10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________________________________________________________________________________________________________

FORM 10-Q

________________________________________________________________________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File No. 001-36550

________________________________________________________________________________________________________________________

PAR PACIFIC HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________________________________________

Delaware	84-1060803
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

825 Town & Country Lane, Suite 1500
Houston,	Texas	77024
(Address of principal executive offices)		(Zip Code)

(281) 899-4800 

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. Yes  ¨ No  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ý

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, $0.01 par value	PARR	New York Stock Exchange

51,182,104 shares of Common Stock, $0.01 par value, were outstanding as of November 1, 2019.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION		Page No.
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Cash Flows	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	4
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	57
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	58
Item 6.	Exhibits	59

The terms “Par,” “Company,” “we,” “our,” and “us” refer to Par Pacific Holdings, Inc. and its consolidated subsidiaries unless the context suggests otherwise.

PART I - FINANCIAL INFORMATION 

Item 1. FINANCIAL STATEMENTS

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)

	September 30, 2019			December 31, 2018
ASSETS
Current assets
Cash and cash equivalents	$	110,688		$	75,076
Restricted cash	2,447			743
Total cash, cash equivalents, and restricted cash	113,135			75,819
Trade accounts receivable	232,413			160,338
Inventories	671,743			322,065
Prepaid and other current assets	10,495			28,370
Total current assets	1,027,786			586,592
Property and equipment
Property, plant, and equipment	1,127,639			649,768
Less accumulated depreciation, depletion, and amortization	(165,416		)	(111,507		)
Property and equipment, net	962,223			538,261
Long-term assets
Operating lease assets	373,269			—
Investment in Laramie Energy, LLC	51,815			136,656
Intangible assets, net	22,214			23,947
Goodwill	193,812			153,397
Other long-term assets	21,766			21,881
Total assets	$	2,652,885		$	1,460,734
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	12,292		$	33
Obligations under inventory financing agreements	731,400			373,882
Accounts payable	142,399			54,787
Deferred revenue	7,321			6,681
Accrued taxes	26,889			17,256
Operating lease liabilities	54,476			—
Other accrued liabilities	76,819			54,562
Total current liabilities	1,051,596			507,201
Long-term liabilities
Long-term debt, net of current maturities	630,129			392,607
Common stock warrants	8,072			5,007
Finance lease liabilities	5,976			6,123
Operating lease liabilities	320,553			—
Other liabilities	57,049			37,467
Total liabilities	2,073,375			948,405
Commitments and contingencies (Note 13)
Stockholders’ equity
Preferred stock, $0.01 par value: 3,000,000 shares authorized, none issued	—			—
Common stock, $0.01 par value; 500,000,000 shares authorized at September 30, 2019 and December 31, 2018, 51,168,084 shares and 46,983,924 shares issued at September 30, 2019 and December 31, 2018, respectively	512			470
Additional paid-in capital	679,706			617,937
Accumulated deficit	(103,381		)	(108,751		)
Accumulated other comprehensive income	2,673			2,673
Total stockholders’ equity	579,510			512,329
Total liabilities and stockholders’ equity	$	2,652,885		$	1,460,734

 

See accompanying notes to the condensed consolidated financial statements.

1

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Revenues	$	1,401,638		$	909,781		$	4,002,382		$	2,531,616
Operating expenses
Cost of revenues (excluding depreciation)	1,265,755			822,785			3,578,329			2,232,608
Operating expense (excluding depreciation)	83,237			54,905			231,741			158,975
Depreciation, depletion, and amortization	22,227			13,192			65,103			39,004
General and administrative expense (excluding depreciation)	11,391			11,871			34,435			35,981
Acquisition and integration costs	623			2,134			4,325			3,515
Total operating expenses	1,383,233			904,887			3,913,933			2,470,083
Operating income	18,405			4,894			88,449			61,533
Other income (expense)
Interest expense and financing costs, net	(18,348		)	(10,425		)	(57,336		)	(29,346		)
Debt extinguishment and commitment costs	—			—			(9,186		)	—
Other income, net	83			85			2,347			861
Change in value of common stock warrants	(826		)	(1,067		)	(3,065		)	(396		)
Change in value of contingent consideration	—			—			—			(10,500		)
Equity earnings (losses) from Laramie Energy, LLC	(85,633		)	1,050			(84,841		)	4,274
Total other income (expense), net	(104,724		)	(10,357		)	(152,081		)	(35,107		)
Income (loss) before income taxes	(86,319		)	(5,463		)	(63,632		)	26,426
Income tax benefit (expense)	2,428			(359		)	69,002			(885		)
Net income (loss)	$	(83,891	)	$	(5,822	)	$	5,370		$	25,541
Income (loss) per share
Basic	$	(1.65	)	$	(0.13	)	$	0.11		$	0.55
Diluted	$	(1.65	)	$	(0.13	)	$	0.11		$	0.55
Weighted-average number of shares outstanding
Basic	50,942			45,709			49,973			45,676
Diluted	50,942			45,709			50,071			45,721

 

See accompanying notes to the condensed consolidated financial statements.

2

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	5,370		$	25,541
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion, and amortization	65,103			39,004
Debt extinguishment and commitment costs	9,186			—
Non-cash interest expense	7,064			5,358
Change in value of common stock warrants	3,065			396
Deferred taxes	(69,563		)	839
Stock-based compensation	4,646			4,799
Unrealized loss on derivative contracts	6,328			8,105
Equity (earnings) losses from Laramie Energy, LLC	84,841			(4,274		)
Net changes in operating assets and liabilities:
Trade accounts receivable	(39,455		)	(12,819		)
Prepaid and other assets	13,838			1,868
Inventories	(247,318		)	(8,994		)
Deferred turnaround expenditures	(8,986		)	—
Obligations under inventory financing agreements	212,862			(43,250		)
Accounts payable, other accrued liabilities, and operating lease assets and liabilities	51,651			35,327
Net cash provided by operating activities	98,632			51,900
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired	(274,291		)	(74,331		)
Proceeds from purchase price settlement related to asset acquisition	3,226			—
Capital expenditures	(64,086		)	(30,198		)
Other investing activities	864			805
Net cash used in investing activities	(334,287		)	(103,724		)
Cash flows from financing activities:
Proceeds from borrowings	470,505			106,500
Repayments of borrowings	(207,121		)	(114,926		)
Net borrowings on deferred payment arrangements and receivable advances	27,783			30,682
Payment of deferred loan costs	(13,450		)	(379		)
Payments for debt extinguishment and commitment costs	(7,142		)	—
Other financing activities, net	2,396			(653		)
Net cash provided by financing activities	272,971			21,224
Net increase (decrease) in cash, cash equivalents, and restricted cash	37,316			(30,600		)
Cash, cash equivalents, and restricted cash at beginning of period	75,819			119,077
Cash, cash equivalents, and restricted cash at end of period	$	113,135		$	88,477
Supplemental cash flow information:
Net cash received (paid) for:
Interest	$	(35,913	)	$	(12,981	)
Taxes	(3,974		)	(48		)
Non-cash investing and financing activities:
Accrued capital expenditures	$	7,207		$	4,048
Common stock issued for business combination	36,980			—
Common stock issued to repurchase convertible notes	30,055			—

 

See accompanying notes to the condensed consolidated financial statements.

3

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands)

											Accumulated
					Additional						Other
	Common Stock				Paid-In			Accumulated			Comprehensive		Total
	Shares		Amount		Capital			Deficit			Income		Equity
Balance, December 31, 2017	45,776		$	458	$	593,295		$	(148,178	)	$	2,144	$	447,719
Stock-based compensation	272		1		1,437			—			—		1,438
Purchase of common stock for retirement	(29	)	—		(543		)	—			—		(543		)
Other comprehensive income (loss)	—		—		—			—			—		—
Net income	—		—		—			15,185			—		15,185
Balance, March 31, 2018	46,019		459		594,189			(132,993		)	2,144		463,799
Stock-based compensation	(8	)	1		1,663			—			—		1,664
Purchase of common stock for retirement	(3	)	—		(21		)	—			—		(21		)
Other comprehensive income (loss)	—		—		—			—			—		—
Net income	—		—		—			16,178			—		16,178
Balance, June 30, 2018	46,008		460		595,831			(116,815		)	2,144		481,620
Stock-based compensation	15		—		1,696			—			—		1,696
Purchase of common stock for retirement	(14	)			(88		)	—			—		(88		)
Other comprehensive income (loss)	—		—		—			—			—		—
Net loss	—		—		—			(5,822		)	—		(5,822		)
Balance, September 30, 2018	46,009		$	460	$	597,439		$	(122,637	)	$	2,144	$	477,406

4

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (continued)

(Unaudited)

(in thousands)

											Accumulated
					Additional						Other
	Common Stock				Paid-In			Accumulated			Comprehensive		Total
	Shares		Amount		Capital			Deficit			Income		Equity
Balance, December 31, 2018	46,984		$	470	$	617,937		$	(108,751	)	$	2,673	$	512,329
Issuance of common stock for business combination	2,364		23		36,957			—			—		36,980
Stock-based compensation	246		3		1,532			—			—		1,535
Purchase of common stock for retirement	(44	)	—		(734		)	—			—		(734		)
Net income	—		—		—			61,092			—		61,092
Balance, March 31, 2019	49,550		496		655,692			(47,659		)	2,673		611,202
Issuance of common stock for convertible notes repurchase, net (1)	1,449		14		17,775			—			—		17,789
Issuance of common stock for employee stock purchase plan	37		—		754			—			—		754
Stock-based compensation	(31	)	—		1,550			—			—		1,550
Purchase of common stock for retirement	(2	)	—		(20		)	—			—		(20		)
Exercise of stock options	21		—		119			—			—		119
Net income	—		—		—			28,169			—		28,169
Balance, June 30, 2019	51,024		510		675,870			(19,490		)	2,673		659,563
Stock-based compensation	(20	)	—		1,448			—			—		1,448
Purchase of common stock for retirement	(6	)	—		(414		)	—			—		(414		)
Exercise of stock options	170		2		2,802			—			—		2,804
Net loss	—		—		—			(83,891		)	—		(83,891		)
Balance, September 30, 2019	51,168		$	512	$	679,706		$	(103,381	)	$	2,673	$	579,510

________________________________________

(1) The issuance of common stock for the repurchase of a portion of our 5.00% Convertible Senior Notes in the three months ended June 30, 2019 is presented net of a $12.3 million write-off associated with the equity component of the repurchased notes.

See accompanying notes to the condensed consolidated financial statements.

5

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Note 1—Overview

Par Pacific Holdings, Inc. and its wholly owned subsidiaries (“Par” or the “Company”) own and operate market-leading energy and infrastructure businesses. Our strategy is to acquire and develop businesses in logistically-complex markets. Currently, we operate in three primary business segments:

1) Refining - We own and operate three refineries with total throughput capacity of over 200 thousand barrels per day (“Mbpd”). Our co-located refinery in Kapolei, Hawaii, produces ultra-low sulfur diesel (“ULSD”), gasoline, jet fuel, marine fuel, low sulfur fuel oil (“LSFO”), and other associated refined products primarily for consumption in Hawaii. Our refinery in Newcastle, Wyoming, produces gasoline, ULSD, jet fuel, and other associated refined products that are primarily marketed in Wyoming and South Dakota. Our refinery in Tacoma, Washington, acquired in January 2019, produces distillates, gasoline, asphalt, and other associated refined products primarily marketed in the Pacific Northwest.

2) Retail - Our retail outlets in Hawaii sell gasoline, diesel, and retail merchandise throughout the islands of Oahu, Maui, Hawaii, and Kauai. Our Hawaii retail network includes Hele and “76” branded retail sites, company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations. Through September 30, 2019, we completed the rebranding of 26 of our 34 company-operated convenience stores in Hawaii to “nomnom,” a new proprietary brand. Our retail outlets in Washington and Idaho sell gasoline, diesel, and retail merchandise and operate under the “Cenex®” and “Zip Trip®” brand names.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies. 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 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 the Ellsworth Air Force Base in South Dakota. Beginning in January 2019, 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 McChord Air Force Base.

As of September 30, 2019, we owned a 46.0% equity investment in Laramie Energy, LLC (“Laramie Energy”). Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado.

Our Corporate and Other reportable segment primarily includes general and administrative costs.

Note 2—Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of Par and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts previously reported in our condensed consolidated financial statements for prior periods have been reclassified to conform with the current presentation.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. The condensed consolidated financial statements contained in this report include all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the complete fiscal year or for any other period. The condensed consolidated balance sheet as of December 31, 2018 was derived from our audited consolidated financial statements as of that date. These condensed consolidated financial statements should be read together with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. Actual amounts could differ from these estimates.

6

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Restricted Cash

Restricted cash consists of cash not readily available for general purpose cash needs. Restricted cash relates to cash held at commercial banks to support letter of credit facilities and certain ongoing bankruptcy recovery trust claims.

Inventories

Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost or net realizable value using the first-in, first-out accounting method (“FIFO”). Commodity inventories at the Washington refinery are stated at the lower of cost or net realizable value using the last-in, first-out (“LIFO”) inventory accounting method. We value merchandise along with spare parts, materials, and supplies at average cost. Our LIFO reserve was $10.3 million as of September 30, 2019.

All of the crude oil utilized at the Hawaii refinery is financed by J. Aron & Company (“J. Aron”) under the Supply and Offtake Agreements as described in Note 8—Inventory Financing Agreements. 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. 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 on our behalf as inventory with a corresponding obligation on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we are obligated to repurchase the inventory.

In connection with the consummation of the Washington Acquisition (as defined in Note 4—Acquisitions), we became a party to an intermediation arrangement (the “Washington Refinery Intermediation Agreement”) with Merrill Lynch Commodities, Inc. (“MLC”) as described in Note 8—Inventory Financing Agreements. Under this arrangement, U.S. Oil (as defined in Note 4—Acquisitions) purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain crude oil purchases. MLC’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third party issuing bank, or purchasing crude oil directly from third-parties on our behalf. U.S. Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of same, exclusively to MLC.

Cost Classifications

Cost of revenues (excluding depreciation) includes the hydrocarbon-related costs of inventory sold, transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our Renewable Identification Numbers (“RINs”) obligations, and certain hydrocarbon fees and taxes. Cost of revenues (excluding depreciation) also includes the unrealized gains (losses) on derivatives and inventory valuation adjustments. Certain direct operating expenses related to our logistics segment are also included in Cost of revenues (excluding depreciation).

Operating expense (excluding depreciation) includes direct costs of labor, maintenance and services, energy and utility costs, property taxes, and environmental compliance costs as well as chemicals and catalysts and other direct operating expenses.

The following table summarizes depreciation and finance lease amortization expense excluded from each line item in our condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues	$	4,763	$	1,620	$	12,579	$	4,866
Operating expense	13,630		7,155		40,212		20,560
General and administrative expense	797		1,297		2,341		3,345

Recent Accounting Pronouncements

There have been no developments to recent accounting pronouncements, including the expected dates of adoption and estimated effects on our financial condition, results of operations, and cash flows, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

7

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Accounting Principles Adopted

On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as amended by other ASUs issued since February 2019 (“ASU 2016-02” or “ASC 842”), using the modified retrospective transition method. Under this optional transition method, information presented prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for the period. There was no adjustment to our opening retained earnings as a result of the adoption of this ASU.

ASU 2016-02 requires lessees to recognize a right-of-use asset (“ROU asset”) and lease liability on the balance sheet for all rights and obligations created by leases. The new standard provided a number of optional practical expedients. We have elected:

• the package of practical expedients, permitting us to carryforward our conclusions regarding lease identification, classification, and initial direct costs for contracts that commenced prior to the effective date;

• the practical expedient pertaining to land easements, allowing us to account for existing land easements under our previous accounting policy;

• the short-term lease exemption, which states that leases that are 12 months or less are exempt from balance sheet reporting; and

• the practical expedient that allows us to combine lease and non-lease components.

ASC 842 had a material impact on our consolidated balance sheet; however, it did not materially impact our consolidated statement of operations or statement of cash flows. As a result of the adoption of ASC 842, we recorded ROU assets and lease liabilities related to operating leases of $347 million and $349 million, respectively. Our accounting for finance leases remained substantially unchanged. Additionally, we acquired operating lease assets and lease liabilities of $62 million in connection with the Washington Acquisition (as defined in Note 4—Acquisitions). Please read Note 12—Leases for further disclosures and information.

On January 1, 2019, we adopted ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) and elected not to reclassify to retained earnings the stranded effects in Accumulated Other Comprehensive Income related to the changes in the statutory tax rate that were charged to income from continuing operations under the requirements of Financial Accounting Standards Board (“FASB”) ASC Topic 740, “Income Taxes.” The adoption of ASU 2018-02 did not have a material impact on our financial condition, results of operations, and cash flows.

Note 3—Investment in Laramie Energy, LLC

As of September 30, 2019, we had a 46.0% ownership interest in Laramie Energy. Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado.

Laramie Energy has a $400 million revolving credit facility with a borrowing base currently set at $240 million that is secured by a lien on its natural gas and crude oil properties and related assets. As of September 30, 2019, the balance outstanding on the revolving credit facility was approximately $204.7 million. We are guarantors of Laramie Energy’s credit facility, with recourse limited to the pledge of our equity interest of our wholly owned subsidiary, Par Piceance Energy Equity, LLC. Under the terms of its credit facility, Laramie Energy is generally prohibited from making future cash distributions to its owners, including us.

At September 30, 2019, we conducted an impairment evaluation of our investment in Laramie Energy because of the significant decline in natural gas prices over the second quarter of 2019 and continued deterioration in the third quarter of 2019. We evaluate equity method investments for impairment when factors indicate that a decrease in the value of our investment has occurred and the carrying amount of our investment may not be recoverable. An impairment loss, based on the difference between the carrying value and the estimated fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary. At September 30, 2019, we determined that the estimated fair value of our investment in Laramie Energy was $51.8 million, compared to a carrying value of $133.3 million. The fair value estimate was determined using a discounted cash flow analysis based on natural gas forward strip prices as of September 30, 2019 for two years through December 31, 2021. A blend of 2021 forward strip pricing and third-party analyst pricing was used for years after 2021 through December 31, 2028. Other significant inputs used in the discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the applicable discount rate. As part of our evaluation, we considered the likelihood that Colorado Interstate Gas (CIG) prices, which have declined from an average spot price of $2.48 ($/MMBtu) in the first quarter of 2019, to $1.84 ($/MMBtu) in the second quarter of 2019 and $1.77 ($/MMBtu) in the third quarter of 2019, will recover in the near term. Based on the significant decline in natural gas prices over the past six months and the reduced likelihood that natural gas prices

8

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

will recover in the near term, we concluded that the decline in the fair value of our investment in Laramie Energy is other than temporary. As a result, we have recorded an impairment charge of $81.5 million on our statement of operations for the three months ended September 30, 2019. The decline in the estimated fair value of our investment in Laramie Energy and the resulting impairment charge is larger than previously disclosed primarily due to the continued decline in natural gas prices during the third quarter of 2019 and the impact of lower than expected prices on the value of Laramie Energy’s proved and unproved reserves.

The change in our equity investment in Laramie Energy is as follows (in thousands):

	Nine Months Ended September 30, 2019
Beginning balance	$	136,656
Equity losses from Laramie Energy	(8,344		)
Accretion of basis difference	5,018
Impairment	(81,515		)
Ending balance	$	51,815

Summarized financial information for Laramie Energy is as follows (in thousands):

	September 30, 2019		December 31, 2018
Current assets	$	16,704	$	28,569
Non-current assets	763,583		788,515
Current liabilities	29,332		41,681
Non-current liabilities	286,623		293,084

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Natural gas and oil revenues	$	38,967		$	58,557		$	150,161		$	151,988
Income (loss) from operations	(10,028		)	6,152			(4,490		)	11,642
Net loss	(12,586		)	(152		)	(18,139		)	(1,708		)

Laramie Energy’s net loss for the three and nine months ended September 30, 2019 includes $20.7 million and $63.1 million of depreciation, depletion, and amortization (“DD&A”) and $4.3 million of unrealized losses and $6.8 million of unrealized gains on derivative instruments, respectively. Laramie Energy’s net loss for the three and nine months ended September 30, 2018 includes $20.7 million and $52.7 million of DD&A and $3.2 million and $6.7 million of unrealized losses on derivative instruments, respectively.

At September 30, 2019 and December 31, 2018, our equity in the underlying net assets of Laramie Energy exceeded the carrying value of our investment by approximately $161.8 million and $85.2 million, respectively. This difference arose primarily due to lack of control and marketability discounts and other-than-temporary impairments of our equity investment in Laramie Energy.

Note 4—Acquisitions

Washington Acquisition

On November 26, 2018, we entered into a Purchase and Sale Agreement to acquire U.S. Oil & Refining Co. and certain affiliated entities (collectively, “U.S. Oil”), a privately-held downstream business, for $358 million plus net working capital (the “Washington Acquisition”). The Washington Acquisition includes a 42 Mbpd refinery, a marine terminal, a unit train-capable rail loading terminal, and 2.9 MMbbls of refined product and crude oil storage. The refinery and associated logistics system are strategically located in Tacoma, Washington, and currently serve the Pacific Northwest market. On January 11, 2019, we completed the Washington Acquisition for a total purchase price of $326.5 million, including acquired working capital, consisting of cash consideration of $289.5 million and approximately 2.4 million shares of Par’s common stock with a fair value of $37.0 million issued to the seller of U.S. Oil. The cash consideration was funded in part through cash on hand, proceeds from borrowings under a new term loan facility entered into with Goldman Sachs Bank USA, as administrative agent, of $250.0 million (the “Term Loan B”) and proceeds from borrowings under a term loan from the Bank of Hawaii of $45.0 million (the “Par Pacific Term Loan”).

9

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Please read Note 9—Debt for further information on the Term Loan B and Par Pacific Term Loan. In January 2019, we incurred $5.4 million of commitment fees associated with the funding of the Washington Acquisition. Such commitment fees are presented as Debt extinguishment and commitment costs on our condensed consolidated statements of operations for the nine months ended September 30, 2019.

In connection with the consummation of the Washington Acquisition, we assumed the Washington Refinery Intermediation Agreement with MLC that provides a structured financing arrangement based on U.S. Oil’s crude oil and refined products inventories and associated accounts receivable. Please read Note 8—Inventory Financing Agreements for further information on the Washington Refinery Intermediation Agreement.

We accounted for the Washington Acquisition as a business combination whereby the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition. Goodwill recognized in the transaction was attributable to opportunities expected to arise from combining our operations with those of the Washington refinery and the utilization of our net operating loss carryforwards, as well as other intangible assets that do not qualify for separate recognition. Goodwill recognized as a result of the Washington Acquisition is not expected to be deductible for income tax reporting purposes.

A summary of the preliminary estimated fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Cash	$	16,146
Accounts receivable	34,954
Inventories	98,367
Prepaid and other assets	5,320
Property, plant, and equipment	412,766
Operating lease assets	62,337
Goodwill (1)	40,415
Total assets (2)	670,305
Obligations under inventory financing agreements	(116,873		)
Accounts payable	(55,444		)
Current operating lease obligations	(21,571		)
Other current liabilities	(18,411		)
Long-term operating lease obligations	(40,766		)
Deferred tax liability	(89,909		)
Other non-current liabilities	(804		)
Total liabilities	(343,778		)
Total	$	326,527

______________________________________________

(1) We allocated $23.4 million and $17.0 million of goodwill to our refining and logistics segments, respectively.

(2) We allocated $402.7 million and $267.6 million of total assets to our refining and logistics segments, respectively.

We have recorded a preliminary estimate of the fair value of the assets acquired and liabilities assumed and expect to finalize the purchase price allocation during the fourth quarter of 2019. The primary areas of the purchase price allocation that are not yet finalized relate to property, plant, and equipment, goodwill, and income taxes. During the six months ended September 30, 2019, the purchase price allocation was adjusted to record an increase in the property, plant, and equipment valuation of $2.1 million, a decrease in the deferred tax liability of $5.9 million, and a net decrease in working capital adjustments of $1.9 million. Goodwill decreased $6.1 million as a result of these adjusting entries. We incurred $2.2 million of acquisition costs related to the Washington Acquisition for the nine months ended September 30, 2019. These costs are included in Acquisition and integration costs on our condensed consolidated statement of operations.

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PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

The results of operations of U.S. Oil were included in our results beginning on January 11, 2019. For the three and nine months ended September 30, 2019, our results of operations included revenues of $300.0 million and $855.6 million and profit before tax of $29.4 million and $49.5 million related to U.S. Oil, respectively. The following unaudited pro forma financial information presents our consolidated revenues and net income (loss) as if the Washington Acquisition had been completed on January 1, 2018 (in thousands except per share information):

	Nine Months Ended September 30,
	2019			2018
Revenues	$	4,030,290		$	3,515,536
Net income (loss)	(72,544		)	19,897
Income (loss) per share
Basic	$	(1.45	)	$	0.41
Diluted	$	(1.45	)	$	0.41

These pro forma results were based on estimates and assumptions, which we believe are reasonable. They are not necessarily indicative of our consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during the periods presented. The pro forma results for the nine months ended September 30, 2019 and 2018 include adjustments to remeasure U.S. Oil’s LIFO inventory reserve as if the Washington Acquisition had been completed on January 1, 2018, record interest and other debt extinguishment costs related to issuance of the Term Loan B and Par Pacific Term Loan, and adjust U.S. Oil’s historical depreciation expense as a result of the fair value adjustment to Property and equipment, net. The pro forma results for the nine months ended September 30, 2019 also include an adjustment to eliminate the $67.0 million tax benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition.

Hawaii Refinery Expansion

On August 29, 2018, we entered into a Topping Unit Purchase Agreement with IES Downstream, LLC (“IES”) to purchase certain of IES’s refining units and related assets in addition to certain hydrocarbon and non-hydrocarbon inventory (collectively, the “Hawaii Refinery Expansion”). On December 19, 2018, we completed the asset purchase for total consideration of approximately $66.9 million, net of a $4.3 million receivable related to net working capital adjustments. The purchase price consisted of $47.6 million in cash and approximately 1.1 million shares of our common stock with a fair value of $19.3 million.

We accounted for the Hawaii Refinery Expansion as an asset acquisition whereby the purchase price was allocated entirely to the assets acquired. Of the total purchase price of $66.9 million, $45.2 million was allocated to property, plant, and equipment, $4.3 million to non-hydrocarbon inventory, and $17.4 million to hydrocarbon inventory. With the completion of the Hawaii Refinery Expansion, the Hawaii refinery operations now have two facility locations which are approximately two miles from one another: Par East, our legacy refinery assets, and Par West, the recently-acquired assets.

Northwest Retail Acquisition

On January 9, 2018, we entered into an Asset Purchase Agreement with CHS, Inc. to acquire twenty-one (21) owned retail gasoline, convenience store facilities and twelve (12) leased retail gasoline, convenience store facilities, all at various locations in Washington and Idaho (collectively, “Northwest Retail”). On March 23, 2018, we completed the acquisition for cash consideration of approximately $74.5 million (the “Northwest Retail Acquisition”).

As part of the Northwest Retail Acquisition, Par and CHS, Inc. entered into a multi-year branded petroleum marketing agreement for the continued supply of Cenex®-branded refined products to the acquired Cenex® Zip Trip convenience stores. In addition, the parties also entered into a multi-year supply agreement pursuant to which Par will supply refined products to CHS, Inc. within the Rocky Mountain and Pacific Northwest markets.

We accounted for the acquisition of Northwest Retail as a business combination whereby the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. Goodwill recognized in the transaction was attributable to opportunities expected to arise from combining our operations with Northwest Retail and utilization of our net operating loss carryforwards, as well as intangible assets that do not qualify for separate recognition. Goodwill recognized as a result of the Northwest Retail Acquisition is expected to be deductible for income tax reporting purposes.

11

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

A summary of the fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Cash	$	200
Inventories	4,138
Prepaid and other current assets	243
Property, plant, and equipment	30,230
Goodwill (1)	46,210
Accounts payable and other current liabilities	(759		)
Long-term capital lease obligations	(5,244		)
Other non-current liabilities	(487		)
Total	$	74,531

________________________________________________________

(1) The total goodwill balance of $46.2 million was allocated to our retail segment.

As of December 31, 2018, we finalized the Northwest Retail Acquisition purchase price allocation. We incurred $0.6 million of acquisition costs related to the Northwest Retail Acquisition for the nine months ended September 30, 2018. These costs are included in Acquisition and integration costs on our condensed consolidated statement of operations. No such costs were incurred during the three months ended September 30, 2018.

Note 5—Revenue Recognition

As of September 30, 2019 and December 31, 2018, receivables from contracts with customers were $223.0 million and $148.4 million, respectively. Our refining segment recognizes deferred revenues when cash payments are received in advance of delivery of products to the customer. Deferred revenue was $7.3 million and $6.7 million as of September 30, 2019 and December 31, 2018, respectively.

The following table provides information about disaggregated revenue by major product line and includes a reconciliation of the disaggregated revenues to total segment revenues (in thousands):

Three Months Ended September 30, 2019	Refining		Logistics		Retail
Product or service:
Gasoline	$	399,543	$	—	$	86,941
Distillates (1)	625,080		—		10,857
Other refined products (2)	311,724		—		—
Merchandise	—		—		24,098
Transportation and terminalling services	—		49,623		—
Other revenue	604		—		338
Total segment revenues (3)	$	1,336,951	$	49,623	$	122,234

Three Months Ended September 30, 2018	Refining		Logistics		Retail
Product or service:
Gasoline	$	260,392	$	—	$	89,358
Distillates (1)	466,148		—		11,282
Other refined products (2)	124,051		—		—
Merchandise	—		—		24,330
Transportation and terminalling services	—		30,660		—
Total segment revenues (3)	$	850,591	$	30,660	$	124,970

12

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Nine Months Ended September 30, 2019	Refining		Logistics		Retail
Product or service:
Gasoline	$	1,060,095	$	—	$	242,952
Distillates (1)	1,827,879		—		30,413
Other refined products (2)	941,109		—		—
Merchandise	—		—		68,176
Transportation and terminalling services	—		144,978		—
Other revenue	1,489		—		1,273
Total segment revenues (3)	$	3,830,572	$	144,978	$	342,814

Nine Months Ended September 30, 2018	Refining		Logistics		Retail
Product or service:
Gasoline	$	755,523	$	—	$	232,314
Distillates (1)	1,318,645		—		29,403
Other refined products (2)	317,094		—		—
Merchandise	—		—		61,536
Transportation and terminalling services	—		95,016		—
Total segment revenues (3)	$	2,391,262	$	95,016	$	323,253

_______________________________________________________

(1) Distillates primarily include diesel and jet fuel.

(2) Other refined products include fuel oil, gas oil, asphalt, and naphtha.

(3) Refer to Note 17—Segment Information for the reconciliation of segment revenues to total consolidated revenues.

Note 6—Inventories

Inventories at September 30, 2019 consisted of the following (in thousands):

	Titled Inventory		Supply and Offtake Agreements (1)		Total
Crude oil and feedstocks	$	192,807	$	120,305	$	313,112
Refined products and blendstock	132,795		164,627		297,422
Warehouse stock and other (2)	61,209		—		61,209
Total	$	386,811	$	284,932	$	671,743

Inventories at December 31, 2018 consisted of the following (in thousands):

	Titled Inventory		Supply and Offtake Agreements (1)		Total
Crude oil and feedstocks	$	7,000	$	117,877	$	124,877
Refined products and blendstock	62,401		100,175		162,576
Warehouse stock and other (2)	34,612		—		34,612
Total	$	104,013	$	218,052	$	322,065

________________________________________________________

(1) Please read Note 8—Inventory Financing Agreements for further information.

(2) Includes $17.1 million and $5.0 million of RINs and environmental credits as of September 30, 2019 and December 31, 2018, respectively.

As of September 30, 2019 and December 31, 2018, there was a $6.2 million and $3.8 million reserve for the lower of cost or net realizable value of inventory, respectively. Our LIFO inventory reserve was $10.3 million as of September 30, 2019.

13

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Note 7—Prepaid and Other Current Assets

Prepaid and other current assets at September 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Collateral posted with broker for derivative instruments (1)	$	4,076	$	2,759
Prepaid insurance	—		7,727
Deferred financing costs	280		—
Derivative assets	118		5,164
Other	6,021		12,720
Total	$	10,495	$	28,370

_________________________________________________________

(1) Our cash margin that is required as collateral deposits on our commodity derivatives cannot be offset against the fair value of open contracts except in the event of default. Please read Note 10—Derivatives for further information.

Note 8—Inventory Financing Agreements

Supply and Offtake Agreements

On June 1, 2015, we entered into several agreements with J. Aron to support the operations of our Hawaii refinery (the “Supply and Offtake Agreements”). The Supply and Offtake Agreements mature on May 31, 2021 and have a one-year extension option upon mutual agreement of the parties. Under the Supply and Offtake Agreements, J. Aron may enter into agreements with third parties whereby J. Aron will remit payments to these third parties for refinery procurement contracts for which we will become immediately obligated to reimburse J. Aron. As of September 30, 2019, we had no obligations due to J. Aron under this contractual undertakings agreement. On December 5, 2018, we amended the Supply and Offtake Agreements to account for additional processing capacity expected to be provided through the Hawaii Refinery Expansion. The amendment to the Supply and Offtake Agreements also (i) required us to increase our margin requirements by an aggregate of $2.5 million by making certain additional margin payments on December 19, 2018, March 1, 2019, and June 3, 2019, and (ii) only allows dividends, payments, or other distributions with respect to any equity interests in Par Hawaii Refining, LLC (“PHR”) in limited and restricted circumstances.

During the term of the Supply and Offtake Agreements, J. Aron and we will identify mutually acceptable contracts for the purchase of crude oil from third parties. Per the Supply and Offtake Agreements, J. Aron will provide up to 150 Mbpd per day of crude oil to our Hawaii refinery. Additionally, we agreed to sell and J. Aron agreed to buy, at market prices, refined products produced at our Hawaii refinery. We will then repurchase the refined products from J. Aron prior to selling the refined products to our retail operations or to third parties. The agreements also provide for the lease of crude oil and certain refined product storage facilities to J. Aron. Following the expiration or termination of the Supply and Offtake Agreements, we are obligated to purchase the crude oil and refined product inventories then owned by J. Aron and located at the leased storage facilities at then-current market prices.

Though title to the crude oil and certain refined product inventories resides with J. Aron, the Supply and Offtake Agreements are accounted for similar to a product financing arrangement; therefore, the crude oil and refined products inventories will continue to be included on our condensed consolidated balance sheets until processed and sold to a third party. Each reporting period, we record a liability in an amount equal to the amount we expect to pay to repurchase the inventory held by J. Aron based on current market prices.

For the three and nine months ended September 30, 2019, we incurred approximately $9.1 million and $24.7 million, respectively, of inventory intermediation fees related to the Supply and Offtake Agreements, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations. For the three and nine months ended September 30, 2018, we incurred approximately $5.0 million and $15.8 million of inventory intermediation fees related to the Supply and Offtake Agreements, respectively. For the three and nine months ended September 30, 2019, Interest expense and financing costs, net, on our condensed consolidated statements of operations includes approximately $1.3 million and $4.3 million of expenses related to the Supply and Offtake Agreements, respectively. For the three and nine months ended September 30, 2018, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $1.3 million and $3.3 million of expenses related to the Supply and Offtake Agreements, respectively.

14

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

The Supply and Offtake Agreements also include a deferred payment arrangement (“Deferred Payment Arrangement”) whereby we can defer payments owed under the agreements up to the lesser of $165 million or 85% of the eligible accounts receivable and inventory. Upon execution of the Supply and Offtake Agreements, we paid J. Aron a deferral arrangement fee of $1.3 million. The deferred amounts under the Deferred Payment Arrangement bear interest at a rate equal to three-month LIBOR plus 3.50% per annum. We also agreed to pay a deferred payment availability fee equal to 0.75% of the unused capacity under the Deferred Payment Arrangement. Amounts outstanding under the Deferred Payment Arrangement are included in Obligations under inventory financing agreements on our condensed consolidated balance sheets. Changes in the amount outstanding under the Deferred Payment Arrangement are included within Cash flows from financing activities on the condensed consolidated statements of cash flows. As of September 30, 2019 and December 31, 2018, the capacity of the Deferred Payment Arrangement was $101.0 million and $77.4 million, respectively. As of September 30, 2019 and December 31, 2018, we had $94.8 million and $68.4 million outstanding, respectively, under the Deferred Payment Arrangements.

Under the Supply and Offtake Agreements, we pay or receive certain fees from J. Aron based on changes in market prices over time. In February 2016, we fixed the market fee for the period from December 1, 2016 through May 31, 2018 for $14.6 million to be settled in eighteen equal monthly payments. In 2017, we fixed the market fee for the period from June 1, 2018 through May 2021 for an additional $2.2 million. The receivable from J. Aron was recorded as a reduction to our Obligations under inventory financing agreements pursuant to our Master Netting Agreement. As of September 30, 2019, the payable was $0.1 million. As of December 31, 2018 the receivable was $2.5 million.

Washington Refinery Intermediation Agreement

In connection with the consummation of the Washington Acquisition, we became a party to the Washington Refinery Intermediation Agreement with MLC that provides a structured financing arrangement based on U.S. Oil’s crude oil and refined products inventories and associated accounts receivable. Under this arrangement, U.S. Oil purchases crude oil supplied from third-party suppliers and MLC provides credit support for such crude oil purchases. MLC’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third-party issuing bank, or purchasing crude oil directly from third parties on our behalf. U.S. Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of same, exclusively to MLC. On November 1, 2019, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021, with an option for us to early terminate as early as March 31, 2021.

During the remaining term of the Washington Refinery Intermediation Agreement, MLC will make receivable advances to U.S. Oil based on an advance rate of 95% of eligible receivables, up to a total receivables advance maximum of $90.0 million (the “MLC receivable advances”), and additional advances based on crude oil and products inventories. Changes in the amount outstanding under the MLC receivable advances are included within Cash flows from financing activities on the condensed consolidated statements of cash flows. The MLC receivable advances bear interest at a rate equal to three-month LIBOR plus 3.25% per annum. We also agreed to pay an availability fee equal to 1.50% of the unused capacity under the MLC receivable advances. As part of the November 1, 2019 amendment, the availability fee was amended to equal 0.75% of the unused capacity under the MLC receivable advances. As of September 30, 2019, our outstanding balance under MLC receivable advances was equal to our borrowing base of $50.9 million. Additionally, as of September 30, 2019, we had approximately $72.2 million in letters of credit outstanding through MLC’s credit support.

For the three and nine months ended September 30, 2019, we incurred approximately $0.9 million and $2.7 million of inventory intermediation fees, respectively, related to the Washington Refinery Intermediation Agreement, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations. For the three and nine months ended September 30, 2019, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $2.0 million and $4.8 million of expenses, respectively, related to the Washington Refinery Intermediation Agreement.

The Supply and Offtake Agreements and the Washington Refinery Intermediation Agreement also provide us with the ability to economically hedge price risk on our inventories and crude oil purchases. Please read Note 10—Derivatives for further information.

15

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Note 9—Debt

The following table summarizes our outstanding debt (in thousands):

	September 30, 2019			December 31, 2018
5.00% Convertible Senior Notes due 2021	$	79,895		$	115,000
7.75% Senior Secured Notes due 2025	300,000			300,000
ABL Credit Facility	—			—
Mid Pac Term Loan	1,441			1,466
Term Loan B	243,750			—
Retail Property Term Loan	44,384			—
Principal amount of long-term debt	669,470			416,466
Less: unamortized discount and deferred financing costs	(27,049		)	(23,826		)
Total debt, net of unamortized discount and deferred financing costs	642,421			392,640
Less: current maturities	(12,292		)	(33		)
Long-term debt, net of current maturities	$	630,129		$	392,607

As of September 30, 2019, we had no letters of credit outstanding under the ABL Credit Facility and $3.7 million in cash-collateralized letters of credit and surety bonds outstanding. Additionally, as of December 31, 2018, we had approximately $13.5 million in letters of credit outstanding under the ABL Credit Facility.

Under the ABL Credit Facility, the indenture governing the 7.75% Senior Secured Notes, and the Term Loan B Facility, our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

7.75% Senior Secured Notes Due 2025

On December 21, 2017, Par Petroleum, LLC and Par Petroleum Finance Corp. (collectively, the “Issuers”), both our wholly owned subsidiaries, completed the issuance and sale of $300 million in aggregate principal amount of 7.75% Senior Secured Notes in a private placement under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The net proceeds of $289.2 million (net of financing costs and original issue discount of 1%) from the sale were used to repay our previous credit facilities and the forward sale agreement with J. Aron and for general corporate purposes.

The 7.75% Senior Secured Notes bear interest at a rate of 7.750% per year (payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2018) and will mature on December 15, 2025.

