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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________________________________________________________________________________________
FORM 10-Q
________________________________________________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
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)
________________________________________________________________________________________________________________________
Delaware84-1060803
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
825 Town & Country Lane, Suite 1500 
Houston,Texas77024
(Address of principal executive offices)(Zip Code)
(281899-4800 
(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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, $0.01 par valuePARRNew 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.    Yes      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).    Yes      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 filerAccelerated filer
Non-accelerated filerSmaller 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.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  

60,183,788 shares of Common Stock, $0.01 par value, were outstanding as of April 30, 2021.




PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS



PART I FINANCIAL INFORMATION
Page No.
Item 1.
Item 2.
Item 3.
Item 4.
PART II OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
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)
 March 31, 2021December 31, 2020
ASSETS  
Current assets 
Cash and cash equivalents$214,733 $68,309 
Restricted cash2,000 2,000 
Total cash, cash equivalents, and restricted cash216,733 70,309 
Trade accounts receivable, net of allowances of $0.5 million and $0.6 million at March 31, 2021 and December 31, 2020, respectively
155,886 111,657 
Inventories579,206 429,855 
Prepaid and other current assets24,913 24,648 
Total current assets976,738 636,469 
Property, plant, and equipment 
Property, plant, and equipment1,158,438 1,183,878 
Less accumulated depreciation, depletion, and amortization(269,266)(251,113)
Property, plant, and equipment, net889,172 932,765 
Long-term assets 
Operating lease right-of-use assets427,577 357,166 
Intangible assets, net18,227 18,892 
Goodwill127,997 127,997 
Other long-term assets62,759 60,572 
Total assets$2,502,470 $2,133,861 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities 
Current maturities of long-term debt$58,816 $59,933 
Obligations under inventory financing agreements592,621 423,686 
Accounts payable136,567 106,945 
Deferred revenue6,980 4,083 
Accrued taxes29,810 27,440 
Operating lease liabilities57,889 56,965 
Other accrued liabilities307,991 199,628 
Total current liabilities1,190,674 878,680 
Long-term liabilities 
Long-term debt, net of current maturities597,185 648,660 
Finance lease liabilities7,350 7,925 
Operating lease liabilities375,384 304,355 
Other liabilities55,810 47,967 
Total liabilities2,226,403 1,887,587 
Commitments and contingencies (Note 13)
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 March 31, 2021 and December 31, 2020, 60,141,841 shares and 54,002,538 shares issued at March 31, 2021 and December 31, 2020, respectively
601 540 
Additional paid-in capital814,467 726,504 
Accumulated deficit(539,255)(477,028)
Accumulated other comprehensive income (loss)254 (3,742)
Total stockholders’ equity276,067 246,274 
Total liabilities and stockholders’ equity$2,502,470 $2,133,861 
 

See accompanying notes to the condensed consolidated financial statements.
1


PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
March 31,
20212020
Revenues$888,680 $1,204,083 
Operating expenses  
Cost of revenues (excluding depreciation)888,863 1,210,211 
Operating expense (excluding depreciation)74,188 73,391 
Depreciation, depletion, and amortization22,880 21,283 
Impairment expense 67,922 
Gain on sale of assets, net(64,912) 
General and administrative expense (excluding depreciation)11,885 11,784 
Acquisition and integration costs438 665 
Total operating expenses933,342 1,385,256 
Operating loss(44,662)(181,173)
Other income (expense) 
Interest expense and financing costs, net(18,151)(18,674)
Debt extinguishment and commitment costs(1,507) 
Gain on curtailment of pension obligation2,032  
Other income, net61 24 
Change in value of common stock warrants 4,270 
Equity losses from Laramie Energy, LLC (45,031)
Total other income (expense), net(17,565)(59,411)
Loss before income taxes(62,227)(240,584)
Income tax benefit 18,247 
Net Loss$(62,227)$(222,337)
Loss per share
Basic$(1.15)$(4.18)
Diluted$(1.15)$(4.18)
Weighted-average number of shares outstanding  
Basic54,280 53,153 
Diluted54,280 53,153 
 








See accompanying notes to the condensed consolidated financial statements.
2


PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands)
Three Months Ended
March 31,
Net Loss$(62,227)$(222,337)
Other comprehensive income (loss):
Other post-retirement benefits income (loss), net of tax3,996  
Total other comprehensive income (loss), net of tax3,996  
Comprehensive income (loss)$(58,231)$(222,337)
See accompanying notes to the condensed consolidated financial statements.

