (1) October 1 - October 31, 2023 230,236 $ 32.69 229.263 $ 206,060,840 November 1 - November 30, 2023 438,141 33.46 438,141 191,400,332 December 1 - December 31, 2023 284,379 33.66 284,261 181,831,998 Total 952,756 $ 33.33 951,665 $ 181,831,998 ________________________________________________ (1) On November 10, 2021, the Board authorized and approved a share repurchase program for up to $50 million of the currently outstanding shares of the Company’s common stock, with no specified end date.
The following line graph compares the cumulative total return on an investment in our common stock against the cumulative total return of the S&P 500 Composite Index and an index of peer companies (that we selected) for the five fiscal years ended December 31, 2022.
The following line graph compares the cumulative total return on an investment in our common stock against the cumulative total return of the S&P 500 Composite Index and an index of peer companies (that we selected) for the five fiscal years ended December 31, 2023.
Recent Sales of Unregistered Securities During the year ended December 31, 2022, we did not have any sales of securities in transactions that were not registered under the Securities Act that have not been reported on Form 8-K or Form 10-Q.
Recent Sales of Unregistered Securities During the year ended December 31, 2023, we did not ha ve any sales of securities in transactions that were not registered under the Securities Act that have not been reported on Form 8-K or Form 10-Q.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information On February 20, 2018, our common stock began trading on the NYSE under the symbol “PARR.” Prior to that date, our common stock was traded on the NYSE American under the symbol “PARR.” As of February 21, 2023, there were 122 common stockholders of record.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND COMPANY PURCHASES OF EQUITY SECURITIES Market Information On February 20, 2018, our common stock began trading on the NYSE under the symbol “PARR.” Prior to that date, our common stock was traded on the NYSE American under the symbol “PARR.” As of February 22, 2024, there were 133 common stockholders of record.
On February 21, 2023, the closing price of our common stock was $26.50 per share on the NYSE. Dividends We have not paid dividends on our common stock and we do not expect to do so in the foreseeable future.
On February 22, 2024, the closing price of our common stock was $38.40 per share on the NYSE. Dividends We have not paid dividends on our common stock and we do not expect to do so in the foreseeable future.
The performance graph of our peer group is weighted by market value at the beginning of the period and our peer group consists of the following companies: Calumet Specialty Products Partners, L.P., Casey’s General Stores, Inc., Crestwood Equity Partners, L.P., Crossamerica Partners, L.P., CVR Energy, Inc., Darling Ingredients Inc., Delek US Holdings, Inc., Green Plains Inc., HF Sinclair Corp, Nustar Energy, L.P., Parkland Corp, PBF Energy, Inc., Stepan Company, Sunoco, L.P., Tronox Holdings, PLC, and Vertex, Inc.
The performance graph of our peer group is weighted by market value at the beginning of the period and our peer group consists of the following companies: Calumet Specialty Products Partners, L.P., Casey’s General Stores, Inc., Crossamerica Partners, L.P., CVR Energy, Inc., Darling Ingredients Inc., Delek US Holdings, Inc., Green Plains Inc., HF Sinclair Corp, Nustar Energy, L.P., Parkland Corp, PBF Energy, Inc., Stepan Company, Sunoco, L.P., Tronox Holdings, PLC, and Vertex Energy, Inc. 28 *$100 invested on December 31, 2018 in stock or index, including reinvestment of dividends.
On November 10, 2021, the Board authorized and approved a share repurchase program for up to $50 million of the currently outstanding shares of the Company’s common stock, with no specified end date. Please read Note 18—Stockholders’ Equity to our consolidated financial statements under Item 8 of this Form 10-K for further information. 33
Shares repurchased that were not associated with the share repurchase program were surrendered by employees to pay taxes withheld upon the vesting of restricted stock awards. Please read Note 19—Stockholders’ Equity to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Removed
We changed our industry index comparison to better reflect the our growing refining portfolio and to include companies that better reflect our strategic direction.
Added
On August 2, 2023, the Board approved expanding the Company’s share repurchase authorization from $50 million to $250 million. During the year ended December 31, 2023, 1,841 thousand shares were repurchased under this share repurchase program for a total of $62.1 million.
Removed
Our previous industry peer group consisted of: Alto Ingredients, Inc., Calumet Specialty Products Partners, L.P., Casey’s General Stores, Inc., CVR Energy, Inc., Darling Ingredients Inc., Delek US Holdings, Inc., FutureFuel Corp., Green Plains Inc., Macquarie Infrastructure Holdings, LLC, Methanex Corporation, Renewable Energy Group, Inc., REX American Resources Corporation, Stepan Company, and Westlake Chemical Corporation.
Removed
We believe our peer group, which is made up of oil and gas refining and marketing companies, retailers, and companies that are generally similar to our operating segments, provides for meaningful comparability to our business as a whole. 32 *$100 invested on December 31, 2017 in stock or index, including reinvestment of dividends.

Item 7. Management's Discussion & Analysis

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

117 edited+58 added−69 removed61 unchanged
Biggest changeFor purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands). 49 As of December 31, 2022 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 2,547 $ 488,350 $ 28 $ 490,925 Restricted cash 331 3,670 — 4,001 Trade accounts receivable — 252,816 69 252,885 Inventories — 1,041,983 — 1,041,983 Prepaid and other current assets 2,229 89,883 (69) 92,043 Due from related parties 229,431 — (229,431) — Total current assets 234,538 1,876,702 (229,403) 1,881,837 Property, plant, and equipment Property, plant, and equipment 19,865 1,200,747 3,955 1,224,567 Less accumulated depreciation and amortization (14,967) (370,643) (3,123) (388,733) Property, plant, and equipment, net 4,898 830,104 832 835,834 Long-term assets Operating lease right-of-use (“ROU”) assets 2,649 348,112 — 350,761 Investment in subsidiaries 487,943 — (487,943) — Intangible assets, net — 13,577 — 13,577 Goodwill — 126,727 2,598 129,325 Other long-term assets 723 72,721 (4,131) 69,313 Total assets $ 730,751 $ 3,267,943 $ (718,047) $ 3,280,647 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 10,956 $ — $ 10,956 Obligations under inventory financing agreements — 893,065 — 893,065 Accounts payable 4,176 147,219 — 151,395 Accrued taxes 47 32,052 — 32,099 Operating lease liabilities 787 65,294 — 66,081 Other accrued liabilities 511 639,396 587 640,494 Due to related parties 77,420 118,139 (195,559) — Total current liabilities 82,941 1,906,121 (194,972) 1,794,090 Long-term liabilities Long-term debt, net of current maturities — 494,576 — 494,576 Finance lease liabilities — 10,710 (4,399) 6,311 Operating lease liabilities 3,273 289,428 — 292,701 Other liabilities — 46,922 1,510 48,432 Total liabilities 86,214 2,747,757 (197,861) 2,636,110 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 604 — — 604 Additional paid-in capital 836,491 409,686 (409,686) 836,491 Accumulated earnings (deficit) (200,687) 104,479 (104,479) (200,687) Accumulated other comprehensive income (loss) 8,129 6,021 (6,021) 8,129 Total stockholders’ equity 644,537 520,186 (520,186) 644,537 Total liabilities and stockholders’ equity $ 730,751 $ 3,267,943 $ (718,047) $ 3,280,647 50 As of December 31, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 4,086 $ 108,105 $ 30 $ 112,221 Restricted cash 330 3,670 — 4,000 Trade accounts receivable — 195,104 4 195,108 Inventories — 790,317 — 790,317 Prepaid and other current assets 15,664 12,864 (3) 28,525 Due from related parties 94,676 — (94,676) — Total current assets 114,756 1,110,060 (94,645) 1,130,171 Property, plant, and equipment Property, plant, and equipment 19,535 1,156,906 3,956 1,180,397 Less accumulated depreciation and amortization (13,869) (307,091) (2,932) (323,892) Property, plant, and equipment, net 5,666 849,815 1,024 856,505 Long-term assets Operating lease right-of-use (“ROU”) assets 3,280 380,544 — 383,824 Investment in subsidiaries 207,483 — (207,483) — Intangible assets, net — 16,234 — 16,234 Goodwill — 124,664 2,598 127,262 Other long-term assets 724 57,382 (1,851) 56,255 Total assets $ 331,909 $ 2,538,699 $ (300,357) $ 2,570,251 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 10,841 $ — $ 10,841 Obligations under inventory financing agreements — 737,704 — 737,704 Accounts payable 1,386 151,676 1,481 154,543 Accrued taxes 48 28,593 — 28,641 Operating lease liabilities 608 53,032 — 53,640 Other accrued liabilities 9,805 360,246 373 370,424 Due to related parties 50,195 10,261 (60,456) — Total current liabilities 62,042 1,352,353 (58,602) 1,355,793 Long-term liabilities Long-term debt, net of current maturities — 553,717 — 553,717 Finance lease liabilities 17 12,192 (4,518) 7,691 Operating lease liabilities 4,150 330,944 — 335,094 Other liabilities — 63,098 (10,842) 52,256 Total liabilities 66,209 2,312,304 (73,962) 2,304,551 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 602 — — 602 Additional paid-in capital 821,713 409,686 (409,686) 821,713 Accumulated earnings (deficit) (559,117) (185,096) 185,096 (559,117) Accumulated other comprehensive income (loss) 2,502 1,805 (1,805) 2,502 Total stockholders’ equity 265,700 226,395 (226,395) 265,700 Total liabilities and stockholders’ equity $ 331,909 $ 2,538,699 $ (300,357) $ 2,570,251 51 Year Ended December 31, 2022 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 7,321,656 $ 129 $ 7,321,785 Operating expenses Cost of revenues (excluding depreciation) — 6,377,494 (1,480) 6,376,014 Operating expense (excluding depreciation) — 342,209 — 342,209 Depreciation and amortization 2,131 97,448 190 99,769 Loss (gain) on sale of assets, net 27 (196) — (169) General and administrative expense (excluding depreciation) 17,882 44,514 — 62,396 Acquisition and integration costs 3,396 267 — 3,663 Total operating expenses 23,436 6,861,736 (1,290) 6,883,882 Operating income (loss) (23,436) 459,920 1,419 437,903 Other income (expense) Interest expense and financing costs, net (1) (68,655) 368 (68,288) Debt extinguishment and commitment costs — (5,329) — (5,329) Other income (expense), net (20) 634 (1) 613 Equity earnings (losses) from subsidiaries 388,008 — (388,008) — Total other income (expense), net 387,987 (73,350) (387,641) (73,004) Income (loss) before income taxes 364,551 386,570 (386,222) 364,899 Income tax benefit (expense) (1) (362) (96,995) 96,647 (710) Net income (loss) $ 364,189 $ 289,575 $ (289,575) $ 364,189 Adjusted EBITDA $ (17,551) $ 659,378 $ 1,608 $ 643,435 52 Year Ended December 31, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 4,710,039 $ 50 $ 4,710,089 Operating expenses Cost of revenues (excluding depreciation) — 4,338,474 — 4,338,474 Operating expense (excluding depreciation) — 300,386 (717) 299,669 Depreciation and amortization 2,452 91,550 239 94,241 Impairment expense — 1,838 — 1,838 Loss (gain) on sale of assets, net 15 (10,949) (53,763) (64,697) General and administrative expense (excluding depreciation) 12,435 35,661 — 48,096 Acquisition and integration costs 87 — — 87 Total operating expenses 14,989 4,756,960 (54,241) 4,717,708 Operating income (loss) (14,989) (46,921) 54,291 (7,619) Other income (expense) Interest expense and financing costs, net (2,600) (64,209) 316 (66,493) Debt extinguishment and commitment costs — (6,728) (1,416) (8,144) Gain on curtailment of pension obligation — 2,032 — 2,032 Other income (expense), net (33) (19) — (52) Equity earnings (losses) from subsidiaries (63,649) — 63,649 — Total other income (expense), net (66,282) (68,924) 62,549 (72,657) Income (loss) before income taxes (81,271) (115,845) 116,840 (80,276) Income tax benefit (expense) (1) (26) 24,835 (25,830) (1,021) Net income (loss) $ (81,297) $ (91,010) $ 91,010 $ (81,297) Adjusted EBITDA $ (12,468) $ 137,323 $ 767 $ 125,622 53 Year Ended December 31, 2020 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 3,124,870 $ — $ 3,124,870 Operating expenses Cost of revenues (excluding depreciation) — 2,947,697 — 2,947,697 Operating expense (excluding depreciation) — 282,159 (4,732) 277,427 Depreciation and amortization 2,900 86,622 514 90,036 Impairment expense — 85,806 — 85,806 General and administrative expense (excluding depreciation) 11,097 30,191 — 41,288 Acquisition and integration costs — 614 — 614 Total operating expenses 13,997 3,433,089 (4,218) 3,442,868 Operating income (loss) (13,997) (308,219) 4,218 (317,998) Other income (expense) Interest expense and financing costs, net (4,982) (61,856) (3,384) (70,222) Other income (expense), net (3) 1,052 — 1,049 Change in value of common stock warrants 4,270 — — 4,270 Equity earnings (losses) from subsidiaries (394,197) — 394,197 — Equity losses from Laramie Energy, LLC — — (46,905) (46,905) Total other income (expense), net (394,912) (60,804) 343,908 (111,808) Income (loss) before income taxes (408,909) (369,023) 348,126 (429,806) Income tax benefit (expense) (1) (177) 80,914 (60,017) 20,720 Net income (loss) $ (409,086) $ (288,109) $ 288,109 $ (409,086) Adjusted EBITDA $ (10,943) $ (46,871) $ 4,732 $ (53,082) ________________________________________________________ (1) The income tax benefit (expense) of the Parent Guarantor and Issuer and Subsidiaries is determined using the separate return method.