ABL Credit Facility

On December 21, 2017, in connection with the issuance of the 7.75% Senior Secured Notes, Par Petroleum, LLC, Par Hawaii, LLC, Hermes Consolidated, LLC, and Wyoming Pipeline Company (collectively, the “ABL Borrowers”), entered into a Loan and Security Agreement dated as of December 21, 2017 (the “ABL Credit Facility”) with certain lenders and Bank of America, N.A., as administrative agent and collateral agent. The ABL Credit Facility provides for a revolving credit facility that provides for revolving loans and for the issuance of letters of credit (the “ABL Revolver”). On July 24, 2018, we amended the ABL Credit Facility to increase the maximum principal amount at any time outstanding of the ABL Revolver by $10 million to $85 million, subject to a borrowing base. As of September 30, 2019, the ABL Revolver had no outstanding balance and a borrowing base of approximately $58.4 million.

5.00% Convertible Senior Notes Due 2021

As of September 30, 2019, the outstanding principal amount of the 5.00% Convertible Senior Notes was $79.9 million, the unamortized discount and deferred financing cost was $7.3 million, and the carrying amount of the liability component was $72.6 million. During May and June 2019, we entered into privately negotiated exchange agreements with a limited number of holders (the “Noteholders”) to repurchase $35.1 million in aggregate principal amount of the 5.00% Convertible Senior Notes held by the Noteholders for an aggregate of $16.2 million in cash and approximately 1.4 million shares of our common stock with a fair value of $30.1 million. We recognized a loss of approximately $3.7 million related to the extinguishment of the repurchased 5.00% Convertible Senior Notes in the nine months ended September 30, 2019.

16

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Term Loan B Facility

On January 11, 2019, Par Petroleum, LLC and Par Petroleum Finance Corp. entered into a new term loan facility with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto from time to time (the “Term Loan B Facility”). Pursuant to the Term Loan B Facility, the lenders made a term loan to the borrowers in the amount of $250.0 million (“Term Loan B”) on the closing date. The net proceeds from Term Loan B totaled $228.9 million after deducting the original issue discount, deferred financing costs, and commitment and other fees.

Loans under Term Loan B bear interest at a rate per annum equal to Adjusted LIBOR (as defined in the Term Loan B Facility) plus an applicable margin of 6.75% or at a rate per annum equal to Alternate Base Rate (as defined in the Term Loan B Facility) plus an applicable margin of 5.75%. In addition to the quarterly interest payments, Term Loan B requires quarterly principal payments of $3.1 million. Term Loan B matures on January 11, 2026.

The obligations of the borrowers under the Term Loan B Facility are guaranteed by Par Petroleum, LLC’s and Par Petroleum Finance Corp.’s existing and future direct or indirect domestic subsidiaries and by the Company, with respect to principal and interest only. The Term Loan B Facility and the 7.75% Senior Secured Notes are secured on a pari passu basis by first priority liens (subject to the relative priority of permitted liens) on substantially all of the property and assets of Par Petroleum, LLC, Par Petroleum Finance Corp., and their subsidiary guarantors, but excluding certain property which is collateral under the ABL Credit Facility, the Supply and Offtake Agreements, and the Washington Refinery Intermediation Agreement.

Par Pacific Term Loan Agreement

On January 9, 2019, we entered into a loan agreement (the “Par Pacific Term Loan Agreement”) with Bank of Hawaii (“BOH”). Pursuant to the Par Pacific Term Loan Agreement, BOH made a loan to the Company in the amount of $45.0 million (the “Par Pacific Term Loan”).

During the term of the Par Pacific Term Loan, the interest payments were due monthly and were based on the outstanding principal balance multiplied by a floating rate equal to 3.50% above the applicable LIBOR rate (as defined in the Par Pacific Term Loan Agreement) subject to an increased default interest rate in the event of a default. The Par Pacific Term Loan Agreement was originally scheduled to mature on July 9, 2019. We terminated and repaid all amounts outstanding under the Par Pacific Term Loan Agreement on March 29, 2019 using the proceeds of the Retail Property Term Loan (as defined below). We recognized approximately $0.1 million of debt extinguishment costs related to the unamortized deferred financing costs associated with the Par Pacific Term Loan Agreement in the nine months ended September 30, 2019.

Retail Property Term Loan

On March 29, 2019, Par Pacific Hawaii Property Company, LLC (“Par Property LLC”), our wholly owned subsidiary, entered into a term loan agreement (the “Retail Property Term Loan”) with BOH, which provided a term loan in the principal amount of $45.0 million. The proceeds from the Retail Property Term Loan were used to repay and terminate the Par Pacific Term Loan Agreement.

The Retail Property Term Loan is guaranteed by Par and secured by a lien on substantially all of the assets of Par Property LLC, including a mortgage lien on 21 retail properties in Hawaii (the “Portfolio Properties”). Certain covenants require us to maintain a loan-to-appraisal value of the Portfolio Properties ratio of not greater than 75% and an annual debt yield of at least 9.0%. Par is also subject to a minimum liquidity covenant measured on the last day of each fiscal quarter.

The Retail Property Term Loan bears interest based on a floating rate equal to the applicable LIBOR for a one-month interest period plus 1.5%. Principal and interest payments are payable monthly based on a 20-year amortization schedule, principal prepayments are allowed subject to applicable prepayment penalties, and the remaining unpaid principal, plus any unpaid interest or other charges, is due on April 1, 2024, the maturity date of the Retail Property Term Loan.

Cross Default Provisions

Included within each of our debt agreements are affirmative and negative covenants, and customary cross default provisions, that require the repayment of amounts outstanding on demand unless the triggering payment default or acceleration is remedied, rescinded, or waived. As of September 30, 2019, we were in compliance with all of our debt agreements.

Guarantors

In connection with our shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission (“SEC”) on February 6, 2019 and declared effective on February 15, 2019 (“Registration Statement”), we may sell

17

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

non-convertible debt securities and other securities in one or more offerings with an aggregate initial offering price of up to $750.0 million. Any non-convertible debt securities issued under the Registration Statement may be fully and unconditionally guaranteed (except for customary release provisions), on a joint and several basis, by some or all of our subsidiaries, other than subsidiaries that are “minor” within the meaning of Rule 3-10 of Regulation S-X (the “Guarantor Subsidiaries”). We have no “independent assets or operations” within the meaning of Rule 3-10 of Regulation S-X and certain of the Guarantor Subsidiaries may be subject to restrictions on their ability to distribute funds to us, whether by cash dividends, loans, or advances.

Note 10—Derivatives

Commodity Derivatives

We utilize commodity derivative contracts to manage our price exposure in our inventory positions, future purchases of crude oil, future purchases and sales of refined products, and crude oil consumption in our refining process. The derivative contracts that we execute to manage our price risk include exchange traded futures, options, and over-the-counter (“OTC”) swaps. Our futures, options, and OTC swaps are marked-to-market and changes in the fair value of these contracts are recognized within Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

We are obligated to repurchase the crude oil and refined products from J. Aron at the termination of the Supply and Offtake Agreements. Our Washington Refinery Intermediation Agreement contains forward purchase obligations for certain volumes of crude oil and refined products that are required to be settled at market prices on a monthly basis. We have determined that these obligations under the Supply and Offtake Agreements and Washington Refinery Intermediation Agreement contain embedded derivatives. As such, we have accounted for these embedded derivatives at fair value with changes in the fair value recorded in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

We have entered into forward purchase contracts for crude oil and forward purchases and sales contracts of refined products. We elect the normal purchases normal sales (“NPNS”) exception for all forward contracts that meet the definition of a derivative and are not expected to net settle. Any gains and losses with respect to these forward contracts designated as NPNS are not reflected in earnings until the delivery occurs. Our open futures expire at various dates through March 2020.

We elect to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting agreement. Our condensed consolidated balance sheets present derivative assets and liabilities on a net basis. Please read Note 11—Fair Value Measurements for the gross fair value and net carrying value of our derivative instruments. Our cash margin that is required as collateral deposits cannot be offset against the fair value of open contracts except in the event of default.

At September 30, 2019, our open commodity derivative contracts represented (in thousands of barrels):

Contract type	Purchases	Sales		Net
Futures	1,980	(1,116	)	864
Swaps	138	(138	)	—
Total	2,118	(1,254	)	864

At September 30, 2019, we also had option collars of 50 thousand barrels per month that economically hedge our internally consumed fuel at our Hawaii refinery. These option collars have a weighted-average strike price ranging from a floor of $48.40 per barrel to a ceiling of $65.00 per barrel and expire in December 2020.

Interest Rate Derivatives

We are exposed to interest rate volatility in our ABL Revolver, Term Loan B Facility, Retail Property Term Loan, Supply and Offtake Agreements, and Washington Refinery Intermediation Agreement. We may utilize interest rate swaps to manage our interest rate risk. As of September 30, 2019, we had entered into an interest rate swap at an average fixed rate of 3.91% in exchange for the floating interest rate and on the notional amounts due under the Retail Property Term Loan. This swap expires on April 1, 2024, the maturity date of the Retail Property Term Loan.

Our 5.00% Convertible Senior Notes include a redemption option and a related make-whole premium which represent an embedded derivative that is not clearly and closely related to the 5.00% Convertible Senior Notes. As such, we have accounted for this embedded derivative at fair value with changes in the fair value recorded in Interest expense and financing costs, net, on our condensed consolidated statements of operations. As of September 30, 2019, this embedded derivative was deemed to have a de minimis fair value.

18

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

The following table provides information on the fair value amounts (in thousands) of these derivatives as of September 30, 2019 and December 31, 2018 and their placement within our condensed consolidated balance sheets.

	Balance Sheet Location	September 30, 2019			December 31, 2018
		Asset (Liability)
Commodity derivatives (1)	Prepaid and other current assets	$	118		$	4,973
Commodity derivatives	Other accrued liabilities	(110		)	(700		)
J. Aron repurchase obligation derivative	Obligations under inventory financing agreements	(2,473		)	4,085
MLC repurchase obligation derivative	Obligations under inventory financing agreements	4,340			—
Interest rate derivatives	Prepaid and other current assets	—			191
Interest rate derivatives	Other accrued liabilities	(315		)	—
Interest rate derivatives	Other liabilities	(1,557		)	—

_________________________________________________________

(1) Does not include cash collateral of $4.1 million and $2.7 million recorded in Prepaid and other current assets and $9.5 million and $8.3 million in Other long-term assets as of September 30, 2019 and December 31, 2018, respectively.

The following table summarizes the pre-tax gains (losses) recognized on our condensed consolidated statements of operations resulting from changes in fair value of derivative instruments not designated as hedges charged directly to earnings (in thousands):

		Three Months Ended September 30,						Nine Months Ended September 30,
	Statement of Operations Location	2019			2018			2019			2018
Commodity derivatives	Cost of revenues (excluding depreciation)	$	(4,836	)	$	(2,842	)	$	(8,095	)	$	843
J. Aron repurchase obligation derivative	Cost of revenues (excluding depreciation)	(2,638		)	(4,330		)	(6,558		)	10,812
MLC repurchase obligation derivative	Cost of revenues (excluding depreciation)	4,656			—			1,317			—
Interest rate derivatives	Interest expense and financing costs, net	(415		)	(21		)	(1,885		)	1,277

Note 11—Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Common Stock Warrants

As of September 30, 2019 and December 31, 2018, we had 354,350 common stock warrants outstanding. We estimate the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock, which is a Level 3 fair value measurement. As of September 30, 2019 and December 31, 2018, the warrants had a weighted-average exercise price of $0.09 and $0.09 and a remaining term of 2.92 years and 3.67 years, respectively.

The estimated fair value of the common stock warrants was $22.78 and $14.13 per share as of September 30, 2019 and December 31, 2018, respectively.

Derivative Instruments

We utilize commodity derivative contracts to manage our price exposure to our inventory positions, future purchases of crude oil, future purchases and sales of refined products, and cost of crude oil consumed in the refining process. We may utilize interest rate swaps to manage our interest rate risk.

19

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as Level 1 instruments are valued using quoted prices in active markets for identical assets and liabilities. These include our exchange traded futures. Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Our Level 2 instruments include OTC swaps and options. These derivatives are valued using market quotations from independent price reporting agencies and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. The valuation of our J. Aron and MLC repurchase obligation embedded derivatives requires that we make estimates of the prices and differentials assuming settlement at the end of the reporting period; therefore, they are classified as Level 3 instruments. We do not have other commodity derivatives classified as Level 3 at September 30, 2019 or December 31, 2018. Please read Note 10—Derivatives for further information on derivatives.

Financial Statement Impact

Fair value amounts by hierarchy level as of September 30, 2019 and December 31, 2018 are presented gross in the tables below (in thousands):

	September 30, 2019
	Level 1			Level 2			Level 3			Gross Fair Value			Effect of Counter-Party Netting			Net Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives	$	2,000		$	813		$	—		$	2,813		$	(2,695	)	$	118
Liabilities
Common stock warrants	$	—		$	—		$	(8,072	)	$	(8,072	)	$	—		$	(8,072	)
Commodity derivatives	(1,946		)	(859		)	—			(2,805		)	2,695			(110		)
J. Aron repurchase obligation derivative	—			—			(2,473		)	(2,473		)	—			(2,473		)
MLC repurchase obligation derivative	—			—			4,340			4,340			—			4,340
Interest rate derivatives	—			(1,872		)	—			(1,872		)	—			(1,872		)
Total	$	(1,946	)	$	(2,731	)	$	(6,205	)	$	(10,882	)	$	2,695		$	(8,187	)

20

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

	December 31, 2018
	Level 1			Level 2			Level 3			Gross Fair Value			Effect of Counter-Party Netting			Net Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives	$	170		$	5,234		$	—		$	5,404		$	(431	)	$	4,973
Interest rate derivatives	—			191			—			191			—			191
Total	$	170		$	5,425		$	—		$	5,595		$	(431	)	$	5,164
Liabilities
Common stock warrants	$	—		$	—		$	(5,007	)	$	(5,007	)	$	—		$	(5,007	)
Commodity derivatives	(870		)	(261		)	—			(1,131		)	431			(700		)
J. Aron repurchase obligation derivative	—			—			4,085			4,085			—			4,085
Total	$	(870	)	$	(261	)	$	(922	)	$	(2,053	)	$	431		$	(1,622	)

_________________________________________________________

(1) Does not include cash collateral of $13.6 million and $10.9 million as of September 30, 2019 and December 31, 2018, respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.

A roll forward of Level 3 financial instruments measured at fair value on a recurring basis is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Balance, at beginning of period	$	(12,720	)	$	(10,559	)	$	(922	)	$	(26,372	)
Settlements	3,777			—			(4,121		)	—
Acquired	6,201			—			3,900			—
Total unrealized income (loss) included in earnings	(3,463		)	(5,397		)	(5,062		)	10,416
Balance, at end of period	$	(6,205	)	$	(15,956	)	$	(6,205	)	$	(15,956	)

The carrying value and fair value of long-term debt and other financial instruments as of September 30, 2019 and December 31, 2018 are as follows (in thousands):

	September 30, 2019
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	72,560	$	109,643
7.75% Senior Secured Notes due 2025 (1)	291,700		299,250
Mid Pac Term Loan (2)	1,441		1,441
Term Loan B Facility (1)	233,171		243,750
Retail Property Term Loan (2)	43,549		43,549
Common stock warrants (2)	8,072		8,072

21

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

	December 31, 2018
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	100,411	$	121,488
7.75% Senior Secured Notes due 2025 (1)	290,763		270,000
Mid Pac Term Loan (2)	1,466		1,466
Common stock warrants (2)	5,007		5,007

_________________________________________________________

(1) The fair value measurements of the 5.00% Convertible Senior Notes, 7.75% Senior Secured Notes, and Term Loan B Facility are considered Level 2 measurements as discussed below.

(2) The fair value measurements of the common stock warrants, Mid Pac Term Loan, and Retail Property Term Loan are considered Level 3 measurements in the fair value hierarchy.

(3) The carrying value of the 5.00% Convertible Senior Notes excludes the fair value of the equity component, which was classified as equity upon issuance.

The fair value of the 5.00% Convertible Senior Notes was determined by aggregating the fair value of the liability and equity components of the notes. The fair value of the liability component of the 5.00% Convertible Senior Notes was determined using a discounted cash flow analysis in which the projected interest and principal payments were discounted at an estimated market yield for a similar debt instrument without the conversion feature. The equity component was estimated based on the Black-Scholes model for a call option with strike price equal to the conversion price, a term matching the remaining life of the 5.00% Convertible Senior Notes, and an implied volatility based on market values of options outstanding as of September 30, 2019. The fair value of the 5.00% Convertible Senior Notes is considered a Level 2 measurement in the fair value hierarchy.

The fair value of the 7.75% Senior Secured Notes and the Term Loan B Facility were determined using a market approach based on quoted prices. Because the 7.75% Senior Secured Notes and Term Loan B Facility may not be actively traded, the inputs used to measure the fair value are classified as Level 2 inputs within the fair value hierarchy.

The Retail Property Term Loan is subject to a market-based floating interest rate. The carrying value of our Retail Property Term Loan was determined to approximate fair value as of September 30, 2019. The fair value of all non-derivative financial instruments recorded in current assets, including cash and cash equivalents, restricted cash, and trade accounts receivable, and current liabilities, including accounts payable, approximate their carrying value due to their short-term nature.

Note 12—Leases

We have cancelable and non-cancelable finance and operating lease obligations for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Most of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 30 years or more. There are no material lease arrangements where we are the lessor.

We determine whether a contract is or contains a lease when we have the right to control the use of the identified asset in exchange for consideration. Lease liabilities and ROU assets are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate in the calculation of present value unless the implicit rate can be readily determined. Certain leases include provisions for variable payments based upon percentage of sales and/or other operating metrics; escalation provisions to adjust rental payments to reflect changes in price indices and fair market rents; and provisions for the renewal, termination, and/or purchase of the leased asset. We only consider fixed payments and those options that are reasonably certain to be exercised in the determination of the lease term and the initial measurement of lease liabilities and ROU assets. Expense for operating lease payments is recognized as lease expense on a straight-line basis over the lease term. Expense for finance leases is recognized as amortization expense on a straight-line basis and interest expense on an effective rate basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

We do not separate lease and nonlease components of a contract. There are no material residual value guarantees associated with any of our leases.

22

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our leased assets and liabilities as of September 30, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	September 30, 2019
Assets
Finance	Property, plant, and equipment	$	10,787
Finance	Accumulated amortization	(3,959		)
Finance	Property and equipment, net	$	6,828
Operating	Operating lease assets	373,269
Total leased assets		$	380,097
Liabilities
Current
Finance	Other accrued liabilities	$	1,632
Operating	Operating lease liabilities	54,476
Long-term
Finance	Finance lease liabilities	5,976
Operating	Operating lease liabilities	320,553
Total lease liabilities		$	382,637
Weighted-average remaining lease term (in years)
Finance		5.90
Operating		11.53
Weighted-average discount rate
Finance		6.68		%
Operating		7.71		%

The following table summarizes the lease costs recognized on our condensed consolidated statements of operations (in thousands):

Lease cost type	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost
Amortization of finance lease assets	$	479	$	1,380
Interest on lease liabilities	128		392
Operating lease cost	24,259		72,237
Variable lease cost	2,799		8,689
Short-term lease cost	1,067		1,483
Net lease cost	$	28,732	$	84,181

23

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):

Lease type	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	1,571
Operating cash flows from finance leases	559
Operating cash flows from operating leases	71,181
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	198
ROU assets obtained in exchange for new operating lease liabilities	15,532

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of September 30, 2019 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2019 (1)	$	540		$	22,109		$	22,649
2020	1,978			79,668			81,646
2021	1,407			51,891			53,298
2022	1,190			49,712			50,902
2023	1,159			48,670			49,829
2024	934			42,962			43,896
Thereafter	2,005			243,517			245,522
Total lease payments	9,213			538,529			547,742
Less amount representing interest	(1,605		)	(163,500		)	(165,105		)
Present value of lease liabilities	$	7,608		$	375,029		$	382,637

_________________________________________________________

(1) Represents period from October 1, 2019 to December 31, 2019.

Additionally, the Company has $54.0 million and $1.2 million in future undiscounted cash flows for four operating leases and one finance lease that have not yet commenced, respectively. These leases are expected to commence when the lessor has made the equipment or location available to the Company to operate or begin construction, respectively.

At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):

	Capital leases			Operating leases
2019	$	2,723		$	62,589
2020	2,264			62,132
2021	1,757			39,821
2022	1,512			38,402
2023	1,148			38,827
Thereafter	2,600			191,717
Total minimum rental payments	$	12,004		$	433,488
Less amount representing interest	(1,865		)
Present value of minimum rental payments	$	10,139

Note 13—Commitments and Contingencies

In the ordinary course of business, we are a party to various lawsuits and other contingent matters. We establish accruals for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably

24

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

estimable. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on our financial condition, results of operations, or cash flows.

United Steelworkers Union Dispute

A portion of our employees at the Hawaii refinery are represented by the United Steelworkers Union (“USW”). On March 23, 2015, the union ratified a four-year extension of the collective bargaining agreement. On January 13, 2016, the USW filed a claim against PHR before the United States National Labor Relations Board (the “NLRB”) alleging a refusal to bargain collectively and in good faith. On March 29, 2016, the NLRB deferred final determination on the USW charge to the grievance/arbitration process under the extant collective bargaining agreement. Arbitration was commenced and concluded on October 1, 2018, with the arbitrator taking the matter under advisement thereafter. In a decision dated November 27, 2018, the arbitrator denied the grievance without prejudice to USW’s NLRB claim regarding retiree medical and short term disability benefits. On June 5, 2019, the NLRB approved the withdrawal of USW’s claim against PHR.

Environmental Matters

Like other petroleum refiners and exploration and production companies, our operations are subject to extensive and periodically-changing federal and state environmental regulations governing air emissions, wastewater discharges, and solid and hazardous waste management activities. Many of these regulations are becoming increasingly stringent and the cost of compliance can be expected to increase over time.

Periodically, we receive communications from various federal, state, and local governmental authorities asserting violations of environmental laws and/or regulations. These governmental entities may also propose or assess fines or require corrective actions for these asserted violations. We intend to respond in a timely manner to all such communications and to take appropriate corrective action. Except as disclosed below, we do not anticipate that any such matters currently asserted will have a material impact on our financial condition, results of operations, or cash flows.

The Par East facility of our Hawaii refinery, our Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted small refinery status by the U.S. Environmental Protection Agency (“EPA”) for 2018. Owing to the receipt of these small refinery exemptions, our net income (loss) for the three months ended September 30, 2019 includes $5.7 million of net RINs benefit.

Wyoming Refinery

Our Wyoming refinery is subject to a number of consent decrees, orders, and settlement agreements involving the EPA and/or the Wyoming Department of Environmental Quality, some of which date back to the late 1970s and several of which remain in effect, requiring further actions at the Wyoming refinery. The largest cost component arising from these various decrees relates to the investigation, monitoring, and remediation of soil, groundwater, surface water, and sediment contamination associated with the facility’s historic operations. Investigative work by Hermes Consolidated LLC, and its wholly owned subsidiary, Wyoming Pipeline Company (collectively, “WRC” or “Wyoming Refining”) and negotiations with the relevant agencies as to remedial approaches remain ongoing on a number of aspects of the contamination, meaning that investigation, monitoring, and remediation costs are not reasonably estimable for some elements of these efforts. As of September 30, 2019, we have accrued $16.8 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.

Additionally, we believe the Wyoming refinery will need to modify or close a series of wastewater impoundments in the next several years and replace those impoundments with a new wastewater treatment system. Based on current information, reasonable estimates we have received suggest costs of approximately $11.6 million to design and construct a new wastewater treatment system.

Finally, among the various historic consent decrees, orders, and settlement agreements into which Wyoming Refining has entered, there are several penalty orders associated with exceedances of permitted limits by the Wyoming refinery’s wastewater discharges. Although the frequency of these exceedances has declined over time, Wyoming Refining may become subject to new penalty enforcement action in the next several years, which could involve penalties in excess of $100,000.

Regulation of Greenhouse Gases

The EPA regulates greenhouse gases (“GHG”) under the federal Clean Air Act (“CAA”). New construction or material expansions that meet certain GHG emissions thresholds will likely require that, among other things, a GHG permit be issued in accordance with the federal CAA regulations and we will be required, in connection with such permitting, to undertake a technology review to determine appropriate controls to be implemented with the project in order to reduce GHG emissions.

25

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Furthermore, the EPA is currently developing refinery-specific GHG regulations and performance standards that are expected to impose GHG emission limits and/or technology requirements. These control requirements may affect a wide range of refinery operations. Any such controls could result in material increased compliance costs, additional operating restrictions for our business, and an increase in the cost of the products we produce, which could have a material adverse effect on our financial condition, results of operations, or cash flows.

On September 29, 2015, the EPA announced a final rule updating standards that control toxic air emissions from petroleum refineries, addressing, among other things, flaring operations, fenceline air quality monitoring, and additional emission reductions from storage tanks and delayed coking units. Compliance with this rule has not had a material impact on our financial condition, results of operations, or cash flows to date.

In 2007, the State of Hawaii passed Act 234, which required that GHG emissions be rolled back on a statewide basis to 1990 levels by the year 2020. In June of 2014, the Hawaii Department of Health (“DOH”) adopted regulations that require each major facility to reduce CO₂ emissions by 16% by 2020 relative to a calendar year 2010 baseline (the first year in which GHG emissions were reported to the EPA under 40 CFR Part 98). The Hawaii refinery’s capacity to materially reduce fuel use and GHG emissions is limited because most energy conservation measures have already been implemented over the past 20 years. The regulation allows for “partnering” with other facilities (principally power plants) that have already dramatically reduced greenhouse emissions or are on schedule to reduce CO₂ emissions in order to comply independently with the state’s Renewable Portfolio Standards. The DOH’s GHG regulation allows, and the Hawaii refinery submitted, a GHG reduction plan, which includes an assessment of alternatives which demonstrates that additional reductions are not cost-effective or necessary because the State of Hawaii has already reached the 1990 levels according to a report prepared by the DOH in January 2019.

Fuel Standards

In 2007, the U.S. Congress passed the Energy Independence and Security Act of 2007 (the “EISA”) which, among other things, set a target fuel economy standard of 35 miles per gallon for the combined fleet of cars and light trucks in the U.S. by model year 2020 and contained an expanded Renewable Fuel Standard (the “RFS”). In August 2012, the EPA and National Highway Traffic Safety Administration (“NHTSA”) jointly adopted regulations that establish an average industry fuel economy of 54.5 miles per gallon by model year 2025. On August 8, 2018, the EPA and NHTSA jointly proposed to revise existing fuel economy standards for model years 2021-2025 and to set standards for 2026 for the first time. The agencies have not yet issued a final rule, but they are expected to do so in 2019. Although the revised fuel economy standards are expected to be less stringent than the initial standards for model years 2021-2025, it is uncertain whether the revised standards will increase year over year. Higher fuel economy standards have the potential to reduce demand for our refined transportation fuel products.

Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply, up to 36 billion gallons by 2022. In the near term, the RFS will be satisfied primarily with fuel ethanol blended into gasoline. We, and other refiners subject to the RFS, may meet the RFS requirements by blending the necessary volumes of renewable fuels produced by us or purchased from third parties. 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 RINs, to maintain compliance. To the extent that we exceed the minimum volumetric requirements for blending of renewable fuels, we generate our own RINs for which we have the option of retaining these self-generated RINs for current or future RFS compliance or selling those RINs on the open market. The RFS may present production and logistics challenges for both the renewable fuels and petroleum refining and marketing industries in that we may have to enter into arrangements with other parties or purchase D3 waivers from the EPA to meet our obligations to use advanced biofuels, including biomass-based diesel and cellulosic biofuel, with potentially uncertain supplies of these new fuels.

In October 2010, the EPA issued a partial waiver decision under the federal CAA to allow for an increase in the amount of ethanol permitted to be blended into gasoline from 10% (“E10”) to 15% (“E15”) for 2007 and newer light duty motor vehicles. In 2019, the EPA approved year-round sales of E15. There are numerous issues, including state and federal regulatory issues, that need to be addressed before E15 can be marketed on a large scale for use in traditional gasoline engines; however, increased renewable fuel in the nation’s transportation fuel supply could reduce demand for our refined products.

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. The effective date for the new standard was January 1, 2017, however, approved small volume refineries have until January 1, 2020 to meet the standard. The eastern location of our co-located Hawaii refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date our Hawaii refinery was disqualified from small volume refinery status, and is currently compliant. On March 19, 2015, the EPA confirmed the small refinery status of our Wyoming refinery. The Par East facility of our Hawaii refinery, our

26

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted small refinery status by the EPA for 2018.

Beginning on June 30, 2014, new sulfur standards for fuel oil used by marine vessels operating within 200 miles of the U.S. coastline (which includes the entire Hawaiian Island chain) was lowered from 10,000 ppm (1%) to 1,000 ppm (0.1%). The sulfur standards began at the Hawaii refinery and were phased in so that by January 1, 2015, they were to be fully aligned with the International Marine Organization (“IMO”) standards and deadline. The more stringent standards apply universally to both U.S. and foreign-flagged ships. Although the marine fuel regulations provided vessel operators with a few compliance options such as installation of on-board pollution controls and demonstration unavailability, many vessel operators will be forced to switch to a distillates fuel while operating within the Emission Control Area (“ECA”). Beyond the 200 mile ECA, large ocean vessels are still allowed to burn marine fuel with up to 3.5% sulfur. Our Hawaii refinery is capable of producing the 1% sulfur residual fuel oil that was previously required within the ECA. Although our Hawaii refinery remains in a position to supply vessels traveling to and through Hawaii, the market for 0.1% sulfur distillates fuel and 3.5% sulfur residual fuel is much more competitive.

In addition to U.S. fuels requirements, the IMO has also adopted newer standards that further reduce the global limit on sulfur content in maritime fuels to 0.5% beginning in 2020 (“IMO 2020”). Like the rest of the refining industry, we are focused on meeting these standards and may incur costs in producing lower-sulfur fuels.

There will be compliance costs and uncertainties regarding how we will comply with the various requirements contained in the EISA, RFS, IMO 2020, and other fuel-related regulations. We may experience a decrease in demand for refined petroleum products due to an increase in combined fleet mileage or due to refined petroleum products being replaced by renewable fuels.

Environmental Agreement

On September 25, 2013, Par Petroleum, LLC (formerly Hawaii Pacific Energy, a wholly owned subsidiary of Par created for purposes of the PHR acquisition), Tesoro, and PHR entered into an Environmental Agreement (“Environmental Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR, including the Consent Decree as described below.

Consent Decree

On July 18, 2016, PHR and subsidiaries of Tesoro entered into a consent decree with the EPA, the U.S. Department of Justice (“DOJ”), and other state governmental authorities concerning alleged violations of the federal CAA related to the ownership and operation of multiple facilities owned or formerly owned by Tesoro and its affiliates (“Consent Decree”), including the Par East facility of our Hawaii refinery. As a result of the Consent Decree, PHR expanded its previously-announced 2016 Hawaii refinery turnaround to undertake additional capital improvements to reduce emissions of air pollutants and to provide for certain nitrogen oxide and sulfur dioxide emission controls and monitoring required by the Consent Decree.

Tesoro is responsible under the Environmental Agreement for directly paying, or reimbursing PHR, for all reasonable third-party capital expenditures incurred pursuant to the Consent Decree to the extent related to acts or omissions prior to the date of the closing of the PHR acquisition. Tesoro is obligated to pay all applicable fines and penalties related to the Consent Decree. Through September 30, 2019, Tesoro has reimbursed us for $12.2 million of our total capital expenditures incurred in connection with the Consent Decree. As of September 30, 2019, all reimbursable capital expenditures incurred pursuant to the Consent Decree were collected. Net capital expenditures and reimbursements related to the Consent Decree for the nine months ended September 30, 2019 and 2018 are presented within Capital expenditures on our condensed consolidated statement of cash flows for the related periods.

Indemnification

In addition to its obligation to reimburse us for capital expenditures incurred pursuant to the Consent Decree, Tesoro agreed to indemnify us for claims and losses arising out of related breaches of Tesoro’s representations, warranties, and covenants in the Environmental Agreement, certain defined “corrective actions” relating to pre-existing environmental conditions, third-party claims arising under environmental laws for personal injury or property damage arising out of or relating to releases of hazardous materials that occurred prior to the date of the closing of the PHR acquisition, any fine, penalty, or other cost assessed by a governmental authority in connection with violations of environmental laws by PHR prior to the date of the closing of the PHR acquisition, certain groundwater remediation work, fines, or penalties imposed on PHR by the Consent Decree related to acts or omissions of Tesoro prior to the date of the closing of the PHR acquisition, and claims and losses related to the Pearl City Superfund Site.

27

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Tesoro’s indemnification obligations are subject to certain limitations as set forth in the Environmental Agreement. These limitations include a deductible of $1 million and a cap of $15 million for certain of Tesoro’s indemnification obligations related to certain pre-existing conditions, as well as certain restrictions regarding the time limits for submitting notice and supporting documentation for remediation actions.

Recovery Trusts

We emerged from the reorganization of Delta Petroleum Corporation (“Delta”) on August 31, 2012 (“Emergence Date”), when the plan of reorganization (“Plan”) was consummated. On the Emergence Date, we formed the Delta Petroleum General Recovery Trust (“General Trust”). The General Trust was formed to pursue certain litigation against third parties, including preference actions, fraudulent transfer and conveyance actions, rights of setoff and other claims, or causes of action under the U.S. Bankruptcy Code and other claims and potential claims that Delta and its subsidiaries (collectively, “Debtors”) hold against third parties. On February 27, 2018, the Bankruptcy Court entered its final decree closing the Chapter 11 bankruptcy cases of Delta and the other Debtors, discharging the trustee for the General Trust, and finding that all assets of the General Trust were resolved, abandoned, or liquidated and have been distributed in accordance with the requirements of the Plan. In addition, the final decree required the Company or the General Trust, as applicable, to maintain the current accruals owed on account of the remaining claims of the U.S. Government and Noble Energy, Inc.

As of September 30, 2019, two related claims totaling approximately $22.4 million remained to be resolved and we have accrued approximately $0.5 million representing the estimated value of claims remaining to be settled which are deemed probable and estimable at period end.

One of the two remaining claims was filed by the U.S. Government for approximately $22.4 million relating to ongoing litigation concerning a plugging and abandonment obligation in Pacific Outer Continental Shelf Lease OCS-P 0320, comprising part of the Sword Unit in the Santa Barbara Channel, California. The second unliquidated claim, which is related to the same plugging and abandonment obligation, was filed by Noble Energy Inc., the operator and majority interest owner of the Sword Unit. We believe the probability of issuing stock to satisfy the full claim amount is remote, as the obligations upon which such proof of claim is asserted are joint and several among all working interest owners and Delta, our predecessor, only owned an approximate 3.4% aggregate working interest in the unit.

The settlement of claims is subject to ongoing litigation and we are unable to predict with certainty how many shares will be required to satisfy all claims. Pursuant to the Plan, allowed claims were settled at a ratio of 54.4 shares per $1,000 of claim.

Note 14—Stockholders’ Equity

Incentive Plans

The following table summarizes our compensation costs recognized in General and administrative expense (excluding depreciation) and Operating expense (excluding depreciation) under the Amended and Restated Par Pacific Holdings, Inc. 2012 Long-term Incentive Plan and Stock Purchase Plan (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Restricted Stock Awards	$	789	$	955	$	2,589	$	2,734
Restricted Stock Units	279		235		841		605
Stock Option Awards	380		506		1,103		1,460

During the three and nine months ended September 30, 2019, we granted 11 thousand shares and 285 thousand shares of restricted stock and restricted stock units with a fair value of approximately $0.1 million and $4.5 million, respectively. As of September 30, 2019, there were approximately $7.1 million of total unrecognized compensation costs related to restricted stock awards and restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.8 years.

During the nine months ended September 30, 2019, we granted 300 thousand stock option awards with a weighted-average exercise price of $17.00 per share and no grants were made for the three months ended September 30, 2019. As of September 30, 2019, there were approximately $3.1 million of total unrecognized compensation costs related to stock option awards, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.8 years.

28

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

During the nine months ended September 30, 2019, we granted 48 thousand performance restricted stock units to executive officers and no performance restricted stock units were granted for the three months ended September 30, 2019. These performance restricted stock units had a fair value of approximately $0.8 million and are subject to certain annual performance targets as defined by our Board of Directors. As of September 30, 2019, there were approximately $1.1 million of total unrecognized compensation costs related to the performance restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.9 years.

Note 15—Income (Loss) per Share

Basic income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average number of shares issuable under the common stock warrants, representing 354 thousand shares during each of the three and nine months ended September 30, 2019 and September 30, 2018. The common stock warrants are included in the calculation of basic income (loss) per share because they are issuable for minimal consideration. The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Net income (loss)	$	(83,891	)	$	(5,822	)	$	5,370	$	25,541
Less: Undistributed income allocated to participating securities (1)	—			—			59		361
Net income (loss) attributable to common stockholders	(83,891		)	(5,822		)	5,311		25,180
Plus: Net income effect of convertible securities	—			—			—		—
Numerator for diluted income (loss) per common share	$	(83,891	)	$	(5,822	)	$	5,311	$	25,180
Basic weighted-average common stock shares outstanding	50,942			45,709			49,973		45,676
Plus: dilutive effects of common stock equivalents (2)	—			—			98		45
Diluted weighted-average common stock shares outstanding	50,942			45,709			50,071		45,721
Basic income (loss) per common share	$	(1.65	)	$	(0.13	)	$	0.11	$	0.55
Diluted income (loss) per common share	$	(1.65	)	$	(0.13	)	$	0.11	$	0.55

________________________________________________________

(1) Participating securities include restricted stock that has been issued but has not yet vested.

(2) Entities with a net loss from continuing operations are prohibited from including potential common shares in the computation of diluted per share amounts. We have utilized the basic shares outstanding to calculate both basic and diluted loss per share for the three months ended September 30, 2019 and 2018.

For the nine months ended September 30, 2019, our calculation of diluted shares outstanding excluded 160 thousand shares of restricted stock and 1.8 million stock options. For the nine months ended September 30, 2018, our calculation of diluted shares outstanding excluded 33 thousand shares of restricted stock and 1.3 million stock options.

As discussed in Note 9—Debt, we have the option of settling the 5.00% Convertible Senior Notes in cash or shares of common stock, or any combination thereof, upon conversion. For the three and nine months ended September 30, 2019 and September 30, 2018, diluted income (loss) per share was determined using the if-converted method. Our calculation of diluted shares outstanding for the three and nine months ended September 30, 2019 and the three and nine months ended September 30, 2018 excluded 4.4 million, 5.5 million, 6.4 million, and 6.4 million common stock equivalents, respectively, as the effect would be anti-dilutive.

Note 16—Income Taxes

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management

29

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

considers the scheduled reversal of deferred tax liabilities, projected future results of operations, and tax planning strategies in making this assessment. For the three and nine months ended September 30, 2019, we recorded an income tax benefit of $2.4 million and $69.0 million, respectively, primarily due to the release of valuation allowance in connection with the recognition of deferred tax liabilities acquired as part of the Washington Acquisition. Management continues to conclude that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets on the remaining amounts and a valuation allowance has been recorded for substantially all of our net deferred tax assets at September 30, 2019.

During the three and nine months ended September 30, 2019 and 2018, no adjustments were recognized for uncertain tax positions.

As of December 31, 2018, we had approximately $1.5 billion in net operating loss carryforwards (“NOL carryforwards”); however, we currently have a valuation allowance against this and substantially all of our other deferred taxed assets. We will continue to assess the realizability of our deferred tax assets based on consideration of actual and projected operating results and tax planning strategies. If sufficient positive evidence of improving actual operating results becomes available, the amount of the deferred tax asset considered more likely than not to be recognized would be increased with a corresponding reduction in income tax expense in the period recorded.

Our net taxable income must be apportioned to various states based upon the income tax laws of the states in which we derive our revenue. Our NOL carryforwards will not always be available to offset taxable income apportioned to the various states. The states from which our refining, retail, and logistics revenues are derived are not the same states in which our NOLs were incurred; therefore, we expect to incur state tax liabilities in connection with our refining, retail, and logistics operations.

Note 17—Segment Information

We report the results for the following four reportable segments: (i) Refining, (ii) Retail, (iii) Logistics, and (iv) Corporate and Other. Commencing January 11, 2019, the results of operations of the Washington Acquisition are included in our refining and logistics segments.