3






PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended March 31,
 20212020
Cash flows from operating activities:  
Net Loss$(62,227)$(222,337)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:  
Depreciation, depletion, and amortization22,880 21,283 
Impairment expense 67,922 
Debt extinguishment and commitment costs1,507  
Non-cash interest expense1,843 1,634 
Non-cash lower of cost and net realizable value adjustment(10,595)182,366 
Change in value of common stock warrants (4,270)
Deferred taxes (18,373)
Gain on sale of assets, net(64,912) 
Stock-based compensation1,886 1,615 
Unrealized (gain) loss on derivative contracts(6,922)28,351 
Equity (earnings) losses from Laramie Energy, LLC 45,031 
Net changes in operating assets and liabilities: 
Trade accounts receivable(45,029)30,989 
Prepaid and other assets2,867 20,719 
Inventories (139,143)119,888 
Deferred turnaround expenditures(5,602)(1,593)
Obligations under inventory financing agreements124,393 (204,375)
Accounts payable, other accrued liabilities, and operating lease ROU assets and liabilities148,317 (54,351)
Net cash provided by (used in) operating activities(30,737)14,499 
Cash flows from investing activities: 
Capital expenditures(8,178)(14,948)
Proceeds from sale of assets102,856 5 
Net cash provided by (used in) investing activities94,678 (14,943)
Cash flows from financing activities: 
Proceeds from sale of common stock, net of offering costs87,401  
Proceeds from borrowings39,409 55,000 
Repayments of borrowings(86,719)(64,762)
Net borrowings (repayments) on deferred payment arrangements and receivable advances44,542 (52,069)
Purchase of common stock for retirement(1,321) 
Payments for debt extinguishment and commitment costs(887) 
Other financing activities, net58 (1,660)
Net cash provided by (used in) financing activities82,483 (63,491)
Net increase (decrease) in cash, cash equivalents, and restricted cash146,424 (63,935)
Cash, cash equivalents, and restricted cash at beginning of period70,309 128,428 
Cash, cash equivalents, and restricted cash at end of period$216,733 $64,493 
Supplemental cash flow information:  
Net cash received (paid) for:
Interest$(17,373)$(8,552)
Taxes 97 
Non-cash investing and financing activities:  
Accrued capital expenditures$2,295 $7,301 
Value of warrants reclassified to equity 3,936 
ROU assets obtained in exchange for new finance lease liabilities1,072 1,590 
ROU assets obtained in exchange for new operating lease liabilities85,426 2,996 
ROU assets terminated in exchange for release from operating lease liabilities 7,738 
 


See accompanying notes to the condensed consolidated financial statements.
4






PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands)
Accumulated
AdditionalOther
Common StockPaid-InAccumulatedComprehensiveTotal
SharesAmountCapitalDeficitIncomeEquity
Balance, December 31, 201953,254 $533 $715,069 $(67,942)$582 $648,242 
Exercise of common stock warrants351 3 3,933 — 3,936 
Stock-based compensation296 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, 202053,837 $538 $719,547 $(290,279)$582 $430,388 

Accumulated
AdditionalOther
Common StockPaid-InAccumulatedComprehensiveTotal
SharesAmountCapitalDeficitIncomeEquity
Balance, December 31, 202054,003 $540 $726,504 $(477,028)$(3,742)$246,274 
Common stock offering, net of issuance costs5,750 58 87,343 — — 87,401 
Stock-based compensation461 3 1,883 — — 1,886 
Purchase of common stock for retirement(76)— (1,321)— — (1,321)
Exercise of stock options4 — 58 — — 58 
Other comprehensive income— — — — 3,996 3,996 
Net loss— — — (62,227)— (62,227)
Balance, March 31, 202160,142 $601 $814,467 $(539,255)$254 $276,067 























