PARR - Earnings call transcript Q4 2017 | Par Pacific Holdings, Inc.

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Operator

Greetings, and welcome to the Par Pacific Holdings Fourth Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Matt Vaughn, General Counsel for Par Pacific Holdings. Thank you, sir.

begin. may You

Matt Vaughn

Good Holdings' Melissa. and to welcome Thank quarter morning, XXXX Pacific fourth earnings Par you, everyone, conference call.

are Chief Joseph Joining Officer; Executive today William and Petroleum. President me Chief Officer, Will Par Monteleone, President Financial Israel, and Officer; and Chief Pate, Executive

with Officer, release, the filings and Chief of press our President presentation investor our at William update call with and forward-looking to and business. federal not begin, any include estimates securities and as be Holdings most the performance factors plans, actual the on our latest risk this, Pacific outlook not statements but note or over place subject results we are Pate. are the financial statements, guarantees laws. our regarding in to, company. found statements XX-Q or information financial forward-looking today a Par please is refer are certain reconciliations term and those I'll These expectations, measures Forms that and materially our investors we non-GAAP in to should obligation and to differ change filed are some SEC. these comparable of I Such GAAP or not of major you as well what including from forward-looking of SEC Before our Executive detailed or discussion as comments XX-K for the subject events. is now for forward-looking affecting disclaim to limited www.parpacific.com may website concerning our our Because reliance more of operating that revise may may statements uncertainties defined these supplemental and Further under undue the any forward-looking indicated include, the to future figures, risks intention and to statements. information, in turn They statements.

William Pate

Pacific. was a efficient. Par record Thanks, year for was XXXX very Matt. It

was $X.XX, we the previous share adjusted share per earnings earnings more Xx highest adjusted Our XXXX. which per in than recorded

adjusted by And reporting than liquidity due $XX our commercial growth. increased our million our more increasing cracks through last excellent capture all improved maturities healthy value and earnings. debt XX% successfully book free these planning with In and crude strong XXXX a We oil to product structure. of during managed eliminating refinancing, quarter, have strengthening Our further near-term million and more December, and in execution. differentials for in operational weakening capital EBITDA up cash flow, operations by reducing than rolled as $XX we of margin we remaining our significant providing team debt broad and our our Hawaii

the be with cracks fundamentals our Mountain inventory pleased our good with very acquisition. demand. and of Our an ahead attractive just time that Refining at asset has EBITDA Wyoming product base. Product refining the acquisition in target in the adjusted addition Logistics to strong Rocky to for year We this Wyoming region We're million announced levels continue of finished $XX we of to of and be transaction. proven the terms

of our in Washington is thrives. we Rocky the we footprint which organization buttress XXXX, region. the the enter growing in Spokane, stores complexity Wyoming believe Mountain our acquisition offers retail the We operations particular, operational of logistics in expand Spokane, area As this announced our in and and XX markets, attractive region of refining type to full

products the stronger of face expected during cracks demand the project year to we per between increase sulfur transaction, finished and our quarter IMO during to our fourth the in agreement state, in start-up as our the the anticipated, strong anticipate the of state demand into market the we record of the This we by hydrotreater share distillate up on-island also as with especially airline project Hawaii operations, refining middle high Domestic-originating scheduled approximately and widening the further spread day. sales benefit refined a changes of beyond Pacific Wyoming new and Hawaii this allow low operational results. As distillate to financial with enhance This announced strong Hawaii our growing barrels output. position is in part project proceeding in to arrivals We were XXXX. due growth. of in XX,XXX air In we the led should XXXX. us the in next be in product continues X.X% supplier a year. entered to

exceptionally been crude rising Our continue perform to retail operations margins have a price. oil well. Retail also good despite

Hawaii For generated merchandise crude by market. on tighter an due sales we XXXX were in a basis, a the X.X% Overall, all, the execution and volume improved same-store outlook in X.X% physical increase basis. same-store a environment a we great difficult up in All year, entered a Wyoming to on with more fuel and XXXX team. in

We generation the to continue capability mitigate refining other of Hawaii business to earning units our cash in operations. build our and cyclicality

a and that in enhanced be by will also asset principal both our current improved capitalization. much better a our market financial projects profile enter position with stronger capital of We operating and markets

possibilities I'll acquisition continue to Joseph. that, We a capabilities. the evaluate strategically to over business turn number fit that With existing call of our