Biggest changeAs of December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 10,369 $ 268,711 $ 27 $ 279,107 Restricted cash 339 — — 339 Trade accounts receivable — 367,249 — 367,249 Inventories — 1,160,395 — 1,160,395 Prepaid and other current assets 4,767 177,638 — 182,405 Due from related parties 380,159 — (380,159) — Total current assets 395,634 1,973,993 (380,132) 1,989,495 Property, plant, and equipment Property, plant, and equipment 21,350 1,552,496 3,955 1,577,801 Less accumulated depreciation and amortization (16,487) (458,616) (3,310) (478,413) Property, plant, and equipment, net 4,863 1,093,880 645 1,099,388 Long-term assets Operating lease right-of-use (“ROU”) assets 7,005 339,449 — 346,454 Refining and logistics equity investments — — 87,486 87,486 Investment in Laramie Energy, LLC — — 14,279 14,279 Investment in subsidiaries 1,070,518 — (1,070,518) — Intangible assets, net — 10,918 — 10,918 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 65,323 120,606 186,655 Total assets $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,255 $ — $ 4,255 Obligations under inventory financing agreements — 594,362 — 594,362 Accounts payable 4,991 386,334 — 391,325 Accrued taxes — 40,064 — 40,064 Operating lease liabilities — 72,833 — 72,833 Other accrued liabilities 947 415,468 5,347 421,762 Due to related parties 128,922 232,803 (361,725) — Total current liabilities 134,860 1,746,119 (356,378) 1,524,601 Long-term liabilities Long-term debt, net of current maturities — 646,603 — 646,603 Finance lease liabilities — 16,693 (4,255) 12,438 Operating lease liabilities 8,462 274,055 — 282,517 Other liabilities — 119,618 (57,251) 62,367 Total liabilities 143,322 2,803,088 (417,884) 2,528,526 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 597 — — 597 Additional paid-in capital 860,797 242,505 (242,505) 860,797 Accumulated earnings (deficit) 465,856 558,581 (558,581) 465,856 Accumulated other comprehensive income (loss) 8,174 6,067 (6,067) 8,174 Total stockholders’ equity 1,335,424 807,153 (807,153) 1,335,424 Total liabilities and stockholders’ equity $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 45 As of December 31, 2022 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 2,547 $ 488,350 $ 28 $ 490,925 Restricted cash 331 3,670 — 4,001 Trade accounts receivable — 252,816 69 252,885 Inventories — 1,041,983 — 1,041,983 Prepaid and other current assets 2,229 89,883 (69) 92,043 Due from related parties 229,431 — (229,431) — Total current assets 234,538 1,876,702 (229,403) 1,881,837 Property, plant, and equipment Property, plant, and equipment 19,865 1,200,747 3,955 1,224,567 Less accumulated depreciation and amortization (14,967) (370,643) (3,123) (388,733) Property, plant, and equipment, net 4,898 830,104 832 835,834 Long-term assets Operating lease right-of-use (“ROU”) assets 2,649 348,112 — 350,761 Investment in subsidiaries 487,943 — (487,943) — Intangible assets, net — 13,577 — 13,577 Goodwill — 126,727 2,598 129,325 Other long-term assets 723 72,721 (4,131) 69,313 Total assets $ 730,751 $ 3,267,943 $ (718,047) $ 3,280,647 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 10,956 $ — $ 10,956 Obligations under inventory financing agreements — 893,065 — 893,065 Accounts payable 4,176 147,219 — 151,395 Accrued taxes 47 32,052 — 32,099 Operating lease liabilities 787 65,294 — 66,081 Other accrued liabilities 511 639,396 587 640,494 Due to related parties 77,420 118,139 (195,559) — Total current liabilities 82,941 1,906,121 (194,972) 1,794,090 Long-term liabilities Long-term debt, net of current maturities — 494,576 — 494,576 Finance lease liabilities — 10,710 (4,399) 6,311 Operating lease liabilities 3,273 289,428 — 292,701 Other liabilities — 46,922 1,510 48,432 Total liabilities 86,214 2,747,757 (197,861) 2,636,110 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 604 — — 604 Additional paid-in capital 836,491 409,686 (409,686) 836,491 Accumulated earnings (deficit) (200,687) 104,479 (104,479) (200,687) Accumulated other comprehensive income (loss) 8,129 6,021 (6,021) 8,129 Total stockholders’ equity 644,537 520,186 (520,186) 644,537 Total liabilities and stockholders’ equity $ 730,751 $ 3,267,943 $ (718,047) $ 3,280,647 46 Year Ended December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 8,231,886 $ 69 $ 8,231,955 Operating expenses Cost of revenues (excluding depreciation) — 6,838,109 — 6,838,109 Operating expense (excluding depreciation) — 485,587 — 485,587 Depreciation and amortization 1,618 118,024 188 119,830 General and administrative expense (excluding depreciation) 29,258 62,189 — 91,447 Equity earnings from refining and logistics investments — — (11,844) (11,844) Acquisition and integration costs — 17,482 — 17,482 Par West redevelopment and other costs — 11,397 — 11,397 Loss (gain) on sale of assets, net 30 (89) — (59) Total operating expenses 30,906 7,532,699 (11,656) 7,551,949 Operating income (loss) (30,906) 699,187 11,725 680,006 Other income (expense) Interest expense and financing costs, net (24) (72,789) 363 (72,450) Debt extinguishment and commitment costs — (19,182) — (19,182) Other income (expense), net 44 (97) — (53) Equity earnings (losses) from subsidiaries 759,528 — (759,528) — Equity earnings from Laramie Energy, LLC — — 24,985 24,985 Total other income (expense), net 759,548 (92,068) (734,180) (66,700) Income (loss) before income taxes 728,642 607,119 (722,455) 613,306 Income tax benefit (expense) (1) — (153,017) 268,353 115,336 Net income (loss) $ 728,642 $ 454,102 $ (454,102) $ 728,642 Adjusted EBITDA $ (28,722) $ 709,613 $ 15,356 $ 696,247 47 Year Ended December 31, 2022 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 7,321,656 $ 129 $ 7,321,785 Operating expenses Cost of revenues (excluding depreciation) — 6,377,494 (1,480) 6,376,014 Operating expense (excluding depreciation) — 333,206 — 333,206 Depreciation and amortization 2,131 97,448 190 99,769 General and administrative expense (excluding depreciation) 17,882 44,514 — 62,396 Acquisition and integration costs 3,396 267 — 3,663 Par West redevelopment and other costs — 9,003 — 9,003 Loss (gain) on sale of assets, net 27 (196) — (169) Total operating expenses 23,436 6,861,736 (1,290) 6,883,882 Operating income (loss) (23,436) 459,920 1,419 437,903 Other income (expense) Interest expense and financing costs, net (1) (68,655) 368 (68,288) Debt extinguishment and commitment costs — (5,329) — (5,329) Other income (expense), net (20) 634 (1) 613 Equity earnings (losses) from subsidiaries 388,008 — (388,008) — Total other income (expense), net 387,987 (73,350) (387,641) (73,004) Income (loss) before income taxes 364,551 386,570 (386,222) 364,899 Income tax benefit (expense) (1) (362) (96,995) 96,647 (710) Net income (loss) $ 364,189 $ 289,575 $ (289,575) $ 364,189 Adjusted EBITDA $ (17,551) $ 659,378 $ 1,608 $ 643,435 48 Year Ended December 31, 2021 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 4,710,039 $ 50 $ 4,710,089 Operating expenses Cost of revenues (excluding depreciation) — 4,338,474 — 4,338,474 Operating expense (excluding depreciation) — 290,795 (717) 290,078 Depreciation and amortization 2,452 91,550 239 94,241 Impairment expense — 1,838 — 1,838 General and administrative expense (excluding depreciation) 12,435 35,661 — 48,096 Acquisition and integration costs 87 — — 87 Par West redevelopment and other costs — 9,591 — 9,591 Loss (gain) on sale of assets, net 15 (10,949) (53,763) (64,697) Total operating expenses 14,989 4,756,960 (54,241) 4,717,708 Operating income (loss) (14,989) (46,921) 54,291 (7,619) Other income (expense) Interest expense and financing costs, net (2,600) (64,209) 316 (66,493) Debt extinguishment and commitment costs — (6,728) (1,416) (8,144) Gain on curtailment of pension obligation — 2,032 — 2,032 Other income (expense), net (33) (19) — (52) Equity earnings (losses) from subsidiaries (63,649) — 63,649 — Total other income (expense), net (66,282) (68,924) 62,549 (72,657) Income (loss) before income taxes (81,271) (115,845) 116,840 (80,276) Income tax benefit (expense) (1) (26) 24,835 (25,830) (1,021) Net income (loss) $ (81,297) $ (91,010) $ 91,010 $ (81,297) Adjusted EBITDA $ (12,468) $ 137,323 $ 767 $ 125,622 ________________________________________________________ (1) The income tax benefit (expense) of the Parent Guarantor and Par Borrower and Subsidiaries is determined using the separate return method.
