XML 44 R25.htm IDEA: XBRL DOCUMENT v3.22.0.1
Leases
 12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases LeasesWe have cancellable and non-cancellable finance and operating lease liabilities 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 and 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 ROU assets and liabilities as of December 31, 2021 and 2020 and their placement within our consolidated balance sheets:
Lease typeBalance Sheet LocationDecember 31, 2021December 31, 2020
Assets
FinanceProperty, plant, and equipment$20,556 $14,998 
FinanceAccumulated amortization(8,397)(6,486)
FinanceProperty, plant, and equipment, net$12,159 $8,512 
OperatingOperating lease right-of-use assets383,824 357,166 
Total right-of-use assets$395,983 $365,678 
Liabilities
Current
FinanceOther accrued liabilities$1,540 $1,491 
OperatingOperating lease liabilities53,640 56,965 
Long-term
FinanceFinance lease liabilities7,691 7,925 
OperatingOperating lease liabilities335,094 304,355 
Total lease liabilities$397,965 $370,736 
Weighted-average remaining lease term (in years)
Finance6.296.97
Operating11.2810.52
Weighted-average discount rate
Finance7.46 %7.93 %
Operating6.70 %7.59 %
    The following table summarizes the lease costs recognized in our consolidated statements of operations (in thousands):
Year Ended December 31,
Lease cost type202120202019
Finance lease cost
Amortization of finance lease ROU assets$1,913 $2,007 $1,896 
Interest on lease liabilities655 654 521 
Operating lease cost91,882 106,256 100,384 
Variable lease cost6,716 9,802 11,663 
Short-term lease cost1,013 1,926 1,874 
Net lease cost$102,179 $120,645 $116,338 
    The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):
Year Ended December 31,
Lease type202120202019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases$1,914 $1,932 $2,167 
Operating cash flows from finance leases658 656 507 
Operating cash flows from operating leases89,677 103,270 99,713 
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities1,936 3,476 963 
ROU assets obtained in exchange for new operating lease liabilities97,011 22,529 79,382 
ROU assets terminated in exchange for release from finance lease liabilities— — — 
ROU assets terminated in exchange for release from operating lease liabilities6,847 7,738 193 
    The table below includes the estimated future undiscounted cash flows for finance and operating leases as of December 31, 2021 (in thousands):
For the year ending December 31, Finance leasesOperating leasesTotal
2022$2,139 $77,382 $79,521 
20232,161 60,257 62,418 
20241,857 52,398 54,255 
20251,702 51,291 52,993 
20261,235 46,696 47,931 
Thereafter2,657 236,780 239,437 
Total lease payments11,751 524,804 536,555 
Less amount representing interest(2,520)(136,070)(138,590)
Present value of lease liabilities$9,231 $388,734 $397,965 
    Additionally, we have $15.6 million and $0.4 million in future undiscounted cash flows for operating leases and finance leases that have not yet commenced, respectively. These leases are expected to commence when the lessor has made the equipment or location available to us to operate or begin construction, respectively.
Sale-Leaseback Transaction
On February 11, 2021, PHL and Par Hawaii Property Company, LLC (collectively, the “Sellers”), both our wholly owned subsidiaries, entered into a Purchase Agreement and Escrow Instructions with MDC Coast HI 1, LLC, a subsidiary of Realty Income Corporation (the “Buyer”), and Fidelity National Title Insurance Company, pursuant to which the Sellers and Buyer agreed to consummate a sale-leaseback transaction (the “Sale-Leaseback Transactions”). Under the terms of the Purchase Agreement, the Sellers agreed to sell to the Buyer a total of twenty-two (22) retail convenience store/fuel station properties located in Hawaii (the “Sale-Leaseback Properties”) for an aggregate cash purchase price of $112.8 million, net of transaction fees.
On February 23, 2021, the Sellers and Buyer closed the Sale-Leaseback Transactions with respect to twenty-one (21) Sale-Leaseback Properties for an aggregate cash purchase price of approximately $107.0 million, net of transaction fees. On March 12, 2021, the Sellers and Buyer closed the sale of one additional property for an aggregate cash purchase price of approximately $5.8 million, net of transaction fees. We recognized a gain of $63.9 million as a result of these transactions, which is included in Loss (gain) on sale of assets, net on our consolidated statements of operations for the year ended December 31, 2021.
Upon the closings of the sales of the Sale-Leaseback Properties, PHL entered into a Master Land and Building Lease Agreement (the “Lease Agreement”) with the Buyer, pursuant to which, among other things, PHL leased the Sale-Leaseback Properties from the Buyer, on a commercial triple-net basis, for 15 years unless earlier terminated. The initial lease term may be extended for up to four five-year renewal terms in accordance with the terms of the Lease Agreement. Under the terms of the
Lease Agreement, PHL is responsible for monthly rent and all expenses related to the leased facilities, including, but not limited to, insurance premiums, taxes, and other expenses, such as utilities. As a result of the Sale-Leaseback Transactions, we recorded operating ROU assets and lease liabilities of $81.3 million. Certain of the Sale-Leaseback Properties were treated as failed sale-leaseback transactions based on the terms of the lease. As such, we retained the book value of the assets and recognized a finance liability of $12.4 million included in Other accrued liabilities and Other liabilities on our consolidated balance sheet.
In connection with PHL’s entry into the Lease Agreement, Par Petroleum, LLC, our wholly owned subsidiary, entered into a guaranty agreement in favor of the Buyer, pursuant to which, among other things, Par Petroleum, LLC guaranteed the payment when due of the monthly rent, and all other additional rent, interest, and charges payable by PHL to the Buyer under the Lease Agreement, and the performance by PHL of all the material terms, conditions, covenants, and agreements of the Lease Agreement.