See accompanying notes to the condensed consolidated financial statements.
5

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020



Note 1Overview
    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 primary business segments:
1) Refining - We own and operate four refineries, including one idled refinery, with total operating throughput capacity of over 150 Mbpd in Hawaii, Wyoming, and Washington.
2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise through Hele and “76” branded sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations. Through March 31, 2021, we completed the rebranding of all company-operated convenience stores in Washington and Idaho to “nomnom,” our proprietary brand.
3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies regions that primarily transports and stores our crude oil and refined products for our refineries and transports refined products to our retail sites or third-party purchasers.
    As of March 31, 2021, 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, 2020 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, 2020.
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 the COVID-19 coronavirus and certain developments in the global crude oil markets have impacted our businesses, people, and operations. We are continuing to actively respond 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 pandemic’s 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
6

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


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 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. We did not have a material change in our allowances on trade receivables during the three months ended March 31, 2021 or 2020.
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 March 31,
20212020
Cost of revenues$5,219 $4,628 
Operating expense12,802 14,451 
General and administrative expense880 801 
Benefit Plans
We maintain defined benefit pension plans covering eligible Wyoming Refining employees and the employees of U.S. Oil covered by a collective bargaining agreement. In March 2021, the Wyoming Refining plan was amended (the “Plan Amendment”) to freeze all future benefit accruals for hourly plan participants. The Plan Amendment reduced the projected benefit obligation by $6.0 million. We recorded a $2.0 million Gain on curtailment of pension obligation in our condensed consolidated statements of operations for the three months ended March 31, 2021, and an unrealized actuarial gain of $4.0 million as Other post-retirement benefits income (loss), net of tax, in our condensed consolidated statements of other comprehensive income for the three months ended March 31, 2021. The projected benefit obligation estimate was determined based on the present value of projected future benefit payments similar to the evaluation done for the estimate as of December 31, 2021. In determining the discount rate, we used pricing and yield information for high-quality corporate bonds that result in payments similar to the estimated distributions of benefits from our plans. The weighted average discount rate used to determine benefit obligations increased from 2.65% to 3.25%, or 23%, from December 31, 2020 to March 31, 2021. The estimated rate of compensation increase remained 3.00%.
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, 2020.
Accounting Principles Adopted
    On December 31, 2020, we adopted Accounting Standards Update (“ASU”) No. 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14”), using the required retrospective transition method. This ASU amended, added, and removed certain disclosure requirements under FASB ASC Topic 715 “CompensationRetirement Benefits.” Our adoption of ASU 2018-14 did not have a material impact on our financial condition, results of operations, cash flows, or related disclosures.
On January 1, 2021, we adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12”). We adopted this ASU under the prospective method and information that was presented prior to January 1, 2021 has not been restated and continues to be reported under the accounting standards in effect for that period. This
7

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


ASU simplified the accounting for income taxes by removing certain exceptions to general principles and clarified and amended guidance to improve consistency under FASB ASC Topic 740 “Income Taxes.” Our adoption of ASU 2019-12 did not have a material impact on our financial condition, results of operations, and cash flows.
On February 11, 2021, we elected to adopt ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) and ASU No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”) following our execution of an amendment to the Washington Refinery Intermediation Agreement which included transition guidance on the interest rate of the Merrill Lynch Commodities, Inc. (“MLC”) receivable advances (“MLC receivable advances”) to U.S. Oil & Refining Co. and certain affiliated entities (collectively, “U.S. Oil”) to be based on another industry standard benchmark rate that will be effective upon the London Interbank Offered Rate’s (“LIBOR”) scheduled retirement at the end of 2021. These ASUs provide 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 LIBOR. ASU 2020-04 and ASU 2021-01 are applicable to contract modifications that meet certain requirements and are entered into between March 12, 2020 and December 31, 2022. Our adoption of ASUs 2020-04 and 2021-01 did not have a material impact on our financial condition, results of operations, and cash flows.
Note 3—Investment in Laramie Energy, LLC
    As of March 31, 2021, 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 $130.6 million that is secured by a lien on its natural gas and crude oil properties and related assets. As of March 31, 2021, the balance outstanding on the revolving credit facility was approximately $190.6 million. We are guarantors of Laramie Energy’s credit facility, with recourse limited to the pledge of our equity interest in 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. Laramie Energy’s credit facility matures on December 15, 2021.
    During the year ended December 31, 2020, Laramie Energy incurred losses that reduced the book value of our investment to zero, and as of December 31, 2020, we had discontinued the application of the equity method of accounting for our investment in Laramie Energy. As such, the balance of our investment in Laramie Energy was zero as of March 31, 2021 and December 31, 2020.
    Summarized financial information for Laramie Energy is as follows (in thousands):
March 31, 2021December 31, 2020
Current assets$88,217 $34,573 
Non-current assets348,586 355,538 
Current liabilities272,677 217,523 
Non-current liabilities44,279 93,193 
Three Months Ended March 31,
20212020
Natural gas and oil revenues$82,348 $34,713 
Income from operations47,209 1,369 
Net income40,451 574 
Laramie Energy’s net income includes (in thousands):
Three Months Ended March 31,
20212020
Depreciation, depletion, and amortization$6,984 $9,279 
Unrealized (gain) loss on derivative instruments(549)(2,414)
    