Summarized financial information concerning reportable segments consists of the following (in thousands):

Three Months Ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,336,951	$	49,623	$	122,234	$	(107,170	)	$	1,401,638
Cost of revenues (excluding depreciation)	1,256,569		28,712		87,631		(107,157		)	1,265,755
Operating expense (excluding depreciation)	63,041		2,553		17,643		—			83,237
Depreciation, depletion, and amortization	14,088		4,798		2,523		818			22,227
General and administrative expense (excluding depreciation)	—		—		—		11,391			11,391
Acquisition and integration costs	—		—		—		623			623
Operating Income (Loss)	$	3,253	$	13,560	$	14,437	$	(12,845	)	$	18,405
Interest expense and financing costs, net										(18,348		)
Other income, net										83
Change in value of common stock warrants										(826		)
Equity losses from Laramie Energy, LLC										(85,633		)
Loss before income taxes										(86,319		)
Income tax benefit										2,428
Net loss										$	(83,891	)
Capital expenditures	$	6,672	$	14,759	$	765	$	486		$	22,682

30

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Three Months Ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	850,591	$	30,660	$	124,970	$	(96,440	)	$	909,781
Cost of revenues (excluding depreciation)	805,051		18,384		95,968		(96,618		)	822,785
Operating expense (excluding depreciation)	36,766		1,663		16,476		—			54,905
Depreciation, depletion, and amortization	8,336		1,654		1,876		1,326			13,192
General and administrative expense (excluding depreciation)	—		—		—		11,871			11,871
Acquisition and integration costs	—		—		—		2,134			2,134
Operating income (loss)	$	438	$	8,959	$	10,650	$	(15,153	)	$	4,894
Interest expense and financing costs, net										(10,425		)
Other income, net										85
Change in value of common stock warrants										(1,067		)
Equity earnings from Laramie Energy, LLC										1,050
Loss before income taxes										(5,463		)
Income tax expense										(359		)
Net loss										$	(5,822	)
Capital expenditures	$	5,332	$	4,501	$	1,425	$	1,283		$	12,541

________________________________________________________

(1) Includes eliminations of intersegment revenues and cost of revenues of $107.2 million and $96.4 million for the three months ended September 30, 2019 and 2018, respectively.

Nine Months Ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	3,830,572	$	144,978	$	342,814	$	(315,982	)	$	4,002,382
Cost of revenues (excluding depreciation)	3,563,503		82,000		248,751		(315,925		)	3,578,329
Operating expense (excluding depreciation)	173,689		7,945		50,107		—			231,741
Depreciation, depletion, and amortization	42,579		12,683		7,429		2,412			65,103
General and administrative expense (excluding depreciation)	—		—		—		34,435			34,435
Acquisition and integration costs	—		—		—		4,325			4,325
Operating income (loss)	$	50,801	$	42,350	$	36,527	$	(41,229	)	$	88,449
Interest expense and financing costs, net										(57,336		)
Debt extinguishment and commitment costs										(9,186		)
Other income, net										2,347
Change in value of common stock warrants										(3,065		)
Equity losses from Laramie Energy, LLC										(84,841		)
Loss before income taxes										(63,632		)
Income tax benefit										69,002
Net income										$	5,370
Capital expenditures	$	25,555	$	32,217	$	5,042	$	1,272		$	64,086

31

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended September 30, 2019 and 2018

Nine Months Ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	2,391,262	$	95,016	$	323,253	$	(277,915	)	$	2,531,616
Cost of revenues (excluding depreciation)	2,204,634		57,775		248,328		(278,129		)	2,232,608
Operating expense (excluding depreciation)	108,862		5,870		44,239		4			158,975
Depreciation, depletion, and amortization	24,173		4,969		6,441		3,421			39,004
General and administrative expense (excluding depreciation)	—		—		—		35,981			35,981
Acquisition and integration costs	—		—		—		3,515			3,515
Operating income (loss)	$	53,593	$	26,402	$	24,245	$	(42,707	)	$	61,533
Interest expense and financing costs, net										(29,346		)
Other income, net										861
Change in value of common stock warrants										(396		)
Change in value of contingent consideration										(10,500		)
Equity earnings from Laramie Energy, LLC										4,274
Income before income taxes										26,426
Income tax expense										(885		)
Net income										$	25,541
Capital expenditures	$	15,359	$	9,050	$	2,520	$	3,269		$	30,198

________________________________________________________ 

(1) Includes eliminations of intersegment revenues and cost of revenues of $316.0 million and $277.3 million for the nine months ended September 30, 2019 and 2018, respectively.

Note 18—Related Party Transactions

Equity Group Investments (“EGI”) - Service Agreement

On September 17, 2013, we entered into a letter agreement (“Services Agreement”) with Equity Group Investments (“EGI”), an affiliate of Zell Credit Opportunities Fund, LP (“ZCOF”), which owns 10% or more of our common stock directly or through affiliates. Pursuant to the Services Agreement, EGI agreed to provide us with ongoing strategic, advisory, and consulting services that may include (i) advice on financing structures and our relationship with lenders and bankers, (ii) advice regarding public and private offerings of debt and equity securities, (iii) advice regarding asset dispositions, acquisitions, or other asset management strategies, (iv) advice regarding potential business acquisitions, dispositions, or combinations involving us or our affiliates, or (v) such other advice directly related or ancillary to the above strategic, advisory, and consulting services as may be reasonably requested by us.

EGI does not receive a fee for the provision of the strategic, advisory, or consulting services set forth in the Services Agreement, but may be periodically reimbursed by us, upon request, for (i) travel and out-of-pocket expenses, provided that, in the event that such expenses exceed $50 thousand in the aggregate with respect to any single proposed matter, EGI will obtain our consent prior to incurring additional costs, and (ii) provided that we provide prior consent to their engagement with respect to any particular proposed matter, all reasonable fees and disbursements of counsel, accountants, and other professionals incurred in connection with EGI’s services under the Services Agreement. In consideration of the services provided by EGI under the Services Agreement, we agreed to indemnify EGI for certain losses relating to or arising out of the Services Agreement or the services provided thereunder.

The Services Agreement has a term of one year and will be automatically extended for successive one-year periods unless terminated by either party at least 60 days prior to any extension date. There were no costs incurred related to this agreement during the three and nine months ended September 30, 2019 or 2018.

32

Item 2. 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.

Our business is organized into three primary segments:

1) Refining - We own and operate three refineries with total throughput capacity of over 200 Mbpd. Our co-located refinery in Kapolei, Hawaii, produces ultra-low sulfur diesel (“ULSD”), gasoline, jet fuel, marine fuel, low sulfur fuel oil (“LSFO”), and other associated refined products primarily for consumption in Hawaii. Our refinery in Newcastle, Wyoming, produces gasoline, ULSD, jet fuel, and other associated refined products that are primarily marketed in Wyoming and South Dakota. Our refinery in Tacoma, Washington, acquired in January 2019, produces distillates, gasoline, asphalt, and other associated refined products primarily marketed in the Pacific Northwest.

2) Retail - Our retail outlets in Hawaii sell gasoline, diesel, and retail merchandise throughout the islands of Oahu, Maui, Hawaii, and Kauai. Our Hawaii retail network includes Hele and “76” branded retail sites, company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock locations. Through September 30, 2019, we completed the rebranding of 26 of our 34 company-operated convenience stores in Hawaii to “nomnom,” a new proprietary brand. Our retail outlets in Washington and Idaho sell gasoline, diesel, and retail merchandise and operate under the “Cenex®” and “Zip Trip®” brand names.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies. We own and operate terminals, pipelines, an SPM, and trucking operations to distribute refined products throughout the islands of Oahu, Maui, Hawaii, Molokai, and Kauai. 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 the Ellsworth Air Force Base in South Dakota. Beginning in January 2019, 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 McChord Air Force Base.

As of September 30, 2019, we owned a 46.0% equity investment in Laramie Energy. Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado.

We have four reportable segments: (i) Refining, (ii) Retail, (iii) Logistics, and (iv) Corporate and Other. Commencing January 11, 2019, the results of operations of the Washington Acquisition are included in our refining and logistics segments. Our Corporate and Other reportable segment primarily includes general and administrative costs. Please read Note 17—Segment Information to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for detailed information on our operating results by segment.

Results of Operations

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

Net Loss. Our financial performance for the third quarter 2019 was primarily driven by a non-cash impairment charge of $81.5 million related to our equity investment in Laramie Energy and unplanned maintenance at our Hawaii refinery, partially offset by the contribution of the Washington Acquisition. Our net loss increased from a net loss of $5.8 million for the three months ended September 30, 2018 to a net loss of $83.9 million for the three months ended September 30, 2019. Other factors impacting our results period over period include higher interest expense and financing costs, net, higher purchased product volumes at our Hawaii refinery, and a $6.2 million lower of cost or net realizable inventory value charge, partially offset by a $5.7 million net RINs benefit related to small refinery waivers received in 2019.

Adjusted EBITDA and Adjusted Net Income. For the three months ended September 30, 2019, Adjusted EBITDA was $49.7 million compared to $27.6 million for the three months ended September 30, 2018. The increase was primarily related to the contribution of the Washington Acquisition, increased sales volumes, favorable crack spreads and crude differentials at our Wyoming refinery, and an increase in fuel margins at our Retail segment, partially offset by higher purchased product volumes and unplanned maintenance at our Hawaii refinery.

For the three months ended September 30, 2019, Adjusted Net Income was $6.7 million compared to $6.0 million for the three months ended September 30, 2018. The change was primarily related to the same factors described above for the increase

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in Adjusted EBITDA, offset by higher depreciation, depletion, and amortization (“DD&A”) driven by the Washington Acquisition, higher interest expense and financing costs, net, and a decrease in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives and excluding our impairment of our investment in Laramie Energy.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Net Income. During 2019, our results were primarily driven by a non-cash impairment charge of $81.5 million related to our equity investment in Laramie Energy, higher feedstock costs and unplanned maintenance at our Hawaii refinery, and an increase in interest expense and financing fees, partially offset by a $69.0 million income tax benefit primarily associated with a partial release of our valuation allowance in connection with the Washington Acquisition and the contribution of the Washington Acquisition. Our net income decreased from $25.5 million for the nine months ended September 30, 2018 to $5.4 million for the nine months ended September 30, 2019. Other factors impacting our results period over period include improved fuel margins at our Retail segment, a $10.5 million charge related to the Tesoro earn-out settlement in 2018 that did not recur in 2019, and favorable crude differentials at our Wyoming refinery, partially offset by debt commitment costs incurred in connection with the Washington Acquisition.

Adjusted EBITDA and Adjusted Net Income. For the nine months ended September 30, 2019, Adjusted EBITDA was $166.3 million compared to $91.1 million for the nine months ended September 30, 2018. The change was primarily related to contributions provided by the Washington Acquisition, increased sales volumes, favorable crack spreads and crude differentials at our Wyoming refinery, and improved margins in our Retail operations, partially offset by higher purchased product volumes and unplanned maintenance at our Hawaii refinery.

For the nine months ended September 30, 2019, Adjusted Net Income was $36.0 million compared to $28.6 million for the nine months ended September 30, 2018. The increase was primarily related to the same factors described above for the increase in Adjusted EBITDA, as well as a $13.2 million increase in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives and excluding our impairment of our investment in Laramie Energy, an increase in DD&A primarily associated with assets acquired in connection with the Washington Acquisition and Hawaii Refinery Expansion, and an increase in interest expense and financing fees related to the Term Loan B Facility and Par Pacific Term Loan.

The following tables summarize our consolidated results of operations for the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report.

	Three Months Ended September 30,
	2019			2018			$ Change			% Change (1)
Revenues	$	1,401,638		$	909,781		$	491,857		54	%
Cost of revenues (excluding depreciation)	1,265,755			822,785			442,970			54	%
Operating expense (excluding depreciation)	83,237			54,905			28,332			52	%
Depreciation, depletion, and amortization	22,227			13,192			9,035			68	%
General and administrative expense (excluding depreciation)	11,391			11,871			(480		)	(4	)%
Acquisition and integration costs	623			2,134			(1,511		)	(71	)%
Total operating expenses	1,383,233			904,887
Operating income	18,405			4,894
Other income (expense)
Interest expense and financing costs, net	(18,348		)	(10,425		)	(7,923		)	(76	)%
Other income, net	83			85			(2		)	(2	)%
Change in value of common stock warrants	(826		)	(1,067		)	241			23	%
Equity earnings (losses) from Laramie Energy, LLC	(85,633		)	1,050			(86,683		)	(8,256	)%
Total other income (expense), net	(104,724		)	(10,357		)
Loss before income taxes	(86,319		)	(5,463		)
Income tax benefit (expense)	2,428			(359		)	2,787			776	%
Net loss	$	(83,891	)	$	(5,822	)

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	Nine Months Ended September 30,
	2019			2018			$ Change			% Change (1)
Revenues	$	4,002,382		$	2,531,616		$	1,470,766		58	%
Cost of revenues (excluding depreciation)	3,578,329			2,232,608			1,345,721			60	%
Operating expense (excluding depreciation)	231,741			158,975			72,766			46	%
Depreciation, depletion, and amortization	65,103			39,004			26,099			67	%
General and administrative expense (excluding depreciation)	34,435			35,981			(1,546		)	(4	)%
Acquisition and integration costs	4,325			3,515			810			23	%
Total operating expenses	3,913,933			2,470,083
Operating income	88,449			61,533
Other income (expense)
Interest expense and financing costs, net	(57,336		)	(29,346		)	(27,990		)	(95	)%
Debt extinguishment and commitment costs	(9,186		)	—			(9,186		)	NM
Other income, net	2,347			861			1,486			173	%
Change in value of common stock warrants	(3,065		)	(396		)	(2,669		)	(674	)%
Change in value of contingent consideration	—			(10,500		)	10,500			100	%
Equity earnings (losses) from Laramie Energy, LLC	(84,841		)	4,274			(89,115		)	(2,085	)%
Total other income (expense), net	(152,081		)	(35,107		)
Income (loss) before income taxes	(63,632		)	26,426
Income tax benefit (expense)	69,002			(885		)	69,887			7,897	%
Net income	$	5,370		$	25,541

________________________________________________________

(1) NM - Not meaningful

The following tables summarize our operating income (loss) by segment for the three and nine months ended September 30, 2019 and 2018 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report.

Three months ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,336,951	$	49,623	$	122,234	$	(107,170	)	$	1,401,638
Cost of revenues (excluding depreciation)	1,256,569		28,712		87,631		(107,157		)	1,265,755
Operating expense (excluding depreciation)	63,041		2,553		17,643		—			83,237
Depreciation, depletion, and amortization	14,088		4,798		2,523		818			22,227
General and administrative expense (excluding depreciation)	—		—		—		11,391			11,391
Acquisition and integration costs	—		—		—		623			623
Operating Income (Loss)	$	3,253	$	13,560	$	14,437	$	(12,845	)	$	18,405

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Three months ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	850,591	$	30,660	$	124,970	$	(96,440	)	$	909,781
Cost of revenues (excluding depreciation)	805,051		18,384		95,968		(96,618		)	822,785
Operating expense (excluding depreciation)	36,766		1,663		16,476		—			54,905
Depreciation, depletion, and amortization	8,336		1,654		1,876		1,326			13,192
General and administrative expense (excluding depreciation)	—		—		—		11,871			11,871
Acquisition and integration costs	—		—		—		2,134			2,134
Operating income (loss)	$	438	$	8,959	$	10,650	$	(15,153	)	$	4,894

________________________________________________________

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $107.2 million and $96.4 million for the three months ended September 30, 2019 and 2018, respectively.

Nine months ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	3,830,572	$	144,978	$	342,814	$	(315,982	)	$	4,002,382
Cost of revenues (excluding depreciation)	3,563,503		82,000		248,751		(315,925		)	3,578,329
Operating expense (excluding depreciation)	173,689		7,945		50,107		—			231,741
Depreciation, depletion, and amortization	42,579		12,683		7,429		2,412			65,103
General and administrative expense (excluding depreciation)	—		—		—		34,435			34,435
Acquisition and integration costs	—		—		—		4,325			4,325
Operating income (loss)	$	50,801	$	42,350	$	36,527	$	(41,229	)	$	88,449

Nine months ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	2,391,262	$	95,016	$	323,253	$	(277,915	)	$	2,531,616
Cost of revenues (excluding depreciation)	2,204,634		57,775		248,328		(278,129		)	2,232,608
Operating expense (excluding depreciation)	108,862		5,870		44,239		4			158,975
Depreciation, depletion, and amortization	24,173		4,969		6,441		3,421			39,004
General and administrative expense (excluding depreciation)	—		—		—		35,981			35,981
Acquisition and integration costs	—		—		—		3,515			3,515
Operating income (loss)	$	53,593	$	26,402	$	24,245	$	(42,707	)	$	61,533

________________________________________________________

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $316.0 million and $277.3 million for the nine months ended September 30, 2019 and 2018, respectively.

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Below is a summary of key operating statistics for the refining segment for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019 (1)			2018 (1)			2019 (1)			2018 (1)
Total Refining Segment
Feedstocks Throughput (Mbpd) (2)	150.7			88.6			161.9			90.8
Refined product sales volume (Mbpd) (2)	184.5			99.9			175.1			99.2
Hawaii Refinery
Feedstocks Throughput (Mbpd)	95.4			71.5			108.1			73.8
Yield (% of total throughput)
Gasoline and gasoline blendstocks	23.5		%	26.0		%	23.1		%	27.4		%
Distillates	44.2		%	49.9		%	43.9		%	48.6		%
Fuel oils	26.6		%	16.0		%	26.6		%	16.3		%
Other products	1.4		%	4.8		%	2.9		%	4.5		%
Total yield	95.7		%	96.7		%	96.5		%	96.8		%
Refined product sales volume (Mbpd)
On-island sales volume	112.4			75.3			111.0			72.2
Exports sale volume	12.5			8.3			6.9			9.9
Total refined product sales volume	124.9			83.6			117.9			82.1
Adjusted Gross Margin per bbl ($/throughput bbl) (3)	$	0.98		$	3.75		$	2.82		$	4.78
Production costs per bbl ($/throughput bbl) (4)	4.17			3.97			3.22			3.72
DD&A per bbl ($/throughput bbl)	0.50			0.66			0.45			0.68
Washington Refinery
Feedstocks Throughput (Mbpd) (2)	38.2			—			38.2			—
Yield (% of total throughput)
Gasoline and gasoline blendstocks	22.9		%	—		%	23.7		%	—		%
Distillates	35.1		%	—		%	35.6		%	—		%
Asphalt	20.9		%	—		%	18.8		%	—		%
Other products	18.5		%	—		%	19.4		%	—		%
Total yield	97.4		%	—		%	97.5		%	—		%
Refined product sales volume (Mbpd) (2)	41.4			—			41.1			—
Adjusted Gross Margin per bbl ($/throughput bbl) (3)	$	11.33		$	—		$	10.10		$	—
Production costs per bbl ($/throughput bbl) (4)	4.40			—			4.55			—
DD&A per bbl ($/throughput bbl)	1.42			—			1.59			—

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2019 (1)			2018 (1)			2019 (1)			2018 (1)
Wyoming Refinery
Feedstocks Throughput (Mbpd)	17.1			17.1			17.0			17.0
Yield (% of total throughput)
Gasoline and gasoline blendstocks	46.7		%	47.7		%	49.0		%	48.2		%
Distillates	47.1		%	46.0		%	44.8		%	46.3		%
Fuel oils	1.8		%	2.1		%	1.8		%	1.8		%
Other products	1.9		%	1.7		%	1.9		%	1.3		%
Total yield	97.5		%	97.5		%	97.5		%	97.6		%
Refined product sales volume (Mbpd)	18.2			16.3			17.6			17.1
Adjusted Gross Margin per bbl ($/throughput bbl) (3)	$	25.65		$	17.93		$	19.06		$	16.51
Production costs per bbl ($/throughput bbl) (4)	6.33			6.10			6.49			6.63
DD&A per bbl ($/throughput bbl)	2.97			2.54			2.86			2.28
Market Indices ($ per barrel)
4-1-2-1 Singapore Crack Spread (5)	$	9.36		$	7.81		$	7.50		$	6.87
Pacific Northwest 5-2-2-1 Index (6)	14.76			—			14.47			—
Wyoming 3-2-1 Index (7)	27.32			26.25			23.81			22.34
Crude Prices ($ per barrel)
Brent	$	62.03		$	75.93		$	64.77		$	72.73
WTI	56.44			69.43			57.09			66.77
ANS	63.63			75.83			65.71			72.78
Bakken Clearbrook	55.32			68.58			56.22			66.10
WCS Hardisty	43.61			41.67			45.07			42.68
Brent M1-M3	1.10			0.11			0.87			0.53

________________________________________________________

(1) Previously reported logistics pipeline throughput volumes have been removed from the Operating Statistics table post-closing of the Washington Acquisition as we have determined that pipeline throughput is no longer a relevant indicator of logistics segment profitability given the low weighting of pipeline movements at the Washington refinery. Operating income (loss) per barrel has also been removed from the table because we do not believe it to be an indicative measure of our refineries’ profitability.

(2) Feedstocks throughput and sales volumes per day for the Washington refinery for the three and nine months ended September 30, 2019 are calculated based on the 92 and 263-day periods for which we owned the Washington refinery in 2019, respectively. As such, the amounts for the total refining segment represent the sum of the Hawaii and Wyoming refineries’ throughput or sales volumes averaged over the three and nine months ended September 30, 2019 plus the Washington refinery’s throughput or sales volumes averaged over the periods from July 1, 2019 to September 30, 2019 and January 11, 2019 to September 30, 2019, respectively. The 2018 amounts for the total refining segment represent the sum of the Hawaii and Wyoming refineries’ throughput or sales volumes averaged over the three and nine months ended September 30, 2018.

(3) Please see discussion of Adjusted Gross Margin below. We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. Adjusted Gross Margin for our Washington refinery is determined under the LIFO inventory costing method. Adjusted Gross Margin for our other refineries is determined under the FIFO inventory costing method.

(4) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There is a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs

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to run the refinery, including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our condensed consolidated statement of operations, which also includes costs related to our bulk marketing operations.

(5) The profitability of our Hawaii 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 4-1-2-1 Singapore crack spread (or four barrels of Brent crude oil converted into one barrel of gasoline, two barrels of distillates (diesel and jet fuel) and one barrel of fuel oil) best reflects a market indicator for our Hawaii operations.

(6) We 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. The 2019 prices for the three and nine months ended September 30, 2019 represent the price averaged over the periods from July 1, 2019 to September 30, 2019, and January 11, 2019 to September 30, 2019, respectively.

(7) The profitability of our Wyoming refinery is heavily influenced by crack spreads in nearby markets. We believe the Wyoming 3-2-1 Index is the best market indicator for our operations in Wyoming. The Wyoming 3-2-1 Index is computed by taking two parts gasoline and one part distillates (ULSD) as created from three barrels of West Texas Intermediate Crude Oil (“WTI”). Pricing is based 50% on applicable product pricing in Rapid City, South Dakota, and 50% on applicable product pricing in Denver, Colorado.

Below is a summary of key operating statistics for the retail segment for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Retail Segment
Retail sales volumes (thousands of gallons) (1)	32,786	32,217	94,330	85,896

________________________________________________________

(1) Retail sales volumes for the three and nine months ended September 30, 2018 include the 92 days and 192 days of retail sales volumes from Northwest Retail since its acquisition on March 23, 2018, respectively. The 2019 amounts represent the sum of the Hawaii and Northwest Retail sales volumes for the three and nine months ended September 30, 2019.

Non-GAAP Performance Measures

Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP and our calculations thereof may not be comparable to similarly titled measures reported by other companies.

Adjusted Gross Margin

Adjusted Gross Margin is defined as (i) operating income (loss) plus operating expense (excluding depreciation); impairment expense; 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 obligations, and purchase price allocation adjustments); DD&A; RINs loss (gain) in excess of net obligation (see definition below); and unrealized loss (gain) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) plus inventory valuation adjustment, unrealized loss (gain) on derivatives, and RINs loss (gain) in excess of net obligation. We define cost of revenues (excluding depreciation) as the hydrocarbon-related costs of inventory sold, transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our RINs obligations, and certain hydrocarbon fees and taxes. Cost of revenues (excluding depreciation) also includes the unrealized gain (loss) on derivatives and the inventory valuation adjustment that we exclude from Adjusted Gross Margin.

Beginning in the fourth quarter of 2018, Adjusted Net Income (loss) excludes RINs loss (gain) recorded in excess of our net RINs obligation (“RINs loss (gain) in excess of net obligation”). Our RINs obligations to comply with the Renewable Fuel Standard (“RFS”) are recorded as liabilities and measured at fair value as of the end of the reporting period. Our RINs assets, which include RINs purchased on the open market and RINs generated by blending biofuels as part of our refining process, are stated at the lower of cost or net realizable value (“NRV”) as of the end of the reporting period. During periods of rising RINs market prices, we recognize unrealized losses associated with the increase in the fair value of our RINs liabilities. Under GAAP,

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we do not adjust the carrying value of our RINs assets because such assets are stated at the lower of cost or NRV. This adjustment represents the income statement effect of reflecting our RINs liability on a net basis, as the settlement of any open obligation would first be offset by RINs assets rather than purchasing such RINs obligations at market prices. We have recast the non-GAAP information for the three and nine months ended September 30, 2018 to conform to the current period presentation.

Management believes Adjusted Gross Margin is an important measure of operating performance and uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. Management believes Adjusted Gross Margin provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost or net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation, depletion, and amortization.

Adjusted Gross Margin should not be considered an alternative to operating income (loss), cash flows from operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted Gross Margin presented by other companies may not be comparable to our presentation since each company may define this term differently as they may include other manufacturing costs and depreciation expense in cost of revenues.

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

Three months ended September 30, 2019	Refining			Logistics		Retail
Operating income	$	3,253		$	13,560	$	14,437
Operating expense (excluding depreciation)	63,041			2,553		17,643
Depreciation, depletion, and amortization	14,088			4,798		2,523
Inventory valuation adjustment	24,796			—		—
RINs gain in excess of net obligation	(1,240		)	—		—
Unrealized gain on derivatives	(15,154		)	—		—
Adjusted Gross Margin	$	88,784		$	20,911	$	34,603

Three months ended September 30, 2018	Refining		Logistics		Retail
Operating income	$	438	$	8,959	$	10,650
Operating expense (excluding depreciation)	36,766		1,663		16,476
Depreciation, depletion, and amortization	8,336		1,654		1,876
Inventory valuation adjustment	3,944		—		—
RINs loss in excess of net obligation	518		—		—
Unrealized loss on derivatives	2,858		—		—
Adjusted Gross Margin	$	52,860	$	12,276	$	29,002

Nine months ended September 30, 2019	Refining			Logistics		Retail
Operating income	$	50,801		$	42,350	$	36,527
Operating expense (excluding depreciation)	173,689			7,945		50,107
Depreciation, depletion, and amortization	42,579			12,683		7,429
Inventory valuation adjustment	3,625			—		—
RINs gain in excess of net obligation	(3,039		)	—		—
Unrealized loss on derivatives	5,523			—		—
Adjusted Gross Margin	$	273,178		$	62,978	$	94,063

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Nine months ended September 30, 2018	Refining			Logistics		Retail
Operating income	$	53,593		$	26,402	$	24,245
Operating expense (excluding depreciation)	108,862			5,870		44,239
Depreciation, depletion, and amortization	24,173			4,969		6,441
Inventory valuation adjustment	(20,034		)	—		—
RINs loss in excess of net obligation	1,408			—		—
Unrealized loss on derivatives	4,849			—		—
Adjusted Gross Margin	$	172,851		$	37,241	$	74,925

Adjusted Net Income and Adjusted EBITDA

Adjusted Net Income (Loss) is defined as Net income (loss) excluding changes in the value of contingent consideration and common stock warrants, acquisition and integration costs, unrealized (gain) loss on derivatives, debt extinguishment and commitment costs, release of tax valuation allowance, inventory valuation adjustment, severance costs, impairment expense, (gain) loss on sale of assets, and Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives. Beginning in the fourth quarter of 2018, Adjusted Net Income (Loss) also excludes RINs loss (gain) in excess of net obligation (as defined in the Adjusted Gross Margin section above). Beginning in 2019, Adjusted Net Income (Loss) also excludes impairment expense associated with our investment in Laramie Energy.

Adjusted EBITDA is Adjusted Net Income (Loss) excluding interest expense and financing costs, income taxes, DD&A, and, equity losses (earnings) from Laramie Energy, excluding Par’s share of unrealized loss (gain) on derivatives. Beginning in 2019, equity losses (earnings) from Laramie Energy also excludes the impairment of Par’s investment.

We believe Adjusted Net Income and Adjusted EBITDA are useful supplemental financial measures that allow investors to assess:

• The financial performance of our assets without regard to financing methods, capital structure, or historical cost basis;

• The ability of our assets to generate cash to pay interest on our indebtedness; and

• Our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure.

Adjusted Net Income and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted Net Income and Adjusted EBITDA presented by other companies may not be comparable to our presentation as other companies may define these terms differently.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	(83,891	)	$	(5,822	)	$	5,370		$	25,541
Inventory valuation adjustment	24,796			3,944			3,625			(20,034		)
RINs loss (gain) in excess of net obligation	(1,240		)	518			(3,039		)	1,408
Unrealized loss (gain) on derivatives	(15,154		)	2,858			5,523			4,849
Acquisition and integration costs	623			2,134			4,325			3,515
Debt extinguishment and commitment costs	—			—			9,186			—
Release of tax valuation allowance (1)	(2,751		)	—			(70,420		)	—
Change in value of common stock warrants	826			1,067			3,065			396
Change in value of contingent consideration	—			—			—			10,500
Impairment of Investment in Laramie Energy, LLC (2)	81,515			—			81,515			—
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	1,961			1,271			(3,129		)	2,440
Adjusted Net Income (3)	6,685			5,970			36,021			28,615
Depreciation, depletion, and amortization	22,227			13,192			65,103			39,004
Interest expense and financing costs, net	18,348			10,425			57,336			29,346
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment of Par's investment	2,157			(2,321		)	6,455			(6,714		)
Income tax expense	323			359			1,418			885
Adjusted EBITDA	$	49,740		$	27,625		$	166,333		$	91,136

________________________________________

(1) Included in Income tax benefit (expense) on our condensed consolidated statements of operations.

(2) Included in Equity earnings (losses) from Laramie Energy, LLC on our condensed consolidated statements of operations.

(3) For the three and nine months ended September 30, 2019 and 2018, there were no severance costs or (gain) loss on sale of assets.

Factors Impacting Segment Results

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

Refining. Operating income for our refining segment was $3.3 million for the three months ended September 30, 2019, an increase of $2.9 million compared to operating income of $0.4 million for the three months ended September 30, 2018. The increase in profitability was primarily driven by the contribution of the Washington refinery, improved sales volumes and crude differentials at our Wyoming refinery, and a $5.7 million net RINs benefit related to small refinery waivers received in 2019. The Washington refinery assets contributed operating income of approximately $26.7 million to the refining segment for the three months ended September 30, 2019. Our Wyoming refinery refined product sales volumes increased by 12%. The Wyoming 3-2-1 Index increased from $26.25 per barrel in the third quarter of 2018 to $27.32 per barrel in the third quarter of 2019. These increases in operating income were partially offset by unplanned maintenance and higher purchased product volumes at our Hawaii refinery. The unplanned maintenance in Hawaii resulted in an increase of $2.6 million in operating expenses and approximately 11 lost throughput days at our Hawaii refinery.

Logistics. Operating income for our logistics segment was $13.6 million for the three months ended September 30, 2019, an increase of $4.6 million compared to operating income of $9.0 million for the three months ended September 30, 2018. The increase is primarily due to a contribution of $4.4 million from the logistics assets acquired in connection with the Washington Acquisition for the three months ended September 30, 2019.

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Retail. Operating income for our retail segment was $14.4 million for the three months ended September 30, 2019, an increase of $3.7 million compared to operating income of $10.7 million for the three months ended September 30, 2018. The increase in operating income was primarily due to a 21% increase in fuel margins.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Refining. Operating income for our refining segment was $50.8 million for the nine months ended September 30, 2019, a decrease of $2.8 million compared to operating income of $53.6 million for the nine months ended September 30, 2018. The decrease in profitability was primarily driven by unplanned maintenance and higher purchased product volumes at our Hawaii refinery and a decrease in net RINs benefits received in 2019 compared to 2018. The unplanned maintenance in Hawaii resulted in an increase of $2.6 million in operating expenses and approximately 11 lost throughput days at our Hawaii refinery. These decreases were partially offset by the contribution provided by the Washington Acquisition and improved crack spreads and crude differentials at our Wyoming refinery. The Washington refinery assets contributed operating income of approximately $41.0 million to the refining segment for the period from January 11, 2019 to September 30, 2019. The Wyoming 3-2-1 Index increased 7% from $22.34 per barrel for the nine months ended September 30, 2018 to $23.81 per barrel for the nine months ended September 30, 2019.

Logistics. Operating income for our logistics segment was $42.4 million for the nine months ended September 30, 2019, an increase of $16.0 million compared to operating income of $26.4 million for the nine months ended September 30, 2018. The increase is primarily due to a contribution of $13.1 million from the logistics assets acquired in connection with the Washington Acquisition for the period from January 11, 2019 to September 30, 2019.

Retail. Operating income for our retail segment was $36.5 million for the nine months ended September 30, 2019, an increase of $12.3 million compared to operating income of $24.2 million for the nine months ended September 30, 2018. The increase in profitability is primarily due to an increase in fuel margins of 15% and an increase in sales volumes of 10% primarily due to the contribution of Northwest Retail for three full quarters during 2019 compared to the 192-day period of ownership during 2018.

Adjusted Gross Margin

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

Refining. For the three months ended September 30, 2019, our refining Adjusted Gross Margin was $88.8 million, an increase of $35.9 million compared to $52.9 million for the three months ended September 30, 2018. The increase was primarily due to the Washington refinery acquisition, which contributed Adjusted Gross Margin of approximately $39.8 million to the refining segment for the three months ended September 30, 2019, and improved sales volumes and favorable crude oil differentials at our Wyoming refinery, partially offset by unplanned maintenance and higher purchased product volumes at our Hawaii refinery. Refined product sales volumes at our Wyoming refinery increased by 12%, benefiting from west coast refinery outages towards the end of the quarter. The unplanned maintenance at our Hawaii refinery resulted in approximately 11 lost throughput days. Other factors impacting our refining results period over period include a $5.7 million net RINs benefit related to small refinery waivers received in 2019 and improved crack spreads at our Wyoming refinery. The Wyoming 3-2-1 Index increased from $26.25 per barrel in the third quarter of 2018 to $27.32 per barrel in the third quarter of 2019.

Logistics. For the three months ended September 30, 2019, our logistics Adjusted Gross Margin was $20.9 million, an increase of $8.6 million compared to $12.3 million for the three months ended September 30, 2018. The increase was primarily driven by the contribution of the Washington assets of $7.2 million to the logistics segment for the three months ended September 30, 2019.

Retail. For the three months ended September 30, 2019, our retail Adjusted Gross Margin was $34.6 million, an increase of $5.6 million when compared to $29.0 million for the three months ended September 30, 2018. The increase was primarily due to a 21% increase in fuel margins.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Refining. For the nine months ended September 30, 2019, our refining Adjusted Gross Margin was $273.2 million, an increase of $100.3 million compared to $172.9 million for the nine months ended September 30, 2018. The increase in profitability was primarily driven by the Washington refinery, which contributed Adjusted Gross Margin of $101.5 million to the refining segment for the period from January 11, 2019 to September 30, 2019. Other factors impacting our refining results period over period include improved crack spreads and crude oil differentials at our Wyoming refinery, offset by unplanned maintenance and higher purchased product volumes at our Hawaii refinery and a decrease in net RINs benefits received in 2019 compared to 2018.

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The Wyoming 3-2-1 Index increased 7% from $22.34 per barrel for the nine months ended September 30, 2018 to $23.81 per barrel for the nine months ended September 30, 2019.

Logistics. For the nine months ended September 30, 2019, our logistics Adjusted Gross Margin was $63.0 million, an increase of $25.8 million compared to $37.2 million for the nine months ended September 30, 2018. The increase was primarily driven by the contribution of the Washington assets and the timing of bulk movements and higher overall throughput in Hawaii, offset by higher production costs in Hawaii primarily due to the Hawaii Refinery Expansion. The Washington assets contributed Adjusted Gross Margin of $20.1 million to the logistics segment for the period from January 11, 2019 to September 30, 2019.

Retail. For the nine months ended September 30, 2019, our retail Adjusted Gross Margin was $94.1 million, an increase of $19.2 million when compared to approximately $74.9 million for the nine months ended September 30, 2018. The increase was primarily due to an increase in fuel margins of 15%.

Discussion of Consolidated Results

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

Revenues. For the three months ended September 30, 2019, revenues were $1.4 billion, a $0.5 billion increase compared to $0.9 billion for the three months ended September 30, 2018. The increase was primarily due to an increase of $494.6 million in third-party refining segment revenue as a result of the Washington Acquisition, which contributed refining revenues of $300.0 million for the three months ended September 30, 2019, and refined product sales volumes increases of 49% and 12% in Hawaii and Wyoming, respectively. These increases were partially offset by decreases in Brent and WTI crude oil prices, which averaged $62.03 and $56.44 per barrel during the third quarter of 2019 compared to $75.93 and $69.43 per barrel during the third quarter of 2018, respectively.

Cost of Revenues (Excluding Depreciation). For the three months ended September 30, 2019, cost of revenues (excluding depreciation) was $1.3 billion, a $0.5 billion increase compared to $0.8 billion for the three months ended September 30, 2018. The increase was primarily driven by the Washington Acquisition and increases of 49% and 12% in refined product sales volumes in Hawaii and Wyoming, respectively. The Washington Acquisition contributed cost of revenues of approximately $250.9 million for the three months ended September 30, 2019. These increases were partially offset by decreases in Brent and WTI crude oil prices as discussed above.

Operating Expense (Excluding Depreciation). For the three months ended September 30, 2019, operating expense (excluding depreciation) was $83.2 million, a $28.3 million increase when compared to $54.9 million for the three months ended September 30, 2018. The increase was primarily driven by operating expenses related to the Washington Acquisition and the Hawaii Refinery Expansion. The Washington Acquisition and Hawaii Refinery Expansion contributed operating expenses of $21.6 million for the three months ended September 30, 2019. The increase was also due to expenditures incurred during the three months ended September 30, 2019 in connection with the unplanned maintenance at our Hawaii refinery.

Depreciation, Depletion, and Amortization. For the three months ended September 30, 2019, DD&A was $22.2 million, an increase of $9.0 million compared to $13.2 million for the three months ended September 30, 2018. The increase was primarily due to the Washington Acquisition and accelerated depreciation resulting from changes in the estimated useful lives of certain refinery equipment. The Washington Acquisition contributed DD&A of $7.9 million for the three months ended September 30, 2019.

General and Administrative Expense (Excluding Depreciation).  For the three months ended September 30, 2019, general and administrative expense (excluding depreciation) was approximately $11.4 million, which is relatively consistent with $11.9 million for the three months ended September 30, 2018.

Acquisition and Integration Costs.  For the three months ended September 30, 2019, we incurred $0.6 million of costs primarily related to integration costs associated with the Washington Acquisition. For the three months ended September 30, 2018, we incurred $2.1 million of costs primarily related to acquisition costs associated with the Hawaii Refinery Expansion.

Interest Expense and Financing Costs, Net. For the three months ended September 30, 2019, our interest expense and financing costs were $18.3 million, an increase of $7.9 million when compared to $10.4 million for the three months ended September 30, 2018. The increase was primarily due to interest expense and financing costs of $6.1 million related to the new Term Loan B Facility entered into on January 11, 2019, interest expense of $1.6 million on the Washington Refinery Intermediation Agreement, and interest expense and financing costs of $0.6 million related to the Retail Property Term Loan entered into on

44

March 29, 2019. Please read Note 9—Debt to our condensed consolidated financial statements for further discussion on our indebtedness.

Change in Value of Common Stock Warrants. For the three months ended September 30, 2019, the change in value of common stock warrants resulted in a loss of $0.8 million, a change of $0.3 million when compared to a loss of approximately $1.1 million for the three months ended September 30, 2018. We estimate the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock. For the three months ended September 30, 2019, our stock price increased from $20.52 per share as of June 30, 2019 to $22.86 per share as of September 30, 2019. During the three months ended September 30, 2018, our stock price increased from $17.38 per share as of June 30, 2018 to $20.40 per share as of September 30, 2018.

Equity Losses from Laramie Energy, LLC. For the three months ended September 30, 2019, equity losses from Laramie Energy were $85.6 million, a decrease of $86.7 million compared to equity earnings of $1.1 million for the three months ended September 30, 2018. During the three months ended September 30, 2019, we recorded an impairment charge of $81.5 million due to the significant decline in natural gas prices over the second quarter of 2019 and continued deterioration in the third quarter of 2019. Please read Note 3—Investment in Laramie Energy, LLC for further information.

Income Taxes. For the three months ended September 30, 2019, we recorded an income tax benefit of $2.4 million primarily driven by a $2.8 million benefit associated with a partial release of our valuation allowance in connection with indefinite-lived deferred tax assets from interest expense carryforwards with no expiration. For the three months ended September 30, 2018, we recorded income tax expense of $0.4 million primarily related to deferred federal taxes for the period.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Revenues. For the nine months ended September 30, 2019, revenues were $4.0 billion, a $1.5 billion increase compared to $2.5 billion for the nine months ended September 30, 2018. The increase was primarily due to an increase of $1.5 billion in third-party revenues at our refining segment primarily as a result of the Washington Acquisition and increased volumes in Hawaii related to the Hawaii Refinery Expansion. The Washington Acquisition contributed third-party revenues of $855.6 million for the period from January 11, 2019 to September 30, 2019. Refined product sales volumes in Hawaii increased 44% from 82.1 Mbpd in the nine months ended September 30, 2018 to 117.9 Mbpd in the nine months ended September 30, 2019. These increases were partially offset by decreases in Brent and WTI crude oil prices. Average Brent prices decreased from $72.73 per barrel in the nine months ended September 30, 2018 to $64.77 per barrel in the nine months ended September 30, 2019, with similar decreases experienced for WTI crude oil prices. Revenues in our retail segment increased $19.5 million primarily due to the acquisition of Northwest Retail, offset by a 4% decrease in fuel sales prices.