The following should be read in conjunction with our consolidated financial statements under Item 8 of this Annual Report on Form 10-K.
The following should be read in conjunction with our consolidated financial statements under Item 8 of this Annual Report on Form 10-K.
Net cash provided by investing activities was approximately $74.6 million for the year ended December 31, 2021 and primarily related to proceeds received from the Sale-Leaseback Transactions partially offset by additions to property, plant, and equipment totaling approximately $29.5 million.
Net cash provided by investing activities was approximately $74.6 million for the year ended December 31, 2021 and was primarily related to proceeds received from the Sale-Leaseback Transactions partially offset by additions to property, plant, and equipment totaling approximately $29.5 million.
Impairment Expense. During the year ended December 31, 2021, we recorded goodwill and asset impairment charges totaling $1.8 million primarily related to discontinued capital projects. Please read Note 8—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our 2021 asset impairment charges.
Impairment Expense. During the year ended December 31, 2021, we recorded goodwill and asset impairment charges totaling $1.8 million primarily related to discontinued capital projects. Please read Note 9—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our 2021 asset impairment charges.
We review property, plant, and equipment, operating leases, and other long-lived assets whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. We use a cash flows model to estimate value because there is usually a lack of quoted market prices for long-lived assets.
We review property, plant, and equipment, operating leases, and other long-lived assets whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. We use a cash flows model to estimate value because there is usually a lack of quoted market prices available for long-lived assets.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In estimating fair value, we use discounted cash flow projections, recent comparable market transactions, if available, or quoted 61 prices.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In estimating fair value, we use discounted cash flow projections, recent comparable market transactions, if available, or quoted prices.
Other factors impacting our results period over period include a 2021 gain on sale of assets of $63.9 million related to the Hawaii sale-leaseback transactions with no such gain in 2022 and a 14% increase in operating expenses compared to 2021. Adjusted EBITDA and Adjusted Net Income.
Other factors impacting our results period over period include a 2021 gain on sale of assets of $63.9 million related to the Hawaii sale-leaseback transactions with no such gain in 2022 and a 14% increase in operating expenses compared to 2021. Adjusted EBITDA and Adjusted Net Income (Loss).
(3) We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator for our operations in Hawaii.
(4) We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator for our operations in Hawaii.
Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method. The definition of Adjusted Gross Margin was modified beginning with the financial results reported for periods in fiscal year 2022.
Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method. The definition of Adjusted Gross Margin was modified beginning with the financial results reported for periods in 35 fiscal year 2022.
There were no impairment charges during the year ended December 31, 2022. Gain on Sale of Assets, Net. For the year ended December 31, 2022, there was a $0.2 million gain on sale of assets, net, which resulted primarily from the sale of equipment.
There were no impairment charges during the year ended December 31, 2022. 43 Gain on Sale of Assets, Net. For the year ended December 31, 2022, there was a $0.2 million gain on sale of assets, net, which resulted primarily from the sale of equipment.
Net cash provided by financing activities was approximately $13.4 million for the year ended December 31, 2022 and consisted primarily of the following activities: • net borrowings under the J.
Net cash provided by financing activities for the year ended December 31, 2022 was approximately $13.4 million and and consisted primarily of the following activities: 54 • net borrowings under the J.
Our financial results for the year ended December 31, 2022 improved from a net loss of $81.3 million for the year ended December 31, 2021 to net income of $364.2 million for the year ended December 31, 2022.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net Income (Loss). Our financial results for the year ended December 31, 2022 improved from a net loss of $81.3 million for the year ended December 31, 2021 to net income of $364.2 million for the year ended December 31, 2022.
We used approximately $53.1 million of the net cash proceeds to repay the certain financing arrangements which were related to certain of the retail properties and the remainder for general corporate purposes. Please read Note 16—Leases to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the Sale-Leaseback Transactions.
We used approximately $53.1 million of the net cash proceeds to repay the certain financing arrangements which were related to certain of the retail properties and the remainder for general corporate purposes. Please read Note 17—Leases to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the Sale-Leaseback Transactions.
Please read Note 15—Fair Value Measurements to our consolidated financial statements under Item 8 of this Form 10-K for additional information. Business Combinations We recognize assets acquired and liabilities assumed in business combinations separately from goodwill at their estimated fair values as of the date of acquisition. Significant judgment is required in estimating the fair value of assets acquired.
Please read Note 16—Fair Value Measurements to our consolidated financial statements under Item 8 of this Form 10-K for additional information. Business Combinations We recognize assets acquired and liabilities assumed in business combinations separately from goodwill at their estimated fair values as of the date of acquisition. Significant judgment is required in estimating the fair value of assets acquired.
Please read Note 13—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Gain on curtailment of pension obligation. During the year ended December 31, 2021, we recorded a gain on curtailment of pension obligation of $2.0 million related to the amendment to the Wyoming Refining defined benefit plan.
Please read Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Gain on curtailment of pension obligation. During the year ended December 31, 2021, we recorded a gain on curtailment of pension obligation of $2.0 million related to the amendment to the Wyoming Refining defined benefit plan.
Impairment is indicated when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying value. If this occurs, an impairment loss is recognized for the difference between the fair value and carrying value. The fair value of long-lived assets is determined using the income approach.
Impairment is required when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying value. If this occurs, an impairment loss is recognized for the difference between the fair value and carrying value. The fair value of long-lived assets is determined using the income approach.
Please read Note 19—Benefit Plans to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on the gain on curtailment of pension obligation. There was no gain on curtailment of pension obligation for the year ended December 31, 2022. Income Taxes.
Please read Note 20—Benefit Plans to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on the gain on curtailment of pension obligation. There was no gain on curtailment of pension obligation for the year ended December 31, 2022. Income Taxes.
We have recast Adjusted Gross Margin for prior periods when reported to conform to the modified presentation. Please see discussion of Adjusted Gross Margin below. (2) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry.
We have recast Adjusted Gross Margin for prior periods when reported to conform to the modified presentation. Please see discussion of Adjusted Gross Margin below. (3) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry.
Finance lease liabilities primarily include obligations associated with the lease of retail facilities and vehicles. Please read Note 16—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Purchase Commitments.
Finance lease liabilities primarily include obligations associated with the lease of retail facilities and vehicles. Please read Note 17—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Purchase Commitments.
Estimating the cost and timing of future remedial efforts is difficult and related technologies, costs, regulatory and other compliance considerations, timing, discount rates, and other inputs into the valuations are subject to change. Please read Note 2—Summary of Significant Accounting Policies, “Asset Retirement Obligations,” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Estimating the cost and timing of future remedial efforts is difficult and related technologies, costs, regulatory and other compliance considerations, timing, discount rates, and other inputs considered in the valuations are subject to change. Please read Note 2—Summary of Significant Accounting Policies, “Asset Retirement Obligations,” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Please read Note 9—Asset Retirement Obligations and Note 17—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for more information. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations were based on the consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
Please read Note 10—Asset Retirement Obligations and Note 18—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for more information. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations were based on the consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
Please read Note 16—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on the Sale-Leaseback Transactions. General and Administrative Expense (Excluding Depreciation).
Please read Note 17—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on the Sale-Leaseback Transactions. General and Administrative Expense (Excluding Depreciation).
Operating lease liabilities primarily include obligations associated with the lease of land, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Please read Note 16—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. Finance Lease Liabilities.
Operating lease liabilities primarily include obligations associated with the lease of land, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Please read Note 17—Leases to our consolidated financial statements under Item 8 of this Form 10-K for further discussion. 55 Finance Lease Liabilities.
Usually, the timing of these accruals coincides with the completion of a feasibility study or our commitment to a formal plan of action. Please read Note 17—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K 62 for further information about our environmental liabilities and assessments.
Usually, the timing of these accruals coincides with the completion of a feasibility study or our commitment to a formal plan of action. Please read Note 18—Commitments and Contingencies to our consolidated financial statements under Item 8 of this Form 10-K for further information about our environmental liabilities and assessments.
Discussion of Operating Income (Loss) by Segment Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Refining. Operating income for our refining segment was $401.9 million for the year ended December 31, 2022, an improvement of $490.7 million compared to an operating loss of $88.8 million for the year ended December 31, 2021.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Refining. Operating income for our refining segment was $401.9 million for the year ended December 31, 2022, an improvement of $490.7 million compared to an operating loss of $88.8 million for the year ended December 31, 2021.
Please read Note 18—Stockholders’ Equity to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the share repurchase program.
Please read Note 19—Stockholders’ Equity to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the share repurchase program.
Future cash flows estimates used for impairment reviews are based on assessments requiring judgment, including future production volumes, commodity prices, operating costs, margins, discount rates, expected capital expenditures, and other factors based on all available information available as of the date of the review.
Future cash flow estimates used for impairment reviews are based on assessments requiring judgment, including future production volumes, commodity prices, operating costs, margins, discount rates, expected capital expenditures, and other factors based on all available information 57 available as of the date of the review.
The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances. 54 Non-GAAP Financial Measures Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Issuer and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc.
The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances. 49 Non-GAAP Financial Measures Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Par Borrower and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc.
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases, or price increases could lead to a decline in demand for our products, which could have a material effect on our business, financial condition or results of operations.
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases, or price increases could lead to a decline in demand for our products, which could have a material effect on our business, financial condition, or results of operations. The COVID-19 Pandemic.
The change was primarily related to the same factors described above for the increase in Adjusted EBITDA. 36 The following table summarizes our consolidated results of operations for the years ended December 31, 2022, 2021, and 2020 (in thousands).
The change was primarily related to the same factors described above for the increase in Adjusted EBITDA. 31 The following table summarizes our consolidated results of operations for the years ended December 31, 2023, 2022, and 2021 (in thousands).
Purchase commitments primarily consist of contracts executed as of December 31, 2022 for the purchase of crude oil for use at our refineries that are scheduled for delivery in 2023. As of December 31, 2022, we have material purchase commitments of $4.3 billion, with required cash outlays primarily expected in the next twelve months. Supply and Offtake Agreement.
Purchase commitments primarily consist of contracts executed as of December 31, 2023 for the purchase of crude oil for use at our refineries that are scheduled for delivery in 2024. As of December 31, 2023, we have material purchase commitments of $1.3 billion, with required cash outlays primarily expected in the next twelve months. Supply and Offtake Agreement.