8

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


Note 4—Revenue Recognition
    As of March 31, 2021 and December 31, 2020, receivables from contracts with customers were $152.0 million and $104.9 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 $7.0 million and $4.1 million as of March 31, 2021 and December 31, 2020, respectively. We have elected to apply a practical expedient not to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected duration of less than one year and (ii) contracts where the variable consideration has been allocated entirely to our unsatisfied performance obligation.
    The following table provides information about disaggregated revenue by major product line and includes a reconciliation of the disaggregated revenues to total segment revenues (in thousands):
Three Months Ended March 31, 2021RefiningLogisticsRetail
Product or service:
Gasoline$277,579 $ $63,822 
Distillates (1)350,799  5,068 
Other refined products (2)209,780   
Merchandise  21,286 
Transportation and terminalling services 41,309  
Other revenue597  1,012 
Total segment revenues (3)$838,755 $41,309 $91,188 
Three Months Ended March 31, 2020RefiningLogisticsRetail
Product or service:
Gasoline$286,598 $ $72,847 
Distillates (1)583,708  8,450 
Other refined products (2)264,167   
Merchandise  21,029 
Transportation and terminalling services 59,150  
Other revenue13,653  487 
Total segment revenues (3)$1,148,126 $59,150 $102,813 
_______________________________________________________
(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—Segment Information for the reconciliation of segment revenues to total consolidated revenues.
Note 5—Inventories
    Inventories at March 31, 2021 consisted of the following (in thousands):
Titled InventorySupply and Offtake Agreements (1)Total
Crude oil and feedstocks$128,343 $119,747 $248,090 
Refined products and blendstock131,385 119,817 251,202 
Warehouse stock and other (2)79,914  79,914 
Total$339,642 $239,564 $579,206 
9

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


    Inventories at December 31, 2020 consisted of the following (in thousands):
Titled Inventory
Supply and Offtake Agreements (1)
Total
Crude oil and feedstocks$88,307 $75,340 $163,647 
Refined products and blendstock112,146 83,601 195,747 
Warehouse stock and other (2)70,461  70,461 
Total$270,914 $158,941 $429,855 
________________________________________________________
(1)Please read Note 7—Inventory Financing Agreements for further information.
(2)Includes $36.3 million and $26.7 million of RINs and environmental credits, reported at cost, as of March 31, 2021 and December 31, 2020, respectively. RINs and environmental obligations of $260.0 million and $150.5 million, reported at market value, are included in Other accrued liabilities on our condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.
    As of March 31, 2021, we had no reserve for the lower of cost or net realizable value of inventory. As of December 31, 2020, there was a $10.6 million reserve for the lower of cost or net realizable value of inventory. As of March 31, 2021, the excess of current replacement cost over the last-in, first-out (“LIFO”) inventory carrying value at the Washington refinery was approximately $10.8 million. Our LIFO inventories, net of the lower of cost or net realizable reserve, were equal to current cost as of December 31, 2020.
Note 6—Prepaid and Other Current Assets
    Prepaid and other current assets at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):
March 31, 2021December 31, 2020
Collateral posted with broker for derivative instruments (1)$2,376 $1,489 
Prepaid insurance10,039 14,932 
Derivative assets6,403 1,346 
Other6,095 6,881 
Total$24,913 $24,648 
_________________________________________________________
(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—Derivatives for further information.
Note 7—Inventory Financing Agreements
The following table summarizes our outstanding obligations under our inventory financing agreements (in thousands):
March 31, 2021December 31, 2020
Supply and Offtake Agreements
$466,071 $312,185 
Washington Refinery Intermediation Agreement126,550 111,501 
Obligations under inventory financing agreements$592,621 $423,686 
Supply and Offtake Agreements
We have several agreements with J. Aron & Company LLC (“J. Aron”) to support our Hawaii refining operations (the “Supply and Offtake Agreements”). On May 4, 2021, we amended the Supply and Offtake Agreements and extended the term expiry date from May 31, 2021, to June 30, 2021. We expect to finalize a new multi-year agreement during the second quarter of 2021. As of March 31, 2021, we had no obligations due to J. Aron under this contractual undertakings agreement.
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 receivable and inventory. Upon execution of the Supply and Offtake Agreements, we paid J. Aron a deferral arrangement fee of $1.3 million. As of March 31, 2021 and December 31, 2020, the capacity of the Deferred Payment Arrangement was
10

