PARR - Earnings call transcript Q3 2017 | Par Pacific Holdings, Inc.

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Operator

Greetings and welcome to the Par Pacific Holdings third quarter 2017 earnings release. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure your my Ms. now is to host, introduce It Public Investor Par Christine of and Affairs Laborde, Director Relations for Pacific Holdings. Thank you.

You begin. may

Christine Laborde

Melissa, President Executive Par Officer; and and to Officer everyone Executive Officer; XXXX of With and Israel, Chief Holdings Chief today you, Financial Monteleone, me Pate, Quarter Call. Earnings President Par William Petroleum. is Joseph Will Third Conference Thank Pacific welcome and Chief

of and Before our refer may statements. to the of including, business. are please discussion as we presentation release with Forms these major I or some supplemental regarding more operating obligation latest detailed factors within you disclaim statements call to of update the They this, and expectations and Holdings, Because any or note statements. and SEC during forward-looking statements, uncertainties, to information a the our of including limited, affecting Pacific forward-looking the with contain make and revise not which risk plans, to actual in for Par SEC. any as the are GAAP, for forward-looking to at XX-Q company. Further results found be our estimates, are investors should financial reconciliations we investor www.parpacific.com website on may change. filings undue our but information, or the We this outlook to well differ and XX-K press place materially. filed our subject begin, subject our intention may not These risks on reliance

Bill to call the turn me let Now Pate.

William Pate

results Par quarter to everyone. Pacific. of and good strong we Yesterday, you, morning reported Christine, another for financial Thank

per net by million. per net our $XXX.X income time million share, reduced Due last our million XX diluted we've period same consistent or over more share. $X.XX the was while debt $XX.X totaled quarter adjusted $XX the was million $XXX EBITDA adjusted over results, that to last $XX.X or now Third over Adjusted net X quarters million. income than $X.XX to months

strong operational over metrics in board. results improvements strong will in reported unit on emphasize a significant prior operating I and the Each the cover year were performance Joseph Retail. Our the across Logistics a but to and quarter-over-quarter want second, basis. our refining

business Logistics EBITDA with segment increased in Wyoming. in and million, margins growing adjusted due volumes on-island Our to $XX was improved Hawaii sales

Our $X.X was volumes Retail million fuel to adjusted solid business EBITDA margins sales. growth in merchandise strong due and same-store segment and

the robust were able season. at our profits summer the Wyoming Finally, to height we achieve of refinery during

favorable and refined robust we are offset somewhat seasonal our we on the tightening for forward, to product both continue market. Cracks are the although return in demand segments, of product in see environment cracks business all regions, although good a physical given Pacific lower to Looking expect crude mainland by Wyoming norms. to the

pleased our maintain Joseph strong focus are free market the on cash now operations. details on We with our And provide more current outlook will and flow. will

Joseph Israel

is narrower, during the third oil. spreads you, per $XX.XX quarter everyone. the to discount crack for $X.XX our same barrel of X-X-X-X barrel, Index implying Mid to quarter Mid crack barrel fuel Mid per global Singapore gasoline Bill, good $X.XX Differential averaged distillate In combined and barrel Oil and XXXX. during $X.XX At diffs crude and per only Brent. Hawaii, Crude basis, the the was for time, strong Pacific are quarter reflecting XXXX our per Pacific Thank Brent compared of spread On morning Pacific Index

and crude aggressive differentials. in selection We process per to mix crude our and be operations our in Hawaii crude adjust and of continue mode demand

adjustments barrel. barrels XX.X% have was $X.XX timing margin per quarter per Export the in operational Our availability. Hawaiian sales. in inventory was margin per a barrel. throughput per per day, $X gross of production third Also XX,XXX XX,XXX including barrel, on-island XX,XXX sold third barrels approximately Adjusted and barrels day were the with quarter, and day, lowered our refinery by costs we $X.XX capture

decided X the fourth fourth planned Moving costs. impact months $X.XX accelerate reformer quarter. it on additional anticipated per maintenance of in at by margin execute to level We and quarter $X.XX barrel our negative gross per and to approximately the barrel with production

