UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, ~~2019~~2020



¨☐	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)~~ (281) 899-4800

(Registrant’s telephone number, including area code)

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

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

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. Yesý☒ 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). Yesý☒ 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~~

~~51,008,846~~53,965,211 shares of Common Stock, $0.01 par value, were outstanding as of August ~~2, 2019.~~4, 2020.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

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)


	June 30, 2019				December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	106,190			$	75,076		$	142,869		$	126,015
Restricted cash	2,447				743			2,413			2,413
Total cash, cash equivalents, and restricted cash	108,637				75,819			145,282			128,428
Trade accounts receivable	254,684				160,338
Trade accounts receivable, net of allowances of $1.1 million and $1.2 million at June 30, 2020 and December 31, 2019, respectively								114,499			228,718
Inventories	573,879				322,065			427,679			615,872
Prepaid and other current assets	13,833				28,370			32,305			59,156
Total current assets	951,033				586,592			719,765			1,032,174
Property and equipment
Property, plant, and equipment
Property, plant, and equipment	1,106,419				649,768			1,176,672			1,146,983
Less accumulated depreciation, depletion, and amortization	(146,251		)		(111,507		)	(224,684		)	(185,040		)
Property and equipment, net	960,168				538,261
Property, plant, and equipment, net								951,988			961,943
Long-term assets
Operating lease assets	389,047				—
Operating lease right-of-use assets								378,323			420,073
Investment in Laramie Energy, LLC	137,448				136,656			—			46,905
Intangible assets, net	22,617				23,947			20,221			21,549
Goodwill	194,705				153,397			127,997			195,919
Other long-term assets	17,392				21,881			26,504			21,997
Total assets	$	2,672,410			$	1,460,734		$	2,224,798		$	2,700,560
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	12,295			$	33		$	58,490		$	12,297
Obligations under inventory financing agreements	636,489				373,882			433,298			656,162
Accounts payable	146,264				54,787			111,309			162,402
Deferred revenue	8,079				6,681			3,012			7,905
Accrued taxes	32,211				17,256			24,425			30,813
Operating lease liabilities	59,707				—			61,013			79,999
Other accrued liabilities	79,148				54,562			115,023			84,744
Total current liabilities	974,193				507,201			806,570			1,034,322
Long-term liabilities
Long-term debt, net of current maturities	631,801				392,607			653,956			599,634
Common stock warrants	7,246				5,007			—			8,206
Finance lease liabilities	6,501				6,123			7,143			6,227
Operating lease liabilities	332,465				—			321,393			340,909
Other liabilities	60,641				37,467			43,260			63,020
Total liabilities	2,012,847				948,405			1,832,322			2,052,318
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 14)
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 June 30, 2019 and December 31, 2018, 51,024,186 shares and 46,983,924 shares issued at June 30, 2019 and December 31, 2018, respectively	510				470
Common stock, $0.01 par value; 500,000,000 shares authorized at June 30, 2020 and December 31, 2019, 53,942,034 shares and 53,254,151 shares issued at June 30, 2020 and December 31, 2019, respectively								539			533
Additional paid-in capital	675,870			��	617,937			722,194			715,069
Accumulated deficit	(19,490		)		(108,751		)	(330,839		)	(67,942		)
Accumulated other comprehensive income	2,673				2,673			582			582
Total stockholders’ equity	659,563				512,329			392,476			648,242
Total liabilities and stockholders’ equity	$	2,672,410			$	1,460,734		$	2,224,798		$	2,700,560

See accompanying notes to the condensed consolidated financial statements.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues	$	1,409,409		$	856,396		$	2,600,744		$	1,621,835		$	515,301		$	1,409,409		$	1,719,384		$	2,600,744

Operating expenses
Cost of revenues (excluding depreciation)	1,251,842			747,924			2,312,574			1,409,823			441,278			1,251,842			1,651,489			2,312,574
Operating expense (excluding depreciation)	74,830			53,060			148,504			104,070			67,027			74,830			140,418			148,504
Depreciation, depletion, and amortization	21,919			12,775			42,876			25,812			22,128			21,919			43,411			42,876
Impairment expense													—			—			67,922			—
General and administrative expense (excluding depreciation)	11,379			12,905			23,044			24,110			10,221			11,379			22,005			23,044
Acquisition and integration costs	818			749			3,702			1,381			90			818			755			3,702
Total operating expenses	1,360,788			827,413			2,530,700			1,565,196			540,744			1,360,788			1,926,000			2,530,700

Operating income	48,621			28,983			70,044			56,639
Operating income (loss)													(25,443		)	48,621			(206,616		)	70,044

Other income (expense)
Interest expense and financing costs, net	(20,278		)	(10,544		)	(38,988		)	(18,921		)	(16,414		)	(20,278		)	(35,088		)	(38,988		)
Debt extinguishment and commitment costs	(3,690		)	—			(9,186		)	—			—			(3,690		)	—			(9,186		)
Other income, net	2,177			657			2,264			776			455			2,177			479			2,264
Change in value of common stock warrants	(957		)	(74		)	(2,239		)	671			—			(957		)	4,270			(2,239		)
Change in value of contingent consideration	—			—			—			(10,500		)
Equity earnings (losses) from Laramie Energy, LLC	491			(2,352		)	792			3,224			(1,874		)	491			(46,905		)	792
Total other income (expense), net	(22,257		)	(12,313		)	(47,357		)	(24,750		)	(17,833		)	(22,257		)	(77,244		)	(47,357		)

Income before income taxes	26,364			16,670			22,687			31,889
Income tax benefit (expense)	1,805			(492		)	66,574			(526		)
Net income	$	28,169		$	16,178		$	89,261		$	31,363
Income (loss) before income taxes													(43,276		)	26,364			(283,860		)	22,687
Income tax benefit													2,716			1,805			20,963			66,574
Net income (loss)													$	(40,560	)	$	28,169		$	(262,897	)	$	89,261

Income per share
Income (loss) per share
Basic	$	0.56		$	0.35		$	1.78		$	0.68		$	(0.76	)	$	0.56		$	(4.94	)	$	1.78
Diluted	$	0.56		$	0.35		$	1.75		$	0.68		$	(0.76	)	$	0.56		$	(4.94	)	$	1.75
Weighted-average number of shares outstanding
Basic	49,960			45,684			49,529			45,659			53,265			49,960			53,246			49,529
Diluted	50,074			45,723			55,580			45,700			53,265			50,074			53,246			55,580

See accompanying notes to the condensed consolidated financial statements.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	89,261		$	31,363
Adjustments to reconcile net income to cash provided by operating activities:
Net Income (Loss)							$	(262,897	)	$	89,261
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation, depletion, and amortization	42,876			25,812			43,411			42,876
Impairment expense							67,922			—
Debt extinguishment and commitment costs	9,186			—			—			9,186
Non-cash interest expense	4,968			3,603			3,261			4,968
Non-cash lower of cost or net realizable value adjustment							24,015			9,667
Change in value of common stock warrants	2,239			(671		)	(4,270		)	2,239
Deferred taxes	(67,129		)	31			(21,088		)	(67,129		)
Stock-based compensation	3,198			3,103			3,537			3,198
Unrealized loss on derivative contracts	21,086			4,878			2,048			21,086
Equity earnings from Laramie Energy, LLC	(792		)	(3,224		)
Equity (earnings) losses from Laramie Energy, LLC							46,905			(792		)
Net changes in operating assets and liabilities:
Trade accounts receivable	(60,680		)	(10,604		)	114,219			(60,680		)
Prepaid and other assets	12,029			(72,043		)	28,241			12,029
Inventories	(154,878		)	15,894			164,178			(164,545		)
Deferred turnaround expenditures	(1,894		)	—			(6,399		)	(1,894		)
Obligations under inventory financing agreements	74,287			22,311			(150,358		)	74,287
Accounts payable, other accrued liabilities, and operating lease assets and liabilities	50,480			10,874
Accounts payable, other accrued liabilities, and operating lease ROU assets and liabilities							(18,958		)	50,480
Net cash provided by operating activities	24,237			31,327			33,767			24,237
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired	(274,291		)	(74,331		)	—			(274,291		)
Proceeds from purchase price settlement related to asset acquisition	3,226			—			—			3,226
Capital expenditures	(41,404		)	(17,657		)	(30,165		)	(41,404		)
Other investing activities	188			797			5			188
Net cash used in investing activities	(312,281		)	(91,191		)	(30,160		)	(312,281		)
Cash flows from financing activities:
Proceeds from borrowings	450,505			106,500			180,950			450,505
Repayments of borrowings	(180,541		)	(111,844		)	(88,208		)	(180,541		)
Net borrowings on deferred payment arrangements and receivable advances	71,447			30,213
Net borrowings (repayments) on deferred payment arrangements and receivable advances							(72,506		)	71,447
Payment of deferred loan costs	(13,413		)	(72		)	(6,055		)	(13,413		)
Payments for debt extinguishment and commitment costs	(7,142		)	—			—			(7,142		)
Other financing activities, net	6			(564		)	(934		)	6
Net cash provided by financing activities	320,862			24,233			13,247			320,862
Net increase (decrease) in cash, cash equivalents, and restricted cash	32,818			(35,631		)
Net increase in cash, cash equivalents, and restricted cash							16,854			32,818
Cash, cash equivalents, and restricted cash at beginning of period	75,819			119,077			128,428			75,819
Cash, cash equivalents, and restricted cash at end of period	$	108,637		$	83,446		$	145,282		$	108,637
Supplemental cash flow information:
Net cash received (paid) for:
Interest	$	(26,740	)	$	(12,012	)	$	(28,950	)	$	(26,740	)
Taxes	(3,966		)	—			240			(3,966		)
Non-cash investing and financing activities:
Accrued capital expenditures	$	8,085		$	2,145		$	5,060		$	8,085
Value of warrants reclassified to equity							3,936			—
ROU assets obtained in exchange for new finance lease liabilities							1,915			192
ROU assets obtained in exchange for new operating lease liabilities							4,557			14,308
ROU assets terminated in exchange for release from operating lease liabilities							7,738			193
Common stock issued for business combination	36,980			—			—			36,980
Common stock issued to repurchase convertible notes	30,055			—			—			30,055

See accompanying notes to the condensed consolidated financial statements.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands)


											Accumulated															Accumulated
					Additional						Other									Additional						Other
	Common Stock				Paid-In			Accumulated			Comprehensive		Total			Common Stock				Paid-In			Accumulated			Comprehensive		Total
	Shares		Amount		Capital			Deficit			Income		Equity			Shares		Amount		Capital			Deficit			Income		Equity
Balance, December 31, 2017	45,776		$	458	$	593,295		$	(148,178	)	$	2,144	$	447,719
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	272		1		1,437			—			—		1,438			246		3		1,532			—			—		1,535
Purchase of common stock for retirement	(29	)	—		(543		)	—			—		(543		)	(44	)	—		(734		)	—			—		(734		)
Other comprehensive income (loss)	—		—		—			—			—		—
Net income	—		—		—			15,185			—		15,185			—		—		—			61,092			—		61,092
Balance, March 31, 2018	46,019		459		594,189			(132,993		)	2,144		463,799
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	(8	)	1		1,663			—			—		1,664			(31	)	—		1,550			—			—		1,550
Purchase of common stock for retirement	(3	)	—		(21		)	—			—		(21		)	(2	)	—		(20		)	—			—		(20		)
Other comprehensive income (loss)	—		—		—			—			—		—
Exercise of stock options																21		—		119			—			—		119
Net income	—		—		—			16,178			—		16,178			—		—		—			28,169			—		28,169
Balance, June 30, 2018	46,008		$	460	$	595,831		$	(116,815	)	$	2,144	$	481,620
Balance, June 30, 2019																51,024		$	510	$	675,870		$	(19,490	)	$	2,673	$	659,563



												Accumulated
						Additional						Other
	Common Stock					Paid-In			Accumulated			Comprehensive		Total
	Shares		Amount			Capital			Deficit			Income		Equity
Balance, December 31, 2019	53,254		$	533		$	715,069		$	(67,942	)	$	582	$	648,242
Exercise of common stock warrants	351		3			3,933			—			—		3,936
Stock-based compensation	296		3			1,612			—			—		1,615
Purchase of common stock for retirement	(64	)	(1		)	(1,067		)	—			—		(1,068		)
Net loss	—		—			—			(222,337		)	—		(222,337		)
Balance, March 31, 2020	53,837		538			719,547			(290,279		)	582		430,388
Issuance of common stock for employee stock purchase plan	95		1			854			—			—		855
Stock-based compensation	10		—			1,794			—			—		1,794
Purchase of common stock for retirement	—		—			(1		)	—			—		(1		)
Net loss	—		—			—			(40,560		)	—		(40,560		)
Balance, June 30, 2020	53,942		$	539		$	722,194		$	(330,839	)	$	582	$	392,476

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


(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.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

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~~3 primary business segments:

1) Refining - We own and operate ~~three~~4 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.~~Washington.

2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise ~~throughout the islands of Oahu, Maui, Hawaii,~~through Hele, “76”, “Cenex®,” and ~~Kauai. Our Hawaii retail network includes Hele and “76”~~“Zip Trip®” branded ~~retail~~ sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations. Through June 30, 2019, we completed the rebranding of 25 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~~Rockies that primarily transports and ~~operate terminals, pipelines, a single-point mooring (“SPM”),~~stores our crude oil and ~~trucking operations to distribute~~ refined products ~~throughout the islands of Oahu, Maui, Hawaii, Molokai,~~for our refineries and ~~Kauai. We own and operate a crude oil pipeline gathering system, a~~transports 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.to our retail sites or third-party purchasers.

As of June 30, ~~2019,~~2020, 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~~2019 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.~~2019.

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.

The worldwide spread and severity of a new coronavirus, referred to as COVID-19, and certain developments in the global crude oil markets have impacted our businesses, people, and operations. We are actively responding to these ongoing matters and many uncertainties remain. Due to the rapid development and fluidity of the situation, the full magnitude of the COVID-19 impact on our estimates and assumptions, financial condition, future results of operations, and future cash flows and liquidity is uncertain and has been and may continue to be material.

Allowance for Credit Losses

We are exposed to credit losses primarily through our sales of refined products. Credit limits and/or prepayment requirements are set based on such factors as the customer’s financial results, credit rating, payment history, and industry and are reviewed annually for customers with material credit limits. Credit allowances are reviewed at least quarterly based on changes in the customer’s creditworthiness due to economic conditions, liquidity, and business strategy as publicly reported and through

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

~~Restricted Cash~~discussions between the customer and the Company. We establish provisions for losses on trade receivables based on the estimated credit loss we expect to incur over the life of the receivable.

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 $10.6 million asAs of June 30, ~~2019.~~

~~All~~2020 and December 31, 2019, trade receivables were $114.5 million and $228.7 million, net of ~~the crude oil utilized at the Hawaii refinery is financed by J. Aron & Company (“J.Aron”) under the Supply~~allowances of $1.1 million 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~~$1.2 million, respectively. We did not have a material change in our ~~storage tanks governed by a storage agreement. Legal title to~~allowances during 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~~three and six months ended June 30, 2020 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.2019.

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 June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of revenues	$	5,867	$	3,950	$	10,495	$	7,816
Operating expense	14,115		13,635		28,566		26,582
General and administrative expense	835		762		1,636		1,544

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Cost of revenues $ 3,950
$ 1,639
$ 7,816
$ 3,246
Operating expense 13,635
6,501
26,582
13,405
General and administrative expense 762
901
1,544
2,048

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.~~2019, except for the following:

In March 2020, the Financial Accounting ~~Principles Adopted~~

~~On January 1, 2019, we adopted~~Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2016-02,~~ ~~Leases~~2020-04, Reference Rate Reform (Topic ~~842)~~848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This ASU provides for optional expedients and allowable exceptions to GAAP to ease the potential burden in recognizing the effects of reference rate reform, especially in regards to the cessation of the London Interbank Offered Rate (“LIBOR”). ASU 2020-04 is applicable to contract modifications that meet certain requirements and are entered into between March 12, 2020 and December 31, 2022. We have several contracts that reference LIBOR, some of which terminate after LIBOR is anticipated to cease being reported in 2021. We are currently reviewing the effect that the election of ASU 2020-04 would have on our financial condition, results of operations, and cash flows.

Accounting Principles Adopted

On January 1, 2020, we adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended by other ASUs issued since ~~February 2019~~June 2016 (“ASU ~~2016-02” or “ASC 842”~~2016-13”), using the modified retrospective transition method.

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

Under this optional transition method, information presented prior to January 1, ~~2019~~2020 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~~2016-13 requires ~~lessees~~expected credit losses on financial instruments to ~~recognize a right-of-use asset (“ROU asset”) and lease liability on~~be recorded over 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~~estimated life of the ~~adoption~~financial instrument. Prior to this ASU, the guidance required recording of ~~ASC 842, we recorded ROU~~credit losses when those losses were incurred. ASU 2016-13 is applicable to credit losses and allowances on loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and certain other financial 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 leasebut excludes derivative 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”)~~FASB ASC Topic ~~740, “Income Taxes.~~815 “Derivatives and Hedging.” ~~The~~Our adoption of ASU ~~2018-02~~2016-13 did not have a material impact on our financial condition, results of operations, cash flows, or related disclosures.

On January 1, 2020, we adopted ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminated Step 2 from the current goodwill impairment test. Under ASU 2017-04, an entity is no longer required to determine a goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

combination. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This ASU changed the policy under which we perform our goodwill impairment assessments by eliminating Step 2 of the test.

On January 1, 2020, we adopted ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This ASU amended, added, and removed certain disclosure requirements under FASB ASC Topic 820 “Fair Value Measurement.” The adoption of ASU 2018-13 did not have a material impact on our financial condition, results of operations, cash flows, or related disclosures.

On January 1, 2020, we adopted ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”), using the prospective method and information that was presented prior to January 1, 2020 has not been restated and continues to be reported under the accounting standards in effect for that period. This ASU required entities to account for implementation costs incurred in a cloud computing agreement that is a service contract under the guidance in FASB ASC Topic 350, “Goodwill and Intangible Assets,” which results in a capitalized and amortizable intangible asset. The adoption of ASU 2018-15 did not have a material impact on our financial condition, results of operations, or cash flows.

Note 3—Investment in Laramie Energy, LLC

As of June 30, ~~2019,~~2020, 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~~$202.5 million that is secured by a lien on its natural gas and crude oil properties and related assets. As of June 30, ~~2019,~~2020, the balance outstanding on the revolving credit facility was approximately ~~$201.0~~$197.5 million. We are guarantors of Laramie Energy’s credit facility, with recourse limited to the pledge of our equity interest ofin 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. On April 23, 2020, Laramie Energy extended the credit facility from its original maturity date of December 15, 2020 to December 15, 2021.

~~During the second quarter of 2019,~~At March 31, 2020, we conducted an impairment evaluation of our investment in Laramie Energy ~~as a result~~because of (i) the global economic impact of the ~~significant decline~~COVID-19 pandemic, (ii) an increase in the weighted-average cost of capital for energy companies, and (iii) continuing declines in natural gas prices ~~during~~through the ~~latter part of the second~~first quarter of ~~2019 and~~2020. Based on our evaluation, we determined that the estimated fair value of our investment in Laramie Energy was ~~in the range of $100 million to $123~~$1.9 million, compared to a carrying value of ~~$137.4 million.~~$47.2 million at March 31, 2020. The ~~range~~fair value estimate was determined using ~~primarily~~ a discounted cash flow ~~approach using pricing forecasts~~analysis based on natural gas forward strip prices as of ~~quarter end through 2023~~March 31, 2020 for the years 2020 and 2021 of the forecast, and a ~~5 year historical average~~blend of forward strip pricing and third-party analyst pricing for ~~subsequent years. As part of our evaluation, we considered the duration of the decline in fair value, the likelihood that natural gas prices will recover~~years 2022 through 2028. Other significant inputs used in the ~~near term,~~discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the ~~severity~~applicable discount rate. As a result, we recorded an other-than temporary impairment charge of ~~the current decline~~$45.3 million in ~~natural gas prices and historical pricing trends. We intend and are able to hold our investment in~~Equity earnings (losses) from Laramie Energy, ~~through the recovery of natural gas prices. Based~~LLC on ~~these factors, we concluded that the excess of the carrying value of~~ our ~~investment in Laramie Energy over its fair value was not other than temporary and that no impairment loss should be recorded on our~~condensed consolidated statement of operations for the three months ended ~~June 30, 2019. However, sustained downward pressure on natural gas prices could potentially be an indicator of a future other-than-temporary impairment of~~March 31, 2020.

The change in our equity investment in Laramie ~~Energy. We will continue to closely monitor these market factors and their effect on the value of our investment in Laramie Energy.~~Energy is as follows (in thousands):



	Six Months Ended June 30, 2020
Beginning balance	$	46,905
Equity earnings from Laramie Energy (1)	(1,611		)
Impairment of our investment in Laramie Energy	(45,294		)
Ending balance	$	—


(1)	As of June 30, 2020, we have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to 0.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

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

Six Months Ended June 30, 2019
Beginning balance $ 136,656
Equity losses from Laramie Energy (2,553 )
Accretion of basis difference 3,345
Ending balance $ 137,448

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


	June 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Current assets	$	21,028	$	28,569	$	16,964	$	23,367
Non-current assets	769,913		788,515		375,679		393,575
Current liabilities	33,986		41,681		20,706		229,687
Non-current liabilities	280,047		293,084		283,728		85,287

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Natural gas and oil revenues $ 43,270
$ 46,750
$ 111,194
$ 93,431
Income (loss) from operations (8,205 ) (554 ) 5,538
5,490
Net loss (2,570 ) (8,846 ) (5,553 ) (1,556 )



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Natural gas and oil revenues	$	23,545		$	43,270		$	58,258		$	111,194
Income from operations	(8,699		)	(8,205		)	(7,330		)	5,538
Net income (loss)	(14,349		)	(2,570		)	(13,775		)	(5,553		)

Laramie Energy’s net loss for the three and six months ended June 30, 2020 includes $10.0 million and $19.3 million of depreciation, depletion, and amortization (“DD&A”) and $4.1 million and $1.7 million of unrealized losses on derivative instruments, respectively. Laramie Energy’s net loss for the three and six months ended June 30, 2019 includes $21.0 million and $42.4 million of ~~depreciation, depletion, and amortization (“~~DD~~&A”)~~&A and $8.4 million and $11.1 million of unrealized gains on derivative instruments, respectively. Laramie Energy’s net loss for the three and six months ended June 30, 2018 includes $17.1 million and $32.0 million of DD&A and $8.1 million and $3.5 million of unrealized losses on derivative instruments, respectively.

At June 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 $81.9 million and $85.2 million, respectively. This difference arose primarily due to lack of control and marketability discounts and an other-than-temporary impairment of our equity investment in Laramie Energy. We attributed this difference to natural gas and crude oil properties and are amortizing the difference over 15 years based on the estimated timing of production of proved reserves.