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


$102.0 million and $80.1 million, respectively. As of March 31, 2021 and December 31, 2020, we had $96.2 million and $78.6 million outstanding, respectively, under the Deferred Payment Arrangement.
Under the Supply and Offtake Agreements, we pay or receive certain fees from J. Aron based on changes in market prices over time. 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 $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 as allowed under the Supply and Offtake Agreements. As of March 31, 2021 and December 31, 2020, the receivable was $0.2 million and $0.5 million, respectively.
Washington Refinery Intermediation Agreement
    The Washington Refinery Intermediation Agreement with MLC provides a structured financing arrangement based on U.S. Oil’s crude oil and refined products inventories and associated accounts receivable. On February 11, 2021, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through March 31, 2022. This amendment also includes transition guidance on the interest rate of the MLC receivable advances to be based on another industry standard benchmark rate that will be effective upon LIBOR’s scheduled retirement at the end of 2021.
    As of March 31, 2021 and December 31, 2020, our outstanding balance under the MLC receivable advances was equal to our borrowing base of $68.0 million and $41.1 million, respectively. Additionally, as of March 31, 2021 and December 31, 2020, we had approximately $95.8 million and $93.6 million in letters of credit outstanding through MLC’s credit support, respectively.
The following table summarizes the inventory intermediation fees, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations, and Interest expense and financing costs, net related to the intermediation agreements (in thousands):
Three Months Ended March 31,
20212020
Net fees and expenses:
Supply and Offtake Agreements
Inventory intermediation fees$3,770 $6,870 
Interest expense and financing costs, net846 1,349 
Washington Refinery Intermediation Agreement
Inventory intermediation fees$971 $1,107 
Interest expense and financing costs, net977 997 
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—Derivatives for further information.
Note 8—Other Accrued Liabilities

Other accrued liabilities at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):

March 31, 2021December 31, 2020
Accrued payroll and other employee benefits$15,543 $14,916 
Gross environmental credit obligations (1)259,973 150,482 
Other32,475 34,230 
Total$307,991 $199,628 
___________________________________________________
(1)Gross environmental credit obligations are stated at market as of March 31, 2021 and December 31, 2020. A portion of these obligations are expected to be settled with our RINs assets and other environmental credits, which are presented as Inventories on our condensed consolidated balance sheet and are stated at the lower of cost and net realizable value. The carrying costs of these assets were $36.3 million and $26.7 million as of March 31, 2021 and December 31, 2020, respectively.
11