Cost of Revenues (Excluding Depreciation). For the nine months ended September 30, 2019, cost of revenues (excluding depreciation) was $3.6 billion, a $1.4 billion increase compared to $2.2 billion for the nine months ended September 30, 2018. The increase was primarily due to the Washington Acquisition and a 44% increase in refined product sales volumes in Hawaii. The Washington Acquisition contributed cost of revenues of approximately $743.8 million for the period from January 11, 2019 to September 30, 2019. These increases were partially offset by decreases in Brent and WTI crude oil prices as discussed above.

Operating Expense (Excluding Depreciation). For the nine months ended September 30, 2019, operating expense (excluding depreciation) was $231.7 million, an increase of $72.7 million compared to $159.0 million for the nine months ended September 30, 2018. The increase was primarily due to the Washington Acquisition, Hawaii Refinery Expansion, and Northwest Retail Acquisition. The Washington Acquisition contributed operating expenses of $45.6 million for the period from January 11, 2019 to September 30, 2019. The Hawaii Refinery Expansion contributed operating expenses of $17.4 million for the nine months ended September 30, 2019. Northwest Retail contributed operating expenses of $14.9 million for the full nine months ended September 30, 2019 as compared to $10.2 million for the 192-day period of ownership from March 23, 2018 to September 30, 2018.

Depreciation, Depletion, and Amortization. For the nine months ended September 30, 2019, DD&A was $65.1 million, an increase of $26.1 million when compared to $39.0 million for the nine months ended September 30, 2018. The increase was primarily due to DD&A on assets acquired as part of the Washington Acquisition and the accelerated depreciation resulting from changes in the estimated useful lives of certain refinery equipment and storage tanks.

General and Administrative Expense (Excluding Depreciation). For the nine months ended September 30, 2019, general and administrative expense (excluding depreciation) was $34.4 million, a decrease of $1.6 million compared to $36.0 million for the nine months ended September 30, 2018. The decrease was primarily due to lower employee benefit costs and professional fees.

Acquisition and Integration Costs. For the nine months ended September 30, 2019, we incurred $4.3 million of acquisition and integration costs primarily related to the Washington Acquisition and the Hawaii Refinery Expansion. For the nine

45

months ended September 30, 2018, we incurred $3.5 million of acquisition and integration costs related to the Northwest Retail Acquisition and Hawaii Refinery Expansion.

Interest Expense and Financing Costs, Net. For the nine months ended September 30, 2019, our interest expense and financing costs were $57.3 million, an increase of $28.0 million when compared to $29.3 million for the nine months ended September 30, 2018. The increase was primarily due to interest expense and financing costs of $18.1 million related to the new Term Loan B Facility entered into on January 11, 2019, interest expense of $4.6 million on the Washington Refinery Intermediation Agreement, increased interest and financing costs of $1.0 million associated with J. Aron deferred payments, a net increase in our loss on interest rate derivatives of $3.2 million, and interest expense and financing costs of $1.8 million related to the Par Pacific Term Loan entered into on January 9, 2019 and replaced by the Retail Property Term Loan entered into on March 29, 2019. Please read Note 9—Debt to our condensed consolidated financial statements for further discussion on our indebtedness.

Change in Value of Common Stock Warrants. For the nine months ended September 30, 2019, the change in value of common stock warrants resulted in a loss of $3.1 million, a change of $2.7 million when compared to a loss of $0.4 million for the nine months ended September 30, 2018. We estimate the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock. For the nine months ended September 30, 2019, our stock price increased from $14.18 per share as of December 31, 2018 to $22.86 per share as of September 30, 2019. During the nine months ended September 30, 2018, our stock price increased from $19.28 per share on December 31, 2017 to $20.40 per share on September 30, 2018.

Change in Value of Contingent Consideration. For the nine months ended September 30, 2018, the change in the value of our contingent consideration liability resulted in a loss of $10.5 million as a result of the settlement agreement reached with Tesoro. As of December 31, 2018 and for the nine months ended September 30, 2019, there was no contingent consideration liability.

Debt Extinguishment and Commitment Costs. For the nine months ended September 30, 2019, our debt extinguishment and commitment costs were $9.2 million and primarily represent the commitment and other fees associated with the financing of the Washington Acquisition and the extinguishment costs associated with the repurchase and cancellation of a portion of our outstanding 5.00% Convertible Senior Notes. Please read Note 9—Debt to our condensed consolidated financial statements for further discussion. No such costs were incurred for the nine months ended September 30, 2018.

Equity Losses from Laramie Energy, LLC. For the nine months ended September 30, 2019, equity losses from Laramie Energy were $84.8 million, a decrease of $89.1 million compared to equity earnings of $4.3 million for the nine months ended September 30, 2018. During the three months ended September 30, 2019, we recorded an impairment charge of $81.5 million due to the significant decline in natural gas prices over the second quarter of 2019 and continued deterioration in the third quarter of 2019. Additionally, Laramie’s operating income decreased during the period due to lower realized prices for natural gas, condensate, and natural gas liquids during the the nine months ended September 30, 2019 compared to the same period in 2018. Please read Note 3—Investment in Laramie Energy, LLC for further information.

Income Taxes. For the nine months ended September 30, 2019, we recorded an income tax benefit of $69.0 million primarily driven by a $67.0 million benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition. For the nine months ended September 30, 2018, we recorded income tax expense of $0.9 million primarily due to deferred federal taxes for the period.

Consolidating Condensed Financial Information

On December 21, 2017, Par Petroleum, LLC (the “Issuer”) issued its 7.75% Senior Secured Notes due 2025 in a private offering under Rule 144A and Regulation S of the Securities Act. On January 11, 2019, the Issuers entered into a term loan and guaranty agreement with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto with respect to a $250.0 million term loan (the “Term Loan B”). The 7.75% Senior Secured Notes and the Term Loan B were co-issued by Par Petroleum Finance Corp. (together with the Issuer, the “Issuers”), which has no independent assets or operations. The 7.75% Senior Secured Notes and Term Loan B are guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc. (the “Parent”) and are guaranteed on a senior secured basis by all of the subsidiaries of Par Petroleum, LLC (other than Par Petroleum Finance Corp.).

The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Petroleum, LLC and its consolidated subsidiaries’ accounts, (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes or Term Loan B and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands).

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	As of September 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
ASSETS
Current assets
Cash and cash equivalents	$	10,127		$	99,959		$	602		$	110,688
Restricted cash	743			1,704			—			2,447
Trade accounts receivable	—			232,400			13			232,413
Inventories	—			671,743			—			671,743
Prepaid and other current assets	1,464			8,725			306			10,495
Due from related parties	67,986			—			(67,986		)	—
Total current assets	80,320			1,014,531			(67,065		)	1,027,786
Property and equipment
Property, plant, and equipment	20,469			1,069,378			37,792			1,127,639
Less accumulated depreciation, depletion, and amortization	(11,372		)	(151,858		)	(2,186		)	(165,416		)
Property and equipment, net	9,097			917,520			35,606			962,223
Long-term assets
Operating lease assets	4,411			388,962			(20,104		)	373,269
Investment in Laramie Energy, LLC	—			—			51,815			51,815
Investment in subsidiaries	633,861			—			(633,861		)	—
Intangible assets, net	—			22,214			—			22,214
Goodwill	—			191,214			2,598			193,812
Other long-term assets	1,405			20,361			—			21,766
Total assets	$	729,094		$	2,554,802		$	(631,011	)	$	2,652,885
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	—		$	10,788		$	1,504		$	12,292
Obligations under inventory financing agreements	—			731,400			—			731,400
Accounts payable	2,319			138,595			1,485			142,399
Deferred revenue	—			7,321			—			7,321
Accrued taxes	—			26,830			59			26,889
Operating lease liabilities	682			58,468			(4,674		)	54,476
Other accrued liabilities	2,403			77,043			(2,627		)	76,819
Due to related parties	56,956			45,453			(102,409		)	—
Total current liabilities	62,360			1,095,898			(106,662		)	1,051,596
Long-term liabilities
Long-term debt, net of current maturities	72,560			515,524			42,045			630,129
Common stock warrants	8,072			—			—			8,072
Finance lease liabilities	322			5,654			—			5,976
Operating lease liabilities	5,840			330,143			(15,430		)	320,553
Other liabilities	430			141,658			(85,039		)	57,049
Total liabilities	149,584			2,088,877			(165,086		)	2,073,375
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value: 3,000,000 shares authorized, none issued	—			—			—			—
Common stock, $0.01 par value; 500,000,000 shares authorized and 51,168,084 shares issued	512			—			—			512
Additional paid-in capital	679,706			309,679			(309,679		)	679,706
Accumulated earnings (deficit)	(103,381		)	152,743			(152,743		)	(103,381		)
Accumulated other comprehensive income	2,673			3,503			(3,503		)	2,673
Total stockholders’ equity	579,510			465,925			(465,925		)	579,510
Total liabilities and stockholders’ equity	$	729,094		$	2,554,802		$	(631,011	)	$	2,652,885

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	As of December 31, 2018
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
ASSETS
Current assets
Cash and cash equivalents	$	28,701		$	46,062		$	313		$	75,076
Restricted cash	743			—			—			743
Trade accounts receivable	—			159,630			708			160,338
Inventories	—			322,065			—			322,065
Prepaid and other current assets	11,711			17,048			(389		)	28,370
Due from related parties	43,928			—			(43,928		)	—
Total current assets	85,083			544,805			(43,296		)	586,592
Property and equipment
Property, plant, and equipment	18,939			630,429			400			649,768
Less accumulated depreciation and depletion	(9,034		)	(102,180		)	(293		)	(111,507		)
Property and equipment, net	9,905			528,249			107			538,261
Long-term assets
Investment in Laramie Energy, LLC	—			—			136,656			136,656
Investment in subsidiaries	638,975			—			(638,975		)	—
Intangible assets, net	—			23,947			—			23,947
Goodwill	—			150,799			2,598			153,397
Other long-term assets	3,334			18,547			—			21,881
Total assets	$	737,297		$	1,266,347		$	(542,910	)	$	1,460,734
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	—		$	33		$	—		$	33
Obligations under inventory financing agreements	—			373,882			—			373,882
Accounts payable	8,312			44,997			1,478			54,787
Deferred revenue	—			6,681			—			6,681
Accrued taxes	—			17,206			50			17,256
Other accrued liabilities	12,349			43,773			(1,560		)	54,562
Due to related parties	96,963			9,848			(106,811		)	—
Total current liabilities	117,624			496,420			(106,843		)	507,201
Long-term liabilities
Long-term debt, net of current maturities	100,411			292,196			—			392,607
Common stock warrants	5,007			—			—			5,007
Long-term capital lease obligations	475			5,648			—			6,123
Other liabilities	1,451			41,040			(5,024		)	37,467
Total liabilities	224,968			835,304			(111,867		)	948,405
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value: 3,000,000 shares authorized, none issued	—			—			—			—
Common stock, $0.01 par value; 500,000,000 shares authorized and 46,983,924 shares issued	470			—			—			470
Additional paid-in capital	617,937			345,825			(345,825		)	617,937
Accumulated earnings (deficit)	(108,751		)	81,715			(81,715		)	(108,751		)
Accumulated other comprehensive income	2,673			3,503			(3,503		)	2,673
Total stockholders’ equity	512,329			431,043			(431,043		)	512,329
Total liabilities and stockholders’ equity	$	737,297		$	1,266,347		$	(542,910	)	$	1,460,734

48

	Three Months Ended September 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	—		$	1,401,637		$	1		$	1,401,638
Operating expenses
Cost of revenues (excluding depreciation)	—			1,265,755			—			1,265,755
Operating expense (excluding depreciation)	—			84,420			(1,183		)	83,237
Depreciation, depletion, and amortization	748			21,350			129			22,227
General and administrative expense (excluding depreciation)	5,046			6,276			69			11,391
Acquisition and integration costs	3			620			—			623
Total operating expenses	5,797			1,378,421			(985		)	1,383,233
Operating income (loss)	(5,797		)	23,216			986			18,405
Other income (expense)
Interest expense and financing costs, net	(1,957		)	(15,503		)	(888		)	(18,348		)
Other income (expense), net	39			43			1			83
Change in value of common stock warrants	(826		)	—			—			(826		)
Equity earnings (losses) from subsidiaries	(75,350		)	—			75,350			—
Equity earnings (losses) from Laramie Energy, LLC	—			—			(85,633		)	(85,633		)
Total other income (expense), net	(78,094		)	(15,460		)	(11,170		)	(104,724		)
Income (loss) before income taxes	(83,891		)	7,756			(10,184		)	(86,319		)
Income tax benefit (expense)	—			(566		)	2,994			2,428
Net income (loss)	$	(83,891	)	$	7,190		$	(7,190	)	$	(83,891	)
Adjusted EBITDA	$	(5,007	)	$	53,631		$	1,116		$	49,740

49

	Three Months Ended September 30, 2018
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	22		$	909,749		$	10		$	909,781
Operating expenses
Cost of revenues (excluding depreciation)	—			822,785			—			822,785
Operating expense (excluding depreciation)	—			54,905			—			54,905
Depreciation, depletion, and amortization	1,268			11,915			9			13,192
General and administrative expense (excluding depreciation)	5,296			6,499			76			11,871
Acquisition and integration costs	2,134			—			—			2,134
Total operating expenses	8,698			896,104			85			904,887
Operating income	(8,676		)	13,645			(75		)	4,894
Other income (expense)
Interest expense and financing costs, net	(2,726		)	(7,699		)	—			(10,425		)
Other income (expense), net	121			(36		)	—			85
Change in value of common stock warrants	(1,067		)	—			—			(1,067		)
Equity earnings (losses) from subsidiaries	6,574			—			(6,574		)	—
Equity earnings (losses) from Laramie Energy, LLC	—			—			1,050			1,050
Total other income (expense), net	2,902			(7,735		)	(5,524		)	(10,357		)
Income (loss) before income taxes	(5,774		)	5,910			(5,599		)	(5,463		)
Income tax benefit (expense)	(48		)	(1,400		)	1,089			(359		)
Net income (loss)	$	(5,822	)	$	4,510		$	(4,510	)	$	(5,822	)
Adjusted EBITDA	$	(5,153	)	$	32,844		$	(66	)	$	27,625

50

	Nine Months Ended September 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	—		$	4,002,370		$	12		$	4,002,382
Operating expenses
Cost of revenues (excluding depreciation)	—			3,578,329			—			3,578,329
Operating expense (excluding depreciation)	—			233,318			(1,577		)	231,741
Depreciation, depletion, and amortization	2,224			62,700			179			65,103
Loss (gain) on sale of assets, net	—			(37,382		)	37,382			—
General and administrative expense (excluding depreciation)	14,940			19,367			128			34,435
Acquisition and integration costs	6			4,319			—			4,325
Total operating expenses	17,170			3,860,651			36,112			3,913,933
Operating income (loss)	(17,170		)	141,719			(36,100		)	88,449
Other income (expense)
Interest expense and financing costs, net	(7,956		)	(46,493		)	(2,887		)	(57,336		)
Debt extinguishment and commitment costs	(3,832		)	(5,354		)	—			(9,186		)
Other income (expense), net	2,274			73			—			2,347
Change in value of common stock warrants	(3,065		)	—			—			(3,065		)
Equity earnings (losses) from subsidiaries	35,269			—			(35,269		)	—
Equity earnings (losses) from Laramie Energy, LLC	—			—			(84,841		)	(84,841		)
Total other income (expense), net	22,690			(51,774		)	(122,997		)	(152,081		)
Income (loss) before income taxes	5,520			89,945			(159,097		)	(63,632		)
Income tax benefit (expense)	(150		)	(18,917		)	88,069			69,002
Net income (loss)	$	5,370		$	71,028		$	(71,028	)	$	5,370
Adjusted EBITDA	$	(12,666	)	$	177,538		$	1,461		$	166,333

51

	Nine Months Ended September 30, 2018
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	22		$	2,531,056		$	538		$	2,531,616
Operating expenses
Cost of revenues (excluding depreciation)	—			2,232,288			320			2,232,608
Operating expense (excluding depreciation)	—			158,971			4			158,975
Depreciation, depletion, and amortization	3,245			35,730			29			39,004
General and administrative expense (excluding depreciation)	15,677			20,074			230			35,981
Acquisition and integration costs	3,314			201			—			3,515
Total operating expenses	22,236			2,447,264			583			2,470,083
Operating income	(22,214		)	83,792			(45		)	61,533
Other income (expense)
Interest expense and financing costs, net	(8,066		)	(21,280		)	—			(29,346		)
Other income (expense), net	944			(71		)	(12		)	861
Change in value of common stock warrants	(396		)	—			—			(396		)
Change in value of contingent consideration	—			(10,500		)	—			(10,500		)
Equity earnings (losses) from subsidiaries	55,321			—			(55,321		)	—
Equity earnings (losses) from Laramie Energy, LLC	—			—			4,274			4,274
Total other income (expense), net	47,803			(31,851		)	(51,059		)	(35,107		)
Income (loss) before income taxes	25,589			51,941			(51,104		)	26,426
Income tax benefit (expense)	(48		)	(12,417		)	11,580			(885		)
Net income (loss)	$	25,541		$	39,524		$	(39,524	)	$	25,541
Adjusted EBITDA	$	(14,711	)	$	105,875		$	(28	)	$	91,136

Non-GAAP Financial Measures

Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Issuer and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc. Adjusted EBITDA calculations. See “Results of Operations — Non-GAAP Performance Measures — Adjusted Net Income (Loss) and Adjusted EBITDA” above.

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

	Three Months Ended September 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	(83,891	)	$	7,190		$	(7,190	)	$	(83,891	)
Inventory valuation adjustment	—			24,796			—			24,796
RINs loss (gain) in excess of net obligation	—			(1,240		)	—			(1,240		)
Unrealized loss (gain) on derivatives	—			(15,154		)	—			(15,154		)
Acquisition and integration costs	3			620			—			623
Release of tax valuation allowance (1)	—			—			(2,751		)	(2,751		)
Change in value of common stock warrants	826			—			—			826
Impairment of Investment in Laramie Energy, LLC (2)	—			—			81,515			81,515
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—			1,961			1,961
Depreciation, depletion, and amortization	748			21,350			129			22,227
Interest expense and financing costs, net	1,957			15,503			888			18,348
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment of Par's investment	—			—			2,157			2,157
Equity losses (income) from subsidiaries	75,350			—			(75,350		)	—
Income tax expense (benefit)	—			566			(243		)	323
Adjusted EBITDA (3)	$	(5,007	)	$	53,631		$	1,116		$	49,740

52

	Three Months Ended September 30, 2018
	Parent Guarantor			Issuer and Subsidiaries		Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	(5,822	)	$	4,510	$	(4,510	)	$	(5,822	)
Inventory valuation adjustment	—			3,944		—			3,944
RINs loss (gain) in excess of net obligation	—			518		—			518
Unrealized loss on derivatives	—			2,858		—			2,858
Acquisition and integration costs	2,134			—		—			2,134
Change in value of common stock warrants	1,067			—		—			1,067
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—		1,271			1,271
Depreciation, depletion, and amortization	1,268			11,915		9			13,192
Interest expense and financing costs, net	2,726			7,699		—			10,425
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment of Par's investment	—			—		(2,321		)	(2,321		)
Equity losses (income) from subsidiaries	(6,574		)	—		6,574			—
Income tax expense (benefit)	48			1,400		(1,089		)	359
Adjusted EBITDA (3)	$	(5,153	)	$	32,844	$	(66	)	$	27,625

	Nine Months Ended September 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	5,370		$	71,028		$	(71,028	)	$	5,370
Inventory valuation adjustment	—			3,625			—			3,625
RINs loss (gain) in excess of net obligation	—			(3,039		)	—			(3,039		)
Unrealized loss on derivatives	—			5,523			—			5,523
Acquisition and integration costs	6			4,319			—			4,325
Debt extinguishment and commitment costs	3,832			5,354			—			9,186
Release of tax valuation allowance (1)	—			—			(70,420		)	(70,420		)
Change in value of common stock warrants	3,065			—			—			3,065
Loss (gain) on sale of assets, net	—			(37,382		)	37,382			—
Impairment of Investment in Laramie Energy, LLC (2)	—			—			81,515			81,515
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—			(3,129		)	(3,129		)
Depreciation, depletion, and amortization	2,224			62,700			179			65,103
Interest expense and financing costs, net	7,956			46,493			2,887			57,336
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment of Par's investment	—			—			6,455			6,455
Equity losses (income) from subsidiaries	(35,269		)	—			35,269			—
Income tax expense (benefit)	150			18,917			(17,649		)	1,418
Adjusted EBITDA (3)	$	(12,666	)	$	177,538		$	1,461		$	166,333

53

	Nine Months Ended September 30, 2018
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	25,541		$	39,524		$	(39,524	)	$	25,541
Inventory valuation adjustment	—			(20,034		)	—			(20,034		)
RINs loss (gain) in excess of net obligation	—			1,408			—			1,408
Unrealized loss on derivatives	—			4,849			—			4,849
Acquisition and integration costs	3,314			201			—			3,515
Change in value of common stock warrants	396			—			—			396
Change in value of contingent consideration	—			10,500			—			10,500
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—			2,440			2,440
Depreciation, depletion, and amortization	3,245			35,730			29			39,004
Interest expense and financing costs, net	8,066			21,280			—			29,346
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment of Par's investment	—			—			(6,714		)	(6,714		)
Equity losses (income) from subsidiaries	(55,321		)	—			55,321			—
Income tax expense (benefit)	48			12,417			(11,580		)	885
Adjusted EBITDA (3)	$	(14,711	)	$	105,875		$	(28	)	$	91,136

________________________________________

(1) Included in Income tax benefit (expense) on our condensed consolidated statements of operations.

(2) Included in Equity earnings (losses) from Laramie Energy, LLC on our condensed consolidated statements of operations.

(3) For the three and nine months ended September 30, 2019 and 2018, there were no severance costs.

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, and working capital needs. Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll. Our primary sources of liquidity are cash flows from operations, cash on hand, amounts available under our credit agreements, and access to capital markets.

Our liquidity position as of September 30, 2019 was $175.3 million and consisted of $165.0 million at Par Petroleum, LLC and subsidiaries, $10.2 million at Par Pacific Holdings, and $0.1 million at all our other subsidiaries.

As of September 30, 2019, we had access to the J. Aron Deferred Payment Arrangement, the ABL Credit Facility, the MLC receivable advances, and cash on hand of $110.7 million. In addition, we have the Supply and Offtake Agreements with J. Aron and the Washington Refinery Intermediation Agreement, which are used to finance the majority of the inventory at our Hawaii and Washington refineries, respectively. Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, payments related to acquisitions, and to repay or refinance indebtedness.

We believe our cash flows from operations and available capital resources will be sufficient to meet our current capital expenditures, working capital, and debt service requirements for the next 12 months. We may seek to raise additional debt or equity capital to fund any other significant changes to our business or to refinance existing debt. We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost.

We may from time to time seek to retire or repurchase our outstanding 5.00% Convertible Senior Notes or 7.75% Senior Secured Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

54

Cash Flows

The following table summarizes cash activities for the nine months ended September 30, 2019 and 2018 (in thousands):

	Nine Months Ended September 30,
	2019			2018
Net cash provided by operating activities	$	98,632		$	51,900
Net cash used in investing activities	(334,287		)	(103,724		)
Net cash provided by financing activities	272,971			21,224

Net cash provided by operating activities was approximately $98.6 million for the nine months ended September 30, 2019, which resulted from net income of approximately $5.4 million and non-cash charges to operations of approximately $110.7 million primarily related to a $81.5 million non-cash impairment of our Investment in Laramie Energy, offset by net cash used for changes in operating assets and liabilities of approximately $17.4 million. The change in our operating assets and liabilities for the nine months ended September 30, 2019 was primarily due to increased inventories associated with the Washington Acquisition and the Hawaii Refinery Expansion, partially offset by an increase in our obligations under inventory financing agreements and accounts payable. Net cash provided by operating activities was approximately $51.9 million for the nine months ended September 30, 2018, which resulted from net income of approximately $25.5 million and non-cash charges to operations of approximately $54.2 million, offset by net cash used for changes in operating assets and liabilities of approximately $27.9 million.

For the nine months ended September 30, 2019, net cash used in investing activities was approximately $334.3 million and primarily related to $274.3 million of net cash consideration paid for the Washington Acquisition and additions to property and equipment totaling approximately $64.1 million. Net cash used in investing activities was approximately $103.7 million for the nine months ended September 30, 2018 and primarily related to $74.3 million paid for the Northwest Retail Acquisition and additions to property and equipment totaling approximately $30.2 million.

Net cash provided by financing activities for the nine months ended September 30, 2019 was approximately $273.0 million, which consisted primarily of net debt borrowings of approximately $263.4 million and net borrowings associated with the J. Aron deferred payment and MLC receivable advances of approximately $27.8 million, offset by the payments of $13.5 million in deferred loan costs and $7.1 million in commitment and extinguishment costs related to the funding for the Washington Acquisition and the financing costs related to the repurchase and cancellation of a portion of our 5.00% Convertible Senior Notes. Net cash provided by financing activities for the nine months ended September 30, 2018 was approximately $21.2 million, which consisted primarily of net debt repayments of approximately $8.4 million and net borrowings associated with the J. Aron deferred payment of approximately $30.7 million.

Capital Expenditures

Our capital expenditures for the nine months ended September 30, 2019 totaled approximately $64.1 million and were primarily related to the second phase of our diesel hydrotreater construction at our Hawaii refinery, the first phase of a project to allow for processing and storage of renewable fuels at our Washington refinery, equipment purchases and pre-engineering work in preparation for the 2020 turnarounds at our refineries, a 2019 turnaround at the newly acquired Par West facility of our Hawaii refinery, construction of the tie-in connecting our SPM to the IES crude oil pipeline for Hawaii logistics, and scheduled maintenance. Our capital expenditure budget for 2019 ranges from $100 million to $110 million and primarily relates to the continuation of the first phase of a project to allow for processing and storage of renewable fuels at our Washington refinery, equipment purchases and pre-engineering work in preparation for the 2020 turnarounds at our refineries, and scheduled maintenance.

We also continue to seek strategic investments in business opportunities, but the amount and timing of those investments are not predictable.

Commitments and Contingencies

Supply and Offtake Agreements. On June 1, 2015, we entered into the Supply and Offtake Agreements with J. Aron to support the operations of our Hawaii refinery. On May 8, 2017, we and J. Aron amended the Supply and Offtake Agreements and extended the term through May 31, 2021 with a one-year extension option upon mutual agreement of the parties. On June 27, 2018, we and J. Aron amended the Supply and Offtake Agreements to increase the amount that we may defer under the deferred payment arrangement. On December 5, 2018, we amended the Supply and Offtake Agreements to account for additional processing capacity expected to be provided through the Hawaii Refinery Expansion. Please read Note 8—Inventory Financing Agreements for more information.

55

Washington Refinery Intermediation Agreement. In connection with the consummation of the Washington Acquisition on January 11, 2019, we assumed the Washington Refinery Intermediation Agreement with MLC to support the operations of our Washington refinery. On November 1, 2019, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021, with an option for us to early terminate as early as March 31, 2021. Please read Note 8—Inventory Financing Agreements for more information.

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of our business. Please read Note 13—Commitments and Contingencies to our condensed consolidated financial statements for more information.

Critical Accounting Policies and Estimates

Except as described below, there have been no material changes to critical accounting policies disclosed in our Annual Report on Form 10-K.

Inventory

Commodity inventories, excluding commodity inventories at the refinery located in Tacoma, Washington, are stated at the lower of cost or net realizable value using the FIFO accounting method. Cost of crude and refined products inventory at the Washington refinery is determined using LIFO inventory valuation method and inventory is stated at the lower of LIFO cost or net realizable value. We value merchandise along with spare parts, materials, and supplies at average cost.

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

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (“PSLRA”), or in releases made by the SEC, all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors including, without limitation, our beliefs with regard to available capital resources, our beliefs regarding the likelihood or impact of any potential fines or penalties and of the fair value of certain assets, and our expectations with respect to laws and regulations, including environmental regulations and related compliance costs and any fines or penalties related thereto, including potential fines and penalties related to Wyoming Refining; our expectations regarding the sufficiency of our cash flows and liquidity; our expectations regarding anticipated capital expenditures, including the timing and cost of compliance with consent decrees; our expectations regarding the impact of the adoption of certain accounting standards; our beliefs as to the impact of changes to inputs regarding the valuation of our stock warrants, as well as our estimates regarding the fair value of such warrants and certain indebtedness; estimated costs to settle claims from the Delta bankruptcy; the estimated value of, and our ability to settle, legal claims remaining to be settled against third parties; our expectations regarding the synergies or other benefits of the Hawaii Refinery Expansion or the Washington Acquisition; our expectations regarding certain tax liabilities and debt obligations; our expectations and estimates regarding our Supply and Offtake Agreements and the Washington Refinery Intermediation Agreement; management’s assumptions about future events; our ability to raise additional debt or equity capital; our ability to make strategic investments in business opportunities; and the estimates, assumptions, and projections regarding future financial condition, results of operations, liquidity, and cash flows. These and other forward-looking statements could cause the actual results, performance, or achievements of Par and its subsidiaries to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act, and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control, including those set out in our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q under “Risk Factors.”

In addition, management’s assumptions about future events may prove to be inaccurate. All readers are cautioned that the forward-looking statements contained in this Quarterly Report on Form 10-Q 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. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described above and under Critical Accounting Policies and Risk Factors included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q. All forward-looking statements speak only as of the date they are made. 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.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

Our earnings, cash flow, and liquidity are significantly affected by commodity price volatility. Our Revenues fluctuate with refined product prices and our Cost of revenues (excluding depreciation) fluctuates with movements in crude oil and feedstock prices. Assuming all other factors remain constant, a $1 per barrel change in average gross refining margins, based on our throughput for the three months ended September 30, 2019 of 151 thousand barrels per day, would change annualized operating income by approximately $54.3 million. This analysis may differ from actual results.

In order to manage commodity price risks, we utilize exchange-traded futures, options, and OTC swaps 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 expire at various dates through March 2020. At September 30, 2019, these open commodity derivative contracts represent (in thousands of barrels):

Contract type	Purchases	Sales		Net
Futures	1,980	(1,116	)	864
Swaps	138	(138	)	—
Total	2,118	(1,254	)	864

Based on our net open positions at September 30, 2019, a $1 change in the price of crude oil, assuming all other factors remain constant, would result in a change of approximately $0.9 million to the fair value of these derivative instruments and Cost of revenues (excluding depreciation).

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 condensed consolidated statements of operations. Assuming normal operating conditions, we consume approximately 151 thousand barrels per day of crude oil during the refining process at our Hawaii, Washington, and Wyoming refineries. We internally consume approximately 4% of this throughput in the refining process, which is accounted for as a fuel cost. We have economically hedged 50 thousand barrels per month of our internally consumed fuel cost at our Hawaii refinery by executing option collars. These option collars have a weighted-average strike price ranging from a floor of $48.40 per barrel to a ceiling of $65.00 per barrel and expire in December 2020. We do not currently economically hedge our internally consumed fuel cost at our Wyoming or Washington refineries.

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. To the degree we are unable to blend the required amount of biofuels to satisfy our RVO, we must purchase RINs on the open market. To mitigate the impact of this risk on our results of operations and cash flows, we may purchase RINs when the price of these instruments is deemed favorable. 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.

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Interest Rate Risk

As of September 30, 2019, we had $288.1 million in debt principal 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 Agreements and the Washington Refinery Intermediation Agreement for which we pay charges based on three-month LIBOR. 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 $3.3 million and $4.5 million per year, respectively.

We may utilize interest rate swaps to manage our interest rate risk. As of September 30, 2019, we had entered into an interest rate swap at an average fixed rate of 3.91% in exchange for the floating interest rate and on the notional amounts due under the Retail Property Term Loan. This swap expires on April 1, 2024, the maturity date of the Retail Property Term Loan.

Credit Risk

We are subject to risk of losses 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.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, as of September 30, 2019, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of September 30, 2019.

Changes in Internal Control over Financial Reporting

There were no changes during the quarter ended September 30, 2019 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financing reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of our business. Please read Note 13—Commitments and Contingencies to our condensed consolidated financial statements for more information.

Item 1A. RISK FACTORS

We are subject to certain risks. For a discussion of these risks, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018. Except as set forth below, there have been no material changes to the risk factors disclosed in our annual report on Form 10-K.

An impairment of an equity investment, a long-lived asset, or goodwill could reduce our earnings or negatively impact the value of our common stock.

Consistent with GAAP, we evaluate our goodwill for impairment at least annually and our equity investments and long-lived assets, including intangible assets with finite useful lives, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the investments we account for under the equity method, such as Laramie Energy, the impairment test requires us to consider whether the fair value of the equity investment as a whole, not the underlying net assets, has declined and whether that decline is other-than-temporary. 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. As a result of our impairment evaluation of our investment in Laramie Energy, we have recorded an impairment charge of $81.5 million on our statement of operations for the three months ended September 30, 2019.

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This impairment charge or any additional impairment charges could have a negative impact on the price of our common stock. Additionally, there can be no assurance no future impairment charge will be made with respect to our equity investments, goodwill, and long-lived assets.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Dividends

We have not paid dividends on our common stock and we do not expect to do so in the foreseeable future. In addition, under the ABL Credit Facility, the indenture governing the 7.75% Senior Secured Notes, and the Term Loan B Facility, our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

Stock Repurchases    

The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended September 30, 2019:

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	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
July 1 - July 31, 2019	5,237	$	22.47	—	—
August 1 - August 31, 2019	1,095	22.50		—	—
September 1 - September 30, 2019	—	—		—	—
Total	6,332	$	22.48	—	—

________________________________________________

(1) All shares repurchased were surrendered by employees to pay taxes withheld upon the vesting of restricted stock awards.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURE

Not applicable.

Item 5. OTHER INFORMATION

None.

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Item 6. EXHIBITS

2.1	Third Amended Joint Chapter 11 Plan of Reorganization of Delta Petroleum Corporation and Its Debtor Affiliates dated August 16, 2012. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on September 7, 2012. @
2.2	Contribution Agreement, dated as of June 4, 2012, among Piceance Energy, LLC, Laramie Energy, LLC, and the Company. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 8, 2012. @
2.3	Purchase and Sale Agreement dated as of December 31, 2012, by and among the Company, SEACOR Energy Holdings Inc., SEACOR Holdings Inc., and Gateway Terminals LLC. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 3, 2013. @
2.4	Membership Interest Purchase Agreement dated as of June 17, 2013, by and among Tesoro Corporation, Tesoro Hawaii, LLC, and Hawaii Pacific Energy, LLC Incorporated by reference to Exhibit 2.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, filed on August 14, 2013. @
2.5	Agreement and Plan of Merger dated as of June 2, 2014, by and among the Company, Bogey, Inc., Koko’oha Investments, Inc., and Bill D. Mills, in his capacity as the Shareholders’ Representative. Incorporated by reference to Exhibit 2.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, filed on August 11, 2014. @
2.6	Amendment of Agreement and Plan of Merger dated as of September 9, 2014, by and among the Company, Bogey, Inc., Koko’oha Investments, Inc., and Bill D. Mills, in his capacity as the Shareholders’ Representative. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 10, 2014. @
2.7	Second Amendment of Agreement and Plan of Merger dated as of December 31, 2014, by and among Par Petroleum Corporation, Bogey, Inc., Koko’oha Investments, Inc., and Bill D. Mills, in his capacity as the Shareholder’s Representative. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 7, 2015. @
2.8	Third Amendment to Agreement and Plan of Merger dated as of March 31, 2015, by and among the Company, Bogey, Inc., Koko’oha Investments, Inc., and Bill D. Mills, in his capacity as the Shareholders’ Representative. Incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed on April 2, 2015. @
2.9	Unit Purchase Agreement, dated as of June 13, 2016, between Par Wyoming, LLC and Black Elk Refining, LLC. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 15, 2016. @
2.10	First Amendment to Unit Purchase Agreement dated as of July 14, 2016, between Par Wyoming, LLC and Black Elk Refining, LLC. Incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on July 15, 2016. @
2.11	Purchase and Sale Agreement dated as of November 26, 2018, among Par Petroleum, LLC, TrailStone NA Oil & Refining Holdings, LLC, and solely for certain purposes specified therein, the Company. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K/A filed on November 30, 2018. @#
2.12	Amendment No. 1 to Purchase and Sale Agreement dated as of January 11, 2019, among Par Petroleum, LLC, TrailStone NA Oil & Refining Holdings, LLC and Par Pacific Holdings, Inc. Incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on January 14, 2019.
3.1	Restated Certificate of Incorporation of the Company dated October 20, 2015. Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on October 20, 2015.
3.2	Second Amended and Restated Bylaws of the Company dated October 20, 2015. Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on October 20, 2015.
4.1	Form of the Company’s Common Stock Certificate. Incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed on March 31, 2014.
4.2	Stockholders Agreement dated April 10, 2015. Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 13, 2015.
4.3	Registration Rights Agreement effective as of August 31, 2012, by and among the Company, Zell Credit Opportunities Master Fund, L.P., Waterstone Capital Management, L.P., Pandora Select Partners, LP, Iam Mini-Fund 14 Limited, Whitebox Multi-Strategy Partners, LP, Whitebox Credit Arbitrage Partners, LP, HFR RVA Combined Master Trust, Whitebox Concentrated Convertible Arbitrage Partners, LP, and Whitebox Asymmetric Partners, LP. Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on September 7, 2012.

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4.4	First Amendment to Registration Rights Agreement dated as of December 19, 2018, by and among the Company and the holders party thereto. Incorporated by reference to Exhibit 4.3 to the Company’s registration statement on Form S-3 filed on December 21, 2018.
4.5	Registration Rights Agreement dated as of September 25, 2013, by and among the Company and the Purchasers party thereto. Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 27, 2013.
4.6	Warrant Issuance Agreement dated as of August 31, 2012, by and among the Company and WB Delta, Ltd., Waterstone Offshore ER Fund, Ltd., Prime Capital Master SPC, Waterstone Market Neutral MAC51, Ltd., Waterstone Market Neutral Master Fund, Ltd., Waterstone MF Fund, Ltd., Nomura Waterstone Market Neutral Fund, ZCOF Par Petroleum Holdings, L.L.C., and Highbridge International, LLC. Incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on September 7, 2012.
4.7	Form of Common Stock Purchase Warrant dated as of June 4, 2012. Incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on September 7, 2012.
4.8	Indenture, dated June 21, 2016, between Par Pacific Holdings, Inc. and Wilmington Trust, National Association, as Trustee. Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 22, 2016.
4.9	Registration Rights Agreement, dated June 21, 2016, between Par Pacific Holdings, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the Initial Purchasers. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 22, 2016.
4.10	Registration Rights Agreement dated as of July 14, 2016, by and among Par Pacific Holdings, Inc. and the purchasers party thereto. Incorporated by Reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 15, 2016.
4.11	First Amendment to Registration Rights Agreement dated as of September 27, 2016, by and among the Company and the purchasers party thereof. Incorporated by reference to Exhibit 4.14 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2016.
4.12	Second Amendment to Registration Rights Agreement dated as of September 30, 2016, by and among the Company and the holders party thereto. Incorporated by reference to Exhibit 4.15 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2016.
4.13	Third Amendment to Registration Rights Agreement dated as of October 7, 2016, by and among the Company and the holders party thereto. Incorporated by reference to Exhibit 4.16 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2016.
4.14	Fourth Amendment to Registration Rights Agreement dated as of October 14, 2016, by and among the Company and the holders party thereto. Incorporated by reference to Exhibit 4.17 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2016.
4.15	Fifth Amendment to Registration Rights Agreement dated as of October 21, 2016, by and among the Company and the holders party thereto. Incorporated by reference to Exhibit 4.18 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2016.
4.16	Sixth Amendment to Registration Rights Agreement dated as of October 28, 2016 by and among the Company and the holders party thereto. Incorporated by reference to Exhibit 4.19 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2016.
4.17	Second Amended and Restated Par Pacific Holdings, Inc. 2012 Long Term Incentive Plan. Incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed on March 29, 2018.
4.18	Par Pacific Holdings, Inc. 2018 Employee Stock Purchase Plan. Incorporated by reference to Appendix B to the Company’s Proxy Statement on Schedule 14A filed on March 29, 2018.
4.19	Registration Rights Agreement dated as of January 11, 2019, by and between the Company and TrailStone NA Oil & Refining Holdings, LLC. Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 14, 2019.
4.20	2019 Par Pacific Holdings, Inc. Management Stock Purchase Plan. Incorporated by reference to Appendix 1 to the Company’s Definitive Proxy Statement on Schedule 14A filed on March 28, 2019.
10.1	Ninth Amendment to First Lien ISDA 2002 Master Agreement dated as of November 1, 2019 by and between U.S. Oil & Refining Co. and Merrill Lynch Commodities, Inc. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 4, 2019.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

60

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.*
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. *
101.INS	XBRL Instance Document.**
101.SCH	XBRL Taxonomy Extension Schema Documents.**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.**

*     Filed herewith.