Discussion of Adjusted Gross Margin by Segment Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Refining . For the year ended December 31, 2022, our refining Adjusted Gross Margin was approximately $812.8 million, an increase of $548.4 million compared to $264.4 million for the year ended December 31, 2021.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Refining . For the year ended December 31, 2022, our refining Adjusted Gross Margin was approximately $812.8 million, an increase of $548.4 million compared to $264.4 million for the year ended December 31, 2021.
Subsequent adjustments, if any, are recorded to the consolidated statement of operations. Please read Note 4—Acquisitions and Note 15—Fair Value Measurements to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Subsequent adjustments, if any, are recorded to the consolidated statement of operations. Please read Note 5—Acquisitions and Note 16—Fair Value Measurements to our consolidated financial statements under Item 8 of this Form 10-K for further information.
The decrease in profitability was primarily due to a gain on sale of assets of $45.0 million primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022 and a 13% increase in operating expenses in the year ended December 31, 2022 primarily related to increased employee costs, higher credit card processing fees due to increased gasoline prices, rebranding fees in Hawaii, and higher rent expense related to the additional leases from our 2021 Hawaii sale-leaseback transactions, partially offset by a 31% increase in fuel margin.
The decrease in profitability was primarily due to a gain on sale of assets of $45.0 million primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022 and a 13% increase in operating expenses in the year ended December 31, 2022 primarily related to increased employee costs, higher credit card processing fees due to increased gasoline prices, rebranding fees in Hawaii, and higher rent expense related to the additional leases from our 2021 Hawaii sale-leaseback transactions, partially offset by a 31% increase in fuel margin. 40 Discussion of Adjusted Gross Margin by Segment Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Refining .
For the year ended December 31, 2022, we recorded an income tax expense of $0.7 million primarily driven by an increase in state taxable income. For the year ended December 31, 2021, we recorded an income tax expense of $1.0 million primarily driven by foreign withholding taxes. Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Revenues.
For the year ended December 31, 2022, we recorded an income tax expense of $0.7 million primarily driven by an increase in state taxable income. For the year ended December 31, 2021, we recorded an income tax expense of $1.0 million primarily driven by foreign withholding taxes.
These improvements were partially offset by unfavorable purchased product and crude oil differentials, unfavorable first in, first-out (“FIFO”) adjustments, increased intermediation fees of $79.0 million, and a $54.7 million increase in RINs expenses.
These improvements were partially offset by unfavorable purchased product and crude oil differentials, unfavorable FIFO adjustments, increased intermediation fees of $79.0 million, and a $54.7 million increase in RINs expenses.
Below is a summary of key operating statistics for the retail segment for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Retail Segment Retail sales volumes (thousands of gallons) 105,456 109,150 102,798 Non-GAAP Performance Measures Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures.
Below is a summary of key operating statistics for the retail segment for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, 2023 2022 2021 Retail Segment Retail sales volumes (thousands of gallons) 117,550 105,456 109,150 Non-GAAP Performance Measures Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures.
Please read Note 11—Inventory Financing Agreements and Note 13—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion of significant activity related to our inventory financing and debt agreements, respectively.
Please read Note 12—Inventory Financing Agreements and Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion of significant activity related to our inventory financing and debt agreements, respectively.
While inflation has increased relative to prior years, we do not believe that inflation has had a material effect on our business, financial condition or results of operations.
While inflation has improved relative to prior years, we do not believe that inflation has had a material effect on our business, financial condition or results of operations in 2023.
Please read Note 11—Inventory Financing Agreements and Note 13—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and indebtedness, respectively. 46 Debt extinguishment and commitment costs.
Please read Note 12—Inventory Financing Agreements and Note 14—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and indebtedness, respectively. Debt extinguishment and commitment costs.
Please read Note 11—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for additional information regarding both our Hawaii and Washington inventory financing agreements. Fair Value Measurements We measure certain assets and liabilities at their fair market value.
Please read Note 12—Inventory Financing Agreements to our consolidated financial statements under Item 8 of this Form 10-K for additional information regarding our Hawaii inventory financing agreement and LC Facility. Fair Value Measurements We measure certain assets and liabilities at their fair market value.
These valuation methods require us to make significant estimates and assumptions regarding future cash flows, capital projects, commodity prices, long-term growth rates, and discount rates. Please read Note 10—Goodwill and Intangible Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information, including the goodwill impairment we recorded in the first quarter of 2020.
These valuation methods require us to make significant estimates and assumptions regarding future cash flows, capital projects, commodity prices, long-term growth rates, and discount rates. Please read Note 11—Goodwill and Intangible Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information.
For the year ended December 31, 2021, our logistics Adjusted Gross Margin was approximately $87.9 million, an increase of $17.4 million compared to $70.5 million for the year ended December 31, 2020.
Logistics. For the year ended December 31, 2022, our logistics Adjusted Gross Margin was approximately $89.4 million, an increase of $1.5 million compared to $87.9 million for the year ended December 31, 2021.
For the year ended December 31, 2022, operating expense (excluding depreciation) was approximately $342.2 million, an increase of $42.5 million compared to $299.7 million for the year ended December 31, 2021. The increase was primarily due to higher utilities expenses, maintenance expenses at our Hawaii refinery and increased employee costs.
For the year ended December 31, 2022, operating expense (excluding depreciation) was approximately $333.2 million, an increase of $43.1 million compared to $290.1 million for the year ended December 31, 2021. The increase was primarily due to higher utilities expenses, maintenance expenses at our Hawaii refinery and increased employee costs.
As such, there were no earnings or losses from Laramie Energy recorded during the year ended December 31, 2021. Please read Note 3—Investment in Laramie Energy, LLC to our consolidated financial statements under Item 8 of this Form 10-K for more information. Income Taxes.
There were no equity earnings from our investment in Laramie Energy, LLC, for the year ended December 31, 2022. Please read Note 4—Investment in Laramie Energy to our consolidated financial statements under Item 8 of this Form 10-K for more information. Income Taxes.
Our estimated interest payments due for 2023 are $44.3 million and our total estimated undiscounted future interest payments will be $133.3 million on the debt obligations held as of December 31, 2022 and using interest rates in effect as of December 31, 2022.
Our estimated interest payments due for 2024 are $51.2 million and our total estimated undiscounted future interest payments will be $312.4 million on the debt obligations held as of December 31, 2023 and using interest rates in effect as of December 31, 2023.
Adjusted Gross Margin for the Hawaii refinery improved from $4.56 per barrel in 2021 to $13.99 per barrel in 2022 primarily due to favorable product crack spreads, and a 1.7% increase in refined product sales volumes, partially offset by unfavorable purchased product and crude oil costs, unfavorable FIFO adjustments, a $78.8 million increase in intermediation fees driven primarily by $59.4 million higher market structure fees under the Supply and Offtake Agreement, increased fuel burn costs related to higher crude oil costs as discussed below, and unfavorable derivatives.
The increase in profitability was primarily driven by favorable realized product crack spreads across all our refineries partially offset by unfavorable purchased product costs, unfavorable FIFO adjustments, increased inventory financing costs of $79.0 million in Hawaii, unfavorable derivative costs, and increased costs related to fuel burn related to higher crude oil costs as discussed below. • Adjusted Gross Margin for the Hawaii refinery improved from $4.56 per barrel in 2021 to $13.99 per barrel in 2022 primarily due to favorable product crack spreads, and a 1.7% increase in refined product sales volumes, partially offset by unfavorable purchased product and crude oil costs, unfavorable FIFO adjustments, a $78.8 million increase in intermediation fees driven primarily by $59.4 million higher market structure fees under the Supply and Offtake Agreement, increased fuel burn costs related to higher crude oil costs as discussed below, and unfavorable derivatives. • Adjusted Gross Margin for the Washington refinery increased by $15.02 per barrel primarily due to favorable product crack spreads, partially offset by unfavorable feedstock costs and increased costs related to fuel burn. • Adjusted Gross Margin for the Wyoming refinery increased by $12.03 per barrel primarily due to favorable product crack spreads, partially offset by unfavorable feedstock costs and increased RINs costs.
(2) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $493.3 million, $402.2 million, and $306.5 million for the years ended December 31, 2022, 2021, and 2020, respectively. 38 Below is a summary of key operating statistics for the refining segment for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Total Refining Segment Feedstocks Throughput (Mbpd) 133.8 135.2 124.1 Refined product sales volume (Mbpd) 140.3 138.8 136.7 Hawaii Refinery Feedstocks Throughput (Mbpd) 81.8 82.0 72.7 Yield (% of total throughput) Gasoline and gasoline blendstocks 25.6 % 24.8 % 24.6 % Distillates 38.8 % 45.0 % 42.2 % Fuel oils 31.4 % 26.6 % 29.5 % Other products 0.7 % 0.6 % (0.7) % Total yield 96.5 % 97.0 % 95.6 % Refined product sales volume (Mbpd) On-island sales volume 82.9 82.6 83.5 Exports sales volume 1.1 — 0.6 Total refined product sales volume 84.0 82.6 84.1 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 13.99 $ 4.56 $ (1.31) Production costs per bbl ($/throughput bbl) (2) 4.86 3.98 4.03 D&A per bbl ($/throughput bbl) 0.67 0.66 0.55 Washington Refinery Feedstocks Throughput (Mbpd) 35.5 36.3 39.1 Yield (% of total throughput) Gasoline and gasoline blendstocks 24.0 % 23.7 % 23.4 % Distillates 34.3 % 34.5 % 35.3 % Asphalt 20.3 % 20.7 % 18.8 % Other products 18.2 % 18.3 % 19.8 % Total yield 96.8 % 97.2 % 97.3 % Refined product sales volume (Mbpd) 39.7 39.6 39.6 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 18.00 $ 2.98 $ 4.67 Production costs per bbl ($/throughput bbl) (2) 4.01 3.86 3.50 D&A per bbl ($/throughput bbl) 2.19 1.57 1.39 39 Year Ended December 31, 2022 2021 2020 Wyoming Refinery Feedstocks Throughput (Mbpd) 16.5 16.9 12.3 Yield (% of total throughput) Gasoline and gasoline blendstocks 49.7 % 47.3 % 49.2 % Distillates 43.1 % 45.7 % 45.2 % Fuel oil 2.4 % 2.2 % 1.9 % Other products 2.1 % 1.7 % 1.3 % Total yield 97.3 % 96.9 % 97.6 % Refined product sales volume (Mbpd) 16.6 16.6 13.0 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 26.50 $ 14.47 $ 6.97 Production costs per bbl ($/throughput bbl) (2) 7.32 6.22 8.69 D&A per bbl ($/throughput bbl) 2.85 2.86 4.34 Market Indices (average $ per barrel) 3-1-2 Singapore Crack Spread (3) $ 25.43 $ 6.22 $ 3.15 Pacific Northwest 5-2-2-1 Index (4) 32.40 15.95 11.44 Wyoming 3-2-1 Index (5) 41.32 29.00 17.80 Crude Oil Prices (average $ per barrel) Brent $ 99.04 $ 70.95 $ 43.21 WTI 94.33 68.11 39.65 ANS 102.56 71.49 41.77 Bakken Clearbrook 98.09 68.20 37.19 WCS Hardisty 75.43 54.61 27.45 Brent M1-M3 3.49 1.12 (0.98) ________________________________________________________ (1) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput.