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


Note 9—Debt
    The following table summarizes our outstanding debt (in thousands):
March 31, 2021December 31, 2020
5.00% Convertible Senior Notes due 2021
$48,665 $48,665 
ABL Credit Facility due 2022  
Retail Property Term Loan due 2024 42,494 
7.75% Senior Secured Notes due 2025
298,000 300,000 
Term Loan B due 2026225,000 228,125 
12.875% Senior Secured Notes due 2026
105,000 105,000 
Mid Pac Term Loan due 2028 1,399 
PHL Term Loan 5,840 
Principal amount of long-term debt676,665 731,523 
Less: unamortized discount and deferred financing costs(20,664)(22,930)
Total debt, net of unamortized discount and deferred financing costs656,001 708,593 
Less: current maturities, net of unamortized discount and deferred financing costs(58,816)(59,933)
Long-term debt, net of current maturities$597,185 $648,660 
    As of March 31, 2021 and December 31, 2020, we had $12.9 million and $1.7 million in letters of credit outstanding under the ABL Credit Facility, respectively, and $3.6 million in cash-collateralized letters of credit and surety bonds outstanding.
    Under the ABL Credit Facility, the indentures governing the 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, and the term loan facility with Goldman Sachs Bank USA (the “Term Loan B Facility”), our subsidiaries are restricted from paying dividends or making other equity distributions, subject to certain exceptions.
5.00% Convertible Senior Notes Due 2021
    As of March 31, 2021, the outstanding principal amount of the 5.00% Convertible Senior Notes was $48.7 million, the unamortized discount and deferred financing cost was $0.7 million, and the carrying amount of the liability component was $48.0 million.
ABL Credit Facility
    The ABL Credit Facility provides for a revolving credit facility that provides for revolving loans and for the issuance of letters of credit (the “ABL Revolver”). As of March 31, 2021, the ABL Revolver had no outstanding revolving loans, $12.9 million in letters of credit outstanding, and a borrowing base of approximately $70.5 million.
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 Bank of Hawaii (“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 loan agreement previously entered into on January 9, 2019 with BOH (the “Par Pacific Term Loan Agreement”).
    The Retail Property Term Loan bore interest based on a floating rate equal to the applicable LIBOR for a one-month interest period plus 1.5%. Principal and interest payments were payable monthly based on a 20-year amortization schedule, principal prepayments were allowed subject to applicable prepayment penalties, and the remaining unpaid principal, plus any unpaid interest or other charges, was due on April 1, 2024, the maturity date of the Retail Property Term Loan. On February 23, 2021, we terminated and repaid all amounts outstanding under the Retail Property Term Loan. We recognized approximately $1.4 million of debt extinguishment costs in the three months ended March 31, 2021 related to our prepayment of the loan principal.
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
12

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


Secured Notes in a private placement under Rule 144A and Regulation S of the Securities Act of 1933, as amended (the “Securities Act”). The net proceeds of $289.2 million (net of financing costs and original issue discount of 1%) from the sale were used to repay certain previous credit facilities and a forward sale agreement with J. Aron and for general corporate purposes.
The 7.75% Senior Secured Notes bear 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. On March 23, 2021, we repurchased and cancelled $2 million in aggregate principal amount of the 7.75% Senior Secured Notes. As of March 31, 2021, the 7.75% Senior Secured Notes had an outstanding principal balance of $298.0 million.
Mid Pac Term Loan
    On September 27, 2018, Par Hawaii, LLC (“PHL”, formerly known as Par Hawaii, Inc. and includes the assets of the dissolved entity formerly known as Mid Pac Petroleum, LLC), our wholly owned subsidiary, entered into the Mid Pac Term Loan with American Savings Bank, F.S.B., which provided a term loan of up to $1.5 million. We received the proceeds on October 18, 2018, which were used to purchase certain retail property. The Mid Pac Term Loan was scheduled to mature on October 18, 2028.
    The Mid Pac Term Loan was payable monthly, bore interest at an annual rate of 4.375%, was secured by a first-priority lien on the real property purchased with the funds, including leases and rents on the property and the property’s fixed assets and fixtures, and was guaranteed by Par Petroleum, LLC. On March 12, 2021, we terminated and repaid all amounts outstanding under the Mid Pac Term Loan.
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 bore interest at a fixed rate of 2.750% per annum. Principal and interest payments were payable monthly based on a 25-year amortization schedule, principal prepayments were allowed with no prepayment charge, and the remaining principal, plus any unpaid interest or other charges, was due on April 15, 2030, the maturity date of the PHL Term Loan. The PHL Term Loan was guaranteed by Par Petroleum, LLC. On February 23, 2021, we terminated and repaid all amounts outstanding under the PHL Term Loan.
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 March 31, 2021, we were in compliance with all of our debt 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—Derivatives
Commodity Derivatives
    Our condensed consolidated balance sheets present derivative assets and liabilities on a net basis. Please read Note 11—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.
13