**    These interactive data files are furnished and deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

@    Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish supplementally a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

#     Portions of this exhibit have been redacted in accordance with Item 610(b)(10) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange of Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PAR PACIFIC HOLDINGS, INC. (Registrant)
By:	/s/ William Pate
	William Pate
	President and Chief Executive Officer
By:	/s/ William Monteleone
	William Monteleone
	Chief Financial Officer

Date: November 6, 2019

62

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)/15d-14(a) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, William Pate, certify that:

1. I have reviewed this annual report on Form 10-Q of Par Pacific Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019

/s/ William Pate

William Pate

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)/15d-14(a) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, William Monteleone, certify that:

1. I have reviewed this annual report on Form 10-Q of Par Pacific Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019

/s/ William Monteleone

William Monteleone

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Par Pacific Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, William Pate, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William Pate

William Pate

President and Chief Executive Officer

November 6, 2019

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Par Pacific Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, William Monteleone, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William Monteleone

William Monteleone

Chief Financial Officer

November 6, 2019

XML

Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management

considers the scheduled reversal of deferred tax liabilities, projected future results of operations, and tax planning strategies in making this assessment. For the three and nine months ended September 30, 2019, we recorded an income tax benefit of $2.4 million and $69.0 million, respectively, primarily due to the release of valuation allowance in connection with the recognition of deferred tax liabilities acquired as part of the Washington Acquisition. Management continues to conclude that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets on the remaining amounts and a valuation allowance has been recorded for substantially all of our net deferred tax assets at September 30, 2019.

During the three and nine months ended September 30, 2019 and 2018, no adjustments were recognized for uncertain tax positions.

As of December 31, 2018, we had approximately $1.5 billion in net operating loss carryforwards (“NOL carryforwards”); however, we currently have a valuation allowance against this and substantially all of our other deferred taxed assets. We will continue to assess the realizability of our deferred tax assets based on consideration of actual and projected operating results and tax planning strategies. If sufficient positive evidence of improving actual operating results becomes available, the amount of the deferred tax asset considered more likely than not to be recognized would be increased with a corresponding reduction in income tax expense in the period recorded.

Our net taxable income must be apportioned to various states based upon the income tax laws of the states in which we derive our revenue. Our NOL carryforwards will not always be available to offset taxable income apportioned to the various states. The states from which our refining, retail, and logistics revenues are derived are not the same states in which our NOLs were incurred; therefore, we expect to incur state tax liabilities in connection with our refining, retail, and logistics operations.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Depreciation Expense Excluded From Each Line Item in Consolidated Statements of Operations

The following table summarizes depreciation and finance lease amortization expense excluded from each line item in our condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues	$	4,763	$	1,620	$	12,579	$	4,866
Operating expense	13,630		7,155		40,212		20,560
General and administrative expense	797		1,297		2,341		3,345

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Debt - Term Loan B Facility (Details) - USD ($)		9 Months Ended
	Jan. 11, 2019	Sep. 30, 2019	Sep. 30, 2018
Debt Instrument [Line Items]
Proceeds from borrowings		$ 470,505,000	$ 106,500,000
Term Loan | Term Loan B Facility
Debt Instrument [Line Items]
Debt instrument, face amount	$ 250,000,000.0
Proceeds from borrowings	228,900,000
Periodic payment, principal	$ 3,100,000
Term Loan | Term Loan B Facility | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin on LIBOR rate	6.75%
Term Loan | Term Loan B Facility | Base Rate
Debt Instrument [Line Items]
Margin on LIBOR rate	5.75%

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Derivatives - Narrative (Details) bbl in Thousands	9 Months Ended
	Sep. 30, 2019 $ / bbl bbl
Credit Derivatives [Line Items]
Derivative contracts, barrels	864
Average fixed interest rate	3.91%
5.00% Convertible Senior Notes due 2021
Credit Derivatives [Line Items]
Debt instrument, interest rate	5.00%
5.00% Convertible Senior Notes due 2021 | Convertible Debt
Credit Derivatives [Line Items]
Debt instrument, interest rate	5.00%
Future
Credit Derivatives [Line Items]
Derivative contracts, barrels	864
Swap
Credit Derivatives [Line Items]
Derivative contracts, barrels	0
Option Collars
Credit Derivatives [Line Items]
Derivative contracts, barrels	50
Long
Credit Derivatives [Line Items]
Derivative contracts, barrels	2,118
Long | Future
Credit Derivatives [Line Items]
Derivative contracts, barrels	1,980
Long | Swap
Credit Derivatives [Line Items]
Derivative contracts, barrels	138
Short
Credit Derivatives [Line Items]
Derivative contracts, barrels	1,254
Short | Future
Credit Derivatives [Line Items]
Derivative contracts, barrels	1,116
Short | Swap
Credit Derivatives [Line Items]
Derivative contracts, barrels	138
Minimum | Option Collars
Credit Derivatives [Line Items]
Derivative, average price risk option strike price | $ / bbl	48.40
Maximum | Option Collars
Credit Derivatives [Line Items]
Derivative, average price risk option strike price | $ / bbl	65.00

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Fair Value Measurements - Fair Value Amounts by Hierarchy Level (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Liabilities
Gross fair value and net carrying value on balance sheet	$ (8,072)	$ (5,007)
Fair Value, Measurements, Recurring
Assets
Gross Fair Value		5,595
Effect of Counter-Party Netting		(431)
Net Carrying Value on Balance Sheet		5,164
Liabilities
Liabilities, fair value disclosure, gross	(10,882)	(2,053)
Derivative, fair value, net	2,695	431
Financial and nonfinancial liabilities, fair value disclosure	(8,187)	(1,622)
Cash collateral	13,600	10,900
Interest rate derivatives | Fair Value, Measurements, Recurring
Assets
Gross Fair Value		191
Effect of Counter-Party Netting		0
Net Carrying Value on Balance Sheet		191
Liabilities
Gross Fair Value	(1,872)
Effect of Counter-Party Netting	0
Net Carrying Value on Balance Sheet	(1,872)
Level 1 | Fair Value, Measurements, Recurring
Assets
Gross Fair Value		170
Liabilities
Liabilities, fair value disclosure, gross	(1,946)	(870)
Level 1 | Interest rate derivatives | Fair Value, Measurements, Recurring
Assets
Gross Fair Value		0
Liabilities
Gross Fair Value	0
Level 2 | Fair Value, Measurements, Recurring
Assets
Gross Fair Value		5,425
Liabilities
Liabilities, fair value disclosure, gross	(2,731)	(261)
Level 2 | Interest rate derivatives | Fair Value, Measurements, Recurring
Assets
Gross Fair Value		191
Liabilities
Gross Fair Value	(1,872)
Level 3 | Fair Value, Measurements, Recurring
Assets
Gross Fair Value		0
Liabilities
Liabilities, fair value disclosure, gross	(6,205)	(922)
Level 3 | Interest rate derivatives | Fair Value, Measurements, Recurring
Assets
Gross Fair Value		0
Liabilities
Gross Fair Value	0
Over the Counter | Fair Value, Measurements, Recurring
Liabilities
Gross fair value and net carrying value on balance sheet	(8,072)	(5,007)
Over the Counter | Level 1 | Fair Value, Measurements, Recurring
Liabilities
Gross fair value and net carrying value on balance sheet	0	0
Over the Counter | Level 2 | Fair Value, Measurements, Recurring
Liabilities
Gross fair value and net carrying value on balance sheet	0	0
Over the Counter | Level 3 | Fair Value, Measurements, Recurring
Liabilities
Gross fair value and net carrying value on balance sheet	(8,072)	(5,007)
Exchange Traded | Future | Fair Value, Measurements, Recurring
Assets
Gross Fair Value	2,813	5,404
Effect of Counter-Party Netting	(2,695)	(431)
Net Carrying Value on Balance Sheet	118	4,973
Liabilities
Gross Fair Value	(2,805)	(1,131)
Effect of Counter-Party Netting	2,695	431
Net Carrying Value on Balance Sheet	(110)	(700)
Exchange Traded | J. Aron repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	(2,473)	4,085
Effect of Counter-Party Netting	0	0
Net Carrying Value on Balance Sheet	(2,473)	4,085
Exchange Traded | MLC repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	4,340
Effect of Counter-Party Netting	0
Net Carrying Value on Balance Sheet	4,340
Exchange Traded | Level 1 | Future | Fair Value, Measurements, Recurring
Assets
Gross Fair Value	2,000	170
Liabilities
Gross Fair Value	(1,946)	(870)
Exchange Traded | Level 1 | J. Aron repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	0	0
Exchange Traded | Level 1 | MLC repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	0
Exchange Traded | Level 2 | Future | Fair Value, Measurements, Recurring
Assets
Gross Fair Value	813	5,234
Liabilities
Gross Fair Value	(859)	(261)
Exchange Traded | Level 2 | J. Aron repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	0	0
Exchange Traded | Level 2 | MLC repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	0
Exchange Traded | Level 3 | Future | Fair Value, Measurements, Recurring
Assets
Gross Fair Value	0	0
Liabilities
Gross Fair Value	0	0
Exchange Traded | Level 3 | J. Aron repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	(2,473)	$ 4,085
Exchange Traded | Level 3 | MLC repurchase obligation derivative | Fair Value, Measurements, Recurring
Liabilities
Gross Fair Value	$ 4,340

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Acquisitions - Washington Acquisition (Details) mbpd in Thousands, barrel / d in Thousands, shares in Millions, bbl in Millions		1 Months Ended	3 Months Ended			9 Months Ended
	Jan. 11, 2019 USD ($) mbpd shares bbl	Jan. 31, 2019 USD ($)	Sep. 30, 2019 USD ($) barrel / d	Mar. 31, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) barrel / d	Sep. 30, 2018 USD ($)	Jan. 09, 2019 USD ($)
Business Acquisition [Line Items]
Oil and gas refinery capacity | barrel / d			200			200
Issuance of common stock for business combination	$ 37,000,000.0			$ 36,980,000
Acquisition and integration costs			$ 623,000		$ 2,134,000	$ 4,325,000	$ 3,515,000
Income tax expense (benefit)			(2,428,000)		$ 359,000	(69,002,000)	$ 885,000
Term Loan | Term Loan B Facility
Business Acquisition [Line Items]
Debt instrument, face amount	250,000,000.0
Term Loan | Par Pacific Term Loan
Business Acquisition [Line Items]
Debt instrument, face amount								$ 45,000,000.0
Washington Acquisition
Business Acquisition [Line Items]
Consideration transferred, gross	$ 358,000,000
Oil and gas refinery capacity | mbpd	42
Oil and gas storage capacity | bbl	2.9
Consideration transferred	$ 326,500,000
Cash consideration transferred	$ 289,500,000
Common stock offering, net of issuance costs (in shares) | shares	2.4
Acquisition and integration costs		$ 5,400,000				2,200,000
Adjustment, property, plant, and equipment			2,100,000
Adjustment, deferred tax liability			5,900,000
Adjustment, working capital adjustment			(1,900,000)
Goodwill, purchase accounting adjustments			(6,100,000)
Revenue			300,000,000.0			855,600,000
Earnings (loss) of acquiree since acquisition date, actual			$ 29,400,000			49,500,000
Income tax expense (benefit)						$ (67,000,000.0)

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Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 11, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
LIFO reserve	$ 10,300
Operating lease assets	373,269
Operating lease, liability	$ 375,029
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease assets			$ 347,000
Operating lease, liability			$ 349,000
Washington Acquisition
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease assets		$ 62,000

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Commitments and Contingencies (Details)		3 Months Ended	9 Months Ended	38 Months Ended
	Mar. 23, 2015	Sep. 30, 2019 USD ($) claim	Sep. 30, 2019 USD ($) claim	Sep. 30, 2019 USD ($) claim
Long-term Purchase Commitment [Line Items]
RINs benefit		$ 5,700,000
Site contingency, recovery from third party of environmental remediation cost				$ 12,200,000
Number of remaining claim to be resolved | claim		2	2	2
Bankruptcy claims amount of claims to be settled		$ 22,400,000	$ 22,400,000	$ 22,400,000
Estimated value of claims remaining to be settled		500,000	500,000	500,000
Maximum bankruptcy claims remaining		$ 22,400,000	$ 22,400,000	$ 22,400,000
Predecessor working ownership percentage		3.40%	3.40%	3.40%
Allowed claims, settlement ratio			0.0544
Wyoming Refinery One
Long-term Purchase Commitment [Line Items]
Environmental remediation accrual		$ 16,800,000	$ 16,800,000	$ 16,800,000
Environmental costs recognized, period for recognition of one third costs			5 years
Environmental costs recognized, remainder, period for recognition			30 years
Wyoming Refinery Two | Waste Water Treatment System
Long-term Purchase Commitment [Line Items]
Environmental remediation accrual		11,600,000	$ 11,600,000	11,600,000
Wyoming Refinery
Long-term Purchase Commitment [Line Items]
Loss contingency, range of possible loss		100,000	100,000	100,000
United Steelworkers Union
Long-term Purchase Commitment [Line Items]
Collective bargaining arrangement, extension term	4 years
Tesoro Corporation | Indemnification Agreement
Long-term Purchase Commitment [Line Items]
Deductible for indemnification obligation		1,000,000	1,000,000	1,000,000
Indemnification obligation cap		$ 15,000,000	$ 15,000,000	$ 15,000,000

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Related Party Transactions (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Related Party Transaction [Line Items]
Travel and out of pocket expenses			$ 50,000
Investor
Related Party Transaction [Line Items]
Initial term of service agreements			1 year
Renewal term for service agreements			1 year
Termination period between extension date			60 days
EGI
Related Party Transaction [Line Items]
Percentage ownership of Par common stock (or more)	10.00%		10.00%
EGI | Investor
Related Party Transaction [Line Items]
Service agreements, commitment costs	$ 0	$ 0	$ 0	$ 0

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Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Finance lease cost
Amortization of finance lease assets	$ 479	$ 1,380
Interest on lease liabilities	128	392
Operating lease cost	24,259	72,237
Variable lease cost	2,799	8,689
Short-term lease cost	1,067	1,483
Net lease cost	$ 28,732	$ 84,181

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Fair Value Measurements - Roll Forward of Level 3 Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, at beginning of period	$ (12,720)	$ (10,559)	$ (922)	$ (26,372)
Settlements	3,777	0	(4,121)	0
Acquired	6,201	0	3,900	0
Total unrealized income (loss) included in earnings	(3,463)	(5,397)	(5,062)	10,416
Balance, at end of period	$ (6,205)	$ (15,956)	$ (6,205)	$ (15,956)

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Stockholders' Equity - Additional Information (Details) $ / shares in Units, $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($) shares	Sep. 30, 2019 USD ($) $ / shares shares
Restricted Stock Awards
Class of Stock [Line Items]
Restricted stock and restricted stock units granted (in shares) | shares	11,000	285,000
Grants in the period, aggregate fair value	$ 0.1	$ 4.5
Unrecognized compensation costs related to restricted stock awards	$ 7.1	$ 7.1
Weighted average period of recognition		1 year 9 months 18 days
Stock Option Awards
Class of Stock [Line Items]
Weighted average period of recognition		1 year 9 months 18 days
Options, granted (in shares) | shares	0	300,000
Weighted average exercise price (in dollars per share) | $ / shares		$ 17.00
Unrecognized compensation costs related to options	$ 3.1	$ 3.1
Performance Restricted Stock Units
Class of Stock [Line Items]
Restricted stock and restricted stock units granted (in shares) | shares	0	48,000
Grants in the period, aggregate fair value		$ 0.8
Unrecognized compensation costs related to restricted stock awards	$ 1.1	$ 1.1
Weighted average period of recognition		1 year 10 months 24 days

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands		Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income
Balance at period start (in shares) at Dec. 31, 2017			45,776
Balance at period start at Dec. 31, 2017		$ 447,719	$ 458	$ 593,295	$ (148,178)	$ 2,144
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (in shares)			272
Stock-based compensation		1,438	$ 1	1,437
Purchase of common stock for retirement (in shares)			(29)
Purchase of common stock for retirement		(543)		(543)
Other comprehensive income (loss)		0
Net income (loss)		15,185			15,185
Balance at period end (in shares) at Mar. 31, 2018			46,019
Balance at period end at Mar. 31, 2018		463,799	$ 459	594,189	(132,993)	2,144
Balance at period start (in shares) at Dec. 31, 2017			45,776
Balance at period start at Dec. 31, 2017		447,719	$ 458	593,295	(148,178)	2,144
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)		25,541
Balance at period end (in shares) at Sep. 30, 2018			46,009
Balance at period end at Sep. 30, 2018		477,406	$ 460	597,439	(122,637)	2,144
Balance at period start (in shares) at Mar. 31, 2018			46,019
Balance at period start at Mar. 31, 2018		463,799	$ 459	594,189	(132,993)	2,144
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (in shares)			(8)
Stock-based compensation		1,664	$ 1	1,663
Purchase of common stock for retirement (in shares)			(3)
Purchase of common stock for retirement		(21)		(21)
Other comprehensive income (loss)		0
Net income (loss)		16,178			16,178
Balance at period end (in shares) at Jun. 30, 2018			46,008
Balance at period end at Jun. 30, 2018		481,620	$ 460	595,831	(116,815)	2,144
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (in shares)			15
Stock-based compensation		1,696		1,696
Purchase of common stock for retirement (in shares)			(14)
Purchase of common stock for retirement		(88)		(88)
Other comprehensive income (loss)		0
Net income (loss)		(5,822)			(5,822)
Balance at period end (in shares) at Sep. 30, 2018			46,009
Balance at period end at Sep. 30, 2018		477,406	$ 460	597,439	(122,637)	2,144
Balance at period start (in shares) at Dec. 31, 2018			46,984
Balance at period start at Dec. 31, 2018		512,329	$ 470	617,937	(108,751)	2,673
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for business combination (in shares)			2,364
Issuance of common stock for business combination		36,980	$ 23	36,957
Stock-based compensation (in shares)			246
Stock-based compensation		1,535	$ 3	1,532
Purchase of common stock for retirement (in shares)			(44)
Purchase of common stock for retirement		(734)		(734)
Net income (loss)		61,092			61,092
Balance at period end (in shares) at Mar. 31, 2019			49,550
Balance at period end at Mar. 31, 2019		611,202	$ 496	655,692	(47,659)	2,673
Balance at period start (in shares) at Dec. 31, 2018			46,984
Balance at period start at Dec. 31, 2018		512,329	$ 470	617,937	(108,751)	2,673
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)		5,370
Balance at period end (in shares) at Sep. 30, 2019			51,168
Balance at period end at Sep. 30, 2019		579,510	$ 512	679,706	(103,381)	2,673
Balance at period start (in shares) at Mar. 31, 2019			49,550
Balance at period start at Mar. 31, 2019		611,202	$ 496	655,692	(47,659)	2,673
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for convertible notes repurchase (in shares)	[1]		1,449
Issuance of common stock for convertible notes repurchase, net	[1]	17,789	$ 14	17,775
Issuance of common stock for employee stock purchase plan (in shares)			37
Issuance of common stock for employee stock purchase plan		754		754
Stock-based compensation (in shares)			(31)
Stock-based compensation		1,550		1,550
Purchase of common stock for retirement (in shares)			(2)
Purchase of common stock for retirement		(20)		(20)
Exercise of stock options (in shares)			21
Exercise of stock options		119		119
Net income (loss)		28,169			28,169
Balance at period end (in shares) at Jun. 30, 2019			51,024
Balance at period end at Jun. 30, 2019		659,563	$ 510	675,870	(19,490)	2,673
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (in shares)			(20)
Stock-based compensation		1,448		1,448
Purchase of common stock for retirement (in shares)			(6)
Purchase of common stock for retirement		(414)		(414)
Exercise of stock options (in shares)			170
Exercise of stock options		2,804	$ 2	2,802
Net income (loss)		(83,891)			(83,891)
Balance at period end (in shares) at Sep. 30, 2019			51,168
Balance at period end at Sep. 30, 2019		$ 579,510	$ 512	$ 679,706	$ (103,381)	$ 2,673

[1] The issuance of common stock for the repurchase of a portion of our 5.00% Convertible Senior Notes in the three months ended June 30, 2019 is presented net of a $12.3 million write-off associated with the equity component of the repurchased notes.

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 110,688	$ 75,076
Restricted cash	2,447	743
Total cash, cash equivalents, and restricted cash	113,135	75,819
Trade accounts receivable	232,413	160,338
Inventories	671,743	322,065
Prepaid and other current assets	10,495	28,370
Total current assets	1,027,786	586,592
Property and equipment
Property, plant, and equipment	1,127,639	649,768
Less accumulated depreciation, depletion, and amortization	(165,416)	(111,507)
Property and equipment, net	962,223	538,261
Long-term assets
Operating lease assets	373,269
Investment in Laramie Energy, LLC	51,815	136,656
Intangible assets, net	22,214	23,947
Goodwill	193,812	153,397
Other long-term assets	21,766	21,881
Total assets	2,652,885	1,460,734
Current liabilities
Current maturities of long-term debt	12,292	33
Obligations under inventory financing agreements	731,400	373,882
Accounts payable	142,399	54,787
Deferred revenue	7,321	6,681
Accrued taxes	26,889	17,256
Operating lease liabilities	54,476
Other accrued liabilities	76,819	54,562
Total current liabilities	1,051,596	507,201
Long-term liabilities
Long-term debt, net of current maturities	630,129	392,607
Common stock warrants	8,072	5,007
Finance lease liabilities	5,976
Finance lease liabilities		6,123
Operating lease liabilities	320,553
Other liabilities	57,049	37,467
Total liabilities	2,073,375	948,405
Commitments and contingencies (Note 13)
Stockholders’ equity
Preferred stock, $0.01 par value: 3,000,000 shares authorized, none issued	0	0
Common stock, $0.01 par value; 500,000,000 shares authorized at September 30, 2019 and December 31, 2018, 51,168,084 shares and 46,983,924 shares issued at September 30, 2019 and December 31, 2018, respectively	512	470
Additional paid-in capital	679,706	617,937
Accumulated deficit	(103,381)	(108,751)
Accumulated other comprehensive income	2,673	2,673
Total stockholders’ equity	579,510	512,329
Total liabilities and stockholders’ equity	$ 2,652,885	$ 1,460,734

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Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Inventory [Line Items]
Crude oil and feedstocks	$ 313,112	$ 124,877
Refined products and blendstock	297,422	162,576
Warehouse stock and other	61,209	34,612
Total	671,743	322,065
Reserves for the lower of cost or market value of inventory	6,200	3,800
LIFO reserve	10,300
Titled Inventory
Inventory [Line Items]
Crude oil and feedstocks	192,807	7,000
Refined products and blendstock	132,795	62,401
Warehouse stock and other	61,209	34,612
Total	386,811	104,013
Supply and Offtake Agreements
Inventory [Line Items]
Crude oil and feedstocks	120,305	117,877
Refined products and blendstock	164,627	100,175
Warehouse stock and other	0	0
Total	284,932	218,052
Renewable Identification Numbers “RINs”
Inventory [Line Items]
Warehouse stock and other	$ 17,100	$ 5,000

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Debt - Schedule of Debt (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018	Dec. 21, 2017
Debt Instrument [Line Items]
Principal amount of long-term debt	$ 669,470,000	$ 416,466,000
Less: unamortized discount and deferred financing costs	(27,049,000)	(23,826,000)
Total debt, net of unamortized discount and deferred financing costs	642,421,000	392,640,000
Less: current maturities	(12,292,000)	(33,000)
Long-term debt, net of current maturities	$ 630,129,000	392,607,000
5.00% Convertible Senior Notes due 2021
Debt Instrument [Line Items]
Debt instrument, interest rate	5.00%
7.75% Senior Secured Note due 2025
Debt Instrument [Line Items]
Debt instrument, interest rate	7.75%
Convertible Debt | 5.00% Convertible Senior Notes due 2021
Debt Instrument [Line Items]
Debt instrument, interest rate	5.00%
Principal amount of long-term debt	$ 79,895,000	115,000,000
Less: unamortized discount and deferred financing costs	$ (7,300,000)
Senior Notes | 7.75% Senior Secured Note due 2025
Debt Instrument [Line Items]
Debt instrument, interest rate	7.75%		7.75%
Principal amount of long-term debt	$ 300,000,000	300,000,000	$ 300,000,000
Term Loan | Mid Pac Term Loan
Debt Instrument [Line Items]
Principal amount of long-term debt	1,441,000	1,466,000
Term Loan | Term Loan B Facility
Debt Instrument [Line Items]
Principal amount of long-term debt	243,750,000	0
Term Loan | Retail Property Term Loan
Debt Instrument [Line Items]
Principal amount of long-term debt	44,384,000	0
Revolving Credit Facility | ABL Revlover
Debt Instrument [Line Items]
Principal amount of long-term debt	0	0
Letters of credit outstanding, amount	0	$ 13,500,000
Letters of Credit and Surety Bonds
Debt Instrument [Line Items]
Letters of credit outstanding, amount	$ 3,700,000

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Assets And Liabilities, Lessee

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our leased assets and liabilities as of September 30, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	September 30, 2019
Assets
Finance	Property, plant, and equipment	$	10,787
Finance	Accumulated amortization	(3,959		)
Finance	Property and equipment, net	$	6,828
Operating	Operating lease assets	373,269
Total leased assets		$	380,097
Liabilities
Current
Finance	Other accrued liabilities	$	1,632
Operating	Operating lease liabilities	54,476
Long-term
Finance	Finance lease liabilities	5,976
Operating	Operating lease liabilities	320,553
Total lease liabilities		$	382,637
Weighted-average remaining lease term (in years)
Finance		5.90
Operating		11.53
Weighted-average discount rate
Finance		6.68		%
Operating		7.71		%

Lease, Cost

The following table summarizes the lease costs recognized on our condensed consolidated statements of operations (in thousands):

Lease cost type	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost
Amortization of finance lease assets	$	479	$	1,380
Interest on lease liabilities	128		392
Operating lease cost	24,259		72,237
Variable lease cost	2,799		8,689
Short-term lease cost	1,067		1,483
Net lease cost	$	28,732	$	84,181

The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):

Lease type	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	1,571
Operating cash flows from finance leases	559
Operating cash flows from operating leases	71,181
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	198
ROU assets obtained in exchange for new operating lease liabilities	15,532

Lessee, Operating Lease, Liability, Maturity

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of September 30, 2019 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2019 (1)	$	540		$	22,109		$	22,649
2020	1,978			79,668			81,646
2021	1,407			51,891			53,298
2022	1,190			49,712			50,902
2023	1,159			48,670			49,829
2024	934			42,962			43,896
Thereafter	2,005			243,517			245,522
Total lease payments	9,213			538,529			547,742
Less amount representing interest	(1,605		)	(163,500		)	(165,105		)
Present value of lease liabilities	$	7,608		$	375,029		$	382,637

_________________________________________________________

(1)

Represents period from October 1, 2019 to December 31, 2019.

Finance Lease, Liability, Maturity

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of September 30, 2019 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2019 (1)	$	540		$	22,109		$	22,649
2020	1,978			79,668			81,646
2021	1,407			51,891			53,298
2022	1,190			49,712			50,902
2023	1,159			48,670			49,829
2024	934			42,962			43,896
Thereafter	2,005			243,517			245,522
Total lease payments	9,213			538,529			547,742
Less amount representing interest	(1,605		)	(163,500		)	(165,105		)
Present value of lease liabilities	$	7,608		$	375,029		$	382,637

_________________________________________________________

(1)

Represents period from October 1, 2019 to December 31, 2019.

Schedule of Future Minimum Lease Payments for Capital Leases

At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):

	Capital leases			Operating leases
2019	$	2,723		$	62,589
2020	2,264			62,132
2021	1,757			39,821
2022	1,512			38,402
2023	1,148			38,827
Thereafter	2,600			191,717
Total minimum rental payments	$	12,004		$	433,488
Less amount representing interest	(1,865		)
Present value of minimum rental payments	$	10,139

Schedule of Future Minimum Rental Payments for Operating Leases

At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):

	Capital leases			Operating leases
2019	$	2,723		$	62,589
2020	2,264			62,132
2021	1,757			39,821
2022	1,512			38,402
2023	1,148			38,827
Thereafter	2,600			191,717
Total minimum rental payments	$	12,004		$	433,488
Less amount representing interest	(1,865		)
Present value of minimum rental payments	$	10,139

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Prepaid and Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid and Other Current Assets

Prepaid and other current assets at September 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Collateral posted with broker for derivative instruments (1)	$	4,076	$	2,759
Prepaid insurance	—		7,727
Deferred financing costs	280		—
Derivative assets	118		5,164
Other	6,021		12,720
Total	$	10,495	$	28,370

_________________________________________________________

(1)

Our cash margin that is required as collateral deposits on our commodity derivatives cannot be offset against the fair value of open contracts except in the event of default. Please read Note 10—Derivatives for further information.

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Acquisitions

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Acquisitions

Acquisitions

Washington Acquisition

On November 26, 2018, we entered into a Purchase and Sale Agreement to acquire U.S. Oil & Refining Co. and certain affiliated entities (collectively, “U.S. Oil”), a privately-held downstream business, for $358 million plus net working capital (the “Washington Acquisition”). The Washington Acquisition includes a 42 Mbpd refinery, a marine terminal, a unit train-capable rail loading terminal, and 2.9 MMbbls of refined product and crude oil storage. The refinery and associated logistics system are strategically located in Tacoma, Washington, and currently serve the Pacific Northwest market. On January 11, 2019, we completed the Washington Acquisition for a total purchase price of $326.5 million, including acquired working capital, consisting of cash consideration of $289.5 million and approximately 2.4 million shares of Par’s common stock with a fair value of $37.0 million issued to the seller of U.S. Oil. The cash consideration was funded in part through cash on hand, proceeds from borrowings under a new term loan facility entered into with Goldman Sachs Bank USA, as administrative agent, of $250.0 million (the “Term Loan B”) and proceeds from borrowings under a term loan from the Bank of Hawaii of $45.0 million (the “Par Pacific Term Loan”).

Please read Note 9—Debt for further information on the Term Loan B and Par Pacific Term Loan. In January 2019, we incurred $5.4 million of commitment fees associated with the funding of the Washington Acquisition. Such commitment fees are presented as Debt extinguishment and commitment costs on our condensed consolidated statements of operations for the nine months ended September 30, 2019.

In connection with the consummation of the Washington Acquisition, we assumed the Washington Refinery Intermediation Agreement with MLC that provides a structured financing arrangement based on U.S. Oil’s crude oil and refined products inventories and associated accounts receivable. Please read Note 8—Inventory Financing Agreements for further information on the Washington Refinery Intermediation Agreement.

We accounted for the Washington Acquisition as a business combination whereby the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition. Goodwill recognized in the transaction was attributable to opportunities expected to arise from combining our operations with those of the Washington refinery and the utilization of our net operating loss carryforwards, as well as other intangible assets that do not qualify for separate recognition. Goodwill recognized as a result of the Washington Acquisition is not expected to be deductible for income tax reporting purposes.

A summary of the preliminary estimated fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Cash	$	16,146
Accounts receivable	34,954
Inventories	98,367
Prepaid and other assets	5,320
Property, plant, and equipment	412,766
Operating lease assets	62,337
Goodwill (1)	40,415
Total assets (2)	670,305
Obligations under inventory financing agreements	(116,873		)
Accounts payable	(55,444		)
Current operating lease obligations	(21,571		)
Other current liabilities	(18,411		)
Long-term operating lease obligations	(40,766		)
Deferred tax liability	(89,909		)
Other non-current liabilities	(804		)
Total liabilities	(343,778		)
Total	$	326,527

______________________________________________

(1) We allocated $23.4 million and $17.0 million of goodwill to our refining and logistics segments, respectively.

(2) We allocated $402.7 million and $267.6 million of total assets to our refining and logistics segments, respectively.

We have recorded a preliminary estimate of the fair value of the assets acquired and liabilities assumed and expect to finalize the purchase price allocation during the fourth quarter of 2019. The primary areas of the purchase price allocation that are not yet finalized relate to property, plant, and equipment, goodwill, and income taxes. During the six months ended September 30, 2019, the purchase price allocation was adjusted to record an increase in the property, plant, and equipment valuation of $2.1 million, a decrease in the deferred tax liability of $5.9 million, and a net decrease in working capital adjustments of $1.9 million. Goodwill decreased $6.1 million as a result of these adjusting entries. We incurred $2.2 million of acquisition costs related to the Washington Acquisition for the nine months ended September 30, 2019. These costs are included in Acquisition and integration costs on our condensed consolidated statement of operations.

The results of operations of U.S. Oil were included in our results beginning on January 11, 2019. For the three and nine months ended September 30, 2019, our results of operations included revenues of $300.0 million and $855.6 million and profit before tax of $29.4 million and $49.5 million related to U.S. Oil, respectively. The following unaudited pro forma financial information presents our consolidated revenues and net income (loss) as if the Washington Acquisition had been completed on January 1, 2018 (in thousands except per share information):

	Nine Months Ended September 30,
	2019			2018
Revenues	$	4,030,290		$	3,515,536
Net income (loss)	(72,544		)	19,897
Income (loss) per share
Basic	$	(1.45	)	$	0.41
Diluted	$	(1.45	)	$	0.41

These pro forma results were based on estimates and assumptions, which we believe are reasonable. They are not necessarily indicative of our consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during the periods presented. The pro forma results for the nine months ended September 30, 2019 and 2018 include adjustments to remeasure U.S. Oil’s LIFO inventory reserve as if the Washington Acquisition had been completed on January 1, 2018, record interest and other debt extinguishment costs related to issuance of the Term Loan B and Par Pacific Term Loan, and adjust U.S. Oil’s historical depreciation expense as a result of the fair value adjustment to Property and equipment, net. The pro forma results for the nine months ended September 30, 2019 also include an adjustment to eliminate the $67.0 million tax benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition.

Hawaii Refinery Expansion

On August 29, 2018, we entered into a Topping Unit Purchase Agreement with IES Downstream, LLC (“IES”) to purchase certain of IES’s refining units and related assets in addition to certain hydrocarbon and non-hydrocarbon inventory (collectively, the “Hawaii Refinery Expansion”). On December 19, 2018, we completed the asset purchase for total consideration of approximately $66.9 million, net of a $4.3 million receivable related to net working capital adjustments. The purchase price consisted of $47.6 million in cash and approximately 1.1 million shares of our common stock with a fair value of $19.3 million.

We accounted for the Hawaii Refinery Expansion as an asset acquisition whereby the purchase price was allocated entirely to the assets acquired. Of the total purchase price of $66.9 million, $45.2 million was allocated to property, plant, and equipment, $4.3 million to non-hydrocarbon inventory, and $17.4 million to hydrocarbon inventory. With the completion of the Hawaii Refinery Expansion, the Hawaii refinery operations now have two facility locations which are approximately two miles from one another: Par East, our legacy refinery assets, and Par West, the recently-acquired assets.

Northwest Retail Acquisition

On January 9, 2018, we entered into an Asset Purchase Agreement with CHS, Inc. to acquire twenty-one (21) owned retail gasoline, convenience store facilities and twelve (12) leased retail gasoline, convenience store facilities, all at various locations in Washington and Idaho (collectively, “Northwest Retail”). On March 23, 2018, we completed the acquisition for cash consideration of approximately $74.5 million (the “Northwest Retail Acquisition”).

As part of the Northwest Retail Acquisition, Par and CHS, Inc. entered into a multi-year branded petroleum marketing agreement for the continued supply of Cenex®-branded refined products to the acquired Cenex® Zip Trip convenience stores. In addition, the parties also entered into a multi-year supply agreement pursuant to which Par will supply refined products to CHS, Inc. within the Rocky Mountain and Pacific Northwest markets.

We accounted for the acquisition of Northwest Retail as a business combination whereby the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. Goodwill recognized in the transaction was attributable to opportunities expected to arise from combining our operations with Northwest Retail and utilization of our net operating loss carryforwards, as well as intangible assets that do not qualify for separate recognition. Goodwill recognized as a result of the Northwest Retail Acquisition is expected to be deductible for income tax reporting purposes.

A summary of the fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Cash	$	200
Inventories	4,138
Prepaid and other current assets	243
Property, plant, and equipment	30,230
Goodwill (1)	46,210
Accounts payable and other current liabilities	(759		)
Long-term capital lease obligations	(5,244		)
Other non-current liabilities	(487		)
Total	$	74,531

________________________________________________________

(1) The total goodwill balance of $46.2 million was allocated to our retail segment.

As of December 31, 2018, we finalized the Northwest Retail Acquisition purchase price allocation. We incurred $0.6 million of acquisition costs related to the Northwest Retail Acquisition for the nine months ended September 30, 2018. These costs are included in Acquisition and integration costs on our condensed consolidated statement of operations. No such costs were incurred during the three months ended September 30, 2018.

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Inventory Financing Agreements

9 Months Ended

Sep. 30, 2019

Other Commitments [Abstract]

Inventory Financing Agreements

Inventory Financing Agreements

Supply and Offtake Agreements

On June 1, 2015, we entered into several agreements with J. Aron to support the operations of our Hawaii refinery (the “Supply and Offtake Agreements”). The Supply and Offtake Agreements mature on May 31, 2021 and have a one-year extension option upon mutual agreement of the parties. Under the Supply and Offtake Agreements, J. Aron may enter into agreements with third parties whereby J. Aron will remit payments to these third parties for refinery procurement contracts for which we will become immediately obligated to reimburse J. Aron. As of September 30, 2019, we had no obligations due to J. Aron under this contractual undertakings agreement. On December 5, 2018, we amended the Supply and Offtake Agreements to account for additional processing capacity expected to be provided through the Hawaii Refinery Expansion. The amendment to the Supply and Offtake Agreements also (i) required us to increase our margin requirements by an aggregate of $2.5 million by making certain additional margin payments on December 19, 2018, March 1, 2019, and June 3, 2019, and (ii) only allows dividends, payments, or other distributions with respect to any equity interests in Par Hawaii Refining, LLC (“PHR”) in limited and restricted circumstances.

During the term of the Supply and Offtake Agreements, J. Aron and we will identify mutually acceptable contracts for the purchase of crude oil from third parties. Per the Supply and Offtake Agreements, J. Aron will provide up to 150 Mbpd per day of crude oil to our Hawaii refinery. Additionally, we agreed to sell and J. Aron agreed to buy, at market prices, refined products produced at our Hawaii refinery. We will then repurchase the refined products from J. Aron prior to selling the refined products to our retail operations or to third parties. The agreements also provide for the lease of crude oil and certain refined product storage facilities to J. Aron. Following the expiration or termination of the Supply and Offtake Agreements, we are obligated to purchase the crude oil and refined product inventories then owned by J. Aron and located at the leased storage facilities at then-current market prices.

Though title to the crude oil and certain refined product inventories resides with J. Aron, the Supply and Offtake Agreements are accounted for similar to a product financing arrangement; therefore, the crude oil and refined products inventories will continue to be included on our condensed consolidated balance sheets until processed and sold to a third party. Each reporting period, we record a liability in an amount equal to the amount we expect to pay to repurchase the inventory held by J. Aron based on current market prices.

For the three and nine months ended September 30, 2019, we incurred approximately $9.1 million and $24.7 million, respectively, of inventory intermediation fees related to the Supply and Offtake Agreements, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations. For the three and nine months ended September 30, 2018, we incurred approximately $5.0 million and $15.8 million of inventory intermediation fees related to the Supply and Offtake Agreements, respectively. For the three and nine months ended September 30, 2019, Interest expense and financing costs, net, on our condensed consolidated statements of operations includes approximately $1.3 million and $4.3 million of expenses related to the Supply and Offtake Agreements, respectively. For the three and nine months ended September 30, 2018, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $1.3 million and $3.3 million of expenses related to the Supply and Offtake Agreements, respectively.

The Supply and Offtake Agreements also include a deferred payment arrangement (“Deferred Payment Arrangement”) whereby we can defer payments owed under the agreements up to the lesser of $165 million or 85% of the eligible accounts receivable and inventory. Upon execution of the Supply and Offtake Agreements, we paid J. Aron a deferral arrangement fee of $1.3 million. The deferred amounts under the Deferred Payment Arrangement bear interest at a rate equal to three-month LIBOR plus 3.50% per annum. We also agreed to pay a deferred payment availability fee equal to 0.75% of the unused capacity under the Deferred Payment Arrangement. Amounts outstanding under the Deferred Payment Arrangement are included in Obligations under inventory financing agreements on our condensed consolidated balance sheets. Changes in the amount outstanding under the Deferred Payment Arrangement are included within Cash flows from financing activities on the condensed consolidated statements of cash flows. As of September 30, 2019 and December 31, 2018, the capacity of the Deferred Payment Arrangement was $101.0 million and $77.4 million, respectively. As of September 30, 2019 and December 31, 2018, we had $94.8 million and $68.4 million outstanding, respectively, under the Deferred Payment Arrangements.