(2) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $590.8 million, $493.3 million, and $402.2 million for the years ended December 31, 2023, 2022, and 2021, respectively. 33 Below is a summary of key operating statistics for the refining segment for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, 2023 2022 2021 Total Refining Segment Feedstocks Throughput (Mbpd) (1) 170.3 133.8 135.2 Refined product sales volume (Mbpd) (1) 183.1 140.3 138.8 Hawaii Refinery Feedstocks Throughput (Mbpd) 80.8 81.8 82.0 Yield (% of total throughput) Gasoline and gasoline blendstocks 26.3 % 25.6 % 24.8 % Distillates 40.4 % 38.8 % 45.0 % Fuel oils 28.9 % 31.4 % 26.6 % Other products 1.1 % 0.7 % 0.6 % Total yield 96.7 % 96.5 % 97.0 % Refined product sales volume (Mbpd) 89.1 84.0 82.6 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 15.25 $ 13.99 $ 4.56 Production costs per bbl ($/throughput bbl) (3) 4.57 4.86 3.98 D&A per bbl ($/throughput bbl) 0.65 0.67 0.66 Montana Refinery Feedstocks Throughput (Mbpd) (1) 54.4 — — Yield (% of total throughput) Gasoline and gasoline blendstocks 48.1 % — % — % Distillates 32.0 % — % — % Asphalt 12.1 % — % — % Other products 3.2 % — % — % Total yield 95.4 % — % — % Refined product sales volume (Mbpd) 58.6 — — Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 21.14 $ — $ — Production costs per bbl ($/throughput bbl) (3) 10.78 — — D&A per bbl ($/throughput bbl) 1.45 — — Washington Refinery Feedstocks Throughput (Mbpd) 40.0 35.5 36.3 Yield (% of total throughput) Gasoline and gasoline blendstocks 23.5 % 24.0 % 23.7 % Distillates 34.5 % 34.3 % 34.5 % Asphalt 19.7 % 20.3 % 20.7 % Other products 18.7 % 18.2 % 18.3 % Total yield 96.4 % 96.8 % 97.2 % 34 Year Ended December 31, 2023 2022 2021 Refined product sales volume (Mbpd) 41.7 39.7 39.6 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 9.41 $ 18.00 $ 2.98 Production costs per bbl ($/throughput bbl) (3) 4.12 4.01 3.86 D&A per bbl ($/throughput bbl) 1.91 2.19 1.57 Wyoming Refinery Feedstocks Throughput (Mbpd) 17.6 16.5 16.9 Yield (% of total throughput) Gasoline and gasoline blendstocks 47.1 % 49.7 % 47.3 % Distillates 46.7 % 43.1 % 45.7 % Fuel oil 2.5 % 2.4 % 2.2 % Other products 1.5 % 2.1 % 1.7 % Total yield 97.8 % 97.3 % 96.9 % Refined product sales volume (Mbpd) 17.9 16.6 16.6 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 25.15 $ 26.50 $ 14.47 Production costs per bbl ($/throughput bbl) (3) 7.50 7.32 6.22 D&A per bbl ($/throughput bbl) 2.69 2.85 2.86 Market Indices (average $ per barrel) 3-1-2 Singapore Crack Spread (4) $ 19.50 $ 25.43 $ 6.22 RVO Adjusted Pacific Northwest 3-1-1-1 Index (5) 25.82 35.27 13.69 RVO Adjusted USGC 3-2-1 Index (6) 22.87 28.55 10.98 Crude Oil Prices (average $ per barrel) Brent $ 82.17 $ 99.04 $ 70.95 WTI 77.60 94.33 68.11 ANS (7) 82.36 98.76 70.56 Bakken Clearbrook (7) 78.58 96.37 67.65 WCS Hardisty (7) 59.34 73.28 53.90 Brent M1-M3 0.81 3.49 1.12 ________________________________________________________ (1) Feedstocks throughput and sales volumes per day for the Montana refinery for the year ended December 31, 2023 are calculated based on the 214-day period for which we owned the Montana refinery in 2023.
For the year ended December 31, 2022, we incurred approximately $3.7 million of expenses primarily related to costs incurred for the pending Billings Acquisition. For the year ended December 31, 2021, we incurred an immaterial amount of acquisition and integration costs. Please read Note 4—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.
For the year ended December 31, 2023 , we incurred $17.5 million of acquisition and integration costs related to the Billings Acquisition, compared to $3.7 million of acquisition and integration costs for the year ended December 31, 2022. Please read Note 5—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Legal title to the crude oil passes to us at the tank outlet. After processing, J. Aron takes title to the refined products stored in our storage tanks until they are sold to our retail locations or to third parties. We record the inventory owned by J.
Aron takes title to the refined products stored in our storage tanks until they are sold to our retail locations or to third parties. We record the inventory owned by J.
We operate in logistically complex, niche markets and, as such, each of our refineries has unique cost advantages and disadvantages as compared to their respective relevant market indices. Recent Events Affecting Comparability of Periods Inflation In 2022, higher national gasoline prices and U.S. inflation affected most Americans.
We operate in logistically complex, niche markets and, as such, each of our refineries has unique cost advantages and disadvantages as compared to their respective relevant market indices. Recent Events Affecting Comparability of Periods Inflation. Energy prices are, among other factors, indicators of inflation, and the U.S.
Adjusted Net Income (Loss) is defined as Net income (loss) excluding: • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our Washington inventory and intermediation obligation, and purchase price allocation adjustments); • the LIFO layer liquidation impacts associated with our Washington inventory; 42 • RINs mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis; this adjustment also includes the mark-to-market losses (gains) associated with our net RINs liability); • unrealized (gain) loss on derivatives; • acquisition and integration costs; • debt extinguishment and commitment costs; • increase in (release of) tax valuation allowance and other deferred tax items; • changes in the value of contingent consideration and common stock warrants; • severance costs; • (gain) loss on sale of assets; • impairment expense; • impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference; and • Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives.
Adjusted Net Income (Loss) and Adjusted EBITDA Adjusted Net Income (Loss) is defined as Net income (loss) excluding: • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory); • Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our RINs and Washington CCA and Clean Fuel Standard); • unrealized (gain) loss on derivatives; • acquisition and integration costs; • redevelopment and other costs related to Par West; • debt extinguishment and commitment costs; • increase in (release of) tax valuation allowance and other deferred tax items; • changes in the value of contingent consideration and common stock warrants; • severance costs; • (gain) loss on sale of assets; • impairment expense; • impairment expense associated with our investment in Laramie Energy; and • Par’s share of equity losses from Laramie Energy, LLC, excluding cash distributions .
The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Petroleum, LLC and its consolidated subsidiaries’ accounts (which are all guarantors of the 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes, Term Loan B, or 12.875% Senior Secured Notes and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated.
The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Borrower and its consolidated subsidiaries’ accounts (which are all guarantors of the Term Loan Credit Agreement), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the Term Loan Credit Agreement and consolidating 44 adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated.
Non-cash charges to operations consisted primarily of the following adjustments: • depreciation and amortization expenses of $99.8 million; • stock based compensation costs of $9.4 million; • unrealized loss on derivatives contracts of $9.3 million; and • debt commitment and extinguishment costs of $5.3 million. 58 Net cash used for changes in operating assets and liabilities resulted primarily from: • net increases in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations and accounts payable; and • an increase in gross environmental credit obligations primarily related to current period production volumes and increases in RINs prices; partially offset by • net increases in our inventories and accounts receivable resulting from higher crude oil and refined product prices and higher inventory volumes at our Hawaii refinery; and • increase in prepaid and other primarily driven by a $34.7 million increase in Collateral posted with broker for derivative instruments.
Net cash used for changes in operating assets and liabilities resulted primarily from: • net increases in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations and accounts payable, and • an increase in gross environmental credit obligations primarily related to current period production volumes and increases in RINs prices, partially offset by • net increases in our inventories and accounts receivable resulting from higher crude oil and refined product prices and higher inventory volumes at our Hawaii refinery, and • increase in prepaid and other primarily driven by a $34.7 million increase in Collateral posted with broker for derivative instruments.
Inventory and Obligations Under Inventory Financing Agreements Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost and net realizable value using the FIFO accounting method. Commodity inventories at the Washington refinery are stated at the lower of cost and net realizable value using the LIFO inventory accounting method.
Actual results may differ from these estimates under different assumptions or conditions. Inventory and Obligations Under Inventory Financing Agreements Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost and net realizable value using the FIFO accounting method.
Adjusted Gross Margin is defined as operating income (loss) excluding: • operating expense (excluding depreciation); • depreciation and amortization (“D&A”); • impairment expense; • loss (gain) on sale of assets, net; • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our Washington inventory and intermediation obligation, and purchase price allocation adjustments); • LIFO layer liquidation impacts associated with our Washington inventory; • Renewable Identification Numbers (“RINs”) mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis; this adjustment also includes the mark-to-market losses (gains) associated with our net RINs liability); and 41 • unrealized loss (gain) on derivatives.
Adjusted Gross Margin Adjusted Gross Margin is defined as operating income (loss) excluding: • operating expense (excluding depreciation); • depreciation and amortization (“D&A”); • Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments; • impairment expense; • loss (gain) on sale of assets, net; • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory); • Environmental obligation mark-to-market adjustment (which represents the mark-to-market losses (gains) associated with our net RINs liability and our net obligation associated with the Washington Climate Commitment Act and Clean Fuel Standard); and • unrealized loss (gain) on derivatives.
Federal Reserve (the “Fed”) has taken significant steps to curb inflation, increasing its benchmark interest rate six times throughout 2022, from near zero percent at the beginning of 2022 to a range of 4.25% to 4.5% in December 2022.
Federal Reserve (the “Fed”) has taken significant steps to curb inflation, and continued to increase interest rates in 2023, from near zero percent at the beginning of 2022 to a range of 5.25% to 5.5% in December 2023.
Interest Expense and Financing Costs, Net . For the year ended December 31, 2022, our interest expense and financing costs were approximately $68.3 million, an increase of $1.8 million compared to $66.5 million for the year ended December 31, 2021.
Please read Note 5—Acquisitions to our consolidated financial statements under Item 8 of this Form 10-K for more information. Interest Expense and Financing Costs, Net . For the year ended December 31, 2022, our interest expense and financing costs were approximately $68.3 million, an increase of $1.8 million compared to $66.5 million for the year ended December 31, 2021.
Please read Note 11—Inventory Financing Agreements and Note 13—Debt to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and indebtedness, respectively. Change in Value of Common Stock Warrants .