Joseph Israel

like operations solid everyone. Thank flexibility Wyoming to you, environmental the have Hawaii, compliance, across reliability our to way good commercial results XXXX. I led on safety, would in in focus Bill, execution board. consistent congratulating by XXXX The teams on start strong morning, and Houston and and a the

system adjusted Singapore Mid rates more Hawaii, allowed market fourth the refining our crack fuel EBITDA generate $XX Now spreads. and million environment planned the weak relatively refineries impacted to Pacific with both oil gasoline in of in quarter. negatively the regards and capture inventories offset In than have and maintenance to in Strong quarter. rising

distillate by crack have strong spreads jet-fuel other demand strong, the hand, inventory. On low and been and especially supported

index to compared barrel $X.XX to the Differential Crude discount Mid barrel fourth XXXX. the per fourth of quarter Oil quarter in only per implied Pacific XXXX for On Brent feedstock discount the of our $X.XX side,

compared a XXXX. result, $X.XX the As $X.XX combined the barrel Index during of to quarter per barrel Pacific quarter during our Mid was fourth per

XX% Hawaii refinery barrels fourth and budget. per catalyst executed throughput XX,XXX added that the high distillate in reformer sold availability a fourth in in XXXX driven XX,XXX of jet record and on-island We XXXX, quarter of fourth by We of day with were This in mainly and barrels our Our number XX% reflecting half planned the growth per half including was compared the sales time successfully on is to of sales XXXX. approximately where barrels regeneration gasoline quarter operational second XX.X% in we the XX,XXX yield. first on-island in and the were fuel contracts on day, total quarter. per day

margin was barrel, gross adjusted barrel. and $X.XX costs $X.XX production per were Our per

So $X far, is approximately in in quarter to first first our XX,XXX Index the approximately Hawaii is per XXXX, barrel, quarter planned day. barrels and of combined Mid $X.XX our Pacific throughput per

in for well process continue low in our and as per crude mix and in demand continued selection We crude fundamentals market distillate. optimize inventory the as mode distillate Rocky by Wyoming, environment Hawaii gasoline operations aggressive our to Mountains was market of and strong In supported be constructive margin condition.

throughput during barrels to Our X-X-X operational of with day. the the XX,XXX averaged compared barrels quarter availability, In approximately barrel and Index per barrel XX% our day was fourth XX,XXX $XX.XX fourth XXXX. sold the we quarter per refining per during per $XX.XX quarter,

Our per and barrel, barrel, work. associated adjusted production gross $X.XX to and margin costs with costs per maintenance was were of including $XX.XX upgrade per $X.XX production approximately barrel the

is index Wyoming averaged our far day strong has refineries. for our in XX,XXX year Overall, approximately and was for barrel, per X-X-X quarter. in first Wyoming quarter, throughput the both So XXXX to per $XX barrels $XX.XX a target

with of over approximately invest results And million $XX CapEx additional in majority, Will the both commercial review we $X announced to in to in highlights. the invested improving call our refineries, In both $XX approximately XXXX, million, in of our $XX million we and including Wyoming operations million of an Hawaii in I'll projects, in optimizing planning Hawaii. and DHT Beyond are refinery. growth turn CapEx CapEx project systems, consolidated now flexibility refinery, to Laramie the

Will Monteleone

Thank In XXXX. our and progress business of solid out Joseph. the refinancing pushing comprehensive a our each of segments of structure. completed year structure, regarding across maturities until was we you, capital financial It December, our capital performance a

In reduced our to growth. our and subsidiary-level have reporting estimated to rate floating markets, XX% simplified rate series capital well of the positioned we improved requirements financings our funding risk. access addition, legacy by current of interest fixed. we Including risk consolidating swaps, With interest a an continue is now are our rate interest

The law. generated was We changes of incurred our accounting as operations rising as our benefit items are $X Some adjusted income. a in impacted follows: $X.X net a price as results of credit positively reported income of million EBITDA Our the that facility. a accounting adjusted Wyoming FIFO environment for result enacted to the existing net by with of and associated $X in adjusted the tax refining million the charge impacted termination million a result QX impact

we However, impact working the outflows net adjusted this reduced charge did during reverse income Cash $X operations by adjusted was that from That expect or not quarter. an capital have on EBITDA. XXXX. during to totaled million

total net totaled to million. during the capitalization $X.X year-end, remains Interest $XXX of debt million was expense and As XX%, roughly liquidity quarter.