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~~included 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 ~~$327.4~~$326.5 million, including acquired working capital, consisting of cash consideration of ~~$290.4~~$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—10—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 six months ended June 30, 2019.

In connection with the consummation of the Washington Acquisition, we assumed the Washington Refinery Intermediation Agreement with ~~MLC~~Merrill Lynch Commodities, Inc. (“MLC”) that provides a structured financing arrangement based on U.S. Oil’s crude oil and refined products inventories

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

and associated accounts receivable. Please read Note 8—9—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.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

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


Cash	$	16,146		$	16,146
Accounts receivable	36,384			34,954
Inventories	96,936			98,367
Prepaid and other assets	5,320			5,320
Property, plant, and equipment	412,766			412,766
Operating lease assets	62,337
Operating lease right-of-use assets				62,337
Goodwill (1)	41,308			42,522
Total assets(2)	671,197			672,412
Obligations under inventory financing agreements	(116,873		)	(116,873		)
Accounts payable	(55,444		)	(55,357		)
Current operating lease obligations	(21,571		)	(21,571		)
Other current liabilities	(18,411		)	(18,411		)
Long-term operating lease obligations	(40,766		)	(40,766		)
Deferred tax liability	(89,909		)	(92,103		)
Other non-current liabilities	(804		)	(804		)
Total liabilities	(343,778		)	(345,885		)
Total	$	327,419		$	326,527


(1)	We allocated $24.7 million and $17.8 million of goodwill to our refining and logistics segments, respectively.


(2)	We allocated $403.9 million and $268.5 million of total assets to our refining and logistics segments, respectively.

~~(1) We allocated $29.7 million and $11.6 million~~As of ~~total assets to our refining and logistics segments, respectively.~~

~~We have recorded a preliminary estimate of~~December 31, 2019, we finalized the ~~fair value of the assets acquired and liabilities assumed and expect to finalize the~~Washington Acquisition purchase price allocation during the remainder 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 three months ended June 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 $2.8 million. Goodwill decreased $5.2 million as a result of these adjusting entries.allocation. We incurred $2.2 million of acquisition costs related to the Washington Acquisition for the six months ended June 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 six months ended June 30, 2019, our results of operations included revenues of $309.8 million and $555.6 million and ~~profit~~income before ~~tax~~income taxes of $23.2 million and $20.1 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):

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~



	Six Months Ended June 30,
	2019
Revenues	$	2,628,652
Net income	10,035

Income per share
Basic	$	0.20
Diluted	$	0.20

~~Notes to Condensed Consolidated Financial Statements~~

~~For~~These pro forma results were based on estimates and assumptions that we believe are reasonable. They are not necessarily indicative of our consolidated results of operations in future periods or the ~~Interim Periods Ended~~results that actually would have been realized had we been a combined company during the periods presented. The pro forma results for the six months ended June 30, 2019 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 ~~2018~~

Six Months Ended June 30,
2019 2018
Revenues $ 2,628,652
$ 2,269,578
Net income 77,704
15,280

Income per share
Basic $ 1.55
$ 0.31
Diluted $ 1.54
$ 0.31

~~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 receivableother debt extinguishment costs 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 completionissuance 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,~~Term Loan B and Par ~~West, the recently-acquired assets.~~

~~Northwest Retail Acquisition~~

~~On January 9, 2018, we entered into an Asset Purchase Agreement with~~ ~~CHS, Inc.~~Pacific Term Loan, and 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 recognizedadjust U.S. Oil’s historical depreciation expense as a result of the ~~Northwest Retail Acquisition is expected~~fair value adjustment to ~~be deductible for income tax reporting purposes.~~

~~A summary~~Property, plant, and equipment, net. Additionally, the pro forma results include the elimination of the ~~fair value of~~$67.7 million tax benefit that was recognized by 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.~~Company

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

~~As of December 31, 2018, we finalized~~in connection with the ~~Northwest Retail Acquisition purchase price allocation. We incurred $0.6~~Washington Acquisition. Including this tax benefit, the pro forma net income would have been $77.7 million ~~of acquisition costs related to~~and the ~~Northwest Retail Acquisition for the six months ended June 30, 2018. These costs are included in Acquisition~~pro forma earnings per share and ~~integration costs on our condensed consolidated statement of operations. No such costs were incurred during the three months ended June 30, 2018.~~diluted earnings per share would have been $1.55 and $1.54 per share, respectively.

Note 5—Revenue Recognition

As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, receivables from contracts with customers were ~~$236.5~~$102.9 million and ~~$148.4~~$214.5 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 ~~$8.1~~$3.0 million and ~~$6.7~~$7.9 million as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

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



Three Months Ended June 30, 2020	Refining		Logistics		Retail
Product or service:
Gasoline	$	135,370	$	—	$	47,157
Distillates (1)	189,760		—		8,642
Other refined products (2)	129,086		—		—
Merchandise	—		—		23,382
Transportation and terminalling services	—		42,132		—
Other revenue	1,085		—		440
Total segment revenues (3)	$	455,301	$	42,132	$	79,621

Three Months Ended June 30, 2019 Refining Logistics Retail
Product or service:
Gasoline $ 372,352
$ —
$ 86,248
Distillates (1) 646,907
—
10,547
Other refined products (2) 327,939
—
—
Merchandise —
—
23,469
Transportation and terminalling services —
50,146
—
Other revenue 359
—
485
Total segment revenues (3) $ 1,347,557
$ 50,146
$ 120,749



Three Months Ended June 30, 2019	Refining		Logistics		Retail
Product or service:
Gasoline	$	372,352	$	—	$	86,248
Distillates (1)	646,907		—		10,547
Other refined products (2)	327,939		—		—
Merchandise	—		—		23,469
Transportation and terminalling services	—		50,146		—
Other revenue	359		—		485
Total segment revenues (3)	$	1,347,557	$	50,146	$	120,749

Three Months Ended June 30, 2018 Refining Logistics Retail
Product or service:
Gasoline $ 255,870
$ —
$ 84,754
Distillates (1) 453,968
—
11,125
Other refined products (2) 90,570
—
—
Merchandise —
—
23,812
Transportation and terminalling services —
31,289
—
Total segment revenues (3) $ 800,408
$ 31,289
$ 119,691


Six Months Ended June 30, 2019	Refining		Logistics		Retail
Six Months Ended June 30, 2020							Refining		Logistics		Retail
Product or service:
Gasoline	$	660,552	$	—	$	156,011	$	421,968	$	—	$	120,004
Distillates (1)	1,202,799		—		19,556		773,468		—		17,092
Other refined products (2)	629,385		—		—		393,253		—		—
Merchandise	—		—		44,078		—		—		44,411
Transportation and terminalling services	—		95,355		—		—		101,282		—
Other revenue	885		—		935		14,738		—		927
Total segment revenues (3)	$	2,493,621	$	95,355	$	220,580	$	1,603,427	$	101,282	$	182,434

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019


Six Months Ended June 30, 2018	Refining		Logistics		Retail
Six Months Ended June 30, 2019							Refining		Logistics		Retail
Product or service:
Gasoline	$	495,131	$	—	$	142,956	$	660,552	$	—	$	156,011
Distillates (1)	852,497		—		18,121		1,202,799		—		19,556
Other refined products (2)	193,043		—		—		629,385		—		—
Merchandise	—		—		37,206		—		—		44,078
Transportation and terminalling services	—		64,356		—		—		95,355		—
Other revenue							885		—		935
Total segment revenues (3)	$	1,540,671	$	64,356	$	198,283	$	2,493,621	$	95,355	$	220,580


(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—~~18—Segment Information for the reconciliation of segment revenues to total consolidated revenues.

Note 6—Inventories

Inventories at June 30, ~~2019~~2020 consisted of the following (in thousands):


	Titled Inventory		Supply and Offtake Agreements (1)		Total		Titled Inventory		Supply and Offtake Agreements (1)		Total
Crude oil and feedstocks	$	71,058	$	173,232	$	244,290	$	94,718	$	98,118	$	192,836
Refined products and blendstock	121,955		158,707		280,662		85,881		85,454		171,335
Warehouse stock and other (2)	48,927		—		48,927		63,508		—		63,508
Total	$	241,940	$	331,939	$	573,879	$	244,107	$	183,572	$	427,679

Inventories at December 31, ~~2018~~2019 consisted of the following (in thousands):



	Titled Inventory		Supply and Offtake Agreements(1)		Total
Crude oil and feedstocks	$	117,717	$	148,303	$	266,020
Refined products and blendstock	127,966		158,737		286,703
Warehouse stock and other (2)	63,149		—		63,149
Total	$	308,832	$	307,040	$	615,872

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—9—Inventory Financing Agreements for further information.


(2)	Includes ~~$4.8~~$17.8 million and ~~$5.0~~$19.1 million of RINs and environmental credits as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. RINs and environmental obligations of $68.9 million and $22.8 million are included in Other accrued liabilities on our condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, ~~2019 and December 31, 2018,~~2020, there was a ~~$13.4 million and $3.8~~$24.0 million reserve for the lower of cost or net realizable value of ~~inventory, respectively.~~inventory. As of December 31, 2019, there was 0 reserve for the lower of cost or net realizable value of inventory. Our ~~LIFO inventory~~last-in, first-out (“LIFO”) inventories, net of the lower of cost or net realizable reserve, ~~was $10.6 million~~were equal to current cost as of June 30, ~~2019.~~2020. As of December 31, 2019, the excess of current replacement cost over the LIFO inventory carrying value at the Washington refinery was approximately $6.4 million.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

Note 7—Prepaid and Other Current Assets

Prepaid and other current assets at June 30, ~~2019~~2020 and December 31, ~~2018~~2019 consisted of the following (in thousands):



	June 30, 2020		December 31, 2019
Advances to suppliers	$	17,374	$	27,635
Collateral posted with broker for derivative instruments (1)	2,712		10,306
Prepaid insurance	4,580		13,536
Derivative assets	3,177		2,075
Other	4,462		5,604
Total	$	32,305	$	59,156

June 30, 2019 December 31, 2018
Collateral posted with broker for derivative instruments (1) $ 2,656
$ 2,759
Prepaid insurance 3,791
7,727
Deferred financing costs 335
—
Derivative assets 1,730
5,164
Other 5,321
12,720
Total $ 13,833
$ 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—~~11—Derivatives for further information.

Note 8—8—Goodwill

During the six months ended June 30, 2020, the change in the carrying amount of goodwill was as follows (in thousands):



Balance at December 31, 2019	$	195,919
Impairment expense	(67,922		)
Balance at June 30, 2020	$	127,997

At March 31, 2020, we performed a quantitative goodwill impairment test of all of our reporting units due to (i) the global economic impact of the COVID-19 pandemic and (ii) a steep decline in current and forecasted prices and demand for crude oil and refined products. As part of our quantitative impairment test, we compared the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. In assessing the fair value of the reporting units, we primarily utilized a market approach based on observable multiples for comparable companies within our industry. Our refining reporting units in Hawaii and Washington were fully impaired and the goodwill associated with our retail reporting unit in Washington and Idaho was partially impaired, resulting in a charge of $67.9 million in our condensed consolidated statement of operations for the six months ended June 30, 2020. The goodwill impairment expense was allocated to the Refining segment ($38.1 million) and to the Retail segment ($29.8 million).

Note 9—Inventory Financing Agreements

Supply and Offtake Agreements

On June 1, 2015, we entered into several agreements with J. Aron & Company LLC (“J. Aron”) to support the operations of our Par East 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 June 30, ~~2019,~~2020, 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~~by the Par West Hawaii ~~Refinery Expansion.~~refinery. 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"~~(“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.~~refineries. Additionally, we agreed to sell and J. Aron agreed to buy, at market prices, refined products produced at our Hawaii ~~refinery.~~refineries. 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~~then-owned by J. Aron and located at the leased storage facilities at then-current

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

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 onin 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 six months ended June 30, ~~2019,~~2020, we received approximately $0.2 million of inventory intermediation benefits and incurred approximately ~~$7.7~~$6.7 million ~~and $13.0 million in handling~~of inventory intermediation fees related to the Supply and Offtake Agreements, respectively, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations. For the three and six months ended June 30, ~~2018,~~2019, we incurred approximately ~~$6.0~~$10.2 million and ~~$10.8~~$15.6 million ~~in handling~~of inventory intermediation fees related to the Supply and Offtake Agreements, respectively. For the three and six months ended June 30, 2020, Interest expense and financing costs, net, on our condensed consolidated statements of operations includes approximately $0.8 million and $2.1 million of expenses related to the Supply and Offtake Agreements, respectively. For the three and six months ended June 30, 2019, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $1.4 million and $3.1 million of expenses related to the Supply and Offtake Agreements, respectively. For the three and six months ended June 30, 2018, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $1.3 million and $2.0 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

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

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 June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the capacity of the Deferred Payment Arrangement was ~~$142.0~~$75.6 million and ~~$77.4~~$155.5 million, respectively. As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had ~~$126.9~~$47.2 million and ~~$68.4~~$97.5 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 $2.2 million. In 2020, we fixed the market fee for the period from February 1, 2020 through April 1, 2021 for an additional ~~$2.2 million.~~$0.8 million to be settled in fifteen payments. The receivable from J. Aron was recorded as a reduction to our Obligations under inventory financing agreements ~~pursuant to our Master Netting Agreement.~~as allowed under the Supply and Offtake Agreements. As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the receivable was ~~$1.0~~$1.1 million and ~~$2.5~~$0.5 million, respectively.

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 the same, exclusively to MLC. ~~The~~On November 1, 2019, we and MLC amended the Washington Refinery Intermediation Agreement ~~expires on December~~and extended the term through June 30, 2021, with an option for us to early terminate as early as March 31, ~~2019.~~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 June 30, 2020 and December 31, 2019, our outstanding balance under the MLC receivable advances was equal to our borrowing base of ~~$62.5 million.~~$41.6 million and $63.8 million, respectively. Additionally, as of June 30,

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

2020 and December 31, 2019, we had approximately ~~$65.9~~$72.2 million and $127.2 million in letters of credit outstanding through MLC’s credit ~~support.~~support, respectively.

For the three and six months ended June 30, ~~2019,~~2020, we incurred approximately ~~$0.9~~$1.0 million and ~~$1.7~~$2.1 million ~~in handling~~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 six months ended June 30, 2019, we incurred approximately $0.9 million and $1.7 million of inventory intermediation fees related to the Washington Refinery Intermediation Agreement, respectively. For the three and six months ended June 30, 2020, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $0.7 million and $1.7 million of expenses related to the Washington Refinery Intermediation Agreement, respectively. For the three and six months ended June 30, 2019, Interest expense and financing costs, net on our condensed consolidated statements of operations includes approximately $1.5 million and $2.8 million of expenses ~~respectively,~~ related to the Washington Refinery Intermediation ~~Agreement.~~Agreement, respectively.

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—~~11—Derivatives for further information.

Note 9—10—Debt

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



	June 30, 2020			December 31, 2019
5.00% Convertible Senior Notes due 2021	$	48,665		$	48,665
7.75% Senior Secured Notes due 2025	300,000			300,000
ABL Credit Facility	—			—
Mid Pac Term Loan	1,416			1,433
Term Loan B	234,375			240,625
Retail Property Term Loan	43,265			44,014
PHL Term Loan	5,922			—
12.875% Senior Secured Notes due 2026	105,000			—
Principal amount of long-term debt	738,643			634,737
Less: unamortized discount and deferred financing costs	(26,197		)	(22,806		)
Total debt, net of unamortized discount and deferred financing costs	712,446			611,931
Less: current maturities	(58,490		)	(12,297		)
Long-term debt, net of current maturities	$	653,956		$	599,634

June 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 1,449
1,466
Term Loan B 246,875
—
Retail Property Term Loan 44,754
—
Principal amount of long-term debt 672,973
416,466
Less: unamortized discount and deferred financing costs (28,877 ) (23,826 )
Total debt, net of unamortized discount and deferred financing costs 644,096
392,640
Less: current maturities (12,295 ) (33 )
Long-term debt, net of current maturities $ 631,801
$ 392,607

~~Additionally, as~~As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had ~~approximately $0.1~~$10.7 million and ~~$13.5~~$0.2 million in letters of credit outstanding under the ABL Credit Facility, ~~respectively. As of June 30, 2019, we also had $3.7~~respectively, and $3.6 million in cash-collateralized letters of credit and surety bonds outstanding.

Under the ABL Credit Facility, the ~~indenture~~indentures governing the 7.75% Senior Secured Notes, and 12.875% 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 Notesbear 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 (“PHL,” formerly known as Par Hawaii, Inc., and includes the assets previously owned by the dissolved entities Mid

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

Pac Petroleum, LLC ~~(“Mid Pac”),~~and HIE Retail, ~~LLC,~~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

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

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 June 30, ~~2019,~~2020, the ABL Revolver had no0 outstanding balance and a borrowing base of approximately ~~$53.7 million and the~~ ~~ABL Credit Facility~~ ~~had $0.1 million in letters of credit outstanding.~~$43.3 million.

5.00% Convertible Senior Notes Due 2021

As of June 30, ~~2019,~~2020, the outstanding principal amount of the 5.00% Convertible Senior Notes was ~~$79.9~~$48.7 million, the unamortized discount and deferred financing cost was ~~$8.3~~$2.7 million, and the carrying amount of the liability component was ~~$71.6~~$46.0 million. During May, June, and ~~June~~December 2019, we entered into privately negotiated exchange agreements with a limited number of holders (the “Noteholders”) to repurchase ~~$35.1~~$66.3 million in aggregate principal amount of the 5.00% Convertible Senior Notes held by the Noteholders for an aggregate of ~~$16.2~~$18.6 million in cash and approximately ~~1.4~~3.2 million shares of ~~Par’s~~our common stock with a fair value of ~~$30.1~~$74.3 million. We recognized a loss of approximately $3.7 million related to the ~~extinguishment~~May and June extinguishments of the repurchased 5.00% Convertible Senior Notesin the ~~three~~six months ended June 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~~, pursuant to which the lenders made the Term Loan B ~~Facility, the lenders made a term loan~~ to the borrowers in the principal amount of $250.0 million ~~(“Term Loan B”)~~ on the closing date. The net proceeds from Term Loan B totaled ~~$228.9~~$232.0 million after deducting the original issue discount, deferred financing costs, and commitment and other ~~fees.~~fees and were used to finance the Washington Acquisition.

Loans under the 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~~, pursuant to ~~the~~ ~~Par Pacific Term Loan Agreement~~,which BOH made a loan to the ~~Company~~company in the principal amount of $45.0 million, ~~(the “Par Pacific Term Loan”).~~the net proceeds of which were used to finance the Washington Acquisition.

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 six months ended June 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%. Par is also subject to a minimum liquidity covenant measured on the last day of each fiscal quarter.

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

~~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.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

PHL Term Loan

On April 13, 2020, PHL, our wholly owned subsidiary, entered into a Term Loan Agreement (“PHL Term Loan”) with American Savings Bank F.S.B., which provided a term loan in the principal amount of approximately $6.0 million. The proceeds from the PHL Term Loan were used to finance PHL’s equity in certain real property. The PHL Term Loan bears interest at a fixed rate of 2.750% per annum. Principal and interest payments are payable monthly based on a 25-year amortization schedule, principal prepayments are allowed with no prepayment charge, and the remaining principal, plus any unpaid interest or other charges, is due on April 15, 2030, the maturity date of the PHL Term Loan. The PHL Term Loan is guaranteed by Par Petroleum, LLC.

12.875% Senior Secured Notes Due 2026

On June 5, 2020, the Issuers completed the issuance and sale of $105 million in aggregate principal amount of 12.875% 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 $99.0 million from the sale will be used for general corporate purposes.

The 12.875% Senior Secured Notesbear interest at an annual rate of 12.875% per year (payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2021) and will mature on January 15, 2026. The indenture for the 12.875% Senior Secured Notes also allows for optional early redemptions, some of which require the Issuers to pay a premium and some of which have certain other restrictions related to timing and the maximum redeemable principal amount.

The obligations of the borrowers under the 12.875% Senior Secured Notes are guaranteed by the Issuers’ existing and future direct or indirect domestic subsidiaries (other than Par Petroleum Finance Corp.) and by Par Pacific Holdings, Inc., with respect to principal and interest only. The 12.875% 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 the Issuers and the subsidiary guarantors, but excluding certain assets which are collateral under the ABL Credit Facility, the Supply and Offtake Agreements, and the Washington Refinery Intermediation Agreement.

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 June 30, ~~2019,~~2020, we were in compliance with all of our debt ~~agreements.~~instruments.

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.

Note ~~10—~~11—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 are required under~~

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the ~~Supply~~Interim Periods Ended June 30, 2020 and ~~Offtake Agreements to hedge the time spread between the period of crude oil cargo pricing and the month of delivery for certain crude oil purchases. We utilize OTC swaps to accomplish this.~~2019

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 and OTC swaps expire at various dates through September 2019.~~

~~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—~~12—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.

Our open futures and OTC swaps expire at various dates through December 2020. At June 30, ~~2019,~~2020, our open commodity derivative contracts represented (in thousands of barrels):



Contract type	Purchases	Sales		Net
Futures	415	—		415
Swaps	6,920	(6,920	)	—
Total	7,335	(6,920	)	415

Contract type Purchases Sales Net
Futures 1,045
(308 ) 737
Swaps 2,700
(3,946 ) (1,246 )
Total 3,745
(4,254 ) (509 )
At June 30, 2020, we also had option collars of 75 thousand barrels of crude oil per month that economically hedge our internally consumed fuel at our Hawaii refineries. These option collars have a weighted-average strike price ranging from a floor of $48.77 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 June 30, ~~2019,~~2020, 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~~.Loan. This swap expires on April 1, 2024, the maturity date of the Retail Property Term ~~Loan~~.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 June 30, ~~2019,~~2020, 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 June 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets.



	Balance Sheet Location	June 30, 2020			December 31, 2019
		Asset (Liability)
Commodity derivatives (1)	Prepaid and other current assets	$	3,177		$	2,075
Commodity derivatives	Other accrued liabilities	(6,662		)	(5,534		)
J. Aron repurchase obligation derivative	Obligations under inventory financing agreements	(56,842		)	173
MLC terminal obligation derivative	Obligations under inventory financing agreements	(9,256		)	(14,717		)

Interest rate derivatives	Other accrued liabilities	(974		)	(314		)
Interest rate derivatives	Other liabilities	(2,557		)	(1,113		)


(1)	Does not include cash collateral of $2.7 million and $10.3 million recorded in Prepaid and other current assets and $9.5 million and $9.5 million in Other long-term assets as of June 30, 2020 and December 31, 2019, respectively.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

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

Balance Sheet Location June 30, 2019 December 31, 2018
Asset (Liability)
Commodity derivatives (1) Prepaid and other current assets $ 1,730
$ 4,973
Commodity derivatives Other accrued liabilities (16,878 ) (700 )
J. Aron repurchase obligation derivative Obligations under inventory financing agreements 165
4,085
MLC repurchase obligation derivative Obligations under inventory financing agreements (5,639 ) —
Interest rate derivatives Prepaid and other current assets —
191
Interest rate derivatives Other accrued liabilities (188 ) —
Interest rate derivatives Other liabilities (1,286 ) —


~~(1)~~	Does not include cash collateral of $2.7 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 June 30, 2019 and December 31, 2018, respectively.