Pacific quarter gross XX,XXX now availability. day. barrels in margins have improved barrel. demand $X.XX our $XX.XX capabilities our supply in constructive So disruptions, hydrotreater. $X.XX Index catalyst turnaround barrel planned result per far were in per impact the fourth barrel, Harvey-related per and costs. quarter, additional supported of Hurricane Hawaii third the Also our quarter, was new to X-X-X in We XX,XXX in $X.XX combined $XX.XX at with and negative during catalyst our Index averaged compared XX.X% is the and our barrel per new executed the in gross and fourth per our level environment fundamentals, per per our the XX,XXX XXXX. with plus fourth refinery throughput In $X.XX the reformer combined production during in approximately third diesel Wyoming, per Adjusted margin of was planned quarter Mid approximately our quarter. to quarter barrel per $XX.XX day, throughput is barrels on turnaround quarter XX-day operational Wyoming costs Estimated production October. is margin barrel, successfully barrel We

consolidated our per to X-X-X XX,XXX our per So in Laramie I and far is to will throughput Index averaged results turn Wyoming $XX.XX At barrel, this barrels call Wyoming and in XX,XXX target the point, approximately the to day. Will highlights. has fourth review quarter, over

Will Monteleone

It was strong Wyoming in also our our benefit FIFO other approximately was quarter Joseph. quiet associated quarter operations than within environment. a segments. you, $X.X with million price each across positive business a a Refining rising of Thank accounting It

net downward XX%. quarter, quarter to I If a have to during out our debt similar second recall, continued the Cash totaled the and FIFO of its impact operations in million you from called $XX amount. capitalization negative to the trend

as $X.X liquidity totaled total and million quarter, of Our the our X, $XXX November interest was million. during expense

million annual our During occurring expenditures Retail of Hawaii $X.X and Wyoming target We range fourth third-party totaled million, within spending Refining expenditure our during the quarter, the net capital quarter. to of $XX with the of million $XX majority capital reimbursements. reiterate

$XX and Moving gains generated million $X.X derivative on in for loss $X.X approximately million a net and derivative in the to realized million, losses, Laramie. EBITDAX derivative benefit $X.X of quarter unrealized million Laramie million. a net including $X.X in of in

XXX XX new ranging $XXX,XXX additional return hedges a XX per totaled of gas Laramie's Recently for $X.XX gallon; of a activity $XX processing to day equivalent wells equivalent. wells, and modifications of Capital expenditures the is day During continued XXXX. between accelerating, exit equivalent, contracts. and $XX brought drilled drilled uncompleted backs and as Laramie are XX barrel. XX totaling million was and feet exit million the spud wells. production XX finishing with Mcf; $XXX $XXX,XXX cubic per but to million, completed XXX day per gas completion for added, a liquids, to feet revolver the million expectations were XXX approximately realizations December improve natural based production cubic driving price September well. Net cubic debt wells following: million on feet million approximately and protect profile our natural sales, $X.XX condensate gas, per balance Unhedged Xx. and completed EBITDAX were leaving of to natural between within Laramie's To September quarter, on

back upon early depending in program Laramie Q&A. program returns. to continue X-rig rigs for the Operator, X to X This of cycle, expanding to expectations rig budget our for for periodic remarks. While preliminary you to its concludes prepared it are turn reviews and I'll the

Operator

[Operator Instructions].

of first comes Our your Tudor, Chow from question Please Chi with Pickering, the proceed with question. line Holt.

Chi Chow

Thanks. everyone. Good morning

William Pate

Good morning.

Chi Chow

retired XQ? that quarter, And was higher reduction it debt of scheduled little 'XX were than maturities debt what what in a like just Will, tranches the were. your bit in the seems

there So any detail helpful. would be

Will Monteleone

Chi. Sure,

primary term That's loan And really up the balance balance up Wyoming or the million. go sale then during did retail quarter, the million. roughly $XX the and really really principal the reduced the is made across is agreement. balance that our Aron $XX of loan, revolver cash the think J. debt position mandatory I we at by debt of Wyoming, and term million the Hawaii net $X a lower Roughly driver. So amortization forward roughly by

the those and So where pieces, combine that that's X reduction debt were see net you you on. commenting

Chi Chow

for Got talk XQ about it. the Any on reduction? you plans can

Will Monteleone

a I think that dated loan that lower until forward have place. in is can little I longer highest-cost we have revolver a sale. got that really continue work $XX the penalty J. million. of mean, opportunities July about we prepayment holdco and debt the the Wyoming That's plus are effect the in year. to next We Aron balances that It's are X.X%. term It's It's L there. the

prepayable loan. our of Wyoming All holdings the debt than fully term other

further our those are for So opportunities reduction. debt

Chi Chow

second you're of improvements quarters question. looks It you this couple And And can results if have here. further on, to feel refining I you like operating Logistics like that guess focused not, then last point Do really across great. at ops over are optimized, and Retail as your from well? the Okay, solidified on point what here?