year to $XX totaled net $XX.X our for During third-party million, the million, total capital of expenditures reimbursements. quarter, our the bringing

systems. midpoint. expenditures capital to be $XX.X Of $XX to $XX regulatory this maintenance dedicated the $XX allocated and for growth million in the requirements $XX projects our is expect million. of at logistic capital project to the and Wyoming million between we in XXXX, towards amount, and is for the is For completion capital, $XX and Oahu DHT site with roughly arrive Of retail the million and within debottlenecking refinery million million the Western in growth Hawaii, balance

million of derivative realized Laramie in margin gains $XX record record derivative EBITDAX in was $XX Moving including $XX $X.X EBITDAX generated a This unrealized to EBITDAX losses, and of net for and benefit net of million, in quarterly a million. XX%. $X.X income Laramie. approximately derivative in and quarter roughly million the million

with per leaving XX $X.XX balance XX DUC gallon; XX December finishing end. During the per revolver the to as uncompleted production day at feet Laramie's gas, exit and barrel. Mcf; approximately wells quarter, of Xx. slightly wells, based $XX were equivalent, prior condensate, a of natural Netbacks natural processing within quarter following: XXX given to EBITDAX contracts. December approximately build price and $XXX $X.XX spud liquids, but totaled modifications was debt Laramie wells. Capital the gas improve million cubic drilled continue in on expenditures $XX expectations XX and million below Unhedged completed a per realizations million, of

Xx in this XX.X%. cubic reduced Bcfe to for roughly to a plans, merger With the to outlay of intends feet a program and At a resulting in-basin equivalent. for million and are spacing day million Recently expenditure a capital consideration $XXX the targeting this addition, cubic Laramie to production. been added per XXX production results. a on between Pacific's XXX approximately Laramie of respect merger, X-rig yielding between day end type prepared and million driving are In percentage drilled issued result, turn run completions Q&A. as it a the completed wells, in $XXX million the to date Operator, small that X.X XX year exit XX% XX $X wells approximate XXXX and equivalent adjusting a for million Laramie and XXXX, range, XXXX, completed ownership at Par recently to growth completed I'll million maintain for has units in encouraging acquisition, end has is concludes Laramie of of than February, the Laramie midpoint production after while all EBITDA. February feet Through on averaging production back This for curve. less you our remarks. the and Laramie X-column debt supporting would recent well, as

Operator

[Operator Instructions] with line from of comes question Mike the Seaport first Harrison Securities. Global Our

Jacob Schowalter

as segment, acquisition preparation you Jacob leveraged This complete Cenex contributing, that time? starts a be Mike. the will for the have added quarter, any this for it acquisition in In is drag that and might costs in was just you retail I on but been over the operating curious, have

William Pate

for haven't significant a putting any team will the group with marketing directly operating logistics Jim We Yates, the added in leverage We're together responsible first that acquisition the be any Hawaii. in able we reporting quarter, material to have and to Hawaii don't that anticipate in small and associated costs. We're operations. Spokane working costs who's we the

Jacob Schowalter

then All a looking right. Logistics at segment. closer little And the

So QX strong. was pretty

any throughput onetime This so quarter's a the segment? decline a a total Were pipeline impacts there that improved bit surprise. in of was year-over-year bit,

Will Monteleone

operating year, within think we quarter you expenses, the activities. higher turnaround quarter the higher fourth lower coming profile our XXXX. our some expenses we We just had of And requirements. And Wyoming off in with last had slightly in compliance if finalized quarter, slightly third expenses that operations associated recall, had then expense a of during I

Operator

Our comes Holt Pickering, the Tudor, Blair with question Matthew next from line & of Co.

Matthew Blair

for question, here, First allocation. on probably Bill I guess, capital just

So XXXX, your retail balance the How for improved the you XXXX? priorities for about early acquisition. free in you made think In you the sheet. cash XXXX, do rest of flow

William Pate

debt cash We, first that and the return and it's to about our the attractive. capital XX%. level foremost, cap we flow of had to returning business liquidity, on sufficient of reduction XX% free our capital shareholders about After in of investment growth that, to to where cap we terms to is were of then and and either debt. form consider we strategically share total reinvesting total start capital in flow to debt a we repurchase that think in the the where dividend. cash dedicate reduce to or relevant of below we And target If would the

Matthew Blair

question, probably Joseph guess, for I here. Very then the And clear. second

On was distillate the pretty XX% refinery, remarkable. the yield Hawaii

time, at think XX%. were this -- XX% year you at I last

the about guess, or think crude refinery? you I then just then, coming an a this seen online, basis. guess, you as slate Should So expect XXXX just I every And the on this? talk DHT two, Hawaii we've one, that Was XXXX an in well optimizing now, able of in function with were in and to a year too? do we annual could yield distillate increase how I