The following table summarizes the pre-tax gains (losses) recognized in Net income (loss) 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 June 30,						Six Months Ended June 30,
	Statement of Operations Location	2020			2019			2020			2019
Commodity derivatives	Cost of revenues (excluding depreciation)	$	781		$	(2,755	)	$	(56,378	)	$	(3,259	)
J. Aron repurchase obligation derivative	Cost of revenues (excluding depreciation)	(10,370		)	13,388			(57,015		)	(3,919		)
MLC terminal obligation derivative	Cost of revenues (excluding depreciation)	(26,882		)	9,603			56,076			(3,339		)
Interest rate derivatives	Interest expense and financing costs, net	(292		)	(1,471		)	(2,312		)	(1,470		)

Three Months Ended June 30, Six Months Ended June 30,
Statement of Operations Location 2019 2018 2019 2018
Commodity derivatives Cost of revenues (excluding depreciation) $ (2,755 ) $ (1,247 ) $ (3,259 ) $ 3,685
J. Aron repurchase obligation derivative Cost of revenues (excluding depreciation) 13,388
8,800
(3,919 ) 15,142
MLC repurchase obligation derivative Cost of revenues (excluding depreciation) 9,603
—
(3,339 ) —
Interest rate derivatives Interest expense and financing costs, net (1,471 ) 62
(1,470 ) 1,298

Note ~~11—~~12—Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Common Stock Warrants

As of ~~June 30, 2019 and~~ December 31, ~~2018,~~2019, we had 354,350 common stock warrants outstanding. We ~~estimate~~estimated 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 ~~June 30, 2019 and~~ December 31, ~~2018,~~2019, the warrants had a weighted-average exercise price of $0.09 and ~~$0.09 and~~ a remaining term of ~~3.17 years and 3.67 years, respectively.~~

2.67 years. The estimated fair value of the common stock warrants was ~~$20.45 and $14.13~~$23.16 per share as of December 31, 2019.

During January and March 2020, one of our stockholders and its affiliates exercised 354,350 common stock warrants with a fair value of $3.9 million. As a result of this cashless transaction, 350,542 shares of common stock were issued. As of June 30, ~~2019 and December 31, 2018, respectively.~~2020, we had 0 common stock warrants outstanding.

Derivative Instruments

We utilize ~~crude oil~~ 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 ~~commodity~~ derivatives are valued using market quotations ~~from independent price reporting agencies and~~published by commodity ~~exchange price curves that are corroborated with market data.~~exchanges. Level 3 instruments are valued using significant unobservable inputs that are not ~~supported by sufficient market activity.~~readily observable in the market. The valuation of the embedded derivatives related to our J. Aron repurchase and MLC ~~repurchase obligation embedded derivatives requires that we make~~terminal obligations is based on estimates of the prices and differentials assuming settlement at the end of the reporting ~~period;~~period. Estimates of the J. Aron and MLC settlement prices are based on observable inputs, such as Brent/WTI indices, and contractual price differentials as defined in the Supply and Offtake Agreements and Washington Refinery Intermediation Agreement. Such contractual differentials vary by location and by the type of product and range from a discount of $11.73 per barrel to a premium of $34.72 per barrel as of June 30, 2020. Contractual price differentials are considered unobservable inputs; therefore, ~~they~~these embedded derivatives are classified as Level 3 instruments. We do not have other commodity derivatives classified as Level 3 at June 30, ~~2019~~2020 or December 31, ~~2018.~~2019. Please read Note ~~10—~~11—Derivatives for further information on derivatives.

~~Financial Statement Impact~~

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

June 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 $ 1,851
$ 3,688
$ —
$ 5,539
$ (3,809 ) $ 1,730

Liabilities
Common stock warrants $ —
$ —
$ (7,246 ) $ (7,246 ) $ —
$ (7,246 )
Commodity derivatives (976 ) (19,711 ) —
(20,687 ) 3,809
(16,878 )
J. Aron repurchase obligation derivative —
—
165
165
—
165
MLC repurchase obligation derivative —
—
(5,639 ) (5,639 ) —
(5,639 )
Interest rate derivatives —
(1,474 ) —
(1,474 ) —
(1,474 )
Total $ (976 ) $ (21,185 ) $ (12,720 ) $ (34,881 ) $ 3,809
$ (31,072 )

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

Financial Statement Impact

Fair value amounts by hierarchy level as of June 30, 2020 and December 31, 2019 are presented gross in the tables below (in thousands):


	December 31, 2018																		June 30, 2020
	Level 1			Level 2			Level 3			Gross Fair Value			Effect of Counter-Party Netting			Net Carrying Value on Balance Sheet (1)			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		$	281		$	25,579		$	—		$	25,860		$	(22,683	)	$	3,177

Liabilities
Commodity derivatives																			$	(131	)	$	(29,214	)	$	—		$	(29,345	)	$	22,683		$	(6,662	)
J. Aron repurchase obligation derivative																			—			—			(56,842		)	(56,842		)	—			(56,842		)
MLC terminal obligation derivative																			—			—			(9,256		)	(9,256		)	—			(9,256		)
Interest rate derivatives	—			191			—			191			—			191			—			(3,531		)	—			(3,531		)	—			(3,531		)
Total	$	170		$	5,425		$	—		$	5,595		$	(431	)	$	5,164		$	(131	)	$	(32,745	)	$	(66,098	)	$	(98,974	)	$	22,683		$	(76,291	)

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	)



	December 31, 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	$	4,595		$	2,075		$	—		$	6,670		$	(4,595	)	$	2,075

Liabilities
Common stock warrants	$	—		$	—		$	(8,206	)	$	(8,206	)	$	—		$	(8,206	)
Commodity derivatives	(10,129		)	—			—			(10,129		)	4,595			(5,534		)
J. Aron repurchase obligation derivative	—			—			173			173			—			173
MLC terminal obligation derivative	—			—			(14,717		)	(14,717		)	—			(14,717		)
Interest rate derivatives	—			(1,427		)	—			(1,427		)	—			(1,427		)
Total	$	(10,129	)	$	(1,427	)	$	(22,750	)	$	(34,306	)	$	4,595		$	(29,711	)


(1)	Does not include cash collateral of $12.2 million and ~~$10.9~~$19.8 million as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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 June 30, Six Months Ended June 30,
2019 2018 2019 2018
Balance, at beginning of period $ (26,741 ) $ (19,285 ) $ (922 ) $ (26,372 )
Settlements (7,898 ) —
(7,898 ) —
Acquired 6,353
—
(2,301 ) —
Total unrealized income (loss) included in earnings 15,566
8,726
(1,599 ) 15,813
Balance, at end of period $ (12,720 ) $ (10,559 ) $ (12,720 ) $ (10,559 )

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

June 30, 2019
Carrying Value Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3) $ 71,621
$ 101,583
7.75% Senior Secured Notes due 2025 (1) 291,386
298,125
Mid Pac Term Loan (2) 1,449
1,449
Term Loan B Facility (1) 235,767
248,727
Retail Property Term Loan (2) 43,873
43,873
Common stock warrants (2) 7,246
7,246

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

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

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



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Balance, at beginning of period	$	4,534		$	(26,741	)	$	(22,750	)	$	(922	)
Settlements	(33,380		)	(7,898		)	(46,679		)	(7,898		)
Acquired	—			6,353			—			(2,301		)
Total gains (losses) included in earnings	(37,252		)	15,566			3,331			(1,599		)
Balance, at end of period	$	(66,098	)	$	(12,720	)	$	(66,098	)	$	(12,720	)

The carrying value and fair value of long-term debt and other financial instruments as of June 30, 2020 and December 31, 2019 are as follows (in thousands):



	June 30, 2020
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	46,008	$	44,999
7.75% Senior Secured Notes due 2025 (1)	292,649		260,922
Mid Pac Term Loan (2)	1,416		1,416
Term Loan B Facility (1)	225,116		200,391
Retail Property Term Loan (2)	42,570		42,570
PHL Term Loan (2)	5,871		5,871
12.875% Senior Secured Notes due 2026 (1)	98,816		106,050



	December 31, 2019
	Carrying Value		Fair Value
5.00% Convertible Senior Notes due 2021 (1) (3)	$	44,783	$	66,477
7.75% Senior Secured Notes due 2025 (1)	292,015		309,375
Mid Pac Term Loan (2)	1,433		1,433
Term Loan B Facility (1)	230,474		240,625
Retail Property Term Loan (2)	43,226		43,226
Common stock warrants (2)	8,206		8,206


(1)	The fair ~~values~~value measurements of the 5.00% Convertible Senior Notes, 7.75% Senior Secured Notes, ~~and~~ Term Loan B Facility, and 12.875% Senior Secured Notes are considered Level 2 measurements in the fair value hierarchy as discussed below.


(2)	The fair value measurements of the common stock warrants, Mid Pac Term Loan, ~~and~~ Retail Property Term Loan, and PHL 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 June 30, ~~2019.~~2020. 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, and 12.875% Senior Secured Notes 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~~The inputs used to measure the fair value are classified as Level 2

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

inputs within the fair value ~~hierarchy.~~hierarchy because the 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes may not be actively traded.

The Retail Property Term Loan is subject to a market-based floating interest rate. The Mid Pac Term Loan and PHL Term Loan are subject to fixed interest rates of 4.375% and 2.750%, respectively. The carrying values of our Retail Property, Mid Pac, and PHL Term Loans were determined to approximate fair value as of June 30, 2020 and December 31, 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.

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

Note ~~12—~~13—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~~lessor 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~~right-of-use assets (“ROU assets”) and liabilities as of June 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets:



Lease type	Balance Sheet Location	June 30, 2020			December 31, 2019
Assets
Finance	Property, plant, and equipment	$	13,467		$	11,552
Finance	Accumulated amortization	(5,460		)	(4,447		)
Finance	Property, plant, and equipment, net	$	8,007		$	7,105
Operating	Operating lease right-of-use assets	378,323			420,073
Total right-of-use assets		$	386,330		$	427,178

Liabilities
Current
Finance	Other accrued liabilities	$	1,838		$	1,784
Operating	Operating lease liabilities	61,013			79,999
Long-term
Finance	Finance lease liabilities	7,143			6,227
Operating	Operating lease liabilities	321,393			340,909
Total lease liabilities		$	391,387		$	428,919

Weighted-average remaining lease term (in years)
Finance		5.73			5.69
Operating		10.57			10.26
Weighted-average discount rate
Finance		7.39		%	6.68		%
Operating		7.72		%	7.88		%

Lease type Balance Sheet Location June 30, 2019
Assets
Finance Property, plant, and equipment $ 10,781
Finance Accumulated amortization (3,481 )
Finance Property and equipment, net $ 7,300
Operating Operating lease assets 389,047
Total leased assets $ 396,347

Liabilities
Current
Finance Other accrued liabilities $ 1,718
Operating Operating lease liabilities 59,707
Long-term
Finance Finance lease liabilities 6,501
Operating Operating lease liabilities 332,465
Total lease liabilities $ 400,391

Weighted-average remaining lease term (in years)
Finance 5.94
Operating 11.40
Weighted-average discount rate
Finance 6.69 %
Operating 7.77 %

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

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



	Three Months Ended June 30,				Six Months Ended June 30,
Lease cost type	2020		2019		2020		2019
Finance lease cost
Amortization of finance lease ROU assets	$	534	$	402	$	1,014	$	901
Interest on lease liabilities	164		108		331		264
Operating lease cost	27,160		24,566		54,130		47,978
Variable lease cost	1,855		910		4,550		2,540
Short-term lease cost	643		163		842		416
Net lease cost	$	30,356	$	26,149	$	60,867	$	52,099

Lease cost type Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Finance lease cost
Amortization of finance lease assets $ 402
$ 901
Interest on lease liabilities 108
264
Operating lease cost 24,566
47,978
Variable lease cost 910
2,540
Short-term lease cost 163
416
Net lease cost $ 26,149
$ 52,099

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



	Six Months Ended June 30,
Lease type	2020		2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	819	$	996
Operating cash flows from finance leases	322		245
Operating cash flows from operating leases	51,179		46,044
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	1,915		192
ROU assets obtained in exchange for new operating lease liabilities	4,557		14,308
ROU assets terminated in exchange for release from operating lease liabilities	7,738		193

Lease type Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases $ 996
Operating cash flows from finance leases 245
Operating cash flows from operating leases 46,044
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease obligations 192
ROU assets obtained in exchange for new operating lease obligations 14,308

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of June 30, ~~2019~~2020 (in thousands):


For the year ending December 31,	Finance leases			Operating leases			Total			Finance leases			Operating leases			Total
2019 (1)	$	1,249		$	47,357		$	48,606
2020	1,983			79,554			81,537
2020 (1)										$	1,369		$	52,562		$	53,931
2021	1,411			51,536			52,947			1,944			68,534			70,478
2022	1,195			49,395			50,590			1,735			67,367			69,102
2023	1,166			48,358			49,524			1,735			53,589			55,324
2024	936			42,737			43,673			1,441			43,855			45,296
2025										1,201			42,487			43,688
Thereafter	2,005			241,297			243,302			1,658			200,329			201,987
Total lease payments	9,945			560,234			570,179			11,083			528,723			539,806
Less amount representing interest	(1,726		)	(168,062		)	(169,788		)	(2,102		)	(146,317		)	(148,419		)
Present value of lease liabilities	$	8,219		$	392,172		$	400,391		$	8,981		$	382,406		$	391,387


(1)	Represents period from July 1, ~~2019~~2020 to December 31, ~~2019.~~2020.

Additionally, the Company has ~~$52.8~~$8.8 million and $1.2 million in future undiscounted cash flows for ~~two~~multiple operating leases and three finance leases that have not yet ~~commenced.~~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.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

~~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—~~14—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, state, and ~~state~~local environmental laws and 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.

Wyoming Refinery

Our Wyoming refinery is subject to a number of consent decrees, orders, and settlement agreements involving the U.S. Environmental Protection Agency (“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 ~~Refining~~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 June 30, ~~2019,~~2020, we have accrued ~~$17.0~~$16.0 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 ~~Hermes Consolidated LLC, and its wholly owned subsidiary,~~ Wyoming ~~Pipeline Company (collectively, “WRC” or “Wyoming Refining”) have~~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

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

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,~~Additionally, the ~~EPA announced a~~EPA’s final rule updating standards that control toxic air emissions from petroleum refineries ~~addressing, among other things,~~imposed additional controls and monitoring requirements on flaring operations, ~~fenceline air quality monitoring, and additional emission reductions from~~ storage tanks, ~~and~~sulfur recovery units, delayed coking ~~units.~~units, and required fenceline monitoring. Compliance with this rule has not had a material impact on our financial condition, results of operations, or cash flows to date.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

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~~refineries’ 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~~DOH’s GHG regulation allows, and the Hawaii ~~refinery~~refineries 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~~On March 31, 2020, the agencies ~~have not yet issued a final rule, but they are expected to do so in 2019. Although the revised~~released updated fuel economy and vehicle emissions standards, ~~are expected to be less stringent than~~which provide for an increase in stringency by 1.5% each year through model year 2026, as compared with the ~~initial~~ standards ~~for model years 2021-2025, it is uncertain whether the revised standards will increase year over year.~~issued in 2012 that required 5% annual increases. 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 ~~January 2011, the EPA issued a second waiver for the use of E15 in vehicles model years 2001-2006. In~~ 2019, the EPA ~~is expected to conduct a rulemaking to allow~~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~~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~~had until January 1, 2020 to meet the standard. The ~~eastern location of our co-located~~Par East Hawaii refinery was required to comply with Tier 3 gasoline standards within 30 months of June 21, 2016, the date ~~our Hawaii refinery~~it was disqualified from small volume refinery ~~status, and is currently compliant.~~status. 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 ~~2017.~~

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For~~2018. As of January 1, 2020, all 4 of our refineries were compliant with the ~~Interim Periods Ended June 30, 2019 and 2018~~

final Tier 3 gasoline standard.

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~~were lowered from 10,000 ppm (1%) to 1,000 ppm (0.1%). The sulfur standards began at the Hawaii ~~refinery~~refineries 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~~distillate 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~~refineries are capable of producing the 1% sulfur residual fuel oil that was previously required within the ECA. Although our Hawaii ~~refinery remains~~refineries remain in a position to supply vessels traveling to and through Hawaii, the market for 0.1% sulfur ~~distillates~~distillate fuel and 3.5% sulfur residual fuel is much more competitive.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

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 Corporation (“Tesoro,” which changed its name to Andeavor Corporation before being purchased by Marathon Petroleum Company in October 2018), 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 Par East 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 June 30, 2019, Tesoro has reimbursed us for $12.2 million of our total capital expenditures incurred in connection with the Consent Decree. As of June 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 six months ended June 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.

~~PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~For the Interim Periods Ended June 30, 2019 and 2018~~

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.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, 2020 and 2019

As of June 30, ~~2019, two~~2020, 2 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~~2 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~~are settled at a ratio of 54.4 shares per $1,000 of claim.

Note ~~14—~~15—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 June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Restricted Stock Awards	$	1,036	$	854	$	1,951	$	1,800
Restricted Stock Units	324		308		644		562
Stock Option Awards	434		388		814		723

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Restricted Stock Awards $ 854
$ 936
$ 1,800
$ 1,779
Restricted Stock Units 308
220
562
370
Stock Option Awards 388
508
723
954

During the three and six months ended June 30, ~~2019,~~2020, we granted 2728 thousand ~~shares~~ and ~~274~~288 thousand shares of restricted stock and restricted stock units with a fair value of approximately ~~$0.2~~$0.1 million and ~~$4.4~~$5.3 million, respectively. As of June 30, ~~2019,~~2020, there were approximately ~~$8.0~~$9.3 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 1.9 years.

During the six months ended June 30, ~~2019,~~2020, we granted ~~300~~279 thousand stock option awards with a weighted-average exercise price of ~~$17.00~~$19.73 per share and no0 grants were made for the three months ended June 30, ~~2019.~~2020. As of June 30, ~~2019,~~2020, there were approximately ~~$3.5~~$3.7 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 ~~1.9~~1.8 years.

During the six months ended June 30, ~~2019,~~2020, we granted 4847 thousand performance restricted stock units to executive officers and ~~no performance restricted stock units~~0 grants were ~~granted~~made for the three months ended June 30, ~~2019.~~2020. These performance restricted stock units had a fair value of approximately ~~$0.8~~$0.9 million and are subject to certain annual performance targets based on three-year-performance periods as defined by our Board of Directors. As of June 30, ~~2019,~~2020, there were approximately ~~$1.3~~$1.4 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 2.1 years.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

Note ~~15—~~16—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~~161 thousand shares during the six months ended June 30, 2020 and 354 thousand shares during the three and six months ended June 30, 2019, ~~and June 30, 2018,~~ respectively. The common stock warrants are included in the calculation of basic income (loss) per share because they ~~are~~were issuable for minimal consideration. As of March 31, 2020, the previously outstanding common stock warrants had been exercised for common stock and no warrants were outstanding. The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018		2019		2018		2020			2019		2020			2019
Net income	$	28,169	$	16,178	$	89,261	$	31,363
Net income (loss)									$	(40,560	)	$	28,169	$	(262,897	)	$	89,261
Less: Undistributed income allocated to participating securities (1)	324		242		1,021		433		—			324		—			1,021
Net income attributable to common stockholders	27,845		15,936		88,240		30,930
Net income (loss) attributable to common stockholders									(40,560		)	27,845		(262,897		)	88,240
Plus: Net income effect of convertible securities	—		—		8,897		—		—			—		—			8,897
Numerator for diluted income per common share	$	27,845	$	15,936	$	97,137	$	30,930
Numerator for diluted income (loss) per common share									$	(40,560	)	$	27,845	$	(262,897	)	$	97,137

Basic weighted-average common stock shares outstanding	49,960		45,684		49,529		45,659		53,265			49,960		53,246			49,529
Plus: dilutive effects of common stock equivalents(2)	114		39		6,051		41		—			114		—			6,051
Diluted weighted-average common stock shares outstanding	50,074		45,723		55,580		45,700		53,265			50,074		53,246			55,580

Basic income per common share	$	0.56	$	0.35	$	1.78	$	0.68
Diluted income per common share	$	0.56	$	0.35	$	1.75	$	0.68
Basic income (loss) per common share									$	(0.76	)	$	0.56	$	(4.94	)	$	1.78
Diluted income (loss) per common share									$	(0.76	)	$	0.56	$	(4.94	)	$	1.75


(1)	Participating securities include restricted stock that ~~has~~had been issued but has not yet ~~vested.~~vested during the three and six months ended June 30, 2019. These participating securities were fully vested as of December 31, 2019.


(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 common share for the three and six months ended June 30, 2020.

For each of the three and six months ended June 30, 2019, our calculation of diluted shares outstanding excluded 8 thousand shares of unvested restricted stock. Additionally, the calculation of diluted shares outstanding for the three and six months ended June 30, 2019 excluded 1.9 million and 1.8 million stock options, respectively. For the three and six months ended June 30, 2018, our calculation of diluted shares outstanding excluded 7 thousand and 27 thousand shares of unvested restricted stock, respectively. For each of the three and six months ended June 30, 2018, our calculation of diluted shares outstanding excluded 1.3 million stock options.

As discussed in Note 9—10—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 six months ended June 30, 2019, ~~and June 30, 2018,~~ diluted income ~~(loss)~~ per share was determined using the if-converted method. Our calculation of diluted shares outstanding for the three months ended June 30, 2019 ~~and the three and six months June 30, 2018~~ excluded 5.6 ~~million, 6.4 million, and 6.4~~ million common stock equivalents, ~~respectively,~~ as the effect would be anti-dilutive.

Note ~~16—~~17—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 six months ended June 30, 2019, we recorded an income tax benefit of $1.8 million and $66.6 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. The remaining net deferred tax assets were evaluated based upon the level of historical taxable income, significant book losses during recent prior periods, and projections for future results of operations over the periods in which the deferred tax assets are deductible, among other factors. 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 June 30, 2020 and December 31, 2019.

We believe that any adjustment to our uncertain tax positions would 0t have a material impact on our financial statements given the Company’s deferred tax and corresponding valuation allowance position as of June 30, 2020 and December 31, 2019.