Leases LeasesWe have cancellable and non-cancellable finance and operating lease liabilities 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 and 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 ROU assets and liabilities as of December 31, 2021 and 2020 and their placement within our consolidated balance sheets:
Lease typeBalance Sheet LocationDecember 31, 2021December 31, 2020
Assets
FinanceProperty, plant, and equipment$20,556 $14,998 
FinanceAccumulated amortization(8,397)(6,486)
FinanceProperty, plant, and equipment, net$12,159 $8,512 
OperatingOperating lease right-of-use assets383,824 357,166 
Total right-of-use assets$395,983 $365,678 
Liabilities
Current
FinanceOther accrued liabilities$1,540 $1,491 
OperatingOperating lease liabilities53,640 56,965 
Long-term
FinanceFinance lease liabilities7,691 7,925 
OperatingOperating lease liabilities335,094 304,355 
Total lease liabilities$397,965 $370,736 
Weighted-average remaining lease term (in years)
Finance6.296.97
Operating11.2810.52
Weighted-average discount rate
Finance7.46 %7.93 %
Operating6.70 %7.59 %
    The following table summarizes the lease costs recognized in our consolidated statements of operations (in thousands):
Year Ended December 31,
Lease cost type202120202019
Finance lease cost
Amortization of finance lease ROU assets$1,913 $2,007 $1,896 
Interest on lease liabilities655 654 521 
Operating lease cost91,882 106,256 100,384 
Variable lease cost6,716 9,802 11,663 
Short-term lease cost1,013 1,926 1,874 
Net lease cost$102,179 $120,645 $116,338 
    The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):
Year Ended December 31,
Lease type202120202019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases$1,914 $1,932 $2,167 
Operating cash flows from finance leases658 656 507 
Operating cash flows from operating leases89,677 103,270 99,713 
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities1,936 3,476 963 
ROU assets obtained in exchange for new operating lease liabilities97,011 22,529 79,382 
ROU assets terminated in exchange for release from finance lease liabilities— — — 
ROU assets terminated in exchange for release from operating lease liabilities6,847 7,738 193 
    The table below includes the estimated future undiscounted cash flows for finance and operating leases as of December 31, 2021 (in thousands):
For the year ending December 31, Finance leasesOperating leasesTotal
2022$2,139 $77,382 $79,521 
20232,161 60,257 62,418 
20241,857 52,398 54,255 
20251,702 51,291 52,993 
20261,235 46,696 47,931 
Thereafter2,657 236,780 239,437 
Total lease payments11,751 524,804 536,555 
Less amount representing interest(2,520)(136,070)(138,590)
Present value of lease liabilities$9,231 $388,734 $397,965 
    Additionally, we have $15.6 million and $0.4 million in future undiscounted cash flows for operating leases and finance leases that have not yet commenced, respectively. These leases are expected to commence when the lessor has made the equipment or location available to us to operate or begin construction, respectively.
Sale-Leaseback Transaction
On February 11, 2021, PHL and Par Hawaii Property Company, LLC (collectively, the “Sellers”), both our wholly owned subsidiaries, entered into a Purchase Agreement and Escrow Instructions with MDC Coast HI 1, LLC, a subsidiary of Realty Income Corporation (the “Buyer”), and Fidelity National Title Insurance Company, pursuant to which the Sellers and Buyer agreed to consummate a sale-leaseback transaction (the “Sale-Leaseback Transactions”). Under the terms of the Purchase Agreement, the Sellers agreed to sell to the Buyer a total of twenty-two (22) retail convenience store/fuel station properties located in Hawaii (the “Sale-Leaseback Properties”) for an aggregate cash purchase price of $112.8 million, net of transaction fees.
On February 23, 2021, the Sellers and Buyer closed the Sale-Leaseback Transactions with respect to twenty-one (21) Sale-Leaseback Properties for an aggregate cash purchase price of approximately $107.0 million, net of transaction fees. On March 12, 2021, the Sellers and Buyer closed the sale of one additional property for an aggregate cash purchase price of approximately $5.8 million, net of transaction fees. We recognized a gain of $63.9 million as a result of these transactions, which is included in Loss (gain) on sale of assets, net on our consolidated statements of operations for the year ended December 31, 2021.
Upon the closings of the sales of the Sale-Leaseback Properties, PHL entered into a Master Land and Building Lease Agreement (the “Lease Agreement”) with the Buyer, pursuant to which, among other things, PHL leased the Sale-Leaseback Properties from the Buyer, on a commercial triple-net basis, for 15 years unless earlier terminated. The initial lease term may be extended for up to four five-year renewal terms in accordance with the terms of the Lease Agreement. Under the terms of the
Lease Agreement, PHL is responsible for monthly rent and all expenses related to the leased facilities, including, but not limited to, insurance premiums, taxes, and other expenses, such as utilities. As a result of the Sale-Leaseback Transactions, we recorded operating ROU assets and lease liabilities of $81.3 million. Certain of the Sale-Leaseback Properties were treated as failed sale-leaseback transactions based on the terms of the lease. As such, we retained the book value of the assets and recognized a finance liability of $12.4 million included in Other accrued liabilities and Other liabilities on our consolidated balance sheet.
In connection with PHL’s entry into the Lease Agreement, Par Petroleum, LLC, our wholly owned subsidiary, entered into a guaranty agreement in favor of the Buyer, pursuant to which, among other things, Par Petroleum, LLC guaranteed the payment when due of the monthly rent, and all other additional rent, interest, and charges payable by PHL to the Buyer under the Lease Agreement, and the performance by PHL of all the material terms, conditions, covenants, and agreements of the Lease Agreement.