Joseph Israel

always room There's a for Yes. opportunities.

structure our and And in you go our different to for continue improve Logistics, to opportunities. crude will ways. integrated cost Retail? And these we in do continue invest select and types system our want of We cover growth to in

William Pate

as to then volumes, somewhat And costs that And provides projects that we we the our is, to I performance just as Chi, we reduce our And that think unit specifically still hydrotreater and something XXXX relatively in are will that's that out working that the XXXX, to quarter third in small the think Yes. operations. underutilized. areas. And working system months, respect Refining, to in and reflected in I both is go forward. play distillate also can the we other next growth would add hope the and over of too, in for larger refining projects smaller-capital with XX I we logistics on say, that we're around in finding on grow that, projects continue some XX to have some we're addition the some of that like and beyond. to

So more capital, some more that kinks. function a and growing our those require our a systems little of we'll about better. may have At utilizing and that's be may debottlenecking to there judicious just bottlenecks, logistics and be volumes careful and point,

Will Monteleone

only I'd The Will. in thing is this Wyoming. add Chi, is And

Wyoming. did our more give we referenced, yields up flexibility in Joseph our expanded over should complete toggle diesel distillate work to there that the hydrotreater. As And time us that

but So sorry, a go again, than a that's ahead. Wyoming, for quarter, probably specifically look higher when -- story substantially horizon story so the is third XX-month it over you a at not much -- if

William Pate

Wyoming, Yes. in close yields day of to capacity We now are Hawaii. and added diesel per and in XXX distillate our XX% XX% barrels

on distillate average. We're with than winter higher the XX% refining and approximately our yield the strong So for the system outlook. is diesel well positioned industry

Chi Chow

Yes. Good for XXXXs.

Operator

[Operator Instructions].

Our next Tim your line with Please the Mizuho question Rezvan comes with of from Securities. proceed question.

Tim Rezvan

folks. Good morning Hi.

William Pate

Good Tim. morning. Hi

Tim Rezvan

go questions. now, level couple to to A on higher I'd equity strong. of the kind XX% strategy be continues to below like side. cap of Debt

a good to seeing if give you're was on of Bill, You're the relative to in on kind commentary year offense a ago. any position front. what I can very play you wondering high-level maybe, A&D

William Pate

me we're provide any first let that, those that that focused projects date. we mean, in return the risk-adjusted will that Wyoming diesel hydrotreater the say we I acquisitions Hawaii, the reviewed just much hydrotreater projects internally, and to than distillate that discussed, similar higher expansion on in a Sure. like

down can we believe, to asset increase pay in generate flow, -- and And continue principal these with free with to debt So we the cash our cash adjusted healthy debt. And focus. flow share that down earnings can alone, we our that's base. pay per and our

our continues that In terms in themselves, to fit current with assets a have and focus Wyoming on Hawaii. of would our acquisitions those strong businesses be

the us I there allow are to capture margin. to around opportunities in think more particularly and in expand Wyoming, and refinery

Tim Rezvan

keeping helpful. prices view and are something okay, kind the given the of a the value is of Wyoming that's this of of But lot of that people in kind And Natural I range-bound some you kind clear but had Laramie. of I if here. in gas for kind Okay, remain have know kind thinking holding about strategic a see of been Will, portfolio? don't of know that upside pretty gas I all forward, how considerably then guess sort going a follow-up. limited investors of

Will Monteleone

Sure.

there's the undeveloped And XX% I to a case for And generate think program the the market of this story liquids, that as north packages allows gathering that the are think we're with think really is current base other respect A&D of us for part I our for return there. is of again, for X-rig the with the our pretty locations. Laramie paid than at being the to inventory fact in we So Rockies differentiated as of limited value important current restructurings is we assets little views well rates the with which a agreements getting see that it actually of asset well Laramie, processing the is out some overall wellhead.