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019

~~During the three and six months ended June 30, 2019 and 2018, no adjustments were recognized for uncertain tax positions.~~

As of December 31, ~~2018,~~2019, we had approximately ~~$1.5~~$1.4 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 ~~on the net income of~~in connection with our refining, retail, and logistics operations.

Note ~~17—~~18—Segment Information

We report the results for the following ~~four business~~4 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 June 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Three Months Ended June 30, 2020													Refining			Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,347,557	$	50,146	$	120,749	$	(109,043	)	$	1,409,409		$	455,301		$	42,132	$	79,621	$	(61,753	)	$	515,301
Cost of revenues (excluding depreciation)	1,244,366		26,758		89,782		(109,064		)	1,251,842			429,967			27,680		45,382		(61,751		)	441,278
Operating expense (excluding depreciation)	55,393		3,028		16,409		—			74,830			49,385			2,247		15,395		—			67,027
Depreciation, depletion, and amortization	14,613		3,989		2,532		785			21,919			12,706			5,902		2,664		856			22,128
General and administrative expense (excluding depreciation)	—		—		—		11,379			11,379			—			—		—		10,221			10,221
Acquisition and integration costs	—		—		—		818			818			—			—		—		90			90
Operating income (loss)	$	33,185	$	16,371	$	12,026	$	(12,961	)	$	48,621		$	(36,757	)	$	6,303	$	16,180	$	(11,169	)	$	(25,443	)
Interest expense and financing costs, net										(20,278		)											(16,414		)
Debt extinguishment and commitment costs										(3,690		)
Other income, net										2,177													455
Change in value of common stock warrants										(957		)
Equity earnings from Laramie Energy, LLC										491
Income before income taxes										26,364
Equity losses from Laramie Energy, LLC																		��					(1,874		)
Loss before income taxes																							(43,276		)
Income tax benefit										1,805													2,716
Net income										$	28,169
Net loss																							$	(40,560	)

Capital expenditures	$	9,437	$	11,945	$	1,798	$	360		$	23,540		$	11,165		$	2,972	$	527	$	553		$	15,217

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019



Three Months Ended June 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,347,557	$	50,146	$	120,749	$	(109,043	)	$	1,409,409
Cost of revenues (excluding depreciation)	1,244,366		26,758		89,782		(109,064		)	1,251,842
Operating expense (excluding depreciation)	55,393		3,028		16,409		—			74,830
Depreciation, depletion, and amortization	14,613		3,989		2,532		785			21,919
General and administrative expense (excluding depreciation)	—		—		—		11,379			11,379
Acquisition and integration costs	—		—		—		818			818
Operating income (loss)	$	33,185	$	16,371	$	12,026	$	(12,961	)	$	48,621
Interest expense and financing costs, net										(20,278		)
Debt extinguishment and commitment costs										(3,690		)
Other income, net										2,177
Change in value of common stock warrants										(957		)
Equity earnings from Laramie Energy, LLC										491
Income before income taxes										26,364
Income tax benefit										1,805
Net income										$	28,169

Capital expenditures	$	9,437	$	11,945	$	1,798	$	360		$	23,540

Three Months Ended June 30, 2018 Refining Logistics Retail Corporate, Eliminations and Other (1) Total
Revenues $ 800,408
$ 31,289
$ 119,691
$ (94,992 ) $ 856,396
Cost of revenues (excluding depreciation) 731,104
18,581
93,213
(94,974 ) 747,924
Operating expense (excluding depreciation) 34,747
2,385
15,924
4
53,060
Depreciation, depletion, and amortization 7,475
1,673
2,697
930
12,775
General and administrative expense (excluding depreciation) —
—
—
12,905
12,905
Acquisition and integration costs —
—
—
749
749
Operating income (loss) $ 27,082
$ 8,650
$ 7,857
$ (14,606 ) $ 28,983
Interest expense and financing costs, net (10,544 )
Other income, net 657
Change in value of common stock warrants (74 )
Equity losses from Laramie Energy, LLC (2,352 )
Income before income taxes 16,670
Income tax expense (492 )
Net income $ 16,178

Capital expenditures $ 5,053
$ 1,866
$ 394
$ 732
$ 8,045


(1)	Includes eliminations of intersegment revenues and cost of revenues of ~~$109.0~~$61.8 million and ~~$95.0~~$109.0 million for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.


Six Months Ended June 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Six Months Ended June 30, 2020													Refining			Logistics		Retail			Corporate, Eliminations and Other (1)			Total
Revenues	$	2,493,621	$	95,355	$	220,580	$	(208,812	)	$	2,600,744		$	1,603,427		$	101,282	$	182,434		$	(167,759	)	$	1,719,384
Cost of revenues (excluding depreciation)	2,306,934		53,288		161,120		(208,768		)	2,312,574			1,643,320			59,116		116,812			(167,759		)	1,651,489
Operating expense (excluding depreciation)	110,648		5,392		32,464		—			148,504			101,629			6,518		32,271			—			140,418
Depreciation, depletion, and amortization	28,491		7,885		4,906		1,594			42,876			25,700			10,569		5,463			1,679			43,411
Impairment expense													38,105			—		29,817			—			67,922
General and administrative expense (excluding depreciation)	—		—		—		23,044			23,044			—			—		—			22,005			22,005
Acquisition and integration costs	—		—		—		3,702			3,702			—			—		—			755			755
Operating income (loss)	$	47,548	$	28,790	$	22,090	$	(28,384	)	$	70,044		$	(205,327	)	$	25,079	$	(1,929	)	$	(24,439	)	$	(206,616	)
Interest expense and financing costs, net										(38,988		)												(35,088		)
Debt extinguishment and commitment costs										(9,186		)
Other income, net										2,264														479
Change in value of common stock warrants										(2,239		)												4,270
Equity earnings from Laramie Energy, LLC										792
Income before income taxes										22,687
Equity losses from Laramie Energy, LLC																								(46,905		)
Loss before income taxes																								(283,860		)
Income tax benefit										66,574														20,963
Net income										$	89,261
Net loss																								$	(262,897	)

Capital expenditures	$	18,883	$	17,458	$	4,277	$	786		$	41,404		$	17,248		$	10,190	$	1,861		$	866		$	30,165

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Interim Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019


Six Months Ended June 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Six Months Ended June 30, 2019													Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,540,671	$	64,356	$	198,283	$	(181,475	)	$	1,621,835		$	2,493,621	$	95,355	$	220,580	$	(208,812	)	$	2,600,744
Cost of revenues (excluding depreciation)	1,399,583		39,391		152,360		(181,511		)	1,409,823			2,306,934		53,288		161,120		(208,768		)	2,312,574
Operating expense (excluding depreciation)	72,096		4,207		27,763		4			104,070			110,648		5,392		32,464		—			148,504
Depreciation, depletion, and amortization	15,837		3,315		4,565		2,095			25,812			28,491		7,885		4,906		1,594			42,876
General and administrative expense (excluding depreciation)	—		—		—		24,110			24,110			—		—		—		23,044			23,044
Acquisition and integration costs	—		—		—		1,381			1,381			—		—		—		3,702			3,702
Operating income (loss)	$	53,155	$	17,443	$	13,595	$	(27,554	)	$	56,639		$	47,548	$	28,790	$	22,090	$	(28,384	)	$	70,044
Interest expense and financing costs, net										(18,921		)										(38,988		)
Debt extinguishment and commitment costs																						(9,186		)
Other income, net										776												2,264
Change in value of common stock warrants										671												(2,239		)
Change in value of contingent consideration										(10,500		)
Equity earnings from Laramie Energy, LLC										3,224												792
Income before income taxes										31,889												22,687
Income tax expense										(526		)
Income tax benefit																						66,574
Net income										$	31,363											$	89,261

Capital expenditures	$	10,027	$	4,549	$	1,095	$	1,986		$	17,657		$	18,883	$	17,458	$	4,277	$	786		$	41,404

________________________________________________________


(1)	Includes eliminations of intersegment revenues and cost of revenues of ~~$208.8~~$167.8 million and ~~$180.9~~$208.8 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Note ~~18—~~19—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 no0 costs incurred related to this agreement during the three and six months ended June 30, ~~2019~~2020 or ~~2018.~~2019.

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 ~~operating~~ segments:

1) Refining - We own and operate ~~three~~four refineries with total throughput capacity of over 200 ~~Mbpd. Our co-located refinery~~Mbpd 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.~~Washington.

2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise ~~throughout the islands of Oahu, Maui, Hawaii,~~through Hele, “76”, “Cenex®,” and ~~Kauai. Our Hawaii retail network includes Hele and “76”~~“Zip Trip®” branded ~~retail~~ sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock locations. Through June 30, 2019, we completed the rebranding of 25 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.stations.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the ~~Rockies. We own~~Rockies that primarily transports and ~~operate terminals, pipelines, an SPM,~~stores our crude oil and ~~trucking operations to distribute~~ refined products ~~throughout the islands of Oahu, Maui, Hawaii, Molokai,~~for our refineries and ~~Kauai. We own and operate a crude oil pipeline gathering system, a~~transports 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.to our retail sites or third-party purchasers.

As of June 30, ~~2019,~~2020, 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—~~18—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.

Recent Events Affecting Comparability of Periods

On March 11, 2020, the World Health Organization (“WHO”) declared that the worldwide spread and severity of a new coronavirus, referred to as COVID-19, was severe enough to be characterized as a pandemic. The spread of COVID-19, in conjunction with related government and other preventative measures taken to mitigate the spread of the virus, has caused severe disruptions in the worldwide economy, including the global demand for crude oil and refined products, the movement of people and goods in the United States, and the global supply chain for industrial and commercial production, all of which have in turn disrupted our businesses and operations.

We continue to actively respond to the impacts that these matters are having on our business. We decreased throughput rates at our Hawaii and Wyoming refineries in response to reduced refined product demand, idled certain refining units at our Hawaii refineries, and have delayed the timing of our planned turnaround in Hawaii until the third quarter of 2020. In addition, we have adjusted production of certain refined products to meet the changing local demand profile. We continue to maintain an ample supply of refined product to meet the refined product needs in the regions in which we operate. On May 5, 2020, we announced that 29 employees were furloughed in response to the previously announced decline in throughput rates at our refineries in Kapolei, Hawaii, and our President and Chief Executive Officer and the independent members of the Company’s Board of Directors have reduced their cash salaries by 75%.

In addition, we are taking measures to address our liquidity, including deferring or delaying certain capital expenditures originally planned for 2020 and early 2021 related to turnaround activities at three of our refineries and, in early June 2020, accessing the capital markets to issue $105 million aggregate principal amount of senior secured notes due 2026. Interest rates associated with our inventory financing arrangements and borrowings under those inventory financing arrangements have also declined. We have also taken actions to reduce operating expenses across our business.

We believe the steps we have taken have strengthened our ability to conduct our operations through current conditions. We are also utilizing some of the tax payment deferral opportunities and federal refund acceleration opportunities provided by the IRS, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and various state-specific provisions. We continue to maintain existing processes and procedures, including but not limited to processes and procedures around protection of our technology systems and proprietary data, even though a significant number of our employees are working from home. During this time of uncertainty, the health and wellbeing of our employees and customers are our top priorities as we continue navigating the challenges presented by the COVID-19 pandemic.

The financial results contained in this Quarterly Report on Form 10-Q reflect the reduced activity experienced in the second quarter of 2020 in the regions in which we operate. The COVID-19 pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report. In Hawaii and Washington, for example, mandatory self-quarantine orders or significant limitations on public gatherings have been extended into the third quarter of 2020. We continue to actively monitor the impact of the global situation on our people, operations, financial condition, liquidity, suppliers, customers, and industry. Due to the rapid development and fluidity of the situation, the full magnitude of the impact of COVID-19 on our financial condition, future results of operations, and future cash flows and liquidity is uncertain and has been and may continue to be material.

Results of Operations

Three months ended June 30, ~~2019~~2020 compared to the three months ended June 30, ~~2018~~2019

Net ~~Income.~~ Income (Loss). Our financial ~~performance~~results for the second quarter ~~2019 was~~of 2020 were primarily driven by ~~the Washington Acquisition~~lower refining sales volumes related to COVID-19 demand destruction, unfavorable crude differentials, unfavorable crack spreads, and ~~positive contributions from our logistics and retail segments.~~increased RINs expenses, partially offset by favorable lower of cost or net realizable value adjustments of $158.4 million. Our net income ~~increased~~(loss) decreased from ~~$16.2 million for the three months ended June 30, 2018 to~~net income of $28.2 million for the three months ended June 30, ~~2019. Other factors impacting our results period over period include~~2019 to a ~~$2.3 million income tax benefit associated with a partial release~~net loss of ~~our valuation allowance in connection with the Washington Acquisition, offset by higher interest expense and financing costs, net, and debt extinguishment costs.~~

~~Adjusted EBITDA and Adjusted Net Income.~~ ~~For the three months ended June 30, 2019, Adjusted EBITDA was $69.0 million compared to $37.5~~$40.6 million for the three months ended June 30, ~~2018.~~2020.

Adjusted EBITDA and Adjusted Net Income (Loss). For the three months ended June 30, 2020, Adjusted EBITDA was a loss of $50.3 million compared to earnings of $68.5 million for the three months ended June 30, 2019. The ~~increase~~decrease was primarily related to ~~higher~~lower refining ~~contribution~~sales volumes related to COVID-19 demand destruction, unfavorable crude differentials, and ~~logistics throughput driven by the Washington Acquisition and the Hawaii Refinery Expansion and an increase in fuel margins at our Retail segment.~~unfavorable crack spreads.

For the three months ended June 30, ~~2019,~~2020, Adjusted Net Income (Loss) was ~~$22.9~~a loss of $90.8 million compared to ~~$14.5~~income of $22.4 million for the three months ended June 30, ~~2018.~~2019. The change was primarily related to the same factors described above for the ~~increase~~decrease in Adjusted EBITDA, partially offset by ~~higher~~lower interest expense and financing ~~costs, net, higher depreciation, depletion, and amortization (“DD&A”), and a decrease in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives.~~costs.

Six months ended June 30, ~~2019~~2020 compared to the six months ended June 30, ~~2018~~2019

Net ~~Income.~~ Income (Loss). During ~~2019,~~2020, our results were primarily driven by ~~a $67.7~~goodwill impairments of $67.9 million, ~~income taxbenefit associated with a partial release~~unfavorable crude differentials, an other-than-temporary impairment of $45.3 million related to our ~~valuation allowance~~equity investment in ~~connection with the Washington Acquisition.~~Laramie Energy, unfavorable crack spreads, increased RINs expenses, and lower refining sales volumes at our Hawaii and Wyoming refineries related to COVID-19 demand destruction, partially offset by lower operating expense and higher retail fuel margins. Our net income ~~increased~~decreased from ~~$31.4 million for the six months ended June 30, 2018 to~~ $89.3 million for the six months ended June 30, ~~2019.~~2019 to a net loss of $262.9 million for the six months ended June 30, 2020. Other factors impacting our results period over period include ~~the impact of the Washington Acquisition,~~ a ~~$10.5~~$45.6 million charge related to the Tesoro earn-out settlement in 2018, an increase in interest expense and financing fees related to the Term Loan B Facility and Par Pacific Term Loan, debt commitment costs incurred in connection with the Washington Acquisition, a decreasereduction in our ~~Equity earnings from Laramie Energy,~~income tax benefit and ~~RINs waivers received in 2018.~~lower debt extinguishment and commitment costs.

Adjusted EBITDA and Adjusted Net ~~Income.~~ Income (Loss). For the six months ended June 30, ~~2019,~~2020, Adjusted EBITDA was ~~$116.6~~a loss of $36.7 million compared to ~~$63.5~~earnings of $119.0 million for the six months ended June 30, ~~2018.~~2019. The change was primarily related to ~~improved margins in~~unfavorable crude differentials, unfavorable crack spreads, and lower refining sales volumes at our ~~Retail operations,~~Hawaii and Wyoming refineries related to COVID-19 demand destruction, partially offset by lower operating expense and higher ~~refining contribution and logistics throughput driven by the Washington Acquisition and the Hawaii Refinery Expansion.~~retail fuel margins.

For the six months ended June 30, ~~2019,~~2020, Adjusted Net Income (Loss) was ~~$29.3~~a loss of $118.0 million compared to ~~$22.6~~income of $31.7 million for the six months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily related to the same factors described above for the ~~increase~~decrease in Adjusted EBITDA, partially offset by a decrease in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives, an increase in DD&A associated with assets acquired in connection with the Washington Acquisition, and an increase in interest expense and financing fees related to the Term Loan B Facility and Par Pacific Term Loan.EBITDA.

The following tables summarize our consolidated results of operations for the three and six months ended June 30, ~~2019~~2020 compared to the three and six months ended June 30, ~~2018~~2019 (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 June 30,											Three Months Ended June 30,
	2019			2018			$ Change			% Change (1)		2020			2019			$ Change			% Change (1)
Revenues	$	1,409,409		$	856,396		$	553,013		65	%	$	515,301		$	1,409,409		$	(894,108	)	(63	)%
Cost of revenues (excluding depreciation)	1,251,842			747,924			503,918			67	%	441,278			1,251,842			(810,564		)	(65	)%
Operating expense (excluding depreciation)	74,830			53,060			21,770			41	%	67,027			74,830			(7,803		)	(10	)%
Depreciation, depletion, and amortization	21,919			12,775			9,144			72	%	22,128			21,919			209			1	%
General and administrative expense (excluding depreciation)	11,379			12,905			(1,526		)	(12	)%	10,221			11,379			(1,158		)	(10	)%
Acquisition and integration costs	818			749			69			9	%	90			818			(728		)	(89	)%
Total operating expenses	1,360,788			827,413								540,744			1,360,788
Operating income	48,621			28,983
Operating income (loss)												(25,443		)	48,621
Other income (expense)
Interest expense and financing costs, net	(20,278		)	(10,544		)	(9,734		)	(92	)%	(16,414		)	(20,278		)	3,864			19	%
Debt extinguishment and commitment costs	(3,690		)	—			(3,690		)	NM		—			(3,690		)	3,690			100	%
Other income, net	2,177			657			1,520			231	%	455			2,177			(1,722		)	(79	)%
Change in value of common stock warrants	(957		)	(74		)	(883		)	(1,193	)%	—			(957		)	957			100	%
Equity earnings (losses) from Laramie Energy, LLC	491			(2,352		)	2,843			121	%	(1,874		)	491			(2,365		)	(482	)%
Total other income (expense), net	(22,257		)	(12,313		)						(17,833		)	(22,257		)
Income before income taxes	26,364			16,670
Income tax benefit (expense)	1,805			(492		)	2,297			467	%
Net income	$	28,169		$	16,178
Income (loss) before income taxes												(43,276		)	26,364
Income tax benefit												2,716			1,805			911			50	%
Net income (loss)												$	(40,560	)	$	28,169


	Six Months Ended June 30,											Six Months Ended June 30,
	2019			2018			$ Change			% Change (1)		2020			2019			$ Change			% Change (1)
Revenues	$	2,600,744		$	1,621,835		$	978,909		60	%	$	1,719,384		$	2,600,744		$	(881,360	)	(34	)%
Cost of revenues (excluding depreciation)	2,312,574			1,409,823			902,751			64	%	1,651,489			2,312,574			(661,085		)	(29	)%
Operating expense (excluding depreciation)	148,504			104,070			44,434			43	%	140,418			148,504			(8,086		)	(5	)%
Depreciation, depletion, and amortization	42,876			25,812			17,064			66	%	43,411			42,876			535			1	%
Impairment expense												67,922			—			67,922			NM
General and administrative expense (excluding depreciation)	23,044			24,110			(1,066		)	(4	)%	22,005			23,044			(1,039		)	(5	)%
Acquisition and integration costs	3,702			1,381			2,321			168	%	755			3,702			(2,947		)	(80	)%
Total operating expenses	2,530,700			1,565,196								1,926,000			2,530,700
Operating income	70,044			56,639
Operating income (loss)												(206,616		)	70,044
Other income (expense)
Interest expense and financing costs, net	(38,988		)	(18,921		)	(20,067		)	(106	)%	(35,088		)	(38,988		)	3,900			10	%
Debt extinguishment and commitment costs	(9,186		)	—			(9,186		)	NM		—			(9,186		)	9,186			100	%
Other income, net	2,264			776			1,488			192	%	479			2,264			(1,785		)	(79	)%
Change in value of common stock warrants	(2,239		)	671			(2,910		)	(434	)%	4,270			(2,239		)	6,509			291	%
Change in value of contingent consideration	—			(10,500		)	10,500			100	%
Equity earnings from Laramie Energy, LLC	792			3,224			(2,432		)	(75	)%
Equity earnings (losses) from Laramie Energy, LLC												(46,905		)	792			(47,697		)	(6,022	)%
Total other income (expense), net	(47,357		)	(24,750		)						(77,244		)	(47,357		)
Income before income taxes	22,687			31,889
Income tax benefit (expense)	66,574			(526		)	67,100			12,757	%
Net income	$	89,261		$	31,363
Income (loss) before income taxes												(283,860		)	22,687
Income tax benefit												20,963			66,574			(45,611		)	(69	)%
Net income (loss)												$	(262,897	)	$	89,261

________________________________________________________

(1) NM - Not meaningful

The following tables summarize our operating income (loss) by segment for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019 (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 June 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Three months ended June 30, 2020												Refining			Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,347,557	$	50,146	$	120,749	$	(109,043	)	$	1,409,409	$	455,301		$	42,132	$	79,621	$	(61,753	)	$	515,301
Cost of revenues (excluding depreciation)	1,244,366		26,758		89,782		(109,064		)	1,251,842		429,967			27,680		45,382		(61,751		)	441,278
Operating expense (excluding depreciation)	55,393		3,028		16,409		—			74,830		49,385			2,247		15,395		—			67,027
Depreciation, depletion, and amortization	14,613		3,989		2,532		785			21,919		12,706			5,902		2,664		856			22,128
General and administrative expense (excluding depreciation)	—		—		—		11,379			11,379		—			—		—		10,221			10,221
Acquisition and integration costs	—		—		—		818			818		—			—		—		90			90
Operating income (loss)	$	33,185	$	16,371	$	12,026	$	(12,961	)	$	48,621	$	(36,757	)	$	6,303	$	16,180	$	(11,169	)	$	(25,443	)


Three months ended June 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Three months ended June 30, 2019												Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	800,408	$	31,289	$	119,691	$	(94,992	)	$	856,396	$	1,347,557	$	50,146	$	120,749	$	(109,043	)	$	1,409,409
Cost of revenues (excluding depreciation)	731,104		18,581		93,213		(94,974		)	747,924		1,244,366		26,758		89,782		(109,064		)	1,251,842
Operating expense (excluding depreciation)	34,747		2,385		15,924		4			53,060		55,393		3,028		16,409		—			74,830
Depreciation, depletion, and amortization	7,475		1,673		2,697		930			12,775		14,613		3,989		2,532		785			21,919
General and administrative expense (excluding depreciation)	—		—		—		12,905			12,905		—		—		—		11,379			11,379
Acquisition and integration costs	—		—		—		749			749		—		—		—		818			818
Operating income (loss)	$	27,082	$	8,650	$	7,857	$	(14,606	)	$	28,983	$	33,185	$	16,371	$	12,026	$	(12,961	)	$	48,621


(1)	Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of ~~$109.0~~$61.8 million and ~~$95.0~~$109.0 million for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.