Please read Note 14—Debt and Note 12—Inventory Financing Agreements to our 42 consolidated financial statements under Item 8 of this Form 10-K for further discussion on our indebtedness and inventory financing, respectively. Debt extinguishment and commitment costs.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a growth-oriented company based in Houston, Texas, that owns and operates market-leading energy and infrastructure businesses. For more information, please read “Part I –Item 1. — Business—Overview” of this Form 10-K.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a growing energy company based in Houston, Texas, that provides both renewable and conventional fuels to the western United States. For more information, please read “Part I –Item 1. — Business—Overview” of this Form 10-K.
In the first quarter of 2021, we closed on the sale and leaseback of twenty-two (22) of our retail properties in Hawaii for an aggregate cash purchase price of approximately $112.8 million net of transaction fees (the “Sale-Leaseback Transactions”).
We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost. Significant Developments In the first quarter of 2021, we closed on the sale and leaseback of twenty-two (22) of our retail properties in Hawaii for an aggregate cash purchase price of approximately $112.8 million net of transaction fees (the “Sale-Leaseback Transactions”).
However, a resurgence of the virus or another pandemic event could cause a return to severe restrictions, leading to a deterioration of macroeconomic conditions and our industry. For more information, please read “Item 1. — Business — Markets” of this Form 10-K.
Consequently, refining product margins have been consistently above pre-pandemic margins since the spring of 2022. Another pandemic event could cause a return to severe restrictions, leading to a deterioration of macroeconomic conditions and our industry. For more information, please read “Item 1. — Business — Markets” of this Form 10-K. Geopolitical Conflicts.
(together with the Issuer, the “Issuers”), which has no independent assets or operations. The 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes are guaranteed on a senior unsecured basis only as to payment of principal and 48 interest by Par Pacific Holdings, Inc.
(together with the Par Borrower, the “Term Loan Borrowers”), which has no independent assets or operations. The Term Loan Credit Agreement is guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc. (the “Parent”) and is guaranteed on a senior secured basis by all of the subsidiaries of Par Borrower.
Logistics. Operating income for our logistics segment was $51.2 million for the year ended December 31, 2021, an increase of $16.2 million compared to operating income of $35.0 million for the year ended December 31, 2020.
Logistics. Operating income for our logistics segment was $69.7 million for the year ended December 31, 2023, an increase of $15.7 million compared to $54.0 million for the year ended December 31, 2022.
The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands): Year ended December 31, 2022 Refining Logistics Retail Operating income $ 401,901 $ 54,049 $ 49,238 Operating expense (excluding depreciation) 245,992 14,988 81,229 Depreciation and amortization 65,472 20,579 10,971 Loss (gain) on sale of assets, net 1 (253) 56 Inventory valuation adjustment (15,712) — — RINs mark-to-market adjustments 105,760 — — Unrealized loss on derivatives 9,336 — — Adjusted Gross Margin (1) $ 812,750 $ 89,363 $ 141,494 Year ended December 31, 2021 Refining Logistics Retail Operating income (loss) $ (88,799) $ 51,159 $ 81,249 Operating expense (excluding depreciation) 213,102 14,722 71,845 Depreciation and amortization 58,258 22,044 10,880 Impairment expense 1,838 — — Loss (gain) on sale of assets, net (19,659) (19) (45,034) Inventory valuation adjustment 31,841 — — RINs mark-to-market adjustments 66,350 — — Unrealized loss on derivatives 1,517 — — Adjusted Gross Margin (1) $ 264,448 $ 87,906 $ 118,940 Year ended December 31, 2020 Refining Logistics Retail Operating income (loss) $ (331,826) $ 35,044 $ 24,211 Operating expense (excluding depreciation) 199,738 13,581 64,108 Depreciation and amortization 53,930 21,899 10,692 Impairment expense 55,989 — 29,817 Inventory valuation adjustment 9,994 — — RINs mark-to-market adjustments 81,709 — — Unrealized gain on derivatives (4,804) — — Adjusted Gross Margin (1) $ 64,730 $ 70,524 $ 128,828 ________________________________________ (1) For the years ended December 31, 2022, 2021 and 2020, there was no LIFO liquidation adjustment.
The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands): Year ended December 31, 2023 Refining Logistics Retail Operating income $ 676,161 $ 69,744 $ 56,603 Operating expense (excluding depreciation) 373,612 24,450 87,525 Depreciation and amortization 81,017 25,122 11,462 Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 1,586 1,857 — Inventory valuation adjustment 102,710 — — Environmental obligation mark-to-market adjustments (189,783) — — Unrealized gain on derivatives (50,511) — — Loss (gain) on sale of assets, net 219 — (308) Adjusted Gross Margin (1) $ 995,011 $ 121,173 $ 155,282 37 Year ended December 31, 2022 Refining Logistics Retail Operating income $ 401,901 $ 54,049 $ 49,238 Operating expense (excluding depreciation) 236,989 14,988 81,229 Depreciation and amortization 65,472 20,579 10,971 Inventory valuation adjustment (15,712) — — Environmental obligation mark-to-market adjustments 105,760 — — Unrealized loss on derivatives 9,336 — — Par West redevelopment and other costs 9,003 — — Loss (gain) on sale of assets, net 1 (253) 56 Adjusted Gross Margin (1) $ 812,750 $ 89,363 $ 141,494 Year ended December 31, 2021 Refining Logistics Retail Operating income (loss) $ (88,799) $ 51,159 $ 81,249 Operating expense (excluding depreciation) 203,511 14,722 71,845 Depreciation and amortization 58,258 22,044 10,880 Impairment expense 1,838 — — Inventory valuation adjustment 31,841 — — Environmental obligation mark-to-market adjustments 66,350 — — Unrealized loss on derivatives 1,517 — — Par West redevelopment and other costs 9,591 — — Gain on sale of assets, net (19,659) (19) (45,034) Adjusted Gross Margin (1) $ 264,448 $ 87,906 $ 118,940 ________________________________________ (1) For the years ended December 31, 2023 and 2022, there was no impairment expense.
Operating income for our retail segment was $81.2 million for the year ended December 31, 2021, an increase of $57.0 million compared to operating income of $24.2 million for the year ended December 31, 2020.
Operating income for our retail segment was $56.6 million for the year ended December 31, 2023, an increase of $7.4 million compared to operating income of $49.2 million for the year ended December 31, 2022.
Please read Item 1A. — Risk Factors for more information on the Russia-Ukraine conflict and its potential impacts on our business. Results of Operations Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net Income (Loss).
Please read “Item 1A. — Risk Factors” for more information on risks and uncertainties, including those related to economic factors, and their potential impacts on our business. Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net Income.
Liquidity and Capital Resources Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements and contractual obligations, capital expenditures, turnaround outlays, and working capital needs. Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll.
Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll.
Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. On November 10, 2021, the Board authorized and approved a share repurchase program for up to $50 million of the currently outstanding shares of our common stock, with no specified end date.
The amounts involved may be material. On November 10, 2021, the Board authorized and approved a share repurchase program for up to $50 million of the currently outstanding shares of our common stock, with no specified end date. On August 2, 2023, the Board approved expanding the Company’s share repurchase authorization from $50 million to $250 million.
We also continue to seek strategic investments in business opportunities, however the amount and timing of those investments are not predictable. Our material cash requirements as of December 31, 2022 include: Debt and Interest Payments. Current and long-term debt includes the scheduled principal payments related to our outstanding debt obligations and letters of credit.
These cash requirements and obligations may result from both general financing activities and from commercial arrangements that are directly related to our operating activities. We also continue to seek strategic investments in business opportunities, however the amount and timing of those investments are not predictable. Our material cash requirements as of December 31, 2023 include: Debt and Interest Payments.
Year Ended December 31, 2022 2021 2020 Revenues $ 7,321,785 $ 4,710,089 $ 3,124,870 Cost of revenues (excluding depreciation) 6,376,014 4,338,474 2,947,697 Operating expense (excluding depreciation) 342,209 299,669 277,427 Depreciation and amortization 99,769 94,241 90,036 Impairment expense — 1,838 85,806 Gain on sale of assets, net (169) (64,697) — General and administrative expense (excluding depreciation) 62,396 48,096 41,288 Acquisition and integration costs 3,663 87 614 Total operating expenses 6,883,882 4,717,708 3,442,868 Operating income (loss) 437,903 (7,619) (317,998) Other income (expense) Interest expense and financing costs, net (68,288) (66,493) (70,222) Debt extinguishment and commitment costs (5,329) (8,144) — Gain on curtailment of pension obligation — 2,032 — Other income (expense), net 613 (52) 1,049 Change in value of common stock warrants — — 4,270 Equity earnings (losses) from Laramie Energy, LLC — — (46,905) Total other expense, net (73,004) (72,657) (111,808) Income (loss) before income taxes 364,899 (80,276) (429,806) Income tax benefit (expense) (710) (1,021) 20,720 Net income (loss) $ 364,189 $ (81,297) $ (409,086) 37 The following tables summarize our operating income (loss) by segment for the years ended December 31, 2022, 2021, and 2020 (in thousands).
Year Ended December 31, 2023 2022 2021 Revenues $ 8,231,955 $ 7,321,785 $ 4,710,089 Cost of revenues (excluding depreciation) 6,838,109 6,376,014 4,338,474 Operating expense (excluding depreciation) 485,587 333,206 290,078 Depreciation and amortization 119,830 99,769 94,241 Impairment expense — — 1,838 General and administrative expense (excluding depreciation) 91,447 62,396 48,096 Equity earnings from refining and logistics investments (11,844) — — Acquisition and integration costs 17,482 3,663 87 Par West redevelopment and other costs 11,397 9,003 9,591 Gain on sale of assets, net (59) (169) (64,697) Total operating expenses 7,551,949 6,883,882 4,717,708 Operating income (loss) 680,006 437,903 (7,619) Other income (expense) Interest expense and financing costs, net (72,450) (68,288) (66,493) Debt extinguishment and commitment costs (19,182) (5,329) (8,144) Gain on curtailment of pension obligation — — 2,032 Other income (expense), net (53) 613 (52) Equity earnings from Laramie Energy, LLC 24,985 — — Total other expense, net (66,700) (73,004) (72,657) Income (loss) before income taxes 613,306 364,899 (80,276) Income tax benefit (expense) 115,336 (710) (1,021) Net income (loss) $ 728,642 $ 364,189 $ (81,297) 32 The following tables summarize our operating income (loss) by segment for the years ended December 31, 2023, 2022, and 2021 (in thousands).
For the year ended December 31, 2022, Adjusted Net Income was $474.7 million compared to an Adjusted Net Loss of $36.1 million for the year ended December 31, 2021. The change was primarily related to the same factors described above for the increase in Adjusted EBITDA. Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Net Loss.
For the year ended December 31, 2022, Adjusted Net Income was $474.7 million compared to an Adjusted Net Loss of $39.0 million for the year ended December 31, 2021.