think we the right I now. So like diversification

something we it over that most the that perspective. yield time, is but our it's ultimately growing that, think think it's look to monetize production, I to I proved from the will developed in going attractive return something

Tim Rezvan

Okay, the but there there quarter memory of an one costs a up is my have in may final $X.XX, in then anything you sort operating okay, that And $X.XX. higher? nudged but of of believe at that. costs note around written if for not operating little third XQ, I'm I appreciate correct, I correctly, one. of and this sure was came was expectation bit

Joseph Israel

did range, noise It's per in Yes. the and our at inventory approximately inside barrel. OpEx have we $X.XX

that without for barrel quarter. exactly would noise, So we the $X.XX per report

good So range, in is it is going guidance and forward. also this a the

Tim Rezvan

all. you Thank Okay.

Operator

Thank you.

next Shapiro proceed Please of line Management. Our with Capital the with your Lawndale from question question. Andrew comes

Andrew Shapiro

down A to macro and questions, drill few then wanted micros.

First about continue cycle? we're and improve, consider would in us to mid-cycle now still off, the high these now end crack as you the spreads of or at you talk the they

Will Monteleone

Andrew, in I crack to view you each have region each separately. think

got and Wyoming that think continued of latter and And that's in in the market in then will really of seasonally, Wyoming, some shapes I And but at think through So market, it's the strong. part in up for typically quarter, strength some are, look reduction you come the balance still we of take related the the the inventories third region, week. certainly the lot a reduction well. this to the Pacific we XXXX Harvey given we're this lift mainland. inventories I We the relatively than I'd say, and into more see. you down up going pretty market, quarter, cracks When think, seeing the

tightness amount tighter. at a And weakened, to in goes, the will they've hard also physical are we're generally procurement function the combined Pacific our a that's right are that they Would related below the Asia the index you Joseph? basin the as Although and reduction move to physical the It's market, can significant has of appears tighter now Saudis point, that a at I the a the is the add level this anything it determine to inventories that to believe probably actually the and you of of in think in Pacific see fact action tighter that mentioned, mid-cycle there and physical crude market. is that, that where but been that certainly because in stable. cracks continue for and relatively prepared along market I

Joseph Israel

we are oil market. fundamentals growth million X constructive growth. all, of barrels After and are per expecting demand a oil X.X% GDP There this day demand the definitely in year

have strong fast As cleared with demand very tight supply. we a surplus inventory and result,

strong low and We for impacted an as both Hurricane more are balance. really. in by well the positioned with cracks industry Harvey In inventories after winter inventory Wyoming, math markets significantly relatively

Andrew Shapiro

except debt's are as capital? bad not timing? it you. as I it a the than rather Okay. sizably you any drilling doesn't the of little it anticipating is wouldn't that to earn bit the penalty you debt? Was go? much increase costing say here. go. cash prepayment chose additional letting Or particular pay your What's down reason letting a because guys balances it And cause deploying there It's Is in then down thing

Will Monteleone

Andrew, subsidiary I within cash I this the Yes, levels. do some levels. mean, down traps We think at certain of some is have Sure.

So that's it. part of

balance The with cash on retain certainly hand to second to lapsing, is flexibility towards we're forward term marching on cash is, some respect prepayment as to need again, to we with possibility. I one holdings Wyoming adequate with loan. an think, deal path penalty if that And trying having that the the

well to that So strike any that of again, adequate we're we'd I pursue. powder inorganic address as think dry trying having as to balance the opportunities

Andrew Shapiro

refi -- that something then the duration respect Wyoming or reduction? with at road, be to the looking down And the on you'd mostly basis is where point

Will Monteleone

opco mean, reduction the down think the our in whether at structure I for at both. at duration looking structure have something that's levels. parent that company constantly we're I that alternatives, capital Likely up would a whether make capital simpler includes that would level or coupons a longer

both are think those I So of things evaluated. we've alternatives that

could our we cost at there I there the think Wyoming lower level results of a balance, like and at today. feel debt given the subsidiary in achieve the certainly we and capital performance

Andrew Shapiro

you are XXX the might, comfortable a points, out basis is to points, able you in with you of costs? And establishing, it be extract think basis -- refi, XXX upon

Will Monteleone

Yes.

when to at it think until see wait where I we'll have is address we're we to the that market point. trying

can a this So don't I at I specific point. think number provide

Andrew Shapiro

And then last X the questions.