Six months ended June 30, 2019	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Six months ended June 30, 2020												Refining			Logistics		Retail			Corporate, Eliminations and Other (1)			Total
Revenues	$	2,493,621	$	95,355	$	220,580	$	(208,812	)	$	2,600,744	$	1,603,427		$	101,282	$	182,434		$	(167,759	)	$	1,719,384
Cost of revenues (excluding depreciation)	2,306,934		53,288		161,120		(208,768		)	2,312,574		1,643,320			59,116		116,812			(167,759		)	1,651,489
Operating expense (excluding depreciation)	110,648		5,392		32,464		—			148,504		101,629			6,518		32,271			—			140,418
Depreciation, depletion, and amortization	28,491		7,885		4,906		1,594			42,876		25,700			10,569		5,463			1,679			43,411
Impairment expense												38,105			—		29,817			—			67,922
General and administrative expense (excluding depreciation)	—		—		—		23,044			23,044		—			—		—			22,005			22,005
Acquisition and integration costs	—		—		—		3,702			3,702		—			—		—			755			755
Operating income (loss)	$	47,548	$	28,790	$	22,090	$	(28,384	)	$	70,044	$	(205,327	)	$	25,079	$	(1,929	)	$	(24,439	)	$	(206,616	)


Six months ended June 30, 2018	Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Six months ended June 30, 2019												Refining		Logistics		Retail		Corporate, Eliminations and Other (1)			Total
Revenues	$	1,540,671	$	64,356	$	198,283	$	(181,475	)	$	1,621,835	$	2,493,621	$	95,355	$	220,580	$	(208,812	)	$	2,600,744
Cost of revenues (excluding depreciation)	1,399,583		39,391		152,360		(181,511		)	1,409,823		2,306,934		53,288		161,120		(208,768		)	2,312,574
Operating expense (excluding depreciation)	72,096		4,207		27,763		4			104,070		110,648		5,392		32,464		—			148,504
Depreciation, depletion, and amortization	15,837		3,315		4,565		2,095			25,812		28,491		7,885		4,906		1,594			42,876
General and administrative expense (excluding depreciation)	—		—		—		24,110			24,110		—		—		—		23,044			23,044
Acquisition and integration costs	—		—		—		1,381			1,381		—		—		—		3,702			3,702
Operating income (loss)	$	53,155	$	17,443	$	13,595	$	(27,554	)	$	56,639	$	47,548	$	28,790	$	22,090	$	(28,384	)	$	70,044


(1)	Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of ~~$208.8~~$167.8 million and ~~$180.9~~$208.8 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Below is a summary of key operating statistics for the refining segment for the three and six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019 (1)			2018 (1)			2019 (1)			2018 (1)			2020			2019			2020			2019
Total Refining Segment
Feedstocks Throughput (Mbpd) ~~(2)~~(1)	172.9			91.2			167.6			91.9			115.5			172.9			133.5			167.6
Refined product sales volume (Mbpd) (2)	176.4			95.3			171.1			98.9
Refined product sales volume (Mbpd) (1)													119.3			176.4			149.5			171.1

Hawaii Refinery
Feedstocks Throughput (Mbpd)	116.2			73.9			114.6			75.0
Hawaii Refineries
Combined Feedstocks Throughput (Mbpd)													66.5			116.2			80.7			114.6
Par East Throughput (Mbpd)													66.5			75.8			68.1			74.2
Par West Throughput (Mbpd)													—			40.4			12.6			40.4

Yield (% of total throughput)
Gasoline and gasoline blendstocks	23.1		%	28.1		%	22.9		%	28.2		%	23.6		%	23.1		%	24.3		%	22.9		%
Distillates	44.5		%	48.7		%	43.7		%	47.9		%	40.8		%	44.5		%	45.1		%	43.7		%
Fuel oils	24.3		%	16.6		%	26.6		%	16.4		%	29.0		%	24.3		%	26.4		%	26.6		%
Other products	5.2		%	3.4		%	3.5		%	4.3		%	2.9		%	5.2		%	0.2		%	3.5		%
Total yield	97.1		%	96.8		%	96.7		%	96.8		%	96.3		%	97.1		%	96.0		%	96.7		%

Refined product sales volume (Mbpd)
On-island sales volume	113.5			71.9			110.2			70.7			69.1			113.5			94.3			110.2
Exports sale volume	4.4			6.8			5.0			10.7
Exports sales volume													—			4.4			—			5.0
Total refined product sales volume	117.9			78.7			115.2			81.4			69.1			117.9			94.3			115.2

Adjusted Gross Margin per bbl ($/throughput bbl) (3)	$	3.46		$	5.34		$	3.60		$	5.27
Production costs per bbl ($/throughput bbl) (4)	2.82			3.55			2.82			3.60
Adjusted Gross Margin per bbl ($/throughput bbl) (2)													$	(6.96	)	$	3.46		$	(2.73	)	$	3.60
Production costs per bbl ($/throughput bbl) (3)													4.45			2.82			3.81			2.82
DD&A per bbl ($/throughput bbl)	0.43			0.65			0.43			0.68			0.48			0.43			0.39			0.43

Washington Refinery
Feedstocks Throughput (Mbpd) (2)	39.1			—			38.2			—
Feedstocks Throughput (Mbpd) (1)													35.9			39.1			38.4			38.2
Yield (% of total throughput)
Gasoline and gasoline blendstocks	24.1		%	—		%	24.1		%	—		%	23.4		%	24.1		%	23.7		%	24.1		%
Distillates	35.2		%	—		%	35.8		%	—		%	34.9		%	35.2		%	35.7		%	35.8		%
Asphalt	18.8		%	—		%	17.6		%	—		%	19.2		%	18.8		%	18.8		%	17.6		%
Other products	19.2		%	—		%	19.9		%	—		%	18.3		%	19.2		%	19.2		%	19.9		%
Total yield	97.3		%	—		%	97.4		%	—		%	95.8		%	97.3		%	97.4		%	97.4		%

Refined product sales volume (Mbpd) (2)	40.9			—			40.9			—
Refined product sales volume (Mbpd) (1)													36.9			40.9			40.3			40.9

Adjusted Gross Margin per bbl ($/throughput bbl) (3)	$	9.92		$	—		$	9.44		$	—
Production costs per bbl ($/throughput bbl) (4)	4.42			—			4.63			—
Adjusted Gross Margin per bbl ($/throughput bbl) (2)													$	3.78		$	9.76		$	7.06		$	9.81
Production costs per bbl ($/throughput bbl) (3)													3.76			4.42			3.57			4.63
DD&A per bbl ($/throughput bbl)	1.50			—			1.67			—			1.49			1.50			1.46			1.67


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019 (1)			2018 (1)			2019 (1)			2018 (1)			2020			2019			2020			2019
Wyoming Refinery
Feedstocks Throughput (Mbpd)	17.6			17.3			16.9			16.9			13.1			17.6			14.4			16.9
Yield (% of total throughput)
Gasoline and gasoline blendstocks	48.0		%	47.2		%	50.2		%	48.5		%	45.7		%	48.0		%	48.6		%	50.2		%
Distillates	45.5		%	48.0		%	43.7		%	46.4		%	47.8		%	45.5		%	46.1		%	43.7		%
Fuel oils	1.6		%	0.7		%	1.7		%	1.6		%	2.1		%	1.6		%	1.8		%	1.7		%
Other products	2.8		%	1.9		%	1.9		%	1.1		%	2.0		%	2.8		%	1.2		%	1.9		%
Total yield	97.9		%	97.8		%	97.5		%	97.6		%	97.6		%	97.9		%	97.7		%	97.5		%

Refined product sales volume (Mbpd)	17.6			16.6			17.3			17.5			13.3			17.6			14.9			17.3

Adjusted Gross Margin per bbl ($/throughput bbl) ~~(3)~~(2)	$	16.78		$	17.58		$	15.72		$	15.82		$	6.22		$	16.78		$	2.39		$	15.72
Production costs per bbl ($/throughput bbl) ~~(4)~~(3)	5.58			6.14			6.59			6.92			7.72			5.58			7.06			6.59
DD&A per bbl ($/throughput bbl)	2.97			1.98			2.82			2.15			4.13			2.97			3.73			2.82

Market Indices ($ per barrel)
4-1-2-1 Singapore Crack Spread (5)	$	6.22		$	6.42		$	6.55		$	6.40
3-1-2 Singapore Crack Spread (4)													$	(0.14	)	$	9.39		$	3.99		$	9.27
Pacific Northwest 5-2-2-1 Index ~~(6)~~(5)	17.14			—			14.31			—			11.92			17.14			12.58			14.31
Wyoming 3-2-1 Index ~~(7)~~(6)	28.89			24.99			22.03			20.35			17.39			28.89			16.62			22.03

Crude Prices ($ per barrel)
Brent	$	68.47		$	74.92		$	66.16		$	71.08		$	33.39		$	68.47		$	42.10		$	66.16
WTI	59.91			67.91			57.42			65.42			28.00			59.91			36.99			57.42
ANS	69.40			75.12			66.76			71.23			28.17			69.40			40.22			66.76
Bakken Clearbrook	58.49			67.58			56.68			64.83			24.63			58.49			33.65			56.68
WCS Hardisty	47.35			49.59			45.82			43.19			18.40			47.35			23.18			45.82
Brent M1-M3	1.42			0.76			0.75			0.74			(2.19		)	1.42			(1.37		)	0.75

(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 six months ended June 30, 2019 are calculated based on the 91 and 171-day periods for which we owned the Washington refinery in ~~2019, respectively.~~2019. 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 six months ended June 30, 2019 plus the Washington refinery’s throughput or sales volumes averaged over the periods from April 1, 2019 to June 30, 2019 and January 11, 2019 to June 30, 2019, respectively. The ~~2018~~2020 amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and six months ended June 30, ~~2018.~~2020.

~~(3)~~(2)

~~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~~refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method. Please see discussion of Adjusted Gross Margin below.


~~(4)~~(3)	Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There isare a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs

~~to run the refinery,~~ to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our 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)~~(4)	After completing the acquisition of the Par West Hawaii refinery in December 2018, we began shifting our Hawaii production profile to supply the local utilities with low sulfur fuel oil and significantly reduced our high sulfur fuel oil yield. In 2020,

following the implementation of IMO 2020, we established the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) as a new benchmark for our Hawaii operations. By removing the high sulfur fuel oil reference in the index, we believe the 3-1-2 Singapore Crack Spread is the most representative market indicator of our current operations in Hawaii.

(5)

We believe the Pacific Northwest 5-2-2-1 Index is the ~~best~~most representative 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.~~crude oil. The 2019 ~~prices~~price for the three and six months ended June 30, 2019 ~~represent~~represents the price averaged over the periods from April 1, 2019 to June 30, 2019 and January 11, 2019 to June 30, 2019, respectively.

~~(7)~~(6)

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~~most representative 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 six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018	2020	2019	2020	2019
Retail Segment
Retail sales volumes (thousands of gallons) ~~(1)~~	31,810	31,489	61,544	53,679	22,586	31,810	51,027	61,544


~~(1)~~	Retail sales volumes for the three and six months ended June 30, 2018 include the 91 days and 100 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 six months ended June 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 ~~adjustments~~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 and terminal obligations, and purchase price allocation adjustments); depreciation, depletion, and amortization (“DD~~&A; RINs~~&A”); Renewable Identification Numbers (“RINs”) loss (gain) in excess of net obligation ~~(see definition below)~~(which represents the income statement effect of reflecting our RINs liability on a net basis); and unrealized ~~losses (gains)~~loss (gain) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) plus inventory valuation ~~adjustments~~adjustment, unrealized loss (gain) on derivatives, and ~~unrealized losses (gains) on derivatives.~~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 and environmental credit obligations, and certain hydrocarbon fees and taxes. Cost of revenues (excluding depreciation) also includes the unrealized ~~gains (losses)~~gain (loss) on derivatives and the inventory valuation ~~adjustments~~adjustment that we exclude from Adjusted Gross Margin.

Beginning in the ~~fourth~~second quarter of ~~2018,~~2020, Adjusted ~~Net Income (loss) excludes RINs losses (gains) recorded in excess of our net RINs obligation (“RINs loss (gain) in excess of net obligation”). Our RINs obligations to comply with~~Gross Margin also includes the ~~Renewable Fuel Standard (“RFS”) are recorded as liabilities~~contango gains 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 unrealizedbackwardation losses associated with our Washington inventory and intermediation obligation. Prior to the ~~increase in~~second quarter of 2020, contango gains and backwardation (losses) captured by our Washington intermediation agreement were excluded from Adjusted Gross Margin (as part of the ~~fair value~~inventory valuation adjustment). This change to our non-GAAP information was made to reflect the favorable or unfavorable impact of the market structure on the profitability of our ~~RINs liabilities. Under GAAP,~~

~~we do not adjust~~Washington refinery consistent with the ~~carrying value~~presentation of such impacts on 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.other refineries. We have recast the non-GAAP information for the three and six months ended June 30, ~~2018~~2019 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), ~~net~~ 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 June 30, 2019	Refining			Logistics		Retail
Operating income	$	33,185		$	16,371	$	12,026
Three months ended June 30, 2020								Refining			Logistics		Retail
Operating income (loss)								$	(36,757	)	$	6,303	$	16,180
Operating expense (excluding depreciation)	55,393			3,028		16,409		49,385			2,247		15,395
Depreciation, depletion, and amortization	14,613			3,989		2,532		12,706			5,902		2,664
Inventory valuation adjustment	(21,556		)	—		—		(35,979		)	—		—
RINs loss (gain) in excess of net obligation	2,713			—		—
Unrealized loss on derivatives	14,379			—		—
RINs loss in excess of net obligation								10,738			—		—
Unrealized gain on derivatives								(22,431		)	—		—
Adjusted Gross Margin (1)	$	98,727		$	23,388	$	30,967	$	(22,338	)	$	14,452	$	34,239


Three months ended June 30, 2018	Refining			Logistics		Retail
Three months ended June 30, 2019								Refining			Logistics		Retail
Operating income	$	27,082		$	8,650	$	7,857	$	33,185		$	16,371	$	12,026
Operating expense (excluding depreciation)	34,747			2,385		15,924		55,393			3,028		16,409
Depreciation, depletion, and amortization	7,475			1,673		2,697		14,613			3,989		2,532
Inventory valuation adjustment	(12,091		)	—		—		(22,102		)	—		—
RINs loss (gain) in excess of net obligation	890			—		—
Unrealized gain on derivatives	5,496			—		—
RINs loss in excess of net obligation								2,713			—		—
Unrealized loss on derivatives								14,379			—		—
Adjusted Gross Margin (1)	$	63,599		$	12,708	$	26,478	$	98,181		$	23,388	$	30,967


Six months ended June 30, 2019	Refining			Logistics		Retail
Operating income	$	47,548		$	28,790	$	22,090
Six months ended June 30, 2020								Refining			Logistics		Retail
Operating income (loss)								$	(205,327	)	$	25,079	$	(1,929	)
Operating expense (excluding depreciation)	110,648			5,392		32,464		101,629			6,518		32,271
Depreciation, depletion, and amortization	28,491			7,885		4,906		25,700			10,569		5,463
Impairment expense								38,105			—		29,817
Inventory valuation adjustment	(21,171		)	—		—		39,345			—		—
RINs loss (gain) in excess of net obligation	(1,799		)	—		—
RINs loss in excess of net obligation								17,340			—		—
Unrealized loss on derivatives	20,677			—		—		445			—		—
Adjusted Gross Margin (1)	$	184,394		$	42,067	$	59,460
Adjusted Gross Margin								$	17,237		$	42,166	$	65,622


Six months ended June 30, 2018	Refining			Logistics		Retail
Six months ended June 30, 2019								Refining			Logistics		Retail
Operating income	$	53,155		$	17,443	$	13,595	$	47,548		$	28,790	$	22,090
Operating expense (excluding depreciation)	72,096			4,207		27,763		110,648			5,392		32,464
Depreciation, depletion, and amortization	15,837			3,315		4,565		28,491			7,885		4,906
Inventory valuation adjustment	(23,978		)	—		—		(18,804		)	—		—
RINs loss (gain) in excess of net obligation	890			—		—
RINs gain in excess of net obligation								(1,799		)	—		—
Unrealized loss on derivatives	1,991			—		—		20,677			—		—
Adjusted Gross Margin (1)	$	119,991		$	24,965	$	45,923	$	186,761		$	42,067	$	59,460

~~(1) For the three and six months ended June 30, 2019 and 2018, there was no impairment expense.~~


(1)	For the three months ended June 30, 2020 and the three and six months ended June 30, 2019, there was no impairment expense recorded in Operating income (loss).

Adjusted Net Income (Loss) 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 ~~(gains) losses~~(gain) loss on derivatives, debt extinguishment and commitment costs, ~~release of~~increase in (release of) tax valuation allowance and other deferred tax items, 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~~derivatives, RINs loss (gain) in excess of net obligation, ~~(as defined~~and impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference. Beginning in the second quarter of 2020, Adjusted ~~Gross Margin section above)~~Net Income (Loss) also includes the contango gains and backwardation losses associated with our Washington inventory and intermediation obligation. Prior to the second quarter of 2020, contango gains and backwardation (losses) captured by our Washington intermediation agreement were excluded from Adjusted Net Income (as part of the inventory valuation adjustment). This change to our non-GAAP information was made to reflect the favorable or unfavorable impact of the market structure on the profitability of our Washington refinery consistent with the presentation of such impacts on our other refineries. We have recast the non-GAAP information for the three and six months ended June 30, 2019 to conform to the current period presentation.

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.~~derivatives, the impairment of Par’s investment, and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

We believe Adjusted Net Income (Loss) 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 (Loss) 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 (Loss) and Adjusted EBITDA presented by other companies may not be comparable to our presentation as other companies may define these terms differently.

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


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net income	$	28,169		$	16,178		$	89,261		$	31,363
Net income (loss)													$	(40,560	)	$	28,169		$	(262,897	)	$	89,261
Inventory valuation adjustment	(21,556		)	(12,091		)	(21,171		)	(23,978		)	(35,979		)	(22,102		)	39,345			(18,804		)
RINs loss (gain) in excess of net obligation	2,713			890			(1,799		)	890			10,738			2,713			17,340			(1,799		)
Unrealized loss on derivatives	14,335			5,496			20,677			1,991
Unrealized loss (gain) on derivatives													(22,431		)	14,335			445			20,677
Acquisition and integration costs	818			749			3,702			1,381			90			818			755			3,702
Debt extinguishment and commitment costs	3,690			—			9,186			—			—			3,690			—			9,186
Release of tax valuation allowance (1)	(2,318		)	—			(67,669		)	—
Changes in valuation allowance and other deferred tax items (1)													(2,714		)	(2,318		)	(21,087		)	(67,669		)
Change in value of common stock warrants	957			74			2,239			(671		)	—			957			(4,270		)	2,239
Change in value of contingent consideration	—			—			—			10,500
Severance costs													96			—			245			—
Impairment expense													—			—			67,922			—
Impairment of Investment in Laramie Energy, LLC (2)													—			—			45,294			—
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	(3,859		)	3,157			(5,090		)	1,169			—			(3,859		)	(1,110		)	(5,090		)
Adjusted Net Income (3)	22,949			14,453			29,336			22,645
Adjusted Net Income (Loss) (3)													(90,760		)	22,403			(118,018		)	31,703
Depreciation, depletion, and amortization	21,919			12,775			42,876			25,812			22,128			21,919			43,411			42,876
Interest expense and financing costs, net	20,278			10,544			38,988			18,921			16,414			20,278			35,088			38,988
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives	3,368			(805		)	4,298			(4,393		)
Income tax expense	513			492			1,095			526
Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment losses													1,874			3,368			2,721			4,298
Income tax expense (benefit)													(2		)	513			124			1,095
Adjusted EBITDA	$	69,027		$	37,459		$	116,593		$	63,511		$	(50,346	)	$	68,481		$	(36,674	)	$	118,960


(1)	~~Included~~Includes increases in (releases of) our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance. These tax expenses (benefits) are 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 six months ended June 30, 2020 and 2019, ~~and 2018,~~ there ~~were~~was no ~~severance costs, impairment expense, or~~ (gain) loss on sale of ~~assets.~~assets or change in value of contingent consideration.

Factors Impacting Segment Results

Three months ended June 30, ~~2019~~2020 compared to the three months ended June 30, ~~2018~~2019

Refining. Operating ~~income~~loss for our refining segment was $36.8 million for the three months ended June 30, 2020, a decrease of $70.0 million compared to operating income of $33.2 million for the three months ended June 30, ~~2019, an increase~~2019. The decrease in profitability was primarily driven by unfavorable crude differentials, lower refining sales volumes, and unfavorable crack spreads, partially offset by favorable lower of ~~$6.1~~cost or net realizable value adjustments of $158.4 million ~~compared to~~and lower maintenance costs and other operating expenses.

Logistics. Operating income ~~of $27.1~~for our logistics segment was $6.3 million for the three months ended June 30, ~~2018. The increase in profitability was primarily driven by the contribution~~2020, a decrease of ~~the Washington refinery, offset by lower crack spreads and a challenging crude market at our Hawaii refinery. The Singapore crack spread decreased from $6.42 per barrel in the second quarter of 2018~~$10.1 million compared to ~~$6.22 per barrel in the second quarter of 2019. The Washington refinery assets contributed~~ operating income of ~~approximately $19.6 million to the refining segment for the three months ended June 30, 2019.~~

~~Logistics.~~ ~~Operating income for our logistics segment was~~ $16.4 million for the three months ended June 30, ~~2019, an increase of $7.7 million compared~~2019. The decrease is primarily due to ~~operating~~a net 27% lower throughput across the logistics fleet, including terminal and pipelines, related to COVID-19 demand destruction and higher DD&A expense, partially offset by higher storage margins.

Retail. Operating income ~~of $8.7~~for our retail segment was $16.2 million for the three months ended June 30, ~~2018. The~~2020, an increase ~~is primarily due~~of $4.2 million compared to ~~a contribution~~operating income of $5.3 million from the logistics assets acquired in connection with the Washington Acquisition for the three months ended June 30, 2019 and higher throughput in Hawaii due to the Hawaii Refinery Expansion.

~~Retail.~~ ~~Operating income for our retail segment was~~ $12.0 million for the three months ended June 30, ~~2019, an increase of $4.1 million compared to operating income of $7.9 million for the three months ended June 30, 2018.~~2019. The increase ~~in operating income~~ was primarily due to a ~~21%~~61% increase in fuel ~~margins.~~margins, partially offset by a 29% decline in sales volumes.