Under the Supply and Offtake Agreements, we pay or receive certain fees from J. Aron based on changes in market prices over time. In February 2016, we fixed the market fee for the period from December 1, 2016 through May 31, 2018 for $14.6 million to be settled in eighteen equal monthly payments. In 2017, we fixed the market fee for the period from June 1, 2018 through May 2021 for an additional $2.2 million. The receivable from J. Aron was recorded as a reduction to our Obligations under inventory financing agreements pursuant to our Master Netting Agreement. As of September 30, 2019, the payable was $0.1 million. As of December 31, 2018 the receivable was $2.5 million.

Washington Refinery Intermediation Agreement

In connection with the consummation of the Washington Acquisition, we became a party to the Washington Refinery Intermediation Agreement with MLC that provides a structured financing arrangement based on U.S. Oil’s crude oil and refined products inventories and associated accounts receivable. Under this arrangement, U.S. Oil purchases crude oil supplied from third-party suppliers and MLC provides credit support for such crude oil purchases. MLC’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third-party issuing bank, or purchasing crude oil directly from third parties on our behalf. U.S. Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of same, exclusively to MLC. On November 1, 2019, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021, with an option for us to early terminate as early as March 31, 2021.

During the remaining term of the Washington Refinery Intermediation Agreement, MLC will make receivable advances to U.S. Oil based on an advance rate of 95% of eligible receivables, up to a total receivables advance maximum of $90.0 million (the “MLC receivable advances”), and additional advances based on crude oil and products inventories. Changes in the amount outstanding under the MLC receivable advances are included within Cash flows from financing activities on the condensed consolidated statements of cash flows. The MLC receivable advances bear interest at a rate equal to three-month LIBOR plus 3.25% per annum. We also agreed to pay an availability fee equal to 1.50% of the unused capacity under the MLC receivable advances. As part of the November 1, 2019 amendment, the availability fee was amended to equal 0.75% of the unused capacity under the MLC receivable advances. As of September 30, 2019, our outstanding balance under MLC receivable advances was equal to our borrowing base of $50.9 million. Additionally, as of September 30, 2019, we had approximately $72.2 million in letters of credit outstanding through MLC’s credit support.

For the three and nine months ended September 30, 2019, we incurred approximately $0.9 million and $2.7 million of inventory intermediation fees, respectively, related to the Washington Refinery Intermediation Agreement, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations. For the three and nine months ended September 30, 2019, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $2.0 million and $4.8 million of expenses, respectively, related to the Washington Refinery Intermediation Agreement.

The Supply and Offtake Agreements and the Washington Refinery Intermediation Agreement also provide us with the ability to economically hedge price risk on our inventories and crude oil purchases. Please read Note 10—Derivatives for further information.

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Leases (Notes)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

We have cancelable and non-cancelable finance and operating lease obligations for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Most of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 30 years or more. There are no material lease arrangements where we are the lessor.

We determine whether a contract is or contains a lease when we have the right to control the use of the identified asset in exchange for consideration. Lease liabilities and ROU assets are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate in the calculation of present value unless the implicit rate can be readily determined. Certain leases include provisions for variable payments based upon percentage of sales and/or other operating metrics; escalation provisions to adjust rental payments to reflect changes in price indices and fair market rents; and provisions for the renewal, termination, and/or purchase of the leased asset. We only consider fixed payments and those options that are reasonably certain to be exercised in the determination of the lease term and the initial measurement of lease liabilities and ROU assets. Expense for operating lease payments is recognized as lease expense on a straight-line basis over the lease term. Expense for finance leases is recognized as amortization expense on a straight-line basis and interest expense on an effective rate basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

We do not separate lease and nonlease components of a contract. There are no material residual value guarantees associated with any of our leases.

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our leased assets and liabilities as of September 30, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	September 30, 2019
Assets
Finance	Property, plant, and equipment	$	10,787
Finance	Accumulated amortization	(3,959		)
Finance	Property and equipment, net	$	6,828
Operating	Operating lease assets	373,269
Total leased assets		$	380,097
Liabilities
Current
Finance	Other accrued liabilities	$	1,632
Operating	Operating lease liabilities	54,476
Long-term
Finance	Finance lease liabilities	5,976
Operating	Operating lease liabilities	320,553
Total lease liabilities		$	382,637
Weighted-average remaining lease term (in years)
Finance		5.90
Operating		11.53
Weighted-average discount rate
Finance		6.68		%
Operating		7.71		%

The following table summarizes the lease costs recognized on our condensed consolidated statements of operations (in thousands):

Lease cost type	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost
Amortization of finance lease assets	$	479	$	1,380
Interest on lease liabilities	128		392
Operating lease cost	24,259		72,237
Variable lease cost	2,799		8,689
Short-term lease cost	1,067		1,483
Net lease cost	$	28,732	$	84,181

The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):

Lease type	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	1,571
Operating cash flows from finance leases	559
Operating cash flows from operating leases	71,181
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	198
ROU assets obtained in exchange for new operating lease liabilities	15,532

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of September 30, 2019 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2019 (1)	$	540		$	22,109		$	22,649
2020	1,978			79,668			81,646
2021	1,407			51,891			53,298
2022	1,190			49,712			50,902
2023	1,159			48,670			49,829
2024	934			42,962			43,896
Thereafter	2,005			243,517			245,522
Total lease payments	9,213			538,529			547,742
Less amount representing interest	(1,605		)	(163,500		)	(165,105		)
Present value of lease liabilities	$	7,608		$	375,029		$	382,637

_________________________________________________________

(1) Represents period from October 1, 2019 to December 31, 2019.

Additionally, the Company has $54.0 million and $1.2 million in future undiscounted cash flows for four operating leases and one finance lease that have not yet commenced, respectively. These leases are expected to commence when the lessor has made the equipment or location available to the Company to operate or begin construction, respectively.

At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):

	Capital leases			Operating leases
2019	$	2,723		$	62,589
2020	2,264			62,132
2021	1,757			39,821
2022	1,512			38,402
2023	1,148			38,827
Thereafter	2,600			191,717
Total minimum rental payments	$	12,004		$	433,488
Less amount representing interest	(1,865		)
Present value of minimum rental payments	$	10,139

Leases

Leases

We have cancelable and non-cancelable finance and operating lease obligations for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Most of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 30 years or more. There are no material lease arrangements where we are the lessor.

We determine whether a contract is or contains a lease when we have the right to control the use of the identified asset in exchange for consideration. Lease liabilities and ROU assets are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate in the calculation of present value unless the implicit rate can be readily determined. Certain leases include provisions for variable payments based upon percentage of sales and/or other operating metrics; escalation provisions to adjust rental payments to reflect changes in price indices and fair market rents; and provisions for the renewal, termination, and/or purchase of the leased asset. We only consider fixed payments and those options that are reasonably certain to be exercised in the determination of the lease term and the initial measurement of lease liabilities and ROU assets. Expense for operating lease payments is recognized as lease expense on a straight-line basis over the lease term. Expense for finance leases is recognized as amortization expense on a straight-line basis and interest expense on an effective rate basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

We do not separate lease and nonlease components of a contract. There are no material residual value guarantees associated with any of our leases.

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our leased assets and liabilities as of September 30, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	September 30, 2019
Assets
Finance	Property, plant, and equipment	$	10,787
Finance	Accumulated amortization	(3,959		)
Finance	Property and equipment, net	$	6,828
Operating	Operating lease assets	373,269
Total leased assets		$	380,097
Liabilities
Current
Finance	Other accrued liabilities	$	1,632
Operating	Operating lease liabilities	54,476
Long-term
Finance	Finance lease liabilities	5,976
Operating	Operating lease liabilities	320,553
Total lease liabilities		$	382,637
Weighted-average remaining lease term (in years)
Finance		5.90
Operating		11.53
Weighted-average discount rate
Finance		6.68		%
Operating		7.71		%

The following table summarizes the lease costs recognized on our condensed consolidated statements of operations (in thousands):

Lease cost type	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost
Amortization of finance lease assets	$	479	$	1,380
Interest on lease liabilities	128		392
Operating lease cost	24,259		72,237
Variable lease cost	2,799		8,689
Short-term lease cost	1,067		1,483
Net lease cost	$	28,732	$	84,181

The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):

Lease type	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	1,571
Operating cash flows from finance leases	559
Operating cash flows from operating leases	71,181
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	198
ROU assets obtained in exchange for new operating lease liabilities	15,532

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of September 30, 2019 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2019 (1)	$	540		$	22,109		$	22,649
2020	1,978			79,668			81,646
2021	1,407			51,891			53,298
2022	1,190			49,712			50,902
2023	1,159			48,670			49,829
2024	934			42,962			43,896
Thereafter	2,005			243,517			245,522
Total lease payments	9,213			538,529			547,742
Less amount representing interest	(1,605		)	(163,500		)	(165,105		)
Present value of lease liabilities	$	7,608		$	375,029		$	382,637

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(1) Represents period from October 1, 2019 to December 31, 2019.

Additionally, the Company has $54.0 million and $1.2 million in future undiscounted cash flows for four operating leases and one finance lease that have not yet commenced, respectively. These leases are expected to commence when the lessor has made the equipment or location available to the Company to operate or begin construction, respectively.

At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):

	Capital leases			Operating leases
2019	$	2,723		$	62,589
2020	2,264			62,132
2021	1,757			39,821
2022	1,512			38,402
2023	1,148			38,827
Thereafter	2,600			191,717
Total minimum rental payments	$	12,004		$	433,488
Less amount representing interest	(1,865		)
Present value of minimum rental payments	$	10,139

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Leases - Cash Flow (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$ 1,571
Cash flows from operating activities	559
Cash flows from operating activities	71,181
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	198
ROU assets obtained in exchange for new operating lease liabilities	$ 15,532

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Fair Value Measurements - Carrying Value and Fair Value of Long-Term Debt and Other Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
5.00% Convertible Senior Notes due 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, interest rate	5.00%
7.75% Senior Secured Note due 2025
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, interest rate	7.75%
Level 2 | Carrying Value | 5.00% Convertible Senior Notes due 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 72,560	$ 100,411
Level 2 | Carrying Value | 7.75% Senior Secured Note due 2025
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	291,700	290,763
Level 2 | Fair Value | 5.00% Convertible Senior Notes due 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	109,643	121,488
Level 2 | Fair Value | 7.75% Senior Secured Note due 2025
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	299,250	270,000
Level 3 | Carrying Value | Warrant
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Warrants not settleable in cash, fair value	8,072	5,007
Level 3 | Carrying Value | Mid Pac Term Loan
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	1,441	1,466
Level 3 | Carrying Value | Term Loan B Facility
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	233,171
Level 3 | Carrying Value | Retail Property Term Loan
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	43,549
Level 3 | Fair Value | Warrant
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Warrants not settleable in cash, fair value	8,072	5,007
Level 3 | Fair Value | Mid Pac Term Loan
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	1,441	$ 1,466
Level 3 | Fair Value | Term Loan B Facility
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	243,750
Level 3 | Fair Value | Retail Property Term Loan
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 43,549

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Income (Loss) per Share - Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share Reconciliation [Abstract]
Net income	$ (83,891)	$ 28,169	$ 61,092	$ (5,822)	$ 16,178	$ 15,185	$ 5,370	$ 25,541
Undistributed income allocated to participating securities	0			0			59	361
Net income (loss) attributable to common stockholders	(83,891)			(5,822)			5,311	25,180
Plus: Net income effect of convertible securities	0			0			0	0
Numerator for diluted income (loss) per common share	$ (83,891)			$ (5,822)			$ 5,311	$ 25,180
Basic weighted-average common stock shares outstanding (in shares)	50,942			45,709			49,973	45,676
Dilutive effects of common stock equivalents (in shares)	0			0			98	45
Diluted weighted-average common stock shares outstanding (in shares)	50,942			45,709			50,071	45,721
Basic income (loss) per share (in dollars per share)	$ (1.65)			$ (0.13)			$ 0.11	$ 0.55
Diluted income (loss) per share (in dollars per share)	$ (1.65)			$ (0.13)			$ 0.11	$ 0.55
5.00% Convertible Senior Notes due 2021
Earnings Per Share Reconciliation [Abstract]
Debt instrument, interest rate	5.00%						5.00%
Restricted Stock Awards
Earnings Per Share Reconciliation [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)							160	33
Stock Option Awards
Earnings Per Share Reconciliation [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)							1,800	1,300
Convertible Debt Securities
Earnings Per Share Reconciliation [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	4,400			6,400			5,500	6,400
Warrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average number of shares issuable under the common stock warrants (in shares)	354			354			354	354

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Stockholders' Equity - Compensation Costs Recognized (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Restricted Stock Awards
Class of Stock [Line Items]
Compensation cost	$ 789	$ 955	$ 2,589	$ 2,734
Restricted Stock Units
Class of Stock [Line Items]
Compensation cost	279	235	841	605
Stock Option Awards
Class of Stock [Line Items]
Compensation cost	$ 380	$ 506	$ 1,103	$ 1,460

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Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 1,401,638	$ 909,781	$ 4,002,382	$ 2,531,616
Refining
Disaggregation of Revenue [Line Items]
Revenues	1,336,951	850,591	3,830,572	2,391,262
Refining | Gasoline
Disaggregation of Revenue [Line Items]
Revenues	399,543	260,392	1,060,095	755,523
Refining | Distillates
Disaggregation of Revenue [Line Items]
Revenues	625,080	466,148	1,827,879	1,318,645
Refining | Other Refined Products
Disaggregation of Revenue [Line Items]
Revenues	311,724	124,051	941,109	317,094
Refining | Merchandise
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Refining | Transportation and Terminalling Services
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Refining | Other Revenues
Disaggregation of Revenue [Line Items]
Revenues	604		1,489
Logistics
Disaggregation of Revenue [Line Items]
Revenues	49,623	30,660	144,978	95,016
Logistics | Gasoline
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Logistics | Distillates
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Logistics | Other Refined Products
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Logistics | Merchandise
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Logistics | Transportation and Terminalling Services
Disaggregation of Revenue [Line Items]
Revenues	49,623	30,660	144,978	95,016
Logistics | Other Revenues
Disaggregation of Revenue [Line Items]
Revenues	0		0
Retail
Disaggregation of Revenue [Line Items]
Revenues	122,234	124,970	342,814	323,253
Retail | Gasoline
Disaggregation of Revenue [Line Items]
Revenues	86,941	89,358	242,952	232,314
Retail | Distillates
Disaggregation of Revenue [Line Items]
Revenues	10,857	11,282	30,413	29,403
Retail | Other Refined Products
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Retail | Merchandise
Disaggregation of Revenue [Line Items]
Revenues	24,098	24,330	68,176	61,536
Retail | Transportation and Terminalling Services
Disaggregation of Revenue [Line Items]
Revenues	0	$ 0	0	$ 0
Retail | Other Revenues
Disaggregation of Revenue [Line Items]
Revenues	$ 338		$ 1,273

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Inventory Financing Agreements - Washington Refinery Intermediation Agreement (Details) - USD ($)			3 Months Ended		9 Months Ended
	Nov. 01, 2019	Jan. 11, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Supply Commitment [Line Items]
Supply and exchange agreement expenses			$ 18,348,000	$ 10,425,000	$ 57,336,000	$ 29,346,000
Washington Refinery Intermediation Agreement
Supply Commitment [Line Items]
Percentage of receivables and inventory for deferred payment arrangement		95.00%
Amount of deferred payment arrangement		$ 90,000,000.0
Unused capacity, commitment fee percentage		1.50%
Outstanding receivable advance balance			50,900,000		50,900,000
Supply and exchange agreement expenses			2,000,000.0		4,800,000
Washington Refinery Intermediation Agreement | Inventory Intermediation
Supply Commitment [Line Items]
Handling fees			900,000		2,700,000
Washington Refinery Intermediation Agreement | Letter of Credit
Supply Commitment [Line Items]
Balance outstanding on the credit facility			$ 72,200,000		$ 72,200,000
London Interbank Offered Rate (LIBOR) | Washington Refinery Intermediation Agreement
Supply Commitment [Line Items]
Margin on LIBOR rate		3.25%
Subsequent Event | Washington Refinery Intermediation Agreement
Supply Commitment [Line Items]
Unused capacity, commitment fee percentage	0.75%

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) $ in Millions	Jun. 30, 2019 USD ($)
Convertible Debt | 5.00% Convertible Senior Notes due 2021
Debt instrument, convertible, carrying amount of equity component	$ 12.3

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	3,000,000	3,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	51,168,084	46,983,924

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Compensation Costs Recognized

The following table summarizes our compensation costs recognized in General and administrative expense (excluding depreciation) and Operating expense (excluding depreciation) under the Amended and Restated Par Pacific Holdings, Inc. 2012 Long-term Incentive Plan and Stock Purchase Plan (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Restricted Stock Awards	$	789	$	955	$	2,589	$	2,734
Restricted Stock Units	279		235		841		605
Stock Option Awards	380		506		1,103		1,460

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Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Summary of Outstanding Debt

The following table summarizes our outstanding debt (in thousands):

	September 30, 2019			December 31, 2018
5.00% Convertible Senior Notes due 2021	$	79,895		$	115,000
7.75% Senior Secured Notes due 2025	300,000			300,000
ABL Credit Facility	—			—
Mid Pac Term Loan	1,441			1,466
Term Loan B	243,750			—
Retail Property Term Loan	44,384			—
Principal amount of long-term debt	669,470			416,466
Less: unamortized discount and deferred financing costs	(27,049		)	(23,826		)
Total debt, net of unamortized discount and deferred financing costs	642,421			392,640
Less: current maturities	(12,292		)	(33		)
Long-term debt, net of current maturities	$	630,129		$	392,607

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Common Stock Warrants

As of September 30, 2019 and December 31, 2018, we had 354,350 common stock warrants outstanding. We estimate the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock, which is a Level 3 fair value measurement. As of September 30, 2019 and December 31, 2018, the warrants had a weighted-average exercise price of $0.09 and $0.09 and a remaining term of 2.92 years and 3.67 years, respectively.

The estimated fair value of the common stock warrants was $22.78 and $14.13 per share as of September 30, 2019 and December 31, 2018, respectively.

Derivative Instruments

We utilize commodity derivative contracts to manage our price exposure to our inventory positions, future purchases of crude oil, future purchases and sales of refined products, and cost of crude oil consumed in the refining process. We may utilize interest rate swaps to manage our interest rate risk.

We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as Level 1 instruments are valued using quoted prices in active markets for identical assets and liabilities. These include our exchange traded futures. Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Our Level 2 instruments include OTC swaps and options. These derivatives are valued using market quotations from independent price reporting agencies and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. The valuation of our J. Aron and MLC repurchase obligation embedded derivatives requires that we make estimates of the prices and differentials assuming settlement at the end of the reporting period; therefore, they are classified as Level 3 instruments. We do not have other commodity derivatives classified as Level 3 at September 30, 2019 or December 31, 2018. Please read Note 10—Derivatives for further information on derivatives.

Financial Statement Impact

Fair value amounts by hierarchy level as of September 30, 2019 and December 31, 2018 are presented gross in the tables below (in thousands):

	September 30, 2019
	Level 1			Level 2			Level 3			Gross Fair Value			Effect of Counter-Party Netting			Net Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives	$	2,000		$	813		$	—		$	2,813		$	(2,695	)	$	118
Liabilities
Common stock warrants	$	—		$	—		$	(8,072	)	$	(8,072	)	$	—		$	(8,072	)
Commodity derivatives	(1,946		)	(859		)	—			(2,805		)	2,695			(110		)
J. Aron repurchase obligation derivative	—			—			(2,473		)	(2,473		)	—			(2,473		)
MLC repurchase obligation derivative	—			—			4,340			4,340			—			4,340
Interest rate derivatives	—			(1,872		)	—			(1,872		)	—			(1,872		)
Total	$	(1,946	)	$	(2,731	)	$	(6,205	)	$	(10,882	)	$	2,695		$	(8,187	)

	December 31, 2018
	Level 1			Level 2			Level 3			Gross Fair Value			Effect of Counter-Party Netting			Net Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives	$	170		$	5,234		$	—		$	5,404		$	(431	)	$	4,973
Interest rate derivatives	—			191			—			191			—			191
Total	$	170		$	5,425		$	—		$	5,595		$	(431	)	$	5,164
Liabilities
Common stock warrants	$	—		$	—		$	(5,007	)	$	(5,007	)	$	—		$	(5,007	)
Commodity derivatives	(870		)	(261		)	—			(1,131		)	431			(700		)
J. Aron repurchase obligation derivative	—			—			4,085			4,085			—			4,085
Total	$	(870	)	$	(261	)	$	(922	)	$	(2,053	)	$	431		$	(1,622	)

_________________________________________________________

(1) Does not include cash collateral of $13.6 million and $10.9 million as of September 30, 2019 and December 31, 2018, respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.

A roll forward of Level 3 financial instruments measured at fair value on a recurring basis is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Balance, at beginning of period	$	(12,720	)	$	(10,559	)	$	(922	)	$	(26,372	)
Settlements	3,777			—			(4,121		)	—
Acquired	6,201			—			3,900			—
Total unrealized income (loss) included in earnings	(3,463		)	(5,397		)	(5,062		)	10,416
Balance, at end of period	$	(6,205	)	$	(15,956	)	$	(6,205	)	$	(15,956	)

The carrying value and fair value of long-term debt and other financial instruments as of September 30, 2019 and December 31, 2018 are as follows (in thousands):

	September 30, 2019
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	72,560	$	109,643
7.75% Senior Secured Notes due 2025 (1)	291,700		299,250
Mid Pac Term Loan (2)	1,441		1,441
Term Loan B Facility (1)	233,171		243,750
Retail Property Term Loan (2)	43,549		43,549
Common stock warrants (2)	8,072		8,072

	December 31, 2018
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	100,411	$	121,488
7.75% Senior Secured Notes due 2025 (1)	290,763		270,000
Mid Pac Term Loan (2)	1,466		1,466
Common stock warrants (2)	5,007		5,007

_________________________________________________________

(1) The fair value measurements of the 5.00% Convertible Senior Notes, 7.75% Senior Secured Notes, and Term Loan B Facility are considered Level 2 measurements as discussed below.

(2) The fair value measurements of the common stock warrants, Mid Pac Term Loan, and Retail Property Term Loan are considered Level 3 measurements in the fair value hierarchy.

(3) The carrying value of the 5.00% Convertible Senior Notes excludes the fair value of the equity component, which was classified as equity upon issuance.

The fair value of the 5.00% Convertible Senior Notes was determined by aggregating the fair value of the liability and equity components of the notes. The fair value of the liability component of the 5.00% Convertible Senior Notes was determined using a discounted cash flow analysis in which the projected interest and principal payments were discounted at an estimated market yield for a similar debt instrument without the conversion feature. The equity component was estimated based on the Black-Scholes model for a call option with strike price equal to the conversion price, a term matching the remaining life of the 5.00% Convertible Senior Notes, and an implied volatility based on market values of options outstanding as of September 30, 2019. The fair value of the 5.00% Convertible Senior Notes is considered a Level 2 measurement in the fair value hierarchy.

The fair value of the 7.75% Senior Secured Notes and the Term Loan B Facility were determined using a market approach based on quoted prices. Because the 7.75% Senior Secured Notes and Term Loan B Facility may not be actively traded, the inputs used to measure the fair value are classified as Level 2 inputs within the fair value hierarchy.

The Retail Property Term Loan is subject to a market-based floating interest rate. The carrying value of our Retail Property Term Loan was determined to approximate fair value as of September 30, 2019. The fair value of all non-derivative financial instruments recorded in current assets, including cash and cash equivalents, restricted cash, and trade accounts receivable, and current liabilities, including accounts payable, approximate their carrying value due to their short-term nature.

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Investment in Laramie Energy, LLC

9 Months Ended

Sep. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investment in Laramie Energy, LLC

Investment in Laramie Energy, LLC

As of September 30, 2019, we had a 46.0% ownership interest in Laramie Energy. Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado.

Laramie Energy has a $400 million revolving credit facility with a borrowing base currently set at $240 million that is secured by a lien on its natural gas and crude oil properties and related assets. As of September 30, 2019, the balance outstanding on the revolving credit facility was approximately $204.7 million. We are guarantors of Laramie Energy’s credit facility, with recourse limited to the pledge of our equity interest of our wholly owned subsidiary, Par Piceance Energy Equity, LLC. Under the terms of its credit facility, Laramie Energy is generally prohibited from making future cash distributions to its owners, including us.

At September 30, 2019, we conducted an impairment evaluation of our investment in Laramie Energy because of the significant decline in natural gas prices over the second quarter of 2019 and continued deterioration in the third quarter of 2019. We evaluate equity method investments for impairment when factors indicate that a decrease in the value of our investment has occurred and the carrying amount of our investment may not be recoverable. An impairment loss, based on the difference between the carrying value and the estimated fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary. At September 30, 2019, we determined that the estimated fair value of our investment in Laramie Energy was $51.8 million, compared to a carrying value of $133.3 million. The fair value estimate was determined using a discounted cash flow analysis based on natural gas forward strip prices as of September 30, 2019 for two years through December 31, 2021. A blend of 2021 forward strip pricing and third-party analyst pricing was used for years after 2021 through December 31, 2028. Other significant inputs used in the discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the applicable discount rate. As part of our evaluation, we considered the likelihood that Colorado Interstate Gas (CIG) prices, which have declined from an average spot price of $2.48 ($/MMBtu) in the first quarter of 2019, to $1.84 ($/MMBtu) in the second quarter of 2019 and $1.77 ($/MMBtu) in the third quarter of 2019, will recover in the near term. Based on the significant decline in natural gas prices over the past six months and the reduced likelihood that natural gas prices

will recover in the near term, we concluded that the decline in the fair value of our investment in Laramie Energy is other than temporary. As a result, we have recorded an impairment charge of $81.5 million on our statement of operations for the three months ended September 30, 2019. The decline in the estimated fair value of our investment in Laramie Energy and the resulting impairment charge is larger than previously disclosed primarily due to the continued decline in natural gas prices during the third quarter of 2019 and the impact of lower than expected prices on the value of Laramie Energy’s proved and unproved reserves.

The change in our equity investment in Laramie Energy is as follows (in thousands):

	Nine Months Ended September 30, 2019
Beginning balance	$	136,656
Equity losses from Laramie Energy	(8,344		)
Accretion of basis difference	5,018
Impairment	(81,515		)
Ending balance	$	51,815

Summarized financial information for Laramie Energy is as follows (in thousands):

	September 30, 2019		December 31, 2018
Current assets	$	16,704	$	28,569
Non-current assets	763,583		788,515
Current liabilities	29,332		41,681
Non-current liabilities	286,623		293,084

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Natural gas and oil revenues	$	38,967		$	58,557		$	150,161		$	151,988
Income (loss) from operations	(10,028		)	6,152			(4,490		)	11,642
Net loss	(12,586		)	(152		)	(18,139		)	(1,708		)

Laramie Energy’s net loss for the three and nine months ended September 30, 2019 includes $20.7 million and $63.1 million of depreciation, depletion, and amortization (“DD&A”) and $4.3 million of unrealized losses and $6.8 million of unrealized gains on derivative instruments, respectively. Laramie Energy’s net loss for the three and nine months ended September 30, 2018 includes $20.7 million and $52.7 million of DD&A and $3.2 million and $6.7 million of unrealized losses on derivative instruments, respectively.

At September 30, 2019 and December 31, 2018, our equity in the underlying net assets of Laramie Energy exceeded the carrying value of our investment by approximately $161.8 million and $85.2 million, respectively. This difference arose primarily due to lack of control and marketability discounts and other-than-temporary impairments of our equity investment in Laramie Energy.

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Prepaid and Other Current Assets

9 Months Ended

Sep. 30, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid and Other Current Assets

Prepaid and Other Current Assets

Prepaid and other current assets at September 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Collateral posted with broker for derivative instruments (1)	$	4,076	$	2,759
Prepaid insurance	—		7,727
Deferred financing costs	280		—
Derivative assets	118		5,164
Other	6,021		12,720
Total	$	10,495	$	28,370

_________________________________________________________

(1)

Our cash margin that is required as collateral deposits on our commodity derivatives cannot be offset against the fair value of open contracts except in the event of default. Please read Note 10—Derivatives for further information.

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Income (Loss) per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Income (Loss) per Share

Income (Loss) per Share

Basic income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average number of shares issuable under the common stock warrants, representing 354 thousand shares during each of the three and nine months ended September 30, 2019 and September 30, 2018. The common stock warrants are included in the calculation of basic income (loss) per share because they are issuable for minimal consideration. The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Net income (loss)	$	(83,891	)	$	(5,822	)	$	5,370	$	25,541
Less: Undistributed income allocated to participating securities (1)	—			—			59		361
Net income (loss) attributable to common stockholders	(83,891		)	(5,822		)	5,311		25,180
Plus: Net income effect of convertible securities	—			—			—		—
Numerator for diluted income (loss) per common share	$	(83,891	)	$	(5,822	)	$	5,311	$	25,180
Basic weighted-average common stock shares outstanding	50,942			45,709			49,973		45,676
Plus: dilutive effects of common stock equivalents (2)	—			—			98		45
Diluted weighted-average common stock shares outstanding	50,942			45,709			50,071		45,721
Basic income (loss) per common share	$	(1.65	)	$	(0.13	)	$	0.11	$	0.55
Diluted income (loss) per common share	$	(1.65	)	$	(0.13	)	$	0.11	$	0.55

________________________________________________________

(1) Participating securities include restricted stock that has been issued but has not yet vested.

(2) Entities with a net loss from continuing operations are prohibited from including potential common shares in the computation of diluted per share amounts. We have utilized the basic shares outstanding to calculate both basic and diluted loss per share for the three months ended September 30, 2019 and 2018.

For the nine months ended September 30, 2019, our calculation of diluted shares outstanding excluded 160 thousand shares of restricted stock and 1.8 million stock options. For the nine months ended September 30, 2018, our calculation of diluted shares outstanding excluded 33 thousand shares of restricted stock and 1.3 million stock options.

As discussed in Note 9—Debt, we have the option of settling the 5.00% Convertible Senior Notes in cash or shares of common stock, or any combination thereof, upon conversion. For the three and nine months ended September 30, 2019 and September 30, 2018, diluted income (loss) per share was determined using the if-converted method. Our calculation of diluted shares outstanding for the three and nine months ended September 30, 2019 and the three and nine months ended September 30, 2018 excluded 4.4 million, 5.5 million, 6.4 million, and 6.4 million common stock equivalents, respectively, as the effect would be anti-dilutive.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of Par and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts previously reported in our condensed consolidated financial statements for prior periods have been reclassified to conform with the current presentation.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. The condensed consolidated financial statements contained in this report include all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the complete fiscal year or for any other period. The condensed consolidated balance sheet as of December 31, 2018 was derived from our audited consolidated financial statements as of that date. These condensed consolidated financial statements should be read together with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. Actual amounts could differ from these estimates.

Restricted Cash

Restricted cash consists of cash not readily available for general purpose cash needs. Restricted cash relates to cash held at commercial banks to support letter of credit facilities and certain ongoing bankruptcy recovery trust claims.

Inventories

Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost or net realizable value using the first-in, first-out accounting method (“FIFO”). Commodity inventories at the Washington refinery are stated at the lower of cost or net realizable value using the last-in, first-out (“LIFO”) inventory accounting method. We value merchandise along with spare parts, materials, and supplies at average cost. Our LIFO reserve was $10.3 million as of September 30, 2019.

All of the crude oil utilized at the Hawaii refinery is financed by J. Aron & Company (“J. Aron”) under the Supply and Offtake Agreements as described in Note 8—Inventory Financing Agreements. 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. 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 on our behalf as inventory with a corresponding obligation on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we are obligated to repurchase the inventory.

In connection with the consummation of the Washington Acquisition (as defined in Note 4—Acquisitions), we became a party to an intermediation arrangement (the “Washington Refinery Intermediation Agreement”) with Merrill Lynch Commodities, Inc. (“MLC”) as described in Note 8—Inventory Financing Agreements. Under this arrangement, U.S. Oil (as defined in Note 4—Acquisitions) purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain crude oil purchases. MLC’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third party issuing bank, or purchasing crude oil directly from third-parties on our behalf. U.S. Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of same, exclusively to MLC.

Cost of Revenues

Cost of revenues (excluding depreciation) includes the hydrocarbon-related costs of inventory sold, transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our Renewable Identification Numbers (“RINs”) obligations, and certain hydrocarbon fees and taxes. Cost of revenues (excluding depreciation) also includes the unrealized gains (losses) on derivatives and inventory valuation adjustments. Certain direct operating expenses related to our logistics segment are also included in Cost of revenues (excluding depreciation).

Operating Expenses

Operating expense (excluding depreciation) includes direct costs of labor, maintenance and services, energy and utility costs, property taxes, and environmental compliance costs as well as chemicals and catalysts and other direct operating expenses.

Recent Accounting Pronouncements and Accounting Principles Adopted

There have been no developments to recent accounting pronouncements, including the expected dates of adoption and estimated effects on our financial condition, results of operations, and cash flows, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as amended by other ASUs issued since February 2019 (“ASU 2016-02” or “ASC 842”), using the modified retrospective transition method. Under this optional transition method, information presented prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for the period. There was no adjustment to our opening retained earnings as a result of the adoption of this ASU.

ASU 2016-02 requires lessees to recognize a right-of-use asset (“ROU asset”) and lease liability on the balance sheet for all rights and obligations created by leases. The new standard provided a number of optional practical expedients. We have elected:

• the package of practical expedients, permitting us to carryforward our conclusions regarding lease identification, classification, and initial direct costs for contracts that commenced prior to the effective date;

• the practical expedient pertaining to land easements, allowing us to account for existing land easements under our previous accounting policy;

• the short-term lease exemption, which states that leases that are 12 months or less are exempt from balance sheet reporting; and

• the practical expedient that allows us to combine lease and non-lease components.

ASC 842 had a material impact on our consolidated balance sheet; however, it did not materially impact our consolidated statement of operations or statement of cash flows. As a result of the adoption of ASC 842, we recorded ROU assets and lease liabilities related to operating leases of $347 million and $349 million, respectively. Our accounting for finance leases remained substantially unchanged. Additionally, we acquired operating lease assets and lease liabilities of $62 million in connection with the Washington Acquisition (as defined in Note 4—Acquisitions). Please read Note 12—Leases for further disclosures and information.

On January 1, 2019, we adopted ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) and elected not to reclassify to retained earnings the stranded effects in Accumulated Other Comprehensive Income related to the changes in the statutory tax rate that were charged to income from continuing operations under the requirements of Financial Accounting Standards Board (“FASB”) ASC Topic 740, “Income Taxes.” The adoption of ASU 2018-02 did not have a material impact on our financial condition, results of operations, and cash flows.

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Fair Value Measurements - Common Stock Warrants (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted average exercise price (in usd per share)	$ 0.09	$ 0.09
Term (years)	2 years 11 months 1 day	3 years 8 months 1 day
Fair value of common stock warrants (in usd per share)	$ 22.78	$ 14.13
Warrant
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Common stock warrants outstanding (in shares)	354,350	354,350

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Debt - 5.00% Convertible Senior Notes Due 2021 (Details) - USD ($) $ in Thousands, shares in Millions	2 Months Ended	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Principal amount of long-term debt		$ 669,470	$ 416,466
Unamortized discount and deferred financing costs		27,049	23,826
Long-term debt		$ 642,421	392,640
5.00% Convertible Senior Notes due 2021
Debt Instrument [Line Items]
Debt instrument, interest rate		5.00%
5.00% Convertible Senior Notes due 2021 | Carrying Value
Debt Instrument [Line Items]
Long-term debt		$ 72,600
Convertible Debt | 5.00% Convertible Senior Notes due 2021
Debt Instrument [Line Items]
Debt instrument, interest rate		5.00%
Principal amount of long-term debt		$ 79,895	$ 115,000
Unamortized discount and deferred financing costs		7,300
Repurchased face amount	$ 35,100
Repurchased amount in cash	$ 16,200
Repurchased amount, shares (in shares)	1.4
Repurchase amount, fair value	$ 30,100
Gain (loss) on extinguishment of debt		$ (3,700)

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Debt - Guarantors (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Debt Disclosure [Abstract]
Debt instruments, initial offering price	$ 750.0

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Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 11, 2019	Dec. 31, 2018	Mar. 23, 2018
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment [Abstract]
Goodwill	$ 193,812		$ 153,397
Washington Acquisition
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment [Abstract]
Cash		$ 16,146
Accounts receivable		34,954
Inventories		98,367
Prepaid and other assets		5,320
Property, plant, and equipment		412,766
Operating lease assets		62,337
Goodwill		40,415
Total assets		670,305
Obligations under inventory financing agreements		(116,873)
Accounts payable and other current liabilities		(55,444)
Current operating lease obligations		(21,571)
Other current liabilities		(18,411)
Long-term operating lease obligations		(40,766)
Deferred tax liability		(89,909)
Other non-current liabilities		(804)
Total liabilities		(343,778)
Total		326,527
Washington Acquisition | Refining
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment [Abstract]
Goodwill		23,400
Total assets		402,700
Washington Acquisition | Logistics
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment [Abstract]
Goodwill		17,000
Total assets		$ 267,600
Northwest Retail Acquisition
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment [Abstract]
Cash				$ 200
Inventories				4,138
Prepaid and other assets				243
Property, plant, and equipment				30,230
Goodwill				46,210
Accounts payable and other current liabilities				(759)
Long-term capital lease obligations				(5,244)
Other non-current liabilities				(487)
Total				74,531
Northwest Retail Acquisition | Retail
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment [Abstract]
Goodwill				$ 46,200

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Investment in Laramie Energy, LLC - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]
Depreciation, depletion, and amortization	$ 22,227,000	$ 13,192,000	$ 65,103,000	$ 39,004,000
Unrealized gain (loss) on derivative contracts			$ (6,328,000)	(8,105,000)
Laramie Energy Company
Schedule of Equity Method Investments [Line Items]
Ownership interest in Laramie Energy, LLC	46.00%		46.00%
Fair value of investment	$ 51,815,000		$ 51,815,000		$ 136,656,000
Investment in Laramie Energy, LLC	133,300,000		133,300,000
Impairment of equity method investment	81,500,000		81,515,000
Depreciation, depletion, and amortization	20,700,000	20,700,000	63,100,000	52,700,000
Unrealized gain (loss) on derivative contracts	(4,300,000)	$ (3,200,000)	6,800,000	$ (6,700,000)
Amount of equity in underlying assets exceeding carrying value by	161,800,000		161,800,000		$ 85,200,000
Revolving Credit Facility | Laramie Energy Company
Schedule of Equity Method Investments [Line Items]
Credit facility, maximum borrowing amount	400,000,000		400,000,000
Asset borrowing base	240,000,000		240,000,000
Balance outstanding on the revolving credit facility	$ 204,700,000		$ 204,700,000

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Acquisitions - Northwest Retail Acquisition (Details)		3 Months Ended		9 Months Ended
	Mar. 23, 2018 USD ($) gasoline_store_facility	Sep. 30, 2019 USD ($) gasoline_store_facility	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) gasoline_store_facility	Sep. 30, 2018 USD ($)
Business Acquisition [Line Items]
Number of retail gasoline, convenience store facilities | gasoline_store_facility		34		34
Acquisition related costs | $		$ 623,000	$ 2,134,000	$ 4,325,000	$ 3,515,000
Northwest Retail Acquisition
Business Acquisition [Line Items]
Number of retail gasoline, convenience store facilities | gasoline_store_facility	21
Number of leased retail gasoline, convenience store facilities | gasoline_store_facility	12
Cash consideration transferred | $	$ 74,500,000
Acquisition related costs | $			$ 0		$ 600,000

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of Par and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts previously reported in our condensed consolidated financial statements for prior periods have been reclassified to conform with the current presentation.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. The condensed consolidated financial statements contained in this report include all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the complete fiscal year or for any other period. The condensed consolidated balance sheet as of December 31, 2018 was derived from our audited consolidated financial statements as of that date. These condensed consolidated financial statements should be read together with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. Actual amounts could differ from these estimates.

Restricted Cash

Restricted cash consists of cash not readily available for general purpose cash needs. Restricted cash relates to cash held at commercial banks to support letter of credit facilities and certain ongoing bankruptcy recovery trust claims.

Inventories

Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost or net realizable value using the first-in, first-out accounting method (“FIFO”). Commodity inventories at the Washington refinery are stated at the lower of cost or net realizable value using the last-in, first-out (“LIFO”) inventory accounting method. We value merchandise along with spare parts, materials, and supplies at average cost. Our LIFO reserve was $10.3 million as of September 30, 2019.

