PARR - Earnings call transcript Q2 2018 | Par Pacific Holdings, Inc.

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Operator

Greetings, and welcome to the Par Pacific Holdings Second Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Suneel Mandava, Senior Vice President of Finance for Par Pacific Holdings. Thank you, Mr. Mandava.

begin. may You

Suneel Mandava

Good Holdings operator. and to welcome Thank Quarter morning, XXXX Pacific Second Earnings Par you, everyone, Conference Call.

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

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

William Pate

participants. of per as morning million, sequential increase I'm year-over-year adjusted another strong to financial results EBITDA conference Par earnings $XX.X all adjusted growth. solid quarter well over pleased and of by Suneel, of call results as second share improvements report strong $X.XX our reflect These XX% the EBITDA. adjusted and quarter XXXX Thank good a you, of to with Pacific

business to financial All of our our contributed units success.

Our consistent jet refining the project XX,XXX enhance attractiveness sales record operations per continues These with robust reported hydrotreater flattening for the physical of XXXX of XXXX. at fuel Overall, curves Hawaii Hawaii start-up. on in sales our distillate and sales. diesel fall project crude on-island of our team The barrels and pace increased Pacific of the That budget challenging and further in I'm to recent of a with our given oil of growth environment. day. the volumes our nearly bodes the in the well late in XXXX futures unit face Hawaii this crude the pleased refining year's oil performance and very crudes availability progress

throughput barrels diversification Newcastle. Pacific performance United crude increase to due again was excellent exposure results day of strong The Mountain product take highlight to and of contributor benefits a Wyoming's to geographic record Rocky advantage refinery was products per XX,XXX operational Wyoming of States throughput Our Par mainline financial achieved the in cracks. with strong markets. oil largely and to

related for the combined our believe, and achieved volumes Spokane quarter's unit segment retail Same-store to that over X.X% we were the margins increase demand the price we're We with the quarter. business with crude prices during The in year. in States. locations Our EBITDA in the XX% has oil fuel with oil despite exceptional for acquisition also results pleased profits down due crude declines million reported sales nearly from Retail Northwest past our quarter, full United recent smoothly, segment retail performance. Hawaii contribution of a adjusted to team's of quarter of increases integration these gone $XX.X strong due for the to

in Finally, a increase was period and Hawaii The XXXX, strong comments same operations. largely for our the the segment over million, increasing utilization this At of and to production of due Wyoming XX% Logistics adjusted volumes our XXXX. point, in call $XX.X EBITDA to over business to our turn Joseph the refining increase logistics reported sales I'd like throughout his network. the on

Joseph Israel

In strong second elevated market refinery. the for both oil cost Wyoming quarter. environment in Hawaii in and the with impacted very negatively refineries Mid-Pacific in our Thank structure market close crack second quarter you, differentials and to market, Bill. crude conditions spreads favorable for Operational our backwardated the average performance was X-year a crude

far, to calculate our So weekly favorable we are the crude Hawaii, as our oil differentials quarter index. differential August, use differentials, buy fourth implied than reported July in for and crude which publicly more we oil Mid-Pacific

supply. are robust the On global fuel quarter barrel distillate $X.XX to of by per Singapore at per crack quarter, the our driven driven low, and In demand have quarter favorable, the inventory. by X-year's Mid-Pacific compared low products oil combined $X.XX mostly spreads side, was gasoline been Singapore strong barrel spreads XXXX. second and during second crack second index

was quarter, We in quarter refinery XX,XXX high barrels XX,XXX availability. the record in barrels a sales. day Hawaii XX.X% a including Our barrels throughput of strong sold the per of per XX,XXX operational with total on-island day per second day

on Our minimal adjusted the per cost our third regeneration execute barrel, our will and $X.XX will million barrel other was was gross XX-days barrel. reformer $X.XX The level. production gross per and plus level, margin margin with to planned expect $X.XX In catalyst following maintenance. and missed of $X.XX we have quarter, on breakdown: impact EBITDA per $X.XX production, per impact $X $X.XX approximately production in to the of adjusted cost opportunities in barrel works we negative