Six months ended June 30, ~~2019~~2020 compared to the six months ended June 30, ~~2018~~2019

Refining. Operating ~~income~~loss for our refining segment was $205.3 million for the six months ended June 30, 2020, a decrease of $252.8 million compared to operating income of $47.5 million for the six months ended June 30, ~~2019, a~~2019. The decrease in profitability was primarily driven by unfavorable crude differentials, lower sales volumes, goodwill impairment charges of ~~$5.7~~$38.1 million, ~~compared to operating~~increased RINs expenses, and lower of cost or net realizable value adjustments of $24.0 million.

Logistics. Operating income ~~of $53.2~~for our logistics segment was $25.1 million for the six months ended June 30, ~~2018. The~~2020, a decrease ~~in profitability was primarily driven by RINs waivers received in 2018 and a lower~~ of ~~cost or net realizable inventory value charge~~$3.7 million compared to operating income of $13.4 million. These decreases were partially offset by the contribution provided by the Washington Acquisition and higher crack spreads in Hawaii and Wyoming. The Singapore crack spread increased 2% from $6.40 per barrel for the six months ended June 30, 2018 to $6.55 per barrel$28.8 million for the six months ended June 30, 2019. The ~~Washington refinery~~decrease is primarily due to a net 8% lower throughput across our logistics assets, ~~contributed an operating income of approximately $14.4 million~~including terminal and pipelines, related to ~~the refining segment for the period from January 11, 2019 to June 30, 2019.~~COVID-19 demand destruction.

~~Logistics.~~Retail. Operating ~~income~~loss for our ~~logistics~~retail segment was ~~$28.8~~$1.9 million for the six months ended June 30, ~~2019, an increase~~2020, a decrease of ~~$11.4~~$24.0 million compared to operating income of $17.4 million for the six months ended June 30, 2018. The increase is primarily due to a contribution of $8.8 million from the logistics assets acquired in connection with the Washington Acquisition for the period from January 11, 2019 to June 30, 2019 and higher throughput in Hawaii due to the Hawaii Refinery Expansion.

~~Retail.~~ ~~Operating income for our retail segment was~~ $22.1 million for the six months ended June 30, ~~2019, an increase of $8.5 million compared to operating income of $13.6 million for the six months ended June 30, 2018.~~2019. The ~~increase~~decrease in profitability is primarily due to goodwill impairment charges of $29.8 million and a decrease in sales volumes of 17%, partially offset by an increase in fuel margins of ~~12% and an increase in sales volumes of 15% primarily due to the contribution of Northwest Retail for two full quarters during 2019 compared to a 100-day period of ownership during 2018.~~38%.

Adjusted Gross Margin

Three months ended June 30, ~~2019~~2020 compared to the three months ended June 30, ~~2018~~2019

Refining. For the three months ended June 30, ~~2019,~~2020, our refining Adjusted Gross Margin was ~~$98.7~~a loss of $22.3 million, ~~an increase~~a decrease of ~~$35.1~~$120.5 million compared to ~~$63.6~~income of $98.2 million for the three months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily driven by unfavorable crack spreads and crude differentials, and lower refining sales volumes. Adjusted gross margin for the Hawaii refineries decreased from $3.46 per barrel in 2019 to $(6.96) per barrel in 2020 primarily due to unfavorable crude differentials and crack spreads. Adjusted gross margin for the Wyoming refinery decreased $10.56 per barrel primarily due to a decrease in crack spreads and higher RINs costs. Adjusted gross margin for the Washington refinery ~~which contributed~~decreased $5.98 per barrel primarily due to unfavorable crack spreads.

Logistics.For the three months ended June 30, 2020, our logistics Adjusted Gross Margin was $14.5 million, a decrease of ~~approximately $35.3~~$8.9 million compared to ~~the refining segment~~$23.4 million for the three months ended June 30, 2019. The decrease was primarily driven by a net 27% lower throughput across the logistics fleet, including terminal and pipelines, related to COVID-19 demand destruction and higher DD&A expense, partially offset by increased inventory in storage in Washington.

~~Logistics.~~Retail. For the three months ended June 30, ~~2019,~~2020, our ~~logistics~~retail Adjusted Gross Margin was ~~$23.4~~$34.2 million, an increase of ~~$10.7~~$3.2 million when compared to ~~$12.7~~$31.0 million for the three months ended June 30, 2018. The increase was primarily driven by the contribution of the Washington assets of $7.4 million to the logistics segment for the three months ended June 30, 2019 and higher throughput in Hawaii due to the Hawaii Refinery Expansion.

~~Retail.~~ For the three months ended June 30, 2019, our retail Adjusted Gross Margin was $31.0 million, an increase of $4.5 million when compared to $26.5 million for the three months ended June 30, 2018.2019. The increase was primarily due to a ~~21%~~61% increase in fuel ~~margins.~~margins, partially offset by a 29% decline in sales volumes.

Six months ended June 30, ~~2019~~2020 compared to the six months ended June 30, ~~2018~~2019

Refining.For the six months ended June 30, ~~2019,~~2020, our refining Adjusted Gross Margin was ~~$184.4~~$17.2 million, ~~an increase~~a decrease of ~~$64.4~~$169.6 million compared to ~~$120.0~~$186.8 million for the six months ended June 30, ~~2018.~~2019. The ~~increase in profitability~~decrease was primarily ~~driven by~~due to unfavorable crude differentials, reduced sales volumes, and unfavorable crack spreads. Adjusted gross margin for the Hawaii refineries decreased from $3.60 per barrel in 2019 to $(2.73) per barrel in 2020 primarily due to unfavorable crude differentials. Adjusted gross margin for the Wyoming refinery decreased $13.33 per barrel primarily due to a decrease in crack spreads and higher RINs costs. Adjusted gross margin for the Washington refinery ~~which contributed Adjusted Gross Margin of $61.7 million to the refining segment for the period from January 11, 2019 to June 30, 2019. The Singapore crack spread increased 2% from $6.40~~decreased $2.75 per barrel ~~for the six months ended June 30, 2018~~primarily due to ~~$6.55 per barrel for the six months ended June 30, 2019.~~unfavorable crack spreads.

Logistics.For the six months ended June 30, ~~2019,~~2020, our logistics Adjusted Gross Margin was ~~$42.1~~$42.2 million, an increase of ~~$17.1~~$0.1 million compared to ~~$25.0~~$42.1 million for the six months ended June 30, ~~2018.~~2019. The increase was primarily driven by ~~the contribution of the~~increased inventory in storage and increased rail throughput in Washington, ~~assets, the timing of bulk movements~~partially offset by lower throughput volumes that decreased 47% in Hawaii and ~~higher throughput~~19% in ~~Hawaii due~~Wyoming related to ~~the Hawaii Refinery Expansion. The Washington assets contributed Adjusted Gross Margin of $13.0 million to the logistics segment for the period from January 11, 2019 to June 30, 2019.~~COVID-19 demand destruction.

Retail.For the six months ended June 30, ~~2019,~~2020, our retail Adjusted Gross Margin was ~~$59.5~~$65.6 million, an increase of ~~$13.6~~$6.1 million when compared to approximately ~~$45.9~~$59.5 million for the six months ended June 30, ~~2018.~~2019. The increase was primarily due to an increase in fuel margins of ~~12% in Hawaii and an increase~~38%, partially offset by a decrease in sales volumes of ~~15% primarily due to the contribution of Northwest Retail for two full quarters during 2019 compared to a 100-day period of ownership during 2018.~~17%.

Discussion of Consolidated Results

Three months ended June 30, ~~2019~~2020 compared to the three months ended June 30, ~~2018~~2019

Revenues. For the three months ended June 30, ~~2019,~~2020, revenues were ~~$1.4~~$0.5 billion, a ~~$0.5~~$0.9 billion ~~increase~~decrease compared to ~~$0.9~~$1.4 billion for the three months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily due to ~~an increase~~a decrease of ~~$551.8 million~~$0.9 billion in third-party

refining segment revenue as a result of ~~the Washington Acquisition~~decreases in Brent and WTI crude oil prices and a ~~50% increase~~32% decrease in ~~refined product~~refining sales volumes related to COVID-19 demand destruction. Brent and WTI crude oil prices averaged $33.39 and $28.00 per barrel during the second quarter of 2020 compared to $68.47 and $59.91 per barrel during the second quarter of 2019, respectively. Revenues at our retail segment decreased $41.1 million primarily due to a 29% decline in ~~Hawaii.~~sales volumes and a 28% decline in fuel prices.

Cost of Revenues (Excluding Depreciation). For the three months ended June 30, 2020, cost of revenues (excluding depreciation) was $0.4 billion, a $0.9 billion decrease compared to $1.3 billion for the three months ended June 30, 2019. The ~~Washington Acquisition contributed third-party~~decrease was primarily driven by decreases in Brent and WTI crude oil prices as discussed above, lower refining volumes related to COVID-19 demand destruction, and a favorable change in the lower of cost or net realizable value adjustment of $171.8 million, partially offset by unfavorable crude differentials. Cost of revenues ~~of $309.8~~at our retail segment decreased $44.4 million primarily due to lower fuel costs and a 29% decline in sales volumes.

Operating Expense (Excluding Depreciation).For the three months ended June 30, 2020, operating expense (excluding depreciation) was $67.0 million, a $7.8 million decrease when compared to $74.8 million for the three months ended June 30, 2019. ~~These increases were slightly~~The decrease was primarily due to lower operating expenses at our refineries driven by lower repairs and maintenance expenses, partially offset by ~~Brent crude oil prices, which averaged $68.47 per barrel during the second quarter of 2019 compared to $74.92 per barrel during the second quarter of 2018.~~increased utilities expenses.

~~Cost of Revenues (Excluding Depreciation)~~Depreciation, Depletion, and Amortization.For the three months ended June 30, ~~2019, cost of revenues (excluding depreciation)~~2020, DD&A was ~~$1.3 billion, a $0.6 billion increase compared to $0.7 billion for the three months ended June 30, 2018. The increase~~$22.1 million, which was ~~primarily driven by the Washington Acquisition and a 50% increase in refined product sales volumes in Hawaii. The Washington Acquisition contributed cost of revenues of approximately $267.3~~relatively consistent with $21.9 million for the three months ended June 30, 2019.

~~Operating~~General and Administrative Expense (Excluding Depreciation).For the three months ended June 30, ~~2019, operating~~2020, general and administrative expense (excluding depreciation) was ~~$74.8~~approximately $10.2 million, a ~~$21.7~~$1.2 million ~~increase~~decrease when compared to ~~$53.1~~$11.4 million for the three months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily driven by ~~operating expenses related to~~a reduction in the ~~Washington~~ use of outside services and COVID-19-related reductions in travel and employee costs.

Acquisition and the Hawaii Refinery Expansion. The Washington Acquisition contributed operating expenses of $15.7 million and the Hawaii Refinery Expansion contributed operating expenses of $5.0 million for the three months ended June 30, 2019.

~~Depreciation, Depletion, and Amortization~~.Integration Costs.For the three months ended June 30, 2019, DD&A was $21.9 million, an increase of $9.1 million compared to $12.8 million for the three months ended June 30, 2018. The increase was primarily due to the Washington Acquisition and the accelerated depreciation resulting from changes in the estimated useful lives of certain refinery equipment and storage tanks. The Washington Acquisition contributed DD&A of $7.4 million for the three months ended June 30, 2019.

~~General and Administrative Expense (Excluding Depreciation).~~For the three months ended June 30, 2019, general and administrative expense (excluding depreciation) was approximately $11.4 million, a decrease of $1.5 million compared to $12.9 million for the three months ended June 30, 2018. The decrease was primarily due to lower employee benefit costs.

~~Acquisition and Integration Costs.For the three months ended June 30, 2019,~~2020, we incurred ~~$0.8~~$0.1 million of costs primarily related to integration costs associated with the Washington Acquisition. For the three months ended June 30, ~~2018,~~2019, we incurred ~~$0.7~~$0.8 million of integration costs primarily related to ~~integration costs for~~ the ~~Northwest Retail Acquisition.~~Washington Acquisition, which closed on January 11, 2019.

Interest Expense and Financing Costs, Net. For the three months ended June 30, ~~2019,~~2020, our interest expense and financing costs were ~~$20.3~~$16.4 million, ~~an increase of $9.8~~a $3.9 million decrease when compared to ~~$10.5~~$20.3 million for the three months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily ~~due to~~driven by a $1.2 million decrease in interest expense associated with our inventory financing agreements, a $1.2 million decrease in interest expense associated with our 5.00% Convertible Senior Notes, and ~~financing costs~~a $1.1 million decrease in interest rate swap losses. These decreases were partially offset by interest expense of ~~$6.2~~$1.0 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, a net increase~~12.875% Senior Secured Notes issued in ~~our loss on interest rate derivatives of $1.5 million, and interest expense and financing costs of $0.5 million related to the~~ ~~Retail Property Term Loan~~ ~~entered into on March 29, 2019.~~June 2020. Please read Note 9—Inventory Financing Agreements and Note 10—Debt to our condensed consolidated financial statements for further discussion on our ~~indebtedness.~~inventory financing and indebtedness, respectively.

Change in Value of Common Stock Warrants. For the three months ended June 30, 2019, the change in value of common stock warrants resulted in a loss of approximately $1.0 ~~million, a change of $0.9 million when compared to a loss of approximately $0.1 million for~~million. During the three months ended June 30, ~~2018. For~~2020, there was no change in value of common stock warrants. During January and March 2020, one of our stockholders and its affiliates exercised the remaining 354,350 common stock warrants in exchange for 350,542 shares of common stock. We estimated 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. During the three months ended June 30, 2019, our stock price increased from $17.81 per share as of March 31, 2019 to $20.52 per share as of June 30, 2019, which resulted in an increase in the fair value of the common stock warrants. During the three months ended June 30, 2018, our stock price increased from $17.17 per share as of March 31, 2018 to $17.38 per share as of June 30, 2018, which resulted in an increase in the fair value of the common stock warrants.2019.

Debt ~~extinguishment~~Extinguishment and ~~commitment costs.~~ Commitment Costs. For the three months ended June 30, 2019, our debt extinguishment costs were $3.7 million and represent the extinguishment ~~costs~~loss associated with the repurchase and cancellation of a portion of our outstanding 5.00% Convertible Senior Notes. in 2019. Please read Note 9—10—Debt to our condensed consolidated financial statements for further discussion. No such costs were incurred for the three months ended June 30, ~~2018.~~2020.

Equity ~~Earnings (Losses) From~~Losses from Laramie Energy, LLC. For the three months ended June 30, ~~2019,~~2020, equity ~~earnings~~losses from Laramie Energy were ~~$0.5~~$1.9 million, ~~an increase~~a decrease of ~~$2.9~~$2.4 million compared to equity ~~losses~~earnings of ~~$2.4~~$0.5 million for the three months ended June 30, ~~2018.~~2019. The ~~change in equity earnings~~decrease was primarily due to Laramie Energy’s net loss ~~on derivative instruments~~associated with lower realized natural gas prices. As of ~~$4.8 million for the three months ended~~ June 30, ~~2018, compared to a gain~~2020, we have discontinued the application of ~~$11.4 million~~the equity method of accounting for ~~the same period in 2019, partially offset by a 17% decrease in sales prices.~~

~~During the second quarter of 2019, we conducted an impairment evaluation of~~ our investment in Laramie Energy ~~as a result of~~because the ~~significant decline in natural gas prices during the latter part of the second quarter of 2019. We concluded that the excess of the carrying~~book value of ~~our~~such investment in Laramie Energy over its fair value was not other-than-temporary and that no impairment loss should be recorded on our statement of operations for the three months ended June 30, 2019. However, sustained downward pressure on natural gas prices could potentially be an indicator of a future other-than-temporary impairment of our investment in Laramie Energy.has been reduced to zero. Please read Note 3—Investment in Laramie Energy, LLC for further information.

Income Taxes. For the three months ended June 30, 2020, we recorded an income tax benefit of $2.7 million primarily related to an increase in our net operating loss carryforwards. For the three months ended June 30, 2019, we recorded an income tax benefit of $1.8 million primarily driven by a $2.3 million benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition. ~~For the three months ended June 30, 2018, we recorded income tax expense of $0.5 million related primarily to deferred federal taxes for the period.~~

Six months ended June 30, ~~2019~~2020 compared to the six months ended June 30, ~~2018~~2019

Revenues. For the six months ended June 30, ~~2019,~~2020, revenues were ~~$2.6~~$1.7 billion, a ~~$1.0~~$0.9 billion ~~increase~~decrease compared to ~~$1.6~~$2.6 billion for the six months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily due to ~~an increase~~a decrease of ~~$958.6 million~~$0.8 billion in third-party revenues at our refining segment primarily as a result of ~~the Washington Acquisition~~decreases in Brent and ~~increased~~WTI crude oil prices and lower sales volumes ~~in Hawaii~~ related to ~~the Hawaii Refinery Expansion. The Washington Acquisition contributed third-party revenues of $555.6 million for the period from January 11, 2019 to June 30, 2019.~~COVID-19 demand destruction. Refined product sales volumes ~~in Hawaii increased 42%~~decreased 13% from ~~81.4~~171.1 Mbpd in the six months ended June 30, ~~2018~~2019 to ~~115.2~~149.5 Mbpd in the six months ended June 30, ~~2019.~~2020. Average Brent prices decreased from ~~$71.08 per barrel in the six months ended June 30, 2018 to~~ $66.16 per barrel in the six months ended June 30, ~~2019.~~2019 to $42.10 per barrel in the six months ended June 30, 2020, with similar decreases experienced for WTI crude oil prices. Revenues in our retail segment ~~increased $22.3~~decreased $38.2 million primarily due to ~~the acquisition of Northwest Retail, offset by~~ a 4%17% decrease in sales volumes and a 13% decrease in fuel ~~sales~~ prices.

Cost of Revenues (Excluding Depreciation). For the six months ended June 30, ~~2019,~~2020, cost of revenues (excluding depreciation) was ~~$2.3~~$1.7 billion, a ~~$0.9~~$0.6 billion ~~increase~~decrease compared to ~~$1.4~~$2.3 billion for the six months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily due to ~~the Washington Acquisition~~decreases in Brent and ~~a 42%~~WTI crude oil prices as discussed above and overall lower refining and retail volumes related to COVID-19 demand destruction. These decreases were partially offset by unfavorable crude differentials in Hawaii and an increase in ~~refined product sales volumes in Hawaii. The Washington Acquisition contributed cost of revenues~~RINs expense of approximately ~~$492.8 million for the period from January 11, 2019 to June 30, 2019.~~$33.7 million.

Operating Expense (Excluding Depreciation).For the six months ended June 30, ~~2019,~~2020, operating expense (excluding depreciation) was ~~$148.5~~$140.4 million, ~~an increase~~a decrease of ~~$44.4~~$8.1 million compared to $104.1 million for the six months ended June 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 $30.2 million for the period from January 11, 2019 to June 30, 2019. The Hawaii Refinery Expansion contributed operating expenses of $9.8$148.5 million for the six months ended June 30, 2019. ~~Northwest Retail contributed operating~~The decrease was primarily due to lower utilities expenses, ~~of $9.5 million for the full six months ended June 30, 2019 as compared to $5.4 million for the 100-day period of ownership from March 23, 2018 to June 30, 2018.~~and repairs and maintenance expenses.

Depreciation, Depletion, and Amortization.For the six months ended June 30, ~~2019,~~2020, DD&A was ~~$42.9~~$43.4 million, ~~an increase of $17.1 million when compared to $25.8~~which was relatively consistent with $42.9 million for the six months ended June 30, ~~2018. The increase~~2019.

Impairment Expense. During the six months ended June 30, 2020, we recorded goodwill impairment charges of $67.9 million related to our Refining and Retail segments. Please read Note 8—Goodwill to our condensed consolidated financial statements for further discussion on the goodwill impairment. There was ~~primarily due to DD&A on assets acquired as part of~~no impairment expense for the ~~Washington Acquisition and the accelerated depreciation of assets to be replaced during the 2020 Wyoming refinery turnaround.~~six months ended June 30, 2019.

General and Administrative Expense (Excluding Depreciation).For the six months ended June 30, ~~2019,~~2020, general and administrative expense (excluding depreciation) was ~~$23.0~~$22.0 million, which iswas relatively consistent with ~~$24.1~~$23.0 million for the six months ended June 30, ~~2018.~~2019.

Acquisition and Integration Costs.For the six months ended June 30, 2020, we incurred $0.8 million of integration costs primarily related to the Washington Acquisition. For the six months ended June 30, 2019, we incurred $3.7 million of acquisition and integration costs ~~primarily~~ related to the Washington Acquisition and the Par West Hawaii ~~Refinery Expansion.~~refinery acquisition.

Interest Expense and Financing Costs, Net. For the six months ended June 30, ~~2018, we incurred $1.4 million of acquisition and integration costs related to the Northwest Retail Acquisition.~~

~~Interest Expense and Financing Costs, Net~~. ~~For the six months ended June 30, 2019,~~2020, our interest expense and financing costs were ~~$39.0~~$35.1 million, ~~an increase~~a decrease of ~~$20.1~~$3.9 million when compared to ~~$18.9~~$39.0 million for the six months ended June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily due to a decrease in interest expense and financing costs of ~~$12.0~~$2.8 million due to the exchange of a portion of our outstanding 5.00% Convertible Senior Notes during 2019 and a decrease of $1.2 million due to reduced borrowings under our Supply and Offtake Agreements and Washington Refinery Intermediation Agreement. These decreases were partially offset by interest expense of $1.0 million related to the new Term Loan B Facility entered into on January 11, 2019, interest expense of $3.0 million on the Washington Refinery Intermediation Agreement, increased interest and financing costs of $1.0 million associated with J. Aron deferred payments, a net increase12.875% Senior Secured Notes issued in our loss on interest rate derivatives of $2.8 million, and interest expense and financing costs of $1.2 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.~~June 2020. Please read Note 9—Inventory Financing Agreements and Note 10—Debt to our condensed consolidated financial statements for further discussion on our ~~indebtedness.~~inventory financing and indebtedness, respectively.

Change in Value of Common Stock Warrants. For the six months ended June 30, ~~2019,~~2020, the change in value of common stock warrants resulted in a ~~loss~~gain of ~~$2.2~~$4.3 million, a change of ~~$2.9~~$6.5 million when compared to a ~~gain~~loss of ~~$0.7~~$2.2 million for the six months ended June 30, ~~2018.~~2019. During January and March 2020, one of our stockholders and its affiliates exercised the remaining 354,350 common stock warrants in exchange for 350,542 shares of common stock. We estimated the fair value of our outstanding common stock warrants and the income recognized upon exercise using the difference between the strike price of the warrant and the market price of our common stock. For the three months ended March 31, 2020, our stock price decreased from $23.24 per share as of December 31, 2019 to $7.10 per share as of March 31, 2020. During the six months ended June 30, 2019, our stock price increased from $14.18 per share ~~as of~~

on December 31, 2018 to $20.52 per share as of June 30, 2019, which resulted in an increase in the fair value of the common stock warrants. During the six months ended June 30, 2018, our stock price decreased from $19.28 per share on December 31, 2017 to $17.38 per share on June 30, ~~2018, which resulted in a decrease in the value of the common stock warrants.~~2019.