Cash Flows The following table summarizes cash activities for the years ended December 31, 2022, 2021, and 2020 (in thousands): Years Ended December 31, 2022 2021 2020 Net cash provided by (used in) operating activities $ 452,606 $ (27,622) $ (37,214) Net cash provided by (used in) investing activities (87,308) 74,628 (63,464) Net cash provided by (used in) financing activities 13,407 (1,094) 42,559 Cash flows for the year ended December 31, 2022 Net cash provided by operating activities for the year ended December 31, 2022 was driven primarily by net income of $364.2 million, non-cash charges to operations of approximately $127.6 million, and net cash used for changes in operating assets and liabilities of approximately $39.2 million.
Cash flows for the year ended December 31, 2022 Net cash provided by operating activities for the year ended December 31, 2022, was primarily driven by net income of approximately $364.2 million, non-cash charges to operations of approximately $127.6 million, and net cash used for changes in operating assets and liabilities of approximately $39.2 million.
Year ended December 31, 2022 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 7,046,060 $ 198,821 $ 570,206 $ (493,302) $ 7,321,785 Cost of revenues (excluding depreciation) 6,332,694 109,458 428,712 (494,850) 6,376,014 Operating expense (excluding depreciation) 245,992 14,988 81,229 — 342,209 Depreciation and amortization 65,472 20,579 10,971 2,747 99,769 Loss (gain) on sale of assets, net 1 (253) 56 27 (169) General and administrative expense (excluding depreciation) — — — 62,396 62,396 Acquisition and integration costs — — — 3,663 3,663 Operating income (loss) $ 401,901 $ 54,049 $ 49,238 $ (67,285) $ 437,903 Year ended December 31, 2021 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 4,471,111 $ 184,734 $ 456,416 $ (402,172) $ 4,710,089 Cost of revenues (excluding depreciation) 4,306,371 96,828 337,476 (402,201) 4,338,474 Operating expense (excluding depreciation) 213,102 14,722 71,845 — 299,669 Depreciation and amortization 58,258 22,044 10,880 3,059 94,241 Impairment expense 1,838 — — — 1,838 Loss (gain) on sale of assets, net (19,659) (19) (45,034) 15 (64,697) General and administrative expense (excluding depreciation) — — — 48,096 48,096 Acquisition and integration costs — — — 87 87 Operating income (loss) $ (88,799) $ 51,159 $ 81,249 $ (51,228) $ (7,619) Year ended December 31, 2020 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 2,886,701 $ 180,909 $ 363,713 $ (306,453) $ 3,124,870 Cost of revenues (excluding depreciation) 2,908,870 110,385 234,885 (306,443) 2,947,697 Operating expense (excluding depreciation) 199,738 13,581 64,108 — 277,427 Depreciation and amortization 53,930 21,899 10,692 3,515 90,036 Impairment expense 55,989 — 29,817 — 85,806 General and administrative expense (excluding depreciation) — — — 41,288 41,288 Acquisition and integration costs — — — 614 614 Operating income (loss) $ (331,826) $ 35,044 $ 24,211 $ (45,427) $ (317,998) ________________________________________________________ (1) Our logistics operations consist primarily of intercompany transactions which eliminate on a consolidated basis.
Year ended December 31, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 7,969,480 $ 260,779 $ 592,480 $ (590,784) $ 8,231,955 Cost of revenues (excluding depreciation) 6,845,834 145,944 437,198 (590,867) 6,838,109 Operating expense (excluding depreciation) 373,612 24,450 87,525 — 485,587 Depreciation and amortization 81,017 25,122 11,462 2,229 119,830 General and administrative expense (excluding depreciation) — — — 91,447 91,447 Equity earnings from refining and logistics investments (7,363) (4,481) — — (11,844) Acquisition and integration costs — — — 17,482 17,482 Par West redevelopment and other costs — — — 11,397 11,397 Loss (gain) on sale of assets, net 219 — (308) 30 (59) Operating income (loss) $ 676,161 $ 69,744 $ 56,603 $ (122,502) $ 680,006 Year ended December 31, 2022 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 7,046,060 $ 198,821 $ 570,206 $ (493,302) $ 7,321,785 Cost of revenues (excluding depreciation) 6,332,694 109,458 428,712 (494,850) 6,376,014 Operating expense (excluding depreciation) 236,989 14,988 81,229 — 333,206 Depreciation and amortization 65,472 20,579 10,971 2,747 99,769 General and administrative expense (excluding depreciation) — — — 62,396 62,396 Acquisition and integration costs — — — 3,663 3,663 Par West redevelopment and other costs 9,003 — — — 9,003 Loss (gain) on sale of assets, net 1 (253) 56 27 (169) Operating income (loss) $ 401,901 $ 54,049 $ 49,238 $ (67,285) $ 437,903 Year ended December 31, 2021 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 4,471,111 $ 184,734 $ 456,416 $ (402,172) $ 4,710,089 Cost of revenues (excluding depreciation) 4,306,371 96,828 337,476 (402,201) 4,338,474 Operating expense (excluding depreciation) 203,511 14,722 71,845 — 290,078 Depreciation and amortization 58,258 22,044 10,880 3,059 94,241 Impairment expense 1,838 — — — 1,838 General and administrative expense (excluding depreciation) — — — 48,096 48,096 Acquisition and integration costs — — — 87 87 Par West redevelopment and other costs 9,591 — — — 9,591 Loss (gain) on sale of assets, net (19,659) (19) (45,034) 15 (64,697) Operating income (loss) $ (88,799) $ 51,159 $ 81,249 $ (51,228) $ (7,619) ________________________________________________________ (1) Our logistics operations consist primarily of intercompany transactions which eliminate on a consolidated basis.
For the year ended December 31, 2022, our logistics Adjusted Gross Margin was approximately $89.4 million, an increase of $1.5 million compared to $87.9 million for the year ended December 31, 2021. The increase was primarily driven by higher third party revenues partially offset by net 2% and 4% decreased throughput across our Hawaii and Wyoming logistics assets, respectively. Retail.
The increase was 41 primarily driven by higher third party revenues partially offset by net 2% and 4% decreased throughput across our Hawaii and Wyoming logistics assets, respectively. Retail.
Please read Note 2—Summary of Significant Accounting Policies, “Income Taxes,” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Please read Note 2—Summary of Significant Accounting Policies, “Income Taxes,” to our consolidated financial statements under Item 8 of this Form 10-K for further information. In the fourth quarter of 2023, we analyzed projections for our future taxable income and the absence of objective negative evidence, such as a cumulative loss in recent years.
Please read Note 6—Inventories to our consolidated financial statements under Item 8 of this Form 10-K for additional information. All of the crude oil utilized at the Hawaii refinery is financed by J. Aron under procurement contracts. The crude oil remains in the legal title of J. Aron and is stored in our storage tanks governed by a storage agreement.
A portion of the crude oil utilized at the Hawaii refinery is financed by J. Aron under procurement contracts. The crude oil remains in the legal title of J. Aron and is stored in our storage tanks governed by a storage agreement. Legal title to the crude oil passes to us at the tank outlet. After processing, J.
Please read Note 8—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information, including the asset impairment we recorded in the first quarter of 2020.
Please read Note 9—Property, Plant, and Equipment and Impairment of Long-Lived Assets to our consolidated financial statements under Item 8 of this Form 10-K for further information. Environmental Matters and Asset Retirement Obligations We record liabilities when environmental assessments and/or remedial efforts are probable and can be reasonably estimated.
Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, payments related to acquisitions, and to repay or refinance indebtedness. 57 We believe our cash flows from operations and available capital resources will be sufficient to meet our current capital and turnaround expenditures, working capital, and debt service requirements for the next 12 months.
We believe our cash flows from operations and available capital resources will be sufficient to meet our current capital and turnaround expenditures, working capital, and debt service requirements for the next 12 months. We may seek to raise additional debt or equity capital to fund acquisitions and any other significant changes to our business or to refinance existing debt.
The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), on a historical basis for the periods indicated (in thousands): Year Ended December 31, 2022 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 364,189 $ 289,575 $ (289,575) $ 364,189 Inventory valuation adjustment — (15,712) — (15,712) RINs mark-to-market adjustments — 105,760 — 105,760 Unrealized loss on derivatives — 9,336 — 9,336 Acquisition and integration costs 3,396 267 — 3,663 Debt extinguishment and commitment costs — 5,329 — 5,329 Changes in valuation allowance and other deferred tax items (1) — — — — Change in value of common stock warrants — — — — Severance costs 351 1,921 — 2,272 Impairment expense — — — — Impairments of Investments in Laramie Energy, LLC (2) — — — — Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2) — — — — Loss (gain) on sale of assets, net 27 (196) — (169) Depreciation and amortization 2,131 97,448 190 99,769 Interest expense and financing costs, net 1 68,655 (368) 68,288 Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — — — Equity losses (income) from subsidiaries (388,008) — 388,008 — Income tax expense (benefit) 362 96,995 (96,647) 710 Adjusted EBITDA (3) $ (17,551) $ 659,378 $ 1,608 $ 643,435 55 Year Ended December 31, 2021 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (81,297) $ (91,010) $ 91,010 $ (81,297) Inventory valuation adjustment — 31,841 — 31,841 RINs mark-to-market adjustments — 66,350 — 66,350 Unrealized loss on derivatives — 1,517 — 1,517 Acquisition and integration costs 87 — — 87 Debt extinguishment and commitment costs — 6,728 1,416 8,144 Changes in valuation allowance and other deferred tax items (1) — — — — Change in value of common stock warrants — — — — Severance costs — 84 — 84 Impairment expense — 1,838 — 1,838 Impairments of Investment in Laramie Energy, LLC (2) — — — — Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2) — — — — Loss (gain) on sale of assets, net 15 (10,949) (53,763) (64,697) Depreciation and amortization 2,452 91,550 239 94,241 Interest expense and financing costs, net 2,600 64,209 (316) 66,493 Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — — — Equity losses (income) from subsidiaries 63,649 — (63,649) — Income tax expense (benefit) 26 (24,835) 25,830 1,021 Adjusted EBITDA (3) $ (12,468) $ 137,323 $ 767 $ 125,622 56 Year Ended December 31, 2020 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (409,086) $ (288,109) $ 288,109 $ (409,086) Inventory valuation adjustment — 9,994 — 9,994 RINs mark-to-market adjustments — 81,709 — 81,709 Unrealized gain on derivatives — (4,804) — (4,804) Acquisition and integration costs — 614 — 614 Debt extinguishment and commitment costs — — — — Changes in valuation allowance and other deferred tax items (1) — — (20,896) (20,896) Change in value of common stock warrants (4,270) — — (4,270) Severance costs 157 355 — 512 Impairment expense — 85,806 — 85,806 Impairment of Investment in Laramie Energy, LLC (2) — — 45,294 45,294 Par’s share of Laramie Energy’s unrealized gain on derivatives (2) — — (1,110) (1,110) Loss (gain) on sale of assets, net — — — — Depreciation and amortization 2,900 86,622 514 90,036 Interest expense and financing costs, net 4,982 61,856 3,384 70,222 Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses — — 2,721 2,721 Equity losses (income) from subsidiaries 394,197 — (394,197) — Income tax expense (benefit) 177 (80,914) 80,913 176 Adjusted EBITDA (3) $ (10,943) $ (46,871) $ 4,732 $ (53,082) ________________________________________________________ (1) Includes increases in (releases of) our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance.