All of the crude oil utilized at the Hawaii refinery is financed by J. Aron & Company (“J. Aron”) under the Supply and Offtake Agreements as described in Note 8—Inventory Financing Agreements. 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. 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 on our behalf as inventory with a corresponding obligation on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we are obligated to repurchase the inventory.

In connection with the consummation of the Washington Acquisition (as defined in Note 4—Acquisitions), we became a party to an intermediation arrangement (the “Washington Refinery Intermediation Agreement”) with Merrill Lynch Commodities, Inc. (“MLC”) as described in Note 8—Inventory Financing Agreements. Under this arrangement, U.S. Oil (as defined in Note 4—Acquisitions) purchases crude oil supplied from third-party suppliers and MLC provides credit support for certain crude oil purchases. MLC’s credit support can consist of either providing a payment guaranty, causing the issuance of a letter of credit from a third party issuing bank, or purchasing crude oil directly from third-parties on our behalf. U.S. Oil holds title to all crude oil and refined products inventories at all times and pledges such inventories, together with all receivables arising from the sales of same, exclusively to MLC.

Cost Classifications

Cost of revenues (excluding depreciation) includes the hydrocarbon-related costs of inventory sold, transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our Renewable Identification Numbers (“RINs”) obligations, and certain hydrocarbon fees and taxes. Cost of revenues (excluding depreciation) also includes the unrealized gains (losses) on derivatives and inventory valuation adjustments. Certain direct operating expenses related to our logistics segment are also included in Cost of revenues (excluding depreciation).

Operating expense (excluding depreciation) includes direct costs of labor, maintenance and services, energy and utility costs, property taxes, and environmental compliance costs as well as chemicals and catalysts and other direct operating expenses.

The following table summarizes depreciation and finance lease amortization expense excluded from each line item in our condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues	$	4,763	$	1,620	$	12,579	$	4,866
Operating expense	13,630		7,155		40,212		20,560
General and administrative expense	797		1,297		2,341		3,345

Recent Accounting Pronouncements

There have been no developments to recent accounting pronouncements, including the expected dates of adoption and estimated effects on our financial condition, results of operations, and cash flows, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

Accounting Principles Adopted

On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as amended by other ASUs issued since February 2019 (“ASU 2016-02” or “ASC 842”), using the modified retrospective transition method. Under this optional transition method, information presented prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for the period. There was no adjustment to our opening retained earnings as a result of the adoption of this ASU.

ASU 2016-02 requires lessees to recognize a right-of-use asset (“ROU asset”) and lease liability on the balance sheet for all rights and obligations created by leases. The new standard provided a number of optional practical expedients. We have elected:

• the package of practical expedients, permitting us to carryforward our conclusions regarding lease identification, classification, and initial direct costs for contracts that commenced prior to the effective date;

• the practical expedient pertaining to land easements, allowing us to account for existing land easements under our previous accounting policy;

• the short-term lease exemption, which states that leases that are 12 months or less are exempt from balance sheet reporting; and

• the practical expedient that allows us to combine lease and non-lease components.

ASC 842 had a material impact on our consolidated balance sheet; however, it did not materially impact our consolidated statement of operations or statement of cash flows. As a result of the adoption of ASC 842, we recorded ROU assets and lease liabilities related to operating leases of $347 million and $349 million, respectively. Our accounting for finance leases remained substantially unchanged. Additionally, we acquired operating lease assets and lease liabilities of $62 million in connection with the Washington Acquisition (as defined in Note 4—Acquisitions). Please read Note 12—Leases for further disclosures and information.

On January 1, 2019, we adopted ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) and elected not to reclassify to retained earnings the stranded effects in Accumulated Other Comprehensive Income related to the changes in the statutory tax rate that were charged to income from continuing operations under the requirements of Financial Accounting Standards Board (“FASB”) ASC Topic 740, “Income Taxes.” The adoption of ASU 2018-02 did not have a material impact on our financial condition, results of operations, and cash flows.

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Prepaid and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Collateral posted with broker for derivative instruments	$ 4,076	$ 2,759
Prepaid insurance	0	7,727
Deferred financing costs	280	0
Derivative assets	118	5,164
Other	6,021	12,720
Total	$ 10,495	$ 28,370

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 5,370	$ 25,541
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion, and amortization	65,103	39,004
Debt extinguishment and commitment costs	9,186	0
Non-cash interest expense	7,064	5,358
Change in value of common stock warrants	3,065	396
Deferred taxes	(69,563)	839
Stock-based compensation	4,646	4,799
Unrealized loss on derivative contracts	6,328	8,105
Equity (earnings) losses from Laramie Energy, LLC	84,841	(4,274)
Net changes in operating assets and liabilities:
Trade accounts receivable	(39,455)	(12,819)
Prepaid and other assets	13,838	1,868
Inventories	(247,318)	(8,994)
Deferred turnaround expenditures	(8,986)	0
Obligations under inventory financing agreements	212,862	(43,250)
Accounts payable, other accrued liabilities, and operating lease assets and liabilities	51,651	35,327
Net cash provided by operating activities	98,632	51,900
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired	(274,291)	(74,331)
Proceeds from purchase price settlement related to asset acquisition	3,226	0
Capital expenditures	(64,086)	(30,198)
Other investing activities	864	805
Net cash used in investing activities	(334,287)	(103,724)
Cash flows from financing activities:
Proceeds from borrowings	470,505	106,500
Repayments of borrowings	(207,121)	(114,926)
Net borrowings on deferred payment arrangements and receivable advances	27,783	30,682
Payment of deferred loan costs	(13,450)	(379)
Payments for debt extinguishment and commitment costs	(7,142)	0
Other financing activities, net	2,396	(653)
Net cash provided by financing activities	272,971	21,224
Net increase (decrease) in cash, cash equivalents, and restricted cash	37,316	(30,600)
Cash, cash equivalents, and restricted cash at beginning of period	75,819	119,077
Cash, cash equivalents, and restricted cash at end of period	113,135	88,477
Net cash received (paid) for:
Interest paid	(35,913)	(12,981)
Taxes	(3,974)	(48)
Non-cash investing and financing activities:
Accrued capital expenditures	7,207	4,048
Common stock issued for business combination	36,980	0
Common stock issued to repurchase convertible notes	$ 30,055	$ 0

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Nov. 01, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-36550
Entity Registrant Name	PAR PACIFIC HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-1060803
Entity Address, Address Line One	825 Town & Country Lane, Suite 1500
Entity Address, City or Town	Houston,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77024
City Area Code	281
Local Phone Number	899-4800
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common stock, $0.01 par value
Trading Symbol	PARR
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding (in shares)		51,182,104
Amendment Flag	false
Entity Central Index Key	0000821483
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3

XML

Debt - 7.75% Senior Secured Notes Due 2025 (Details) - USD ($) $ in Thousands	Dec. 21, 2017	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Principal amount of long-term debt		$ 669,470	$ 416,466
7.75% Senior Secured Note due 2025
Debt Instrument [Line Items]
Debt instrument, interest rate		7.75%
Senior Notes | 7.75% Senior Secured Note due 2025
Debt Instrument [Line Items]
Principal amount of long-term debt	$ 300,000	$ 300,000	$ 300,000
Proceeds from issuance of senior long-term debt	$ 289,200
Unamortized discount (premium) and debt issuance costs, percentage	1.00%
Debt instrument, interest rate	7.75%	7.75%

XML

Leases - Maturity Schedule Prior to the Adoption of ASC 842 (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2019	$ 2,723
2020	2,264
2021	1,757
2022	1,512
2023	1,148
Thereafter	2,600
Total minimum rental payments	12,004
Less amount representing interest	(1,865)
Present value of minimum rental payments	10,139
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2019	62,589
2020	62,132
2021	39,821
2022	38,402
2022	38,827
Thereafter	191,717
Total minimum rental payments	$ 433,488

XML

Leases - Leased Assets and Liabilities (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Finance
ROU asset, gross	$ 10,787
Accumulated amortization	(3,959)
Total finance	6,828
Operating
Total operating	373,269
Total leased assets	380,097
Current
Finance	1,632
Operating	54,476
Long-term
Finance	5,976
Operating	320,553
Total lease liabilities	$ 382,637
Weighted-average remaining lease term (in years)
Finance	5 years 10 months 24 days
Operating	11 years 6 months 10 days
Weighted-average discount rate
Finance	6.68%
Operating	7.71%

XML

Segment Information (Details) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 30, 2018 USD ($)
Segment Reporting [Abstract]
Reporting segments | segment							4
Segment Reporting Information [Line Items]
Revenues	$ 1,401,638			$ 909,781			$ 4,002,382	$ 2,531,616
Cost of revenues (excluding depreciation)	1,265,755			822,785			3,578,329	2,232,608
Operating expense (excluding depreciation)	83,237			54,905			231,741	158,975
Depreciation, depletion, and amortization	22,227			13,192			65,103	39,004
General and administrative expense (excluding depreciation)	11,391			11,871			34,435	35,981
Acquisition and integration costs	623			2,134			4,325	3,515
Operating income	18,405			4,894			88,449	61,533
Interest expense and financing costs, net	(18,348)			(10,425)			(57,336)	(29,346)
Debt extinguishment and commitment costs	0			0			(9,186)	0
Other income, net	83			85			2,347	861
Change in value of common stock warrants	(826)			(1,067)			(3,065)	(396)
Change in value of contingent consideration	0			0			0	(10,500)
Equity earnings (losses) from Laramie Energy, LLC	(85,633)			1,050			(84,841)	4,274
Income (loss) before income taxes	(86,319)			(5,463)			(63,632)	26,426
Income tax benefit (expense)	2,428			(359)			69,002	(885)
Net income (loss)	(83,891)	$ 28,169	$ 61,092	(5,822)	$ 16,178	$ 15,185	5,370	25,541
Capital expenditures	22,682			12,541			64,086	30,198
Refining
Segment Reporting Information [Line Items]
Revenues	1,336,951			850,591			3,830,572	2,391,262
Logistics
Segment Reporting Information [Line Items]
Revenues	49,623			30,660			144,978	95,016
Retail
Segment Reporting Information [Line Items]
Revenues	122,234			124,970			342,814	323,253
Operating Segments | Refining
Segment Reporting Information [Line Items]
Revenues	1,336,951			850,591			3,830,572	2,391,262
Cost of revenues (excluding depreciation)	1,256,569			805,051			3,563,503	2,204,634
Operating expense (excluding depreciation)	63,041			36,766			173,689	108,862
Depreciation, depletion, and amortization	14,088			8,336			42,579	24,173
General and administrative expense (excluding depreciation)	0			0			0	0
Acquisition and integration costs	0			0			0	0
Operating income	3,253			438			50,801	53,593
Capital expenditures	6,672			5,332			25,555	15,359
Operating Segments | Logistics
Segment Reporting Information [Line Items]
Revenues	49,623			30,660			144,978	95,016
Cost of revenues (excluding depreciation)	28,712			18,384			82,000	57,775
Operating expense (excluding depreciation)	2,553			1,663			7,945	5,870
Depreciation, depletion, and amortization	4,798			1,654			12,683	4,969
General and administrative expense (excluding depreciation)	0			0			0	0
Acquisition and integration costs	0			0			0	0
Operating income	13,560			8,959			42,350	26,402
Capital expenditures	14,759			4,501			32,217	9,050
Operating Segments | Retail
Segment Reporting Information [Line Items]
Revenues	122,234			124,970			342,814	323,253
Cost of revenues (excluding depreciation)	87,631			95,968			248,751	248,328
Operating expense (excluding depreciation)	17,643			16,476			50,107	44,239
Depreciation, depletion, and amortization	2,523			1,876			7,429	6,441
General and administrative expense (excluding depreciation)	0			0			0	0
Acquisition and integration costs	0			0			0	0
Operating income	14,437			10,650			36,527	24,245
Capital expenditures	765			1,425			5,042	2,520
Corporate, Eliminations and Other
Segment Reporting Information [Line Items]
Revenues	(107,170)			(96,440)			(315,982)	(277,915)
Cost of revenues (excluding depreciation)	(107,157)			(96,618)			(315,925)	(278,129)
Operating expense (excluding depreciation)	0			0			0	4
Depreciation, depletion, and amortization	818			1,326			2,412	3,421
General and administrative expense (excluding depreciation)	11,391			11,871			34,435	35,981
Acquisition and integration costs	623			2,134			4,325	3,515
Operating income	(12,845)			(15,153)			(41,229)	(42,707)
Capital expenditures	486			1,283			1,272	3,269
Gross profit	$ (107,200)			$ (96,400)			$ (316,000)	$ (277,300)

XML

Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

As of September 30, 2019 and December 31, 2018, receivables from contracts with customers were $223.0 million and $148.4 million, respectively. Our refining segment recognizes deferred revenues when cash payments are received in advance of delivery of products to the customer. Deferred revenue was $7.3 million and $6.7 million as of September 30, 2019 and December 31, 2018, respectively.

The following table provides information about disaggregated revenue by major product line and includes a reconciliation of the disaggregated revenues to total segment revenues (in thousands):

Three Months Ended September 30, 2019	Refining		Logistics		Retail
Product or service:
Gasoline	$	399,543	$	—	$	86,941
Distillates (1)	625,080		—		10,857
Other refined products (2)	311,724		—		—
Merchandise	—		—		24,098
Transportation and terminalling services	—		49,623		—
Other revenue	604		—		338
Total segment revenues (3)	$	1,336,951	$	49,623	$	122,234

Three Months Ended September 30, 2018	Refining		Logistics		Retail
Product or service:
Gasoline	$	260,392	$	—	$	89,358
Distillates (1)	466,148		—		11,282
Other refined products (2)	124,051		—		—
Merchandise	—		—		24,330
Transportation and terminalling services	—		30,660		—
Total segment revenues (3)	$	850,591	$	30,660	$	124,970

Nine Months Ended September 30, 2019	Refining		Logistics		Retail
Product or service:
Gasoline	$	1,060,095	$	—	$	242,952
Distillates (1)	1,827,879		—		30,413
Other refined products (2)	941,109		—		—
Merchandise	—		—		68,176
Transportation and terminalling services	—		144,978		—
Other revenue	1,489		—		1,273
Total segment revenues (3)	$	3,830,572	$	144,978	$	342,814

Nine Months Ended September 30, 2018	Refining		Logistics		Retail
Product or service:
Gasoline	$	755,523	$	—	$	232,314
Distillates (1)	1,318,645		—		29,403
Other refined products (2)	317,094		—		—
Merchandise	—		—		61,536
Transportation and terminalling services	—		95,016		—
Total segment revenues (3)	$	2,391,262	$	95,016	$	323,253

_______________________________________________________

(1) Distillates primarily include diesel and jet fuel.

(2) Other refined products include fuel oil, gas oil, asphalt, and naphtha.

(3)

Refer to Note 17—Segment Information for the reconciliation of segment revenues to total consolidated revenues.

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Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

The following table summarizes our outstanding debt (in thousands):

	September 30, 2019			December 31, 2018
5.00% Convertible Senior Notes due 2021	$	79,895		$	115,000
7.75% Senior Secured Notes due 2025	300,000			300,000
ABL Credit Facility	—			—
Mid Pac Term Loan	1,441			1,466
Term Loan B	243,750			—
Retail Property Term Loan	44,384			—
Principal amount of long-term debt	669,470			416,466
Less: unamortized discount and deferred financing costs	(27,049		)	(23,826		)
Total debt, net of unamortized discount and deferred financing costs	642,421			392,640
Less: current maturities	(12,292		)	(33		)
Long-term debt, net of current maturities	$	630,129		$	392,607

As of September 30, 2019, we had no letters of credit outstanding under the ABL Credit Facility and $3.7 million in cash-collateralized letters of credit and surety bonds outstanding. Additionally, as of December 31, 2018, we had approximately $13.5 million in letters of credit outstanding under the ABL Credit Facility.

Under the ABL Credit Facility, the indenture governing the 7.75% Senior Secured Notes, and the Term Loan B Facility, our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.

7.75% Senior Secured Notes Due 2025

On December 21, 2017, Par Petroleum, LLC and Par Petroleum Finance Corp. (collectively, the “Issuers”), both our wholly owned subsidiaries, completed the issuance and sale of $300 million in aggregate principal amount of 7.75% Senior Secured Notes in a private placement under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The net proceeds of $289.2 million (net of financing costs and original issue discount of 1%) from the sale were used to repay our previous credit facilities and the forward sale agreement with J. Aron and for general corporate purposes.

The 7.75% Senior Secured Notes bear interest at a rate of 7.750% per year (payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2018) and will mature on December 15, 2025.

ABL Credit Facility

On December 21, 2017, in connection with the issuance of the 7.75% Senior Secured Notes, Par Petroleum, LLC, Par Hawaii, LLC, Hermes Consolidated, LLC, and Wyoming Pipeline Company (collectively, the “ABL Borrowers”), entered into a Loan and Security Agreement dated as of December 21, 2017 (the “ABL Credit Facility”) with certain lenders and Bank of America, N.A., as administrative agent and collateral agent. The ABL Credit Facility provides for a revolving credit facility that provides for revolving loans and for the issuance of letters of credit (the “ABL Revolver”). On July 24, 2018, we amended the ABL Credit Facility to increase the maximum principal amount at any time outstanding of the ABL Revolver by $10 million to $85 million, subject to a borrowing base. As of September 30, 2019, the ABL Revolver had no outstanding balance and a borrowing base of approximately $58.4 million.

5.00% Convertible Senior Notes Due 2021

As of September 30, 2019, the outstanding principal amount of the 5.00% Convertible Senior Notes was $79.9 million, the unamortized discount and deferred financing cost was $7.3 million, and the carrying amount of the liability component was $72.6 million. During May and June 2019, we entered into privately negotiated exchange agreements with a limited number of holders (the “Noteholders”) to repurchase $35.1 million in aggregate principal amount of the 5.00% Convertible Senior Notes held by the Noteholders for an aggregate of $16.2 million in cash and approximately 1.4 million shares of our common stock with a fair value of $30.1 million. We recognized a loss of approximately $3.7 million related to the extinguishment of the repurchased 5.00% Convertible Senior Notes in the nine months ended September 30, 2019.

Term Loan B Facility

On January 11, 2019, Par Petroleum, LLC and Par Petroleum Finance Corp. entered into a new term loan facility with Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto from time to time (the “Term Loan B Facility”). Pursuant to the Term Loan B Facility, the lenders made a term loan to the borrowers in the amount of $250.0 million (“Term Loan B”) on the closing date. The net proceeds from Term Loan B totaled $228.9 million after deducting the original issue discount, deferred financing costs, and commitment and other fees.

Loans under Term Loan B bear interest at a rate per annum equal to Adjusted LIBOR (as defined in the Term Loan B Facility) plus an applicable margin of 6.75% or at a rate per annum equal to Alternate Base Rate (as defined in the Term Loan B Facility) plus an applicable margin of 5.75%. In addition to the quarterly interest payments, Term Loan B requires quarterly principal payments of $3.1 million. Term Loan B matures on January 11, 2026.

The obligations of the borrowers under the Term Loan B Facility are guaranteed by Par Petroleum, LLC’s and Par Petroleum Finance Corp.’s existing and future direct or indirect domestic subsidiaries and by the Company, with respect to principal and interest only. The Term Loan B Facility and the 7.75% Senior Secured Notes are secured on a pari passu basis by first priority liens (subject to the relative priority of permitted liens) on substantially all of the property and assets of Par Petroleum, LLC, Par Petroleum Finance Corp., and their subsidiary guarantors, but excluding certain property which is collateral under the ABL Credit Facility, the Supply and Offtake Agreements, and the Washington Refinery Intermediation Agreement.

Par Pacific Term Loan Agreement

On January 9, 2019, we entered into a loan agreement (the “Par Pacific Term Loan Agreement”) with Bank of Hawaii (“BOH”). Pursuant to the Par Pacific Term Loan Agreement, BOH made a loan to the Company in the amount of $45.0 million (the “Par Pacific Term Loan”).

During the term of the Par Pacific Term Loan, the interest payments were due monthly and were based on the outstanding principal balance multiplied by a floating rate equal to 3.50% above the applicable LIBOR rate (as defined in the Par Pacific Term Loan Agreement) subject to an increased default interest rate in the event of a default. The Par Pacific Term Loan Agreement was originally scheduled to mature on July 9, 2019. We terminated and repaid all amounts outstanding under the Par Pacific Term Loan Agreement on March 29, 2019 using the proceeds of the Retail Property Term Loan (as defined below). We recognized approximately $0.1 million of debt extinguishment costs related to the unamortized deferred financing costs associated with the Par Pacific Term Loan Agreement in the nine months ended September 30, 2019.

Retail Property Term Loan

On March 29, 2019, Par Pacific Hawaii Property Company, LLC (“Par Property LLC”), our wholly owned subsidiary, entered into a term loan agreement (the “Retail Property Term Loan”) with BOH, which provided a term loan in the principal amount of $45.0 million. The proceeds from the Retail Property Term Loan were used to repay and terminate the Par Pacific Term Loan Agreement.

The Retail Property Term Loan is guaranteed by Par and secured by a lien on substantially all of the assets of Par Property LLC, including a mortgage lien on 21 retail properties in Hawaii (the “Portfolio Properties”). Certain covenants require us to maintain a loan-to-appraisal value of the Portfolio Properties ratio of not greater than 75% and an annual debt yield of at least 9.0%. Par is also subject to a minimum liquidity covenant measured on the last day of each fiscal quarter.

The Retail Property Term Loan bears interest based on a floating rate equal to the applicable LIBOR for a one-month interest period plus 1.5%. Principal and interest payments are payable monthly based on a 20-year amortization schedule, principal prepayments are allowed subject to applicable prepayment penalties, and the remaining unpaid principal, plus any unpaid interest or other charges, is due on April 1, 2024, the maturity date of the Retail Property Term Loan.

Cross Default Provisions

Included within each of our debt agreements are affirmative and negative covenants, and customary cross default provisions, that require the repayment of amounts outstanding on demand unless the triggering payment default or acceleration is remedied, rescinded, or waived. As of September 30, 2019, we were in compliance with all of our debt agreements.

Guarantors

In connection with our shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission (“SEC”) on February 6, 2019 and declared effective on February 15, 2019 (“Registration Statement”), we may sell

non-convertible debt securities and other securities in one or more offerings with an aggregate initial offering price of up to $750.0 million. Any non-convertible debt securities issued under the Registration Statement may be fully and unconditionally guaranteed (except for customary release provisions), on a joint and several basis, by some or all of our subsidiaries, other than subsidiaries that are “minor” within the meaning of Rule 3-10 of Regulation S-X (the “Guarantor Subsidiaries”). We have no “independent assets or operations” within the meaning of Rule 3-10 of Regulation S-X and certain of the Guarantor Subsidiaries may be subject to restrictions on their ability to distribute funds to us, whether by cash dividends, loans, or advances.

XML

Segment Information (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Summarized Financial Information

Summarized financial information concerning reportable segments consists of the following (in thousands):

Three Months Ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,336,951	$	49,623	$	122,234	$	(107,170	)	$	1,401,638
Cost of revenues (excluding depreciation)	1,256,569		28,712		87,631		(107,157		)	1,265,755
Operating expense (excluding depreciation)	63,041		2,553		17,643		—			83,237
Depreciation, depletion, and amortization	14,088		4,798		2,523		818			22,227
General and administrative expense (excluding depreciation)	—		—		—		11,391			11,391
Acquisition and integration costs	—		—		—		623			623
Operating Income (Loss)	$	3,253	$	13,560	$	14,437	$	(12,845	)	$	18,405
Interest expense and financing costs, net										(18,348		)
Other income, net										83
Change in value of common stock warrants										(826		)
Equity losses from Laramie Energy, LLC										(85,633		)
Loss before income taxes										(86,319		)
Income tax benefit										2,428
Net loss										$	(83,891	)
Capital expenditures	$	6,672	$	14,759	$	765	$	486		$	22,682

Three Months Ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	850,591	$	30,660	$	124,970	$	(96,440	)	$	909,781
Cost of revenues (excluding depreciation)	805,051		18,384		95,968		(96,618		)	822,785
Operating expense (excluding depreciation)	36,766		1,663		16,476		—			54,905
Depreciation, depletion, and amortization	8,336		1,654		1,876		1,326			13,192
General and administrative expense (excluding depreciation)	—		—		—		11,871			11,871
Acquisition and integration costs	—		—		—		2,134			2,134
Operating income (loss)	$	438	$	8,959	$	10,650	$	(15,153	)	$	4,894
Interest expense and financing costs, net										(10,425		)
Other income, net										85
Change in value of common stock warrants										(1,067		)
Equity earnings from Laramie Energy, LLC										1,050
Loss before income taxes										(5,463		)
Income tax expense										(359		)
Net loss										$	(5,822	)
Capital expenditures	$	5,332	$	4,501	$	1,425	$	1,283		$	12,541

________________________________________________________

(1)

Includes eliminations of intersegment revenues and cost of revenues of $107.2 million and $96.4 million for the three months ended September 30, 2019 and 2018, respectively.

Nine Months Ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	3,830,572	$	144,978	$	342,814	$	(315,982	)	$	4,002,382
Cost of revenues (excluding depreciation)	3,563,503		82,000		248,751		(315,925		)	3,578,329
Operating expense (excluding depreciation)	173,689		7,945		50,107		—			231,741
Depreciation, depletion, and amortization	42,579		12,683		7,429		2,412			65,103
General and administrative expense (excluding depreciation)	—		—		—		34,435			34,435
Acquisition and integration costs	—		—		—		4,325			4,325
Operating income (loss)	$	50,801	$	42,350	$	36,527	$	(41,229	)	$	88,449
Interest expense and financing costs, net										(57,336		)
Debt extinguishment and commitment costs										(9,186		)
Other income, net										2,347
Change in value of common stock warrants										(3,065		)
Equity losses from Laramie Energy, LLC										(84,841		)
Loss before income taxes										(63,632		)
Income tax benefit										69,002
Net income										$	5,370
Capital expenditures	$	25,555	$	32,217	$	5,042	$	1,272		$	64,086

Nine Months Ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	2,391,262	$	95,016	$	323,253	$	(277,915	)	$	2,531,616
Cost of revenues (excluding depreciation)	2,204,634		57,775		248,328		(278,129		)	2,232,608
Operating expense (excluding depreciation)	108,862		5,870		44,239		4			158,975
Depreciation, depletion, and amortization	24,173		4,969		6,441		3,421			39,004
General and administrative expense (excluding depreciation)	—		—		—		35,981			35,981
Acquisition and integration costs	—		—		—		3,515			3,515
Operating income (loss)	$	53,593	$	26,402	$	24,245	$	(42,707	)	$	61,533
Interest expense and financing costs, net										(29,346		)
Other income, net										861
Change in value of common stock warrants										(396		)
Change in value of contingent consideration										(10,500		)
Equity earnings from Laramie Energy, LLC										4,274
Income before income taxes										26,426
Income tax expense										(885		)
Net income										$	25,541
Capital expenditures	$	15,359	$	9,050	$	2,520	$	3,269		$	30,198

________________________________________________________ 

(1)

Includes eliminations of intersegment revenues and cost of revenues of $316.0 million and $277.3 million for the nine months ended September 30, 2019 and 2018, respectively.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Amounts by Hierarchy Level

Fair value amounts by hierarchy level as of September 30, 2019 and December 31, 2018 are presented gross in the tables below (in thousands):

	September 30, 2019
	Level 1			Level 2			Level 3			Gross Fair Value			Effect of Counter-Party Netting			Net Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives	$	2,000		$	813		$	—		$	2,813		$	(2,695	)	$	118
Liabilities
Common stock warrants	$	—		$	—		$	(8,072	)	$	(8,072	)	$	—		$	(8,072	)
Commodity derivatives	(1,946		)	(859		)	—			(2,805		)	2,695			(110		)
J. Aron repurchase obligation derivative	—			—			(2,473		)	(2,473		)	—			(2,473		)
MLC repurchase obligation derivative	—			—			4,340			4,340			—			4,340
Interest rate derivatives	—			(1,872		)	—			(1,872		)	—			(1,872		)
Total	$	(1,946	)	$	(2,731	)	$	(6,205	)	$	(10,882	)	$	2,695		$	(8,187	)

	December 31, 2018
	Level 1			Level 2			Level 3			Gross Fair Value			Effect of Counter-Party Netting			Net Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives	$	170		$	5,234		$	—		$	5,404		$	(431	)	$	4,973
Interest rate derivatives	—			191			—			191			—			191
Total	$	170		$	5,425		$	—		$	5,595		$	(431	)	$	5,164
Liabilities
Common stock warrants	$	—		$	—		$	(5,007	)	$	(5,007	)	$	—		$	(5,007	)
Commodity derivatives	(870		)	(261		)	—			(1,131		)	431			(700		)
J. Aron repurchase obligation derivative	—			—			4,085			4,085			—			4,085
Total	$	(870	)	$	(261	)	$	(922	)	$	(2,053	)	$	431		$	(1,622	)

_________________________________________________________

(1) Does not include cash collateral of $13.6 million and $10.9 million as of September 30, 2019 and December 31, 2018, respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.

Roll Forward of Level 3 Financial Instruments Measured at Fair Value on a Recurring Basis

A roll forward of Level 3 financial instruments measured at fair value on a recurring basis is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Balance, at beginning of period	$	(12,720	)	$	(10,559	)	$	(922	)	$	(26,372	)
Settlements	3,777			—			(4,121		)	—
Acquired	6,201			—			3,900			—
Total unrealized income (loss) included in earnings	(3,463		)	(5,397		)	(5,062		)	10,416
Balance, at end of period	$	(6,205	)	$	(15,956	)	$	(6,205	)	$	(15,956	)

Carrying Value and Fair Value of Long-term Debt and Other Financial Instruments

The carrying value and fair value of long-term debt and other financial instruments as of September 30, 2019 and December 31, 2018 are as follows (in thousands):

	September 30, 2019
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	72,560	$	109,643
7.75% Senior Secured Notes due 2025 (1)	291,700		299,250
Mid Pac Term Loan (2)	1,441		1,441
Term Loan B Facility (1)	233,171		243,750
Retail Property Term Loan (2)	43,549		43,549
Common stock warrants (2)	8,072		8,072

	December 31, 2018
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	100,411	$	121,488
7.75% Senior Secured Notes due 2025 (1)	290,763		270,000
Mid Pac Term Loan (2)	1,466		1,466
Common stock warrants (2)	5,007		5,007

_________________________________________________________

(1) The fair value measurements of the 5.00% Convertible Senior Notes, 7.75% Senior Secured Notes, and Term Loan B Facility are considered Level 2 measurements as discussed below.

(2) The fair value measurements of the common stock warrants, Mid Pac Term Loan, and Retail Property Term Loan are considered Level 3 measurements in the fair value hierarchy.

(3) The carrying value of the 5.00% Convertible Senior Notes excludes the fair value of the equity component, which was classified as equity upon issuance.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Schedule of inventories

Inventories at September 30, 2019 consisted of the following (in thousands):

	Titled Inventory		Supply and Offtake Agreements (1)		Total
Crude oil and feedstocks	$	192,807	$	120,305	$	313,112
Refined products and blendstock	132,795		164,627		297,422
Warehouse stock and other (2)	61,209		—		61,209
Total	$	386,811	$	284,932	$	671,743

Inventories at December 31, 2018 consisted of the following (in thousands):

	Titled Inventory		Supply and Offtake Agreements (1)		Total
Crude oil and feedstocks	$	7,000	$	117,877	$	124,877
Refined products and blendstock	62,401		100,175		162,576
Warehouse stock and other (2)	34,612		—		34,612
Total	$	104,013	$	218,052	$	322,065

________________________________________________________

(1) Please read Note 8—Inventory Financing Agreements for further information.

(2)

Includes $17.1 million and $5.0 million of RINs and environmental credits as of September 30, 2019 and December 31, 2018, respectively.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

In the ordinary course of business, we are a party to various lawsuits and other contingent matters. We establish accruals for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably

estimable. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on our financial condition, results of operations, or cash flows.

United Steelworkers Union Dispute

A portion of our employees at the Hawaii refinery are represented by the United Steelworkers Union (“USW”). On March 23, 2015, the union ratified a four-year extension of the collective bargaining agreement. On January 13, 2016, the USW filed a claim against PHR before the United States National Labor Relations Board (the “NLRB”) alleging a refusal to bargain collectively and in good faith. On March 29, 2016, the NLRB deferred final determination on the USW charge to the grievance/arbitration process under the extant collective bargaining agreement. Arbitration was commenced and concluded on October 1, 2018, with the arbitrator taking the matter under advisement thereafter. In a decision dated November 27, 2018, the arbitrator denied the grievance without prejudice to USW’s NLRB claim regarding retiree medical and short term disability benefits. On June 5, 2019, the NLRB approved the withdrawal of USW’s claim against PHR.

Environmental Matters

Like other petroleum refiners and exploration and production companies, our operations are subject to extensive and periodically-changing federal and state environmental regulations governing air emissions, wastewater discharges, and solid and hazardous waste management activities. Many of these regulations are becoming increasingly stringent and the cost of compliance can be expected to increase over time.

Periodically, we receive communications from various federal, state, and local governmental authorities asserting violations of environmental laws and/or regulations. These governmental entities may also propose or assess fines or require corrective actions for these asserted violations. We intend to respond in a timely manner to all such communications and to take appropriate corrective action. Except as disclosed below, we do not anticipate that any such matters currently asserted will have a material impact on our financial condition, results of operations, or cash flows.

The Par East facility of our Hawaii refinery, our Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted small refinery status by the U.S. Environmental Protection Agency (“EPA”) for 2018. Owing to the receipt of these small refinery exemptions, our net income (loss) for the three months ended September 30, 2019 includes $5.7 million of net RINs benefit.

Wyoming Refinery

Our Wyoming refinery is subject to a number of consent decrees, orders, and settlement agreements involving the EPA and/or the Wyoming Department of Environmental Quality, some of which date back to the late 1970s and several of which remain in effect, requiring further actions at the Wyoming refinery. The largest cost component arising from these various decrees relates to the investigation, monitoring, and remediation of soil, groundwater, surface water, and sediment contamination associated with the facility’s historic operations. Investigative work by Hermes Consolidated LLC, and its wholly owned subsidiary, Wyoming Pipeline Company (collectively, “WRC” or “Wyoming Refining”) and negotiations with the relevant agencies as to remedial approaches remain ongoing on a number of aspects of the contamination, meaning that investigation, monitoring, and remediation costs are not reasonably estimable for some elements of these efforts. As of September 30, 2019, we have accrued $16.8 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.

Additionally, we believe the Wyoming refinery will need to modify or close a series of wastewater impoundments in the next several years and replace those impoundments with a new wastewater treatment system. Based on current information, reasonable estimates we have received suggest costs of approximately $11.6 million to design and construct a new wastewater treatment system.

Finally, among the various historic consent decrees, orders, and settlement agreements into which Wyoming Refining has entered, there are several penalty orders associated with exceedances of permitted limits by the Wyoming refinery’s wastewater discharges. Although the frequency of these exceedances has declined over time, Wyoming Refining may become subject to new penalty enforcement action in the next several years, which could involve penalties in excess of $100,000.

Regulation of Greenhouse Gases

The EPA regulates greenhouse gases (“GHG”) under the federal Clean Air Act (“CAA”). New construction or material expansions that meet certain GHG emissions thresholds will likely require that, among other things, a GHG permit be issued in accordance with the federal CAA regulations and we will be required, in connection with such permitting, to undertake a technology review to determine appropriate controls to be implemented with the project in order to reduce GHG emissions.

Furthermore, the EPA is currently developing refinery-specific GHG regulations and performance standards that are expected to impose GHG emission limits and/or technology requirements. These control requirements may affect a wide range of refinery operations. Any such controls could result in material increased compliance costs, additional operating restrictions for our business, and an increase in the cost of the products we produce, which could have a material adverse effect on our financial condition, results of operations, or cash flows.

On September 29, 2015, the EPA announced a final rule updating standards that control toxic air emissions from petroleum refineries, addressing, among other things, flaring operations, fenceline air quality monitoring, and additional emission reductions from storage tanks and delayed coking units. Compliance with this rule has not had a material impact on our financial condition, results of operations, or cash flows to date.

In 2007, the State of Hawaii passed Act 234, which required that GHG emissions be rolled back on a statewide basis to 1990 levels by the year 2020. In June of 2014, the Hawaii Department of Health (“DOH”) adopted regulations that require each major facility to reduce CO₂ emissions by 16% by 2020 relative to a calendar year 2010 baseline (the first year in which GHG emissions were reported to the EPA under 40 CFR Part 98). The Hawaii refinery’s capacity to materially reduce fuel use and GHG emissions is limited because most energy conservation measures have already been implemented over the past 20 years. The regulation allows for “partnering” with other facilities (principally power plants) that have already dramatically reduced greenhouse emissions or are on schedule to reduce CO₂ emissions in order to comply independently with the state’s Renewable Portfolio Standards. The DOH’s GHG regulation allows, and the Hawaii refinery submitted, a GHG reduction plan, which includes an assessment of alternatives which demonstrates that additional reductions are not cost-effective or necessary because the State of Hawaii has already reached the 1990 levels according to a report prepared by the DOH in January 2019.

Fuel Standards

In 2007, the U.S. Congress passed the Energy Independence and Security Act of 2007 (the “EISA”) which, among other things, set a target fuel economy standard of 35 miles per gallon for the combined fleet of cars and light trucks in the U.S. by model year 2020 and contained an expanded Renewable Fuel Standard (the “RFS”). In August 2012, the EPA and National Highway Traffic Safety Administration (“NHTSA”) jointly adopted regulations that establish an average industry fuel economy of 54.5 miles per gallon by model year 2025. On August 8, 2018, the EPA and NHTSA jointly proposed to revise existing fuel economy standards for model years 2021-2025 and to set standards for 2026 for the first time. The agencies have not yet issued a final rule, but they are expected to do so in 2019. Although the revised fuel economy standards are expected to be less stringent than the initial standards for model years 2021-2025, it is uncertain whether the revised standards will increase year over year. Higher fuel economy standards have the potential to reduce demand for our refined transportation fuel products.

Under EISA, the RFS requires an increasing amount of renewable fuel to be blended into the nation’s transportation fuel supply, up to 36 billion gallons by 2022. In the near term, the RFS will be satisfied primarily with fuel ethanol blended into gasoline. We, and other refiners subject to the RFS, may meet the RFS requirements by blending the necessary volumes of renewable fuels produced by us or purchased from third parties. 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 RINs, to maintain compliance. To the extent that we exceed the minimum volumetric requirements for blending of renewable fuels, we generate our own RINs for which we have the option of retaining these self-generated RINs for current or future RFS compliance or selling those RINs on the open market. The RFS may present production and logistics challenges for both the renewable fuels and petroleum refining and marketing industries in that we may have to enter into arrangements with other parties or purchase D3 waivers from the EPA to meet our obligations to use advanced biofuels, including biomass-based diesel and cellulosic biofuel, with potentially uncertain supplies of these new fuels.

In October 2010, the EPA issued a partial waiver decision under the federal CAA to allow for an increase in the amount of ethanol permitted to be blended into gasoline from 10% (“E10”) to 15% (“E15”) for 2007 and newer light duty motor vehicles. In 2019, the EPA approved year-round sales of E15. There are numerous issues, including state and federal regulatory issues, that need to be addressed before E15 can be marketed on a large scale for use in traditional gasoline engines; however, increased renewable fuel in the nation’s transportation fuel supply could reduce demand for our refined products.

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. The effective date for the new standard was January 1, 2017, however, approved small volume refineries have until January 1, 2020 to meet the standard. The eastern location of our co-located Hawaii refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date our Hawaii refinery was disqualified from small volume refinery status, and is currently compliant. On March 19, 2015, the EPA confirmed the small refinery status of our Wyoming refinery. The Par East facility of our Hawaii refinery, our

Wyoming refinery, and our Washington refinery, acquired in January 2019, were all granted small refinery status by the EPA for 2018.

Beginning on June 30, 2014, new sulfur standards for fuel oil used by marine vessels operating within 200 miles of the U.S. coastline (which includes the entire Hawaiian Island chain) was lowered from 10,000 ppm (1%) to 1,000 ppm (0.1%). The sulfur standards began at the Hawaii refinery and were phased in so that by January 1, 2015, they were to be fully aligned with the International Marine Organization (“IMO”) standards and deadline. The more stringent standards apply universally to both U.S. and foreign-flagged ships. Although the marine fuel regulations provided vessel operators with a few compliance options such as installation of on-board pollution controls and demonstration unavailability, many vessel operators will be forced to switch to a distillates fuel while operating within the Emission Control Area (“ECA”). Beyond the 200 mile ECA, large ocean vessels are still allowed to burn marine fuel with up to 3.5% sulfur. Our Hawaii refinery is capable of producing the 1% sulfur residual fuel oil that was previously required within the ECA. Although our Hawaii refinery remains in a position to supply vessels traveling to and through Hawaii, the market for 0.1% sulfur distillates fuel and 3.5% sulfur residual fuel is much more competitive.