~~Change in Value of Contingent Consideration~~. For the six months ended June 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 six months ended June 30, 2019, there was no contingent consideration liability.

Debt Extinguishment and Commitment Costs. For the six months ended June 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—10—Debt to our condensed consolidated financial statements for further discussion. No such costs were incurred for the six months ended June 30, ~~2018.~~2020.

Equity ~~Earnings (Losses)~~Losses from Laramie Energy, LLC. For the six months ended June 30, ~~2019,~~2020, equity ~~earnings~~losses from Laramie Energy were ~~$0.8~~$46.9 million, a decrease of ~~$2.4~~$47.7 million compared to ~~$3.2~~equity earnings of $0.8 million for the six months ended June 30, ~~2018.~~2019. During the three months ended March 31, 2020, we recorded an other-than-temporary impairment charge of $45.3 million related to our investment in Laramie Energy. The ~~change~~remaining decrease was primarily due to ~~higher interest expense~~Laramie Energy’s net loss associated with ~~Laramie Energy's revolving credit facility and a loss on derivative instruments~~lower realized prices. As of ~~$0.3 million for the six months ended~~ June 30, ~~2018, compared to a loss on derivative instruments~~2020, we have discontinued the application of ~~$1.0 million~~the equity method of accounting for ~~the same period in 2019.~~

~~During the second quarter of 2019, we conducted an impairment evaluation of~~ our investment in Laramie Energy ~~as a result of~~because the ~~significant decline in natural gas prices during the latter part of the second quarter of 2019. We concluded that the excess of the carrying~~book value of ~~our~~such investment in Laramie Energy over its fair value was not other than temporary and that no impairment loss should be recorded on our statement of operations for the six months ended June 30, 2019. However, sustained downward pressure on natural gas prices could potentially be an indicator of a future other-than-temporary impairment of our investment in Laramie Energy.has been reduced to zero. Please read Note 3—Investment in Laramie Energy, LLC for further information.

Income Taxes. For the six months ended June 30, 2020, we recorded an income tax benefit of $21.0 million primarily driven by an increase in our net operating loss carryforwards and the change in our indefinitely-lived goodwill due to the impairments. For the six months ended June 30, 2019, we recorded an income tax benefit of $66.6 million primarily driven by a $67.7 million benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition. ~~For the six months ended June 30, 2018, we recorded income tax expense of $0.5 million primarily due to deferred federal taxes.~~

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 (defined below) 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”). On June 5, 2020, the Issuers issued their 12.875% Senior Secured Notes due 2026 in a private offering under Rule 144A and Regulation S of the Securities Act. The 7.75% Senior Secured Notes ~~and~~, the Term Loan B, and the 12.875% Senior Secured Notes 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, and 12.875% Senior Secured Notes 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 (which are all guarantors of the 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes or, Term Loan B, or 12.875% Senior Secured Notes and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated. 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).


	As of June 30, 2019												As of June 30, 2020
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
ASSETS
Current assets
Cash and cash equivalents	$	11,062		$	94,865		$	263		$	106,190		$	3,944		$	137,685		$	1,240		$	142,869
Restricted cash	743			1,704			—			2,447			743			1,670			—			2,413
Trade accounts receivable	—			254,666			18			254,684			—			114,496			3			114,499
Inventories	—			573,879			—			573,879			—			427,679			—			427,679
Prepaid and other current assets	5,388			8,144			301			13,833			5,539			26,122			644			32,305
Due from related parties	68,873			—			(68,873		)	—			147,802			—			(147,802		)	—
Total current assets	86,066			933,258			(68,291		)	951,033			158,028			707,652			(145,915		)	719,765
Property and equipment
Property, plant, and equipment
Property, plant, and equipment	19,952			1,048,675			37,792			1,106,419			20,992			1,117,888			37,792			1,176,672
Less accumulated depreciation, depletion, and amortization	(10,624		)	(133,570		)	(2,057		)	(146,251		)	(12,947		)	(209,161		)	(2,576		)	(224,684		)
Property and equipment, net	9,328			915,105			35,735			960,168
Property, plant, and equipment, net													8,045			908,727			35,216			951,988
Long-term assets
Operating lease assets	4,415			405,071			(20,439		)	389,047
Investment in Laramie Energy, LLC	—			—			137,448			137,448
Operating lease right-of-use assets													3,999			390,776			(16,452		)	378,323
Investment in subsidiaries	715,655			—			(715,655		)	—			350,213			—			(350,213		)	—
Intangible assets, net	—			22,617			—			22,617			—			20,221			—			20,221
Goodwill	—			192,107			2,598			194,705			—			125,399			2,598			127,997
Other long-term assets	1,405			15,987			—			17,392			722			25,782			—			26,504
Total assets	$	816,869		$	2,484,145		$	(628,604	)	$	2,672,410		$	521,007		$	2,178,557		$	(474,766	)	$	2,224,798
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	—		$	10,806		$	1,489		$	12,295		$	46,008		$	10,930		$	1,552		$	58,490
Obligations under inventory financing agreements	—			636,489			—			636,489			—			433,298			—			433,298
Accounts payable	2,485			142,146			1,633			146,264			2,224			107,602			1,483			111,309
Deferred revenue	—			8,063			16			8,079			—			3,012			—			3,012
Accrued taxes	—			32,187			24			32,211			—			24,382			43			24,425
Operating lease liabilities	429			62,926			(3,648		)	59,707			744			64,419			(4,150		)	61,013
Other accrued liabilities	3,747			78,305			(2,904		)	79,148			4,106			112,137			(1,220		)	115,023
Due to related parties	64,936			48,936			(113,872		)	—			70,036			81,138			(151,174		)	—
Total current liabilities	71,597			1,019,858			(117,262		)	974,193			123,118			836,918			(153,466		)	806,570
Long-term liabilities
Long-term debt, net of current maturities	71,621			517,796			42,384			631,801			—			612,938			41,018			653,956
Common stock warrants	7,246			—			—			7,246
Finance lease obligations	430			6,071			—			6,501
Operating lease obligations	5,954			343,302			(16,791		)	332,465
Finance lease liabilities													89			7,054			—			7,143
Operating lease liabilities													5,195			328,500			(12,302		)	321,393
Other liabilities	458			138,405			(78,222		)	60,641			129			81,199			(38,068		)	43,260
Total liabilities	157,306			2,025,432			(169,891		)	2,012,847			128,531			1,866,609			(162,818		)	1,832,322
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 51,024,186 shares issued	510			—			—			510
Preferred stock													—			—			—			—
Common stock													539			—			—			539
Additional paid-in capital	675,870			309,657			(309,657		)	675,870			722,194			307,967			(307,967		)	722,194
Accumulated earnings (deficit)	(19,490		)	145,553			(145,553		)	(19,490		)	(330,839		)	2,569			(2,569		)	(330,839		)
Accumulated other comprehensive income	2,673			3,503			(3,503		)	2,673			582			1,412			(1,412		)	582
Total stockholders’ equity	659,563			458,713			(458,713		)	659,563			392,476			311,948			(311,948		)	392,476
Total liabilities and stockholders’ equity	$	816,869		$	2,484,145		$	(628,604	)	$	2,672,410		$	521,007		$	2,178,557		$	(474,766	)	$	2,224,798


	As of December 31, 2018												As of December 31, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			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		$	6,309		$	118,812		$	894		$	126,015
Restricted cash	743			—			—			743			743			1,670			—			2,413
Trade accounts receivable	—			159,630			708			160,338			—			228,707			11			228,718
Inventories	—			322,065			—			322,065			—			615,872			—			615,872
Prepaid and other current assets	11,711			17,048			(389		)	28,370			12,325			46,470			361			59,156
Due from related parties	43,928			—			(43,928		)	—			180,686			—			(180,686		)	—
Total current assets	85,083			544,805			(43,296		)	586,592			200,063			1,011,531			(179,420		)	1,032,174
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
Property, plant, and equipment													20,961			1,088,230			37,792			1,146,983
Less accumulated depreciation, depletion, and amortization													(12,117		)	(170,607		)	(2,316		)	(185,040		)
Property, plant, and equipment, net													8,844			917,623			35,476			961,943
Long-term assets
Operating lease right-of-use assets													4,276			434,909			(19,112		)	420,073
Investment in Laramie Energy, LLC	—			—			136,656			136,656			—			—			46,905			46,905
Investment in subsidiaries	638,975			—			(638,975		)	—			636,742			—			(636,742		)	—
Intangible assets, net	—			23,947			—			23,947			—			21,549			—			21,549
Goodwill	—			150,799			2,598			153,397			—			193,321			2,598			195,919
Other long-term assets	3,334			18,547			—			21,881			1,128			20,869			—			21,997
Total assets	$	737,297		$	1,266,347		$	(542,910	)	$	1,460,734		$	851,053		$	2,599,802		$	(750,295	)	$	2,700,560
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	—		$	33		$	—		$	33		$	—		$	10,777		$	1,520		$	12,297
Obligations under inventory financing agreements	—			373,882			—			373,882			—			656,162			—			656,162
Accounts payable	8,312			44,997			1,478			54,787			2,597			158,323			1,482			162,402
Deferred revenue	—			6,681			—			6,681			—			7,905			—			7,905
Accrued taxes	—			17,206			50			17,256			—			30,745			68			30,813
Operating lease liabilities													698			84,366			(5,065		)	79,999
Other accrued liabilities	12,349			43,773			(1,560		)	54,562			14,591			72,670			(2,517		)	84,744
Due to related parties	96,963			9,848			(106,811		)	—			125,778			101,936			(227,714		)	—
Total current liabilities	117,624			496,420			(106,843		)	507,201			143,664			1,122,884			(232,226		)	1,034,322
Long-term liabilities
Long-term debt, net of current maturities	100,411			292,196			—			392,607			44,783			513,145			41,706			599,634
Common stock warrants	5,007			—			—			5,007			8,206			—			—			8,206
Long-term capital lease obligations	475			5,648			—			6,123
Finance lease liabilities													223			6,004			—			6,227
Operating lease liabilities													5,629			349,327			(14,047		)	340,909
Other liabilities	1,451			41,040			(5,024		)	37,467			306			120,001			(57,287		)	63,020
Total liabilities	224,968			835,304			(111,867		)	948,405			202,811			2,111,361			(261,854		)	2,052,318
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
Preferred stock													—			—			—			—
Common stock													533			—			—			533
Additional paid-in capital	617,937			345,825			(345,825		)	617,937			715,069			293,006			(293,006		)	715,069
Accumulated earnings (deficit)	(108,751		)	81,715			(81,715		)	(108,751		)	(67,942		)	194,023			(194,023		)	(67,942		)
Accumulated other comprehensive income	2,673			3,503			(3,503		)	2,673			582			1,412			(1,412		)	582
Total stockholders’ equity	512,329			431,043			(431,043		)	512,329			648,242			488,441			(488,441		)	648,242
Total liabilities and stockholders’ equity	$	737,297		$	1,266,347		$	(542,910	)	$	1,460,734		$	851,053		$	2,599,802		$	(750,295	)	$	2,700,560


	Three Months Ended June 30, 2019												Three Months Ended June 30, 2020
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	—		$	1,409,407		$	2		$	1,409,409		$	—		$	515,301		$	—		$	515,301

Operating expenses
Cost of revenues (excluding depreciation)	—			1,251,842			—			1,251,842			—			441,278			—			441,278
Operating expense (excluding depreciation)	—			75,224			(394		)	74,830			—			68,210			(1,183		)	67,027
Depreciation, depletion, and amortization	724			21,151			44			21,919			769			21,229			130			22,128
Loss (gain) on sale of assets, net	—			(37,382		)	37,382			—
General and administrative expense (excluding depreciation)	4,900			6,409			70			11,379			2,628			7,593			—			10,221
Acquisition and integration costs	1			817			—			818			—			90			—			90
Total operating expenses	5,625			1,318,061			37,102			1,360,788			3,397			538,400			(1,053		)	540,744

Operating income (loss)	(5,625		)	91,346			(37,100		)	48,621			(3,397		)	(23,099		)	1,053			(25,443		)

Other income (expense)
Interest expense and financing costs, net	(5,617		)	(12,662		)	(1,999		)	(20,278		)	(1,245		)	(14,610		)	(559		)	(16,414		)
Debt extinguishment and commitment costs	(3,690		)	—			—			(3,690		)
Other income (expense), net	2,128			50			(1		)	2,177
Change in value of common stock warrants	(957		)	—			—			(957		)
Other income, net													2			453			—			455
Equity earnings (losses) from subsidiaries	41,930			—			(41,930		)	—			(35,920		)	—			35,920			—
Equity earnings from Laramie Energy, LLC	—			—			491			491
Equity earnings (losses) from Laramie Energy, LLC													—			—			(1,874		)	(1,874		)
Total other income (expense), net	33,794			(12,612		)	(43,439		)	(22,257		)	(37,163		)	(14,157		)	33,487			(17,833		)

Income (loss) before income taxes	28,169			78,734			(80,539		)	26,364			(40,560		)	(37,256		)	34,540			(43,276		)
Income tax benefit (expense)	—			(16,869		)	18,674			1,805
Income tax benefit (expense) (1)													—			7,814			(5,098		)	2,716
Net income (loss)	$	28,169		$	61,865		$	(61,865	)	$	28,169		$	(40,560	)	$	(29,442	)	$	29,442		$	(40,560	)

Adjusted EBITDA	$	(2,772	)	$	71,474		$	325		$	69,027		$	(2,530	)	$	(48,999	)	$	1,183		$	(50,346	)


	Three Months Ended June 30, 2018												Three Months Ended June 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	—		$	856,380		$	16		$	856,396		$	—		$	1,409,407		$	2		$	1,409,409

Operating expenses
Cost of revenues (excluding depreciation)	—			747,924			—			747,924			—			1,251,842			—			1,251,842
Operating expense (excluding depreciation)	—			53,056			4			53,060			—			75,224			(394		)	74,830
Depreciation, depletion, and amortization	864			11,896			15			12,775			724			21,151			44			21,919
Loss (gain) on sale of assets, net													—			(37,382		)	37,382			—
General and administrative expense (excluding depreciation)	5,156			7,670			79			12,905			4,900			6,409			70			11,379
Acquisition and integration costs	749			—			—			749			1			817			—			818
Total operating expenses	6,769			820,546			98			827,413			5,625			1,318,061			37,102			1,360,788

Operating income (loss)	(6,769		)	35,834			(82		)	28,983			(5,625		)	91,346			(37,100		)	48,621

Other income (expense)
Interest expense and financing costs, net	(2,686		)	(7,858		)	—			(10,544		)	(5,617		)	(12,662		)	(1,999		)	(20,278		)
Other income (expense), net	668			(5		)	(6		)	657
Debt extinguishment and commitment costs													(3,690		)	—			—			(3,690		)
Other income, net													2,128			50			(1		)	2,177
Change in value of common stock warrants	(74		)	—			—			(74		)	(957		)	—			—			(957		)
Equity earnings (losses) from subsidiaries	25,039			—			(25,039		)	—			41,930			—			(41,930		)	—
Equity earnings from Laramie Energy, LLC	—			—			(2,352		)	(2,352		)
Equity earnings (losses) from Laramie Energy, LLC													—			—			491			491
Total other income (expense), net	22,947			(7,863		)	(27,397		)	(12,313		)	33,794			(12,612		)	(43,439		)	(22,257		)

Income (loss) before income taxes	16,178			27,971			(27,479		)	16,670			28,169			78,734			(80,539		)	26,364
Income tax benefit (expense)	—			(5,264		)	4,772			(492		)
Income tax benefit (expense) (1)													—			(16,869		)	18,674			1,805
Net income (loss)	$	16,178		$	22,707		$	(22,707	)	$	16,178		$	28,169		$	61,865		$	(61,865	)	$	28,169

Adjusted EBITDA	$	(4,488	)	$	42,020		$	(73	)	$	37,459		$	(2,772	)	$	70,928		$	325		$	68,481


	Six Months Ended June 30, 2019												Six Months Ended June 30, 2020
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	—		$	2,600,733		$	11		$	2,600,744		$	—		$	1,719,382		$	2		$	1,719,384

Operating expenses
Cost of revenues (excluding depreciation)	—			2,312,574			—			2,312,574			—			1,651,489			—			1,651,489
Operating expense (excluding depreciation)	—			148,898			(394		)	148,504			—			142,784			(2,366		)	140,418
Depreciation, depletion, and amortization	1,476			41,350			50			42,876			1,505			41,646			260			43,411
Loss (gain) on sale of assets, net	—			(37,382		)	37,382			—
Impairment expense													—			67,922			—			67,922
General and administrative expense (excluding depreciation)	9,894			13,091			59			23,044			5,629			16,376			—			22,005
Acquisition and integration expense	3			3,699			—			3,702
Acquisition and integration costs													—			755			—			755
Total operating expenses	11,373			2,482,230			37,097			2,530,700			7,134			1,920,972			(2,106		)	1,926,000

Operating income (loss)	(11,373		)	118,503			(37,086		)	70,044			(7,134		)	(201,590		)	2,108			(206,616		)

Other income (expense)
Interest expense and financing costs, net	(5,999		)	(30,990		)	(1,999		)	(38,988		)	(2,473		)	(29,640		)	(2,975		)	(35,088		)
Debt extinguishment and commitment costs	(3,832		)	(5,354		)	—			(9,186		)	—			—			—			—
Other income (expense), net	2,235			30			(1		)	2,264
Other income, net													12			467			—			479
Change in value of common stock warrants	(2,239		)	—			—			(2,239		)	4,270			—			—			4,270
Equity earnings (losses) from subsidiaries	110,619			—			(110,619		)	—			(257,572		)	—			257,572			—
Equity earnings from Laramie Energy, LLC	—			—			792			792
Equity earnings (losses) from Laramie Energy, LLC													—			—			(46,905		)	(46,905		)
Total other income (expense), net	100,784			(36,314		)	(111,827		)	(47,357		)	(255,763		)	(29,173		)	207,692			(77,244		)

Income (loss) before income taxes	89,411			82,189			(148,913		)	22,687			(262,897		)	(230,763		)	209,800			(283,860		)
Income tax benefit (expense)(1)	(150		)	(18,351		)	85,075			66,574			—			39,309			(18,346		)	20,963
Net income (loss)	$	89,261		$	63,838		$	(63,838	)	$	89,261		$	(262,897	)	$	(191,454	)	$	191,454		$	(262,897	)

Adjusted EBITDA	$	(7,659	)	$	123,907		$	345		$	116,593		$	(5,460	)	$	(33,582	)	$	2,368		$	(36,674	)


	Six Months Ended June 30, 2018												Six Months Ended June 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Revenues	$	—		$	1,621,307		$	528		$	1,621,835		$	—		$	2,600,733		$	11		$	2,600,744

Operating expenses
Cost of revenues (excluding depreciation)	—			1,409,503			320			1,409,823			—			2,312,574			—			2,312,574
Operating expense (excluding depreciation)	—			104,066			4			104,070			—			148,898			(394		)	148,504
Depreciation, depletion, and amortization	1,977			23,815			20			25,812			1,476			41,350			50			42,876
Loss (gain) on sale of assets, net													—			(37,382		)	37,382			—
General and administrative expense (excluding depreciation)	10,381			13,575			154			24,110			9,894			13,091			59			23,044
Acquisition and integration expense	1,180			201			—			1,381
Acquisition and integration costs													3			3,699			—			3,702
Total operating expenses	13,538			1,551,160			498			1,565,196			11,373			2,482,230			37,097			2,530,700

Operating income (loss)	(13,538		)	70,147			30			56,639			(11,373		)	118,503			(37,086		)	70,044

Other income (expense)
Interest expense and financing costs, net	(5,340		)	(13,581		)	—			(18,921		)	(5,999		)	(30,990		)	(1,999		)	(38,988		)
Other income (expense), net	823			(35		)	(12		)	776
Debt extinguishment and commitment costs													(3,832		)	(5,354		)	—			(9,186		)
Other income, net													2,235			30			(1		)	2,264
Change in value of common stock warrants	671			—			—			671			(2,239		)	—			—			(2,239		)
Change in value of contingent consideration	—			(10,500		)	—			(10,500		)
Equity earnings (losses) from subsidiaries	48,747			—			(48,747		)	—			110,619			—			(110,619		)	—
Equity earnings from Laramie Energy, LLC	—			—			3,224			3,224
Equity earnings (losses) from Laramie Energy, LLC													—			—			792			792
Total other income (expense), net	44,901			(24,116		)	(45,535		)	(24,750		)	100,784			(36,314		)	(111,827		)	(47,357		)

Income (loss) before income taxes	31,363			46,031			(45,505		)	31,889			89,411			82,189			(148,913		)	22,687
Income tax benefit (expense)	—			(11,017		)	10,491			(526		)
Income tax benefit (expense) (1)													(150		)	(18,351		)	85,075			66,574
Net income (loss)	$	31,363		$	35,014		$	(35,014	)	$	31,363		$	89,261		$	63,838		$	(63,838	)	$	89,261

Adjusted EBITDA	$	(9,558	)	$	73,031		$	38		$	63,511		$	(7,659	)	$	126,274		$	345		$	118,960


(1)	The income tax benefit (expense) of the Parent Guarantor and Issuer and Subsidiaries is determined using the separate return method. The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances.