Mid-Pacific So barrel. far index spread the per X-X-X-X approximately quarter, has third in $X.XX crack averaged our

the expected very range. well is and The per $XX.XX per availability. second DHT record-high of of premium record-high refinery to the remains record-high production. announced our Wyoming, distillates Our per third of the barrels in during a barrel time XXXX. during on strong day with is quarter. in operational premium, Par quarter was capture the quarter IMO day was through quarter, XX% budget ULSD $XX.XX the production strong our planned In resulting XX.X% resulting barrels XX,XXX averaged XX,XXX position produced compared This and distillates, X-X-X to and gasoline XX,XXX throughput In distillate production index in barrel to quarter. throughput our second XX% outlook gasoline, is the in project transition. to per high-octane on was gasoline our

the profitability. combined rail to and markets other to products oil flexibility our out with in past, As has slate proven a products ability seasonality be truck mentioned optimize strategy our and smooth successful to to

margin low, per barrel, the the costs strong compared and day. only per Our barrel per quarter in barrel adjusted reliability quarter $XX.XX quarter $XX.XX throughput. $X.XX per in to in were XX,XXX the was driven gross XXXX. Production of high second by barrels sold We

basis. of which future Powder X-X-X in per on So River signs with are has Basin, Bakken local far Wyoming barrels, we early WTI we differentials to $XX approximately quarter, basis. third barrel averaged index regular starting upside see constraints the our for the on potential logistics a crude consume and In market,

highlights. to per Wyoming is results I'll throughput Will and Finally, review Laramie now third And financial barrels approximately call target to turn XX,XXX quarter in over day. the

William Monteleone

minimal items small Joseph. calling refinery than other quarter Thank FIFO a our quiet It approximately you, Wyoming operations benefit was financial worth out for with million. relatively within a $X

XXXX. quarter capitalization of margin In of to debt first and and our in addition, total Cash RIN million during from $XX to Net XX%, million to end $X quarter. the was $XXX gross drove lower the liquidity compared the a $XXX prices the compared at second was totaled million operations improvement XX% million quarter.

GAAP $XX expense totaled $XX.X million, quarter, interest the totaled For DD&A and million.

quarter, million. capital the expenditures During $X totaled

our We DHT year capital to and be $XX continue as spending to million the project our expect the on between million up. $XX ramps expenditures Hawaii for

to increases Moving million $XX approximately adjusted loss impact Laramie's $X.X $X.X based million which Laramie second excludes adjusted EBITDAX the program. and losses production from $XX Laramie's on with on Laramie. now the net projected of unrealized LTM expected growth million, on at drilling million stands of a half further EBITDAX of generated during derivatives.

XX but finishing year Laramie million is feet guidance exit wells. for on Laramie and uncompleted completion equivalent. date. June day exit track on to production the XXX the well wells, During cubic drilled spud XX to completed XX based quarter, a cadence production with was and exceed results

the prices While gas under at wellhead to gas price continue liquids contributions weakness. offset remain pressure,

hedges added as total Unhedged per revenue. XX, and represented June expenditures $XX during million to During both were million, Mcf; EBITDAX realizations for natural per condensate of liquids a $XXX price quarter barrel. liquids, $X.XX of approximately X.Xx. Capital of the natural XX% gas, per natural gas $XX at gallon; revolver $X.XX follows: approximately Laramie totaled balance and quarter, and debt the gas. liquids approximately leaving as of revenues

the balance for For liquids natural are gas gas hedges production. in and approximately XX% of XXXX, projected of place natural

feet hedges by X.XXx is remain year-end. EBITDA. to Operator, This XXXX, quarter in to are Laramie consistent roughly to Laramie's costs of it for EBITDAX reduction of and completed the to year free averaging of Q&A. XX% cash and CapEx approximately and as $XXX,XXX natural fourth liquids previously gas section a expected and in a plans. Recently production, respectively. communicated by back defined $XXX place natural projected equivalent balance new continue flow Completion maintain Full data you billion end continues on has to X.X completions good with the Through capital Laramie expenditures prepared to of X-column than and cubic June XX drive generation target between XXXX, well, expected concludes debt spacing. on per DUC type in the and the million wells support curves. activity I'll the with XXXX turn and $XXX at calendar million, XX% are gas our less acreage well pace For drilled spacing continues southern for production less are the remarks.