In addition to U.S. fuels requirements, the IMO has also adopted newer standards that further reduce the global limit on sulfur content in maritime fuels to 0.5% beginning in 2020 (“IMO 2020”). Like the rest of the refining industry, we are focused on meeting these standards and may incur costs in producing lower-sulfur fuels.

There will be compliance costs and uncertainties regarding how we will comply with the various requirements contained in the EISA, RFS, IMO 2020, and other fuel-related regulations. We may experience a decrease in demand for refined petroleum products due to an increase in combined fleet mileage or due to refined petroleum products being replaced by renewable fuels.

Environmental Agreement

On September 25, 2013, Par Petroleum, LLC (formerly Hawaii Pacific Energy, a wholly owned subsidiary of Par created for purposes of the PHR acquisition), Tesoro, and PHR entered into an Environmental Agreement (“Environmental Agreement”) that allocated responsibility for known and contingent environmental liabilities related to the acquisition of PHR, including the Consent Decree as described below.

Consent Decree

On July 18, 2016, PHR and subsidiaries of Tesoro entered into a consent decree with the EPA, the U.S. Department of Justice (“DOJ”), and other state governmental authorities concerning alleged violations of the federal CAA related to the ownership and operation of multiple facilities owned or formerly owned by Tesoro and its affiliates (“Consent Decree”), including the Par East facility of our Hawaii refinery. As a result of the Consent Decree, PHR expanded its previously-announced 2016 Hawaii refinery turnaround to undertake additional capital improvements to reduce emissions of air pollutants and to provide for certain nitrogen oxide and sulfur dioxide emission controls and monitoring required by the Consent Decree.

Tesoro is responsible under the Environmental Agreement for directly paying, or reimbursing PHR, for all reasonable third-party capital expenditures incurred pursuant to the Consent Decree to the extent related to acts or omissions prior to the date of the closing of the PHR acquisition. Tesoro is obligated to pay all applicable fines and penalties related to the Consent Decree. Through September 30, 2019, Tesoro has reimbursed us for $12.2 million of our total capital expenditures incurred in connection with the Consent Decree. As of September 30, 2019, all reimbursable capital expenditures incurred pursuant to the Consent Decree were collected. Net capital expenditures and reimbursements related to the Consent Decree for the nine months ended September 30, 2019 and 2018 are presented within Capital expenditures on our condensed consolidated statement of cash flows for the related periods.

Indemnification

In addition to its obligation to reimburse us for capital expenditures incurred pursuant to the Consent Decree, Tesoro agreed to indemnify us for claims and losses arising out of related breaches of Tesoro’s representations, warranties, and covenants in the Environmental Agreement, certain defined “corrective actions” relating to pre-existing environmental conditions, third-party claims arising under environmental laws for personal injury or property damage arising out of or relating to releases of hazardous materials that occurred prior to the date of the closing of the PHR acquisition, any fine, penalty, or other cost assessed by a governmental authority in connection with violations of environmental laws by PHR prior to the date of the closing of the PHR acquisition, certain groundwater remediation work, fines, or penalties imposed on PHR by the Consent Decree related to acts or omissions of Tesoro prior to the date of the closing of the PHR acquisition, and claims and losses related to the Pearl City Superfund Site.

Tesoro’s indemnification obligations are subject to certain limitations as set forth in the Environmental Agreement. These limitations include a deductible of $1 million and a cap of $15 million for certain of Tesoro’s indemnification obligations related to certain pre-existing conditions, as well as certain restrictions regarding the time limits for submitting notice and supporting documentation for remediation actions.

Recovery Trusts

We emerged from the reorganization of Delta Petroleum Corporation (“Delta”) on August 31, 2012 (“Emergence Date”), when the plan of reorganization (“Plan”) was consummated. On the Emergence Date, we formed the Delta Petroleum General Recovery Trust (“General Trust”). The General Trust was formed to pursue certain litigation against third parties, including preference actions, fraudulent transfer and conveyance actions, rights of setoff and other claims, or causes of action under the U.S. Bankruptcy Code and other claims and potential claims that Delta and its subsidiaries (collectively, “Debtors”) hold against third parties. On February 27, 2018, the Bankruptcy Court entered its final decree closing the Chapter 11 bankruptcy cases of Delta and the other Debtors, discharging the trustee for the General Trust, and finding that all assets of the General Trust were resolved, abandoned, or liquidated and have been distributed in accordance with the requirements of the Plan. In addition, the final decree required the Company or the General Trust, as applicable, to maintain the current accruals owed on account of the remaining claims of the U.S. Government and Noble Energy, Inc.

As of September 30, 2019, two related claims totaling approximately $22.4 million remained to be resolved and we have accrued approximately $0.5 million representing the estimated value of claims remaining to be settled which are deemed probable and estimable at period end.

One of the two remaining claims was filed by the U.S. Government for approximately $22.4 million relating to ongoing litigation concerning a plugging and abandonment obligation in Pacific Outer Continental Shelf Lease OCS-P 0320, comprising part of the Sword Unit in the Santa Barbara Channel, California. The second unliquidated claim, which is related to the same plugging and abandonment obligation, was filed by Noble Energy Inc., the operator and majority interest owner of the Sword Unit. We believe the probability of issuing stock to satisfy the full claim amount is remote, as the obligations upon which such proof of claim is asserted are joint and several among all working interest owners and Delta, our predecessor, only owned an approximate 3.4% aggregate working interest in the unit.

The settlement of claims is subject to ongoing litigation and we are unable to predict with certainty how many shares will be required to satisfy all claims. Pursuant to the Plan, allowed claims were settled at a ratio of 54.4 shares per $1,000 of claim.

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Segment Information

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

We report the results for the following four reportable segments: (i) Refining, (ii) Retail, (iii) Logistics, and (iv) Corporate and Other. Commencing January 11, 2019, the results of operations of the Washington Acquisition are included in our refining and logistics segments.

Summarized financial information concerning reportable segments consists of the following (in thousands):

Three Months Ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,336,951	$	49,623	$	122,234	$	(107,170	)	$	1,401,638
Cost of revenues (excluding depreciation)	1,256,569		28,712		87,631		(107,157		)	1,265,755
Operating expense (excluding depreciation)	63,041		2,553		17,643		—			83,237
Depreciation, depletion, and amortization	14,088		4,798		2,523		818			22,227
General and administrative expense (excluding depreciation)	—		—		—		11,391			11,391
Acquisition and integration costs	—		—		—		623			623
Operating Income (Loss)	$	3,253	$	13,560	$	14,437	$	(12,845	)	$	18,405
Interest expense and financing costs, net										(18,348		)
Other income, net										83
Change in value of common stock warrants										(826		)
Equity losses from Laramie Energy, LLC										(85,633		)
Loss before income taxes										(86,319		)
Income tax benefit										2,428
Net loss										$	(83,891	)
Capital expenditures	$	6,672	$	14,759	$	765	$	486		$	22,682

Three Months Ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	850,591	$	30,660	$	124,970	$	(96,440	)	$	909,781
Cost of revenues (excluding depreciation)	805,051		18,384		95,968		(96,618		)	822,785
Operating expense (excluding depreciation)	36,766		1,663		16,476		—			54,905
Depreciation, depletion, and amortization	8,336		1,654		1,876		1,326			13,192
General and administrative expense (excluding depreciation)	—		—		—		11,871			11,871
Acquisition and integration costs	—		—		—		2,134			2,134
Operating income (loss)	$	438	$	8,959	$	10,650	$	(15,153	)	$	4,894
Interest expense and financing costs, net										(10,425		)
Other income, net										85
Change in value of common stock warrants										(1,067		)
Equity earnings from Laramie Energy, LLC										1,050
Loss before income taxes										(5,463		)
Income tax expense										(359		)
Net loss										$	(5,822	)
Capital expenditures	$	5,332	$	4,501	$	1,425	$	1,283		$	12,541

________________________________________________________

(1)

Includes eliminations of intersegment revenues and cost of revenues of $107.2 million and $96.4 million for the three months ended September 30, 2019 and 2018, respectively.

Nine Months Ended September 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	3,830,572	$	144,978	$	342,814	$	(315,982	)	$	4,002,382
Cost of revenues (excluding depreciation)	3,563,503		82,000		248,751		(315,925		)	3,578,329
Operating expense (excluding depreciation)	173,689		7,945		50,107		—			231,741
Depreciation, depletion, and amortization	42,579		12,683		7,429		2,412			65,103
General and administrative expense (excluding depreciation)	—		—		—		34,435			34,435
Acquisition and integration costs	—		—		—		4,325			4,325
Operating income (loss)	$	50,801	$	42,350	$	36,527	$	(41,229	)	$	88,449
Interest expense and financing costs, net										(57,336		)
Debt extinguishment and commitment costs										(9,186		)
Other income, net										2,347
Change in value of common stock warrants										(3,065		)
Equity losses from Laramie Energy, LLC										(84,841		)
Loss before income taxes										(63,632		)
Income tax benefit										69,002
Net income										$	5,370
Capital expenditures	$	25,555	$	32,217	$	5,042	$	1,272		$	64,086

Nine Months Ended September 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	2,391,262	$	95,016	$	323,253	$	(277,915	)	$	2,531,616
Cost of revenues (excluding depreciation)	2,204,634		57,775		248,328		(278,129		)	2,232,608
Operating expense (excluding depreciation)	108,862		5,870		44,239		4			158,975
Depreciation, depletion, and amortization	24,173		4,969		6,441		3,421			39,004
General and administrative expense (excluding depreciation)	—		—		—		35,981			35,981
Acquisition and integration costs	—		—		—		3,515			3,515
Operating income (loss)	$	53,593	$	26,402	$	24,245	$	(42,707	)	$	61,533
Interest expense and financing costs, net										(29,346		)
Other income, net										861
Change in value of common stock warrants										(396		)
Change in value of contingent consideration										(10,500		)
Equity earnings from Laramie Energy, LLC										4,274
Income before income taxes										26,426
Income tax expense										(885		)
Net income										$	25,541
Capital expenditures	$	15,359	$	9,050	$	2,520	$	3,269		$	30,198

________________________________________________________ 

(1)

Includes eliminations of intersegment revenues and cost of revenues of $316.0 million and $277.3 million for the nine months ended September 30, 2019 and 2018, respectively.

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Investment in Laramie Energy, LLC (Tables)

9 Months Ended

Sep. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

The change in our equity investment in Laramie Energy is as follows (in thousands):

	Nine Months Ended September 30, 2019
Beginning balance	$	136,656
Equity losses from Laramie Energy	(8,344		)
Accretion of basis difference	5,018
Impairment	(81,515		)
Ending balance	$	51,815

Equity Method Investees Financial Information

Summarized financial information for Laramie Energy is as follows (in thousands):

	September 30, 2019		December 31, 2018
Current assets	$	16,704	$	28,569
Non-current assets	763,583		788,515
Current liabilities	29,332		41,681
Non-current liabilities	286,623		293,084

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Natural gas and oil revenues	$	38,967		$	58,557		$	150,161		$	151,988
Income (loss) from operations	(10,028		)	6,152			(4,490		)	11,642
Net loss	(12,586		)	(152		)	(18,139		)	(1,708		)

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Acquisitions - Hawaii Refinery Expansion (Details) - USD ($) shares in Thousands, $ in Thousands			3 Months Ended
	Jan. 11, 2019	Dec. 19, 2018	Mar. 31, 2019
Business Acquisition [Line Items]
Issuance of common stock for business combination	$ 37,000		$ 36,980
Hawaii Refinery Expansion - Asset Acquisition
Business Acquisition [Line Items]
Consideration transferred		$ 66,900
Consideration transferred, working capital adjustments		4,300
Payments for asset acquisitions		47,600
Issuance of common stock for business combination		19,300
Property, plant and equipment, additions		45,200
Asset acquisition, non-hydrocarbon inventory		4,300
Asset acquisition, hydrocarbon inventory		$ 17,400
Common Stock
Business Acquisition [Line Items]
Common stock offering, net of issuance costs (in shares)			2,364
Issuance of common stock for business combination			$ 23
Common Stock | Hawaii Refinery Expansion - Asset Acquisition
Business Acquisition [Line Items]
Common stock offering, net of issuance costs (in shares)		1,100

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Investment in Laramie Energy, LLC - Summarized Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
ASSETS
Current assets	$ 1,027,786						$ 1,027,786		$ 586,592
Current liabilities	1,051,596						1,051,596		507,201
REVENUE
Income (loss) from operations	18,405			$ 4,894			88,449	$ 61,533
Net income	(83,891)	$ 28,169	$ 61,092	(5,822)	$ 16,178	$ 15,185	5,370	25,541
Laramie Energy Company
ASSETS
Current assets	16,704						16,704		28,569
Non-current assets	763,583						763,583		788,515
Current liabilities	29,332						29,332		41,681
Non-current liabilities	286,623						286,623		$ 293,084
REVENUE
Natural gas and oil revenues	38,967			58,557			150,161	151,988
Income (loss) from operations	(10,028)			6,152			(4,490)	11,642
Net income	$ (12,586)			$ (152)			$ (18,139)	$ (1,708)

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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Accounting Policies [Abstract]
Cost of revenues	$ 4,763	$ 1,620	$ 12,579	$ 4,866
Operating expense	13,630	7,155	40,212	20,560
General and administrative expense	$ 797	$ 1,297	$ 2,341	$ 3,345

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Debt - Par Pacific Term Loan Agreement (Details) - Term Loan - Par Pacific Term Loan - USD ($)		9 Months Ended
	Jan. 09, 2019	Sep. 30, 2019
Debt Instrument [Line Items]
Debt instrument, face amount	$ 45,000,000.0
Amortization of debt issuance costs		$ 100,000
London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin on LIBOR rate	3.50%

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Derivatives - Fair Value Amounts of Derivatives and Placement in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Prepaid and other current assets
Derivative Instruments, Gain (Loss) [Line Items]
Cash collateral	$ 4,100	$ 2,700
Other current assets
Derivative Instruments, Gain (Loss) [Line Items]
Cash collateral	9,500	8,300
Commodity derivatives | Prepaid and other current assets
Derivative Instruments, Gain (Loss) [Line Items]
Asset (Liability)	118	4,973
Commodity derivatives | Other accrued liabilities
Derivative Instruments, Gain (Loss) [Line Items]
Asset (Liability)	(110)	(700)
J. Aron repurchase obligation derivative | Over the Counter | Obligations under inventory financing agreements
Derivative Instruments, Gain (Loss) [Line Items]
Asset (Liability)	(2,473)	4,085
MLC repurchase obligation derivative | Over the Counter | Obligations under inventory financing agreements
Derivative Instruments, Gain (Loss) [Line Items]
Asset (Liability)	4,340	0
Interest rate derivatives | Prepaid and other current assets
Derivative Instruments, Gain (Loss) [Line Items]
Asset (Liability)	0	191
Interest rate derivatives | Other accrued liabilities
Derivative Instruments, Gain (Loss) [Line Items]
Asset (Liability)	(315)	0
Interest rate derivatives | Other liabilities
Derivative Instruments, Gain (Loss) [Line Items]
Asset (Liability)	$ (1,557)	$ 0

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

A summary of the fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Cash	$	200
Inventories	4,138
Prepaid and other current assets	243
Property, plant, and equipment	30,230
Goodwill (1)	46,210
Accounts payable and other current liabilities	(759		)
Long-term capital lease obligations	(5,244		)
Other non-current liabilities	(487		)
Total	$	74,531

________________________________________________________

(1) The total goodwill balance of $46.2 million was allocated to our retail segment.

A summary of the preliminary estimated fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Cash	$	16,146
Accounts receivable	34,954
Inventories	98,367
Prepaid and other assets	5,320
Property, plant, and equipment	412,766
Operating lease assets	62,337
Goodwill (1)	40,415
Total assets (2)	670,305
Obligations under inventory financing agreements	(116,873		)
Accounts payable	(55,444		)
Current operating lease obligations	(21,571		)
Other current liabilities	(18,411		)
Long-term operating lease obligations	(40,766		)
Deferred tax liability	(89,909		)
Other non-current liabilities	(804		)
Total liabilities	(343,778		)
Total	$	326,527

______________________________________________

(1) We allocated $23.4 million and $17.0 million of goodwill to our refining and logistics segments, respectively.

(2)

We allocated $402.7 million and $267.6 million of total assets to our refining and logistics segments, respectively.

Business Acquisition, Pro Forma Information

The following unaudited pro forma financial information presents our consolidated revenues and net income (loss) as if the Washington Acquisition had been completed on January 1, 2018 (in thousands except per share information):

	Nine Months Ended September 30,
	2019			2018
Revenues	$	4,030,290		$	3,515,536
Net income (loss)	(72,544		)	19,897
Income (loss) per share
Basic	$	(1.45	)	$	0.41
Diluted	$	(1.45	)	$	0.41

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Stockholders' Equity

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Incentive Plans

The following table summarizes our compensation costs recognized in General and administrative expense (excluding depreciation) and Operating expense (excluding depreciation) under the Amended and Restated Par Pacific Holdings, Inc. 2012 Long-term Incentive Plan and Stock Purchase Plan (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Restricted Stock Awards	$	789	$	955	$	2,589	$	2,734
Restricted Stock Units	279		235		841		605
Stock Option Awards	380		506		1,103		1,460

During the three and nine months ended September 30, 2019, we granted 11 thousand shares and 285 thousand shares of restricted stock and restricted stock units with a fair value of approximately $0.1 million and $4.5 million, respectively. As of September 30, 2019, there were approximately $7.1 million of total unrecognized compensation costs related to restricted stock awards and restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.8 years.

During the nine months ended September 30, 2019, we granted 300 thousand stock option awards with a weighted-average exercise price of $17.00 per share and no grants were made for the three months ended September 30, 2019. As of September 30, 2019, there were approximately $3.1 million of total unrecognized compensation costs related to stock option awards, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.8 years.

During the nine months ended September 30, 2019, we granted 48 thousand performance restricted stock units to executive officers and no performance restricted stock units were granted for the three months ended September 30, 2019. These performance restricted stock units had a fair value of approximately $0.8 million and are subject to certain annual performance targets as defined by our Board of Directors. As of September 30, 2019, there were approximately $1.1 million of total unrecognized compensation costs related to the performance restricted stock units, which are expected to be recognized on a straight-line basis over a weighted-average period of 1.9 years.

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Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Equity Group Investments (“EGI”) - Service Agreement

On September 17, 2013, we entered into a letter agreement (“Services Agreement”) with Equity Group Investments (“EGI”), an affiliate of Zell Credit Opportunities Fund, LP (“ZCOF”), which owns 10% or more of our common stock directly or through affiliates. Pursuant to the Services Agreement, EGI agreed to provide us with ongoing strategic, advisory, and consulting services that may include (i) advice on financing structures and our relationship with lenders and bankers, (ii) advice regarding public and private offerings of debt and equity securities, (iii) advice regarding asset dispositions, acquisitions, or other asset management strategies, (iv) advice regarding potential business acquisitions, dispositions, or combinations involving us or our affiliates, or (v) such other advice directly related or ancillary to the above strategic, advisory, and consulting services as may be reasonably requested by us.

EGI does not receive a fee for the provision of the strategic, advisory, or consulting services set forth in the Services Agreement, but may be periodically reimbursed by us, upon request, for (i) travel and out-of-pocket expenses, provided that, in the event that such expenses exceed $50 thousand in the aggregate with respect to any single proposed matter, EGI will obtain our consent prior to incurring additional costs, and (ii) provided that we provide prior consent to their engagement with respect to any particular proposed matter, all reasonable fees and disbursements of counsel, accountants, and other professionals incurred in connection with EGI’s services under the Services Agreement. In consideration of the services provided by EGI under the Services Agreement, we agreed to indemnify EGI for certain losses relating to or arising out of the Services Agreement or the services provided thereunder.

The Services Agreement has a term of one year and will be automatically extended for successive one-year periods unless terminated by either party at least 60 days prior to any extension date. There were no costs incurred related to this agreement during the three and nine months ended September 30, 2019 or 2018.

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Investment in Laramie Energy, LLC - Change in Equity Investment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Equity losses from Laramie Energy	$ (85,633)	$ 1,050	$ (84,841)	$ 4,274
Laramie Energy Company
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Beginning balance			136,656
Equity losses from Laramie Energy			(8,344)
Accretion of basis difference			5,018
Impairment	(81,500)		(81,515)
Ending balance	$ 51,815		$ 51,815

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Overview (Detail) barrel / d in Thousands	9 Months Ended
	Sep. 30, 2019 barrel / d segment gasoline_store_facility refinery
Schedule of Equity Method Investments [Line Items]
Operating segments | segment	3
Number of owned and operated refineries | refinery	3
Oil and gas refinery capacity | barrel / d	200
Number of retail gasoline, convenience stores, rebranded	26
Number of retail gasoline, convenience store facilities	34
Laramie Energy Company
Schedule of Equity Method Investments [Line Items]
Ownership interest in Laramie Energy, LLC	46.00%

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Acquisitions - Pro Forma Information (Details) - Washington Acquisition - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Revenues	$ 4,030,290	$ 3,515,536
Net income (loss)	$ (72,544)	$ 19,897
Pro forma earnings per share, basic (in dollars per share)	$ (1.45)	$ 0.41
Pro forma earnings per share, diluted (in dollars per share)	$ (1.45)	$ 0.41

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Debt - Retail Property Term Loan (Details) - Retail Property Term Loan	Mar. 29, 2019 USD ($) retail_property
Debt Instrument [Line Items]
Retail properties with mortgage liens | retail_property	21
Term Loan
Debt Instrument [Line Items]
Debt instrument, face amount | $	$ 45,000,000.0
Loan-to-appraisal value of portfolio properties, ratio	75.00%
Debt covenant, minimum annual debt yield	9.00%
Debt instrument, term	20 years
London Interbank Offered Rate (LIBOR) | Term Loan
Debt Instrument [Line Items]
Margin on LIBOR rate	1.50%

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Derivatives - Schedule of Pre-Tax Gain (Loss) Recognized in the Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Commodity derivatives | Cost of revenue
Derivative Instruments, Gain (Loss) [Line Items]
Pre-tax gains (losses)	$ (4,836)	$ (2,842)	$ (8,095)	$ 843
J. Aron repurchase obligation derivative | Cost of revenue
Derivative Instruments, Gain (Loss) [Line Items]
Pre-tax gains (losses)	(2,638)	(4,330)	(6,558)	10,812
MLC repurchase obligation derivative | Cost of revenue
Derivative Instruments, Gain (Loss) [Line Items]
Pre-tax gains (losses)	4,656	0	1,317	0
Interest rate derivatives | Interest expense
Derivative Instruments, Gain (Loss) [Line Items]
Pre-tax gains (losses)	$ (415)	$ (21)	$ (1,885)
Interest rate derivatives | Interest income
Derivative Instruments, Gain (Loss) [Line Items]
Pre-tax gains (losses)				$ 1,277

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Revenues	$ 1,401,638	$ 909,781	$ 4,002,382	$ 2,531,616
Operating expenses
Cost of revenues (excluding depreciation)	1,265,755	822,785	3,578,329	2,232,608
Operating expense (excluding depreciation)	83,237	54,905	231,741	158,975
Depreciation, depletion, and amortization	22,227	13,192	65,103	39,004
General and administrative expense (excluding depreciation)	11,391	11,871	34,435	35,981
Acquisition and integration costs	623	2,134	4,325	3,515
Total operating expenses	1,383,233	904,887	3,913,933	2,470,083
Operating income	18,405	4,894	88,449	61,533
Other income (expense)
Interest expense and financing costs, net	(18,348)	(10,425)	(57,336)	(29,346)
Debt extinguishment and commitment costs	0	0	(9,186)	0
Other income, net	83	85	2,347	861
Change in value of common stock warrants	(826)	(1,067)	(3,065)	(396)
Change in value of contingent consideration	0	0	0	(10,500)
Equity earnings (losses) from Laramie Energy, LLC	(85,633)	1,050	(84,841)	4,274
Total other income (expense), net	(104,724)	(10,357)	(152,081)	(35,107)
Income (loss) before income taxes	(86,319)	(5,463)	(63,632)	26,426
Income tax benefit (expense)	2,428	(359)	69,002	(885)
Net income (loss)	$ (83,891)	$ (5,822)	$ 5,370	$ 25,541
Income (loss) per share
Basic (in dollars per share)	$ (1.65)	$ (0.13)	$ 0.11	$ 0.55
Diluted (in dollars per share)	$ (1.65)	$ (0.13)	$ 0.11	$ 0.55
Weighted-average number of shares outstanding
Basic (in shares)	50,942	45,709	49,973	45,676
Diluted (in shares)	50,942	45,709	50,071	45,721

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Debt - ABL Credit Facility (Details) - USD ($)	Jul. 24, 2018	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Principal amount of long-term debt		$ 669,470,000	$ 416,466,000
Revolving Credit Facility | ABL Credit Facility
Debt Instrument [Line Items]
Line of credit facility, increase	$ 10,000,000
Maximum borrowing amount	$ 85,000,000
Revolving Credit Facility | ABL Revlover
Debt Instrument [Line Items]
Principal amount of long-term debt		0	0
Line of credit facility, borrowing base		58,400,000
Letters of credit outstanding, amount		$ 0	$ 13,500,000

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Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Contract receivable	$ 223,000	$ 148,400
Deferred revenue	$ 7,321	$ 6,681

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Overview

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Overview

Overview

Par Pacific Holdings, Inc. and its wholly owned subsidiaries (“Par” or the “Company”) own and operate market-leading energy and infrastructure businesses. Our strategy is to acquire and develop businesses in logistically-complex markets. Currently, we operate in three primary business segments:

1) Refining - We own and operate three refineries with total throughput capacity of over 200 thousand barrels per day (“Mbpd”). Our co-located refinery in Kapolei, Hawaii, produces ultra-low sulfur diesel (“ULSD”), gasoline, jet fuel, marine fuel, low sulfur fuel oil (“LSFO”), and other associated refined products primarily for consumption in Hawaii. Our refinery in Newcastle, Wyoming, produces gasoline, ULSD, jet fuel, and other associated refined products that are primarily marketed in Wyoming and South Dakota. Our refinery in Tacoma, Washington, acquired in January 2019, produces distillates, gasoline, asphalt, and other associated refined products primarily marketed in the Pacific Northwest.

2) Retail - Our retail outlets in Hawaii sell gasoline, diesel, and retail merchandise throughout the islands of Oahu, Maui, Hawaii, and Kauai. Our Hawaii retail network includes Hele and “76” branded retail sites, company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations. Through September 30, 2019, we completed the rebranding of 26 of our 34 company-operated convenience stores in Hawaii to “nomnom,” a new proprietary brand. Our retail outlets in Washington and Idaho sell gasoline, diesel, and retail merchandise and operate under the “Cenex®” and “Zip Trip®” brand names.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies. 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 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 the Ellsworth Air Force Base in South Dakota. Beginning in January 2019, 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 McChord Air Force Base.

As of September 30, 2019, we owned a 46.0% equity investment in Laramie Energy, LLC (“Laramie Energy”). Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado.

Our Corporate and Other reportable segment primarily includes general and administrative costs.

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Inventory Financing Agreements - Supply and Offtake Agreements (Details)		3 Months Ended		9 Months Ended
	Dec. 05, 2018 USD ($) mbpd	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Jun. 01, 2018 USD ($)	Dec. 01, 2016 USD ($) installment	Jun. 01, 2015 USD ($)
Supply Commitment [Line Items]
Supply and exchange agreement expenses		$ 18,348,000	$ 10,425,000	$ 57,336,000	$ 29,346,000
Supply and Offtake Agreements
Supply Commitment [Line Items]
Agreement extension term				1 year
Deferred payment arrangement, aggregate marginal increase	$ 2,500,000
Barrels of crude per day provided (up to) | mbpd	150
Supply and exchange agreement expenses		1,300,000	1,300,000	$ 4,300,000	3,300,000
Amount of deferred payment arrangement	$ 165,000,000
Percentage of receivables and inventory for deferred payment arrangement	85.00%
Deferral arrangement fee									$ 1,300,000
Capacity of deferred payment arrangement		101,000,000.0		101,000,000.0		$ 77,400,000
Outstanding amount of deferred payment arrangement		94,800,000		94,800,000		68,400,000
Number of fee agreement payments | installment								18
Fee agreement receivable (payable)		(100,000)		(100,000)		$ 2,500,000	$ 2,200,000	$ 14,600,000
Supply and Offtake Agreements | London Interbank Offered Rate (LIBOR)
Supply Commitment [Line Items]
Margin on LIBOR rate	3.50%
Deferred payment availability fee	0.75%
Supply and Offtake Agreements | Inventory Intermediation
Supply Commitment [Line Items]
Handling fees		$ 9,100,000	$ 5,000,000.0	$ 24,700,000	$ 15,800,000

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Leases - Maturity Schedule (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Finance Lease
2019	$ 540
2020	1,978
2021	1,407
2022	1,190
2023	1,159
2024	934
Thereafter	2,005
Total lease payments	9,213
Less amount representing interest	(1,605)
Present value of lease liabilities	7,608
Operating Lease
2019	22,109
2020	79,668
2021	51,891
2022	49,712
2023	48,670
2024	42,962
Thereafter	243,517
Total lease payments	538,529
Less amount representing interest	(163,500)
Present value of lease liabilities	375,029
Lease Liabilities Payments Due [Abstract]
2019	22,649
2020	81,646
2021	53,298
2022	50,902
2023	49,829
2024	43,896
Thereafter	245,522
Total lease payments	547,742
Less amount representing interest	(165,105)
Total lease liabilities	$ 382,637

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Leases - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Lease not yet commenced, undiscounted amount	$ 54.0
Finance lease, not yet commenced, undiscounted amount	$ 1.2
Minimum
Lessee, Lease, Description [Line Items]
Lease, remaining lease term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Lease, remaining lease term	30 years

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Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ (2,428,000)	$ 359,000	$ (69,002,000)	$ 885,000
Adjustments recognized for uncertain tax positions	$ 0	$ 0	$ 0	$ 0
Operating loss carryforwards					$ 1,500,000,000

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Inventories

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories at September 30, 2019 consisted of the following (in thousands):

	Titled Inventory		Supply and Offtake Agreements (1)		Total
Crude oil and feedstocks	$	192,807	$	120,305	$	313,112
Refined products and blendstock	132,795		164,627		297,422
Warehouse stock and other (2)	61,209		—		61,209
Total	$	386,811	$	284,932	$	671,743

Inventories at December 31, 2018 consisted of the following (in thousands):

	Titled Inventory		Supply and Offtake Agreements (1)		Total
Crude oil and feedstocks	$	7,000	$	117,877	$	124,877
Refined products and blendstock	62,401		100,175		162,576
Warehouse stock and other (2)	34,612		—		34,612
Total	$	104,013	$	218,052	$	322,065

________________________________________________________

(1) Please read Note 8—Inventory Financing Agreements for further information.

(2) Includes $17.1 million and $5.0 million of RINs and environmental credits as of September 30, 2019 and December 31, 2018, respectively.

As of September 30, 2019 and December 31, 2018, there was a $6.2 million and $3.8 million reserve for the lower of cost or net realizable value of inventory, respectively. Our LIFO inventory reserve was $10.3 million as of September 30, 2019.

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Derivatives

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

Commodity Derivatives

We utilize commodity derivative contracts to manage our price exposure in our inventory positions, future purchases of crude oil, future purchases and sales of refined products, and crude oil consumption in our refining process. The derivative contracts that we execute to manage our price risk include exchange traded futures, options, and over-the-counter (“OTC”) swaps. Our futures, options, and OTC swaps are marked-to-market and changes in the fair value of these contracts are recognized within Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

We are obligated to repurchase the crude oil and refined products from J. Aron at the termination of the Supply and Offtake Agreements. Our Washington Refinery Intermediation Agreement contains forward purchase obligations for certain volumes of crude oil and refined products that are required to be settled at market prices on a monthly basis. We have determined that these obligations under the Supply and Offtake Agreements and Washington Refinery Intermediation Agreement contain embedded derivatives. As such, we have accounted for these embedded derivatives at fair value with changes in the fair value recorded in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.

We have entered into forward purchase contracts for crude oil and forward purchases and sales contracts of refined products. We elect the normal purchases normal sales (“NPNS”) exception for all forward contracts that meet the definition of a derivative and are not expected to net settle. Any gains and losses with respect to these forward contracts designated as NPNS are not reflected in earnings until the delivery occurs. Our open futures expire at various dates through March 2020.

We elect to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting agreement. Our condensed consolidated balance sheets present derivative assets and liabilities on a net basis. Please read Note 11—Fair Value Measurements for the gross fair value and net carrying value of our derivative instruments. Our cash margin that is required as collateral deposits cannot be offset against the fair value of open contracts except in the event of default.

At September 30, 2019, our open commodity derivative contracts represented (in thousands of barrels):

Contract type	Purchases	Sales		Net
Futures	1,980	(1,116	)	864
Swaps	138	(138	)	—
Total	2,118	(1,254	)	864

At September 30, 2019, we also had option collars of 50 thousand barrels per month that economically hedge our internally consumed fuel at our Hawaii refinery. These option collars have a weighted-average strike price ranging from a floor of $48.40 per barrel to a ceiling of $65.00 per barrel and expire in December 2020.

Interest Rate Derivatives

We are exposed to interest rate volatility in our ABL Revolver, Term Loan B Facility, Retail Property Term Loan, Supply and Offtake Agreements, and Washington Refinery Intermediation Agreement. We may utilize interest rate swaps to manage our interest rate risk. As of September 30, 2019, we had entered into an interest rate swap at an average fixed rate of 3.91% in exchange for the floating interest rate and on the notional amounts due under the Retail Property Term Loan. This swap expires on April 1, 2024, the maturity date of the Retail Property Term Loan.

Our 5.00% Convertible Senior Notes include a redemption option and a related make-whole premium which represent an embedded derivative that is not clearly and closely related to the 5.00% Convertible Senior Notes. As such, we have accounted for this embedded derivative at fair value with changes in the fair value recorded in Interest expense and financing costs, net, on our condensed consolidated statements of operations. As of September 30, 2019, this embedded derivative was deemed to have a de minimis fair value.

The following table provides information on the fair value amounts (in thousands) of these derivatives as of September 30, 2019 and December 31, 2018 and their placement within our condensed consolidated balance sheets.

	Balance Sheet Location	September 30, 2019			December 31, 2018
		Asset (Liability)
Commodity derivatives (1)	Prepaid and other current assets	$	118		$	4,973
Commodity derivatives	Other accrued liabilities	(110		)	(700		)
J. Aron repurchase obligation derivative	Obligations under inventory financing agreements	(2,473		)	4,085
MLC repurchase obligation derivative	Obligations under inventory financing agreements	4,340			—
Interest rate derivatives	Prepaid and other current assets	—			191
Interest rate derivatives	Other accrued liabilities	(315		)	—
Interest rate derivatives	Other liabilities	(1,557		)	—

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(1) Does not include cash collateral of $4.1 million and $2.7 million recorded in Prepaid and other current assets and $9.5 million and $8.3 million in Other long-term assets as of September 30, 2019 and December 31, 2018, respectively.

The following table summarizes the pre-tax gains (losses) recognized on our condensed consolidated statements of operations resulting from changes in fair value of derivative instruments not designated as hedges charged directly to earnings (in thousands):

		Three Months Ended September 30,						Nine Months Ended September 30,
	Statement of Operations Location	2019			2018			2019			2018
Commodity derivatives	Cost of revenues (excluding depreciation)	$	(4,836	)	$	(2,842	)	$	(8,095	)	$	843
J. Aron repurchase obligation derivative	Cost of revenues (excluding depreciation)	(2,638		)	(4,330		)	(6,558		)	10,812
MLC repurchase obligation derivative	Cost of revenues (excluding depreciation)	4,656			—			1,317			—
Interest rate derivatives	Interest expense and financing costs, net	(415		)	(21		)	(1,885		)	1,277

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

At September 30, 2019, our open commodity derivative contracts represented (in thousands of barrels):

Contract type	Purchases	Sales		Net
Futures	1,980	(1,116	)	864
Swaps	138	(138	)	—
Total	2,118	(1,254	)	864

Fair Value Amounts of Derivatives and Placement in Consolidated Balance Sheets

The following table provides information on the fair value amounts (in thousands) of these derivatives as of September 30, 2019 and December 31, 2018 and their placement within our condensed consolidated balance sheets.

	Balance Sheet Location	September 30, 2019			December 31, 2018
		Asset (Liability)
Commodity derivatives (1)	Prepaid and other current assets	$	118		$	4,973
Commodity derivatives	Other accrued liabilities	(110		)	(700		)
J. Aron repurchase obligation derivative	Obligations under inventory financing agreements	(2,473		)	4,085
MLC repurchase obligation derivative	Obligations under inventory financing agreements	4,340			—
Interest rate derivatives	Prepaid and other current assets	—			191
Interest rate derivatives	Other accrued liabilities	(315		)	—
Interest rate derivatives	Other liabilities	(1,557		)	—

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(1)

Does not include cash collateral of $4.1 million and $2.7 million recorded in Prepaid and other current assets and $9.5 million and $8.3 million in Other long-term assets as of September 30, 2019 and December 31, 2018, respectively.

Pre-Tax Gain (Loss) Recognized in the Statement of Operations

The following table summarizes the pre-tax gains (losses) recognized on our condensed consolidated statements of operations resulting from changes in fair value of derivative instruments not designated as hedges charged directly to earnings (in thousands):

		Three Months Ended September 30,						Nine Months Ended September 30,
	Statement of Operations Location	2019			2018			2019			2018
Commodity derivatives	Cost of revenues (excluding depreciation)	$	(4,836	)	$	(2,842	)	$	(8,095	)	$	843
J. Aron repurchase obligation derivative	Cost of revenues (excluding depreciation)	(2,638		)	(4,330		)	(6,558		)	10,812
MLC repurchase obligation derivative	Cost of revenues (excluding depreciation)	4,656			—			1,317			—
Interest rate derivatives	Interest expense and financing costs, net	(415		)	(21		)	(1,885		)	1,277

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Three Months Ended September 30, 2019	Refining		Logistics		Retail
Product or service:
Gasoline	$	399,543	$	—	$	86,941
Distillates (1)	625,080		—		10,857
Other refined products (2)	311,724		—		—
Merchandise	—		—		24,098
Transportation and terminalling services	—		49,623		—
Other revenue	604		—		338
Total segment revenues (3)	$	1,336,951	$	49,623	$	122,234

Three Months Ended September 30, 2018	Refining		Logistics		Retail
Product or service:
Gasoline	$	260,392	$	—	$	89,358
Distillates (1)	466,148		—		11,282
Other refined products (2)	124,051		—		—
Merchandise	—		—		24,330
Transportation and terminalling services	—		30,660		—
Total segment revenues (3)	$	850,591	$	30,660	$	124,970

Nine Months Ended September 30, 2019	Refining		Logistics		Retail
Product or service:
Gasoline	$	1,060,095	$	—	$	242,952
Distillates (1)	1,827,879		—		30,413
Other refined products (2)	941,109		—		—
Merchandise	—		—		68,176
Transportation and terminalling services	—		144,978		—
Other revenue	1,489		—		1,273
Total segment revenues (3)	$	3,830,572	$	144,978	$	342,814

Nine Months Ended September 30, 2018	Refining		Logistics		Retail
Product or service:
Gasoline	$	755,523	$	—	$	232,314
Distillates (1)	1,318,645		—		29,403
Other refined products (2)	317,094		—		—
Merchandise	—		—		61,536
Transportation and terminalling services	—		95,016		—
Total segment revenues (3)	$	2,391,262	$	95,016	$	323,253

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(1) Distillates primarily include diesel and jet fuel.

(2) Other refined products include fuel oil, gas oil, asphalt, and naphtha.

(3)

Refer to Note 17—Segment Information for the reconciliation of segment revenues to total consolidated revenues.

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Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Income (Loss) Per Share

The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Net income (loss)	$	(83,891	)	$	(5,822	)	$	5,370	$	25,541
Less: Undistributed income allocated to participating securities (1)	—			—			59		361
Net income (loss) attributable to common stockholders	(83,891		)	(5,822		)	5,311		25,180
Plus: Net income effect of convertible securities	—			—			—		—
Numerator for diluted income (loss) per common share	$	(83,891	)	$	(5,822	)	$	5,311	$	25,180
Basic weighted-average common stock shares outstanding	50,942			45,709			49,973		45,676
Plus: dilutive effects of common stock equivalents (2)	—			—			98		45
Diluted weighted-average common stock shares outstanding	50,942			45,709			50,071		45,721
Basic income (loss) per common share	$	(1.65	)	$	(0.13	)	$	0.11	$	0.55
Diluted income (loss) per common share	$	(1.65	)	$	(0.13	)	$	0.11	$	0.55

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(1) Participating securities include restricted stock that has been issued but has not yet vested.

(2) Entities with a net loss from continuing operations are prohibited from including potential common shares in the computation of diluted per share amounts. We have utilized the basic shares outstanding to calculate both basic and diluted loss per share for the three months ended September 30, 2019 and 2018.