The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), on a historical basis for the periods indicated (in thousands): Year Ended December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 728,642 $ 454,102 $ (454,102) $ 728,642 Inventory valuation adjustment — 102,710 — 102,710 Environmental obligation mark-to-market adjustments — (189,783) — (189,783) Unrealized loss (gain) on derivatives — (49,690) — (49,690) Par West redevelopment and other costs — 11,397 — 11,397 Acquisition and integration costs — 17,482 — 17,482 Debt extinguishment and commitment costs — 19,182 — 19,182 Severance costs 492 1,293 — 1,785 Equity losses from Laramie Energy, LLC, excluding cash distributions — — (14,279) (14,279) Loss (gain) on sale of assets, net 30 (89) — (59) Depreciation and amortization 1,618 118,024 188 119,830 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 24 71,968 (363) 71,629 Laramie Energy, LLC cash distributions to Par — — (10,706) (10,706) Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 3,443 3,443 Equity losses (income) from subsidiaries (759,528) — 759,528 — Income tax expense (benefit) — 153,017 (268,353) (115,336) Adjusted EBITDA (1) $ (28,722) $ 709,613 $ 15,356 $ 696,247 50 Year Ended December 31, 2022 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 364,189 $ 289,575 $ (289,575) $ 364,189 Inventory valuation adjustment — (15,712) — (15,712) Environmental obligation mark-to-market adjustments — 105,760 — 105,760 Unrealized loss on derivatives — 9,336 — 9,336 Acquisition and integration costs 3,396 267 — 3,663 Debt extinguishment and commitment costs — 5,329 — 5,329 Severance costs 351 1,921 — 2,272 Loss (gain) on sale of assets, net 27 (196) — (169) Depreciation and amortization 2,131 97,448 190 99,769 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 1 68,655 (368) 68,288 Equity losses (income) from subsidiaries (388,008) — 388,008 — Income tax expense (benefit) 362 96,995 (96,647) 710 Adjusted EBITDA (1) $ (17,551) $ 659,378 $ 1,608 $ 643,435 Year Ended December 31, 2021 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (81,297) $ (91,010) $ 91,010 $ (81,297) Inventory valuation adjustment — 31,841 — 31,841 Environmental obligation mark-to-market adjustments — 66,350 — 66,350 Unrealized gain on derivatives — (1,393) — (1,393) Acquisition and integration costs 87 — — 87 Debt extinguishment and commitment costs — 6,728 1,416 8,144 Severance costs — 84 — 84 Impairment expense — 1,838 — 1,838 Loss (gain) on sale of assets, net 15 (10,949) (53,763) (64,697) Depreciation and amortization 2,452 91,550 239 94,241 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 2,600 67,119 (316) 69,403 Equity losses (income) from subsidiaries 63,649 — (63,649) — Income tax expense (benefit) 26 (24,835) 25,830 1,021 Adjusted EBITDA (1) $ (12,468) $ 137,323 $ 767 $ 125,622 ________________________________________________________ (1) Please read the Non-GAAP Performance Measures and Adjusted Net Income (Loss) and Adjusted EBITDA discussions above for information regarding the components of Adjusted Net Income (Loss) and Adjusted EBITDA.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+3 added−3 removed2 unchanged
Biggest changeWe also had interest rate exposure in connection with our liability under the J. Aron Supply and Offtake Agreement and the MLC Washington Refinery Intermediation Agreement for which we pay charges based on three-month LIBOR.
Biggest changeInterest Rate Risk As of December 31, 2023, we had $665.6 million of indebtedness that was subject to floating interest rates. We also had interest rate exposure in connection with our liabilities under the J. Aron Supply and Offtake Agreement for which we pay charges based on three-month Secured Overnight Financing Rate (“SOFR”).
Compliance Program Price Risk We are exposed to market risks related to the volatility in the price of RINs required to comply with the Renewable Fuel Standard. Our renewable volume obligation (“RVO”) is based on a percentage of our Hawaii, Wyoming, and Washington refineries’ production of on-road transportation fuel. The EPA sets the RVO percentages annually.
Compliance Program Price Risk We are exposed to market risks related to the volatility in the price of RINs required to comply with the Renewable Fuel Standard. Our renewable volume obligation (“RVO”) is based on a percentage of our Hawaii, Wyoming, Washington and Montanta refineries’ production of on-road transportation fuel. The EPA sets the RVO percentages annually.
On June 3, 2022, the EPA finalized the 2021 and 2022 RVOs, reduced the existing 2020 RVO, denied 69 small refinery exemption petitions including ours, and proposed that certain small refineries be permitted to use an alternative RIN retirement schedule for their 2019-2020 compliance obligations.
On June 3, 2022, the EPA finalized the 2021 and 2022 RVOs, reduced the existing 2020 RVO, denied 69 small refinery exemption petitions including ours, and proposed that certain small refineries be permitted to use an alternative RIN retirement schedule for their 2019-2020 compliance obligations. On June 21, 2023, the EPA finalized the 2023, 2024, and 2025 RVOs.
An increase of 1% in the variable rate on our indebtedness, after considering the instruments subject to minimum interest rates, would result in an increase to our Cost of revenues (excluding depreciation) and Interest expense and financing costs, net of approximately $6.4 million and $3.9 million per year, respectively.
An increase of 1% in the variable rate on our indebtedness, after considering the instruments subject to minimum interest rates, would result in an increase to our Cost of revenues (excluding depreciation) and Interest expense and financing costs, net of approximately $0.6 million and $7.3 million per year, respectively.
Our predominant variable operating cost is the cost of fuel consumed in the refining process, which is included in Cost of revenues (excluding depreciation) on our consolidated statements of operations. For the year ended December 31, 2022, we consumed approximately 134 Mbpd of crude oil during the refining process across all our refineries.
Our predominant variable operating cost is the cost of fuel consumed in the refining process, which is included in Cost of revenues (excluding depreciation) on our consolidated statements of operations. For the year ended December 31, 2023, we consumed approximately 170 Mbpd of crude oil during the refining process across all our refineries.
We internally consumed approximately 3% of this throughput in the refining process, which is accounted for as a fuel cost. We have executed option 63 collars to economically hedge our internally consumed fuel cost at all our refineries. Please read Note 14—Derivatives to our consolidated financial statements under Item 8 of this Form 10-K for more information.
We internally consumed approximately 4% of this throughput in the refining process, which is accounted for as a fuel cost. We have executed option collars to economically hedge our internally consumed fuel cost at all our refineries. Please read Note 15—Derivatives to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Based on our net open futures positions at December 31, 2022, a $1 change in the price of crude oil, assuming all other factors remain constant, would result in $0.2 million change to the fair value of our derivative instruments and Cost of revenues (excluding depreciation).
Based on our net open futures positions at December 31, 2023, a $1 change in the price of crude oil, assuming all other factors remain constant, would result in $6.1 million change to the fair value of our derivative instruments and Cost of revenues (excluding depreciation).
We utilize exchange-traded futures, options, and over-the-counter (“OTC”) swaps to manage commodity price risks associated with: • the price for which we sell our refined products; • the price we pay for crude oil and other feedstocks; • our crude oil and refined products inventory; and • our fuel requirements for our refineries.
This analysis may differ from actual results. 58 We utilize exchange-traded futures, options, and over-the-counter (“OTC”) swaps to manage commodity price risks associated with: • the price for which we sell our refined products; • the price we pay for crude oil and other feedstocks; • our crude oil and refined products inventory; and • our fuel requirements for our refineries.
All of our futures and OTC swaps are executed to economically hedge our physical commodity purchases, sales, and inventory. Our open futures and OTC swaps will expire in April 2024.
Substantially all of our futures and OTC swaps are executed to economically hedge our physical commodity purchases, sales, and inventory. Our open futures and OTC swaps will expire in March 2025.
Assuming all other factors remain constant, a $1 per barrel change in average gross refining margins, based on our throughput of 134 Mbpd for the full year of 2022, would change annualized operating income by approximately $48.2 million. This analysis may differ from actual results.
Assuming all other factors remain constant, a $1 per barrel change in average gross refining margins, based on our throughput of 170 Mbpd for the full year of 2023, would change annualized operating income by approximately $61.3 million.
We will continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.
Please read Note 15—Derivatives for more information. 59 Credit Risk We are subject to the risk of loss resulting from nonpayment or nonperformance by our counterparties. We will continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.
Some of these contracts are derivative instruments, however, we elect the normal purchases normal sales exception and do not record these contracts at their fair values. Interest Rate Risk As of December 31, 2022, we had $203.1 million of indebtedness that was subject to floating interest rates.
Some of these contracts are derivative instruments, however, we elect the normal purchases normal sales exception and do not record these contracts at their fair values. Additionally, we are exposed to market risks related to the volatility in the price of compliance credits required to comply with the Washington Climate Commitment Act and Clean Fuel Standard.
We may utilize interest rate swaps to manage our interest rate risk. As of December 31, 2020, we had entered into an interest rate swap at an average fixed rate of 3.91% in exchange for the floating interest rate on the notional amounts due under the Retail Property Term Loan.
We may utilize interest rate swaps to manage our interest rate risk. As of December 31, 2023 we had entered into an interest rate collar at a cap of 5.50% and floor of 2.30%, based on the three month SOFR as of the fixing date. This swap expires on May 31, 2026.
Removed
This swap was set to expire on April 1, 2024, the maturity date of the Retail Property Term Loan. On February 23, 2021, we terminated and repaid all amounts outstanding under the Retail Property Term Loan and the related interest rate swap. We may utilize interest rate swaps to manage our interest rate risk.
Added
To the extent we are unable to reduce the amount of greenhouse gas emissions in the transportation fuels we sell in Washington, we must purchase compliance credits at auction or in the open market.
Removed
As of December 31, 2022, we did not hold any open interest rate swaps. We have several contracts that reference London Interbank Offered Rate (“LIBOR”), some of which terminate after LIBOR is anticipated to cease being reported in 2023. Our facilities that currently reference LIBOR include transition language consistent with the scheduled transition.
Added
The number of credits required to comply with the Washington Climate Commitment Act and Clean Fuel Standard is based on the amount of greenhouse gas emissions in the transportation fuels we sell in Washington compared to certain regulatory limits.
Removed
We do not expect the transition away from LIBOR to have a material impact on our financial condition, results of operations, or cash flows. Credit Risk We are subject to the risk of loss resulting from nonpayment or nonperformance by our counterparties.
Added
To mitigate the impact of this risk on our results of operations and cash flows, we may purchase credits when we deem the price to be favorable. Some of these contracts may be derivative instruments and recorded at their fair value. Please read Note 15—Derivatives to our consolidated financial statements under Item 8 of this Form 10-K for more information.

Other PARR 10-K year-over-year comparisons