Operator

Instructions]. [Operator

Pickering, is & The Tudor, Holt first question Matthew, Blair, Co. from

Matthew Blair

could So an a capture barrel make tanker your rule share of with thumb directly pretty on-island on-island West at a terms rates? was $X that can share there also to high Is move that record connection. your us the Singapore margin in connecting of and help I solid. you use We so cost capture gasoline Coast, a we to provide was Hawaii to know see there's approximate don't something if from

William Monteleone

Matt, this is Will.

over per generally speaking, improved capture the barrel correlates gross and higher margin on with basis. sales on-island adjusted years commented think, we've positively I a

our I continue, of think few the an see sold that and jet last to in import you primarily that in excess that's to likely is and fuel over is due largely trend the on volume increase probably throughput activity quarters can side. our

imports nicely, on-island growing margins as with So associated attractive is the again, manufacturing. as while sale the not incremental is

DHT project growing built our again However, in locally. I think and again, portfolio of to how jet exactly Hawaii see with we've those and jet allow the barrels us project ties that the in DHT business manufacture And attractiveness the the will evolving.

Matthew Blair

the fuel retail Hawaii Sounds margins then for $XX.X the but if then had good. on seen system over of I reason you've you sure XQ. or here? And retail that a your wasn't up comment finally, And because QX as Do can had your Hawaii. legacy that for were mainland EBITDA normalized retail ask And number mentioned on that to view systems you down larger in million year-over-year? pressure in spilled we've if

William Pate

retail crude capability good get the into probably this a kind But trend? respect is with it's our it. increases. believe fuel alluded retail, quarter do of it oil Northwest as we of not typically compressed to. evident this numbers reaction earnings really was the oil to and are little with commenting that with integration entire mean, a don't of of flat bit the in which and and And as We to rapid your margins just and factors I demand factors margins. by margins price see bit. year our impacted price of want practice destruction there big retail crude to little indicative on that which Those think increases, I question our also one is a respect do the really that's you acquisition well regarding, of good of system. the I this a a because offset the

Operator

We Harrison, Mike Global have question Seaport Securities. a from

Jacob Schowalter

is for This on Jacob Mike.

in in You the addition in saw production solid per cost reduction to barrel throughput. Wyoming a guys record year-over-year

should we on So working to And performance year? cost just update back to improve half on could you us an there? of are where production give the in the operational you then initiatives expect go

Joseph Israel

systems, utilization high a as and When operational reliability operations. smoothly. Yes, And maintenance execute We To and works with focus extreme on is with is in and think I we we the efficiency. type sustainable barrel we this really that, we to probably get and that a money level do preventative per number don't discipline. on good safe of almost we focus reliability. PM, Early Joseph. our program, less invest there key, availability It's is to repairs rates, and reliability in case. XXX% out of Wyoming a this high high everything this achieve cost. for as training continue high call maintenance the throughput, is $X.XX

going think indication. I continue per $X.XX think $X in throughput, And range probably forward. per see barrel barrel we is type in I to of long better term will then this Hawaii, the to for of the a level $X.XX

it keep you, agree up. structure, with cost just I good So reliability. to We need good

Jacob Schowalter

sounds That then All And right. a follow-up. good.

of were much kind whether impact on-island The sales answer the negatively us tell asking guys to anything. we So in were last going volcanoes you to that. pretty Hawaii the record quarter

question So have of the sort people natural, were the call due this quarter? tourism island, a during sort sort coming of it, phenomenon? and it other it What from one of maybe way, may that look and the Hawaii improved of my at do sort air of you was looking check to that in to feel flights unaffected out actually did to part rare like that given down of traffic kind