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~~Net income (loss), on a historical basis for the periods indicated (in thousands):


	Three Months Ended June 30, 2019												Three Months Ended June 30, 2020
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	28,169		$	61,865		$	(61,865	)	$	28,169		$	(40,560	)	$	(29,442	)	$	29,442		$	(40,560	)
Inventory valuation adjustment	—			(21,556		)	—			(21,556		)	—			(35,979		)	—			(35,979		)
RINs loss (gain) in excess of net obligation	—			2,713			—			2,713			—			10,738			—			10,738
Unrealized loss (gain) on derivatives	—			14,335			—			14,335			—			(22,431		)	—			(22,431		)
Acquisition and integration costs	1			817			—			818			—			90			—			90
Debt extinguishment and commitment costs	3,690			—			—			3,690
Increase in (release of) tax valuation allowance (1)	—			—			(2,318		)	(2,318		)
Change in value of common stock warrants	957			—			—			957
Loss (gain) on sale of assets, net	—			(37,382		)	37,382			—
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—			(3,859		)	(3,859		)
Changes in valuation allowance and other deferred tax items (1)													—			—			(2,714		)	(2,714		)
Severance costs													96			—			—			96
Depreciation, depletion, and amortization	724			21,151			44			21,919			769			21,229			130			22,128
Interest expense and financing costs, net	5,617			12,662			1,999			20,278			1,245			14,610			559			16,414
Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives	—			—			3,368			3,368
Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives													—			—			1,874			1,874
Equity losses (income) from subsidiaries	(41,930		)	—			41,930			—			35,920			—			(35,920		)	—
Income tax expense (benefit)	—			16,869			(16,356		)	513			—			(7,814		)	7,812			(2		)
Adjusted EBITDA (3)	$	(2,772	)	$	71,474		$	325		$	69,027		$	(2,530	)	$	(48,999	)	$	1,183		$	(50,346	)


	Three Months Ended June 30, 2018												Three Months Ended June 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	16,178		$	22,707		$	(22,707	)	$	16,178		$	28,169		$	61,865		$	(61,865	)	$	28,169
Inventory valuation adjustment	—			(12,091		)	—			(12,091		)	—			(22,102		)	—			(22,102		)
RINs loss (gain) in excess of net obligation	—			890			—			890			—			2,713			—			2,713
Unrealized loss (gain) on derivatives	—			5,496			—			5,496
Unrealized loss on derivatives													—			14,335			—			14,335
Acquisition and integration costs	749			—			—			749			1			817			—			818
Debt extinguishment and commitment costs													3,690			—			—			3,690
Changes in valuation allowance and other deferred tax items (1)													—			—			(2,318		)	(2,318		)
Change in value of common stock warrants	74			—			—			74			957			—			—			957
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—			3,157			3,157
Loss (gain) on sale of assets, net													—			(37,382		)	37,382			—
Par’s share of Laramie Energy’s unrealized gain on derivatives (2)													—			—			(3,859		)	(3,859		)
Depreciation, depletion, and amortization	864			11,896			15			12,775			724			21,151			44			21,919
Interest expense and financing costs, net	2,686			7,858			—			10,544			5,617			12,662			1,999			20,278
Equity (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives	—			—			(805		)	(805		)
Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives													—			—			3,368			3,368
Equity losses (income) from subsidiaries	(25,039		)	—			25,039			—			(41,930		)	—			41,930			—
Income tax expense (benefit)	—			5,264			(4,772		)	492			—			16,869			(16,356		)	513
Adjusted EBITDA (3)	$	(4,488	)	$	42,020		$	(73	)	$	37,459		$	(2,772	)	$	70,928		$	325		$	68,481


	Six Months Ended June 30, 2019												Six Months Ended June 30, 2020
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	89,261		$	63,838		$	(63,838	)	$	89,261		$	(262,897	)	$	(191,454	)	$	191,454		$	(262,897	)
Inventory valuation adjustment	—			(21,171		)	—			(21,171		)	—			39,345			—			39,345
RINs loss (gain) in excess of net obligation	—			(1,799		)	—			(1,799		)	—			17,340			—			17,340
Unrealized loss (gain) on derivatives	—			20,677			—			20,677
Unrealized loss on derivatives													—			445			—			445
Acquisition and integration costs	3			3,699			—			3,702			—			755			—			755
Debt extinguishment and commitment costs	3,832			5,354			—			9,186
Increase in (release of) tax valuation allowance (1)	—			—			(67,669		)	(67,669		)
Changes in valuation allowance and other deferred tax items (1)													—			—			(21,087		)	(21,087		)
Change in value of common stock warrants	2,239			—			—			2,239			(4,270		)	—			—			(4,270		)
Loss (gain) on sale of assets, net	—			(37,382		)	37,382			—
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—			(5,090		)	(5,090		)
Severance costs													157			88			—			245
Impairment expense													—			67,922			—			67,922
Impairment of Investment in Laramie Energy, LLC (2)													—			—			45,294			45,294
Par’s share of Laramie Energy’s unrealized gain on derivatives (2)													—			—			(1,110		)	(1,110		)
Depreciation, depletion, and amortization	1,476			41,350			50			42,876			1,505			41,646			260			43,411
Interest expense and financing costs, net	5,999			30,990			1,999			38,988			2,473			29,640			2,975			35,088
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives	—			—			4,298			4,298
Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses													—			—			2,721			2,721
Equity losses (income) from subsidiaries	(110,619		)	—			110,619			—			257,572			—			(257,572		)	—
Income tax expense (benefit)	150			18,351			(17,406		)	1,095			—			(39,309		)	39,433			124
Adjusted EBITDA (3)	$	(7,659	)	$	123,907		$	345		$	116,593		$	(5,460	)	$	(33,582	)	$	2,368		$	(36,674	)


	Six Months Ended June 30, 2018												Six Months Ended June 30, 2019
	Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries			Parent Guarantor			Issuer and Subsidiaries			Non-Guarantor Subsidiaries and Eliminations			Par Pacific Holdings, Inc. and Subsidiaries
Net income (loss)	$	31,363		$	35,014		$	(35,014	)	$	31,363		$	89,261		$	63,838		$	(63,838	)	$	89,261
Inventory valuation adjustment	—			(23,978		)	—			(23,978		)	—			(18,804		)	—			(18,804		)
RINs loss (gain) in excess of net obligation	—			890			—			890			—			(1,799		)	—			(1,799		)
Unrealized loss (gain) on derivatives	—			1,991			—			1,991
Unrealized loss on derivatives													—			20,677			—			20,677
Acquisition and integration costs	1,180			201			—			1,381			3			3,699			—			3,702
Debt extinguishment and commitment costs													3,832			5,354			—			9,186
Changes in valuation allowance and other deferred tax items (1)													—			—			(67,669		)	(67,669		)
Change in value of common stock warrants	(671		)	—			—			(671		)	2,239			—			—			2,239
Change in value of contingent consideration	—			10,500			—			10,500
Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives (2)	—			—			1,169			1,169
Loss (gain) on sale of assets, net													—			(37,382		)	37,382			—
Par’s share of Laramie Energy’s unrealized gain on derivatives (2)													—			—			(5,090		)	(5,090		)
Depreciation, depletion, and amortization	1,977			23,815			20			25,812			1,476			41,350			50			42,876
Interest expense and financing costs, net	5,340			13,581			—			18,921			5,999			30,990			1,999			38,988
Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives	—			—			(4,393		)	(4,393		)
Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives													—			—			4,298			4,298
Equity losses (income) from subsidiaries	(48,747		)	—			48,747			—			(110,619		)	—			110,619			—
Income tax expense (benefit)	—			11,017			(10,491		)	526			150			18,351			(17,406		)	1,095
Adjusted EBITDA (3)	$	(9,558	)	$	73,031		$	38		$	63,511		$	(7,659	)	$	126,274		$	345		$	118,960


(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 six months ended June 30, 2019, ~~and 2018,~~ there were no severance costs or impairment expense. For the three months ended June 30, 2020, there were no debt extinguishment costs, impairment expense, or common stock warrants outstanding.

Liquidity and Capital Resources

Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements and contractual obligations, capital expenditures, turnaround outlays, and working capital needs. Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll. 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 June 30, ~~2019~~2020 was ~~$175.0~~$203.8 million and consisted of ~~$163.7~~$198.5 million at Par Petroleum, LLC and subsidiaries, ~~$11.2~~$5.3 million at Par Pacific Holdings, and ~~$0.1 million~~an immaterial amount at all our other subsidiaries.

As of June 30, ~~2019,~~2020, we had access to the J. Aron Deferred Payment Arrangement, the ABL Credit Facility, the MLC receivable advances, and cash on hand of ~~$106.2~~$142.9 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 and turnaround expenditures, working capital, and debt service requirements for the next 12 months. We may seek to raise additional debt or equity capital to fund 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 , our 7.75% Senior Secured Notes, our 12.875% Senior Secured Notes, or our common stock through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, or otherwise. Such repurchases or exchanges, if any, will

depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

Cash Flows

The following table summarizes cash activities for the six months ended June 30, ~~2019~~2020 and ~~2018~~2019 (in thousands):


	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2020			2019
Net cash provided by operating activities	$	24,237		$	31,327		$	33,767		$	24,237
Net cash used in investing activities	(312,281		)	(91,191		)	(30,160		)	(312,281		)
Net cash provided by financing activities	320,862			24,233			13,247			320,862

Net cash provided by operating activities was approximately $33.8 million for the six months ended June 30, 2020, which resulted from a net loss of approximately $262.9 million, offset by net cash provided by changes in operating assets and liabilities of approximately $130.9 million and non-cash charges to operations of approximately $165.7 million. The change in our operating assets and liabilities for the six months ended June 30, 2020 was primarily due to: 1) decrease in our trade receivables of $114.2 million, 2) decrease in inventories of $164.2 million, and 3) a net decrease in our Supply and Offtake Agreements and Washington Refinery Intermediation Agreement obligations of $150.4 million. These decreases in operating assets and liabilities were primarily driven by the decline in crude oil prices in 2020. Net cash provided by operating activities was approximately $24.2 million for the six months ended June 30, 2019, which resulted from net income of approximately $89.3 million and non-cash charges to operations of approximately ~~$15.6~~$25.3 million, offset by net cash used for changes in operating assets and liabilities of approximately $80.7 million. The change in our operating assets and liabilities for the six months ended June 30, 2019 was primarily due to increased inventories and trade receivables related to higher inventory volumes at our Washington refinery and higher sales volumes in Hawaii primarily from the Hawaii Refinery Expansion, respectively. Net cash provided by operating activities was approximately $31.3 million for the six months ended June 30, 2018, which resulted from net income of approximately $31.4 million and non-cash charges to operations of approximately $33.5 million, offset by net cash used for changes in operating assets and liabilities of approximately $33.6$90.3 million.

For the six months ended June 30, ~~2019,~~2020, net cash used in investing activities was approximately $30.2 million and primarily related to additions to property, plant, and equipment totaling approximately $30.2 million. Net cash used in investing activities was approximately $312.3 million for the six months ended June 30, 2019 and primarily related to $274.3 million of net cash consideration paid for the Washington Acquisition and additions to property and equipment totaling approximately $41.4 million.

Net cash ~~used in investing~~provided by financing activities ~~was approximately $91.2 million~~ for the six months ended June 30, ~~2018~~2020 was approximately $13.2 million, which consisted primarily of net debt and insurance premium borrowings of approximately $92.7 million, offset by net repayments associated with the J. Aron deferred payment and MLC receivable advances of approximately $72.5 million and payments of $6.1 million in deferred loan costs primarily related to ~~$74.3 million paid for~~ the ~~Northwest Retail Acquisition and additions to property and equipment totaling approximately $17.7 million.~~

issuance of the 12.875% Senior Secured Notes. Net cash provided by financing activities for the six months ended June 30, 2019 was approximately $320.9 million, which consisted primarily of net debt borrowings of approximately $270.0 million and net borrowings associated with the J. Aron deferred payment and MLC receivable advances of approximately $71.4 million, offset by the payments of $13.4 million in deferred loan costs and $7.1 million in commitment and other fees 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~~Notes.

Capital Expenditures and Turnaround Costs

Our deferred turnaround costs and capital expenditures, excluding acquisitions, for the six months ended June 30, 2018 was approximately $24.2 million, which consisted primarily of net debt repayments of approximately $5.3 million and net borrowings associated with the J. Aron deferred payment of approximately $30.2 million.

~~Capital Expenditures~~

~~Our capital expenditures for the six months ended June 30, 2019~~2020 totaled approximately ~~$41.4~~$36.6 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~~engineering work in preparation for the third quarter 2020 ~~turnarounds~~turnaround at our ~~refineries,~~Par East Hawaii refinery, the second phase of a Washington renewables project, tank compliance construction ~~of the tie-in connecting~~and repairs within our ~~SPM to the IES crude oil pipeline for Hawaii~~Wyoming logistics network, and scheduled maintenance. Our capital expenditure and deferred turnaround cost budget for ~~2019~~2020 ranges from ~~$100~~$95 million to $110 million and primarily relates to the ~~continuation~~second phase of ~~those~~a Washington renewables project, equipment purchases and engineering work related to the execution of the 2020 turnarounds at our Par East Hawaii and Wyoming refineries, tank compliance construction and repairs within our Wyoming logistics network, and scheduled maintenance and other capital projects.

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 Par East 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 and J. Aron amended the Supply and Offtake Agreements to account for additional processing capacity expected to be provided ~~through~~by the Par West Hawaii ~~Refinery Expansion.~~refinery. Please read Note 8—9—Inventory Financing Agreements for more information.

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. ~~The~~On November 1, 2019, we and MLC amended the Washington Refinery Intermediation Agreement ~~expires on December~~and extended the term through June 30, 2021, with an option for us to early terminate as early as March 31, ~~2019.~~2021. Please read Note 8—9—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—~~14—Commitments and Contingencies to our condensed consolidated financial statements for more information.

Critical Accounting Policies and Estimates

~~Except as described below, there~~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 first-in, first-out accounting method (“FIFO”). Cost of crude and refined products inventory at the Washington refinery is determined using the last-in, first-out (“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 expectations regarding the impact of COVID-19 on our business, our customers, and the markets where we operate; 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;~~thereto; 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;~~decrees and other enforcement actions; 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 acquisitions; 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. Additionally, significant uncertainties remain with respect to COVID-19 and its economic effects. Due to the unpredictable and unprecedented nature of

the COVID-19 pandemic, we cannot identify all potential risks to, and impacts on, our business, including the ultimate adverse economic impact to the Company’s business, results of operations, financial condition, and liquidity. However, the adverse impact of COVID-19 on the Company has been and will likely continue to be material. There can be no guarantee that the operational and financial measures the Company has taken, and may take in the future, will be fully effective. 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,~~flows, 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 June 30, ~~2019~~2020 of ~~173~~116 thousand barrels per day, would change annualized operating income by approximately ~~$62.2~~$41.6 million. This analysis may differ from actual results.

In order to manage commodity price risks, we utilize exchange-traded futures, options, and ~~OTC~~over-the-counter (“OTC”) swaps ~~to manage commodity price risks~~ associated with:

the price for which we sell our refined products;

the price we pay for crude oil and other feedstocks;

our crude oil and refined products inventory; and

our fuel requirements for our refineries.

We are required under the Supply and Offtake Agreements with J. Aron to hedge the time spread between the period of crude oil cargo pricing and the month of delivery for certain crude oil purchases. We manage this exposure by entering into swaps. Please read Note 8—Inventory Financing Agreements for more information.

All of our futures and OTC swaps are executed to economically hedge our physical commodity purchases, sales, and inventory. Our open futures and OTC swaps expire at various dates through ~~September 2019.~~December 2020. At June 30, ~~2019,~~2020, these open commodity derivative contracts represent (in thousands of barrels):


Contract type	Purchases	Sales		Net		Purchases	Sales		Net
Futures	1,045	(308	)	737		415	—		415
Swaps	2,700	(3,946	)	(1,246	)	6,920	(6,920	)	—
Total	3,745	(4,254	)	(509	)	7,335	(6,920	)	415

Based on our net open positions at June 30, ~~2019,~~2020, a $1 change in the price of crude oil, assuming all other factors remain constant, would result in a change of approximately ~~$1.2~~$0.4 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,~~For the three and six months ended June 30, 2020, we ~~consume~~consumed approximately ~~173~~116 thousand and 134 thousand barrels per day, respectively, of crude oil during the refining process at our Hawaii, Washington, and Wyoming refineries. We internally ~~consume~~consumed approximately 4% and 3% of this throughput in the refining process during the three and six months ended June 30, 2020, respectively, which is accounted for as a fuel cost. We have economically hedged 75 thousand barrels per month of our internally consumed fuel cost at our Hawaii refineries by executing option collars. These option collars have a weighted-average strike price ranging from a floor of $48.77 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.

Interest Rate Risk

As of June 30, ~~2019,~~2020, we had ~~$291.6~~$277.6 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 MLC 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 $3.2 million and ~~$4.5~~$4.2 million per year, respectively.

We may utilize interest rate swaps to manage our interest rate risk. As of June 30, ~~2019,~~2020, 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~~.Loan. This swap expires on April 1, 2024, the maturity date of the Retail Property Term ~~Loan~~.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 June 30, ~~2019,~~2020, 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 June 30, ~~2019.~~2020.

Changes in Internal Control over Financial Reporting

There were no changes during the quarter ended June 30, ~~2019~~2020 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over ~~financing~~financial reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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~~2019. These “Risk Factors” may be amplified by the uncertain and unprecedented nature of the COVID-19 pandemic.

Our business, financial condition, results of operations, and liquidity have been ~~no material changes~~adversely affected by the COVID-19 pandemic that has caused, and is expected to continue to cause, the global slowdown of economic activity (including the decrease in demand for crude oil and the refined products that we produce and sell), disruptions in global supply chains, and significant volatility and disruption of financial markets and that also has adversely affected workforces, customers, and regional and local economies.

Because the severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing, and difficult to predict, the impact on our business, results of operations, financial condition, and liquidity remains uncertain and difficult to predict. The ultimate impact of the COVID-19 pandemic on our results of operations and financial condition remains uncertain and depends on numerous evolving factors, many of which are not within our control, and which we

may not be able to effectively respond to, including, but not limited to: governmental, business, and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transport, workforce pressures and social distancing, and stay-at-home orders); the effect of the pandemic on economic activity and actions taken in response; the effect on our customers and their demand for our products; the effect of the pandemic on the creditworthiness of our customers; national or global supply chain challenges or disruption; workforce availability; facility closures; commodity cost volatility; general economic uncertainty in key global markets and financial market volatility and ability to access capital markets; global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides, as well as response to a potential reoccurrence.

Further, the COVID-19 pandemic, and the volatile regional and global economic conditions stemming from the pandemic, could also precipitate or aggravate the other risk factors ~~disclosed~~that we identify in our 2019 Annual Report on Form ~~10-K.~~

~~An impairment~~10-K, which could materially adversely affect our business, financial condition, results of ~~an equity investment,~~operations (including revenues and profitability), and liquidity and/or stock price. Additionally, COVID-19 may also affect our operating and financial results in a ~~long-lived asset,~~manner that is not presently known to us or ~~goodwill could reduce our earnings or negatively impact the value of our common stock.~~

~~Consistent with GAAP,~~that 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 maycurrently do not ~~be recoverable. For the investments we account for under the equity method, such as Laramie Energy, the impairment test requires us~~consider 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 noncash charge to earnings with a correlative effect on equity and balance sheet leverage as measured by debt to total capitalization. This could have a negative impact on the price of our common stock. If such an impairment were to occur, there can be no assurance no future impairment charge will be made with respectpresent significant risks to our ~~equity investments, goodwill, and long-lived assets.~~operations.

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~~indentures governing the 7.75% Senior Secured Notes, and the 12.875% 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 June 30, ~~2019:~~2020:

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
April 1 - April 30, 2019 146
$ 17.87
—
—
May 1 - May 31, 2019 869
19.77
—
—
June 1 - June 30, 2019 968
19.13
—
—
Total 1,983
$ 19.32
—
—



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
April 1 - April 30, 2020	146	$	7.32	—	—
May 1 - May 31, 2020	—	—		—	—
June 1 - June 30, 2020	—	—		—	—
Total	146	$	7.32	—	—

(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.

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.



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.

~~10.1~~4.20	~~Form of Exchange Agreement~~Indenture, dated ~~May 15, 2019, by~~December 21, 2017, among Par Petroleum, LLC, Par Petroleum Finance Corp., the Guarantors (as defined therein), and ~~between the Company~~Wilmington Trust, National Association, as Trustee and ~~certain holders of the Company’s 5.00% Convertible Senior Notes due 2021.~~Collateral Trustee. Incorporated by reference to Exhibit ~~10.1~~4.1 to the Company’s Current Report on Form 8-K filed ~~May 16, 2019.~~on December 22, 2017.

~~10.2~~4.21	First Supplemental Indenture, dated November 20, 2018, among Par Petroleum, LLC, Par Petroleum Finance Corp., the Guarantors (as defined therein), and Wilmington Trust, National Association, as Trustee. Incorporated by reference to Exhibit 4.21 to the Company’s registration statement on Form S-3 filed on December 21, 2018.



4.22	Second Supplemental Indenture, dated January 11, 2019, among Par Tacoma, LLC (f/k/a TrailStone NA Asset Finance I, LLC), U.S. Oil & Refining Co., McChord Pipeline Co., Par Petroleum, LLC, Par Petroleum Finance Corp., Par Pacific Holdings, Inc., the other guarantors party thereto, and Wilmington Trust, National Association. Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 14, 2019.

4.23	Third Supplemental Indenture, dated August 15, 2019, among Par Hawaii, LLC (successor by conversion to Par Hawaii, Inc.), Par Petroleum, LLC, Par Petroleum Finance Corp., Par Pacific Holdings, Inc., the other guarantors party thereto, and Wilmington Trust, National Association. *

4.24	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.

4.25	Indenture, dated as of June 5, 2020, among Par Petroleum, LLC, Par Petroleum Finance Corp., the Guarantors (as defined therein) and Wilmington Trust, National Association, as Trustee and Collateral Trustee. Incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed on June 8, 2020.

10.1	Purchase Agreement, dated as of May 27, 2020, among Par Pacific Holdings, Inc., the Issuers, the Subsidiary Guarantors and Goldman Sachs & Co. LLC. Incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on May 28, 2020.

10.2	Fifth Amendment to Loan and Security Agreement, dated as of June 5, 2020, among Par Petroleum, LLC, Par Hawaii, LLC, Hermes Consolidated, LLC, Wyoming Pipeline Company LLC, the guarantors party thereto, the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent and collateral agent for the lenders. Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on June 8, 2020.

10.3	Omnibus Amendment to Amended and Restated Pledge and Security Agreement and Amended and Restated Supply and Offtake Agreement, dated as of June ~~20, 2019,~~5, 2020, among Par Hawaii Refining, ~~LLC f/k/a Hawaii Independent Energy,~~ LLC, Par Petroleum, LLC and J. Aron & Company LLC.* Incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed on June 8, 2020.


31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

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.*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).*

* 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.Furnished herewith.

@ 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.

# ~~Confidential treatment has been requested for portions of this exhibit. Omissions are designated with brackets containing asterisks. As part of our confidential treatment request, a complete version~~Portions of this exhibit ~~has~~have been ~~filed separately~~redacted in accordance with ~~the Securities and Exchange Commission.~~Item 610(b)(10) of Regulation S-K.

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: August ~~8, 2019~~10, 2020

5963



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	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3031
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5457
Item 4.	Controls and Procedures	5558
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	5558
Item 1A.	Risk Factors	5558
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5559
Item 3.	Defaults Upon Senior Securities	5559
Item 4.	Mine Safety Disclosures	5559
Item 5.	Other Information	5559
Item 6.	Exhibits	5660



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



	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