on So activity little quarter revaluations. but if didn't What caused the during sequentially, know whether to have the prior acquisition or the would goodwill would it sheet the micro. it think a activity I from I was rise there quarter? balance be bit any one's

can that fine. I call off-line, So can just and us didn't on that's -- -- if that, I spotted call we you

Will Monteleone

Sure.

of that take aware material. not off-line. Let's anything We're

Andrew Shapiro

that sudden lastly, know there didn't in and shows, road the non-deal it et wasn't Yes. of X what's No, was had And cetera, but was -- next on months all that the it and outreach/road any visibility I your movement, large, some then been conferences? of it just flat, acquisition. investor a

William Pate

you that schedule? do have Christine,

Christine Laborde

Christine. It's

December the in Mizuho January. to the Next we to then and to conference, Cowen the going are Seaport week, then conferences and in conferences Argus go and plan we Wolfe and

Andrew Shapiro

guys. Great. Thanks

William Pate

Thanks Andrew.

Operator

you. Thank

with Chi question. Please Tudor, comes proceed Holt. your Our the with from next line Pickering, question Chow of

Chi Chow

comments the markets. that this slate change headwind say the on capture a may a at And bit thoughts for how any on is physical tighter on follow-up a Would the crude QX of Just you rates? Hawaii?

William Pate

of a several from Well, first product the combined headwind, we've but a see and to to Brent but the is at you And if extent think gone and really of differential. gone probably an crude it combined basis, X-X-X-X FOB last takes -- because our we've you a on look certain in months. it's cracks, the that over can Brent index to all, is a to discount I reflected week premium this the the October, last the

it have say will index. would in the general rising that a impacted I think is well. that move I If shape combined market So bit of it's then a material as think in it'll of And flatter, but well we the be, headwind then our And prices of tends the something sure little to how not as I'm about. the create because to physical is of that curve. of length crude. the the impact

Chi Chow

Okay. the $X And sustainability any here? thoughts going of TI above forward on Brent

Joseph Israel

the $X to we Take And has think a the as point Coast barrels has to TI compete oil with exports parity Cushing with $X shifted talking about $X call it Gulf that incremental plus, to $X, per toward Brent the the from Brent. structure. million with and there in incremental of of reflected in and I call Brent, America $X Gulf parity day Asia, it WTI, Gulf LLS, with X barrel now the to are the and coming compete Coast cost past around to it shipping, at different completely from the Latin U.S., now barrel.

have seen a or spread $X today, $X, we than term $X to I have $X, is sustainable the $X $X, more the we before. think longer $X of

Chi Chow

one doesn't on question back Maybe that Retail. final thoughts. Okay, here the make good

trend fuel Can and trends what nice going per kind last of going forward? fuel the on of your up. we've of those site levels QX about sales You QX quarters got more seen is there? And you ticking talk couple of kind a for normalized volumes

William Pate

quarter. seen of but fuel up I -- for growth. reiterate, just numbers, the our the same-store just share, I the to think specific X.X% as sales good volumes terms we've And didn't in you give on some were

and saw similar in QX. we a in that trend we QX QX So saw

I in on out little the the a strong a sophisticated think also mentioned reflection strategy, last just of it's a as pretty I it's of a being market in pricing more street, quarter, and there.

Chi Chow

you kicking impacts think, Bill? as Hele in well,

William Pate

I XX similar wasn't taking with growth the -- think think huge. is a brands -- similar competitors mentioned showing but we're in it I both I of Hele mean, but couple some We're on quarter, side. the that both there were seeing profiles. honestly, openings as had growth are a factor, impact last I quarter, some new they're

Chi Chow

Bill. I it. appreciate Thanks Okay.

Operator

no turn will there Ladies questions any further Mr. final this for floor you. are gentlemen, time. the at comments. Thank back and to I Pate

William Pate

and a our day. focused with for happy Thank year. to our you. on bolster adjusted free remain continue to joining sheet, and our team's this our grow We'll good share. per cash strong us. performance we'll We're earnings balance flow generating Thanks Have reduce debt

Operator

This teleconference. concludes today's Thank you your for participation.

disconnect lines. now may You your

Par Pacific (PARR) 7 Nov 172017 Q3 Earnings call transcript