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


    Our open futures and over-the-counter (“OTC”) swaps at March 31, 2021 will settle by October 2021. At March 31, 2021, our open commodity derivative contracts represented (in thousands of barrels):
Contract typePurchasesSalesNet
Futures500 (250)250 
Swaps2,525 (3,025)(500)
Total3,025 (3,275)(250)
    At March 31, 2021, we also had option collars of 25 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 $36.50 per barrel to a ceiling of $60.00 per barrel and expire in December 2021.
Interest Rate Derivatives
    We are exposed to interest rate volatility in our ABL Revolver, Term Loan B Facility, Supply and Offtake Agreements, and Washington Refinery Intermediation Agreement. We may utilize interest rate swaps to manage our interest rate risk. As of December 31, 2020, we had entered into an interest rate swap at an average fixed rate of 3.91% in exchange for the floating interest rate on the notional amounts due under the Retail Property Term Loan. This swap was set to expire on April 1, 2024, the maturity date of the Retail Property Term Loan. On February 23, 2021, we terminated and repaid all amounts outstanding under the Retail Property Term Loan and the related interest rate swap.
    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 March 31, 2021, 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 March 31, 2021 and December 31, 2020 and their placement within our condensed consolidated balance sheets.
Balance Sheet LocationMarch 31, 2021December 31, 2020
Asset (Liability)
Commodity derivatives (1)Prepaid and other current assets$6,403 $1,346 
Commodity derivativesOther accrued liabilities(1,045) 
J. Aron repurchase obligation derivativeObligations under inventory financing agreements(21,572)(20,797)
MLC terminal obligation derivativeObligations under inventory financing agreements410 (10,161)
Interest rate derivativesOther accrued liabilities (966)
Interest rate derivativesOther liabilities (2,027)
_________________________________________________________
(1)Does not include cash collateral of $2.4 million and $1.5 million recorded in Prepaid and other current assets as of March 31, 2021 and December 31, 2020, respectively, and $9.5 million in Other long-term assets as of both March 31, 2021 and December 31, 2020.
14

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


    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 March 31,
Statement of Operations Location20212020
Commodity derivativesCost of revenues (excluding depreciation)$631 $(57,159)
J. Aron repurchase obligation derivativeCost of revenues (excluding depreciation)(775)(46,645)
MLC terminal obligation derivativeCost of revenues (excluding depreciation)(24,372)82,958 
Interest rate derivativesInterest expense and financing costs, net104 (2,020)
Note 11—Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Common Stock Warrants
    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 March 31, 2021, we had no common stock warrants outstanding.
Derivative Instruments
We utilize 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 derivatives are valued using market quotations from independent price reporting agencies and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. The valuation of the embedded derivatives related to our J. Aron repurchase and MLC terminal obligations is based on estimates of the prices and differentials assuming settlement at the end of the reporting period. Estimates of the J. Aron and MLC settlement prices are based on observable inputs, such as Brent and West Texas Intermediate Crude Oil (“WTI”) indices, and unobservable inputs, such as 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 $15.49 per barrel to a premium of $14.05 per barrel as of March 31, 2021. Contractual price differentials are considered unobservable inputs; therefore, these embedded derivatives are classified as Level 3 instruments. We did not have other commodity derivatives classified as Level 3 at March 31, 2021 or December 31, 2020. Please read Note 10—Derivatives for further information on derivatives.
Gross Environmental credit obligations
     Estimates of our gross environmental credit obligations are based on the amount of RINs or other environmental credits required to comply with U.S. Environmental Protection Agency (“EPA”) regulations and the market prices of those RINs or other environmental credits as of the end of the reporting period. The gross environmental credit obligations are classified as Level 2 instruments as we obtain the pricing inputs for our RINs and other environmental credits from brokers based on market quotes on similar instruments. Please read Note 13—Commitments and Contingencies for further information on the EPA regulations related to greenhouse gases.
15

PAR PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Interim Periods Ended March 31, 2021 and 2020


Financial Statement Impact
    Fair value amounts by hierarchy level as of March 31, 2021 and December 31, 2020 are presented gross in the tables below (in thousands):
March 31, 2021
Level 1Level 2Level 3Gross Fair ValueEffect of Counter-Party NettingNet Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives$380 $11,955 $