Joseph Israel

out more And market distillate-driven, the mainly fuel jet you're than as are the we increased needs. profile Hawaii quality. Yes, a all the on make local was distillate primarily for The ran is feedstock right, yield distillate we the and of what there, market function the refinery us part, typical. demand crude focused allowed especially the to

Operator

of James Mizuho comes Securities. question next line from Our the Lizzul with

James Lizzul

in switching been just to Laramie, you seen adding Wyoming Rockies? given incremental the So hedges have over in dislocations basis pricing

Will Monteleone

for I this Yes, prior hedges in we look XX have point, the we for cubic disclosures, but basis feet a can roughly I on and XXXX had day. at I you million hedge our off think SIG, think think, at schedule -- of

we've been growing adding So we've additional production. pretty well on hedged basis basis hedges but as in 'XX, not been

we've been as However, adding we hedges have Henry Hub been growing production.

James Lizzul

XXX Laramie about that cubic talked for day growth in you continued rate feet then And a Great. suggests 'XX. million exit

a as So when you cash third incremental guys flow, rig? build could you conceivably add

Will Monteleone

really to or leverage I production price guides think higher. -- even and outspend the third rig adequate to and think as inventory Yes, fourth on we're respect the I activity. Again, drive bring our we profile growth a Laramie environment additional have watching and primary has a our with

outspend -- to balance a trying Laramie growth in production we're think I and striking and between leverage.

XX% in juncture I in backdrop at light of so this the especially program bit of growth sense, expected for X-rig the year. the a of quite kind makes price And think current production

Operator

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

Andrew Shapiro

help if understand, to me I'm cost Is could the of just in costs? higher cost to here. itself production production of little what wondering I'm bit and the part a barrel? Hawaii the per you contributed each crude Wyoming, trying

William Pate

do to take Joseph, that? you want

Joseph Israel

$X.XX cost. Hawaii, very production a good barrel In low per actually is

$X.XX that the we'll barrel So Wyoming, we included and maintenance In quarter. take we're every happy very that, associated that with with the work there. per $X.XX had

'XX, approximately that per positive $X.XX, fourth made again, a 'XX fourth that it's $X.XX please earning release of in have barrel per of quarter similar remember, $X, what little when the the the bit number without shown quarter our pension past. included lower. credit you And So 'XX very we to approximately compare to

Andrew Shapiro

part though, below costs line But look they're Okay. production is -- year-over-year, that -- costs? are I'm line crude you when at costs production below are crude costs? of of Or the sorry,

William Pate

the in costs facility. not include included associated with Crude operating The are costs. only production costs costs production the

Andrew Shapiro

-- conference in on regarding thought acquisition transaction the Cenex you on would press during And and close release that QX. you Okay. stated that the call the

before You of see quarter? the weeks end Do going got smoothly? closing process more And left. closing the about it still the you X is

William Pate

before to the few upon necessary we stores Yes, the closing of operate closing. a We're it ensure Andrew, the anticipate waiting quarter. permits we that end still can on

Andrew Shapiro

see record we're then And of Okay. sales. happy a amount to on-island

this that of were think year? kind you guided that is upon? nicely. -- something on-island X expecting of you they I Is and sales are kind you improved level contracts, longer these increase that to duration? feel A Do be maintained it can are of months?

Joseph Israel

the it's have good volume up contractual table, well right next our the a down Obviously, this XX what but assumption day on the to and is we for With level reflects XX,XXX go quarter, per every barrels now at going least. pretty months.

Andrew Shapiro

I another coming for With non-deal Christine, you coming play? plans? is this Okay. you a And up, to able calendar else got into on the when What guys be maybe little week, announced think, one. the here you months, a then a Bill or you, foresight question show then will is few and think make next road I so

Will Monteleone

Sure, Andrew.

planning yes, the then of May Argus with Thursday we show or is So also March Howard the Weil Platts. to also week. some Conference, Scotiabank New for industry also we're think on in Joseph York nondeal the either are and Refining attend Bank then And attend XX. to Conference planning -- And road in this America evaluating I conferences

Operator

Nick Associates. Our with Brown next Zazove question of comes from the line

Nick Brown

retail if from guess know came understand, that dropped really I of the and acquisitions you've the then? But as sort refining the you side investments in -- since to investment that all this I and view call, just been the investment from apologize do how importance sort was how but additional given have about bankruptcy, of Laramie I Petroleum's briefly your on of I so want Delta -- asked. I legacy strategic a was