William Pate

that which do overall in are in mind, Well, don't business. in tourism with I different islands. And is see But some state state's the bulk when in of around look on has in changes the statistically the is Oahu, the other significant We at numbers, think impact the are and our Big keep declines sales see Island business trends a most don't we Island residents to we associated in built consumption changes than that we state. island one the our impacts of the of on fuel our and transportation sales Big most our major really had see tourism, has any population. on our

Operator

[Operator question is Capital Instructions]. Management. Shapiro, The next Lawndale from Andrew

Andrew Shapiro

When our of visibility the RINs exemption rims of greater when either XXXX sort refineries there And calendar granted is that both another on for year? generating likely being will or decision? be

Joseph Israel

don't We this we point. point, not can know and really Andrew, this much there's at disclose at

Andrew Shapiro

Is acquisition, the additional gone has of terms highlighted I right. QX results you've all what the there the see that likelihood, expect any Not does we integration? reflect After even think Cenex integration in pretty to Or quickly. should forward? going

William Pate

the results any QX for integration we so the the Cenex anticipate the think reflect cost I cost of that the remainder integration year. don't see with in additional we business, associated

Andrew Shapiro

ratios range are for there, excessive into the are you is you Okay. can the that foresee acquisition update, Cenex to or enough? coming your in? give strategy, deal now would and And your be right you accretive pricing the come be increased and where you that been whether seeing see or of bolt-ons And has may the feel leverage a digested liquidity indications kind acquisition additional an if on focus feel

William Pate

of might we not that believe Rockies acquisitions today. Look, -- acquisitions. businesses positioned company team well around Hawaii. adding I'm comment is it's this certainly the executing those I any acquisitions have be And the current continue have and on to that great conversations revolve a focus we're right very with will we be in that question. or now, We think our on well Northwest, our we and that the but obviously to going in in for to a will pursuing, fit our networks good growth

Operator

Mr. the Shapiro, in queue. further are no there questions

do. please continue, to like you If

Andrew Shapiro

Sure. few I more. have a only Yes,

said that equity acquisitions on really you issue, capital major the an have previous without for calls didn't you up raise. Following acquisition on

of to would your expanded. other utilization get time NOLs focus in that shareholder capabilities the like towards I don't doing balance would of their buyback through because That methods or so on capitals makes not but our are now, returning get Or Par's the versus given sense accelerate just go think stock the think deploying is that way right those enhancing being have said, I NOLs. lower be price value trying of large, you acquisition? a in that at necessarily would there ways other in

William Pate

The taxable at and cash taxable associated NOLs the about X we've factor think generated flow income quarters. the now, are income a had net the and we income when enterprise, we last the for

allocate to demands, shareholders return growth we're thirdly, versus on those to So are way capital that of there to in capital are our there capital returns business pay well debt-to-cap transactions as for level on if to business. Whether to and debt are importantly, And for a about targeted our generate are we start opportunities down XX% debt, returns to a depends no out good we with the opportunities a and profitable a respect there business our shareholders we've then as or, going repay no if acquisitions building that's to opportunities our us we to that would level, certain excess acquisitions? acquisition get most base lot there If we demand? the capital to that pursue. we shareholders XX% if respect a got below returning think that ratio, were to with

Andrew Shapiro

this got lines, telling roadshows, And non-deal investor you company the what's has? the lastly, the along presentations going story Great. upcoming same towards that compelling

Suneel Mandava

scheduled put Conference to Oil for XX. I And in we'll is Fuel and XX, Will coming the the the scheduled attend Miami. Later Seaport August in Argus XX. October Joseph weeks. planning Chicago, in to notices are planning Energy in that's out year, Summit and for Industrial the attend That's

William Pate

across performance operational board. with I'm the joining you for organization's Thank us morning. this pleased our

overcoming Pacific results. financial diffs with Our quarterly job team crude the in of the strong has done a great

and positioned existing these our good on Have acquisitions. assets well a day. capitalize Thank and with performance assets to on additional operator. you, are our build We

Operator

Ladies gentlemen, This you teleconference. participation. thank for and today's your concludes

lines, disconnect a and may You have your day. wonderful

Par Pacific (PARR) 10 Aug 182018 Q2 Earnings call transcript