William Pate

very an well it team coming a obviously our obviously, Laramie. to Laramie our maximizing value treat for legacy IPO divestiture as the asset. with evaluate activities us grow our completed lot out very investment happy a interest acquisition This They always add-on to as continue business sale in-basin, helps on a we and Petroleum, tax and itself. reorganization, attributes. had We and realizations returns opportunities Delta nice to amount brings of and with we to nice of be tax investment in an and And And as are Laramie our a equity deal include we're our well Laramie as you continue attributes, and as business. Laramie. of they We as noted, successor a as to great operations. looking continued month that those from investment downstream it with refining an could built large in On that operations acquisition and for an to anything within acquisition last a -- the that was announced an little or a of

So in share per toward contribution its it and we'll with our and both earnings evaluate we're continue of the profile. company, production to growth, the in pleased context

Operator

next of Our Thompson] question comes from Värde the with line [ph] [Rich Partners.

Unidentified Analyst

to Yes. update insight year to an year a last of bit I you're you to develop as how -- any seeing far just so just other have spreads outlook. and this this the was hoping get on relative

William Pate

But to to $X probably (sic) expect $X.XX last our we per $X strong strong. margins year's in continue are which market Well, margins where barrel, $X.XX] mentioned results $X Wyoming to are to Joseph [$X is Pacific average. that below

our color you in business rate yields. Mid retail to has the Joseph, the sales bit well. quite capture do with improved any due cracks our to Pacific and Index? doing our add to is And want Our a quite Hawaii

Joseph Israel

to this Mid-Pacific. board low. just very add the low across I Mid the encouraging. closer oil, is that are and Gasoline, distillate will But mid-cycle fuel extremely in the is in inventories Pacific,

Operator

[Operator line Pickering, next from with Instructions] Our Tudor, the question Blair a is Holt. Matthew follow-up of

Matthew Blair

year. for same-store it looks rose Transportation for If we look data, fuel vehicle the were miles mentioned XXXX. up volumes X.X% think X.X% I traveled Department like at Bill, you the retail that Hawaii of only

retail guess implication is side. about could XX I the your that and that? on you're a here Is just taking you of Hele that the function brands? Is And correct? So that share efforts talk with

William Pate

good. but you team has at volume and think great share, have to continue been evaluate do done growth, noted. retail to same in hard Margins team our stable I And shown job Hawaii time, strong our look always the the as and has market. It's a pretty

very I us rebranding think volumes allow to to has to some well. of store gone strategies grow to our operations from related team that attractive put fuel the fact due also some and that our together that's marketing fact that the the Hele It's our existing network. has

Matthew Blair

Are here, the about the the Africa just could these -- you Any then in Great. on probably Africa crude guess that but delivered? you on that the I getting off? from tankers record be that cargoes crude on I volumes ran Hawaii given like commercial barrels appreciate Are distressed talk refinery, side. these looks And chartering? would there's crude more logistics some the color distance, you're you're your picking helpful. sensitivities

Joseph Israel

we both. we we aggressive continue like be a honest, use for and crude place we think rich the do optimization as crude. you Africa can of western quarter, to here in our only happened said be very I in every selection candidate Africa, the process much used and crude pretty in the earlier, fourth there's world And side the to be that it. on To distillate And sourcing, our guess

something do with has it So that. to

every crude the in and look selection this month critical. diff company. every quarter, is Especially So environment, to flexibility we for crude continue best of the make type

Matthew Blair

XXXX, turnaround be that's the that that, Okay. you years But in when the Hawaii know a give off. could you Joseph, next just remind And I for Wyoming? question. a are ways Hawaii probably could final great. us, so if and big would major had on turnarounds then my us

Joseph Israel

early able plans needed Hopefully, to monitor to continue our XXXX. to we'll catalyst before and will make be it late Yes, We major don't to be turnaround we'll equipment push accordingly. 'XX. think

see. will We

Operator

are the time. back floor questions Thank final turn comments. at you. no there for to Ladies management I'll gentlemen, this and

William Pate

the for forward capitalization, our XXXX hydrotreater Thank our bolster done deal you, Melissa. of this businesses. strong Hawaii. and building morning. us you, organization in our through and We With Thank we'll offer everyone, that financial a distillate close in I'd opportunities to retail announced joining our business to project a look the on XXXX. continue to fit well during Thank you. a congratulating job existing pursue profile like strategic by recently

Operator

you. Thank concludes today's This teleconference.

this You may participation. you disconnect lines your Thank at time. your for

Par Pacific (PARR) 6 Mar 182017 Q4 Earnings call transcript